Landi Renzo

Earnings Release • Sep 7, 2017

H1 2017 FINANCIAL RESULTS

Stefano Landi Chairman

Cristiano Musi CEO

					Highlights
M€	H1 2017	H1 2016	Delta M€	Delta %	• Revenues increase driven
Revenues	103,5	89,3	14,2	15,9%	primarily by the Automotive
EBITDA Adj.	6,4	1,9	4,5	N/A	sector (both in the OEM and
% on Revenues	6,2%	2,1%			After-market sales channels)
EBITDA	4,5	-1,6	6,0	N/A	turnover increase and from initial
% on Revenues	4,3%	-1,7%			fixed costs reduction (delta with
EBIT Adj.	-1,5	-6,1	4,6	75,3%	EBITDA due to ongoing
% on Revenues	-1,5%	-6,9%			restructuring cost)
EBIT	-5,6	-9,6	4,0	42,1%	• EBIT is negatively effected for
% on Revenues	-5,4%	-10,7%
Financials	-3,0	-2,0	-1,0	50,0%	(Labs sale)
EBT	-8,6	-11,6	3,0	26,1%
Taxes	0,0	-1,2	1,2	N/A	• Financial charges have
Net Income	-8,6	-12,8	4,1	32,5%	increased mainly due to non monetary exchange losses from
	-8,3%	-14,3%

Highlights

• Revenues increase driven primarily by the Automotive sector (both in the OEM and After-market sales channels)
• Adjusted EBITDA benefits from turnover increase and from initial fixed costs reduction (delta with EBITDA due to ongoing restructuring cost) 2,1 M€ by the non-monetary loss
• EBIT is negatively effected for on the assets disposal to AVL (Labs sale)
• Financial charges have increased mainly due to nonmonetary exchange losses from valuation

Revenues breakdown - based on new Group structure

AUTOMOTIVE SECTOR

GAS DISTRIBUTION AND COMPRESSED NATURAL GAS SECTOR

Profit & Loss breakdown

M€, %
Profit & Loss	Automotive Sector	Gas Distrib. and Compr.Nat.Gas Sector	Sound Sector	H1 2017
Revenues	87,3	9,9	6,4	103,5	87,3
EBITDA Adj.	6,9	-1,1	0,6	6,4
% on Revenues	7,9%	-10,8%	9,4%	6,2%
EBITDA	4,9	-1,1	0,6	4,5
% on Revenues	5,6%	-10,8%	9,4%	4,3%
EBIT Adj.	-0,1	-1,7	0,3	-1,5
% on Revenues	-0,1%	-17,2%	4,9%	-1,5%
EBIT	-4,2	-1,7	0,3	-5,6		-1,1
% on Revenues	-4,8%	-17,2%	4,9%	-5,4%
• Automotive Sector –		excluding net of extraordinary costs and loss			0,1
		on labs sales to AVL improves almost to breakeven			4,1
•		Gas Distribution and Compressed Natural Gas Sector –		in 2Q
turnover up to 6,8M€		(compared to 3,1M€	in Q1) with EBITDA in		-4,2
balance
• Sound Sector -	no significant impact				Automotive Sector	Gas Distrib. and Compr.Nat.Gas Sector

• on labs sales to AVL improves almost to breakeven
• balance

Profit & Loss breakdown Actual H1 2017 vs H1 2016

	M€, %
	Profit & Loss	Automotive Sector	Gas Distrib. and Compr.Nat.Gas Sector	Sound Sector	H1 2017	Highlights
	Revenues	87,3	9,9	6,4	103,5	• Automotive Sector: market
	EBITDA Adj.	6,9	-1,1	0,6	6,4	growth and market driven
	% on Revenues	7,9%	-10,8%	9,4%	6,2%	approach positively impact on
	EBITDA	4,9	-1,1	0,6	4,5	the turnover (both in the OEM
	% on Revenues	5,6%	-10,8%	9,4%	4,3%	and After-market sales channels)
		Automotive	Gas Distrib. and	Sound		• Gas Distribution and Compressed Natural Gas Sector slight underperformance, but improvement at EBITDA level
H	Profit & Loss	Sector	Compr.Nat.Gas Sector	Sector	H1 2016	compared to 2016
	Revenues	73,1	10,1	6,0	89,3	• Sound Sector, a non-core
	EBITDA Adj.	3,0	-1,4	0,4	1,9	business, revenues growth in line with expectations
	% on Revenues	4,0%	-14,1%	6,0%	2,1%
	EBITDA	-0,5	-1,4	0,4	-1,6
	% on Revenues	-0,7%	-14,1%	6,0%	-1,7%

