Global Dominion Access Sa

Before starting, we would like to remind you that once the presentation is over, we will open the Q&A session. So you can leave your questions in writing in the section for questions, or you can contact by telephone or raise your hand. So let's start off with the presentation. Miquel Valadirán, Roberto Tobíos, and Patricia Rejón, the Director for Development is now here to speak. Good morning, many thanks for attending our conference with the results of the first half of the year 2021. So let's start and we're going to start off with many positive messages and with what I believe is a headline that confirms what we already saw during the first quarter and that is that we're growing relative to 2019 and at a record level. So this is why I would like to refer in many cases to a comparison with 2019, although I will specifically refer to comparison with 2020 because we believe that it doesn't make any sense, bearing in mind what the second quarter of last year that had very significant impacts because of the pandemic. So therefore, as regards 2019, we are growing above the historic average. We are growing in terms of sales and margins, and we've recovered the levels of leverage. This leverage can be observed at all levels, and we have plus 15% in EBITDA that becomes plus 30% in EBITDA and 37% more in EBIT. Although you cannot see this in terms of net profits, and the reason that because there were negative Forex differences, If we eliminate this effect that has to do with the leverage of the business we have in Mexico and renewments and the syndicated business in the United States in dollars, the growth of net profit would have been plus 45%. So therefore, we can make this leverage visible. which has to do with very efficient structural costs below 3% relative to sales and financial expenses and taxes in line with the predictions and with retail businesses growing up to 2.6 million and we're closing with a net profit of 19 billion compared to just over 1 million in 2020 in the 14 million of 2019. And this is a record figure because this is the biggest net profit that has been recorded in a first half of the year. So let's look at the detail of sales so you can see what we have behind these growth figures. In the comparative analysis, 2020 forex and inorganic growth provide a minus 0.6% each in the half year. but in comparison to compared to 2019 negative impact of forex is much greater minus three percent and inorganic has practically no impact bearing in mind the investments and divestitures we've made so therefore organic growth relative to 2019 is 21 without a doubt the highest level of growth that we've ever recorded and which means that we've grown organically at double digit in all of our segments In inorganic, this change of perimeter that affects 2021 compared to 2019, sorry, no, that has been done in 2021, has to do with an acquisition in April of Minison, three months, so therefore it's a company in the field of exploration of B2C, and in February, five months, we have Tankyak, that is a company related to environmental services. But let's now analyze the evolution segment by segment. We started with B2B services with a very good evolution with very strong levels of growth in terms of sales and a strong recovery of margins that in this first half of the year stand at 11.4% and which should increase during the rest of the year as we've already seen in the second quarter. So this happens, among other things, thanks to the fact that we are renegotiating historic contracts, mainly in the European industrial environment, with customers like Salsky, and because we are now entering into new contracts and customers like CGE in Chile, among others. So for B2B services, it's been a half year of business as usual, but it's been excellent. In the case of B2B projects, well, we have a strong execution in the quarter where the contribution margin now reaches 17.4%. That has been pushed by a high margin during this second quarter, which was 19%. That has to do with the first phases of the PV project carried out in the Dominican Republic. So this good performance of the renewable business and the possible evolution of the project pipeline where we've added on new projects and above all, where the existing projects have evolved towards ready to build statuses at a higher speed than what we had initially forecast, make us consider that the value of this business area has grown over the last few months and this is the main reason why we have not yet closed at the arrival of a member of a partner in this area so we are now reassessing the evaluation we made at the beginning of the year if we want to maximize the reference value of this business in other words we are continuing with the same um approach to this activity in the next few months and we want to profit from this very positive evolution and the rest of the B2B projects. We are still including very diversified projects and we have advanced in the hospital tenders in Chile where we were not awarded the June tender and we are now about to submit a new tender, a new offer in a few days that will be awarded in September. So with this commercial activity and with this rhythm execution, we have maintained high levels of portfolios above €605 million. As you can see in the figures that we have published, that we have presented, this grand B2B segment that covers the 360 projects and services covers 85% of our business. You can see how the industrial part is growing on average at plus 25%, whereas The area of TNT is growing below the average. Well, we have to bear in mind the divestiture of telco services in Spain and the energy sector has grown a lot. It now accounts for nearly 20% of the B2B business. But now I have to review the B2C business segment with a weight of 15% as regards to the contribution margin. it's a complex uh semester for the segment and the restrictions were still significant during the first quarter and in spain we also had the phenomena snowstorm that had an impact on