The relationship between RZD and Ansaldo STS

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1 + London + The relationship between RZD and Ansaldo STS Following the agreements signed by Finmeccanica and RZD in 2007, Ansaldo STS and NIIAS (subsidiary of RZD) started to cooperate for the development of an innovative signalling and safety ensuring system, called ITARUS-ATC In May 2007 the Parties signed a Concept for the development of such new system In August and Nov the Parties agreed to sign an ITARUS-ATC contract In April 2009 Ansaldo STS and NIIAS signed a contract for the development and testing of the new ITARUS-ATC system on a Russian trial site, whose value for Ansaldo STS is 7.4 M In 2008 ZST (subsidiary of RZD) launched an international tender for the realization of the signalling, automation, security, ticketing, telecommunication and power supply systems on the Sirth-Benghazi railway line in Libya On August 2010 the Consortium between Ansaldo STS and Selex Communications (another Finmeccanica company) signed with ZST a contract for the Sirth-Benghazi line worth M. The portion of the Contract for Ansaldo STS S is M. 2 nd December

2 + London + Russian Railway infrastructure development (i) Strategy for Developing Rail Transport in the Russian Federation up to nd December

3 + London + Russian Railway infrastructure development (ii) Strategy for Developing Rail Transport in the Russian Federation up to 2030 Ratified by the Government in June 2008, the Strategy for Developing Rail Transport in the Russian Federation up to 2030 envisages a significant expansion of Russia's rail network in two stages: The first involves a period of modernization ( ) to ensure the necessary capacity on key routes, a fundamental renewal and upgrading of existing infrastructure and the beginning of planning and surveying work for expansion, as well as a start on the construction of some high-priority lines. This construction program will cost 4.2 trillion rubles, with 58.6% coming from the Russian Federation, 11.9% from administrative areas of the Russian Federation, 10.7% from Russian Railways and 18.8% from private investors. Among the Company s top priorities are the reconstruction of existing main lines and their technical enhancement, along with the construction of new lines to remove infrastructural limitations to Russia's economic growth. The cost of upgrading existing railways will exceed 3.2 trillion rubles. The development of high-speed lines in Russia will make rail travel more attractive and reduce journey times, attracting passengers from air and road. This will make rail passenger services more profitable and help to reduce the environmental impact resulting from the growing demand for travel. The second stage from 2016 to 2030 involves large-scale expansion. This will create the infrastructure needed to develop new areas of economic growth across Russia's vast territory, achieving a world-class level of technology and improving the competitiveness of the country s rail system on the global market The minimum version envisages the construction of km of new route by 2030, while the maximum scenario calls for km 2 nd December

4 + London + ASTS is a value creating partner -a case history- RZD was looking for an international partner willing to design a new signalling system in compliance with some specific needs of Russian Railways Ansaldo STS established a joint working group with NIIAS (subsidiary of RZD) Ansaldo STS and NIIAS conceived an innovative version of the ERTMS Level 2 system, called ITARUS-ATC, based on satellite location and without the use of any distributed ib t d device (Eurobalises), in order to improve the efficiency i and maintainability of the system, sensitive factors on a large territory such as Russia Now the system is going to be tested on a trial site close to Sochi Following the results on the performances of the system, it is planned to apply it on an extensive portion of Russian Railways The intention of the Parties - RZD, NIIAS and Ansaldo STS is to propose the same system also to other countries (Belarus, etc ) 2 nd December

5 + London + The new MoU signed on 26 th November 2010 On 26 th November 2010 RZD, NIIAS, RZD High Sped Rail, Finmeccanica and Ansaldo STS S signed a new Memorandum of Understanding d (MoU) to define e their cooperation till 2020 Ansaldo STS will establish a Joint Venture together with NIIAS and RZD HSR The JV will focus its business on safety and security systems The prospected business for the JV regards the equipment, with safety and security systems, of 100 stations, 50 spans (open lines) and 100 locomotives till 2010 Ansaldo STS will localize a part of its production in Russia By means of this MoU, Ansaldo STS will access new segments of the railway market in Russia, such as security systems, computer-based interlockings and traffic management centers. 2 nd December

6 Ansaldo STS Investor Meeting 2010 Markets, focus on Turkey Turkey State Railways (TCDD ), Head of Department Mehmet Turşak

