ENVIRONMENT & INDUSTRY(AMB)

149

Number of Employees

€46.5M

Turnover

€4.3M

EBITDA

VISion

We intend to take our place as a global reference and as a player supported by our know-how and skills, acquired in the field of project development for the Portuguese market

MISSION

To conceive, to design, to complete and to recommission the infrastructures and solutions for the business segments we operate in, under turnkey contracts, and the respective maintenance and operation

STRATEGY

To develop supplementary strategies (e.g.: building and construction)
To broaden our offer in Waste Management through technological partnerships
To diversify the geographical markets, maximising growth
To revisit past geographies, relying on cautious risk management

WHICH GEOGRAPHIES?

The environmental business began in the 1970’s for Efacec, and since then it has been meeting the growing need to create systems and infrastructures that can deal with the constant and increasing pressure that comes from human development. In the 2010’s, using the existing synergies in the target geographies’ markets and the end clients, Efacec decided to join the Industry’s activity, by creating the Environment and Industry Business Unit.

STRATEGIC PILLAR

Technological Innovation

Expand the supply in the Water and Waste business, through technological partnerships
Increase offer in the biomass plants’ activities and the hybrid generation plants

Operational excellence

Integrated management of the execution resources for projects in the systemic areas
Developing skills/procedures for risk management and project management

Proactive comercial approach

Improving commercial skills, promoting synergy with the remaining systemic areas
Keeping our fly-in/fly-out model for countries that don’t have an Efacec structure, using local presences that radiate to the neighbouring countries
Geographical diversification that maximises growth

Focus on the client

Developing partnerships supplementary to the project, with special focus on sharing of risks and faithful execution

Talent Development

Building a dual career model, fostering the professional development of technical tasks, as well as management tasks
Revising our performance assessment model, transversely incorporating throughout Efacec the specificity of functional families versus functional groups
Revising our compensation and benefits’ model, promoting guidance towards strategic (e.g.: commercial proactivity) and tactical goals (e.g.: lowering accident rate) of the Group’s Business Unit
Defining a talent management model that allows for high potential employees to be singled out, guiding them through to more accelerated pathways of professional development
Putting together a behavioural, functional and management training plan, one that enables us to prepare our employees for the Efacec 2020 vision

The outlined strategy is materialised in 10 initiatives, which foreseeably will have a positive impact on the EBITDA around mid-2017.

GLOBAL MARKET VISION

In the Environment market (Water and Waste), especially in the countries that depend more on oil resources, we have seen a delay in investment policies. However, the countries in the North of Europe inverted that trend, proving themselves to be particularly active in 2016, with regard to investments. In the water supply and treatment sector, there were still significant deficiencies regarding water supply and basic sanitation, in particular in the African markets and in the Balkan States of Europe, countries which are closely monitored, given the future potential for projects regarding infrastructures. Furthermore, in 2016 we started a new cycle of investment in Portugal, as far as waste treatment is concerned.

In the Industry market, in 2016, certain countries continued to have significant needs for the production of thermal energy, such as the African market, for example. For those cases, a hybrid production concept was developed, which can provide greater flexibility and be more advantageous for energy production.

On a global level, the ageing of existing infrastructures also led to an increase in the need for their improvement and renovation, therefore meaning opportunities for Efacec.

OPERATIONAL PERFORMANCE

Throughout 2016, the Unit implemented highcomplexity, large-dimension projects in several countries: Portugal, Spain, Romania, Denmark, Malta, Algeria, Morocco, Angola, Cape Verde, São Tomé and Príncipe and Mozambique.

WATER
In 2016, of particular note in Portugal, was the start of the remodelling/renovation of one of the largest Water Treatment Plants in Portugal (Vale da Pedra ETA), as well as the start of the remodelling of the Waste Water Treatment Plant in Matosinhos, where in both cases Efacec was responsible for all the electro-mechanical components. Efacec consolidated its presence as a benchmark supplier to EDIA (Alqueva Development and Infrastructure Company), having concluded the projects for hydro-agricultural use in the Beja Block and hydro-agricultural use in the Roxo-Sado Block. In both cases, Efacec implemented the entire electromechanical component for the respective pumping stations, as well as the associated irrigation networks.

In Angola, we should point out the completion of the Calueque Dam, where Efacec was responsible for all of the electromechanical components of the pumping stations.

