Novabase SGPS

Earnings Release • Jul 28, 2023

Relevant information

Results 1H23

Lisbon, 28 July 2023

Novabase – Sociedade Gestora de Participações Sociais, S.A., under the terms and for the purposes of article 17 of Regulation (EU) no. 596/2014 of the European Parliament and of the Council and article 29.º- Q of the Portuguese Securities Code, discloses today to the market the results regarding the 1st half of 2023, whose essential features are included in the presentation attached.

Any questions about the information disclosed herein can be sent to investor.relations@novabase.com.

Privileged Information

NEXT-GEN

IT SERVICES COMPANY

1H23 CONSOLIDATED RESULTS July 28, 2023

Disclaimer

• This presentation contains sector and forward-looking statements concerning the development of Novabase's business. While these statements are based on Novabase's current projections, judgments and future expectations, a number of risks and uncertainties could cause actual data to differ materially from those expressed or implied by such statements. Such risks and uncertainties relate to factors that are beyond Novabase' ability to control or estimate precisely, and include but are not limited to, general economic conditions, macroeconomic factors, regulatory, political or government guidelines and trends, credit markets, among others.
• Statements in this release relate only to this presentation date. Except when required by law or specific regulation, Novabase assumes no obligation to update the information or to notify in the event that any matter stated herein changes or becomes inaccurate. Thus, neither Novabase, nor any of its subsidiaries, its administrators, members of the other corporate bodies or employees, make any declaration or commitment on the accuracy or completeness of the information and do not assume, therefore, any type of obligation or responsibility.
• Comparative information (1H22) in this presentation shows Value Portfolio segment including Shared Services, as its merger with Celfocus (Next-Gen segment) in 2022 was recorded in August 2022. The contribution of Shared Services to Turnover and EBITDA in 1H22, included in Value Portfolio, is disclosed here: Turnover 0 M€ and EBITDA 1.0 M€. Throughout this presentation LFL comparisons are included, as well as additional commentary whenever useful.
• Financial reporting terms used in this Report are mostly in accordance with International Financial Reporting Standards (IFRS) but will include certain non-IFRS financial measures of our performance (APMs). APMs used by Novabase are intended to provide additional information, more comprehensive and relevant to users, and are applied consistently in all periods reflected in this release. Reconciliation of each of these APMs to its most directly comparable IFRS financial measure can be found in the end of this Report. All amounts in this presentation are expressed in million Euros, except otherwise stated. The financial information here reported is unaudited.
• This presentation is provided for informational purposes only and does not constitute a document for the offer of securities, and its distribution or use by any person or entity is forbidden without prior authorization from Novabase.

1H23 Outlook

Message from Luís Paulo Salvado

"Novabase's first half 2023 results validate the successful execution of our strategy and our ability to capitalize on the current market conditions.

Global turnover has increased by 17%, driven by a remarkable growth of 33% in our international operations, which now account for nearly two-thirds of our business.

EBITDA and Net Income have grown by 10% and 4% respectively, influenced by largerscale internationalization, wage inflation, and investments in key offerings.

The first half was also marked by a Public Offer for the Acquisition of our own shares, with the purchase of 11% of the capital and the payment of a dividend of €0.42 per share. Together, these operations represented an investment of €28 million,

placing our net cash position at €17 million. Discounting the previous effect, operations generated €6 million during this period.

The outlook for this year continues to be shrouded in considerable uncertainty, and we have been witnessing a deterioration in expectations. While we cannot predict what will happen in the market, we trust in the value of our team, to whom I extend my gratitude for their dedication and hard work."

1H23 in Review

Next-Gen: 2019+ Strategy Execution

Next-Gen delivers strong 1H with outstanding international growth

Next-Gen grew organically at double-digit YoY, and international business grew strongly, with revenues up 36%. Profitability near the two-digit goal, despite the still delivery challenges in ME.

Next-Gen focused on Cognitive, Digital and Agile DevOps offers to propel its growth strategy, while working on its talent engine.

Value Portfolio: 2019+ Strategy Execution

Value Portfolio continues to grow

Value Portfolio turnover grew at double-digit YoY, and IT Staffing profitability grew more than 20% YoY.

Value Portfolio is well positioned for sustained growth and to generate further value.

