Engineering Group Company Profile by obr18219

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									             Engineering Group

                         Company Profile
    Results for the 1Q ended 31 March 2008



                                Armando Iorio
                                Niccolò Bossi

                                 15 May 2008



1
                                           Executive Summary




    1.   Forward looking statement

    2.   Overview

          a.   Success key factors
          b.   Engineering at a glance
          c.   Last M&A processes
          d.   The New Group
          e.   Restructuring Process

    3.   Economics and financials

          a.   1Q08 Results
          b.   Revenues target 2008-2010
          c.   Revenues breakdown
          d.   Profitability breakdown
          e.   Historical track record

    4.   Analysts coverage




2
                                                                 Forward Looking Statement




    This communication contains statements that constitute “forward-looking statements”, including, but
    not limited to, statements relating to the implementation of strategic initiatives and other statements
    relating to our future business development and economic performance. While these forward-looking
    statements represent our judgments and future expectations concerning the development of our
    business, a number of risks, uncertainties and other important factors could cause actual developments
    and results to differ materially from our expectations. These factors include, but are not limited to, (1)
    general market and macro-economic trends, (2) legislative developments, governmental and regulatory
    trends, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or
    creditworthiness of our customers, obligors and counterparties and developments in the markets in
    which they operate, (6) management changes and changes to our Business Group structure and (7)
    other key factors that we have indicated could adversely affect our business and financial performance
    which are contained in other parts of this document and in our past and future filings and reports.
    Engineering is not under any obligation to (and expressly disclaims any such obligations to) update or
    alter its forward-looking statements whether as a result of new information, future events, or otherwise.

    For additional information on such risks, we ask you to consult Engineering’s filings with Borsa Italiana
    and CONSOB and to consult applicable Italian laws.




3
                                                                 Success Key Factors




    Engineering has been coming as the First italian player in ICT italian market with a
    share of approximately 7%.
    That has been possible thanks to:


       Unique Business Model
       Investments in R&D and continuos training of human resources
       Deep insight of the Market (Finance, PA, Industry)
       Strong commitment with main italian customers
       Full openness at foreign challenges
       Feeling with M&A deals




4
                                                                                                                                                        At a glance (FY07)
    The Group

    Engineering, founded in the 1980s and headquartered in Rome, is a leading player in the Italian IT Sector.

    The Group, which is mainly focused on the domestic market, has gradually evolved from a pure system integrator to an Integrated IT Solutions and Services
    Provider, with a selected set of proprietary software products and strong presence in consulting and outsourcing (Application Management)

    The Company, listed in 2000 on Milan Stock Exchange (Star Segment), employs roughly 6500 professionals (after the acquisition of AOI) and 1400
    external resources, with operations in 28 sites in Italy and 3 abroad (Ireland, Belgium, Brasil).



     Consolidated financials                   2006      2007       07 - 06

     Net Revenues                         410.224      442,800       + 7.9%                                                                     System
                                                                                                                                                Integration




                                                                                               Research & Development
     Total Revenues                       425.630      457,100       + 7.4%




                                                                                                                        Training – ICT School
     EBITDA                                63.943       70,500      + 10.3%
                                                                                                                                                AM
     % on net revenues                        15,6%     15.9%
                                                                                                                                                                PA     Finance    Industry
     EBIT                                  52.256       58,300      + 11.5%
                                                                                                                                                Consultancy
     % on net revenues                        12,7%     13.2%

     EBT                                   51.354       52,164       + 1.6%

     % on net revenues                        12,5%     11,8%                                                                                   Products

     EAT                                   24.174       27,800      + 15.1%




    Market and Stoks                                      Tr. Multiples                       2007                                                   Shareholders

    Share outstanding (M)               12,5              MV/Sales (net)                      0.72x                                                  Cinaglia family   34.8%
    Current Share Price (€)             24.0              MV/EBITDA                           4.54x                                                  Amodeo family     31.9%
    Market Cap.                         300               MV/EBIT                             5.48x                                                  Generali          4.39%     Eurizon     2.05%
    Net debt                            19.8              P/E                                 10.8x                                                  Alleanza          2.32%     AXA         2.03%
    Market Value                        319.8                                                                                                        Bestinver Gest.   2.15%     Others<2%   20.0%



5
                                                                The M&A process (dec-07)


                                                               The transfer of shares was scheduled to occur by 2008
                                                               after the final outcome of the due-diligence process.

