// MANAGEMENT REPORT // 01 MARTIFER GROUP Highlights Key Financial Indicators Main Events Main Posterior Events 02 FINANCIAL PERFORMANCE Consolidated Results Analysis Revenues EBITDA and Net Profit Consolidated Capex Consolidated Capital Structure Analysis 03 ANALYSIS BY SEGMENT Metallic Constructions Naval Industry Renewables 04 MARTIFER SHARE PERFORMANCE 05 FUTURE PROSPECTS // MANDATORY INFORMATION // INTERIM CONSOLIDATED FINANCIAL INFORMATION 06 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 07 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS NOTE: This translation into English of the Portuguese document was made only for the convenience of non-Portuguese speaking shareholders. For all intents and purposes, the Portuguese version shall prevail. 2 // 1H 2017 REPORT // // 4 // 1H 2017 REPORT // // 01 01 | MARTIFER GROUP HIGHLIGHTS Revenues reached 96.5 M€ in the 1st half Positive EBITDA of 3 M€ with a 3.2 % margin Net Profit attributable to shareholders of 5.7 M€ (which compares with -3.2 M€ YOY) Net Debt decreased 29 M€ compared with December 2016 to 207 M€ Order Book in Metallic Constructions and Naval Industry registered an YTD growth to 292 M€ and the Naval Industry segment represents 34 % MAIN FINANCIAL INDICATORS M€ JUNE -17 JUNE -16 VAR.% Revenues 96.5 106.8 -10% EBITDA 3.0 4.4 -33% EBITDA margin 3.2% 4.5% -1.3 pp Depreciation & Amortization -5.1 -5.6 10% Provisions & Impairment Losses -10.4 -0.7 <-100% EBIT -12.6 -1.9 <-100% EBIT margin -13.4% -1.9% -11.5 pp Financial Results 18.5 0.1 >100% Profit before taxes 5.9 -1.8 n.m. Income tax -1.4 -1.2 -22% Profit after taxes on continued operations 4.5 -3.0 n.m. Discontinued operations results 0.0 -3.7 n.m. Attributable to non-controlling interests 0.0 -1.7 n.m. Attributable to shareholders 0.0 -1.9 n.m. Net Profit 4.5 -6.6 n.m. Attributable to non-controlling interests -1.2 -3.4 65% Attributable to shareholders 5.7 -3.2 n.m. Earnings per share 0.058 -0.033 n.m. 6 // 1H 2017 REPORT // 01 // MAIN EVENTS JANUARY 2017 Construction of the new Midland Metropolitan Hospital Martifer is participating in the construction of one of the most innovative health infrastructure projects in the United Kingdom, the new Midland Metropolitan Hospital. Located in Sandwell, west of Birmingham, it occupies an area of 6.76 hectares and, it will start operating in 2018. With architecture by Edward William Architects office, this hospital is designed in 3 levels, each one corresponding to functionality: the upper part includes the nursing areas, the middle the clinical areas and finally, the lower floor, the car parks. Its interior has several squares and gardens providing natural lighting in most of the facilities. Martifer has been part of the project since July 2016 and has the responsibility of providing, transporting and installing 16,500 sqm of modular podium facades, with terracotta and wooden coating in the nursing wards. Remodelling Al Faisaliah Shopping Centre With Al Khozama Management Company as its Client, Martifer participates in the remodelling of the Al Faisaliah Shopping Centre in Riyadh, Saudi Arabia, being responsible for the supply and assembly of 510 tonnes of metal structure, 4,300 sqm of glass facades and 3,900 sqm of stainless steel coating. Award of the construction of a Suction Dredger to West Sea West Sea was awarded the construction of a Trailing Split Suction Hoper Dredger, 70.25 metres long, with a 11.40 metre beam and a 4 metre draught. Reaching a speed of 9 knots, the ship will have a load capacity of 1,001 cubic metres and a maximum depth of dredging of -40 metres. MARCH 2017 Delivery of Douro Elegance and Douro Serenity hotel ships West Sea delivered to Douro Azul two hotel ships that were baptized as Douro Elegance and as Douro Serenity. The baptism gala was held at the Pier of Gaia and Joss Stone and Sara Sampaio were the godmothers of the hotel ships. The party, with about 200 guests, included music, a multimedia and fireworks show in an evening full of glamour, which ended with a concert by Joss Stone. The presence of national and international public figures led to a great coverage by the media, from TV and general newspapers to magazines and channels dedicated to social life and fashion. With these two ships, plus the Emerald Radiance ship delivered in April to Scenic Cruises, West Sea and Navalria have 10 hotel ships sailing in the Douro River (8 for Douro Azul and 2 for Scenic Cruises) in their construction portfolio. Multipurpose Pavilion of Dammam University, the third sports infrastructure built in Saudi Arabia Martifer started the assembly of the Multipurpose Pavilion of the University of Dammam, in