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Salini Impregilo - Board of Directors approves half-year financial report at june 30, 2014 Confirmed targets and double digit revenue growth

August 7, 2014

ENP Newswire - 07 August 2014

Release date- 06082014 - Milan - Meeting today, the Board of Directors of Salini Impregilo reviewed and approved the Half-Year Financial Report at June 30, 2014, which reports revenues of EUR2,109.0 million, EBITDA ofEUR192.7 million and EBIT of EUR113.9 million, confirming the alignment of Key Performance Indicators with the year-end targets for 2014 and coherent with the Business Plan.

Given that international accounting principles (IFRS 3 - Business Combinations) require, for business continuity reasons, a comparison of the results of the Salini Impregilo Group with those of the 'standalone Salini Group', the Board also examined a version of the consolidated income statement of the Salini Group for the first half of 2013 which utilizes a comparable scope of consolidation in both six-month periods to provide a more complete understanding of the industrial performance of the new Group.

Main consolidated economic-financial results of the Salini Impregilo Group at June 30, 2014, compared with June 30, 2013 (comparable scope of consolidation)

In the first half of 2014, the Salini Impregilo Group reported total revenues of EUR2,109.0 million (EUR1,868.8 million), an increase of 12.8% compared with the same period last year. The development in revenues reflects the positive effects of the production of several large projects (Ethiopia, Denmark and Poland) and the resumption of activity on the Panama Canal project, which had been temporarily interrupted in the first quarter of 2014.

This growth corresponds to an acceleration of revenues in the second quarter, which, in fact, reported an increase equal to 46% compared to First Quarter 2014 revenues.

In the First Half of 2014, EBITDA amounted to EUR192.7 million (EUR192.2 million), with an EBITDA margin of9.1%, substantially in line with the year-end target (10%). Second quarter EBITDA totalled EUR104 million, again of 18% compared with the first quarter of 2014.

Total operating costs amounted to EUR1,916.3 million (EUR1,676.7 million). Headquarter costs equalled EUR83.3 million, with a reduction of circa EUR17 million compared to the 2014 budgeted costs, showing the first effects of synergies projected in the 2014-2017 Industrial Plan. The increase of EUR239.6 million in operating costs, tied primarily to higher service costs, including subcontracts and other operating expenses, is directly related to the increase in production generated by a few orders.

The operating result (EBIT) amounted to EUR113.9 million (EUR116.5 million), for an EBIT margin (Return on Sales) of 5.4%, higher than the year-end target for 2014 (>5%). Continuing the analysis of Q2 on Q1,EBIT totalled EUR69 million, increasing by 53% compared with the First Quarter (EUR45 million). Because of this gain, the EBIT margin (Return on Sales) improved from 5.2% to 5.5% in the second quarter.

At EUR78.8 million, depreciation and amortization expense was in line with the first half of 2013 (EUR75.7 million). Capital expenditures reflected a policy that, while consistent with a conservative approach, will continue to support ongoing activities and the development of new projects. In line with this strategy, the Group carried out net capital expenditures of EUR101.7 million in the First Half of 2014. Capex was mainly undertaken in relation to some large recently awarded projects in Australia, Qatar and Chile as well as projects already existing in Ethiopia.

The combined result of financial transactions and equity investments was a net expense of EUR81.8 million (EUR38.7 million). Taken separately, financial transactions generated a net charge of EUR86.8 million (negative EUR42.6 million), which includes foreign exchange losses of EUR35.9 million.

The main cause of this loss is a nonrecurring charge of about EUR55 million deriving from the adoption by the Group of the new official exchange rate called SICAD 2 to translate its net financial assets denominated in the Venezuelan currency (called Bolivar Fuerte or VEF), effective as of June 30, 2014. Equity investments contributed a positive result of EUR5.0 million (EUR3.9 million).

The result from non-current assets held for sale was positive by EUR55.3 million (EUR74.7 million). This amount includes the capital gain realized on the sale perfected last May and the loss recorded in the period of Fisia Babcock Environment G.m.b.H., for a total value of EUR85.1 million, and the losses of Todini Costruzioni Generali S.p.A. and its subsidiaries amounting to EUR 26.2 million, and the losses of CDR (WTE Campania Projects), amounting to EUR3.6 million.

The profit for the period amounted to EUR75.2 million (EUR110.7 million). The result attributable to minorities totalled EUR4.0 million (-EUR0.2 million). The Group net result (after minorities) amounted to EUR79.3 million (EUR110.5 million).

The net financial position, negative for EUR417.7 million at June 30, 2014, improved significantly compared with March 31, 2014 (negative for EUR634.0 million), and returned towards the level recorded at December 31, 2013 (-EUR331.7 million). At June 30, 2014, gross financial debt stood at EUR1,466.7 million and was reduced by circa EUR270 million (in the Second Quarter the reduction equalled circa EUR375 million).

