BIANCAMANO NEUTRAL. Stable Net Debt; Payment Terms Should Improve In 2013

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1 Italian Research 3Q12 Results Milan, November 15, 2012 Price (Eu): Target Price (Eu): NEUTRAL SECTOR: Utilities Jacopo Tagliaferri Stable Net Debt; Payment Terms Should Improve In 2013 Operating results improve in 3Q12. Biancamano s turnover was Eu63.4mn in 3Q12, up 8.0% YoY due to the ramp-up of new contracts awarded between 4Q11 and 2Q12. EBITDA stood at Eu6.5mn, up 38.1% YoY: in this quarter lower costs for services (due to some activities being brought in-house and better savings on supplies) compensated for higher fuel costs and personnel expenses. As a result, the margin went up from 8.0% in 3Q11 to 10.2% in 3Q12. EBIT came to Eu1.9mn in 3Q12, up 91.4% YoY despite higher DA. Pre-tax profit turned negative (Eu-0.1mn) due to much higher net financial charges (up to Eu2.1mn in 3Q12 from Eu1.0mn in 3Q11): the company was penalised by further delayed Public Administration payments. Finally, the bottom line was slightly negative (Eu-0.2mn). 9M12 results down YoY. Sales came to Eu191.6mn in 9M12, flat YoY. EBITDA declined by 4.0% YoY to Eu19.4mn, penalised by higher fuel costs and personnel expenses. The margin went down from 10.6% in 9M11 to 10.1% in 9M12. EBIT came to Eu7.2mn in 9M12, down 23.7% YoY on higher DA. Net profit was only marginally positive at Eu0.3mn, down 78.7% YoY due to much higher net financial charges (up to Eu5.8mn in 9M12 from Eu4.8mn in 9M11) as a result of higher average net debt. Balance sheet stable QoQ. As at the end of September 2012, net debt came to Eu141.0mn, broadly unchanged from Eu143.4mn at the end of June Working capital decreased slightly from Eu28.1mn in 2Q12 to Eu26.2mn in 3Q12. The increasing reluctance on the part of the credit system to liquidate receivables from Central and Southern Italian public customers is making it more difficult for the company to assign credit without recourse. Having said that, total factoring came to Eu37mn in 3Q12 (Eu115mn in 9M12) compared to Eu39mn in 3Q11 (Eu132mn in 9M12). Biancamano is working to increase lines for disinvesting receivables due from public bodies (IFITALIA granted an additional Eu10mn), and is renegotiating payback terms of its leasing portfolio (60% done). NEUTRAL confirmed, estimates and target price unchanged. Awaiting the new business plan, we keep a cautious stance on the stock as i) the performance of core business operations has been volatile in recent quarters, ii) the company s financial risk profile has worsened significantly. A successful implementation of the European Late Payment Directive (approved by the government, due to take effect in January 2013) would give a huge boost to Biancamano s cashflow generation, restoring the company s balance sheet. - 12m Performance N-11 J-12 M-12 M-12 J-12 S-12 N-12 Rel. to BCI Index (Reb.) RATING: Unchanged TARGET PRICE (Eu): Unchanged Change in EPS est: 2012E 2013E 0.0% 0.0% STOCK DATA Reuters code: Bloomberg code: BIAN.MI BCM IM Performance 1m 3m 12m Absolute -3.7% -13.7% -43.0% Relative -1.5% -16.7% -40.4% 12 months H/L: 1.43/0.74 SHAREHOLDER DATA No. of Ord. shares (mn): 34 Total No. of shares (mn): 34 Mkt Cap Ord (Eu mn): 27 Total Mkt Cap (Eu mn): 27 Mkt Float - ord (Eu mn): 13 Mkt Float (in %): 48.5% Main shareholder: G. Pizzimbone 51.5% Key Figures 2010A 2011A 2012E 2013E 2014E Sales (Eu mn) Ebitda (Eu mn) Net profit (Eu mn) EPS - New (Eu) EPS - Old (Eu) DPS (Eu) BALANCE SHEET DATA 2012 Book value (Eu mn): 44 BVPS (Eu): 1.29 P/BV: 0.6 Net Financial Position (Eu mn): -144 Enterprise value (Eu mn): 171 Ratios & Multiples 2010A 2011A 2012E 2013E 2014E P/E 8.9 nm Div. Yield 5.1% 0.0% 0.0% 0.0% 0.0% EV/Ebitda ROCE 6.7% 7.0% 5.4% 6.0% 6.8% The reproduction of the information, recommendations and research produced by Intermonte SIM contained herein, and of any of its parts, is strictly prohibited. None of the contents of this document may be shared with third parties without Company authorization. Intermonte SIM S.p.A. Milan (Italy) - Corso Vittorio Emanuele II, 9 - phone: fax: New York - (USA) - Sales contacts: JPP Eurosecurities, 595 Madison Avenue, phone: +1 (212)

