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Edited Transcript of PSG.MC earnings conference call or presentation 28-Feb-20 12:00pm GMT

Full Year 2019 Prosegur Compania de Seguridad SA Earnings Presentation

Madrid Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Prosegur Compania de Seguridad SA earnings conference call or presentation Friday, February 28, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Antonio de Cárcer

Prosegur Compañía de Seguridad, S.A. - Head of IR

* Antonio Rubio Merino

Prosegur Compañía de Seguridad, S.A. - CFO

* Maite Rodriguez

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Conference Call Participants

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* Juan Ros Padilla

InterMoney Valores, S.V., Research Division - Research Analyst

* Manuel Lorente

Mirabaud Securities Limited, Research Division - Analyst

* Pedro Alves

* Steven James Goulden

Deutsche Bank AG, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Prosegur Full Year 2019 Results Presentation. (Operator Instructions) I must advise you that this conference is being recorded today, Friday, the 28th of February, 2020.

And now I would like to hand the conference over to your speaker today, Antonio de Cárcer. Please go ahead.

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Antonio de Cárcer, Prosegur Compañía de Seguridad, S.A. - Head of IR [2]

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Good afternoon, everybody. On behalf of Prosegur, I'd like to thank you for taking the time to attend this conference call, setting out the company's full year 2019 results. This presentation will be hosted by Antonio Rubio, Prosegur's CFO; Maite Rodriguez, Finance Director; and myself.

Over the next 30 minutes, we will give you a detailed summary of the key financial indicators and most significant events in the period. At the end of this conference call, we will open the line for questions where we will be answering any remaining doubts or inquiries you may have.

Prior to starting, I would like to remind you that this presentation has been prerecorded and that it will be also available via webcast on our corporate web page.

I will now hand you over to our CFO, Antonio Rubio.

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [3]

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Thank you, Antonio, and good afternoon, everyone. 2019 has been a very demanding year for Prosegur. A strong combination of challenges and opportunities mixed altogether in a very harsh macro environment have tested to the max our capability to generate growth and increase profitability. I am very proud to state that the outcome has been extremely satisfactory. As you will see along this presentation, not only we have delivered a consistent growth in both local currency and euros, but we have also increased profitability above revenues' growth rate and also expanded into new territories in a strategic corporate alliance.

In summary, an outstanding performance by divisions, the excellent capability of our business model and geographical exposure to withstand adverse headwinds, and that I would like to elaborate for you with more detail in the following slides.

Looking at the main highlights of the period, in pure economic performance terms, the first thing to note is the excellent 6.6% revenues growth in consolidated euro terms, deriving from the combination of more than 9% organic growth and a healthy 6-plus percent inorganic growth, coming from a very active M&A year that I will comment in more detail later on.

High double-digit local currency growth of 15% is the most solid evidence of the resiliency of our business model to a strong macro headwinds, a model that benefits from inflationary environments and is able to transform all that potential into consistent growth with no dilution.

On the profitability side, 2019 performance has also been remarkable as it has been improving quarter-on-quarter, driven by the excellent performance of the new products in both Cash and Security and also by the brilliant results of our commercial teams when transferring cost increase to prices. Taking advantage of the strong seasonal dynamics of our business, mainly in Ibero-America, but also in Europe and the rest of the world.

Very good result, moreover, considering the best comparable effects seen in the first half of the year coming from the application of the hyperinflationary accounting in Argentina, the strong M&A investments and some extraordinary costs coming from restructuring actions needed to turn around loss-making operations in some geographies.

The final outcome has been a close to 10% EBIT growth and an EBIT margin expansion of 20 basis points that confirms the trend of historical margins recovery we were advising at the beginning of the year.

Furthermore, cash flow generation has also maintained the improvement tendency initiatives several years ago as our financial discipline measures also benefit from the improvements generated by the digital transformation projects the company is involved and that are also progressively bearing fruit.

