ELLAKTOR S.A. Share Capital Increase
Proposed Framework & Timeline
Investors' Presentation
17th March 2021
1. ELLAKTOR Group: A well diversified Infrastructure Player
ELLAKTOR Group at a glance - a leading diversified infrastructure player
Visible, predictable, long term cash flows from well invested portfolio of critical infrastructure
Key highlightsPositionOwnership
|
t of 7 e |
Largest Concessionaire in Greece | ece |
100%
|
of |
Second largest RES producer in Greece | ece |
100%
94.4%
|
100%
One of the largest developers in Greece | ce |
55.5%
A rapidly growing portfolio of well invested critical infrastructure assets in Greece
Significant investment over the last 2 decades, establishing a high quality asset base with c. €3bn total assets 1
"One of the worlds longest multi-span cable bridges connecting Peloponnese - one of Greece's most important regions, to mainland Greece"
2017 2018 2019 2020
Legend
Attiki Odos ring road
Rion-Antirrion bridge
Moreas motorway
Aegean motorway
Olympia Odos
Alimos Marina
Car park (min 20% stake)
Wind (Operating)
Wind (Under Construction)
Small-hydro (operating)
Solar PV (operating)
1As at 30.09.2020
x#: indicates number of
wind parks
2. The Opportunity: Capitalise on the Positive Macro Outlook and Prospects
Greek Macro Outlook - "V shaped" recovery expected
Real GDP Evolution (%)
-8.2 2020e
2017a
2018a
2019a
Sources for 2020 estimate, projections:
Estimate: Hellenic Statistical Authority 1st estimate dated March 5th 2021 IMF: IMF World Economic Outlook (Oct. 2020)
• Following Greece's decade long recession, the economy showed signs of recovery in 2017, accelerating by early 2020
• The onset of COVID-19 sent the economy into a strong contraction
• The Greek State implemented fiscal and liquidity support measures exceeding €18b in 2020 partially mitigating the impact of the pandemic
• As nation-wide lockdowns are still in place, the effects of the pandemic are ongoing
• Nonetheless, the economy is expected to post robust growth in the years ahead
• Greece is expected to receive €32b from the EU Resilient and Recovery Facility, of which €19.5b relates to grants and €12.5b to loans
• In addition Greece will receive almost €40b from other medium term European programs.
2021f
2022f
• The Greek government has stated that infrastructure is one of the priority areas of public spending, which directly and positively affects ELLAKTOR Group.
• According to consensus projections, Greece is not only expected to recover lost output due to COVID-19, but to continue its growth trajectory at a faster pace
• EU funds directed to Greece are expected to be more than €70 billion over the next few years
Infrastructure investment led growth…
Planned infrastructure projects of more than €43b in the next 5 years
Composition of future projects (€43 billion) 2020 - 2026
Number of Projects by completion year (cumulative)
2020
Energy
Waste ManagementRailways
Urban railwaysMotorwaysTourism
Infrastructure investment is expected to be a strong driver for growth for Greece as they carry an economic multiplier of 1.8x
2021
2022
2023
2024
2025
2026
• Infrastructure in Greece has been severely affected by the deep recession, and infrastructure underinvestment between 2009 and 2018 has resulted in a €13b shortfall vs Europe
• Infrastructure investments have an economic multiplier of 1.8x, a significant boost to GDP growth
• Given current planning projects' completion rate is expected to accelerate from 2023
Source: PwC October 2020 infrastructure report ("Funding the Future")
… Supported by the EU Recovery Fund | The Recovery and Resilience Facility (RRF) will be a catalyst for sustainable growth
RRF Grants & Loans available to Greece (€ billion)
RRF Allocation of Grants, net of expected payments (% 2019 GDP)
Payments Horizon
10
8.8
6
5
4
3
2
1
0
-4
5.5
5.5
5.5
5.5
8
6
4
2
0
-2
2021
2022
2023
2024
2025
2026
GR
PTSKLV
LT ES CY EE IT SI MT FR BE FI IE LU AT
Source: European Commission, Hellenic Republic, NBG Securities
Source: ECB, NBG Securities
• Greece is expected to benefit significantly from the RRF, which is expected to catalyze growth and economic transformation
• The highest allocation of grants in Europe on a percentage of GDP basis
ELLAKTOR's businesses are expected to benefit significantly
The sector priorities for deployment of the RRF perfectly map onto the Group's Business Units
Source: PwC 2020 infrastructure report
3. The Rationale of Share Capital Increase (SCI)
Concessions, RES and Environment contribute the majority of EBITDA (3-year average of €220m per annum)
Revenues per BU (€m)
2018 BUs share
Construction
Concessions
RES
Environment
Real Estate
EBITDA per BU (€m)
1,857
2020 LTM BUs share
Robust & resilient to COVID-19EBITDA generation from the major growth drivers of the Group - Concessions, Renewables and Environment
2018
2019
2020 LTM
2018
2019
2020 LTM
ConstructionConcessions
