Tesmec

Earnings Release • Sep 8, 2016

Partner in a changing world

1H2016 results presentation ⁸

Solutions partner for your world

Tesmec Group is leader in the market of the infrastructures related to the transport and distribution of energy, data and material.

We focus on strategic markets for the growth and modernization of every country.

Market overview & Strategic update

1H2016 Economic Results

GROUP (€ mln)	1H2016	1H2015	Delta %
Revenues	74,0	85,1	-13,0%
EBITDA	7,4	14,2	-47,9%
% on Revenues	10%	17%
EBIT	1,4	9,6	-85,4%
% on Revenues	2%	11%
Profit Before Taxes	-1,3	8,9	-114,6%
% on Revenues	-2%	10%
NET INCOME	-1,3	6,5	-120,0%
% on Revenues	-2%	8%
GROUP (€ mln)	1H2016	2015	Delta %
NFP (IAS17)	104,8	89,9	16,6%
NFP (without IAS17)	87,6	72,1	21,5%

ENERGY	1H2016		1H2015Delta %
Revenues	22,2	45,9	-51,6%
EBITDA	2,5	8,2	-69,5%
% on Revenues	11%	18%

TRENCHERS	1H2016		1H2015Delta %
Revenues	49,4	38,6	28,0%
EBITDA	4,7	6,2	-24,2%
% on Revenues	10%	16%

RAILWAY	1H2016	1H2015	Delta %
Revenues	2,4	0,6	284,0%
EBITDA	0,2	-0,2	200,0%
% on Revenues	8%	-32%

• REVENUES FROM SERVICES: +71,8% IN 1H2016
• 1H2015: POSITIVELY AFFECTED BY EXTRAORDINARY ORDER OF STRINGING EQUIPMENT AND BADWILL FROM MARAIS ACQUISITION
• CONSOLIDATION OF BERTEL AND CPT IMPACTS ON MARGINS

Revenues

EBITDA 1H2016

1H2015 Cost variances reflect heavier service activity 1H2016

Financial Information (Euro mln)	1H2016	1Q2016	2015
Net Working Capital	70,0	80,6	63,5
Non Current assets	87,1	81,8	83,9
Other Long Term assets/liabilities	(1,2)	(1,2)	(1,7)
Net Invested Capital	155,9	161,2	145,7
Net Financial Indebtness	104,8	107,1	89,9
Equity	51,1	54,1	55,8
Total Sources of Financing	155,9	161,2	145,7

Working Capital Evolution
Euro Mln	1H2016	1Q2016	2015	Days 1H2016
Trade Receivables	53,8	63,2	50,9	131
Inventories	60,1	60,1	58,9	152
Work in progress contracts	2,3	2,7	3,8
Trade Payables	(32,7)	(34,0)	(39,0)	-80
Other Current Assets/(Liabilities)	(13,5)	(11,4)	(11,1)	-33
Net Working Capital	70,0	80,6	63,5

Increase in business VOLUMES and MARGINS

Relevant projects related to the offer of VALUE ADDED SOLUTIONS and complementary services

Finalization of orders and important ongoing negotiations for INNOVATIVE RAILCARS that will replace the existing vehicles

Consolidation of the INTEGRATION STRATEGY and significant business opportunities in key countries

Trencher business highlights

Business model:

FROM sales TO value added solutions and services

Need of integrated technological platforms for TELECOM and ENERGY

REPOSITIONING in the market segment of SERVICES and INTEGRATED SOLUTIONS

FIBER OPTIC PROJECTS with international contractors; positive RENTAL ACTIVITIES in France

REORGANIZATION of TESMEC USA subsidiary:

• Costs efficiency strong reduction of workforce
• Partial reduction of production capacity focusing on rental activities

2H2016 outlook

BUSINESS MODEL:

• Reduction of stock with decrease of working capital
• Further reduction of cost of materials (from 51% in 1H2015 to 42% in 1H2016)

Growing OPPORTUNITIES in TLC and ENERGY CALBES MARKET, especially in Africa & Australia/NZ

Launch of Tesmec MICROTRENCHING TECHNOLOGY in USA for the new ultra broadband networks projects

Railway business highlights

Certified technologies already in compliance with the highest standards of the European rules

