Digitouch — Audit Report / Information 2020

Mar 31, 2021

st March 2021

Disclaimer

This document has been prepared by Gruppo DigiTouch (the "Company") for use during meetings with investors and financial analysts and solely for information purposes.

The information set out herein has not been verified by an independent audit company, neither the Company nor any of its subsidiaries, affiliates, branches, representative offices as well as any of their directors, officers, employees, advisers or agents accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Company, whether written, oral or in visual or electronic form, transmitted or made available.

This document may contain forward looking statements about the Company based on current expectations and opinions developed by the Company. These forward looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company) which could cause a material difference between forward looking information and actual future results. The Company assumes no obligation to provide updates of any of the aforesaid forward looking statements.

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GRUPPO DIGITOUCH

2020 IN A SNAPSHOT

COVID-19 RECOVERY WILL BE DIGITAL – READY FOR THE «NEXT NORMAL»

• 1. Strong free cash cash flow in tough circumstances and after M&A activities (in the booming Ecommerce field); +€3,1m in Op. Cash Flow
• 2. Exceptionally low Net Debt/EBITDA at 0,3x, offering room for additional leverage and further investments
• 3. Pandemic impact on ADV Marketing Revenue level almost entirely compensated by the growth in Technology and E-commerce segments
• 4. Operating profitability improved and overall profitability preserved
• 5. Net income as adjusted for goodwill amortization at €1,7m
• 6. Share buy-back programme in execution for €700K
• 7. Dividend distribution of €0,01 in payment end of June 2021

A FAST GROWING DIGITAL PLAYER

• ✓ ESTABLISHED IN 2007
• ✓ LISTED on AIM ITALIA since 2015
• ✓ 300+ HIGHLY SKILLED PEOPLE
• ✓ OFFICES in ROME, MILAN, MONZA
• ✓ FULLY GDPR COMPLIANT
• ✓ 300+ CLIENTS

MISSION We support our clients in the Digital Transformation path through an integrated offer comprising of Digital Marketing, Technology and E-commerce services, with a market centric approach

Gruppo DigiTouch is an ISO-9001 Certified Company for:

Data accounted in IT GAAP Note: Net Income as adj. for goodwill amortization • business management systems

• design and delivery of training interventions in Digital Transformation area

A FULLY INTEGRATED OFFER

CREATING VALUE BY LEVERAGING ON AN INTEGRATED APPROACH AND CROSS FERTILIZATION

• Data analysis & insights
• Business analytics & predictive models
• Data science & machine learning
• Mar-Tech system integration
• Marketing Automation
• Business Process Automation

CORE

OFFER

Plan, implement and manage clients' digital offers

E-COMMERCE SERVICES

• E-commerce solutions
• •Interface development
• Experience Design
• Cloud Solutions

• Cyber Security

• Omnichannel marketing

• Content & Creativity
• Tracking
• SEO & CRO
• Special projects
• Digital event platform

We are a Cloud Marketing Company with focus on integrating Technology, Marketing, Resources and Skills. Flexibility, market centricity, consultancy and assets integration are our keys

Display and sell clients' goods and services digitally Promote market and services and recruit clients online

MULTIPLE PROPRIETARIES TECHNOLOGIES

TECH SKILLS WITHIN THREE CORE DIVISIONS

• ✓ Experience in M&A
• ✓ Capability in People & Process integration
• ✓ Focus on mid-term Business Innovation

EXPERTISE IN DIFFERENT SEGMENTS – CORE CUSTOMERS

GROWING AND RESILIENT BUSINESS MODEL

RESILIENT BUSINESS MODEL COMBINED WITH CASH FLOW GENERATION AND SOUND BALANCE SHEET

Tough pandemic impact on the Media ADV business, while operating profitability improved and overall profitability was preserved

• DigiTouch expanded its offer and reshaped its services to face the changing needs in E-commerce, Digital Marketing, Cloud Management
• ✓ Moving to a digital platform offering a wide range of integrated services
• ✓ Strong increase in the number of public and private tenders participation in 2020
• ✓ Acquisitions in the booming segments of Digital transformation, Omnichannel marketing and E-commerce
• Results reflect impact of ADV budgets cuts
• ✓ Better than expected results at Gross Operating Income and NFP level
• ✓ Benefit of cost-savings actions
• ✓ Delivered positive free cash flow in tough circumstances