                                                               The deal has benn financed through a cash-down
                                                               payment of 15 mln € (2008-2009)
                                                               CONSOLIDATED BY May 2008



    4 December 2007
    Engineering signed a binding agreement for the
    acquisition of 100% of Xaltia SpA.


    12 December 2007                                           The acquisition was carried out through a single cash-
                                                               down payment for a total value of 45 million € for the
    Engineering and Atos Origin have signed definitive
                                                               100% of Atos Origin Italia.
    agreement whereby Engineering acquires the
    operations of Atos Origin in Italy.                        The company, debt free, brings 30mln of net fiscal
                                                               asset.

    13 December 2007                                           CONSOLIDATED BY February 2008 as Enginnering.it

    In the same time, Engineering disposed its participation
    in BIP-Business Integration Partners (60%) – 35mln €
    Vop, 6mln € Ebitda


                                                               The deal generated positive income thanks to 14.8
                                                               millions € of cash payment and 7.5 millions € of debt
                                                               left to new owners
                                                               DECONSOLIDATED BY January 2008

6
                             The New Group – Market positioning


    Company                 S&S VOP

    1.   IBM Italia         1.811       710 mln pro-forma
    2.   Accenture Italia   798
                                        Revenues 2007*

         ENGINEERING        710         6300 Employees

    3. Almaviva             707         1° System
                                        Integrator in Italy
    4. Microsoft            700
                                        3° player on
    5. HP Italia            512,8       Software and
    6. EDS Italia           499,9       Services market in
                                        Italy
    7. Engineering          457
                                        7% market share
    8. EDA                  295,5
    9. Atos Origin Italia   268
    10.Value Team           259,2                           Source: ComputerWorld Italia
                                            * Considering also the effect of Xaltia and BIP



7
                                                       The New Group – Worldwide exposure



                                                          UK
                                                           500
                                                          ,6
                                                                 9,300


                                                                 Italy
                                                                 3,100
    50 millions
                                                                                                     00
    Current foreign
    market value

    Argentina (Telecom Personal, Diasorin)
    Australia (IVECO, ENI)
    Austria (Coca Cola HBC)
    Belgium (Kraft)
    Brazil (TIM Celular)
    Congo (ENI)
    Czech Republic (Coca Cola HBC)                                       Russia (Whirlpool)
    Denmark (Cementir)                                                   Serbia (Telecom Srbija, Promonte GSM)
    Egypt (ENI)                                                          Slovakia (Whirlpool, ENEL)
    France (AO International, Autogrill, IKEA, FIAT)                     Spain (Whirlpool, Atos Origin Spain, Canon, FIAT)
    Germany (Kraft, Eurofighter)                                         Sweden (IKEA)
    Greece (Atos Origin Hellas, BAE Systems)                             Switzerland (Atos Origin Schweiz)
    Hungary (Coca Cola HBC)                                              Turkey (AVEA, FIAT)
    Portugal (Whirlpool)                                                 United States (ENI)
    Poland (Whirlpool, FIAT, Selenia)                                    United Kingdom (FIAT, Ferrero)
    Romania (Whirlpool)                                                  Venezuela (Digitel)




8
                                  The New Group – Main clients

    Client                 Rev.      Split by revenues

    Telecom Italia Group    70
                                               Top10 Clients
    MPS                     27
    IntesaSanPaolo Bank
       ENGINEERING          25
    Regione Sicilia         24
    FIAT                    18
                                                32 %
    ENI                     17
    Consip                  11         68 %

    Generali                10

    Unicredit                9

    Whirpool                 9
                                      Others
    Piaggio                  8
    Data in mln €                                                 Data in mln €
                                                       FY07 pro-forma estimate



9
                                                         The New Group (FY08E)



                             PAL
                    PAC                Finance   Services       Utilities           Industry            TELCO
                             & HC
     Research &
     Development
                    80,8    142,2      191,5      56,7            53,2                84,0                80,5




                                                                                                                          New operations coming from Atos acquisition
              System Integration & Consultancy

              Application Management

              Software

              ECM

              SAP

              Facility Management

             Automation Controls

                                                         Data in mln € FY08E considering full consolidation (12 months)


10
                                                      Restructuring process




     Main items


     Taking account of the process activated by Atos Origin in 2007:
     1. Displacement of some 65 managers spending (one-off) 10.6 mln€
        and gaining benefits by roughly 9 mln€ per year.
     2. Re-organization of the market divisions moving TELCO / Industry
        to Engineering.it and Finance / PA to Engineering.
     3. Making up of synergies thanks to the cross-selling of solutions in
        different markets.



