Global Dominion Access Sa

Welcome to the presentation of Annual Results of 2020 of Dominion. This afternoon we have the following speakers. Patricia Zercon, who is the Director for Corporate Development, and Roberto Torrillas, who is the Director General, and Miguel Barandiran, who is the CEO of Dominion. So please go ahead. Thank you. Good afternoon, everybody, and my apologies for this slight delay, and thank you for connecting with our conference call of today. Well, this year, like everybody else, has been a big test for Dominion, a test for the model, for the team, and for the strategic plan, and I think that we have won. We can say that we have closed one of the most complicated years of recent times, And we have done so by creating value with Q4 better than the Q4 of 2019 in terms of sales, and with results that for this year are much better than what we expected them to be. The results are much better than the forecast we established once the pandemic started, because then the estimates we had was to close with a positive net profit and a positive operating cash flow. But we said there is more than €36 million in operational flow, only €10 million less than last year, and with a net profit of €12.5 million. Later on, I will give you the details of these numbers, but the message, as usual, is not focused on the numbers, but rather on what they reflect. And these results are the consequence of an excellent execution, a team that has reacted quickly and resiliently, assisted by the decentralization of our management model, and we also have a resilient model that is ready for growth, but is also able to create a value in adverse moments, thanks to diversification, digitization, and the financial discipline that characterizes us. But if we were to move on to the numbers now, it's important to bear in mind several things. On the one hand, this year the inorganic impact has reduced both because the investments or the divestitures we have carried out have been greater than the investments. So this has reduced the consolidation perimeter by about €8 million. But the main divestiture of the year was the sale of the service activity for the Telefónica network in Spain, which was a mature activity. so that we could focus resources on other activities with greater profitability and a higher added value. On the other hand, operational margins, in terms of EBITDA and the contribution margin, apart from the effect of the divestitures, there's also been a one-off and negative impact of €10 million in the year. And these one-offs are the end result of staff restructuring measures, including the redundancy scheme in B2C, as well as the stock provisions and insolvencies and the sale of the telco services in Spain. So, bearing in mind these two issues, I think we have a much better picture of what the results of the year have been like. So, therefore, the adjusted business figure of €900 million in the year represents a minimum organic variation of only 0.4%. and the rest can be explained because of the net divestiture, inorganic, it was minus 1%, and the effect of foreign currency operations with minus 2.5%. And this evolution of the business figure has been brought about by the recovery that took place in Q4. After the slumps reported in Q2 and Q3, Q4 had an organic growth of 5% compared to the last quarter of 2019. In other words, this 5% is in line with our objective for growth in the normal situation, and this recovering in Q4 did not only happen at the level of sales, but also in terms of margins. So that means that the EBITDA figure for the end of the year is in excess of €36 million, and net profit totals €12.5 million, and these margins have been penalized by approximately €10 million in net one-offs. But let's now review what each of the business segments have done and the main references we had in the year because it's important to point out that we have not stopped advancing in the strategic plans that we have set for each one of these segments. Firstly, we have the 360 project. They have behaved in an excellent manner during the year because the business figure has changed only very little in relation to 2019 and the profitability levels have been very high. with a contribution margin of 17.3%, in other words, above our strategic objective for this segment that stands at 15%. We've not only been able to minimise impacts on projects under execution, but rather we have situated our project portfolio at €617 million for the next few years. Some of the most important awards, for instance, are the hospital in Windbain, which is one of the ten hospital packages, that is currently now being offered in Chile, or the extension of the transmission network in Langoda. And we also want to reinforce our business in the world of renewables. As we pointed out, together with our BAS partner, we have a pipeline of more than one gigawatt of projects, mainly PV, whose execution starts in 2021. We want to become an ICP actor, an independent power producer with assets in generation in Europe and Latin America. And for this, we are now incorporating a minority shareholder by increasing our capital. This process has advanced a lot, and as you will see in the figures, we have already established a long-term financial investment of $20 million that will be used to increase our capital and which has to be closed in the next few months. This operation at market prices as well as information. The information convention shows how valuable this business is that is not being identified by the market, and this is one of the commitments we have in the case of our current strategic plan. But also in the area of renewables, and as an example of how well we know the sector, in the last renewables auction that took place on January 26th, we were awarded 45 megawatts at a price above the average price of the