PRESS RELEASE – ITWAY’S BOARD OF DIRECTORS APPROVES THE HALF-YEAR FINANCIAL REPORT AT 30 JUNE 2023

Itway’s Board of Directors approves the Half-Year Financial Report at 30 June 2023

ITWAY GROUP HALF-YEARLY:

REVENUES (+17%) , NET PROFIT JUMPS

FROM -301 TO +485 THOUSAND EUROS

EBITDA AND EBIT SLIGHTLY DECREASED, MAINLY DUE TO THE INCREASED COSTS IN STRUCTURE AND PERSONNEL (FROM 67 TO 80 EMPLOYEES)

THE GROUP’S NFP IMPROVED SHARPLY, GOING FROM NET CASH OF € 1,317 THOUSAND TO € 2,737 THOUSAND

Ravenna, 29 September 2023 – The Board of Directors of Itway S.p.A. – a company listed on Euronext Milan of the Italian Stock Exchange – heads  the leading Group in the IT sector for the design, production and distribution of technologies and solutions in the cybersecurity, artificial intelligence, cloud computing and big data sector, chaired by G. Andrea Farina, today approved the Half-Year Financial Report at 30 June 2023.

The main consolidated economic results achieved by the Itway Group in the first half of the 2023 financial year are shown below, compared with those of the same period to 30 June 2022.

in thousands of Euro	30/06/2023 (6 months)	30/06/2022 (6 months)
Revenues	21.495	18.326
Gross operating profit (EBITDA)	743	828
Operating profit (EBIT)	415	526
Pre-tax result	769	(88)
Net result	485	(301)

In the half-year ended June 30, 2023, revenues increased by 17%, while operating results fell slightly: EBITDA went from Euro 828 thousand in the first half of 2022 to Euro 743 thousand in the first half of 2023, while Operating profit (EBIT) went from Euro 526 thousand to Euro 415 thousand. On the other hand, the net result for the first half improved sharply, going from Euro -301 thousand to Euro 485 thousand, thanks above all to the exchange gains made by the Turkish subsidiary.

Operating results are affected by the increase in costs, which is mainly linked to the significant investments in progress, and, in particular, is linked to the growth in personnel costs of 33% (+522 thousand euros) and employees. The number of employees increased from 67 units (30 June 2022) to 80 units (30 June 2023) and relates to the inclusion of qualified personnel in the Group, with an increase of 13 units among executives (4), senior account managers, junior account managers, project managers, developers, service desks, cybersecurity consultants, systems engineers and back offices, as envisaged in the company’s investment plans.

The insertion and training of new resources in such an important way has inevitably led to a phase of lower internal efficiency in the ability to deliver revenues, even if growing, due precisely to the absorption of senior resources in training and in the transfer of know-how to new entries.

This phase of lower efficiency and production capacity is expected to improve as early as the second half of 2023.

General context of the economy and development of the ICT market

The latest projections of the trend of the ICT market 2023 take into account the prolongation of the extremely complex international scenario linked and determined by the continuation of the war in Ukraine, the shortage of raw materials, the still very high energy costs, the beating inflation, projections that Anitec-Assinform published in June 2023.

The trend of the digital market expected for the two-year period 2023-2024 will be influenced by several factors:

• the real use of PNRR resources allocated to the country’s digitization projects and their real feasibility in complex territorial and operational contexts;

• the persistence, as described above, of an uncertain economic situation both at national and international level;

• an increase in external and internal costs to the ICT sector which makes the digital transition more expensive.

Following the growth of 13.4% in 2022, the most innovative components of digital innovation, the so-called digital innovation, are expected to continue to grow at double-digit rates, more precisely 13%. “Digital Enabler and Transformer”, starting from Cloud, Cybersecurity, IoT, AI and collaborative and remote work platforms (including smartworking).

Italian GDP is expected to grow both in 2023 (+1.2%) and in 2024 (+1.1%), albeit slowing down compared to 2022.

