Tinexta S.p.A.

Good afternoon. This is the Coral School Conference operator. Welcome and thank you for joining the Tinexta half-yearly financial report at the 30th of June, 2024. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Joseph Mastragostino, investor-relator. Please go ahead.

Good afternoon and good morning to the folks in the U.S. Thank you for joining us in the next First Half Results presentation. Here with me today is Donipol Group CFO. Good afternoon, everybody. As a reminder, all the relevant documentation of the First Half 2024 results can be downloaded from our company website and in the Best Relations section. For the purpose of this call, I will go over the first half 2024 highlights and updates, although instead we'll go over the first half 2024 financial results, as well as the business unit's performance, providing us with a deep dive. The last part of the call will be dedicated to Q&A. A recording of this conference call will also be available on our company website, and it will be posted upon completion of this call. Given that you all have the available documentation, I would turn to page four of the presentation to go over some key data of the first half 2024 results. Revenues came in at $203 million, growing 11% versus prior year. EBITDA adjusted was $34.4 million, with a decline of 9% versus the prior year. EBITDA on a reported basis was $25.5 million, and EBITDA adjusted was $19.5. Net profit on an adjusted basis was close to $12 million. Important to highlight is the free cash flow of continuing operation, which was pretty much $26 million in terms of free cash flow. Net financial position is at $276.9 million versus $102 of the fiscal year 2023. Let us turn to page five. On page five, we give you a bit of a summary of the first stage highlights and updates. Therefore, we're updating the market following the first six months. Aside from some of the numbers that have already been mentioned, I would concentrate on EBITDA adjusted, which was, again, $34.4 million. The decline of 9% was mainly impacted by ABF's contribution combined with CS's less favorable revenue mix, and business innovations known seasonality. We will discuss extensively on a business unit by business unit basis to try to understand what has affected the decline of the first stage results. It is important to highlight that on the positive term, there was a partial offset of a very strong performance from Digital Trust, which I think did an excellent performance, both in terms of revenue as well as EBITDA. EBITDA reported was $25.5 million with a significant decline from the prior year, but that includes $6.5 million in non-recurring items. EBIT margin came in at $17 million. Adjusted net profit on the continuing operations base was around $12 million. Let's highlight, I think, both the leverage ratio, which is to be defined as a peak for the year, which came in at 2.78 times, but I think it's important to highlight how the free cash flow was pretty decent coming in at $26 million, but more significantly, I think, is the LTM-based adjusted free cash flow, which was still more than $60 million, more close to $60.3 million, $60.4 million. Top line still growing on all three divisions, notwithstanding what we just said. Again, very good performance on a digital trust base, which grew 18.4%. Still, again, witnessing operating leverage on an EBITDA base, which grew 21%. So I would say excellent maintenance of margin. It's not an increase in margin. which reached 28.8% in terms of the first half results. Cybersecurity grew around 6.5% in revenue. EBITDA was 4%. We will discuss about the margin, but it was around 9%. Business innovation obviously grew mid-single, so we're around 7%. It needs some explanation. We will give extensive explanation in terms of how EBITDA progressed in the first half. In terms of recent events and updates, this is on a one-age basis. You all know that in January, we finalized the 74% purchase of AVF. In February, we launched a new strategic operational advisory business in the SMEs and reached, in April, you know, 100% of Yoroi Swastikans and Corvalis. As a reminder, the 100% ownership of Eurois, Western, and Corvallis is already reflected in the net financial position. Just as a reminder, the Board of Directors also authorized the purchase and disposal of Treasury shares. Turning to page six, I think this is more of a graphic representation of the results. Most of the numbers have already been highlighted. Let's concentrate mostly on seven. Slide seven shows you obviously the cadence of the different quarters. We did not purposely remove this slide because we wanted to highlight to the market how important, again, for us is the second half of the year. Second half of the year, in the last three years shows 60, 61, and 63%, so I'm talking about 2H generation of EBITDA. This year, this percentage is going to be even more important. As we know, the second half will be important both for, you know, the divisions in the case of business innovation, first and foremost, and then also in terms of cyber. We highlighted the contribution or the missed contribution of ABF in that dotted line on the right because it kind of shows you where the miss is and obviously the percentage of the second quarter in terms of the midpoint of the initial guidance that we provided in March. We will have time to discuss about that. At this point, I will leave it to Oldone, which will kick it off from page 9 of the census, you know, analysis of the PNL. Oldone?