	Sector	Compr.Nat.Gas Sector	Sector	H1 2017
					• Automotive Sector: market
					growth and market driven
					approach positively impact on
					the turnover (both in the OEM
Profit & Loss	Automotive Sector	Gas Distrib. and Compr.Nat.Gas Sector	Sound Sector	H1 2016	• Gas Distribution and Compressed Natural Gas Sector slight underperformance, but improvement at EBITDA level compared to 2016
Revenues	73,1	10,1	6,0	89,3	• Sound Sector, a non-core business, revenues growth in line
EBITDA Adj.	3,0	-1,4	0,4	1,9	with expectations
% on Revenues	4,0%	-14,1%	6,0%	2,1%
EBITDA	-0,5	-1,4	0,4	-1,6
			6,0%	-1,7%

• Automotive Sector: market growth and market driven approach positively impact on the turnover (both in the OEM and After-market sales channels)
• Gas Distribution and Compressed Natural Gas Sector slight underperformance, but improvement at EBITDA level compared to 2016

• Sound Sector, a non-core business, revenues growth in line with expectations

• Volume effect primarily driven by sales increase in the Automotive Sector

• Price / mix effect primarily due to a different channel distribution mix in the Automotive Sector
• Overhead and Payroll benefits due to initial fixed costs reduction

Balance Sheet Overview

M€, %

Balance Sheet Overview
M€, %
Balance Sheet	H1 2017	FY 2016	H1 2016	Highlights
Intangible Assets	56,8	58,9	60,0
Tangible Assets	25,3	30,5	32,9	• Disciplined approach to
Other non-current Assets	7,9	7,6	7,4	assets management
Fixed Capital	89,9	97,0	100,3	• Improvement in Net Working
Receivables	36,7	37,6	36,2	Capital positively affected by
Inventory	49,5	51,2	64,1	a change in S&OP
Paybles	-55,2	-53,1	-52,5	management that resulted in
Net Working Capital	31,0	35,6	47,8	inventory optimization
% on Revenues	15,6%	19,4%	24,3%	• Strong focus to optimize the
Other current assets/liabilities	-1,6	0,8	1,9	Capital Expenditures
Working Capital	29,4	36,4	49,7	• Tangible assets (25,3 M€) still
% on Revenues	14,8%	19,8%	25,3%
TFR and other Funds	-12,6	-12,6	-13,4	held for sale (AVL Labs)
Invested Capital	106,7	120,8	136,6	• Net Financial Position has
				been impacted by a positive free cash flow
Shareholder's Equity	45,0	45,1	58,3
Net Financial Position	61,7 106,7	75,7 120,8	78,3 136,6

• assets management
• Disciplined approach to • Improvement in Net Working Capital positively affected by a change in S&OP management that resulted in inventory optimization • Strong focus to optimize the • Tangible assets (25,3 M€) still including 5,7 M€ of assets • Net Financial Position has
• Capital Expenditures
• held for sale (AVL Labs)
• been impacted by a positive free cash flow

Working Capital evolution

	H1 2016	FY 2016	Q1 2017	H1 2017
Days Sales Outstanding	67	74	67	68
Days Payable Outstanding	119	136	112	119
Days Inventory on Hand	111	101	97	92

Net financial position evolution

16,5	Cash liquidity (+)	15,9
-75,7	NFP (*)	-61,7

* For recently financial structure optimization operation signed with banks, loans have been reclassified from short to long-term (excluding the first portion expiring on June 30, 2018)

At the end of 2016, LRG has undertaken a structured turnaround and relaunch project, which will reach its first completion by mid 2018

End of Dec. 2016		The Group appointed Mr. Cristiano Musi as CEO Elect
Jan. 2017		The Group launched a new organization structure for the "Automotive Business"
Feb. 2017		The Group launched a structured and extensive turnaround program with a top tier consulting company to improve the operational efficiency, redefine its production footprint, and streamline R&D activities to recover the marginality on the core business
Mar. 2017		The Group successfully renegotiated the debt with banks and bondholders
Mar. 2017		Mr. Landi, the major shareholder, injected 8,9 M€ of new capital in the company to sustain its growth
Apr. 2017		Mr. Cristiano Musi appointed as Director and Group CEO
Apr. 2017		Landi Renzo-AVL signed the preliminary agreement for the sales of a company branch including part of LR Technical Center and for the cooperation on R&D strategic projects on CNG, LNG and Hydrogen, that will strength innovation
May. 2017		Reinforced the Management Team both in automotive business and SAFE with experienced managers joining the Group in key positions
Q2 2017		Strong focus of the Automotive business on international growth in Asia (China and India) and start of the review of business model in US
Sept. 2017		The Group defines a new 2018 - 2022 strategic plan, with the main goal to identify the proper competitive positioning and a set of actions to sustain the revenues performance in the Automotive and Gas distribution business
		Given the set of launched actions, the Group confirms the targets

