NEXI S.P.A.

Good afternoon. This is the Coruscall Conference Operator. Welcome and thank you for joining the NEXI First Half 2020 Results Conference Call. 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 Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Thank you very much. This is Paolo. Good afternoon to all of you and welcome to our first half 2020 results presentation and call. As usual, I'm here with Bernardo Mingrone, our CFO, and Stefania Mantegazza, who's leading our investor relations. We have a few other colleagues that may help us in cases needed that in the Q&A session. I anticipate that we'll have probably a slightly longer than usual presentation this afternoon. And the reason is that we try to give you as much as possible clarity on what is happening around the COVID situation, most importantly the recovery after the lockdown periods. And the presentation will be basically split in two parts. This COVID update that I will be leading, and then second, obviously, we'll cover the results for the first half of the year, and Bernardo will be leading that session. And then, as usual, we will have our Q&A session. So let me start from the executive summary as usual on page three. As you probably observed, the COVID-19 situation in Italy is currently under control. We normally have around 200, 300, from 100 to 300 new positives per day, depending on the day, with less than 50 people still in intensive care across the country. After two months of very strict lockdown in Italy, they were March and April basically, we had a reopening phase, a phase two that started at the beginning of May when basically we were having our first quarter call. And then a phase three started in June with a gradual return to normality. Also, international travel recently reopened with some country-specific restrictions in place. And as you know, the situation is changing on a daily basis, but that is, broadly speaking, the situation. The first half of the year, transaction volumes aggregating, acquiring, and issuing has been down compared to last year, about 17%, with a gradual recovery across all components from May. In particular, the two areas that are still behind, although recovering, are all the travel tourism sector and across sectors of international travelers contribution. We show data on this. Our acquiring volumes last week rolling, and you see again all the details here, was at around minus 9% with a strong recovery across category over the last couple of months in particular acquiring volumes on the Italian cards so net of the foreign cards are now back to pre-COVID levels while as I said foreign cards are still behind we are observing and we also give you data on there's a progressive reopening of the commercial activities with transacting merchants levels now back to pre-COVID and 2019 levels Obviously, as we said in the past, e-commerce saw a strong acceleration outside of travel industries during the lockdown period. This is actually continuing. The numbers we reported is about a 35% year-on-year growth for the first half of the year and a 43% year-on-year growth in the second quarter. As I said, net of the travel, tourism-related sectors and restaurants. If you take e-commerce overall, it has been slightly down minus 2.8% due to the important effects in the travel industry. Last but not least, we start to see early signals of acceleration across different sectors and industries of the structural shift from cash to digital payments. That was already happening. We start to see some signals that allow us to be thinking positive about the possibility what is happening is creating an acceleration in that transition. Page four, continuing executive summary. First, after your results, first of all, we just want to remind everybody that at the end of June, I would say a bit earlier than expected, we have completed the acquisition of the Intesa San Paolo Merchant Book. And therefore, given the nature of that deal, that was including the fact that the full economics for 2020 would have been coming to NEXI regardless of the date of completion. The numbers that we are reporting today are both with INTESA book contribution for the first half as well, and without to allow you to have comparisons, starting from next time, we'll only report including INTESA book contribution. Said that EBITDA in the first half has been going down minus 3.9%, including the organic contribution of INTESA. On a standalone basis, without that contribution, it has been actually negative 8%. On the revenue side, again, including Intesa, revenues have been down 6%, while on a standalone basis, it was about minus 8.5%. As far as the key business data are concerned, merchant services and solutions commercial activities are now back to pre-COVID levels. I will give you a bit more details, and we think this is positive. We are launching a new proposition in particular, one is called, I'll say a few words, a few more words later on. We are accelerating our pipeline of large merchants and many channeling propositions and actually commerce is having a step up in terms of gateway activations. On cards and digital payments, also here the activities are gradually recovering, even if they're