Prosegur Cash SA

MAD:CASH

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and

gentlemen,

thank

you

for

standing

by

and

welcome

to

the

Prosegur

Cash

Full

Year

2021

Results

Presentation

Conference

Call.

At

this

time,

all

participants

are

in

a

listen-only

mode.

After

the

speaker

presentation, there'll

be

a

question-and-answer

session.

[Operator Instructions]



I

must

advise

you

this

conference

is

being

recorded

today.

Now,

I

would like

to

hand

the

conference

over

to your

speaker

today,

Miguel

Bandrés,

Head

of

IR.

Please

go

ahead,

Miguel.

[Miguel Ángel Bandrés Gutierrez, Investor Relations Director, Prosegur Cash SA]

Thank

you

for

the

introduction.

On

behalf

of

the

Prosegur

team,

I

would

like

to

welcome

you

to

our

2021

fourth

quarter

results

review

that

will

be

led

by

our

CEO;

José

Antonio

Lasanta;

our

CFO,

Javier

Hergueta;

and

myself.

We

estimate

it

will

last

around

25

minutes.

And

so

at

this

time,

we'll

review

the

key

events

and

actions

that

have

occurred

in

the

quarter

and

the

year

that

are

behind

our

performance.

At

the

end

of

the

call,

we'll

open

the

floor

for

Q&A

session

where

we

will try

to

address

all

the

questions

you

might

have.

Should

we

not

get

to

respond

all

points

today,

we'll

be

pleased

to

answer

those

remaining

on

an

individual

basis

with

each

of

you.

I

wish

to

thank

you

all

for

your

attendance

and

remind

you

that

this

presentation

has

been

pre-recorded

and

is available

via

webcast

on

our

corporate

web

page.

Now,

before

turning

the

call

over

to

José

Antonio,

let

me

comment

some

relevant

news

regarding

cash

during

the

quarter

that

cover

from

how

important

cash

is

for

the

economy

in

Brazil,

how

much

cyber

fraud

has

risen

in

the

last

Black

Friday

campaign,

the

resilient

increase

of

cash

in

circulation

during

the

pandemic

or

the

law

passed

in

Spain

as

has

occurred

in

other

countries

to

ensure

that

cash

is

accepted

everywhere

as

a

mean

of

payment.

First,

I'd

like

to

share

the

view of

Brazilians

that

consider

cash

as

their

preferred

mean

of

payment.

Folha

de

S.Paulo,

a

highly

regarded

Brazilian

newspaper,

shared

an

interview

with

Locomotiva's

President that

showed that

cash

is

the

most

used

mean

of

payment

in

Brazil.

It

underlined

as

one

of

cash

advantages

the

fact

that

when

chosen

versus

other

payment

means,

the

consumer

can

often

obtain

at

least

a

5%

discount,

this

reflecting

it's

the

most

efficient

mean

of

payment

in

commerce

today.

Second,

the

ever-growing

menace

of

online

frauds

is

creating

a

larger

unrest

and

worry

putting

in

the

limelight

the

fragility

of

such

systems.

Infosecurity,

the

leading

online

security

information

page,

outlined

the

fact

that

prior

to

2021's

Black

Friday

campaign,

online

payment

systems

fraud

climbed

over

200%,

giving

an

idea

of

the

dangers

these

means

pose

for

millions

of

unaware

consumers.

Third,

the

London

School

of

Economics

and

Fathom

Consulting

released

an

article

on

the

increase

of

money

in

circulation

during

these

past

two

years.

The

report

states

that

during

these

critical

two

years,

money

in

circulation

not

only

increased

but

also

its

growth

rate

rose.

Far

from

certifying

its

decline,

as

announced

by

parties

with

a

biased

agenda,

people

showed

their

trust

in

the

security

only

money

provides

them

with.

Lastly,

around

the

underlying

important

piece

of

law

passed

by

the

Spanish

government

in

November,

in

which

it

stated

the

obligation

of

merchants

to

accept

cash

and

a

total

ban

to

rejecting

it.

Quoting,

"Consumers'

right

to

pay

in

cash

has

to

be

protected

by

the

state,

and

whomever

denies

that

right

will

be

accordingly

sanctioned".

I'll

now

proceed

to

share

today's

agenda

that

will

be

as

follows.

Firstly,

we'll

review

the

key

events

that

have

taken

place

in

the

quarter.

In the

second

part,

we

will

analyze

the

performance

of

our

business

regions,

as

well

as the

environment

in

which

they

have

evolved.

