Global Dominion Access Sa

Good morning and welcome to the results presentation of Dominion.

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Before starting, we would like to remind you that once we've finished with the presentation, as usual, we will open the Q&A session. So you can leave us your questions in writing in the Q&A section of Zoom, or you can call in by telephone, or you can raise your hand in the internal Zoom menu. So let's start off with the presentation. We have Miquel Barandiran, CEO of Dominion, Roberto Tobías, who is the Director General, and Patricia Berjón, who is the Director for Corporate Development. Hello, good morning, and thank you very much for attending this disclosure of the year 2021. And if we were to describe in a very few words what 2021 has been like, I'd say that we've had a very complex year as regards this environment, but it's been a very good year for Dominion, the best until now. a year in which quarter after quarter we've smashed all previous records and we've created more value than ever before with more than 42 million in net profit and we've advanced in our strategic plan too by focusing on consolidating the environmental activities and by also implementing the renewables business and transforming the B2C segment. We've done all of this within a much more complex macroeconomic environment than any of us believe would happen when this year started. And it seems that it's not stabilizing, nor do we expect it to do so. It's a context full of uncertainties and also with higher energy prices and higher prices of commodities and the devaluation of certain currencies and the onset of the COVID variant. So this is why these results are very good. and we have to be very proud about our figures and our team it's more than 10 500 employees and we're also proud of our management model that has allowed us to achieve these goals and will allow us to carry on with our strategic plan our management plan is based on a culture of diversification by means of which we evaluate the different market alternatives and we can evolve and adapt to them in a flexible manner so we're not afraid of renovating and changing to offer our customers what they need most and this is what we have done throughout our history starting off by applying technology and digitization to improve the efficiency of the processes of our telco companies and after that we replicated this know-how in energy and industry and we are leading partners for our customers and we're offering them end-to-end solutions and more recently Our customers want to reduce the environmental impact and this is boosting the demand for energy efficient solutions. And at Dominion, we think that sustainability is like long-term efficiency and we're ready to meet the needs of our customers in this field too. So now that we have the context clear for Dominion, let's move on to the figures in much greater detail. Figures that we compare with those of 2019 due to obvious reasons. Because it's clear that all of these growths that we're going to be talking about right now will be much greater if we were to compare ourselves with 2020. And it would be growth of about 100% in EBIT or 237% in net profit, for instance. So in 2021, we have exceeded for the first time ever 1 billion in adjusted sales figure. And to reach this figure, we have grown or guaranteed at a constant currency at 12.6%. In other words, double digit, as we pointed out at the beginning of the and far above the minimum threshold established by the strategic plan. And this growth has taken place in all segments in B2B services and B2B projects and in B2C. And compared to 2019, Forex has had a negative impact of more than 30 million euros in the year, and especially in Q4. On the other hand, the inorganic effect has been netted between acquisitions and divestitures that have been carried out over these years. As regards EBITDA, it stands above 111 million euros, which is about 40% higher compared to the figure of last year and 7% higher to the figure of 2019, whilst EBIT grew 13% versus 2019, so that means that we have operational leverage. And it has to be underscored that we have reduced its structural cost by more than €800,000 in relation to 2019, although we've grown. And these costs account for less than 2.6% of our adjusted sales. And this is due to the less trips we've had, but it's also thanks to a continuous optimization of central structures. The levels of amortization are in line with the previous year and also in line with the financial results. However, as regards the accounts, we have to consider that this year we have exchanged differences with a very high figure of minus 7.5 million euros. which affect the net profit but even so we have a net profit of 42.2 million euros which is 20 higher than what we recorded in 2019 in other words in 2021 we have reached a net profit which is 20 higher than what we achieved in a year that was excellent before the pandemic and of course we are addressing 2022 convinced that we will have another record year So let's move on to the segments. So if we look at the contribution made by each one of them, all of them have undergone a positive evolution and each one has had different elements that we're going to be talking about. As regards our B2B business, services and projects, our technological knowledge and sectoral knowledge has allowed us to have the global vision of the businesses and we've implemented innovation throughout the entire value chain of our customers. And this differential contribution has allowed us to obtain higher margins and we are now strategic partners in a moment of transition and business disruption. In 2021, we saw how the contribution margins relative to sales evolved very positively and they are especially high in the two B2B segments. On the other hand, The industrial activities, as well as TNT, are growing at a