Livorno, October 7th 2010
LEM Conferences Room
CONFERENCE of EU INTERREG IVC
FLIPPER PROJECT
Piero Sassoli – Director General Tiemme S.p.A.
TIEMME: Transport Companies Merger
PT IN ITALY
Backwardness factors
Criticità
Evidenza
NEGATIVE PROFITABILITY
•
•
EBIT equal to -2,3%
Public contribution of around €4
billions
PRODUCTIVITY GAP
•
Difference of 20% comparing to the
EU average
FRAGMENTATION AND
SMALL COMPANIES SIZE
•
•
More than 1.200 operators
The 1st 5 companies absorbe 27%
of the market
Italian PT is characterized by several
backwardness factors
PT IN ITALY
Management shape
N° of Companies on the basis of workers number
1.300
135
1238
158
1.000
500
0
945
11%
13%
76%
Meno di 20 addetti Tra 20 e 100 addetti
< 20 workers
20< x < 100
Oltre 100 addetti
> 100 workers
Totale operatori
Total
number of
companies
More than 1.200 companies, 90% of which has less than
100 workers
PT IN ITALY
Italian Players Dimension
730 million
Euros
Main EU operators
Revenue (mln. €)
160 million
Euros
4.300
3.400
470 million
Euros
120 million
2.400
2.300
Arriva
Keolis
Euros
540 million
Euros
TOTAL REVENUE OF
MILAN, TURIN, BOLOGNA, FLORENCE AND
ROME COMPANIES: 2 billion Euros
Veolia
Transport
RATP
PT IN ITALY
Integration among the
different transport
modalities (road/rail,
urban/periurban)
MODAL
INTEGRATION
Development Axis
TERRITORIAL INTEGRATION
Creation of widened transport basins
(clearing of local dimension)
PT IN ITALY
Local utilities consolidation process
Southern
companies
Fusione Lombardy
tra le aziende
della
Lombardia
meridionale
merger
AEM
Milanotra
and
ASM
Brescia
Fusione
AEM
Milano
e ASM
Brescia
merger
The Local Utilities are facing an
important competitive market change
Fusione tra AEM Torino e
AEM Torino
and AMGA Genova
AMGA Genova
merger
Multiutility
dalla fusione
delle
Multiutilitynata
generated
through
aziende di servizi pubblici di Parma,
Parma,
Piacenza
andEmilia
Reggio
Piacenza
e Reggio
Emilia PT companies merger
Multiutility nata dalla
Multiutility
generated through
fusione delle aziende di
Romagnole
Area
companies
servizi pubblici
dell’area
romagnola
merger
PT IN ITALY
Consolidation Drivers
International “big player”
which buy little local
companies
PT CONSOLIDATION
AXIS
Local/Regional companies
merger
Local Utilities consolidation process, which is determined by two different factors, is
affecting also PT sector
PT IN ITALY
The presence of foreign providers
Bergamo Trasporti
Lecco Trasporti
SIA Brescia SAIA
Brescia
Trasporti
Brescia
SAF Udine
SAB Bergamo
SAL Lecco
SADEM Torino
Trieste Trasporti
SAPAV Pinerolo
KM Cremona
ASF Como
Cremona
Trasporti
Important foreign providers are playing a significant
role on the Italian market scenario
CIRCA
100 MILIONI
DI
100 million
of kilometers
CHILOMETRI
