Piero Sassoli – Director General Tiemme S.p.A . TIEMME: Transport Companies Merger

1. 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

2. PT IN ITALYBackwardness factors Criticità Evidenza • EBIT equal to -2,3% • Public contribution of around €4 billions NEGATIVE PROFITABILITY • Difference of 20% comparing to the EU average PRODUCTIVITY GAP • More than 1.200 operators • The 1st 5 companies absorbe 27% of the market FRAGMENTATION ANDSMALL COMPANIES SIZE Italian PT is characterized by several backwardness factors

3. 11% 13% 76% > 100 workers Total number of companies 20< x < 100 < 20 workers PT IN ITALYManagement shape N° of Companies on the basis of workers number More than 1.200 companies, 90% of which has less than 100 workers

4. PT IN ITALYItalian Players Dimension 730 million Euros Main EU operators Revenue (mln. €) 470 million Euros TOTAL REVENUE OF MILAN, TURIN, BOLOGNA, FLORENCE AND ROME COMPANIES: 2 billion Euros 160 million Euros 120 million Euros 540 million Euros

5. PT IN ITALYDevelopment Axis Integration among the different transport modalities (road/rail, urban/periurban) MODAL INTEGRATION TERRITORIAL INTEGRATION Creation of widened transport basins(clearing of local dimension)

6. Southern Lombardy companies merger AEM Milano and ASM Brescia merger AEM Torino and AMGA Genova merger Multiutility generated through Romagnole Area companies merger Multiutility generated through Parma, Piacenza and Reggio Emilia PT companies merger PT IN ITALYLocal utilities consolidation process The Local Utilities are facing an important competitive market change

7. PT IN ITALYConsolidation Drivers PT CONSOLIDATION AXIS International “big player” which buy little local companies Local/Regional companies merger Local Utilities consolidation process, which is determined by two different factors, is affecting also PT sector

8. SIA Brescia SAIA Brescia Bergamo Trasporti Trasporti Brescia Lecco Trasporti SAF Udine SAB Bergamo SAL Lecco SADEM Torino Trieste Trasporti SAPAV Pinerolo CIRCA 100 MILIONI DI CHILOMETRI COMPLESSIVI KM Cremona CremonaTrasporti ASF Como PT IN ITALYThe presence of foreign providers 100 million of kilometers travelled (on the whole) Important foreign providers are playing a significant role on the Italian market scenario

9. PT IN ITALYTerritorial Aggregations Friuli Venezia Giulia: hypothesis of integrating PT services at a regional level (the service is now operated by 4 companies) Hypothesis to aggregate Milan and Turin PT companies Abruzzo: hypothesis of merger the 3 PT companies currently participated by the Region • At the same time, some Italian Regions are now facing territorial aggregation projects Liguria: hypothesis of PT reorganization on a regional basis (aggregation of current service basins) Veneto: hypothesis of services (road/rail) integration in “Central-Veneto” area (Venice, Padua, Treviso) Marche: integration of services on a provincial basis Hypothesis of integrating provincial basins, starting from merger Bologna and Ferrara companies Umbria: hypothesis of integrating regional PT operators

10. PT IN TUSCANYMarket Dimensions Kilometers on a Regional Basis (mln. km./year) 7% overall national offer Total Italy: 1,8 billion Km

11. PT in TuscanyService structure before TIEMME Tuscany assigned the operation of the whole road PT by tenders, generally identifying service areas fitting with Province territories

12. PT IN TUSCANYDevelopment Perspectives • The new Regional PT system should aim at clearing the Province territorial dimension, 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 covering Regional railway network will be identified. Area costiera Coast Metropolitan Area Southern Area

13. TIEMME PROJECTGeneral Framework “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

14. TIEMME PROJECTThe 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

15. TIEMME PROJECTStakeholders perspective SHAREHOLDERS • Enhancing managing and commercial efficiency CUSTOMERS EMPLOYEES Improving the service both from a quantitative and qualitative point of view Job protection One of project’s key characteristics is the production of an output for all the involved stakeholders

16. TIEMME PROJECTAggregated values TOTAL UP TO 2009 REVENUE (mln €) 35,6 21,7 9,2 26,3 92,8 428 273 125 333 1.159 EMPLOYEES KILOMETRES (mln km) 12,4 8,3 3,3 12,0 36,0 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

17. TIEMME PROJECTIn the national framework Kilometres covered by the main Italian PT operators (mln. km) The new subject would play a crucial role in the National framework (among the 1st 10 actors of the Country)

