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Welcome to the earnings release of Dominion.

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Before starting, I would like to remind you that once we finish with the presentation, we will move on to the Q&A session. So you can leave us your question in writing in the section on Zoom, or you can send in your questions by telephone or by raising your hand. So let's kick off with the earnings release. We have Roberto Guineas and Patricia Avejón, who is the Director for Business Development. Good afternoon and thank you for attending this nine-month earnings release of 2021. And as we've seen in previous quarters and as you've already been able to see in the figures that have been published today, at Dominion we've been growing at a very rapid pace this year. and it's an organic growth. And although we consider that these results are excellent, I would like to underscore that they are even better if we frame within the context in which we are experiencing, because we are in a post-pandemic context where many of the economic variables and the dynamics have not yet been recovered. I was thinking about the behavior of consumers and also about the levels of industrial activity. And on the other hand, we have other very worrying circumstances, the price of raw materials that is rising, the growth of logistic costs. We have very exorbitant energy prices, which have the increase in financing costs in certain countries. So this is why the value of the results we are presenting here today is doubly relevant. Growing at a double digit in any of these parameters in terms of sales and the different lines of marketing is something that we cannot take for granted and it's not easy either. It is the end result of a maximum flexibility of a clear orientation towards results of a very sound management and also because we've had a very big financial discipline and we've managed risks perfectly well. And if you want, it's also the end result of a certain amount of luck between inverted commas of having been in these sectors and with these customers in these countries, thanks to our diversification. But I would now like to review the figures. I'm not going to compare ourselves with 2020 with those figures of plus 200% and 600% don't give us any information. And I'm referring to a comparison in relation to the nine months of 2019, where we grew at 18% at the current currency. with inorganic growth that practically has no impact. I would like to remind you that we have investments in the world of B2B and B2C services and divestitures like Telefonica and digital service in the forest that subtracts more than 20 million in growth, that is minus 3%, even though it's the highest level of growth that we have recorded in our history. And this growth is happening in all of our segments and in all of them at a double digit, both in the case of services and projects, as well as in the B2C segment. As regards the contribution margin, it's growing and has globally reached 13.3% relative to sales and has grown as from 12.3%, which is how we started the year. And we are also adjusting our overheads. and we are focusing on a structure that is smaller than that we had in 2019. This is because there have been less trips, but also because there have not been major M&A operations that we've had to integrate. So we reached in Navita above 80 million euros, which is nearly double the figure reached last year and accounts for a growth of 12% vis-à-vis the same period of 2019. And once again, we've had these double-digit growths. And the amortization levels and the financial results remain stable compared to previous quarters and compared to last year. And therefore, this operational leverage produces an attributable net profit of €30 million, which is 22% higher than the figure recorded in 2019. That is growing above what we had already established in our strategic plan. Now, moving on to the segments, as I said, all of the segments are evolving very positively, although each one has different points on which we have to focus our attention. B2B services, which was one of the most affected ones in 2020, recovers its previous levels and has grown in terms of sales compared to 2019. It's grown at 10% organic at constant currency with a negative impact of Forex and with a consolidation perimeter that is low at least nine months of 2021. compared to the, well, it's lower in 2021 because we've had an increase in investments. And in spite of this growth, we are closely monitoring how the industrial sector is evolving. that was about to overcome the pandemic crisis without recovering the previous levels of activities and in recent months has found that now there's a crisis with raw materials and power which could make it very difficult for this sector to recover. As regards the contribution margin this segment, it's still positive. It's recovered the pre-COVID levels and is growing very well. and in the last two quarters has reached the levels we set as a target, that is about 12.5%. Let's move on now to the 360 projects, and this is the segment that is growing more in a continuous manner since 2019, especially if we look at its contribution in terms of the contribution margin. This segment didn't have its profitability affected last year, and it stands at levels of margins that are high in this quarter and were high in the last quarter. they've accumulated a margin relative to sales of 18%. There's going to be a positive evolution over the next few months based on our portfolio that stands close to 600 million euros, and the executions of recent months mean that we are at a moment of portfolio consumption, although we are adding on more projects. We don't rule out including, perhaps in 2022, some additional hospitals in the Chilean bids, but it's important to know how the macro post-pandemic is affecting us. What it's done is toughen the conditions to obtain access to financing in the country, and this means that it's very difficult to structure the projects. And this is why we, as well as other offerors, decided not to participate in the recent bid, the one that took place in the early