the physical and online shopping and in the second quarter we still did not recover the pre-pandemic consumption habits and there's also been a change in the electricity bill it took place on june the first that has increased the churn rate of the energy vertical even so at the closing date of the semester we have a basis of 260 000 supplies 59 000 more than one year ago where there's a strong catchment in the telecommunications segment and where most of the elements that have limited growth during that first half of the year are absolutely circumstantial and will disappear over the second half of the year and that means that we have lots of room to improve But in order to profit from this recovery, we're working on several fields. Firstly, we are opening up new physical shops and we are also launching new brands and new agreements with partners so that we can amplify our distribution channels and our commercial proposals for our customers. And the most imminent of these launches has to do with the launch of a new brand with an agreement with Hawke X, which are the creators of Hawkers, which is now in the pilot stage and which will be implemented after the holidays. And if you want, we can move on to the equity movements and above all to cash generation. In this first part of the year, we have generated 24 million euros as from 31 millions of EBITDA. In other words, above the generation goal of 75%. We are investing capex of about 12 million below the levels of amortization, although there's been very strong growth. On the other hand, we have the movement of working capital that has been minimal and disembursements due to financial expenses and taxes have remained stable. so what have we done with this low operational level well basically this has been used for two things on the one hand 10 million have been used to pay past earnouts five million euros and the new m&a of the year with tankiac and miniso and with these payments and with these new acquisitions and with the pending earnouts uh now total 12.5 million euros 1 million is to be paid in 2021 and 11.5 million are to be paid from 23 to 27. And then we have another 9 million that have gone to the share repurchase program. On the closing date of June, we've reached 4.3% of our own shares. And once we covered 5% covered by the program, we will then move on to amortizing these shares. But to square the movement of net cash that has dropped by 5 billion euros, we also have to add the 9 million of net debt taken on board by the companies that have been integrated during this semester. So we've nearly come to the conclusion. And the conclusion is that we have an excellent recovery of our activity and profitability that already started in Q4 of 2020. So that means it's the third quarter of consecutive growth after the decline that was produced by the pandemic. growth also in relation to pre-pandemic levels, and we have exceeded historic figures, and the net profit is the best net profit we've ever recorded for the first half of the year. And as all of this is happening, although we are still affected by COVID-19, and especially in certain businesses, it makes us think that there's still a long way to go to improve in all the segments, especially in B2C. And this is why all of the goals that were reviewed are still completely valid, and we know that they will increase and improve. and that all the lines of actions are going to be maintained in terms of sales, profitability and operating cash flow. So thank you very much for attention. And now we'll move on to your questions. And I would like to remind you that you can ask via chat or you can do so directly by telephone. Okay, we have Carlos Deliño from Santander as the first person to ask a question. Hello, good morning. Can you hear me clearly? Yes, perfectly. Well, thank you very much. I have three questions for you. You increased the guidelines in April. And then the development in the second quarter has been very significant. You haven't modified anything. But could you please quantify your growth expectations for this year, relative to what we've already seen in Q2? What kind of rate growth do you think we'll be able to achieve by the end of the year? then we've also seen well my second question would had to do with uh solutions and projects it's been a very strong uh quarter i suppose that because of your turnover turnover landmarks and i would like to know what kind of growth expectations do you see in terms of projects for the rest of the year and the third question the third question has to do with b2c and a particular Well, the departure of customers we've seen in the second quarter. I'd like to know why this has increased the churn, why this tariff change has produced this higher churn rate, and why has this had such a big impact on you? And I would also like to ask you about the gross newcomers you've had in the figure, the growth figure as regards energy in this quarter. Thank you. Muchas gracias. Well, thank you very much for your questions. Well, I'm going to answer the first one that has to do with the guidance for the year. And as you point out quite rightly, we were in the presentation results of the first quarter. We mentioned this and well, let's say that we stand far above the objective set in the strategic plan. And what we've done with the results of this first quarter is we've well supported them. Basically, we've confirmed that because we had visibility in May. when we presented the data at the first quarter and what we thought is that we could achieve these very ambitious goals and this double-digit growth in sales compared to 2019. Everything is, 2019 is being used as a reference in this growth of EBITDA above 10% and net results in excess of 25% growth. So obviously with the operating cash flow levels that were set by our plan with 75%. So this vision or this visibility we had in the month of May, all these results just confirmed this visibility or this vision, and we have maintained this objective to close 2021. yes you've been