SeSa S.p.A.

Good afternoon, and thanks for joining the Sesa Group presentation. On behalf of Sesa are participating Alessandro Fabbroni, Group CEO; Caterina Gori, IR and Corporate Finance, M&A Manager; and myself as Stakeholder and Corporate Sustainability Officer.

Today, our Board of Directors has approved the first half 2025 results. And in the late morning, we made available our corporate presentation on the Sesa website that we may follow during the conference call.

Alessandro will open the presentation with an overview of our main strategic achievements.

Thank you, Jacopo. Good afternoon, and thanks to all of you for joining our call.

Today, we disclosed our first half financial statement with a resilient set of financial results by consolidating the great growth achieved in the 2024 period in face of very challenging reference market. After improving our size by about 2x in terms of revenues from EUR 1.7 billion to EUR 3.2 billion and 3x in terms of people and EBITDA from EUR 94 million to around EUR 240 million in 2020 over the last 4 years.

In the first half of the 2025, we are laying the foundations for recovery of mid-single-digit growth path starting from the second half 2025 and the full year 2026 thanks to our significant investments and industrial reengineering carried out the last 12 months, focusing on higher marginality sectors. Starting from the second half, now we expect Digital Green to significantly contribute to our improvement as a result of both lower market prices volatility that will drive after 4 consecutive quarters of decline to a stable like-for-like trend from Q3 onwards.

In the first half 2025, consolidated pro forma revenues, including the corporate acquisition of Greensun starting from the beginning of the year, increased by 1.1% compared to a very challenging first half 2024 when Sesa Group revenues grew by around 15% year-on-year. In terms of group sectors trend during the half, System Integration revenues were up by 10% year-on-year, thanks to the positive performance of the key business units from Cloud, Vertical Application to Cyber Security and Data/AI.

Business Services sector increased by an outstanding 25% year-on-year, driven by the development of Vertical Banking Application and Digital Platforms dedicated to the financial services industry and recent corporate acquisitions. The Digital Green sector grew by about 16%, including Greensun, while on a like-for-like basis, revenues declined by around 40% year-on-year due to the price downturn experienced last 12 months.

Starting from the second half, we expect a stable trend of revenues like-for-like with a higher than 30% growth, including Greensun, also thanks to the stabilization of market prices. Finally, Value Added Solutions sector declined by 7.6% compared to the first half 2024 with a negative trend in the second quarter and an expectation of stable trend starting from Q3 2025.

Consolidated pro forma EBITDA decreased by 4.5%, mainly driven by unfavorable market trends in value-added ICT distribution and due to the above-mentioned reengineering process of the Digital Green sector. On a like-for-like basis and excluding Digital Green, consolidated EBITDA declined by 2.2% compared to the first half 2024 with an EBITDA margin broadly in line with the first half 2021 and equal to 7.2%.

Earnings after taxes adjusted before minorities declined by 12% as a result of EBITDA trend above mentioned and the higher financial charges still growing year-on-year due to the unfavorable trend in market interest rates with an expectation of reversal starting from the second half of 2025, thanks to the efficiency actions carried out over last 12 months period and the trend of reduction of interest rates. In the first half of 2025, net financial position reported pro forma was equal to net debt for EUR 122 million, including EUR 210 million of IFRS debt compared to around EUR 60 million as of October 2023, reflecting EUR 26 million of buyback and dividend distributions over the last 12 months and EUR 110 million M&A investments and CapEx last 12 months that are contributing to our group transformation and mainly focusing on the group sectors with double-digit growth in the half year and potential for further expansion.

Now I give the floor to Caterina, who will provide us an overview of our M&A programs and pipeline. Please, Caterina, go ahead.

Thank you, Alessandro. Most M&As over the last 18 months has focused on high-margin and growing sector as Business Services and Software and System Integration.

In FY '24 only, we realized 13 M&As, which contribute for more than EUR 110 million revenue, a progressively growing EBITDA and brought in more than 450 skilled new headcounts. In the FY 2025, we closed 8 M&As, which generate revenue for roughly EUR 180 million with more than 450 experienced accounts.