7 TARGET 2023 RESTRUCTURING MoT NEW TURKISH RAILWAY SECTOR THE MINISTRY OF TRANSPORT THE DIRECTORATE THE RAILWAY ACCIDENT THE DIRECTORATE TURKISH GENERAL OF INVESTIGATING GENERAL OF RAILWAY TRANSPORT RAILWAY TRANSPORT BOARD TURKISH STATE RAILWAYS J.S.C. DUGEM DEKAK TCDD DETAŞ London 2 nd December

8 PRESENT SITUATION Passenger and Freight Transport MoT FREIGHT TRANSPORT (2009) PASSENGER TRANSPORT (2009) Volume : 22 million tons Volume : 80 million pax (10,3 billion tons-km) (5,4 billion pax-km) Share : 5% Share : 2% Line Length (km) Conventional Lines High Speed (HS) Lines 397 Total Lines Since 13 th of March, 2009, high speed (HS) trains are in operation on Ankara Eskişehir Line. Since 1 st of July, 2010, HS trains have been operating every hour with 22 ti trips a day, carrying daily 6000 pax at weekdays & 7000 pax at weekends. A total of 2.2 million passengers have been carried between March 2009 and September 2010 London 2 nd December

9 RAILWAY CORRIDORS IN OUR REGION There is a 75 billion USD transpot potential between Europe and Asia. Istanbul-Kars-Tbilisi-Baku, Kurtalan-Nusaybin-Iraq, Kars-Nahcevan-Iran, Kavqaz-Samsun-Basra, Istanbul-Aleppo-Makkah and Far East Asia Istanbul-Aleppo-North Africa transport corridors are being developed. MoT The Central and North Asia Samsun-Kavqaz Kars-Tbilisi-Baku Tekirdağ-Muratlı Marmaray Lake Van Crossing Kars-Nahcevan-Iran Kurtalan- Nusaybin- Iraq North Africa The Middle East South East Asia 39

10 BUDGET ALLOCATED TO RAILWAYS HAS RISEN TL Million Milyon TL Years Yıllar While the allocation to railways were 75 Million TL in 2000, 3,11 Billion TL has been allocated in Yearly allocation to railways has risen 41 times in ten years

11 HEDEF HEDEF IMPORTANT PROJECTS Construction of Ankara-İstanbul, Ankara-Konya, Ankara-Sivas and Ankara-Bursa High Speed Lines, Ankara set as the center, started Pityon Kapıkule Kırklareli K A R A D E N İ Z Tiflis Karabük Samsun İzmit Adapazarı Çankırı Amasya Kars Bandırma Balıkesir BURSA BİLECİK ESKİŞEHİR Alayunt ANKARA Polatlı Irmak Yerköy Yozgat SİVAS Divriği Erzincan Erzurum E G E D E N İ Z İ İZMİR Aliağa Manisa Uşak Aydın Denizli AFYON KAYSERİ MALATYA KONYA ANTALYA High Speed Lines Length Ankara - İstanbul 533 km Ankara - Konya 212 km Ankara - Sivas 460 km Karaman Mersin ADANA İskenderun Kahramanmaraş Narlı Gaziantep Halep Elazığ Van Gölü Kapıköy Muş Tatvan Van Batman Diyarbakır Kurtalan Mardin Nusaybin Musul Kerkük HS LINES UNDER THE COSTRUCTION Bursa - Bilecik 106 km HS LINES UNDER THE OPERATION TOTAL km 41 Bağdad 41 /53 41

12 IMPORTANT PROJECTS ANKARA ISTANBUL HIGH SPEED TRAIN PROJECT MoT İSTANBUL 533 km ANKARA ESKİŞEHİR Ankara-Eskisehir Section was completed and high speed train operation started on 13 th March, Construction works on Eskisehir-Istanbul Section are going on and 50 % physical progress will be realised by the end of PROJECT FEATURES Length : 533 km Operating Speed : 250 kph Journey Times : Ankara-Eskisehir 1 h 30 min Ankara-Istanbul 3 h 42

13 IMPORTANT PROJECTS ANKARA KONYA HIGH SPEED TRAIN PROJECT MoT ANKARA POLATLI 212 Km KONYA Length : 212 km Operating Speed : 250 kph PROJECT FEATURES 2010 : Projectwill becompleted. y y Journey Times : Ankara - Konya 1 h 15 min. Istanbul - Konya 3 h 30 min. Project Cost : 1 billion 128 million TL (including 6 sets) 43

