Tinexta S.p.A.

Ladies and gentlemen, thank you for joining Tenexta's Capital Markets Day in Milan. The presentation is about to begin. Let me hand over to Joseph Mastragostino, Chief Investor Relations Officer of Tenexta Group.

Good afternoon and good morning to the folks connected from abroad. Thank you for joining Tenexta's 2024 results and 2025 outlook. Here with me today, we have Pirandrea Chevalard, Chief Executive Officer of Tenexta, Odone Polsi Group Chief Financial Officer, Danilo Cattagno, Infochats CEO, Andrea Vingolo, Visura CEO, Andrea Monti, Tenexta Cyber Managing Director, Emilio Gisondi, Defense Tech CEO, and Fiorenzo Bellelli, Warrant Hub CEO. Thank you for being here, and we're very pleased to have you here in our brand new state-of-the-art facility here in Milan. For the purpose of this slide, I will go over the agenda. On page three, you can see what we will be discussing today, starting from an executive summary. Then it will be Pier Andrea, who will go over fiscal year 2024 business highlights. Odone will give us a deep dive of the financials for 2024. I will give you the BU outlook of all the three business units and then all three of us will take a stab at strategy pillars as well as the 2025 outlook where Aldona will guide us through the guidance for 2025 and we'll have some prepared closing remarks. Let me, given that this is an official presentation, let me go over the disclaimer. The company presentation includes forward-looking data based on internal management assumptions that are subject to material changes, including changes to external factors beyond the group's control, management data when presented or identified as such. Business unit data are divisional and include intra-BU items, which are instead eliminated at a group level. For detailed information on Tenexa SPA, it is recommended to refer to the company's documentation, including the latest interim reports and the company's financial statements. As you all recall, Tenex is an industrial group and offers innovative solution, in particular in the digital transformation world. The group is active in strategic sectors of digital trust, cybersecurity, and business innovation. And as you all know, we are listed on the star segment of Borsa Italiana. You're all very familiar with all my all stones for in terms of the equity story. Even this year, we registered further growth, but let me deep dive directly on the main numbers for financial data as of December 31st of 24. Revenues came in at 455 million, growing 15% versus the prior year. EBITDA adjusted reached 111 million, growing 8% versus the prior year. Net profit on a reported basis was 25 million, while on an adjusted basis, it was 50 million. Still strong, the free cash flow at 42 million. NFP, which reflects the most recent acquisition, came in at 322 million, or 2.79 times the NFP over adjusted EBITDA, and that includes the pro forma contribution of DefenseTech as of January the 1st of 24. Let's give a nice glance to the different business unit. Digital Trust, bottom left, outstanding year. We reached 65 million in terms of adjusted EBITDA. 207 million was the revenue on a fiscal year 24 basis. growing respectively 19% and 14% versus the prior year. Another historical high in terms of margins, 32% was the EBITDA margin for 2024. I think the numbers speak for themselves. Cybersecurity, we grew 19% in terms of EBITDA adjusted. This includes also the contribution on a pro quota basis. That means as of August the 1st of 2024, in terms of defense tech, so we reached 18 million, and revenues went over 100 million at 106 million, growing 19%. Very strong was obviously the margin, thanks also to the contribution of defense tech. Business innovation on the right side of the slide reached 44 million of EBITDA adjusted with revenues that came in at over 150 million and the margin was mostly impacted on the different mix. Here, I think every year is important to highlight how the growth continues to be very strong. Revenues in terms of CAGR reached 20% from 2014 to 2024. Even more importantly, I think, is the contribution in terms of EBITDA, where the CAGR reached almost 26%. NFP, as you can see here, reflects the recent acquisition. and the leverage ratio came in at 2.79 times, but Odona will give you much more color in terms of also covenants and what else. On slide 11, what you see here is basically the cadence of the EBITDA. Even this year, the latter part of the year, in particular the second half, was very strong and was very, I would say, The overall weight was around 69%, as you can see. We registered almost more than all the first three quarters put together in terms of EBITDA. In fact, the fourth quarter EBITDA had a relative weight of 50%, coming in close at 55 million. Pier Andrea will go over the business highlights, and I'll leave the word to Pier Andrea.

