The name of the Issuer is TREVI : Finanziaria Industriale S.p.A. and it has been constituted as a joint: stock company.

Transcription

1 Document prepared on 16 th June

2 CONTENTS 1. ISSUER INFORMATION Name, Place and Registration Number of the Issuer Date the Issuer was constituted and its duration Registered office and legal status of the Issuer, legislation under which it operates, country of incorporation and telephone number of the registered office Corporate Governance THE DEVELOPMENT OF THE BUSINESS OF THE ISSUER GEOGRAPHIC FOOTPRINT BUSINESS OVERVIEW Main businesses of the TREVI Group Services Division Mechanical Engineering Division Special foundations plant and equipment Drilling plant and equipment ORGANISATIONAL STRUCTURE HUMAN RESOURCES SHAREHOLDING STRUCTURE FINANCIAL AND ECONOMIC PERFORMANCE Trend in revenues Net financial position and key financial indicators Financial performance by Division Services Division Mechanical Engineering Division DIVIDEND DISTRIBUTION

3 1. ISSUER INFORMATION 1.1. Name, Place and Registration Number of the Issuer The name of the Issuer is TREVI : Finanziaria Industriale S.p.A. and it has been constituted as a joint: stock company. The Issuer is listed in the Business Register of Forlì Cesena as no Date the Issuer was constituted and its duration The Issuer was constituted on 20 June 1983 by a deed drawn up by the Notary Mr O. Porfiri of Cesena, register no. 153,023, record no. 18,894 Under the Articles of Association the duration of the Company is until 31 December 2099 and may be extended one or more times by the Shareholders Meeting in accordance with enacted law Registered office and legal status of the Issuer, legislation under which it operates, country of incorporation and telephone number of the registered office The Issuer is a joint:stock company operating under Italian legislation. Its registered office is in Cesena, Via Larga 201; telephone number Corporate Governance The Issuer prepares an annual report on corporate governance and the shareholding structure. Complete information (regarding the 2013 financial year) and the current Company Articles of Association are available on the Company website ( 2. THE DEVELOPMENT OF THE BUSINESS OF THE ISSUER The Group activities started in 1957 with the constituton of Impresa Palificazioni Trevisani Geom. Davide operating in special foundations. The Company business was soon characterised by strong technological innovation with traditional engineering combined with the development of manufacturing know:how and innovative equipment design. In 1962, it registered its first patent, which was for an innovative self:propelled drive piling machine; in 1967, the first rotary for digging large diameter sunken piles was designed and patented. It was also during this period that the Group won its first international contract, which was to construct the foundations of the Apapa Road to be built in Lagos, Nigeria. In 1969, the brothers, Davide and Gianluigi Trevisani (the latter had joined the Company in 1962) set up Soilmec S.p.A., a company specialised in designing and manufacturing plant and machinery specifically for underground engineering work. In 1973 Tecnosol S.p.A. was constituted with a registered office in Rome the was a company carrying out geognostic investigation and water exploration that in 1975 it won the contract for the foundation piles of the thermoelectric energy plant at Porto Tolle, near Venice. 3