Besides these financial statements, there have also been several other highlights during 2019 that I would like to comment with you. First, I would like to state the extraordinary performance that our new products and solutions have experienced this year in both Cash and Security business. With sales increase of more than 40% and 27%, respectively, it is now becoming evident that cash automation machines for retailers, or Smart Cash, as per their commercial name; ATM management and added-value outsourcing services, or AVOs; will be supporting Prosegur margin expansion and guaranteeing its long-term revenue growth.

Similar happens with Integrated Security Solutions of the Security business line, showing a steady progression and benefiting from several internal digital transformation projects. These innovative services are largely responsible of the margin expansion of Security that you will see when analyzing business lines.

Second, I would like to give you an update on the joint venture project with Telefónica for the Spanish alarm market that we announced last quarter. The project received final clearance from the regulator 1 week ago. As you may know from the information made public this same morning, today, we closed the transaction, and operations will initiate in the incoming days. We are confident this strategic alliance will unlock a large amount of inherent value in our Alarms business and in a short period of time will position Movistar Prosegur Alarmas as the leading alarm company in Spain.

Regarding M&A, 2019 has been a very active year. We have incorporated 2 new geographies to our footprint, U.S.A. and Indonesia, and also performed several other bolt-on acquisitions in almost all business lines and type of products in Brazil, Singapore, Germany, Spain, Colombia and Argentina. This, together with the selected divestments made in Alarms in India and Turkey and in Cash in France and South Africa have been also a good contributor to our profitability improvement in the year.

Also important to note is the evolution of our entry in the U.S. market through the acquisition of 4 different companies in the Security business line. Our revenues in U.S.A. have exceeded our forecast. Our margins in the country have been slightly better than expected, achieving our main milestone in terms of integrations and also performing several marketing events that had rendered very good commercial results.

Market conditions in Argentina had also been one of our main focus of attention in 2019. Political uncertainty suffered along the year, triggered extraordinary additional volumes on top of the traditional seasonal growth. This, together with a milder-than-expected FX translational impact in the last quarter of the year, has been turned into a remarkable organic revenue growth. As usual, our sales team in the country have been able to fully transfer cost increases to prices with no dilution. And I would like also to point out that there is a normal benefit separation procedure in the country.

Finally, a few words on the share buyback program we initiated in June last year and that has progressed also very fast. When closing 2019, the total amount of treasury stock purchase represented slightly more than 5% of total company capital. And as of today, this figure has already increased to close 7%, being very close to the maximum of 10% we stated when launching the program. This has been a long introduction of forewords that all the events happened during the year deserved.

Let's now have a look and the P&L of the period that looks as follows: consolidated revenues have reached for EUR 4,198 million, representing 6.6% growth versus 2018. Revenue growth breaks down into an excellent 9.1% organic growth, enhanced by an additional 6.1% coming from M&A operations, totaling a strong total growth of 15% in local currency.

FX translational impact has been increased versus previous quarter, mainly coming from the mix effect of the additional volumes in Ibero-America but also from some further depreciation of other Latin currencies.

EBITDA has grown by 17.6% to achieve EUR 536 million driven mainly by the positive contribution from the operation businesses but also partially improved by the application of IAS 16. EBITA has also increased by 9.5%, achieving EUR 358 million, with, after the intangibles' amortization, we are taking an EBIT of EUR 330 million, almost 10% improvement over the same figure in 2018 and leading a solid EBIT margin of 7.9%.

Historically, Prosegur has always used the EBITA metric to internally measure the performance of the business and to define the value creation formula within the group. We believe that EBITDA represents a more accurate way to deliver the afterimage of how the business is managed as it is free of the volatility generated in amortization line by M&A activity, which is very intense in this type of industry. Therefore, in future statements, we will put more emphasis in this indicator as it aligns better both our internal criteria and the public reporting methods. Nonetheless, both EBIT and EBITA will still be present in all our reports.

Negative FX, most of it noncash, impacts mainly in financial results and tax rate and drives a total net profit of EUR 160 million that totals into EUR 114 million consolidated net profit when deducting the 27.5% minority interest related to our cash business. Yet a very solid set of results considering the harsh environment and an excellent performance of all the company and in all the areas that can be managed.