RES
Real EstateEnvironmentOther
LTM: Last Twelve Months (Q4 '19 - Q3 '20)
Other
ConcessionsReal EstateConstruction - Non Core Markets & One OffsRESConstruction - Core Markets (GR & ROM)Environment
Historically Construction has been the largest contributor to Group revenue, but Group EBITDA is driven by Concessions, RES and Environment
Significant cash flow generation from long term concession contracts…
Key highlights
• The Group is the largest concessionaire in Greece
• AKTOR Concessions provides integrated and comprehensive build-operate-transfer ("BOT") services for a broad range of critical public infrastructure projects including motorway and road transport infrastructure, bridges and car parks
• Portfolio has recently been strengthened by adding the 40+10 year concession for Greece's largest marina
• Resilient financial performance through the business cycle
• Concessions segment generates a significant amount of operating cash flow every year
• Total cash and liquid assets of Concessions were at c. €260m at the end of Dec '20
Concessions Cash flow (€ m.)
2018
-69 2019
2020 est.
Operating CFInvesting CFFinancing CF
… and Renewables offtake agreements
• Second largest renewable energy producer in Greece
• 491MW of installed capacity and a further 88MW underway
• ELLAKTOR has signed a strategic cooperation framework with EDPR, Europe's second largest renewables business, for the joint development of 900MW of wind power assets. The estimated value for this joint investment, upon its full implementation, exceeds €1 billion
• RES segment generates a significant amount of operating cash flow every year
• Total cash and liquid assets of RES were at c. €30m at the end of Dec '20
RES Cash flow (€ m.)
-2 2019
2018
2020 est.
Operating CFInvesting CFFinancing CF
Medium to long term waste management contracts alongsidefavorable PPA framework for landfill biogas W-t-E assets
• Largest player in waste management in Greece (43% market share based on tons of mixed waste)
• HELLECTOR has developed technologically advanced operations across the high value part of the waste management value chain including recycling, treatment, conversion of waste into energy and disposals
• Total installed biogas capacity of electricity production from landfill gas to c.33MW
• Prospects appear strong as Greece needs to urgently proceed with new infrastructure in order to comply with national and EU waste management legislation as well as utilize the available EU funding within a very tight time frame
• Total cash and liquid assets of Environment segment were at c. €30m at the end of Dec '20
Environment Cash flow (€ m.)
20 3
2018
-20 2019
2020 est.
Operating CFInvesting CFFinancing CF
Group's performance has been negatively affected in the past by Construction's losses
Key Construction Challenges
EBITDA 2018 - 2020 LTM (€m)
Construction
Core Markets (GR & ROM)
Construction
Non Core Markets
Mismatched liabilities & receivables
One Off Costs (non-cash)
*As of 30/9/2020
Critical operational challenges
• Ad hoc selection of target geographical markets without the appropriate operating model and controls, leading to poor scope management and cost overruns
• Suboptimal organisational structure and promotion of silos on operating model
• Inflexible fixed cost base, currently not aligned with revenue levels
• Not structured project planning and control practices
- Frequent cases of poor project planning and budgeting practices
- Lack of systematic monitoring of projects' progress and performance
- Inefficient risk management procedures
• Increasing operating costs (wages, rentals, LCs etc.) due to liquidity constraints
All BUs except Construction, are cash generative and self funded | The majority of proceeds of the proposed SCI will be directed to Construction - part of the proceeds will be used to accelerate RES' growth plan
15 15
ELLAKTOR's BoD proposes a Rights' Issue of €120.5m: €100m will be directed to AKTOR allowing it to restore its competitiveness & stabilize its performance and €20.5m will be used to accelerate RES investment plan
1. Resolving AKTOR's liquidity issues
Key Initiatives
2. Accelerating RES Investment plan
Coverage of AKTOR's financing needs (€m)
• AKTOR's immediate funding needs - that need to be gradually covered by Q2 '21 to ensure smooth running of operations - are related to:
- €45m linked with the strategic decision to exit non-profitable international businesses/ projects and associated recognized losses
- €55m critical overdue payments to suppliers in Greece to be gradually settled to ensure smooth running of operations
• In Q1 2021, ELLAKTOR has been supporting AKTOR with €13m funds
• Additional funds to become available to AKTOR through
ELLAKTOR's share capital increase of €100m
• Following a successful SCI, AKTOR may be further supported by a potential working capital facility from the Banks
