Tesmec — Investor Presentation 2018

Mar 1, 2018

• Stringing
• Energy Automation
• Railway
• Trencher

Integrated Solutions Provider

2017 Results Presentation

Corporate Strategy >

• 2017 Results >

• 2018 Outlook >

• Overhead power lines construction & maintenance >

• Reconductoring and line improvement >

• Underground cable laying >

• Railway lines electrification >

• Catenary maintenance and diagnostic >

• Special Applications >

• Telecommunication & Teleprotection >

• Electronic integrated sensors, fault detection and measurement >

• Protections & Electronics for Distribution >

• > Telecom networks, FTTH & long distance, power cable installation

• > Oil & Gas, Water pipelines
• > Bulk excavation of rock and Quarries

TESMEC

" From Steel to sustainable Technology "

OUR MISSION

• Value added integrated solutions provider in the market of infrastructure for the transport of energy, data and material >
• Efficiency, digitalization, safety and sustainability are our drivers for the modernization of the infrastructures projects in the world >
• R&D investments: match the people and high know-how to meet the new demands of the markets >

Strategic Approach evolution

4.

Adoption of the Industry 4.0 plan by the Italian Government & new tax incentives in 2017 Budget Law.

TESMEC 4.0
------------

> The most developed markets are strongly investing in high-tech content sectors.

> Expansive fiscal policies are an important driver for the investments.

> Italy & Europe: market leader which recognize the added value of Tesmec "4.0" solutions.

R&D activities & DIGITALIZATION

MARKET xxx

Relevant investments in technologies and solutions with an innovative digital content.

Further investments in industrial technological & digital transformation, in accordance with the Industry 4.0 model.

Make the most of

TAX-SAVING OPPORTUNITIES

• Corporate Strategy >
• 2017 Results >
• 2018 Outlook >

2017 Closing

GROUP (Euro mln)	2017	2016	Delta %
REVENUES	175,6	128,5	36,6%
EBITDA Adj (*)	22,9	11,6	97,4%
% on Revenues	13,1%	9,0%
EBITDA	20,7	8,5	143,5%
% on Revenues	11,8%	6,6%
EBIT	6,1	(4,3)	241,7%
% on Revenues	3,5%	-3,4%
NET FINANCIAL COST	(2,9)	(4,4)	31,4%
% on Revenues	-1,7%	-3,3%
Differences in Exchange	(4,7)	1,7	-370,3%
% on Revenues	-2,7%	1,3%
US DEFERRED TAX	(0,8)	0,0	-100,0%
% on Revenues	-0,5%	0,0%3%
NET INCOME/(LOSS)	(1,4)	(3,8)	63,7%
% on Revenues	-0,8%	-3,1%

GROUP (Euro mln)	2017	2016
NFP	85,2	96,7

ENERGY	2017	2016	Delta %
Revenues	52,1	42,2	23,4%
EBITDA Adj (*)	8,5	6,0	39,9%
% on Revenues	16,2%	14,2%
EBITDA	8,0	4,6	73,4%
% on Revenues	15,4%	10,9%

TRENCHERS	2017	2016	Delta %
Revenues	106,0	80,6	31,6%
EBITDA Adj (*)	11,3	4,5	153,4%
% on Revenues	10,7%	5,6%
EBITDA	10,3	2,9	260,4%
% on Revenues	9,7%	3,5%

RAILWAY	2017	2016	Delta %
Revenues	17,5	5,7	204,4%
EBITDA Adj (*)	3,1	1,1	184,8%
% on Revenues	18,0%	19,2%
EBITDA	2,4	1,0	133,0%
% on Revenues	13,9%	18,2%

(*) Not including Euro 0,4 million non recurring consultancy costs and Euro 1,8 million reclassified Grassobbio rent cost.

2017 Q4 Improvements on 9M - YTD performance

Euro/mln		9M - YTD			Q4			FY - YTD
	2017	2016	Var.	2017	2016	Var.	2017	2016	Var.
REVENUES	132,1	108,5	21,8%	43,5	20,0	117,5%	175,6	128,5	36,6%
EBITDA Adj	15,3	10,7	42,7%	7,6	0,9	744,4%	22,9	11,6	97,4%
EBITDA Adj %	11,5%	9,9%		17,5%	4,5%		13,1%	9,0%
EBIT	3,1	1,6	97,5%	3,0	(5,9)		6,1	(4,3)

2017 Differences in Exchange

GROUP (Euro mln)	2017	2016	2015
Differences in Exchange	(4,7)	1,7	1,8
of which:
Realised	(1,6)	0,2	0,8
Unrealised	(3,1)	1,5	1,0
End-of-period exchange rate USD/Eur as at 31 December	1,199	1,054	1,089
Differences in Exchange for currency:
USD	(3,0)	0,7	2,5
ZAR	(0,2)	0,6	(0,9)
IDR	(0,6)	0,0	0,4
OTHER	(0,9)	0,4	(0,2)
Total	(4,7)	1,7	1,8