auctions. So as regards the B2B service segment, this segment ended by growing 2% in the last quarter after the slumps that were reported in Q2 and Q3. Activity slumps that were due to the imposition of significant restrictions for the activities of some of our customers. And although we haven't fully recovered these activities, the new contract that we have obtained during the year And I also feel very confident in relation to 2021 in terms of growth, in terms of B2B services. So if we're talking about contracts in the industrial sphere as well as in the field of energy, where we have a third contract with Enel in Latin America that will contribute another €10 million per year to this segment. With contracts like this and with the diversities that have been carried out into the communication services in Spain, as I mentioned previously, what we are doing now is is advanced towards this strategic objective of optimising profitability by focusing our resources on contracts with a higher added value. And apart from divestitures, this area has also carried out acquisitions of strategic companies during the year. More than 80% of the activity and more than 90% of the contribution margin comes from the two segments that I've just pointed out and which form part of our B2B activities. And in this B2B segment, energy has become an outstanding activity thanks to the contracts with Enel and thanks to the Angoda project, to the renewable project, and also to the decrease we've had in terms of telco. As regards to the B2C segment, this year, well, has been difficult for the physical channel and therefore for the sale of services and devices and for the catchment of new customers. Shops were closed during long periods of time. and when they were opened, there were less customers. But in spite of all that, and during 2020, we increased our base of our own services. We have 71,000 net supplies, which means that growth represents more than 40%. There will be 173,500 supplies of electrical, city, and gas, and 68,700 telco supplies. So thanks to this service base, It is producing recovered revenues and the turnover of the year has grown, but the margin has suffered from the impact of the closures. Even though this impact has been mitigated by quick decision-making in this area, by renegotiation rentals and redundancy schemes and negotiations with suppliers, and the segment accumulates practically all of the negative impacts of the one-offs totalling €10 million. Four of those ten occurred during Q4, which is when the redundancy scheme was carried out in this segment. And this redundancy scheme, as well as other operational and structural measures implemented during the year and in previous years, are necessary to transform the business more focused on the retail business into an integrator of personal and household services. So therefore, for B2C, 2020 was a complicated year, although we have a very powerful team in charge of the project and significant programs have been made in the transformation that would allow us to grow as long as we have the suitable model. And with this, I'm finished with the businesses and with the different segments, and now I would like to move on to the balance sheet. We maintain a strong position of net positive cash with C&O levels that are in line with previous years and RONA levels in excess of 16%. 16% during one year of profitability that have been exceptionally lower. But this has been very positive considering how difficult the situation was. Operationally speaking, the CON has remained stable with an improvement thanks to the good behaviour of the 360 project and the rest of the improvement is associated with differences in terms of negative conversion compared to 2019. Net cash goes from €113 million in the closing date of 2019 to the current figure of €87.5 million and the main movements are €38 million that were spent on remunerating shareholders by paying dividends totaling €11 million and repurchasing shares totaling €17 million and through M&A. And €20 million have been spent on financial investments in our renewable business, which will help us increase the capital by incorporating the minority partners during the next few months. And this has been carried out in order to not postpone projects that are going to be carried out soon. And this has been possible thanks to the high generation of operational cash that we've observed during the year. We've had a high level of operating cash during the year. And this has to do with our financial discipline, which, among other things, has been able to contain our casings and structural costs. We're talking about 5% less compared to 2019 and capping that has been limited throughout the year was reactivated in Q4 in view of the good prospects and we have finished by investing 24 million euros which is a figure lower than in 2019. And with this the operational generation of cash represents 101% of the VISA and it's been enough to pay dividends to repurchase shares. And to conclude with this review of the year, what I would like to underscore is that we've finished the COVID year with a reasonably good impact. We've had excellent results considering the circumstances of our environment. We've also tested the business model. We know it very well, and we believe that it's a suitable model to grow, as we've done in the past, but it's also a model that will guarantee our success in adverse circumstances. If the market has any doubts about how the company is going to behave, this year has been a major stress test and we've won the battle and we've created much more value than what you can see in the figures because the situation that we have gone through and still are suffering has not allowed us to advance in all the strategic objectives and we're not yet so fully comfortable with the future prospects and we also