NEXI

Company report Hold (unchanged)

13 May 2020 – 5:30 PM MARKET PRICE: EUR13.95 TARGET PRICE: EUR15.0 (from EUR14.80)

Financial Tech. - Payments Solid quarter, good visibility on 2020

Data Shares Outstanding (m): 627.8 Despite 1Q20 preliminary figures were already disclosed (16 April), Nexi managed to surprise by reporting slightly stronger revenues and EBITDA. However, the focus was Market Cap. (EURm): 8,757 on trading conditions update and, eventually, a 2020 guidance. Management Enterprise Value (EURm): 11,008 indicated signs of stabilization in April (value of acquiring and issuing transactions - 33.0% Y/Y and -43.4% Y/Y respectively) vs. what disclosed with the preliminary Free Float (%): 46.6% results (that mentioned a -45/50% in volumes at the beginning of April). Av. Daily Trad. Vol. (000): 2,014 Furthermore, value of acquiring and issuing transactions at -25% Y/Y in the last week rolling (May 2nd – 8th) showed very early signals of possible initial recovery across Main Shareholder: Mercury UK (50.2%) categories. While this was not enough to give a 2020 guidance, management announced a EUR100 million cash costs containment plan to mitigate EBITDA and Reuters/Bloomberg: NEXI.MI NEXI IM cash flow impact. All in all, we are fine tuning down our estimates (-1.1% on 52-Week Range (EUR) 8.0 16.9 2020/22 EPS) and stick with our Hold rating, mostly for valuation reasons: the stock trades in line with peers (although we acknowledge a discount to Worldline) showing Source: FactSet, UBI Banca estimates

similar or worse fundamentals (in terms of cash metrics) balanced by M&A appeal Performance (SIA discussions still on-going) and growth prospects of the Italian market. TP fine- tuned to EUR15.0 on peers re-rating.

1m 3m 12m Absolute 7.5% -0.8% +65.3% > 1Q20 in more details: Top line posted a -0.5% YoY driven by a combination Rel. to FTSE IT 9.2% 29.0% +84.2% of low single-digit volume decline, high single-digit decline in average value per Source: FactSet transaction and a significant increase in take-rates. The cost base declined 4.8% YoY thanks to the fact that 38% of it is variable (linked to volumes of Graph area Absolute/Relative 12 M transaction and level of activities on POS, ATMs, etc.) so EBITDA grew 3.9% YoY. The company generated EUR50 million cash in 1Q20. > Transaction volumes -35% in March, -48% in April, -35% last week rolling. 52% of Nexi revenues are installed-base driven. The remaining 48% are split almost evenly by basic consumption (growing during the crisis), discretionary consumptions (hit by the crisis) and high-impacted consumptions (collapsed). While there are signs of stabilization, we expect transaction volumes still negative in July/August (-7%) and then back to growth from September (at a 10% rate). Adding the Intesa division, we get to a revenue’s growth of 5.7% this year. The risk on our estimates, we believe, is tilted towards the downside as consumption recovery may be slower and depends also on the speed of exit from the lockdown in Italy.

Source: FactSet > Cost cutting should mitigate volumes decline. No significant credit Massimo Vecchio risk. The reduction EUR100 million in cash costs is to be split by capex or Senior Analyst Opex depending on the transaction volume trend. We assumed it to be [email protected] two/third on capex, also to protect the cash flow given the leverage (3.7x our Tel. +39 02 62753016 FY2020 estimate). We learnt that there is a strong protection mechanism on Dario Fasani the business to be acquired from Intesa (i.e. there is a compensation on the Analyst EBITDA which in fact, pro-forma, would have grown 6.3% YoY). Management [email protected] Tel. +39 02 62753014 reinforced the concept of a very low credit risk with provisions of around EUR7/8 million in 2019 which, at worst could double this year. www.ubibanca.com/equity-research

Financials Ratios priced on 11 May 2020 2019A 2020E 2021E 2022E 2019A 2020E 2021E 2022E

