Tinexta S p A : 04 Aug 2022 Tinexta - Results First Half 2022

PRESS RELEASE

TINEXTA: GROWTH CONTINUES IN FIRST HALF 2022

The Board of Directors of Tinexta S.p.A. approves results as at 30 June 20221

The comparative figures for the first half of 2021 have been restated following the agreement for the sale of the Credit Information & Management division:

• Revenues € 168.0 million, +20.2%
• Adjusted EBITDA: € 37.1 million, +20.6%; EBITDA: € 32.6 million +11.8%
• Net profit from continuing operations: € 13.3 million, +22.3%; Net profit: € 16.6 million, -7.7%
• Free Cash Flow from continuing operations: € 16.1 million (€ 45.0 million in last twelve months at
  30 June 2022); Free Cash Flow: € 23.1 million
• Total financial indebtedness: € 266.7 million (€ 263.3 million at 31 December 2021)
• Guidance 2022 confirmed

* * * *

Rome, 4 August 2022. The Board of Directors of Tinexta S.p.A., a leading provider of Digital Trust, Cyber Security, and Innovation & Marketing services, listed in the Euronext Star Milan segment, organised and managed by Borsa Italiana, met today under the chairmanship of Mr Salza and approved the Interim Financial Report at 30 June 2022. In the first half of the year, Revenues amounted to € 168.0 million (+20.2%), adjusted EBITDA to € 37.1 million (+20.6%) and Net profit from continuing operations was € 13.3 million (+22.3%).

The Chairman, Enrico Salza, commented: "Despite the great economic instability and turbulence in the international environment, Tinexta recorded growth in the first half of the year. The positive results confirm the validity of the business model and soundness of our Group, which is increasingly well positioned to seize

1 The comparative figures for the first quarter of 2021 have been restated in relation to the completion, in the fourth quarter of 2021, of the activities to identify the fair values of the assets and liabilities of Swascan S.r.l., which is consolidated on a line-by-line basis from 1 October 2020, and Euroquality S.A.S., which is consolidated on a line-by-line basis from 31 December 2020, and of Corvallis S.r.l., Yoroi S.r.l and Queryo Advance S.r.l., consolidated on a line-by-line basis from 1 January 2021. The comparative figures for the first half of 2021 have been restated due to the reclassification of the Credit Information & Management Division's discontinued operations as a result of the conclusion of binding agreements for the sale.

The adjusted income statement results are calculated gross of non-recurring components, of the cost relating to stock option plans and incentives, of the amortisation of other intangible assets emerging at the time of allocation of the price paid in the business combinations and of the adjustment of liabilities for contingent consideration linked to acquisitions, net of the related tax effects and net of "Profit (loss) from discontinued operations". These indicators reflect the Group's economic performance, excluding non-recurring factors not strictly related to the activities and management of the business. For further details on the construction of the adjusted income statement results, please refer to the Interim Financial Report at 30 June 2022.

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new development opportunities and support the production system to meet the challenges of growth, technological innovation and digital transformation".

The Chief Executive Officer, Pier Andrea Chevallard, commented: "The first half confirmed growth both in revenues and profitability, in line with expectations. The companies acquired delivered the expected performance, contributing significantly to the overall value creation. The first half-yearperformance allows us to confirm the growth targets for this year and to aim for a further strengthening of Tinexta in the digital services market, characterised by important growth prospects and central to the Group's development strategy".

CONSOLIDATED GROUP RESULTS AT 30 JUNE 2022

	Summary data	1st half of	1st half of		Change	Change
	(In millions of Euro)	2022	2021		%
	Revenues	168.0	139.7		28.3	20.2%
	EBITDA	32.6	29.2	3.4	11.8%
	Adjusted EBITDA	37.1	30.7		6.3	20.6%
	Operating profit (loss)	19.0	17.1	2.0	11.5%
	Adjusted operating profit (loss)	28.8	23.8		5.0	20.8%
	Net profit from continuing operations	13.3	10.9	2.4	22.3%
	Adjusted net profit from continuing operations	18.8	14.9		3.9	26.0%
	Profit (loss) from discontinued operations	3.3	7.1	-3.8	-53.8%
	Net profit	16.6	18.0		-1.4	-7.7%
	Free cash flow	23.1	29.7	-6.5	-22.0%
	Free Cash Flow from continuing operations	16.1	20.8		-4.7	-22.7%

	30/06/2022	31/12/2021	Change	% change
Net financial indebtedness	266.7	263.3	3.4	1.3%

Revenues for the first half-year period amounted to € 168.0 million, up by 20.2% compared to the same period of the previous year. Organic growth was 8.0% (€ 11.1 million). The increase in Revenues attributable to the change in the scope of consolidation2 was 12.3%, (€ 17.1 million).