not yet back at the level that they were at in the past. And you have certain areas of acceleration such as, for example, international debit and digital more in general. Third area of business, digital banking solutions. Here we see an accelerated interest, I would say, around the open banking ecosystem proposition and a good trend on self-banking and digital corporate banking and more advanced solutions. On the cost side, we are implementing our 100 million euro cash cost containment plan that we announced back in May. Also thanks to that, but not only thanks to that, the costs were down for the first half of the year at around minus 9.1%, and Bernardo will give you more details, including an update on where we are in our cost containment plan. As a consequence of everything I said before, the net debt on EBITDA financial position is at four times EBITDA, including the intensive merchant acquiring book and cost of acquisition. You remember we raised over time about a billion to fund that acquisition. Net off debt component actually would have been, despite COVID-19, at 2.9 on a standalone basis, which we believe is just confirming what we committed to you in the past in terms of trend of reduction of the time of our leverage. As you know, we suspended our financial guidance back in April, given the fact it was very difficult and is still very difficult to have a clear view of how the recovery will continue. Nevertheless, we are starting to have clearer plans and therefore we are keen to share with you what our ambition, I will not call it guidance, but in many cases our current plan and ambition is for the year. We see the possibility to come back to positive revenue growth towards the end of the year if the path of recovery continues along the current trajectory. If that happens, thanks to The cost plan that we are implementing, we have the ambition to grow EBITDA versus last year, including the organic contribution of the Intesa book. Without that contribution, we would be kind of in line with last year. With a full year EBITDA that we believe could be close to 600 million, including obviously the full effect of the Intesa book acquisition. On top of these, given the fact that the capex will be lower this year compared to last year, we expect to have a material growth in EBITDA minus capex versus 2019 with and without the intangible contribution. And again, as we said last time, we confirm to have a strong cash position, which is particularly important these days. Now, let me go into the update on COVID and the recovery out of COVID and what we see happening. Page five is simply the evolution of the same page we did present to you back in May. Here you see in gray the curve of the current positive case. They were peaking at above 100,000 back in April, and now they are trending towards 10,000 with a gradual decrease on a daily basis. The people in intensive care, which is clearly a very, very relevant measure because it's not just counting numbers, but it's also adding the concept of how severe is the virus and the situation. At peak, there were about 4,000 in intensive care. Now, the people in intensive care across Italy are less than 50%. Key dates on the right. As you remember, on the 18th of May, you had the reopening of retail businesses and restaurants with certain restrictions that in most cases are still in place. On the 3rd of June, free travel across Italian regions were allowed again. It was not possible to do it before that. And we also had the reopening to EU travelers that were incoming to Italy. On the 15th of June... travel across European frontiers was reopened, and we also had the reopening of certain entertainment activities, again, with certain restrictions. At the beginning of this month, in July, extra-year travel was allowed with country-specific restrictions, and now, on a daily basis, there are small changes to what the barriers, restrictions, and conditions are. As a note, we said last time that the Italian government was putting in place, as many other governments, a major support economy and society support programs. Curitalia, Liquidita and Rilancio were the three big names out there. Now, as you speak, the government is discussing a potential new support package for about 25 billion. And as you know, Europe has approved a recovery fund for European country and the amount of money that should be dedicated to Italy is 209 billion euros, which obviously creates the opportunity to invest in many different areas and relaunch many activities that have been suffering in this case, but most importantly, create a better future for the country in the long term. Now, within this context, what has happened on volumes? Let me move to page six. This is exactly a similar graph to what we've seen in the past. Here you may remember our combined acquiring and issuing volumes were kind of growing at 5% to 10% depending on the week and the month before COVID. With COVID, the lockdown went down to minus 50%. And when we met last time, we were already at around minus 30, minus 35 type of thing. Since then, with the reopening happening, the trend has continued to improve. Most recent data suggests that we are now trailing around minus 4, minus 