Nexi S.p.A.'s (NEXPF) CEO Paolo Bertoluzzo on Q2 2021 Results - Earnings Call Transcript

Nexi S.p.A. (OTCPK:NEXPF) Q2 2021 Earnings Conference Call July 30, 2021 7:00 AM ET

Company Participants

Paolo Bertoluzzo – Chief Executive Officer

Bernardo Mingrone – Chief Financial Officer

Stefania Mantegazza – Investor Relations

Conference Call Participants

James Goodman – Barclays

Hannes Leitner – UBS

Sebastien Sztabowicz – Kepler Cheuvreux

Josh Levin – Autonomous

Mohammed Moawalla – Goldman Sachs

Simonetta Chiriotti – Mediobanca

Gianmarco Bonacina – Equita

Alexandre Faure – Exane BNP Paribas

Paulo Luis – Verition Advisors

Operator

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining for the Nexi's First Half 2021 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Paolo Bertoluzzo, CEO of Nexi. Please go ahead, sir.

Paolo Bertoluzzo

Good morning. Good morning to all of you. This is Paolo and welcome to our first half 2021 results call. As usual I'm here with Bernardo Mingrone, our CFO; and Stefania Mantegazza, who is leading our Investor Relations activities.

In the session today in our presentation, most importantly, we will be covering as usual the first half volume dynamics and Nexi Italy results if I may say that. So, the first session is going to be focused on the Nexi of yesterday, but this is still the Nexi that is relevant for the first half results for 2021. And then actually we give you a short update on where we are on progress on the integration of Nets and SIA. And then we will a little bit switch gears that now that we will cover summary of Nets results in the first of the year. And then we will give you a flavor of how now the combined Nexi and Nets entity would look like in the first of the year if it was already a one single company. And then I will come back at the end with our updated and upgraded ambition for 2021 as a new aggregated entity.

Let me jump to Page 3, where as usual we will summarize the key messages from today. Three gate messages. As far as volume or dynamics are concerned, we continue to see an acceleration in volumes, thar are by now well, back to above pre-COVID levels. Over the last couple of weeks, we have seen all macro sectors now growing versus 2019, including also the more travel and leisure related sectors. Italian cards have been growing over the last few weeks above 20% year-over-year, will now I have double-digit growth across all sectors. In parallel also international cards and foreign cards are now foreign cards are now accelerating the still negative base accelerating very fast. Last but not least, as you will see we have a specific page we see a confirmed acceleration of cash digital payments shift across, I would say, most of the sectors.

Second key message, our financial performance in the second quarter have been strong and accelerating versus the third quarter. We have been growing revenues in the quarter by almost 23% versus last year, actually 6.7% versus 2019. So the results of material growth versus pre-COVID levels.

EBITDA has been growing almost 27% versus last year, actually 10.6% versus second quarter 2019 confirming operating leverage working in our favor.

Third key message, we are continuously progressing and consistently progressing in creating The European PayTech leader on the back half of the combination with Nets and SIA.

As you have seen we have strong SIA and Nets standalone performances in their geographies. The Nets deal has been closed on the 1 of July and in now one company. While next is SIA, we expect to receive regulatory approvals by September, October and we expect to close in the fourth quarter of this year. Overall, the transformation is well on track, actually we are a little bit ahead of where we thought we would have been. And as we are doing the numbers with more detail we start to see an upside on at the announced synergies offer at least 10% in the mid and long-term.

Overall, as we combine these three messages, we're actually now increasing the ambition for the year, for the second half of the year, for the full year as well. Obviously, we are now talking about the combined Nexi and Nets that will give us a larger and more diversified base, as well.

As far as revenues are concerned, we expect to see an acceleration in second half, anywhere in between 11% and 13%, bringing the total for the year around 10%. Now while EBITDA should grow in the second half of the year, is around 13% to 16%, while overall year should be anywhere in between 11% to 13%, which is higher versus where we were as Nexi’s standalone when we talked in May.

Now let me jump to the volume dynamics. I would cover only three pages we put everything in the document as always and we'll be also having the backups to the comparisons with 2020, but I really want to cover three pages here. So, if you jump to Page 7, Page 7, gives you a focus on Merchant Services and what we in terms of acquiring volumes. Here, the total has been over the last week at around 14%. We received last night the most recent data is also anywhere in between 10% to 15%. So good growth.

As always, we started with the split in between Italian cards and international cards. Italian cards have been growing at around 26%, 25% in the recent period. And this is consistent over the last few weeks, while you see a strong and accelerated, I would say, acceleration in particular in June and July from international cards regardless of citizens incoming into Italy from other countries. So consistent growth, double-digit growth on Italian cards and the real acceleration of international cards, as well.

If you now jump to Page 9, to give you the usual by sector dynamics. I think the picture is a fairly clear. We see a consistent accelerated growth in what we call basic consumption sectors from groceries, to pharmacies, to utilities, to basic services more in general, over the last few weeks have been moving around 30%, 31% in the last week. We’ve seen a recovery of what we call discretionary services, discretionary products, which is the gray line that came back into the positive around June and was at around 8% in the last week.

And last but not least, is probably the most positive and unexpected news in over the last few weeks, we have seen a very, very, very fast recovery in the high impact consumption sectors that went into positive space over the last couple of weeks. And here we have seen that a very, very material acceleration, especially when it comes to restaurants, bars, hotels, and so on, which means that people are really, really keen to come to a more normal life as restrictions are released.

Final page that I want to cover on volume is Page 10. On Page 10, as we've done in the past, we tried to highlight elements that give comfort on the fact that we are seeing an acceleration of the shift from cash to digital in Italy. On the left you see – and here we have basically taken out from the numbers the contribution from a foreign card. So, we're talking about Italian cards only. So that we need to realize that effect of international travel being still limited, even as you have seen its recovering fast.

On the left, you see the macro-categories dynamic. You’ve seen now an acceleration basically across 2021 and is now moving anywhere in between 30% to 40%. Discretionary consumption recovering throughout the year and now a double digit as well, 19% in the last week. And high impact consumption if you remove the effect of the foreign cards, is actually also into double digit growth actually in the last week. And with the consistent recovery at around 23%.

On the right we have highlighted the dynamics in more specific sectors and more granular sectors, to give you a real perception of what is happening in terms of shift from cash to digital. You can read them yourself, but on basic assumption we have the usual grocery sector that is actually most important here growing in between 20% and 30%. But actually, you see sectors like doctors and dentists that are sometimes have be newer to digital payments growing 70% to 80%.

When it comes to discretionary consumption, you see certain sectors, in particular, I would say also the business-to-business sector is growing at 50%, 60%, 90%. When it comes to high impact consumption sector, I think, this is practically failing in terms of how the society is coming back, or is trying to come back to more normal life where you see hotels coming back into double digit growth, entertainment, despite a lot of limitations still in place, 20% and restaurants with an outstanding 35%.

