Trevi Group - FIN · Trevi Group Initiation of coverage 3 keplercheuvreux.com Slow recovery ahead...

06 August 2013 Initiation of coverage

Trevi Group

Italy | Capital goods

Hold (None) Target price EUR 6.50

Current price EUR 6.36

Matteo Bonizzoni, CFA [email protected] +39 02 80 62 83 43

Slow recovery priced in

Reuters TFI.MI Bloomberg TFI IM Index DJ Stoxx 600

Market data

Market cap (EURm) 446

Free float 51%

No. of shares outstanding (m) 70

Avg. daily trading volume('000) 171

YTD abs performance 57.4%

52-week high (EUR) 7.20

52-week low (EUR) 3.48

FY to 31/12 (EUR) 2013E 2014E 2015E

Sales (m) 1,185.2 1,246.9 1,321.1

EBITDA adj (m) 119.8 132.9 147.3

EBIT adj (m) 56.3 65.3 75.2

Net profit adj (m) 13.8 18.4 24.9

Net fin. debt (m) 403.0 401.9 392.2

FCF (m) 23.2 16.0 29.0

EPS adj. and fully dil. 0.20 0.26 0.35

Consensus EPS 0.37 0.51 0.64

Net dividend 0.13 0.13 0.12

FY to 31/12 (EUR) 2013E 2014E 2015E

P/E (x) adj and ful. dil. 32.3 24.3 18.0

EV/EBITDA (x) 7.6 6.9 6.2

EV/EBIT (x) 16.2 14.0 12.1

FCF yield (%) 5.2% 3.6% 6.5%

Dividend yield (%) 2.0% 2.0% 1.9%

Net debt/EBITDA (x) 3.5 3.2 2.8

Gearing (%) 90.8% 88.7% 84.2%

ROIC (%) 3.5% 4.0% 4.8%

EV/IC (x) 1.1 1.1 1.1

Very favourable business conditions over 2006-08 (which boosted Trevi’s P&L with low working capital) stemmed from drivers that we do not expect to be repeated any time soon. We believe 2012 marked the bottom for Trevi’s business, but we factor in a slow recovery path with uninspiring FCF and deleverage. We initiate with Hold, EUR6.5TP.

Well-diversified player in special foundations and drilling Trevi Group’s core business is represented by its Trevi division(39% of 2013E sales), which boasts a strong footprint in special foundations services and engineering worldwide with solid track record in complex jobs. Trevi division is strongly integrated with Soilmec (20% of 2013E sales), active in foundations equipment. Leveraging on its mechanical expertise, the group has successfully expanded into onshore/offshore drilling machines/rigs through Drillmec (33% of 2013E sales), and then into drilling services, which are currently operated in Latam through its Petreven division (18% of 2013E sales).

Boom and bust - from here, main drivers point to slow recovery Trevi’s business is characterised by high cyclicality and capital intensity and mid-to-high execution risks. The company quadrupled its EBITDA in 2004-09, leading net profit from slightly above breakeven to >EUR80m. Exceptionally favourable (and hardly repeatable) market conditions in the Middle East (Dubai/Abu Dhabi) strongly contributed to this boom. Following the bust in 2010/12 (down to EUR11m net profit), exacerbated by adverse working capital dynamics and growing NFP, we expect recovery to start in 2013 at a slow pace, with minor deleverage.

We expect EBIT margin up 140bp by 2015 to 5.7% , half the peak We project a 6% CAGR 2012-15 on revenues, 10% on EBITDA, 32% on EPS, on the back of improving market conditions. We project EBIT margin to recover by 140bps over the period to 5.7%, still well below the peak touched in 2007 (12.4%) and more similar to 2004/05 levels. According to our sensitivity, upside to our base case could come from any awards of large jobs under tender mainly in the US, and higher growth for Drillmec.

Stock fully valued, trading at sizeable premium to peers We value Trevi through our DCF (WACC 8.3%, TG 2%, terminal EBIT margin 8.2%), which returns EUR6.5 TP. The stock looks fairly valued at current prices. Trevi also trades at stretched 20% (EV/EBITDA 13/15E) premium to its main peer Bauer, which has historically achieved very similar business dynamics and, on our estimates, looks set to do the same in 2013/15. Our best case valuation (higher intake for Trevi/Drillmec) points to EUR8ps.

IMPORTANT. Please refer to the last page of this report for “Important disclosures” and analyst(s) certifications

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Trevi Group Initiation of coverage

2 keplercheuvreux.com

Summary

Company profile The Trevi Group is active in four businesses 1) Trevi - foundations services (core business). In this division, Trevi operates in tunnel excavation, soil consolidation, recovery of polluted sites; 2) Petreven - drilling services; 3) Soilmec - foundation machinery; 4) Drillmec - drilling machinery. The company has a well-diversified geographic footprint

Management structure

Davide Trevisani Chairman

Stefano Trevisani CEO

Daniele Forti CFO

Key shareholders

Trevisani family 48.7%

EPS and PE FCF and Gearing Balance sheet structure, 2013E

Valuation

Base case We derive a EUR6.5ps TP through our DCF (WACC: 8.3%, TG: 2%), which is based on terminal EBIT margin (2022) = 8.5%, up from 4.7% 2013E.

Best case Assuming a steeper margin recovery with terminal EBIT margin of 10% (from 4.7% 2013E), we would derive a EUR8.4 FV.

Worst case In case of lower margin recovery and assuming a terminal 6.5% EBIT margin (from 4.7% in 2013E), we would derive a EUR4.5FV.

Target price

Risk to our rating Main risks: 1) higher/lower than expected margin recovery, driven by better/worse conditions in the reference markets; 2) higher/lower than expected deleverage, mainly deriving from working capital dynamics.

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Slow recovery ahead well priced The very favourable business dynamics seen in 2006/2008, which boosted P&L

with low working capital, were based on drivers that we do not expect to be

repeated any time soon. We believe 2012 marked the bottom for Trevi’s

business, but factor in a slow recovery path with uninspiring FCF and deleverage.

The stock looks well priced: we initiate with Hold, EUR6.5 TP.

Well positioned in a diversified, niche business…

Company profile and geographical diversification With c EUR1.2bn revenues (2013E), the Trevi Group is active in foundation and drilling

services and machinery. Its business model relies on integration between its four divisions:

Trevi (foundation services; 39% of 2013E sales). This division, which represents

the core business, operates in the execution of specialised works in the field of

underground engineering, including tunnel excavation, soil consolidation, dam

repairs and recovery of polluted sites.

Soilmec (foundation machinery; 20% of 2013E sales), which manufactures plants

and rigs that are used for foundation engineering.

Petreven (drilling services, 9% of 2013E sales): as a drilling contractor, this

division operates onshore and offshore drilling rig engineering & management

services. Petreven currently operates 14 HH (hydraulic) rigs in Latam.

Drillmec (drilling machinery, 32% of 2013E sales), which manufactures onshore

and, as a more recent diversification, offshore Oil & Gas (both conventional and

HH/hydraulic) and water rigs.

Trevi boasts a well-diversified geographic exposure: we expect the largest region in 2013

to be LatAm, where the company is active with all its four divisions and to which Petreven

has exclusive exposure. We expect Middle East to represent 21% of 2013E revenues, still

down sharply from 35/40% in 2008/09 when several large and very profitable contracts

were under execution, notably in Dubai, Abu Dhabi and Qatar. We expect Italy to account

for just 7% of total revenues, down sharply from 17% (2007), due to the ongoing slump in

new infrastructure building in the country. We expect the US to represent 10% of 2013E

sales.

Four divisions, strongly integrated

Broad geographical diversification



Chart 1: Sales by region 2013E Chart 2: Sales by region 2007-13E

Source: Kepler Cheuvreux Source: Trevi, Kepler Cheuvreux

Chart 3: Foundations/drilling services -presence

Chart 4: Foundations/drilling machinery - presence

Source: Kepler Cheuvreux Source: Kepler Cheuvreux

Peers and competitive environment In foundation services, Trevi ranks no4 worldwide after the UK-listed Keller (which, unlike

Trevi, has high exposure to the US non-residential market), Soletanche-Bachy (part of the

French Vinci) and the German Bauer, which we consider the closest peer in terms of job

specialisation.

Italy 7%

Europe 15%

North America

10%

South America

24%

Africa 14%

Middle East 21%

Far East/RoW

9%

No4 worldwide in special foundations services



Chart 5: Special foundations – 2012 revenues EURm (left) and EBIT margin (right)

Source: Company data (EBIT margin not disclosed for Soletanche Bachy), Kepler Cheuvreux

In foundation equipment (Soilmec division), Trevi ranks second with EUR236m revenues in

2012, less than half the level of Bauer (EUR596m), which however also includes Drilling

machines in this division. Taking Soilmec+Drillmec, Trevi’s turnover in 2012 was

EUR583m, quite in line with Bauer. Unlike foundation services, which is quite concentrated

and with medium to high entry barriers (execution track record required; job complexity

typically high), the foundation machinery competitive arena suffers from lower entry

barriers and looks increasingly fragmented. In particular, apart from smaller established

European competitors, price competition from emerging Asian players is on the rise, which

exacerbated margin pressure in the 2008-2012 downturn.

In drilling machinery (Drillmec) and Services (Petreven), Trevi is a very small player by size.

Drillmec’s main competitor is the US major National Oilwell Varco, which is worldwide

leader in onshore/offshore drilling rigs. However, in the last five years Drillmec has

considerably strengthened from a technological point of view, through the development of

the “HH series”, which benefits from the know-how developed by Soilmec in hydraulic

foundation machinery. The HH hydraulics rigs have better performance, smaller

dimensions, greater flexibility and lower logistic/transport costs than conventional rigs.