5, minus 6, minus 3, depending on the week and depending on the various phasings and seasonality. That is the shape of the recovery so far. As I said, there are, however, very specific underlying dynamics that we would like to explain to you a bit better. Let me start, first of all, to show you what is happening when you separate Italian cards from international cards in acquiring here. We need to separate acquiring from issuing to make sure that we can understand the underlying dynamics. So on page 7, you see basically the same type of curve so this is the weekly rolling week year-on-year growth rate for acquiring only and the dark blue line you see it's minus nine percent last year and here with the lighter blue you see what is happening for the italian card that as you see over the last few weeks have been coming back to break even positive actually plus six in the last reported week. While actually the international cards and therefore the inbound travel to Italy, tourist but also business, is still very much behind. During lockdown it was at minus 95%, like I believe in most other countries. As the reopening was starting, Disney started to improve, as you see, slowly, very slowly in the beginning, a bit more, a bit faster, in the recent weeks, but it's still at minus 60%. And this is particularly important because in this season in particular, you also have a mixed effect because as you see below the graph, while normally on average throughout the year in acquiring international travelers would account for about 15% of the traffic, this is obviously very different across seasons and months. because during the winter it's much closer and the fall is much closer to 10%. Well, actually, as you get into the summer, you see, for example, July, normal July, 2019 July would be actually above 20% contribution. And therefore, there is a mixed effect that in this specific moment is working against us. And obviously, as we will exit the summer and go towards the fall, it should work in our favor. and so on and so forth as the underlying dynamics continue to move. So, bottom line, Italians and Burkina are actually starting to come in the positive effect. Also, including the negative contribution of the travel sector, foreigners are still very much behind, recovering slowly, but I would also say steadily. What is happening in terms of sectors? And again, here we continue to look at acquiring. Page eight, this is exactly the same page we did use last time. I know it's a complex page, but maybe now it's a bit easier because the second time we see it together. As a reminder, we have organized the different mergers categories and grouped them in three macro buckets. First of all, on the left, you see the basic consumption, which is basically groceries, Medicare, retail, utilities, and similar type of services, they account for 35% of our last year total volumes. Second, generic discretionary consumption. Here, you have clothing, household, and the various purchases that are more discretionary, and therefore, in theory, you can also postpone them. These accounts for about 34% of our total volumes. And then last but not least, the high-impact consumption, we're regrouping Basically, everything is travel or entertainment and leisure related to hotels, restaurants, travel, transport, and so on and so forth, which accounts for 31%. Again, there is an underlying mixed effect. I will show you in a second the numbers by category. Although there is a mixed effect because in the summer period, normally, the 31%, that is a yearly number in terms of weight of the impact consumption, actually decreases. goes up to 36%. And therefore, again, throughout the year, there is a negative mixed effect for this period that is somehow shaping our numbers. So it's going sector by sector. Table on the right, basic consumption when we met, we said it was kind of stable, actually growing double digit throughout also the COVID period. And actually, as we exit in the COVID period, this is continuing to run. You see 13% in May, 14% in June. Over the last week, again, another 14%. Interestingly enough, on Italian cards, this is a plus 18%. The contribution of international travelers actually would be important across sectors because it totalizes more than 20%. So also in this segment, you have some contribution from international travelers that today are not traveling to Italy yet. Again here, basically you had a solid performance and contribution both from physical and e-commerce. Actually e-commerce you see it's running at around 40% to 50% depending on the period. Second block, generic and discretionary consumption. This is where obviously with the reopenings we have the fastest and steepest recovery. It was down minus 77% in the peak of lockdown. May was already back to 33%. Now it's back to minus 11%. I'm understanding the last week positive on Italian card. And here you see again e-commerce actually running fairly fast. It was already running at 20-30%. Now it's running north of that 36% in the last week, but normally it's anywhere around 40%. Last but not least, the impact consumption segment, which is obviously the one that is also the most affected by COVID. by the incoming tourists