Investor Relator Patrizia Pellegrinelli Tel: 035.4232840 - Fax: 035.3844606 e-mail: [email protected]

Tesmec S.p.A.

Registered Office: Piazza Sant'Ambrogio, 16 – 20123 Milan Fully paid up share capital as at 30 September 2015 Euro 10,708,400 Milan Register of Companies no. 314026 Tax and VAT code 10227100152

Website: www.tesmec.com Switchboard: 035.4232911

TABLE OF CONTENTS

TABLE OF CONTENTS 5
COMPOSITION OF THE CORPORATE BODIES 7
GROUP STRUCTURE 11
INTERIM REPORT ON OPERATIONS 13
1. Introduction 14
2.Macroeconomic Framework 15
3.Significant events occurred during the period 15
4. Activity, reference market and operating performance for the first nine months of 2015 18
5.Summary of balance sheet figures as at 30 September 2015 24
6.Management and types of financial risk 26
7.Atypical and/or unusual and non-recurring transactions with related parties 26
8.Group Employees 26
9.Other information 26
INTERIM REPORT ON OPERATIONS 29
Consolidated statement of financial position as at 30 September 2015 and as at 31 December 2014 30
Consolidated income statement as at 30 September 2015 and 2014 31
Consolidated statement of comprehensive income as at 30 September 2015 and 2014 32
Statement of consolidated cash flows as at 30 September 2015 and 2014 33
Statement of changes in consolidated shareholders' equity as at 30 September 2015 and 2014 34
Explanatory notes 35
Certification pursuant to Article 154-bis of Italian Legislative Decree 58/98 58

COMPOSITION OF THE CORPORATE BODIES

Board of Directors (in office until the date of the Shareholders' Meeting convened to approve the financial statements as at 31 December 2015)

Chairman and Chief Executive Officer	Ambrogio Caccia Dominioni
Vice Chairman	Gianluca Bolelli
Directors	Sergio Arnoldi () Gioacchino Attanzio () Guido Giuseppe Maria Corbetta (*) Caterina Caccia Dominioni Lucia Caccia Dominioni
(*)Independent Directors

Board of Statutory Auditors (in office until the date of the Shareholders' Meeting convened to approve the financial statements as at 31 December 2015)

Chairman	Simone Cavalli
Statutory Auditors	Stefano Chirico Alessandra De Beni
Alternate Auditors	Attilio Marcozzi Stefania Rusconi

Members of the Control and Risk Committee (in office until the date of the Shareholders' Meeting convened to approve the financial statements as at 31 December 2015)

Chairman Sergio Arnoldi

Members Gioacchino Attanzio Gianluca Bolelli

Members of the Remuneration Committee (in office until the date of the Shareholders' Meeting convened to approve the financial statements as at 31 December 2015)

Chairman Gioacchino Attanzio

Members Sergio Arnoldi Caterina Caccia Dominioni

Members of the Appointments Committee (in office until the date of the Shareholders' Meeting convened to approve the financial statements as at 31 December 2015)

Chairman Gioacchino Attanzio

Members Sergio Arnoldi Caterina Caccia Dominioni

Lead Independent Director Gioacchino Attanzio

Director in charge of the internal control
and risk management system	Caterina Caccia Dominioni

Manager responsible for preparing the Company's	Andrea Bramani
financial statements

Independent Auditors Reconta Ernst & Young S.p.A.

GROUP STRUCTURE

(1) The remaining 33% is held by Simest S.p.A. Since Tesmec has an obligation to buy it back from Simest S.p.A., from an accounting point of view the shareholding of the Parent Company in Tesmec USA, Inc. is fully consolidated on a 100% basis.

INTERIM REPORT ON OPERATIONS

(Not audited by the Independent Auditors)

1. Introduction

The Parent Company Tesmec S.p.A. (hereinafter "Parent Company" or "Tesmec") is a legal entity organised in accordance with the legal system of the Italian Republic. The ordinary shares of Tesmec are listed on the MTA (screen-based share market) STAR Segment of the Milan Stock Exchange. The registered office of the Tesmec Group (hereinafter "Group" or "Tesmec Group") is in Milan, Piazza S. Ambrogio 16.

The Tesmec Group is a leader in the design, production and marketing of special products and integrated solutions for the construction, maintenance and streamlining of infrastructures relating to the transmission of electrical power and data and material transport.

The Group, established in 1951 and led by Charmain & CEO Ambrogio Caccia Dominioni, relies on more than 500 employees and has six production plants: four in Italy, in Grassobbio (Bergamo), Endine Gaiano (Bergamo), Sirone (Lecco), Monopoli (Bari), one in the USA, in Alvarado (Texas) and one in France, in Durtal. The Group also has a global commercial presence through foreign subsidiaries and sales offices in USA, South Africa, Russia, Qatar, Bulgaria, China and France.

As a result of its listing on the Stock Exchange on 1 July 2010, the Parent Company has pursued the stated objective of diversification of the types of products in order to offer a complete range of integrated solutions grouped into three main areas of business: Stringing equipment, Trencher and Rail.

Through the different types of product, the Group is able to offer:

Stringing equipment segment

machines and integrated systems for overhead and underground stringing of power lines and fibre optic cables;
integrated solutions for the streamlining, management and monitoring of low, medium and high voltage power lines (smart grid solutions).

Trencher segment

high-efficiency crawler trenching machines for excavation with a set section for the construction of infrastructures for the transmission of data, raw materials and gaseous and liquid products in the various segments: energy, farming, chemical and public utilities;
crawler trenching machines for working in the mines, surface works and earth moving works (RockHawg);
specialised consultancy and excavation services on customer request;
multipurpose site machinery (Gallmac);
this sector also includes the excavation services for power lines and fibre optic cables that constitute the core business of the recently acquired Marais Group.

Rail segment

Machines and integrated systems for the installation, maintenance and diagnostics of the railway catenary wire system, plus customised machines for special operations on the line.

All types of product are developed according to the ISEQ approach (Innovation, Safety, Efficiency and Quality), in observance of environmental sustainability and energy saving.

The know-how acquired in developing specific technologies and innovative solutions and the presence of a team of highly specialised engineers and technicians allows the Tesmec Group to directly manage the entire production chain: from the design, production and marketing of machinery, to the supply of know-how relating to the use of systems and optimisation of work, to all pre- and post-sales services related to machinery and the increase in site efficiency. A combination of leading edge products and in-depth knowledge on the use of innovative technologies for tackling the new requirements of the market allows the Group to offer a successful mix with the objective of ensuring high work performances.

Today, the Group not only sells cutting edge machines, but genuine integrated electrification and excavation systems, which provide advanced solutions during the work performance phase. This is a result of the constant pursuit of innovation, safety, efficiency and quality, and of the development of software for making machines safer, more reliable and high-performance.

The Group also has a global commercial presence throughout the majority of foreign countries, with a direct presence on different continents, through joint ventures, independent distributors and directly through companies and sales offices in the USA, South Africa, Russia, France, Qatar, Bulgaria and China and thanks to the recent acquisition of the Marais Group in France, it inherited important new positions in the markets of North Africa and Oceania.

2.Macroeconomic Framework

Based on the estimates of the International Monetary Fund published in October, the macroeconomic scenario highlights the following trends:

global growth in the current year is expected to be 3.1%, down by 0.3% compared to the figure recorded in 2014;
this growth is the result of the recovery in some advanced economies (United States and United Kingdom in the lead) balanced by the reduction in the growth rate of the economies of Emerging and Developing Countries for the fifth consecutive year;
the slowdown in the growth of the economies of Emerging Countries is a result of the fall in oil prices and the weakening of local currencies following the reduced foreign capital inflow in anticipation of the increase in rates announced for the United States;
However, this situation can be considered contingent in that the development process of the economies that have recently embarked on a growing and modernisation trend will not easily come to an end;
In this context, interesting opportunities for growth are confirmed also in the presence of a higher level of volatility - due to the skills acquired by the Tesmec Group in the field of infrastructural investments and to the market positioning in the areas with higher growth.

3.Significant events occurred during the period

The extraordinary transactions that occurred during the period include the following:

On 19 March 2015, Cerved Rating Agency, the Italian rating agency specialised in assessing the creditworthiness of non-financial companies, confirmed the "A2.2" solicited rating with reference to the bond issue "Tesmec S.p.A. 6% 2014-2021" (ISIN: IT0005012247), traded on the ExtraMOT PRO market organised and managed by Borsa Italiana S.p.A. More specifically, the "A2.2" rating issued by the Cerved Rating Agency ranks fifth on a scale of 13 risk levels (from A1.1 to C2.1) and it is the result of an evaluation process that combines rigorous quantitative models to forecast the credit risk and accurate qualitative analyses of specialised analysts, with an eye also to the Company's competitive position in the industry.
On 30 April 2015, with the approval of the 2014 financial statements, the Shareholders' Meeting of Tesmec S.p.A. decided to allocate the profit of the Parent Company of Euro 6,278 thousand, as follows:
Euro 137 thousand to the Legal reserve;
assign a dividend of Euro 0.023 to each outstanding ordinary share;
assign to the Extraordinary Reserve the amount of profit remaining after the allocation to the Legal reserve and dividend.
On 1 May 2015, the lease contract of the building of Grassobbio signed on 31 January 2011 with the related company Dream Immobiliare S.r.l. was changed.

This changement provides a different division of the leased spaces, with a reduction in square meters used by Tesmec and a perfectly symmetrical increase in square meters used by Reggiani Macchine S.p.A. Moreover, Tesmec achieved from the owner related company Dream Immobiliare S.r.l., the construction of an underground archive/parking of around 662 square meters.

Therefore, the Rental of Tesmec will decrease by Euro 144 thousand/year.

Alfredo Brignoli, Vice Chairman of Tesmec S.p.A. and a historical figure of the Tesmec Group, died on 10 June 2015. Born in 1920 in Ponteranica (Bergamo), Alfredo Brignoli had done his entire entrepreneurial path in the mechanical sector and, in 1951, was a co-founder of the Tesmec Group, together with Annibale Caccia Dominioni, father of the current Chairman and Chief Executive Officer.
The renewal of the contract for the lease of the building of Endine Gaiano signed with the related party Dream Immobiliare S.r.l. was approved for the period from 1 January 2016 to 31 December 2021 without changing the current rental of Euro 310 thousand per year fixed in 2004 in that Tesmec bore the costs for renovating the roof of Euro 348 thousand.

As part of the development of the company structure, the following are of note:

On 26 February 2015, the final decree of approval relating to the transfer of the business units of the company AMC2 to Tesmec Service S.r.l. was filed.
On 13 February 2015, the East Trenchers S.r.l. minority shareholder sold its entire investment equal to 8.8% of the Share Capital to Tesmec S.p.A. As a result of the operation described above, as from 13 February 2015, Tesmec S.p.A. has become sole shareholder of East Trenchers S.r.l.
On 8 April 2015, Tesmec S.p.A. concluded the acquisition of the entire share capital of Marais Technologies SAS ("Marais Group"), French company at the head of an international group leader in excavation services and in the construction of machines for infrastructures in telecommunications, electricity and gas. This operation is of strategic importance for Tesmec in that it will allow the Group to use technological skills developed by Marais as part of the service activities (leases) in the Trencher segment in telecommunications and laying of optical fibres and of underground electrical cables and to use them in markets where the Tesmec Group has already acquired an important market positioning. Moreover, the acquisition allows Tesmec to enter in the French market and, more in general, in all the markets where Marais is a leader (Africa, Australia, New Zealand, etc.) with the aim to further expand its activities in telecommunications, where significant investments are planned over the next few years. Finally, the transaction allows the Tesmec Group to use the expertise of Marais Technologies in the rental of machines and in complementary services. The effects of this acquisition were described in detail in the next paragraph.
On 8 September 2015, the Shareholders' Meeting of Tesmec Service S.p.A. approved the merger plan of the company into Tesmec S.p.A. The merger is part of a process of corporate simplification and rationalisation in order to improve the functionality of the organisational structure in economic, management and financial terms and better seize the future growth opportunities of the Group.

3.1 Effects of the acquisition of the Marais Group

The Transaction involved the purchase of 1,093,005 shares of Marais (corresponding to 100% of the share capital), of 1,160,534 convertible bonds issued by Marais (corresponding to 100% of the existing bonds) and of 215,384 warrants issued by Marais (corresponding to 100% of existing warrants) at a price of Euro 32 (units).

Tesmec also envisaged a recapitalisation of Marais of Euro 5 million to boost the business of the Group by using own funds and a dedicated credit facility granted by the Cariparma Crédit Agricole Group.

The additional expenses related to the above-mentioned acquisition totalling Euro 494 thousand, net of the related tax effect, were posted to the Income statement; moreover, the badwill from a bargain purchase was recognised in the income statement in the amount of Euro 2,633 thousand in the consolidated financial statements.

