GRUPO EZENTIS, S.A. FIRST HALF 2020
RESULTS PRESENTATION
July 2020
CONTENTS
Sector/Markets | 01 |
Resilient Business Model | 11 |
Results | 18 |
Visibility and Outlook | 26 |
Sustainability | 29 |
Conclusions | 32 |
Annexes | 34 |
01
SECTOR / MARKETS
02 SECTOR / MARKETS
DIVERSIFIED GEOGRAPHIC FOOTPRINT
MEXICO
GERMANY
COLOMBIA | TARGET Q1 2021 |
PERU
BRAZIL
the for Working
CHILE
ARGENTINA
ARGENTINA
SPAIN & PORTUGAL
Future
Asset for Sale
03 SECTOR / MARKETS
REVENUE BY GEOGRAPHIC REGION AND SECTOR: GREATER PRESENCE IN EUROPE
Generation of Revenue | Generation of Revenue |
by Geographic Region | by Sector 1H 2020 |
(1)
Future the for Working
- Pacific country percentages: Chile: 16.3% FH 2020 / 20.1% FH 2019; Peru: 5.3% FH 2020 / 8.5% FH 2019; Argentina 0.0% FH 2020 / 3.9% FH 2019; Mexico: 1.6% FH 2020 / 1.7% FH 2019; Colombia: 1.9% FH 2020 / 2.0% FH 2019
04 | SECTOR / MARKETS | |
EZENTIS: LEVERS FOR GROWTH IN MARKETS | ||
GERMANY
Working
Context
Opportunity
for Ezentis
Nationwide development of infrastructures with gigabyte networks to cover 100% of homes by 2025
Potential FTTH market: general fibre-opticroll-out plan to connect 24 million additional homes in the period (5 million homes are currently connected)
The government is promoting a favourable regulatory framework for investment. Financing with public and private funds
Competitive edge: experience in the development of FTTH infrastructures in Spain, one of the main global markets for the development thereof, as well as in Brazil and the Pacific
Future the for
05 SECTOR / MARKETS
RESILIENT BUSINESS MODEL
VALUE CHAIN CONTINUITY
Planning | Design | Logistics | Deployment | Operation | Maintenance |
Presence of Ezentis in the value chain
for Working
Design, Logistics and Deployment
Operation
and Maintenance
Clients focus on their Core Business implies increased outsourcing for the stages of design, logistics and roll-out
Logistics as added value for Deployment and O&M
Market: infrastructure stock
O&M tied to operating costs (OPEX) Medium-term contracts: 3-5years
Stable margins with incentives for quality and adjusted for inflation
Future the
06 SECTOR / MARKETS
TRENDS AND KEYS FOR THE TELECOMS MARKET
The health crisis has helped to emphasize the value of using communication and digitalization infrastructures to cope
with the increased use of teleworking, e-commerce, and online education and leisure
Working
Modernization of existing telecoms networks and deployment of new infrastructures to extend them to rural areas. Deployment of 4G and 5G mobile networks
Digitalization of processes in companies and public authorities as a competitive lever: remote working, e-commerce, health and training
Security in transactions and data privacy
Reduction of the digital gap
MARKET KEYS
Deployment and O&M for fiber optic. <15% FTTH penetration rate in Europe
Deployment and O&M of 4G and 5G (1 per 60 antennas, respectively)
Removal of obsolete infrastructures
Digital services
Future the for
07 | SECTOR / MARKETS | EZENTIS: LEVERS FOR GROWTH IN TELECOMMUNICATIONS | |
FIBRE-OPTIC AND 5G NETWORKS | |||
EZENTIS: CURRENT BUSINESS | |||
FTTH |
Roll-out, operation and maintenance of fibre-optics
Dismantling of obsolete infrastructures
Roll-out of equipment for 4G technology
Alarms: roll-out and maintenance
EZENTIS: ADDITIONAL BUSINESS
FTTT
Network roll-out
Installation of towers/cells
Fibre to the tower roll-out
Roll-out of equipment for 5G technology
Operation and maintenance of the 5G network
Towers and fiber-optic network
Telecommunications equipment
Greater density: economies of scale, efficiency and margin
