How To Improve Profits At Ccm

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1 Riservato & Confidenziale FY 2014 Results Presentation May 8th, 2015 Authorised and regulated by the Financial Conduit Authority

2 Disclaimer THIS PRESENTATION IS NOT, NOR SHALL BE CONSTRUED AS, AN OFFER, INVITATION OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY TO BE USED AT AN INVESTOR PRESENTATION AND IT IS PROVIDED FOR INFORMATION PURPOSE ONLY. THIS DOCUMENT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS MATERIAL TO AN INVESTOR. BY ATTENDING THE PRESENTATION OR BY READING THE PRESENTATION SLIDES YOU AGREE TO BE BOUND AS FOLLOWS: This document and its contents are confidential and may not be reproduced, redistributed, published or passed on to any other person, directly or indirectly, in whole or in part, for any purpose. This presentation, prepared by Cooperativa Muratori e Cementisti CMC di Ravenna S.c.p.a. (the Company ), is furnished on a confidential basis only for the use of the intended recipient and only for discussion purposes, may be amended and supplemented and may not be relied upon for the purposes of entering into any transaction. The information contained herein has been obtained from sources believed to be reliable but the Company does not represent or warrants that it is accurate and complete and such information has not been independently verified. The views reflected herein are those of the Company and are subject to change without notice. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the presentation and the information contained herein and no reliance should be made on such information. Neither the Company nor any of its representatives shall accept any liability whatsoever (whether in negligence or otherwise) arising in any way from the use of this document or its contents or otherwise arising in connection with this document or any material discussed during the presentation. This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words target, believe, expect, aim, intend, may, anticipate, estimate, would,, will, could, should, plan, potential, predict, project or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company s control that could cause the Company s actual performance or achievements to be materially different from future performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future strategies and the environment in which it will operate in the future. These forward-looking statements speak only as of the date of this presentation and no reliance should be made on these statements. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based. 2

3 Introduction 4 Page Financial Highlights 7 Q&A 19 Appendix 21 3

4 Introduction q Total turnover and construction revenue increased by 8.8% and 8.9% respectively in FY2014 compared to FY2013. q EBITDA increased by 18.3% from to million. EBITDA margin improved from 10.2% to 11.1% as a percentage of total turnover. q Higher revenue from Italy due to significant contribution of three large Transport Infrastructure projects reaching the revenue generation peak, and higher revenue Overseas thanks to higher contribution from Asia and South America and Northern Africa. q Secured new orders for 1.2 billion in FY 2014 vs 1.0 billion in FY 2013, including million for the construction of a dam in Kenya and a 150 million tunnelling water supply project in Lebanon. q Higher International backlog, representing 54% of the total compared to 45% as at December Total backlog substantially unchanged at 2.9 billion. q Net Working Capital affected by impact of Italian projects with large milestones. Expected to improve in H thanks to expected positive outcome of certain claims, recovery of overdue receivables and higher involvement in lower milestone project. q Increase in Capex due to TBMs and other heavy equipment investments cycle for new projects in Italy, Mozambique, Chile, Nepal and USA. Capex expected to be lower in H q Adjusted Net Financial Position/EBITDA improved from 3.92x to 3.79x, despite the increase in debt driven by higher Capex and Net Working Capital. 4

5 Key Developments in 2014 q Ingula: works to be completed in 2015 resulting in release of working capital q Singapore Metro: excavation will be completed according to plan, then CMC will provide technical assistance for 2 years q Angola Soyo Quifume motorway: in July, SACE, the Italian export credit institution, provided a guarantee for a 164 million financing to the Finance Ministry of Angola for the completion of the Soyo Quifume motorway project q Italy, Motorway Agrigento-Caltanissetta: acquired additional share in the project from exiting shareholder Iter q A new company, Saudi CMC, established in Saudi Arabia to leverage on CMC s transportation and civil infrastructure capabilities in a fast growing market. The new entity was established in partnership with two subsidiaries of a major Saudi construction group q Full reimbursement of the 12.0 million "Preferred Pooled Shares" (PREPS) program q Key new contract wins: q Italy: Acquisition of the share previously owned by the shareholder Iter of the second section of the SS640 Agrigento- Caltanissetta (Sicily). Project extension value: 105 million (CMC s share 100%) q Italy: Construction of 2 sections of the Catania underground for the Ministry of Infrastructure and Transport - Management of Government Railway Circumetnea Catania. Project value: Section 1: 80.3 million (100% CMC); Section 2: 58.9 million (CMC s share 70%) q Italy: Construction of the Lingotto-Bengasi (Line 1) section of the Turin underground. Project value: approximately 60.5 million (CMC s share 75%) q France: Construction of the exploratory tunnel for the Lyon-Turin high-speed railway. Project value: approximately 391 million (CMC s share 16%) q Kenya: construction of the Itare dam for the Rift Valley Water Services Board, a government body. Project value: approximately 241 million (100% CMC share) q Lebanon: water supply project for the Council for Development and Reconstruction in Beirut. Project value: approximately 150 million (100% CMC share). 5

