The Board of Directors of Itway S.p.A. approves the Interim Management Report

as of September 30, 2020

Revenue Euro 22.3 million, +12% YoY – EBITDA Euro 774 thousand, +82% YoY

All economic and financial performance indicators improve significantly

• Group Revenue total Euro 22.3 million as at 9.2020 compared with approx. Euro 20 million in the same period of 2019 (+12%), over 90% of which generated outside Italy.
• Substantial improvement in Consolidated EBITDA that almost doubled to approx. Euro 774 thousand, with an Ebitda Margin of 3%, compared with Euro 426 thousand in the first nine months of 2019
• Return to a positive and significant EBIT at Euro 372 thousand compared with a negative Euro -45 thousand at 30.9.2019 (EBIT Margin +2%)
• Considerable improvement in the Group Net Financial Position (NFP) at 9.2020, totalling Euro -3.1 million compared with Euro -3.4 million at 31.12.2019
• Profit before tax that rises by OVER Euro 1.1 million, from a negative Euro -573 thousand to a positive Euro +566 thousand, equivalent to approx. 3% of revenue
• Parent Company NFP improves at Euro -4 million compared with Euro -4.4 million at 12.2019

Ravenna, November 13, 2020 – The Board of Directors of Itway S.p.A., a company listed on the main Mercato Telematico Azionario (MTA) of Borsa Italiana, active in the IT sector, approved today the financial results for the interim period to September 30, 2020.

The period under review saw a significant improvement in all economic and financial indicators of the Group compared with the same period of 2019, as the repositioning underway continued. These positive results are even more important when placed in the context of the historically difficult period that Italy, Europe and global society is going through due to Covid-19 or the Coronavirus.

Revenue of the “Itway Group” in the nine-month period that ended September 30, 2020, increased in volume terms by 12% compared with the same year-ago period, coming in at Euro 22.3 from approx. Euro 19.9 million in the first nine months of 2019. The increase reflected the positive performance of the Greek and Turkish subsidiaries and, in Italy, of 4Science.

EBITDA was a positive Euro 774 thousand compared with Euro 426 thousand in the same period of 2019 with an EBITDA margin of +3%.

EBIT and the Result before taxes are both positive and total Euro 372 thousand and Euro 566 respectively, compared with the same period of 2019 when EBIT came in at Euro -45 thousand the Result before taxes at Euro -573 thousand.

Financial proceeds in the first nine months of 2020 were impacted by a positive currency effect in Turkey compared with the same period a year ago and the fall in financial charges of the Parent Company.

The Group Net Financial Position as of September 30, 2020 improved and totalled Euro -3.1 million compared with Euro -3.4 million at 31.12.2019. The change compared with June 30, 2020, when it stood at Euro -2.8 million, is essentially attributable to debt taken on for the issue of warrants as described below.

In the month of August 2020, Itway S.p.A. signed an investment contract with Nice & Green SA, a Swiss international investor, involving the issue of a “Warrant and Convertible Notes Funding Program” for an overall value of Euro 6,000,000. The transaction aims to support the working capital of the Company, to strengthen the financial structure and broaden its shareholding.

Andrea Farina, President and CEO of Itway said:

“The first nine months of 2020 continue to highlight the improvement of almost all financial performance indicators posting growth also in this period of heightened global uncertainty. The investments made in the Cybersecurity, Artificial Intelligence and, Big Data markets are already producing interesting levels of margins that allowed us to punctually respond to the needs in this difficult moment remaining in pole position for the Digital Transformation market. The results achieved, thanks to the commitment of everyone, allow us to look to the future with confidence and serenity. We will continue to pursue with dedication our objectives also in light of the new recently concluded financial partnership with Nice&Green that makes us stronger and determined to face national and international markets where the Group operates.”

In Q3 2020, Revenue totalled Euro 6,855 thousand compared with Euro 5,685 thousand in the same period of 2019, an increase of 20%. EBITDA came in at a positive Euro 209 thousand compared with Euro 59 thousand in Q3 2019 with an EBITDA margin of +3% while EBIT totalled Euro 75 thousand compared with the negative Euro -96 thousand in the same period of 2019, a 178% growth. The Result before Taxes was a positive Euro 276 thousand compared with the negative Euro -230 thousand in Q3 2019.