Thirdly,

Javier

will

follow

with

the

presentation

of

our

key

financials

for

the

period.

And

lastly

to

conclude,

our

CEO

will

comment

on

relevant

ESG

progress

and

the

key

highlights

for

the

year

after

which

we will

take

the

questions

that

you

may

have.

I'll

now

give

the

floor

to

José

Antonio,

who

will

review

the

key

events

in

the

last

three

months.

[José Antonio Lasanta Luri]

Thank

you,

Miguel. I'm

pleased to

address

the

investors

community

this

morning.

Our

Q4

results

presentation

is

an

important

highlight

of

the

year

since

it

enables

us

to

share

with

you

the

main

events

our company

has

gone

through

in

the

period,

as

well

as

the

financial

impact

those

events

have

resulted

in.

For

me,

the

most

relevant

message

is

that

in

Q4

as

we

already

show

in

Q3,

improvement

we

had

announced

continued

to

materialize.

This

reflects

in

all

our

key

indicators

them

being

sales

recovery,

non-stop

advancement

of

our

transformation,

margin

improvement,

cash

generation,

our

commitment

to

sustainability.

Regarding

the

recovery

confirmation,

our

volumes

have

shown

a

constant

recovery

throughout

the

year

after

two

very

hard

initial

quarters

across

our

geographies.

With

the

release

of

restriction

measures,

once

again,

society

has

shown

that

when

allowed

to

move

with

a

certain

degree

of

freedom,

people

are

willing

to

spend

and

move

commerce

and

hence

the

economy.

It's

there

that

we

play

a

role

that

is

critical

to

our

business.

And

that

recovery

has

been

the

case

in

Q4,

even

though

in

late

November

and

mid-December

in

some

countries,

the

Omicron

variant

reduced

the

comeback

rate

we

were

experiencing.

To

this

point,

I'm

happy

to

share

that

in

the

last

four

weeks,

we

have

seen

activity

recovery

as

well

in

those

Omicron-struck

markets.

I

would like

to

underline

that

in

several

markets,

we

are

already

at

pre-pandemic

cash

volumes

despite

the

fact

that

the

economies

are

not

fully

back

yet.

With

that

activity

recovery,

sales

have

continued

their

improvement.

And

in

the

quarter,

they

show

a

very healthy

18.7%

improvement

versus

last

year's

Q4,

driven

by

an

impressive

15.2%

organic

growth.

If

we

look

at

the

full

year

effect,

the

improvement

of

0.7%

levers

on

a

remarkable

organic

7%

growth

versus

2020,

despite

the

fact

that

last

year,

we

had

our

pre-pandemic

Q1,

and

that

in

2021,

the

first

half

of

the

year

was

very

slow

due

to

the

Delta

variant.

We

as

well

have

a

net

inorganic

impact

of

0.2%

that

added

to

the

organic

growth,

more

than

offsets

the

negative,

though

lessening

by

quarter

ForEx

impact

of

6.4%.

Important

to

note

that

our

transformation

continues

to

accelerate.

Loyal

to

our

Perform

and

Transform

strategy,

I'm

happy

to

share

our

new

product

efforts

grew

by

a

phenomenal

36%.

If

we

factor

out

the

AVOS

disposal

we

materialized

early

in

the

year.

If

we

consider

the

overall

figure

and

take

into

account

the

sale,

we

were

able

to

more

than

offset

it,

achieving

total

growth

of

15.2%.

As

a

measure

of

our

transformation,

its

penetration

of

our

sales

grew

by

260

basis

points

to

21.4%

of

sales,

more

than

doubling

its

share

in

just

four

years.

Margin

profitability

kept

improving

along

the

year,

with

Q4

showing

a

14.6%

EBITA

margin

implying

a

22.1%

growth

in

the

quarter

as

of

last

year

and

driving

full

year

margin

to

13.5%

and

full

year

EBITA

growth

to

10.8%.

This

is

a

direct

consequence

of

both

the

continued

increase

in

turnover

and

the

impacts

from

the

efficiency

measures

undertaken

in

the

last

two

years.

So,

lastly,

on

the

number

side,

important

to

underline

our

financial

discipline.

Our

commitment

to

generate

cash

remains

not

intact

but

increased,

having

generated

€57

million

free

cash

flow

in

the

quarter,

one

of

our

best

performances

ever,

and

over

a

50%

improvement

versus

Q3.