from abroad. Here, this was a minus 90% basically down, minus 70%, minus 46%, minus 20% in the last week. Actually, it's already minus 6% on Italian cards. There is another point which I think is a good use at least for Italians. If you take within this segment restaurants, from Italian customers last week it was positive for the first time after a longer period which is particularly appreciated I would say again here e-commerce is also suffering although is recovering in parallel or a bit faster than physical all in physical channels are at around minus 10% Year-on-year, e-commerce is now back to positive as the first two sectors contribute and accelerate and go very fast, and the travel industry recovers. That's about it in terms of sector dynamics. We also share with you how the mix in between smaller merchants and larger merchants is evolving. It's actually on page 9. This is a question that came to us a few times from investors, so we felt it was good to provide some clarity here. If you take our portfolio of merchants on a pre-COVID basis, the mix of volumes were about half-half between large merchants and SMEs. During the lockdown, this mix went more in favor of the larger merchants. A lot of them are into large retail, and by the way, a lot of them are were organizing themselves faster than the smaller merchants. So you see it locked down to around 37% of the contribution from SMEs. I think the good news is that over time the weight of the SMEs went back to the previous levels and very much in line with last year numbers as well. So it's actually around 50% or north of 50% and actually this recovery these dynamics apply both across physical and e-commerce. Another topic that for us is very relevant is how fast the shops and the retail activities have been reopening after lockdown. And this is also a question that we receive quite often from many of you. Page 10, you have a little bit of similar analysis of what you've seen before. So this is the weekly year-on-year movement compared to the same week of last year across the three macro categories. And this is actually the number of merchants that are transacting compared to last year, same week, last year. So here you see that in the blue line, the dark blue line is actually the total, and then you see the three macro segments. So you see that before COVID, the total was kind of flat here over here. with some specific sector dynamics. While we were in lockdown, only about 70% of them were transacting. As we got out of lockdown rapidly, the situation improved. And then we got to end of May, around 14% less transacting merchant chance compared to last year. And then since then, week after week, you see how We had more and more merchants transacting, and right now we are marginally below last year's level, minus 2%. Again, here you see different dynamics by sector. In fact, the basic consumption sector has a growing number, went very rapidly back to growth. The reason why you have more and more merchants transacting is because more and more merchants are getting the terminals, and this is actually the effect of deep penetration of digital payments. Well, actually, you see that the other sectors are still a bit behind. In particular, travel and tourism is at minus 8, minus 9 percent, kind of recovering one percentage point per month. So this is the overall picture of what we observe in terms of dynamics. So, again, in natural, fast, I would say, also strong recovery, not yet. at the levels as a total of last year, back at the levels of last year if you exclude the contribution that is not coming as it should be. From international travelers, the two key areas of pain, if I may say that, for the economy at the moment and also for our volumes remain the travel and tourism and entertainment space and obviously the contribution from foreigners. I think there's been enormous debate across the industry around how have consumer behaviors changed, people behavior changed over this lockdown and now what is happening in terms of propensity to use digital payments and shifting from cash to digital payments. And I think all of us have a strong perception that this is happening. I think we've all seen lots of market research that is saying that this is happening. But the reality is that it's still very difficult, given the underlying dynamics, to have specific data that are giving a size, a number, to this dynamic that is reliable enough. So let us try to give you on page 11 a bit more insight on what we see in terms of speed of growth. And here on the left, we picked certain categories where we've seen specific already accelerations. These are categories that were pre-COVID, that's the gray area in the positive space or kind of flattish. And in here, with the dark blue, you see the acceleration that we are observing today. So, for example, let's take one in florists and nurseries. It was going at around 15% before COVID. Now it's running at 39% year-on-year growth. And therefore, there is a doubling of the speed of growth. Or, for example, electronics that were kind of flattish are now growing 20%, and furniture is kind of doubling, and so on and so forth. Here we have selected some categories where we felt