have a firm commitment towards the business, the team and the shareholders. And as regards 2021, What we believe is that our recovery, the recovery we had in Q4, is going to be consolidated and will grow in relation to the figures of 2019. In other words, for Dominion, the recovery will take place this year when other people are saying that this is going to take place in 2022. And in 2021, we will also maintain our shareholder remuneration commitment by paying something more than $4 million in dividends and by extending the repurchase program. And with this, I've finished the review of the year and our prospects, and now we can move on to your questions, to the Q&A session. Thank you. Ladies and gentlemen, if you want to ask any questions, please press asterisk 1 on your keypad. The first question comes from Miguel González from AT Capital. Please go ahead with your question, sir. Hello. Good afternoon, everybody. I've got three questions for you. And the first of these questions is I would like to know if you have given some thought to how you can restructure the presence of a minority shareholder or partner in the business of renewables. Are you going to increase your stake in BAS? I think they had something like 35%. So how much would you keep? And then I'm not sure if you know how much you would sell for operations and maintenance because I know that this is what you are consolidating. And then the second question would be, well, to confirm, I'm not sure if I understood you well, but you have $4 million in negative one-offs in this first quarter, I think, but they have to do with the B2C business. And I would like to know if we should expect any other costs in the first quarter of this year or if everything has been provisioned. And the final question has to do with the... tendering process in Chile. I think there are two hospitals that have already been covered and I know that you've been in charge of the windpaint. I'd like to know how many tendering processes are going to happen in that country and do you expect to win any other offers? Should I start? Hello. Hello, Miguel. Well, you can talk about Chile and Plumhead. You can start with the first part of the question. Structure. Well, obviously, you know that we're not intensive in capital investment, so you also know that we were supposed to have a minority state, and if we become an ITP, what we wouldn't want to have is maturity shifts. We want to maintain the Dominion business. We don't want to affect our financial statement, and our financial statement has to be what it was like before, and we don't want to... mix up anything with IPP or with G2 Cooperative or whatever. As regards to structure now, the structure would be based on co-investing in a Dominion company. In other words, we would make a capital increase and as I say, the structure or the operation is advancing favourably and I cannot disclose all that much information, I'm afraid. But what I can say, however, is that at least temporarily the stakes in BAS would be minority, it would be associated to company, and we'd be talking about reinforcing the balance sheet of our company over Dominion so that all of these flows can be used to permanently fund all the pipelines that we have that is going to be executing over the next two, three, or four years so that we can reach one giga. And as regards operation and maintenance, Well, this is still under the convening group. It's still under B2B, and what we're trying to do is doing cross-sells, and we don't want to include that technological component that we are somewhat obsessed about, and that would be our approach in principle at least. And I'm not sure, shall I say something about B2C, the one after the 4 million? This is an integral effect. We have the redundancy scheme as we had some positive effects of IFRS 16 because of the renegotiation of rentals. And I think that we've changed that chapter. And I think that we've carried out all the transformation we wanted to do. And if there's anything that will be exceptional or hardly relevant, perhaps you can talk about the hospitals in Chile. Oh, yes, the hospitals in Chile. We have submitted two packages. We won the second. And we are now going to deliver the third package on March the 15th, if I'm not mistaken. I think that there are another two more to go throughout the year 2021, and we think that we will win at least another one. That's what we think, at least. Thank you very much for the answers. The next question comes from Carlos Divina from Santander. Please go ahead, sir. Hello, good afternoon. I wanted to put several questions to you and the first thing is that you expect to have a dividend of about 4 million euros and then what I understand, well please do confirm this, that you will continue with the same policy, in other words it would be one third of the net profit that would be focused on dividends and And you're not going to maintain the dividend that you had last year, if you please confirm that. And then the second question is, could you please say a little bit more about the levels of growth in terms of revenues and EBITDA and free cash flow? In other words, what do you expect for the year in relation to the level of 2019? And the third question has to do with attracting new customers at Smart House. Things have slowed down, at least since Q3, but also if we compare this with the number of newcomers you had in 2019. Perhaps you could explain that too. Perhaps you could let us know what kind of commercial activities you're carrying out in that area. Or could you explain why things have slowed down, regardless of this difficult context? And then the final question has to do with growth we've seen in the backlogs. So why was this wrote in Q4? Was it because the silly contract was signed or has it not yet been signed? Or does this come from