This

has

uplifted

total

free

cash

flow

generation

in

the

year

to

€159

million

that,

together

with

the

results

improvement,

take

our

leverage

down

to

2.2

times

from

2.5

times

a

year

ago.

Turning

to

sustainability,

it's

very

important

to

stress

our

continuous

commitment

to

corporate

governance

and

sustainability.

We

have

been

included

in

the

IBEX

Gender

Equality

Index

that

recognizes

those

companies

promoting

gender

equality.

On

these

same

lines,

the

staff

of

Prosegur

Cash

comprises

of

a

share

of

26%

of

women

in an

industry where

such

ratio

is

normally

much

lower.

We

expect

to

keep

on

growing

this

percentage

as

part

of

our

Sustainability

Director

Master

Plan.

Before

diving

in

to

the

numbers,

I

would like

to

spend

some

time

in

this

slide

that

shows

some

very

important

trends

for

our

business

that

are

showing

already

in

our

performance

and

should

continue

to

do

so

in

the

future.

Firstly,

two

graphs

that

reflect

the evolution

of

money

circulating

by

the

strongest

central

banks,

the

US

Federal

Reserve

and

the

European

Central

Bank. They

show

that

for

the

last

two

years,

the

growth

pace

in

absolute

terms

of

money

in

circulation

has

accelerated.

This,

I

believe,

shares

two

very important

underlying

messages,

on

one

side,

that

people

constantly

and

increasingly

trust

money,

physical

money,

and

that

they

particularly

do

so

in

uncertain

environments.

And

if

there

is

one

thing

we

can

conclude

from

these

last

two

years

is

that

uncertainty

has

increased.

And

that

is

the

only

variable

that

has

become

accustomed.

Secondly,

we

see

a

heat

map

of

inflation

across

the

globe

showing

its

growing

trend,

especially

in

Europe

is

not

that

relevant

to

us.

Inflation,

as

you

all

know,

is

positive

for

our

business

since

it

increases

the

velocity

of

money

in

circulation,

raising

our

volumes.

Of

course,

this

is

a

very

important

advantage

when

we

manage

our

cost

base

actively

and

raise

prices

accordingly.

And

thirdly,

it's

important

to

underline

that

despite

the

impact

of

COVID

and

its

variants,

in

2021

mostly

Delta

and

lately

Omicron,

the

progress

of

the

vaccination

campaigns

have

reached

most

of

the

global

population.

And

this

should

help

the

economy

regain

most

of

the global

population. And

this should

help the economy

gain

its normal

activity. This

is

as

well

great

news

for

the

world

and

subsequently

for

us.

Turning

to

the

next

slide,

we

can

see

on

a

full

year

basis

how

growth

ex-forex

has

evolved

versus

last

year,

as

well

as

our

how

margins

have

improved

throughout

the

year

2021.

On

the

top

graph,

we

can

see

our

top-line

growth

in

constant

currency

terms

for

the

full

year,

which

is

7.2%,

confirming

the

good

trend

we

announced

in

Q3

when

that

figure

was

4.5%,

already

higher

than

the

3.1%

increase

we

observed

for

the

first

half

of

the

year.

This

reflects

and

confirms

the

comeback

of

the

activity

in

our

countries.

When

we

look

at

the

breakdown

by

areas,

the

improvement

is

very

notable

in

LatAm,

where

it

claims

up

to

13.9%

after

seeing

a

very

strong

growth

of

28.3%

the

last

quarter

of

the

year.

Europe

shows

a

6.3%

organic

growth

and

in

the

quarter

despite

the

toll

of

the

Omicron

variant and

is

able

to reach

a

yearly

figure

of

positive

0.8%

organic

and

8.4%

including

inorganic

due

to

the

sale

of

AVOS,

A-V-O-S.

Asia

Pacific

has

delivered

a

5.1%

growth

in

the

quarter,

reflecting

the

easing

of

the

last

restrictions,

closing

the

year

at

9%

in

local

currency

terms.

On the

bottom

graph,

it's

noteworthy

to

point

out

the

constant

improvement

of

our

underlying

EBIDTA

margin

quarter

after

quarter,

rising

to

12.2%

for

the

full-year

result.

These

numbers

reflect

the

above-mentioned

increase

of

activity

level

and

commercial

actions

combined

with

the

constant

efforts

we

have

undertaken

to

improve

the

efficiency

of

our

company.

We

are

very

confident

that

these

results,

combined

with

a

positive

macro-inflationary

environment

set

us

in

the

good

track

for

the

future.