Revenues (EURm) 984 1040 1136 1224 P/E (x) 44.2 43.6 34.7 27.3

EBITDA (EURm) 503 590 675 766 P/CF (x) 35.1 33.6 26.6 23.7 EBITDA margin (%) 51.1% 56.7% 59.4% 62.6% P/BV (x) 4.5 5.7 4.9 4.2 EBIT (EURm) 382 440 500 586 Dividend Yield 0.0% 0.0% 0.4% 0.7% EPS (EUR) 0.22 0.32 0.40 0.51 EV/EBITDA (x) 14.8 18.7 15.9 13.5 CFPS (EUR) 0.27 0.42 0.52 0.59 Debt/Equity (x) 1.1 1.5 1.1 0.8 DPS (EUR) 0.0 0.0 0.1 0.1 Debt/EBITDA (x) 2.9 3.8 2.9 2.1

Source: Company data, UBI Banca estimates Source: Company data, UBI Banca estimates

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NEXI 13 May 2020

Key Financials (EURm) 2019A 2020E 2021E 2022E Revenues 984 1040 1136 1224 EBITDA 503 590 675 766 EBIT 382 440 500 586 NOPAT 302 344 405 474 Free Cash Flow 170 261 329 370 Net Capital Employed 2795 3775 3729 3700 Shareholders' Equity 1325 1526 1778 2099 Net Financial Position 1471 2250 1951 1601 Source: Company data, UBI Banca estimates

Key Profitability Drivers 2019A 2020E 2021E 2022E Net Debt/EBITDA (x) 2.9 3.8 2.9 2.1 Net Debt/Equity (x) 1.1 1.5 1.1 0.8 Interest Coverage (%) 3.1 8.5 10.5 12.6 Free Cash Flow Yield (%) 2.8% 3.0% 3.8% 4.2% ROE (%) 10.2% 13.2% 14.2% 15.3% ROI (%) 13.6% 11.6% 13.4% 15.8% ROCE (%) 9.1% 7.8% 9.0% 10.6% Source: Company data, UBI Banca estimates

Key Valuation Ratios 2019A* 2020E 2021E 2022E P/E (x) 44.2 43.6 34.7 27.3 P/BV (x) 4.5 5.7 4.9 4.2 P/CF (x) 35.1 33.6 26.6 23.7 Dividend Yield (%) 0.0% 0.0% 0.4% 0.7% EV/Sales (x) 7.6 10.6 9.4 8.5 EV/EBITDA (x) 14.8 18.7 15.9 13.5 EV/EBIT (x) 19.5 25.0 21.4 17.7 EV/CE (x) 2.7 2.9 2.9 2.8 Source: Company data, UBI Banca estimates * Based on 2019 average price

Key Value Drivers 2019A 2020E 2021E 2022E Payout 0% 0% 15% 20% NWC/Sales -5.2% -6.2% -7.0% -7.7% Capex/Sales 17.1% 14.1% 12.8% 10.6% Source: Company data, UBI Banca estimates

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NEXI 13 May 2020

Recent developments

> 4Q19: financials in line with last year in a tough environment. Preliminary results were published on 16 April so only a minor surprise in NEXI’s 1Q20 set of figures, but a nice YoY comparison given the current scenario: a) Revenues of EUR225.3 million or -0.5% YoY – UBI est. EUR221.0 million - Consensus EUR233 million; b) Adj EBITDA of EUR115 million or +3.9% YoY - UBI est. EUR113.0 million - Consensus EUR118 million; c) A Net Financial position of EUR1,420 million - UBI est. EUR1,405 million - Consensus EUR1,441 million. During Q1 20, Nexi managed over 1bn issuing and acquiring transactions in Jan-Feb (up 13.2% Y/Y) with value of managed transactions of EUR 72.5bn (+5.4% Y/Y), while in March, given the implementation of the lockdown measures nationwide, managed transactions decreased 31% Y/Y to 338m with a value down 33% Y/Y to EUR 24.9bn. > 52% of the revenues are non-volume driven. In detailing how the business model behaved during the crisis management mentioned that half of the total 2019 Revenues are linked to the installed base (n. of POS terminals, n. of merchants, n. of managed cards, n. of ATMs, etc.) - and therefore not directly impacted by the short term volumes’ dynamics – while and 38% of variable costs related to volumes and activities. MSS is the division where the volume-driven share of revenues is higher (64%) while DBS is where it is the lowest (only 9%, in fact that division posted a YoY growth in revenues). CDS sits in the middle with a 41% share of volume driven revenues).

