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DISCLAIMER AT THE END OF THE DOCUMENT Mota-Engil 1/51
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This report points out a brief description of a well-known group, whose activities are spread in 19 countries, from an internal as well as external view. Its main business areas are Engineering & Construction, Environment & Services as well as Transport Concessions. Furthermore, the market was also relevant to be analyzed to contextualize the company in its proper markets and industries with its competitors in order to find opportunities of development or divestments to be made for the improvement of the company, to create value for its shareholders, adding value for the company as a whole.
Mota-Engil Construction & Materials
Divestment Opportunity Report
Mota-Engil Divestment Opportunity Report
June 2010
Private and Confidential Mota-Engil | Table of Contents 2/51
Table of Contents
Table of Contents ........................................................................................................................... 2
Executive Summary........................................................................................................................ 3
Mota-Engil Overview ..................................................................................................................... 4
Mota-Engil Business Portfolio ..................................................................................................... 5
Contribution per Business Unit ................................................................................................... 8
Competitive Advantages in Each Business Unit ......................................................................... 11
Mota-Engil Presented Strategic Plan ........................................................................................ 12
Market Analysis – per Business Unit ............................................................................................. 14
Market Characteristics, Value and Trends ................................................................................ 15
Main Players ............................................................................................................................ 22
Success Conditions and Growth Opportunities ......................................................................... 24
Divestment Opportunity .............................................................................................................. 27
Proposed Divestment Transaction (Buyer and Seller Perspective) ............................................ 27
Target Company Overview ....................................................................................................... 30
Success Conditions of the Transaction ...................................................................................... 32
Valuation of Proposed Divestment Transaction ........................................................................ 32
Considerations on the Negotiation Process .............................................................................. 33
Appendices .................................................................................................................................. 35
Mota-Engil Valuation ............................................................................................................... 35
Mota-Engil Proforma Financials................................................................................................ 41
Martifer Valuation ................................................................................................................... 43
Disclaimer .................................................................................................................................... 51
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June 2010
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Executive Summary
On request of Mota-Engil board of directors, this paper is the result of an analysis on the viability
of a divestment in Martifer stake.
The divestment would result in the sale of 37,5% of Martifer (total stake owned by Mota-Engil),
which can be interpreted as a divestment in participations in non core activities. Mota-Engil
activities are related to Engineering and Construction, Environment and Services and Transport
Concessions, while Martifer business areas are Metallic Construction, Energy Systems, and
Electricity Generation through Renewables. Excluding Metallic Construction there is no apparent
connection in terms of synergies presented between these companies. Moreover, as business
areas are really different from the ones of Mota-Engil it is difficult to influence its long-term
strategy. That is, this is a divestment in an area in which Mota-Engil does not have a big influence
in operational terms (its expertise and know-how are just more connected with Metallic
Construction with which there are some synergies).
Consequently, there must be an industrial player in the market that gives more value and
increases its own company valuation, through synergies with this one. It can be in a position of
high understanding of Martifer businesses and it can have Human Resources, in number and
competence, which bring additional values to the recent business areas, leading them to optimal
ones. New projects require good leadership and projects coordination. Otherwise, they can
become value destructive. The buyer can also achieve a strong market share, economies of scale
and scope (operational) and strategic goals in terms of growth with this takeover.
The transaction make sense for Mota-Engil if it must be, at least, 3,13€ per share, but this value is
above actual market price. Economic agents are putting a high risk premium in the stock at the
moment. However, when during the year it achieves the previous value or a higher one the
participation can be sold, as an all, through an IPO, according to the rules of CMVM for this
transaction.
In numerical terms, this sale of Martifer stake brings € 51,83 millions as a transaction gain to
Mota-Engil valuation (with Martifer stake), which represents an additional gain of 0,25€ per share.
Moreover, leverage ratios, such as Net Debt/EBITDA suffers a bigger reduction in 2010, from the
previous expected 4,82x with Martifer to 4,31x with the divestment on it, which is a positive
improvement.
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June 2010
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59,70%
5,36%5,06%
29,88%
Capital Structure
Mota Family
Company -Owned Shares
Private Holding
Free Float
Figure 1: Mota-Engil Capital Structure
Source: Mota-Engil Report 2009
Mota-Engil Overview
Mota-Engil is a multinational, multi-services group with a proper strategy at a national and
international level, being its businesses present in nineteen countries through branches and
subsidiaries. Its main objective is to be market leader in every business area in which it acts in the
national market.
This Mota-Engil Group was founded in 2000, from the merger of Mota & Companhia, S.A. and
Engil – Sociedade de Construção Civil, S.A.. Two years later, this previous process starts having its
main effects with the growing of this Portuguese biggest construction company (the highest
business volume, approximately € 890 millions) and, onwards, its diversification strategy was
intensified, whose major emphases was on Environment and Services as well as Transport
Concessions.
The entrance in the Euronext Lisbon Index, in PSI-20, occurred in 2005 with the objective of
gaining visibility, stability and potentiality of share appreciation (not happening in 2009 having,
indeed, the worst performance in the PSI-20 Index), moreover, opening horizons for growth and
investment attraction with the access of long term capitals for a possible company
recapitalization.
Some recognition has been attested to the Group, by the market and even by some stakeholders,
through the award of a reasonable number of prizes and diverse recognitions due to the quality /
excellence of the services that Mota-Engil provide in its sectors and its contribution to the national
economy and to the projection of the image of
Portuguese companies around the world. For
example, Vasco da Gama Bridge was an
emblematic work.
There is stability in the shareholders structure. It’s a
familiar, 64-year-old-company which allows
consistency in the strategy. Moreover, Mota-
Family was presented in bringing capital to the
company in the past. In terms of private holding
part, it can be sold in a near future to Mota-
Family or attributed to other banks to sell that
part (brokerage) because that actual vehicle is
managed by Banco Privado Português, a bank in
dissolution. So it is difficult to continue sustaining it
(constituted by participations in Mota-Engil, Cimpor
and Hamburg port).
Nowadays the corporate structure of the Group has six branches, being the first three presented
below the main sectors of activity.
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Mota-Engil, SGPS, S.A.
Engineering &
Construction
Environment &
Services
Transport
Concessions
Metallic Construction
Energy Systems
Electricity Generation
(Martifer Group)
Tourism
(Amarante)
Shared Services
Figure 2: Group Structure
Mota-Engil Business Portfolio
Mota-Engil Group structure includes Engineering and Construction, Environment and Services and
Transport Concessions as the main three business areas. However, despite being different, they
are correlated among each other. There are synergies, for instance: Engineering and Construction
and Environment and Services (waste and multiservices) deals with municipal councils, as clients,
which sometimes imply cross-selling projects; in Engineering and Construction more than half of
the order backlog in Portugal and in Poland involves also Transport Concessions (greenfield
projects). With Martifer, a Mota-Engil subsidiary that operates in the industry and energy sector, it
keeps a strategic partnership. In the field of tourism, it keeps some activities in the sports and
leisure and the hotels and restaurants sectors.
Mota-Engil has its businesses internationalized, operating in the Portuguese-speaking countries of
Africa (with the biggest emphases to Angola), in Central and Eastern Europe and in some countries
of the American continent, such as Mexico, Brazil, Peru.
The following chart summarizes the fields of work in which they are engaged per business unit.
Figure 3: Chart of business areas
Engineering & Construction (E&C)
All its activities in this unit are presented not only in Portugal but also in Spain, Ireland, Central and
Eastern Europe (Poland, Romania, Hungary, Czech Republic, Slovakia), Africa (Angola, Cape Verde,
Sao Tome e Principe, Mozambique, Malawi) and America (USA, Peru, Mexico, Brazil). Its market
share as an all is between [3%, 5%], being market leaders in Portugal.
Engineering & Construction
Infrastructures
Railways
Real Estate
Specialized Sections
Environment & Services
Waste
Water
Ports & Logistics
Multi-Services
Transport Concessions
Motorways & Expressways
Railways
Bridges
Metro
Source: Mota-Engil
Source: Mota-Engil and Ascendi
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In this area the revenues and order backlog increased from 2008 to 2009. Division backlog
increased in all regions, excluding Angola, but it did not imply a decrease in its turnover. EBITDA
margin are being reduced.
Figure 4: Order Backlog and Revenues Evolution Figure 5: E&C Backlog Evolution per Geographic Area
Source: Mota-Engil Source: Mota-Engil
Figure 6: Turnover Evolution per Geographic Area Figure 7: EBITDA margin per Geographic Area
Source: Mota-Engil Source: Mota-Engil
Mota-Engil Engineering and Construction expects to be leader in the national market (although it
has leadership in civil construction and public works) and an European reference, to have an
increase of its margins (EBITDA margin: 6,27% in 2007 to 10% in 2013) as well as an improvement
of the EBITDA contribution .
Environment & Services (E&S)
The group has a leading position in the privatized urban waste management market as well as in
the logistics and ports, through Suma (Mota-Engil subsidiary). They are not leaders in water
treatment. Mota-Engil Environment and Services main aim is to be leader in all the sectors in
which it works, despite being a really difficult task. This area is still in growth and there is the
possibility of much more to do before being in maturity. Essentially it can be expanded in terms of
business volume, order book, through internationalization and even in this national context.
As far as internationalization is concerned, this May was a new reaffirmation of the area through
the acquisition of 50% of the social capital of GeoVision, Soluções Ambientais e Energia of Waste
0
5
2008 2009Val
ue
(in
bill
ion
€)
Years
Order Backlog & Revenues Evolution
Order backlog Revenues
0
5
2008 2009Val
ue
(in
€b
illio
ns)
Years
Division Backlog Evolution
Portugal &Spain Central Europe
Angola Other
0
500
1000
1500
2000
2007 2008 2009
Val
ue
(in
mill
ion
€)
Years
Turnover Evolution per Geographic Area
Portugal Central Europe
Angola Other
0%
50%
2007 2008 2009
%
Years
EBITDA margin per Business Area
Construction Divison PortugalCentral Europe AngolaOthers
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Figure 8: E&S Backlog Evolution (2007 excludes ports and water concessions)
Source: Mota-Engil
0
200
400
2007* 2008 2009Val
ue
(in
€m
illio
ns)
Years
Division Backlog Evolution
Treatment, mainly working in San Paulo (Brazil), by Suma. The operation involved € 21 millions, in
a company whose business volume last year was approximately € 45 millions. However, just
before this acquisition, in April there were other acquisitions: three companies in Portugal (Correia
& Correia; Transporlixos; Enviroil) and one in Poland (Ekosrodowisko). According to the President
of Suma, its expansion was crucial due to the “strangulation of private sector in the waste
management area so there was a need to grow through new acquisitions and through
international market, which represents 10% of its all actual activity”. Suma has a 50% market share
in waste unit which is difficult to expand, just if there were more municipal councils privatizing the
sector, which is being a slowly process. In Peru, the group increased order books after gaining, in
consortium, the adjudication of the Paita Port, the second more important of the country. The
modernization of the port would be via concession, and involves around 230 million dollars in 30
years. This is the major Portuguese investment in this country.
Order backlog was increasing along time.
Transport Concessions (TC)
Mota-Engil Transport Concessions
anticipates being a global operator in
this business unit. It has an aggressive
politics in finding strategic markets and
helps the strategy of growth of Ascendi.
In 2009, the group turns out to be the
major shareholder of LUSOPONTE with
38,02% of the company’s capital. This company has the concession of the two crossings over Tejo
River until March 2030. So, its Transport Concessions in Portugal under exploration are: Concessão
Norte, Costa da Prata, Beiras Litoral e Alta, Grande Porto, Grande Lisboa,LUSOPONTE and Metro
Sul do Tejo. In Mexico AE Construção Perote-Banderilla is in construction and, in Brazil, Marechal
Rondon Lest is being explored.
Moreover, European Accounting Court gave prior approval to the Douro Interior concession, a
concession that involves the conception, construction, financing, maintenance and exploration,
without toll collection, of some hauls of principal and supplementary itineraries. However, Mota-
Engil consortium reduced the value of the proposal, from € 757,33 million to € 696,57 million.
Anyway, it is in construction too.
The biggest sub-concession released by Estradas de Portugal, in terms of construction volume and
investment, Pinhal Interior, was recently attributed to a consortium with Mota-Engil in leadership.
The investment associated was approximately € 1.429 millions and will be managed by Ascendi
(Mota-Engil has 60% of Ascendi).
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Contribution per Business Unit
The final 2009 earnings evidences strong final results and with good prospects to remain growing,
influenced by the Order Book growth, by the acquisitions in the Environment and Services area
and by new developments in the Transport Concessions area. The potential of growth in this last
referred to area will come from foreign economies due to the fact that the investment in
motorways in Portugal is being revaluated.
