Salcef Group — Investor Presentation 2021

Aug 6, 2021

1H 2021 Results Presentation

6 August 2021

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Speakers

Valeriano Salciccia Chief Executive Officer

Fabio De Masi Chief Financial Officer

Alessio Crosa IR & Sustainability Manager

Key messages

• Business volumes materially up YoY mainly thanks to robust organic growth and consolidation of recently acquired companies
• Backlog at record-high level above € 1.1 Bn, assuring more than 3 years of equivalent production
• Italian Recovery and Resilience Plan recently received green light by the EU
• Material capital increases received after conversion of Warrants
• First sustainable finance transaction completed

1H 2021 Highlights

Streamlined and strengthened capital structure

• Conversion of both categories of Warrant completed
• In less than 2 years since the listing on the AIM:
  • 98.8% of the warrants converted
  • More than € 76 Mln of new resources received by shareholders
  • 18.6 mln of new ordinary shares¹ , now the only listed security on the market
• Remaining Performance and Special Shares to be converted in January 2022 since all the conditions have been already met

• 1. Including 8.2 million from the conversion of Special Shares (7 ordinary shares each) and Performance Shares (5 ordinary shares each)
• 1. Entirely in the hands of the majority shareholder Finhold s.r.l.
• 1. Entirely in the hands of the Promoters of Industrial Stars of Italy 3
• 1. Including Promoters and Treasury Shares

Revenues

• Consolidated Revenues at € 213.4 mln, up 42.0% YoY mainly due to:
  • Favourable comparison with 1H2020, impacted by reduction of production due to Covid-19 crisis (€ 18.1 mln)
  • Change in perimeter with the consolidation of Delta (€ 21.3 mln) and, to a lesser extent, Bahnbau Nord (€ 1.6 mln)
• Without considering those effects, remarkable organic growth at 14.8%

	1H 2021	1H 2020	Δ (%)
Track and Light Civil Works	144. 6	106.5	35.7%
Energy, Signalling & TLC	28.2	15.5	81.8%
Heavy Civil Works	12.1	10.0	21.6%
Railway Machines	9.2	3.3	181.5%
Railway Materials	19.3	15.0	28.8%
Total	213.4	150.2	42.0%

• 67.8% Track & Light Civil Works (70.9% in 1H 2020) 13.2% Energy, Signalling & TLC (10.3% in 1H 2020)
• 5.7% Heavy Civil Works (6.6% in 1H 2020)
• 4.3% Railway Machines (2.2% in 1H 2020)
• 9.0% Railway Materials (10.0% in 1H 2020)

Focus on Business Units (1/2)

• 1H 2021 Revenues at € 144.6 mln, up 35.7% YoY mainly due to:
  • Consolidation of Delta
  • Ramp-up of the activities in Abu Dhabi for track construction on the Ruwais - Ghuweifat railway
  • Final activities within the expiring 3-year 2018-2020 framework agreements
  • Execution of recently signed contracts for light civil works in Italy
• New contract for track construction in Freight Facilities along the railway connecting Abu Dhabi to the border with Saudi Arabia
• Going forward, activities will be focused on executing new framework agreements and international contracts

Track & Light Civil Works Energy, Signalling & Telecommunication

• 1H 2021 Revenues at € 28.2 mln, up 81.8% YoY mainly due to:
  • Recovery of production activities, especially at COGET, which was the mostly impacted company during the Covid-19 crisis
  • Ramp-up of the activities within contracts for catenary maintenance in Southern Italy
• Going forward, activities will be focused on executing current agreements in both business segments

8

Focus on Business Units (2/2)

• 1H 2021 Revenues at € 12.1 mln, up 21.6% YoY mainly due to:
  • Final activities on some contracts in Italy
  • Execution of existing contract in Germany
• Going forward, production volumes mainly driven by activities in Germany

Heavy Civil Works Railway Machines Railway Materials

• 1H 2021 Revenues at € 9.2 mln, up 181.5% YoY mainly due to:
  • Consolidation of Delta
  • Sales to third-party customers, both Delta in the US and SRT in Italy
• Design phase of two new machines for the Group completed. Production expected to start at the beginning of 2022
• Going forward, activities will continue to be focused on expanding the third-party market and supporting Group companies

• 1H 2021 Revenues at € 19.3 mln, up 28.8% YoY mainly due to a higher number of sleepers produced
• Average impact of raw materials, mainly steel, on the total cost of production up YoY but still under control and fully manageable
• Production line for slab-track ready to kickoff, with final products now in the testing process before qualification
• Investments for the upgrade of old production lines ongoing
• Going forward, activities at Overail focused on reaching operational excellence and enlarging the range of products

Revenues by Country

• Revenues coming from outside Italy at 24% of the total, highest level of the last five years, mainly driven by:
  • North America, now at 10% with the consolidation of Delta
  • Material step-up in the contribution from Middle East, thanks to the contract in Abu Dhabi
  • North Africa back to growth after the reduction in 1Q thanks to a new contract in Egypt
  • Europe lower YoY, with the contribution from Germany more than offset by the end of Norwegian projects

