Tesmec

Investor Presentation • Aug 5, 2020

• Stringing
• Energy Automation
• Railway
• Trencher

Integrated Solutions Provider

2020.1H Results Presentation

www.tesmec.com

Strategic overview >

• 2020.1H Business highlights and Results >
• Outlook 2020-2021 >

Strategic overview

TESMEC Group strategic market segments

• ENERGY
• TELECOM
• INFRASTRUCTURES

Post COVID-19 approach

Further focus on development guidelines:

• CONNECTIVITY IS A MUST (5G opportunities, digitalization)
• xxx ▪ SAFETY-FIRST (Diagnostic, Artificial Intelligence, Cybersec)
• ENVIRONMENTAL IMPACT (Energy transition)

Focus on key geographic areas: USA, China and New developed Countries

st 1 PHASE xxx Health emergency	Different impacts on the several businesses and key countries of the Group Stop of the production activities in Europe No impacts in the Tesmec markets/sector but delays due to the production and logistic lock down
nd 2 PHASE xxx Reopening	Essential services granted in smart working modality Reopening of production activities The gears of the reopening will be impacted by the Government Rules.
rd 3 PHASE xxx Recovery & growth	Recovery and growth thanks to new business opportunities and relevance of Tesmec key drivers: safety, connectivity and sustainability
Summary Management xxx Actions	▪ Efficiency and flexibility actions adopted ▪ Actions to maintain employment levels ▪ Investments in key infrastructure sectors

COVID-19 outbreak as a global emergency - Extraordinary measures to fight the pandemic

	- Slowdown activities from end of February and block of the deliveries	ITALY:
Slowdown, block & lockdown of production activities	- Grassobbio, Endine, Sirone, Fidenza and Padova: stop from 23 March to 4 May	State of emergency
	- Patrica and Monopoli: stop from 23 March to 12 April	triggered by
	- Durtal (France): stop from 17 March to 20 April	COVID-19
	- No stops in Alvarado plant (USA)	extended until
Safety and health measures	- adoption of all the safety and health protocols required in full compliance with the Italian Health Ministry instructions	15 October 2020
	- new procedures to enter the corporate facilities (temperature measurement)
	- push on smart working	TESMEC:
	- increase of spaces in the workplace, measures to avoid occasions of assembly of large groups, DPI and protective barriers	Flexibility and full operation
	- strong cleaning and sanitizing cycles of the premises	starting from
	- business travel restrictions	June 2020
	- specific insurance coverage for employees	Target: highest
Social and welfare initiatives	- "Solidal Hours Bank" and "Tesmec Family Solidarity Fund"	level of safety &
	- "Abitare la cura – Coronavirus " fund raising	business
	- internal communications and periodically updates to Group employees and collaborators	continuity

EQUIPMENT SUPPLIER

Design & production of trenchers able to work under extreme conditions

Sales business model

FULL-SERVICE PROVIDER

Digital and connected systems Complete package of business models (sales, rental..) >> >>

INTEGRATED VALUE CHAIN

Fiber installation & automatic laying of energy cables Wide range of surface mining segments (bauxite, gypsum, iron, potash..)

	>> CLEAN & FAST SOLUTIONS FOR EACH APPLICATION
Growth strategy	>> DIGITAL & CONNECTED SYSTEMS
	>> COMPLETE PACKAGE OF INTEGRATED SERVICES

COMPLETE TRADITIONAL OFFER

A complete package for the stringing operations

NEW DIGITAL CONCEPT

A new range of digital machines for a safe & faster jobsite >> >>

GREEN APPROACH & NEW METHODOLOGIES

New machines range full electric New methodologies for reconductoring

	>> DIGITALIZATION FOR SAFE AND EFFICIENT STRINGING OPERATIONS
Growth strategy	>> GREEN TECHNOLOGIES FOR A SUSTAINABLE JOBSITE
	>> INNOVATIVE SOLUTIONS FOR POWER GRIDS MAINTENANCE

COMPLEMENTARY SOLUTIONS

Design & production of HV solutions to strengthen the core competence in the energy automation

EQUIPMENT SUPPLIER

Complete portfolio of HV and MV solutions with solid technical support >> >>

SYSTEM INTEGRATOR

From the development of new products to the management of complex innovative projects

	>> T&D RANGE OF SOLUTIONS FOR GRID AUTOMATION
Growth strategy	>> IOT INTEGRATION FOR ENERGY DATA ANALYTICS
	>> DIVERSIFIED APPROACH BOTH ON PRODUCTS AND SYSTEMS

Tesmec Rail business

EQUIPMENT SUPPLIER

Design & production of railway solutions keeping the core competence in the catenary installation

