Ladies and gentlemen, thank you for standing by, and welcome to the Prosegur Cash Financial Year 2020 Results Presentation. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. I must advise you that this conference is being recorded today on Friday, the 26th of February 2021. I would now like to hand the conference over to your first speaker today, Pablo de la Morena. Please go ahead, sir.
Thank you. On behalf of all the Prosegur Cash team, I would like to welcome you to our 2020 full year results review. This presentation will be led by our CEO, José Antonio Lasanta, our CFO, Javier Hergueta, and myself. We estimate it will last around 25 minutes, and during this time, we will try to address the main event that took place during the reference period. At the end of the call, we will open the floor for a Q&A session where we will try to answer any remaining doubts. In case we don't get to all your questions today, we would be pleased to answer those on individual calls 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 webpage.
Before turning the call over to José Antonio, let me comment some relevant news regarding the use of cash. I would like to point out a new study coming from the DNB, the Dutch central bank, stating that there is a social need for cash, but that declining usage is jeopardizing the existing infrastructure. The DNB emphasizes that specific attribute of cash, stressing that it is the only form of public money available to public. It is the basis of trust in the monetary system. It is a backup solution in the event of the failure of electronic payment. It is generally accepted and an important budgetary tool, also that it enables transactions without third-party intermediation. The institution considers that cash must remain accessible and available. Let's analyze the European Central Bank stance regarding the cashless initiative launched last December by the Italian government.
This cash-back initiative offers an automatic refund from the state to citizens making in-store purchases with a payment card or a smartphone app. It has been implemented as part of an ongoing campaign to discourage tax evasion. The ECB has complained that the program is disproportionate and undermines the neutral approach to payment. Central Bank also mentioned that creates a distortion within the European internal market. Just to highlight that the Australian government has scrapped legislation restricting cash payments. The currency bill, a controversial law that would have banned cash payments over AUD 10,000, has been voted out by the Australian Senate, as many saw it as a limitation of the freedom to use cash and to protect the financial privacy. Just a few comments in relation to the interview that former Mastercard CEO gave to tech journalist, Whitney Pennington.
Mr. Banga discussed financial inclusion, the digital divide, and the future of money, and recognizes that cash will not, and more importantly, should not, go away. He rightly points out that there are people who rely on cash because they are unbanked or underbanked, because they are on the other side of the digital divide, or because they lack a formal proof of identity. On the other hand, he also acknowledged that there are people who simply prefer to use cash. Moving forward, today's agenda is as follows. We will start discussing the main highlights of the period. Then, we will review our performance in the different regions. Finally, we will summarize our financials and explain the way we are adapting to the new reality and how we are progressing in our sustainability strategy.
I will now turn the call over to José Antonio, who will cover the most relevant topics of the year.
Thank you, Pablo, and good morning to everyone. 2020 has proven to be one of the toughest years we have ever seen, as we had to deal with not only with the sanitary crisis derived from the COVID-19, but also with false rumors around cash, and a depressed level of activity resulting from the lockdown measures implemented by the governments to prevent the spread of the virus. However, if the impact of the virus has been terrific, the response of our organization was no less than extraordinary. Therefore, I want to take this opportunity to publicly recognize the enormous effort of all our employees and emphasize how thankful we are for their very deep commitment and sacrifice during these difficult times.
Since the beginning of the pandemic, our services were declared essential, which guaranteed us a certain level of activity, and we took several actions to, first, minimize the operational risk in our operations. Second, to adapt our cost structure to the existing levels of activity. Third, to preserve our cash generation and liquidity. We have more than followed the guidelines issued by the public health agencies, and we have reinforced our health and safety protocols to protect the well-being of our employees. We have kept a fluid dialogue with our customers and have adapted our operations to their needs, and this to guarantee the business continuity of all our customer services. Finally, we have cooperated with several governments and local authorities in the communities where we operate to help them to mitigate the effects of the pandemic.
On the agility side, our sales growth in local terms reached 1.7%, while our underlying EBITDA margin, a metric that excludes the restructuring cost, kept progressing along the year up to 14.2%. Our organic growth remained slightly positive despite additional headwinds coming from new lockdowns in Europe at the end of the year. Inorganic growth accelerated to 1.6%, benefiting from the M&A activity during the year and the lower weight of the French and Mexican divestments. We have continued deploying our efficiency programs, and during the last quarter, we have raised the total invested amount by EUR 4 million to EUR 29 million. On the consolidation front, I would like to highlight that we have invested EUR 94 million in several transactions to reinforce our leadership in the traditional business and enlarge our portfolio of new solutions. The integration of these newly acquired companies and asset has now been completed.