that this effect was already visible. Obviously, there are many others where, unfortunately, it's still difficult to have this clarity because the underlying consumption is still weak and is recovering. On the right, we've done again an attempt, an exercise to try and help you and ourselves and obviously you to understand what is happening. Here we took only Italian consumer cars, so trying to clean from the effect of other components such as, for example, remote working for commercial cars and obviously being bound traffic from foreign users. And we also focused on the basic consumption, generic consumption areas. And here you see that on a total basis, the rate of growth is already around 13%, 14% with actually basic consumption running at around 20%. And this was not necessarily happening before the effect of COVID. Now here we have more analysis that is trying to address the other more specific questions. Okay, fine, but is the penetration of digital payments growing or not? And here we decided not to show you data because there are too many assumptions, too many nexus analysis type of components here and therefore we really don't want to take any risk of misleading you. However, what comes out looking at specific cases and bigger samples and so on and so forth is that probably while in a normal situation digital penetration was growing a kind of 1.5 to 2 percentage points per year, probably as we speak is growing more or less twice the speed. It's probably around 4%, 5 percentage points year over year. We'll continue to observe this and we'll share with you as we go along what we believe is really reliable and can be fully drafted. That's about it in terms of volume updates. A quick business update on the key initiatives also in the context of the COVID situation, actually the recovery situation, so that Bernardo can then run faster as we go through the results. You may remember we said that we were trying to capture as early as possible the changes of behaviors of of customers and help them with the recovery. If you take all in what is happening on merchant services and solution, as I said before, we are observing commercial activities coming back to normal recording levels. In particular, if you take the post-installations that suffer, as you can imagine, while shops were closed, is now actually accelerating and is running faster than last year. In June, we did activate about 20% more merchants than last year. There is strong demand for solutions that allow merchants to transact from remote or in a very agile way. So, for example, strong mobile POS demand for small and micro merchants. As I was suggesting before, we launched NexiGo. It is a new proposition. It is actually packaging things that we already had plus new things. It is really targeting SMEs omni-channel digitalization, providing a very light type of solution. Also, for example, for remote commerce and e-commerce, for example, through social commerce. So even smaller merchants who don't have technical capabilities can actually start selling cross-channel in a very simple way. And we've done this through a list of partnerships. As I said before, we're accelerating our large merchants omni-channel project pipeline. There was a startup, and it's obvious to be confirmed as we go along, but we saw a startup on e-commerce gate with activation. Basically in the second quarter of this year, we did activate twice what we did activate last year. Actually nine times if you include pay-by-link. Pay-by-link is the solution we launched three months back to allow merchants that didn't have any e-commerce presence to be paid from remote because they simply send an email or a text with a link. The customer clicks the link and they can pay as if it was a normal e-commerce transaction. And finally, just to continue to talk about digital, and digital assets you know the penetration of our next business app on label merchant is now about 50 percent with actually a 60 growth in active users in june versus june last year on cars and digital payments as i said commercial activities are recovering fast but not yet at the same level of last year renewed interest in international debit as an e-commerce mass market product at the same time we're supporting national debit a bancomat that is a very strategic product also for us to develop more digital and e-commerce ready capabilities while we're participating to the next generation platform tender that is ongoing. We see strong demand for our commercial and corporate payment products. YAP is continuing to grow on a more organic basis and, of course, lower because at the moment we're not pushing in big marketing efforts. And we see an acceleration of our digital onboarding and digital issuing projects. And last but not least, as you may have read also yesterday from the press, we are working to extend the no-pin contactless limits also in Italy from 25 to 50 euros. This is something that will go over time into place starting probably by the beginning of next year because there is a technical rollout. There are certain issues to be addressed. We can do that across both the acquiring side of the business and the the issuing side, not just from us, but also from