BoD APPROVES H1 2017 RESULTS
  • Consolidated revenues: Euro 460.8 million (Euro 519.3 million in H1 2016)
  • Consolidated EBITDA: loss of Euro 18.8 million (profit of Euro 62.3 million in H1 2016)
  • Group net result: loss of Euro 118.3 million (loss of Euro 23.6 million in H1 2016)
    • Net Financial Debt of Euro -­565.9 million (Euro -­440.9 million at December 31, 2016)
  • Backlog of Euro 637 million at June 30, 2017 (Euro 956.4 million at December 31,
2016)

Cesena, September 29, 2017 -­ The Board of Directors of TREVI -­ Finanziaria Industriale S.p.A., holding company of the TREVI Group, among the global soil engineering and foundations and drilling plant production leaders, meeting today reviewed and approved the 2017 first half-­year results.

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The Chief Executive Officer Stefano Trevisani stated: "The first half-­year results fell significantly short of expectations, principally as a result of the continued challenges on the Energy market, a lack of investment and the cancellation of a major Oil&Gas segment order expected in the period. The Group therefore identified concrete measures to streamline operating division costs and contain exposure to typical industry cycles. The foundation engineering segment maintains a significant market share, although has seen the margin contract due to -­ in addition to reducing volumes -­ strategic decisions which will deliver benefits and recoveries over the coming years. Significant prudent write-­downs also impacted the result -­ however of a one-­off nature and not impacting available cash. The Group is focused on improved organisational efficiencies and streamlining costs in view of the availability of advanced technologies and increased opportunity on the international markets. Finally, we are confident, of the signing shortly of a standstill agreement and their consequent availability to assess proposals from the company to identify restructuring options for the Group financial debt according to terms consistent with the new industrial plan ".

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Consolidated revenues amounted to Euro 460.8 million (Euro 519.3 million in H1 2016), contracting Euro 58.4 million (-­11.2%), principally in the Oil&Gas Segment (Euro -­49.3 million total revenue decrease for the segment compared to the previous year), impacted by the global segment decline and the related difficulty in acquiring orders, in addition to the cancellation of the YPFB order for the supply of three drilling plant in Bolivia. EBITDA was Euro -­18.8 million, down Euro 81.2 million compared to Euro 62.3 million in H1 2016. This is substantially due to the stated reduction in volumes -­ together with a differing mix of orders in progress in the period, principally for the drilling segment -­ and of special foundation plant sold compared to the first half of the previous year, in addition to the inventory obsolescence provision accruals made in the period of approx. Euro 18 million, mainly concerning the Drillmec division. EBIT, for similar reasons as that outlined for EBITDA, was Euro -­75.1 million (reducing Euro 100.6 million on a profit of Euro 25.6 million in the same period of the previous year). This contraction, while also resulting from the issues outlined above, related to the doubtful debt provision accrual of approx. Euro 10.7 million and the partial write-­down of capitalised development costs in the Drillmec division following an Impairment test for approx. Euro 12 million.

The Group Net Result in H1 2017 was Euro -­118.3 million (Euro -­23.6 million in H1 2016 -­ down Euro 94.8 million). This was impacted by -­ in addition to the events outlined above -­ the write-­down of deferred tax assets (deriving from tax losses and temporary changes) for approx. Euro 12 million following the recoverability assessment at June 30, 2017.

The Net Financial Position at June 30, 2017 was Euro -­565.9 million (Euro -­440.9 million at December 31, 2016), increasing Euro 125 million on December 31, 2016, principally as a result of Oil&Gas segment developments and the reduced use of without recourse factoring compared to the end of 2016. In addition, FY 2016 benefitted from the significant advances paid on the Mosul order.

At June 30, 2017, the majority of bank debt was reclassified to short-­term as the Group has proposed to the credit institutions the signing of a standstill agreement to facilitate its focus on the development of the industrial plan and the Oil&Gas segment reorganisation, in which terms it has undertaken a "de facto" standstill approach to the capital amounts maturing during the period ahead of the finalisation of an agreement with the lending institutions.

Total Shareholders' Equity amounted to Euro 332.2 million (Euro 482.7 million at December 31, 2016).

Concerning the respect of the financial ratios provided by the existing loan contracts with the banking group and the bondholders, given the negative EBITDA in the period, they appear to be not significant and therefore they are not reported;; "Net Financial Position/Total Equity (Debt/Equity)" ratio is as follows: 1.7 at June, 30 2017 and 0.7 at June, 30 2016.

Order intake in the first half of 2017 was approx. Euro 263 million (Euro 644.2 million in H1 2016, of which Euro 273 million concerning the Mosul dam order). The backlog at June 30, 2017 was Euro 637 million (Euro 956 million at December 31, 2016), decreasing Euro 319 million on December 31, 2016, principally due to continued Oil&Gas segment stagnation, in addition to the cancellation of the YPFB order in Bolivia for a value of approx. Euro

121.4 million. The absence of an Oil&Gas market recovery is reflected also in foundation segment orders on a number of the Group's traditional markets impacted by a weak oil segment.

Segment reporting

FOUNDATION SEGMENT

In the first half of 2017, the Foundation segment (the core Group business comprising the companies Trevi S.p.A. and Soilmec S.p.A. and their respective subsidiaries and associates) reported revenues of Euro 377.2 million* (Euro 392 million in H1 2016, reducing Euro 14.9 million).

