Strategy Update 2020 OHL Group - Madrid, March 2nd, 2015 Northern Urban Toll Road (Mexico)
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Strategy Update 2020
OHL Group
Madrid, March 2nd, 2015
Northern Urban Toll Road (Mexico)Any declaration made in this presentation that may differ from previous past figures made in
reference to, but not limited to; the operational development, business strategies and future
goals, are to be interpreted only as future estimates, and as such, they imply known and
unknown risks, uncertainties and other factors that could cause OHL’s results, behavior and
achievements, or the results and conditions of its activities, to be substantially different to
those and to its future estimates.
This presentation and the future estimations contained here within, are given on this date
and OHL expressly declines from any obligation or compromise to give any update or revision
of the information contained here within, any change in its expectations or modification in
the facts, conditions and circumstances in which these future estimates were founded.
OBRASCÓN HUARTE LAIN 1Table of Contents
The OHL Group Today
Strategic Plan and Vision for 2020
OHL Concessions
OHL Engineering & Construction
• OHL Construction
• OHL Industrial
• OHL Services
OHL Developments
Conclusions
OBRASCÓN HUARTE LAIN 2The OHL Group Today
OBRASCÓN HUARTE LAIN Airport Link Metrorail 3(USA)OHL is a worldwide leader and international reference in
Concession, Engineering, and Construction projects
OHL Engineering & Construction
OHL OHL
Concessions OHL Construction OHL Industrial OHL Services Developments
Leading company in PPP projects International Engineering Management Comprehensive
reference and construction of projects in the management of
Controlling stake of ~56% in the in the of turn-
turn-key facility unique top-
top-quality
equity capital of OHL México construction of industrial management projects in the
civil engineering installations and urban hotel-
hotel-tourism sector
Participation of ~14% in the infrastructure and services sectors
equity capital of Abertis singular buildings
OBRASCÓN HUARTE LAIN 4OHL has leveraged its progressive international expansion to
compensate for the reduction of activity in Spain
Proactive increase in international presence Selection of recent international projects
Evolution of revenue (%) Mexiquense Beltway
Bicentennial Viaduct
~20 Spain Centre hospitalier de l'Université
de Montréal – CHUM
Rehabilitation of New York's subway
~70 Airport Link Metrorail in Florida Average
Istanbul-
Istanbul-Ankara High Speed Train project
and Marmaray project size of
~80 International
>€300M
High Speed Train
Medina - Mecca
~30
Eastern Vespucio toll-
toll-road
Río Magdalena toll-
toll-road
2004 2014
# of Oran Convention Center
15 30
countries
Allowing OHL Construction to reach a current orderbook of ~€
~€8B, equivalent to over 3 years of production
OBRASCÓN HUARTE LAIN 5OHL has historically delivered significant financial growth
while complying with its financial policy ratio
Revenue (€
(€M) EBITDA (€
(€M) Orderbook (€
(€M)
CAGR:
CAGR: +5% CAGR:
CAGR: +15% CAGR:
CAGR: +8%
3,731 7,984
1,078
2,231
3,717
262
2004 2014 2004 2014 2004 2014
Maintaining the commitment with the financial policy ratio: recourse debt / recourse EBITDA below 3x
OBRASCÓN HUARTE LAIN 6Strategic Plan and Vision for 2020
Centre
OBRASCÓN HUARTE hospitalier
LAIN de l'Université de Montréal – CHUM (Canada)
7The new Strategic Plan is based on two key principles:
cash generation and sustainability of each division
1 Further strengthen OHL's capabilities and resources
to enhance project execution and risk control mechanisms
Ensure cash
2 Concentrate the Group's activities on eight Home Markets
generation
in each division and balance project size and client portfolio
3 Optimize cash flow generation with
self-
self-funding policy per division
Guarantee 4 Revenue and EBITDA to double between 2014 and 2020
sustainability with low CAPEX requirements
of each division
5 Strengthen the commitment of the OHL Group with
People, R&D&i and Corporate Social Responsibility
Solid updated strategy to ensure future growth while maintaining financial discipline
OBRASCÓN HUARTE LAIN 81
The Strategic Plan and Vision for 2020 have been based on the OHL
Group's strengths and capabilities
Integrated Five divisions with strong synergies and opportunities for collaboration
Group • Within OHL Engineering & Construction and as support for OHL Concessions
Technical large--scale projects in all sectors
Vast experience and high skilled teams leading large
Capability • From transportation infrastructure to unique construction
Development/
Excellent management of the Group's concession portfolio throughout all geographies
management of
concessions • 18 projects in 5 countries, with a managed investment of ~€7B
Commercial Diversified, high value-
value-added, and profitable orderbook,
orderbook, including emblematic projects
Capability • ~€8B Construction orderbook, or equivalent to over 3 years of production
International Successful international expansion and positioning as a worldwide reference
Footprint • Consolidated presence in attractive markets with large growth potential
Commitment Part of one of the largest European industrial conglomerates
of the Villar
Mir Group • As a majority shareholder, the Villar Mir Group guarantees the OHL Group's stability
OBRASCÓN HUARTE LAIN 92
The OHL Group will focus its activity on eight Home Markets
Shifting the company's center of gravity towards North and South America
x1,9 Poland
x1,7 Czech Rep.
