PRESS RELEASE – The BoD of Itway S.p.A. approves the consolidated half-year report as of June 30, 2020.

Press Release

The BoD of Itway S.p.A. approves

the consolidated half-year report as of June 30, 2020

Auditing Company Report

• REVENUE: Euro 15,468 thousand compared with Euro 14,220 thousand in H1 2019, up 9%
• EBITDA: Euro 352 thousand compared with Euro 72 thousand as of June 30m 2019
• EBIT: positive Euro 84,000 compared with a negative Euro (244,000) as of June 30
• NFP of the Group (2,792) thousand compared (3,356) thousand in H1 2019
• NFP of the Parent Company Euro (4,173) thousand vs Euro (4,374) thousand as of December 31, 2019

Ravenna, September 30, 2020– The Board of Directors of Itway S.p.A., a company listed on the Mercato Telematico Italiano of Borsa Italiana, active in the IT sector to plan, produce and distribute technologies and solutions in Cybersecurity, Artificial Intelligence, Cloud Computing and Big Data, met today under the chairmanship of G. Andrea Farina to approve the half-year financial statement as of June 30, 2020.

In the period under review the Group continued its repositioning towards a Digital product oriented model, focusing on business segments with higher value added through the three business units: cybersecurity, data science and Safety. Furthermore, also through its subsidiaries, it continued to invest in the markets of Cybersecurity, IoT and Artificial Intelligence (AI) and Big Data that are all connected between one another.

The Group took back full control of its Itway Hellas and Itway Turkiye subsidiaries, companies that are operational in the historic VAD business.

Itway S.p.A. went back to being an operational holding company, managing consultancy, planning and system integration in the cyber security sector in particular on the GDPR, Internet of Things (IoT), work safety in the so-called EH&S (Environment, Health & Safety) sector. This plan evolves towards a Digital Product-Oriented model through the management of activities in four business units: Cybersecurity, Adapt/Smartys, Data Science, Safety presided over by Itway, 4Science and BE Innova.

Notwithstanding the lack of projections available for 2020 for the sector that consider the changed macroeconomic scenario after Covid-19, the general context and the performance of the ICT market confirm the forecasts of the digital market in Italy for 2019 that saw growth of 2.5% for the entire sector with segments related to digital innovation, defined as Digital Enablers, that continue with their double-digit growth [Assinform projections 2019: Cybersecurity (+12.2%), Cloud Computing (+23.6%), IoT (+19.2%), Big Data (+18.1%)].

President and CEO G. Andrea Farina said:

“We are extremely satisfied with the results achieved in the first six months of 2020 that showed positive data on all performance indicators, thanks to the strategies adopted and the repositioning of the Group.

“The new industrial and organizational structure of the Group, leaner and Digital Product-Oriented, today supplies services and products that are more strategic and ‘smart’ to a market that is broader, in constant evolution and with more complex needs.”

In the first half of 2020 Revenue rose in volume terms by approximately 9% while Ebit turned positive compared with a negative value in the same period of 2019. The result after taxes is of Euro 209 thousand, significantly better than the negative Euro 168 thousand in the same year ago period.

ECONOMIC AND FINANCIAL ANALYSIS TO JUNE 30, 2O2O

In particular:

REVENUE during the period totalled Euro 15,468 thousand, up Euro 1,248 thousand or 9% compared with H1 2019 when they totalled Euro 14,220 thousand.

EBITDA was a positive Euro 352 thousand compared with Euro 72 thousand in the same period a year ago, highlighting a positive performance.

EBIT was a positive Euro 84 thousand compared with a negative Euro 244 thousand as of June 30, 2019, indicating also in this case a marked improvement.

The Result before Taxes shows an excellent performance totalling Euro 290 thousand compared with a negative Euro 253 thousand in H1 2019 .

The Result for the period was a positive Euro 209 thousand, improving from the negative Euro -168 thousand in the same period of 2019.

The Net Financial Position of the Group as of June 30, 2020, even though still negative, improved by over Euro 500 thousand compared with December 31, 2019 going from Euro (3,356) thousand as of June 30, 2019 to Euro (2,792) thousand in the period under review.

