TREVI - Finanziaria Industriale S.p.A. · TREVI - Finanziaria Industriale S.p.A. HALF-YEAR...
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TREVI - Finanziaria Industriale S.p.A. HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2019 TREVI - Finanziaria Industriale S.p.A. Registered Office Cesena (Forlì-Cesena) - Via Larga 201 - Italy Share capital in Euro 82,391,632.50 fully paid-up Forlì – Cesena Chamber of Commerce Business Register No. 201,271 Tax code, VAT No. and Forlì – Cesena Register of Companies: 01547370401 Website: www.trevifin.com
Transcript of TREVI - Finanziaria Industriale S.p.A. · TREVI - Finanziaria Industriale S.p.A. HALF-YEAR...
TREVI - Finanziaria Industriale S.p.A.
HALF-YEAR FINANCIAL REPORT
AT 30 JUNE 2019
TREVI - Finanziaria Industriale S.p.A.
Registered Office Cesena (Forlì-Cesena) - Via Larga 201 - Italy
Share capital in Euro 82,391,632.50 fully paid-up
Forlì – Cesena Chamber of Commerce Business Register No. 201,271
Tax code, VAT No. and Forlì – Cesena Register of Companies: 01547370401
Website: www.trevifin.com
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MEMBERS OF THE CORPORATE BODIES
CHAIRMAN
Davide Trevisani
EXECUTIVE DEPUTY CHAIRMAN
Gianluigi Trevisani
DEPUTY CHAIRMAN
Cesare Trevisani
MANAGING DIRECTORS
Stefano Trevisani
Sergio Iasi
BOARD DIRECTORS
Marta Dassù (non-executive and independent)
Umberto della Sala (non-executive and independent)
Cristina Finocchi Mahne (non-executive and independent)
Guido Rivolta (non-executive)
Rita Rolli (non-executive and independent)
Simone Trevisani (executive)
BOARD OF STATUTORY AUDITORS
Statutory Auditors
Milena Motta (Chairman)
Adolfo Leonardi
Stefano Leardini
OTHER CORPORATE BODIES
Director in charge of the internal audit and risk management system
Sergio Iasi
Committee for the appointment and remuneration of Directors
Rita Rolli (Chairperson)
Umberto della Sala
Cristina Finocchi Mahne
Related-party Committee
Rita Rolli (Chairperson)
Cristina Finocchi Mahne
Marta Dassù
Risk Control Committee
Cristina Finocchi Mahne
Rita Rolli
Umberto della Sala
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Director of Administration, Finance and Control
Massimiliano Battistelli
Appointed Manager charged with preparing the company’s financial reports by the Board of Directors on 8 May 2019
Audit firm
KPMG S.p.A.
Appointed on 15 May 2017 and in charge until the Shareholders' Meeting to approve the Financial Statements at 31
December 2025.
Supervisory Body of the Organizational Model
Enzo Spisni (Chairman)
Floriana Francesconi
Gerardo Diamanti
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SUMMARY
KEY FINANCIAL AND ECONOMIC FIGURES
Report on operations at 30 June 2019
CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS AT 30 JUNE 2019
Consolidated Statement of Profit or Loss, Consolidated Statement of Profit or Loss and other Comprehensive
Income, Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows and
Consolidated Statement of Changes in Equity
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS AT
30 JUNE 2019
SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
POSITIONS OR TRANSACTIONS DERIVING FROM ATYPICAL AND/OR UNUSUAL
OPERATIONS
ATTACHMENTS
Companies included in the Consolidated Financial Statements at 30 June 2019 on a line-by-line basis, Group
Organisational Chart.
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Report on operations at 30 June 2019
Methodological note
The Board of Directors' Report on Operations includes information concerning revenue, profitability,
financial position and financial performance of the Trevi Group at 30 June 2019.
Unless otherwise indicated, all amounts are expressed in thousands of Euro. Items of the Statement of
Financial Position were compared with respect to the amounts at 31 December 2018 while, with regard to the
Statement of Profit or Loss, only items relating to the half-year ended 30 June 2019 were stated.
It should be noted that any differences detected in some tables are due to the rounding effects of amounts
expressed in thousands of Euro. The Parent Company TREVI – Finanziaria Industriale S.p.A. is referred to
with its full company name or simply as Company; the Group headed by the same is hereinafter referred to as
Trevi Group or simply as Group.
It is also specified that the condensed consolidated half-year financial statements are drawn up on the basis of
the opening balances resulting from the financial statements approved by the Board of Directors of 15 July
2019 and that the Company Financial Statements at 31 December 2018 have not yet been approved by the
Shareholders' Meeting.
In line with what done at 31 December 2018, the Group applied the IFRS 5 accounting policy also to the half-
year financial statements at 30 June 2019, following the ongoing negotiations for the sale of the Oil & Gas
Division, as further detailed hereunder.
Accounting standards of reference
The half-year financial report at 30 June 2019 were prepared in accordance with art. 154-ter paragraph 5 of
the Italian Legislative decree 58/98 - Consolidated Finance Act - and subsequent amendments and additions -
and pursuant to art. 2.2.3. of the Italian Market Regulation.
The accounting standards of reference, the consolidation principles and the measurement criteria for preparing
the Half-year financial report comply with those adopted in the Annual Report at 31 December 2018,
available on the website www.trevifin.com, under the section “Investor Relations”.
The accounting standards used by the Company and the Group are represented by the “International Financial
Reporting Standards” adopted by the European Union and are compliant with Italian Legislative Decree
38/2005 and other CONSOB provisions concerning financial statements, according to the cost method (except
for derivative financial instruments, financial assets held for sale and financial instruments classified as
available for sale, which are measured at their fair value) and the going concern assumption.
Reclassified consolidated statement of profit or loss
The Statement of Profit or Loss of the Group, included in this Board of Directors' Report on Operations, was
classified according to the presentation method deemed useful by the management to represent intermediate
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indicators of profitability such as Production Revenue, Gross Operating Profit (EBITDA), Operating
Profit/(Loss) (EBIT).
Some of the intermediate indicators of profitability mentioned above are not identified as accounting
measurement within IFRS Accounting Standards adopted by the European Union and, therefore, the
quantitative determination of such indicators may not be unique. Such indicators are measures used by the
management to monitor and evaluate the operating performance of the Group. Management believes that said
indicators are an important measurement of the operating performance insofar as it is not affected by the
various factors used in determining taxable income, by the amount and nature of capital employed and by
amortisation and depreciation policies. The criterion used by the Group for determining said indicators may
not be consistent with the one adopted by other groups or companies and, therefore, their value may not be
comparable with the one determined by the latter.
Trevi Group key financial highlights at 30 June 2019 are shown below:
Group key financial highlights
(in thousands of Euro) (*)
30/06/2019
Order backlog 721,016
Foundations 517,316
Oil & Gas (discontinued operations) 203,700
Orders received: 362,669
Foundations 308,669
Oil & Gas (discontinued operations) 54,000
Production revenue 312,075
Total Revenue 301,740
Value Added 103,384
% of Total Revenue 34.26%
Gross Operating Profit (EBITDA) 18,259
% of Total Revenue 6.05%
Operating Profit/(Loss) (EBIT) (13,040)
% of Total Revenue -4.32%
Net profit/(loss) deriving from discontinued operations -
Net profit/(loss) of the Group (25,666)
% of Total Revenue -8.51%
Employees (No.) 6,231
Earnings/(Losses) per share (Euro) (0.1559)
Diluted Earnings/(Losses) per share (Euro) (0.1562)
Net operating profit (loss) / Total Revenue (R.O.S.) -4.32%
Total net financial position / Net equity
Total (Debt / Equity) (4.25)
(*) figures are stated applying IFRS 5, unless otherwise specified
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30/06/2019 31/12/2018 Changes % of changes
Gross investments
46,803 39,104 7,699 20%
Net invested capital
562,966 545,304 17,663 3%
Net financial position
(736,235) (692,640) (43,595) 6%
Total net equity
(173,268) (147,335) (25,933) 18%
Group net equity
(173,486) (148,075) (25,411) 17%
Net equity attributable to non-controlling interests
218 740 (521) -70%
The order backlog totalled Euro 721 million, of which Euro 517 million referring to the Foundation Division
and the remaining Euro 204 million to the Oil & Gas Division. Orders received in the first half of 2019
amounted to around Euro 363 million, of which Euro 309 million referring to the Foundation Division and the
remaining Euro 54 million to the Oil & Gas Division.
Total revenue totalled approximately Euro 301.7 million, while EBIT amounted to Euro -13 million (-4.3% of
total revenue).
Net profit/(loss) of the Group was Euro -25.7 million at 30 June 2019.
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The reclassified Consolidated Statement of Profit or Loss, the Statement of Financial position and the Net
Financial Position are provided below.
(in thousands of Euro)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS 30/06/2019
TOTAL REVENUE 301,740
Changes in work in progress products and finished goods 8,330
Internal work capitalised 2,005
PRODUCTION REVENUE 312,075
Consumption of raw materials and external services 203,119
Other operating costs 5,571
VALUE ADDED 103,384
Personnel expense 85,126
GROSS OPERATING PROFIT (EBITDA) 18,259
% of Total revenue 6.1%
Depreciation and amortisation 21,528
Provisions and impairment losses 9,770
OPERATING PROFIT/(LOSS) (EBIT) (13,040)
% of Total revenue -4.3%
Financial income/(expenses) (9,405)
Gains/(losses) on exchange rates (577)
Adjustments to financial assets 729
PROFIT BEFORE TAXES (22,293)
Income taxes
Profit or loss attributable to non-controlling interests
2,968
405
PROFIT OR LOSS FOR THE PERIOD ATTRIBUTABLE TO THE GROUP (25,666)
% of Total revenue -8.5%
The following table shows the analysis of the reclassified consolidated statement of financial position at 30
June 2019; it is specified that the inventories item takes into account the contract work in progress caption.
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TREVI GROUP
Consolidated Statement of Financial Position
(In thousands of Euro)
30/06/2019 31/12/2018 Changes
A) Assets
- Tangible assets (1) 245,945 224,972 20,974
- Intangible assets 6,065 6,397 (332)
- Financial assets (2) 5,504 4,611 892
257,514 235,980 21,534
B) Net working capital
- Inventories 193,345 187,794 5,551
- Trade receivables (3) 261,291 274,952 (13,660)
- Trade payables (-) (4) (187,101) (193,803) 6,702
- Payments on account (-) (5) (30,009) (29,928) (81)
- Other assets (liabilities) (6) (28,295) (26,697) (1,598)
209,231 212,317 (3,086)
C) Discontinued assets and liabilities 109,836 111,000 (1,164)
D) Invested capital less liabilities for the period (A+B+C) 576,581 559,298 17,284
E) Employees’ leaving entitlement (-) (13,615) (13,994) 379
F) NET INVESTED CAPITAL (D+E) 562,966 545,304 17,663
Financed by:
G) Group Net Equity (173,486) (148,075) (25,411)
H) Net Equity attributable to non-controlling interests 218 740 (521)
I) Net Financial Position (7) 736,235 692,640 43,595
L) TOTAL SOURCES OF FINANCING (G+H+I) 562,967 545,304 17,662
The above Statement of Financial Position, referred to in the Notes, is a reclassified summary of the Consolidated Statement of Financial Position.
Figures at 30 June 2019 reflect the reclassification in accordance with IFRS 5.
(1) The entry for tangible assets also includes investment property (Note 3). (2) The entry for financial assets includes equity investments (Note 4) and other long-term financial assets (Note 7). (3) The entry for Trade receivables includes: long-term (Note 9) and short-term (Note 11) trade receivables and short-term receivables from associates
(Note 11). (4) Trade payables includes: short-term trade payables (Note 20), short-term payables to associates (Note 20). (5) Payments on account include both long-term (Note 20) and short-term (Note 20) payments on account. (6) Other assets/(liabilities) includes: other receivables/(payables), prepayments and accrued income/(accrued expenses and deferred income), tax
receivables/(payables) and short-term and long-term risk provisions (Notes 5-9-11-11.a-16-19-20-21-25). (7) The Net Financial Position, used as an indicator of financial indebtedness, is the sum of the following positive and negative entries in the Statement
of Financial Position:
− short-term and long-term positive items: cash and cash equivalents (cash, bank accounts and bank assets); readily realizable investments in
working capital, financial receivables;
− short-term and long-term negative items: bank loans and borrowings, loans and borrowings from other financial backers (leasing and
factoring companies) and shareholders loans. Further details on this item are given in the relevant table in the Notes to the Financial
Statements.
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Reconciliation of the Reclassified Statement of Financial Position with the Consolidated Financial
Statements with reference to the reclassification of the contract work in progress item:
The scope of application of IFRS 15 relates to the accounting of contract work in progress in the financial
statements of contractors. The standard requires that the value of contract work in progress be expressed net
of the relevant payments on account received from customers and that this net balance be represented by trade
receivables or other liabilities, respectively depending on whether the progress of the work is greater than the
payment on account received or less.
Below is a reconciliation between the figures shown in the reclassified Statement of Financial Position that
does not take into account the application of IFRS 15 with respect to the Consolidated Financial Statements in
which this effect is reflected.
(in thousands of Euro)
Net working capital 31/12/2018 Reclassification
31/12/2018
reclassified 30/06/2019 Reclassification
30/06/2019
reclassified
- Inventories 187,794 (42,525) 145,269 193,345 (44,118) 149,227
- Trade receivables 274,952 5,022 279,974 261,291 6,632 267,923
- Trade payables (-) (193,803) - (193,803) (187,101) - (187,101)
- Payments on account (-) (29,928) 5,481 (24,447) (30,009) 6,009 (24,001)
- Other assets (liabilities) (26,697) 32,022 5,325 (28,295) 31,478 3,182
Total 212,317 - 212,317 209,231 - 209,231
The consolidated net invested capital amounted to Euro 576.6 million compared to the value of Euro 545.3
million recorded at 31 December 2018: the increase of Euro 18.8 million mainly reflects the tangible assets
item.
The Net Financial Position as at 30 June 2019 compared with figures as at 31 December 2018 is shown in the
following table:
(in thousands of Euro)
CONSOLIDATED NET FINANCIAL POSITION
30/06/2019 31/12/2018 Changes
Short-term bank loans and borrowings (665,271) (658,348) (6,923) Short-term loans and borrowings from other financial
backers (105,144) (88,846) (16,297)
Short-term derivative financial instruments (246) (359) 113
Current financial assets - - -
Short-term cash and cash equivalents 77,747 88,912 (11,165)
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Total short-term (692,914) (658,641) (34,273)
Medium/Long-term bank loans and borrowings (451) (331) (121) Medium/Long-term loans and borrowings from other
financial backers (42,869) (33,668) (9,202)
Securities at nominal value - - -
Medium/Long-term derivative financial instruments - - -
Total medium/long-term (43,321) (33,998) (9,323)
Net financial debt (736,235) (692,640) (43,595)
The Net Financial Position at 30 June 2019 was Euro 736.2 million, compared with the same item at 31
December 2018 amounting to Euro 692.6 million, down by Euro 43.6 million.
This value was affected by the application of the IFRS 16 accounting standard starting from 1 January 2019,
which was adopted with the modified retrospective approach. The impact of IFRS 16 on the Net Financial
Position of the Group was approximately Euro 27.6 million.
Half-year operational performance
The market context
In 2019, global growth remains subdued. This is the opinion of the International Monetary Fund that has
slightly reduced its estimates of world GDP trends by 0.1% for this year and next year. The most recent data
included in the update of the World Economic Outlook, published in July 2019, set the increase in world
gross domestic product at 3.2% in 2019 and 3.5% in 2020, that is to say 0.1% lower than that indicated in the
April report. Economists claim that the scenario is weighed down by fears linked to the trade war, Brexit and
the rising geopolitical tensions that have pushed energy prices up. Risks to the forecast are mainly to the
downside and have increased compared to April. Concerns are mainly centred around the fact that “further
trade and technology tensions dent sentiment and slow investment” and that “disinflationary pressures
increase debt service difficulties” and “constrain monetary policy space”.
With regard to the Foundation sector, the Global Construction Outlook of IHS Markit estimates that global
expenditure will grow by 0.9% in 2019; the slowdown in growth in many markets, as well as the risks linked
to the growing tensions in the Middle East, have led to a review of growth at more moderate rates.
Expenditure on major infrastructures has been revised in many countries following the recent government
elections, but estimates for 2019 still foresee growth of 3.2%. In terms of non-residential and residential
construction, estimates indicate growth of 2.4% and 0.9% respectively.
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As regards the Oil & Gas sector, new year prices partly cancelled the losses recorded at the end of 2018.
Nevertheless, optimism lasted only until the spring, when the new fall in prices required to revise the 2019 oil
price forecasts.
According to the latest 2019 forecasts by analysts in the Short-Term Energy Outlook published in early July
by the EIA, the price of Brent oil will average around 67 dollars per barrel.
The initial estimate of 70 dollars has therefore been negatively revised in view of the growing uncertainties
regarding the trend of global demand.
Purchases and order backlog
Orders received in the first half of 2019 amounted to about Euro 363 million, of which Euro 309 million
referring to the Foundation Division.
Approximately 85% of orders received in the first half of 2019 refers to the Foundation Division while the
remaining 15% relates to the Oil & Gas Division.
The remaining order backlog at 30 June 2019 totalled Euro 721 million (Euro 713 million at 31 December
2018). The breakdown of activity sectors shows that 72% of orders was attributable to the Foundation
Division while the remaining 28% to the Oil & Gas Division.
Investments
Gross investments in tangible assets of Trevi Group for the first half of 2019 were Euro 46.4 million, of which
Euro 34,342 thousand relating to the first application of the IFRS 16 accounting standard from 1 January
2019, adopted with the modified retrospective approach, due to the purchase of plants, machinery and
equipment to be allocated mainly to support the activities of the Foundation Division. The higher amounts
refer to investments made in Latin America, the Middle East, the United States and Europe. During the first
half of the year under review, divestments totalled approximately Euro 9 million. The net value of tangible
assets as at 30 June 2019, equal to Euro 245.7 million, was positively impacted by translation differences of
approximately Euro 0.4 million, generated by the difference between the historical exchange rates and those
in force as at 30 June 2019.
The main information is provided below by Division:
Special Foundation Division
ORDER BACKLOG
The order backlog of the Foundation Division at 30 June 2019 amounted to Euro 517.3 million.
A breakdown of the main orders received is shown below by Geographical Area:
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Europe
In Europe, the Trevi Division acquired 8 new contracts and received contractual changes to existing contracts
for a total amount of about Euro 49 million. The major contracts were:
• The job order in France with Demathieu Bard for the execution of diaphragm walls by means of
hydromill and grouting works for the new metro line of the Grand Paris Express - Line 17 (Lot 1);
• The job order in France with NGC-Salini for the execution of diaphragm walls by means of hydromill
and grouting works for the new metro line of the Grand Paris Express - Line 16 (Lot 2).
Middle East
In the Middle East, the Trevi Division acquired 40 new contracts and received contractual changes to existing
contracts for a total amount of about Euro 22 million. The major contracts were:
• The job order in Oman with Saipem Spa for the execution of piles within the framework of the
development project of the Duqm refinery located near the north-east coast of the country;
• The job order in Saudi Arabia with Al-Ameen Distinctive Co. for Urban Development aimed at
executing secant piles and dewatering activities for the construction of the new shopping center Al-
Ameen in Jeddah.
Far east and Oceania:
In the Far East and in Oceania, the Trevi Division acquired 2 new contracts in Hong Kong and in the
Philippines. The item “contractual changes to existing contracts” include approximately Euro 7 million.
North America
In North America, the Trevi Division acquired 15 new contracts and received contractual changes to existing
contracts for a total amount of about Euro 73 million. The major contracts were:
• The job order in Florida with USACE for the Herbert Hoover Dike 2 project (MATOC). The project
makes part of the renovation plan of the Lake Okeechobee dam.
• The job order in Boston with J. Moriarty & Associates for the One Congress project involving the
construction of a new office tower.
South America
In South America, the Trevi Division acquired 20 new contracts and received contractual changes to existing
contracts for a total amount of about Euro 8 million. The major job contract was acquired in Argentina with
Vitco SRL that envisages the capacity expansion of the storage sites belonging to the company.
Africa
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In Africa, the Trevi Division acquired 20 new contracts and received contractual changes to existing contracts
for a total amount of about Euro 31 million. The major contracts were:
• Various job orders in Nigeria for preparatory foundation works for the expansion of port and industrial
sites and for the Oil & Gas sector;
• Contract extensions in Algeria with Cosider for the Algiers Metro.
BUSINESS PERFORMANCE
Total production revenue of the Division of Special Foundation Services in the first half of 2019 was
approximately Euro 212 million. This increase is mainly attributable to the opening of initiatives in the new
European reference market, especially in France and Germany, and to the growth in volumes both in the
United States and Chile. Performance is contrasting in the Middle East, where satisfactory increases were
registered in Saudi Arabia and Oman while substantial decreases were recorded in Dubai and Kuwait. In
Africa, due to the continuing crisis situation in Nigeria and the demonstrations that took place in Algeria
following the elections, there were strong slowdowns in operational activities.
Below is information on the main contracts, managed during the first half of 2019, broken down by
geographical area:
Europe
Germany: Frankfurt Four - GP CON GMBH
Construction of special foundations within the Four Frankfurt project located in the downtown of Frankfurt
and involving the construction of 4 towers and a 4-storey underground parking.
France: Eiffage Genie Civil – Metro Grand Paris
Execution of diaphragm walls with hydromill and Jet Grouting for the new metro line of the Grand Paris
Express - Line 16, lot 02.
Italy: Port Authority of La Spezia – Molo Pagliari
Executive design for the redevelopment of the Pagliari Pier including the construction of buildings, floating
docks and the recovery of the existing wharves.
Italy: Italcave – Taranto
Construction of a waste disposal site in an old quarry adjacent to the ILVA of Taranto.
Middle East
Iraq: Mosul Dam
The project calls for the safety of the Mosul dam, in northern Iraq. The end of 2018 marked the completion of
the phase 1 of the project that consisted in the construction of the residential area, new office buildings and the
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new dam warehouse, including the enhancement of the infrastructures inside the tunnel, the installation of
telecommunication systems, underwater works for the Bottom Outlet and Drilling and Grouting activities. In
the meantime, a contract for the extension of Drilling and Grouting works was signed and activities were
completed in July 2019 with the departure of both the Italian and American military forces.
Turkey: Salipazari Cruise Port
The project, to be carried out in the Karakoy area of Istanbul, involves the construction of a modern berth for
cruise ships and the creation of a “shorefront” area complete with commercial, real estate and hotel premises.
At the end of 2018, most of the activities were completed while the entire project was expected to be
completed by the end of the first half of 2019.
Saudi Arabia: King Salaman Project
Dynamic Compaction order in Saudi Arabia with the customer Huta Hegerfeld for the construction of the
world's largest shipyard in Ras Al-Khair. The project was completed in the first quarter of 2019.
Oman: Botanical Garden
Project executed for the customer Larsen & Toubro for the expansion of the botanical garden of Muscat.
Oman: Al Mina Residences at Barr Al Jissah
Project for the construction of foundation piles of a new luxury resort south of Muscat.
Saudi Arabia: Marjan Field development
Dynamic Compaction order with the customer Al-Shalawi for the expansion of the industrial area related to
the Oil & Gas development of the Marjan Field.
Saudi Arabia: Shuaiba Phase 3 Desalination Plant
This project is part of the expansion of the existing desalination plant in Shuaiba, which is expected to add
250,000 m3/day to the current production capacity.
Far east and Oceania:
Philippines: Cebu Link
The contract, signed with Accions-CCLEX, calls for the construction of a connection between Cebu islands
and Mactan.
Philippines: Segment 10
The project, signed with Leighton, involves the construction of a highway called North Luzon Expressway
(NLEX) Harbour Link Segment 10 - R10 Exit Ramp.
Hong Kong: CLP Power Station Black Point
The project, assigned by Leighton Asia, consists in the execution of special foundations (pipe piles wall and
jet grouting) that are preparatory to the construction of an important extension of the power plant.
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North America
Washington: Northeast Boundary Tunnel
The project was entrusted by Salini Impregilo JV in September 2017 but activities started in early 2018.
Works consist in the execution of the foundation works (concrete diaphragms, plastic diaphragms, secant piles
and jet grouting) for the construction of the NEBT Tunnel in Washinghton DC. The project aims at increasing
the capacity of the present sewage system and lessens the frequency, strength and impact of flooding, while at
the same time improving the water quality of the Anacostia River.
Florida: Herbert Hoover Dike Reach 1 COW - Gap Closure
The contract, entered into with USACE at the end of 2017, makes part of the renovation plan of the Lake
Okeechobee dam in Florida. TreviIcos South had already worked on this project in previously assigned lots
and the new site highlights the technical capacity of the company that is especially recognised within the
framework of “Dam Rehabilitation” projects in the USA and worldwide.
Boston: West End Garage
Job order with J. Derenzo Inc. which involves the development of a residential complex in the city center.
Florida: SELA 26 - Florida Avenue Canal
Contract with Cajun Contractors to extend the Florida Avenue road to New Orleans.
South America
Chile: Puente Chacao
The project consists in the construction of a bridge of about 2,750 meters that will connect the island of Chiloe
with the mainland. Trevi Chile signed the contract for the execution of bored piles for the Central and North
Pier at a maximum depth of 90 meters. The project, although presenting many technical and logistical
difficulties, started in early 2018 and is being carried out on schedule.
Africa
Algeria: Algiers Metro
Job order related to foundation works of the metro sections MC1 and MC2 in Algiers. In the MC1 section, the
contract involves the construction of 1 station, 1 ventilation shaft, 1 open-air tunnel, 1 viaduct and the
consolidation of the Algiers Metro tunnel sections in its extension to Baraki of line C for about 2.7 kilometres.
While for the Metro MC2 the construction of 9 stations and 10 ventilation shafts of the Algiers Metro is
planned in its extension towards the airport for more than 8.0 kilometres. Technologies such as bored piles,
diaphragm walls with hydromill, tie rods, micropiles and jet grouting are involved.
SOILMEC
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As far as revenue is concerned, there were positive signs in Italy thanks to sales of hydromills and top-of-the-
range pile rigs. Nevertheless, there were also some slowdowns, which occurred mainly in Europe and the
Middle East, attributable to a reduction of sales to some subsidiaries of the Group. The areas that showed
growth were APAC and North America.
An analysis of the single companies in both Italian production areas shows a decrease in revenue due to the
postponement of the production plan in the second half of the year because of the reduced availability of
materials.
The situation improved significantly when analysing the Order Backlog, where an increase was recorded
thanks to the contribution of the Eastern APAC area, North America and Europe.
The positive trend in sales, which began in 2018 and lasted over the first half of 2019, was confirmed.
Oil & Gas Division
The orders acquired by the Oil & Gas Division, made up of Drillmec S.p.A., Petreven S.p.A. and the
respective subsidiaries, amounted to about Euro 54 million at 30 June 2019; specifically:
• the Drillmec Division entered into new contracts for about Euro 31 million, mainly relating to the
acquisitions of contracts in the following business segments:
- Services & Spare Sparts for about Euro 20 million;
- Components for about Euro 7 million.
• the Petreven Division entered into new contracts for about Euro 23 million, all of them relating to oil
drilling services to be carried out in South America and India. In particular, it is worth mentioning:
- approx. Euro 7 million in Peru;
- approx. Euro 7 million in Argentina;
- approx. Euro 9 million in India.
ORDER BACKLOG
The order backlog of the Oil & Gas Division, made up of Drillmec S.p.A., Petreven S.p.A. and the respective
subsidiaries, amounted to about Euro 203.5 million at 30 June 2019.
The order backlog of the Petreven Division at 30 June 2019 amounted to about Euro 127 million compared to
the Euro 147 million at 31 December 2018 (Euro -20 million, -13%).
The order backlog of the Drillmec Division at 30 June 2019 amounted to about Euro 76.5 million compared to
the Euro 93.8 million at 31 December 2018 (Euro -17 million, -18%).
BUSINESS PERFORMANCE
Total revenue of the Oil & Gas Division in the first half of 2019 was approximately Euro 91 million.
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Total revenue of the Petreven Division in the first half of 2019 was approximately Euro 44 million. The
Division is currently operating in South America on behalf of the leading oil Majors and National oil
companies. Specifically, in the period under review the Division generated revenue for about Euro 31 million
in Argentina and about Euro 13 million in Peru.
