ENGINEERING INGEGNERIA INFORMATICA SpA ROME, Via San Martino della Battaglia, 56 THE UNDERSIGNED AND FULLY PAID UP SHARE CAPITAL IS EQUAL TO 31,875,000 TRADE REGISTER NO. 00967720285 ROME CHAMBERS OF COMMERCE REA NO. 531128 QUARTERLY REPORT AS AT 30 SEPTEMBERS 2012 BOARD OF DIRECTORS REPORT ON MANAGEMENT PERFORMANCE OF THE ENGINEERING GROUP 1. CORPORATE BOARDS... 2 2. GROUP ACTIVITIES... 4 3. CONSOLIDATION AREA AS AT 30 SEPTEMBER 2012... 5 4. FORM, CONTENT AND ACCOUNTING PRINCIPLES... 6 5. BUSINESS PERFORMANCE... 8 6. NET FINANCIAL POSITION...10 7. SIGNIFICANT EVENTS OCCURRED DURING THE QUARTER...10 8. SIGNIFICANT EVENTS OCCURRED AFTER THE CLOSE OF THE QUARTER...10 9. INTRAGROUP OPERATIONS...11 10. OWN SHARES...11 11. OUTLOOK...12 12. CERTIFICATION ACCORDING TO ART. 154 - BIS LGS. DECREE N. 58/1998...13 Quarterly Report as at 30 September 2012 1 of 14
1. CORPORATE BOARDS Board of Directors The Board of Directors, as deliberated during the last General Shareholders meeting on 24 April 2012, has been appointed for the next three-year period 2012-2014, as follows: Michele Cinaglia Rosario Amodeo Tommaso Amodeo Paolo Pandozy Costanza Amodeo Marilena Menicucci Armando Iorio Giuliano Mari Dario Schlesinger Alberto De Nigro Massimo Porfiri Chairman Executive Vice Chairman Vice Chairman Chief Executive Officer Executive Director Executive Director Executive Director Independent Director Independent Director Independent Director Independent Director The so called one-tier governance system adopted by Engineering Ingegneria Informatica S.p.A. requires that the Control and Risk Management Committee, be entirely composed by independent board members. Secretary Armando Iorio Lead Independent Director Giuliano Mari Internal Control and Risk Management System Supervisor Paolo Pandozy Control and Risk Management Committee Chairman Massimo Porfiri Control and Risk Management Committee Members Alberto De Nigro Dario Schlesinger Quarterly Report as at 30 September 2012 2 of 14
Remuneration Committee Chairman Giuliano Mari Remuneration Committee Members Alberto De Nigro Massimo Porfiri Appointments Committee Chairman Giuliano Mari Appointments Committee Members Massimo Porfiri Dario Schlesinger Committee for the Identification and Implementation of transactions with Correlated Parties Chairman Massimo Porfiri Members Alberto De Nigro Dario Schlesinger Independent Auditors Deloitte & Touche S.p.A. Specialist Banca IMI S.p.A. Quarterly Report as at 30 September 2012 3 of 14
2. GROUP ACTIVITIES The Engineering Ingegneria Informatica Group (hereafter Engineering Group, or the Group, or Engineering) is the Italian leader in software and IT services. Four market areas, Public Administration, Industry and Utilities, Finance, Telco and Media, having each one of them their specificity and peculiarities but capable to share cross experiences matured in other fields. Three business lines, systems integration and consulting, software, outsourcing services, strongly connected to build an integrated offering on the market. Six competence centres, Managed Operations, ERP, ECM, IT Security, Plant Management System, Broadband & Media, with an expertise acknowledged at international level. The Research & Innovation department counts more than 320 highly qualified specialists, constantly collaborating with the most important research centres and universities worldwide. As at 30 September 2012, the Group holds a leadership position with about 10% of the IT domestic market share. The Group has 43 offices distributed throughout Italy, EU, Latin America, and USA. Designing and implementing IT architectures for medium-large size companies is the Group s mission resulting in a portfolio made-up by more than 1,500 clients and process, technological and business expertise. Quarterly Report as at 30 September 2012 4 of 14