So, all in, good volume dynamics, I would say faster than expected growth in certain areas and confirmed acceleration of cash to digital migration in Italy.

Let me now hand over to Bernardo that will take us through our results again, as Nexi Italy alone for the first half.

Bernardo Mingrone

Thanks, Paolo. Good afternoon from me as well. Starting on Page 12, we'll go through the usual set of slides with regards to financial performance, starting with revenues. I would highlight on this slide what Paolo has said, i.e. a stronger quarter, strong first half with volume recovery fueling the growth in revenues. What I would highlight is the margin expansion we've seen compared to last year. So, two percentage point pick up from 54% last year to 56% this year. The progression is also clear if you look at the first quarter this year, compared to second quarter of this year, where we have picked up a similar margin. Overall, for the first half, we have a 55% margin which is in line with this progression I just outlined.

So, a pickup in revenues, which follows the growth of revenues and in margin, which is also being helped by what we will see with Merchant Services, and Cards & Digital Payments in terms of the mix we have seen in terms of these volume recoveries.

So, on Slide 13, if we go on to Merchant Services here is where we have the strong growth in the quarter in terms of revenues with 25% increase. This is against a quarterly increase in volumes of approximately 34%. Approximately two thirds of our revenues in Merchant Services are volume-driven and therefore, the growth in revenues is slightly lower than the growth in volumes. However, more than proportional. And we’ve just tried to highlight this in the comments in the right. What we've seen in the quarter are two mix effects, which are positive. The first one is sales. So, cards being used at POS terminals rather than for withdrawing cash from ATMs has grown 22% compared to the average growth of overall managed transactions of 16%, so positive mix effect there.

The other positive mix effect is on the composition of volumes at terminals. So, compared to compared to LAKA SMEs have grown more. We see that 28% growth in terms of SMEs, which outperformed the overall growth in point-of-sale volume growth.

The other highlights of the quarter indeed for the first half of this year with regards to performance Merchant Services & Solutions is the ongoing and increasing demand for omni-channel solutions, where our merchants are asking for ways to make sure they can accept payments through all of their distribution channels seamlessly. An acceleration of our mPOS proposition, so to counter also some new entrants in the markets, which is giving us good results in particular in certain verticals, for instance, I'd say, restaurants or micro merchants in general.

And E-commerce, which is both grown very healthy, 54% growth compared to the first half of 2019. The comparison with 2020 is obviously impacted by the severe lockdown we had last year in the first half, which obviously created a huge surge in E-commerce volumes, but still growth compared to last year 15%. But also in terms of revenues, which is driven by a greater, let's say penetration or a greater demand for gateway activations, for instance, in our example here, which are twice what they were in the first half of 2019.

Overall volumes are still slightly down compared to 2019. So, we're not at pre-COVID level in terms of value transactions. Indeed, we are in terms of number of transactions, and that's clearly the impact of foreign cards, which is still knocked back to where it was.

Moving on to Slide 14, we have a similar picture in terms of cards and digital payments. I won't comment the volumes, you have the data there. We're pretty much back to pre-COVID levels, also in terms of value of managed transactions. And that's because obviously foreign cards don't impact on this value of transactions number. So, less tourism. And I think less impact from tourism. But what we'd like to highlight is, again, a mix, a positive mix effect within cards and digital payments, which is two-fold. I would say one driven by commercial cards. So, as people travel for business more than the Houston in the past because of lower restrictions, we have a benefit and profitability of these cards is roughly, I would say, three times that of a normal card. And the faster or increasing pace of growth of international debit. Again, international debit product for us is more profitable than a standard national debit product, approximately four times more – or sorry, three times it is four times more for commercial cards.

Overall, we have a strong growth in installed base, and this is a mix of effects. Most importantly, new clients we've onboarded a new client and we have new value-added services, which were introduced in the market in the first half of this year, which have helped to grow this number.

Page 15, on Digital Banking Solutions less impacted overall by COVID more helped, I would say, by project work to help a couple of our clients integrate the acquisition of UBI. But otherwise, a generalized increase in revenues throughout the four divisions of Digital Banking Solutions.

Slide 16 on costs, as you know, as we saw in the first quarter of this year, and we are expecting for the full year, we have a bounce back of costs, which are basically driven by the bounce back in volumes I have just spoken up. And also the fact that we are now occurring variable compensation to budget compared to last year where we zeroed it because of the negative impact of COVID on profitability. I would highlight that notwithstanding all of this and going basically anticipating something that Paul will then say with regards to guidance for the year, I would just highlight how there is strong cost control at Nexi, and we still remain committed and will deliver costs for 2021, which are below 2019 level.

And this, I think, is a worth of note given that compared to 2019, we're managing 25% more volumes in terms of number of transactions, which is what drives the variable components of our cost base to our outsourcer. And we have approximately 80 FTEs more than 2019. So notwithstanding this greater cost base for this greater volume, the days that we manage costs will be below 2019 levels.

The other point maybe that is worth highlighting and this is again, a byproduct of one of the transactions we've announced is that part of the growth in variable costs for us is processing costs of more volumes. And those are processing revenues for SIA, which will be merged into Nexi later this year. So, revenues for SIA.

On Slide 17 on CapEx, we are roughly flat compared to last year in-line with the guidance for the year. I would say only highlight how the growth in ordinary CapEx is essentially tied to the growth in volumes. So last year we were buying few less POS terminals given the lockdown. And I would say the growth is primarily driven by that €5 million growth from €40 million to €45 million. But overall, the 12% of revenues are pretty much in line with expectations for the year.

On Slide 18, I think here, what I would highlight is how we are – approximately three quarter of the way done with our transformation program. Here we have had the opportunity to basically you revise the transformation program and secure savings of approximately €40 million compared to the additional €80 million we still have to spend. And that's thanks to the integration, which will happen with CSO we already have with our next generation platform, which we don't have to build any more, and that's how we are coming by the savings. Which means we are actually further down the transformation or the Nexi Play. Normalize for that we're probably 85% done, which is a good news because it means we can focus on integration of Nets and SIA.

Slide 19, is usual slide we show on what's going on below EBITDA. At Nexi we have flat, I would say, transformation costs around €10 million, €11 million in the first half of this year. Three quarters earlier on two thirds I would say this is related to the app, the rest is just pure transformation.

And then on the right, we have a bridge between transformation costs and overall costs below EBITDA. And you can see the €70 million would take us to minus €80 million, overall, I would say M&A driven. So, it's advisory costs, refinancing costs and integration costs related to Nets and SIA which take us to minus €80 million.

And then we have a non-cash cost of €15 million, which is born by Mercury UK, the former parent company of NEXI. And it just goes through our P&L, but is netted by an equal and opposite contribution by Mercury. And there is a legacy of the IPO back in 2019.