During the quarter, we have made some deferred payments, thus reducing the amount of our future financial commitments, This is something that you will appreciate in our cash flow generation and net debt position. Regarding transformation, our new solutions, which represented 18.8% of our total sales at the end of 2020, continued to outperform the traditional business. This reported figure represented a meritorious increase of 260 basis points compared to 2019 figures, especially when you consider that the lockdowns have limited the retailers' activity and have temporarily slowed down the sale of some of these solutions. All this without giving up our commitment with the digital transformation and innovation, areas where we are accelerating our investments, as we will discuss later. Finally, let me stress one more time our financial soundness.
The resilience of the business and the cash protection initiatives implemented earlier in the year have yielded positive results and allow us to post a strong free cash flow figure of EUR 161 million, and to carry on de-leveraging our balance sheet. Our strong cash flow generation, combined with our access to liquidity and a more than comfortable debt maturity profile, has allowed us to maintain our investment-grade credit rating by Standard & Poor's, which remain at BBB with a stable outlook. Also, last December, the Board of Directors proposed a new dividend of close to EUR 60 million. Let me now spend some minutes discussing the evolution of our sales and operating margins and our performance in terms of M&A and new products.
In the next slide, we can see two different charts showing on a cumulative basis the evolution of our local growth and our underlying EBITDA margin. The chart at the top reveals that our business grew despite the lockdowns implemented in all countries. This was the result of the fantastic job done by our commercial teams, who maintained the pricing discipline and captured additional services in all our regions, and the inorganic growth derived from our M&A activity. The chart at the bottom highlights the gradual margin recovery in 2020 due to the efficient management of our cost base and the lower restrictions in mobility during the second half of the year, despite the lower activity and the negative translational impact of the currency.
As you have seen, our M&A activity, which was very prolific in the first quarter of 2020 and contributed positively to our results, was less intense later in the year as we have concentrated our efforts on the integration of the acquired companies. We have allocated two-thirds of our resources to keep strengthening our traditional business platform in LATAM, which have translated into new investments in Ecuador and Brazil and the divestment of our Mexican assets. On the other hand, we have assigned the other third of our resources to enlarge our new solutions portfolio in Colombia, Australia, and Spain. To conclude, I would like to stress that M&A remains at the forefront of our growth strategy. We are being very selective and preparing well to act on the opportunities that are opening right now in most of our countries.
In 2020, we have continued transforming our company and increasing the weight of our new solutions within our revenue mix. As of December 2020, the new product sales ended in EUR 283 million, maintaining a healthy mid-teen growth rate in local currency terms. In terms of sales penetration, new solutions finalized close to 19% at the end of the year, showing a more resilient profile than the traditional business in most of the countries.
Finally, as you can see in the slide, in 2020, we have more than doubled our investments in digital transformation and cybersecurity, reaching EUR 17 million. We continue allocating resources and accelerating our investments in these areas, not only to be better prepared to address the future challenges, but also to capture new growth opportunities. Now, I will give the word to Pablo, who will walk you through the different dynamics of our regions.
Thank you, José Antonio. Latin America, where the COVID-19 and the currency depreciation continued to negatively impact the comparison versus last year, our sales reached EUR 973 million, an 18% drop versus the same period in 2019. The organic growth for the year remained positive at 5.9%, despite the selective lockdowns in certain countries and the tough comparison versus 2019 due to the non-recurring volumes captured in Argentina a year ago. Positive organic contribution was complemented by our acquisitions in Brazil, Ecuador, and Colombia that add another 3.2% net growth, including the divestment of Mexico. Moving to the new products, it is interesting to mention that our sales kept growing at double-digit rates in local currency terms and amounted to EUR 171 million. This figure represented at 17.5% of our total Latin American sales, a 130 basis points improvement versus the 16.2% posted a year ago.
On the profitability side, the EBITDA margin, excluding the restructuring cost, ended in EUR 222 million in absolute terms and 22.8% in relative terms. The lower level of activity resulting from the confinements and the currency depreciation negatively impacted the full comparison versus 2019. Moving on to Europe, our sales ended in EUR 436 million, a 14% decrease versus last year, which is fully explained by the lockdowns under the consolidation of France. We have observed that the impact of the pandemic has been less severe than in previous quarters, although the implementation of interim lockdowns continues to introduce certain volatility in the evolution of the business. New product sales ended in EUR 99 million, representing 22.7% of our European sales, an increase of 5% versus last year figures.