14 IMPORTANT PROJECTS ANKARA SIVAS HIGH SPEED TRAIN PROJECT MoT ANKARA KIRIKKALE YOZGAT 466 Km SİVAS 2009 : Works started on 13 th March, Length : 466 km Operating Speed : PROJECT FEATURES 250 kph 2010 : Construction works are going on Yerkoy Sivas section (292 km). Project Cost : 2 billion 91 million TL Journey Time : Ankara - Sivas approx. 2,5 h 44

15 IMPORTANT PROJECTS ANKARA BURSA HIGH SPEED TRAIN PROJECT MoT BURSA 455 Km ESKİŞEHİR BİLECİK ANKARA PROJECT FEATURES 2010 : Tender process is going on. Length : 124 km (Bursa-Bilecik) Operating Speed : 250 km/saat Journey Time : Ankara - Bursa approx. 2 h Project Cost : 851 million TL 45

16 IMPORTANT SUNUM İÇERİĞİ PROJECTS HIGH SPEED TRAIN STATIONS MoT EDİRNE İSTANBUL TRABZON KARS BURSA ESKİŞEHİR ANKARA YOZGAT SİVAS ERZURUM İZMİR AFYON POLATLI KAYSERİ ERZİNCAN KONYA ADANA GAZİANTEP MERSİN COMPLETED HIGH SPEED LINES HIGH SPEED LINES UNDER CONSTRUCTION PLANNED HIGH SPEED LINES HIGH SPEED TRAIN STATIONS 46

17 IMPORTANT PROJECTS ANKARA İSTANBUL HIZLI TREN PROJESİ BAŞKENTRAY ( THE CAPITAL COMMUTER RAIL) MoT 1. BAŞKENTRAY (Kayas Ankara Sincan) Ankara Sincan : 24 km Passengers without the Project : 15 million per annum Ankara Kayas : 12 km Total Length : 36 km Number of Stations : 25 Passengers with the Project : 60 million per annumm Project Cost : 495 million TL. Project works are going on. The Present ANKARA STATION SİNCAN ETİMESGUT BEHİÇBEY KAYAS lesi YENİKENT LINE BEHİÇBEY FACILITIES Karayolu Altgeçidi Karayolu Altgeçidi Karayolu Altgeçidi Mevcut Çevre Yolu köprüsü urgut Özal Köprüsü karayolu Altgeçidi karayolu Üstgeçidi aynak Fb. Altgeçidi Yaya Altgeçidi karayolu üstgeçidi karayolu üstgeçidi Karayolu Üstgeçidi Karayolu Altgeçidi Altınsoy Altgeçiti rk Bulvarı Altgeçiti caddesi Altgeçidi r caddesi Altgeçidi k vasıta Üstgeçidi Karayolu Üstgeçidi Caddesi Altgeçidi ak Hamit Altgeçidi karayolu üstgeçidi caddesi üstgeçidi Lale Elvankent Emirler Güneşevler Hava Durağı Yıldırım Marşandiz Gazi Gazi Mahal Hipodrom Yenişehir Kurtuluş Cebeci Demirlibahçe Saimekadın Mamak Bağderesi Üreğil Topkaya Köstence EXISTING LINE New HIGH SPEED STATION High Speed Lines Commuter Rail Lines Conventional Lines Platforms Road Underpasses Sincan Lale K Lale Mevcut Tu Hava Kuvvetleri k Şaşmaz k Ray Ka Anadolu Bulvarı AOÇ k Hipodrom Mevcut K Road Overpasses lediye tarafından yapılan Atatür Adnan Saygun Dumlupınar Ankara soka Talatpaşa Bulvarı K Arif Yıldız Abdülha 19 Mayıs Bulvarı k Kayaş High Standard Commuter Train Operations will start in the Capital, ANKARA. Bel 47

18 HEDEF 2023 TARGET 2023 To renew the existing lines in order to increase the share of rail sector Tiflis Uzunköprü Kırklareli SİRKECİ Batum H.PAŞA İzmit Adapazarı Arifiye Karabük Ülkü Çankırı Samsun Amasya Çarşamba Kars Bandırma BALIKESİR Soma Tunçbilek ESKİŞEHİR Alayunt ANKARA Polatlı Irmak Yerköy Turhal Kalın Hanlı SİVAS Bostankaya Divriği Çetinkaya Erzincan ERZURUM Horasan İZMİR Manisa Dumlupınar Uşak Menemen Çatal Ödemişş Çivril Tire Goncalı Aydın Nazilli Söke Denizli AFYON Eğirdir Konya Karaman Boğaz köprü Ulukışla Yenice Mersin KAYSERİ ADANA Kahramanmaraş MALATYA Hekimhan Narlı Gaziantep Karkamış Yolçatı Elazığ Diyarbakır Mardin Şenyurt Muş Batman Nusaybin Tatvan Kurtalan Van Gölü Van Musul Kapıköy Kerkük Halep Lines being renewed Renewed Lines : km % 53 Lines to be renewed : km % 47 Renewed Lines Lines to be renewed 48