The group expects to close 2010 with € 3 thousand millions in order books, supported by the
international activity. Last year the group net profit doubled to € 71,7 millions, where Martifer was
relevant. The operational cash-flow reduced around 2%, and this occurred because the company
was not able to replicate in the last trimester of 2009 the excellent performance of the
homogeneous period. Essentially the business (revenue) growth in 2009 was achieved due to the
growth of approximately 15% in Engineering and Construction (while its EBITDA margin fell to
7,91% and its EBITDA grew around 3% to 134 million euros) and 17% in Environment and Services
(strong improvement in the fourth quarter). Transport Concessions turnover appears to be
relatively stable. The order book reached an historic maximum of € 3.600 million at the end of
December, about € 1 million above the existing one in the previous year. The company is going to
distribute dividends related to the exercise of 2009 from April 30 onwards. The gross value of
dividends is € 0,11 per share, the same as in the previous year, which means a dividend yield of
3,27%.
Analyzing the provenience of turnover in the total one of the company from 2007 to 2009, more than 75% of it comes from Engineering and Construction, a value that is marginally growing; less than 8% and slowly reduced in Transport Concessions; and between the interval [15%; 18%] in Environment and Services. However, looking attentively to EBITDA contribution Transport Concessions area is noted in second place of importance, just after Engineering and Construction in the last two years.
Figure 9: % Turnover Contribution per business area Figure 10: % EBITDA Contribution per business area
Source: Mota-Engil Source: Mota-Engil
0%
20%
40%
60%
80%
2007 2008 2009
%
Years
Percentual Turnover Contribution
E & C E & S T C
0%
10%
20%
30%
40%
50%
2007 2008 2009
%
Years
Percentual EBITDA Contribution
E & C E & S T C
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Figure 11: EBITDA Margin Evolution per Business Areas
0%
20%
40%
60%
80%
100%
2007 2008 2009
%
Years
EBITDA Margin Evolution
E & C
E & S
T C
Group
Martifer
Source: Mota-Engil and Martifer reports
In terms of Engineering and Construction,
on the one hand, and influenced by the
currency, the performance of Eastern
Europe continue to be limited. On the other
hand, there was a favorable evolution in
Angola, which registered a growth of around
40%, to € 421 millions. Peru, Mozambique
and Malawi reduced their velocity, but their
growth and margins still continued above the
area average. Indeed, there was a strong
turnover in all markets, excluding Central
Europe. But in Portugal during the last
quarter of 2009 revenues decreased while at the same time in Central Europe it occurred the
reverse, with an increase of 10%. However, this area backlog was € 3,2 billions, Portugal grew 14%
last year, Central Europe turnover got € 300 millions, having a positive EBITDA. Overall, the area
got positive, good results in an environment of problems in macro economy and in sector.
Figure 12: E&C Geographic EBITDA Contribution for the Segment Figure 13: E&S EBITDA Evolution per Segment
Source: Mota-Engil Source: Mota-Engil
Looking carefully at Environment and Services area, it can be shown that the performance in all
segments was satisfactory in the last quarter of the year. EBITDA was similar to the one verified in
2008 and this area had a backlog of 363 million euros. Multi-Services set aside a strong growth,
whose EBITDA margin was 7% and logistics turnover grew 2% but at any case its EBITDA margin
went down to 16%. Water business grew up its importance through Indaqua and, to finish this
brief description of the division, in terms of waste business, its growth was positively influenced by
the first consolidation of an Angolan subsidiary (Vista Waste) and turnover grew 11% last year.
As far as Transport Concessions under exploration are concerned, the most rentable ones were
the Beira Litoral e Alta and Costa de Prata, with an EBITDA in total of 121% and 76%, respectively.
In absolute values, turnover was unchanged even with a decrease in Beiras Litoral e Alta that was
offset by other concessions performances, such as Concessão Norte that registered a magnificent
growth, for instance. Nevertheless, AADT (Annual Average Daily Traffic) still grew in all concessions
explored. Its EBITDA margin was 89,3%, which was smaller than 99,8% verified in 2008.
-50%
0%
50%
100%
2007 2008 2009
%
Years
E&C EBITDA Portion Evolution per Geographic Area
Portugal Central Europe
0%
20%
40%
60%
2007 20082009
%
Years
E&S EBITDA Portion per Segment
Waste Water Logistic Multi-Services
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Figure 14: Transport
Concessions EBITDA
portion per main
concessions under
exploration
Continuing with the previous area it requires more debt involved, so that in 2009 invested capital
in this area was € 1,362 billion, which was more than half of the global amount. Along time net
debt was growing.
Figure 15: Net Debt in value per business area Figure 16: Net Debt/EBITDA per business area
Source: Mota-Engil Source: Mota-Engil
Figure 17: Invested Capital evolution per business area Figure 18: Operating Cash-Flow Evolution
Source: Mota-Engil Source: Mota-Engil
The investment in capital expenditures in 2009 was € 516 millions, from which € 86 millions was spent to reinforce the participation in Lusoponte and the remaining one majorly invested in Transport Concessions.
-
2.000
4.000
2007 2008 2009Ne
t d
eb
t (i
n m
illio
n
€)
Years
Net Debt
E & C E & S T C Group
-
10,0
20,0
2007 2008 2009Ne
t d
eb
t/EB
ITD
A (
in
x)
Years
Net Debt/EBITDA
E & C E & S T C Group
-
2.000
4.000
2008 2009
Inve
ste
d C
apit
al
(in
mill
ion
€)
Years
Invested Capital
E & C E & S T C Group
-
200
400
2007 2008 2009
Op
era
tin
g C
F(i
n m
illio
n €
)
Years
Operating Cash-Flow
E & C E & S T C Group
-200%
-100%
0%
100%
200%
20072008
2009
%
Years
TC EBITDA Portion per Concessions
Concessão Norte
Costa de Prata
Beiras Litoral e Alta
Grande Porto
Grande Lisboa Source: Ascendi
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Figure 19: Capex (Fixed - Maintenance, growth; Financial) Figure 20: Net income evolution per business area
Source: Mota-Engil Source: Mota-Engil
To sum up this part, it is imperative to evidence net income attributable to the group, which was
€71,738 millions in 2009. There is an increase of 134,7% compared to the year 2008. Concretely, it
is vital to evidence a strong net income in Engineering and Construction and a net loss of € 7
millions in Transport Concessions. This evidences a strong evolution in an economic scenario of
crisis but still bellow the expectations of numerous analysts that have put the bar at € 80 millions
for that period.
Competitive Advantages in Each Business Unit
Mota-Engil Group has some competitive advantages in its sectors and this is why it is leader in
most of its activities. According to a SWOT (Strengths, Weaknesses, Opportunities and Threats)
analysis, some characteristics can be pointed out to the entire company as all.
Not only does the company have more than 60 years of experience but also it has a recognized
original spirit in terms of construction techniques, which makes Mota-Engil Engineering
responsible for running very important engineering projects, such as bridges/dams (Vasco da
Gama Bridge, for instance), highways/expressways, railways/ports/airports, canals/tunnels,
sundry infrastructures in the environment, health, commerce as well as industry fields. Indeed,
Mota-Engil has actually relevant strengths: versatility, quality, capacity for innovation given its
large specialized skills in all areas of Engineering, then putting it in the vanguard in Portugal and in
a good position for future positive developments as far as international growth is concerned.
Furthermore, Environment and Services in Mota-Engil, with its diversified and large number of
services, put it as a leader in Portugal in terms of privatized solid urban waste management
market (Waste and Urban Cleaning Segments) and in a foremost position in the Portuguese port
operations market (this company also provides complementary services in this area, that is, it
gives a variety of logistic integration services and it is known as the first operator to go in the
carriage of goods by the railway sector. Additionally, it has as strength the capability to bid
complex projects and to get financing for them. It can withdraw non-recourse debt, which do not
0
200
400
600
2008 2009
Cap
ex
(in
mill
ion
€)
Years
Capex
E & C E & S T C Group-50
0
50
100
150
2007 2008 2009Val
ue
(in
mill
ion
€)
Years
Net Income per Business Unit
E&C E&S TC Group
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create growth restrictions and have a high level of auto financing. Besides that, there are
multidisciplinarity and business quality that let them have productivity and be competitive in the
market. In a few words, the group has leadership, recognition in the market, technical capacity,
strong presence in Angola, for instance and strategy.
About weaknesses, it can mainly be pointed out its capital structure dependence. It has high
leverage ratios, shown later on. Furthermore, the company has to be careful about the evolution
of its debt.
There are also opportunities to be exploited nationally, such as the requalification of towns/cities
or the ones created by the construction or exploration of some infrastructures being publicly
launched, capitalizing the benefits to an enforcement of the international strategy and,
internationally, the big potential of transport concessions sector in Poland (as well as Central
Europe as an all), the high potential of the new markets in which it is entering through new
acquisitions and stable partnerships. In Portugal there are also some big projects in which Mota-
Engil can take part in the future, such as the New Airport in Lisbon and ANA privatization, High
Speed Railway, new road sub concessions.
Threats are obviously presented too. A change in political opinion is one that can be referred to.
Furthermore, the risk that project finance stop being sustainable in the long term, which can stop
financing public works due to market illiquidity or being no more viable to it. Another threat is the
fact that in Angola there is almost 67% of long term debt without hedging because of the
immaturity of its institutions. Moreover, there is a degree of risk to establish partnerships in other
countries with companies that are not large enough or do not have special relationships with the
State or are not included in the top ones for the achievement of the best projects, that is, the ones
that allow the highest margins. In Portugal, the political risks of the motorways of Centre and
other large infrastructures’ projects. There are always fear about materials price plus market of
construction materials, international crisis trends, the exposition of the Portuguese market of
construction and, why not, Spanish companies. The last but not the least important one can be its
businesses in some geographic areas in which they can get small/tiny margins due to lack of
knowledge. Anyway, there are some specific risks, such as: financial risk management, interest
rate risk, exchange rate risk, liquidity risk and credit risk.
Mota-Engil Presented Strategic Plan
Mota-Engil Group has some basic strategic guidelines stated in its “Ambition 2013” Strategic Plan,
comprising the period: 2009-2013. Its four main pillars are sustainable growth, diversification of its
businesses, internationalization as well as development of its human capital. The aim of all these
items is to create value for shareholders.
Concerning diversification, there is a huge will to diversify to areas of mines. The group has
experience in gold mines in Peru and uranium in Malawi, at the moment. They just do not have
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ore manipulation. They receive cash, but they want an exchange for the project equity in a near
future. There is also some interest in mini-dams, construction and mines.
Figure 21: Expected Turnover (2013) Figure 22: Expected EBITDA Margin (2013)
Source: Mota-Engil Source: Mota-Engil
Internationalization is related with the presence of Mota-Engil in three geographic poles, which
are: Central Europe, Africa and America. Mota-Engil, SGPS has constituted specific structures,
choosing representatives with responsibilities over the previous defined geographic poles, creating
a connection between the different business units and the markets (potential for synergies).
Mota-Engil, through its subsidiaries, has a vast number of international acquisitions examples that
sustain this pillar.
Figure 23: Turnover by Geographic Segment in 2009 Figure 24: Expected Turnover by Geographic Segment in 2013
Source: Mota-Engil Source: Mota-Engil
Then, it appears the development of its human capital, which in reality was translated in
formation schools in Angola for its employees, ME Active School, professional formation actions,
for instance.
Summarizing, the key challenges for the group are: internationalization, management capacity,
sustained development of Human Resources, growth in the markets and globalization.
59%21%
14%
6%Engineering & Construction
Environment & Services
Transport concessions
New Businesses
24%
21%50%
5%Engineering & Construction
Environment & Services
Transport concessions
New Businesses
55%17%
28%
54%21%
25%Iberian Peninsula
Central Europe
Africa & America
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Private and Confidential Mota-Engil | Market Analysis – per Business Unit 14/51
Market Analysis – per Business Unit
According to Dominique Strauss-Kahn, IMF Chief, in an article in Financial Times newspaper in
April 10, it comes: “The global economy now appears to be on the path of recovery. Though it
remains sluggish and uneven, and in need of continued policy support in many advanced
economies. Moreover, the costs of the crisis – low growth, high unemployment and sharply higher
public debt – will take many years to overcome.”
The first quarter of 2010 was, in global terms, positive for the main World Indexes. Although the
year began with good perspectives, they were penalized by the possibility of having Greece in
failure and the movements in China to stop the fast economic growth after having an inflation
above the expected (these facts brought uncertainty). The indexes were at maximum levels for
eighteen weeks and the economic indicators, despite not having been consistently spectaculars,
continued to encourage market participants. The companies’ results came to confirm those
improvements. At the same time, interest rates were kept at historically low levels. However, in
Portugal, Spain and Greece capital market was pressured by investors. PSI-20 lost more than 3,5%.
Indeed, in small economies (such as Portugal, Spain, and Ireland where Mota-Engil is present)
leaving recession would be a slowly phase due to strong budget and current accounts imbalances.
But in Euro Area there is another small economy (Slovakia Republic) that despite having had losses
of more than 4% last year, contradicts the previous and it is expected to grow almost the value of
the previous loss in the current year.
