OHL Servicios. The market in which it operates. OHL Servicios. has maintained in 2015 the trend of mild recovery started last year

Transcription

1 4 Activity Report 2015 OHL Servicios The market in which it operates OHL Servicios has maintained in 2015 the trend of mild recovery started last year 42 In the area of Facilities Management of OHL Servicios-Ingesan grew 33% in In the picture, works in the Metro de Madrid.

2 MARKET & STRATEGY OHL Servicios has started this year with the internationalization foreseen in the Strategic Plan of the OHL Group, with confirmed presence in Mexico and Chile and market research beginning in the U.S.A. In turn, the urban services activities transferred from OHL Construction have consolidated and been integrated into the management structure of the Services Division. Turnover figures in the building cleaning sector in Spain registered a 2.0% increase in 2015, reaching 9,385 million euros. In 2016, a moderate increase in the growth rate is expected, and turnover figures should grow by approximately 3%. Over the last few years, of interest is the progress made in larger size operators, to a large extent backed up by the purchase of other companies, as well as the closure of small enterprises that have been unable to overcome a weak demand and highly competitive prices. After several years with a downward trend in the business volume of home care services, short-term forecasts indicate a slight increase, as a result of better economic indicators and a gradual reactivation in the procurement rate of public administrations. Thus, in light of the falls registered in 2013 and 2014, the turnover of companies involved in this activity has remained stable in 2015, whereas in 2016 an approximate increase of 2% is expected, until reaching 1,295 million euros. The building and facility technical maintenance sector registered a 2% increase in 2015, reaching a turnover figure of approximately 8,000 million euros, in a more dynamic demand scenario with less pressure on prices. A progressive improvement in the overall economic activity will enable new increases in the building and facility technical maintenance market over 2016, where a 2.5% growth is expected. The sector companies include the presence of large multiservice groups, specializing in the provision of auxiliary services to companies, as well as installation and assembly companies. Large firms continue to diversify both in and outside the sector in order to cover the growing demand for comprehensive supply, unifying basic auxiliary services into a single supplier, whilst taking advantage of existing opportunities in the energy efficiency services field. The urban services sector continued with a steady trend in 2015, as a result of cessation in local administration activity in an electoral year, as well as the cut-backs imposed by the Budgetary Stability Act. Leading operators in this highly concentrated market continue to fiercely compete in terms of prices, consequently hindering the entry of new companies, such as the case of OHL Servicios-Ingesan. Despite this incipient improvement in the markets where the lead institution,ohl Servicios- Ingesan is present, sector performance fell last year. Company clients, mostly public, have still tended to concentrate their suppliers, leading to a growth in the sales of leading sector companies at the cost of reducing their profitability, given that on these markets the basic decision-making factor is price-related. OHL Servicios has started the internationalization with confirmed presence in Mexico and Chile and market research in the U.S.A. The sales of OHL Servicios ascend to 199 million euros in 2015, 37.7% more than the previous year and 3.1x that

3 In this context, OHL Servicios-Ingesan has managed to increase its turnover in Facilities Management above the figures of sector leaders, going from million euros to 153 million, i.e. a 33% increase multiplying by 10 the 3.3% rate of the sector. Turnover in Urban Services-22 million euros-is 10% higher than in 2014, when this activity was assigned to OHL Construcción. Moreover, Sacova had 24 million sales. The sum of these figures has resulted in total sales for this division of 199 million euros in 2015, 37.7% more than the previous year and 3.1x that of Ebitda has dropped compared to the previous year, in line with the lower profitability enjoyed by leading sector companies. Despite the division s spectacular increase over 2015, in its type of activity, with intensive labor, and generalized default in receivables owed by the public administrations in 2015, OHL Servicios-Ingesan has been able to practically selffinance its activity, without considering its divestment in Sacova (a non-strategic asset), as the cash generated from the sale of this company was used to reduce the Group s indebtedness. Position of OHL Servicios-Ingesan Three priority sectors: cleaning and healthcare services, maintenance&energy efficiency and urban services. Strategy: consolidation in Spain, its main market, and commencement of international expansion in another three home markets: Mexico, Florida (USA) and Chile. A reference in Spain, through OHL Servicios-Ingesan, in the facilities management sector. Management criteria Increase in return obtained in 2015 due to improvements in management, client selection and markets. Sales performance in OHl Servicios (Million ) 200 x 3, OHL Servicios-Ingesan (facilities management) OHL Servicios-Ingesan (urban services) * Sacova (geriatric services) ** * Transferred from OHL Construcción in ** Disinvestment of OHL Group in 2015.