very good pace, although it's the energy field of activity where we've seen more growth, in particular 37% compared to 2020, which confirms this continuous diversification that means that energy, which at the beginning of the strategic plan didn't account for 10%, now has a weight of 20% in the total of B2B sales. But as regards B2B services, we've seen a very good behavior throughout the entire year with an organic growth in excess of 7% relative to 2019, which would be 17.2% more versus 2020. And it's been the segment that has had the biggest forest impact, negative impact, and its consolidation perimeter has been reduced because the divestitures carried out since 2019 have exceeded the new acquisitions. but it has to be pointed out that there's been an improvement of margins that have reached and even exceeded the target of 12%, something that has happened quarter after quarter. As regards activities, we've signed new recurrent contracts in different geographies and with different customers. In energy, for instance, Enel in Colombia, apart from already being present in Peru and Chile. And in 2022, a new, very relevant contract with Endesa in Spain that will start to operate in 2022. In the case of telecommunications, we have a contract, for instance, with Claro in Colombia as an example of country diversification and our presence in the deployment of fiber in Germany, which is one of the European countries with less fiber and where we can apply our very extensive experience in this field. And within this segment, we have placed our strategic focus on setting up a business unit in the environmental area, which has the already existing capacities of the company and wants to grow organically and inorganically and make use of the trends that we can see in terms of sustainability. And this is fully in line with the taxonomic analysis According to the EU criteria, as you know, this year, companies are only reporting the percentage of our sales that are considered to be sustainable in accordance with two out of six fields that will be analyzed in the next few years. And bearing in mind these two fields, 16% of our sales are contributing towards environmental criteria. But we estimate that once we take into account all six criteria, the tentative criteria, we could be talking about something like 40% of our sales that can be considered to be taxonomic. Let's move on to B2B 360 projects where our turnover reached 296 million euros and the contribution margin has grown compared to 2019 up to 53.5 million. And this is due to circumstantially high margins in the last three quarters. which means that the second has cleared the year with a margin of 18% relative to sales, over and above the 15% target. It's been a year in which we've had significant projects like the transmission line in Angola, or the wind farm in Mexico, or a new solar plant in the Dominican Republic. And as regards to the future, we have a solid portfolio of €616 billion that includes the hospital of Windbein in Chile, which we will soon start to build, and several renewable projects also in this portfolio that will be carried out throughout the year in the Dominican Republic, in Spain and Italy, and a major diversity of projects in the industrial sphere, which gives us a visibility of about two years. And we would also like to underscore the expansion of the renewables business and this presence of a minority shareholder in Dominion Energy. So we are going to fulfill our commitment. In other words, INCUS capital provided 50 million euros for shares, minority shares representing 33%. And the business has an IPP value of more than 230 million. And these funds together with the other 25 million euros we Dominion is providing will finance the development, execution and operation of our pipeline that is over one gigawatt. And moving on to B2C, in the last few months and quarters, we saw how the increase in the price of energy has produced an increase in the churn rates. and an impairment deteriorated our commercial proposal, the attractiveness of our commercial proposal. In the last quarter, we also have the temporary closure of a large number of shops during the Christmas campaign because of the Omicron variant. And in spite of these difficulties, we haven't stopped growing. And although we've had lots of vertical energy issues in the field of telecommunications, we have multiplied the number of lines by two compared to 2020. So B2C accounts for 18% of the total adjusted sales, and there's been a growth of 65% compared to 2019, because we have attracted more than 115,000 new subscriptions or contracts, of which more than 45,000 were carried out in 2021. And at this segment, we've also boosted the digitization. We've carried out an in-depth transformation process to transform the business into household service integrator. See, we are less phone, more house. And in 2022, we will continue with this multi-brand, multi-product and multi-channel strategy. and we'll be launching new brands and products, we'll open up new channels, and we'll be working to adapt our commercial energy proposal to the energy transition we are experiencing. In other words, we want to play the role of energy tech with the signing of PPAs or other options. And we close the review of business, moving on to the balance sheet, and the main movements of our net equity are related to three events. In positive, we have the 42 million in profits of the year and the arrival of this minority shareholder in the renewable business which adds on adds on another 50 million euros and then we have the shares acquired within these uh rebuying programs that is 27 million in total and there are no changes in the perimeter and as regards of the net cash valuation instead of 87 million at the close on the closing of 2020 it's now 65 points 5 million euros. Now, well, we have to explain this. We have 52 million euros