Icona Technology SpA: Icona Technology S.p.A. reports the results for the H1 2023

Cinisello Balsamo (MI) (pta044/29.09.2023/15:28 UTC+2)

HIGHLIGHTS

• Consolidated total sales at 1,2M EUR (+17% YoY, all organic) on more than 2200 clients in 42 countries
• Recurring revenue amounting to 72% of the total revenue, with international sales equal to 20% of the total sales
• Consolidated EBITDA at 110k EUR (+200% YoY), adj EBITDA at 150k EUR
• Operating cash flow at 396k EUR and Free cash flow at 237k EUR
• Cash conversion "Operating Cash Flow into EBITDA" exceeds 100% Net cash
• Successfully acquired Explan, Independent Software Vendor focused on the digitalization of maintenance

Giorgio Nepa, President of Icona Technology, comments: "I am profoundly elated to acknowledge that Icona Srl, our subsidiary, has solely reached sales revenues of €1.069.514, a majority being a result of the sale of our recurring services, showcasing a notable revenue increment of over €150.000, primarily from orders finalized at the end of 2022. Our advancements, including the strategic introduction of Service Hub and our investment in technological innovations like Microsoft's Dynamics, have solidified our commitment to continual growth and innovation. The acquisition of EXPLAN Consulting Srl is another milestone, positioning us as a software vendor dedicated to catalyzing the digital evolution of after-sales services, encompassing areas like maintenance, technical assistance, and customer care. Our journey, despite the foreseen economic uncertainties of 2023, is marked by optimism and a resolve to emerge stronger, innovating and growing in alignment with market demands."

Cinisello Balsamo, September 29, 2023. Icona Technology S.p.A. ("Icona Technology") (ISIN IT0005465528 – ticker: CARE), an international scale-up aimed at catalysing the digital evolution of after-sales services, reports the results for the H1 2023.

(source: management account, unaudited)

Comment on the consolidated financial statements

Icona Srl, a subsidiary, solely accounted for sales revenues amounting to €1.069.514, with a significant portion, over 70%, deriving from the sale of recurring services, and international sales representing about 20% of the total revenues. There was a noteworthy revenue increment by over €150.000, primarily attributed to orders finalized at the end of 2022. It's crucial to note that the parent company, Icona Technology, did not generate any revenues externally. In 2023, the group continued its policy of capitalizing on development projects, focusing significantly on enhancing the functionalities of the Acty software to meet market demands, with expectations of a positive clientele response. However, a reduction of €15.667 was observed in other revenues and proceeds due to the method of attributing the tax credit received in May 2022. The decline in the resale of hardware by Icona Srl caused a reduction in the costs of raw materials and goods by €30.127, reflecting the current lack of market interest in such products. Meanwhile, the costs related to fuels and consumable materials have remained relatively stable. Service costs, coupled with personnel expenses, have a considerable impact on the group's financials. The management has instigated constant monitoring mechanisms to assure efficient and economical operations. The first half of 2023 witnessed a decline in service costs by nearly €55.000 due to optimization of internal resources and reduced reliance on external consultations. The costs related to the leasing of company cars and condominium expenses by the subsidiary have seen no significant changes. However, there was an increase in personnel costs by €39.578, which constitutes almost 40% of the characteristic revenues. The management is committed to valuing its employees and fostering a positive and conducive work environment.

The group has attained a positive EBITDA value in the first half of 2023, with Icona Srl effectively covering all the group's costs through its unique activities. The increased depreciation of €11.504 is attributed to the capitalization of development projects leading to higher values of intangible assets. EBIT also saw a positive increase of €212.711, showcasing the group's capability in maintaining efficient management and creating substantial value. Lastly, the financial result remained relatively unchanged, primarily composed of the passive interests on Icona Srl's two loans with banks, which continue to be regularly repaid.

(source: management account, unaudited)

The items involved in the adjustment process include the service costs associated with consultations and the management expenses of the stock exchange, along with intangible depreciations arising from the listing and corporate restructuring costs recorded in 2021; in total, they amount to approximately €60.000 across both financial years.

The impact of the adjustments over the two years is essentially consistent, as the activities involve steady and recurring costs, hence the variation values have remained largely unchanged. As evident from the overview, the industrial management of the group demonstrates a substantially improved level of profitability, attaining an EBITDA value of €148.838. This, in percentage terms, represents 13,91% of the sales revenues as opposed to the 10,31% non-adjusted, culminating in a positive net operating result of €32.743.

Significant events in the first half of the fiscal year

In the first half of 2023, significant organizational initiatives were undertaken by the company to align with a renewed vision of development and growth. They introduced a more dynamic marketing strategy, focusing on overcoming the challenges faced in 2022 related to lead acquisition, especially for Acty.

This new approach allowed for more flexibility and quicker adjustment to market demands, optimizing resources and investments. Strategic restructuring was also implemented in the sales department to enhance commercial activities, introducing standardized methods for prospect qualification and a technical pre-sales role, ensuring precision in negotiations and discussions. This restructuring aimed at strengthening partnerships and focusing on key clients, emphasizing fast and efficient response to client inquiries. Moreover, substantial investment was made in technological advancements, implementing Microsoft's Dynamics, a CRM software, as a crucial tool for organizational growth, enhancing operational efficiency and providing comprehensive customer insights, thus aiding in strategic decision-making.

The company also emphasized organizational well-being, introducing new company policies and welfare policies to create a transparent, flexible, and conducive working environment. Efforts were made to ensure employee satisfaction, trust, and respect, by offering clarity and stability in work hours, leaves, and providing support in critical times, focusing on maintaining a balanced and adaptive work environment to attract and retain talent.

