Global Dominion Access Sa

Before starting, I would like to remind you that once the presentation is over, as usual, we will open the Q&A session. You can leave your questions in writing under the Q&A section of Zoom, or you can call in, or you can raise your hand. So we're going to start off with a presentation. We have Mikel Varandieran, who is the CEO of Dominion, Roberto Tobias is the Director, and Patricia Rejon is the Director for Corporate Development. Good afternoon everybody and thank you for connecting to our conference call for the year 2023. But before starting I would like to say that in these results we've incorporated for the first time additional material to the presentation and the press release that we shared and it's an experimental report that tries to facilitate the analysis of the results by giving a greater context on the evolution and dynamics effect in each chapter. We're doing so because we believe that this should help you have a better understanding of what we've done and our aim is to improve our communication with the market. Having said that, let's move on now to reviewing this information that we've already shared and I would like to say that the year 2023 has been once again a challenging period full of uncertainties and in which we have shown that we are very flexible so that based on our culture we can overcome the difficulties that crop up along the path and so that we can make the most of these opportunities and the path. By the way, we have now turned 25 years old. There have been many macroeconomic situations and events, like for instance the conflict between Palestine and Israel, the blocking of the Suez Canal or the election of Millet in Argentina. None of these, in fact, have had a relevant impact on the company's activities. There have been other factors that have had an impact, like the increase of interest rates or the movement of foreign currencies, which you can see in the financial statement and on the balance sheet that we presented. Inflation has also been an element to be taken into account in the year 2023, but as we already mentioned on previous occasions, The nature of our business and the contract, especially in the area of services, make this not have any significant impact on the company's margins. And we'll see that now with the figures, which is just the opposite. One of the elements that has to be underscored of these results for 2023 is that we've been able to significantly improve our margins over sales. I think that this is one of the most important elements. And as regards to the numbers we're going to be sharing with you today, we have to bear in mind several things which I would like to talk about now. On the one hand, revenues as usual contain inorganic components. And in the case of this year, that includes an additional invoicing that is provided by Festivro for 10 months. This company was acquired in March of 2023. Nine months of invoicing at Beta Ingenieros, an acquisition in Colombia of September 2022, an incorporation of 12 months of the infrastructure business that was incorporated in December of 2022. So in total, we have an inorganic addition to the business figure of about 22 million euros. And then during the third Q of the year, you know that we carried out the restructuring, the B2B2C business, and this divestiture decision means that there has been a reduction in the sale of devices, which represents an inorganic impact of about minus 45 million euros. So therefore, the inorganic contribution towards the business figure in 2023 is minus 23 million euros. And on the other hand, as regards margins, we have included some extraordinary effects. From the negative perspective, the restructuring that I've just mentioned that took place in Q3 and which is fully in line with the objectives of adapting to the reality of the market and to simplify things, as I mentioned, by the strategic plan. And this brought about extraordinary costs of 6.5 million euros. We've also had some extraordinary positive results, mainly related to claims materialized successfully in Q4. And in the next figure, we have negative one-offs of 5.1 billion euros. So let's move on to the accounts. We've closed the year with a business figure that exceeds 1.1 billion euros. which means that it's been 2% in growth compared to the figure of the previous year. But I would like to underscore that this growth is really 5% from an organic perspective in line with what we have in our strategic plan. And inorganic growth in this case has subtracted 2% based on what I mentioned at the beginning. And the forest effect has been negative. It's been minus 0.9%. And by geography, business figure, we have 36% of it in America, 54% in Europe and Africa, and 10% in Asia and Oceania. and our activity in absolute figures has grown in all geographies and what we have seen as regards the figures of 2022 is that part of the weight has gone from America to Europe and this is because the renewable project activities in 2022 was very intensive in the Dominican Republic whilst this year in 2020 we've initiated projects in the European area and basically in Spain too And additionally, we also have the service activity in the telecommunications that has grown significantly in Germany and also gives greater weight to Europe. As regards the operating margins, we maintain high levels of profitability. We'd already discussed this trend in previous quarters, and the contribution margin grows 16% compared to the previous year, 19% if we look at it in recurrent terms. In other words, without taking into account those one-offs that I mentioned previously. And the central structure of the company has reduced its weight up to 2.2% over the sales. And, well, some time ago, we set the target of going below 3%, and we have achieved that completely. And even in spite of the growth of the business and of the inflationary environment in which we operate, But with this level of adjusted structure, we have EBITDA growths that are bigger than what we saw in the operating margins. It's 18% more, which is equivalent to 22% if we look at it in recurrence terms, and it reaches €145 million, €150 million of recurrent euros, so therefore we have fulfilled the objective established in the strategic plan. But as I said, the score under this heading is that we've been able to make the operating margins grow. Evita over the sales figure has improved by one percentage point and for the first time we have exceeded the barrier of 12% of Evita over sales. And as regards amortizations, we've had an increase of about 16 million euros compared to 22 because we have amortizations linked to renewable infrastructures. These are infrastructures that we own and we also have the devices from renting activity. financial expenses as we've had in the most recent quarters have been an increase in the costs of funding which means that it's 15 million more compared to what we recorded in 2022 so with this we have an attributable net result of 44.3 million euros which is 43% greater