Total revenue of the Drillmec Division in the first half of 2019 was approximately Euro 47 million. Said
Division generated revenue for Euro 16.5 million in the On-shore sector, Euro 14 million in Components,
Euro 8 million in services and Euro 8 million in spare parts.
Business plan, main risks and uncertainties to which the Trevi Group is exposed
and assessments on the going concern
Introduction
As is well known, and as already described in detail in the report on the financial statements as at 31
December 2018, there are some material uncertainties regarding the going concern of the Company and of the
main companies of the Group, including the subsidiaries Trevi S.p.A., Soilmec S.p.A., Petreven S.p.A. and
Drillmec S.p.A. However, it should be pointed out that, also with respect to what was already stated at the
time of approval of the financial statements, the Company (as well as, as far as Trevi S.p.A. and Soilmec
S.p.A. are concerned) entered into binding agreements - the effectiveness of which is subject to certain
conditions precedent detailed below - with the main lending banks of the Trevi Group, with the institutional
shareholders FSI and Polaris (as defined below), as well as with MEIL. Said agreements regulate the terms
and conditions of the capital strengthening and debt restructuring transaction aimed at enabling the Company
(and the other companies of the Trevi Group) to overcome the current economic, financial and capital crisis
and, consequently, to achieve, through the implementation of the Plan, economic-financial and capital targets
appropriate to its market sector. More specifically, the Company (as well as its subsidiaries Trevi S.p.A. and
Soilmec S.p.A.) signed a debt restructuring agreement, lodged with the Court of Forlì to obtain the approval
pursuant to art. 182-bis of the Italian Bankruptcy Law. Furthermore, the Company signed also the investment
agreement with the institutional shareholders FSI and Polaris and the agreement for the sale of the Oil & Gas
Division to the MEIL group. Therefore, the process to overcome the above uncertainties regarding the going
concern is, at the date of this report, already defined with all the main counterparties, and mainly depends on
the approval of the restructuring agreement, the fulfilment of the conditions precedent provided for in the
agreement itself and the subsequent implementation of the transactions provided for in the same agreement
and in the further agreements governing the transaction.
Short overview of the most relevant events up to the date of this report
For the sake of full disclosure, it is deemed appropriate to report below what has been already included in the
Report on Operations for the financial year ended 31 December 2018 with regard to the events that led to the
current situation.
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It should be noted that, since 2016, the Company and the Group have been recording a progressive worsening
of the economic-financial results and, from the second half of 2016, the trend of the main economic-financial
indicators and of the prospective cash flows led to a situation of financial difficulty which, as it will be
explained below, required the start of a complex and structured negotiation with the Group's main lending
banks. Due to the aforementioned situation of financial crisis, which in any case affected the entire sector of
reference, the Company acknowledged that it would have not been able to comply - at the relative verification
dates (which fell during the first months of 2017) - with the financial parameters (the so called covenants)
provided for by some of the medium and long-term loan agreements and by the bond loan. For these reasons,
in February 2017, the Company sent waiver requests to the lending banks and bondholders with regard to the
obligation to comply with the aforementioned financial parameters. These waivers were granted, respectively,
in March and April 2017.
In this context, the Company, also on behalf of the other Group companies, expressed to the main lending
banks of the Group, during some plenary meetings and/or through bilateral discussions, the need to adopt a
financial manoeuvre aimed at restructuring its own financial debt in line with the Group's situation and with
the expected cash flows.
Therefore, on 19 May 2017, the Company's Board of Directors, in the context of broader considerations about
the strategic development of the TREVI Group's core business and the reduction in the activity of the Oil &
Gas Division, resolved to submit a standstill request until 31 December 2017 to the main lending banks,
aimed at enabling the Group to continue to benefit from the financial support necessary to focus its attention
on the development of its business plan and on the reorganization process of the Oil & Gas Division.
In the same year, the further contraction of orders, particularly in the Oil & Gas Division (which was
associated with the cancellation of a very significant order with the customer YPFB in Bolivia), led to the
persistence and aggravation of the critical issues related to the financial situation of the Drillmec Division and
(albeit to a lesser extent) of the rest of the Group.
In the context described above, and also at the request of the credit institutions, the Group had to take some
immediate actions, such as, in addition to the standstill request mentioned above, the preparation of a forecast
for 2017 and the update of the 2017-2021 business plan, which included, among other things, a cost
containment policy through targeted interventions, in order to interrupt the ongoing negative trends and
implement initiatives to rebalance the economic and financial situation. The organizational and managerial
structure of the Group was also strengthened and actions were taken to redefine the control model.
In 2017, the Company also granted:
• a mandate to a “financial advisor” to assist the Group in requesting financial support from banks
through the maintenance of credit lines and a moratorium on loan repayments;
• a mandate to an “industrial advisor” to assist the Group in preparing a new business plan;
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• a mandate to a “legal advisor” to assist the Group in negotiating the contractual terms with the banks
aimed at restructuring the financial debt.
The lending credit institutions also requested – and the Group took steps to comply with this request - the
appointment of a lawyer of the lending banks in order to assist them in the aforementioned negotiations, as
well as the appointment of a financial advisor to their liking in order to evaluate the content of the financial
proposals formulated by the Company and its advisors, as well as to formulate proposals on behalf of the
lending banks.
The discussions - started on 19 May 2017 with the lending banks for the signing of a standstill agreement -
were aimed at allowing the Company and the Group, pending the updating of the business plan and the
definition of a proposal for a financial manoeuvre to submit to the lending banks, to continue to operate
normally, hence preventing any individual initiatives on the part of the same and continuing to receive from
the lending banks the support necessary to cover their financial requirements for the necessary period. The
standstill proposal made to the institutions consisted, in a nutshell, of: (i) a suspension of the application of
the provisions of the loan agreements that could determine the expiry, termination, withdrawal, forfeiture of
the benefit of the term or the “acceleration” (in any case defined) of the reimbursement obligations to be
borne by the companies of the Group as a result of the economic-financial crisis, (ii) a suspension or a
moratorium on the obligations to pay the principal amounts towards the lending banks (without prejudice to
the obligation to pay the interests, considerations and fees due by contract) expiring with start from 19 May
2017; and (iii) the confirmation of the existing credit lines and the maintenance of the credit lines and existing
credit facilities in accordance with those used by the Group as of 31 March 2017.
During the meetings aimed at discussing the content of the standstill proposal, the lending credit institutions
requested an Independent Business Review (IBR) from the Company that was carried out by a leading
company. The IBR focused mainly on four macro areas: (i) Analysis and Sensitivity of the Business Plan, (ii)
Tax Analysis, (iii) Analysis of Historical Data, and (iv) Technical Review on job order management. The IBR
concerned both the individual Divisions making up the Trevi Group and all the aspects concerning the
consolidation.
The IBR did not initially highlight any critical issues that could jeopardise the aforementioned definition path
with the lending banks, that is, of an agreement aimed at restructuring the financial debt in line with the
business plan.
Therefore, on 31 August 2017, the Board of Directors of Trevifin approved the forecast for the 2017 financial
year and the update of the Group business plan for the period 2017-2021.
Furthermore, on 29 September 2017, the Board approved the condensed consolidated half-year financial
statements of the Trevi Group at 30 June 2017, on which KPMG S.p.A., the Company's statutory auditor,
issued a limited audit report containing a conclusion without comments on the condensed consolidated half-
year financial statements. The limited audit report also contains a notice of information regarding the
21
application of the going concern assumption illustrated by the directors in the note “Main risks and
uncertainties to which the Trevi Group is exposed and assessments on the going concern”.
Negotiations with the lending banks, both in relation to the standstill agreement and to the definition of the
financial manoeuvre, continued in the following months, during which, however, some significant deviations
emerged with respect to the 2017-2021 business plan and the related forecasts of the economic-financial data,
with repercussions on the consistency/viability of the same. Clearly, this also affected the possibility of
quickly concluding agreements with the lending banks, which required, before considering their adherence to
a possible manoeuvre, to have greater visibility on the economic-financial data and on the industrial and
management prospects of the company and the Group.
On 13 November 2017, therefore, the Company's Board of Directors postponed the approval of the financial
figures relating to the third quarter of that current financial year in light of the uncertainties about the outcome
of the negotiations with the lending banks for the definition and subscription of the standstill agreement, and
therefore of the consequent impossibility to verify the going concern assumption. In light of the above, the
Company's Board of Directors also highlighted the need to implement, within the framework of the financial
manoeuvre being discussed with the lending banks, and together with it, a more complex operation, which - in
addition to a more incisive restructuring of the debt - also entailed the strengthening of capital, in order to
allow the economic and financial rebalancing of the Company and the Trevi Group. The Board also invested
the competent governance bodies with the task of identifying, within a short time, a managerial figure of
adequate standing who could be appointed as Chief Restructuring Officer (“CRO”).
On 18 December 2017, the Company's Board of Directors approved the appointment by co-optation -
pursuant to Article 2386 of the Italian Civil Code - of Mr. Sergio Iasi, who was assigned the office of CRO, as
well as the operating powers for (i) the analysis, structuring and negotiation of the aforementioned debt
restructuring and capital strengthening transaction, (ii) the review of the Company's and the Group's business
and financial plan, and (iii) the management of the negotiations underway with the lending banks and the
related financial manoeuvre. The Board, in acknowledging the persistence, at that time, of the uncertainties
already reported to the market, consequently resolved to further postpone the approval of the financial data
relating to the third quarter of the current financial year.
Subsequently, in consideration of some sensitivity analyses carried out in the meantime on the 2017-2021
business plan, as well as in light of the preliminary data for the year ended 31 December 2017 and the first
data for the 2018 financial year, the Company deemed it appropriate to carry out a further and definitive
deepening at the industrial level, with the contribution of an external and independent consultant, specialised
in the sector and appreciated by the lending banks.
During the first few months of 2018, the management of the Company, under the supervision and
coordination of the CRO, also initiated discussions with some potential investors interested in the acquisition
of all or part of the companies operating in the Oil & Gas Division of the Trevi Group.
22
In this context, on 27 April 2018, in light of the continuing discussions with the lending banks aimed at
restructuring the debt and signing the standstill agreement, and in consideration of the necessary definition of
the capital strengthening transaction, the Company announced the postponement of the approval of the
interim report at 30 September 2017 and of the annual financial report at 31 December 2017, previously
scheduled for 30 April 2018.
Also in April, the CRO, with the support of the management as well as of the legal and financial advisors in
charge, started a number of discussions regarding the possible capital strengthening transaction. These
discussions concerned, in addition to the lending banks, both potential third parties interested in making an
investment intervention to rescue the Group and the main shareholders of the Company. At the outcome of
these discussions, the Company also received some preliminary feedback and expressions of interest, as well
as some preliminary offers. In particular, two binding offers were presented, one by Bain Capital Credit
(“BCC”) and the other by Sound Point Capital, in addition to an expression of interest by the Quattro R fund.
The first two offers, that of BCC and that of Sound Point Capital, were essentially based on the granting of a
super senior loan and on a recapitalization through the conversion of the loans of the banks into participating
financial instruments of the Company, while the hypothesis of Quattro R recognized the need for a strong
reserved capital increase in order to provide Trevifin with sufficient capital and financial resources, hence
improving the financial position of the Group. This last preliminary offer, however, was subsequently
withdrawn by Quattro R, which announced its intention not to continue the negotiations.
On 17 May 2018, the Company's Board of Directors, after having thoroughly evaluated the offers received
from potential third-party investors, from the point of view of their adequacy to the Group's capital and
financial needs as well as their feasibility with the lending banks, and after having acknowledged the
withdrawal of the expression of interest presented by Quattro R, considered that, among the offers received
from third-party investors, the preferable one was that presented by BCC. Therefore, the BoD focused its
activities on the negotiations with the latter for a possible operation that was centred on the overall debt of the
Trevi Group. On 30 May 2018, the Board of Directors resolved to entrust the CRO with the mandate to define
the terms of the exclusivity with BCC, as well as to submit to the main creditors the proposal formulated by
the same, which was based on the granting of a loan called “Super senior” to the Company. Said loan was
aimed at repaying part of the outstanding debt and supporting the business plan as well as partially converting
the residual debt, without resorting to a capital increase. The Board also entrusted the CRO with the task of
checking the feasibility of the solution proposed by the BCC with the lending banks.
Despite the positive continuation of the negotiations with BCC, in consideration of the uncertainties that were
in any case connected with the hypothesis of the transaction presented by the latter and the possibility that it
was approved by the banks, the Board of Directors considered it wise that, simultaneously, also the
hypotheses of alternative transactions were examined, namely the so-called “Stand-alone”, which did not
include the necessary involvement of third parties but which were addressed exclusively to the current
stakeholders (banks and shareholders) of the Company. These transactions would logically and functionally
23
be closely linked to a capital increase. Therefore, at the same meeting, the Board of Directors also resolved to
submit to the approval of a forthcoming Extraordinary Shareholders' Meeting the proposal to grant the
directors - pursuant to Article 2443 of the Italian Civil Code - the right to increase the share capital against
payment, in one or more times, even in divisible form, up to Euro 400 million (of which, in cash, not
exceeding the maximum amount of Euro 150 million).
The delegation provided for by Article 2443 of the Italian Civil Code endowed the Board with the right to
increase the share capital, in a reasonably flexible and timely manner, in order to meet any possible needs or
to be able to benefit from the opportunities expressed, both in the context of the possible transaction with
BCC, and if there was a need to resort to alternative intervention solutions in support of the Company.
Also on that date, the Board finally resolved to submit to the Shareholders' Meeting:
1. the elimination of the nominal value of the shares; and
2. the amendment to Article 23 of the Company's articles of association to eliminate the obligation of the
administrative body to obtain the prior authorization of the ordinary shareholders' meeting for the
following transactions: (a) transfer of a business branch or of the only company; (b) purchase of a
business branch or of the only company; (c) rent of a business branch or of the only company; and (d)
transfer through contribution in kind of a business branch or of the only company.
On 8 June 2018, the Company entered into an exclusive agreement with BCC, valid until 16 July 2018, in
relation to the proposed capital strengthening transaction.
More in detail, the preliminary proposal made by BCC provided for the granting of a super senior loan for an
amount of Euro 150 million with a four-year bullet repayment to the subsidiaries Trevi S.p.A. and Soilmec
S.p.A.. Such new financing, to be disbursed under a restructuring agreement entered into pursuant to Article
182-bis of the Italian Royal Decree No. 267 of 16 March 1942 (“Italian Bankruptcy Law” or “IBL”),
should have been used to support the business plan and the partial repayment of the outstanding financial
debt. The remaining portion of the debt should have been subject to the consolidation in line with the plan,
write-off and/or conversion into financial instruments. The granting of the loan should have been subject to
certain conditions, including: the entering into of the standstill agreement with the lending banks and, more
generally, the reaching of an agreement with the main financial creditors on the terms of the manoeuvre, the
managerial development and the successful completion of the due diligence activities carried out by BCC.
On 11 June 2018, in accordance with the aforementioned resolution of the Board of Directors dated 30 May
2018, the Shareholders' Meeting was called on 27 July 2018 at 11.00 am, on first call and, if necessary, on 30
July 2018 on second call.
In consideration of the uncertainties resulting from the continuation of the discussions with the lending banks
aimed at restructuring the debt, the signing of the standstill agreement and the definition of the capital
strengthening transaction and the negotiations with the BCC, on 14 June 2018 the Company announced the
24
postponement of the approval of the interim report at 30 September 2017, of the annual financial report at 31
December 2017 and of the interim report at 31 March 2018.
BCC then submitted a request to the Company aimed at extending the exclusivity period until 31 July 2018,
which was accepted on 24 July 2018, and which led to the formulation by BCC itself of a binding offer
concerning the possible intervention in the capital strengthening transaction subject to an acceptance deadline
until 10 August 2018 and with the related extension of the exclusivity period until 31 October 2018.
In consideration of the numerous conditions precedent of the offer, including the reaching of an agreement
with the lending banks and with the controlling shareholder, also with reference to the future governance of
the Company (in particular to the severed managerial discontinuity), as well as to some elements worthy of
further investigation, on 26 July 2018, the Board of Directors gave the CRO - with the assistance of the
Company's advisors - the mandate to explore the margins for the improvement of the same, in order to verify
the existence of the conditions for the granting of exclusivity and the continuation of negotiations, also with
the lending banks and the main shareholders.
The Board also acknowledged the status of negotiations with the lending banks for the signing of the standstill
agreement, approving the text in its final version and giving the CRO the powers to subscribe it.
Also with regard to the terms established under the envisaged standstill agreement and to the suspension
already implemented by the Company of the payment of interests on medium-long term debts towards the
lending banks, the Board of Directors established to suspend the payment of interests on the bond loan issued
on 28 July 2014, with a nominal value totalling Euro 50 million, starting from the instalment of interests
falling due on 30 July 2018.
Therefore, on 30 July 2018, the Shareholders' Meeting of Trevi - Finanziaria Industriale S.p.A., convened on
second call, adopted a resolution on the proposal of the shareholder Trevi Holding (subsequently adjusted for
the correction of a material error on 7 August 2018 by a notarial deed executed by Marcello Porfiri, Notary
Public in Cesena, rep. No. 11.358 folder No. 5.227 - on the proposal of the Chairman of the Board of
Directors approved by the Company's Board of Directors with its resolution of acknowledgement dated 3
August 2018) which established - as per the last text registered in the competent Register of Companies - to
“grant the Board of Directors, pursuant to Article 2443 of the Italian Civil Code, the right to increase the
share capital by payment, in one or more times, even in divisible form, for a maximum period of 24 months
from the date of the resolution and for a maximum value of Euro 400 million (of which, in cash, not exceeding
the maximum amount of Euro 150 million). This increase is to be made by issuing ordinary shares without the
nominal value, having the same characteristics as the outstanding ones, subject to verification by the Board
of the existence and compliance with the conditions established by law, with the right for the Board to
determine the issue price and any share premium, the procedures for the relating subscription, also through
the conversion of receivables towards the Company, and the number of new shares from time to time issued,
provided that the increase is made with the option right and, if the banks use credits to free up financial
instruments, they are participating financial instruments and not shares, unless the circumstance that the
25
banks use credits to free up shares constitutes a necessary element for the success of the part of the increase
to be released by payment in cash, it being understood that the faculty conferred to the Board of Directors
may be exercised only in connection with a debt restructuring agreement pursuant to Article 182-bis of the
Italian Royal Decree No. 267 dated 16 March 1942”. On that date, the Shareholders’ Meeting also approved,
as proposed by the Board of Directors, the elimination of the nominal value of shares as well as the
amendment to Art. 23 of the Company’s Articles of Association, in order to eliminate the restriction for the
administrative body to obtain the prior authorisation of the Ordinary Shareholders’ Meeting for specific
corporate transactions.
By virtue of the approved resolution of the Shareholders' Meeting, in the month of August 2018, and in
particular on the 10th, the concerned companies of the Trevi Group established a standstill agreement with the
lending banks and started the procedure for collecting subscriptions for adherence of the numerous lending
banks of the Trevi Group which are parties to the agreement. The effectiveness of the agreement was subject
to acceptance for adherence, by 15 September 2018, by a number of financial creditors representing at least
93% of the total debt claimed by the Trevi Group from the lending banks that were expected to join the
agreement.
The same agreement was proposed to the lending banks on the assumption of the implementation of the
financial manoeuvre and strengthening of the capital at the time under study, including the part relating to the
capital increase delegated pursuant to Article 2443 of the Italian Civil Code to the terms and conditions set
forth in the amendment of 7 August 2018. Therefore, the lending banks placed their reasonable reliance on
the swift realization of the aforementioned manoeuvre, including the capital increase, as mentioned in the
standstill agreement.
On 10 August 2018, BCC also granted the Company an extension of the term for the acceptance of the
binding offer presented until 14 September 2018, in order to allow the parties to complete the assessments in
progress and to continue the discussions still pending on the terms of this proposal. Trevifin, for its part,
agreed to extend the exclusivity, previously granted to BCC for the negotiation of the aforementioned offer,
until the same date of 14 September 2018.
Despite the complex and difficult negotiations aimed at reaching an agreement, upon the expiry of the
deadline for accepting the binding offer (14 September 2018), the Company notified BCC of its decision not
to adhere to the aforementioned offer. In fact, also in light of some worsening changes proposed by BCC
compared to the originally hypothesized terms, the transaction outlined as a result of the discussions with this
possible third-party investor was deemed, on the one hand, less convenient from the point pf view of the
company’s interest and, comparatively, less protective than the so-called “stand-alone” hypothesis and, on the
other hand, less feasible from the point of view of the financing banks. Specifically, in the offer revised by
BCC, the amount of the super senior loan was reduced and divided into tranches, the second of which could
be disbursed only upon the occurrence of certain assumptions, while providing a complete guarantee package
from the beginning. Furthermore, this loan could no longer be used, not even in part, to offer partial
26
reimbursement to credit institutions, making the offer itself less attractive to the latter (whose approval was
clearly a condition for the success of the transaction). Finally, the offer was subject to numerous conditions
precedent whose occurrence was uncertain. Therefore, this offer proved to be inadequate and did not
correspond to the objectives identified by the Board of Directors, making the achievement of those financial
and equity targets identified by the Company and aimed at reaching the economic-financial rebalancing of the
same company and of the Group uncertain, due the foreseeable difficulty of having the lending banks approve
the offer finally made by the third investor. The Board considered that the financial support proposed by
BCC, also due to the penalizing conditions proposed, would have done nothing else than postpone the
difficulties experienced by the Group without being able to solve them.
The Company has therefore decided to continue only in the process aimed at defining an alternative
manoeuvre, according to the so-called “stand-alone” model (that is, without the intervention of third parties
but addressed only to its current stakeholders). This transaction would necessarily have involved, also taking
into account the outcome of the Extraordinary Shareholders' Meeting held on 30 July 2018, a capital increase
reserved as an option to the shareholders and the simultaneous conversion of part of the Group's financial debt
into financial instruments, on whose nature an agreement should have been reached with the banks called to
convert.
In the days immediately following, and in particular on 17 September 2018, the Company - on the assumption
of the manoeuvre based on a capital increase delegated to the Board of Directors - received formal
confirmation of the effectiveness of the standstill agreement, due to the adherence of the same number of
financial creditors as indicated above. The standstill agreement, which is functional to enable the Company to
continue the ongoing discussions with its stakeholders for the definition of the capital-strengthening
manoeuvre and the restructuring of the total debt according to the “stand alone” hypothesis, provided for,
among other things and in summary, what follows:
i) the granting of a moratorium on the obligations to pay the principal amounts of the medium-long
term loans granted to the Trevi Group, until 31 December 2018 and, with reference only to Trevi -
Finanziaria Industriale S.p.A., a moratorium on the interests that will accrue on medium-long term
loans;
ii) the maintenance of the existing short-term credit lines within the limit of the amounts currently
used for Trevi S.p.A., Soilmec S.p.A. and the other Trevi Group companies operating in the
foundation sector; and
iii) the possibility of making new uses of the existing facilities which have been confirmed in the
context of the Agreement both in the form of cash advances and of issuance of guarantee facilities,
in order to meet cash requirements and to support business development in national and
international markets where the Group operates.
On the basis of the assumption and the delays for defining the capital strengthening manoeuvre, including the
execution of the delegation to the Board of Directors pursuant to Article 2443 of the Italian Civil Code, on
27
whose full effectiveness the lending banks have reasonably relied, the same lending banks have therefore
consented not just to the moratoria but also to new uses in the form of cash and guarantee facilities
indispensable to the needs of the Group for a total amount of approximately Euro 17 million for the new cash
finance and Euro 59 million for the new finance in the form of guarantee facilities.
On 8 October 2018, the Company's Board of Directors, upon proposal of the CRO and taking into account the
preliminary indications received from the main shareholders of the Company and from the lending banks,
unanimously approved the guidelines of the alternative manoeuvre hypothesis involving the capital
reinforcement and the debt restructuring, which included inter alia:
i) a share capital increase of Euro 130 million, to be paid up in cash with an option right in favour of
the shareholders, on the basis of the proxy granted by the Extraordinary Shareholders' Meeting of
30 July 2018 pursuant to Article 2443 of the Italian Civil Code; and
ii) the conversion of the receivables claimed by the lending banks from the Company and from the
other companies of the Trevi Group for Euro 250 million in shares (or possibly, if accepted, in
financial instruments) and the rescheduling of the residual credits;
all of the above to be implemented within the framework and in execution of a debt restructuring agreement
pursuant to Article 182-bis of the Italian Bankruptcy Law (the “Restructuring Agreement”).
The Board of Directors has therefore mandated the CRO to immediately start negotiating with the lending
banks in order to define the terms and final conditions of the financial manoeuvre, including the conversion
rate of the receivables as well as the characteristics and rights pertaining to the financial instruments intended
for lending banks at the time of conversion, with the aim of reaching the definition of an agreement.
As for the disposal of the Trevi Group companies operating in the Oil & Gas Division, on 4 December 2018
the Company's Board of Directors resolved to accept the binding offer presented by Megha Engineering &
Infrastructures Ltd. (“MEIL Group”) for the acquisition of the Group companies operating in the Oil & Gas
Division and, in particular, of Drillmec S.p.A. and Petreven S.p.A. (the “Oil & Gas Disposal”).
More specifically, as a result of an extensive and prolonged search for potential buyers of the Oil & Gas
Division carried out by the CRO with the help of specialized advisors of top international standing, the
Company's Board of Directors considered that, in the light of the expressions of interest and offers received
from financial or industrial operators potentially interested in the acquisition of the Oil & Gas Division or part
of it, the offer presented by the MEIL Group was the best and most consistent one with the Company's
objectives, also with a view to the going concern of the business, which is an essential element to preserve the
value of the Division.
The offer of the MEIL Group provides for the enhancement of the companies and assets making part of the
Oil & Gas Division of the Trevi Group based on an equity value of Euro 140 million, assuming: (a) the
absence of financial debt; and (b) a working capital value no lower than that recorded at 30 September 2018.
This enhancement is also subject to some pre-closing price adjustments aimed at reflecting, in the definitive
28
equity value, the negative effects on the value of the Division that may arise from the occurrence of certain
events such as, for example, a reduction in the reference value of the working capital of the companies in the
Oil & Gas Division (with a cap set at 15% of the proposed price) or the existence, at the closing date, of
financial debt or, again, the occurrence of leakage (meaning those payments made by the companies of the Oil
& Gas Division in favour of the other companies of the Trevi Group). The closing of the transaction is subject
to the occurrence of certain conditions precedent, which are usual for this type of transaction, including the
signing, filing and approval of the Debt Restructuring Agreement pursuant to Article 182-bis of the Italian
Bankruptcy Law, as well as the failure to meet significantly negative events.
The Board of Directors also acknowledged that the acceptance of the offer led to a significant write-down of
the carrying amount of the investments and of the financial receivables from the companies belonging to the
Oil & Gas Division, as well as the necessary write-downs of other intangible assets consequent to the
foreseeable results of the impairment test based on the new business plan, and that these write-downs are
reflected in the reduction of the Company's equity below the limits set by Article 2447 of the Italian Civil
Code.
On 19 December 2018, the Board of Directors resolved to approve the 2018-2022 consolidated Business Plan
updated on the basis of the data as at 30 September 2018 available to the management (the “Plan”) and the
related capital strengthening and restructuring of the Trevi Group's debt (the “Transaction”).
In particular, the Plan, which assumes that the Transaction will be implemented during the 2019 financial
year, is based on four main pillars:
(a) the prospective concentration of the Group's activities in geographical areas characterized by high levels of
growth and attractive margins, as well as, at the same time, by a limited level of risk positioning of the Group;
(b) concentration of the portfolio of projects and products with high complexity and margins;
(c) optimization of the commercial and operational footprint; and
(d) implementation of standard processes to maximize the control of Group companies.
The Plan specifically provides for the Trevi and Soilmec Divisions - also as a result of and due to the
Transaction - the return, within the period considered, to levels of revenues and margins comparable to those
achieved before the onset of financial difficulties, by leveraging on the recognized positioning of these
Divisions in the construction and special foundation sector; as well as, thanks to the manoeuvre, the
achievement by 2020 of the capital and financial targets identified as adequate (also in the light of those of the
main competitors) by the Board of Directors, i.e., a ratio between debt and EBITDA not exceeding 3x and a
ratio between debt and net equity equal to 1:1.