The effects of the acquisition of the Marais Group as at 30 September 2015 were included in the following tables:

Income statement

	As at 30 September
		Marais					2015
(Euro in thousands)	2015	Recurring	Non recurring	Write-offs	2015 Adjusted	2014	Adjusted vs 2014
Revenues from sales and services	120,178	11,383	-	(433)	109,228	80,996	28,232
Cost of raw materials and consumables	(61,796)	(4,388)	-	363	(57,771)	(37,852)	(19,919)
Cost of service	(20,930)	(2,425)	(494)	-	(18,011)	(13,743)	(4,268)
Payroll costs	(24,499)	(3,625)	-	-	(20,874)	(18,838)	(2,036)
Other operating (costs)/ revenues, net	(2,494)	(773)	-	-	(1,721)	(2,052)	331
Badwill from a bargain purchase	2,633	-	2,633	-	-	-	-
Development costs capitalised	3,762	-	-	-	3,762	3,655	107
Portion of losses/(gains) from the valuation of Joint Ventures using the equity method	(120)	-	-	-	(120)	394	(514)
EBITDA	16,734	172	2,139	(70)	14,493	12,560	1,933
Amortisation and depreciation	(7,476)	(1,013)	-	-	(6,463)	(5,836)	(627)
Operating income	9,258	(841)	2,139	(70)	8,030	6,724	1,306
Financial expenses	(5,534)	(129)	-	-	(5,405)	(3,987)	(1,418)
Financial income	3,468	54	-	-	3,414	2,405	1,009
Portion of losses/(gains) from the valuation of equity investments using the equity method	(254)	66	-	-	(320)	(172)	(148)
Pre-tax profit	6,938	(850)	2,139	(70)	5,719	4,970	749
Income tax	(2,248)	292	155	22	(2,717)	(1,844)	(873)
Net profit for the period	4,690	(558)	2,294	(48)	3,002	3,126	(124)
Profit / (loss) attributable to non-controlling interests	6	4	-	-	2	(3)	5
Group profit (loss)	4,684	(562)	2,294	(48)	3,000	3,129	(129)

Revenues as at 30 September 2015 increased all in all by 48.4%; without considering the effects of the acquisition of the Marais Group, overall growth would have been 34.9%.

In terms of margins, EBITDA increased by 33.2%; without considering the effects of the acquisition of the Marais Group, overall growth would have been 15.4%.

Balance sheet reclassified by funding sources and uses

	As at 30 September				As at 31
		Marais			2015	December
(Euro in thousands)	2015	Recurring	Non recurring	Write-offs	Adjusted	2014
USES
Net working capital (1)	57,946	2,165	(254)	(70)	56,105	57,991
Fixed assets	83,443	14,032	-	-	69,411	65,283
Other long-term assets and liabilities	(1,887)	(540)	155	22	(1,524)	(1,737)
Net invested capital (2)	139,502	15,657	(99)	(48)	123,992	121,537
SOURCES
Net financial indebtedness (3)	86,719	8,388	5,240	-	73,091	73,364
Shareholders' equity	52,783	7,269	(5,339)	(48)	50,901	48,173
Total sources of funding	139,502	15,657	(99)	(48)	123,992	121,537

(1) The net working capital is calculated as current assets net of current liabilities excluding financial assets and financial liabilities. Net working capital is not recognised as a measure of performance by the IFRS. The valuation criteria applied by the Company may not necessarily be the same as those adopted by other groups and therefore the balance obtained by the Company may not necessarily be comparable therewith.

(2) The net invested capital is calculated as net working capital plus fixed assets and other long-term assets less long-term liabilities. The net invested capital is not recognised as a measure of performance under IFRS. The valuation criteria applied by the Company may not necessarily be the same as those adopted by other groups and therefore the balance obtained by the Company may not necessarily be comparable therewith.

(3) The net financial indebtedness is calculated as the sum of cash and cash equivalents, current financial assets including available-for-sale securities, noncurrent financial liabilities, fair value of hedging instruments and other non-current financial assets.

Following these changes in gross and net acquisition of Group Marais:

Net working capital remains unchanged from the same period last year and without considering the effects of the acquisition of the Marais Group decreased by 3.2%.

The intangible fixed assets increased by 27.8% and without considering the effects of the acquisition of the Marais Group increased by 6.3%.

The debt increased by 18.2% and without considering the effects of the acquisition of the Group Marais is reduced compared to the same period last year.

Shareholders' equity increased by 9.56% and without considering the effects of the acquisition of the Group Marais increase of 5.7% over the same period last year.

4. Activity, reference market and operating performance for the first nine months of 2015

In the first nine months of 2015, the Group consolidated revenues of Euro 120,178 thousand, marking a considerable increase of Euro 39,182 thousand compared to Euro 80,996 thousand in the same period of the previous year. In percentage terms, it is equal to 48.4%. Without considering the effects of the acquisition of the Marais Group, growth would have been 34.9%. The three business areas contributed in different ways with the growth in the Stringing equipment and Trencher segments, whose revenues increased respectively by 72.5% and 61.6% offset by the decrease in the Rail segment (-71.3%), equal to Euro 7.734 thousand. Without considering the effects of the acquisition of the Marais Group, the growth in the Trencher segment would have been 31.6%.

Finally, the decrease in revenues in the Rail segment is mainly attributable to the nature of a business characterised by longterm contracts and prolonged times for executing the negotiations that can hardly be expected. Important negotiations that will lead to a growth in revenues of the segment in the coming quarters are currently underway.

The Trencher segment recorded an increase in revenues due to the positive contribution of sales on the US market. On the Middle-Eastern and African markets, growth expectations for the current quarter are still positive.

The revenues of the Stringing equipment segment benefit in the period from the particularly significant order related to the supply of equipment to the Spanish Abengoa group for the construction of more than 5,000 km of 500kV lines in Brazil. The Group has also recorded the first revenues and orders in the new business of Automation, confirming the validity of the strategic choices implemented in the past years that also focused on the market of streamlining of power lines.

The EBITDA increased by 33,2%, without considering the effects of the acquisition of the Group Marais the total increase of EBITDA would be 15.4%.

The increase in margins less than proportional to that volume was affected by the effort of introduction of new products in the markets where traditionally Tesmec work and input supply of the Group's products in new sectors such as agriculture and construction industries.

The consolidated financial statements of Tesmec have been prepared in accordance with the International Financial Reporting Standards (hereinafter the "IFRS" or the "International Accounting Standards"), which were endorsed by the European Commission, in effect as at 31 December 2014. The following table shows the major economic and financial indicators of the Group in September 2015 compared with the same period of 2014.

OVERVIEW OF RESULTS
30 September 2014	Key income statement data (Euro in millions)	30 September 2015
81.0	Operating Revenues	120.2
12.6	EBITDA	16.7
6.7	Operating Income	9.3
3.1	Group Net Profit	4.7

31 December 2014	Key financial position data (Euro in millions)	30 September 2015
121.5	Net Invested Capital	139.5
48.2	Shareholders' Equity	52.8
73.4	Net Financial Indebtedness	86.7
12.9	Investments in property, plant and equipment and intangible assets	9.4

491	Annual average employees	561

Information on the main companies in operation in the first nine months of the year is provided below:

Tesmec USA Inc., a company that is 67% owned by Tesmec S.p.A. and 33% by Simest S.p.A. (Tesmec S.p.A. has the option to repurchase the latter shareholding in 2018), is based in Alvarado (Texas) and operates in both the Trencher segment and, since 2012, in the rail sector. In the first nine months of 2015, revenues achieved directly with customers/end users came to Euro 24.1 million;
Tesmec Service S.r.l., a company wholly-owned by Tesmec S.p.A. with registered office in Grassobbio (BG) and an operating unit in Monopoli (BA), where its operations regard the design and manufacture of machinery for the maintenance of rolling stock following the acquisition of the business unit of the company AMC2 Progetti e Prototipi S.r.l occurred in February 2015. During the first nine months of 2015, the company continued to develop its product range and recorded revenues of Euro 0.9 million. On 8 September 2015, the Shareholders' Meeting of Tesmec Service S.p.A. approved the merger plan of the company into Tesmec S.p.A.. The merger plan of the company into Tesmec S.p.A. will be made in the current year.
Tesmec SA (Pty) LTD, with registered office in Johannesburg (South Africa), 100% owned by Tesmec S.p.A. In the first nine months, the company generated revenues of Euro 3 million;
Condux Tesmec Inc, a joint venture that is 50% owned by Tesmec S.p.A. and 50% by US shareholder Condux, which is based in Mankato (USA), has been active since June 2009 in selling products for the North American stringing equipment market. The company has been consolidated using the equity method and in the first nine months of the year generated revenues totalling Euro 3.1 million;
Tesmec Peninsula WLL, a Joint Venture with registered office in Doha (Qatar) 49% owned by Tesmec S.p.A., is the hub through which the Tesmec Group is present on the Arabian Peninsula. The activity of Tesmec Peninsula started in the second quarter of 2011. The company has been consolidated using the equity method and in the first nine months of the year generated revenues of Euro 4.5 million;
Marais Technologies SA, with registered office in Durtal (France), 100% owned by Tesmec S.p.A. and acquired on 8 April 2015. The French company is at the head of an international group leader in rental services and construction of machines for infrastructures in telecommunications, electricity and gas. The Group generated during the six months (from the date of acquisition as at 30 September 2015) revenues totalling Euro 11.4 million;
SGE S.r.l.: controlled company specialised in the design and sales of sensors and fault detectors and measurement devices for medium voltage power lines. During the first nine months of 2015, revenues amounted to Euro 3.2 million.

Income statement

The comments provided below refer to the comparison of the consolidated income statement figures as at 30 September 2015 with those as at 30 September 2014. The data given below reflect the change in the consolidation area with the acquisition of the Marais Group as from 8 April 2015. The effects of this acquisition will be described in more detail in the following pages of this report.

The main income figures for the first nine months of 2015 and 2014 are presented in the table below:

	As at 30 September
(Euro in thousands)	2015	% of revenues	2014	% of revenues
Revenues from sales and services	120,178	100.0%	80,996	100.0%
Cost of raw materials and consumables	(61,796)	-51.4%	(37,852)	-46.7%
Cost of service	(20,436)	-17.0%	(13,743)	-17.0%
Non-recurring costs for services	(494)	-0.4%	-	0.0%
Payroll costs	(24,499)	-20.4%	(18,838)	-23.3%
Other operating (costs)/ revenues, net	(2,494)	-2.1%	(2,052)	-2.5%
Badwill from a bargain purchase	2,633	2.2%	-	0.0%
Amortisation and depreciation	(7,476)	-6.2%	(5,836)	-7.2%
Development costs capitalised	3,762	3.1%	3,655	4.5%
Portion of losses/(gains) from the valuation of Joint Ventures using the equity method	(120)	-0.1%	394	0.5%
Total operating costs	(110,920)	-92.3%	(74,272)	-91.7%
Operating income	9,258	7.7%	6,724	8.3%
Financial expenses	(5,534)	-4.6%	(3,987)	-4.9%
Financial income	3,468	2.9%	2,405	3.0%
Portion of losses/(gains) from the valuation of equity investments using the equity method	(254)	-0.2%	(172)	-0.2%
Pre-tax profit	6,938	5.8%	4,970	6.1%
Income tax	(2,248)	-1.9%	(1,844)	-2.3%
Net profit for the period	4,690	3.9%	3,126	3.9%
Profit / (loss) attributable to non-controlling interests	6	0.0%	(3)	0.0%
Group profit (loss)	4,684	3.9%	3,129	3.9%

Profile of revenues:

Revenues as at 30 September 2015 increased all in all by 48.4%; without considering the effects of the acquisition of the Marais Group, overall growth would have been 34.9%.

a) Revenues by geographic area

The turnover of the Group continues to be produced almost exclusively abroad and in particular in extra EU countries. Also sales made to customers based in Europe are at times intended for use outside the European continent. The revenue analysis by area is indicated below, compared with the first nine months of 2015 and the first nine months of 2014, which indicates the growth of the European and African markets, partially balanced by the downtrends recorded in the market of BRICs countries.

We also point out that the European market benefited from the entrance of Marais in Tesmec Group and from the increase in revenues of the Stringing equipment segment deriving from the particularly significant order related to the supply of equipment to the Spanish Abengoa group for the construction of more than 5,000 km of 500kV lines in Brazil and Euro 6,305 thousand for the effects of the acquisition of the Marais Group.

	As at 30 September
(Euro in thousands)	2015	2014
Italy	8,596	11,438
Europe	46,809	13,573
Middle East	17,432	9,489
Africa	9,924	3,598
North and Central America	24,932	21,303
BRIC and Others	12,485	21,595
Total revenues	120,178	80,996

b) Revenues by segment

The tables below show the income statement figures as at 30 September 2015 compared to those as at 30 September 2014, broken down into three operating segments.

	As at 30 September
(Euro in thousands)	2015	% of revenues	2014	% of revenues	2015 vs. 2014
Stringing equipment	58,190	48.4%	33,724	41.6%	24,466
Trencher	58,876	49.0%	36,426	45.0%	22,450
Rail	3,112	2.6%	10,846	13.4%	(7,734)
Total revenues	120,178	100.0%	80,996	100.0%	39,182

Revenues as at 30 September 2015 recorded an increase in both the Stringing equipment segment (72.5%) and the Trencher segment (61.6%) and a decrease in the Rail segment (71.3%).

The increase in revenues in the Trencher segment is mainly a result of the positive contribution of the American and the Middle East market. Moreover, the consolidation of revenues of the Marais Group from 8 April to 30 September 2015 generated total revenues of Euro 11 million. Without considering the effects of the acquisition of the Marais Group, the growth in the Trencher segment would have been 31.6%.

The significant increase in the first nine months in the Stringing equipment segment is due to the deliveries related to the order for the supply of equipment to the Spanish Abengoa Group for the construction of more than 5,000 km of 500kV lines in Brazil.