Overall, >350 Drillmec rigs are operating worldwide. The recent entry into the offshore

segment and growing penetration of key clients (eg Pemex) bode well for Drillmec,

supporting our above-average growth expectations for this division (2013E +12% YOY,

2014 +6%, 2015 +7%), with potential upside in case of major contract awards. We believe

Drillmec could benefit from the high potential for customisation and flexibility embedded

in its solutions, which might help it to grab market share from big established players

focused on a more traditional and standardised approach. Petreven, on the other hand,

operates 14 rigs in Latam: after strong growth from 2005 (4 rigs operated) to 2012 (14

rigs), the development of this division has recently slowed, as attractive margins (EBITDA

margin in the 18-20% range) are coupled to high capital intensity.

Overall, we expect Services to account for 48% of revenues in 2013 but for a much higher

69% of consolidated EBITDA.

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Keller Soletanche Bauer Trevi - specialfoundations

No2 worldwide in foundations equipment… … low entry barriers

Smaller player in drilling machinery and services

Drillmec to drive growth in 2013/15: technological expertise, favourable outlook



Chart 6: Sales by division 2013E Chart 7: EBITDA by division 2013E


…with high cyclicality and capital intensity

Main drivers for backlog and profitability: past and future We highlight the following main drivers for Trevi’s business:

The Construction side of the business (Trevi and Solimec divisions) is mostly

dependent on infrastructure spending worldwide. In fact, Trevi is not exposed to

residential, while non-residential (commercial) forms a very small part.

The Oil&Gas side of the business (Drillmec and Petreven) relies on capex

spending in the industry. The readiness of clients (traditionally conservative) to

switch to less traditional/higher technological content solution is also an

important driver for Drillmec’s future growth.

Overall, barring a decline in 2009 after the boom in 2005/08, Trevi has constantly

increased its backlog and order intake over time, keeping a healthy book-to-bill at >1x.

However, we point out that taking order backlog as a proxy for economic performance and

profitability would have been totally misleading, as it would have prevented the capture of

the key drivers of major profitability swings.

Chart 8: Sound backlog performance…

Chart 9: …not a good proxy for profitability


Services - Foundation

(TREVI) 39%

Services - Drilling

(PETREVEN) 9%

Machinery - Foundations (SOILMEC)

20%

Machinery - Drilling

(DRILLMEC) 32%

Services 69%

Machinery 31%

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Backlog (right) Intake (left) Revenues (left) Book to bill (right)

Main business drivers Backlog evolution not a good proxy for profitability



In fact, the sharp profitability decline that drove EBIT margin from >11% in 2007/09 to

4.3% in 2012 was driven by two main issues:

1. The end of very lucrative (and in our view “one-off”) projects in the Middle East.

Trevi has been present in Middle East for a long time through its Swissboring

subsidiary and it benefited from the construction, boom particularly in Dubai,

suffering strongly from the subsequent downturn of 2008. As per Chart 2, the

declining weight of Middle East in the overall turnover was coupled with

increases in Latam and North America: while intake and turnover were well

protected, the adverse mix impact was significant: EBIT margin in services fell

from 15% in 2009 to 5.6% in 2012, entirely due to the Trevi division as Petreven

kept resilient margins over the period (breakdown not officially disclosed).

2. A massive profitability decline in Machinery, with EBIT margin down from the

peak of 13.7% in 2007 to just 2.8% in 2012. Also in this case, the breakdown

between Soilmec and Drillmec is not officially disclosed, but we believe most of it

was driven by Soilmec, which kept relatively resilient revenues over the period

but suffered from huge price competition, also driven by growing competition

from newcomers (Asian players).

Chart 10: Machinery profitability suffered most

Chart 11: Capital employed up, ROCE down sharply


Margin deterioration was only a part of the story, as its detrimental impact on ROCE was

greatly exacerbated by strong growth in capital employed, which almost trebled from

EUR0.3bn in 2007 to >EUR0.8bn in 2012. This was largely driven by working capital

deterioration: in fact NWC grew from c EUE0.1bn (2007) to c EUR0.5bn (2005), despite

increasing resort to non-recourse factoring. This trend was driven by a mix of longer

payment terms for clients (higher receivables), higher inventories (notably at Soilmec) and

lower advance payments.

Trevi versus peer Bauer: historical and expected trends very similar We have compared Trevi’s operating trends with those of Bauer, its closest listed

competitor based in Germany. P&L trends (2007 = 100) were very similar: both companies

posted growing revenues over 2007-12 and declining profitability, and we (KECH

estimates for both companies) still expect similar trends for 2013-15 in our base case, with

potential for Trevi to outperform Bauer in the event of significant intake by Drillmec.

Capital employed deterioration was much greater for Trevi: as such, its initial ROCE

Booming profitability of 2007/09 unlikely to be repeated any time soon

2010/12: growing capital employed + declining profitability = strong ROCE deterioration

Trevi vs. Bauer: similar past and expected trends



premium (2007: c 30% Trevi, c 20% Bauer) faded over time. We expect post-tax ROCE to

have bottomed to c 5% for both companies in 2012, with a mild recovery to 7/8% in 2015.

Chart 12: Trevi vs Bauer: very similar P&L trends

Chart 13: Trevi vs Bauer: ROCE/capital employed trend


Table 1: SWOT analysis

STRENGTHS WEAKNESSES Well established positioning/track record Capital intensive business (fixed + working capital) Technological expertise High financial leverage, patchy FCF generation Broad geo diversification smoothes risks Outsourcing lower fixed costs

OPPORTUNITIES THREATS Drillmec: further market share gain leveraging on HH technology and newly built penetration in offshore

Trevi division: mid to high execution risks in complex jobs

Trevi: sizeable order opportunities, mostly in the US, Middle East Soilmec: growing competition from Asian players Anaemic recovery in developed countries in infra-spending Weaker USD vs. Euro

Source: Kepler Cheuvreux

Recovery and some deleveraging ahead, at a slow pace

Good old days (2007-09) not expected to return any time soon We project a 6% CAGR 2012/15 on revenues, 9% on EBITDA and 32% on net profit

(starting from low absolute figures). We expect EBIT margin to have bottomed in FY 2012

at 4.3%, but we project a quite uninspiring 140bps cumulative margin expansion to 5.7% in

FY 2015. This is well below peaks of >11% touched in 2007/09, when: 1) the Trevi division

was benefiting from positive infrastructure spending across all geographic areas and in

particular from hefty and in effect “one-off” profitability in the Middle East (Dubai, Abu

Dhabi and Qatar); 2) Soilmec too was running healthy margins (and low inventory levels), in

a much less harsher competitive environment. At this time, we do not expect such

favourable business conditions to be repeated in the period 2013/15. In the Valuation

section, we have in any case drafted a best case scenario, including a sensitivity analysis in

We flag the downward guidance revision issued by Bauer on 2 August. Bauer, which revised

its EBIT guidance down from EUR85m to EUR70m, blamed “delays in major projects in the

Construction area, reduced margins in the Equipment segment”. While this looks quite

company-specific, particularly as regards special foundations, nevertheless it points to a

continued weak environment for the Trevi and Soilmec division in the next few quarters.

Bottom in 2012

We project 6% CAGR 2012/15 on revenues, 9% on EBITDA, 32% on net profit

Bauer: recent guidance downgrade

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Table 2: Divisional sales, order intake, order backlog 2007-15E

Intake FY07

Sales FY07

Backlog FY07

Intake FY08

Sales FY08

Backlog FY08

Intake FY09

Sales FY09

Backlog FY09

Intake FY10

Sales FY10

Backlog FY10

Intake FY11

Sales FY11

Backlog FY11

Intake FY12

Sales FY12

Backlog FY12

Intake FY13E

Sales FY13E

Backlog FY13E

Intake FY14E

Sales FY14E

Backlog FY14E

Intake FY15E

Sales FY15E

Backlog FY15E

Trevi (Foundation services) 358 456 495 420 404 453 467 488 512 YOY 11% 28% 9% -15% -4% 12% 3% 4.5% 5% Petreven (Drilling services) 47 65 65 80 99 109 111 114 117 YOY 69% 39% 1% 22% 23% 11% 2% 2% 3% Interco -3 -3 -6 -6 -7 -5 Total services 517 401 432 787 518 701 336 554 483 540 493 530 694 495 729 557 558 728 573 578 723 602 602 722 644 630 737 YOY 49% 11% 37% 52% 29% 62% -57% 7% -31% 61% -11% 10% 28% 0% 38% -20% 13% 0% 3% 4% -1% 5% 4% 0% 7% 5% 2% Solimec (Foundations machinery) 281 319 187 202 222 236 241 255 273 YOY 62% 14% -41% 8% 10% 6% 2% 6% 7% Drillmec (Drilling machinery) 194 289 310 288 379 349 391 414 443 YOY 62% 49% 8% -7% 31% -8% 12% 6% 7% Interco -10 -1 -1 -5 -4 -2 Total machinery 421 465 277 738 607 408 386 496 298 445 485 258 622 597 284 642 583 342 674 632 385 715 670 430 765 717 478 YOY -5% 50% -14% 75% 31% 47% -48% -18% -27% 15% -2% -13% 40% 23% 10% 3% -2% 21% 5% 8% 12% 6% 6% 12% 7% 7% 11% Elisions -24 -24 0.0 -56 -56 0.0 -15 -15 0.0 -26 -26 0.0 -31 -31 -30 -26 -35 -25 -35 -25 -35 -25 Total 914 842 709 1469 1069 1109 708 1036 781 960 953 788 1286 1061 1013 1169 1115 1070 1213 1185 1097 1282 1247 1152 1374 1321 1215 YOY 19% 30% 11% 61% 27% 56% -52% -3% -30% 36% -8% 1% 34% 11% 28% -9% 5% 6% 4% 6% 3% 6% 5% 5% 7% 6% 5%