In terms of Mergers and Acquisitions, this first quarter was favorable. Concretely, there were more
than 2.034 international transactions and 10 hostile takeovers, which can reveal market
recuperation, from its worst period in six years. This market wins growth rhythm in the quarter.
Based on Bloomberg data, hostile takeovers grew 5%, when compared to the same period of the
previous year (to US $498,24 million); acquisitions in foreign markets more than doubled to US
$249 thousand million and announcements of hostile acquisitions grew to $17,46 thousand million
(growth of 3,07 times compared to the same last year period). This is essentially related to the
behavior of capital markets previous referred to, whose rise boosts confidence in companies’
leaders, accompanied by the improvement of credit market that makes financing business easier
than otherwise. Considering the first 5 months of the year the higher volume of M&A transactions
were in the industry of telecommunications (US $79,4 biillions), followed by Insurance. And the
main transactions were presented in North America. The main financial adviser was Goldman
Sachs that did the highest operations volume (US $189,56 billions), distributed by 95 operations,
followed by JP Morgan with US $171,94 millions distributed among 92 operations. The following
tables and figure summarizes this year M&A activity and its trend across time.
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Source: Bloomberg
Figure 25: Global Activity Trend/Evolution
-5
15
2005 2006 2007 2008 2009 2010e2011e2012e2013e2014e2015e
An
nu
al %
Ch
ange
Years
Real GDP Growth
Europe World Angola Brazil Portugal Peru
Table 1: Activity Breakdown
Activity Breakdown (Jan 1- May 31 2010) (in US$ million) Per Industry Per Region
Target Industry Volume Count Target Region Volume Count Telecommunications 79.400 261 Global 785.740 9.085 Insurance 70.120 125 North America 334.220 3.447 Oil&Gas 63.200 337 Asia Pacific 211.070 3.182
Mining 35.510 436 Europe 106.330 1.776 Electric 33.000 91 Latin America & Caribbean 93.320 345
Middle East & Africa 35.840 258
Source: Bloomberg
Table 2: M&A Top Deals (1 Jan – 31 May 2010)
Recent Top Deals (in US$ million)
Target Acquirer Annc Date
Annc Value
Premium Payment Type
AIA Group Ltd Prudential PLC 03/01/10 35.500 Cash and Stock Curso Global Telecom SAB de CV America Movil SAB de CV 01/13/10 25.740 2.68% Stock Qwest Communications International
CenturyTel Inc 04/22/10 22.160 12.49% Stock
American Life Insurance Co MetLife Inc 03/08/10 12.590 Cash and Stock Smith International Inc Schlumberger Ltd 02/21/10 12.340 42.18% Stock
Source: Bloomberg
Market Characteristics, Value and Trends
Each country, each business
area has a market with
specificities at each moment
in time and 2009 was a year
of worldwide crisis, which
now continues to have its
repercussion despite being in recuperation. Firstly, Mota-Engil is presented in
19 countries so the reality that it faces in each country is different, some opportunities of growth
in some ones, a weak period in others in a business area… Looking at real GDP, there is a sign that
economies are in recovery after the disaster of 2009 and after 2011 there is a sort of stabilization.
Figure 26: Annual Percentual Change of Real GDP Growth
Source: IMF – World Economic Outlook (April 2010)
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-5
5
15
25
An
nu
al %
Ch
ange
Years
Inflation Rate, Average Consumer Prices
Europe World Angola Brazil Portugal Peru
Source: IMF – World Economic Outlook (April 2010)
Portugal, the main country in terms of Mota-Engil results and backlog, is predicted to grow but
there are divergences in terms of the value: 0,3% for IMF, 0,7% for Portuguese Government, 0,4%
for Portuguese Central Bank. This means that, for IMF, Portugal is going to evolutes positively but
less than half of the average of the Euro Area (1%). This might imply a deep divergence of
Portugal, continuing the previous one that took almost 10 years and that was just interrupted last
year (Portugal decreased 2,7% while Monetary Union dropped 4,1%). Anyway, previsions make
the situation worse for 2011 when Portugal may increase 0,7% (even with a better performance)
while Euro Area grows 1,5%.
Globally, Europe is going to have the worst performance in terms of real GDP growth while Asia
and Pacific takes the best rate (6,8% from 2010 to 2013 and 6,9% afterwards). However, in 2009
Europe was the most hurt by the crisis, immediately followed by Western Hemisphere (-2,3%).
According to the information revealed, inflation is expected to be relatively stable in Europe in the
medium term, which is essential for the politics conduction.
Figure 27: Annual Percentage Change in Inflation Rate, Average Consumer Prices
Portugal is going to follow
the pattern of inflation rate
of Euro Area, which is
indispensable for its
permanence in the
Monetary Union. So
Portuguese purchasing
power remains stabilized
too.
Construction - Portugal
Construction was deeply affected by the recession in 2009, being the worst year for construction
market in Euroconstruct area in the last 10 years, when it fell 8,4%. For 2010, it is expected a
decline of 2,2% and it is predicted a recovery from 2012 onwards. The downturn for Euroconstruct
area GDP is approximately 4% while for construction output was even worse, dropping 8,4%, being
€ 1.365 billions then. In this area construction market accounts 11% of GDP, being in the range
[8%; 15%] of GDP each European member. Excluding Switzerland and Poland (5,3%), all remaining
members had negative growths (Spain = -21,5%; Ireland = -32,2%). Portuguese construction
output declines more than this area average. This year GDP is expected to grow more than
construction sector, the following year they must have the same level but for 2012 it is expected
that construction sector grew more than the other indicator/measure. Moreover, comparing
February 2010 with the previous month there is a reduction of 3,3% and 2,9% in construction
output in Euro Area and EU27, respectively. Picking up February 2010 and the same month in 2009
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there is a dive of 15,2% and 10,2%, respectively according to the previous order. Portugal has a
positive performance in monthly comparison (1,4%) as well as Hungary (6%) and the worst
performance was Romania.
Figure 28: Construction Output in Europe – Monthly Variation (in %)
Source: EUROSTAT – April 2010
Portugal, the internal market of Mota-Engil, is the main source of results in all its business units
(exception to Engineering and Construction where in terms of EBITDA Portugal was exceeded just
by Angola in 2009). However, it depends on public investment, having a subsector of public works.
Looking at GDP components, we assist that the positive predicted growth for the economy for this
and upcoming years comes essentially from exports, investment will grow slowly. And, indeed,
according to Stability and Growth Plan in Portugal from 2009 until 2013, it is predicted a gradual
reduction of deficit, to be below 3% in 2013 mainly due to expenditures reduction and automatic
stabilizers. So, Government is going to choose investments that affect critical factors of
competitiveness, such as human resources qualification, business competitiveness, innovation
which have high capacity of economy dynamism and with small budget effects. Then, the main
projects with high value such as the new airport, logistics and ports, among others that are in the
Government Plan until 2017 cannot be started in the short run, despite being considered with high
capability of private capitals’ mobility and revenues generating, and with small impact to the State
(financed by EU funds and private investors too).
Source: INE and Ministry of Finance and Public Administration (in Stability and Growth Plan 2010-2013)
-15
-5
5
15
Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10
% C
han
ge C
om
par
ed
wit
h
Pre
vio
us
Mo
nth
(%
)
Months
Construction Output - Monthly Variation
EA16 EU27 Portugal
-12
-22008 2009e. 2010e 2011e 2012e 2013e
Var
iati
on
rat
e (
in %
)
Years
Portuguese GDP Components
GDP Private Consuption Public ConsumptionInvestment Exports Imports
Figure 29: Portuguese GDP per
Component (in real terms)
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Source: INE, Statistics Portugal, Construction and Public Works Indexes
Source: INE, Statistics Portugal, Construction and Public Works Indexes
50
60
70
80
90
100
110
∆ P
rod
uct
ion
Vo
lum
e
Data Reference Period
Index of Production in Construction
Buildings Civil Engineering Projects Total
Table 3: Big Investments in Construction 2008-2017
Table 3: Big Investments in Construction 2008-2017
From the investments listed to be done between 2008 and2017, Mota-Engil has capability and high probability of receiving adjudication, which involves all its business areas and even indirectly through Martifer in the field of energy and renewable energy. However, the consortium “Asterion” (Mota-Engil/Brisa/Somague/BES/BCP/CGD), taking into account its lack of expertise in airport operator can put in risk its chance of gaining New Airport of Lisbon, if not includes also ANA Privatization.
At the moment there is too
much uncertainty about when
and if the major public
investments go in front. At
the same time, the production
in civil engineering plunges
14,8% at the end of first
quarter of 2010 and
construction of non
residential buildings drops
4,5% due to the association of
the reduction of Private
Investment and now onwards
the contraction of Public
Investment.
Figure 30: Index of Production in Construction - Non Adjusted (Base 2005) by Type of Project in Portugal; Monthly
To sum up, intense competition
from the main internalized
construction companies persist in
putting pressure on margins and
other features of contracts,
timetables and guarantees, for
instance. Moreover, the global
variability of economies humidify
demand in many relevant sectors
and attracting plus retaining top
performing professionals is,
without any doubt, a big
challenge for the industry.
Type of Infrastructure Announced Investment
(in €millions) New Airport of Lisbon 3.100 Airports 246 Water, Environment 5.729 Dams 1.568 Energy 1.600 Renewable Energies 7.124 Traditional Railroad 1.494 Logistics 1.875 Metro 1.366 Ports 534 Highway 7.208 TGV 7.650 Third Crossing of the Tejo River 500 Jails, Schools, Hospitals, Justice 2.905 Others (Urban Rehabilitation, Commercial Centers, Tourism) 13.425
Total 56.324
Source: FEPICOP
Source: FEPICOP
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-7
-2
3
8
13
An
nu
al %
Ch
ange
Years
Real GDP Growth
Poland Slovak Republic Hungary Romania
Source: IMF
Source: IMF
0
100
200
300
400
500
Soares da Costa Teixeira Duarte Mota Engil
Val
ue
s (i
n m
illio
n €
)
Turnover 2009
Source: Companies Reports
Source: Companies Reports
Construction - Central and Eastern Europe, Angola and Others (Mexico, Peru, Brazil)
In Central and Eastern Europe there are opportunities of growth, specially in Poland, because
there is a short of decent roads and in a fewer number, the housing market faces a deficit for
about 1,6 millions households and requires renovation for 30% of units. Government is going to
spend € 26 billions by 2013 in the construction of kilometers of roads, motorways and
expressways (3.700 km). This can bring more revenues for Mota-Engil, mainly in Poland (an
economy in growth).
Figure 31: Central and Eastern European Countries Real GDP Growth
In Angola, compared to its
competitors, Mota-Engil
receives the highest revenues. It
is in a good position, and has a
high backlog as it was referred
to before. Concerning GDP
growth, it is predicted a 7,1% for
2010 and a decrease in inflation
rate that continues over time,
which induces investments and
allows continuing its growth expansion verified in recent years in this economy in
development.
Figure 32: Comparison between Angolan Turnover of Mota-Engil and 2 Competitors
In other countries, such as Peru,
Mexico, Brazil, Colombia there are
opportunities related with
partnerships with municipal councils.
Moreover, real GDP growth in these
countries is above 4% until 2015e.
Brazil is also a special case with some
new investment opportunities (case
that is going to be developed
afterwards).
Environment & Services
Logistics:
Mota-Engil Group acts in the logistics area through its subsidiary, Tertir Group that had
concessions in terms of cargo containers terminals in Santa Apolónia (Sotagus), Alcantara (Liscont),
Leixões (TCL), Setubal (Sadoport), Aveiro (Socarpor).
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Figure 33: Baltic Dry Index Evolution (in USD)
Table 4: Container Traffic Evolution
Source: Bloomberg Source: APL, APDL and APA publications
2240
2260
2280
2300
2008 2009M
illio
n €
Years
Exports to Angola
Figure 34: Exports Evolution to Angola
Source: INE Statistical Data
The container traffic of the port terminals worsens, excluding Leixões in terms of TEUs and
Setubal. The major representativeness of external trade of ports
in Lisbon were Angola (22,4% in exports side) and United
Kingdom (10,9% in imports side). The Leixões terminal
performance was positive mainly due to the exports to
Maghreb that grew 40% yoy in 2009, being almost 200
thousand tons per year, representing 10% of the overall cargo
containers. In Setubal, only exports for non European countries
have a positive annual variation (45,7%) influencing its positive
performance. Anyway, exports to Angola, the major positive
influence in all the previous terminals increased just 1,45% y.o.y,
in 2009.
The recent challenge for this sub-area (80% of market share) is the integration of the port business
with the rail freight and logistics platforms of Caia-Poceirão. Moreover, the group has plans for
exploring ports in Africa and Latin America (Paita Port was already an example of success).
Water, Waste Treatment and Multi-Services
This area depends on the commercial municipal council relationship and its will to do outsourcing
of the activities related to sewage and water treatment, waste management and multi-services.
