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Strategy Update 2020
OHL Group
Madrid, March 2nd, 2015
Northern Urban Toll Road (Mexico)
Any declaration made in this presentation that may differ from previous past figures made in
reference to, but not limited to; the operational development, business strategies and future
goals, are to be interpreted only as future estimates, and as such, they imply known and
unknown risks, uncertainties and other factors that could cause OHL’s results, behavior and
achievements, or the results and conditions of its activities, to be substantially different to
those and to its future estimates.
This presentation and the future estimations contained here within, are given on this date
and OHL expressly declines from any obligation or compromise to give any update or revision
of the information contained here within, any change in its expectations or modification in
the facts, conditions and circumstances in which these future estimates were founded.
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Table of Contents
The OHL Group Today
Strategic Plan and Vision for 2020
OHL Concessions
OHL Engineering & Construction
• OHL Construction
• OHL Industrial
• OHL Services
OHL Developments
Conclusions
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The OHL Group Today
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Airport Link Metrorail 3(USA)
OHL is a worldwide leader and international reference in
Concession, Engineering, and Construction projects
OHL
Concessions
Leading company in PPP projects
Controlling stake of ~56% in the
equity capital of OHL México
Participation of ~14% in the
equity capital of Abertis
OHL Engineering & Construction
OHL Construction
OHL Industrial
OHL Services
International
reference
in the
construction of
civil engineering
infrastructure and
singular buildings
Engineering
and construction
of turnturn-key
industrial
installations
Management
of projects in the
facility
management
and urban
services sectors
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OHL
Developments
Comprehensive
management of
unique toptop-quality
projects in the
hotelhotel-tourism sector
4
OHL has leveraged its progressive international expansion to
compensate for the reduction of activity in Spain
Proactive increase in international presence
Selection of recent international projects
Mexiquense Beltway
Bicentennial Viaduct
Evolution of revenue (%)
~20
Spain
~70
~80
International
~30
# of
countries
Centre hospitalier de l'Université
de Montréal – CHUM
Rehabilitation of New York's subway
Airport Link Metrorail in Florida
Average
project
IstanbulIstanbul-Ankara High Speed Train
size of
and Marmaray project
>€300M
High Speed Train
Medina - Mecca
Eastern Vespucio tolltoll-road
2004
2014
15
30
Río Magdalena tolltoll-road
Oran Convention Center
Allowing OHL Construction to reach a current orderbook of ~€
~€8B, equivalent to over 3 years of production
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OHL has historically delivered significant financial growth
while complying with its financial policy ratio
Revenue (€
(€M)
EBITDA (€
(€M)
Orderbook (€
(€M)
CAGR:
CAGR: +5%
CAGR:
CAGR: +15%
CAGR:
CAGR: +8%
3,731
7,984
1,078
2,231
3,717
262
2004
2014
2004
2014
2004
2014
Maintaining the commitment with the financial policy ratio: recourse debt / recourse EBITDA below 3x
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Strategic Plan and Vision for 2020
Centre
hospitalier
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de l'Université de Montréal – CHUM (Canada)
7
The new Strategic Plan is based on two key principles:
cash generation and sustainability of each division
Ensure cash
generation
in each division
Guarantee
sustainability
of each division
1
Further strengthen OHL's capabilities and resources
to enhance project execution and risk control mechanisms
2
Concentrate the Group's activities on eight Home Markets
and balance project size and client portfolio
3
Optimize cash flow generation with
selfself-funding policy per division
4
Revenue and EBITDA to double between 2014 and 2020
with low CAPEX requirements
5
Strengthen the commitment of the OHL Group with
People, R&D&i and Corporate Social Responsibility
Solid updated strategy to ensure future growth while maintaining financial discipline
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1
The Strategic Plan and Vision for 2020 have been based on the OHL
Group's strengths and capabilities
Integrated
Group
Five divisions with strong synergies and opportunities for collaboration
• Within OHL Engineering & Construction and as support for OHL Concessions
Technical
Capability
large--scale projects in all sectors
Vast experience and high skilled teams leading large
• From transportation infrastructure to unique construction
Development/
management of
concessions
Excellent management of the Group's concession portfolio throughout all geographies
• 18 projects in 5 countries, with a managed investment of ~€7B
Commercial
Capability
Diversified, high valuevalue-added, and profitable orderbook,
orderbook, including emblematic projects
• ~€8B Construction orderbook, or equivalent to over 3 years of production
International
Footprint
Successful international expansion and positioning as a worldwide reference
• Consolidated presence in attractive markets with large growth potential
Commitment
of the Villar
Mir Group
Part of one of the largest European industrial conglomerates
• As a majority shareholder, the Villar Mir Group guarantees the OHL Group's stability
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2
The OHL Group will focus its activity on eight Home Markets
Shifting the company's center of gravity towards North and South America
x1,9
x1,7
Poland
Czech Rep.