Let's now have a closer look to the revenue analysis by region and business line. As you can appreciate, similar to previous quarter, there has been positive sales growth in both local currency and consolidated euros in all geographies and business lines. U.S. growth of 1.7% was mainly affected by the negative top line effect of our divestment of our cash activity in France and also from some restructuring applied to the Security business in the same country. Spain also reflected the effect of our voluntary withdrawal from some large contracts 1 year ago, while Portugal and Germany both maintained a positive growth trend similar to the one seen in previous quarters, delivering mid-single-digit increments despite a perceived general macro slowdown in the region that may worsen in months to come.

Ibero-America region has reported an outstanding local currency growth close to 20%, coming from the excellent performance of the Cash business in nearly all countries of the region and benefiting from extraordinary additional volumes originated by macro. As we always point out, this remarkable growth rate demonstrates the capabilities of our commercial teams to transfer cost increases to market and allow us to compensate additional currency depreciation that despite of the severity shown along the year has been offset, delivering final positive 2.2% revenues growth in the whole region in consolidated euro terms.

Finally, rest of the world region also reports a significant growth of more than 115% despite the tough situation in Australia. The significant volume increase is mainly of inorganic nature coming from the initiated operations in North America where performance in sales growth has been slightly better than forecasted.

Moving on to a breakdown of revenues by business line. We can appreciate a similar behavior in terms of sales growth with all business lines reporting double-digit growth in local currency terms and mid-single-digit growth in euros. As usual, Antonio de Cárcer will give you more insight on the drivers of this good performance when commenting on individual business results, so I won't stand myself longer in this topic. But I would like to stress once again the excellent delivery done by all our different activities during 2019, all of them being positive contributors to both our revenues and profits.

Looking now at profitability and cash flow generation over the period, we see that EBIT has reached EUR 330 million versus EUR 301 million obtained during 2018, outstanding results given the initial macro conditions for the year and the additional complication of the hyperinflationary accounting tools.

As mentioned in my introduction, margin improvement has been consistent during the whole year quarter-on-quarter. As you can see on the additional chart at the bottom of the slide, during the whole 2019, our margins had been constantly improving, and even with the very adverse FX environment suffered, the resilient business fundamentals have managed to increase EBIT margin up to 7.9% of sales. The main explanations of this excellent margin recovery rely on all business lines. Increased activity in Cash, higher penetration of new products and services, a positive outcome from Brazil and the excellent results obtained by our Alarm division in Spain and -- are the reasons behind this progress. Profitability on the year also reflects the positive impacts of divestments made in Alarms in India and Cash in South Africa and France.

Finally, regarding our cash flow. We are very satisfied with the consistent improvement of our operational cash flow generation by the end of the year that continues increasing for the third year in a row regardless of the market conditions. This has been especially important this year due to the fact of the high concentration of adverse conditions we have seen in the last quarter.

Our Finance Director, Maite Rodriguez, will give you more detail about this when analyzing the cash flow statement of the year. And I would like to draw your attention, once again, to the fact that cash flow generation is not affected by the hyperinflationary accounting rules. And consequently, it can be considered a very sound indicator of the real underlying performance of the business. Even in the context of the current macro uncertainty, we continue delivering consistent cash flow figures and believe we will be able to continue doing so in the near future.

This is all on my side for now. I will now hand the presentation over to Antonio de Cárcer, who will provide you with further information on the performance of each business line. I will join you again at the end of the presentation for my closing remarks and Q&A.

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Antonio de Cárcer, Prosegur Compañía de Seguridad, S.A. - Head of IR [4]

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Thank you, Antonio. We will now cover some more detailed information on the breakdown of sales by nature in each business line as well as some additional insights on the main drivers of profitability evolution and other key performance indicators.

