TXT E-Solutions — Investor Presentation 2017

Apr 21, 2017

TXT e-Solutions

Corporate Overview April 2017

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 31 December 2016.

FY 2015 & 2016 Results

	FY 2015	FY 2016
 Revenues:	61.5 m€ (+13.1%)	69.2 m€ (+12.4%)
 Net Income	3.9 m€	5.6 m€
 Free Cash Flow	8.4% of Rev.	12.7% of Rev.
 NFP:	8.3 m€	5.4m€

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 & Aviation

• Engineering Solutions & Services across the Product Life-cycle
• Leadership in Italy
• Growing international presence

Fashion, Luxury & Specialty Retail

5

• 20 New Major Customers and 50+ Go-Lives of Major Projects in 2016…
• … across all Segments, Business Models & Geographies

1500 Tier-1 & Tier-2 Omnichannel Retailers across Europe, North America & APAC: how industry transformation impacts Key Business Processes?

To be successful Retailers have to:

• Provide an omnichannel experience to Customers
• Optimize the merchandise investment across channels
• Specialize and differentiate with curated assortments
• Manage the increased complexity of the merchandising processes

The Omnichannel Retailers' «Merchandise Lifecycle»

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
• In-Memory technology supporting 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

Recognised Leader in the Target Markets

• Fitting & Planning by images with Augmented Reality

Collaboration across Collection Development Lifecycle

TXT Retail: The End-to-End Merchandise Lifecycle Opportunity

Competitive Differentiation: We engage in Customer Success !!!

Aerospace & Aviation

TXT Next: since 30 years Partner for our Clients to boost their Engineering Capabilities

Products & core Processes are highly complex … … calling for cooperation across an extensive

network of Specialised Partners

• A growing portion of R&D/Engineering Budgets, and a growing range of value-adding activities, are externalised to highly specialised Solutions providers like TXT Next

• On-board Software accounts for a large portion of externalized engineering services

• The Market of externalised R&D/Engineering Services is set to grow at CAGR 9+% in the next 5 years:

• Growth of underlying R&D spending (CAGR +6%)

• Growth of the rate of externalisation

• Consideration 6.8m€, Revenues 7,3m€, Ebitda 10%

• A major acceleration in TXT Next Internationalisation Plans
• A positive, transformational impact on TXT Next

• Integration achieved very quickly

• A diversified Customer Base of Industry Leaders

• Long-term partnership underpinning stable and repeatable revenues streams
• A significant up-selling opportunity, that started already materialising

A Broader Value Proposition, Now Spanning the Entire Product Life-cycle

• Breadth and Depth: focus on high-value niches, but understand the whole picture
• Technology and Industry expertise, backed by Software Assets

A responsive and agile team: local presence, to provide best-in-class on-site support to key customers, backed by corporate competence centers, capable of delivering & supporting customers across 30+ Countries world-wide

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• 30+ years in the Industry
• 50+ Customers, industry leaders
• Breadth AND depth across the Product Lifecycle, with focus on software
• 330+ specialised engineers, with global delivery & support capability
• «People»'s Technology AND Industry expertise, backed by a growing portfolio of software «IPs»
• Track record in risk-sharing & results-based engagements
• Solid Management Team with a track record in self-sustainable organic growth AND acquisitions

Solid Foundations Identified Growth Initiatives

Our Vision: to become an Int'l, specialized, multi-niche, mid-sized (100 m€) provider of Engineering "Solutions" serving the global Aerospace & Aviation Industry

• Inorganic Growth Be a platform to aggregate niche engineering software solution providers Selectively target mid-sized acquisitions
• Grow the share of wallet in current customers: focus on higher-value activities and risk-sharing engagement models
• International Expansion Capture new Int'l customers, leveraging on the combination of software assets and specialized service capabilities
• Product innovation: extend the capabilities and the range of the offering of Sw assets
• Service innovation: expand the offering with Managed Services
• Opportunistic approach in Automotive

Organic

Offering Innovation

Mid-term diversification opportunity

Summary & Financial Details

24 Confidential & Proprietary

Management

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 – Group 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.

Simone Pozzi joined TXT in 2009 as VP Sales and Marketing, in 2014 Simone became Managing Director of TXT Retail and since May 2016 he has been named CEO TXT Retail. Simone has previously held various international leadership roles at Geox, global brand and retailer, Oracle (Oracle Retail Business Unit), SAS (Marketmax), i2 Technologies (now part of JDA). Simone holds a degree in Industrial Engineering from the University of Padua, Italy.

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 November 2007 as Group CFO.

2016 – Consolidation of acquisition of Pace GmbH from Q2

€ thousand	2016	%	2015	%	Var %
REVENUES	69.152	100,0	61.540	100,0	12,4
Direct costs	32.039	46,3	29.189	47,4	9,8
GROSS MARGIN	37.113	53,7	32.351	52,6	14,7
Research and Development costs	6.550	9,5	5.118	8,3	28,0
Commercial costs	13.574	19,6	12.681	20,6	7,0
General and Administrative costs	8.774	12,7	7.893	12,8	11,2
EBITDA before Stock Grant	8.215	11,9	6.659	10,8	23,4
Stock Grant	-	-	740	2,3	n.m.
EBITDA	8.215	11,9	5.919	9,6	38,8
Amortization, depreciation	1.309	1,9	1.124	1,8	16,5
OPERATING PROFIT (EBIT)	6.906	10,0	4.795	7,8	44,0
Financial income (charges)	105	0,2	(151)	(0,2)	n.m.
EARNINGS BEFORE TAXES (EBT)	7.011	10,1	4.644	7,5	51,0
Taxes	(1.456)	(2,1)	(762)	(1,2)	91,1
NET PROFIT	5.555	8,0	3.882	6,3	43,1

€ thousand	31.12.2016	31.12.2015	Total variance	of which Pace GmbH	of which TXT
Intangible assets	21.296	14.692	6.604	7.871	(1.267)
Tangible assets	1.598	1.361	237	168	6 9
Other fixed assets	2.534	2.079	455	610	(155)
Fixed Assets	25.428	18.132	7.296	8.649	(1.353)
Inventories	3.146	2.075	1.071	-	1.071
Trade receivables	23.740	25.032	(1.292)	698	(1.990)
Other short term assets	2.629	2.759	(130)	229	(359)
Trade payables	(1.626)	(1.422)	(204)	(54)	(150)
Tax payables	(2.532)	(1.291)	(1.241)	(974)	(267)
Other payables and short term liabilities	(17.928)	(16.090)	(1.838)	(1.726)	(112)
Net working capital	7.429	11.063	(3.634)	(1.827)	(1.807)
Severance and other non current liabilities	(3.945)	(3.830)	(115)	-	(115)
Capital employed	28.912	25.365	3.547	6.822	(3.275)
Shareholders' equity	34.283	33.624	659	-	659
Net financial debt	(5.371)	(8.259)	2.888	6.822	(3.934)
Financing of capital employed	28.912	25.365	3.547	6.822	(3.275)

•Share Price

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

•15.3.2017: 9.66€ /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
• •2017: 0.30 € / share

TXT Market Capitalization (m€)