TAS S.p.A

COMPANY SUBJECT TO THE MANAGEMENT AND COORDINATION OF OWL S.p.A.

TAS S.p.A.

Consolidated Financial Statements and Annual Financial Statements at 31 December 2019

TAS Tecnologia Avanzata dei Sistemi S.p.A. Page 2

Consolidated Financial Statements and Annual Financial Statements of TAS S.p.A at 31 December 2019

CONTENTS

CONSOLIDATED FINANCIAL STATEMENTS OF TAS GROUP

Page

- Corporate structure of the Parent Company TAS S.p.A. 3

- Group structure 4

- Information on Parent Company 5

- Activities and Group Structure 8

- Management Report 12

- Consolidated Financial Statements 60

- Notes to the Financial Statements 64

- Annexes: 129

1. Statement pursuant to art. 154-bis, sections 3 and 4 of Italian Legislative Decree no. 58/1998

FINANCIAL STATEMENTS OF TAS S.P.A.

- Financial statements of TAS S.p.A. 130

- Notes to the Financial Statements 135

- Annexes: 199

1. Financial statements of OWL S.p.A.

2. Statement pursuant to art. 154-bis, sections 3 and 4 of Italian Legislative Decree no. 58/1998



CORPORATE BODIES

Board of Directors

expiry: on the approval of the Financial Statements at 31

December 2019

Dario Pardi Chairman

Valentino Bravi Chief Executive Officer

Carlo Felice Maggi Vice Chairman and Non-executive

Director

Alberto Previtali 3 Non-executive Director

Martino, Maurizio Pimpinella 1 Independent non-executive director

Ambrosella Ilaria Landonio 2 Independent non-executive director

Carlotta De Franceschi 1 Independent non-executive director

Giancarlo Maria Albini 1.2 Independent non-executive director

Roberta Viglione 2 Independent non-executive director

Board of Statutory Auditors

expiry: on the approval of the Financial Statements at 31

December 2019

Statutory Auditors

Antonio Mele Chairman

Silvano Crescini

Claudia Sgualdino

Alternate Auditors

Sonia Ferrero

Gian Luca Succi

Auditing Firm Deloitte & Touche S.p.A.

Share capital € 24,330,645.50 Fully subscribed and paid-up

No. shares 83,536,898

1 Member of the Remuneration and Appointments Committee

2 Member of the Control, Risks and Related Parties

Committee 3 On 18 July 2019, Board member Alberto

Previtali was co-opted to replace Nicolò Locatelli, who had resigned with effect from 5

April 2019.



GROUP STRUCTURE

Ownership percentages and structure at 31 December 2019

TAS S.P.A.

TAS Iberia SLU

100%

Global Payments SpA

100%

TAS France SASU

100%

TAS International SA

100%

TAS Eastern Europe D.O.O.

70%

TAS Germany GMBH

100%

TASAMERICAS LTDA

99,65%

TAS Usa INC

100%

Mantica Italia Srl

80%



INFORMATION ON TAS S.P.A.

TAS Group is a group specialising in software solutions for electronic money, payments,

capital markets and Extended Enterprise systems. Listed on the Italian Online Stock Exchange

[“Mercato Telematico Azionario”] since May 2000, TAS is the market leader in Italy for card

management systems, payment networks access and stock exchange order management.

TAS Group (hereinafter the “Group”) is the trade name identifying the group of companies

comprising TAS Tecnologia Avanzata dei Sistemi S.p.A. (hereinafter “TAS”, “TAS S.p.A.”, the

“Company” or the “Parent Company”) - controlled by OWL S.p.A. - and the companies in which

it has an interest TAS France S.A.S.U. (“TAS France”), TAS International S.A. (formerly TAS

Helvetia S.A.) (“TAS International”), TAS Iberia S.L.U. (“TAS Iberia”), TAS Germany GmbH

(“TAS Germany”), TASamericas Ltda (“TAS Americas”) TAS USA Inc (“TAS Usa”), TAS

Eastern Europe d.o.o. (“TAS EE”), Mantica Italia S.r.l. (”Mantica”).

The TAS Group serves the most important commercial and central banks in Italy and Europe,

major organisations offering financial services and some of the main global brokers present

in the Fortune Global 500 classification.

Standing as a first level partner on international markets, the TAS Group operates through

various subsidiaries.

Thanks to the diversification path followed over the last ten years, TAS Group solutions have been

adopted by Public Administrations (Ministries, Regions and other local Entities) and by non-

banking companies from many different sectors.

TAS is held for 73.125% (figure at the approval date of this report) by OWL S.p.A., a company

indirectly controlled by Dario Pardi, who is also Chairman of the Board of Directors of TAS S.p.A.

and by Valentino Bravi, Chief Executive Officer of the Company, by their respective family

members, and by the investors Carisma S.p.A. and Sergio Loro Piana S.a.p.A. that became part of

the TAS ownership structure on 20 February, via the vehicle CLP S.r.l.

Over 100 million

cards managed at

international level

A presence in 8 countries

and more than 150

customers worldwide

Over 100 financial

institutions in Italy

manage securities

using TAS solutions

The largest payment

carrier in Europe

ERP solutions

adopted by major

service industries and

PA entities

ISO 9001 2015

compliance

certificate



1st Quarter

2019 opened on a positive note, with the awarding of the tender launched by BNL in the scope of

BNP Paribas Group’s 2020 Domestic Market Strategic Plan to completely overhaul the platform

for issuing debit, credit and prepaid cards.

The TAS CARD 3.0 Issuing solution was chosen by BNL as the highest performing platform to

realign its technology infrastructure, in order to adequately respond to market requirements, enable

a more effective Customer Digital Experience and consolidate the relationship with end Retail and

Corporate customers.

The strategic acquisition by the TAS Group was finalised in February, referring to 80% of the

American Mantica Inc., the Parent holding the entire capital of Mantica Italia S.r.l., a company

specialising in the creation of Artificial Intelligence and Machine Learning models for bank and

fintech applications. The acquisition follows on from the partnership signed in July 2018 between

the two companies, directed at combining Mantica’s assets of excellence, the proprietary software

platform “Adaptive Intelligence” created for Machine Learning and Big Data processing, with

TAS technology core products, with the objective of developing solutions able to capitalise on the

data, forming the basis of financial and payment applications. The first product to benefit from

this synergy is TAS Fraud Protect, which by integrating the advanced Mantica Machine Learning

models, is currently the most advanced solution on the Italian and international markets for

monitoring and preventing fraud.

Still in the first quarter of 2019, the TAS Group with KMPG and Accenture formed a Work Group

on the issue of T2/T2S Consolidation, with the objective of pooling financial institutions and

domain experts in a collaborative and pre-competitive manner, to deal with the challenges of the

Eurosystem project that will go live in November 2021.

2nd Quarter

ICCREA Banca selects the TAS Fraud Protect solution for the analysis, prevention and monitoring

of its payment infrastructure to comply with the requirements of the European PSD2 Directive on

the security of electronic payments. Fraud Protect represents a distinctive asset for Payment

Service Providers (PSP) in that it reduces the risk of fraud without penalising the execution of

frictionless transactions, which improve the customer experience.

Growth continues in all the Group’s economic and financial indicators: core revenue increased by

23.2%, whereas the gross operating margin (EBITDA) doubled on the same period in 2018.

On a geographic level, market performance in North America is accelerating, where the offering

of Card 3.0 combined with the Cloud proposition is attracting broad interest; in the Brazilian

market, opportunities for vertical solutions on the Strong Customer Authentication in

the EMVCo 3DSecure2.0 area have increased.

The second quarter also saw the close of an important contract with the Anglo-Arab AGTB digital

bank, where TAS solutions are considered key to starting up the Bank’s operations.

The Group also finalised the acquisition of the Serb company ArsBlue d.o.o., which now becomes

TAS Eastern Europe, with the sale to B2PT d.o.o. (company controlled by Mr Nemanja Paunovic)

of the entire 80% shareholding held in Bassilichi CEE; reference is made to the Notes to the

https://www.tasgroup.it/soluzioni/global-payments/card-digital-payments/issuing

https://www.tasgroup.it/soluzioni/global-payments/card-digital-payments/issuing



Financial Statements for details on the transaction. The new company name represents 7 years of

successful cooperation between the two companies, culminating at the end of 2018 with the TAS

Group acquiring 51% of the Serb company, in the scope of the international strategy that aims to

consolidate a presence in geographic areas with significant growth rates in digital payments. The

expertise of TAS Eastern Europe in card management supplements and enhances the portfolio of

TAS solutions, enabling customers to quickly adapt to the changes resulting from rapidly evolving

market scenarios.

3rd Quarter

The TAS Group is the only Italian company to be recognised as a Cloud Excellence Implementer

for Oracle, thanks to the Business Unit 2ESolutions developed for extended enterprise solutions.

The CEI (Cloud Excellence Implementer) specialisation was obtained on the basis of EPM

(Enterprise Performance Management) expertise in the EMEA region, where the TAS Group is

the only Italian Partner in a list of around ten European entries.

This quarter also saw further recognition from the market. The Nexi Group, via Mercury Payment

Services, chose the TAS Group’s Cashless 3.0 solution to become more competitive and

responsive to market changes in the issuing of the new payment cards. The TAS Group suite was

essentially chosen because it guarantees management of the entire life cycle of payment products,

including managing fraud, disputes, security and clearing with the international Card Networks.

Based on the many positive reviews regarding Consolidation, TAS decided to form a new User

Group for the Eurosystem Consolidation project, made up of only the Banks and Service Centres

that have become customers of the Aquarius and/or Network Gateway solutions. The new

interbank work group initially had 7 market players, and numbered 12 operators by year-end,

representing more than 40 financial institutions.

4th Quarter

In November, TAS took the initial step towards the Group’s corporate restructuring with the

transfer of the payments business unit to the NewCo fully held by TAS, called Global Payments

S.p.A., effective as from 1 January 2020. The restructuring that will have consequences at both the

national and international level, aims to provide the Group with the organisational means and

brands to grow value, with more vertical focus on the business in terms of sector and geographic

area, so as to allow better economies of scale and specialisations, as well as facilitating possible

industrial and/or financial partnership arrangements.

After the high-level of interest triggered by the TAS Group’s participation at SIBOS in London

during October on the issues of Liquidity Management and Consolidation, the fourth edition of

the Payments conference followed, achieving record attendance with 11,000 visitors over the 3

days. The focus in this case is on presenting the evolution in the TAS offering, based on the

platforms enabling the payvolution, in particular Fraud Protect and TAS TPP Enabler, proving that

in the era of Open Innovation and the Platform Economy, it has become essential to know how to

cooperate with Partners but also with Competitors, knowing how to integrate third party expertise

and services to build value for customers’ end users.

https://www.tasgroup.it/soluzioni/global-payments/card-digital-payments

https://www.tasgroup.it/soluzioni/global-payments/card-digital-payments/processing/fraud-protect

https://www.tasgroup.it/soluzioni/global-payments/payment-networks/financial-messaging



The year closed with significant feedback from across the Atlantic for the CARD 3.0 I.E. solution

(International Edition), the localised electronic money platform for the USA market. TAS USA

was awarded a contract with Super Processor Inc., a full-service payment processor intent on

taking full advantage of the power and flexible platform functions to manage operator

acquiring on-boarding, commercial position, processing of the transactions acquired from both

physical and virtual POS on the one hand, and issuing: management of cards’ life cycle, processing

of transactions, authorisations, monetary regulation, disputes, detection of fraud and e-commerce

3DS2 (ACS) security on the other, all perfectly integrated within a secure and state-of-the-art

technology environment.

GROUP ACTIVITIES

TAS Tecnologia Avanzata dei Sistemi S.p.A. and its subsidiaries operate in the IT sector with

particular reference to the development and marketing of software applications and solutions,

consulting, providing support and maintenance, able to offer proprietary and third party solutions

in SaaS mode or cloud, thanks to its specialised Data Centre infrastructure.

For over thirty five years, the Company is one of the leading operators on the Italian market and

has been focusing on consolidating its position on the international electronic money sector (over

100 million cards managed via the following services: Card Lifecycle Management, Acquiring

channels and Terminal management, Authorization Systems, Fraud Management, EMV

Solutions), payment systems and access to inter-banking networks (with installations within the

Eurosystem T2 and T2S infrastructures), in addition to trading and settlement on financial

markets, including the aspects of compliance and liquidity management for bank treasuries.

In particular, the more recent TAS solutions include:

the cashless 3.0 platform, which is among the most innovative and comprehensive at world

level for the issuing, authorisation and control of all kinds of physical and virtual cards,

providing modular management of all issuing and acquiring processes and fraud

management;during 2019, the Card3.0. I.E. (International Edition) solution was added to

this platform, which is particularly suited to localisations and integrations for projects with

limited time constraints;

the EasyBranch suite solutions to guide the transformation of bank branches towards the

future in Customer-Bank relations, by managing the entire ATM channel and creating a

new generation of customer journey self-services for banking customers;

the Network Gateway 3.0 platform, which manages the decoupling between back-office

applications and protocols for interfacing with market infrastructures, for the exchange and

settlement of inter-banking transactions, including Instant Payments; the platform was

recently strengthened to offer banks a framework to manage API Open Banking in

compliance with the changes introduced by the PSD2 Directive; this extension has given

rise to the TAS TPP enabler platform;

management of B2C, B2B and B2G e-marketplaces, which extends to new smart devices

and innovative projects:

o Multichannel FVC portals for Payment Institutions,

o e-Payment/e-Collection platforms,

o Collaborative Order-to-Cash solutions;

the PayTAS application suite dedicated to eGovernment, making a single access point

available to citizens, companies and the Public Administration for the collection of taxes

and duties and the payment of goods and services provided by Public Administrations; the



platform integrates a number of traditional and innovative payment channels, and offers

public entities technological tools for interfacing with the pagoPA system;

the Aquarius platform for the integrated and real-time management of bank treasury

liquidity;

additional solutions for Capital Markets aimed especially at guaranteeing:

o the monitoring and centralised and integrated management in real time of Cash and

Collateral Securities;

o Straight-through processing from securities trading to settlement;

o Regulatory Reporting and Trading Compliance;

the TAS ExtendERP solutions for Corporate Clients, comprising proprietary or

Partner solutions for the following sectors:

o Public Governance: a suite for managing performance management processes in

the public administration, currently being used by important Italian PA offices;

o Services companies: a platform which offers full coverage of administrative-

accounting issues, as well as core business processes (project management, billing,

procurement) and that currently has a significant customer base in Italy;

o The international and national market: an offer based on advanced social and

collaborative user models, and implemented on the Oracle Cloud Application

platform, using the leverage of the consolidated partnership with Oracle.

There are also the TAS solutions enhanced by the contribution of Mantica Italia S.r.l., a company

that entered the Group in 2019, specialising in the processing of Artificial Intelligence and

Machine Learning models for bank, fintech and corporate applications. The acquisition of Mantica

has specifically consolidated the TAS Fraud Protect Fraud Prevention solution, making it one of

the most attractive solutions for the European PSP market. The fraud context is only one of many

application scenarios for Mantica’s Adaptive Intelligence technology in the development roadmap

of core TAS products, which now strengthens the Group’s PSD2 offering.

In general, application solutions developed by TAS for the market can be installed directly at the

customer’s base, or provided in Cloud and SaaS mode (Software as a Service) from the technology

infrastructure managed by TAS.

The Company operates abroad through its subsidiaries TAS International, TAS France, TAS

Iberia, TAS Germany, TAS Eastern Europe d.o.o. , TAS Americas and TAS Usa.

TAS France, a French registered company established as a data centre and internet service provider

with extensive experience in the Housing & Hosting value added services; this traditional business

was complemented by the marketing of TAS products in France, Principality of Monaco, Belgium

and Luxembourg. TAS France recently extended its offer with a significant investment, to create

one of the most innovative Data Centres in France, with enormous development potential,

especially in the provision of Cloud services. In 2019, the infrastructure of TAS France obtained

HDS:2018 Hosting Health Data certification for hosting and outsourcing activities referring to

the management of health data. Up until 2018, all that was required was a simple Ministerial

approval in France, whereas now, this requires separate certification, and in loco auditing. In line

with the ISO 27001 framework, HDS certification focuses on the protection of sensitive personal

data in the health area.

TAS International, a Swiss registered company, covers the whole of Switzerland and is the

preferred interlocutor for countries without a subsidiary. This subsidiary is gradually assuming a

coordination role for all the Group’s international go to market.

https://www.tasgroup.eu/solutions/hosting-and-housing-/data-protection/hsd-2018



TAS Iberia, a Spanish registered company, operates as the Group’s EMV centre for payment cards

with chips. In this respect, it provides standardised software solutions, customised software

solutions, maintenance and outsourcing services. It supports and markets the Group’s solutions

throughout the Iberian peninsula and Spanish speaking countries, with special reference to

payment networks, capital markets and electronic money for digital and mobile payments.

TAS Americas, a company incorporated under Brazilian law, intends to develop the local market

by leveraging its greater proximity to customers, while streamlining existing TAS activities and

investments in the South American market.

TAS USA, a company incorporated under USA law was established at the end of 2014, with the

objective of driving the Parent Company’s solutions in the North American market, in particular,

offering prepaid cards and interconnection to payment circuits worldwide.

TAS Germany, a German-registered company, was established at the end of 2015 with the

objective of driving the Parent Company’s solutions in the German speaking European market; to

date, it is not operational.

TAS Eastern Europe, a company incorporated under Serbian law, is the result of having rebranded

the acquired Arsblue d.o.o. The objective is to consolidate TAS development capacity and

offerings in the electronic money segment worldwide, by leveraging the complementary nature

of technologies and applications on its issuing and acquiring platforms, as well as the consolidated

customer portfolio in Eastern Europe.

All subsidiaries have separate valid agreements with the Parent Company aimed at the reciprocal

marketing of products in their respective reference markets. These are currently being finalised in

respect of the newly acquired Group companies.



SCOPE OF CONSOLIDATION

Group companies are consolidated using the line-by-line consolidation method.

The companies held by the Group at 31 December 2019 and the relevant equity investments are

detailed in the table below:

Company Name Nationality

Share capital (€/000) at

31/12/2019

% Ownership 31/12/2019


Net Equity (€/000) at

31/12/2019

TAS SPA Italy 24,330 29,296

TAS FRANCE SASU France 500 100 100 1,912

TAS INTERNATIONAL SA* Switzerland 65 100 100 (271)

TAS IBERIA SLU Spain 20 100 100 80

TAS AMERICAS LTDA Brazil 792 99.65 99.65 130

TAS USA INC USA 16 100 100 652

TAS GERMANY GMBH Germany 25 100 100 1

MANTICA ITALIA SRL** Italy 10 80 80 13

GLOBAL PAYMENTS SPA Italy 50 100 NA 38

TAS EASTERN EUROPE D.O.O.*** Serbia 1,016 70**** 51 973

* It should be noted that the net equity amount includes Euro 1,037 thousand of negative reserve concerning the actuarial valuation of the pension

plan.

** Acquired on 26 February 2019 via the company Mantica Inc. (USA) held for 100%. On 1 October 2019, following the liquidation of the company Mantica Inc. during September, 80% of the shares in the company Mantica Italia S.r.l. were assigned directly to TAS S.p.A.

*** On 5 April 2019, the ownership stake was transferred from Bassilichi CEE D.O.O. to TAS S.p.A.

**** Following the share capital increase of Euro 400 thousand underwritten and paid by the Parent Company in October 2019.

Company Name Registered office Secondary Unit % Share

TAS S.p.A. (Parent Company)

Via Cristoforo Colombo no.149, Rome – Italy

- Milan, Via Famagosta no. 75 – Italy - Verona, Via Francia no. 21 – Italy - Siena, Via Girolamo Gigli, no. 2 - Italy - Parma, Via Colorno no. 63/a – Italy - Casalecchio di Reno (BO), Via del Lavoro, 47 – Italy - Genoa, Via De Marini 1 – Italy - Prato, Via Traversa Pistoiese, 83 - Italy

TAS France Sasu 15 Traverse des Brucs, 06560 Valbonne, France

100.00%

TAS International Sa Via Serafino Balestra 22A Lugano – Switzerland

100.00%

TAS Iberia SLU Calle Julian Camarillo, 47 Madrid – Spain

- Plaza Ramon y Cayal 1, Cordoba – Spain

100.00%

TAS Americas Ltda Rua Irma Gabriela no. 51, Brooklin Novo – São Paulo – SP – Brazil

99.65%

TAS Usa Inc Empire State Building 350 Fifth Avenue, 41st Floor New York, NY 10118-4100

- 1180 N. Town Center Drive, Suite 100 Las Vegas, NV 89144

100.00%

TAS Germany Gmbh c/o A.L.B. Friedl GmbH Wilhelm-Hale-Str. 50 80639 Munich - Germany

100.00%

TAS EE D.o.o. Bulevar Mihajla Pupina, 115 z Belgrade - Serbia

70%

Mantica Italia S.r.l Via Cristoforo Colombo no.149, Rome – Italy

80%

Global Payments S.p.A. Via Famagosta no.75, Milan – Italy

100%



DIRECTORS’ MANAGEMENT REPORT

INTRODUCTION

Dear Shareholders,

The Management Report at 31 December 2019 that we are submitting for your consideration forms

part of the TAS Group’s Consolidated Financial Statements at 31 December 2019 and contains

references to the significant events that have occurred during the financial year and their impact

on the Financial Statements and Consolidated Financial Statements, together with a description of

the principal risks and uncertainties faced by TAS S.p.A. and the Group.

The Consolidated Financial Statements at 31 December 2019 were drawn up in accordance with

the applicable international accounting standards adopted by the European Union under Regulation

(EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002, with the

regulations issued to implement Art. 9 of Italian Legislative Decree No. 38/2005, and in

compliance with Consob Regulation No. 11971 of 14 May 1999 and subsequent amendments.

In particular, the Consolidated Financial Statements follow the format required by international

accounting standards (IAS/IFRS) as adopted by the European Union.

The amounts shown are in thousands of Euro. The corresponding figure for the same period last

year is shown next to each figure in the Financial Statements, for comparison purposes.

By referring to what is stated in this Report and in the Notes to the financial statements for further

details, we note that the Financial Statements submitted for your consideration include:

1) The effects of the entry into force of the new IFRS 16 – Leases standard from 1 January 2019,

replacing IAS 17 – Leases.

The table below illustrates the impact from the adoption of the aforementioned principle at

01/01/2019 and at 31/12/2019. The Group has chosen to apply the standard retrospectively,

recognising the cumulative effect from the application of the standard under Net Equity at 1

January 2019 (not restating the comparative figures for 2018), based on the provisions under

paragraphs C7-C13 of IFRS 16.

€ thousand

ASSETS Impact at 31/12/2019 Impact at 01/01/2019

Non-current assets

Buildings right of use € 7,714 € 8,476

Vehicles right of use € 382 € 479

Other assets right of use € 463 € 200

Total € 8,559 € 9,155

Current Assets

Accrued income -€ 40 € 0

Total Assets € 8,519 € 9,155



NET EQUITY AND LIABILITIES

Non-current liabilities

Financial liabilities for non-current

leases € 8,052 € 8,615

Current liabilities

Financial liabilities for current

leases € 1,116 € 835

Accrued liabilities -€ 295 -€ 295

Total € 8,873 € 9,155

Net Equity

Profit/(loss) for the period -€ 354 € 0

Total liabilities € 8,519 € 9,155

INCOME STATEMENT Impact at 31/12/2019 Impact at 01/01/2019

Costs for use of third-party assets € 1,402 na

Positive effect on Ebitda € 1,402 na

Amortisation right of use -€ 1,3999 na

Net effect on operating result € 4 na

Financial charges -€ 358 na

Net effect on year profit/(loss) -€ 354 na

2)

The effects from the purchase price allocation carried out by the Company with regard to the

aggregation operation of TAS EE finalised in 2018. As permitted under paragraph 62 of IFRS 3,

pending an accurate calculation of the fair value of all the assets and liabilities acquired, the

difference between the price paid and fair value for the assets and liabilities acquired was

provisionally allocated entirely to Goodwill.

The provisional impairments were recorded with effect from the initial recognition date (21

December 2018). It is noted that the economic effects were recognised from 1 January 2019, given

that those referring to 2018 were not deemed significant.

Following an evaluation programme conducted by Group management, intangible fixed assets

with a defined useful life came to light that had previously not been recorded in the financial

statements of the acquired company. These were attributable to specific contracts with major

customers (“Customer list”), for a total fair value of Euro 505 thousand. The recognition of these

assets in the Group’s consolidated Financial Statements resulted in corresponding entries for

deferred tax liabilities, and an impact on third-party interests, as detailed in the table below.

The following table summarises these effects:



Balance Sheet 31/12/2018

restated 31/12/2018 approved Delta

Intangible fixed assets (12) 23,810 23,523 287

- Goodwill 18,355 18,573 (218)

- Other intangible fixed assets 5,455 4,950 505

Total Assets 23,810 23,523 287

Deferred taxes provision (28) 81 5 76

Net equity attributable to third parties 555 344 211

Total liabilities 636 349 287

The figures in the Financial Statements for the whole of 2018 were consequently restated to include

the aforementioned effects.

It should also be noted that after the share capital increase of Euro 400 thousand, underwritten and

paid by TAS in October 2019, the Group’s ownership percentage rose to 70%.

3)

As already announced to the market, on 18 July 2019, the TAS Board of Directors approved a

corporate restructuring project (the “Operation”), which made provision for the establishment of

an Italian registered company named “Global Payments S.p.A.”, on 26 July, fully held by TAS.

The business unit relating to the payments division (the “Payments Unit”) was transferred to the

new company on the basis of the notary deed dated 29 November 2019, which was registered on

3 December 2019, and became effective from 1 January 2020.

The Operation further included the transfer by TAS finalised on 17 February, of all its equity

investments in other Group foreign subsidiaries to TAS International (formerly TAS Helvetia

S.A.); these included TAS France S.A.S.U., TAS Germany GmbH, TAS Iberia S.L.U., TAS USA

Inc., TAS Americas Ltda, TAS Eastern Europe D.O.O.

Following the implementation of this project, TAS S.p.A. retains the Extended ERP and Capital

Market activities, the centralised staff and corporate functions, the equity investments in the Italian

subsidiaries Global Payments S.p.A. and Mantica Italia S.r.l, and the Swiss company TAS

International S.A.

For additional details on this Operation that will impact TAS S.p.A. in asset and economic terms

as from 2020, reference is made to Note 1 in the section of the Parent company TAS S.p.A.

Financial Statements.



GROUP RESULTS SUMMARY1

The following table summarises the key financial results of the Group at 31 December 2019:

TAS GROUP (in thousands of Euro) 31/12/2019 31/12/2018 Change % change

Total revenue 57,368 50,526 6,842 13.5%

- of which core 56,367 45,453 10,914 24.0%

- of which resales - 4,025 (4,025) (100.0%)

- of which non-typical 1,001 1,048 (47) (4.5%)

Gross operating margin (EBITDA2) 13,044 6,329 6,715 >100%

% of total revenue 22.7% 12.5% 10.2% 81.5%

Operating result (EBIT) 5,980 801 5,179 >100%

% of total revenue 10.4% 1.6% 8.8% >100%

Net profit (loss) for the period 5,363 200 5,163 >100%

% of total revenue 9.3% 0.4% 9.0% >100%

TAS GROUP (in thousands of Euro) 31/12/2019 31/12/2018* Change % change

Total Assets 75,367 65,725 9,642 14.7%

Total net equity 29,727 24,945 4,782 19.2%

Net Equity attributable to parent company shareholders 29,328 24,390 4,938 20.2%

Net Financial Position (9,544) (3,073) (6,471) >(100)%

- of which cash and cash equivalents 7,247 5,315 1,932 36.3%

- of which liabilities to banks and other lenders (2,743) (3,624) 881 24.3%

- of which liabilities for leases (IFRS 16) (9,168) - (9,168) -

- of which towards shareholders (4,879) (4,764) (116) (2.4%)

Employees at the year-end (number) 477 519 (42) (8.1%)

Employees (average in the year) 486 467 19 4.1%

* Figures for 2018 were restated to include the effects of the PPA referred to in the previous paragraph.

The Group’s total revenue amounted to Euro 57.4 million, compared to Euro 50.5 million the

previous year. Core revenues, consisting of software licenses and related maintenance (41.5%),

royalties, usage and SAAS service fees (12.5%), support fees and professional services (46.0%)

were up by 24%. In absolute terms, revenue increased mainly in Italy (+19.5%), with a significant

46.6% rise in percentage terms for foreign revenue (Euro +3.5 million). This included the line-by-

line consolidation of the financial flows from the subsidiary TAS Eastern Europe, acquired in

December 2018.

Ebitda for the year doubled compared to 2018, reaching Euro 13 million compared to Euro 6.3

million the previous year, impacting for a total of 22.7% on total revenue compared to the 12.5%

in 2018. The improvement mainly refers to the increase in sales of user licenses (+80.4%, for Euro

6 million), where the nature of this revenue (with user and maintenance fees) has higher margins.

1The European Securities and Markets Authority (ESMA) has published guidelines on Alternative Performance Measures (“API”) for listed issuers.

The APIs refer to measures used by management and investors to analyse Group trends and performance, which are not derived directly from the financial statements. These measures are important in helping management and investors to analyse the Group’s performance. Investors should not

consider these APIs as substitutes, but rather as supplements to the information included in the financial statements. Please note that the API, as

defined, may not be comparable to similarly titled measures used by other companies. 2 IAP EBITDA (Earning Before Interest Taxes Depreciations and Amortisations - Gross Operating Margin) is an alternative performance indicator not defined by IFRS but used nonetheless by the Company’s management to monitor and evaluate operational performance, as this is not influenced by the volatility arising from different criteria in determining taxable income, the amount and nature of capital employed, and the relevant depreciation policies. This indicator is defined for the Group as Profit/(loss) before depreciation, gross of amortisation and write-downs, tangible and intangible assets, financial income and expenses, and taxes on income.



It refers to a lesser extent to the positive effect from the adoption of the new IFRS 16 standard for

around Euro 1.4 million.

The Operating profit for the year, which includes amortisations for Euro 6.8 million and other

write-downs for Euro 0.3 million, was positive for Euro 6 million, improving significantly

compared to the Euro 0.8 million the previous period.

The Net profit for the year showed a profit for Euro 5.4 million, net of the negative impact from

the sale of the company Bassilichi CEE d.o.o., together with the year result of the former subsidiary

of Euro 0.4 million, compared to the profit of Euro 0.2 million the previous year.

With the exception of the impact from the adoption of the IFRS 16 standard, the Net financial

position was negative for Euro 0.4 million compared to the negative Euro 3.1 million at 31

December 2018, recording an improvement of Euro 2.7 million.



13.057 15.712 11.608 12.681

12.135 13.369

12.029 12.470

9.860 12.035

11.456 12.006

12.914

20.291

15.433 20.211

-

10.000

20.000

30.000

40.000

50.000

60.000

70.000

2016 2017 2018 2019

Total Revenues

Q1 Q2 Q3 Q4

47.966 fy

61.407 fy

50.526 fy

57.368 fy

9.158 9.999 10.228 12.598

10.645 10.774 11.013 12.199

9.177 10.102 9.598 11.464

12.417 13.037 14.614

20.106

-

10.000

20.000

30.000

40.000

50.000

60.000

2016 2017 2018 2019

Ricavi core

Q1 Q2 Q3 Q4

41.397 fy 43.913 fy

45.453 fy

56.367 fy



(3.073)

(8.679) (7.660)(9.730) (9.544)

(15.000)

(12.000)

(9.000)

(6.000)

(3.000)

-

3.000

Posizione / (Esposizione) finanziaria netta

31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019

(3.073)

556

1.700

(314) (376)

(4.000)

(3.000)

(2.000)

(1.000)

-

1.000

2.000

3.000

Posizione / (Esposizione) finanziaria netta

esclusi i debiti per Ifrs 16

31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019



ANALYSIS OF THE MAIN ECONOMIC AND FINANCIAL DATA

An analysis of the main economic and financial data for 2019 is found below.

Total revenue

Revenue 31/12/2019 31/12/2018 Change Change %

Revenue 52,445 49,789 2,656 5.3%

Changes to orders in progress 3,922 (311) 4,233 >100%

Total core revenue 56,367 49,478 6,889 13.9%

Other revenue 1,001 1,048 (47) (4.5%)

TOTAL 57,368 50,526 6,842 13.5%

At 31 December 2019, the Group recorded Total revenue for Euro 57,368 thousand, compared to

Euro 50,526 thousand for the previous year, broken down as follows:

- Euro 56,367 thousand made up of revenue from typical management (Euro 49,478 thousand in

2018);

- Euro 1,001 thousand made up of other non-typical revenue (Euro 1,048 thousand in 2018).

The figure at 31 December 2018 included Euro 4,025 thousand for revenue from hardware and

software resales.

Core revenue by type

The details of revenue by type are reported below:

Revenue by type 31/12/2019 % impact 31/12/2018 % impact Change Change

%

Core revenue 56,367 100.0% 45,453 91.9% 10,914 24.0%

- Licenses 13,448 23.9% 7,454 16.4% 5,994 80.4%

- Maintenance 9,929 17.6% 8,651 19.0% 1,278 14.8%

- Services 22,540 40.0% 19,304 42.5% 3,236 16.8%

- Royalties and usage fees 7,077 12.6% 6,676 14.7% 401 6.0%

- Support fees 3,373 6.0% 3,368 7.4% 5 0.1%

Resale revenue third party sftw and hrdw - 0.0% 4,025 8.1% (4,025) (100.0%)

- Licenses - - 356 8.8% (356) (100.0%)

- Maintenance - - 1,170 29.1% (1,170) (100.0%)

- Services - - 540 13.4% (540) (100.0%)

- Royalties and usage fees - - 1,959 48.7% (1,959) (100.0%)

TOTAL CORE REVENUE 56,367 100.0% 49,478 100.0% 6,889 13.9%

23,9%

17,6%

40,0%

12,6%

6,0%

0,0%

31.12.2019

Licenses Maintenance

Professional Services Royalties and recurring fees

Assistance Fees Ancillary revenues third parties

16,4%

19,0%

42,5%

14,7%

7,4%8,1%

31.12.2018

Licenses Maintenance

Professional Services Royalties and recurring fees

Assistance Fees Ancillary revenues third parties



An analysis of total core revenue by type of service showed an overall increase of 24% compared

to the previous year, referring to all service types. Of specific significance, growth was seen in the

software licenses sold, which at 31 December 2019 made up 23.9% of total core revenue, going

from Euro 7,454 thousand to Euro 13,448 thousand (+80.4%). The growth in software licenses

revenue is the result of consistent investments over recent years to revamp the Group’s proprietary

portfolio of products in terms of technology and functions.

Revenue by geographic area

The table below shows the distribution of revenue by geographic area:

Revenue by geographic area 31/12/2019 % impact 31/12/2018 % impact Change Change %

Core revenue 56,367 100.0% 45,453 91.9% 10,914 24.0%

- Italy 45,303 80.4% 37,906 83.4% 7,397 19.5%

- Switzerland 2,661 4.7% 627 1.4% 2,034 >100%

- Spain 842 1.5% 1,709 3.8% (867) (50.7%)

- South America 694 1.2% 817 1.8% (123) (15.1%)

- France 3,005 5.3% 3,043 6.7% (38) (1.2%)

- Eastern Europe 1,923 3.4% 13 0.0% 1,910 >100%

- USA 1,300 2.3% 368 0.8% 932 >100%

- Other foreign countries 639 1.1% 970 2.1% (331) (34.1%)

Resale revenue third party sftw and hrdw - - 4,025 8.1% (4,025) (100.0%)

- Italy - - 4,025 100.0% (4,025) (100.0%)

- Foreign countries - - - 0.0% - -


The distribution of revenue by geographic area reflects the location of the companies that make up

the Group. Revenue for Other Foreign Countries mainly includes Cuba, Germany and Great

Britain.

80,4% 4,7%1,5%

1,2%

5,3%

3,4%

2,3%

1,1%0,0%

31.12.2019

- Italy - Switzerland

- Spain - South America

- France - Eastern Europe

- Usa - Other foreign

- Ancillary revenues third parties

76,6%1,3% 3,5%

1,7%

6,2%

0,0%

0,7%

2,0%8,1%

31.12.2018

- Italy - Switzerland

- Spain - South America

- France - Eastern Europe

- Usa - Other foreign

- Ancillary revenues third parties



Total costs

The table below sets out a cost comparison at 31 December 2019, against the previous year:

Costs 31/12/2019 31/12/2018 Change Change %

Raw materials, consumables and goods 1,580 2,693 (1,113) (41.3%)

- of which software development costs (439) (390) (49) (12.6%)

- of which costs third party sftw and hrdw - 1,526 (1,526) (100.0%)

Personnel costs 28,339 24,934 3,405 13.7%

- of which software development costs (2,490) (2,638) 148 5.6%

For services 12,867 13,943 (1,076) (7.7%)

- of which software development costs (762) (1,039) 277 26.7%


- of which non-recurring 18 284 (266) (93.7%)

For use of third-party assets 275 1,680 (1,405) (83.6%)

- of which, IFRS 16 impact (1,408) - (1,408) -

Various operating charges 711 459 252 54.9%

Provision for risks and extraordinary charges 553 488 65 13.3%

TOTAL 44,325 44,197 128 0.3%

To provide a more homogeneous comparison of the Group’s core costs, the capitalised costs for

software development, the resale costs and non-recurring costs were removed from each cost item:


Raw materials, consumables and goods 2,019 1,557 462 29.7%

Personnel costs 30,829 27,572 3,257 11.8%

Costs of services 13,611 12,238 1,373 11.2%

Use of third-party assets net of IFRS 16 effect 1,683 1,680 3 0.2%

Provisions and other expenses 1,264 947 317 33.5%

TOTAL CORE COSTS 49,406 43,994 5,412 12.3%

Costs third party sftw and hrdw - 3,986 (3,986) (100.0%)

IFRS 16 impact (1,408) - (1,408) -

Capitalised costs for software development (3,691) (4,067) 376 9.2%

Non-recurring costs 18 284 (266) (93.7%)

TOTAL COSTS 44,325 44,197 128 0.3%

The table above shows an increase in the Group’s core costs of Euro 5,412 thousand on the

previous year, of which, about Euro 2.2 million refers to the line-by-line consolidation of the TAS

EE financial flows, as mentioned above.

The most significant item in the Income Statement is Personnel costs, which at 31 December 2019

stood at Euro 30,829 thousand, and is detailed below:

Personnel costs 31/12/2019 31/12/2018 Change Change %

Salaries and wages 22,685 20,178 2,507 12.4%

Social security contributions 6,668 5,943 725 12.2%

TFR provision 1,302 1,298 4 0.3%

Other costs 174 153 21 13.7%

TOTAL 30,829 27,572 3,257 11.8%

The item Other costs includes the IAS 19 actuarial adjustment for the Swiss subsidiary TAS

International on an insurance policy for social security benefits for its employees.



The table below illustrates the TAS Group staff at 31 December 2019:

Staff 31/12/2019 31/12/2018* Change

TAS 386 375 11

TAS HELVETIA 12 10 2

TAS FRANCE 7 8 (1)

TAS AMERICAS 3 4 (1)

TAS IBERIA 12 13 (1)

TAS GERMANY - 1 (1)

TAS USA - - -

BASSILICHI GROUP (sold on 5.4.2019) - 59 (59)

MANTICA 6 - 6

TAS EE 51 49 2

Number of employees 477 519 (42)

Average number of employees 486 467 19

In this regard, we note that the Group is not required to prepare the non-financial declaration

pursuant to Art. 2 of Italian Legislative Decree 254 of 30 December 2016, as it has less than 500

employees, as shown in the table.

Operating result

The Operating result for the year was positive for Euro 5,980 thousand compared to Euro 801

thousand in the previous year.

In accordance with Consob communication DEM/6064293 of 28 July 2006, non-recurring costs

are shown below for Euro 18 thousand, which impacted on the results stated above:

BALANCE SHEET ITEM AMOUNT DESCRIPTION

“Costs of services” (18) Consulting

TOTAL NON-RECURRING COSTS (18)

The Costs of services refer to the activities related to the transfer of the business unit detailed

above.

The statement of non-recurring income and costs for 2018 is attached for comparative purposes:


“Costs of services” (284) Legal and financial consulting


Costs of services mainly refer to legal consulting provided by leading companies regarding the

operation to release the company from debt during the previous year.

Consolidated profit/(loss) for the year

At 31 December 2019, a profit of Euro 5,363 thousand was recorded, compared to Euro 200

thousand.

The earnings per share for the year was Euro 0.06 compared to the insignificant amount at 31

December 2018.



Earnings per share 31/12/2019 31/12/2018

Share Capital 24,330,646 24,330,646

Profit/(loss) for the year 5,363,193 199,931

Ordinary shares 83,536,898 83,536,898

Weighted average of number of shares in circulation in financial year 83,536,898 83,536,898

EARNINGS PER SHARE 0.06 0.00



CONSOLIDATED BALANCE SHEET

TAS GROUP (in thousands of Euro) 31/12/2019 31/12/2018*

Non-current assets 35,664 27,604

- of which, Goodwill 18,355 18,355

- of which, Right of use IFRS 16 8,559 -

Net working capital 8,795 4,290

Non-current liabilities (5,187) (4,396)

Group held for sale - 519

Net Invested Capital 39,272 28,017

Net financial position in respect of banks (4,503) (1,691)

Financial liabilities for IFRS 16 9,168 -

Shareholder financing 4,879 4,764

Total net equity 29,727 24,945

- of which profit for the period 5,363 200

* Figures for 2018 were restated to include the effects of the PPA.

Non-current assets (API)

Non-current assets are broken down as follows:

Euro 18,355 thousand relating to goodwill of which (Euro 18,355 at 31 December 2018):

o Euro 15,976 relating to the Payments CGU transferred with the contribution of the

business unit to Global Payments S.p.A. as stated above;

o Euro 1,345 thousand relating to the TAS Iberia CGU;

o Euro 91 thousand relating to the TAS France CGU;

o Euro 943 thousand relating to the TAS EE CGU;

Euro 4,642 thousand for other intangible fixed assets refer mainly to internally developed

software (Euro 5,455 thousand at 31 December 2018);

Euro 11,313 thousand related to tangible fixed assets (Euro 3,073 thousand at 31 December

2018). It is noted that this amount includes the effect of adopting the new IFRS 16 standard

from 1 January 2019, for Euro 8,559 thousand;

Euro 137 thousand related almost exclusively to the shareholding in SIA S.p.A.; (same

amount at 31 December 2018);

Euro 1,218 thousand relating to deferred tax receivables and other receivables (Euro 584

thousand at 31 December 2018).

Net working capital (API)

Net working capital included:

Euro 30,084 thousand relating to trade receivables and contract assets with customers

(Euro 24,619 thousand at 31 December 2018);

Euro 1,862 thousand relating to other receivables including trade accruals and deferrals

receivable (Euro 1,110 thousand at 31 December 2018);

Euro 5,662 thousand relating to trade payables (Euro 4,858 thousand at 31 December

2018);

Euro 17,490 thousand relating to other payables including accruals payable and liabilities

from contracts with customers (Euro 16,581 thousand at 31 December 2018).



Non-current liabilities (API)

Non-current liabilities included:

Euro 4,801 thousand related to the employee severance indemnity provision (Euro 4,232

thousand at 31 December 2018);

Euro 323 thousand relating to provisions for risks and charges (Euro 83 thousand at 31

December 2018);

Euro 63 thousand related to deferred tax liabilities (Euro 81 thousand at 31 December

2018).

Assets and liabilities held for sale

On 5 April, TAS completed the sale to B2PT d.o.o. (company controlled by Mr Nemanja

Paunovic) of the entire 80% shareholding held in Bassilichi CEE. The scope of the sale did not

include the shareholding held by Bassilichi CEE in the Serb registered company TAS EE (formerly

ArsBlue d.o.o. for 51%), which was transferred directly to TAS, as this was the effective target of

the acquisition at the end of 2018. In total, the sale and purchase of assets and liabilities held for

sale recognised at 31 December 2018 determined a negative entry in the Income Statement for

approximately Euro 400 thousand.

Net Equity

At 31 December 2019, net equity was equal to Euro 29,727 thousand compared to Euro 24,945

thousand at 31 December 2018.

Net Financial Position

Pursuant to the requirements set out in Consob Communication no. 15519 of 28 July 2006, the

financial position of the Group was as follows:

Consolidated Net Financial Position NOTES 31/12/2019 31/12/2018

A. Cash and cash equivalents (6) (5)

B. Bank and postal deposits (7,240) (5,310)

C. Securities held for trading - -

D. Cash and cash equivalents (A) + (B) + (C) 23 (7,247) (5,315)

E. Current financial receivables 22 (22) (22)

F. Current bank payables 302 142

G. Short-term portion of medium to long-term bank borrowings 163 217

H. Current financing from Shareholders 4,879 -

I. Other current financial liabilities 1,637 1,364

of which liabilities for leases (IFRS 16) 1,116 -

J. Liabilities and other current fin. liabilities (F) + (G) + (H) + (I) 33 6,982 1,723

K. Current net financial debt (D) + (E) + (J) (287) (3,614)

L. Non-current bank payables - -

M. Non-current portion of medium to long-term bank borrowings 1,661 927

N. Non-current financing from Shareholders - 4,764

O. Other non-current payables 8,659 1,485




P. Liabilities and other non-current financial liabilities (L) + (M) + (N) + (O) 29 10,321 7,176

Q. Net financial debt CESR (K) + (P) (*) 10,033 3,561

R. Non-current financial receivables 15 (489) (489)

S. Net financial debt(Q) + (R) 9,544 3,073

of which excludes Shareholder financing 4,665 (1,691)

of which, excluding liabilities for leases (IFRS 16) 376 3,073

(*) The criterion for calculating CESR Net Financial Debt corresponds to the provisions under Paragraph 127 of the CESR Recommendation 05/054b implemented by Regulation CE 809/2004

The Net Financial Position, less the impact of adopting IFRS 16 from 1 January 2019, was

negative for Euro 0.4 million compared to Euro 3.1 million at 31 December 2018. Cash and cash

equivalents amounted to Euro 7.3 million, compared to Euro 5.3 million in 2018. Including the

effects of adopting IFRS 16, the Net Financial Position was negative for Euro 9.5 million.