In

the

coming

bit,

I

want

to

share

the

results

of

the

important

initiatives

to

transform

our

company

today

for

the

best

of

our

features.

Our

growth

initiatives

lever

fundamentally

on

Cash

Today

and

Corban.

Have

delivered

our yearly

growth

of

15%

reaching

a

total

share

of

21.4%

of

sales.

This

means

we

have

increased

our

penetration

by

260

basis

points

and

taking

the

absolute

level

of

our

remarkable

€326

million.

If

we factor

out

the

AVOS

business,

the

increase

in

sales

has

been

a

36% and

increase

in

share

of

sales

of

almost 500

basis

points.

I

would

like

to

stress

that

this

performance

has

been

strong

across

all

geographies

given

an

idea

of

the

robustness

of

our

transformation

strategy.

Our

growth

initiatives

mentioned,

Cash

Today

and

Corban,

have

grown

by

almost

50%

in

the

year.

In

parallel

to

that,

we

have

been

making

progress

in

identifying

new product

niches

which

we

expect

will

also

play

an

important

in

the

future

transformation

of

our

product

mix.

At

the

same

time,

we

have

continued

our

commitment

to

the

digital transformation

project

which

are

preparing

us

for

a

leaner

and

more

scalable

future.

In

this

area,

we

have

noted

€22

million,

an

increase

of

33%

versus

last

year

which, as

I

said,

we

are

sure will

result

in

strong

advantages

going

forward.

The

evolution

of

the

markets

we

operate

in

and

the

customer

trends

underway

make

us

very

optimistic

toward

the

performance

of

our

Transform

starting

into

the

future.

With

this,

I

ask

Miguel

to

please

highlight

the

main

events

by

region.

[Miguel Ángel Bandrés Gutierrez, Investor Relations Director, Prosegur Cash SA]

Thank

you,

José Antonio.

I

will

start

with

Latin

America,

our

main

region,

accounting

for

67%

of

our

sales.

Here,

we

can

see

a

very

strong

organic

growth

of

9.9%

that

added

to

a

4.1%

push

of

M&A,

more

than

offsets

the

FX

impact

of

minus

10.1%,

and

leaves

in

overall

sales

increase

of

plus

4%,

reaching

over

€1

billion.

It's

important

to

highlight

the

evolution

of

the

region

quarter

after

quarter

where

we

have

seen

a

very

positive

development

of

both

organic

growth,

which

ended

being

20.9%

in

the

last

quarter

and

a

constant

decrease

of

the

negative

impact

of

foreign

exchange.

Transformation

has

performed

extraordinarily

in

the

region,

where

sales

reached

almost

€240

million

and

grew

by

40%

over

2020,

increasing

its

share

of

sales

to

23.6%,

almost

600

basis

points

better

than

the

prior

year.

In

this

area,

it's

relevant

to

mention

the

growth

of

Corban

in

the

region

to

which

our

RedPagos

acquisition

strongly

contributes.

Regarding

EBITA

it

has

improved

in

absolute

terms

despite

the

foreign

exchange

negative

impact,

as

well

as

this

shift

in

mix

and

displays

a

constant

positive

evolution

quarter-after-quarter.

Looking

now

at

Europe,

that

contributes

26%

of

total

sales,

we

continue

to

see

a

positive

evolution

on

a

quarterly

basis.

Organic

growth

improvement

in

the

quarter

of

6.3%

shows

the

resilience

of

our

business

as

consumption

returns

despite

the

Omicron

effect

in

the

last

month

of

the

year,

allowing

it

to

reach

0.8%

in

the

full

year.

It's

important

to

note

that

2021's

organic

growth

compares

a

very

slow

first

half

of

2021

versus

Q1

in

2020

with

a

fully

opened

economy.

In

absolute

terms,

we're

reducing

the

gap

created

by

the

AVOS

divestment

that

accounts

to

minus

9.2%.

Transformation

for

the

region

has

been

an

absolute

priority

as

well,

totaling

€67

million

and

reaching

16.8%

of

sales.

New

products,

without

AVOS,

have

grown

by

17%,

and

the

penetration

has

grown

by a

noteworthy 280

basis

points.

In

terms

of

EBITA,

it

totaled

€22

million

reflecting

ex-AVOS,

a

notable

improvement

of

profitability

in

the

second

half

of

the

year

that

reached

€6

million

versus

the

negative

€4

million

on

the

first

half.

