Tesmec

Investor Presentation • Mar 12, 2021

Integrated Solutions Provider

2020 Results Presentation

• 1. Key Market trends & Corporate strategy
• 1. 2020 Business highlights & Results
• 1. Outlook
• 1. ANNEX

1. Key Market trends & Corporate strategy

Green and Digital Technology trends drive market opportunities

Note: * increase in average annual investment to reach Paris Accord targets compared to current trends Source: IEA, WEO, 2019

INVESTMENT & DIVERSIFICATION

2020-2023

THE NEXT DEVELOPMENTS

New Business Model

• INTEGRATED SYSTEMS
• DIGITAL SOLUTIONS
• FULL SERVICES

to increase recurring revenue streams

Strategic drivers

• DIGITALISATION
• SUSTAINABILITY
• ENERGY TRANSITION

Business strategy

ENERGY

STRINGING ENERGY AUTOMATION

INNOVATIVE WORKING METHODOLOGIES for grid maintenance

Green technologies for SUSTAINABLE JOBSITES

AUTOMATING process for new line construction

INTEGRATED and OPTIMIZED approach to underground HV links

DIGITAL solutions and Substation Automation SYSTEMS

CYBERSECURITY requirements for Grid safety

IOT integration for energy data analytics VIRTUALIZATION of technological application on multi purpose platform

CLEAN & FAST SOLUTIONS for underground energy cable and fiber optic networks

DIGITAL & CONNECTED systems

Autonomous Mining machine (SMART Mining)

Complete package of INTEGRATED SERVICES (sales, wet/dry rental, training, mapping, survey, fleet management…)

TRENCHERS RAILWAY

Working vehicles CERTIFIED as passenger trains in EU

Advanced technologies for railway ELECTRIFICATION

AUTOMATED & CLOUD CONNECTED vehicles

Artificial Intelligence for UNMANNED DIAGNOSTIC & BIG DATA MANAGEMENT

Green approach with HYBRID & BIMODAL SOLUTIONS

2. 2020 Business highlights & Results

2020 highlights

CORPORATE

▪ New ERP project implementation and go live for Tesmec SpA ▪ Cost saving actions

maintenance methodologies: ▪ Growing business on cybersecurity protection and control solutions

Great opportunities in West Africa in the surface mining industry (bauxite..)

refurbishment (working methodology)

GROUP (€ mln)	2020 proforma	2020	2019 proforma	2019	Delta vs. Proforma 19-20	Delta vs. 19-20
REVENUES (1)	172,8	170,6	199,6	200,7	-13,4%	-15,0%
EBITDA (2) (3) % on Revenues	22,9 13,2%	21,0 12,3%	30,0 15,0%	27,4 13,7%	-23,8%	-23,6%
EBIT (4) % on Revenues	(0,6) -0,3%	(0,9) -0,5%	6,4 3,2%	8,4 4,2%
Differences in Exchange (5) % on Revenues	(3,3) -1,9%	(3,6) -2,1%	(3,6) -1,8%	0,8 0,4%
PROFIT (LOSS) BEFORE TAX % on Revenues	(8,7) -5,0%	(9,0) -5,3%	2,0 1,0%	4,2 2,1%
NET INCOME/(LOSS) % on Revenues	(6,5) -3,8%	(6,8) -4,0%	1,6 0,8%	3,0 1,5%
GROUP (€ mln)	2020 proforma	2020	2019 proforma	2019	Delta vs. Proforma 19-20	Delta vs. 19-20
NFP ante IFRS 16	82,3	82,3	106,9	98,5	23,0%	16,4%
NFP post IFRS 16	104,4	104,4	130,9	118,0	20,2%	11,5%
NFP without Share capital Increase	129,1	129,1	130,9	118,0

* The pro-forma results include the result of the 4Service Group on the annual basis, instead of the results achieved within the perimeter of the Tesmec Group from the date of first consolidation (April 23, 2020)

Achieved the target communicated during the process of the share capital increase

(1) Revenues: (mainly TRS Sales) affected by the actions taken by public authorities to contain the spread of the COVID-19. After the slowdown and lockdown phases, the Group restarted its activities in May, reaching full operations during June and generate around 100 M€ of revenues in the 2H

(2) EBITDA: negative impact by the drop of TRS sales and the performance of the railways business due to the production of low margin vehicles. Positive impact thanks to Rental activities with high margin and cosst reduction

(3) Efficiency: Starting from March, the Group undertook all the necessary actions to contain its fixed costs. This actions will impact the 2H, too. The Group collected all the possible operating grants in the different countries around the world

(4) Impacted by 4service's fleet depreciation

(5) Negative impact of Forex losses (USD & related currencies), 3,3 M€ are "not realized" forex losses.

