Technogym — Investor Presentation 2019

Sep 10, 2019

Cesena, September 10th, 2019

This presentation is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This presentation might contain certain forward-looking statements that reflect the Company's management's current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on Technogym S.p.A.'s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Technogym S.p.A. to control or estimate. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Technogym S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. Any reference to past performance or trends or activities of the Technogym Group shall not be taken as a representation or indication that such performance, trends or activities will continue in the future. This presentation does not constitute an offer to sell or the solicitation of an offer to buy Technogym's securities, nor shall the document form the basis of or be relied on in connection with any contract or investment decision relating thereto, or constitute a recommendation regarding the securities of Technogym. Technogym's securities referred to in this document have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Andrea Alghisi, the Manager in charge of preparing the corporate accounting documents, declares that, pursuant to art. 154-bis, paragraph 2, of the Legislative Decree no. 58 of February 24, 1998, the accounting information contained herein correspond to document results ,books and accounting records. Some figures related to previous periods were reclassified for a better representation of balance sheet and the profit and loss statements.

Technogym distinctive factors

Revenues showing high single-digit growth

N.A. & APAC driving the growth

Main sales channels are growing YoY

Solid growth on revenues and adjusted EBITDA

Profit and Loss statement (excluding IFRS 16) Key comments

Profit and Loss statement (excluding IFRS 16)					Key comments
(€m)	Jun 2018	Jun 2019 excluding IFRS 16	Delta	2019 vs 2018
Total revenue	272,9	295,3	22,4	8,2%
Cost of raw, ancillary and consumable materials and
goods for resale	(85,1)	(96,3)	(11,2)	13,2%
of which (cost) not recurrent	0,0	(0,1)	(0,1)
Service, Rentals and leases	(74,9)	(82,8)	(7,9)	10,6%
of which (cost) not recurrent	0,0	(0,6)	(0,6)
Personnel cost	(65,6)	(67,8)	(2,2)	3,3%
of which (cost) not recurrent	0,0	(0,6)	(0,6)
Depreciations, amortisations and write-downs	(10,4)	(11,9)	(1,6)	15,3%
Provision for risk and charges	(0,9)	(1,4)	(0,5)	49,5%
Other operations cost	(2,5)	(2,7)	(0,2)	9,7%
of which (cost) not recurrent	0,0	0,0	0,0
Share of result joint venture	0,1	0,5	0,4	h.v.
Net operating income	33,6	32,7	(0,9)	(2,6)%
Margin (%)	12,3%	11,1%	(1,2%)
Financial income and (expenses) and from	(0,2)	(0,4)	(0,2)	h.v.
investments Profit (loss) before tax	33,4	32,4	(1,0)	(3,1)%
Taxes	4,5	(6,8)	(11,3)	h.v.
of which (cost) not recurrent	12,5	0,0	(12,5)
Profit (loss) before minority interest	37,9	25,5	(12,4)	(32,6)%
Margin (%)	13,9%	8,6%	(5,2%)
Profit (loss) for the year of minority interests	(0,2)	(0,1)	0,1	(42,8%)
Profit for the year	37,7	25,4	(12,3)	(32,6)%
Adjusted EBITDA	44,9	47,4	2,6	5,8%
Margin (%)	16,4%	16,1%	(0,4%)

• Net operating income drivers Confirmed growth in volumes Positive performance on products cost reduction partially offset by the increase in custom duties
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• Increase in Service costs due to mainly ⁻ Logistic costs (inbound and outbound) ⁻ Consultancy & maintenance Increase in personnel costs is mainly due to 2018 carry over and new hires, mainly driven by increasing focus on digital & contents and increasing global market coverage Increase in D&A is driven by higher investments for new products development and IT projects also related to digital transformation Increase in provision for risk and charges is due to the increase of bad debt provision Tax variation is due to lower non recurring patent box and deferred taxes accrual for a total of 12,5m€ Positive FX impact driven primarily by USD and JPY: +4,5m € on revenues +2,8m € on Net operating income +2,7m € on Net result
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Solid growth on revenues and adjusted EBITDA

Profit and Loss statement (including IFRS 16) Key comments

Profit and Loss statement (including IFRS 16)					Key comments
(€m)	Jun 2018	Jun 2019	Delta	2019 vs 2018
Total revenue	272,9	295,3	22,4	8,2%
Cost or raw, ancillary and consumable materials and goods for resale	(85,1)	(96,3)	(11,2)	13,2%
of which (cost) not recurrent	0,0	(0,1)	(0,1)
Service, Rentals and leases	(74,9)	(80,7)	(5,8)	7,7%
of which (cost) not recurrent	0,0	(0,6)	(0,6)
Personnel cost	(65,6)	(67,0)	(1,4)	2,1%
of which (cost) not recurrent	0,0	(0,6)	(0,6)
Depreciations, amortisations and write-downs	(10,4)	(14,7)	(4,4)	42,5%
Provision for risk and charges	(0,9)	(1,4)	(0,5)	49,5%
Other operations cost	(2,5)	(2,7)	(0,2)	9,7%
of which (cost) not recurrent	0,0	0,0	0,0
Share of result joint venture	0,1	0,5	0,4	h.v.
Net operating income	33,6	32,8	(0,8)	(2,3)%
Margin (%)	12,3%	11,1%	(1,2%)
Financial income and (expenses) and from investments	(0,2)	(0,6)	(0,4)	h.v.
Profit (loss) before tax	33,4	32,2	(1,2)	(3,7)%
Taxes	4,5	(6,8)	(11,3)	h.v.
of which (cost) not recurrent	12,5	0,0	(12,5)
Profit (loss) before minority interest	37,9	25,4	(12,5)	(33,0)%
Margin (%)	13,9%	8,6%	(5,3%)
	(0,2)	(0,1)	0,1	(42,8%)
Profit (loss) for the year of minority interests			(12,4)	(32,9)%
Profit for the year	37,7	25,3
Adjusted EBITDA	44,9	50,4	5,5	12,2%

