Global Dominion Access Sa

Buenas tardes. Bienvenidos a la presentación de resultados de Dominion. Welcome to Dominion's results presentation. If you want to follow this presentation in English, you can do so selecting the English language on the world icon at the bottom of your screen.

Before we start, I would like to remind you that once the presentation is over, as usual, we'll move on to the Q&A session. You can leave us your questions in writing under the heading of Zoom for Q&A, or you can call in via the telephone or raising your hand on the menu. So let's kick off with the presentation. We have Patricia Verjon, who is the Director for Corporate Development. Good afternoon, everybody, and thank you very much for attending this call. The results of the first quarter of 2024, as you know, we held our AGM yesterday, where apart from approving the results of the 2023 fiscal year, we approved the renewal of the members of the board. And we also paid out 15 million euros in the form of dividends. And Miquel Barranderán, our CEO, also reviewed the non-financial information and our performance in the area of sustainability, an information that is becoming increasingly relevant for our stakeholders. And he also took the opportunity to talk about our performance our sort of position in relation to activities connected to sustainability and to the transitions of our strategic plan, that is the energy, digital, industrial transition that are transitions that are addressed by society and more particularly by our customers. But as regards the figures for Q1 that we published this morning before the market opened, we've seen that the quarter doesn't have major headlines as regards the evolution of the business. So we have continuous growth in organic terms with clear improvements in terms of operational profitability. In other words, we have organic sales. that compensate or are even greater than the sales that we eliminated that are very few. They make a very low contribution to the margin. So this shows that our current roadmap is suitable to give our businesses towards the most recurrent, profitable, and resilient businesses or activities. So now that we're growing organically with good profitability levels and we have decreased inorganically in activities that are less profitable. But to correctly interpret the financial statement, we have to take into account several elements. On the one hand, we have this negative inorganic growth that we mentioned due to the restructuring of our retail business, and as you know, this meant that we closed down the physical shops in 2023. which means that we have lower sales of our mobile devices because we reduce the sales platform and this doesn't have any impact on the margin because these devices produce practically no profitability and the inorganic effect has been about minus 10 million euros. And secondly, during Q1 of 2024, we also had to address payments of nearly 90 million euros. And the most important was the payment of 67 million to INCUS in the month of January, followed by the disbursement of 12 million euros for the purpose of our own shares. And in particular, it was in the month of March when we bought 2.6 million shares that reach the other 1.5 million shares acquired in 2023 and 2022 and which will be purchased by the management team according to a plan that has been designed for a greater stake in the share capital of Dominion. So that means that part of the Directors will become shareholders which shows that they do trust the shares and they are also fully in agreement with the strategic plan of this company. But going back to the figures of the quarter, organic growth at a constant currency of the business figure was 5.2% whilst the total growth of the company has remained practically flat. plus 0.6% as a consequence of the inorganic elements that I mentioned previously. And the effect of negative forex has been minus 1.2%. As regards margins, I'd like to say that the operational profitability of the business is improving. And this proves that this inorganic effect not affect the margins but rather the strategy and the strategic plan that was presented last year is correct. I would like to remind you that our strategy consists in focusing on activities and businesses that are more profitable and reducing those activities that have lower margin profiles with investments and divestitures. margin over sales of 12.3 percent and this means that we've gone beyond the barrier 12 percent for the second consecutive quarter and we've improved compared to the profitability reported in the first quarter of 2023. Amortizations have been stable compared to the same period of the previous year about 15 million euros. Well the main differences that are results from our renting business for mobile devices and the effect of IFRS 16. As regards finance and expenses, they have increased because of the payment commitments of this quarter that I've already mentioned because compared to Q1 of 2023, interest rates are higher. And in this quarter, financial expenses reached 10.2 million euros. So this means that we have a profit in continuous operations of 9.3 million euros and an attributable net profit of 7.3 million after considering the interrupted activities that refer mainly to the financial expenses of the Cerritos wind farm, which, as you know, is about to be divested. But let's move on now to the behavior of each one of the business segments. And we're going to start off with sustainable services that maintains a weight of 70% of the Dominion sales and has reached a business figure of 194 million euros. And organic growth in this segment has been very positive. We're talking about 6%. And therefore, this is above the target that was established in the strategic plan. And even so, our sales are flat compared to the same quarter of the previous year because it's in this segment where we can see this inorganic effect that I spoke about before. and we expect it to reach the halfway through the year, and that's when we will have sales platform that compares to what we had last year. As regards the contribution margins for sustainable services, this quarter we will reach 12%. In other words, it's a margin that is 7% higher than the one reported in the same period of the previous fiscal year. and this improvement in margins is possible thanks to that approach from the company in terms of services with higher margins and in services that are more related to environmental services and because of the decline in these activities with lower margins. And there's also been excellent behavior in the case of telecommunication service contracts and they've behaved perfectly well in the last few quarters and therefore in this first quarter of the year both in Latin America as well as in Europe with Germany as a success case for the company. And in the 360 degrees project segment, we've reached the sales of 86 million euros, which represents a growth of 1.5% compared to Q1 of 2023, which is 3.2 in organic terms. As regards margins, this quarter, they stand at 18.7%. They are somewhat more normalized, but they are far above the target established in the strategic plan for this business segment, which is 15%. This somewhat more moderate growth is characteristic in seasonality, the seasonality that projects have when we look at an isolated quarter. And in this case, we are dealing with a transitional quarter within the framework of renewable projects because as we mentioned in the call of 2023, the execution of the parks in the Dominican Republic is being closed and we are transferring the activities towards the European market where we will start with an execution in Italy over the next few months. And as regards the portfolio, on the closing date of March 2024, it stands at €618 million, where renewables have remained practically stable and where most of the additions happen in the area of industrial infrastructures with projects that are about to be put into motion. And we also have to underscore the successful execution in a record time in Chile of the design and construction of a data center, a project that could not only represent a major success but also the fact that new similar contracts will be awarded. And finally, we have our stake in infrastructure that is still providing something like €3.5 million in turnover and €2.2 million in EBITDA per quarter. This is very similar to the figures reported last year because we have the same wind farms in operation. because of the global integration, because of the global consolidation, and the 281 megawatts that are under construction refer to those wind farms that we said were made in 2023 in the Dominican Republic and which right now are undergoing a connection process, so therefore they are about to enter into COD. And then we have the other one farmed in Perritos that is also about to be connected prior to be completely divested. And with this, we've just reviewed our business and also the different elements of the financial statements. Thank you very much for your attention. And now we're going to be moving on to your questions so that we can answer them accordingly. Thank you very much. Okay, we're going to start off with the questions. If you're connected via Zoom, you can ask in writing through the Q&A section, or you can raise your hand by choosing the button in the lower menu, and we will give you the floor. Should you be following the presentation via the telephone, please press asterisk 9, and we'll give you the floor. And we're going to start off with a Q&A and giving the floor to the people that have raised their hand. And please make sure that your microphone is not too silent. Firstly, we have Enrique Padón from JV Capitan.