At the end of the further discussions with the lending banks (and in particular, following the communications
received from the consultants, the latter on 2 October and 14 December 2018, in which the general terms
around which there could have been a consensus of the lending banks to the transaction were assumed), on the
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one hand, and the main shareholders of the Company, Trevi Holding S.E. (“Trevi Holding”), FSI
Investimenti S.p.A. (“FSI”), a company making part of the Cassa Depositi e Prestiti Group, and Polaris
Capital Management LLC, a leading management company specialised in investments in the construction
sector, on behalf of the funds managed by the same shareholders of the Company (“Polaris” and, together
with FSI, the “Institutional Shareholders”), on the other, the Board of Directors has defined the terms
essential to the capital strengthening transaction, which is articulated in extreme synthesis in:
(i) a cash increase in capital of Euro 130 million, to be offered as an option to shareholders pursuant to Article
2441, paragraph 1 of the Italian Civil Code; and
(ii) a capital increase reserved to the lending banks to be released by converting part of the receivables due
from the Company and its subsidiaries for an amount that, on that date, also based on the aforementioned
communications received from the advisors of the banks, is calculated in approximately Euro 310 million in
newly issued ordinary shares of the Company admitted to trading on the MTA. It should be noted that the
lending banks, to which the option had also been repeatedly submitted, decided to accept the aforementioned
conversion exclusively for the issue of ordinary shares, and not of the so-called participating financial
instruments (pursuant to Article 2346, sixth paragraph of the Italian Civil Code), since they are easier to
liquidate with a view to recovering the related receivables. Moreover, the transaction thus structured led to the
willingness of the lending banks to convert a larger amount of receivables into equity, thereby deriving, based
on the conversion ratio, an implicit write-off of approximately Euro 240 million.
To this end, the Institutional Shareholders, FSI and Polaris, formally confirmed to the Board of Directors that
they will undertake, subject to certain conditions (as described in detail below), to subscribe the share of the
cash capital increase due to them because of their respective rights of option, along with guaranteeing the
subscription of an additional portion of any unexercised portion up to a maximum amount of Euro 38.7
million each, i.e., for a total of Euro 77.4 million of the total Euro 130 million. The subscription of the
remaining portion of the cash increase in capital amounting to Euro 52.6 million would be guaranteed, in the
event of an unexercised portion, by a guarantee consortium organized by the lending banks, using credits as
part of the capital increase reserved for them and to be released by conversion of credits. The commitments
that are assumed by the Institutional Shareholders with reference to the implementation, subscription and
payment of the cash increase in capital are today regulated by the investment agreement that will be signed
before the signing of the Restructuring Agreement by the latter and the Company, which also governs the
principles relating to the governance of the Company (the “Investment Agreement”).
Said reserved capital increase, as mentioned above, to be subscribed through the use in compensation of bank
receivables (for an agreed total amount of Euro 284 million) - in part intended for the underwriting of any
remaining unexercised portion of the cash capital increase - would be carried out according to a ratio of 4,5:1,
that is to say, through the attribution to the lending banks of newly issued ordinary shares (or fractions
thereof, due to the terms of the transaction that will be subsequently identified) for a value of Euro 1 (at the
relevant subscription price) for every Euro 4.5 of converted credits.
30
Each of the commitments of the Institutional Shareholders was subject to the occurrence of different
circumstances which, in addition to the conditions to which this type of commitment is normally subject,
include, among other things, the completion of the Oil & Gas Disposal and the achievement of the
restructuring agreement to be submitted for approval pursuant to Article 182-bis of the Italian Bankruptcy
Law, to be approved by all the parties involved concerning the various elements necessary for the
implementation of the Transaction, including the definition of agreements on the treatment of the residual
bank debt following the conversion and to any new financing necessary to support the Plan, as well as the
new governance principles of the Company and the other main Group companies that guarantee professional
and independent management. In particular, the shareholder FSI has subordinated its commitment to the fact
that, at the outcome of the Transaction, no shareholder reaches a controlling interest in the Company.
Pending the decision-making processes of the lending banks and the definition of the contractual texts, the
Company asked the same lending banks to extend the effective term of the standstill agreement expiring on 31
December 2018 until the entire period necessary for the subscription of the definitive agreements, as well as
to refrain from requesting the repayment of the financial debt and to maintain the current operations of the
credit lines in the form of cash and guarantee facilities.
Within the framework outlined above, taking into account the occurrence of the conditions set out in Article
2447 of the Italian Civil Code as an effect of the acceptance of the offer presented by the MEIL Group for the
acquisition of the Group companies operating in the Oil & Gas Division, the Board of Directors also gave a
mandate to the Chairman and the CRO to arrange, within the terms of the law, the convening of the
Shareholders' Meeting for the measures of competence and to fix the date of the meeting taking into account
the time necessary for the negotiation concerning the Restructuring Agreement, in any case not exceeding the
deadline for the approval of the financial statements, that is, by the month of April 2019.
The manoeuvre subject to the approval by the Board also provided for a possible restructuring of the bond
loan called «Trevi-Finanziaria Industriale S.p.A. 5.25% 2014 - 2019», for an issue value of Euro 50 million,
with respect to which a market survey was conducted with some of the main holders and which was submitted
for approval by the bondholders' meeting in time useful for defining the Restructuring Agreement.
During the first few months of 2019, negotiations continued with lending banks and all stakeholders in order
to define and agree on the terms of the individual agreements and all the operations envisaged in the context
of the Trevi Group capitalization restructuring process. Although substantial progress has been made and the
lending banks have de facto extended the conditions of the standstill agreement, also allowing some new uses
for cash as well as the issuance of some new guarantees necessary for the financial support of the Group, as
there are still certain elements in the definition phase, the Board, on 1 April 2019, resolved to postpone the
Extraordinary Meeting already called for 24 and 30 April 2019 (on first and second call respectively) for the
adoption of the provisions pursuant to Article 2447 of the Italian Civil Code, in order to make it coincide with
the date of the Shareholders' Meeting to be called to approve the 2017 and 2018 financial statements under the
terms provided for in Article 2364, paragraph 2, last sentence, of the Italian Civil Code. On that date, the
31
Board also approved the Plan in its consolidated and updated version based on the data as at 31 December
2018.
On 2 May 2019, the bondholders' meeting of the bond loan, held on second call, approved the granting of
waivers and the modification of some terms of the loan regulation in order to adapt the relative provisions to
the current situation of the Company and to what is foreseen by the Plan, thereby contributing to the
restructuring of the Company's financial structure.
The changes to the loan regulation concern, inter alia, the maturity date of the loan that has been postponed to
31 December 2024, the rescheduling of the interests that have been recalculated by 2% starting from the 2nd
of May, and the redefinition of some contractual obligations and of certain significant events in order to adapt
them to the current situation of the Company and to the new Plan.
It should be noted that the effectiveness of the changes to the loan regulation is subject to the condition
subsequent of the failure to grant the approval in relation to the Restructuring Agreement pursuant to Article
182-bis of the Italian Bankruptcy Law and the non-occurrence of the closing of the Transaction by the
deadline of 31 December 2019.
On 8 May 2019, the Company informed the market that the Board of Directors, after acknowledging the
advanced state of the negotiation and drafting of the agreements relating to the Transaction, resolved to
approve the final proposal for an inclusive financial manoeuvre of the economic-financial plans, which was
sent to the lending banks to allow them to complete the preliminary investigation on the Transaction and the
related decision-making processes.
The manoeuvre proposal approved by the Board, which is now reflected in the Plan and in the Restructuring
Agreement, is in line with the principles that had already been established in the resolution adopted by the
same on 19 December 2018, and concisely provides for:
1. a capital increase to be offered in option for an amount of Euro 130 million, at a subscription price per
share of Euro 0.0001, in relation to which the Institutional Shareholders have confirmed their
willingness to make a commitment of subscription for a total of Euro 77.4 million, while the remaining
part, whereas it is not optionally subscribed by the market, will be subscribed by the lending banks
through the conversion of the related credits according to the conversion ratio indicated in the following
point (ii);
2. the conversion into newly issued ordinary shares admitted to trading on the MTA of the receivables
claimed by the lending banks, according to a ratio of 4.5:1 for a maximum amount of Euro 284 million,
in part, where necessary, to guarantee the unexercised portion and, for the remaining part, to subscribe
and release a reserved capital increase;
3. a further capital increase, up to a maximum of approximately Euro 20 million, reserved for the current
shareholders of the Company, with a corresponding total issue of No. 164,783,265 quoted European
“loyalty warrants”, each valid to underwrite No. 933 conversion shares, for a total of maximum No.
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184,491,343,494 conversion shares, to be subscribed in cash, at an exercise price per warrant equal to
Euro 0.00013;
4. balance and write-off transactions with some financial creditors who refused to adhere to the proposed
conversion into ordinary shares referred to in point (ii) above, for a total amount of approx. 32 million,
with an estimated capital benefit of approx. additional 20 million;
5. the disposal of the investments held, directly or indirectly, by Trevifin in Drillmec and Petreven (and,
through the latter, in the other companies controlled by them and operating in the Oil & Gas Division),
in favour of the MEIL Group and the use of the net proceeds deriving from the disposal for the
repayment of the debt weighing, respectively, on each of these companies, upon payment of these
exposures by Trevifin immediately before the closing of the disposal. The residual debt not reimbursed
through the use of net cash proceeds deriving from the Oil & Gas Disposal will be partly converted into
the capital increase per conversion, partially cancelled as it is not guaranteed by Trevifin and, for the
residual portion guaranteed by Trevifin, rescheduled and modified in a uniform manner to the debt,
subject to the restructuring pursuant to point (vi) below;
6. in the event of failure to fully subscribe the portion of the cash increase reserved in option for the
existing shareholders, the eventual granting and payment in favour of Trevi S.p.A. and Soilmec S.p.A.
of a medium-long term syndicated loan in the form of cash for a total maximum amount equal to the
lower of (a) Euro 41 million, and (b) the difference between Euro 130 million and the amount of the
capital increase per cash underwritten by the market and the shareholders (including the Institutional
Shareholders). Of this loan, Euro 12 million must be disbursed in the period between the filing of the
appeal and the date on which the decree approving the Restructuring Agreement was finalized (and,
therefore, following the authorization by the competent Court pursuant to Article 182-quinquies,
paragraph 1, of the Italian Bankruptcy Law). The amount of the new finance, which was calculated
taking into account the agreements reached with MEIL and assuming that through the Petreven Disposal
the Group will benefit from a net amount of approx. Euro 11.6 million after having repaid the entire
debt of this company, will be reduced in any case by an amount equal to the net amounts deriving from
the disposal of Petreven which exceed the aforementioned amount of Euro 11.6 million;
7. the consolidation and rescheduling of the bank debt which will have a final maturity date and related
balloon repayment on 31 December 2024, except in cases of mandatory early repayment, and the
modification of the related terms and conditions;
8. the granting of new credit lines required for implementing the business plan;
9. the provision of part of the new cash finance and a part of the new credit lines in the form of guarantee
facilities even during the period between the filing and the approval date of the restructuring agreement
pursuant to the Article 182-quinquies of the Italian Bankruptcy Law, subject to obtaining authorization
from the competent Court;
10. the rescheduling until 31 December 2024 and the modification of the related terms and conditions of the
bond loan issued by Trevifin.
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With regard to the subscription price of the newly issued shares as part of the capital increase, in line with the
provisions of the Board document of 19 December 2018, as well as with the commitments undertaken by the
Institutional Shareholders, the same was set by the Board of Directors in the amount of Euro 0.0001 which,
based on the current share listing values, corresponds to a 28% discount on the TERP, in line with the market
precedents.
The financial manoeuvre illustrated above would entail an overall recapitalization of the Company estimated
in a range between approximately Euro 390 and 440 million and an improvement in the net financial position
of approximately Euro 150-250 million (depending on the amount of the capital increase in the form of cash
subscribed by the market).
As for the Oil & Gas Division Disposal, the related terms and conditions are now reflected and detailed in the
implementation agreements of the same (including, among others, the Sale and Purchase Agreement, the
Escrow Agreements, the Non-Compete Agreement and the Intercompany Commercial Agreement), (the “Oil
& Gas Disposal Agreements”).
Finally, the Company: (a) approved both the statutory and consolidated financial statements on 15 July 2019,
which are subject to the approval of the Shareholders' Meeting on 30 September 2019; (b) entered into the
final agreements relating to the Transaction, including the Restructuring Agreement, the Investment
Agreement and the Oil & Gas Disposal Agreements, on 5 August 2019; and (c) lodged (jointly with the
applicant companies Trevi S.p.A. and Soilmec S.p.A.) the Restructuring Agreement with the Court of Forlì on
8 August 2019, to request the approval of the same pursuant to art. 182-bis of the Italian Bankruptcy Law.
Key financial and economic indicators of the Group
Below, a summary of the key equity and financial indicators of the Group / Company to date:
(in thousands of Euro)
30/06/2019
Production revenue 312,075
Total Revenue 301,740
Value Added 103,384
% of Total Revenue 34.3%
Gross Operating Profit (EBITDA) 18,259
% of Total Revenue 6.1%
Operating Profit/(Loss) (EBIT) (13,040)
% of Total Revenue -4.3%
Net profit/(loss) of the Group (25,666)
% of Total Revenue -8.5%
Net invested capital 562,966
Net financial position (736,235)
Total Net Equity (173,268)
Group Net Equity (173,486)
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Net Equity attributable to non-controlling interests 218
Net operating profit/(loss) / Total revenue (R.O.S.) -4.3%
Total net financial position / Total net equity (Debt / Equity) -4.2
These indicators confirm that, in order to overcome the current crisis that is affecting the Company and the
Group in general, it is necessary to implement the Transaction described above aimed at ensuring the going
concern assumption.
Based on the Business Plan, the implementation of the transaction is expected to result, by the 2020 financial
year, in the achievement for the Group of financial and equity targets consistent with those of the main market
competitors, as identified by the Board of Directors.
Main risks and uncertainties to which the Trevi Group is exposed and assessment of the going concern
The current conditions of the markets in which the Trevi Group operates, related to the Group’s complex
situation that has been widely described in the consolidated financial statements at 31 December 2018, have
required the Company Management to carry out particularly accurate assessments with reference to the going
concern also in respect of these half-year report at 30 June 2019.
Specifically, the Board of Directors carried out all the necessary assessments relating to the going concern
assumptions also taking into account, to this end, all the available information referring to foreseeable future
events.
In assessing whether the going concern assumption is appropriate or not, the Management took into account
all the available information about the future, relating at least - without limitation - to 12 months from the
reference date of the half-year report dated 30 June 2019.
The assessment of the going concern assumption as well as the outlook analysis are necessarily linked to the
implementation of the aforementioned Transaction for the capital strengthening and debt restructuring of the
Group, including the implementation of the Plan. In particular, at the time of the approval of the 2018
financial statements, the Board of Directors concluded that the existence of the going concern assumption
required the occurrence of the following circumstances, which by their very nature are uncertain, by the end
of 2019:
A. the execution of: (i) the Restructuring Agreement by all the related parties to be filed with the competent
Court by the applicant companies (i.e., Trevifin, Trevi S.p.A. and Soilmec S.p.A.) to obtain the approval
pursuant to article 182-bis of Italian Bankruptcy Law; (ii) the restructuring agreement under article 67,
paragraph 3, lett. d) of Italian Bankruptcy Law between PSM S.p.A. and the relating lending banks; (iii)
the Investment Agreement and the commitments undertaken by the Institutional Shareholders; and (iv)
the Oil & Gas Disposal Agreements with MEIL, as well as the fulfilment of the obligations of the
relevant counterparties under the agreements from (i) to (iv);
35
B. the obtainment of the authorisation from the competent Court pursuant to article 182-quinquies of
Italian Bankruptcy Law, necessary to grant new financing, both cash and guarantee facilities, in the
period running from the filing date of the appeals and the approval of the Restructuring Agreement, as
well as the actual disbursement of the same by the lending banks; and
C. the effectiveness of the arrangements described under A, following the occurrence of all the conditions
precedent contained in the same, including: (i) the approval of the Restructuring Agreement, as well as
of the other agreements for which approval is requested, by decree of the competent Court towards all
the applicant companies pursuant to article 182-bis of Italian Bankruptcy Law; (ii) the adoption by the
Shareholders' Meeting of the resolutions envisaged for the implementation of the Transaction as
illustrated in the Restructuring Agreement and in the Investment Agreement, including the one relating
to the appointment of the new Board of Directors, a circumstance that constitutes a condition precedent
under the Restructuring Agreement; and (iii) the rejection of the appeal pursuant to art. 2409 of Italian
Civil Code presented by THSE on 18 July 2019; and (iv) the closing, including the actual collection of
the agreed consideration, of the Oil & Gas Disposal following the occurrence of the related conditions
precedent;
D. the achievement of the objectives set in the Plan as approved by the Board of Directors on 19 December
2018 (see above) and the attainment of economic-financial and equity targets that will mark the
definitive recovery of the Group according the forecasts of the same Plan. Said targets, however, also
depend on future factors that, by their very nature, are uncertain and uncontrollable beforehand.
It is therefore necessary to carry out an assessment of the state of implementation of the above circumstances,
which to date represent elements of significant uncertainty that may raise doubts about the ability of the
Company and the Group to continue to operate on the basis of the going concern assumption. It is anticipated
that, although it is not yet possible to consider said uncertainties overcome, some important steps have been
taken in the direction of a positive outcome of the transaction, which reinforce the conclusions of the directors
regarding the reasonable probability that the above circumstances will occur and which, therefore, allow the
same directors to continue to consider appropriate the use of the going concern assumption in the preparation
of the half-year report as at 30 June 2019.
Specifically, the Board of Directors based its conclusions on what follows, with reference to each of the
uncertainty elements mentioned above:
1. with reference to the previous paragraph A, on 5 August 2019 the following final and binding
agreements were signed (subject to the occurrence of certain conditions, among which the approval of
the Restructuring Agreement pursuant to art. 182-bis):
36
(i) the Restructuring Agreement pursuant to article 182-bis of Italian Bankruptcy Law by the applicant
companies (i.e., Trevifin, Trevi S.p.A. and Soilmec S.p.A.) and the lending banks; the said
Agreement was filed at the Register of Companies of Forlì-Cesena on 7 August 2019 and on 8
August 2019 the appeal was lodged with the Court of Forlì (the “Appeal”) for the approval of the
said Agreement;
(ii) the Restructuring Agreement under article 67, paragraph 3, lett. d) of Italian Bankruptcy Law
between PSM S.p.A. and the relating lending banks;
(iii) the Investment Agreement pursuant to which the shareholders FSI and Polaris committed to
subscribe the shares issued in the context of the Euro 130 million capital increase to be offered in
option to the current shareholders, as resolved by the Board of Directors of the Company on 17
July 2019, for a total amount of Euro 77.5 million;
(iv) the Sale and Purchase Agreement relating to the Oil & Gas Disposal by Trevifin (and by the
subsidiaries companies Trevi S.p.A., Soilmec S.p.A. and Trevi Holding USA Corporation) and
Megha Engineering & Infrastructures Ltd – MEIL.
2. with reference to the previous paragraph B, the approval of the competent Court pursuant to article 182-
quinquies of Italian Bankruptcy Law, along with the granting of new financing by the lending banks
during the period preceding the approval of the Restructuring Agreement, appears realistic - although
depending on considerations made at the Court's discretion and under its responsibility. Said approval
should not be issued under a so called “composition with creditors filed without a scheme of
arrangement” (hence in the absence of a plan and a manoeuvre already defined) but rather under a
Restructuring Agreement already defined and signed, as well as under an exhaustive declaration by the
expert in charge concerning the functionality of the new interim finance aimed at improving the level of
satisfaction of non-participating creditors.
It is also pointed out that:
i) on 2 August 2019, Prof. Enrico Laghi issued the specific Declaration pursuant to art. 182-
quinquies of Italian Bankruptcy Law where, following an assessment of the financial
requirements of the Company, the functionality of the new interim finance aimed at improving
the level of satisfaction of creditors has been certified;
ii) on 5 August 2019, the lending banks signed the facility agreement for granting new finance
(“New Financing Agreement”), by which some lending banks undertook to grant further
financing in favour of Trevi and Soilmec to meet the liquidity needs of the Trevi Group in the
37
execution of the Restructuring Agreement and the related business plan, for a maximum amount
of Euro 41 million. Euro 12 million will be made available before the approval of the
Restructuring Agreement, subject to the issuance of the authorization by the Court pursuant to
article 182-quinquies of the Italian Bankruptcy Law;
iii) on 8 August 2019, concurrently with the lodging of the appeal for the approval of the
Restructuring Agreement, a specific authorisation request was submitted to the Court of Forlì
pursuant to article 182-quinquies of the Italian Bankruptcy Law for contracting new interim
finance;
iv) on 28 August 2019, the Court of Forlì asked Trevifin (and the subsidiaries Trevi S.p.A. and
Soilmec S.p.A.), through a specific provision, to integrate its appeal, pursuant to article 182-
quinquies of Italian Bankruptcy Law for contracting new interim finance, with the following
documents: the Statement of Financial Position of the Company updated at 30 June 2019, the
updated accounts of Drillmec S.p.A. and Petreven S.p.A., including the Statement of Financial
Position and the Statement of Profit or Loss up to the expected sale date; the integration of the
Declaration pursuant to art 182-bis of Italian Bankruptcy Law on the basis of data updated as at
30 June 2019; the financial statements for the years 2017 and 2018 approved by the
Shareholders' Meeting;
v) on 16 September 2019, Prof. Enrico Laghi issued the integration of his Declaration confirming
the opinion already expressed on the feasibility of the Agreement, with particular reference to
its suitability to ensure full payment of foreign creditors in accordance with the terms of the
law;
vi) on 16 September 2019, all the required documentation was filed with the Court of Forlì, except
for the financial statements approved by the shareholders' meeting of Trevifin, scheduled for 30
September 2019 on second call, for which the deadline set by the Court is the first working day
immediately following that of approval;
3. with reference to paragraph C, it should be noted that, as for the conditions precedent:
(i) Prof. Enrico Laghi - in his quality as expert in charge of certifying the feasibility of the
Restructuring Agreement pursuant to article 182-bis of Italian Bankruptcy Law - completed his
activities and on 2 August 2019 issued the Declaration on the truthfulness of the accounting figures
and on the feasibility of the Restructuring Agreement, with particular reference to its suitability to
ensure full payment of foreign creditors in accordance with the terms of the law. There are
therefore no reasons to believe that the competent Court will not approve the Restructuring
Agreement. This is also in consideration of the fact that, in accordance with the established case
law, the control carried out by the Court on these agreements only concerns the compliance of the
same with legal requirements and the relating legal feasibility. This applies except in the case in
38
which oppositions are presented, requiring the Court to assess the economic feasibility of
agreements and the underlying plans;
(ii) the additional conditions precedent set by the Restructuring Agreement (which largely coincide
with those of the Investment Agreement) appear reasonably achievable, and for the most part
depend mainly on activities that must be carried out by the Company and that are under the control
of the same, with some exceptions. Specifically: (a) the condition precedent relating to the
obtaining of the authorization by Consob to publish the prospectus to be issued within the
framework of the capital increase, which obviously also depends on the discretion of the
supervisory authority. However, it seems reasonable to believe that this authorization will be
granted by the same, considering that the capital increase, which is strictly necessary in the context
of the Transaction, has been largely anticipated to the market and to the authority, and is already
guaranteed for the entire amount necessary, and (b) the appointment by the Shareholders' Meeting
of the Company of the new Board of Directors according to the provisions of the Restructuring
Agreement and the Investment Agreement, depending on the decisions of the Shareholders'
Meeting, which are not under the control of the Company. Nevertheless, also with reference to this
condition, it must be considered that the Company has been taking all the necessary measures to
make the shareholders aware that the new Board is to be appointed in compliance with the
provisions of the signed agreements and that, therefore, in the absence of such appointment, the
Transaction cannot be completed and the current financial statements cannot be approved on the
going concern assumption. Furthermore, it should be pointed out that, for this purpose, the two
Institutional Shareholders FSI and Polaris have undertaken a specific commitment to solicit proxies
within the framework of the Investment Agreement. With regard to the appointment of the new
Board of Directors it should be noted that, on 2 September 2019, the Company announced that a
single list was jointly submitted by the Institutional Shareholders for the renewal, respectively, of
the Board of Directors and the Board of Statutory Auditors of the Company. Said list is to be
considered substantially consistent with what provided for by the Restructuring Agreement and the
Investment Agreement; and
(iii) the Sale and Purchase Agreement relating to the Oil & Gas Disposal provides for the signing and
the approval of the Restructuring Agreement as the main conditions precedent (for which reference
should be made to the previous point (i)). It also provides for the approval of the resolutions
concerning the capital increase by the competent corporate bodies of the Company included in the
restructuring plan of the Trevi Group as well as the obligation of the Institutional Shareholders and
lending banks to sign the capital increase as already envisaged by the Restructuring Agreement.
Further conditions precedent concern the non-occurrence of significantly negative events and other
activities that are for the most part under the control of Trevifin, including the execution of some
39
transactions that are preparatory and functional to the disposal itself, mostly infragroup, by the
Trevi Group (including the assumption by the Company of the existing debt held by Petreven
S.p.A., Drillmec S.p.A. and Drillmec Inc. in order to allow the repayment of this indebtedness with
the net proceeds deriving from the disposal).
4. Finally, with reference to the Paragraph D above, concerning the uncertainty factors associated with the
Plan, it should be noted that said Plan has been drawn up on a prudent basis with the assistance of
leading industrial and financial advisors. The Plan has been examined several times by the Board of
Directors and has been certified by Prof. Enrico Laghi. Furthermore, in the context of the preparation of
integrations to his declarations, the expert, in light of the final economic and equity figures as at 30 June
2019 and also based on the cash balance recorded as at the same date, confirmed that the assumptions
contained in the Plan are to be considered reasonably reliable.
With reference to the conditions precedent referred to in paragraph C above, a further profile should be noted
with respect to the considerations made in paragraph 3 above, which emerged subsequently: as already
announced to the market, on 21 July 2019, the shareholder THSE filed an appeal with the Court of Bologna
pursuant to art. 2409 of Italian Civil Code against the Board of Directors of the Company, alleging serious
irregularities to the Directors and the Board of Statutory Auditors, and requesting its revocation and the
subsequent appointment of a judicial administrator. The rejection of this appeal was, in the last few days prior
to the signing of the Restructuring Agreement, provided for as a condition precedent of the same at the
request of the lending banks.
In this regard, it is worthy to mention that the independent directors and the CRO consider THSE's findings to
be totally unfounded and the appeal inadmissible, and have therefore given a mandate to their lawyers to
protect their interest.
Without prejudice to the above, it should also be noted that, in recent weeks, discussions have taken place
between representatives of THSE and the Company in order to settle, in the best interests of the Company and
the Trevi Group, the disputes with the current relative majority shareholder. In particular, as already
communicated to the market on 22 August 2019, the Board of Directors favourably acknowledged the
possibility of a settlement proposed by some indirect shareholders of THSE aimed at outlining a hypothesis
for THSE to adhere to the agreements relating to the financial manoeuvre and to overcome the conflicts and
disputes that have arisen in the meantime. Subsequently there were some meetings and exchanges of
correspondence between the parties involved, aimed at defining a possible settlement of the disputes that
arose. Even though the outcome of these discussions has not yet been defined, they are at an advanced stage
and there is no doubt that progress has been made to reach an agreement in the best interest of the Company
and the Trevi Group. It is, therefore, reasonable to expect that this agreement will be reached.
40
On the basis of these considerations, although this aspect should be included among the elements of
uncertainty, it seems reasonable to believe that also this condition precedent can be met and the relative
uncertainty can be overcome.
It should also be noted that at the beginning of May 2019 the meeting of bondholders holding the bond loan
approved the amendments made to the terms and conditions of said bond loans in the light of the new
business plan and the current situation of the Company. The resolution is exclusively subject to certain
conditions subsequent, such as the failure to approve the Restructuring Agreement and the failure to complete
the transactions envisaged at the closing of the same by 31 December 2019. Therefore, this element was not
considered among the events on which the considerations concerning the going concern depend, as it already
appears to have been resolved through the adoption of the aforementioned resolution by the holders of the
loan, it being understood that, where the closing of the Transaction should not occur by 31 December 2019,
the resolution taken would become ineffective and the loan would immediately become collectable.
The Directors, in light of the considerations set out above, have adopted the going concern assumption to
prepare the half-year report at 30 June 2019, as considering it reasonable that the Group's current difficulties
may be overcome through the above-stated actions undertaken and to be undertaken.
In summary, during 2019, the financial manoeuvre will allow obtaining a significant recapitalization (for a
total amount of Euro 434 million) linked to the cash capital increase of Euro 130 million, to the conversion of
a part of receivables claimed by the lending banks totalling Euro 284 million and to the capital benefit of
about Euro 19 million associated with full and final settlement transactions with some financial creditors.