2020 shows us a bridge of normalized net profit from the reported amount, just shy of €50 million to €100 million once we normalize for the non-recurring items and address for a number of other items to be normalized, for instance, interest expense, where we normalized for the new capital structure following the new emissions during the year.

On Slide 21, we confirm our strong cash conversion at 83%, roughly in line, slightly better than what it was last year, but hovering around the 80% mark.

Slide 22, just a word on leverage. We're back to around 3x. This is pre-closing of Nets. Obviously, when Nets and SIA closes, we'll be consolidating their EBITDA – well, Nets is already closed. But from the third quarter, we'll be consolidating the Nets’ financial indebtedness and then SIA's and consolidating their EBITDA. But in general, we have shown a strong cash flow generation and ability to deleverage.

Just a few notes we have, words of – to be spent on what happened during the quarter. We successfully refinanced Nets’ indebtedness, as you know. We have had a constructive discussion with rating agencies and we're hoping for improvements following the closure of these transactions. And overall, the pretax cash coupon of – is now lower than it was before. It's now 1.65% in the face of an extended maturity profile, the weighted average maturity of our debt is now 5.5 years after we extended the maturity of the IPO facilities.

I'll hand the floor over back to Paolo for a few words on the progress on Nets and SIA.

Paolo Bertoluzzo

Thank you, Bernardo. Let me start with a brewer update. Let me start with Nets that is now completely combined with Nexi. Nets performance has been strong in the first half. The cost revenue is around €500 million, up 5.7% year-on-year and actually up 14.3% in the quarter. EBITDA consistently up 5% in the first half year-on-year and up almost 18% in the second quarter.

As far as SIA is concerned, there is strong performance there as well, plus 13.6% year-over-year in the first half, 18% in the second quarter. EBITDA even stronger 28% in the first half, actually 48% in the second quarter. Here, there are phasing effects across the year as far as we understand. So this is a bit exceptional. But we expect to see a strong performance in the SIA side for the full year as well. On this front, as far as closing is concerned, we already had EGM approval in June. We already received the many, many regulatory approvals such as for example, Bank of Italy, Golden Share and many others. We expect to complete the regulatory approvals at around September, October, and we will fine-tune the closing date that should happen around the fourth quarter, also based on technical and CapEx optimization considerations.

If you move to the next one, let me just remind you what our approach to the integration of the three company is and is on the left, you see exactly the same page that we did present back a few months ago. As we have decided in the past and confirming now, we will let run Nets on a stand-alone basis, for the time being, while we integrate as fast as we can Nexi-SIA in Italy, right after closing, we're already preparing for that. While in the meantime, we are launching and we actually started executing with Nets, a list of fast-track joint initiative. Now we will move towards a deeper and broader integration of the three companies later on. And we will plan for that in 2022.

In terms of keep updates, every single work stream is progressing well. And especially in the case of Nets, we are moving from the planning phase into the execution phase. Just three highlights here. We have defined a new technology plan for the company, and we are now moving into the execution of what can be executed already with Nets, while as you've understood from Bernardo, we already reshaped our CapEx spending and optimize our CapEx spending on the back of this new plan.

As far as procurement is concerned, we already have an execution plan and we're already engaging with more than 20 suppliers in renegotiations. And last but not least, on the revenue side, we already have with Nets, in particular, our commercial teams are engaging on international and cross-border opportunities. And I was personally very pleased to see a few weeks back, our first large merchant omnichannel, and most importantly, cross-country win across, I would say, most of the geographies from the Nordics to Germany to Italy.

Second point, our execution is actually ahead of plan, and we didn't plan a lot for 2021, but actually we're going to be delivering more than twice versus what we were expecting. And as we do the numbers and we look more bottom up in detail, we are already highlighting a potential, more than 10% upside in the mid-long term on top of the €320 million of cash recurring synergies that we have announced back when we did announce the deal. And as you understood from Bernardo, we have already achieved and secured the one-off CapEx synergies from the combination of – with SIA.

On Page 26, we just wanted to give you a very high level view of how we have started running the company right after the closing of the combination with Nets. This is the Nexi-Nets view and is obviously not exhaustive of our organization. Basically, if you look at the bottom part of the page, we will have the Italian team led by myself that we continue to focus on the delivery of Italian growth, capturing all the Italian opportunities focused on customer and performance.

And here, you see the three business units, and these are people that you met and you will meet again in our Investor Day over the next few months. On the left, you have the Nets team that will be focused on delivering on Nets transformation, Nets performance and Nets customer focus led by Klaus Pedersen, formerly CFO for the company. And here, you see the two business units, mission services and insurance security services led by Robert Hoffmann and Torsten Jørgensen in continuity with the past.

So you have basically these two big hubs accountable for delivering performance and growth. Myself and Bernardo as Group CEO and Group CFO will be participating together with Klaus and the team to Nets reviews and performance reviews, as you can imagine. Together with this, we have created a larger group governance. The group governance will be focused on transformation, strategy and if needed M&A. And here, again, you see the three relevant, for you relevant units, which are group financed led by Bernardo, group transformation and strategy led by Roberto Catanzaro and the technology – Group Technology team that will drive the technology transformation and the technology governance and therefore, the delivery of the technology synergies as well, led by Giuseppe Dallona. But again, we're trying to focus as much as possible in continuity on delivering short and medium term, while creating the company of the future through our transformation at the group level.

Let me now hand over to Bernardo that will take us through a highlight of H1 and Nets [ph] performance and how the combined group would have looked like in the first half of the year.

Bernardo Mingrone

Thanks, Paolo. So this is the first time we introduced Nets into the picture of Nexi results and this will be the standard going forward. Obviously, closing happened on the first of July. So our actual numbers are adjusted for the first half are just Nexi. But on a pro forma basis, we have aggregated them to give you a view as what – as to what the performance looks like for the enlarged group given closing happened, as I said, on the first of July.

So starting with volumes on Page 28, what we have done is given you a bit of a flavor with regards to total volumes of how overall SME acquiring volumes are now well above where they were for 2019 at Nets 8% up compared to 2019. LAKA is still suffering. Obviously, given the higher proportion of the Nets has compared to Nexi in terms of certain verticals, for instance, travel minus 23%. So still heavily impacted by COVID restrictions. If we net that out, we're back to pretty much where we were in 2019, almost pre-COVID levels.

And on the issuing front, we have growth compared to – in June, 5% growth compared to 2019. Obviously, issuing has always been a concern when we've discussed Nets with all of you guys with regards to the penetration maturity of the Nordic market, and we're hoping to show highlight how there is growth even in these more mature markets.

