Earnings Release 1H2015 31 August 2015
Results overview Regional segments Final remarks PAG. 2 PAG. 12 PAG. 19 Angola SADC West East 1
Key highlights Turnover reached 379 Mn, with the SADC region accounting for 53% namely Mozambique, Zambia, Zimbabwe and South Africa delivering significant growth and contributing to diversification of revenue streams EBITDAof 70Mn,withamarginof18.5%,affectedbyCapitalProjectcompletionbutsupported by an increase of profitability in Angola(21%) and by a resilient profitability in SADC(24%) Backlog of 1.5 Bn,upcompared withyearend 2014, spreadamong11countriesand withsadc and Angola representing 48% and 41%, respectively and new regions representing already 11% Capital project completion in 4Q14, in Malawi, ahead of schedule, totally replaced by new and diversified backlog Net debt, excluding leasing, reached 228 Mn, remaining stable QoQ, and the average cost of debt has come down from December 2014 Receivables in Angola showed no deterioration, despite the country s worsening macro environment Notwithstanding the persistent weakness in the prices of oil and other commodities the company has a pipeline of US$12 Bn that provides confidence for the future 2
Lower Turnover due the end of capital projects P&L ( Mn) 1H15 1H14 YoY 2Q15 YoY Turnover 379 557 (32%) 192 (41%) EBITDA 70 141 (50%) 36 (61%) Margin 18.5% 25.3% (7 p.p.) 18.6% (9 p.p.) EBIT 31 97 (68%) 14 (78%) Margin 8.2% 17.5% (9 p.p.) 7.1% (12 p.p.) Net financial income (3) (23) 86% 0 n.m. Associates (0) (0) 63% (0) n.m. EBT 28 74 (62%) 13 (72%) Net income 19 62 (70%) 12 (70%) Attributable to: Non-controlling interests 13 8 54% 8 154% Group 6 54 (89%) 4 (89%) Turnover down 32% YoY to 379 Mn driven by Angola and SADC activity slowdown, as Nacala Corridor Project ended in 4Q14 EBITDA margin of 18.5% affected by capital project completion, but supported by increase of profitability in Angola and resilient profitability in SADC Non-cash costs, mostly related to depreciation of fixed assets Net financial income reflects positive impact of 7 Mn related with foreign exchange gains Effective tax rate of 33%, with holding costs starting to be allocated to the regions and increase of net income in Angola in 2Q15 Netincomeattributable togroupof 6 Mn negatively impacted by higher minorities in Angola 3
EBITDA of 70 Mn P&L breakdown ( Mn) 1H15 1H14 YoY 2Q15 YoY Turnover 379 557 (32%) 192 (41%) Angola 159 225 (29%) 91 (27%) SADC 201 322 (38%) 90 (54%) West Africa 7 9 (20%) 3 (23%) East Africa 8 0 n.m. 4 n.m. Other and interc. 4 1 n.m. 3 91% EBITDA 70 141 (50%) 36 (61%) Margin 18% 25% (7 p.p.) 19% (9 p.p.) Angola 33 42 (21%) 20 (4%) Margin 21% 19% 2 p.p. 22% 5 p.p. SADC 49 93 (47%) 26 (61%) Margin 24% 29% (4 p.p.) 29% (5 p.p.) West Africa 0 (0) n.m. (0) 146% Margin 1% (2%) 3 p.p. (8%) (6 p.p.) East Africa (1) (0) n.m. 0 n.m. Margin (12%) n.m. n.m. 8% n.m. Other and interc. (11) 7 n.m. (11) n.m. Angola project execution pace with some slowdown in 1Q15 due to macro context, although project s profitability has increased SADC activity benefited from significant growth in Mozambique, which represented 49% of the region s turnover and increase of the activity in new regions Profitability in SADC remained strong at 24%, notwithstanding decrease of activity as Nacala s Corridor project ended in 4Q14 Acceleration of turnover in West and East Africa regions EBITDA impacted by the increase of activity in new regions, but still with below average margins EBITDA of other and intercompany negatively impacted by changes in forex (Euro/US$) on BS items 4
Capital projects with no contribution in 1H15 Capital projects, namely the Nacala Corridor project had a significant contribution both to Turnover and EBITDA evolution in the last two years Excluding capital projects, turnover would have increased by 8% and profitability has been resilient Company continues to pursue capital projects, as these are a key driver for Company s long term growth in the region Turnover ( Mn) EBITDA ( Mn) 436 107 557 207 379 0 115 40 141 68 70 0 1H13 1H14 1H15 1H13 1H14 1H15 Capital projects contribution 5