6 Introduction 4 Page Financial Highlights 7 Q&A 19 Appendix 21 6

7 Financial Highlights million Income Statement FY 2014 FY 2013 % Change Comment Total turnover 1, , % Construction revenue 1, % - Italy % - International % EBITDA % EBITDA Margin 11.1% 10.2% Net Income % q m in Italy, mainly driven by: q Motorway Agrigento/Caltanissetta q Milan external ring road q Quadrilatero Umbria/Marche q m overseas thanks to higher contribution from projects in Asia and South America q Significant increase in EBITDA (+ 19.0m), also improved as a percentage of total turnover q Maintained Net Income at appr. 11m despite increased interest charges Balance Sheet Dec-31, 2014 Dec-31, 2013 % Change Comment Net working capital* % q m: higher WIP and receivables Net financial position* % q Higher capex in TBM and seasonality Adj. Net fin. position % q Adj. NFP/EBITDA improved * Restated by including recourse factoring in receivables and current financial debt as a result of a recent change in Italian Gaap Cash Flow FY 2014 FY 2013 Change Comment - CF from operations CF from investing (84.5) (50.8) CF from financing Total cash flow 27.5 (4.1) 31.6 q Higher capex in TBM and other heavy equipment funded by higher CFO and CF from financing. q Further improvement in CFO expected in H thanks to a gradual reduction of NWC 7

8 Financial Highlights million Backlog Dec-31, 2014 Dec-31, 2013 Change Comment - Italy - International Total Backlog , , , , , q Maintained Backlog levels and increased geographical diversification thanks to new large orders secured in Africa and Middle East Breakdown by area Intl. 53.9% Italy 46.1% Intl. 44.7% Italy 55.3% q Higher percentage of projects in Water and Irrigation Works accounting for 24.9% of backlog in 2014 compared to 14.8% in 2013 New Orders FY 2014 FY 2013 Change Comment - Italy International Total new orders 1, , q 122m Catania underground q 63m exploratory tunnel Lyon-Turin q 39m section Turin underground q 241 dam in Kenya q 150 Water Supply Tunnel in Lebanon Key Indicators Dec-31, 2014 Dec-31, 2013 % Change Comment LTM Turnover 1, , % LTM Constr. revenue 1, % LTM EBITDA % Backlog/Constr. revenue 2.73x 3.03x NFP/LTM EBITDA 3.67x 3.68x Adj. NFP/LTM EBITDA 3.79x 3.92x q Higher LTM Turnover, Construction revenue and EBITDA q Lower Backlog/Constr. Revenue as a result of additional International projects q Improved Adj. NFP/EBITDA despite higher capex and NWC resulting in higher debt 8

9 Consistent financial performance q Continued revenue growth through the recent economic cycle q Higher margins as a result of low-risk project portfolio and increasing share in international operations Total turnover ( m) EBITDA ( m) and EBITDA margin (%) CAGR 8% ,016 1, % CAGR 12% % 20% 18% 16% 14% 12% 10% 8% 6% 20 4% 2% % 9

10 Backlog q International projects increased to 54% of total backlog in 2014 vs 45% in ,688 1, Dec-13 Dec-14 Dec Dec-14 0 Dec Dec Dec-13 Dec-14 Dec-13 Dec-14 0 Dec Dec Dec-13 Dec-14 Dec-13 Dec-14 million Backlog 2, ,914.0 Dec-13 Dec-14 Europe 0% North America 3% South America 2% Eastern Africa 9% Northern Africa 9% Asia 7% Italy 49% Southern Africa 21% Mining and Waste Treatment 4% Water Control and Marine 1% Building 10% Water and Irrigation 25% Transport 60% q Higher International backlog, representing more than 50% of total in 2014 q Slightly lower total backlog due to shorter project duration in International markets q Presence in two new areas thanks to the two large orders secured in Lebanon and Kenya 10