We then move down the page, we have segmented between the two core geographies within Nets and Nordics and DACH, and open up the volumes in the three categories we have normally shown you at Nexi. Long story short, I guess, I mean my key takeaway here to highlight is how there's been a different phasing with regards to COVID that is impacted, therefore, Nets in terms of their volumes and their results different to Italy, that is with most of the geographies in which Nets operates coming out of restrictions essentially at the end of June, I mean, I think maybe Denmark or some other geography came out a little sooner.

But overall, I would say, largely skewed towards the end of the first half. And clearly, last year, a completely different picture compared to Italy where most of these countries entered lockdown later than what happened for Italy. And therefore comparison if we're looking at growth rates, both in terms of volumes and revenues between Nexi and Nets, it's kind of an unfair comparison because obviously, it's comparing different stages of the lockdown.

Within the Nordics performance, what I would highlight is the green line on top of the Nordics, again, an area where as part of our due diligence as well and within discussions with investors, we've always challenged with regards to ability to grow volumes in mature markets, et cetera.

And what we can see here is groceries, which is a pretty, I would say, boring sector and less impacted by COVID is still growing at 23% if we look at the last data available, which is roughly similar to what we're seeing in underpenetrated countries like Italy, and you saw the data earlier on when Paolo was commenting on Nexi’s performance. The same holds through for DACH, obviously in DACH you could see the overall value transactions is significantly below where it is for Nordics or Nexi because of the higher exposure towards certain sectors, for instance, travel that was mentioned earlier, which has weighed on this.

Moving on to how these volumes translated into revenues, notwithstanding COVID and all, we can see revenues growing by close to 6% in the first half at €500 million. And if you look at the quarter, the performance is higher, obviously, 14% as we slowly went into releasing restrictions also in the Nets geographies.

Overall, underlying EBITDA is up 5% in the first half, up 18% in the quarter. Just a word here on underlying numbers. As we had said back in February, back in May – and when we announced transactions, the underlying numbers are the ones we look at together with Klaus and the Nets team to evaluate performance and effectively normalize for business CID, which is subject to some one-off revenues which are declining in nature, given their project nature, and does not any longer include anything with regards to clients loss or repricing, which was a much more relevant in terms of benchmarking 2020 performance against 2019 or first quarter 2021 performance against the prior year. So no longer any normalization related to that.

Having said that, on Merchant Services, we have an 8% growth in terms of revenues for the first half and 18% in the quarter, so strong performance there. On Cards and Digital Payments, in the second quarter, we can see the effects of the recovery for the first half, obviously, compared to 2020, we have a bit of a volume effect, which drives us minus 5%. And Digital Banking and Corporate Solutions, which effectively have been taken out the usual reporting of Nets from Cards and Digital payments relating to e-Security services and digitization, which has benefited – less impacted by COVID; and secondly benefitting from strong growth in digitization in both productions and in the subscription on the [indiscernible]

Moving on to Slide 31. We can see what the combined group looks like. And starting from the overall revenues, we have four pie charts which relative to [ph] pie charts and revenues and more costs. Revenues, you can see how Merchant Services remains the vast majority of our business, close to 60%. And within that quarter of this is e-commerce. So e-commerce is large in Nets, and it's larger than the combined entity, roughly 1/3 is Cards and Digital Payments and then the remaining 10% or thereabouts is Digital Banking and Corporate Solutions.

We have a more balanced geographical mix. Italy remains a core country within the group and will remain – so even more after the merger with SIA just north of 50% and Nordics accounting for roughly 1/3 and the rest being adapting Poland essentially.

Importantly, we increased our exposure to volume growth with now 60% of our revenues being volume-driven compared to 50% before. Installed base is still an important source of revenues and revenue growth, frankly, at 40%. And you can see how the split is more skewed towards volume based revenues in Merchant Services & Solutions, least so in Digital Banking and Corporate Solutions, and it's very balanced within Cards & Digital Payments.

Finally, on our cost base, having merged with Nets, which has greater processing capabilities in-house compared to Nexi. We have an increase of our roughly 64-40 fixed, variable cost mix at Nexi to 74%, 26% now that we have merged with Nets. And this rising volumes and hopefully rising revenues environment, we would expect to help us with operating leverage.

Slide 32, I wouldn't comment in the interest of time and just gives you the sum of various items we've just discussed both Nexi and Nets and weighted average deliver 9% growth in revenues for the combined group in the first half, which is an 18% if you look at the second quarter. And with regards to EBITDA, it's double digit for both growth in the first half but close to 11% and 23.5% in terms of the second quarter year-on-year growth.

EBITDA margin showed some improvement helped by Nets’ improvement in operating margin, which adds on to the Nexi one.

On Slide 33, Italy are purely Nexi numbers we've seen in terms of the growth in revenue. So I won't comment then. As you can see, Nordics are roughly flat year-on-year in terms of growth in revenues. If we look at the quarter, revenues are growing 8% in the Nordics. And again, this performance compared to Italian when it’s primarily driven by the lockdown profile of the countries in which Nets operates compared to Italy.

Moving on to DACH in Poland, we have a notwithstanding a lockdown. Huge growth, fueled by, I would say, two or three elements, BNPL [ph] e-commerce in Germany and Poland, in general, which have shown and exhibited very strong growth in the first quarter, second quarter and hence the first half. And Southeastern Europe is essentially our processing agreement with Intesa, which has grown nicely as well, if you look at the first quarter processing volume grew 13% compared to the first half which was 7%.

I'll hand over to Paolo for outlook and final remarks.

Paolo Bertoluzzo

Thank you, Bernardo. Now looking forward, and now at the perimeter is the new one. So it's the combined Nexi and Nets. Obviously, the outlook remains uncertain in terms of the evolution of COVID here. Our underlying assumption is that we continue to see a recovery from COVID with the trajectory that we've been observing recently with new material, new restrictions coming in across geographies.

By definition, while in the past, we were more directly affected by the Italian measures now here, as we underscored by Bernardo, it's a portfolio of measures across the different geographies. And this actually overall gives us more resilience. Now looking at this new perimeter Overall, we are de facto confirming our growth ambition in 2021 as far as revenues are concerned, well actually increasing our ambition in terms of EBITDA.

Coming to the numbers. As far as revenues are concerned, in the second half, we expect to grow anywhere between 11% to 13% and around 10% for the full year. When it comes to EBITDA, we expect to grow in the second half of the year, anywhere between 13% to 16%. And in the full year, anywhere between 11% and 13% with one percentage point EBITDA margin increase versus 2020.

I would say well supported, especially from Nets and an overall three percentage points compared to 2019. Overall, as we understood, we expect to see broadly stable CapEx intensity ratio, anticipating M&A synergies from the combination of other three companies – and overall, we'll continue to deliver strong organic cash flow. And over time, we will continue to deleverage our profile from the new starting point as we combine the companies.

