ACS, Actividades de Construccion y Servicios SA · BME:ACS

ACS, Actividades de Construccion y Servicios SA — Merger or Acquisition (July 2003)

43 slides from ACS, Actividades de Construccion y Servicios SA's merger presentation, Jul 7, 2003

  1. Slide 1: Presentation on the Merger Proposal: A New Leader in Europe

    Presentation on the Merger Proposal A New Leader in Europe 7th July 2003

  2. Slide 2: Disclaimer

    Disclaimer ƒ This document contains market assumptions, information and forward-looking statements with respect to ACS, Actividades de Construcción y Servicios, S.A. (“ACS”) and Grupo Dragados, S.A. (“DRC”) and their respective subsidiaries which have been compiled from different sources. ƒ Such for

  3. Slide 3: Agenda: The Proposed Transaction

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  4. Slide 4: Description of the transaction

    Description of the transaction ƒ Merger proposal through a share-for-share exchange offer ƒ Exchange of 33 newly-issued ACS shares for every 68 existing DRC shares 9 54.46 new ACS shares to be issued to DRC shareholders • Representing 46% of the share capital of the New Group 9 Cancellation of 34.88

  5. Slide 5: Strategic rationale of the merger

    Strategic rationale of the merger ƒ Creation of a European leader ƒ #1 in the most profitable market: Spain ƒ Market leader in all businesses related to the development and management of infrastructure ƒ High complementarity in diversification strategies ƒ Creation of significant synergies ƒ Financi

  6. Slide 6: Considerations on the exchange ratio

    Considerations on the exchange ratio ƒ Recommendation based on different valuation methodologies 9 Average historical prices for ACS and DRC 9 Research analysts’ reports 9 Sum-of-the-parts valuation based on multiples of comparable companies 9 Discounted cash-flow analysis ƒ Supported by prestigious

  7. Slide 7: Preliminary timetable

    Preliminary timetable “Proyecto de Fusión” (merger proposal) approved by the Boards of 2nd July Directors of ACS and DRC Publishing of the report by the Independent Expert to be appointed by the August Mercantile Registry September EGMs of both ACS and DRC to be called EGMs of both ACS and DRC Octob

  8. Slide 8: The New Group

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  9. Slide 9: The New Group

    The New Group ƒ Leader in Spain on European scale ƒ A success story ƒ Efficient organization ƒ Strong strategic values ƒ Management team committed to value creation ƒ Higher market capitalization coupled with increased liquidity 9

  10. Slide 10: Creation of a market leader

    Creation of a market leader ƒ Revenues: €10.8bn in 2003E ƒ Diversification: 50% of revenues from services ƒ EBITDA > € 900 million ƒ Profitability: ROE > 20% ƒ Business lines 9 #1 in Spanish construction 9 #1 in industrial services in Spain, Portugal and Latin America 9 #1 in waste management in Spa

  11. Slide 11: A success story… in terms of growth

    A success story… in terms of growth ACS – REVENUES (€ bn) DRC – REVENUES (€ bn) CAGR 98-02 = 14.8% CAGR 98-02 = 15.8% 5.5 5.1 4.4 4.3 3.9 3.6 3.4 26% 2.7 15% 20% 19% 13% 10% 12% 8% 1999 2000 2001 2002 1999 2000 2001 2002 Revenues Growth (y-o-y) Revenues Growth (y-o-y) 11

  12. Slide 12: A success story... in terms of profitability

    A success story... in terms of profitability ACS – EBITDA (€ million) DRC – EBITDA (€ million) CAGR 98-02 = 28.5% CAGR 98-02 = 22.0% 411 423 391 353 331 280 9.2% 219 9.0% 8.0% 182 8.2% 7.6% 7.1% 6.1% 6.7% 1999 2000 2001 2002 1999 2000 2001 2002 EBITDA EBITDA/Revenues EBITDA EBITDA/Revenues 12

  13. Slide 13: A success story... in terms of net income

    A success story... in terms of net income ACS – NET INCOME (€ million) DRC – NET INCOME (€ million) CAGR 98-02 = 29.1% 241 CAGR 98-02 = 27.8% 221 181 183 149 121 4.7% 107 4.1% 4.2% 3.8% 4.0% 85 3.5% 3.0% 3.2% 1999 2000 2001 2002 1999 2000 2001 2002 Net Income Net Income/Revenues Net Income Net Incom

  14. Slide 14: A success story... based on a dynamic and effective management team

    A success story... based on a dynamic and effective management team Merger of Merger of Dragados Merger of Strategic Plan Valora2000 Inmobiliaria Aurea with Dragados XXI with Aumar with Urbis ACESA 1995 1996 1997 1998 1999 2000 2001 2002 SHAREHOLDER RETURN * VALUE CREATION > 25% (Annual average sinc