days of October, out of financial caution. And we'll see how things evolve over the next few months. Even so, we expect that as we go to the end of the year, the portfolio will grow substantially because some of the renewable energy projects will be included and would move from that pipeline of more than one gigawatt they would move on to into our execution elements and we're talking about executions that will take place in 2022 and this is the case of some projects in Latin America for which we've signed PPAs recently and for projects in the European pipeline where we have developed more than 700 megawatts in Italy with land and interconnection points and 100 megawatts in Spain that are still pending allocation and points of connection and there's another thing that i think has to be mentioned and that is that the activity the energy activity um field accounts for more than 20 of the b2b activity and it used to have a weight of less than 10 until 2019 which i think has to be underscored And as regards B2C, well, you know that we are in a year in which the measures taken at the end of last year, that is the incorporation of a new management team, restructuring actions, redirecting the digital and multi-brand strategy are now settling in to produce results. And we also are facing a very turbulent world. because the dynamics of end consumers have changed and the volumes of traffic have not yet been recovered. There have been regulatory changes that have affected the rates and the terms of the contracts as regards electricity supplies. And we can see how the cost of energy has been multiplied month after month. So the segment is evolving positive with the growth of the contribution margin that reaches €15 million of the total of €100 million of the company and recovers the pre-pandemic levels. As regards the growth of our client portfolio and our service portfolio, We know that energy is becoming more and more expensive and there's been a reduction in the supply base, and we're still cleaning our portfolio with payment defaults. And let's say that our pool prices are not the most attractive, but in any case, this commercial proposal has allowed us to avoid operational risks that could have resulted from offering customers a fixed rate. And we've decided to wait to see how the sector evolves whilst we launch the new brands and the new commercial proposals. And we're doing so because the evolution of our telecommunications service portfolio is growing very well, because we have nearly 119,000 active services, which is double compared to one year ago. And I'd like to underscore that the lower percentage you can see in B2C it should not be attributed to a worsening of operational management, but rather has to do with the fact that the energy bill is going up and therefore our contribution towards top line is also changing. And as regards to balance sheet, well, there is very little to say in this presentation where there's where we don't share any information in the documentation that we have sent to the CNMV. Although I would like to remind you that the main disbursements towards the end of the year already took place in the first half of the year and appear in the six-month report. to which we should also have to add the disbursement of the dividend, totalling €4 million, and what we invested in the buyback programme in Q3, which was €3.5 million, and this together with... And a minor variation, the working capital and the level of capings make us believe that there are not going to be big cash movements. And I would also like to provide you with information that has to do with the buyback programme. And as we've mentioned on October the 19th, We completed our first buyback program in which we've invested 31 million euros to buy 5% of the share capital at an average purchase price of 3.7 euros per share. This share will be amortized together with the revenue of our own shares with a value of 0.19% of the share capital, which is going to mean that there's going to be a bigger stake for our shareholders and a bigger profit too of nearly 5.5%. This agreement was confirmed yesterday by our board, who also approved the launching of a second buyback programme for another 5%, whose details will be communicated very soon, possibly today. These programmes, as I said before, come under the objective of providing an additional remuneration to our shareholders, apart from multiplying profits per share, and also distributing net profits in the form of a dividend. But I would like to stress the same message I kicked off with. That is, the world is a very complicated place because some of these macro dynamics that I was talking about and that everybody's observing, some of them affect us more and some of us less because of the nature of our different businesses. But we are not unfamiliar with what's going on. And even so, we've set some very demanding targets for the year. and we have to reiterate this commitment when there are only two months left to close this year 2021. And I would like to finish here and thank you and now we're going to move on to your questions. I would like to remind you as we pointed out at the beginning that you can also ask by the chat or you can use the telephone to ask your questions. Okay, we're going to start off with a Q&A session and we're going to give the floor to the people that have raised their hand. First, we have Carlos Treviño from Santander speaking. Hello, good afternoon. Can you hear me clearly? Yes. Hello, Carlos. Thank you. Well, just two questions. The first question has to do with smart house because you've spoken about payment defaults that are also favoring the dropouts. So I would like to ask you, do you think that this is going to be relevant to figure or do you think that there could be some kind of provision in the second half of the year because of these payment defaults? And then secondly, as regards telecommunications, it's growing very well, but I would like you to give us more details on this growth because those customers that you have Are they fixed broadband? Are they mobile phone owners? Are they converging countries? And to what extent are these