Sector performance: Value Added Distribution

Through the Value Added Distribution division the Group operates in the distribution of specialized software and hardware products, certification services on software technologies distributed and pre- and post-sale technical assistance.  Following are the main economic indicators, compared with the previous fiscal year, of the VAD SBU that includes Itway Hellas SA and Itway Turkyie Ltd that were taken back in the consolidation perimeter of Itway:

Sector performance: Activities of the Parent Company and other sectors in the start-up phase

Itway S.p.A. has the role of the parent company listed on Borsa Italiana S.p.A. and is an operational holding responsible for production and system integration activities that supplies services of different nature to the operational subsidiaries. Following is a brief income statement with data of the Parent Company activities and other sectors in the start-up phase.

Group net financial position

Current liabilities at the moment include two medium-term loans, for a total of Euro 556 thousand, currently classified as short-term even though the parameters are currently being redefined in order to maintain the original status of medium-term.

Net financial position of the Parent Company

The Net Financial Position of the Parent Company as of June 30, 2020 is broadly unchanged compared with December 31, 2019. Current liabilities at the moment include two Iccrea medium-term loans, for a total of Euro 100 thousand. Furthermore, non-current liabilities include Euro 29 thousand due to the application of IFRS 16 “Leasing” which came into force from January 1, 2019.

Going concern

The consolidated half-year financial statements as of June 30, 2020 show a positive result of Euro 209 thousand compared with the loss of Euro 168 thousand in the previous fiscal year.

At June 30, 2020, the Itway Group had a current net financial indebtedness of Euro 7.76 million, of which Euro 6.7 million that had already expired at the date of the financial statements, expired tax and social security payables of some Euro 696 thousand (that will be paid within the terms foreseen by existing regulations) and an expired indebtedness towards suppliers of Euro 4.9 million (of which Euro 0.8 million for amounts being contested and some Euro 1.4 million towards suppliers that are no longer present on the market but that for prudential reasons are still booked in the balance sheet).

To face this tension, after the interruption of collegiate talks with banks, negotiations continued on a bilateral basis with each institute.

The Company has progressively renegotiated and remodulated debt (over 90%) with most banks. To date negotiations are still underway for minor amounts with some financial institutions or Companies that acquired debt from banks that the Company deems it can reasonably conclude by reaching agreements on the modalities to repay the debt.

In this context the Company deemed necessary to regain full control of Itway Hellas and Itway Turkiye for their excellent profitability; this took place following the serious and persistent breach by Cyber 1 of the agreements underwritten for the purchase of the shares of the Subsidiaries in Greece and Turkey.

The industrial plan for the 2020-2023 period, approved by the Board of Directors on September 14, 2020 foresees that the Group continues to specialize in the security sector with a repositioning based on investments that will be carried out by Itway S.p.A. and that will be covered with the proceeds and cash flows from the Greek and Turkish subsidiaries, as well as a greater focus on the Be Innova S.r.l. and 4Science S.r.l. affiliates Furthermore, once the general situation will allow it, the Company will continue to develop its foreign businesses also in Africa and the Middle East where the Group is present through its investment in Itway Mena FZC.

This plan, from a financial point of view, is based on cashing in of proceeds and cash flows from the Itway Hellas SA, Itway Turkiye Ltd and Be Innova S.r.l. subsidiaries and the positive outcome of negotiations with some banking institutions and with the main suppliers of the Group for a remodulation of the debt payments according to the forecasts of the plan.

The Directors drafted these half-year financial statements on a going concern basis, based on the industrial plan and while recognizing there continue to be elements of uncertainty regarding the positive outcome of the transactions that constitute the fundamental assumptions of the plan, in particular regarding the positive continuation of the debt restructuring process but also comforted by the positive results achieved in the past two years,

Subsequent events

On August 6, 2020 Itway S.p.A. announced that it signed an investment contract with Nice & Green SA, a Swiss institutional investor, for the issue of a Warrant and Convertible Notes Funding Program for an overall Euro 6.000.000. The transaction was finalized to support the working capital of the Company, to strengthen its financial structure and broaden its shareholding structure. The capital raise deriving from the transaction with N&G will give Itway further capital and financial resources that will be used to accelerate the development of growth and investment strategies of the Company in the market segments where Itway operates without any additional charge for the Company.