Growth strategy

TECHNOLOGICAL PROVIDER

Certified & connected rail vehicles & services for electrification & maintenance >> >>

SYSTEM INTEGRATOR with TECHNOLOGICAL PARTNERSHIPS

Solutions for unmanned diagnostic and data management platform

>> CERTIFIED, AUTOMATED & CLOUD CONNECTED VEHICLES

>> ARTIFICIAL INTELLIGENCE FOR UNMANNED DIAGNOSTIC AND BIG DATA MANAGEMENT

>> GREEN APPROACH WITH HYBRID AND BIMODAL SOLUTIONS

• Strategic overview >
• 2020.1H Business highlights and Results >
• Outlook 2020-2021 >

Complete Business model

Full package of solutions Sales, Wide Rental Fleet, Jobsite Management

Technologies for top performances

EVO generation available on all main models (975/1150/1475)

Surface Mining Business

New markets development West Africa (Ivory Coast and Guinea)

5G & Fiber Optics

New projects, started to catch post-covid opportunities Telecommunication and Infrastructures

Worldwide webinar to introduce the green & digital technologies

New approach to face the COVID-19 situation and Strengthen customer relations during the lockdown period

Jobsite in Michigan City (Indiana) Jobsite in Morehead (Kentucky)

Increase of order acquisition 1H 2020 vs 1H2019

New sales approach:

• Digital communication tools
• New sales team in US + commercial agreement

Important projects:

• EU
• US

Very important increase of order acquisition compared to 1H 2019

Maintenance Advanced technology Full Electric Machines Introduction on USA market

Supply on awarded tenders for protection and control solutions to guarantee the maximum security and reliability of the Power Grids

Enel Market: new opportunities Russia: focus on product awareness

Continuous supplies to local players in different regions of the country

Italian Market: new opportunities for Distribution and Transmission markets

Awarded tenders for PLC & remote control solutions with supplies in H2.2020

Internationalization Domestic market

New orders and short listed in strategic projects for catenary maintenance and diagnostics (Central-East EU).

Certified vehicles for safety railway network Safety and operative continuity

EU Agency for Railways (ERA): after the authorizations achieved for 3 vehicles, Tesmec issued technical documents to register the rolling stocks in the European Register of Vehicles, according to the Rules of "4 th Railway Package".

Selected in the proposal for the award of the 3rd lot of RFI tender for the supply of solutions for the diagnostic of railway infrastructure.

Vehicles in convoy running on active line thanks to the SCMT/SSC Signalling safety system and Tesmec full maintenance service at full capacity.

GROUP (€ mln)	2020.1H* proforma	2020.1H	2019.1H	Delta vs. Proforma%
REVENUES (1)	73,0	70,8	97,5	-25,1%
EBITDA (2) (3)	9,8	8,2	12,1	-18,8%
% on Revenues	13,4%	11,5%	12,4%
EBIT	(1,4)	(1,6)	3,3
% on Revenues	-1,9%	-2,2%	3,3%
Differences in Exchange (4)	(0,7)	(1,0)	0,3
% on Revenues	-1,0%	-1,5%	0,3%
PROFIT (LOSS) BEFORE TAX	(4,9)	(5,3)	1,1
% on Revenues	-6,7%	-7,5%	1,1%
NET INCOME/(LOSS)	(3,6)	(3,9)	0,5
% on Revenues	-4,9%	-5,5%	0,5%
GROUP (€ mln)	2020.1H* proforma	2020.1H	2019 proforma	Delta vs. Proforma%
NFP ante IFRS 16	109,2	109,2	99,8	-9,5%
NFP post IFRS 16	132,5	132,5	120,4
Shareholders Loan	10,5	10,5	10,5

(2) EBITDA has been impacted by the spread of Covid-19 which caused the reduction in turnover and the consequent contraction of margins to cover fixed costs

• (3) Starting from the month of March, the Group undertook all the necessary actions in order to contain its fixed costs. This actions will impact the second half too. The Group collected all the possible operating grants in the different country around the world.
• (4) The exchange differences are negative, mainly for the depreciation of the Australian dollar, USD, ZAR & Ruble.

*The pro-forma results 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).

2020.1H Closing

1 And And Personal Property of the Company of the company of the company of the company of the county of the county of the county of the county of the first of the first of the

ENERGY	2020.1H	2019.1H	Delta %
Revenues	16,8	21,9	-23,6%
EBITDA	1,7	2,8	-38,5%
% on Revenues	10,4%	12,9%

The decrease related to the Stringing business is due to the production and logistic blocks

The slowdown in production activities and the switch of the invoicing process in July impacted the Energy Automation

The confirmed order backlog amounted to Euro 49,0 million

TRENCHERS	2020.1H	2019.1H	Delta %
Revenues proforma	43,0	59,2	-27,3%
EBITDA proforma	6,1	6,4	-3,8%
% on Revenues	14,3%	10,8%

> The integration of the rental activities mitigated the drop of the margins

Impacted by the slowdown in logistics and by the blocks of production and services. This impact has been partially balanced by the recovery phase in the second half of May

The confirmed order backlog was Euro 68,0 million as at 30 June 2020.

