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Tesmec Group
STAR Conference London, October 5th 2010
Corporate
2/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Index
Tesmec Group
Financials
Strategy for the future
3/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Tesmec Group
Tesmec Group mainly operates in
the market of infrastructure for
the transport of electricity, data
and materials (petroleum and
derivatives, gas, water), a
strategic area for growth and
modernization of each Country.
TWO BUSINESS UNITS
Integrated systems for stringing power lines, fiber optic
cables and electric power lines for railways
High powered tracked trenchers for linear excavation of
underground networks and pipelines or bulk excavation and,
to a less extent, Gallmac multipurpose machines
4/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Business lines
Mission
Products
STRINGING EQUIPMENT
Design, production and marketing of integrated solutions for the
construction and maintenance of infrastructures such as aerial and
underground networks and pipelines.
TRENCHERS
Catenary Installations
Oil, Gas, Water & Sewage Pipelines, Bulk Excavation
Transmission & Distribution Networks
Road Jobs, Construction,
Utilities
Stringing Equipment
Railway Equipment
Trenchers Multipurpose
Machines
Power Lines Railway Lines Civil
Infrastructures Urban
Constructions
Markets
Products and Markets
5/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Global Footprint
1 Headquarter (Grassobbio) and 3 production sites in Italy (Grassobbio, Endine, Sirone)
Trencher production facility in Alvarado
JV for the supply of stringing equipment to the US market
Representative offices in Russia and China
Trenchers supply company
Commercial offices in Canada and Mexico
Saudi Arabia JV (in progress)
6/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
TOTAL AREA (m2)
COVERED AREA (m2)
PRODUCTS ACTIVITIES
GRASSOBBIO (BG - Italy)
68,000 32,500
Stringing equipment
Trenchers Gallmac machines
Mechanical works Quality control Assembly Testing
ENDINE GAIANO (BG - Italy)
20,000 7,500
Stringing equipment
Railway equipment
Quality control Assembly Testing
ALVARADO (TEXAS - USA)
93,000 16,000 Trenchers Assembly Testing
SIRONE (LC - Italy)
18,000 6,750 Components Mechanical works Quality control Assembly
Production Plants
7/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Post IPO lock-up agreements:
TESMEC: 360 days
TTC & FI.IND.: 360 days
3T Finanziaria: 180 days
Shareholding Structure
3T Finanziaria S.p.A.
7,45%
TTC S.r.l. 30,30%
FI.IND S.p.A. 12,54%
Free float 42,07%
Ennismore 2,30%
Italiana Alimenti 5,34%
8/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Index
Tesmec Group
Financials
Strategy for the future
9/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
1H 2010 Results
86
40,653,415,7
7,2 10,4
18,3%
17,8%19,4%
0
15
30
45
60
75
90
FY 2009 1H 2009 1H 2010
1H 2010 Results
Revenues EBITDA EBITDA margin
FY 2009 1H 2009 1H 2010 delta %
Revenues 86,0 40,6 53,4 31.5%
EBITDA 15,7 7,2 10,4 44.4%% Revenues 18,3% 17,8% 19,4%
EBIT 12,3 5,8 7,9 36.2%% Revenues 14,3% 14,4% 14,9%
Net income/(loss) 7,4 2,9 4,7 62.1%% Revenues 8,6% 7,2% 8,8%
Income Statement
(€ m)
Tesmec (Cons.)
FY 2009 1H 2010
Net working capital 48,6 45,7Net current assets 43,1 46,9Non current assets 25,2 25,4Other funds (1,3) (1,1)
Net invested capital 67,1 71,2
Net financial indebtedness 46,2 45,2Equity 20,9 26,0
Total equity and net financial
indebtedness67,1 71,2
Financial Information (€m)Tesmec (Cons.)
€ m
10/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
20,530,5
20,0
10,0
2,8
22,9
0
15
30
45
60
75
Revenues 1H 2009 Stringing Equipment Trenchers Revenues 1H 2010
Revenues Evolution
+ 48,7%+ 14%
€53,4 mm
€40,5 mm
+ 31,6%
Revenues Evolution
Tesmec Group
Revenues increase in both business segments was driven by increasing volumes of products
sold
€ m
11/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
40,6 43,5
1,1
3,9-2,1
3,56,4 53,4
0
15
30
45
60
75
Revenues 1H
2009
Italy Europe North and
Central
America
India and the
Middle East
Rest of the
World
Revenues 1H
2010
Revenues Geographical Split
Revenues Geographical Split
Tesmec Group
Revenue increase was mainly driven by increasing sales in India and CSI in stringing, and by
Africa and Eastern Europe in Trenchers
North America trencher business was negatively impacted by the postponement to the
second half of projects with deliveries initially forecasted in the first half of the year
€ m
12/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Revenues Focus on Emerging Markets
3,0 2,6
6,2
3,1
7,7
22,5
1,1 2,0
0,7
4,1 3,8
11,8
0
5
10
15
20
25
China/F. East CSI India S. America Africa Total
Revenues Focus on Emerging Markets
H1 2010 H1 2009
Tesmec Group
Revenues generated in the main emerging economies accounted for 42% of total revenues
in H1 2010 compared to 29% in H1 2009 thanks to strong grow in almost all markets
In South America important projects were postponed to the second part of the year
€ m
13/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Order Book
13,5
38,2 30,5
55,2
0
15
30
45
60
Order bookFY 2009
H1 2010revenues
Order Intake Order bookH1 2010
19,7
12,9
22,9
16,1
0
6
12
18
24
30
Order bookFY 2009
H1 2010revenues
Order Intake Order bookH1 2010
STRINGING EQUIPMENT TRENCHERS
ORDER BOOK 2008 - H1 2010
17,3 12,6 13,5
38,2
22,1
19,1 19,7
12,9 39,4
31,7 33,2
51,1
0
15
30
45
60
FY 2008 H1 2009 FY 2009 H1 2010
Stringing Equipment Trenchers
€ m
€ m € m
14/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
43,146,9
5,04,7
-12,66,7
0
10
20
30
40
50
60
2009 Net
Working capital
Inventories Trade
Receivables
Trade Payables Other current
ass. / liab.