Lastly,

we

turn

to

Asia

Pacific

that

accounts

for

7%

of

total

sales.

Here,

once

the

last

lockdowns

were

finally

released

in

mid-October

and

the economy

started

returning,

although

not

at

full

swing

yet,

the

commercial

initiatives

we

pursued

and

achieved

in

the

last

quarters

kicked

in

and

showed

a

7.2%

growth,

resulting

in

sales

of

€30

million

in

the

quarter,

the

highest

quarterly

sales

we've

ever

achieved.

On

a

full

year

basis,

sales

totaled

€110

million,

11%

better

than 2020

with

organic

accounting

for

almost

6%

of

the

total

growth.

Transformation

has

climbed

in

the

year

by

over

50%

to

reach

€20

million.

New

product

sales

now

account

for

almost

18% of

sales

and

have

increased

their

penetration

by

490

basis

points.

It's

important

to

understand

we're

looking

at

the

region's

margins

that

losses

have

decreased

in

the

second

half

of

the

year

versus

the

first half

of

the

year

and

2020,

despite

having

to

offset

the

absence

of

the

state

aid

received

last

year.

With

these,

I

finalize

the

review

of

our

performance

by

geographic

region.

I

will

ask

Javier

to

please

continue

with

the

financials.

[Javier Hergueta Vázquez, Chief Financial Officer, Prosegur Cash SA]

Thank

you, Miguel.

Regarding

the

financials,

I

am

glad

to

share

a

consistent

message

with

that

I

gave

you

three

months

ago.

We

continue

to

see

an

improvement

in

both

absolute

and

relative

terms.

Both

are

a

consequence

of

all

the

initiatives

we

placed

in

the

sales

and

in

the

operating

areas,

as

well

as

to

the

tailwind

we

have

seen

from

a

macro

level

and

volumes

in

the

last

months.

Looking

at

the

top

line,

full

year

sales

of

€1,519

million

are

0.7%

better

than

full

year

2020.

This

is

particularly

noteworthy

when

we

started

with

a

Q1

gap

over

2020

of 16.8%

that

has

been

narrowing

to

5%

in

nine

months

and

then

reverted

to

the

mentioned

positive

0.7%

at

year-end.

These

sales

imply

a

healthy

organic

growth

of

7%

with

inorganic

contributing

a

net

effect

of

0.2%

and

with

FX

deducting

6.4%.

Alone,

in

euro

terms,

quarterly

growth

year-on-year

in

Q4

has

been

a

remarkably

strong

18.7%.

Reading

down

on

margins,

reported

EBITA

of

€205

million

represents

13.5%

of

sales

and

implies

an

improvement

of

almost

11%

versus

2020.

Interestingly,

if

we

look

at

underlying

EBITA

adjusted

for

divestments

in

2020

efficiency

plans,

it

reached

€185

million.

And

to

it,

I

would

like

to

point

two

factors. On

one

side,

the

sustained

positive

constant

quarterly

evolution

in

both

absolute

and

relative

terms

reaching

14.6%

of

sales

in

Q4,

a

470

basis

points

improvement

over

the

one

reached

in

Q1;

and

on

the

other

side,

the

fact

that

the

gap

in

year-on-year

performance

has

been

closed

along

the

year

and,

in

Q4,

the

underlying

EBITA

of

€64

million

overtook

that

of

Q4

2020

by

14.6%.

If

we

look

below

EBITA,

amortization

has

increased

versus

prior

quarters

and

reached

€39

million

because

of

an

€18

million

impairment

on

our

Australian

investment.

Despite

the

improving

performance

of

the

Australian

business

quarter-after-quarter

and

of

its

enhanced

behavior

more

than

offsetting

the

government

support

it

received

back

in

2020,

together

with

the

auditors,

we

decided

to

impair

part

of

the

investment

following

a

prudent

approach

principle.

The

amount

impaired

is

lesser

compared to

the €27

million euros accounted

for

in 2020.

It's

important

to

underline

that

this

item

merely

a campaign

and

has

a

noncash

effect.

Financial

costs

totaled

€59

million

on

the

back

of

lower

FX

gains

versus

last

year,

despite

lower

interest

and

financial

costs

versus

2020. And

finally,

the

effective

tax

rate

reached

69.2%

affected

by

the

impairment

accounted

for

and

a

more

disadvantaged

US

fiscal

mix

and

higher

corporate

tax

rate

in

some

countries.

This

all

results

in

a

net

profit

of

€33.1

million,

which

more

than

doubles

last

year's

figure.