Figure 1 – Nexi 1Q20 results (EURm) 1Q19A 1Q20A YoY chg. 1Q20E A/E change Consensus Merchant Serv. & Solutions 106.1 105 -0.9% 102 3.4% Cards & Digital Payments 93.0 93 -0.4% 93 -0.2% Digital Banking Solutions 27.4 28 0.7% 27 4.1% Net Revenues 226.5 225.3 -0.5% 221.0 1.9% 233.0 EBITDA 110.6 114.9 3.9% 113.0 1.7% 118.0 EBITDA margin % 48.8% 51.0% 51.1% 50.6% Net Debt/(Cash) 2,185 1,419 -35.1% 1,405 1.0% 1,441 Source: Company data, UBI Banca estimates, FactSet

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NEXI 13 May 2020

Financial Projections

> Our assumptions on COVID-19. Since we developed a scenario to assess the COVID-19 impact there was a major advancement in terms of therapy (drugs) to treat the disease: Gilead’s drug should mark the first approval this week from the FDA. Aside from that, the other assumptions are still valid: a) A vaccine for the mass population would not be ready before fall 2021 but it should be ready for healthcare operators in fall 2020; b) Serology testing is probably the faster and easier way to stabilize the economy by allowing immune people to avoid the lockdown; c) Very likely the virus would re-emerge in the fall so, social distancing is here to stay for a while. > A fine tuning in EPS estimates, slightly deeper cuts in EBITDA. The EBITDA decline of 3.3% on average for 2020-22 is mitigated by the lower costs of debt following the bond issuance (1.75% vs. our previous assumptions of 2.25%). The assumption that the majority of the cash cost containment goes to capex protects the Net Debt which in fact is broadly unchanged.

Figure 2 – Old vs. new estimates

2020E 2021E 2022E (EURm) Old New % diff. Old New % diff. Old New % diff.

Sales 1,068 1,040 -2.6% 1,168 1,136 -2.7% 1,258 1,224 -2.7%

EBITDA 603 590 -2.3% 701 675 -3.8% 795 766 -3.7%

Operating Profit 453 440 -3.0% 526 500 -5.0% 615 586 -4.8%

Operating Profit % 42.4% 42.2% 45.0% 44.0% 48.9% 47.9%

Net result 264 265 0.2% 315 309 -1.9% 377 371 -1.5%

Net Debt/(Cash) 2,250 2,250 0.0% 1,945 1,951 0.3% 1,590 1,601 0.7%

Source: UBI Banca estimates

> 2Q20 strongly hit, abnormally high 4Q20. While Nexi will consolidate the business to be acquired from ISP since 1 January 2020 this will happen “retroactively” (i.e. after the deal closing, expected in the summer). For 2Q20, before the inclusion of the ISP business, we expect revenues of EUR197.7 million or a 17.7% YoY decline. EBITDA, also thanks to the cost containment, should reach EUR104.8 million or 14.3% lower YoY. We expect growth to normalize in 2021 and an abnormally strong 4Q20. > Enough liquidity to manage upcoming maturities. Management was very transparent in detailing how the business behaved, on a weekly base, and splitting by volume-driven and by category in the acquiring business (see next two graphs). While the stabilization trend is evident the magnitude of the movement is so wide that the variability of the forecast is significant. In our estimates, for the acquiring business, we assumed -30% YoY in May (highly-impacted consumptions -74%, discretional consumptions -35%, basic consumptions +18%) and -23% in June (-40%, +5% and +15% respectively). July/August are still seen down 7% YoY still due to a -40% in “Highly- impacted consumptions” and then a normalization (with some over-spending in discretionary at +10% YoY) should take place from September through December.

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NEXI 13 May 2020

Figure 3 – Acquiring transaction volumes -7-days rolling % change Y/Y

Source: Company data

Figure 4 – Acquiring volumes by category

Source: Company data

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NEXI 13 May 2020

Valuation

> Fine tuning our target price to EUR15.0 (from EUR14.8). Not a lot of changes in our valuation methodology, aside from the fact that peers re-rated by some 5% since our last report. We continue to incorporate 30% chances of a merger with SIA, during the call management confirmed talks are still on although nothing was “agreed, decided or signed”.

