Mota Engil SGPS S A : Engil informs about the Earnings Release regarding the first half of 2020

1H2020

Earnings Release

27 August 2020

Earnings Release 1H2020

Table of Contents	01	04
		Relevant Information				Regional Segments
		Page 04				Page 16
						4.1 Europe
						4.2 Africa
						4.3 Latin America
	02	05
	Key Highlights			Outlook and Final Remarks
	Page 06			Page 24
	03	06
	Results Overview			Appendix
	Page 08			Page 27

2

1

Relevant Information

Earnings Release 1H2020

Strategic Partnership and Investment Agreement

MOTA-ENGIL is in the last stages of negotiation of a Partnership and Investment Agreement with one of the largest infrastructures groups in the world (top five), with significant activity worldwide, aiming the New Partner to become a relevant shareholder and a long-term partner of MOTA-

ENGIL.

In the context of the envisaged Agreement, MGP, the controlling shareholder of MOTA-ENGIL, has accepted to sell a relevant stake in the share capital of MOTA-ENGIL at a price that reflects a valuation which is high above the current market price.

Also pursuant to the Agreement, if concluded successfully - which is expected to occur shortly -, and assuming that the regulatory clearances and several other conditions precedent will be met, the New Partner:

• Will enter into a partnership and investment understanding with MOTA-ENGIL to jointly develop commercial opportunities;
• Will be committed to subscribe a relevant stake in a share capital increase of up to 100 million new shares that will be submitted for deliberation in a General Meeting, to be called shortly.

Following such share capital increase:

• MGP will have a stake of c. 40% of MOTA-ENGIL, showing a full commitment and alignment with its historical position in the Company;
• The New Partner will reach a stake slightly above 30%.

This new configuration and the framework of this partnership, which is based on a Group´s valuation of circa €750 million, will enhance the financial, technical and commercial capabilities of MOTA-ENGIL in order to upscale its activities in all markets and will open new opportunities for further developments.

MOTA-ENGIL, as the leading Portuguese infrastructure multinational group, will strengthen its commitment, based on its 75-year culture and corporate values, towards its clients, employees, communities, environment and all other stakeholders.

4

1H20

Earnings Release	2

Key

Highlights

Earnings Release 1H2020

Key	BACKLOG
Highlights	€ 5.5 bn
	(record high)

NET LOSS

€ 5 mn

TURNOVER	EBITDA
€ 1,157 mn	€ 144 mn
(-14% YoY)	(margin 12%)

Europe

Africa

Latam

NET DEBT	CAPEX
€ 1,248 mn	€ 94 mn
(Net debt / EBITDA 3.4x)	(-13mn YoY)

6

1H20	3
Earnings Release
	Results
	Overview

Earnings Release 1H2020

EBITDA margin of 12%

	1H20		1H19		YoY
P&L (€ mn)
Turnover	1,157		1,344		(14%)
EBITDA	144		194		(26%)
Margin	12%		14%		(2 p.p.)
EBIT	33		91		(64%)
Margin	3%		7%		(4 p.p.)
Net financial results	(39)		(52)		26%
Associates	3		1		145%
Net monetary position1	7		-		n.m.
EBT	5		40		(88%)
Net income	10	26	(61%)
Attributable to:
Non-controlling interests	15		17		(13%)
Group	(5)	8		n.m.

1The caption "Net monetary position" reflects partially the accounting, as an hyperinflationary economy

(IAS 29), of Zimbabwe in the 1H20,

• Turnover of €1,157 mn, with the non-E&C businesses accounting for 26% of the total
• Covid-19had an estimated negative impact of €280 mn in Turnover and of €45 mn in EBITDA, mostly affecting the emerging markets
• Tax was impacted by the lower EBT and by some investment tax credits

• EBITDA margin at 12% with the non-E&C businesses accounting for 45% of the total EBITDA
• EBIT impacted by €16 Mn of provisions and impairment losses, mainly related to Covid-19
• Net financial results positively impacted by forex gains
• Net loss of €5 mn, with the minorities mostly related to Angola and Mexico

8

Earnings Release 1H2020

Europe was resilient within the Covid-19 context

	1H20	1H19	YoY
P&L breakdown (€ mn)
Turnover	1,157	1,344	(14%)
Europe	455	407	12%
Africa	385	453	(15%)
Latin America	305	457	(33%)
Other and intercompany	11	28	(60%)
EBITDA	144	194	(26%)
Margin	12%	14%	(2 p.p.)
Europe	48	41	16%
Margin	10%	10%	0 p.p.