Source: Trevi, Kepler Cheuvreux

Table 3: Divisional EBITDA and EBIT 2007-15E

FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E

Services – EBITDA margin 16.2% 18.3% 24.7% 19.4% 14.5% 14.4% 14.5% 15.4% 15.6% Machinery – EBITDA margin 15.5% 12.9% 9.2% 9.0% 8.3% 5.4% 6.0% 6.3% 7.2% Services -EBIT margin 11.2% 13.3% 15.0% 11.6% 7.6% 5.6% 6.0% 6.7% 7.0% Machinery – EBIT margin 13.7% 11.4% 7.3% 6.3% 5.9% 2.8% 3.5% 3.9% 4.6% Services - EBITDA 65 95 137 96 72 80 84 93 98 Machinery - EBITDA 72 78 46 44 50 31 38 42 52 Other/Elisions -3 -7 -1 -2 -2 0 -2 -2 -3 EBITDA total 134 166 182 137 119 112 120 133 147 Margin 15.9% 15.6% 17.6% 14.4% 11.2% 10.1% 10.1% 10.7% 11.1% Services - EBIT 45 69 83 57 38 31 35 40 44 Machinery - EBIT 64 69 36 31 35 16 22 26 33 Other/elisions -5 -10 -2 -3 -4 0 -1 -1 -2 EBIT Total 104 128 117 84 69 47 56 65 75 Margin 12.4% 11.9% 11.3% 8.8% 6.5% 4.3% 4.7% 5.2% 5.7%




Table 4: P&L 2004-15E

EURm 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

Revenues 372.4 506.8 675.3 878.9 1201.8 1095.3 942.2 1137.6 1157.6 1227.2 1291.9 1366.1 YOY 36.1% 33.3% 30.1% 36.7% -8.9% -14.0% 20.7% 1.8% 6.0% 5.3% 5.7% Costs (249.3) (357.4) (485.1) (623.3) (888.6) (748.2) (632.3) (825.2) (822.3) (876.4) (919.7) (968.9) on revenues 65.3% 69.4% 71.0% 69.8% 73.1% 68.3% 67.1% 72.5% 71.0% 71.4% 71.2% 70.9% Labour (81.5) (94.0) (104.7) (121.6) (146.9) (165.3) (172.6) (193.5) (223.0) (232.0) (241.4) (251.2) on revenues 22.2% 18.9% 16.3% 14.4% 13.7% 16.0% 18.1% 18.2% 20.0% 19.6% 19.4% 19.0% EBITDA 41.6 55.3 85.6 134.0 166.3 181.8 137.3 119.0 112.3 119.8 132.9 147.3 EBITDA margin 11.4% 11.1% 13.3% 15.9% 15.6% 17.6% 14.4% 11.2% 10.1% 10.1% 10.7% 10.8% YOY 33.0% 54.9% 56.5% 24.1% 9.3% -24.5% -13.3% -5.6% 6.7% 11.0% 10.8% Provisions (5.6) (6.1) (3.6) (3.6) (6.3) (22.3) (7.6) (3.3) (15.6) (8.0) (8.0) (9.0) Amortisation (1.4) (1.7) (1.9) (2.1) (2.6) (3.4) (3.6) (4.3) (5.3) (6.3) (6.8) (7.4) Depreciation (16.2) (18.8) (22.0) (24.3) (29.8) (38.8) (41.7) (42.1) (43.9) (49.2) (52.8) (55.7) D&A on rev. 4.7% 4.0% 3.5% 3.0% 2.7% 3.8% 4.8% 4.4% 4.4% 4.7% 4.8% 4.8% EBIT 18.4 28.7 58.1 104.0 127.6 117.4 84.3 69.3 47.5 56.3 65.3 75.2 EBIT margin 5.0% 5.8% 9.0% 12.4% 11.9% 11.3% 8.8% 6.5% 4.3% 4.7% 5.2% 5.7% YOY 56.2% 102.4% 79.0% 22.7% -8.0% -28.1% -17.8% -31.5% 18.6% 16.1% 15.1% Net fin. charges (8.8) (3.4) (15.5) (18.1) (18.4) (12.7) (14.1) (18.0) (26.5) (25.7) (24.7) (23.8) Pre tax profit 9.6 25.3 42.6 85.9 109.2 104.6 70.2 51.3 21.0 30.5 40.6 51.3 Taxes (6.4) (11.6) (14.7) (28.0) (31.8) (20.4) (24.5) (24.2) (9.5) (14.7) (19.5) (23.1) Tax rate 67% 45.8% 34.4% 32.7% 29.1% 19.5% 34.9% 47.2% 45.2% 48.0% 48.0% 45.0% Total net profit 3.1 13.7 27.9 57.8 77.4 84.2 45.7 27.1 11.5 15.9 21.1 28.2 Minorities (0.6) (0.9) (1.2) (2.0) (2.7) (2.0) 0.7 (1.4) (0.7) (2.1) (2.7) (3.4) Net Profit 2.5 12.8 26.8 55.8 74.7 82.2 46.4 25.7 10.8 13.8 18.4 24.9 Net margin 0.7% 2.6% 4.2% 6.6% 7.0% 7.9% 4.9% 2.4% 1.0% 1.2% 1.5% 1.9% YOY 412.8% 108.7% 108.6% 33.8% 10.0% -43.6% -44.6% -58.0% 27.9% 33.0% 35.3%


We project NWC/sales stabilisation, slow deleveraging ahead On our estimates, NWC/sales should continue to decline slightly, following the peak

touched in 2010, on the back of gradually improving payment terms from clients and

assuming some improvement in advance payments. Coupled to profitability recovery from

the 2012 bottom, this should enable NFP/EBITDA to improve from 3.7x (2012) to 2.7x

(2015E).

We project NFP/EBITDA down from 3.7x (2012) to 2.7x (2015E)



Table 5: Balance sheet 2004-15E

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

Intangibles 3.8 4.06 4.9 5.4 6.1 13.7 18.4 20.5 28.0 27.7 26.9 25.4 Tangibles 154.3 168.19 192.4 207.4 294.4 319.8 323.8 339.6 339.5 356.3 363.5 372.8 Stakes/other 8.3 14.1 20.8 22.9 31.8 34.4 41.8 38.0 47.0 47.0 47.0 47.0 Fixed assets 166.3 186.3 218.2 235.6 332.3 367.9 384.0 398.2 414.5 430.9 437.3 445.2 Inventories 91.9 120.3 118.3 164.1 321.4 348.3 234.9 292.6 264.2 292.3 307.5 318.5 Due from clients 6.6 14.2 7.9 58.1 97.5 88.1 88.9 93.5 99.1 Receivables 140.9 183.5 236.1 254.1 378.1 360.3 401.8 571.3 461.7 470.8 488.5 506.7 Other 6.1 9.5 7.9 10.3 24.0 35.2 30.5 30.5 42.1 45.0 47.4 50.2 .Current assets 239.0 313.2 362.3 435.1 737.6 751.6 725.2 992 856.1 897.0 936.9 974.5 Payables (135.5) (215.2) (218.4) (290.5) (442.1) (279.9) (270.9) (463.9) (335.6) (384.2) (415.7) (451.3) Other (5.2) (11.4) (12.1) (29.5) (25.8) (33.5) (24.4) (26.9) (28.5) (30.7) (32.2) (33.9) Current liabilities (140.7) (226.6) (230.4) (320.0) (468.0) (313.4) (295.4) (490.8) (364.1) (414.9) (447.9) (485.2) NWC 98.3 86.6 131.8 115.1 269.7 438.2 429.9 501.1 492.0 482.2 489.0 489.3 % on sales 26.4% 17.1% 19.5% 13.1% 22.4% 40.0% 45.6% 44.1% 42.5% 39.3% 37.8% 35.8% Severance Pay (12.6) (14.2) (16.1) (14.8) (15.4) (16.8) (16.9) (17.9) (19.3) (19.3) (19.3) (19.3) Other funds (23.1) (30.7) (30.7) (29.7) (29.2) (29.6) (34.4) (39.1) (41.9) (46.9) (51.9) (56.9) Total Funds (35.8) (44.8) (46.7) (44.5) (44.6) (46.4) (51.3) (57.0) (61.2) (66.2) (71.2) (76.2) Capital employed 228.9 228.1 303.3 306.2 557.4 759.7 762.6 842.3 845.3 846.9 855.1 858.3 Financed by : Equity 77.2 97.2 122.0 156.5 226.4 302.2 354.2 425.8 419.3 420.7 427.3 436.8 Minorities 3.7 4.8 5.4 7.0 8.9 13.7 12.4 12.1 12.5 23.1 25.9 29.3 Total equity 80.9 102.1 127.4 163.5 235.3 315.9 366.5 437.9 431.9 443.9 453.2 466.1 Short-term debt 92.2 82.1 68.8 61.2 192.3 216.0 250.3 279.4 359.9 173.4 168.6 162.7 Long-term debt 90.4 95.5 197.1 172.3 218.8 341.1 280.4 288.2 243.5 404.6 393.3 379.6 Cash (34.5) (51.4) (89.9) (90.8) (88.1) (112.0) (134.7) (162.6) (189.9) (189.9) (189.9) (189.9) Other (0.2) (0.2) (0.2) (0.1) (1.0) (1.4) 0.0 (0.5) (0.1) 14.9 29.9 39.9 NFP 148.0 126.0 175.9 142.7 322.1 443.8 396.1 404.5 413.4 403.0 401.9 392.2 NFP/Equity (x) 1.83 1.23 1.38 0.87 1.37 1.40 1.08 0.92 0.96 0.91 0.89 0.84 NFP/EBITDA (x) 3.56 2.28 2.05 1.06 1.94 2.44 2.89 3.40 3.68 3.36 3.02 2.66


Chart 14: NWC/Sales and NWC/EBITDA to have peaked in 2010/2012 respectively


10%

15%

20%

25%

30%

35%

40%

45%

50%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014E 2015E

NFP/EBITDA (left) NWC/Sales (right)



The capital intensity of Trevi’s business was reflected in organic FCF absorption in past

years, particularly in 2008/09 when high capex was coupled with NWC deterioration.