Starting with Prosegur Cash, the most relevant fact we would like to highlight is the excellent organic growth achieved during the period, which was close to 12% mark, coming from almost all countries and with a significant share located in Ibero-America that has grown organically above 16%. Besides LatAm excellent performance, Europe has also reported very good growth figures, close to 5%, high above the corresponding market's GDP. While AOA region still reducing softly its organic revenues, has increased its volume above 13%, coming from the M&A operations made in Philippines and most recently in Indonesia.

Altogether, M&A activity has supplied an additional 4.8% to Cash business top line. And this remarkable close to 17% local currency growth has been impacted from a 12.8% negative FX. Nevertheless, a final consolidated outcome of nearly EUR 1.8 billion in revenues represents a steady 4% growth in euro terms can be considered a very good result for Cash business in 2019. This excellent revenue has been supported by the new products that now represent 16.2% of total sales volume and whose year-on-year growth has exceeded the 40% mark when compared to 2018.

Smart Cash solutions, integral ATM operations and added-value outsourcing services are becoming more and more a frequent service demanded by our clients. And while ATMs and AVOs are products oriented to the existing corporate client base, Smart Cash solutions are more of B2C nature as they are geared towards mid-size or small size commerce and, therefore, can increase substantially the addressable market size and the opportunity.

Finally, in terms of profitability, EBIT has increased by 13.7%, totaling EUR 305 million. The recovery versus last year is mostly explained by the positive contribution coming from most of our operations that are growing and improving their performance. The synergies captured from our acquisitions and our divestments in South Africa and France.

Looking now at the Security business. We also see a strong positive consolidated growth of more than 8% to achieve EUR 2,108 million. Organic growth of the activity has been up 5.5%, while inorganic growth coming entirely from our recent interest in the U.S. has added 8.3% of total growth. Translational FX impact has also implied a negative 5.5% effect.

Besides a good contribution from our North American operations, Spain has also led the growth together with Portugal and Singapore. While in Ibero-America, Brazil has also shown positive growth, both in terms of revenues and profitability. The rest of LatAm countries have performed according to their respective contribution budgets, only with the exception of Argentina where the recessionary macro situation is leading us to perform a selective client portfolio optimization to protect profitability and promote the introduction of our new products and services.

On this regard, Integrated Security Solutions sales continue increasing at faster ratios than seen in previous years, accounting now for 28% of total sales. These innovative solutions are becoming a solid cornerstone of our Security offering to clients and begin to demonstrate the positive contribution to margins as payback periods for the initial investments in technology are achieved, and the multiyear contracts of these type of solutions begin to deliver the full potential.

Regarding profitability increase, we have reported an excellent 21%-plus EBIT increase, totaling EUR 66 million, an increase in the activity margin to 3.1%. We remain confident that this margin will continue increasing to meet our goals in the quarters to come.

Finally, let's move now to analyze the performance of the Alarms division in the period. Total installed base has reached 578,000 connections, increasing by 6% in respect of the same period last year. Contract-based growth is still showing good dynamics, affected only by the change in commercial strategy initiated almost 2 years ago to focus on healthy client portfolios, which in the midterm will increase profitability and reduce churn rate at the expense of a longer sales cycle and a more careful client selection.

Nevertheless, revenues continue growing over 16% in local currency, suffering from currency translation effect of 10.1% leading to a 6.2% plus consolidated sales increment, still above the average speed of growth of the industry. ARPU has remained stable of EUR 36 per month on the full year, proving the structural capability of this business to adapt prices to inflation with no major concerns.

Smart platform, the intelligent new alarm system that provides full control of the alarm using a mobile phone application, keeps penetrating the client base and now accounts for more than 23% of the total installed platform. It is important to highlight that Alarms has also been this year a good contributor to profitability as our selective approach when obtaining new clients aligns better the subscriber acquisition cost with the generated cash flow, thus generating a noticeable increase in the profitability coming from the existing contract base.

Finally, regarding our recently approved joint venture with Telefónica to fully address the residential market in Spain. As Antonio Rubio mentioned in his introduction, we are proud to announce the imminent launch of what will become the leading alarm company in Spain with close to 6 million potential clients to attend and with one of the most diversified product offering in the market.

