Alkemy — Investor Presentation 2020

Nov 13, 2020

9M 2020 RESULTS

13.11.2020

Disclaimer

• This document has been prepared by Alkemy S.p.A. (the "Company") for information purpose only, it contains only summary information and, therefore, it is preliminary in nature. Furthermore it has been drafted without claiming to be exhaustive.
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• Certain Information may contain forward-looking statements which involve risks and uncertainties and are subject to change. In some cases, these forward-looking statements can be identified by the use of words such as "believe", "anticipate", "estimate", "target", "potential", "expect", "intend", "predict", "project", "could", "should", "may", "will", "plan", "aim", "seek" and similar expressions. The forecasts and forward-looking statements included in this document are necessarily based upon a number of assumptions and estimates that are inherently subject to significant business, operational, economic and competitive uncertainties and contingencies as well as assumptions with respect to future business decisions that are subject to change. By their nature, forward-looking statements involve known and unknown risks and uncertainties, because they relate to events, and depend on circumstances, that may or may not occur in the future. Furthermore, actual results may differ materially from those contained in any forward-looking statement due to a number of significant risks and future events which are outside of the Company's control and cannot be estimated in advance, such as the future economic environment and the actions of competitors and others involved on the market. These forward-looking statements speak only as at the date of this Presentation. The Company cautions you that forward looking-statements are not guarantees of future performance and that its actual financial position, business strategy, plans and objectives of management for future operations may differ materially from those made in or suggested by the forward-looking statements contained in this Presentation. In addition, even if the Company's financial position, business strategy, plans and objectives of management for future operations are consistent with the forward-looking statements contained in this Presentation, those results or developments may not be indicative of results or developments in future periods. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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WE DESIGN BUSINESS EVOLUTION THROUGH DATA, TECHNOLOGY & CREATIVITY

Alkemy was founded in 2012 with the aim of supporting the top management of large companies in the process of digitizing their business model.

The market in which Alkemy insists is the digital transformation market which today is worth over 6 billion euros in Italy and grows at a rate of between 7 and 10% per year.

In this market, Alkemy has developed a differentiated positioning that has allowed it to grow with a CAGR of 42% (>3x the market), to move from the 23 starting resources to a team of over 650 people and a turnover over 80M€.

In these 7 years, Alkemy has successfully used the M&A lever (7 acquisitions) using the IPO proceeds in less than nine months, and the EBITDA growth of the four acquisitions made in Italy from 2013 to 2018 was between 150 and 440%.

Alkemy has developed a new organization and a new Go-to-Market strategy that have laid the foundations for the industrialization and expansion of the business scale, resulting in strong organic growth and higher marginality.

We help companies to evolve their business in the post-digital scenario

9M 2020 – RESILIENCY OF BUSINESS MODEL

• EBITDA up 92.9% compared to 9M 2019

• Improvement in marginality compared to 9M 2019 (EBITDA margin net media 8.4%pps)

• Resiliency of TIER 1 and TIER 2 customers (+10% ARPC)

• Strong cash generation over the period (€M 7.5 operative cash flow)

• Improvement of NFP of +8.26 €M

Focus on the industrialization of its business model to strengthen marginality and business resiliency

FIRST 9 MONTHS 2020 MAIN ACHIEVEMENTS

FINANCIAL HIGHLIGHTS

€M	9M 2020	9M 2019
Turnover	52.65	60.43	-12.9% compared to 9M 2019, mostly due to the Mexican > company, exposed to travel and leisure sector, highly effected by COVID-19
EBITDA	3.83	1.99	+ 92.9% compared to 9M 2019, thanks to the better mix > and efficiencies arising from the new organization. EBITDA margin up by + 4 pps
EBIT	2.16	0.39	+450% compared to 9M 2019, thanks to the better > operating result. EBIT margin up by +3.4 pps
EBT	1.40	(0.51)	Positive result compared to 9M 2019, thanks to the better > performance over the period. EBT margin up by +3.5 pps
Group Net Income	0.81	(0.66)	Thanks to better operating results, mostly of Italian > companies
Operating Cash Flow	7.51	(0.02)	Increase of €M 7.5 compared to 9M 2019 mainly due to the > better operating result and the lower absorption of NWC
NFP	-10.95	FY 2019 -19.21	Variation since 31 December 2019 of €M 8.26 mostly due > to: €M +1.95 decrease in put options, €M +11.40 in cash liquidity, €M –5.7 increase in financial debt

Variation since 31 December 2019 of €M 8.26 mostly due to: €M +1.95 decrease in put options, €M +11.40 in cash liquidity, €M –5.7 increase in financial debt

9M REVENUES(€M) – IAS /IFRS

REVENUES

(1)Revenues 2013-14-15-16 are Management estimates and are not audited, following the introductions of IFRS in 2018.

