Grandi Stazioni PPP in Railway Stations Prague 17

Grandi Stazioni PPP in Railway Stations Prague 17 March 2004

Grandi Stazioni BACKGROUND

European Scenario Key Drivers o Pan-European trend on introducing new organization and management model in Public Companies operating railway transportation o Focus on reducing State budget burden o Achieve/increase rentability of operation and management effectiveness o Preparing for opening domestic market to competitors

Ferrovie dello Stato Milestone Core and “not Core” assets and activities identification - End ’ 90 s dismissions and PPP creation Assignment of assets to operative Companies - Mid ’ 90 s FS Group Assignment of assets’ ownership from the State to FS-1990: FS Sp. A 1985 FS: Public Body

Ferrovie dello Stations Management

Grandi Stazioni Who is Grandi Stazioni is the company established by Ferrovie dello Stato to refurbish and manage the 13 major Italian railway stations

Grandi Stazioni GRANDI STAZIONI AND THE PPP MODEL

Grandi Stazioni and the PPP Model The PPP Model PPP is a mean to increase the potential of being successful in implementing a “public-funded” project where investing in a public assets could match profitable operation Refurbishment of stations: “public funded “project Stations: public assets Commercial exploitation of stations: profitable operation

Grandi Stazioni and the PPP Model The Assets

Grandi Stazioni and the PPP Model – Key Elements of the PPP A clear base and long-term strategy set by the public partner – A clear identification of roles between the two (Public and Private) partners A tailor-made contract between the parties

Grandi Stazioni and the PPP Model Long Term Strategy and Identification of Roles Scope: Integrated management of 13 major Italian railway station o o o planning and design project and construction management of the spaces management of the advertisement assets management of the technical services Duration: 40 years Investment financing: o Public Partner: extraordinary maintenance and restructuring works required by technical regulations in force o Private Partner: upgrading and functional works aimed at improving usability and commercial value of the complexes Revenues: o FS: Minimum guaranteed + variable amount linked to GS actual revenues

Grandi Stazioni and the PPP Model Critical Factors for Success In order to be successful a PPP-Model should rely on a Private partner capable of bringing in added value in terms of know-how, business expertise, and standing The right partnership

Grandi Stazioni and the PPP Model The Partners 40 % 60 % 31. 67 % Pirelli & C. Pirelli Group Edizione Holding S. p. A. Benetton Group 31. 67 % Vianini Lavori S. p. A. Caltagirone Group 5. 00 % S. N. C. F. Partecipations S. A.

Grandi Stazioni and the PPP Model Opportunity for the Public Partner Diverting human resources and financial flows to core business activities Maximize value of the contributed assets Being supported by a private partner with a strong expertise in developing and operating such business Private Expertise Shareholders Construction Works Caltagirone Group Pirelli Group Benetton Group Media/Real Estate Asset Management Asset/Facility/Property Management Retail

Grandi Stazioni and the PPP Model Level 1 Primary services Splitting of Responsibilities Ticket counters Travel information Maintenance of tracks and rolling stock Level 2 Secondary services Cleaning Safety Maintenance of building Trolley services Toilettes Waiting lounge Retail Advertising Travel services Office rent, hotels Tobacco / press point Food & Beverages Car rental services Other

Grandi Stazioni and the PPP Model Results for Ferrovie dello Stato Improved services to the customer base and the non travelers Improved public opinion image Increased value in real estate assets Profits from operations

Grandi Stazioni and the PPP Model Results for Grandi Stazioni 2001 2002 2003 ( Figures in M€ ) (Figures in M€) Turnover 127 138 Operating Costs 106 115 107 EBITDA 24 28 31 EBIT 25 27 23