SOLID WASTE
In 2016, worth highlighting is that Provisional Acceptance was obtained for the Mechanical-Biological Waste Treatment Plant in the North of Malta, with a foreseen capacity for treating around 40% of the solid urban waste currently produced in the country.

We achieved our objective of entering the markets in the North of Europe in 2016, with the order and execution of the Solid Urban Waste Mechanical Treatment Plan in the city of Aalborg, Denmark, for the customer, Reno Nord. This installation stands out for being the first plant in Denmark with automatic mechanical separation of materials of a significant size.

In Cape Verde, we would point out the continued work on special installations project for Hotel Hilton on the island of Santa Maria, where we expect to carry out additional work in the future.

In Morocco, it is important to mention the conclusion of the system of telemanagement and automation of 7 pipelines and a distribution network in the Northern area of the country for the customer ONEP – Office National de l’Eau Potable.

INDUSTRY
The conclusion of the Santo Amaro 2 Electricity Production Plant in São Tomé and Principe, was also of relevance to the results obtained by the Unit in 2016. Set up on the plot of the Santo Amaro 1 Plant, with Diesel engines, this new Plant has an installed capacity of 6 megawatts.

In Angola, final acceptance was obtained for the CCRL – Combined Cycle Refinery Plant, in Luanda. This plant has a total installed power of 33MW and has been operating since 2015.

In Mozambique, we managed to obtain the final acceptance for the Thermal Power Plant in Inhambane.

The extension to the DCS System for the Aboño 2 Plant, in Spain, was also successfully concluded.

In 2016, we should highlight the following events:

Further implementation of an operation and maintenance contract for the Ave region’s sanitation subsystem, as well maintenance for the water supply system in the greater Oporto region;
Obtaining the order for the expansion of the Container Terminal in Maputo’s Harbour, where Efacec was responsible for its electromechanical components;
Obtaining the order for the expansion of the Thermal Plant of Caminho Novo, in São Jorge island, in the Azores;
Reinforcing our partnership with the Thyssen Group, completing several orders for dedusting.

FINANCIAL PERFORMANCE

ECONOMIC INDICATORS

(MILLIONS OF EUROS)

In 2016, the UN AMB saw its total order value reach the EUR 29 million, which represented a drop of 5% when compared to the previous year. The reason for this drop was the impossibility to penetrate new markets, which would have counteracted the pronounced decrease of order numbers in geographies like Cape Verde (EUR -4.7 million, in Waste), São Tomé and Príncipe (EUR -5 million, Thermal) and Romania (EUR -5.4, Waste). Despite the adverse macro-economic environment, we struck important deals in Portugal which have allowed us to partially compensate for the dwindling numbers in several external markets.

The steady value of the orders that were received in 2016, compared to the same period, worked down the Unit’s backlog. At the end of 2016, the backlog was still the same as almost 2 years of revenue coverage.

2016’s revenues, when compared to 2015’s, show a decrease of about EUR 17 million, which represents a relative drop of 27%. The contributing factors to this drop are part of the residue area of business (e.g. Malta, which represented about EUR 13 million in the year before) projects in Portugal, namely in the Water area (EUR -33 million) as well as several UTE’s – Usinas Termelétricas de Energia in Brazil, in the Thermal area of business, which contributed to a drop of about EUR -3.2 million when compared to the previous year. These drops have been partially compensated by an increase in our activity in Portugal (EUR +2 million in Thermal), in Cape Verde (EUR +3.3 million in Residue) and also by our entering into new countries in Northern Europe (EUR +2 million in Residue).

As to the gross margins, we saw improved performance in some of the projects that were accomplished in Portugal and the completion of some of the work we started in Angola, which allowed for balancing the gross margin in value and improving the percentage on the gross margin for this accounting year, despite the decrease in revenue.

Revenue, balance the gross margin in value and improve The gross margin percentage of this fiscal year Substantial reduction of the EBITDA compared to the previous year, from to 7.7 to 4.3 million, is associated with the favourable exchange-rate differences of about EUR 3 million in 2015. Excluding this effect, the EBITDA would be in line with the previous year, leveraged by a continuous trend of lower fixed costs, which was, in 2016, of almost 10% compared to the previous year.