Figure 5 – Valuation summary standalone

(EUR) New Old % difference

DCF 15.4 15.5 -0.5%

Peers 13.7 13.2 3.7%

Average 14.6 14.4 1.4%

Share price 14.0

Upside 4.3%

Source: Company data, UBI Banca estimates

Figure 6 – Valuation summary including SIA

(EUR) New Old % difference

Nexi fair value - standalone 14.6 14.4 1.1%

Nexi fair value - including SIA 15.9 15.7 1.3%

Chances of deal happening 30.0% 30.0%

Nexi fair value - weighted 15.0 14.8 1.1%

Upside 7.2% 7.4%

Source: Company data, UBI Banca estimates

> We confirm our Hold rating on this quality name, any weakness is to be seen as a good entry point. While we understand that payment stocks are extremely resilient in this new context and that Nexi has also a speculative appeal (both as a consolidator or as a target) we cannot avoid noting that it is exposed 100% to Italy, the country with the highest GDP decline expected for 2020 and that, If anything, our estimates risk is tilted on the downside. In terms of valuation, the stock trades in line with peers although on cash flow metrics it ranks worse than many of them. Nexi has rebounded massively from lows (+76%) and while we tried to be as bullish as possible in our valuation exercise we don’t have enough upside to suggest being a buyer. > A look at historical multiples. At this point any peer group valuation is more complex as it is not clear at which stage the consensus adjustment process is. It is useful to look at current multiples (1 Year Forward EV/EBITDA) compared to where they stood back in 2009. As can be seen in the next graph, the current level of 18x expressed by the payment sector is above the 2008 bottom (6.7x), the 2009 average (7.6x) and even above the exit speed from the 2009 crisis (9.3x). While arguably the sector is in much better shape now and as it is considered more valuable from investors, bottom multiples suggest that there could be further downside if our worst- case scenario materializes.

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NEXI 13 May 2020

Figure 7 – Peer group historical EV/EBITDA 1 year forward

40

35

30

25

20

15

10

5

0

Jan-10 Jan-12 Jan-13 Jan-16 Jan-17 Jan-08 Jan-09 Jan-11 Jan-14 Jan-15 Jan-18 Jan-19 Jan-20

Sep-09 Sep-11 Sep-12 Sep-15 Sep-16 Sep-18 Sep-08 Sep-10 Sep-13 Sep-14 Sep-17 Sep-19

May-10 May-14 May-17 May-08 May-09 May-11 May-12 May-13 May-15 May-16 May-18 May-19 May-20

Global Payments Worldline Fidelity Fiserv

Source: FactSet

Figure 8 – Peer group – Multiples (priced on 11 May 2020)

Company name TIER Price Currency Mkt Cap EV/EBITDA EV/EBIT P/E FCF Yield

(bn) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E Global Payments Inc. I 159.5 USD 47.7 19.3 x 15.8 x 13.6 x 21.3 x 17.4 x 15.0 x 27.4 22.0 18.2 3.2% 4.0% 4.9%

Worldline SA I 66.8 USD 12.2 21.7 x 17.9 x 15.7 x 31.1 x 25.2 x 21.5 x 40.7 32.1 27.6 2.6% 3.5% 4.7%

Fidelity National Inf. I 118.5 USD 73.2 17.7 x 14.9 x 12.9 x 21.0 x 17.9 x 15.2 x 23.2 19.0 16.4 4.1% 5.6% 7.0%

Fiserv Inc. I 94.0 EUR 62.9 15.6 x 13.7 x 11.1 x 35.1 x 26.6 x 19.2 x 22.8 18.8 16.3 6.0% 6.1% 6.8%

Average 18.6 x 15.6 x 13.3 x 27.1 x 21.8 x 17.7 x 28.5 x 23.0 x 19.6 x 3.9% 4.8% 5.8%

Nexi 13.95 EUR 8.8 18.7 x 15.9 x 13.5 x 25.0 x 21.4 x 17.7 x 43.6 x 34.7 x 27.3 x 3.0% 3.8% 4.2%