In line with the trend in economic activity, consumption by resident households and Private Social Institutions (ISPs) is expected to increase in 2023 (+0.5%), which will strengthen the following year (+1.1%), thanks to a further reduction in inflation associated with a gradual recovery in wages and an improvement in the labour market.

Investments will maintain high growth rates, compared to the other components: 3% in 2023 and 2% in 2024, decelerating compared to the previous two years.

In this forecast, employment will grow in line with GDP (+1.2% in 2023 and +1% in 2024). The improvement in employment will be accompanied by a fall in the unemployment rate to 7.9% this year and 7.7% the following year.

The path of inflation recovery, favoured by the fall in energy prices and the restrictive policies implemented by central banks (ECB and FED), will be reflected in a reduction in inflation dynamics both in the current year (+5.7%) and, to a greater extent, in 2024 (+2.6%).

On the basis of consolidated and forecast data, the ECB has implemented a series of powerful interest rate increases since July 2022, when it was at a negative rate, up to today’s 4.75%; There is a strong conviction on the part of the president and a majority of advisers that a tight monetary policy can squeeze inflation down to the 2% target. This also at the cost of triggering any recessionary processes.  (Source ISTAT June 2023 and Bank of Italy July 2023).

Sector Performance: Cyber Security Products

Through the Cyber Security Products VAD + PS sector, the Group operates in Greece and Turkey, as Value Added Distributor with Project Services associates, in the sale of specialized Cyber Security products (software and hardware), certification services on distributed software technologies and assistance and technical design services, pre and post sales services.

The main economic indicators of this sector are presented below, compared with the values of the previous year:

in thousand of Euro	30/06/2023	30/06/2022
Revenues	18.484	16.376
Gross operating profit (EBITDA)	1.261	1.105
Operating profit (EBIT)	1.220	1.056
Pre-tax result	1.939	1.136
Net result	1.585	952

The first half of 2023, despite the negative effects related to the Ukrainian conflict and the particularly complex situation in Turkey, showed good growth in both revenues and profitability.

Performance of segments: Activities of the Parent Company and other sectors in Scale-up

The parent company Itway S.p.A is an operating holding company and is divided into two business segments: Corporate and Operating. 

Corporate Sector

• carries out Group management activities; deals with administrative and financial management, organization, strategic planning and operational control, budget process, human resource management, general affairs, legal affairs, marcomm management, information systems 

corporate and extraordinary finance transactions of Group companies. In summary, the Corporate sector deals with the strategic, operational governance and financial management and human capital of the Group.

Operating Sector

• Two Business Units are operating in the holding company: Cyber Security and Cyber Safety.
  • Cyber Security: deals with consulting, design, system integration; in short, IT Services in the field of Cyber Security, in particular on Cyber Risk Management, GDPR, Cyber Resiliency;
  • Cyber Safety: with the patented and proprietary product ICOY ™ ® operates in the occupational safety market in the so-called EH&S (Environment, Health & Safety) segment. This Business Unit, the subject of important investments in an extremely innovative product, is in an advanced start-up phase.

Other sectors in scale-up

• 4Science S.p.A: is the Data Science Business Unit, specialized in Data Science and Data Management services and solutions for the digital repository market of scientific research, cultural heritage and Big Data. 4 Science is in Scale-up.

Net financial position

Details of the Group’s net financial position are shown below:

in thousands of Euro	30/06/2023	31/12/2022
Cash and equivalents	5.017	2.345
Financial receivables	–	2.110
Current financial assets	1.617	1.152
Current financial liabilities	(411)	(697)
Convertible bonds	–	(284)
Current net financial position	6.223	4.626
Non-current financial assets	–	–
Non-current financial liabilities	(3.846)	(3.309)
Non-current net financial position	(3.846)	(3.309)
Total net financial position	2.737	1.317

The Group’s net financial position at 30 June 2023 improved as a result of the capital increase of the subsidiary 4Science in the second half of 2022 and the income deriving from the issue of convertible bonds. Cash and cash equivalents also improved as a result of the receipt of the sale of the subsidiary Be Innova S.r.l. to SEAC S.p.A.