4 Following its first international contract in Nigeria, the Group began to grow its international presence in 1971 through the constitution of Pilotes Trevi S.A. (Argentina), a sub:contractor active in large underground projects. In 1973 the Group set up Trevi Foundations Nigeria Ltd, which, that same year, won the contract for the foundations of the Third Mainland Bridge in Lagos, Nigeria. Between 1977 and 1980, the Group grew its portfolio of clients both in Italy and abroad: it won contracts for the construction of the Bandar Abbas port in Iran, the commercial port of Gioia Tauro in Italy, and the drilling and grouting for the cut:offs of the Alicura Dam in Argentina and the Khao Laem Dam in Thailand. From 1980 to 1985 the Group increased in size with the constitution of new companies that included Trevi Construction Hong Kong Ltd, a branch office of Trevi Ltd in the Philippines, and Italthai:Trevi Company Ltd in Thailand. In 1983, the name of the Group company in the special foundations services changed its name from Impresa Palificazioni Trevisani Geom. Davide to Trevi S.p.A. At the same time, Soilmec implemented a strategy of acquiring selected brands and companies manufacturing drilling plant for the extraction of oil, gas and water and applied its proprietary hydraulic technology to this area of activity. It was also at this time that the Group won (as part of a consortium) the contract to save and consolidate the Leaning Tower of Pisa in Italy work started on this project in 1994 and took over a decade to complete. In the mid:1990s, the Group s collaboration with Agip offered it the chance to carry out experimental research and development on the design and construction of a new deep water drill for hydrocarbon exploration that was based on the hydraulic technology for special foundations developed by Soilmec and on Agip s know:how in the oil sector. The first plant of this type, the forerunner of the HH range, was manufactured in Piacenza and tested with success in Italy in the second half of the 1990s. Trevi Cimentaciones CA was constituted in Venezuela in 1991 and won several contracts for the Caracas metro. In 1994, the Group carried out the piling work for the Vasco da Gama Bridge in Lisbon, Portugal. In 1997, the Group entered the US market with the acquisition of I.C.O.S. Corp., with a registered office in Boston, and the subsequent constitution of Treviicos Corporation in Boston. In subsequent years, Treviicos Corporation took part in the construction of the Central Artery Tunnel in Boston and was responsible for constructing the majority of the diaphragm walls of the project. On 15 July 1999, the Issuer was listed on the main index of the Milan stock exchange. Following its listing, TREVI Group embarked on a new phase of expansion both through internal growth and through the acquisition of small, quality companies with strategic market positions. In 1999 it extended its sphere of operations enetering the Middle Eastern markets through the acquisition of Swissboring Piling Overseas Corporation, the leading geotechnical and foundations company in the Arabian Gulf and active in the United Arab Emirates, Oman and Qatar. In 1999 the Group took the decision to become a drilling contractor using its HH technology and constituted Petreven, a company specialising in drilling and drilling services for the oil industry. It started operating in Venezuela but has since extended its activities to other South American countries including Argentina, Colombia and Peru. In 2004, the Group acquired the Ing. Giovanni Rodio S.p.A., one of the oldest Italian companies in the geotechnical and foundations sector, which had been active since In the same year Drillmec was constituted by spinning off the business division for the design and manufacture of oil, gas and water 4

5 drilling equipment from Soilmec. In 2008, the TREVI Group acquired Galante S.A. Colombia and, in 2009, Arabian Soil Contractors Ltd. in Saudi Arabia and Watson Inc. in the Unites States of America. More recently, between 2011 and 2013, the Group gradually acquired a majority stake in the Belarusian company OJSC Seismotekhnika to facilitate its entry into a new area, that of the Eastern European oil and gas sector. In 2013, the Group acquired Foundation Construction Ltd to consolidate its leadership position in Nigeria. 5

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9 3. GEOGRAPHIC FOOTPRINT The summary history of the Group given in the previous section bears witness to the internationalisation process that has been a feature of the Group since its early days. TREVI Group has over fifty:five companies operating in more than thirty:five countries enabling it able to grasp the major opportunities worldwide. A highly diversified geographic footprint is an important factor for success in a macroeconomic scenario like the present one that is characterised by geographic areas with widely differing economic growth rates. The map below shows the geographic distribution of Group companies divided by those of the Services Division and those of the Mechanical Engineering Division. 9

