Salcef Group — Investor Presentation 2020

Sep 7, 2020

A global player in the railway industry

September 07th 2020

Disclaimer

THIS PRESENTATION IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE, OR SUBSCRIBE FOR, SECURITIES

IMPORTANT: Please read the following before continuing. For the purposes of this disclaimer, this presentation (the "Presentation") comprises the attached slides and any materials distributed at, or in connection with, the Presentation. This Presentation and the information, statements and opinions contained herein have been prepared by Salcef Group S.p.A. (the "Company" or "Salcef") for use during meetings with investors and financial analysts and is solely for information purposes and may not be reproduced or redistributed to any other person. The following applies to the Presentation, the oral presentation and any question and answer session that follows the oral presentation.

This Presentation may contain forward-looking statements about the Company, and/or the group headed by Salcef (the "Group"), based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. Forward looking statements include (but are not limited to) statements identified generally by the use of terminology such as "may", "will", "should", "plan", "expect", "anticipate", "estimate", "believe", "intend", "project", "goal", "aim", "foresee", or "target" or the negative of these words or other variations on these words or comparable terminology. By their nature, forwardlooking statements are based upon various assumptions, expectations, projections, provisional data, many of which are based, in turn, upon further assumptions, including, without limitation, examination of historical operating trends and other data available from third parties. Projections, estimates and targets presented herein are based on information available to Salcef as at the date of this Presentation. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of the Company and/or the Group to control or estimate. You are cautioned not to place undue reliance on the forward-looking statements or other information contained in this Presentation. The information contained herein has a merely informative and provisional nature and does not constitute investment, legal, accounting, regulatory, taxation or other advice. This Presentation speaks as of the date hereof and the information contained herein is provided as at the date of this Presentation and, except to the extent required by applicable law, Salcef nor any other person is under any obligation to update and keep current this Presentation, nor the information contained in this Presentation or any other written, electronic or oral information provided in connection with this Presentation. The information contained herein may be subject to updating, completion, revision and amendment and may change materially without notice. Any reference to past performance or trends or activities of Salcef or the Group shall not be taken as a representation or indication that such performance, trends or activities will continue in the future.

The information contained in this Presentation does not purport to be comprehensive nor to include everything which might be material to your purposes and has not been independently verified by any third party. No representation, warranty or undertaking, express or implied, is made by the Company or any of its respective affiliates or any of its of their respective directors, officers, advisers, employees or agents or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained therein or any other statement made or purported to be made in connection with the Company and its consolidates subsidiaries, for any purpose whatsoever, including but not limited to any investment considerations. Neither the Company nor any of its respective affiliates, directors, officers, advisers, agents or employees, nor any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of these materials or its contents or otherwise arising in connection with this Presentation. Neither this Presentation nor any part or copy of it may be taken or transmitted into the United States or distributed, directly or indirectly, in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. The information contained in this Presentation is not for publication or distribution, directly or indirectly, in Australia, Canada or Japan. Neither this Presentation nor its delivery to any recipient will or is intended to constitute or contain or form part of any offer to sell or solicitation of any offer to purchase, or subscribe for, any securities or related financial instruments, nor shall it or any part of it form the basis of or be relied upon in connection with or act as any inducement or recommendation to enter into any contract or commitment or investment decision whatsoever. By attending the meeting where this Presentation is made, by reading the presentation slides or by accessing and/or accepting delivery of this Presentation, you agree to be bound by the foregoing limitations and restrictions. The Presentation cannot be reproduced in any form, further distributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. Any failure to comply with these restrictions may constitute a violation of applicable laws.