2 - KEY FIGURES 2010A 2011A 2012E 2013E 2014E Fiscal year end 31/12/ /12/ /12/ /12/ /12/2014 PROFIT & LOSS (Eu mn) Sales EBITDA EBIT Financial income (charges) (4) (7) (9) (9) (9) Associates & Others Pre-tax profit (Loss) Taxes (5) (5) (0) (1) (2) Tax rate (%) -75.1% % -55.0% -55.0% -55.0% Minorities & discontinue activities Net profit Total extraordinary items (4) Ebitda excl. extraordinary items Ebit excl. extraordinary items Net profit restated 2 (0) PER SHARE DATA (Eu) Total shares out (mn) - average fd EPS stated fd EPS restated fd BVPS fd Dividend per share (ord) Dividend per share (sav) Dividend pay out ratio (%) 85.8% 0.0% 0.0% 0.0% 0.0% CASH FLOW (Eu mn) Gross cash flow Change in NWC 3 11 (16) 5 1 Capital expenditure (20) (34) (20) (18) (16) Other cash items Free cash flow (FCF) 0 (3) (19) 4 3 Acquisitions, divestments & others Dividend (1) (1) Equity financing/buy-back Change in Net Financial Position (2) (6) (19) 4 3 BALANCE SHEET (Eu mn) Total fixed assets Net working capital Long term liabilities (5) (11) (18) (19) (20) Net capital employed Net financial position (119) (125) (144) (140) (137) Group equity Minorities Net equity ENTERPRISE VALUE (Eu mn) Average mkt cap - current Adjustments (associate & minorities) Net financial position (119) (125) (144) (140) (137) Enterprise value RATIOS(%) EBITDA margin* 10.6% 10.3% 10.2% 10.6% 11.1% EBIT margin* 4.2% 4.3% 3.8% 4.3% 4.9% Gearing - Debt/equity nm nm nm nm nm Interest cover on EBIT Debt/Ebitda ROCE* 6.7% 7.0% 5.4% 6.0% 6.8% ROE* 3.7% 3.8% 0.8% 2.5% 4.1% EV/CE EV/Sales EV/Ebit Free Cash Flow Yield 1.3% -10.1% -72.3% 16.0% 11.0% GROWTH RATES (%) Sales 110.3% 6.5% -5.0% 0.0% 0.0% EBITDA* 106.6% 3.6% -6.3% 4.5% 4.2% EBIT* 128.1% 8.8% -16.7% 14.6% 12.6% Net profit -55.1% 4.8% -79.0% 216.5% 67.9% EPS restated -14.4% nm nm 216.5% 67.9% * Excluding extraordinary items Source: Intermonte SIM estimates 2

3 3 Biancamano 3M12 and 9M12 Results (Eu mn) Restated 3Q11A 3Q12A Restated 9M11A 9M12A Sales YoY growth 8.0% -0.1% EBITDA YoY growth 38.1% -4.0% margin % 8.0% 10.2% 10.6% 10.1% EBIT YoY growth 91.4% -23.7% margin % 1.7% 3.1% 4.9% 3.7% Pretax Profit 0.1 (0.1) YoY growth n.m % Net Profit (0.2) (0.2) YoY growth n.m % Source: Company data and Intermonte Sim

4 Peer Group - Absolute Performances Stock Price Ccy Mkt cap 1M 3M 6M YTD 1Y 2Y 0.8 EUR % -13.7% -24.9% -41.3% -43.0% -43.2% CASELLA WASTE 4.5 USD % 7.9% -19.8% -29.8% -25.8% -3.6% GPE 11.7 EUR % 22.0% 18.4% 9.2% -7.1% -34.9% LASSILA & TIKANOJA 11.5 EUR % 11.2% 11.1% 0.1% 0.0% -12.9% SECHE ENVIROMENT 25.7 EUR % -4.2% 12.3% -10.5% -7.3% -51.9% SHANKS GROUP 0.9 GBP % 5.4% 1.1% -4.7% -23.5% -26.2% Mean performance 0.1% 4.8% -0.3% -12.8% -17.8% -28.8% Italy Fixed 15,252.9 EUR 174, % 4.1% 11.7% 1.1% -1.4% -26.8% Source: FactSet Peer Group - Multiple Comparison Stock Price Ccy Mkt cap EV/Sales EV/Sales EV/Ebitda EV/Ebitda EV/Ebit EV/Ebit P/E P/E Div Yield Div Yield EUR % 0.0% CASELLA WASTE 4.5 USD GPE 11.7 EUR % 2.3% LASSILA & TIKANOJA 11.5 EUR % 5.7% SECHE ENVIROMENT 25.7 EUR % 5.0% SHANKS GROUP 0.9 GBP % 3.9% Median % 3.9% Source: Intermonte SIM estimates for covered companies, FactSet consensus estimates for peer group - Estimates Comparison with Consensus (Eu mn) Intermonte Consensus %diff Intermonte Consensus %diff Revenues % % Ebitda % % Net Profit % % EPS % % Net Debt (144.4) (138.6) 4.2% (140.1) (136.6) 2.6% Source: Intermonte SIM estimates and Factset consensus estimates 4

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