Premium/(Disc.) to peers 1.8% 1.4% -43.1% -7.6% -1.6% -0.3% 52.7% 50.9% 39.1% 32.3% 27.8% 38.2% Source: FactSet, UBI Banca estimates

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NEXI 13 May 2020

ESG Picture

Corporate Governance Does the company have a combined Chair/CEO? No Percentage of independent directors 23.1% (3 out of 13) Does the company have loyalty shares? No Does major shareholders (if any) have a “shareholders pact” in place? Yes Has the company adopted a “poison pill” or “change of control” clauses? No Potential dilution from stock options outstanding + not yet granted? Yes CEO remuneration detail (fixed salary) EUR1.2 million Chairman remuneration detail (fixed salary) EUR0.5 million Is the share price included in the MBO criteria? Yes Percentage of treasury shares 0%

Climate related risk Has the company defined GHG-emissions targets? No How does the company assess climate-related risk? Sustainability Report

Social Responsibilities Does the company publish a separated Sustainability report? Yes Does the company have a Chief SRI/CSR officer (or a committee)? Yes Does the Chief SRI/CSR officer votes in any of the company’s committee? Yes Is the Investor Relation officer a different person from CFO (or other officers)? Yes Is the ESG strategy integrated in the Business Plan (or in the group strategy)? No Does the company have an ethical code? Yes Percentage of female directors 30.8% (4 out of 13) How is the cybersecurity issue managed? Compliance with GDPR regulation and internal system for information security management

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Income Statement (EURm, %) 2019A 2020E 2021E 2022E Net Revenues 984 1040 1136 1224 EBITDA 503 590 675 766 EBITDA margin 51.1% 56.7% 59.4% 62.6% EBIT 382 440 500 586 EBIT margin 38.8% 42.2% 44.0% 47.9% Net financial income/expense (160) (70) (65) (61) Associates & Others (81) (77) (67) (57) Profit before taxes 140 293 368 468 Taxes (4) (91) (114) (145) Minorities & discontinuing operations (1) (1) (2) (2) Net Income 135 201 252 321 Source: Company data, UBI Banca estimates

Balance Sheet (EURm) 2019A 2020E 2021E 2022E Net working capital 51 65 80 95 Net Fixed assets 195 195 195 195 M/L term funds 823 824 824 824 Capital Employed 2795 3775 3729 3700 Shareholders’ equity 1325 1526 1778 2099 Minorities 0 0 0 1 Shareholders’ funds 1325 1526 1778 2100 Net Financial Debt /(cash) 1471 2250 1951 1601 Source: Company data, UBI Banca estimates

Cash Flow Statement (EURm) 2019A 2020E 2021E 2022E NFP Beginning of Period 2418 1471 2250 1951 EBITDA 503 590 675 766 Interest expenses (116) (70) (65) (61) Cash taxes (38) (92) (116) (147) Change in Working Capital (11) (20) (20) (20) Other 0 0 0 1 Operating Cash Flow 338 408 474 539 Net Capex (168) (147) (145) (130) Other Investments 0 0 0 1 Free Cash Flow 170 261 329 410 Dividends Paid 0 0 0 -38 Other & Chg in Consolid. Area 0 0 0 1 Chg in Net Worth & Capital Incr. 829 (1000) 0 0 Change in NFP 999 (739) 329 373 NFP End of Period 1471 2250 1951 1601 Source: Company data, UBI Banca estimates

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Financial Ratios (%) 2019A 2020E 2021E 2022E ROE 10.2% 13.2% 14.2% 15.3% ROI 13.6% 11.6% 13.4% 15.8% Net Fin. Debt/Equity (x) 1.1 1.5 1.1 0.8 Net Fin. Debt/EBITDA (x) 2.9 3.8 2.9 2.1 Interest Coverage 3.1 8.5 10.5 12.6 NWC/Sales -5.2% -6.2% -7.0% -7.7% Capex/Sales 17.1% 14.1% 12.8% 10.6% Pay Out Ratio 0% 0% 15% 20% Source: Company data, UBI Banca estimates

