Good morning. Good morning, everyone.

Thank you for joining today's call on the Q1 2026 results for Princes Group, NewPrinces Group, sorry. I'm Benedetta Mastrolia, Investor Relations Director of NewPrinces Group, and I am delighted to be joined by our Chairman Angelo Mastrolia, our CEO Giuseppe Mastrolia, our CFO Rocco Sergi, and our Group Financial Director Fabio Fazzari.

Before starting, I would like to remind you that this presentation may 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 NewPrinces S.p.A.'

s current expectations and projections about future events, and any reference to past performance of NewPrinces shall not be taken as a representation or an indication that such performance will continue in the future, and this presentation does not constitute an offer or a solicitation of an offer to subscribe any of the NewPrinces securities. We'll start directly from page six of the presentation with our financial highlights.

Q1 was particularly strong in terms of margin progression, and we had solid revenues with €1.5 billion of revenues recorded in the first quarter. On a reported basis, this marks an increase of 120 122.5%.

On a like-for-like basis, we had some slight decrease in certain categories because of the deflationary environment. However, underlying demand remained pretty strong and stable throughout the period, and we expect the next quarter to see more an increased demand versus the other quarters of of last year.

In terms of margins, we decided to show pro forma margins for 2025 to give you an understanding of the increase and the ongoing work that has been going on with the acquisition, especially of Princes retail. Adjusted EBITDA on a like-for-like basis increased by 21.3%, which means that we went from around €63 million in EBITDA to 20 to €76.5 million.

In terms of margin, we also saw an improvement from 3.9% to 5.1%, which means that we had an increase of 117 bps in margins. Then EBIT was was minus a loss of €4.4 million.

However, we were very I would say we had very good results in terms of recovering those recovering in terms of EBIT with an €8 million increase as opposed to a loss of €12.8 million last year. Net profit similarly had a saw an increase of €12.6 million, from a loss of €34.8 million to a loss of €22.6 million.

We want to also say that we will we expect this this trend, let's say this positive trend, to continue in the next quarters as well. Interestingly, we were able to generate cash despite the new perimeter with an underlying free cash flow, which excludes real estate investments, of €31.4 million, meaning that we had a 41% free cash flow conversion.

Similarly, our net cash remained essentially unchanged. This is excluding IFRS 16.

If we include IFRS 16, we actually had an improvement of €23 million in the period. We also want to mention that, of course, net cash position includes the investments in real estate.

On to the next slide, we have shown a P&L analysis comparing the consolidated P&L versus the pro forma performance. In terms of consolidation of consolidated P&L, of course, we see an increase, material increase in revenues, an increase in gross profit.

Of course, from EBIT down, we see a let's say a decrease or a decrease in terms of of margins. That's mainly related to, of course, the higher costs that we now have with the enlarged perimeter.

We also wanted to highlight that we had some admin expenses which were higher in the period because of one-off reorganization plan. However, this will we expect this to gradually normalize in the next quarters as well.

On a pro forma basis, we had an improvement in gross profit, gross profit margin was up 112 bps, and we also saw a reduction in COGS of around 8%, which is a result of a new strategy in terms of procurement, especially at retail level and optimizing purchase prices, and also on on the other hand, some decreases and deflationary effects that we had in some other raw materials. Adjusted EBITDA margin, as we said, increased by 117 bps, and we had pretty strong delivery of EBITDA in the first three months of the year, especially if we look at the performance of the retail segments.

We had a particularly strong results in March, and also in April in our year-to-date update which we will go over in the next couple of slides. Net income, as we said, improved by €12 million, overall a particularly good and positive results for the whole P&L.

Now just quickly on our net financial position analysis. We wanted to show you how the financial position has been constructed as we thought it might be helpful.

In terms of total liquidity, as you can see, it remained close to €1.4 billion. This was also supported by the operational and the operational activities of the group.

Essentially unchanged versus year-end. If we look at the net debt including IFRS 16, as I was mentioning earlier, this improved by €23 million.

If we exclude the effect of the €27 million investment in real estate, we would have had an increase of a €50 million improvement of €50 million in net debt position. In terms of liabilities, we also had a decrease here.