EXPECTATIONS FOR 2017

For the future, it’s crucial to secure the opportunities that are still in the Unit’s existing markets, particularly in Portugal, Northern Africa (Algeria is the most prominent), Angola and Mozambique. Yet, given the present macro economical context of these geographies, it’s essential to rely on entering new markets and improving customer acquisition, in areas like the Environment, especially in geographies such as Northern Europe (Ireland, Denmark, Norway, The Netherlands and Sweden), as well as Oman and some of the still unexploited markets (Ivory Coast, Uganda and Botswana). Some of the new markets to be approached, namely Oman and the African countries, still show specific opportunities as far as the Industry area is concerned, essentially in the Thermal Plant business.

For this reason, Efacec is now concentrating its efforts and bringing synergies together to promote the acquisition of projects in these regions.

We predict that there will be significant impact from the implementation, that began in late 2016, of the Transversal Directorate of Operations common to all of the Group’s System Business Units, an approach that we expect will increase efficiency of means and improve our results in fulfilling projects. In addition,
we predict the implementation of a Transversal Engineering Division to the several organised structures of the Unit, expecting increased quality and efficiency of the procedures and resources to be used. Bringing about these measures, we aim to give the AMB BU enough capacity to focus on the most relevant aspects of its future growth: securing orders and expanding its portfolio through the consolidation of our partnerships and the existing technology, as well as a greater reliance on our own R&D.

A GLANCE AT THE BUSINESS

JOSÉ
SOUSA

ENVIRONMENT & INDUSTRY BUSINESS UNIT

As far as Waste is concerned, in 2016, we point out the provisional acceptance of the Mechanical and Biological Treatment Waste Plant, in Northern Malta. What are the particulars of this project and how did Efacec create value for its client?

The referred infrastructure – Mechanical Treatment Waste Plant – has the capacity to mechanically treat about 113.000 tons a year (47.000t/year of common industrial waste and 66.000t/year of solid urban waste) and to biologically treat the respective organic portion, and as much as 39.000 tons a year of manure from the livestock industry. The biological treatment is done through anaerobic digestion, producing biogas and generating electrical power estimated in 11.000MW/ year. This plant expects to treat about 40% of solid urban waste that is produced in Malta.

As far as performance and environmentally related activities are concerned, specifically the Water and Waste sectors, which events would you like to highlight in 2016?

As far as orders are concerned, entering the Northern European markets through the securing of an order that surpasses the EUR 2.5 million-mark was very significant and should be noted. The project was for the Solid Urban Waste Mechanical Treatment Plant in the city of Aalborg, Denmark, for Reno Nord. This was the first Automated Mechanical Triage Plant for considerable-size materials in Denmark, and for this reason it’s especially relevant to the next investments that are planned for this country In Portugal, in the Water business, despite the evident investment decline, we point out the order for building the Wastewater Treatment Plant in Beja, valued in approximately EUR 4 million, which wouldn’t have been obtained if Efacec hadn’t presented a quality solution. Our excellent presentation was also important to obtain one of the most important orders of the year in the Water business: the requalification of the ETAR of Matosinhos (over EUR 4.5 million).

What about Industry-related activities, which events were more relevant?

In that respect, we should highlight maintaining Sonangol’s trust in us as our client, as we extended our period of Operation Supervision and CCRL Maintenance, which resulted in an order of more than EUR 3 million in value. In Mozambique, despite the extremely adverse economic environment, we secured the order for the Container Terminal Expansion in Maputo’s Harbour, which amounts to more than EUR 2 million. This deal made Efacec responsible for the electromechanical component of the project (supplying emergency generators, expanding the main medium-voltage switchboards and supplying a supervision system). In Portugal, one of the most notable contracts was securing an order to expand the Thermal Plant of Caminho Novo, in São Jorge island, in the Azores, which amounted to more than EUR 3 million, for EDA – Electricidade dos Açores. As for Dedusting, despite the postponement of investment that a few clients opted for, we were able to reinforce the existing partnership with one of our main partners (Thyssen Group), through the completion of several orders, of which we point out the order for sleeve filters for the Sigusfa factory in Algeria, an order of more than EUR 1 million.

Carlos Freitas - Unidade de Negócio de Energia

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Vitorino Rocha - Unidade de Negócio de Transportes