Trevi Fin Industriale

Earnings Release • May 15, 2017

Informazione Regolamentata n. 0262-23-2017		Data/Ora Ricezione 15 Maggio 2017 19:26:11	MTA
Societa'	:	TREVI GROUP
Identificativo Informazione Regolamentata	:	89599
Nome utilizzatore	:	TREVIN01 - Cocco
Tipologia	:	REGEM
Data/Ora Ricezione	:	15 Maggio 2017 19:26:11
Data/Ora Inizio Diffusione presunta	:	15 Maggio 2017 19:26:12
Oggetto	:	Press Release: The Board approves 1^Quarter 2017 Results
Testo del comunicato

Vedi allegato.

THE BoD APPROVES THE FIRST QUARTER 2017 RESULTS

STABLE REVENUES IN THE SPECIAL FOUNDATIONS SECTOR BUT ONGOING WEAKNESS IN THE OIL & GAS SECTOR

Total revenues: Euro 237 million EBITDA: Euro 11.8 million (EBITDA margin of 5%) Result for the period attributable to the Group: a loss of Euro 18.6 million Net debt: Euro 543.8 million Order portfolio: Euro 732.5 million of which 73% to be completed in 2017 Significant special foundations contracts in Asia and the Middle East

Cesena, 15 May 2017 - The Board of Directors of TREVI - Finanziaria Industriale S.p.A., the Parent Company of the TREVI Group, one of the world leaders in special foundations engineering and in the manufacture of machinery for special foundations and for drilling, approved the results for the first quarter 2017.

In the first quarter 2017, TOTAL CONSOLIDATED REVENUES were Euro 237 million, a decrease compared to the figure of Euro 264.6 million for the first quarter of the previous financial year. The decline in revenues reflected the weakness of the Oil & Gas segment and, in particular, Drillmec. This segment contributed 19% of total revenues compared to 29% in the first quarter of the previous financial year. Revenues in the special foundations segment were stable, accounting for 81% of total revenues compared to 71% in the same quarter of 2016, and were boosted by new and important contracts that will continue throughout 2017.

The overall decrease in first quarter 2017 Group revenues is attributable to the Oil & Gas segment where the worldwide crisis continues and is causing difficulties for companies operating in this sector. The decrease was mainly due to the Drillmec Division that was affected by a stop to work on the contract to supply three drilling plants in Bolivia for YPFB following the unexpected cancellation of the contract by the client.

The drop in volumes, together with lower profitability from the different mix of contracts in the Special Foundations Division, was also reflected in the EBITDA of Euro 11.8 million (5% of total revenues), down from Euro 35.7 million in the first quarter 2016 (13.5% of total revenues).

As a result of the above and also due to a prudent provision made for the aforementioned Drillmec contract, there was a net operating loss of Euro 7.6 million, a decrease compared to the operating profit of Euro 18.6 million in the first quarter 2016.

The NET RESULT of the GROUP was a loss of Euro 18.6 million (a loss of Euro 8.4 million in first quarter 2016).

GROUP NET EQUITY was Euro 446.7 million compared to Euro 472.4 million at year-end 2016.

TOTAL NET DEBT was Euro 543.8 million compared to Euro 440.7 million at 31 December 2016.

At 31 March 2017, in compliance with IAS 10 and in continuation of the process shown in the consolidated statement of financial position at 31 December 2016, since the Group had failed to meet one of the financial covenants (Net Debt/ EBITDA) in the contracts for the banks loans at 31 December 2016, the Directors reclassified in current debt the sum of Euro 292 million, which was the total of all the loans for which one of the financial covenants had not been met; however, it should be noted that by 12 April 2017, the Company had received waiver agreements from all the banks that had given it loans and, therefore, from that date, financial debt was once again classified according to the maturity terms of each individual contract.

SEGMENT ANALYSIS

SPECIAL FOUNDATIONS DIVISION

Total revenues in the first quarter 2017 in the Special Foundations Division, which includes Trevi S.p.A., Soilmec S.p.A. and their respective subsidiaries and associates, was Euro 194.3 million, more or less in line with the figure for the same period of the previous financial year.