RAILWAY	2020.1H	2019.1H	Delta %
Revenues	13,2	16,3	-19,2%
EBITDA	1,9	2,9	-32,8%
% on Revenues	14,6%	17,5%

The decrease is mainly due to the slowdown/lockdown, mitigated by the relaunch of activities in May

The confirmed order backlog was Euro 77,2 million plus Euro 50 million of the provisional award of the RFI Tender

2020.1H

Euro/mln		1Q			2Q			1H_proforma
	2020	2019	Var.	2020	2019	Var.	2020	2019	Var.
REVENUES	34,0	49,8	-31,8%	39,0	47,7	-18,2%	73,0	97,5	-25,1%
EBITDA	4,1 12,5%	5,7 11,5%	-28,1%	5,7 14,6%	6,4 13,6%	-10,1%	9,8 13,4%	12,1 12,4%	-18,8%
EBIT	(1,3)	1,6		(0,1)	1,7		(1,4)	3,3

After the slowdown and lockdown phases, March and April, the Group restarted its activities in May, reaching full operations during the month of June and the first results from the restarting of the activities were confirmed with the growth of turnover and improvement in margins in the second quarter compared to the first quarter

Starting March, the Group took all the necessary actions in order to contain its costs with impacts also in the second half of the year, making the company structure more efficient and ensuring the working flexibility. The Group used the measures made available by the various Governments to mitigate the impacts of the spread of the pandemic

BACKLOG

(1) including the provisional award of the RFI tender for the production of diagnostic vehicles for around Euro 50 million, the backlog would be around Euro 244,2 million

2020.1H EBITDA

€ mln

5 August 2020 20

Financial Information (€ mln)	2020.1H	2019
Net Working Capital	83,3	73,0
Non Current assets	79,1	66,8
Right of use - IFRS 16/IAS 17	24,9	20,1
Other Long Term assets/liabilities	6,4	4,2
Net Invested Capital	193,7	164,2
Net Financial Indebtness	119,2	98,5
Lease liability - IFRS 16/IAS 17	23,8	19,5
Equity	50,7	46,2

2019		Increase of working capital (mainly the inventories) and fixed assets in
		the first parts of the half		2020.1H

Working Capital evolution

Mln €	2020.1H	2019.FY	Days 2020.1H	Days 2019.FY
Trade Receivables	59,8	67,9	120	122
Inventories	77,5	69,9	161	125
Work in progress contracts	17,8	16,3	37	29
Trade Payables	(50,9)	(57,5)	-106	-103
Other Current Assets/(Liabilities)	(21,0)	(23,6)	-44	-42
Net Working Capital	83,3	73,0

Increase of inventories due to the Covid period and support the growth in the second half

2020.1H € 83,3 mln

NET FINANCIAL POSITION

* From 1 st January 2019, the new IFRS 16 has been introduced, the impact in term of NFP is around 23,8 M€, otherwise the NFP would have been around 119,2. Since April the NFP included the financial debt from the acquisition of 4service around 10,2 M€.

• Strategic overview >
• 2020.1H Business highlights and Results >
• Outlook 2020-2021 >

Outlook 2020-2021

xxx FOCUS ON STRATEGIC MARKETS

TESMEC is focused in strategic market segments:

• SMART GRIDS & ENERGY TRANSITION
• 5G AND TELECOM
• INFRASTRUCTURES & RAILWAYS

xxx DEVELOPMENT DRIVERS

• ENERGY: increasing needs of "smart and digital" systems, focus on energy transition and carbon free solutions
• RAIL: push on maintenance and diagnostic of the railway network, new green motorization and high safety standard
• TRENCHERS: investment plan for modern infrastructures, global demand of connectivity that requires underground fiber optic networks

xxx ACTION PLAN

• Rationalization of costs structure and improvement of margins
• Take advantage of the liquidity measures announced by the governments
• Reinforcement of the management structure in strategic positions to face the new challenges