18. EBITDA INCREMENTALE IN % SULL % INCREMENTAL EBITDA ON THE ’ ’ EBITDA INIZIALE INITIAL EBITDA EBITDA INCREMENTALE IN % SULL EBITDA INCREMENTALE IN % SULL ’ ’ EBITDA INIZIALE EBITDA INIZIALE FONTE: ESPERIENZE BAIN & COMPANY SOURCE: BAIN & COMPANY Experiences 21,0% 21,0% 20,3% 20,3% 15 / 20% Of the initial EBITDA 15 15 - - 20% 20% Reference range range di dell dell ’ ’ EBITDA EBITDA 16,0% 16,0% riferimento iniziale iniziale 14,3% 14,3% The figure refers to the overall benefits that could be reached (in terms of positive impact of the final EBITDA comparing to the initial one) Il grafico si riferisce ai benefici Il grafico si riferisce ai benefici Il grafico si riferisce ai benefici COMPLESSIVAMENTE ottenibili (in COMPLESSIVAMENTE COMPLESSIVAMENTE ottenibili (in ottenibili (in termini di impatto positivo sull ’ ’ EBITDA termini di impatto positivo sull termini di impatto positivo sull ’ ’ EBITDA EBITDA rispetto all ’ ’ EBITDA aggregato iniziale) rispetto all rispetto all ’ ’ EBITDA aggregato iniziale) EBITDA aggregato iniziale) in a long-term perspective thanks to Utilities aggregation processes nell ’ ’ arco di un piano pluriennale a nell nell ’ ’ arco di un piano pluriennale a arco di un piano pluriennale a seguito di operazioni di aggregazione seguito di operazioni di aggregazione seguito di operazioni di aggregazione BEST BEST WORST WORST nel settore delle Utilities nel settore delle Utilities nel settore delle Utilities CASE CASE CASE CASE Operazione Operazione A A Operazione Operazione B B Operazione Operazione C C Operazione Operazione D D Bain & Company, reference advisor on the main merger procedures in the utilities sector (e.g. A2A, Iride, Hera), found out an increase of the “post merger“EBITDA between 15 and 20% of the initial value Bain & Company, Bain & Company, advisor advisor di riferimento delle principali operazioni di aggregazione nel di riferimento delle principali operazioni di aggregazione nel settore delle settore delle utilites utilites (es. A2A, Iride, (es. A2A, Iride, Hera Hera ), ha riscontrato sul campo un incremento ), ha riscontrato sul campo un incremento dell dell ’ ’ EBITDA EBITDA “ “ post aggregazione post aggregazione ” ” quantificabile tra il 15 e il 20% del valore di partenza quantificabile tra il 15 e il 20% del valore di partenza TIEMME PROJECTBenefits produced by local utilities aggregation

19. TIEMME PROJECTArezzo urban-metropolitan integration KEY OBJECTIVES • First step towards a wider convergence perspective in Southern Tuscany • 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 • 170 addetti • 15 million Euro revenue • 6,7 million km • 170 employees • 6 million Euro revenue • 1,8 million Euro km • 110 employees

20. TIEMME PROJECTArezzo urban-metropolitan integration: synergies Company merger related benefits - governance costs reduction - logistical optimization (headquarters) Core processes synergies (operation, 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 - administration and staff “COMPANY” SYNERGIES “OPERATING” SYNERGIES “CORPORATE” SYNERGIES

21. TIEMME PROJECTOverall operation structure • “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 In Kind Transfer

22. TIEMME PROJECTBusiness model - COSTS- - REVENUE - ° - TPL revenue – service contract and traffic related revenue - Market activities revenue “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 LFI, TRAIN, RAMA, ATM • Newco fare for real estate exploitation • Real estate depreciation • Extraordinary property maintenance expenses • Financial costs for real estate loans • Service operation, management and maintenance costs • Corporate costs • Administration costs • Administration revenue from “parent companies” • “Parent companies” fares for real estate exploitation TIEMME

23. TIEMME PROJECTMethodology 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” NET ASSETS SELF-START-UP FORECAST 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

24. TIEMME PROJECTBus 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) • Identification of a vehicles value that could be associated to the “real” market value Curva d’ammortamento ATM Vehicle value (% on ourchase cost) Curva d’ammortamento RAMA Curva d’ammortamento LFI Curva d’ammortamento TRAIN 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

25. TIEMME PROJECT Different companies assets in the newco TRAIN LFI RAMA ATM mln € Adjusted Net Assets % assets Start-up Income Overall Value % assets Other Transfers (liquidity/credits) Company Branches Value % assets in the “newco” 36,72% 30,32% 30,52% 2,44

26. TIEMME PROJECTIndustrial plan: inertial scenario 2010 2011 2012 2013 2013 BREAK-EVEN OBJECTIVE INITIAL ECONOMIC SITUATION (“time zero”) INERTIAL SCENARIO(costs dynamics increase economic impacts identification)

27. TIEMME PROJECTReferenceFramework • Multi-year objective attainment is based on some crucial strategic axis ADJUSTMENT FEES PRODUCTIVITY IMPROVEMENT INDIRECT STAFF PUBLIC TRANSPORT MAINTENANCE OTHER REVENUES INCREASE INTERNAL EFFICIENCYENHANCEMENT PURCHASES GENERAL EXPENDITURES MINOR BUSINESS DEVELOPMENT RATIONALIZATION

28. TIEMME PROJECTImplementation Approach Trade union negotiacion and homogenization of employment rules PRODUCTIVITY COMPLEMENTARY SERVICES Reorganization and implementation of maintenance activities and optimization processes MANTEINANCE Staff and governance reorganization and indirect staff turn-over procedure CORPORATE “Purchase unit” design and implementation PURCHASE WORKING GROUPS New commercial strategy and development opportunities identification COMMERCIAL SYSTEMS AND TECHNOLOGIES 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