of operational cash generated in the year of which we are dedicating 45 million to inorganic operations, 25 million of the renewables operation and about 20 million for M&A in the year and earnouts of previous year and cash positions or inorganic debt. And 27 million are going to remuneration, remunerating the shareholder. with the payment of dividends totaling 4 million and the rebuying of shares, 23 million. A rapid calculation that I would like to do. If we bear in mind that one third of the results of the year, in other words, 14 million that are charged to the results of 2021 are going to be used to pay dividends and that we've spent 23.3 million to purchase our own shares, we have 88.5% of the net result that goes back to the shareholder. So I would also like to underscore the great operational cash generation capacity that Dominion has as part of our financial discipline. In 2021, we generated those 52.4 million euros in cash that I mentioned previously that stand above the target of 75% of EBITDA established by the strategic plan. It is 77% of EBITDA this year. and which is higher than the net profit of this year, €52 million in cash generation vis-à-vis €42 million of net profit. And this includes all the maintenance capex of the year, and it's been sufficient to address the inorganic growth and the distribution of dividends. And I'd also like to say that we have a RONA level of 21%, which is over and above our commitment of 20%. And to conclude, I would like to underscore the message that I started off with. We are living in complex environments where the only constant thing is change. And at Dominion, we're ready to sail in this sea. And we tested this during the pandemic and during the different adaptations we've carried out. We are resilient. and we are evolving to adapt to the context as can be clearly seen in the results of the last two years and this year of the year 2021 and as regards 2022 it's not going to be different and we would like to stress our commitment towards the strategic plan to generate more value that we've implemented and will last until 2023 so thank you very much for attention and we'll now move on to your questions and i would like to remind you that you can either ask a via the chat or you can do so directly via telephone Thank you. Well, you can either use the Q&A section on Zoom or you can raise your hand by clicking on the button in the menu and we'll give you the floor. And should you follow this presentation by telephone, please press asterisk nine and wait for us to give you the floor so that you can ask your question. We have Juan Peña, Juan Peña from Silvester High School. Hello, good morning. Can you hear me now? Juan, the connection isn't very good. Can you hear me better now? Yes, much better now. Okay, sorry about that. Well, good morning, everybody. I wanted to ask a couple of questions. Firstly, you said that the margin of projects has been high, which is true. Perhaps you could give me some guidance on which guidance would be comfortable for you in 2022, this business area. And then could you please give me some kind of indication of how much growth you expect in the top line of your business in 2022? And could you give me details of the telco customers? Because you've given us the consolidated figure. And then finally, as regards to the free cash flow, well, this year it's been negative because of the enlargement of capital. Do you expect to have a positive for free cash flow in 2022? Thank you. Thank you very much, Juan. I'll start off with the final question, negative free cash flow. As Patricia said in her presentation, if you compare the initial balance with the final balance, there's been a reduction, I think it's of 87. It's gone down to 65 million. But what we've explained is that this reduction of 22 million together with another additional 5 billion that we get from the operational cash flow have gone back to the shareholders. So our operational cash flow generation is 82 million. It's still above 75% of EBITDA. It's healthy and it's what we advanced and nothing has changed relative to the previous year and also relative to the guidance we've established for this year. I'm not sure if this clarifies the issue. Well, we're talking about the semantics of free cash flow. I suppose that you're referring to that. Okay, perfect. And that's regards the margin of the projects. Well, it is true that this year, in the last few years, we've never reached 18%, because you know that our strategic guidance had always been 15. What I would say is that if we were to refer to the fact that the inertia of the projects we have in the portfolio here, we have and the visibility we have, well, for 2022, we should maintain 15% as the floor. And this is what I would say about this. Well, yes, you were also asking about the sales guidance for 2022. And the truth is that, as usual, we have a strategic plan for 2023, and we have certain targets in the guidance. And what we're going to be doing in 2022 is we're going to carry on growing according to this guidance or according to the metrics established by the strategic plan. So therefore, we're going to be growing organically 5% in sales, at least, and then we'll see how the year unfolds, but we're not going to establish a specific guidance for 2022. And I think that finally, you were asking me about, I'm not sure if I understood you properly, the number of telco companies in the B2C segment? Yes, the split, the split between the two businesses. which is what you usually give us. Well, basically, of the 287,000, if I'm not mistaken, of the total supplies, half would be telco and the other half would be energy. So this is why we're saying that in telco we are multiplying by two, those that we had on the closing date of last year. It's more than doubled, in fact. Thank you very much. Perfect. Carlos Treviño from Santander has the floor now.