We will talk about our real estate investments later. However, our intention is to gradually reduce our exposure to leases over time by by acquiring and by investing in some strategic real estate which have an average yield of at least 8%, but again we will talk about that later, which now brings us to the net cash position that I was mentioning earlier of €317.5 million, which is essentially close to close to full-year full-year results.

Now on to free cash flow and free cash flow conversion. As mentioned, free underlying free cash flow was €31.4 million.

This excludes the the investments in real estate, and free cash flow conversion was 41%. If we look at some of the leverage ratios for the group, we see a pretty healthy situation.

We used 12-month rolling EBITDA based on Q1 results, and we see that 2026 gearing ratio, net debt over EBITDA ratios, are pretty positive, close to zero. Now on to the business performance.

We will go through some of the business units and highlight some of the progress we've made in terms of new product launches and also some other key areas of the business. On to division of performance, as you can see, this is on a consolidated basis, we're showing Q1 2025 on a consolidated basis.

We saw generally an increase, of course, in the business units where we had where we acquired some businesses, Italian, drinks, and retail of course. However, the underlying demand was quite resilient.

We had declining prices, some deflationary effects on some key commodities which were then translated into lower revenues, particularly in dairy. We had a pretty strong decrease in in the average purchasing price of dairy and some other and milk commodities.

Drinks was, of course, affected positively by the acquisition of Princes Ready to Drink. However, the underlying demand was was pretty flat.

However, we had a decrease in terms of orange juice prices at Princes. In terms of Italian, we saw a good increase in terms of again, mostly Plasmon, and we had slightly decreasing some of the key raw materials as well, which reflected in a lower results in terms of revenues.

Oils was pretty stable, and retail of course saw an increase compared to the reported numbers. In terms of like-for-like basis, we've seen a we've been working on a gradual repositioning of the prices at Princes Retail, across the network, going from a average consumer index of 106, price index sorry, of 106 at Carrefour Italia before to close to 100, near near the sort of market average.

Overall, in terms of performance in our geographies and channels, we saw a stable performance, which reflects the trends that I just highlighted, deflationary trends with a stable demand and some increases in some areas, for example food service and B2B following the acquisitions, and of course the inclusion of of the retail business unit. Now on to some of the NPD we've been working on.

This is Princes Retail exclusive, or at least the products that we've been working on with the Princes Retail team, especially with Princes Group. These will be the top ones have been launched into Princes Retail stores in May, and the bottom ones, except for Pizzolo which was also launched in May, were are going to be launched in the next couple of months.

We've been working and spanning across different categories, going from tuna, first time launching tuna into Italy with the Princes Tonno, Princes tuna, completely targeted to the Italian market. Yellowfin product very similar to the competition in the market.

Terrazza di Limone is a limoncello product we launched and produced at Santa Vittoria, energy drinks such as Spartan again at Santa Vittoria, and new sauces at the Foggia site. We also have a pipeline of ready sauces which will be launched in the next couple of months as well, and more to come in in terms of juices from Cardiff in the UK, and and Santa Vittoria with tonics and and fizzy drinks.

Now on to some of the general NPD launches for the period. These are all products that were either launched launched in Q1 or launched in April/May, already on shelf.

Delverde launched its first ready sauces into the German market, which were was very well received by German retailers. We also launched 100% MSC certified jack mackerel into the UK market.

This follows what was done in the Netherlands a couple years ago. We also launched two new shapes of pasta with Napolina.

This is made at our Eboli site, really exciting to see how the integration of of our manufacturing system into with Napolina now can allow further NPD. Casarecce is one of the Casarecce is one of the products we produce at Eboli, and cavatappi is one of the highest-growing SKUs in the UK market or product type, pasta shape in the UK market with 25% increase year-on-year, we of course took the opportunity to launch this new shape into the UK market, and we expect to see good growth coming from this.

We also launched some high-protein pasta in Germany. This follows the trend that's been going on for the past couple of years, but very strong in Germany.

We also renewed our partnership with Sammontana, the Italian ice cream maker. Last year we launched the biscuit on stick.

This year we also launched the tub, which is which has Plasmon biscuits inside, very well received by by our by retailers in Italy. This was initially just a dedicated launch into one retailer.

However, it was so well received that we've received demand from different retailers, which is not Carrefour by the way, it's other retailers as well. We're also launching this into Carrefour, of course, but really good performance in in this with this product as well.

