Tinexta — Investor Presentation 2020

Oct 13, 2020

Presentation to the Financial Community

13 October 2020

Disclaimer

• This document was prepared by Tinexta Spa ("Tinexta" or the "Company") for the purpose of presenting the creation of the Cybersecuirity Business unit through the acquisition of certain businesses. The information provided with this document does not contain nor constitute an offer of securities for sale, or the solicitation of an offer to purchase securities, in the United States, in Australia, in Canada or in Japan or in any other jurisdictions where such an offer or solicitation would require the approval of local authorities or be otherwise unlawful (the Other countries). This document or any parts thereof, or its distribution, may not constitute the basis for, or be invoked in association with, any agreements or decisions about investments related thereto.
• The shares of Tinexta Spa (the "shares"), if referred to in this document, have not been registered and will not be registered pursuant to the USA Securities Act of 1933, as amended (the Securities Act) or pursuant to the corresponding regulations in force in the other countries, and they may not be offered or sold in the United States or to US citizens unless these securities are registered in compliance with the Securities Act, or if an exemption from the requirements of Registration by the Securities Act is set forth.
• The content of this document is of an informative nature and must not be interpreted as investment advice. This document does not constitute a prospectus, an offering circular, an offering memorandum or an offering for the purchase of shares and must not be considered as a recommendation to underwrite or purchase Tinexta shares. This presentation or any other documentation or information (or part of it) provided, shall not be considered as an offer or an invitation by or on behalf of the Company.
• The information herein refers to a new initiative of Tinexta in the sector of Cybersecurity and does not intend to be comprehensive or to include all the information that a potential or existing investor may should have on which to make an informed investment decision. In all cases, any parties interested in investing in Tinexta shares must carry out their own analysis of the Company, which may include an analysis of the data contained in this document, but should also include an analysis of other documents, including recent financial statements and other corporate documents, including those relative to Tinexta's corporate governance or other important policies.
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• Because of these uncertainties and risks, the readers are advised not to rely excessively on such "forward looking statements" as a prediction of the actual results. The ability of the Group to achieve its objectives or expected results depends on many factors outside of Management's control. The actual results may differ materially from (or be more negative than) those projected or implicit in the declarations or information contained herein. Therefore, any prospective information contained in this document involves risks and uncertainties, many of which are outside the control of the Company and which may significantly affect the expected results. Such prospective information is based on some key assumptions. All statements included in this document are based on information available to the Company as at the date of this document. The Company does not incur an obligation to provide a public update or revision of any statements, both as a result of new information, future events or other circumstances, unless required by the applicable laws. All the following statements, written, verbal or oral made by the Company or by parties acting on its behalf are expressly qualified in their entirety by these cautionary statements. Neither Tinexta S.p.A. nor any Tinexta Group company nor its respective representatives, directors or employees accept any responsibility in relation to this presentation or its contents in relation to any loss deriving from its use or from the reliance made on it.

Agenda

			Relatore
I.	The Strategic Importance of the Operation	3	P.A. Chevallard
II.	Business Strategy	6	M. Comastri
III.	Key Transaction Terms	16	O. Pozzi
IV.	Conclusions	21	P.A. Chevallard

Tinexta creates a new, unique player in Cybersecurity that offers digital security and digital identity

To accompany the Digital Trust business, where it is a leader in Europe, Tinexta has signed binding agreements to acquire three business:

• Corvallis: the Projects & Solutions Division, that includes the R&D activities
• Yoroi: among the most advanced players in the sector which will incorporate Cybaze (and its brand Emaze) and Mediaservice.net; and
• Swascan, an innovative company that operates through "security testing" cloud platforms.

The new business unit can count on skills, highly specialized resources and advanced technologies to satisfy the most demanding customers and seize the growing opportunities in the rapidly expanding digital market

I. Principal Elements of the Operation The transaction in the Cybersecurity sector represents the natural evolution of the Tinexta Group towards services with a high digital content and focused on areas where the market demand is growing fast

➢ The share of Group Revenues in the digital sector is estimated to rise from 43% to circa 55%

Tinexta Group has already demonstrated a notable capability to execute M&A transactions successfully:

• ➢ 16 acquisitions in the last 8 years (total invested circa €200 m)
• ➢ With this operation Tinexta will have invested over €300 m
• ➢ In 2019 Tinexta reorganized and laid a solid base on which to expand through external growth
• ➢ Tinexta has constantly created value for shareholders, its clients, its employees and other stakeholders