The existing contracts are mainly of long term, and in water there are concessions. But the
process of increasing new contracts in Portugal is at a slow pace.
Transport Concessions
In Transport Concessions, through Ascendi, its network is extensive and similar to the one of Brisa,
its main competitor. It has the highest kilometers travelled.
Container Traffic by Ports (∆2009/2008)
Nr. Of Containers
TEUs
Santa Apolónia -4,8% -2,9%
Alcantara -16% -13,6%
Leixões -1% 1%
Setubal (Sesimbra also included) 23,1% 27,8%
Aveiro N.A. N.A.
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Table 6: Drivers of Traffic
Source: IMF
Table 5: Transport Market Sub-Segments in Kilometers
Player Tolled Network Shadow Toll EP Sub-concessions Total
Brisa Brisa 1.116 Baixo Tejo 68 Brisal 92 Litoral Oeste 112 Atlântico 170 Douro Litoral 129
Brisa Total 1.507 180 1.687
Ascendi AENOR 176 Costa da Prata 105 Douro Interior 245 Lusoponte 24 Beira Litoral e Altas 178 Pinhal Interior 567 Grande Lisboa
61 Grande Porto 55
Ascendi Total 261 338 812 1.411 Sacyr Túnel Marão 30 30 Soares da Costa Beira Interior 178 Transmontana 174
Interior Norte 156 S. Costa Total 334 174 508
Cintra Norte Litoral 130 Algarve 156
Cintra Total 286 286 Edifer/ACS/Dragados Baixo Alentejo 334 334
42% 23% 35% 100%
Source: Estradas de Portugal
The major risk that concessionaires may face is the road traffic, which is driven by the GDP, tariffs,
inflation, car ownership, and fuel prices. Despite the GDP decrease, the road traffic has increased
from 2008 to 2009.
Growth Rates % 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E
Portuguese GDP 0% -2,70% 0,30% 0,70% 0,80% 1,30% 1,40% 1,40%
Portuguese Inflation Rate 2,7% -0,90% 0,80% 1,10% 1,40% 1,60% 1,70% 1,80%
Figure 35: Average Daily Traffic (ADT) Figure 36: Kilometers Travelled
Source: APCAP Source: APCAP
22,7722,51
22,66
20,96 21,05
20,00
20,50
21,00
21,50
22,00
22,50
23,00
2005 2006 2007 2008 2009
(in
th
ou
san
ds)
Years
Average Daily Traffic (ADT)
11,96
11,74
12,32
11,8811,95
11,4
11,6
11,8
12
12,2
12,4
2005 2006 2007 2008 2009
(in
10
⁶ K
m)
Years
Kilometres Travelled
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Unlike Brisa and others, which mainly have the concession exploration, Mota-Engil has also the
construction of concessions, granting it a more stable position, and synergies between both
activities.
From June 1 2010 there is going to be the introduction of tolls in some actual shadow tolls
network. This implies a reduction in the traffic of those roads, while increasing it in the ones
without tolls (national roads, for instance). However, this fact is not going to affect companies’
revenues predicted with those concessions. There was a renegotiation of the concessions with the
State in which a “fixed rent” is going to be paid by it to the company and the company transfers
the amount of tolls collected to the State.
Main Players
The main construction companies, at a national level, are: Mota-Engil, Brisa, Somague, Teixeira
Duarte, Soares da Costa, OPWAY, Bento Pedroso, Edifer, Monte Adriano and Construtora do
Tâmega. At an international level, it should be pointed out some companies, such as: HOCHTIEF
AG, VINCI, Skanska AB, STRABAG SE, BOUYGUES, Bechtel, Saipem, TECHNIP, Bilfinger Berger AG,
Eiffage and Bovis Lend Lease. In terms of Environment and Services, Suez and Veolia Environment
are well-known companies. For Transport Concessions, Brisa, Atlantia, Abertis have a prominent
position.
Last year revenues of some competitors in terms of Mota-Engil business areas came majorly from
Europe. Moreover, for Engineering and Construction it can be seen a different level of
internationalization within this business unit, some with more revenues coming from internal and
others from external. In Environment and Services there is also no tendency of the main revenues
provenience. However, in Transport Concessions Revenues came mainly from internal market.
0%
20%
40%
60%
80%
100%
Revenues by geographical area in 2009
Europe America Africa Asia/Middle East Oceania
Figure 17: Revenues by Geographical Area in 2009
Source: Companies Reports
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Figure 38: Engineering & Construction Level of Internationalization According to Revenues of 2009
0%10%20%30%40%50%60%70%80%90%
%
Companies
E & C Internationalization 2009
Internal Market
0%
20%
40%
60%
80%
100%
Strabag SE Veolia Environnement
Mota-Engil
%
Companies
E & S Internationalization 2009
Internal Market External Market
Figure 39: Environment & Services Level of Internationalization According to Revenues of 2009
Source: Companies reports Source: Companies reports
0%
20%
40%
60%
80%
100%
Concessions Vinci
Soares da Costa
Mota-Engil
%
Companies
TC Internationalization 2009
Internal Market External Market
Figure 40: Transport Concessions Level of Internationalization According to Revenues of 2009
Source: Companies Reports
Table 7: Competitors’ Credit Risk
Source: S&P 500
Mota-Engil does not have a credit rating given by a credit rating agency which is commonly justifiable by the argument that the company acts in a risky industry which involves high leverage ratios. However, some competitors have the ratings presented bellow.
Companies Ratings (in S&P)
Vinci S.A. BBB+
Strabag SE BBB-
Bouygues, S.A. A-
Technip BBB+
Veolia Environment BBB+
Brisa BB-
Atlantia A-
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Success Conditions and Growth Opportunities
According to Luís Filipe Pereira, President of the Executive Commission of Efacec and Best Leader
Awards 2010/Internationalization Leader, strategic leadership is essential for the development of
a company, even more if the company is in the process of internationalization that needs to
compete in foreign markets, open and usually more competitive. Some operational and tactic
mistakes can be reversed but if a company made a mistake in terms of defining how to compete,
where and the way to do it, so all organization is in risk. So in an international context, there is a
superior need to define objectives to achieve, to establish priorities, to form teams, to motivate
and remunerate human resources.
There are some main worries in CEOs’ mind when carrying on a company strategy, which makes all
sense because markets are, in part, unpredictable, not controlled by them and, when taking a
decision, the result can diverge from the expected. But in any case there are usually success
conditions.
EV1/EBITDA EV1/Revenues
Net Debt/EBITDA
Net Debt/Equity
Net Debt/Assets
ROE ROA EBITDA margin
2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
Vinci 4,22 4,14 0,61 0,64 3,15 2,76 1,70 1,31 0,43 0,36 17,6% 15,3% 4,44% 4,22% 14,6% 15,5%
Strabag SE 3,37 3,19 0,18 0,17 2,64 2,21 0,57 0,49 0,17 0,16 5,6% 6,0% 1,70% 1,92% 5,3% 5,5%
Eiffage GB 2,55 2,50 0,24 0,24 9,45 9,88 4,47 4,81 0,46 0,50 11,1% 7,3% 1,15% 0,76% 9,4% 9,6%
Soares da Costa
N.A. N.A. N.A. N.A. 7,02 7,54 4,37 5,19 0,44 0,44 5,9% 8,8% 0,59% 0,75% 10,3% 9,6%
Teixeira Duarte
1,88 1,68 0,27 0,28 9,86 9,50 5,46 3,90 0,58 0,57 -121,8% 22,5% -12,99% 3,27% 14,5% 16,4%
Sacyr 2,17 2,93 0,25 0,23 4,48 3,78 1,03 0,58 0,10 0,08 -9,7% 17,3% -0,91% 2,49% 11,3% 7,7%
Average Construction
2,83 2,89 0,31 0,31 6,10 5,94 2,93 2,71 0,36 0,35 -15,2% 12,9% -1,00% 2,24% 10,9% 10,7%
Abertis 4,25 3,93 2,60 2,43 6,23 5,99 2,97 2,53 0,63 0,59 14,5% 12,5% 3,08% 2,93% 61,3% 61,9%
Atlantia 4,14 3,98 2,52 2,43 4,61 4,71 2,45 2,44 0,55 0,53 18,4% 16,2% 4,16% 3,50% 60,8% 61,0%
Brisa 6,65 6,13 4,31 4,36 7,61 6,94 2,69 2,33 0,66 0,63 11,2% 11,2% 2,73% 3,05% 70,4% 71,1%
Average Transport
Concessions 5,01 4,68 3,14 3,08 6,15 5,88 2,70 2,43 0,61 0,58 14,7% 13,3% 3,32% 3,16% 64,2% 64,7%
Suez Environment
3,33 3,40 0,57 0,57 2,84 3,05 1,43 1,42 0,30 0,28 12,8% 9,1% 2,70% 1,80% 17,0% 16,8%
Veolia Environment
2,57 2,67 0,30 0,31 4,03 3,82 1,73 1,49 0,34 0,30 4,2% 5,8% 0,82% 1,17% 11,5% 11,4%
Average Environment
& Services 2,95 3,04 0,43 0,44 3,43 3,44 1,58 1,46 0,32 0,29 8,5% 7,4% 1,76% 1,48% 14,2% 14,1%
Mota-Engil2 1,42 1,45 0,24 0,21 5,95 7,52 5,43 6,09 0,75 0,76 11,7% 21,3% 1,62% 2,67% 16,7% 14,3%
1EV is an approximation through market capitalization 2Includes the consolidation of Transport Concessions Source: Companies Reports
Table 8: Ratios for Companies Comparison
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0% 20% 40% 60% 80%
Lack of Stability in Capital Markets
Protracted Global Recession
Inability to Finance Growth
Exchange Rate Volatility
Over-Regulation
CEOs Main Worries about Economic and Financial Risks
Global Engineering & Construction
Source: Price Water House Coopers – 13th Annual Global CEO Survey
Figure 41: Engineering & Construction CEOs Main Worries about
Various Economic and Financial Risks
Going abroad for internationalization
assumes too many risks that can be
reduced if there is a partnership, or
any takeover, with high knowledge
of the local market, with know-how
that complements itself, with
previous good financial performance,
with good relations with the local
State, making it easier to have access
to some main value creation
projects. The value of advantages is
higher than the weaknesses.
However, these success conditions
are at some point controlled by the companies, if they have done a previous analysis of the other
(at a micro-level). At a macro-level there are economies with its GDPs, proper growths, external
factors that conditions the overall performance of companies indirectly. No economy is equal, so
some grew more at a certain length of time while in others it happens later on. So,
internationalization reduces the risk of being in an economy of small growth, of restricted market
conditioning all its results while others are in strong expansion. For instance, in the second quarter
of 2010 US GDP is expected to grow 2,3% while in the major three economies of Euro Area is
predicted just 1,9%. There are some good opportunities that can be caught in specific business
areas in different countries.
Other matter of success can be works in consortium when the possibility of gaining a project alone
seems improbable. Taking part in a consortium, as an all, the group is more valuable, capable to
take a bigger step, complementary companies’ issues in some aspects, saving development as well
as money. That is, capable to bid and win high value added projects. Just important to take into
consideration if there are different interests/objectives between the construction companies and
operators (it may have impact in the quality of civil work, for example); some duplication of
activities and resources; internal problems in communication plus assignment of responsibilities
intra-group. For example, Mota-Engil takes part in Altavia Consortium for the High Speed Train
Concession and in Asterium Consortium for New Lisbon Airport and ANA Privatization. This
increases its chance of gaining value in the projects due to the aggregation of expertise and
dimension.
Mota-Engil diversifying its markets through internationalization is reducing risks inherent to the
dependence of having just the internal one.
Mota-Engil is betting in the public sector of Peru, for construction and road rehabilitation and, this
country is considered by numerous financial analysts, one of the best markets is Latin America and
where big investments in the infrastructures recuperation are forecasted. Moreover, it is
predicted a strong economy recuperation for this year. Mota-Engil subsidiary, Translei, awards
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recent projects in an amount of € 71 millions in Peru. In the American continent, the group is also
presented in USA, Mexico and Brazil.
For instance, Brazilian construction sector can grow 7,1% or 8,8% in 2010 according to Amaryllis
Romano (Economist of Tendencies) or Getúlio Vargas Foundation, respectively. This probable
improvement is due to the mortgages expansions, investments growth and habitation deficit, not
forgetting World Cup 2014 and Olympiads 2016 that require important infrastructures
constructed. Foreign investments are going to play an important role but there are increases in
public and private investments, at the same time. Last year, from January until October,
construction sector received 5,4% of the total amount received in the country that was applied to
building construction (5,5 million houses in habitation deficit yet), infrastructures construction and
engineering and architecture. The main investors are usually US or European groups that are
seeing Brazil as a potential attraction in the sector. Camargo Corrêa Group, Mota-Engil competitor,
considered this boom prediction in construction sector and it is buying spaces for future
development of houses, mainly in the low/economic rent segments where demand is explosive.