asking carlos about what has to do with projects and yes the truth is that it is pretty strong and that visibility for next year especially as regards hospitals and renewable projects as patricia pointed out before we are seeing high probabilities or possibilities especially in spain and italy for next year and in europe too So we are now focusing on finishing the wind power projects in Mexico. We also have projects in the Dominican Republic up and running. So there's obviously growth and there's obviously an execution in Angola that has to finish. And I suppose that they will support this double digit growth that Patricia has put it up for the total figure. But I can't give you an exact figure right now because we are obviously going to grow. We are very strong in terms of B2B projects and this is supporting our accounts. The margins are very interesting. And this for the time being, well, this is going to remain here this year and next year. so we'll have to see how the year evolves and then we'll be able to give you more visibility and in any case i'd like to refer to what patricia said previously yes and as regards your final question b2c and especially the rhythms of catchment and the churn rate in the energy vertical What I'd say is that what we're seeing here, we're seeing absolutely circumstantial effects. We are seeing some effects that are closely associated from the half year perspective. This is very related to the restrictions we had in the first quarter. And if we look at B2C in the energy sector, there's been a very significant increase in the churn rate because of the market movements. that have been brought about by the tariff changes that took place on June the 1st. So this has disturbed the market. The churn rates have been increased and all the operators are affected by this. And what we are doing right now is not only focusing on this quarter or in that particular month of June, but rather we're working on initiatives to make use of this recovery so that outside this month of June and that noise, we can increase our levels of catchment and number of customers. So this has to do with what I mentioned before and this quarter we've been working a lot in the launch of new brands. New brands that are not just only new brands but they mean that new agreements are being signed by partners and we want to increase our catchment possibilities and our different channels and the different kinds of commercial offers that we can suggest to our customers. I mentioned one of the agreements with Coppers, but there are other things that we'll be launching in the second part of the year. So most of our efforts have been focused on preparing these launch campaigns. We've prepared these new physical shops that perhaps goes against certain trends, but we are absolutely clear in our minds that this is what has to be done and that we will have possibilities of growth too. And I would take this as something that is circumstantial. And we do see, I think that we're going to see a significant recovery in the second half of the year. Well, yes, a follow-up question, please. why do you think that you have to launch new brands because what i thought i understood the smart house concept as an aggregator of services for the customer so up to what extent this concept in which you want to send or sell lots of services to the same customer make that customer loyal but up to what extent is this affected now because you want to launch a new brand in the energy sector and what is your position going to be for each one of the brands what is your goal Well, I'll try to answer you, Carlos. Well, we continue with the same concept. We also want to group services. And for that, we have our own brand, Alterna Mobil. alterna energia, et cetera, et cetera. So what happens, though? Well, we have a network that we acquired with Phone House, and this is a way of attracting customers. And we have different paths to attract people. It could be contracts of any of the verticals. So one of the possibilities, as Patti is pointing out, has to do with physical shops. Physical shops have a high cost involved, but they have a lifetime value that is equally high, because sometimes I've said that when you attract people through the network and by having people clicking with the mouse, that's what they do. They use the mouse, especially now in these moments of so many disturbances. So we are bringing together certain services. We are grouping them. And as Patti pointed out, We're launching a new brand in the second half of the year, but we've reached out to people in the world of social media, like the people with hawkers. That's why we've created new brands and we're going to have majority shares, but they also have a substantial part to play. but in any case that means that we won't have any um catchment costs because they are experts in that kind of marketing they've demonstrated this and they've done things perfectly well in other business processes and we've created brands for instance the energy brand which is called dos tres and you'll start to see at the end of august you'll see these campaigns these are completely different campaigns that are geared towards other markets and each brand especially what we've seen is that each group, I'm not talking about age groups, but I'm talking about the fact that each one is focused on a specific brand, and by having only one brand, well, you'd go against these catchment levels, of course. But in each group, we're going to have different brands, and what we're trying to do is maximize or not have any constraints imposed by a brand. and we're going to try to find the cheapest possible traction channels and attack at all levels. And that's what we have been doing and what we've been preparing during this period of the pandemic. Yes, so that each brand can address a specific segment of customers with the value proposal adapted to their needs. That's it, exactly. Well, thank you three very much indeed for your answers. Thank you, Carlos, for the question.

