INFORMATION MEETING - Colas

INFORMATION MEETING February 26, 2015

Contents

The year 2014

Business by operating sector

Financial statements

Outlook for 2015

Appendix

The year 2014

Highlights of 2014

  Revenue down 3.5% at €12.4 billion euros §  slump in road market in Mainland France §  headway in international units helped limit drop

  Current operating income at €332 M (€390 M in 2013) §  in particular heavy losses in refining activity (SRD)

  Strong actions to §  adapt as quickly as possible to road market volumes in Mainland France §  reconfigure the production unit at the Dunkirk refinery

  Strategic move: sale at the beginning of 2014 of Colas’ stake in Cofiroute

4

Highlights of 2014 (cont.)

  Continued focus on targeted external growth, with several acquisitions that reinforce the business network

  Net profit attributable to the Group is up sharply: €604 M against €312 M in 2013, including capital gain from the sale of the stake in Cofiroute

  Strong commercial actions §  several major contracts secured §  core business developed §  high level work-on-hand at end-December 2014: €7.2 billion euros

(+1% compared to end-December 2013)

5

Key figures

in millions of € 2014 2013(1) Change

14/13

Revenue (in billions of €) 12.4 12.8 -3.5%

Current operating income 332 390 -€58 M

Net profit attributable to the Group 604 312 +€292 M

Net cash flow 610 667 -€57 M

Net cash / (Net debt) 682 31 +€651 M in €

Dividend per share 15.40(2) 7.26 +€8.14

6

(1) All figures as at December 31, 2013 have been restated following the change in consolidation method as of January 1, 2014 (application of IFRS 11) to ensure comparability with figures as at December 31, 2014

(2) Proposed to the Ordinary Shareholders’ meeting on April 14, 2015

Revenue


14/13

Revenue 12,396 12,845 -3.5%

France 6,582 7,388 -11%

International 5,814 5,457 +7%

Currency effect -97 Changes in scope of consolidation +80

7

  External growth which offsets unfavorable exchange effect

  Good dynamics in international Roads and Railways helped strongly offset a good part of the slump in the road business and some Specialized Activities in Mainland France

Key figures for change in revenue 2014/2013

� Roads in Mainland France: -13% � Roads Int'l and Fr. Overseas: +5% � Specialized Activities excl. Railways: -9% � Railways: +18%

(1)  All figures as at December 31, 2013 have been restated following the change in consolidation method as of January 1, 2014 (application of IFRS 11) to ensure comparability with figures as at December 31, 2014

Strategy 2014

  Strategic move: sale of longstanding stake in highway concession company Cofiroute §  almost perfect timing (January 31, 2014) and good financial conditions §  significant net after tax capital gain of €385 M §  strong boost to cash (≈ €700 M)

  A plan to reconfigure production unit at Dunkirk refinery §  current configuration: production of base oils, bitumen and other coproducts

(fuels, paraffin) §  recurrent losses in sales of refined products due in majority to base oil market

(forecasts show no improvement in medium-term) §  production of base oil halted at the end of first quarter 2015 §  production refocused on bitumen and coproducts §  Employment Preservation Plan in final phases of approval §  additional investment in 2016 to optimize new production modes

8

Strategy 2014 (cont.)

  Continued focus on targeted external growth to reinforce existing network §  in Denmark: acquisition of a subsidiary of Skanska

▸  production and sales of asphalt mix (2 plants) ▸  reinforcement of positions in Jutland and Seeland

§  in Ireland: acquisition of 38% stake in SIAC ▸  construction, with road works and asphalt mix division ▸  expanding range of activities for Colas in Ireland in addition to core business

(production and sales of bitumen and binders)

§  in Australia: acquisition of assets in Sunstate Roads Services in Queensland ▸  production of asphalt mix and road works ▸  reinforcement in road works in Queensland

9

Business by operating sector

Roads in Mainland France

11

€4.5 Revenue

billion

-13% Operating profit margin 3.3%

Brutal market slump Road subsidiaries held up well

Roads in Mainland France

  Brutal collapse of road market

  Decline in investments from local authorities as of March

  A drop that was sharper and quicker than expected (13% against 6 to 7%), i.e., €700 M or the equivalent of a French subsidiary