Mota-Engil Brazil had had some experience in transport concessions (Marechal-Leste in San Paulo
State) and it reveals also some growth opportunities in ports and environment (waste, for
example) sector. In fact, Brazil shows much more opportunities because it has the second phase of
Growth Acceleration Program 2011-2014 led by its Federal Government and its value is US$220
Billion.
Table 9: Growth Acceleration Program – Phase 2 (2011-2014)
Type of Infrastructure Announced Possible Private Investment (in US$ Million)
Urban Sector Mobility (Subway, Light Rail Vehicle, Bus Rapid Transit, Bus Lane projects)
10.300
Ports (Dredge, Port Seabed) 498 Housing 40.700 Electric Power 36.200 Oil 106.700 Natural Gas 4.600 Shipbuilding Industry 20.800
Total US $219.798 Million Source: Dredging Today - Brazil
Mota-Engil Group wants to go from € 20 millions of business volume to € 120 millions in Cape
Verde in the following three years. The group is going to apply for all tenders in terms of
infrastructures and public works, letting the Cape Verdean Government know its intention. It is
going to bet in local partnerships and its areas of interest are construction of housing and roads,
expansion of ports, construction of dams, alternative energy, and solid waste treatment among
others. According to Jorge Coelho, Mota-Engil CEO, “Cape Verde became a priority for the group
because it is a stable country, with good governance and has good potential of development and
business”. This African country predicts to construct 4.000 houses until 2011, starting this year
with 1.000, according to Cape Verdean Ministry. With this construction program financed by the
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credit line of Portugal (Habit Cape Verde and Pro-dwelling and Rehabilitate), local government will
construct 8.500 houses and recover half of the investment, and in return it will give fiscal, par
fiscal, customs incentives to construction companies and municipalities that adhere to the project.
Cape Verde is a potential market, where it is possible to develop new projects without the need of
credit resort. This is a country that awakens more interest by the Portuguese investors, according
to the President of the Business Association of the Region of Lisbon, António Ferreira de Carvalho.
Angola should grow 10% this year, with the recuperation of the petroleum resources sector and
the predicted investments in the public sector and international investors, according to the
estimates of the BES Research, which is positive due to the growing weight of Mota-Engil Angolan
works.
In Ireland Mota-Engil is growing in terms of construction. This March it was announced that its
participated, GLAN AGUA, signed 2 contracts to the construction to 20 years of 25 water
treatment stations, € 55,2 millions involved. This signature has a special meaning because it
integrates a new project’s format in design, construction and operation and they are two of the
biggest projects released in 2009 in this country (GLAN AGUA takes part of Mota-Engil
Environment and Services since 2008).
To conclude, an opportunity that the Portuguese President of Republic referred to in a speech this
April was to make a deeper link between Portugal and Czech Republic, economic cooperation, in
which Portugal can benefit from its ability in infrastructures construction, renewable energies,
telecommunications that are fulcra for Czech development and in exchange the other country
benefits from the connections of Portuguese companies with African and Latin America ones.
Mota-Engil is presented there; maybe from now onwards its business cooperation between
companies must be strong and leads to better profits and margins for both.
Divestment Opportunity
The opportunity analyzed in this chapter is a total divestment of Mota-Engil Group in Martifer,
selling its 37,50% position. The proceeds of this divestment will immediately result in debt
reduction. Thus, giving more capacity to raise medium-term debt to finance new projects [such as
the New Airport of Lisbon new, the participation in ANA, the participation in High Speed Railways
(TGV) consortium, the equity participation in new grants of highways, among others] if these
major investments will be put in place in the near future and/or awarded by this company.
Otherwise, it can be used for future acquisitions at an international level or even reinforce its
financial position in ones partially owned at the time (its core business).
Proposed Divestment Transaction (Buyer and Seller Perspective)
In the seller perspective, Mota-Engil is in a position that allowed itself to strengthen its businesses
(finding ways to optimize its business portfolio, improving cash management or release cash into
the businesses and reducing costs). Due to its strong financial position, it will need to understand
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0% 10% 20% 30% 40% 50% 60%
Looking for Cash
Dispose of Non-Performing Assets
Increase Focus on Core Business
Most Important Factor in Planning a Divestment?
Source: Ernst & Young Report: “Divesting in Turbulent Times – Achieving Value in a Buyers’ Market”, 2009
the current market conditions plus valuations and make a review about the best ways to finance
future investments.
Indeed, companies undertake divestments to guarantee their business future and as a way to fund
strategic investments (acquisitions included). So that it is in line with the Mota-Engil strategic plan
(according to the strategic puzzle aimed to promote value creation, business and geographical
diversification).
Figure 42: Inquire Results about the Most Important Factors Considered in Planning a Divestment
“Under the current economic
circumstances, and given the
company’s financial position,
paying down debt is the most
important for us when planning a
divestment”, a Media Company
responsible said. For Mota-Engil,
with this divestment, it will have
the opportunity to improve its
leverage ratios, repaying debt will
mean auto financing of new future
projects related to its core business.
The value per share of Martifer for Mota-Engil is 3,13€ while in the market it is being transacted at
1,75€.
So, as Martifer brings fewer benefits for Mota-Engil than before (just synergies in one division –
Metallic Construction), Mota-Engil should sell its participation and at the same time reducing its
net debt, improving its leverage ratios in the short-run for possible future investments in core
business. As actual market price is below the value for Mota-Engil, and expecting to have a
financial gain, it is necessary to wait until the market reaches 3,13€. Economic agents are putting a
huge risk premium in the stock, so that the cash-flows are understated, below its fair value. Then
Mota-Engil should sell the stock but just when market facilities are favourable. On the other hand,
there can exist a company in the same industry as Martifer that believes that the amount of
synergies with its own business areas is going to be so high. Moreover, it can bring Human
Resources in number and quality for Martifer that put it capable to take all new business areas
(electricity generation from renewable, for instance) to its optimal values .
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Table 10: Qualifying Holdings at December 2009
Source: Martifer
* Holder of a position in the Corporate Bodies of I‟M SGPS, SA;
** Holder of a position in the Corporate Bodies of Mota-Engil SGPS, SA.
Indeed, Mota-Engil does not influence Martifer strategy and does not manage the company from
an operational point of view. However, it has 37,5% of voting rights.
In the actual financial conditions, the Buyers are the companies with strong balance sheets. While
some companies are avoiding making investments, others consider that today’s facilities bring
exceptional opportunities for acquiring healthy business companies. However, Buyers considered
that convincing stakeholders about new transaction benefits will be a challenge, i.e, the boards,
financial people and shareholders will verify in a really detailed way the acquiring transaction, as
the statement of financial position is under pressure. The Buyers valued, in the preparation of the
divestment, the experienced management team, clear/realistic forecasts for the future company’
forecasts, a well-based description of potential future synergies, the most efficient tax structure
and the due diligence report properly set by the Seller. Martifer possible buyer can extract high
synergies, can try to reverse company’s strategy to the one in line with itself, can cut cost and
optimize the entire structure, creating more value.
In conclusion, possible buyers are characterized by stable businesses, strong balance sheets and
cash that put them in the favorable position of to re-shape their businesses through strategic
acquisitions. At the same time, sellers have to work really hard in the sense that a careful
preparation is essential and adds value to the transaction, even more in the current time when
lots of divestments are executed in record times. Buyers’ motivation is a factor of primordial
interest at this period despite challenging and successfully critical.
Shareholders Nr. of shares % of Share Capital % Voting Rights
I’M – SGPS, SA 41,590,473 41.590473% 41.590473% Carlos Manuel Marques Martins*
70,030 0.07003% 0.07003%
Jorge Alberto Marques Martins*
131,760 0.13176% 0.13176%
Total attributable to I’M – SGPS, SA
41,792,263 41.792263% 41.792263%
Mota-Engil – SGPS, SA 37,500,000 37.50% 37.50% Eduardo Jorge de Almeida Rocha **
20,000 0.02% 0.02%
Total attributable to FM – Sociedade de Controlo, SGPS, SA
37,520,000 37.520000% 37.520000%
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Martifer, SGPS, S.A.
Metallic Construction
Energy Systems | Wind
Energy Systems | Solar
Renewables Developer
Source: Martifer
46,30%
6,60%19%
28,10%
Revenues by Geographic Area
Portugal Spain
0%20%40%60%EBITDA Weight per Business Unit
46,3%
6,6%19%
28,1%
Revenues by Geographic Area
Portugal
Spain
Central Europe
Rest of the World
Target Company Overview
Martifer is a Portugal-based holding company, founded in 1990 and has initiated its activity in the
steel structures (within the metallic construction) sector. Now the company operates in 20
countries and it is engaged in the four business units presented below, that despite being
independent, complement each other in order to ensure sustained and balanced growth.
Concerning the Metallic Construction area, the company is market leader in
the Iberian Peninsula and a reference player at European level. Moreover, Martifer has recently
focused its strategy in the fast-growing countries of Central Europe and Angola. It does
construction of stadiums, bridges, buildings, airports and industrial plants. In the Energy Systems,
it constructs industrial facilities and equipment for the renewable energy sector; specifically in the
solar area it produces photovoltaic panels. In the RE Developer field, Martifer currently generates
104 megawatts of electricity with wind farms and solar parks. All the electricity generation
projects are based on renewable energy sources.
Figure 44 EBITDA Weight per Business Unit Figure 45: Revenues Weight per Geographic Area in 2009
Figure 43: Martifer Group Structure
Source: Martifer
Figure 46: Revenues Breakdown by Geographic Area
Source: Martifer
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41,79%
37,50%
20,71%
Capital Structure
I'M - SGPS, SA
Mota-Engil
Free Float
Figure 47: % of Share Capital by Shareholder Shareholder
3,50 €3,20 €
4,50 €3,90 €
3,00 €3,70 €
3,90 €3,67 €
0,00 € 1,00 € 2,00 € 3,00 € 4,00 € 5,00 €
BCP
BPI
Santander
Goldmen Sachs
Main Analysts' Target Price per Share
Source: Martifer
Figure 48: Main Analysts’ Price per Share
Source: Martifer
EV/EBITDA EV/Revenues
Net Debt/EBITDA
Net Debt/Equity
Net Debt/Assets
ROE ROA EBITDA margin
2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
Martifer 2,84 2,62 0,28 0,29 7,87 6,65 1,45 1,14 0,36 0,31 1,59% -3,39% 0,39% -0,93% 9,72% 11,02%
Essentially, the main group’s strategy is i) internationalization of all its business units; ii) the
maintenance of its leading position within the metallic construction field in Europe; iii) to become
one of the best players in the supply of renewable energies’ equipment and systems, by improving
its technical skills; iv) to be operative, financially efficient and strong in its financial structure.
Following this strategy, recently Martifer has sold 11% of its participation in the subsidiaries Prio
and Prio Advance Fuels to Severis (€ 13,75 million involved), reducing its participation from 60% to
49% which meant a reduction in its previous strategic interest in agriculture and biofuels business
and focus on core business. There are growth opportunities in all these segments of operation
which may allow sustainable growth and value creation if the strategy is properly put in place.
The actual capital structure is as presented, noting
that Mota-Engil holds 37,5%; and the Martins’
Brothers have a participation of 50-50% in I’M.
However, it is important to note that until 2007
Martifer was jointly owned by Mota-Engil and
Martins’ Brothers. Martifer has decided to sell its
shares to institutional investors at 8€ per each, the
upper end of the price range for its IPO. Since then, Martifer is listed in Euronext Lisbon Stock
Exchange. The objective was to use its capital increase to finance the group’s expansion of its
businesses abroad. Due to this event, Mota-Engil reached a capital gain of € 67 millions, which
allowed having a net profit in 2007 that was the triple of the one obtained in the previous year
(even with a decline in the Engineering and Construction sector). The actual market price is 1,75€
which is far from its 8€, and this can be due to: the forced re composition in shareholders (free-
float); change in investors’ type (hedge funds were reduced); business model does not allow doing
project finance; regulation risk; company dependence of public subsidies which are perceived as
improbable in this period of restraint and dependence
on Iberian markets for financing.
However, for Martifer analysts its
market price is below its value and,
according to my valuation, Martifer
value per share is 3,13€, an amount
below average.
Table 11: Martifer Ratios
Source: Martifer (*Adjusted values)
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Key Factors for a Successful
Divestment
Clear Defined Strategy
Group Procedures Put
in Place
Optimization of the Blend of
Business Unit Execution with Central Control
Right People Involved
Business Value and Deal Value
Drivers UnderstandingPace and
Direction Control
Identification / Resolution of
Issues Early on
Impact of the Transaction on
the Group
Clear Communication
Good Selection of Advisors
Figure 49: Diagram about Key Factors for a Successful Divestment
Source: Price Water House Coopers Report: “The Journal – Preparing the Ground for Successful Divestment”, 2009
Success Conditions of the Transaction
The divestment of assets in the shortest length of
time, the minimization of transaction costs, the
maximization of the value of the business
unit and the avoidance of disruption to
other business activities are crucial for
the optimization of the both parties’
goals.