11
                                                              Restructuring process




     Posted results                    1Q08       1Q08r      1Q08Group
      Net Revenues                     42         63*        161.7
      EBITDA                           2.2        4.4*       15.6
      Margin                           5.2%       7.0%       9.6%




      *Revenues are calculated considering 3 effective months
      *EBITDA is coming from:
      2.2mln € posted +
      750k € (february manager costs not to be considered for the next months)
      Reported over 3 months (2.95mln * 3 / 2 = 4.4)
12
                 Contacts




     Economics




13
                                                                                                    1Q08 results



      Value of Production             1Q2007   1Q2008   Change

      Net Revenues                      97.0    140.8
                                                                  Other key figures
      Others                             3.6      3.9
                                                                            1Q07               FY07                 1Q08
      Total Revenues                   100.6    144.7   + 43.9%

      Cost of production                                          NFP       (3.3)              5.1                  (19.8)*
      Raw materials and consumables      0.8      1.9
                                                                  People    --                 3888                 6331
      Services                          37.1     49.7

      Personnel                         49.4     78.6             Orders    107                --                   170
      Others                             0.8      1.1
                                                                  Backlog   --                 261                  417
      EBITDA                            12.5     13.4    + 7.3%

      % on net revenues                12.9%     9.5%

      Restructuring costs                0.0      5.2
                                                                  * NFP coming from:
      EBITDA                            12.5      8.2    -34.3%

      % on net revenues                12.9%     5.8%             5.1       at the end ’07
      EBIT                               9.9      4.7    -52.5%   (45)      Atos acquisition
      % on net revenues                10.2%     3.3%
                                                                  (7.2)     cash-out (restructuring)
      EBT                                9.6      3.9    -59.0%

      % on net revenues                 9.9%     2.8%             27.3      CASH-IN by operations

     Data in mln €
                                                                                                                    Data in mln €
                                                                                    * Employees counted after the disposal of BIP



14
                                                                Revenues breakdown

      Business Line                               Market


                                          442.8
                                                                                       442.8



                                  410,2   12.3%                                410,2
                                                                                       23.3%

                                  10,7%
                          373,8           14.7%                        373,8
                                                                               22,1%
                          10,2%   11,9%
                                                                       21,7%
                  309,8   12,8%                                309,8
                                                                                       38.3%
                                  25,2%   24.1%
                  29,0%                                        22,8%
                          27,5%                                                40,2%
     Revenues
                                                                       42,6%
      Software
                                                    Revenues
                                                               44,1%

      Consul.                                       Industry
                  71,0%           52,2%   48.9%
                                                                                       38.4%
                          49,5%                                                37,8%
        AM                                            PA
                                                                       35,7%
                                                               33,1%
      Syst.Int.                                     Finance



       Year        Y04     Y05    Y06     Y07        Year       Y04     Y05    Y06     Y07



                  mln €                                        mln €
15
                                                                                      Profitability breakdown

                                                                                             15.9%
     The figures show the ability of the Group to increase the
     profitability, thanks to the uptake of their strategic guidelines in
     terms of:                                                                      15,6%    70.5

       Developing the software business line;
       Getting synergies among the owned companies;                                  63,9
                                                                            14,2%
       Selling high value added services.
                                                                                             14.6%

                                                                             52,9
                                                                12,9%

                                                                                     17,5%

                                                                 40,1
                                                                            19,2%

                                                                                             17.2%

                                                                16,4%
                                          Group
                                          Margin                                     15,9%

                                                                            15,5%
                                          EBITDA
                                                                12,8%

                       Industry
                                          EBITDA                                             15.4%
                                          Margin                                     14,1%
                         PA               By Mkt
                                                                10,8%       11,2%

                       Finance


                                            Year                  Y04        Y05      Y06     Y07



                                                              mln €
16
                                                                 Historical – Value of Production



                                                                                                           457.1
     > Since the IPO, the Group has been showing
     the ability to growth year by year faster than
     the ICT Italian Market in general and the main                                                425,6
     competitors on the relevant market.                      CAGR
                                                                           14.3%
                                                              00 - 07
     > The average growth rate, roughly near to
     14%, is more than 7x the CAGR of the italian                                          388,3
     ICT market during the same period (2%).