Turning

now

to

cash

flow,

I

would like

to

underline

the

free

cash

flow

figure

achieved

in

2021,

reaching

€159

million

after

an

extraordinary

Q4

where

we

generated

€57

million.

In

relative

terms,

this

€159

million

free

cash

flow

implies

an

improved

conversion

ratio

up

78%

versus

74%

a

year

ago,

and

a

yield

of

10%,

which

makes

our

stock

price

very

attractive.

Lower

tax

related

outflows

are

explained

by

the

time

gap

between

accruals

and

effective

payments

and

recovery

from

previous

years'

excess

payments

in

advanced.

CapEx

in

the

quarter

added

to

€25

million

taking

the

full

year

amount

to

€67

million,

a

4%

decrease

over

the

previous

year.

Working

capital

variation

reflected

a

€15

million

surplus

in

the

quarter,

thanks

to

a

very

proactive

management

that

took

the

yearly

amount

to

a

€12

million

investment.

This

is

remarkable

given

the

7%

increase

of

organic

growth

in

the

period.

If

we

look

below

the

free

cash

flow

line,

interest

payments

remained

in

line

with

previous

year,

while

M&A

payments,

some

€32.6

million

and

are

the

net

effect

of

payments

of

acquisitions

made

in

the

year,

deferred

payments

of

acquisitions

and

proceeds

from

the

divestment

of

the

AVOS

business.

Last

line,

dividend

and

Treasury

stock

accounts

for

the

payment

of

the

four

installments

of

our

dividend

program,

together

with

the

share

buyback

program

in

place

till

the

beginning

of

Q3.

As

you

can

see,

we

keep

on

stressing

the

importance

of

our

cash

flow

generation

that

has

been

improving

throughout

the

year

and

most

significantly

in

this

last

quarter.

Moving

to

the

next

page,

we

can

review

our

total

net

debt,

which,

besides

our

net

financial

position,

includes

deferred

payments

coming

from

former

acquisitions,

Treasury

stock,

and

IFRS

16

related

debt.

In

this

quarter,

the

[indiscernible]



(26:49) total

net

debt

has

decreased

by

€39

million

in

the

quarter

driven

by

the

good

cash

flow

behavior.

At

year-end,

total

net

debt

of

€672

million

was

equal

to

that

of

one

year

before.

After

having

financed

its

organic

growth,

we

invested

in

the

company

to

prepare

it

the

best

for

the

future,

increase

substantially

client

CapEx,

and

as

well

rewarded

shareholders.

This

debt

level

when

compared

versus

our

EBITDA

brings

down

our

leverage

ratio

by

0.3

times

to

total

2.2

times.

I

would like

to

remind

as

well

that

our

debt

maturity

profile

remains

stable,

with

no

major

refinancing

efforts

required

before

2026.

In

this

environment,

as

we

shared

in

our

Q3

presentation,

S&P

has

confirmed

a

BBB

rating

with

a

stable

outlook

for

our

company,

underlining

our

strong

financial

health.

Let

me

also

remind

you

that

more

recently,

the

board

of

directors

approved

in

December

the

payment

of

a

dividend

of

€30 million

plus

a

share

buyback

program

of

up

to

€15

million.

With

this,

I

conclude

the

financials

review

and

hand

it

over

to

José

Antonio.

[José Antonio Lasanta Luri]

Thank

you, Javier.

Before

concluding,

I

would

like

to

outline

some

key

aspects

of

our

commitment

to

sustainability.

The

first

topic

to

point

out

regarding

our

concern

for

the

environment

is

that

we

can

probably

share

that

all

electricity

we

use in Spain

comes

from

renewable

sources.

With

all

these

efforts,

plus

our

reduced

usage

of

paper

and

plastic,

we

contribute

to

a

better

environment.

On

these lines,

I'm

proud

to

share

we

have

signed

a

climate

pledge

to

protect

the environment

by

which

we

commit

to

reach

the

Net

Zero

Carbon

by

2040

in

years

earlier

than

the

Paris

Agreement.

Related

to

corporate

governance,

I

would

like to

highlight

that

we

have

been

awarded

with

the

maximum

recognition

for

our

good

corporate

governance

on

the

field

by

AENOR.

Moreover,

we

have

become

members

of

the

IBEX

Gender

Equality

Index,

which

acknowledges

our

efforts

to

promote

gender

equality.

And

we

have

joined

Forética

that

strives

to

integrate

ESG

into

the

strategy

for

companies.