Let me just close on Page 35, reiterating the three very key messages. Again, volume accelerating on the back of the exit from the last phase of COVID, now positive growth in all sectors, macro sectors compared to 2019 with actually more than 20% growth in Italian cards and foreign cards are recovering faster. A very, very visible signals of acceleration from cash to digital payments across all sectors.

Strong performance in the quarter, revenue is up 22.6% in the quarter, and EBITDA 26% – 26.9% in the quarter. Overall strong progress in creating the European PayTech leader, both in terms of stand-alone performances of Nets and SIA and in terms of progress on our transformation with an increased outlook in terms of synergies that we'll be delivering over time. And all in an improved ambition for the – on a larger and more diversified base.

Let me stop here. And sorry if we've been rushing a little bit through the presentation, but you have the numbers, you have the documents. Obviously, we'll be super happy to answer to any further questions in the coming days.

I would leave now the floor to your questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from James Goodman with Barclays. Please go ahead sir.

James Goodman

Good afternoon. Thank you. A couple of questions from me around the guidance, please. Strong guidance for the combined Nexi/Nets business, perhaps just slightly above sort of prior expectations. I'm just wondering if you can really add some context to the Nexi versus Nets performance within that, and sort of the expectations by business. And if I look at Nets, what's implied for the EBITDA there. It's clearly above where I was originally anticipating Nets. But there's also some pretty ambitious targets that I think you're setting for the Nets business. So perhaps you could comment around that.

And then the second question on the guidance and probably more important, to be honest, is really, I think we need to look at how the business is going to look on a pro forma basis, including SIA for the year. That's actually the business units is outperforming on my numbers the most. Is there anything you can say in terms of how you're anticipating SIA to continue to perform in the second half of the year would be helpful? Thank you.

Paolo Bertoluzzo

So James, let me try to give you – I'll answer, and then I will ask also Bernardo. Listen, the way you should look at it is basically on the past Nexi perimeters confirming what we said back in May that I always want to remember it was an upgrade – material upgrade compared to what it was in February. So we basically confirm that outlook for the year, that's strong outlook for the year. And then actually, we're aggregating Nets where we've seen a good performance, a strong performance, and we expect this performance to increase in the second half of the year. Don't forget that we are observing different profiles across geographies in terms of measures being released.

Nets has seen in its geography a situation that has been a bit worse than expected in terms of reopenings and speed of reopenings. I would say, especially in Germany and in the Nordics. Maybe Italy has benefited a little bit the other way around. And now instead, we see the situation improving across geographies. And I think that in the volume profile that Bernardo has given to you, we – you found some evidence of that also for Nets in the key geographies.

And as you've understood from the numbers, we expect to see also on EBITDA margin expansion in the second half of the year from Nets. On the overall profile, we're not providing a guidance, an ambition for the broader – for the broader perimeter of the company. As I said before, we expect to see SIA continue to perform well. We have understood that probably some of the overperformance, especially EBITDA level in – will not be repeated in the second half of the year. I mean you cannot see every quarter, 48% EBITDA growth. But actually, we expect to see a strong full year performance for SIA as well. Bernardo, don't know if you want to add anything to this?

Bernardo Mingrone

No, I think going back to James' request for comment on Nexi relative performance. I think you should at least this is the way we have analyzed and see the performance is driven primarily – the relative performance is driven primarily in terms of the different profile of lockdowns, the geographies and much two companies operated in, the different profiles they followed in terms of release of these lockdown procedures.

So in fact, what you're expecting for Nets is a much higher performance in the third and fourth quarter. Following this trend, as I said, they're only exiting lockdown at the end of the second quarter and take a full benefit in the third. And we're we expecting to take the full benefit in the third and fourth quarter, some acceleration there. In line as in the past, we've always highlighted how we have – and there are no calculation on EBITDA for Nets, it [ph] highlights the range of between, if I remember correctly, 425 and 470 [ph] and we expect to be within that range within the full year numbers.

And any lower performance compared to higher performance, I think, again, the other thing I'd be happy to state is primarily driven by lockdowns rather than any delay in initiatives that is in place.

James Goodman

Yes, that’s helpful. Thank you.

Operator

The next question is from Hannes Leitner with UBS. Please go ahead.

Hannes Leitner

Yes. Thank you. Congrats on the good result. In regards to the M&A opportunity, we know that Nets has been very active over the last 18 months. Maybe you can comment there a little bit that you are planning to also do quite a lot of tuck-ins and then maybe give an update on just like the large opportunities from banks, for example, merchant books in increase or any areas in Europe? And then just on the Nets stand-alone, it seems like their OpEx is about €100 million larger than Nexi compared to lower revenues in H1. Where do you think you can balance it? Or is there something structurally in this business, which doesn't imply that you can get the same efficiency rate.

Paolo Bertoluzzo

Hi, Hannes. Well, let me start on M&A. And as always, we don’t – we try to comment any specific opportunities. You're right. I think Nets has been very active, and we are very active with that on good opportunities. I think as in the context of a new group, our approach will be at the end of the day very simple. Number one focus is going to be from all of us, including myself and Bernardo in delivering the organic growth.

Number two is going to be on delivering the integration with the companies on the benefit associated to it. But we will also continue to be open to considering further M&A opportunities. We – best to be selective as we've always been, we'll be even more selective. And therefore, we will pursue and capture the ones that we believe really, really makes sense for the future of our company and are a good use of the resources of our shareholders in the company.

So you will continue to see us being active and very selective and value driven as well. When it comes to net stand-alone margins, so on and so forth, I think, these are always very difficult comparisons because we are comparing different markets with different business models and so on and so forth. I will not be able to tell you right now how much opportunity there is in terms of cost in Nets compared to Nexi and so on and so forth.

What I can tell you are two or three things. Number one, in Italy, as we always said, we have certain business models, for example, in issuing at a particularly high value for the banks, for the customers and for ourselves as well. We have that business model that we call co-issuing or licensing, while actually Nets is mainly an issuer processor that normally comes with lower margins. This is definitely something that we're already working on together in terms of opportunities.

The second area is that we should never forget that Nets is investing big time in driving growth in e-commerce and in certain geographies, in particular, like, for example, Germany. And last but not least, we should always go back to what we said in the past. Again, we were saying that we are a great believers of the importance of local scale. I think from this point of view, Nexi is quite unique given the fact that we have a very large scale in one country, that is Italy, and this gives us the opportunity for cost optimization and running the business quite efficiently. Probably from this point of view, Nets is more similar to other companies, European companies, in the payment space that do have the challenges of serving multiple markets.

But clearly, as we will give priority to top line growth within the new group, we will continue to focus on net cost as well. And obviously, here, we will benefit from the synergies across, not only Nexi and Nets but also, SIA.

Hannes Leitner

Okay. Great. And then just a quick question on the variable outsourced costs, which you described like last year, you definitely ramp them down and also the transformative CapEx. Maybe you can give an update then across the enlarged base, cost base, how much is the other ratio and then how you're progressing with that transformation? Thank you.