Furthermore, benefits will be generated from the consolidation and rescheduling of the bank debt that will
have final maturity date and related balloon repayment on 31 December 2024, with the amendment of the
relating terms and conditions.
The existence and the overcoming of these uncertainties depend only in part on internal variables and factors
controllable by the Company Management, while those remaining depend on external factors which are
assessed according to criteria of reasonableness as mentioned above.
41
Key financial figures of the disposal group
Below, the key financial figures of the disposal group, classified within assets and liabilities held for sale:
Statement of profit or loss figures
(in thousands of Euro) 30/06/2019
Revenue 91,812
Operating Profit (Loss) (7,986)
Net profit or loss for the period (15,216)
Statement of financial position
figures
(in thousands of Euro) 30/06/2019
Non-current assets 129,671
Current assets 235,093
Non-current liabilities 13,803
Current liabilities 157,588
Figures for the year 2019 are stated pursuant to IFRS 5 par. 40.
Net profit or loss for the period with reference to discontinued operations is offset by the remeasurement of assets of the sector that
were previously written down in accordance with IFRS 5.
Staff and Organisation
The company TREVI – Finanziaria Industriale S.p.A.
During the first half of 2019, the Company's top positions have changed. In particular:
- on 8 May 2019, Eng. Massimiliano Battistelli was appointed new Chief Financial Officer of the
Company and the Group; with the favourable opinion of the Board of Statutory Auditors. Starting
from 8 May 2019, Mr. Battistelli was also appointed Manager charged with preparing the company’s
financial reports pursuant to Art. 154-bis of Italian Legislative Decree No. 58/1998, in replacement of
Mr. Marco Andreasi.
Workforce as at 30 June 2019
The workforce at 30 June 2019 amounted to 6,231 employees with a net decrease of 147 resources compared
to 6,378 employees year over year.
The average number of employees in the first half of 2019 was 6,305 resources.
42
Company risk management
Objectives, management strategies and identification of financial risks
The Trevi Group is subject to various types of risk and uncertainty that may affect its operating activities,
financial structure and economic results.
Firstly, one of these is the liquidity risk that affects the strategic choices in terms of investments and
acquisition of orders.
Sudden changes within the political contexts in which the Group operates have an immediate effect on its
operating results and financial position.
The Group is also exposed to the risk of the deterioration of the international macro-economic environment.
Jobsite and Oil & Gas operations are subject to the market performance which is more seasonal than in the
past, due to the gradual shift towards a low-carbon economy.
The introduction of stricter data protection rules in the European Union and the increasing complexity of IT
expose the Group to cyber risks.
To mitigate exposure to these risks, the Trevi Group, among other projects, completed the implementation of
a risk management system in 2018 that is based on two milestones in the Project Risk Management System
(PRMS) for Trevi Finanziaria Industriale S.p.A. and for the Trevi Division, as well as the definitive
centralisation of the Insurance Department and claim management in Trevi-Finanziaria at the service of all the
Divisions of the Group.
The Risk Committee was also set up to provide a detailed analysis of the contracts at the acquisition phase.
Liquidity risk
For the time being, liquidity risk represents the main risk for the Group. For a company, the availability of
liquidity guarantees compliance with scheduled deadlines and healthy economic growth. Business cash flow
planning allows for periodic liquidity planning while maintaining control over income and expenses and
promptly recognising peak demand.
Following the signing of the Moratorium Agreement with the banks, the liquidity management was
guaranteed and regulated by the said agreement through the suspension of medium- to long-term debt
payments, the disbursement of new short-term cash lines and new guarantee lines for the issue of commercial
guarantees. It should be noted that although the Agreement expired on 31 December 2018, the Group is
operating in a de facto Standstill situation, pending completion of the restructuring agreement which, as
described in the paragraph on “Business plan, main risks and uncertainties to which the Trevi Group is
exposed and assessments on the going concern”, will guarantee a financially stable position and adequate
flexibility to the Company in the management of its liquid funds.
A Steering Committee was also established to evaluate the cash performance, giving a permanent boost to
financial planning tasks.
In compliance with the indications of the Standstill Agreement and pending the signing of the Restructuring
Agreement, the Group has complied with its disclosure obligations and the commitment provided for in the
43
Standstill agreement, which essentially took place in the twice-weekly provision of the treasury plan and of
information based on management data on financial debt, overdue payments to suppliers, tax authorities and
social security institutions, in addition to details regarding intercompany relations and guarantees granted on a
quarterly basis.
Exchange rate risk
Due to the Group's geographical extension and access to international markets for the development of jobsites
and oil drilling, companies are exposed to the risk that a change in exchange rates between the account
currency and other currencies will generate unexpected changes. The economic and financial amounts
deriving from the above fluctuation could have an impact both on the individual corporate financial
statements and those at the consolidated level. Specifically, given the current Group structure, the exposure to
exchange rate risk is mainly linked to the US dollar. It must also be noted that the Group has interests in
countries such as Algeria and Nigeria, whose currencies could be subject to significant fluctuations.
The Group has not entered into derivative contracts.
With regard to the US dollar, the exchange rate risk mainly derives from the conversion into Euro of items
relating to equity investments in companies whose account currency is different from the Euro (so-called
“currency translation risk”).
The Group has not subscribed to derivatives, because of the constraints imposed on it by the negotiation of the
Standstill Agreement.
The management policy for exchange rate risk is mostly based on the use of price lists in Euro or Dollar.
Interest rate risk
The company’s interest rate risk relates to the increase in financial charges derived from the rise in interest
rates.
Following the signing of the Standstill Agreement, the Group obtained a moratorium on capital and interest
on medium- and long-term cash lines.
The short-term lines disbursed and governed by the Standstill Agreement have maintained the pricing adapted
to the nature of the underlying transaction
Credit risk
The management of commercial credit is an essential activity for defining the maximum degree of exposure
considered by the company to be reasonably bearable for a supply that provides for a deferred payment. The
correct application of credit scoring and Trade Finance techniques is extremely useful for the configuration of
financial procedures with an early assessment of the customer’s risk and solvency.
As a result of the decrease in the use of the factoring lines following the moratorium, the credit risk required
the setting up of a Risk Committee, for the assessment of individual transactions and for the implementation
of the credit & risk management, through the use of Trade Finance instruments for the engineering industry
and the control of progress on orders in the shipbuilding sector.
44
The timely collection of information on the customer (or potential customer), corporate history and corporate
structure, the management of reference, the activities undertaken, its location, commercial potential and the
characteristics associated with banking information and other types of information provided by companies
specialising in sourcing commercial information, represented an element supporting the preliminary
assessment of the customer.
Risks pertaining to business activities abroad
The development of economic and geo-political scenarios has always influenced the Group’s financial and
industrial business.
The Trevi Group’s revenue from overseas operations maintained a strong trend in terms of consolidation
abroad, amounting to 95% of the total revenue. The Group’s growth mostly occurred in the USA, Algeria and
Northern Europe.
For this reason, “country risk” is continuously monitored and is distinguished by the risk of insolvency of
public and private operators, linked to the geographical area of origin and beyond their control. It is also the
risk linked to the origin of a specific financial instrument and dependent on political, economic and social
variables.
Cyber risk
A cyber crime occurs when the conduct or the material object of the crime is related to a computer or screen-
based system, and when the offence is perpetrated by exploiting or attacking the system.
Additionally, following the new European regulation for Data Protection (GDPR), the Group has begun a
process of setting new Policies and a review of ICT Security programs.
Purchase of treasury shares
During the first half of year 2019, the company did not buy any treasury shares.
Significant events after the reporting period at 30 June 2019
The material events subsequent to the end of the interim period, at 30 June 2019, refer to aspects pertaining to
the process of capital restructuring and strengthening undertaken by the Group at the beginning of 2017 and
carried out up to the date of approval of this document, for which reference should be made to “Short
overview of the most relevant events up to the date of this report” under the section “Accounting standards
and measurement criteria”. It is worthy to mention that the date 5 August 2019 marked the execution of: (i)
the Restructuring Agreement pursuant to article 182-bis of the Italian Bankruptcy Law by and between all the
related parties (i.e., Trevifin, Trevi S.p.A. and Soilmec S.p.A.) and the lending banks; the said Agreement was
filed at the Register of Companies of Forlì-Cesena on 7 August 2019 and on 8 August 2019 the appeal was
lodged at the Court of Forlì (the “Appeal”) for the approval of the said Agreement; (ii) the Restructuring
Agreement under article 67, paragraph 3, lett. d) of Italian Bankruptcy Law between PSM S.p.A. and the
45
relating lending banks; (iii) the Investment Agreement pursuant to which the shareholders FSI and Polaris
committed to subscribe the shares issued in the context of the Euro 130 million capital increase to be offered
in option to the current shareholders, as resolved by the Board of Directors of the Company on 17 July 2019
for a total amount of approximately Euro 77.5 million, and (iv) the Sale and Purchase Agreement relating to
the Oil & Gas disposal by and between Trevifin (including the subsidiaries Trevi S.p.A., Soilmec S.p.A. and
Trevi Holding USA Corporation) and Megha Engineering & Infrastructures Ltd – MEIL.
As reported in the financial statements as at 31 December 2018, it should be noted that on 2 July 2019 the
Board of Directors of Trevi Finanziaria Industriale SpA met to review the request made by the shareholder
Trevi Holding S.E. (“THSE”) pursuant to Art. 2367 of the Italian Civil Code to call the ordinary shareholders'
meeting for the revocation of the board of directors and the simultaneous appointment of new directors and,
after a broad and in-depth examination, with a majority decision, considered the reasons underlying the
aforementioned request by THSE to be completely groundless and contradictory. The Board of Directors has,
in any case, dutifully ordered the initiation of the appropriate preliminary investigations aimed at examining
certain elements of THSE's request, by also requesting from the latter information and clarifications.
It should also be mentioned that, on 21 July 2019, THSE (duly authorised by the Court of Forlì, where a
procedure of composition with creditors filed without a scheme of arrangement is still pending) lodged an
appeal at the Court of Bologna under art. 2409 of Italian Civil Code, notifying serious irregularities to
directors and statutory auditors and requesting the revocation of the board of directors along with the
appointment of a judicial administrator. The independent directors and the CRO entrusted their lawyers to
start all initiatives with aim to protect their rights, considering the appeal inadmissible and groundless. Banks
requested the rejection of the appeal under art. 2409 be a condition precedent of the Restructuring Agreement.
Without prejudice to what mentioned above, over the last few weeks, some discussions were initiated and
carried out upon initiative of some representatives of THSE (with this regard, please refer to the press release
issued on 22 August 2019) with the aim of settling the issues encountered. Even though the outcome of these
discussions has not yet been defined, they are at an advanced stage and there is no doubt that progress has
been made to reach an agreement in the best interest of the Company and the Trevi Group. It is, therefore,
reasonable to expect that this agreement will be reached.
Probable trend in operations
In light of the information available to date, it is possible and reasonable to expect that, by the end of the year
2019, the procedure envisaged will be completed both in relation to the debt restructuring transaction and the
capital strengthening and to the sale of assets relating to Oil & Gas, thus being able to focus on the
implementation of the strategic and business Plan.
In the context of the strategy outlined in the aforementioned Plan, the main industrial drivers provide for in
brief:
46
a. The optimization of the Group's organisational structure through the creation of commercial and
operational hubs and the simultaneous reduction of the non-strategic branch/legal entity scope;
b. The review of the organisational structure in order to align it with the market benchmark, also by
centralising some corporate functions (i.e. AFC, business development, procurement, strategy, etc.);
c. The optimisation of the organisational structure of the Soilmec Division, through the concentration of
commercial activities in hubs;
d. The review of the organizational structure in order to align it with market benchmarks and make
important savings in terms of indirect costs;
e. The rationalisation of the product backlog through, on the one hand, the focus of production on high-
tonnage machines (Rotary and Hydromill) and, on the other, the enhancement of standard product
platforms.
The goals defined may be influenced by exogenous factors that are not predictable and not covered by the
management’s sphere of dominance.
To date, a reduction in terms of volumes is expected for the year 2019 compared to 31 December 2018.
Cesena, 30 September 2019
On behalf of the Board of Directors
The Chairman
Mr. Davide Trevisani
47
Condensed Consolidated Half-year Financial Statements
at 30 June 2019
1. Consolidated accounts
1.1 Consolidated Statement of Profit or Loss
(in thousands of Euro)
CONSOLIDATED STATEMENT OF PROFIT OR LOSS Notes 30/06/2019
Turnover from sales and services (18) 288,319
- of which with related parties 5,127
Other operating revenue (18) 13,421
- of which with related parties -
Total revenue 301,740
Raw materials and consumables 104,031
Change in raw materials, consumables, supplies and goods (2,651)
Personnel expense (19) 85,126
Other operating expenses (20) 107,311
- of which with related parties 2,780
Depreciation and amortisation (1)-(2) 21,528
Provisions and impairment losses (21) 9,770
Internal work capitalised 2,005
Change in inventories of finished and semi-finished products 8,330
Operating profit/(loss) (13,040)
Financial income (22) 3,888
(Financial expenses) (23) (13,293)
Gains/(losses) on exchange rates (24) (577)
Sub-total of financial income/(expenses) and gains/(losses) on exchange rates (9,982)
Adjustments to financial assets 729
Profit before taxes (22,293)
Income taxes (25) 2,968
Net result derived from operating activities (25,261)
Net profit/(loss) deriving from discontinued operations (27) 0
Net profit or loss for the period (25,261)
Attributable to:
Parent Company shareholders (25,666)
48
Non-controlling interests 405
Group basic earnings/(losses) per share: (26) (0.1559)
Group diluted earnings/(losses) per share: (26) (0.1562)
Notes are an integral part of these condensed consolidated half-year financial statements.
1.2 Consolidated Statement of Profit or Loss and Other Comprehensive Income
(in thousands of Euro)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 30/06/2019
Profit/(loss) for the period (25,261)
Other items of comprehensive income that will be reclassified subsequently to the
profit/(loss) for the period
Currency translation reserve 370
Total of other items of comprehensive income that will be reclassified subsequently to
the profit/(loss) for the period net of taxes 370
Other items of comprehensive income that will not be reclassified subsequently to
profit/(loss) for the period:
Total of other items of comprehensive income that will not be reclassified
subsequently to the profit/(loss) for the period net of taxes -
Comprehensive profit/(loss) net of taxes (24,891)
Parent Company shareholders (25,411)
Non-controlling interests 519
Notes are an integral part of these condensed consolidated half-year financial statements.
49
1.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in thousands of Euro)
ASSETS Notes 30/06/2019 31/12/2018
Non-current assets
Tangible assets
Land and buildings 52,275 45,580
Plant and machinery 133,564 141,609
Industrial and commercial equipment 41,852 22,485
Other assets 17,685 14,775
Assets under construction and payments on account 570 523
Total tangible assets (1) 245,945 224,972
Intangible assets
Development costs 4,753 4,879
Industrial patents and intellectual property rights 347 256
Concessions, licences, trademarks 122 115
Other intangible assets 843 1,147
Total intangible assets (2) 6,065 6,397
Equity investments (3) 2,572 1,394
- Equity investments in associates and joint ventures
accounted for using the equity method
1,865 687
- Other investments 707 707
Deferred tax assets (4) 47,428 46,265
Non-current derivative financial instruments (5) - -
Other long-term financial receivables 2,931 3,217
- of which with related parties 1,769 1,732
Trade receivables and other long-term assets (6) 2,051 6,129
Total financial assets 54,982 57,005
Total Non-current Assets 306,993 288,374
Current assets
Inventories (7) 149,227 145,269
Trade receivables and other short-term assets (8) 318,161 328,965
- of which with related parties 12,243 6,596
Current tax assets (9) 15,135 17,009
Other short-term financial receivables 132 121
Current derivative financial instruments and available-for-sale securities at fair value (5) - 15
Cash and cash equivalents (10) 77,747 88,912
Total Current Assets 560,402 580,290
Assets held for sale 281,226 248,022
Non-current assets held for sale (27) 281,226 248,022
TOTAL ASSETS 1,148,621 1,116,686
50
Starting from 1 January 2019, the Group adopted IFRS 16 using the modified retrospective approach according to which the
comparable information has not been restated and the cumulative effect deriving from the initial application is recognised among
retained earnings at the first application date.
Notes are an integral part of these condensed consolidated half-year financial statements.
(in thousands of Euro)
Net Equity Notes 30/06/2019 31/12/2018
Share capital and reserves
Share capital 82,290 82,290
Other reserves 212,980 152,395
Retained earnings/(losses) carried forward (443,090) (239,333)
Profit/(loss) for the period (25,666) (143,427)
Group Net Equity (11) (173,486) (148,075)
Net equity attributable to non-controlling interests 218 740
Total Net Equity (173,268) (147,335)
LIABILITIES
Non-current liabilities
Long-term loans (12) 451 331
Long-term loans and borrowings from other financial backers (12) 42,869 33,668
Deferred tax liabilities (4) 33,835 35,360
Employees’ leaving entitlement (13) 13,615 13,994
Long-term provisions for risks and charges (14) 7,002 6,766
Total non-current liabilities 97,773 90,118
Current liabilities
Trade payables and other short-term liabilities (15) 250,999 260,376
- of which with related parties 2,899 1,287
Current tax liabilities (16) 14,169 15,822
Short-term loans (17) 665,271 658,348
Short-term loans and borrowings from other financial backers (17) 105,144 88,846
Short-term derivative financial instruments (5) 246 374
Short-term provisions (14) 16,897 13,115
Total current liabilities 1,052,726 1,036,882
Liabilities held for sale 171,390 137,022
Non-current liabilities held for sale (27) 171,390 137,022
TOTAL LIABILITIES 1,321,889 1,264,022
TOTAL NET EQUITY AND LIABILITIES 1,148,621 1,116,686
Starting from 1 January 2016, the Group adopted IFRS 16 using the modified retrospective approach according to which the
comparable information has not been restated and the cumulative effect deriving from the initial application is recognised among
retained earnings at the first application date.
Notes are an integral part of these condensed consolidated half-year financial statements.
51
1.4 CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of Euro)
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes 30/06/2019
Net profit or loss for the period attributable to the Parent Company and third parties (25,261)
Income taxes (33) 5,654
Profit/(loss) before taxes (19,607)
(*) Amortisation, depreciation and write-downs (1)-(2) 18,970
Financial (income)/expenses (30)-(31) 14,594
Change in provisions for risk and charges and for employees’ leaving entitlement (16)-(18) 2,642
Provisions for risks and charges (16)-(18) 10,712
Use of the provisions for risks and employees’ leaving entitlement (16)-(18) 0
Adjustments to financial assets and discontinued operations (15,945)
(Gains)/losses from the sale or impairment of fixed assets (26)-(28) (478)
Cash flow from operating activities before changes in the Working Capital 10,888
(Increase)/Decrease in Trade receivables (9)-(11) 593
- of which with related parties (35) 0
(Increase)/Decrease in Inventories (10) (865)
(Increase)/Decrease in other assets 1,584
Increase/(Decrease) in Trade payables (20) 3,011
- of which with related parties (35) 0
Increase/(Decrease) in other liabilities 3,779
Change in net working capital 8,103
Interest payables and other payables (30)-(31) (14.594)
Paid taxes (13) (1,695)
Cash flow generated/(absorbed) from operating activities (A+B+C+D) 2,702
Investment activities
Operational (investments) (1)-(2) (22,724)
Operational divestments (1)-(2) 6,434
Currency exchange differences (1)-(2) 0
Net change in financial assets (4) (449)
Cash flow generated (absorbed) in investment activities (16,740)
Financing activities
Increase/(Decrease) in Share Capital and reserves for the purchase of treasury shares (14) 0
Other changes including those in non-controlling interests (14) (922)
Changes in loans, financing, derivative financial instruments (15)-(22) 6,931
Changes in leasing liabilities and other financing (15)-(23) (2,095)
Payment of dividends to shareholders of the Parent Company and non-controlling interests (13) (1,041)
Cash flow generated (absorbed) in investment activities 2,873
Net Change in Cash Flows (E+F+G) (11,165)
52
Cash and cash equivalents at the beginning of the year net of bank overdrafts 88,912
Net change in cash flows (11,165)
Final cash and cash equivalents 77,747
Cash and cash equivalents classified among assets held for sale
Final cash and cash equivalents 77,747
Note: the entry Final cash and cash equivalents includes: cash and cash equivalents (Note 13), net of bank overdrafts (Note 21). (*) Having a non-cash nature, the entry does not take into account the amortisation/depreciation charge deriving from the application of IFRS 16,
equal to Euro 9,092 thousand.
Notes are an integral part of these condensed consolidated half-year financial statements.
53
1.5 Consolidated statement of changes in net equity
(in thousands of Euro)
Note (11)
Share
Capital
Other
reserves
Retained
earnings
Profit
(loss) for
the
period
Total of the
Group
Non-
controlling
interests
Total
Net Equity
Description
Balance at 01/01/19 82,290 152,395 (239,333) (143,427) (148,075) 740 (147,335)
Profit or loss for the period - - - (25,666) (25,666) 405 (25,261)
Other comprehensive
profit/(loss) - 255 - - 255 115 370
Total comprehensive
profit/(loss) - 255 - (25,666) (25,411) 520 (24,892)
Allocation of 2018 profits and
distribution of dividends - (143,427) - 143,427 - (1,041) (1,041)
Balance at 30/06/19 82,290 9,223 (239,333) (25,666) (173,486) 218 (173,268)
Starting from 1 January 2019, the Group adopted IFRS 16 using the modified retrospective approach according to which the
comparable information has not been restated and the cumulative effect deriving from the initial application is recognised
among retained earnings at the first application date.
Notes are an integral part of these condensed consolidated half-year financial statements.
54
2. Notes to the condensed consolidated half-year financial
statements at 30 June 2019
2.1 General information
TREVI - Finanziaria Industriale S.p.A.− (hereinafter referred to as the “Company”) and the companies that it
controls (“TREVI Group” or “the Group”) operate in the following two sectors:
• Foundation engineering services for civil works and infrastructure projects and construction of
equipment for special foundations (“Foundations - (the Core Business)”);
• Construction of drilling rigs for the extraction of hydrocarbons and water exploration and oil drilling
services (“Oil & Gas”).
These businesses are organised within the four main companies of the Group:
• Trevi S.p.A., which heads the sector of foundation engineering;
• Soilmec S.p.A., which heads the Division manufacturing and marketing plant and equipment for
foundation engineering;
• Petreven S.p.A., which operates in the drilling sector providing oil drilling services;
• Drillmec S.p.A., which manufactures and sells drilling equipment for the extraction of hydrocarbons
and water exploration.
TREVI - Finanziaria Industriale S.p.A., controlled by Trevi Holding SE which, in turn, is controlled
by I.F.I.T. S.r.l., has been listed on the Milan stock exchange since July 1999.
2.2 Accounting standards and measurement criteria
Background
The Condensed Consolidated Half-year Financial Statements refer to the six-month period ended 30 June
2019 and were prepared pursuant to art. 154-ter paragraph 2 and 3 of the Italian Consolidated Finance Act
(TUF) and in accordance with the International Accounting Standard applicable to interim financial reporting
(IAS 34), except for some comparative figures as mentioned below, and consist of the Consolidated Statement
of Profit or Loss, the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Net Equity, the
Consolidated Statement of Cash Flows and the Notes.
IAS 34 allows for the preparation of “condensed” interim financial statements, namely based on minimum
disclosures that are significantly lower than those required by the International Financial Reporting Standards
(hereinafter “IFRS”) as a whole, if complete financial statements prepared in accordance with IFRS have
previously been made available to the public. These Condensed Consolidated Half-year Financial Statements
were prepared in summary form and should therefore be read together with the Consolidated Financial
55
Statements of the Group at 31 December 2018 prepared in accordance with the IFRS adopted by the European
Union, to which reference should be made to better understand the accounting standards and criteria applied.
The drawing up of interim financial statements in accordance with IAS 34 - Interim Financial Reporting calls
for expressing judgements, making estimates and assumptions that may have an impact on assets, liabilities,
costs and revenues. It should be noted that final results may differ from those obtained on the basis of these
estimates.
Main risks and uncertainties to which the Trevi Group is exposed and assessment of the going concern
Introduction
As is well known, and as already described in detail in the report on the financial statements as at 31
December 2018, there are some material uncertainties regarding the going concern of the Company and of the
main companies of the Group, including the subsidiaries Trevi S.p.A., Soilmec S.p.A., Petreven S.p.A. and
Drillmec S.p.A. However, it should be pointed out that, also with respect to what was already stated at the
time of approval of the financial statements, the Company (as well as, as far as Trevi S.p.A. and Soilmec
S.p.A. are concerned) entered into binding agreements - the effectiveness of which is subject to certain
conditions precedent detailed below - with the main lending banks of the Trevi Group, with the institutional
shareholders FSI and Polaris (as defined below), as well as with MEIL. Said agreements regulate the terms
and conditions of the capital strengthening and debt restructuring transaction aimed at enabling the Company
(and the other companies of the Trevi Group) to overcome the current economic, financial and capital crisis
and, consequently, to achieve, through the implementation of the Plan, economic-financial and capital targets
appropriate to its market sector. More specifically, the Company (as well as its subsidiaries Trevi S.p.A. and
Soilmec S.p.A.) signed a debt restructuring agreement, lodged with the Court of Forlì to obtain the approval
pursuant to art. 182-bis of the Italian Bankruptcy Law. Furthermore, the Company signed also the investment
agreement with the institutional shareholders FSI and Polaris and the agreement for the sale of the Oil & Gas
Division to the MEIL group. Therefore, the process to overcome the above uncertainties regarding the going
concern is, at the date of this report, already defined with all the main counterparties, and mainly depends on
the approval of the restructuring agreement, the fulfilment of the conditions precedent provided for in the
agreement itself and the subsequent implementation of the transactions provided for in the same agreement
and in the further agreements governing the transaction.
Short overview of the most relevant events up to the date of this report
For the sake of full disclosure, it is deemed appropriate to report below what has been already included in the
Report on Operations for the financial year ended 31 December 2018 with regard to the events that led to the
current situation.
It should be noted that, since 2016, the Company and the Group have been recording a progressive worsening
of the economic-financial results and, from the second half of 2016, the trend of the main economic-financial
56
indicators and of the prospective cash flows led to a situation of financial difficulty which, as it will be
explained below, required the start of a complex and structured negotiation with the Group's main lending
banks. Due to the aforementioned situation of financial crisis, which in any case affected the entire sector of
reference, the Company acknowledged that it would have not been able to comply - at the relative verification
dates (which fell during the first months of 2017) - with the financial parameters (the so called covenants)
provided for by some of the medium and long-term loan agreements and by the bond loan. For these reasons,
in February 2017, the Company sent waiver requests to the lending banks and bondholders with regard to the
obligation to comply with the aforementioned financial parameters. These waivers were granted, respectively,
in March and April 2017.
In this context, the Company, also on behalf of the other Group companies, expressed to the main lending
banks of the Group, during some plenary meetings and/or through bilateral discussions, the need to adopt a
financial manoeuvre aimed at restructuring its own financial debt in line with the Group's situation and with
the expected cash flows.
Therefore, on 19 May 2017, the Company's Board of Directors, in the context of broader considerations about
the strategic development of the TREVI Group's core business and the reduction in the activity of the Oil &
Gas Division, resolved to submit a standstill request until 31 December 2017 to the main lending banks,
aimed at enabling the Group to continue to benefit from the financial support necessary to focus its attention
on the development of its business plan and on the reorganization process of the Oil & Gas Division.
In the same year, the further contraction of orders, particularly in the Oil & Gas Division (which was
associated with the cancellation of a very significant order with the customer YPFB in Bolivia), led to the
persistence and aggravation of the critical issues related to the financial situation of the Drillmec Division and
(albeit to a lesser extent) of the rest of the Group.
In the context described above, and also at the request of the credit institutions, the Group had to take some
immediate actions, such as, in addition to the standstill request mentioned above, the preparation of a forecast
for 2017 and the update of the 2017-2021 business plan, which included, among other things, a cost
containment policy through targeted interventions, in order to interrupt the ongoing negative trends and
implement initiatives to rebalance the economic and financial situation. The organizational and managerial
structure of the Group was also strengthened and actions were taken to redefine the control model.
In 2017, the Company also granted:
• a mandate to a “financial advisor” to assist the Group in requesting financial support from banks
through the maintenance of credit lines and a moratorium on loan repayments;
• a mandate to an “industrial advisor” to assist the Group in preparing a new business plan;
• a mandate to a “legal advisor” to assist the Group in negotiating the contractual terms with the banks
aimed at restructuring the financial debt.