Lastly, the new product development in terms of rusks. It has been had been several years where we hadn't really had any innovation in terms of flavors and taste profiles in rusks, and we launched two new SKUs.

One is with coconut and one is with with citrus and cinnamon, one with energy and one with sort of immune defense benefits. Really trying to capture all trends and all the the consumer demand that's coming to to market.

We've been very fast also in delivering these products, really pleased with the outcome of these NPD launches. Going on to EBITDA now.

As we said, adjusted EBITDA on a like-for-like basis increased by 22%. Looking at retail especially, we saw a material increase of €20 million, from €2.5 million in first Q first quarter of 2025 to €22.2 million in first quarter of 2026, especially in the month in the month of March.

From March onwards, we've seen a step change in the profitability of Princes Retail, which is largely due to the first rolling like first unfolding and first evidence of our synergies taking place. We will see this progressively continue over the coming months and to year-end as well.

Generally, we kept margins quite stable, increased them where possible. Drinks, as I mentioned, there was a mismatch in terms of of pricing adjustments in Q1 last year as we had higher prices into the market last year as opposed to now because of the raw material prices and also reflecting some of the arrangements we have in terms of drinks contracts.

Other than that, we kept margins quite high. Dairy products increased its margins by 100 bps.

We had a huge increase again in Italian products of 110 bps, and retail of course was the standout performer with 250 bps from almost 0% EBITDA margin to 2.8%. We're really much on track and delivering ahead of plan with our margin recovery plan for the retail for the retail sector.

Now we wanted to really give you some granularity on the performance of the retail business, especially with year-to-date data, to end of April. We've seen a very good performance in the month of March, but also in April, and completely exceeding our expectations, initial expectations that we had previously disclosed to the market.

This was, of course, not a full surprise because we're finally seeing the fruits, let's say, of the seeds we planted with in the first couple of months where we saw a more softer EBITDA performance, which was just sort of the first months of the implementation of the synergies. However, now with a new plan and with with a new strategy, we will see this with we will see this proceeding also in the next months.

In terms of of year-to-date results, we had an increase in EBITDA of EBITDA of 46% year-on-year, year-to-date to year-to-date. Just looking at March and April, we saw an increase of EBITDA of 240%.

We're really hopeful that we will see this trend to continue in the future. This brings us to be comfortable enough to upgrade our guidance from what we disclosed with the full-year results, and we expect the retail EBITDA to be in the range of €110 to €120 million at year-end at least.

We will, of course, keep the market informed with our half-year results should this guidance improve materially. However, we don't see anything any reason why this shouldn't be met.

Now just on to real estate investments. As I mentioned, the current plan is to invest in strategic real estate either in strategic locations, for example city center of Milan or some hypermarkets or high-traffic areas in Turin, Bologna, Rome, all the major cities we operate in, but also locations that we know could be interesting for other retailers.

We wanted to really make sure that those we could keep those those locations as they're very highly sought after. For example, we also had some locations around the lakes in in Lombardy.

Really, I would say, high-yield locations. As mentioned, we go into the So our investment approach is to invest in locations that have a high yield of at least 8% and also invest in those locations where we know that we have a good return also in terms of of traffic and in terms of revenue generated by our by our stores.

These locations are all Carrefour, Princes Retail operated locations, we didn't buy anything with where there was another another supermarket, for example. These are all our own locations.

We expect this to, as mentioned earlier, to reduce lease liabilities over over the next months and over the years, and also improve and strengthen our cash generation and generally the EBITDA profile of the company if we look at the IFRS 16 post-IFRS 16 EBITDA. Now just some closing remarks.

We are very positive on the integration of all the acquisitions of the companies we acquired last year, especially the retail acquisition, which of course is the the question mark that everybody had. Really good progress in terms of strategy, in terms of procurement optimization, of price and positioning, repositioning of prices on shelves of stores, of the new plan in terms of of layouts.

Really positive, especially with H2, we'll have to we expect to see more benefits to to show to show in our accounts. That will reflect in a strong margin improvement by year-end.

We also keep working on our real estate program, of course keeping a disciplined approach to investments, never investing in anything that wouldn't have a good return. In terms of pricing, of course the current situation is very uncertain in terms of of commodity prices and raw material prices.