Future the for Working
08 SECTOR / MARKETS
TRENDS AND KEYS FOR THE ENERGY MARKET
Energy transition to contain climate change, reduce energy poverty and as a competitive lever for
industrial activities and services
Working
Need for decarbonization to stop the planet's temperature increase
Increase in the weight of electricity in the total energy demand in Europe to reach the energy and climate targets set by the EU
PNIEC (National Integrated Energy and Climate Plan) in Spain
Reduction of energy costs for industrial processes to enable companies to improve their competitiveness
MARKET KEYS
Target: 59% electrification to meet the demands of the Paris Agreement by 2050
PNIEC: increase of 42% in the consumption of renewable energy and reduction of emissions by 23%
Public and private funding in a 10 years period in Spain in electricity grids, renewable generation and energy savings and efficiency
Future the for
09 SECTOR / MARKETS
Effect
of the pandemic on transition plans
Ezentis
is maintaining its growth strategy in the energy sector
EZENTIS: LEVERS FOR GROWTH IN ENERGY
The government plans to anticipate and bring forward the PNIEC to 2030 in order to support the reconstruction process
Energy companies have offered to maintain or even increase investments in the energy transition as a driving force for economic recovery (80% of planned investment from a total 240 billion euros is private)
Calls are being made for the government's renewables plan to be brought forward to 2025 in order to accelerate investments
Collaboration on the execution of the necessary investments in power grids - both electricity and gas - with action in the fields of installation assembly, operation and maintenance
In the field of distributed generation, participation in the strong roll-outof two-wayself- consumption photovoltaic electricity systems for domestic and industrial clients through supply, installation and maintenance activities
Facilitating the roll-out of electric vehicle charging stations across the national network, engaging in the installation and maintenance of these stations
Ezentis will contribute towards development in this field in every country where it operates
Future the for Working
10 | SECTOR / MARKETS | |
ATTRACTIVE STRATEGIC POSITIONING |
60 years of experience and as benchmark in the market
Maximization of volume and recurrence through long-termcontracts in diversified markets
Robust resilience in the Europe, Brazil and Pacfic markets, and in the Telecoms and Energy sectors
Optimization of density in geographical areas to reach the critical size which allows profitability improvement and maximizes economies of scale
Ready to lead the consolidation of the market due to its history, experience and proven quality
Future the for Working
11
RESILIENT BUSINESS MODEL
12 | RESILIENT BUSINESS MODEL | RESILIENT BUSINESS MODEL | |
Revenue Evolution | €M | Backlog Evolution | €M |
TACC8%
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 1H20 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 1H20 | |
LTM | Backlog/ | |||||||||||||
1,6x | 1,8x | 2,6x | 1,9x | 1,7x | 2,1x | 1,8x | ||||||||
Revenue | ||||||||||||||
LTM |
Operating Cash Flow | €M | Final Cash Position | €M |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 1H20 |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 1H20 |
LTM |
Future the for Working
13 RESILIENT BUSINESS MODEL | KEY ASPECTS OF THE BUSINESS MODEL |
ONGOING TRANSFORMATION FOR IMPROVING COMPETITIVENESS
UNIQUE MARKET SITUATION
Market concentration
Opportunities: Teleco/Energy and geographic areas
Greater presence in the value chain
