TBS GROUP S.p.A.investor.tbsgroup.com/images/pdf/Analytical_rating_report_TBSGROUP.pdfTBS GROUP SPA...

Cerved Rating Agency S.p.A.u.s.

TBS GROUP - S.p.A

Analytical Rating Report

Sent on: 25 June 2014

Analyst: Mara Cassinari

Responsibility for approval: Rating Committee – Chair Cristina Zuddas

TBS GROUP S.p.A.

Cerved Rating Agency S.p.A.u.s Report Analitico Rating 2

TBS GROUP

- S.p.A

Via Padriciano 99

34149 Trieste (TS)

Analytical Rating Report

RATING ..................................................................................................................................3

RATING AND PROBABILITY OF INSOLVENCY ............................................................................................. 3

OVERALL ASSESSMENT ....................................................................................................................... 4

STRENGTHS ..................................................................................................................................... 6

WEAKNESSES AND RISK FACTORS ......................................................................................................... 7

PERFORMANCE TRENDS ..................................................................................................................... 8

SCENARIOS .................................................................................................................................... 10

RATING FACTORS ................................................................................................................. 11

TRENDS ........................................................................................................................................ 11

NEGATIVE TREND DATA.................................................................................................................... 16

BUSINESS SECTOR ........................................................................................................................... 17

COMPETITIVE POSITIONING .............................................................................................................. 19

CUSTOMER PORTFOLIO .................................................................................................................... 22

LEVEL OF CUSTOMER CONCENTRATION ............................................................................................... 24

ECONOMIC-FINANCIAL EVALUATION ................................................................................................... 25

BALANCE SHEET AND FINANCIAL SITUATION ......................................................................................... 26

SHORT-TERM CREDIT RELATIONS ........................................................................................................ 30

INFORMATION ..................................................................................................................... 32

COMPANY PROFILE ......................................................................................................................... 32

ECONOMIC-FINANCIAL PROFILE ......................................................................................................... 40

EVALUATIONS ...................................................................................................................... 45

GRADING ...................................................................................................................................... 45

TBS GROUP S.p.A.


Rating

Rating

Rating and probability of insolvency

The rating is an opinion relating to a party’s capacity to honour its debts which stems from objective elements combined with

subjective evaluations made by a rating analyst. Cerved Group issues long-term ratings that express an opinion on the reliability of

a debtor that is independent of the technical debt structure.

Rating and probabilità of insolvency

It is the evaluation on the ability of an economic subject to meet its financial engagements within the agreed terms..

Rating: Good Credit worthiness (B1.1)

Probability of insolvency: (at 12 months)

Medium - Low (1.14%)

Company characterized by a suitable capacity to meet its financial engagements and that

could be influenced by serious and sudden changes in the economic-financial context of

its sector of activity. Good credit worthiness

Subject

C2.1 C1.2 C1.1 B2.2 B2.1 B1.2 B1.1 A3.1 A2.2 A2.1 A1.3 A1.2 A1.1

Low credit worthiness High credit worthiness

TBS GROUP S.p.A.


Rating

Overall assessment

TBS GROUP SPA (full name: Ital Tbs Telematic & Biomedical Service Spa), was

founded in 1987. Since December 2009 it has been listed in stock exchange on the AIM

ITALIA market; it is the parent company of a group comprising more than 20 companies

and through its subsidiaries it is present in 19 countries (distributed across Europe,

Asia, Middle East Latin America and Africa). The business activity is split into two

divisions: development and management of Clinic Engineering, e-Health and e-

Government services. In the national territory it has acquired a position of leadership

through a widespread presence in health and hospital premises and more generally in

the public sector, through the provision of modular and complete IT solutions, specialist

know-how and project skills for the management of processes for Health and

Government Authorities.

The parent company has 78 employees (1.9% of the total) of the 2,350 total workforce,

with 84.1% employed by BU “MED & ICT” and 14.1% by BU “e-H & e-G”, 90% of whom

has a medium to high level of education (32% are graduates). It extended its size

gradually over time offering an innovative operational process by exploiting the keenest

requirements within Government Authorities in general (and Health foremostly). The

outsourcing of part of the business activities, the reduction in management costs and, at

the same time, the improvement in the efficiency of the service represent a growth

opportunity in the sector in which the group operates. It is currently the main player in

the national market in terms of size and range of services it offers, and owes this

position of leadership also to the various acquisitions it has made.

The results achieved to date have given a positive response in terms of growth and the

management has shown a suitable ability to face the issues that have emerged over the

years while constantly expanding and strengthening the group. However, in terms of

profitability the results in recent years have been less positive.

This is due essentially to two types of factors: the spending review policies of the public

system which have reduced resources that are available for investment and secondly,

the outcome of acquisitions made by the group.

The acquisition of 35% di REM SRL enabled the company to enter the field of medical

imaging, but had a negative bearing on the 2012 financial statement because of an

inefficient management. In this case, TBS Group succeeded in bringing about a

recovery through the creation of REM DI, a start-up that is obtaining a good

performance. Medical imaging continues to represent one of the key points for the

group in order to acquire new market opportunities and in this regard the group is

considering a new acquisitions.

The acquisition of the Agile business division – which was merged into TBS IT -

represented, despite the quality of this business division, another factor which had a

negative impact on the financial statement, which will need to be reorganised in the

short-term (via incorporation in to the parent company and the acquisition of the

business line from EBM) including in terms of the workforce.

TBS GROUP S.p.A.


Insiel Mercato (which is the result of a spin-off of INSIEL SPA, a company that is 100%

owned by the Friuli V.G. Region) which joined the TBS group in 2009) is the leading

company of BU e-Health e e-Government. It aims to expand in foreign markets but

requires interventions to improve internal productivity through the reorganisation of the

company structure which will entail a reduced need for external processing. In February

2014 and agreement was signed with the trade unions for putting 24 people into a

labour mobility scheme. Tesan Spa and EBM, which contributed significantly to the

reduction in the consolidated EBITDA in 2013 because of the spending review policies;

the need to provide the Chinese joint venture Sinopharm with a new management, as

for the time being the company has not yielded the desired results. Other supporting

interventions related to the company TBS ES (which also represent a vehicle for the

expansion of the group in Latin American countries).

The negative performance of the German subsidiary Subitech was the main factor in

determining the extent of the consolidated loss in 2013. In 2014 the impact of the losses

of Subitech will be residual (Euro 300 thousand) and on the whole the group expects to

close the year with a small profit.

These matters have been the subject of focus from the management which has put in

place corrective measures to resolve them, by reviewing the Governance model (which

began in July 2013) which involved at the end of 2013 the separation of the role of

chairman with that of managing director, the reorganisation of the MED Division in the

two General Departments “Italy” and “Abroad”, setting up of the so-called ”Knowledge

Sharing” units comprising the Business Development Department and the

Industrialization Department.

From an equity and financial perspective the Group, despite its suitability even in terms

of the parameters adopted to monitor the capital structure and the incidence of the

Working Capital on Ebitda and despite the improvement of the net financial

indebtedness in 2013, it has to meet its liquidity requirements through a constant and

owner and use of sources of external financing in the short term with particular regard to

factoring.

In the year 2014 the release of payments from Government Authorities should take

place allowing

the group to reduce in a significant manner the use of factoring which in 2013 was equal

to circa 90 million with an average cost of 4% with overall financial charges of circa Euro

3.6 million. The expected savings in terms of interest rates charges is circa Euro 1.4

million for a total credit transfer of circa Euro 65 million (however the first quarter of

2014 showed an increase that was still partial and which must therefore be assessed in

the coming months).

