Tinexta : First Three Months of 2019 results

PRESS RELEASE

Tinexta: Excellent Results in the First Three Months of 20191

➢Results approved as at 31 March 20192

•Revenues: €59.7 million (+ 15.8%)

•EBITDA: €14.4 million (+ 41.4%)

•Net income: €6.0 million (+ 51.9%)

•Free Cash Flow grows robustly: €17.9 million (+ 67.8%)

•Net Financial Indebtedness: €132.3 million, of which €14.7 million due to the adoption of IFRS 16 (€124.9 million at 31/12/18)

➢2019 Targets Confirmed

Rome, 15 May 2019. The Board of Directors of Tinexta S.p.A., active in the services of Digital Trust, Credit Information and Management and Innovation and Marketing Services, approved the Interim Report on Operations at 31 March 2019, which highlights a positive progression of Group Results, solid revenue growth as well as a robust expansion of Free cash flow.

The Chairman Enrico Salza commented "Tinexta Group continues to record positive results, pursuing a project of solid and balanced growth."

CEO Pier Andrea Chevallard added, "The results of the first three months of 2019 are very positive. All three Business units contributed to the strong growth of EBITDA and the solid cash generation."

CONSOLIDATED GROUP ECONOMIC RESULTS AT 31 MARCH 2019

Following is the table of the Income Statement with the detail of the items of First Quarter 2019 compared with the same period of the previous year:

1From 1 January 2019 the Group adopted the IFRS 16 "Leasing" accounting principle which resulted in changes in accounting policies and in some cases adjustments to the amounts recorded in the Balance Sheet. The comparative data of 2018 have not been re-determined while the data from the period under review are affected by the application of the aforementioned principle. In order to ensure effective comparability with the economic, patrimonial and financial results of 2018, the effects on comparative analyses arising from the application of the IFRS 16 principle adopted from 1 January 2019 are illustrated.

2The comparative data of First Quarter 2018 were redetermined in relation to the completion in Fourth Quarter 2018 of the activities to identify the fair value of the assets and liabilities of Warrant Hub S.p.A. and its subsidiaries, fully consolidated from 1 December 2017.

Tinexta S.p.A. - Results at 31 March 2019

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			1st			1st				of which			of which
	Consolidated Income Statement							change			change %
		Quarter	%		Quarter	%		Change		Change %
	(€ '000s)				for		for
	2019			2018
								IFRS 16			IFRS 16
	Revenues		59,735		100.0%		51,601		100.0%		8,133	0		15.8%	0.0%
	Total Operating Costs	45,285	75.8%	41,380	80.2%	3,905	-822	9.4%	-2.0%
	Costs of raw materials	1,694	2.8%	1,702	3.3%	-7	0	-0.4%	0.0%
	Service costs		19,606		32.8%		17,830		34.6%		1,776	-760		10.0%	-4.3%
	Personnel costs	21,265	35.6%	18,719	36.3%	2,547	-62	13.6%	-0.3%
	Contract costs		2,146		3.6%		2,717		5.3%		-571	0		-21.0%	0.0%
	Other operating costs	573	1.0%	412	0.8%	161	0	39.0%	0.0%
	EBITDA		14,450		24.2%		10,222		19.8%		4,228	822		41.4%	8.0%
	Depreciation, amortisation, provisions	5,109	8.6%	3,846	7.5%	1,263	799	32.8%	20.8%
	and impairment
	Operating profit		9,340		15.6%		6,375		12.4%		2,965	23		46.5%	0.4%
	Financial income	176	0.3%	24		0.0%	152	0	637.4%	0.0%
	Financial charges		659		1.1%		587		1.1%		72	85		12.2%	14.5%
	Profit of equity-accounted investments	29		0.0%	31		0.1%	-2	0	-6.1%	0.0%
	Profit before tax		8,886		14.9%		5,843		11.3%		3,043	-62		52.1%	-1.1%
	Income taxes	2,907	4.9%	1,906	3.7%	1,000	-17	52.5%	-0.9%
	Net profit		5,979		10.0%		3,936		7.6%		2,043	-45		51.9%	-1.1%

The Tinexta Group closed First Quarter 2019 with Revenues of €59.7 million, growing 15.8% compared to First Quarter 2018. The organic growth in Revenues was equal to 10.2%, while 5.5% is attributable to the variation of the perimeter.

EBITDA amounted to € 14.4 million with a growth of €4.2 million (+41.4%). The increase is attributable to an organic variation of 28.6%, the variation in the perimeter of 4.8% and the application of IFRS 16 for 8.0%. The EBITDA margin increased from 19.8% in First Quarter 2018 to 24.2%. This improvement is due to the mix of sales, careful cost control and, to a residual extent, the effect of adopting the IFRS16 principle introduced from 2019 onwards. Net of the effects of IFRS 16, the EBITDA margin for First Quarter 2019 would have amounted to 22.8%.

