Generalfinance

Investor Presentation • Oct 11, 2022

GENERALFINANCE H1 2022 Financial Results

1

2022 ITALIAN EXCELLENCES Mid Corporate Conference October 12, 2022

STRICTLY PRIVATE AND CONFIDENTIAL

Disclaimer

This presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number or assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of Generalfinance S.p.A. (the "Company").

There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of futures performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise expect as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.

The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advise or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any State or other jurisdiction of the United States or in Australia, Canada or Japan or any jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form apart of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.

Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Ugo Colombo, in his capacity as manager responsible for the preparation of the Company's financial reports declares that the accounting information contained in this Presentation reflects the Generalfinance documented results, financial accounts and accounting records. Neither the Company nor any of its or their respective representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.

Generalfinance: Factoring, Digital, Low Risk

Overview and business model

Generalfinance: Factoring Digital Low Risk player

• traditional banks, with no comparable companies
• ✓ Digital platform enables unique efficiency, knowledge of clients (competitive advantage) and better risk management
• ✓ Competitive advantage with tailor-made services to customers by using a unique in-house Scoring and Rating system and high sector diversification
• ✓ Excellent risk management due to digital platform data management and managerial proven experience
• ✓ Strong growth opportunities supported by sound capital and excellent funding structure
• ✓ Management with a solid experience in financial services to distressed companies, as well as significant skills in business development

Value proposition, distinctive features and value chain

Value proposition 1 Distinctive skills

Generalfinance offers its customers (mostly companies under financial stress) rapid and customized interventions for the financing of the working capital and trade receivables, covering the entire supply chain finance

"Revolving" relationship (LIR¹ at 24 months) in a predominantly "notification" mode and, where applicable, "acceptance" of the debt

• o Consolidated expertise throughout the entire process
• o End-to-end in-house valuation process, tailored to customer specifications
• o Strong risk reduction and diversification mechanisms
• o In-house-developed proprietary factoring platform to support business specifications
• o Fast operational processes and capability to provide bridge financing within turnaround processes

3

Generalfinance masters all the crossroads of the value chain

2

• o All operational steps and core activities are carried out internally by Generalfinance's dedicated structures
• o Generalfinance does not relies on external consultants to assess the creditworthiness of sellers and debtors but owns all the skills
• o The process is reinforced by credit insurance policies provided by Allianz Trade insurance company which, during the risk acquisition phase, performs an independent assessment of the assigned debtors, providing Generalfinance a feedback on the results of their assessment

IPO and updated shareholder base

Factoring market and distressed financing

What is Factoring? (1/2)

Factoring

What is Factoring? (2/2)

Source: Management

An attractive market with key growth drivers

In the overall fast growing factoring market (turnover in Italy is expected to grow from € 250bn in 2021 up to €269-€275bn in 2022) Generalfinance focuses on distressed sellers (UTP, forborne and past due) with a portfolio of performing debtors (in bonis)

29,4%

6,1%

5,0%

Other

Notes: (1) range of values estimated in the last Assifact report «ForeFact» 22

Source: Assifact, Banca d'Italia, Banca IFIS Market Watch, report PWC, company balance sheets and website

Factoring

19%

Not classified Small (<10€M) Medium (10-50€M) Corporate (50-250€M)

Large Corporate (250€M+)

Vulnerable companies and new non-bankruptcy procedures

More than 40% of SMEs are in vulnerability or risk condition An annual average (2016-2020) of 1,494 companies entered nonbankruptcy procedures

The potential market for Generalfinance

▪ The 2020 recession has affected the trend of the UTP/Past Due/Forborne stock, which is the best proxy of the Generalfinance's niche market, with an expected growth from 70bn in 2021E to 90bn in 2023E

EVOLUTION OF NON-PERFORMING EXPOSURES IN ITALY (€bn)

Notes: 1) Excluding Repo and Current Accounts

Source: Assifact, Prometeia, Banca d'Italia, Banca IFIS Market Watch, report PWC, company balance sheets and website

