Acquisition of EGF November 14, 2014

Transcription

1 Acquisition of EGF November 14, 2014

2 Framework of the transaction Acquisition of EGF Deal: Privatization of 95% of EGF (remaining 5% were attributed to employees) Price: 147 M for 95% stake of EGF (includes exercise of put option by municipalities) Conditions: Deal is subject to the Portuguese Competition Authority's non-rejection Closing: Deal expected to be concluded in first half

3 Description of EGF

4 Description of EGF EGF overview EGF is the market leader in Portugal in waste treatment and recycling activities, which are regulated EGF is present in 174 municipalities and serves around 6.4 million inhabitants, which represents a 68% market share in municipal solid waste (MSW) treatment business 65% of EGF revenues derived from resilient sources: regulated revenues for MSW treatment and renewables FiT 1 framework 1 Feed-in tariff 4

5 Description of EGF EGF overview Geographic presence Concessions overview 5

6 Description of EGF Portfolio of services Collection Treatment/ Recovery/ Disposal Products Collection in ecocenters Transfer Stations Organic recycling Energy Bottom ashes Urban Waste Organic Waste Selective collection of biodegradable waste Selective collection of degradable materials Mechanical treatment Sanitary landfills Sorting centers Energetic valorisation Organic compost Refuse-derived fuel Glass, plastic, metal and paper Incineration processes Biogas valorisation Others (wood, oils, etc.) EGF is present in the whole waste management services value chain 6

7 Description of EGF A Regulated Asset Base (RAB) regulatory model Currently, solid waste management activities are remunerated on a cost plus basis A new regulatory framework based on a return on RAB will start in 2016, with regulatory periods of three to five years Return on RAB for each period is set by the regulator 1 and is based on - a WACC formula Framework allows for incentive mechanisms, such as opex and revenue optimization Regulatory framework 1 Entidade Reguladora dos Serviços de Água e Resíduos (ERSAR) 7

8 Description of EGF Historical financial data ( M) Resilient turnover Strong Ebitda margin in the last three years (over 38%) Net debt/ebitda ratio of 2.4x in

9 Strategic Rationale of the acquisition

10 Strategic Rationale of the acquisition Acquisition of a Portuguese market leader highly complementary with SUMA SUMA is the market leader of the privatized waste collection and street cleaning (WCSC) SUMA has a share of 50.5% in the private market of WCSC, serving more than 50 municipalities The private sector serves 44% of the Portuguese population Waste treatment EGF is the market leader in the regulated market of waste treatment segment. Following the transaction SUMA and EGF will cover all regions in Portugal SUMA EGF CESPA Focsa Public entities 10

11 Strategic Rationale of the acquisition Long term concessions will allow for more stable cash-flows of waste management segment All concessions have a 20 year length (until 2034) Strong operational free cash-flow Annual capex of 30 M in first two years, will decrease to c. 15 M in the following years Utility sector profile, with resilience to economic cycles 11

12 Strategic Rationale of the acquisition EGF: an attractive company with high potential growth Asset quality: high quality waste treatment infrastructure Scope for upside: operational improvements will allow for efficiency gains and synergies Growth potential: high expectations for increasing turnover due to the new goals aiming at convergence to European Standards until 2020 in terms of recycling and reutilization Growth drivers: more environment-friendly waste destinations and increased weight of value added waste treatment forms, such as sale of energy and recycled materials 12

13 Strategic Rationale of the acquisition EGF and SUMA together, have scale to gather international market opportunities in a strong position EGF and SUMA serve 3.8 million people in waste collection and treat more than 3.7 million tons of waste SUMA intends to increase its presence in Africa and LatAm countries and will benefit from integration with EGF, as it allows the company to qualify for tenders in large cities EGF s track record on energetic valorisation will be an important credential in international tenders 13

14 Strategic Rationale of the acquisition Mota-Engil s integrated management will allow synergies Integration of redundant activities Acceleration of internationalization Sharing of innovation and developing activities Economies of scale in procurement 14

15 Transaction Structure & Fundamentals

16 Transaction Structure & Fundamentals Consortium structure 61.5% 38.5% 80% 10% 10% Suma Tratamento 100% Consortium between SUMA and its shareholders acquire EGF in the context of its privatization SUMA holds 80% of Suma Tratamento, and MEAS and Urbaser hold 10% each 16

17 Transaction Structure & Fundamentals Transaction price Implicit figures of transaction Acquisition price per share (Price of EGF shares) 11,200,000 Shares (Shares representing 100% of EGF 1 share capital) Equity value (100% EGF) M 2 (+) Net debt M 3 (+) Minority interests M (municipalities) Enterprise value: M 1 A public offer of 5% of EGF shares for EGF workers will occur after signing, however the public tender required a bid for 100% of shares, as the bidder will have the obligation to buy the shares not acquired by workers under such public offer. 2) Excludes value of shares of municipalities/ associations of municipalities who exercised the put option. 3) Net debt as of 31 December

18 Transaction Structure & Fundamentals Transaction s financing At consortium level Non recourse MLT 1 loan of 88M Corporate MLT 1 loan of 59M At EGF level Refinancing EGF subsidiaries in 158.5M (non recourse debt) 1 Medium long term 18

19 Transaction Structure & Fundamentals Acquisition and sector multiples Shareholder IRR: 9.4% Recent transactions multiples EV EV/SALES EV/EBITDA EV / SALES EV / EBITDA PER Gruppo Waste Italia (32.72%) - IT 185.3M Veolia ES Solid Waste, Inc. (100%) - USA 1,556.3M 2.5 n.a Neales Waste Management Ltd (100%) - UK 11.6M WCA Waste Corporation (100%) - USA 329.5M Donarbon Limited (100%) - UK 58.0M

20 Transaction Structure & Fundamentals Environment & Services (E&S) division (after transaction) Full consolidation of EGF from 1H15 onwards Turnover of the E&S division would have been c. 565 M in 2013 E&S s division Ebitda would have risen to 142 M, with waste management representing 55% of the total 2013 proforma Turnover Ebitda mg Turnover Waste management Logistics Water Energy and maintenance Waste management % Logistics % Water % Energy and maintenance % Ebitda % million euro 1 Indaqua subsidiary, which is consolidated by the equity method 20

21 Disclaimer This presentation used sources deemed credible and reliable but is not guaranteed as to accuracy or completeness. It also contains forward looking information that expresses management s best assessments but might prove inaccurate. The information contained in this presentation is subject to many factors and uncertainties and therefore subject to change without notice. The company declines any responsibility to update, revise or correct any of the information hereby contained. This presentation does not constitute an offer or invitation to purchase securities of Mota-Engil nor any of its subsidiaries. 21

22 João Vermelho Director, Head of Investor Relations Rua de Mário Dionísio, Linda-A-Velha Portugal Tel Maria Borrega Investor Relations Officer maria.borrega@mota-engil.pt Rua de Mário Dionísio, Linda-A-Velha Portugal Tel