Tinexta S p A : Significant growth in Group Results in First Quarter 2021

PRESS RELEASE

Tinexta: significant growth in Group Results in First Quarter 2021

Successful start-up for the Cyber Security BU

Board of Directors approves results at 31 March 2021

• Revenues: € 82.7 million, +50.5%
• EBITDA: € 16.4 million, +49.8%
• Net profit: € 6.8 million, >100%
• Adjusted net profit: € 7.4 million, +90.3%
• Free Cash Flow: € 24.8 million (€71.4 million in the last twelve months at 31 March 2021)
• Net Financial Position: € 187.0 million; NFP/EBITDA: 2.2x
• • * * *

12 May 2021. The Board of Directors of Tinexta S.p.A., a leading provider of Digital Trust, Cyber Security, Credit Information & Management, and Innovation & Marketing Services, listed in the STAR segment of Borsa Italiana's MTA market, today approved the Interim Report on Operations at 31 March 2021. In the first quarter of 2021, Revenues amounted to € 82.7 million (+50.5%), EBITDA to € 16.4 million (+49.8%) and Net

Profit was € 6.8 million (+136.0%).

The Chairman, Enrico Salza, remarked: "The Tinexta Group continues to see positive results even in the present context, pursuing a plan for solid and balanced growth, both organic and through acquisitions. The Group's commitment, alongside the business ecosystem, is to contribute to relaunching Italy's economy, following the guidelines indicated by the digital new deal of the National Recovery and Resilience Plan".

"All the business units recorded excellent performances that contributed to the first quarter results, which saw a solid organic growth in addition to the growth due to the consolidation of acquisitions", emphasised Pier Andrea Chevallard, the Group's Chief Executive Officer. "Furthermore, the significant cash flow generation further supports the external growth plan. Lastly, we can report the positive results achieved by Cyber Security, the new Group business unit, which has successfully seized upon market opportunities, even in its start-up phase of operations, in the increasingly integrated context of the various Group companies".

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CONSOLIDATED GROUP ECONOMIC RESULTS AT 31 MARCH 2021

Summary income statement	1st quarter	1st quarter		Change		Change
(In thousands of Euro)	2021		20201
Revenues	82,666		54,911		27,755		50.5%
EBITDA before Stock Options	16,777		10,916	5,861	53.7%
EBITDA	16,351		10,916		5,435		49.8%
Operating profit	9,527		4,643	4,885	105.2%
Net profit	6,822		2,890		3,932		136.0%
Adjusted net profit	7,380		3,878	3,502	90.3%
Free cash flow	24,783		20,113		4,670		23.2%

The Group closed first quarter 2021 with Revenues of € 82.7 million. EBITDA amounted to € 16.4 million, or 19.8% of Revenues. Operating profit and Net profit amounted to € 9.5 million and € 6.8 million, or 11.5% and 8.3% of Revenues, respectively.

Revenues increased by € 27.8 million compared to the first quarter of 2020 (+50.5%), EBITDA by € 5.4 million (+49.8%), Operating profit was also up by € 4.9 million (+105.2%), and Net profit by € 6.8 million (+136.0%).

The period results include contributions from the acquisitions: Corvallis S.r.l., Payotik S.r.l., Yoroi S.r.l., Queryo Advance S.r.l. (consolidated from 1 January 2021), Swascan S.r.l. (consolidated from 1 October 2020), Euroquality S.A.S. and Europroject O.O.D. (consolidated from 31 December 2020), Trix S.r.l. (established at the end of December 2020), and Tinexta Cyber S.p.A. (established in January 2021). The contributions from these companies are reported below as a change in the scope of consolidation.

The Income statement for the first quarter of 2021 is provided below, compared with the same period of the previous year.

	Consolidated Income Statement	1st quarter	%		1st quarter	%			Change	Change %
	(€ '000s)	2021			2020
	Revenues	82,666		100.0%		54,911		100.0%			27,755	50.5%
Total Operating Costs*	65,889	79.7%	43,995	80.1%	21,894	49.8%
	Costs of raw materials	3,168	3.8%	1,875	3.4%	1,293	68.9%
	Service costs	26,553	32.1%	19,555	35.6%	6,999	35.8%
	Personnel costs*	33,860	41.0%	20,234	36.8%	13,626	67.3%
	Contract costs	1,896	2.3%	1,887	3.4%	9	0.5%
	Other operating costs	411	0.5%	444	0.8%	-33	-7.4%
	EBITDA before Stock Options	16,777		20.3%		10,916		19.9%			5,861	53.7%
Stock Option costs	426	0.5%	0		0.0%	426	n.a.
	EBITDA	16,351		19.8%		10,916		19.9%			5,435	49.8%
	Amortisation and depreciation	6,254	7.6%	5,163	9.4%	1,091	21.1%
	Provisions	333	0.4%	238	0.4%	95	39.8%
	Impairment	238	0.3%	873	1.6%	-635	-72.8%
	Operating profit	9,527		11.5%		4,643		8.5%			4,885	105.2%
	Financial income	55		0.1%	204	0.4%	-148	-72.8%
	Financial charges	918	1.1%	687	1.3%	231	33.7%
	Net Financial Charges	863		1.0%		483		0.9%			380	78.6%