We have very skilled procurement teams that are keeping monitoring raw material prices, we don't really see any disruption or any problem in terms of of translating those prices into our customers. However, we I have a selection of of increase of processes that we will put in place if needed, and we are optimizing as always our procurement base and we'll keep doing so.

In terms of M&A, we currently have, and this morning we disclosed with Princes Group, that we still have a active pipeline of potential targets at Princes Group level with increasing, actually an increasing number of targets, and we expect to close at least one deal so in the in the food and beverage manufacturing, performed by Princes Group in the next in the next one or two months. We are seeing more and more opportunities coming to market, so that is really comforting, and we are one of the, I would say, most sought-after partners in terms of of potential acquirer because of our track record, but also because of a very strong position, especially at Princes Group level.

Now we can take questions. I will take questions.

I think we have a couple of our analysts, we'll ask them to ask questions. I think the first one's from Alberto Gegra.

I will just allow your microphone. You can ask your question now.

Hi. Good morning, everybody.

Hope you can hear me. My first question is if you can provide some example of these first benefits and synergies from these initiatives on Princes Retail and whether these are more on cost or on the sales development.

Then on the cash generation around working capital. What are the main moving parts that we should expect going forward between the retail and the manufacturing part of working capital?

On CapEx, without real estate, CapEx in this first quarter were very low, just to understand which kind of CapEx profile for the retail and for the manufacturing division you are expecting on the full year excluding the real estate. Thank you.

Hi, Alberto. I can start from the end speaking about CapEx and working capital.

What is important to highlight in this quarter is that we have been able to generate cash with the real estate investments, and this means that if we consider going forward the level of CapEx that could be more or less in line with the past years, we will be able quarter-by-quarter to manage the cash generations, the investments, the CapEx investments to continue following these trends without any particular deteriorations of the cash generations profile because substantially all the parts, the investments in CapEx, the investments in real estate, will be managed to try to support the trend. If you consider, for example, no real estate investments during this quarter, we would have all the resources to do CapEx investments in line with the past years.

What we are doing is to manage the resources between CapEx spending and real estate investments to try to get the best opportunity and also to optimize the investment in CapEx because also on this side we are very prudent, with a very high level of attention to try to do only the investments that are really necessary and that could create value for the company. In terms of the initiatives on the retail side, we are implementing initiatives at 360°.

This means that there are investments on the IT to develop the different platform that could support the development of the online business. We are investing in reorganizing hypermarkets, putting inside the two different offer for B2B and for the offer that was already there for retailer.

We are operating to revamp the offer, reorganizing the shelf with new products. We are creating the base for the development of the private label.

We introduce, for example in May, as Benedetta shows, Princes tuna in Italy. That is the first time that is on the shelf.

It's a new product, a new initiatives. We are working also on the cost base, and the cost base is for sure the first element that gave important contributions, especially in March and in April.

The project is a 360° project. There are a lot of things that are in place.

It's clear that not everything could be delivered in a couple of months because we need the right time, as we already explained last time. I have to say that the contributions that we saw in the past two months, it was really good, really supportive.

For this reason, we decide to increase substantially the guidance also for this year.

Yeah. Just on the sales side, what we are doing on the commercial just to give you some number.

We grew into Carrefour from the industrial part increased by 60% of our sales compared to last year in volume and 77% in value in term of our product that are sold into our stores into Carrefour. This is excluding the initiatives that are going live now that Benedetta told around the tuna, that is a really high-value business.

This is just milk and dairy and pasta that was already there. Like-for-like, we increased around 60%.

These are the first four months of 2026. Just to give you a bit of numeric base in term of how much is the sales that we are doing.

Okay. Thank you.

Sorry, Fabio, I also had one on working capital.

Yes. In terms of working capital, sorry, we expect that the trend should continue in this way in the sense that we put in place a lot of actions on inventories, on payable in particular, but also in managing the credit we have in place, especially for the obviously not the direct business, but the franchising business.

The aim is obviously to maintain this situations also in the coming quarters. It's a moving part situation.

Something could move, but we are, I would say, confident that as we did in Q1, the same trend that could be visible also in the coming quarters.

Okay. Thank you.

Arianna, you should be able to Yeah. Yeah.

Thank you, Benedetta. Hi, Fabio.

Thanks for the presentation. I have a couple of questions.

