Tinexta S.p.A.

Good afternoon to all of you that joined INEXA's first half financial results presentation. Here with me today, the Group Financial Officer, Oddone Pozzi. Good afternoon, everybody. As usual, I will go over some highlights and updates. Oddone then will deep dive into 1H results as well as the business unit's dynamics and updates. And then we will be closing with some closing remarks. The last part of the call will be dedicated to Q&A. and as a reminder all the recording and the necessary documentation such as the press release as well as the presentations are already available on the company website so let's turn to page five so we can go over some of the key group financial data revenues came in at 214 million Pretty much in line with previous year EBITDA adjusted was 34 million with a small decline of 3% versus the prior year EBITDA on a reported basis was 28 million net profit on an adjusted basis was 2 and the net financial position was 343 million versus the 240 of the fiscal year 25 Very strong came in in terms of cash flow results, 52 million, plus 39 versus the prior year, and even an LTM number, which we'll discuss later, was very, very strong. Let's please turn to page six of the presentation so we can go over some of the key highlights. Revenues, as we said, are 214 million, pretty much flat versus the prior year, reflecting growth both in digital trust which grew 3.8% and business innovation business units growing 2.9% which were offset unfortunately by Tenexa Cyber's performance which declined by 17%. EBITDA adjusted was 33 million dragged down by a significant decrease both in the cybersecurity and business innovation business lines despite a double-digit growth instead in the digital trust business unit. The EBITDA on a reported basis was $28 million. The margin was $15.7 million when we're looking at EBITDA adjusted margin. The reported margin was 13%. EBITDA reported instead was negative 40%. One million, this was intended to ABF, but Oddone will go over the impairments in detail. Net profit on an adjusted basis from continuing operation was 2 million, while on a reported basis it was negative 43 million. Net debt we discussed, and maybe it's worthwhile mentioning that the change in the net financial debt mainly reflects the estimated value of the exercise of the call option on Bregal Milestone, but this is a known fact. Free cash flow from continuing operation, again, was $53 million versus $38 million a prior year, and kudos to, I think, the entire finance department, because $85 million of free cash flow on an LTM basis was a great result, specifically in the last Thank you for joining us. Already the KPIs from a business unit perspective, very good top line, I would say, in terms of revenues for digital trusts, even though it was shy of 4%. EBITDA was much stronger at 13% growth versus prior year. EBITDA margin was at another historical high, 30.2%. Cybersecurity instead was deeply impacted, with revenues declining 17% and EBITDA declining 59%. The margin was really mid-single-digit at 5%. Business innovation grew 3%, while EBITDA declined 36% versus the prior year. The bottom part of the slide. Instead, we are recapping some of the recent events. As you all have been aware, as of June the 10th, there was a launch of a voluntary tender offered by Zinc Bitco. And by July the 22nd, the final results of the VTO, again, voluntary tender offer, showed an overall 90.34% of the share capital of Tinexta. Relatively to the last couple of days, between July 24th and July 29th, the offer continued to purchase Tinexta shares, reaching a total as of July 30th of 90.36%. I think the major takeaway here is that the consideration due to for the shares remaining will be determined by Consul. So you will obviously be informed by all means. Turning to page seven, I think most of these numbers have been commented and highlighted. So the revenues were flat. Revenue declined 3%. and at this point I will leave it to Oddone turning to page 9 of the presentation.