There is still a need to reposition over the long-term part of the short-term debt to

strengthen the overall structure. To offset the banking credit crunch which has been

significantly affecting businesses in recent years and has also affected TBS in finding

medium to long-term financing, through the parent company the opportunity was

TBS GROUP S.p.A.


considered to obtain financing through the issuing of “mini-bonds”. These resources will

allow the company to rebalance its overall position of the indebtedness, reduce the use

of factoring and have the necessary liquidity to grasp new opportunities which the

market is offering.

The introduction of the “pay per use” service, through the rental of equipment to health

providers (which is proving successful in the United Kingdom) represents for the group

a significant business opportunity, that allowing it to extend the range of services it

offers. In fact, this enables users to have a lesser risk in financial terms due to

collaboration with dedicated institutions.

In addition, consideration must be given to the good performance of the share price so

far which has shown the trust placed in the company by dedicated operators, on the

basis of the strategies which the group intends to implement.

The overall position is therefore characterised by the potential for improvement given

the criticalities which emerged, but it is also a position which confirms the overall validity

in terms of the credit risk which appears to be limited.

.

Rating

Strengths

The company is well introduced at the national level where there is also a low

competitive pressure.

The shareholding structure includes historic and important entrepreneurs, that

were already part of the ownership structure prior to the listing on the stock

exchange.

High level of know-how acquired over the course of the years through

acquisitions made and the possibility to operate in a market which is not

saturated that offers good growth margins.

Widespread presence in the territory with its structure of qualified personnel.

Flexibility in management: in the event of loss of contracts the on-site personnel

normally follow the new commission agent.

Rating

TBS GROUP S.p.A.


Weaknesses and risk factors

Performance linked to government authority issues: despite a continuity and the

size of the value of the contracts that have been acquired, it suffers (in terms of

the national territory, which is currently the main outlet market) of extremely long

payment times, with resulting need to make use in a constant manner of external

financial support with respective correlated costs.

The need to change the composition of the debt to allow a greater flexibility in

choices while also managing the pressure caused by the slowness in the

collection timeframes from customers.

The group Structure is very complicated as a result of the various acquisitions

made over the years, which resulted in dispersions in terms of cost and efficiency

with an effect on final results. A process of reorganisation is underway which

aims to resolve these aspects.

The activities carried out by the group required a high level specialisation by

staff, and this know-how requires a long time to be acquired.

With its range of services TBS has a high potential which has still not been

completely exploited with customers; barriers are represented in good part by the

difficulty for users to modify consolidated operational procedures, upstream from

which there are limits linked to bureaucracy.

With regard to potential risk factors we do not note any significant problems.

The Interest rate risk is essentially linked to the variable interest rate which financial indebtedness is subject

to, with the exclusion of the bond (which has been fixed at a nominal level of 8% per annum). Variations in

interest rates influence the level of financial charges for the group which, according to the sensitivity analysis

which was carried out, given a hypothetical upward variation of 100bp, could result in a net increase in

annual financial charges of circa €700 thousand.

Credit risk– The company is not exposed in a significant manner to credit risk since it operates with public

entities our private concession holders for public services.

Liquidity Risk – The main factors which influenced liquidity are the resources generated or absorbed by the

operational or investment activities on the one hand and, on the other, the characteristics of expiry and

renewal of the debt. In order moreover to respect the lengthy collection cycles from the public sector the

companies of the group adopt the transfer of credits to factoring companies.

TBS GROUP S.p.A.


Exchange rate risk– The group operates mainly in the Euro area therefore it is not exposed in a significant

manner to this risk. This does not apply to transactions made with subsidiaries situated in the UK, India, and

China where exchange rate variations are limited.

Risk connected to the international presence of the group: TBS Group has been present historically at a

European level, with a propensity to diversify more in countries characterised by a legislative and political

framework that is less structured. In any case, in conjunction with Sace, the group makes suitable analyses

in order to limit this risk through precise agreements with individual countries and international banks.

Rating

Performance trends

To date, TBS Group has shown a constant growth trend, which is a result of the

acquisitions and capacity it has shown in identifying new outlet areas both in terms of

markets and in terms of know-how that can be used within these. On the whole the

positive effects of the reorganisation which began during the course of 2013 should be

noted which, starting from the new Governance model for the company, aim to improve

the organisational composition and the decision-making and operational processes for

the group. The board meeting of the 28.2.2013 approved the new Strategic Plan of the

TBD Group which describes the guidelines which the group intends to pursue in the

coming years and which concern: services for the multivendor management and

maintenance of the “DI” medical equipment to be integrated with services that are

already dedicated to other biomedical equipment; services for the maintenance of IT

systems in hospitals and other social health entities; the integration of contact services

– centres with teleassistance and telemedicine activities that are already carried out by

the group; finally we report the design, global supply and maintenance services for

biomedical equipment for hospitals in less-developed countries, promoted and financed

by national and international entities. The incorporations which are expected during the

course of the current year (which will involve Tecnobiopromo, Caribel Programmazione,

TBS IT), along with the improvement in efficiency of some companies, where a greater

need for intervention was noted, should allow the group to reach the established

objectives. The strategy of expansion towards foreign markets, which could potentially

lead to additional market shares at a domestic level, the strengthening in the medical

imaging sector (a context which is constantly evolving), the objective of pushing with

customers the importance of the “technology as a service” formula and treatment in the

home, other elements which require a relevance, in the context of a development which

is greater than the forecasts which have been prudently made. These aspects, if

TBS GROUP S.p.A.


supported by an improvement in the company’s financial structure, due mainly to the

implications of relations with government authorities in Italy, will enable the company to

obtain key competitive advantages in the long term.

TBS GROUP S.p.A.


Rating

Scenarios

Rating in the event of the least favourable scenario

The least favourable scenario, barring catastrophic events, regarding the company and

its business sector, could lead to the opinion on credit worthiness to be downgraded. In

particular it is estimated that the minimum rating value could be B1.2 with a credit

worthiness that is nonetheless positive. (Probability of insolvency between 1.50% and

3.50%).

Rating in the event of the most favourable scenario

The most favourable scenario regarding the company and its business sector could

involve, in consideration of the company’s operational development plan piano, an

upgrading of the rating, bringing the credit worthiness to a superior class, i.e. A3.1 The

ability to meet commitments is certainly high. The credit worthiness is high (Probability

of insolvency between 0.40% and 0.77% ).

TBS GROUP S.p.A.


Rating Factors

Rating Factors

Trends

During the course of the financial years the TBS group has displayed a positive turnover

trend, despite internal dynamics for some companies of the group and problems linked

to the effects of the “Spending Review”. The results achieved by the parent company do

not have a significant impact on the consolidated turnover as the main activity carried

out by the company relate to “management fees” invoiced to subsidiaries for

consultancy and coordination services provided, as well as administrative, legal and

fiscal services contracts. In 2013 the revenues of the parent company increased by

11.8%, mainly as a result of the trading activity of biomedical equipment following the

awarding of international contracts. EBITDA and EBIT decreased as a result both of

lesser margins in international tenders, and costs linked to the preparation of the

Strategic Plan, the review of the company Governance and the Spending Review

project. It should however be noted that the above-mentioned financial statement

indices of the parent company are generally not positive because of the impossibility to

attribute and divide costs sustained for the group to the subsidiaries themselves.

The significant variation that has been seen between 2012 and 2013 relates to the pre-

tax result which is negative in the latter year. The loss is attributable to the write-down of

the SUBITEC shareholding (of 6.1 million); in 2012 the company had been written down

by a further 4 million and the entry also included the write-down of Euro 2 million of the

connected company REM. The reduction of dividends compared to 2012 (which was

due to the deliberation of an extraordinary dividend by the subsidiary EBM of Euro 6

million) has contributed to increasing the difference in the final result between the two

financial years.

TBS GROUP S.p.A.