Quality, efficiency and safety as criteria for supplier selection
ONGOING TRANSFORMATION:
KEY ISSUES
Density
Operational Synergies
Innovation
SUSTAINABLE
GROWTH
IMPROVED
COMPETITIVENESS
STRATEGIC | for Working |
OBJECTIVES | Future the |
14 | RESILIENT BUSINESS MODEL | KEY ASPECTS OF THE BUSINESS MODEL | |
ONGOING TRANSFORMATION: CORE ISSUES | |||
DENSITY | OPERATIONAL |
SYNERGIES |
ONGOING
TRANSFORMATION
Future the for Working
INNOVATION
15 | RESILIENT BUSINESS MODEL | KEY ASPECTS OF THE BUSINESS MODEL | |
ONGOING TRANSFORMATION: DENSITY | |||
DENSITY
ONGOING
TRANSFORMATION
Achieving the most profitable critical size to enable profitability improvement and economies of scale to be maximised
Market consolidation
Ezentis is involved in the market consolidation process due to its proven history, experience and quality
Focus on large business volumes Maximisation of volume and recurring business through long-term contracts in diversified markets
Future the for Working
16 | RESILIENT BUSINESS MODEL | KEY ASPECTS OF THE BUSINESS MODEL | |
ONGOING TRANSFORMATION: OPERATIONAL SYNERGIES | |||
OPERATIONAL
SYNERGIES
ONGOING
TRANSFORMATION
Operation of the business
Promoting better practices in all countries
Integration of companies and structures into Shared Services and Logistics Centres by territory
Development of centres of excellence for the roll-outof fibre- optics: FTTH Excellence Centre
Consolidation of the Control Tower model for managing operation and maintenance
Centralisation of Dispatching
the for Working
Efficiency in resource management (people and fleet)
Increased flexibility for the structure, greater efficiency in resources
Adaptation of expenditures to revenues
In coordination with social stakeholders / governments / clients
Reduction of 2,279 people
Restructuring of the organisational structure: € 7,5 M
Future
17 RESILIENT BUSINESS MODEL
ONGOING
TRANSFORMATION
INNOVATION
Main
Projects
KEY ASPECTS OF THE BUSINES MODEL
ONGOING TRANSFORMATION: INNOVATION
Digital technology
Process automation
Ongoing improvement in the level of service and costs
PRAXIS Project | ORACLE Tool |
More exhaustive control of resources, quality and safety | |
audits, and reporting incidents in real time | |
FLEET Project | PULPOMATIC Tool |
Monitoring the use and refuelling of fuel, GPS vehicle positioning,
speed control and verification of programmed routes
FINANCIAL Project | SAP Tool |
Future the for Working
Digital tools that improve quoting, treasury management, asset accounting, purchase and logistics records, billing and reporting
18
RESULTS
19 | RESULTS | GROUP BUSINESS | |
FIRST HALF 2020 | |||
TELECOMMUNICATIONS
AND ENERGY BUSINESS
Normal development of activity while
adapting to the needs of demand
Telecommunications:
for Working
BUSINESS IMPACTED BY
COVID-19
Governmental restrictions imposed in
certain countries
Domestic installation and maintenance Telephony service portability limitation
Energy:
Energy disconnection and reconnection business
Economic impact: revenue decrease of 13.6% at constant exchange rate and of 23.3% at current exchange rate
Future the
20 RESULTS
MAIN FIGURES 1H 2020
REVENUE € 182.6 M
-23.3% o/1H2019
EBITDA | € 17.8 M |
-39.5% o/1H2019 | |
FINAL CASH | € 26.2 M |
POSITION | |
BACKLOG
multi-annual
contracts
EBITDA MARGIN
NET
DEBT
€ 719.5 M
1.8x o/revenue last 12 months (LTM)
9.8%
vs 12.4% in 1H2019
3.3x
vs 2.4x in 2019
Future the for Working
21 RESULTS
TRENDS IN LATIN AMERICAN CURRENCIES
2020 Exchange Rate Trends - Base 100 | |
Depreciation of Latin American currencies against | COVID 19 |
the Euro since the start of the pandemic |
