Global Dominion Access Sa

Good afternoon and welcome to the presentation results of Dominion.

Before we start, we'd like to remind you that after the presentation, as usual, there will be a Q&A. You can write your questions in the Zoom Q&A section or put your questions by phone or by hand in the Zoom menu. Hello everyone, good afternoon and thank you very much for attending this conference call on the 1st of 2024. We barely published the information an hour ago and the first thing I'd like to highlight is that we find ourselves in the first half of the year where the business is moving forward positively from the point of view of the business portfolio and contract performance. and from the point of view of strategic advances, some of which have already been included in the figures and others are to come in the coming months. But it's true that we've been through a more challenging time in the development in invoicing and in investment intensity markets. The positive dynamics and the medium-term objectives are still in force and will continue to materialize during the rest of the year and the rest of the year's strategic plan. There are two very clear subjects that should be mentioned in this first part. On one hand, there's the inorganic aspect that links to the mobile devices, which has an impact on sales negatively, and in working capital dynamics. And also during this half year, we've had less activity in renewables projects. And regarding the capital allocation investment and debt criteria, we are, according to plan, in conformance with the payment commitments you all know about, and the strategic transformation in our plans. During these first six months, a large amount of these investments have been concentrated while there have been no operations in the opposite sense, with a temporary decoupling that will be offset in the coming quarters. Finally, I would point out the good operating margin dynamics and the recurrence of the business, represented by the high growth in turnover and margin in the service segment. Without forgetting that in the last line, we continue to have a very high financial cost. We're going to see all these dynamics reflected in figures, and I'll start with the income statement that shows a practically 5% organic increase, although the global growth is practically flat. There are almost 20 million turnover eliminated inorganically after the restructuring of the businesses carried out in the second half of 2023. That is, the inorganic part subtracts 3.3% in the half year, while the exchange rate effect also subtracts 1.2%. Regarding margins, we highlight that the business operating profitability continues at very high levels, 14.9% over sales, the contribution margin at 12.5%, which remains over that 12% for the third quarter running. and consolidate the dynamics we've been seeing since the beginning of the year 2023. I'd like to remind you that the strategy is to focus the company on the more profitable activities and businesses and reduce activities with lower margin profiles. There are no significant variations on the amortization side. And regarding financial expenses, we have a somewhat buffered net effect because of the positive contribution of the exchange rate differences in the comparison in the half year, but there's a significant increase in financial expenses somewhat more than 6.5 million as a result of the interest rates and increasing debt related to the payment commitments that have been taken on during the first quarter of this year. We have an attributed net profit of 16.3 million euros, which is compared to the first quarter of 2023 and it's completely connected to the financial expenses I've just mentioned. Let's see what the performance of the activity has been by business segments, which is part of the sustainable services, which has slightly increased its weight in invoicing and in margins over the total company and represents 71% in turnover and 62% in contribution margin and provides a higher recurrence to the companies. Services reaches a turnover of 401 million euros, which means growing 2% compared to the same path last year. This segment concentrates the entire half year inorganic effect. Inorganic growth is much higher and is at a very healthy 7.9%, much higher than the target established in the strategic plan and showing the strength of the areas that we have strategically put our space on. Regarding the contribution margins, once again, we see the results of our positioning, mainly because of the environmental services with a 12.4% margin in the six months and 12.7% for the isolated quarter, which is the highest figure in the historical period for this segment. There are no main headlines in the activity for this segment beyond the good performance and the positive prospects for the coming quarters. The 360 project segment had a more moderate activity than in previous quarters compared to the first quarter in 2023. The reason is due to the execution phase for renewable projects as a result of various factors present during this first half of the year. During the first quarter, we said that we were at a time of transition since we were completing the Dominican Republic farms and taking the activity to the European environment. In parallel, during the second quarter, elections were held in two of the geography's 12 regions, Dominican Republic and Mexico. This always slows down some of the procedures. Let's say a group of elections have had positive results for our interests in these regions. This is the case