CONSOLIDATED LEVEL The TBS is active in the MED (Medical Devices and ICT

Systems) and Integrated e-Health Solutions (Medical IT) & e-Government sectors

(software for government authorities.). The business activity is carried out for customers

belonging to the national service health sector, and on behalf of public entities in

general for e-Government. The group's presence is mainly national but it is also

contemplating its presence abroad where it is currently present through subsidiaries.

Still with regard to the performance of consolidated turnover, 2013 saw an increase of

4.5% compared to 2012, where the greatest contribution came from BU MED (which

increased by 5.6%) and which

represents 86% of the overall

turnover. The underlying table

shows the breakdown of the

turnover per Business Unit with

the contribution of each of these

towards Ebitda. 85.4% of the

consolidated turnover was

generated by BU MED and in

particular by the company EBM

SRL, the main company in terms of volumes even with regard to overall turnover (€ 93

million in 2013, equal to circa 43%).

Despite the increase of the consolidated turnover, Ebitda in 2013 decreased because of

the contribution of various companies in the group (EMB -1.63%, Insiel M. -44.4%, TBS

IT -1.11%).

The MED sector experienced

a fall in Ebitda of € 2.8

million compared to 2012

due mainly to the decrease

in profitability of EBM Srl and

Tesan Spa (because of the

spending review policies);

even TBS GB experienced a fall in margins because of the development of new

73%

10%

6%

4%

1% 2% 3% 1%

Tbs Group -Revenues breakdown 2013

Italy

UK

France

Austria

Germany

Spain

others UE

others extra UE

TBS Group Revenue and Ebitda breakdown by business

(Eu mn)2012 2013

MED 178,6 188,6

on group sales 85,4% 86,3%

Ebitda margin 11,9% 9,7%

e-Health 30,4 29,9

on group sales 14,1% 12,7%

Ebitda margin 6,3% 5,6%

TOTAL REVENUES 209,0 218,5

TOTAL EBITDA 23,1 20,0

TBS GROUP S.p.A.


activities, the returns from which will not be immediately visible, but will bring positive

results in both national and foreign markets.

With regard to the “Integrated e-Health & e-Government Solutions” the reduction in

EBITDA was less significant (from 1.9 to 1.6 million euro) with the main reference being

the results of Insiel Mercato which especially in the first semester of 2013 experienced a

slowdown (in Veneto and Piedmont) of the scheduled activities, along with functional

and territorial reorganisation operations. INSIEL MERCATO SPA is the reference

company in the described sector è (in 2013 it achieved a turnover of € 19 million, equal

to 65% of the BU).

The presence of “labour intensive” activities, the increase in external costs, the

commencement of System Integration activities for Insiel are in general factors that

caused a reduction in margins. TBS IT a subsidiary of Insiel, had in 2013 a loss of € 1.1

million, a reduction in the value of production of 3.4% and overall situation not without

difficulties, which contributed negatively to the results of the group. The company TBS

IT is to be subject to a reorganisation for the purpose of having the positioning of the

business unit within the group. The newly incorporated REM DI, is active in medical

imaging, a market segment for which the TBS group is particularly focused on in the

near future, contributed overall in a positive manner to the group's results with a

turnover of € 6.3 million, but it is an activity which is evolving and has not yet

significantly influenced the Ebitda. Amongst the foreign subsidiaries, we report the

positive performance of the Austrian company PCS and the less favourable

performance of the Chinese joint venture Sinopharm which required a review of the

management after the obtainment of results which fell short of the forecasted levels.

EBIT fell by Euro 3.4 million compared to 2012, with this reduction related to the

performance of the EBITDA. In addition a reduction of €3.5 million was made in the

value of the goodwill (which related essentially to the CGU and-H & e-G software

production). EBIT were equal to € 6.2 million (the reduction of 6.9 million compared to

2012). The company closed the year with a loss of € 10.5 million which was caused by:

a greater incidence of financial charges compared to 2012 (+13%) which generated a

negative pre-tax result of € 501 thousand, to which we must add the loss deriving from

the German subsidiary Subitech of 6.1 million (a company which is to be disinvested in

the near future, as per REM SRL). The income results has been limited especially by

factors that are not strictly linked to trading, although they are indirectly related to this.

TBS GROUP S.p.A.


The increase in financial charges is essentially due to the increase in the “spread” in the

cost of financing (in the short and medium to long-term), the cost of the greater transfer

operations without recourse.

In the first quarter of 2014 there was an overall improvement in the economic results

compared to the same period in the previous year. That follows the data published by

TBS Group with regard to the performance within the period in question.

TBS GROUP P&L (in '000 €) Q12014 Q12013

TOTAL REVENUES 57,947 51,384 TOTAL OPERATING COSTS 53,791 48,604 EBITDA 4,156 2,780 ebitda% 7.2% 5.4% Amortization, depreciation and impairment loss 2,457 2,423 EBIT 1,699 357 ebit% 2.9% 0.7% Financial Income 0 0 Financial Expenses 65 80 PRE-TAX INCOME 72 -936 TAXES -675 -628 NET INCOME -686 -2,364

Amongst the main events which characterised the first part of the year 2014 we report

the following:

the agreement with the trade unions for transferring of 24 people from INSIEL

MERCATO into labour mobility schemes; Insiel was also awarded a portion of

lots 1 and 4 of the tender organised by the Marche Region for the acquisition of

goods and services regarding its health and socio-health information system.

the subsidiary TBS GB signed a contract with "The Robert Jones and Agnes

Hunt Orthopaedic Hospital NHS Foundation Trust", which shall have a duration

of six years with the possibility for an extension of a further one year, with an

overall value of 2 million pounds.

the renewal of the contract by the Tuscany Region in favour of EBM for the

outsourcing of clinical engineering services.

TBS GROUP S.p.A.


the renewal of the contract drawn up by the subsidiary TBS FR, on 13 February

2014, with Médi PARTENAIRES for the maintenance of the health structure

networks for the entire biomedical technological park with the overall value of

Euro 3.06 million.

In the context of expansion in Latin America through the subsidiary TBS ES, we

report the awarding of a contract from the hospital Barros Luco Trudeau of

Santiago in Chile (one the largest in the country) for the supply of clinical

engineering services. The contract will have an annual duration with the

possibility for extensions and relates to the preventive and corrective

maintenance of circa 1,000 biomedical devices, with a value of Euro 100

thousand. The importance of the operation is to be identified essentially in the

expansion of the group in South America which is currently present in Peru.

The analysis from an economic perspective therefore describes a situation which can

certainly be improved and highlights the limitations which affected the group in terms of

two types of factors: external (linked to the reference market in general and the internal

dynamics of the government authorities) and internal (which expressed the effects of

the progressive acquisitions made and their not always positive impact on the group's

results).

TBS GROUP S.p.A.


Rating Factors

Negative trend data

Negative events

Black-listing

No black-listings were noted with regard to the company, or parties related to the

company.

Controls carried out on “dubious” entries during cross-checks involved procedures to rule out any coincidence of

names.

Bankruptcies and insolvency proceedings

No Bankruptcies and/or Insolvency Proceedings were noted with regard to the

company, or for parties related to the company.

Relating to main Subsidiaries

REM S.R.L. - IN LIQUIDATION On 03/06/2013 we report in the court of SALERNO (SA): ARRANGEMENT WITH CREDITORS on 03/06/2013 for - REM S.R.L. - IN LIQUIDATION (Fiscal CODE: 03123320651) (VAT number: 03123320651) Registered in the company register on 04/06/2013 - Approved on 30/12/2013 Official Receiver: PICCOLO VINCENZO - Fiscal Code: PCCVCN69R15G273Q

Negative entries in the real estate archives

No negative entries were noted in the real estate archives for the company, or for

parties related to the company.

Negative press clippings

From our press database, which includes a daily analysis of 100 national, regional and

above all provincial newspapers, no significant negative news emerged on the company

in question.

TBS GROUP S.p.A.