The Group has also recorded the first revenues and orders in the new business of Automation, confirming the validity of the strategic choices implemented in the past years that also focused on the market of streamlining of power lines. Finally, the decrease in revenues in the Rail segment is mainly attributable to the nature of a business characterised by longterm contracts and prolonged times for executing the negotiations. Important negotiations are currently underway that will lead to a growth in revenues of the segment in the coming quarters.

Operating costs net of depreciation and amortisation

	As at 30 September
(Euro in thousands)	2015	2014	2015 vs. 2014	% change
Cost of raw materials and consumables	(61,796)	(37,852)	(23,944)	63.3%
Cost of service	(20,436)	(13,743)	(6,693)	48.7%
Non-recurring costs for services	(494)	-	(494)	100.0%
Payroll costs	(24,499)	(18,838)	(5,661)	30.1%
Other operating (costs)/ revenues, net	(2,494)	(2,052)	(442)	21.5%
Badwill from a bargain purchase	2,633	-	2,633	100.0%
Development costs capitalised	3,762	3,655	107	2.9%
Portion of losses/(gains) from the valuation of Joint Ventures using the equity method	(120)	394	(514)	-130.5%
Operating costs net of depreciation and amortisation	(103,444)	(68,436)	(35,008)	51.2%

The table shows an increase in the cost of raw materials and consumables due to the increase in turnover and to a different sales mix by Country/product that mainly concerned the period.

As described in the paragraph 3.1 Effects of the acquisition of the Marais Group, the operating costs include Euro 8,709 thousand of net costs deriving from the acquisition of the Marais Group that include Euro 2,139 thousand of net nonrecurring revenues deriving from this transaction (consisting of non-recurring costs for services of Euro 494 thousand and of badwill from the acquisition of Euro 2,633 thousand) and Euro 363 from intercompany write-off. Without considering these effects, the operating costs net of depreciation and amortisation would have increased by 38.4%.

EBITDA

In connection with this trend in revenues, in terms of margins, EBITDA amounts to Euro 16,734 thousand, which represents 13.9% of the sales for the period, compared to 15.5% recorded in the first nine months of 2014.

As described in the paragraph 3.1 Effects of the acquisition of the Marais Group, the income statement includes nonrecurring costs for services of Euro 494 thousand and profit from badwill from a bargain purchase of Euro 2,633 thousand. Without considering the effects of the acquisition of the Marais Group, EBITDA would have been 13.3%.

They were separately shown when calculating the EBITDA.

	As at 30 September
(Euro in thousands)	2015	% of revenues	2014	% of revenues	2015 vs. 2014
Operating income	9,258	7.7%	6,724	8.3%	2,534
+ Depreciation and amortisation	7,476	6.2%	5,836	7.2%	1,640
EBITDA (*)	16,734	13.9%	12,560	15.5%	4,174
+ Non-recurring costs	494	0.4%	-	0.0%	494
+ Badwill	(2,633)	-2.2%	-	0.0%	(2,633)
adj EBITDA (*)	14,595	12.1%	12,560	15.5%	4,668

(*) EBITDA is represented by the operating income gross of amortisation/depreciation. The EBITDA thus defined represents a measurement used by Company management to monitor and assess the company's operating performance. EBITDA is not recognised as a measure of performance by the IFRS and therefore is not to be considered an alternative measurement for assessing the performance of the Group's operating income. As the composition of EBITDA is not governed by the reference accounting standards, the criterion for determination applied by the Group may not be in line with the criterion adopted by others and is therefore not comparable.

The tables below show the income statement figures as at 30 September 2015 compared to those at 30 September 2014, broken down into three operating segments:

	As at 30 September
(Euro in thousands)	2015	% of revenues	2014	% of revenues	2015 vs. 2014
Stringing equipment	9,369	16.1%	6,092	18.1%	3,277
Trencher	7,473	12.7%	2,835	7.8%	4,638
Rail	(108)	-3.5%	3,633	33.5%	(3,741)
EBITDA (*)	16,734	13.9%	12,560	15.5%	4,174

This result is the combined effect of different trends in the three segments:

Stringing equipment: the margin percentage on revenues fell to 16.1% in the first nine months of 2015, compared to 18.1% achieved in the first nine months of 2014 also thanks to a better absorption of fixed costs on higher sales volumes;
Trencher: the margin percentage on revenues rose to 12.7% in the first nine months of 2015, compared to 7.8% achieved in the first nine months of 2014. This trend is due to the more favourable exchange rate and to the improvement in margins in newly developing countries. Without considering the effects of the acquisition of the Marais Group, the margin percentage on revenues would have been 10.9%. This trend is the result of the marginality decrease in the Oil&Gas sector due to the low oil price.
Rail: the margin percentage on revenues fell to -3.5% in the first nine months of 2015, compared to 33.5% recorded in the first nine months of 2014 mainly due to lower volumes, which led to a lesser absorption of fixed costs.

Financial Management

	As at 30 September
(Euro in thousands)	2015	2014
Net Financial Income/Expenses	(3,575)	(3,508)
Foreign exchange gains/losses	1,417	1,817
Fair value adjustment of derivative instruments	92	109
Portion of losses/(gains) from the valuation of equity investments using the equity method	(254)	(172)
Total net financial income/expenses	(2,320)	(1,754)

Net financial management decreased compared to the same period in 2014 by Euro 566 thousand, insofar as it mainly reflects:

for Euro 67 thousand higher interests payable generated by the signing of new medium/long-term loans in connection with several investment initiatives undertaken by the Group;
for Euro 400 thousand the effects of the different USD/EUR exchange rate trend in the two periods of reference that resulted in the recording of net profits totalling Euro 1,417 thousand in the first nine months of 2015 (Euro 475

thousand realised and Euro 942 thousand unrealised) against net profits of Euro 1,817 thousand in the first nine months of 2014.

5.Summary of balance sheet figures as at 30 September 2015

Information is provided below on the Group's main equity indicators, as at 30 September 2015 compared to 31 December 2014. In particular, the following tables show the reclassified funding sources and uses from the consolidated balance sheet as at 30 September 2015 and as at 31 December 2014. The figures given below are not always directly comparable given the effects of the acquisition of the Marais Group over the first nine months of 2015, described in more detail in the following pages of this report:

	As at 30 September	As at 31 December
(Euro in thousands)	2015	2014
USES
Net working capital (1)	57,946	57,991
Fixed assets	83,443	65,283
Other long-term assets and liabilities	(1,887)	(1,737)
Net invested capital (2)	139,502	121,537
SOURCES
Net financial indebtedness (3)	86,719	73,364
Shareholders' equity	52,783	48,173
Total sources of funding	139,502	121,537

(3) The net financial indebtedness is calculated as the sum of cash and cash equivalents, current financial assets including available–for–sale securities, noncurrent financial liabilities, fair value of hedging instruments and other non-current financial assets.

A) Net working capital

Details of the composition of the "Net Working Capital" as at 30 September 2015 and 31 December 2014 are as follows:

(Euro in thousands)	As at 30 September 2015	As at 31 December 2014
Trade receivables	51,855	41,297
Work in progress contracts	4,504	5,249
Inventories	60,777	55,390
Trade payables	(41,930)	(34,179)
Other current assets/(liabilities)	(17,260)	(9,766)
Net working capital (1)	57,946	57,991

Net working capital amounted to Euro 57,946 thousand, substantially in line with 31 December 2014 decreasing by Euro 45 thousand.

As described in the paragraph 3.1 Effects of the acquisition of the Marais Group, without considering the effects of the acquisition of the Marais Group, net working capital would have amounted to Euro 56,105 thousand and the decrease would have been 3.3%.

The performance of the individual items of the net workig capital in which is included the change of the acquisition of the Group Marais, shows a substantial increase in the balance of assets and liabilities that in the presence of the increase in revenues noted above confirms an improvement efficiency in the use of funds.

B) Fixed assets and other long-term assets

The table below shows a breakdown of "Fixed assets and other long term assets" as at 30 September 2015 and 31 December 2014:

(Euro in thousands)	As at 30 September 2015	As at 31 December 2014

Intangible assets	13,590	12,372
Property, plant and equipment	64,955	48,116
Equity investments in associates	4,883	4,792
Other equity investments	15	3
Fixed assets	83,443	65,283

Total fixed assets and other long-term assets recorded an increase of Euro 18,160 thousand due to the increase in the value of property, plant and equipment of Euro 16,839 thousand mainly due to the acquisition of the Marais Group as described in paragraph 3.1 Effects of the acquisition of the Marais Group (of Euro 14,032 thousand) and of intangible assets of Euro 1,218 thousand due to the increase in development costs net of the amortisation/depreciation effect for the period mainly related to the development of new production lines.

C) Net financial indebtedness

Details of the breakdown of Net financial indebtedness as at 30 September 2015 and 31 December 2014 are as follows:

(Euro in thousands)	As at 30 September 2015	of which with related parties and group	As at 31 December 2014	of which with related parties and group
Cash and cash equivalents	(17,075)		(18,665)
Current financial assets (1)	(9,942)	(9,640)	(6,798)	(6,552)
Current financial liabilities	46,068	1,183	36,506	1,100
Current portion of derivative financial instruments	14		-
Current financial indebtedness (2)	19,065	(8,457)	11,043	(5,452)
Non-current financial liabilities	67,303	15,046	61,861	15,954
Non-current portion of derivative financial instruments	351		460
Non-current financial indebtedness (2)	67,654	15,046	62,321	15,954
Net financial indebtedness pursuant to CONSOB Communication No. DEM/6064293/2006	86,719	6,589	73,364	10,502

(1) Current financial assets as at 30 September 2015 and 31 December 2014 include the market value of shares and warrants, which are therefore considered cash and cash equivalents.

(2) Current and non-current financial indebtedness is not identified as an accounting element by the IFRS. The valuation criteria applied by the Group may not necessarily be the same as those adopted by other groups and therefore the balances obtained by the Group may not be comparable therewith.

In the first nine months of 2015, the Group's net financial indebtedness increased by Euro 13,355 thousand compared to the figure at the end of 2014.

Without considering the effects of IAS 17 for the lease contract of the premises of Grassobbio, the net financial indebtedness would be Euro 68,654 thousand as at 30 September 2015, compared to Euro 54,474 thousand as at 31 December 2014. The change compared to 31 December 2014 is mainly due to the acquisition of the Marais Group that resulted in the takingover of a new debt of Euro 13,628 thousand, in addition to the seasonal nature of the business and to the changes in working capital as well as to the payment of dividends. The table below shows the breakdown of the following changes:

increase in current financial indebtedness of Euro 13,873 thousand due to the:
increase in current financial liabilities of Euro 8,022 thousand mainly due to (i) Euro 3,378 thousand as a result of increase in payables to factors and (ii) to Euro 1,023 thousand of the drawing-up of new short-term loan contracts; this increase is compensated by:
increase in current financial assets and cash and cash equivalents of Euro 1,554 thousand;
increase in non-current financial indebtedness of Euro 5,333 thousand deriving from the combined effect of the increase of Euro 4,676 thousand related to the loans of the Marais Group, the drawing-up of new medium/longterm loan agreements amounting to Euro 13,345 thousand offset by the reclassification in the current financial indebtedness of the amount of Euro 12,688 thousand relating to the short-term portion of medium/long-term loans.

6.Management and types of financial risk

For the management of financial risks, please see the paragraph "Financial risk management policy" contained in the Explanatory Notes to the Annual Consolidated Financial Statements for 2014, where the Group's policies in relation to the management of financial risks are presented.

7.Atypical and/or unusual and non-recurring transactions with related parties

In compliance with the Consob communications of 20 February 1997, 27 February 1998, 30 September 1998, 30 September 2002 and 27 July 2006, we specify that during the first nine months of 2015, no transactions took place with related parties of an atypical or unusual nature that are far removed from the company's normal operations or such as to harm the income statement, balance sheet or financial results of the Group.

For significant intercompany and related party information, please see the paragraph "Related party transactions" in the Explanatory Notes.

8.Group Employees

The average number of Group employees in September 2015, including the employees of companies that are fully consolidated, is 561 persons (of which 68 related to the Marais Group) compared to 491 in 2014.

9.Other information

Treasury shares

On 30 April 2015, the Shareholders' Meeting resolved favourably on the First Section of the Report on Remuneration pursuant to Article 123-ter of Legislative Decree no. 58/98 and authorised also the Board of Directors, for a period of 18 months, to purchase, on the regulated market, ordinary shares of Tesmec until 10% of the share capital of the Company and within the limits of the distributable profits and of the available reserves resulting from the last financial statements duly approved by the Company or the subsidiary company making the purchase. The authorisation also includes the right to dispose of (in whole or in part and also in several times) the shares in the portfolio subsequently, even before having exhausted the maximum amount of shares purchasable and to possibly repurchase the shares to the extent that the treasury shares held by the Company and, if necessary, by the companies controlled by it, do not exceed the limit established by the authorisation. The quantity and the price at which transactions will be made will comply with the operating procedures laid down by the regulations. This authorisation replaces the last authorisation resolved by the Shareholders' Meeting on 30 April 2014 and expiring in October 2015.

In the period between 1 July 2015 and the date of this Report, the Company purchased 804,176 treasury shares (0.75% of Share Capital) at an average price of Euro 0.7019 for a total amount net of commissions of Euro 564,475.34. On the date of this report, the Company holds a total of 3,400,497 treasury shares, equal to 3.18% of the Share Capital.