That was all on my side regarding the evolution and performance of our different business lines. I will now hand the presentation over to our Finance Director, Maite Rodriguez, who will cover the main financial parameters of this full year '19 results.

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Maite Rodriguez, [5]

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Thank you very much, Antonio. Good afternoon, everybody, and thank you very much for attending this presentation. I want now to briefly comment on our consolidated cash flow statement, financial position and the balance sheet.

Looking at the cash flow statement, you can appreciate a strong operating cash flow generation above EUR 350 million. This implies an improvement when compared with the already excellent 2018 figure, and it is especially remarkable considering all the adverse circumstances Prosegur had to face during the last quarter of the year.

In terms of EBITDA to cash conversion, as mentioned by Antonio earlier and following the traditional seasonality of the group, we closed 2019 with an outstanding 72% ratio, broadly in line with previous year after normalizing the pure accounting impact of the IAS 16.

Analyzing in more detail the operating cash flow, the change in provisions and other noncash items is explained almost entirely by IAS 16, which has only been applied since the beginning of the year.

As far as changes in working capital are concerned, during the fourth quarter of the 2019, we have achieved the traditional seasonal end of the year optimization. Nevertheless, this positive trend has been brutally interrupted by the additional extraordinary volumes with subsequent increase in invoicing. This one-off impact is expected to be normalized during the first half of 2020 when these late invoices will be collected.

When it comes to interest payments, just like in the previous quarters, continued debt optimization, combined with the special interest in surplus cash management are the main drivers for the constant improvement.

CapEx in absolute terms remains almost flat versus last year, totaling EUR 201 million. It is important to highlight that client CapEx represents now more than 50% of total amount. This is a positive evolution considering that client CapEx is an investment directly linked to future sales growth. On top of that, we are still highly committed to controlling pure maintenance CapEx.

Regarding M&A, the minor variations you can appreciate during the fourth quarter are explained by the release of some pending deferred payments, along with the acquisition of a BPO Spanish company and an Alarm portfolio in Colombia.

Finally, during the last quarter of 2019, Prosegur has acquired 20 million of own shares, which had a direct impact in net debt.

Let me conclude that further currency devaluation continues to impact our consolidated net debt position, however, significantly less than last year, driven not only by a more benign currency evolution this year but also by our constant efforts to control the liquidity denominated in non-euro currencies. Please bear in mind that just like in previous quarters, the debt figure shown does not reflect the debt impact triggered by IAS 16. Some further details are to follow in the following slide.

As far as the current structure of our debt is concerned, at the end of 2019, the total net debt position amounted to EUR 653 million, including both deferred payments of EUR 116 million and treasury stock valued at EUR 112 million. Furthermore, if we include the additional debt of EUR 132 million related to IAS 16, total financial position figure increases to EUR 785 million. The main reason that justifies the variation seen during the last quarter of the year is related to the currently ongoing shares repurchase program. Nevertheless, despite this increase, the group maintains its usual low leverage profile with a net financial debt-to-EBITDA ratio of 1.5x, far below our internal limit of 2.5x.

In terms of pure cost of debt, our group's average keeps evolving positively with a reduction of 30 basis points when compared to the same period of last year.

Finally, it is also worth mentioning that in October, S&P has confirmed its BBB stable rating based on the healthy financial position of Prosegur.

To conclude with our financial information review, let's have a look at our consolidated balance sheet. The most significant variation that happened during the last quarter of 2019 is the treasury stock repurchase, which has implied a reduction in equity. By the end of December 2019, the number of acquired own shares has totaled 30.1 million, which represented 5.02% of the total company social capital. And as of today, it already amounts for more than 6.5%. Apart from that, no other variation during the fourth quarter is worth highlighting on our balance sheet.

As a final remark, I would like to point out that our debt maturity profile remains very solid since more than 80% of our financial liabilities are considered of long-term nature.