ENERGY	2020	2019	Delta %
Revenues	43,8	44,2	-1,0%
EBITDA	5,3	5,6	-6,2%
% on Revenues	12,0%	12,6%

• > The decrease is related to the lockdown and slowdown in the 1H
• > Improved 3Q-4Q resiliency of the Energy sector and the better performance of the Energy Automation, Euro 10,0 million of revenues in the 2H and a better margin mix
• > The confirmed order backlog was Euro 76,2 million of which Euro 54,0 million from the Energy Automation

TRENCHERS	2020	2019	Delta %
Revenues proforma	102,6	125,3	-18,1%
EBITDA proforma	14,4	16,6	-13,5%
% on Revenues	14,0%	13,3%

• > Drop of the sales in the first half and slowdown of the USA market of the 2020.Q4, due to political instability linked to the election
• > More impact on TRS sales than rental
• > Better % EBITDA thanks to the integration of the rental activities
• > The confirmed order backlog was Euro 84,6 million

RAILWAY	2020	2019	Delta %
Revenues	26,4	31,1	-15,2%
EBITDA	3,2	5,2	-38,2%
% on Revenues	12,2%	16,8%

• > The decrease is mainly due to the slowdown / lockdown, mitigated by the relaunch of activities in May and the delay of the new tenders acquisition or tenders confirmation with high margin.
• > EBITDA is affected by low margins vehicles
• > The confirmed order backlog was Euro 121,6 million, thanks the confirmation of the Euro 50 million of the award of the RFI Tender, already communicated in the 2021.Q2

BACKLOG

2020.FY Revenues: sales spread over different geographical area

INTERNATIONAL SCALE, FOCUS ON EU-USA

IMPORTANCE OF THE ITALIAN MARKET

2020.FY Proforma EBITDA

€ mln

2020.FY Financial Results

2019

Financial Information (€ mln)	2020	2019
Net Working Capital	64,3	73,0
Non Current assets	76,7	66,8
Right of use - IFRS 16/IAS 17	22,8	20,1
Other Long Term assets/liabilities	10,0	4,2
Net Invested Capital	173,8	164,2
Net Financial Indebtness	82,3	98,5
Lease liability - IFRS 16/IAS 17	22,1	19,5
Equity	69,4	46,2

Decrease of NWC (mainly for the work in progress and receivables reduction), increase of the asset by the change of Group perimeter (4Service Group) and decrease of NFP due the decrease of the NWC and share capital increase

2020

2020.FY Working Capital evolution

€ 60,8 mln 2019 € 73,0 mln After the increase of the NWC due to the impact of the Covid 19 in the 1H, the Group recorded a reduction of the inventories and working in progress and a better balance of DPO - DSO

2020

15

2020.FY Net Financial Position Evolution

€ mln NET FINANCIAL POSITION

2020.FY Net Financial Position Evolution

NET FINANCIAL POSITION

* From 1 st January 2019, the new IFRS 16 has been introduced, the impact in term of NFP is around 23,1 M€, otherwise the NFP would have been around 82,3. Since April the NFP included the financial debt from the acquisition of 4service around 5,9 M€.

3. Outlook

Outlook

STRINGING ENERGY AUTOMATION ENERGY

Expected positive outlook driven by "Green Deal" on key markets such as US, Western Europe and Australia

Innovation and optimization of newly developed solutions

Portfolio rationalization and industrial planning for stock reduction

Strong growth perspective based on high visibility significant market opportunities

Profitability improvement coming from

• Product mix
• Economies of scale

COVID impact on lead times and not on new projects

Further focus on recurring revenues through the offer of rental business model

Strategic positioning in key and growing sectors such as:

• Telecommunication: higher connectivity request
• Mining: increasing demand of raw materials
• Renewable: push on green energies

TRENCHERS RAILWAY

Increasing revenues thanks to:

• Strong backlog (121.6 M€)
• Opportunities in EU, tenders pipeline

Higher margins thanks to:

• new products in the portfolio
• diagnostic solutions
• services growth

R&D and product development in line with the latest technological trend (green and diagnostic)

	2019pf	2020pf	2021		2023
TURNOVER	199.6 M€	172.8 M€	~ 220 M€	>> Significant performance of the Energy Automation segment; Stringing segment back to historical performances >> Focus on recurring revenues (rental & services)	~ 275 290 M€ cagr : 8.5%~10.0% 19-23
				>> Growth in each business line
EBITDA	30,0 M€	22,9 M€	>16%	>> Better mix of products & systems, premium price policy, impact of new high margin activities such as rental and hi-tech solutions >> Rationalization and standardization of the products portfolio	~ 53 58 M€ cagr : 17.0%~18.0% 19-23
				>> Broadly stable fixed costs
NFP / EBITDA	4.4x	104,4 M€	improvement	>> Net working capital improvement and efficiency actions on inventory >> Optimization of credit management policies	improvement
				>> 2020-2023: Cumulated Capex in 4 years 60 M€, progressive reduction to 5% of the CAPEX/Revenues	21