Novabase in the News¹

• Partnership with MATRIXX Software | Celfocus and MATRIXX have joined forces to launch an AI solution for 5G monetization.
• Digital Talent Ecosystem | Neotalent launched a talent management platform using blockchain and AI.
• Sponsorship of Banking Transformation Summit, FutureNet World and Total Telecom Congress | Celfocus continues to support international reference events focused on topics impacting digital economy and next-gen technology innovation.
• Sponsorship of FST12 | Celfocus is once again the sponsor of the FST Lisboa2.
• Building up an employer branding | Novabase is invested in attracting the best talent, engaging in multiple initiatives at universities and job fairs, e.g. FISTA233, SINFO 30, JEEC 20234 and Jobshop 2023, to name a few.
• Equity Partnership in Celfocus | Within the scope of Celfocus's business development plan, a process will be initiated that will culminate in the acquisition of a minority percentage of the share capital of Celfocus by a group of employees of Novabase Group with operational leadership responsibilities.
• Novabase launched a Public Offer for the acquisition of own shares | As a result, Novabase acquired 3,558,550 shares (11.33% of its share capital) and reduced its share capital by cancelation of the shares acquired in the context of the Offer.
• Novabase paid 0.42 €/share | The commitment to pay a total of 1.50 €/share to shareholders in 2019-2023 horizon, under 2019+ Strategy, was fulfilled.

¹ Until this presentation date.

Press Zone

² Formula Student team of University of Lisbon's Instituto Superior Técnico. ³ Forum of ISCTE School of Technology and Architecture. ⁴ Engineering & Tech Talks.

Financial Highlights

1H23 Performance

Strong 1H with excellent international growth

• Turnover increased 17% YoY, with Next-Gen representing 73%
• 65% of Turnover is generated outside Portugal, with Next-Gen growing internationally at high double-digit, +36% YoY
• Europe & ME target markets account for 96% of NG's International Ops

• Next-Gen Top Tier clients grew 11% YoY

• EBITDA increased 10% YoY, leveraged by Next-Gen
• Net Profit of 4.1 M€, +4% YoY
• Net Cash position of 17.4 M€
• Talent Pool of 2160 employees
• Total Shareholder Return of 18% in 1H23

Turnover increased 17% YoY, with Next-Gen representing 73%

Driven by both Next-Gen and IT Staffing businesses. International business grew strongly, with revenues up 33% YoY.

(1) Turnover by Geography is computed based on the location of the client where the project is delivered.

EBITDA increased 10% YoY, leveraged by Next-Gen

EBITDA Margin

Next-Gen Segment

Next-Gen Turnover grew organically by 18% YoY

EBITDA up 17% YoY, Vs. 5.4 M€ in adj. 1H22 (1)

International scale-up costs, wage inflation, delivery challenges in ME, and investments in key offerings pressured profitability.

Next-Gen Segment

New half-year record high in international Revenues

Entry into new clients of other industries with strategic offers, but still Telco dominance. International Turnover showed an outstanding 36% growth YoY and stands for 72% of Next-Gen's Turnover.

Target markets of Europe & ME totalled 96% of the segment's international Ops, +40% YoY.

Next-Gen Segment

# Top Tier clients grew 11% YoY…

... as a result of commercial wins in new flagship clients with Cognitive, Digital and DevOps offerings.

% of Revenues from Top Tier clients (1)

Total number of clients in 1H23 increased to 117 (109 in 1H22).

(1) Top Tier clients (>1 M€) considers the Trailing 12 Months.

Value Portfolio Segment

Value Portfolio Turnover grew 13% YoY

Mainly driven by international operations (+22% YoY).

EBITDA of 2.0 M€, Vs. 2.1 M€ in adj. 1H22 (1)

IT Staffing (2) EBITDA grew 22% YoY but central structure negatively impacted profitability.

EBITDA to Net Profit

Net Profit of 4.1 M€, +4% YoY

Net Profit increased as a result of higher EBITDA, partially offset by lower Financial Results and Discontinued Operations Results, and higher D&A and Income Tax.

Total EPS reached 0.15 € (0.13 € in 1H22).

EBITDA to Net Profit

Net Cash

Net Cash position of 17.4 M€

Cash generation of 6.0 M€ in 1H23, excluding the cash outflows from shareholder remuneration (10.8 M€) and acquisition of own shares in the context of the Public Offer (17.3 M€).

Considering the last 12 months, payments related to shareholder's remuneration initiatives amounted to 41.1 M€.

2.9 M€ of Net Cash refers to Non-Controlling Interests (Vs. 3.2 M€ in FY22).

Talent

Talent Pool of 2160 employees

Average number of Employees

• (1) Value Portfolio including shared services team of 54 employees in 1H22, absorbed by Celfocus (Next-Gen's main company) in 2022.
• (2) Determined by the formula: number of leaves at the employee's initiative ÷ average number of employees, for the Trailing 12 Months.

