Acquisition of EGF November 14, 2014 Framework of the transaction Acquisition of EGF Deal: Privatization of 95% of EGF (remaining 5% were attributed to employees) Price: €147 M for 95% stake of EGF (includes exercise of put option by municipalities) Conditions: Deal is subject to the Portuguese Competition Authority's non-rejection Closing: Deal expected to be concluded in first half 2015 2 Description of EGF Description of EGF EGF overview EGF is the market leader in Portugal in waste treatment and recycling activities, which are regulated EGF is present in 174 municipalities and serves around 6.4 million inhabitants, which represents a 68% market share in municipal solid waste (MSW) treatment business 65% of EGF revenues derived from resilient sources: regulated revenues for MSW treatment and renewables FiT1 framework 1 Feed-in tariff 4 Description of EGF EGF overview Geographic presence Concessions overview 5 Description of EGF Portfolio of services Collection Collection in ecocenters Treatment/ Recovery/ Disposal Transfer Stations Products Organic recycling Energy Bottom ashes Selective collection of biodegradable waste Mechanical treatment Selective collection of degradable materials Sanitary landfills Sorting centers Organic compost Urban Waste Organic Waste Energetic valorisation Refuse-derived fuel Glass, plastic, metal and paper Incineration processes Biogas valorisation Others (wood, oils, etc.) EGF is present in the whole waste management services value chain 6 Description of EGF A Regulated Asset Base (RAB) regulatory model Currently, solid waste management activities are remunerated on a cost plus basis A new regulatory framework based on a return on RAB will start in 2016, with regulatory periods of three to five years Return on RAB for each period is set by the regulator1 and is based on- a WACC formula Framework allows for incentive mechanisms, such as opex and revenue optimization Regulatory framework 1 Entidade Reguladora dos Serviços de Água e Resíduos (ERSAR) 7 Description of EGF Historical financial data (€M) Resilient turnover Strong Ebitda margin in the last three years (over 38%) Net debt/Ebitda ratio of 2.4x in 2013 8 Strategic Rationale of the acquisition Strategic Rationale of the acquisition Acquisition of a Portuguese market leader highly complementary with SUMA Waste treatment SUMA is the market leader of the privatized waste collection and street cleaning (WCSC) SUMA has a share of 50.5% in the private market of WCSC, serving more than 50 municipalities The private sector serves 44% of the Portuguese population EGF is the market leader in the regulated market of waste treatment segment. Following the transaction SUMA and EGF will cover all regions in Portugal SUMA EGF CESPA Focsa Public entities 10 Strategic Rationale of the acquisition Long term concessions will allow for more stable cash-flows of waste management segment All concessions have a 20 year length (until 2034) Strong operational free cash-flow Annual capex of €30 M in first two years, will decrease to c.€15 M in the following years Utility sector profile, with resilience to economic cycles 11 Strategic Rationale of the acquisition EGF: an attractive company with high potential growth Asset quality: high quality waste treatment infrastructure Scope for upside: operational improvements will allow for efficiency gains and synergies Growth potential: high expectations for increasing turnover due to the new goals aiming at convergence to European Standards until 2020 in terms of recycling and reutilization Growth drivers: more environment-friendly waste destinations and increased weight of value added waste treatment forms, such as sale of energy and recycled materials 12 Strategic Rationale of the acquisition EGF and SUMA together, have scale to gather international market opportunities in a strong position EGF and SUMA serve 3.8 million people in waste collection and treat more than 3.7 million tons of waste SUMA intends to increase its presence in Africa and LatAm countries and will benefit from integration with EGF, as it allows the company to qualify for tenders in large cities EGF’s track record on energetic valorisation will be an important credential in international tenders 13 Strategic Rationale of the acquisition Mota-Engil’s integrated management will allow synergies Integration of redundant activities Sharing of innovation and developing activities Acceleration of internationalization Economies of scale in procurement 14 Transaction Structure & Fundamentals Transaction Structure & Fundamentals Consortium structure 61.5% 38.5% 80% 10% Suma Tratamento 100% 10% Consortium between SUMA and its shareholders acquire EGF in the context of its privatization SUMA holds 80% of Suma Tratamento, and MEAS and Urbaser hold 10% each 16 Transaction Structure & Fundamentals Transaction price Implicit figures of transaction Equity value (100% EGF) €149.9 M2 € 13.38 per share (+) Net debt €158.5 M3 11,200,000 Shares (+) Minority interests €102.6 M Enterprise value: €411.0 M Acquisition price (Price of EGF shares) (Shares representing 100% of EGF1 share capital) 1 (municipalities) A public offer of 5% of EGF shares for EGF workers will occur after signing, however the public tender required a bid for 100% of shares, as the bidder will have the obligation to buy the shares not acquired by workers under such public offer. 2) Excludes value of shares of municipalities/ associations of municipalities who exercised the put option. 3) Net debt as of 31 December 2013. 17 Transaction Structure & Fundamentals Transaction’s financing Non recourse MLT1 loan of €88M At consortium level At EGF level 1 Corporate MLT1 loan of €59M Refinancing EGF subsidiaries in €158.5M (non recourse debt) Medium long term 18 Transaction Structure & Fundamentals Acquisition and sector multiples Recent transactions multiples Shareholder IRR: 9.4% EV / SALES EV / EBITDA PER 2011 2012 2013 2.4 2.6 2.3 6.2 6.9 6.9 8.8 6.2 9.0 EV EV/SALES EV/EBITDA Gruppo Waste Italia (32.72%) - IT €185.3M 2.2 18.4 Veolia ES Solid Waste, Inc. (100%) - USA €1,556.3M 2.5 n.a Neales Waste Management Ltd (100%) - UK €11.6M 0.8 4.8 WCA Waste Corporation (100%) - USA €329.5M 1.9 8.3 Donarbon Limited (100%) - UK €58.0M 2.6 16.3 19 Transaction Structure & Fundamentals Environment & Services (E&S) division (after transaction) Full consolidation of EGF from 1H15 onwards Turnover of the E&S division would have been c.€565 M in 2013 E&S’s division Ebitda would have risen to €142 M, with waste management representing 55% of the total Turnover 2013 proforma Waste management Logistics 1 Water Energy and maintenance Turnover Ebitda 78 37 23 4 30% 565 142 25% Logistics Water mg 258 200 68 40 Waste management Energy and maintenance 19% 34% 9% Ebitda million euro 1 Indaqua subsidiary, which is consolidated by the equity method 20 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. 21 João Vermelho Director, Head of Investor Relations Maria Borrega Investor Relations Officer Email:[email protected] [email protected] Email: [email protected] Rua de Mário Dionísio, 2 2796-957 Linda-A-Velha Portugal Rua de Mário Dionísio, 2 2796-957 Linda-A-Velha Portugal Tel. +351-21-415-8671 Tel. +351-21-415-8443
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