19 HEDEF HEDEF TARGET 2023 To install signalling systems on the existing km long non-signalled railway lines Kapıkule Pityon Kırklareli Tiflis 100 % Line Capoacity İncrease (On a Single Track) Karabük Samsun İzmit Adapazarı Arifiye Ülkü Çankırı Amasya Çarşamba Kars İZMİR Bandırma Balıkesir Tunçbilek Soma Aliağa Dumlupınar Manisa Menemen Uşak Çatal Ödemiş Çivril Torbalı Ortaklar Tire Goncalı Aydın Nazilli Söke Denizli Eskişehir Alayunt AFYON Eğirdir ANKARA Polatlı Konya Karaman Irmak Yerköy Boğazköprü Ulukışla Yenice Mersin ADANA Kayseri Turhal Kalın Hanlı SİVAS Kahramanmaraş Bostankaya Divriği Çetinkaya MALATYA Hekimhan Narlı Gaziantep Karkamış Erzincan Yolçatı Elazığ Diyarbakır Mardin Şenyurt Erzurum Muş Batman Nusaybin Horasan Tatvan Kurtalan Van Gölü Van Musul Kapıköy Kerkük İskenderun Signaled Lines : km % 28 Non signaled Lİnes İ : km % 72 Halep 49 Bağdad 49 /53

20 TARGET 2023 MoT To have a km long railway network by constructing new km long rail lines until 2023 BULGARİSTAN BLACK SEA YUNANİSTAN THE AGEAN SEA Çandarlı Kapıkule Kırklareli Bandırma Balıkesir Manisa İZMİR Menemen Ödemiş Torbalı Ortaklar Güllük Söke Tire Aydın İSTANBUL H.Paşa Rota Bursa Uşak Denizli Arifiye İzmit AFYON Antalya Bilecik Zonguldak Ereğli Karasu Adapazarı Eskişehir Alayunt Eğirdir Bartın ANKARA Sincan Manavgat THE MEDITERRANEAN Polatlı Konya Çankırı Irmak Karaman Yerköy Mersin Yozgat Niğde Ulukışla Yenice Havza Turhal ADANA Amasya Kayseri İskenderun Existing Conventional Lines : km High Speed dlines : km Conventional Lines : km TOTAL : km Alanya Hanlı Çarşamba Yıldızeli SİVAS Bostan kaya K.maraş Divriği Çetinkaya MALATYA Narlı Gaziantep Çobanbey Halep Gümüşhane Karkamış Erzincan ELAZIĞ Yolçatı SURİYE Trabzon Palu Mardin Bingöl Diyarbakır Erzurum Muş Horasan Kurtalan Nusaybin Batum Tatvan Cizre IRAK Çıldır GÜRCİSTAN Kars Van Gölü Van Aralık Musul ERMENİSTAN Kapıköy : EXISTING CONVENTIONAL LINES : NEW CONVENTIONAL LINEES : HIGH SPEED LINES 50 : PORTS Kerkük NAHÇİVAN İRAN 50

21 THANK YOU FOR YOUR ATTENTION 51

22 London, October 16 th 2008 London 2 nd December 2010 Q & A Session

23 Ansaldo STS Investor Meeting 2010 Excellence in Execution Ansaldo STS, Chief Executive Officer Sergio De Luca

24 Extremely thoughtful about long-term shareholder value: our challenge is not growing, but protect profitability Market will still continue to grow healthily at 4.3% CAGR, but with higher volatility Growth to continue through this downturn: strong pp pipeline of upcoming orders due to European standard adoption worldwide Even if China, Russia, India are committed to building trains domestically, they are likely to use outside suppliers for signalling/ transportation systems Volatility in new orders acquisition likely to be higher due to evolving geographical scope, increased projects amounts, longer acquisition process, possible involvement in infrastructure operations Despite competitive landscape becoming increasingly fragmented and complex... All players moving from core/protected national markets into emerging markets to fiercely capture growth opportunities Increased project size and progressive enlargement of scope of work (to include, financing, service, operations & maintenance, training, operations) increasing operational risk... growth is not our challenge: unique ASTS business model allows for 8% CAGR superior growth and a sustainable book to bill greater than 1.3 Our business model is client centric and allows us to establish long lasting profitable relationships with our clients globally ASTS next challenge: enforce execution excellence to protect profitability by enhancing the efficiency of current and future operations London 2 nd December 2010 Master v27+ts.ppt 54