  15. Slide 15: ... and based on an efficient organization

    ... and based on an efficient organization NEW GROUP ACS + DRC Urban and Industrial Construction Logistics Concessions Services Services Revenues 2002 53% 19% 28% Equity Accounted EBITDA 2002 45% 27% 28% Equity Accounted 15

  16. Slide 16: ... with well-defined strategic values

    ... with well-defined strategic values CRITERIA OBJECTIVES ƒ Strengthen current leadership in ƒ Corporate culture focused on infrastructure development customer service ƒ Achieve maximum client satisfaction 9 High standards in terms of quality, ƒ Competitive advantage based security and reliability

  17. Slide 17: ... and a highly committed management team

    ... and a highly committed management team ƒ Top management with stake in share capital ƒ Compensation scheme linked to value creation ƒ Proven and extensive track-record in successfully integrating businesses 17

  18. Slide 18: A benchmark in Europe

    A benchmark in Europe ƒ High market capitalization 9 More than € 4.4bn 9 #1 in the sector in Spain 9 #2 in the sector in Europe ƒ Increased liquidity 9 Free float > 60% 9 Average daily trading volume > € 20 million ƒ Stable core shareholder base 18

  19. Slide 19: Description of the Business Lines

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  20. Slide 20: Construction: a clear leader in Spain

    Construction: a clear leader in Spain 2002 Total Construction 2002 Construction Revenues Revenues (€ bn) in Spain (€ bn) 5.3 4.6 3.8 2.7 18 18 2.9 20 20 2.6 2.4 2.4 17 3,13 3,13 2,61 16 na 2,61 16 New Group Ferrovial Acciona FCC New Group Ferrovial Acciona FCC Backlog (months) Backlog (months) 20

  21. Slide 21: …focused on civil works

    …focused on civil works 2002 Revenue Breakdown 2002 Revenue by Client Residential Non- Building Residential International 11% Building 13% 22% Central Admin. 33% Private 31% Regional Admin. 17% Civil Works Local 67% Admin. 6% 21

  22. Slide 22: …and a clear strategic positioning

    …and a clear strategic positioning OBJECTIVE COMPETITIVE ADVANTAGE ƒ Maintain consistent growth ƒ Highly competitive position in public ƒ Consolidate profitability through sector projects 9 Proven quality and technical capacity focusing on projects of: 9 Wide global multi-disciplinary experience 9 S

  23. Slide 23: Urban & Logistics Services: a benchmark for the sector

    Urban & Logistics Services: a benchmark for the sector Urban & Logistic Services revenues 2002 (€ bn) 2.0 1.9 0.6 0.4 0.3 New Group FCC CESPA Acciona Ferrovial 23

  24. Slide 24: ...with a multi-service approach

    ...with a multi-service approach Environmental Services Port and Logistics Services ƒ Solid urban waste management: ƒ Port handling 9 Collection and treatment 9 Loading 9 Street cleaning 9 Towage ƒ Special waste ƒ Maritime Agency 9 Sanitary 9 Consignment 9 Industrial 9 Transit ƒ Integrated managemen

  25. Slide 25: …and a recurring and profitable revenue flow

    …and a recurring and profitable revenue flow 2002 Revenues by activity EBITDA 2002 by activity (€ 2.0 bn) (€ 221 m) Integrated Transport Integrated Transport Maintenance 7% Maintenance 14% 22% 8% SPL 24% SPL 15% Environment Environment 63% 47% 25

  26. Slide 26: ... with a clear focus on growth

    ... with a clear focus on growth OBJECTIVE COMPETITIVE ADVANTAGE ƒ Maintain double digit growth rates ƒ Technological leadership in over the next 3 years environmental services: 9 SUW: Incineration, biological ƒ Lead the solid urban waste sector treatment, compost 9 Special Waste: Toxic waste, oil,

  27. Slide 27: Industrial Services: an unrivalled leader

    Industrial Services: an unrivalled leader Industrial Services revenues 2002 (€ bn) 2.8 1.5 0.6 0.5 0.4 Técnicas New Group Abengoa Elecnor Isolux Reunidas 27

  28. Slide 28: ...Positioned throughout the value chain

    ...Positioned throughout the value chain Promotion Engineering Installation Maintenance Energy 9 9 9 9 Oil & Gas 9 9 9 9 Systems - 9 9 9 Industrial - 9 9 9 Integrated services for large clients and public sector 28

