PRESS RELEASE International construction revenues account for 70% SACYR INCREASES ITS INTERNATIONAL BUSINESS AND EARNS 83 MILLION EUROS TO SEPTEMBER The order book grows 20% Sacyr Industrial's portfolio soars 86% Madrid, 13 November 2014.- The net profit attributable to the Sacyr Group in the first nine months of 2014 amounted to 82.6 million euros, slightly higher (+3.1%) than the 80.1 million euros of last year, which is a significant advance after the sale of property assets contributed 47 million euros to net profit in 2013. This positive result confirms the group's good business performance and ratifies its appropriate strategy of focusing on its core businesses (construction, infrastructure concessions and services) and its new industrial division, opening new international markets, reducing costs and debt, and improving profitability. Sacyr applied the new IFRS 11* accounting standard, which led to lower turnover, EBITDA, portfolio and debt, but had no impact on net profit. The gross operating profit (EBITDA) totalled 277 million euros; considering the divestments made, profitability remained stable with a gross margin of 13.8%. Therefore, the group achieved its objective of maintaining profitability despite the drop in business operations, above all in Spain. The highlights in the year have been the successful monetisation by Repsol of the Argentinian bonds as compensation for the expropriation of YPF and of its stake in the Argentinian state-owned oil company. Sacyr received an extraordinary dividend of 1
122 million euros which Repsol distributed in that transaction and has used it to redeem its debt. Through September, turnover amounted to 1,978.6 million euros (down 2.4%) due mainly to the ongoing deceleration of construction operations in Spain, Testa's smaller lettable area as a result of divestments, the completion of two desalination plants and the impact of the recent regulations on renewable energies and on electricity prices. In this period, the Panama Canal expansion works were affected by the negotiations with the client and the nationwide strike in that sector. The change in consolidation as a result of IFRS 11 has lowered the weighting of the international activity in the turnover and portfolio; despite this, the group continued its international expansion, which now accounts for 46% of revenues. By geographical area, 31% of international turnover was in Chile, 25% in Angola, 11% in Portugal, 8% in Italy and the rest mainly stems from activity in Brazil, Togo, Australia, Bolivia, Colombia, Mexico, Peru, Panama, Algeria, Ireland, Cape Verde and Mozambique. The Group still maintains a strong future income portfolio with 26.736 billion euros, based mainly on the most recurring businesses: Sacyr Concesiones accounts for 43% of the total, and Valoriza 33%. 44% of the total portfolio stems from international activity. In the construction business, this percentage amounts to 83% due to the large amount of tendering activity taking place outside Spain; in the concession activity, this amounts to 45% of its international order book. The Group continues to devote considerable efforts to strengthen the balance sheet. Therefore, the Group's net financial debt amounted to 6.298 billion euros at 30 September, i.e. 344 million euros lower than in December 2013. Corporate debt fell by 8% to 293 million euros in the first nine months of 2014. The businesses' debt has been perfectly structured since 90% is associated with financing very long-term projects. After completing its balance sheet consolidation phase, Sacyr boosted the shareholders' equity by 166 million euros through a capital increase of 36 million shares, each with a par 2
value of 1 euro and a subscription price of 4.58 euros per share, which was fully subscribed. It also successfully registered an issue of convertible bonds for an amount of 250 million euros. The aim of these operations, for a total amount of 416 million euros, is to obtain additional funds for investment and boost the core business lines, mainly infrastructure concessions and industrial construction, both of which are priorities within its international expansion strategy. BUSINESS PERFORMANCE Construction (Sacyr Construcción + Somague).