2017 Financial Results 15 March 2018 PowerPoint Presentation - PowerPoint PPT Presentation

we build value 2017 Financial Results 15 March 2018 PowerPoint Presentation Guidelines Author Job Title Gabes-Sfax Motorway, Tunisia March 15, 2018

Agenda 2017 key messages Pietro Salini Chief Executive Officer Financial Update Massimo Ferrari General Manager Finance & Corporate Group CFO Business update Pietro Salini Chief Executive Officer 2017 Financial Results 2 March 15, 2018

Agenda 2017 key messages Pietro Salini Chief Executive Officer 2017 Financial Results 3 March 15, 2018

FY17 Key Earnings Highlights  Strong order intake; Lane order backlog hit record € 3 billion  Solid underlying performance  Significant improvement in net income  A Sustainable gross debt and sound financial structure  Strongly committed to growing the US business  Dealing with legacy issues: Venezuela  Proposed dividend per share of € 0.053 2017 Financial Results 4 March 15, 2018

Addressing Market Concerns  The business does NOT need any equity funding • Balance sheet well capitalized and equity reserves greater than € 1.1 billion  Potential M&A will only focus on growing US business and NOT participate in any bail out capital increases  The Company is assessing changing the reporting currency to US dollars to mitigate future FX volatility • Increasing focus to match assets and liabilities  Continue to sell non-core assets to support gross debt de-leveraging targets • Seeking to sell ca. € 100M of non-core assets in 2018  Actively looking to return cash to shareholders  Business Plan targets revised to reflect FX moves and adoption of IFRS 15  Lane’s strong growth potential and valuation not being appreciated by the market 2017 Financial Results 5 March 15, 2018

Financial Update Massimo Ferrari General Manager Finance & Corporate Group CFO 2017 Financial Results 6 March 15, 2018

Adjustments data | disclaimer  The figures presented for FY16 and FY17 are represented adjusting the IFRS data: • to reflect on a proportional basis the financial results of the jv not controlled by Lane at revenues, EBITDA and EBIT level • exclude the effects arising from impairment of the financial assets in Venezuela • assuming constant exchange rate  We included these adjustments in order to facilitate a comparison of the underlying business performance across periods. 2017 Financial Results 7 March 15, 2018

FY17 Earnings underlying performance  Infrastructure market still healthy and growing  A strong pipeline of commercial activity  New orders: € 6.7 billion, of which Lane € 2.6 billion  Lane: Backlog grew up by 19% in 2017, reaching its record high of € 3 billion  Consolidated revenues growth: +5.8%  FY17 Group net income reached € 211M; +200% FY16 Group net income  Net debt at ca. € 457M, roughly in line with the guidance indicated to the market  Post Venezuela’s write-off, net equity amounted to € 1.1 billion  Successfully completed € 1.1 billion of corporate debt refinancing  Covenants fully respected notwithstanding exogenous impacts  Estimated impact at net equity of IFRS 9 and 15 of approx. € 130M 2017 Financial Results 8 March 15, 2018

2017 financial results* Adjusted Revenues Bridge ( € /M) 1 +5.8% 135 6,482 6,348 6,348 6,125 2016 2017 forex 2017 effect EBIT ( € /M) EBITDA ( € /M) Group net profit ( € /M) 2 3 4 Margin % Margin % 9.4% 9.6% 5.1% 5.4% 625 577 347 314 211 70 2016 2017 2016 2017 2016 2017 *Adjusted pre-Venezuela and at constant exchange rate 2017 Financial Results 9 March 15, 2018

Overview of currency mix 1 2017 Geographical Revenues Distribution 26% 16% 5% 53% 100% 74% 74% 58% 53% USD BIRR other total non EUR EUR total 2 2017 Cash and Cash Equivalent Distribution 13% 17% 16% 54% 100% 83% 83% 70% 54% USD BIRR other total non EUR EUR total  FY17: more than 70% of Groups’ revenues are denominated in currencies other than Euro  Most of debt is Euro denominated  More than 50% at cash holding are denominated in USD and USD related currencies (*) Including USD related currencies 2017 Financial Results 10 March 15, 2018

1200 20.0% Margins improvement evolution 18.0% 1000 16.0% 14.0% Profitability Evolution [ € /M] Ebitda Ebit 800 12.0% +110bp 600 10.0% EBITDA margin 9.6% 9.4% 1200 8.5% 8.0% 400 +40bp 6.0% 1000 EBIT margin 5.4% 5.1% 4.6% 4.0% 200 352 Peers' Construction Ebit 800 314 281 2.0% margin consistently around 3.5% 0 0.0% 600 400 625 577 512 200 347 314 281 0 2015 2016 2017  Excellent margins resilience in 2017 thanks to a better business mix EBITDA EBIT CAGR CAGR (*) 2015 restated, including Lane acquisition 10% 10% 2016 adjusted for Venezuela 2017 Adjusted for Venezuela and at constant currency rate 2017 Financial Results 11 March 15, 2018