01

Salcef Group Overview

Salcef Group Overview

Salcef Group Overview

02

Operative Business Units

Business Unit Track & Light Civil Works

Track Maintenance

Extraordinary Maintenance

Track Construction

Light Civil Works

Ordinary Maintenance

Business Unit Track & Light Civil Works

12,6% 2,7%

L I G H T C IV IL W O R K S

N E W C O S T R U CT IO N

• High barriers to entry
• Huge equipment investments

(Salcef fleet substitution value over than

€400M)

• Manpower specialization
• Clients' PQ and certifications
• Highly demanding working conditions
• More than 600 employees involved

O R D I N A RY M A I N T E N A N CE

E X T R A O R DI N A RY M A I N T E N A N CE

Business Unit Energy, Signalling & Telecommunication

Activities

• Railway catenary, signalling, substations, telecommunication construction, ordinary & extraordinary maintenance (renewal

activities)

• Construction and maintenance of infrastructure for high and medium voltage electricity transmission (aerial and underground)

Strenghts

• High barriers to entry
• Clients' PQ and certifications
• Highly demanding working conditions
• Huge Italian and European investment plan (Terna 2019-2023 plan with € 6,2 Bn investments + 20%)

Revenues 1H 2020 (€M)

Extraordinary Maintenance 48,8% - Ordinary Maintenance 27,2% - New Construction 24,0%

Business Unit Railway Materials

• Manufacturing of prestressed concrete railway sleepers • Manufacturing of slab-track systems for unballasted tracks (metro, tramway and railway) • Clients' PQ and certifications • Vertical Integration with trackworks BU • Extensive development possibilities for unballasted solutions Activities Strenghts Revenues 1H 2020 (€M)

• Development of new solution and patents

• Manufacturing of concrete segments for tunnels (metro lines)

Business Unit Railway Machines

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• Design of new railway equipment and construction technologies
• Maintenance and revamping of railway equipment
• Construction of new railway wagons and equipment

• Renting of equipment and tool

• Clients' PQ and certifications

• Vertical integration with trackworks and energy BUs
• Market with high margin and few competitors
• Development of new solutions and patents

Activities Strenghts Revenues 1H 2020 (€M)

ITA GAAP 1H2020 PRODUCTION: €4,6M [€3,3M + €1,3M]

Business Unit Heavy Civil Works

• Multidisciplinary railway construction projects (civil and technological works)
• Doubling of existing railway line
• Construction of railway stations and buildings
• Bridges, viaducts and tunnels

• Environmental mitigation works

• Vertical integration with other Salcef Group BUs

• Salcef Group competitiveness, and all the qualifications for general and specialized works

Activities Strenghts Revenues 1H 2020 (€M)

Business Unit Engineering

• Design of new railway equipment and construction technologies
• Maintenance and revamping of railway equipment
• Construction of new railway wagons and equipment
• Renting of equipment and tool

Activities Strenghts

• Clients' PQ and certifications
• Vertical integration with trackworks and energy BUs
• Market with high margin and few competitors
• Development of new solutions and patents

Revenues 1H 2020 (€M)

Salcef Group 1H 2020 Production Analysis

€x 1.000

Operative B.U. Revenues	2020 1H	%	2019 1H	%	Δ (€)
Track and Light Civil Works	106 523 9 ,	70 9% ,	106 012 4 ,	75 9% ,	511 5 ,
Signalling & Telecommunication Energy,	512 15 6 ,	10 3% ,	941 0 15 ,	4% 11 ,	(428 4) ,
Civil Works Heavy	9 971 5 ,	6 6% ,	2 795 4 ,	2 0% ,	7 176 1 ,
Railway Machines	3 268 0 ,	2 2% ,	159 1 1 ,	0 8% ,	2 108 9 ,
Railway Materials	14 966 4 ,	0% 10 ,	13 843 2 ,	9% 9 ,	1 123 2 ,
Total	150.242 ,4	100%	139.751 ,1	100%	10.491 3 ,

• Despite Covid19 emergency no relevant impact on the production value on main operative business units:
• o Track and Light Civil Works +0,5%
• o Energy, Signalling and Telecommunication: -2,7%
• o Railway Materials: +8,1%
• Heavy Civil Works: >100% (€7,2M), due to the contribution of Salcef Bau GmbH on the B.U. Value.
• Railway Machines: >100% (€1,1M), mainly due to increased SRT effort to the develop external customers

€x 1.000

Commercial Area Revenues	2020 1H	%	2019 1H	%	Δ (€)
Italy	121 937 6 ,	81 2% ,	118 323 3 ,	84 7% ,	3 614 4 ,
Eastern Europe	2 288 6 ,	5% 1 ,	12 738 2 ,	9 1% ,	(10 449 7) ,
Western Europe	21 863 7 ,	6% 14 ,	3 088 6 ,	2% 2 ,	18 775 1 ,
Middle East	3 214 7 ,	2 1% ,	3 124 6 ,	2 2% ,	90 1 ,
Africa North	937 8 ,	6% 0 ,	2 476 5 ,	8% 1 ,	(1 7) 538 ,
Total	150.242 ,4	100%	139.751 ,1	100%	10.491 3 ,