10 4. BUSINESS OVERVIEW 4.1. Main businesses of the TREVI Group The Group is one of the world leaders in special foundations engineering. It builds special foundations, excavates tunnels and consolidates land; it also designs, manufactures and sells specialist machinery and equipment for the sector. The Group also operates in the drilling sector (oil, gas and water) both manufacturing plant and providing services. The TREVI Group is active in two sectors: Special Foundations and Drilling Services, where it carries out foundation engineering works for civil engineering and infrastructure projects and drilling for the extraction of oil, gas and water; the second sector is the Mechanical Engineering sector where it manufactures plant and equipment for special foundations and drill rigs for the extraction of hydrocarbons and water exploration. These business sectors are organised within the four main operating companies of the Group: (i) (ii) Trevi S.p.A. and Petreven S.p.A., which head up the Services sector; the former provides special foundations services for civil engineering projects whilst the latter provides drilling services; Soilmec S.p.A. and Drillmec S.p.A., which head up the Mechanical Engineering Division and specialise in mechanical engineering through the manufacture and assembly of plant and equipment; Soilmec S.p.A. manufactures equipment for the special foundations sector and Drillmec S.p.A. for the drilling sector. Each of the four companies is both an operating company and a sub:holding company within its relevant division and each controls (directly and indirectly), manages and coordinates various subsidiaries and branches operating in its same sector worldwide. Soilmec and Drillmec, as manufacturers of specialist plant and equipment are also suppliers to Trevi and Petreven respectively. The Group is also characterised by a business model that is based on the interaction and exchange of technologies among the various companies. In particular, the interaction between the Services Division 10

11 and the Mechanical Engineering is two:way so that the service supply companies highlight systems innovations that enable the machinery and equipment manufacturing companies in the various sectors to develop new avant:garde solutions; at the same time, the manufacturing companies develop new technologies that enable the service companies often to introduce radical improvements to their systems as shown in the following table. The interaction between companies and divisions is coordinated and controlled by the Issuer Services Division Special foundations services Special foundations services within the Group are carried out by Trevi and its subsidiaries: these services include ground strengthening, known as grouting, whereby the ground is consolidated through the injection of materials; tunnelling and micro piling; the installation of iron casing tubes and sheet piling; the construction of diaphragm walls; excavation and excavation trenches; the construction of deep foundations; and sheet pile shoring and water containment systems. 11

12 The Group develops the technological processes and systems required in special foundations services and carries out the engineering works required using proprietary plant and equipment and its own personnel. Soilmec is the main supplier to Trevi of the technical plant used in the special foundations services. The Group s use of sub:contractors in this type of work is extremely limited. Trevi operates and offers its services globally to different sectors that include commercial construction and infrastructure projects. The main infrastructure projects in which Trevi has been involved include: Metro systems: over 50 projects worldwide with avant:garde solutions and innovative processes which have resulted in Trevi acquiring significant technological know:how; Dams: over 170 dam consolidation projects worldwide that have made Trevi the world leader in this sector; Maritime projects: 62 projects carried out internationally that reflect Trevi s ability to adapt its technological solutions to the local environmental and morphological conditions, often extremely harsh, in the regions where the work is carried out Drilling services The Group s oil & gas drilling services are supplied by Petreven and its subsidiaries. The main Group clients in this sector are the leading international oil companies. At 31 March 2014, Petreven operated fifteen onshore drill rigs: two in Venezuela, seven in Argentina, one in Colombia, one in Peru and four in Chile. The Group drilling services in oil & gas consist of drilling activity to extract oil, gas or water and the supply of the necessary specialised personnel to operate the equipment. The drill rigs used by the Group in supplying its services are manufactured exclusively by Drillmec and use the HH (Hydraulic Hoist) hydraulic technology, which the Group was the first to launch in the international market. Although all the drill rigs used by the Group have the HH hydraulic technology, drill rigs can have different types of tractions or different features depending on the new models introduced over time by Drillmec. The Group strategy in drilling services is to increase its number of drill rigs and to expand its business into new countries. 12