than the figure reported the previous year we must bear in mind that the net profit figure reported last year in other words in 2022 included some because of activity that had been interrupted that was much greater than the figure reported in 2023. But this increase in balance costs does not reduce our net profit. But moving on now to how business segments have evolved, let's start off with sustainable services, where we reached a growth of 1%, of which it's 5.5% that is predicted to organic growth. because the inorganic effect of the year is focused on this business segment. In other words, we are growing organically above what was established in the strategic plan and also in this segment of sustainable services. And this segment maintains an important weight relative to the business figure, 70%, and increases its weight in terms of margin by up to 60%, which means that we have an important amount of recurrence. The reduction of contracts existing in services is being very favourable, and it's improved the margin by 1% compared to of 11.4% and this is thanks to our orientation towards the businesses with high levels of profitability that are generally linked to sustainability and also because we have less presence of less profitable activities like mobile phones and the extraordinary expenses of this year are located in this segment so that means that the recurrent service margin would have been even greater, even reaching the level of 12%. So as regards the 360-degree project segment, the business figure remains pretty stable and somewhat limited by the impact of Forex, which subtracts 2%. And although we are now facing the best isolated quarter of 2023, which is Q4, the quarterly comparative can produce a mistaken interpretation because Q4 is was the highest quarter we've ever had in terms of projects. As regards the contribution margin, there's been an increase compared to 2022, closing the fiscal year at 19.4% over sales, which is above our strategic target. The execution of the project has been carried out throughout the year. According to the rhythm established, the portfolio remains stable. We've closed the year with 624 million euros that guarantee future results. And we've added new projects in the area of water management in the Latin American setting, for instance. And we also have the possibility of incorporating future projects in Angola after having finished the projects that were underway in that country. Our segment of Stakes in Infrastructure closed the 2023 fiscal year by contributing nearly 10 million euros in the recap to the traditional business as regards renewable infrastructures in 2023. We've carried out part of the five wind farms in the Dominican Republic which as you know are under the umbrella of the divestiture agreement of 50% with CMI and two wind farms in Spain. One of them is going to be and the other one was sold in the last quarter of the year on the 20th of December. And as we mentioned, we sold 100% of the shares of the Valdecaretas PV farm sold to Renewables Japan. And this means that we materialized our divestiture strategy for our renewable assets. As regards the wind farm in Cerritos in Mexico, We've connected it to the grid, and that's how we will be able to sell it. And this is why it's one of the assets that's still open for sale, and we have several offers for its acquisition. As regards the balance sheet, the main movements that have to be underscored are the following. In the case of fixed assets, we have an addition of 15 million euros that is connected to the integration of the company that we said was acquired in 2023. In infrastructural assets, The assets of 30% of the corrective leave are privates of the first because of a reclassification and that will be sold in the case of the latter because it has already been sold. As regards the net financial debt, it has been reduced by 88 million euros and at the end of the fiscal year it now stands at 75 million euros which is 0.5 times EBITDA. In other words, excluding the debt of the infrastructure that is temporary until the divestiture takes place and which is greatly associated to each one of the projects, closes the fiscal year with a net cash possession of 45 million euros. And the net financial debt of the infrastructure business is reduced because of the departure of Cerritos and the sale of Valdecarecas whilst we invest in new developments. As regards the generation of operating cash flow in 2023, it's a total of 71 billion euros, in other words, it's in line with the 17 million that we established in the plan. And this strong cash generation was reversed, has been invested that includes the acquisitions of the year and payments for operations of previous years, dividends paid out to shareholders, 14.7 million euros, and to minority shareholders, 2.6 million, and the repurchase of shares on which we spent 8.4 million euros. And as regards CapEx, in addition to the recurrent maintenance CapEx, that is something like 20 million euros, and which is included in Operative generation, we have spent $39 million on the expansion of our business, basically renewable infrastructures and the renting of mobile devices. So the global interpretation of these results is therefore extremely positive, with significant growth, especially in terms of margins and the profitability of the sales, and with the progress made in the strategy established by our plan. As mentioned in May, In the presentation of the plan, our ambition is to become a company that is totally focused on sustainable activity. We mustn't forget that sustainability is all about long-term efficiency. Our activities in 2023 were focused more than ever before on these areas, on the circular economy, on reducing emissions, the recovery of waste, activities that have a growing demand and also have a profitability above our average. And these 2023 results, which is the first year of the plan, are placing us on the right path to fulfill this plan. And this means that we can confirm the guidance for the years to the years until 2026. So we are talking about growth of 5% in terms of sales, 7% in EBITDA, and 9% in the generation of operative cash flow. because you know that we talk about what we can predict. So these figures are in organic terms, and we will also have to add the investments and divestitures that we carry out along this path until we become a 360-degree sustainability firm. Right, well, thank you very much for your attention. And if you want, now we can move on to your questions, to the Q&A session. Well, let's start with the Q&A session. If you are connected through Zoom, you can connect in writing under the Q&A section or raise your hand by selecting the button on the menu, and we'll give you the floor. But if you're following the presentation via the telephone, please press asterisk 9 to ask a question, and we will give you the floor. Right, let's move on to the Q&A session, and these are the people that have raised their hands. Please make sure that your microphone is not muted.