3. CONSOLIDATION AREA AS AT 30 SEPTEMBER 2012 ENGINEERING INGEGNERIA INFORMATICA S.p.A. ENGIWEB SECURITY S.r.l. 100.0% 100.0% ENGINEERING TRIBUTI S.p.A. ENGINEERING SARDEGNA S.r.l. 100.0% 100.0% ENGINEERING INTERNATIONAL INC. OVER IT S.r.l. 95.0% 95.0% NEXEN S.p.A. ENGO S.p.A. 91.0% ENGINEERING INTERNATIONAL BELGIUM S.A. 75.0% ENGINEERING DO BRASIL S.A. 25.0% 100.0% 75.0% ENGINEERING.IT S.p.A. 100.0% 65.0% SERVIZI TELEMATICI SICILIANI S.r.l. SICILIA E SERVIZI VENTURE S.c.r.l. 100.0% SITEL S.r.l. As at 30 September 2012, the structure of Engineering Group is composed by 12 companies (besides Sitel and Servizi Telematici Siciliani Srl wound-up the first quarter 2012) for which the Parent Company coordinates the activities and addresses business and management operations. Quarterly Report as at 30 September 2012 5 of 14
4. FORM, CONTENT AND ACCOUNTING PRINCIPLES With relation to the implementation of the policy on Transparency and complying with the communication n 1814 of 28/1/2008 issued by Borsa Italiana and provisions of Consob communication of 30/4/2008 DEM/8041082, the information contained herein has been drafted according to the instructions contained in the Art. 154-ter Financial Reports of the Testo Unico della Finanza, introduced by Legislative Decree 195/2007. Economic and financial results herein contained have been drafted in compliance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), validated by the European Union, as well as to all relevant interpretations of the International Financial Reporting Interpretation Committee (IFRIC) and of the Standing Interpretation Committee (SIC). The companies included within the scope of the consolidation have been consolidated lineby-line, with the exception of the ones that are not operative, and results for both subsidiaries and the parent company are based on the same financial year. All evaluations have been made considering the Group continuing the activities in the foreseeable future. Achieved results as at 30 September 2012 include the companies shown in the scheme on previous page. Consolidated income statement represents the progressive situation as at the date and the one of the reference quarter compared with the same periods of previous year. In this present report, some alternative performance indicators not envisaged by IFRS are used, in line with recommendation CESR/05-178b published on 3 November 2005. Quarterly Report as at 30 September 2012 6 of 14
In particular, Ebitda (Gross Operating Margin) is calculated, with reference to the income statement tables, from the operative income gross of amortizations, provisions and writedowns. Instead, Ebit matches with the operating income. For a better understanding of the results, two additional indicators have been included (Adjusted Ebitda and Adjusted Ebit), computed with the same criteria described above, adding extraordinary charges incurred during the year 2011 and 2012 for reorganization charges. Furthermore, some estimates and assumptions have been made, evenly on all intermediate shown periods, having an effect on economic values and assets. If in the future, these estimates and assumptions, based on management s best evaluations, should differ from actual happenings, they will be modified in the period in which these circumstances will change. These evaluations are inspired to the principle of fairness and take into account standard procedures, past experiences, as well as market conditions. Net financial position figures are compared with closing figures of the previous quarter and with figures of the last financial year. Values in this quarterly report are expressed in millions of euros. Quarterly Report as at 30 September 2012 7 of 14