First, if you can provide a general comment on your expectation on price and volumes for the full year. We saw a mixed bag in terms of business units, I was wondering, for example, if the dairy performance was linked to some less contracts you had, some rationalization of contracts, or if it was the long tail of the deflationary environment we saw in 2025.

If you could comment by business units if possible the expectation you have. Also on business units, if you could provide an update on Princes Ready to Drink and what are your expected volumes for 2026.

Then I have a follow-up on networking capital in the sense that I was wondering if there is any seasonal dynamic in the Princes Retail we should be aware of or, for example, in terms of relations, contracts with franchisees. Then I noticed an increase in the shareholder loan by €5 million versus year-end 2025 if you could comment that.

Thank you.

In terms of the general picture, price, volume, I have to say that it's difficult to define a picture for the next months because the general macro situations is moving every day, and on this basis, it's obviously we expect to have a price increase, to pass through a price increase, and this means that on our revenues, we expect to have a contributions from pricing. In general, apart from this dynamic, I have to say that the trend that we are seeing in volumes is improving materially during April, and for example, the dynamics that we had in April was able also to more than offset the impact of the portfolio rationalization.

The view that we have going forward in terms of volumes, also considering the delivery of the several different initiatives that we put in place, is to have substantially a positive trend in pricing. It's clearly that everything will be link to the inflationary scenario that we are going to see and the needs that we have to complete a pass-through.

Yeah. If I can build on that just for your information.

I want to talk about sector, for example on the dairy, that the the the first quarter the first quarter of 2026 has been affected by the reduction in cost of raw material of milk, because as after let's say the the the the duty from US, the price of milk in Italy and Europe has dropped, we dropped or any margin-wise, we recovered more margin than in the past, just to give you a bit of a flavor. Of course, the effect on Q1 most of the time is the price and the condition that we agree with the retailer on Q4 of the previous year.

The deflation is, I would say, around 85% related to the deflation of of raw material and not to an increase in term of promotional promotional activity. Of course, Q1 has been a soft first quarter for all the FMCG industry, even looking around how the retailer are working.

There's been a really extraordinary Q4 2025, and this created an effect of extra stock into the retailer for the beginning of 2026. This this is where the impact of volumes we we are we we are seen in the in the different categories.

Overall, the dairy on margin side, we improved our marginality even though we we followed the the price trend. As Fabio said, now we are in different in a different scenario after the 20 at the end of February and the start of the the the the war in Iran where now we are in inflationary and we are working on the pass-through of our inflationary cost to the customer.

The the the quarter are changing quite rapidly. I don't know if it's clear.

Really helpful. Thank you, Giuseppe.

In terms of Princes Ready to Drink, the situation is the one that we already described at the end of the year in the sense that we are involved in several different tenders, and we expect by the end of the year to get new customers, new product developments. We already got an important contract in the B2B with an important spirit brand.

We are also in talk with Diageo because there are a lot of volumes that will remain also in the next years, and this is obviously something really positive for the plant and for the development of Princes Ready to Drink. At the moment, everything, I would say, is going on with the plan that we have.

It's clear that the first year of contribution of this company to the group EBITDA, it will be 2027, for sure. In terms of the networking capital, there is nothing that we need to highlight in terms of seasonality.

We don't have particular seasonality in the business apart the months between September and December in which we have the peak of the tomato production, especially in September. Excluding that, there are no particular moving parts that are sensible to the seasonality.

In terms of the movement that you may see in the shareholder loan, you remember that all the interest and the cost related to the shareholder loan are PIK, capitalized, are not paid, that they are not link to a cash-out. Every year it's clear that the amount will increase link to the capitalization of the interest.

Thanks, Fabio.

Welcome.

The next question Yeah, let me see Henry Dennis, you can ask your question.

Good morning. Can you hear me?

Yes.

Could I just ask a question from the Princes Group point of view? You talked about current trading seeing positive momentum in Q4.

Just first, just a clarifying question. When you say current trading, would that be organic revenue growth turning positive in April?

Then beyond that, we estimated Q1 organic growth, if you take out Plasmon, we thought Q1 organic was looking at something like -2.5%. Is that in the right ballpark from your point of view?

Then if so, and if April has turned positive, kind of what are the drivers behind that improvement from Q1 to April? Thank you.