Events occurring after the close of the financial period

On October 13, 2015 there was the sale of 20% of Marais Technologies SA to the French company 2CD SA as required by the original purchase agreement.

Business outlook

Based on the backlog and several ongoing negotiations, we expect a great growth in the fourth quarter, both organic and from the integration of Marais Group, that will lead an improvement compared to the previous year.

The expected increase in business volumes will support margins increase with a better absorption of fixed costs and cash generation. Moreover, excluding the effect of the expected increase in revenues, the net financial indebtedness is expected lower, thanks to efficiency actions on working capital.

INTERIM REPORT ON OPERATIONS

Consolidated financial statements

Consolidated statement of financial position as at 30 September 2015 and as at 31 December 2014

	Notes	30 September 2015	31 December 2014
(Euro in thousands)
NON-CURRENT ASSETS
Intangible assets	6	13,590	12,372
Property, plant and equipment	7	64,955	48,116
Equity investments valued using the equity method		4,883	4,792
Other equity investments		15	3
Financial receivables and other non-current financial assets		491	274
Derivative financial instruments	15	14	16
Deferred tax assets		7,237	3,374
Non-current trade receivables		213	546
TOTAL NON-CURRENT ASSETS		91,398	69,493
CURRENT ASSETS
Work in progress contracts	8	4,504	5,249
Inventories	9	60,777	55,390
Trade receivables	10	51,855	41,297
of which with related parties:	10	5,231	6,570
Tax receivables		395	489
Other available-for-sale securities		68	125
Financial receivables and other current financial assets	11	9,874	6,673
of which with related parties:	11	9,667	6,552
Other current assets		4,218	2,491
Cash and cash equivalents		17,075	18,665
TOTAL CURRENT ASSETS		148,766	130,379
TOTAL ASSETS		240,164	199,872
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS
Share capital	12	10,708	10,708
Reserves / (deficit)	12	37,401	32,547
Group net profit / (loss)	12	4,684	4,909
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS		52,793	48,164
Minority interest in capital and reserves / (deficit)		(16)	13
Net profit / (loss) for the period attributable to non-controlling interests		6	(4)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		(10)	9
TOTAL SHAREHOLDERS' EQUITY		52,783	48,173
NON–CURRENT LIABILITIES
Medium-long term loans	13	67,303	61,861
of which with related parties:	13	15,046	15,954
Derivative financial instruments	15	351	460
Employee benefit liability		2,818	3,016
Provisions for risks and charges		-	39
Deferred tax liabilities		7,024	2,892
TOTAL NON-CURRENT LIABILITIES		77,496	68,268
CURRENT LIABILITIES
Interest-bearing financial payables (current portion)	14	46,068	36,506
of which with related parties:	14	1,183	1,100
Derivative financial instruments	15	14	-
Trade payables		41,930	34,179
of which with related parties:		68	8
Advances from customers		6,314	5,705
Income taxes payable		3,160	1,003
Provisions for risks and charges		4,403	1,040
Other current liabilities		7,996	4,998
TOTAL CURRENT LIABILITIES		109,885	83,431
TOTAL LIABILITIES		187,381	151,699
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		240,164	199,872

Consolidated income statement as at 30 September 2015 and 2014

		As at 30 September
(Euro in thousands)	Notes	2015	2014
Revenues from sales and services	17	120,178	80,996
of which with related parties:		6,920	5,334
Cost of raw materials and consumables		(61,796)	(37,852)
of which with related parties:		(171)	(1,044)
Cost of service		(20,436)	(13,743)
of which with related parties:		(42)	17
Non-recurring costs for services		(494)	-
Payroll costs		(24,499)	(18,838)
Other operating (costs)/ revenues, net		(2,494)	(2,052)
of which with related parties:		11	34
Badwill from a bargain purchase		2,633	-
Amortisation and depreciation		(7,476)	(5,836)
Development costs capitalised		3,762	3,655
Portion of losses/(gains) from the valuation of Joint Ventures using the equity method		(120)	394
Total operating costs	18	(110,920)	(74,272)
Operating income		9,258	6,724
Financial expenses		(5,534)	(3,987)
of which with related parties:		(785)	(983)
Financial income		3,468	2,405
of which with related parties:		117	117
Portion of losses/(gains) from the valuation of equity investments using the equity method		(254)	(172)
Pre-tax profit		6,938	4,970
Income tax		(2,248)	(1,844)
Net profit for the period		4,690	3,126
Profit / (loss) attributable to non-controlling interests		6	(3)
Group profit (loss)		4,684	3,129
Basic and diluted earnings per share		0.0437	0.0292

Consolidated statement of comprehensive income as at 30 September 2015 and 2014

			As at 30 September
(Euro in thousands)	Notes	2015	2014
NET PROFIT FOR THE PERIOD		4,684	3,129
Other components of comprehensive income

Other components of comprehensive income that will be subsequently reclassified to net income/(loss) for the year:
Exchange differences on conversion of foreign financial statements	12	2,864	2,652

Other components of comprehensive income that will not be subsequently reclassified to net income/(loss) for the year:
Actuarial profit (loss) on defined benefit plans		84	(162)
Income tax		(23)	44
	12	61	(118)

Total other income/(losses) after tax		2,925	2,534
Total comprehensive income (loss) after tax		7,609	5,663
Attributable to:
Shareholders of the Parent Company		12,299	8,789
Minority interests		(4,690)	(3,126)

Statement of consolidated cash flows as at 30 September 2015 and 2014

		As at 30 September
(Euro in thousands)	Notes	2015	2014
CASH FLOW FROM OPERATING ACTIVITIES
Net profit for the period		4,690	3,126
Adjustments to reconcile net income for the period with the cash flows generated by (used in) operating activities:
Amortisation and depreciation	6-7	7,476	5,836
Provisions for employee benefit liability		7	104
Provisions for risks and charges / inventory obsolescence / doubtful accounts		1,016	658
Badwill from a bargain purchase		(2,633)
Employee benefit payments		(165)	(12)
Payments of provisions for risks and charges		(271)	(718)
Net change in deferred tax assets and liabilities		(844)	1,105
Change in fair value of financial instruments	15	(94)	(52)
Change in current assets and liabilities:
Trade receivables	10	(2,313)	(1,330)
Inventories	9	43	(13,264)
Trade payables		3,930	6,003
Other current assets and liabilities		1,610	(2,635)
NET CASH FLOW GENERATED BY OPERATING ACTIVITIES (A)		12,452	(1,179)
CASH FLOW FROM INVESTING ACTIVITIES
Investments in property, plant and equipment	7	(8,780)	(7,908)
Investments in intangible assets	6	(4,705)	(4,340)
(Investments) / disposal of financial assets		(1,842)	(487)
Changes in the consolidation area		315	-
Proceeds from sale of property, plant and equipment and intangible assets	6-7	4,107	2,242
NET CASH FLOW USED IN INVESTING ACTIVITIES (B)		(10,905)	(10,493)
NET CASH FLOW FROM FINANCING ACTIVITIES
Disbursement of medium/long-term loans	16	13,345	19,248
Repayment of medium/long-term loans	16	(13,712)	(11,828)
Net change in short-term financial debt	16	112	2,370
Purchase of treasury shares	12	(564)	(168)
Other changes	12	48	-
Dividend distribution	12	(2,403)	(1,682)
NET CASH FLOW GENERATED BY (USED IN) FINANCING ACTIVITIES (C)		(3,174)	7,940
TOTAL CASH FLOW FOR THE PERIOD (D=A+B+C)		(1,627)	(3,732)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (E)		37	206
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD (F)		18,665	13,778
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (G=D+E+F)		17,075	10,252
Additional information:
Interest paid		3,950	3,286
Income tax paid		1,343	1,986

Statement of changes in consolidated shareholders' equity as at 30 September 2015 and 2014

(Euro in thousands)	Share capital	Legal reserve	Share premium reserve	Reserve of Treasury Shares	Translation reserve	Other reserves	Profit for the period	Total Shareholders' Equity Attributable to Parent Company Shareholders	Total Shareholders' Equity Attributable to Non Controlling Interests	Total Shareholders' Equity

Balance as at 1 January 2014	10,708	1,810	10,915	(793)	(1,455)	16,218	4,384	41,787	8	41,795
Profit for the period	-	-	-	-	-	-	3,129	3,129	(3)	3,126
Other profits / (losses)	-	-	-	-	2,652	(118)	-	2,534	-	2,534
Total comprehensive income / (loss)	-	-	-	-	-	-	-	5,663	(3)	5,660
Allocation of profit from the previous year	-	194	-	31	-		2,477 (2,702)	-		-
Dividend distribution	-	-	-	-	-		- (1,682)	(1,682)	-	(1,682)
Other changes	-	-	-	(168)	-	-	-	(168)	-	(168)
Balance as at 30 September 2014	10,708	2,004	10,915	(930)	1,197	18,577	3,129	45,600	5	45,605

(Euro in thousands)	Share capital	Legal reserve	Share premium reserve	Reserve of Treasury Shares	Translation reserve	Other reserves	Profit for the period	Total Shareholders' Equity Attributable to Parent Company Shareholders	Total Shareholders' Equity Attributable to Non Controlling Interests	Total Shareholders' Equity

Balance as at 1 January 2015	10,708	2,004	10,915	(1,010)	2,114	18,524	4,909	48,164	9	48,173
Profit for the period	-	-	-	-	-	-	4,684	4,684	6	4,690
Other profits / (losses)	-	-	-	-	2,864	61	-	2,925	-	2,925
Total comprehensive income / (loss)	-	-	-	-	-	-	-	7,609	6	7,615
Allocation of profit from the previous year	-	137	-	60	-	2,309	(2,506)	-	-	-
Dividend distribution	-	-	-	-	-	-	(2,403)	(2,403)	-	(2,403)
Change in the consolidation area	-	-	-	-	-	25	-	25	(25)	-
Other changes			-	(564)	-	(38)	-	(602)	-	(602)
Balance as at 30 September 2015	10,708	2,141	10,915	(1,514)	4,978	20,881	4,684	52,793	(10)	52,783

Explanatory notes

Accounting policies adopted in preparing the consolidated financial statements as at 30 September 2015

1.Company information

The Parent Company Tesmec S.p.A. (hereinafter "Parent Company" or "Tesmec") is a legal entity organised in accordance with the legal system of the Italian Republic. The ordinary shares of Tesmec are listed on the MTA STAR Segment of the Milan Stock Exchange since 1 July 2010. The registered office of the Tesmec Group (hereinafter "Group" or "Tesmec Group") is in Milan, Piazza S. Ambrogio 16.

2.Reporting standards

The consolidated financial statements as at 30 September 2015 were prepared in condensed form in accordance with International Financial Reporting Standards (IFRS), by using the methods for preparing interim financial reports provided by IAS 34 Interim financial reporting.

The accounting standards adopted in preparing the interim consolidated financial statements as at 30 September 2015 are those adopted for preparing the consolidated financial statements as at 31 December 2014 in compliance with IFRS.

More precisely, the consolidated statement of financial position, income statement, comprehensive income statement, statement of changes in shareholders' equity and statement of cash flows are drawn up in extended form and are in the same format adopted for the consolidated financial statements as at 31 December 2014. The explanatory notes to the financial statements indicated below are in condensed form and therefore do not include all the information required for annual financial statements. In particular, as provided by IAS 34, in order to avoid repeating already disclosed information, the notes refer exclusively to items of the consolidated statement of financial position, the consolidated income statement, the consolidated statement of comprehensive income, the statement of changes in consolidated shareholders' equity and the statement of consolidated cash flows whose breakdown or change, with regard to amount, type or unusual nature, are significant to understanding the economic and financial situation of the Group.

Since the interim consolidated report on operations does not disclose all the information required in preparing the consolidated annual financial statements, they must be read together with the consolidated financial statements as at 31 December 2014.

The interim consolidated report on operations as at 30 September 2015 comprises the consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income, statement of changes in consolidated shareholders' equity, statement of consolidated cash flows and related explanatory notes. Comparative figures are disclosed as required by IAS 34 (31 December 2014 for the statement of financial position and 30 September 2014 for the consolidated income statement, consolidated comprehensive income statement, statement of changes in shareholders' equity and cash flow).

The interim consolidated report on operations is presented in Euro and all values are rounded to the nearest thousand, unless otherwise indicated.

Disclosure of the interim consolidated report on operations of the Tesmec Group for the period ended 30 September 2015 was authorised by the Board of Directors on 9 November 2015.

Translation of foreign currency financial statements and of foreign currency items

The exchange rates used to determine the value in Euros of the financial statements of subsidiary companies expressed in foreign currency (exchange rate to 1 Euro) are shown below:

		Average exchange rates for the	End-of-period exchange rate
		quarter ended 30 September	as at 30 September
	2015	2014	2015	2014
US Dollar	1.115	1.355	1.120	1.258
Bulgarian Lev	1.956	1.956	1.956	1.956
Russian Rouble	66.554	48.039	73.242	49.765
South African Rand	13.687	14.540	15.498	14.261
Renminbi	6.965	8.358	7.121	7.726
Qatar Riyal	4.057	4.935	4.078	4.582
Algerian Dinar	109.337	107.132	118.775	104.465
Tunisian Dinar	2.169	2.240	2.199	2.267
Australian dollar	1.462	1.477	1.594	1.444
New Zealand Dollar	1.573	1.601	1.757	1.621
CFA franc	1.062	1.218	1.092	1.206

3.Consolidation methods and area

As at 30 September 2015, the area of consolidation changed with respect to that as at 31 December 2014:

On 13 February 2015, the East Trenchers S.r.l. shareholder sold its entire investment equal to 8.8% of the Share Capital to Tesmec S.p.A. As a result of the operation described above, as from 13 February 2015, Tesmec S.p.A. has become sole shareholder of East Trenchers S.r.l.;
on 8 April 2015, Tesmec S.p.A. concluded the acquisition of the entire share capital of Marais Technologies SAS ("Marais Group"), French company at the head of an international group leader in rental services and construction of machines for infrastructures in telecommunications, electricity and gas.