The line item Depreciation, amortisation, provisions and impairment, which evidences a total of €5.1 million (€3.8 million in First Quarter 2018) relates to €1.4 million for depreciation of intangible assets that were identified in the allocation of the excess cost paid in business combinations, mainly by Innolva, Visura, Co. Mark and Warrant Hub. The increase of the entry was impacted by the adoption of the IFRS 16 principle, which resulted in the detection of depreciation on the rights of use recorded for € 0.8 million.

Income taxes are estimated to equal €2.9 million, a tax rate of 32.7%, in line with the same period of the previous year (32.6%).

Net profit amounted to € 6.0 million, up 51.9% compared to First Quarter 2018.

The following table shows the economic results net of non-recurring components.

Tinexta S.p.A. - Results at 31 March 2019

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	Summary income statement net of		1st				1st								of which					of which
												change					change %
	non-recurring items		Quarter		%		Quarter			%			Change				Change %
									for				for
	(€ '000s)		2019				2018
												IFRS 16					IFRS 16
	Revenues	59,735	100.0%	51,601	100.0%	8,133		-		15.8%	0.0%
	EBITDA		14,895		24.9%		10,222			19.8%			4,673		822			45.7%		8.0%
	Operating profit	9,785	16.4%	6,375	12.4%	3,410		23	53.5%	0.4%
	Net profit		6,076		10.2%		3,936			7.6%			2,140		-45			54.4%		-1.1%

Net of non-recurring components, EBITDA grew by 45.7%, the Operating profit by 53.5% and Net profit by 54.4%.

Non-recurring operating costs for €0.445 million were recorded, of which €0.255 million for charges linked to the implementation of the new group operating model. Non-recurring financial income for 0.148 million was recorded for the proceeds received from the sale of a minority shareholding.

Non-recurring income of €0.201 million is recorded in non-recurring taxes, of which €0.88 million deriving from the so-called "Patent Box" benefit.

RESULTS BY BUSINESS SEGMENT

Growth Dynamics per business segment are shown in the following table that reports Revenues and EBITDA compared with the same period of the previous year, net of non-recurring components.

	Abbreviated Income Statement by	1st			EBITDA %	1st			EBITDA %				of which				Change %
	business segment net of			1st			1st				change
	Quarter			Quarter			Change
	nonrecurring items			Quarter			Quarter			for
	2019			2018						Total			IFRS 16		Organic		Perimeter
	(€ '000s)		2019			2018					IFRS 16
	Revenues
	Digital Trust	25,192					21,755					3,438		0	15.8%		0.0%	9.5%	6.3%
	Credit Information & Management	19,364					18,423					941		0	5.1%		0.0%	-3.1%	8.2%
	Innovation & Marketing Services	15,178					11,423					3,755		0	32.9%		0.0%	32.9%	0.0%
	Other segments (Parent Company)	0					0					0		0	0		0.0%	0.0%	0.0%
	Total Revenues	59,735					51,601					8,133			0	15.8%			0.0%		10.2%		5.5%
	EBITDA
	Digital Trust	5,984		23.8%	4,894		22.5%		1,089		385	22.3%		7.9%	10.1%	4.3%
	Credit Information & Management	5,289		27.3%	4,068		22.1%		1,221		190	30.0%		4.6%	15.6%	9.8%
	Innovation & Marketing Services	5,927		39.0%	2,882		25.2%		3,045		213	105.7%		7.4%	98.3%	0.0%
	Other segments (Parent Company)	-2,305			n.a.	-1,622			n.a.	-683		35	-42.1%		2.1%	-44.2%	0.0%
	Total EBITDA	14,895			24.9%		10,222			19.8%		4,673			822	45.7%			8.0%		31.7%		6.0%

Digital Trust

The revenues of the Digital Trust segment amounted to €25.2 million with an increase of 15.8% compared to First Quarter 2018. The increase is derived from organic growth of 9.5% and an increase of 6.3% due to perimeter variation. The variation of the perimeter is due to the full consolidation of Camerfirma and Camerfirma Peru starting from 1 May 2018.

Tinexta S.p.A. - Results at 31 March 2019

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The EBITDA of the segment amounted to €6.0 million. The increase over EBITDA in First Quarter 2018 is 22.3%. Organic growth amounts to 10.1%, while the contribution of Camerfirma and Camerfirma Peru, for the aforementioned variation of the perimeter, is equal to 4.3%. The adoption of IFRS 16 principle from 1 January 2019 resulted in a positive variation compared with First Quarter 2018 equal to 7.9%. In percentage terms, the EBITDA margin equaled 23.8%, up compared to the same period of the previous year (22.5%). Net of the effects of the adoption of IFRS 16 the margin would have been in line with the prior year (22.2%).

