Technogym — Investor Presentation 2016

Aug 4, 2016

Financial Results 1H 2016

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Stefano Zanelli, the Manager in charge of preparing the corporate accounting documents, declares that, pursuant to art. 154-bis, paragraph2, of the Legislative Decree no. 58 of February 24, 1998, the accounting information contained herein correspond to document results ,books and accounting records.

CEO Remarks Financial Results 1H2016

Revenues showing double-digit growth

Overview of key performance indicators

Revenue growth stemming primarily from NA, EU and Italy

Revenue breakdown by geography

All channels contributing to revenue growth ("omni-channel")

Revenue breakdown by channel

Cost base impact almost in line with Y-1 performance excluding non-recurring costs

EBITDA growing at 23% vs Y-1 with positive impact on profitability (14,1% vs 12,6% of Y-1)

EBITDA margin increase thanks to

• operational leverage from the increase in sales volume
• optimization of production processes with positive impact on manufacturing direct costs
• reduction in rent costs following the acquisition of the TG Village
• tight control on Opex

Reduction in Trade Working Capital at 10,4% on revenues from 11,6% of Y-1

Working Capital (€m)

€m	Jun 2015	Jun 2016
Inventories	67 4 ,	68 0 ,
Trade receivables	76 8 ,	88 6 ,
Trade payable	(87 2) ,	(100 8) ,
Trade Working Capital	57 0 ,	55 9 ,
% LTM of total revenue	11 6% ,	10 4% ,
Other assets/(liabilities) current	(38 6) ,	(26 8) ,
Current liabilities tax	(10 4) ,	(4 4) ,
Provisions	(9 2) ,	(16 4) ,
Working Capital Net	(1 2) ,	8 4 ,
% LTM of total revenue	-0 2% ,	1 6% ,
Inventory turnover1	5,4	6,0
Day sales outstanding2 (DSO)	45,8	53,6
Day payables outstanding3 (DPO)	90,9	100,1

Key comments

Inventories

• Largely in line with Y-1
• Finished products at €53m
• Product raw material at €13,1m

Trade receivables

• Incidence on revenues in line with previous year (16,4% vs15,6% of Y-1)
• Increase driven by higher sales
• Leasing warranties €6,6m (+€3m vs Y-1) with an equal amount accounted in financial net debt

Provisions

• Despite increase vs Y-1, provisions in line with YE 2015

Trade payables

• Increase vs Y-1 from suppliers for ITA plant

Other assets and liabilities (2016)

• Includes VAT credit of €36m from SK authorities (received in July)

• Residual debt of €21,5m from TG Village acquisition

• Calculated as revenues for products, spares parts, hardware e software divided by gross inventory;

CAPEX would be in line with Y-1 excluding property and TG Village investments

Net Financial Debt

Net Financial Debt (€m)		Key comments
€m	2015-June	2016-June
Cash & cash equivalents	(45.6)	(53.1)	despite of cash out for • €11m VAT payment
Current financial receivables	(0.2)	(0.5)	• €21m cash out for Exerp acquisition
			Current bank debt
Current Bank debt	31.7	77.5	short-term financing. As of 30/06/2016
Current portion of non-current debt	17.7	24.8
Other current financial debt	4.1	8.2	floating rate: EURIBOR + spread)
Net current financial debt	53.6	110.5
			spread)
Non current financial debt	56.0	88.5
			current financial debt
Financial Net Debt	63.9	145.4
NFD / EBITDA (LTM12m)	1,18x	1,56x	EURIBOR + spread)

Cash & cash equivalents increase of €8m despite of cash out for • €11m VAT payment • €21m instalment for TGB Srl acquisition • €21m cash out for Exerp acquisition
Current bank debt • Mainly composed of credit lines stand-by and short-term financing. As of 30/06/2016 − Lines of credit and overdrafts uncommitted for ~81€m of which €36.5m drawn (revocable / floating rate: EURIBOR + spread) − Committed credit line (medium-long term) for ~€45m o/w €41m drawn (floating: EURIBOR + spread)
Current portion of non-current debt / Non current financial debt • Flexible financial structure based on bank

amortizing loans with ~2,9y duration (floating: EURIBOR + spread)

Net Financial Debt walk

Excluding non-recurring items, NFD would be equal to €38m in June '16, practically unchanged vs YE '15

Executive Summary 1H 2016

Revenues: €250m, +10,5% vs 1H2015 (+12,4% at constant FX) thanks to positive volume effect coming primarily coming from

• Salesforce effectiveness
• New product launches (Group Cycle, MyRun, Skillmill)
• Sound growth in key markets covered by owned subsidiaries

EBITDA: €35,2m, +22,9% vs 1H2015 (+30,1% at constant FX) thanks to

• Operational leverage from the increase in sales volume
• Optimization of production processes with positive impact on manufacturing direct costs
• Reduction in rent costs following the acquisition of the TG Village
• Tight control on Opex

Free Cash Flow¹ : equal to €20,2m (+38,9% vs 1H2015, €14,5m) excluding non-recurrent Capex

Net Financial Debt: €145,4m vs €63,9m as of June '15 (€38,1m as of December '15)