The EBITDA margin improved during the second half of the year, reaching EUR 7 million in absolute terms and 1.6% in relative terms, excluding the restructuring cost. Nevertheless, the profitability of the region remained heavily penalized by the lower activity versus 2019. Let's review now our performance in Asia Pacific. Our sales amounted EUR 99 million, a decrease of 6% versus a year ago. This figure, partially affected by the confinements implemented to counter the pandemic, has been improving along the year, thanks to the new contracts awarded in Australia. New products, as a result of the new ATM business in Australia, increased by 127% in absolute terms, reaching 13% of the sales of the region.
Last, let me highlight that the profitability of the region, if we exclude the positive impact resulting from the sale of South Africa in 2019, has slightly improved versus the one reported a year ago, despite the negative impact of the pandemic and certain costs associated with the transition of new contracts in Australia. This is all regarding the performance of our different regions. I will now hand you over to Javier, who will summarize the financials.
Thank you, Pablo. Starting with the top line, total sales reached EUR 1,508 million, 16.2% less than the previous year. This is the result of a total negative impact of -17.9%, coming from the combination of currency depreciation and the effect of applying IAS 29 and 21, partially offset by the positive contribution of our local growth of 1.7%. As previously explained, our organic growth remained slightly positive, which means that we have been able to offset the drop in sales due to the pandemic and the tough comparable base versus the previous year with the new services and price revisions. On the other hand, in organic growth, partially diluted by the deconsolidation of France and Mexico, kept yielding positive results and accelerated to 1.6% due to the M&A activity accomplished during the year.
On the profitability side, our reported EBITDA margin ended in EUR 185 million, representing 12.3% over sales and 14.2% excluding our restructuring costs. Despite the fact that our accumulated profitability continued affected by the sharp devaluation of emerging currencies, the lower activity resulting from the COVID-19 and the EUR 29 million incurred to restructure our operations, the gradual recovery of our operational leverage due to a higher mobility and our cost adjustments have helped us offsetting a very significant part of the overall effect. Let me explain in greater detail our underlying operating performance by focusing on the charts placed at the right-hand side of the slide.
Our recurrent EBITDA margin, metric that excludes the capital gains derived from our divestments in 2019 and the restructuring costs in 2020, reached EUR 214 million, 14.2% over sales, narrowing the gap versus last year to a decrease of 13.3% on absolute figures and 280 basis points in relative terms. Below the EBITDA line, we have booked a higher than initially expected amortization expense, as in a prudent approach, we have decided to write off EUR 27 million of intangibles and goodwill in Australia. Our financial results posted net expenses of EUR 46 million, broadly in line with last year figures. Higher interest expenses resulting from the increase in our net debt position in subsidiaries, hyperinflation, and FX-related costs, have been offset by the profits on foreign currency transactions.
To conclude, our tax rate for the period reached 82.3%, being the temporary increase the result of the write-off in Australia, some non-deductible losses and one-off expenses, and the impact of hyperinflation in Argentina. Regarding cash generation, let me underline that our free cash flow reached EUR 161 million by the end of December, which means a stable cash conversion ratio of 74% and an implied free cash flow yield of 9% if we consider our last 12 months' free cash flow and our current enterprise value. Provisions and other items decreased versus previous quarters, as they no longer benefited from the tax payment deferrals resulting from the COVID-19 and the provision related to the restructuring program. We have also made some payments in the ordinary course of business that contributed to this decrease.
CapEx and working capital figures continue benefiting from the rationalization of our investments as well as the thorough management of our working capital. As a result, our CapEx investments have been reduced by 33% versus last year, while our working capital have contributed EUR 34 million to our cash flow generation. This is not only the result of the activity contraction, but also of a proactive management of our clients, our suppliers, and our investments in systems and processes to improve the entire collection cycle. M&A payments reached EUR 108 million, and were a combination of cash outflows from deferred payments and new M&A, and cash inflows related to the disposal of our Mexican operations. The dividend and the treasury stock lines incorporated the results of our voluntary dividend reinvestment program and our share buyback program, both implemented in early June.
Finally, the new proposed dividend of EUR 60 million will be fully paid in 2021 in four equal installments in January, April, July, and October. Let me now make some comments regarding our total net debt, which on top of our net financial position, includes the deferred payments coming from former acquisitions, our treasury stock, and the IFRS 16 related debt. As of December 2020, our total net debt amounted to EUR 672 million, a EUR 42 million sequential reduction versus the figures reported in September, and an EUR 85 million decrease since the beginning of the pandemic in March. Our financial discipline is allowing us to continue deleveraging in absolute terms, despite the harsh environment and the restructuring costs incurred during the year.