Hola, buenos dias.

Hello. Good morning. Can you hear me clearly? Yes. Good morning, Carlos. Thank you. Thank you for accepting my question. Two things. Firstly, it is true that growth in the year has been good. But if we look at this, if we look at the breakdown, we can see growth of 23% in organic growth in the first months of the year. And in the fourth quarter, we had a drop of 6%. which also was organic. So what I would like to do is ask you a little bit about that inertia. And is there anything that's a concern for you or anything that has changed as regards trends when we extrapolate this for 2022? And my second question is, are you coming across any kind of problems with supplies or raw materials becoming more expensive? Could this reduce the margins? and do you expect that there's going to be a big wage increase too this year which could affect your profitability and i don't know perhaps you could give us the figure of how much you intend to spend on the workforce how much you're going to put up the wages Well, there are several issues here, Carlos. And the first subject, the issue of the sales of Q4. I think that, well, we were comparing ourselves with 2020, which was spectacular because, well, the contribution of the project business and the project solutions was very significant. And here we are working against the portfolio and against executions. But if we compare Q4 of 2020 with Q4 of 2021, the levels are somewhat similar or somewhat lower, which is what you were saying. So we're not worried about this because the portfolio is healthy and we can see that these 300 million solutions have to follow those lines and that's how we have to make further progress. Yes, I think that it's important for you to understand that we are a company that we link the development of projects to incentives. So it so happens that the executives that we consider to be entrepreneurs, when they reach the limit of their initiatives due to operational reasons, the limit is 120%. So the year has been spectacular in the different quarters. So this is why in the final quarter, well, perhaps there's been a little bit less thrust, as it were, a little bit less enthusiasm. But that's no problem. And then as regards inflation issues, and here there's a bit of a debate because we think that in the company that this is circumstantial, it's stable. And these levels we've had of 6% or whatever are not recurrent. But what we are seeing in the company is that the wage increases, well, they have to be according to the labor agreements, but there are links to productivity, et cetera, et cetera. So I think that there's not going to be a very relevant impact, although we haven't calculated this to date. And as Mikkel points out in the contracts and so on and so forth, this is transferred to the customer. But as regards supplies, it is true. And if you were to ask me about the effect of Russia, well, there's going to be no direct effect. And let's only hope that this situation between Russia and Ukraine will solve itself. Well, there's going to be an increase in raw materials. You saw that yesterday. All of the companies in the world of renewables have gone up and the curve is going to go up, too. And as you know, we are end to end here in this business. And there's no doubt that in recent months we've seen increases in the logistic costs of transport. There could be specific increases in the price of components. But as we have a global vision, we have, for instance, the interest rate and possibly with this situation, they will maintain a very relaxed monetary policy and will have prices at the end of the energy chain that I think will be increasing. There will be an upward trend. So some of the supplies could be affected and there could be some cost increases. But I think that this can be transferred to the end customer at the end of the chain. Thank you very much for the answer. Gabriel Colominas from Recibis, please. Well, hello. Good morning, Gabriel. Well, I have a very straightforward question, and this has to do with the margins that have clearly grown in B2C. But has this been due to operational leverage, or has there been any other effect as regards the improvement of margins? Yes, B2C is operational leverage, so we have the same structure and you know that we are now transforming all of our B2C world and the increase in sales has an increase or produced an increase in margins and that is what you just said, you're right. And what about your forecast? Well, not forecast, the idea that you have as regards optimization for shops and B2C plans for 2022. Could you please advance something about this? Could you say something about this? Well, we are expectant. We are waiting for consumption to recover so that we can carry out some campaigns. We want to launch some significant campaigns. We want to change the model. And as Patricia pointed out, it's more house and less phone. So we're going to be carrying out some campaigns along those lines and we'll see how the market evolves. What we need at this point in time is for people to feel optimistic. And we need the public bodies to put across some optimism so that people can move more and consume more. And well, the news on Ukraine doesn't really help very much. So let's wait and see