Going forward, we assume: 1) capex 2013/15 to stabilise around EUR70m, still above D&A;

2) NWC outflow to stop. Under these assumptions, we expect equity FCF in the EUR16-

29m range in 2013/15 (FCF yield: 3.8-6.9%). Assuming DPS to remain flat at EUR0.13ps

over the period, this should be just enough to allow for a minor deleverage.

Table 6: Cash flow 2005-15E

2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

EBIT 29 58 104 128 117 84 69 47 56 65 75 Depreciation 19 22 24 30 39 42 42 44 49 53 56 Amortisation 8 6 6 9 26 11 8 21 14 15 16 Total sources 55 86 134 167 182 137 119 112 120 133 147 Taxes -12 -15 -28 -32 -20 -25 -24 -9 -15 -19 -23 Capex -24 -44 -34 -122 -80 -52 -72 -73 -66 -66 -71 Change in NWC 12 -45 17 -155 -169 8 -71 9 10 -7 0 Total uses -24 -104 -45 -309 -269 -68 -168 -74 -71 -92 -94 Net fin. charges -3 -15 -18 -18 -13 -14 -18 -26 -26 -25 -24 FCF 28 -34 71 -160 -100 55 -67 12 23 16 29 Convertible 0 0 0 0 0 0 45 0 0 0 0 Dividends -1 -2 -3 -6 -8 -8 -9 -9 -9 -9 -9

Other -5 -15 -34 -13 -14 0 23 -12 -4 -7 -12

Cash flow from other -6 -16 -37 -19 -21 -7 59 -21 -13 -15 -19 Delta NFP 25 -48 48 -196 -125 43 -6 -18 22 1 10 NFP (debt)/Cash -126 -176 -143 -322 -444 -396 -404 -413 -403 -402 -392


We believe D&A and financial charges are underestimated by consensus While we are quite aligned with consensus on revenues and EBITDA, we believe most

contributors are failing to capture growing D&A and financial charges going forward.

Hence, we are positioned 16-17% below EBIT consensus and a material 27-42% below on

net profit over the period.

Table 7: Our estimates versus Bloomberg consensus

EURm 2012 2013 KECH

2013 BBG

delta 2014 KECH

2014 BBG

delta 2015 KECH

2015 BBG

delta CAGR 2012/15

KECH

CAGR 2012/15

BBG

Revenues 1115 1185 1191 0% 1247 1256 -1% 1321 1331 -1% 6% 6% EBITDA 112 120 124 -3% 133 136 -2% 147 148 0% 9% 10% Margin 10.1% 10.1% 10.4% 10.7% 10.8% 11.1% 11.1% EBIT 47 56 67 -16% 65 79 -17% 75 90 -16% 17% 24% Margin 4.3% 4.7% 5.6% 5.2% 6.3% 5.7% 6.8% Net profit 11 14 24 -42% 18 30 -39% 25 34 -27% 32% 47% NFP 413 403 403 0% 402 390 3% 392 378 4%

Source: Bloomberg, Kepler Cheuvreux

High capital intensity to stay, but we project NWC/Sales to stabilise

We are aligned to consensus on sales/EBITDA, but remain materially below on EPS



Initiating with Hold, TP EUR6.5

DCF returns EUR6.5 fair value We value Trevi at EUR6.5 per share (downside: -3%) through our DCF (WACC: 8.3%, TG:

2%). We assume EBIT margin to recover from 4.7% (2013) to 8.5% in the terminal year, well

below the 12.4% peak touched in 2007. As the stock is trading in full valuation territory, we

rate it a Hold.

Table 8: DCF valuation

EURm 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E Terminal

EBIT 56 65 75 102 105 115 119 126 129 138 EBIT margin 4.7% 5.2% 5.7% 7.5% 7.5% 8.0% 8.0% 8.2% 8.3% 8.5% Taxes on EBIT (27) (31) (34) (43) (44) (49) (50) (53) (54) (58) tax rate 48% 48% 45% 42% 42% 42% 42% 42% 42% 42% NOPAT 29 34 41 59 61 67 69 73 75 80 80 D&A (56) (60) (63) (54) (56) (58) (59) (61) (63) (65) Gross operating cash flow 85 94 104 114 117 125 128 134 138 142 Change in net working capital 11 (6) 1 (14) (15) (15) (16) (16) (16) (17) Adj. for down-payments 0 0 0 0 0 0 0 0 0 0 Net operating cash flow 95 88 105 99 102 110 113 118 122 128 Capex (66) (66) (71) (55) (57) (58) (60) (62) (64) (66) FCF 29 22 34 44 46 51 53 56 58 62 80 WACC 8.3% TG 2% Discounted cash flow 29 19 28 34 32 33 32 31 29 28 ∑ discounted cash flow 29 48 76 109 142 175 206 238 267 296 A. ∑ discounted cash flow 13-22 296 34% Terminal value 1,290 Implied EV/EBITDA TV 6.3x Implied EV/EBIT TV 9.2x B. discount. terminal value 607 66% A+B. enterprise value 903 100% NFP of FY2012A (413) Employee's benefits (19) Minorities as of FY2011E (23) Equity Value 448 No of shares (m) 70.4 Fair value - EURps 6.5 upside +2%


DCF sensitivity to margin recovery/terminal EBIT margin The following table reports our valuation sensitivity to terminal EBIT margin, which is quite

huge also in light of high financial leverage (NFP is 47% of current EV): in fact, each 100bps

of margin swing in the terminal year drives a 17% swing in the equity value. If we assume

terminal EBIT margin up to 12.4% (2007 peak), the stock would be worth EUR11.1ps, 71%

above our base case.

Our DCF points to EUR6.5ps

DCF: high sensitivity to terminal EBIT margin



Table 9: DCF valuation sensitivity to terminal EBIT margin

EBIT margin - terminal year Fair value - EURps delta vs. base case

4.3% (no recovery vs. 2012) 1.8 -68% 5.2% 3.3 -49% 6.2% 4.4 -32% 7.2% 5.5 -15% 8.2% 6.5 0% 9.2% 7.6 17% 10.2% 8.7 34% 11.2% 9.8 52% 12.4% (return to 2007 peak) 11.1 71%


Trading multiples: peer comparison We have compared Trevi with its two listed peers in special foundations, Bauer (Germany)

and Keller (UK), and with its closest peer in drilling, National Oilwell Varco (US). Trevi is

trading at a sizeable premium to its peers, particularly on P/E.

Table 10: Peer comparison

P/E (x) EV/EBITDA (x) EV/EBIT (x) 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E

Bauer 10.9 8.3 6.9 6.1 5.6 5.1 13.1 11.1 9.7 Keller 16.2 13.8 12.3 7.1 6.1 5.7 11.3 9.2 9.1 Average Special Foundations 13.6 11.1 9.6 6.6 5.9 5.4 12.2 10.2 9.4 National Oilwell Varco (NOV) 12.8 10.9 9.7 7.5 6.5 6.0 9.1 7.7 7.1 Trevi 32.3 24.3 18.0 7.6 6.9 6.2 16.2 14.0 12.1 Trevi vs Construction 138% 119% 86% 13% 15% 11% 28% 33% 24% Trevi vs NOV 154% 123% 89% 2% 6% 3% 72% 75% 64%

Source: Bloomberg, Kepler Cheuvreux

SOP by division points to EUR5.2 fair value We have also built a SOP valuation by division, centred on 2014E, applying 5.9x

EV/EBITDA as the average of Bauer and Keller to the special foundation business

(Trevi+Soilmec divisions) and 6.5x EV/EBITDA (in line with NOV) to the Drilling business.

Our divisional SOP returns a EUR5.2ps fair value (downside: -18%).

Table 11: SOP by division

EURm EBITDA 2014E EV/EBITDA 2014E EV/Equity Value 2014E

Foundations (Trevi+Soilmec), est 69 5.9x 403.7 Drilling (Drillmec+Petreven), est 64 6.5x 415.6 EV 819.2 NFP (401.9) Pension (19.3) Minorities (31.8) Equity value 366.2 Number of shares 70.2 FV per share (EUR) 5.2 downside -18%


Trading multiples: Trevi trading at premium to peers

SOP by division points to EUR5.2ps



Best case valuation: “what if” extra EUR450m intake H2 2013E-2015E? Finally, we have carried out a sensitivity analysis assuming a best-case scenario for order

intake, with the following assumptions: 1) EUR450m additional order intake in the Special

Foundations division in H2 2013-2015, related to potential big projects under tender in the

US (dam repairs) or at Drillmec, mostly related to more successful penetration with key

clients (eg. Pemex) and in the offshore segment, in which penetration was more recent, and

where potential intake opportunities might be sizeable; 2) these orders bring an average

20% EBITDA margin, well above the divisional average. The impact on 2015 would be quite

sizeable, as sales would be boosted by 12%, EBITDA by 22% and EPS by a huge 67%.