Okay, thank you, Josef. Good afternoon again to everybody. Here we have the results of overall group and by business unit as you may have seen in the press release. We are delivering now, sharing the results of H1 while the results of Q2 has been Thank you for watching. Overall, still the revenue is flat compared to previous year and also on LTM basis we are basically flat with the end of the year. On the ABTDA, like I said, we recover a bit despite, you know, results of cybersecurity that unfortunately was definitely much lower than currently we expected, but already some actions have been put in place in order to restore partially the situation by the end of the year. Digital Trust went well in terms of revenues. We have a growth of 4%, but in terms of EBITDA, we are up of 13.4% as we were able to handle The costs that affected negatively last year in terms of third-party costs and cloud, as we shared with the market, here the company is back to delivering a higher than double-digit result in the first half. Cybersecurity is facing a tough H1. The revenue continues to go down basically aligned to the performance of H1. The pressure on the market of system integration is heavily impacting the results of our division but also in cyber security despite reasonable profitability in terms of EBITDA margins still the revenue are weaker than expected I would say mostly driven by internal effect you know our capability The drop cost has been there because we left 7 million of revenue but we dropped only 2.5 million of profitability. We were able to cut quickly some costs but not enough to restore the situation. The aggressive action we have taken over Q2 on cost will start to deliver back in Q3 and Q4 and we do expect to partially recover compared to H2, even though also for H2 we are not planning a recovery in terms of revenue as the trend in this moment is what we have seen. For business innovation, I would say that if we are going to take out the impact of ABF, the results of business innovation are finally back to a positive, let's say, growth, despite, you know, the number in this, looking at the numbers, you know, basically decreasing. We are all growing the revenue, but not in terms of profitability of H1, but I will deep dive later on. In terms of P&L, as you may see already commented in terms of ABGDA, as you can see here, we were able to drop the cost of third party and services cost, as like I mentioned, in terms of Thank you very much. Public offer. You know, the company has been involved in many, many legal matters as well as fairness opinion for the board, for the independent board member. And so this has been a burden of cost and activity for our group over the last six months that is carrying some costs. We had also some cost of layoffs here as well as some costs from consultancy in order to speed up a cost out program. here on the business unit that are facing more difficulties. Depreciation amortization includes 30.5 million that then net of the fair tax liability went down to 31 million related to ABF business. Basically here the trend in terms of success rate went down to the minimum level ever, just before France entered into very different dynamics compared to the past where the success rate All the filing was 71% in H1. The success rate at the end was 24%. So definitely, you know, we are reacting in terms of, again here, in terms of cost cutting and, you know, not replacement of resources and probably we will accelerate further. But the situation as of today is this. Financial charges overall, the cost of debt is... Just we accounted the put and the call for the minority of the Next Innovation Hub and InfoServe, but not yet. We had the cash out, so overall the financial cost is the same, while obviously last year we got benefit as financial income that came from the cancellation of put on Asherzia and ABF. Overall, the result has been impacted, like I mentioned before, by the depreciation from ABF. In non-recurring results, the non-recurring impact is quite detailed over here. I would say that the main point is related, the main difference compared to the past is related To ABF, I would say no major other impact that I have not yet commented, like the non-recurring service cost that we had on the past. Net capital invested decreased compared to the end of the year. Obviously, here we benefit as already Joseph shared with you. We had a strong organic decrease in net working capital that helped us to deliver a very strong third generation. and despite, you know, of the overall results, it means that we further improve our DSOs down the road. Obviously, we have amortization on top of the, let's say, depreciation of ABF. Net financial position went up as we accounted already in Q1 the potential debt for the payment of the exercise of the call over the minority of ABF. Still the process is ongoing following the shareholder agreement and the contract with the minority. We do expect the following quarters to be completely set up. No other measure point on total shareholder equity. Obviously, here we have two impacts. The main impact is related to the decrease by the estimated value of the acquisition of the shares of Bregal in Tinexta InfoCert, as well as the impact of the loss of the period. If we go on an LPM basis, I would say I have nothing major to share here with you. And while if we jump to page 14, yes, to page 14, like I said before, we had a very strong, another strong quarter in terms of cash generation, strong improvement over the previous year that was less positive than the past driven by the Infocet that now is fully recovering. So we are up to 52 million in 1H and LTM basis we are up to 85 million. That is a very strong performance in terms of cash generation. Page 15, you can see here how we have the test of comment on the net financial position over the The ABTDA has planned that we are below the 3.5, despite we are including both the debt for Intesa and for the acquisition of the minority stake in the next generation from Intesa and the minority stake from Regal. So it means that the very strong cash generation allowed us to keep a well-balanced Thank you very much. I would say I would jump to the business unit in order to give you more color and many others around our operations. InfoCert went up to 3.8% compared to previous year. I would say that all the different legal entities performed Alessandra Ruzzu, Valerio Zappalà, Maria Maria Pozzi, Gianluca Rosboch, Danilo Cattaneo Combined with the tight cost management control allows to jump up already above 30% at H1 while Generally, we will achieve this percentage at the end of the year where we have a little bit more revenue there. So I think we are glad of the results and, you know, the potential of the company is there. CAPEX has been managed accordingly to previous year and so we had As you can see here, we lowered the production cost by 5%, G&A cost by 8%, so we had a combination of revenue growth as well as addressing strong actions on the cost side.

Cyber security unfortunately is down.

Quite significantly, the system integration activities from one side are bringing lower contribution, from the other side we have a range. and many others. Nevertheless, we were able to basically absorb five out of the seven million of Revenue declined but still many action has already put in place that will deliver a best situation, best results over the second part of the year. Although we are not expecting actually a recovery in terms of revenue. If we go to business innovation, Like I said, we are overall glad of the results delivered, because unfortunately we need to take out ABF from this pitch, and ABF, we know that we have a tough situation there, mainly driven from the market, although the company is trying to address this shortfall in terms of revenue. For the rest of the business, we are in a situation where financing grants You know, overall are improving over the previous year. We are in the middle of the campaign for the hyper-ammortamento. The level of incoming orders is satisfactory. You know, we have a challenge in front of us, but so we have a target by the end of the program to collect orders and we are on as of now perfectly on the trajectory and this will help us to deliver a very strong Q4 because you know most of the revenue will be delivered when the investment of our customer will be finalized and put on Put on working and at that time we will be able to deliver a very strong result. We do expect to fully achieve the results of the initial plan of the business unit by by the end of the year, excluding obviously what is happening relating to ABF. But this is, I think it's very important, it's a step there. Also we are trying to implement streamlining activities for which we will benefit in the second part of the year. I leave now to Josef for the final comments.

So, closing remarks on page 22. Following the first stage financial results, the board of directors updated the group targets. You can find them on this slide. Revenues are now expected to be anywhere between 0% to 2% growth versus the prior year. versus the 3% to 4% growth that we had disclosed back in March in 26. The EBITDA adjusted is now expected to grow between 2% and 4% versus the 6% and 7% that we had disclosed in March. And lastly, the net financial position over EBITDA adjusted or leverage ratio is expected to be anywhere between 3.3 to 3.4 times versus the 3.1 and 3.3 times. We had this class back in March.

Like I said, you know, in order to complete, so basically we do expect a good year from Digital Trust and Business Innovation and this is really key to us because, you know, they are the most important contributor Thank you very much. What's planned, but not for a weakness in terms of extraordinary costs that we incurred already driven by the public off, public tender and all the related activities. We have strict management of the cash flow will be continuously in play.

At this point, we are done with our prepared remarks. We can please ask the operator to open the Q&A. If there are any questions, please go ahead.

Thank you to the speakers today. We now have an opportunity for questions. As a reminder, if you would like to ask a question, please use the raise hand function on your screen or for those dialing in, hit star nine on your keypad. Once your name is announced, please remember to unmute your line and state your company name before asking your question. Thank you. There are currently no questions, so we will wait just a few moments to give everyone the opportunity to ask a question if they have any. As there are no questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.

Thank you very much for your attention, and if you have any questions, we're always available. Thank you again, everybody.