Firstly, we have Juan Peña who stands for the floor from GBC ISCOM.

Hello, good afternoon. Can you hear me loud and clear? Yes, perfect. Go ahead, please. Good afternoon, everybody. Thank you very much. I would like to ask you a couple of questions on the renewables business because do you have any new developments that you can talk about about the possible arrival of a minority shareholder in Europe Or have you implemented any change of strategy? Or what is your vision in relation to this business? What is your take? And secondly, I'd like to understand how the pipeline under construction is going, because nothing has happened in terms of construction since the nine-month result. So do you have any projects coming up in this year so that we can have a clear picture of what's going to be going on? but right now it's not very clear. These are the two questions that I wanted to ask you. Thank you very much. Juan, I will answer you. The strategy in Europe has not changed and we are in the process, as we explained some time ago, and we're looking at digital alternatives. I think that the sale of all the carretas has been the first step in any case what we're doing. is now we are adopting a much more global position to link Spain and Italy. We are carrying out the process and we hope that we will be able to identify somebody this year. And with regard to the pipeline and the portfolio, we are ready on the ready-to-be, everything on ready-to-be. You identified four ready-to-be projects in Italy of about 100 to 100 megawatts and some other projects in ready-to-be. Well, we have something in Ecuador that is on standby and which we won at the auction. And there are a couple of more opportunities, too, in the Dominican Republic and another one in Spain. And apart from that, we have the small projects of less than five megawatts that are under the radar in Spain. So as all of these things are reached so that we can initiate the construction process, that is when we will consider that the enterprise is valid. and the contract can be included in the portfolio. Perfect. Thank you very much.

We're going to continue with Carlos Trevino from Banco Santander.