Okay. Thank you, Joseph. Good afternoon again. So here, after the introduction of Joseph, we go through the PNL of Q1 24 that we compared both to 23 as well as, you know, on the same perimeter basis. As Joseph said, you know, Q1 showed positive revenue growth over the previous year, but the revenue mix that happened then was slightly unfavorable. In cybersecurity, we, within the implementation services, we deliver more products as a resale of product services and this unfavorable product mix has definitely impacted the results. The same I would say occurred within business innovation where the expected decline in the rates on subsidized finance, and this was definitely expected, has not properly replaced by the 5.0 sales motion we have, and this has impacted the margin. I would say these are the two main drivers, and I will divide later on that impacted the results. If we go through the P&L, We do see that we have a quite significant increase in terms of third-party costs where the percentage of revenue landed in the region of 40% on the same perimeter basis. mainly driven, I would say, mainly driven from the revenue mix and partially driven for a potential better management that we are planning to have in the second part of the year. As far as concerns personal cost, I would say they are definitely, you know, although the revenue, they grow in the same period, they came not as expected. They are under control with an incidence on the revenue that is almost the same over the period. We are in front of a business where part of the revenue has been shifted to Q3 and Q4, and this is something that year over year is definitely emerging quite clearly. And so when we talk later on, we will see which action we are going to take on these subjects. ABTDA landed at 25.5 million euro and this has been impacted as already highlighted during Q1 by the fees related to the ADF purchase as well as, you know, other costs in terms of slightly layoff of people that we have done in some specific areas. Depreciation, amortization, and provision, we have no significant difference from what we do expect. I would say is continuing the level of investment from business union in order to support the continuing innovation of our portfolio of product and services. And I would say especially we will see then in terms of capital, especially digital trust is, you know, investing quite heavily in order to continue to maintain the best of capabilities in its portfolio of products. Financial charges, here we have a mix. Definitely we have some positive financial income coming from non-recurring items as we had some decline in earnouts that occurred during Q1. And when we are talking about interest, obviously the net financial position moved quite significantly compared to the year-end 23, but the level of interest is under control, so the increase is very light. Overall, we came to a net profit of continued operation that is positive, and we benefit here from, you know, a tax anticipation that we have done in order to get better tax relief in the next years. Here we have page 10. the adjustment, you know, from the reported income to the adjustment in the stated results. As you can see, we have several impact here. And I would say, you know, I will concentrate the focus on the three last numbers. of the column 1H24. So basically we have relief over and out for 3.9 million euro. Then we had to rectify the amount we have in our books on defense tech driven by the lower market value of the company, related obviously to some results, and then we have the tax effect, the non-recurrent taxes that I already mentioned. If we go to the balance sheet, I would say that The balance sheet is running as expected. We have no major variances compared to our expectation. Obviously, our net invested capital went up 26%, mainly driven by the acquisition we have done both in ADF and in Lenovis. for a total amount of 150 million, so basically this is the driver. And I would say very important to mention is that our working capital management, again, help us to generate a positive cash flow. This is a key indicator that we are monitoring, and so when you look at the cash generation on short term, you know, we know that the first half has been slightly impacted by the drop in the EBITDA, but the net working capital has been properly managed also during the first half. Net financial position, as I mentioned, is driven by the acquisition we have done over the period. In addition, you know, we distributed almost 30 million dividends over the period. You know, total shareholder equity obviously is declining due to the significant distribution of dividends during the month of June. The net financial position, we talked about it, and I would focus on free cash flow on continuing operations. You know, technically, we do see a slight decline compared to previous year, but still, as already Joseph mentioned, we were able to deliver on an LTM basis a free cash flow well north of 50 million euro. And so we do have in this first half a slight decline, but it's mainly driven again by the delay of ABTDI booking. And like I said, we properly manage the working capital. And I would say in the first half, we accelerated our investment in the most, you know, profitable and stable division, business unit that is digital craft as we continue to invest in order to renew, you know, our services, our infrastructure, and the products that we are bringing to the market. I would skip the page 13. Like I said, it's a graphic analysis of what we have already seen. I would say very important is to look at the net financial position LTM bridge. So, the group has invested over the last year more than 200 million. So, the group basically at mid-23 has squeezed the net financial position close to zero. So, we had room for investing, and so we completed the acquisition of Ashertia, EVF, and Lenovis over the period. And then, as you can see, you know, we generated more than $50 million as adjusted free cash flow from the operation. We were able to distribute dividends in the region of $30 million, and then for the rest, we do not have major difference compared to the previous year. Now I think it's time to move to page 16, and I will jump immediately to page 17 in order to start to comment on operational performance of our business. Like I said over the last 10-plus conference calls, we do have a further positive performance from Digital Trust. Both InfoCert and Visura, the two main legal entities in the group, have delivered a significant increase with an operational leverage, a very interesting operating leverage. So, on a same perimeter basis, you can see here that the growth in the revenue has been 9 percent, which is very aligned to the previous quarters. with the ABTDA going up in double digits. If we add Asherzia, you know, basically the ratio has doubled and, you know, the component of revenue coming from international is increasing. But I would say even more important is that the solution related to both legal NAIT and legal SEPT, as well as GO-SIGN, has continued to grow significantly over the last half year. You know, here, you know, the ABTDI increased close to 20% with a very interesting ratio in terms of profitability. So I would say here, definitely, again, a brilliant quarter and a brilliant delivery. Cybersecurity. In cybersecurity, we all know, and I think you all learned over the period that this is basically a segment of the IT business, and the IT business has a significant acceleration driven by the spending on the budget by the customer in the second half of it. Definitely, we are not that happy about the absolute results of ABTDA in the first task, but again, we are talking about 800K euro difference or even less compared to previously. So, here, like I said before, the driver has been mainly So we were in a position to deliver more products and services. Services will come later on during the second half. And so this has been the main drivers. I would say here we have a few things also to improve, and already we put in place action to improve it. And what I would say, if we look ahead and look in the head versus the second half, I would say that we ended up the first half with a very promising backlog of orders. This is something for which we are very glad about that. And we do believe that we have all the opportunities and capabilities to deliver, as it happened also in 23, a very strong second half. So here, you know, again, we did not deliver exactly as we expected, but, you know, the gap is huge. absolutely not relevant and, you know, the second part of the year in terms of profitability is like two and a half times the first half. So this difference is something that is not a worrying thing also because, specifically because we have a very strong backlog as an opening balance of second half. Let's move now to business innovation. Here the situation has to be explained. First of all, I will keep for a second apart ADF, and then we start to talk about, you know, the traditional core business of the business innovation. We, within our internal plans, we already knew that ADF the lowering of the rates in the tariffs on Industry 4.0 was going to happen. We were fully aware of this and we factored it in our first half projection and in our full year projection. So this has been known. Obviously, we put in our original budget quite interesting business from Industry 5.0. And this has taken or is taking more time in the approval process from the public bodies in order to be available. This is something that has impacted our first alpha and this is probably, is definitely the main driver of the results if we take apart ADA. Obviously, this is putting us in an even more challenging situation. I think everybody here is going to remember, you know, the very strong second alpha we delivered last year. And here, you know, the NICSI is changing during Q1, so a lower contribution from subsidized finance, a higher contribution from new businesses that we developed, you know, definitely was able to keep a certain level of revenue, but this was impacting in terms of ABTDA. Again, here the last, I would say, June and also the information we have from July in terms of incoming orders are very promising. And so we are in a position where we will be not in a position to fully recover. you know, the gap of Q1, but we are in a position to perform the second half accordingly to the original plan and probably being slightly below the original budget, mainly driven by this. Obviously, the second part of the year is going to be very, very, very challenging. But, you know, people around the table, I think everybody knows T-NEXT. Everybody knows what Warrant and Business Innovation were able to do. delivered in the last part of the year, both in 23 and even in 22. So we are reasonably confident at this point in time to project still results not far from the original plan we have here. If we talk about ADF, again, here Obviously, we are very disappointed. Sorry, I'll move to page 20 now. Obviously, we are very disappointed of the results. This has to be very clear and cannot be different. So we had a delivery in the first task well below our expectation. very closely, we are working very closely with the management of the company. And we, everybody is aware that the political environment in France during the first month of the year I would say during the full first half has been not the best condition where to work. So basically there has been a government change in January and we all know and I would say that what happened in close to the end of the February with the city's significant budget revision that was a public information around, you know, a possible cut of 10 billion euro has definitely impacted in two ways. The first way was a significant slow in terms of projects accepted. On the other hand, also on the much more selective way of assessing projects. So, although the level of, you know, backlog was very positive, then the percentage of projects that were filed and then won was below the expectation driven mainly by the political situation around, you know, the public bodies that reacted at this cut. in slowing down the acceptance and, secondly, to being much more selective. Obviously, again, it happened also in order to create, unfortunately, the perfect storm. The dissolution of the National Assembly at the end of June and the election was another Having said that, obviously, this has heavily impacted the results. That is very clear. And the results are, yes, like I said, we are very disappointed about that. But we are putting a lot of effort in order to start an immediate and strong recovery in the second half. Here, definitely, this situation allowed us to swap out of the balance sheet 23 million of financial debt. As you know, with this information, we are not going to have earn outs. And this is definitely reducing our capital investment. Second, this has been seen from the local management as a postponement in the range of six, nine months of the planned delivery. But we are working closely with the manager in order to put pressure on this. And also we slightly review also the value of the put and the end of the period because obviously this is something . I think this is very, very important. So again, not happy at all about what's happened here. monitoring and working, monitoring closely and working hard on the subject, obviously we will keep you updated and we do expect a reverse of performance in the second part. I would say that and, okay, I will comment a bit also when Joseph will go through the update of the guidance. Okay, I leave now to Joseph for the closing remarks.