Slovakia
x1,8
x1,3
x1,5
Spain
x1,7
Balkans1
x1,3
USA
x2,3
Saudi
Arabia
Mexico
x2,3
Colombia
x1,6
Australia
Singapore
x1,8
Peru
x1,4
x2,0
Target international
positioning
(% of 2020 revenue)
Canada
New
Zealand
x1,5
x1,5
Home Markets
Markets on a project basis2
(potential future Home Markets)
Rest of the World
85 %
10 %
5%
Chile
x#
Growth of investment in
Transportation Infrastructure
(Nominal 2020 vs. 2013)
1. Includes Croatia, Bosnia & Herzegovina, Serbia and Macedonia 2. Periodically reviewed
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3
Two key financial principles: sustainable cash flow generation
and self funding per division
Key Principles
Specific targets per Division
Equity for new concessions through dividends
and rotation of mature assets
Optimize the profitability
and cash flow generation
of each line of business
Target IRR of 15% in EUR for new concessions
OHL Mexico selfself-funding to deliver growth
opportunities in Mexican infrastructure plan
Reach target 70%70%-80% cash flow/EBITDA ratio
in 2020
SelfSelf-funding of growth within
each one of the divisions
Margins within the first quartile in the sector
Balanced project size and client portfolio
to minimize risk exposure
To be funded through asset rotation
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4
Revenue will double between 2014 and 2020, reaching €8B
Maintaining the current business mix and ensuring financial policy compliance
Revenue (€
(€B)
x2+
EBITDA (€
(€B)
~8.0
x2
~2.0
~5.5
24%
~1.4
89%
~3.7
~1.1
20%
87%
22%
76%
88%
80%
12%
13%
11%
2014
2017
2020
2014
OHL E&C and OHL Developments
78%
2017
2020
OHL Concessions
OHL E&C and OHL Developments will limit CAPEX requirements to €200200-300M between 20152015-2020
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5
The Strategic Plan reinforces the OHL Group's commitment
to People, R&D&i,
R&D&i, and Corporate Social Responsibility
People
R&D&i
Corporate Social
Responsibility
Grow and promote growth
Innovate to create value
Joint value creation
• Promotion of programs to identify
and manage talent
• Collaboration agreements with 60
universities and research centers
in over 15 countries
• Comprehensive CSR management
along the entire value chain
• Excellence in mobility plans and
international development
• Commitment to technical
excellence and continuous training
• Development of a respectful and
diverse environment with equal
opportunities
• Promotion of ethical and cultural
values and principles
• Multiple innovative solutions:
Cubípodo, SATOgrab, Sogedron,
Dina sat, SULABU, Futuro Solar, etc.
• Special attention and priority given
to preventing occupational
hazards
• Protection of natural resources
• LargeLarge-scale projects in Concessions:
and biodiversity
OASIS, FOTsis (FP7), SMARTSIT, Free
Flow toll system, etc.