Assuming such a scenario, we would derive a EUR8ps FV based on 5.5x EV/EBITDA 2015E

(upside: 25%), a hefty 52% above our base case SOP.

Table 12: Best case valuation – “what if” additional EUR450m intake is collected in 2013/15 (Trevi and/or Drillmec)?

EURm 2013 2014 2015

Intake base case 1213 1282 1374 EBITDA 2015 best 179 Intake best case 1363 1432 1524 EV/EBITDA 15 5.5x Delta 12.4% 11.7% 10.9% EV 986 Revenues base case 1185 1247 1321 NFP (360) Revenues best case 1215 1387 1481 Pension (19) Delta 2.5% 11.2% 12.1% Minorities (49) EBITDA base case 120 133 147 Equity value 559 EBITDA best case 126 161 179 Number of shares 70.2 Delta 5.0% 21.1% 21.7% SOP best case-EURps 8.0 Net profit base case 14 18 25 upside 25% Net profit best case 17 33 41 SOP base case-EURps 5.2 Delta 22.6% 79.3% 67.0% delta vs base case 52%


Best case valuation: “what if EUR450m extra intake in H213/FY15?” – points to EUR8ps



Valuation

FY to 31/12 (EUR) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Per share data EPS adjusted 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % Change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% EPS adjusted and fully diluted 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % Change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% EPS reported 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % Change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% EPS Consensus 0.37 0.51 0.64 Cash flow per share -0.60 -0.31 1.67 0.08 1.22 1.27 1.17 1.42 Book value per share 3.54 4.72 5.53 6.07 5.97 5.99 6.09 6.22

DPS 0.12 0.12 0.13 0.13 0.13 0.13 0.13 0.12 Number of shares, YE (m) 64.0 64.0 64.0 70.2 70.2 70.2 70.2 70.2 Number of shares, fully diluted, YE (m) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Share price Latest price / year end 7.4 11.0 10.8 4.9 4.0 6.4 6.4 6.4 52 week high (Year high) 17.4 12.8 13.2 11.3 6.6 7.2 52 week low (Year low) 6.4 4.4 8.5 4.8 3.2 4.2 Average price (Year) 12.5 8.8 11.3 8.8 4.6 6.4 Enterprise value (EURm)

Market capitalisation 798.7 563.3 726.2 618.5 326.3 446.4 446.4 446.4 Net financial debt 322.1 443.8 396.1 404.5 413.4 403.0 401.9 392.2 Pension provisions 15.4 16.8 16.9 17.9 19.3 19.3 19.3 19.3 Market value of minorities 8.9 13.7 12.4 12.1 12.5 23.1 25.9 29.3 Market value of equity affiliates (net of tax)

15.4 16.8 16.9 17.9 19.3 19.3 19.3 19.3

Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Enterprise value 1,160.5 1,054.3 1,168.5 1,070.9 790.9 911.3 912.9 906.6 Valuation P/E adjusted 10.7 6.9 15.7 24.1 30.2 32.3 24.3 18.0 P/E adjusted and fully diluted 10.7 6.9 15.7 24.1 30.2 32.3 24.3 18.0 P/E consensus 17.2 12.5 9.9

P/BV 3.5 1.9 2.1 1.5 0.8 1.1 1.0 1.0 P/CF na na 6.8 na 3.8 5.0 5.4 4.5 Dividend yield (%) 1.0% 1.4% 1.1% 1.5% 2.8% 2.0% 2.0% 1.9% Dividend yield preference shares (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% FCF yield (%) na na 7.6% na 3.8% 5.2% 3.6% 6.5% ROE (%) 37.4% 29.8% 13.6% 6.4% 2.5% 3.2% 4.1% 5.4% ROIC (%) 20.4% 14.3% 7.3% 4.6% 3.1% 3.5% 4.0% 4.8% EV/Sales 1.1 1.0 1.2 1.0 0.7 0.8 0.7 0.7 EV/EBITDA 7.0 5.8 8.5 9.0 7.0 7.6 6.9 6.2



Income statement

FY to 31/12 (EURm) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Sales 1,069.2 1,035.8 953.0 1,061.4 1,115.3 1,185.2 1,246.9 1,321.1 % Change 27.0% -3.1% -8.0% 11.4% 5.1% 6.3% 5.2% 5.9% EBITDA reported 166.3 181.8 137.3 119.0 112.3 119.8 132.9 147.3 % Change 24.1% 9.3% -24.5% -13.3% -5.6% 6.7% 11.0% 10.8% Depreciation and amortisation -32.4 -42.2 -45.3 -46.3 -49.2 -55.5 -59.6 -63.1 Goodwill impairment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other financial result and associates -6.3 -22.3 -7.6 -3.3 -15.6 -8.0 -8.0 -9.0 EBIT reported 127.6 117.4 84.3 69.3 47.5 56.3 65.3 75.2

% Change 22.7% -8.0% -28.1% -17.8% -31.5% 18.6% 16.1% 15.1% Net financial items -17.2 -17.4 -14.1 -17.7 -21.6 -25.7 -24.7 -23.8 Associates 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 Others -1.3 4.7 -0.3 -0.3 -4.9 0.0 0.0 0.0 Earnings before tax 109.2 104.6 70.2 51.3 21.0 30.5 40.6 51.3 % Change 27.1% -4.2% -32.9% -26.9% -59.1% 45.5% 33.0% 26.5% Tax -31.8 -20.4 -24.5 -24.2 -9.5 -14.7 -19.5 -23.1 Net profit from continuing operations 77.4 84.2 45.7 27.1 11.5 15.9 21.1 28.2

% Change 33.8% 8.9% -45.7% -40.7% -57.6% 38.1% 33.0% 33.8% Net profit from discontinuing activities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net profit before minorities 77.4 84.2 45.7 27.1 11.5 15.9 21.1 28.2 Minorities -2.7 -2.0 0.7 -1.4 -0.7 -2.1 -2.7 -3.4 Net profit reported 74.7 82.2 46.4 25.7 10.8 13.8 18.4 24.9 % Change 33.8% 10.0% -43.6% -44.6% -58.0% 27.9% 33.0% 35.3% Adjustments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net profit adjusted 74.7 82.2 46.4 25.7 10.8 13.8 18.4 24.9 % Change 33.8% 10.0% -43.6% -44.6% -58.0% 27.9% 33.0% 35.3%

Gross profit 323.7 347.1 309.9 312.4 335.3 350.8 372.3 397.2 EBITDA adjusted 166.3 181.8 137.3 119.0 112.3 119.8 132.9 147.3 EBIT adjusted 127.6 117.4 84.3 69.3 47.5 56.3 65.3 75.2 Gross profit margin (%) 30.3% 33.5% 32.5% 29.4% 30.1% 29.6% 29.9% 30.1% EBITDA margin (%) 15.6% 17.6% 14.4% 11.2% 10.1% 10.1% 10.7% 11.1% EBIT margin (%) 11.9% 11.3% 8.8% 6.5% 4.3% 4.7% 5.2% 5.7% Net profit margin (%) 7.0% 7.9% 4.9% 2.4% 1.0% 1.2% 1.5% 1.9% Tax rate (%) 29.1% 19.5% 34.9% 47.2% 45.2% 48.0% 48.0% 45.0% Payout ratio (%) 11.3% 10.3% 9.3% 19.7% 35.5% 84.5% 66.1% 49.7%

EPS reported (EUR) 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% EPS adjusted (EUR) 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% EPS adj and fully diluted(EUR) 1.17 1.28 0.72 0.37 0.15 0.20 0.26 0.35 % change 33.8% 10.0% -43.6% -49.5% -58.0% 27.9% 33.0% 35.3% DPS (EUR) 0.12 0.12 0.13 0.13 0.13 0.13 0.13 0.12 % change 20.0% 0.0% 8.3% 0.0% 0.0% 0.0% 0.0% -7.4% DPS,preference shares (EUR) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 % Change na na na na na na na na

Consensus Sales (EURm) 1,195.0 1,267.4 1,325.0 Consensus EBITDA (EURm) 126.0 141.0 153.0 Consensus EBIT (EURm) 72.5 87.0 97.2 Consensus EPS (EUR) 0.37 0.51 0.64 Consensus DPS (EUR) 0.13 0.13 0.14



Cash flow statement

FY to 31/12 (EURm) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Net profit before minorities 77.4 84.2 45.7 27.1 11.5 15.9 21.1 28.2 Depreciation and amortisation 32.4 42.2 45.3 46.3 49.2 55.5 59.6 63.1 Goodwill impairment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Change in working capital -154.6 -168.5 8.3 -71.3 9.1 9.8 -6.8 -0.4 Others 6.3 22.3 7.6 3.3 15.6 8.0 8.0 9.0 Cash Flow from operating activities -38.5 -19.8 107.0 5.5 85.4 89.2 82.0 100.0 % Change na na na -94.9% 1454.2% 4.5% -8.2% 22.0% Capex -122.2 -80.4 -51.9 -72.4 -73.2 -66.0 -66.0 -71.0