Could you give us, please, more details on the one-offs of B2B, please?

That's in the chat. Well, yes, I understand that with one-offs, I'm not sure if you're referring to the fact that there's a very high margin in this second half of the year, and that's because we are in the first phases of the PV project in the Dominican Republic, and you know that there are a number of landmarks that have especially high margins. And then the execution in Angola is pretty strong. And it's also very good. And this is another interesting project. Well, yes, when these major projects are carried out, we always leave some items for imponderable. So that means that different circumstances crop up as you advance in the process that have to be addressed. Miguel has two questions. Have you exchanged term sheets for the partial sale of renewables? Was this today produced by the evaluation or was this covered by the agreement? Or is there any possibility of increasing your participation in the joint venture of the hospital in Chile? I'll kick off with the second question. Is there a possibility? Well, we're not interested really. What we're doing with these participations and these concessions, if we can get 10%, well, it's better than 20 or 30% to immobilize too much equity. And what we want to have is a position on the board. We want to protect our margins in the project and that 10%, if we negotiate it that way, it makes it possible to do so. and for future hospital hospital operations in which we are involved we are also trying to minimize this to a figure of 10 because it gives us the same as 30. well roberto and i would dare say that if we could have a position a seat on the board and look after our margins of the project with one percent it would be enough because we have no interest we have no interest in having a concessional business because what we want to have is the business of construction plus the maintenance business throughout 15 years And then as regards to the issue of renewables, as regards renewables, well, this is so, because there were term sheets that had been negotiated. We had not yet communicated this to the market, but what is happening with this somewhat proactive approach on our part, and which has to do with what Patricia said before, we feel legitimated and we feel responsible for the fact that it's a business that we believe is going very well. We feel very strong. And in this regard, we wanted to open up more possibilities to the competition and give more flexibility in terms of the value we wanted to propose. So it has been a unilateral decision. We're still involved in that process and we still have that situation. And that's it.

I think that just about wraps it up, basically.