Financing to the Parent Company OWL S.p.A. was restated over the short term, as this falls due

on 31 December 2020. Nonetheless in terms of the agreement between the parties, if TAS should

be unable to meet its repayment obligations for the financing, in its entirety or in part, TAS may

request an extension to the repayment deadline, albeit partial, up to a maximum of 5 years from

the data it was granted (21 December 2018), which OWL may not refuse.

MACRO-ECONOMIC REFERENCE SCENARIO3

Risks to the global economy are still declining; expansion in world trade resumed, and there have

been signals of lessening tensions in the tariff dispute between the United States and China,

however, prospects remain uncertain and geo-political tensions have increased. Less pessimistic

forecasts on growth, based on the accommodative stance of central banks, have pushed stock prices

and encouraged a moderate recovery in long-term yields.

Economic activity in the Euro area has been stalled by weakness in the manufacturing sector,

especially marked in Germany despite higher performance than expected in November; the risk

remains that this will also affect growth in services, which have remained more solid up to now.

Economic performance impacts on inflation, which according to Eurosystem projections is being

supported by monetary stimulus, but is still expected to fall below 2 percent over the next three-

year period. The ECB’s Governing Council has confirmed the need to maintain the current

accommodative stance.

In Italy, while economic activity grew slightly in the third quarter of last year, it would remain

almost stationary during the fourth, continuing to be impacted especially by the weak

manufacturing sector. Surveys conducted by the National Statistics Institute (ISTAT) and the Bank

of Italy showed businesses recording slight increases in orders and foreign demand, but citing trade

uncertainty and tensions as factors impeding their activities. Companies are planning to expand

investments in 2020, albeit at a more contained rate than the previous year.

The Central Bank is forecasting 0.5 percent growth in GDP for this year, 0.9 in 2021 and 1.1 in

2022. This would be underpinned by the gradual recovery in international trade, and the moderate

expansion in internal demand. Whilst reflecting the persistent uncertainty, investments would be

3 Source: Economic Bulletin No. 1 of 2020



driven by the progressive recovery in the prospects for global demand and expansionary financial

conditions; the drop in sovereign spreads seen from the beginning of last June would contribute to

raising total accumulated capital by around 3.5 percentage points over the three-years 2020-22.

Inflation would rise gradually from the 0.7 percent this year to 1.3 in 2022, due mainly to a

recovery in remunerations and profit margins that would be benefiting from an improved cyclical

phase.

Growth remains exposed to significant risks, related to increasing geopolitical uncertainties, trade

conflicts that have only partially been resolved and the weak performance in our major European

partners’ economic activity; it could also fall lower than expectations if there are delays in the

substantial public investments planned and included in the forecasts, or if there should be a

resurgence in tensions on financial markets.

As from January 2020, the national and international scenario have been characterised by the

spread of Covid-19 (Coranavirus), and the consequent restrictive measures to contain it introduced

by the public authorities in the countries affected. Reference is made to the chapter “Main risks

and uncertainties to which TAS S.p.A. and the Group were exposed” in this Report.

THE REFERENCE MARKET4

According to IDC estimates, the spend in information technologies (IT) worldwide, for now

excluding the effects of the coronavirus, should increase by 5% this year. Investments in software

and services will remain stable, while sales of smartphones will pick up in the wake of the

implementation of 5G networks in the second half of the year.

The greatest risk, according to analysts, is business and markets’ fear of investing due to the

uncertainties and concerns related to the spread of the coronavirus epidemic in China and the rest

of the world.

Prospects are nonetheless good. The global spend in Information and communication

technologies (ICT) solutions should reach 5,200 billion dollars by the end of 2020, with a +6%

increase on an annual basis.

This figure also includes investments in IT and telecommunication services (+1%), as well as

emerging technologies, like the internet of things and robotics (+16%).

Based on IDC estimates, worldwide investments in technology, services and infrastructure for

smart cities should reach 124 billion dollars this year. Expenditure will be increasing at a rate of

+18.9% compared to 2019.

Around 20% of these investments will be absorbed by the top 100 smart cities in the world, 70%

of which according to a study, are concentrated in the United States, western Europe and China.

More specifically, 29.5% in the United States, 24.7% in Europe and 21.5% in China. Singapore,

Tokyo, New York and London, are the four cities spending the most on smart city technologies.

The top 80 smart cities in the world could invest up to around 100 million dollars a year. On

average, the larger cities (out of a list of 200 drawn up by the IDC) will be spending about 1 million

dollars a year.

One third of business opportunities for sector companies should come from energy efficiency and

its infrastructure, whereas data-driven public safety and intelligent transportation systems

4

Source: IDC Report and Assintel Report 2020



(ITS) account for 18% and 14% respectively. In so far as the ICT market in Italy is concerned, the

Italian Information Technology market doubled its growth in 2019 compared to 2018, despite

general stagnation in conditions: this equates to over Euro 24,2 billion, +3.8% compared to the

last year. This trend is expected to consolidate over coming years, with +2.6% total growth in IT

investments over the period 2018-2022 (CAGR). Countering these positive numbers however is

the ongoing drop in the TLC sector (-2.7%), which therefore brings the overall ICT growth to

“just” +2.3% in 2019, amounting to over Euro 31 billion. The software segment grew by +5.7%,

with hardware once again in the positive at +6.2%, and less significant growth in the IT Services

sector of +1.4%.

On closer examination, the 2020 ICT market trends seem to indicate at what point Italian

companies find themselves inter alia, in the digitalisation process. Similarly to last year, for

example, telecommunication services’ expenditure continues to drop, both for the fixed and

mobile networks, proof that Italian companies no longer require the simplest form of

infrastructure: around Euro 6.9 billion has been spent this year in the segment, more than 2.7%

less than just one year ago. Decidedly better is the IT segment: here expenditure has already

recorded Euro 24.2 billion this year, and should reach 24.7 by the end of 2020, increasing by 3.8%

compared to the previous Assintel figures.

Italian companies already seem to have entered a “ multiple innovation stage”, where they need

to take another look at their entire business from a digital perspective and take on board the main

platform economy logics. Once again according to Assintel, there is a consistent group of “digitally

determined” companies, focusing on ICT and IT specifically, so as to offer their customers new

super-personalised digital services. On a more pragmatic level, investing in digital transformation

for most Italian companies means redesigning the business model, promoting and monetising

available data, but also emphasising automation and integration. Increasing priority also seems

to be given to modernising, training and new policies for the workforce and ICT professionals (as

shown by the data from the 2019 Digital Skills Observatory).

https://www.insidemarketing.it/mercato-ict-in-italia-assintel-2019/

https://www.insidemarketing.it/glossario/definizione/innovazione/



In respect of individual “tech” components driving the digital transformation of Italian companies,

the highest growth this year seems to be in virtual reality, with an increase (up by 160.5%),

in wearable devices (+116.2%), artificial intelligence (+39.1%), public cloud (i.e. highly

simplified on-demand cloud services at low or extremely low costs, also used increasingly by

businesses as well as individuals, +26.1%), IoT (+24%) and data analytics solutions (+7.6%).

Source: Assintel Report 2020

Trend data for the ICT market in 2020 is particularly reassuring: 16% of Italian

companies expect to increase their budget for Information Technology in coming months,

against just one company in ten that intends restructuring or rationalising their ICT expenditure. It

goes without saying that there is clear distinction in terms of size: it is mostly the medium and

larger enterprises (25% and 23% of these respectively) that expect an increase in their ICT budget

for 2020, in some cases, even higher than one fifth; contrary to this, smaller and micro-enterprises

could contract their spend in the sector over coming months by 7-10%.

While the geographic distribution of businesses investing most in ICT replicates the trend in the

Italian industrial sector (the North-West, where most Italian companies are based, and are leading

digitalisation), of greater interest are the different types of enterprises focusing increasingly on

digitalisation: in coming months public administrations, health and education will be investing

in the ICT market at double-digit growth rates, and with significantly more initiative drive than

commerce, for example.

CORPORATE GOVERNANCE

The TAS Group adheres and complies with the new Corporate Governance Code for listed Italian

companies issued by the Italian Stock Exchange and available on their website, with the additions

and amendments related to the characteristics of the Group.

The “Corporate Governance Report” is drawn up on an annual basis pursuant to regulatory

obligations. This document contains a general description of the system of corporate governance

https://www.insidemarketing.it/glossario/definizione/budget/



adopted by the Group, including information on the ownership structure and adherence to the Self-

Regulatory Code of Conduct, covering the main governance practices applied and the

characteristics of the system of internal control and risk management in relation to financial

reporting process.

The Annual Report on Corporate Governance, drawn up pursuant to art. 123-bis of the

Consolidated Law on Finance (TUF), is also available on the TAS website

http://www.tasgroup.it/investors, under “Financial Statements and Documents” and update notices

can be found under “Press Releases”.

The Corporate Governance Code is publicly available on the website of the Italian Stock Exchange

(www.borsaitaliana.it).

REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE

In accordance with the requirements of art. 123-bis of Italian Legislative Decree no. 58 of 24

February 1998 (“TUF”), we provide the following information:

a) Structure of share capital (as per art. 123-bis, paragraph 1, letter a) TUF)

The Company’s subscribed and fully paid share capital amounts to Euro 24,330,645.50 consisting

of 83,536,898 ordinary shares with voting rights.

The Company currently has no share-based incentive plans involving increases in share capital,

including those that are free of charge. In this regard, on 18 March 2020, the BoD passed a

resolution to submit a proposal to the Company’s Extraordinary Shareholders' Meeting called for

28-29 April 2020 for a paid non-divisible share capital increase, with the exclusion of pre-emptive

rights pursuant to Art 2441, paragraph 8 of the Italian Civil Code, up to a maximum nominal

amount of Euro 482,299.58, inclusive of any share premium, for the issue of a maximum of

1,663,102 ordinary shares with a nominal value of zero, over several tranches, to service a stock

option plan reserved for employees of the TAS Group – including directors with strategic

responsibilities – for the period 2020-2022, which in terms of Art. 114-bis of the Consolidated

Law on Finance (TUF), will be submitted to the TAS Shareholders' Meeting on 28-29 April 2020.

b) Restrictions on the transfer of securities (as per art. 123-bis, paragraph 1, letter b) TUF)

In terms of the by-laws, shares are registered, non-divisible and freely transferable. The provisions

referring to representation, entitlement and circulation of company shares related to securities

traded on regulated markets are applicable.

On 21 December 2018, TAS signed to terminate the execution agreement for the recovery plan

pursuant to Art. 67, paragraph three, letter d) of the Italian Bankruptcy Law, referring to a medium-

long term loan contract for Euro 72,000,000.00 of 29 November 2007 (the “Termination

Agreement”). The residual financial debt in this regard was Euro 5,000,000.00. Following the

Termination Agreement:

- a lien exists on 4,176,845 TAS shares owned by OWL, corresponding to 5% of the share capital,

registered as a guarantee in favour of the pool of banks.

- there is a lien on 20,875,871 TAS shares owned by OWL, corresponding to 24.99% of the share

capital, registered as a guarantee for Illimity - Banca Interprovinciale for the funding provided

by the latter to OWL on 21 December 2018 in favour of Illimity - Banca Interprovinciale.

http://www.tasgroup.it/investors

http://www.borsaitaliana.it/



Furthermore, in 2019, the Parent Company OWL entered into two lease contracts with its

shareholder GUM International S.r.l. and with the latter’s majority shareholder GUM Consulting

S.r.l., one for 7,500,000 and the other for 2,000,000 TAS shares respectively, corresponding to a

total of 11.372% of the share capital, which the lessee companies granted as a lien to Banca Santa

Giulia S.p.A., as surety on the loan provided by the bank for the TAS chain of control restructuring

operation.

c) Significant investments in the share capital (as per art 123-bis, paragraph 1, letter c) of the

TUF)

The company qualifies as an SME according to Art. 1, comma 1, letter w-quater.1) of the TUF

and, therefore, pursuant to Art. 120, paragraph 2 of the TUF, the significant equity investments in

the Company’s share capital for the purposes of reporting requirements are those that exceed 5%

of the share capital.

Persons who, at the date of approval of these financial statements, based on statements made in

accordance with Art. 120 of the TUF, directly or indirectly possess a significant shareholding

exceeding 5% of the share capital of TAS are as follows:

Declarant or person at the

top of the investment chain

Direct shareholder

% share of voting capital % share of ordinary

capital Company Name Ownership status

Dario Pardi OWL S.p.A.

Ownership 73.125 73.125

Total 73.125 73.125

Total 73.125 73.125

d) Securities that grant special rights (as per art. 123-bis, paragraph 1, letter d) TUF)

There has been no issue of securities that confer special or other controlling rights. There are no

special powers. The by-laws of TAS do not provide for multiple or loyalty votes.

e) Employee share ownership: mechanism for exercising voting rights (as per art. 123-bis,

paragraph 1, letter e) TUF)

There are no specific mechanisms for exercising voting rights in the event of employee share

ownership.

f) Restrictions on voting rights (as per art. 123-bis, paragraph 1, letter f) TUF)

There are no restrictions on voting rights.

g) Shareholder agreements (as per art. 123-bis, paragraph 1, letter g) TUF)

On 16-17 May 2019, the shareholders' agreements expired at the end of their three-year term,

relating to the Company pursuant to Art. 122, paragraph 5, letter a), b) and c) of Italian Legislative

Decree No. 58/1998. There are no significant shareholder agreements pursuant to Art. 122 TUF in

force at the approval date of this Report.

h) Change of control clause and statutory regulations on takeover bids (as per art. 123-bis,

paragraph 1, letter h) TUF and art. 104, paragraph 1-ter and 104-bis, paragraph 1)



Neither the Company, nor any TAS subsidiaries have signed significant agreements that become

effective, are amended or terminated in the event of changes to the control of the contracting

company.

The By-laws envisage no derogation from the passivity rule provided for by Art. 104, paragraphs

1 and 1-bis of the TUF, nor provides for the implementation of neutralisation rules set out by Art.

104-bis, paragraphs 2 and 3 of the TUF.

i) Mandates to increase the Share Capital and authorisations to purchase treasury shares

(as per art. 123-bis, paragraph 1, letter m), TUF)

On 18 March 2020, the BoD passed a resolution to submit a proposal to the Company’s

Extraordinary Shareholders' Meeting called for 28-29 April 2020 for a paid non-divisible share

capital increase, with the exclusion of pre-emptive rights pursuant to Art 2441, paragraph 8 of the

Italian Civil Code, up to a maximum nominal amount of Euro 482,299.58, inclusive of any share

premium, for the issue of a maximum of 1,663,102 ordinary shares with a nominal value of zero,

including on several occasions, to service a stock option plan reserved for employees of the TAS

Group – including directors with strategic responsibilities – for the period 2020-2022, which in

terms of Art. 114-bis of the Consolidated Law on Finance (TUF), will be submitted to the TAS

Shareholders' Meeting on 28-29 April 2020.

At the date this Report was approved, no other mandates were resolved to increase the issuer’s

share capital.

At present, the Company’s Directors are not authorised to issue equity instruments.

l) Management and coordination activities (as per Art. 2497 et seq. of the Italian Civil Code)

The Company is controlled by OWL, which owns a 73.125% stake of the share capital and also

performs management and coordination activities pursuant to art. 2497 of the Italian Civil Code.

Other information

Note also that:

- the information required pursuant to article 123-bis, paragraph one, letter i) (“agreements

between the company and directors … providing an indemnity in the case of dismissal or

resignation without just cause or if the working relationship should cease subsequent to a public

takeover bid”) is provided in the remuneration report published in terms of art. 123-ter of the TUF;

- the information required by article 123-bis, paragraph one, letter l) (“the regulations applicable

to the appointment and replacement of Directors … as well as changes to the by-laws, if different

from legislative and regulatory rules applicable by way of addition”) is provided in the section in

the Corporate Governance Report dedicated to the Board of Directors.

INTERNAL AUDIT SYSTEM

Following the actions undertaken during the course of previous financial years, the Board of

Directors continued with the implementation of the internal audit system to ensure that the main

risks to which TAS and its subsidiaries are exposed can be correctly identified and properly

measured, managed and monitored, while also defining criteria to make such risks compatible with

sound and proper management.



The process is continuously updated and strengthened.

The internal audit system of TAS consists of an organised system of internal rules, procedures and

organisational structures whose purpose is to facilitate the achievement of business objectives

through effective and efficient operations and compliance with laws and regulations.

In order to assess the effectiveness of the internal audit system, the governance of TAS requires

the involvement of the following entities, each according to its respective responsibilities:

- Board of Directors

- Executive director in charge of the internal control and risk management system

- Control, Risks and Related Parties Committee;

- Remuneration and Appointments Committee;

- Person in charge of Internal Audit function

- Director responsible for preparing corporate accounting documents pursuant to Law No.

262/05

- Supervisory Board formed pursuant to Italian Legislative Decree 231/2001

- Board of Statutory Auditors

The system’s functioning is ensured with frequent meetings between the bodies referred to above,

mainly through the supervision and coordination of the Control, Risks and Related Parties

Committee and the Board of Statutory Auditors, in order to provide the most complete picture of

business risks and the mechanisms implemented to control them.

In terms of risk issues regarding interim financial reporting, the Issuer has identified a number of

measures to achieve the objectives of trustworthiness, accuracy, reliability and timeliness

regarding accounting and finance information, which are based on accounting standards.

On the one hand, control is focused on the tasks and responsibilities of the Director in charge, who

was granted the powers and means to carry out his duties and, on the other hand, on the definition

of a structured system of procedures influencing the administrative and accounting aspects.

Setting the internal rules referred to above was carried out on the basis of an analysis of each

operational process, which focused on the Financial Statement items relevant to financial reporting

as a way to address the risks identified with appropriate control mechanisms.

Responsibility for maintaining the adequacy of this regulatory system was governed and

communicated within the administration-finance-control area, and periodic analyses were carried

out by the Internal Audit Manager.

As additional structural elements of the control environment, it is necessary to highlight both the

supervision provided by the “Quality” unit and the related business operating procedures

governing internal operations.

The organisational structure is formalised through internal regulations issued by the Organisation

and Human Resources management following the approval of the CEO; these communications are

available to all employees on the company and the Board of Directors is regularly informed about

the most significant organisational changes.

Based on the information gathered at the meeting on 12 March 2019, the Control and Risks

Committee made a positive evaluation of the adequacy, efficiency and effectiveness of the internal



control system, referring to the reports of the responsible bodies (Internal Audit structure and

Supervisory Board).

Main characteristics of the internal control system and management of existing risks in

relation to the financial disclosure process - Application criterion 7, paragraph 1, letter d) and

art. 123 bis, paragraph 2 letter b) of the TUF

Introduction

For the system of internal control and risk management, the Issuer has taken the “COSO

Framework” as a reference model; this standard is considered a best practice internationally. The

system is made up by the set of business procedures and rules adopted by the different operational

units to allow, through an appropriate identification process, for the measurement, management

and monitoring of the main risks in achieving business objectives.

The internal control and risk management system is also intended to provide reasonable certainty

that the financial reporting information disclosed to users, in compliance with established

deadlines, gives a true and accurate presentation of management events, ensuring the integrity,

accuracy, reliability and timeliness of the financial reporting.

Characteristics of the system of management of existing risk and internal control in relation to the

financial reporting process

To ensure the effective application of the system and a high standard of reliability of information,

various business procedures, including administrative and accounting checks, are adopted and

periodically updated subsequent to organisational and regulatory changes.

With particular reference to the structure and operating modes that characterise the operation of

the system of internal control and management of risks in relation to the financial reporting

process, we specify that:

the identification of financial reporting risks has been carried out within the wider process

of risk assessment of identification risks that may affect the achievement of the objectives

established by business processes; the risk assessment is updated annually at the time of

the internal audit plan;

the risk assessment is done with qualitative criteria designed to estimate the probability of

events occurring and their impact on the pursuit of business objectives;

risk oversight is ensured by responsible individuals and institutions’ monitoring of

compliance with procedures, in addition to the specific activities of the Internal Audit

function. In that regard, it should be noted that the audit plan of the Internal Audit function

provides specific tests for administrative processes to allow the issue of certification by the

director in charge of financial reporting at 31 December 2019 (Italian Legislative Decree

No. 262/05).

the assessment of controls on identified risks is carried out through the Internal Auditor’s

activity and may involve, where appropriate, the identification of compensating controls,

corrective actions or improvement plans.

the Head of the Internal Audit function provides a quarterly report on the results of the

monitoring activities to the Chief Executive Officer to oversee the operation of the Internal

Control System, and by the Internal Control and Risk Committee, which in turn reports to

the Board of Directors and the Board of Statutory Auditors.



Within the financial reporting process, the preparation of financial reporting is the responsibility

of the Legal, Administration, Finance and Control Department, which the CFO oversees, also in

his capacity as manager in charge. The CFO reports to the CEO and is therefore independent of

all business areas.

The administrative heads of subsidiaries report to that area on a functional level. The area reports

to the CEO.

Financial reporting processes are supported by written procedures that govern roles and

responsibilities and control points; the procedures are prepared by the process owner, verified by

the Internal Audit Function Manager and approved and issued by the CFO.

These procedures cover the Company’s entire operations; foreign subsidiaries are less complex

from the administrative point of view.

The Internal Audit function, responsible for outsourcing to third parties outside the Company with

adequate specific competence and experience and a suitable organisational structure to support the

execution of control, reports directly to the Board of Directors and operates on the basis of an

appropriate plan of checks prepared annually.

Board of Directors

Pursuant to Art. 18 of the by-laws, the entire Board of Directors, made up of no less than five and

no more than eleven members, is elected by the Shareholders’ Meeting on the basis of lists that

are filed at the registered offices twenty five days prior to the date set for the Meeting, accompanied

by all the documents and information required by law.

The Board is appointed by a list voting procedure to ensure (i) compliance with pro tempore gender

balance rules in force and (ii) the presence of minority shareholders among at least one fifth of the

Directors to be elected.

Only shareholders that individually or together with other shareholders representing the percentage

set by Consob pursuant to article 144-quater of the Issuers Regulation, published in terms of article

144-septies of Consob Issuers Regulation, are entitled to present lists, or failing this representing

at least 2.5%. With management resolution No. 28 of 30 January 2020 in respect of 2020, Consob

set the shareholding percentage required to present a list of candidates for election to TAS

administrative and control bodies at 2.5%.

The by-laws do not incorporate the provision under Article 147-ter, paragraph one of the TUF,

according to which in the interests of the Directors to be elected, the by-laws disregard the lists

that have not obtained a percentage of votes equal to at least half of that required by the by-laws

for their submission.

Directors must have the prerequisites stipulated by pro tempore applicable regulations; of these, a

number corresponding to the minimum set by the regulations must have the prerequisite of

independence pursuant to article 148, paragraph 3 of the TUF. The by-laws do not stipulate further

requisites of independence with respect to those laid down for statutory auditors under the terms

of the aforementioned Article 148 of the TUF, and/or integrity and/or professionalism for the

appointment of Directors. This also applies regarding the requisites stipulated by the Codes of

Conduct drawn up by the management companies of the regulated markets or by the category

associations.

Reference is made to the Corporate Governance Report for information on the diversity policy.



Director in charge of the control and risk management system

The Board has appointed the Chief Executive Officer Valentino Bravi as the Executive Director

in charge of the internal control and risk management system.

The executive Director in charge of the internal control and risk management system has identified

the main business risks (strategic, operational, financial and compliance) in the context of the risk

assessment process especially, taking into account the characteristics of the activities conducted

by the Issuer and its subsidiaries, and submitted them periodically to the Board; he implemented

the guidelines defined by the Board, overseeing the design, implementation and management of

the internal control and risk management system, constantly monitoring its adequacy and

effectiveness; adapted the system to changes in operating conditions and legislative and regulatory

framework; within the scope of the renewal, he has proposed the appointment of the Head of the

Internal Audit function, continuing with the appointment being outsourced; he has the authority to

ask the Internal Audit function to conduct any audits on specific operating areas or on compliance

with internal rules and procedures in executing corporate operations; he has always reported

promptly to the Control and Risk Management Committee and to the Board of Directors regarding

any critical issues and problems emerging in the course of its business or of which he might

become aware to take appropriate action.

Control, Risks and Related Parties Committee

The Board of Directors has established an internal Control, Risks and Related Parties Committee

(the “CCR” or simply the “Committee”), with the duties formalised in the Governance Code.

The Committee comprises 3 (three) independent Directors: Ambrosella Ilaria Landonio

(Chairperson), Roberta Viglione and Giancarlo Maria Albini.

During the year and at the date of approval of this document, the Committee is made up of only

independent and non-executive directors, whose work is coordinated by a Chairperson, who is

currently Ambrosella Ilaria Landonio.

The composition of the Committee is compliant with the recommendations of Principle 7.P.4 of

the Corporate Governance Code, which states that at least one member of the Control and Risks

Committee has experience and knowledge in the field of risk management accounting and finance,

deemed adequate by the Board of Directors at the time of their appointment.

On 13 November 2018, the Board also approved a CCR regulation setting its composition, duties

and operation, in accordance with the Governance Code.

During 2019, the Committee met 9 (nine) times, with an average meeting lasting about 55 minutes,

with full participation of its members on average at all meetings.

As regards the financial year 2020, at the date of approval of this Report, 4 (four) meetings had

been held.

At the Committee meetings held during 2019, the Chief Executive Officer Valentino Bravi and

CFO Paolo Colavecchio attended on the invitation of the Committee or its Chairperson. The

meetings of the Committee were attended, subject to invitation, by members of the Board of

Statutory Auditors and the other parties involved in the control and risk management system, in

particular the Head of the Internal Audit function and other members of the Supervisory Board.



Remuneration and Appointments Committee

The Remuneration and Appointments Committee (“CRN”) established by the Board of Directors

currently consists of three independent directors: Giancarlo Maria Albini (Chairman), Martino,

Maurizio Pimpinella and Carlotta De Franceschi.

During the 2019 and at the date of approval of this document, the Committee is made up only of

independent and non-executive directors. The Committee’s work is coordinated by the Chairman

and minutes are duly prepared.

The current composition of the Committee is compliant with the recommendations of Principle

6.P.3 of the Corporate Governance Code, which states that at least one member of the

Remuneration and Appointments Committee has experience and knowledge in the field of

accounting and finance or remuneration policies, deemed adequate by the Board of Directors at

the time of their appointment. All members have ensured effective and proactive participation in

the meetings and the discussions.

On 13 November 2018, the Board of Directors also approved a CRN regulation setting its

composition, duties and operation, in accordance with the Governance Code.

During 2019, the Remuneration and Appointments Committee met in total 5 (five) times, with an

average meeting lasting about 30 minutes. As regards the financial year 2020, at the date of

approval of this Report, 3 (three) meetings had been held.

Pursuant to application criterion 6.C.6. of the Code, Directors must abstain from taking part in the

committee meetings formulating proposals to the Board relating to their own remuneration.

At the invitation of the Committee itself, the meetings held in 2019 were attended by the CFO

Paolo Colavecchio and the Board of Statutory Auditors: also invited to take part were

representatives of the company functions involved from time to time in the individual points on

the agenda, including the Human Resources Manager.

Person in charge of Internal Audit function

Based on the proposal of the executive Director in charge of Internal Audit and Risk Management,

and the favourable opinion of the Control and Risks Committee and the Board of Statutory

Auditors, the Board of Directors appointed Gerardo Diamanti as the Internal Audit Function

Manager.

The Company has therefore continued with its commitment to ensure maximum independence

with the appointment of an external person to be responsible for this function. Without prejudice

to him reporting to the Board of Directors in accordance with the Italian Civil Code, he reports on

a functional level to the Chairman of the Board of Directors, and to the Board and the Control and

Risks Committee on an information level.

Among its duties, the Head of the Internal Audit function reported during 2019 to the Control and

Risks Committee on the outcome of the compliance tests regarding current procedures and the

need to update and implement these. During the year, Internal Audit functions were conducted

according to the work plan prepared by the function itself for 2019 (the “2019 IA Plan”).



Manager responsible for preparing corporate accounting documents

The appointment of a manager responsible for preparing the corporate accounting documents was

conferred on the Administrative and Finance Manager, Paolo Colavecchio.

Under the provisions of Art. 27 of the by-laws, the appointment was made on the basis of a Board

resolution, after consulting the Board of Statutory Auditors and prior to the relevant verification

regarding his professionalism, accounting, economic and financial skills, as well as his familiarity

with the appointment covered thus far. In fact, as he was already specifically responsible for the

preparation of the accounting documents, he was the obvious choice as candidate.

With the adoption of procedures in accordance with Law 262/2005, the precise and appropriate

responsibilities for carrying out the tasks laid down in the laws and regulations have been described

in detail and are governed by the procedures.

Supervisory Board formed pursuant to Italian Legislative Decree 231/2001

From 2008, the Issuer follows an organisation, management and control model pursuant to Art. 6

of Italian Legislative Decree 231/2001.

This SB currently consists of two parties external to the Group (the Chairman, Massimiliano Lei

and Gerardo Diamanti, Manager of the Internal Audit function) and the Director responsible for

preparing the accounting documents, Mr Paolo Colavecchio.

During 2019, due to the organisational and regulatory changes over the year, the Issuer updated

its Organisational Model pursuant to Italian Legislative Decree No. 231 of 8 June 2001, based,

inter alia, on the Confindustria Guidelines; the purpose of this model is to prevent the risk of

unlawful acts relevant to the Decree and thus avoid the onset of administrative liability in respect

of the Company. It also includes specific behavioural protocols, which together with company

procedures, provide guidelines for the management of activities that in abstract terms are exposed

to a risk-offence, applicable pursuant to Italian Legislative Decree No. 231/2001.

The Supervisory Board constantly monitors the changes introduced in legislation and case law

relating to the responsibility of entities pursuant to Italian Legislative Decree No. 231/01, so that

it may make the necessary updates to the Organisation, Management and Control Model adopted

by the Issuer, which implemented said updates in order to incorporate the intervening amendments

to Italian Legislative Decree No. 231/2001.

The model also paid particular attention to the following elements, which are considered essential

in terms of its adequacy:

- the appointment of a Supervisory Board, consisting of the Internal Audit Manager, a

director of the Issuer, and an outside professional with proven and specific experience on

various legal aspects of the "231" within companies. The Supervisory Board generally

meets twice a month and reports regularly to the Board of Directors, also through the Audit

and Risk Management Committee and the Board of Statutory Auditors.

- the formalisation of the code of ethics as a fundamental element of corporate ethics. The

document has been communicated to all employees and is considered an integral part of

internal organisational model; it is available on a special directory within the corporate

Intranet and is also published on the Issuer’s website together with the general part of the

model, at http://www.tasgroup.it/investors/governance.

- A comprehensive staff training programme.



This Model represents a further step towards the seriousness, transparency and a sense of

responsibility required within the Company and towards the external world, while guaranteeing

shareholders efficient and proper management.

During 2019 and until the approval of the Report, no infringements of the Organisational Model

or notices of critical areas have been received by the Supervisory Board.

Board of Statutory Auditors

Pursuant to Art. No. 31 of the by-laws, the appointment of the Board of Statutory Auditors is made

on the basis of lists filed at the registered offices at least twenty five days prior to the date set for

the meeting, accompanied by the candidate’s declaration accepting the candidacy. In the

declaration, each candidate declares that there are no reasons for ineligibility or incompatibility,

and that the candidate complies with the requirements prescribed by applicable regulations. This

is accompanied by detailed information on the candidates’ personal and professional profiles. In

particular, Art. 31 of the by-laws provides that no person can assume the office of Statutory

Auditor or be included in lists if they have exceeded the limits on the number of management and

control positions held, if incompatible or failing to meet the requirements of integrity and

professionalism pursuant to applicable legislation and regulations, specifying, for the purposes

thereof, that business matters and sectors closely connected to that of the company shall be

understood as matters and the sectors of information technology and communications. The

nomination is done on the basis of a voting list system, which ensures representation to the

minority and gender balance, based on applicable pro tempore regulations.

HUMAN RESOURCES

For the TAS Group, the attention paid to the valuable assets in its human resources is a central and

critical factor for a Group that focuses on innovation within rapidly and continuously changing

scenarios.

Continuous training enables the development of knowledge and innovation capacity and the

systematic transfer of skills, in a process of continuous improvement, focusing on human

resources, their motivation and their involvement in the company’s objectives.

A great deal of commitment is therefore given every year to staff development and training based

on a needs analysis, the definition of plans and training programmes, conducting courses internally

and with reliable external institutes, webinars and on-line courses, participation in workshops and

seminars and evaluating training activities.

Special attention is also given to the selection of staff based on sophisticated research procedures

and scientific assessments to identify the best candidates to recruit for TAS and ensure the

necessary technical, people skills and integrity in the people appointed.

The TAS Group has always focused on collaborating with specialist schools, universities and other

higher education institutes to identify and attract young talents to the TAS Group for placement

on specific career paths. Finally, the TAS Group promotes corporate social responsibility activities

with employment start-off schemes for young graduates and job seekers and with participation in

various school-work alternating programmes, as well as IFTS technical-scientific commissions.



RESEARCH AND DEVELOPMENT

Research and development are recognised by the Group as a fundamental value for its growth and

consolidation strategy in the domestic and international market. The Group was again confirmed

its commitment in this area in 2019, with an overall investment of Euro 3,692 thousand.

Investments in fixed assets 31/12/2019 31/12/2018 Change Change %

Software development 3,692 4,066 (374) (9.2%)

Other intangible fixed assets 238 65 173 >100%

Electronic office equipment and hardware 207 561 (354) (63.1%)

Other tangible fixed assets 985 219 766 >100%

TOTAL 5,122 4,911 211 4.3%

The item Software development for Euro 3,692 thousand relates to capitalised internal costs for

the development of new computer applications.

Group investments continued during the period in different areas, with market action consolidated

in European countries, and strategic partnerships established to develop the Group’s business.

Specifically:

in the Financial Markets and Treasury area: the continued development of the Aquarius

platform to manage liquidity, under Basel 3 principles, in an integrated manner for bonds,

cash and collateral. Aquarius was specifically designed for the European market and

integrated with the Target2 and Target 2 Securities platforms, as well as the tripartite

collateral management systems. Thanks to the work done by the inter-bank work group for

the Consolidation T2/T2S Eurosystem project, created and coordinated by TAS with the

support of its Partners KPMG and Accenture, the Aquarius solution qualifies as the most

flexible, complete and updated platform available to the Banks involved in the challenging

compliance consequences created by the new European Central Bank regulatory

infrastructure replacing current systems, based on a big bang approach;

in the Electronic money area: continued development on the CashLess 3.0® platform to

obtain Card 3.0 benchmark certification in the Cloud Oracle environment and completion

of the ACS module certification for the secure authentication of cardholders based on the

EMVCo 3DSecure2.0 protocol for e-commerce payments; continued development to

extend the Fraud Protect module to the management of rules and the use of predictive

models referring to card-based transaction payments, but also bank transfers and instant

payments, focusing specifically on the implications of the PSD2 regulations regarding

Strong Customer Authentication exemption and Transaction Risk Analysis;

in the Payment Systems area: continued development and extension of the TAS Open

Banking solution and Network Gateway suite following the interest shown by Banks and

candidate Third Parties to operate as PISP/AISP/CISP in response to the incentives and

opportunities introduced by PSD2;

in the Financial Value Chain area: the strengthening of the PayTAS suite offering for

eGovernment in line with the specifications gradually issued by AgID on PagoPA for

access to the Payment Node by PSP (Payment Service Providers) and central and local

public administration bodies. Furthermore, the operational and technological overview

continues regarding the e-Banking and Corporate Banking solutions for business clientèle,

also from the perspective of PSD2 and consumers;



in the 2ESolutions area: the continuation of the project to reposition TAS’ offering,

changing it from a proprietary solution to a market-orientated solution with international

reach, focusing on the Cloud, Customer eXperience and Social business collaboration, built

on Oracle Cloud Applications.

On a geographic level, market action in North America continues, where the offering of Card

3.0 combined with the Cloud proposition is achieving success; similarly, the new vertical security

solutions have created opportunities in the Brazilian market.

Finally, of note are the signing of an important contract with the Anglo-Arab AGTB digital bank,

where TAS solutions were key to starting up the Bank’s operations; the extension of the TAS

platform for PSD2 on the Italian market; the enormous success of the Aquarius TAS solution on

the Italian market for the T2/T2S Consolidation project.

SIGNIFICANT EVENTS

In addition to what has already been referred to regarding the company restructuring operation, we

note:

On 7 January 2019, the TAS Group announces that on 13 November 2018 it was awarded

the tender launched by BNL in the scope of BNP Paribas Group’s 2020 Domestic Market

Strategic Plan to completely overhaul the platform for issuing debit, credit and prepaid

cards. BNL decided to confirm the TAS Group as its partner, based on its ability to respond

in an innovative and highly reliable manner to the Bank’s development requirements.

On 26 February 2019, TAS completed the acquisition of an 80% shareholding in the share

capital of the American company Mantica Inc., which was then liquidated in September,

with the 80% stake in the subsidiary Mantica Italia S.r.l. transferred directly to TAS S.p.A.

Mantica Italia S.r.l specialises in the production, development and marketing of the

proprietary “Adaptive Intelligence” software platform, created to process predictive

models.

On 21 March 2019, TAS signed an agreement with the Anglo-Gulf Trade Bank, a digital

corporate trade bank for international clientèle, headquartered in Abu Dhabi, through its

subsidiary TAS International S.A. to provide its solution to create and manage a payment

hub for correspondent banks worldwide, using the proprietary software platforms, Network

Gateway, Card 3.0 and Aquarius.

On 5 April 2019, TAS completed the sale to B2PT d.o.o. (company controlled by Mr

Nemanja Paunovic) of the entire 80% shareholding held in Bassilichi CEE. The scope did

not include the shareholding held by Bassilichi CEE in the Serb registered company TAS

EE (formerly ArsBlue d.o.o. for 51%), which was transferred directly to TAS.

On 29 April 2019, the TAS Shareholders' Meeting resolved to allocate the entire TAS

profit for 2018 of Euro 359,942.29 to the legal reserve. As proposed by the majority

shareholder OWL S.p.A., it also resolved to fully cover the losses from previous years

resulting from the financial statements at 31 December 2018 for Euro 12,759,824.91, using



the capital account reserves for the same amount of Euro 12,759,824.91, recognising the

remainder of this capital account reserve of Euro 7,240,175.09 in the extraordinary reserve.

On 18 July 2019, the Board of TAS co-opted Mr Alberto Previtali as the new non-

executive and non-independent member of the Board of Directors, replacing Mr Nicolò

Locatelli, who had resigned as non-executive and non-independent Board member on 5

April 2019. Based on available information, Mr Previtali indirectly holds a stake in TAS,

with the 10% shareholding in Alex S.r.l., which in turn, holds 58.2% in OWL S.p.A.

On 12 September 2019, the Nexi Group, via Mercury Payment Services, chose the TAS

Group’s Cashless 3.0 solution to become more competitive and responsive to market

changes in the issuing of the new payment cards. The TAS Group suite was chosen because

it guarantees management of the entire life cycle of payment products, including managing

fraud, disputes, security and clearing with the international Card Networks.

On 24 September 2019, for the eleventh consecutive year, TAS was confirmed among the

Top 100 companies in the IDC FinTech Rankings 2019.

On 31 October 2019, a resolution was taken for a capital increase reserved to TAS S.p.A.

in the subsidiary TAS Eastern Europe. Following this operation, the stake held by TAS

S.p.A. increased from 51% to 70%.

On 9 December 2019, TAS USA signed an agreement with Super Processor Inc., a full-

service payment processor based in Hawaii, to provide the TAS Group proprietary CARD

3.0 I.E. solution, an end-to-end card management platform, with innovative functions in

the area of issuing and acquiring to cover the entire payment chain.

INFORMATION FOR INVESTORS

The Group Parent Company has been listed on the Italian Online Stock Exchange (ISIN code

IT0001424644) since May 2000.

On 30 December 2019, the last trading day of the year, TAS securities reached a closing price of

Euro 2.01 and its market capitalisation amounted to approximately Euro 168 million. In the last

twelve months, the value of TAS securities was negative for 13%, going from Euro 1.78 to Euro

2.01.

REMARKS ON THE ADEQUACY OF THE DIRECTIVES ISSUED BY THE COMPANY TO

SUBSIDIARIES PURSUANT TO ART. 114, PARAGRAPH 2 OF ITALIAN LEGISLATIVE

DECREE 58/1998

In reiterating that the Company is subject to the management and coordination of the Parent

Company OWL, the Board of Directors confirmed the certification pursuant to paragraphs 7 and

8 of Art. 2.6.2 of Borsa Italiana S.p.A. Regulation relating to compliance with the provisions under

articles 15 and 16 of the Markets Regulation (“Conditions for the listing of parent company joint-

stock companies incorporated and governed by the laws of non-EU member countries and

“conditions that prevent the listing of shares of parent companies subject to the management and

coordination of other companies”).



MAIN RISKS AND UNCERTAINTIES TO WHICH TAS S.P.A. AND THE GROUP WERE

EXPOSED

The Company has an internal control system consisting of a system of rules, procedures and

organisational structures intended to enable sound, correct business management, which includes

the proper identification, management and monitoring of the principal risks that could threaten the

achievement of corporate objectives.

This paragraph describes the risk factors and uncertainties related to the economic-regulatory

framework and market, which could significantly impact the Company’s performance; the specific

risks that could result in obligations for the Company and the Group are assessed at the time of

determining the relevant provisions and are mentioned in the Notes to the financial statements,

together with any significant potential liabilities.

Additional risks and uncertain events that are currently not predictable or deemed improbable,

could similarly influence and the Company and Group’s business, economic and financial position

and prospects.

The Company adopts specific procedures to manage risk factors aimed at maximising value for its

shareholders and putting in place the measures needed to prevent the risks inherent to the Group’s

activities. As the parent company, the Company is exposed to the same risks and uncertainties

described below for the Group.

Exposure to various types of risk

FINANCIAL RISKS

(i) Foreign exchange risks

The Group is not particularly exposed to currency risk except for the conversion of the Financial

Statements of its subsidiaries TAS International (Switzerland), TAS Americas (Brazil), TAS USA

(United States) and TAS EE(Serbia).

At 31 December 2019, there were no significant business transactions denominated in a currency

other than the functional currency of the company (Euro).

At the reporting date, there was no hedging in place to protect from such exposure.

(ii) Interest rate risks (of fair value and cash flow)

The interest rate risk threatening the Group originates primarily from financing to the parent

company OWL S.p.A., which provides a 3-month Euribor percentage rate and a spread of 150 base

points. At the date of these financial statements there are no significant risks of fluctuation in

market interest rates. The Group’s policy does not include using derivative financial instruments

for the purposes of hedging and/or trading.

(iii) Credit risk

The Group operates almost exclusively in the banking sector, mainly with known and reliable

customers who possess proven solidity and solvency; this is why loan losses in past years have is

always been insignificant. The Group does not have significant areas of customer solvency risk.



The receivables balance is monitored constantly throughout the year. In particular, all overdue

items are specifically analysed and an estimate is made on losses on receivables, based on

information that includes historic, current and forecast data as required by the IFRS 9 standard.

Financial assets are entered in the balance sheet net of depreciation calculated on the basis of the

risk of a counterparty default, which is determined based on the available information on

customers’ creditworthiness.

(iv) Liquidity risk

Liquidity risk management deals with the risk of the financial resources available to the company

proving insufficient to meet the financial and commercial obligations under the agreed terms and

deadlines.

The cash flows, financing needs and the liquidity of the Group companies are constantly

monitored, with the aim of ensuring effective and efficient management of financial resources.

It cannot be ruled out that, should the situation of weakness and uncertainty in the market continue

resulting in a drop in revenue, or if longer collection times or significant write-offs occur, there

could be a risk of reduced liquidity with the consequent need to seek recourse to external financing.

At 31 December 2019, the reserve of liquid assets was as follows:

Loans Utilisation Availability of credit Availability of credit

Bank credit lines 31/12/2019 31/12/2019 31/12/2019 31/12/2018

Cash credit line 489 (169) 319 267

Self-liquidating lines - - - -

Other Financing Lines 2,908 (1,878) 1,030 30

Financing Lines 5,000 (5,000) - -

Total Bank Credit Lines 8,397 (7,048) 1,349 297

Factoring Lines 3,567 (567) 3,000 105

Total Factoring Credit Lines 3,567 (567) 3,000 105

Total Banking/Factoring Credit Lines 11,964 (7,615) 4,349 402

Cash and cash equivalents 7,247 5,315

Total 11,964 (7,615) 11,596 5,717

The Group’s liquidity reserve of € 11.6 million is deemed sufficient to meet existing commitments

on the reporting date.

EXTERNAL RISKS

(i) Risks associated with general economic and sector conditions

The market for IT consulting is linked with economic trends in industrialised countries, where the

demand for high technology content products is much higher.

Unfavourable economic conditions at domestic and/or international level, or high inflation rates

could stall or reduce growth in demand, with consequent repercussions on business and the

Group’s economic, asset and financial position.

As from January 2020, the national and international scenario have been characterised by the

spread of Covid-19 (Coranavirus), and the consequent restrictive measures to contain it introduced

by the public authorities in the countries affected.



The type of services provided by the Group, namely payment digitalisation, could make a

significant contribution to countering the epidemic, and is linked to the Group’s core technology

and experience.

Close contact between people when paying in cash, and the cash itself, are instances and tools that

could become vehicles for the contagion. As we know, money going from hand to hand is a

potential means for spreading the pathogen, even under normal circumstances.

Over recent weeks, there has been an unexpected and clear increase in remote payments, via

mobiles, the web or kiosks. Many banks have experienced exponential growth in downloads of

payments apps, the use of cards and customers interacting with unmanned channels (ATMs,

Internet and Mobile Banking). The unforeseen growth in volumes on these channels was made

possible by the highly resilient and scalable technology infrastructure available.

The circumstances related to Covid 19, which are extraordinary in terms of their nature and extent,

are having direct and indirect repercussions on economic forecasts and activity, creating general

uncertainty, where the relative developments and effects cannot yet be measured in general terms

or regarding the Group’s business. Currently all the Group’s companies are fully operational using

smartworking, which for some time now is one of the Group’s operating methods to provide

services to its customers. We are providing our client base with full support in their related

requirements, continuing to provide our services normally. Based on the most recent analyses

conducted and the most conservative estimates related to revenue and margins, there are no

specific critical areas apparent at the date of these financial statements, given the Group’s liquidity

and commitments.

The Company reserves the right to update its guidance should the “Coronavirus (or Covid-19)

crisis” cause material repercussions on the Group’s economic and financial indicators.