NPE

Digital, Low Risk Player

Digital factoring – L12M KPI

Digital

From Funding to Operations

VERTICAL SPECIALIST COVERING THE ENTIRE VALUE CHAIN

	FUNDING				The Company has a stable and diversified funding structure, thanks to the different available lines of credit allowing for an optimal management of disbursements and collections
	ORIGINATION				Solid network and strong reputation are at the base of Generalfinance turnover (81%) while the remaining part (19%) is originated through formal agreements with agents and brokers	Turnover generated by… (%) Generalfinance's Network Third Parties	2019A 93% 7%	2020A 96% 4%	2021A 96% 4%	H1 2022 97% 3%
OPERATIONS					Generalfinance is among the few Italians Factors to have developed an in-house proprietary platform allowing for custom solutions (scoring in c.15 days)	GENERALWEB (FRONT-END) Generalweb is the platform through which the sellers can interact with Generalfinance. It acts as an archive of files and as an exchange of documentation between the parties
					The proprietary platform enables to perform further additional analysis	TOR (BACK-END)
€K Capex- Intangibles	2019A 199	2020A 611	2021A 1,096	H1 2022 280	and guarantees a high level of flexibility and a constant	DATA MANAGEMENT		CREDIT AND	MANAGEMENT INSURANCE
Capex - Tangibles	487	456	547	159	monitoring activity	OPERATIONAL			TREASURY

A unique business model

The peculiarity of Generalfinance's business model is the choice of Seller–Debtor, where clients (Sellers) typically have a low credit rating (turnaround situation) while the Debtors underlying customer loans refer to a high credit rating (investment grade) S&P Fitch

Moody's

Investment Grade

Non-Investment Grade

Source: Management

Notes: 1) Generalfinance data refers to 1H 2022; Assifact data refers to FY 2021; 2) Assifact data net of household debtors.

Low Risk

Valuation Framework

	Valuation Framework		Low Risk
		Distressed Client
Scoring Components	DISTRESSED SELLER SCORING	DEBTOR SCORING/ SELLER'S PORTFOLIO	OPERATIONS'S FINAL SCORING
Key Factors for Valuation	▪ Industrial market position and client portfolio ▪ ▪ ▪ ▪	Recovery plan credibility and sustainability of the repayment plan of the previous debt position Standing and profile of the Seller's legal/financial advisors Feasibility of the financial measures and presence of legal protections Presence of financial support (Equity/Debt) from investors/shareholders
Output	▪ Distressed Seller's quantitative score (green, yellow, red)	▪ Debtor's score Seller's portfolio score ▪	▪ Overall valuation (Seller + Debtor) To be Grant Reject evaluated
		Performing Client
Scoring Components	PERFORMING SELLER SCORING	DEBTOR SCORING/ SELLER'S PORTFOLIO	OPERATIONS'S FINAL SCORING
Key Factors for Valuation	▪ ▪ Positioning in the sector ▪ ▪ Credibility of the management	Economic and financial analysis of the Balance Sheet/P&L/Cash Flow Statement Sustainability of the debt position (Debt-Service Coverage Ratio)
Output	▪ Performing Seller's quantitative score	▪ Debtor's score Seller's portfolio score ▪	Overall valuation (Seller ▪ + Debtor) To be Grant Reject evaluated

Debtor Scoring

Macro score	Indicator	Assessment details
1	BRI	▪ Counterparty summary assessment considering the economic and financial aspects, the history of the company, the shareholders structure, etc.
	CGS	▪ Counterparty summary assessment considering the economic and financial aspects, the history of the company, the shareholders structure, etc.
Commercial score	Rating Score	Counterparty summary assessment considering the economic ▪ and financial aspects, the history of the company, the shareholders structure, etc.
	Delinquency Score	Probability of late payments over the next 12 months ▪
	Failure Score	▪ Company probability of default over the next 12 months
2 Payments	Paydex	Score on the counterparty's payment performance ▪
score	Payline	Score on the counterparty's payment performance ▪
3 Credit	Grade Allianz Trade	Degree of credit insurability ▪
insurability score	DRA	▪ Degree of credit insurability ▪ Coface – in progress
4 Credit insurance	Insurance	▪ Insurance partnership with Allianz Trade to insure up to 100% of the credit cross, starting from amounts above 30k

A Model Difficult-to-Replicate

Low Risk

Generalfinance boasts a portfolio quality, both in terms of Payment Conditions and Payment Delays, higher than the rest of the market

% Exposure

Risk reduction in Distressed Factoring

Given that the majority of Generalfinance's turnover is realized towards distressed Sellers, the Company can benefit from a reduction in risk, because of 3 main factors

Lower Credit Risk

• o Effects of insolvency proceedings on financial position (ex. credit write-offs)
• o Recovery and relaunch plan
• o Possible change in the Governance
• o Possible capital injection or new financing
• o Predeductibility (i.e., superpriority) of receivables arising from loans disbursed in execution of the plan and loans disbursed prior to the submission of the composition with creditors plan, respectively, if the conditions provided by the regulations are met