Thank you, Joseph, and thanks to everyone who joined us today, both in person and via conference call. First of all, I wish to stress how important it is for us to meet the financial community during this meeting to discuss the main factors that characterized our financial performance, especially in a year when, and I wish to underline this for the first time in our group's history, we were not able to deliver our guidance. Before going over all the elements which influenced our results, let us turn to slide 13 to illustrate some key events of 2024. At the beginning of the year, we finalized two important deals related to expansion of our business innovation division. The first being the acquisition of nearly 74% of ABF Group in January with the aim to enter the French market for subsidized finance. And the second one relating to the acquisition of Lenovis. I think it's mandatory to start from ABF, and our knowledge that its performance throughout 2024 has not been in line with our expectations. Why? The reasons lie on a variety of external factors which were outside of our control. In particular, the political turmoil in France was completely unforeseeable and unpredictable. The frequent government changes. I remember that last year we had four different governments in France. The frequent government changes led to significant budget cuts and cancellation and approval of public financing tenders. I wish to stress the fact that such phenomenon was unprecedented and never registered in the last decades of France's history. All these things put together in a relatively short period of time made a notable impact on the company's performance and weighed down the overall group result for the year. Notwithstanding that, and to diversify our business innovation portfolio, in February 2024 we acquired the 60% of Lenovis, an Italian company active in strategic consulting and lead management. And we launched our advisory business line, which we expected to become a very important part of our offering, especially in the mid-corporate range, where there are plenty of greenfield opportunities. Our cybersecurity business unit also experienced some important changes. With the acquisition in April, we acquired the remaining stakes of Corvalde, Ciro and Swoskan and we integrated them in the following month in Tinexa Cyber. Furthermore, we decided to exercise the call option on the 40% of defense tech in June, which triggered a mandatory tender offer that was completed in November. Both these transactions aimed at establishing Tinexa as a comprehensive cybersecurity hub in Italy required significant reorganization effort in order to improve our level of efficiency. The focus needed on this adjustment and the changes in leadership that followed impacted on the level of delivery for this division. However, 2024 has also set the basis for some key regulatory tailwind which we expect will drive future growth in these divisions. For instance, the launch of industry transition 5.0 tax credit plan in Italy, which has been amended and improved at the end of 2024 in order to facilitate its implementation, as well as the introduction of the DOA and its two directives on a national and European Union level. As for digital trust, already Joseph said, the numbers speak for themselves. In 2024, the division recorded an impressive performance with an adjusted margin of 31% and hitting again its historical high, notwithstanding the microeconomic and geopolitical uncertainty and the challenges of an ever-changing environment. We are confident that our strong brand positioning, our presence in key markets like France and the UK, and the opportunity which will arise throughout the regulatory efforts to increase the level of digitalization in the European Union, the European wallet de-invoicing will allow us to maintain interesting level of growth which this division has experienced in the last decade. 2024 results were still very positive with overall growth revenues reaching almost more than 450 million euros or if you want 11% versus prior year. And EBITDA adjusted, as Jose mentioned before, posted an 8% growth to 111 million euros with an healthy margin of 24.4%. Let me add to that by saying how important it is to Fortinextra to maintain a strong identity as a group and create meaningful synergies across our divisions and business lines and nurturing a strong company culture with over 3,000 employees in 12 countries across the world. To conclude on this slide, I'd like to provide an update on the dividend which we will propose to this year's General Assembly. 30 euro cents per share for a total value of about 40 million euro, showing that we keep our commitments to provide the shareholders with satisfying returns. Moving on to slide 14, I would give some more insight on the key items on 2024. Notwithstanding positive growth in results, we decided to react in a timely manner and we have carried out an in-depth analysis on planning and goal-setting model to set the targets for the next years that are first and foremost achievable and that prioritize delivery in the future. Q4 was still a strong quarter on the overall company results, with an EBITDA adjusted of nearly 55 million euros, boasting a margin of more than 36%. As mentioned before, one of the main actions of 2024 was the important reorganization of cybersecurity business unit, following the incorporation of three subsidiaries under the Tinexa cyber umbrella. Furthermore, with the successful acquisition of Defense Tech Holding under Tinexta Defense, we will be able to expand the scope of our business, create the basis for meaningful synergies, and enhance our presence within the very promising public administration of space and