everybody else in the market, and in particular, the banks. Last but not least, before I leave the floor to Bernardo for results, as a reminder, on page 13, we closed the Intesa merchant book acquisition successfully at the end of second quarter on the 30th of June. despite the COVID emergency. We were given a full, clean European anti-stress approval. Actually, the commentary around the market test that was done was actually very encouraging, also in terms of the competitive dynamics and the outlook for more of this type of deals. As a reminder, we're talking about 180,000 merchants who transact about $68 billion euros per year in 2019 as a reminder again we bought the asset for about a billion euro plus a potential earn out in 2025 and together with this we have a market agreement plus the extension of all the other contracts we had in issuing and other areas with them within PESA until 2044 As a reminder, the economics of this book are into NEXE account, will be into NEXE account from the 1st of January this year. The size of this is about 60 million cash flow contribution generated by the Aquarium book in the first start and transfer to NEXE. financials about 100 million euro of revenues 95 million euro EBITDA net income of about 60 million euros and again here on the right as a reminder again you see that thanks to this to this deal the share of business that we have in merchant services and solutions goes up to more than 50% and within merchant services by now about 50% of what we do is through the referral or direct acquiring business while we continue to develop business with the other banks in the other business models that obviously continue to execute in parallel. With this, I will leave the floor. Bernardo, take us through that.

Thanks, Paolo. I'm on slide 15 now. So we start with the slide you've already seen, and it helps understand the dynamics or what drives the revenues in our business and the costs in our business. I think once you understand the structure of our revenues and our costs, and have all the parameters that's easy to predict or to rationalize the performance. So we start by reminding you that half of our revenues or just over half of our revenues grow but are not driven by volume growth. They're driven by the growth in install base. And this is clearly less affected by COVID or has been less affected by COVID in the recent months. And that approximately close to 40% of our cost base is actually comprised of variable costs. 20% of which or half of this variable cost base is actually absorbing part of the lost revenues by falling in size thanks to the fall in volume growth. Within the various businesses we have a slightly different mix of install base and volume driven revenues. This helps understand why the different business units perform differently. Merchant Services and Solutions has the largest portion of volume-driven revenue, 64%, and then a third is install-based driven. This ratio is inverted in cards and digital payments, where you have approximately 60% of revenues driven by the install-based and 40% driven by volumes. And Digital Banking Solutions is almost entirely reliant upon install-based revenues. So with that said, I would move to slide 16, where just a word of warning, as Paolo mentioned, When we agreed to purchase the merchant book from Intesa back in November last year or December when we announced, we agreed that we next year would take the full benefit or the underperformance of the book from the 1st of January, even though we closed the transaction and knew we would close the transaction after the 1st of January. In actual fact, it closed on the 30th of June. So we have the full economic benefit as of the 30th of June, as if we had owned the business on the 1st of January. And so we're representing our performance for the year to date and we'll do so going forward for the full year 2020 on a performer basis. We've given you also the breakdown of what performance would have been like without the book. But as we have the economics of the book from the 1st of January, we believe it's the right way to look at our business and it helps you better monitor performance also going forward. So starting with revenues, you can see how revenues in the quarter declined 13%. worse than what we reported in the first quarter. This is due to the timing of lockdown in Italy. As you know, lockdown was progressively introduced from the beginning of March and impacted us in full in April. And only halfway through May, we started to exit the lockdown. And this obviously is reflected in the volume dynamics Paolo showed you earlier and therefore translated into loss of revenues. For the first half, revenues were down 6.3%, so even there, slightly better with Intesa Book than without the protection mechanisms we have in place, guaranteeing a kind of floor to revenues in EBITDA from this acquisition. If we look at the EBITDA, the fall in revenue translates into fall in EBITDA in the half of almost 4%, with an EBITDA margin accretion of approximately 200 basis points Again, primarily driven by the fact that the book we bought from Intesa has a very high EBITDA margin, being the transfer of revenues essentially with the costs already