US: recovery in 4Q

EBITDA Adj 2017

²⁰¹⁶ Profitability growth in all the sectors in proportion to the revenues ²⁰¹⁷

Financial Information (Euro mln)	2017	2016
Net Working Capital	60,8	76,0
Non Current assets	68,4	70,1
Other Long Term assets/liabilities	0,9	0,5
Net Invested Capital	130,1	146,6
Net Financial Indebtness	85,2	96,7
Equity	44,9	49,9

2016	Working capital reduction & lower capex drive improvement in net invested capital	2017
st March 2018 1		14

Working Capital evolution

2016 2017 € 76,0 mln € 60,8 mln Working capital strong reduction despite sales increase

st March 2018 15

OPERATING NET FINANCIAL POSITION

• Corporate Strategy >
• 2017 Results >
• 2018 Outlook >

BACKLOG MAIN ACTIONS

2018 Outlook

MACRO ECONOMIC xxx TREND	+ > Economy is growing > Price adjustment with positive topline impact	- > Higher inflation rate (material & salary costs), especially in US > Longer supply-chain lead time
	ENERGY: New digital 4.0 products (automation, machines 4.0)
BUSINESS xxx	RAIL: Strong increase: new products and new manufacturing plant

TRENCHERS (cable and fiber): Service and Projects (Australia, US, Europe)

FINANCIALS xxx	Sales: 1Q.2018 no one-off impacts; revenues in line 2017
	2018 Sales: target in the range of 200 M€
	EBITDA: improvement due to better fixed costs absorption & innovations incentives
	NFP: year end reduction target
	Expected BACKLOG in line with 2017 year end (short term)

Summary 2017 Profit & Loss statement - Appendix A

Profit & Loss Account (Euro mln)	2017	2016	Delta vs 2016	Delta %
Net Revenues	175,6	128,5	47,1	36,6%
Raw materials costs (-)	(78,3)	(49,0)	(29,3)	59,8%
Cost for services (-)	(30,9)	(29,1)	(1,8)	6,0%
Personnel Costs (-)	(46,3)	(40,0)	(6,3)	15,6%
Other operating revenues/costs (+/-)	(5,3)	(6,8)	1,5	22,6%
Portion of gain/(losses) from equity investments evaluated using the equity method	0,2	(0,1)	0,3	444,2%
Capitalized R&D expenses	5,7	5,0	0,7	12,9%
Total operating costs	(154,9)	(120,0)	(34,9)	29,1%
% on Net Revenues	(88%)	(93%)
EBITDA	20,7	8,5	12,2	143,5%
% on Net Revenues	12%	7 %
Depreciation, amortization (-)	(14,6)	(12,8)	(1,8)	14,1%
EBIT	6,1	(4,3)	10,4	241,7%
% on Net Revenues	3 %	-3%
Net Financial Income/Expenses (+/-)	(7,6)	(2,7)	(4,9)	197,7%
Taxes (-)	0,1	3,0	(2,9)	-96,7%
Minorities	-	0,2	(0,2)	-80,2%
Group Net Income (Loss)	(1,4)	(3,8)	2,4	63,7%

Balance Sheet (Euro mln)	2017	2016
Inventory	69,9	70,5
Accounts receivable	39,9	49,4
Accounts payable (-)	(39,5)	(31,2)
Op. working capital	70,3	88,7
Other current assets (liabilities)	(9,5)	(12,7)
Net working capital	60,8	76,0
Tangible assets	46,1	47,3
Intangible assets	18,3	18,9
Financial assets	4,0	3,9
Fixed assets	68,4	70,1
Net long term liabilities	0,9	0,5
Net invested capital	130,1	146,6
Cash & near cash items (-)	(21,5)	(18,5)
Short term financial assets (-)	(12,5)	(9,1)
Short term borrow ing	79,2	70,1
Medium-long term borrow ing	40,0	54,2
Net financial position	85,2	96,7
Equity	44,9	49,9
Funds	130,1	146,6

Disclaimer

The Manager responsible for preparing the company's financial reports, Andrea Bramani, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

Any estimates or forward-looking statements contained in this document are referred to the current date and, therefore, any of the assumptions underlying this document or any of the circumstances or data mentioned in this document may change. Tesmec S.p.A. expressly disclaims and does not assume any liability in connection with any inaccuracies in any of these estimates or forward-looking statements or in connection with any use by any third party of such estimates or forward-looking statements.

This document does not represent investment advice or a recommendation for the purchase or sale of financial products and/or of any kind of financial services. Finally, this document does not represent an investment solicitation in Italy, pursuant to Section 1, letter (t) of Legislative Decree no. 58 of February 24, 1998, or in any other country or state.

In addition to the standard financial reporting formats and indicators required under IFRS, this document contains a number of reclassified tables and alternative performance indicators. The purpose is to help users better evaluate the Group's economic and financial performance. However, these tables and indicators should not be treated as a substitute for the standard ones required by IFRS.

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