Lower Operating Risk

• o Court approval (arrangement with creditors, restructuring agreement)
• o Supervision by the court commissioner (arrangement with creditors)
• o Presence of high standing Financial Advisors and Legal Counsels
• o Management change

Low Risk

Lower Risk of Clawback Action

• o Financial assistance for the implementation of the agreement / plan / arrangement with creditors with exemptions from clawback actions
• o Authorization for bridge financing (in these cases, the risk of clawback actions is excluded on a de facto basis)
• o Factoring law and related protections (clawback actions regarding collections from assigned debtors)

A sustainable Growth

Generalfinance's financials

Main KPIs behind our H1 results - adjusted figures

Note: Turnover includes Future receivables; Net Income Adj, see slide 15 for the detailed calculation

Turnover – historical series

2022 annual growth rate (71%) above the CAGR '19-'21

Sources: Company financial statements; Management accounts Note: Turnover includes Future receivables

Turnover breakdown vs system average

AT THE CORE OF THE BUSINESS MODEL, GENERALFINANCE HAS A PERFECT BALANCE IN TERMS OF:

Note: Generalfinance Turnover data refers to 1H 2022; Assifact Turnover data refers to FY 2021 Source: Management

Turnover breakdown vs system average

Notes: 1) Generalfinance Turnover data refers to 1H 2022; Assifact Turnover data refers to FY 2021; 2) Household debtors have not been included Source: Management

Costs Structure & Bottom Line – adjusted figures

Notes: ; Operating costs as of 1H 2022 adjusted; Other items = Net provision for risks and charges + Net value adjustments / write-backs on property, plan and equipment + Net value adjustments / write-backs on intangible assets + Other operating income and expenses

Asset quality – Cost of Risk and NPE ratio

GENERALFINANCE HAS A LOWER COST OF RISK AND A NON-PERFORMING EXPOSURE COMPARED TO THE MARKET THANKS TO ITS UNIQUE AND EFFECTIVE BUSINESS MODEL ENABLING A CONSTANT MITIGATION OF CREDIT RISK

The main KPIs behind our business – adjusted figures

Income Statement (€m)	2019A	2020A	2021A	CAGR '19-'21	H1 2021	H1 2022 adj	YoY
Interest Margin	3,4	4,1	6,2	35,0%	2,7	3,8	38%
Net Fee and Commission Income	10,1	13,1	17,7	32,4%	7,8	10,8	39%
Net Interest and Other Banking Income	13,5	17,2	23,9	33,1%	10,5	14,6	39%
Operating Costs	(6,9)	(8,4)	(9,8)	19,2%	(4,9)	(5,8)	18%
Profit for the year	4,2	5,3	9,5	50,4%	3,9	5,7	47%
(€m)	2019A	2020A	2021A	CAGR '19-'21	H1 2021	H1 2022	YoY
Turnover	590,0	761,0	1.403,0	54,2%	545,5	932,6	71,0%
Disbursed Amount	445,0	562,0	1.118,0	58,5%	432,2	776,8	79,7%
LTV	75,4%	73,9%	79,7%	2,8%	79,2%	83,3%	5,1%
Net Banking Income / Average Loan (%)	12,2%	11,2%	9,6%	(11,3%)	10,7%	8,6%	(20,4%)
Interest Margin / Net Banking Income (%)	25,4%	23,8%	26,0%	1,2%	25,9%	25,8%	(0,4%)
Cost Income Ratio	51,0%	48,7%	40,9%	(10,4%)	46,9%	39,7%	(15,2%)
ROE (%)	27,6%	30,9%	42,0%	23,4%	34,7%	25,0%	(27,9%)
Balance Sheet (€m)	2019A	2020A	2021A	CAGR '19-'21	H1 2021	H1 2022	YoY
Cash & Cash Equivalents	16,8	24,2	33,5	41,2%	19,5	32,2	65,6%
Financial Assets	131,9	176,5	321,0	56,0%	214,6	361,7	68,6%
Other Assets	9,7	9,5	10,8	5,5%	9,8	13,2	35,3%
Total Assets	158,4	210,2	365,3	51,9%	243,8	407,2	67,0%
Financial Liabilities	129,0	175,4	314,6	56,2%	204,9	332,5	62,3%
Other Liabilities	10,0	12,2	18,7	36,7%	12,6	24,0	90,0%
Total Liabilities	139,0	187,6	333,3	54,8%	217,5	356,5	63,9%
Shareholder's Equity	19,4	22,6	32,0	28,4%	26,3	50,7	92,8%