Business sector

The company is active in the sector of clinical engineering and it includes number of

business activities in order to offer integrated services to user companies to limit and

reclassify health expenditure in the sector of technologies.

In the field of the production of medical equipment there is a high degree of competition,

which is accentuated by the cost reduction measures of public and private health. In this

context Italy has a negative commercial balance with imports in 2013 reaching a level of

circa 82% of internal demand and exports representing 75% of production (+4.6%) in

2013. For 2014 internal demand is expected to be broadly stable (+0.2%) and a slightly

positive performance of exports which should sustain national production. The sector

considers all instruments and equipment for diagnosis, prevention and care of illnesses

and includes:

electrical medical and electrical equipment

medical equipment, medical-surgical material, equipment and instruments for

dentistry, furniture for medical use

Prostheses and aids

Characteristics of demand– Demand is slightly down because of the numerous and

stringent constraints on public finance (internal stability agreement, the ban on financing

debt with current expenditure, suspension of additional taxes, etc.) and the increased

responsibility for Regions with regard to health, resulted in a trend for the limitation of

health expenditure and the search for an economic-financial balance of national health

expenditure. This trend to control expenditure is reflected in many cases in a strong

pressure on acquisition prices of health supplies and a reduction in consumption itself.

73% of equipment is destined to public structures and the remainder is to private

institutions and individual private parties.

Demand is driven by less developed countries and new discoveries which enable

therapies to be personalised through genomic analysis.

After several years of linear cuts the future appears to hold greater stability and the

solidity of the financing of the national health fund which is essential for the

programming of public health services. At the end of January 2014 the agreement was

reached on the 2014-2016 Health Fund within the discussion that is still ongoing on the

Health Agreement (between the Ministry and the Regions) which will involve the

allocation of circa Euro 463 million, of which 109.9 million for 2014. Another objective of

the agreement will relate to the review of the LEA.

Characteristics of supply– There is a strong presence of operators in the northern

regions, dominated by multinationals that in the sector of electro-medical equipment

have circa 52% of the Italian market. Italian companies suffer the very strong

competition from abroad (in particular from US producers on the back of their domestic

market which makes up 40% of the global market). The greatest importers of the

sectors that do not carry out production activities in Italy are: Johnson & Johnson

Medical, Siemens, GE Medical System, Instrumentarium Laboratory and Covidien Italia,

TBS GROUP S.p.A.


who are followed by other operators such as ELETTRONICA BIO MEDICALE SRL

(TBS Group). There is a market niche for Italian operators who have a significant

tradition in the segments of medical radiology and neurology. Concentration is high and

constantly increasing because of the policies of acquisition which took place in recent

years by multinationals within the sector. In Italy there are circa 2,500 companies

(corporations) which employ circa 35,000 employees. Of these more than a third are

producers. We also report the presence of the district of Mirandola (MO) which is

comprised by about 80 companies which employ about 1800 people. As well as

competition, even price continues to represent a strategic factor of significant

importance. External factors which influence supply are mainly the CE mark (which

aims to safeguard the patient and which must respond to essential safety requirements)

and the application of the criteria of Traceability of health products available within the

EU. Finally, the innovation of the product represents a key factor of growing importance

for survival of companies in the medium/long. The average level of investment in R&D

in Italy by companies (both commercial and production foreign multinationals) has

witnessed a significant reduction because of the economic crisis, the credit crunch,

failure to normalise payment times from government authorities. The main difficulty

consists in managing the extended payment times from public health structures with an

average waiting time as of December 2013 of 211 days (-65 compared to December

2012) with a more positive situation in Valle D’Aosta, Trentino A.A. and Marche

(respectively 73, 78 and 80 days) and peaks of 832 in Calabria and 822 in Molise.

TBS GROUP S.p.A.


Rating Factors

Competitive positioning

The TBS group, including through the many acquisitions it has made over the years,

has a good position in the national market compared to its competitors, due to the good

timing shown by TBS in undertaking this type of activity. At the national level, we note

some operators that, in terms of size and diversification of business activities, can be

compared to the TBS group. An important player however appears to be the company

Hospital Consulting which as of June 2012 was acquired by Hermed Technische

Beratungs GmbH, a Germany company of Clinical Engineering services, which in turn is

part of the German group VAMED, a global leader in the international health market. In

2013 the group had a turnover of Euro 1,020 million (of which 59.4% at an international

level), EBITDA of Euro 65 million, EBIT of Euro 52 million. The group has circa 7000

employees. The Italian subsidiary HC SPA employs circa 220 employees. The company

Ingegneria Biomedica S. Lucia relates to the group S.S. Giovanni Paolo Srl (Gragnano

Trebbiense/PC) which includes companies operating in the sector of hospital services,

biomedical engineering, assistance of biomedical equipment. In the second case this is

a less structured company, where Ing. Biomedica S.Lucia is the largest company.

At an international level there are players that have been in the sector for some time

although they do not all have the specific characteristics of TBS. The US is the country

in which the model of TBS and similar foreign competitors originated, in that these were

precursors of this type of activity. From an analysis made on foreign competitors

compared on the basis of results obtained and by the performance of the respective

share. The main ones include the French company Bastide, Boston Scientific (Usa),

Mckesson(Usa),Synergy Health(Uk).

TBS GROUP S.p.A.


Note: Ingegneria Biomedica S. Lucia closes its accounts on 30.06

20

15

6

-14,70%

8,04%

16,30%

GRUPPO TBS ING.BIOMEDICA S. LUCIA

H.C. SPA

Market Position

It compares the growth of 2013's MOL of TBS group with that of its main national competitors (val in mln Euro)

EBITDA

218

64

42

4,50%

0,14% 9,85%

GRUPPO TBS ING. BIOMEDICA S. LUCIA H.C. SPA

Market Position It compares the growth of 2013's turnover of TBS group with that of its main national

competitors (val in mln Euro)

SALES

Var % against previous year

TBS GROUP S.p.A.


6

10

4

-26.48%

-1,35%

28,87%

GRUPPO TBS ING.BIOMEDICA S. LUCIA

H.C. SPA

Market Position It compares the growth of 2013's Operative result of TBS group with that of

its main national competitors (val in mln Euro)

EBIT

Var % against previous year

TBS GROUP S.p.A.


Rating Factors

Customer portfolio

On the basis of the data provided by TBS Group until 31.12.2013, the analysis of the

customer portfolio in Italy relating to companies belonging to the private sector takes

into consideration a minority (both in numeric and value terms) of the entire portfolio in

question, however it provides indications on its quality and level of risk. An analysis was

made of the risk in terms of numbers of customers and the respective level of exposure.

The first diagram shows the percentage breakdown of the customer-companies and the

exposure present in the portfolio in terms of class of credit worthiness, while the second

diagram shows the distribution on the basis of the number of companies and the

exposure present in the database per class of Cerved Group Rating. It appears that

40% of the companies are in a high credit risk band, while the remaining 60% is divided

between the higher classes. The estimate of the expected loss is equal to Euro

428,662.00, which represents 6.5% of the total reference exposure. This estimate is

worse than 2012 where it stood at Euro 349,097.00, i.e. 5% of the reference exposure.

For both the years, despite the fact that the modal class per exposure and customer

companies is in a safety band, the presence in the customer portfolio of companies

with a high risk is key for the two above-mentioned estimates of expected losses.

40%

67%

20%

8% 20% 9%

20% 16%

Number enterprises-customer: 5 Value of credit line: 6.531.163

Risk level of customer portfolio

HIGH risk

MEDIUM risk

LOW risk

MINIMUM risk

TBS GROUP S.p.A.