Significant events occurring after the end of the period

There are no significant events that occurred after the end of the period.

Outlook

Itway S.p.A.

In the months that follow, the Group will continue its development activities in its reference markets: Cyber security, Data Science and Cyber safety. The strengthening of the technical and commercial structure, as commented above, we expect to bring an acceleration in growth.

BU Cyber security & Infrastructure

To achieve the objectives of the business plan, Itway will focus on the growth of the Cyber Security & Resiliency Business Unit, in particular by pushing the new product line “Itway Cyber Security & Resiliency 360 ™”, offering the market further expanded NOC/SOC services and managed security services (MSP) h24x365gg. which today represent a true excellence.

Important agreements for the resale of advanced products and services have also been defined; in particular, it is worth mentioning the important exclusive agreement signed with the MasterCard company, which has developed innovative Cyber Risk Assessment services (RiskRecon) and exclusively also with the company Zerofox (social engineering products and brand/web reputation). The strategic partnership agreement signed with Cloudian, a Silicon Valley company specializing in the creation of enterprise-class object storage software, is also of considerable importance. Our offering is fully part of the “new wave” of Cyber Resilience with a vertical and horizontal integration of “state of the art” products and specific services. Also in Cyber Resiliency we have the new agreement with the company Quest Software that provides cloud management services, software as-a-service, security, mobility and backup / recovery.

The theme of Cyber security and infrastructures therefore remains the central pivot of the Itway Group’s range of services, with the aim of increasingly strengthening our market shares through the expansion of the customer base and the creation of new partnerships with technology vendors that represent the state of the art in the field of Cyber Security & Cyber Resiliency and infrastructures.

BU Cyber safety

The Cyber Safety Business Unit, based on the ICOY MOVER product, deserves a special mention. During the first half of the year, the first orders were fulfilled and important signs of interest from customers were found, and this bodes well for the realization of further orders.

With the specialized sales team on ICOY, which also includes a senior professional in the role of Key Account Manager (KAM), a conspicuous pipeline of offers and opportunities has developed, and therefore we will continue with the Direct Marketing activity aimed at companies in the engineering and steel sector to further increase the portfolio of negotiations and realize orders before the end of the fiscal year. We have developed the brand of the Business Unit, activating all the communication tools such as registered logo and trademark, specific website www.icoy.it, as well as signed the first alliances with specific associations in the security sector, such as RSPP Italia and AIAS, with whom we have started to plan a communication and evangelization activity to the market; contacts are also underway with other sector associations.

The interest in ICOY MOVER is really great and the terrible sequence of accidents at work (even these days) further testifies how many lives could be saved with the adoption of the ICOY MOVER product. As of this report, more than 130 large steel and metallurgy companies contacted have shown concrete interest and 31 of these have requested and received an offer from ICOY MOVER.

4 Science S.p.A., BU Data Science

The second half of 2023 opens with an important order book and with interesting growth prospects linked above all to the international market and in particular to the US one, hoping however that, as regards the national market, there will be the hoped-for positive effect linked to the investments envisaged in the PNRR and in particular in the so-called PND (National Digitization Plan).

In addition, the growth in orders received during the first half of 2023, well above that of last year, positions us well for the second half of 2023.

In terms of revenues and margins, the positive effects linked to the new organizational structure should also be seen, in particular with regard to the efficiency of operations made necessary as a result of the substantial investments made in the company’s personnel starting from last year and continued during the first half of 2023. 

The company is today, worldwide, one of the main service providers of the DSpace platform with a leading role within the American steering committee that defines its developments and future evolutions; This leading role, together with the increased production capacity of our software factory, will allow us to grow both on the international and national markets.

Even the direct presence in the US market, which has already given the first positive results, will have to represent a growth factor generating a significant amount of negotiations to be transformed into sales, in a market that can certainly offer great opportunities.

BU Cyber security Products VAD + PS: Itway Turkiye Ltd. e Itway Hellas S.A.

There are no significant factors that could in any way slow down steady growth in the remainder of 2023. A close eye on the currency situation in Turkey and a vigilant management of operating costs will be maintained.