EBITDA, including non-recurring costs, among which acquisition costs, amounted to € 32.6 million, up by 11.8% compared to the same period of 2021. Adjusted EBITDA3 amounted to € 37.1 million, up 20.6% compared to the same period of the previous year. The change in scope of consolidation led to a 19.3% increase in adjusted EBITDA, while organic growth was 1.3%, for the most part reflecting the investments in

1. The results for the period include the contribution of acquisitions: Forvalue S.p.A. (consolidated from 1 July 2021), CertEurope S.A.S. (consolidated from 1 November 2021) and Evalue Innovación SL (consolidated from 1 January 2022), Enhancers S.p.A. (consolidated from 1 April 2022) and Sferabit S.r.l. (consolidated from 1 May 2022). The contributions from these companies are shown below as a change in the scope of consolidation.
2. Adjusted EBITDA excludes non-recurring costs, including acquisition costs, of € 3.0 million and stock option costs of € 1.5 million.

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the organisational structure in the first half of the year by the Cyber Security Division and the strengthening of the Group's central functions to serve the expected growth.

Operating Profit amounted to € 19.0 million, up by 11.5% compared to last year. Amortisation, depreciation, impairment and provisions totalled € 13.6 million (€ 12.1 million in the same period of 2021) and includes €

5.3 million of amortisation of Other intangible assets arising from allocation of the price paid in Business Combinations (€ 5.2 million in the first half of 2021), mainly relating to the Cyber Security BU and the companies Warrant Hub, Forvalue and Queryo.4

Net profit from continuing operations in the first half amounted to € 13.3 million compared to € 10.9 million in the first half of 2021. Net financial charges for the period amounted to € 2.5 million, compared to € 1.7 million in the previous year. The increase in net financial charges was impacted by higher charges on contingent considerations adjustments linked to acquisitions for € 0.7 million compared to the first half of 2021. Income taxes were € 3.1 million compared to € 4.3 million in the previous year. In the first half of 2022, non-recurring tax receivables amounted to € 3.2 million (€ 1.0 million in the previous year), attributable to redemption for a total of € 2.7 million.

The Profit (loss) from discontinued operations, amounting to € 3.3 million, includes income of the Credit Information & Management Division, which is reported as Discontinued Operations pursuant to IFRS 5. The decrease compared to the previous year (€ 7.1 million in 1H21) is mainly due to non-recurring income recorded in the first half of 2021 for € 2.9 million.

The Net profit for the first half of 2022 was € 16.6 million (of which EUR 1.6 million was minority interests), compared to € 18.0 million in the first half of 2021.

The Free Cash Flow from continuing operations amounted to € 16.1 million (€ 20.8 million in the same period of 2021) and was affected by the payment of the substitute tax for redemption for a total of € 3.7 million and higher investments compared to the same period of 2021. Free cash flow from discontinued operations was

• 7.0 million (€ 8.8 million in the same period of 2021). Free Cash Flow from continuing operations in the last twelve months to 30 June 2022 was € 45.0 million.

RESULTS BY BUSINESS SEGMENT

The table below shows the economic results of the Business Units, adjusted for the non-recurring items.5

	Adjusted condensed Income						EBITDA						EBITDA							% change
	Statement by business segment			1st half of			MARGIN			1st half of			MARGIN			Change
			2022			1st half of			2021			1st half of
	(in millions of Euro)																Scope of
						2022						2021
																	Total	Organic	consolida
																					tion
	Revenues
	Digital Trust	76.9				63.6%				13.2	20.8%	8.1%	12.7%
	Cybersecurity	36.8				34.6				2.1	6.2%	6.2%	0.0%
	Innovation & Marketing Services	55.4				41.7				13.7	32.9%	11.1%	21.8%

4The figure does not include the amortisationthat could arise from completion of the CertEurope, Evalue Innovación, Enhancers and Sferabit business combinations, the recognition of which could lead to a restatement of the balances after the date of first-time consolidation

5 After concluding binding agreements for the sale of the Credit Information & Management Division, the segment's contribution to the consolidated figures is presented as discontinued operations, and therefore excluded from the Group's business segments (comparative data were restated). Management also decided to reclassify the contribution of Forvalue S.p.A. (excluded from the scope of the sale) in the Innovation & Marketing Services business segment.

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	Other segments (Parent	1.5			1.0			0.4	41.6%	41.6%	0.0%
	Company)
	Intra-segment	-2.5			-1.2			-1.3	104.4%	100.7%	3.7%
	Total Revenues	168.0			139.7			28.3	20.2%	8.0%	12.3%
	Adjusted EBITDA
	Digital Trust	21.1	27.4%	15.6	24.5%	5.5	35.1%	15.5%	19.7%
	Cybersecurity	3.0	8.2%	3.5	10.1%	-0.5	-13.5%	-13.5%	0.0%
	Innovation & Marketing Services	20.0	36.1%	17.1	41.1%	2.9	16.8%	0.0%	16.8%
	Other segments (Parent	-7.1		N/A	-5.5		N/A	-1.6	-28.4%	-28.4%	0.0%
	Company)
	Total adjusted EBITDA	37.1		22.1%	30.7		22.0%	6.3	20.6%	1.3%	19.3%

Digital Trust. Revenues amounted to € 76.9 million, with an increase of 20.8% compared to the first half of 2021, attributable for 8.1% to organic growth and for 12.7% to the change in perimeter, due to the consolidation from 1 November 2021 of CertEurope S.A.S., which contributed € 7.9 million to revenues for the first half. The BU's revenues continue to benefit from the demand of businesses and public administrations needing to evolve digital and dematerialisation processes.