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The lending credit institutions also requested – and the Group took steps to comply with this request - the
appointment of a lawyer of the lending banks in order to assist them in the aforementioned negotiations, as
well as the appointment of a financial advisor to their liking in order to evaluate the content of the financial
proposals formulated by the Company and its advisors, as well as to formulate proposals on behalf of the
lending banks.
The discussions - started on 19 May 2017 with the lending banks for the signing of a standstill agreement -
were aimed at allowing the Company and the Group, pending the updating of the business plan and the
definition of a proposal for a financial manoeuvre to submit to the lending banks, to continue to operate
normally, hence preventing any individual initiatives on the part of the same and continuing to receive from
the lending banks the support necessary to cover their financial requirements for the necessary period. The
standstill proposal made to the institutions consisted, in a nutshell, of: (i) a suspension of the application of
the provisions of the loan agreements that could determine the expiry, termination, withdrawal, forfeiture of
the benefit of the term or the “acceleration” (in any case defined) of the reimbursement obligations to be
borne by the companies of the Group as a result of the economic-financial crisis, (ii) a suspension or a
moratorium on the obligations to pay the principal amounts towards the lending banks (without prejudice to
the obligation to pay the interests, considerations and fees due by contract) expiring with start from 19 May
2017; and (iii) the confirmation of the existing credit lines and the maintenance of the credit lines and existing
credit facilities in accordance with those used by the Group as of 31 March 2017.
During the meetings aimed at discussing the content of the standstill proposal, the lending credit institutions
requested an Independent Business Review (IBR) from the Company that was carried out by a leading
company. The IBR focused mainly on four macro areas: (i) Analysis and Sensitivity of the Business Plan, (ii)
Tax Analysis, (iii) Analysis of Historical Data, and (iv) Technical Review on job order management. The IBR
concerned both the individual Divisions making up the Trevi Group and all the aspects concerning the
consolidation.
The IBR did not initially highlight any critical issues that could jeopardise the aforementioned definition path
with the lending banks, that is, of an agreement aimed at restructuring the financial debt in line with the
business plan.
Therefore, on 31 August 2017, the Board of Directors of Trevifin approved the forecast for the 2017 financial
year and the update of the Group business plan for the period 2017-2021.
Furthermore, on 29 September 2017, the Board approved the condensed consolidated half-year financial
statements of the Trevi Group at 30 June 2017, on which KPMG S.p.A., the Company's statutory auditor,
issued a limited audit report containing a conclusion without comments on the condensed consolidated half-
year financial statements. The limited audit report also contains a notice of information regarding the
application of the going concern assumption illustrated by the directors in the note “Main risks and
uncertainties to which the Trevi Group is exposed and assessments on the going concern”.
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Negotiations with the lending banks, both in relation to the standstill agreement and to the definition of the
financial manoeuvre, continued in the following months, during which, however, some significant deviations
emerged with respect to the 2017-2021 business plan and the related forecasts of the economic-financial data,
with repercussions on the consistency/viability of the same. Clearly, this also affected the possibility of
quickly concluding agreements with the lending banks, which required, before considering their adherence to
a possible manoeuvre, to have greater visibility on the economic-financial data and on the industrial and
management prospects of the company and the Group.
On 13 November 2017, therefore, the Company's Board of Directors postponed the approval of the financial
figures relating to the third quarter of that current financial year in light of the uncertainties about the outcome
of the negotiations with the lending banks for the definition and subscription of the standstill agreement, and
therefore of the consequent impossibility to verify the going concern assumption. In light of the above, the
Company's Board of Directors also highlighted the need to implement, within the framework of the financial
manoeuvre being discussed with the lending banks, and together with it, a more complex operation, which - in
addition to a more incisive restructuring of the debt - also entailed the strengthening of capital, in order to
allow the economic and financial rebalancing of the Company and the Trevi Group. The Board also invested
the competent governance bodies with the task of identifying, within a short time, a managerial figure of
adequate standing who could be appointed as Chief Restructuring Officer (“CRO”).
On 18 December 2017, the Company's Board of Directors approved the appointment by co-optation -
pursuant to Article 2386 of the Italian Civil Code - of Mr. Sergio Iasi, who was assigned the office of CRO, as
well as the operating powers for (i) the analysis, structuring and negotiation of the aforementioned debt
restructuring and capital strengthening transaction, (ii) the review of the Company's and the Group's business
and financial plan, and (iii) the management of the negotiations underway with the lending banks and the
related financial manoeuvre. The Board, in acknowledging the persistence, at that time, of the uncertainties
already reported to the market, consequently resolved to further postpone the approval of the financial data
relating to the third quarter of the current financial year.
Subsequently, in consideration of some sensitivity analyses carried out in the meantime on the 2017-2021
business plan, as well as in light of the preliminary data for the year ended 31 December 2017 and the first
data for the 2018 financial year, the Company deemed it appropriate to carry out a further and definitive
deepening at the industrial level, with the contribution of an external and independent consultant, specialised
in the sector and appreciated by the lending banks.
During the first few months of 2018, the management of the Company, under the supervision and
coordination of the CRO, also initiated discussions with some potential investors interested in the acquisition
of all or part of the companies operating in the Oil & Gas Division of the Trevi Group.
In this context, on 27 April 2018, in light of the continuing discussions with the lending banks aimed at
restructuring the debt and signing the standstill agreement, and in consideration of the necessary definition of
the capital strengthening transaction, the Company announced the postponement of the approval of the
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interim report at 30 September 2017 and of the annual financial report at 31 December 2017, previously
scheduled for 30 April 2018.
Also in April, the CRO, with the support of the management as well as of the legal and financial advisors in
charge, started a number of discussions regarding the possible capital strengthening transaction. These
discussions concerned, in addition to the lending banks, both potential third parties interested in making an
investment intervention to rescue the Group and the main shareholders of the Company. At the outcome of
these discussions, the Company also received some preliminary feedback and expressions of interest, as well
as some preliminary offers. In particular, two binding offers were presented, one by Bain Capital Credit
(“BCC”) and the other by Sound Point Capital, in addition to an expression of interest by the Quattro R fund.
The first two offers, that of BCC and that of Sound Point Capital, were essentially based on the granting of a
super senior loan and on a recapitalization through the conversion of the loans of the banks into participating
financial instruments of the Company, while the hypothesis of Quattro R recognized the need for a strong
reserved capital increase in order to provide Trevifin with sufficient capital and financial resources, hence
improving the financial position of the Group. This last preliminary offer, however, was subsequently
withdrawn by Quattro R, which announced its intention not to continue the negotiations.
On 17 May 2018, the Company's Board of Directors, after having thoroughly evaluated the offers received
from potential third-party investors, from the point of view of their adequacy to the Group's capital and
financial needs as well as their feasibility with the lending banks, and after having acknowledged the
withdrawal of the expression of interest presented by Quattro R, considered that, among the offers received
from third-party investors, the preferable one was that presented by BCC. Therefore, the BoD focused its
activities on the negotiations with the latter for a possible operation that was centred on the overall debt of the
Trevi Group. On 30 May 2018, the Board of Directors resolved to entrust the CRO with the mandate to define
the terms of the exclusivity with BCC, as well as to submit to the main creditors the proposal formulated by
the same, which was based on the granting of a loan called “Super senior” to the Company. Said loan was
aimed at repaying part of the outstanding debt and supporting the business plan as well as partially converting
the residual debt, without resorting to a capital increase. The Board also entrusted the CRO with the task of
checking the feasibility of the solution proposed by the BCC with the lending banks.
Despite the positive continuation of the negotiations with BCC, in consideration of the uncertainties that were
in any case connected with the hypothesis of the transaction presented by the latter and the possibility that it
was approved by the banks, the Board of Directors considered it wise that, simultaneously, also the
hypotheses of alternative transactions were examined, namely the so-called “Stand-alone”, which did not
include the necessary involvement of third parties but which were addressed exclusively to the current
stakeholders (banks and shareholders) of the Company. These transactions would logically and functionally
be closely linked to a capital increase. Therefore, at the same meeting, the Board of Directors also resolved to
submit to the approval of a forthcoming Extraordinary Shareholders' Meeting the proposal to grant the
directors - pursuant to Article 2443 of the Italian Civil Code - the right to increase the share capital against
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payment, in one or more times, even in divisible form, up to Euro 400 million (of which, in cash, not
exceeding the maximum amount of Euro 150 million).
The delegation provided for by Article 2443 of the Italian Civil Code endowed the Board with the right to
increase the share capital, in a reasonably flexible and timely manner, in order to meet any possible needs or
to be able to benefit from the opportunities expressed, both in the context of the possible transaction with
BCC, and if there was a need to resort to alternative intervention solutions in support of the Company.
Also on that date, the Board finally resolved to submit to the Shareholders' Meeting:
1. the elimination of the nominal value of the shares; and
2. the amendment to Article 23 of the Company's articles of association to eliminate the obligation of the
administrative body to obtain the prior authorization of the ordinary shareholders' meeting for the
following transactions: (a) transfer of a business branch or of the only company; (b) purchase of a
business branch or of the only company; (c) rent of a business branch or of the only company; and (d)
transfer through contribution in kind of a business branch or of the only company.
On 8 June 2018, the Company entered into an exclusive agreement with BCC, valid until 16 July 2018, in
relation to the proposed capital strengthening transaction.
More in detail, the preliminary proposal made by BCC provided for the granting of a super senior loan for an
amount of Euro 150 million with a four-year bullet repayment to the subsidiaries Trevi S.p.A. and Soilmec
S.p.A.. Such new financing, to be disbursed under a restructuring agreement entered into pursuant to Article
182-bis of the Italian Royal Decree No. 267 of 16 March 1942 (“Italian Bankruptcy Law” or “IBL”),
should have been used to support the business plan and the partial repayment of the outstanding financial
debt. The remaining portion of the debt should have been subject to the consolidation in line with the plan,
write-off and/or conversion into financial instruments. The granting of the loan should have been subject to
certain conditions, including: the entering into of the standstill agreement with the lending banks and, more
generally, the reaching of an agreement with the main financial creditors on the terms of the manoeuvre, the
managerial development and the successful completion of the due diligence activities carried out by BCC.
On 11 June 2018, in accordance with the aforementioned resolution of the Board of Directors dated 30 May
2018, the Shareholders' Meeting was called on 27 July 2018 at 11.00 am, on first call and, if necessary, on 30
July 2018 on second call.
In consideration of the uncertainties resulting from the continuation of the discussions with the lending banks
aimed at restructuring the debt, the signing of the standstill agreement and the definition of the capital
strengthening transaction and the negotiations with the BCC, on 14 June 2018 the Company announced the
postponement of the approval of the interim report at 30 September 2017, of the annual financial report at 31
December 2017 and of the interim report at 31 March 2018.
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BCC then submitted a request to the Company aimed at extending the exclusivity period until 31 July 2018,
which was accepted on 24 July 2018, and which led to the formulation by BCC itself of a binding offer
concerning the possible intervention in the capital strengthening transaction subject to an acceptance deadline
until 10 August 2018 and with the related extension of the exclusivity period until 31 October 2018.
In consideration of the numerous conditions precedent of the offer, including the reaching of an agreement
with the lending banks and with the controlling shareholder, also with reference to the future governance of
the Company (in particular to the severed managerial discontinuity), as well as to some elements worthy of
further investigation, on 26 July 2018, the Board of Directors gave the CRO - with the assistance of the
Company's advisors - the mandate to explore the margins for the improvement of the same, in order to verify
the existence of the conditions for the granting of exclusivity and the continuation of negotiations, also with
the lending banks and the main shareholders.
The Board also acknowledged the status of negotiations with the lending banks for the signing of the standstill
agreement, approving the text in its final version and giving the CRO the powers to subscribe it.
Also with regard to the terms established under the envisaged standstill agreement and to the suspension
already implemented by the Company of the payment of interests on medium-long term debts towards the
lending banks, the Board of Directors established to suspend the payment of interests on the bond loan issued
on 28 July 2014, with a nominal value totalling Euro 50 million, starting from the instalment of interests
falling due on 30 July 2018.
Therefore, on 30 July 2018, the Shareholders' Meeting of Trevi - Finanziaria Industriale S.p.A., convened on
second call, adopted a resolution on the proposal of the shareholder Trevi Holding (subsequently adjusted for
the correction of a material error on 7 August 2018 by a notarial deed executed by Marcello Porfiri, Notary
Public in Cesena, rep. No. 11.358 folder No. 5.227 - on the proposal of the Chairman of the Board of
Directors approved by the Company's Board of Directors with its resolution of acknowledgement dated 3
August 2018) which established - as per the last text registered in the competent Register of Companies - to
“grant the Board of Directors, pursuant to Article 2443 of the Italian Civil Code, the right to increase the
share capital by payment, in one or more times, even in divisible form, for a maximum period of 24 months
from the date of the resolution and for a maximum value of Euro 400 million (of which, in cash, not exceeding
the maximum amount of Euro 150 million). This increase is to be made by issuing ordinary shares without the
nominal value, having the same characteristics as the outstanding ones, subject to verification by the Board
of the existence and compliance with the conditions established by law, with the right for the Board to
determine the issue price and any share premium, the procedures for the relating subscription, also through
the conversion of receivables towards the Company, and the number of new shares from time to time issued,
provided that the increase is made with the option right and, if the banks use credits to free up financial
instruments, they are participating financial instruments and not shares, unless the circumstance that the
banks use credits to free up shares constitutes a necessary element for the success of the part of the increase
to be released by payment in cash, it being understood that the faculty conferred to the Board of Directors
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may be exercised only in connection with a debt restructuring agreement pursuant to Article 182-bis of the
Italian Royal Decree No. 267 dated 16 March 1942”. On that date, the Shareholders’ Meeting also approved,
as proposed by the Board of Directors, the elimination of the nominal value of shares as well as the
amendment to Art. 23 of the Company’s Articles of Association, in order to eliminate the restriction for the
administrative body to obtain the prior authorisation of the Ordinary Shareholders’ Meeting for specific
corporate transactions.
By virtue of the approved resolution of the Shareholders' Meeting, in the month of August 2018, and in
particular on the 10th, the concerned companies of the Trevi Group established a standstill agreement with the
lending banks and started the procedure for collecting subscriptions for adherence of the numerous lending
banks of the Trevi Group which are parties to the agreement. The effectiveness of the agreement was subject
to acceptance for adherence, by 15 September 2018, by a number of financial creditors representing at least
93% of the total debt claimed by the Trevi Group from the lending banks that were expected to join the
agreement.
The same agreement was proposed to the lending banks on the assumption of the implementation of the
financial manoeuvre and strengthening of the capital at the time under study, including the part relating to the
capital increase delegated pursuant to Article 2443 of the Italian Civil Code to the terms and conditions set
forth in the amendment of 7 August 2018. Therefore, the lending banks placed their reasonable reliance on
the swift realization of the aforementioned manoeuvre, including the capital increase, as mentioned in the
standstill agreement.
On 10 August 2018, BCC also granted the Company an extension of the term for the acceptance of the
binding offer presented until 14 September 2018, in order to allow the parties to complete the assessments in
progress and to continue the discussions still pending on the terms of this proposal. Trevifin, for its part,
agreed to extend the exclusivity, previously granted to BCC for the negotiation of the aforementioned offer,
until the same date of 14 September 2018.
Despite the complex and difficult negotiations aimed at reaching an agreement, upon the expiry of the
deadline for accepting the binding offer (14 September 2018), the Company notified BCC of its decision not
to adhere to the aforementioned offer. In fact, also in light of some worsening changes proposed by BCC
compared to the originally hypothesized terms, the transaction outlined as a result of the discussions with this
possible third-party investor was deemed, on the one hand, less convenient from the point pf view of the
company’s interest and, comparatively, less protective than the so-called “stand-alone” hypothesis and, on the
other hand, less feasible from the point of view of the financing banks. Specifically, in the offer revised by
BCC, the amount of the super senior loan was reduced and divided into tranches, the second of which could
be disbursed only upon the occurrence of certain assumptions, while providing a complete guarantee package
from the beginning. Furthermore, this loan could no longer be used, not even in part, to offer partial
reimbursement to credit institutions, making the offer itself less attractive to the latter (whose approval was
clearly a condition for the success of the transaction). Finally, the offer was subject to numerous conditions
63
precedent whose occurrence was uncertain. Therefore, this offer proved to be inadequate and did not
correspond to the objectives identified by the Board of Directors, making the achievement of those financial
and equity targets identified by the Company and aimed at reaching the economic-financial rebalancing of the
same company and of the Group uncertain, due the foreseeable difficulty of having the lending banks approve
the offer finally made by the third investor. The Board considered that the financial support proposed by
BCC, also due to the penalizing conditions proposed, would have done nothing else than postpone the
difficulties experienced by the Group without being able to solve them.
The Company has therefore decided to continue only in the process aimed at defining an alternative
manoeuvre, according to the so-called “stand-alone” model (that is, without the intervention of third parties
but addressed only to its current stakeholders). This transaction would necessarily have involved, also taking
into account the outcome of the Extraordinary Shareholders' Meeting held on 30 July 2018, a capital increase
reserved as an option to the shareholders and the simultaneous conversion of part of the Group's financial debt
into financial instruments, on whose nature an agreement should have been reached with the banks called to
convert.
In the days immediately following, and in particular on 17 September 2018, the Company - on the assumption
of the manoeuvre based on a capital increase delegated to the Board of Directors - received formal
confirmation of the effectiveness of the standstill agreement, due to the adherence of the same number of
financial creditors as indicated above. The standstill agreement, which is functional to enable the Company to
continue the ongoing discussions with its stakeholders for the definition of the capital-strengthening
manoeuvre and the restructuring of the total debt according to the “stand alone” hypothesis, provided for,
among other things and in summary, what follows:
i) the granting of a moratorium on the obligations to pay the principal amounts of the medium-long
term loans granted to the Trevi Group, until 31 December 2018 and, with reference only to Trevi -
Finanziaria Industriale S.p.A., a moratorium on the interests that will accrue on medium-long term
loans;
ii) the maintenance of the existing short-term credit lines within the limit of the amounts currently
used for Trevi S.p.A., Soilmec S.p.A. and the other Trevi Group companies operating in the
foundation sector; and
iii) the possibility of making new uses of the existing facilities which have been confirmed in the
context of the Agreement both in the form of cash advances and of issuance of guarantee facilities,
in order to meet cash requirements and to support business development in national and
international markets where the Group operates.
On the basis of the assumption and the delays for defining the capital strengthening manoeuvre, including the
execution of the delegation to the Board of Directors pursuant to Article 2443 of the Italian Civil Code, on
whose full effectiveness the lending banks have reasonably relied, the same lending banks have therefore
consented not just to the moratoria but also to new uses in the form of cash and guarantee facilities
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indispensable to the needs of the Group for a total amount of approximately Euro 17 million for the new cash
finance and Euro 59 million for the new finance in the form of guarantee facilities.
On 8 October 2018, the Company's Board of Directors, upon proposal of the CRO and taking into account the
preliminary indications received from the main shareholders of the Company and from the lending banks,
unanimously approved the guidelines of the alternative manoeuvre hypothesis involving the capital
reinforcement and the debt restructuring, which included inter alia:
i) a share capital increase of Euro 130 million, to be paid up in cash with an option right in favour of
the shareholders, on the basis of the proxy granted by the Extraordinary Shareholders' Meeting of
30 July 2018 pursuant to Article 2443 of the Italian Civil Code; and
ii) the conversion of the receivables claimed by the lending banks from the Company and from the
other companies of the Trevi Group for Euro 250 million in shares (or possibly, if accepted, in
financial instruments) and the rescheduling of the residual credits;
all of the above to be implemented within the framework and in execution of a debt restructuring agreement
pursuant to Article 182-bis of the Italian Bankruptcy Law (the “Restructuring Agreement”).
The Board of Directors has therefore mandated the CRO to immediately start negotiating with the lending
banks in order to define the terms and final conditions of the financial manoeuvre, including the conversion
rate of the receivables as well as the characteristics and rights pertaining to the financial instruments intended
for lending banks at the time of conversion, with the aim of reaching the definition of an agreement.
As for the disposal of the Trevi Group companies operating in the Oil & Gas Division, on 4 December 2018
the Company's Board of Directors resolved to accept the binding offer presented by Megha Engineering &
Infrastructures Ltd. (“MEIL Group”) for the acquisition of the Group companies operating in the Oil & Gas
Division and, in particular, of Drillmec S.p.A. and Petreven S.p.A. (the “Oil & Gas Disposal”).
More specifically, as a result of an extensive and prolonged search for potential buyers of the Oil & Gas
Division carried out by the CRO with the help of specialized advisors of top international standing, the
Company's Board of Directors considered that, in the light of the expressions of interest and offers received
from financial or industrial operators potentially interested in the acquisition of the Oil & Gas Division or part
of it, the offer presented by the MEIL Group was the best and most consistent one with the Company's
objectives, also with a view to the going concern of the business, which is an essential element to preserve the
value of the Division.
The offer of the MEIL Group provides for the enhancement of the companies and assets making part of the
Oil & Gas Division of the Trevi Group based on an equity value of Euro 140 million, assuming: (a) the
absence of financial debt; and (b) a working capital value no lower than that recorded at 30 September 2018.
This enhancement is also subject to some pre-closing price adjustments aimed at reflecting, in the definitive
equity value, the negative effects on the value of the Division that may arise from the occurrence of certain
events such as, for example, a reduction in the reference value of the working capital of the companies in the
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Oil & Gas Division (with a cap set at 15% of the proposed price) or the existence, at the closing date, of
financial debt or, again, the occurrence of leakage (meaning those payments made by the companies of the Oil
& Gas Division in favour of the other companies of the Trevi Group). The closing of the transaction is subject
to the occurrence of certain conditions precedent, which are usual for this type of transaction, including the
signing, filing and approval of the Debt Restructuring Agreement pursuant to Article 182-bis of the Italian
Bankruptcy Law, as well as the failure to meet significantly negative events.
The Board of Directors also acknowledged that the acceptance of the offer led to a significant write-down of
the carrying amount of the investments and of the financial receivables from the companies belonging to the
Oil & Gas Division, as well as the necessary write-downs of other intangible assets consequent to the
foreseeable results of the impairment test based on the new business plan, and that these write-downs are
reflected in the reduction of the Company's equity below the limits set by Article 2447 of the Italian Civil
Code.
On 19 December 2018, the Board of Directors resolved to approve the 2018-2022 consolidated Business Plan
updated on the basis of the data as at 30 September 2018 available to the management (the “Plan”) and the
related capital strengthening and restructuring of the Trevi Group's debt (the “Transaction”).
In particular, the Plan, which assumes that the Transaction will be implemented during the 2019 financial
year, is based on four main pillars:
(a) the prospective concentration of the Group's activities in geographical areas characterized by high levels of
growth and attractive margins, as well as, at the same time, by a limited level of risk positioning of the Group;
(b) concentration of the portfolio of projects and products with high complexity and margins;
(c) optimization of the commercial and operational footprint; and
(d) implementation of standard processes to maximize the control of Group companies.
The Plan specifically provides for the Trevi and Soilmec Divisions - also as a result of and due to the
Transaction - the return, within the period considered, to levels of revenues and margins comparable to those
achieved before the onset of financial difficulties, by leveraging on the recognized positioning of these
Divisions in the construction and special foundation sector; as well as, thanks to the manoeuvre, the
achievement by 2020 of the capital and financial targets identified as adequate (also in the light of those of the
main competitors) by the Board of Directors, i.e., a ratio between debt and EBITDA not exceeding 3x and a
ratio between debt and net equity equal to 1:1.
At the end of the further discussions with the lending banks (and in particular, following the communications
received from the consultants, the latter on 2 October and 14 December 2018, in which the general terms
around which there could have been a consensus of the lending banks to the transaction were assumed), on the
one hand, and the main shareholders of the Company, Trevi Holding S.E. (“Trevi Holding”), FSI
Investimenti S.p.A. (“FSI”), a company making part of the Cassa Depositi e Prestiti Group, and Polaris
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Capital Management LLC, a leading management company specialised in investments in the construction
sector, on behalf of the funds managed by the same shareholders of the Company (“Polaris” and, together
with FSI, the “Institutional Shareholders”), on the other, the Board of Directors has defined the terms
essential to the capital strengthening transaction, which is articulated in extreme synthesis in:
(i) a cash increase in capital of Euro 130 million, to be offered as an option to shareholders pursuant to Article
2441, paragraph 1 of the Italian Civil Code; and
(ii) a capital increase reserved to the lending banks to be released by converting part of the receivables due
from the Company and its subsidiaries for an amount that, on that date, also based on the aforementioned
communications received from the advisors of the banks, is calculated in approximately Euro 310 million in
newly issued ordinary shares of the Company admitted to trading on the MTA. It should be noted that the
lending banks, to which the option had also been repeatedly submitted, decided to accept the aforementioned
conversion exclusively for the issue of ordinary shares, and not of the so-called participating financial
instruments (pursuant to Article 2346, sixth paragraph of the Italian Civil Code), since they are easier to
liquidate with a view to recovering the related receivables. Moreover, the transaction thus structured led to the
willingness of the lending banks to convert a larger amount of receivables into equity, thereby deriving, based
on the conversion ratio, an implicit write-off of approximately Euro 240 million.
To this end, the Institutional Shareholders, FSI and Polaris, formally confirmed to the Board of Directors that
they will undertake, subject to certain conditions (as described in detail below), to subscribe the share of the
cash capital increase due to them because of their respective rights of option, along with guaranteeing the
subscription of an additional portion of any unexercised portion up to a maximum amount of Euro 38.7
million each, i.e., for a total of Euro 77.4 million of the total Euro 130 million. The subscription of the
remaining portion of the cash increase in capital amounting to Euro 52.6 million would be guaranteed, in the
event of an unexercised portion, by a guarantee consortium organized by the lending banks, using credits as
part of the capital increase reserved for them and to be released by conversion of credits. The commitments
that are assumed by the Institutional Shareholders with reference to the implementation, subscription and
payment of the cash increase in capital are today regulated by the investment agreement that will be signed
before the signing of the Restructuring Agreement by the latter and the Company, which also governs the
principles relating to the governance of the Company (the “Investment Agreement”).
Said reserved capital increase, as mentioned above, to be subscribed through the use in compensation of bank
receivables (for an agreed total amount of Euro 284 million) - in part intended for the underwriting of any
remaining unexercised portion of the cash capital increase - would be carried out according to a ratio of 4,5:1,
that is to say, through the attribution to the lending banks of newly issued ordinary shares (or fractions
thereof, due to the terms of the transaction that will be subsequently identified) for a value of Euro 1 (at the
relevant subscription price) for every Euro 4.5 of converted credits.
Each of the commitments of the Institutional Shareholders was subject to the occurrence of different
circumstances which, in addition to the conditions to which this type of commitment is normally subject,
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include, among other things, the completion of the Oil & Gas Disposal and the achievement of the
restructuring agreement to be submitted for approval pursuant to Article 182-bis of the Italian Bankruptcy
Law, to be approved by all the parties involved concerning the various elements necessary for the
implementation of the Transaction, including the definition of agreements on the treatment of the residual
bank debt following the conversion and to any new financing necessary to support the Plan, as well as the
new governance principles of the Company and the other main Group companies that guarantee professional
and independent management. In particular, the shareholder FSI has subordinated its commitment to the fact
that, at the outcome of the Transaction, no shareholder reaches a controlling interest in the Company.
Pending the decision-making processes of the lending banks and the definition of the contractual texts, the
Company asked the same lending banks to extend the effective term of the standstill agreement expiring on 31
December 2018 until the entire period necessary for the subscription of the definitive agreements, as well as
to refrain from requesting the repayment of the financial debt and to maintain the current operations of the
credit lines in the form of cash and guarantee facilities.
Within the framework outlined above, taking into account the occurrence of the conditions set out in Article
2447 of the Italian Civil Code as an effect of the acceptance of the offer presented by the MEIL Group for the
acquisition of the Group companies operating in the Oil & Gas Division, the Board of Directors also gave a
mandate to the Chairman and the CRO to arrange, within the terms of the law, the convening of the
Shareholders' Meeting for the measures of competence and to fix the date of the meeting taking into account
the time necessary for the negotiation concerning the Restructuring Agreement, in any case not exceeding the
deadline for the approval of the financial statements, that is, by the month of April 2019.
The manoeuvre subject to the approval by the Board also provided for a possible restructuring of the bond
loan called «Trevi-Finanziaria Industriale S.p.A. 5.25% 2014 - 2019», for an issue value of Euro 50 million,
with respect to which a market survey was conducted with some of the main holders and which was submitted
for approval by the bondholders' meeting in time useful for defining the Restructuring Agreement.