Note: Turnover includes Future receivables; Income statement data as of 1H 2022 adjusted. ROE adj = annualized net income adj / (equity-net profit)

Balance sheet overview and regulatory capital

H1 2022A LIABILITIES AND EQUITY BREAKDOWN

CAPITAL AND RWA CET1 RATIO (%)

Provisions Shareholders'

Equity

19.2%

⁵¹⁴⁰⁷

Total Liabilities and Equity

Capital Stack – A capital light lending business

Funding evolution

Annexes

A successful history

Long Standing Experience, Specialisation and Unique Positioning

Top line components

SIMPLE AND TRANSPARENT P&L PAIRED WITH ALMOST NO VOLATILITY OF FAIR VALUE / CREDIT ADJUSTMENT

Revenues' generation – example

PRO SOLVENDO TRANSACTION		Formula	Accounting
(fattura) Valore nominale cessione	100 000 00 ,	a
% anticipazione	80%	b
Importo lordo erogato	80 000 00 ,	b c = a x
Giorni erogazione (data scadenza-data erogazione)	88	e
Tasso contrattuale	4 00%	f
Interessi contrattuali	789 04	= ( (e+2) ) / f 365 g c x x	ricavi riscontati fino scadenza a
Giorni credito (data scadenza-data pratica)	90	h
Tasso commissionale	0 50%	i
Commissioni contrattuali	500 1 00 ,	l i (h/30) = a x x	ricavi riscontati fino scadenza a
Totale ricavi economico conto a	2 289 04 ,	+ l m = g	ricavi riscontati fino scadenza a
Importo erogato netto	77 710 96 ,	n = c - m
Giorni tardato pagamento	5	o
Interessi tardato contrattuali pagamento	5 00%	p
Commissioni tardato pagamento	0 50%	q
Interessi tardato pagamento	54 79	= ( o) / 365 r c x p x	ricavi tardato pagamento per cassa
Commissioni tardato pagamento	83 33	(o / 30) s = a q x x	ricavi tardato pagamento per cassa
Ricavi tardato pagamento	138 13	t = r + s	ricavi tardato pagamento per cassa
Importo anticipato non	20 000 00 ,	= a - c u
Liquidato netto	19 861 87 ,	- t v = u

Note: Pro soluto Factoring regarding full rights purchase IAS compliant

Revenues Breakdown

NET BANKING INCOME (€M)

Regulatory Framework

			Calendar	Provisioning		New definition of default
Default Period	1	2	3	4	5	6	7	8	9
Secured A	-	-	25%	35%	55%	70%	80%	85%	100%	more than 90 days.
Secured B	-	-	25%	35%	55%	80%	100%	-	-	st From January 1
Unsecured	-	-	35%	100%

Based on the March 2018 BCE addendum, NPEs should be clustered in terms of default period and level of security, with a distinction between secured ('Secured A') other collateral ('Secured B') and unsecured ('Unsecure') properties. For each cluster, banks are expected to apply the above provisioning schedule such that the impaired exposure (NPLs and UTPs) is fully removed from the balance sheet by 2026.

The main implications are:

• development of a strategy for effective NPE reduction
• limiting inflows of impaired exposures into banks with a high NPE ratio
• Acceleration of credit recovery processes through the transfer / sale of positions

According to CRR 178, a default occurs when any of the following conditions occur: (i) probable default, or (ii) exposures past due by more than 90 days.

From January 1 st , 2020 the European Banking Authority has introduced stricter rules to define if an exposure is in default.

	Previous Reg.	NEW REG.
Thresholds	Client in default if arrears for more than 90 days, equal to at least 5% of their exposure towards the bank	Client in default if arrears of € 100 for individuals or € 500 for other exposures for more than 90 days, and at least 1% of their exposure towards the bank. (Bank of Italy can decide between 0 and 2.5%)
Compensation	Offsetting of overdue amounts against unused credit lines is possible	No compensation granted
Thresholds	Default status expires when the client settles the position	The default status remains for at least 90 days after the client settles the position

Other "Basel III" regulatory impacts

The envisaged tightening of current account overdrafts, which until now did not require capital provisions but could in future be subject to risk weighting for credit institutions, may have a significant impact in Italy, where they are widely used for household and PMI financing.