13 4.3. Mechanical Engineering Division Special foundations plant and equipment Soilmec designs, assembles, sells and hires out equipment for foundations engineering, that is plant and drilling equipment for special foundations. Soilmec products feature several criteria governing safety, the containment of noise emissions, eco:compatibility, adherence to regulations covering gas emissions, ease of transport and use, efficiency, productivity, and the use of innovative technology for foundations. Since 2011, Soilmec has evolved from being merely an equipment supplier to being a supplier of complete solutions. It no longer just manufactures machinery but also offers all the solutions and equipment necessary to complete a project and will build equipment with specific features at the request of clients. Soilmec also offers after:sales and maintenance services. Soilmec s main clients are direct contractors and foundations engineering services companies. The expansion of the Group s international network has given Soilmec the opportunity to contact a growing number of global, regional and local operators in the construction sector. The company has been able to export its proprietary technology and sell equipment even to Trevi s main competitors in the international market and in regional/local markets. Soilmec is the main supplier of Trevi and the latter tests many of the innovations introduced to the market by Soilmec Drilling plant and equipment Drillmec is an international leader in the design, production and customisation of onshore drill rigs and has recently entered the offshore drilling market. The company, a spin:off from Soilmec S.p.A., develops, assembles and markets both conventional and hydraulic (HH) lifting equipment for use in water, gas, oil and geothermal wells. Compared to conventional technology, the HH technology offers 13

14 a significant average increase in drilling performance under suitable conditions with an important reduction in operating costs, in the volumetric requirements of the drilling site, in transport, start:up and dismantling costs whilst offering substantially better health and safety standards for operators. Drillmec has delivered over 200 HH plants worldwide since the technology was launched. Drillmec is the sole supplier of Petreven, which tests the innovations introduced to the HH hydraulic plants that are launched on the market. Drillmec plant and equipment is used for mobile drill rigs and for drilling water wells, onshore drilling to extract oil, gas and water, deep drilling, and offshore oil and gas drilling. Drillmec can design, implement, develop, customise and execute large:scale projects. In addition to equipment manufacture, Drillmec also produces spare parts and offers plant maintenance and modernisation services. In the offshore sector, Drillmec manufactures equipment for fixed platforms drilling to medium depths of up to 5,000 feet (1,500 metres). In the onshore sector Drillmec can supply equipment for all types of drilling including plant to drill water wells. The product range uses both conventional technology and hydraulic technology (HH) for use on land or on artificial islands. 14

15 5. ORGANISATIONAL STRUCTURE The Issuer is the parent company of the TREVI Group and exercises direction and coordination over the direct subsidiaries that are Trevi, Soilmec, Drillmec, Trevi Energy and Petreven and indirectly over the other companies of the Group. The table below is a flow chart of the main companies in the TREVI Group at 31 March 2014 and shows the percentage of each company held either directly or indirectly by the Issuer. 15

16 6. HUMAN RESOURCES At 31 March 2014 the TREVI Group employed 7,187 people. 7. SHAREHOLDING STRUCTURE The following table gives the main shareholders of the Issuer at 30 April 2014 under Article 120 of The Consolidated Finance Act; the information derives from communications received in accordance with the aforementioned Act and the relevant enacted regulatory requirements and integrated with information from the shareholders register and with other information available to the Issuer. Declarer Shareholder No. of shares held in the Issuer Percentage (%) of voting share capital I.F.I.T. S.r.l. Trevi Holding SE 34,399, % Oppenheimer Funds Inc. Oppenheimer Funds Inc. 10,518, % Polaris Capital Management LLC Polaris Capital Management LLC 3,303, % Henderson Global Investors Limited Henderson Global Investors Limited 1,477, % Citigroup Inc. Citigroup Global Markets Limited 1,468, % The Issuer has only ordinary shares in issue and has not issued any shares with voting rights that differ from those of the ordinary shares. The share capital of the Issuer is Euro 35,097, fully paid up. It is made up of 70,194,300 ordinary shares each of nominal value Euro They are registered shares and are dematerialised securities. 8. FINANCIAL AND ECONOMIC PERFORMANCE This section covers the financial and economic performance shown in the annual consolidated financial statements of TREVI Finanziaria Industriale S.p.A. It should be noted that the figures for the 2012 financial year have been restated following the early adoption by TREVI Group of the new accounting standards IFRS 10, 11 and 12 which must be applied from 1 st January The individual and consolidated financial statements of the Issuer are available on the Company website. 8.1 Trend in revenues The bar chart below shows the trend in revenues of the TREVI Group in the last eight financial years with a breakdown by geographic area. Following a brief interruption in 2009 and 2010 due to the difficult world macroeconomic and financial environment, the growth of the early years of this century, which was helped by the stock market listing in 1999, has, since 2011, once again been evident. The main drivers have been the development of the special foundations division (Trevi) and the performance of drilling plant and equipment (Drillmec). 16