▪ Positive turnover evolution in	▪	EBITDA in Europe was up
Europe reflected a strong activity		16% YoY, with higher margin
in the E&C business and a		both in E&C and E&S
positive evolution in the E&S
activity, partially offsetting the
weaker performance of the other
regions (higher Covid-19 impact)

▪ Africa's turnover was down 15% ▪	EBITDA margin in Africa
YoY to €385 mn as Covid-19 led	reached 18% with resilient
to slower execution pace and	contributions from the main
stoppages in some markets,	markets
namely in Angola, Uganda and
Mozambique

Africa	69	91	(24%)
Margin	18%	20%	(2 p.p.)
Latin America	27	59	(55%)
Margin	9%	13%	(4 p.p.)
Other and intercompany	-	3	n.m.

• In Latin America, turnover was the most impacted by Covid-19 (mainly Peru and Mexico) due to the imposed lockdowns and stoppages policies

• EBITDA margin in Latin America was 9% as the Covid-19 impacted the E&C operations

9

Earnings Release 1H2020

Largest projects enhancing value creation

TOTAL BACKLOG EVOLUTION (€ mn)	E&C BACKLOG BY SEGMENT	BACKLOG BY REGION
	Railway
		Latin
		14%	America
			32%
	16%	€4.7 bn	€5.5 bn
	Mining

17%		42%
Oil & Gas	11%	Roads,	21%
and	Infrastructures and
Power		Others	Europe
	Civil
	Construction

• Record backlog level: €5,491 mn (E&C represents 86% of the total) with a backlog/sales ratio1 in the E&C activity of 2.3
• There were no cancellations of projects due to Covid-19
• Largest contracts awarded in the 1H20 (> €200 Mn):
• • Mexico - First stretch of Tren Maya (Mota-Engil Mexico: 58% stake)
  • Mozambique - Construction of a pier bridge and an offloading facility for Mozambique LNG project (Mota-Engil: 50% stake)
  • Poland - S1 expressway Kosztowy - Bielsko-Biała - Section II (Mota-Engil: 50% stake)
  • Angola - Construction of infrastructures for the collection, treatment and distribution of water (Mota-Engil Angola: 40% stake)
  • Colombia - Construction of a Dam (Talasa) (Mota-Engil: 100% stake)

Africa

47%

1Sales of the last 12 months

10

Earnings Release 1H2020

Major construction projects in
backlog at June 30			(€ mn)		Country
1			Range
Project
Tren Maya	> 250		Mexico
Vale Mining Moatize	> 250		Mozambique
Gran Canal highway	> 250		Mexico
BR-381 highway dualisation (section 3.1 and section 7)	> 250		Brazil
Requalification of the Soyo Naval Base	> 250		Angola
Las Bambas dam (phase 4 under execution)	> 250		Peru
Talasa hydroelectric facility	[200;250[		Colombia
Mandiana gold mine	[150;200[		Guinea Conakry
Siguiri gold mine	[150;200[		Guinea Conakry
Calacuve Dam	[150;200[		Angola
Calueque Dam - lifting system, irrigated perimeter and hybrid generation plant	[100;150[		Angola
General Hospital of Cabinda	[100;150[		Angola
Capacity Improvement Kampala Northern Bypass	[100;150[		Uganda
BITA System - B1 (Construction of infrasctructures for the collection, treatment and distribution of water)	[100;150[		Angola
Bordo Poniente landfill	[100;150[		Mexico

Segment

Railway infrastructures

Mining

Roads

Roads

Ports

Power

Power

Mining

Mining

Power

Power

Civil Construction

Roads

Urban infrastructures

Urban infrastructures

Exp. Year

of

Completion

2022

2022

2020

2021

2022

2021

2024

2027

2022

2023

2023

2021

2021

2022

2022

1Selection of E&C projects above €100 mn.

11

Earnings Release 1H2020

Growth and long-term capex accounted for 65%

• Capex reached €94 mn, mostly related to growth and long- term projects
• Capex decreased €13 mn YoY mainly due to delays in the execution of some long-term projects, whose investment is expected to accelerate in 2021
• E&C Capex of €30 mn reached c.3% of the E&C Turnover
• E&S capex of €33 mn was mainly channeled to EGF in order to comply with the regulator's approved investment for the current regulatory period
• Maintenance capex reached 2.9% of the total turnover (FY2019: 4%) benefiting from planning, procurement and logistics efficiencies

NET CAPEX (€ mn)

E&C Capex

Capex - long term contracts1

E&S Capex

CAPEX BY REGION (1H2020)

(€ mn)

Maintenance

Growth

Capex - long term contracts1

1Includes mining contracts in Africa and the Energy business in Latin America.	12

Earnings Release 1H2020

Working capital to Turnover ratio of 5%

	Working capital
	evolution
25%	20%							500
								450
20%		17%						400
								350
15%								300
					9%			250
	475			7%
		7%
10%		367					200
						5%
					251	4%	150
5%				199			100
		177
						139
						115	50
0%								0
	Dec.15	Dec.16	Dec.17	Dec.18	Jun.19	Dec.19	Jun.20
							1
		Working capital (€ mn)	Working capital/Turnover

1Turnover of the last twelve months.