in place at Nexi through the Mercury Payment Services acquisition a few years ago. At a group level, that is the overview. If we go into the various business units on slide 17, we summarize the performance of merchant services and solutions. I mentioned the mix in terms of install-based and volume-based, so merchant services and solutions is the division which is most exposed to the falling volumes given its highest reliance on volume-based revenues. There's also a number of other effects we've summarized in the notes here which have impacted us in merchant services revenues, I would say. Obviously, in terms of Volumes, we have lost all foreign travel, most of foreign travel. It's not picking up, but in the second quarter, the travel restrictions in place basically made it such that volumes from X-ray EA or indeed even intra-European travel were much lower than they were last year, and that has impacted this division more than the others. We have a mixed effect with large customers, as we call them, delivering better in terms of volumes during lockdown than SMEs. From a revenues perspective, these are less profitable clients than SMEs, and this mixed effect has also impacted us. However, the performance in the quarter and in the first half, I think, is absolutely consistent with the volume dynamics we discussed earlier. and the resilience attributable to the significant, albeit 40%, I'd say, proportion of revenues which is install-based driven. We've also seen how e-commerce has performed well during the quarter. If you exclude travel and tourism, we have significant growth which is accelerating first in the quarter-by-quarter basis in the first half 2020 compared to 2019 level. On slide 18, we see the similar analysis for cards and digital payments. Here we have no performer numbers given that the merchant book required for performing days only impacts merchant services and solutions. Again here, the installed basis compared to merchant services and solutions is a high proportion of revenues derived from the installed basis. and therefore this division suffered less. We are also benefiting from the growth in e-commerce on clients that we do not act as an acquirer for. Think of Netflix or Amazon, etc. Italian cards or cards issued by Nexia used on those platforms. You don't see those volumes on merchant services. We do see those volumes in our money on cards and digital payments. The year-on-year comparison is not affected by foreign travel restrictions here. although we do suffer a bit from a mixed effect with Italian cards being used abroad going close to zero, similarly to foreign cards being used in Italy. All in all, however, the impact has been lower, and indeed revenues were down only 4% in the first half. And you can see also from a volumes perspective, we also suffered less in cards and digital payments than in merchant services and solutions, as would be expected given the premises. We continue to push on products such as international debit, which are more suited to the current environment, which sees growth in e-commerce and domestic debit, for instance. And we continue to push on commercial cards and other initiatives as we have done in previous quarters. With regards to digital banking solutions, here, as we mentioned earlier, this is the division which is less reliant on volume-based volume goal for the same terms of revenues. COVID has impacted it marginally. This division clearly working on ATMs in a lockdown period has not been as easy as it should have been, and therefore we have some decline in revenue, though very limited through this minus 2.3% and a half. We continue rolling out our initiatives on advanced ATMs, which are becoming always more relevant given the branch closures which were affected during the first half of the year. and we've recently announced further additions and developments on the Nexi Open ecosystem with an announcement a couple of days ago of the authorization received from Bank of Italy to operate as a PIS or an AIP. A word on costs on slide 20. As we had mentioned back in May, we embarked on a cost containment program. We'll speak to that in a second. The benefits of this cost containment program started in April, we have an acceleration in terms of the cost reduction compared to what you saw in the first quarter and year-on-year we have a 13% decline or reduction in costs that you can see here on the aggregate we haven't broken out the Intesa book costs I mean they're tiny showing you how in the first half the overall decline of 9% would have been 8.9% on a standalone basis the cost base acquired with the merchant book is just more it would have created more confusion if we broke it out on this slide. However, in general, personnel costs are down 7%. This is primarily driven by variable components of cost cutting. We haven't embarked on any kind of redundancy procedures or downsizing of staff following COVID. We simply think this was a temporary impact on our business. And as volumes are picking up, as Paolo has shown you, we didn't believe we should downsize and then scale up again once volumes picked up. Whereas with regards to non-HR costs, they're down 10%. Here we have benefited from lower processing