Strong improvements below EBIT line Profit (loss) on exchange rates 2016 2017 ( € /M) Management View Ethiopia 3.2 (44.4) 2016 2017 Change Venezuela (USD denominated) (1.8) (26.7) adjusted adjusted [ € /million] Headquarter 1.6 (17.5) EBIT 314 347 11% 33 Tajikistan (2.1) (14.4) Other minor 14.6 (19.8) financial income 45 65 46% 20 total 15.5 (122.8) financial charges -8% 12 (147) (135) net financing costs (102) (70) -31% 32 Significant reduction in net financing costs profit (loss) on exchange rates 15 - net gains on equity investments 96 111 (15) 2017 positively impacted by Ausol participation revaluation for € 83M Net financing costs, forex & (102) 26 -194% 198 net gains on equity investm. taxes (81) (137) 69% (56) tax rate 38.4% 36.7% Minorities ( € /M) 2016 2017 results from discontinued Lane 10.8 9.3 (21) (2) -91% 19 operations Saudi Arabia 2.9 8.0 minorities (40) (23) -42% 17 Riachuelo 3.7 4.5 Other minor 22.2 1.1 Group Net Result 70 211 200% 141 total 39.6 22.9 2017 Financial Results 12 March 15, 2018

Net income Net income bridge ( € /M) +200% +67% 93 211 117 117 70 224 -107 2016 2017 venezuela 2017 forex 2017 write-off ex-venezuela effect  Underlying FY17 Group net income: 3x FY16 Group net income 2017 Financial Results 13 March 15, 2018

Financial structure improvements Increasing Fix-rate M/LT Corporate Debt Portion Progressively Reduced Average Corporate Debt Cost 3.73 yrs Duration 2.95 yrs 3.18 yrs 3.8% 3.5% 3.2% 53% 70% 85% Fixed Dec 2015 Dec 2016 Dec 2017 Variable 47%  € 500 million 7-year bond issue a particularly competitive 30% 15% rate of 1.75% 2015 2016 2017  Orders received nearly 7x the amount planned originally Corporate Credit Rating Improving GROSS DEBT / EBITDA ratio 4.3x Rating Agency Rating Outlook note 4.2x Standard & Rating confirmed on BB+ Stable Poor’s June 2017 EBITDA 3.7x Rating upgraded on Gross Debt / EBITDA Fitch Ratings BB+ Stable October 2017 Rating confirmed on Dagong Europe BB+ Positive November 2017 2015A 2016A 2017A 2015 pro-forma, including Lane acquisition / 2017 management view adjusted figures 2017 Financial Results 14 March 15, 2018

Successful large refinancing operation 1 2017 Net Financial Position [ € /M] 2,304 Bank Loan Bond Leasing SPV Net debt 130 (1.603) 1,387 703 (57) (190) 1.3 457 768 Total Total Cash Net Derivatives Net Financial Position Venezuela Forex Net Financial Position Gross debt & Other Financial "Normalized" Assets 2 M/L Corporate Debt as of 31 December 2017 [ € /M] Bank debt bond  € 250 million of committed lines not drawn  Successfully completed refinancing of circa € 1.1 billion corporate debt 600 500  Over 2016-2017, the Group has refinanced over 95% of 283 its corporate debt , leveraging on very favorable credit 136 107 85 58 41 market conditions as well as on the debt market appetite 2018 2019 2020 2021 2022 2023 2024 for the Group’s credit standing % on total M/L 18% 8% 6% 36% 5% 0% 28% corporate debt 2017 Financial Results 15 March 15, 2018

A Sustainable gross debt de-leveraged 2016 GROSS DEBT / EBITDA ratio 3.7x in 2017 Peers' average 14.0 ex-SAL 5.2x 8.3 5.7 5.5 4.2 4.3 3.5 2.4 1.2 1.7 Skanska Strabag Hochtief Vinci Salini ACS Astaldi FCC Ferrovial Sacyr Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Impregilo Not Not Not S&P rating BBB BBB A- BB+ BBB CCC+ BBB- rated rated rated  Salini impregilo among top league in terms of Gross Debt / EBITDA ratio vs. European peers  Leverage ratio improved in 2017 and further improvements expected for 2018-19 2017 Financial Results 16 March 15, 2018

Cash flow generation Adjusted Operating Free Cash Flow Before Dividends and Investments ( € /M) 625 (234) (97) (116) DISPOSAL CAPEX 156 € 171m € 75m (59) (51) 68 EBITDA adj* Change in NWC CAPEX (net Current taxes paid Net financial other 2017 2016-2017 of disposal) expenses OFCF OFCF  Generated more than € 150 million of OFCF in the first 2 years of Business Plan  Successful disposals and efficient optimization of assets rotation on completed projects (*) EBITDA adjusted for cash purposes reflecting cash impact of WUM 2017 Financial Results 17 March 15, 2018