4.New accounting standards

The accounting standards adopted for the preparation of the interim condensed consolidated report on operations are the same as those adopted for the preparation of the consolidated financial statements for the year ended 31 December 2014, with the exception of the adoption as of 1 January 2015 of the new standards, amendments and interpretations. The Group has not adopted in advance any new standard, interpretation or change issued but not yet in force.

The nature and effects of these changes are shown below. Albeit these new standards and amendments were applicable for the first time in 2015, they had no impact on the consolidated financial statements of the Group or on the interim consolidated report on operations of the Group. The nature and impact of each new standard/amendment is listed below:

Amendments to IAS 19 - Defined contribution plans: employee contributions

IAS 19 requires an entity to consider contributions from employees or third parties in the recording of defined benefit plans. When the contributions are related to the provided service, they should be attributed to the periods of service as a negative benefit. This amendment clarifies that, if the amount of contributions does not depend on the number of years of service, the entity is allowed to recognise these contributions as a reduction of the cost of service in the period in which the service is rendered, instead of allocating the contribution to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014. This amendment is not relevant to the Group, given that none of the entities that are part of the Group have plans comprising contributions of employees or third parties

Annual Improvements to IFRSs 2010–2012 Cycle

These improvements have been in force since 1 July 2014 and had no impact on the consolidated financial statements of the Group.

IFRS 2 Share-based payments

This improvement applies prospectively and clarifies various points related to the definition of performance and service conditions representing vesting conditions, including:

a performance condition must include a service condition;
an objective of performance must be achieved while the counterparty provides a service;
an objective of performance can refer to the operations or activities of an entity, or to those of another entity within the same Group;
a performance condition can be a market based performance condition or a non-market performance condition;
if the counterparty, regardless of the reasons, ceases to provide service during the vesting period, the service condition is not met.

The above definitions are consistent with how the Group has identified any performance and service conditions that are vesting conditions in previous periods, and thus these amendments do not impact the Group's accounting policies.

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable). This is consistent with the Group's current accounting policy, and thus this amendment does not impact the Group's accounting policy.

IFRS 8 Operating segments

The amendment applies prospectively and clarifies that:

an entity should disclose information on the assessments made by the management in applying the aggregation criteria set forth in paragraph 12 of IFRS 8, including a short description of the operating segments that have been aggregated and of the economic characteristics (for example: sales, gross margin) used for defining whether the segments are "similar";
it is necessary to present the reconciliation of the segment assets with the total assets only if the reconciliation is presented by the senior operating decision maker, as required for segment liabilities.

The Group did not apply the aggregation criteria provided by IFRS 8.12.

IAS 16 Property, plant and equipment and IAS 38 Intangible assets

The amendment applies prospectively and clarifies that in IAS 16 and in IAS 38 an asset can be revalued with reference to observable data both by adjusting the gross book value of the asset to the market value and by determining the market value of the book value and adjusting proportionally the gross book value in such a way that the resulting book value is equal to the market value. Moreover, the accumulated amortisation and depreciation is the difference between the gross book value and the book value of the asset. The Group has not recorded any revaluation adjustment during the interim period of reference.

IAS 24 Related party disclosures

The amendment applies prospectively and clarifies that a management entity (entity providing key management personnel services) is a related party subject to related party disclosures. Moreover, an entity that makes use of a management entity must disclose the costs incurred for management services. This amendment is not relevant for the Group in that it does not receive management services from other entities.

Annual Improvements to IFRSs 2011–2013 Cycle

These improvements have been in force since 1 July 2014 and the Group applied them for the first time in this interim condensed consolidated report on operations. They include:

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that:

joint arrangements, not just joint ventures, are outside the scope of IFRS 3;
this scope exception applies only to the accounting in the financial statements of the joint arrangement itself.

Tesmec Group has no joint arrangement, and thus this amendment is not relevant for the Group and its subsidiaries.

IFRS 13 Fair Value Measurement

The amendment applies prospectively and clarifies that the portfolio exception provided by IFRS 13 can be applied not only to financial assets and liabilities, but also to other contracts in the scope of IFRS 9 (or IAS 39, as applicable). The Group does not apply the portfolio exception in IFRS 13.

IAS 40 Investment property

The description of additional services in IAS 40 differentiates between investment properties and owner-occupied properties (for example: property, plant and equipment). The amendment applies prospectively and clarifies that in determining whether an operation represents the purchase of an asset or a business combination, IFRS 3 must be used and not the description of additional services of IAS 40. This amendment does not impact the accounting policy of the Group.

5.Significant events occurred during the period

The significant extraordinary transactions that occurred during the period include the following:

On 19 March 2015, Cerved Rating Agency, the Italian rating agency specialised in assessing the creditworthiness of non-financial companies, confirmed the "A2.2" solicited rating with reference to the bond issue "Tesmec S.p.A. 6% 2014-2021" (ISIN: IT0005012247), traded on the ExtraMOT PRO market organised and managed by Borsa Italiana S.p.A. More specifically, the "A2.2" rating issued by the Cerved Rating Agency ranks fifth on a scale of 13 risk levels (from A1.1 to C2.1) and it is the result of an evaluation process that combines rigorous quantitative models to forecast the credit risk and accurate qualitative analyses of specialised analysts, with an eye also to the Company's competitive position in the industry.
On 30 April 2015, with the approval of the 2014 financial statements, the Shareholders' Meeting of Tesmec S.p.A. decided to allocate the profit of the Parent Company of Euro 6,278 thousand, as follows:
Euro 137 thousand to the Legal reserve;
assign a dividend of Euro 0.023 to each outstanding ordinary share;
assign to the Extraordinary Reserve the amount of profit remaining after the allocation to the Legal reserve and dividend.
On 1 May 2015, the lease contract of the building of Grassobbio signed on 31 January 2011 with the related company Dream Immobiliare S.r.l. was changed.

Therefore, the Rental of Tesmec will decrease by Euro 144 thousand/year.

Was approved the renewal of the contract for the lease of the building of Endine Gaiano signed with the related party Dream Immobiliare S.r.l. for the period from 1 January 2016 to 31 December 2021 without changing the current rental of Euro 310 thousand per year fixed in 2004 in that Tesmec bore the costs for renovating the roof of Euro 348 thousand.
Alfredo Brignoli, Vice Chairman of Tesmec S.p.A. and a historical figure of the Tesmec Group, died on 10 June 2015. Born in 1920 in Ponteranica (Bergamo), Brignoli had done his entire entrepreneurial path in the mechanical sector

and, in 1951, was a co-founder of the Tesmec Group, together with Annibale Caccia Dominioni, father of the current Chairman and Chief Executive Officer.

As part of the development of the company structure, the following are of note:

On 26 February 2015, the final decree of approval relating to the transfer of the company AMC2 in favour of Tesmec Service S.r.l. was received. For further details, refer to the next paragraph 5.2.
On 13 February 2015, the East Trenchers S.r.l. shareholder sold its entire investment equal to 8.8% of the Share Capital to Tesmec S.p.A. As a result of the operation described above, as from 13 February 2015, Tesmec S.p.A. has become sole shareholder of East Trenchers S.r.l.
On 8 April 2015, Tesmec S.p.A. concluded the acquisition of the entire share capital of Marais Technologies SAS ("Marais Group"), French company at the head of an international group leader in excavation services and in the construction of machines for infrastructures in telecommunications, electricity and gas. For further details, refer to the next paragraph 5.1.
On 8 September 2015, the Shareholders' Meeting of Tesmec Service S.p.A. approved the merger plan of the company into Tesmec S.p.A. The merger is part of a process of corporate simplification and rationalisation in order to improve the functionality of the organisational structure in economic, management and financial terms and better seize the future growth opportunities of the Group.

5.1 Acquisition of the Marais Group

The method used for the first consolidation of the companies acquired as requested by the Accounting Standards of reference is shown below.

The acquisition was recorded based on the provisions of IFRS 3 on business combinations; according to this principle, for the purposes of a proper accounting of the operations, it is necessary to:

determine the total consideration of the acquisition;
allocate, on the date of acquisition, the consideration of the business combination to acquired assets and to the liabilities undertaken, including those not recognised before the purchase;
recognise any goodwill acquired in the aggregation.

Illustrated below are the net economic and financial effects deriving from the acquisition of the Marais Group on the date of acquisition.

Determining the total consideration of the acquisition

The Transaction involves the purchase of 1,093,005 shares of Marais (corresponding to 100% of the share capital), of 1,160,534 convertible bonds issued by Marais (corresponding to 100% of the existing bonds) and of 215,384 warrants issued by Marais (corresponding to 100% of existing warrants) at a price of Euro 32 (units).

The additional expenses related to the above-mentioned acquisition totalling Euro 494 thousand, net of the related tax effect, which were posted in these Financial Statements to the Income statement in accordance with IFRS 3 and considered among the non-recurring items.

Measurement of assets and liabilities of the Marais Group on the date of acquisition

The breakdown of assets and liabilities acquired at their book value and their restated value, according to IFRS 3 ("Acquisition Method"), in order to reflect their fair value, is shown below.

	Marais Group	Adjustment to the Acquisition situation	Notes	Adjusted Marais Group
(Euro in thousands)
NON-CURRENT ASSETS
Intangible assets	1	-		1
Property, plant and equipment	10,360	4,494	a)	14,854
Equity investments valued using the equity method	294	-		294
Financial receivables and other non-current financial assets	124	-		124
Deferred tax assets	115	2,737	b)	2,852
TOTAL NON-CURRENT ASSETS	10,894	7,231		18,125
CURRENT ASSETS
Inventories	3,144	-		3,144
Trade receivables	6,592	43	c)	6,635
Tax receivables	485	-		485
Financial receivables and other current financial assets	913	-		913
Other current assets	753	-		753
Cash and cash equivalents	315	-		315
TOTAL CURRENT ASSETS	12,202	43		12,245
TOTAL ASSETS	23,096	7,274		30,370
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY ATTRIBUTABLE TO PARENT
COMPANY SHAREHOLDERS Share capital	10,930	(10,930)		-
Reserves / (deficit)	(37,648)	40,937		3,289
Group net profit / (loss)	(949)	293		(656)
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO
PARENT COMPANY SHAREHOLDERS	(27,667)	30,300		2,633
Minority interest in capital and reserves / (deficit)	(17)	-		(17)
Net profit / (loss) for the period attributable to non	-	-		-
controlling interests
TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO NON CONTROLLING INTERESTS	(17)			(17)
TOTAL SHAREHOLDERS' EQUITY	(27,684)	30,300		2,616
NON–CURRENT LIABILITIES
Medium-long term loans	27,371	(18,389)	d)	8,982
Employee benefit liability	-	44	e)	44
Deferred tax liabilities	2,924	941	f)	3,865
TOTAL NON-CURRENT LIABILITIES	30,295	(17,404)		12,891
CURRENT LIABILITIES
Interest-bearing financial payables (current portion)	8,197	(3,354)	d)	4,843
Trade payables	3,318	-		3,318
Advances from customers	71	-		71
Income taxes payable	100	-		100
Provisions for risks and charges	3,580	-		3,580
Other current liabilities	5,219	(2,268)	d)	2,951
TOTAL CURRENT LIABILITIES	20,485	(5,622)		14,863
TOTAL LIABILITIES	50,780	(23,026)		27,754
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	23,096	7,274		30,370

In determining the fair value of acquired assets and liabilities, the main differences identified refer:

a) to the revaluation of property, plant and equipment of Euro 4,494 thousand. The measurement was confirmed by independent expert opinions and was defined by determining the state of use and level of obsolescence for each asset;
b) to the recording of deferred taxes of Euro 3,454 thousand related to losses incurred in previous years; this recovery was supported by the recovery expectations expressed by the business plans referring to the newly acquired group.

The value is net of the tax impact of the operations subject matter of the acquisition, amounting to Euro 717 thousand;

c) to the net effect of Euro 43 thousand from the waiver of receivables from third parties;
d) to the waiver of Euro 24,011 thousand by banks and other lenders of their loans, as defined in the agreements related to the sale of the Marais Group;
e) to the allocation of Euro 44 thousand for covering the severance indemnity of the employees;
f) to the deferred tax liability of the entries made when measuring the assets and liabilities acquired of Euro 941 thousand.

As provided by IFRS 3, within 12 months after the transaction (i.e. April 2016), the recording of the acquisition will be completed through the final allocation of the paid purchase price.

Determining the residual goodwill or Badwill from a bargain purchase

The difference between the total consideration of the acquisition and the net value of the acquired assets and liabilities measured at fair value was recognised as follows:

(Euro in thousands)	Badwill from a bargain purchase calculation
Total consideration of the acquisition	- (*)
Marais Group shareholders' equity	2,633
Badwill from a bargain purchase	2,633

(*) Euro 32

With regard to the definition of the total consideration of the acquisition, refer to what is already described in the previous paragraphs.