Free cash flow -160.7 -100.2 55.1 -66.9 12.3 23.2 16.0 29.0 % Change na na na na na 89.3% -31.4% 81.9% Acquisitions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Divestments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 Dividend paid -6.3 -7.7 -7.7 -9.1 -9.1 -9.1 -9.1 -9.1 Share buy back 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 Capital increases 0.0 0.0 0.0 45.0 0.0 0.0 0.0 0.0 Others -12.8 -13.8 0.3 22.6 -12.1 -3.8 -5.7 7.6 Change in net financial debt -179.8 -121.7 47.7 -8.4 -8.9 10.4 1.1 29.5 Change in cash and cash equivalents -1.8 24.3 21.4 28.5 26.9 -15.0 -15.0 -10.0

Attributable FCF -160.7 -100.2 55.1 -66.9 12.3 23.2 16.0 29.0 Cash flow per share (EUR) -0.60 -0.31 1.67 0.08 1.22 1.27 1.17 1.42 % Change na na na -95.3% 1454.2% 4.5% -8.2% 22.0% FCF per share (EUR) na na 0.86 na 0.17 0.33 0.23 0.41 % Change na na na na na 89.3% -31.4% 81.9% Capex / Sales (%) 11.4% 7.8% 5.4% 6.8% 6.6% 5.6% 5.3% 5.4% Capex / D&A (%) 377.1% 190.6% 114.5% 156.2% 148.7% 118.9% 110.7% 112.4% Cash flow / Sales (%) -3.6% -1.9% 11.2% 0.5% 7.7% 7.5% 6.6% 7.6%

FCF / Sales (%) -15.0% -9.7% 5.8% -6.3% 1.1% 2.0% 1.3% 2.2% FCF Yield (%) na na 7.6% na 3.8% 5.2% 3.6% 6.5% Unlevered FCF Yield (%) na na 3.9% na 3.1% 3.0% 2.5% 3.4%



Balance sheet

FY to 31/12 (EURm) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Cash and cash equivalents 89.0 113.3 134.7 163.1 190.0 175.0 160.0 150.0 Inventories 321.4 348.3 234.9 292.6 264.2 292.3 307.5 318.5 Accounts receivable 378.1 360.3 401.8 571.3 461.7 470.8 488.5 506.7 Other current assets 38.1 43.0 88.5 128.1 130.2 133.9 140.9 149.3 Current assets 826.7 864.9 859.9 1,155.1 1,046.1 1,072.0 1,096.9 1,124.5 Tangible assets 294.4 319.8 323.8 339.6 339.5 356.3 363.5 372.8 Goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other Intangible assets 6.1 13.7 18.4 20.5 28.0 27.7 26.9 25.4 Financial assets 31.8 34.4 41.8 38.0 47.0 47.0 47.0 47.0

Other non-current assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Non-current assets 332.3 367.9 384.0 398.2 414.5 430.9 437.3 445.2 Short term debt 192.3 216.0 250.3 279.4 359.9 173.4 168.6 162.7 Accounts payable 442.1 279.9 270.9 463.9 335.6 384.2 415.7 451.3 Other short term liabilities 25.8 33.5 24.4 26.9 28.5 30.7 32.2 33.9 Current liabilities 660.3 529.4 545.7 770.2 724.0 588.3 616.5 647.8 Long term debt 218.8 341.1 280.4 288.2 243.5 404.6 393.3 379.6 Pension provisions 15.4 16.8 16.9 17.9 19.3 19.3 19.3 19.3 Other long term provisions 29.2 29.6 34.4 39.1 41.9 46.9 51.9 56.9 Other long term liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Non-current liabilities 263.3 387.5 331.7 345.2 304.7 470.8 464.5 455.8

Shareholders' equity 226.4 302.2 354.2 425.8 419.3 420.7 427.3 436.8 Minority interests 8.9 13.7 12.4 12.1 12.5 23.1 25.9 29.3 Total equity 235.3 315.9 366.5 437.9 431.9 443.9 453.2 466.1 Balance sheet total 1,159.0 1,232.8 1,243.9 1,553.3 1,460.6 1,503.0 1,534.2 1,569.7 % Change 52.2% 6.4% 0.9% 24.9% -6.0% 2.9% 2.1% 2.3% Book value per share (EUR) 3.54 4.72 5.53 6.07 5.97 5.99 6.09 6.22 % Change 44.7% 33.5% 17.2% 9.6% -1.5% 0.3% 1.6% 2.2% Net debt 337.5 460.6 413.0 422.4 432.7 422.3 421.2 411.6

Net financial debt 322.1 443.8 396.1 404.5 413.4 403.0 401.9 392.2 Trade working capital 257.4 428.7 365.8 399.9 390.4 378.9 380.2 374.0 Working capital 269.7 438.2 429.9 501.1 492.0 482.2 489.0 489.3 Inventories/sales 30.1% 33.6% 24.6% 27.6% 23.7% 24.7% 24.7% 24.1% Invested capital 564.1 758.0 753.6 840.8 831.5 838.5 852.5 862.1 Net debt / EBITDA (x) 2.0 2.5 3.0 3.6 3.9 3.5 3.2 2.8 Net debt / FCF (x) -2.1 -4.6 7.5 -6.3 35.3 18.2 26.4 14.2 Gearing (%) 136.9% 140.5% 108.1% 92.4% 95.7% 90.8% 88.7% 84.2% Goodwill / Equity (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%



Divisions and regions

FY to 31/12 (EUR) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Key assumptions

Sales by division Foundations 517.8 554.2 493.4 495.4 557.8 578.4 602.2 629.5 Drlling 607.2 496.4 485.4 596.7 583.2 631.8 669.7 716.6 Intercoy -55.8 -14.9 -25.9 -30.7 -26.0 -25.0 -25.0 -25.0 EBIT by division Foundations 94.8 136.9 95.7 71.8 80.3 83.9 92.7 98.2 Drlling 78.3 45.7 43.7 49.5 31.5 37.9 42.2 51.6 Intercoy -6.8 -0.8 -2.1 -2.4 0.5 -2.0 -2.0 -2.5 EBIT margin (%) Foundations (%) 18.3% 24.7% 19.4% 14.5% 14.4% 14.5% 15.4% 15.6% Drlling (%) 12.9% 9.2% 9.0% 8.3% 5.4% 6.0% 6.3% 7.2%

Geographic breakdown of sales, adjusted (%) Eurozone 28.7% 18.0% 19.0% 24.1% 24.1% 24.1% 24.1% 24.1% of which Italy 12.0% 12.7% 13.7% 11.5% 11.5% 11.5% 11.5% 11.5% North America 8.6% 11.2% 15.8% 14.8% 14.8% 14.8% 14.8% 14.8% Latam 11.1% 11.8% 18.3% 30.9% 30.9% 30.9% 30.9% 30.9% Asia 5.2% 3.9% 5.3% 8.0% 8.0% 8.0% 8.0% 8.0% Middle East 34.0% 40.7% 30.9% 15.7% 15.7% 15.7% 15.7% 15.7% Currency exposure of sales (%) EUR 28.7% 18.0% 19.0% 24.1% 24.1% 24.1% 24.1% 24.1% USD 71.3% 82.0% 81.0% 75.9% 75.9% 75.9% 75.9% 75.9%

Hedging policy none


Research ratings and important disclosures Disclosure checklist - Potential conflict of interests Stock ISIN Disclosure (See Below) Currency Price

Bauer DE0005168108 nothing to disclose EUR 17.94

Keller GB0004866223 nothing to disclose GBP 1,100.00

Trevi Group IT0001351383 nothing to disclose EUR 6.36

Vinci FR0000125486 nothing to disclose EUR 40.81

Source: Factset closing prices of 02/08/2013 Stock prices: Prices are taken as of the previous day’s close (to the date of this report) on the home market unless otherwise stated.

Key:

Kepler Capital Markets SA (KCM) holds or owns or controls 100% of the issued shares of Crédit Agricole Cheuvreux SA (CA Cheuvreux), collectively hereafter KEPLER CHEUVREUX .