The EBITDA was Euro 18.1 million, a margin of 9.3% of sales compared to 17.2% in the first quarter of the previous financial year. The drop in the gross operating margin was due to lower volumes, in particular from the Trevi Division in Nigeria and Venezuela, and to the partial completion of contracts in the water business unit of Soilmec.

Net debt was Euro 194.9 million and had increased Euro 77.9 million compared to the figure at year-end 2016, which is in line with the typical seasonality of the business.

TREVI

The first quarter 2017 consolidated revenues of this Division were Euro 150.5 million, an increase of 4.4% compared to the figure for the same period of the previous financial year (Euro 144 million).

The growth was mainly from the Middle East and reflected the contribution of the Mosul Dam project in Iraq, which is now fully operational, and the Salipazari Port project in Istanbul, Turkey.

SOILMEC

The first quarter 2017 consolidated revenues of the Soilmec Division were Euro 46.9 million (-11.9% year-on-year) but exceeded the budget figures for the period.

The decrease mainly reflects the business flows in Africa, Latin America and the Far East.

OIL & GAS SEGMENT

The growth outlook remains uncertain for this segment and, given the continued unfavourable trends in the energy sector, the Group continued with the important process of restructuring this sector to improve efficiency and decrease costs.

In the first quarter 2017, this segment had total revenues of Euro 46 million, compared to Euro 80.3 million in the first quarter of the previous financial year, a decrease of 42.7%.

This decrease was a direct consequence of the negative performance of the Drillmec Division caused by stagnation in the market and the stalling of the contract to supply three drilling plants to Bolivia following cancellation of the contract by the client YPFB.

As a result of the lower revenues, the Segment had negative EBITDA in the first quarter of Euro 7 million (EBITDA of Euro 1.4 million at 31 March 2016).

Net debt was Euro 358.7 million, a deterioration of approximately Euro 27 million compared to the figure at 31 December 2016.

Drillmec

The first quarter 2017 revenues were Euro 17.7 million, a decrease of approximately Euro 37 million compared to the same quarter of 2016. This decrease was due to the completion of some important contracts during 2016, the continuing weakness of the Oil & Gas market, which hampered the acquisition of new orders, and the interruption in work for the contract for YPFB. The operating profitability reflected the drop in revenues.

Currently, the main markets for this Division are in the Far East, Eastern Europe and Africa.

Petreven

Whilst the market sector in which it operates remains in crisis, the Division is working to return to profitability by using its competitive advantages that are its solid client relationships and avant-garde fleet. It is also implementing efficiency measures and optimising its cost base in order to offset the reduction in margins and cash flows.

The Petreven division had an increase in revenues of 8% to Euro 28.4 million in the first quarter 2017, compared to Euro 26.3 million at 31 March 2016.

The Division is currently active in South America and is working for the leading Oil majors and Oil nationals.

***

The Group order portfolio was Euro 732.5 million compared to Euro 956.4 million at 31 December 2016; the decrease of Euro 223.9 million (-23.4%) compared to the figure at year-end 2016 was mainly because this figure is prudently shown net of the contract with YPFB in Bolivia for approximately Euro 121.4 million, following cancellation of the contract at the request of the client. It should also be remembered that the figure for the first quarter 2016 included the important Mosul (Iraq) contract acquired in that period.

***

Orders acquired in the first quarter 2017 totalled approximately Euro 131.4 million.

The Managing Director, Stefano Trevisani, commented "The first quarter 2017 results confirm the solidity of the Special Foundations Division, which had good growth in the Middle East. However, the difficulties in the Oil & Gas Division persist. In particular, without prior warning, Drillmec received a "notice of cancellation" for the contract to supply three drilling plants to Bolivia. The client, Yacimientos Petroliferos Fiscales Bolivianos (YPFB), cancelled the contract citing "force majeure" but without providing any further reasons for this decision. The Company has taken all necessary steps to protect its rights and interests under the contract and, at the same time, is working on the order portfolio to increase the existing backlog and reduce the impact on 2017."