• Working capital/Turnover ratio stood at 5%, confirming the downward trend in recent years notwithstanding the challenging context
• Downward trend follows (i) reinforcement of cooperation with multilaterals, ECA´s, and (ii) higher exposure to private clients, namely in the mining sector and to projects financed by the client
• Alignment of the commercial strategy with strict financial targets and structuring the contracts with the aim of minimizing the receivables payment period and the credit risk exposure with down payment clauses in the largest contracts

13

Earnings Release 1H2020

Resilient CFFO of €126 mn

(€127 mn in 1H19)

CFFO €126 mn

FREE CASH-FLOW (€ mn)

25

2

Mainly,

forex impact

94

144

1

1,248

1,213

1

39

24

5

Net debt Dec.19	EBITDA	Changes in working	Corporate tax	Net	Capex	Dividends	Others	Net debt Jun.20
		capital		financials		paid

1Net debt considers Angola's sovereign bonds denominated in US$, US$ linked and kwanzas as "cash and cash equivalents" which amounted to €186 mn (€203 mn nominal value) in June 2020 (€210 mn Angola's sovereign bonds and €13 mn Ivory Coast's sovereign bonds in December 2019).

14

Earnings Release 1H2020

GROSS DEBT MATURITY2, JUNE 2020

Comfortable liquidity position of €817 Mn

• Net debt1 of €1,248 mn, up €34 mn YTD
• Liquidity position corresponds to 1.6x of non-revolving financing needs with maturity less than one year
• Leasing & Factoring amounted to €403 mn (of which €292 mn Leasing), down €79 mn from December 2019

(€ mn)
Undrawn
credit	196
lines
Cash		314
&
Cash	621
equiv.
	203
		119
	Liquidity	1 year
	position

Already refinanced

or to be shortly

refinanced

323	376
	230
2 years	3 years	4 years

Non-revolving

Revolving

215

90

5 years

> 5 years

• Average debt maturity of 2.6 years up from 2.5 in December 19

COST OF DEBT AND NET DEBT / EBITDA

• Cost of debt of 5.1%, slightly down from 2019

▪ Net debt / Ebitda of 3.4x, within a difficult context due to Covid-	5.8%	5.6%	5.6%
	5.1%	5.0%	5.2%
19, but committed to strengthen the capital structure
3.6x	3.4x
▪ Sale and reimbursement during the 1H20 of €35 Mn of Angolan			2.2x	2.5x	2.3x	2.5x
and Ivory Coast sovereign bonds
1Excluding leasing and factoring and including €186 mn (€203 mn nominal value) of Angolan sovereign bonds;
2Excluding leasing and factoring;	Dec.15	Dec.16	Dec.17	Jun.18	Dec.18	Jun.19

5.2% 5.1%

3.4x

2.8x

Dec.19 Jun,20

15

4

Regional

Segments

1H20

Earnings Release

1H20

Earnings Release

Highlights 1H20

05 €455mn €1,156mn

Countries Turnover

Backlog

Portugal

Spain

Poland

Ireland

United Kingdom

4.1

Europe

Earnings Release 1H2020

Positive outlook in the E&C in

Portugal

• Activity in the E&C business in Portugal was flat YoY, mainly supported by private projects
• Public tenders in Portugal were up 35% YoY to €2.7 bn in 1H20, thus opening new opportunities for larger projects awards in 2020 and 2021
• The recently agreed European Recovery Plan1 with €15 bn non- refundable funds channelled to Portugal, will include a relevant share allocated to infrastructure projects that is expected to start to be invested in mid-2021
• Poland showed a relevant growth (+62% YoY), reflecting the execution of projects awarded in 2019

1 €15.3 bn in non-refundable funds and approximately €15.8 bn in loans at favorable interest rates, to be executed (invested or committed) in three years until the end of 2023. In addition, Portugal will have: (i) c.€30 bn of the Multiannual Financial framework to be	18
implemented in seven years until the end of 2029 and (ii) c.€12 bn of the Portugal 2020 framework, still to be implemented.