travelled (on the whole)
COMPLESSIVI
PT IN ITALY
Territorial Aggregations
Hypothesis to aggregate Milan and Turin PT
companies
Liguria:
hypothesis of PT
reorganization on
a regional basis
(aggregation of
current service
basins)
Friuli Venezia Giulia:
hypothesis of integrating
PT services at a regional
level (the service is now
operated by 4 companies)
Veneto: hypothesis of services
(road/rail) integration in “CentralVeneto” area (Venice, Padua,
Treviso)
Marche: integration of
services on a provincial basis
Hypothesis of integrating provincial basins, starting
from merger Bologna and Ferrara companies
Abruzzo: hypothesis of
merger the 3 PT companies
currently participated
by the Region
Umbria: hypothesis of integrating regional
PT operators
 At the same time, some Italian Regions are now facing territorial aggregation projects
PT IN TUSCANY
Market Dimensions
Kilometers on a Regional Basis (mln. km./year)
236,2 233,4
7% overall
national offer
168,9
142,9 141,5
139,8
Total Italy: 1,8
billion Km
129,4
117,5
95,3
69,6 69,5
54,1 52,2
49,4
45,3 44,2 40,7
26,0
20,0
rd
eg
na
Ab
ru
zz
o
Ca
la
br
ia
M
ar
ch
e
Fr
iu
U
li
Ve mb
ri
ne
zi a
a
G
iu
lia
Tr
en
tin
o
Ba
si
lic
at
a
M
ol
Va
is
lle
e
D
'A
os
ta
Sa
Li
gu
ria
Pu
gl
ia
ag
na
Ro
m
on
te
Em
ili
a
Pi
em
sc
an
a
To
ne
to
lia
Ve
Si
ci
La
z
io
Ca
m
pa
ni
a
Lo
m
ba
rd
ia
6,2
PT in Tuscany
Service structure before TIEMME
CAT
BLUBUS
Cons. Autolinee Pratesi
Massa C.
Prato
VAIBUS
Lucca
ATAF & LINEA, Più Bus,
Autolinee Chianti
Valdarno, Autolinee
Mugello Valdisieve
Pistoia
Firenze
Arezzo
Pisa
Livorno
Cons. Pisano Trasporti
Siena
Etruria Mobilità
Grosseto
ATL/ATM
RAMA Mobilità
Siena Mobilità
Tuscany assigned the operation of the whole road PT by tenders, generally
identifying service areas fitting with Province territories
PT IN TUSCANY
Development Perspectives
• The new Regional PT system
should aim at clearing the
Province territorial dimension,
Area costiera
by defining 3 integrated road-rail
areas (coast, metropolitan area
and southern area)
• These 3 areas will complement
Regional transport which is
mainly significant at a local
level, while a 4th area for
Coast
covering Regional railway
Metropolitan Area
network will be
Southern Area
identified.
TIEMME PROJECT
General Framework
Massa Carrara
Lucca
Prato
Pistoia
Firenze
Livorno
Pisa
Siena
Piombino
Grosseto
Arezzo
“Southern Tuscany”
project, bases on
merger process of PT
companies of the
cities of Arezzo,
Siena, Grosseto and
Piombino, concluding
with the creation of
TIEMME on 01st
August 2010
TIEMME PROJECT
The objectives
• Exploiting the potential coming from companies merger as a tool to
enhance competitiveness, by creating a new subject playing a crucial
role both at Regional and National level.