0,0% 0,0% 0,0% 0,0%

20,0% 20,0%

0,0%

20,0%

0,0% 0,0%

20,0% 20,0%

0,0%

19%

48%

8% 9%

17%

A1.1 A1.2 A1.3 A2.1 A2.2 A3.1 B1.1 B1.2 B2.1 B2.2 C1.1 C1.2 C2.1

Distribution of customers and credit lines following rating

enterprises customers

credit line

TBS GROUP S.p.A.


Rating Factors

Level of customer concentration

The analysis of the customer portfolio of the TBS group has a significant presence of

companies belonging to the public sector. These are important players that are active

mainly in the health sector which confirm the significant presence of the group which

can offer opportunities for growth that are greater than the current levels.

TBS GROUP S.p.A.


Rating Factors

Economic-financial evaluation

It represents the distribution of the enterprises of the sector following the categories of economic-financial risk and compares the

risk of the enterprise with the one of the sector over the last three years.

PD 1 year

In the last year under consideration, the company being assessed is in class V1 of the

scale of economic-financial evaluation, which entails a level of risk that is in line with the

median level for its business sector.

0,04% 0,60%

12,62%

20,68%

25,74%

14,61% 15,12%

8,52%

1,72% 0,35%

S1 S2 S3 S4 V1 V2 R1 R2 R3 R4

31/12/2013 31/12/2012 31/12/2011

Enterprise Sector

S1 High safety

S2 Safety

S3 High solvency

S4 Solvency

V1 Limited solvency

V2 Low solvency

R1 Limited risk

R2 Risk

R3 High risk

R4 Very high risk

TBS GROUP S.p.A.


Rating Factors

Balance sheet and financial situation

The company ITAL TBS appears to have a suitable level of capitalization: in 2013 the

shareholders’ equity, which was equal to € 67,149K, represented 58% of overall

sources. Fixed assets are completely covered through the fixed asset to equity capital

and medium-long term debt. To maintain or adapt the capital structure the Debt/Equity

is used (which was equal to 0.2 both in 2013 and 2012; at a consolidated level this

indicator is equal to 1.25).

In the composition of sources, the non-current financial liabilities are equal to 17% of the

total. The most significant share (which is equal to €14,709K) is made up by 97%

(€14,227K) by medium to long-term loans or less than 5 years, with the main item is a

convertible bond of € 9,997K that is reserved to Fondo Italiano d’Investimento (fixed

interest rate of 8%, majority premium €2,3 per share issued on 9 February 2012 with

expiry 31.12.2014). The current liabilities represent 26% of sources and have increased

by 21% compared to 2012, mainly as a result of bank payables of €18,537K (+29.9%

compared to 2012). Moreover, supplier payables increased by 96.4% as a result of

acquisitions of electoral medical equipment resold by the company in the context of its

trading activity.

At the end of 2013 the total assets increased moderately (+4.68%) compared to 2012,

the increase of the short term assets were more significant, € 39,410K (+11.6%). This

variation is mainly attributable to inventories of finished products and the increase of

commercial receivables. The inventories relate to equipment acquired at the end of

2013 which is still to be delivered to the end customer, while the increase in commercial

receivables is due to the trading activity carried out by TBS Group following the

awarding of international contracts for the supply of electronic equipment in Gabon and

China.

Fixed capital increased by 1.4%. The overall value of the shareholdings increased by Il

€2,300K linked to the recapitalisation of TBS ES that was made through the waiver of

the conversion to equity of the parent company’s credit with the company. The analysis

of the main financial indices (Current Ratio, Acid Test and the index of indebtedness)

TBS GROUP S.p.A.


demonstrate the presence of sufficient liquidity, a debt situation which is still within the

norm, despite the worsening of the ratio of equity to third party capital.

At a consolidated level, we can see in the assets a reduction of the intangible fixed

assets of 7.2% in which the greatest impact comes from the goodwill: the overall value

of the goodwill at the end of 2013 is €31,427K (-3.116 compared to 2012) and relates to

different CGU belonging to both sectors of activity (Clinical Engineering – eH&e-G

software production and Telemedicine and Teleassistance). The reduction is

attributable essentially to the write-down of € 3,500K relating to the goodwill of the CGU

“e-H & e-G” relating mainly to the acquisition of the business division from Insiel

Mercato. The Impairment Test was made by comparing the value that can be recovered

on the goodwill that was attributed to the individual CGU with the respective accounting

value at 31.12.2013.

Between 2012 and 2013 that there was an overall reduction in the current assets of 5%;

the main variation relates to commercial receivables (-6.7%). During the course of the

2013 financial year, as had also taken place in the past, some companies in the Group

carried out credit transfer transactions without recourse worth an overall value of € 89.8

million (83% was made by EBM SRL). The increase of the inventories relates

essentially to the activities of the parent company. With regard to the analysis of the

consolidated liabilities we report a reduction because of reimbursements of medium to

long-term loans, but the main share of the operations relates to the parent company (

€14,709K compared to €19,968K at a consolidated level), that is responsible for the

majority of the operations. The short-term assets also includes the item “Assets held for

sale” which relate to the subsidiary Subitec following the decision to assign the

shareholding .

There has been a significant increase in the current liabilities (+9.8% compared to 2012)

and it represents circa 63% of sources. It relates to short-term instalments of group

tables towards leasing and factoring companies, banks and other lenders; the debts to

factoring companies and banks in 2013 where respectively equal to 78% of short-term

financial liabilities. Short-term liabilities at a consolidated level also include commercial

TBS GROUP S.p.A.


payables of € 48,023K the growth of which compared to 2012 is correlated to the

increase in volumes.

At a consolidated level the medium to long-term liabilities and the current liabilities

represent 15% and 63% of total sources respectively while the shareholders’ equity

represents 20%. We report a greater imbalance between equity and third-party capital

and a net prevalence of short-term indebtedness.

At the end of 2013 the net financial indebtedness was equal to a Euro 59.8 million (- 7.2

million compared to 2012) because of the effect of more operations of without recourse

transfers (89.8 compared to 78.7 million in 2012). The transfers enabled a reduction in

the working capital from Euro 88.7 million (42.5% of revenues) in 2012 to Euro 78.4

million in 2013 (35.9% of revenues). For the calculation of the working capital the group

essentially considers the differences between commercial receivables, inventories and

commercial payables, excluding other components which would not allow it to monitor

the aspect it considers most important; to this end it also uses the working

capital/Revenues ratio with the objective of not exceeding 40%. The following diagram

shows the progressive reduction of the net financial position in a three-year period

2011-2013.

.

69.325

66.964

59.785

2011 2012 2013

Net Financial Position

TBS GROUP S.p.A.


In Q12014 as result of the increase in the working capital compared to Q12013

(increase in commercial receivables, reduction in commercial payables and inventories)

and the reduction of Capital (because of the loss of 0.7 million) the net financial position

increased by 8.6 million. However, the dynamics surrounding the net financial position

of the group will have a more significant value during the course of the following

months since it will be possible to consider a longer timeframe.

The cash flow from the operational activities at the end of 2013 has a positive balance

of Euro 24.3 million, the investment activities absorbed Euro 10.5 million of this gross of

disinvestments.

The flow from Financing activities absorbed Euro 3.8 million. The cash flow is positive

by Euro 10.6 million. The dynamics concerning the Cash flow show an improvement. In

2012 there had been a worsening of the working capital (2.5 million), the payment of

greater taxes on income (1.4 million); in addition the balance between operating cash

flow and that generated by the investment activity was equal to 4.4 million (in line with

2011), was absorbed by the reduction in the financial liabilities, with respective payment

of interest and from the payment of dividends.

.

8.822

19

10.557

2011 2012 2013

Cash Flow

TBS GROUP S.p.A.


Rating Factors

Short-term credit relations

The financial management of the group Is undertaken by the parent company TBS

Group; the main bank lines of credit (both direct and in the form of guarantees) are

centralised with the parent company.

