TXT E-Solutions — Investor Presentation 2016

Mar 14, 2016

TXT e-Solutions

Corporate Overview March 2016

The material in this presentation has been prepared by TXT e-solutions ("TXT") and is general background information about TXT's activities current as at the date of this presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.

This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to TXT's businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. TXT does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside TXT's control. Past performance is not a reliable indication of future performance.

Unless otherwise specified all information is for the Fiscal Year ended December 31th 2015.

TXT at Glance: International Software & Services

Fashion, Luxury & Specialty Retail

• Fashion/Luxury & Specialty Retail
• Omnichannel End-to-end Planning and Collection Development
• Global Leadership
• Global presence: Europe, North America & Asia Pacific

Aerospace, Automotive & Transport

• Aerospace, Automotive & Transport
• Embedded Software & Simulationbased Training solutions.
• Leadership in Italy
• Growing international presence

FY 2014 & 2015 Results

• Net Income (Norm.) 3.3 m€ (-10.1%) 3.9 m€ (+17.4%)
• Free Cash Flow 9.3% of Rev. 8.4% of Rev.
• NFP: 8.5 m€ 8.3 m€

Revenues: 55.9 m€ (+6.3%) 61.5 m€ (+13.1%) FY 2014 FY 2015

5 years CAGR +11% p.a.

2015 Financial highlights

• Revenues: € 61.5 million (+ 13.1% compared to normalized 2014)
• TXT Perform grew +12.4%; TXT Next +14.2%,
• Software revenues +26.4%: Service revenues +9.1%.
• 55% of revenues from outside Italy.
• EBITDA before Stock Grant: € 6.7 million (+16.2% compared to normalized 2014).
• R&D investments (+8.9%)
• Commercial investments (+14.3%)
• EBIT: € 4.8 million (+8.8 % compared to normalized 2014), after € 0.7 million non-cash Stock Grants
• Net income: € 3.9 million 6.3% of revenues
• Net Financial Position at 29.2.2016: € 14.0 million

Fashion, Luxury & Specialty Retail

TXT Retail – Major Growth & Profit opportunity for TXT Group

7

• 15+ New Major Customers and 50+ Go-Lives of Major Projects, each Year …
• … across all Segments, Business Models & Geographies

Core to Retailers' competitive differentiation is the Merchandise Lifecycle, the end-to-end process that encompasses:

• Understanding customer needs and opportunities,
• Devising a brand and product strategy,
• Developing and sourcing a compelling collection,
• Optimizing the assortment across markets and channels,
• Buying and delivering the products
• Managing the sell out to optimise the return on merchandise investment.

The 1 st & only End-to-End Merchandise Lifecycle Management Software

TXT Retail enables Customerdriven Merchandising Excellence through an End-to-End Merchandise Lifecyle Management Software featuring:

• A unified database that informs the End-to-End Merchandise processes
• Real-time integration across all Merchandise Lifecycle processes
• Collaboration across all actors in the Merchandise Lifecycle processes, blending art, science & mobility as appropriate
• Productivity enhancing UI: "2 hours adoption" thanks to the right UI for each User & Task.
• Flexible configuration: it helps you adopting business process best practices, and flexes as the market & your organization change

AgileFit Deployment: from SW to Business Best Practices «Ready to Go»

TXT Retail Competitive Position: Recognised Leader in the Target Markets

Committment to Innovate: 5.1 m€ invested in Innovation

• Total Cost of Ownership: TXT On-Cloud and Cloud-based Managed Services

• Assortments based on Consumer Insight

Fashion, Luxury & Specialty Reatil: Large, Healthy & Transforming Market

• Accounts for approx. 40% of the 18 Tr\$ global Retail Industry, and is posted to grow at CAGR 4-5%
• Retailers are among the top IT spenders
• 1500 Target Companies (Tier-1 & Tier-2) across Europe, North America & APAC
• Omni-channel transformation:
• Sets Retailer's investment priorities in Operations and supporting Technologies
• Accelerate the demand for integrated Merchandise Lifecycle Management Software

Organic growth, targeted acquisitions, innovation in product & business process, self-financed through Profit & Cash generated by the business

Aerospace, Automotive & Transport

Since 30 years Partner for our Clients to boost their Engineering Capabilities

AEROSPACE AUTOMOTIVE & TRANSPORTATION HIGH TECH

An integrated set of «Lines of Business», sharing a common set of Methodologies, IT Technologies, Standards & Tools, but each:

• Focused on a specific Market/Process
• Self-sufficient in terms of both Sales & Delivery capability
• With a well-defined «Offering Portfolio»

Approach: People, Knowledge & IPs

• «Do more with less»
• Differentiate from competitors
• Enable & support the expansion to other domains & geographies

TXT Next: Growth Strategy & Drivers

Healthy & profitable growth, building on a baseline revenues stream from long-lasting relationships with core clients, and targeting International growth, both Organically & through Acquisitions.