- Revenue in this area reached 1.124 billion euros, up 3% as compared to the first nine months of 2013, due mainly to strong international activity, which soared 38.8% and now accounts for 70% of turnover, compared with 52% a year ago. The EBITDA margin remained at good levels: 5.9%, wider than in the first nine months of 2013. The order book expanded by 20% to 5.265 billion euros and evidences the wise strategy in international contracts, which account for 83% of the total portfolio. The international order book rose by 25% in the first nine months of 2014 and includes major awards in the third quarter such as railway construction work in São Paulo (Brazil) for 490 million euros and in Guadalajara (Mexico) for 95 million euros. The final agreement with the Panama Canal Authority (ACP) was signed on 4 August. At present, over 80% of the work has been completed and the 16 gates have already arrived in Panama before schedule; moreover, the work prior to their installation is already being carried out. During the year, the company obtained other contracts: in Angola for 325 million euros, two hospitals in Peru for 81 million euros, the second phase of the Costanera Norte road in Chile for 175 million euros, the new Coquimbo town council in Chile for 20 million euros, and the Almúdevar reservoir in Huesca (Spain) for 90 million euros, among others. Infrastructure concessions (Sacyr Concesiones).- In the first nine months of 2014, Sacyr Concesiones' turnover amounted to 88.8 million euros, 3.7% less than in the same period of 2013, due to the sale in March 2014 of 49% of the hospitals in Parla and Coslada. 3
EBITDA amounted to 59 million euros, and the EBITDA margin remained at good levels: 66.4%. The total turnover was 302 million euros (+33.2%) due to the higher contribution from construction revenue. In January this year, a consortium in which Sacyr Concesiones jointly participates was awarded the tender for building and operating the Américo Vespucio Oriente (AVO) city motorway in Santiago (Chile), with an estimated investment of 710 million euros. Since the end of the third quarter of 2014, Sacyr Concesiones has completed the financing for the Antofagasta hospital in Chile and has put into operation three months ahead of schedule the first section of the 31 kilometres of the access roads to Iquique in Chile. Services (Valoriza).- Through 30 September 2014, Valoriza reported turnover of 669.8 million euros, a decrease of 11.1% on the same period of 2013. EBITDA amounted to 53 million euros in June 2014 (-32.3%) due to the impact of the new regulations on renewable energy, the lower construction activity of the desalination plants, and the sale of some water concessions in Portugal. Revenue by area was as follows: Environment reported sales of 220.7 million euros; Water, 112.1 million; Multi-services, 205.9 million; and Industrial, 131.1 million. Valoriza's future income portfolio exceeds 8.721 billion euros, 25% of its revenue coming from abroad. As a result of Sacyr Industrial's major tendering activity, its international sales have grown by around 14% and its order book has soared 86% in the first nine months of the year to 2.375 billion euros. The highlights in the first nine months of the year were as follows: Sacyr Industrial was awarded a contract to build a cement plant in Bolivia for 180 million euros and electricity infrastructure in Mexico for 12 million euros; Valoriza Agua obtained contracts in Asturias and Cantabria for more than 20 million euros; Valoriza Servicios a la Dependencia will manage 6 day centres in La Rioja for almost 6 million euros and the home care services in Guadalajara for 3.5 million euros; Valoriza Facilities signed maintenance and/or cleaning 4
contracts for more than 45 million euros; and Valoriza Servicios Medioambientales obtained upkeep and maintenance contracts for more than 50 million euros. Property rentals (Testa).-Testa s turnover in the first nine months of the year was 140.7 million euros, and EBITDA was 110.9 million euros, lower than the figures for the same period in 2013, largely due to the smaller lettable area. The EBITDA margin is 76% and the occupancy ratio in Testa buildings is 96%, virtually full occupancy. During the period, Testa completed the divestment of 32% of its stake in Preim Defense 2 (12% in June and the remaining 20.1% in September) for a total amount of 64 million euros. It also sold a let residential building in calle Conde de Xiquena, 17, Madrid, for 7.4 million euros and has assigned the right to the surface area of a nursing home in Madrid for 13 million euros, obtaining capital gains in both transactions. * The IFRS 11 accounting standard entails significant changes to Sacyr's financial statements, as its stakes in joint ventures will be equity accounted instead of proportionally consolidated. Thus, the group's companies will be equity accounted under the heading company results by equity accounting. This entails a reduction of the turnover, EBITDA, portfolio and debt, but has no impact on the net profit. 5