Thank you, Adonai. So, to be very clear, we're on page 22 of the presentation. We are giving an update on the financial targets. Let me explain all of it and obviously, you know, Adonai, please feel free to add anything that we're missing here. The guidance has been updated in excluding ABS. This is the most important thing I would say of this call. The performance, the underlying performance is showing continuing progress. So the underlying business trends are strong and sound. We want this to be crystal clear. We want this to be very, you know, achievable also in terms of the output for the second age. ABF's contribution for fiscal year 24 has been moderately revised, and that was due to the political events that we just mentioned. Transiciones 5.0, as you all know, is a major factor for the contribution of BI, of business innovation. So, the benefits are expected to come in the latter part of the year. We explicitly said that we are expecting contribution already in the second half of August, more likely beginning of September. So no earlier than the end of Q3 and Q4, we will see a strong acceleration. So again, for the last four to five years, business innovation is going to be extremely busy already, end of Q3 and Q4. How does all this, you know, end up in terms of numbers? As you can see on this slide, we have parsed out ABF. So we're isolating the effect of ABF. Without ABF, revenues are expected for fiscal year 24 versus prior year to be growing anywhere between 11 and 15%. EBITDA adjusted, which I think is an extremely strong message, is expected to grow anywhere between 10 and 14. When we add the new outlook of ABF that Aldona just pointed out, We are looking at, again, revenues for fiscal year 24 versus prior year growing 20% and EBITDA adjusted growing 22%. So, we're still growing in excess of 20% in terms of EBITDA. In terms of the NFPO or EBITDA adjusted, the overall target is within the obviously announced the guidance at 1.9 times. This does not include any additional M&A in terms of guidance. I wanted this to be very clear. I don't know, Don, if you wanted to add anything.

