Technogym — Investor Presentation 2018

Sep 20, 2018

Financial Results H1 2018

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Revenues showing high single-digit growth

NA & ITALY driving with double-digit growth

High single-digit growth on field sales

Cost base impact substantially in line with Y-1 performance

Key comments

D&A / Impairments • Declining on a yearly basis in value and in % of sales

Personnel cost • Moderate increase compared to Y-1 driven by new hirings to expand the global coverage of the Field Sales network Services cost • Increase in Service costs mainly driven by higher revenues and advertising costs in the period Raw Materials, WIP & Finished • Further increase in sourcing and logistics led to a further decline

vs Y-1

Goods

EBITDA adjusted improving vs Y-1

Key comments

• EBITDA adjusted margin increase: • Positive effect coming from product mix and further efficiencies in cost of production steered an expansion in margin despite the lower operating leverage recorded in Q2 • Labor cost increased due to new hirings aimed at expanding the global reach of Technogym's Field Sales • SG&A has increased +7,3% Y/Y driven by marketing, IT activities and a direct support to the expansion of the sales network coverage
• network

Profit and Loss statement

(€m)	June
	2017	2018	%Chg
Total revenue	263,4	272,9	3,6%
Cost or raw, ancillary and consumable materials and goods for resale	(87,3)	(85,1)	-2,5%
Service, Rentals and leases	(68,0)	(74,9)	10,1%
of which (cost) not recurrent	(0,0)	0,0	nm
Personnel cost	(62,0)	(65,6)	5,9%
of which (cost) not recurrent	(0,0)	0,0	nm
Depreciations, amortisations and write-downs	(11,4)	(10,4)	-9,5%	sourcing
Provision for risk and charges	(1,5)	(0,9)	-38,2%
Other operations cost	(2,5)	(2,5)	0,1%
of which (cost) not recurrent	(0,2)	0,0	nm
Share of result joint venture	(0,6)	0,1	-119,0%
Net operating income	30,1	33,6	11,6%
Margin (%)	11,4%	12,3%
Financial income and (expenses)	(2,8)	(0,2)	-108%
Profit (loss) before tax	27,3	33,4	24,0%
Taxes	(8,2)	4,5	nm
Profit (loss) before minority interest	19,0	37,9	99%
Margin (%)	7,2%	14,0%
Profit (loss) for the year of minority interests	(0,1)	(0,2)	nm
Profit for the year	19,0	37,7	99%

Key comments

• Net operating income key drivers • Commercial customers leading the growth with sound contribution from
• HCP and H&R • Revenues driven by a healthy combination of volumes/price/product
• mix growth • Increase in personnel and service costs offset by efficiencies in production and better raw material sourcing • Declining D&A on a yearly basis Negative FX impact driven primarily by USD, JPY and RUB • -12,3m € on revenues • -6,8m € on EBITDA ADJ • -7,1m € on NET RESULT

H1 18 tax rate was positively affected by one offs (Patent Box estimated at c. 12,5m € and US for c. 2,6m € DTA not previously accrued)

Trade Working Capital analysis

Working Capital (€m) Key comments

Working Capital (€m)			Key comments
(€m)	June
	2017	2018	Inventories
Inventories	77,5	79,1	Y-1.
Trade receivables	86,2	114,3
Trade payable	(99,1)	(114,2)	€) and raw materials (11,6m €)
Trade Working Capital	64,6	79,1	Trade receivables
% LTM of total revenue	11,4%	13,0%
Other current assets/(liabilities)	(44,5)	(43,3)
Current tax liabilities	(5,0)	(11,0)
Provisions	(12,7)	(11,6)
Net Working Capital	2,4	13,2	Trade payables
% LTM of total revenue	0,40%	2,20%
Inventory Turnover 1	5,5	5,8	usual seasonality.
Days Sales Outstanding (DSO) 2	46,3	58,1
			Other assets and liabilities which included:

TWC at 13% of revenues and increasing vs. H1 17 (11,4% of revenues) driven by seasonal dynamics.

Inventories

• Y-1.

• Slight increase in absolute and relative value vs. • Main components are finished products (66,0m €) and raw materials (11,6m €)

• Trade receivables • Increasing vs. Y-1 and stable vs December 2017 (-3m €) due to one-offs not pertaining to regular business activity. Recovery in H2. • Confirmed general good credit quality Trade payables • Improving DPO dynamics, now only 10 days below Dec-2017 level (vs >25 in H1 17) despite usual seasonality. Other assets and liabilities which included: • Payables to employees: 13 m € • Advance payments from customers: 19 m € • Deferred income (e.g. maintenance): 32.7 m €

CAPEX stable <5% on revenues

Strictly Private and Confidential 9

Net Financial Debt

Net Financial Debt (€m) Key comments

Net Financial Debt (€m)			Key comments
€m	30 Jun 2017	30 Jun 2018
Cash & cash equivalent	(39,0)	(58,1)
Current financial receivables	(0,6)	(0,2)
Current bank debt	46,6	30,9
of which granted by Committed Credit facilities	10	5,0
of which granted by Uncommitted Credit facilities	10	25,9
Current portion of non current debt	19,6	18,4
Other current financial debt	6,8	8,4
Net current financial debt	73,0	57,7
Non current portion of non current debt	63,9	46,8
Other non current financial debt	12,3	15,3
Non current financial debt	76,2	62,1
Financial net debt	109,6	61,5
NFD / EBITDA (LTM12m)	1,02x	0,51x