Gabriel Colominas de Zurich, who's raising his hand. Hello, good morning. Can you hear me clearly, loud and clear? Yes, perfect. Okay, thank you very much, Patricia. Well, I have several questions, and the first question is very specific and has to do with the energy business. And in the presentation, you say that the sales of energy, well, in the second quarter, you say that you've had higher levels of revenue because there have been increases in the price of energy. Well, yes, Gabriel, what we refer to the fact is that the fact that the energy pool has had higher prices compared to previous quarters and as our commercial proposal to our customers is that we're going to sell energy at cost and we add on a management or administrative fee. Well, yes, the invoice of the bills of our customers has increased and our top line has also increased, of course. Perfect. And then while there's something else, well, normally you know that there's usually a pretty negative impact in terms of capital in the first half of the year. But have there been any limiting factors for this to be so? Or is it that there's been a change in the activity mix. That means that the working capital has had less impacts. Well, the truth is that there's nothing relevant here because we've had this on an annual basis and we are in recurrence and normality. There's nothing special to mention in that regard. Okay. And well, finally, as regards the generation of this half year has been very good. So I suppose that by the end of the year, it's going to be extremely good. And I understand that you don't expect to have a bad second half of the year to compensate this first semester. So if this is maintained, it's because you believe that everything is going to continue at the same rate in the near future. Yes, I fully agree. Generation has been very good in this first half of the year, but we expected to be equally good in the second half of the year. And we're talking about 75% of generation of operating cash flow. Perfect. And then I had another question too, has to do with the current, the interest paid. I think that in the, I can't remember exactly, but I think the memorandum, you don't give the detail of the interest rates that you're paying. So you just give a gross figure, really, of what you have between IOUs and bank operations. I think it's 3.9%, if I'm not mistaken, of interest rate. Perhaps, could you tell us what kind of interest rates you're working with now in bank debts and IOUs or promissory notes? Well, we have the long-term structured operations with BEI and ICO, and the syndicated, that is between 2 and 2.5%. And then we have quite a lot of financial expenses because of the situation of endorsements and guarantees. And then when we've carried out specific revisions in terms of promissory notes and IUs, I think that we are, I think it's 0.15 or 0.20. We're within the margin, but in any case, it's a mix of operations and of different geographies. And well, at the end of the day, that said that they all converge on these values. So we have the impact in endorsements or guarantees that increase the costs. Yes, that's it. Exactly. Okay, perfect. And I had a few more questions here written down. This is something that you can't really modify. And perhaps by reducing the amount of debt, you'll be able to modify the current costs you have. Well, yes, of course. Or to the extent that we've had business growth, many times there are more guarantee requirements to be met. And you know that we have financial expenses involved and you know that we have factoring policies that we implement in different parts of the world. And these are things that have to be taken into account and which can be seen in the P&L. okay well that's all from me then i have no more questions thank you very much gabriel bye Has the sale of diet tools and pharma tools produced extraordinary positive results? Could you quantify this, please? Oh yes, the sale of diet tools and pharma tools has produced something like 3 million, but we also have to bear in mind the liabilities that have been taken on board, and I think that the impact is about 2.1 million euros. It's an operation and exploitation operation and it's had an impact of about two million euros roughly but what we are seeing is that this is a recurrent result in other words when we do operations like this kind it is true according to what mika pointed out what we're doing is we feel comfortable with these uh situations on the balance sheet and with our projects because we have hedging and the most important thing is that this impact of two million is pretty diluted so i'd say that the results that you're seeing are absolutely recurrent Juan Huguet from Augustos Capital says, do you expect to increase the buyback once you reach 5%? And what is the funding figure for factoring? Well, I'll answer about factoring. Well, we have factoring of about €70 million, which is very in line with the closing date of last year, which I think was €2 million higher. So there's no significant variation. And for the closing of the year, Well, we don't expect there to be major variations either. So it's a more or less stable figure that grows according to the growth of the business. And as regards the buyback, well, it's a 5%, which I understand will go down to 4 point something, will amortize, as you know. And as long as the shares follow these prices, And this is one of the equity allocation possibilities that the company had, which is good for the company and will continue to do so, of course, and will then approve this at the AGM. Ignacio Ortiz de Vendibil has raised his hand. Ignacio, you've got your microphone muted. We can't hear what you're saying. Can you hear me now? Yes. Yes, loud and clear now. How are you? Miguel and Patricia. Well, two very quick questions. The first question, how do you think the next generation of fans will affect you? So do you think that you'll be able to benefit in one way or another? And if it's not directly, indirectly, in which vertical do you think that you will be able to play a relevant role? Or where do you think you'll be able to benefit through a customer? And then, well, Angola. How many more quarters to go? contributing towards a cash generation and towards the P&L. Well, as regards to the next funds, we haven't included them in any budgets, although we have submitted several projects. I think it's 13 that we presented, but you know what this issue is like. Sometimes it's pretty difficult to understand things. It's difficult to know where responsibilities lie, but we are there. And the truth is that these next funds, at least 70% of them, are geared towards those areas in which we are, that is, digitization and sustainability. And we've submitted projects that are interesting. So we are trying to carry them out, but like any other commercial operation, but in a world that is very difficult and very complex from the point of view of the administration. So it's complex. And then the other question, yes, regarding Angola, I was asking, it's a contract of 220 million for the high voltage line. So there's approximately only 20, 21%, and those 40 or 45 million have to execute the project.

Wait a minute, I have some feedback here.