This is all on my side. I would now like to return this presentation back to our CFO, Antonio Rubio, who will share his final conclusions and remarks with you. Thank you very much for your attention.

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [6]

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Thank you, Maite. Before coming to my final comments, I would like to take some time to specifically remark Prosegur's ESG commitment. Compliance with environment sustainability, social responsibility and flawless governance practices has been embedded in Prosegur's DNA since its incorporation, and it has gradually begun a cornerstone of Prosegur operational activity since more than 10 years ago.

Convinced of our responsibility as a leader, the commitments of compliance with the highest standards in ESG are reflected in all activities and in all areas where our company is present. In Prosegur, we have a strong culture of commitment to excellence and continuous improvement in our corporate values. Therefore, we have developed a global ESG policy that generates several procedures and practices inside the organization, and not only to guarantee full compliance with ultra requirements but also develop the highest benchmark in our industry.

Some of those initiatives, but not all of them, are briefly listed in this page. To cover them all would be a matter of another fully dedicated webcast. But nevertheless, I would like to draw your attention to the fact that we have a strong commitment on reduction of CO2 emissions through the innovative introduction of some electric armored vans. And the extensive utilization of our large fleets of electric and hybrid vehicles and the car-sharing model for all our technical support operatives in all business lines.

Furthermore, one of the initial outcomes of our global digital transformation project has been a drastic reduction of paper construction, thanks to the introduction of a digital signature system for all new hires in human resources as well as for all new contracts in Alarms and also paperless delivery note procedure put in place in Cash.

In Spain, we have signed an agreement with our electricity supplier to guarantee that 100% of all the electricity consumption in Prosegur comes for renewable resources.

On the social side, our main milestone of this year has been a signature of administration of our Equality Plan aimed to ensure full guarantee to our employees against any type of discrimination.

And on the health and safety area, we have fully deployed an integrated global platform geared towards the fast and effective management of severe labor accidents and incidents with the objective of a 0 accident goal in the years to come.

As you already know, Prosegur has been actively adhering to the United Nations Global Compact since 2002, and it's also constituent of the FTSE4Good IBEX Sustainability Index.

We will be reporting more information on our ESG policies in the future communications to market. And now I would like to end this webcast, sharing with you my final conclusions and takeaways of this results presentation.

First of all, I would like to remark once again the excellent combination of revenues growth and profitability improvements obtained during the period, both in local currency and euro terms and across all business lines and geographies. In a year strongly defined by uncertain macro perspectives and with one of the worst FX scenarios of our past 20 years, the company has been able to continue delivering sustained growth and increase its margins in a structured and sustainable way, and we expect it will continue doing so in the years to come.

M&A activity has been intense and probably the most relevant milestone has been our entrance in the U.S. market through our Security business line. We expect this market to deliver excellent growth both in terms of sales and margins, as the U.S. remains being the biggest security market in the world with interesting levels of profitability and where our main market penetration strategy will rely on the promotion of the Integrated Security Solutions better than the traditional manguarding. Nevertheless, M&A will continue being very active not only in our current perimeter but also adding some new geographies.

Also worth to restate is the extraordinary market penetration that our new products and services are achieving year-on-year. This offering transformation is led by Cash and its new products, but we have extended it also to our integrated and transformational products in Security that had begun nearly 30% of total sales.

Talking about Security, it's also good to point out the steady and constant profitability improvement that the business delivers when excluding the one-off effects of integration and restructuring costs. Thanks to our Integrated Solutions, Security business is turning around this time faster towards a more profitable activity with higher barriers of entry for competitors.

Our promising performance in the U.S., the good results in Spain and Singapore and, to some extent, the actual recovery of our truck situation in Brazil are a good provider.

On the Alarms side, the main takeaway today is obviously the launch of the joint venture project with Telefónica that will establish operations in a few days' time and will imply a major change in our position in the alarms market, both in terms of growth speed and distinctive offering. It is important to recall that parallel to these new projects, nearly 375,000 alarms in Ibero-America, South Africa and Portugal will continue being managed by -- developed internally by Prosegur, and those will continue expanding at similar ratios of previous year.

