Results Presentation 9M 2019 1
9m 19 HIGHLIGHTS OF THE PERIOD REVENUE STABLE SOUND GROWTH PROFITABILITY FINANCIALS Increase close to 7.4% EBIT Margin Good Cash Flow 10% in euro terms generation Comparable interannual Low variation of margins despite Constant operating cash flow periods of IAS 21&29 application the strong Forex effect generation and resistant to adverse FX Organic growth close to 8% Margins mainly affected by supported also by strong M&A, mix effect and Australia S&P BBB Stable Credit Rating inorganic activity renewal
P&L % Consolidated Results 9M 2018 9M 2019 Variation Sales 3,098 2,829 9.5% EBITDA 332 378 +9.5% 14.0% Margin 11.7% 12.2% -5.4% 3,098 +7.1% Depreciation (90) (129) EBITA 249 242 3.2% +7.8% 2,829 Margin 8.6% 8.0% Amortization of intangibles (18) (21) EBIT 224 228 2.2% Margin 7.9% 7.4% 9M 2018 Org Inorg FX (1) 9M 2019 13 (45) Financial result ! Profit before tax 237 183 (22.7)% Margin 8.4% 5.9% • Excellent growth in local currency Tax (82) (65) close to 15% Tax rate 34.7% 35.7% • Comparable IAS 21&29 impact Net Profit 155 118 (23.9)% • Profitability positively affected by Minority Interest 39 35 recent divestments Consolidated Net Profit 116 83 (28.3)% Earnings per share 0.19 0.14 (Euros per share) (1) Includes exchange rate effect and IAS 21 & 29 3 Amounts in Eur. millions - 2018 & 2019 figures have been elaborated applying IAS 21 & 2 9, additionally 2019 figures also include the application of IAS16 -
Consolidated Revenues by Region and Business Line Revenues by Region Revenues by Business Line +1.5% +18.8% +123.4% +18.0% +12.2% +16.0% +9.1% +7.9% +9.8% +1.5% 1,555 +123.5% 1,425 +10.3% 1,535 1,422 1,337 1,316 1,297 1,217 246 205 186 110 Europe Ibero-America RoW Cash Security Alarms 9M 2018 9M 2018 Growth in Local Currency ( 1 ) % 9M 2019 9M 2019 Growth in Euros % (1) Includes organic growth and acquisitions Amounts in Eur. millions - 4
Consolidated EBIT and Cash Flow Generation EBIT Cash Flow Generation +2.2% +15.9% 228 184 224 159 49% 7.9% 7.4% 48% 9M 2018 9M 2019 9M 2018 9M 2019 EBIT Margin % Cash/EBITDA EBIT Operating Cash Flow Amounts in Eur. millions 5
Results by Business Line Cash 1 Security 2 Alarms 3 6
PROSEGUR CASH Revenues Profitability New Products +7.3% +420 bps +9.8% 213 198 16.0% +6.3% -8.2% 1,337 11.8% +11.7% 8.7% 1,217 16.3% 15.9% 6.4% 9M Org Inorg FX (1) 9M 9M 2018 9M 2019 FY 2016 FY 2017 FY 2018 9M 2019 2018 2019 EBIT Margin ! EBIT Continuous improvement of • • New products reach 16.0% of • 18% growth in local currency total sales in 9M 2019 stand-alone quarterly margins • 9.8% growth in Euro terms Divestments in South Africa and • Sales of NPs grew by 52% in • • Positive contribution in all euros fueled by Smart Cash, France partially compensate markets except Australia AVOS and ATMs the negative effect FX (1) Includes exchange rate effect and IAS 21 & 29 7 Amounts in Eur. millions -
PROSEGUR SECURITY Revenues Profitability (2) New Products (3) +420 bps -12.5% +9.1% 39 27.2% 34 1,555 -3.1% 23.0% +8.7% 20.0% 17.0% 2.7% 2.2% 1,425 +3.5% 9M Org Inorg FX (1) 9M 9M 2018 9M 2019 FY 2016 FY 2017 FY 2018 9M 2019 2018 2019 EBIT Margin ! EBIT • Growth in local currency above • Increased penetration of • Profitability affected by the 12% “Integra” Solutions reaching IAS21&29 impact in Argentina, 27.2% of current client portfolio integration of acquisitions in USA • Strong inorganic growth close to 9 % driven by USA and reorganization in France • Spain leads growth (1) Includes exchange rate effect and IAS 21 & 29 (2) Profitability in Security excluding Overhead Costs - 8 Amounts in Eur. millions - - (3) Excludes USA
PROSEGUR ALARMS Installed Base Revenues ARPU +10.3% +3.6% +13.6% 559 38 38 +0.0% 547 36 539 36 36 -5.7% 205 499 +16.0% 424 186 2016 2017 2018 9M 9M 9M Org Inorg FX (1) 9M 2015 2016 2017 2018 9M 2018 2019 2018 2019 2019 • Installed base increase of 3.6% Growth of more than 10% in Euros ARPU of € 36 per month • • over the same period of 2018 and 16% in local currency maintained despite the strong adverse FX. • Affected by both macro and Duplicating the average global • strategic focus on quality of client growth of the sector Penetration of “Smart” Platform • portfolio exceeding 23% of the installed base Amounts in Eur. millions - Installed base in thousands of connections - ARPU in Euros - (1) Includes exchange rate effect and IAS 21 & 29 9