With regard to banking relations TBS Group operates habitually with numerous

institutions including the main national groups; we do not report any anomalies in the

relations with these institutions in terms of the management of lines of credit The use of

external support does not feature any anomalies ingredients prior to that under

consideration.

With regard solely to customers of the parent company we have a value that has more

than trebled in 2013 compared to 2012 (€ 4,095K compared to €1,153K) due to the

commencement of the new trading activities by the company, following the awarding of

international contracts or the supply of electromedical equipment in Gabon and China.

61% of the total commercial receivables relates to relations with related parties.

At the same time, we note an increase in the supply payables following the resale of the

above-mentioned equipment in the context of the trading activity described above. The

commercial payables also include those with related parties, which amount to 39% of

the total.

At a group level, the composition of customers and suppliers illustrates on the one hand

the significant presence of companies from the public sector and, on the other,

companies operating in the sector of medical equipment (relating to the supply of spare

parts).

The problem relating to the collection timeframe from government authorities constantly

influences the group’s capacity of financial independence, without prejudice to the

quality of the suspended receivables. Even in 2013 some companies of the group

made use of non-recourse factoring operations which involved the removal of

commercial receivables of € 89.8 million (compared to 78.7 in 2012). In particular, it is

the subsidiary EBM which made it the most significant use of Factoring, which was a

€75,232K (83% of the total) in 2013.

There follows the group situation as inferred from the Financial Report for the year

ended 31.12.2013.

TBS GROUP S.p.A.


(in thousands euro) total Not expired < 30 dd < 30/dd <60/90 dd <90/180 dd more 180 dd

Credits tw/customers 120.453 81.376 3.964 5.427 3.180 7.642 18.864

Incidence on total 100 68% 3% 5% 3% 6% 16%

Government authorities normally have very long payment terms, a condition which

explains the high level of expired credits. The public sector (with differences between

one region and another) adopts highly variable timeframes. There is therefore a time lag

between DSO and DPO where the latter has payment times of 90-120 days by Bank

Transfer or Cash Order against an average collection period of nine months ( there are

however regions, such as Friuli V.G., that regularly make payments in a far shorter

timeframe).

The payables to suppliers of the group are equal, at 31.12.2013, to € 48 million, an

increase of 9.48% compared to the previous year. The submitting of payments reflects,

despite its regularity with regard to the commitments which have been undertaken, the

lengthy timeframes that characterise the company and the group. In any case we do

not note any anomalies. The management of relations with third parties, in

consideration of the aspects outlined above, appears on the whole to be straight-

forward.

TBS GROUP S.p.A.


Information

Information

Company profile

Identification details

Name ITAL TBS TELEMATIC & BIOMEDICAL SERVICES

Short name TBS GROUP

Address VIA PADRICIANO 99, 34149 TRIESTE (TS)

Telephone 04092291

Website www.italtbs.com

Email [email protected]

Certified Email JOINT-STOCK COMPANY

Legal Form Operational

Status 17/02/1987

Date of establishment 17/02/1987

Share capital Approved: € 4.653.340

Subscribed and paid-up: € 4.218.558

Reg. number / registered on TS95352, registered on 07/08/1987

Tax ID 00707060323

VAT number 00707060323

Istat Code 71121

Nace Code 71.12

Rae Code 830

Sae Code 430

Company belonging to the group TBS

Secondary branches 3

TBS GROUP S.p.A.


Historic news

The company was founded on 17/2/1987 by Diego Bravar (in November 2013 he

became a member of the board of the University of Trieste), downstream from a

research project by CNR – Institute of clinical physiology of Pisa denomiBorn

inCMAGEST. It began its industrial activity in the early 90s and expanded at a

European level at the start of the new millennium. It was listed in the stock exchange in

December 2009 in the AIM segment, and it appeared in Asian markets as of 2010. It

was first called ITAL TBS TECNOLOGIE BIOMEDICHE E SANITARIE, and

subsequently changed to ITAL TBS TECNOLOGIE BIOMEDICE E SCIENTIFICHE

before finally changing to the current, initialled form TBS GROUP SPA. Its registered

offices initially were in Trieste in Via Zanetti 1, and in 1991 it was transferred to Via Del

Follatoio 12 before being moved in 1997 to the Science Park in Trieste where its trading

offices were already based. It started as an advanced services company in the sector of

clinical engineering; in line with the integrated technological development (both IT and

telematics) the growth of ITAL TBS followed the evolution of clinical engineering itself,

which can no longer be defined as the management of biomedical technologies but,

more broadly, as the management of advanced health technologies (biomedical, IT and

telecommunication technologies). The company therefore developed both internally

and through a series of strategic acquisitions in Italy and in Europe. The ITAL TBS

Group was therefore created.

The current board of directors was appointed on 4.5.2012 and will expire with

shareholder assembly for the approval of the 2014 financial statement. We report,

however, the termination from the position of Managing Director of Mr Diego Bravar who

remains in office as a chairman and the appointment of Mr Paolo Salotto as MD, who

was already a board member. Paolo Salotto occupies the role of General Manager and

was Investor Relator of TBS Group replaced at the end of March 2014 by Mr Marco

Bosastra (who is in office ad interim in this role). During the course of the financial years

numerous acquisitions and incorporation operations were made: the most recent relates

to the subsidiary TECNOBIOPROMO SRL for which the merger in to ITAL TBS was

deliberated on 29.4.2014, with the registration in the Chamber of Commerce taking

TBS GROUP S.p.A.


place on 20/05/2014. In addition the merger by incorporation of Caribel

Programmazione in Insiel Mercato was deliberated, with this operation being deposited

in the Chamber of Commerce in May 2014. Both of these will be executed shortly.

Ownership

As of 21.12.2009 the company has been listed in the Stock Exchange of Milan (Listing

Market: AIM Italia). During the course of the operation, Eidos Partners acted as financial

adviser for the company, while MPS Capital Services and Intermonte carried out the

role of Joint Global Coordinator. The share capital of TBS Group at 31.12.2013

amounted to Euro 4,142,137 and comprises n. 41,421,370 shares that are entirely

subscribed and paid up with a nominal value of Euro 0.10 each. The overall value of

own shares held by the company at 31.12.2013 is equal to 764.210 (747.715 at

31.12.2012). At the start of 2012 report to the entry of Fondo Italiano di Investimento in

the ownership structure, through an increase in reserved capital of Euro 10 million (with

a post increase shareholding of 13.17%) and the subscription of a convertible bond

shareholding of the Fund to 21.28%). The agreement with the fund was completed at

the end of the 2011 financial year and was perfected with their shareholders’ assembly

of 31 January 2012. The ownership structure features a free float of circa 23%, own

shares of TBS of 1.81% and the shareholders also include the company CE&IT (with

22.16%), a finance company in which some managers of TBS Group and other third

party shareholders directly and indirectly hold shares.

Shareholders on 18/6/2014

ITATECH 0,34%

SIPI INV 1,04%

TBS GROUP 1,81%

SIS SRL 3,87% TERRA NOVA CAPITAL SRL

5,17%

EMMEPI SRL 5,72%

CAPITOL HEALTH 6,65%

FONDO ITALIANO DI

INVESTIMENTO SGR

13,17%

ALLEGRO SARL P/CTO DI GENERALI FINANTIAL HOLDING 15,86%

CE&IT 20,44%

FREE FLOT 22,16%

TBS GROUP S.p.A.


Groups

The company is the parent company of the ITAL TBS group which mainly includes

businesses operating in the development and management of outsourced multivendor

integrated engineering services, the maintenance of endoscopic equipment, the

management of medical and government authority information technology. The group

includes 25 companies (including the parent company) and is present in 19 Countries.

TBS GROUP S.p.A.


TBS GROUP S.p.A.