11

Landi Renzo - Company profile (06/09/2017)

BOARD OF DIRECTORS

Stefano Landi – Chairman Giovannina Domenichini – Honorary Chairman Cristiano Musi - CEO Angelo Iori – Director Silvia Landi - Director Anton Karl – Independent Director

TOP MANAGERS INVESTOR RELATIONS

STOCK VS MARKET Investor Relations Contacts: Pierpaolo Marziali Tel: +39 0522 9433 E-mail: ir@landi.it www.landirenzogroup.com

SHAREHOLDING SHARE INFORMATION

N. of shares outstanding: 112.500.000

FTSE Italia STAR

CONSOLIDATED P&L

CONSOLIDATED P&L
(thousands of Euro)
INCOME STATEMENT	30/06/2017	30/06/2016
Revenues from sales and services	103,216	89,219
Revenues from sales and services - related parties	292	71
Other revenue and income	433	559
Cost of raw materials, consumables and goods and change in inventories	-50,121	-42,240
Costs for services and use of third party assets	-25,644	-24,286
Costs for services and use of third party assets - related parties	-1,613	-1,614
Personnel cost	-20,446	-18,966
Provision, provision for bad debts and other operating expenses	-1,660	-4,297
Gross Operating Profit	4,457	-1,554
Amortization, depreciation and impairment losses	-7,948	-8,037
Loss on assets disposal	-2,060	0
Net Operating Profit	-5,551	-9,591
Financial income	48	65
Financial expenses	-2,297	-2,677
Exchange gains (losses)	-828	660
Gains (losses) on equity investments valued using the equity method	54	-64
Profit (Loss) before tax	-8,574	-11,607
Current and deferred taxes	-47	-1,159
Net Profit (loss) for the Group and minority interests, including:	-8,621	-12,766
Minority interests	-147	-225
Net Profit (Loss) for the Group	-8,474	-12,541

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET
(thousands of Euro)
ASSETS	30/06/2017	31/12/2016
Non-current assets
Land, property, plant and equipment	19,556	30,500
Development expenditure	7,516	8,420
Goodw ill	30,094	30,094
Other intangible assets w ith finite useful lives	19,216	20,359
Equity investments consolidated using the equity method	97	43
Other non-current financial assets	443	664
Deferred tax assets	7,310	6,887
Total non-current assets	84,232	96,967
Current assets
Trade receivables	35,015	35,553
Trade receivables - related parties	1,642	1,998
Inventories	49,321	49,872
Contract w orks in progress	210	1,281
Other receivables and current assets	10,310	10,082
	15,916	16,484
Cash and cash equivalents	112,414	115,270
Total current assets
Non-current assets held for sale	5,700
TOTAL ASSETS	202,346	212,237

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET
(thousands of Euro)
EQUITY AND LIABILITIES	30/06/2017	31/12/2016
Shareholders' equity
Share capital	11,250	11,250
Other reserves	42,675	59,400
Profit (loss) of the period	-8,474	-25,245
Total equity attributable to the Group	45,451	45,405
Minority interests	-435	-323
TOTAL EQUITY	45,016	45,082
Non-current liabilities
Non-current bank loans	31,401	18,687
Other non-current financial liabilities	31,098	22,812
Provisions for risks and charges	9,294	8,973
Employee defined benefit plans	2,829	3,124
Deferred tax liabilities	464	514
Total non-current liabilities	75,086	54,110
Current liabilities
Bank overdrafts and short-term loans	13,495	40,662
Other current financial liabilities	1,603	10,039
Trade payables	50,272	48,919
Trade payables - related parties	4,948	4,171
Tax liabilities	2,313	2,604
Other current liabilities	9,588	6,650
Total current liabilities	82,219	113,045
Non-current liabilities held for sale	25
TOTAL EQUITY AND LIABILITIES	202,346	212,237