Ladies and gentlemen, thank you for standing by, and welcome to the Prosegur Cash Financial Year twenty twenty 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, 02/26/2021. I would now like to hand the conference over to your first speaker today, Pablo Della Morena.
Please go ahead, sir.
Thank you. On behalf of all the Password Gas team, I would like to welcome you to our twenty twenty full year results review. This presentation will be led by our CEO, Jose Antonio Lassanta our CFO, Javier Herrera and myself. We estimate it will last around twenty five 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 and 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 prerecorded and is available via webcast on our corporate webpage. Now, before turning the call over to Jose Antonio, let me comment some relevant news regarding the use of cash. First, I would like to point out a new study coming from the DNV, the Dutch Central Bank, stating that there is a social need for cash, but that the cleaning usage is jeopardizing the existing infrastructure.
The DNV emphasizes that a specific attribute of cash is 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 and also that it enables transactions without third party intermediation. Therefore, the institution considered that cash must remain accessible and available.
Second, let's analyze the European Central Bank stance regarding the cashless initiative launched last December by the Italian government. This cashback initiative offers an automatic refund from the state to citizens making in store purchases with a payment card or a smartphone app. And it has been implemented as part of an ongoing campaign to discourage exacerbation. However, the ECB has complained that the program is disproportionate and undermines the neutral approach to payments. Central Bank also mentioned that creates a distortion within the European internal market.
Third, 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 10,000 has been voted out by the Australian Senate as may saw it as a limitation of the freedom to use cash and to protect the financial privacy. Finally, just a few comments in relation to the interview that former MasterCard CEO gave to debt journalist, Whitney Pennington. Mr. Tanga 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 point out that there are people who rely on cash because they are in bank or under bank, 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.
And 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 Jose 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 have to deal with not only with the sanitary crisis derived from the COVID-nineteen, 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 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 costs 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 and 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 €4,000,000 to €29,000,000 On the consolidation front, I would like to highlight that we have invested €94,000,000 in several transactions to reinforce our leadership in the traditional business and enlarge our portfolio of new solutions. Integration of these newly acquired companies and assets has now been completed.
During the quarter, we have made some deferred payments, thus reducing the amount of our future financial commitments. And 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 2020, continued to outperform the traditional business. This reported figure represented a meritorious increase of two sixty 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. And 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 161,000,000 and to carry on deleveraging 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 and Poor's, which remain at BBB with a stable outlook. Also last December, the Board of Directors proposed a new dividend of close to €60,000,000 Let me now spend some minutes discussing the evolution of our sales and operating margins and our performance in terms of M and 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 capture additional services in all regions and the inorganic growth derived from our M and 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 and A activity, which was very prolific in the 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 and 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 €283,000,000 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 €17,000,000 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, Jose Antonio. Latin America, where the COVID-nineteen and the currency depreciation continued to negatively impact the comparison versus last year, our sales reached €973,000,000 an 18% drop versus the same period in 2019. However, 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 going at double digit rates in local currency terms and amounted to €171,000,000 This figure represented at 17.5 percent of our total Latin American sales, a 130 basis points improvement versus the 16.2% posted a year ago.
On the profitability side, the EBITA margin excluding the restructuring cost ended in €322,000,000 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 now to Europe, our sales ended in €436,000,000 a 14% decrease versus last year, which is fully explained by the lockdowns and the deconsolidation 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 €99,000,000 representing 22.7% of our European sales, an increase of 5% versus last year figures.
EBITDA margin improved during the second half of the year reaching €7,000,000 in absolute terms and 1.6% in relative terms, excluding the restructuring cost. Nevertheless, the profitability of the region remained heavily penalized by lower activity versus 2019. Let's review now our performance in Asia Pacific. Our sales amounted EUR 99,000,000, a decrease of 6% versus a year ago. This figure, partially affected by the confinements implemented to counter the pandemic, has been improving around 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 $15.00 8,000,000, 16.2% less than the previous year. This is the result of a total negative impact of minus 17.9%, coming from the combination of currency depreciation and the effect of applying IFRS '29 and 2021, 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, inorganic growth, partially diluted by the deconsolidation of France and Mexico, kept yielding positive results and accelerated to 1.6% due to the M and A activity accomplished during the year.
On the profitability side, our reported EBITA margin ended in €185,000,000 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-nineteen and the EUR 29,000,000 incurred to restructure 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. But 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 EBITA margin metric that excludes the capital gains derived from our divestments in 2019 and the restructuring costs in 2020 reached EUR $214,000,000 and fourteen point two percent over sales, narrowing the gap versus last year to a decrease of 13.3% on absolute figures and two eighty basis points in relative terms. Below the EBITA line, we have booked a higher than initially expected amortization expense as in a prudent approach, we have decided to write off €27,000,000 of intangibles and goodwill in Australia.
Our financial results posted net expenses of €46,000,000 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 161,000,000 by the December, which means a stable cash conversion ratio of 74% and an implied free cash flow yield of 9%, if we consider our last twelve 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-nineteen 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 EUR34 million to our cash flow generation. And 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 and A payments reached €108,000,000 and were a combination of cash outflows from deferred payments and new M and 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 60,000,000 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 $672,000,000, a EUR 42,000,000 sequential reduction versus the figures reported in September and an €88.85000000 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 cost 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. Therefore, 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 Jose 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 attention of our company to a more volatile and complex environment. And 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, 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-nineteen. 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. And all these 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.