• Increased «National» production due to the contribution of Railway Materials and Railway Machines Operative Business Units.
• Eastern Europe: -(€10,4M) decrease in production value due to the end of Poland Project
• Western Europe: >100% (€18,8M), due to the contribution of
• o Salcef Bau GmbH
• o Austrian JV of Coget Impianti S.p.A.
• o Increase of Norwegian production
• North Africa: decrease in production value due to the final stage of Egyptian Project

1H 2020 Financial Results

Salcef Group 1H 2020 Financial Results

€M	2020 1H YTD _ IFRS	2019 1H YTD _ IFRS	Δ (€) IFRS	Δ (%) IFRS
Revenues	150,2	139,7	10,5	7,5%
EBITDA	36,5	29,9	6,6	22,1%
EBITDA Margin (%)	24,3%	21,4%	2,9%	13,5%
EBIT	25,9	22,6	3,3	14,6%
Margin (%) EBIT	17,2%	16,2%	1,1%	1,1%
Profit Net	* Adj 16,4	14,6	1,8	12,3%
Profit Margin Net (%)	* Adj 10,9%	10,5%	0,5%	0,5%
€M	2020 1H YTD _ IFRS	19 FY YTD _ IFRS	(€) Δ IFRS	(%) Δ IFRS
NFP	* Adj 36,0	* Adj 47,00	-11,00	-23,4%
Equity Net	* Adj 249,2	* Adj 250,0	-0,80	-0,3%

IFRS 1H 2020 vs IFRS 1H 2019

Revenues: compared to LY19 increase is equal to €10,5M (+7,5%).

EBITDA: compared to LY19 increase is equal to €6,6M (+22,1%) due to:

• Increasing of revenues, decreasing of material and service costs related to the internalization of works and major use of manpower on sites

EBIT: compared to LY19 increase is equal to €3,3M (+14,6%) due to an increasing of amortization of intangible assets and depreciation of tangible assets

Adj NFP:

• Compared to FY19 decrease is equal to €11,0M (-23,4%), mainly due to:
• o €1,9M for buyback transaction
• o €16,9M for dividend distribution [20/05/2020]

Pro Forma before Coget

€M
P&L IFRS	1H 2020 Salcef Group [Conso]	1H 2020 Coget Impianti	IFRS Adj	1H 2020 Salcef Group [Before Coget]
Revenues	150,2	7,0	0,0	143,2
EBITDA	36,5	0,7	(0,1)	35,9
EBIT	25,9	0,2	(0,1)	25,8

Coget EBITDA: €0,7M due to:

• Impact of Covid19 emergency [production – 19,8%]
• Temporary relevant incidence of costs on specific Austrian Project

*Adj: did not consider negative impact caused by Warrant Fair Value

Salcef Group Mar - Apr 2020 Covid Impact

• 1H 2020: total Covid19 impact on Salcef Group production is - 10,7% on the scheduled production

• At 1H 2020 there was no financial impact due to Covid19 Emergency

• During March 2020 there were first signs of a production slowdown

• o March 2020 Actual vs Budget: -€10,3M
• o Italian Production: Covid Impact on trackworks and energy operative business units due to the initial problems linked to the displacement of manpower in Italy
• o Foreign Production: no relevant impacts on the production
• April 2020 Act vs Bdg -€7,8M, lower than previous month.
• Trackwork BU : more than 100% of site convertions. Taking advantage of reduced railway line use due to COVID19, 14 new sites not in the budget were opened (e.g: extraordinary maintenance on the Rome-Naples high speed line), despite 7 blocked sites
• Energy Signalling & Telecommunication BU: Most of the relevant sites are located in Northern Italy. In particular COGET Impianti S.p.A., specialized in the Energy B.U., is located in the initial Red Zone
• No particular effects on the other operative business units
• In May and June 2020 the production has fully resumed, confirmed by an increase in full production 1H 2020 (€150,2M) compared 1H 2019 (€139,8M)