International Italy

10,1 14,8 26,3 32,5 42,7 71,6 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 ALKEMY INTERNATIONAL TURNOVER(%) › 9M 2020 revenues are €M52.65, -12.9% compared to 9M 2019 which were €M60.43, mostly due to the Mexican company, highly effected by COVID-19 for its exposure to travel & leisure clients. CAGR 13-19 42% 9M 2019 9M 2020 60,43 52,65 9M 2019 9M 2020

› 9M 2020 Italian turnover is €2.0M lower than 9M 2019 (-5%), of which €M -1.7 are non-core revenues related to lower tax credit for R&D projects. Italian core business showed resiliency thanks to the Go-to-Market strategy, strongly focused on main clients, which increased the ARPC by 10%.

› The underperformance in foreign markets (-29%) is due to higher exposure to travel and hospitality sectors, impacted by lockdowns, especially in Mexico and it concerned mostly Media related investments.

FY REVENUES (€M) – IAS /IFRS (1)

27%

-

73%

33%

67%

RESILIENCY OF ITALIAN CORE BUSINESS

9M ALKEMY EBITDA(€M) – IAS/IFRS

(1)Ebitda margin is calculated relating the EBITDA to the revenues of the period (2()Ebitda margin net media is calculated relating the EBITDA to the revenues of the period net of Media related revenues from Spain and Mexico companies

9M EBITDA MARGIN – EBITDA MARGIN NET MEDIA (%)(1)(2)

EBITDA CONSISTENT IMPROVEMENT IN MARGINALITY

• › 9M 2020 EBITDA is €M3.83, +92.9% compared to 9M 2019 of €M1.99, thanks to the better mix of the new Go-to-Market strategy and the efficiency and razionalizati0n of the new organization.
• › EBITDA Margin is 7.3% in 9M 2020 vs 3.3% in 9M 2019 with a positive growth of 4 pps, thanks to lower costs impact on revenues, thanks to the industrialization process started in 2020E
• › EBITDA Margin net media is 8.4% in 9M 2020 vs. 4.1% in 9M2019

-0,1

38%

NET FINANCIAL POSITION BRIDGE AND DETAILS

• › Net Financial Position NFP (2) at September 30th 2020 was €M -10.95 with an improvement of €M 8.26 compared to €M -19.21 at December 31st, 2019
• › Variation mainly due to: increase in liquidity on bank accounts (€M +11.4), increase in non current bank loans (€M -3.8), increase in current bank loans (€M -1.9), re-determination of put options value (€M +1.95).

› Gross debt is composed by €M 17.2 of financial debt (of which €M 12.7 non current, €M4.4 current), €M 11.4 put options deriving from M&A (of which €M 2.1 non current) and €M 3.4 IFRS16 financial leases

› 9M 2020 NFP (1) ex IFRS16 is €M 7.55

› 9M 2020 cash is €M 21.0

Net Financial Position Break Down 9M 2020 (€M)

10

NET TRADE WORKING CAPITAL DYNAMICS

Net Trade Working Capital over Last 12 Months Revenues (%)

• 9M 2020 Trade working capital shows better performance compared to history

• The cash generation from Net Trade Working Capital decrease (€ +2.94 million) was more than 3 times higher in comparison to 9M 2019, thanks to payables and receivables dynamics

• Strong improvement in other current assets contributes to NWC inflow in 9M 2020. The driver of this improvement was inflow from 2019 public financing and 2019 tax credit

Net Trade Working Capital (€M)

Cash Conversion Cycle Details (days)

9M 2020 P&L – IAS/IFRS

› 9M 2020 Revenues at €M 52.65, down by 12.9% compared to €M 60.43 of 9M 2019. The decrease is mostly attributable to the foreign subsidiaries who underperformed in the period (-29%), especially in Mexico where the contraction of revenues is due to high exposure to travel & leisure customers. Italian turnover is down by 5%, mostly due to lower tax credit and incentives for R&D projects over the period. Italian core business

› Operative costs decreased by -16.5% yoy, reducing the impact on revenues by 4% compared to 9M 2019. Services costs decreased by 24.2% yoy. This efficiency is mostly achieved thanks to the actions taken to internalize tech activities. Personnel costs is mostly stable, with a decrease of 2.9% compared to 9M 2019, attributable to the rationalization of the new organization in the Italian companies, while there has not been use of any temporary layoffs nor other unemployment benefits.