Hello? Yes, go ahead, Carlos. We can hear you now. Great, thank you. Well, firstly, I would like to thank you for the additional information you are giving on this quarter. But there's a question I would like to ask. I had a question on renewables that you've already answered. But the other question that I would like to put to you has to do with 360 projects. And it's a year which in the total of the year there has been practically no growth. And it's true that it was very difficult to make the comparison and there hasn't been a major thrust in the backlog in this quarter either. So what I wanted to ask you is about your growth expectations in projects this year. And what kind of projects are we talking about? And do you expect that you'll go back to the usual patterns of growth in this particular business? Well, if you want, Michael can answer later on, but I'll start. For us, it's a very exceptional and positive year in 360, because the €350 million that we've imposed has not affected our project. And I think that we've improved it a little bit in relation to this conservative approach of including to the portfolio what is ready to be. But I think that as regards the capital markets, we are very positive since, we have been positive since then, And we are very optimistic with rate agency issues and with new projects and with doing things again in Angola. And we're very excited about the different opportunities that can pop up in terms of hospitals and also in relation to renewables, not only for Zippy, but also battery projects. We are pretty optimistic. as regards whatever is connected to 360, and we reaffirm that this is an absolutely valid strategy with which we feel extremely happy. So I believe that we are in that process now, and the margins of 19 point something percent are sustainably above the figure of 15. And as I say, we're very comfortable with the strategy and with the approach too. And the three transitions that we spoke about, we believe that this is like tailwinds to continue along these lines. So for us, or at least our perception is that the year is very good in 360. And I seem to recall that in 22, and because of the closure of renewable projects and other issues, we had an exceptionally good final quarter that we have not been able to repeat in terms of revenues and margins by very little. But it's a figure very similar to the figure report in 2022 in margins that are improving. So we're very, very happy. And the truth is that I can't say much more about this, but I would just like to remind you that in 360 is where we had the biggest Forex impact, which was 2%. Well, continue now with Enrique Barrondo from Forte Capital. Hello. Good afternoon. I have three questions for you people that have to do with renewables. And the first one is, could you please talk about the partial divestiture that you've been referring to in the Dominican Republic? And the second one has to do with the timing that has been adopted for divestiture in renewables. You said something about Cerritos, but could you please add some details on the potential timing And then as regards to the agreement with CBI, if I'm not mistaken, you were talking about significant divestiture by the end of 2023, which I suppose has been postponed until this year. So could you please say something about that? And then how should we address CAPEX at INFA for 2024-25 so that we can understand the timing of these new projects that are currently under construction? Thank you. Thank you for the questions. I'm going to ask about the divestiture systems in the Dominican Republic. But in this case, and as occurred with Valdecaretas, that was a specific agreement for a specific project. But in the case, the two projects in the Dominican Republic, they are under a framework agreement with CMI. And automatically, and as we develop the projects, what they do is materialize this 50% divestiture. So in 2023, we have made progress in the execution and construction of five projects in the Dominican Republic. And as they progress, what we do is gather this information in the books. where we have established the divestiture, or perhaps more semantically, more than a partial divestiture, it's an accounting recognition of the framework agreement we have, where in a way we are co-investing. So in other words, we have a non-control stake and another one that is accounts collectible. But in any case, what you said for about last year, something that we're looking into right now, and perhaps for the year 2024, there would be other options So it was a bit to be a complete diversity, but in any case, work is still in progress and we'll see what's going to happen. This is what I would say about the Dominican project. But as regards the issue of Cerritos, what I can say about that is that the news we've received, we've just been informed by the Energy Regulation Commission. We are now processing the permit and they have the consent of SINAPE and we're waiting this is something that affects the National Conservation of Energy. And we are now waiting for things to happen this week or next week so that from the legal and documentary perspective, everything will be ready to initiate the trial process. So this, fortunately, after quite a lot of time when nothing has happened, means that in the month of March, the trials will start and will inform you about this. and the part that is connected will be suitable for the complete divestiture process. And as regards the infrastructure, Capex, what we have to consider is that we're talking about a mix here. And as you can see, it requires new projects in Italy. We also have part of the Greenfield that Fabrizio pointed out at the beginning. So I think that what we're going to have here is a net positive balance as regards cash generation. with the consumption of Capex so that we can forge ahead with these projects with a 360 location or whatever has to do with the recovery of the enterprise value and use the invested equity. But of course, there are quite a lot of variables at stake to be able to quantify an estimate of what would be reasonable for the year, I mean. Understood. Thank you very much. Okay, we're now going to review the questions that are still pending and answers, which are written on the chat. And if you want to write in with more questions, now would be the time to do so. So in line with the question on Cerritos that has just been answered, Miguel Medina is asking us, The central scenario, the connection in Q124, and after the connection, will you automatically talk to what are the offers received? Well, yes. These are, well, it's a Mexican timing, but in any case, as I say, we're talking about March and April to have the project connected and to readdress the different offers received so that we can advance and carry out an operation together with this timing. And, of course, our interest, And, well, money has a certain value as time goes by, and we want to speed up the process as much as we possibly can. So we have to run the tests for connection, but in any case, we'll try to do this as soon as possible. Governor Colominas has raised his hand, so you have the floor now, sir, Mr. Colominas. Hello, can you hear me? hello good afternoon everybody i have some questions for you and the first one has to do with the capex for renewables have you mentioned anything about the return on the capital invested in these projects or do you have any kind of internal reference when you analyze how much has to be invested Well, our approach since the capital markets days as regards renewables, as you know, this is a 360 vision and what we have is the obligations over 20. But in any case, the assets that we're selling, well, they have return that we think is about 10. But this is something we see in the price of sale and it's relevant as regards knowing what we're selling. but what everybody believes and what we want to achieve is a return on our resources with a rona above 20 and you've already seen how this year we were at 21 and the fact is that we have that capex undergoing a transition in some of the projects which we hope will be transformed into liquidity and thank you and then the second question the question has to do with the buyback of shares Are you considering that option for 2024? Will you be establishing a new buyback program for shares? Well, yes. We held the board meeting yesterday and we still have the intention of buying at these prices. I think that the best investment we can make is to buy back the shares of the company itself and we will carry on doing so.

Perfect. Thank you very much.

There's another question from the chat. How do you expect net profit to evolve within the strategic plan? Well, we've established guidance for this 2023-26 plan, and the guidance talks about turnover and cash flow. So if EBITDA evolves as we expect it to at about 7%, it will greatly depend on how interest rates evolve and how this can be transformed into a net profit. Well, according to the information we have today, and if everything would continue along the same lines, it should be the same proportion. But it's very difficult to predict how things are going to be between 2024 and 2026, so that's why we decided to establish a specific target for the net profit. We have no more questions, so we can therefore close the presentation this afternoon. Thank you very much for attending. Goodbye. Thank you all very much. Bye-bye.