11 New Orders q Significant increase in new orders, +13% vs FY2013 Key new orders q Acquisition of the share previously owned by the shareholder Iter of the second section of the SS640 Agrigento-Caltanissetta (Sicily). Project extension value: 105 million (CMC s share 100%) New Backlog Italy q 2 sections (Stesicoro-Aeroporto e Nesima-Misterbianco) of the local underground. Project value: Nesina section: 80.3 million (100% CMC); Stesicoro section: 58.9 million (CMC s share 70%) q Exploratory tunnel for the Lyon-Turin high-speed railway. Project value: approximately 391 million (CMC s share 16%) 289.3m Kenya q Itare dam and related water treatment facilities for the Rift Valley Water Services Board. Project value: approximately 241 million (100% CMC share) 241.0m Lebanon Mozambique USA q q q Greater Beirut Water Supply Project Tunnel and Transfer Lines, funded by the World Bank. Project value: approximately 150 million (100% CMC share); Rehabilitation of the Massingir dam for the Ministry of Public Infrastructure. Project backed by the African Development Bank. Porject value: 37 million (100% CMC s share) Rehabilitation of a bridge on the Merrimack River, 40 Km north of Boston, for the Massachusetts Bay Transportation Authority. Project value: 15.5 million (100% CMC) and additional minor projects for a total of approximately 50 million; 150.0m 37.0m 84.3m Other q q q Additional works on Ingula project. Value: 66.0 million Additional works on Motorway Algeria. Value: 32.0 million Additional works on Quighai hydro-tunnel. Value: 20.0 million 378.1m 1,179.7m 11

12 Construction revenue q +8.9% increase in FY 2014 vs FY 2013, with higher contribution mainly from Italy, Asia and Chile FY-13 FY FY-13 FY FY-13 FY-14 FY-13 FY FY-13 FY-14 FY-13 FY-14 million Construction revenue 1, FY-13 FY-14 Europe 1% North America 5% South America 2% Northern Africa 2% Asia 13% Italy 46% Sothern Africa 31% Mining and Waste Treatment 1% Water Control and Marine 5% Building 13% Water and Irrigation 20% Transport 61% q Higher revenue in Italy, mainly driven by projects in large Transport sector achieving mature stage q Lower revenue in Southern Africa due to completion of projects in Mozambique and Lesotho, and a temporary suspension of works in a section of the Ingula project q Higher contribution from Asia and Chile 12

13 Margins q Improving profitability despite transition period in key international markets million % % Profitability analysis % 7.4% 5.1% 5.5% % 1.0% EBITDA Contribution Margin EBIT Net income q Increased EBITDA both in absolute and in percentage terms q Contribution margin significantly improved in Italy thanks to large projects achieving revenue generation peak q Contribution margin overseas slightly lower compared to FY 2013 due to the temporary suspension of a section of the Ingula project in H q EBIT margin in FY 2014 is higher then in the previous year. q Net income in FY 2014 affected by higher interest charges. FY 2013 FY Contribution margin by area* million % 4.1% Italy 11.2% 10.7% International FY 2013 FY2014 * Calculated on construction revenue in Italy and overseas, respectively. 13

14 Working Capital q Net working capital was 44.6 million higher in 2014 than in 2013 as a result of an increase in WIP and receivables Working Capital Analysis million Inventories Work in progress Receivables Advances Suppliers Other op. net assets NWC Dec-13 Dec q Receivables now include recourse factoring, an off-balance sheet item until recent changes in Italian Gaap (Oic 15). As a result, 2013 figures have been restated to allow comparison with q Higher work in progress and receivables mainly due to the impact of projects with large milestones and long collection period in Italy, only partially offset by an increase in advances on contracts. q In the medium term, a gradual improvement of working capital expected to be driven by: q impact of new projects in Italy with more frequent milestones, q gradual shift towards International projects, which normally requires less working capital q end of Ingula project in South Africa in 2015 q possible successful outcome on important claims in Italy and South Africa 14

15 Capex q Significant capital expenditures already incurred to start new high capital intensive, profitable projects Capital Expeditures* million Intangible Tangible Financial Total Capex FY-13 FY-14 * Net of capital disposals during the period q Capital expenditures in intangibles: mainly related to start-up and mobilisation of projects in Italy, Algeria, South Africa, Zambia and Singapore q Capital expenditures in tangible assets: significantly higher due to decision to enter into lease agreement with buy-back clause (vis-à-vis a rental agreement) for TBM machines required to start new important projects. q Capital expenditures in financial assets: mainly related to an inter-company loan to an associated company for the Val di Chienti project 15