****

About TREVI Group:

Trevi Group is a worldwide leader in the field of soil engineering (special foundations, tunnel excavation, soil consolidation and the building and marketing of special rigs and equipment relevant to this engineering sector); the Group is also active in the drilling sector (oil, gas and water) both in the production of plant and the supply of services, and it also builds automated underground car parks. The Group was established in Cesena in 1957 and today has more than 30 branches and is present in over 80 countries. Its success is due to the vertical integration of the main divisions making up the Group: the Trevi Division that supplies special services in the field of soil engineering;; the Petreven Division active in oil drilling services;; the Soilmec Division that produces and develops plant and machinery for soil engineering;; and the Drillmec division that produces and develops drilling rigs (oil, gas and water).

The parent company has been listed on the Milan stock exchange since July 1999.

The key financial figures for 2016 are: Total revenues of € 1080.5 million, EBITDA of €75.7 million (margin of 7%), a negative EBIT of €38 million, and a Group Net Loss of €86.4 million. Further information can be found on the website: www.trevifin.com

For further information:

Investor Relations: Francesca Cocco e-mail: investorrelations@trevifin.com

Group corporate communications: Franco Cicognani e-mail: fcicognani@trevifin.com Tel: +39/0547 319503

Press Office: Studio Mailander Tel: +39/011 5527 311

TREVI GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(In thousands of Euro) ASSETS	31/03/2017	31/12/2016
Non-current Assets
Property, plant and equipment	351,089	356,415
Intangible Fixed Assets	63,448	65,226
Investments	2,627	2,631
Deferred tax assets	80,879	82,141
Non-current financial derivative instruments	0	0
Trade receivables and other non-current assets	24,359	25,241
Total Non-current Assets	522,402	531,653
Current Assets
Inventories	350,584	352,398
Trade receivables and other current assets	517,034	493,642
Tax assets for current taxes	36,658	32,425
Current financial derivative instruments	0	0
Current financial assets	0	0
Cash and cash equivalents	211,640	301,133
Total Current Assets	1,115,915	1,179,598
TOTAL ASSETS	1,638,318	1,711,251

SHAREHOLDERS' EQUITY	31/03/2017	31/12/2016
Share Capital and Reserves
Share capital	82,289	82,290
Other reserves	302,469	309,541
Retained earnings including Result for the period	61,959	80,539
Group Net Shareholders' Funds	446,717	472,369
Net shareholders' funds attributable to non-controlling interests	10,749	10,371
Total Net Shareholders' Funds	457,465	482,740
Non-current Liabilities
Non-current financing	115,662	100,397
Non-current financial derivative instruments	1,015	1,126
Deferred taxes	29,435	29,790
Post-employment benefits	19,699	19,729
Non-current provisions for risks and charges	4,458	4,450
Other non-current liabilities	99	127
Total Non-current Liabilities	170,368	155,619
Current Liabilities
Trade payables and other current liabilities	329,888	388,636
Tax liabilities for current taxes	29,102	29,872
Current financing	638,552	640,047
Current provisions for risks and charges	12,576	13,891
Current financial derivative instruments	368	447
Total Current Liabilities	1,010,484	1,072,892
TOTAL LIABILITIES	1,180,853	1,228,511
TOTAL NET SHAREHOLDERS' EQUITY AND LIABILITIES	1,638,318	1,711,251

TREVI GROUP CONSOLIDATED INCOME STATEMENT

31/03/2017	31/03/2016
231,307	252,452
5,681	12,184
0	0
236,988	264,636
	124,108
	(21,627)
	60,244
1,442	0
100,806	87,661
0	0
13,407	16,222
5,982	871
(629)	(2,037)
3,232	(19,407)
(7,561)	18,601
	476
	(6,955)
	(17,827)
	(24,306)
(270)	(0)
	(5,705)
5,201	181
(18,706)	(5,886)
(18,581)	(8,369)
	68,369 Changes in inventories of raw materials, ancillary materials, consumables and products (5,342) 58,724 501 (5,737) (438) (5,674) (13,505)

TREVI GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands of Euro)