25 Efficiency enhancement requires excellence in execution achievable leveraging new organization driven by business Clear value proposition for Centres of Excellence, Shared Services, Planning groups Superior value proposition to serve clients globally Global Development Centres Flexible Delivery Streamlined Support Functions Maximize site activities, achieve global scale, scope and knowledge advantage Geographically flexible and adaptive structures linked to project execution steered centrally with tight risk management Focus on value added activities and centralize support activities to improve service, quality and cost Impact bottom-line by standardizing platforms and optimizing i i product families Impact bottom-line by flexibly planning, managing and agilely orchestrating ti activities iti globally ll according to portfolio and specific project requirements Global Supply chain Lean Manufacturing Impact bottom-line by unlocking hidden potential extracting synergies benefits of global l scale and revised processes Impact bottom-line by optimizing external cost management (bundling, best cost country sourcing, design to cost) along an integrated lean manufacturing structure tight to current and expected customer needs London 2 nd December 2010 Master v27+ts.ppt 55

26 Ansaldo STS Investor Meeting 2010 Road to 150 Ansaldo STS, VP Supply Chain Eric Morand

27 Excellence in Supply chain: the Road to years cross functional project to enhance ASTS business model Supply chain excellence a key pillar to Supply chain Excellence sustain ASTS business model along 6 main levers Product/ service offering Value proposition Target segment(s) Revenue model Supplier Bundling Design to Cost and Standardization ASTS Business model Price Optimization Hebel Supply Chain Optimization/ E-Procurement Organizational Cost structure Model Value chain Operating model Global/LCC l/lcc Sourcing Partnering Make or Buy Short term results will be delivered by ASTS suppliers, while medium and long term results requiring ASTS to evolve transform its supply chain model London 2 nd December

28 The pragmatic approach in a snapshot I II III Spend analysis and prioritization of category optimization Category standardization Spend and supplier analysis and potential synergies definition Definition of procurement strategy and target by category Category workshops to validate optimization i hypotheses, formalize target t and evaluate ease of implementation and gather commitment as well as form the responsible teams Strategy recommendations, target setting and quick-wins to achieve savings immediately Definition of the implementation plan and responsibilities Detailed planning of the master plan and of its implementation waves streams Definition of key milestones and check points for implementation Clear assignment of the responsibilities IV Definition and structuring of the key elements to support the implementation Launch the procurement optimization initiatives Definition of procurement performance metrics (KPI) to track and monitor savings Creation of cross-functional and cross-company teams V Improvement of purchasing maturity: resources, process and practices Assessment of current level of maturity and plan for the improvement Detailed training i both in class and on the job London 2 nd December 2010 Master v27+ts.ppt 58

29 Achieve 150M cumulate results on ~1B external spending: protect margins and support commercial effectiveness What Saving target on spend base ~15% Direct Material i.e. Cables, electronics, components 15% 10% ~20% Business Services i.e. SW developments, Engineering i services 10% 8% ~35% Indirect Services i.e. Facility mgmt, IT, Communication, Travel, 20% 20% ~30% Packages& Subcontracting Telecom, Power supply... 15% 10% Scope External Spend London 2 nd December 2010 Master v27+ts.ppt Sustainable results protecting current margins, hitting the bottom line and allowing for new markets penetration & consolidation 59 15% 12%

30 While achieving results, we are driving supply chain + model evolution to support group value creation strategy Workstreams Boards and components Cables Racks & cabinets Electric components Mechanical & plastic parts Design and engineering Apparatus and equipment for PSS Telecommunication subsystem Station Auxiliary subsystem Main high priority initiatives Global tender and standardization Standardization and global tender Standardization Best Cost Country Sourcing (BCCS) Best Cost Country Sourcing (BCCS) Make or buy strategy Standardization and global tender Standardization and global tender Standardization and global tender Global supply chain orchestration London 2 nd December

31 Ansaldo STS Investor Meeting 2010 Confirming Superior Profitable Growth