To conclude, let me highlight that we do not have any major refinancing needs before 2026, as we have recently extended our revolving credit facility in Spain to that date. We can fully concentrate on capturing the existing organic and inorganic opportunities while we continue transforming our company. I will now turn it back over to José Antonio, who will make some closing remarks.
Thank you, Javier. Since the outbreak of the pandemic, we have been taking several steps to guarantee the rapid transition and adaptation of our company to a more volatile and complex environment. Once again, and despite the adverse conditions, all our employees have done a fantastic work and have proven the resilience of our company's business model. First, and from a commercial point of view, our teams have captured additional services in all our regions that have partially mitigated the lower volumes resulting from the COVID-19. Second, and from a cost perspective, we have also frozen most of our discretionary expenses and restructured our operations to achieve further efficiencies and adapt our structure to the current changing environment. As a result of these initiatives, our underlying EBITDA dropped 23% in 2020, showing our ability to reduce and make more variable our cost base.
All this accelerating our investments in digital transformation and innovation, something that we will keep doing to address future challenges in the best possible way. Finally, we have focused on some initiatives to preserve our cash generation and to protect our balance sheet. We have reduced our DSO, we have optimized our maintenance CapEx, and we have launched an optional dividend reinvestment program. These actions allow us not only to maintain a solid cash flow generation and to continue executing our consolidation and transformation strategies, but also to preserve our remuneration to shareholders and to reduce our total net debt since the beginning of the pandemic.
To conclude, let me remark that although we still have some tough months ahead of us until the impact of the pandemic slows down, I firmly believe that these measures will allow us to navigate the remaining part of the crisis and strengthen the agility of the company in order to emerge stronger and ready to capture future growth opportunities. Before moving to the Q&A, let me spend some minutes reviewing our progress in sustainability, a recurring topic in our presentations. Prosegur Cash integrates ESG factors into its business model and continues improving the disclosure of all its actions in this area to be fully transparent and be aligned with the standards demanded by the investment community. In this regard, and despite the detailed information available in our annual reports and in our corporate web page, let me summarize our main pillars.
First, and regarding our employees, our aim to reduce serious work accidents to zero and to increase the employability of our workers through the Prosegur University. Second, and related with our environmental impact, our objective to mitigate our carbon footprint, making a more efficient use of our resources. We are introducing electric and hybrid vehicles in our fleet to reduce CO2 emissions, digitizing our processes to become less paper intensive, and using recyclable materials to reduce plastic consumption. We are also expanding our portfolio of services, increasing the penetration of our new solutions, which will allow us to reduce our emissions. All this supported by a very strong corporate governance, with the management aligned with the main climate change initiatives such as the United Nations Global Compact and The Climate Pledge, and also with long-term incentives linked to sustainable objectives.
This is all on my side. Thank you for the attention. I will now be pleased to begin with the Q&A session.
If you wish to ask a question, please press excuse me, star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, to ask a question, please press star and one on your telephone keypad. Your first question comes from the line of Alberto Espelosín from JB Capital.
Good morning, and thank you for taking my questions. I have two, actually. First, you added EUR 4 million of restructuring costs in this quarter. Do you expect any additional restructuring costs in 2021? Second, could you please elaborate a bit more on the EUR 20 million write-off registered in the quarter in Australia?
Thank you, Alberto, for the question. On the first one, on the restructuring cost, we really believe we have fully booked all the restructuring costs that we wanted to do in 2020. Maybe there is some tail in 2021, but it will be very, very marginal. I think we have undertaken everything that we wanted to do at this moment. On the second question on the Australia write-off, we thought that given the current situation on the market in Australia and given the pandemia, putting both things together, we thought it was the most prudent way to do it. The news in Australia are that we have gained two major contracts, but we are still ramping up the sales and really, the pandemia has not allowed us to see the results on the P&L. Hopefully, we'll see them during the next year.
We are making efforts to have a linear restructure that accommodates to the new contract. Hopefully, we are going to see it in 2021. We are still competing for other new contracts that could come. If the pandemia had not occurred, we would be very close to the break even on a running side. Now, I think we are very committed to the market and really, we think within 2021, we'll see results of all the work we've done in 2020.
Perfect. Thank you. Just following your answer. In any case, if the performance remains subdued, do you have any target or deadline to exit Australian market as you did with France?
