Alkemy — Investor Presentation 2020

Mar 22, 2021

FY2020 RESULTS

22.03.2021

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.
• This presentation ("Presentation") and the information set out herein ("Information") are strictly confidential and, as such, has not been prepared with a view to public disclosure and, except with the prior written consent of the Company, it cannot be used by the recipient for any purpose nor can it be disclosed, copied, recorded, transmitted, further distributed to any other person or published, in whole or in part, by any medium or in any form for any purpose.
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• Therefore, the recipient undertakes vis-à-vis the Company (i) to keep secret any information of whatever nature relating to the Company and its affiliates including, without limitation, the fact that the information has been provided, (ii) not to disclose any Information to anyone, (iii) not to make or allow any public announcements or communications concerning the Information and (iv) to use reasonable endeavours to ensure that Information are protected against unauthorized access.
• THIS PRESENTATION AND ANY RELATED ORAL DISCUSSION DO NOT CONSTITUTE AN OFFER TO THE PUBLIC OR AN INVITATION TO SUBSCRIBE FOR, PURCHASE OR OTHERWISE ACQUIRE ANY FINANCIAL PRODUCTS, AS DEFINED UNDER ARTICLE 1, PARAGRAPH 1, LETTER (T) OF LEGISLATIVE DECREE NO. 58 OF 24 FEBRUARY 1998, AS AMENDED. Therefore, this document is not an advertisement and in no way constitutes a proposal to execute a contract, an offer or invitation to purchase, subscribe or sell for any securities and neither it or any part of it shall form the basis of or be relied upon in connection with any contract or commitment or investments decision whatsoever. The Company has not prepared and will not prepare any prospectus for the purpose of the initial public offering of securities. Any decision to purchase, subscribe or sell for securities will have to be made independently of this Presentation. Therefore, nothing in this Presentation shall create any binding obligation or liability on the Company and its affiliates and any of their advisors or representatives.
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• The information and opinions contained in this document are provided as at the date hereof and are subject to change without notice. The recipient will be solely responsible for conducting its own assessment of the information set out in the Presentation. Neither the Company and its affiliates, nor any of their advisors or representatives shall be obliged to furnish or to update any information or to notify or to correct any inaccuracies in any information. Neither the Company and its affiliates, nor any of their advisors or representatives shall have any liability to the recipient or to any of its representatives as a result of the use of or reliance upon the information contained in this document.
• 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 33% (>2x the market), to move from the 23 starting resources to a team of over 650 people and a turnover of about 74.8M€.

In these 8 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

FY 2020 – RESILIENCY OF BUSINESS MODEL

• Adj. EBITDA up >23% compared to FY 2019

• Improvement in marginality compared to FY 2019 (EBITDA margin 8.3% vs 6.0%)

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

• Positive group result of €M 1.8

• Strong cash generation over the period (€M 9.6 operative cash flow)

• Improvement of NFP of €M +6.7

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

FY 2020 MAIN ACHIEVEMENTS

FINANCIAL HIGHLIGHTS

€M	FY 2020	FY 2019
Turnover	74.9	84.5	-11% compared to FY 2019, mostly due to the Mexican > company, exposed to travel and leisure sector, highly effected by COVID-19
Adj. EBITDA	6.2	5.0	+ 23% compared to FY 2019, thanks to the better mix and > efficiencies arising from the new organization. Adj. EBITDA margin up by + 2.3 pps
EBIT	3.1	1.4	+123% compared to FY 2019, thanks to the better operating > result. EBIT margin up by +2.5 pps
EBT	2.5	0.2	More than 10x compared to FY 2019, thanks to the better > performance over the period. EBT margin up by +3 pps
Group Net Income	1.8	(0.1)	Thanks to better operating results, mostly of Italian > companies
Operating Cash Flow	9.6	1.6	Increase of €M 8 compared to FY 2019 mainly due to the > better operating result and the lower absorption of NWC
NFP	-12.5	-19.2	Positive variation since 31 December 2019 of €M 6.7 mostly > due to: €M +9.3 increase in cash liquidity, €M +1.3 decrease

Positive variation since 31 December 2019 of €M 6.7 mostly due to: €M +9.3 increase in cash liquidity, €M +1.3 decrease in put options, €M –3.8 increase in financial debt

ALKEMY REVENUES(€M) – IAS /IFRS(1)

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

ALKEMY INTERNATIONAL TURNOVER(%)

› FY 2020 revenues are €M 74.9 -11.4% vs. €M 84.5 in FY 2019, mostly due to the Mexican subsidiary, exposed to travel & leisure sector, highly

• effected by COVID-19 emergency

› FY 2020 Italian turnover is 71% of total vs. 68% in FY 2019, showing more resiliency compared to foreign subsidiaries, thanks to the new Go-to-Market strategy, strongly focused on main clients, which over performed over the period: Top 50 clients increased ARPC by 10%