Increasing backlog Backlog at 1.5 Bn, up 80 Mn from December 2014 as new contracts were awarded in 1H15, correspondingtoabacklogtoturnover 1 ratioof1.73x South Africa and Rwanda added to the portfolio, reflecting the efforts to both diversify and gather opportunities in new countries West and East regions already contributed to 11% of total backlog New projects awarded after the close of the 2Q15 amounting to c. 50 Mn in Malawi and São Tomé and Príncipe, related to road infrastructures Backlog by region Backlog evolution ( Mn) 5% 5% 41% 1,480 1,504 48% Angola SADC West Africa East Africa 2012 1Q13 1H13 9M13 2013 1Q14 1H14 9M14 2014 1Q15 1H15 1 Last twelvemonths 6
Capex is key to support growth in Africa Total capex of 41 Mn, of which 87% allocated to SADC, namely to support new contract awarded in Mozambique in the mining sector for Vale Maintenance capex still represents 60% of total capex mainly due to Nacala Corridor project completion in 4Q14 and subsequent repair of equipment, enabling its future usage and higher return Actions being taken to enhance project management efficiency, with focus on optimizing the invested capital and increasing fixed assets profitability Capex by region Capex by nature ( Mn) 3% 11% 41 36 87% Angola SADC West and East 1H15 Maintenance 1H14 Growth 7
EBITDA and working capital impacted cash flow Cash-flow ( Mn) 1H15 1H14 Net debt start position 1 145 149 EBITDA 70 141 Change in working capital (103) (69) Operating cash-flow (33) 72 Maintenance capex (24) (30) Net financials (10) (19) Corporate tax (9) (12) Free cash-flow bf growth capex (77) 11 Growth capex (16) (6) Financial investments (3) 0 Dividends 0 (1) Repayment of finance lease contracts (14) (12) Effect of exchange rates 28 1 Change in debt position 83 8 Lower activity in the period impacted the generation of operating cash flow Change in working capital was driven bothbyseasonalityandstartupofnew projects without pre-payments Cash flow also impacted by capex in the period Solid financial structure with net debt/ebitda of 1.2x, without leasing Net debt end position 1 228 157 Net debt/ebitda 2 1.2x 0.6x 1 Excluding leasing 2 Last twelvemonths 8
Working capital well controlled in 2Q15 Balance sheet ( Mn) Jun.15 Mar.15 Dec.14 Jun.-Dec. Fixed assets 375 363 354 21 Financial investments 64 51 47 16 Long term receivables 23 25 23 0 Working capital 375 394 274 101 837 833 698 139 Equity 475 483 431 44 Provisions 39 42 40 (1) Long term payables 95 81 82 14 Net debt 228 227 145 83 837 833 698 139 Invested Capital 702 710 576 127 Increase in fixed assets, including goodwill, driven by capex in the period Working capital decreased QoQ, on the back of the favourable evolution of receivables, namely in Angola Equity in 1H15 positively impacted by both net income of 19 Mn and foreign exchange differences of 32 Mn and negatively impacted by the dividend distribution to noncontrolling interests in Angola Net debt, without leasing, stable QoQ at 228Mn 9
Net debt with leasing up QoQdue to capex Net debt, including leasing, reached 302 Mn, from which leasing accounted for 74 Mn M/Ltermdebtof 150Mn,correspondingto40%oftotalgrossdebt,excludingleasing Averagedebtlifeof1.97years Averagecostofdebtof8.4%,downfrom8.8%inDecember2014 Comfortable liquidity position of 175 Mn, from which c. 31 Mn in undrawn credit lines 10
Results overview Regional segments Final remarks PAG. 2 PAG. 12 PAG. 19 Angola SADC West East 11
Towards increased diversification Backlog: 82 Mn Turnover: 7 Mn EBITDA: 0 Mn Backlog: 79 Mn Turnover: 8 Mn EBITDA: - 1 Mn Backlog: 615 Mn Turnover: 159 Mn EBITDA: 33 Mn Backlog: 729Mn Turnover: 201 Mn EBITDA: 49 Mn 12
Monitoring Angola evolution Luanda s road rehabilitation works Difficult macro context due to decrease in oil prices might impact future growth in the country in the short term No signs to date of deterioration in receivables, with invoices being paid on a recurrent basis Recent Luanda s road rehabilitation contract ongoing according to plan, which should contribute to acceleration of activity in 2H15 Increase in profitability related with higher perception of risk and less competition in the market Backlogof 615Mnin2Q15 13