Partnership for the Spanish alarm market (1) + Excellent “Best in class” Attractive opportunity Alliance valuation Low market 6 million potential 50% of the Spanish penetration level clients business valued in 300 M Spain represents close to 40% of The combination of the largest Out of a total of nearly 19 million Prosegur's total alarms telephone operator in the households, only 9% have connections country, and the leading private currently a professionally security provider with best in monitored alarm Valuation in the upper range of class reputation and quality of the current industry benchmark Industry with annual growth service exceeding 5% 10 (1) Operation is pending approval by market regulatory entities
Financial Information Consolidated Cash Flow 1 Financial Position 2 Balance Sheet 3 11
Consolidated Cash Flow 9M 2018 9M 2019 Cash Flow Generation +15.9% 332 378 EBITDA 184 159 37 4 Provisions and other non-cash items (96) (83) Tax on profit (ordinary) 49% Changes in working capital (92) (103) (22) (11) Interests payments 48% 159 184 Operating cash flow (140) (143) Acquisition of property, plant & equipment 9M 2018 9M 2019 (54) (124) Payments for acquisitions of subsidiaries % Cash/EBITDA Dividend payments (92) (82) Operating Cash Flow (2) 13 Others (288) (336) Cash flow from investing / financing ! (129) (151) Total net cash flow • Constant improvement in operating cash flow generation (252) (425) Initial net financial debt • EBITDA to cash conversion ratio (129) (151) Net increase / (decrease) in cash close to 50% Exchange rate (77) (27) (458) (603) (1) Final net financial debt (1) Excludes IAS 16 debt Amounts in Eur. millions - 12
Financial Position Net financial Debt • • Increase of 178 millions of euros (1) vs. December 2018, deriving mainly from inorganic growth initiatives. 1.5x 0.7x • Average cost of debt: reduction of c. 30 basis points vs. the same period in 2018 ( 1.4% vs. 1.7%) Rating. Confirmation by S&P of BBB rating, stable Outlook • (October 9, 2019) 1.7% 1.7% 1.4% 1.4% 1.4% 109 95 78 54 61 603 594 581 458 425 127 133 132 IAS 16 Debt -3 -15 -84 -91 -101 Sep. 2018 Dic. 2018 Mar. 2019 Jun. 2019 Sep. 2019 Average Cost of Debt Deferred Payments Net Financial Debt Treasury Stock (2) Amounts in Eur. millions - (1) Excludes IAS 16 impact - (2) Treasury Stock of Prosegur and Prosegur Cash at closing market price of the period 13
Balance Sheet 9M 2019 (1) FY 2018 1,721 1,967 Non-current assets 745 873 Tangible fixed assets and real estate investments 842 954 Intangible assets 133 141 Others 2,099 2,091 Current assets 76 68 Inventory 975 1,080 Customer and other receivables 1,048 943 Cash and equivalents and other financial assets 3,820 4,058 TOTAL ASSETS 1,066 1,068 Net equity Share capital 37 36 (53) (14) Treasury shares 1,013 958 Retained earnings and other reserves 69 88 Minority interest ! 1,676 1,742 Non-current liabilities 1,392 1,434 Bank borrowings and other financial liabilities • 80% of total Group debt is of 285 308 Other non-current liabilities long-term nature 1,077 1,248 Current liabilities Bank borrowings and other financial liabilities 151 358 926 890 Trade payables and other current liabilities 3,820 4,058 TOTAL NET EQUITY AND LIABILITIES 14 Amounts in Eur. millions - 2018 & 2019 figures have been elaborated applying IAS 21 & 2 9, additionally 2019 figures also include the application of IAS16
Conclusions and Final Remarks Notable growth in both local currency and 1 Euros despite the strong translational currency effect Complex macro-political environment, especially in LatAm. 2 Strong additional depreciation of currencies, stressed by hyperinflationary accounting Remarkable resiliency of the Cash business, 3 with continued margin improvement and innovation 4 Security business recovery delayed Alliance with Telefónica opens a new 5 phase for the Alarms business in Spain Stable profitability despite the adverse environment, 6 backed by excellent financial strength 15
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