defense segments. Turning to slide 15, I would like to take the time to analyze what went wrong in 2024 and what are the actions we are already taking in 2025 to resolve these issues. We have already reviewed ABF performance, which was mainly attributable to country-specific downturns. Given the unpredictable situation, we took close attention to analyze the company's order book and customer basis. And at the same time, we closely scrutinized the process application, cost analysis, and resource allocation to identify areas of improvement. Moving on the single business unit, starting with cybersecurity, the main issue Determining a slowdown in performance was the strong focus on the incorporation of UROs, Roscan and Corvallis under the next cycle, as well as the impact of the different revenue mix weighed down by an increase of the resale component. A lower operational efficiency in services leading to lower level of performance despite the opportunities we will know driven by growing market. In 2025 our objectives are clear and they focus on improving the integration of all services within the business unit, eliminate redundancies, optimize the mix between and the third-party services, and most of all concentrate on the reorganization of the sales and operations departments with the aim to promote and expand the development and knowledge of key employees. The business innovation division has also been impacted by significant changes in the Italian subsidized finance landscape. Namely, in 2024, the well-known reduction in deductible rates related to industry 4.0 tax credit combined with the delay in the implementation of the Transition 5.0 program were two of the main drivers of divisions' drop in performance versus the past, together with an increase in demand of low-margin activities. The main action we are taking in 2025 regarding this division refer to a shift in the business unit business model toward a comprehensive advisory framework integrating all business line combined with a simplification of the organizational structure focusing on delivery and higher efficiency, also with regards to employee responsibilities. Slide 16. Let me highlight the next need to strengthen its role as parent company, staying away from the mere concept of being and holding, and instead taking on a proactive approach to foster unified strategy across business unit subsidiaries to promote a one group identity. The next key duty as the head of the group, as depicted in the slide, is to provide the subsidiaries with the shared services in strategy, M&A, innovation, investor relation, just to name a few, at the group level, as well as coordinate the cross-functional departments such as HR, legal, external communication, and administration and finance. foster the development of a single company culture across the different businesses here are some some key elements of the one group model which we are putting in place intended to pursue for the future innovation which has always been one of the key pillar of our value proposition Our main objective is to monitor the market for new opportunities and promote innovation across the different parts of our group, leveraging on capabilities and synergies across business units. Advisory. As mentioned above, one of our 2025 goals is to establish an advisory-based ecosystem under the T-NEXA brand to satisfy the ever-evolving needs of our corporate customers of all sizes, leveraging on the increase in demand driven by an evolving regulatory environment. This integrated innovative framework will allow us to expand our customer base toward segments with high growth potential, such as the public administration sector. Internationalization, of course. The expansion includes also new potential market where we can successfully replicate the Tinexta business model, especially in the European Union. Integration and synergy. One of Tinexta's main strengths as a group is the ability to cross-sell and create synergies across the different business units. such as the concept of cybersecurity by design, which implies the potential of implementation of cybersecurity services in the digital trust landscape. The implementation of a single group strategy creates a fil rouge across the different business units, which can be beneficial for collaboration and synergies to create more value. One group. Ultimately, our objective is to establish the next identity as a unique group, leader in ICT markets at the pan-European level, with a strong unified strategy across a variety of strategic business lines. The scope of our presence at an international level is, I think, very clear. With acquisition, we completed in the past years, we are now present in 12 countries with... 38 subsidiaries, reaching an account of over 3,000 employees. Italy remains our primary market, representing around 83% of our revenues, but we have a significant development of reach outside of Italy, as we can see in the graph below. This growth in international revenues is the result of our effort toward becoming a pan-European player in the ICT industry, a growing market full of potential opportunities. To conclude, before leaving you to the numbers and leaving Ordone, I would like to provide some colors on 2025, which will be which will be on setting achievable goal. For that matter, the guidance will be an outstanding one. Revenues are expected to go between 12% and 14% versus 2024, 7%, 9% on an organic basis. EBITDA adjusted to increase by 15%, 17% versus 2024, 10%, 12% on organic basis. The leverage ratio is expected to land between 2.2 and 2.5, confirming the strong financial solidity of our group and its continuous growth. I will now leave the stage to .. Good afternoon, everybody.