Ferrovial N.V. · BME:FER
Ferrovial — Ferrovial Servicios — Investor Day (November 2011)
60 slides from Ferrovial's investor day presentation, Nov 22, 2011
Slide 1: Investors' Day: Cash, Profitability and Growth
Investors’ Day Cash, Profitability and Growth London, November 22nd 2011
Slide 2: Disclaimer
DISCLAIMER This document has been prepared by Ferrovial Servicios, S.A. (“Ferrovial Servicios” or “the Company”) exclusively for use during the presentation of the Investors’ Day addressed to investors and analysts. Therefore, this document may not be disclosed or published, nor used by any other pe
Slide 3: Welcome
Welcome Ernesto López Mozo CFO Ferrovial 3
Slide 4: Ferrovial Services: Cash, Profitability and Growth
Ferrovial Services: Cash, Profitability and Growth Santiago Olivares CEO Ferrovial Services 4
Slide 5: Agenda
Agenda 1. Ferrovial Services: Cash, Profitability and Growth 11:00 – 11:40 2. Strong and Resilient Financial Performance 11:40 – 12:10 3. Practical Application of Asset Management as a Key Differentiator 12:10 – 12:40 4. Anticipating Market Challenges 12:40 – 13:10 Break – Lunch 13:10 – 14:00 5. Cut
Slide 6: Strong Service Provider with High Growth Prospects
Strong Service Provider with High Growth Prospects Scale 1) Leading positions • Sales EUR 2.6 B • Local Government – Spain, UK • Employees 44,000 • Waste Treatment – Spain • Order book EUR 12.4 B • Facility Management – Spain • Asset Management – UK 1) 2010 data, Swissport not included 6 Source: Fer
Slide 7: Scale and Capabilities through Acquisitions
Scale and Capabilities through Acquisitions Growth Operational excellence 7.7% 10.5% EBITDA 810 12,370 Order book (EUR M) 3,900 Sales Aviation Services Infrastructure Maintenance Environmental Services 340 Facility Management 2002 2003 2004 2005 2006 2007 2008 2009 2010 7 Source: Ferrovial Services
Slide 8: Three Service Lines with Specific Attributes
Three Service Lines with Specific Attributes Recurring EBITDA Margin capex Client Profile Contract length (% sales) Sector FS 1) • Government • 3-10 years 1-3% 7-10% 9.5% Infrastructure Maintenance • 20-25 years (PPP) • Government • 7-10 years 6-8% 14-18% 17.1% Environmental Services • Industry • 20
Slide 9: Strong Competitive Position in Spain and the UK
Strong Competitive Position in Spain and the UK FS 2010 (EUR M) FS position Sales EBITDA Spain UK Main brands 1,060 101 Top 3 Top 3 Infrastructure Maintenance 952 163 Top 3 Top 10 Environmental Services Facility and 586 37 Top 3 Top 10 Energy Management 9 Source: Ferrovial Services
Slide 10: Focus on Key Value Drivers
Focus on Key Value Drivers Short-term drivers Long-term drivers • Order book • Pipeline Sales • Success rate • Long-term contracts Growth • Renewals, extensions • Client partnerships • Project work • New geographies • Operational efficiency • Value-added services EBITDA Margin • Project work Activit
Slide 11: Our Strategic Vision
Our Strategic Vision Partner of choice to clients and citizens to optimise the performance of urban, transport and social infrastructure • Client Focus Differentiation • Integrated Service Offer drivers • Whole Life Asset Management • Innovation 11
Slide 12: Strong and Resilient Financial Performance
Strong and Resilient Financial Performance Fernando González de Canales CFO Ferrovial Services 12
Slide 13: Strong Organic Financial Performance
Strong Organic Financial Performance Ferrovial Services’ financial performance (CAGR 2006-10) Total Cumulative operating Sales +4.6% +7.6% +5.8% cash flow (2006-10): EUR 1 B Secure revenue flow • Order book and pipeline EBITDA +3.2% +11.0% +5.8% • Quality of client base Operational optimisation • Co
Slide 14: Sound Financial Evolution Despite Economic Crisis
Sound Financial Evolution Despite Economic Crisis Ferrovial Services’ financial performance (EUR M) Order book Sales 12,373 2,570 2,596 2,594 10,749 2,290 9,882 2,068 8,552 13.6% 1,011 1,069 1,099 7.6% 7,611 6,592 866 5,276 820 4,839 3,992 3,956 12.1% 1,424 1,559 1,527 1,495 4.6% 5,043 5,473 5,781 1
Slide 15: Strong Order Book and Pipeline
Strong Order Book and Pipeline FS’ secured sales (EUR B) Identified potential projects for 2012 6.6 EUR 23.7 B Infrastructure 8.1 Maintenance 4.6 Environmental Services 2.0 1.5 1.2 Facility 0.9 10.3 Management 12 13 14 15 >2015 15 Source: Ferrovial Services analysis
Slide 16: Contract profile – Road Maintenance