TXT Next: Changing Gears in International Development of Aviation Market

• Add Leading Customers & a new segment of the Aviation Industry: Airlines
• Add specialised know-how
• Add new Proprietary Software Products

PACE's Target Markets & Offering Footprint

	Airframe & Engine OEMs	1st Tier Suppliers	MRO Providers	Regional Operators	Mainline Carriers	Military Air Transport
Œ	PLS	PRELIMINARY DESIGN
$\bullet$	Cab MS	RNA	AIRCRAFT MARKETING & ACQUISITION
					FLIGHT OPERATIONS

PACE's Software Products

		Pro-forma 2015 (M€)	TXT	PACE	TOTAL
•	Improve the Revenues Mix (Services + Software)	Software		4,2	4,2
		Services	24,9	3,2 28,1 7,4 32,3
		TOTAL	24,9

TXT Next + PACE: Large Customer Base & Solid History

360° Knowledge of the Aviation Industry after 25+ Years working with Leaders

Civil & Defense Aviation; Fixed & Rotary Wings

Suppliers (OEM, 1° Tier Suppliers) & Customers (Airlines)

Entire Life-cycle: R&D and Product Development, System Design & Engineering, Marketing & Sales, Manufacturing, Post-sales Support & Operations

All aspects of Engineering: Hardware (structure, systems & subsystems) & Software (Avionics & Simulation)

		90% of Business	AIR TRANSPORT OEMs & 1st Tier Suppliers	AIR TRANSPORT Airlines	AUTOMOTIVE & Other Hi-Tech Ind.
	CUSTOMER PRODUCT LIFECYCLE	TXT ROLE	MARKETS PRACTICES
	R&D & Product Development	We develop Software that is "inside" our Customer's Products	ON-BOARD SOFTWARE FLIGHT SIMULATORS
	Design & Engineering		PRELIMINARY DESIGN
	Marketing & Sales	We provide Software Tools & Software	MARKETING
	Manufacturing	Services to support Customers'	DIGITAL MANUF.
	Post-Sales & Operations Support	core Processes	TRAINING & FLIGHT OPERATIONS

TXT Next PACE

TXT Next + PACE: Global Customers, Delivery Capability & Presence

70+ Customers

320+ Consultants

Aviation Industry:

• Large, innovative & healthy Industry, capturing a big portion of global IT investments
• Long-term positive trends, despite short-term fluctuations

Aviation Industry:

• Large & steadily growing R&D (Product Development & Engineering) investment Budgets: Sustained R&D Spending is not an option in our Target Industries
• A growing portion of such Budgets externalised to highly specialised Engineering Solutions providers like TXT Next

Summary & Financial Details

27 Confidential & Proprietary

Alvise Braga Illa – Chairman

After graduating at the Polytechnic Institute in Milan, Mr Braga Illa was for 10 years in research and teaching at the Lincoln Laboratory and Massachusetts Institute of Technology, innovating in satellite technology, optical communication and network systems. He directed the R&D Labs at Italtel, founded Zeltron S.p.A. and managed the restructuring of Ducati Energia as General Manager. Mr. Braga Illa founded TXT Automation Systems, later sold to ABB (1997), and TXT e-solutions (1989).

Marco Guida – CEO

Graduated in Electronic Engineering, Marco Guida managed innovative IT projects in various areas of the manufacturing operations of Pirelli Group until 1994, when he joined TXT e-solutions. Initially responsible for Advanced Information Systems, in January 2000 promoted to Vice President. As Director of International Operations he successfully led the transformation of TXT e-solutions from an Italian to an International Group. Since 2009 he is Chief Executive Officer of TXT Group.

Paolo Matarazzo – CFO

After graduating from Milan's Bocconi University and majoring in business administration at the University of San Diego (California), has had significant experience in the financial world. He was initially an analyst in London for three years and then worked for the Recordati Group for seven years, with responsibility for treasury management. In the following seven years he was Head of Finance, Administration & Control in Europe for Eurand, a company listed on NASDAQ. He joined TXT in May 2007 as Group CFO.