	1H 2021	1H 2020	Δ (%)
Italy	162.4	121.9	33.2%
Europe [Excluding Italy]	14. 9	24.2	(38.2%)
North America	21.3	0.0	N/A
Middle East	13.2	3.2	310.1%
North Africa	1.5	0.9	63.8%
Total	213.4	150.2	42.0%

76.1%	Italy (81.2% in 1H 2020)
7.0%	Europe (excl. Italy) (16.1% in 1H 2020)
10.0%	North America (0% in 1H 2020)
6.2%	Middle East (2.1% in 1H 2020)
0.7%	North Africa (0.6% in 1H 2020)

Economic and Financial KPI

Mln
	1H 2021	1H 2020	Δ (%)
Revenues	213.4	150.2	42.0%
EBITDA	48.0	36.5	31.7%
EBITDA Margin	22.5%	24.3%	-
D&A1	(13.6)	(10.6)	28.4%
EBIT	34.5	25.9	33.0%
EBIT Margin	16.2%	17.3%	-
Adjusted Net Financial Income (Expenses)*	1.8	(2.3)	178.2%
Adjusted EBT	36.2	23.6	53.34%
Adjusted Income Taxes**	(9.8)	(7.2)	35.41%
Adjusted Net Profit	26.4	16.4	61.3%

Adjusted Net Financial Position	71.2	20.02	256.9%
Net Profit	15.3	(1.3)	-
** DTA reversal related to revaluations	(1.6)	-	-
* Change in warrant fair value	(9.6)	(17.7)	(45.7%)

• EBITDA Margin down 1.8 p.p. vs. 1H 2020 due to the different mix of revenues compared to the first quarter of 2020, mainly generated by the different consolidation perimeter of the subsidiaries
• Higher D&A on the back of higher Capex
• Tax rate adjusted at 27.1%, up compared to FY 2020 (26.0%), which benefitted from lower Regional Corporate Tax (IRAP) as part of the extraordinary measures to support companies during Covid-19 crisis. Going forward, on the back of Industry 4.0 tax benefit and without additional benefits, tax rate adjusted expected to be between 27% and 28%
• Since all the warrants have been converted/expired, P&L adjustments expected to remain broadly in line with 1H figure. NFP at 30 September 2021 won't be impacted by adjustments (€ 3.6 mln in 1H 2021) any longer.
• Adjusted NFP at € 71.2 mln, materially up vs. FY2020 due to solid cash generation and contribution from warrant conversion

Backlog

• Backlog¹ at the all-time high € 1.1 Bn, of which € 993 mln (87.1%) from Italian market and € 147 mln (12.9%) from foreign markets
• The different time frame of Italian contracts, typically longer than foreign ones, impacts the current composition of the backlog
• Track & Light and Civil Works and Energy Signalling & Telecommunication confirmed as the core Business Units, with 92.4% of the total backlog

Business Unit		Amount	%
Track and Light Civil Works		876.1	76.8%
	of which Foreign	130.5	11.4%
Energy		178.5	15.6%
	of which Foreign	4.1	0.4%
Heavy Civil Works		13.9	1.2%
	of which Foreign	11.2	1.0%
Railway Machines		2.8	0.2%
	of which Foreign	1.6	0.1%
Railway Materials		69.4	6.1%
Total		1,140.7	100.0%
	Italy	993.3	87.1%
	Foreign	147.4	12.9%

Closing remarks

• Well positioned for a positive second half of the year
• Positive medium-term outlook supported by the new backlog and upside coming from Italian PNRR
• Continuous scouting of the market for potential new acquisitions

Q&A

Appendix

Recent history

2021-2022

Group Structure

Focus on Italian Recovery and Resilience Plan

€ Bn

Italian Recovery and Resilience Plan Mission 3 – Infrastructure for a sustainable mobility

TOTAL: € 31.5 Bn

Source: National Recovery and Resilience Plan

In the Italian Recovery and Resilience Plan the amount allocated to the railway sector is around € 28 Bn of which € 24.8 Bn already allocated to various sectors and activities

TOTAL							-→ Starting production of new contracts
	2020	2021	2022	2023	2024	2025	2026
1.400	30	80	173	200	271	322	324
1.440	22	25	140	219	283	399	352
1.800	0	20	146	399	365	304	566
3.670	152	341	710	116	900	1.096	355		€M
3.970	398	532	724	736	886	559	135		750
930	0	8	20	56	244	280	322
510	0	1	27	61	92	125	204		600
620	0	2	16	57	125	186	234
450	2	6	9	57	84	116	176		450
936	0	22	30	58	254	287	285
700	0	21	64	103	195	192	125		300
2.970	172	189	280	320	616	715	678
2.970	0	50	299	345	643	705	928		150
2.400	41	147	187	217	506	565	737

Source: Il Sole 24 Ore - May 11th 2021

Contacts

Alessio Crosa

Investor Relations & Sustainability Manager

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

Bloomberg: SCF:IM Reuters: SCFG.MI Borsa Italiana: SCF