Hola, buenas tardes.

Hello. Good afternoon, everybody.

Hello.

Well, I have a number of questions I'll ask too, and then I'll join the queue again so that I don't interrupt anybody. The first one has to do with this. I know that you don't give this information for Q2 and Q3, but do you have any estimates? Do you have any leverage ratios? Is it 1x or 2x? I'm not sure if I'm getting things right or not in this respect. And the second question has to do with the Canada for the Development of Renewables. So when do you expect that these projects will be arriving, those that are advanced, those cases you have, for instance, in the Dominican Republic? When will they be included? Thank you very much, Enrique. Well debt is not something that we usually give you information on in this quarter but as we've said there have been a number of payments for the first quarter. It's about 900 to 100 million euros and bearing in mind too that there have been no additional bad messages or any additional debt reductions and the only thing we have to bear in mind from a positive perspective is the generation of cash which is very healthy as you already know and it's obvious that our debt levels will be somewhat higher than what we had on the closing date of 23 but we'll see how this changes over the year and in the semester we'll give you this detailed information and then we'll be able to talk more specifically about what the debt is as like, but I'd say that the dynamic here is the one you already know. And better that divestiges have to be made in some firm's term plan that we could have more or less debt, and we would have to focus on reducing these figures throughout the entire plan. And then as regards As regards the renewables projects, what you were asking us about, I think, had to do with the connections of these projects and the time schedule for those had already been carried out in the Dominican Republic. Was that your question? Yes, that's correct. Well, okay. Well, as I said before, we have been working on them pretty intensely throughout 2023, and right now we have five projects in the Dominican Republic that have to be connected. and that they are looking into it. that anything has stopped but these processes are continuing business as usual and these natural bureaucratic processes that mean that they will be connected sometime during the year and I can't really give you any dates right now just bear in mind that there are going to be elections in the Dominican Republic I think they're going to take place in the month of May and this is something that has always produced some kind of uncertainty in relation to the specific dates. But in any case, we expect these projects to be collected in the next few months.