And 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 and 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 webpage, let me summarize our main pillars.
First, regarding our employees, our aim to reduce serious work accidents to zero and to increase the employability of our workers through the Prosegur's corporate 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 resicable materials to reduce plastic consumption. We are also expanding our portfolio of services, increasing the penetration of our new solutions, which are will allow us to reduce our emissions. And 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 and A session.
Your first question comes from the line of Alberto Espolocin from JP Capital.
Good morning. Thank you for taking my questions. I have two actually. First, you added EUR 4,000,000 of rest of thing costs in this quarter. Do you expect any additional rest of thing costs in 2021?
And second, could you please elaborate a bit more on the €27,000,000 write off registered in the quarter in Australia?
Thank you, Alberto, for the question. The on the first one, on the restructuring cost, we really believe we have fully booked all the restructuring cost 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 at this moment. On the second question on the Australia write off, we thought that given the situation on the 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 main contracts or two major contracts, but we are still ramping back the the sales and and really, the pandemic has not allowed us to see the results on the on the p and l. Hopefully, we'll see them on during the next year. We are making efforts to to have a linear restructure that accommodates to the to the new contract. Hopefully, we are gonna see it in in '21. We are applying And we are we are still competing for other new contracts that could come.
But if the pandemic had not occurred, we would be on a very close to the breakeven on a on a running our running side. So now I think we are very committed to to the market and really, and we think we in 2021 will 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 as far as market as you do with France?
We are committed to Margaret, I think the 2020, we have seen very good news and positive signs. In 2021, we'll see the the results. I think they are gonna be they're gonna have good news coming from Australia. So I don't think that's on on the table.
Okay. Perfect. Thank you. Thank you very much.
If you wish to ask a question. Your next question comes from the line of Patrice Rodriguez 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?
And finally, how do you think you will be affected by the fact that during the pandemic, people have become accustomed to not use using gas? Do you think that when our market is back, the use of CAS will also be recovered? Thank you.
Thank you. Yeah. I think I I answered the first question before I think that we'll see we'll have good news from Australia 2021 in which we'll see the results of the of the work done in 2020. On the CapEx, we are gonna be very very much trying to optimize the infrastructure, one. On the client CapEx, I think we are going to it's going to pick up because I think we are seeing quite strong start of the year on new products.
On the question on cashless or change of habits in society, I think we have very two different regions. We have Latin America in which we have not seen a major change. Even in the hardest lockdown periods, we have seen how cash has performed quite well. And we can see a strong need of the population. And we have another region, which is Europe mainly, in which we have seen that there has been some 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. And that has and 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, five months in our markets. And even in the last one month, one point months, it has picked up again the use of cash compared to to cards or other methods of payment.
So we understand that the the that Europe is gonna pick up when the activity levels and the consumption comes back. And the the the the levels of of of of the mix payments will be, like, two points behind of what they were before the pandemic.
Okay? Okay. Thank you very much.
We currently have no further questions. 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, you know, say, evolution of, say, cash usage in in in society.
When you say, you know, that you see a two percentage point shift in the mix of uses of cash. So what what does that imply, say, this will say revenues relative to 02/2009? So is it, like, a minus five, minus 10% compared to those levels? Just just approximately, if you could give us some some guidance as a run rate. And and the second question is really just a question about, you the industry is evolving, and one of your competitors, so Lumis, is launching Lumisperi, which seems to be like a, you know, a broad based omnichannel offering to to to the customers that also use cash.
Are you having any are you looking into this to potentially offer something similar to your customers? You know, do you see, like, a value proposition in in this offering? Or for the time being, you're not you're not really, say, looking at it? Thank you very much.
Thank you, Maria, for the for the question. On on the first one, I think that we would like to that we need as we said, we have two regions. On the first region, we are not gonna 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. And 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 gonna see some good news from our side on the three main products in which we are working. The first one would be the SmartCast in which even during the pandemic, we have grown 24% in a number of machines. So now it's been sold as a service. And I think we are getting very good news every day, even under the circumstances that we are living.
So I think we are and we are gonna have good news on on that front. I think the second one on the ATM front, we also think we are gonna be able to grow faster than we have done so far. I think there's gonna be a need in the a new need in the market for ATM outsourcing coming from the from the banks. And I think this is something that we are gonna are gonna see some good news in the next few months. And then on the last one, which is the bank branch outsourcing in which I think this is a product in which we are putting a lot of effort.
We are starting to get some results. I think that also we are gonna have very good news in this 2021 on this product as well. So I think, as we said, a very rapid recovery in Latin America, slower recovery in Europe, and some of this recovery will come from new products. And these are new products, as we said, SmartCast, very strong growth on it, ATMs, and bank branch outsourcing. So Okay.
Okay.
Yeah.
Yeah. Thank you very much.
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 costs and a generation of €161,000,000 that have allowed us to devote more than €100,000,000 to M and 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, 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.