Then, in the execution process it can
be maximized value by, for
instance, putting the divestments
into the market at the considered
best period of time. The company should be
focused in the ongoing business
operations during all the process,
keeping in mind the company’s overall
maximization of value. The analysis in terms of valuation and financial
models must be performed in a comprehensive way and there must exist a
formal procedure for the review of what was learned. Moreover, the proper allocation of
resources to this transaction process, the control of the information flows, communication,
planning and better preparation bring value. In summary, the diagram represents the main ideas
for a successful divestment.
To sum up, the main successful condition is to find a market price, at least, equal to the value for
Mota-Engil. It is to find a shareholder that find the highest value from the company. At the
moment market price does not transpires the rela value of the compny for the industrial investor
Valuation of Proposed Divestment Transaction
The proposed divestment is to sell Martifer capital at 3,13€, an amount achieved by Martifer
valuation. This will bring a gaining in Mota-Engil shares of 0,25€ per share, resulting in a increase
from 3,57€ to 3,57€. Transacting at the actual market price does not make any sense for Mota-
Engil since that amount is not translating Martifer value, so it is going to increase during this year
and then the best opportunity for this transaction will be achieved. Stock market recuperation is
expected. The Net Debt/EBITDA is going to decrease along time, ceteris paribus.
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Table 12: Mota-Engil Divestment in Martifer
Considerations on the Negotiation Process
Considering that the transaction proposed is the sale of 37,5% by Mota-Engil, the position of
control remains in Martins’ Brothers. To keep stability and avoid possible conflicts among the main
board of power, Martins’ Brothers should agree with this transaction and believes that for any
reason the acquirer of that part of capital can bring additional value to the company because it is
going to take part in the decision making process. Maybe it is important to note some motivation
by the buyer for the expansion/development of the core activities.
The buyer knows the highest price that it can pay for this acquisition and Mota-Engil should try to
find that value, considering Martifer valuation plus the synergies that are also favorable to the
acquiring company, even not presented for this seller. All the possible risks of this divestment
should be covered to the limit that the acquirer can carry on without putting in danger its own
business.
There must be an alignment of incentives between Martifer and Mota-Engil for this transaction,
and Mota-Engil should make clear that it is not divesting in this company due to misbelieve in the
valuation and forecasts associated with its potential backlog but just a corporate level strategy to
have more funds in hand to finance its expansion, projects and diversification policy. Both
companies can continue cooperating in the areas in which they can get synergies, such as Metallic
Construction in Martifer with Engineering and Construction in Mota-Engil.
Sum of the Parts (Mota-Engil Valuation with Martifer Divestment Opportunity) (In Eur Million)
Valuation Stake
SoP (Pmarket=1,75€)
SoP 2010 (PME=3,13€)
Engineering & Construction 468,16 100% 468,16 468,16 Environment & Services 198,01 55% 108,90 108,90
Transport Concessions 279,50
279,50 279,50 Other Assets 79,00
79,00 79,00
Own Shares 23,16
23,16 23,16 Initial Debt at the Holding Level (2010) 298,70
298,70 298,70
Reduction in Debt due to Sale of Martifer participation
65,63 117,46 Total
679,33 731,17
Number of Outstanding Shares
204,63 204,63 Total per Share (€)
3,32 3,57
At Market Value
(Pmarket) At Mota-Engil Value
(PME)
Martifer price per share 1,75 € 3,13 €
Gain in the Transaction 0 51,83 €
Gain in the Transaction per share 0 0,25 €
Leverage Ratio 2008 2009 2010E 2011E 2012E 2013E
Net Debt/EBITDA – Before Martifer Divestment (x) 3,94 4,92 4,82 4,55 4,29 4,04 Net Debt/EBITDA - After Martifer Divestment (x) 3,94 4,92 4,31 3,43 3,33 3,21
Source: Research Estimates
Table 13: Gains in the Divestment
Transaction
Source: Research Estimates
Table 14: Net Debt/EBITDA Before and After the Divestment Transaction (Transport Concessions not consolidated for
comparison)
Source: Research Estimates
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To sum up, due to the amount of capital put on sale (more than one third of total share capital) it
is necessary to inform CMVM about this transaction. The price cannot be accepted if CMVM
considers that it rises anomalies to the economy, according to article187º (Obligation to launch a
takeover bid) and 188º (Counterpart) of Section II of CMVM Code.
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Appendices
Mota-Engil Valuation
Sum of the Parts (In Eur Million)
Valuation at Equity Value
Stake SoP 2010
Engineering & Construction 468,16 100% 468,16 Environment & Services 198,01 55% 108,90 Transport Concessions 279,50 279,50 Martifer1 175,00 37,50% 65,63 Other Assets 79,00 79,00 Debt at the Holding Level 298,70 298,70 Own Shares 23,16 23,16 Total 679,33
Number of Outstanding Shares 204,63 Total per Share (€) 3,32 1Valued at market price = 1,75€ x 100.000.000 shares
2Valued at market price = 2,111€ x 10.972.328 shares
In the following DCF assumptions:
LT Portuguese Inflation = 2015e =1,80% (source: IMF)
Real GDP Portugal = 2015e = 1,40% (source: IMF)
Tax Rate= 25% (IRC) + 1,5% (Derrama)
Risk-free rate = German Government Bonds 8y =4,25% (source: Bloomberg)
Beta of Mota-Engil = Company’s Beta = 1,34 (source: Reuters)
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Engineering and Construction
Main DCF Assumptions
Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,34 Cost of Equity 12,29%
Debt Spread 3,00% Cost of Debt 6,22% Corporate Tax Rate 26,50% After Tax Cost of Debt 4,57% Leverage 64% WACC 7,33%
Depreciation Rate 13,62%
Perpetuity Growth Rate 3,20%
Real Perpetuity Growth Rate 1,40% LT Inflation 1,80%
WACC-G 4,13%
P&L Statement (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E
Revenues 1.048,70 1.466,70 1.693,86 1.797,91 1.908,35 2.025,57 2.150,00 Cost of Goods Sold 956,80 1.337,00 1.559,71 1.646,97 1.738,52 1.834,49 1.935,00
EBITDA 91,90 129,70 134,15 150,94 169,83 191,09 215,00
EBITDA margin 8,76% 8,84% 7,92% 8,40% 8,90% 9,43% 10,00% Depreciation 47,50 56,10 56,53 60,37 64,49 68,88 73,57
EBIT 44,40 73,60 77,63 90,57 105,35 122,21 141,43
Financial Expenses 26,00 31,00 22,15 27,81 30,92 34,25 37,81
Equity Method 6,00 3,39 7,34 5,58 5,58 5,58 5,58 EBT 24,40 45,99 62,82 68,33 80,00 93,54 109,20 Taxes 1,00 10,00 16,29 16,29 19,07 22,30 26,03
Net Income 23,40 35,99 46,53 52,04 60,93 71,24 83,17
Financial Balance Sheet (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E Fixed Assets 280,00 366,00 415,00 443,26 473,45 505,69 540,13 Concessions Fixed Assets
- - - - - - -
Investments 86,00 94,00 83,00 83,42 83,83 84,25 84,67 Long-Term Receivables
30,00 34,00 63,00 63,63 64,27 64,91 65,56
Working Capital 156,00 160,00 238,00 308,04 336,15 366,85 400,14
Capital Employed 552,00 654,00 799,00 898,34 957,70 1.021,70 1.090,50
Capital 126,60 206,01 238,47 305,01 326,42 349,34 373,59
Net Income 23,40 35,99 46,53 52,04 60,93 71,24 83,17
Minority Interests - - - - - - -
Total Equity 150,00 242,00 285,00 357,05 387,35 420,58 456,76
Provisions 10,00 16,00 15,00 15,30 15,61 15,76 16,08 Long-Term Payables
116,00 131,00 143,00 145,00 147,00 149,00 151,00
Net Debt 276,00 265,00 356,00 380,99 407,74 436,37 466,67
Of which non-recourse
- - - - - - -
Liabilities 402,00 412,00 514,00 541,29 570,35 601,13 633,74
Capital Invested 552,00 654,00 799,00 898,34 957,70 1.021,70 1.090,50
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2008 2009 2010E 2011E 2012E 2013E
Net Profit 35,99 46,53 52,04 60,93 71,24 83,17 Depreciation 56,10 56,53 60,37 64,49 68,88 73,57 Cash-Flow from Operations 92,09 103,06 112,42 125,42 140,12 156,74
Capital Expenditures 142,10 105,53 88,64 94,67 101,12 108,01 Change in NWC 4,00 78,00 70,04 28,11 30,70 33,29
Change in Provisions 6,00 -1,00 0,30 0,31 0,16 0,32 Change in LT Payables 15,00 -6,00 0,96 0,95 0,94 0,93
Change in LT Receivables and Investments
12,00 18,00 1,04 1,05 1,06 1,07
Cash-Flow from Investment 137,10 190,53 157,42 121,53 130,73 140,05 Change in Equity 56,01 -3,53 20,01 -30,63 -38,01 -46,98 Change in Net Debt -11,00 91,00 24,99 26,75 28,63 30,30
Cash-Flow from Financing 45,01 87,47 45,00 -3,88 -9,39 -16,68
DCF (in mln€) 2009 2010E 2011E 2012E 2013E
Operating Income (EBIT) 77,63 90,57 105,35 122,21 141,43
(+) Non Cash Items (depreciations) 56,53 60,37 64,49 68,88 73,57 (-) Taxes 20,57 24,00 27,92 32,39 37,48 (-) Capex 105,53 88,64 94,67 101,12 108,01 (-) ∆ NWC 78,00 70,04 28,11 30,70 33,29
(+) ∆ Provisions -1,00 0,30 0,31 0,16 0,32 (+) ∆ LT Payables -6,00 0,96 0,95 0,94 0,93
(-) ∆ LT Receivables & Investments 18,00 1,04 1,05 1,06 1,07
Free Cash-Flow to Firm (FCFF) -94,94 -31,52 19,33 26,91 36,40
Discounted Factor (WACC) 1,00 0,93 0,87 0,81 Discounted Cash-Flow -31,52 18,01 23,36 29,44
PV FCFF 39,29 Terminal Value 726,45
Enterprise Value (EV) 765,74 (-) Net Debt (2010) 380,99
(+) Financial Investments (2010) 83,42
(-) Dividend Payment Equity Value 468,16
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Environment and Services
Main DCF Assumptions
Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,34
Cost of Equity 12,29% Debt Spread 3,00%
Cost of Debt 5,60%
Corporate Tax Rate 26,50%
After Tax Cost of Debt 4,11% Leverage 87,05%
WACC 5,17%
Depreciation Rate 6,00%
Perpetuity Growth Rate 3,20% Real Perpetuity Growth Rate 1,40%
LT Inflation 1,80% WACC-G 1,97%
P&L Statement (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E