                                                                                   322,3



                                                              276,1
                                                                                                           7.4%
                                                      256,5
                                                                                                   9,6%

                                            215,8                                          20,4%

                                                                                   16,7%
               Revenues          182,7
                                                              7,6%      IFRS
                                                      18,9%
                 Other
                 Rev.                       18,1%

                Growth
                T / (T-1)


                  Year            Y00        Y01      Y02     Y03                   Y04    Y05     Y06     Y07



                                 mln €


17
                                                         Historical – Net Revenues by Segment




                                                                                                        442,8


                                                                                                410,2
     > During the last 4 years the Finance Division,
     also thaks to the contribution of extraordinary
     deals (Nuova Trend), has been growing faster                                                       23.3%
     than PA and Industry.                                                              373,8
                                                                                                22,1%


                                                                                        21,7%
                                                                                309,8

                                                                                                        38.3%
                                                                 265,0          22,8%
                                                                                                40,2%
                                                         247,2
                                                                 22,2%                  42,6%
                                               211,4     19,3%

                                                                                44,1%
                Revenues           180,9       27,2%     36,3%   44,0%   IFRS
     Industry                      26,0%                                                                38.4%
                                               22,7%
                                                                                                37,8%
                                   24,9%
       PA         Break                                                                 35,7%
                  down                                   44,4%                  33,1%
                                               50,1%             33,8%
                                   49,1%
     Finance


                   Year             Y00         Y01       Y02    Y03             Y04     Y05    Y06     Y07

                                                 49,1%
                                  mln €


18
                                                                Historical – Orders & Backlog

                                                                                                        456



                                                                                            400


                                                                                371


                                                                  328
                                                    319
                                        305


                            277                                                                               261
                                                                          260         257
                                                          254
                                                                                                  248

                                              200
               212



                                  140




     Value
                       88


     Orders


     Backlog


      Year       Y00          Y01         Y02         Y03               Y04       Y05         Y06         Y07


               mln €


19
                                                                                      Historical – NFP
                                                                             > The NFP has been steady decreasing
                                                                             since Year 2000 when the Company was
                                                                             listed.
                   mln €

                           74.8                                               After the acquisition of Nuova Trend
                                                                             and the purchasing of the BIP’s offices
                                                                             building (2005) the NFP became
                                  53.1                                       negative.
                                         55.0
                                                                               In 2007 it came back positive thanks to
                                                                             the disposal of BIP
                                                40.5

                                                              26.4                         5.1
        NFP                95,3
                                  74,0
                                         70,9

                                                54,3   IFRS                                44.2
                                                              44,6             33.9
      Cash or
     equivalents                                                      26.6


                           10,2   8,4    8,0    8,8           7,3    13.5      11.9        5.3
     Long Term
       Debt                       12,5   7,9                  10,8
                           10,3                 5,0
     Short Term                                                                            34.2
       Debt                                                                    42.5
                                                                     30.6




                                                                     -17.1
                                                                              -20.3


        Year               Y00    Y01    Y02    Y03           Y04    Y05       Y06         Y07




20
     Analysts coverage




21
                                                                            Contacts




                                                Thanks for your attention

     Engineering Ingegneria Informatica SPA
     Via San Martino della Battaglia, 56
     00185 Roma - Italy
     Tel. +39 06 49 20 11
     www.eng.it

     Niccolò Bossi
     Investor Relator
     Strada 2, Palazzo D/3
     20090 Assago Milanofiori, Milano – Italy
     Tel. + 39 02 52 82 04 56
     Fax. + 39 02 52 82 04 00
     Mob. + 39 335 77 69 751




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