Slovakia x1,8
x1,3 Canada
x1,5 Spain
x1,3 USA
x2,3 Mexico
Saudi
Arabia x2,3 Colombia
x1,7 Balkans1 x1,6
Australia x1,8 Peru
Singapore x1,4
x2,0
New x1,5 Chile
x1,5
Zealand
Target international Markets on a project basis2
Home Markets Rest of the World
positioning (potential future Home Markets)
Growth of investment in
(% of 2020 revenue) 85 % 10 % 5% x# Transportation Infrastructure
(Nominal 2020 vs. 2013)
1. Includes Croatia, Bosnia & Herzegovina, Serbia and Macedonia 2. Periodically reviewed
OBRASCÓN HUARTE LAIN 103
Two key financial principles: sustainable cash flow generation
and self funding per division
Key Principles Specific targets per Division
Equity for new concessions through dividends
and rotation of mature assets
Optimize the profitability Target IRR of 15% in EUR for new concessions
and cash flow generation OHL Mexico self-
self-funding to deliver growth
of each line of business opportunities in Mexican infrastructure plan
Reach target 70%-
70%-80% cash flow/EBITDA ratio
in 2020
Self-
Self-funding of growth within Margins within the first quartile in the sector
each one of the divisions Balanced project size and client portfolio
to minimize risk exposure
To be funded through asset rotation
OBRASCÓN HUARTE LAIN 114
Revenue will double between 2014 and 2020, reaching €8B
Maintaining the current business mix and ensuring financial policy compliance
Revenue (€
(€B) EBITDA (€
(€B)
x2+ ~8.0 x2
~2.0
~5.5
24%
~1.4
89% ~1.1 22%
~3.7
87% 20%
76%
88% 78%
80%
12% 13% 11%
2014 2017 2020 2014 2017 2020
OHL E&C and OHL Developments OHL Concessions
OHL E&C and OHL Developments will limit CAPEX requirements to €200-
200-300M between 2015-
2015-2020
OBRASCÓN HUARTE LAIN 125
The Strategic Plan reinforces the OHL Group's commitment
to People, R&D&i,
R&D&i, and Corporate Social Responsibility
Corporate Social
People R&D&i
Responsibility
Grow and promote growth Innovate to create value Joint value creation
• Promotion of programs to identify • Collaboration agreements with 60 • Comprehensive CSR management
and manage talent universities and research centers along the entire value chain
in over 15 countries
• Excellence in mobility plans and • Special attention and priority given
international development • Multiple innovative solutions: to preventing occupational
Cubípodo, SATOgrab, Sogedron, hazards
• Commitment to technical Dina sat, SULABU, Futuro Solar, etc.