5. BUSINESS PERFORMANCE 1 / 1-30 / 09 1 / 07-30 / 09 ECONOMIC FIGURES (Amounts in mn) 2011 2012 yoy 2011 2012 yoy Net revenues 542.1 542.0 0.0% 171.0 176.9 3.4% Other revenues and income 12.8 11.2 2.7 3.2 Total revenues 554.9 553.2-0.3% 173.7 180.1 3.7% Raw materials, consumables and goods 10.9 8.2-24.2% 2.1 2.9 34.4% Services 228.8 213.5-6.7% 74.1 70.3-5.2% Personnel 252.7 263.0 4.1% 76.4 82.7 8.2% Other overhead costs 4.3 6.1 43.1% 2.2 2.9 34.2% Production costs 496.6 490.9-1.2% 154.9 158.8 2.5% Gross Operating Result (Adjusted EBITDA) 58.3 62.3 7.0% 18.8 21.3 13.2% % on net revenues 10.8% 11.5% 11.0% 12.0% Operating Result (Adjusted EBIT) 42.9 45.2 5.5% 14.4 16.5 14.9% % on net revenues 7.9% 8.3% 8.4% 9.3% Extraordinary charges (*) 15.5 2.3 1.3 0.6 Gross Operating Result (EBITDA) 42.8 60.0 40.4% 17.5 20.7 18.3% % on net revenues 7.9% 11.1% 10.2% 11.7% Operating Result (EBIT) 27.4 42.9 56.9% 13.0 15.9 21.8% % on net revenues 5.0% 7.9% 7.6% 9.0% Result before Taxes (EBT) 24.8 38.8 56.1% 11.4 13.2 16.2% % on net revenues 4.6% 7.1% 6.7% 7.5% (*) Reorganization charges The analysis of the consolidated income statement of the third quarter 2012, compared with the one of the same period 2011, confirms the positive trend of Group profitability indicators: Total revenues came in at 180.1 mn, + 3.7% yoy. Ebitda grew by 18.3% ( +3.2 mn) and Ebit registered and increase by 21.8% ( +2.9 mn) yoy. Adjusted EBITDA and Adjusted EBIT (both gross f extraordinary charges) registered and increase of +13.2% and +14.9% yoy, respectively. Quarterly Report as at 30 September 2012 8 of 14
In comparison with the nine months period 2012: Total revenues reached 553.2 mn, as result basically in line with the result obtained during the same period of previous year; Gross Operating Result (EBITDA) came in at 60.0 mn on 42.8 mn of the first nine months of year 2011 (+40.4%); Operating Result (EBIT) registered an amount of 42.9 mn on 27.4 mn (+56.9%) yoy; Adjusted EBITDA and Adjusted EBIT (both gross of extraordinary charges) registered +7.0% and +5.5% respectively on the results reached in the same period of previous year. As at 30 September 2012, net financial position came in at -55.3 mn, registering a clear improvement on -93.2 mn registered as at 30 September 2011 and in line with the result obtained during the previous quarter. As at 30 September 2012, acquired orders were 455.5 mn with a backlog of 457.1 mn (taking into account net revenues for 542.0 mn). ORDERS PORTFOLIO 2012 2011 % (Amounts in mn) Orders in portfolio to realize ( a ) as at 01/01 543.6 507.9 6.6% Booking ( b ) as at 30/09 455.5 518.5-12.1% Net revenues ( c ) 542.0 542.1 0.0% ORDERS IN PORTFOLIO ( a ) + ( b ) - ( c ) AS AT 30/09 457.1 484.3-5.6% Group headcount during the first nine months of current year was equal to 6,652 units, with a growth of 243 units on 6,409 units registered in the same period of year 2011, partially due (for approx. 100 units) to the resources acquired through the business line Opera 21 Nord Est. Quarterly Report as at 30 September 2012 9 of 14
6. NET FINANCIAL POSITION As at 30 September 2012, net financial position was -55.3 mn, showing a slight increment on -52.5 mn registered as at 30 June 2012, mainly due to the disbursement carried out for the acquisition of a business line. NET FINANCIAL POSITION (Amounts in mn) 30 / 09 / 2011 31 / 12 / 2011 30 / 06 / 2012 30 / 09 / 2012 Non current financial liabilities (26.3) (26.1) (19.3) (13.9) Liquid cash 31.9 88.9 74.2 78.1 Current financial liabilities (98.8) (107.9) (107.4) (119.4) TOTAL NET FINANCIAL POSITION (93.2) (45.1) (52.5) (55.3) 7. SIGNIFICANT EVENTS OCCURRED DURING THE QUARTER Main events: On 1 August 2012, the acquisition of the business line in Opera 21 specialized in the utilities market has been finalised. The operation is part of the consolidation strategy in the Italian utilities market, on which Engineering Group is the leader. 8. SIGNIFICANT EVENTS OCCURRED AFTER THE CLOSE OF THE QUARTER Main events: On 16 October 2012 Engineering Ingegneria Informatica S.p.A. acquired a stake of 9% in ENGO SpA from the company KK3 SpA. As a result of this transaction, the Parent Company today fully owns ENGO; On 31 October 2012, a business line of Software and Sistemi Avanzati SpA (SESA) has been sold to Engineering.IT. This business line supplies IT services to Vodafone Italian offices. Quarterly Report as at 30 September 2012 10 of 14