Benefits for AKTOR
• Restore competitiveness
• Performance stabilization
• Return to positive net cash flows by the end of 2021 on a run rate
• Positioned to take advantage of the positive outlook of the sector
• Additional funds of €20.5m will be used by ELLAKTOR towards accelerating the expansion of RES portfolio through further wind parks' acquisitions, as well as investments in other RES technologies
On top of the SCI of €120.5m, a Group wide Transformation Plan is being implemented, aiming to revise the cost structure
The Programme is expected to deliver significant benefits
Key Objectives
Total 2020 Actual Results & | ||
Estimated Benefits '21 - '23 | ||
• | Streamline organizational structure, improve effectiveness and enhance controls through a revised CoA | |
• | Improve operating model and achieve cost efficiencies | |
• | Gradually align compensation & benefits' levels to market based benchmarks - while remaining competitive, link | 32 |
pay with performance and shift towards variable compensation |
Adjust cost base to current size of the business, while securing flexibility for the future
Dimensionsof Transformation
Programme
• Establishment of a Group Procurement function (supply centralization, streamlining of suppliers, frame agreements)
• Renegotiation with suppliers and subcontractors and settlement of overdue payments
• Reduction of overtime through effective HR management
• Further rationalization and alignment of fringe benefits to market based benchmarks
• New organizational structure to be put in place, promoting effectiveness, synergies and accountability
• Effective release of personnel linked with projects' completion rate
>€30m potential till end '23
2
Rationalisation of payroll cost
• Salaries' reductions and rationalization of fringe benefits (mobile phone | cars | fuel)
• Implementation of a "Voluntary Exit Scheme"
and a "Retirement Scheme"
>€30m potential till end '23
4
Disposal of non-operating assets and participations
• Collection of receivables, disposal of participations/ financial assets, disposals in Real Estate in Greece and abroad
>€38m potential till end '23
(1) Salary reductions were effective as of Sept 1st. The cost reduction was offset by one-off compensation costs occurred as a result of layoffs that were implemented in Q4 '20.
2020 actual
2021 est. 2022 est. 2023 est.
Procurement ExcellenceRationalisation of payroll cost
Best Practice Organisational Model
Disposal of non-operating assets & participations
Following the Share Capital Increase, the Group is well placed and sufficiently funded to proceed with a growth strategy
Construction
• Geographical focusing on Greece, Romania and Qatar (FM projects)
• Wind-down of all other international operations
• Significant backlog by undertaking profitable projects
• Rigorous implementation of Transformation Program
Concessions
• Integration of additional works/ extensions in the existing projects'
portfolio
• Portfolio enhancement by at least one more motorway
• Preparation for new bid on Attiki Odos
• Participation in upcoming tenders concerning social infrastructure projects and waste management
Renewables
• Deployment and formulation of an attractive portfolio with EDPR as a Strategic Partner, including the timely completion of Agrafa project
• Further growth through technology diversification (PVs)
Environment
• Growth in line with the market by capitalizing current leading position:
- Focus on succeeding in undertaking new contract regarding the Attica Mechanical Sorting Plant (EMA)
- Extension of current contracts (e.g. Larnaka)
- Form potential alliances and prepare for new PPP projects to be launched
• R&D enhancement and evaluation of new technologies
Real Estate
• Achieve full tenancy of Smart Park
• Intensify efforts in finding a strategic partner in Cambas project
• Undertake the real estate development and operation management of Alimos Marina
4. Share Capital Increase: Framework & Timeline
Share Capital Increase (SCI) - Use of Funds Raised
The total funds of €120.5m that will be raised from the Share Capital Increase will be used as follows:
• An amount of €100m will be used to cover the capital requirements of the Construction pillar, AKTOR SA. In more details:
- An amount of €45m will cover liabilities which arose from exiting international PVs and loss-making projects
- An amount of €55m will be used to cover critical overdue payments to the Greek market
• An amount of €20.5m will be used by ELLAKTOR to finance new investments in RES
Based on current time-plan, the Share Capital Increase is expected to be completed by June '21
SCI - Indicative Dates
Note: The timeline is subject to Regulatory approval
22
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Disclaimer
Ellaktor SA published this content on 17 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 March 2021 15:53:05 UTC.