  29. Slide 29: .... Highly diversified by activity and geography

    .... Highly diversified by activity and geography 2002 Revenues by activity 2002 revenues by (€ 2.8 bn) geographical area (€ 2.8 bn) Other Europe Oil & Gas 5% Industrial Latam 10% 19% 23% 14% Energy 30% Systems 28% Spain 71% 29

  30. Slide 30: ... with solid foundations for future growth

    ... with solid foundations for future growth OBJECTIVE COMPETITIVE ADVANTAGE ƒ Lead sector growth in the coming ƒ Unrivalled leadership position years ƒ State-of-the-art technical qualification ƒ Improve productivity ƒ Processes and services integration capacity 9 Growth in value added services ƒ Wi

  31. Slide 31: Concessions: a world leader

    Concessions: a world leader • Over €10 bn invested • 42 highway concessions • 5 airport concessions • 1,500 km of managed railways World leader in • 2 railway concessions infrastructure • Over 31.7 m passengers in • 2 telecommunications promotion airports concessions • 135 car parks • Some 100,000 p

  32. Slide 32: Core shareholder in Abertis

    Core shareholder in Abertis #1 European concession #2 European concession company in terms of company by market shareholders’ equity capitalization € 2.0 bn € 6.0 bn #3 European concession #2 European concession company by number of company by net profit kilometres managed 1,500 km + € 300 million 3

  33. Slide 33: Highly competitive strategic positioning

    Highly competitive strategic positioning OBJECTIVE COMPETITIVE ADVANTAGE ƒ Lead the global market in promotion ƒ Excellent and proven experience of concessions over 30 years: 9 Bid ƒ Develop a diversified portfolio of 9 Financing Reliability projects 9 Construction 9 Execution ƒ Foster international

  34. Slide 34: Value Creation Opportunities

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  35. Slide 35: Outstanding value creation potential

    Outstanding value creation potential • Attractive business • Improve visibility of opportunities in the revenues and infrastructure sector margins • Generation of synergies • Increase returns on • Financial strength capital employed • “Must have” construction • Increased liquidity of stock shares 35

  36. Slide 36: Two strong growth drivers of future activity

    Growth opportunities: strong fundamentals Public Investment Private Investment • Infrastructure Plan • Recovery of investment in equipment • National Hydrological Plan • Investment in infrastructures • National Energy Plan 9 New highway concessions 9 PFI in hospitals, airports, light • Solid Urban W

  37. Slide 37: Significant synergy generation opportunities over the next 3 years

    and significant synergy generation opportunities over the next 3 years Cost savings of approx. € 75 million (post-tax) Corporate Urban, Logistics & Industrial 9 Streamlining of organisation 9 Streamlining of organisation 9 Tax shield of goodwill 9 Achievement of economies of scale and amortisation b

  38. Slide 38: Financial Impact

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  39. Slide 39: Consolidated 2002 pro-forma P&L

    Consolidated 2002 pro-forma P&L New ACS DRC € million Group Revenues 4,420 5,542 9,962 EBITDA 411 391 802 % Margin 9.3% 7.1% 8.1% EBIT 305 271 576 % Margin 6.9% 4.9% 5.8% EBT 250 239 447 Net Attributable Profit 181 221 359 39

  40. Slide 40: Financial strength: pro-forma Balance Sheet as at 30 April 2003

    Financial strength: pro-forma Balance Sheet as at 30 April 2003 New ACS DRC € million Group Shareholders’ Equity 1,030 1,155 1,738 Total Assets 5,363 5,888 10,804 Company Net Debt 793 733 1,526 Project Finance 205 103 308 Total Net Debt 998 836 1,834 Net Debt / 96.9% 72.4% 105.5% Shareholder’s Equit

  41. Slide 41: Conclusions

    THE PROPOSED TRANSACTION THE NEW GROUP DESCRIPTION OF THE BUSINESS LINES VALUE CREATION OPPORTUNITIES FINANCIAL IMPACT CONCLUSIONS

  42. Slide 42: Conclusions

    Conclusions 9 Creation of a European leader 9 Value-creation oriented strategy 9 Committed management team with proven track record Ambitious and 9 Unrivalled position to benefit from attractive opportunities in the infrastructure sector achievable objectives 9 Financial strength 9 Attractive growth

  43. Slide 43: Financial objectives: Strategic Plan 2003-2007

    Financial objectives Strategic Plan 2003-2007 • Revenues CAGR: 5-10% • EPS CAGR: 10-15% • Dividend policy: pay-out ≅ 25% SUSTAINABLE PROFITABILITY 43

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