• Supporting the conditions enhancing services efficiency and quality
• Preserve companies value, by protecting shareholders assets: risk of
colonization or sale”
• Encouraging PT re-launch in Southern Tuscany, as a crucial condition
to safeguard and develop occupation
“TIEMME” Project bases on several well-defined
strategic axis
TIEMME PROJECT
Stakeholders perspective
SHAREHOLDERS
CUSTOMERS
Improving the service both
from a quantitative and
qualitative point of view
• Enhancing managing
and commercial
efficiency
EMPLOYEES
Job protection
One of project’s key characteristics is the production of an
output for all the involved stakeholders
TIEMME PROJECT
Aggregated values
TOTAL
REVENUE
(mln €)
35,6
21,7
9,2
26,3
92,8
EMPLOYEES
428
273
125
333
1.159
KILOMETRES
(mln km)
12,4
8,3
3,3
12,0
36,0
UP TO 2009
The overall merger could lead to the creation of one single operator producing
more than 90 million Euros revenue and having more than 1.100 employees
TIEMME PROJECT
In the national framework
Kilometres covered by the main Italian PT operators (mln. km)
150
141
130
100
100
96
81
74
51
50
0
ATM
Trambus
Arriva
SITA
COTRAL
GTT
CTT*
37
36
36
ATC Bo
ANM Na
Toscana
del Sud
The new subject would play a crucial role in the National framework
(among the 1st 10 actors of the Country)
TIEMME PROJECT
Benefits produced by local utilities aggregation
EBITDA
INCREMENTALE
IN
%
’EBITDA
%
INCREMENTAL
EBITDA
THE ’INITIAL
EBITDA
EBITDA
INCREMENTALE
IN ON
% SULL
SULL
’EBITDA INIZIALE
INIZIALE
FONTE: ESPERIENZE
SOURCE:
BAIN & COMPANY
BAIN &Experiences
COMPANY
21,0%
20,3%
range di
Reference
range
riferimento
16,0%
14,3%
BEST
CASE
Operazione A
EBITDA
Il
riferisce
ai
The
figuresi
refers
to the
overall
Il grafico
grafico
si
riferisce
ai benefici
benefici
benefits that could beottenibili
reached (in
(in
COMPLESSIVAMENTE
COMPLESSIVAMENTE
ottenibili
(in
terms
of
positive
impact
of
the
final
termini
di
impatto
positivo
sull
’EBITDA
’
termini di impatto positivo sull ’EBITDA
EBITDA
comparing
to the initial
one)
rispetto
all
aggregato
iniziale)
rispetto
all’’EBITDA
’EBITDA
aggregato
iniziale)
nell’arco
di
piano
in
a ’long-term
thanksaato
nell’arco
di un
un perspective
piano pluriennale
pluriennale
Utilities
seguito
di
operazioni
aggregazione
seguito
diaggregation
operazioni di
diprocesses
aggregazione
nel
settore
delle
Utilities
nel settore delle Utilities
WORST
CASE
Operazione B
Operazione C
15-20%
15
/ 20%
dell’EBITDA
Of the initial
iniziale
Operazione D
Bain
& Company, reference
advisor di riferimento
delle
principali
operazioni
di aggregazione
nel
Bain
&
Company,
advisor
on
the
main
merger
procedures
in
the
settore delle utilites (es. A2A, Iride, Hera), ha riscontrato sul campo un incremento
utilities
sector (e.g.
A2A,
Iride, Hera),
found out
increase
“post
merger“
dell’EBITDA
“post
aggregazione”
quantificabile
traan
il 15
e il 20%of
delthe
valore
di partenza
EBITDA between 15 and 20% of the initial value
TIEMME PROJECT
Arezzo urban-metropolitan integration
KEY OBJECTIVES
• First step towards a wider
convergence perspective in
Southern Tuscany
-170 addetti
-15 million Euro revenue
-6,7 million km
-170 employees
-6 million Euro revenue
-1,8 million Euro km
-110
employees
• Consolidation of competitiveness
on a local basis, in order to get
ready for the next integradìted
tenders
• Creation of a more efficient and
better organized service network
(urban-periurban integration)
• Achievement of economic benefits,
and industrial efficiency
improvement
TIEMME PROJECT
Arezzo urban-metropolitan integration: synergies
Company merger related benefits
“COMPANY”
SYNERGIES
- governance costs reduction
- logistical optimization (headquarters)
Core processes synergies (operation,
“OPERATING”
SYNERGIES
maintenance)
- network optimization possibilities, thanks
to service areas territorial contiguity
(routes rationalization on common
itineraries)
- productivity increase linked to a joint
management of turn-over