Contract profile – Road Maintenance EUR 50 M Term • 4 to 6 years Capex • 1-3% sales • Fixed amount Revenue • Project work • Schedule of rates Success • Experience Year 1 Year 2 Year 3 Year 4 Year 5 factors to • Technical solution win • Price Revenues EBITDA Cash Flow Note: Disguised data, informatio
Slide 17: Contract profile – Waste Treatment
Contract profile – Waste Treatment EUR 30 M Term • 15 to 20 years Capex • 10-20% sales • Fixed amount Revenue • Variable rate (EUR/tn) • Third parties Success • Technical expertise Y1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 factors to • Track record win • Environmental solution Revenues EBITDA Ca
Slide 18: Contract Profile – Long Term Asset Management
Contract Profile – Long Term Asset Management EUR 80 M Subcontract Term • 20 to 25 years Equity • Minority stake Index 100 Equity holder Contract operations • 100% Success • Understanding client factors to needs Y1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 win • Funding capacit
Slide 19: Contract Development Through Client Partnership
Contract Development Through Client Partnership Example: Sales and scope of contracts with industrial client (EUR M) Term 3 years 3 + 2 years 5 + 3 years 14.4 9.7 3.9 4.1 2.8 3.1 1.7 1.6 1.8 2002 2003 2004 2005 2006 2007 2008 2009 2010 ... 2017 • Facilities • Facilities • FM (408,100 sqm) Management
Slide 20: Stable Cash Flow Generation
Stable Cash Flow Generation Ferrovial Services’ cash flow (EUR M) Average Average Cash Flow optimization 2006-08 2009-10 • Quality of the client base of existing and new contracts Operating 202 210 cash flow • Active working capital management Capex -135 -93 • Project finance, operating leases Activ
Slide 21: High Quality Client Portfolio
High Quality Client Portfolio Ferrovial Services’ main clients in Spain (2010) Sales of Top 10 clients (EUR M) Top 20 cities • Madrid City Council 83.6 La Coruña Getxo San Sebastián • Madrid Region 60.2 Baracaldo • Murcia City Council 58.3 Zaragoza Cerdanyola • Barcelona City Council 57.5 Barcelona
Slide 22: Continuous Working Capital Management
Continuous Working Capital Management Ferrovial Services DSO1) and Operating Cash Flow (EUR M) Avg. 2006-08 Avg. 2009-10 Working Capital optimisation 76 • Cash forecast by client/contract 68 63 54 DSO Operating cash flow • Active management (bonus linked to operating cash flow targets) 150 182 148 1
Slide 23: Practical Application of Asset Management as a Key Differentiator
Practical Application of Asset Management as a Key Differentiator Mel Ewell CEO Amey 23
Slide 24: End-to-End Asset Management
End-to-End Asset Management Strategic alignment of Asset Management ASSET The development & design of completely PLANNING new infrastructure assets Maximise ROI and optimise risk to core business objectives The whole life optimisation of existing ASSET assets including life-cycle, routine, major OPT
Slide 25: Asset Management as a Differentiator
Asset Management as a Differentiator Differentiating through asset Cost management Asset Management approach Efficiency Gain c25% • Fully integrated business model Cost supporting stand alone or holistic Time Efficiency service package Gain c25% • Competitive scale with 2,500 Time Time professionals
Slide 26: Asset Management: Innovation and Partnership
Asset Management: Innovation and Partnership Partnership Approach to Innovation Engaging • Best practice sharing harnessed across the whole group – e.g. Ferrovial Employees Asset Management Center of Excellence • Profit sharing partnerships (e.g. North Lanarkshire CC) Client Partnerships • Long term
Slide 27: Optimising the Existing Asset
Optimising the Existing Asset Example: Network Rail Network Rail GRIP Framework GRIP 1 GRIP 2 GRIP 3 GRIP 4 GRIP 5 GRIP 6 GRIP 7 GRIP 8 Construction Output Pre- Option Single option Detailed Scheme hand Project definition feasibility selection development design test & back close out commission Case
Slide 28: Benefits of Whole Life Asset Management
Benefits of Whole Life Asset Management Optimised Efficiency • Cost efficiencies • Environmental efficiencies • Improved asset utilisation Societal Benefits Risk Transfer • Skills and employment • Asset accountability WHOLE LIFE ASSET transfers to private sector • Community engagement MANAGEMENT • H
Slide 29: Application of Whole Life Asset Management
BIRMINGHAM PARTNERSHIP Application of Whole Life Asset Management Contract dynamics • 25 year, £2.7bn PFI contract • Largest local authority contract in Europe • 5 year capex period - £350 M - Payment released every semester according to milestones & Service Level Agreements • 20 year maintenance pe
