Prosegur Compania de Seguridad SA

MAD:PSG

Earnings Call Transcript 2019-Q1

[Operator]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Prosegur Q1 2019 Results Presentation. [Operator Instructions] I must advise you that this conference is being recorded today, Wednesday, 8th of May 2019.I would now like to hand the conference over to your speakers today. Your first speaker, Antonio de Cárcer. Please go ahead, sir.

[Antonio de Cárcer, Head of Investor Relations]

Good afternoon and welcome to Prosegur's first quarter results presentation. We expect this presentation to last about 30 minutes, during which, we will provide you with a detailed information on the most relevant aspects of the period. The presentation will be led by Antonio Rubio, CFO of Prosegur; Christoph Schoofs, Capital Markets Director and myself.I would like to remind you that this webcast has been prerecorded. At the end of this presentation, we will open the line for a live Q&A session, and the presentation will remain available for download on our corporate website.I will now hand over the presentation to our CFO, Antonio Rubio.

[Antonio Rubio Merino, Chief Financial Officer]

Thank you, Antonio. Good afternoon, everyone, and thank you for attending this presentation. Today, we are presenting our results for the first quarter of 2019. Results that, as we have already anticipated during our full year 2018 presentation, are still affected by the strong adverse FX situation as well as the application of the accounting rules IAS 21 and 29 related to the hyperinflationary conditions in Argentina.Nevertheless, this negative environment also allow us to highlight the strong capability of our business model to withstand adverse conditions, delivering not only sustained incremental revenues growth in local currency but also solid cash flow generation. With all business lines positively adapting to current conditions benefiting from local market dynamics, we consider these set of results to be solid, and we remain confident regarding our performance estimation for the midterm. However, Q1 2019 had not been only defined by adverse market conditions, there are also several other positive highlights I would like to emphasize on the following slide.First of all, I would like to point out the excellent revenues growth in local currency terms that has reached almost 13%, driven by the intense inorganic expansion during the past months, consistent across all regions and business lines. Also, all our activities had delivered solid organic growth, even the ones that are seeing tougher local market conditions, such as Alarms in Argentina, achieving double-digit growth in sales in local currency terms.Furthermore, the continued positive operational cash flow generation already seen in previous quarters is also remarkable. Even taking into consideration the usual negative seasonal effect of our business in the first half of the year, our cash flow generation continues to improve, deriving from effective efficiency measures implemented in our back-office operations as well as from the revised sales strategy fully focused on working capital improvements in all activities and countries.Another important milestone is the integration of our whole Cybersecurity practice under the name of cipher, promoting our brand as one of the most well-known and fastest growing in IT industry. Cipher, the multinational cybersecurity company we incorporated to our perimeter at the beginning of this year, is one of the leading names in this segment, with great reputation and market recognition. We have decided to take advantage of such a powerful brand by integrating our existing activity into the cipher brand environment. As of today, Prosegur cipher has doubled its annual revenues, and the company is also one of the main pillars of our recent entry in the U.S. security market.In this regard, I would also like to point out that during Q1, we had fully closed all pending M&A transactions in North America. We're proud to state that since the end of February, we don't have a fully operational platform of our security activity in that market. Going forward, we will be able to deliver on a country-wide basis the more sophisticated intelligence security solutions will allow us to create value for all of our clients. Our platform represents a strong combination of remote monitoring services and fast and specialized response intervention capabilities that we expect to be one of the main drivers of our expansion during the coming years.Finally, I would also like to remind you that this year we have initiated the rollout of the main project related towards digital transformation strategy across our main geographies. Given the excellent efficiency obtained by our new administrative and financial processed, both in terms of working capital improvement and reduction of corporate costs, we are now in position to perform the investment related to the digital transformation which will impact all business support operations. Let's now move on and analyze the P&L for the first quarter. Revenues for the period have totaled EUR 993 million, remaining almost flat compared to 2018. We consider this a very solid performance, taking into consideration the important negative comparable effect. This quarter, our main currencies had lost around 50% of their previous years' value. And moreover, in Q1 2018, the hyper-inflationary accounting rules were still not applied. This becomes quite evident in the chart on the right where we can see whole in organic terms our revenues have expanded by almost 7.5%, in line with average high single-digit organic growth seen in previous years, further increased by an additional 5% of inorganic operations.When looking at profitability, the strong combined effect of the currency depreciation and the application of IAS 21 and 29 accounting rules is clearly