And finally, as always in our presentations, a quick and satisfactory call to our excellent cash flow generation, fruit of our conservative and disciplined financial policies that will continue progressing in following quarters to keep up with our commitment of value creation for our investors.

This is all on my side for this result presentation. I would like to thank you all for your participation in this call. And now we will be pleased to attend any questions you may have. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question comes from the line of Pedro Alves from CaixaBank.

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Pedro Alves, [2]

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A couple of questions, if I may. The first one on Argentina. If you could give us an update on the volumes' evolution and the inflation pass-through in this first month of the year? And whether you're expecting the Cash division to continue to benefit from high volumes? Or should we start to be more impacted by the recession, like Security and the Alarms divisions?

My second question is on the agreement with Telefónica. Telefónica has played -- decided to play with their own shares. My question is to know if you have any derivative in place to hedge the price fluctuations.

And the last question is on the -- on this partnership, the economics. How -- if you can give us additional color on whether you are expecting to share the revenues and costs? And this means, obviously, an acceleration of subscribers in Spain. But then what can we expect in terms of the evolution of the ARPU and the client acquisition costs?

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [3]

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About Argentina, you know that the inflation in this moment is one of the key issues that the government is dealing with. Usually, the sale increase are faced during the year in 2 periods, and our commercial teams are investing half of their year time in this process of passing through. In this moment of the year, there is no -- nothing different than in any other year, and the inflation of the last tranche having passed through to prices normally.

About volume, we experienced a usually very important increase in volumes related to the Southern Hemisphere summer. And now we are receiving a normal volume in January.

And about the recession, it's true that forecast of the situation in the country is an opportunity for increasing volume and providing a better services to the banking and retail industries. In the case of Security and Alarms, they are suffering a little bit more. But I would like to remark that in the case of Cash where we are competing in the world of a family is for different issues, we are being able to maintain the ARPU in euro terms in Argentina. That is something really remarkable, no?

About the Telefónica agreement, we are really very satisfied, very happy with this agreement. In this moment, I think that I'm looking through the windows to the treasury manager to be sure we have achieved finally the shares. But in any case, we don't have any kind of derivative, and we don't have any concrete plans about what to do with these shares in the future. But we are today, very happy to be partners of Telefónica and, consequently, shareholders of this big Spanish company.

And our expectation about the joint venture itself are really high. We have seen different experience last year, for example, adding to the Fusión package of Telefónica of new products and the region of growth is really, really fantastic. So we have very ambitious plans for growth in digital inventory in Spain and important acceleration of the revenue growth of Alarms. You know that alarms market in Spain is underpenetrated in comparison with any European standard. And imagine with the penetration in the U.S. with more than 28% of households with an alarm, in Spain, it's less than 9%, no? So this is a huge opportunity because it's also a push market. And we are sure that we will see in the following months an important acceleration of the penetration of the Alarms in Spain, led by Movistar Prosegur Alarmas. And with a deterioration of the quality of the market, that means we done ARPU very similar to that we have in -- until this year in Alarms in Spain.

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Operator [4]

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The next question comes from the line of Steven Goulden from Prosegur (sic) [Deutsche Bank].

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Steven James Goulden, Deutsche Bank AG, Research Division - Research Analyst [5]

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I just wanted to ask about IFRS 16. So at the EBIT level, can you just tell us how much of a benefit that was? My understanding is that, certainly, in Prosegur Cash, the increase in interest was around EUR 20 million. So I'm guessing that, that was roughly in line with the benefit at the EBIT level. But if you could just clarify that, that would be very helpful.

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [6]

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It's not very significant. In the EBITDA, the impact of the new outstanding way of leases is around EUR 16 million, so nothing significant.

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Steven James Goulden, Deutsche Bank AG, Research Division - Research Analyst [7]

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Sorry, did you say EUR 16 million, 1-6?

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [8]

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Yes. 1-6.