Strengthening the Tesmec Group

1H 2020	3Q 2020	4Q 2020
1) Shareholder loan 2) Acquisition of the Rental Business 3) Liquidity measures 4) Operating Grants 5) Starting cost reduction activities 6) Reopen/reload phase 7) Confirmed Backlog	1) Guidelines of the Business Plan will be released 2) Flexibility and full operations phase 1) Completion - Loans guaranteed by SACE ✓ investments ✓ supply chain ✓ salariesBY SACE 2) Follow-up of the cost reduction activities 3) Orders Acquisition: Railways, Energy Automation & FTTH/5G	1) Follow up on the procedures for the Share capital increase ✓ In the interest of all shareholders: minorities and main shareholders ✓ Supporting the future development 2) Reinforcement of the management structure
5 August 2020		28

New Infrastructures Projects

Middle East, Egypt

5G & Fiber Optics market development

Cleanfast in USA Demos and development

Wind Farm (Australia) Automatic cables laying system

Renewable Projects Digital & Connected systems

New features, trencher remote control Available for all TrenchTronic equipped machines

Europe Projects

Interconnection & projects to support EU Green Deal

Energy Transition and energy network reorganization

APAC Projects Growth in North America markets

Constant growth no COVID-19 impact for now

Green development: full electric range Digital Refurbishment Methodology

Development of a complete range of green equipment Safer, Cleaner & more efficient technology

Enel Market: innovative technologies available Russia: improving our position in the market

Diversification through availability of new solutions

Reinforce the perception of Tesmec as a new well-known competitive Player

Full package telecom proposal and high engineering support

Italy: Growth in the Transmission market Foreign Markets: new tender opportunities

Enlarge the markets through new collaboration

Fully electric & hybrid vehicles free of any emissions to be operated in tunnels and urban area.

INTERNATIONALIZATION

Export of technology and expertise in the key Countries worlwide

Green approach: Sustainability Platform with Artificial Intelligence to manage big data

Enabler for the optimization of the railway's infrastructure: automated elaboration data process

R&D & innovative projects

Centre of excellence for the development of maintenance & diagnostic vehicles with integrated systems

Summary 2020.1H Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	2020.1H	2019.1H	Delta vs 2019.1H	Delta %
Net Revenues	70,8	97,5	(26,7)	-27,4%
Raw materials costs (-)	(28,0)	(43,2)	15,2	-35,2%
Cost for services (-)	(13,4)	(17,9)	4,6	-25,5%
Personnel Costs (-)	(23,3)	(25,6)	2,3	-9,1%
Other operating revenues/costs (+/-)	(0,9)	(2,3)	1,4	-59,3%
Non recurring revenues/costs (+/-)	0,0	0,0	0,0	na
Portion of gain/(losses) from equity investments evaluated using the equity method	0,1	(0,1)	0,2	-194,3%
Capitalized R&D expenses	2,9	3,8	(0,9)	-24,6%
Total operating costs	(62,6)	(85,4)	22,7	-26,6%
% on Net Revenues	(88%)	(88%)
EBITDA	8,2	12,1	(3,9)	-32,5%
% on Net Revenues	12%	12%
Depreciation, amortization (-)	(9,7)	(8,8)	(0,9)	10,2%
EBIT	(1,6)	3,3	(4,8)	-147,7%
% on Net Revenues	-2%	3%
Net Financial Income/Expenses (+/-)	(3,7)	(2,1)	(1,6)	76,4%
Taxes (-)	1,4	(0,5)	1,9	-360,8%
Minorities	(0)	(0)	(0,0)
Group Net Income (Loss)	(3,9)	0,6	(4,5)	n/a
% on Net Revenues	-6%	1%

Summary 2020.1H Balance Sheet - Appendix B

Balance Sheet (€ mln)	2020.1H	2019
Inventory	77,5	69,9
Work in progress contracts	17,9	16,3
Accounts receivable	59,8	67,9
Accounts payable (-)	(50,9)	(57,5)
Op. working capital	104,3	96,7
Other current assets (liabilities)	(21,0)	(23,6)
Net working capital	83,3	73,0
Tangible assets	53,2	42,5
Right of use - IFRS 16/IAS 17	24,9	20,1
Intangible assets	21,7	20,4
Financial assets	4,1	3,9
Fixed assets	103,9	87,0
Net long term liabilities	6,4	4,2
Net invested capital	193,7	164,2
Cash & near cash items (-)	(25,1)	(17,9)
Short term financial assets (-)	(13,1)	(12,1)
Lease liability - IFRS 16/IAS 17	23,8	19,5
Short term borrowing	97,4	79,8
Medium-long term borrowing	59,9	48,7
Net financial position	143,0	118,0
Equity	50,7	46,2
Funds	193,7	164,2

Disclaimer

The Manager responsible for preparing the company's financial reports, Marco Paredi, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Tesmec S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forwardlooking statements.

This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.

In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.