	31/03/2017	31/03/2016
Profit/ (loss) for the period	(18,706)	(5,886)
Other items of comprehensive income subsequently recycled to profit or loss for the
period
Cash flow hedge reserve	115	(110)
Tax	(37)	18
Change in cash flow hedge reserve	79	(92)
Translation reserve	(6,647)	(20,904)
Total of other comprehensive income that may be recycled subsequently to profit or
loss net of tax	(6,569)	(20,997)
Other items of comprehensive income that will not subsequently be recycled to profit
or loss for the period:
Actuarial gains/ (losses)	0	0
Tax	0	0
Total other items of comprehensive income will not subsequently be recycled to profit /
(loss) for the period net of tax	0	0
Comprehensive income net of tax	(25,275)	(26,883)
Parent Company shareholders	(25,652)	(26,110)
Non-controlling interests	378	(773)

TREVI GROUP CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY

(In thousands of Euro)

	Share	Other	Accumulated	Group	Share of non	Total
Description	Capital	Reserves	Profit	Total	controlling	Net
					interests	Equity
Balance at 01/01/16	82,289	315,322	167,302	564,914	14,658	579,572
Result for the period			(8,368)	(8,368)	2,482	(5,885)
Actuarial gains/ (losses)
Other comprehensive income/ (loss)		(17,741)		(17,741)	(3,256)	(20,997)
Total comprehensive income/ (loss)	0	(17,741)	(8,368)	(26,109)	(773)	(26,882)
Allocation of profit for 2015 and dividend distribution				0		0
Other Changes				0		0
Balance at 31/03/16	82,289	297,581	158,934	538,804	13,885	552,689
Balance at 01/01/17	82,290	309,540	80,539	472,369	10,371	482,740
Result for the period			(18,581)	(18,581)	(124)	(18,705)
Actuarial gains/ (losses)		0		0		0
Other comprehensive income/ (loss)		(7,071)		(7,071)	502	(6,569)
Total comprehensive profits/ (losses)	0	(7,071)	(18,581)	(25,651)	378	(25,274)
Allocation of profit for 2016 and dividend distribution				0		0
Other Changes				0		0
Balance at 31/03/17	82,290	302,470	61,959	446,718	10,749	457,466

TREVI – Finanziaria Industriale S.p.A. – Via Larga, 201 - 47522 Cesena (FC) (Italia) Tel. 0547 319311 – Fax 0547 319313 E mail trevifin@trevifin.com sito internet www.trevifin.com Capitale sociale Euro 82.391.632,50 Int. Vers. Registro Imprese Forlì – Cesena, Codice Fiscale e Partita IVA: 01547370401 – C.C.I.A.A. R.E.A. n 201.271

TREVI GROUP CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands of Euro)

		31/03/2017	31/03/2016
	Net Result for the period	(18,706)	(5,886)
	Income taxes for the period	5,201	181
	Pre-tax Result	(13,505)	(5,705)
	Depreciation and amortization	13,407	16,222
	Financial (revenues)/ expenses	5,236	6,479
	Changes in reserve for risk and costs and for post-employment benefits	(1,337)	(2,991)
	Adjustments to financial assets	270	0
	(Gains) / losses from sale or write-downs of fixed assets	7	270
(A)	Cash Flow from Operations before Changes in Working Capital	4,079	14,274
	(Increase)/Decrease trade receivables	(15,971)	4,379
	(Increase)/Decrease inventories	1,815	(27,704)
	(Increase)/Decrease other assets	(9,511)	18,817
	Increase/(Decrease) trade payables	(40,781)	(71,209)
	Increase/(Decrease) other liabilities	(22,892)	(32,100)
(B)	Changes in Working Capital	(87,340)	(107,817)
(C)	Cash out for interest and other expenses	(5,236)	(6,479)
(D)	Cash out for taxes	(1,430)	(297)
(E)	Cash Flow generated (absorbed) by operations (A+B+C+D)	(89,928)	(100,319)
	Investments
	Operating (investments)	(10,928)	(9,726)
	Operating divestments	2,207	5,491
	Net change in financial assets	(266)	(415)
(F)	Cash Flow generated (absorbed) by investments	(8,987)	(4,650)
	Financing activities
	Increase/(Decrease) in share capital for purchase of own shares	0	0
	Other changes including those in non-controlling interests	(4,158)	(8,301)
	Increase/(Decrease) in debt, financing and derivative instruments	13,992	37,637
	Increase/(Decrease) in leasing liabilities and other financing debt	(6,172)	(3,759)
(G)	Cash Flow generated (absorbed) from financing activities	3,662	25,578
(H)	Net Change in Cash Flows (E+F+G)	(95,253)	(79,391)
	Opening Balance of Net Liquid Funds	293,708	290,490
	Net Changes in Liquid Funds	(95,253)	(79,391)
	Closing Balance of Net Liquid Funds	198,454	211,099
	Description	31/03/2017	31/03/2016
	Cash and cash equivalents	211,640	218,297
	Bank overdrafts	(13,186)	(7,198)
	Cash and cash equivalents net of bank overdrafts	198,454	211,099