Greater impact on revenues in Brazil and Chile. Other currencies have a lesser weight on revenue (Peru 5.3% Colombia 1.9% and Argentina 0.0%)
Our business model: | 01/01/20 | 29/02/20 | 30/04/20 | 30/06/20 |
Natural coverage of income and expenditure in local currencies
Increased generation of revenues in Euros (Europe = 46% o/1H 2020)
Inflation and interest rate trends in Brazil and the Pacific allow for cost control
Most contracts are tied to inflation
PEN -7,47%
CLP -9,97%COP -12,79% ARS -15,06%
BRL
-26,14%
Future the for Working
22 RESULTS
Revenue €M
Constant currency var. -13.6%
-23.3%
1H19 R | Business | Currency | Reclas. | 1H20R |
Variation | Variation | Argentina |
REVENUE AND EBITDA TRENDS
Less domestic installation and maintenance business, telephony portability limitation and energy "disconnection and re-connection" restrictions due to the health emergency situation
The revenue reduction when disregarding the currency effect
stands at 13.6%
EBITDA €M
Constant currency var. -30.5%
-39.4%
Future the for Working
Gradual cost adaptation
The EBITDA reduction when disregarding the currency
effect stands at 30.5%
1H19 R | Business | Currency | Reclas. | 1H20R |
variation | variation | Argentina |
23 RESULTS
NET FINANCIAL DEBT: MAIN MATURITY IN 2025
1H20 | 2019 FY | 65% debt with maturity from 2023 | |
Net Financial Debt (NFD) | 160.2 | 147.4 | |
Gross financial debt | 186.4 | 170.9 | |
Cash and other equivalent assets | 26.2 | 23.5 | Average debt cost 5.4% vs 5.9% in 2019 |
NFD/EBITDA Ratio | 3.3x | 2.4x | |
Maturities Calendar as from 1H20Debt Composition 1H20
for Working
Leases Other Debt
1,0 | |||
2,6 | |||
78,3
Future the
2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Syndicated | Leases | Bank | Interest rate | Others | Total Financial |
Loan | (1) | Loans | coverage | Debt | |||||||
(1) Syndicated loan with Banco Santander, BBVA, Bankia, Banco Pichincha, EBN, and the Muzinich and Arcano funds
24 RESULTS
PROFIT AND LOSS ACCOUNT 1H2020
1H20 | 1H19 | |||
Revenue | 182,6 | 238,0 | ||
EBITDA | 17.8 | 29.4 | ||
EBITDA Margin | 9.8% | 12.4% | ||
Depreciation and amortization charges | (19.3) | (16.6) | ||
EBIT | (1.5) | 12.8 | ||
Revenue and financial expenses | (8.2) | (8.5) | ||
Currency exchanges | 0.2 | 0.3 | ||
Non-recurring results | (7.5) | (2.0) | ||
Non-Controlling Interests, discontinued | 1.1 | (1.2) | ||
operations and non-strategic investments | ||||
Taxes | 2.0 | 0.1 |
Future the for Working
Net Result | (13.9) | 1.5 |
25 | RESULTS | SOLID GENERATION OF OPERATING CASH FLOW | ||
CASH FLOW LAST 12 MONTHS / 1H20 | ||||
CF LTM | CF | |||
Q3 19-Q2 20 | 1H20 |
EBITDA | 46.5 | 17.8 |
Changes in working capital and other movements | (17.1) | (3.6) |
Recurring Operating Cash Flow | 29.3 | 14.3 |
Movements for non-recurring results | (9.5) | (6.7) |
Operating Cash Flow | 19.8 | 7.6 |
Inorganic growth payments | (27.5) | - |
Acquisition of property, plant & equipment, and intangible assets (CAPEX) | (6.7) | (2.3) |
EBITDA conversion rate in recurring business Cash Flow: 63% in LTM and 80% in 1H20
Variation in average periods vs December 2019
Reduction of the average payment period by 6.7% Reduction of the average cash transformation period by 7.1%
for Working
Cash flow from investing | (34.2) | (2.3) |
Financing inorganic growth | 30.0 | - |
Changes in financial debts, net | (2.5) | 9.4 |
Collection and payment of interests, net | (17.8) | (8.7) |
Cash flow from financing | 9.7 | 0.7 |
Total net cash flow | (4.6) | 6.0 |
Initial net financial position | 35.1 | 23.5 |
Net increase/(decrease) in cash and cash equivalents | (4.6) | 6.0 |