• Net operating income drivers Confirmed growth in volumes Positive performance on products cost reduction partially offset by the increase in custom duties
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    -
• Increase in Service costs due to mainly ⁻ Logistic costs (inbound and outbound) ⁻ Consultancy & maintenance Increase in personnel costs is mainly due to 2018 carry over and new hires, mainly driven by increasing focus on digital % contents and increasing global market coverage Increase in D&A is driven by higher investments for new products development and IT projects also related to digital transformation Increase in provision for risk and charges is due to the increase of bad debt provision Tax variation is due to lower non recurring patent box and deferred taxes accrual for a total of 12,5m€ IFRS16 impact is as follows: -2,1m € costs of rentals -0,8m € costs of rentals related to employee +2,9m€ D&A Positive FX impact driven primarily by USD and JPY: +4,5m € on revenues

  - +2,8m € on Net operating income +2,7m € on Net result

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TWC heading towards normalization

Working Capital (€m) Key comments

			Key comments
11,8%	15,3%	12,4%
(43,1)	(40,4)	(41,4)
(11,0)	(8,1)	(17,9)
(11,6)	(14,1)	(10,9)	Inventories
13,0	34,6	11,0
1,9%	5,5%	1,7%
6,3	5,2	5,2
	Working Capital (€m) Jun 2018 79,0 114,4 (114,8) 78,6 53 102	Dec 2018 89,5 151,5 (143,9) 97,1 73 133	Jun 2019 94,8 113,4 (126,9) 81,3 53 112

Trade Working Capital • TWC declining as percentage on revenues (12,4%) compared to Dec 18 (15,3% of revenues) • Improved trade receivables driven by the recovery plan on year's end overdue (DSO at 53 days vs 73 days of last December) • Improving DPO dynamics (112 days vs 102 days in Jun 2018) • Inventories include mainly finished products (78,3m €) and raw materials & components (15,1m €) • Increase due to: • Local and transit stock in overseas countries • Spare parts in commercial subsidiaries Other current A/L •Mostly in line with December 2018

Inventories

Current tax liabilities •Increase due to tax payment processed in July

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CAPEX at >6,7% on revenues

Net Financial Debt (€m)			Key comments
€m	30 Jun 2018	30 Jun 2019
Cash & cash equivalent	(58,1)	(74,1)	deposits € denominated
Current financial receivables	(0,2)	(0,1)
Current bank debt	30,5	32,2
of which granted by Committed Credit facilities of which granted by Uncommitted Credit facilities	5,0 25,5	32,2 0,0
Current portion of non current debt	18,4	19,1
IFRS 16 Current liability Other current financial debt	0,0 8,5	5,1 9,4
Net current financial debt	57,5	65,8
Non current portion of non current debt	46,8	28,7
IFRS 16 Non Current liability	0,0	13,9
Other non current financial debt	15,3	16,0
Non current financial debt	62,1	58,6
Financial net debt	61,3	50,2
NFD / EBITDA (LTM12m)	0,43x	0,36x
NFD / EBITDA (LTM12m) exclud. IFRS 16	0,43x	0,22x

Cash & Cash equivalent •Strong increase in cash position mainly refers to bank

• Current bank debt •Mainly composed of credit lines stand-by and shortterm financing. As of 30/06/2019 ⁻ Lines of credit and overdrafts committed for ~35m € of which 20m € drawn (revocable / floating rate: EURIBOR + spread) ⁻ Lines of credit and overdrafts uncommitted for ~73,5m € of which 12,2m € drawn (revocable / floating rate: EURIBOR + spread) Current portion of non-current debt / Non current
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financial debt •Flexible financial structure based on bank amortizing loans with ~2y duration (floating: EURIBOR + spread) •Leasing exposure stands at 25,3m € in H1-19 (9,3m € short term among "other current financial debt" and 16m € among "non current financial debt"), slightly increasing vs Y-1 (22,8m €). •IFRS 16 impact on financial debt is 19,1m € in H1-19