Agenda

Relatore

I.	The Strategic Importance of the Operation	3	P.A. Chevallard
II.	Business Strategy	6	M. Comastri
III.	Key Transaction Terms	16	O. Pozzi
IV.	Conclusions	21	P.A. Chevallard

Tinexta's goal is to enable clients to exploit commercial opportunities safely and to defend organizations and IT systems from malicious attacks

What Cybersecurity represents

• Strategic infrastructure: for the Country: an essential asset for the protection of citizens, companies and society in general
• Determining factor: in international competition: Italy and Europe deserves a dedicated, strong player to compete better
• An enabling factor: make possible the use of interesting and innovative IT trends (together with AI, Machine Learning, Big Data, IoT)

What Cybersecurity offers

• An answer to Government Digitalization priorities
• Relevant and rapidly growing business opportunities
• A natural extension of
  • the Tinexta offer in the Digital Trust sector
  • Tinexta's marketing efforts to leverage its extensive client base of SMEs, large financial & industrials corporations

An opportunity to respond to a rapidly growing demand and leverage Group strengths

Values & Trends of the global Cyber Security Market

The Western European Cybersecurity market in 2020 is c.\$30 bn It is expected to grow in line with the global market through 2024

Project Cyber Security 13 October 2020

II. Business Strategy

The Italian Cybersecurity Market

II. Business Strategy

After the Covid related slowdown the Italian Cybersecurity market is estimated to grow 9% p.a.*

Tinexta Cybersecurity BU's reference market is the service market of \$1.2 bn: \$900m Enterprise Solutions, \$300m SME Services

Main players in the Italian Cybersecurity market

II. Business Strategy

The main Italian cybersecurity players in three main segments of offering:

There is an opportunity to establish a national Player with a clear, declared cybersecurity brand in the Italian market

Source: Elaborations on market data and internal analyses

Tinexta's design to approach the cybersecurity market

13 October 2020

Cybersecurity offering of Tinexta BU

Cybersecurity: Tinexta BU Competences
IT Security, Strategy and Transformation (Strat)
Resource Management (Resource)
Enterprise Security Operations (Ops)
	Data security (Data)	Security	IoT
ID Mgmt	Software and Application Security (App)	services	Security
(Mgmt)	Infrastructure security (Infr)	(Svcs)	(IoT)

Legend

II. Business Strategy

Areas requiring IT background and competences, potential extension of Solution Provider offering

Areas of high specialization, requiring specific skills

The offer will be provided both "on premises" and via SaaS offering, based on the customer needs (Enterprise / SME)

Some insights on the different services:

Strat: entry point, to develop upselling

Ops: «higher-ticket»/ ongoing services, related to SOC/NOC/CERT

Mgmt: natural extension of Tinexta's Digital Trust

App: DevSecOp activity

Svcs: «lower-ticket»/On Demand like PT and VA

IoT: fast-growing, area

Tinexta's goal is to play an active role in 9 areas of cybersecurity: 4 require strong IT project expertise, 5 need specific skills.

Tinexta Cybersecurity will:

• ➢ integrate different businesses,
• ➢ leverage on the Tinexta Corporate Model and, therefore,
• ➢ grow faster than the reference market & increase profitability even more over the next 3 years

Challenges for Tinexta Cybersecurity

Select new additional opportunities in the market to continue acquiring best of breed solutions

Leverage the Tinexta M&A approach/model

The full strategic plan will be illustrated with Tinexta's next 3 year plan

The critical elements for Tinexta Cybersecurity to succeed:

• 1. Reach a critical mass to be a credible player for large enterprises, public sector, small and medium businesses to Italian and European clients
• 1. Develop an integrated offer with InfoCert
• 1. Incorporate capabilities and expertise to:
  2. manage and deliver complex, multi-year projects
  3. develop a diversified offer for large and small clients with a strong value proposition based on cutting edge technology
• 1. Seek partnerships with primary strategic players and players with highly specialized skills/technology to reinforce the offer/capabilities

Objective: be a market leader with a focused offer

Agenda

			Relatore
I.	The Strategic Importance of the Operation	3	P.A. Chevallard
II.	Business Strategy	6	M. Comastri
III.	Key Transaction Terms	16	O. Pozzi
IV.	Conclusions	21	P.A. Chevallard

Financial overview: the three businesses

In 2020 Revenues and EBITDA are estimated to grow at double digit rates

* Forecasts are based on various assumptions, expectations, projections and forward-looking data relating to future events and are subject to multiple uncertainties and other factors beyond the control of the management of the acquired companies and of Tinexta Group. There are numerous factors that can generate significantly different results and trends with respect to the implicit or explicit contents of the forward-looking information and therefore such information is not a reliable guarantee regarding future performance.