4 RELEVANT ACTIVITIES CLEANING AND HEALTHCARE SERVICES This area has focused on consolidating a commercial portfolio, achieving higher organic growth than its competitors, meeting the highest quality and performance standards based on the following criteria: Consolidation of continuous improvement in the services provided, entailing an increase in client satisfaction, through an effective and efficient management of resources. Extended provision of services to new markets, generating synergies with other services and improving the value chain, backed up by best practices. Commitment to RDI, with the highest standards in quality and environmental matters. Strengthening of the division s greatest asset- its people- by furthering their professional career, integrating underprivileged persons, useful and personalized training, providing personal and individual assistance to all employees. The sum of these principles has allowed OHL Servicios to develop its committed provision of services to society with guarantees and satisfaction. This has generated an organic average growth rate over the last few years of more than 35%/year. MAIN CONTRACTS IN 2015 Cleaning service of the Alicante-Elche airport, for 5.7 million euros and a 36-month term. Cleaning service of the Manacor hospital and dependent centers in the Levante healthcare sector, for 2.66 million euros and a 24-month term. Cleaning service for the premises ascribed to the Special Delegation of the Valencia Tax Agency, for 2.5 million euros and a 24-month term. General cleaning service and others related to all the facilities of the Spanish Ministry of Defense, for 8.85 million euros and a 24-month term. Cleaning service of judicial buildings in the territorial managements of Castilla y León in Valladolid, for 1.82 million euros and a 12-month term. 45 Huelva Platform, for 15.9 million euros and a 24-month term. In 2015, OHL Servicios- Ingesan achieved a contract for general cleaning and other related services in all the facilities of the Spanish Ministry of Defense Facilities of the Spanish Ministry of Defense.

5 The most valuable contract in 2015 for cleaning and healthcare services The contract for cleaning services and waste collection at the hospitals covered by the Healthcare Area of the province of Huelva, awarded by the Provincial Platform for Integrated Logistics (Huelva), ascribed to the Andalusian Health Service, has represented the highest budget achieved by OHL Servicios-Ingesan in 2015 in the cleaning and healthcare services field. OHL Servicios-Ingesan took part in the public tender along with the most important companies in the cleaning sector and achieved the highest technical score. The project involves a detailed analysis of each high, medium and low-risk area, distributing all staff and optimizing resources, contributing the latest innovations and guaranteeing maximum quality and sustainability standards. For 2016, the aim is to certify this cleaning service under ISO 9001:2014 and ISO 14001:2014 standards in all facilities. The contract was awarded a budget of 15.9 million euros and a 24-month term, starting on 27 June 2015, extendable for the same period of time upon expiry. The staff providing this service consists of 440 workers. The following hospitals are covered by this contract: 46 Área Hospitalaria Juan Ramón Jiménez. With a total surface area of 45,490 m², it consists of two hospitals (Juan Ramón Jiménez and Vázquez Díaz), a specialty center, a mental health building and a doctor s office. Hospital Infanta Elena. With a surface area of 4,208 m². Área de Gestión Sanitaria Norte de Huelva. With a total surface area of 2,951 m², it includes the Riotinto hospital, seven health centers, ten doctor s offices and eight emergency rooms. Distrito Sanitario Huelva Costa-Condado Campiña. With a total surface area of 3,629 m², with 23 health centers and 23 doctor s offices, 24 emergency rooms between both types of center. MAINTENANCE & ENERGY EFFICIENCY This area has focused its effort on increasing the number of contracts through private corporate clients. One of the main objectives is to consolidate energy service contracts for the Public Administration, both in the construction sector and public lighting. Along these lines, OHL Servicios-Ingesan s efforts will be directed at the award of similar contracts to the ones already achieved in 2015, such as the Santa Marta (Salamanca), Cantillana (Seville) and Ávila hospitals.