We will now provide an overview of the latest M&A transaction by sector. In the first half 2025, we announced 2 strategic deals in the Business Service sector, which contribute to enhance the exponential growth of the sector and build a unique software solution portfolio.

More in detail, in May 2024, we acquired the majority stake of ATS, a leading Italian company in the digital platform for capital markets with annual revenue of EUR 14 million. In September 2024, we announced the acquisition of Metoda Finance, a leading company specialized in offering software solution for the supervision of financial intermediaries with more than 200 clients, including some of the main Italian banking groups, and which generates annual revenue for EUR 8.5 million at the acquisition date.

In the SSI sector, after several small, medium-sized acquisition, including also abroad, SMART Engineering in Germany and Boot Systems, LBS in Spain. Today, we announced the acquisition of Metisoft, a leading Italian company in consultancy and digital solution on SaaS platform, adding 160 qualified accounts annual revenue for EUR 15 million and 8.58% EBITDA margin.

This acquisition aims to create a leading company in Italy with EUR 75 million revenue, 550 employees and growing margin. Regarding Digital Green, following the authorization of the Italian Antitrust Authority received last November and according to the binding agreement already disclosed last October, in December 2024, we announced the acquisition of 66% of Greensun, a key player in the renewable and energy savings sector, which offers technology and specialized consultancy services.

For the first half 2025, we present Sesa's financial performance statement by including the 6 months results of Greensun. For the second half 2025, Greensun will be included in the consolidation perimeter.

Moving now to buyback. At the shareholder meeting of August 2024, we approved the renewal of the authorization for the purchase and disposal of ordinary treasure for a maximum amount of EUR 10 million.

We have already reached EUR 8 million, and we are expecting to achieve EUR 10 million shortly. As suggested by some of our shareholders, our intention is to increase the volume of purchases, also evaluating a higher amount authorized in the next shareholder meeting.

In terms of M&A process, we recently intensified our activity towards high margin and growth sectors to support group transformation. Our deal activity structure has oriented towards long-term commitments of key people of the target company with an entry value of 5x EBITDA and the progressive integration within the group strategic business unit, typically ending with a merger.

Now I'll leave the floor to Jacopo to provide an update overview of our HR and sustainability path.

Thank you, Caterina. In terms of ESG path, we confirm our strong commitment to value generation for our stakeholders, and we continue to constantly monitor all ESG growth drivers and key sustainability ratings.

We underline the recent extension of our main group certifications as gender equality certification, environmental certification, social international standard and United Nations Global Compact membership, confirming at the same time, all of our ESG ratings as EcoVadis Gold Medal, MSCI with a BBB and Carbon Disclosure Project with a B score. We would like to restate also the achievement of all ESG targets included in our annual report as of April 30, 2024, with a commitment still focused on key priority areas as equal opportunities, reduction of environmental impact and natural resources consumption, human capital development, contributing to economic growth and support for local communities.

Efforts to strengthen the group's sustainability have been carried out since our foundation. And in recent years, we have improved our ESG profile with a proactive approach.

In light of the new European regulations on sustainability reporting, the so-called CSRD, we are implementing new CSR assessment and monitoring activities based on a continuous improvement path. Thanks to the steady improvement of our sustainability profile, we are increasingly qualified as an investment target for long-term investors who make sustainability an essential part of their assessment.

In terms of people management, in the first half of the fiscal year 2025, we continue our long-term development of our workforce, achieving 6,200 headcounts, up by 15% compared to the first half 2024 and up by 39% compared to the first half 2023, with a strong focus on key growth areas as Vertical Applications, Digital Platforms and System Integration. We also continue to reinforce our education, hiring and in particular, welfare programs with wider and specific measures to support parenting, diversity, well-being and work-life balancing, thanks to dedicated programs in favor of diversity and inclusion.

Now I give the floor again to Alessandro for the final conclusions.