Strengthening SADC presence Maputo s Platinum building works, Mozambique Mozambique, Zambia and Zimbabwe showing a significant growth in terms of activity, allowing the diversification of revenue streams Backlog of 729 Mn with new countries reinforcing the region s portfolio Mozambique contributing significantly to backlog, with 304 Mn, which includes the recent railway project award from Vale Major ongoing projects include the mining contract and the rehabilitation of Cuamba-Lichinga railway both from Vale and the rehabilitation of Sena Corridor in Mozambique, the Hwange Colliery mining contract in Zimbabwe and the rehabilitation of the Great East Road in Zambia Future pipeline expected to be driven by Mozambique, Zambia and South Africa 14
Major opportunities in West and East regions Road works, São Tomé and Príncipe West and East regions account for 11% of backlog, namely Ghana, São Tomé and Príncipe, Cape Verde, Rwanda and Uganda Sundance s project MoU in Cameroon ending in December 2015, but Company might still be somehow involved Kigali s airport works, Rwanda Major potential opportunities in two additional countries, namely Kenya and Uganda, related to road and energy infrastructures, respectively 15
Pipeline remains strong, but timing is uncertain Project pipeline amounts to c.us$12 Bn, already excluding the Sundance contract Geographical diversification, with major opportunities to grow in West and East Africa The majority of the pipeline is related to infrastructure and power projects Good visibility for contract wins related to a dry port in Malawi, two dams in Zambia and Uganda, and roads in Kenya Pipeline by region Pipeline by client sector 1% 66% 22% 11% 42% 9% 3% 29% 17% Angola SADC West Africa East Africa Const./Real Estate Infrastructure Power Logistics Infrastructure mining 16
Actions in place to enhance efficiency Optimise invested capital Optimise capex vs opex management Align projects cash-inflow with opex cash-flow Strengthen pay-per-use basis of equipment and increase their fleet Increase adaptability Increase flexibility Share best practices across the group Anticipate market trends and ability to modify supply networks Forecast program cost saving exceed expectations Increase efficiency Optimise supply chain management between regions and projects Share information related to expected demand with suppliers in order to reduce delivery times and capital invested 17
Results overview Regional segments Final remarks PAG. 2 PAG. 12 PAG. 19 Angola SADC West East 18
Final Remarks The Company has always regarded 2015 as a transition year and expects the turnover to be slightlybelow 1BnandEBITDAmarginofc.20% Focus on cash-flow generation, with close attention to Angola s evolution Actions in place to improve operations efficiency and flexibility Pipeline of US$12 Bn, across all regions, supports expected growth ahead Good visibility in several projects in the pipeline, including capital projects 19
Disclaimer & other information Certain statements made in this document contain forward-looking statements which relate to the Group s results of operations, business and prospects. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance which may differ materially from any future results expressed or implied from such forward-looking statements. The forward-looking statements contained in this document speak only as at the date of this document. Subject to any obligations under applicable law, Mota-Engil Africa undertakes no obligation to update publicly or to review any forwardlooking statement, whether as a result of new information, future developments or otherwise. The Group s pipeline and backlog is based on the beliefs of Mota-Engil Africa, as well as the assumptions made by and information currently available to Mota-Engil Africa. Although Mota-Engil Africa believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure you that such expectations will prove to be correct. The financial information presented in this document is unaudited. 20
João Vermelho Director, Head of Investor Relations Maria Anunciação Borrega Investor Relations Officer Email: jvermelho@mota-engil.pt Email: maria.borrega@mota-engil.pt ir@mota-engil.com Rua de Mário Dionísio, 2 2796-957 Linda-A-Velha Portugal Tel. +351-21-415-8671 REGISTERED OFFICE AFRICAN HEADQUARTERS