• Strong cash generation over the period

• ✓ €3,1 m in Operating Cash Flow vs €1,5m as of 31st December 2019 thanks to better NWC management
• ✓ €0,6 m in Free Cash Flow vs -€0,7m last year despite new equity investments Converse
• NFP improved from -2,5m in FY 2019 to -€2,0m in FY 2020
• Revenues at €33,5 million – down 14% vs €38,9m in FY 2019 - (vs. sector decrease of nearly 30%) as a consequence of COVID 19 impact on ADV budgets cuts, mitigated by the good performance in Technology Services business
• Improvement in marginality compared to FY 2019
• Adj. EBITDA at €5,7 m in line with FY 2019 and EBITDA margin improved to 17,1% vs 14,8% in FY 2019
• Pre-tax result at €0,7m and Net income as adjusted for goodwill amortization at €1,7m
• ✓ Net income as reported is impacted by the amortization of goodwill as for ITA GAAP

FY 2020 INCOME STATEMENT AND BALANCE SHEET

INCOME STATEMENT BALANCE SHEET

(Euro M) Income Statement	FY'19	'20 FY
Revenues	38 94 ,	33 52 ,
adj EBITDA	5 76 ,	5 72 ,
margin EBITDA	14,8%	17,1%
EBIT	1 69 ,	1 02 ,
EBIT margin	4,3%	3,0%
adj for goodwill Net Income amortization	2 30 ,	1 70 ,
Earnings before tax	1 31 ,	0 68 ,
Net Income	0 77 ,	0 07 ,
Net Income margin	2,0%	0,2%

Balance Sheet (Euro M)	FY'19	'20 FY
Goodwill	8 60 ,	8 35 ,
Other Assets	6 39 ,	7 67 ,
Working Capital Net	3 22 ,	2 40 ,
Liabilities Long-term	-1 16 ,	-1 64 ,
Capital Employed Net	17 05 ,	16 77 ,
Net Equity	14 54 ,	14 77 ,
Financial Debt Net	2 55 ,	2 01 ,
and Funds Net Equity	17 09 ,	16 78 ,

• Adj. EBITDA Margin increased thanks a better mix, and the new go-tomarket approach with focus on more profitable projects
• Amortization, depreciation and write-downs up compared to last year due to some investments entered into the production cycle that were completed in the previous year and certain write-downs

FY 2020 – NET RESULT AS ADJ FOR GOODWILL

NET INCOME ADJ.

(Euro M) Analysis of adj Net Income	FY'17	FY'18	FY'19	'20 FY
Revenues	28 9 ,	30 6 ,	38 9 ,	33 5 ,
residual Goodwill	11 4 ,	10 0 ,	8 6 ,	8 3 ,
Net Equity	14 1 ,	14 1 ,	14 5 ,	14 8 ,
after goodwill Net Equity coverage	2 7 ,	4 1 ,	5 9 ,	6 4 ,
Goodwill amortization	1 2 ,	1 3 ,	1 5 ,	1 6 ,
Net Income	0 4 ,	0 3 ,	0 8 ,	0 1 ,
adj for goodwill amortization Net Income	1 7 ,	1 6 ,	2 3 ,	1 7 ,
adj Net Income . margin	7% 5 ,	3% 5 ,	8% 5 ,	0% 5 ,

• DigiTouch reports its Financials in IT GAAP
• Adjusted Net Result: heavily impacted by the effect of goodwill amortization accounted in accordance with OIC rules
• Net Equity after goodwill coverage: highlights the ability to cover the residual value of goodwill

NET DEBT

Detailed (Euro M) FCF	FY'19	'20 FY
EBITDA	5 76 ,	5 72 ,
Other	-1 81 ,	-2 01 ,
Change in WC	-2 50 ,	-0 60 ,
Operating Cash Flow	1 45 ,	3 11 ,
Capital expenditures	-0 85 ,	-2 80 ,
(investments)/divestments Other	-1 29 ,	0 30 ,
FCF	-0 69 ,	0 60 ,
Debt/EBITDA Net	0 44 ,	0 35 ,

• €3m bond repaid in March 2020; issuance of a new loan
• Significantly low Net Debt/EBITDA at 0,3x still room for additional leverage and investments
• Positive change in at Operating cash flow level due a lower absorption of Working capital

• Positive change in Net Debt mostly due to the increase in cash liquidity (€7,8m as of December 31st 2020)

• Revenues >= €40m

• EBITDA adj. €6,2-6,5m

DigiTouch will continue to focus on the new integrated offer through the go-to-market approach while maintaining attention on both top line growth – also through M&As – and profitability progress

The Group has already reinforced priorities and enhanced continuity plans to navigate the "next normal". In the current difficult market context, the Group was favored by its versatile business model and the sound balance sheet

The digital shift is one of the most profound changes brought about by the pandemic, and DigiTouch is taking all the available opportunities with a clear strategy aimed at:

• 1. Focus on the sector of public tenders
• 1. Accelerate e-commerce / development of digital enabler e-commerce positioning
• 1. Speed up innovation in the fast growing areas of cloud marketing, machine learning, cyber security
• 1. Offer integrated projects combining its platforms with customers' technologies

.O4

experience in the industry and trustable credibility

investor.relator@digitouch.it