Thank you very much.

Thank you. Thank you, Enrique, for your questions too. Well, let's continue now with Carlos Treviño from Santander. Can you hear me loud and clear? Yes, perfect, Carlos. Well, thank you very much for accepting my questions, firstly. Well, the first question would be how can we transform into revenues these renewable projects that you're going to be initiating in Italy because, Patricia, you said that they will be initiated in the next few months. So are they going to join the Q2 projects? But is it something that is going to pick up more speed in the second half of the year? That would be my question. And the next question has to do with finance and expenses because this has been a somewhat special quarter because we've had some very significant cash expenses. But what is your forecast for the next quarter? So in other words, these 10 million euros you've had in the quarter, How many have to do with non-recurrent issues that should not continue in the next few months? And the third question has to do with the interrupted actions with a loss of 2 million euros, and you told us that most of them had to do with the financial expenses of the Cerritos wind farm in Mexico. And I wanted to ask you how things are going. Has any progress been made in the last three months as regards the final divestiture? And then we also have the business of tall metal structures. What is the current status of that business? And do you think that the divestitures will come to a close in that particular segment?

Thank you very much.

Carlos, well, I'll answer your questions. Thank you very much, by the way. Well, look, as far as the contribution made by the new operations in Europe and in particular in the case of Italy with wind farms, I do think that they will start to make a contribution as from Q2 this year, but we're always going to try to adapt the execution of these new infrastructures with diversities from the previous ones. Because when you start with the execution process, it means that you have to start investing in those projects and we want to regulate things properly. And as we divest in the others, what we will do is speed up the rate of execution of the following projects. And this, in any case, let's say that if we are thinking about the global figures of the year, if we're talking about project turnover or project revenues, they shouldn't have an impact because in the same manner that we can adapt to the renewables operations, when we If we start a little bit later with the execution of renewable infrastructure, what we will do is speed up the execution of other projects because you know that we are tremendously diversified, that we have lots of projects, and this allows us to offer security for accounts or for the global year. You can have some quarters that are more or less intense, but from a global perspective with regard to the year, those prospects are those that you already know. And as regards how financial expenses are going to evolve, yes, this is a quarter that in which we have bigger financial expenses, not only because of the increase in interest rates, but also because we've had these payment commitments that mean that we have a debt position that is somewhat higher. And what we expect is that this will continue in the next quarter. It will be regulated, but I think that we have to wait. We have to expect financial expenses at this level in the next quarter. As regards to interrupted operations, well, in the case of Cerritos, those 2 million euros have to do mainly with Cerritos. STILCOM is not significant in that figure. I'd say that it's something like 0.3 million euros. In other words, this is a non-significant part of the whole thing. And I'm going to start with Stilcon. And this is an operation which on the closing date of the year, we put it on the back burner on standby. But in any case, This is now going to be readdressed in Q2 of this year, and let's only hope that we will make progress, too, in the divestiture of this activity. But as I say, it's not significant to date. And as regards cerritos, well, yes, this obviously mainly refers to financial expenses that have been brought about by the repayment of the debt of this infrastructure. progress has been made in the connection of this wind farm. And we're talking about Mexico, and you know that things have to undergo certain processes there, and we are much, much closer to this final connection, which is a basic requirement and it's something that we'll see in the next few months because yes, we have made progress in Q1 this year. Thank you very much, Patricia. I have one final question very quickly. Could you give us some specific figures for the backlog of the different segments? Well, yes, the 618 million euros of portfolio that we closed this quarter with would be divided at 275 million for renewables. As I said, that's pretty stable because of the lower level of turnover we've had in this quarter. And then we have infrastructure of 119, industrial infrastructure of 154 million. growing since we closed the year. As I said, there have been new incorporations in this segment. Thank you very much. Thank you, Carlos, for asking the question. Here we have the questions that have to be answered that are on the chat. If you have any more questions, then now is the time to do so. So I'm going to start off with the question from Miguel. He's asking us, what do we think about the renewables market after the slump in prices? Could this affect the business? Well, I'm not an expert in the renewables segment, but I believe that you're talking about the slump in energy prices. And I think that, well, what we have to do is we have to look at the market, and we're talking about the long term. It's not only the current specific point in time and in our negotiations, well, this is what affects us. And bearing in mind our significant portfolio where we have more than 2.5 gigas, we don't really think that this is going to affect our projects, mainly the projects we're beginning to add or the inclusion in the portfolio over these renewable projects. and this is not going to affect the negotiations that are underway right now. And we are closely monitoring what is going on and we've included this in our negotiations and also in those executions that we currently have underway. Okay, we're going to continue with a question from Juan Peña. He's asking us about financial expenses. Is it reasonable to estimate financial expenses for something like 40 million euros in the year as a function of what we've observed in Q1? Well, Juan, as I was mentioning to Carlos before, what I would do is make an estimate of financial expenses according to what we have seen in Q1. So as from half of the year when we have more visibility and once we know what our debt position is like and once we know what the interest rates, we will be able to give you an estimate for the date of the year. But this is the only thing we can give you for the time being. Leticia Margarina is asking, when do you think you'll be selling the Peritos farm? Well, it's the same as what I mentioned. Ducato said something that will take place in the next few months. And this depends on the final connection. Progress has been made, and it's getting closer and closer. Miguel Medina is asking about the construction of projects in Italy. Does this mean that we are about to reach an agreement with a European partner for renewables? Well, without a doubt, yes, we are getting closer to the agreement with a European partner. And well, we would like this agreement to be reached as quickly as possible. And we know that these executions will be coming along in 2024, and they are starting in Q2 this year. Well, Enrique Parrolo from JV Capital has raised his hand again, so you have the floor again, sir.