noticeable. However, similarly to revenues, the comparison with the same period of 2018 does not reflect a fully accurate image of the real underlying performance of the business.EBITDA amounted to EUR 116 million and EBIT to EUR 67 million, respectively. Both had been strongly affected by FX, by the adverse competitive market situation in Australia and, to a minor extent, by the integration of all recently acquired companies as well as the investment related to the digital transformation. Below the EBIT line, the most noticeable fact is the increased tax rate to 43.3%. This is another purely accounting-related effect deriving from the application of the hyper-inflationary accounting rules. We expect that this has strong impact in Q1 will be normalized during the year. Finally, consolidated net profit also affected by all previously mentioned effects reached EUR 22 million.Let's now have a more detailed look at revenues broken down by business and region. As previously mentioned, revenues growth in local currency terms has been good in all business lines and regions. The result of staying in cash in the Ibero-America region are the only 2 that had achieved negative growth when converted into euros.Europe has reported a solid 3.1% growth, outperforming GDP growth in all European countries and continuing a similar trend as seen in previous years. However, in the first quarter, there is still some dilutive comparable effect related to the reduction of the airports contract in Spain that occurred in the mid-2018. We expect this to be compensated during the year as some other large contracts were obtained at the end of last year, which will gain relative weight as the year progresses.Ibero-America's revenues have also grown over 15% in local currency terms. They are strongly affected by the drop of currencies and the slow reaction of the Brazilian economy following the elections. In consolidated terms, they reached EUR 503 million. While the Q1 typically sees less growth due to seasonality, we are noticing good performance as far as passing cost increments to market is concerned, without any deterioration of any of the countries of the region. As usual, this pass-through is expected to accelerate over the next months.Finally, the rest of the world region shows an extraordinary growth above 83% driven by the incorporation of Philippines into the region and by the start of operations in the U.S. as these revenues are also consolidated in that segment. Regarding business lines, in general terms, we see a similar performance. Only cash has experienced a negative revenue growth in euro terms mainly due to this higher, especially to adverse FX. Nevertheless, in local currency terms, cash has improved this result for the fifth consecutive quarter, achieving an excellent growth of 15%, evidencing its resilience and value-creation capabilities.Security also rose by almost 10% in local currency, benefiting from the recent addition of the U.S. combined with the good performance of Spain and Europe in general. At the same time, its more balanced geographical mix has allowed revenues of the activity to remain practically flat when converted into euros. Finally, Alarms has also experienced positive growth both in local and consolidated euro terms, delivering an excellent organic growth above 20%. This evidence the strong market performance of the settings and reflects the capability to continuously update price in all the geographies. Antonio de Cárcer will give you broader detail on the specific dynamics of each individual business lines later on, so I would like not to comment our consolidated profitability and cash flow generation.Regarding profitability, EBIT has totaled in euro terms EUR 67 million compared to EUR 99 million achieved in the same quarter in 2018. As previously touched upon, several factors make this comparison not representative of the real underlying performance of the business. The mix effects related to the strong depreciation of the main currencies when compared to the same period of last year, the application of the IAS 21 and 29 accounting rules, and the integration efforts of all the recent acquisitions combined with the still weak situation in Australia and Brazil are all factors that had contributed to our current EBIT margin of 6.8%. Nevertheless, we expect the margins to recover during the second half of 2018, catching up with the previous years' levels. Equal accounting effects will be applied in both periods, normalizing the comparison, hence, making our positive margin evolution more evident.On the other hand, an undistorted way to assess the strong resilience of the business and its solid performance can easily be seen when looking at the very good operational cash flow generated during the period. EBITDA conversion into operational cash flow of 34.5% is an excellent achievement in a quarter that is traditionally low in cash flow generation due to seasonal effects. This is the best outcomes seen over the past several years, but it is also in line with the improved cash flow generation trend we have been delivering quarter-over-quarter. This arguably the most solid evidence of the capability of our business model and financial discipline to generate cash even in the most unfavorable macro conditions. And cash flow is not affected by the recently implemented accounting rules. In our view, it is the best way to demonstrate the solidness of our performance. We are very proud of this achievement and through continued working capital optimization measures, we believe it will continue improving during the rest of the year.This is all on my side for now. I will now hand the presentation over to Antonio de Cárcer, who will provide you with further information on the performance of each business line during this quarter. I will join you again at the end of presentation for my closing remarks and the Q&A.