  Subsidiaries held up well, thanks to §  anticipation of market downturn in September 2012 (merger of

three brands and reduction of number of subsidiaries from 16 to 7 as early as January 2013)

§  additional adaptation measures throughout 2014 §  major projects currently under way: Nîmes-Montpellier high-speed

train bypass, L2 bypass in Marseille §  PPP projects (Vichy and Troissereux bypasses)

12

In this context, preserving operational profit margin at over 3% is a good performance

A complicated year

Roads in Europe

13

Headway in 2014

+18.5% €1.7 billion

+16% at constant scope and exchange rates

Revenue

Roads in Europe

  Strong business §  in long-term MAC/ASC maintenance contracts for road

and highway networks in the United Kingdom §  in Denmark with a road infrastructure development program §  in Ireland with slight recovery in road maintenance budgets

  Stable revenue in Switzerland

  A decrease in revenue in Belgium, with sharp drop in investments from local authorities

  Strong growth in revenue in central Europe thanks to major highway projects in Hungary and Slovakia secured at the end of 2013

14

Northern Europe held up well Growth in central Europe

Roads in North America

15

A year of progress

+3% €2.5 billion

+4% at constant scope and exchange rates

Revenue

Roads in North America United States

  Revenue up 4% at constant scope and exchange rates

  Traditional road market still hasn’t fully benefited from economic recovery

  Improved operating performance for majority of subsidiaries

  Additional losses recorded in 2014 on large-scale civil engineering projects taken on end-2012, with completion scheduled for 2015

  A marked improvement in work-on-hand during last quarter

16

Step towards return to satisfactory profitability

Roads in North America Canada

  Particularly harsh weather during 1st half year, offset at year-end

  Confirmation of infrastructure budget cuts in the province of Quebec §  continued action to adapt subsidiary to market

  Revenue up 4% at constant scope and exchange rates §  major projects in Alberta §  full year consolidation of company acquired

in Ontario in 2013

  Launching of PPP project for the Iqaluit International Airport in Nunavut

17

A solid year, comparable to the previous year

Roads in the Rest of the World French Overseas Departments, Africa, Indian Ocean,

Asia, Australia, Pacific

18

-4% €1.3 billion

-3% at constant scope and exchange rates

Revenue down slightly Focus on profitability

Revenue

Roads in the Rest of the World French Overseas Departments

  Business resisted well in French Caribbean with low volume market, thanks to §  good work-on-hand §  structures adapted over last two years

  Launching of the new Route du Littoral Coastal Road project in Reunion §  construction of causeway and interchange §  contract value: €850 M, of which €482 M

for subsidiary §  end of work: 2019

  Completion of major project in Mayotte

19

Stable activity

Roads in the Rest of the World Africa, Indian Ocean

  Stability in Morocco, which benefited from expected positive impact of structural adaptation in 2013

  Increased revenue in West Africa §  recovery in Côte d’Ivoire, launching of North

Exit project in Brazzaville, Congo §  down in Gabon, Burkina Faso and Benin

  Decrease in production and sales of emulsion in southern Africa

  Absence in 2014 of major projects in Indian Ocean (Madagascar, Comoros, Mauritius)

20

Business down 10%

Roads in the Rest of the World Asia, Australia, Pacific

  Growth of business in Asia, in particular Thailand and Vietnam

  Expanded scope in Australia with the acquisition of Sunstate, specialized in asphalt mix production and road works in Queensland

  Record sales volumes in bitumen products for the Thai subsidiary Tipco and the Kemaman bitumen refinery in Malaysia

21

Continued development in the zone

Specialized Activities Waterproofing and Safety and Signaling

  Waterproofing -10% §  sluggish construction market in France §  decrease in volumes (works, industries) §  continued strong pressure on prices

22

  Safety and Signaling -8% §  cutback in public investment in signaling and traffic

management as of April §  increase in export sales for safety (road marking

paint, guardrails) §  1st long-term maintenance contract (22 years)

for Troissereux bypass

Sluggish markets

Specialized Activities Sales of refined products (SRD)