17 It is important to stress the significant contribution made to revenues from the recent contracts carried out by the Drillmec division in the offshore sector and by the Trevi division on dams and metro systems. Revenues generated in Italy as a percentage of total revenues is less than 8% From 2006:2013 the compound average growth rate (CAGR) in revenues was approximately 10.30%. 8.2 Net financial position and key financial indicators 17

18 The increase in revenues has been helped by the capital strengthening of the Company to be attributed to management s prudent strategy regarding dividend distribution, to a recourse to financial debt with agreements reached for credit lines with leading domestic and international financial counterparties. Net debt at 31 December 2013 was approximately Euro million, an increase of approximately Euro 42.8 million compared to the end of the previous financial year, and was the result of the increase in the business of the Group. The chart also shows the trend in the key financial indicators. 8.3 Financial performance by Division Services Division The Services Division comprises Trevi and Petreven and is characterised by a stable financial trend due to the nature of its business. Revenues in the last two financial years (2012 and 2013) were approximately Euro 600 million with an EBITDA margin in excess of 15%. It should be noted that the results largely reflect the performance of Trevi, which represents the greater part of the Services Division Mechanical Engineering Division Soilmec and Drillmec make up the Mechanical Engineering Division and in 2013 this division had a significant increase in revenues (+22% compared to 2012) that was primarily generated by Drillmec following its entry into the offshore drilling market. 18

19 The oil & gas sector continued to grow mainly on the back of the average oil price and the increase in exploration that has led the international oil majors, which are the main clients of Drillmec, to increase their capital expenditure. Moreover, over time, Drillmec has diversified its product range to include plant and equipment for use in other areas of activity besides oil drilling. The range now includes equipment for water and gas which should generate higher revenues and profitability in future years. The decrease in average profitability in 2012, which was only in part recouped in 2013, was primarily linked to Drillmec due to some extraordinary events and to its entry in the new offshore segment. The latter required considerable commercial and manufacturing effort that the Group considered essential given the opportunities offered by this market segment. The construction market appears to be recovering, particularly in the Americas, Africa and the Far East, areas in which Soilmec is present due to its extensive network of local legal entities, dealers and agents. However, in recent financial years the markets in Europe and the Middle East have continued to stagnate with the main regions suffering from the recent global economic crisis: Europe is expected to recover slowly starting in 2014 driven primarily by the North European countries whilst the Middle East should experience rapid growth due to a recovery in investments in infrastructure and commercial projects as well as residential works. 9. DIVIDEND DISTRIBUTION In the past the Issuer has always distributed an annual dividend to its shareholders in order to ensure a fair return to those who over time have invested capital in the Group and have believed in the business model and the ability of management and have thereby supported the important development achieved by the Group since its listing on the Italian stock market in

20 The bar chart shows the dividend per share (in Euro cents) distributed in each of the last ten years. TREVI Group s growth was accompanied by an increase in the dividend distributed until 2010 when the dividend paid was Euro 0.13 per share. In the last three years (2011:2013) the Issuer has maintained the dividend paid unchanged (Euro 0.13 per share) with the aim of offering a sufficient return to its shareholders without impacting the capital strength of the Group. 20