Credit Information & Management

In the segment of Credit Information & Management revenues amounted to €19.4 million. Compared to the first quarter of the previous year there was an increase of 5.1%, consisting of an organic reduction of 3.1% and an increase of 8.2% due to the perimeter variation , following the consolidation of Comas and Webber from 1 July 2018, of Promozioni Servizi from the 1st November 2018 and the deconsolidation from June 2018 of Creditreform Assicom Ticino (today Creditreform GPA Ticino).

EBITDA equaled €5.3 million, an increase of 30.0% compared to First Quarter 2018; organic growth was 15.6%, while the perimeter variation generated an increase of 9.8%. The EBITDA margin was 27.3%, up compared to the same period of the previous year (22.1%), net of the effect of the adoption of IFRS 16 the margin was still higher (26.3%).

Despite an extremely competitive market, which resulted in an organic reduction in revenues the Credit Information and Management segment thanks to a careful policy of cost control contributed to Group results with positive results in terms of EBITDA.

Innovation and Marketing Services

The revenues of the Innovation and Marketing Services segment amounted to €15.2 million, with an increase compared with First Quarter 2018 equal to 32.9%.

The EBITDA of the segment equaled €5.9 million. The increase over EBITDA in the previous year is 105.7% with organic growth of 98.3%. The EBITDA margin was 39.0%, growing compared to First Quarter 2018 (25.2%), while net of the impact of IFRS 16 it was still higher (37.6%).

The segment's performance in this quarter is mainly due to the revenues of the innovation consultancy (tax credit and hyper-amortization) that continue the trend of Fourth Quarter 2018.

Group Net Financial Indebtedness

The Group's Net Financial Indebtedness amounted to €132.3 million at 31 March 2019. The Net Financial Indebtedness as at 31 March 2019 includes: €62.8 million of liabilities related to the acquisition of minority shares subject to the exercise of put options, liabilities for contingent considerations linked to acquisitions for €1.2 million and liabilities for delayed payment (Vendor loans) granted by sellers of €8.2 million.

Tinexta S.p.A. - Results at 31 March 2019

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Net Financial Indebtedness at 31/12/2018	124,946
Free Cash Flow	-17,927
FTA IFRS 16	15,034
Dividends approved	5,665
Adjustment for put options	3,776
Net financial (income) charges	631
New leasing contracts	237
Sales of minority participations	-150
Other residual	136
Net Financial Indebtedness at 31/03/2019	132,348

The Free Cash Flow generated in the period was €17.9 million. Net cash and cash equivalents generated by operations amounted to €20.9 million net of €3 million absorbed by investments in property, plant and equipment and intangible assets. Free Cash Flow grew 67.8% compared to First Quarter 2018 (€10.7 million).

The adoption of IFRS 16 starting from 1 January 2019 resulted in the recognition of financial liabilities for leasing of €15 million. In First Quarter 2019, the new leasing contracts entered into equalled €0.2 million.

IMPORTANT EVENTS FOLLOWING THE CLOSURE OF FIRST QUARTER 2019

After the closure of First Quarter 2019 Tinexta received notice of the exercise of the options by the minority shareholders of three subsidiaries:

oon 19 April 2019 the exercise of the Put option on 11.875% of the capital of RE Valuta S.p.A. was communicated by the minority partner. The definition of the price according to the

contractual terms is underway. Following the exercise of the option Tinexta will be holder of 95% of RE Valuta;

oon 30 April 2019, the options on 20.25% of the capital of Warrant Hub S.p.A. were exercised. As a consequence, Tinexta holds 90.25% of the share capital of Warrant Hub. The compensation for the purchase of 9.75% of the capital was equal to €14.9 million. The purchase of the additional 10.5% of the capital was paid in the same date an amount of €8.0 million (calculated on 50% of the shares acquired) and for the remaining quota another amount will be paid in 2020 on the basis of results of 2019 applying a multiple on the annual EBITDA of the consolidated balance sheet of Warrant Hub in the light of the net financial position and in relation to the recorded growth rates. The options on the remainder of

capital may be exercised in 2020.

oon 7 May 2019 Tinexta received notice of the exercise of the put option on 10% of the capital of Co. Mark S.p.A. by the minority shareholders. Activities are underway for the definition of the price according to the contractual terms; following the exercising Tinexta will be the owner of 100% of the company.

It should be noted that on 27 March 2019 Tinexta received notice of the exercise of the Put option on 40% of the capital of Visura S.p.A. by the minority shareholders. Activities are underway for the definition of the price according to the contractual terms, following the exercising Tinexta will be the owner of 100% of the company.

Tinexta S.p.A. - Results at 31 March 2019

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