Enrique Parrolo, hello.

Well, I have another two questions. One of them is that do you think that you will be able to launch any guidelines in the short term like you did for instance in 2023 or do you think that this should be aligned with the guidance you gave for 2023, 2026. And the second one, just understand the mathematics of the buyback of shares and the remuneration to our management. Well, perhaps we should, this should be like an OPEX item or is there going to be a buyback by the interested party and at what prices? Perhaps we can, is this going to be execution prices or is there going to be some kind of discount or premium for those people? Thank you very much. Well, Enrique, as regards the guidance, we're not going to be delivering a specific guidance for the year. and we gave the specific guidance for 2023 because when we presented the plan it was May and there was visibility and it seemed that it did make sense for us to establish the guidance for the entire plan in two segments for 2023 and for 24 to 26 and as regards 24 we stuck to that guidance in other words we maintained the guidance of the plan with these compound growth rates of five percent in terms of turnover 7% in EBITDA and 9% as regards operating cash flow or free cash flow. And right now we are not going to be giving any details. But as regards the buyback program, the share buyback program, well, these shares are already in the company's portfolio, self-portfolio, because, well, they bought 2.6 million shares in March and they were Other purchases within the program of 1% that was carried out between the end of 22 and the end of the month of 23 is 4.1 million shares that are going to be bought by these directors of the company. And the terms or the prices at which this acquisition will take place. Well, we will give you all the necessary information once this takes place. And what it depends on when this happens, the premium will be higher or lower relative to the listed price. But in any case, It is a program to reward the commitment of our directors so that this talent can be associated with the company and to the strategic objectives we've set ourselves for the next four years. And what we want to do is we want our directors to form part of the company as shareholders and we want them to benefit from the revaluation of the share because we expect that the share will evolve perfectly well and this will show the fundamental aspects of the company and will also reflect the work that these directors are currently carrying out within the company. Understood. Thank you very much. Thank you, Enrique. Okay, we're going back to the chat, and we have another question from Miguel Medina. If you want to ask any more questions, this would be the time to do so before we finish. He's asking us about Cerritos, and what he understood is that in the call of 2023, trials will begin to be carried out in March 24, but apparently this has not taken place. Is that correct? They're not carrying out any trials there. Well, I can't remember the details for the call when we closed the year, but I don't really think that we committed ourselves to getting this done by March 2024, because it's very difficult to give you an exact date. Although we do believe that it was in the first part of the year, and I think that this is something that we did mention, but I cannot really tell you in which phase of the connection it is, or if we've reached the trial stage or not. I'm sorry, Miguel, my apologies, but I'm sorry I don't have those details. So no more questions, and with this we will conclude the presentation. Thank you all very much for participating. Thank you all very much, and I hope to see you again in the...