Yes, yes. You know, thank you, Joseph. You know, we want to try to make everybody very clear. look at the next for a while as, you know, the ongoing business, traditional business we have before ADF. Still, we are talking about, so we are confirming the range of that the implicit range we have excluding ADF, so it means in the range of 10-14% growth of the ADTDA. Obviously, driven by the performance of the first half of business innovation would be, you know, more close to the lowest part of the fork, but I think it is not changing the picture. So the message we want to share with you all that the core traditional business of Tinexta has not changed. We have, and it's very solid, and it's growing double digits. This, I think, is very important. We had a weaker, slightly weaker than expected first alpha, but again, you all know how the business is moving quarter after quarter, and Joseph and myself shared many times with you all, and so here is. So this is important. About ADF, obviously, we reduce our guidance. Obviously, we are, everybody's alerted on this. We are focused in following on a daily basis what's happened, the management of Warrant and even, you know, the corporate people involved in that. You know, the management strongly believes that this is what they committed to our board. to deliver by the end of the year, and this is reflected in the total guidance we are giving. I would say even more important, despite of this disappointing first-half results of ADF, if you look at the leverage of the group, it's still there. It's exactly, again, within the fourth we gave at the beginning of the year. This has to be taken significantly in consideration because this is so basically the message that Joseph, myself, and the managers is transferring is that ABTDA growth of the recurring business is there, exactly aligned with the guidance, and the leverage is still there again. Then we have an issue of ADS mainly driven by political environment, and so we are putting under pressure the management in order to deliver what they committed to the board of finance.