Marais Group contribution to the profit and loss for the period ended 30 September 2015

The economic contribution of the Marais Group in the period between the date of first consolidation (8 April 2014) and the end of the reporting period was as follows:

(Euro in thousands)	From 8 April as at 30 September 2015
Revenues from sales and services	10,950
EBITDA	102
Operating Income	(911)
Net profit for the period	(610)

The impact of the transaction on the net financial indebtedness of the Group on 8 April 2015 amounted to Euro 12,597 thousand and refers to the consideration exchanged for the acquisition (Euro 32) and to the net financial indebtedness of the acquired companies, including the liability of the fair value of derivatives and the positive effect deriving from the measurement at fair value of the loan, as already mentioned above.

	Impact on consolidated figures
(Euro in thousands)
Cash and cash equivalents	(315)
Current financial assets (1)	(913)
Current financial liabilities	4,843
Current portion of derivative financial instruments	-
Current financial indebtedness (2)	3,615
Non-current financial liabilities	8,982
Non-current portion of derivative financial instruments	-
Non-current financial indebtedness (2)	8,982
Net financial indebtedness pursuant to CONSOB Communication No. DEM/6064293/2006	12,597

(1) Current financial assets as at 30 September 2015 and 31 December 2014 include the market value of shares and warrants, which are therefore considered cash and cash equivalents.

5.2 AMC2 Business Unit Acquisition

On 26 February 2015, the final decree of approval relating to the transfer of the business units of the company AMC2 in favour of Tesmec Service S.r.l. was filed. The consideration paid for the acquisition amounted to Euro 1,987 thousand, while the book value of the transferred assets was Euro 150 thousand; as a result, the arising differential amounted to Euro 1,837 thousand and was provisionally allocated to goodwill.

As provided by IFRS 3, within 12 months after the transaction (i.e. February 2016), the recording of the acquisition will be completed through the final allocation of the paid purchase price.

Book values of the acquired company	Company acquisition
(Euro in thousands)	AMC 2

Assets
Intangible assets	11
Property, plant and equipment	50
Inventories	37
Other current assets	48
Cash and cash equivalents	4
Total assets	150

Total liabilities	-

Fair value of net assets acquired/sold	150

Consideration for the acquisition/sale	(1,987)

Difference between consideration paid and net assets acquired	(1,837)

In previous years, part of the upfront costs for the acquisition of the business operations of the company AMC2 were capitalised as intangible assets in progress.

COMMENTS ON THE MAIN ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

6.Intangible assets

The breakdown and changes in "Intangible assets" as at 30 September 2015 and as at 31 December 2014 are shown in the table below:

(Euro in thousands)	01/01/2015	Increases due to purchases	Change in the consolidation area	Decreases	Reclassifications	Amortisation	Exchange rate differences	30/09/2015
Development costs	10,365	4,199	-	(23)	-	(3,374)	234	11,401
Rights and trademarks	386	94	1	-	-	(129)	-	352
Goodwill	-	287	-	-	1,550	-	-	1,837
Assets in progress and advance payments to suppliers	1,621	125	-	(196)	(1,550)	-	-	-
Total intangible assets	12,372	4,705	1	(219)	-	(3,503)	234	13,590

(*) This item includes the effects on the date of acquisition of the Marais Group

Intangible assets amounted to Euro 13,590 thousand as at 30 September 2015, and were up by Euro 1,218 thousand against the previous year mainly due to development costs capitalised during the first nine months of 2015 of Euro 4,199 thousand, partially offset by the amortisation for the period (Euro 3,374 thousand). These costs refer to projects that the Group's technical offices are working on, based on expectations of income that go beyond those of orders currently in progress. The increase in the period is due to development costs borne and capitalised with reference to the design of machines and integrated systems for the installation, maintenance and diagnostics of the railway catenary wire system, plus customised machines for special operations on the line.

The temporary goodwill of Euro 1,837 thousand generated by the acquisition of the company AMC2 in February 2015 was also recorded during the period. As provided by IFRS 3, within 12 months after the transaction (i.e. February 2016), the recording of the acquisition will be completed through the final allocation of the paid purchase price. The investment was made for the development of design and production of machines for the maintenance of railway lines.

Where impairment indicators and the result of impairment tests suggest that the value of a project will not be recovered by the generation of future cash flows, it is fully amortised in the financial period.

7.Property, plant and equipment

The breakdown and changes in "Property, plant and equipment" as at 30 September 2015 and as at 31 December 2014 are shown in the table below:

(Euro in thousands)	01/01/2015	Increases due to purchases	Change in the consolidation area	Decreases	Reclassifications	Depreciation	Exchange rate differences	30/09/2015
Land	5,457	-	342	-	-	(4)	16	5,811
Buildings	24,596	54	-	-	189	(650)	451	24,640
Plant and machinery	6,007	170	2,721	(68)	-	(931)	142	8,041
Equipment	503	349	942	(75)	-	(310)	-	1,409
Other assets	10,831	7,932	10,849	(3,745)	-	(2,078)	439	24,228
Assets in progress and advance payments to suppliers	722	275	-	-	(189)	-	18	826
Total property, plant and equipment	48,116	8,780	14,854	(3,888)	-	(3,973)	1,066	64,955

(*) This item includes the effects on the date of acquisition of the Marais Group

As at 30 September 2015, property, plant and equipment totalled Euro 64,955 thousand, up compared to the previous year by Euro 16,839 thousand.

The increase is due for Euro 14,854 thousand to the acquisition of the Marais Group partially offset by the depreciation for the period of Euro 3,937 thousand.

The fleet's machines increased by Euro 4,187 thousand due to: i) the sale to third parties of trencher machines previously rented and booked in the fleet and (ii) the inclusion of new machines in the Trencher fleet for a total of Euro 7,479 thousand, related to the launch of new lease businesses. As at 30 September 2015, the net book value of the fleet amounted to Euro 23,625 thousand corresponding to 112 trencher machines (including 8 in Tesmec S.p.A., 5 in Tesmec SA, 23 in Tesmec USA and 76 in the Marais Group).

8.Work in progress contracts

The following table sets forth the breakdown of Work in progress contracts as at 30 September 2015 and as at 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014
Work in progress (Gross)	8,991	8,211
Advances from contractors	(4,487)	(2,962)
Work in progress contracts	4,504	5,249
Advances from contractors (Gross)	-	-
Work in progress (Gross)	-	-
Advances from contractors	-	-

"Work in progress" refers exclusively to the rail segment where the machinery is produced in accordance with specific customer requirements. "Work in progress" is recognised as an asset if, on the basis of an analysis carried out for each contract, the gross value of work in progress is greater than advances from customers; it is recognised as a liability if the advances are greater than the related work in progress.

If the advances are not collected at the reporting date, the corresponding amount is recognised as trade receivables. The item work in progress decreased by Euro 745 thousand due to billings in the period exceeding the revenue generated.

9.Inventories

The following table provides a breakdown of Inventories as at 30 September 2015 compared to 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014
Raw materials and consumables	29,747	27,768
Work in progress	14,160	13,001
Finished products and goods for resale	16,779	14,469
Advances to suppliers for assets	91	152
Total inventories	60,777	55,390

Compared to 31 December 2014, inventories recorded an increase of Euro 5,387 thousand mainly attributable to the increase in Raw materials and consumables and Finished products and goods for resale necessary to cover the expected sales for the coming months of the year. The balance includes Euro 2,704 of Inventories related to the Marais Group.

10.Trade receivables

The following table provides a breakdown of Trade receivables as at 30 September 2015 and as at 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014
Trade receivables from third-party customers	46,624	34,727
Trade receivables from associates, related parties and joint ventures	5,231	6,570
Total trade receivables	51,855	41,297

The increase in trade receivables (25.6%) reflects the trend of sales, the balance of trade receivables due from related parties decreased by Euro 1,339 thousand mainly due to lower sales to the associated company Condux Tesmec. The balance reported in the financial statements is shown net of Provisions for doubtful accounts of Euro 3,218 thousand.

11.Financial receivables and other current financial assets

The following table provides a breakdown of financial receivables and other current financial assets as at 30 September 2015 and as at 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014
Financial receivables due from associates, related parties and joint ventures	9,640	6,552
Financial receivables from third parties	163	-
Other current financial assets	71	121
Total financial receivables and other current financial assets	9,874	6,673

The increase in current financial assets from Euro 6,673 thousand to Euro 9,874 thousand is mainly due to the increase in credit positions relating to specific contracts signed with the related parties of joint ventures on which an interest rate is applied and repayable within 12 months.

12.Share capital and reserves

The share capital amounts to Euro 10,708 thousand, fully paid in, and is comprised of 107,084,000 shares with a par value of Euro 0.1 each.

The following table provides a breakdown of Other reserves as at 30 September 2015 and as at 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014
Revaluation reserve	86	86
Extraordinary reserve	20,559	16,881
Change in the consolidation area	25	(43)
Severance indemnity valuation reserve	(256)	(317)
Network Reserve	794	794
Retained earnings/(losses brought forward)	3,721	5,171
Effects of operations with entities under common control charged directly to net equity	(4,048)	(4,048)
Total other reserves	20,881	18,524

The revaluation reserve is a reserve in respect of which tax has been deferred, set up in accordance with Italian Law No. 72/1983.

The value of translation differences has a positive impact on Shareholders' Equity of Euro 2,864 thousand as at 30 September 2015.

As a result of the resolution of 30 April 2015, with the approval of the 2014 financial statements, the Shareholders' Meeting of Tesmec S.p.A. decided to allocate the profit of the Parent Company of Euro 6,278 thousand, as follows:

Euro 137 thousand to the Legal reserve;
assign a dividend of Euro 0.023 to each outstanding ordinary share;
assign to the Extraordinary Reserve the amount of profit remaining after the allocation to the Legal reserve and dividend.

13.Medium-long term loans

During the first nine months of 2015, medium-long term loans increased from Euro 61,861 thousand to Euro 67,303 thousand deriving from the combined effect of the increase of Euro 4,676 thousand related to the loans of the Marais Group, the drawing-up of new medium/long-term loan agreements amounting to Euro 13,345 thousand offset by the reclassification in the current financial indebtedness of the amount of Euro 12,688 thousand relating to the short-term portion of medium/long-term loans.

14.Interest-bearing financial payables (current portion)

The following table provides details of this item as at 30 September 2015 and as at 31 December 2014:

(Euro in thousands)	30 September 2015	31 December 2014

Advances from banks against invoices and bills receivables	17,827	18,786
Other financial payables (short-term leases)	2,773	2,474
Payables due to factoring companies	5,444	2,066
Guarantee deposits	17	-
Current account overdrafts	2,648	-
Short-term loans to third parties	3,832	2,809
Current portion of medium/long-term loans	13,527	10,371
Total interest-bearing financial payables (current portion)	46,068	36,506

The increase in the current portion of medium/long-term loans is related to the increase in payables to factors of Euro 3,378 thousand and to the drawing-up of new short-term loan contracts of Euro 1,023 thousand.

15.Disclosure of derivative financial instruments

The following table shows a summary of the financial instruments, other than cash and cash equivalents, owned by the Group as at 30 September 2015:

(Euro in thousands)	Loans and receivables/ financial liabilities measured at amortised cost	Guarantee deposits	Cash and cash equivalents	Available-for sale financial assets	Fair value recognised in the income statement

Financial assets:
Guarantee deposits	-	491	-	-	-
Trade receivables	213	-	-	-	-
Derivative financial instruments	-	-	-	-	14
Total non-current	213	491	-	-	14

Trade receivables	51,855	-	-	-	-
Financial receivables due from related parties	9,667	-	-	-	-
Financial receivables from third parties	207	-	-	-	-
Other available-for-sale securities	-	-	-	68	-
Cash and cash equivalents	-	-	17,075	-	-
Total current	61,729	-	17,075	68	-

Total	61,942	491	17075	68	14

Financial liabilities:
Loans	50,262	-	-	-	-
Non-current portion of finance leases, net	17,041	-	-	-	-
Derivative financial instruments	-	-	-	-	351
Total non-current	67,303	-	-	-	351

Loans	17,359	-	-	-	-
Derivative financial instruments	-	-	-	-	14
Other financial payables (short-term leases)	2,773	-	-	-	-
Other short-term payables	25,919	17	-	-	-
Trade payables	41,930	-	-	-	-
Total current	87,981	17	-	-	14

Total	155,284	17	-	-	365

Management and types of risk

Within its scope of operations, the Group is exposed, to a greater or lesser extent, to certain types of risk that are managed as follows.

The Group does not hold derivatives or similar products for purely speculative purposes.

Interest rate risk

The Tesmec Group's exposure to interest rate risk is managed by taking overall exposure into consideration: as part of the general policy to optimise financial resources, the Group seeks equilibrium, by using less expensive forms of financing.

With regard to the market risk due to changes in the interest rate, the Group's policy is to hedge the exposure related to the portion of medium to long-term indebtedness. Derivative instruments such as Swaps, Collars and Caps are used to manage this risk.

As at 30 September 2015, there were six positions related to derivative instruments of interest rate swap hedging the risk related to the potential increase in interest bearing financial payables (current portion) due to fluctuating market rates. The notional value of these positions was Euro 15.9 million, with a negative equivalent value of Euro 347 thousand. There were also four CAP type positions with notional value equal to Euro 9.5 million and with a negative equivalent value of Euro 4 thousand.