In order to carry out the Bond Issue an Extraordinary Shareholders’ Meeting of Itway will be convened in the month of October of 2020 in order to execute the Bond Issue.

Currently N&G exercised a warrant for Euro 150.000. The warrant will not be listed on any regulated market.

Foreseeable evolution of operations

The guidelines foresee that the Group focus on the security sector that in the next five years is expected to grow over 12% and that there be a repositioning in the products and services sector. Furthermore there is expected to be a greater focus on the Be Innova S.r.l. and 4Science S.r.l. affiliates.

In light of the current situation regarding a possible impact on the business performance caused by the Covid-19 pandemic, it is difficult to assess to date if there will be significant effects. The activities of the Itway Group, mostly linked to cybersecurity, have proven to be essential also, and most importantly, in these moments of global emergency. The measures adopted by almost all organizations in terms of smart working have made risks related to security multiply at exponential rates resulting in resorting to cybersecurity. As far as the Greek and Turkish subsidiaries are concerned, there don’t seem to be significant effects also due to the limited spread of the pandemic in these countries.

4Science s.r.l.

The company is fully operational with a highly qualified personnel to realize its objectives: become the reference company in the emerging Data Management, Big Data (Data Curation) and Digital Repository and Preservation of the digital heritage related to Cultural and Artistic Assets, or the so-called Digital Library.

The Big Data market is still expected to grow with 48% of companies expecting in the future investments in this sector and in the three years from 2016-2019 it grew on average 23.1% (Assinform).

The services offered by 4Science, places the company in a highly specialized sector. If on the one hand 4Science operates in the so-called Big Data segment it is also true that this segment is very broad and it is necessary to be focused. The skills are in data management for digital libraries and digital repositories and this market is certainly adjacent to the so called Business Analytics market, the Deep Learning and Artificial or Augmented Intelligence (AI); this makes it necessary to consider how to interact and collaborate with companies that are specialized in this sector.

There is also the intention to develop alliances and partnerships with players that have complementary skills and with whom to face projects from which we were before precluded. In this sense, at the beginning of 2020 the Company won an important tender worth euro 860 thousand with Peruvian client Concytec, the national consortium for research and science. In light of the above, the revenue trend of 4Science is on track to increase 50% compared with 2019.

Itway S.p.A.

The company, after returning to being an operational holding, deals with consultancy, planning and system integration in cybersecurity, in particular on GDPR, Internet of Things (IoT) and work safety or the so called EH&S (Environment, Health & Safety) segment.

In the Safety market, a particular focus will be placed on the development and sale of ICOY solutions, the ICOY product line thought of to offer Artificial Intelligence and Deep Learning support to operators who work in dangerous industrial settings in order to prevent accidents.

Itway Turkiye Ltd, e Itway Hellas S.A.

The value added distribution activities continue being significantly developed proving also in the first half of 2020 a good ability to grow, in particular on revenue where Greece reported a 41% increase. These are promising figures that make us confident on the growth during the year of the value added distribution segment, despite the delicate situation caused by the Coronavirus the effects of which for now have not been significant.

Own shares

The Parent Company as of June 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. On August 12, 2020 No 650 thousand shares were loaned to Nice & Green SA.

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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.

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Auditing Company Report

The Report of the Auditing Company, Analisi S.p.A., shows significant uncertainty in the Half Year Report as at June 30, 2020 in terms of the going concern that, however, does not lead to irregularities and a reference to disclosure in the paragraph “trade receivables”. Attached to the current press release is the full text of the Auditing Company Report.

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Pursuant to Consob’s Issuers’ Regulation, the half-year report as of June 30, 2020 will be made available to the public at the corporate headquarters, at Borsa Italiana S.p.A. and on the internet site www.itway.com from September 30, 2020 in the “Investor/Financial Info/Half-Year Statement” section as well as at the authorized central storage mechanism Emarket Storage, managed by Spafid S.p.A. that can be seen at wwww.emarketstorage.

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 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, 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.

Balance Sheet schemes

Auditing Company Report attached