Extraordinary events registered over the last 12 months

Project of merger by incorporation of the company:

TECNOBIOPROMO SRL

Registered office: TRIESTE

Tax ID 06205201004

Date approval: 29/04/2014

Date registration 20/05/2014

Main official directors

Director Function

DIEGO BRAVAR

Tax ID: BRVDGI48P09G778N

Born in: POLA on 09/09/1948

Address: VIA STRABONE 11,

34134 TRIESTE (TS)

President Board of Directors

in charge since 24/07/2000

Member


Until: BALANCE-SHEETS APPROVAL

PAOLO SALOTTO Tax ID: SLTPLA67C22L424R

Born in: TRIESTE (TS) on 22/03/1967

Address: LOC. CONTOVELLO 132,

34100 TRIESTE (TS)

Managing director

In charge since 19/12/2013:

Member

In charge since 09/11/2005


ALESSANDRO FIRPO Tax ID: FRPLSN46M11L219L

Born in: TORINO (TO) on 11/08/1946

Address: VIA SAN PIO V 36,

10100 TORINO (TO)

Member



DEBORA ALLEN GUTHRIE Tax ID: GTHDRL55R48Z404J

Born in: JACKSONVILLE FLORIDA on

08/10/1955

Address: ONE HARBOUR ROAD PAGET

PG01 6, BERMUDA

Member



DARIO SCROSOPPI Tax ID: SCRDRA55T09L424N


Address: VIA DOBERDO' 8,

34100 TRIESTE (TS)

Member



LAURA AMADESI Tax ID: MDSLRA68D66A944H

Born in: BOLOGNA (BO) on 26/04/1968

Address: VIA PASSAGGIO PALATUCCI

1, 40100 BOLOGNA (BO)

Member



NICOLA PANGHER Tax ID: PNGNCL67S15L424J


Member


TBS GROUP S.p.A.


Address: VIA D'ANNUNZIO 3,

34015 MUGGIA (TS)


ALDO CAPPUCCIO Tax ID: CPPLDA49D26L424K


Address: VIA JACOPO CAVALLI 12,

34129 TRIESTE (TS)

Member



FABIO FALTONI Tax ID: FLTFBA55M28A390N

Born in: AREZZO (AR) on 28/08/1955

Address: LOCALITA' TREGOZZANO

83/B, 52100 AREZZO (AR)

Member



Special Proxy


STEFANO BEORCHIA Tax ID: BRCSFN65D26L483P

Born in: UDINE (UD) on 26/04/1965

Address: VIA MONTE GRAUZARIA 21,

33100 UDINE (UD)

Special Proxy


Until: REVOCATION

TBS GROUP S.p.A.


Certification and patents

The parent company has a quality management system that is certified in accordance

with the UNI EN ISO 9001 and UNI EN ISO 13485 regulations, with the latter applying

to the sector of medical devices.

The trading companies of the Group have quality management systems which are in

conformity to the ISO 9001 quality standards and certified by internationally recognised

entities.

In Italy, during the integration process of the quality policy, the company EBM was the

first to implement an environmental management system, and obtained the certification

in accordance with regulation UNI EN ISO 14001:2004.

All other companies in the Medical devices & ICT systems division, even in foreign

countries (United Kingdom, Spain, Portugal, France, Belgium, Holland, Germany), are

certified in conformity with ISO 13485, a specific regulation for the sector of medical

devices.

http://www.tbsgroup.com/images/stories/pdf/pagina_Downloads/iso9001_2008_2013_ott2013.pdf

http://www.tbsgroup.com/images/stories/pdf/pagina_Downloads/iso13485-2012_1013_ott2013.pdf

TBS GROUP S.p.A.


Information

Economic-financial profile

Abridged accounts

2013

on production

Profit and Loss Account 31/12/2011 % 31/12/2012 % 31/12/2013 Eenterprise

% Sector

%

Turnover 9.556 97,01 8.083 95,06 9.043 94,84 99,23

+ Variation stocks of products under processing, semi finished and finished products

0 0,00 0 0,00 0 0,00 0,10

+ Increase assets for internal work 0 0,00 0 0,00 0 0,00 0,39

+ Contribution for the year 295 2,99 420 4,94 492 5,16 0,28

= Production 9.851 100,00 8.503 100,00 9.535 100,00 100,00

- Purchases 159 1,61 257 3,02 1.980 20,77 18,00

+ Variation raw materials 0 0,00 0 0,00 0 0,00 1,14

- Costs for services and third-parties goods

6.255 63,50 6.632 78,00 6.372 66,83 49,48

Added value 3.437 34,89 1.614 18,98 1.183 12,41 33,65

- Staff costs 5.362 54,43 3.370 39,63 3.828 40,15 26,06

EBITDA -1.925 -19,5 -1756 -20,65 -2.645 -27,74 7,59

- Depreciations tangible assets 152 1,54 157 1,85 159 1,67 1,79

- Operational provisions 10 0,10 10 0,12 30 0,31 1,16

- Provisions on intangible assets 764 7,76 1.037 12,20 1.079 11,32 1,42

+ Result other income/expenses -311 -3,16 -333 -3,92 -711 -7,46 0,51

EBIT -3.162 -32,10 -3.293 -38,7 -4.624 -48,50 3,73

Financial result 13.349 135,51 10.478 123,2 6.110 64,08 -0,06

+ Net financial income 14.171 143,85 11.950 140,5 7.570 79,39 1,28

- Financial expenses 822 8,34 1.472 17,31 1.460 15,31 1,34

Result of the year 10.187 103,41 7.185 84,50 1.486 15,58 3,67

- Adjustment financial activities -5.150 -52,28 -6.008 -70,6 -6.111 -64,09 -0,59

+ Result extraordinary activities 0 0,00 908 10,68 0 0,00 0,41

Result before taxes 5.037 51,13 2.085 24,52 -4.625 -48,51 3,49

- Taxes -1.042 -10,58 -1.625 -19,1 -1.137 -11,92 2,17

= Net result 6.079 61,71 3.710 43,63 -3.488 -36,58 1,32

+ Other items 0 0,00 0 0,00 0 0,00 0,06

= Profit/loss of the year 6.079 61,71 3.710 43,63 -3.488 -36,58 1,38

Cash flow 10.702 108,64 8.812 103,6 2.478 25,99 15,83

2013 on assets

Abridged balance sheets 31/12/2011 % 31/12/2012 % 31/12/2013 Enterprise %

Sector %

Assets 98.099 100,00 111.204 100,0 116.408 100,00 100,0

0

Fixed assets 73.375 74,80 75.907 68,26 76.998 66,14 23,72

Intangible Assets 3.005 3,06 2.557 2,30 2.022 1,74 3,83

Tangible Assets 1.559 1,59 1.518 1,37 1.520 1,31 13,42

Financial Assets 68.811 70,14 71.832 64,59 73.456 63,10 6,47

Current assets 24.724 25,20 35.297 31,74 39.410 33,86 76,28

Stocks 0 0,00 0 0,00 2.084 1,79 9,78

Receivables 9.182 9,36 11.411 10,26 10.765 9,25 50,67

TBS GROUP S.p.A.