Exchange differences | (4.3) | (3.3) |
Non-recurring operating cash flow due to transformation of the productive model
CAPEX 1.0%-1.5% o/sales
Significant reduction to the financial cost
Final net financial position of € 26.2 M
Future the
Final net financial position | 26.2 | 26.2 |
26
VISIBILITY
AND OUTLOOK
27 | VISIBILITY AND OUTLOOK | VISIBILITY AT 2020 | |
PRE-COVID19 | COVID19 IMPACT | EXPECTATION |
Revenue and backlog will develop with an expected increase in business in 2H20
Ongoing transformation: increased productivity and cost efficiency. Adaptation of expenditure to revenue trends
GRADUAL RECOVERY OF THE MARGIN IN 2H20
First half: | Revenue (€M) | EBITDA Margin(€M) |
Moderate impact from the emergency situation in the first quarter that has increased in the second quarter, the greatest impact of which took place in April and May (IM and energy segments), recovery in June
Second half:
Gradual recovery of business in all business segments. Geographically, this is being reflected in Europe by an increase in revenue and in all business indicators from June. The Brazil and Pacific markets are expected to develop along the same lines but at a later date
Future the for Working
The information on this slide is not a profit forecast or estimate by Ezentis but rather its expectations on future trends of a merely aspirational and programmatic nature that reflect current expectations, current and past trends and the expected development of business in the market where the Company operates and that, at any event, may not take place or may be subject to variation and/or alteration as a result of possible future events
28 | VISIBILITY AND OUTLOOK | OUTLOOK FOR 2022-2023 | |
DIVERSIFICATION | GROWTH | FINANCIAL | (1) |
GEOGRAPHY | EBITDA MARGIN | ||
65% - 70% | REVENUE | 8% - 9% | |
EUROPE | BORROWING RATIO | ||
SECTOR | € 1,000 M | < 2x EBITDA | |
60% - 65% | (x2) | FINANCING COST | |
TELECOMMUNICATIONS | < 4,5% | ||
(1) Without considering the effect of IFRS16
The strategic position of Ezentis enables the opportunities presenting themselves in the Telecommunications and Energy sectors to be harnessed
Future the for Working
The information on this slide is not a profit forecast or estimate by Ezentis but rather its expectations on future trends of a merely aspirational and programmatic nature that reflect current expectations, current and past trends and the expected development of business in the market where the Company operates and that, at any event, may not take place or may be subject to variation and/or alteration as a result of possible future events
29
SUSTAINABILITY
30 SUSTAINABILITY
GOBERNANCE
Publication of a new
Sustainability Policy
Creation of a Sustainability
Committee
Publication of a Progress Report in response to the commitment made to the Global Compact
Updates to the Materiality
Analysis
FOCUSED ON SUSTAINABILITY
PLAN 2020
ENVIRONMENT
Publication of a new Climate
Change Policy
Inclusion of the climate change risk in the company's Risk Map
Review of the Carbon Footprint Calculation procedure
STAKEHOLDERS
Strengthened relationship with Clients through sustainability
Search for alignment of criteria with ESG Investors
Increased environmental awareness initiatives with Employees
Future the for Working
CONTRIBUTION TO THE GLOBAL HEALTH CRISIS
We are working to improve connectivity in people's homes and in business, an essential factor for economic
sustainability and for society as a whole
31 SUSTAINABILITY
COMMITTED TO SUSTAINABILITY
SUSTAINABILITY PLAN UP TO 2022
Entry into major Sustainability Indexes (FTSE4GOOD, VIGEO...)