Exchange rate risk

A significant portion of the Group's revenues is generated by sales in foreign countries, including developing countries.

The main transaction currencies used for the Group's sales are the Euro and the US Dollar. The Group believes that if the exchange rate fluctuations of these two currencies are low, there is no risk to operating margins, insofar as the sale price could be adapted on each occasion to the exchange rate. However, if the US dollar were to depreciate significantly against the Euro, we cannot exclude negative effects on margins to the extent that a good portion of sales in US dollars concerns the productions of Italian factories that operate with costs in the Eurozone.

With regard to net exposure that is mainly represented by loans in US Dollars of Tesmec S.p.A., the forward buying of the American currency is adopted as the only hedging instrument. However, these hedges are carried out only for one part of the total exposure in that the timing of the inflow of the receipts in dollars is difficult to predict at the level of each sales invoice. Besides, for a good part of the sales in dollars, the Group uses the production of the American factory with costs in US dollars by creating in this way a sort of natural hedging of the currency exposure.

Forward sale instruments for fixing the exchange rate at the moment of the order are mainly used for covering the risk of the dollar exposure deriving from:

i) selling trenchers produced in Italy in Middle-East Countries;

ii) selling stringing machines produced in Italy in the USA where purchases are in Euro, and sales in US dollars.

Despite the adoption of the above strategies aimed at reducing the risks arising from fluctuation of exchange rates, the Group cannot exclude that future changes thereof might affect the results of the Group. Fluctuations in exchange rates could also significantly affect the comparability of the results of each financial period.

In the first nine months of 2015, Tesmec S.p.A. entered into two forward cover contracts of the Euro/USD exchange rate both closed as at 30 September 2015.

Credit risk

For the Group, credit risk is closely linked to the sale of products on the market. In particular, the extent of the risk depends on both technical and commercial factors and the purchaser's solvency also linked to the country risk in some areas. From a commercial viewpoint, the Group is not exposed to a high credit risk insofar as it has been operating for years in

markets where payment on delivery or letter of credit issued by a prime international bank are usually used as payment methods. There are risks for some countries now subject to military tensions (Iran and Libya). For customers located in the European region, the Group mainly uses factoring without recourse. The provisions for doubtful accounts are considered to be a good indication of the extent of the overall credit risk.

Price risk

In general, price risk is linked to the fluctuation of commodity prices.

Specifically, the price risk of the Group is mitigated by the presence of many suppliers of raw materials as well as by the need to be sure on the supply volumes, in order not to affect the warehouse stock.

In reality, this risk seems remote for two fundamental reasons:

the existence and use of alternative suppliers;
the heterogeneity of raw materials and components used in the production of the Tesmec machinery: it is unlikely for all of them to be affected by increasing price tensions at the same time.

In particular, in the current market situation, this risk seems particularly weakened by the situation of oversupply in many markets.

Liquidity/cash flow variation risks

The management of financial requirements and related risks (mainly interest rate risks, liquidity and exchange rate risks) is carried out by the Group on the basis of guidelines defined by the Group General Management and approved by the Chief Executive Officer of the Parent Company.

The main purpose of these guidelines is to guarantee the presence of a liability structure always in equilibrium with the structure of the balance sheet assets, in order to keep a very sound balance sheet structure.

Forms of financing most commonly used are represented by:

medium-long term loans with multiyear redemption plan, to cover the investments in fixed assets and to finance expenses related to several development projects;
short-term financial payables, advances on export, transfers of trade receivables, to finance the working capital.

The average cost of indebtedness is benchmarked to the trend of the 1/3-month Euribor rates for short-term loans and of the 3/6-month Euribor rates for medium to long-term loans. Some interest rate hedges have been set in place for floating medium-long term loans. Existing loans contemplate the observance of financial covenants. Loan contracts signed with ICCREA-BCC, BNL and Comerica contain certain financial covenant clauses.

In particular, they require that certain parameters, calculated on the basis of the financial statements of the Group and of the financial statements of Tesmec USA, have to be met; they are verified on a semi-annual and annual basis.

Based on the results of the financial statements of the Company and of the Tesmec Group, all expected covenants on medium to long-term loans have been observed.

Risks related to transactions with suppliers

The Tesmec Group adopts a supply policy aimed at diversifying the suppliers of components that are characterised by purchased volumes or by high added value. However, the termination for any reason of these supply relations could imply for the Group supply problems of such raw materials, semi-finished and finished goods as for quantity and time suitable for ensuring the continuity of production, or the provisioning could lead to time issues for achieving quality standards already acquired with the old supplier.

Disclosures: hierarchy levels of fair value measurement

In relation to financial instruments measured at fair value, the following table shows the classification of such instruments on the basis of the hierarchy of levels required by IFRS 13, which reflects the significance of the inputs used in measuring the fair value. The levels are broken down as follows:

level 1 quoted prices without adjustment recorded in an active market for measured assets or liabilities;
level 2 are inputs other than quoted prices included within Level 1, that are observable in the market, either directly (as in the case of prices) or indirectly (i.e. when derived from the prices);
level 3 inputs that are not based on observable market data.

The following table shows the assets and liabilities that are measured at fair value as at 30 September 2015, divided into the three levels defined above:

	Book value as at 30 September	Level 1	Level 2	Level 3
(Euro in thousands)	2015

Financial assets:
Other available-for-sale securities	68	-	-	68
Derivative financial instruments	14	-	14	-
Total current	82	-	14	68

Total	82	-	14	68

Financial liabilities:
Derivative financial instruments	351	-	351	-
Total non-current	351	-	351	-

Derivative financial instruments	14	-	14	-
Total current	14	-	14	-

Total	365	-	365	-

16. Net financial indebtedness

Details of the breakdown of Net financial indebtedness as at 30 September 2015 and 31 December 2014 are as follows:

(Euro in thousands)	As at 30 September 2015	of which with related parties and group	As at 31 December 2014	of which with related parties and group
Cash and cash equivalents	(17,075)		(18,665)
Current financial assets (1)	(9,942)	(9,640)	(6,798)	(6,552)
Current financial liabilities	46,068	1,183	36,506	1,100
Current portion of derivative financial instruments	14		-
Current financial indebtedness (2)	19,065	(8,457)	11,043	(5,452)
Non-current financial liabilities	67,303	15,046	61,861	15,954
Non-current portion of derivative financial instruments	351		460
Non-current financial indebtedness (2)	67,654	15,046	62,321	15,954
Net financial indebtedness pursuant to CONSOB Communication No. DEM/6064293/2006	86,719	6,589	73,364	10,502

(1) Current financial assets as at 30 September 2015 and 31 December 2014 include the market value of shares and warrants, which are therefore considered cash and cash equivalents.

In the first nine months of 2015, the Group's net financial indebtedness increased by Euro 13,355 thousand compared to the figure at the end of 2014.

increase in current financial indebtedness of Euro 13,873 thousand due to the:
increase in current financial liabilities of Euro 8,022 thousand mainly due to (i) Euro 3,378 thousand as a result of increase in payables to factors and (ii) to Euro 1,023 thousand of the drawing-up of new short-term loan contracts; this increase is compensated by:
increase in current financial assets and cash and cash equivalents of Euro 1,554 thousand;
increase in non-current financial indebtedness of Euro 5,333 thousand deriving from the combined effect of the increase of Euro 4,676 thousand related to the loans of the Marais Group, the drawing-up of new medium/longterm loan agreements amounting to Euro 13,345 thousand offset by the reclassification in the current financial indebtedness of the amount of Euro 12,688 thousand relating to the short-term portion of medium/long-term loans.

17.Revenues from sales and services

The table below shows the breakdown of Revenues from sales and services as at 30 September 2015 and as at 30 September 2014. The figures given below are not always directly comparable given the effects of the acquisition of the Marais Group over the first nine months of 2015:

	As at 30 September
(Euro in thousands)	2015	2014
Sales of products	103,941	74,492
Services rendered	13,835	3,071
	117,776	77,563
Changes in work in progress	2,402	3,433
Total revenues from sales and services	120,178	80,996

In the first nine months of 2015, the Group consolidated revenues of Euro 120,178 thousand, marking an increase of Euro 39,182 thousand compared to Euro 80,996 thousand in the same period of the previous year. In percentage terms, this increase represents a total positive difference of 48.4%. Without considering the effects of the acquisition of the Marais Group, growth would have been 34.9%.

The three business areas contributed in different ways to this growth with the growth in the Stringing equipment and Trencher segments, whose revenues increased respectively by 72.5% and 61.6%, which was offset by the decrease in the Rail segment (-71.3%) equal to Euro 7,734 thousand.

Without considering the effects of the acquisition of the Marais Group, the growth in the Trencher segment would have been 31.63%.

Finally, the significant increase in the first nine months in the Stringing equipment segment is due to the order related to the supply of equipment to the Spanish Abengoa Group.

18.Operating costs

The item operating costs amounted to Euro 110,920 thousand, an increase of 49.3% compared to the previous year, a more than proportional increase with respect to the performance in revenues (+48.4%).

We point out an increase in the cost of raw materials and consumables due to a different sales mix by Country/product that mainly concerned the first quarter.

We note that the operating costs include Euro 10,848 thousand represented by the costs of the Marais Group and Euro 2,139 thousand represented by non-recurring costs and revenues deriving from this transaction (consisting of non-recurring costs for services of Euro 494 thousand and of badwill from a bargain purchase deriving from acquisition of Euro 2,633 thousand).

Without considering the effects of the acquisition of the Marais Group, the operating costs would have increased by 38.4%.

The increase in development costs capitalised mainly regards activities relating to the development of an offer of products in the Rail and energy efficiency segments that will complete the traditional offer of products in the Stringing equipment and Trencher segments.

Segment Reporting

For management purposes, the Tesmec Group is organised into strategic business units on the basis of the nature of the goods and services supplied, and presents three operating segments for disclosure purposes:

Stringing equipment segment
machines and integrated systems for overhead and underground stringing of power lines and fibre optic cables; integrated solutions for the streamlining, management and monitoring of low, medium and high voltage power lines (smart grid solutions).
Trencher segment
high-efficiency crawler trenching machines for excavation with a set section for the construction of infrastructures for the transmission of data, raw materials and gaseous and liquid products in the various segments): energy, farming, chemical and public utilities, crawler trenching machines for working in the mines, surface works and earth moving works (RockHawg);
specialised consultancy and excavation services on customer request;
multipurpose site machinery (Gallmac);
this sector also includes the excavation services for power lines and fibre optic cables that constitute the core business of the recently acquired Marais Group.
Rail segment
Machines and integrated systems for the installation, maintenance and diagnostics of the railway catenary wire system, plus customised machines for special operations on the line.

The table below shows the income statement figures as at 30 September 2015 compared to those at 30 September 2014, broken down into three operating segments; to achieve a like-for-like comparison with the figures from the previous year, the income statement and statement of financial position results of the Rail segment were reclassified separately from those of the Stringing equipment segment.

	As at 30 September
			2015		2014
(Euro in thousands)	Stringing equipment	Trencher	Rail	Consolidated	Stringing equipment	Trencher	Rail	Consolidated
Revenues from sales and services	58,190	58,876	3,112	120,178	33,724	36,426	10,846	80,996
Operating costs net of depreciation and amortisation	(48,821)	(51,403)	(3,220)	(103,444)	(27,632)	(33,591)	(7,213)	(68,436)
EBITDA	9,369	7,473	(108)	16,734	6,092	2,835	3,633	12,560
Amortisation and depreciation	(1,751)	(4,680)	(1,045)	(7,476)	(1,770)	(3,331)	(735)	(5,836)
Total operating costs	(50,572)	(56,083)	(4,265)	(110,920)	(29,402)	(36,922)	(7,948)	(74,272)
Operating income	7,618	2,793	(1,153)	9,258	4,322	(496)	2,898	6,724
Net financial income/(expenses)				(2,320)				(1,754)
Pre-tax profit				6,938				4,970
Income tax				(2,248)				(1,844)
Net profit for the period				4,690				3,126
Profit / (loss) attributable to non-controlling interests				6				(3)
Group profit (loss)				4,684				3,129

(*) The EBITDA is represented by the operating income gross of amortisation/depreciation. The EBITDA thus defined represents a measurement used by Company management to monitor and assess the company's operating performance. EBITDA is not recognised as a measure of performance by the IFRS and therefore is not to be considered an alternative measurement for assessing the performance of the Group's operating income. As the composition of EBITDA is not governed by the reference accounting standards, the criterion for determination applied by the Group may not be in line with the criterion adopted by others and is therefore not comparable.

Management monitors the operating income of its business units separately for the purpose of making decisions on resource allocation and performance assessment. Segment performance is assessed on the basis of operating income. Group financial management (including financial income and charges) and income tax is managed at Group level and are not allocated to the individual operating segments.

The following table shows the consolidated statement of financial position by operating segments as at 30 September 2015 and as at 31 December 2014; to achieve a like-for-like comparison with the figures from the previous year, the income statement and statement of financial position results of the Rail segment were reclassified separately from those of the Stringing equipment segment.