2010 Net
Working capital
Working Capital Evolution
Working Capital Evolution
Tesmec Group
Working capital increased by around € 4m while decreasing its weight on annualized
revenues (from 50% to 44%)
Working capital was negatively impacted by exchange differences on inventories (€ 2,7m)
Other current assets include € 5,8m of deferred listing costs
€ m
15/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
46,2-10,3
45,2
3,71,4 0,7 0,9
2,6
0
10
20
30
40
50
60
NFP 2009 OFCF NWC Capex Int. exp.net Tax Dividends NFP 1H2010
NFP Evolution
NFP Evolution
Tesmec Group
NFP benefited from positive operating cash generation in the period
In the period were paid dividends for € 2,6m
€ m
16/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Raw Materials Impact
Saving actions
Contracts revision with key suppliers with the target of maintaining costs to 2009 level
Certification and start up of new suppliers in low cost areas mainly for steel structures (i.e.
Bulgaria and Romania steel workshops)
17/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
9,912,2
0
3
6
9
12
15
July-August 2009 July-August 2010
Revenues
+22,1%
31,0%
69,0%
Revenues July-August 2010
Trencher Stringing Equipment
Revenues and Order Intake Update - July & August 2010
New orders intake for July and August
amounted to € 16m with the following
breakdown:
Europe & CSI: € 2.2m
South America: € 10.3m
India & Middle East: € 2.6m
Rest of World: € 0.9m
Tesmec Group
0
2
4
6
8
10
12
Europe & CSI South AmericaIndia & MiddleEast
Rest of World
€ m New orders intake
€ m
18/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Index
Tesmec Group
Financials
Strategy for the future
19/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Key Strategic Drivers
INNOVATION
Products: innovative technological solutions
Service: innovative offer of integrated solutions
Market: approach to new market segments (high speed railway lines; new generation fiber
networks)
ENVIRONMENT
Worldwide Emission Standard: “one step ahead”
Green energy: renewables
Power Grids: Smart and Strong Vision
EMERGING ECONOMIES
Enhancing presence in Brazil, India and Eastern Europe
Direct activities in China, Russia and Middle East
20/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Product: Innovative Technological Solutions
50 years of experience in the stringing business and 25 years in the trenching business
Main R&D results 2007-2010
R&D spending 2007-H1 2010
Note: TESMEC Group Consolidated Financial Statements, IFRS compliant
1,3 2,6 3,0
1,2
1,9 2,5
2,8%
4,1% 6,4%
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2007 2008 2009
2.5
4.5
5.5
1,5 1,8
1,2 1,0
6,9%
5,3%
H1 2009 H1 2010
2.8 2.8
1,32,6 3,0
1,2
1,9
2,5
2,8%
4,1%6,4%
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2007 2008 2009
Capitalized R&D costs Other R&D costs % on revenues
2.5
4.5
5.5
2.5
4.5
5.5
Ultra high voltage transmission lines*
Electronically synchronized multi conductor
puller / tensioner machines
New generation conductors HTLS
Complete set of equipment machines & tools
High voltage underground power lines
Integrated solutions for laying cables
Maintenance & live lines works
Integrated solutions
High speed railway lines
Automatic cable laying wagons
Long distance fiber optic installation
Integrated system to dig & lay fiber optic
Urban rings & FTTH
Advanced solution for installation
Pipelines & underground
infrastructures
Development & set up of different high
performance attachment
Special purpose application
Fast moving wheeled Trenchers
STRINGING EQUIPMENT TRENCHER
* AC 750kv-1000kv / 660kv -800kv DC line
21/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Service: Innovative Offer of Integrated Services
Market needs are changing: trend is to outsource specific technologic works
The more you can innovate on these specific services, the more you can gain market share
Tesmec answer to this trend: Tesmec Service supplies the whole package
of integrated services, from survey and feasibility study to the turnkey
project
New Multi Product Pipeline (NMPP) in South Africa
Gas Pipeline System in Croatia The King Abdullah Financial District in Saudi Arabia
SOUTH AFRICA: TESMEC was awarded a rental contract of 4trenchers for the 550km NMPP project
CROATIA: TESMEC won a contract for 5 trenchers for the Pinakro gas pipeline (190km)
SAUDI ARABIA: TESMEC won a contract for 9 trenchers for the foundation/site preparation of the
new King Abdullah financial district
22/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Market: Innovative Approach to new market segments
Railway sector is undergoing a relevant development around the world, especially in high growth
markets such as China, where there are plans of 12,000km of new high speed lines within 2012.