of the Dominican Republic, where in June we opened one of the five partners we have about coming to operations, and the rest will be connected in the coming months. And finally, we haven't performed at the same rate that we have been doing in the Dominican Republic since we are trying at to pace the investments in the FECUNIO project with the existence of agreements in disinvestment. For the rest of the projects, industrial or social infrastructures, the pace is still strong and progress has been made in projects that are closer to generating a direct turnover or being included in our portfolio figures. For example, a project in the Matam Hydroelectric Power Station, a distribution network, or a mandatory tsunami alarm in Chile. The ability to go to the airport. I think one many years with no major variation. And you have to get to the end of the project in the recovery of the execution page in new books. They get to the second half of the year with the project will come back to their previous level and regarding the projects, the levels are still above the goals. 18.8% in this half of 2024. And finally, the segment participation infrastructures, the business in a bit is pretty similar to the same half in 2023, since we have the same plant in operation that we had at that time. And along the way, we have disinvested in Paldecaretas, and now the Perito Sprint Farm is available to sale. The Infrastructures under construction carried out in 2023 in the Dominican Republic are about to be connected, as I said, and about to join the CND, and 80 megawatts of those should be executed in Italy. And regarding the Perico-Swift farm, very specific progress has been in this connection that could take place during the first quarter of this year, and for which we have several purchase options on the table. Regarding the... sun and sheep movements. Most movements were already carried out and were discussed during the presentation of the results for the first quarter of this year. On the one hand, we have had to make payments related to corporate operations from previous years, the most important of which refers to recovering the total control over the renewable business with the purchasing of the stake in INCUS for €67 million. And the other €9 million are earned out in operations such as Bigging India, Pancake and other environmental service buildings. Another 50 million euros have been invested in the first nation in various business areas. Specifically, 20 million euros are assigned to the renewal project pipeline and the device rating business and the rest is working capital at the consequence of the reduction in retail business. In other words, there is a net working capital nature in the sale of those devices since their deferred payments to the manufacturers and reducing the volume of this business reduces the net associated operating working capital. And in March, we acquired treasury shares of about 12 million euros, the objective of which was to complete the participation plan of part of the management team in the share capital of the company, which was finally carried out in June and through which almost 50 managers became Dominion shareholders. On the other hand, the activity has generated free operating cash flows, 35 million euros, including the payment of taxes and financial expenses. This increases in debt should be circumstantial since in this first half of the year, there are many payment commitments and investment positions where the goal of materializing the benefits during the strategic plan. During the second part of the year, we will not have this investment pressure with the payout of the dividend as the only significant payout There are no other significant movements. We have shared out €15 million last 9th of July, and we also have the already mentioned earn-out. And finally, it's important to mention that continuous growth in organic growth with a clear operating profitability, which means that we can expect a second half of the year that will be stronger and with fewer investment needs. And we foresee a year 2024 in line with the general guidelines of the strategic plan. Thank you very much. And we now move on to the Q&A. We start with the questions. If you're connected to the Zoom app, or you can raise your hand at the bottom. If you're following the presentation by phone, press straight nine to ask a question. We start with the Q&A. Starting with the people that raised their hand. Yes, hello, good afternoon. Thank you for the presentation. I had two questions. First of all, regarding this growth in the second half of the year, were you expecting to reactivate that? and mainly through the project side, what class or what kind of growth do you expect here? It seems complicated to reach that 5% sales for the complete year, since the figure in the second half would have to be very significant, so I'd appreciate a little bit of time on this, and related to this, but more long-term. Bearing in mind the guidelines given for EBITDA and margins 24 to 26, we've already seen the improvements, but considering the year 2024, which perhaps ought to be more modest from the point of view of growth in the top line, what kind of growth can be considered for the next few years? And do you still feel comfortable with those sales growth guidelines in particular? Thank you, Enrique. Let's see. I'll start with the second part of the question. We're seeing that the second half of the year could have a very interesting decrease in portfolio. So in the project side, we're very