Yes. If you exclude Plasmon, the underlying was low single-digit negative.

You have to consider that Plasmon didn't have a full performance in the quarter because January was a month of the integration, it's not a full quarter. In any case, yes, it was low single-digit negative.

The situation is completely reversed in April in which, thanks to the several initiatives that have been put in place in Q1 and at the end of last year, we had a positive situations versus last year, an underlying positive situations versus last year in terms of volumes and in terms of general revenues reported. This means that the general picture was really stronger because this result that we got in April is a results in which the underlying trend was able to more than offset the negative impact that we have for the portfolio rationalization initiatives that we mentioned.

The current trading, speaking about the last months and also the beginning of May, it's really supportive for the full year.

Thank you.

Welcome.

We have a few questions from the Q&A, we'll take that and we'll take the other question from Arturo. First one from Q&A was, "Congratulations on strong Q1 results, especially in improvement in margins and cash generation.

Could you kindly provide some additional clarification regarding the fee and royalty structure related to Carrefour Italia? During the previous calls, you indicated that there are no material fees payable to Carrefour Group than the only remaining costs related to temporary IT TSA services.

However, some external analysis still refer to potential economic impact linked to the transition and master branding period. It would be therefore helpful to better understand whether there are still any extra royalties and sourcing fees payable to Carrefour SA, or whether the topic mainly relates to the timing of the progressive capture of commercial and industrial synergies during the transition period."

As we said last time, at the moment we had no able to immediately eliminate all the costs and the fees versus Carrefour Group because for two reasons. Because we have still in place the TSA, especially for IT and in general platform services.

The idea is to finish the implementations of our own services by the end of September, we can probably have a material reduction of fees starting from Q4, but obviously it depends about the progress of this implementations. There are also external party involved like SAP, for example, and this means that is not everything in our hands, but this is a provisions that we can do in terms of the elimination of the impact of the TSA.

The other part

of fees

Sorry, Fabio, but I want to underline the impact, okay, but this is not a material impact on the business. Just to clarify, maybe this is very important.

We have TSA, but is not the materially impact on this cost. Just I wanted to underline this because maybe it's not clear this.

Yes.

No, this is because maybe some people can think that there is a bigger spending. No, is not materially on the total trading.

Yeah. The other cost that remain is that, obviously, until we remain with the Carrefour banner, we have to include the private label linked to the Carrefour brand, and this means that we cannot manage this alone.

Also in this case, step-by-step with the initial change of the banners, we can progressively eliminate also this link and to be more efficient because the idea, obviously, is to produce internally, using our production platform, all the products that we can produce, generating a lot of synergies for both souls of the group.

Okay. I think you answered the question.

There was another question coming from Alejandro asking, "What is the expected margin for Princes Retail at year-end?"

Speaking about margin is difficult at the moment because there are several different elements that could impact in the sense that you have to balance top line and EBITDA. This is the reason why we decided to give you a view on the EBITDA expected between €110 and €120 million.

I think that at the moment, the best way is to remain on the absolute terms of the EBITDA because there are too much parts moving the picture until the end of the year, including inflation, for example, and probably is too difficult at the moment to define a precise margin level.

There's another question from the Q&A saying, "You mentioned Q1 to be the softest of the year and you expect margins to increase. Is the retail EBITDA guidance of €110 to €120 million for full-year '26 very conservative or are you expecting even softer quarters during the year?"

We spoke about a softer quarter especially for food manufacturing, but in reality in general for the industry, also for the retail, because it's clear that is the first quarter after Christmas, after the end of the year. Historically you can analyze the trend of the industry also and of our company.

The Q1 contributions is the lowest of the year. In any case, what we consider giving this guidance is the strong results, strong evidences that the actions are producing the results that we expect in March and April.

We have a very strong base of structure, a strong cost base, especially in retail, and with the revamp of the top line thanks to the several different initiatives, we believe that this could create a very strong contributions. On this basis, we gave this numerical guidance of a range between €110 and €120 million.

On the food manufacturing side, we expect margins to increase in the coming quarters because we have several different initiatives in place that just started, and we expect the contributions to come in the coming months related to not only the commercial side, but also the production side. There are a reorganizational plan in place for the factory to get more efficiency.

We believe that going forward we can have a better additional contributions on the margin side.