Income Statement

Income Statement (€m)	2019A	2020A	2021A	H1 2021	H2 2022
Interest income and similar income		5,7	9,2	3,9	6,4
Interest expense and similar charges	(1,2)	(1,6)	(3,0)	(1,2)	(2,6)
INTEREST MARGIN		4,1	6,2	2,7	3,8
Fee and commission income	11,5	14,7	20,8	9,3	12,9
Fee and commission expense	(1,4)	(1,6)	(3,1)	(1,5)	(2,0)
NET FEE AND COMMISSION INCOME		13,1	17,7	7,8	10,8
Dividends and similar income	0,0	0,0	0,0	0,0	0,0
Net profi (loss) from trading		(0,0)	(0,0)	(0,0)	(0,0)
Net results of other financial assets and liabilities measured at fair value through profit or loss	0,0	(0,0)	0,0	0,0	0,0
NET INTEREST AND OTHER BANKING INCOME		17,2	23,9	10,5	14,6
Net value adjustments / write-backs for credit risk	(0,4)	(0,7)	(0,2)	(0,0)	(0,2)
a) Financial assets measured at amortised cost	(0,4)	(0,7)	(0,2)	(0,0)	(0,2)
NET PROFIT (LOSS) FROM FINANCIAL MANAGEMENT		16,5	23,7	10,5	14,4
Administrative expenses	(6,8)	(7,2)	(8,7)	(4,2)	(6,4)
a) Personnel expenses		(4,3)	(5,2)	(2,6)	(3,0)
b) Other administrative expenses		(3,0)	(3,4)	(1,6)	(3,4)
Net provision for risks and charges	(0,0)	(1,1)	(0,2)	(0,2)	(0,0)
b) Other net provisions	(0,0)	(1,1)	(0,2)	(0,2)	(0,0)
Net value adjustments / write-backs on property, plan and equipment	(0,6)	(0,7)	(0,7)	(0,4)	(0,4)
Net value adjustments / write-backs on intangible assets		(0,2)	(0,2)	(0,1)	(0,2)
Other operating income and expenses	0,8	0,8	0,1	(0,1)	(0,1)
OPERATING COSTS	(6,9)	(8,4)	(9,8)	(4,9)	(7,0)
PRE-TAX PROFIT (LOSS) FROM CURRENT OPERATIONS		8,1	13,9	5,6	7,4
Income tax for the year on current operations		(2,8)	(4,5)	(1,7)	(2,5)
PROFIT (LOSS) FOR THE YEAR		5,3	9,5	3,9	4,9

Balance Sheet

Balance Sheet (€m)	2019A	2020A	2021A	H1 2021	H2 2022
ASSET ITEMS
Cash and cash equivalents		24,2	33,5	19,5	32,2
Financial assets measured at fair value through profit or loss		0,0	0,0	0,0	0,0
Financial assets measured at amortised cost	148,7	176,5	321,0	214,6	361,7
Property, Plan and Equipment (PPE)	5,3	5,1	4,9	4,9	4,7
Intangible assets	0,4	0,8	1,7	1,0	1,8
Tax assets	0,9	1,4	1,2	0,6	1,9
a) current	0,5	0,7	0,9	0,4	1,7
b) deferred	0,4	0,8	0,3	0,3	0,2
Other assets	3,1	2,2	3,0	3,2	4,8
TOTAL ASSETS	158,4	210,2	365,3	243,8	407,2
LIABILITY AND SHAREHOLDERS' EQUITY ITEMS
Financial liabilities measured at amortised cost	129,0	175,4	314,6	204,9	332,5
a) payables		175,4	283,6	204,9	296,2
b) outstanding securities	129,0	0,0	31,0	0,0	36,3
Tax liabilities	0,6	0,9	1,2	0,5	1,6
Other liabilities	7,6	8,3	15,8	10,5	20,8
Severance pay	1,2	1,4	1,4	1,4	1,4
Provision for risk and charges	0,6	1,6	0,3	0,2	0,1
Share capital	3,3	3,3	3,3	3,3	4,2
Share premium reserve	5,8	5,8	7,8	7,8	25,4
Reserves	6,2	8,2	11,4	11,4	16,2
Valuation reserves	(0,1)	(0,1)	(0,0)	(0,1)	(0,0)
Profit (loss) for the year	4,2	5,3	9,5	3,9	4,9
TOTAL LIABILITIES AND SHAREHOLDERS'S EQUITY	158,4	210,2	365,3	243,8	407,2

Source: Company financial statements