1. KEPLER CHEUVREUX holds or owns or controls 5% or more of the issued share capital of this company; 2. The company holds or owns or controls 5% or more of the issued share capital of Kepler Capital Markets SA; 3. KEPLER CHEUVREUX is or may be regularly carrying out proprietary trading in equity securities of this company; 4. KEPLER CHEUVREUX has been lead manager or co-lead manager in a public offering of the issuer’s financial instruments during the last twelve months; 5. KEPLER CHEUVREUX is a market maker in the issuer’s financial instruments; 6. KEPLER CHEUVREUX is a liquidity provider in relation to price stabilisation activities for the issuer to provide liquidity in such instruments; 7. KEPLER CHEUVREUX acts as a corporate broker or a sponsor or a sponsor specialist (in accordance with the local regulations) to this company; 8. KEPLER CHEUVREUX and the issuer have agreed that KEPLER CHEUVREUX will produce and disseminate investment research on the said issuer as a service to the issuer; 9. KEPLER CHEUVREUX has received compensation from this company for the provision of investment banking or financial advisory services within the previous twelve months; 10. KEPLER CHEUVREUX may expect to receive or intend to seek compensation for investment banking services from this company in the next three months; 11. The author of, or an individual who assisted in the preparation of, this report (or a member of his/her household), or a person who although not involved in the preparation of the report had or could reasonably be expected to have access to the substance of the report prior to its dissemination has a direct ownership position in securities issued by this company; 12. An employee of KEPLER CHEUVREUX serves on the board of directors of this c ompany; 13. As at the end of the month immediately preceding the date of publication of the research report Kepler Capital Markets, Inc. beneficially owned 1% or more of a class of common equity securities of the subject company; 14. KEPLER CHEUVREUX and UniCredit Bank AG have entered into a Co-operation Agreement to form a strategic alliance in connection with certain services including services connected to investment banking transactions. UniCredit Bank AG provides investment banking services to this issuer in return for which UniCredit Bank AG received consideration or a promise of consideration. Separately, through the Co-operation Agreement with UniCredit Bank AG for services provided by KEPLER CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also received consideration or a promise of a consideration in accordance with the general terms of the Co-operation Agreement; 15. KEPLER CHEUVREUX and Crédit Agricole Corporate & Investment Bank (“CACIB”) have entered into a Co-operation Agreement to form a strategic alliance in connection with certain services including services connected to investment banking transactions. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration. Separately, through the Co-operation Agreement with CACIB for services provided by KEPLER CHEUVREUX in connection with such activities, KEPLER CHEUVREUX also received consideration or a promise of a consideration in accordance with the general terms of the Co-operation Agreement; 16. UniCredit Bank AG holds or owns or controls 5% or more of the issued share capital of KEPLER CAPITAL MARKETS SA. UniCredit Bank AG provides investment banking services to this issuer in return for which UniCredit Bank AG received consideration or a promise of consideration; 17. CACIB holds or owns or controls 15% of more of the issued share capital of KEPLER CAPITAL MARKETS SA. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration; 18. An employee of UniCredit Bank AG serves on the board of directors of KEPLER CAPITAL MARKETS SA; 19. Two employees of CACIB serves on the board of directors of KEPLER CAPITAL MARKETS SA. CACIB provides investment banking services to this issuer in return for which CACIB received consideration or a promise of consideration; 20. The services provided by KEPLER CHEUVREUX are provided by Kepler Equities S.A.S., a wholly-owned subsidiary of KEPLER CAPITAL MARKETS SA.

Rating history:

KEPLER CHEUVREUX current rating for Trevi Group is Hold and was issued on 06/08/2013.

We did not disclose the rating to the issuer before its publication and dissemination.

Rating ratio Kepler Cheuvreux Q2 2013 Rating breakdown A B Buy 52.5% 0.0% Hold 23.5% 0.0% Reduce 23.5% 0.0% Not Rated/Under Review/Accept Offer 0.5% 0.0% Total 100.0% 0.0% Source: Kepler Cheuvreux A: % of all research recommendations B: % of issuers to which Investment Banking Services are supplied

From 9 May 2006, KEPLER CHEUVREUX’s rating system consists of three ratings: Buy, Hold and Reduce. For a Buy rating, the minimum expected upside is 10% in absolute terms over 12 months. For a Hold rating the expected upside is below 10% in absolute terms. A Reduce rating is applied when there is expected downside on the stock. Target prices are set on all stocks under coverage, based on a 12-months view. Equity ratings and valuations are issued in absolute terms, not relative to any given benchmark.

Analyst disclosures The functional job title of the person(s) responsible for the recommendations contained in this report is Equity Research Analyst unless otherwise stated on the cover.

Name of the Equity Research Analyst(s): Matteo Bonizzoni, CFA

Regulation AC - Analyst Certification: Each Equity Research Analyst(s) listed on the front-page of this report, principally responsible for the preparation and content of all or any identified portion of this research report hereby certifies that, with respect to each issuer or security or any identified portion of the report with respect to an issuer or security that the equity research analyst covers in this research report, all of the views expressed in this research report accurately reflect their personal views about those issuer(s) or securities. Each Equity Research Analyst(s) also certifies that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that equity research analyst in this research report.

Each Equity Research Analyst certifies that he is acting independently and impartially from KEPLER CHEUVREUX shareholders, directors and is not affected by any current or potential conflict of interest that may arise from any KEPLER CHEUVREUX activities.

Analyst Compensation: The research analyst(s) primarily responsible for the preparation of the content of the research report attest that no part of the analyst’(s’) compensation was, is or will be, directly or indirectly, related to the specific recommendations expressed by the research analyst’s(s’) in the research report. The research analyst’s(s’) compensation is, however, determined by the overall economic performance of KEPLER CHEUVREUX.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of KEPLER CHEUVREUX, which is a non-US affiliate and parent company of Kepler Capital Markets, Inc. a SEC registered and FINRA member broker-dealer. Equity Research Analysts


employed by KEPLER CHEUVREUX, are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of Kepler Capital Markets, Inc. and may not be subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

Please refer to www.keplercheuvreux.com for further information relating to research and conflict of interest management.

Regulators

Location Regulator Abbreviation

Kepler Capital Markets S.A - France Autorité des Marchés Financiers AMF Kepler Capital Markets, Sucursal en España Comisión Nacional del Mercado de Valores CNMV Kepler Capital Markets, Frankfurt branch Bundesanstalt für Finanzdienstleistungsaufsicht BaFin Kepler Capital Markets, Milan branch Commissione Nazionale per le Società e la Borsa CONSOB Kepler Capital Markets, Amsterdam branch Autoriteit Financiële Markten AFM Kepler Capital Markets, Zurich branch Swiss Financial Market Supervisory Authority FINMA Kepler Capital Markets, Inc. Financial Industry Regulatory Authority FINRA Kepler Capital Markets, London branch Financial Conduct Authority FCA Kepler Capital Markets, Vienna branch Austrian Financial Services Authority FMA Crédit Agricole Cheuvreux, SA - France Autorité des Marchés Financiers AMF Crédit Agricole Cheuvreux España S.V Comisión Nacional del Mercado de Valores CNMV Crédit Agricole Cheuvreux Niederlassung Deutschland Bundesanstalt für Finanzdienstleistungsaufsicht BaFin Crédit Agricole Cheuvreux S.A., branch di Milano Commissione Nazionale per le Società e la Borsa CONSOB Crédit Agricole Cheuvreux Amsterdam Autoriteit Financiële Markten AFM Crédit Agricole Cheuvreux Zurich Branch Swiss Financial Market Supervisory Authority FINMA Crédit Agricole Cheuvreux North America, Inc. Financial Industry Regulatory Authority FINRA Crédit Agricole Cheuvreux International Limited Financial Conduct Authority FCA Crédit Agricole Cheuvreux Nordic AB Finansinspektionen FI

Kepler Capital Markets S.A and Crédit Agricole Cheuvreux SA, are authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers.

For further information relating to research recommendations and conflict of interest management please refer to www.keplercheuvreux.com..


Legal and disclosure information Other disclosures

This product is not for retail clients or private individuals.

The information contained in this publication was obtained from various publicly available sources believed to be reliable, but has not been independently verified by KEPLER CHEUVREUX. KEPLER CHEUVREUX does not warrant the completeness or accuracy of such information and does not accept any liability with respect to the accuracy or completeness of such information, except to the extent required by applicable law.

This publication is a brief summary and does not purport to contain all available information on the subjects covered. Further information may be available on request. This report may not be reproduced for further publication unless the source is quoted.

This publication is for information purposes only and shall not be construed as an offer or solicitation for the subscription or purchase or sale of any securities, or as an invitation, inducement or intermediation for the sale, subscription or purchase of any securities, or for engaging in any other transaction. This publication is not for private individuals.

Any opinions, projections, forecasts or estimates in this report are those of the author only, who has acted with a high degree of expertise. They reflect only the current views of the author at the date of this report and are subject to change without notice. KEPLER CHEUVREUX has no obligation to update, modify or amend this publication or to otherwise notify a reader or recipient of this publication in the event that any matter, opinion, projection, forecast or estimate contained herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. The analysis, opinions, projections, forecasts and estimates expressed in this report were in no way affected or influenced by the issuer. The author of this publication benefits financially from the overall success of KEPLER CHEUVREUX.

The investments referred to in this publication may not be suitable for all recipients. Recipients are urged to base their investment decisions upon their own appropriate investigations that they deem necessary. Any loss or other consequence arising from the use of the material contained in this publication shall be the sole and exclusive responsibility of the investor and KEPLER CHEUVREUX accepts no liability for any such loss or consequence. In the event of any doubt about any investment, recipients should contact their own investment, legal and/or tax advisers to seek advice regarding the appropriateness of investing. Some of the investments mentioned in this publication may not be readily liquid investments. Consequently it may be difficult to sell or realise such investments. The past is not necessarily a guide to future performance of an investment. The value of investments and the income derived from them may fall as well as rise and investors may not get back the amount invested. Some investments discussed in this publication may have a high level of volatility. High volatility investments may experience sudden and large falls in their value which may cause losses. International investing includes risks related to political and economic uncertainties of foreign countries, as well as currency risk.

To the extent permitted by applicable law, no liability whatsoever is accepted for any direct or consequential loss, damages, costs or prejudices whatsoever arising from the use of this publication or its contents.

KEPLER CHEUVREUX (and its affiliates) have implemented written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research business, which are available upon request. The KEPLER CHEUVREUX research analysts and other staff involved in issuing and disseminating research reports operate independently of KEPLER CHEUVREUX Investment Banking business. Information barriers and procedures are in place between the research analysts and staff involved in securities trading for the account of KEPLER CHEUVREUX or clients to ensure that price sensitive information is handled according to applicable laws and regulations.

Country and region disclosures

United Kingdom: This document is for persons who are Eligible Counterparties or Professional Clients only and is exempt from the general restriction in section 21 of the Financial Services and Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is being distributed in the United Kingdom only to persons of a kind described in Articles 19(5) (Investment professionals) and 49(2) (High net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. Any investment to which this document relates is available only to such persons, and other classes of person should not rely on this document.