(ii) Risks associated with rapidly changing technologies, customer needs and the reference

regulatory framework

The industry in which the Group operates is characterised by rapid and profound technological

change and constant developments in skills and professionalism. In addition, the increase in

customer requirements, together with any change in the regulatory framework, demand constant

software updates for the banking sector and other financial institutions.

The Group invests heavily in the development of new projects and technologies, not only in order

to respond quickly to its target market demand, but also to anticipate potential development lines,

thus offering a range of new products that are suitable to influence user demand. Therefore, any

reduction in the customers’ spending propensity in respect of new technologies could expose the

Group to the risk of not gaining adequate returns on its investments.

Regardless, these investments cannot guarantee that the Group will always be able to recognise

and use innovative technological tools, eliminate the risk of obsolescence of existing products, or

ensure the Group’s ability to develop and introduce new products or renew existing ones, and do

so at an appropriate time for customers that is acceptable for the market. The situations described

pose a significant potential risk to the business and the Group’s economic and financial results.

(iii) Risks associated with the high levels of competition in the sector where the Group operates

The IT market is highly competitive, and some competitors could attempt to expand at the expense

of the Group’s market share. In addition, the increased intensity in competition levels and the

possible entry of new players in the Group’s target sectors, with human resources and financial

and technological capabilities that offer more competitive prices, could affect the Group’s business



and its ability to consolidate or expand its competitive position in the sector, negatively impacting

on the business and economic situation and the Group’s financial position.

(iv) Risks associated with protecting intellectual property

The Group’s software procedures and programmes are protected under Italian copyright

legislation. The Group also holds the exclusive rights to the usage of certain programmes and

procedures that have been registered in the Special Public Register for Computer Programmes held

at the Italian Author and Publishers Association SIAE [Società Italiana degli Autori ed Editori].

Management also believes that the level of technology in the products offered by the Group,

combined with the necessary technical know-how to constantly and progressively implement and

update these, in themselves constitute elements that limit the risks associated with potential and

current competitors gaining significant competitive advantages. However, there is no certainty that

the protection granted by Italian legislation on copyright law prevents other sector operators from

independently developing similar products or duplicating the Group’s unregistered products, or

further, designing new ones that could replicate the same systems and functions without however,

violating the Group’s rights. The Group’s technology could also become exposed to piracy from

outside parties.

(v) Risks associated with Cyber security

Cyber threats are one of the risks emerging at global level. Cyber security is an issue that impacts

pervasively on company organisations, the development of software products and the provision of

services. The reference TAS market is based on a relationship of consolidated trust between the

supplier (TAS) and customer (primarily Banks and Service Centres). If TAS’ reputation should be

affected regarding its ability to protect and guarantee the cyber security of its products and services

it could translate into significant losses in terms of business. Therefore, for some time now TAS

has put in place a series of measures and prevention policies to mitigate the risks, investing in

state-of-the-art technology, both in respect of data protection and access, as well as the

development of secure software. Furthermore, periodic training has been introduced aimed at

creating awareness among staff and consultants on the issue of Cyber Security. Finally, the

Company has subscribed to an appropriate insurance policy with a leading insurance company on

these specific issues, which extends to all companies in the Group.

(vi) Risks associated with health, safety and the environment

TAS undertakes regular and systematic prevention and control to protect health in the workplace,

in accordance with applicable legislation on the subject. Specifically:

› keeps the powers, delegations and appointments referring to health and safety in the workplace

updated;

› implements a health monitoring programme;

› implements a management system for health and safety in the workplace;

› monitors trends in occupational accidents and illnesses;

It should also be noted that the TAS Group is specifically committed to the aspects referring to

administrative, safety and environmental liability in the scope of the risk of committing the crimes

pursuant to Italian Legislative Decree No. 231/01.



(vii) Risks associated with climate change

The Group does not consider the risk associated with climate change to be high. The progressive

move towards a low-carbon economy should not have significant repercussions for the Group’s

business, and to date, the resulting technology changes should not have significant effects on the

reference market.

INTERNAL RISKS

(i) Risks related to dependence on key personnel

The Group’s success depends significantly on the ability of certain key figures that have made a

decisive contribution to its development, such as the executive directors and other management

personnel with multiple years of experience in the sector.

The loss of any of these key figures without an adequate replacement, could have negative

repercussions on the Group’s outlook, assets and economic and financial results. The Group is also

strongly characterised by the extremely high technical skills of its staff.

The future success of its business therefore depends on the continuity of the functions carried out

by specialised technical employees, and the ability to attract and retain highly qualified personnel.

Within the IT field, personnel costs represent a critical development factor. The difficulties of the

Group in managing staff could have an adverse effect on its business, its financial position and

operating profits.

(ii) Risks related to sales deadlines and implementation cycles

Sales cycles of the Group’s software products demand major investments in terms of time,

particularly due to the need to illustrate the potential benefits of the Group’s products and provide

customer training to allow for the products to be used properly. Negotiations and the consequential

requirements arising from the sale of products extend for an average period of time ranging from

several months to a year. Furthermore, the implementation process for the Group products often

requires the customer to engage human and economic resources for extended periods. Sales

activities and adjustment cycles of the product to the customer’s computer system may suffer

potential delays caused, for example, by the completion of the implementation process on the

product itself, unexpected events outside of the Group’s control such as sudden budget constraints

or the client or business restructuring or, more generally, the complexity of the customer’s

technical requirements. Any delays due to extended sales cycles or related to the use of the product

by the customer could affect business development and the Group’s financial position and

operating profits.

(iii) Risks related to dependence on customers

The Group offers its products and services to small, medium and large companies operating in

different markets. A significant part of the Group’s revenue is concentrated on a relatively small

number of customers whose potential loss could, therefore, adversely affect future business and

the Group’s economic and financial position.

Management believes, however, that Group profits do not significantly depend on any specific

customer in particular, because these customers update their information systems at different times

and with rather long intervals.



(iv) Risks associated with internationalisation

The Group has made significant efforts in recent years as part of its internationalisation strategy

and expects that an increasingly large part of its revenue will be generated from foreign customers.

Therefore, the Group could be exposed to risks inherent to international operations, which include

those relating to changes in economic, political, tax and local regulations, as well as to changes in

the currency exchange rate in the case of countries outside the Euro area. The occurrence of

adverse developments in these areas could adversely affect the Group’s business and future

prospects.

(v) Risks relating to breaches in contractual obligations and potential liabilities in respect of

customers

Highly complex software products such as those offered by the Group can, even when duly tested,

present inefficiencies and anomalies in the installation process and integration into the customer’s

computer system. These circumstances may damage the image of the company and its products,

as well as expose the same to claims for damages suffered by customers and the application of

contractual penalties for failure to comply with deadlines and/or quality standards.

Furthermore, the Group may need to allocate significant resources for the implementation of

corrective actions and be forced to stop, delay or discontinue the provision of services to the

customer.

To date, there have been no significant events of this nature that could lead to conflict in customer

relationships.

CAPITAL RISK MANAGEMENT

The Group manages its capital with the aim of protecting its continuity, ensuring returns to

shareholders, benefits to stakeholders, and maintaining an optimal capital structure while reducing

the relevant costs. In line with industry practices, the Group monitors capital on the basis of the

gearing ratio. This index is calculated as the relationship between net debt and net equity. Net debt

is calculated by subtracting cash and cash equivalents calculated for the purposes of the cash flow

from the remaining financial assets and liabilities shown in the balance sheet. Total capital

corresponds with the “net equity” shown in the Consolidated Financial Statements plus net debt,

as defined above.

As can be seen from the table below, the Group’s gearing ratio is 25%, compared to the 11% from

the previous year.

31/12/2019 31/12/2018

Financial assets/liabilities 16,791 8,388

Less: cash and cash equivalents (7,247) (5,315)

Net debt (A) 9,544 3,073

Group net equity (B) 29,328 24,390

Total Capital [(A) + (B)] = (C) 38,873 27,462

gearing ratio (A)/(C) 25% 11%



TRANSACTIONS WITH SUBSIDIARIES, WITH COMPANIES PURSUANT TO ART. 2497-

BIS OF THE CIVIL CODE AND RELATED PARTIES

With regard to transactions with related parties, including intra-group transactions, it should be

noted that these were not classified as atypical or unusual, but rather as part of the Group’s normal

course of business.

These transactions are regulated at arm’s length given the characteristics of the goods and services

provided and comply with the OPC Procedure.

Information on related-party transactions, including the information required by Consob

Communication of 28 July 2006, is presented in Note 43 of the Consolidated Financial Statements

and Note 39 of the Financial Statements.

TREASURY SHARES AND SHARES/SHAREHOLDINGS OF PARENT COMPANIES

During the financial year, the Company did not purchase or sell any treasury shares or parent

company shares. The Company does not directly or indirectly retain ownership of treasury shares

or parent companies’ shares.

MANAGEMENT OUTLOOK

The 2019 results are a direct consequence of the R&D investments undertaken in recent years to

enhance the market offering (from 2015 to date, TAS has invested on average 9% of its core

revenue for over Euro 21 million).

Significant investments continued in the year that has just ended. More specifically, we have

concentrated our efforts on a new microservices platform for PSD2, developing the Aquarius

platform - to manage banks’ treasuries and developing the Consolidation T2/T2S European

project. We are also pursuing the development of our GPP platform (Global Payments Platform)

with great determination; this was announced last year, and will make us one of the first in the

world to have an integrated solution to manage: payments (both digital and inter-bank), cards and

fraud prevention. GPP will be developed in cloud native, adopting the innovative “microservices”

technology, which ensure total modularity.

In 2019, important results were recorded internationally, particularly in our strategic markets,

based on extending geographic control and the localisation of solutions for these markets (for

example, in North America, the offer of our Card Management Systems, combined with the Cloud

proposal are achieving considerable success).

A this stage when the market is recording decisive growth in digital payments, the TAS Group has

all the requirements, expertise and solutions to continue enabling this change in technology,

continually improving the performance of its solutions, to meet the expectations of our partners

and customers.

EQUITY INVESTMENTS HELD BY MEMBERS OF THE ADMINISTRATIVE AND

CONTROLLING STRUCTURES, GENERAL MANAGERS AND DIRECTORS WITH

STRATEGIC RESPONSIBILITIES



Pursuant to and for the purposes of the provisions of art. 84-quater, paragraph 4 of Consob

Regulation 11971/1999 and subsequent amendments, and according to the criteria set out in

Annex 3A diagram 7-ter, the shares held in TAS S.p.A. and its subsidiaries by directors and

statutory auditors of TAS, as well as spouses not legally separated and minor children, either

directly or through subsidiaries, trust companies or nominees, as per the shareholders’ register,

communications received and other information obtained from same members of the

administrative and control bodies, general managers and directors with strategic responsibilities,

are indicated in the table below.

Surname and

first name

Position Company in

which an

interest is held

Number of

shares held at

the end of the

previous year

number of

shares acquired

number of

shares sold

number of

shares held at

year end

Dario Pardi and

Valentino Bravi

Chairman and

Chief Executive Officer

TAS S.p.A. 67,741,216 0 6,655,221 61,085,995*

* Shares held through the indirect participation in OWL as per the press releases to the market.

Pursuant to and for the purposes of the provisions of art. 84-quater, paragraph 4 of Consob

Regulation 11971/1999 and subsequent amendments, and according to the criteria set out in Annex

3A diagram 7-ter, the shares held in TAS S.p.A. and its subsidiaries by key management personnel

of TAS, as well as spouses unless legally separated and minor children, either directly or through

subsidiaries, trust companies or nominees, as per the shareholders’ register, communications

received and other information obtained from same members of the administrative and control

bodies, general managers and directors with strategic responsibilities, are indicated in the table

below.

Number of

directors with

strategic

responsibilities

Company in

which the

interest is held

Number of shares or

quotas held at the end

of the previous year

Number of shares

acquired

Number of shares sold Number of shares or

quotas held at year-

end

1 TAS S.p.A. 10,500 0 2,000 8,500

1 TASAMERICAS

Ltd

10,088.36 0 0 10,088.36*

* equal to 0.35% of capital.



FINANCIAL POSITION OF TAS S.P.A.

The tables presented and discussed below have been prepared on the basis of referenced separate

financial statements at 31 December 2019, prepared in accordance with International Financial

Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and

approved by the European Union, and the provisions implementing Art. 9 of Italian Legislative

Decree 38/2005.

In particular, we note that the TAS financial statements presented below, include:

a) the effects of the entry into force of the new IFRS 16 – Leases standard from 1 January 2019,

replacing IAS 17 – Leases.

The table below illustrates the impact from the adoption of the aforementioned principle at

01/01/2019 and at 31/12/2019. The Compliance has chosen to apply the standard retrospectively,

recognising the cumulative effect from the application of the standard under Net Equity at 1

January 2019 (not restating the comparative figures for 2018), based on the provisions under

paragraphs C7-C13 of IFRS 16.

€ thousand


Non-current assets

Buildings right of use € 6,588 € 7,245

Vehicles right of use € 373 € 454

Other assets right of use € 246 € 0

Total € 7,207 € 7,699

Current Assets

Accrued income -€ 41 € 0

Total Assets € 7,166 € 7,699



Financial liabilities for non-current

leases € 6,849 € 7,406

Current liabilities

Financial liabilities for current

leases € 917 € 588

Accruals payable -€ 295 -€ 295

Total € 7,472 € 7,699

Net Equity

Profit/(loss) for the period -€ 306 € 0

Total liabilities € 7,166 € 7,699



INCOME STATEMENT Impact at 31/12/2019 Impact at 01/01/2019

Costs for use of third-party assets € 1,114 NA

Positive effect on Ebitda € 1,114 NA

Amortisation right of use -€ 1,104 NA

Net effect on operating result € 10 NA

Financial charges -€ 316 NA

Net effect on year profit/(loss) -€ 306 NA

b) the effects from applying the equity method relating to equity investments in subsidiaries as

provided in IAS 27 and alternatively, based on IAS 28 - Investments in Associates and Joint

Ventures, the cost adjusted for impairments used until 31 December 2018. For management,

this change provides more reliable and relevant information especially regarding the

Operation referred to above, in terms of the economic, asset and financial position. As required

by IAS 8, the change in this standard was applied retrospectively, in other words, as if this

standard had always been applicable. Prior transactions are therefore recognised according to

the new standard adopted. Figures and the respective comparative information were restated

in application of the new standard.

The table below illustrates the effects of adopting the aforementioned standard:

€ thousand


Equity investments

Equity investments in Tas

International € 0 -€ 1,269

Equity investments in Tas Americas -€ 146 -€ 1,543

Equity investments in Tas Iberia -€ 211 -€ 939

Equity investments in Tas France € 339 -€ 1,113

Equity investments in Tas Germany -€ 9 € 9

Equity investments in Tas USA € 164 -€ 563

Equity investments in Tas EE -€ 426 € 0

Equity investments in Mantica Italia -€ 74 € 0

Equity investments in Global

Payments -€ 12 € 0

Total -€ 375 -€ 5,418

Total Assets -€ 375 -€ 5,418





Equity investments measured using

the equity method -€ 196 € 368

Net Equity - € 179 -€ 5,786

Equity valuation reserve -€ 340 -€ 5,626

Revaluation/impairment of equity

investments - measured at equity € 161 -€ 160

Total liabilities -€ 375 -€ 5,418



ECONOMIC PERFORMANCE

The table below summarises the key financial results of TAS at 31 December 2019 and the

comparison with the last year:

TAS (in thousands of Euro) 31/12/2019 31/12/2018** Change % change

Total Revenue 49,463 45,510 3,953 8.7%

- of which core 48,432 40,204 8,229 20.5%

- of which resales - 4,025 (4,025) (100.0%)

- of which non-typical 1,031 1,281 (251) (19.6%)

Gross operating margin (EBITDA*) 11,300 6,642 4,658 70.1%

% of total revenue 22.8% 14.6% 8.3% 56.5%

Operating result 5,552 795 4,757 >100%

% of total revenue 11.2% 1.7% 9.5% >100%

Profit (loss) for the period 5,402 200 5,202 >100%

% of total revenue 10.9% 0.4% 10.5% >100%

Net Financial Position (7,135) (733) (6,402) >(100)%

- of which in respect of banks and other lenders 5,511 (733) 6,244 >100%

- of which liabilities for leases (IFRS 16) (7,766) - (7,766) -

- of which to shareholders (4,879) - (4,879) -

* IAP ** The figures were restated in application of the new accounting standard for investments in subsidiaries.

At 31 December 2019 TAS recorded Total revenue equal to Euro 49.5 million, compared to Euro

45.5 million the previous year. Core revenues, consisting of software licenses and related

maintenance (40.6%), royalties, usage and SAAS service fees (8.6%), support fees and

professional services (50.8%) were up by 20.5%.

Ebitda for the period stood at Euro 11.3 million, which was up significantly compared to the Euro

6.6 million at 31 December 2018. This impacted for 22.8% on total revenue.

The Operating profit for the year was positive for Euro 5.6 million, and includes amortisations

for Euro 5.7 million, and receivable write-downs for Euro 0.2 million, and a positive impact of

Euro 0.2 million, referring to subsidiary investments measured at equity. The result for 2018 was

Euro 0.8 million.

The Net profit for the period recorded a profit of Euro 5.4 million, compared to the Euro 0.2

million in the previous period.

With the exception of the impact from the adoption of the IFRS 16 standard, the Net financial

position was positive for Euro 0.6 million compared to the negative Euro 0.7 million at 31

December 2018, recording an improvement of Euro 1.4 million.








The Costs of services refer to the activities related to the Operation detailed above.

The statement of non-recurring costs for 2018 is attached for comparative purposes:


“Costs of services” (284) Legal and financial consulting


Costs of services mainly refer to legal consulting provided by leading companies regarding the

operation to release the company from debt, detailed above.

BALANCE SHEET

The Balance Sheet for the Parent Company at 31 December 2019 can be summarised in the

following table:

TAS (in thousands of Euro) 31/12/2019 31/12/2018*

Non-current assets 34,266 25,516

- of which, Goodwill 15,393 15,393

- of which, Right of use IFRS 16 7,207 -

- of which, Equity investments 6,396 4,903

Net working capital 6,225 3,522

Non-current liabilities (4,060) (3,916)

Net Invested Capital 36,431 25,123

Net financial position in respect of banks (5,511) 733

Financial liabilities for IFRS 16 7,766 -

Shareholder financing 4,879 -

Total net equity 29,296 24,390

- of which profit for the period 5,402 200

* Figures were restated following the change to the measurement criterion for equity investments in subsidiaries, referred to previously.

NON-CURRENT ASSETS

Non-current assets (API) are broken down as follows:

Euro 15,393 thousand referring to the Payments CGU, which will be included in the business

unit transfer to Global Payments S.p.A. detailed above (Euro 15,393 thousand at 31

December 2018);

Euro 3,851 thousand for other intangible fixed assets refer mainly to internally developed

software (Euro 4,515 thousand at 31 December 2018);

Euro 7,766 thousand related to tangible fixed assets (Euro 639 thousand at 31 December

2018). It is noted that this amount includes the effect of adopting the new IFRS 16 standard

from 1 January 2019, for Euro 7,207 thousand;



Euro 6,261 thousand relating to the controlling interests of the Group (Euro 4,768 thousand

at 31 December 2018). Changes over the year refer primarily to:

o the negative effects from the application of the equity method for Euro 375

thousand;

o capital contributions made to the subsidiaries TAS USA for Euro 362 thousand;

o the subsidiary TAS EE for Euro 400 thousand related to the capital increase

resolved on 31 October 2019 and reserved to TAS S.p.A,, after which the TAS

S.p.A. shareholding increased by about 70% compared to the current 51%; and

Euro 871 thousand related to the sale to B2PT d.o.o. (company controlled by Mr

Nemanja Paunovic) of the entire 80% shareholding held in Bassilichi CEE (former

Parent Company of TAS EE).

Euro 135 thousand related to the shareholding in SIA S.p.A. (same amount at 31 December

2018);

Euro 45 thousand relating to other receivables (same amount at 31 December 2018).

NET WORKING CAPITAL

Net working capital (API) included:

Euro 27,380 thousand relating to trade receivables and contract assets with customers

(Euro 22,780 thousand at 31 December 2018);

Euro 1,255 thousand relating to other receivables including trade accruals and deferrals

receivable (Euro 963 thousand at 31 December 2018);

Euro 6,105 thousand relating to trade payables, with the increase attributable trade during

the period (Euro 4,919 at 31 December 2018);

Euro 16,306 thousand relating to other payables including accruals payable and liabilities

from contracts with customers (Euro 15,303 thousand at 31 December 2018).

NON-CURRENT LIABILITIES

Non-current liabilities (API) included:

Euro 3,588 thousand related to the employee severance indemnity provision (Euro 3,486

thousand at 31 December 2018);

Euro 472 thousand relating to provisions for risks and charges (Euro 428 thousand at 31

December 2018).

NET EQUITY

At 31 December 2019, net equity was equal to Euro 29,296 thousand compared to Euro 24,390

thousand at 31 December 2018.



NET FINANCIAL POSITION

Pursuant to the requirements set out in Consob Communication no. 15519 of 28 July 2006, the

financial position of the Company was as follows:

Statutory Net Financial Position NOTES 31/12/2019 31/12/2018




D. Cash and cash equivalents (A) + (B) + (C) 23 (6,234) (4,542)

E. Current financial receivables 22 (21) (21)

of which in respect of related parties - -


G. Current portion of medium to long-term bank borrowings - -


I. Other current financial liabilities 1,432 288

of which liabilities for leases (IFRS 16) 917 -

of which in respect of related parties - -

J. Liabilities and other current financial liabilities (F) + (G) + (H) + (I) 31 6,316 298

K. Current net financial debt (D) + (E) + (J) 61 (4,265)


M. Non-current portion of medium to long-term bank borrowings - -


O. Other non-current payables 7,385 544


P. Liabilities and other non-current financial liabilities(L) + (M) + (N) + (O) 27 7,385 5,308


R. Non-current financial receivables 16 (311) (309)

S. Net financial debt(Q) + (R) 7,135 733


of which, excluding liabilities for leases (IFRS 16) (632) 733

(*) The criterion for calculating CESR Net Financial Debt corresponds to the provisions under Paragraph 127 of the CESR Recommendation 05/054b implemented by Regulation CE 809/2004.

The Net Financial Position, less the impact of adopting IFRS 16 from 1 January 2019, was positive

for Euro 0.6 million compared to Euro 0.7 million at 31 December 2018. Cash and cash equivalents

amounted to Euro 6.2 million, compared to Euro 4.5 million in 2018. Including the effects of

adopting IFRS 16, the Net Financial Position was negative for Euro 7.1 million.








RECONCILIATION OF NET EQUITY

The reconciliation between net equity and the profits of the Parent Company and the corresponding

consolidated figures is as follows:

31 December 2019 31 December 2018*

(in thousands of Euro) Net Equity Profit Net Equity Profit

Net equity and profit for the year as reported in the Parent Company’s Financial Statements 29,296 5,402 24,390 200 Elimination of the book value of consolidated equity investments

- difference between book value and pro-quota value of equity (3,018) - (2,565) -

b) pro-rata profit of subsidiaries - - - -

c) carrying value and capital gains/losses attributed at the date of acquisition of subsidiaries 2,962 - 2,491 - Elimination of the effects of transactions between consolidated companies (9) - - -

Effect of changes in exchange rates of foreign currencies 107 - 84 -

Other changes (10) (39) (10) - Net Equity and profit/(loss) for the year attributable to the Group 29,328 5,363 24,390 200

Net Equity and profit for the year attributable to third parties 399 (56) 555 (1)

Consolidated net equity and profit 29,727 5,307 24,945 199

* Figures for net equity and the result for the year for the Parent Company were restated following the change to the measurement criterion for

equity investments in subsidiaries, referred to previously. The net equity and result for the year for the Group and third parties were restated

following the PPA of TAS EE detailed above.

OTHER INFORMATION

Management systems

The Company adopted and maintains a Quality Management System, compliant with UNI EN

ISO 9001:2015 regulation, for the design, development, installation, support and maintenance of

infrastructure and application software for payment systems, electronic money, bank services,

financial markets, public administration and IT consulting on the products supplied. Design and

provision of Data Centre Hosting and Housing services.

During 2019, TAS S.p.A. successfully passed the Audits by the Certification Authorities to renew

and maintain existing certification.

On 20 January 2020, ISO9001:2015 certification was successfully renewed for TAS SpA and TAS

France.

Note on branches

The Company has six branches where software development and maintenance activities are

conducted:

– Milan, Via Famagosta No. 75 – Italy

– Verona, Via Francia no. 21 - Italy



– Casalecchio di Reno (BO), Via del Lavoro, 47 – Italy

– Siena, Via Girolamo Gigli No. 2 - Italy

– Parma, Via Colorno No. 63/A - Italy

– Genoa, Via De Marini 1 - Italy

– Prato, Via Traversa Pistoiese, 83 - Italy

PROPOSAL FOR THE APPROVAL OF THE FINANCIAL STATEMENTS AND ALLOCATION

OF THE PROFIT/(LOSS) FOR THE 2019 FINANCIAL PERIOD

Dear Shareholders,

We believe that the Management Report in support of the Company’s Financial Statements and

the Consolidated Financial Statements of the TAS Group provide a comprehensive representation

of the performance and results achieved in 2019.

The draft financial statements for TAS S.p.A. were approved on 18 March 2020 and showed a net

profit for the period of Euro 5,402,024.25. The Board of Directors proposes allocating this profit

as follows:

- Euro 270,101.21 to the Legal Reserve pursuant to Art. 2430 of the Italian Civil Code;

- Euro 5,131,923.04 to be carried forward.

For the Board of Directors

Chief Executive Officer

VALENTINO BRAVI



CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 December 2019

FINANCIAL STATEMENTS

Consolidated Balance Sheet Notes 31/12/2019 31/12/20185 Intangible fixed assets 12 22,997 23,811

- Goodwill 18,355 18,355

- Other intangible fixed assets 4,642 5,455

Tangible fixed assets 13 11,313 3,073

- Right of use IFRS 16 8,559 -

- Other tangible fixed assets 2,754 3,073

Investments and other securities 14 137 137

Financial fixed asset receivables 15 489 489

Deferred tax receivables 16 1,172 539

Other receivables 17 45 45

Total non-current assets 36,153 28,093

Contract assets with customers 18 6,798 3,537

Trade receivables 19 24,462 22,037

(of which trade accruals and deferrals) 1,176 955


Receivables for current taxes on income 21 486 1

Financial receivables 22 22 22

Cash and cash equivalents 23 7,247 5,315

Total current assets 39,214 31,066

Assets held for sale 24 - 6,566

TOTAL ASSETS 75,367 65,725

Share capital 24,331 24,331

Other reserves 6,245 19,141

Profit/(loss) of previous years (6,611) (19,282)

Profit (loss) for the period 5,363 200

Group net equity 29,328 24,390

Capital and reserves attributable to third parties 455 556

Profit/(loss) attributable to third parties (56) (1)

Net equity attributable to third parties 399 555

Consolidated net equity 25 29,727 24,945

Employee severance indemnity provision 26 4,801 4,232

Provisions for risks and charges 27 323 83

Deferred taxes provision 28 63 81

Financial liabilities 29 10,321 7,176

(of which in respect of related companies) - 4,764

Total non-current liabilities 15,508 11,571

Trade payables 30 13,851 12,407

(of which liabilities from contract with customers) 8,168 7,236

(of which trade accruals payable) 22 313

(of which in respect of related companies) 69 42

Other payables 31 8,804 8,988

Current income tax payables 32 495 44

(of which in respect of related companies) 140 -


(of which financial accruals and deferrals) - 2

(of which in respect of related companies) 4,879 -

Total current liabilities 30,132 23,162

Liabilities held for sale 24 - 6,048

TOTAL LIABILITIES AND NET EQUITY 75,367 65,725

5 The Financial Statements at 31 December 2018 were amended subsequent to the company aggregation operation undertaken in 2018. The changes compared to the Financial Statements at 31 December 2018, approved by the Shareholders' Meeting on 29 April 2019 are detailed in paragraph 2 of the Notes to the “Changes made to the Financial Statements at 31 December 2018”.



Consolidated Income Statement Notes 31/12/2019 31/12/2018 Revenue 52,445 49,789

Changes to orders in progress 3,922 (311)

Other revenue 1,001 1,048

Total revenue 34 57,368 50,526

Raw material consumables (1,580) (2,693)

Personnel costs (28,339) (24,934)

Costs of services (12,867) (13,943)

(of which non-recurring) (18) (284)

(of which in respect of related companies) (369) (326)

Other costs (1,539) (2,627)

Total costs 35 (44,325) (44,197)

Depreciation and amortisation 36 (6,804) (5,456)

Write-downs 36 (260) (72)

Operating result 5,980 801

Financial revenue 222 415

Financial charges (932) (1,015)


Results of financial management 37 (710) (600)

Profit/(loss) before tax 5,270 200

Current and deferred taxes 38 438 (1)

Profit/(loss) from continuing operations 5,707 199

Profit/(loss) from non-continuing operations (400) -

Profit/(loss) for the year 5,307 199

Net profit/(loss) attributable to third parties (56) (1)

Net profit/(loss) attributable to the Group 5,363 200

Earnings per share 39

- base 0.06 0.00

- diluted 0.06 0.00

Comprehensive Consolidated Income Statement Notes 31/12/2019 31/12/2018

Net profit/(loss) for the year (A) 5,307 199

Other profits/(losses), net of tax effect that will not subsequently be reclassified in the financial year profit/(loss): Actuarial profit/(loss) on defined benefit plans (602) 324

Tax effect 89 (33)

Total Other profit/(loss), net of tax effect that will not subsequently be reclassified in the financial year profit/(loss) (B1) 40 (513) 290

Other profits/(losses) that will subsequently be reclassified in the financial year profit/(loss):

Profit/(loss) deriving from the conversion of foreign companies’ Financial Statements 20 7

Tax effect - -

Total Other profit/(loss), net of tax effect that will subsequently be reclassified in the financial year profit/(loss) (B2) 40 20 7

Total Other profit/(loss), net of tax effect (B1 + B2=B) (493) 298

Total Profit/(loss) (A) + (B) 4,815 497

Total Profit/(loss) attributable to: Shareholders of parent company 4,867 498

Third-party interests (53) (1)



Consolidated Cash Flow Statement Notes 31/12/2019 31/12/2018


Amortisations and depreciations 36 7,064 5,528

Change to employee severance provision 26 (37) (215)

Change in provisions for risks and charges 27 (60) (253)

Payment of income taxes (161) (31)

Interest liabilities/ (interest income) 358 -

Other non-monetary changes 1,604 635 Decrease/ (increase) in contract assets with customers and other current assets items (7,356) 14,849

Increase/(decrease) in accounts payable and other liabilities 2,006 (13,555)

Cash flow from operating activities 8,726 7,159

Change in intangible fixed assets 12 (3,929) (4,131)

Change in tangible fixed assets 13 (377) (773)

Acquisition of subsidiaries (300) (100)

Cash flow from investments (4,607) (5,004)

Termination old pool finance - (5,000)

OWL financing - 5,000

Change to current financial receivables - 9

Change to financial fixed asset receivables - (0)

Change to other financial liabilities 29/33 (584) (188)

Paid financial charges (510) (209)

Changes to liabilities for leases IFRS 16 (1,094) -

Cash flow from financing (2,187) (388)

Change in cash and cash equivalents 1,932 1,766

Cash and cash equivalents - initial balance 5,315 3,549

CASH AND CASH EQUIVALENTS – CLOSING BALANCE 23 7,247 5,315


Statement of changes in Consolidated Net Equity

€ thousand Share capital

Conv. res.

Legal res.

Res. Extr.

Res. IAS 19

Cap. contr. res.

Fair value

reserve

Profit/(loss) carried forward

Profit/(loss) for the year

Tot. Group

net equity

Cap. and

Minority Share Res.

Minority share

Tot. Third party net

equity

Total net

equity

Balances at 31 December 2017 24,331 1,587 - (18) (1,211) 20,000 (1,515) (17,792) (1,490) 23,892 6 (4) 2 23,894

allocation of 2017 profit (1,490) 1,490 - (4) 4 - -

profit from comprehensive profit and loss account 7 290 200 498 - (1) (1) 497

reclassification (1,515) 1,515 - - -

impact allocation of goodwill TAS EE 211 211 211

change in consolidation scope - 344 344 344

Balances at 31 December 20186 24,331 1,594 - (1,533) (920) 20,000 - (19,282) 200 24,390 556 (1) 555 24,945

allocation of 2018 profit 360 (160) (200) - (1) 1 - -

to cover losses 7,240 (20,000) 12,760 - - -

profit from comprehensive profit and loss account 17 (513) 5,363 4,867 3 (56) (53) 4,815 impact dilution minority interests TAS EE on allocation of goodwill 71 71 (71) (71) -

change in consolidation scope - (32) (32) (32)

Balances at 31 December 2019 24,331 1,610 360 5,707 (1,433) - - (6,611) 5,363 29,328 455 (56) 399 29,728

6 The Financial Statements at 31 December 2018 were amended subsequent to the company aggregation operation undertaken in 2018. The changes compared to the Financial Statements at 31 December 2018, approved by the Shareholders' Meeting on 29 April 2019 are detailed in paragraph 2 Notes to the “Changes made to the Financial Statements at 31 December 2018”.


EXPLANATORY NOTES

INTRODUCTION

TAS Tecnologia Avanzata dei Sistemi S.p.A. (hereinafter “TAS”, the “Company” or the “Parent

Company”) is a joint-stock company [società per azioni] listed on the Milan Stock Exchange

[Borsa Italiana S.p.A] on the standard segment of the MTA market. It is held for 73.125% by OWL

S.p.A., a company indirectly controlled by Dario Pardi, who is also Chairman of the Board of

Directors of TAS and by Valentino Bravi, Chief Executive Officer of the Company, by their

respective family members and a group of investors.

The Consolidated Financial Statements at 31 December 2019 include TAS and its subsidiaries

(hereafter referred to as the “Group”).

These Financial Statements were prepared by the Board of Directors on 18 March 2020, for

approval by the Shareholders’ Meeting called for 28 April 2019 at the first call, and 29 April 2019

at the second call.

1)

SIGNIFICANT EVENTS



an Italian registered company named “Global Payments S.p.A.”, on 26 July, fully held by TAS.



3 December 2019, and effective from 1 January 2020.

The Operation further included the transfer by TAS finalised on 17 February, of all its equity

investments in other foreign Group subsidiaries to TAS International (formerly TAS Helvetia


Inc., TAS Americas Ltda, TAS Eastern Europe D.O.O.

Following the implementation of this project, TAS S.p.A. retains the Extended ERP and Capital

Market activities, the centralised staff and corporate functions.

For additional details on this Operation that will impact TAS S.p.A. in asset and economic terms

as from 2020, reference is made to Note 1 in the section on the Parent company TAS S.p.A.

financial statements.

2)

CHANGES TO FINANCIAL STATEMENTS AT 31 DECEMBER 2018

At 31 December 2019, the Company recognised the aggregation operation from the end of 2018

relating to the acquisition of the Serb subsidiary TAS EE. The provisional impairments determined

at 31 December 2018 were recorded in accordance with the international IFRS 3 standard, with

effect from the initial recognition date (21 December 2018). It is noted that the economic effects

were recognised from 1 January 2019, given that the impact for 2018 was not deemed significant.



Following an evaluation conducted on the basis of a programme drawn up by Group management,

intangible fixed assets with a defined useful life were identified that had previously not been

recorded in the financial statements of the acquired company. These were attributable to specific

contracts with major customers (“Customer list”), for a total fair value of Euro 506 thousand. The

recognition of these assets in the Group’s consolidated financial statements resulted in

corresponding entries for deferred tax liabilities, and an impact on third-party interests, as detailed

in the table below.


Balance Sheet 31/12/2018

restated 31/12/2018 approved Delta

Intangible fixed assets (12) 23,810 23,523 287

- Goodwill 18,355 18,573 (218)

- Other intangible fixed assets 5,455 4,950 505

Total Assets 23,810 23,523 287

Deferred taxes provision (28) 81 5 76

Net equity attributable to third parties 555 344 211

Total liabilities 636 349 287

Due to the changes made to the financial statements at 31/12/2018 with the application of IFRS 3

for the final recognition of goodwill that had provisionally been recorded with the company

aggregation at 31 December 2018, the comparisons between the 2019 and 2018 figures in the

tables of these notes, refer to the restated balance sheet and income statement.

3)

INFORMATION REQUIRED BY CONSOB PURSUANT TO ART. 114 OF ITALIAN

LEGISLATIVE DECREE 58/98 Based on the Consob notification received on 23 June 2017, the Company is no longer required to

provide supplementary disclosures on a monthly basis, pursuant to Art. 114, paragraph 5 of Italian

Legislative Decree 58/98 (“TUF”), thus no longer forming part of the black list. As a replacement

for these obligations, Consob has asked the Company to provide supplementary information as

from the interim financial report at 30 June 2017 in its annual and half-year financial reports and

in interim management reports (when published on a voluntary basis), and where applicable, in

press releases referring to the approval of the aforementioned accounting documentation:

a) net Financial Position of the Company and Group under which it falls, with details of

the short-term component separate from the medium-long term

With the exception of the impact from the adoption of the IFRS 16 standard, the Company’s Net

financial position was positive for Euro 0.6 compared to the negative Euro 0.7 million at 31

December 2018.



Statutory Net Financial Position 31/12/2019 31/12/2018




D. Cash and cash equivalents (A) + (B) + (C) (6,234) (4,542)

E. Current financial receivables (21) (21)






J. Payables and other current financial liabilities (F) + (G) + (H) + (I) 6,316 298







P. Liabilities and other non-current financial liabilities(L) + (M) + (N) + (O) 7,385 5,308


R. Non-current financial receivables (311) (309)





The Group’s Net financial position was negative for Euro 0.4 million, compared to the negative

Euro 3.1 million at 31 December 2018, with the exception of the impact from the adoption of the

IFRS 16 standard.

Consolidated Net Financial Position 31/12/2019 31/12/2018











J. Liabilities and other current fin. liabilities (F) + (G) + (H) + (I) 6,982 1,723









P. Liabilities and other non-current financial liabilities (L) + (M) + (N) + (O) 10,321 7,176






(*) The criterion for calculating CESR Net Financial Debt corresponds to the provisions under Paragraph 127 of the CESR Recommendation

05/054b implemented by Regulation CE 809/2004

b) The outstanding debt of the Company and the Group it falls under, broken down by

type (financial, commercial, tax, social security and in respect of employees) and the

related initiatives as a response from creditors (reminders, injunctions, supplies

suspended etc.)

At 31 December 2019, the Parent Company had past due trade payables, including those falling

due at 31 December, for Euro 1,625 thousand of which Euro 804 thousand in respect of

subsidiaries/the parent company. No creditor has undertaken response action. The lowest past due

is at 30 days for Euro 788 thousand. At 31 December 2019, there were no payables outstanding of

a financial nature, relating to tax and/or social security or in respect of employees.

As far as the companies in the Group are concerned:

TAS International S.a.: has no past due debts of any kind;

TAS France S.a.s.u.: at 31 December 2019, had Euro 2 thousand outstanding in respect of

the Parent Company TAS S.p.A.;

TASAMERICAS Ltda: at 31 December 2019, had Euro 350 thousand outstanding in

respect of the Parent Company TAS S.p.A.. There were no other past due debts of any

kind;

TAS Iberia S.l.u.: at 31 December 2019 has trade payables outstanding for Euro 121

thousand, of which Euro 52 thousand past due by less than 30 days. At 31 December 2019,

there was also Euro 448 thousand outstanding in respect of the Parent Company TAS

S.p.A.;

TAS USA Inc.: the American subsidiary has no past due debts.

TAS Germany GMBH: has no past due debts of any kind.

TAS EE: at 31 December 2019 has trade payables outstanding for Euro 16 thousand, of

which Euro 14 thousand past due by less than 30 days.

c) the main changes in relations with the related parties of this Company and the Group

it falls under, compared to the last approved annual or interim financial statements

pursuant to art. 154-ter of the TUF

Relations with related parties of the Company and Group are detailed in Note 43 of this section,

and have not undergone any significant changes.



d) possible lack of compliance regarding covenants, negative pledges and other debt

clauses for the Group involving restrictions in the utilisation of financial resources,

with confirmation and updated date of level of compliance of said clauses

Following the debt release operation on 21 December 2018, the agreement between TAS - Banks

signed on 17 May 2016, became invalid and therefore there is nothing to report in this regard.

e) the implementation status of the business plan, highlighting possible disparities

between actual and forecast figures.

The table below compares the main indicators with the final results at 31 December 2019. It should

be remembered that the 2016-2020 Plan formed the basis for the TAS - Banks agreement, which

following the debt release operation, is not subject to an audit by the pool of banks. On 12 March

2020, the TAS Board approved the new 2020-2022 business plan. The Plan is based on

consolidating its leadership position in reference markets by progressively replacing the software

solutions based on old technology with the more advanced ones developed recently by the Group,

growing the market in the areas impacted by specific regulatory changes, and finally, expanding

significantly on the international market by responding to specific territorial requirements

combined with global partnerships. The following targets have been set up to 2022: CAGR on

turnover for the relevant period of over 13%, and by the end of the plan, an EBITDA margin at

35% of revenue. The approved plan is a stand-alone according to the current corporate perimeter,

and does not reflect any repercussions from COVID-19.

In millions of Euro Final data Plan data Delta

Total revenue 57.4 56.4 1.0

Total operating costs (48.1) (52.5) 4.4

Gross operating margin (EBITDA) 9.3 3.9 5.4

R&D costs 3.7 3.5 0.2

MOL + R&D costs 12.9 7.4 5.5

Operating result 5.9 3.1 2.8

Net profit 5.3 2.3 3.0

Net financial position (9.5) 0.8 (10.3)

The figures recognised at 31 December 2019 show an improved gross margin in relation to the

plan (Euro +5.4 million). The net result has also improved by Euro 3 million.

The net financial position, negative for Euro 9.5 million, includes the impact for Euro 9.2 million

from the adoption of IFRS 16 with effect from 1 January 2019 and is not considered in the Plan’s

figures. Net of this effect, the net financial position falls just below the Plan (Euro 1.2 million).



4)

VALUATION CRITERIA

REFERENCE ACCOUNTING STANDARDS

The 2019 consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board

(“IASB”) and endorsed by the European Union, and the measures implementing Art. 9 of Italian

Legislative Decree 38/2005. IFRS also means the currently applicable International Accounting

Standards (IAS) and all of the interpretation documents issued by the IFRS Interpretations

Committee, formerly known as International Financial Reporting Interpretations Committee

(IFRIC) and Standing Interpretations Committee before that (SIC).

The Financial Statements were prepared on the basis of the historic cost principle, modified where

required for the valuation of certain assets and liabilities, where the fair value principle was

applied, and the assumption of a going concern.


The Consolidated Financial Statements are presented in thousands of Euro.

Accounting policies have been uniformly applied in all Group companies and for all the periods

presented.

The Financial Statements adopted by the Group have the following characteristics:

• in the Consolidated Balance Sheet, assets and liabilities were analysed according to when

they fall due, separating current and non-current items with due dates within or after 12

months from the date of the Financial Statements, respectively. Pre-paid and deferred taxes

were offset per country and recorded under the assets or liabilities in the Financial

Statements according to the net deferred taxes for each country;

• the Consolidated Income Statement and the Consolidated Comprehensive Income

Statement were presented with the different items analysed based on their nature;

• the Statement of changes in the consolidated equity statements were prepared in accordance

with IAS 1 provisions;

• the Consolidated Cash Flow Statement shows consolidated cash flows based on the

“indirect method”, as permitted by IAS 7.

It should be noted that, with reference to Consob Resolution no. 15519 of 27 July 2006 on

Financial Statements, the Balance Sheet provides information on transactions with related parties

and the Consolidated Income Statement on non-recurring income items (whether positive or

negative).

Use of estimates and assumptions in preparing the Consolidated Financial Statements

The preparation of the Consolidated Financial Statements also requires the use of estimates and

assumptions that can determine significant effects on the values posted on the balance sheet and

income statement, as well as on the disclosure relative to the potential liabilities and assets stated

on the financial statements. The production of such estimates involves the use of available

information and the adoption of subjective assessments based on past experience, which are used



to formulate reasonable assumptions for the recognition of operations. By their nature, these

estimates and assumptions may change from year to year and, therefore, cannot be excluded that,

in future years, the current values entered in the Financial Statements may differ significantly as

a result of changes in the subjective valuations.

The main areas where subjective judgements by management were required include:

• the quantification of losses for impairment of loans and, generally, other financial assets;

• the determination of fair value of financial instruments;

• an assessment on whether the goodwill, other intangible fixed assets and investments are

appropriate (it is noted that, due to the importance of this particular item, a sensitivity

analysis was carried out. Reference is made in this regard to Note 12);

• an estimate of contract costs for the valuation of assets resulting from contracts;

• the quantification of severance indemnity provisions and the risks and charges provisions;

• estimates and assumptions relating to the recognition of deferred tax receivables.

The description of the accounting principles applied to the main items in the Financial Statements

provides the information needed to identify the main assumptions and subjective judgements used

in preparing the Consolidated Financial Statements. Reference is made to the specific sections of

the Notes for more information and details on the item’s composition and amounts involved in

these estimates.

As mentioned in the section referring to “External risks”, from January 2020, the national and

international scenario have been characterised by the spread of the Coranavirus, and the

consequent restrictive measures to contain it introduced by the authorities in the countries

affected.

The Group has introduced an action plan following these events, adopting appropriate health

precautions, in compliance with the directives of the relevant authorities in Italy and the other

countries where it operates, to ensure that its staff works under the best possible conditions.

The potential effects of this phenomenon on the financial statements cannot currently be

determined, and will be monitored continuously over the course of the year. As things stand, it is

possible that a contraction in sales will be seen in 2020 compared to the previous year, but the

extent of this decrease cannot currently be quantified and will depend on the duration of the

infection and extent of the restrictions adopted in the countries for the Group’s main product

markets, as well as the effects that will be experienced by world economies as a result of these

phenomena.

Directors note that their estimates in applying international accounting standards (IFRS) to

measure certain assets and liabilities in the drafting of the Consolidated Annual Financial Report,

could differ from the results that will be recorded in years to come as a consequence of these

events, particularly with regard to the payment of bonuses to employees, the impairment of non-

financial assets and the recoverability of capitalised development costs.

In respect of the impairment of non-financial assets, and in consideration of the sensitivity analysis

conducted on the tests at year end, and extended to take into account the potential impact from

the spread of the virus, Directors believe based on the information currently available, that the

effects from Covid-19 will not require the recognition of impairments in the assets recorded in the



financial statements over the next year. The Directors note further that despite the collapse in all

global markets, at the date of this Financial Report’s approval, the market capitalisation for TAS

S.p.A. was still higher than the Group’s consolidated net equity.

In so far as potential liquidity risks are concerned, and in consideration of the Groups current

reserves, including the available and unused credit lines, Directors do not believe that the

repercussions of the above events would result in the Group being unable to meet its payment

commitments due to difficulties in procuring the necessary funds.

CONSOLIDATION PRINCIPLES

The Consolidated Financial Statements include the Financial Statements of TAS and those of

companies over which TAS exercises direct or indirect control.

The criteria adopted for the classification, recognition, assessment and cancellation of various

asset and liability entries are set out below, together with the criteria for the recognition of income

components. The accounting standards applied are the same as those applied in the annual

Financial Statements at 31 December 2018, except for IFRS 16, which was applied from 1 January

2019. The consequences of applying IFRS 16 are detailed in the paragraph below “Accounting

principles, amendments and interpretations applied from 1 January 2019” and in the relevant

sections in the Notes for the items affected.

Scope and methods of consolidation

The consolidated financial statements are prepared on the basis of the draft financial statements at

31 December 2019, prepared by the directors of the companies included in the scope of

consolidation, submitted for the approval of the Shareholders' Meeting.

The scope of consolidation changed during the year due to the following operations:

- acquisition on 26 February 2019, of the controlling stake of the company Mantica Inc. (USA)

for Euro 80 thousand, held for 100%, which in turn held a controlling share of 80% in Mantica

Italia S.r.l. On 1 October 2019, following the liquidation of the company Mantica Inc. during

September, 80% of the shares in the company Mantica Italia S.r.l. were assigned directly to

TAS S.p.A.

- sale on 5 April 2019 to BSPT d.o.o. (company controlled by Mr Nemanja Paunovic) of the

entire 80% shareholding held in Bassilichi CEE. The scope did not include the shareholding

held by Bassilichi CEE in the Serb registered company TAS EE (formerly ArsBlue d.o.o. for

51%), which was transferred directly to TAS.



All companies are consolidated using the line-by-line method. The table below summarises the

main information relating to the scope of consolidation at 31 December 2019.

Company Name Nationality

Share capital (€/000) at

31/12/2019



Net Equity (€/000) at

31/12/2019

TAS SPA Italy 24,330 29,296

TAS FRANCE SASU France 500 100 100 1,912

TAS INTERNATIONAL SA* Switzerland 65 100 100 (271)

TAS IBERIA SLU Spain 20 100 100 80

TAS AMERICAS LTDA Brazil 792 99.65 99.65 130

TAS USA INC USA 16 100 100 652

TAS GERMANY GMBH Germany 25 100 100 1

MANTICA ITALIA SRL** Italy 10 80 80 13

GLOBAL PAYMENTS SPA Italy 50 100 NA 38

TAS EASTERN EUROPE D.O.O.*** Serbia 1,016 70**** 51 973

* It should be noted that the value of shareholders’ equity includes Euro 1,037 thousand of negative reserve concerning the actuarial valuation of

the pension plan. ** Acquired on 26 February 2019 via the company Mantica Inc. (USA) held for 100%. On 1 October 2019, following the liquidation of the company

Mantica Inc. during September, 80% of the shares in the company Mantica Italia S.r.l. were assigned directly to TAS S.p.A.

*** On 5 April 2019, the ownership stake was transferred from Bassilichi CEE D.O.O. to TAS S.p.A. **** Following the share capital increase of Euro 400 thousand underwritten and paid by the Parent Company in October 2019.

With regard to the consolidation methodology, equity investments were consolidated using the

line-by-line method. In accordance with IFRS 10, the concept of control goes beyond a majority

percentage interest held in the investee company’s share capital, and applies when an entity is

exposed to variable returns, or is entitled to these returns, resulting from its relationship with the

subsidiary, and at the same time, has the ability to affect these returns by exercising its power over

said entity.

The consolidation envisages the line-by-line aggregation of balance sheet and income statement

aggregates in the subsidiaries’ accounting positions. The following adjustments were made in this

regard:

(a) the carrying amount for equity investments held by the Parent Company and the corresponding

portion of net equity were eliminated;

(b) the portion of net equity and profit or loss for the year pertinent to minority interests were

recognised in a separate item.

If the outcome of these adjustments is positive, after being allocated as assets or liabilities of the

subsidiary, they are recognised as goodwill under “Intangible fixed assets” on the date of first

consolidation, if the requisites apply.

If the resulting differences are negative, these are generally recognised in the income statement.

Infra-group balances and transactions, including revenue, costs and dividends are completely

eliminated. The financial results of a subsidiary acquired during the year are included in the

consolidated financial statements from the date control was acquired.

Similarly, the financial results of a sold subsidiary are included in the consolidated financial

statements up to the date when control ceased. The accounting positions used in drafting the



consolidated financial statements are prepared on the same date. The consolidated financial

statements are drawn up using uniform accounting standards for similar transactions and events.

If a subsidiary should use different accounting standards from the ones in the consolidated

financial statements for similar transactions and events under similar circumstances, adjustments

are made to the accounts for the purpose of consolidating the financial and asset balances.

All assets and liabilities of foreign subsidiaries in currencies other than the Euro that fell within

scope of consolidation were converted using the exchange rate applicable at the Financial

Statements date (current exchange rate method). Income and expense items were converted at the

average exchange rate for the period. Exchange rate differences resulting from the application of

this method were recorded in the Comprehensive Income Statement and accumulated in the

specific equity reserve until the investment was sold. In preparing the Consolidated Cash Flow

Statement, cash flows of foreign subsidiaries were converted using exchange rates that

approximate the effective ones.

Goodwill and fair value adjustments resulting from the acquisition of foreign companies were

recorded in the relevant currency and converted using the exchange rate at the end of the period.

On first-time adoption of IAS/IFRS (1 January 2004), the cumulative conversion differences

arising from the consolidation of foreign subsidiaries outside the Euro area were cleared, as

permitted by IFRS 1.

Capital gains/losses on the subsequent disposal of said companies will only include the cumulative

conversion differences arising after 1 January 2004.

The exchange rates used were as follows:

Currency Average Close

2019 2018 2019 2018

Swiss Franc 1.11 1.15 1.08 1.13

Brazilian Real 4.41 4.31 4.52 4.44

Serbian Dinar 117.82 118.31 117.83 118.24

US dollar 1.12 1.18 1.12 1.14

As from the financial statements starting from 1 July 2009, business combinations must be

recognised by applying the IFRS 3 accounting standards; the recognition of shareholding

acquisition operations, where control was acquired and that could qualify as “business

combinations”, must be done using the “acquisition method”, which requires:

identifying the acquirer;

determining the acquisition date;

recognising and measuring the identifiable assets acquired, the liabilities assumed and any

non-controlling interest in the acquiree;

recognising and measuring goodwill or a gain from a bargain purchase.



INTANGIBLE FIXED ASSETS

Goodwill

Goodwill acquired in a business combination represents a payment made by the acquirer in

anticipation of future economic benefits from assets that are not individually identified and

separately recognised, or it is determined as the positive difference between the consideration

transferred (equal to the fair value at the acquisition date) and the net amounts at the date of

acquisition of the assumed identifiable assets and liabilities. It should be noted that if the difference

is negative, a gain is recognised in the Income Statement.

It is entered in the balance sheet as an intangible asset.

Goodwill is recorded at cost and is not amortised but is subject to impairment tests once a year or

more frequently if any events or changes in circumstances indicate possible losses in value

(impairment losses), according to the provisions of IAS 36 – Impairment of assets.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

In the context of First-time Adoption IAS/IFRS, it was decided not to apply IFRS 3 retrospectively

to the business combinations that occurred before 1 January 2005; as a consequence, goodwill

arising on acquisitions before the date of transition to IFRS was retained at the previous Italian

GAAP amounts, subject to impairment testing at that date.

Research and development expenses

Research costs were charged to the Income Statement at the time the cost was incurred on the basis

of IAS 38.

When the costs incurred in respect of software development meet the following conditions, they

are recognised as an intangible assets on the asset side of the balance sheet.

Capitalisation begins when the company can demonstrate:

a) the technical possibility of completing the software solution so that it is available for use

or sale;

b) its intention to complete the software solution to use it or sell it;

c) its ability to use or sell the software solution;

d) the procedure to generate future economic profits, e.g., by demonstrating the existence of

a market for any software-based product or for software itself, or its internal use;

e) the availability of adequate technical, financial and other resources to complete the

development of software and the use or sale of the software;

f) the ability to reliably assess the cost attributable to the software during the development

phase.

The amortisation of capitalised software development costs is based on a systematic criterion from

the initial product availability for use through to the estimated useful life, which is normally three

years. The straight-line method is the chosen amortisation approach.

Other intangible fixed assets

Other intangible assets are recognised as assets in accordance with IAS 38 – Intangible fixed

assets, when it is probable that the use of said assets will generate future economic benefits and if

their costs can be reliably measured. Assets are valued at purchase cost and amortised on a straight-

line basis over their estimated useful life.



The other intangible fixed assets include specific intangible fixed assets acquired by the Group in

the scope of company aggregation operations, and these are therefore identified and measured at

fair value on the acquisition date in the context of recognition using the abovementioned purchase

method. These assets are considered as intangible fixed assets with a definite life and are amortised

over their estimated useful life.

The useful life for each category is as follows:

CATEGORY RATES Goodwill Indefinite useful life

Development costs 33%

Industrial patent rights 20%

Trademarks 10%

Customer List 17%

TANGIBLE FIXED ASSETS

Property, plants and machinery

Tangible fixed assets are recognised at cost and entered at the purchase price or cost of production

including the directly attributable ancillary costs necessary to make the assets available for use.

Assets acquired under financial leases, where all the risks and benefits of ownership are

substantially transferred to the Company, are classified as tangible assets at their fair value or, if

lower, at the present value of minimum lease payments under the lease. The corresponding liability

to the lessor, equal to the capital portion of future lease payments, is recognised under financial

liabilities. If there is no reasonable certainty that the right of redemption can be exercised, the asset

is depreciated over the life of the lease, if shorter than the asset’s useful life.

Based on IFRS 16 - Leases, which came into force from 1 January 2019, leases where the lessor

substantially retains all the risks and benefits of ownership are recognised in the same way as assets

under financial leases. For further details, please refer to Note 5 below.

Tangible assets are systematically depreciated on a straight-line basis throughout their useful life,

with this understood as the estimated period in which the asset will be used by the company.

Should tangible fixed assets consist of several components with different useful lives, depreciation

is calculated separately for each component. The depreciation value is represented by the

recognition value less the presumed net value of disposal at the end of its useful life, if significant

and reasonably determinable.

When events occur that lead to expectations of an impairment in the value of tangible assets, their

recoverability is verified by comparing the recognition and value against the related recoverable

value, represented by the higher of the fair value, net of disposal costs, and the value in use.

In the absence of any binding sale agreement, fair value is estimated on the basis of the values

expressed by an active market, by recent transactions, or on the basis of the best information

available to reflect the amount that the company could obtain from selling the assets.

The value in use is determined by discounting the expected cash flows deriving from use of the

assets and, if significant and reasonably determinable, from its disposal at the end of its life. Cash



flows are determined on the basis of reasonable and documented assumptions representing the best

estimate of future economic conditions during the asset’s remaining life. Discounting takes place

at a rate that takes into account the implicit risk in the business sector.

Should the grounds for impairment lapse, the assets would be revalued and the adjustment

recognised in the Income Statement as a revaluation (reversal of impairment) up to the amount of

the write-down, or the lower of the recoverable value and the carrying value before previous write-

downs and reduced by the depreciation had it not been written down.

Depreciation begins when the asset is available for use, taking into account the actual time that

condition is realised.

The rates applied by the Company are as follows:

CATEGORY RATES

Specific plants and machinery 15%

Equipment: 15%-20%-25%

Other assets:

- Cellphones 25%

- Furniture and furnishings 12%

- Electronic office machinery 40%

- Hardware 40%

Impairment of assets (impairment test)

Goodwill, intangible assets with an indeterminate life, and current development costs are subjected

to a systematic impairment test, at least once a year or whenever indications of value impairments

arise.

Tangible fixed assets and equity investments in subsidiaries, affiliates and joint ventures, as well

as intangible fixed assets subject to amortisation undergo an impairment test, whenever

impairment indicators occur, and in any case at least once a year.

The reductions in value correspond to the difference between the book value and the recoverable

value of an asset. The recoverable value is the higher of the fair value of an asset or a cash

generating unit, less the sale costs, and its value in use, defined on the basis of discounted future

cash flows. The value in use is the sum of the cash flows expected from the use of an asset, or their

sum in the case of cash-generating units.

The discounting of the expected cash flows is carried out according to the weighted average cost

of capital (WACC). If the recoverable value is less than the book value, it is entered at the

recoverable value, and the impairment in value is recorded on the Income Statement. If the value

impairment of the assets (excluding goodwill) ceases to exist, the book value of the assets (or

CGU) is increased up to the new estimate of the recoverable value without exceeding the original

value.

FINANCIAL ASSETS AND LIABILITIES

IFRS 9 – Financial Instruments: recognition and measurement was applied by the Group from

1 January 2018, introducing new criteria for the classification and measurement of financial assets

and liabilities. In particular, for financial assets, the new principle uses a single approach based on



the management of financial instruments and the type of contractual cash flows from those

instruments, in order to determine the valuation criteria, by replacing the various rules provided

for under IAS 39. For financial liabilities, the principal change relates to the recognition of changes

in the fair value of a financial liability designated as a financial liability valued at fair value in the

income statement, where those changes are due to changes in the credit rating of issuer of said

liability. According to the standard, these changes must be entered under “Other comprehensive

income” and no longer in the income statement. In addition, with changes in financial liabilities

qualifying as non-substantial, it is no longer permitted to spread the economic effects of

renegotiation over the payables’ residual life by varying the effective interest rate at that date. The

relevant effect must now be recognised in the income statement.

With regard to the impairment model, the new principle requires that the losses estimate on

receivables is based on the expected losses model (and not on the incurred losses model used by

IAS 39), by using information that is supported and available without unreasonable effort or

expense, and that includes historic, current and forecast data. The standard requires that this

impairment model is applied to all financial assets, namely financial assets measured at amortised

cost, to those measured at fair value through other comprehensive income, to receivables arising

from rental contract and trade receivables.

Finally, the standard introduces a new hedge accounting model. This specifically refers to:

o an increase in the types of transactions eligible for hedge accounting, and including

the risks of non-financial assets/liabilities eligible for hedge accounting

management;

o the change in the way forward contracts and options are recognised, when included

in the hedge accounting relationship, so as to reduce volatility on the income

statement;

o changes to the effectiveness test by replacing the current procedures based on the

80-125% parameter with the principle of an “economic relationship” between the

item covered and hedging instrument; a retrospective effectiveness test is no longer

required for the hedging relationship.

The greater flexibility in the new accounting rules is offset by additional disclosure requirements

on the company’s risk management activities.

Loans and receivables

These financial instruments mainly consist of trade receivables, non-derivatives, not listed on an

active market, which expected to yield fixed or determinable payments. They are entered under

the current section with the exception of those expiring more than twelve months after the balance

sheet date, in which case they are classified in the non-current section. These assets are valued at

cost amortised on the basis of the effective interest rate method. If there is are clear indications of

value impairments the asset value is reduced so that it is equivalent to the future flows obtainable

in the future. Value impairments are recorded in the Income Statement. If, in subsequent periods,

the reasons for the previous write-downs no longer exist, the asset value is restored up to the value

that would have resulted from application of the amortised cost, had no write-down taken place.

As specified for impairments under IFRS 9 – Financial Instruments: recognition and

measurement, an estimate was made on impairment losses based on the expected losses model,

using the information available.



Financial assets measured at fair value through profit or loss

These are financial assets acquired mainly with the aim of making a profit from short-term price

fluctuations or designated as such from the outset.

They are entered at fair value and the related changes for the period are recognised in the Income

Statement.

The fair value of listed securities is based on current market prices.

Derivative financial instruments

The Group does not hold these types of instruments at the date of the Financial Statements.

Contract assets with customers

The Group initially recognises an asset deriving from contracts with customers for each project

carried out. These amounts are then reclassified under trade receivables at the time the amount is

invoiced to the customer (generally once contract-based milestones have been achieved).

The payment of receivables arising from software installation services is not payable by the

customer until the installation service is completed, and consequently any assets deriving from

contracts with customers is recognised during the period when the installation services were

carried out, so that the balance sheet reflects the company’s right to consider the services as

transferred at the financial statements’ reporting date.

The Group always calculates a write-down provision on the amounts arising from contracts with

customers for an amount equal to the losses expected over the entire life of the asset, basing this

on its experience regarding losses on receivables and an assessment of future developments in the

construction industry. None of the amounts for assets deriving from contracts with customers had

lapsed at the end of the financial period.

Cash and cash equivalents

Cash and cash equivalents include liquid assets, bank and postal deposits.

Financial liabilities valued at amortised cost

Financial liabilities are recorded initially at the cost corresponding to the fair value. Subsequently,

financial liabilities held until maturity are valued at the amortised cost. Transaction costs directly

attributable to the issue of the liabilities are amortised throughout the life of the loan.

In the event of contract changes associated with renegotiations, the Group’s internal accounting

policy requires that both a qualitative and quantitative test are carried out.

Employee severance indemnity provision (TFR)

The employee severance indemnity (TFR) is classified as a post-employment benefit and consists

of payments due to employees after the termination of their employment contracts.

Under IAS 19 Revised – Employee benefits, the related liability is considered on the basis of a

valuation made on the date of the balance sheet, in respect of the service rendered during the



current year, and in previous years. The method used is the projected unit credit method applied

by independent actuaries.

This calculation consists of estimating the amount of benefit that the employee will receive on the

estimated date of termination, using demographic assumptions (such as the rate of mortality and

staff rotation rate) and financial assumptions (such as the discount rate and future salary

increments). The total calculated in this way is discounted and re-proportioned on the basis of the

length of service accumulated, compared to the total length of service, and represents a reasonable

estimate of the benefits already accrued by each employee in return for their work.

The actuarial gains and losses deriving from the actuarial calculation are recorded in the Balance

Sheet under Reserves IAS 19 and accounted for in the Comprehensive Income Statement. The cost

components relating to work and net financial expenses are accounted for in the Income Statement.

With reference to the TFR provision, considered as a defined-benefits plan until 31 December

2006, Law no. 296 of 27 December 2006 (the “2007 Finance Act”) and the subsequent decrees

and regulations issued during 2007 introduced significant reforms to the way in which quotas of

severance pay are allocated, as part of the reforms to the welfare and pensions system.

Specifically, workers can now decide to allocate new TFR benefits to supplementary pension

schemes or keep them with the company (for companies with less than 50 staff) or transfer them

to the National Pension Fund (INPS) (for companies with more than 50 staff). Following these

reforms, the Company has based itself on the generally accepted interpretation and has decided

that:

for TFR benefits accruing up until 31 December 2006 the provision will be a defined-

benefits plan to be valued according to the existing actuarial rules but without including

the component relating to future salary increases;

for subsequent TFR benefits, whether these are destined for supplementary pension

schemes or the Treasury fund held by INPS, they are classified as defined-benefit plans.

Components subject to actuarial estimates are excluded from the calculation of the

accrual cost.

Provisions for potential risks and liabilities

Provisions for risks and charges relate to costs and charges of a certain nature, or risks and charges

which are certain or likely to exist on the closing date but whose amount or date of occurrence is

not yet known. The provisions are recorded when: (i) the existence of a legal or implied obligation

deriving from a past event is probable; (ii) it is probable that fulfilment of the liability will involve

expenditure; (iii) the amount of the liability can be reliably estimated. The provisions are booked

at the value representing the best estimate of the amount that the company would reasonably pay

to discharge the obligation or to transfer it to a third party, on the closing date. When the temporal

financial effect is significant and the payment dates can be reasonably estimated the provision is

discounted.

The costs that the company expects to incur by carrying out restructuring programmes are

recognised in the year in which the programme is formally defined, and when the interested parties

have a reasonable expectation that the restructuring will take place.

The provisions are periodically updated to reflect any changes in the costs’ estimates, realisation

times and discounting rates. The revised estimates of the provisions are charged to the same

Income Statement headings under which the provision was previously booked, or, when the

liability relates to material assets, as a contra-entry to the assets in question.



Foreign currency transactions

Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance

sheet date are converted at the spot exchange rate prevailing on that date. Exchange differences

arising from the settlement of monetary items or from their conversion at rates other than those at

which they were initially recorded during the period or in previous financial statements, are

recognised in the Income Statement.

Revenue

As required by IFRS 15 - Revenue from Contracts with Customers, the recognition of revenue

follows the steps set out below:

o identifying the contract with the customer;

o identifying the performance obligations in the contract;

o determining the price;

o assigning the price to the contract’s performance obligations;

o the recording criteria for revenue when the entity satisfies each performance

obligation.

Specifically:

Revenues from proprietary software applications are recognised in the income statement at the

time of receipt by the customer of the material required for installation with the customer. As

this relates to user licences, the installation of the test environment is considered to represent

the transfer of the intangible asset to the client, because, as from that time onwards, the client

has the standard software version available.

Revenue from customised software applications are recognised according to the terms and

conditions of the related contract, when the test environments are installed with the client.

The revenue for maintenance services governed by periodic contracts are recognised on an

accrual basis.

The revenue for fixed-price orders are recognised with reference to the stage of completion on

the balance sheet date, according to the completion percentage criterion.

The revenue for other types of order are recognised at the time when the services were

rendered, on an accruals basis.

Government grants

According to the provisions of IAS 20, government grants are only recognised if there is

reasonable certainty that:

a. the company will meet the required conditions; and

b. the grants have been received.

Public grants are booked as income, according to a systematic principle, in the years needed to set

them against the related costs that the grant is intended to offset.



Taxes

Income taxes include all taxes based upon the taxable profits. Taxes on income are recognised in

the Income Statement unless they relate to items directly charged or credited to net equity, in which

case the effect is recognised directly in net equity. Provisions for income taxes that could arise on

the distribution of the subsidiaries’ undistributed profits are only made where there is a real

intention to distribute such profits. Deferred taxes are recognised using the full liability method.

Deferred tax receivables on unused tax losses and tax credits carried forward are recognised to the

extent that is it probable that future profits will be available against which they can be recovered.

Current and deferred income tax assets and liabilities are offset when the income taxes are levied

by the same tax authority and where there is a legally enforceable right of offset. Deferred tax

assets and liabilities are measured at the tax rates expected to apply in the periods in which

temporary differences will be realised or discharged.

Deferred taxes are not discounted and are classified under non-current assets/liabilities.

Management, coordination and Tax Consolidation

In accordance with Italian Legislative Decree No. 6/2003, it is noted that the Company is subject

to the management and coordination of OWL S.p.A.

The contract, signed in 2008 between the Company and OWL S.p.A., now the parent company of

TAS, governs the reciprocal relations resulting from and consequent to implementation of the

consolidation option.

Dividends

Dividends payable are reported as a movement in net equity in the period in which they are

approved by the Shareholders’ Meeting.

Earnings per share

Basic earnings per share are calculated by dividing the Company’s net profit by the weighted

average number of shares in circulation during the year, excluding treasury shares. For the

calculation of the diluted earnings per share, the weighted average number of shares in circulation

is adjusted assuming conversion of all potentially diluting shares.

5)

ACCOUNTING PRINCIPLES, AMENDMENTS AND INTERPRETATIONS APPLIED FROM

01 JANUARY 2019

The following IFRS accounting principles, amendments and interpretation were applied for the

first time by the Group from 1 January 2019:

On 13 January 2016, the IASB published principle IFRS 16 – Leases which replaces IAS 17–

Leases, and the interpretations IFRIC 4 Determining whether an Arrangement contains a Lease,

SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions

Involving the Legal Form of a Lease.



The standard provides a new definition of lease and introduces a criterion based on the concept

of control (right of use) of an asset to distinguish lease contracts from service provision

contracts, using as differentiating factors for leases: the identification of an asset, the right to

its replacement, the right to essentially obtain all the economic benefits deriving from the use

of the asset and finally, the right to direct the use of the asset underlying the contract.

The standard sets a single model for the recognition and measurement of lease contracts for the

lessee, which requires that the asset under lease is recorded under assets, with a counter entry

under financial liabilities. The standard does not however introduce any significant changes for

the lessor.

Impact of the new lease definition

The change in the definition of a lease refers primarily to the criterion based on control (the

“right of use”). According to IFRS 16, a contract contains a lease if the customer is entitled to

control the use of a specific asset for a period of time in exchange for a consideration. This

concept differs substantially from the concept of “risks and benefits”, which were the main

focus of IAS 17 and IFRIC 4.

The Group applies the definition of lease, and the relevant IFRS 16 provisions to all lease

contracts entered into or amended from 1 January 2019 (regardless of the status of lessee or

lessor in each lease contract).

Transition with amended retrospective method

The Group has chosen to apply the standard retrospectively, recognising the cumulative effect

from the application of the standard under Net Equity at 1 January 2019 (not restating the

comparative figures for 2018), based on the provisions under paragraphs C7-C13 of IFRS 16.

In particular, the Group recognised the following relating to lease contracts previously

classified as operational:

a) a financial liability equal to the current value of future residual payments at the

transition date, discounted by using the incremental borrowing rate for each

contract, applicable at the transition date;

b) a right of use equal to the value of the financial liability at the transition date, net

of any accruals and deferrals receivable referring to the lease and recognised in the

balance sheet at the reporting date of these financial statements.

The table below shows the resulting impact from the adoption of IFRS 16 at the transition date:

€ thousand

ASSETS Impact at 01/01/2019

Non-current assets

Buildings right of use € 8,476

Vehicles right of use € 479

Other assets right of use € 200

Total Assets € 9,155





Financial liabilities for non-current leases € 8,615

Current liabilities

Financial liabilities for current leases € 835

Accruals payable -€ 295

Total € 9,155

Net Equity

Profit/(loss) carried forward € 0

Total liabilities € 9,155

An average weighted incremental borrowing rate of 4% was applied to financial liabilities

recognised at 1 January 2019.

The value of non-current assets relating to operational lease contracts was decreased by Euro

295 thousand for the balance of accruals payable recorded at 31 December 2018.

In adopting IFRS 16, the Group made use of the exemption allowed under paragraph IFRS 16

5(a) regarding short-term leases for the vehicles and properties asset classes.

Similarly, the Company made use of the exemption allowed under IFRS 16 5(b) regarding lease

contracts, where the underlying asset qualifies as a low-value asset (i.e. the single asset

underlying the lease contract is not higher than Euro 8 thousand when new). Contracts where

the exemption has been applied refer primarily to the following categories:

Computers, telephones and tablets;

Printers;

Other electronic devices;

Furniture and furnishings.

With regard to these contracts, the introduction of IFRS 16 did not result in financial liabilities

being recorded for the lease and relative right of use, but rather the rentals were recognised in

the income statement on a straight-line basis over the duration of the respective contracts under

“other costs” in the consolidated income statement.

Furthermore, with regard to the transition rules, the Group made use of the following practical

expedients available in the event of choosing the adjusted retrospective transition method:

Classification of contracts that expire within 12 months from the transition data as

short-term leases. The rental fees for these contracts are stated in the income

statement on a straight-line basis;

Exclusion of direct initial costs from the measurement of the right of use at 1

January 2019;

Use of the information available at the transition date to determine the lease term,

with specific reference to exercising the extension and early termination options.

Prior financial leases

There were no lease contracts at 31 December 2018 that had previously been classified as

financial leases in application of IAS 17.



Reconciliation with lease commitments

In order to provide a better understanding of the impact from the first application of the

standard, the table below provides a reconciliation between the future commitments relating to

lease contracts, where the relevant information was provided under “Reconciliation with lease

commitments” in the 2018 consolidated financial statements, and the impact resulting from the

adoption of IFRS 16 at 1 January 2019.

Reconciliation lease commitments

€ thousand

Impact 01/01/2019

Discounted operational lease commitments at 31 December 2018 9,789

Minimum payments for financial leasing liabilities

at 31 December 2018 9,450

Short term and low-value lease fees (exemption) 183

Non-lease component amount included under liabilities 233

Other changes -

Non-discounted financial liabilities for leases

at 1 January 2019 11,253

Discounting effect (1,803)

Financial liabilities for leases at 1 January 2019 9,450

On 12 December 2017, the IASB published the document “Annual Improvements to IFRSs

2015-2017 Cycle”, which incorporates the changes to certain principles in the scope of the

annual improvements. The primary changes refer to:

o IFRS 3 Business Combinations e IFRS 11 Joint Arrangements: the amendment

clarifies that at the time when an entity takes control of a business that represents a

joint operation, the interest previously held in that business needs to be restated.

This process is not envisaged however in the case of obtaining joint control.

o IAS 12 Income Taxes: the amendment clarifies that all tax effects related to

dividends (including payments on financial instruments classified under net equity)

should be recognised consistently with the transaction that generated these profits

(income statement, OCI or net equity).

o IAS 23 Borrowing costs: the amendment clarifies that in the event of financing that

remains in place even after the reference qualifying asset is ready for its intended

use or sale, the latter become part of the total funds used to calculate the financing

costs.

The adoption of this amendment has not had any effect on the Group’s consolidated

financial statements.

On 7 February 2018, the IASB published the document “Plant Amendment, Curtailment or

Settlement (Amendments to IAS 19)”. The document clarifies how an entity must record an

amendment (i.e. a curtailment or a settlement) to a defined-benefits plan. The amendments

require the entity to update its assumptions and remeasure the liabilities or net assets resulting

from the plan. The amendments clarify that after such an event has occurred, an entity utilises

https://www.iasplus.com/en/standards/ifrs/ifrs3




updated assumptions to measure the current service cost and interest for the remainder of the

reference period after the event. The adoption of this amendment has not had any effect on

the Group’s consolidated financial statements.

On 12 October 2017, the IASB published the document “Long-term Interests in Associates

and Joint Ventures (Amendments to IAS 28)”. This document clarifies the need to apply

IFRS 9, including the requirements related to impairment, to the other long-term interests in

associates and joint ventures where the net equity method is not applied. The adoption of this

amendment has not had any effect on the Group’s consolidated financial statements.

On 7 June 2017, the IASB published the interpretation “Uncertainty over Income Tax

Treatments (IFRIC Interpretation 23)”. The interpretation deals with the uncertainties on

the tax treatment to apply to income taxes. In particular, the interpretation requires an entity

to analyse the uncertain tax treatments (individually or as a whole, according to its

characteristics), always assuming that the tax authorities examine the relevant tax position,

with full knowledge of all the relevant information. Should an entity deem it improbable that

the tax authority will accept the tax treatment followed, the entity must reflect the effects of

the uncertainty in the measurement of its current and deferred income taxes. The document

contains no new disclosure requirements but underlines that the entity must establish whether

it is necessary to provide information on management’s considerations and on the

uncertainties pertinent to the recognition of taxes, in accordance with IAS 1. The new

interpretation was applied from 1 January 2019. The adoption of this amendment has not had

any effect on the Group’s consolidated financial statements.

On 12 October 2017, the IASB published an amendment to IFRS 9 “Prepayment Features

with Negative Compensation”. This document specifies that the instruments requiring an

early repayment could comply with the “Solely Payments of Principal and Interest ” (SPPI)

test, even in the case where the “reasonable additional compensation” to be paid in the case

of an early repayment is “negative compensation” for the financing party. The adoption of

this amendment has not had any effect on the Group’s consolidated financial statements.

6)

AIFRS AND IFRIC ACCOUNTING PRINCIPLES, AMENDMENTS AND

INTERPRETATIONS APPROVED BY THE EU BUT NOT YET MANDATORY AND NOT

ADOPTED EARLY BY THE GROUP AT 31 DECEMBER 2019

On 31 October 2018, the IASB published the document “Definition of a Material

(Amendments to IAS 1 and IAS 8)”. The document introduced an amendment to the

definition of “material” contained in the IAS 1 – Presentation of Financial Statements and

IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors. The aim of the

amendment is to make the definition of "material” more specific and introduces the concept

of “obscured information” together with the concepts of omitted or incorrect information in

the main standards amended. The amendment clarifies that information is “obscured” when

it is presented in such a way that it produces a similar effect for primary readers as omitting

or misstating the information.

The amendments introduced were endorsed on 29 November 2019, and apply to all

transactions after 1 January 2020.



Directors do not expect the adoption of these amendments to have a significant effect on the

Group’s consolidated Financial Statements.

On 29 March 2018, the IASB published an amendment to “References to the Conceptual

Framework in IFRS Standards”. The amendment is effective for reporting periods starting 1

January 2020 or thereafter, with earlier application permitted.

The Conceptual Framework sets out the fundamental concepts for financial reporting that guide

the Board in developing IFRS Standards. The document helps to ensure that the Standards are

conceptually consistent and that similar transactions are treated the same way, so as to provide

useful information for investors, lenders and other creditors.

The Conceptual Framework also assists companies in developing accounting policies when no

IFRS Standard applies to a particular transaction, and more broadly, helps stakeholders to

understand and interpret the Standards.

On 26 September 2019, the IASB published the “Amendments to IFRS 9, IAS 39 and IFRS

7: Interest Rate Benchmark Reform”. This amends IFRS 9 - Financial Instruments and IAS

39 - Financial Instruments: Recognition and Measurement as well as IFRS 7 - Financial

Instruments: Disclosures. More specifically, the amendment changes certain hedge accounting

application requirements, providing temporary relief from these, so as to mitigate the impact

resulting from the uncertainty of the IBOR reform (currently underway) on future cash flows

in the period prior to its completion. The amendment further requires companies to provide

additional information in the financial statements regarding their hedging relationships that are

directly affected by the uncertainties caused by the reform, and to which the aforementioned

relief is applicable.

The amendments come into force from 1 January 2020, but companies may choose earlier

application. Directors do not expect the adoption of these amendments to affect the Group’s

consolidated Financial Statements.

7)

IFRS ACCOUNTING PRINCIPLES, AMENDMENTS AND INTERPRETATIONS NOT YET

APPROVED BY THE EU

At the reference date of these consolidated Financial Statements, the European Union had not yet

concluded the approval process necessary for the adoption of the following amendments and

accounting principles.

On 22 October 2018, the IASB published the document “Definition of a Business

(Amendments to IAS 3)”. The document provides clarification regarding the definition of a

business for the purposes of correctly applying IFRS 3. In particular, the amendment clarifies

that whereas a business usually produces an output, the existence of an output is not strictly

necessary to identify the existence of an integrated grouping of assets/processes and goods in

a business. Nonetheless to comply with the definition of a business, an integrated grouping

of assets/processes and goods must include as a minimum, a substantive input and process

that together contribute significantly to the ability to create output. In this regard, the IASB

has replaced the term "ability to create output" with "contribute to the ability to create output"

to clarify that a business can also exist without all the inputs and processes needed to create

an output.



The amendment also introduced an optional concentration test, which will exclude a business

if the price paid essentially refers to a single asset or group of assets. The amendments apply

to all business combinations and acquisitions of assets after 1 January 2020, but early

application is allowed.

Given that this amendment will be applied to new acquisition transactions that will be

finalised as from 1 January 2020, any effects will be recognised in the consolidated financial

statements for the years ended after this date.

On 18 May 2017, the IASB published IFRS 17 – Insurance Contracts that is intended to

replace IFRS 4 – Insurance Contracts.

The aim of the new standard is to ensure that an entity provides pertinent information to

faithfully represent the rights and obligations deriving from the insurance contracts issued. The

IASB developed the standard to eliminate discrepancies and weaknesses in existing accounting

policies, providing a single principle-based framework to take into consideration for all kinds

of insurance contracts, including the reinsurance contracts held by an insurer.

The new standard also sets presentation and disclosure requirements to improve comparability

between the entities belonging to this sector.

The entity must apply the new standard to insurance contracts issued, including reinsurance

contracts issued, reinsurance contracts held and investment contracts with a discretionary

participation feature (DPF).

The principle becomes applicable as from 1 January 2021 with early application permitted only

for companies that have already applied IFRS 9 -Financial Instruments and IFRS 15 - Revenue

from Contracts with Customers. The Directors do not expect the adoption of this standard to

have a significant effect on the Group’s consolidated Financial Statements.

8)

MAIN RISKS AND UNCERTAINTIES TO WHICH TAS S.P.A. AND THE GROUP WERE

EXPOSED

In carrying out its activities, the Group is exposed to various financial risks, related to the

economic-regulatory and market conditions that may affect the Group’s performance.

The Group has an internal control system consisting of a system of rules, procedures and




The Group constantly monitors the risks to which it is exposed, in order to value the potentially

negative effects in advance, and so that the best action can be taken to mitigate them.

TAS S.p.A., as the parent company, is exposed to the same risks and uncertainties described below

for the Group.

The Group’s risk management policies seek to identify and analyse the risks the Company is

exposed to, by establishing appropriate limits and controls and monitoring risks and compliance

with such limits. These policies and related systems are reviewed on a regular basis in order to

reflect any changes in market conditions and the Group’s activities. For more details on the

principal risks and uncertainties facing the Group, please refer to the relevant section of the Group

Report on Operations.



9)

FINANCIAL LIABILITIES BASED ON DUE DATE

The table below analyses the Group’s net financial liabilities and traded derivatives, which have

been grouped according to residual maturity and contractual expiry date, compared to the reporting

date. The amounts shown below, relating to financial liabilities, represent the discounted

contractual cash flows.

At 31 December 2019 From 0 to 1 year From 1 to 5 years More than 5 years Total

Financial liabilities 676 2,759 492 3,927

Shareholder financing 5,075 - - 5,075

Trade and other payables 14,982 - - 14,982

Financial liabilities - IFRS 16 1,468 6,241 2,678 10,386

Commitment liabilities 289 - - 289


Financial liabilities 1,832 1,955 439 4,226

Shareholder financing 75 5,075 - 5,150


Commitment liabilities 1,459 4,732 3,598 9,789

10)

FINANCIAL ASSETS AND LIABILITIES BY CATEGORY

The table below details “Financial assets and liabilities”, based on IFRS 9:

Financial assets at amortised

cost

Financial assets at FV recognised in

income statement

Financial assets at FV

recognised in OCI

31/12/2019

Non-current financial assets 534 137 - 671

Investments and other securities - 137 137

Financial fixed asset receivables 489 489

Other receivables 45 45

Current financial assets 23,508 - - 23,508

Trade receivables (6) 23,286 23,286


Financial receivables 22 22

Total 24,042 137 - 24,179



Financial

liabilities at amortised cost

Financial liabilities at FV recognised in

income statement


OCI

31/12/2019

Non-current financial liabilities 10,321 - - 10,321

Financial liabilities - Financing (11) 1,661 1,661

Financial liabilities - Others (11) 8,660 8,660

Current financial liabilities 21,448 - - 21,448

Trade payables (12) 5,662 5,662

Other payables (13) 8,804 8,804

Financial liabilities - Financing (14) 163 163


Total 31,769 - - 31,769

11)

FAIR VALUE HIERARCHY BASED ON IFRS 13

The table below lists the assets and liabilities measured at “fair value” and classified according to

a three-level hierarchy which takes into account the different variables used for valuation purposes.

Level 1 Level 2 Level 3 Total

ASSETS AND LIABILITIES

Investments and other securities - - 137 137

Total Assets and Liabilities - - 137 137

The classification of financial instruments at fair value required by IFRS 13, measured according

to the quality of the input sources used, results in the following hierarchy:

Level 1: fair value determined based on the listed prices (unadjusted) in active markets for identical

assets or liabilities. At this time, there are no instruments falling into this category;

Level 2: fair value determined based on inputs other than the listed prices included under “Level

1”, that are directly or indirectly observable. At this time, there are no instruments falling into this

category;

Level 3: fair value determined based on the evaluation models where the inputs are not founded

on unobservable market data. Falling within this category are equity instruments relating to

unlisted companies not representing associates or subsidiaries classified in the category fair value

through profit and loss. The amount of Euro 137 thousand refers almost entirely to the

shareholding in the company SIA S.p.A.



BALANCE SHEET INFORMATION

ASSETS

Below are the comments on the financial accounting data. These are compared with the restated

(*) figures at 31 December 2018, as they recognise the final effects of the aggregation operation

for the subsidiary TAS EE, put in place at the end of 2018.

It is noted that pre-paid and deferred tax payables were recognised under the assets or liabilities

according to the net deferred taxes for each country.

NON-CURRENT ASSETS

12)


GOODWILL

Goodwill 31/12/2019 31/12/2018* Change

Goodwill 18,355 18,355 -

TOTAL 18,355 18,355 -

The following table shows the detail for individual CGUs:

Description 31/12/2019 31/12/2018* Change

TAS Global Payments (formerly TAS Units) 15,976 15,976 -

TAS Iberia 1,345 1,345 -

TAS France 91 91 -

TAS EE 943 943 -

Total 18,355 18,355 -

These CGUs respond to the requirements of IAS 36 para. 6, i.e. they represent “the smallest

identifiable group of assets that generates cash inflows that are largely independent of the cash

inflows from other assets or groups of assets” and see also IAS 36 para. 80 paragraphs a) and b).

It is noted that the Global Payments CGU (“Payments Unit” CGU) named as such because it refers

solely to the Payments business unit. It was transferred to to Global Payments S.p.A. and also

includes the cash flows generated by the subsidiaries TAS Americas, TAS International and TAS

USA, given that these derive primarily from resales and support on the business unit’s related

products. Consequently for this CGU, a weighted WACC was used, based on typical 2019 revenue.

As required by IAS 36, the amount for goodwill relating to the TAS EE CGU not allocated to

specific intangibles for Euro 943 thousand, was subject to an impairment test. No allocation was

made because no other intangible fixed assetswere identified responding to the requirements under

IAS 38.12, and where the relevant fair value could be reliably estimated (IFRS 3.37, letter c).

In line with the provisions of international accounting principle IAS 36, an impairment test was

carried out to verify whether any losses existed in value for all the CGUs identified, by comparing

the recoverable value against the related book values of the net invested capital (including the

assets with an undefined useful life).



For the purposes of estimating the recoverable value, the value in use of the net invested capital of

each CGU was calculated by using the “Discounted Cash Flow – asset side” principle, which

considers the company’s expected cash flows based on plans approved by management.

The calculation formula for the above methodology is given below:

FCF = free cash flow, or cash flow generated by operations;

WACC = weighted average cost of capital;

n = specific forecast period;

TV = current terminal value, i.e. the value deriving from the cash flows generated beyond the

forecast period.

In determining the value in use of the net invested capital, the cash flow projections were based

on a 3-year time frame (2020-2022), as reported in the 2020-2022 business plan, approved by the

Board of Directors on 12 March 2020. It is noted that this plan is nominally in line with the WACC

used.

The cash flows for the period after the third year were calculated with the following formula

(Gordon formula):

where:

FCFn = cash flow sustainable beyond the forecast period;

g = business growth rate beyond the period of the plan in question

WACC = weighted average cost of capital.

The main assumptions used in calculating the value in use are given below:

Discount rate (Weighted Average Cost of Capital – WACC) post tax:

7.2% for the Payments Unit CGU (7.3% at 31 December 2018)

5.9% for the TAS France CGU (5.5% at 31 December 2018)

6.4% for the TAS Iberia CGU (6.2% at 31 December 2018)

7,8% for the TAS EE CGU (not carried out in 2018)

The WACC was determined on the basis of the following values:

a. Financial structure of the industry (debt/equity ratio + third party equity = 5.85%)

b. Risk free rate:

3.05% for the Payments Unit CGU

1.76% for the TAS France CGU

2.25% for the TAS Iberia CGU

3.73% for the TAS EE CGU

c. Sector unlevered beta: 0.81

d. Risk premium: 5.2% for all the CGUs

gWACCgFCF

TV n

)1(*

TVWACC)(1FCFV i

n

1i

i



The criteria for estimating future financial flows: the cash flows – net of taxes – were taken

as references as shown above.

A total was then calculated for the discounted values (using the WACC mentioned above)

of the expected cash flows after the last year of the plan extrapolated on the basis of a

constant growth rate of 2%.

The principal values used to determine the value in use are given in the table below:

TAS Iberia TAS France TAS EE Payments

Unit

Average weighted rate of growth of income 40.9% 11.1% 43.6% 15.4%

Average gross operating margin (EBITDA) 8.0% 37.0% 49.1% 35.3%

Rate of growth in cash flow after plan period 2.0% 2.0% 2.0% 2.0%

Post-tax discounting rate (WACC - post tax) 6.4% 5.9% 7.8% 7.2%

The basic assumptions in the plan reflect past experiences and are consistent with the external

sources of information available. The average operating margin of TAS EE represents the fact that

the subsidiary was acquired at the end of 2018 with the objective of strengthening TAS’ electronic

money development and offering capacity worldwide, by leveraging the complementary

technology and applications of its issuing and acquiring platforms.

The discounting rate used reflected the specific risk of the sector in which the TAS Group

companies operate.

As permitted by paragraph 55 of IAS 36, the discounting rate was estimated post-tax, as the

unlevered cash flows of each Cash Generating Unit (CGU) were also estimated post-tax, calculated

on the basis of the specific tax rate of each CGU.

PAYMENTS UNIT CGU RESULTS

The criteria used for estimating the value in use recorded recoverable values that were higher than

the book value of the net invested capital (CIN) for the Payments Unit CGU at 31 December 2019,

inclusive of goodwill. In the light of the results of the impairment test, no significant value

impairments were recorded.

A sensitivity analysis appears below, where the book value of the invested capital of the TAS Units

CGU on 31 December 2019 was compared against the related value in use calculated on the basis

of a 7.2% discount rate and a long-term growth rate “g” of 2%, selected by the company and with

the value in use calculated on the basis of a discounting rate and a “g” rate that were respectively

half a percentage point lower (6.7%, 1.5%) or higher (7.7%; 2.5%) than the parameters used, and

an Ebitda over the years of the plan and the year after the last year that was basically in line the

margins recorded in 2019.



“g”=2.0%

Amounts in €/000 6.7% rate 7.2% rate 7.7% rate

Value in use Payments Unit CGU 293,519 264,251 240,132

CIN carrying amount at 31 December 2019 27,860 27,860 27,860

Surplus value in use on book value 265,659 236,391 212,272

The results were as follows with the sensitivity on the Ebitda figure:





“g”=1.5%










“g”=2.5%










TAS FRANCE CGU RESULTS

The criteria used for estimating the value in use led to the recording of recoverable values that

were higher than the book value of the net invested capital (CIN) of the TAS France CGU on 31

December 2019, inclusive of goodwill. In the light of the results of the impairment test, no

significant value impairments were recorded.



A sensitivity analysis appears below, where the book value of the invested capital of the TAS

France CGU on 31 December 2019 was compared against the related value in use calculated on

the basis of a 5.9% discount rate and a long-term growth rate “g” of 2%, selected by the company

and with the value in use calculated on the basis of a discounting rate and a “g” rate that were

respectively half a percentage point lower (5.4%, 1.5%) or higher (6.4%; 2.5%) than the

parameters used, and an Ebitda over the years of the plan and the year after the last year that was

basically in line the margins recorded in 2019.

“g”=2.0%


Value in use - TAS France CGU 18,144 15,853 14,081








“g”=1.5%










“g”=2.5%












TAS IBERIA CGU RESULTS


were higher than the book value of the net invested capital (CIN) of the TAS Iberia CGU on 31



A sensitivity analysis appears below, where the book value of the net invested capital of the TAS

Iberia CGU on 31 December 2019 was compared against the related value in use calculated on the

basis of a 6.4% discount rate and a long-term growth rate “g” of 2%, selected by the company and

with the value in use calculated on the basis of a discounting rate and a “g” rate that were


parameters used, and an Ebitda over the years of the plan and the year after the last year at 30%

lower, which was deemed consistent by management considering the negative margin recorded in

2019 and a gross average operating margin of 8%.

“g”=2.0%


Value in use TAS Iberia CGU 5,012 4,439 3,981








“g”=1.5%











Surplus value in use on book value 1,459 1,176 943

“g”=2.5%










TAS EE RESULTS


were higher than the book value of the net invested capital (CIN) of the TAS EE CGU on 31



A sensitivity analysis appears below, where the book value of the net invested capital of the TAS

EE CGU on 31 December 2019 was compared against the related value in use calculated on the

basis of a 7.8% discount rate and a long-term growth rate “g” of 2%, selected by the company and

with the value in use calculated on the basis of a discounting rate and a “g” rate that were


parameters used, and an Ebitda over the years of the plan and the year after the last year minus the

infra-group margin.

“g”=2.0%


Value in use TAS EE CGU 39,658 36,001 32,930










“g”=1.5%










“g”=2.5%










OTHER INTANGIBLE FIXED ASSETS

The Other intangible fixed assets came down by Euro 814 thousand compared to 31 December

2018. The net value of Euro 4,642 thousand was made up as follows:

Other intangible fixed assets 31/12/2019 31/12/2018* Change

Software developed internally 3,958 4,670 (712)

Industrial patents and intellectual property rights 90 68 22

Customer List 421 506 (85)

Fixed assets in progress - - -

Other intangible fixed assets 173 211 (38)

TOTAL 4,642 5,455 (813)

Below are the movements in the past two financial years:

Description Value on

31/12/2017 Aggregation

operation and PPA

Increases for the year

Amortisation for the year

Value 31/12/2018*

- Software developed internally 4,572 392 4,066 (4,360) 4,670 - Industrial patent rights 96 - 5 (33) 68 - Customer List - 506 - - 506 - Others 384 - 60 (233) 211

TOTAL 5,052 898 4,131 (4,626) 5,455



Description Value 31/12/2018*



Value on 31/12/2019

- Software developed internally 4,670 3,693 (4,405) 3,958 - Industrial patent rights 68 70 (48) 90 - Customer List 506 - (85) 421 - Others 211 167 (205) 173

TOTAL 5,455 3,930 (4,743) 4,642

The balance of the item Software developed internally, which amounted to Euro 3,958 thousand

was made up of project development costs which were capitalised as they met the requirements of

IAS 38 and referred to the Parent Company and subsidiary TAS EE.

Group investments continued during the year in different areas, with market action consolidated

in European countries, and strategic partnerships established to develop the Group’s business.

Specifically:




integrated with the Target2 and Target 2 Securities platforms, as well as the triparty































On a geographic level, market action in North America continues, where the offering of Card

3.0 combined with the Cloud proposition is achieving success; similarly, the new vertical security

solutions have created opportunities in the Brazilian market.

Finally, of note are the signing of an important contract with the Anglo-Arab AGTB digital bank,

where TAS solutions were key to starting up the Bank’s operations; the extension of the TAS

platform for PSD2 on the Italian market; the enormous success of the Aquarius TAS solution on

the Italian market for the T2/T2S Consolidation project.

The figure in the Customer list item is the result of the purchase price allocation conducted by the

Company consequent to the TAS EE aggregation operation completed in 2018. This asset was

amortised on the basis of a residual life of 6 years.

13)


These went from Euro 3,073 thousand in 2018 to Euro 11,313 thousand at 31 December 2019. The

increase refers to the effects of adopting IFRS 16 from 1 January 2019, which is stated separately

in the table below. The net value was made up as follows:

Tangible fixed assets 31/12/2019 31/12/2018 Change

Plants and machinery 2,102 2,316 (214)

Industrial and commercial equipment - 1 (1)

Other assets 652 756 (104)

Right of use 8,559 - 8,559

TOTAL 11,313 3,073 8,240

Detailed movements for the last two years are reported below:


31/12/2017 Adoption of

IFRS 16 Increases

for the year Reductions for the year

Amortisation for the

year

Value on 31/12/2018

Plants and machinery 2,082

-

374

(3)

(137)

2,316

Industrial and commercial equipment

2

- - -

(1)

1

Other assets 999

-

405

(5)

(694)

756

TOTAL 3,083

-

779

(8)

(832)

3,073

Description Value on 31/12/2018

Adoption of IFRS 16


Reductions for the year

Amortisation for the

year

Value on 31/12/2019

Plants and machinery 2,316

-

23

(45)

(192)

2,102

Industrial and commercial equipment

1

- -

(1) - -

Other assets 756

-

357 -

(461)

652

Right of use -

9,155

812 -

(1,408)

8,559

- buildings -

8,476

218 -

(979) 7,715

- vehicles -

479

158 -

(254)

383

- other assets -

200

436 -

(175)

461

TOTAL 3,073

9,155

1,192

(46)

(2,061)

11,313



Plants and machinery refer specifically to the new Data Centre at the TAS France subsidiary.

Right of use refers primarily to the rental contracts for the Parent Company’s premises. The

increases relate to the new contracts entered into or renewals on expiring contracts.

14)

EQUITY INVESTMENTS AND OTHER INVESTMENT SECURITIES

These amount to Euro 137 thousand, and refer almost entirely to the shareholding in the company

SIA S.p.A.; the fair value of the latter remained unchanged from last year.

Other investments and investment securities 31/12/2019 31/12/2018 Change

Equity investments in other companies valued at fair value 137 137 -

TOTAL 137 137 -

15)

FINANCIAL FIXED ASSET RECEIVABLES

Financial fixed asset receivables amounted to Euro 489 thousand and related mainly to Parent

Company security deposits.

The book value of the financial receivables is considered to reflect their fair value.

16)

DEFERRED TAX ASSET AND LIABILITIES

Deferred tax assets and liabilities recognised in the assets or liabilities according to the net taxes

resulting for each country at 31 December 2019 are as follows:

Deferred taxes 31/12/2019 31/12/2018 Change

Italy 814 20 794

France - 373 (373)

USA 129 - 129

Switzerland 229 146 83

TOTAL 1,172 539 633

The items recognises the taxes paid in previous years to the current year.

With regard to the Parent Company, in view of the new business plan approved by the Board on

12 March 2020, and considering the positive tax result for 2019, the Company recognised deferred

tax assets at 31 December 2019 for Euro 814 thousand. This amount, referring solely to a portion

of the deductible deferred costs recognised in the year and previous years, was carefully calculated

by applying a conservative sensitivity analysis in terms of the margins realised to the forecasting

years in the 2020 -2022 business plan.

The balance for the French subsidiary at 31 December 2019 amounting to Euro 486 thousand, was

restated among current tax receivables (Note 21), because this refers to a tax credit accrued on



investments realised, which can be used the following year to offset the income tax payable by the

company. On expiry, an application for a refund can be made for the remainder.

The deferred taxes for the Swiss subsidiary TAS International referred primarily to the effects of

recognising the pension plans.

The total unregistered amount for advances on prior tax losses is approximately 10.3 million Euro

(of which 9 million Euro relates to the Parent Company and 1.3 million Euro to the Spanish

subsidiary TAS Iberia). It should be remembered however that with the elimination of the

restriction on carrying-over tax losses, the Group will still have the option of recognising these in

the future.

17)

OTHER NON-CURRENT RECEIVABLES

Other receivables totalling Euro 45 thousand referred to advances paid to employees of the parent

company in accordance with the harmonisation agreement signed with workers’ representatives.

The book value is considered to reflect their fair value.



CURRENT ASSETS

18)

CONTRACT ASSETS WITH CUSTOMERS

Amounted to Euro 6,798 thousand. The value of work in progress referred mainly to the

installation activities and services currently being completed by the Parent Company. All work

presented at 31 December 2019 had begun during the period in question, whereas those that existed

at 31 December 2018 were all fully completed. This item comprises:

Contract assets with customers Gross value at

31/12/2019 Risk provisions on work in progress

Net value at 31/12/2019


Work in progress 7,286 (500) 6,786 3,505

Advances to suppliers 12 - 12 32

TOTAL 7,298 (500) 6,798 3,537

A large number of activities were initiated in 2019 compared to the previous year, which partially

accounts for the increase in revenue, determining the increase in the items in question.

Movements for the provision are shown below:

Risk provisions on work in progress 31/12/2018 Provisions Utilisation 31/12/2019

Risk provisions on work in progress 300 200 - 500

TOTAL 300 200 - 500

19)

TRADE RECEIVABLES

The value of trade receivables, totalling Euro 24,462 thousand also included trade-related accruals

and deferrals receivable, and was made up as follows:

Trade receivables and accruals and deferrals receivable 31/12/2019 31/12/2018 Change

Trade receivables 23,286 21,082 2,204

Trade accruals and deferrals receivable 1,176 955 221

TOTAL 24,462 22,037 2,425

Within the following year 24,462 22,037 2,425

From 1 to 5 years - - -

More than 5 years - - -

TOTAL 24,462 22,037 2,425

Overdue – less than 1 month 1,136 699 437

Overdue – more than 1 month 1,277 1,200 77

TOTAL 2,413 1,899 514

Trade receivables amounted to Euro 23,286 thousand (net of the write-down provision of Euro

4,051 thousand), with a 10% increase with respect to the comparison data at 31 December 2018,

which is essentially in line with the increase in recorded revenue.

The book value of the trade receivables is considered to reflect their fair value.

The receivables write-down provision underwent the following changes during 2019:



Write-down provision 31/12/2018 Provisions Utilisation 31/12/2019

Write-down provision (trade receivables) 3,949 216 (114) 4,051

TOTAL 3,949 216 (114) 4,051

On the balance sheet date the maximum credit risk exposure was equal to the fair value of each of

the categories indicated above.

The trade accruals and deferrals receivable related mainly to:

Trade accrued income and prepaid expenses 31/12/2019 31/12/2018 Change

Insurance 66 156 (90)

Rentals payable 32 35 (3)

Maintenance and other services costs 467 201 266

Purchase of hardware/software for resale 552 189 363

Others 59 374 (315)

TOTAL 1,176 955 221

20)

OTHER RECEIVABLES

This item amounted to Euro 200 thousand and was made up as follows:

Other receivables 31/12/2019 31/12/2018 Change

Tax receivables 51 47 4

Receivables from personnel 54 53 1

Advances to suppliers 80 42 38

Various receivables 15 12 3

TOTAL 200 154 46

Within the following year 200 154 46



TOTAL 200 154 46

Overdue – less than 1 month - - -

Overdue – more than 1 month - - -

TOTAL - - -

The book value of the other receivables is considered to reflect their fair value.

21)

CURRENT TAX RECEIVABLES

Current tax receivables 31/12/2019 31/12/2018 Change

Current tax receivables 486 1 485

Receivables from related parties - - -

TOTAL 486 1 485




TOTAL 486 1 485



TOTAL - - -

Current tax income for Euro 486 thousand relates to a tax credit accrued on investments made by



the French subsidiary that can be utilised for the next year to offset taxes on the subsidiary

company’s taxable income. On expiry, an application can be made for any residue. At 31

December 2018, this was recognised under receivables for pre-paid taxes (Note 15).

22)

FINANCIAL RECEIVABLES

The value of financial receivables expiring within 12 months amounting to Euro 22 thousand

recorded no changes compared to the previous financial period.


23)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents amounted to Euro 7,247 thousand and were made up as follows:

Cash and cash equivalents 31/12/2019 31/12/2018 Change

Cash and cash equivalents 7 5 2

Bank and postal deposits 7,240 5,310 1,930

TOTAL 7,247 5,315 1,932

The balance represented the cash and valuables available at the year-end date. The values stated

may be converted readily into cash and are subject to an insignificant risk of a change in value.

The changes compared to the previous period are shown in the Cash Flow Statement.

It is considered that the book value of the cash assets is aligned with their fair value on the balance

sheet date.

The credit risk related to the cash and cash equivalents is limited, as the counterparties are leading

national banks.

Pursuant to the requirements set out in Consob Communication No. 15519 of 28 July 2006, we

note that Group’s Net Financial Position was as follows:

















M. Non-current portion of medium to long-term bank borrowings 879 927












The Net Financial Position, less the impact of adopting IFRS 16 from 1 January 2019, was

negative for Euro 0.4 million compared to Euro 3.1 million at 31 December 2018. Cash and cash

equivalents amounted to Euro 7.3 million, compared to Euro 5.3 million in 2018. Including the

effects of adopting IFRS 16, the Net Financial Position was negative for Euro 9.5 million.






24)

ASSETS/LIABILITIES HELD FOR SALE

On 5 April, TAS completed the sale to B2PT d.o.o. (company controlled by Mr Nemanja

Paunovic) of the entire 80% shareholding held in Bassilichi CEE. The scope of the sale did not

include the shareholding held by Bassilichi CEE in the Serb registered company TAS EE (formerly

ArsBlue d.o.o. for 51%), which was transferred directly to TAS, as this was the effective target of

the acquisition at the end of 2018. In total, the sale and purchase of assets and liabilities held for

sale at 31 December 2018 determined a negative entry in the Income statement for approximately

Euro 400 thousand.




LIABILITIES AND NET EQUITY

25)

NET EQUITY

A breakdown of the net equity items is given below, while the related changes are shown in the

relevant schedule.

Net Equity 31/12/2019 31/12/2018* Change

Share capital 24,331 24,331 -

Legal Reserve 360 - 360

Extraordinary reserve 5,707 (1,533) 7,240

Conversion reserve 1,611 1,594 17

Capital account reserve - 20,000 (20,000)

IAS 19 actuarial valuation reserve (1,433) (920) (513)

Profit/(loss) carried forward (6,611) (19,282) 12,671

Group profit (loss) for the period 5,363 200 5,163

TOTAL GROUP NET EQUITY 29,328 24,390 4,938

On 29 April 2019, the TAS Shareholders' Meeting resolved to allocate the entire TAS profit for

2018 of Euro 359,942.29 to the legal reserve. As proposed by the majority shareholder OWL

S.p.A., it also resolved to fully cover the losses from previous years resulting from the financial

statements at 31 December 2018 for Euro 12,759,824.91, using the capital account reserves for the

same amount of Euro 12,759,824.91, recognising the remainder of this capital account reserve of

Euro 7,240,175.09 in the extraordinary reserve.

The share capital was made up as follows:

Shares Number Nominal value

Ordinary shares 83,536,898 No value

Total 83,536,898

No new shares were subscribed during the period.

Therefore on the closing date 83,536,898 ordinary shares were in circulation with no nominal

value, and the share capital amounted to Euro 24,330,645.50.

The Conversion reserve was generated from the process of converting the Financial Statements of

the foreign subsidiaries in currencies other than the Euro.

The Actuarial valuation reserve was generated by the recognition of actuarial gains and losses in

the Comprehensive Income Statement. The changes were as follows:

Movements in the actuarial valuation reserve 2018

Actuarial valuation reserve 01/01/2018 (1,211)

Effect of actuarial valuation 324

Tax effect on actuarial valuation (33)

Actuarial valuation reserve 31/12/2018 (920)





Effect of actuarial valuation (602)

Tax effect on actuarial valuation 89

Actuarial valuation reserve 31/12/2019 (1,433)

With regard to the comments on the Comprehensive Income Statement reference is made to Note

40 in this section.




26)

EMPLOYEE SEVERANCE INDEMNITY PROVISION

The provision represents the severance pay liability to be paid to employees in the case of contract

termination and is represented net of the advances paid. This item mainly reflected the Group’s

residual liability relating to the indemnity granted to employees in Italy until 31 December 2006.

If specific conditions occur, it may be paid in advance to an employee during his service. The

changes compared to the previous year are as follows:

Employee severance indemnity provision (TFR) 31/12/2019 31/12/2018 Change

Employee severance indemnity provision 4,801 4,232 569

TOTAL 4,801 4,232 569

The fund is made up as follows:

employee severance indemnity provision changes 31/12/2018

Employee Severance indemnity provision 01/01/2018 4,718

Provision for the period 1,298

Aggregation operation 12

Interest costs 52

Amount paid to INPS Treasury fund (1,279)

Indemnities and advances paid during the year (246)

Actuarial profit/(loss) (323)


employee severance indemnity provision changes 31/12/2019



Acquisition of Mantica 38

Interest costs 35

Amount paid to the INPS Treasury fund and other supplementary funds (1,289)


Actuarial profit/(loss) 571


In addition to the effects from the acquisition of the subsidiary Mantica Italia, the liabilities during

the period include Euro 1,302 thousand for provisions, of which Euro 1,289 thousand paid to the

INPS treasury fund, utilisations from indemnities paid during the year for a total of Euro 88

thousand, a negative effect from the actuarial valuation for Euro 571 thousand referring primarily

to the Swiss subsidiary and interest costs for Euro 35 thousand.

The actuarial model used for the valuation of severance pay is based on various demographic,

economic and financial assumptions.

Where possible, for some of the assumptions express reference has been made to the direct

experience of the parent company while for others, industry best practices have been applied.



The main assumptions of the model are given below:

Financial assumptions

Annual discounting rate 0.77% 0.30% for TAS International

Annual inflation rate

1.20% 0.00% for TAS International

Annual rate of increase in employee severance indemnity

2.40% 0.00% for TAS International

Demographic assumptions

Mortality RG48 mortality table

Disability INPS tables divided by age and gender

Pension age TAS: 100% upon reaching the Mandatory General Insurance requirements

TAS International: Men 65/ Women 64

From the historical experience of the parent company and based on the available data, an annual

turnover rate of 5% and an anticipation rate of 2% were deduced.

In particular, we note that:

- the Annual discounting rate in Italy used to calculate the current figure for the obligation

was determined according to par. 78 of IAS 19, with reference to the IBoxx Eurozone

Corporate AA 10+ index;

- the Annual rate of increase in employee severance indemnity in Italy pursuant to Art.

2120 of the Italian Civil Code is 75% of inflation plus 1.5 percentage points.

The sensitivity analysis for the Parent Company appears below:

Sensitivity analysis of main evaluation parameters on data at 31/12/2019

TFR [Employee Severance

Pay] Delta %

+ 1% on turnover rate 3,565 - 86.13 -2.4%

- 1% on turnover rate 3,615 - 36.39 -1.0%

+ 1/4% on annual inflation rate 3,637 - 14.05 -0.4%

- 1/4% on annual inflation rate 3,541 - 110.09 -3.1%

+ 1/4% on annual discounting rate 3,512 - 138.87 -4.0%

- 1/4% on annual discounting rate 3,668 16.55 0.5%

The sensitivity analysis of TAS International’s pension plan appears below:


PENSION PLAN Delta %

+ 0.50% on annual inflation rate 1,157 6.90 0.6%

- 0.50% on annual inflation rate NA NA NA

+ 0.50% on annual discounting rate 1,042 - 108.10 -9.4%

- 0.50% on annual discounting rate 1,275 125.35 10.9%

+1 year on mortality rate 1,179 28.75 2.5%

-1 year on mortality rate 1,120 - 29.90 -2.6%



27)

PROVISIONS FOR RISKS AND CHARGES

This item amounted to Euro 323 thousand and referred to provisions made primarily by the Parent

Company for disputes in respect of former employees.

Risk provisions 31/12/2019 31/12/2018 Change

Provision for risks 323 83 240

Other provisions - - -

TOTAL 323 83 240

The changes are shown below:

Risk provision changes 31/12/2018

Opening balance at 01/01/2018 476

Increases -

Reclassification risk provisions work in progress (140)

Utilisation (253)

Risk provision at 31/12/2018 83

Risk provision changes 31/12/2019


Increases 300

Utilisation (60)


28)

DEFERRED TAX PROVISION

The deferred tax provision at 31 December 2019 amounts to Euro 63 thousand, and refers primarily

to the effects of the purchase price allocation, the details of which are available under Note 2 of

this section.

Tax provision 31/12/2019 31/12/2018* Change

Serbia 63 81 (18)

TOTAL 63 81 -



29)

NON-CURRENT FINANCIAL LIABILITIES

Non-current financial liabilities for Euro 10,321 thousand include the effects of adopting the new

IFRS 16 from 1 January 2019. The non-current portion thereof amounts to Euro 8,052 thousand.

Non-current financial liabilities 31/12/2019 31/12/2018 Change

Funding to the parent company OWL - 5,000 (5,000)

Financing liabilities 1,661 1,839 (178)

Financial liabilities for IFRS 16 leases, of which: 8,052 - 8,052

- Right of use buildings 7,593 - 7,593

- Right of use vehicles 190 - 190

- Other assets right of use 270 - 270

Other financial liabilities 629 629 -

Effect of recognition at the amortised cost of financial liabilities (21) (292) 271

TOTAL 10,321 7,176 3,145

Within the following year - - -

From 1 to 5 years 7,341 6,846 495

More than 5 years 2,980 330 2,650

TOTAL 10,321 7,176 3,145



TOTAL - - -






Financing liabilities is mainly attributable to financing accessed by the French subsidiary to

construct the new Data Centre.

Other financial liabilities include Euro 560 thousand related to the aggregation operation for the

subsidiary TAS EE.



CURRENT LIABILITIES

30)

TRADE PAYABLES

The value of trade payables, totalling Euro 13,851 thousand included the liabilities from customer

contracts and trade-related accruals payable, and was made up as follows:

Trade payables 31/12/2019 31/12/2018 Change

Advances 668 381 287

Payables to suppliers 4,924 4,435 489

Payables to related parties 69 42 27

Contract liabilities with customers 8,168 7,236 932

Trade accruals payable 22 313 (291)

TOTAL 13,851 12,407 1,444




TOTAL 13,851 12,407 1,444

Overdue – less than 1 month 763 616 147

Overdue – more than 1 month 209 561 (352)

TOTAL 972 1,177 (205)

Payables to suppliers for Euro 4,924 thousand increased by 11% compared to 31 December 2018.

The item Advances included the advances received from customers in relation to the supply of

goods and services not yet completed.

The Contract liabilities with customers related mainly to the deferral of orders in progress already

invoiced to the customer but not yet completed at 31 December 2019.

Reference is made to Note 43 in this section for relations with related companies.

31)

OTHER PAYABLES

Other payables for Euro 8,804 thousand, related to:

Other payables 31/12/2019 31/12/2018 Change

Tax payables 1,609 2,311 (702)

Payables to social security institutions 2,450 2,252 198

Various payables 4,745 4,425 320

TOTAL 8,804 8,988 (184)

Within the following year 8,804 8,988 (184)



TOTAL 8,804 8,988 (184)



TOTAL - - -

The details relating to the other payables appear below:



Tax payables 31/12/2019 31/12/2018 Change

IRPEF payables 1,220 1,211 9

VAT payables 360 1,028 (668)

Other tax payables 29 72 (43)

TOTAL 1,609 2,311 (702)




TOTAL 1,609 2,311 (702)



TOTAL - - -

IRPEF payables relate to withholding tax on the December payroll.

Social security payables 31/12/2019 31/12/2018 Change

Payable to INPS [pension fund] 2,130 1,922 208

Payables to INAIL and other institutions 237 291 (54)

Other social security payables 83 39 44

TOTAL 2,450 2,252 198

Within the following year 2,450 2,252 198



TOTAL 2,450 2,252 198



TOTAL - - -

Payables to social security institutions relate mainly to contributions payable on the December

payroll, and on salaries accruing on the balance sheet date in relation to additional monthly salary

payments, holidays not taken and bonuses.

Various payables 31/12/2019 31/12/2018 Change

Payables to personnel 4,449 3,733 716

Various other payables 296 692 (396)

TOTAL 4,745 4,425 320




TOTAL 4,745 4,425 320



TOTAL - - -

There were no outstanding payables to employees on 31 December 2019.

The book value of the Other payables on the balance sheet date is considered to reflect their fair

value.



32)

CURRENT INCOME TAX LIABILITIES

The amount of Euro 495 thousand refers to current tax liabilities for subsidiaries, included in the

scope of consolidation, net of advances paid.

Current tax liabilities 31/12/2019 31/12/2018 Change

Current tax liabilities 495 44 451

TOTAL 495 44 451




TOTAL 495 44 451



TOTAL - - -

33)

CURRENT FINANCIAL LIABILITIES

Current financial liabilities amount to Euro 6,982 thousand and include the effects of adopting the

new IFRS 16 from 1 January 2019. The current portion thereof amounts to Euro 1,116 thousand.

Current financial liabilities 31/12/2019 31/12/2018 Change

Financing liabilities 163 218 (55)

Payables to banks 302 139 163

Funding to the parent company OWL 5,000 - 5,000

Other financial liabilities 564 1,376 (812)

Financial liabilities for IFRS 16 1,116 - 1,116

- Right of use buildings 723 - 723



Effect of recognition at the amortised cost of financial liabilities (163) (12) (151)

Financial accruals and deferrals - 2 (2)

TOTAL 6,982 1,723 5,259




TOTAL 6,982 1,723 5,259



TOTAL - - -

Other financial liabilities include the second instalment of Euro 557 thousand, falling due on 31

December 2020, relating to the aggregation operation for the subsidiary TAS EE in 2018.

As stated above, financing to the Parent Company OWL S.p.A. was restated over the short term,

as this falls due on 31 December 2020.

The fair value of financing (current and non-current), largely corresponded with the book value.

The structure of the current and non-current financial liabilities, in terms of the annual interest rate

at 31 December 2019 is as follows (nominal values):



Financial liabilities zero rate less than 5% between 5% and 10.0%

Euro of which: 1,193 15,505 -

- Funding to the parent company OWL - 5,000 -

- Financial liabilities IFRS 16 - 9,168 -

- Other financial liabilities 1,193 1,337 -

Rsd - 421 -

TOTAL 1,193 15,926 -

More specifically, funding to the parent company OWL provides a 3-month Euribor percentage

rate and a spread of 150 base points, whereas the calculation of financial liabilities for IFRS 16

leases was based on the incremental borrowing rate of 4%.

The rest of the debt is mainly made up of financing referring to the French and Serb subsidiaries

at rates below 5%.

At the reporting date, the Group’s exposure to changes in interest rates, and the dates for the review

of the rates, were as follows:

Rate review period 31/12/2019 31/12/2018

From 0 to 6 Months 6,824 7,057

The table below shows the changes in the Group’s financial liabilities (balance sheet values):

Financial liabilities 31/12/2019 31/12/2018 Change

Non-current 10,321 7,176 3,145

Current 6,982 1,722 5,260

TOTAL 17,303 8,898 8,405

Changes 31/12/2018

Opening balance at 01/01/2018 6,376

Termination of pool finance (5,000)

Financing by Parent Company OWL 5,000

Financial liabilities for ArsBlue acquisition 1,770

Accounting effect at amortised cost 399

Financial liabilities from aggregation operation 543

Monetary changes in bank and financial liabilities (190)

Closing balance at 31/12/2018 8,898

Changes 31/12/2019


Accounting effect at amortised cost 120

Effect of adopting IFRS 16 9,168

Monetary changes in bank and financial payables (883)




At 31 December 2019, the reserve of liquid assets was as follows:



Cash credit line 489 (169) 319 267

Self-liquidating lines - - - -

Other Financing Lines 2,908 (1,878) 1,030 30


Total Bank Credit Lines 8,397 (7,048) 1,349 297

Factoring Lines 3,567 (567) 3,000 105




Total 11,964 (7,615) 11,596 5,717

The Group’s liquidity reserve of € 11.6 million is deemed sufficient to meet existing commitments

on the balance sheet date.



INFORMATION ON THE INCOME STATEMENT

Comments on the Income Statement follow. These are compared with the relevant figures for the

corresponding period in 2018.

It also shows the revenue and costs accruing with regard to related parties. Reference is made to

Note 43 in this section for the relevant details.

34)

REVENUE

Revenue 31/12/2019 31/12/2018 Change Change %

Revenue 52,445 49,789 2,656 5.3%



Other revenue 1,001 1,048 (47) (4.5%)

TOTAL 57,368 50,526 6,842 13.5%

At 31 December 2019, the Group recorded Total revenue for Euro 57,368 thousand, compared to

Euro 50,526 thousand for the previous year, broken down as follows:

- Euro 56,367 thousand made up of revenue from typical management (Euro 49,478 thousand in

2018);

- Euro 1,001 thousand made up of other non-typical revenue (Euro 1,048 thousand in 2018).

For further details on the trend in revenue, reference is made to the Report on Operations.

35)

COSTS OF PRODUCTION

Costs of production amounting to Euro 44,325 thousand are detailed in the following table:


Raw materials, consumables and goods 1,580 2,693 (1,113) (41.3%)

- of which software development costs (439) (390) (49) (12.6%)


Personnel costs 28,339 24,934 3,405 13.7%


For services 12,867 13,943 (1,076) (7.7%)

- of which software development costs (762) (1,039) 277 26.7%





Various operating charges 711 459 252 54.9%

Provision for risks and extraordinary charges 553 488 65 13.3%

TOTAL 44,325 44,197 128 0.3%

To provide a more homogeneous comparison of the Group’s core costs, in the table below, we

removed the capitalised costs for software development, the resale costs, the non-recurring costs

from each cost item and the impact from IFRS 16:




Raw materials, consumables and goods 2,019 1,557 462 29.7%

Personnel costs 30,829 27,572 3,257 11.8%

Costs of services 13,611 12,238 1,373 11.2%

Use of third-party assets net of IFRS 16 effect 1,683 1,680 3 0.2%

Provisions and other expenses 1,264 947 317 33.5%

TOTAL CORE COSTS 49,406 43,994 5,412 12.3%


IFRS 16 impact (1,408) - (1,408) -



TOTAL COSTS 44,325 44,197 128 0.3%



Personnel costs 31/12/2019 31/12/2018 Change Change %



TFR provision 1,302 1,298 4 0.3%

Other costs 174 153 21 13.7%

TOTAL 30,829 27,572 3,257 11.8%

The item Other costs includes the IAS 19 actuarial adjustment for the Swiss subsidiary TAS

International on an insurance policy for social security benefits for its employees.

The table below illustrates the TAS Group staff numbers at 31 December 2019:

Staff 31/12/2019 31/12/2018* Change in year

TAS 386 375 11

TAS INTERNATIONAL 12 10 2

TAS FRANCE 7 8 (1)



TAS GERMANY - 1 (1)

TAS USA - - -


MANTICA 6 - 6

TAS EE 51 49 2



The costs of services amounted to Euro 13,611 thousand, increasing by 11.2% compared to the

previous period. These are made up as follows:

Costs of services 31/12/2019 31/12/2018 Change Change %

Software design and development 2,450 2,363 87 3.7%

Professional services from third parties for resale 2,980 2,367 613 25.9% Remuneration and refunds to directors, statutory auditors and committees 1,053 892 161 18.0%

Travel costs 1,152 1,124 28 2.5%

Consulting and auditing firm 2,339 2,184 155 7.1%

Outsourced IT services 766 818 (52) (6.4%)

Utilities and logistics 686 694 (8) (1.2%)

Insurance 263 340 (77) (22.6%)

Marketing and communication 648 327 321 98.2%

Personnel services 844 797 47 5.9%

Other services 430 332 98 29.5%

TOTAL SERVICE COSTS 13,611 12,238 1,373 11.2%



More specifically, Marketing and Communication relates to the increased participation in events

associated mainly with the Eurosystem Consolidation T2/T2S.

In accordance with Consob Communication DEM/6064293 of 28 July 2006, non-recurring costs

are shown below for Euro 18 thousand:




The Costs of services refer to the activities related to the Operation detailed above.

36)

AMORTISATIONS AND DEPRECIATIONS

Amortisations and depreciations amounted to Euro 7,064 thousand and was broken down as

follows:

Amortisations and depreciations 31/12/2019 31/12/2018 Change Change %

Capitalised software 4,405 4,360 45 1.0%

Other intangible fixed assets 338 264 74 28.0%

Tangible fixed assets 2,061 832 1,229 >100%

- of which, IFRS 16 impact 1,407 - 1,407 -

Other fixed asset impairments 44 - 44 -

Impairment of trade receivables 216 72 144 >100%

TOTAL 7,064 5,528 1,536 27.8%

37)

FINANCIAL INCOME AND CHARGES

The balance of financial management was negative for Euro 710 thousand and was made up as

follows:

Financial income/(expenses) 31/12/2019 31/12/2018 Change Change %

Income from non-current receivables 12 11 1 9.1%

Income from securities - 3 (3) (100.0%)

Income from fair value recognition 51 376 (325) (86.4%)

Other income 5 1 4 >100%

Exchange rate gains 154 24 130 >100%

TOTAL FINANCIAL INCOME 222 415 (193) (46.5%)

Interest payable and other financial charges (640) (975) 335 34.4%

Interest payable to parent company OWL (75) (2) (73) >(100)%

Exchange rate losses (217) (38) (179) >(100)%

TOTAL FINANCIAL CHARGES (932) (1,015) 83 8.2%

TOTAL RESULT OF FINANCIAL MANAGEMENT (710) (600) (110) (18.3%)

The item Interest payable and other financial charges, which went from Euro 975 thousand in

2018 to Euro 640 thousand at 31 December 2019, included:

- interest payable on loans, current bank accounts and factoring accounts for Euro 77 thousand

(Euro 216 thousand in 2018);



- the effect for the period for Euro 170 thousand relating to the recognition of the amortised cost

of financial liabilities (Euro 707 thousand in 2018);

- the effect for the period for Euro 35 thousand (Euro 52 thousand in 2018) relating to the

recognition of interest costs linked to the actuarial valuation of the employee severance

indemnity provision (TFR).

- the effect for the period for Euro 358 thousand, relating to IFRS 16.

It should be noted that the interest rate risk the Group is exposed to, originates from the financing

with the parent company OWL S.p.A., which provides a 3-month Euribor percentage rate and a

spread of 150 base points, and subsidiaries’ financial liabilities at an interest rate below 5%. For

the OWL financing, if the Euribor should assume a negative value, the applicable rate will be

formally considered zero, and in such cases only the spread would apply.

A hypothetical increase of 0.5% in the interest rates applicable to the above funding would result

in increased net expenses before tax for about Euro 87 thousand. A reduction of 0.5% in interest

rate levels on the other hand would result in an annual net benefit before tax of around Euro 62

thousand.

This analysis is based on the assumption of a generalised and instantaneous 0.50% change in

interest rates, measured in homogeneous categories. A homogeneous category is defined on the

basis of the currency in which the financial liability is expressed.

38)

TAXES

Current taxes amounted to Euro 498 thousand and refer to subsidiaries’ current taxes included in

the scope of consolidation.

Current and deferred taxes 31/12/2019 31/12/2018 Change Change %

Current taxes 498 45 453 >100%

Deferred taxes (936) (44) (892) >(100)%

TOTAL (438) 1 (439) >(100)%

The taxes included adjustments relating to the recognition of the deferred tax assets and liabilities,

details of which are given in Notes 15 and 28 in this section. They have been calculated according

to the global allocation principle, taking into account the cumulative effect of all the temporary

differences based on the rates expected to be in force at the time when those differences are

realised.



39)

PROFIT/(LOSS) PER SHARE

At 31 December 2019, a profit of Euro 5,363 thousand was recorded, compared to Euro 200

thousand in 2018. The earnings per share for year was Euro 0.06 compared to the insignificant

amount at 31 December 2018.

Earnings per share 31/12/2019 31/12/2018

Share Capital 24,330,646 24,330,646

Profit/(loss) for the year 5,363,193 199,931

Ordinary shares 83,536,898 83,536,898

Weighted average of number of shares in circulation in financial year 83,536,898 83,536,898

EARNINGS PER SHARE 0.06 0.00

As there are no potential shares or any other circumstances that could lead to dilutions, the diluted

result per share is the same as the basic result per share calculated above.

40)

OTHER PROFIT/(LOSS) IN THE COMPREHENSIVE INCOME STATEMENT

The value of the Other profit/(loss) is made up as follows:

Other profit/(loss) 31/12/2019 31/12/2018



Actuarial profit/(loss) on defined benefit plans (602) 324

Income tax relating to Other profit/(loss) 89 (33)

Total Other profit/(loss), net of tax effect (493) 298

The income tax effect relating to Other profit/(loss) is made up as follows:

31/12/2019 31/12/2018

Gross value

tax (burden)/benefit Net value

Gross value

tax (burden)/benefit Net value

Profit/(loss) deriving from the conversion of foreign companies’ Financial Statements 20 - 20 7 - 7

Actuarial profit/(loss) on defined benefit plans (602) 89 (513) 324 (33) 291

Total Other profit/(loss) (582) 89 (493) 331 (33) 298



41)

DISCLOSURE OF AUDITING FIRM’S REMUNERATION

According to the provisions of Article 149-duodecies of the Issuers Regulations, enacting Italian

Legislative Decree No. 58 of 24 February 1998, below are the details of the services rendered by

the auditing firm in 2019.

The table below indicates the fees in thousands of Euro, for the accounts auditing and other

services.

Type of services Service provider Service recipient Compensation

Accounts auditing Parent company auditor Parent company TAS S.p.A. 88

Parent company auditor Subsidiaries 10

Provision of other services for the issue of certification from the auditing firm Parent company auditor Parent company TAS S.p.A. 10

42)

INFORMATION ON OPERATING SEGMENTS

INFORMATION ON OPERATING SEGMENTS

An operating segment is part of an entity that undertakes business activities that generate costs and

revenue, the results of which are periodically reviewed at the highest operational decision-making

level so that decisions can be taken about the resources to be allocated to the segment, and the

evaluation of its results. A geographical segment refers to a group of activities that supply products

or services within a specific economic environment subject to risks and returns that differ from

those of segments operating in other economic environments.

We note that at the reporting date for these consolidated Financial Statements, the operating

segment did not meet the requirements of IFRS 8 to provide for a separate disclosure.

In terms of IFRS 8, information is provided below on the geographic segments. Specifically:

- revenue from external customers from the country where the business has its registered

office, and all foreign countries, that the business obtain revenue from;

- non-current assets other than financial instruments and deferred tax assets in the country

where the business has its registered office and in all foreign countries, in total where the

business holds assets.


GEOGRAPHIC SEGMENT

The other information about geographic segments is provided below:

Income statement 31/12/2019 31/12/2018

€ thousand Italy Switzerland Spain South

America France Eastern Europe USA

Other foreign

countries Cons. Italy Switzerland Spain South


Other foreign

countries Cons.

Total revenue 46,205 2,665 892 694 3,019 1,947 1,306 640 57,368 42,960 627 1,711 817 3,059 13 368 970 50,526

Balance Sheet 31/12/2019 31/12/2018*

€ thousand Italy

Switzerland Spain South


Other foreign

countries Cons. Italy

Switzerland Spain South


Other foreign

countries Cons.

Intangible fixed assets 19,809 - 1,370 76 124 1,618 - - 22,997 20,430 - 1,383 61 97 1,840 - - 23,811

- Goodwill 15,915 - 1,345 61 91 943 - - 18,355 15,915 - 1,345 61 91 943 - - 18,355

- Other intangible fixed assets 3,894 - 25 15 33 675 - - 4,642 4,515 - 38 - 6 897 - - 5,455

Tangible fixed assets 7,773 - 133 20 3,355 32 - - 11,313 640 2 4 15 2,362 51 - - 3,073 Financial receivables and fixed assets 374 10 12 1 135 - 2 - 534 352 9 16 1 156 - - - 534

Non-current assets 27,956 10 1,515 97 3,614 1,650 - 34,844 21,422 11 1,403 77 2,615 1,890 - - 27,418


43)

TRANSACTIONS WITH RELATED PARTIES

The following related-party transactions took place during the period. For the definition of

“Related parties”, reference has been made to IAS 24 R, approved by Regulation (EC) No

632/2010.

Related-party transactions as defined by IAS 24R were carried out in accordance with laws in

force, at normal market prices.

The table below summarises the economic, capital and financial relations with related parties on

31 December 2019:

OWL SPA GUM CONSULTING

SRL BRAVI

CONSULTING SRL MAUDEN SPA

Trade payables - (42) (27) -

Financial liabilities (4,879) - - -

Other payables (140) - - -

Costs - - - -

Costs of services - (288) (80) (1)

Financial charges (191) - - -

Relations with related parties were all conducted at arm’s length, and refer to:

the relations between the Company and the parent company OWL S.p.A. referring to the

existing financing following the debt release operation concluded at the end of 2018.

the relations with the company Gum Consulting S.r.l. in which Dario Pardi is a majority

shareholder and referring to the compensation including the refund of expenses as

Chairman of the Company’s Board of Directors;

the relations with the company Bravi Consulting S.r.l. in which Valentino Bravi is a

shareholder referring to the consulting provided to the Company;

the relations with the company Mauden S.p.A. in which Roberta Viglione, a TAS Board

member is a shareholder and CEO, referring to the provision of specialist services in the

MQ Advanced (IBM) area.



Impact of related-party transactions

Related parties

Total Absolute Amount %

a) Impact of related-party transactions on items on the Balance Sheet

Trade payables (13,851) (69) 0.50%

Financial liabilities (17,302) (4,879) 28.20%

Other payables (8,804) (140) 1.59%

b) Impact of related-party transactions on items on the Income Statement

Costs of services (12,867) (369) 2.87%

c) Impact of related-party transactions on cash flow

Financial charges (932) (191) 20.44%

The following information contains details of the impact that related-party transactions had on the

Group’s financial and asset position:

44)

SUBSEQUENT EVENTS

From the financial year’s closing date, it is noted as follows:

On 17 February 2020, TAS completed the Group’s international business restructuring

project, which had formerly been announced to the market on 18 July 2019. More

specifically, today it transferred to TAS International (formerly TAS Helvetia S.A.) - a

Swiss registered company fully held by TAS - all the interests held by TAS in the Group’s

other foreign subsidiaries, namely TAS France S.A.S.U., TAS Germany GmbH, TAS

Iberia S.L.U., TAS USA Inc., TAS Americas Ltda and TAS Eastern Europe D.O.O.,

without a capital increase. The amount for the transfer equals the amount recorded for the

relevant equity investments in the individual TAS financial statements at 31 December

2019, and will be recognised under TAS International S.A. as “capital contribution

reserves”.

On 20 February 2020, an operation changing the TAS Group’s ownership structure was

completed, with the entry of the new investor CLP S.r.l. and the increased shareholding of

the controlling shareholder GUM International S.r.l., the indirect Parent Company of TAS.

For additional information, reference is made to the market communications.

On 12 March 2020, the TAS Group made its entry into the Temenos MarketPlace. The

company is a global leader in the supply of core banking systems, with its state-of-the-art

platform for digital and mobile CARD 3.0 IE payments. The addition of the CARD 3.0 IE

on the Temenos MarketPlace, a powerful end-to-end card management platform, allows

banks to offer a complete user experience for digital and mobile payments, whether in the

scope of a new challenger bank seeking a quick and easy distribution approach and limited

time-to-market, or an established incumbent looking to embrace digital transformation and



keep pace with customers’ expectations.

As already mentioned, from January 2020, the national and international scenario have been

characterised by the spread of the Coranavirus, and the consequent restrictive measures to contain

it introduced by the authorities in the countries affected.

The Group has introduced an action plan following these events, adopting appropriate health

precautions, in compliance with the directives of the relevant authorities in Italy and the other

countries where it operates, to ensure that its staff works under the best possible conditions.







phenomena.

45)

INFORMATION REQUIRED BY THE LAW OF 4 AUGUST 2017, ART. 1, PARAGRAPHS

125-129

Paragraphs 125 to 129 were added to article 1 of Italian Law 124/2017 to introduce certain

measures aimed at ensuring transparency in the public service provider system, which fall within

the scope of European and national regulatory framework: in this regard, Italian Legislative Decree

33/2013 reformulated the regulations referring to the right of civic access and obligations of

disclosure, transparency and the dissemination of information by public administrations.

The formulation of the text in this regulation immediately gave rise to a number of problems for

businesses in terms of interpretation and application. The National Anti-Corruption Authority

[ANAC] then intervened in this regard with resolution No. 1134 of 8 November 2017, in which it

identified people responsible for the implementation and monitoring of service provision in

individual administrations, and the correct fulfilment of the consequent obligations. In the opinion

No. 1149 dated 1 June 2018, the Council of State then clarified that 2019 would be the first year

of application for the amounts received from 1 January to 31 December 2018.

More recently, Italian Law dated 11 February 2019 (Italian Legislative Decree No. 135 of 14

December 2018) stipulated that provisions falling within the scope of the National State Aid

Register established by the Ministry of Economic Development did not need to be disclosed

(Italian Law 115/2015).

Also of note is the Assonime Circular No.5 “Business and competition activities”, published on

22 February 2019, which contains certain guidelines and notes the main areas of uncertainties,

hoping that the authorities will intervene by issuing regulations to guarantee the correct and

standard fulfilment of business obligations, and that the sanctions contained in the regulation will

not be applied.

On this basis, the criteria adopted by TAS S.p.A. in accordance with the Assonime Circular

referred to, are set out below. Grants, contributions and economic benefits of any kind received

from 1 January to 31 December 2019 were taken into consideration. These amounts were

recognised for the purposes of this regulation based on a cash criterion, whilst complying with the

correct accounting standards, they were recognised in the financial statements according to the



accrual criterion. Considerations were excluded on the other hand, including remunerated

appointments, tax incentives, grants to private parties and those originating from the public entities

of other countries, or supranational entities (for example, the European Commission).