Bernardo Mingrone

The transformation for Nexi you've seen, you want to know for Nets, right?

Paolo Bertoluzzo

No, I guess the question is more around the variable costs going down, right?

Hannes Leitner

Correct. Hence, basically the outsourcing contract with [indiscernible]

Paolo Bertoluzzo

Yes. I think, in general, this was already in the plans of Nexi. And never forget that over the last, basically, three, four years, we have sourced 1/3 to half of what we were outsourcing in many different fronts. And in our own plans, we were already having the plan to in source more. Clearly, with the combination of Nets and SIA that are really not technology reach on the processing side and infrastructure centers and so and so forth, we will in source even more and even faster. So you will see that dynamic continuing and actually over time accelerating, which means that we will have to invest all the transformation CapEx that we have announced in the past. But over time, you will see the variable component going down, giving us even further operating leverage.

Hannes Leitner

Perfect. Thank you.

Operator

The next question is from Sebastien Sztabowicz with Kepler Cheuvreux. Please go ahead, sir.

Sebastien Sztabowicz

Hi, everyone, and thanks for taking the question. Coming back on Nets’ profitability, I am looking at the margin. It was 30% EBITDA margin in H1. And last year, they ended the full year at 37%. So I just wanted to understand, why the margin has been declining at Nets, despite the growing revenue? And also, it seems that you are still confident to increase the margin on a year-on-year at Nets standalone. Can you explain a little bit the dynamic behind that?

And the second one would be on your growth prospects for the medium term. So no one – pro forma numbers, combined entity, you are targeting 10% growth for this year. Do you think this is a sustainable trend beyond 2021? Or there is any positive or negative one-off of special items that are impacting the growth for this year? Thank you.

Paolo Bertoluzzo

Bernardo will cover the first one. Hi Sebastien, by the way.

Bernardo Mingrone

Hi. So I think when you look at Nets’ performance, if you always go back to the discussion or the points we made with regards to the timing of lockdown, et cetera. So last year, 2021, when you're looking at the comp, you have the first half of the year, which was less impacted in the countries in which Nets operates compared to second half when compared to the first half of this year. And therefore, what we have is the trend you have observed in the margin, which is exacerbated, I would say, by the fact that Nets has a higher, for instance, component of fixed cost. It’s the other side of operating leverage, right, declining volumes, lower volumes with a higher percentage of fixed costs. And then therefore, when volumes go down, revenues go down, the margin suffers more than it did, for instance, in Nexi, where we were with 40% of variable costs able to compensate part of this decline in terms of the erosion of the margin. So this is in terms of, let's say, relative percent.

Then in terms of absolute margins, as you know, Nexi has higher margin structurally for a number of reasons. One of them and the main one is that we are very, very large, €1 billion of revenues in one market, which drives a lot of this efficiency. The other is that we in part report our revenues slightly differently to companies like Nets because we have a different arrangement with regards to distribution or different operating level with regards to distribution that flatters our margin compared to Nets. So these are the primary reason and also Nets has a bigger on the issuing side, processing business compared to ours, which is more of a co-issuing business, which, as Paolo highlighted earlier is our margins.

So in terms of absolute margins, Nets is lower level starting off with for these reasons. The dynamics are the ones that I highlighted with regards to the exit of the lockdown and you overlay on top of this, the higher structural fixed cost base that Nets has and that explains the performance.

Paolo Bertoluzzo

When it comes to the outlook for next year and so on, Sebastien, I think it's really a bit too early to talk about is because I think there are too many moving parts. – into the environment, driven by COVID-19, as always said the growth rates across 2021 and probably also 2022 would depend also from the good or bad dynamic in the previous year. As we said in the past, the outlook, I think, for this group is if you move a little bit to COVID, and you look at the underlying dynamics is the one of our group that has the ambition to grow revenues anywhere in between mid high to high single-digit and EBITDA double digit with continued operating leverage. So this is, at the end of the day, what we have in mind across the different individual year, specific dynamics.

Sebastien Sztabowicz

And the EBITDA that you forecast for Nets for this year, you provide a market, but I did not catch up – get it up well.

Bernardo Mingrone

No. No. Sorry we didn’t provide a specific target of EBITDA. We've given you a guidance with regards to the growth of EBITDA for the combined group, but we never set a specific target for Nets. What we have done what I did in this call as well is highlight how we have – at the time of the announcement of the merger, we negotiated an earnout payable to the sellers of Nets, which was triggered by – will be triggered by an EBITDA falling within the range of €425 million to €470 million for the year.

And we expect to be within that range, subject, obviously, through what Paolo said in the past in terms of the unpredictability of COVID.

Paolo Bertoluzzo

But clearly, if you take our previous guidance, the Nexi’s standalone and the new one that we're getting for the second half, obviously, you clearly understand that we expect to see acceleration of EBITDA for Nets in the second half of the year, which is as Bernardo suggested, a good mix of accelerating revenues on the back of the exit of COVID and continued good cost control and actually certain measures coming into place.

Sebastien Sztabowicz

Great. Thanks a lot.

Operator

Your next question is from Josh Levin with Autonomous. Please go ahead.

Josh Levin

Hi, good afternoon. I have two questions. The first, I wanted to follow up on some of the previous questions to get a bit more clarity. So as you've indicated, for Nets management to earn its minimum EBITDA earn-out shares, Nets needs to generate at least $420 million EBITDA in 2021. Based on the Nets 1H 2021 results, and if our math is correct, please correct me if it's not, that implies that Nets' EBITDA will grow 24% year-over-year in the second half just at the low end of that EBITDA range. So that must involve a fair amount of degree of cost cuts, So maybe you could sort of walk us through what those cost cuts might be and how Nets will balance those cost cuts with revenue growth.

And then the second question is, Worldline recently announced an Italian acquisition. The acquisition is small, but do you think it's significant? Or how should we think about the competitive dynamic as Worldline tries to expand in Italy? Thank you.

Paolo Bertoluzzo

Good morning, Josh. So on Nets’ second half performance, I can only reiterate what we said before and actually the range that Bernardo was referring to has to do with shareholders earn-outs, not directly connected to management. Actually, the real driver of the acceleration of EBITDA performance for Nets will be basically volume growth and revenue growth. Also on the back of COVID, driven by their growth plans that are under execution, but also supported by the volume growth expected as the economies and the markets reopen after COVID. So that's really the main driver beyond the cost work that is a bit more conventional. When it comes to Worldline and Italy, I think here, we always have to be clear in reading what is happening because Worldline has bought a nice little asset here in Italy that is the merchant activities of BNP Paribas. That company was already de facto competitor in Italy. And by the way, a successful competitor and with a very focused approach because it was a stand-alone company.