optimistic of a significant portfolio in projects, both in renewables that are already underway, as well as projects that are funded by equal pay agencies. And one of the projects So we feel very comfortable with that. As Patricia said, on the project side, it is what it is. We've had some temporary differences, let's say, in the closing at the end of June. But as usual, we're going to see what the operations are in December. Again, we see a temporary issue. There's nothing that has dropped off. we could have a volume in Italy, we could go back and forth in Dominican Republic, significant projects under execution. And I think that we have to wait until the last quarter to see the whole picture because it could be a clear event. But in this case, we've grown organically at a rate of 5%. In other words, Although we've seen a slowdown in projects, perhaps the global figure for the company is 5%. I think it is important for us to consider that in that simplification process that we established in the strategic plan, we're going to carry out divestments. And when we talk about increases of 5% in sales, as Patricia said, we're talking about organic growth. that will be affected by those diabetes. Understood, thank you. We continue with Juan Pena. You're mute. You can hear me now, right? Yes, perfect, sorry. Hello, good afternoon. I had a few questions. First of all, The infrastructure, as you mentioned, a figure in Dominican Republic that we're going to come in in the following month. And you mentioned divestments. Are these divestments for the second half of 2024, or will that be in 2025? And thanks to this, I don't know whether you can give us any visibility on the net debt regarding 2024, because the increase in this H1 is quite significant, and it surprises the British need. And if we have visibility of the things you talked about, for example, we expect it to finally close during this half of the year. And other times, if you have any figures in mind that could serve as a guide regarding net debt at the end of the year, that would be very useful. And secondly, regarding capex, you said that there's an extraordinary capex, let's say, or a growth capex of 20 million. But in the annual accounts, I can't see the current figure because it's a very high figure. in the investment line. And I'm not sure if that's it, or whether it's included in something I don't know about. So I'd like to have some visibility as to whether this capex growth is going to be repeated in phase two. In other words, will it be 4 million? How much is recurrence as the usual 40, which it was a total of 80 million capex, or if the other figures to have a bit of visibility. And finally, going a step further, and what my colleague Enrique just said. Last year, with the presentation of the strategic plan, you estimated in a litter of 150 million for the year, which wasn't reached in the end because of greenhouse, but theoretically it was reached. And although it's difficult, obviously, to make estimates, do you currently think that those 115 million can be reached on an additional level for this year? bearing in mind that we have over 70 in H1. And we've mentioned speed up in this second half. And finally, can you give us a bit more color on the famous subject of the agreement with the industrial partner in Europe? That would be more than welcome to shed a little bit more light, because in the end, we've been talking about this almost a year. And logically, the sooner we know something, the better for the company and for everyone. Thanks. Well, I'll answer the questions. I'm sure I'll be held by Patricia. I'm not sure I wrote it all down. You talk about the Dominican Republic and the infrastructures. Yes, in August and September we'll be connecting Washington capital 23 at Lucilla and an additional project that we'll start to build in the month of September. And you know that we are a facilitator, we're not paying as being an ITP and that's in the process. It's in the process in a very effective way, I think in the Dominican Republic, being a partner of ours with the majority stakeholder we could consider of up to 100% to acquire the TV that would turn the buyer into the leader in the Dominican Republic and would also be very well positioned for everything that's coming next year. And there are going to be more tenders or PPAs. So we're not going to give concrete figures on net debt, obviously. But we do see a significant contribution in the generation of operating cash flow. And we feel that these operations can give us a different picture to what we have now in June. Which, as Patricia said, we have all the inorganic investments that carried out and paid for. And basically, we have the acquiring the control of 100% of the area in the renewable area. And what we did want to show is that you'll see that 25% of the purchase is going to significantly cover the payments that we've made, both current and future payments. So I think that there's nothing that makes us think in Dominion in relation to these operations. We see a positive second half to tackle that figure of 150 we gave. Let's see. And certainly the day we don't see it, we'll see. The day we don't see it is because we're optimistic and we do see it. You were talking about the growth cap accent. You've also seen some investment in working capital. And in Italy, we have what we pay for developments and so forth. and then we have IFRS 16 in the half that means a net increase of 6 million. And what I would say is that our capex, let's say, we've closed