	As at 30 September 2015					As at 31 December 2014
(Euro in thousands)	Stringing equipment	Trencher	Rail	Not allocated	Consolidated	Stringing equipment	Trencher	Rail	Not allocated	Consolidated
Intangible assets	3,969	3,404	6,217	-	13,590	3,206	3,387	5,779	-	12,372
Property, plant and equipment	11,553	53,294	108	-	64,955	11,885	36,131	100	-	48,116
Financial assets	4,215	832	-	356	5,403	4,364	432	-	289	5,085
Other non-current assets	134	3,305	71	3,940	7,450	36	696	63	3,125	3,920
Total non-current assets	19,871	60,835	6,396	4,296	91,398	19,491	40,646	5,942	3,866	69,493
Work in progress contracts	-	-	4,504	-	4,504	-	-	5,249	-	5,249
Inventories	13,463	29,576	17,738	-	60,777	13,753	41,470	167	-	55,390
Trade receivables	12,610	36,951	2,294	-	51,855	12,084	26,187	1,143	1,883	41,297
Other current assets	712	2,303	225	11,315	14,555	307	122	498	8,851	9,778
Cash and cash equivalents	-	-	-	17,075	17,075	-	-	-	18,665	18,665
Total current assets	26,785	68,830	20,257	28,390	144,262	26,144	67,779	7,057	29,399	130,379
Total assets	46,656	129,665	26,653	32,686	235,660	45,635	108,425	12,999	32,813	199,872
Shareholders' equity attributable to Parent Company Shareholders	-	-	-	52,793	52,793	-	-	-	48,164	48,164
Shareholders' equity attributable to non-controlling interests	-	-	-	(10)	(10)	-	-	-	9	9
Non-current liabilities	28	8,436	530	68,502	77,496	13	-	622	67,633	68,268
Current financial liabilities	-	-	-	46,082	46,082	-	-	-	36,506	36,506
Trade payables	14,892	7,448	19,590	-	41,930	11,939	20,287	1,953	-	34,179
Other current liabilities	3,465	9,908	925	7,575	21,873	5,567	1,273	262	5,644	12,746
Total current liabilities	18,357	17,356	20,515	53,657	109,885	17,506	21,560	2,215	42,150	83,431
Total liabilities	18,385	25,792	21,045	122,159	187,381	17,519	21,560	2,837	109,783	151,699
Total shareholders' equity and liabilities	18,385	25,792	21,045	174,942	240,164	17,519	21,560	2,837	157,956	199,872

Related party transactions

The following table gives details of economic and equity transactions with related parties. The companies listed below have been identified as related parties as they are linked directly or indirectly to the current shareholders:

			As at 30 September 2015		As at 30 September 2014
(Euro in thousands)	Revenues	Cost of raw materials	Cost of service	Other operating (costs)/ revenues, net	Financial income and expenses	Revenues	Cost of raw materials	Cost of service	Other operating (costs)/ revenues, net	Financial income and expenses
Associates:
Locavert S.A.	47	-	-	-	-	204	-	-	-	-
Bertel S.p.A.	78	-	3	8	28	29	-	-	-	3
Subtotal	125	-	3	8	28	233	-	-	-	3
Joint Ventures:
Condux Tesmec Inc.	2,453	-	1	136	15	2,872	-	10	112	1
Tesmec Peninsula	2,759	(147)	(28)	82	74	170	(1,018)	(12)	69	113
Subtotal	5,212	(147)	(27)	218	89	3,042	(1,018)	(2)	181	114
Related parties:
Ambrosio S.r.l.	-	-	-	(11)	-	-	-	-	(12)	-
TTC S.r.l.	-	-	(49)	-	-	-	-	(44)	-	-
CBF S.r.l.	-	-	-	-	-	-	-	-	-	-
Ceresio Tours S.r.l.	-	-	(8)	-	-	-	-	(7)	-	-
Dream Immobiliare S.r.l.	-	-	-	(272)	(785)	-	-	1	(155)	(983)
Eurofidi S.p.A.	-	-	-	-	-	-	-	-	-	-
FI.IND. S.p.A.	-	-	-	-	-	-	-	-	-	-
Lame Nautica S.r.l.	71	-	1	-	-	5	-	-	-	-
M.T.S. Officine meccaniche S.p.A.	1,478	(5)	4	48	-	1,876	-	3	9	-
Reggiani Macchine S.p.A.	-	(19)	34	12	-	178	(26)	66	11	-
Finetis SARL	25	-	-	-	-	-	-	-	-	-
C2D	-	-	-	8	-	-	-	-	-	-
Comatel	9	-	-	-	-	-	-	-	-	-
Subtotal	1,583	(24)	(18)	(215)	(785)	2,059	(26)	19	(147)	(983)
Total	6,920	(171)	(42)	11	(668)	5,334	(1,044)	17	34	(866)

			30 September 2015			31 December 2014
(Euro in thousands)	Trade receivables	Current financial receivables	Non current financial payables	Current financial payables	Trade payables	Trade receivables	Current financial receivables	Non current financial payables	Current financial payables	Trade payables
Associates:
Locavert S.A.	21	-	-	-	-	21	-	-	-	-
Bertel S.p.A.	17	1,747	-	-	-	129	563	-	-	1
Subtotal	38	1,747	-	-	-	150	563	-	-	1
Joint Ventures:
Condux Tesmec Inc.	464	1,778	-	-	-	1,084	156	-	-	-
Tesmec Peninsula	2,428	4,247	-	-	-	2,755	4,729	-	-	1
Marais Tunisie	-	2	-	-	-	-	-	-	-	-
SOGEA EST BTP	-	23	-	-	-	-	-	-	-	-
Marais Lucas Technologies	-	741	-	-	-	-	-	-	-	-
College Semafor	-	6	-	-	-	-	-	-	-	-
SEP Cergy	-	27	-	-	-	-	-	-	-	-
Subtotal	2,892	6,824	-	-	-	3,839	4,885	-	-	1
Related parties:
Ambrosio S.r.l.	-	-	-	-	5	-	-	-	-	4
TTC S.r.l.	-	-	-	-	41	-	-	-	-	-
CBF S.r.l.	-	-	-	-	-	-	-	-	-	-
Ceresio Tours S.r.l.	-	-	-	-	1	-	-	-	-	2
Dream Immobiliare S.r.l.	-	1,069	15,046	1,183	-	-	1,102	15,954	1,100	-
Eurofidi S.p.A.	-	-	-	-	-	-	2	-	-	-
FI.IND. S.p.A.	-	-	-	-	-	-	-	-	-	-
Lame Nautica S.r.l.	1	-	-	-	-	4	-	-	-	-
M.T.S. Officine meccaniche S.p.A.	2,240	-	-	-	-	2,440	-	-	-	-
Reggiani Macchine S.p.A.	21	-	-	-	-	137	-	-	-	-
Finetis SARL	30	-	-	-	-	-	-	-	-	-
C2D	-	-	-	-	21	-	-	-	-	-
Comatel	9	-	-	-	-	-	-	-	-	-
Subtotal	2,301	1,069	15,046	1,183	68	2,581	1,104	15,954	1,100	6
Total	5,231	9,640	15,046	1,183	68	6,570	6,552	15,954	1,100	8

Condux Tesmec Inc.: the JV purchases stringing machines and equipment for sale on the American market booming in the 2012 financial period at market prices and terms of payment.

Tesmec Peninsula WLL: the JV operates on the Saudi Arabian market supplying trencher machinery produced by the Group as well as on-site and after-sale support services. The income and cost items relate to the normal marketing activities of trenching machines.

Dream Immobiliare S.r.l.: financial income and expenses includes interests payable deriving from the recognition in accordance with IAS 17 of the Building in Grassobbio of Euro 785 thousand; also current and non-current financial payables refers to the same recognition; other operating costs include the cost for the lease of the building in Endine of Euro 272 thousand.

M.T.S. Officine meccaniche S.p.A.: revenues refer to sales of semi-finished products made by the Tesmec Workshop in Sirone.

TTC S.r.l.: the cost of service refers to services delivered to the Tesmec S.p.A. parent company.

As a result of the acquisition of the Marais Group, the following companies were inserted among the associated companies: SEP Cergy 95, SEP Moselle 57, SEP Semafor 77, SEP Liaison Natix 77, SEP College 77, Marais Algerie SARL, Marais Lucas Technologies (Pty) Ltd., Marais Tunisie SA e Mir SA; whereas companies belonging to a member of the board of directors of Marais were included among the related parties, represented by: Finetis SARL, Comatel and CD2. The Marais Group has commercial dealings with these companies in arm's lengths conditions.

19.Commitments and risks

The Group uses guarantees provided by primary banking institutions and insurance companies on behalf of the operating companies for the requirements relating to the execution of contracts in progress. In general, these are guarantees for the satisfactory performance of contracts (known as performance bonds) or guarantees issued upon receipt of payment by the contractor in the form of advance/down payment on contracts in progress (advanced payment bonds). As at 30 September, the value of these guarantees amounted to Euro 30,180 thousand, an increase compared to the value of Euro 23,602 thousand as at December 2014.

20.Significant events occurring after the close of the financial period

On October 13, 2015 there was the sale of 20% of Marais Technologies SA to the French company 2CD SA as required by the original purchase agreement.

Certification pursuant to Article 154-bis of Italian Legislative Decree 58/98

1. The undersigned Ambrogio Caccia Dominioni and Andrea Bramani, as the Chief Executive Officer and the Manager responsible for preparing the Company's financial statements of Tesmec S.p.A., respectively, hereby certify, also taking into consideration the provisions of Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58 of 24 February 1998:
the adequacy in relation to the characteristics of the business and
the actual application

of the administrative and accounting procedures for preparing the Interim Condensed Consolidated Financial Statements as at 30 September 2015.

1. We also certify that:
2.1 The Interim condensed consolidated financial statements as at 30 September 2015:
have been prepared in accordance with international accounting standards endorsed by the European Union, as provided by the Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002;
correspond to the amounts shown in the Company's accounts, books and records;
provide a true and fair view of the equity, income and cash flow situation of the issuer and of its consolidated companies.
2.2 The interim report on operations refers to the important events that took place during the first nine months of the year and their impact on the interim condensed consolidated financial statements, together with a description of the main risks and uncertainties for the three remaining months of the financial period. The interim report on operations also includes a reliable analysis of information on significant transactions with related parties.

Grassobbio, 9 November 2015

Ambrogio Caccia Dominioni Andrea Bramani Chief Executive Officer Manager responsible for

preparing the Company's financial statements

AI assistant

Tesmec — Interim / Quarterly Report 2015

4055_ir_2015-11-12_2ac856d8-75ff-43aa-a34f-8ed25e9e5186.pdf

Tesmec S.p.A.

INTERIM REPORT ON OPERATIONS

1. Introduction

Stringing equipment segment

Trencher segment

Rail segment

2.Macroeconomic Framework

3.Significant events occurred during the period

3.1 Effects of the acquisition of the Marais Group

Balance sheet reclassified by funding sources and uses

4. Activity, reference market and operating performance for the first nine months of 2015

Income statement

a) Revenues by geographic area

b) Revenues by segment

Operating costs net of depreciation and amortisation

EBITDA

Financial Management

5.Summary of balance sheet figures as at 30 September 2015

A) Net working capital

B) Fixed assets and other long-term assets

C) Net financial indebtedness

6.Management and types of financial risk

7.Atypical and/or unusual and non-recurring transactions with related parties

8.Group Employees

9.Other information

Treasury shares

Events occurring after the close of the financial period

Business outlook

INTERIM REPORT ON OPERATIONS

Consolidated statement of financial position as at 30 September 2015 and as at 31 December 2014

Consolidated income statement as at 30 September 2015 and 2014

Consolidated statement of comprehensive income as at 30 September 2015 and 2014

Statement of consolidated cash flows as at 30 September 2015 and 2014

Statement of changes in consolidated shareholders' equity as at 30 September 2015 and 2014

Explanatory notes

Accounting policies adopted in preparing the consolidated financial statements as at 30 September 2015

1.Company information

2.Reporting standards

Translation of foreign currency financial statements and of foreign currency items

3.Consolidation methods and area

4.New accounting standards

Amendments to IAS 19 - Defined contribution plans: employee contributions

Annual Improvements to IFRSs 2010–2012 Cycle

IFRS 2 Share-based payments

IFRS 3 Business Combinations

IFRS 8 Operating segments

IAS 16 Property, plant and equipment and IAS 38 Intangible assets

IAS 24 Related party disclosures

Annual Improvements to IFRSs 2011–2013 Cycle

IFRS 3 Business Combinations

IFRS 13 Fair Value Measurement

IAS 40 Investment property

5.Significant events occurred during the period

5.1 Acquisition of the Marais Group

Determining the total consideration of the acquisition

Measurement of assets and liabilities of the Marais Group on the date of acquisition

Determining the residual goodwill or Badwill from a bargain purchase

Marais Group contribution to the profit and loss for the period ended 30 September 2015

5.2 AMC2 Business Unit Acquisition

COMMENTS ON THE MAIN ITEMS IN THE CONSOLIDATED FINANCIAL STATEMENTS

6.Intangible assets

7.Property, plant and equipment

8.Work in progress contracts

9.Inventories

10.Trade receivables

11.Financial receivables and other current financial assets

12.Share capital and reserves

13.Medium-long term loans

14.Interest-bearing financial payables (current portion)

15.Disclosure of derivative financial instruments

Management and types of risk

Interest rate risk

Exchange rate risk

Credit risk

Price risk

Liquidity/cash flow variation risks

Risks related to transactions with suppliers

Tesmec Interim / Quarterly Report 2015