6 MAIN CONTRACTS IN 2105 Energy management at Hospital Universitario de la Princesa, Centro de Especialidades García Noblejas and Centro de Salud Mental de Chamartín, for 34 million euros and a 15-year term. Preventive, corrective and regulatory maintenance of electricity and temperature control facilities in Hospital Clínico de Barcelona, for 1.7 million euros and a three-year term. Combined supply and services project, consisting of a warranted comprehensive service for public lighting and municipal buildings of the Town Council of Cantillana, for 3.5 million euros and a 12-year term. Reform, conservation and repair works for public and private buildings ascribed to the districts of Barajas, Tetuán and Retiro (Madrid), for 2.5 million euros. Mixed Supply and Works Contract for the Efficient Management of Primary Energy Sources Hospital Universitario de La Princesa, Centro de Especialidades García Noblejas and Centro de Salud Mental de Chamartín The aim of the contract is to achieve greater efficiency in energy consumption in the various centers ascribed. To do this, OHL Servicios-Ingesan, as the awardee, will complete the project and manage improvement works in minimum facilities specified as such in the tender bases, including any other additional proposals submitted in the Technical Bid. The service is structured into 4 activities: Activity 1: Supply of useful energy. Management of supply of thermal, cooling and electrical energy, control over quality, amount and use. Activity 2: Facility operation. Management, control, operating adjustments, preventive, corrective and legal maintenance of the equipment and facilities in the buildings covered by the contract. Activity 3: Warranty of equipment and facilities related to the facility improvement works. Activity 4: Basically, renovation and improvement works in the facilities, to help optimize energy consumption. 47

7 Essentially, the works, with an estimated total investment of 2.7 million euros, involve: Substitution of heat and steam generated by the Hospital Universitario de La Princesa. Partial replacement of the cold water generated for temperature control in common and hospitalization areas, and a redistribution of the system s primary circuit. Substitution of the cold water generation system for temperature control in operating theaters and associated temperature control system. Substitution of hospitalization temperature control, along with the associated system to regulate variable water flow by areas, for temperature purposes. Substitution of emergency electricity supply equipment. Facility regulation and control system. The model implemented under this contract is expected to generate savings for the Administration, with respect to the real costs over the next 15 years, of more than 30%; in net terms, this results in at least 15 Million. Furthermore, the project represents a milestone in environmental sustainability matters, as CO 2 emissions will be reduced by 2,250 tons/year In other words, a reduction in electrical and thermal consumption, in energy terms (KWh), will respectively reach 32% and 17%. 48 Features of the contract: Term of the Contract: 15 Years. Contract Amount: 35 M. Thermal Energy Produced: 8,500 MWh/Year. Electricity under Management: 8,700 MWh/Year. Design Engineering: 3,500 Hours. Energy and Maintenance Engineering: 2,500 Hours/Year. Technical Maintenance and Operation of Facilities: 50,000 Hours/Year. URBAN SERVICES Over 2015, OHL Servicios has brought together and integrated all urban services activities provided by other OHL Group divisions. This basically covers road clearing services, waste collection, green area maintenance, preservation of urban fixtures and general public road infrastructures. Based on common management and unified strategy for all territories, the production and management models have been standardized. The OHL Servicios-Ingesan brand has been introduced in employer associations in the sector and trade unions, and the Group has been publicized on this new market. The activities of urban services transferred by OHL Construcción in 2015 have been integrated into the management structure of OHL Servicios