Thank you, Caterina and Jacopo. So our half year results that we achieved in a very challenging scenario confirm our resilient path and capability to evolve, invest and sustain the Sesa Group industrial development.

We consolidated our strong growth achieved in the full year 2024 by laying the foundations to return to growth from the second half of 2025 and particularly in the full year 2026, where we will benefit from CapEx and investment we did last 12 months that will contribute to the group's transformation process. In the light of our resiliency and growing focus on the high marginality sectors, we confirm the positive outlook for the second half 2025 with expected mid-single-digit growth in revenues and operating profit, also considering a less challenging year-on-year comparison.

In particular, starting from the second half 2025, we will benefit from the following effects: positive revenues and profitability growth that we expect in the System Integration sector, which in the first half reflected skills investment and industrial reengineering of some business units, an outstanding growth in revenues, up by 25% and profit with EBITDA growing by around 40% year-on-year that we continue to expect in the Business Services sector with progressive development of the customer set and the Digital Platforms. Finally, also a stable trend of Value Added Solution revenues that after the decline in the first half will contribute in a positive way to our trend of the second half.

The double-digit increase we expect in revenues and profitability in the Digital Green sector will be driven by the stabilization of market prices and perimeter expansion resulting from the acquisition of Greensun. Overall, the outlook for the full year 2025 forecast a mid-single-digit growth in revenue and low single-digit growth in consolidated EBIT adjusted in accordance with the lower range of the guidance we already disclosed last July 2024.

We plan to realize most of our group transformation pillars, particularly in the full year 2026 when we expect also to face better market conditions. Thank you for your kind attention.

A couple on my end. The first one is on maybe more the midterm.

So you said you're expecting this mid-single-digit growth in the next, let's say, 6 months. Should we consider this as a sort of new normalized level for Sesa growth also for 2026 and beyond?

And the second one is on M&A. So if your strategy on M&A remains bolt-on?

And what is your expectation for M&A for the next, let's say, 6 and 12 months in both Italy and abroad?

Thank you, Aleksandra. So yes, we believe that in that first half, we really did a great job in terms of reengineering and industrial investments to be ready to recover mid-single-digit trend growth in terms of not only revenues, but also profitability that we maybe consider the new normal for Sesa.

So after full year of more than 15% in revenues and 20% in marginality. While on the other side, we expect to catch this growth rate, in particular, in the Business Services segment and Software and System Integration.

So that means it will be possible to catch a mid-single-digit growth rate in revenues and high single digit in profitability. We have also to consider that in coming 18 months, 24 months, we expect also a recovery below EBIT due to the lower financial charges deriving from an effective impact of the reduction on interest rates.

And so that maybe improve our performance bottom line compared to the top line. In terms of M&A, if Caterina wants...

Yes. In terms of M&A process, we recently intensified our activity towards high-margin and growing sectors as Business Services and Software and System Integration.

In FY '25, we closed 8 deals, 2 strategic deals in the Business Service sector and other like Digital Green and Metisoft announced today. We are still focused on integration and mergers, if necessary.

And I think we are still continuing the bolt-on process, but more focused on marginality and business sector and SSI.

And just to underline again that most of our investments will generate effects not only in the second half of the year, but also in the full year 2026 and '27, i.e., underlying among these investments, the new sector of the group, so the Business Services one with great potential of additional expansion.

I have 3 questions. The first one is on net working capital.

If you can comment on the result at the end of October, especially payables seems lower than before. And if you provide us a comment on what we should expect for the full year in terms of cash generation.

This is the first. The second one is about the value-added services.

If you can comment the next month's outlook for this business line and also why the performance in the second quarter seemed lower than in the first one. I mean, also considering the comparison seems a bit weaker.

If we have to know something about that or it's just a very diversified, I mean, reason. The third question is about a clarification on the outlook about the Business Services line.

You are commenting 25% growth that is the same recorded in the first half. So -- and you are commenting a 40% EBITDA growth for the second half.