  European base oil market has plummeted

  Revenue down 12%

  Current operating loss at €64 M, higher than in 2013 (€46 M), despite adaptation efforts and investments over the last three years §  worsening of gap between production cost (price of

feedstock) and sales price of products §  cost of strikes in November and December 2014

  Decision to reconfigure refinery in Dunkirk

23

Heavier operating losses

Specialized Activities Pipelines

  -4%

  Revenue down slightly, due to voluntary halt to certain activities

  Good level of business in natural gas and oil transport

  First international contract in Gabon

  Improved operating performance

24

Confirmed recovery

Specialized Activities Railways

  +18%

  Rail market is buoyant §  on longstanding, recurrent markets (renovation

and maintenance in France and the United Kingdom) §  in international units (activity based on major projects)

  Revenue up 18% (+ 16% at constant scope and exchange rates), principally in international units §  France: strong business in renovation and maintenance

of the national railway network, but a decrease in tramway projects §  United Kingdom: record level of business and renewal of two

major long-term track maintenance contracts §  Rest of the World: continued work on the extension of the light

metro in Kuala Lumpur, Malaysia and line 1 of the Algiers, Algeria metro, launching of lines 3 and 6 for the Santiago, Chili metro

25

Strong headway

Financial statements

Income statement

in millions of € 2014 2013(1)

Revenue 12,396 12,845 Net depreciation and amortization expenses (401) (407)

Net charges to provisions and impairment losses (128) (125)

Current operating income 332 390 Other non-current income and expenses (67) (11)

Operating income 265 379 Cost of net debt (18) (21)

Other financial income and expenses 10 (2)

Income tax expenses (65) (120)

Share in income from associates and joint ventures 413 78

Net profit 605 314 Net profit attributable to minority interests 1 2

Net profit attributable to the Group 604 312

27


2013 2014

Free cash flow

28

(2) Free cash flow: cash flow (determined after cost of net debt and net income tax expense, but before changes in working capital requirements) minus net capital expenditure for the period

Net cash flow Net capital expenditure

Free cash flow(2)

in millions of €

667

289 378

610 456

154

(1)


Net cash position 2014

29

in millions of €

(1) Including net liabilities relating to property, plant and equipment and intangible assets

Net cash flow

Other

Cash surplus from operations

Income tax expense less

income tax paid

Change in working capital

requirements

Net Capex(1)

13

-413

-98

610

71 183

2013(2) 667 -3 -12 -275 177 +554

(2) All figures as at December 31, 2013 have been restated following the change in consolidation method as of January 1, 2014 (application of IFRS 11) to ensure comparability with figures as at December 31, 2014

Net cash position 2014 (cont.)

30

Significant improvement in net cash: + €651 M in millions of €

Cash surplus from

operations

Changes in equity

Dividends paid out

Net sales of subsidiaries

and assets

Net cash as of 01/01/2014

Net cash as of 31/12/2014

Changes in scope

31

721

-4 -9

183

-240

682

2013(1) -174 -4 +554 -104 -239 +31 -2


Condensed consolidated balance sheet

31


14/13

Non-current assets 3,688 3,479 +209

Current assets 4,973 4,429 +544

Total Assets 8,661 8,266 +395

Shareholders’ equity 2,945 2,527 +418

Non-current liabilities 1,133 1,101 +32

Current liabilities 4,583 4,638 -55

Total liabilities and shareholders’ equity 8,661 8,266 +395

Net cash / (Net debt) 682 31 +651


2010 2011 2012 2013 2014

Dividend: €15.40(1) per share for 2014

32

Yield(2)

€503 million(2)

•  €4.00 ordinary dividend •  €11.40 extraordinary dividend

(1) If the proposed dividend of €15.40 is approved by the Ordinary Shareholders’ Meeting on April 14, 2015 (2) Based on number of shares on December 31, 2014 (3) Based on share price on December 31

4.3% 7.1% 6.2% 5.9%

€7.26 per share

11.6%

206 237 237 237

131

372 €11.40 per share

€4.00 per share

503(1)(2)

