Tamburi Investment Partners S p A : Letter to the Shareholders

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Dear shareholders,

Strange tempora currunt !

I decided to start this year's letter this way since it is the strangeness of so many recent events that is most surprising. I don't delve into the intricacies of politics or geopolitics, it's the economic issues I try to understand. My reticence is not so much because of the endemic uncertainty about which J. Galbraith wrote a great book more than forty years ago and which continues to be relevant, but since the phenomena we are currently experiencing are truly peculiar and particular.

Strange indeed, but also partially contradictory.

Keeping the tradition, a mention of TIP is due before going into detail on any topic. 2023 was another exceptional year, with a total return of over 28%, 149 million in pro forma net profit and net equity that grew to over 1,4 billion, after 42 million in dividends distributed and further purchases of treasury shares, now at 10.3% of TIP's capital.

Moreover, the confirmation that, in ten years, we have a stock that continues to outperform almost all national and international indices, is really satisfactory. Not least because, among other oddities, in 2023, the stock markets rewarded banks, large-cap stocks, and some technology -related securities. But with very few exceptions, mid and small caps were snubbed. The customary ten-year comparison graph is always sig- nificant.

TIP STOCK VS DIFFERENT INDEXES FROM 8/3/2014 TO 8/3/2024

10 years TIP Total return : +323,4%

Nasdaq

+273.9%

+262.5%

S&P 500 +174.1%

Dow Jones

+136.9%

IT Star

+135.1%

FTSE MIB

+61.0%

MSCI Eur

+49.7%

Source: Bloomberg

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

1/13

A year ago we were bombarded with messages about uncontrollable in- flation, high interest rates, and the looming recession. On the political front, there was (only) the conflict in Ukraine to worry about, not least due to uncertainty about China's position.

During 2023, inflation began to fall everywhere, often more than ex- pected. The global recession receded month by month, and China showed that it was too concerned about internal economic issues to meddle in external matters. Interest rates remained high.

I'll start with interest rates. Central banks realised that they made such a colossal mistake in lowering them too much and for too long that they're now try looking for any excuse to postpone any cuts. Speculation about interest rate cuts abounds every day; banks, economists, and traders continue to make predictions about their number, extent, and even the likely dates of announcements. This is a pitiful exercise on the part of people who increasingly demonstrate how far they are from the real economy, i.e. what really matters. What difference could does it make if an announcement is made in May or July ? Or if there is to be two, three, or four cuts, if their size is unknown ?

The most important thing is that the market has realised that downturns will come and even the bond world has immediately gone into a bubble as companies and banks try to anticipate decisions; we are moving from the certainty of a trend to a very likely over-interpretation. Other weirdness.

There will be rate cuts, but, I believe, they will be gradual and limited, precisely since of the - ex post awareness of the central banks. The rate cuts have given wings to the stock markets, especially Milan; in 2023, despite many sceptics and staunch xenophile investors, it fared better than almost everyone. The Nasdaq has been riding high for months, essentially because of Faang stocks. The rest seems forgotten. In Europe, small and mid-cap stocks are trading at the highest discount to fundamentals anyone can remember because everyone is chasing the big ones and those banks that, because of the interest rate spread, but also because they performed the largest derisking in history on the backs of governments, are benefitting from an unexpected and exceptional sea- son. The level European markets' discount compared to American markets (33% on P/E) is at an all-time high too. Traders' fears induced them

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

2/13

to invest are concentrate on large capitalizations, which in many cases are at all-time highs. those records, however, are right since the actual financial results of many companies are at their highest ever levels; hundreds of other companies have had similar results, but the stock markets continue not to notice it.

For some weeks now, many operators are signalling that 2024 will be the year of mid-cap stocks. Let's hope that at least on this point, the forecasts, or rather the trends, are not wrong, because by now such predictions have proven to be so fallacious that discouraged everyone.

Moving on to TIP, with the total return figure in 2023 above 28%, the ten-year performance of the TIP stock dropped slightly, and currently stands at 323%, corresponding to an average of 32.3%, a rather good, and certainly rare figure. Considering size, industry and vintage diver- sification, it is clear that the implicit risk in TIP stock is very very low.

The sectoral breakdown of the group's investments, at our adjusted value, i.e. the N.I.V.*, is summarized in the following table.