On

the

sustainability

front,

we

have

stressed

the

importance

of

having

a

properly trained

workforce appropriately

trained

workforce,

for

which

we

total

over

720,000

training

hours

in

2021,

an

average

of

17

hours

per

employee

reflecting

the

pivotal

role

sustainability

has

for

us.

We

made

compulsory

training

in

the

matter

for

everyone.

In

our

efforts

to

digitalize,

I

want

to

stand

out

that

online

training

reached

almost

60%

of

these

trainings.

Through

our

Prosegur

university

platform,

it

has

seen

an

increase

of

more

than

50%

of

users

during

the

year.

Being

our

associate

safety

paramount

to

our

priorities

in

2021,

we

continue

with

our

quarterly

health

and

safety

committees

to

track

performance

and

monitor

action

plans

and

over

11,000 employees

follow

driving

safely

training.

All

these

initiatives

contributed

to

a

reduction

of

light

accidents

by

over

12%

and

of

major

ones

by

16%.

Last

but

not

least,

we'd

like

to

share

that

we

have

actively

communicated

on

the

matter

with

an

increasing

number

of

proxies

and

ESG

related

bodies.

To

conclude,

I

would

stress

that

our

business

has

experienced

throughout

the

year

a

constant

and

solid

recovery

that

can

be

observed

in

a

healthy

organic

growth

of

7%

versus

last

year.

That

has

allowed

us

to

more

than

offset

the

negative

forex

impact

as

well

as

the

AVOS

divestment.

New

products

have

strongly

contributed

to

the

above

mentioned

growth.

Ex-AVOS,

this

have

grown

by

over

one-third

and

account

to

over

20.5%

of

total

sales.

This

€310

million

consolidates

[indiscernible]



(31:37)

from

the

date

of

the

acquisition

on

a

very

promising

base

to

face

the

feature.

Margin

levels

resulting

from

both

the efforts made

at

commercial

and

operation

levels

have

grown

from

9.9%

in

Q1

to

14.6%

in

Q4,

isolating

capital

gains.

This

is

as

well

a

very

positive

indicator

of

profitability

sustained

improvement

potential

in

the

future.

It's

important

as

well

to

underline

our

absolute

commitment

to

cash

flow

generation

and

financial

discipline

which

have

allowed

us

to

reduce

our

leverage

to

2.2

times

after

investing

in

the

company's

future

and

growth

and

rewarding

our

shareholders.

This

discipline

has

been

recognized

as

are

reassured in

Q3

with

the

Standard

Poor's BBB

stable

outlook

recognition.

In

order

to

conclude

the

presentation,

I

would

like

to

stress

our

commitment

to

keep

developing

our

sustainability

director

plans

that

together

with

our

transformation

initiatives

and

a

great

team

working

for

the

company

are

the

best

guarantee

for

a

solid

future.

And

before

taking

your

questions,

I would

like

to

thank

you

all

for

your

attention

and

summarize

the

year

2021

under

the

phrase

of

our

consistent

and

strong

recovery.

Thank

you.

[Operator]

Thank

you.

Ladies

and

gentlemen, we

will

now

begin

the

question-and-answer

session.

[Operator Instructions]



Please

stand

by

while

we

compile

the

Q&A

queue.

This

will

just

take

a

few

moments.

[Operator Instructions]



The

first question

comes

from the

line

of

Enrique

Yáguez

from

Bestinver

Securities.

Please

go

ahead.

[Enrique Yáguez, Analyst, Bestinver Sociedad de Valores SA]

Good

morning,

everybody.

I

have

four

questions.

The

first

one

is

if

you

could

quantify

the

organic

growth

that

you

are

foreseeing

in

those

first

months

of

the

year

in

the

interim

business

areas

organically,

I

mean.

Secondly,

in

the

fourth

quarter,

we

have

had

a

cash

outflow

of €20

million

– €22

million

from

acquisitions.

Could

you

disclose

fees

from

pending

payments

or

something

small?

Third,

I

don't

know

if

you

could

disclose

the

number

of

small

cash

terminals

that

you

have

now

and

what

will

be

your

target

for

this

year,

taking

into

account

that

this

is

one

of the

main

growth

drivers?

And,

finally,

regarding

the

operations

in

Asia-Pacific,

I

don't

know

what

kind

of

operating

profit

do

you

foresee

for

this

year. Do

you

expect

to

reach

breakeven

or

not?

Thank

you

very much.

Hello?