8 With the relevant references it already enjoys, OHL Servicios is prepared for a market that approximately generates 5,000 million euros/year in 6,500 municipalities, in road clearing and waste collection activities. Furthermore, the green area maintenance sector has a potential market of 2,900 million euros/year. Furthermore, this multi-year contract sector has average terms of four and eight years, consequently guaranteeing recurring income in the medium term. Sweeper (left) and collector, used by OHL Servicios-Ingesan in its urban services. The population assisted in 2015 has exceeded one million inhabitants, with a turnover figure in the year of 22 million euros and a warranted portfolio of over 100 million. With these initial contract references and business turnover, over 2015 steps were taken to prepare technical references and classification in order to be eligible for contracts whose maturity and renovation will arise over the next few years, thus reaching a selective market share in terms of client and profitability. Distribution of urban services business in 2015 (Million ) The activity of urban services has generated a turnover of 22 million euros, with a portfolio of over 100 million Road Clearing and Waste Collection Green Area Maintenance Urban Fixtures-Children s play areas Irrigation Networks-Hydrants-Others MAIN CONTRACTS IN 2105 Comprehensive management of road clearing and green area maintenance, urban fixtures, fountains and hydrants in four Madrid districts, for 37 million euros/year and a six-year term. Conservation and maintenance service for parks, green areas, gardens and trees in Jerez de La Frontera (Cádiz), for 2.5 million euros/year and a 24-month term.

9 OTHER URBAN SERVICES PROJECTS Conservation and maintenance services for green areas and gardens in the Universidad Rey Juan Carlos I campuses of Móstoles, Alcorcón, Fuenlabrada and Vicálvaro (Madrid). Conservation and maintenance services for green areas and gardens in Torrejón de Ardoz (Madrid). Cleaning, conservation and maintenance services for gardens and rural areas in the Torrejón de Ardoz airforce base (Madrid). Maintenance of green areas in La Rosaleda shopping center (Málaga). Garden maintenance in buildings located in Madrid ascribed to Servicio Público de Empleo Estatal (SEPES). Clearing of plots of land belonging to Empresa Municipal de Transportes (EMT) in Madrid. Comprehensive management of four Madrid districts In 2013, OHL Construcción was awarded one of the seven comprehensive contract units for the city of Madrid. In a Joint Venture (UTE), it has since then been managing four surrounding districts of Madrid (Hortaleza, Barajas, Ciudad Lineal and San Blas), assisting a population of 600, The comprehensive contract managed as a Joint Venture(UTE) by OHL Servicios- Ingesan for the City Council of Madrid has a park of 100 mobile units. The picture shows a hosing machine. In 2015, the contract was formally assigned to OHL Servicios-Ingesan, in order to integrate into a single brand the technical solvency and references provided by a contract of this size. The tasks included in the contract basically consist of road clearing, hosing/ washing services, manual and mechanical sweeping, collection of furniture and effects, waste collection in the public thoroughfare outside containers for urban solid waste, graffiti removal, green area maintenance, maintenance of tree-lined roads, pruning and felling, stump removal, planting, play area maintenance, urban fixtures in parks, automated watering systems, park fountains, maintenance of watering fountains and hydrants for firemen and updating of a geographical data system for the entire asset inventory.

10 The annual fee of the contract has increased from 34 million euros/year to 37 million at present, due to the addition of new neighborhoods receiving conservation services. The service hires more than 1,000 workers covered by three different Collective Bargaining Agreements. The expiry date of the contract is 2021, with the possibility of renewing it for a further two years. Further to the contract, more than 700 hectares (ha) of green area are maintained, and over 160,000 trees; mechanical hosing is carried out in 26,100 km of urban roads each year, and combination hosing in 10,200 ha, and 10,800 tons of waste have already been gathered in the four districts covered. A machinery park of 100 mobile units has been assigned, to include collectors, hosing tanks, sweepers, heavy and light trucks, cranes and inspection vehicles. 51