N.I.V. - NET INTRINSIC VALUE *

NIV by industry
LUXURY AND DESIGN		24%
			∼	2,7 BILLION
INDUSTRIAL / TECHNOLOGY		20%
	(> 3 billion excluding NFP)
			> 2 BILLION OF
IT, DIGITAL, INNOVATION		17%
			CAPITAL GAIN
FOOD, RETAIL AND TOURISM		17%		vs cost capital
			> 14 EURO PER
HEALTHCARE		11%
		SHARE
TREASURY SHARES		10%

NIV by year of investment
Before 2008	12%
2009/2012	8%
2013/2014	10%
2015/2016	8%
2017/2018	11%
2019/2020	26%
2021/2023	24%

* N.I.V. - Net Intrinsic Value - internal calculation of the aggregate valuation of the shares held in the investees based on the business plans prepared by us

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

3/13

As can be seen, the "correct" value for us of the investee companies

brings THE N.I.V. - NET INTRINSIC VALUE OF TIP STOCK TO OVER 14 EU-

ROS, AGAINST A STOCK PRICE THAT IS AND HAS BEEN AROUND 9 EUROS FOR A LONG TIME. Evidently, also TIP is now among the ranks of the forgotten stocks, victims of divestment from P.I.R. funds, and considered by many sort of "B series" capitalizations. A great pity.

Just considering that TIP's market cap net of treasury shares is about 1,5 bln and that the aggregate today's market prices of only the listed stocks is around 1,4 bln, it is quite ridiculous to consider that the private (non listed) assets, that have an aggregate Ebitda of 600 mln, are valued by the market so low.

Therefore, we'll continue, with conviction, to buy back.

The key figures of the main investee companies, i.e., those representing about 85% of the about 3 billion of N.I.V. gross of debt, are set out be- low, and the most important thing is that also in 2023, almost all of them continued to grow even compared to 2022, which benefitted from the extraordinary post-pandemic development, with margins that were always exceptional. Truly impressive numbers.

Listed companies

Private companies

		Sales	Sales	Ebitda	NFP /			Sales	Sales	Ebitda	NFP /
2023	2023 vs	margin	EBITDA		2023	2023 vs	margin	EBITDA
		(€ mln)	2022	adj. 2023	ADJ.						(€ mln)	2022	adj. 2023	ADJ.
2.260	6,7%	24,0%	1,5x				***	2.228	39,9%	6,4%	1,5x
473	-13,7%	10,2%	0,9x					1.276	23,4%	12,2%	Liq.
4.197	15,0%	17,9%	0,3x					360	140,1%	n.d.	n.d.
2.240	7,8%	24,0%	0,9x					251	11,0%	13,2%	2,1x
311	16,6%	17,5%	0,3x	*				176	4,4%	25,7%	Liq.
2.984	14,7%	41,1%	Liq.					664	9,7%	6,3%	1,2x
1.534	1,4%	11,9%	0,9x					50	9,2%	∼10,0%	Liq.
		15.354	-1,1%**	10,6%	0,7x						107	19,8%	9,6%	0,6x
430	5,1%	19,8%	Liq.					187	-4,5%	23,6%	Liq.
		∼ 3.300	13,5%	7,4%	Liq. *		82	9,4%	27,7%	Liq.
Average		18,4%				Average					15,0%

Actual data or estimates. *banking NFP. **Organic growth. *** 2023 figures include revenues relating to Jumbo discontinued operations

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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IN 2023, WE INVESTED 144 MILLION AND DIVESTED 190.

The largest investment was in IDB - ITALIAN DESIGN BRANDS - a high- end design, furniture and lighting group that we strongly believe in. We are dedicating and will continue to dedicate all the necessary time to it because its growth - both organic and through acquisitions - has to be strong, solid, and capable of providing the country (foreign acquisitions are not excluded) a clear reference point in an industry in which Italy is the global leader, but in which there is too much fragmentation.

IDB is not (yet) the largest Italian group in the sector, but the project we have in mind is to try to achieve it. The stock market listing - which we studied at the time of our entry using a rather innovative system - can be the extra lever to accelerate this development. Today, IDB has a turnover of over 300 million euro, nearly 55 million in Ebitda, strong cash flow conversion and very little bank debt, making it among the largest, most complete, and dynamic operators in the sector. Its range of furniture, lighting, kitchens, and furnishing systems, all of high quality, along with turnkey supplies for shops of many of the leading luxury fashion houses, makes it a unique player at international level.