[José Antonio Lasanta Luri]

Thank

you, Enrique.

Going

to

your

first

question

about

the

organic

growth

by

region.

We

will

say

that

LatAm

has

grown

9.9%.

Europe

has

grown

0.8%

partially,

as

we

said,

and

APAC

has

grown

5.8%,

that

was

throughout

the

year.

And

as

we

pointed

out,

we

had,

I

think,

a

very

weak

first

semester

and

then,

third

quarter

volumes

have

come

back

in

fourth

quarter.

I

think

the

volumes

are

mostly

where

we

will

be

able

to

see

them

in

2022.

Going

to

your

second

question

about

the

money

payments,

yes,

all

of

them

were

payments

or

prior

acquisitions

and

there's

nothing

new,

although

I

must

say

that

we

have

a

strong

pipeline

for

2022. And

we

are

very

close

to

announce

transactions

that

will

be

in

the

lower

range

of

our

target

which

is

around

€50

million.

About

Cash

Today,

we

say

that

we

are

not

disclosing

the

number

of

machines,

but

our

outlook

for

2022

is

to

multiply

by

3

what

we've

done

in

the

last

year

which

was

2021

was

a

year

resuming

at

the

2020.

But

in

the

last

quarter,

we

have

very,

very

strong

quarter

and

I

think

that

2022,

we

are

expecting

it to

be

even

stronger,

what

we've

seen

in

the

in the

first

month

of

the

year.

And regarding

the

operation

of

Australia,

mainly of APAC,

but

mainly

Australia,

I

have

to

say

that

this

is

going

to

be

the

first

quarter

in

which

we

are

going

to

be

without

any

restrictions

in

Australia

with

any

pandemia.

Hopefully

this

year,

we're

going to

see

all

the

results

of

all

the

measures

that

we

have

been

taking

in

the

last

two

years.

Our

target

is

to

reach

out

at

one

point

in

time

breakeven,

but

not

for

the

whole

of

the

year.

But

I

think

this

is

going to

be

a

very

important

year

for

us

because

it

will

be

the

first

year

with

no

restrictions

as

we

said.

So,

the

first

year

is

going

to be

a

clean

year

for

us,

and

will

be

very

decisive

or

will

be

very

important

in order to

take

decisions

on

it.

[Operator Instructions]

[Operator]

Thank

you. The

next

question

is

from

the

line

of

Joaquín

García-Quirós. Please

go

ahead.

Your

line

is

open.

[Joaquín García-Quirós]

Yes.

Hello,

everyone.

I

had

one

question.

I

was

wondering

if

you

could

provide

the

split

on

the

15%

organic

growth.

And

what

is

related

to

hike

in

prices

and

what

is

related

to

volume

recovery?

Thank

you.

[José Antonio Lasanta Luri]

Thank

you,

Joaquin. I

will

say

that

it

is

more

up

50/50.

I

would

say

part

is

between

recovery

volumes

of

half

a

bit,

half

a

bit

more

or

less

in

this

very

draft

idea,

but

is

–

I

think,

we

are

going to

see

this

organic

growth

in

the –

or

these

volumes

that

are

[indiscernible]



(39:52)

in

the

last

quarter are

going to be the

volumes

we're

going to

see

throughout

2022.

The

Omicron

variant

has

some

effects

on

absenteeism,

but

not

much

on

volumes.

So,

I

think

that

2022 is

going

to

be

a

full

year.

It

seems

that

is

going

to

be

a

full

year

of

recover

volumes.

[Joaquín García-Quirós]

Perfect.

Thank

you.

[Operator]

Thank

you.

[Operator Instructions]



There

are no

further

questions

in

the

queue.

That

will

conclude

today's

Q&A

session.

I

would

now

like to

turn

the

call

back

to

Mr.

José

Antonio

Lasanta

for

any

additional or

closing

remarks.

[José Antonio Lasanta Luri]

Thank

you.

And

now

I

would

like to

conclude

by

thanking

everyone's

attendance

and

by

emphasizing

the

positive

evolution

of

our

company

as

shown in

the

last

quarters

where

our

resilience

in

performing

and

our

proven

transformation

is

generating

positive

results

which

I

reckon

will

continue

despite

the global

volatility

that

we've

seen

in

the

last

few

months.

Thank

you

all

again.

Thank

you

very

much.

[Operator]

That

will

conclude

today's

conference

call.

Thank

you for

your

participation.

Ladies

and

gentlemen,

you

may

now

disconnect.