9. INTRAGROUP OPERATIONS Pursuant to Consob recommendation no. 97001574 of 20 February 1997, this is to certify that operations within the Group took place at normal market conditions and there were no atypical operations and operations with related parties. It should be noted that relations among Engineering Group companies consist mainly of the supply of services required in customer projects, generating shared revenues/costs for 70.9 mn. 10. OWN SHARES On 24 April 2012, the Engineering Ingegneria Informatica Shareholders meeting resolved a plan to purchase the company's own shares up to a maximum of 2,500,000 shares over a maximum period of 18 months. As at 30 September 2012, the company owned 310,027 shares. The equivalent value of these shares is 6,939,462.45, booked as a balance sheet liability accordingly to IAS 32, for an average share price of 22.383. On the date this report is approved, the number of own shares in the company portfolio has not changed. Quarterly Report as at 30 September 2012 11 of 14
11. OUTLOOK The results obtained in the first 9 months of current year are in line with our expectations, and allow us to confirm the already stated year-end estimates: total revenues ranging between 770 mn and 800 mn and Adjusted Ebitda between 94 mn and 98 mn. As it occurred in the past, we will propose - in occasion of the next General Shareholders meeting of the companies Engineering Ingegneria Informatica S.p.A. and Engineering.IT S.p.A. the distribution of a portion of yearly profits to employees, accordingly to criteria bound to the achievement of precise business goals. We feel confident that this allocation will be approved by the Shareholders General meeting. As provided by IAS 19, these costs, up to 6.0 mn, will be recorded at the end of the current year among personnel costs. Quarterly Report as at 30 September 2012 12 of 14
12. CERTIFICATION ACCORDING TO ART. 154 - BIS LGS. DECREE N. 58/1998 DOCUMENTS IN COMPLIANCE WITH ART. 154 - BIS, PARAGRAPH 2, LGS. DECREE N. 58/1998 DATED 24 FEBRUARY 1998 AND SUBSEQUENT INTEGRATIONS SUBJECT: Third Quarter Report, as at 30 September 2012 The undersigned Armando Iorio, in the position of Manager assigned to preparing accounting documents of Engineering Ingegneria Informatica SpA, certifies that the economic and financial figures shown on this quarterly report as at 30 September 2012 correspond to the results of accounting records, as provided by art. 154 bis, paragraph 2, Lgs. Decree n 58/1998. Rome, 14 November 2012 The manager assigned to the preparation of accounting documents Armando Iorio Quarterly Report as at 30 September 2012 13 of 14
ENGINEERING GROUP 1 / 1-30 / 09 1 / 07-30 / 09 ECONOMIC FIGURES (Amounts in mn) 2011 2012 yoy 2011 2012 yoy Net revenues 542.1 542.0 0.0% 171.0 176.9 3.4% Other revenues and income 12.8 11.2 2.7 3.2 Total revenues 554.9 553.2-0.3% 173.7 180.1 3.7% Raw materials, consumables and goods 10.9 8.2-24.2% 2.1 2.9 34.4% Services 228.8 213.5-6.7% 74.1 70.3-5.2% Personnel 252.7 263.0 4.1% 76.4 82.7 8.2% Other overhead costs 4.3 6.1 43.1% 2.2 2.9 34.2% Production costs 496.6 490.9-1.2% 154.9 158.8 2.5% Gross Operating Result (Adjusted EBITDA) 58.3 62.3 7.0% 18.8 21.3 13.2% % on net revenues 10.8% 11.5% 11.0% 12.0% Operating Result (Adjusted EBIT) 42.9 45.2 5.5% 14.4 16.5 14.9% % on net revenues 7.9% 8.3% 8.4% 9.3% Extraordinary charges (*) 15.5 2.3 1.3 0.6 Gross Operating Result (EBITDA) 42.8 60.0 40.4% 17.5 20.7 18.3% % on net revenues 7.9% 11.1% 10.2% 11.7% Operating Result (EBIT) 27.4 42.9 56.9% 13.0 15.9 21.8% % on net revenues 5.0% 7.9% 7.6% 9.0% Result before Taxes (EBT) 24.8 38.8 56.1% 11.4 13.2 16.2% % on net revenues 4.6% 7.1% 6.7% 7.5% (*) Reorganization charges NET FINANCIAL POSITION (Amounts in mn) 30 / 09 / 2011 31 / 12 / 2011 30 / 06 / 2012 30 / 09 / 2012 Non current financial liabilities (26.3) (26.1) (19.3) (13.9) Liquid cash 31.9 88.9 74.2 78.1 Current financial liabilities (98.8) (107.9) (107.4) (119.4) TOTAL NET FINANCIAL POSITION (93.2) (45.1) (52.5) (55.3) Quarterly Report as at 30 September 2012 14 of 14