Other short-term assets 15.185 15,48 23.292 20,95 26.472 22,74 8,32

Liquidity 357 0,36 594 0,53 89 0,08 7,50

2013

on liabilities

Balance sheets Liabilities 31/12/2011 % 31/12/2012 % 31/12/2013 Enterprise % Sector

%

Liabilities 98.099 100,00 111.204 100,00 116.408 100,00 100,0

0

Shareholders’ funds 57.975 59,10 70.665 63,55 67.150 57,69 18,05

Share Capital 3.613 3,68 4.144 3,73 4.142 3,56 6,05

Other reserves 49.283 50,24 62.811 56,48 66.496 57,12 12,21

Profit / loss previous years 5.079 5,18 3.710 3,34 -3.488 -3,00 -0,21

Consolidated funds and debts 12.309 12,55 19.140 17,21 19.405 16,67 14,56

M/l term debts towards Banks 5.936 6,05 5.264 4,73 4.230 3,63 8,39

M/l term Funds and other debts 6.373 6,50 13.876 12,48 15.175 13,04 6,17

Short-term liabilities 27.815 28,35 21.399 19,24 29.853 25,65 67,39

Short-term debts towards Banks 19.231 19,60 14.262 12,83 18.537 15,92 6,54

Debts towards suppliers 3.556 3,62 3.254 2,93 6.380 5,48 46,48

Other liabilities 5.028 5,13 3.883 3,49 4.936 4,24 14,38

Financial results 31/12/2011 31/12/2012

31/12/2013

Liabilities

Net self-financing 6.495 5.755 4.240

- Variation working capital -3.115 2.180 -4.250

= NET RESULT OF THE YEAR (A) 9.610 3.575 8.490

- Tangible and intangible net investments -1.104 -210 -423

- Net investments on financial assets -12.029 -14.361 -10.853

= NET FLOWS FROM INVESTMENT ACTIVITIES (B) 13.133 14.571 11.276

NET FINANCIAL RESULT (C=A-B) -3.523 -10.996 -2.786

+ Net capital increases 0 8.980 0

+ Variation m/l term financial debts -1.046 7.394 -2.966

+ Variation in financial debts 4.492 -3.141 5.247

= NET FLOWS FROM FINANCING ACTIVITIES (D) 3.446 13.233 2.281

VARIATION OF LIQUIDITY (C+D) -77 2.237 -505

Economic – financial ratios 31/12/2011 31/12/2012 31/12/2013 2013

sector

Development ratios

Variation % turnover 5,90 -15,50 11,90 -4,49

Variation % production n/a n/a n/a. -4,24

Variation % added value -7,10 -53,00 -26,70 -0,72

Variation % assets -1,10 13,40 4,70 0,56

TBS GROUP S.p.A.


Variation % shareholders’ funds 7,10 21,90 -5,00 5,18

Profitability ratios

R.O.S. (%) 115,21 107,10 32,58 5,05

R.O.I. (%) 8,10 5,50 -2,00 3,60

R.O.E. (%) 10,70 5,70 -5,10 4,03

Cash flow / assets % 10,90 8,40 2,20 3,18

Turnover (revenues/assets) 0,08 0,08 0,57

Financial costs / revenues % 8,60 18,21 16,15 1,35

Productivity ratios

Revenues per employee (€ / 000) 96,5 124,4 123,9 208,48

Added value per employee ( € / 000) 34,7 24,8 16,2 70,7

Staff costs per employee ( € / 000) 54,2 51,9 52,4 54,75

Cash-flow management

Current ratio % 88,9 165 132 113,18

Acid test % 88,9 165 125 157,24

Average days of stock 0 0 41,5 57,73

Days of customers credit 369,1 458,6 441,4 323,26

Days of suppliers credit 184,3 177,9 207,6 197,38

Net working capital ( € / 000) -3.091 13.898 9.557

Financial structure

Treasury Margin ( € / 000) -3.091 13.898 7.473

Margin of structure ( € / 000) -15.400 -5.242 -9.848

Debt ratio 0,59 0,53 0,66 4,32

Tangible shareholders’ funds / total financial debts % 211,00 222,70 197,40 80,74

Short-term debts on production 2,82 2,52 3,13 1,19

TBS GROUP S.p.A.


Consolidated TBS Group (From financial relation published by TBS Group)

PROFIT AND LOSS ACCOUNT (in thousand of euro)

31/12/2012 31/12/2013 2013 / 2012 (%)

Total Revenues 209.002 218.493 4,54%

Purchase of raw material 23.656 28.925 22,27%

Purchase of external services 76.024 79.736 4,88%

Staff costs 85.451 90.317 5,69%

Other operating costs 3.429 3.232 -5,75%

Cost adjustments for internal increases -3.014 -4.217 39,91%

Other provisions 316 362 14,56%

Total Costs 185.862 198.445 6,77%

EBITDA 23.140 20.048 -13,36%

ebitda% 11,1% 9,2% -17,13%

Depreciations 10.007 10.330 3,23%

EBIT BEFORE TANGIBLE DEPRECIATIONS 13.133 9.718 -26,00%

Ebit % 15,4% 10,8% -29,99%

Tangible depreciation 0 3.500

EBIT 13.133 6.218 -52,65%

ebit% 6,3% 2,8% -54,71%

Shareholdings Evaluation -2.014 -8 -99,60%

Financial income 1.389 484 -65,15%

Financial expenses -6.364 -7.195 13,06%

Result before taxes 6.144 -501

Taxes -3.491 -3.905 11,86%

Result of operating activities 2.653 -4.407

Result activities for sale -4.097 -6.088 48,60%

NET RESULT OF THE YEAR -1.942 -10.955

TBS GROUP S.p.A.


MAIN BALANCE SHEET DATA (in thousands of Euro)

31/12/2012 31/12/2013 2013/2012 %

Intangible assets 60.091 55.770 -7,2%

Tangible assets 17.180 17.159 -0,1%

Other non-current assets 9.987 9.317 -6,7%

Non-current assets 87.258 82.246 -5,7%

Current assets 161.131 169.143 5,0%

Assets for sale 0 1.854 n/a

TOTAL ASSETS 248.389 253.243 2,0%

Shareholders’ funds of the Group 59.427 47.802 -19,6%

Shareholders’ funds of third parties 2.781 2.783 0,1%

Shareholders’ funds 62.208 50.585 -18,7%

Non-current liabilities 41.900 39.230 -6,4%

Current liabilities 144.281 158.458 9,8%

Liabilities for sale 0 4.970 n/a

SHAREHOLDERS’ FUNDS AND LIABILITIES 248.389 253.243 2,0%

TBS GROUP S.p.A.


Evaluations Evaluations

Grading

Analyst evaluation Economic-Financial Situation

It expresses synthetically the

opinion of a Cerved Rating

Agency analyst on the overall

situation of the enterprise

Positive

Some weak points

Negative

Very negative

It evaluates the economic-

financial solidity of an

enterprise, placed in its

current and future system of

reference..

High safety

Safety

High reliability

Reliability

Limited reliability

Low reliability

Moderate risk

Risk

High risk

Very high risk

Negative events Payment terms

It evaluates the seriousness of

negative events as they have

been registered by the

company and its linked

entities..

None

Minimum

Limited

Serious

Very serious

It expresses the punctuality of

payments of the company towards

its suppliers gathered through the

Payline system.

Regular

Mainly regular

Deferred

Delays

Serious delays

Risk linked with the number of requests Structural profile

It evaluates the degree of risk

linked with the number of

information requests received

by Cerved Rating Agency

taken into consideration on the

basis of the characteristics of

the enterprise and its sector.

.

No signals of risk

Weak signals of risk

Signals of risk

It evaluates the reliability

linked to the sector and

dimension of the subject on

the basis of official information

coming from the Register of

Companies.

No signals of risk

Potential signals of risk

TBS GROUP S.p.A.


The Cerved Rating Agency rating is an opinion on the credit worthiness that summarizes the reliability or the insolvency probability

of the subject.

Cerved Rating Agency issues solicited ratings, that is to say evaluations on credit reliability requested by a third party. The issued

rating is subject to an on-going monitoring until the indicated expiry date. Until this date Cerved Rating Agency guarantees the

update of official and owned information concerning the subject and, if necessary, the immediate communication to the customer of

possible modifications of the given rating.

The Cerved Rating Agency rating is not an investment advice, nor a form of financial consultancy; it is not a recommendation for the

purchase or sale of shares or for making particular investments, nor does it represent advice to a particular investor to make a

particular investment

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