renewables? Well, could you perhaps give us a little bit more details on the backlog, please? Thank you very much. Well, let's see if I don't forget any of the questions. Well, starting off with the dividend, yes, because we are still paying up one-third of the dividend. We'll be paying a little bit more than $4 million this year. Regarding... Regarding the second issue, and I think it was the forecast for 2021, we said that we were going to carry on growing according to what our guidance said. And our guidance said that we would go at least 5% in our adjusted sales figure relative to 2019. And logically, we're talking about 2019 because 2020 is like a precipice. And what we can say, based on our forecast, is that we'll grow at least by two digits in terms of our business figure. And this means that our projections are somewhat better than what we had established for 2020 without a pandemic. So we are continuing with all the ratios you already know about in our strategic plan. We want to grow in excess of 10% in terms of our EBITDA, and we want to multiply it by two, our net profits. Regarding Regarding attracting new customers in B2C, yes, we were hit very hard by the pandemic, and we've had most of our shops closed down. And still to date, in this third wave, in this third outbreak, we have about one-third of our sales channel that is operating normally, one-third in a difficult situation. It might even be better for them to close down because there are restrictions. and another third that has been closed down because of all of the shops we have in the shopping centres. So we're very far away from a situation of normality, but even so, we're still attracting people and doing so online. And it's also true that during the redundancy scheme, you know, that that was at the end of the year, and with one thing and another, it takes about a month and a month and a half. The situation was very difficult, and it's not the best moment to... growth in terms of sales. So everybody's seeing who's going to be affected and who's not going to be affected. And as Patricia has pointed out in her presentation, we have defined the team, we have the people. I think that it's a very powerful team too. And that 2021 will be a year that will clearly set the trend for this division. And I would also like to say that the strategic plan of this division, B2C, was presented to the board last Monday and it was approved. And we'll, at some point in time, during the, I suppose, Patricia, we'll make a disclosure of all of this information and we'll be holding a specific meeting on the strategic BGC program. And I'm not sure if I've left out any of the questions. Oh, yes, the backlog. Yes, you're right. The backlog. As Patricia also pointed out, in this backlog, we have the part that corresponds to our In other words, it's about 100 million for the hospital, or just under 100 million euros in the case of the Chilean hospital, and it's been incorporated into this backlog. Thank you very much, Mikko. If you want to ask any questions, please press asterisk 1 on your keypad. The next question comes from Juan Pena, Hello, good afternoon, thank you for taking my question. This has to do with the capital increase that has been made for the renewables business. What I understand is that this will be focused on BAT and it was going to be 20 million for BAT so that they can maintain their stake of 35% and it's not very clear right now If it's going to be vast, it's going to be dominion. That's the first question. And the second question is, let's say you have a powerful team for the B2C issues. Could you give me any names of the people that are going to be in charge of these projects? Or perhaps you could give me some more information. Thank you. Well, I will talk about renewables. Well, the capital increase. take place in a dominion company but these funds have to go to the equity of the project in the different vehicle societies that are going to use the assets and are going to have all the financing instruments. So what is the main idea? Well the idea is that these funds are going to be taken on board by a dominion company and it's going to belong to the dominion perimeter so that this arrival of funds, 100% of these funds, in other words whatever is obtained is going to be loaned let's say It's going to be a sort of convertible that is going to be loaned to BAS, B-A-S. But what we agreed after considering the situation we have is that at least during this year we're not going to change the status of Dominion and BAS, although this project was born to become a completely independent vehicle. And because of its size and its importance and its ambition and also because of how figures were evolving as well as the pipeline, well, we could perhaps not be doing enough with this catchment of funds. And when you don't attract enough funds, you usually have to take a second step and you have to look around at the market and you have to carry out a prospection. And this obviously in the midterm is going to be a different thing and it's going to be one company, all of them together, where there's going to be a green energy or solar pack model, what you're seeing in the market, which is an IPP. And this is the vocation this project has been born with. So this is why we are now attracting funds that, for the time being, haven't reached their destination, and they're going to reach that destination as a transitional loan. But what we have agreed to with the Maruti shareholders is that this be a completely independent project, So the challenge for this company is that it be something of very relevant value because of the situation we're facing or have been facing for the last four years and also the way the company has evolved in terms of growth and portfolio. So this pipeline, we're talking about one giga, but it's a living