- bus park rationalization
- money saved thanks to spending power
increase
-
“Activities sharing” related benefits
“CORPORATE”
SYNERGIES
- administration and staff
TIEMME PROJECT
Overall operation structure
..%
..%
TIEMME
In Kind Transfer
..%
..%
• “TIEMME” project required
the creation of a new company
(“newco”)where the involved
companies (TRAIN, LFI,
RAMA, ATM)were acting as
shareholders
• In particular, former
companies got “newco” assets
basing on in kind transfers
evaluated on a patrimonial
basis (in kind patrimonial
contribution of each former
company to the “newco”)
TIEMME PROJECT
Business model
-
- REVENUE -
°
• Newco fare for real estate exploitation
- COSTS
LFI, TRAIN,
RAMA, ATM
• Real estate depreciation
• Extraordinary property maintenance expenses
• Financial costs for real estate loans
• Administration costs
- TPL revenue – service contract
and traffic related revenue
- Market activities revenue
• Service operation, management and maintenance
costs
• Corporate costs
• Administration revenue from “parent
companies”
• “Parent companies” fares for real estate
exploitation
TIEMME
“Parent Companies” (LFI, TRAIN, RAMA, ATM), besides being newco shareholders, will keep
their real estate property rights (headquarters, depots), and receive a fare from newco for
property exploitation
TIEMME PROJECT
Methodology
NET ASSETS
SELF-START-UP
FORECAST
Algebraic Sum of Budget Values of assets and liabilities
related to the different company branches (discounted back)
Income Surplus Value/Capital Loss associated to the activities
transferred to the “newco”
COMPANY BRANCHES
VALUE
The contribution of every company was determined basing on a mixed
methodology (property-income) and considering transferred activities
discounting back and start-up forecast
TIEMME PROJECT
Bus park evaluation methodology
OBJECTIVES
• Homogenization of amortization
policies among the different companies
(real incidence of amortizations on the
cost of vehicles between 4,7% and 9,2%
on a yearly basis)
100,0%
Vehicle value (% on ourchase cost)
80,0
60,0
• Identification of a vehicles value that
could be associated to the “real” market
value
40,0
20,0
0,0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 18 19
Number of years
In order to define bus park value at market value, UNI-ASSTRA methodology
was employed: “real” vehicles depreciation was calculated by normalizing
different companies amortization policies
TIEMME PROJECT
Different companies assets in the newco
mln €
TRAIN
LFI
RAMA
36,72%
30,32%
30,52%
ATM
Adjusted Net Assets
% assets
Start-up Income
Overall Value
% assets
Other Transfers (liquidity/credits)
Company Branches Value
% assets in the “newco”
2,44
TIEMME PROJECT
Industrial plan: inertial scenario
2010
2011
2012
2013
2013
BREAK-EVEN
OBJECTIVE
INITIAL
ECONOMIC
SITUATION
(“time zero”)
INERTIAL SCENARIO
(costs dynamics increase
economic impacts
identification)
TIEMME PROJECT
Reference Framework
ADJUSTMENT
FEES
PUBLIC
TRANSPORT
MINOR
BUSINESS
OTHER REVENUES
INCREASE
PRODUCTIVITY
IMPROVEMENT
INTERNAL EFFICIENCY
ENHANCEMENT
INDIRECT
STAFF
MAINTENANCE
PURCHASES
GENERAL
EXPENDITURES
DEVELOPMENT
RATIONALIZATION
 Multi-year objective attainment is based on some crucial
strategic axis
TIEMME PROJECT
Implementation Approach
PRODUCTIVITY
MANTEINANCE
CORPORATE
PURCHASE
WORKING
GROUPS
COMMERCIAL
SYSTEMS AND
TECHNOLOGIES
COMPLEMENTARY
SERVICES
Trade union negotiacion and homogenization of
employment rules
Reorganization and implementation of
maintenance activities and optimization processes
Staff and governance reorganization and indirect
staff turn-over procedure
“Purchase unit” design and implementation
New commercial strategy and development
opportunities identification
Managing of companies convergence process
towards an integrated platform
Business revitalizattion strategies identification
and implementation
Industrial plan implementation is managed by the different working groups