Dividends in millions of €

8.6%(3)

3.0%(3)

Outlook for 2015

Several major projects secured in 2014

  Construction of a causeway and interchange for the New Route du Littoral Coastal Road in Reunion §  order intake: €482 M (Colas share) §  completion in 2018

  Two long-term rail maintenance contracts in UK §  order intake: €270 M §  duration: 2014-2019

  Construction and renovation of sections of Highway 63 in Alberta, Canada §  order intake: €110 M §  completion slated for 2016

34

Work-on-hand is high

35

  Work-on-hand up 1%, maintained at high level: €7.2 B

  Confirmation of trends seen during last three quarters of 2014 §  work-on-hand for international units and French

Overseas: +8% §  work-on-hand for Mainland France: -7%

in billions of €

At end- December

2014

Change 14/13

Mainland France 3.03 -7%

International and French Overseas Depts and Terr. 4.12 +8%

Total for the Group 7.15 +1%

Outlook 2015

Roads

The roads business could be roughly equivalent in 2015

  Down in Mainland France (some 6-7%)

  Up in the international units and French Overseas §  in North America

▸  in the United States, the road market should benefit from progressive economic improvement

▸  in Canada, business could slow in the West (Alberta) due to the recent drop in oil prices, but will still benefit from a strong economy

§  in Europe, the market could be stable as a whole, with different situations among the countries

§  Asia, Australia, Africa, Indian Ocean (including French Overseas Departments) should be buoyant

36

Outlook 2015 (cont.)

Specialized Activities

The markets will be contrasted depending on the lines of business

  Railways should continue to progress in growth oriented markets both in France and in the international units

  The Sales of refined products will halt the sale of base oil as of the second half year §  revenue (€428 M in 2014) could be cut by some 70%

  Waterproofing and Safety and Signaling will continue to operate in difficult markets

  Pipelines could benefit from several international projects

37

Conclusion

  Action plans §  cut losses in Refining in 2015

▸  Employment Preservation Plan currently under way ▸  base oil production halted at the end of the 1st quarter 2015 ▸  1st positive impact on results only expected for 2nd half year 2015

§  continue efforts to adapt road subsidiaries in Mainland France to market volume in 2015

  Continued development in strategic axes §  in particular, Roads in the international units and Railways §  financial means available (notably half of the cash generated by the sale

of Colas’ stake in Cofiroute)

38

In light of all available data, revenue could be down slightly in 2015

Appendix

Sales of refined products 3% Railways

(Colas Rail) 7% Waterproofing (Smac) 5% Safety & Signaling

(Aximum) 3% Pipelines (Spac) 2%

Colas by business sector

40

9.9 80% ROADS

2.5 20% SPECIALIZED ACTIVITIES

8.1 66% Road construction (incl. civil engineering and building)

in billions of €

1.8 14% Sales of construction materials

12.4

2013 2014

Geographic breakdown of revenue

41

53% France

20% North America

19% Europe (excl. France)

8% Rest of the World

57% France

19% North America

15% Europe (excl. France)

9% Rest of the World

Revenue by operating sector

42


14/13 At constant scope

and exchange rates 14/13

Roads Mainland France 4,459 5,142 -13.3% -13.3%

Roads Europe 1,660 1,401 +18.5% +16.1%

Roads North America 2,470 2,409 +2.5% +4.3%

Roads Rest of the World 1,351 1,413 -4.4% -2.8%

Total Roads 9,940 10,365 -4.1% -3.8%

Specialized Activities 2,446 2,463 -0.7% -1.3%

Parent company 10 17 ns ns

Total 12,396 12,845 -3.5% -3.4%


Revenue for Specialized activities


14/13

Waterproofing 608 672 -9.6%

Railways 904 764 +18.3%

Sales of refined products 428 487 -12.1%

Road Safety & Signaling 312 337 -7.5%

Pipelines 194 203 -4.5%

Total 2,446 2,463 -0.7%

43


INFORMATION MEETING - Colas

Documents

Transcript of INFORMATION MEETING - Colas