I'm sorry. And how many quarters did you say, roughly? When are you going to finish this in Angola? I think that it's towards the middle of next year, basically, 2022. But it's difficult to give you a forecast because we are protecting our collections a lot. So what we do is adapt how we progress in the work and how we collect to avoid any risks. as a function of how we in the government and golden government releases payment capabilities and depending on that we either go quicker or slower so once this contract finishes are you going to have continuity once you've already put your once you've already entered the country And do you think you will be able to contemplate new contracts? Well, yes, we obviously know the country and what is happening with Angoda is that you know that we'd have to go there with some project that could be funded by some European project or and considering the situation of angoda and considering what the monetary international monetary fund says about the country and how petrol is evolving it's something that we're not considering right now and we are focusing our commercial activities on other countries that doesn't mean that we don't have a structure in angola if there's anything of interest of course we would go for it but i can't see anything in the short term though Well, thank you very much. Thank you. Congratulations on the results and have a splendid summer holiday. We have a question from Gabriel. There's a difference between sales and adjusted sales. The difference is smaller. Why? Is it you're selling less? You've sold less terminals in B2C. Well, yes. Well, this is not about developing the retail business, but it's about developing the service business in B2C. So this is not only our strategic focus, but it's also a reality because there has been lack of growth in this area and we are more focused on making services grow. So this is why we have the adjusted growth figure, adjusted business figure, because this adjusted business figure shows where we are focusing on and where we want to grow. And the other issue, as we've always said, is like a magnet to attract traffic to shops with very low levels of attractiveness, but what they do is generate traffic and make the rest of the business attractive too. Alvaro Echevarria from Prenta Cuatro has a question. You're muted, Alvaro.

Alvaro, you got to switch your microphone on.

We can't hear what you're saying, Alvaro. You apparently have a problem with the mic, and if not, I'm not sure if you're connecting by telephone or online. Perhaps you could send in your question via the chat. Well, we have no more questions for the time being, and if Alvaro doesn't manage to enter.

Okay, well, we'll close here.

Álvaro, you have our contacts and obviously we'll be able to have a chat with you later on once the meeting is over. And thank you all very much indeed for your participation and for your questions. And I hope that everybody... Oh, wait a minute, Álvaro is now entering through the chat. The potential increase in the contribution of B2B services because of a change in the business mix. When we're talking about the change of business mix, we are usually referring to B2C. If you're referring to B2B, yes, we are growing in energy. We are eliminating some low margin businesses. And well, this is what we've always said. and that is we want to obtain 12.5% in the contribution margin in services. And you remember that it was 10%, but with the regulatory change we had, we increased this internally, and this objective now is 12.5. It was 10, but it's gone up 2.5 points. Okay, well, good morning. Three questions in B2C. The goal in terms of the number of shops, How many did you expect by the end of the year? And are they going to be your own shops? Are they going to be franchises? And then I'd like you to explain how much you're charging the customers. And I'd like to know if you give us an indication of the margins shops are going to have excluding smart house well the target as regards the number of shops we're defining it but it could be between about 100 additional shops and we'll see when this will happen and of course it would be a franchise system which is what we've always used because we have well we have our own shops with my operations, but the figure should be more or less stable in terms of our own shops and we are growing via franchises. And the second question, understanding the additional income that the customer is charged at a monthly basis. I think you're referring to the fee. No. No. Well, telecommunications operates differently. In energy, we do charge a fee relative to the pool price for management actions. But in telecommunications, what we have is a virtual brand where we negotiate things. So it's the campaigns and the prices that vary. So in telecommunications, this is the most usual commercial proposal in which there's a closed rate related to telephone calls and data. But in any case, The margin has to do with the offer we make, and it's not like a separate fee, which is the cost plus fee, which our commercial proposal in energy. So these are different commercial proposals. And the third question you were asking is, could you give us an indication of the margins of the shops, excluding smart house? Well, in B2C, we have a target. The margin should be about 10%. Globally, that would be what has to do with B2C. And then services have somewhat larger margin as regards physical shops. But we don't report that data separately, nor do we report the data for each of the verticals separately either. Thank you very much, Antonio, for your question. And I think that we can close the presentation here. Thank you all very much indeed for your participation. And I hope you have a wonderful summer. Goodbye, everybody. Thank you.