At this point, we can open Q&A. Please, operator.

Thank you. This is the Coruscall conference operator, and we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. That's star and one. We will pause for a moment while questioners are joining the queue.

The first question is from Srimanan Chandra with Stifel. Please go ahead.

Hi, sorry. Can you hear me? We can, Chandra.

We can. Go ahead. Yes, go ahead.

Thanks a lot. So yeah, a couple of questions from my side. The first thing in terms of the guidance, Have you de-risked the second half enough? Because when I look at the cybersecurity side of things, at least when looking at the guidance for the year initially, it was about in the mid-teens. And now you started off the first half quite weak. So I'm just wondering, do you have enough bandwidth to deliver a similar guidance, assuming that the guidance downgrade is only on the ABF side of things. That was my first question, and a sort of related one is, do you envisage any kind of impact in the second half from the issues that CrowdStrike has faced in the recent weeks? That was my first question. And in terms of ABF, A six- to nine-month delay is a significant delay, and given the uncertainties, maybe it's a bit too early, but I just wanted to get some early thoughts in terms of how you think this might affect your medium-term guidance that you're looking at. Thanks.

Yes, okay. I keep the questions.

I take the questions there. You know, like I said, on cybersecurity, you know, We have been late to start compared to previous year, that's a fact. The revenue was going up, so this is positive. The margin is going down, but it's mainly one thing, is the revenue mix we delivered, and you know, you know, sometimes it's very difficult to balance everything within a short time period. But, you know, so the issue we face, you know, where the first half is the smallest part of the year, so if you have more products, you have been negatively impacted. we do expect in the second half not to be impacted again by this revenue mix because of the portfolio, because of the traditional flow of the business. So overall, again, we are not changing our view on the year. Definitely it's a bit more challenging, but, you know, Actions are already in place, and like I said, I think that the level of order portfolio and the backlog we have is definitely help us in looking in a solid way to the foreigners. If we talk to ADF, the answer is, if I look at 24 and 25 for sure there is a delay and this is also what the management of idf reported to us so if for me term you you talk about 20 20 24 and 25 for sure i would say that We have to look at it. We are monitoring very carefully. For sure, it's going to be impacted much more heavily 24, and this is already incorporated in our guidance. Although, you know, still a challenge is there for the management, but this is what they committed to our board today. And for 25, I think it will be something like in the middle before the original projections and now. In terms of return of capital invested, definitely we swap off from the debt 22 million. So, you know, less results, less debt. We do believe that in the figures, you know, the leverage we do expect is still slightly below two times.

John, I think you had also asked about cross-strike issues. Well, we're not experiencing anything like that as we speak right now.

Perfect.

Thank you.

Thank you.

The next question is from Isacco Brambilla with Mediobanca. Please go ahead.

Hi. Good afternoon, everybody. A couple of questions on my side. The first one is on Asertia. Looking at your details on perimeter effect, it looks like the asset is already basically the same profitability of the rest of digital trust business units. So if you can comment on A bit on integration of this asset, which looks like it's going quite well. Second question is on taxes. Odon, if you can elaborate a bit more on what helped you in the first half and maybe help us for modeling purposes to better understand what we should expect for the full year in terms of tax rate.

The first one?