We are committed to market. I think the 2020, we have seen very good news and positive signs. In 2021, we'll see the results. I think we are going to have good news coming from Australia. I don't think that's on the table.
Okay, perfect. Thank you. Thank you very much.
Another reminder, to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. That's star and one, if you wish to ask a question. Your next question comes from the line of Beatriz Rodríguez from GVC.
Hi. Just a few questions. The first one is, in case the business of Australia doesn't finally pick up, have you set a deadline when you might consider selling the business? The second one is, what CapEx levels do you expect for the year? The 50% of maintenance CapEx that you have not invested in 2020, do you plan to carry it out during 2021? Finally, how do you think you will be affected by the fact that during the pandemic, people have become accustomed to not using cash? Do you think that when normality is back, the use of cash will also be recovered? Thank you.
Thank you. I think I answered the first question before. I think that we'll have good news from Australia 2021, in which we'll see the results of the work done in 2020. On the CapEx, we are going to be very much trying to optimize the infrastructure one. On the client CapEx, I think it's going to pick up because, I think we are seeing a quite strong start of the year on new products. On the question on cashless or change of habit in society, I think we have very two different regions. We have Latin America, in which we have not seen major change. Even in the hardest lockdown periods, we have seen how cash has performed quite well, and we can see it's a strong need of the population.
We have another region, which is Europe, mainly, in which we have seen that there has been some changes in the habits of the population. I think that it's been an acceleration of what is the mix between credit cards and cash. I think it has been stabilized in the last few months. We have seen that. We are following those KPIs every month, and it has been stabilized for the last four or five months in all markets. Even in the last one month, one month and a half, it has picked up again, the use of cash compared to cards or other methods of payment. We understand that Europe is going to pick up when the activity levels and the consumption comes back. The levels of the mix payments will be two points behind of what they were before the pandemic. Okay?
Okay. Thank you very much.
We currently have no further questions. Another reminder, to ask a question, please press star and one on your telephone keypad. We now have a question from the line of Matija Gergolet from Goldman Sachs.
Yes, hello. Good morning. Two questions for me. One is a follow-up on the evolution of cash usage in society. When you say that you see a two percentage points shift in the mix of uses of cash. What does that imply, say, revenues relative to 2019? Is it like a -5%, -10% compared to those levels? Just approximately, if you could give us some guidance as a run rate. The second question is really just a question about the industry's evolving and one of your competitors. Loomis is launching Loomis Pay, which seems to be a broad-based omni-channel offering to the customers that also use cash. Are you looking into this to potentially offer something similar to your customers? Do you see a value proposition in this offering, or could it be you're not really looking at it? Thank you very much.
Thank you, Matija, for the question. On the first one, as we said, we have two regions. On the first region, we are not going to see any change, and that's what we are forecasting. On the second region, in Europe, we are trying to work in the recovery of the full volume of sales, but pretty dependent on new products. That links to the second question. I think the new products are going to play a very strong influence in the next few months. I think that you are going to see some good news from our side on the three main products in which we are working. The first one would be the Smart Cash, in which, even during the COVID-19, we have grown 24% in the number of machines.
Now it's being sold as a service, and I think we are getting very good news every day, even under the circumstances that we are living. I think we are going to have good news on that front. I think the second one, on the ATM front, we also think we are going to be able to grow faster than we've done so far. I think there's going to be a new need in the market for ATM outsourcing, coming from the banks. I think this is something that we are going to see some good news in the next few months. Then on the last one, which is the bank branch outsourcing, I think this is a product in which we are putting a lot of effort, and we are starting to get some results.
I think that also we are going to have very good news in this 2021 on this product as well. I think, as we said, pretty rapid recovery in Latin America, slower recovery in Europe, and some of this recovery will come from new products. This new products, as we said, Smart Cash, very strong growth on it, ATMs and bank branch outsourcing.
Okay. Yeah. Thank you very much.
Star and one if you wish to ask a question. There are no further questions. Please continue.
Thank you very much for your time. I would like to finish reinforcing our message that despite the current environment in which we have seen a drop in turnover of almost 16%, we have been able to achieve a 14.2% EBITDA margin after restructuring cost. A generation of EUR 161 million that have allow us to devote more than EUR 100 million to M&A, mainly in obtaining new capabilities for the growth in new products. We firmly believe that we have a more agile, more efficient, more transformed, and more digitized company. What is better prepared to capture growth opportunities that the market is ready to offer. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may all disconnect.