Talent pool grew 4% YoY (2076 in 1H22).

Breakdown by segment, shows a 2% increase YoY LFL (1) in Next-Gen, which represents 60% of Total, in line with the strategic objectives.

TTM attrition rate (2) of Next-Gen dropped to 14.4% (21.5% in 1H22), in a downward trend since 1H22, as a result of proactive management of our pool and evolving market context.

Stock Market

TSR of 18% in 1H23

Main stock markets performed well in 1H23 ending on a high note in June, despite investor's concerns over rising interest rates, slowing economic growth and persistently high inflation.

NBA stock price increased 8% in 1H23 (or 18% adjusting the shareholder remuneration), whilst EuroStoxx Technology Index increased 25% and PSI All-Share Index decreased 0.3%.

• (1) Expressed by the Board of Directors under the terms of Strategy Update 2019+.
• (2) The GMS held on 24 May also approved a share capital reduction by cancellation of 1,315,207 own shares, but it was not completed by the end of June 2023.

In 1H23 Novabase launched a Public Offer over own shares, creating an additional remuneration opportunity for shareholders. As a result, Novabase acquired 3,558,550 shares for 4.85 €/share.

Also in this period, Novabase paid 0.42 €/share to shareholders, thus fulfilling the intention to pay a total of 1.50 €/share in 2019-2023 (1) .

Excluding shares acquired in the context of the Offer (cancelled afterwards to reduce share capital), Novabase acquired 18k shares in 1H23, and holds 2,065,207 own shares (2) (7.42% of its share capital) at 30 June 2023.

Average price target disclosed by Novabase's analysts is 5.75 €. Average upside is 31%.

17 Market Cap at the end of 1H23 is 122.0 M€, with a ttm Price to Sales of 0.76x.

APMs

In compliance with ESMA guidelines

Alternative Performance Measures

APMs used by Novabase in this presentation are: EBITDA and Net Cash.

EBITDA allows to evaluate the profitability of the business and the company's capacity to generate resources through its operating activities. EBITDA is defined as operating profit excluding depreciation and amortisation and (if any) non-operating costs (e.g. restructuring costs). "Operating Profit" is simultaneously the item of the consolidated income statement, which is an integral part of this Report, more directly reconcilable and more relevant to this APM.

Net Cash provides information on the level of cash and other bank deposits and marketable securities, after discounting the debts to financial institutions, assisting in the analysis of the company's liquidity and its ability to meet non-bank commitments. "Cash and cash equivalents" is simultaneously the item of the consolidated statement of financial position more directly reconcilable and more relevant to this APM.

The detail and breakdown of Net Cash, as well as the reconciliation in 1H23 and prior period, is analysed in the table below.

	FY22	1H23
Cash and cash equivalents	40 617 ,	28 136 ,
(1) shares held by the Company Treasury	8 272 ,	9 046 ,
Bank borrowings - Non-Current	(5 200) ,	(12 824) ,
Bank borrowings - Current	200) (4 ,	(6 947) ,
Cash thousands) Net (Euro	39 489 ,	17 411 ,

	FY22	1H23
Treasury shares held by the Company	2 047 413 , ,	2 065 207 , ,
Closing price last tradable day (€) @	040 4	380 4
shares held by the Company Treasury (Euro thousands)	8 272 ,	9 046 ,

(1) Determined by multiplying the number of treasury shares held by the Company at the end of the period by the share price on the last tradable day.

NEXT-GEN IT SERVICES COMPANY

Novabase SGPS, S.A. Euronext code: PTNBA0AM0006 Registered in TRO of Lisbon and Corporate Tax Payer no. 502.280.182 Share Capital: 795,829.11 € Head Office: Av. D. João II, 34, 1998-031 Lisbon - PORTUGAL

María Gil Marín Chief Investors Officer Tel. +351 213 836 300 Fax: +351 213 836 301 investor.relations@novabase.com

Report available on website: www.novabase.com

Next Events

2023 Full Year Results (tbd)

Consolidated Statement of Financial Position Consolidated Income Statement as at 30 June 2023 for the period of 6 months ended 30 June 2023