Slide 30: Contractual Structure
BIRMINGHAM PARTNERSHIP Contractual Structure Governance structure Main benefits for the client • Ability to manage complex financing and attract private investment • Payment by results ensure quality Banks SPV Equity holders metrics are delivered Service subcontract • Investment in new technology •
Slide 31: Example: Birmingham Tunnels Refurbishment
BIRMINGHAM PARTNERSHIP Example: Birmingham Tunnels Refurbishment ASSET • Integration of specialists teams PLANNING - Design, civils, M&E, technology systems, transportation & planning, operational delivery • Tunnels integrated into asset management schedule for the capex period ASSET OPTIMISATION •
Slide 32: Anticipating Market Challenges
Anticipating Market Challenges Íñigo Jodra Director of Strategy & Development 32
Slide 33: Our Clients Face a Challenging Environment
Our Clients Face a Challenging Environment 1. Economic • Limited economic growth • Credit and liquidity shortages Constraints of public resources and more demanding society 3. Environmental 2. Socio-demographic • Regulation • Urban population • More responsible society • Unemployment 33
Slide 34: Search for Efficiency of the Public Sector
1. ECONOMIC Search for Efficiency of the Public Sector Public spending in infrastructure maintenance services (2010) EUR 12 B EUR 20 B CAGR (08-10): +1% CAGR (08-10): +6% • Bundling • Outsourcing Trends public • Scope optimisation • Partnership schemes sector • Privatisation • Bundling • Financial s
Slide 35: Cities Are a Growing Priority
2. SOCIODEMOGRAPHIC Cities Are a Growing Priority Increasing Urban Population Dissatisfied citizens World population (billion) Example: Spanish cities 1) 8.3 Citizen Satisfaction (%) 100 7.1 41% Non- 80 50% urban 60 40 59% Urban 50% 20 0 2015 2035 0 20 40 60 80 100 120 140 Cities pop.>1 M 477 527 Bu
Slide 36: Regulation Drives Environmental Focus
3. ENVIRONMENTAL Regulation Drives Environmental Focus Main regulatory frame Main content/objectives • Directive 2010/75/EU • Limits to greenhouse gas emissions CO2 Industrial Emissions • BAT1) implementation emissions • New monitoring requirements Waste as • Directive 2008/98/EC Waste • 2020 recycl
Slide 37: Clients Demand New Business Models
Clients Demand New Business Models Intelligent Cost and investment efficiency • Systems integration • Data management Connected • Asset management • Environmental efficiencies Bundled • Long-term • Multi-service scope • Payments by results Single Sustainability and citizen experience 37 Source: Ferr
Slide 38: Connected Contracts Are a Reality
Connected Contracts Are a Reality Examples of existing contracts & current bids Service providers Scope Years EUR B Bidders Winner • Highways 25 3.2 • Amey • Amey Birmingham maintenance, • Vinci/John street lighting Laing/WSP • Waste collection 20 1.6 • Cespa • Cespa Murcia and treatment, • Sacyr st
Slide 39: FS is Ready to Seize the Opportunity
FS is Ready to Seize the Opportunity Business models of European support services companies + New success factors Integrator Asset Manager Integrated management • End-to-end delivery FS • Integrated offer to cities • Sustainability • Scale - Specialist Bundler - + Portfolio of services Support servi
Slide 40: Break-Lunch
Break-Lunch 40
Slide 41: Cutting-Edge Services: Intelligent Cities
Cutting-Edge Services: Intelligent Cities Enrique Sánchez Director of Cities 41
Slide 42: An Attractive Market – FS is Well Positioned
INTELLIGENT CITIES An Attractive Market – FS is Well Positioned Large potential market FS capabilities and resources • Strong presence in the city services market - 134 out of 339 cities in Spain and UK are FS clients Cities >50K 145 194 • Largest integrated portfolio of urban inhabitants services C
Slide 43: FS Model: Higher Quality at Lower Cost
INTELLIGENT CITIES FS Model: Higher Quality at Lower Cost Main features Benefits for Cities and Citizens • Integration economies of scale • 20% public expenditure savings • Operational excellence efficiency • Output-oriented/KPIs flexibility • Citizen satisfaction • Citizen/client focus quality • “S
Slide 44: Action Plan
INTELLIGENT CITIES Action Plan • Specific Cities division created Main short- term actions • Commercial & Marketing plan • City services re-engineering Impact in 2012-16 Main • Multidisciplinary and dedicated team • Market leader in Spain and UK resources • Far-reaching commercial network • Strong i