• Application of ethical principles in
all business relationships
• Cumulative investment of over €70M
in R&D&i,
• Commitment to fulfilling human
R&D&i, with over 80 projects
rights standards
• Projects always on demand
from the business lines
• Committed to involving
communities
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OHL Concessions
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Bicentennial Viaduct (Mexico)
14
OHL Concessions will maintain and strengthen the business model
that has successfully developed over the past years
Participation in the equity capital of
Abertis
OHL Mexico and Other Concessionaires
• Financial autonomy from the OHL Group
• Strategic / Industrial partner of the bestbest-ininclass operator of mature tollroads
– Complementary to OHL's building and
development of greenfield projects
• NonNon-recourse concessionaire funding,
and with local currency
• Taking up majority stakes which enable
asset control during the development phase
• Minimum equity profitability of 15%,
15%, in Euros
• Business model based in tollway charges,
periodic asset rotation and rere-leveraging
• Stable cash flow contribution via annual
dividends
– With core shareholders supportive
of dividend payments
• Low risk profile investment
– Low volatility and significantly liquid stock
– Low risk infrastructure operations
– Long-term investor base
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OHL Concessions' EBITDA is now over €850M, and the asset rotation
strategy has resulted in high return rates
Rapid growth of the EBITDA (€
(€M)
High return rates through asset rotation
Selection of operations from the past few years
CAGR: +25%
866
91
2004
InvestInvestment
Years
Fumisa
€73M
5
ConMex
€163M
11
I2000
€66M
9
Alasa
€47M
10
OHL Brasil
€132M
11
Abertis
€485M
2
Operation
2014
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IRR (%)
Average
IRR
~27%
16
OHL Concessions has a low execution risk, international portfolio
7 out of 13 international concessions currently in operation
Remaining years of the international OHL Concessions' portfolio
37
28
19
28
30
45
41
30
38
30
25
23
19
Mexico
8 concessions
~€5B investment managed
Chile
3 concessions
~€1.3B investment
Other Lat. Am.1
2 concessions
~€1.2B investment
1. Peru and Colombia
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ShortShort-term growth will stem from transportation infrastructures
within countries in the Pacific Alliance
Sector strategy
Current footprint
Focus on developing
transportation infrastructures
• Highways
• Railroads
• Ports
• Airports
Priority given to sectors in which
revenue correlates to GDP
• Avoiding the businesses
specific risks (real estate,
industry, agriculture, etc.)
Geographic strategy
Consolidate
current
positioning
Mexico
Grow
in the short
term
Colombia
Chile
5 projects
8 projects
1 project
1 project
3 projects
Countries with current presence
Countries with development potential
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Explore
specific
sectors
Enter in the
medium
term
Peru
Brazil
USA
Canada
18
OHL Engineering & Construction
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Jamal Abdul Nasser Viaduct (Kuwait)
19
Four key design principles for the definition of
OHL Engineering & Construction's Strategic Plan
Four key design principles...
1
2
3
4
...with specific targets for each Division
Diversification of the average size
of projects, and focus on the
transportation infrastructure sector
Geographic focus on markets with growth
potential and high attractiveness for the
Group: Home Markets
Collaboration with OHL Concessions
Strengthening of areas of expertise by making
the most of the Group's cumulative experience
Focus on Power Generation, Mining,
and Oil & Gas sectors
Optimization of synergies with
OHL Construction in Home Markets
Reinforcement of risk management
and human resources development
to achieve sustainable growth
International expansion of activity in
American Home Markets
Promotion of collaboration with other
OHL Divisions and maximization of
synergies within OHL E&C
Optimization of synergies with other
Divisions in the OHL Group
OHL E&C's Strategic Plan is based on organic growth and does not foresee significant investments
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Every OHL Engineering & Construction Division has ambitious
growth plans up to 2020
Evolution of OHL Engineering & Construction's revenue (€
(€M)
OHL Construction
OHL Industrial
OHL Services
CAGR: +11%
CAGR: +27%
CAGR: +23%
5,300
3,900
1,000
2,793
700
500
350
234
2014
2017
2020
Rapid growth in Latin American
(x5) and North American (x2)
Home Markets
2014
145
2017
2020
Current project orderbook of
already ~€
~€430M in early 2015
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2014
2017
2020
International growth by entering
American Home Markets
21
OHL Construction activity will focus on Home Markets
Increasing relevance of North American and Pacific Alliance markets
OHL Construction revenue by geography (% 2020)
2014
2020
70%
~85%
Home Markets
15-20
5-10
North and South America
40%
~65%
10-15
5-10
5-10
100
10-15
15-20
Forecasted mix according to current potential
identified in each market
15-20
USA and
Canada
Mexico
Chile
Peru
Colombia
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Spain
Czech
Republic and
catchment
area
RoW
Total
22
The Strategic Plan is expected to balance the average size of projects