	30.06.23	31.12.22		30.06.23	30.06.22	Var. %
	(Thousands of Euros)				(Thousands of Euros)
ASSETS			CONTINUING OPERATIONS
Tangible assets	1,645	1,918	Operating income
Intangible assets	11,970	11,935	Services rendered	88,911	76,073
Right-of-use assets	8,983	3,253	Supplementary income and subsidies	56	69
Financial investments	14,309	13,961	Other operating income	73	99
Deferred income tax assets	8,757	8,826
Other non-current assets	1,526	1,706		89,040	76,241
Total Non-Current Assets	47,190	41,599	Operating expenses
			External supplies and services	(28,043)	(22,535)
Inventories	-	-	Employee benefit expense	(52,859)	(46,510)
Trade debtors and accrued income	54,652	55,528	(Provisions) / Provisions reversal	(14)	418
Other debtors and prepaid expenses	11,109	10,866	Net impairm. losses on financ. assets	311	87
Derivative financial instruments	74	763	Other operating expenses	(193)	(228)
Cash and cash equivalents	28,136	40,617
Total Current Assets	93,971	107,774		(80,798)	(68,768)
Assets for continuing operations	141,161	149,373	Gross Net Profit (EBITDA)	8,242	7,473	10.3 %
			Depreciation and amortisation	(1,753)	(1,690)
Assets for discontinued operations	-	268
			Operating Profit (EBIT)	6,489	5,783	12.2 %
Total Assets	141,161	149,641	Financial results	(552)	(482)
EQUITY			Net Profit before taxes (EBT)	5,937	5,301	12.0 %
Share capital	835	32,971	Income tax expense	(1,361)	(1,191)
Treasury shares	(62)	(2,150)
Share premium	226	226	Net Profit from continuing operations	4,576	4,110	11.3 %
Reserves and retained earnings	27,324	16,436
Net profit	4,125	8,917	DISCONTINUED OPERATIONS
Total Shareholders' Equity	32,448	56,400	Net Profit from discont. operations	(190)	6	-3266.7 %
Non-controlling interests	11,546	10,827
Total Equity	43,994	67,227	Non-controlling interests	(261)	(133)
LIABILITIES			Attributable Net Profit	4,125	3,983	3.6 %
Bank borrowings	12,824	5,200
Lease liabilities	7,851	1,114
Provisions	3,061	3,047
Other non-current liabilities	291	363
Total Non-Current Liabilities	24,027	9,724
Bank borrowings	6,947	4,200
Lease liabilities	1,694	2,737
Trade payables	4,304	7,015
Other creditors and accruals	33,523	36,503
Derivative financial instruments	77	260
Deferred income	25,448	20,007
Total Current Liabilities	71,993	70,722

Total Liabilities for cont. operations	96,020	80,446
Total Liabilities for discont. operations	1,147	1,968
Total Liabilities	97,167	82,414	Other information :
Total Equity and Liabilities	141,161	149,641	Turnover EBITDA margin	88,911 9.3 %	76,073 9.8 %	16.9 %
			EBT % on Turnover	6.7 %	7.0 %
Net Cash	17,411	39,489	Net profit % on Turnover	4.6 %	5.2 %

Novabase S.G.P.S., S.A.	Euronext code: PTNBA0AM0006	Share Capital 795,829.11 Euros - Corporate Registration CRCL N.º 1495
	Head-office: Av. D. João II, 34, Parque das Nações, 1998-031 Lisbon, Portugal	Corporate Tax Payer N.º 502 280 182

Results Information by SEGMENTS for the period of 6 months ended 30 June 2023

(Thousands of Euros)
	Value Portfolio	Next-Gen	NOVABASE
CONTINUING OPERATIONS
Turnover	23,776	65,135	88,911
Gross Net Profit (EBITDA)	- 1,953	- 6,289	- 8,242
Depreciation and amortisation	- (163)	- (1,590)	- (1,753)
Operating Profit (EBIT)	1,790	4,699	6,489
Financial results	- (162)	- (390)	- (552)
Net Profit / (Loss) before Taxes (EBT)	1,628	4,309	5,937
Income tax expense	- (238)	- (1,123)	- (1,361)
Net Profit / (Loss) from cont. operations	1,390 -	3,186	4,576
DISCONTINUED OPERATIONS
Net Profit from discontinued operations	(190)	-	(190)
Non-controlling interests	(261)	-	(261)
Attributable Net Profit / (Loss)	939 -	3,186 -	4,125 -
Other information :
EBITDA % on Turnover	8.2%	9.7%	9.3%
EBT % on Turnover	6.8%	6.6%	6.7%
Net profit % on Turnover	3.9%	4.9%	4.6%