Project Cyber Security 13 October 2020

III. Key

Transaction Terms

Key transaction terms

This complex transaction must be analyzed on a combined basis since together the three businesses form a strategic unit.

Key transaction terms:

III. Key Transaction Terms

€46.5m

Estimated value on a present value basis of the of PUT/CALL options relating to the sale/purchase of the outstanding minority participations puts

Summary of the Transaction Terms

Total impact on the Tinexta Group Balance Sheet (€m)
Initial cash-out	47.2
Debt for the Earnout	0.6
Financial indebtedness to be consolidated	10
1 Debt for PUT options	46.5
Total investment 1Actualized amounts	104.3

On a pro forma basis the NFP / EBITDA ratio is estimated to be lower than 2.5 times

The total balance sheet future impact will equal €104.3 million ****

Since Swascan closes in 2020, the only impact on 2020 YE accounts will be €13.5 m: €4.2 m Price paid for 51%, €9.3m in puts exercisable in 2024

Agenda

			Relatore
I.	The Strategic Importance of the Operation	3	P.A. Chevallard
II.	Business Strategy	6	M. Comastri
III.	Key Transaction Terms	16	O. Pozzi
IV.	Conclusions	21	P.A. Chevallard

The New Tinexta Group

22

• 1. This operation is the natural evolution/extension of the Group to provide more key solutions to our clients.
  • ➢ Implication: it is foreseen that the Group will be concentrated (55%) on the fast growing digital market with a unique value proposition
• 2. The Cybersecurity BU forecasts to grow revenues faster than its reference market and improve its marginality even faster.
  • ➢ While initially this operation will dilute earnings per share, in the long run our potential to create value for our Shareholders is increased
• 3. The Total investment of the operation equals €104 million. On a Pro forma basis the Net Financial Position is forecast to be lower than 2.5 times EBITDA.
  • ➢ This is part of our sound and prudent financial management, especially given Tinexta's excellent growth prospects and high cash flow generating capabilities

Appendix

Appendix

The Project & Solution Division, including the R&D activities, are based in Padova. The capabilities developed by Corvallis and the dimension of these activities is essential to build a critical mass to sustain complex, large projects needed by the most demanding customers. This business vaunts a wide customer base developed on performance & strong relationships and is aligned with international best practices. In addition, it boasts a training model based on an "Academy", thanks also to the collaboration with the University of Padua and the University of Milan-Bicocca.

http://www.corvallis.it/

Yoroi Group (that will be re-organized before the closing in 2021) provides cutting-edge answers to companies and organizations that need to contain and manage all levels of cyber risk, to prevent or reduce the damage potentially resulting from a cyber attack. The group has a diversified commercial offering that covers the entire cybersecurity value chain for large companies, with highly specialized technologies and well-known brands such as Cybaze, Emaze, Yoroi and @ Mediaservice.net. Finally, Yoroi group carries out intense R&D activities, collaborating with Univ. Bologna, the La Sapienza University of Rome and the University of Sannio.https://yoroi.company/

Swascan(Milan), is an innovative Italian Cybersecurity startup that owns the homonymous Cloud Security Testing platform and a recognized Cyber Competence Center. The combination of the "SaaS ready to use" platform and the vertical and highly specialized skills make it a reference point for SMEs for the needs of information security and legislative compliance. https://www.swascan.com/

Enterprise Value = Price paid

• 1. Depending on the level of debt of the company, there are two ways of calculating the Enterprise Value (EV):
  • a. In the case of indebted companies: EV = stock market capitalization + net debt;
  • b. In the case of non-indebted companies: EV = stock market capitalization - net liquidity. The value of the company thus calculated represents the price that would have to pay those who want to acquire the company without debt. The value of the company (EV) must be equal to the market value of debt and equity capital. This therefore implies that the total value generated by the operating and investment activities of a company and must be divided among the various holders of capital (whether they are debt or risk holders).
• 2. Enterprise value is used in the calculation of market multiples: EV / EBIT (Enterprise Value / Earnings before interest and taxes) and EV / EBITDA (Enterprise Value / Earnings before interest taxes depreciation and amortization).

To calculate the Equity Value starting from Enterprise Value, it is necessary to subtract the Net Financial Position of the company if it has net debt (or add back if there is net cash).