telecommunication customers also energy customers? And we know that telecommunications are becoming bigger and bigger, so perhaps you can give us more details. And then the other question has to do with what you said about the decision of not going to the bid in Chile because of the funding difficulties related to projects of this kind do you think that other projects you have in the pipeline for 2022 2023 do you think that the same thing could happen and that there could be a slow down in order intake for future projects thank you very much carlos well i will start off by answering about the smart house issue that regards payment defaults no we don't think that this is going to have an economic impact Although this does have an impact when we deregister these customers because we've asked them to pay and even so they have not made the payment. So this means that we reduce the number of active customers or active supplies. And perhaps here the figures are a little bit higher. This is not compensated by higher levels of catchment. And we were also asking about telco. In the case of telco, we have a large majority of customers on converging lines. And we also have many customers with mobile lines, but obviously convergent lines are the most important ones. And as regards how many customers go for telco and energy, this is data that we're not providing yet, but the main initial effort has been focused on developing each vertical separately in order to set up a significant customer basis and then do the pro-setting and we want to avoid it being more exponential. Hello, Carlos. Well, I'm going to answer what has to do with Chile, because as you know, the last call involved the hospital La Serena. It was a very large and very relevant hospital. You know that together with our partner, although it is true that we had a minority stake, but I think that here we share financial discipline and culture. And when we worked out the figures as regards returns, although it is true that there has been no negative influence, we are in an environment in which finding leverage of 70, 75, or 80% in the project with interest rates of about another three points mean that the profitability the profitability is not does not look attractive so what we did was decide in terms of diversification to not um participate in this bid and i think that in anything that has to do with the upcoming elections of next year well there'll be one more batch to go but we will look into it very carefully but what i would say is that from the industrial perspective it does make sense because the figures do work out but in any case Well, this depends on the financial profitability. It all depends on the structures, too, because there are projects that require that you increase your equity at a given point in time. And these are projects that we don't like as much as we like the previous ones in these environments in which we have had much better conditions in the past. So I think that this just a response to the spirit and to this conviction. And what you're seeing in Chile could also apply to projects in other places. That's the question. Well, that's not our case because you know that as far as concessions are concerned, we are very focused on Chile and then we have other projects that we do through ECAs, etc. And this is one of the issues that doesn't have an impact on us. So I would say that this is one of the very specific element and what we will do is assess the situation and as regards the semi-concessional business or the need to have more leverage or to have better interest rates for project finance. The truth is that this doesn't have a very big impact. I think that's the only case that we have and which we have described very openly. Thank you to both of you. Thank you very much, Carlos. okay well let's now review the questions you've sent us through the chat one of the question has to do with how do you expect the contribution margins to evolve considering the high rates of inflation and possible expense of the customers and the possible impact for 2022 in the margins we expect for 360 projects think that in b2b services we're talking about recurrences and we're talking about our capability of transferring the inflationary increases to our customers because you know that these recurrent contracts are protected by pricing update clauses and i think that what we are focused is on our internal productivity and the digitization of processes and i think that this in the future will allow us to maintain these margins And even for the issue of inflation, what this could produce is higher volumes. In other words, we will establish the most recent relative margin. But in terms of absolute value, I think that things will be favorable as regards sales and absolute margins. As regards B2B projects, I think that Patricia pointed this out in the presentation. It is true that we have had a number of projects that have helped us in the third quarter. And in other words, PV projects in the Dominican Republic and PPAs. We have some very interesting projects. We have the Eurodollar project. So we have some tailwind with margins that have been very attractive. And it is true. And I would say the same thing. I think that it's been three quarters or seven quarters over 16%. but you know that our strategic target here is to go beyond 15 we've reached 18 so i think that in q4 we shouldn't reach those high levels i think that we should be between 15 and 16 so that in the mix we can stand at a level of 17. and then the following year well perhaps in 2022 23 we have a healthy portfolio there are some projects that i believe are very attractive in the pipeline And as regards to green or renewables, I think that there's a very interesting pipeline in 360 for hospitals, as well as for ECA projects. And I think that we will be able to maintain that figure of 15%. But going beyond that, well, we find that it's very difficult now to predict anything. OK, we'll continue with Jaime and Guribita. B2B services in Q3, because you were talking about a figure of 7% relative to 2019, and then in the third quarter, it's minus three. So could you please give us an update