Cash & Cash equivalent • Very strong cash position mainly refers to bank deposits € denominated

• Current bank debt

• Mainly composed of credit lines stand-by and short-term financing. As of 30/06/2018 − Lines of credit and overdrafts uncommitted for ~101m € of which 25,9m € drawn (revocable / floating rate: EURIBOR + spread) − Committed credit line (medium-long term) for ~30m of which 5m € drawn (floating: EURIBOR + spread) Current portion of non-current debt / Non current

• financial debt • Flexible financial structure based on bank amortizing loans with ~1,9y duration (floating: EURIBOR + spread) • One amortizing loan hedged with a plain vanilla

• interest swap (Notional: 12m €, maturity 2020) • Leasing exposure stands at 22,7m € in H1 (7,4m € short term among "other current financial debt" and 15,3m € among "non current financial debt"), sligthly increasing vs Y-1 (18,7m €).

Net Financial Debt walk (in m €)

Key comments

Despite the seasonal cash absorption Technogym still has a very low leverage providing high

Appendix

Balance Sheet

€m	Jun 2017	% on Revenues	Jun 2018	% on Revenues
Inventories	77,5	29,4%	79,1	29,0%
Trade receivables	86,2	32,7%	114,3	41,9%
Trade payables	(99,1)	(37,6%)	(114,2)	(41,8%)
Trade Working Capital	64,6	24,5%	79,1	29,0%
Other current assets/(liabilities)	(44,5)	(16,9%)	(43,3)	(15,9%)
Current tax liabilities	(5,0)	(1,9%)	(11,0)	(4,0%)
Provisions	(12,7)	(4,8%)	(11,6)	(4,3%)
Net Working Capital	2,4	0,9%	13,2	4,8%
Property, plant and equipment	141,5	53,7%	139,7	51,2%
Intangible assets	27,1	10,3%	30,2	11,1%
Investments in joint ventures	20,5	7,8%	17,8	6,5%
Employee benefit obligations	(3,2)	(1,2%)	(3,1)	(1,2%)
Other non current asset and (liabilities)	12,9	4,9%	17,2	6,3%
Net Fixed Capital	198,9	75,5%	201,8	73,9%
Net Invested Capital	201,3	76,4%	215,0	78,8%
Shareholders' Equity	91,7		153,4
Financial Net Debt	109,6	41,6%	61,5	22,6%
Total Source of Funding	201,3	76,4%	215,0	78,8%

EBITDA Reconciliation

(€m)		June
	2017	2018	Jun 2017 vs Jun 2018 Δ
Net operating income	30,1	33,6	11,6%
Restructuring costs	(0,0)	0,0
Consultancies costs	0,0	0,0
IPO Cost	(0,2)	0,0
Total not recurring items	(0,2)	0,0	nm
Adjusted Net operating income	29,9	33,6	12,3%
Depreciations, amortisations and write downs	(11,4)	(10,4)	-9,5%
Provision for risk and charges	(1,5)	(0,9)	-38,2%
EBITDA adjusted	42,9	44,9	4,7%
Margin %	16,3%	16,4%
Non recurring	(0,2)	0,0
EBITDA	43,0	44,9	4,3%
Margin %	16,3%	16,4%

Cash Flow statement

	June
(€m)	2017	2018	Δ ass.	Δ %
Consolidated profit for the year	19,0	37,9	18,9	99,3%
Depreciation, amortization and impairment losses	11,4	10,4
Provisions	1,5	0,9
Share of net result from joint ventures	0,6	(0,1)
Net financial expenses	2,6	0,2
Income/(expenses) from investments	0,2	(0,0)
Income tax expenses	8,2	(4,5)
Cash flows from operating activities before changes in WC	43,6	44,8	1,2	2,70%
Change in inventory	(5,5)	(11,8)
Change in trade receivables	5,9	(4,8)
Change in trade payables	(27,2)	(9,1)
Change in other operating assets and liabilities	(12,8)	(5,8)
Non-recurrent fiscal payment	0,0	0,0
Income taxes paid	(6,9)	(3,4)
Net cash inflow from operating activities (A)	(2,9)	9,9	12,7	nm
Investments in property, plant and equipment	(4,5)	(7,4)
Disposals of property, plant and equipment	0,0	0,0
Investments in intangible assets	(7,6)	(5,2)
Dividends received from other entities	0,1	0,0
Dividends received from joint ventures	0,0	0,0
Investments in subsidiaries, associates and other entities	(0,3)	0,0
Net cash inflow (outflow) from investing activities (B)	(12,4)	(12,6)	(0,3)	2,4%
Proceeds from new borrowings	0,0	0,0
Repayment of borrowings	(10,9)	(28,6)
Net increase (decrease) of current financial assets and liabilities	27,0	29,7
Dividends paid	(13,0)	(18,1)
Payments of net financial expenses	(1,5)	(0,6)
Net cash inflow (outflow) from financing activities (C)	1,6	(17,6)	(19,2)	nm
Net increase (decrease) in cash and cash equivalents
before FX impact (D)=(A)+(B)+(C)	(13,6)	(20,4)	(6,8)	49,6%