During the first few months of 2019, negotiations continued with lending banks and all stakeholders in order
to define and agree on the terms of the individual agreements and all the operations envisaged in the context
of the Trevi Group capitalization restructuring process. Although substantial progress has been made and the
lending banks have de facto extended the conditions of the standstill agreement, also allowing some new uses
for cash as well as the issuance of some new guarantees necessary for the financial support of the Group, as
there are still certain elements in the definition phase, the Board, on 1 April 2019, resolved to postpone the
Extraordinary Meeting already called for 24 and 30 April 2019 (on first and second call respectively) for the
adoption of the provisions pursuant to Article 2447 of the Italian Civil Code, in order to make it coincide with
the date of the Shareholders' Meeting to be called to approve the 2017 and 2018 financial statements under the
terms provided for in Article 2364, paragraph 2, last sentence, of the Italian Civil Code. On that date, the
Board also approved the Plan in its consolidated and updated version based on the data as at 31 December
2018.
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On 2 May 2019, the bondholders' meeting of the bond loan, held on second call, approved the granting of
waivers and the modification of some terms of the loan regulation in order to adapt the relative provisions to
the current situation of the Company and to what is foreseen by the Plan, thereby contributing to the
restructuring of the Company's financial structure.
The changes to the loan regulation concern, inter alia, the maturity date of the loan that has been postponed to
31 December 2024, the rescheduling of the interests that have been recalculated by 2% starting from the 2nd
of May, and the redefinition of some contractual obligations and of certain significant events in order to adapt
them to the current situation of the Company and to the new Plan.
It should be noted that the effectiveness of the changes to the loan regulation is subject to the condition
subsequent of the failure to grant the approval in relation to the Restructuring Agreement pursuant to Article
182-bis of the Italian Bankruptcy Law and the non-occurrence of the closing of the Transaction by the
deadline of 31 December 2019.
On 8 May 2019, the Company informed the market that the Board of Directors, after acknowledging the
advanced state of the negotiation and drafting of the agreements relating to the Transaction, resolved to
approve the final proposal for an inclusive financial manoeuvre of the economic-financial plans, which was
sent to the lending banks to allow them to complete the preliminary investigation on the Transaction and the
related decision-making processes.
The manoeuvre proposal approved by the Board, which is now reflected in the Plan and in the Restructuring
Agreement, is in line with the principles that had already been established in the resolution adopted by the
same on 19 December 2018, and concisely provides for:
i. a capital increase to be offered in option for an amount of Euro 130 million, at a subscription price per
share of Euro 0.0001, in relation to which the Institutional Shareholders have confirmed their willingness
to make a commitment of subscription for a total of Euro 77.4 million, while the remaining part, whereas
it is not optionally subscribed by the market, will be subscribed by the lending banks through the
conversion of the related credits according to the conversion ratio indicated in the following point (ii);
ii. the conversion into newly issued ordinary shares admitted to trading on the MTA of the receivables
claimed by the lending banks, according to a ratio of 4.5:1 for a maximum amount of Euro 284 million, in
part, where necessary, to guarantee the unexercised portion and, for the remaining part, to subscribe and
release a reserved capital increase;
iii. a further capital increase, up to a maximum of approximately Euro 20 million, reserved for the current
shareholders of the Company, with a corresponding total issue of No. 164,783,265 quoted European
“loyalty warrants”, each valid to underwrite No. 933 conversion shares, for a total of maximum No.
184,491,343,494 conversion shares, to be subscribed in cash, at an exercise price per warrant equal to
Euro 0.00013;
69
iv. balance and write-off transactions with some financial creditors who refused to adhere to the proposed
conversion into ordinary shares referred to in point (ii) above, for a total amount of approx. 32 million,
with an estimated capital benefit of approx. additional 20 million;
v. the disposal of the investments held, directly or indirectly, by Trevifin in Drillmec and Petreven (and,
through the latter, in the other companies controlled by them and operating in the Oil & Gas Division), in
favour of the MEIL Group and the use of the net proceeds deriving from the disposal for the repayment of
the debt weighing, respectively, on each of these companies, upon payment of these exposures by
Trevifin immediately before the closing of the disposal. The residual debt not reimbursed through the use
of net cash proceeds deriving from the Oil & Gas Disposal will be partly converted into the capital
increase per conversion, partially cancelled as it is not guaranteed by Trevifin and, for the residual portion
guaranteed by Trevifin, rescheduled and modified in a uniform manner to the debt, subject to the
restructuring pursuant to point (vi) below;
vi. in the event of failure to fully subscribe the portion of the cash increase reserved in option for the existing
shareholders, the eventual granting and payment in favour of Trevi S.p.A. and Soilmec S.p.A. of a
medium-long term syndicated loan in the form of cash for a total maximum amount equal to the lower of
(a) Euro 41 million, and (b) the difference between Euro 130 million and the amount of the capital
increase per cash underwritten by the market and the shareholders (including the Institutional
Shareholders). Of this loan, Euro 12 million must be disbursed in the period between the filing of the
appeal and the date on which the decree approving the Restructuring Agreement was finalized (and,
therefore, following the authorization by the competent Court pursuant to Article 182-quinquies,
paragraph 1, of the Italian Bankruptcy Law). The amount of the new finance, which was calculated taking
into account the agreements reached with MEIL and assuming that through the Petreven Disposal the
Group will benefit from a net amount of approx. Euro 11.6 million after having repaid the entire debt of
this company, will be reduced in any case by an amount equal to the net amounts deriving from the
disposal of Petreven which exceed the aforementioned amount of Euro 11.6 million;
vii. the consolidation and rescheduling of the bank debt which will have a final maturity date and related
balloon repayment on 31 December 2024, except in cases of mandatory early repayment, and the
modification of the related terms and conditions;
viii. the granting of new credit lines required for implementing the business plan;
ix. the provision of part of the new cash finance and a part of the new credit lines in the form of guarantee
facilities even during the period between the filing and the approval date of the restructuring agreement
pursuant to the Article 182-quinquies of the Italian Bankruptcy Law, subject to obtaining authorization
from the competent Court;
x. the rescheduling until 31 December 2024 and the modification of the related terms and conditions of the
bond loan issued by Trevifin.
With regard to the subscription price of the newly issued shares as part of the capital increase, in line with the
provisions of the Board document of 19 December 2018, as well as with the commitments undertaken by the
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Institutional Shareholders, the same was set by the Board of Directors in the amount of Euro 0.0001 which,
based on the current share listing values, corresponds to a 28% discount on the TERP, in line with the market
precedents.
The financial manoeuvre illustrated above would entail an overall recapitalization of the Company estimated
in a range between approximately Euro 390 and 440 million and an improvement in the net financial position
of approximately Euro 150-250 million (depending on the amount of the capital increase in the form of cash
subscribed by the market).
As for the Oil & Gas Division Disposal, the related terms and conditions are now reflected and detailed in the
implementation agreements of the same (including, among others, the Sale and Purchase Agreement, the
Escrow Agreements, the Non-Compete Agreement and the Intercompany Commercial Agreement), (the “Oil
& Gas Disposal Agreements”).
Finally, the Company: (a) approved both the statutory and consolidated financial statements on 15 July 2019,
which are subject to the approval of the Shareholders' Meeting on 30 September 2019; (b) entered into the
final agreements relating to the Transaction, including the Restructuring Agreement, the Investment
Agreement and the Oil & Gas Disposal Agreements, on 5 August 2019; and (c) lodged (jointly with the
applicant companies Trevi S.p.A. and Soilmec S.p.A.) the Restructuring Agreement with the Court of Forlì on
8 August 2019, to request the approval of the same pursuant to art. 182-bis of the Italian Bankruptcy Law.
Key financial and economic indicators of the Group
Below, a summary of the key equity and financial indicators of the Group / Company to date:
(in thousands of Euro)
30/06/2019
Production revenue 312,075
Total Revenue 301,740
Value Added 103,384
% of Total Revenue 34.3%
Gross Operating Profit (EBITDA) 18,259
% of Total Revenue 6.1%
Operating Profit/(Loss) (EBIT) (13,040)
% of Total Revenue -4.3%
Net profit/(loss) of the Group (25,666)
% of Total Revenue -8.5%
Net invested capital 562,966
Net financial position (736,235)
Total Net Equity (173,268)
Group Net Equity (173,486)
Net Equity attributable to non-controlling interests 218
Net operating profit/(loss) / Total revenue (R.O.S.) -4.3%
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Total net financial position / Total net equity (Debt / Equity) -4.2
These indicators confirm that, in order to overcome the current crisis that is affecting the Company and the
Group in general, it is necessary to implement the Transaction described above aimed at ensuring the going
concern assumption.
Based on the Business Plan, the implementation of the transaction is expected to result, by the 2020 financial
year, in the achievement for the Group of financial and equity targets consistent with those of the main market
competitors, as identified by the Board of Directors.
Main risks and uncertainties to which the Trevi Group is exposed and assessment of the going concern
The current conditions of the markets in which the Trevi Group operates, related to the Group’s complex
situation that has been widely described in the consolidated financial statements at 31 December 2018, have
required the Company Management to carry out particularly accurate assessments with reference to the going
concern also in respect of these half-year report at 30 June 2019.
Specifically, the Board of Directors carried out all the necessary assessments relating to the going concern
assumptions also taking into account, to this end, all the available information referring to foreseeable future
events.
In assessing whether the going concern assumption is appropriate or not, the Management took into account
all the available information about the future, relating at least - without limitation - to 12 months from the
reference date of the half-year report dated 30 June 2019.
The assessment of the going concern assumption as well as the outlook analysis are necessarily linked to the
implementation of the aforementioned Transaction for the capital strengthening and debt restructuring of the
Group, including the implementation of the Plan. In particular, at the time of the approval of the 2018
financial statements, the Board of Directors concluded that the existence of the going concern assumption
required the occurrence of the following circumstances, which by their very nature are uncertain, by the end
of 2019:
A. the execution of: (i) the Restructuring Agreement by all the related parties to be filed with the
competent Court by the applicant companies (i.e., Trevifin, Trevi S.p.A. and Soilmec S.p.A.) to obtain
the approval pursuant to article 182-bis of Italian Bankruptcy Law; (ii) the restructuring agreement
under article 67, paragraph 3, lett. d) of Italian Bankruptcy Law between PSM S.p.A. and the relating
lending banks; (iii) the Investment Agreement and the commitments undertaken by the Institutional
Shareholders; and (iv) the Oil & Gas Disposal Agreements with MEIL, as well as the fulfilment of the
obligations of the relevant counterparties under the agreements from (i) to (iv);
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B. the obtainment of the authorisation from the competent Court pursuant to article 182-quinquies of
Italian Bankruptcy Law, necessary to grant new financing, both cash and guarantee facilities, in the
period running from the filing date of the appeals and the approval of the Restructuring Agreement, as
well as the actual disbursement of the same by the lending banks; and
C. the effectiveness of the arrangements described under A, following the occurrence of all the conditions
precedent contained in the same, including: (i) the approval of the Restructuring Agreement, as well as
of the other agreements for which approval is requested, by decree of the competent Court towards all
the applicant companies pursuant to article 182-bis of Italian Bankruptcy Law; (ii) the adoption by the
Shareholders' Meeting of the resolutions envisaged for the implementation of the Transaction as
illustrated in the Restructuring Agreement and in the Investment Agreement, including the one relating
to the appointment of the new Board of Directors, a circumstance that constitutes a condition precedent
under the Restructuring Agreement; and (iii) the rejection of the appeal pursuant to art. 2409 of Italian
Civil Code presented by THSE on 18 July 2019; and (iv) the closing, including the actual collection of
the agreed consideration, of the Oil & Gas Disposal following the occurrence of the related conditions
precedent;
D. the achievement of the objectives set in the Plan as approved by the Board of Directors on 19 December
2018 (see above) and the attainment of economic-financial and equity targets that will mark the
definitive recovery of the Group according the forecasts of the same Plan. Said targets, however, also
depend on future factors that, by their very nature, are uncertain and uncontrollable beforehand.
It is therefore necessary to carry out an assessment of the state of implementation of the above circumstances,
which to date represent elements of significant uncertainty that may raise doubts about the ability of the
Company and the Group to continue to operate on the basis of the going concern assumption. It is anticipated
that, although it is not yet possible to consider said uncertainties overcome, some important steps have been
taken in the direction of a positive outcome of the transaction, which reinforce the conclusions of the directors
regarding the reasonable probability that the above circumstances will occur and which, therefore, allow the
same directors to continue to consider appropriate the use of the going concern assumption in the preparation
of the half-year report as at 30 June 2019.
Specifically, the Board of Directors based its conclusions on what follows, with reference to each of the
uncertainty elements mentioned above:
1. with reference to the previous paragraph A, on 5 August 2019 the following final and binding
agreements were signed (subject to the occurrence of certain conditions, among which the approval of
the Restructuring Agreement pursuant to art. 182-bis):
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(i) the Restructuring Agreement pursuant to article 182-bis of Italian Bankruptcy Law by the
applicant companies (i.e., Trevifin, Trevi S.p.A. and Soilmec S.p.A.) and the lending banks;
the said Agreement was filed at the Register of Companies of Forlì-Cesena on 7 August 2019
and on 8 August 2019 the appeal was lodged with the Court of Forlì (the “Appeal”) for the
approval of the said Agreement;
(ii) the Restructuring Agreement under article 67, paragraph 3, lett. d) of Italian Bankruptcy Law
between PSM S.p.A. and the relating lending banks;
(iii) the Investment Agreement pursuant to which the shareholders FSI and Polaris committed to
subscribe the shares issued in the context of the Euro 130 million capital increase to be offered
in option to the current shareholders, as resolved by the Board of Directors of the Company on
17 July 2019, for a total amount of Euro 77.5 million;
(iv) the Sale and Purchase Agreement relating to the Oil & Gas Disposal by Trevifin (and by the
subsidiaries companies Trevi S.p.A., Soilmec S.p.A. and Trevi Holding USA Corporation)
and Megha Engineering & Infrastructures Ltd – MEIL.
2. with reference to the previous paragraph B, the approval of the competent Court pursuant to article 182-
quinquies of Italian Bankruptcy Law, along with the granting of new financing by the lending banks
during the period preceding the approval of the Restructuring Agreement, appears realistic - although
depending on considerations made at the Court's discretion and under its responsibility. Said approval
should not be issued under a so called “composition with creditors filed without a scheme of
arrangement” (hence in the absence of a plan and a manoeuvre already defined) but rather under a
Restructuring Agreement already defined and signed, as well as under an exhaustive declaration by the
expert in charge concerning the functionality of the new interim finance aimed at improving the level of
satisfaction of non-participating creditors.
It is also pointed out that:
i) on 2 August 2019, Prof. Enrico Laghi issued the specific Declaration pursuant to art. 182-
quinquies of Italian Bankruptcy Law where, following an assessment of the financial
requirements of the Company, the functionality of the new interim finance aimed at improving
the level of satisfaction of creditors has been certified;
ii) on 5 August 2019, the lending banks signed the facility agreement for granting new finance
(“New Financing Agreement”), by which some lending banks undertook to grant further
financing in favour of Trevi and Soilmec to meet the liquidity needs of the Trevi Group in the
execution of the Restructuring Agreement and the related business plan, for a maximum amount
of Euro 41 million. Euro 12 million will be made available before the approval of the
74
Restructuring Agreement, subject to the issuance of the authorization by the Court pursuant to
article 182-quinquies of the Italian Bankruptcy Law;
iii) on 8 August 2019, concurrently with the lodging of the appeal for the approval of the
Restructuring Agreement, a specific authorisation request was submitted to the Court of Forlì
pursuant to article 182-quinquies of the Italian Bankruptcy Law for contracting new interim
finance;
iv) on 28 August 2019, the Court of Forlì asked Trevifin (and the subsidiaries Trevi S.p.A. and
Soilmec S.p.A.), through a specific provision, to integrate its appeal, pursuant to article 182-
quinquies of Italian Bankruptcy Law for contracting new interim finance, with the following
documents: the Statement of Financial Position of the Company updated at 30 June 2019, the
updated accounts of Drillmec S.p.A. and Petreven S.p.A., including the Statement of Financial
Position and the Statement of Profit or Loss up to the expected sale date; the integration of the
Declaration pursuant to art 182-bis of Italian Bankruptcy Law on the basis of data updated as at
30 June 2019; the financial statements for the years 2017 and 2018 approved by the
Shareholders' Meeting;
v) on 16 September 2019, Prof. Enrico Laghi issued the integration of his Declaration confirming
the opinion already expressed on the feasibility of the Agreement, with particular reference to
its suitability to ensure full payment of foreign creditors in accordance with the terms of the
law;
vi) on 16 September 2019, all the required documentation was filed with the Court of Forlì, except
for the financial statements approved by the shareholders' meeting of Trevifin, scheduled for 30
September 2019 on second call, for which the deadline set by the Court is the first working day
immediately following that of approval;
3. with reference to paragraph C, it should be noted that, as for the conditions precedent:
(i) Prof. Enrico Laghi - in his quality as expert in charge of certifying the feasibility of the
Restructuring Agreement pursuant to article 182-bis of Italian Bankruptcy Law - completed
his activities and on 2 August 2019 issued the Declaration on the truthfulness of the
accounting figures and on the feasibility of the Restructuring Agreement, with particular
reference to its suitability to ensure full payment of foreign creditors in accordance with the
terms of the law. There are therefore no reasons to believe that the competent Court will not
approve the Restructuring Agreement. This is also in consideration of the fact that, in
accordance with the established case law, the control carried out by the Court on these
agreements only concerns the compliance of the same with legal requirements and the relating
legal feasibility. This applies except in the case in which oppositions are presented, requiring
the Court to assess the economic feasibility of agreements and the underlying plans;
75
(ii) the additional conditions precedent set by the Restructuring Agreement (which largely coincide
with those of the Investment Agreement) appear reasonably achievable, and for the most part
depend mainly on activities that must be carried out by the Company and that are under the control
of the same, with some exceptions. Specifically: (a) the condition precedent relating to the
obtaining of the authorization by Consob to publish the prospectus to be issued within the
framework of the capital increase, which obviously also depends on the discretion of the
supervisory authority. However, it seems reasonable to believe that this authorization will be
granted by the same, considering that the capital increase, which is strictly necessary in the context
of the Transaction, has been largely anticipated to the market and to the authority, and is already
guaranteed for the entire amount necessary, and (b) the appointment by the Shareholders' Meeting
of the Company of the new Board of Directors according to the provisions of the Restructuring
Agreement and the Investment Agreement, depending on the decisions of the Shareholders'
Meeting, which are not under the control of the Company. Nevertheless, also with reference to this
condition, it must be considered that the Company has been taking all the necessary measures to
make the shareholders aware that the new Board is to be appointed in compliance with the
provisions of the signed agreements and that, therefore, in the absence of such appointment, the
Transaction cannot be completed and the current financial statements cannot be approved on the
going concern assumption. Furthermore, it should be pointed out that, for this purpose, the two
Institutional Shareholders FSI and Polaris have undertaken a specific commitment to solicit proxies
within the framework of the Investment Agreement. With regard to the appointment of the new
Board of Directors it should be noted that, on 2 September 2019, the Company announced that a
single list was jointly submitted by the Institutional Shareholders for the renewal, respectively, of
the Board of Directors and the Board of Statutory Auditors of the Company. Said list is to be
considered substantially consistent with what provided for by the Restructuring Agreement and the
Investment Agreement; and
(iii) the Sale and Purchase Agreement relating to the Oil & Gas Disposal provides for the signing and
the approval of the Restructuring Agreement as the main conditions precedent (for which reference
should be made to the previous point (i)). It also provides for the approval of the resolutions
concerning the capital increase by the competent corporate bodies of the Company included in the
restructuring plan of the Trevi Group as well as the obligation of the Institutional Shareholders and
lending banks to sign the capital increase as already envisaged by the Restructuring Agreement.
Further conditions precedent concern the non-occurrence of significantly negative events and other
activities that are for the most part under the control of Trevifin, including the execution of some
transactions that are preparatory and functional to the disposal itself, mostly infragroup, by the
Trevi Group (including the assumption by the Company of the existing debt held by Petreven
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S.p.A., Drillmec S.p.A. and Drillmec Inc. in order to allow the repayment of this indebtedness with
the net proceeds deriving from the disposal).
4. Finally, with reference to the Paragraph D above, concerning the uncertainty factors associated with the
Plan, it should be noted that said Plan has been drawn up on a prudent basis with the assistance of
leading industrial and financial advisors. The Plan has been examined several times by the Board of
Directors and has been certified by Prof. Enrico Laghi. Furthermore, in the context of the preparation of
integrations to his declarations, the expert, in light of the final economic and equity figures as at 30 June
2019 and also based on the cash balance recorded as at the same date, confirmed that the assumptions
contained in the Plan are to be considered reasonably reliable.
With reference to the conditions precedent referred to in paragraph C above, a further profile should be noted
with respect to the considerations made in paragraph 3 above, which emerged subsequently: as already
announced to the market, on 21 July 2019, the shareholder THSE filed an appeal with the Court of Bologna
pursuant to art. 2409 of Italian Civil Code against the Board of Directors of the Company, alleging serious
irregularities to the Directors and the Board of Statutory Auditors, and requesting its revocation and the
subsequent appointment of a judicial administrator. The rejection of this appeal was, in the last few days prior
to the signing of the Restructuring Agreement, provided for as a condition precedent of the same at the
request of the lending banks.
In this regard, it is worthy to mention that the independent directors and the CRO consider THSE's findings to
be totally unfounded and the appeal inadmissible, and have therefore given a mandate to their lawyers to
protect their rights.
Without prejudice to the above, it should also be noted that, in recent weeks, discussions have taken place
between representatives of THSE and the Company in order to settle, in the best interests of the Company and
the Trevi Group, the disputes with the current relative majority shareholder. In particular, as already
communicated to the market on 22 August 2019, the Board of Directors favourably acknowledged the
possibility of a settlement proposed by some indirect shareholders of THSE aimed at outlining a hypothesis
for THSE to adhere to the agreements relating to the financial manoeuvre and to overcome the conflicts and
disputes that have arisen in the meantime. Subsequently there were some meetings and exchanges of
correspondence between the parties involved, aimed at defining a possible settlement of the disputes that
arose. Even though the outcome of these discussions has not yet been defined, they are at an advanced stage
and there is no doubt that progress has been made to reach an agreement in the best interest of the Company
and the Trevi Group. It is, therefore, reasonable to expect that this agreement will be reached.
77
On the basis of these considerations, although this aspect should be included among the elements of
uncertainty, it seems reasonable to believe that also this condition precedent can be met and the relative
uncertainty can be overcome.
It should also be noted that at the beginning of May 2019 the meeting of bondholders holding the bond loan
approved the amendments made to the terms and conditions of said bond loans in the light of the new
business plan and the current situation of the Company. The resolution is exclusively subject to certain
conditions subsequent, such as the failure to approve the Restructuring Agreement and the failure to complete
the transactions envisaged at the closing of the same by 31 December 2019. Therefore, this element was not
considered among the events on which the considerations concerning the going concern depend, as it already
appears to have been resolved through the adoption of the aforementioned resolution by the holders of the
loan, it being understood that, where the closing of the Transaction should not occur by 31 December 2019,
the resolution taken would become ineffective and the loan would immediately become collectable.
The Directors, in light of the considerations set out above, have adopted the going concern assumption to
prepare the half-year report at 30 June 2019, as considering it reasonable that the Group's current difficulties
may be overcome through the above-stated actions undertaken and to be undertaken.
In summary, during 2019, the financial manoeuvre will allow obtaining a significant recapitalization (for a
total amount of Euro 434 million) linked to the cash capital increase of Euro 130 million, to the conversion of
a part of receivables claimed by the lending banks totalling Euro 284 million and to the capital benefit of
about Euro 19 million associated with full and final settlement transactions with some financial creditors.
Furthermore, benefits will be generated from the consolidation and rescheduling of the bank debt that will
have final maturity date and related balloon repayment on 31 December 2024, with the amendment of the
relating terms and conditions.
The existence and the overcoming of these uncertainties depend only in part on internal variables and factors
controllable by the Company Management, while those remaining depend on external factors which are
assessed according to criteria of reasonableness as mentioned above.
Key financial figures of the disposal group
Below, the key financial figures of the disposal group, classified within assets and liabilities held for sale:
Statement of profit or loss figures
(in thousands of Euro) 30/06/2019
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Revenue 91,812
Operating Profit (Loss) (7,986)
Net profit or loss for the period (15,216)
Statement of financial position
figures
(in thousands of Euro) 30/06/2019
Non-current assets 129,671
Current assets 235,093
Non-current liabilities 13,803
Current liabilities 157,588
Figures for the year 2019 are stated pursuant to IFRS 5 par. 40.
Net profit or loss for the period with reference to discontinued operations is offset by the remeasurement of assets of the sector that
were previously written down in accordance with IFRS 5.
Preparation of financial statements
The Condensed Consolidated Half-year Financial Statements are made up of the Consolidated Statement of
Financial Position, the Consolidated Statement of Profit or Loss, the Consolidated Statement of Profit or Loss
and Other Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of
Changes in Net Equity and these Notes. The economic figures of the half-year ended 30 June 2019 are not
shown on a comparative basis since the Group did not draw up the condensed consolidated half-year financial
statements at 30 June 2018. On the contrary, figures pertaining to the Statement of Financial Position and to
the changes in net equity at 30 June 2019 are shown in a comparative form with the corresponding values at
31 December 2018.
The Statement of Profit or Loss, the Statement of Profit or Loss and other Comprehensive Income, the
Statement of Financial Position, the Statement of Changes in Net Equity and the Statement of Cash Flows are
drafted in their extended format. The currency adopted for these consolidated financial statements is Euro,
being this currency principally used in the countries in which the companies of the TREVI Group operate. All
the values stated are in thousands of Euro, unless otherwise indicated.
Finally, it is specified that these condensed consolidated half-year financial statements at 30 June 2019 is
subject to the limited audit of KPMG S.p.A..
2.3 Changes to accounting criteria
For the preparation of the Condensed Consolidated Half-year Financial Statements at 30 June 2019, except
for what became applicable starting from 1 January 2019 and explained below, the Group applied the same
accounting standards and measurement criteria adopted in the consolidated financial statements at 31
December 2018, to which reference should be made for a more complete disclosure. In preparing the
79
Condensed Consolidated Half-year Financial Statements at 30 June 2019, the Group has not chosen the early
application of standards, amendments or improvements issued for which application is not yet mandatory.
Accounting standards, amendments and interpretations to be applied shortly.
IASB AND IFRS IC DOCUMENTS EU Date of entry
into force
Date of approval Date of publication in
the Official Gazette
IFRS 16 1 January 2019 31 October 2017 6 November 2017
Annual Improvements to IFRS Standards 2015-2017 Cycle (issued on
12 December 2017)
1 January 2019 14 March 2019 15 March 2019
Amendments to IAS 19: Plan Amendment, Curtailment or Settlement
(issued on 7 February 2018) 1 January 2019 13 March 2019 14 March 2019
Amendments to IAS 28: Long-term Interests in Associates and Joint
Ventures (issued on 12 October 2017) 1 January 2019 8 February 2019 11 February 2019
IFRIC 23 Uncertainty over Income Tax Treatments (issued on 7 June
2017) 1 January 2019 23 October 2018 24 October 2018
Amendments to IFRS 9: Prepayment Features with Negative
Compensation (issued on 12 October 2017) 1 January 2019 22 March 2018 26 March 2018
IFRS 16 - IFRS 16 was published in January 2016 and supersedes IAS 17 Leasing, IFRIC 4, SIC-15 and
SIC-27.
IFRS 16 defines the standards for the recognition, measurement, presentation and disclosure of leases
(contracts that authorise the use of third-party assets) and requires lessees to account for all lease contracts in
the Financial Statements based on a single model similar to the one used to account for financial leases in
accordance with IAS 17, while nothing changes for accounting by the lessors. The principle provides for two
exemptions for registration by lessees - leasing contracts relating to “low value” activities (for example
personal computers, photocopiers, etc.) and short-term leasing contracts (for example contracts with expiry
within 12 months or less). On the date of commencement of the lease agreement, the lessee will recognise a
liability in respect of lease payments (i.e. the lease liability) and an asset that represents the right to use the
underlying asset for the duration of the contract (i.e. the right to use the asset). The lessees will have to
account separately for interest expenses on the lease liability and the depreciation of the right to use the asset.