[Antonio de Cárcer, Head of Investor Relations]

Thank you, Antonio. We will now cover some more detailed information on the breakdown of sales by nature in each business line as well as some additional insights on the main drivers of the profitability improvement and other key performance indicators.Starting with Prosegur Cash, the most significant fact is the strong 15% growth in local currency terms. As Antonio Rubio has pointed out, this is the fifth consecutive quarter of local growth improvement and an excellent indicator of the solidness of the business model in both emerging and mature economies. Unfortunately, due to its footprint mix, cash also suffers the highest impact of FX in its consolidated accounts, obtaining a final figure of EUR 432 million. This is a 3.9% reduction versus same period in 2018 and can be considered a very good result taken in consideration the strong adverse currency scenario.Profitability-wise, we see a slight margin contraction, deriving from the change in regional mix as the biggest contributors have reduced their weight due to the FX impact, and also the impact of the increased indirect cost and the current situation in France and Australia now in the process of being corrected, and finally, the integration costs of all the new acquisitions. This means that EBIT margin is now 14.2% of sales, still a very strong figure when compared to the industry and with a positive evolution trend as the year unfolds and the negative comparison effect vanishes on the second half of the year. Finally, it's also worth mentioning the strong acceleration of sales that the new services and products of Prosegur Cash are delivering.Smart Cash solutions added value that flows in services, an integrated ATM management, now represent 15% of total sales figures in cash, increasing the penetration in all markets and growing more than 37% versus the same period in previous year.Similar trends as the one seen in Cash applied also to Prosegur Security. Sales in local currency have grown close to 10%, benefiting from the good market dynamics in Europe and the recently initiated operations in the U.S. that accounts for 4% of total growth. Brazil, even in the current slow economic recovery, has also remained almost flat in organic terms and so we're certain improving profitability in comparison with previous years.Being Argentina area, the third-largest market, Security business also reflects the effect of the application of hyper-inflationary accounting rules. Therefore, when looking at the profitability figures, this effect in combination with the initiated integration of our 4 acquired companies in North America also presents a dilutive effect on the reported EBIT margin that has totaled EUR 11 million and represents 2.2% of sales in margin terms.When looking at the penetration of integrated and advanced security solutions, we also see a similar pace as the one seen in Cash. Integra and transformation products in Security as these are the short-brand names used to denominate them, represent now almost 25% of sales and are present in most of our largest clients. Still with a nonvisible margin gain as most of them are in this pilot or initial implementation stages, but steadily becoming the foundation of the future evolution of our services, whose profitability will continue increasing on a constant base.Let's now look at the Alarms business. Client base has grown by 8% when compared to Q1 '18 and now totals 552,000 clients. Sales grew by almost 20% in organic terms and by more than 5% in euros, totaling EUR 68 million, excellent performance that clearly stated our capability to pass prices to market with no deterioration and to continue growing despite being the most sensible business to adverse cycle macro conditions.ARPU remains stable at EUR 36 per month. This is also a very remarkable achievement when comparing to Q1 past year. As in this first quarter, a large portion of our installed base in Ibero-America was affected by a much higher negative currency exchange than in the same period in 2018.The Alarms business in all countries is now focusing in client quality and margin improvement. Furthermore in Argentina, due to the higher inflationary environment and the subsequent churn deterioration, we have now focused on commercial strategy towards a less-intensive growth in exchange of a stronger client retention policies. Margin improvement derives from operational efficiencies and, therefore, technology innovations in the products such as the new Smart platform add a natural trend towards this effect.On the other hand, client quality enhancement demands a higher level of transformation on the sales model. In this regard, we have increased our efforts in both client satisfaction metrics and NPS, and at the same time, started an ambitious project to try to bancarize as much of the client base as possible as this has a direct effect on the churn reduction, increase that from revenues and better working capital use.As you can see in this slide chart, all these initiatives are quickly bearing fruit as our client bancarization inflation has substantially increased in this first quarter to become almost 84% of all new additions to the base. That was all on my side regarding the evolution and performance of our different business lines. I will now hand the presentation over to our Capital Markets Director Christoph Schoofs, who will cover the main financial parameters of our first quarter 2019 results.