1H20

Earnings Release

Highlights 1H20

10 €385mn €2,571mn

Countries Turnover Backlog

Angola	Rwanda
Mozambique	Guinea Conakry
Malawi	Cameroon
Zimbabwe	Ivory Coast
Uganda	Kenya

4.2

Africa

Earnings Release 1H2020

Africa with positive outlook for the long-term

• Covid-19led to relevant logistics constraints related to equipment and materials sourcing, thus negatively impacting the normal execution of some works
• Mozambique is expected to be the main driver of growth for the next years due to existing large contracts (Vale and LNG Project)
• Positive outlook with potential contracts to be awarded in new markets (Ghana, Nigeria) and in main markets markets such as, Mozambique
• Continuing reinforcing (i) the relations with different ECA's and multilaterals to finance projects and (ii) the footprint in long- term projects denominated in hard currency and with higher profitability

20

1H20

Earnings Release

Highlights 1H20

06 €305mn €1,764mn

Countries Turnover

Backlog

Mexico

Peru

Brazil

Colombia

Dominican Republic

Aruba

4.3

Latin America

Earnings Release 1H2020

Strong impact of Covid-19

• Performance was impacted by the lockdown in Peru in the 2Q20 and stoppages of works, namely in Mexico
• Positive outcome from the commercial activity with main achievements: (i) in Mexico, the largest contract awarded to Mota-Engil in Latam (Tren Maya) in a consortium with CCCC and local companies; (ii) in Colombia, the award in the 1Q20 by CTG and CCCC of the Talasa dam that opened a wide range of new partnership opportunities
• Positive outlook to revamp the commercial and activity dynamism, namely in Mexico
• Diversification strategy ongoing with growing footprint in the Energy and E&S activities

22

1H20

Earnings Release	5

Outlook

and Final

Remarks

Earnings Release 1H2020

Outlook

• Total turnover is expected to decrease due to Africa and Latin America, notwithstanding an expected increase in activity in Europe
• EBITDA margin to remain below 2019
• Backlog to stand above €5 bn
• Capex below €200 mn (partially financed by down payments), down from an initial estimate of €200 mn-€250 mn
• Focus on organic cash-flow generation in order to help strengthening the capital structure

24

Earnings Release 1H2020

Final Remarks

• Activity was impacted by Covid-19, with a resilient profitability
• Strong commercial performance that led to a record and comfortable Backlog (€5.5 Bn), which paves the way for a strong recovery in turnover when the economic recovery begins
• Capex was adjusted to the current context and to projects with high profitability and stable cash-flow stream
• Net debt level was up €34 mn YTD in a challenging environment, while maintaining a comfortable liquidity position
• Working capital was under control at 5% of turnover, reflecting the efficiency measures in place

25

1H20

Earnings Release

6

Appendix

Earnings Release 1H2020

Balance sheet

	Jun.		Dec.
	20	19
Balance sheet (€ mn)
Fixed assets	1,356		1,358
Financial investments	346		340
Long term receivables	161		190
Non-current Assets held for sale (net)	101		145
Working capital	139		115
	2,101	2,148

Equity	235		328
Provisions	110		107
Long term payables	510		500
Net debt	1,248		1,213
	2,101	2,148

YoY

(2)

7

(29)

(44)

24

(47)

(93)

4

11

34

(47)

27

Earnings Release 1H2020

Europe performance breakdown

	1H20	1H19	YoY
P&L breakdown (€ mn)
Turnover	455	407	12%
E&C	322	284	14%
E&S	137	127	8%
Other, elim. and interc.	(4)	(4)	(17%)
EBITDA	48	41	16%
Margin	10%	10%	0 p.p.
E&C	13	10	23%
Margin	4%	4%	0 p.p.
E&S	35	29	19%
Margin	25%	23%	2 p.p.
Other, elim. and interc.	-	1	n.m.

28

Earnings Release 1H2020

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.

The financial information presented in this document is non-audited.

TURNOVER: corresponds to the consolidated income statement caption "Sales and services rendered".

EBITDA MARGIN: corresponds to the division between the algebraic sum of the following captions of the consolidated income statement "Sales and services rendered"; "Cost of goods sold, mat. cons., Changes in production and Subcontractors"; "Third-party suppliers and services"; "Wages and salaries"; "Other operating income / (expenses)" and the TURNOVER.

CAPEX: acquisitions less disposals of tangible, intangible assets and rights of use assets.

NET DEBT: corresponds to the algebraic sum of the following captions of the consolidated statement of financial position: "Cash and cash equivalents without recourse - demand deposits"; "Cash and cash equivalents with recourse - demand deposits"; "Cash and cash equivalents with recourse - term deposits" "Loans without recourse"; "Loans with recourse" and "Other financial investments recorded at amortised cost". Leasing and factoring operations established by the Group are not recorded in the captions aforementioned.

BACKLOG: turnover to be recognised in the future related to projects for which contracts have been signed or awarded.

29

PEDRO ARRAIS

Head of Investor Relations

[e-mail]

MARIA ANUNCIAÇÃO BORREGA Investor Relations Officer [e-mail]

[e-mail]

Rua de Mário Dionísio, 2

2796-957Linda-A-Velha Portugal Tel. [phone]

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