Salcef Group Q1 2020 Financial Results

Net Financial Position

Specific of financial debt:

• Duration: approx. 24 months
• Average of replacement: rolling
• Average cost of funds: about 90 bps
• Structure: Corporate No Financial Covenant
• Coverage: the whole Italian banking system
• Cash/Cash Equivalent: €113,8M
• NFP 1H 2020:Total effect due to
• Impact Lease Accounting Ex IFRS 16
• Impact FVTPL Financial Assets Ex IFRS 9

*NFP IFRS (1H 2020 – FY 2019) did not consider negative impact caused by Warrant Fair Value

Salcef Group 1H 2020 Backlog

€x1.000

Business Unit	Amount	%
Track and Light Civil Works	262.939,6	52,00
Track and Light Civil Works - Foreign	72.603,7	14,36
Energy	138.866,1	27,47
Railway Materials	11.688,9	2,31
Heavy Civil Works	15.867,5	3,14
Railway Machines	3.645,5	0,72
Total	505.611,2	100,00

• Backlog Value: €506M of which €409M (82%) from Italian market and €97M (18%) from the foreign market confirming the increase trend.
• Revenues Coverage: Salcef Group order backlog stands at €506M as at the end of 1H 2020, offering 18 month visibility (1,58 x Revenues)
• Book to Bill Ratio: the ratio (0,36) reflects the end of the 3-year company acquisition cycle, typical of the Italian railway industry.

Commercial Development

Salcef Group Highlights Strong International Focus

• March 12th 2020: Salcef USA Inc. was established. This new Salcef Group company to develop production and infrastructure for the US and Canadian markets, the largest in the world, with around 200.000 km.

• Sweden and Denmark are target markets for the Salcef Group in order to strengthen its position in the Scandinavian peninsula area
• Australia: The railway market in Australia is growing in freight, passenger and urban transport system, with huge public and private investment.

Salcef Group and M&A 8 Acquisition in 20 years [o.w. 4 in last 5 years]

Salcef Group ESG

Salcef has always followed an industrial development model that embraces sustainable development: in every activity we adopt practices based on corporate social accountability, to create value for clients, for society and for the community, while respecting the environment.

2021 – 2022 Goal: Corporate Social Responsability Report

Railway Industrial Market

Railway Industry Market Italian Market – Ferrovie dello Stato

FS S.p.A. Investment Plan 2019 -2023 for € 58 Billion

Trains and buses; €12Bn Roads ; €14Bn Other ; €2Bn Railway Infrastructure; €28Bn Metro Infrastructure; €2Bn €58 Billion

RFI S.p.A. (100% controlled by FS) Investment Plan 2019 -2023 for € 25 Billion

FS S.p.A. Investment Plan 2019-2023 for € 58 Billion foresees investments for € 13Bn per year, about 75% respect to 2018 (€ 7,5 Bn)

RFI Investment Plan 2019-2023 (part of the FS Plan), foresees investments of over € 25Bn, of which €14.5Bn in maintenance, safety and upgrades.

Railway Industry Market Global and European Market

103,0 95,0 112,0 68,0 80,0 2003-2005 2015 -2017 2021-2023 Services and Infrastructure Rolling stock 103 163 192 € Bn € Bn CAGR: +3.6%

World Railway Market European Railway Market

Source: 6th report monitoring developments in the railway market under Article 15, Paragraph 4 of Directive 2012/34/EU of the European Parliament and Council

Europe: more than € 45Bn invested annually, more than 50% for maintenance and renovation.

Germany: the value of the Deutsche Bahn 10-year Business Plan is € 86 Bn with an increase of 54%. Compared to the last BP is "the biggest railway modernization program"

Norway: NOK 120 Bn the value of the Bane Nor Business Plan 2018-2023 is approx. € 12 Billion. The BP covers new projects, renewal and investments.

