Basic Net SpA — Call Transcript 2021

Feb 10, 2021

FY2020 Conference call

February 10th 2021

Economic and financial results confirm the effectiveness of Group's business model, despite the lock-down impact.

Aggregated sales declined by 20,6% benefitting from an improving trend in 3Q (-17,8%) and 4Q (-17,0%) after -38,0% in 2Q.

Consolidated sales amounted to € 259,7m (- 15,0% YoY). Online sales grew double digit.

EBITDA was positive with a strong recovery in H2 (€ 19,0m), after communication investments just slightly below last year.

Net Financial Position stood at € 82,2m, with a slight increase vs YE2019 (€ 78,3m) thanks to a careful management of working capital, after € 10,5m cash out to finalize the 2019 acquisition of BasicVillage Milano, € 10,9m cash out to re-acquire the Kappa® brand in Japan, and € 6,4m dividend payment. Debt maturity has been lengthened.

€ 814m Aggregated Sales

€ 260m Consolidated Sales

€ 19,8m EBITDA

€ 82,2m NFP

1

AGGREGATED SALES AGGREGATED SALES BY QUARTER

Aggregated Sales of Sourcing Centers (ASSC, Eu mn)

Aggregated Sales of Licensees (ASL, Eu mn)

Q1 Q2 Q3 Q4

CONSOLIDATED SALES CONSOLIDATED SALES BY QUARTER

Consolidated sales of goods (Eu mn) Royalties income ASSC (Eu mn) Royalties income ASL (Eu mn)

Q1 Q2 Q3 Q4

EBITDA Bridge

• Contribution margin suffered from lower sales volumes and temporary commercial actions on prices in H1
• Net royalties income included lower royalties income from ASL (- € 5,6m) and ASSC (- € 3,9m), net of € 0,2m saving on royalties paid to third parties
• Labour cost decreased thanks to temporary layoffs in Italy, France, Spain and UK (€ 3,9m)
• Communication investments were lower thanks to the re-negotiation of sponsorship agreements to account for the impact of covid-19 on sports competitions
• EBITDA YoY comparison was penalized due to non-recurring income in 2019 from the settlement of AS Roma litigation

FY2020 Consolidated Net Financial Position

in € .000	31.12.20	31.12.19	Var
Net Cash	(6.266)	(27.040)	20.774
ST portion of MT Loans	(8.412)	(9.169)	757
MT Loans	(44.387)	(19.939)	(24.448)
IFRS 16 debt	(23.097)	(19.287)	(3.809)
Put/call option	-	(2.839)	2.839
Net Financial Position:	(82.162)	(78.274)	(3.887)
NFP/Equity:	0,72	0,64	0,07

Net Financial Position bridge

• Operating activities generated a positive cash flow through a positive EBITDA and careful management of trade working capital
• Investing activities included recurring capex (€ 7,1m), the cash-out for the completion of Kappa Europe acquisition, the BasicVillage acquisition, the acquisition of Kappa brand in Japan
• Financing activities include dividend payment and the differential impact of new leases (IFRS 16) on debt net of rent concessions obtained as a consequence of store closures

Back-Up

4Q 2020 Communication activities

4Q 2020 Communication activities

Glossary

Aggregated Sales of Licensees (ASL)	sales by commercial licensees
Aggregated Sales of Sourcing Centers (ASSC)	sales by productive licensees
Communication investments	Sponsorship and media costs along with Commercial expenses
Consolidated sales	the sum of royalties income from ASL, sourcing commissions from ASSC and direct sales of goods