• TXT Retail
• Global Retail Industry is large, growing & dynamic: e-commerce, new business models, new players
• Planning is a «big niche» & a growing investment area for Retailers
• TXT has a unique offering and a solid competitive position, sustained by constant innovation
• Large, world-wide base of happy global customers.
• Global presence with the opportunity to further expand in North America and APAC markets.
• TXT Next + PACE
• Large, innovative & healthy target markets, with long-term positive trends
• Highly fidelised customer base
• Solid team with 30+ years of domain expertise
• Specialised know-how consolidated in Sw assets: differentiation, competitive advantage and margins

• Leader with the opportunity to continue growing in Europe, both organically and through targeted acquisition, and to accelerate international development

• International profile: >55% of Revenues from Int'l markets, and growing

• Growth in Revenue, Profit & Cash
• Large fidelised customer base of 350+ blue-chip customers: a key asset in good & bad times, hard to replicate for new competitors
• Solid presence in large, healthy markets with very high growth potential
• Upside growth potential: opportunity to capitalize existing product & know how in other industries
• Innovation is in our DNA: historically a «1° mover» in many markets
• Solid & stable management team, who are shareholders of TXT
• Cash & Stock Dividend policy
• Expanding Shareholder base: co-workers & management; private & retail; institutional investors
• Financially solid and self-sustainable

2015 – Growth of Revenues and development investments

€ thousand	2015	%	2014 (1)	2014 non recurring	2014 Normalized (2)	%	Var % vs 2014	Var % vs 2014 Normalized
REVENUES	61.540	100,0	55.878	(1.468)	54.410	100,0	10,1	13,1
Direct costs	29.189	47,4	26.455	(407)	26.048	47,9	10,3	12,1
GROSS MARGIN	32.351	52,6	29.423	(1.061)	28.362	52,1	10,0	14,1
Research and Development costs	5.118	8,3	4.698		4.698	8,6	8,9	8,9
Commercial costs	12.681	20,6	11.094		11.094	20,4	14,3	14,3
General and Administrative costs	7.893	12,8	6.839		6.839	12,6	15,4	15,4
EBITDA before Stock Grant	6.659	10,8	6.792	(1.061)	5.731	10,5	(2,0)	16,2
Stock Grant	740	1,2
EBITDA	5.919	9,6	6.792	(1.061)	5.731	10,5	(12,9)	3,3
Amortization, depreciation	1.124	1,8	1.325		1.325	2,4	(15,2)	(15,2)
OPERATING PROFIT (EBIT)	4.795	7,8	5.467	(1.061)	4.406	8,1	(12,3)	8,8
Financial income (charges)	(151)	(0,2)	(249)		(249)	(0,5)	(39,4)	(39,4)
EARNINGS BEFORE TAXES (EBT)	4.644	7,5	5.218	(1.061)	4.157	7,6	(11,0)	11,7
Taxes	(762)	(1,2)	(1.046)	197	(849)	(1,6)	(27,2)	(10,2)
NET PROFIT	3.882	6,3	4.172	(864)	3.308	6,1	(7,0)	17,4

(1) Official Financial Reporting.

(2) Income Statement 2014 includes non-recurring income of 1.468k€ and non-recurring costs of 407k€. In order to compare performance w ith current year, financial results 2014 have been "Normalized" excluding non-recurring Revenues and Costs. Taxes have been calculated pro-rata.

Strong Balance Structure

€ thousand	31.12.2015	31.12.2014	Var
Intangible assets	14.692	15.079	(387)
Tangible assets	1.361	1.249	112
Other fixed assets	2.079	1.692	387
Fixed Assets	18.132	18.020	112
Inventories	2.075	1.821	254
Trade receivables	25.032	18.571	6.461
Other short term assets	2.759	2.197	562
Trade payables	(1.422)	(1.540)	118
Tax payables	(1.291)	(1.117)	(174)
Other payables and short term liabilities	(16.090)	(13.606)	(2.484)
Net working capital	11.063	6.326	4.737
Severance and other non current liabilities	(3.830)	(3.841)	1 1
Capital employed	25.365	20.505	4.860
Shareholders' equity	33.624	28.970	4.654
Net financial debt	(8.259)	(8.465)	206
Financing of capital employed	25.365	20.505	4.860

•Share Price

•31.12.2010: 1.51€/share (rebased for free share distribution) •29.2.2016: 7.76€ /share

• Dividends

• •2011: 1 € /share (extraordinary, rebased)
• •2012: Free Share Distribution 1:1
• •2013: 0.20 € /share (rebased)
• •2014: Free Share Distribution 1:1
• •2014: 0.25 € / share
• •2015: Free Share Distribution 1:10
• •2015: 0.25 € / share
• •2016: 0.25 € / share

TXT Market Capitalization (m€)