Tesmec is developing several strategic
actions in order to catch business
opportunities:
Development of high tech systems in
accordance with the strong tech.
specifications (speed >400km/h)
Participation to main projects of high
speed railway lines (tech. partner of
CRCC)
Promotion of Tesmec high quality
products and experience (international
trade fair, media and web)
Becoming the tech. partner of the main
Chinese construction companies
worldwide
Ongoing discussion to set up a JV with a local player to develop the business of construction
and maintenance of high speed railway lines
23/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Tesmec believes that the “Next Generation Networks (NGN)” business has high growth
prospects linked also to the projects of Smart Grids.
Several job site experiences of urban and extra-urban cabling were carried out with solutions
provided by Tesmec.
New Generation Networks
Established relationship with key players in the TLC field (Ericsson, Siemens-Nokia)
Awarded a main fiber optic installation project in Central Italy
Submitted proposal for a 600km extra urban fiber cable project in S. Africa
24/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Worldwide Emission Standard: “One Step Ahead”
Tesmec sensitivity to the environmental problems is well known worldwide
Tesmec R&D team is
collaborating with the main
engine manufacturers to review
our product range
The goal is to reduce by 75%
emissions with next generation
Tier 4 engines
We believe market share can be
increased by being first
supplying new generation
machines
25/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Green Energy: Renewables
Trends of the global energy system show a growing increase in green energy demand
A strong integration of renewable energy sources is needed
Tesmec offers a new automated methodology to connect wind mills and solar plants to
substations
26/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
To transport “green energy” the actual grid must be
significantly rebuilded
Tesmec is involved in the improvement of grid
performance with a “Strong Grid Vision”: strengthen
the role of the network, optimize the system, improve
energy efficiency and accelerate the construction of
"Strong & Smart Grid“
Power Grids: Smart and Strong Vision
750 kV AC Russia
765 kV AC South Africa
1000 kV AC China
660 kV DC Brazil
660 kV DC China
800 kV DC China
27/27 Tesmec Presentation-1H 2010 results-EN-Rev.02 04/10/2010
Disclaimer
This presentation contains certain statements that are neither reported financial results nor other historical information (“forward-looking statements”). These forward-looking statements are based on TESMEC S.p.A.’s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual
future results may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of TESMEC S.p.A. (“TESMEC”) to control or estimate precisely, including future market developments. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. TESMEC does not undertake any obligation to publicly release any
revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation.
This presentation does not constitute an offer of, or an invitation to make an offer for or purchase, any securities of TESMEC in the United States, to U.S. persons (as such term is defined in Regulation S of the U.S. Securities Act of 1933, as amended
(the “Securities Act”) or to any person in any other jurisdiction where such offer or invitation would be unlawful. No securities may be offered or sold in the United States absent registration or an exemption from registration under the
Securities Act. TESMEC does not intend to register any portion of its offering of shares in the United States or to conduct a public offering of shares in the United States or in any other jurisdiction where such offer would be unlawful. TESMEC (and certain shareholders of TESMEC) are offering shares in an Institutional Offering that comprises an offering of shares outside the United States pursuant to Regulation S under the Securities Act. An offering circular (the “Offering Circular”), has been
furnished to each person authorized to invest in the shares. Such persons should refer to the Offering Circular for more complete information about the offering. Any investment decision with respect to the proposed offering should be based on the information contained in the Offering Circular. No representation or warranty, whether express or implied, is being made
with respect to the accuracy or completeness of the information, opinions or forecasts disclosed in this presentation. Neither this document nor any copy thereof may be retained by you or reproduced, redistributed or passed on, in whole or
in part, to any other person. You should not act or rely on, or make any use of the content of, this presentation. This presentation does not purport to be comprehensive. By attending the presentation you agree to be bound by the foregoing
restrictions.
The information contained in this presentation is not for publication or distribution in Australia, Canada, Japan or the United States. The distribution of the content of this presentation in other jurisdictions may be restricted by law. Persons into
whose possession the content of this presentation come should inform themselves about and observe any such restrictions. Any failure to comply with the restrictions set forth above may constitute a violation of applicable securities laws.
TESMEC S.p.A - Headquarters via Zanica, 17/O - 24050 Grassobbio (BG) - Italy
Tel. +39.035.423 2911 - Fax +39.035.4522444 Management and Administration Fax +39.035.4522445 Stringing Equipment Division - Fax +39.035.335664 Trencher Division
www.tesmec.com - info@tesmec.it
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