TREVI GROUP TOTAL REVENUES

(In Thousands of Euro)

Geographic Area	31/03/2017	%	31/03/2016	%	Change	Ch%
Italy	8,807	3.7%	11,894	4.5%	(3,087)	-26.0%
Europe (ex-Italy)	18,453	7.8%	16,709	6.3%	1,744	10.4%
USA and Canada	22,152	9.3%	28,694	10.8%	(6,542)	-22.8%
Latin America	54,979	23.2%	54,331	20.5%	648	1.2%
Africa	21,796	9.2%	64,257	24.3%	(42,461)	-66.1%
Middle East and Asia	98,274	41.5%	65,387	24.7%	32,887	50.3%
Far East and rest of the World	12,528	5.3%	23,364	8.8%	(10,836)	-46.4%
TOTAL REVENUES	236,988	100%	264,636	100%	(27,648)	-10.4%

(In Thousands of Euro)

	31/03/2017	%	31/03/2016	%	Change	Ch.%
Oil, gas and water drilling equipment	17,721	7%	54,420	21%	(36,699)	-67.4%
Drilling services	28,387	12%	26,296	10%	2,091	8.0%
Interdivision eliminations and adjustments	(115)		(393)		278
Sub-Total Oil & Gas Sector	45,993	19%	80,323	30%	(34,330)	-42.7%
Special foundation services	150,500	69%	144,211	54%	6,289	4.4%
Manufacture of special foundation machinery	46,923	22%	53,256	20%	(6,333)	-11.9%
Interdivision eliminations and adjustments	(3,156)		(2,757)		(399)
Sub-Total Foundations Sector (Core Business)	194,267	82%	194,710	74%	(443)	-0.2%
Parent Company	6,424		6,743		(319)	-4.7%
Interdivision and Parent Company eliminations	(9,696)		(17,140)		7,444
TREVI GROUP	236,988	100%	264,636	100%	(27,648)	-10.4%

TREVI – Finanziaria Industriale S.p.A. – Via Larga, 201 - 47522 Cesena (FC) (Italia) Tel. 0547 319311 – Fax 0547 319313 E mail trevifin@trevifin.com sito internet www.trevifin.com Capitale sociale Euro 82.391.632,50 Int. Vers. Registro Imprese Forlì – Cesena, Codice Fiscale e Partita IVA: 01547370401 – C.C.I.A.A. R.E.A. n 201.271

FOUNDATION SECTOR (CORE BUSINESS) Summary Income Statement (*)

(In Thousands of Euro)

	31/03/2017	31/03/2016	Change	Change %
TOTAL REVENUES	194,267	194,710	(443)	-0.2%
Changes in inventories of work in progress, semi finished and finished goods	(839)	8,637	(9,475)
Increase in fixed assets for internal use	584	2,009	(1,426)
VALUE OF PRODUCTION	194,012	205,356	(11,344)	-5.5%
Raw materials and external services	133,279	129,037	4,242
Other operating expenses	2,400	1,898	502
VALUE ADDED	58,334	74,421	(16,088)	-21.6%
% of Total revenues	30.0%	38.2%
Personnel expenses	40,217	40,906	(689)
GROSS OPERATING RESULT (EBITDA)	18,116	33,515	(15,399)	-45.9%
% of Total revenues	9.3%	17.2%
Depreciation and amortization	8,666	11,169	(2,503)
Provisions and write-downs	723	885	(161)
OPERATING RESULT (EBIT)	8,728	21,462	(12,734)	-59.3%
% of Total revenues	4.5%	11.0%