being that is moving, that increases, that grows, that we're diversifying in terms of geographies and what we're seeing is where we are attracting PPAs and that we... want to try to guarantee revenues through PPAs at 80% or 90% or 100% in hard currency, whether it be dollars or euros, and we're finishing projects that have been very profitable in the Latin American world so that we can then have a look at places like Italy, Spain and Portugal where we think we are positioning ourselves quite well. So let's say that this capital increase, and let's say we hope that this will be the case because of our commercial success, I think it's going to be somewhat short and it's going to be short and too early. And as I was saying, this is a project before we become much more ambitious and much bigger, and I think that we will see very clearly that we will no longer have the BAT or the Dominion Energy Concept. We'll be talking about Dominion Green, or we'll be talking about an organization reported with its own independent price, and we have to give value to this green project in the same manner that we want to do with B2C. I'm not sure if I can say much more. Well, I think that you've even said too much. Well, I'll answer the B2C question. On the team, we have a very powerful team, and it's made up of 9 or 10 people with plenty of experience in different areas, but all of them are closely related to digital issues. And to answer the question that came from Gavros regarding what we've done, well, we've been impacted through the fact that we've attracted customers, not through the physical channel, but certainly through the online channel, We have to reinforce that channel, and we have to profit as much as we possibly can. This project is led by Susana Alvarez Nieto, who's got lots of experience in telco and in other areas that are related to the end consumer. And there are people that have recently joined, or this year, like Jose Rivera. He has a background with companies like Amadeus, Rumbo. and he's worked at top levels in Santander in digital issues, so I think that he'll be able to produce whatever is connected to financial services. And then the person that's going to be in charge of coordinating that digital project also comes from Tweed and Tweed Travel, for instance, and those environments, and not only these new corporations, but the pre-existing team, like Hayman Fresnet, who's been in this sector for 20 years, and he knows Bonehouse and knows perfectly well the retail business. So it's a very powerful team and it's a first-line team for this B2C project for the integration of services for people and for households. Oh yes, just to add a final comment, it's a project in which we are investing more than in seats. We're investing in neeps, to make it clear. It's a very powerful team, very attached to the project, and we hope that it will unfold and could be a complete success. The next question comes from Alvarez Aristegui from Venture Capital Telegraphic for your question. Hello, how are you? Good afternoon. I'd only want to ask you, How many payments have you made for financial leases? I think that last year it was about €20 million. And what about the impact in the ETC restructuring process? I suppose that this is going to reduce the payment of financial leases in the future. Sorry? Well, no. You're talking about the IFR 16 effect because of all the rentals we have in the group. Well, here, this also has to do with B2B. And if we're talking about B2C, all of the company is at the level of about €20 or €21 million. But what I did say is that we've had a positive effect between €1 and €2 million in the last quarter because of all the negotiations we've had after in the state of alarm. So what is it we're seeing? Well, there's something that has been restructured at B2C, some specific shops, but we're not talking about relevant terms. I think that in order to establish a projection, we could continue at that level of 20 million. It could be 19 or 21 approximately, but we don't expect any relevant changes in those megacues. Well, I think that perhaps what wasn't clear is that this restructuring process that was carried out in B2C doesn't mean that shops are going to be closed down. And I think that some people have been mistaken about this because, as Roberto put it up, it could be a repositioning, but it doesn't mean that there's going to be a closing down of shops. But there's been a change of profile. So it was a profile based on setting hardware to move on to a service vendor, a profile that is about $50,000 per year, and now it's $120,000 to $200,000 in sales per year. Could you please repeat that? We didn't hear the complete question. Yeah, so you maintain the number of shots because I think that what you were going to do is move things onto the online channel, if I'm not mistaken. No, no, no. No, what we are going to do... We're going to maintain our sales network as it stands, or nearly as it stands, our physical network, and we're going to reinforce the online panel. We're not going to replace one with the other. Thank you very much. Great. Thank you. If you want to ask a question, please press one, asterisk one, on your keypad on the telephone. We have another question from Cabo Serena from Santander. Please go ahead. You mentioned a figure of $17 million last year. Could you give us a figure for 2021, please, for the fill-outs? We've just closed an acquisition, but in any case, you can answer that one. Well, on the closing date of 2020, the amounts are payable $17 million, and payable this year in 2021, it's going to be $6 million approximately, and most within the first quarter of the year. Thank you very much for being here. Ladies and gentlemen, we have no more questions in the conference call. Well, okay. Well, thank you very much and good afternoon, everybody.