In particular:

Trevi (Foundation) reported Revenues of Euro 287.2 million, up Euro 9 million on H1 2016. This growth principally stems from the Middle East, thanks to the contribution of the Mosul dam project in Iraq, now fully operational, and the Salipazari Port project in Istanbul, Turkey.

Special foundation plant manufacturing carried out by the company Soilmec S.p.A. returned revenues of Euro 97 million, reducing Euro 27.5 million on the same period of the previous year, principally due to a differing mix of plant sold and the associated margin differential. Finally, it is highlighted that the performance for the first half of 2016 was particularly strong.

Segment EBITDA was Euro 18.4 million, a 5% margin, reducing on Euro 60.1 million for H1 2016 (15% margin). The operating margin contraction is principally due to lower volumes, in particular on the West African (Nigeria) and South American (Venezuela) markets due to the Oil&Gas slowdown which was inevitably followed also by a drop in Oil&Gas port and infrastructure construction , and the partial completion of the Water business unit orders of the Soilmec division in Africa. The Segment Net Financial Position was Euro 210.3 million, increasing Euro 93.3 million on the end of 2016, in line with typical business seasonality.

OIL&GAS SEGMENT

Growth prospects remain uncertain and, as a result of particularly strong energy segment headwinds, the Group continues the important reorganisation of the segment in order to streamline the cost structure.

Total Oil&Gas Segment Revenues in 2017 were Euro 92.8 million*, reducing Euro 49.3 million on Euro 142.1 million for the first half of 2016.

This decrease is due to the poor Drillmec division performance as a result of substantial market stagnation and also the cancellation by YPFB of a contract for the supply of three drilling plant in Bolivia. The division reports Revenues of Euro 32.9 million, reducing Euro 59.3 million on the same period of the previous year (Euro 92.2 million for the first half of 2016). In addition, supply operations are recovering following the receipt of orders from international clients.

Drillmec has strengthened its position on the services and replacement parts market.

Drilling operations carried out by the subsidiary Petreven S.p.A. delivered Revenues of Euro

60.4 million, up Euro 9.8 million on Euro 50.6 million for the same period of the previous year.

(*) The individual income statement accounts stated above do not include intersegment adjustments; the parent company and Trevi Energy S.p.A. are not included.

Principally due to reduced revenues, Segment EBITDA was a loss of Euro 38 million (profit of Euro

  1. million in H1 2016).

    The Segment Net Financial Position was Euro 305.0 million, improving Euro 26.9 million on December 31, 2016, benefitting however from the share capital increase of Drillmec S.p.A. for Euro 50 million.

    The main Drillmec division markets are the Far East and Africa, while the Peterven division is exclusively engaged in South America.

    Subsequent events

    New Group Industrial Plan approved

    As a result of the contraction of orders and volumes, particularly for the Oil&Gas segment, and the consequent impact on the Group's earnings and financial position, with the introduction of immediate measures to restructure financial liabilities and the drawing up of an updated forecast for 2017, the Board of Directors of the company had already approved by the preparation date of the half-­year consolidated financial statements a new Group Industrial Plan for the 2018-­2021 period.

    During the meetings to discuss the content of the standstill proposal, the lending institutions also requested an Independent Business Review (IBR) by a leading consultancy firm. The Trevi Group appointed PricewaterhouseCoopers (PwC) to carry out this task.

    The IBR did not highlight any issues which may jeapordise the negotiation with the Banks of a financial debt restructuring.

    The guidelines of the Group industrial and financial plan for the 2018-­2021 period may be summarised as:

    • focus on the development of the special foundation and plant "core business" (Trevi and Soilmec divisions), with the maintenance of slight growth against strong consolidated results;;

    • focus on new commercial development regions, particularly for the Trevi Division;; regions in which the division in recent years has not grown business and -­ as outlined in the industrial plan -­ will be developed through dedicated offices and personnel;;

    • partial diversification of the Oil&Gas commercial offer (Drillmec and Petreven divisions) with a focus on increased services development (Maintenance, Upgrade, Replacement parts, Training, Commissioning/Decommissioning, Management Pressure Drilling) rather than the production and assembly of drilling plant, with new innovative proposals whose growth potential is reflected in the plan on the basis of expectations and market response;;

    • the reduction of Group costs with targeted measures on:

      • reducing personnel costs, through downsizing and use of the Temporary Lay-­Off Scheme;;

      • increasing focus on Research and Development and optimising the product and services range.

We in addition highlight that, in relation to the "TREVI-­FINANZIARIA INDUSTRIALE S.P.A. 5.25% 2014-­2019" ISIN CODE IT0005038382 bond listed on the Extra MOT PRO Segment of Borsa Italiana

S.p.A. for a value of Euro 50,000,000.00 (the "Bond"), on March 10, 2017 a Bondholders' Meeting was held which approved the proposal of the Board of Directors concerning: (a) the granting of a waiver on compliance with the financial covenants established by Article 12 (Issuer Commitments),

Trevi Finanziaria Industriale S.p.A. published this content on 29 September 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 29 September 2017 17:49:03 UTC.

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