The lessees will also have to re-measure the lease liability upon the occurrence of certain events (e.g. a
change to the lease contract conditions, a change to the future lease payments resulting from the change to an
index or a rate used to determine said payments). The lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right to use the asset.
IFRS 16 entered into force for financial years starting on 1 January 2019; its early application is allowed but
only after the adoption of IFRS 15. A lessee may choose to apply the principle by using a fully retrospective
approach or a modified retrospective approach. Therefore, the standard became applicable for the Group from
1 January 2019.
80
The impact as at 1 January 2019 generated an increase of approximately Euro 33.1 million in assets and Euro
33.1 million in financial liabilities; as at 30 June 2019, instead, there was an increase of Euro 27.2 million in
assets, of Euro 27.6 million in financial liabilities, of Euro 7 million in depreciation and amortisation, of Euro
7.1 million for lower operating expenses and of Euro 0.432 million in financial costs. The Group chose to
apply the standard retrospectively, entering the cumulative effect derived from the application of the standard
in the net equity as of 1 January 2019 (modified retrospective method). In particular, in relation to lease
contracts previously classified as operating, the company accounted for:
→ a financial liability, equal to the current value of the future payments remaining on the transition date,
discounted using the incremental borrowing rate applicable to the date of transition for each contract.
→ a right of use equal to the value of the financial liability at the transition date, net of any prepayments,
accrued income, accrued expenses and deferred income related to the lease and recognised in the Statement of
Financial Position at the reporting date.
In adopting IFRS 16, the Group decided to use the exemption granted by the standard in relation to short-term
leases (contracts with a duration of less than 12 months) for all classes of assets. For these contracts, the
introduction of IFRS 16 does not entail the recognition of the financial liability of the lease and the related
right of use. However, the lease instalments are recorded in the Statement of Profit or Loss on a linear basis
for the duration of the respective contracts.
The Group decided to use the exemption granted by the standard in relation to lease contracts for which the
underlying assets is a low-value asset, namely lease contracts for which the unit value of the underlying assets
does not exceed Euro 5 thousand when new.
For these contracts, the introduction of IFRS 16 did not involve the recognition of the financial liability of the
lease and the related right of use. However, the lease instalments will be recognised in the Statement of Profit
or Loss on a linear basis for the duration of the respective contracts.
Accounting standards not yet applied
Below the accounting standards, amendments and interpretations issued by the IASB and the International
Financial Reporting Standard Interpretations Committee (IFRS IC) whose approval process has not yet been
completed by the competent bodies of the European Union at the date of these Financial Statements:
IASB AND IFRS IC DOCUMENTS EU Date of entry
into force
Date of issue Expected date of
approval
IFRS 17 Insurance Contracts (issued on 18 May 2017) 01/01/2022 May 2017 Unknown
Amendments to References to the Conceptual Framework in IFRS
Standards (issued on 29 March 2018) 01/01/2020 March 2018 2019
Amendment to IFRS 3 Business Combinations (issued on 22 October
2018) 01/01/2020 October 2018 2019
Amendments to IAS 1 and IAS 8: Definition of Material (issued on 31
October 2018) 01/01/2020 October 2018 2019
81
Use of estimates
The drafting of the Consolidated Financial Statements requires the Management to apply accounting
standards and methodologies that, in some cases, employ complex and subjective assessments and estimates.
These are based on past experience and assumptions, which are always considered reasonable and realistic
given the information available at the time. Taking into account the joint document from the Bank of
Italy/Consob/Isvap No. 2 of 6 February 2009, it is specified that estimates are based on the most recent
information available to the Management at the time the Financial Statements were drawn up without
undermining their reliability.
The application of these estimates and assumptions affects the figures in the Financial Statements - the
Statement of Financial Position, the Statement of Profit or Loss and the Statement of Cash Flows, as well as
those given as additional information. Actual results may differ from these estimates given the uncertainty
surrounding the assumptions and conditions on which the estimates are based.
Listed below are the items of the Financial Statements requiring the greatest degree of subjectivity on behalf
of the Management in establishing estimates and, for which any change in the conditions underlying the
assumptions made, would have a significant impact on the Group's Consolidated Financial Statements:
• Impairment of fixed assets;
• Contract work in progress;
• Development costs;
• Deferred tax assets;
• Provisions for doubtful receivables;
• Employee benefits;
• Provisions for risks and charges.
Estimates and assumptions are reviewed periodically and the effects of any changes are recognised in profit or
loss for the period in which the change occurred.
82
2.5 Exchange rates adopted
The exchange rates applied in the translation of financial statements and balances in currencies other than the
Euro at 30 June 2019 were the following (foreign exchange rate corresponding to 1 Euro):
Currency Average exchange rate
at 30 June 2019
Final exchange rate
at 30 June 2019
Pound Sterling GBP 0.8736 0.89655
Japanese Yen JPY 124.293 122.600
US Dollar USD 1.1298 1.1380
Turkish Lira (TRY) 6.3543 6.5655
Argentine Peso ARS 46.8144 48.5678
Venezuelan Bolívar VES 4.422.67 7.463.30
Nigerian Naira NGN 346.162 348.683
United Arab Emirates Dirham AED 4.1491 4.1793
Singapore Dollar SGD 1.5354 1.5395
Philippine Peso PHP 58.9710 58.3350
Chinese Renminbi CNY 7.6670 7.8185
Malaysian Ringgit MYR 4.6539 4.7082
Mozambican Metical MZN 70.9383 70.7400
Algerian Dinar DZD 134.454 135.145
Hong Kong Dollar HKD 8.8609 8.8866
Iranian rial IRR 47,450.3 47,796
Indian Rupee INR 79.1182 78.5240
Australian Dollar AUD 1.6002 1.6244
Libyan Dinar LYD 1.5716 1.5838
Saudi Riyal SAR 4.2367 4.2675
Brazilian Real BRL 4.3407 4.3511
Omani Rial OMR 0.4344 0.4376
Qatari Riyal QAR 4.1124 4.1423
Mexican Peso MXN 21.6539 21.8201
Kuwait Dinar KWD 0.3433 0.3454
Canadian Dollar CAD 1.5067 1.4893
Colombian Peso COP 3,601.6 3,639.0
Danish Krone DKK 7.4651 7.4636
Thai Baht THB 35.7047 34.8970
Russian Ruble RUB 73.7215 71.5975
New Belarusian Ruble BYN 2.3941 2.3253
Egyptian Pound EGP 19.560 19.001
Swiss Franc CHF 1.1294 1.1105
Norwegian Crown NOK 9.7291 9.6938
Iraqi Dinar IQD 1,336.52 1,346.25
New Zealand Dollar NZD 1.6815 1.6960
Ethiopian Birr ETB 32.2833 32.8468
Chilean Peso CLP 763.128 773.8500
83
2.6 Area of consolidation
Compared to 31 December 2018, the scope of consolidation as at 30 June 2019 has been changed due to the
exclusion of Trevi Fundacoes Angola LDA and I.D.T. S.r.L. that were liquidated during the first half of 2019.
2.7 Notes to the main items of the Condensed Consolidated Half-year Financial
Statements at 30 June 2019
Below are the notes to the main items of the Consolidated Statement of Financial Position:
(1) Tangible assets
Tangible assets at 30 June 2019 totalled Euro 245,945 thousand, an increase of Euro 20,973 thousand
compared to 31 December 2018.
Changes in the first half of 2019 are summarised in the table below:
Description Original
cost
31/12/2018
Accumulated
deprec.
31/12/2018
Net value at
31/12/2018 Incr.
Incr.
IFRS
16
Decr. Deprec.
Deprec.
IFRS
16
Use of
the
Provision
Impairment
Other
changes
in orig.
cost
Exchange
rate diff.
Original
cost
30/06/2019
Accumulated
deprec.
30/06/2019
Net value
at
30/06/2019
Land 8,589 - 8,589 213 - - - - - - - 18 8,820 - 8,820
Buildings 62,851 (25,860) 36,991 282 7,154 (30) (1,178) (871) - - 964 143 71,364 (27,909) 43,455
Plant and machinery 349,092 (207,483) 141,609 2,329 1,688 (3,538) (9,489) (465) 1,606 - (149) (27) 349,395 (215,831) 133,564
Industrial and
commercial equipment 69,741 (47,255) 22,485 4,227 22,926 (2,274) (1,805) (5,025) 2,224 - (975) 68 93,713 (51,862) 41,851
Other assets 63,769 (48,995) 14,775 4,426 2,575 (2,852) (1,952) (590) 769 - 350 185 68,453 (50,768) 17,685
Assets under
construction and
payments on account
523 - 523 641 - (413) - - - - (189) 9 570 - 570
TOTAL 554,565 (329,593) 224,972 12,118 34,342 (9,107) (14,424) (6,951) 4,598 - 1 396 592,315 (346,370) 245,945
Gross increases in the period were Euro 46,460 thousand of which Euro 34,342 thousand relating to the first
application of the IFRS 16 accounting standard from 1 January 2019, adopted with the modified retrospective
approach, while decreases were Euro 9,107 thousand. The group chose to grant the right of use to specific
classes of assets to which the relating contracts refer. Changes reflect the normal replacement of plants and
equipment.
The exchange rate effect recorded in the period under review is positive for Euro 396 thousand.
Some assets are encumbered by mortgages against the loans received, as described in the Payables item.
84
(2) Intangible assets
Intangible assets at 30 June 2019 totalled Euro 6,065 thousand. Changes in the first half of 2019 are
summarised in the table below:
Description
Original
cost
31/12/2018
Accumulated
amort.
31/12/2018
Net value
at
31/12/2018
Incr. Decr. Amort. Impairment Exchange
Rate diff.
Original
cost
30/06/2019
Accumulated
amort.
30/06/2019
Net value
at
30/06/2019
Goodwill - - - - - - - - - - -
Development costs 59,716 (54,837) 4,879 - 25 (151) - - 59,741 (54,988) 4,753
Industrial patents and
intellectual property
rights
7,746 (7,489) 257 180 - (90) - - 7,926 (7,580) 347
Concessions, licenses,
trademarks and similar
rights
3,847 (3,731) 115 46 - (40) - - 3,893 (3,771) 121
Assets under
development and
payments on account
- - - - - - - - - - -
Other intangible assets 17,917 (16,770) 1,147 116 - (424) - 6 18,038 (17,194) 843
TOTAL 89,226 (82,827) 6,398 342 25 (706) - 6 89,598 (83,533) 6,065
The net value of development costs at 30 June 2019 was Euro 4,753 thousand (Euro 4,879 thousand at 31
December 2018 with a total decrease of Euro 126 thousand); these costs, which meet the requirements of IAS
38, were capitalised and subsequently amortised from the start of production and over the average economic
life of the relevant equipment.
No impairment of intangible assets was carried out over the half year under review.
(3) Equity investments
Equity investments amounted to Euro 2,572 thousand, up by a total of Euro 1,178 thousand compared to 31
December 2018. The increase is mainly attributable to the write-backs of the equity investment in Trevi Icos
Nicholson JV measured using the equity method.
(4) Deferred tax assets and deferred tax liabilities
30/06/2019 31/12/2018 Changes
Deferred tax assets 47,428 46,265 1,163
Total 47,428 46,265 1,163
Provision for deferred tax liabilities (33,835) (35,360) 1,524
Total (33,835) (35,360) 1,524
Net financial position at the end of the period 13,592 10,905 2,687
Deferred tax assets refer in part to temporary differences and prior tax losses which, in accordance with tax
regulations, may be recovered in future years and, for the remaining part, they refer to the deferred tax effects
deriving from consolidation entries. At 30 June 2019, equity investments amounted to Euro 47,428 thousand,
85
up by a total of Euro 1,163 thousand compared to 31 December 2018. Deferred tax assets are considered
recoverable in part through the offsetting of deferred tax liabilities that will be concurrently reversed in the
future and, for the remaining part, are attributable to tax losses of the U.S. holding company, which generates
sufficient taxable income in its tax consolidation to recover net deferred tax assets.
Deferred tax liabilities refer to the differences between the values of assets and liabilities shown in the
Consolidated Financial Statements and the corresponding values recognised for tax purposes in the countries
where the Group operates. At 30 June 2019, equity investments amounted to Euro 33,835 thousand, down by
a total of Euro 1,524 thousand compared to 31 December 2018. Below the table showing the changes in
question:
Description Balance at 31/12/18 Provisions Uses of provisions Other changes Balance at 30/06/19
Provision for deferred tax liabilities 35,360 (1,244) (74) (207) 33,835
TOTAL 35,360 (1,244) (74) (207) 33,835
(5) Derivative financial instruments
At 30 June 2019, there were no active short/long-term derivative financial instruments.
Passive derivative financial instruments are exclusively of a short-term nature and totalled Euro 264 thousand,
representing the fair value of derivative contracts to hedge the interest rate risk.
(6) Trade receivables and other long-term assets
Trade receivables and other long-term assets are shown below:
Description 30/06/2019 31/12/2018 Changes
Trade receivables 1,042 5,105 (4,062)
Other prepayments and accrued income 1,008 1,024 (16)
TOTAL 2,051 6,129 (4,078)
Trade receivables and other long-term assets are mainly attributable to the subsidiary Soilmec S.p.A. totalling
Euro 954 thousand and the subsidiary Trevi Spezialtiefbau GmbH for Euro 88 thousand.
(7) Inventories
Inventories were Euro 149,227 thousand at 30 June 2019 and the breakdown was as follows:
Description 30/06/2019 31/12/2018 Changes
Raw materials, consumables and supplies 90,064 92,978 (2,914)
Work in progress and semi-finished products 12,780 10,367 2,413
Finished goods 40,924 41,287 (363)
Payments on account 5,459 637 4,822
TOTAL INVENTORIES 149,227 145,269 3,958
86
The total amount of inventories recognised for in the financial statements increased slightly (Euro 3,958
thousand) with respect to 31 December 2018.
Inventories are shown net of write-down provisions of Euro 39,302 thousand (Euro 37,742 thousand at
31/12/2018) to cover the risk of obsolescence and the slow disposal of some inventory units at the end of the
reporting period.
(8) Trade receivables and other short-term assets
At 30 June 2019 this item totalled Euro 318,161 thousand. The item includes:
Description 30/06/2019 31/12/2018 Changes
Trade receivables 247,963 263,202 (15,239)
Receivables due from customers: 6,632 5,019 1,614
Sub Total: Customers 254,595 268,220 (13,625)
Receivables from associates 12,243 6,597 5,646
Receivables from the tax authorities for VAT 19,713 20,312 (599)
Receivables from others 25,007 29,435 (4,428)
Other prepayments and accrued income 6,604 4,401 2,203
Total Customers and Others 318,161 328,965 (10,803)
At 30 June 2019, the Group did not carry out any sales without recourse with factoring companies.
The amount payable to factoring companies for collections received from customers but not reimbursed to the
factor amounts to Euro 27.8 million.
The decrease in trade receivables includes provisions of Euro -7 million in accordance with IFRS 9. The
increase in receivables from associates is mainly due to the subsidiary Trevi France for the execution of the
Metro Grand Paris contract.
87
The following table gives details of the breakdown of the item “total payables due to customers”:
Amounts in thousands of Euro
Description 30/06/2019 31/12/2018 Changes
Current assets:
Contract work in progress 62,360 47,138 15,222
Write-down provision (31,277) (31,269) (8)
Total contract work in progress 31,083 15,869 15,214
Payments on account from customers (24,450) (10,850) (13,601)
Total receivables due from customers 6,632 5,019 1,614
Current liabilities:
Contract work in progress 92,169 47,326 44,843
Payments on account from customers (96,204) (53,917) (42,287)
Total payables due to customers (4,035) (6,591) 2,556
Trade receivables are stated net of the bad debt provision that amounted to Euro 77,071 thousand at 30 June
2019 (Euro 69,329 thousand at 31 December 2018). Changes are shown in table below:
Description Balance at 31/12/18 Provisions Uses of provisions Other changes Balance at 30/06/19
Bad debt provision 69,329 7,966 (1,586) 1,362 77,071
TOTAL 69,329 7,966 (1,586) 1,362 77,071
Provisions totalled Euro 7,966 thousand at 30 June 2019 and refer to individual measurement of receivables,
based on a specific analysis of each situation where there could be a payment risk.
The item “Other changes” mainly includes exchange rate differences.
Details of receivables from associates, which totalled Euro 12,243 thousand at 30 June 2019, are included in
paragraph 2.9 - Related party transactions
Prepayments and accrued income
This item is mainly composed of prepayments detailed as follows:
Description 30/06/2019 31/12/2018 Changes
Insurance premiums paid in advance 738 415 324
Rent payables 910 730 180
Sabatini law interests 53 53 0
Other 4,902 3,203 1,699
TOTAL 6,604 4,401 2,203
Information on “Receivables from others” is as follows:
Description 30/06/2019 31/12/2018 Changes
88
Receivables from employees 1,336 1,445 (108)
Advances to suppliers 11,537 10,115 1,422
Receivables from factoring companies 3,718 4,274 (557)
Other 8,416 13,601 (5,185)
TOTAL 25,007 29,435 (4,428)
(9) Current tax assets
Tax receivables from Tax Authorities amounted to Euro 15,135 thousand (Euro 17,009 thousand at 31
December 2018), mainly represented by receivables for direct taxes and tax advances.
(10) Cash and cash equivalents
The item includes:
Description 30/06/2019 31/12/2018 Changes
Bank and postal accounts 77,000 87,875 (10,875)
Cash-in-hand and cash equivalent 747 1,037 (290)
TOTAL 77,747 88,912 (11,165)
The item Cash and cash equivalents includes non-transferable amounts without authorisation from the
Financial Institution in which they are deposited as they guarantee bank credit lines for issuing commercial
bonds; as at 30 June 2019 they amounted to approximately Euro 2.5 million in the United Arab Emirates and
about Euro 0.2 million in Turkey. There is also a limit of USD 10 million to guarantee issues of Insurance
Bonds in the United States.
In addition, there are companies in the Group for which cash and cash equivalents on company current
accounts are not immediately transferable due to currency restrictions (mainly in Nigeria for Euro 7.9 million
and in Venezuela for Euro 0.1 million). Restricted liquidity in dormant foreign companies for political and/or
commercial reasons must be added to these (approximately Euro 0.3 million in Libya).
For an analysis of the net financial position and the cash and cash equivalents of the Trevi Group please refer
to the Report on Operations and the Statement of Cash Flows.
89
(11) NET EQUITY
The breakdown of Net Equity is given in the following table:
- Share capital:
The company issued No. 164,783,265 shares, of which 204,000 were purchased as treasury shares. As at 30
June 2019, the Company’s fully subscribed and paid-up Share Capital amounted to Euro 82,290 thousand, net
of treasury shares consisting of 164,579,265 ordinary shares.
- Retained earnings/(losses) carried forward:
At 30 June 2019, this item was negative for Euro 443,090 thousand and includes the consolidated results of
operations of previous years, for the part not distributed as dividends to Shareholders and the results of
operation for the period attributable to the parent company.
- Share premium reserve:
At 30 June 2019, this reserve was Euro 114,480 thousand and was unchanged with respect to 31 December
2018.
- Legal reserve:
The legal reserve is the share of the net profit that pursuant to Article 2430 of the Italian Civil Code may not
be distributed as dividends. Compared to 31 December 2018, the legal reserve has not changed. At 30 June
2019 this reserve was Euro 8.353 thousand.
Other reserves:
The other reserves are as follows:
1. Fair value reserve:
This reserve includes the changes in fair value of derivative financial instruments measured as cash flow
hedges under IAS 39.
2. Extraordinary reserve:
The extraordinary reserve amounted to Euro 15,805 thousand as at 30 June 2019.
3. IFRS transition reserve:
The item includes the effects of the transition to IAS/IFRS of the Group companies carried out with reference
to 1 January 2004.
90
4. Reserve for treasury shares in Portfolio:
The reserve for treasury shares in portfolio was Euro 736 thousand at 30 June 2019, unchanged compared to
31 December 2018.
5. Currency translation reserve:
This reserve, amounting to a positive value of Euro 13,883 thousand as at 30 June 2019, relates to the
exchange differences from the conversion into Euro of financial statements expressed in currencies other than
the Euro. Exchange rate fluctuations are mainly between the Euro and the US Dollar and between the Euro
and the currencies of South American countries.
6. Retained earnings/(losses) carried forward:
The item includes the consolidated results of operations of previous years, for the part not distributed as
dividends to Shareholders. The decrease compared to 31 December 2018 is due to the allocation of the result
of the previous year.
- Net equity attributable to non-controlling interests
At 30 June 2019 the net equity attributable to non-controlling interests amounted to Euro 218 thousand.
It should be noted that at 30 June 2019, the parent company Trevi Finanziaria Industriale S.p.A. was under the
conditions of art. 2447 of Italian Civil Code.
(12) Bank loans and other long-term loans
Description 30/06/2019 31/12/2018 Changes
Bank loans and borrowings 451 331 120
Payables due to leasing companies 28,395 33,460 (5,065)
Loans and borrowings from other financial backers 14,474 207 14,267
TOTAL 43,320 33,998 9,322
The breakdown of long-term bank loans and borrowings by maturity was as follows:
Description From 1 to 5 years Over 5 years Total
Bank loans and borrowings 451 - 451
TOTAL 451 - 451
Furthermore, the breakdown of long-term payables due to leasing companies by maturity is shown below:
Description From 1 to 5 years Over 5 years Total
Payables due to leasing companies 15,437 238 15,675
TOTAL 15,437 238 15,675
91
(13) Employees’ leaving entitlement
At 30 June 2019, the employees’ leaving entitlement item (TFR) and the provision for pensions totalled Euro
13,615 million and consisted of the indemnities accrued at year-end by employees of Italian companies, as
required by law, and provisions made by foreign companies to cover accrued liabilities towards employees.
They were determined as the present value of defined service obligation, adjusted to take into account
“actuarial gains and losses”. The effect recognised was calculated by an external and independent actuary
based on the projected unit credit method.
Changes in the first half of 2019 are shown in the following table:
Description Balance at
31/12/18 Provisions
Benefits and
advances paid
Other
changes Balance at 30/06/19
Employees’ leaving entitlement 5,998 248 (227) (95) 5,923
Provision for pensions and similar obligations 7,996 992 (537) (759) 7,692
TOTAL 13,994 1,239 (764) (854) 13,615
Other changes in the provision for pensions were due to exchange rate translation effects from foreign
subsidiaries.
30/06/2019 31/12/2018
Initial balance 5,998 7,951
Operating cost of services 106 238
Interest payable 46 84
Employees' leaving entitlement paid out (227) (1,238)
Reclassification of assets held for sale - (1,037)
Final balance 5,923 5,998
The main actuarial assumptions were:
30/06/2019 31/12/2018
Annual technical discount rate 1.57% 1.57%
Annual inflation rate 1.50% 1.50%
Annual rate of increase in total remuneration 2.50% 2.50%
Annual rate of increase in Employees’ leaving entitlement (TFR) 2.63% 2.63%
92
(14) - Provisions for risks and charges
Provisions for risks and charges consist of:
Description 30/06/2019 31/12/2018 Changes
Contractual risks - 35 (35)
Work carried out under warranties 878 878 -
Coverage of losses in subsidiaries 822 822 -
Risks on disputes 2,088 1,780 308
Other provisions for risks 3,213 3,250 (37)
TOTAL Long-term provisions for risks and charges 7,002 6,766 235
Other provisions for risks 16,897 13,115 3,782
TOTAL Short-term provisions for risks and charges 16,897 13,115 3,782
TOTAL 23,898 19,881 4,017
The provision for work carried out under warranties of Euro 878 thousand relates to provisions for technical
warranty interventions on the serviceable products of the companies in the metalworking sector.
The provision for charges to cover losses in subsidiaries of Euro 822 thousand relates to the minor
investments of Trevi S.p.A.
The provision for legal disputes totalled Euro 2,088 thousand, increasing of Euro 308 thousand compared to
the previous period mainly attributable to Trevigalante SA for Euro 1,454 thousand, to Trevi S.p.A. for Euro
163 thousand, to the subsidiary Trevi Foundations Nigeria Ltd. for Euro 430 thousand and to the subsidiary
Pilotes Trevi Sacims in Argentina for Euro 41 thousand.
This provision represents the management's best estimate of the liabilities that must be accounted for with
reference to:
− Legal proceedings arising during the ordinary course of business;
− Legal proceedings involving the tax authorities.
The provisions classified as short-term as at 30 June 2019 amounted to Euro 16,897 thousand (Euro 13,115 as
at 31 December 2018). The most significant amount of this balance is attributable to Swissboring Overseas
Piling Corporation for Euro 10,464 thousand, and relates to a provision for contractual risks related to a
contract in Oman. It is also worthy to mention a provision for contractual risks in the French subsidiary of the
Trevi Division equal to approximately Euro 3,017 thousand concerning the job order in France.
Below are details of changes in short and long-term provisions:
Description Balance at 31/12/18 Provisions Uses of
provisions
Other
changes
Balance at
30/06/19
Other long-term
provisions 6,766 791 (642) 87 7,002
TOTAL 6,766 791 (642) 87 7,002
Description Balance at 31/12/18 Provisions Uses of
provisions
Other
changes
Balance at
30/06/19
93
Other short-term
provisions 13,115 4,204 (884) 463 16,897
TOTAL 13,115 4,204 (884) 463 16,897
(15) Trade payables and other short-term liabilities
Description 30/06/2019 31/12/2018 Changes
Trade payables 184,276 192,561 (8,285)
Payments on account 24,001 24,447 (446)
Payables due to customers 4,035 6,591 (2,556)
Payables to associates 2,900 1,287 1,613
Payables to social security bodies 4,064 3,941 123
Accrued expenses and deferred income 8,532 10,924 (2,392)
Other payables 19,059 15,723 3,336
Payables to tax authorities for VAT 4,133 4,902 (768)
TOTAL 250,999 260,377 (9,378)
The decrease of the item “trade payables and other short-term liabilities” was equal to Euro 9,378 thousand; at
31 December 2018 this item was Euro 260,377 thousand.
For further details on the item “payables due to customers” please refer to note 8 “Trade Receivables and
Other Short-term Assets”. Details of payables to associates, which totalled Euro 2,900 thousand, are included
in paragraph 2.9 - Related party transactions.
Other payables:
The item “Other payables” mainly includes:
Description 30/06/2019 31/12/2018 Changes
Payables to employees 13,877 12,031 1,846
Other 5,182 3,692 1,490
TOTAL 19,059 15,723 3,336
Payables to employees were for wages and salaries and provisions for leaves accrued but not used.
(16) Current tax liabilities:
At 30 June 2019, tax payables amounted to Euro 14,169 thousand, down by a total of Euro 1,653 thousand
compared to 31 December 2018.
The balance at 30 June 2019 includes payables related to estimated taxes pertaining to the first half of 2019.
(17) Short-term loans and borrowings from other financial backers:
Details of short-term loans and borrowings are shown below:
Description 30/06/2019 31/12/2018 Changes
Bank overdrafts 25,471 24,363 1,108
Business advances 59,069 63,569 (4,500)
Bank loans and borrowings 103,564 93,281 10,283
94
Share of mortgages and loans expiring within twelve months 477,167 477,135 32
TOTAL Short-term loans and borrowings 665,271 658,348 6,923
Description 30/06/2019 31/12/2018 Changes
Payables due to leasing companies 50,579 51,560 (981)
Loans and borrowings from other financial backers 54,565 37,286 17,279
TOTAL Loans and borrowings from other financial backers 105,144 88,846 16,297
Short-term loans and borrowings are made up of bank loans and borrowings and of short-term residual
instalments for long-term mortgages. The increase with respect to 31 December 2018 is attributable to the
accounting of accrued expenses on loans. Payables to leasing companies were the capital element of
instalments payable within twelve months.
The item “loans and borrowings from other financial backers” at 30 June 2019 includes approximately Euro
13.2 million relating to the first application of IFRS 16.