Asherzia started well the year. Asherzia is a business where sometimes we have peaks of business when we deliver our solutions. Let's say that as of the end of first half of the performance financially wise is perfectly on track. I would say even more important, and we do expect by the end of the year the companies delivering what's expected, what is most incorporated in our forecast. Now, I think here we are. working together with Ascensia management in a very close and productive manner. I think we are working together in order to having, you know, a significant exchange of competencies and capabilities, and competent capabilities, and we are working on several matters. First one, you all know that they have a quite strong team in terms of solution development in Pakistan, and we are planning, you know, to have a centralized piece and to reduce, you know, partially third-party at local level and to concentrate over there where we have strong skills, lower cost, and in order to internalize these competencies. Second, also in terms of sales approach, now InfoCert, together with Ascertia, we are in a position to offer to clients and customers solutions that can basically fit every need of the customer. Whether we are talking about on-Cloud solution or on-premises solution, this is a unique capability that InfoChair has in the digital trust environment. Very happy about that. We have several areas of cooperation and the trend of financial performance is aligned. So, fine for this. About taxes, okay, very clear here. Here we have a trade to say in Italian, so to make it very clear, so we take the opportunity of a francamento. So basically, we had a cash out of 4 million euro, and we have a tax benefit in the P&L. So the net was basically 3.5 million euro benefit that we recorded during Q1. If you look at our tax rate, I would say that this is not significant to look at Q1 where we had such level of basically profit before tax close to zero. You have to consider that there are few amounts of money that are not deductible, you know, all costs we incurred for acquisition that are not, so they are going to increase the taxable income of 4 million, so this is bringing 1 million ERES on our P&L, and then we have ERAP that accounted for another million. Having said that, we do not expect a major impact on the tax rate. So overall, by the end of the year, the tax rate is going to be what we forecasted. And obviously, we have to add the benefit that we got from this affrancamento. But nothing special is going to happen there.

Can you hear us? Hello?

Mr. Brambilla, has your question been answered?

Yes, sure, of course.

Okay, thank you. The next question is from Andrea Bonfa with Banca Acros. Please go ahead.

Hi, thank you, but my question has already been answered. Thank you very much. Thank you, Andrea.

We knew that. The tough one.

We move to the next question from Alexandra Arsova with Equita. Please go ahead.

Hi, good afternoon. Thank you for taking my questions. Three on my side. So the first one, again on EBS, if I may. One of the reasons you explained to us when you acquired the company early this year was the fact that you were trying, of course, to diversify the business of Italy, and France was a country with a lot more stability in terms of government incentives for SMEs and generally a more stable country. Now the situation is likely changing, and in Italy we are still having these ongoing issues on delays. in Transizione 5.0. So the end question is, are these issues changing your approach to business innovation division to future M&A pipeline and general overall strategy on this division? So this is the first question. The second one is, again, on business innovations on the Italian part. So you mentioned that you are ready with your clients, SMEs clients, on transition 5.0 and 4.0 to be ready to work with them and to invoice all the activities once the regulation is set up and, let's say, enforceable. So can you maybe give us a little bit more of color on what is the actual backlog or soft backlog you can invoice within the end of the year once the regulation is set up? And the last one is maybe a technical one, just to be very quick and clear on the guidance. During the previous guidance, you usually provided the total, let's say, growth for the company and organic growth. So now you provide an indication X ABS. So just understand if the old organic guidance is, if I understand confirmed, and maybe just in the lower end, but still confirmed. Thank you.

I keep the first question on IDF as well as the second on warrants, and then I leave to Joseph the third one. So on IDF, well, I think over the last decades, the risk premium in France was... you know, lower than in Italy. So I would say this is normal. I remember several investors asking Tinesca to go abroad in order to lower the risk and to have more balanced areas where to operate. Having said that, it happens. This is clear. Having said that, we have But, like I said, nothing disruptive. Like I said, the leverage of the group is still there. ABF committed to the Board of TNECSA to have a prompt, let's say, recovery and having that for a delay of six, nine months. So, this is not changing at all our long-term strategy. Obviously, it's something definitely unpredictable. And this is the case. Facts are there. We are reacting. In this moment, we are, you know, we are the recurring business that is solid, growing, delivering cash, so no issues. A lighter first half, fine, and then we have the second half, the next, I will deliver what from me. Then, if we move to ADS, we talk about opportunity of synergy. For example, an opportunity to address the subsidized finance segment of the market that is not covered by ADS is still an opportunity. Obviously, we have to face unexpected market conditions, and we do. We do face this situation. We react, but again, we lower our depth with a lower ABTDA expected, but at the end, the leverage is there. The group is still solid. The core part of the group is growing, like Joseph said, more than double digit. About warrant, I think, you know, your view is correct, so we are working hard with our customers. Customers are very interested in 5.0. Rates are very interesting for customers and for us too. We do expect, we are working with them, we are getting orders and we do expect to evolve. Obviously, the level of risk of this second part of the year of water is higher than we planned at the beginning of the year. So we review slightly below our targets. But still, you know, we are floating within the fork.