• Non-recurring investments in TG Village and Exerp

Profit and Loss statement

€ m	Jun 2015	Jun 2016	Jun 2015 vs Jun 2016 Δ %
Total revenue	226,2	250,0	10,5%
Cost or raw, ancillary and consumable materials and
goods for resale	(79,4)	(89,0)	12,1%
Service, Rentals and leases	(70,0)	(75,3)	7,6%
of which not-recurrent	(0,8)	(2,2)
Personnel cost	(47,3)	(50,3)	6,4%
of which not-recurrent	(0,2)	(0,1)
Depreciations, amortisations and write-downs	(9,8)	(10,7)	9,7%
Provision for risk and charges	1,4	(1,6)	-216,6%
Other operations cost	(2,1)	(5,3)	155,3%
of which not-recurrent	0,0	(2,7)
Share of result joint venture	0,3	0,1	-56,7%
Net operating income	19,3	17,9	-7,3%
Margin (%)	8,5%	7,2%
Financial income and (expenses)	(1,1)	(1,1)	-2,6%
Profit (loss) before tax	18,2	16,8	-7,6%
Taxes	(6,1)	(7,6)	25,0%
Profit (loss) before minority interest	12,1	9,2	-24,0%
Margin (%)	5,4%	3,7%
Profit (loss) for the year of minority interests	(0,6)	(0,1)	-86,3%
Profit for the year	12,0	9,1	-24,3%

EBITDA Reconciliation

€ m	Jun 2015	Jun 2016	Jun 2015 vs Jun 2016 Δ %
operating income Net	19 3 ,	17 9 ,	-7 3% ,
Consultantcy cost	0 2 ,
Consultancy cost	0 6 ,
IPO Cost		2 3 ,
(previous year) Brasil tax		2 1 ,
China WH litigations		0 6 ,
recurring items Total not	0 8 ,	5 0 ,	538 4% ,
Adjusted Net operating income	20 1 ,	22 9 ,	13 9% ,
Depreciations , amortisations and write-downs	(9 8) ,	(10 7) ,	9 7% ,
Provision for risk and charges	1 4 ,	(1 6) ,	-216 6% ,
EBITDA	28 5 ,	35 2 ,	23 5% ,
Margin %	12 6% ,	14 1% ,

Cash Flow statement

€ m	Jun 2015	Jun 2016
Profit for the year	12,1	9,2
Depreciation , amortization and impairment losses	9,8	10,7
Provisions	(1 ,4)	1,6
Share of from result joint net ventures	(0 ,3)	(0 ,1)
Net financial expenses	1,5	1,2
Income/(expenses) from investments	(0 ,4)	-0,1
Income tax expenses	6,1	7,6
Cash flows from operating activities before in working capital changes	27,4	30,0
Increase (decrease) in inventory	(5 ,0)	(7 ,8)
(decrease) Increase in trade receivables	1,7	(1 ,3)
Increase (decrease) in trade payables	(7 ,1)	7,7
Increase (decrease) in other operating and liabilities assets	4,5	(22 ,2)
fiscal Non-recurrent payment	0,0	0,0
Income paid taxes	(4 ,5)	(16 ,5)
Net cash inflow from operating activities (A)	17,0	-10,0
Investments in plant and equipment property,	(12 ,9)	(24 ,9)
Disposals of plant and equipment property,	0,0	0,0
Investments in intangible assets	(3 ,4)	(4 ,1)
Disposals of intangible assets	0,0	0,0
Dividends received from associates	0,0	0,0
Dividends received from other entities	0,4	0,1
Dividends received from joint ventures	1,7	0,7
Dividends paid	-	-
Minority Interest	0,0	0,0
Investments in subsidiaries , associates and other entities	(0 ,9)	(19 ,0)
Disposal of subsidiaries , associates and other entities	0,3	0,0
Net cash inflow (outflow) from investing activities (B)	(14,9)	(47,3)
Proceeds from new borrowings	70,0	97,9
Repayment of borrowings	(11 ,0)	(9 ,2)
Net increase (decrease) of financial and liabilities current assets	-58,6	(43 ,9)
Payments of financial net expenses	1,4	(3 ,2)
(outflow) (C) Net cash inflow from financing activities	1,8	41,5
Net increase (decrease) in cash and cash equivalents (D)=(A)+(B)+(C)	3,9	(15,8)

Balance Sheet

	Jun 2015	% on	Jun 2016	% on
€ m		Revenues		Revenues
Inventories	67,4	29,8%	68,0	27,2%
Trade receivables	76,8	33,9%	88,6	35,4%
Trade payables	(87,2)	-38,5%	(100,8)	-40,3%
Trade Working Capital	57,0	25,2%	55,9	22,4%
Other current assets/(liabilities)	(38,6)	-17,1%	(26,8)	-10,7%
Current tax liabilities	(10,4)	-4,6%	(4,4)	-1,7%
Provisions	(9,2)	-4,1%	(16,4)	-6,5%
Net Working Capital	(1,2)	-0,5%	8,4	3,3%
Property, plant and equipment	57,5	25,4%	141,9	56,8%
Intangible assets	22,2	9,8%	21,5	8,6%
Investments in joint ventures	3,9	1,7%	22,3	8,9%
Employee benefit obligations	(3,3)	-1,5%	(3,1)	-1,3%
Other non current asset and (liabilities)	7,7	3,4%	7,9	3,2%
Net Fixed Capital	88,0	38,9%	190,5	76,2%
Net Invested Capital	86,8	38,4%	198,8	79,6%
Shareholders' Equity	22,9		53,5
Financial Net Debt	63,9	28,2%	145,4	58,2%
Total Source of Funding	86,8	38,4%	198,8	79,6%

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