Revenues 253,00 285,70 333,48 382,17 437,96 501,91 575,19 632,70 695,97 765,57 842,13
Cost of Goods Sold
193,00 219,30 267,17 301,80 340,56 383,86 432,11 475,32 522,85 575,13 632,65
EBITDA 60,00 66,40 66,31 80,37 97,40 118,05 143,08 157,39 173,13 190,44 209,48 EBITDA margin
23,72% 23,24% 19,88% 21,03% 22,24% 23,52% 24,88% 24,88% 24,88% 24,88% 24,88%
Depreciation 18,80 19,40 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08
EBIT 41,20 47,00 36,60 48,17 61,42 77,84 98,15 107,17 117,01 127,73 139,40
Financial Expenses
17,00 21,00 18,15 24,38 26,82 29,50 32,45 35,70 39,27 43,25 47,61
Equity Method
- 1,00 0,49 0,75 0,75 0,75 0,75 0,75 0,75 0,75 0,75
EBT 24,20 27,00 18,94 24,53 35,35 49,09 66,44 72,22 78,49 85,22 92,54
Taxes 9,00 11,00 8,51 6,50 9,37 13,01 17,61 19,14 20,80 22,58 24,52 Minority Interests
10,00 10,00 8,00 8,11 11,69 16,24 21,97 23,89 25,96 28,19 30,61
Net Income 5,20 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41
Financial Balance Sheet (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E
576,52 642,07 698,49 762,85 826,59 911,90 1.006,87 1.110,71 Fixed Assets 155,40 266,00 309,00 317,09 353,14 384,17 419,57 454,62 501,55 553,78 610,89 Concessions Fixed Assets 94,10 111,00 197,00 259,43 288,93 314,32 343,28 371,96 410,36 453,09 499,82 Investments 126,00 40,00 42,00 42,84 43,70 44,57 45,46 46,37 47,30 48,24 49,21 Long-Term Receivables 12,20 13,00 4,00 4,20 4,41 4,63 4,86 5,11 5,36 5,63 5,91 Working Capital -2,60 40,00 27,00 30,94 35,46 40,64 46,57 51,23 56,35 61,98 68,18
Capital Employed 385,10 470,00 579,00 654,50 725,64 788,33 859,75 929,29 1.020,91 1.122,73 1.234,02
Capital 55,80 68,00 64,57 82,50 90,75 99,83 109,81 120,79 132,87 146,34 161,07
Net Income 5,20 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41 Minority Interests 10,00 10,00 8,00 8,11 11,69 16,24 21,97 23,89 25,96 28,19 30,61
Equity 71,00 84,00 75,00 100,53 116,73 135,90 158,64 173,87 190,55 208,98 229,09
Provisions 10,00 14,00 15,00 16,07 17,22 18,45 19,77 21,18 22,69 24,31 26,05
Long-Term Payables 17,10 52,00 93,00 102,30 112,53 106,90 101,56 96,48 106,13 116,74 128,42 Net Debt 287,00 320,00 396,00 435,60 479,16 527,08 579,78 637,76 701,54 772,69 850,46 Of which non-recourse
29,00 81,00 89,10 98,01 107,81 118,59 130,45 143,50 158,05 173,96
Liabilities 314,10 386,00 504,00 553,97 608,91 652,43 701,11 755,42 830,36 913,75 1.004,93
Capital Invested 385,10 470,00 579,00 654,50 725,64 788,33 859,75 929,29 1.020,91 1.122,73 1.234,02
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2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E
Net Profit 6,00 2,43 9,92 14,29 19,84 26,86 29,19 31,73 34,45 37,41 Depreciation 19,40 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08 Cash-Flow from Operations 25,40 32,15 42,11 50,27 60,05 71,79 79,41 87,84 97,16 107,49
Capital Expenditures 146,90 158,71 102,72 101,53 96,63 109,29 113,95 141,43 157,68 173,93 Change in NWC 42,60 -13,00 3,94 4,52 5,18 5,93 4,66 5,12 5,63 6,20 Change in Provisions 4,00 1,00 1,07 1,15 1,23 1,32 1,41 1,51 1,62 1,74 Change in LT Payables 34,90 41,00 9,30 10,23 -5,63 -5,35 -5,08 9,65 10,61 11,67 Change in LT Receivables -85,20 -7,00 1,04 1,07 1,09 1,12 1,15 1,18 1,21 1,25 Cash-Flow from Investment 65,40 96,71 97,33 95,74 107,30 120,38 123,42 136,58 152,29 167,96
Change in Equity 7,00 -11,43 15,61 1,91 -0,67 -4,12 -13,96 -15,04 -16,02 -17,30 Change in Net Debt 33,00 76,00 39,60 43,56 47,92 52,71 57,98 63,78 71,15 77,77 Cash-Flow from Financing 40,00 64,57 55,21 45,47 47,25 48,59 44,01 48,73 55,13 60,47
DCF (in mln€) 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E
Operating Income (EBIT) 36,60 48,17 61,42 77,84 98,15 107,17 117,01 127,73 139,40 (+) Non Cash Items (Depreciation) 29,71 32,20 35,98 40,21 44,93 50,21 56,12 62,71 70,08 (-) Taxes 8,51 6,50 9,37 13,01 17,61 19,14 20,80 22,58 24,52 (-) Capex 158,71 102,72 101,53 96,63 109,29 113,95 141,43 157,68 173,93 (-) ∆ NWC -13,00 3,94 4,52 5,18 5,93 4,66 5,12 5,63 6,20 (+) ∆ Provisions 1,00 1,07 1,15 1,23 1,32 1,41 1,51 1,62 1,74 (+) ∆ Other LT Payables 41,00 9,30 10,23 -5,63 -5,35 -5,08 9,65 10,61 11,67 (-) ∆ Other LT Reveibales and Investments -7,00 1,04 1,07 1,09 1,12 1,15 1,18 1,21 1,25
Free Cash-Flow to Firm (FCFF) -38,91 -23,46 -7,70 -2,25 5,10 14,83 15,75 15,56 17,00 Discounted Factor (WACC)
1,00 0,95 0,90 0,86 0,82 0,78 0,74 0,70
Discounted Cash-Flow
-23,46 -7,32 -2,04 4,38 12,12 12,24 11,50 11,94
PV FCFF
7,41 Terminal Value
583,35
Enterprise Value (EV) 590,77 (-) Net Debt (2010)
435,60
(+) Financial Investments (2010)
42,84
(-) Dividend Payment
Equity Value 198,01
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Transport Concessions
Eur Million Valuation Stake Mota-Engil Method
Lusoponte1
340 38,02% 129,27 Last Deal Aenor -171,99 35,11% -60,39 DCF Lusoscut Costa da Prata 176,07 36,09% 63,54 DCF Lusoscut Beira Litoral e Alta 137,39 36,09% 49,59 DCF Lusoscut Grande Porto 121,03 36,09% 43,68 DCF Grande Lisboa -18,25 36,09% -6,59 DCF Douro Litoral - 45,93% - Pinhal Interior - 42,08% - Mexico Concessions
1 80 30,00% 24,00
Brazil Concessions1
91 40,00% 36,40 Total 279,50 1Balance Sheet figures
Concessions valued according to the following assumptions:
Main DCF Assumptions - AENOR
Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 0,90 Cost of Equity 9,65% Debt Spread 2,50%
Cost of Debt 6,25% Corporate Tax Rate 26,50%
After Tax Cost of Debt 4,59%
Main DCF Assumptions - Lusoscuts
Risk-Free Rate 4,25%
Market Premium 6,00% Levered Beta 0,80
Cost of Equity 9,05% Debt Spread 2,50%
Cost of Debt 6,50% Corporate Tax Rate 26,50%
After Tax Cost of Debt 4,78% Shadow Toll
Main DCF Assumptions - Grande Lisboa
Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,00
Cost of Equity 10,25% Debt Spread 2,50%
Cost of Debt 6,25% Corporate Tax Rate 26,50%
After Tax Cost of Debt 4,59%
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Mota-Engil Proforma Financials (Excluding Transport Concessions Consolidation)
P&L Statement (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E Revenues 1.301,70 1.752,40 2.027,34 2.180,08 2.346,31 2.527,48 2.725,19 Cost of Goods Sold 1.149,80 1.556,30 1.826,88 1.948,77 2.079,08 2.218,34 2.367,11 EBITDA 151,90 196,10 200,46 231,31 267,23 309,14 358,08 EBITDA margin 11,67% 11,19% 9,89% 10,61% 11,39% 12,23% 13,14% Depreciation 66,30 75,50 86,24 92,57 100,47 109,09 118,50 EBIT 85,60 120,60 114,22 138,74 166,77 200,05 239,58 Financial Expenses 43,00 52,00 40,30 52,20 57,74 63,75 70,27 Equity Method 6,00 4,39 7,84 6,32 6,32 6,32 6,32 EBT 48,60 72,99 81,76 92,86 115,35 142,62 175,63 Taxes 10,00 21,00 24,80 22,79 28,44 35,30 43,64 Minority Interests 10,00 45,99 54,53 60,16 72,62 87,47 105,14 Net Income 28,60 41,99 48,96 61,96 75,22 91,08 110,02
Financial Balance Sheet (In Eur Million)
2007 2008 2009 2010E 2011E 2012E 2013E Fixed Assets 435,40 632,00 724,00 760,35 826,59 889,86 959,70 Concessions Fixed Assets 94,10 111,00 197,00 259,43 288,93 314,32 343,28 Investments 212,00 134,00 125,00 126,26 127,53 128,82 130,13
Long-Term Receivables 42,20 47,00 67,00 67,83 68,68 69,54 70,42 Working Capital 153,40 200,00 265,00 338,98 371,61 407,49 446,71 Invested Capital 937,10 1.124,00 1.378,00 1.552,85 1.683,34 1.810,04 1.950,25
Capital 182,40 274,01 303,04 387,51 417,17 449,16 483,40 Net Income 28,60 41,99 48,96 61,96 75,22 91,08 110,02
Minority Interests 10,00 10,00 8,00 8,11 11,69 16,24 21,97
Equity 221,00 326,00 360,00 457,58 504,08 556,48 615,40
Provisions 20,00 30,00 30,00 31,37 32,83 34,21 35,84
Long-Term Payables 133,10 183,00 236,00 247,30 259,53 255,90 252,56
Net Debt 563,00 585,00 752,00 816,59 886,90 963,44 1.046,45 Of which non-recourse - 29,00 81,00 89,10 98,01 107,81 118,59
Liabilities 716,10 798,00 1.018,00 1.095,26 1.179,26 1.253,56 1.334,85
Capital Employed 937,10 1.124,00 1.378,00 1.552,85 1.683,34 1.810,04 1.950,25
Cash-Flow Statement (In Eur Million)
2008 2009 2010E 2011E 2012E 2013E Net Profit 41,99 48,96 61,96 75,22 91,08 110,02 Depreciation 75,50 86,24 92,57 100,47 109,09 118,50 Cash-Flow from Operations 117,49 135,20 154,53 175,69 200,17 228,53
Capital Expenditures 289,00 264,24 191,35 196,21 197,75 217,30 Change in NWC 46,60 65,00 73,98 32,63 35,88 39,22 Change in Provisions 10,00 0,00 1,37 1,45 1,39 1,63 Change in LT Payables 49,90 35,00 10,26 11,18 -4,69 -4,42 Change in LT Receivables and Investments -73,20 11,00 2,09 2,12 2,16 2,19 Cash-Flow from Investment 202,50 305,24 255,79 218,33 239,09 261,50
Change in Equity 63,01 -14,96 35,62 -28,72 -38,68 -51,10 Change in Net Debt 22,00 167,00 64,59 70,31 76,54 83,01 Cash-Flow from Financing 85,01 152,04 100,22 41,59 37,86 31,90
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Financials 2008 2009 2010E 2011E 2012E 2013E
Turnover (Eur millions) 1.752,40 2.027,34 2.180,08 2.346,31 2.527,48 2.725,19 EBITDA (Eur millions) 196,10 200,46 231,31 267,23 309,14 358,08 Net Income (Eur millions) 41,99 48,96 61,96 75,22 91,08 110,02 EPS (Eur) 0,21 0,24 0,30 0,37 0,45 0,54 Ratios
ROIC (%) 4,61% 4,40% 4,86% 5,41% 5,99% 6,62% ROE (%) 12,88% 13,60% 13,54% 14,92% 16,37% 17,88% Net Debt/EBITDA (x) 3,94 4,92 4,82 4,55 4,29 4,04 Financials
P/E (x) 16,18 13,87 10,96 9,03 7,46 6,17 EV/Revenues (x) 0,39 0,34 0,31 0,29 0,27 0,25 EV/EBITDA (x) 3,46 3,39 2,94 2,54 2,20 1,90
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Martifer Valuation
Sum of the Parts
Eur Million Valuation Stake EV/10 Method Metallic Construction 289,47 85%1 246,05 DCF Energy Systems|Wind 67,98 100% 67,98 DCF Energy Systems|Solar 80,16 100% 80,16 DCF RE Developer (Electricity Generation) 207,90 100% 207,90 DCF Agriculture and Biofuels3 49% 61,25 Market Value
EDP stake2 43,97 Market Value Real Estate Assets 57,00 Value of the Company (EV) 764,00 (-) Consolidated Debt (2010) 451,10 Equity Value 313,22
Number of Outstanding Shares 100,00 Price per Share 3,13 € 1Martifer Aluminios is controlled by the Group in 55%