1The comparative data for the first three months of 2020 were re-stated in relation to the completion, in the fourth quarter of 2020, of identification of the fair values of the assets and liabilities of PrivacyLab S.r.l., consolidated on a line-by-line basis from 1 January 2020.

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Profit from equity-accounted investments	0	0.0%	14	0.0%	-14	-102.3%
Profit before tax	8,664	10.5%	4,174	7.6%	4,490	107.6%
Income taxes	1,842	2.2%	1,283	2.3%	559	43.6%
Net profit	6,822	8.3%	2,890	5.3%	3,932	136.0%
of which minority interests	127	0.2%	17	0.0%	110	639.4%

• Personnel costs are recognised net of the Stock Option costs, shown below, in order to better understand the composition of EBITDA before the Stock Options.

Revenues rose from € 54.9 million in the first quarter 2020 to € 82.7 million in first quarter of 2021, marking an increase of € 27.8 million or 50.5%. The increase in Revenues attributable to the change in the scope of consolidation was 33.0% (€ 18.1 million); organic growth was 17.6% (€ 9.6 million).

Operating costs before Stock Options increased from € 44.0 million in the first quarter of 2020 to € 65.9 million in the first quarter of 2021, an increase of € 21.9 million (49.8%). The increase in operating costs attributable to the change in the scope of consolidation was 36.3% (€ 16.0 million), while the remaining 13.4% (€ 5.9 million) is due to organic growth.

EBITDA before Stock Options rose from € 10.9 million in the first quarter of 2020 to € 16.8 million in the first quarter of 2021, an increase of € 5.9 million (+53.7%; 34.2% attributable to organic growth, 19.5% to the change in the scope of consolidation).

At 31 March 2021, costs for € 426 thousand had been allocated to the 2020-2022 Stock Option Plan.

EBITDA for the first quarter of 2021 totalled € 16.4 million, an increase of 49.8% with respect to the same period of 2020. The EBITDA margin is 19.8%, essentially in line with the first quarter of 2020.

The item Amortisation and depreciation, impairment and provisions, for €6.8 million (€6.3 million in the same period in 2020) includes €1.3 million in amortisation of Other intangible assets arising upon allocation of the price paid in Business Combinations (€1.5 million in the first three months of 2020), mainly relating to Innolva, Visura and Warrant Hub.

Net financial charges amounted to € 0.9 million (€ 0.5 million in first quarter 2020). The increase in financial charges reflects the increase in bank debt to support the acquisitions made.

Income taxes, calculated based on the tax rates envisaged for the year under current regulations, amounted to € 1.8 million (€ 1.3 million in the first quarter of 2020). The tax rate is 21.3% (30.7% in the first quarter of 2020) due to a non-recurring tax income of € 0.9 million deriving from the IRAP 2020 benefit recognised as a result of extension of the maximum benefit envisaged in Decree Law no. 41/2021, the "Support Decree".

The Net profit for the first quarter was € 6.8 million (of which € 0.1 million due to minority interests), compared to € 2.9 million in the first quarter of 2020.

Free cash flow in the first quarter of 2021 totalled € 24.8 million (€ 20.1 million in the same period of 2020). The Free Cash Flow generated in the twelve months to 31 March 2021 was € 71.4 million.

Adjusted Group Results

The adjusted income statement results are calculated gross of non-recurring components, of the cost relating to stock option plans, 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. These indicators reflect the Group's economic performance, net of non-recurring factors not strictly related to the activities and management of the "core business".

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Adjusted Income Statement	1st quarter	%		1st quarter	%			Change		Change %
(€ '000s)	2021		2020
Adjusted revenues	82,666	100.0%		54,911	100.0%		27,755	50.5%
Adjusted EBITDA	16,994	20.6%		10,999	20.0%			5,995		54.5%
Adjusted operating profit	11,496	13.9%		6,219	11.3%		5,277	84.9%
Adjusted net profit	7,380	8.9%		3,878	7.1%			3,502		90.3%

Compared to the first quarter 2020, the adjusted results showed an increase of 50.5% in Revenues, 54.5% in EBITDA, 84.9% in Operating profit and 90.3% in Net profit.