[Christoph Schoofs, Capital Markets Director]

Thank you very much, Antonio. Let's now have a closer look at our cash flow statement, debt structure and balance sheet.Starting with the cash flow statement, the most remarkable aspect is certainly the strong operating cash flow obtained during the first quarter, improving by more than EUR 30 million compared to March 2018. As the increase of operating cash flow is coupled with lower EBITDA in absolute terms, our EBITDA-to-cash conversion ratio has increased significantly, reaching 34.5% versus 4.5% last year.Especially given our seasonality with traditionally weaker performance at the beginning of the year, we're quite pleased with the current results as already pointed out by Antonio Rubio earlier. One of the main drivers of this overall improvement is the continued optimization of our working capital. Even if we exclude the one-off effect of delayed collections in Brazil we saw during Q1 2018, the underlying trend is still positive.The other main contributor to higher operating cash flow is the provisions and other noncash items line. This improvement is mainly triggered by a calendar effect related to the AT payments in Spain as well as the positive impact, the devaluation of the Argentinian peso and the Brazilian real has on Social Security payments and leave provisions when consolidated in euro terms.As far as tax payments are concerned, please bear in mind that in February 2018, the group received the withholding tax reimbursement of EUR 13 million, which did not occur this year. Isolating this effect, tax payments remain in line with last year.Interests increased from EUR 8 million to EUR 15 million. Since last year, the coupon of our former EUR 500 million Eurobond was only paid out at the beginning of April, whereas this year's first quarter already includes both coupons of our current bonds.If we move on to cash flow from investing and financing activities, you can appreciate the strong increase in M&A payments, reaching almost EUR 100 million. This is mainly linked to our different acquisitions in the U.S., which represent more than 70% of the total investment made during the first quarter of 2019.In terms of CapEx, although in absolute terms, it is similar to last year's figure, it is important to emphasize that the proportion of client CapEx continues to increase gradually and already represents almost 60% of the total figure.Dividend payout remains flat if we exclude the portion of the withholding tax paid in Q1 2018 that was related to the extraordinary dividend back in December 2017.Lastly, the continued currency devaluations still impacts our consolidated net debt position although, to a lesser extent, as a result of our increased efforts to reduce cash balances in non-euro currencies. Please bear in mind that the final debt figure shown does not reflect the impact in net debt triggered by IAS 16. We will give you some details as to how this accounting rule has impacted our net debt position on the following slide.As far as the current structure of our debt is concerned, at the end of the first quarter, total net debt amounted to EUR 568 million, including both deferred payments of EUR 78 million and treasury stock valued at EUR 91 million. As a result of the application of IAS 16, this amount is increased by an additional EUR 127 million, totaling EUR 695 million. If we take into consideration IAS 16, our net financial debt-to-EBITDA ratio reaches 1.6x versus 0.9x at the end of last year. Please note that in line with our traditionally conservative approach, we're calculating this ratio including the full negative impact in our debt but only 1 quarter of positive impact in our LTM EBITDA. Even with this prudent methodology, current leverage still remains far below our internal limit of 2.5x, and it should also decrease as the positive P&L impact of IAS 16 gains relative weight in the LTM EBITDA calculation. Excluding IAS 16, net financial debt increased by EUR 156 million during the period, reaching EUR 581 million at March 2019. This increase is mainly driven by the delivery of our M&A strategy, especially the recent entry in the U.S. security market.Finally, looking at Prosegur's consolidated balance sheet, you will appreciate some variations when compared to December 2018. The increase in tangible fixed assets can be mainly attributable to IAS 16, which has been applied for the first time in the Q1 consolidated financial statements of the group. In this context, financial liabilities both long and short term also show the corresponding impact. Moreover, the intense M&A activity during the first quarter, I mentioned on the previous slide, has led to an increase in intangible assets as goodwill is being recognized. It is still worth highlighting that our debt maturity profile remains very solid since more than 85% of our financial liabilities are considered of long-term nature.This is all on my side. I would now like to hand the presentation back to our CFO, Antonio Rubio, who will share with you his final conclusions and remarks.

[Antonio Rubio Merino, Chief Financial Officer]

Thank you very much, Christoph. To close this first quarter results presentation, I would like to highlight once again the following key points of the period. We had improved our volume growth in local currency terms despite adverse FX and the tough economic environment that's still prevailing in our main markets in Ibero-America. We have further increased the penetration of innovative products in all business lines, which are becoming a more and more significant part of our service offering.We also have delivered additional M&A, adding new countries, business and services to our portfolio. And we have been able to improve our cash flow conversion compensating the adverse FX impact with solid tangible results. We believe this year we'll continue to present headwinds, but all our business lines had made the required adjustment in order to extract the most of any positive change.The contraction in our profitability in euro terms responds mainly to FX impact. At the same time, it is offset by the excellent operational cash flow generation that is also expected to continue its positive evolution as we keep optimizing our internal back-office efficiencies.We are now fully focused in the fast integration of all the businesses acquired during the previous months, which allow us to expand into 8 new countries. We are trying to reduce the inherent cost to the minimum possible while simultaneously growing out the main initiatives of our digital transformation projects.Finally, I would like to emphasize once more that business fundamentals remain solid and stable despite the difficult environment. We remain confident that we will continue delivering positive results as we have done in similar situations throughout the last decade.This is all from my side. We will now be happy to attend any questions you may have. I would also like to thank you all once again for sharing your time with us today.