So I guess the point is not – Worldline not becoming a competitor or not is will Worldline be able to lead this company performing more and competing stronger than what it was before. So, I think that's the way to read it. But I think what they are doing makes sense.

Josh Levin

Thank you very much.

Operator

The next question is from Mohammed Moawalla with Goldman Sachs. Please go ahead.

Mohammed Moawalla

Great. Good afternoon Paolo and Bernardo. I had a couple. So first of all, I just wanted to sort of clarify on the Merchant Services. You indicated that sort of volume grew 2% in Q2. Has it been the restatement around – I’m sorry, that was relative to 2019, has there been a restatement relative of the 2019 figures, because I think when we take what you previously reported, it actually implies a decline?

And then I think you've talked about double-digit volume growth relative to 2019 for Core Nexi. Can you just kind of help us understand and bridge that gap there on what gives you the confidence around that recovery?

And then the second question is just for Core Nexi, I know that your previous guidance was sort of around double-digit growth, but you had indicated that as travel and tourism recover, there is sort of upside to that. So even in the new guidance that you have given for four months, have you changed your expectations around Core Nexi in any way? Thank you.

Paolo Bertoluzzo

Maybe I can take last one as Bernardo is preparing for the first couple of ones. And I move to talk to you again. So, your point is well put we have adjusted our mix and outlook for the rest of the year on the back of what we have observed over the last couple of months, I would say. I think now in terms of dynamics that we see we have developed a more optimistic view on the recovery in the high impact sectors and marginally on international travelers as well. The one sector where instead we have rebalanced and taking a more conservative approach is at the discretionary spending sector. And this is actually due to the observations that we have. I think it is very visible and I think it is also interesting from the social point of view.

As people exit from restrictions, we see people are much more, keen to enjoy a social life and for restaurants, travel, bars, and so on and so forth growing much faster than expected, a bit less jumping to shops and buying stuff. And for discretionary spending back into positive but accelerating a bit less than expected. So, I think the mix is slightly different, but is all-in supporting the guidance that we gave in the past.

The other thing is that for the Italian standalone piece, I mean the other thing that I want to underline, which I think all-in is a positive – is the quality of the mix. We're seeing a faster than expected recovery of SMEs growing faster than LAKA. And the normally SMEs come with a better overall contribution for us. And similarly, we've seen also commercial cards starting to reaccelerate, still below the previous levels by actual accelerating better than expected, which is again, all-in positive news, supporting, again, as I said, a confirmation of the guidance. That's what we are seeing in terms of volume dynamics and that therefore expectation going forward. Bernardo, on...

Bernardo Mingrone

Yes, sorry, I don't know if your question is a detailed question on the numbers in Slide 6, where we have a footnote saying that we are now reporting volume numbers, including Mercury Payment Services, whereas before we were bigger base of numbers with a slight difference, I guess, compared to historic reported numbers, or if there was some other question behind this. If it's the first then I’d just suggest you, you look up with Stefani and she can give you full visibility on the database effectively.

Mohammed Moawalla

Okay. Yes, I know there's more on Slide 8 where you had Q2 2% in merchant volume, like when you do the calculated number of the 19 basis minus x. Just curious if there was any restatement?

Bernardo Mingrone

I don't know if you calculating – I don’t where you're doing the calculation. This is just Italian Cards, right? So…

Mohammed Moawalla

No, this is total.

Bernardo Mingrone

Page 8.

Mohammed Moawalla

Page 8.

Bernardo Mingrone

Sorry, I don't know. Honestly, I don't know where you are calculating this difference.

Paolo Bertoluzzo

Okay. Can you follow-up, because I'm not sure we understand exactly the question.

Mohammed Moawalla

Okay. And also, just for the basis of the guidance for 2021 on growth rates, what is the base proforma sort of revenue and EBITDA you're using to get to the sort of – that we should use to calculate the growth rates?

Bernardo Mingrone

Talking about it, ambition is the new perimeter Nexi plus Nets with the full set of assets that the two companies that do have at the moment, including Poland when it comes to Nets.

Mohammed Moawalla

Yes. So, what number should we use for 2020 revenue number and EBITDA number?

Paolo Bertoluzzo

Yes okay, right.

Bernardo Mingrone

900 and what is it for revenues it's 900, for Nexi It's €1.44 million and for Nets it’s €1.58 billion.

Mohammed Moawalla

Okay. Thank you.

Bernardo Mingrone

Want the EBITDA numbers as well just to make sure we are…

Mohammed Moawalla

Yes, sure why not?

Bernardo Mingrone

It’s €601 million for Nexi and €374 million for Nets.

Mohammed Moawalla

Okay. Thank you.

Bernardo Mingrone

Thanks.

Operator

The next question is from Simonetta Chiriotti with Mediobanca. Please go ahead, madam.

Simonetta Chiriotti

Good afternoon everybody. So, I have a question on financial expenses. That in the normalized P&L of Nexi stand-alone €61 million. So could you please tell us which are the underlying function of these obvious number? And which are the elements that we should consider when we estimate their financial expenses for the new Group Nexi, Nets and SIA in 2022. Thank you.

Bernardo Mingrone

Yes, so starting from page, I guess 20, or I guess you're looking at a P&L rather than the cash number on Page 21, right? So, €61 million being a difference between the €77 million and the €16.6 million. Is that right?

Simonetta Chiriotti

Yes, I was looking at Page 38 in the presentation.

Bernardo Mingrone

38?

Simonetta Chiriotti

Yes, D&A.

Bernardo Mingrone

Yes, as I said, it's the same.

Simonetta Chiriotti

Yes.

Bernardo Mingrone

So, I would just use the Page 22 illustrated. So, interest expense is €77.7 million is what we actually booked in the first half. And it's both cash costs of interest. So, the coupon we're paying to bondholders and lenders, the amortized cost of these instruments, et cetera.

What we have done then is to normalize this effectively is try to superimpose the most current capital base, or the fact that we've reimbursed or closed the bridge loan, the fact that we issued bonds partway through the first half, and therefore bringing back to the 1 of January, so that we would annualize it for the first half if you want. And we also got rid of the negative carry in this normalization of the cash that we have raised in anticipation of closing the Net deal that we have on the €2 billion odd that we issued from the convertible bonds and the remaining financing that took place during the first half.

So, what we've tried to do in calculating €61 million is give you a view of what the run rate, cash and non-cash costs, of this capital structure will be. So, if you want to annualize it, you multiply that by two, and that's what you would expect for Nexi net. This does not include if you want, CIS. And SIA will bring additional, let's say, additional €1 billion of indebtedness of SIA on top of this at the average cost that we've highlighted on slide, I think, it is a slide…

Stefania Mantegazza

[Indiscernible].

Bernardo Mingrone

Here we go we’ve highlighted it €21 million of additional interest from SIA here we go. This is both the coupon and 1.65%, plus the amortized cost of it. So approximately 2% and additionally €1 billion.