Per Share Data (EUR) 2019A 2020E 2021E 2022E EPS 0.22 0.32 0.40 0.51 DPS 0.0 0.0 0.1 0.1 Op. CFPS 0.52 0.67 0.81 0.98 Free CFPS 0.27 0.42 0.52 0.59 BVPS 2.11 2.43 2.83 3.34 Source: Company data, UBI Banca estimates

Stock Market Ratios (x) 2019A 2020E 2021E 2022E P/E 44.2 43.6 34.7 27.3 P/OpCFPS 18.4 20.7 17.2 14.2 P/BV 4.5 5.7 4.9 4.2 Dividend Yield (%) 0.0% 0.0% 0.4% 0.7% Free Cash Flow Yield (%) 2.8% 3.0% 3.8% 4.2% EV (EURm) 7,441 11,007 10,708 10,358 EV/Sales 7.6 10.6 9.4 8.5 EV/EBITDA 14.8 18.7 15.9 13.5 EV/EBIT 19.5 25.0 21.4 17.7 EV/Capital Employed 2.7 2.9 2.9 2.8 Source: Company data, UBI Banca estimates

Growth Rates (%) 2019A 2020E 2021E 2022E Growth Net Sales 5.8% 5.7% 9.2% 7.7% Growth EBITDA 18.5% 17.3% 14.4% 13.5% Growth EBIT 9.3% 15.2% 13.7% 17.3% Growth Net Profit 579.1% 48.7% 25.6% 27.1% Source: Company data, UBI Banca estimates

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Disclaimer

Analyst Declaration This research report (the “Report”) has been prepared by Massimo Vecchio and Dario Fasani (the “Analysts”) on behalf of UBI Banca S.p.A. (“UBI Banca”) in the context of the ancillary service provided by UBI Banca named “Investment research and financial analysis or other forms of recommendation relating to transactions in financial instruments” under Paragraph 5), Section B, Annex I of the Directive 2014/65/EU (“MiFID II”). UBI Banca is an Italian bank under art. 4 (1)(27) of MiFID II and it is supervised by the European Central Bank and duly authorised to provide investment services pursuant to Article 1, Paragraph 5, letter a), b), c), c-bis), e) and f) of the Legislative Decree 24 February 1998, n° 58 under the supervision of the Italian Authority for the financial markets (Consob). UBI Banca has its head office at Piazza Vittorio Veneto 8, 24122 Bergamo. The Analyst who prepared the Report, and whose name and role appear on the front page, certifies that: a. The views expressed on the company, mentioned herein (the “Company”) accurately reflect his personal views, but does not represent the views or opinions of UBI Banca, its management or any other company which is part of or affiliated with UBI Banca group (the “UBI Banca Group”). It may be possible that some UBI Banca Group officers may disagree with the views expressed in this Report; b. He has not received, and will not receive any direct or indirect compensation in exchange for any views expressed in this Report; c. The Analyst does not own any securities and/or any other financial instruments issued by the Company or any financial instrument which the price depends on, or is linked to any securities and/or any financial instruments issued by the Company. d. Neither the Analyst nor any member of the Analyst’s household serves as an officer, director or advisory board member of the Company. e. The remuneration of the Analyst is not directly tied to transactions for services for investment firms or other types of transactions it or any legal person, part of the same group performs, or to trading fees it or any legal person that is part of the same group receives. f. The Analyst named in this document is a member of AIAF – Associazione Italiana per l’Analisi Finanziaria. General disclosure This Report is for information purposes only. This Report (i) is not, nor may it be construed, to constitute, an offer for sale or subscription or of a solicitation of any offer to buy or subscribe for any securities issued or to be issued by the Company; (ii) should not be regarded as a substitute for the exercise of the recipient’s own judgement; and (iii) should not be considered as an investment advice and is therefore not falling within the scope of the requirements governing the provision of investment advisory services within the meaning of the Directive no. 2014/65/EU. In addition, the information included in this Report may not be suitable for all recipients. Therefore the recipient should conduct their own investigations and analysis of the Company and securities referred to in this document, and make their own investment decisions without undue reliance on its contents. Neither UBI Banca, nor any other company belonging to the UBI Banca Group, nor any of its directors, managers, officers or employees, accepts any direct or indirect liability whatsoever (in negligence or otherwise), and accordingly no direct or indirect liability whatsoever shall be assumed by, or shall be placed on, UBI Banca, or any other company belonging to the UBI Banca Group, or any of its directors, managers, officers or employees, for any loss, damage, cost, expense, lower earnings howsoever arising from