and remain committed to transportation infrastructures
Forecasted mix according to current potential identified in each market
Balanced project size
Focus on transportation infrastructures
Cumulative revenue '15'15-'20 (%)
Cumulative revenue '15'15-'20 (%)
10
15
~75%
Transportation
infrastructures
25
25
15
10
25
100
25
100
Focus of collaboration
with OHL Concessions
40
10
< 10
10-50
50-150 150-300 >300
Total
Roads and
highways
Average project size (€
(€M)
Ports and
airports
Railways
and subways
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Hospitals
and singular
buildings
Energy,
Total
mining
and others
23
OHL Industrial will focus on increasing its activity
in the Power Generation, Mining, and Oil & Gas sectors
Full development of EPC projects and operation and maintenance services provider
Power generation
• Gas plants
Mining
• Wet and dry process
facilities
• Hydroelectric plants
• Solar power plants
and other renewables
• Seaport and land
terminals
• Full transportation and
storage systems
• Dosing, screening,
and crushing
Oil & Gas
• Oil and gas pipelines
• Storage and regasification
terminals
• Gas processing
plants
• Ancillary refining and
petrochemical facilities
Maintaining the Solids Transportation and Fire Protection Systems businesses
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Three priority sectors and two growth models for
OHL Services: Consolidation in Spain and Internationalization
Geographic strategy
Sector strategy
Facility
Management
Growth
consolidation
Maximize cash flow generation
while maintaining margins
Spain
Promote international development
Mexico
Urban
services
Industrial
maintenance
Consolidate OHL's current footprint
in the Spanish market
USA
Business
internationalization
towards American
Home Markets
Launch international expansion
along with other Divisions
Explore mediummedium-term entry
opportunities in the sector, both in
Spain and other Home Markets
Peru
Chile
Colombia
OHL Services' international expansion strategy will combine organic and inorganic growth
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The Strategic Plan promotes synergies and collaboration
among all of OHL Engineering & Construction's Divisions
Transportation
infrastructure1
Industrial
Works2
Singular
Buildings3
JointJoint-management of business
development functions between
each Division
OHL
Concessions
Centralized processes for the
Group's knowledge management
in specialized areas
OHL
Construction
OHL
E&C
Development of a jointjointcollaboration model
CrossCross-Division teams in the
research phase, as well
as during project execution
OHL
Industrial
OHL
Services
Formal collaboration models
between Divisions to share
risks and workload
Participation / Involvement in projects
1. Roads and highways, railways and subways, ports and airports. 2. Energy, mining, and hydraulic works. 3. Hospital and non-residential building projects
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OHL Developments
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(Madrid)
27
OHL Developments will continue to promote unique projects
for toptop-quality tourism and recreational complexes
Divestment of
exploited projects
8
1
Seeking and identification
of opportunities
Exploitation
and operation
7
2
Viability analysis,
global conceptualization,
and project development
Participation in the
marketing and sales
phases
6
3
Construction design
and execution
Identification
and shaping of
strategic partnerships
5
4
Obtaining funds
and structuring of
financing
Focusing on projects with limited investment requirements for OHL Developments
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OHL Developments currently has three large projects
at different execution phases
Mayakoba
Canalejas (Madrid)
TopTop-level tourism project
on the Mayan Riviera
Urban revitalization in
Madrid's historic center
Paradigm of the balance
between tourist development
and environmental protection
Will lead to the development
of Four Season's first hotel in
Spain
Second phase under way:
Mayakoba City
• ~17,000 homes
• Retail area
• Second golf course
Considers converting
seven historic buildings
• Hotel and homes
• Parking
• Shopping mall
Old War Office (London)
Project to restore and
renovate the emblematic War
Office
Will lead to the development
of a fivefive-star hotel and luxury
apartments in downtown
London
Mayakoba and Canalejas have made OHL Developments an international reference
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Conclusions
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Autovía del Cantábrico A-8 (Spain)
30
Key conclusions of the Strategic Plan and Vision for 2020
Principles of OHL Group Strategic Plan
A
B
C
Optimize sustainable cash flow
generation and self funding for all
divisions
OHL Group commitments for 2020
2+
x
85% of revenue coming
from Home Markets
Maximization of project profitability
and strengthening of risk control
mechanisms
Focus of OHL Group's activity on
priority markets and sectors
Industrial and Services will
represent 20% of revenue
2
x
D
~€8B revenue vs. €3.7B in 2014
Leveraging on synergies and
collaboration potential among
the Group's Divisions
~€2B EBITDA vs. €1.1B in 2014
Maintaining the recourse debt /
recourse EBITDA ratio below 3x
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Strategy Update 2020
OHL Group
Madrid, March 2nd, 2015
Autopista Urbana Norte (México)