Net Financial Debt walk

APPENDIX

EBITDA vs EBITDA adjusted Reconciliation

EBITDA vs EBITDA adjusted Reconciliation
			Jun 2019
(€m)	Jun 2018	Jun 2019	excluding	Jun 2018 vs	Jun 2018 vsJun 2019
			IFRS 16	Jun 2019 Δ %	excluding IFRS 16 Δ %
Net operating income	33,6	32,8	32,7	(2,3)%	(2,6)%
Services, Rental and leases	0,0	0,6	0,6
Personell cost	0,0	0,6	0,6
Cost of raw, ancillary and
consumable materials and goods
for resale	0,0	0,1	0,1
Total not recurring items	-	1,4	1,4	n.a	n.a
Adjusted Net operating income	33,6	34,2	34,1	1,9%	1,6%
Depreciations, amortisations and write-downs	(10,4)	(14,7)	(11,9)	42,5%
Provision for risk and charges	(0,9)	(1,4)	(1,4)	49,5%
EBITDA adjusted	44,9	50,4	47,4	12,2%	5,8%
Margin %	16,4%	17,1%	16,1%
Non recurring	0,0	1,4	1,4
			46,0
EBITDA Margin %	44,9 16,4%	48,9 16,6%	15,6%

Balance sheet

€m	Jun 2018	% on LTM Revenues	Dec 2018	% on Revenues	Jun 2019	% on LTM Revenues
Inventories	79,0	11,9%	89,5	14,1%	94,8	14,4%
Trade receivables	114,4	17,2%	151,5	23,9%	113,4	17,3%
Trade payables	(114,8)	(17,2%)	(143,9)	(22,7%)	(126,9)	(19,3%)
Trade Working Capital	78,6	11,8%	97,1	15,3%	81,3	12,4%
Other current assets/(liabilities)	(43,1)	(6,5%)	(40,4)	(6,4%)	(41,4)	(6,3%)
Current tax liabilities	(11,0)	(1,7%)	(8,1)	(1,3%)	(17,9)	(2,7%)
Provisions	(11,6)	(1,7%)	(14,1)	(2,2%)	(10,9)	(1,7%)
Net Working Capital	13,0	1,9%	34,6	5,5%	11,0	1,7%
Property, plant and equipment	139,7	21,0%	142,6	22,5%	166,4	56,4%
Intangible assets	30,2	4,5%	35,9	5,7%	38,8	13,1%
Goodwill	0,0	0,0%	0,0	0,0%	0,0	0,0%
Investments in joint ventures	17,8	2,7%	18,0	2,8%	17,5	5,9%
Employee benefit obligations	(3,1)	(0,5%)	(3,0)	(0,5%)	(2,9)	(1,0%)
		2,6%	16,1	2,5%	19,4	6,6%
				33,0%	239,3	36,4%
Other non current asset and (liabilities)	17,2
Net Fixed Capital	201,8	30,3%	209,6
Net Invested Capital	214,8	32,3%	244,1	38,5%	250,3	38,1%
Shareholders' Equity Financial Net Debt	153,5 61,3	9,2%	209,3 34,9	5,5%	200,1 50,2	7,7%

NFD = 31,1m€ excluding IFRS16

Cash Flow statement

Cash Flow statement
(€m)	Jun 2018	Jun 2019
Consolidated profit for the year	37,9	25,4
Depreciation, amortization and impairment losses	10,4	14,7
Provisions	0,9	1,4
Share of net result from joint ventures	(0,1)	(0,5)
Net financial expenses	0,2	1,0
Income/(expenses) from investments	(0,0)	(0,4)
Income tax expenses	(4,5)	6,8
Cash flows from operating activities before changes in working capital Change in inventory	44,8 (11,8)	48,5 (5,1)
Change in trade receivables	(4,8)	33,2
Change in trade payables	(9,1)	(17,4)
Change in other operating assets and liabilities	(5,8)	1,3
Non-recurrent fiscal payment	0,0	0,0
Income taxes paid	(3,4)	(3,4)
Net cash inflow from operating activities (A)	9,9	57,2
Investments in property, plant and equipment	(7,4)	(14,0)
Disposals of property, plant and equipment	0,0	1,4
Investments in intangible assets	(5,2)	(7,1)
Disposals of intangible assets	0,0	0,0
Dividends received from associates	0,0	0,0
Dividends received from other entities	0,0	0,0
Dividends received from joint ventures	0,0	1,0
Dividends paid	0,0	0,0
Minority Interest Net cash inflow (outflow) from investing activities (B)	0,0 (12,7)	0,0 (18,7)
Proceeds from new borrowings	0,0	0,9
Repayment of borrowings	(28,6)	(9,2)
Net increase (decrease) of current financial assets and liabilities	29,7	0,2
Dividends paid	(18,1)	(36,2)
Payments of net financial expenses Net cash inflow (outflow) from financing activities (C)	(0,6) (17,6)	(0,2) (44,4)
Net increase (decrease) in cash and cash equivalents (D)=(A)+(B)+(C)	(20,4)	(6,0)
Cash and cash equivalents at the beginning of the year	77,8	78,5
Net increase (decrease) in cash and cash equivalents from January 1 to June 30	(20,4)	(6,0)
Effects of exchange rate differences on cash and cash equivalents	0,6	1,6
Cash and cash equivalents at the end of the year	58,1	74,1
* Data based on IFRS16 figures

* Data based on IFRS16 figures