- mostly stable.

• 9M 2019.

› 9M 2020 EBITDA at €M 3.83 +92.9% compared to €M 1.99 in 9M 2019, with a margin increase of 4 pps (EBITDA margin 7.3%). EBIT is equal to €M 2.16 higher than €M 0.39 in 9M 2019, with an increase of 3.4 pps in EBIT margin. The improvement is mostly attributable to the Italian companies.

› Financial charges decreased from €M 0.90 in 9M 2019 to €M 0.75. 9M 2020 EBT positive for €M 1.40. 9M 2020 Group Net Result is €M 0.81 vs €M -0.66 in

Consolidated Profit & Loss

Profit and Loss (€000) - IAS/IFRS	9M 2019 9M 2020
Revenues	60.433	52.653
Service costs, consum. & goods	(36.845)	(27.837)
Personnel	(21.600)	(20.981)
EBITDA	1.988	3.835
% Revenues	3,3%	7,3%
D&A	(1.320)	(1.292)
Bad debts/ claims/ provisions	(276)	(385)
EBIT	392	2.158
% Revenues	0,6%	4,1%
Financial charges	(901)	(754)
EBT	(509)	1.404
Taxes	(261)	(591)
% Tax rate	-51,3%	42,1%
Net Profit (Loss)	(770)	813
o/w Minorifies	(108)	(2)
o/w Group Net Profit (Loss)	(664)	815

9M 2020 BALANCE SHEET – IAS/ IFRS

› Net Invested Capital at €M 45.0 (€M 51.1 at FY 2019) and consisted of approx. € 11.4 million of Net Working Capital (€M 14.7 FY2019), €M 40.7 of fixed assets (€M 41.6 FY2019) of which €M 31.8 of Goodwill and €M 3.3 of rights of use (IFRS 16), and €M 4.7 of final Employees' leaving entitlement (€M 4.3

• FY2019)
• period

› Shareholders' equity increased in the period by €M 2.0 since 31 dec. 2019 (+6.8%), thanks to the positive result of the

› Net Financial Position at September 30th 2020 negative for €M -10.95 (ante-IFRS 16 at €M -7.55) compared to the negative Net Financial Position at 31 December 2019, which was €M -19.2. The variation is mainly due to positive cash generation in the semester resulting in higher cash position and lower valuation of put options.

Consolidated Balance Sheet

Balance Sheet (€000) - IAS/IFRS	2 2019	9 M 2020
Tangible assets	980	850
Intagible assets	7.801	6.950
o/w rights of use (IFRS16)	3.907	3.301
Goodwill	31.752	31.755
Financial assets	1.078	1.133
Fixed Assets	41.611	40.688
Inventories	61	31
Trade Receivables	31.791	22.818
Trade Payables	(17.142)	(11.440)
Net Trade Working Capital	14.710	11.409
Other Current Assets	8.931	5.056
Other Current Liabilities	(9.790)	(7.462)
Employees' leaving entitlement	(4.356)	(4.665)
Total Capital Invested	51.106	45.026
Total Equity	31.897	34.073
o/w Group Equity	31.723	33.741
o/w Minorities	174	332
Cash	(9.581)	(20.983)
Bank Debts	11.501	17.178
Put Option Liabilities	13.342	11.392
Other Financial Debts (IFRS 16)	3.947	3.366
Net Debt (Cash)	19.209	10.953
Total Funds	51.106	45.026

1H 2020 CASH FLOW GENERATION – IAS/IFRS

› 9M 2020 Gross Cash Flow at €M 4.0, compared to €M 1.8 9M 2019. The increase yoy is mostly due to the higher result of the period

› 9M 2020 Operating cash flow at €M 7.51 compared to €M -0.02 of 9M 2019. The positive variation is mostly due to the better operating result and the lower absorption of the Net Working capital compared to 9M 2019.

- and higher non-cash items.