Results of the Parent Company and other sectors in the start-up phase  as at September 30, 2020

In the first nine months of 2020 Revenue of the Parent Company Itway and the 4Science subsidiary totalled Euro 1,908 thousand compared with Euro 1,719 thousand in the same period of 2019.

EBITDA, even though still negative, improved from Euro -472 thousand at 30.9.2019 to Euro -461 thousand in the first nine months of 2020 while EBIT 30.9.2020 totalled euro -784 thousand compared with Euro -855 thousand in the same period of 2019.

In the third quarter of 2020, Revenue totalled Euro 509 thousand compared with Euro 491 thousand in Q3 2019, an increase of 4%.

EBITDA was Euro -304 thousand in the period of 2020 compared with Euro -182 thousand in Q3 2019 while EBIT totalled Euro 411 thousand in 2020 compared with Euro -308 thousand in the same period of 2019.

The NFP of the Parent Company at September 30, 2020 was a negative Euro 4,043 thousand, improving from the Euro -4,173 thousand at June 30, 2020 and Euro -4,374 thousand at December 31, 2019. The Itway Group during the period continued to invest in the markets of Cybersecurity, IoT and Artificial Intelligence, and Big Data, sectors that are interconnected. It continues to pursue its re-positioning on new product lines, aiming to replace low-margin lines with ones with greater value added that allow even less use of working capital.

The industrial policy of the Group continues to focus on business segments with higher value added represented in the new Business Units: Cybersecurity, Adapt/Smartys, Data Science, Safety, presided over Itway, 4Science and Be Innova.

Itway S.p.A. continues the repositioning of the two business units, Cybersecurity and ICOY. New technical and commercial staff was hired and the growth pipeline is increasing. The process to submit the patent in Italy and the EU for ICOY (a new product that was launched in the past few months for the prevention of workplace accidents) was completed and it is now Patent Pending. The ICOY Mover Bridge Crane line has completed testing and is now ready to be launched on the market with the first commercial development activities underway, while the FORKLIFT line is being tested with positive results. ICOY suffered a delay due to Covid-19 since the companies that it targets were hit by the lockdown that resulted from the pandemic.

4Science S.r.l. aims at becoming the reference company in the emerging Data Science, Data Management Big Data (Data Curation) markets as well as the Digital Repository and Preservation of the digital heritage regarding cultural and artistic assets, or the so-called Digital Library.

General context and performance of the ICT Market

The provisional forecasts for the performance of the ICT market in 2020 consider the changed economic context following Covid-19. GDP this year is seen falling between 8% to 10% and the general projections for the ICT sector see a general contraction of -3.1% and then a significant rebound in 2021 (source: Assinform 2020).

In 2020 the dynamics of the digital market will go into negative territory (ICT services -3.7%, Software and ICT Solutions -1.1%, Devices and Systems -3.5%, Network Services -3.9%, Digital Content and Digital Advertising -1.5%) but they will be more resilient than almost all other market sectors, while there will continue to be double digit growth to the more cutting-edge components of digital innovation, or the so-called Digital Enablers, starting from the Cloud, Cybersecurity, IoT, AI and collaborative and remote work platforms (including smart-working)

Sector performance – Value Added (VAD)

The subsidiaries that operate in Greece and Turkey in the first nine months of 2020 posted an increase in volumes and results compared with the same period of 2019. Revenue totalled Euro 20.4 million compared with Euro 18.2 million in the same period of 2019, up 12%; EBITDA in the period of 2020 totalled Euro 1,235 thousand compared with Euro 898 thousand in the first nine months of 2019, up 38%; EBIT was Euro 1,156 thousand compared with Euro 810 thousand in the same period of 2019.

In the third quarter of 2020, Revenue of the subsidiaries totalled Euro 6,346 thousand compared with Euro 5,194 thousand in the third quarter of 2019. EBITDA was a positive Euro 513 thousand compared with Euro 241 thousand in the same period of 2019. EBIT stood at Euro 486 thousand in the third quarter of 2020 compared with Euro 212 thousand in the comparable period a year ago.

The results achieved confirm the growth trend of the Cybersecurity-specialized value added distribution companies that operate in Greece and Turkey despite the pandemic that is hitting less these two Countries.