Saudi Arabia. The metal structure manufactured by Martifer weighs 4,300 tonnes and begins to rise. Following King Abdullah Sports City and Prince Abdullah Al Faisal Stadiums in Jeddah, this is the third sports infrastructure built in Saudi Arabia. MARTIFER GROUP 7 // 01 Ventinveste completes wind farms Martifer Group participated in the construction and development of the Moimenta, Sernancelhe, Três Marcos and Vale do Chão wind farms, with the construction by Martifer Construções and the development by Ventinveste, a subsidiary of Martifer Group. This is the largest wind project in which Martifer group participated, with Ventinveste realizing the disposal of the projects in reference. MAY 2017 West Sea celebrates the floatation of NRP Sines On 3rd May, West Sea celebrated the floating of NRP Sines, one of two Oceanic Patrol Ships that are under construction for the Portuguese Navy. The ceremony brought to the shipyard the Minister of National Defence, the Minister of the Sea and the Chief of Staff of the Navy and National Maritime Authority. The ship is expected to be delivered in 2018. West Sea’s team has been consistently praised for its ability to work, to meet deadlines and for its quality in the building of these two ships. The good execution rhythm of these complex projects and the satisfaction of our client give greater strength for future challenges. JUNE 2017 ITER - Structure for the Tokamak reactor Martifer continues to participate in the ITER project. This time with the supply and assembly of the metal structure that will allow the assembly of the Tokamak reactor in building B11. This project includes the structural and connection dimensioning and also the supply and assembly of the covering of the roof and facade (deck and checker plate), totalling 280 tonnes and 818 sqm area. The structure is a provisional platform that works as a top that will allow a simultaneous development of several works, in the several levels of height. MAIN POSTERIOR EVENTS JULY 2017 Two new shipbuilding projects Douro Splendor Douro Azul awarded West Sea the construction of a hotel vessel to sail in the Douro, identical to Douro Elegance. It will have a length of 79 metres and capacity for 126 passengers. Its completion is scheduled for May 2018. World Explorer Mystic Cruises has awarded West Sea the construction of a luxury cruise ship to navigate in Antarctica. This will be a major challenge for West Sea because of its size and technical requirements. With 126 meters of length and a mouth of 19 meters, it will have a capacity for 176 guests and for 125 members of the crew. The cruise should be ready to sail at the end of 2018. 8 // 1H 2017 REPORT // 01 // Supply and assembly of metallic structure for Geneva International Airport - East Wing Martifer Group won a contract for the supply and assembly of metal structure for the Geneva International Airport - East Wing. The contract has an estimated value of 45 million euros and the deadline for the execution of the work is 24 months. The metal structure will be manufactured mainly in Martifer Group’s facilities in Oliveira de Frades, making it possible to reinforce the export side of Martifer Group, which currently represents more than 80 % of the turnover in the metal structure segment in Portugal. The award of this contract is a demonstration of confidence in national engineering and in Martifer Group’s technical capacity. SUBSEQUENT EVENTS No other facts that affect the released financial information have occurred since the reference date of the results up until the release of this report. MARTIFER GROUP 9 // 01 10 // 1H 2017 REPORT // // 02 02 | FINANCIAL PERFORMANCE CONSOLIDATED RESULTS ANALYSIS M€ JUNE -17 JUNE -16 VAR.% Revenues 96.5 106.8 -10% EBITDA 3.0 4.4 -33% EBITDA margin 3.2% 4.5% -1.3 pp Depreciation & Amortization -5.1 -5.6 10% Provisions & Impairment Losses -10.4 -0.7 <-100% EBIT -12.6 -1.9 <-100% EBIT margin -13.4% -1.9% -11.5 pp Financial Results 18.5 0.1 >100% Profit before taxes 5.9 -1.8 n.m. Income tax -1.4 -1.2 -22% Profit after taxes of continued operations 4.5 -3.0 n.m. Discontinued operations results 0.0 -3.7 n.m. Attributable to non-controlling interests 0.0 -1.7 n.m. Attributable to shareholders 0.0 -1.9 n.m. Net Profit 4.5 -6.6 n.m. Attributable to non-controlling interests -1.2 -3.4 65% Attributable to shareholders 5.7 -3.2 n.m. Earnings per share 0.058 -0.033 n.m. REVENUES In the 1st half of 2017, the operating income was 96.5 million euros (106.8 million euros in the 1st half of 2016), 61 % of which were in the Metallic Constructions segment, 32 % in the Naval Industry segment and 7 % in the Renewables segment.