Listing Process and Securities

Listing Process and Securities Listing Information

Listing Highlights Buyback

• ➢ Total shares at 01.09.2020: 43.392.222 o.w.
• o 41.632.222 ordinary shares
• o 1.500.000 performance shares
• o 260.000 special shares
• ➢ Warrants at 01.09.2020: 15.669.852 o.w.
• o W1 8.342.527
• o W2 7.327.325
• ➢ Floating and promoters at 01.09.2020: 27,8%
• ➢ Controlling Shareholder: Finhold S.r.l.
• o 72,2 % CS

• o 72,6% voting rights

• ➢ Buyback planning: started on 28.05.2020

• ➢ Duration: max 18 months
• ➢ Max purchasable shares: 10% of total
• ➢ No. treasury shares at 31.08.2020: 264.687
• ➢ % Treasury shares on total at 31.08.2020: 0,6137%

Listing Process and Securities Stock Data

• ➢ Market: AIM Italia of Borsa Italiana S.p.A.
• ➢ Ticker on Borsa Italiana: SCF
• ➢ Listing Price at 08.11.2019: €9,60
• ➢ Last Price at 31.08.2020: €11,70
• ➢ Market Cap: €508M
• ➢ Max 12 months: €12,75 (June)
• ➢ Min 12 months: €8,66 (March)
• ➢ EV/EBITDA*: 6,46
• ➢ P/E*: 15,48

* Data on an annual basis are calculated simply by doubling the 1H 2020 figures

Coverages: Banca Akros, Intermonte, Mediobanca → Average Target Price (ATP) at 31.08.2020: €13,23

Salcef Group – Listed Securities
Share	SCF	ISIN IT0005388266	41.632.222
Warrant 2024	WSCF	ISIN IT0005388183	8.342.527
Warrant 2023	WSCF23	ISIN IT0005388191	7.327.325

Warrant 2024 (WSCF): Warrants give right to buy shares at price of € 0,10 each

Conversion Ratio: is variable and based on monthly share price with strike price at € 9,30 and Cap at € 13,00

Maximum converted Ordinary Shares: No. 2.392.637 (at Max Conversion Ratio 0,2868x), with capital increase of € 239.264,67

Warrants expiry on 8th November 2024 (or before, in case of "Accelerated Condition", if the Official Price of the Share reaches € 13,00 for at least 15 days out of 30 consecutive days).

Warrant 2023 (WSCF23): Warrants give right to buy shares at price of € 10,50 each Conversion Ratio: is fix at 1,0x, strike price at € 10,50

Maximum converted Ordinary Shares: No. 7.327.325 (Conversion Ratio 1x), with capital increase of € 76,9M

Warrants expiry on 30th April 2023 (or before, in case of "Accelerated Condition", if the Official Price of the Share reaches € 13,00 for at least 15 days out of 30 consecutive days).

Listing Process and Securities Not Listed Securities

Salcef Group – Not Listed Securities
Special Shares	ISIN IT0005388274	260.000
Performance Shares	ISIN IT0005388282	1.500.000

Special Shares: Owned by ISI3 Promoters - Conversion Ratio: in Ordinary Shares 7x

• 1. Conversion: 100.000 Special Shares to be converted in 700.000 Ordinary Shares (No Lock-Up), at Price Threshold of € 13,50, within 60 Months from BC
• 2. Conversion: 160.000 Special Shares to be converted in 1.120.000 Ordinary Shares (No Lock-Up), at Price Threshold of € 11,50, within 15 January 2025, in proportion with the conversion of No. 5 Million Warrant2023 in Ordinary Shares.

Performance Shares: Owned by Finhold, No. 1.500.000 (portion of the initial Equity Value) - Conversion Ratio: in Ordinary Shares 5x

• 1. Conversion: 416.667 Performance Shares to be converted in 2.083.335 Ordinary Shares, at Price Threshold of € 13,00, within 60 Months from BC.
• 2. Conversion: 416.667 Performance Shares to be converted in 2.083.335 Ordinary Shares, at Price Threshold of € 13,50, within 60 Months from BC.
• 3. Conversion: 666.666 Special Shares to be converted in 3.333.330 Ordinary Shares, at Price Threshold of € 11,50, within 15 January 2025, in proportion with the conversion of No. 5 Million Warrant2023 in Ordinary Shares.

Contacts

Diego Paniccia

Investor Relator

Tel: +39 06 416281 E-mail: investor.relations@salcef.com