- to €M -0.51 of 9M 2019.

• €M -0.06 in 9M 2019.

› Ordinary Capex of the period are 70% lower than 2019. 9M 2020 Free Cash Flow before Acquisitions is equal to €M 7.36, compared

› 9M 2020 Free Cash Flow is €M 7.25, showing a strong improvement compared to 9M 2019 €M -1.82.

› Total change in cash for the period was €M 11.40 compared to

Consolidated Cash Flow

Cash Flow Statement (€000) - IAS/IFRS	9M 2019	9 M 2020
Net Profit (Loss)	(770)	813
Adjustments (cash tax, interest and other)	649	992
Non cash items	1.932	2.202
Gross Cash Flow	1.811	4.007
Change in inventories	72	30
Change in trade receivables	4.558	8.616
Change in trade payables	(3.901)	(5.702)
Total change in NTWC	729	2.944
Total change in other asset/liabilities	(2.563)	ર્સ્ડિ
Operating Cash Flow	(23)	7.514
Capex	(489)	(152)
Free Cash Flow before Acquisition	(512)	7.362
Other fixed assets	(1.309)	(113)
Free Cash Flow	(1.821)	7.249
Change in treasury shares	(438)	O
Dividends to minorities	(662)	(667)
Change in bank & fin. Debts	8.153	5.625
IFRS 16 effect	(751)	(715)
Changes in equity	1.047	0
Change in put/option	(5.585)	(90)
Change in Cash	(57)	11.402
Initial Cash	10.098	9.581
Final Cash	10.041	20.983

LOOKING AHEAD

• Alkemy will continue the process of industrialization of the business model, started over the course of 2019, defining our new organization and the new go to market strategy. Alkemy will continue to work in this direction with an elevated focus on both marginality and organic growth.

• In 9M indeed Alkemy already started to register the first positive results in terms of marginality, thanks to the better mix and the business efficiencies generated.

• In 9M 2020 the top line was impacted by an unprecedented crisis, but the management is confident that in a post COVID-19 world, the services offered by Alkemy for digital transformation and business evolution will be structurally necessary for current and future customers to be competitive and successful.

• The evolution of the Business in the next few months will depend mostly on exogenous factors such as the dynamics of the pandemic, the resilience of our clients on one hand, and government interventions in support of the economy and investments in the digital field on the other.

• The management will monitor continuously and carefully the developments of the events, in order to be ready to promptly take the necessary actions to mitigate any impacts on business performance resulting from the tough economic environment in key geographies.

• Taking into account the results achieved in 9M 2020, and current trading conditions, excluding the occurrence of further aggravating events that are not foreseeable at the moment (ie new lockdowns), in FY 2020 we expect to reach an EBITDA higher than that of 2019, despite the decline in revenues expected.

(1) O2E Srl belongs to Francesco Beraldi

(2) Lappentrop Srl belongs to Alessandro Mattiacci (3) Other Managers: Alkemy and founders of new acquired companies (4) Buy Back plan was in place until December 2019

A PUBLIC COMPANY LISTED ON MTA – STAR SEGMENT

A SOLID CORPORATE GOVERNANCE

BOARD OF DIRECTORS BOARD OF STATUTORY AUDITORS

Independent Audit Firm: KPMG S.p.A.

Chairman	Alessandro Mattiacci
Chief Executive Officer	Duccio Vitali
Deputy Chairman	Vittorio Massone
General Manager	Massimo Canturi
Director	Riccardo Lorenzini
Independent Director	Giorgia Albeltino
Independent Director	Giulia Bianchi Frangipane
Independent Director	Andrea Di Camillo
Independent Director	Serenella Sala

Chairman	Mauro Dario Bontempelli
Standing Auditor	Gabriele Gualeni
Standing Auditor	Daniela Bruno
Alternate Auditor	Marco Garrone
Alternate Auditor	Mara Sartori

• The Board of Directors, the Board of Statutory Auditors and the Independent Audit Firm were appointed by the Shareholders' Meeting on June 25, 2017.

• Vittorio Massone was appointed by the Shareholders' Meeting on April 24, 2020.

Alkemy innovation_enabler Via San Gregorio 34 20124 Milano, Italy Tel: +39 02 92894 1 - Fax: +39 02 92894 500 info@alkemy.com Alkemy enabling evolution

INVESTOR RELATIONS ir@alkemy.com