16 Net Financial Position Net Financial Position Analysis million RCF Recourse factoring Other current fin. debt Senior Notes Other noncurrent fin. debt Liquid assets Net financial position Shareholders' loan PREPs Adj. Net financial position Dec-13 Dec-14 q From FY 2014, recourse factoring is included in Net Financial Position, in compliance with the recent change in Italian Gaap (Oic 15). As a result, FY 2013 figures have been restated to allow a comparison with FY q Net Financial Position was 450 million, 69.7 million higher than in 2013, mainly due to the significant investments in TBMs and other equipment for new projects. However, Net Financial Position/EBITDA slightly improved from 3.68x to 3.67x. q Adjusted Net Financial Position was 464 million, 58 million higher than in The 12.0 million outstanding amount of PREPS was entirely reimbursed in the period. Adjusted Net Financial Position/EBITDA improved from 3.92x to 3.79x. 16

17 Cash flow Cash Flow Analysis million CF from Operations CF from Investing CF from Financing Total CF FY-13 FY-14 q Cash flow from Operations significantly higher in FY2014 due to improved profitability q Cash flow from financing affected by higher capital expenditures q Cash flow from financing higher in FY2014 due to investment in heavy equipment for new projects 17

18 Introduction 4 Page Financial Highlights 7 Q&A 19 Appendix 21 18

19 Q&A 19

20 Introduction 4 Page Financial Highlights 7 Q&A 19 Appendix 21 20

21 Reclassified Consolidated Income Statement! Twelve months ended Dec 31 % of change ( in milllion) Revenue (1)!.. 1, Other income and proceeds (2) Total turnover (3). 1, , Raw materials, comsumables and goods (4).. (197.8) (191.1) 3.5 Services, lease and hire (5).. (546.8) (487.5) 12.2 Personnel (176.0) (157.0) 12.1 Provisions for risk and charges (6) (32.6) (50.2) (35.1) Other operating costs (29.0) (26.2) 10.7 EBITDA Depreciation, amortisation and write-offs of receivables.. (62.2) (52.6) 18.3 Operating profit Net financial income and charges (7) (41.9) (29.1) 44.0 Net extraordinary income and charges 1.7 (1.8) (194.4) Income before tax Income taxes (9.7) (9.5) 2.1 Income before minority interests (0.9) Minority interests Consolidated net income

22 Reclassified Net Working Capital December 31, 2014 December 31, 2013 ( in million) Inventories (1)! Raw materials and consumables Work in progress and semi-finished products Finished products and goods Contract work in progress Receivables from clients Receivables from non-consolidated affiliates (2)! Other current assets (3)! Total current assets 1, ,008.4 Contractual advances payments from clients Advances Trade payables to suppliers (4)! Payables to non-consolidated affiliates (5)! Other current liabilities (6)! Reserves for risks and charges Total current liabilities Net Working Capital

23 Reclassified Adjusted Net Financial Position! December 31, 2013 June 30, 2014 Adjustments Pro-forma June 30, 2014 December 31, 2014 ( in million) Cash and cash equivalents (1) (99.3) (135.3) 2.4 (132.9) (126.8) Short-term financial assets (2) (3.8) (5.8) - (5.8) (2.3) Liquid assets. (103.1) (141.1) 2.4 (138.7) (129.1) Short-term bank loans and borrowings (127.6) Revolving Credit Facility Recourse factoring (3) (59.7) Current portion of non-current borrowings (108.1) Other short-term debt (4) Capitalized transaction costs - - (7.0) (7.0) - Current financial debt (302.4) Net current financial debt (300.0) (9.6) 65.9 Non-current bank loans and borrowings Senior Unsecured Notes Other non-current loans (5) Non-current financial debt Total financial debt (6) (2.4) Net financial position Shareholder loans Preferred pooled shares (PREPs) Total adjustments Adjusted net financial position LTM EBITDA Net financial position/ltm EBITDA 3.68x 3.58x 3.58x 3.67x Adj. Net financial Position/LTM EBITDA 3.92x 3.80x 3.80x 3.79x 23

24 Condensed Cash Flow! December 31, 2014 December 31, 2013 ( in million) Cash and cash equivalents at start of the period Cash flow generated by operating activities Cash flow generated by/(used in) investing activities. (84.5) (50.8) Cash flow generated by/(used in) financing activities Cash and cash equivalents at the end of the period

25 Contacts Alberto Morigi CFO CMC di Ravenna Tel: Andrea Pierpaoli, CFA Investor Relations CMC di Ravenna Tel: Mob: Valeria Garavini Investor Relations CMC di Ravenna Tel: