AIM Italia Survey · In June-September 2016 IR Top conducted, through the AIM Italia Research...

Investor Relations and Financial Communication

AIM Italia Survey AIM Italia Research Centre www.aimnews.it October 10, 2016

2 IR Top, AIM Italia Research Centre, “AIM ITALIA SURVEY 2016” - All rights reserved. No reproduction, even partial, of the document is allowed.

IR TOP PROFILE

IR Top is the italian leading consulting firm in Investor Relations, ECM and Financial Communication for listed and going public companies. IR Top Research Department performs statistical analysis and surveys on the AIM Italia stock market in order to observe its evolution, also in terms of fundamentals; it conducts research and market surveys on specific industries and practices; it carries out systematic monitoring of the evolution of the relevant legislation; it organizes seminars and conferences for an in-depth discussion on AIM Italia. Established in Milan in 2001, IR Top is Advisor for the IPO process and for the capital raising from Institutional Investors. IR Top operates through the Investor Relations and Financial Media Relations units with a team of professionals with many years of experience on capital markets. IR Top has developed strategic relationships with the international financial community (investors and analysts), gaining a solid track record on Small & Mid cap stocks listed on the MTA/STAR and a leading position on the AIM Italia, the listing market dedicated to outstanding SMEs. IR Top is Equity Markets Partner of Borsa Italiana LSE Group. AIMnews.it is the information provider for AIM Italia.


The AIM Italia Research Centre has been set up by IR Top in order to become the reference point for the AIM Italia stock market. It generates and spreads knowledge about the listing practices of the Italian SME’s. In particular, the AIM Italia Research Centre targets are: spreading knowledge to firms and investors about the rules, operators, benefits, limits and costs of the

listing process in a systematic way;

operating as a research centre able to provide accurate analysis of financial results and performance of listed companies;

providing sector analysis and valuation benchmarks through the ECM valuation tools;

encouraging debates on the most relevant stock market issues and market trends;

collecting insights, suggestions and stimuli coming from the Italian and the international financial community for the market development;

serving as a trait d’union connecting SME’s, Institutions, Nomad, Media and the Financial Market, while establishing a network of constructive relationships;

contributing, in direct cooperation with the listed companies, to the identification of best practices in terms of financial information and communication designed in order to achieve a proper and effective representation of the Equity Story of the company on the market throughout all the phases of the information activity.

The AIM Italia Research Centre addresses to all key players in AIM Italia listing process together with those that deal with finance, governance and compliance, both within the companies and on the stock market.

AIM ITALIA RESEARCH CENTRE


In June-September 2016 IR Top conducted, through the AIM Italia Research Centre, a market research that involved the following actors: 1) Companies (Chief Executive Officer) 2) NomAd and Advisor (ECM officers) 3) Institutional Investors (Portfolio Managers) The survey was conducted through questionnaires handed out one-to-one to the CEOs, Fund Managers and Nomad ECM Officers, with closed and open questions in order to explore themes of analysis. The purpose of the survey is to estimate the "market sentiment"; the survey is considered representative as the following participated:

AIM ITALIA SURVEY: METHODOLOGY AND SAMPLE

50 Companies

(66%)

15 Nomad (83%)

21 Institutional Investors


Interpreting Companies’ sentiment about the IPO and ongoing listing experience on the AIM Italia market

Interpreting NomAds and Institutional Investors’ sentiment

Identifying strenghts and weaknesses of the Market

Creating a constructive dialogue about the future of AIM Italia and the opportunities for enhancement

Acquiring a deep knowledge of AIM Italia market and its potential

AIM ITALIA SURVEY: PURPOSES


SURVEY RESULTS

Listed companies


GENERAL OBJECTIVES FOR FUTURE GROWTH

Internationalization and M&A are the main growth drivers, respectively 57% and 55%.

Consolidating the position in Italy and investing in R&D are strategic objectives for the 51% and 43% of companies.

Among the "other factors", the expand into new areas related to the core business.

13%

32%

43%

51%

55%

57%

Other

JV and strategic agreements

R&D of new products and services

Increase the share of domestic market

M&A

Growth in new geographic areas

Source: IR Top, AIM Italia Research Centre, “AIM ITALIA SURVEY 2016” – www.aimnews.it


MAIN TARGET AREAS IN THE NEXT 3 YEARS

Europe represent the main target for international growth: 49% Other EU Countries 47% consolidating presence in Italy 27% and 24% aim at Germany and France

Outside Europe, the relevant markets are USA, Canada, Asia, Latin America, Africa and Middle East.

8%

12%

18%

24%

27%

31%

41%

47%

49%

Middle East

Africa

Latin America

France

Germany

Asia

USA and Canada

Italy

Other Eu countries



STRATEGIC GUIDELINES FOR THE NEXT 3 YEARS

61% report aggressiv growth as the main objective

33% aim at improving cashflow.

Cost control was mentioned by 27%

16%

27%

33%

61%

Other

Cost control

Improve cashflow

Aggressiv growth



NEXT STEPS TO STRENGTHEN GROWTH PROCESS

65% of the Companies believe that in order to achieve the strategic objectives to shift to the main market is necessary

27% will raise funds on the secondary market

22% highlights the possibility of extraordinary transactions facilitated by the status as listed

8% through PE and 6% through minibond

Shift to the main market

Raise capital on secondary market

M&A

Private Equity

Minibond



96% 88%

37%

100%

4% 12%

63%

Raise capital to finance growth

Create or consolidate

brand awareness

Exit to owner shareholders

Other

(managerialisation,

governance, training) Yes No

REASONS TO LIST AND LEVEL OF SATISFACTION

The main reason to list is to raise new capital to finance expansion projects (92% of the companies), a goal that was reached in 96% of cases

67% arrives on the market with the aim of creating or strengthening the brand (67%) and confirms the achievement of this goal in 88% of cases

39% of the issuers listed in order to guarantee an exit for owner shareholders, this goal was reached only in 37% of cases

Among other objectives, fully achieved: to attract managerial resources in the enterprise, improve governance and "training" before shifting to the main market.

REASONS TO LIST

LEVEL OF SATISFACTION

92%

67%

39%

12%

Raise capital to finance growth

Create or consolidate

brand awareness

Exit to owner shareholders

Other

(managerialisation,

governance, training)




OTHER ELEMENTS OF SATISFACTION

Companies are very satisfied (90%) by the quality of services offered by Professionals (attorneys, accounting firms, financial communication company, etc.) in terms of added value for the company culture

National visibility of the Company and the quality of investors in follow.

61% were satisfied with the Financial Advisors (Specialist and Nomad), although many companies do not consider the Specialist necessary.

More than half of the Company consider appropriate the time spent on activities required by the new status as listed company

58% judge positively the regulatory activities related to the process of listing on AIM Italia.

90%

71% 63% 61% 58% 58%

10%

29% 37% 39% 42% 42%

Quality of professionals Visibility Quality of Investor Quality of advisor

(Nomad and Specialist)

Time dedicated to remain on the market

IPO regulation

Satisfied Not satisfied



88% of the Companies are very unsatisfied with the liquidity of the shares and the effective need of the Specialist figure

65% report dissatisfaction with the costs related to remain a listed company

55% of companies are dissatisfied by the limited number of specialised investors

51% complained about the ongoing excessive regulation and bureaucracy (especially MAR)

ELEMENTS OF DISSATISFACTION

12%

35% 45% 49%

88%

65% 55% 51%

Liquidity Costs related to remain on market

N. Of specialised investors Ongoing regulation

Satisfied Not satisfied



WEAKNESSES OF AIM ITALIA

Liquidity: poor liquidity of shares, low number of trades

Lack of Italian investors specialized on small cap and the difficulty in attracting investors (institutional and retail)

Lack of interest by Small Cap International Investors, due to the characteristics of the AIM Italia Market

International visibility: poor international visibility of the AIM Italia market

Rules and bureaucracy: growing requirements not consistent with the structure of SMEs



SURVEY RESULTS

NomAd and Advisors


WHAT NOMADS WANT FROM AIM ITALIA COMPANIES

The majority of Nomad / Advisor want a history of strong and solid growth and high quality in terms of corporate governance and transparency.

31% require a minimum size in terms of EBITDA (minimum suggested €5m) Revenue (minimum suggested €20m)

Important growth opportunities are considered essential, but only if part of a sustainable and

credible plan.

Other relevant aspects are profit margins and a strong capital structure.

13%

31%

31%

50%

50%

63%

81%

Future growth opportunities

Minimun EBITDA level

Minimum Revenue level

Adequate management reporting system

Higher level of disclosure

Better Corporate Governance

History of strong and solid growth



REVERSE TAKEOVERS

73% of Nomad/Advisor judges positively reverse takeovers, on the condition that there is an industrial and strategic integration between high quality companies.

Reverse takeover is not positively judged when substituting a negative IPO experience.

73%

27%

Agree Not agree



CHALLENGES FOR AIM ITALIA COMPANIES

44% of Nomad / Advisor agree that the biggest challenge for AIM Italia companies is to manage investor relations.

Regarding the shift to the main market there are conflicting opinions: part of the panel identify this opportunity as a "myth" that does not guarantee the increase in liquidity, another part argue that AIM Italia represents the first step to listing on the main market

6%

19%

25%

25%

31%

44%

Appropriate remuneration policy

Monitoring of performance through adequate KPIs

Manage corporate news-flow

Growth through M&A

Shift to main market

Manage relations with investors



PROPOSAL TO IMPROVE AIM ITALIA MARKET

The creation of specialised funds represent according to 69% of Nomad / Advisor the best corrective to the market.

The introduction of tax incentives for investment in SMEs is suggested by the majority (63%)

Only a minority (19% and 6%) believe that the development of independent research and valuation discounts during IPO could serve as a corrective.

6%

19%

63%

69%

Valuation discounts in the IPO process

Development of independent research

Tax incentives for investment in SMEs

Creation of specialised funds



PROPOSALS TO IMPROVE LIQUIDITY

Nomad and Advisor agree that the proposals to improve the market contribute to improve liquidity; among other factors that can be adopted: Increasing the free float threshold is the main instrument to improve liquidity:

Part of the sample suggest a minimum float between 25% and 40% Others consider €10m as an optimal level of float

Other elements are the reduction of the minimum lot and the establishment of a minimum

capitalization

6% propose weekly trading

6%

6%

19%

25%

63%

Weekly trading

Include retail investors in IPO

Impose minimum capitalisation

Reduce minimum lot

Increase free float



SURVEY RESULTS

Institutional Investors


INVESTMENT POLICY

64% of institutional investors adopt a different investment policy for AIM Italia compared to main market, due to reduced liquidity and specific risks that characterize the market (e.g. governance risk). The main differences are: attention to financials

medium-long term approach (e.g. matching the period of the first industrial

plan)

direct relationship with management and possibility to discuss strategic choices (active shareholder)

More attention to growth drivers and opportunities

A more careful risk analysis



The majority of investors look for a history of strong and solid growth (76%).

42% calls for higher level of transparency (including the presentation of a business plan) and a more frequent news-flow

Direct relationship with management and corporate governance (35%) are important issues

12% look for leadership in terms of market share in the reference market.

WHAT INVESTORS WANT FROM AIM ITALIA COMPANIES

12%

24%

35%

35%

42%

76%

Market Share

Future growth opportunities

Better Corporate Governance

Direct relationship with top management

Higher level of disclosure

History of strong and solid growth



REVERSE TAKEOVERS

48% of Investors believe that a reverse takeover is positive when it allows an industrial integration of the companies involved.

47% do not agree and oppose to the lack of protection of minority shareholders

5% no answer 48%

47%

5%

Agree Not agree No answer



CHALLENGES FOR AIM ITALIA COMPANIES

53% of investors consider managing relations with investors the true challenge for AIM Italia companies.

The management of the company's news-flow (47%) and the shift to the main market (41%)

Other challenges include the identification of an appropriate remuneration policy (35%) and the improvement of corporate governance (29%)

Another important issue raised by investors is to deliver the promises made during the IPO, realizing the growth plans presented (18%).

18% highlights the need to align the interests of company with those of investors.

53%

47%

41%

35%

29%

24%

18%

18%

18%

Manage relations with investors

Manage corporate news-flow

Shift to the main market

Appropriate remuneration policy for employees and Senior Management

Improve Corporate Governance

Growth through M&A

Monitoring of performancethrough adequate KPIs

Deliver industrial plan proposed in IPO

Allign interests



65% of investors consider the creation of specialized funds priority to improve the market.

It’s important also the introduction of tax incentives to encourage investment in SMEs (59%).

47% of investors underlines the need for valuation discounts in the IPO process (IPO discount + Market Discount)

The development of independent research is key for the 41% of investors.

Other issues include a more careful selection of companies

PROPOSALS TO IMPROVE AIM ITALIA MARKET

35%

41%

47%

59%

65%

Development of independent research

Valuation discounts in the IPO process

Tax incentives for investment in SMEs

Creation of specialized funds



PROPOSALS TO IMPROVE LIQUIDITY

Investors agree that the proposals to improve the market contribute to improve liquidity; among other factors that can be adopted: 65% sustain that increasing the free float threshold (above 30%) will help improve liquidity

Other elements are the involvement of retail investors during IPO and the establishment of a

minimum capitalization (both 35% of investors)

18% propose the reduction of the minimum lot

65%

35%

35%

18%

6%

6%

Increase free float

Include retail investor in IPO

Impose minimum capitalisation

Reduce minimum lot

Valuation discounts in IPO

Weekly trading



SURVEY RESULTS

Conclusions


AIM ITALIA: POSITIVE AND NEGATIVE ASPECTS

+ - COMPANIES

New finance for growth

Managerialization

Eucation of italian SMEs on financial

aspects

Visibility and brand awareness

Poor liquidity

Costs related to remain a listed company

N. of specialised investors

Excessive ongoing regulation

INSTITUTIONAL INVESTOR

Important growth prospects

Risk capital to finance growth

Opportunity to shift to the main market

Low level of free float

Poor liquidity

High volatility

Low attention to disclosure

Time consuming investment

Lack of specialised funds

Lack of high quality independent research



AIM ITALIA SURVEY

Participants


Listed companies

Abitare In Ambromobiliare Assiteca axélero Biodue Blue Financial Communication Blue Note Bomi Italia Caleido Group Clabo Cover 50 Digital Magics Digitouch Ecosuntek Elettra Investimenti Energica Motor Company Energy Lab Enertronica Expert System First Capital Frendy Energy

Gala Gambero Rosso Giglio Group Giorgio Fedon & Figli Go Internet Iniziative Bresciane Italia Independent Group Italian Wine Brands Leone Film Group LU-VE Mail UP Masi Agricola MC-link Methorios Capital Mobyt Modelleria Brambilla Neurosoft Notorious Pictures Piteco Rosetti Marino Safe Bag

SITI B&T Group S.M.R.E. TBS Group Tech-Value Te Wind Vita Società Editoriale WM Capital Zephyro

AIM ITALIA SURVEY: PARTICIPANTS

50 companies (66% of 76

listed companies)


NomAd Advance SIM Baldi Finance Banca Akros Banca Aletti Banca Finnat Euramerica Banca Intermobiliare di Investimenti e Gestioni Banca Popolare di Vicenza Banca Profilo EnVent Capital Markets Equita SIM Integrae SIM Intermonte SIM MPS Capital Services Banca per le Imprese UBI Banca Unicredit Bank AG Ambromobiliare Corporate Family Office SIM Crosar Capital

Investors

Advisor

4AIM SICAF 8A+ Investimenti SGR AcomeA SGR Advam Partners SGR Amaranto Investment SIM Anima SGR Banca Ifigest Banor SIM Cassa Lombarda Corniola Partecipazioni Doria Investimenti Duemme SGR Fideuram SGR First Capital Mediolanum Gestione Fondi SGR Patrimony 1873 Sempione SIM Soprarno SGR Symphonia SGR Zeus Capital Websim

AIM ITALIA SURVEY: PARTICIPANTS


IR Top Consulting Investor & Media Relations Via C. Cantù, 1 - 20123 Milan Tel. +39 02 45473884/3 [email protected] www.irtop.com

DISCLAIMER

The information provided in this report is based on publicy available data. Despite having taken all the necessary precautions for careful consideration of the data and information used and a rigorous writing of the results, IR Top does not guarantee, expressly or implied, on the accuracy, correctness, completeness of data and of the information or the reliability of the judgments and calculations contained in this document. IR Top and its directors, officers and employees are therefore exempt from all direct or indirect liability that may arise from the use by the recipient of this document in its entirety or any item of information contained therein. The judgments and calculations presented here should be considered preliminary, constituting a mere working hypotheses functional depth of the investigation and, as such, subject to the further analysis of the technical feasibility and implications for financial, legal and tax that may be necessary or appropriate. In this document can not be derived in any case a constraint for IR Top the realization of what it presented, nor any liability can be ascribed to regard its directors, officers and employees. The document, data, information and calculations contained therein may not be reproduced in the form in part without the prior consent of IR Top. All rights reserved. No reproduction, even partial, of the document is allowed.

AIM Italia Survey · In June-September 2016 IR Top conducted, through the AIM Italia Research...

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