costs, which are volume driven, but also a number of cost containment initiatives aimed at either shifting costs to when the market picks up entirely and lockdown is completely released or have been simply saved because certain initiatives have not been carried out. Slide 21 gives you a bit of an update on the 100 million cost containment plan. This is a cash cost containment plan. Not all of this is P&L. Some of it is balance sheet in terms of CAPEX. I think we gave you the breakdown back in the first quarter or had hinted to it. It's roughly 40% CAPEX, 60% P&L, and within the P&L it's roughly 20% volume-based and 40% of the total coming from discretionary spending cuts, including transformation costs. And we are, I think, suffice it to say that we're pretty much on track in terms of delivering what we were expecting to deliver, what we were expecting to deliver in terms of 100 million reduction year on year. And so we'll keep on monitoring this and giving you updates as the year progresses. Slide 22 shows you the progress on CapEx. We're slightly up compared to 2019, 62 million reduction. In total, roughly one-third of this is transformation spend and two-thirds of this has been ordinary capex, including the purchase of POS terminals. On the purchase of POS terminals, I think there's some dynamics in the first half, which might have been counterintuitive. In lockdown, we kept on stocking up on POS terminals, afraid of the disruption that there might have been on the supply chain. But in general, as I've said, the current plan is to spend between 535 million euros compared to 170 million last year. And you can see where the cash savings are coming from here. None of our cost-cutting or capex savings has been aimed at any of the transformational initiatives. And indeed, on slide 23, we have readjusted the diagram we've shown in the past of how we expect to continue investing in our IT transformation. What has happened is essentially COVID has caused the flattening of the overall curve and the shifting of some of the expenses or the investments that we were going to be making this year to next year. But just to cite one example, we are investing heavily in our next generation acquiring platform. This went almost live where we had the first transaction a couple weeks ago and is progressing as to plan and what we've shifted out there are essentially expenses or investments on CapEx which probably would have been delayed anyway due to bank closures and the lockdown. So we're trying to be efficient in our spend without postponing structurally important investments. On slide 24 we highlight how transformation costs continue to fall. They were down 60%, 19 on 18. They're down 60% first half this year compared to last year. And also this is clearly part of the cost containment program I was mentioning earlier. And then we have a bridge from transformation costs to the total non-recurring items. some of which are tied to Damasco, most of which are tied to Damasco. As far as the code name we've given to the acquisition, it is a book, so 17 million are related to that. Six million are costs which go to our P&L related to the IPO, but are paid for by our shareholder, Mercury UK, so they're WASH. And then we have approximately 9 million euros, which is comprised of non-cash costs such as LTI, but more importantly also COVID-related costs, termination payments, other one-off items which are below EBITDA. Slide 25 bridges EBITDA to net profit, normalized net profit. I would say the only comment I would make here is the $100 million normalized net profit is below what it was last year, essentially due to the lower EBITDA that we've commented on earlier. and also the ramp-up of DNA, which is up year-on-year due to the investments we have made in RIT, essentially, over the last couple of years. Slide 26 speaks to the strong cash conversion we had in the first half, 77%, which is, I think, perfectly in line with what it was in the past, which I think last time we reported was somewhere around in the same region, around 70-80%. We have, you know, even if you look further down to normalized pre-cash flow, once you take into account cash taxes and interest expense, you know, cash flow generation is strong at Nexi. And this translates to slide 27, where we can see that from a cash position, we have approximately just north of 400 million euros of cash and cash equivalent sitting on balance sheets. Our net debt position has worsened, if you want, due to the Intesa acquisition. This was as expected, I would say. We stand by our targets of reaching levels similar to what we announced at the IPO by the end of this year. So this four times leverage will be reabsorbed in the second half of the year and be much closer to what we discussed when we announced the Intesa deal. Overall, the cost of debt, notwithstanding the worsening of market conditions and the fact that we had to fund a billion of acquisitions of the acquisition costs during COVID, is pretty stable at just under 200 basis points, 1.9%. And it's significantly lower than where we were just over a year ago at the IPO, where we were paying close to 4% on our debt. So that said, Paolo, I'll hand the floor back to you.