The Turkish subsidiary saw 5% revenue growth compared with a year ago and it improved significantly its profitability. There was a 1% increase in margins for products and a greater efficiency in operating costs related both to a greater focus and also to a positive impact from the 19.9% devaluation of the Turkish lira; in relative terms, Itway Turkiye increased its market share in Turkey by 25%. New product lines were added to the offer portfolio and these are starting to produce their first results.

The Greek subsidiary in the first nine months posted a 30% increase in revenue and of its market shares mainly in the Cybersecurity sector with demand that is forecast to grow even more also thanks to smart-working and the need to protect data of private and public organizations. New product lines were also added and these are producing the expected results. Itway Hellas has obtained Covid-19 related aid from the Greek State totalling Euro 250 thousand and this will be available in the fall at a favourable interest rate.

Subsequent events

Shareholders of Itway on October 30, 2020 held an extraordinary meeting and deliberated:

• The issue of a bond for up to a maximum of Euro 5,500,000, convertible into Itway shares to be issued in one or more tranches, reserved for Nice & Green SA;
• Increase in share capital pursuant to article 2420-bis, paragraph 2, of the Civil Code, in instalments, without option right pursuant to article 2441, paragraph 5 of the Civil Code for up to a maximum of Euro 5,500,000, including share premium to service the conversion.

Foreseeable evolution of operations and going concern assessment

The Group is committed to implementing the industrial plan for the period 2020-2024 aimed at pursuing, in the medium term, the historical positioning in the information security sector and overcoming the current situation of financial stress. In particular, the Group is continuing to define agreements with Mercatoria that foresee a full and final settlement of the positions acquired.

Relationship with related parties

During the first nine months of 2020, the Group had commercial and financial relationships with related parties. These relationships were part of normal management activity, regulated at market conditions that are established by contract by the parties in line with the standard procedures.

Itway directs and coordinates its subsidiaries in Italy. This activity consists in indicating the general strategic and operational direction of the Group, defining and adjusting the reorganizational Model and elaborating the general policies to manage human and financial resources.

Own shares

The Parent Company as of September 30, 2020 had No, 853.043 own shares (equal to 10.79% of share capital), for a nominal value of Euro 426,522 and an overall purchase cost of the shares held in the portfolio of Euro 1,346 thousand (equal to the amount booked in the Own Share Reserve deducted from net equity of the fiscal period and at a consolidated level).

On August 12, 2020 No 650 thousand shares were loaned to Nice & Green SA. These shares were already in the portfolio and aimed at ensuring Nice & Green had the shares available to exercise the previously described warrant.

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Pursuant to paragraph 2, article 154-bis of the T.U.F., Sonia Passatempi, the manager mandated to draft the accounting documents of the Itway Group, declares that the accounting information included in the current press release corresponds to the documental evidence, financial books and accounting records. The data published in the current press release was not audited.

Pursuant to Consob’s Issuers’ Regulation, the interim management report as at September 30, 2020 is available to the public at the corporate headquarters, Via L. Braille, 15 and published on authorized central storage mechanism www.emarketstorage.com. The document can also be consulted on the Internet site of the company www.itway.com in the “INVESTORS/FINANCIAL INFO/Quarterly Reports”

The current press release is available at the corporate headquarters, on the Internet site of the company at the address www.itway.com, in the Press Release section, with Borsa Italiana S.p.A. and at the authorized central storage mechanism Emarket Storage, managed by Spafid Connect S.p.A. that can be seen at www.emarketstorage.com

Founded in Ravenna on July 4, 1996, Itway S.p.A. is the parent of a group that operates in the IT sector through the planning, production and distribution of technologies and solutions in the cyber security sector artificial intelligence (AI), cloud computing and big data. The group for over 25 years has represented a reference point in terms of solutions and services for digital transformation. It has been listed on Borsa Italiana since 2001. 

CONTACTS:

Brief income statement of the Group as of September 30, 2020, compared with the same period a year ago.

Unaudited data

Brief consolidated income statement for the July-September 2020 quarter compared with the same year-ago period.

Unaudited data

Group Net Financial Position as at 30.9.2020, compared with previous periods.

Net financial position of the Parent Company as at 30.9.2020, compared with previous periods.