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Edited Transcript of GES.CO earnings conference call or presentation 1-Aug-19 1:00pm GMT

Half Year 2019 Athena Investments A/S Earnings Call

Copenhagen Aug 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Athena Investments A/S earnings conference call or presentation Thursday, August 1, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alessandro Reitelli

Athena Investments A/S - CEO & Member of Management Board

* Francesco Vittori

Athena Investments A/S - CFO & Member of Management Board

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Athena Investments First Half 2019 Results Conference Call. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Alessandro Reitelli, CEO of Athena Investments. Please go ahead, sir.

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Alessandro Reitelli, Athena Investments A/S - CEO & Member of Management Board [2]

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Thank you, and welcome, everybody, for this call today on our H1 results of 2019. So as usual, I will start commenting the performance of this semester. And then I will leave the floor to our CFO, Francesco Vittori, just to give you some additional details on the one main item, which is the result of the depreciation of the assets related to the sale of approximately 7% of our portfolio recently closed with Ardian and Glennmont and the related impairment test.

So the performance of the semester is, I would say, even surprisingly very, very, very similar to the first semester of 2018. As you've seen from our PowerPoint presentation and also the interim report, the net production and the revenue and of course, EBITDA and even the EBITDA margin are very, very similar to 2018. So I don't have any particular additional comments on -- to this performance. As usual, you know that we are very careful in managing our assets. And even if we always have a different mix between production and price depending on the period in the year and the year's -- the final outcome is always quite stable, and this is the case for the first semester. There is a slight decrease in the cash flow from operating activities related to the evolution in net working capital, but I would say it's not really relevant. It's more a matter of seasonality than a very specific item occurred during the period.

I was mentioning at the beginning of this call that, and I believe that all of you are aware of that, the real main event for our company in the first semester has been the signing in early June and then the closing occurred 1 week ago of this transaction with Ardian Infrastructure Fund and Glennmont Capital. You all know these 2 players, international players, large infrastructure funds. After quite a long period of thorough due diligence, we received binding offers in May, and then we went for the signing of this transaction early June. And then we succeeded in fulfilling all the conditions precedent that were needed for performing the closing, and the closing occurred last Thursday where the price of EUR 90.9 million was paid to us.

This means now that 70% approximately of our capacity installed is disposed to these 2 players. We still own 45 megawatts of wind technology plants in Cagliari in Sardinia, and we still own 12 megawatts of solar technology in the south of Italy, mainly Apulia, which still deliver the normal performance and our -- and stay in our portfolio for the moment.

I don't have additional comments related to extraordinary activities. And I think it's worth for you -- it's worth understanding a little bit better the numbers, the accounting related to this transaction, especially, as I said, the depreciation. And there's quite significant depreciation that was triggered by the transaction and also the related impairment test that we have performed on the remaining assets in our portfolio, those I mentioned in Cagliari and in the south of Italy for wind and solar. Impairment test, this was due to be done, I would say, because of the transaction. Because when such a large transaction occurs, and it is a clear indicator that you may need to have a refresh of the impairment test before the end of the year. So that was the case.

We -- I would like to remind you that the day of the signing, we had already -- even before, when we accepted the binding offer actually, we have -- from Ardian and Glennmont, we had already disclosed to the market and to our shareholders the potential impact of the transaction. And you may have noticed that there is a slight difference in the figures that we published at that moment compared to the ones that you find in the interim financial report of the half year. And so for better understanding, I would like our CFO, Francesco Vittori, to comment on these figures and to give you the full picture, also considering what will happen in the second semester in terms of accountings related to these items. Thank you.

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Francesco Vittori, Athena Investments A/S - CFO & Member of Management Board [3]

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Thanks, Alessandro. Regarding the impairment test, of course, we dedicated specific paragraphs in our interim report, in particular, Page 7. Of course, after the signing of the [SBA] with Ardian and Glennmont, according to the IFRS 5, we reclassified the portfolio sold at the end of July as assets held for sale. And of course, following the principle, we adjusted our book value at the lower between the price basically or better deferred value of the transaction, and we already accrued in the financial statement.