excellence and continuous training • Protection of natural resources
• Large-
Large-scale projects in Concessions: and biodiversity
• Development of a respectful and OASIS, FOTsis (FP7), SMARTSIT, Free
diverse environment with equal Flow toll system, etc. • Application of ethical principles in
opportunities all business relationships
• Cumulative investment of over €70M
• Promotion of ethical and cultural in R&D&i,
R&D&i, with over 80 projects • Commitment to fulfilling human
values and principles rights standards
• Projects always on demand
from the business lines • Committed to involving
communities
OBRASCÓN HUARTE LAIN 13OHL Concessions
OBRASCÓN HUARTE LAIN Bicentennial Viaduct (Mexico)
14OHL Concessions will maintain and strengthen the business model
that has successfully developed over the past years
Participation in the equity capital of
OHL Mexico and Other Concessionaires
Abertis
• Financial autonomy from the OHL Group • Strategic / Industrial partner of the best-
best-in-
in-
class operator of mature tollroads
• Non-
Non-recourse concessionaire funding, – Complementary to OHL's building and
and with local currency development of greenfield projects
• Taking up majority stakes which enable • Stable cash flow contribution via annual
asset control during the development phase dividends
– With core shareholders supportive
of dividend payments
• Minimum equity profitability of 15%,
15%, in Euros
• Low risk profile investment
• Business model based in tollway charges, – Low volatility and significantly liquid stock
periodic asset rotation and re-
re-leveraging – Low risk infrastructure operations
– Long-term investor base
OBRASCÓN HUARTE LAIN 15OHL Concessions' EBITDA is now over €850M, and the asset rotation
strategy has resulted in high return rates
Rapid growth of the EBITDA (€
(€M) High return rates through asset rotation
Selection of operations from the past few years
Invest-
Invest-
Operation Years IRR (%)
CAGR: +25% ment
866
Fumisa €73M 5
ConMex €163M 11
I2000 €66M 9 Average
IRR
Alasa €47M 10 ~27%
91
OHL Brasil €132M 11
2004 2014 Abertis €485M 2
OBRASCÓN HUARTE LAIN 16OHL Concessions has a low execution risk, international portfolio
7 out of 13 international concessions currently in operation
Remaining years of the international OHL Concessions' portfolio
45
41
37 38
28 28 30 30 30
23 25
19 19
Mexico Chile Other Lat. Am.1
8 concessions 3 concessions 2 concessions
~€5B investment managed ~€1.3B investment ~€1.2B investment
1. Peru and Colombia
OBRASCÓN HUARTE LAIN 17Short-
Short-term growth will stem from transportation infrastructures
within countries in the Pacific Alliance
Sector strategy Current footprint Geographic strategy
Focus on developing Consolidate Mexico
transportation infrastructures current
• Highways positioning Chile
• Railroads
• Ports 5 projects
• Airports Grow Colombia
8 projects in the short
Priority given to sectors in which term Peru
revenue correlates to GDP 1 project
• Avoiding the businesses
1 project
specific risks (real estate, Explore
industry, agriculture, etc.) specific Brazil
3 projects sectors
Enter in the USA
Countries with current presence medium
Countries with development potential term Canada
OBRASCÓN HUARTE LAIN 18OHL Engineering & Construction
OBRASCÓN HUARTE LAIN Jamal Abdul Nasser Viaduct (Kuwait)
19Four key design principles for the definition of
OHL Engineering & Construction's Strategic Plan
Four key design principles... ...with specific targets for each Division
1 Geographic focus on markets with growth Diversification of the average size
potential and high attractiveness for the of projects, and focus on the
Group: Home Markets transportation infrastructure sector
Collaboration with OHL Concessions
2 Strengthening of areas of expertise by making
the most of the Group's cumulative experience Focus on Power Generation, Mining,
and Oil & Gas sectors
3 Reinforcement of risk management Optimization of synergies with
and human resources development OHL Construction in Home Markets
to achieve sustainable growth
International expansion of activity in
American Home Markets
4 Promotion of collaboration with other
OHL Divisions and maximization of Optimization of synergies with other
synergies within OHL E&C Divisions in the OHL Group
OHL E&C's Strategic Plan is based on organic growth and does not foresee significant investments
OBRASCÓN HUARTE LAIN 20Every OHL Engineering & Construction Division has ambitious
growth plans up to 2020
Evolution of OHL Engineering & Construction's revenue (€
(€M)
OHL Construction OHL Industrial OHL Services
CAGR: +11% CAGR: +27% CAGR: +23%
5,300
3,900 1,000
2,793 700 500
350
234 145
2014 2017 2020 2014 2017 2020 2014 2017 2020
Rapid growth in Latin American
Current project orderbook of International growth by entering
(x5) and North American (x2)
already ~€
~€430M in early 2015 American Home Markets
Home Markets
OBRASCÓN HUARTE LAIN 21OHL Construction activity will focus on Home Markets
Increasing relevance of North American and Pacific Alliance markets
OHL Construction revenue by geography (% 2020)
2014 2020
Home Markets 15-20
70% ~85%
5-10
North and South America
40% ~65% 10-15
5-10
5-10
100
10-15
15-20
Forecasted mix according to current potential
identified in each market
15-20
USA and Mexico Chile Peru Colombia Spain Czech RoW Total