how things evolve over time. Okay. And the final question from me, 2020, well, obviously because of the context and 2021, I think have been years of consolidation and very few acquisitions or practically no acquisitions. I don't know what your prospects are as regards to acquisitions over the next few years. And it's clear as shareholders and investors in Dominion, nobody expected that phone house operation because it's working out fantastically well. I'm not sure. Are you considering entering other verticals or are you going to consider any other specific areas? Well, as regards the BTC world, well, yes, we are creating new verticals. We've created a new vertical and soon it's going to be a financial vertical that only had an insurance policy for terminals. And now we have a new service that is called Rentik. And which is all about going back to those origins from where telephones came from. And we're very happy with that initiative because we are in an environment of about 1000 contracts per month, which is pretty good. because this greatly increases the value of our customers, and they stay with us for a long time, for at least two years, and then the service itself has a very significant value. It's about 400 euros. And then in other activities, and as Patricia pointed out, yes, we are trying to do a build-up in the environmental segment, so that we can create this future Dominion environment. But let's say that the situation is complex due to two reasons, because there have been many customers that were affected before the pandemic. We've had the ICO loans and now we have companies that apply for those loans and now they have problems and it's something that we don't want. So that's where we had a difficulty because of those loans. And then we have the assessment of Dominion or the valuation of Dominion, rather. It's in no terms, if you can put it that way. And it means that practically any purchase at a reasonable cost would have a dilution of value. So we're looking into other possibilities and we're, let's say, expectant and we're waiting to have some other possibility to rebuy our shares because we believe that's the best investment and that's the best buy we can do. And well, I think that you've carried out the buyback, you've completed the buyback programme. Yes, we completed it in October and we have a new one now in place. and we will go all the way up to 95%. In October, we finished the first one. We have reduced the figure with about 9 million shares, and now we're moving on to the second buyback plan. Well, very good. Thank you very much. Thank you. And finally, we're going to give the floor to Joaquin Garcia Quiroz. It's the final question we have right here in front of us. And bearing in mind that we've already answered about the impact that the Russia conflict has. Can you hear me? Yes, go ahead, perfectly loud and clear. Well, hello. Well, this is a very quick question. Could you please give us a little bit more information on how you've injected that capital you mentioned, 75 million? How did you transfer that capital? And I'd also like to know if the other partners in Bars, if they are also going to contribute a proportional figure, proportional to your 75 million euros. I think that Patricia pointed this out, the inorganic operation we've invested since in Dominion, which is the sponsoring arm, or which is the company that is the holder of the equity or the capital of these companies, And it's been 75 million euros, 25 million of our own equity that have to do with inorganic operations, and 50 that have been received from INCUS and Dominion. And the way of reducing this has been based on a participative convertible loan. And we have the possibility of flexibility in the future. And this money in this company gives them the possibility of launching everything over above the gigawatt that we'd considered for the portfolio. And this allows Dominion to carry out the development, construction, commissioning, and then operation and maintenance. And these partners, well, this was a contribution from Dominion and the partners are still there and they still have their shares or they have the different share segments. And you know that there were some original partners and partners from family offices, etc. So as this is convertible, could you increase your stake in the future with these 75 million? Yes, that is correct. Correct. Thank you. Perfect. Thank you very much. And perhaps to complement what has just been pointed out as regards the impact that the conflict with Russia has, or Russia-Ukraine, I would like to say that we had very little activity with Russia. It was activity from Germany with specific technology that had to do with improving furnace efficiency and some other engineering projects, only engineering and not construction. And the truth is that it's a minimum impact. On the other hand, we are always glad to see oil to go up because let's say that our activity in the refinery world in improving their processes and in the Near East world and Angola, this facilitates our economic flows tremendously. Okay, well, if there are no further questions, then we will close our disclosure here. And thank you very much indeed to all of you for your participation. Thank you very much. Goodbye.