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any use of this Report or its contents or otherwise arising in connection with this Report. The information provided and the opinions expressed in this Report are based upon information and data provided to the public by the Company or news otherwise public, and refers to the date of publication of the Report. The sources (press publications, financial statements, current and periodic releases, as well as meetings and telephone conversations with the Company’s representatives) are believed to be reliable and in good faith, but no representation or warranty, express or implied, is made by UBI Banca as to their accuracy, completeness or correctness. Past performance is not a guarantee of future results. Any opinions, forecasts or estimates contained herein constitute a judgement as of the date of this Report, and there can be no assurance that the future results of the Company and/or any future events involving directly or indirectly the Company will be consistent with any such opinions, forecasts or estimates. Any information herein is subject to change, update or amendment without notice by UBI Banca subsequent to the date of this Report, with no undertaking by UBI Banca to notify the recipient of this Report of such change, update or amendment. Organizational and administrative arrangements to prevent conflicts of interests UBI Banca maintains procedures and organizational mechanism (physical and non-physical barriers designed to restrict the flow of information between the unit which performs investment research activity, and other units of UBI Banca) to prevent and professionally manage conflicts of interest in relation to investment research in accordance with art. 23 of Directive 2014/65/EU and under art. 34 (3) and art. 37 of the Regulation 2017/565/EU. UBI Banca is organized in such a way as to minimize conflicts of interest and has within the meaning of art. 20 (1) of the Regulation (EU) No 596/2014/EU and has adequate control procedures in place to counter infringements of the obligations laid down in Article 20 (1) of the Regulation (EU) No 596/2014. More specifically, UBI Banca has established, implements and maintains an effective conflicts of interests policy aimed at preventing and managing the potential conflicts of interest that could occur during the performance of the investment research services. Insofar as the above mentioned organizational and administrative arrangements established by UBI Banca to prevent or manage potential conflicts of interests are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of the client will be prevented, UBI Banca engages to provide a clear disclosure of the specific conflicts of interests arising from the performance of investment research services, including a description of the sources of those conflicts and the steps undertaken to mitigate them, taking into account the nature of the client to whom the disclosure is being made. For further information please see UBI Banca’s website (www.ubibanca.com/equity- research - “Informativa sintetica sull’attività di ricerca”) and (www.ubibanca.com/Mifid - “Policy sintetica conflitti di interessi”). More details about the conflicts of interests policy will be provided by UBI Banca upon request. Disclosure of interests and conflicts of interests pursuant to Delegated Regulation 2016/958/EU In relation to the Company the following interest/conflict of interest have been found: > UBI Banca, in the last 12 months, has acted as lead manager, co-lead manager, bookrunner or in similar roles in the context of a public offering of financial instruments of Nexi > UBI Banca may have long or short positions not exceeding the threshold of 0,5 % of the total issued share capital of the issuer > UBI Banca has delivered corporate finance services to Nexi S.p.A. in the last 12 months On the basis of the checks carried out no other interest/conflict of interest arose.