Net financial position
Information of the Net Financial Position of the Group is shown below:
TREVI GROUP
NET FINANCIAL DEBT
(in thousands of Euro)
Notes 30/06/2019 31/12/2018 Changes
A Cash (10) (747) (1,036) 289
B Other cash equivalents (10) (77,000) (87,876) 10,876
C Securities held for trading - - -
D Cash and cash equivalents (A+B+C) (77,747) (88,912) 11,165
E Current financial assets (5) 0 - 0
F Current bank loans (17) 188,104 181,213 6,891
G Current portion of non-current debt (17) 477,167 477,135 32
H Other current financial debt (5) (17) 105,390 89,205 16,185
I Current financial debt (F+G+H) 770,661 747,553 23,108
J Current net financial debt (I+E+D) 692,914 658,641 34,273
K Non-current bank loans (12) 451 331 120
L Bonds issued - -
M Other non-current debt (12) 42,869 33,668 9,201
N Non-current financial debt (K+L+M) 43,321 33,999 9,322
O Net financial debt (J+N) 736,235 692,640 43,595
95
GUARANTEES AND COMMITMENTS
The guarantees given are listed below:
• Guarantees given to insurance companies (both in Euro and US dollars): these amount to Euro
363,971,955 and refer both to the issuance of sureties for VAT refunds of the Company and the main Italian
subsidiaries and to guarantees given in favour of leading American insurance companies, in the interests of
the sub-subsidiary Trevi Icos Corporation, for the execution of its projects; these guarantees are reduced in
proportion to the remaining work still to be performed at the end of each year;
• Guarantees given to third parties: these amount to Euro 269,233,231 and refer in particular to:
- Bank guarantees for Euro 218,473,004 to guarantee cash and secured lines as well as leasing contracts
for subsidiaries of Trevi Finanziaria Industriale Spa;
- Commercial guarantees (mainly to take part in tenders, performance bond and contractual advances)
for Euro 24,800,876;
- Financial guarantees of Euro 25,959,350 issued to credit institutions for loans received.
It should be noted that at the Trevi Group level, at the date of the preparation of these Condensed
Consolidated Half-Year Financial Statements, some reminders and injunctions were received from suppliers
against commercial relations. The aggregate value of these positions is approximately Euro 12.7 million, of
which approximately Euro 10.8 million have been settled and approximately Euro 1.9 million for which the
definition is ongoing. It is worthy to mention that at 30 June 2019, there were overdue payables to social
security institutions for approximately Euro 176 thousand.
OPERATING REVENUE
(18) Turnover from sales and services and other operating revenue
This item amounted to Euro 301,740 thousand. The Group operates in various business sectors and in
different geographical areas.
A breakdown of turnover from sales and services and other revenues is given in the following table:
Geographic Area 30/06/2019 %
Italy 30,566 10.1%
Europe (excluding Italy) 39,156 13.0%
U.S.A. and Canada 60,424 20.0%
Latin America 19,304 6.4%
Africa 22,654 7.5%
Middle East and Asia 80,134 26.6%
Far East and Rest of the World 49,502 16.4%
TOTAL REVENUE 301,740 100%
96
The following table gives a breakdown of Group revenues by business sector:
(In thousands of Euro)
30/06/2019
Special foundation works 209,575
Manufacture of machinery for special foundation works 93,659
Interdivisional write-offs and adjustments (5,575)
Sub-total Special Foundation Division (Core Business) 297,659
Parent Company 13,640
Interdivisional and Parent Company write-offs (9,560)
TREVI GROUP 301,740
Other operating revenue
The item “Other revenue and income” amounted to Euro 13,421 thousand and is made up as follows:
Description 30/06/2019
Grants related to income 84
Recovery of expenses and charge-backs to Consortia 5,427
Sales of spare parts and raw materials 2,350
Gains on sale of capital goods 982
Compensation for damages 2,184
Rental income 279
Contingent assets 541
Other 1,573
Total 13,421
PRODUCTION COSTS
Production costs amounted to Euro 325,115 thousand. The main items were the following:
(19) Personnel expense
This item amounted to Euro 85,126 thousand.
Description 30/06/2019
Wages and salaries 66,463
Social security charges 13,450
Employees’ leaving entitlement 669
Provision for pensions 571
Other costs 3,974
Total 85,126
The breakdown of personnel and changes with the respect to the previous year are as follows:
97
Description 30/06/2019 31/12/2018 Changes Average
Executives 152 162 (10) 157
Employees and managers 2,336 2,820 (484) 2,578
Workers 3,743 3,396 347 3,570
Total number of staff 6,231 6,378 (147) 6,305
(20) Other operating expenses
Description 30/06/2019
Costs for services 88,601
Costs for use of third-party assets 13,138
Other operating costs 5,571
Total 107,311
This item amounted to Euro 107,311 thousand. For further details please see the information provided below.
Costs for services:
This item amounted to Euro 88,601 thousand. This item mainly includes:
Description 30/06/2019
Sub-contracts 21,776
Technical, legal, tax consultancy services 17,289
Other expenses for the provision of services 11,974
Food, accommodation and travel expenses 9,368
Insurance 6,480
Shipping, customs and transport costs 6,072
Maintenance and repairs 4,821
Banking services 2,153
Expenses for energy, telephone, gas, water and post 1,934
Work subcontracted 1,632
Technical assistance 1,576
Advertising and promotions 1,249
Administrative services 1,044
Motive force 500
Commissions and ancillary charges 362
Entertainment expenses 276
Consortium cost share 95
Total 88,601
Costs for use of third-party assets:
This item amounted to Euro 13,138 thousand. The item mainly refers to:
Description 30/06/2019
Equipment rentals 9,322
Rental expenses 3,816
98
Total 13,138
The entry for “equipment rentals” includes operational hire costs for contracts in progress.
Other operating costs:
This item amounted to Euro 5,571 thousand. Their composition is as follows:
Description 30/06/2019
Indirect duties and taxes 1,570
Ordinary capital losses from asset disposal 541
Contingent liabilities 401
Other miscellaneous expenses 3,059
Total 5,571
Taxes other than income taxes were mainly attributable to the companies Trevi Finanziaria Industriale S.p.A.
for Euro 315 thousand, Pilotes Trevi Sacims for Euro 236 thousand, Soilmec S.p.A. for Euro 187 thousand,
Trevi Galante SA for Euro 59 thousand, Trevi S.p.A. for Euro 155 thousand and Trevi Foundation Philippines
for Euro 149 thousand.
(21) Provisions and impairment losses
Description 30/06/2019
Provisions for risks 1,804
Provisions for receivables 7,966
Impairment losses -
Total 9,770
Provisions for risks:
These were Euro 1,804 thousand mainly consisting in provisions for product guarantees, legal disputes and
contractual risks.
Provisions for receivables included in current assets:
The amount of Euro 7,966 thousand refers to the provisions for doubtful receivables of subsidiaries, in
accordance with IFRS 9 requirements.
Impairment losses:
During the half-year under review, no asset impairment losses were recorded.
(22) Financial income
The entry is as follows:
99
Description 30/06/2019
Interest on bank loans and borrowings 3,711
Interest on trade receivables 47
Other financial income 131
Total 3,888
(23) Financial expenses
The entry is as follows:
Description 30/06/2019
Interest on bank loans and borrowings 11,564
Bank charges and fees 53
Interest payables on mortgages 240
Interest due to leasing companies 784
Interest on loans and borrowings from other financial backers 652
Total 13,293
(24) Gains/(Losses) on exchange rates
As at 30 June 2019, the realised and unrealised net exchange differences were negative for Euro 577 thousand
and mostly originate from the fluctuation between the Euro and the US Dollar, and between the Euro and the
currencies of South American countries.
30/06/2019
Realised gains on exchange rates 1,865
Realised losses on exchange rates (2,196)
Sub-total of realised gains/(losses) on exchange rates (331)
Unrealised gains on exchange rates 2,189
Unrealised losses on exchange rates (2,436)
Sub-total of unrealised gains/(losses)on exchange rates (247)
Gains/(losses) on exchange rates (577)
(25) Income taxes for the period
The main components of income taxes in the condensed consolidated half-year financial statements are:
Description 30/06/2019
Current taxes:
- I.R.A.P. 377
- Income taxes 6,034
Deferred tax liabilities (1,244)
Deferred tax assets (2,199)
Total Income Taxes 2,968
Income taxes are an estimate of the direct taxes payable for the financial period derived from the taxable
100
income of each consolidated company in the Group.
Taxes for foreign companies are calculated according to the tax rates in force in the respective countries.
(26) Group earnings/(losses) per share
The calculation of basic and fully diluted earnings/(losses) per share was as follows:
Description
30/06/2019
Net Result
deriving from operating activities
30/06/2019
Net Result deriving from
discontinued operations
A Net profit/(loss) for the period (thousands of Euro) (25,666) -
B Weighted average number of ordinary shares for the determination of basic
earnings per share 164,579,265 164,579,265
C Profit/(Loss) per basic share: (A*1000) / B (0.1559) -
D Net profit/(loss) adjusted for the dilution analysis (thousands of Euro) (25,666) -
E Weighted average number of ordinary shares for calculating basic earnings
per share (B) 164,270,181 164,270,181
F Diluted earnings/(losses) per share: (D*1000) / E (0.1562) -
(27) Discontinued Operations
Discontinued activities of the Oil & Gas Division were extended to the entire first-half of 2019; the accounting
treatment as at 30 June 2019 is the same adopted at 31 December 2018. During the first half of the year under
review, there were no changes such as to require a modification in the approach already adopted at 31
December 2018.
Net profit or loss for the period with reference to discontinued operations is offset by the remeasurement of
assets of the Oil & Gas sector that were previously written down in accordance with IFRS 5.
101
2.8 Transactions with related parties
The related party transactions of Trevi Group were mainly commercial transactions between the subsidiary
Trevi S.p.A. and consortia, settled at market terms.
The most significant amounts of these long-term receivables as at 30 June 2019 and at 31 December 2018 are
as follows:
Long-term financial receivables 30/06/2019 31/12/2018 Changes
Porto Messina S.c.a.r.l. 720 720 -
Filippella S.c.a.r.l. 225 225 -
Pescara Park S.r.l. 515 515 -
Other 310 273 37
TOTAL 1,769 1,732 37
The most significant amounts of short-term trade receivables as at 30 June 2019 and at 31 December 2018
included in the item “Trade receivables and other short-term assets” are shown below:
Short-term trade receivables 30/06/2019 31/12/2018 Changes
Parcheggi S.p.A. 75 164 (89)
Roma Park Srl 634634 634634 -
Sofitre S.r.l. 1,363 1,391 (28)
Other 29 29 -
Sub-total 2,101 2,218 (117)
Porto di Messina S.c.a.r.l. 793 764 29
Consorzio Trevi Adanti 7 7 -
Nuova Darsena S.c.a.r.l. 1,170 1,035 134
Trevi S.G.F. Inc. per Napoli 1,857 1,857 -
Sep Trevi Sefi 5,536 - 5,536
Other 780 715 65
Sub-total 10,142 4,378 5,764
TOTAL 12,243 6,596 5,647
% of total consolidated trade receivables 4.6% 2.4%
Group revenue generated with these companies at 30 June 2019 are shown in the following table:
Revenue from sales and services 30/06/2019
Parcheggi S.p.A. 106
Sub-total 106
Hercules Foundation AB 438
Nuova Darsena 625
Sep Trevi Sefi 3,957
Other 1
Sub-total 5,021
TOTAL 5,127
as % of total revenue 1.7%
102
The most significant amounts of trade payables as at 30 June 2019 and at 31 December 2018 included in the
item “Trade payables and other short-term liabilities” are shown below:
Short-term trade payables 30/06/2019 31/12/2018 Changes
IFC Ltd 130 130 -
Sofitre S.r.l. (5) 23 (28)
Sub-total 126 153 (28)
Trevi Adanti 8 8 -
Porto di Messina S.c.a.rl. 386 386 -
Trevi S.G.F. Inc. S.c.a.r.l. 32 32 -
Sep Trevi Sefi 1,664 - 1,664
Other 684 708 (24)
Sub-total 2,774 1,134 1,640
TOTAL 2,899 1,287 1,612
% of consolidated trade payables 1.4% 0.6%
Expenses incurred by the Group with related parties at 30 June 2019 were as follows:
Consumption of raw materials and external services 30/06/2019
Sofitre Srl 21
Sub-total 21
Nuova Darsena S.c.a.r.l. 53
Sep Trevi Sefi 2,706
Sub-total 2,759
TOTAL 2,780
% on consumption of raw materials and consolidated external services 1.4%
In addition to what has already been highlighted in the information relating to the acquisitions of the period, as
can be seen from the tables above, the Trevi Group has limited dealings with the companies belonging to
Sofitre S.r.l., a company 100% controlled by the Trevisani family. For the first half of 2019, transactions with
the companies that are part of the Sofitre group (qualifying for the TREVI Group as companies under common
control by the Trevisani family) were done at normal market conditions. They are summarised in the table
above, which also shows the negligible impact on the Group’s consolidated figures.
Finally, it must be noted that there were no economic relations between TREVI Group companies and TREVI
Holding S.E., the parent company of TREVI - Finanziaria Industriale S.p.A., and its parent company I.F.I.T
S.r.l.
103
3. Segment reporting
The Group has identified financial information by business division as the primary segment for disclosure of
further economic and financial information about the Group (segment reporting). This representation reflects
the organisation of the Group's business and internal reporting structure, based on the consideration that risks
and benefits are influenced by the business sectors in which the Group operates.
The Management monitors the operating results of its business units separately in order to make decisions
regarding the allocation of resources and assessment of performance. Segment performance is evaluated on
operating profit or loss, which, as shown in the tables below, is calculated differently from the operating profit
or loss shown in the Consolidated Financial Statements. So far, pending the completion of the disposal
process, there is no change to the structure of the information reviewed by the directors. Therefore, segment
reporting continues to be structured according to the Foundation and the O&G sectors, even if the latter is
presented as a discontinued operation.
The Management monitors the revenue by geographical area as the secondary segment information; further
information is provided in the Notes to the Financial Statements.
The figures relating to the statement of profit or loss and the statement of financial position for segment at 30
June 2019 are provided in the following tables and further information on the performance of the two
divisions is given in the Directors’ Report on Operations.
104
Special Foundation Division (Core Business)
Summary statement of financial position (In thousands of Euro)
30/06/2019 31/12/2018 Changes
A) Assets 234,196 211,524 22,672
B) Net working capital
- Inventories 193,190 187,639 5,551
- Trade receivables 250,238 253,299 (3,061)
- Trade payables (-) (204,137) (195,165) (8,973)
- Payments on account (-) (30,259) (30,287) 28
- Other assets (liabilities) (33,065) (29,967) (3,097)
175,966 185,519 (9,553)
C) Invested capital less liabilities for the period (A+B) 410,163 397,043 13,119
D) Employees’ leaving entitlement (-) (12,834) (13,241) 407
E) NET INVESTED CAPITAL (C+D) 397,328 383,802 13,526
Financed by:
F) Net Equity 171,222 193,212 (21,989)
G) Net Financial Position/(Cash and cash equivalents) 226,106 190,590 35,516
H) TOTAL FINANCING SOURCES (F+G) 397,328 383,802 13,526
105
Oil & Gas Division
Summary statement of financial position (In thousands of Euro)
30/06/2019 31/12/2018 Changes
A) Assets 75,195 64,900 10,295
B) Net working capital
- Inventories 127,073 124,914 2,160
- Trade receivables 94,500 92,944 1,556
- Trade payables (-) (110,497) (93,487) (17,010)
- Payments on account (-) (51,944) (45,300) (6,644)
- Other assets (liabilities) 17,839 20,126 (2,287)
76,972 99,197 (22,225)
C) Invested capital less liabilities for the period (A+B) 152,167 164,097 (11,930)
D) Employees’ leaving entitlement (-) (1,394) (1,206) (188)
E) NET INVESTED CAPITAL (C+D) 150,773 162,891 (12,118)
Financed by:
F) Net Equity (113,940) (97,529) (16,410)
G) Net Financial Position/(Cash and cash equivalents) 264,713 260,421 4,292
H) TOTAL FINANCING SOURCES (F+G) 150,773 162,891 (12,118)
106
Special Foundation Division (Core Business)
Economic summary (In thousands of Euro)
30/06/2019
TOTAL REVENUE 297,659
- of which interdivisional 485
Change in work in progress, semi-finished products and finished
goods 8,330
Internal work capitalised 1,432
Other operating revenue
PRODUCTION REVENUE 307,422
Consumption of raw materials and external services 204,912
Other operating costs 5,369
VALUE ADDED 97,141
% of Total revenue 32.6%
Personnel expense 82,518
GROSS OPERATING PROFIT 14,623
% of Total revenue 4.9%
Depreciation and amortisation 20,170
Provisions and Impairment losses 9,795
OPERATING PROFIT/(LOSS) (15,342)
% of Total revenue -5.2%
107
Oil & Gas Division
Economic summary (In thousands of Euro)
30/06/2019
TOTAL REVENUE 91,240
- of which interdivisional 112
Change in work in progress, semi-finished products and finished
goods 4,333
Internal work capitalised 682
Other operating revenue
PRODUCTION REVENUE 96,255
Consumption of raw materials and external services 70,056
Other operating costs 2,048
VALUE ADDED 24,151
% of Total revenue 26.5%
Personnel expense 26,381
GROSS OPERATING PROFIT/(LOSS) (2,230)
% of Total revenue -2.4%
Depreciation and amortisation 6,447
Provisions and Impairment losses (776)
OPERATING PROFIT/(LOSS) (7,901)
% of Total revenue -8.7%
Management believes business segments are the primary segment disclosure for understanding the business of the Group whilst geographical
segment disclosure is the secondary segment; the Directors' Report on Operations includes comments on the summary data shown in this Note
on segment reporting.
108
RECONCILIATION SCHEDULE as at 30/06/2019
Economic summary
(In thousands of Euro)
Special
Foundation
Division
(Core
Business)
Oil & Gas
Division
TREVI-
Fin.Ind.S.p.A. Adjustments
Reclassifications
for discontinued
operations
Trevi Group
TOTAL REVENUE 297,659 91,240 13,640 (13,551) (87,248) 301,740
Change in work in progress, semi-
finished products and finished goods 8,330 4,333 - - (4,333) 8,330
Internal work capitalised 1,432 682 - - (110) 2,005
Other operating revenue - - - - - -
PRODUCTION REVENUE 307,422 96,255 13,640 (13,551) (91,691) 312,075
Consumption of raw materials and
external services 204,912 70,056 7,562 (13,489) (65,922) 203,119
Other operating costs 5,369 2,048 362 (159) (2,048) 5,571
VALUE ADDED 97,141 24,151 5,716 97 (23,721) 103,384
Personnel expense 82,518 26,381 2,608 - (26,381) 85,126
GROSS OPERATING PROFIT 14,623 (2,230) 3,108 97 2,660 18,259
Depreciation and amortisation 20,170 6,447 1,562 (118) (6,533) 21,528
Provisions and Impairment losses 9,795 (776) 3,270 (3,295) 776 9,770
OPERATING PROFIT/(LOSS) (15,342) (7,901) (1,724) 3,510 8,417 (13,040)
109
Summary statement of financial position
(In thousands of Euro)
Special
Foundation
Division
(Core
Business)
Oil & Gas
Division
TREVI-
Fin.Ind.S.p.A. Adjustments
Reclassifications
of Assets held
for sale
Trevi
Group
A) Assets 234,196 75,195 164,090 (100,701) (115,266) 257,514
B) Net working capital
- Inventories 193,190 127,073 - 155 (127,073) 193,345
- Trade receivables 250,238 94,500 66,423 (146,751) (3,119) 261,291
- Trade payables (-) (204,137) (110,497) (47,770) 157,814 17,489 (187,101)
- Payments on account (-) (30,259) (51,944) (150) 400 51,944 (30,009)
- Other assets (liabilities) (33,065) 17,839 (9,284) 14,137 (17,921) (28,295)
175,966 76,972 9,219 25,756 (78,681) 209,231
C) Assets and liabilities held for sale 109,836 109,836
D)
Invested capital less liabilities for the
period (A+B) 410,163 152,167 173,308 (74,945) (84,111) 576,581
E) Employees’ leaving entitlement (-) (12,834) (1,394) (781) - 1,394 (13,615)
F) NET INVESTED CAPITAL (C+D) 397,329 150,773 172,527 (74,945) (82,718) 562,966
Financed by:
G) Net Equity 171,222 (113,940) (226,454) 79,442 (83,539) (173,268)
H) Net financial position 226,106 264,713 398,982 (154,387) 821 736,235
I)
TOTAL SOURCES OF FINANCING
(F+G+H) 397,328 150,773 172,527 (74,945) (82,718) 562,967
The column concerning adjustments to statement of financial position items includes the write-off of equity investments and intercompany financial
receivables for assets, for trade receivables and payables it includes the remaining intercompany write-offs; for Group net equity it includes the
balancing item for the write-off of investments.
110
4. Significant non-recurring events and transactions
There were no significant non-recurring events or transactions other than those already described in
the paragraph “Business plan, main risks and uncertainties to which the Trevi Group is exposed and
assessments on the going concern” related to the debt restructuring and the sale of the Oil & Gas
Division.
5. Positions or transactions deriving from atypical and/or
unusual operations
In the first half of 2019, the Trevi Group did not record positions or transactions deriving from atypical and/or
unusual operations.
111
Attachments
The following attachments supplement the information contained in the Notes to the Financial Statements of
which they form an integral part.
1 Companies consolidated in the Financial Statements at 30 June 2019 on a line-by-line basis.
2 Group organisational chart.
112
Attachment 1
Companies included in the Consolidated Financial Statements at 30 June 2019 on a line-by-line basis
COMPANY NAME REGISTERED
OFFICE CURRENCY SHARE CAPITAL
% HELD BY
THE GROUP
1 TREVI - Finanziaria Industriale S.p.A. Italy Euro 82,391,632 Parent company
2 Soilmec S.p.A. Italy Euro 25,155,000 99.90%
3 Soilmec U.K. Ltd United Kingdom Pound Sterling 120,000 99.90%
4 Soilmec Japan Co. Ltd Japan Yen 45,000,000 92.90%
5 Soilmec France S.a.S. France Euro 1,100,000 99.90%
6 Drillmec S.p.A. Italy Euro 5,000,000 99.90%
7 Soilmec H.K. Ltd. Hong Kong Euro 44,743 99.90%
8 Drillmec Inc. USA U.S.A. US Dollar 5,000,000 99.80%
9 Pilotes Trevi S.a.c.i.m.s. Argentina Peso 1,650,000 98.90%
10 Cifuven C.A. Venezuela Bolivar 300,000 99.80%
11 Petreven C.A. Venezuela Bolivar 10,504,361,346 99.90%
12 Trevi S.p.A. Italy Euro 32,300,000 99.80%
13 RCT S.r.L. Italy Euro 500,000 99.80%
14 Treviicos Corporation U.S.A. US Dollar 23,500 99.80%
15 Trevi Foundations Canada Inc. Canada Canadian Dollar 10 99.80%
16 Trevi Cimentaciones C.A. Venezuela Bolivar 12,766,206,370 99.80%
17 Trevi Construction Co. Ltd. Hong Kong US Dollar 2,051,668 99.80%
18 Trevi Foundations Nigeria Ltd. Nigeria Naira 402,554,879 59.90%
19 Trevi Contractors B.V. The Netherlands Euro 907,600 99.80%
20 Trevi Foundations Philippines Inc. Philippines Philippine Peso 52,500,000 99.80%
21 Swissboring Overseas Piling Corporation Switzerland Swiss Franc 100,000 99.80%
22 Swissboring & Co. LLC. Oman Omani Rial 250,000 99.80%
23 Swissboring Qatar WLL Qatar Qatari Riyal 250,000 99.80%
24 Idt Fzco United Arab
Emirates Dirham 1,600,000 99.80%
25 Treviicos South Inc. U.S.A. US Dollar 5 99.80%
26 Wagner Constructions L.L.C. U.S.A. US Dollar 5,200,000 99.80%
27 Trevi Algerie E.U.R.L. Algeria Dinar 53,000,000 99.80%
28 Borde Seco Venezuela Bolivar - 94.90%
29 Trevi Insaat Ve Muhendislik A.S. Turkey Turkish Lira 777,600 99.80%
30 Petreven S.A. Argentina Peso 30,000 99.90%
31 Petreven – U TE – Argentina Argentina Peso 99.80%
32 Soilmec F. Equipment Pvt. Ltd. India Indian Rupee 500,000 79.90%
33 PSM S.p.A. Italy Euro 1,000,000 99.90%
34 Trevi Energy S.p.A. Italy Euro 1,000,000 100%
35 Trevi Geotechnik Ges.m.b.H. Austria Euro 100,000 99.80%
36 Trevi Panamericana S.A. Republic of Panama Balboa 10,000 99.80%
37 Soilmec North America U.S.A. US Dollar 10 79.90%
113
COMPANY NAME REGISTERED
OFFICE CURRENCY SHARE CAPITAL
% HELD BY
THE GROUP
38 Soilmec Deutschland Gmbh Germany Euro 100,000 99.90%
39 Soilmec Investment Pty Ltd. Australia Australian Dollar 100 99.90%
40 Soilmec Australia Pty Ltd. Australia Australian Dollar 100 99.90%
41 Soilmec WuJiang Co. Ltd. China Renminbi 58,305,193 51%
42 Soilmec do Brasil S/A Brazil Real 5,500,000 38%
43 Trevi Asasat J.V. Libya Libyan Dinar 300,000 64.90%
44 Watson Inc. USA U.S.A. US Dollar 37,500 79.90%
45 Arabian Soil Contractors Saudi Arabia Saudi Riyal 1,000,000 84.80%
46 Galante Foundations S.A. Republic of Panama Balboa - 99.80%
47 Trevi Galante S.A. Colombia Colombian Peso 1,000,000,000 99.80%
48 Trevi Cimentacones y Consolidaciones S.A.
Republic of Panama Balboa 10,000 99.80%
49 Petreven S.p.A. Italy Euro 4,000,000 99.90%
50 Idt Llc United Arab
Emirates Dirham 1,000,000 99.80%
51 Idt Llc Fzc United Arab
Emirates Dirham 6,000,000 99.80%
52 Soilmec Algeria Algeria Algerian Dinar 1,000,000 69.90%
53 Drillmec OOC Russia Russian Ruble 153,062 99.90%
54 Drillmec International Sales Inc. U.S.A. US Dollar 2,500 99.90%
55 Watson International Sales Inc. U.S.A. US Dollar 2,500 79.90%
56 Perforazioni Trevi Energie B.V. The Netherlands Euro 18,000 99.90%
57 Trevi Drilling Services Saudi Arabia Saudi Riyal 7,500,000 51.00%
58 Trevi Foundations Saudi Arabia Co. Ltd. Saudi Arabia Saudi Riyal 500,000 99.80%
59 Petreven Perù SA Peru Nuevo Sol 11,216,041 99.90%
60 Petreven Chile S.p.A. Chile Chilean Peso 239,550,000 99.90%
61 Trevi Foundations Kuwait Kuwait Kuwait Dinar 100,000 99.80%
62 Trevi Foundations Denmark Denmark Danish Krone 2,000,000 99.80%
63 Trevi ITT JV Thailand Baht - 94.90%
64 Soilmec Colombia Sas Colombia Colombian Peso 335,433,812 99.90%
65 Petreven do Brasil Ltd Brazil Brazilian Real 1,000,000 99.90%
66 Galante Cimentaciones Sa Peru Nuevo Sol 3,000 99.80%
67 Trevi SpezialTiefBau GmbH Germany Euro 50,000 99.80%
68 Profuro Intern. L.d.a. Mozambique Metical 36,000,000 99.30%
69 Hyper Servicos de Perfuracao AS Brazil Brazilian Real 1,200,000 50.90%
70 Immobiliare SIAB S.r.l. Italy Euro 80,000 100%
71 Foundation Construction Nigeria Naira 28,006,440 80.20%
72 OJSC Seismotekhnika Belarus Belarusian Ruble 12,029,000 50.90%
73 Trevi Australia Pty Ltd Australia Australian Dollar 10 99.80%
74 Soilmec Singapore Pte Ltd Singapore Singaporean Dollar 100,109 99.90%
75 Trevi Icos Soletanche JV United States US Dollar - 54.90%
114
COMPANY NAME REGISTERED
OFFICE CURRENCY SHARE CAPITAL
% HELD BY
THE GROUP
76 TreviGeos Fundacoes Especiais Brazil Brazilian Real 5,000,000 50.90%
77 RCT Explore Colombia SAS Colombia Colombian Peso 960,248,914 99.80%
78 6V SRL Italy Euro 150,000 50.90%
79 Trevi Arabco J.V. Egypt Egyptian Pound - 50.90%
80 Trevi Holding USA United States USD 1 99.80%
81 Drillmec Messico S de RL de CV Mexico Mexican Peso - 99.60%
82 Trevi Chile S.p.A. Chile Chilean Peso 10,510,930 98.90%
83 Trevi Fondations Spéciales SAS France Euro 100,000 99.80%
115
Attachment 2
GROUP ORGANISATIONAL CHART