the replacement capex with around 8%. So we have a stronger financial discipline than we did in the last two or three years. working on the CapEx and then some colour on the agreement with Europe. As far as I can say, again, we are more focused on finding a partner for the Italian portfolio, because if the Italian portfolio this year is to build four projects, two in Sicily, two in Vatelitata, that construction doesn't... isn't included in the account for margins because they'll be eliminated. So we feel that during the second half, we have to find a solution between three plausible options we have on the table. And we are assessing all three and perhaps making more progress with one of them. And that's as much as I can say. You'll see it and I think it will also be seen in the second half of the year But like everything else, the operations are on the table. There are names to them. And all we have to do is materialize them. I don't know if I forgot something out of the three or four questions. No, yes, you've covered it all. Yes, thank you. Thank you. That was Perino from Santander. Next. Good afternoon. Thank you for taking my questions. The first one, a follow-up to the answers you've just given on the partner in Europe. In other words, could you go to a solution of not looking for a partner for all the operations in Europe and look for solutions country by country, a partner in Italy, perhaps to have a partner in Spain? Would that be more possible than having a global partner like you have now in Madagascar? especially if you're slowing down some projects because they will find a global partner in Europe. If you could clarify this a bit further. And then the second question I wanted to ask you is related to working capital. In the slide show, you compare the summarized balance sheet of December 23 versus June 24. And that's where you talk about those 40 million euros in working capital that you attribute partly to the divestment of the phone house stores. And my question is, Dave, you're comparing June versus December. Most of those store divestments had been carried out in the second or third quarter last year. So I wonder if that adjustment in working capital related to those stores shouldn't have already been included in the balance sheet snapshot we gave in December 2023. And another question, if the new project you're talking about, distribution areas and electric power station in Latin America, so what the effect is on investments? Thank you, Carlos. The final question. Those Latin American projects are more export trade agencies. It would be one of the 360 projects where we usually carry out and which are collected in Europe. So it wouldn't need equity. The partner in Italy, as you say, I think that last year when we filled with Japan renewables, that was a case. But what we're seeing is that it's very difficult to cut to a deal to maximize value if you close looking to the future. There are so many macro uncertainties and therefore in Europe this would be specifically for the project this year and maybe next year. And Mikko was saying we're talking about simplifying the company and this increases the appetite and maximizes the value threshold. So yes, you're on the right track and more by natural focus instead of covering the whole portfolio initially. We have to look at it. We have to look at the various European geographies and there will be opportunities for PTAs, audits and private opt-in strategies, etc. But we'll be looking much more at the details. The working capital issue you mentioned, this was, yes, September, October last year. But in the end, because of our central purchasing structures, etc., we've felt this more in the first half. So all that reduction of sales points, et cetera, even the great effect of the renting plan as a service means that we closed working capital levels with that negative recurrence in December 23. And now we've basically deleveraged it during this month. Thank you. If you have questions on the chat, if you'd like to leave any more questions, this would be the time before finishing. Martina has two questions. Are the forecasts for the 2024-26 plans maintained despite the difficulties of the past and also whether you've considered any short-term sales to reduce debt? I'll answer the first question. I also mentioned it when I read the report. The forecasts for the 2024-2026 plan are still steady, although this first half of 2024 is more demanding, 5%, and both in 2024 and during the rest of the plan, the goals we set can be maintained And the second question was a sales operation to reduce debt. So you know that we are in a process of selling non-taxonomical services. Let's say there was news in the press, negotiations have paid progress. We have a project on the table and the end is not to reduce debt, but to simplify the company and move towards the plan for a sustainable services company. Yes, that's on the table, and I believe we'll be looking at it in this quarter. The goal isn't to reduce the debt, but obviously it will have an impact as long as we carry out some acquisitions in sustainable services. And we feel very fast, what capex can we expect for the entire year? Well, the recurrent role I mentioned earlier, we have more adjusted capex levels than previous years, so a maximum of that capex level and in the growth and expansion capex, I think that what we've had in the first half of the year could be extrapolated to the entire year. Any further questions? Well if you have no more questions, thank you very much.