ORGANIC VS. ACQUISITIONS REVENUES (€M) – IAS /IFRS (1)

REVENUES

ALKEMY ADJ. EBITDA(€M) – IAS/IFRS(1)

(1)Ebitda 2014-15-16 are Management estimates and are not audited because of introduction of 2017 IFRS. 2017 Ebitda is net of AIM listing costs

ADJ. EBITDA MARGIN ex Media (Spain & Latam)(2)

› Part of revenues coming from the integration of Ontwice Group (Spanish and Mexican markets, consolidated since H2 2018) is related to Media (i.e. purchase and sale of Digital media spaces) which is structurally a pass through business

› This effect had a negative impact on EBITDA margin of 1.4 pps. EBITDA margin ex Media is estimated to be 9.7%(2) in FY 2020 compared to 7.4%(2) in FY 2019

• › FY 2020 Adj. EBITDA is €M 6.2 +23% compared to €M 5.0 in FY 2019. The strong increase is mainly achieved thanks to the efficiency arising from the new organization and the better mix, and the new Go-to-Market strategy focused on more profitable projects
• › FY 2020 Adj. EBITDA is about 8.3% vs. 6.0% in FY 2019 with an increase of 2.3 pps, due to structural lower costs impact on revenues, thanks to the industrialization process started in 2020

8,7%

Adj. EBITDA

Net Financial Position Bridge FY2020 (€M)

NET FINANCIAL POSITION BRIDGE AND BREAK DOWN

• › Net Financial Position NFP (2) at December 31st 2020 was €M -12.5 with an improvement of €M 6.7 compared to €M -19.2 at December 31st, 2019
• › Variation mainly due to: increase in liquidity on bank accounts (€M +9.3), increase in non current bank loans (€M -2.5), increase in current bank loans (€M -2.1), redetermination of put options value (€M +1.3), decrease of leasing financial debt (IFRS 16) (€M +0.8).

› Gross debt is composed by €M 16.1 of financial debt (of which €M 11.4 non current, €M4.6 current), €M 12.0 put options deriving from M&A (of which €M 3.1 non current) and €M 3.2 IFRS16 financial leases

› FY 2020 NFP (1) ex IFRS16 is €M 9.3

› FY 2020 cash is €M 18.8

Net Financial Position Break Down FY 2020 (€M)

16,1

9,3 12,5 12,0 3,2 (18,8) Financial Debt Put & Call Cash NFP (1) IFRS16 NFP (2)

10

NET TRADE WORKING CAPITAL DYNAMICS

• FY 2020 Trade working capital over revenues was higher compared to history

• The cash outflow from Net Trade Working Capital increase (€ -2.2 million) was more than 4 times higher in comparison to FY 2019, due to payables dynamics

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

Cash Conversion Cycle Details (days)

FY 2020 P&L – IAS/IFRS

Consolidated Profit & Loss

› FY 2020 Revenues at €M 74.9, down by 11% compared to €M 85.2 of FY 2019. The decrease is mostly attributable to the foreign subsidiaries who underperformed in the period (-21%), especially in Mexico where the contraction of revenues is due to high exposure to travel & leisure customers, while in Spain turnover completely recovered by the end of 2020. Italian turnover is down by 7%, mostly due to lower tax credit and incentives for R&D projects over the period. Italian core business mostly stable, with an increase in top 50 clients' ARPC of 10%.

› Operative costs decreased by -13.5% yoy, reducing the impact on revenues by 2.3% compared to FY 2019. Services costs decreased by 20% yoy. This efficiency is mostly achieved thanks to the actions taken to internalize tech activities. Personnel costs is mostly stable, with a decrease of 2.2% compared to FY 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.

› FY 2020 Adj. EBITDA at €M 6.2 +23% compared to €M 5.0 in FY 2019, with a margin increase of 2.3 pps (EBITDA margin 8.3%). EBIT is equal to €M 3.1 +123% higher than €M 1.4 in FY 2019, with an increase of 2.5 pps in EBIT

• margin.
• 2019.

› Financial charges decreased from €M 1.2 in FY 2019 to €M 0.7 in FY 2020. EBT €M 2.5 vs. €M 0.2 in FY 2019. Group Net Profit is €M 1.8 vs €M -0.1 in FY

Profit and Loss (€000) - IAS/IFRS	FY 2019	FY 2020
Revenues	84.520	74.932
Service costs, consum. & goods	(51.404)	(40.100)
Personnel	(29.635)	(28.861)
EBITDA	3.481	5.971
% Revenues	4,1%	8,0%
Non recurrent costs	(1.549)	(224)
Adj. EBITDA	5.030	6.195
% Revenues	6,0%	8,3%
D&A	(1.738)	(1.749)
Bad debts/ claims/ provisions	(336)	(1.077)
EBIT	1.407	3.145
% Revenues	1,7%	4,2%
Financial charges	(1.161)	(601)
EBT	246	2.544
Taxes	(486)	(722)
% Tax rate	197,6%	28,4%
Net Profit (Loss)	(240)	1.822
o/w Minorities	(101)	30
o/w Group Net Profit (Loss)	(139)	1.792