Growing pressure on SAFETY and ENVIRONMENTAL issues

DESIGN of INNOVATIVE RAILCARS that will replace the existing vehicles:

• equipped with Automatic Train Control System that provides enhanced levels of safety
• particular focus on sustainable and green solutions
• patented technologies, certification in Europe and USA

Participation at Innotrans in Berlin presenting Tesmec advanced METHODOLOGIES for CATENARY INSTALLATION and MAINTENANCE

2H2016 outlook

Investments of rail operators for the RENEWAL OF EXISTING FLEET to satisfy new rail regulations

New relevant AWARD for full maintenance service on multipurpose units in Italy, recurrent revenues

Effective COLLABORATIONS with Railway Authorities and participation in the main tenders as qualified supplier

Energy business highlights

Consolidation of the integration strategy in the sector smart technologies for power lines

Increasing demand of MODERNIZATION and EFFICIENCY of power grids worldwide

COMPLETION of SOLUTIONS PORTFOLIO in order to face the new technological challenges related to renewable energy sources and distributed generation

Projects of GRIDS INTERCONNECTION and INTEGRATION of RENEWABLE ENERGIES in the networks discussed also at CIGRÉ event in Paris

CYCLICALITY of the STRINGING MARKET and dependence from the release of BIG PROJECTS 2H2016 outlook

OPPORTUNITIES in strategic countries like Italy, Russia and South America

Strategic LONG TERM COLLABORATIONS with the major power companies for grids efficiency

ONGOING NEGOTIATIONS in the commercial pipeline of STRINGING SEGMENT

Order Book 1H2016 ENERGY

17,8 22,2 10,4 14,8 0 5 10 15 20 25 Order book FY 2015 1H2016 Revenues Order Intake Order book 1H2016 € mln

Summary 1H2016 Profit & Loss statement

Profit & Loss Account (€ mln)	1H2016	1H2015	Delta vs 2015	Delta %
Net Revenues	74,0	85,1	(11,1)	-13,0%
Raw materials costs (-)	(31,1)	(44,0)	12,9	-29%
Cost for services (-)	(15,4)	(13,8)	(1,6)	12%
Personnel Costs (-)	(19,8)	(16,1)	(3,7)	23%
Other operating revenues/costs (+/-)	(2,9)	0,6	(3,5)	-583%
Portion of gain/(losses) from equity investments evaluated using the equity method	-	(0,1)	0,1	-100%
Capitalized R&D expenses	2,6	2,5	0,1	4 %
Total operating costs	(66,6)	(70,9)	4,3	-6,1%
% on Net Revenues	(90%)	(83%)
EBITDA	7,4	14,2	-6,8	-47,9%
% on Net Revenues	10%	17%
Depreciation, amortization (-)	(6,0)	(4,6)	(1,4)	30%
EBIT	1,4	9,6	-8,2	-85,4%
% on Net Revenues	2 %	11%
Net Financial Income/Expenses (+/-)	(2,7)	(0,7)	(2,0)	286%
Taxes (-)	-	(2,4)	2,4	-100%
Minorities	-	-	-	-
Net Income (Loss)	-1,3	6,5	(7,8)	-120,0%
% on Net Revenues	-2%	8 %

Summary 1H2016 Balance Sheet

Balance Sheet (€ mln)	1H2016	2015
Inventory	60,1	58,9
Work in progress contracts	2,3	3,8
Accounts receivable	53,8	50,9
Accounts payable (-)	(32,7)	(39,0)
Op. working capital	83,5	74,6
Other current assets (liabilities)	(13,5)	(11,1)
Net working capital	70,0	63,5
Tangible assets	64,1	65,3
Intangible assets	19,3	13,8
Financial assets	3,7	4,8
Fixed assets	87,1	83,9
Net long term liabilities	(1,2)	(1,7)
Net invested capital	155,9	145,7
Cash & near cash items (-)	(28,8)	(21,2)
Short term financial assets (-)	(7,2)	(11,8)
Short term borrowing	61,2	45,2
Medium-long term borrowing	79,6	77,7
Net financial position	104,8	89,9
Equity	51,1	55,8
Funds	155,9	145,7

Disclaimer

The Manager responsible for preparing the company's financial reports, Andrea Bramani, 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 forward-looking 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.

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