With IDB, we would like to repeat the growth paths that have been achieved in INTERPUMP (over 40 acquisitions since our investment 21 years ago), AMPLIFON (over 20 acquisitions in 14 years), SESA (over 50 in just 5 years), PRYSMIAN (5 transactions, 2 of which were very large), BETA (6 acquisitions), BENDING SPOONS (9 acquisitions), or even in MONCLER (a major acquisition and stores tripled in 11 years), ROCHE BOBOIS, with a significant increase in direct stores worldwide, or OVS, where in addition to the considerable in-store investments, 7 brands have been added in less than 4 years.

The largest divestment in 2023 was in PRYSMIAN, a fantastic group which we were involved in for 14 years, but in which we haven't had a presence at governance level anymore. As TIP is always very focused on trying to make a direct and effective contribution to the companies in which it invests, it was time for us to consider reducing our stake. In 2024 we continued to divest, with excellent capital gains. This doesn't detract from the fact that the group remains an unrivalled global leader in terms of revenue, technology and backlog, and will certainly continue to provide great satisfaction to shareholders, as it has done

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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so far, and in which we have been happy and honoured to have been its largest shareholder for years, and lately among the largest.

The complete structure of the TIP group today is as follows:

LISTED COMPANIES

PRIVATE COMPANIES

11	Worldwide leader

StarTIP

4	European leader

10

Italian leader

In 2023, the TIP group had an aggregated turnover of OVER 40 BILLION EURO, with an EBITDA OF OVER 6 BILLION, employing OVER 130,000 PEOPLE . Once again, we are truly proud and happy to have created such a grouping.

This year I'll refrain from listing individual companies, so that I no longer have the problem - given their results - of finding the most appropriate adjectives to compliment entrepreneurs and managers who, as previously mentioned, have once again performed positively, confirming that we have witnessed many exceptional stories, with further prospects for improvement with indisputable leadership that could not fail to deliver results. We are confident that the few companies that have not performed so well will catch up in the near future.

I would like to stress that the group of unlisted, and therefore prima facie less visible, companies continues to grow. Its weight in TIP's N.I.V. is approaching the one billion euro mark, and we believe that there we

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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could have an excellent group of opportunities for IPOs and corporate combinations in the coming years.

A specific mention should be made of ALPITOUR. Months ago we began a valorisation process because, after what we went through during the Covid period, it was only right to survey third-party interests. The process is ongoing, although we have slowed down it due to the improved results compared to the record year ended in October 2023. In fact, some stakeholders had observed that last year's results may have been influenced by the sort of post-pandemic enthusiasm that lead everyone to travel more. What we are demonstrating, however, is that even in the months following the year-end, it not only performed better than budg- eted, but also consolidated an increase in growth that appears to be structural. Even the negative effects on Egypt (an important destination for the group) of the Israeli-Palestinian war were limited and were offset by increases in other destinations.

It may be its absolute leadership in the Italian market, or the uniqueness of its offer (hotels, airlines, tour operators, online sales, etc.) but the numbers to date have improved further. And while it's not easy, in a sector as specialized as tourism, to find investors interested in such a complex structure, which is also conditioned by constraints such as the need for a European final beneficial owner for the airline, we don't have the slighest intention of accepting proposals that don't adequately take into account what the group is and what it can still be- come.

In the interest, as always, of the shareholders, we will do our best to find the best technical, corporate, and financial solutions.

Another specific mention should be made of BENDING SPOONS, a well- known app developer headquartered in Italy, but effectively a true digital multinational, of which TIP has been a partner for many years. As soon as we heard about them - back in 2017 - as an almost unique phenomenon in the digital landscape, we immediately contacted them. While we received praise for our business model, we were unable to convince them to let us invest in their capital, but they "took note" of our inter- est.

Later, they contacted us and invited us to invest, which we did without hesitation, without negotiations, without demanding anything even in

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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terms of governance. Subsequently, they further opened their capital to others, and we have always supported every transaction. As of to- day, StarTIP holds around 3.3% of the capital, has a representative on the Board of Directors and benefits from the impressive increase in the company's value over time; the last transaction was at a pre-money valuation of 2.4 billion dollars.

A final mention, given the attention this group has received in the past, concerns EATALY. The company closed an excellent 2023 with over 40 million in Ebitda and expects to continue its growth in terms of revenues and margins.