FY 2020 BALANCE SHEET – IAS/ IFRS

Consolidated Balance Sheet

Balance Sheet (€000) - IAS/IFRS	FY 2019	FY 2020
Tangible assets	980	855
Intagible assets	7.801	7.093
o/w rights of use (IFRS16)	3.907	3.122
Goodwill	31.752	31.755
Financial assets	1.078	1.174
Fixed Assets	41.611	40.877
Inventories	61	0
Trade Receivables	31.791	31.044
Trade Payables	(17.142)	(14.688)
Net Trade Working Capital	14.710	16.356
Other Current Assets	8.931	4.289
Other Current Liabilities	(9.790)	(12.579)
Employees' leaving entitlement	(4.356)	(5.087)
Total Capital Invested	51.106	43.856
Total Equity	31.897	31.396
o/w Group Equity	31.723	31.142
o/w Minorities	174	254
Cash	(9.581)	(18.840)
Bank Debts	11.501	16.071
Put Option Liabilities	13.342	12.038
Other Financial Debts (IFRS16)	3.947	3.191
Net Debt (Cash)	19.209	12.460
Total Funds	51.106	43.856

› Net Invested Capital at €M 43.9 (€M 51.1 at FY 2019) and consisted of approx. € 8.1 million of Net Working Capital (€M 13.8 FY2019), €M 40.9 of fixed assets (€M 41.6 FY2019) of which €M 31.8 of Goodwill and €M 3.1 of rights of use (IFRS 16), and €M 5.1 of final Employees' leaving entitlement (€M 4.3

› Shareholders' equity decreased in the period by €M 0.5 since FY 2019 (-1.6%), mainly due to dividends to minorities and the buyback of treasury shares carried out over the course of 2020, partly compensated by the FY 2020 Net Profit

• FY2019)
• of put options.

› Net Financial Position at December 31st 2020 negative for €M -12.5 (ante-IFRS 16 at €M -9.3) 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 over the year resulting in higher cash position and lower valuation

FY 2020 CASH FLOW GENERATION – IAS/IFRS

› FY 2020 Gross Cash Flow at €M 5.7, compared to €M 2.8 of FY 2019. The increase yoy is mostly due to the higher result of the period and higher non-cash items.

› FY 2020 Operating cash flow at €M 9.6 compared to €M 1.6 of FY 2019. The positive variation is mostly due to the better operating result and the lower absorption of the Working capital (other assets/liabilities referred to inflows from 2019 tax credit for R&D projects) compared to FY 2019.

› Ordinary Capex of the period are 44% lower than FY 2019. FY 2020 Free Cash Flow before Acquisitions is equal to €M 9.3, compared to €M 1.1 of FY 2019.

› FY 2020 Free Cash Flow is €M 9.2, showing a strong improvement

• compared to FY 2019 €M -0.3.
• 0.5 in FY 2019.

› Total change in cash for the period was €M 9.3 compared to €M -

Consolidated Cash Flow

Cash Flow Statement (€000) - IAS/IFRS	FY 2019	FY 2020
Net Profit (Loss)	(240)	1.822
Adjustments (cash tax, interest and other)	573	462
Non cash items	2.457	3.390
Gross Cash Flow	2.790	5.674
Change in inventories	79	61
Change in trade receivables	592	244
Change in trade payables	(1.161)	(2.540)
Total change in NTWC	(490)	(2.235)
Total change in other asset/liabilities	(651)	6.145
Operating Cash Flow	1.649	9.584
Capex	(580)	(325)
Free Cash Flow before Acquisition	1.069	9.259
Other fixed assets	(1.328)	(91)
Free Cash Flow	(259)	9.168
Change in treasury shares	(581)	(181)
Dividends to minorities	(668)	(667)
Change in bank & fin. Debts	8.934	4.542
IFRS 16 effect	(1.119)	(950)
Changes in equity	969	0
Change in put/option	(7.794)	(2.652)
Change in Cash	(518)	9.260
Initial Cash	10.098	9.581
Final Cash	9.580	18.841

OUTLOOK

• › Alkemy will continue the process of industrialization of the business model, which showed already the first results in terms of marginality, and the management expect to see further improvement over the course of both FY 2021 and the whole business plan period. Indeed, Alkemy will continue to work in this direction with an elevated focus on both marginality and organic growth.
• › In FY 2020 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 our current and future customers to be competitive and successful.
• › Taking into account FY 2020 results (in particular in 4Q 2020), and current trading, Group's expectation is to resume the path of organic growth, both in terms of revenues and marginality, thanks to the rationalization and efficiency work carried out in the previous year and currently underway. The first positive results will be registered already in 1Q 2021.

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
Director & GM	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

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