[Operator]

[Operator Instructions] Your first question is coming from the line of Chirag Vadhia from HSBC.

[Chirag Vadhia, Research Analyst]

I just have 3. Given the recent entry in the U.S., could you talk a little about the -- a little bit about the strategy of the Alarms business in particular with regards to this market? And how you feel you might differ from competitors in the U.S. who already have an integrated offering and some of which is seeing a stronger mix of electronic security sales? And secondly, has recent M&A activity from the larger players in the U.S. affected your strategy of expansion? And finally, could you talk a little bit about how the churn has progressed in Argentina in the Alarms division?

[Antonio Rubio Merino, Chief Financial Officer]

Chirag, and thank you for your questions. Related to U.S., you know that we had acquired 4 companies that are very complementary between them, but one on Alarms business. One of the things, monitoring. But with all the focus of the 4 companies in B2B. Related to our strategy, it's true that probably the American market is the most sophisticated in terms of technology. But what we detected when we analyzed the opportunity there and we have been working more than 2 years in exploring the market, and we have been thinking about going to the U.S. in the last 10 years, we consider that in this concentration process that the security industry is suffering in the U.S. is focused mainly in traditional manned guarding. And the big key players, none of them is really today offering an integrated solution combining the traditional manned guarding with sophisticated technology, with software, with advisory, with risk management, and finally, already is sophisticated, complete product that is including cybersecurity and the intelligence incorporated into this. So we consider that is a very regional offering in the American market and this is the main reason behind the landing there, and we remain very optimistic about the domestic alarm market in the U.S. we are not interested at all because it's the most penetrated market in the world, more than 25% of the households had alarm in the U.S. when less than 1% of the household had an alarm in Latin America. So we are thinking more in the south than in the north part of this continent.About M&A, in the U.S., now we are thinking integration, we have done our job in terms of acquisition of the companies. And in this moment, we are thinking about the integration of the 4 companies we have bought and nevertheless, something that is true is that now we have the platform in the U.S., we have the some more units, financial, human resource, IT department. So probably in the future, we will analyze more opportunities in the American market. But we are not thinking in the big ways, in the large transaction that the market is speaking today related to the U.S. You know that, that is not our strategy.And about the churn rate in Argentina, we have the previous listings of the group in Argentina. One of them is demonstrating every day their resiliency. That is Cash business, in this kind of tough environment, on the other side traditional security -- or the Alarms business is suffering the tough economic environment in the country. And what I can tell you is that the churn rate have been duplicating Argentina in the last 1.5 years.

[Operator]

Your next question is coming from the line of Juan Ros from BBVA Bank.

[Juan Ros Padilla, Chief Analyst]

I have couple of them, please. First is regarding the Alarms business. I was wondering if you could provide a little bit more detail, namely regarding evolution per country. If there's a country that's may be slowing down more the BTC growth. Also, if you could elaborate a little bit more on churn rate. Secondly, regarding the Security business, you mentioned that the Brazilian Security business is improving. You guys already reaching a positive EBIT margin including the overheads? Or when do you expect to be around that?

[Antonio Rubio Merino, Chief Financial Officer]