Now we can take the question from Arturo Lofis. You can unmute yourself and ask your question.

Thank you.

Hello. Thanks for the opportunity.

I have a few questions if I may. I was looking at the UK entity cash generation.

The numbers you project are very high, £34 million. I was wondering how sustainable is that.

Generally, the industry goes between 70% and 80% of the EBITDA, I was wondering what's the normalized level for the cash flow from the UK entity. That would be the first question.

I will take them one-by-one, please.

I have to say that first of all, it's a matter of model, because if you analyze the history of NewPrinces, we always had a very strong level of conversions. It was always above 60%.

It's clearly that we cannot say that going forward we will have for sure always a level that will be above 80%. What is important to highlight on the UK cash generation side is that, first of all, this is the first quarter in which we don't have a material contributions from the networking capital, because the networking capital gave a lot of material contributions in the past years.

This is much more related to the operating contribution. It's clear that there are a bit of temporary lag between the investment in CapEx.

For sure this quarter was with a lower level of investments, but as we said also in the previous call, we believe that the free cash flow, the underlying free cash flow generations, could remain above 60% going forward on average, including maybe quarters in which we may have more investments, quarter in which, like this one, we have a lower level of investments. The difference is a different approach in managing the company with a more efficiency working capital, a better profitability, because if you consider the history of Princes Group under Mitsubishi, the profitability was materially lower.

It was lower the efficiency of the working capital because the networking capital always absorbed in the past cash. Now we are getting a positive contributions, and in general, also the approach on the investment side because CapEx is only related to the real investments for growth, is not maintenance.

Maintenance is treated as a cost in the P&L. I think that what is differentiate the new era of Princes Group plc is for sure a more disciplined approach in investments.

If you consider that we have spare capacity, a lot of spare capacity, it's clear that we don't have this particular strong need of material CapEx investments. I don't know if I answer your question.

Yes, thanks. I'll go with the next one.

Can you talk about the cash pooling from the UK entity at this stage? In particular, I would like to understand how hard or how easy is to do cash pooling from the holding to the UK entity given the net cash position of the UK entity.

The cash pooling is substantially something, I would say, muted in the sense that was created at the beginning to create a direct connections with NewPrinces to help Princes after the acquisition in case of necessary. Because when we acquired Princes, we found inside Princes a lot of intercompany debt.

It was a big acquisition, a reverse merger. We needed to create, also to give confidence to the bank that supported the acquisitions, this kind of link.

After that, it was always muted in the sense that now in the account that is linked to the cash pooling, we have just the deposit of part of the investments that have been done during the IPO by NewPrinces in Princes. It's not moved, all the business is managed by a different account.

It's something that is there, substantially, and with no effect on the consolidated figure of NewPrinces. This means that it's not a matter of how is easy or difficult to manage this pooling situation because in reality the pooling situation is just theoretical because there were no movement.

If you consider the amount at the end of the year and the amount at the end of the quarter is substantially the same. It's a deposit of, I would say, Princes for the amount that was invested by NewPrinces.

Okay. I'm just trying to understand because if I do the math, basically the Italian entity right now is burning cash.

In case this burning cash accelerates given the current macro environment, I was wondering whether you can actually do cash pooling from UK or whether it's necessarily an intercompany loan or whether it's necessarily a dividend payment from the UK entity to the basically Italian structure.

We can consider potentially all of the options that you mentioned in the sense that so we will see which kind of needs we may consider in the future. All the options are open.

You have to consider that the two entities are not two separated entities in terms of strategy, in terms of management, also in terms of ownership. It's clear that everything will be managed using the best options that at the moment we can see.

They are really linked companies. If you consider the names of the board member, there is a very strong connection, it's not something that if you consider a real holding company in which maybe you have a participations in a company that is managed by different manager, independent manager, or whatever, you have to receive an approval for a shareholder loan, for a dividend, or whatever.

In this case, there is a strong connections. It's clear that everything will be done in the interest of both entities, but everything is fully connected.

Okay.

For example, we may have an opportunity for new potential shareholder of Princes plc that are interested to invest into the company, or the market could ask for an increase of liquidity. This is an area in which we may see the connections of NewPrinces and Princes.

Okay. Can I ask you a follow-up on the question on the shareholder loan?