The expectation is that value-added distribution activities with design services will continue in an important way in their growth, maintaining a constant focus on margin protection, which are increasing, and working capital management.

The reference market in the two countries in which we operate is in a phase of significant development and the prospect is to grow organically thanks to the growth rates expected by the vendors we represent, the increase in our market share and the introduction of new product lines, such as Mastercard, as well as other lines for the storage and cloud back-up market.

The objective remains to maintain good growth rates, both in terms of revenues and profitability, in line with the Business Plan, and to confirm the strategic leadership positioning in Cyber security of Greece and Turkey.

The risks related to the well-known conflict between Russia and Ukraine and the possible effects that this emergency could have on the global economy, in relation to the Group and the reference businesses, in the process of drawing up the financial statements, were assessed by the Management in order to verify whether there could be potential impacts in relation to the performance of the business itself. The Group does not currently maintain direct relations with Russia and Ukraine and their markets; there are no financial flows that directly involve the Group’s operations that are expressed or regulated by Russian and Ukrainian foreign currencies. The Group also assessed the impacts linked to the potential increase in energy costs.

Management will continue to monitor all scenarios and any impacts related to such events.

Related Party Relationships

During the first half of 2023, the Group maintained commercial and financial relationships with related companies. These are relationships established as part of normal management activities, regulated under conditions contractually established by the parties, in line with ordinary market practices and summarized below:

in thousands of Euro	Credits	Debts	Costs	Revenues
Itway S.p.A. vs Giovanni Andrea Farina & Co. S.r.l.	–	–	99	–
Itway S.p.A. vs Fartech S.r.l.	136	100	–	68
Total	136	100	99	68

Itway S.p.A. directs and coordinates subsidiaries resident in Italy. This activity consists in indicating the general and operational strategic guidelines of the Group, in the definition and adaptation of the Organizational Model and in the elaboration of general policies for the management of human and financial resources.

Itway S.p.A. is not subject to management and coordination by any company.

Shares

As at 30 June 2023, the Parent Company owns 203,043 treasury shares (equal to 1.91% of the share capital), for a nominal value of Euro 101,522 and a total purchase cost of the shares held in portfolio of Euro 320 thousand (equal to the amount reflected in the “Reserve for treasury shares” deducted from the shareholders’ equity for the year and consolidated). Of these, 136,400 treasury shares (equal to 1.29% of share capital) in 2020 were loaned to N&G to service the convertible bond.

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As required by paragraph 2 art. 154-bis of the T.U.F., the manager responsible for preparing the corporate accounting documents of the Itway Group, Sonia Passatempi, declares that the corporate accounting information contained in this press release corresponds to the documentary results, books and accounting records.

In accordance with the provisions of the Consob Issuers’ Regulation, we inform you that the interim report on operations as at 30 June 2023 is available to the public at the Ravenna office, Via L. Braille 15, as well as published at the storage mechanism at: www.emarketstorage.com.

The document is also available on the Company’s website at www.itway.com, in the section “INVESTORS / FINANCIAL INFO / Half-Year Financial Statements”.

This press release is available at the Company’s registered office and website at www.itway.com, at Borsa Italiana and at the centralized authorized storage mechanism called “Emarket Storage” managed by Spafid Connect S.p.A., and can be consulted at www.emarketstorage.com.

Itway – www.itway.com

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Founded in Ravenna on 4 July 1996 by G. Andrea Farina, Itway S.p.A. is the head of a group that operates  in the IT sector for the design, production and distribution of technologies and solutions in the field of cybersecurity, artificial intelligence (AI), cloud computing and big data. For over 25 years, the group has been the benchmark in the field of Digital Transformation solutions and services. Since 2001 Itway has been listed on the Mercato Telematico Azionario (MTA) of the Italian Stock Exchange.

CONTACTS:
Itway S.p.A.	Mirella Villa Comunicazione
Tel. +39 0544 288710	Mirella Villa Tel. +39 335 7592701
investor.relation@itway.com

Attached financial statements