217,7 million shares x 2,484€
3 Valued at the price of the sale of 11% of Prio capital in March 25.
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Metallic Construction
Main DCF Assumptions
Risk-Free Rate 4,25%
Market Premium 6,00% Levered Beta 1,06%
Cost of Equity 10,61% Debt Spread 3,00%
Cost of Debt 8,26% Corporate Tax Rate 26,50%
After Tax Cost of Debt 6,07% Leverage 82,75%
WACC 6,85% Depreciation Rate 2,30%
Perpetuity Growth Rate 3,20% Real Perpetuity Growth Rate 1,40%
LT Inflation 1,80% WACC-G 3,65%
P&L Statement
Eur Million 2008 2009 2010E 2011E 2012E 2013E Revenues 323,60 315,50 321,81 331,46 344,72 361,96 Cost of Goods Sold 288,90 278,40 283,97 292,87 305,35 321,80 EBITDA 34,70 37,10 37,84 38,60 39,37 40,16 EBITDA margin 10,72% 11,76% 11,76% 11,64% 11,42% 11,09%
Depreciation 9,20 10,10 11,96 12,05 12,13 12,21 EBIT 25,50 27,00 25,88 26,55 27,24 27,95
Financial Expenses 8,60 15,40 11,61 12,25 12,78 13,21 EBT 16,90 11,60 14,27 14,30 14,46 14,74 Taxes 3,60 3,50 3,78 3,79 3,83 3,91 Net Income 13,30 8,10 10,49 10,51 10,63 10,84
Eur Million 2008 2009 2010E 2011E 2012E 2013E
Net Assets 513,43 516,94 520,48 524,04 527,62 531,23 Investments
Working Capital 32,36 53,92 55,00 56,65 58,91 61,86 Capital Empoyed 545,79 570,86 575,48 580,69 586,54 593,09
Capital 78,03 87,90 99,00 104,49 109,00 112,63
Net Income 13,30 8,10 10,49 10,51 10,63 10,84 Minority Interests 2,40 2,50 3,24 3,24 3,28 3,34
Equity 93,73 98,50 112,73 118,25 122,91 126,81 Provisions 3,52 3,66 4,02 4,43 4,87 5,36
Other LT Payables 292,34 328,90 318,21 309,71 304,05 301,06 Net Debt 156,20 139,80 140,51 148,30 154,70 159,86
Liabilities 452,06 472,36 462,75 462,44 463,62 466,28 Capital Invested 545,79 570,86 575,48 580,69 586,54 593,09
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Cash-Flow Statement
Eur Million 2009 2010E 2011E 2012E 2013E Net Profit 8,10 10,49 10,51 10,63 10,84
Depreciation 10,10 11,96 12,05 12,13 12,21
Cash-Flow from Operations 18,20 22,45 22,56 22,76 23,05
Capital Expenditures (Investment) 13,61 15,50 15,61 15,71 15,82 Change in NWC 21,56 1,08 1,65 2,27 2,95
Change in Provisions 0,14 0,37 0,40 0,44 0,49 Change in Other Liabilities 36,56 -10,69 -8,50 -5,66 -2,98
Cash-Flow from Investment -1,53 26,90 25,36 23,20 21,26
Change in Equity -3,33 3,74 -4,99 -5,96 -6,94
Change in Net Debt -16,40 0,71 7,79 6,40 5,15
Cash-Flow from Financing -19,73 4,45 2,80 0,44 -1,78
DCF (in mln€) 2009 2010E 2011E 2012E 2013E
Operating Income (EBIT) 27,00 25,88 26,55 27,24 27,95
(+) Non Cash Items (depreciations) 10,10 11,96 12,05 12,13 12,21 (-) Taxes 7,16 6,86 7,04 7,22 7,41 (-) Capex 13,61 15,50 15,61 15,71 15,82
(-) ∆ NWC 21,56 1,08 1,65 2,27 2,95 (+) ∆ Provisions 0,14 0,37 0,40 0,44 0,49
(+) ∆ Other Liabilities 36,56 - 10,69 - 8,50 -5,66 -2,98 Free Cash-Flow to Firm (FCFF) 31,47 4,09 6,21 8,95 11,49 Discounted Factor (WACC) 1,00 0,94 0,88 0,82 Discounted Cash-Flow 4,09 5,81 7,84 9,42
PV FCFF 27,15 Terminal Value 262,32 Enterprise Value (EV) 289,47
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Energy Systems | Wind
Main DCF Assumptions
Risk-Free Rate 4,25% Market Premium 6,00% Levered Beta 1,06 Cost of Equity 10,61%
Debt Spread 3% Cost of Debt 4,8% Corporate Tax Rate 26,50%
After Tax Cost of Debt 4%
Leverage 66%
WACC 5,95%
Depreciation Rate 3%
Perpetuity Growth Rate 3,2% Real Perpetuity Growth Rate 1,40%
LT Inflation 1,8%
WACC-G 2,75%
P&L Statement (In Eur Million)
2008 2009 2010E 2011E 2012E 2013E Revenues 193,50 154,50 146,78 161,18 167,63 172,66
Cost of Goods Sold 176,30 143,30 136,36 150,38 156,57 161,44 EBITDA 17,20 11,20 10,42 10,80 11,06 11,22
EBITDA margin 8,89% 7,25% 7,10% 6,70% 6,60% 6,50%
Depreciation 3,20 6,90 6,99 7,09 7,18 7,28
EBIT 14,00 4,30 3,43 3,71 3,88 3,94
Financial Expenses 5,20 3,30 3,30 3,30 3,32 3,33
EBT 8,80 1,00 0,13 0,41 0,56 0,61
Taxes 2,20 0,27 0,03 0,11 0,15 0,16 Net Income 6,60 0,74 0,10 0,30 0,42 0,45
Financial Balance Sheet (In Eur Million)
2008 2009 2010E 2011E 2012E 2013E
Net Assets 262,70 266,29 269,94 273,63 277,37 281,16
Working Capital 46,44 44,81 42,57 46,74 48,61 50,07
Capital Empoyed 309,14 311,10 312,50 320,37 325,98 331,23
Capital 120,80 106,55 107,09 107,22 107,61 108,15 Net Income 6,60 0,74 0,10 0,30 0,42 0,45
Minority Interests 2,00 -0,20 0,03 0,09 0,13 0,14
Total Equity 129,40 107,09 107,22 107,61 108,15 108,73
Provisions 0,44 2,58 2,84 3,12 3,44 3,78
Other Liabilities 134,00 132,13 133,06 140,00 144,41 148,36 Net Debt 45,30 69,30 69,38 69,63 69,98 70,36
Liabilities 179,74 204,01 205,29 212,76 217,83 222,50
Capital Invested 309,14 311,10 312,50 320,37 325,98 331,23
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Cash-Flow Statement (In Eur Million)
2009 2010E 2011E 2012E 2013E Net Profit 0,74 0,10 0,30 0,42 0,45 Depreciation 6,90 6,99 7,09 7,18 7,28
Cash-Flow from Operations 7,63 7,09 7,39 7,60 7,73 Capital Expenditures (Investment) 10,49 10,63 10,78 10,93 11,07 Change in NWC -1,63 -2,24 4,18 1,87 1,46
Change in Provisions 2,14 0,26 0,28 0,31 0,34 Change in Other Liabilities -1,87 0,94 6,94 4,41 3,95
Cash-Flow from Investment 8,58 7,20 7,73 8,07 8,24
Change in Equity -23,05 0,03 0,09 0,13 0,14 Change in Net Debt 24,00 0,08 0,25 0,35 0,38
Cash-Flow from Financing 0,95 0,11 0,34 0,48 0,51
DCF (in mln€) 2009 2010E 2011E 2012E 2013E
Operating Income (EBIT) 4,30 3,43 3,71 3,88 3,94 (+) Non Cash Items (Depreciations) 6,90 6,99 7,09 7,18 7,28 (-) Taxes 1,14 0,91 0,98 1,03 1,04
(-) Capex 10,49 10,63 10,78 10,93 11,07 (-) ∆ NWC -1,63 -2,24 4,18 1,87 1,46
(+) ∆ Provisions 2,14 0,26 0,28 0,31 0,34 (+) ∆ Other Liabilities -1,87 0,94 6,94 4,41 3,95
Free Cash-Flow to Firm (FCFF) 1,48 2,32 2,08 1,96 1,94
Discounted Factor (WACC) 1,00 0,94 0,89 0,84
Discounted Cash-Flow 2,32 1,97 1,75 1,63 PV FCFF 7,66
Terminal Value 60,33
Enterprise Value (EV) 67,98
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Energy systems – Solar
Main DCF Assumptions
Risk-Free Rate 4,25%
Market Premium 6% Levered Beta 1,06%
Cost of Equity 10,61% Debt Spread 3,0%
Cost of Debt 6,0% Corporate Tax Rate 26,50%
After Tax Cost of Debt 4,4% Leverage 81,54%
WACC 5,58% Depreciation Rate 3,6%
Perpetuity Growth Rate 3,20% Real Perpetuity Growth 1,40%
LT Inflation 1,80% WACC-G 2,38%
Financial Balance Sheet (In Eur Million)
2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Net Assets 76,7 87,9 97,9 109,9 118,9 126,9 133,9 140,9 155,9 Investments Working Capital 12,2 35,7 39,3 43,6 47,1 53,2 58,3 65,2 73,1
Capital Employed 88,9 123,6 137,2 153,5 166,0 180,1 192,2 206,2 229,0
Capital 13,7 17,0 23,8 29,9 31,0 31,7 34,0 36,7 39,7 Net Income 2,0 4,8 5,0 5,0 5,6 6,9 7,2 7,6 8,0
Minority Interests 2,8 1,0 1,1 1,0 1,2 1,4 1,5 1,6 1,7
Total Equity 18,5 22,8 29,9 36,0 37,7 40,0 42,8 45,9 49,4
Provisions 1,3 1,3 1,3 1,3 1,3 1,3 1,3 1,3 1,3 Other Liabilities 55,2 63,1 58,3 58,9 66,8 74,9 79,8 85,7 99,6
Net Debt 13,9 36,4 47,7 57,4 60,2 63,9 68,3 73,3 78,7
Liabilities 70,4 100,8 107,3 117,6 128,3 140,1 149,4 160,2 179,6
Capital Invested 88,9 123,6 137,2 153,5 166,0 180,1 192,2 206,2 229,0
P&L Statement (In Eur Million)
2008 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Revenues 122,40 130,50 143,55 159,34 172,09 194,46 212,93 238,48 267,10 Cost of Goods Sold 113,20 118,00 130,93 146,34 157,91 178,30 195,00 218,76 245,40 EBITDA 9,20 12,50 12,63 13,00 14,17 16,16 17,94 19,73 21,70 EBITDA margin 7,52% 9,58% 8,79% 8,16% 8,24% 8,31% 8,42% 8,27% 8,13%
Depreciation 1,50 3,20 3,56 4,00 4,33 4,62 4,87 5,13 5,67 EBIT 7,70 9,30 9,06 9,00 9,85 11,54 13,06 14,60 16,03 Financial Expenses 3,30 2,20 2,20 2,20 2,20 2,20 3,20 4,20 5,20 EBT 4,40 7,10 6,86 6,80 7,65 9,34 9,86 10,40 10,83 Taxes 2,40 2,30 1,82 1,80 2,03 2,47 2,61 2,76 2,87 Net Income 2,00 4,80 5,04 5,00 5,62 6,86 7,25 7,64 7,96
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Cash-Flow Statement (In Eur Million)
2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E Net Profit 4,8 5,0 5,0 5,6 6,9 7,2 7,6 8,0 Depreciation 3,2 3,6 4,0 4,3 4,6 4,9 5,1 5,7
Cash-Flow from Operations
8,0 8,6 9,0 9,9 11,5 12,1 12,8 13,6
Capital Expenditures (Investment)
14,4 13,6 16,0 13,3 12,6 11,9 12,1 20,7
Change in NWC 23,5 3,6 4,3 3,5 6,1 5,1 7,0 7,8 Change in Provisions -0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Change in Other Liabilities
8,0 -4,8 0,6 7,8 8,2 4,9 5,8 14,0
Cash-Flow from Investment
30,0 22,0 19,7 9,0 10,6 12,0 13,3 14,5
Change in Equity -0,5 2,1 1,0 -3,8 -4,6 -4,5 -4,5 -4,5 Change in Net Debt 22,5 11,3 9,6 2,9 3,7 4,4 5,0 5,4 Cash-Flow from Financing
22,0 13,4 10,7 -1,0 -0,9 -0,1 0,5 0,9
DCF (in mln€) 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Operating Income (EBIT)
9,3 9,1 9,0 9,8 11,5 13,1 14,6 16,0
(+) Non Cash Items 3,2 3,6 4,0 4,3 4,6 4,9 5,1 5,7 (-) Taxes 2,5 2,4 2,4 2,6 3,1 3,5 3,9 4,2 (-) Capex 14,4 13,6 16,0 13,3 12,6 11,9 12,1 20,7
(-) ∆ NWC 23,5 3,6 4,3 3,5 6,1 5,1 7,0 7,8 (+) ∆ Provisions -0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 (+) ∆ Other Liabilities 8,0 -4,8 0,6 7,8 8,2 4,9 5,8 14,0
Free Cash-Flow to Firm (FCFF)
-20,0 -11,7 -9,1 2,6 2,5 2,4 2,6 2,9
Discounted Factor (WACC)
1,00 0,95 0,90 0,85 0,80 0,76 0,72
Discounted Cash-Flow
-11,7 -8,6 2,3 2,1 2,0 2,0 2,1
PV FCFF -9,8 Terminal Value 89,98
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RE Developer
1 Enterprise Value from Millennium Investment Bank, then actualized to EV/2010 at the WACC prpresented
Equity Debt
Weight 30,23% 69,77%
Cost 13,08% 1,94%
W * C 3,95% 1,35% WACC 5,31% Source: Bloomberg - 5/May/2010
Eur Million Valuation (EV/2009)
Locations:
Spain 46 Portugal 63
Poland 13 Romania -12
Slovakia - Ukraine 0
Germany 76 USA -
Brazil 12 1981
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Disclaimer
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information and estimates contained herein and for the opinions expressed which exclusively
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