Based on the above, it is believed that TAS has no amounts to report with regard to this Law.

46)

NUMBER OF EMPLOYEES

Staff 31/12/2019 31/12/2018* Change

TAS 386 375 11

TAS HELVETIA 12 10 2

TAS FRANCE 7 8 (1)



TAS GERMANY - 1 (1)

TAS USA - - -


MANTICA 6 - 6

TAS EE 51 49 2




47)

REMUNERATION TO DIRECTORS, STATUTORY AUDITORS, GENERAL MANAGERS AND DIRECTORS WITH STRATEGIC

RESPONSIBILITIES

Below are the details of the remuneration (in Euro) payable to the directors, members of the Board of Statutory Auditors, General Managers

and directors with strategic responsibilities in the year 2019.

Name and Surname Position held during the year

Period in which the position was held

Expiry of office Fixed remuneration*

Consideration as member of committees

Non-monetary benefits

**

Bonuses and other incentives

***

Total Fixed remuneration over total (%)

Variable remuneration over total (%)

Dario Pardi Chairman 01/01-31/12/2019 Approv. FS 2019 260,000

75,000 335,000 77.6% 22.4%

Valentino Bravi Chief Executive Officer 01/01-31/12/2019 Approv. FS 2019 370,000

3,667 75,000 448,667 83.3% 16.7%

Carlo Felice Maggi Vice Chairman 01/01-31/12/2019 Approv. FS 2019 40,000

40,000 100.0% 0.0%

Carlotta De Franceschi Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Giancarlo Maria Albini Board member 01/01-31/12/2019 Approv. FS 2019 15,000 10,000

25,000 100.0% 0.0%

Roberta Viglione Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Ambrosella Ilaria Landonio Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Martino Maurizio Pimpinella Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Nicolò Locatelli Board member 01/01-05/04/2019 Approv. FS 2019 5,000

5,000 100.0% 0.0%

Alberto Previtali Board member 18/07-31/12/2019 Approv. FS 2019 9,167

9,167 100.0% 0.0%

Total directors’ remuneration 759,167 30,000 3,667 150,000 942,834 84.1% 15.9%

Antonio Mele Chairman 01/01-31/12/2019 Approv. FS 2019 41,600

41,600

Claudia Sgualdino Standing Auditor 01/01-31/12/2019 Approv. FS 2019 31,239

31,239

Silvano Crescini Standing Auditor 01/01-31/12/2019 Approv. FS 2019 31,239

31,329

Total auditors’ remuneration 104,167 - - - 104,167 -

TOTAL REMUNERATION 863,334 30,000 3,667 150,000 1,047,001 84.1%

Directors with strategic responsibilities**** 550,000 4,715 220,000 774,715 71.6% 28.4%

* The amounts stated refer to the remuneration authorised by the Shareholders’ Meeting, flat-rate refunds and fixed remuneration for employees. It does not include welfare contributions payable by employer and TFR provisions.

** Includes fringe benefits.

*** The stated amounts refer to the variable portion of remuneration. **** Includes the 4 managers in office on 31 December 2019.

For more details, please refer to the Remuneration Report.

Casalecchio di Reno, 18 March 2020


the Chief Executive Officer

VALENTINO BRAVI


Certification of the Consolidated Financial Statements pursuant to Art. 81-ter of the

Consob Regulation No.

11971 of 14 May 1999, as amended.

The undersigned Valentino Bravi, Chief Executive Officer, and Paolo Colavecchio, as Officer in

charge of the preparation of the company accounting documents for TAS S.p.A. also considering

that as established by Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24

February 1998, certify:

the adequacy in respect of the Company’s characteristics, and

the effective application,

of the administrative and accounting procedures for the preparation of the Consolidated Financial

Statements during the financial period from January-December 2019.

It is also hereby certified that the Consolidated Financial Statements at 31 December 2019:

a. have been drawn up according to the international accounting standards applicable and

recognised in the European Community pursuant to the regulation (EC) no. 1606/2002 of

the European Parliament and Council of 19 July 2002;

b. correspond to the balances in the accounting records;

c. provide a true and correct representation of the equity and economic and financial situation

of the issuer and of all the companies included in the consolidation.

The Report on Operations includes a reliable analysis of the trend and operating profit, in addition

to the position of TAS and all businesses included in the consolidation and a description of the

main risks and uncertainties to which they are exposed.


Chief Executive Officer Financial Reporting Officer

Valentino Bravi Paolo Colavecchio

Tas SpA Administrative Headquarters Via del Lavoro 47 40033 Casalecchio di Reno (BO) T [+39] 051 458011 F [+39] 051 4580248 www.tasgroup.it Company subject to the direction and coordination of OWL S.p.A. based in Milan, Via dell’Annunciata 23/4 - Tax Code and Milan Company Reg. 03222440160

Tas SpA Registered Office Via Cristoforo Colombo 149 00142 Rome T [+39] 06 7297141 F [+39] 06 72971444

Share Capital € 24,330,645.50 fully paid up R.E.A. No. RM 732344 VAT number 03984951008 Tax code and Rome Co. Reg. no. 05345750581 PEC: [email protected]



TAS TECNOLOGIA AVANZATA DEI SISTEMI S.p.A.

Registered Office Via Cristoforo Colombo, 149 - 00142 Rome (RM) - Fully paid-up Share Capital:

Euro 24.330645,50 - Registration Company Reg. and Tax Code 05345750581 - Rea 732344

FINANCIAL STATEMENTS AT 31 December 2019

Balance sheet Notes 31/12/2019 31/12/20187 Intangible fixed assets 13 19,244 19,908

- Goodwill 15,393 15,393

- Other intangible fixed assets 3,851 4,515

Tangible fixed assets 14 7,766 639

- Right of use IFRS 16 7,207 -

- Other tangible fixed assets 560 -

Investments and other securities 15 6,396 4,903

Financial fixed asset receivables 16 311 309

Deferred tax receivables 17 814 22


Total non-current assets 34,577 25,826

Contract assets with customers 19 5,717 3,435

Trade receivables 20 22,780 20,183

(of which in respect of related companies) 2,128 1,164

(of which trade accruals and deferrals) 1,117 837


(of which in respect of related companies) - 38

Financial receivables 22 21 21

Cash and cash equivalents 23 6,234 4,542

Total current assets 34,890 28,307

TOTAL ASSETS 69,467 54,133


Other reserves (437) 12,619

Profit/(loss) of previous years - (12,760)


Net Equity 24 29,296 24,390

Employee severance indemnity provision 25 3,588 3,486

Provisions for risks and charges 26 472 428

Deferred taxes provision - 2


(of which in respect of related companies) - 4,764

Total non-current liabilities 11,445 9,223

Trade payables 28 14,224 12,006

(of which in respect of related companies) 1,123 749

(of which liabilities from contract with customers) 8,126 7,087

(of which trade accruals payable) 6 313

Other payables 29 7,977 8,171


(of which in respect of related companies) 140 -

Financial liabilities 31 6,316 298

(of which in respect of related companies) 4,879 -

(of which financial accruals and deferrals) - 2

Total current liabilities 28,726 20,520

TOTAL LIABILITIES 69,467 54,133

7 The Financial Statements at 31 December 2018 were amended following the application of the equity method to investments in subsidiaries as permitted by IAS 27 and based on the provisions of IAS 28. The changes compared to the Financial Statements at 31 December 2018, approved by the Shareholders' Meeting on 29 April 2019 are detailed in paragraph 2 of the Notes to the “Changes made to the Financial Statements at 31 December 2018”.



Income statement Notes 31/12/2019 31/12/20188

Revenue 45,950 44,502

(of which in respect of related companies) 2,129 934

Changes to orders in progress 2,482 (274)

Other revenue 1,031 1,281

(of which in respect of related companies) 127 253

Total revenue 32 49,463 45,510

Raw materials, consumables and goods (1,046) (1,841)


Personnel costs (24,254) (22,329)

Costs of services (11,797) (12,629)

(of which non-recurring) (18) (284)

(of which in respect of related companies) (2,044) (1,700)

Other costs (1,066) (2,069)

Total costs 33 (38,163) (38,868)

Depreciation and amortisation 34 (5,709) (5,046)

Write-downs 34 (200) (641)

Revaluation/impairment of equity investments measured at equity 15 161 (160)

Operating result 5,552 795

Financial revenue 64 397

(of which non-recurring) 51 307

Financial charges (617) (967)

(of which non-recurring) - (417)


Results of financial management 35 (553) (571)

Profit/(loss) before tax 4,999 224

Current and deferred taxes 36 403 (24)

Profit/(loss) from continuing operations 5,402 200

Profit/(loss) from non-continuing operations - -


Earnings per share

-base 0.06 0.01

- diluted 0.06 0.01




Comprehensive income statement Notes 31/12/2019 31/12/20189

Net profit/(loss) pertaining to Company (A) 5,402 200

Other profits/(losses), net of tax effect that will not subsequently be reclassified in the financial year profit/(loss): Profit/(loss) relative to equity investments measured at equity (357) 133

Actuarial profit/(loss) on defined benefit plans (156) 157

Tax effect - -

Total Other profit/(loss), net of tax effect that will not subsequently be reclassified in the financial year profit/(loss) (B1) (513) 291

Other profits/(losses) that will subsequently be reclassified in the financial year profit/(loss): Profit/(loss) relative to shareholdings measured at equity 17 7

Tax effect - -

Total Other profit/(loss), net of tax effect that will subsequently be reclassified in the financial year profit/(loss) (B2) 37 17 7

Total Other profit/(loss), net of tax effect (B1 + B2=B) 37 (496) 298

Total Profit/(loss) (A) + (B) 4,906 498




Cash Flow Statement Notes 31/12/2019 31/12/201810


Amortisations and depreciations 34 5,909 5,688

Change to employee severance provision 25 (88) (246)

Change in provisions for risks and charges 26 (60) (253)

Payment of income taxes (89) -

Interest liabilities/ (interest income) 316 -

Other non-monetary changes 674 737 Decrease/ (increase) in contract assets with customers and other current assets items (6,185) 15,885

Increase/(decrease) in accounts payable and other liabilities 2,483 (14,412)

Cash flow from operating activities 8,361 7,598

Net change in intangible fixed assets 13 (3,641) (4,099)

Net change in tangible fixed assets 14 (221) (223)

Change in equity investments 15 (1,196) (673)

Cash flow from investments (5,058) (4,996)

Termination old pool finance - (5,000)

Financing to Parent Company OWL - 5,000

Change in other financial receivables (1) (3)

Change to other financial liabilities 27/31 (362) 5

Changes to liabilities for leases IFRS 16 (839) -

Paid financial charges (409) (193)

Cash flow from financing (1,611) (191)

Change in cash and cash equivalents 1,692 2,412

Cash and cash equivalents - initial balance 4,542 2,130

CASH AND CASH EQUIVALENTS – CLOSING BALANCE 23 6,234 4,542




Statement of Changes in Net Equity

Share capital

Res. Legal

Res. Port. to NE

Other res.

Act. val. reserve

Profit/(loss) carried forward

Reserve for the year

Total

Balances at 31 December 2017 24,331 - - 18,485 (398) (9,677) (3,083) 29,658

Allocation of 2017 profit - - - - - (3,083) 3,083 -

Profit from comprehensive profit and loss account - - 140 - 157 - 200 498

Equity investments measured at equity - - (5,767) - - - - (5,767)

Other changes - - - - - - -

Balances at 31 December 201811 24,331 - (5,626) 18,485 (240) (12,760) 200 24,390

Allocation of 2018 profit - 360 (160) - - (200) -

Profit from comprehensive profit and loss account - - (340) - (156) - 5,402 4,906

Covering losses - - - (12,760) - 12,760 - -

Other changes - - - - - - -

Balances at 31 December 2019 24,331 360 (6,126) 5,725 (396) - 5,402 29,296




EXPLANATORY NOTES

INTRODUCTION

TAS Tecnologia Avanzata dei Sistemi S.p.A. (hereinafter “TAS”, the “Company” or the “Parent

Company”) is a joint-stock company [società per azioni] listed on the Milan Stock Exchange

[Borsa Italiana S.p.A] on the standard segment of the MTA market. It is held for 73.125% by OWL

S.p.A., a company indirectly controlled by Dario Pardi, who is also Chairman of the Board of

Directors of TAS and by Valentino Bravi, Chief Executive Officer of the Company, by their

respective family members and the investors, Carisma S.p.A. and Sergio Loro Piana S.a.p.A. that

became part of the TAS ownership structure on 20 February, via the vehicle CLP S.r.l.

These Financial Statements were prepared by the Board of Directors on 18 March 2020, for

approval by the Shareholders’ Meeting called for 28 April 2020 at the first call, and 29 April 2020

at the second call.

1)

SIGNIFICANT EVENTS



an Italian registered company named “Global Payments S.p.A.” on 26 July, fully held by TAS.



3 December 2019, and became effective from 1 January 2020.

The Operation further includes the transfer by TAS finalised on 17 February, of all its equity

investments in other Group foreign subsidiaries to TAS International (formerly TAS Helvetia


Inc., TAS Americas Ltda, TAS Eastern Europe D.o.o.

Consequently, TAS S.p.A. retains the Extended ERP and Capital Market activities, the centralised

staff and corporate functions.

The Operation aims to provide the Group with the organisational means and brands to grow value,

with more vertical focus on the business in terms of sector and geographic area, so as to allow

better economies of scale and specialisations. This organisation also seeks to facilitate possible

industrial and/or financial partnership operations.

More specifically, with regard to Global Payments S.p.A., fully held by TAS, the Operation

included a paid share capital increase by the latter, from Euro 50,000.00 to Euro 6,000,000.00,

with a total share premium of Euro 21,189,935.46, which was fully released by TAS with the

contribution in kind of the Payments business unit (Payments Unit).

The Operation is excluded from the application of the regulations on related parties’ transactions,

pursuant to Art. 14, para. 2 of the Regulation, which contains the provisions on related parties’

transactions adopted by Consob with Resolution No. 17221 of 12 March 2010, as subsequently



amended (the “CONSOB OPC Regulation”), as well as Art. 13.2 (iv) of the TAS procedure

governing transactions with related parties.

Based on this exclusion, even though the operations did exceed the thresholds set by the CONSOB

OPC Regulation, no disclosure documents were therefore published in terms of Art. 5 of the

aforementioned Regulation.

As required by Art. 2343 of the Italian Civil Code, a certified report was prepared by an

independent expert, containing a description of the Payments Unit that was transferred, so as to

verify that the amount contributed was at least equal to the amount attributed for the purposes of

determining the share capital and share premium, and the measurement criteria followed.

The table below shows the assets and liabilities referring to the contribution to Global Payments

S.p.A.

(A) Contributed assets 40,510

Intangible fixed assets 18,308

- of which, Goodwill 15,393

Tangible fixed assets 139

- of which, Right of use IFRS 16 139

Contract assets with customers 4,351

Trade receivables 17,324

Other receivables 77

Accruals and deferrals receivable 311

(B) Contributed liabilities (13,370)

Employee severance indemnity provision (TFR) (2,264)

Payables to suppliers (2,480)

Financial liabilities (139)

Other payables (2,263)

Accruals and deferrals payable (6,223)

Contributed net equity (A-B) 27,140

2)

CHANGES TO FINANCIAL STATEMENTS AT 31 DECEMBER 2018

At 31 December 2019, the Company changed the measurement criterion for investments in

subsidiaries, moving over from the cost criterion to the equity method as permitted by IAS 27 and

based on IAS 28 – Investments in Associates, as an alternative to the adjusted cost impairment

losses utilised up until 31 December 2018. Directors believe that this change was necessary as a

consequence of the Group restructuring Operation, in order to channel the financial flows from the

Payments Unit within TAS to the correct corresponding year. Based on this method, the financial

results of subsidiaries are recognised concurrently as they are generated, according to the economic

accrual principle, and in accordance with what appears in the Group’s consolidated financial

statements; the application of the equity method essentially generates a summarised consolidation

of the subsidiaries’ financial statements. In addition, the equity method is consistent with the non-

temporary nature of the investment in subsidiaries, and does not significantly impact on the

operating and strategic policies exercised by TAS S.p.A. in their respect. As required by IAS 8,

the change in this standard was applied retrospectively, in other words, as if this standard had

always been applicable. Prior transactions are therefore recognised according to the new standard



adopted. Figures and the respective comparative information were restated in application of the

new standard.


Balance Sheet 31/12/2018 restated 31/12/2018 approved Delta

Investments and other securities (15) 4,903 10,321 (5,418)

Total Assets 4,903 10,321 (5,418)

Other reserves 12,619 18,245 (5,626)

Profit/(loss) for the year 200 360 (160)

Total net equity (24) 12,819 18,605 (5,786)

Provisions for risks and charges (26) 428 60 368

Total liabilities 13,247 18,665 (5,418)

3)

INFORMATION REQUIRED BY CONSOB PURSUANT TO ART. 114 OF ITALIAN

LEGISLATIVE DECREE 58/98 Based on the Consob notification received on 23 June 2017, the Company is no longer required to

provide supplementary disclosures on a monthly basis, pursuant to Art. 114, paragraph 5 of Italian

Legislative Decree 58/98 (“TUF”), thus no longer forming part of the black list. As a replacement

for these obligations, Consob has asked the Company to provide supplementary information as

from the interim financial report at 30 June 2017 in its annual and half-year financial reports and

in interim management reports (when published on a voluntary basis), and where applicable, in

press releases referring to the approval of the aforementioned accounting documentation:

a) net Financial Position of the Company and Group under which it falls, with details of

the short-term component separate from the medium-long term

With the exception of the impact from the adoption of the IFRS 16 standard, the Company’s Net

financial position was positive for Euro 0.6 compared to the negative Euro 0.7 million at 31

December 2018.














J. Liabilities and other current financial liabilities (F) + (G) + (H) + (I) 6,316 298














The Group’s Net financial position was negative for Euro 0.4 million, compared to the negative

Euro 3.1 million at 31 December 2018, with the exception of the impact from the adoption of the

IFRS 16 standard.





























b) The outstanding debt of the Company and the Group it falls under, broken down by

type (financial, commercial, tax, social security and in respect of employees) and the

related initiatives as a response from creditors (reminders, injunctions, supplies

suspended etc.)

At 31 December 2019, the Parent Company had past due trade payables, including those falling

due at 31 December, for Euro 1,625 thousand of which Euro 804 thousand in respect of

subsidiaries/the parent company. No creditor has undertaken response action. The lowest past due

is at 30 days for Euro 788 thousand. At 31 December 2019, there were no payables outstanding of

a financial nature, relating to tax and/or social security or in respect of employees.

As far as the companies in the Group are concerned:

TAS International S.a.: has no past due debts of any kind;

TAS France S.a.s.u.: at 31 December 2019, had Euro 2 thousand outstanding in respect of

the Parent Company TAS S.p.A.;

TASAMERICAS Ltda: at 31 December 2019, had Euro 350 thousand outstanding in

respect of the Parent Company TAS S.p.A.. There were no other past due debts of any

kind;

TAS Iberia S.l.u.: at 31 December 2019 has trade payables outstanding for Euro 121

thousand, of which Euro 52 thousand past due by less than 30 days. At 31 December 2019,

there was also Euro 448 thousand outstanding in respect of the Parent Company TAS

S.p.A.;

TAS USA Inc.: the American subsidiary has no past due debts.

TAS Germany GMBH: has no past due debts of any kind.

TAS EE: at 31 December 2019 has trade payables outstanding for Euro 95 thousand, of

which Euro 14 thousand past due by less than 30 days.

c) the main changes in relations with the related parties of this Company and the Group

it falls under, compared to the last approved annual or interim financial statements

pursuant to art. 154-ter of the TUF

Relations with related parties of the Company and Group are detailed in Note 39 of this section,

and have not undergone any significant changes.

d) possible lack of compliance regarding covenants, negative pledges and other debt

clauses for the Group involving restrictions in the utilisation of financial resources,

with confirmation and updated date of level of compliance of said clauses

Following the debt release operation on 21 December 2018, the agreement between TAS - Banks

signed on 17 May 2016, became invalid and therefore there is nothing to report in this regard.



e) the implementation status of the business plan, highlighting possible disparities

between actual and forecast figures.

The table below compares the main indicators with the final results at 31 December 2019. It should

be remembered that the 2016-2020 Plan formed the basis for the TAS - Banks agreement, which

following the debt release operation, is not subject to an audit by the pool of banks. On 12 March

2020, the TAS Board approved the new 2020-2022 business plan.

In millions of Euro Final data Plan data Delta

Total revenue 49.5 50.6 (1.1)

Total operating costs (41.8) (47.8) 6.0

Gross operating margin (EBITDA) 7.7 2.7 4.9

R&D costs 3.5 3.5 (0.0)

MOL + R&D costs 11.2 6.3 4.9

Operating result 5.5 2.2 3.3

Net profit 5.3 1.8 3.5

Net financial position (7.1) (1.5) (5.6)

Final data at 31 December 2019 shows growth margins compared to the plan. The negative net

financial position for Euro 7.1 million, includes the effects of IFRS 16 for Euro 7.8 million.

4)

VALUATION CRITERIA

REFERENCE ACCOUNTING STANDARDS

The annual Financial Statements for 2019 were prepared in accordance with the International

Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board

(IASB) and endorsed by the European Union, and the measures implementing Art. 9 of Italian

Legislative Decree No. 38/2005. IFRS also means the currently applicable International

Accounting Standards (IAS) and all of the interpretation documents issued by the IFRS

Interpretations Committee, formerly known as International Financial Reporting Interpretations

Committee (IFRIC) and Standing Interpretations Committee before that (SIC).

The Financial Statements were prepared on the basis of the historic cost principle, modified where

required for the valuation of certain assets and liabilities, where the fair value principle was

applied, and the assumption of a going concern.


The Financial Statements are presented in thousands of Euro.

The Financial Statements structures adopted by the Group have the following characteristics:

• in the Balance Sheet, assets and liabilities were analysed according to when they fall due,

separating current and non-current items with due dates within or after 12 months from the

date of the Financial Statements, respectively;



• the Income Statement and the Comprehensive Income Statement were presented with the

different items analysed based on their nature;

• the Statement of changes in the equity statements were prepared in accordance with IAS 1

provisions;

• the Cash Flow Statement shows cash flows based on the “indirect method”, as permitted

by IAS 7.

Use of estimates and assumptions in the preparation of the annual Financial Statements

The preparation of the Consolidated Financial Statements requires the use of estimates and

assumptions that may have a significant effect on the amounts recognised in the Balance Sheet

and Income Statement, as well as the disclosure of contingent assets and liabilities reported in the

Financial Statements. The production of such estimates involves the use of available information

and the adoption of subjective assessments based on past experience, which are used to formulate

reasonable assumptions for the recognition of operations. By their nature, these estimates and

assumptions may change from year to year and, therefore, cannot be excluded that, in future years,

the current values entered in the Financial Statements may differ significantly as a result of

changes in the subjective valuations.

The main areas where subjective judgements by management were required include:

• the quantification of losses for impairment of loans and, generally, other financial assets;

• the determination of fair value of financial instruments;

• an assessment on whether the goodwill, other intangible fixed assets and certain

investments are appropriate (it is noted that, due to the importance of this particular item,

a sensitivity analysis was carried out. Reference is made in this regard to Note 12 and 14);

• an estimate of contract costs for the valuation of assets resulting from contracts;

• the quantification of severance indemnity provisions and the risks and charges provisions;

• estimates and assumptions relating to the recoverability of deferred tax assets.

The description of the accounting policies applied to the main aggregates of the Financial

Statements provides the information needed to identify the key assumptions and subjective

evaluations used in the preparation of the Financial Statements. Reference is made to the specific

sections of the Notes for more information and details on the item’s composition and amounts

involved in these estimates.

As mentioned in the section referring to “External risks”, from January 2020, the national and

international scenario have been characterised by the spread of the Coranavirus, and the

consequent restrictive measures to contain it introduced by the authorities in the countries

affected.

The TAS Group and the Company have introduced an action plan following these events, adopting

appropriate health precautions, in compliance with the directives of the relevant authorities in

Italy and the other countries where it operates, to ensure that its staff works under the best possible

conditions.









phenomena.

Directors note that their estimates in applying international accounting standards (IFRS) to

measure certain assets and liabilities in the drafting of the Annual Financial Report, could differ

from the results that will be recorded in years to come as a consequence of these events,

particularly with regard to the payment of bonuses to employees, the impairment of non-financial

assets and the recoverability of capitalised development costs.

In respect of the impairment of non-financial assets, and in consideration of the sensitivity analysis

conducted on the tests at year end, and extended to take into account the potential impact from

the spread of the virus, Directors believe based on the information currently available, that the

effects from Covid-19 will not require the recognition of impairments in the assets recorded in the

financial statements over the next year. The Directors note further that despite the collapse in all

global markets, at the date of this Financial Report’s approval, the market capitalisation for TAS

S.p.A. was still higher than the Group’s consolidated net equity.

In so far as potential liquidity risks are concerned, and in consideration of the Groups current

reserves, including the available and unused credit lines, Directors do not believe that the

repercussions of the above events would result in the Company and the Group being unable to

meet their payment commitments due to difficulties in procuring the necessary funds.


Goodwill

Goodwill acquired in a business combination represents a payment made by the acquirer in

anticipation of future economic benefits from assets that are not individually identified and

separately recognised, or it is determined as the difference between the consideration transferred

(equal to the fair value at the acquisition date) and the net amounts at the date of acquisition of the

assumed identifiable assets and liabilities.

It is entered in the balance sheet as an intangible asset.

Goodwill is recorded at cost and is not amortised but is subject to impairment tests once a year or

more frequently if any events or changes in circumstances indicate possible losses in value

(impairment losses), according to the provisions of IAS 36 – Impairment of assets.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

In the context of First-time Adoption IAS/IFRS, it was decided not to apply IFRS 3 retrospectively

to the business combinations that occurred before 1 January 2005; as a consequence, goodwill

arising on acquisitions before the date of transition to IFRS was retained at the previous Italian

GAAP amounts, subject to impairment testing at that date.

Research and development expenses

Research costs were charged to the Income Statement at the time the cost was incurred on the basis

of IAS 38.



When the costs incurred in respect of software development meet the following conditions, they

are recognised as an intangible assets on the asset side of the balance sheet.

Capitalisation begins when the company can demonstrate:

a) the technical possibility of completing the software solution so that it is available for use

or sale;

b) its intention to complete the software solution to use it or sell it;

c) its ability to use or sell the software solution;

d) the procedure to generate future economic profits, e.g., by demonstrating the existence of

a market for any software-based product or for software itself, or its internal use;

e) the availability of adequate technical, financial and other resources to complete the

development of software and the use or sale of the software;

f) the ability to reliably assess the cost attributable to the software during the development

phase.

The amortisation of capitalised software development costs is based on a systematic criterion from

the initial product availability for use through to the estimated useful life, which is normally three

years. The straight-line method is the chosen amortisation approach.

Other intangible fixed assets

Other intangible assets are recognised as assets in accordance with IAS 38 – Intangible fixed

assets, when it is probable that the use of said assets will generate future economic benefits and if

their costs can be reliably measured. Assets are valued at purchase cost and amortised on a straight-

line basis over their estimated useful life.

The useful life for each category is as follows:

DESCRIPTION YEARS

Goodwill Indefinite useful life

Development costs 3 years

Industrial patent rights 5 years

Trademarks 10 years


Property, plants and machinery

Tangible fixed assets are recognised at cost and entered at the purchase price or cost of production

including the directly attributable ancillary costs necessary to make the assets available for use.

Assets acquired under financial leases, where all the risks and benefits of ownership are

substantially transferred to the Company, are classified as tangible assets at their fair value or, if

lower, at the present value of minimum lease payments under the lease. The corresponding liability

to the lessor, equal to the capital portion of future lease payments, is recognised under financial

liabilities. If there is no reasonable certainty that the right of redemption can be exercised, the asset

is depreciated over the life of the lease, if shorter than the asset’s useful life.



Based on IFRS 16 - Leases, which came into force from 1 January 2019, leases where the lessor

substantially retains all the risks and benefits of ownership are recognised in the same way as assets

under financial leases. For further details, please refer to Note 5 below.

Tangible assets are systematically depreciated on a straight-line basis throughout their useful life,

with this understood as the estimated period in which the asset will be used by the company.

Should tangible fixed assets consist of several components with different useful lives, depreciation

is calculated separately for each component. The depreciation value is represented by the

recognition value less the presumed net value of disposal at the end of its useful life, if significant

and reasonably determinable.

The cost of improvements, modernisation or transformation that increases the working life of

tangible assets are allocated to the relevant category and depreciated throughout the asset’s residual

life.

When events occur that lead to expectations of an impairment in the value of tangible assets, their

recoverability is verified by comparing the recognition and value against the related recoverable

value, represented by the higher of the fair value, net of disposal costs, and the value in use.

In the absence of any binding sale agreement, fair value is estimated on the basis of the values

expressed by an active market, by recent transactions, or on the basis of the best information

available to reflect the amount that the company could obtain from selling the assets.

The value in use is determined by discounting the expected cash flows deriving from use of the

assets and, if significant and reasonably determinable, from its disposal at the end of its life. Cash

flows are determined on the basis of reasonable and documented assumptions representing the best

estimate of future economic conditions during the asset’s remaining life. Discounting takes place

at a rate that takes into account the implicit risk in the business sector.

Should the grounds for impairment lapse, the assets would be revalued and the adjustment

recognised in the Income Statement as a revaluation (reversal of impairment) up to the amount of

the write-down, or the lower of the recoverable value and the carrying value before previous write-

downs and reduced by the depreciation had it not been written down.

Depreciation begins when the asset is available for use, taking into account the actual time that

condition is realised.

The rates applied by the Company are as follows:

CATEGORY RATES

Specific plants and machinery 15%

Equipment: 15%-20%-25%

Other assets:

- Cellphones 25%

- Furniture and furnishings 12%

- Electronic office machinery 40%

- Hardware 40%



Impairment of assets (impairment test)

Goodwill, intangible assets with an indeterminate life, and current development costs are subjected

to a systematic impairment test, at least once a year or whenever indications of value impairments

arise.

Tangible fixed assets and equity investments in subsidiaries, affiliates and joint ventures, as well

as intangible fixed assets subject to amortisation undergo an impairment test, whenever

impairment indicators occur, and in any case at least once a year.

The reductions in value correspond to the difference between the book value and the recoverable

value of an asset. The recoverable value is the higher of the fair value of an asset or a cash

generating unit, less the sale costs, and its value in use, defined on the basis of discounted future

cash flows. The value in use is the sum of the cash flows expected from the use of an asset, or their

sum in the case of cash-generating units.

The discounting of the expected cash flows is carried out according to the weighted average cost

of capital (WACC). If the recoverable value is less than the book value, it is entered at the

recoverable value, and the impairment in value is recorded on the Income Statement. If the value

impairment of the assets (excluding goodwill) ceases to exist, the book value of the assets (or

CGU) is increased up to the new estimate of the recoverable value without exceeding the original

value.

FINANCIAL ASSETS AND LIABILITIES

IFRS 9 – Financial Instruments: recognition and measurement was applied by the Group from

1 January 2018, introducing new criteria for the classification and measurement of financial assets

and liabilities. In particular, for financial assets, the new principle uses a single approach based on

the management of financial instruments and the type of contractual cash flows from those

instruments, in order to determine the valuation criteria, by replacing the various rules provided

for under IAS 39. For financial liabilities, the principal change relates to the recognition of changes

in the fair value of a financial liability designated as a financial liability valued at fair value in the

income statement, where those changes are due to changes in the credit rating of issuer of said

liability. According to the standard, these changes must be entered under “Other comprehensive

income” and no longer in the income statement. In addition, with changes in financial liabilities

qualifying as non-substantial, it is no longer permitted to spread the economic effects of

renegotiation over the payables’ residual life by varying the effective interest rate at that date. The

relevant effect must now be recognised in the income statement.

With regard to the impairment model, the new principle requires that the losses estimate on

receivables is based on the expected losses model (and not on the incurred losses model used by

IAS 39), by using information that is supported and available without unreasonable effort or

expense, and that includes historic, current and forecast data. The standard requires that this

impairment model is applied to all financial assets, namely financial assets measured at amortised

cost, to those measured at fair value through other comprehensive income, to receivables arising

from rental contract and trade receivables.

Finally, the standard introduces a new hedge accounting model. This specifically refers to:

o an increase in the types of transactions eligible for hedge accounting, and including

the risks of non-financial assets/liabilities eligible for hedge accounting

management;



o the change in the way forward contracts and options are recognised, when included

in the hedge accounting relationship, so as to reduce volatility on the income

statement;

o changes to the effectiveness test by replacing the current procedures based on the

80-125% parameter with the principle of an “economic relationship” between the

item covered and hedging instrument; a retrospective effectiveness test is no longer

required for the hedging relationship.

The greater flexibility in the new accounting rules is offset by additional disclosure requirements

on the company’s risk management activities.

Equity investments

a) Equity investments in subsidiaries

TAS S.p.A. controls a company when, in exercising the power that it has in regard of the latter, it

is exposed and entitled to its variable returns, via its involvement in management, and at the same

time, it is in a position to impact on the subsidiary’s variable returns. Power is exercised over the

subsidiary on the basis of: (i) voting rights held, all be they potential, and whereby a majority of

votes may be exercised in the company’s ordinary shareholders' meeting; (ii) the content of

possible shareholder agreements or the existence of specific by-laws, attributing the powers of

governance; (iii) controlling a sufficient number of votes to exercise effective control of the

company’s ordinary shareholders' meeting.

Equity investments in subsidiaries are measured in the financial statements using the equity

method, as permitted by IAS 27 and based on the provisions of IAS 28. By applying the equity

method, the investment in a subsidiary is initially recognised at cost and the book value is increased

or decreased to record the Parent Company’s relevant portion of the subsidiary’s profit or losses

realised after the acquisition date. The portion of the subsidiary’s profit/(loss) for the period

pertinent to the Parent Company is recognised in the income statement. Dividends received from

a subsidiary reduce the equity investment’s book value. Adjustments to the book value may

become necessary following changes to the investment portion or changes to items in the other

comprehensive income in the subsidiary’s comprehensive income statement (e.g. changes arising

from conversion differences for entries in foreign currencies). The relevant portion of these

changes is recognised under other comprehensive income in the comprehensive income statement.

If the relevant portion of the subsidiary’s losses is equal to or surpasses the value of the equity

investment, after bringing the interest’s value to zero, the additional losses are accrued and

recognised as liabilities, only to the extent that there are legal or implicit obligations, or if payments

have been made on behalf of the subsidiary. If the subsidiary should subsequently realise profits,

the subsidiary resumes recognising the portion of profits only once it has matched the portion of

unrecognised losses.

Profits and losses deriving from transactions with a subsidiary are recognised in the Parent

Company’s financial statements limited to the portion of minority interests in the subsidiary. When

a company measured at equity in turn holds investments in subsidiaries, associates or joint

ventures, the profit/(loss) for the period, the other comprehensive income and the net assets

considered when applying the equity method are those recorded in the consolidated financial

statements of the company in which the interest is held.



Should there be evidence of impairment, the equity investment is subjected to an impairment test,

based on the same process previously referred to under tangible and intangible fixed assets.

For the purposes of applying the equity method, the financial statements of each foreign subsidiary

is stated in Euro, which is the functional currency for TAS S.p.A., and the presentation currency

for the separate financial statements. All assets and liabilities of foreign subsidiaries in currencies

other than the Euro are converted using the exchange rate applicable at the financial statements’

reporting date (current rate method). Income and expense items were converted at the average

exchange rate for the period. The conversion difference from the application of this method, and

the conversion difference resulting from the comparison between the initial net equity converted

to current rates, and the same converted to historic rates, transit in the comprehensive income

statement and are accumulated in a specific equity reserve until the equity investment is sold.

The exchange rates used to convert subsidiaries’ financial statements into Euro are shown below:

Currency Average Close

2019 2018 2019 2018

Swiss Franc 1.11 1.15 1.08 1.13

Brazilian Real 4.41 4.31 4.52 4.44

Serbian Dinar 117.82 118.31 117.83 118.24

US dollar 1.12 1.18 1.12 1.14

b) Equity investments in other companies

Equity investments in other companies include investments held for less than 20% relating to

strategic and production investments held, as these relate to the management of projects or

concessions. For the most part, these investments may not be freely sold to third parties as they

are essentially subject to rules and agreements that prevent their free circulation. Equity

investments in other companies, a circumstance that applies for those held by the Company at 31

December 2019, are measured at fair value where there is an active market for the securities

representing these equity investments. Profits or losses determined by fair value adjustments are

recognised directly in the income statement.

Loans and receivables

These financial instruments mainly consist of trade receivables, non-derivatives, not listed on an

active market, which expected to yield fixed or determinable payments. They are entered under

the current section with the exception of those expiring more than twelve months after the balance

sheet date, in which case they are classified in the non-current section. These assets are valued at

cost amortised on the basis of the effective interest rate method. If there is are clear indications of

value impairments the asset value is reduced so that it is equivalent to the future flows obtainable

in the future. Value impairments are recorded in the Income Statement. If, in subsequent periods,

the reasons for the previous write-downs no longer exist, the asset value is restored up to the value

that would have resulted from application of the amortised cost, had no write-down taken place.



Financial assets measured at fair value through profit or loss

These are financial assets acquired mainly with the aim of making a profit from short-term price

fluctuations or designated as such from the outset.

They are entered at fair value and the related changes for the period are recognised in the Income

Statement.

The fair value of listed securities is based on current market prices.

Derivative financial instruments

The Company does not hold those types of derivative financial instruments at the date of the

Financial Statements.

Contract assets with customers

The Company initially recognises an asset deriving from contracts with customers for each project

carried out. These amounts are then reclassified under trade receivables at the time the amount is

invoiced to the customer (generally once contract-based milestones have been achieved).

The payment of receivables arising from software installation services is not payable by the

customer until the installation service is completed, and consequently any assets deriving from

contracts with customers is recognised during the period when the installation services were

carried out, so that the balance sheet reflects the company’s right to consider the services as

transferred at the financial statements’ reporting date.

The Company always calculates a write-down provision on the amounts arising from contracts

with customers for an amount equal to the losses expected over the entire life of the asset, basing

this on its experience regarding losses on receivables and an assessment of future developments in

the construction industry. None of the amounts for assets deriving from contracts with customers

had lapsed at the end of the financial period.

Cash and cash equivalents

Cash and cash equivalents include liquid assets, bank and postal deposits.

Financial liabilities valued at amortised cost

Financial liabilities are recorded initially at the cost corresponding to the fair value. Subsequently,

financial liabilities held until maturity are valued at the amortised cost. Transaction costs directly

attributable to the issue of the liabilities are amortised throughout the life of the loan.

In the event of contract changes associated with renegotiations, the Group’s internal accounting

policy requires that both a qualitative and quantitative test are carried out.

Employee severance indemnity provision (TFR)

The employee severance indemnity (TFR) is classified as a post-employment benefit and consists

of payments due to employees after the termination of their employment contracts.

Under IAS 19 Revised 2011 – Employee benefits, the related liability is considered on the basis of

a valuation made on the date of the balance sheet, in respect of the service rendered during the



current year, and in previous years. The method used is the projected unit credit method applied

by independent actuaries.

This calculation consists of estimating the amount of benefit that the employee will receive on the

estimated date of termination, using demographic assumptions (such as the rate of mortality and

staff rotation rate) and financial assumptions (such as the discount rate and future salary

increments). The total calculated in this way is discounted and re-proportioned on the basis of the

length of service accumulated, compared to the total length of service, and represents a reasonable

estimate of the benefits already accrued by each employee in return for their work.

The actuarial gains and losses deriving from the actuarial calculation are recorded in the Balance

Sheet under Reserves IAS 19 and accounted for in the Comprehensive Income Statement. The cost

components relating to work and net financial expenses are accounted for in the Income Statement.

With reference to the TFR provision, considered as a defined-benefits plan until 31 December

2006, Law no. 296 of 27 December 2006 (the “2007 Finance Act”) and the subsequent decrees

and regulations issued during 2007 introduced significant reforms to the way in which quotas of

severance pay are allocated, as part of the reforms to the welfare and pensions system.

Specifically, workers can now decide to allocate new TFR benefits to supplementary pension

schemes or keep them with the company (for companies with less than 50 staff) or transfer them

to the National Pension Fund (INPS) (for companies with more than 50 staff). Following these

reforms, the Company has based itself on the generally accepted interpretation and has decided

that:

for TFR benefits accruing up until 31 December 2006 the provision will be a defined-

benefits plan to be valued according to the existing actuarial rules but without including

the component relating to future salary increases. The difference resulting from the new

calculation, compared to the previous one was dealt with a curtailment, in accordance

with the provisions under paragraph 109 of IAS 19 and, consequently recorded in the

Income Statement;

for subsequent TFR benefits, whether they are destined for supplementary pension

schemes or the Treasury fund held by INPS, they are classified as defined-benefit plans.

Components subject to actuarial estimates are excluded from the calculation of the

accrual cost.

Provisions for potential risks and liabilities

Provisions for risks and charges relate to costs and charges of a certain nature, or risks and charges

which are certain or likely to exist on the closing date but whose amount or date of occurrence is

not yet known. The provisions are recorded when: (i) the existence of a legal or implied obligation

deriving from a past event is probable; (ii) it is probable that fulfilment of the liability will involve

expenditure; (iii) the amount of the liability can be reliably estimated. The provisions are booked

at the value representing the best estimate of the amount that the company would reasonably pay

to discharge the obligation or to transfer it to a third party, on the closing date. When the temporal

financial effect is significant and the payment dates can be reasonably estimated the provision is

discounted.

The costs that the company expects to incur by carrying out restructuring programmes are

recognised in the year in which the programme is formally defined, and when the interested parties

have a reasonable expectation that the restructuring will take place.

The provisions are periodically updated to reflect any changes in the costs’ estimates, realisation

times and discounting rates. The revised estimates of the provisions are charged to the same



Income Statement headings under which the provision was previously booked, or, when the

liability relates to material assets, as a contra-entry to the assets in question.

Foreign currency transactions

Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance

sheet date are converted at the spot exchange rate prevailing on that date. Exchange differences

arising from the settlement of monetary items or from their conversion at rates other than those at

which they were initially recorded during the period or in previous financial statements, are

recognised in the Income Statement.

Revenue

As required by IFRS 15 - Revenue from Contracts with Customers, the recognition of revenue

follows the steps set out below:

o identifying the contract with the customer;

o identifying the performance obligations in the contract;

o determining the price;

o assigning the price to the contract’s performance obligations;

o the recording criteria for revenue when the entity satisfies each performance

obligation.

Specifically:

Revenues from proprietary software applications are recognised in the income statement at the

time of receipt by the customer of the material required for installation with the customer. As

this relates to user licences, the installation of the test environment is considered to represent

the transfer of the intangible asset to the client, because, as from that time onwards, the client

has the standard software version available.

Revenue from customised software applications are recognised according to the terms and

conditions of the related contract, when the test environments are installed with the client.

The revenue for maintenance services governed by periodic contracts are recognised on an

accrual basis.

The revenue for fixed-price orders are recognised with reference to the stage of completion on

the balance sheet date, according to the completion percentage criterion.

The revenue for other types of order are recognised at the time when the services were

rendered, on an accruals basis.

Government grants

According to the provisions of IAS 20, government grants are only recognised if there is

reasonable certainty that:

a. the company will meet the required conditions; and

b. the grants have been received.

Public grants are booked as income, according to a systematic principle, in the years needed to set

them against the related costs that the grant is intended to offset.



Taxes

Income taxes include all taxes based upon the taxable profits. Taxes on income are recognised in

the Income Statement unless they relate to items directly charged or credited to net equity, in which

case the effect is recognised directly in net equity. Provisions for income taxes that could arise on

the distribution of the subsidiaries’ undistributed profits are only made where there is a real

intention to distribute such profits. Deferred taxes are recognised using the full liability method.

Deferred tax receivables on unused tax losses and tax credits carried forward are recognised to the

extent that is it probable that future profits will be available against which they can be recovered.

Current and deferred income tax assets and liabilities are offset when the income taxes are levied

by the same tax authority and where there is a legally enforceable right of offset. Deferred tax

assets and liabilities are measured at the tax rates expected to apply in the periods in which

temporary differences will be realised or discharged.

Deferred taxes are not discounted and are classified under non-current assets/liabilities.

Management, coordination and Tax Consolidation

In accordance with Italian Legislative Decree No. 6/2003, it is noted that the Company is subject

to the management and coordination of OWL S.p.A.

The contract, signed in 2008 between the Company and OWL S.p.A., now the parent company of

TAS, governs the reciprocal relations resulting from and consequent to implementation of the

consolidation option.

Dividends

Dividends payable are reported as a movement in net equity in the period in which they are

approved by the Shareholders’ Meeting.

Earnings per share

Basic earnings per share are calculated by dividing the Company’s net profit by the weighted

average number of shares in circulation during the year, excluding treasury shares. For the

calculation of the diluted earnings per share, the weighted average number of shares in circulation

is adjusted assuming conversion of all potentially diluting shares.

5)

ACCOUNTING PRINCIPLES, AMENDMENTS AND INTERPRETATIONS APPLIED FROM

01 JANUARY 2019

The following accounting principles, amendments and interpretation were applied for the first

time by the Company as from 1 January 2019:

On 13 January 2016, the IASB published principle IFRS 16 – Leases which replaces IAS 17–

Leases, and the interpretations IFRIC 4 Determining whether an Arrangement contains a Lease,

SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions

Involving the Legal Form of a Lease.



The standard provides a new definition of lease and introduces a criterion based on the concept

of control (right of use) of an asset to distinguish lease contracts from service provision

contracts, using as differentiating factors for leases: the identification of an asset, the right to

its replacement, the right to essentially obtain all the economic benefits deriving from the use

of the asset and finally, the right to direct the use of the asset underlying the contract.

The standard sets a single model for the recognition and measurement of lease contracts for the

lessee, which requires that the asset under lease is recorded under assets, with a counter entry

under financial liabilities. The standard does not however introduce any significant changes for

the lessor.

Impact of the new lease definition

The change in the definition of a lease refers primarily to the criterion based on control (the

“right of use”). According to IFRS 16, a contract contains a lease if the customer is entitled to

control the use of a specific asset for a period of time in exchange for a consideration. This

concept differs substantially from the concept of “risks and benefits”, which were the main

focus of IAS 17 and IFRIC 4.