Conclusions

Having started this review of the year commenting on the singularity of the period, it is even more difficult than in the past to try to draw any precise conclusions.

Starting from the industrial markets - the markets that matter most - our first focus should be on China and Asia in general. It is they that been driving the world economy for decades, and the first question to be clarified is whether or not this driving force is about to weaken.

For us, the answer is no; there is too much desire in Asia to continue growing, to align as much as possible with the West, to conclude that there might be a significant slowdown. The feeling about China is that the country's political leadership cannot afford to thwart the economic expectations of households because after the huge growth that they have enjoyed for many years, the population cannot be deceived. So it is possible that the government will move from lowering the salaries of public employees to normalizing them and 'patching up' real estate crises in order to prevent the situation from deteriorating. It is no coincidence that they have already adopted a stance on stock exchanges by issuing regulations with other incentives; the consequences are already visible.

So there seems to be some awareness of not wanting to fall behind. If this scenario plays out, China will continue to grow significantly and, above all, will seek recover the gap created by many international

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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groups' withdrawal from local production in the last 2/3 years, not least because, as we know, starting with Apple, this disengagement is structural.

Nevertheless, something that many banks, economists, and media overlook is that China grew by 5% in 2023 and has just confirmed 5% growth in 2024 as well. Figures that beyond our wildest dreams. Furthermore, India (8%), Vietnam (5%), the Philippines (5%), Indonesia (5%), and many other Asian countries are experiencing very strong growth rates. Therefore, in my humble opinion, the Asian pull will continue, and if it does, the world will be able to stay quiet for a while longer and benefit from it, even amidst wars and threats of further conflicts.

Tranquillity can mean consolidation, sometimes a slowdown in growth, which is healthy at this stage, following the excess demand witnessed in 2021, 2022, and partly in 2023.

The budgets of almost all the companies we observe are prudent, at least in terms of revenue and profitability growth, while they are more positive in terms of cash generation. given the reduced demand for working capital, now that the season of excesses in raw materials and energy has hopefully come to an end, and for investment, following the heavy capital expenditure commitments of recent years. As is well- known, liquidity levels are always the primary engine of growth.

Moving on to financial markets, besides the anomalies touched upon ear- lier, some phenomena, partly mentioned in last year's letter, need to be highlighted.

The first, and in our view the most important, concerns company valua- tions, which continue to decline. As can be noticed in the graph below, the mythical "multiples" (a concept we are not fond of, but given its now pervasive use, we are compelled to consider) are approaching ten-year lows and in 2023 were lower than Covid period level. This was also the case with the overall values of finalised deals.

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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The graphs are really emblematic.

Global M&A value

				4.418
		3.552		3.652
3.175	3.265		3.112
2.987		3.007

2.468	2.553

Median M&A EV/EBITDA

multiple

					11,0x
10,0x		10,0x	10,1x	10,1x
9,2x	9,5x			9,6x		9,3x
				8,9x

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Value (bln USD)

Source: KPMG

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Source: Pitchbook

The causes and effects of this are that the entire private equity world is slowing down, from fund raising to the value of deals, and sometimes even to their number, from exits (which more than halved in 2023 compared to 2022) to LBO operations, which still account for 75% of global private equity market.

Everything seems to contribute to a slowdown in the operations of that category of players that had been doing the lion's share of Mergers and Acquisitions for at least 20 years. We are already seeing signs of increased activity among so-called "trade buyers", i.e. companies that conclude transactions on the basis of strategic considerations and synergies, not because they need to "put to work" money that had flowed even more abundantly during the years of low interest rates.

All of this is generating strong sensations of structural change in the corporate finance world: apart from a few groups or banks that have benefitted in terms of favourable stock market valuations in recent months, most of the companies do not consider themselves well-valued in the markets and, conversely, are willing to pay lower prices for mergers and acquisitions than those seen in the recent past.

The very fact that competition from a significant portion of the private equity sector has decreased induces caution. Obviously, there will be exceptions, but even these, I believe, will be more limited than in the past because the groups that can truly afford to "not worry about the numbers " are always few, and Nvidia's 33 times turnover, Microsoft's 13

The information contained in this letter is intended for purely information purposes; this letter in no way constitutes solicitation of public investments, nor indication for eventual buys.

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