More specifically, the following factors had a positive impact on the net financial position: the capital increase, which generated net proceeds of EUR162 million, and proceeds from the sale of some participations. At June 30, 2014, total Group liquidity amounted to EUR981 million, of which EUR645 million of cash directly controlled by the Group. Please note that, during the same period, net working capital increased by more than EUR358 million, due mainly to executed work in progress (over EUR250 million), in particular at certain large projects in Ethiopia, Denmark and Nigeria.

The ratio of NFP/ equity is equal to 0.37, in line with the data at December 31, 2013.

Insofar as gross indebtedness is concerned, one must mention that the bond issue issued by Impregilo International Infrastructures NV for an amount of EUR150 million will mature in November 2015.

Lastly, please note that in July the Group received contractually stipulated advances from customers for a total of about EUR100 million that were not reflected in the accounts at June 30, 2014, but will further improve the net financial position and help align it with the target projected for the end of 2014.

Major new orders booked in the first half of 2014, which totalled EUR3.5 billion, include the following:

Lima Metro (Peru): the total value of the project is $8.6 billion, with the value of the construction work amounting to $3.0 billion, of which the Salini Impregilo Group has a 25.5% share (valued at about EUR555 million). The value for the Group is rounded out by its share of the concessions (18.3%), for a total portfolio value for almost EUR580 million.

Lietavska Luka - Dubna Skala highway (Slovakia): Salini Impregilo is the leader of the consortium with a 75% stake, and the total value of the contract is EUR410 million.

Brenner Tunnel project: Salini Impregilo, in partnership with other companies, was awarded the construction of two lots of the project. The total value of the first lot ('Tulfes - Pfons') is about EUR380 million, and Salini Impregilo's share is 49%. In addition, on July 7, 2014, Salini Impregilo, as leader of another consortium, was awarded the second lot for the underground tunnel crossing of the Isarco River, the total value of which is about EUR300 million; Salini Impregilo's share is 41%.

Other backlog variations totalled more than EUR1.5 billion.

The most important projects include the following:

The Verona-Padua High Speed Rail Line project (IRICAV2), for about EUR600 million (backlog reintegration);

A new contract change for the Porto Cabello project (Venezuela) for about EUR300 million (contract change order).

During the First Half, Salini Impregilo was informed that it had submitted the winning bids for various projects, for a total value of more than EUR1.1 billion not included in the order intake. The Company is awaiting the outcome of the respective tender procedures.

At June 30, 2014, the total order backlog amounted to about EUR28.6 billion (EUR28.2 billion at December 31, 2013), including EUR21.4 billion in the Construction area and EUR7.2 billion in the Concessions area (full-life value).

Key events of the first half of 2014

As mentioned earlier in the press release of March 19, 2014, the transaction involving the sale of the entire share capital of Fisia Babcock Environment GmbH closed on May 7, 2014. This transaction, which, as specified above, contributed to improving the net financial position by EUR55 million, is consistent with the process of focusing the Group on its core construction business and divestiture of non-core assets.

On June 25, 2014, Salini Impregilo and Salini Costruttori completed a share placement with qualified institutional investors in Italy and abroad. The offering included the following:

44,740,000 newly issued Salini Impregilo common shares, without par value, regular ranking for dividends, equal to 9.96% of Salini Impregilo's share capital, at a price of EUR3.70 per share (the 'Offering Price'), for a total gross consideration of EUR165,538,000;

94,000,000 Salini Impregilo common shares, without par value, regular ranking for dividends, held by Salini Costruttori, at a price of EUR3.70 per share, for a total gross consideration of EUR347,800,000;

an additional 4,050,000 Salini Impregilo common shares, without par value, regular ranking for dividends, at a price of EUR3.70 per share, for a total gross consideration of EUR14,985,000 related to the overallotment option (so-called 'Greenshoe') exercised on July 18, 2014, by Goldman Sachs International, Mediobanca and Banca IMI.

Further to the transactions described above, Salini Impregilo's share capital currently amounts to EUR544,740,000 and is comprised of 493,788,182 shares, without par value, as follows:

Total number of common shares issued and subscribed: 492,172,691

Total number of savings shares issued and subscribed: 1,615,491

As a result of the transactions described above, the interest held by Salini Costruttori S.p.A. in the Company's voting share capital decreased from 89.99% to 61.9%, with the remaining 38.1% held by the market.

This transaction, in addition to increasing the share float and broadening the shareholder base with the inclusion of important Italian and international institutional investors, also strengthened the Group's financial structure, which is a prerequisite for the implementation of the 2014-2017 Industrial Plan. It should be noted that following the secondary placement, Salini Costruttori has totally reimbursed its debt versus Salini Impregilo S.p.A.

Business outlook for the current year

The improved results for the Second Quarter and for the First Half of 2014, as a whole, show that the Group's operating performance and economic results are aligned with the announced targets for 2014.

Massimo Ferrari, in his capacity as Director in charge of the preparation of the company's accounting documents, declares, pursuant to Section 2 of Article 154 bis of the Italian Uniform Financial Code, that the information contained in this press release corresponds to the accounting documents, books and entries.


Luigi Vianello

Tel: +39 06 6776 595


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Source: ENP Newswire

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