Non-recurring components

During the first quarter of 2021, non-recurring operating costs of € 0.2 million were recorded, associated with acquisitions of target companies.

Non-recurring income taxes includes non-recurring income of € 0.9 million, mainly referring to the IRAP benefits as per the "Support Decree".

In the first quarter of 2020, non-recurring operating costs of € 0.08 million and non-recurring tax income of

• 0.005 million were recorded.

Stock Option costs

The costs, totalling € 0.4 million, refer to the 2020-2022 Stock Option Plan.

Amortisation of Other intangible assets from Business Combinations

The amortisation of Other intangible assets that emerged at the time of allocation of the price paid in Business Combinations came to € 1.3 million (€ 1.5 million in the same period of the previous year).

Adjustment of the contingent considerations connected to acquisitions

Adjustments of the contingent considerations connected to acquisitions entailed the recognition of financial income for € 0.02 million (€ 0.16 million in the same period of the previous year).

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RESULTS BY BUSINESS SEGMENT

The table below shows the adjusted economic results by business segment.

	Adjusted condensed Income			1st			EBITDA %			1st			EBITDA %								Change %
			quarter			1st			quarter			1st			Change
	Statement by business segment					Quarter					Quarter					Total		Organic		Scope of consolidation
			2021					2020
						2021					2020
Revenues
Digital Trust	31,180				26,111				5,069	19.4%	19.4%	0.0%
Cyber Security	16,786				0					16,786		n.a.	0.0%		n.a.
Credit Information & Management	18,869				17,052				1,817	10.7%	10.7%	0.0%
Innovation & Marketing Services	16,145				11,994				4,151	34.6%	23.5%	11.1%
Other segments (Parent Company)	569				525				44		8.4%	8.4%	0.0%
Intra-segment	-882				-770				-112	14.5%	12.5%	2.0%
	Total adjusted revenues			82,666						54,911						27,755			50.5%		17.6%		33.0%
EBITDA
Digital Trust	7,165	23.0%	5,919	22.7%	1,246	21.1%	21.1%	0.0%
Cyber Security	1,934	11.5%	0			n.a.	1,934		n.a.	0.0%		n.a.
Credit Information & Management	5,280	28.0%	3,584	21.0%	1,697	47.3%	47.3%	0.0%
Innovation & Marketing Services	4,993	30.9%	3,396	28.3%	1,598	47.1%	36.0%	11.1%
Other Segments (Parent Company)	-2,379		n.a.	-1,899		n.a.	-479	-25.2%	-25.2%	0.0%
	Total adjusted EBITDA			16,994			20.6%			10,999			20.0%			5,995			54.5%		33.5%		21.0%

Digital Trust

Revenues in the Digital Trust segment amounted to € 31.2 million. The increase compared to the first quarter 2020 is 19.4% (€ 5.1 million). The first quarter 2021 continued to see a growing demand for digital and dematerialisation services, which boosted the growth of certified e-mail products (Legalmail), digital signature (LegalCert) and SPID (Public Digital Identity System), with an increase in Off the Shelf revenues (Telematic Trust Solutions), which the Group primarily sells through the E-Commerce and indirect channels, as well as through the web sites and digital platforms. There was also an increase in revenues linked to Enterprise Solutions on existing contracts and on new commercial initiatives. The Group continues to develop its digital onboarding service, which means that its customers are guaranteed remote work continuity with high safety and functionality standards.

Segment EBITDA equalled € 7.2 million. The increase compared to the first quarter of 2020 is 21.1% (€ 1.2 million). The EBITDA margin was 23.0% (22.7% in the first three months of 2020).

Cyber Security

Revenues in the Cyber Security segment amounted to € 16.8 million, with EBITDA of € 1.9 million. The EBITDA margin was 11.5%. The Cyber Security BU results achieved in the first quarter of 2021 are in line with expectations, in terms of the level of business volume developed and the profit margins. The BU has seized upon market opportunities in a context of increasing integration among the Group companies.

Credit Information & Management

In the Credit Information & Management segment, Revenues amounted to € 18.9 million, with an increase of 10.7% (€ 1.8 million) compared to the first quarter of 2020. The number of cases managed by the Group in relation to access to the Central Fund guarantees remained high: the DPCMs issued and Italian Law Decree

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