Obtaining score of B in the CDP questionnaire
Preparation of a Non-Financial Internal Financial Information Control System (SCIINF)
Integrated Annual Report
Approval of suppliers with regard to sustainability criteria
Safety audits of contractors and subcontractors
Commitment to zero accidents
60% of fleet with alternative fuel in 2022
Future the for Working
32
CONCLUSIONS
33 CONCLUSIONS
CONCLUSIONS
Impact by COVID-19 but with positive profitability and cash flow generation
Gradual improvement in business during second half
Cash position of € 26 M in 1H20
Backlog with visibility at 1.8 years
Increased competitiveness through our transformation programme
Market undergoing consolidation with sound levers for growth
Outlook for 2022-2023
Future the for Working
WE ARE GRATEFUL TO ALL OUR EMPLOYEES FOR THEIR COMMITMENT TO MAINTAINING THE ESSENTIAL TELECOMS
AND ENERGY SERVICES
34
ANNEXES
35 ANNEX I
SHARE VS INDICES DURING THE COVID-19 CRISIS PERIOD
EZENTIS +59%
IBEX SMALL +30%
IBEX 35 +11%
IBEX MEDIUM +9%
Future the for Working
36 ANNEX II
CONSOLIDATED BALANCE SHEET 1H20
€M | 1H20 | 2019 |
Non-current assets | 183.480 | 195.377 |
Tangible and intangible assets | 117.785 | 131.270 |
Long-term financial investments | 17.067 | 17.830 |
Deferred tax assets | 48.628 | 46.277 |
1H20 | 2019 | |
Equity (1) | (12.868) | 14.312 |
Non-current liabilities | 170.679 | 160.309 |
Financial debt | 133.867 | 120.093 |
Lease liabilities IFRS 16 | 16.804 | 15.130 |
Other non-current liabilities | 20.008 | 25.086 |
for Working
Current assets | 160.397 | 183.634 |
Assets held for the sale | 893 | 7.037 |
Inventories | 24.694 | 23.929 |
Trades and other receivables | 108.620 | 129.165 |
Cash and cash equivalents | 26.190 | 23.503 |
Current liabilities | 186.066 | 204.390 | |
Liabilities associated with assets held for the sale | 1.780 | 3.585 | |
Financial debt | 25.644 | 23.714 | |
Lease liabilities IFRS 16 | 10.074 | 11.976 | |
Other current liabilities | 148.568 | 165.115 |
the
TOTAL | 343.877 | 379.011 TOTAL | 343.877 | 379.011 | ||
(1) Equity of the individual company Grupo Ezentis S.A.at 1H20 stands at € 130.5 M
Future
37 LEGAL WARNING
LEGAL WARNING
This document has been prepared by EZENTIS, only for use during the PRESENTATION OF FIRST HALF 2020 and for institutional and professional investors of the same sector. Consequently, it may not be disclosed or made public or used by any other natural or legal person for a purpose other than the one expressed above without the express written consent of EZENTIS. EZENTIS assumes no responsibility for the content of the document if it is used for a purpose other than that stated above. The information and any opinions and statements contained in this document have not been verified by independent third parties, so neither does it imply or explicitly grant any guarantee about the impartiality, accuracy, completeness or correctness of the information or opinions and statements that in He expresses himself. Neither Ezentis, nor its affiliates assume responsibility of any kind, regardless of whether or not there is negligence or any other circumstance, regarding damages or losses that may arise from any use of this document or its contents. This document does not constitute a contractual document, nor can it be used to integrate or interpret any contract or any other type of commitment. This document does not constitute an offer or invitation to subscribe or acquire shares, in accordance with the provisions of Royal Legislative Decree 4/2015, of October 23, which approves the consolidated text of the Securities Market Law, of Stock Market, in Royal Decree-Law 5/2005, of March 11, and / or in Royal Decree 1310/2005, of November 4, and its development regulations. This communication contains information or statements with forward-looking statements on Ezentis that are subject to risks and uncertainties that may cause actual results and developments to differ from those expressed or implied in such information or forward- looking statements. The information or statements with future forecasts refer exclusively to the date on which they were expressed, do not constitute any guarantee of future results and have not been reviewed by the EZENTIS auditors. It is recommended not to make decisions based on information or statements with future forecasts. All the information or statements with future forecasts reflected in the document issued by EZENTIS or any of its directors, managers, employees or representatives are expressly subject to the warnings made. The information or statements with future forecasts included in this document are based on the information available as of the date of this communication.
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Grupo Ezentis SA published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 08:23:10 UTC