Slide 45: Cutting-Edge Services: Energy Efficiency
Cutting-Edge Services: Energy Efficiency Juan Ignacio Beltrán CEO Ferroser 45
Slide 46: Energy Efficiency is Emerging in Spain and the UK
ENERGY EFFICIENCY Energy Efficiency is Emerging in Spain and the UK Market (EUR M, CAGR) Main growth drivers • Energy cost optimization +20% • Environmental regulation 2,300 • Corporate social responsibility 920 • Quality of life improvement • Development of Cities 2010 2015 Main players +25% • FM s
Slide 47: FS Model: End-to-End Focused on Total Savings
ENERGY EFFICIENCY FS Model: End-to-End Focused on Total Savings FS Energy Efficiency model Example: Bilbao Kirolak contract Client energy cost • Client: Bilbao Council ha r e o f savings Client’s s • Scope: 24 centers Cost, savings FS’ share of savings • Term: 10 years Energy cost • Benefits for the
Slide 48: Action Plan
ENERGY EFFICIENCY Action Plan • Grow share in buildings and public lighting Main short- term actions • Increase presence in Industrial market • Contracts in district heating and cooling • Sales network in Spain and UK Impact in 2012-16 Main resources • Engineering and technical personnel • Top 3 pla
Slide 49: Cutting-Edge Services: Energy from Waste
Cutting-Edge Services: Energy from Waste Javier Llansó CEO Cespa 49
Slide 50: High Growth Market in Environmental Services
ENERGY FROM WASTE High Growth Market in Environmental Services Market (EUR M, CAGR) Main growth drivers Growth opportunities +11% 2,154 • Ambitious targets of Renewable Energies Plan 2011-20 • EU regulation 612 • 9 new incinerator projects • European Commission forecast: increase in • Subsidies to e
Slide 51: FS Has the Relevant Experience and Capabilities
ENERGY FROM WASTE FS Has the Relevant Experience and Capabilities 660 GWh produced in 2010 Other competitive advantages • Landfill and anaerobic digestion • Experience in public services and biogas (14 plants) waste management/treatment • Municipal solid waste thermal • Know-how in biogas energy tre
Slide 52: Action Plan
ENERGY FROM WASTE Action Plan • Development of awarded capacity Main short- − 1 Thermal Treatment plant (UK) term actions − 8 SRF1) production plants (Spain) − 3 Anaerobic Digestion plants (Spain, UK, Portugal) − 3 Combined Heat & Power plants (Spain) Impact in 2012-16 • Leader in Spain, Top 3 in UK
Slide 53: Strategic Plan to Maintain Profitable Growth
Strategic Plan to Maintain Profitable Growth Santiago Olivares CEO Ferrovial Services 53
Slide 54: Three Strategic Guidelines
Three Strategic Guidelines 1. Optimize operational • Cross-functional efficiency programs efficiency 2. Expand value-added • Cutting-edge innovation projects services • Acquire distinctive capabilities portfolio 3. Grow in new • Multi-service platforms in Europe and America geographies 54 Source :Fe
Slide 55: Ongoing Efficiency Program
1. OPERATIONAL EFFICIENCY Ongoing Efficiency Program Key levers Target Indirect costs • Accounts payable (central, contracts) – • Temporary employees recruitment • 20 M£ savings Infrastructure Maintenance UK • Organisation Direct costs – • Route optimisation Environmental Services • Supplier managem
Slide 56: Cutting-Edge Services to Foster Organic Growth
2. VALUE-ADDED SERVICES Cutting-Edge Services to Foster Organic Growth Intelligent Cities Energy Efficiency Energy from Waste • 15-25% cost savings • 20% energy • Reduction of CO2 • Quality of service consumption savings emissions • Citizen engagement • Capex and risk • Reduction of landfilled shari
Slide 57: New Geographies – Key Driver for Value Creation
3. NEW GEOGRAPHIES New Geographies – Key Driver for Value Creation Strategic rationale Internationalization model • Profitable growth • Focus on large and growing markets • Diversification - Emerging: strong macroeconomic fundamentals • Distinctive, proven business model - Developed: propensity to o
Slide 58: Future Profitable Growth and Cash Generation
Future Profitable Growth and Cash Generation • 1 Proven and resilient business model 2011-15 goals (organic) • 2 Key distinctive capabilities • 3 Clear strategic direction • CAGR Sales: 5-8% • EBITDA Margin: 10%+ • 4 Ability to develop new markets • 5 Qualified, committed management team 58
Slide 59: Q&A
Q&A Ferrovial Services’ Executive Committee 59
Slide 60: Final Remarks
Final Remarks Íñigo Meirás CEO Ferrovial 60