The Company applies the definition of lease, and the relevant IFRS 16 provisions to all lease

contracts entered into or amended from 1 January 2019 (regardless of the status of lessee or

lessor in each lease contract).

Transition with amended retrospective method

The Company has chosen to apply the standard retrospectively, recognising the cumulative

effect from the application of the standard under Net Equity at 1 January 2019 (not restating

the comparative figures for 2018), based on the provisions under paragraphs C7-C13 of IFRS

16. In particular, the Company has recognised the following relating to lease contracts

previously classified as operational:

a) a financial liability equal to the current value of future residual payments at the

transition date, discounted by using the incremental borrowing rate for each

contract, applicable at the transition date;

b) a right of use equal to the value of the financial liability at the transition date, net

of any accruals and deferrals receivable referring to the lease and recognised in the

balance sheet at the reporting date of these financial statements.

The table below shows the resulting impact from the adoption of IFRS 16 at the transition date:

€ thousand

ASSETS Impact at 01/01/2019

Non-current assets

Buildings right of use € 7,245

Vehicles right of use € 454

Other assets right of use € 0

Total Assets € 7,699





Financial liabilities for non-current leases € 7,406

Current liabilities

Financial liabilities for current leases € 588

Accruals payable -€ 295

Total € 7,699

Net Equity

Profit/(loss) for the period € 0

Total liabilities € 7,699

An average weighted incremental borrowing rate of 4% was applied to financial liabilities

recognised at 1 January 2019.

The value of non-current assets relating to operational lease contracts was decreased by Euro

295 thousand for the balance of accruals payable recorded at 31 December 2018.

In adopting IFRS 16, the Company made use of the exemption allowed under paragraph IFRS

16 5(a) regarding short-term leases for the vehicles and properties asset classes.

Similarly, the Company made use of the exemption allowed under IFRS 16 5(b) regarding lease

contracts, where the underlying asset qualifies as a low-value asset (i.e. the single asset

underlying the lease contract is not higher than Euro 8 thousand when new). Contracts where

the exemption has been applied refer primarily to the following categories:

Computers, telephones and tablets;

Printers;

Other electronic devices;

Furniture and furnishings.

With regard to these contracts, the introduction of IFRS 16 did not result in financial liabilities

being recorded for the lease and relative right of use, but rather the rentals were recognised in

the income statement on a straight-line basis over the duration of the respective contracts under

“other costs” in the consolidated income statement.

Furthermore, with regard to the transition rules, the Company made use of the following

practical expedients available in the event of choosing the adjusted retrospective transition

method:

Classification of contracts that expire within 12 months from the transition data as

short-term leases. The rental fees for these contracts are stated in the income

statement on a straight-line basis;

Exclusion of direct initial costs from the measurement of the right of use at 1

January 2019;

Use of the information available at the transition date to determine the lease term,

with specific reference to exercising the extension and early termination options.



Prior financial leases

There were no lease contracts at 31 December 2018 that had previously been classified as

financial leases in application of IAS 17.

Reconciliation with lease commitments

In order to provide a better understanding of the impact from the first application of the

standard, the table below provides a reconciliation between the future commitments relating to

lease contracts, where the relevant information was provided under “Reconciliation with lease

commitments” in the 2018 consolidated financial statements, and the impact resulting from the

adoption of IFRS 16 at 1 January 2019.

Reconciliation lease commitments

€ thousand

01 January 2019

Operational lease commitments at 31 December 2018 Euro 8,349

Minimum payments for financial leasing liabilities at 31 December

2018

Euro 7,994

Short term and low-value lease fees (exemption) Euro 123

Non-lease component amount included under liabilities Euro 233

Non-discounted financial liabilities for leases at 1 January 2019 Euro 9,624

Discounting effect Euro -1,630

Financial liabilities for leases at 1 January 2019 Euro 7,994

On 12 December 2017, the IASB published the document “Annual Improvements to IFRSs

2015-2017 Cycle”, which incorporates the changes to certain principles in the scope of the

annual improvements. The primary changes refer to:

o IFRS 3 Business Combinations e IFRS 11 Joint Arrangements: the amendment

clarifies that at the time when an entity takes control of a business that represents a

joint operation, the interest previously held in that business needs to be restated.

This process is not envisaged however in the case of obtaining joint control.

o IAS 12 Income Taxes: the amendment clarifies that all tax effects related to

dividends (including payments on financial instruments classified under net equity)

should be recognised consistently with the transaction that generated these profits

(income statement, OCI or net equity).

o IAS 23 Borrowing costs: the amendment clarifies that in the event of financing that

remains in place even after the reference qualifying asset is ready for its intended

use or sale, the latter become part of the total funds used to calculate the financing

costs.

The adoption of these amendments has not had any effect on the Company’s financial

statements.

On 7 February 2018, the IASB published the document “Plant Amendment, Curtailment or

Settlement (Amendments to IAS 19)”. The document clarifies how an entity must record an

amendment (i.e. a curtailment or a settlement) to a defined-benefits plan. The amendments





require the entity to update its assumptions and remeasure the liabilities or net assets resulting

from the plan. The amendments clarify that after such an event has occurred, an entity utilises

updated assumptions to measure the current service cost and interest for the remainder of the

reference period after the event. The adoption of these amendments has not had any effect on

the Company’s financial statements.

On 12 October 2017, the IASB published the document “Long-term Interests in Associates

and Joint Ventures (Amendments to IAS 28)”. This document clarifies the need to apply

IFRS 9, including the requirements related to impairment, to the other long-term interests in

associates and joint ventures where the net equity method is not applied. The adoption of

these amendments has not had any effect on the Company’s financial statements.

On 7 June 2017, the IASB published the interpretation “Uncertainty over Income Tax

Treatments (IFRIC Interpretation 23)”. The interpretation deals with the uncertainties on

the tax treatment to apply to income taxes. In particular, the interpretation requires an entity

to analyse the uncertain tax treatments (individually or as a whole, according to its

characteristics), always assuming that the tax authorities examine the relevant tax position,

with full knowledge of all the relevant information. Should an entity deem it improbable that

the tax authority will accept the tax treatment followed, the entity must reflect the effects of

the uncertainty in the measurement of its current and deferred income taxes. The document

contains no new disclosure requirements but underlines that the entity must establish whether

it is necessary to provide information on management’s considerations and on the

uncertainties pertinent to the recognition of taxes, in accordance with IAS 1. The new

interpretation was applied from 1 January 2019. The adoption of these amendments has not

had any effect on the Company’s financial statements.

On 12 October 2017, the IASB published an amendment to IFRS 9 “Prepayment Features

with Negative Compensation”. This document specifies that the instruments requiring an

early repayment could comply with the “Solely Payments of Principal and Interest ” (SPPI)

test, even in the case where the “reasonable additional compensation” to be paid in the case

of an early repayment is “negative compensation” for the financing party. The adoption of

these amendments has not had any effect on the Company’s financial statements.

6)

AIFRS AND IFRIC ACCOUNTING PRINCIPLES, AMENDMENTS AND

INTERPRETATIONS APPROVED BY THE EU BUT NOT YET MANDATORY AND NOT

ADOPTED EARLY BY THE COMPANY AT 31 DECEMBER 2019

On 31 October 2018, the IASB published the document “Definition of a Material

(Amendments to IAS 1 and IAS 8)”. The document introduced an amendment to the definition

of “material” contained in the IAS 1 – Presentation of Financial Statements and IAS 8 –

Accounting Policies, Changes in Accounting Estimates and Errors. The aim of the amendment

is to make the definition of "material” more specific and introduces the concept of “obscured

information” together with the concepts of omitted or incorrect information in the main

standards amended. The amendment clarifies that information is “obscured” when it is

presented in such a way that it produces a similar effect for primary readers as omitting or

misstating the information.



The amendments introduced were endorsed on 29 November 2019, and apply to all transactions

after 1 January 2020.

The Directors do not expect the adoption of this amendment to have a significant effect on the

Company’s Financial Statements.

On 29 March 2018, the IASB published an amendment to “References to the Conceptual

Framework in IFRS Standards”. The amendment is effective for reporting periods starting 1

January 2020 or thereafter, with earlier application permitted.

The Conceptual Framework sets out the fundamental concepts for financial reporting that guide

the Board in developing IFRS Standards. The document helps to ensure that the Standards are

conceptually consistent and that similar transactions are treated the same way, so as to provide

useful information for investors, lenders and other creditors.

The Conceptual Framework also assists companies in developing accounting policies when no

IFRS Standard applies to a particular transaction, and more broadly, helps stakeholders to

understand and interpret the Standards.

On 26 September 2019, the IASB published the “Amendments to IFRS 9, IAS 39 and IFRS

7: Interest Rate Benchmark Reform”. This amends IFRS 9 - Financial Instruments and IAS

39 - Financial Instruments: Recognition and Measurement as well as IFRS 7 - Financial

Instruments: Disclosures. More specifically, the amendment changes certain hedge accounting

application requirements, providing temporary relief from these, so as to mitigate the impact

resulting from the uncertainty of the IBOR reform (currently underway) on future cash flows

in the period prior to its completion. The amendment further requires companies to provide

additional information in the financial statements regarding their hedging relationships that are

directly affected by the uncertainties caused by the reform, and to which the aforementioned

relief is applicable.

The amendments come into force from 1 January 2020, but companies may chose earlier

application. The Directors do not expect the adoption of this amendment to affect the

Company’s Financial Statements.

7)

IFRS ACCOUNTING PRINCIPLES, AMENDMENTS AND INTERPRETATIONS NOT YET

APPROVED BY THE EU At the reference date of these Financial Statements, the European Union had not yet concluded the

approval process necessary for the adoption of the following amendments and accounting

principles.

On 22 October 2018, the IASB published the document “Definition of a Business

(Amendments to IAS 3)”. The document provides clarification regarding the definition of a

business for the purposes of correctly applying IFRS 3. In particular, the amendment clarifies

that whereas a business usually produces an output, the existence of an output is not strictly

necessary to identify the existence of an integrated grouping of assets/processes and goods in a

business. Nonetheless to comply with the definition of a business, an integrated grouping of

assets/processes and goods must include as a minimum, a substantive input and process that

together contribute significantly to the ability to create output. In this regard, the IASB has

replaced the term "ability to create output" with "contribute to the ability to create output" to



clarify that a business can also exist without all the inputs and processes needed to create an

output.

The amendment also introduced an optional concentration test, which will exclude a business

if the price paid essentially refers to a single asset or group of assets. The amendments apply to

all business combinations and acquisitions of assets after 1 January 2020, but early application

is allowed.

Given that this amendment will be applied to new acquisition transactions that will be finalised

as from 1 January 2020, any effects will be recognised in the consolidated financial statements

for the years ended after this date.

On 18 May 2017, the IASB published IFRS 17 – Insurance Contracts that is intended to

replace IFRS 4 – Insurance Contracts.

The aim of the new standard is to ensure that an entity provides pertinent information to

faithfully represent the rights and obligations deriving from the insurance contracts issued. The

IASB developed the standard to eliminate discrepancies and weaknesses in existing accounting

policies, providing a single principle-based framework to take into consideration for all kinds

of insurance contracts, including the reinsurance contracts held by an insurer.

The new standard also sets presentation and disclosure requirements to improve comparability

between the entities belonging to this sector.

The entity must apply the new standard to insurance contracts issued, including reinsurance

contracts issued, reinsurance contracts held and investment contracts with a discretionary

participation feature (DPF).

The principle becomes applicable as from 1 January 2021 with early application permitted only

for companies that have already applied IFRS 9 -Financial Instruments and IFRS 15 - Revenue

from Contracts with Customers. The Directors do not expect the adoption of this standard to

have a significant effect on the Company’s Financial Statements.

8)

PRINCIPAL RISKS AND UNCERTAINTIES TO WHICH TAS S.P.A IS EXPOSED

In carrying out its business, the Company is exposed to various risks of a financial nature, related

to the financial-regulatory and market context which might influence the Company’s performance.

The Company has an internal control system consisting of a system of rules, procedures and




The Company constantly monitors the risks to which it is exposed, in order to assess the potentially

negative effects in advance, and so that the best action can be taken to mitigate them.

The Company’s risk management policies seek to identify and analyse the risks the Company is

exposed to, by establishing appropriate limits and controls and monitoring risks and compliance

with such limits.

These policies and related systems are reviewed on a regular basis in order to reflect any changes

in market conditions and the Company’s activities.



For more details on the principal risks and uncertainties facing the Company, please refer to the

relevant section of the Group Report on Operations.

9)

FINANCIAL LIABILITIES BASED ON DUE DATE

The table below analyses the Company’s net financial liabilities, which have been grouped

according to the residual maturity and contractual expiry date, compared to the reporting date.

The amounts shown below, relating to financial liabilities, represent the discounted contractual

cash flows.


Financial liabilities 350 570 - 920

Shareholder financing 5,075 - - 5,075


Financial liabilities - IFRS 16 1,237 5,270 2,621 9,128

Commitment liabilities 289 - - 289


Financial liabilities 373 383 - 756

Shareholder financing - 5,000 - 5,000


Commitment liabilities 990 4,220 3,139 8,349

10)

FINANCIAL ASSETS AND LIABILITIES BY CATEGORY

The table below details “Financial assets and liabilities”, based on IFRS 9:

Financial assets at

amortised cost

Financial assets at FV recognised in

income statement

Financial assets at FV

recognised in OCI

31/12/2019

Non-current financial assets 356 135 - 491

Investments and other securities - 135 135

Financial fixed asset receivables 311 311


Current financial assets 21,822 - - 21,822

Trade receivables (6) 21,663 21,663


Financial receivables 21 21

Total 22,178 135 - 22,313



Financial

liabilities at amortised cost


income statement


OCI

31/12/2019

Non-current financial liabilities 7,385 - - 7,385

Financial liabilities - Financing (11) - -


Current financial liabilities 20,387 - - 20,387

Trade payables (12) 6,094 6,094

Other payables (13) 7,977 7,977

Financial liabilities - Financing (14) 5,000 5,000


Total 27,772 - - 27,772

11)

FAIR VALUE HIERARCHY BASED ON IFRS 13

The table below lists the assets and liabilities measured at “fair value” and classified according to

a three-level hierarchy which takes into account the different variables used for valuation purposes.

Level 1 Level 2 Level 3 Total

ASSETS AND LIABILITIES

Investments and other securities - - 137 137

Total Assets and Liabilities - - 137 137

The classification of financial instruments at fair value required by IFRS 13, measured according

to the quality of the input sources used, results in the following hierarchy:

Level 1: fair value determined based on the listed prices (unadjusted) in active markets for identical

assets or liabilities. At this time, there are no instruments falling into this category;

Level 2: fair value determined based on inputs other than the listed prices included under “Level

1”, that are directly or indirectly observable. At this time, there are no instruments falling into this

category;

Level 3: fair value determined based on the evaluation models where the inputs are not founded

on unobservable market data. Falling within this category are equity instruments relating to

unlisted companies not representing associates or subsidiaries classified in the category fair value

through profit and loss. The amount of Euro 137 thousand refers almost completely to the

shareholding in the company SIA S.p.A.

12)

CAPITAL RISK MANAGEMENT

The Company manages its capital with the aim of protecting its continuity, ensuring shareholders’

return and stakeholders’ benefits, and maintaining an optimal capital structure while reducing its

cost. In line with practices in the sector, the Company monitors capital based on the gearing ratio.



This index is calculated as the relationship between net debt and net equity. Net debt is calculated

by subtracting cash and cash equivalents calculated for the purposes of the cash flow from the

remaining financial assets and liabilities shown in the balance sheet. The total capital corresponds

to the “net equity”, as shown in the Balance Sheet for the year plus the net debt, as determined

above.

As can be seen from the table below, the Company’s gearing ratio is 20%, compared to 3% from

the previous year.

2019 2018

Financial assets/liabilities 13,369 5,276

Less: cash and cash equivalents (6,234) (4,542)

Net debt (A) 7,135 733

Net Equity (B) 29,194 24,390

Total Capital [(A) + (B)] = (C) 36,329 25,123

gearing ratio (A)/(C) 20% 3%




ASSETS

Below are the comments on the financial accounting data. These are compared with the restated

(*) figures at 31 December 2018 as they highlight the effects of the application of the equity

method to interests in subsidiaries as permitted by IAS 27 and based on the provisions of IAS 28.

NON-CURRENT ASSETS

13)


The balance for the item was made up as follows:

Intangible fixed assets 31/12/2019 31/12/2018 Change

Goodwill 15,393 15,393 -

Other intangible fixed assets 3,851 4,515 (664)

TOTAL 19,244 19,908 (664)

Goodwill refers to the Payments Unit CGU, named as such because it pertains to the Payments

business unit, and was the subject of the contribution to Global Payments S.p.A. as detailed above.

This CGU was allocated the entire amount for goodwill, which also includes the cash flows

generated by the subsidiaries TAS Americas, TAS International and TAS USA, given that these

derive mainly from the resale and support for the business unit’s products. Consequently for this

CGU, a weighted WACC was used, based on typical 2019 revenue.

In line with the provisions of the international accounting principle IAS 36, an impairment test

was carried out on 31 December 2019 to verify whether any losses in value existed for this CGU,

by comparing the recoverable value against the related book values of the net invested capital

(including the assets with an indefinite useful life).

These CGUs respond to the requirements of IAS 36 para. 6, i.e. they represent “the smallest

identifiable group of assets that generates cash inflows that are largely independent of the cash

inflows from other assets or groups of assets” and see also IAS 36 para. 80 paragraphs a) and b).

For the purposes of estimating the recoverable value, the value in use of the net invested capital of

the CGU was calculated by using the “Discounted Cash Flow – asset side” principle, which

considers the company’s expected cash flows based on plans approved by management.

The calculation formula for the above methodology is given below:

FCF = free cash flow, or cash flow generated by operations;

WACC = weighted average cost of capital;

TVWACC)(1FCFV i

n

1i

i



n = specific forecast period;

TV = current terminal value, i.e. the value deriving from the cash flows generated beyond the

forecast period.

In determining the value in use of the net invested capital, the cash flow projections were based

on a 3-year time frame (2020-2022), as reported in the 2020-2022 business plan, approved by the

Board of Directors on 12 March 2020. It is noted that this plan is nominally in line with the WACC

used. The basic assumptions in the plan reflect past experiences and are consistent with the external

sources of information available.

The cash flows for the period after the third year were calculated based on the following formula

(Gordon formula):

where:

FCFn = cash flow sustainable beyond the forecast period;

g = business growth rate beyond the period of the plan in question

WACC = weighted average cost of capital.

The main assumptions used in calculating the value in use are given below:

Discount rate (Weighted Average Cost of Capital – WACC) post tax: 7.2%, slightly lower

than the previous year (7.3%).

The WACC, as mentioned above, was determined on the basis of the following values:

a. Sector financial structure (debt/equity ratio = 5.85%)

b. Risk free rate: 3.05%

c. Sector unlevered beta: 0.81

d. Risk premium: 5.2%

The criteria for estimating future financial flows: the cash flows – net of taxes – reported

in the 2020-2022 business plan were taken as references.

A total was then calculated for the discounted values (using the WACC mentioned above)

of the expected cash flows after the last year of the plan extrapolated on the basis of a

constant growth rate of 2%.

The principal values used to determine the value in use are given in the table below:

gWACCgFCF

TV n

)1(*



CGU

Payments Unit

Average weighted rate of growth of income 15.4%

Average gross operating margin (EBITDA) 35.3%

Rate of growth in cash flow after plan period 2.0%

Post-tax discounting rate (WACC - post tax) 7.2%

The discounting rate used reflected the specific risk of the sector in which the Company operates.

As permitted by paragraph 55 of IAS 36, the discounting rate was estimated post-tax, as the

unlevered cash flows of each Cash Generating Unit (CGU) were also estimated post-tax, calculated

on the basis of the specific tax rate of each CGU.

PAYMENTS UNIT CGU RESULTS

The criteria used for estimating the value in use recorded recoverable values that were higher than

the book value of the net invested capital (CIN) for the TAS Payments Unit CGU at 31 December

2019, inclusive of goodwill. In the light of the results of the impairment test, no significant value


A sensitivity analysis appears below, where the book value of the invested capital of the TAS

Payments Unit CGU on 31 December 2019 was compared against the related value in use

calculated on the basis of a 7.2% discount rate and a long-term growth rate “g” of 2%, selected by

the company and with the value in use calculated on the basis of a discounting rate and a “g” rate

that were respectively half a percentage point lower (6.7%, 1.5%) or higher (7.7%; 2.5%) than the

parameters used, and an Ebitda over the years of the plan and the year after the last year that was

basically in line the margins recorded in 2019.

“g”=2.0%












“g”=1.5%










“g”=2.5%










The item Other intangible fixed assets is broken down as follows:

Other intangible fixed assets 31/12/2019 31/12/2018 Change

Software developed internally 3,690 4,256 (566)

Industrial patents and intellectual property rights 32 64 (32)

Other intangible fixed assets 129 195 (65)

TOTAL 3,851 4,515 (664)



31/12/2017 Increases for

the year Amortisation for

the year Value on

31/12/2018

- Software developed internally 4,540 4,049 (4,333) 4,256 - Industrial patents and intellectual property rights 96 - (32) 64 - Others 372 50 (227) 195

TOTAL 5,008 4,099 (4,592) 4,515



the year Amortisation for

the year Value on

31/12/2019

- Software developed internally 4,256 3,510 (4,077) 3,690 - Industrial patents and intellectual property rights 64 - (32) 32 - Others 195 130 (196) 129

TOTAL 4,515 3,641 (4,304) 3,851



The balance of the item Software developed internally, which amounted to Euro 3,690 thousand,

was made up of development costs which were capitalised as they meet the requirements of IAS

38.

Company investments continued during the period in different areas, with market action

consolidated in European countries, and strategic partnerships established to develop the

Company’s business. Specifically:




integrated with the Target2 and Target 2 Securities platforms, as well as the triparty































14)


These went from Euro 639 thousand in 2018 to Euro 7,766 thousand at 31 December 2019. The

increase refers to the effects of adopting IFSR 16 from 1 January 2019, which is stated separately

in the table below. The net value was made up as follows:

Tangible fixed assets 31/12/2019 31/12/2018 Change

Plants and machinery 121 145 (24)

Industrial and commercial equipment - 1 (1)

Other assets 439 493 (55)

Right of use 7,207 - 7,207

TOTAL 7,766 639 7,127




the year Reductions for

the year Amortisation for the year

Value on 31/12/2018

- Plants and machinery 176 8 (1) (38) 145 - Industrial and commercial equipment 2 - - (1) 1 - Other assets 692 221 (4) (416) 493

TOTAL 870 229 (6) (454) 639


31/12/2018 Adoption of IFRS 16


Reductions for the year


Value on 31/12/2019

- Plants and machinery 145 - 15 - (39) 121 - Industrial and commercial equipment 1 - - (1) - - - Other assets 493 - 207 - (262) 439 - Right of use - 7,699 612 - (1,104) 7,207 - buildings - 7,245 144 - (801) 6,588 - vehicles - 454 158 - (238) 373 - other assets - - 310 - (65) 246

TOTAL 639 7,699 834 (1) (1,405) 7,766

The item Other assets relates mainly to electronic office equipment and furniture of the Company.

Right of use refers primarily to the rental contracts for the Company’s premises. The increases

relate to the new contracts entered into or renewals on expiring contracts.

15)

EQUITY INVESTMENTS AND OTHER INVESTMENT SECURITIES

The balance for the item is made up as follows:

Investments and other securities 31/12/2019 31/12/2018* Change

Equity investments in subsidiaries 6,261 4,768 1,493

Equity investments in other companies 135 135 -

TOTAL 6,396 4,903 1,493

The equity investments entered under assets referred to a long-term strategic investment by the

Company.

No availability restrictions on the part of the investing company existed on any term equity



holdings, nor were there any option rights or other privileges.

The table below illustrates the value of equity investments at 31/12/2017, applying the equity

method retrospectively.

Equity investments in subsidiaries changes 31/12/2017 Effects on NE from change in standard

Underlying transfer

31/12/2017 restated

Equity investments in Tas Helvetia 1,269 (1,671) 402 -

Equity investments in Tas Americas 1,457 (1,298) - 159

Equity investments in Tas Iberia 2,579 (1,011) - 1,568

Equity investments in Tas France 2,769 (1,251) - 1,518

Equity investments in Tas Germany 395 (363) - 32

Equity investments in Tas USA 174 (173) - 1

TOTAL 8,643 (5,767) 402 3,278

A detailed breakdown of the changes to equity investments in subsidiaries in the last two years is

given below:

Equity investments in subsidiaries changes 31/12/2017 restated Increases Decreases

Total impact NE

Revaluations / (Impairments) 31/12/2018*

Equity investments in Tas Helvetia - - (34) 141 (107) -

Equity investments in Tas Americas 159 427 - (2) (244) 340

Equity investments in Tas Iberia 1,568 - - - 72 1,640

Equity investments in Tas France 1,518 - - - 138 1,656

Equity investments in Tas Germany 32 231 (626) - 372 9

Equity investments in Tas USA 1 511 - 1 (390) 122

Equity investments Bassilichi CEE - 1,000 - - - 1,000

TOTAL 3,278 2,169 (660) 140 (160) 4,767

Equity investments in subsidiaries changes 31/12/2018* Increases Decreases Total impact

NE Revaluations / (Impairments) 31/12/2019

Equity investments in Tas Helvetia - - (196) (335) 532 -

Equity investments in Tas Americas 340 - - (2) (144) 194

Equity investments in Tas Iberia 1,640 101 - - (211) 1,531

Equity investments in Tas France 1,656 - - - 339 1,995

Equity investments in Tas Germany 9 - - - (9) 1

Equity investments in Tas USA 122 362 - (4) 168 648

Equity investments Bassilichi CEE 1,000 (1,000) - - -

Equity investments in Tas EE - 2,271 - 1 (427) 1,845

Equity investments in Mantica Italia - 85 - - (74) 11

Equity investments in Global Payments - 50 - - (12) 38

TOTAL 4,767 1,868 (1,196) (340) 161 6,261

The increases in the item Equity investments in subsidiaries related to:

- capital contributions made to the subsidiary TAS USA for Euro 362 thousand;

- the acquisition of an 80% shareholding on 26 February 2019, in the share capital of the

American company Mantica Inc., which was then liquidated in September, with the 80%

stake in the subsidiary Mantica Italia S.r.l. transferred directly to TAS S.p.A.

- the establishment of an Italian registered company named “Global Payments S.p.A.” on

26 July, fully held by TAS. The business unit relating to the payments division (the

“Payments Unit”) was transferred to the new company on the basis of the notary deed

dated 29 November 2019, which was registered on 3 December 2019, and effective from

1 January 2020.



- the recapitalisation of the subsidiary TAS Iberia with the Company’s waiver of trade

receivables for Euro 101 thousand;

- the share capital increase for Euro 400 thousand resolved on 31 October 2019, reserved

to TAS S.p.A. in the subsidiary TAS Eastern Europe. Following this operation, the stake

held by TAS S.p.A. increased from 51% to 70%. The residual increase portion is related

to the sale of to B2PT d.o.o. (company controlled by Mr Nemanja Paunovic) of the entire

80% shareholding held in Bassilichi CEE. The scope did not include the shareholding

held by Bassilichi CEE in the Serb registered company TAS EE (formerly ArsBlue d.o.o.

for 51%), which was transferred directly to TAS.

The decrease relating to the subsidiary TAS International refers to the reduction in liabilities

accrued following the losses exceeding the equity investment’s value.

Information relating to subsidiaries is provided below.

Subsidiaries

Company Name Non-

current assets

Current assets

Non-current

liabilities

Current liabilities

Net equity

Revenue Costs Profit/(loss)

TAS France Sasu 3,523 1,732 2,658 685 1,912 3,364 (2,903) 461

TAS International SA 266 2,053 1,276 1,314 (271) 3,985 (3,454) 532

TAS Iberia SLU 172 648 168 988 (337) 980 (1,190) (211)

TAS Americas Ltd 28 704 - 602 130 649 (794) (145)

TAS Usa Inc 131 1,645 - 1,123 652 1,268 (1,097) 172

TAS Germany Gmbh - 6 - 5 1 21 (50) (29)

Mantica Italia Srl 49 143 67 112 13 437 (497) (61)

Global Payments SpA 18 37 - 18 38 - (12) (12)

TAS EE DOO 287 1,525 128 712 973 2,405 (2,439) (35)



Company Name Registered office Share

Capital Net Equity

pro-rata Pro-rata

profit/(loss) % Share Carrying

Value Delta

TAS France Sasu 15 Traverse des Brucs, 06560 Valbonne, France 500 1,912 461 100.00 1,995 (83)

TAS International SA Via Serafino Balestra 22A Lugano – Switzerland 65 (271) 532 100.00 - (271)

TAS Iberia SLU Calle Julian Camarillo, 47 Madrid – Spain 20 (337) (211) 100.00 1,530 (1,867)

TAS Americas Ltd Rua Irma Gabriela nº 51, Brooklin Novo – São Paulo – SP – Brazil 792 130 (144) 99.65 194 (65)

TAS Usa Inc One Liberty Plaza, 165 Broadway, 23rd floor New York, NY 10006 - USA 16 652 172 100.00 648 4

TAS Germany Gmbh c/o A.L.B. Friedl GmbH Wilhelm-Hale-Str. 50 - 80639 Munich - Germany 25 1 (29) 100.00 1 -

Mantica Italia Srl Via Cristoforo Colombo no.149, Rome – Italy 10 13 (61) 80.00 11 2

Global Payments SpA Via Famagosta n.75, Milan – Italy 50 38 (12) 100.00 38 -

TAS EE DOO Bulevar Mihajla Pupina, 115 z Belgrade - Serbia 1,016 683 (25) 70.23 1,845 (1,162)

Total 6,261 (3,440)

The delta above refers primarily to the implicit goodwill in the amounts recognised for equity

investments in subsidiaries and the conversion differences for financial statements in currencies

other than the Euro, with the exception of TAS International, where the negative amount was

accrued following the losses exceeding the equity investment’s value. Considering that the equity

method provides a summary representation of the same effects on the consolidation process,

implicit goodwill is therefore equal to those recognised in the TAS Group’s consolidated financial

statements, and as such, subjected to annual impairment testing.

With regard to the negative differentials of TAS France and TAS International, there are no

impairment indicators given the excellent results recorded over the year by the two subsidiaries,

as well as the growth prospects envisaged in the business plan referred to previously.

The test was carried out by comparing the recoverable value of the equity investments net of the

net financial position (“PFN”) on 31 December 2019 (“Economic Value”), with the relative

carrying load amounts for the equity investments at 31 December 2019. In order to estimate the

recoverable value, the equity investments’ economic value was determined using the “Discounted

Cash Flow – asset side” criterion, which considers the operating cash flows expected by the

company based on the economic-financial projections in the 2020-2022 business plan, approved

by the Board of Directors on 12 March 2020, and subtracting the net financial position on the

reporting date.



The terminal value is determined by applying a perpetual growth rate of 2% to all CGUs to the

operating cash flow relating to last year of the appropriately standardised plan. The discounting

rate used to discount cash flows reflects the current market valuation, with reference to the current

money value and specific risks related to the business. The discounting rates were estimated net

of taxes, corresponding to the cash flows considered, based on the weighted average cost of capital

(WACC).

The main rates used to determine the value in use and results of the impairment test are shown

below:

TAS Iberia TAS France TAS EE

Average weighted rate of growth of income 40.9% 11.1% 43.6%

Average gross operating margin (EBITDA) 8.0% 37.0% 49.1%

Rate of growth in cash flow after plan period 2.0% 2.0% 2.0%

Post-tax discounting rate (WACC - post tax) 6.4% 5.9% 7.8%

The basic assumptions in the plan reflect past experiences and are consistent with the external

sources of information available. The average operating margin of TAS EE represents the fact that

the subsidiary was acquired at the end of 2018 with the objective of strengthening TAS’ electronic

money development and offering capacity worldwide, by leveraging the complementary

technology and applications of its issuing and acquiring platforms.

A sensitivity analysis appears below, where the recognised value of the equity investments subject

to testing at 31 December 2019 was compared against the related value in use, minus the net

financial position. The test was conducted by varying the discount rate and long-term growth rate

“g” by half a percentage compared to the parameters calculated by management. Sensitivity

analyses were also carried out, reducing the Ebitda value over the years of the plan and the one

after the last year, without noting any impairment positions.

TAS IBERIA

The criterion to estimate the economic value of equity investments led to the collection of

recoverable values higher than the accounting carrying value in TAS’ separate Balance Sheet at

31 December 2019. In the light of the results of the impairment test, no significant value



Value in use - TAS Iberia 5,012 4,439 3,981

PFN at 31 December 2019 -294 -294 -294

Economic value of shareholding in Tas Iberia 4,718 4,145 3,687

Load value of shareholding 1,530 1,530 1,530




TAS FRANCE






Value in use - TAS Iberia 18,144 15,853 14,081

PFN at 31 December 2019 -2,260 -2,260 -2,260

Economic value of shareholding in Tas Iberia 15,884 13,593 11,821

Load value of shareholding 1,995 1,995 1,995


TAS EE






Value in use - EE TAS 27,852 25,284 23,127

PFN at 31 December 2019 -271 -271 -271

Economic value equity investment in TAS EE 27,581 25,013 22,856

Load value of equity investment 1,845 1,845 1,845


The details of Equity investments in other companies, measured at fair value as stated above, are

set out below:

Other companies

Company

Name Registered office Share

Capital Net Equity Profit/(loss) %

Share Carrying

Value

SIA S.p.A. Via Francesco Gonin, 36, Milan, Italy 22,275 273,939 84,641 0.02 135

Total 135

16)

FINANCIAL FIXED ASSET RECEIVABLES

Financial fixed asset receivables amounted to Euro 311 thousand and related exclusively to

security deposits:



Financial receivables 31/12/2019 31/12/2018 Change

Guarantee deposits for rentals 311 309 2

Receivables from related parties - - -

TOTAL 311 309 2


From 1 to 5 years 311 309 2


TOTAL 311 309 2



TOTAL - - -


17)

DEFERRED TAX ASSETS

This item is made up as follows:

Receivables for deferred tax assets 31/12/2019 31/12/2018 Change

Tax losses - - -

Other temporary tax differences 814 22 793

TOTAL 814 22 793

In view of the new business plan approved by the Board on 12 March 2020, and considering the

positive tax result for 2019, the Company recognised deferred tax assets at 31 December 2019 for

Euro 814 thousand. This amount, referring solely to a portion of the deductible deferred costs

recognised in the year and previous years, was carefully calculated by applying a conservative

sensitivity analysis in terms of the margins realised to the forecasting years in the 2020 -2022

business plan.

The overall unrecognised amount for advances on prior tax losses is about 9 million Euro. It

should be remembered however that with the elimination of the restriction on carrying-over tax

losses, the Company will still have the option of recognising these in the future.

18)

OTHER NON-CURRENT RECEIVABLES

Other non-current receivables were unchanged over the year and referred exclusively to advances

paid to employees of the Company in accordance with the harmonisation agreement signed with

workers’ representatives.




CURRENT ASSETS

19)

CONTRACT ASSETS WITH CUSTOMERS

Amounted to Euro 5,717 thousand. The value of work in progress referred mainly to the

installation activities and services currently being completed by the Company. All work presented

at 31 December 2019 had begun during the period in question, whereas those that existed at 31

December 2018 had all been fully completed.

This item comprises:

Contract assets with customers Gross value at

31/12/2019

Risk provisions on work in progress


Gross value at 31/12/2018

Work in progress 6,217 (500) 5,717 3,435

Finished products and goods - - - -

TOTAL 6,217 (500) 5,717 3,435

A large number of activities were initiated in 2019 compared to the previous year, which partially

accounts for the increase in revenue, determining the increase in the items in question.

Movements for the provision are shown below:

Risk provisions on work in progress 31/12/2018 Provisions Utilisation 31/12/2019

Risk provisions on work in progress 300 200 - 500

TOTAL 300 200 - 500

20)

TRADE RECEIVABLES

The value of trade receivables, totalling Euro 22,780 thousand also included trade-related accruals

and deferrals receivable, and was made up as follows:

Trade receivables 31/12/2019 31/12/2018 Change

Trade receivables 19,535 18,182 1,353

Receivables from related parties 2,128 1,164 964

Trade accruals and deferrals receivable 1,117 837 280

TOTAL 22,780 20,183 2,597




TOTAL 22,780 20,183 2,597

Overdue – less than 1 month 1,025 592 433

Overdue – more than 1 month 1,761 1,094 667

TOTAL 2,786 1,686 1,100

Trade receivables amounted to Euro 19,535 thousand (net of the write-down provision of Euro

3,712 thousand), with an increase of 5% with respect to the comparison data at 31 December 2018.

Reference is made to point 39 in this section regarding Receivables from related parties.

The book value of the trade receivables is considered to reflect their fair value.



The receivables write-down provision underwent the following changes during 2019:

Write-down provision 31/12/2018 Provisions Utilisation 31/12/2019

Write-down provision (trade receivables) 3,520 200 (8) 3,712

TOTAL 3,520 200 (8) 3,712

On the balance sheet date the maximum credit risk exposure was equal to the fair value of each of

the categories indicated above.

The accruals and deferrals receivable are made up of:

Trade accrued income and prepaid expenses 31/12/2019 31/12/2018 Change

Insurance 66 156 (90)

Rentals payable 32 35 (3)

Leases and maintenance and other services 467 201 265

Purchase of hardware/software for resale 552 189 362

Others - 255 (255)

TOTAL 1,117 837 280

21)

OTHER RECEIVABLES

This item amounted to Euro 138 thousand and was made up as follows:

Other receivables 31/12/2019 31/12/2018 Change

Tax receivables 1 - 1

Receivables from personnel 52 53 (1)

Advances to suppliers 72 4 68

Various receivables 13 31 (18)

Receivables from related parties - 38 (38)

TOTAL 138 126 12




TOTAL 138 126 12



TOTAL - - -


22)

CURRENT FINANCIAL RECEIVABLES

The value of Financial receivables expiring within 12 months amounting to Euro 21 thousand

recorded no changes compared to the previous financial period.




23)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents amounted to Euro 6,234 thousand and were made up as follows:

Cash and cash equivalents 31/12/2019 31/12/2018 Change

Cash and cash equivalents 2 3 (1)

Bank and postal deposits 6,233 4,540 1,693

TOTAL 6,234 4,542 1,692

The balance represented the cash and valuables available at the year-end date. The values stated

may be converted readily into cash and are subject to an insignificant risk of a change in value.

It is considered that the book value of the cash assets is aligned with their fair value on the balance

sheet date. The credit risk related to the cash and cash equivalents is limited, as the counterparties

are leading national banks.

Pursuant to the requirements set out in Consob Communication no. 15519 of 28 July 2006, we

note that the Company’s Net Financial Position was as follows:












J. Liabilities and other current financial liabilities (F) + (G) + (H) + (I) 6,316 298

















The Net Financial Position, less the impact of adopting IFRS 16 from 1 January 2019, was positive

for Euro 0.6 million compared to Euro 0.7 million at 31 December 2018. Cash and cash equivalents

amounted to Euro 6.2 million, compared to Euro 4.5 million in 2018. Including the effects of

adopting IFRS 16, the Net Financial Position was negative for Euro 7.1 million.









LIABILITIES AND NET EQUITY

24)

NET EQUITY

A breakdown of the net equity items is given below, while the related changes are shown in the

relevant schedule.

Net Equity

31/12/2019 31/12/2018* 31/12/2018 approved

changes 2019

changes 2018 restated vs

2018 approved

Capital 24,331 24,331 24,331 - -

Legal Reserve 360 - - 360 -

Extraordinary reserve 5,725 (1,515) (1,515) 7,240 -

Reserves in capital account - 20,000 20,000 (20,000) -

IAS 19 actuarial valuation reserve (396) (240) (240) (156) -

Equity valuation reserve (6,126) (5,626) - (500) (5,626)

Profit/(loss) carried forward - (12,760) (12,760) 12,760 -

Profit (loss) for the period 5,402 200 360 5,202 (160)

TOTAL 29,296 24,390 30,176 4,906 (5,786)

* Net equity at 31 December 2018 was amended following the change in the valuation criterion for equity investments in subsidiaries, moving to the equity method as permitted by IAS 27 and based on the provisions of IAS 28. The changes compared to the Financial Statements at 31 December

2018, approved by the Shareholders' Meeting on 29 April 2019 are detailed in paragraph 2 of the Notes to the “Changes made to the Financial

Statements at 31 December 2018”.

On 29 April 2019, the TAS Shareholders' Meeting resolved to allocate the entire TAS profit for

2018 of Euro 359,942.29 to the legal reserve. As proposed by the majority shareholder OWL

S.p.A., it also resolved to fully cover the losses from previous years resulting from the financial

statements at 31 December 2018 for Euro 12,759,824.91, using the capital account reserves for the

same amount of Euro 12,759,824.91, recognising the remainder of this capital account reserve of

Euro 7,240,175.09 in the extraordinary reserve.

The share capital was made up as follows:

Shares Number Nominal value

Ordinary shares 83,536,898 No value

Total 83,536,898

No new shares were subscribed during the period.

Therefore on the closing date 83,536,898 ordinary shares were in circulation with no nominal

value, and the share capital amounted to Euro 24,330,645.50.

The Actuarial valuation reserve was generated by the recognition of actuarial gains and losses in

the Comprehensive Income Statement. The changes were as follows:





Effect of actuarial valuation 158

Tax effect on actuarial valuation -




Effect of actuarial valuation (156)

Tax effect on actuarial valuation -


The equity valuation reserve is generated by applying the equity method to investments in

subsidiaries.

Changes for the year are shown below:

Changes Equity valuation reserve 2018

Equity valuation reserve 1.01.2018 (5,766)

Effects from actuarial reserve 133

Effects from conversion reserve 7

Equity valuation reserve 31/12/2018* (5,626)

Changes Equity valuation reserve 2019

Equity valuation reserve 1.01.2019 (5,626)

Effects 01/01/2019 from equity valuation reserve carried forward (160)

Effects from actuarial reserve (357)

Effects from conversion reserve 17

Equity valuation reserve 31/12/2019 (6,126)



The table below shows the origin, possibility of use and availability for each item in the net equity,

as well as actual uses in the previous financial years:

Summary of uses over

the three previous years

Nature/description Amount Possibility for use

Unrestricted portion

to replenish losses

for other reasons

Capital 24,331 - - -

-

Capital reserve

Share premium reserve - - - -

-

Payments for future share capital increases - - - -

-

Reserves in capital account - - -

(20,000)

-

Other Reserves Reserve to cover conversion losses Shareholders Loan - TasNch - - - -

-

Waiver of Vendor Loan - - - -

-

Fair value reserve - - - -

-

Equity valuation reserve

(6,126) A,B,C

(6,126)

IAS 19 actuarial valuation reserve

(396) A,B,C

(396) -

-

Profit reserve

Legal Reserve 360 B - -

-

Extraordinary reserve 5,725 A,B,C 5,725 7,240

-

Profit/(loss) carried forward - - - 12,760

-

Profit/(loss) current year 5,402 A,B,C 5,402 -

-

Total 29,296 4,605 -

-

Non-distributable portion 4,605

Remaining distributable portion -

Key: A: for capital increase B: to cover losses C: for distribution to shareholders

The non-distributable portions of net equity amount to Euro 4,506 thousand covering the legal

reserve equalling one fifth of the share capital. The remaining distributable portion amounted to

Euro 99 thousand.

With regard to the comments on the Comprehensive Income Statement reference is made to Note

38 in this section.




25)

EMPLOYEE SEVERANCE INDEMNITY PROVISION

The provision represents the severance pay liability to be paid to employees in the case of contract

termination and is represented net of the advances paid. Its value has been updated.

The changes compared to the previous year are as follows:

Employee severance indemnity provision (TFR) 31/12/2019 31/12/2018 Change

Employee severance indemnity provision 3,588 3,486 103

TOTAL 3,588 3,486 103

The movement was as follows:

employee severance indemnity provision changes Year 18



Interest costs 52

Amount paid to the INPS Treasury fund and other funds (1,279)


Actuarial profit/(loss) (158)


employee severance indemnity provision changes Year 19



Interest costs 35

Amount paid to the INPS Treasury fund and other funds (1,289)


Actuarial profit/(loss) 155


Liabilities during the period include Euro 1,289 thousand for provisions, payments to the INPS

treasury fund, utilisations from indemnities paid during the year for a total of Euro 88 thousand, a

negative effect for Euro 155 thousand and interest costs for Euro 35 thousand.

The actuarial model used for the valuation of severance pay is based on various demographic,

economic and financial assumptions.

Where possible, for some of the assumptions express reference was made to the direct experience

of the Company while for others, industry best practices were applied.

The main assumptions of the model are given below.

Financial assumptions

Annual discounting rate 0.77%

Annual inflation rate:

1.20%

Annual rate of increase in employee severance indemnity

2.40%



Demographic assumptions

Mortality RG48 mortality table

Disability INPS tables divided by age and gender

Pension age 100% upon reaching the Mandatory General Insurance requirements

From the historical experience of the parent company and based on the available data, an annual

turnover rate of 5% and an anticipation rate of 2% were deduced.

In particular, we note that:

- the Annual discounting rate in Italy used to calculate the current figure for the obligation

was determined according to par. 78 of IAS 19, with reference to the IBoxx Eurozone

Corporate AA 10+ index;

- the Annual rate of increase in employee severance indemnity in Italy pursuant to Art.

2120 of the Italian Civil Code is 75% of inflation plus 1.5 percentage points.

The sensitivity analysis for the Parent Company appears below:


TFR [Employe

e Severance

Pay] Delta %

+ 1% on turnover rate 3,565 - 86.13 -

2.4%

- 1% on turnover rate 3,615 - 36.39 -

1.0%

+ 1/4% on annual inflation rate 3,637 - 14.05 -

0.4%

- 1/4% on annual inflation rate 3,541 - 110.09 -

3.1%

+ 1/4% on annual discounting rate 3,512 - 138.87 -

4.0%

- 1/4% on annual discounting rate 3,668 16.55 0.5%

26)

PROVISIONS FOR RISKS AND CHARGES

This item amounted to Euro 472 thousand and referred for Euro 300 thousand to disputes in respect

of former employees.

Other provisions related to the portion of losses for the subsidiary TAS International exceeding

the equity investment’s value. After bringing the interest’s value to zero, the additional losses were

accrued and recognised as liabilities.