To wrap up on the last question, Alexander, on the guidance, I think we reiterate the message. Parsing out ABS, the business is solid. The sound growth is there. We have highlighted the interval within which we expect ABS to grow, and that is 10% to 14%. We think that this is very positive news because this means that aside from an acquisition that can be isolated in time and it can be isolated in the area and the geographical area, which it is, the overlying business is actually doing very well. So that should answer your question. So the 10% to 14% are probably going to be in that range, maybe as you were correctly mentioned in the bottom part of that of that interval but overall you know 10 to 14 uh without abf and 22 with abs we still believe are very round and strong numbers for the market okay very clear thank you as a reminder if you wish to register for a question please press star and one on your telephone

The next question is from Gabriele Berti with Intesa San Paolo. Please go ahead.

Hi, good afternoon. Just a quick clarification from me. Odone, you said that you expect 23 million benefits on net financial position due to savings on ABF and out. Is this correct or did I misunderstand? And if it is correct, is this impact already included in the NSDAP on EBITDA guidance you have given for 2024, or you will have this benefit on 2025?

No, no, no. That's totally correct. I tried to explain myself slightly better. So driven by results expected, the amounts flew away. And so, we already reflected in current, in the actual results, and therefore there will be not any more there compared to Q1, for example. And second, obviously, we review the cost of the put because of the delay of the plan implementation. So the total is amounted around 22.5, but you can find also, I think, in our Relaciones Regestriones.

But any case, that's it.

Okay, thank you. The next question is from Russell Pointon with Edison. Please go ahead.

Good afternoon, Joseph. A couple of questions. Just on the five-pointer, information just for not knowing this can you actually do the work on behalf of your customers ahead of them actually claim for the deductions or is this a matter of and so therefore you can make the claims as and when it's you know they're allowed um so that there's no in the timing of what you can do for them and second just following up on assertion uh your was was was Can you see a little bit? Because in Q2, it looks as though it was about 6%, and it was much contribution. So can you just qualify what happened in Q2?

We got your first question. We didn't get your second one because you're badly breaking up. I mean, what's the question on Asherzia that we did? What did you say?

So I saw that you said that the first half was good for Asertia. The difference in performance between Q1 and Q2, because both slowed a little bit, profitability was good.

I got it. I got it. Let me try to take a stab at these questions, okay? So let's start with 5.0, right? Transition 5.0 is something that, you know, it is the cause of the lower margins on BI. And we said this in the first quarter, and this is again the case in Q2. The explanation is very simple. We bear the cost. but we don't have the equivalent overall revenue of this. Now, I understand your question, and the question is, can you start doing the work before? The question is, we are mapping the overall market very closely. We go to our clients. We speak to them. We try to identify beforehand any probability that there is in terms of understanding what their needs are, But obviously we need to have certainty in order for us to actually start and take over and carry out the work. So, you know, the answer to your question is we already are proactively reaching out, but let us, you know, give us, you know, the time for these decrees because they are that need to be actually approved and therefore, you know, the process starts. One thing I want to really say to the market is, and we've seen that in 4.0, once transition 5.0 starts, There's no stopping it, right? So this is a very good part. We've seen that in 4.0. It's been going on for three years. We said that the 4.0 was going to come to, you know, a big diminishing returns because you're looking at deductible rates that go down versus what they are at the beginning. But now we are in 5.0 where deductible rates can be as high as 45%. So, you know, this is good. It's very good news. It's just a matter of timing. That's pretty much it. Now, in terms of a share, I mean, these businesses obviously can be lumpy. They are lumpy by nature, right? So if you want it very well, if you're doing pretty well, that's the first quarter. But we don't see any issue whatsoever in terms of obtaining what we expect in terms of year-end results. I think this is... Very good also because, remember, we consolidated Ascertia only as of last year, and also we are now seeing the pure effect of Ascertia. Remember, Ascertia has, from a strategic standpoint, it is very complementary because it's a complement to the offering of InfoCert, and we're actually able to participate to certain tenders, as you might recall, which we couldn't have with InfoChat on a standalone base.

Thank you, Joseph. You're welcome.

Operator, do we have any other questions?

No, there are no more questions registered at this time.

All right. Thank you very much. I'm available to all the analysts and investors that would like any additional information, so you can easily reach out to me. And we thank you very much and stay tuned. Have a good evening. Goodbye.

Good afternoon, everybody. Thank you. Bye-bye.

Bye.