[Foreign Language] And thank you for your questions. About Alarms, we remain very happy about the strategy that the company refocused on Alarms business more than 6 years ago. But you know that the industry today is showing, generally speaking, a reduction in the BTC. So it's true that the device of our domestic alarm is growing, the demand is growing, but the traditional companies are presenting in their numbers and negative growth in BTC, at the same time, we are growing. We remain optimistic in all our markets.In the case of Argentina, where we are suffering, is a concrete particular situation due to the tough environment because we are competing with the wallet of the normal household with different quotas or different service size and is normal in this kind of tough economic environment that you are suffering. But we are quite satisfied about the performance in Nordic countries. We are growing in Spain barely about the market average, and we remain very optimistic. However, the churn rate, generally speaking, is in line with our traditional one. Nevertheless, something that we are focusing every year more and more is in the bancarization degree that we know that kind of sounds in Spain a little bit or Portugal a little bit of strength but you know the degree of bancarization in most of our markets is more reduced. We are absolutely convinced in the correlation between bancarization and churn rate in the long term, and this investment focus, in the quality of the new customer, we are sure that we'll provide a very positive result in the churn rate in the future.And about Security, it's true that these past quarters, we are not showing the improvement that we are waiting from our performance this year and in the concrete case of Brazil, although the macro is not performing as we expected, probably 0.5 year ago, but we remain optimistic in the possibilities of the country, and we remain with our target of breaking even completely in the P&L of Security in Brazil within this year.

[Operator]

Your next question is coming from the line of Miguel Medina from JB Capital.

[Miguel Medina-Sivilotti]

[Foreign Language] Three questions if I may. The first one is a follow-up on the Security business. You have this target of 5% EBIT margin in 2020, if I recall correctly. And I was wondering what the impact of the integration of the U.S. business could be on this target. You mentioned that what you are aiming to have in the U.S. is a value-added proposition. So I guess that might help to improve this 5% margin. But on the other hand, you are also restructuring the business. So just to have an idea of how the U.S., the move into the U.S. could affect this 5% target?The second question is on the agenda for the 2018 Shareholders' Meeting, and the share buyback that you have announced, which could be up to 10%. And the question is whether the share buyback is compatible with the traditional dividend policy of Prosegur? So we are going to have a situation where you pay, you follow the dividend policy and then on top of that, you have the share buyback or the share buyback is going to replace the dividend policy?And the third and final one is an accounting one, and I hope I can put this in Spanglish. In the release, you mentioned the implication of this new accounting standard 23, which increases liabilities, and that liability increase is offset by a charge against shareholders' fund. I think this is related to some tax contingencies. My question is whether -- I guess this is a noncash item. Is there any chance of this liability becoming cash in the future?

[Antonio Rubio Merino, Chief Financial Officer]

Miguel, thank you for your questions. Our Security, we remain with a target of achieving 5% EBIT margin. So this is our goal, our target and our aspiration. And we will remain in the same trench for some point in time to achieve this. Obviously, the project in the U.S. is very important. It's very significant. It's something that is changing clearly -- is changing clearly the share of our new market in the portfolio of personnel security. We have bought 4 companies in 4 different places around the East Coast, one of them was listed and we're working in the listing. So it's true that we will have some integration costs. But nevertheless, this is not affecting to Brazil, to France or to Spain. So the target of improving the EBIT margin and being closer and closer to 5% remain in the roles of the company. We had -- our plan is true for the next year. But if at the end of the year, we are in below 5%, then we have the opportunity to be profitable and offering our new products in this content, we will remain happy. But we remain with the same target.About the agenda of the next shareholder meeting, you know that frequently, the typical American investor is asking us about the share buybacks programs. This is something very frequent, very easy to do under the American law, you know that in Spain, it's very complicated. But it's true is that we have the intention of setting back the present shares that we have in our portfolio, close to 3%. Now with the following points in the agenda, we are only required the normal standard authorization as we ask in any shareholder meeting authorization or many transactions is in bonds and this kind of typical corporate transaction. But we don't have any program for acquiring shares, and it's only a normal standard authorization, just in case. But we don't have a program or a concrete intention in this moment. In any case, although you know we don't have a policy of paying dividends, we had a beautiful tradition. We have the intention of maintaining this tradition of growth of the dividend in the same line in the past 10 years without any effect coming from this program of sharing back shares.And about IAS 23 is only an interpretation of the accounting rule about the estimations of some -- the rule basically is permitting to you to apply a new system for estimation, your tax potential contingencies is a noncash item, and we are not waiting in the future any impact coming from the cash flow related to these contingencies.

[Operator]

[Operator Instructions] We seem to have no further questions at this time. I'd like to hand the call over to Antonio Rubio for his final remarks.

[Antonio Rubio Merino, Chief Financial Officer]

So once again thank you very much for attending this presentation. This is only the first quarter of the year, we have the full year in front of us. We will see what will happen with macro and the rest of the things, but we remain very proud about the performance of our teams, more than 170,000 people working every day protecting our work and we can't be more proud of them. Thank you very much.

[Operator]

That does conclude our conference for today. Thank you for participating. You may all disconnect.