Adjusted EBITDA amounted to € 21.1 million, an increase of 35.1%. Organic growth was 15.5%, while growth due to the change in scope amounted to 19.7%. The margin, equal to 27.4%, benefited from the organic growth in revenues and the consolidation of CertEurope S.A.S., characterised by higher margins.

Cyber Security. Segment revenues amounted to € 36.8 million, with an organic increase of 6.2% compared to the first half of 2021. The increase, which was substantially in line with expectations, was driven by the continuous growth in system integration services, by constant demand for the Legalmail Security Premium service - based on Yoroi's Sandbox Yomi technology that allows suspicious communications to be blocked - and the launch of specific products and services for security related to dedicated architectures. A strategic partnership with a leading software company for financial services and the rebranding on a new suite of products for AML processes were finalised during the first half of the year. The partnership with InfoCert, for the resale of standardised cyber products and qualification of the sales force for the large enterprise market segment, was further enhanced in the first half.

Adjusted EBITDA was € 3.0 million, down from € 3.5 million in the first half of 2021 due to investments in the organisational and commercial structure made in the period against the expected development of revenues from the second half of the year. In Q2 2022, EBITDA reported a significant growth, up 18.8% compared to the same period last year.

Innovation & Marketing Services. Revenues amounted to € 55.4 million, an increase compared with the first half of 2021 of 32.9%, 11.1% of which attributable to organic growth and the remainder to changes in scope (21.8%), due to the consolidation of Evalue Innovación SL from 1 January 2022, of Enhancers S.p.A. from 1 April 2022 and of Forvalue S.p.A. from 1 July 2021. The BU increased the volume of business generated through an increase in the number of files managed, the acquisition of new clients and access to new markets. This growth was driven by the good performance of the acquired companies, Evalue and Enhancers, by activities relating to European Funding and Training, as well as by the internationalisation and Digital Marketing services.

Adjusted EBITDA amounted to € 20.0 million, an increase of 16.8% compared to EBITDA in the first half of 2021, entirely attributable to the change in scope of consolidation.

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SUMMARY OF SECOND QUARTER 2022 RESULTS

The Group achieved Revenues of € 89.9 million. EBITDA amounted to € 21.0 million and adjusted EBITDA was

• 22.6 million, representing 25.1% of Revenues. Operating profit and net profit from continuing operations amounted to € 14.1 million and € 10.9 million respectively, representing 15.7% and 12.1% of revenues.

	Summary income statement data		Q2 2022		Q2 2021		Change	Change
	(In millions of Euro)				%
	Revenues		89.9		75.6		14.2	18.8%
	EBITDA	21.0	18.1	2.9	16.2%
	Adjusted EBITDA		22.6		19.1		3.5	18.2%
	Operating profit (loss)	14.1	12.1	2.0	16.6%
	Adjusted operating profit (loss)		18.3		15.7		2.6	16.6%
	Net profit from continuing operations	10.9	7.3	3.6	48.5%
	Adjusted net profit from continuing operations		12.1		9.8		2.3	23.1%
	Profit (loss) from discontinued operations	1.7	5.2	-3.5	-67.4%
	Net profit		12.6		12.5		0.1	0.6%
	Free cash flow	-1.6	4.9	-6.5	-133.5%
	Free Cash Flow from continuing operations		-4.3		1.0		-5.3	-533.9%

Revenues increased by 18.8%, compared to the second quarter of 2021, and adjusted EBITDA by 18.2%. Operating profit rose by 16.6% and Net profit from continuing operations by 48.5%.

GROUP NET FINANCIAL INDEBTEDNESS

Net Financial Indebtedness amounted to €266.7 million at the end of the first half of the year, an increase of € 3.4 million compared to 31 December 2021.

The change in net financial indebtedness in the first half of 2022 compared to the first half of 2021 and the last 12 months to 30 June 2022 is detailed below:

In millions of Euro	1st half of 2022	1st half of 2021	Last 12 months to 30 June 2022
Net financial indebtedness - opening balance	263.3	92.0	205.3
Free Cash Flow from continuing operations	-16.1	-20.8	-45.0
Free Cash Flow from discontinued operations	-7.0	-8.8	-4.8
Net financial (income) charges	2.7	1.8	4.1
Approved dividends	19.4	12.6	19.4
New leases and adjustments to existing contracts	17.4	1.6	21.7
Acquisitions	60.8	110.9	143.2

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