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Operator [9]

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And the next question comes from the line of Juan Ros from InterMoney.

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Juan Ros Padilla, InterMoney Valores, S.V., Research Division - Research Analyst [10]

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I have a couple of quick ones. First one is regarding the cash taxes. I've seen there's bigger than usual gap between the P&L taxes and the cash taxes. Maybe you can elaborate a little bit more on that? Then regarding the cash flow other, there's an outflow of EUR 79 million. So maybe if you can split the different items under that line?

And finally, early this morning with your Cash colleagues, they were saying that they were not really seeing nothing really different with this coronavirus? So just requestioning that do you guys at the holding level, if you see anything different.

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [11]

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About the tax rate, you know that with the hyperinflationary accounting plus the divestment in some countries, there is this year some -- the aligning between the normal tax rate. But at country level and local currency, the tax suffering in Prosegur remains the same, as you can see in the cash flow. So the tax base are very similar.

About the line in other, there are many different effects, but the most important one in Prosegur is related to the share buyback program.

About the coronavirus, I think the WHO is a better source of information. But in any case, we're a security company, and we provide key services for protecting society. And in the case of Cash division, providing a basic public service with providing cash to all the society. So we are collaborating with authorities, and we are -- a lot of contingency plans, not only for protecting ourselves and our business but for helping the government to protect society as a whole.

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Operator [12]

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(Operator Instructions) And the next question comes from the line of Manuel Lorente from Mirabaud.

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Manuel Lorente, Mirabaud Securities Limited, Research Division - Analyst [13]

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A couple of questions. The first one is regarding the gap between the P&L financials and the cash financials, it's roughly EUR 55 million. Well, you can give us some indications on the main drivers of that.

And my second point is regarding your new performance metric, this EBITDA. Antonio has stated that the main reason lies on the fact that better represents the real economics of the business despite the distortion from M&A, et cetera. So by doing this now and not 6 months before or in 6 months' time, this is something related to a more active M&A role or something like that?

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [14]

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About this gap, all of my colleagues in IR can help you in elaborating a little bit more, but mainly it's because there are many -- due to a high penetration in accounting and so on, there are some items related to financial expenses that are noncash, no?

And about the reason for changing, for being absolutely transparent with you, I have been asked by our Board for many years why you were speaking about EBIT when internally in Prosegur, since my arrival 12 years ago, we are only speaking about EBITA. Because historically, we had a very acquisitive company. We have done in the last 12 years, more than 240 acquisitions. And we, the -- managing the company will have a long-term incentive plan related to the value creation, and the metric for their performance is a multiple of the EBITA, not of EBIT or EBITDA. So historically, when the CFO of the company, José Antonio Lasanta, my colleague, the CEO Prosegur Cash today, we considered that for avoiding the short-term effect of the acquisition of the M&A, the better performance -- the better metric for the performance of the run rate long-term activity was the EBITA than EBIT. But it's only for aligning our monthly reports and our internal metric of performance with the standard one. In any case, we will maintain providing you both data with absolute transparency for helping you to maintain the -- and we'll give you also the comparison with the year and quarter before for helping you to maintain the comparison. But we are doing only in sake of transparency and using outside the same metric that we are using historically inside the company.

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Operator [15]

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And there are no further questions at the moment, so I would like to hand the conference over to Antonio Rubio. Please go ahead.

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Antonio Rubio Merino, Prosegur Compañía de Seguridad, S.A. - CFO [16]

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So once again, thank you very much for attending this presentation. We are very satisfied with the result of this year, 2019, being a difficult year in terms of macro environment. But once again, Prosegur has demonstrated the resiliency of our business model. The extraordinary transformation we are leading in all our activities, in Cash, in Security in Alarms and our enormous capacity to innovate and to lead the transformation of our industry. Thank you very much, again, for attending. And we -- you have our colleagues in the IR department for attending any further questions. Thank you.

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Operator [17]

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Thank you so much. That does conclude our conference for today. Thank you for participating. You may all disconnect.