What's the interest on that shareholder loan? Because €5 million over €175 is actually a 2.8% interest rate, it's a bit too high to be honest only for being a quarter.

No,

the interest is a bit higher. It's 300 and

Yes, but it was only a quarter. So €5 million on €175 on €175 million loan currently outstanding is actually a 2.8% for basically 90 days.

If the interest is about 300 bps, whatever, you should have that on 365 days rather than just on a quarter. Would be materially lower the impact of the PIK versus the €5 million loan that you actually explained.

I can't do the math on that. I'm really struggling.

Either the interest is different or there is something else going on.

No, the interest is the one you mentioned. This is the spread, obviously, plus Euribor, but we can send you the full calculation on this.

I would really appreciate that. I also have one one last question which regards to logistics costs for the company.

Obviously, the current environment is very challenging for all the logistics. Perhaps you can elaborate on how much do you spend actually in logistics and what's the so far the increase that you have seen.

That would be great to better understand the current macro scenario and the impact on the company.

At the moment, especially logistic and fuel are the two main things that we are in discussions with I'm speaking in particular about the food manufacturing business. We are in talk with all the customer to complete the pass-through, and for the food manufacturing side, beginning mid-June, it will be the time in which we put in place this pass-through.

We already inform the customer about that, it's something that it will be obviously passed through because it's something objective, evidence is something that we cannot avoid to share with our customer. I think that we may probably see one month in which we have to absorb this impact.

That could be May, but could be mid-April and May, but from June this will be fully passed through to the customer.

What's the value of the consolidated expense on that?

Speaking about food manufacturing, we have in terms of logistics should be around It depends what we include, because there are also some costs related to some warehouse that are not directly managed, is not only related to fuel, but you can consider around 2% of revenues.

2% of revenues. Okay.

On a consolidated basis?

On the consolidated basis, it could be a bit more because we need to include the retail business that it's a bit more exposed. To give you a precise number, I will send you this precisance.

Yeah. Maybe, Fabio, if I can jump in, if it's easier.

Basically, we already communicated to the retailer what is the CPI process. With most of the retailer, we have an automatic pass-through of most of the commodity prices.

This means that on some like plastic or transport, we had official index that are agreed with the retailer. As the index goes on, I just give an example on transport, that is the Trasporto index where the cost of petrol is based on So we fixed the term of the base before the start on the conflict, and then we agree with the customer on a weekly basis what is the difference between the start of the conflict and up to now.

A few big retailer, I cannot name for privacy and confidentiality manner, a few top retailer agreed already to this mechanism concerning the cost of transport, and now we are going with the CPI concerning everything that is related to all the other costs. That are some of them are already kicking in, and some will kick in in the short period of time.

I want to say of course, I have a clear number in mind. I don't think that this is the place where we can share the number.

I think is confidential and needs to stay confidential. By the way, Fabio's indication is not far concerned to what we are going to ask, but I want to be clear that we will pass to the retailer the increase that is real impacting our P&L, and I don't want that these questions can create any kind of turbulences as well, because I agree that you can ask this kind of question, the management is total under control, but I don't want on the other side that, as this is a public moment, I don't want that we disclose this kind of number if I may say my honest opinion.

Okay. Thank you very much, then.

Thank you.

We'll take the last question from Alberto, and I think we can close the call after that.

Just a quick follow-up on my side if you can give us an idea of the size and profitability of these potential deals in the upcoming months.

You mean on the M&A?

Exactly.

On the M&A, we are involved in several different potential deals. We have €100 million revenues target in fish.

This is the most in advance. We have €150 million revenues deal in bakery in France.

We have a potential deal in Europe in the oil sector. This was just so at the beginning of the process for €800 million.

We have a potential deal this is more diversified in terms of portfolio, but is always food manufacturing, exposure in Western Europe and UK, mainly UK because it's around 70% of revenues and it is around £500 million of revenues. Then we are also considering other smaller deals, for example €70 million in oils, but this because is creating a lot of synergies and it's really complementary with the existing business and in particular also the potential acquisitions that I mentioned before.

This are the most interesting potential M&A deals that we have on the table now.

That's it.

Thank you.

We may end the call here. Of course, if you have any other questions, you can reach out to us directly, and we look forward to talking and speaking again soon.

Bye.