as regards to the incorporation of another partner? Hello, Jaime, good afternoon. Well, as regards to growth in the area of B2B services in the third quarter, Yes, we've had a larger growth in the second quarter. And now we have to bear in mind that, well, firstly, that this is a variation that we've had in Q2 of this year, in Q2 of 2019. So we can see that there's a seasonality element present in these quarters. Depending on how strong that third quarter was in 2019, and sometimes with the summer months, you know that the third quarter is subject to a certain degree of seasonality, and that's the reason that we shouldn't think about a change of trend. and that I would only like to point out that although growth in the third isolated queue is negative, as I said before, it's minus 3%, this is due to a negative effect of minus 4% in forex and minus 2% in organic. So in other words, the growth is positive in the quarter, okay, in organic. And then as regards to this recurrent question that I have from Patricia, I hope that you will not ask me about this in the next conference call because we're going to be talking about the operation. I think that very close. I think that we're about to incorporate an energy partner. What I can say is that I'm very happy for having waited, for having really carefully analyzed the best partner for us. I think that we're close and I think that having made this a long process has been positive because we have much more visibility. We have much more certainty in terms of value. and we also feel much safer too and we are making solid progress and I'd say that in the last month we did the waiver and you know that if we were to perform an operation you know that Dominion Green which is there as a guarantee for the syndicate you have to do the waiver and everything else and I think that this is something that we have done to a certain extent and it's been closed So what I would say to you is that we have that target in mind and we believe that it was important and necessary to have the pipeline we already have and with the visibility we have with the incorporation of more capital. And I'd say that what we are doing now is finishing off all the details. So let's see if by the next earnings release, we'll be able to give you all kinds of details and explain how we've carried out the operation and what kind of investor we are going to be dealing with. I think that this is all we can say for the time being. And well, yes, and Miguel Medina was also asking about this very issue. And I think that you've just answered it perfectly well. So let's move on. Let's move along. So Miguel from Cartera, which projects have to do with renewables? Can you talk about the energy losses? Could you give us a figure of losses incurred due to payment defaults? Well, yes, as regards this final point that Miguel is asking about, I'm afraid that I don't have the information here right now to give you the breakdown. Oh, yes, no, the other part. I think that as regards to renewables, what we have at the closing of the quarter, I think it's about 100 and 120 million euros approximately. Yes, that's it, exactly. Luis Gonzalez is also asking us about any new developments in Dominion Green. So how are the negotiations going? Well, I think that this is something that we've already answered. I think that Patricia mentioned this as regards a new development. And apart from, well, what people want to know is who's going to be coming along, who's going to be joining us. But I think that what Patrycja has mentioned, I think that we are forming a very interesting project portfolio in the Dominican Republic, because this year we will finish the construction. I think that the COD will be by the first project, the first quarter of next year. And we have allocated another project, another one, and these are bankable megawatts at 15 years. And I think that they offer us very interesting visibility in terms of the backlog. This was signed in October, as well as in terms of margins and also in terms of and cash flow. And this was also mentioned by my colleague in Spain. We have about 100 megawatts with points of connection and land. And in the auction of July the 1st, we asked for another 400 approximately. But I'd say that we're still waiting. We're still waiting for all of this to be decided upon by the government. And we have a very significant number of megawatts for generation nodes. that will be established, presumably, in the month of November. So what I'd say is that in Spain, we are still waiting, but we have a very clear-cut and identified pipeline. And once we choose the land, we think that the environmental issues have already been looked into. We are very close to the points of connection to and close to the nodes. And as I say, we are now waiting to see what is going to be awarded in the end and where we think that we are making lots of progress is in Italy and it's about 750 megawatts that we have with TICA with points of connection and 92 you know that in italy a short time ago we were looking into the prices of ppas and in spain it was 31 or 32 but in italy i think it's 42 and it's a very attractive market we've diversified it into four different areas we have sardinia sicily and pugna And as I say, we are now launching what they call the single authorizations. So all of this is going to be done in stages. We have a bigger pipeline. And our challenge is to tell you that next year we will have products underway. In other words, we'll be constructing. So these are the possibilities that green offers. What we want to do is incorporate more capital in this second step. to achieve this ambition of forming a powerful company and following the steps and things that other players have done in the market and as i say we i think are advancing in a very positive manner Well, it seems that we have no more questions from anybody. And if so, we're going to close the presentation here. And thank you very much for coming and for listening to our earnings release. Well, thank you all very much indeed. We'll see you at the next earnings release. That will be our annual earnings release. Thank you very much. Goodbye.