Risk provisions 31/12/2019 31/12/2018* Change

Provision for risks 300 60 240

Other provisions 172 368 (196)

TOTAL 472 428 44

The movement was as follows:



Risk provision changes Year 18


decrease equity valuation provision using equity method (34)

Reclassification risk provisions work in progress (140)

Utilisation (253)


Risk provision changes Year 19


Increases 300

decrease equity valuation provision using equity method (196)

Utilisation (60)


27)

NON-CURRENT FINANCIAL LIABILITIES

Non-current financial liabilities for Euro 7,385 thousand include the effects of adopting the new

IFRS 16 from 1 January 2019. The non-current portion thereof amounts to Euro 6,849 thousand.

Non-current financial liabilities 31/12/2019 31/12/2018 Change

Other financial liabilities 557 600 (43)

Financial liabilities for IFRS 16 leases, of which: 6,849 - 6,849

- Right of use buildings 6,568 - 6,568



Funding to the parent company OWL - 5,000 (5,000)

Effect of recognition at the amortised cost of financial liabilities (21) (292) 271

TOTAL 7,385 5,308 2,077


From 1 to 5 years 4,928 5,308 (380)

More than 5 years 2,457 - 2,457

TOTAL 7,385 5,308 2,077



TOTAL - - -








CURRENT LIABILITIES

28)

TRADE PAYABLES

The value of trade payables, totalling Euro 14,224 thousand also included trade-related accruals

and deferrals payable, and was made up as follows:

Trade payables 31/12/2019 31/12/2018 Change

Advances 555 333 222

Payables to suppliers 4,414 3,524 890

Payables to related parties 1,123 749 374

Contract liabilities with customers 8,126 7,087 1,039

Trade accruals payable 6 313

(308)

TOTAL 14,224 12,006 2,218




TOTAL 14,224 12,006 2,218

Overdue – less than 1 month 788 631 157

Overdue – more than 1 month 837 890 (53)

TOTAL 1,625 1,521 104

The figure for Payables to suppliers at 31 December 2019 referred entirely to trade debts payable

within 12 months.

The item Advances included the advances received from customers in relation to the supply of

goods and services not yet completed.

The Contract liabilities with customers related mainly to the deferral of orders in progress already

invoiced to the customer but not yet completed on the year-end date. The breakdown is given

below:

Contract liabilities with customers 31/12/2019 31/12/2018* Change

Deferrals payable maintenance 292 225 67

Deferrals payable installation and consulting 7,446 6,603 843

Deferrals payable royalties and fees 388 259 129

TOTAL 8,126 7,087 1,039

With regard to relations with related companies, reference is made to Note 39 in this section.

The book value of the trade payables at the reporting date is considered to reflect their fair value.



29)

OTHER PAYABLES

Other payables for Euro 7,977 thousand, related to:

Other payables 31/12/2019 31/12/2018 Change

Tax payables 1,326 2,049 (723)

Payables to social security institutions 2,281 2,013 269

Various payables 4,370 4,110 260

TOTAL 7,977 8,171 (194)




TOTAL 7,977 8,171 (194)



TOTAL - - -

The details relating to other payables appear below:

Tax payables 31/12/2019 31/12/2018 Change

IRPEF payables 1,158 1,149 9

VAT payables 161 889 (728)

Other tax payables 7 11 (4)

TOTAL 1,326 2,049 (723)




TOTAL 1,326 2,049 (723)



TOTAL - - -

IRPEF payables relate to withholding tax on the December payroll.

Social security payables 31/12/2019 31/12/2018 Change

Payable to INPS [pension fund] 2,045 1,808 237

Payables to INAIL and other institutions 236 205 32

Other social security payables - - -

TOTAL 2,281 2,013 269




TOTAL 2,281 2,013 269



TOTAL - - -



Payables to social security institutions relate mainly to contributions payable on the December

payroll, and on salaries accruing on the balance sheet date in relation to additional monthly salary

payments, holidays not taken and bonuses.

Various payables 31/12/2019 31/12/2018 Change

Payables to personnel 4,127 3,482 645

Various other payables 243 628 (385)

TOTAL 4,370 4,110 260




TOTAL 4,370 4,110 260



TOTAL - - -

There were no outstanding payables to employees on 31 December 2019.

The book value of the Other payables on the balance sheet date is considered to reflect their fair

value.

30)

CURRENT INCOME TAX PAYABLES

Payables for current taxes amounted to Euro 208 thousand and referred to the Company’s current

income tax.

Current tax payables 31/12/2019 31/12/2018 Change


TOTAL 208 44 164




TOTAL 208 44 164



TOTAL - - -



31)

CURRENT FINANCIAL LIABILITIES

Current financial liabilities amount to Euro 6,316 thousand and include the effects of adopting the

new IFRS 16 from 1 January 2019. The current portion thereof amounts to Euro 917 thousand.

Current financial liabilities 31/12/2019 31/12/2018 Change

Other financial liabilities 557 300 257

Payables to banks 5 7 (2)

Funding to the parent company OWL 5,000 - 5,000

Financial liabilities for IFRS 16 917 - 917

- Right of use buildings 573 - 573



Effect of recognition at the amortised cost of financial liabilities (163) (12) (151)

Financial accruals and deferrals - 3 (3)

TOTAL 6,316 298 6,018

Within the following year 6,316 298 6,018



TOTAL 6,316 298 6,018



TOTAL - - -

The fair value of financing (current and non-current), largely corresponded with the book value.

The structure of the current and non-current financial liabilities, in terms of the annual interest rate

at 31 December 2019 exclusively in Euro, is as follows (nominal values):

Financial liabilities zero rate less than 5% between 5% and 10.0%

Euro of which: 1,056 12,645 -

- Funding to the parent company OWL - 4,879 -

- Financial liabilities IFRS 16 - 7,766 -

- Other financial liabilities 1,056 - -

TOTAL 1,056 12,645 -

More specifically, funding to the parent company OWL provides a 3-month Euribor percentage

rate and a spread of 150 base points, whereas the calculation of financial liabilities for IFRS 16

leases was based on the incremental borrowing rate of 4%.

The zero debt rate almost exclusively refers to the residual payment for the acquisition of TAS EE.

At the reporting date, the Company’s exposure to changes in interest rates, and the dates for the

review of the rates, were as follows:

Rate review period 31/12/2019 31/12/2018

From 0 to 6 Months 5,000 5,000

The table below shows the changes in the Company’s financial liabilities (book value):

Financial liabilities 31/12/2019 31/12/2018 Change

Non-current 7,385 5,308 2,077

Current 6,316 298 6,018



TOTAL 13,701 5,606 8,095

Changes Year 18


Termination of pool finance (5,000)

Financing by Parent Company OWL 5,000

Financial liabilities for acquisition Bassilichi CEE Group 900

Fair value financial liabilities (307)

Release of amortised cost of pool loan 703

Effect of recognition at the amortised cost of financial liabilities 4

Monetary changes in bank and financial liabilities 5


Changes Year 19


Instalment payment acquisition TAS EE (556)

Effect of adopting IFRS 16 7,766

Effect of recognition at the amortised cost of financial liabilities 120

Liability for acquisition TAS EE 871

Monetary changes in bank and financial liabilities (106)


More specifically, the liability for the acquisition of TAS EE for Euro 871 thousand occurred

within the scope of the broader operation that included the sale of Bassilichi CEE d.o.o. as detailed

above.

At 31 December 2019, the liquidity reserve assets was as follows:



Cash credit line 50 - 50 -


Other Financing Lines 1,000 - 1,000 -

Total Bank Credit Lines 6,000 (5,000) 1,000 -

Factoring Lines 3,567 (567) 3,000 105




Total 10,234 4,647

The Company's liquidity reserve of 10.2 million Euro has been considered sufficient to meet the

existing commitments on the reporting date.



INFORMATION ON THE INCOME STATEMENT

Comments on the Income Statement follow. These are compared with the relevant figures for the

corresponding period in 2018.

It also shows the revenue and costs accruing with regard to related parties.

For additional details on the relations with related parties, please refer to Note 39 in this section.

32)

REVENUE

Revenue 31/12/2019 31/12/2018 Change % Change

Revenue 45,950 44,502 1,448 3.3%

(of which in respect of related companies) 2,129 934 1,195 >100%



Other revenue 1,031 1,281 (251) (19.6%)

(of which in respect of related companies) 127 253 (126) (49.8%)

TOTAL 49,463 45,510 3,953 8.7%

At 31 December 2019 the Company recorded Total revenue for Euro 49,463 thousand, compared

to Euro 45,510 thousand the previous financial year. These are made up as follows:

- Euro 48,432 thousand made up of revenue from typical management (Euro 44,228

thousand in 2017);

- Euro 1,031 thousand made up of other non-typical revenue (Euro 1,281 thousand in

2017).

The details of core revenue by type are reported below:

Revenue by type 31/12/2019 Impact % 31/12/2018 Impact % Change %

Change

Core revenue 48,432 100.0% 40,204 90.9% 8,229 20.5%

- Licenses 11,230 23.2% 6,311 15.7% 4,919 78.0%

- Maintenance 8,434 17.4% 8,099 20.1% 335 4.1%

- Services 19,924 41.1% 18,225 45.3% 1,699 9.3%

- Royalties and usage fees 4,186 8.6% 4,184 10.4% 2 0.0%

- Support fees 4,659 9.6% 3,385 8.4% 1,274 37.6%

Resale revenue third party sftw and hrdw - 0.0% 4,025 9.1% (4,025) (100.0%)

- Licenses - #DIV/0! 356 8.9% (356) (100.0%)

- Maintenance - #DIV/0! 1,170 29.1% (1,170) (100.0%)

- Services - #DIV/0! 540 13.4% (540) (100.0%)

- Royalties and usage fees - #DIV/0! 1,959 48.7% (1,959) (100.0%)


An analysis of total core revenue by type of service showed an increase of 20.5% compared to the

previous year, referring to all service types. Of specific significance, growth was seen in the

software licenses sold, which at 31 December 2019 made up 23.2% of total core revenue, going

from Euro 6,311 thousand to Euro 11,230 thousand (+78.0%). The growth in software licenses

revenue is the result of consistent investments over recent years to revamp the Company’s

proprietary portfolio of products in terms of technology and functions.

The table below shows the distribution of core revenues by geographic area:



Revenue by geographic area 31/12/2019 Impact % 31/12/2018* Impact % Change

% Change

Core revenue 48,432 100.0% 40,204 90.9% 8,229 20.5%

- Italy 45,197 93.3% 37,792 94.0% 7,405 19.6%

- Germany 226 0.5% 263 0.7% (37) (14.2%)

- Great Britain 181 0.4% 401 1.0% (220) (54.9%)

- Brazil 255 0.5% 192 0.5% 63 33.0%

- Spain 120 0.2% 282 0.7% (161) (57.3%)

- Switzerland 1,738 3.6% 181 0.5% 1,556 >100%

- United States 91 0.2% 282 0.7% (190) (67.5%)

- Other 625 1.3% 812 2.0% (187) (23.1%)

Resale revenue third party sftw and hrdw - - 4,025 9.1% (4,025) (100.0%)

- Italy - - 4,025 100.0% (4,025) (100.0%)

- Foreign countries - - - 0.0% - -

TOTAL CORE REVENUE 48,432 100.0% 44,228 100.0% (4,025) (9.1%)

Revenues for the Italian area grew by 19.6% to Euro 45,197 thousand compared to Euro 37,792

thousand in the corresponding period last year.

33)

COSTS OF PRODUCTION

The table below sets out a cost comparison at 31 December 2019, against the previous year:

Costs 31/12/2019 31/12/2018 Change % Change

Raw materials, consumables and goods 1,046 1,841 (795) (43.2%)

- of which capitalised development costs (439) (390) (49) (12.7%)


Personnel costs 24,254 22,329 1,925 8.6%


For services 11,797 12,629 (832) (6.6%)


- of which in respect of related companies 2,044 1,700 344 20.2%

- of which capitalised development costs (762) (1,039) 277 26.7%




Provision for risks 500 160 340 >100%

Various management charges and other charges 474 639 (165) (25.9%)

TOTAL COSTS 38,163 38,868 (705) (1.8%)

To provide a more homogeneous comparison of the Company’s core costs, we removed the

capitalised costs for software development, the resale costs and non-recurring costs from each cost

item.


Raw materials, consumables and goods 1,485 705 780 >100%

Personnel costs 26,563 24,949 1,614 6.5%

For services 12,540 10,925 1,615 14.8%

Use of third-party assets net of IFRS 16 effect 1,207 1,270 (63) (5.0%)

Provisions and other expenses 974 799 175 21.9%

TOTAL CORE COSTS 42,769 38,648 4,121 10.7%


IFRS 16 impact (1,114) - (1,114) -



TOTAL 38,163 38,868 (705) (1.8%)



The table above shows an increase of Euro 4,121 thousand in the Company’s core costs compared

to the previous period.



Personnel costs 31/12/2019 31/12/2018 Change % Change



TFR provision 1,289 1,279 10 0.8%

Other costs 150 111 39 35.2%

TOTAL 26,563 24,949 1,614 6.5%

The table below illustrates the TAS staff at 31 December 2019:

Staff 31/12/2019 31/12/2018 Change

- Managers 27 26 1

- Executive 99 96 3

- Workers 260 253 7

TOTAL 386 375 11

The costs of services amounted to Euro 12,540 thousand, increasing by 14.8% compared to the

previous period. These are made up as follows:

Costs of services 31/12/2019 31/12/2018 Change

% Change

Software design and development 3,289 3,117 172 5.5%

Professional services from third parties for resale 3,077 2,248 830 36.9% Remuneration and refunds to directors, statutory auditors and committees 938 886 51 5.8%

Travel costs 916 937 (21) (2.3%)

Consulting and auditing firm 1,244 1,051 193 18.4%

Outsourced IT services 932 812 120 14.8%

Utilities and logistics 362 381 (18) (4.8%)

Insurance 250 296 (46) (15.5%)

Marketing and communication 586 293 293 >100%

Personnel services 798 783 16 2.0%

Other services 148 122 25 20.5%

TOTAL SERVICE COSTS 12,540 10,925 1,615 14.8%

More specifically, Marketing and Communication relates to the increased participation in events

associated mainly with Eurosystem Consolidation T2/T2S.






The Costs of services refer to the activities related to the sale of the business unit.



34)

AMORTISATIONS AND DEPRECIATIONS

This item went from Euro 5,688 thousand to Euro 5,909 as follows:

Amortisations, depreciations and impairment reversals 31/12/2019 31/12/2018 Change % Change

Capitalised software 4,077 4,333 (256) (5.9%)

Other intangible fixed assets 228 259 (32) (12.3%)

Tangible fixed assets 1,405 454 951 >100%

Impairment of equity investments - 626 (626) (100.0%)

Impairment of trade receivables and other receivables 200 15 185 >100%

TOTAL 5,909 5,688 221 3.9%

The increase in the depreciation of tangible fixed assets refers mainly to the depreciation portion

on the right of use recognised on the basis of IFRS 16 (Euro 1,104 thousand).

35)

FINANCIAL INCOME AND CHARGES

The balance of financial management was negative for Euro 571 thousand and was made up as

follows:

Financial income/(expenses) 31/12/2019 31/12/2018 Change Change %

Income from non-current receivables 12 11 1 14.1%

Income from fair value recognition 51 376 (325) (86.5%)

Other income 1 1 - (28.8%)

Exchange rate gains 1 10 (9) (92.8%)

TOTAL FINANCIAL INCOME 64 397 (333) (83.8%)

Interest payable and other financial charges (526) (942) 417 44.2%

Interest payable to parent company OWL (75) (2) (73) >(100)%

Exchange rate losses (16) (23) 7 28.9%

TOTAL FINANCIAL CHARGES (617) (967) 350 36.2%

TOTAL RESULT OF FINANCIAL MANAGEMENT (553) (571) 18 3.1%

The item Interest payable and other financial charges, which went from Euro 942 thousand in

2018 to Euro 526 thousand at 31 December 2019, included:

- interest payable on loans, current bank accounts, factoring and bank commissions account for

Euro 5 thousand (Euro 183 thousand in 2018);

- the effect for the period for Euro 170 thousand relating to the recognition of the amortised cost

of bank payables (Euro 707 thousand in 2018);

- the effect for the period for Euro 35 thousand (Euro 52 thousand in 2018) relating to the

recognition of interest costs linked to the actuarial valuation of the employee severance

indemnity provision (TFR).

- the effect for the period for Euro 316 thousand, relating to IFRS 16.

It should be noted that the interest rate risk the Company is exposed to, originates from the

financing with the parent company OWL S.p.A., which provides a 3-month Euribor percentage

rate and a spread of 150 base points, and financial liabilities for the right of use where the average

weighted incremental borrowing rate applied was below 5%. For the OWL financing, if the



Euribor should assume a negative value, the applicable rate will be formally considered zero, and

in such cases only the spread would apply.

A hypothetical increase of 0.5% in the interest rates applicable to the above funding would result

in increased net expenses before tax for about Euro 69 thousand. On the other hand, a 0.5%

reduction in interest rates would not entail any benefit for the OWL financing, because the Euribor

at the reporting date is negative, whereas there would be an annual benefit of Euro 44 thousand

for other financial liabilities.

This analysis is based on the assumption of a generalised and instantaneous 0.50% change in

interest rates, measured in homogeneous categories. A homogeneous category is defined on the

basis of the currency in which the financial liability is expressed.

36)

TAXES

Current taxes amounted to Euro 392 thousand and refer to the Company’s corporate income tax

(IRES) and regional income tax (IRAP).

Current and deferred taxes 31/12/2019 31/12/2018 Change Change %

Current taxes 392 44 348 >100%

Deferred taxes (794) (20) (774) >(100)%

TOTAL (403) 24 (427) >(100)%

The taxes included adjustments relating to the recognition of the deferred tax payable and

receivable, details of which are given in Note 17 in this section.

The reconciliation of the IRES and IRAP tax charges is reported below:

Reconciliation of IRES tax charges 31/12/2019 31/12/2018

Pre-tax profit 4,999 384

Theoretical rate (IRES) 24.0% 24.0%

Theoretical taxes 1,200 92

Higher taxes from non-deductible costs 599 391

Less taxes from non-taxable income/deductible costs (1,106) (680)

lower tax from use of prior tax losses (555) -

Net variation in deferred tax recorded and not recorded - 196

TOTAL CURRENT IRES TAXES 138 -

Reconciliation of IRAP tax charges 31/12/2019 31/12/2018

Balance IRAP carrying balances = (A-B) +B.9 + B.10.d) + B.12 + B.13 30,365 24,328

Theoretical rate (IRAP 4.21%: weighted average between regions with 3.9% rate and Lombardy at 4.82%) 4.21% 4.2%

Theoretical taxes 1,278 1,014

Higher taxes from non-deductible costs 119 124

Less taxes from non-taxable income/deductible costs (26) (1,094)

lower taxes due to tax wedge (1,118) -

Net variation in deferred tax recognised and not recognised

TOTAL CURRENT IRAP TAXES 253 44



37)

OTHER PROFIT/(LOSS) IN THE COMPREHENSIVE INCOME STATEMENT

The value of the Other profit/(loss) is made up as follows:

Other profit/(loss) 31/12/2019 31/12/2018* Change

Profit/(loss) relative to equity investments measured at equity (340) 140 (480)

Actuarial profit/(loss) on defined benefit plans (156) 158 (314)

Income tax relating to Other profit/(loss) - - -

Total Other profit/(loss), net of tax effect (496) 298 (794)

There are no tax effects relative to Other profit/(loss), in particular, “Profit/(loss) relative to equity

investments measured at equity” refers to the effects from the equity method valuation of equity

investments in subsidiaries relating to the comprehensive income statement.

38)

DISCLOSURE OF AUDITING FIRM’S FEES

According to the provisions of article 149-duodecies of the Issuers Regulations, enacting Italian

Legislative Decree No. 58 of 24 February 1998, below are details of the services rendered by the

auditing firm in 2019, in thousands of Euro.

The table below indicates the fees for the accounts audited and other services.

Type of services Service provider Service recipient Compensation

Accounts audited Company auditor TAS S.p.A. 88

Rendering other services for the issue of the auditing firm’s certification Company auditor TAS S.p.A. 10

39)

TRANSACTIONS WITH RELATED PARTIES

The following related-party transactions took place during the period. For the definition of

“Related parties”, reference is made to IAS 24 R, approved by Regulation (EC) No. 632/2010.

The table below summarises the economic, capital and financial relations with related parties on

31 December 2019:


MANTICA ITALIA

TAS EASTERN EUROPE

TAS FRANCE

TAS GERMANY

TAS INTERNATIONAL

TAS IBERIA TAS USA TAS AMERICAS OWL GUM

CONSULTING BRAVI

CONSULTING MAUDEN

Trade receivables - 103 2 - 810 391 302 520 - - - -

Trade payables (60) - (397) - (229) (8) - (360) - (42) (27) -

Financial liabilities - - - - - - - - (4,879) - - -

Other payables - - - - - - - - (140) - - -

Investments - - 61 - - - - - -

Costs

Costs for raw materials (120) (34) (4) - - (19) - - -

Costs of services (325) (78) (260) - (872) (68) - (72) - (288) (80) (1)

Financial charges - - - - - - - - (191) - - -

- - - - - - - - -

Revenue

Revenue for services - 16 2 16 1,664 120 55 255 -

Other revenue - 8 117 - - - - 3 -


Related-party transactions as defined by IAS 24 were carried out in accordance with laws in force,

at normal market prices.

The costs regarding subsidiaries referred mainly to the days worked by the subsidiary’s

employees on the Company’s jobs and projects;

Revenue from subsidiaries referred mainly to the royalties due to the Company on the

subsidiary's revenue;

The relations between the Company and the Parent Company OWL S.p.A. referring to

Group management and coordination services and existing funding consequent to the debt

release operation completed at the end of 2018;

The relations with the company Gum Consulting S.r.l. in which Dario Pardi is a majority

shareholder and referring to the compensation including the refund of expenses as

Chairman of the Company’s Board of Directors;

The relations with the company Bravi Consulting S.r.l. in which Valentino Bravi is a

shareholder referring to the consulting provided to the Company;

The relations with the company Mauden S.p.A. in which Roberta Viglione, a TAS Board

member is a shareholder and CEO, referring to the provision of specialist services in the

MQ Advanced (IBM) area.

The following information contains details of the impact that related-party transactions had on the

Company’s financial and asset situation:

Impact of related-party transactions

Related parties

Total Absolute Amount %

a) Impact of related-party transactions on items on the Balance Sheet

Trade receivables 22,780 2,128 9.3%

Trade payables (14,224) (1,123) 7.9%

Current financial liabilities (6,316) (4,879) 77.3%

Other payables (7,977) (140) 1.8%

b) Impact of related-party transactions on items on the Income Statement

Raw material consumables (1,046) (177) 16.9%

Costs of services (11,797) (2,044) 17.3%

Trade revenue 45,950 2,129 4.6%

Other revenue 1,031 127 12.3%

c) Impact of related-party transactions on cash flow

Financial revenue 64 - 0.0%

Financial charges (617) (191) 30.9%



40)

SUBSEQUENT EVENTS

From the financial year’s closing date, it is noted as follows:

On 1 January 2020, the transfer of the Payments Unit from TAS to the fully controlled

company Global Payments S.p.A. took effect. Consequently, TAS retains the Extended

ERP and Capital Market activities, the centralised service functions. For additional

information, reference is made to Note 1 in this section of the document.

On 17 February 2020, TAS completed the Group’s international business restructuring

project, which had formerly been announced to the market on 18 July 2019. More

specifically, today it transferred to TAS International (formerly TAS Helvetia S.A.) - a

Swiss registered company fully held by TAS, all the interests held by TAS in the Group’s

other foreign subsidiaries, namely TAS France S.A.S.U., TAS Germany GmbH, TAS

Iberia S.L.U., TAS USA Inc., TAS Americas Ltda and TAS Eastern Europe D.O.O.,

without a capital increase. The amount for the transfer equals the amount recorded for the

relevant equity investments in the individual TAS financial statements at 31 December

2019, and will be recognised under TAS International S.A. as “capital contribution

reserves”.

On 20 February 2020, an operation changing the TAS Group’s ownership structure was

completed, with the entry of the new investor CLP S.r.l. and the increased shareholding of

the controlling shareholder GUM International S.r.l., the indirect Parent Company of TAS.

For additional information, reference is made to the market communications.

41)

NUMBER OF EMPLOYEES

Staff 31/12/2019 31/12/2018 Change

- Managers 27 26 1

- Executive 99 96 3

- Workers 260 253 7

TOTAL 386 375 11



42)

INFORMATION REQUIRED BY THE LAW OF 4 AUGUST 2017, ART. 1, PARAGRAPHS

125-129

Paragraphs 125 to 129 were added to article 1 of Italian Law 124/2017 to introduce certain

measures aimed at ensuring transparency in the public service provider system, which fall within

the scope of the European and national regulatory framework: in this regard, Italian Legislative

Decree 33/2013 reformulated the regulations referring to the right of civic access and obligations

of disclosure, transparency and the dissemination of information by public administrations.

The formulation of the text in this regulation immediately gave rise to a number of problems for

businesses in terms of interpretation and application. The National Anti-Corruption Authority

[ANAC] then intervened in this regard with resolution no. 1134 of 8 November 2017, in which it

identified people responsible for the implementation and monitoring of service provision in

individual administrations, and the correct fulfilment of the consequent obligations. In the opinion

no. 1149 dated 1 June 2018, the Council of State then clarified that 2019 would be the first year of

application for the amounts received from 1 January to 31 December 2018.

More recently, Italian Law dated 11 February 2019 (Italian Legislative Decree no. 135 of 14

December 2018) stipulated that provisions falling within the scope of the National State Aid

Register established by the Ministry of Economic Development did not need to be disclosed

(Italian Law 115/2015).

Also of note is the Assonime Circular No.5 “Business and competition activities”, published on

22 February 2019, which contains certain guidelines and notes the main areas of uncertainties,

hoping that the authorities will intervene by issuing regulations to guarantee the correct and

standard fulfilment of business obligations, and that the sanctions contained in the regulation will

not be applied.

On this basis, the criteria adopted by TAS S.p.A. in accordance with the Assonime Circular

referred to, are set out below. Grants, contributions and economic benefits of any kind received

from 1 January to 31 December 2018 were taken into consideration. These amounts were

recognised for the purposes of this regulation based on a cash criterion, whilst complying with the

correct accounting standards, they were recognised in the financial statements according to the

accrual criterion. Considerations were excluded on the other hand, including remunerated

appointments, tax incentives, grants to private parties and those originating from the public entities

of other countries, or supranational entities (for example, the European Commission).

Based on the above, it is believed that TAS has no amounts to report with regard to this Law.


43)

REMUNERATION TO DIRECTORS, STATUTORY AUDITORS, GENERAL MANAGERS AND DIRECTORS WITH STRATEGIC

RESPONSIBILITIES

Below are the details of the remuneration (in Euro) payable to the directors, members of the Board of Statutory Auditors, General Managers

and directors with strategic responsibilities in the year 2019.

Name and Surname Position held during

the year

Period in which the

position was held

Expiry of office Fixed

remuneration*

Consideration

as member of committees

Non-

monetary benefits

**

Bonuses

and other incentives

***

Total Fixed

remuneration over total (%)

Variable

remuneration over total (%)

Dario Pardi Chairman 01/01-31/12/2019 Approv. FS 2019 260,000

75,000 335,000 77.6% 22.4%

Valentino Bravi Chief Executive Officer 01/01-31/12/2019 Approv. FS 2019 370,000

3,667 75,000 448,667 83.3% 16.7%

Carlo Felice Maggi Vice Chairman 01/01-31/12/2019 Approv. FS 2019 40,000

40,000 100.0% 0.0%

Carlotta De Franceschi Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Giancarlo Maria Albini Board member 01/01-31/12/2019 Approv. FS 2019 15,000 10,000

25,000 100.0% 0.0%

Roberta Viglione Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Ambrosella Ilaria Landonio Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Martino Maurizio Pimpinella Board member 01/01-31/12/2019 Approv. FS 2019 15,000 5,000

20,000 100.0% 0.0%

Nicolò Locatelli Board member 01/01-05/04/2019 Approv. FS 2019 5,000

5,000 100.0% 0.0%

Alberto Previtali Board member 18/07-31/12/2019 Approv. FS 2019 9,167

9,167 100.0% 0.0%

Total directors’ remuneration 759,167 30,000 3,667 150,000 942,834 84.1% 15.9%

Antonio Mele Chairman 01/01-31/12/2019 Approv. FS 2019 41,600

41,600

Claudia Sgualdino Standing Auditor 01/01-31/12/2019 Approv. FS 2019 31,239

31,239

Silvano Crescini Standing Auditor 01/01-31/12/2019 Approv. FS 2019 31,239

31,329

Total auditors’ remuneration 104,167 - - - 104,167 -

TOTAL REMUNERATION 863,334 30,000 3,667 150,000 1,047,001 84.1%

Directors with strategic responsibilities**** 550,000 4,715 220,000 774,715 71.6% 28.4%

* The amounts stated refer to the remuneration authorised by the Shareholders’ Meeting, flat-rate refunds and fixed remuneration for employees. It does not include welfare contributions payable by employer and TFR provisions.

** Included fringe benefits.

*** The stated amounts refer to the variable portion of remuneration. **** Includes the 4 managers in office on 31 December 2019.

For more details, please refer to the Remuneration Report.



the Chief Executive Officer

VALENTINO BRAVI


ANNEX 1:

The basic data on the parent company OWL S.p.A. set out in the summary chart required by article

2497-bis of the Civil Code, was taken from the respective Balance Sheet for the financial year

ending 31 December 2018. For a full and complete understanding of the Balance Sheet and

financial situation of OWL S.p.A. at 31 December 2018, as well as the financial profit achieved

by the company in the financial year which ended on that date, reference is made to the Financial

Statements which, together with the auditing firm’s report, is available in the forms and formats

set down by law.

OWL S.p.A.

Registered Office: Via Dell’Annunciata, 23/4 - Milan

Tax code/Milan Registry of Businesses No. 03222440160

BALANCE SHEET

ASSETS

Amounts in Euro 31/12/2018 31/12/2017

A Receivables from shareholders for outstanding payments - -

B Fixed assets 43,418,218 31,157,316

C Current assets 365,085 1,007,396

D Accruals and deferrals 224,357 -

TOTAL ASSETS 44,007,660 32,164,712

LIABILITIES

Amounts in Euro 31/12/2018 31/12/2017

A Net Equity 28,789,206 29,128,680


Reserves 24,036,813 24,036,813

Profit/(loss) carried forward 4,971,867 (148,799)

Profit (loss) for financial year (339,474) 5,120,666

B Provisions for risks and charges - -

C Severance pay for end of employment - -

D Payables

15,203,454 3,036,032

E Accruals and deferrals 15,000 -

TOTAL LIABILITIES 44,007,660 32,164,712

INCOME STATEMENT

Amounts in Euro 31/12/2018 31/12/2017

A Value of production 100,600 28,891

B Costs of production (235,950) (299,785)

C Financial income and charges 2,260 121

D Impairment of financial assets (206,384) 5,391,439

E Extraordinary income and expenses - -

Income tax for financial year - -

Profit (loss) for the period (339,474) 5,120,666



Certification of the Financial Statements pursuant to Art. 81-ter of the Consob Regulation

No. 11971 of 14 May 1999, as amended.

The undersigned Valentino Bravi, Chief Executive Officer, and Paolo Colavecchio, as Officer in

charge of the preparation of the company accounting documents for TAS S.p.A. also considering

that as established by Art. 154-bis, paragraphs 3 and 4 of Italian Legislative Decree No. 58 of 24

February 1998, certify:

the adequacy in respect of the Company’s characteristics, and

the effective application,

of the administrative and accounting procedures for the preparation of the Financial Statements

during the financial period from January-December 2019.

It is also hereby certified that the Financial Statements at 31 December 2019:

a. have been drawn up according to the international accounting standards applicable and

recognised in the European Community pursuant to the regulation (EC) no. 1606/2002 of

the European Parliament and Council of 19 July 2002;

b. correspond to the balances in the accounting records;

c. provide a true and correct representation of the equity and economic and financial situation

of the issuer and of all the companies included in the consolidation.

The Report on Operations includes a reliable analysis of the trend and operating profit, in addition

to the position of TAS and all businesses included in the consolidation and a description of the

main risks and uncertainties to which they are exposed.


Chief Executive Officer Financial Reporting Officer

Valentino Bravi Paolo Colavecchio

Tas SpA Administrative Headquarters Via del Lavoro 47 40033 Casalecchio di Reno (BO) T [+39] 051 458011 F [+39] 051 4580248 www.tasgroup.it Company subject to the direction and coordination of OWL S.p.A. based in Milan, Via dell’Annunciata 23/4 - Tax Code and Milan Company Reg. 03222440160

Tas SpA Registered Office Via Cristoforo Colombo 149 00147 Rome T [+39] 06 7297141 F [+39] 06 72971444

Share Capital € 24,330,645.50 fully paid up R.E.A. No. RM 732344 VAT number 03984951008 Tax code and Rome Co. Reg. no. 05345750581 PEC: [email protected]

Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220.00 i.v. Codice Fiscale/Registro delle Imprese Milano n. 03049560166 – R.E.A. Milano n. 172039 | Partita IVA IT 03049560166 Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo www.deloitte.com/about. © Deloitte & Touche S.p.A.

Deloitte & Touche S.p.A. Piazza Malpighi, 4/2 40123 Bologna Italia Tel: +39 051 65811 Fax: +39 051 230874 www.deloitte.it

INDEPENDENT AUDITOR’S REPORT

PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

AND ARTICLE 10 OF THE EU REGULATION 537/2014

To the Shareholders of

TAS Tecnologia Avanzata dei Sistemi S.p.A.

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of TAS Tecnologia Avanzata dei Sistemi S.p.A. and its

subsidiaries (“TAS Group” or the “Group”), which comprise the consolidated balance sheet as at December 31,

2019, the consolidated income statement and the comprehensive consolidated income statement, the

statement of changes in consolidated net equity and the consolidated cash flow statement for the year then

ended, and notes to the consolidated financial statements, including a summary of significant accounting

policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated

financial position of the Group as at December 31, 2019, and of its consolidated financial performance and its

consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards

as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of

Italian Legislative Decree no. 38/05.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated

Financial Statements section of our report. We are independent of TAS Tecnologia Avanzata dei Sistemi S.p.A.

(the “Company”) in accordance with the ethical requirements applicable under Italian law to the audit of the

financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit

of the consolidated financial statements of the current period. These matters were addressed in the context of

our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do

not provide a separate opinion on these matters.

2

Impairment test on goodwill

Description of the

key audit matter

The TAS Group has recognised goodwill of Euro 18,355 thousand, allocated

mainly to the cash generating unit (CGU) called “Ramo Pagamenti” and

recorded in the Group financial statements for Euro 15,976 thousand, mainly

deriving from acquisitions in previous years of business units operating in the

Italian market. The balance also includes the goodwill allocated to the Spanish

CGU for Euro 1,345 thousand, to the Serbian CGU for Euro 943 thousand and

to the French CGU for Euro 91 thousand.

As foreseen in IAS 36 "Impairment of assets", goodwill is not amortised but

subjected to an impairment test at least once a year, by comparing the

recoverable amount of each CGU - determined according to the value in use

method - and the carrying amount, which takes into account both the goodwill

and the other assets allocated to individual CGUs.

The valuation process adopted by management is complex and is based on a

series of assumptions, such as the forecast cash flows of the cash-generating

units (CGUs), the appropriate discounting rate (WACC) and the long-term

growth rate (g-rate). These assumptions are, by nature, influenced by future

expectations regarding the evolution of external market conditions linked to

the propensity of banks and other financial institutions, that are among the

Company and the Group's main customers, to invest in software.

Considering the size of the goodwill of the “Ramo Pagamenti” CGU shown in

the financial statements, the subjectivity of the estimates relating to the

determination of the cash flows of the CGU and the key assumptions of the

impairment test, despite the presence of a test result having a large margin of

coverage, we considered the impairment test of goodwill was a key audit

matter for the consolidated financial statements of the TAS Group.

Note 12 of the consolidated financial statements presents information about

the goodwill recognised, including a sensitivity analysis that describes the

effects of changing the key assumptions used to carry out the impairment test.

3

Audit procedures

performed

With reference to this key audit matter, we firstly examined the approach taken by management to determine the value in use of the “Ramo Pagamenti” CGU, analysing the methods and assumptions applied by management to carry out the impairment test, also with the support of experts from the Deloitte network, the following audit procedures were adopted:

• identification and understanding of the key controls implemented by the

TAS Group over the impairment testing process;

• analysis of the reasonableness of the principal assumptions made to

estimate their cash flows, including by recourse to data on the expected

growth in revenues of the software sector and by obtaining other

information from management that we deemed to be significant;

• analysis of actual data of the year in comparison with the original plan, in

order to assess the nature of variances and the reliability of the planning

process;

• assessment of the reasonableness of the discount rate (WACC) and the

long-term growth rate (g-rate);

• verification of the mathematical accuracy of the model used to determine

the value in use of the “Ramo Pagamenti” CGU;

• verification that the carrying amount of the “Ramo Pagamenti” CGU was

determined properly and comparison with the value in use resulting from

the impairment test;

• verification of the sensitivity analysis prepared by management.

We also examined the adequacy of the disclosures provided by the Group

about the impairment test and its consistency with the requirements of IAS 36.

Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated Financial

Statements

The Directors are responsible for the preparation of consolidated financial statements that give a true and fair

view in accordance with International Financial Reporting Standards as adopted by the European Union and the

requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05, and,

within the terms established by law, for such internal control as the Directors determine is necessary to enable

the preparation of consolidated financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless they have identified the existence of the conditions for the liquidation

of the Company or the termination of the business or have no realistic alternatives to such choices.

The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Group’s

financial reporting process.

4

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due

to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the Directors.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor’s report to the related

disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.

However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including

the disclosures, and whether the consolidated financial statements represent the underlying transactions

and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business

activities within the Group to express an opinion on the consolidated financial statements. We are

responsible for the direction, supervision and performance of the group audit. We remain solely responsible

for our audit opinion.

We communicate with those charged with governance, identified at an appropriate level as required by ISA

Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence applicable in Italy, and to communicate with them all relationships and

other matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

5

From the matters communicated with those charged with governance, we determine those matters that were of

most significance in the audit of the consolidated financial statements of the current period and are therefore

the key audit matters. We describe these matters in our auditors’ report.

Other information communicated pursuant to art. 10 of the EU Regulation 537/2014

The Shareholders' Meeting of TAS Tecnologia Avanzata dei Sistemi S.p.A. has appointed us on April 29, 2015 as

auditors of the Company for the years from December 31, 2015 to December 31, 2023.

We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU Regulation

537/2014 and that we have remained independent of the Company in conducting the audit.

We confirm that the opinion on the financial statements expressed in this report is consistent with the

additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11 of the

said Regulation.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Opinion pursuant to art. 14 paragraph 2 (e) of Legislative Decree 39/10 and art. 123-bis, paragraph

4, of Legislative Decree 58/98

The Directors of TAS Tecnologia Avanzata dei Sistemi S.p.A. are responsible for the preparation of the report on

operations and the report on corporate governance and the ownership structure of TAS Group as at December

31, 2019, including their consistency with the related consolidated financial statements and their compliance

with the law.

We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an

opinion on the consistency of the report on operations and some specific information contained in the report on

corporate governance and the ownership structure set forth in art. 123-bis, n. 4 of Legislative Decree 58/98,

with the consolidated financial statements of TAS Group as at December 31, 2019 and on their compliance with

the law, as well as to make a statement about any material misstatement.

In our opinion, the above-mentioned report on operations and some specific information contained in the report

on corporate governance and the ownership structure are consistent with the consolidated financial statements

of TAS Group as at December 31, 2019 and are prepared in accordance with the law.

6

With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on

the basis of the knowledge and understanding of the entity and of the related context acquired during the

audit, we have nothing to report.

DELOITTE & TOUCHE S.p.A.

Signed by

Francesco Masetti

Partner

Bologna, Italy

April 3, 2020

This report has been translated into the English language solely for the convenience of international readers.

Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220.00 i.v. Codice Fiscale/Registro delle Imprese Milano n. 03049560166 – R.E.A. Milano n. 172039 | Partita IVA IT 03049560166 Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo www.deloitte.com/about. © Deloitte & Touche S.p.A.

Deloitte & Touche S.p.A. Piazza Malpighi, 4/2 40123 Bologna Italia Tel: +39 051 65811 Fax: +39 051 230874 www.deloitte.it

INDEPENDENT AUDITOR’S REPORT

PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

AND ARTICLE 10 OF THE EU REGULATION 537/2014

To the Shareholders of

TAS Tecnologia Avanzata dei Sistemi S.p.A.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of TAS Tecnologia Avanzata dei Sistemi S.p.A. (the “Company”),

which comprise the balance sheet as at December 31, 2019, the income statement and the comprehensive

income statement, the statement of changes in net equity and the cash flow statement for the year then

ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the

Company as at December 31, 2019, and of its financial performance and its cash flows for the year then ended

in accordance with International Financial Reporting Standards as adopted by the European Union and the

requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial

Statements section of our report. We are independent of the Company in accordance with the ethical

requirements applicable under Italian law to the audit of the financial statements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit

of the financial statements of the current period. These matters were addressed in the context of our audit of

the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

opinion on these matters.

2

Impairment test on goodwill

Description of the

key audit matter

The Company has recognised goodwill of Euro 15,393 thousand, allocated to

the cash generating unit (CGU) called "Ramo Pagamenti", mainly deriving from

acquisitions in previous years of business units operating, in particular, in the

Italian market.

As foreseen in IAS 36 "Impairment of assets", goodwill is not amortised but

subjected to an impairment test at least once a year, by comparing the

recoverable amount of each CGU - determined according to the value in use

method - and the carrying amount, which takes into account both the goodwill

and the other assets allocated to individual CGUs.

The valuation process adopted by management is complex and is based on a

series of assumptions, such as the forecast cash flows, the appropriate

discounting rate (WACC) and the long-term growth rate (g-rate). These

assumptions are, by nature, influenced by future expectations regarding the

evolution of external market conditions linked to the propensity of banks and

other financial institutions, which are among the main customers of the

Company, to invest in software.

Considering the size of the goodwill, the subjectivity of the estimates relating

to the determination of the cash flows and the key assumptions of the

impairment test, despite the presence of a test result having a large margin of

coverage, we considered the impairment test of goodwill a key audit matter for

the financial statements of the Company.

Note 13 of the financial statements present information about the goodwill

recognised, including the impairment test, which comprises a sensitivity

analysis that describes the effects of changing the key assumptions used to

carry out the impairment test.

3

Audit procedures

performed

With reference to this key audit matter, we firstly examined the approach

taken by management to determine the value in use of the "Ramo Pagamenti"

CGU, analysing the methods and assumptions applied by management to carry

out the impairment test, also with the support of experts from the Deloitte

network, the following audit procedures were adopted:

• identification and understanding of the significant controls implemented by

the Company over the impairment testing process;

• analysis of the reasonableness of the principal assumptions made to

estimate their cash flows, including by recourse to data on the expected

growth in revenues of the software sector and by obtaining other

information from management that we deemed to be significant;

• analysis of actual data of the year in comparison with the original plan, in

order to assess the nature of variances and the reliability of the planning

process;

• assessment of the reasonableness of the discount rate (WACC) and the

long-term growth rate (g-rate);

• verification of the mathematical accuracy of the model used to determine

the value in use of the "Ramo Pagamenti" CGU;

• verification that the carrying amount of the "Ramo Pagamenti" CGU was

determined properly and comparison with the value in use resulting from

the impairment test;

• verification of the sensitivity analysis prepared by management.

We also examined the adequacy of the disclosures provided by the Company

about the impairment test and its consistency with the requirements of IAS 36.

Responsibilities of the Directors and the Board of Statutory Auditors for the Financial Statements

The Directors are responsible for the preparation of financial statements that give a true and fair view in

accordance with International Financial Reporting Standards as adopted by the European Union and the

requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05 and,

within the terms established by law, for such internal control as the Directors determine is necessary to enable

the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the

Company or for the termination of the operations or have no realistic alternative to such choices.

The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the

Company’s financial reporting process.

4

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis

of these financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by the Directors.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor’s report to the related

disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future

events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance, identified at an appropriate level as required by ISA

Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence applicable in Italy, and to communicate with them all relationships and

other matters that may reasonably be thought to bear on our independence and, where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of

most significance in the audit of the financial statements of the current period and are therefore the key audit

matters. We describe these matters in our auditors’ report.

5

Other information communicated pursuant to art. 10 of the EU Regulation 537/2014

The Shareholders' Meeting of TAS Tecnologia Avanzata dei Sistemi S.p.A. has appointed us on April 29, 2015 as

auditors of the Company for the years from December 31, 2015 to December 31, 2023.

We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU Regulation

537/2014 and that we have remained independent of the Company in conducting the audit.

We confirm that the opinion on the financial statements expressed in this report is consistent with the

additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11 of the

said Regulation.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Opinion pursuant to art. 14, paragraph 2 (e), of Legislative Decree 39/10 and art. 123-bis,

paragraph 4, of Legislative Decree 58/98

The Directors of TAS Tecnologia Avanzata dei Sistemi S.p.A. are responsible for the preparation of the report on

operations and the report on corporate governance and ownership structure of TAS Tecnologia Avanzata dei

Sistemi S.p.A. as at December 31, 2019, including their consistency with the related financial statements and

their compliance with the law.

We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an

opinion on the consistency of the report on operations and some specific information contained in the report on

corporate governance and ownership structure set forth in art. 123-bis, n. 4 of Legislative Decree 58/98 with

the financial statements of TAS Tecnologia Avanzata dei Sistemi S.p.A. as at December 31, 2019 and on their

compliance with the law, as well as to make a statement about any material misstatement.

In our opinion, the above-mentioned report on operations and information contained in the report on corporate

governance and ownership structure are consistent with the financial statements of TAS Tecnologia Avanzata

dei Sistemi S.p.A. as at December 31, 2019 and are prepared in accordance with the law.

With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on

the basis of the knowledge and understanding of the entity and of the related context acquired during the

audit, we have nothing to report.

DELOITTE & TOUCHE S.p.A.

Signed by

Francesco Masetti

Partner

Bologna, Italy

April 3, 2020

This report has been translated into the English language solely for the convenience of international readers.