Again, it looks like an EBITDA margin very high because last year, you recorded a very high EBITDA margin in the second half. So if you can comment on the margin expansion you are expecting in second half because in my calculation, it seems like a 20% second half marginality that just mean I would like to know more comment on that.

Thank you, Andrea. So starting from the first question, our net working capital trend performed not so well in the Q2 because we closed with around EUR [ 17 ] million against EUR 36 million of the second quarter of 2024.

That was impacted by a slight decrease also in sectorization. And in any case, we consider to be able to recover a well-equilibrated net working capital consistency at the end of the year, so more or less in line with the fourth quarter.

I think that it is important to underline that we have maintained a good quality of account receivable. And so that is also visible in our lower provisions that we reported in the first half.

The other question refer to our Value Added Solution trend in the Q2 that was affected by negative trends of value-added distribution segment. So the distribution is recovering in physical technology is facing a negative trend by around 10% in value-added.

We made also a great job in order to be refocused and to be able to attract new customers. We expect to stabilize our trend from the Q3.

I remember that the comparison with the Q2 of the previous year was really, really challenging because in the Q2 of the previous year, we grew by higher than 15%. Remember that our VAS sector grew from EUR 1.1 billion in 2020 year up to EUR 2.15 billion revenues in 2024 when the other peers more or less were flattish.

So we grew really a lot. So that is just a quarter of consolidation.

After that, we restart with a stable trend. The point to be underlined is that in any case, our EBITDA margin continued to be stable to 4.4% and best-in-class for this specific industry.

Finally, the trend of the Business Services. The Business Services is going really well because we are attracting new customers.

We continue to invest because we are developing a complete offering of digital platform for the financial services industry. We are working through bolt-on M&As with great value.

And so there's a scale opportunity. So in the first half, our EBITDA margin improved to higher than 16% compared to 14.5% for the previous year.

So that is the way we continue to expect an additional growth in EBITDA higher than the growth in revenues. In any case, that is a sector that has great potential for additional expansion and we will target EUR 160 million revenues, but we have a potential of about EUR 300 million revenues in the 3-year period after 2025.

Can you hear me?

Yes, very well.

Yes, very well. Okay.

I have a question on factoring. As you said in the press release, you said that factoring increased during the period.

I wanted to know if the increase in interest rates is related also to that. And if you can comment a bit on what extent?

And then I remember -- for my second question, I remember you were working on the cash pooling to try to make some efficiencies in managing your cash position, as I remember it was not generating that much interest income. I wanted an update on that, if possible, as well.

And if you can elaborate a bit on the interest income that you're able to generate as of now.

Many thanks for the question. So first of all, we include in our IR presentation that is available on the website, a slide dedicated to our net financial expenses trend, where we explain that the first half 2025 trend of financial cost shows an increase of around 15% compared to the first half 2024, but a decrease by about 10% compared to the second half of 2024.

So that means we are decreasing if we compare with the previous quarter, so second half of 2024. But again, we are still growing our financial cost if we compare with the first half of 2024.

In effect, if we consider the Euribor rate, so at the beginning of the half 2025, the Euribor rate equal to 3.8%, while at the beginning of H1 2024, the Euribor was equal to 3.1%. And so in particular, in the securitization when we recorded the interest rate, they are accounted for in advance on a quarterly basis.

So we did not manage to take significant advantage from the trend of interest rates. So we [ continue ] to be able to realize significant and effective advantage in terms of trend of interest rates starting from the Q3.

The other point is the amount of the securitization. So we work with about EUR 300 million.

We reduced by -- not to increase, but we reduced at the end of the half by around EUR 40 million, EUR 50 million in order to obtain savings also in terms of financial cost in the Q3. Consider that in any case, we intend to continue to have a good and complete coverage of the main risk on the accounts receivable.

And as I mentioned before, the quality of account receivable is good, and we reduced the amount of the provision in the first half. Thank you for the question.

So we thank you very much to all participants, and we would like also to wish Merry Christmas to all our stakeholders.

Yes. And we stay also available for any additional information with our mailing list [email protected].

Thank you very much.

Thank you.