INVESTMENT PLAN ACCELERATION: RIDING THE WAVE OF GREEN AND DIGITAL TECHNOLOGY

Summary 2020.FY Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	2020	2019	Delta vs 2019	Delta %
Net Revenues	170,7	200,7	(30,0)	-15,0%
Raw materials costs (-)	(77,4)	(88,0)	10,6	-12,1%
Cost for services (-)	(30,2)	(35,4)	5,2	-14,8%
Personnel Costs (-)	(48,5)	(52,6)	4,1	-7,8%
Other operating revenues/costs (+/-)	0,2	(4,7)	4,9	-104,4%
Non recurring revenues/costs (+/-)	0,0	0,0	0,0	na
Portion of gain/(losses) from equity investments evaluated using the equity method	0,5	0,2	0,3	107,1%
Capitalized R&D expenses	5,8	7,2	(1,4)	-20,0%
Total operating costs	(149,6)	(173,2)	23,6	-13,6%
% on Net Revenues	(88%)	(86%)
EBITDA	21,1	27,4	(6,4)	-23,3%
% on Net Revenues	12%	14%
Depreciation, amortization (-)	(21,8)	(19,1)	(2,8)	14,5%
EBIT	(0,8)	8,4	(9,2)	-109,3%
% on Net Revenues	0%	4%
Net Financial Income/Expenses (+/-)	(8,2)	(4,2)	(4,0)	95,6%
Taxes (-)	2,2	(1,2)	3,4	-282,1%
Minorities	(0)	(0)	(0,0)
Group Net Income (Loss)	(6,8)	3,0	(9,7)	n/a
% on Net Revenues	-4,0%	1,5%

Summary 2020.FY Balance Sheet - Appendix B

Balance Sheet (€ mln)	2020	2019
Inventory	74,2	69,9
Work in progress contracts	11,2	16,3
Accounts receivable	60,7	67,9
Accounts payable (-)	(61,4)	(57,5)
Op. working capital	84,7	96,7
Other current assets (liabilities)	(20,4)	(23,6)
Net working capital	64,3	73,0
Tangible assets	49,8	42,5
Right of use - IFRS 16/IAS 17	22,8	20,1
Intangible assets	22,5	20,4
Financial assets	4,4	3,9
Fixed assets	99,5	87,0
Net long term liabilities	9,3	4,2
Net invested capital	173,1	164,2
Cash & near cash items (-)	(70,4)	(17,9)
Short term financial assets (-)	(14,5)	(12,1)
Lease liability - IFRS 16/IAS 17	22,1	19,5
Short term borrowing	85,8	79,8
Medium-long term borrowing	77,3	48,7
Net financial position	100,3	118,0
Equity	69,5	46,2
Funds	169,8	164,2

Notes

The pro-forma results were prepared for illustrative purposes only, and were obtained by making appropriate pro-forma adjustments to the historical data to retroactively highlight the effects of the 4Service Group's transaction, as if this transaction had occurred on 1st January 2020, instead of on 23 April 2020. The pro-forma results therefore include the result of the 4Service Group on the half-year basis, instead of just the results achieved within the perimeter of the Tesmec Group from the date of first consolidation (April 23, 2020).

Considering the uncertainty linked to the spread of the COVID-19 virus and the impacts on the global economy, the targets set by the Management may be susceptible to changes. These targets are set in the assumption that the pandemic situation remains stable and / or better in Europe and that it does not get worse in other areas of the world, such as the United States and Latin America

The plan doesn't include any cash in from share capital increase. 50 M€ of credit lines already collected from financial institutions

Disclaimer

The manager responsible for the preparation of the corporate accounting documents, Marco Paredi, declares, pursuant to article 154-bis, paragraph 2, of Legislative Decree No. 58/1998 ("Consolidated Law on Finance") that the information contained in this press release corresponds to the document results, books and accounting records. Note that in this press release, in addition to financial indicators required by IFRS, there are also some alternative performance indicators (e.g. EBITDA) in order to allow a better understanding of the economic and financial management. These indicators are calculated according to the usual market practice.

This press release contains some forward looking statements that reflect the current opinion of the Tesmec Group management on future events and financial and operational results of the Company and of its subsidiaries, as well as other aspects of the Group's activities and strategies. These forward looking statements are based on current expectations and assessments of the Tesmec Group regarding future events, as well as on the Group's intentions and beliefs. Considering that these forward looking statements are subject to risk and uncertainty, the actual future results may considerably differ from what is indicated in the above forward looking statements as these differences may arise from several factors, many of which lie beyond the Tesmec Group's ability to accurately check and estimate them. Amongst these - including but not limited to - there are potential changes in the regulatory framework, future developments in the market, price fluctuations and other risks. Therefore, the reader is asked to not fully rely on the content of the forecasts provided as the final results could significantly differ from those contained in these forecasts for the reasons indicated above. They have been included only with reference up to the date of the above-mentioned press release. The prospective data are, in fact, forecasts or strategic targets established within the corporate planning.

The Tesmec Group does not assume any obligation to publicly disclose updates or amendments of the forecasts included regarding events or future circumstances that occur after the date of the above-mentioned press release. The information contained in this press release is not meant to provide a thorough analysis and has not been independently verified by any third party. This press release does not constitute a recommendation for investment on the Company's financial instruments. Furthermore, this press release does not constitute an offer of sale or an invitation to purchase financial instrumentsissued by the Company or by its subsidiaries.

www.tesmec.com