United States: This communication is only intended for, and will only be distributed to, persons residing in any jurisdictions where such distribution or availability would not be contrary to local law or regulation. This communication must not be acted upon or relied on by persons in any jurisdiction other than in accordance with local law or regulation and where such person is an investment professional with the requisite sophistication to understand an investment in such securities of the type communicated and assume the risks associated therewith.

This communication is confidential and is intended solely for the addressee. It is not to be forwarded to any other person or copied without the permission of the sender. This communication is provided for information only. It is not a personal recommendation or an offer to sell or a solicitation to buy the securities mentioned. Investors should obtain independent professional advice before making an investment.

Notice to U.S. Investors: This material is not for distribution in the United States, except to “major US institutional investors” as defined in SEC Rule 15a-6 ("Rule 15a-6"). Kepler Cheuvreux refers to Kepler Capital Markets, Société anonyme (S.A.) (“Kepler Capital Markets SA”) and its affiliates, including CA Cheuvreux, Société Anonyme (S.A.). Kepler Capital Markets SA has entered into arrangements with Crédit Agricole Cheuvreux North America, Inc. (“CA Cheuvreux North America”) and Kepler Capital Markets, Inc. ("KCM, Inc.") (collectively “US Broker-Dealers”), which enables this report to be furnished to certain U.S. recipients in reliance on Rule 15a-6 through US Broker-Dealers registered under the U.S. Securities Exchange Act of 1934, as amended.

Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of the US Broker-Dealer that provided the report. Under no circumstance should you direct orders to CA Cheuvreux North America as payment for products or services provided by KCM, Inc. In turn, under no circumstance should you direct orders to KCM, Inc. as payment for products or services provided by CA Cheuvreux North America.

CA Cheuvreux North America is a broker-dealer registered with the Securities and Exchange Commission ("SEC"), a member of the Financial Industry Regulatory Authority ("FINRA"), the New York Stock Exchange ("NYSE") and the Securities Investor Protection Corporation ("SIPC"). You can reach CA Cheuvreux North America at 1301 Avenue of the Americas, 15th floor, New York, NY 10019, phone (212) 492-8800; Equity trading: (212) 492-8825. Further information is also available at www.cheuvreux.com.

KCM, Inc.is a broker-dealer registered with the SEC, a member of FINRA and SIPC. You can reach KCM, Inc. at 600 Lexington Avenue, New York, NY 10022, phone (212) 710-7606; Equity trading: 212-710-7602. Further information is also available at www.keplercapitalmarkets.com.

You may obtain information about SIPC, including the SIPC brochure, by contacting SIPC directly at 202-371-8300; website: http://www.sipc.org.

CA Cheuvreux North America is a wholly owned subsidiary of Crédit Agricole Cheuvreux S.A. which is, in turn, owned by Kepler Capital Markets SA. As part of the ownership of Crédit Agricole Cheuvreux S.A., Kepler Capital Markets SA is entitled to distribute certain financial research produced by Crédit Agricole Cheuvreux S.A.

KCM, Inc. is a wholly owned subsidiary of Kepler Capital Markets SA. Kepler Capital Markets SA, registered on the Paris Register of Companies with the number 413 064 841 (1997 B 10253), whose registered office is located at 112 avenue Kléber, 75016 Paris, is authorised and regulated by both Autorité de Contrôle Prudentiel (ACP) and Autorité des Marchés Financiers (AMF).

http://www.cheuvreux.com/

http://www.keplercapitalmarkets.com/

http://www.sipc.org/


The US Broker-Dealers are under common ownership, but operate independently in the US. In this regard, US Broker-Dealers are the distributors of this research publication in the United States. Commissions are not shared between US Broker-Dealers (directly or indirectly).

Nothing herein excludes or restricts any duty or liability to a customer that US Broker-Dealers have under applicable law. Investment products provided by or through US Broker-Dealers are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution, may lose value and are not guaranteed by the entity that published the research as disclosed on the front page and are not guaranteed by US Broker-Dealers.

Investing in non-U.S. Securities may entail certain risks. The securities referred to in this report and non-U.S. issuers may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Rule 144A securities may be offered or sold only to persons in the U.S. who are Qualified Institutional Buyers within the meaning of Rule 144A under the Securities Act. The information available about non-U.S. companies may be limited, and non-U.S. companies are generally not subject to the same uniform auditing and reporting standards as U.S. companies. Securities of some non-U.S. companies may not be as liquid as securities of comparable U.S. companies. Securities discussed herein may be rated below investment grade and should therefore only be considered for inclusion in accounts qualified for speculative investment.

Analysts employed by Kepler Capital Markets SA, a non-U.S. broker-dealer, are not required to take the FINRA analyst exam. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position.

In jurisdictions where US Broker-Dealers are not registered or licensed to trade in securities, or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements.

The information in this publication is based on sources believed to be reliable, but US Broker-Dealers do not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author's judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice.

US Broker-Dealers or their affiliates may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance.

US Broker-Dealers and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company's actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company's products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.

France: This publication is issued and distributed in accordance with Articles L.544-1 and seq and R. 621-30-1 of the Code Monétaire et Financier and with Articles 313-25 to 313-27 and 315-1 and seq of the General Regulation of the Autorité des Marchés Financiers (AMF).

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Italy: This document is issued by Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano, authorised in France by the Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel (ACP) and registered in Italy by the Commissione Nazionale per le Società e la Borsa (CONSOB) and is distributed by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.), authorised in France by the AMF and the ACP and registered in Italy by CONSOB. This document is for Eligible Counterparties or Professional Clients only as defined by the CONSOB Regulation 16190/2007 (art. 26 and art. 58).Other classes of persons should not rely on this document. Reports on issuers of financial instruments listed by Article 180, paragraph 1, letter a) of the Italian Consolidated Act on Financial Services (Legislative Decree No. 58 of 24/2/1998, as amended from time to time) must comply with the requirements envisaged by articles 69 to 69-novies of CONSOB Regulation 11971/1999. According to these provisions Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)warns on the significant interests of Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)indicated in Annex 1 hereof, confirms that there are not significant financial interests of Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the securities object of this report as well as other circumstance or relationship with the issuer of the securities object of this report (including but not limited to conflict of interest, significant shareholdings held in or by the issuer and other significant interests held by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)or other entities controlling or subject to control by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)in relation to the issuer) which may affect the impartiality of this document]. Equities discussed herein are covered on a continuous basis with regular reports at results release. Reports are released on the date shown on cover and distributed via print and email. Kepler Capital Markets, Milan branch and Crédit Agricole Cheuvreux S.A., branch di Milano analysts are not affiliated with any professional groups or organisations. All estimates are by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.)unless otherwise stated.

Spain: This document is only intended for persons who are Eligible Counterparties or Professional Clients within the meaning of Article 78bis and Article 78ter of the Spanish Securities Market Act. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This report has been issued by Kepler Capital Markets, Sucursal en España and Crédit Agricole Cheuvreux España S.V, registered in Spain by the Comisión Nacional del Mercado de Valores (CNMV) in the foreign investments firms registry and it has been distributed in Spain by it or by Kepler Capital Markets S.A and Crédit Agricole Cheuvreux, Société Anonyme (S.A.) authorised and regulated by both Autorité de Contrôle Prudentiel and Autorité des Marchés Financiers. There is no obligation to register neither file any report and any supplemental documentation or information with the CNMV. Neither verification nor authorisation or compliance revision by the CNMV regarding this document and related documentation or information needs to be fulfilled in accordance with the Spanish Securities Market Law (Ley del Mercado de Valores).

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Other countries: Laws and regulations of other countries may also restrict the distribution of this report. Persons in possession of this document should inform themselves about possible legal restrictions and observe them accordingly.

Local insight, European scale

Amsterdam Kepler Cheuvreux Benelux Johannes Vermeerstraat 9 1071 DK Amsterdam

+31 20 573 06 66

Frankfurt Kepler Cheuvreux Germany Taunusanlage 18 60325 Frankfurt

+49 69 756960

Geneva Kepler Cheuvreux SA Route de Crassier 11 1262 - Eysins Switzerland

+41 22361 5151

London Kepler Cheuvreux UK 12th Floor, Moorhouse 120 London Wall London EC2Y 5ET

+44 20 7621 5100

Madrid Kepler Cheuvreux Espana Alcala 95 28009 Madrid

+3491 4365100

Milan Kepler Cheuvreux Italia Corso Europa 2 20122 Milano

+39 02 855 07 1

Paris Kepler Cheuvreux France 112 Avenue Kleber 75016 Paris

+33 1 53653500

Stockholm Kepler Cheuvreux Nordic Regeringsgatan 38 10393 Stockholm

+468 723 5100

Vienna Kepler Cheuvreux Vienna Schottenring 16/2 Vienna 1010

+43 1 537 124 147

Zurich Kepler Cheuvreux Switzerland Stadelhoferstrasse 22 Postfach 8024 Zurich

+41 433336666

North America Boston Kepler Capital Markets, Inc 225 Franklin Street, Floor 26 Boston MA 02110 +1 617-295-0100

New York CA Cheuvreux North America

1301 Avenue of the Americas, Floor 15

New York, NY 10019

+1 212-492-8800

San Francisco Kepler Capital Markets, Inc 50 California Street, Suite 1500 San Francisco, CA 94111

+1 415-255-9802

New York Kepler Capital Markets, Inc. 600 Lexington Avenue, Floor 28 10022 New York, NY USA

+1 212-710-7600

Kepler Cheuvreux has exclusive international distribution rights for UniCredit’s CEE product.

Trevi Group - FIN · Trevi Group Initiation of coverage 3 keplercheuvreux.com Slow recovery ahead...

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