Canada Republic and
catchment
area
OBRASCÓN HUARTE LAIN 22The Strategic Plan is expected to balance the average size of projects
and remain committed to transportation infrastructures
Forecasted mix according to current potential identified in each market
Balanced project size Focus on transportation infrastructures
Cumulative revenue '15-
'15-'20 (%) Cumulative revenue '15-
'15-'20 (%)
15 10
~75% 15
25 Transportation
10
infrastructures
100 25 100
25
25 40 Focus of collaboration
with OHL Concessions
10
< 10 10-50 50-150 150-300 >300 Total Roads and Ports and Hospitals
highways airports and singular
buildings
Average project size (€
(€M) Railways Energy, Total
and subways mining
and others
OBRASCÓN HUARTE LAIN 23OHL Industrial will focus on increasing its activity
in the Power Generation, Mining, and Oil & Gas sectors
Full development of EPC projects and operation and maintenance services provider
Power generation Mining Oil & Gas
• Gas plants • Wet and dry process • Oil and gas pipelines
facilities
• Hydroelectric plants • Storage and regasification
• Seaport and land terminals
• Solar power plants terminals
and other renewables • Gas processing
• Full transportation and plants
storage systems
• Ancillary refining and
• Dosing, screening, petrochemical facilities
and crushing
Maintaining the Solids Transportation and Fire Protection Systems businesses
OBRASCÓN HUARTE LAIN 24Three priority sectors and two growth models for
OHL Services: Consolidation in Spain and Internationalization
Sector strategy Geographic strategy
Maximize cash flow generation Growth
Spain
Facility while maintaining margins consolidation
Management
Promote international development
Mexico
Consolidate OHL's current footprint
Urban in the Spanish market USA
services Business
Launch international expansion
internationalization
along with other Divisions Peru
towards American
Home Markets
Explore medium-
medium-term entry Chile
Industrial opportunities in the sector, both in
maintenance Spain and other Home Markets Colombia
OHL Services' international expansion strategy will combine organic and inorganic growth
OBRASCÓN HUARTE LAIN 25The Strategic Plan promotes synergies and collaboration
among all of OHL Engineering & Construction's Divisions
Transportation Industrial Singular Development of a joint-
joint-
infrastructure1 Works2 Buildings3 collaboration model
Joint-
Joint-management of business
development functions between
OHL each Division
Concessions
Centralized processes for the
OHL Group's knowledge management
Construction in specialized areas
OHL OHL Cross-
Cross-Division teams in the
E&C Industrial research phase, as well
as during project execution
OHL
Formal collaboration models
Services
between Divisions to share
risks and workload
Participation / Involvement in projects
1. Roads and highways, railways and subways, ports and airports. 2. Energy, mining, and hydraulic works. 3. Hospital and non-residential building projects
OBRASCÓN HUARTE LAIN 26OHL Developments
OBRASCÓN HUARTE LAIN (Madrid)
27OHL Developments will continue to promote unique projects
for top-
top-quality tourism and recreational complexes
Divestment of 8 1 Seeking and identification
exploited projects of opportunities
Viability analysis,
Exploitation 7 2 global conceptualization,
and operation
and project development
Participation in the
marketing and sales 6 3 Construction design
phases and execution
Identification 5 4 Obtaining funds
and shaping of and structuring of
strategic partnerships financing
Focusing on projects with limited investment requirements for OHL Developments
OBRASCÓN HUARTE LAIN 28OHL Developments currently has three large projects
at different execution phases
Mayakoba Canalejas (Madrid) Old War Office (London)
Top-
Top-level tourism project Urban revitalization in Project to restore and
on the Mayan Riviera Madrid's historic center renovate the emblematic War
Office
Paradigm of the balance Will lead to the development
between tourist development of Four Season's first hotel in Will lead to the development
and environmental protection Spain of a five-
five-star hotel and luxury
apartments in downtown
Second phase under way: Considers converting London
Mayakoba City seven historic buildings
• ~17,000 homes • Hotel and homes
• Retail area • Parking
• Second golf course • Shopping mall
Mayakoba and Canalejas have made OHL Developments an international reference
OBRASCÓN HUARTE LAIN 29Conclusions
OBRASCÓN HUARTE LAIN Autovía del Cantábrico A-8 (Spain)
30Key conclusions of the Strategic Plan and Vision for 2020
Principles of OHL Group Strategic Plan OHL Group commitments for 2020
A Optimize sustainable cash flow
generation and self funding for all
divisions
x 2+ ~€8B revenue vs. €3.7B in 2014
85% of revenue coming
B Maximization of project profitability from Home Markets
and strengthening of risk control
mechanisms
Industrial and Services will
represent 20% of revenue
C Focus of OHL Group's activity on
priority markets and sectors
x 2 ~€2B EBITDA vs. €1.1B in 2014
D Leveraging on synergies and
collaboration potential among Maintaining the recourse debt /
the Group's Divisions recourse EBITDA ratio below 3x
OBRASCÓN HUARTE LAIN 31Strategy Update 2020
OHL Group
Madrid, March 2nd, 2015
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