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Frequency of updates UBI Banca aims to provide continuous coverage of the companies in conjunction with the timing of periodical accounting reports and any exceptional event that occurs affecting the issuer’s sphere of operations and in any case at least twice per year. The companies for which UBI Banca acts as Sponsor or Specialist are covered in compliance with regulations of the market authorities. For further information please refer to www.ubibanca.com/equity-research Valuation methodology UBI Banca’s analysts value the Company subject to their recommendations using several methods among which the most prevalent are: the Discounted Cash Flow method (DCF), the Economic Value Added method (EVA), the Multiple comparison method, the SOP method and the NAV method. The analysts use the above valuation methods alternatively and/or jointly at their discretion. The assigned target price may differ from their fair value, as it also takes into account overall market/sector conditions, corporate/market events, and corporate specifics (i.e. holding discounts) reasonably considered to be possible drivers of the company’s share price performance. These factors may also be assessed using the methodologies indicated above. For further information please refer to www.ubibanca.com/equity-research. Rating system UBI Banca’s analysts use an “absolute” rating system, not related to market performance. The explanation of the rating system is listed below: Buy: if the target price is 15% higher than the market price, over the next 12 months. Hold: if the target price is 15% below or 15% above the market price, over the next 12 months. Sell: if the target price is 15% lower than the market price, over the next 12 months. No Rating: the investment rating and target price have been suspended as there is not sufficient fundamental basis for determining an investment rating or target. The previous investment rating and target price, if any, are no longer in effect. Alternatively, No Rating is assigned in certain circumstances when UBI Banca is acting in any advisory capacity in a strategic transaction involving the Company. Target price: the market price that the analyst believes that the share may reach within a one-year time horizon. Market price: closing price on the day before the issue date of the report, appearing on the first page. Distribution Italy: This document is intended for distribution in electronic form to “Professional Clients” and “Qualified Counterparties” as defined by Legislative Decree 24 February 1998, n. 58 and by Consob Regulation n. 20307 dated 15 February 2018, as further amended and supplemented. Spain: This document is intended for distribution in electronic form to “Professional Clients” and “Eligible Counterparties” as defined by Royal Legislative Decree 4/2015, of 23 October, approving the revised text of the Securities Market Act, as further amended and supplemented. IN THE UNITED KINGDOM, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT PERSONS WHO (A) ARE (I) PERSONS FALLING WITHIN ARTICLE 19 OR ARTICLE 49 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AND ONLY WHERE THE CONDITIONS CONTAINED IN THOSE

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ARTICLES HAVE BEEN, OR WILL AT THE RELEVANT TIME BE, SATISFIED) OR (II) ANY OTHER PERSONS TO WHOM IT MAY BE LAWFULLY COMMUNICATED; AND (B) ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC), (ALL SUCH PERSONS BEING REFERRED TO AS "RELEVANT PERSONS"). THIS DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. IN FRANCE, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT PERSONS WHO ARE CONSIDERED AS PROFESSIONAL CLIENTS WITHIN THE MEANING OF ARTICLES L. 533-16 AND D. 533-11 ET SEQ. OF THE FRENCH CODE MONETAIRE ET FINANCIER (THE FRENCH FINANCIAL CODE) OR AS ELIGIBLE COUNTERPARTIES, AS DEFINED IN ARTICLES L. 533-20 AND D. 533-13 ET SEQ. OF THE FRENCH FINANCIAL CODE.

IN IRELAND, THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, INCLUDING BY DIRECTIVE 2010/73/EC) ("QUALIFIED PERSONS"). THIS DOCUMENT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT QUALIFIED PERSONS. Copyright This Report is being supplied solely for the recipient’s information and may not be reproduced, redistributed or passed on, directly or indirectly to any other person or published, in whole or in part, for any purpose without prior written consent of UBI Banca. The copyright and intellectual property rights on the data are owned by UBI Banca Group, unless otherwise indicated. The data, information, opinions and valuations contained in this Report may not be subject to further distribution or reproduction, in any form or via any means, even in part, unless expressly consented by UBI Banca.

By accepting this Report the recipient agrees to be bound by all of the forgoing provisions. Distribution of ratings Equity rating dispersion in the past 12 months Buy Hold Sell No Rating 80.0% 14.2% 2.9% 2.9%

Proportion on issuers to which UBI Banca has supplied investment banking services relating to the last 12 months Buy Hold Sell No Rating 71.4% 30.0% 100% -

For further information regarding yearly and quarterly rating statistics and descriptions, please refer to www.ubibanca.com/equity-research.

Historical ratings and target prices

Date Rating Target Price (EUR) Market Price (EUR)

23 May 2019 BUY 10.20 8.80 29 July 2019 BUY 11.70 9.80 8 November 2019 BUY 11.70 9.45 19 December 2019 BUY 13.70 10.94 9 January 2020 BUY 13.70 12.19 12 February 2020 HOLD 15.20 14.06 14 April 2020 HOLD 14.80 13.74

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