Taking these -- the result, the outcome of the application of the IFRS 5 was an impairment write-down of EUR 41.9 million, which is different compared to the EUR 29 million already announced at the beginning of May mainly due to 2 main items. The first one is that the EUR 29 million already announced was based on the book value of this asset at the end of 2018. So Page 7, we said that the net result of this portfolio was in the first semester 2019 about EUR 6.6 million -- sorry, EUR 6.3 million. And of course, this net result consolidated in our financial statement at the same time increased the impairment write-down.

The second point is the accounting principle because as I said, the IFRS 5 regulates to adjust the value at the lower between the price and the book value. But if there is a potential capital gain, and it is the case for 2 plants of this portfolio, you have to accrue this capital gain only after the closing of the transaction. So since we have a capital gain of EUR 6.6 million for a part of the portfolio sold to Ardian, we will have these effects in the second half. And so the EUR 41.9 million accrued in the first semester is higher compared to what we will have at the end of the year. So including -- considering these 2 points, these 2 points represent the reconciliation between the EUR 29 million announced and the amount accrued in the financial statement.

At the same time, as Alessandro said, we had an impairment test on the remaining portfolio which amounted to EUR 9.2 million compared to EUR 8.5 million announced in May. And again, for -- in this case, the increased value is mainly due to the result of this portfolio in the first semester of 2019.

Just to summarize, if you look at the net result which was a loss of EUR 44.3 million considering the capital gain which -- of EUR 6.6 million which would be accrued in the second half of 2019, we will have a result -- a net result adjusted of EUR 57.8 million, which is a good proxy of what we included in the Board statement published and the Board of Directors approved the operation at the beginning of May.

The other point which is probably useful to understand our number is the evolution in net financial position. And it's probably useful, Page 13 of the presentation, because of course, we have strongly decreased between EUR 71.3 million to EUR 22.7 million and of course, we believe the result of 2 main items. The first one, which increased the net financial position, is the dividend paid in May to our shareholder for EUR 42 million. And the second one is, of course, the deconsolidation of the net financial position regarding the portfolio sold to Ardian and Glennmont reclassified, again, as asset held for sale for approximately EUR 91 million. So these 2 effects fully explain the evolution in net financial position which is, for sure, decreased compared to the beginning of the year.

So I have no additional comments regarding the number. Of course, probably the other point is the outlook for 2019. We update after the -- due to the transaction, and the new outlook is included in our interim report, Page 12. And this is, let me say, a mechanical adjustment because of course, the operating results of the portfolio, both the portfolio sold to Ardian and also the remaining portfolio, is in line with our expectation. And also for the second half of 2019, we expect performance in line with our budget, with our original outlook. But of course, the outlook considers the consolidation of the portfolio sold from August to the end of the year. And for this reason, we expect an EBITDA -- a decrease in EBITDA and -- from EUR 54 million, EUR 57 million (sic) [EUR 34 million to EUR 37 million] to EUR 21 million, EUR 24 million. And consequently, also all the -- our indicators decreased due to the consolidation of the Ardian perimeter.

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Alessandro Reitelli, Athena Investments A/S - CEO & Member of Management Board [4]

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No additional comments, I would say, on our side, and then we leave the floor to you for any potential questions that you may have or clarification you may need on our figures. Thank you.

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Operator [5]

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(Operator Instructions) We are about to close the Q&A session. (Operator Instructions) Gentlemen, there are no questions registered at this time. Back to you for any closing remarks.

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Alessandro Reitelli, Athena Investments A/S - CEO & Member of Management Board [6]

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No closing remarks. Just thank you for those who joined the call. We hope that this was clear to you and our communication was also very clear to you, and we look forward for the next call after the end of the year for the financial year 2019. Thank you very much.

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Operator [7]

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Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.