FOUNDATION SECTOR (CORE BUSINESS) Summary Statement of Financial Position

(In Thausands of Euro)

		31/03/2017	31/12/2016	Change	Change %
A)	Fixed assets	270.685	273.790	(3.105)	-1.1%
	- Inventories	314.292	287.275	27.017
	- Trade receivables	319.897	324.148	(4.251)
	- Trade payables (-)	(216.732)	(253.612)	36.880
	- Pre-payments (-)	(107.949)	(114.004)	6.055
	- Other assets (liabilities)	2.006	(9.332)	11.338
B)	Net invested capital	311.514	234.476	77.038	32.9%
C)	Invested capital less liabilities for the year (A+B)	582.199	508.266	73.933	14.5%
D)	Post-employment benefits (-)	(16.575)	(16.822)	247	-1.5%
E)	NET INVESTED CAPITAL (C+D)	565.624	491.444	74.181	15.1%
	Financed by:
F)	Group net equity	359.745	363.953	(4.207)	-1.2%
G)	Share of non-controlling interests	11.005	10.468	537
H)	Net debt	194.874	117.023	77.851	66.5%
I)	TOTAL SOURCES OF FINANCING (F+G+H))	565.624	491.444	74.181	15.1%

TREVI – Finanziaria Industriale S.p.A. – Via Larga, 201 - 47522 Cesena (FC) (Italia) Tel. 0547 319311 – Fax 0547 319313 E mail trevifin@trevifin.com sito internet www.trevifin.com Capitale sociale Euro 82.391.632,50 Int. Vers. Registro Imprese Forlì – Cesena, Codice Fiscale e Partita IVA: 01547370401 – C.C.I.A.A. R.E.A. n 201.271

OIL&GAS SECTOR Summary Income Statement (*)

(In thousands of Euro)

	31/03/2017	31/03/2016	Change	Change %
TOTAL REVENUES	45,993	80,323	(34,330)	-42.7%
Changes in inventories of work in progress, semi
finished and finished goods	(2,420)	9,841	(12,261)
Increase in fixed assets for internal use	45	28	17
VALUE OF PRODUCTION	43,618	90,193	(46,575)	-51.6%
Raw materials and external services	31,616	69,287	(37,670)
Other operating expenses	1,675	1,124	551
VALUE ADDED	10,327	19,783	(9,455)	-47.8%
% of Total revenues	22.5%	24.6%
Personnel expenses	17,384	18,349	(965)
GROSS OPERATING RESULT (EBITDA)	(7,057)	1,434	(8,490)	-592.2%
% of Total revenues	-15.3%	1.8%
Depreciation and amortization	4,382	5,123	(741)
Provisions and write-downs	5,259	10	5,249
OPERATING RESULT (EBIT)	(16,698)	(3,699)	(12,999)	-351.4%
% of Total revenues	-36.3%	-4.6%

OIL&GAS SECTOR

Summary Statement of Financial Position

Stato patrimoniale Oil&Gas	31/03/2017	31/12/2016	Change	Change %
Fixed assets	118,886	122,659	(3,773)	-3.1%
- Inventories	213,143	217,079	(3,936)
- Trade receivables	128,761	127,983	778
- Trade payables (-)	(84,514)	(93,426)	8,913
- Pre-payments (-)	(26,703)	(23,928)	(2,775)
- Other assets (liabilities)	35,652	29,479	6,174
Net invested capital	266,339	257,187	9,152	3.6%
Invested capital less liabilities for the year (A+B)	385,225	379,846	5,379	1.4%
Post-employment benefits (-)	(2,066)	(1,817)	(249)	13.7%
NET INVESTED CAPITAL (C+D)	383,160	378,029	5,130	1.4%
Financed by:
Group net equity	23,877	45,275	(21,399)	-47.3%
Share of non-controlling interests	593	940	(347)
Net debt	358,690	331,814	26,876	8.1%
TOTAL SOURCES OF FINANCING (F+G+H))	383,160	378,029	5,130	1.4%

(*)The individual Income Statements above have not been adjusted for inter-divisional transactions; they do not include the Parent Company or Trevi Energy S.p.A.