Introducing a Customer Success Manager (CSM) demonstrated the company's commitment to innovation and continuous evolution, aiming to strengthen customer care and long-term sales strategies. The CSM role is pivotal in preventing customer churn, ensuring customer needs are met proactively and efficiently.

Finally, Service Hub was introduced as a comprehensive solution, reflecting the company's constant commitment to innovation and their capability to adapt to market needs. This new product marked a radical shift in their value proposition, offering a complete ecosystem designed to be the centerpiece of Icona's solutions while ensuring an intuitive and valuable interface for clients. The positive market response and significant contracts concluded underscored Icona's ability to transform challenges into opportunities, reinforcing their market position and customer trust.

Significant events after the first half of the fiscal year

Icona Technology has announced the completion of the acquisition of 80% of EXPLAN Consulting Srl ("EXPLAN") on July 19, 2023. EXPLAN Consulting Srl, founded in 1999 and headquartered in Bollate (Milan), is an independent software vendor (ISV) specializing in the digitalization of maintenance, through its flagship product, Plangei.

Plangei has a user base of 40 customers and has seen a growth of 20% in the last year. Some of EXPLAN's notable customers include Azimut Benetti, Eletecno, Giva Group, Generali, Italgas, RCS, Venchi, and Virgin Active. In the year 2022, EXPLAN experienced a growth of 20%, recording a turnover of €1.1M (against €933k in 2021), an EBITDA of €140k (compared to €64k in 2021), and a Net Profit of €55k (up from €9k in 2021). The Net Debt stood at €214k, mainly due to the mortgage related to the office acquisition. The company is cashflow positive, with a cash conversion rate (EBITDA/OpCash) of around 85%.

On July 19, 2023, Icona Technology completed the first step of the transaction, purchasing 80% of the share capital of EXPLAN from Alessandro Villani and Francesco Soatin, who each owned 50% of the share capital, and signed a shareholders' agreement. This agreement granted Icona Technology the option to acquire an additional 20% of the share capital within 90 days from the approval of the financial statements for the year 2025. The total value of the transaction for the acquisition of 100% of the share capital is €1,5M, with €1,2M paid in cash at closing and €300k scheduled to be paid in shares of Icona Technology upon the completion of the second step of the operation. After the acquisition, both Alessandro Villani and Francesco Soatin will continue as executive directors of EXPLAN and will join the management team of Icona Technology.

Business outlook

In light of the anticipated economic recession in 2023, impacting mainly B2B companies, Icona Technology has maintained a clear, future-oriented vision, recognizing crises as potential opportunities. The company aims to guide other businesses through economic uncertainties by leveraging leadership, technological expertise, and data analysis to deliver premium, transformative solutions, focusing on Service Hub and its innovative offerings. Icona Technology is not only concentrating on revenue generation but also on establishing economies of scale and customer loyalty, emphasizing innovation and upselling strategies. The acquisition of Explan Consulting Srl has further solidified Icona's position on the market. Despite foreseen challenges, the company remains optimistic, committed to innovation and growth, poised to emerge stronger from the possible economic upheavals of 2023.

Other tables

(source: management account, unaudited)

(source: management account, unaudited)

Terminology

EBITDA indicates operating income before income taxes, financial income and expenses, depreciation and amortization of fixed assets, impairment of receivables, and provisions for risks and charges. EBITDA is not identified as an accounting measure under national accounting standards and therefore should not be considered as an alternative measure for assessing the performance of the Issuer's operating results. Since the composition of EBITDA is not regulated by the relevant accounting standards, the determination criterion applied by the Issuer may not be homogeneous with that adopted by other companies and therefore may not be comparable with them.

EBIT indicates earnings before income taxes and financial income and expenses. EBIT therefore represents the result of operations before remuneration of both debt and equity capital. EBIT is not identified as an accounting measure under national accounting standards and therefore should not be considered as an alternative measure for assessing the performance of the Issuer's operating results. Since the composition of EBIT is not regulated by the relevant accounting standards, the Issuer's applied determination criterion may not be homogeneous with that adopted by other companies and therefore may not be comparable with them.

Net Working Capital is calculated as the sum of inventories, trade receivables, trade payables, other current assets, other current liabilities, tax receivables and payables, and net accruals. Net Working Capital is not identified as an accounting measure by the relevant accounting standards. The determination criterion applied by the Issuer may not be homogeneous with that adopted by other groups and, therefore, the balance obtained by the Issuer may not be comparable with that determined by them.

Net Invested Capital is calculated as the sum of Net Working Capital, Net Fixed Assets, and Non-Current Liabilities (which also include deferred and prepaid taxes). Invested Capital is not identified as an accounting measure by the relevant accounting standards. The determination criterion applied by the Issuer may not be homogeneous with that adopted by other groups and, therefore, the balance obtained by the Issuer may not be comparable with that determined by them.

Net Financial Position is calculated as the difference between total financial debts and liquid assets including financial receivables.

This press release is available in the Investor Relations section at www.iconatech.com.

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Emitter:	Icona Technology SpA Viale Brianza 20 20092 Cinisello Balsamo (MI) Italy
Contact Person:	Giorgio Nepa
Phone:	+39 02 6111981
E-Mail:	investor.relations@iconatech.com
Website:	www.iconatech.com
ISIN(s):	IT0005465528 (Share)
Stock Exchange(s):	Vienna Stock Exchange (Vienna MTF)