Simonetta Chiriotti

Yes.

Paolo Bertoluzzo

Simonetta it is Paolo here basically it is exactly the same approach we took in the past without representing the financial cost.

Stefania Mantegazza

Thank you.

Operator

The next question is from Gianmarco Bonacina with Equita. Please go-ahead sir.

Gianmarco Bonacina

Yes, good afternoon. Just to follow-up on SIA, I know you are kind of restricted because the deal is not closed yet. But given the fact that SIA did not have any impact or very limited impact in Q2’20 from lockdown because the revenues they were kind of flattish. So, the growth this quarter is remarkable. Shall we expect, let's say, that SIA 2021 could be accretive to your Nexi Nets ambition in terms of top line EBITDA growth, on a pro forma basis?

Paolo Bertoluzzo

Sure. Gianmarco its Paolo here. Well listen, I think, it's difficult for us to say from here. I believe that when we look at the SIA dynamics, we should always remember the fact that they have been winning customers, especially, I would say, outside of it, and that's something that contributes to their revenue dynamics.

And number two, through certain customers, I would say, in particular, one, they've been very exposed and they are currently very exposed on the issuing side that the growth of E-commerce in Italy now as one other customer is the most probably used the way of paying online in Italy.

Last but not least, and I think, this is also very important. And don't forget that you share issuer processor or model that is one of SIA and for them issuing is actually more relevant than merchant services. The number of transactions that is more relevant, than the value of transactions and that number has been growing a lot during COVID compared to volume. So, I think it's a mix of all these elements that support the strong performance that we have been observing in the recent past from SIA.

Gianmarco Bonacina

Okay. Let me just a quick follow-up, but because the idea was that, correct me if I'm wrong, that SIA was an asset which maybe a top line in EBITDA growth, maybe slightly less strong than Nexi, while in reality, given that the number of transactions probably continuing to grow very strongly also in the future, they could have at least a similar growth.

Paolo Bertoluzzo

Well, as I said before, let's hope that's the case. I think before confirming with you, I would be more comfortable to have the conversation after we've closed.

Gianmarco Bonacina

Okay.

Paolo Bertoluzzo

I mean, you can look at the plan. But again, congratulations, I think to SIA’s strong performance, by the way, don't forget that sometimes certain phenomena unwind. So, if you had to assume acceleration in one year, then you have a deceleration the following year. So, I really want to make sure that we don't have that effect.

Gianmarco Bonacina

Thank you.

Operator

The next question is from Alexandre Faure with Exane BNP Paribas. Please go ahead.

Alexandre Faure

Hi, good afternoon. Thanks for letting me on. I have a couple of questions. One is on SIA, again and on the review and regulatory approvals. I think you pushed it a little bit into Q4 in terms of closing. Could you please remind us of the next steps you mentioned you had the approval from the Bank of Italy? So, what would be the next phases in getting all the approvals done? That would be my first question.

And the second question is on your new cost structure. I think Bernardo, you are applying on one slide that you've been moving from 70-40 fixed variable to 74-26 by merging with Nets. Where do you think this number will end up once you've integrated with SIA as well? Thank you very much.

Bernardo Mingrone

Yes, thanks I’ll answer it. So, I think a lot has been made about us inserting this fourth quarter number in terms of SIA closing. The truth is we are trying to be as transparent as possible with regards to the process where there is no news really. We are in discussion. We have received Bank of Italy clearance, we have received antitrust clearance in Germany, Poland, I can't remember what other markets or number of markets.

Essentially, most of the work is being done on Antitrust Clearance in Italy, which was expected. I think, Paolo highlighted, how we were expecting end of – between the 15 of September and the 30 of September. We had always said, 30 September. Now this might move by a couple of weeks to mid-October. That's really it right.

So, we are expecting to have deal certainty exactly pretty much where we were 12 months ago, or when we announced the transaction in October last year. We are just fine-tuning to give you a day-to-day or as alive as possible updates on timing. We will then choose the accounting effectiveness of closing based on what is most convenient at that point. But transaction certainty is expected to come pretty much where we said it was going to come when we discussed this previously. So, there's no real delay, unless you can call two weeks delay within a one-year process.

Now, the second question is on the cost structure. So, 74-26, I think, when we go back to what we announced in November, when we announced the second of the two transactions, we said the pro forma cost structure would be approximately 70-30 cost, including SIA fixed variable. So, always an improvement or an increase of the fixed base compared to Nexi standalone, slightly more variable compared to Nexi-Nets. So, 70-30 is the answer.

Alexandre Faure

All right, thank you.

Operator

The next question is from Paulo Luis with Verition Advisors. Please go ahead, sir.

Paulo Luis

Hi. I had one question on your leverage. So, I noticed similar commentary to when you announced to the Nexi Nets acquisition. But the targets are not mentioned. I think you are targeting 2 to 2.5 times post close net leverage by the end of 2022, including run rate synergies. Are those targets still the plan, or are you using the upcoming Investor Day that you alluded to provide an update?

Bernardo Mingrone

No, I mean those are – the targets remain unchanged, which doesn't mean we won't update you in the Investor Day when there's probably greater granularity and greater analysis with regards to the coming years. But by the end of – what we said at the time of the acquisition i.e., one year after closing of both the transactions, somewhere between 2- and 2.5-times leverage remains our target. Clearly this is excluding any material M&A. It would include any non-material M&A, but if there were to be any M&A in the next year and a half, obviously we need to see how we fund that, et cetera, and maybe revise the target. But otherwise, it's between 2 and 2.5 times.

Paulo Luis

Right. Thank you.

Paolo Bertoluzzo

I think Bernardo is very consistent with what we have seen over the last couple of years, and I'm aware of may not as we did in a very efficient way, capital efficient way, in terms the – I know you increased leverage, but then start again a very fast with leveraging journey, by the way, despite COVID, which I think is really important to be underlined.

Bernardo Mingrone

Yes.

Operator

[Operator Instructions] Gentlemen, no more questions registered at this time.

Paolo Bertoluzzo

Well, I guess this is enough for today. Thank you for participating. I understand this also Friday afternoon we try to anticipate the call compared to our usual standard, and also try to make it a bit shorter and faster. Listen, thank you very much for attending. Again, the key messages for us are faster recovery volumes which is most importantly, super, super visible acceleration cash digital happening in Italy. Some performance as for H1 and in particular, I would say second quarter with more than 20%, 25% growth or revenues, and EBITDA for Nexi.

Italy, strong progress on our combinations with SIA and Nets but in the meantime are performing quite well as you've seen. And last but not least, for the rest of the year, double-digit growth for both revenues and EBITDA with some margin expansion in the second half of the year for the new entity Nexi+Nets.

We’ll stop there. Thank you very much again for attending. I hope you will enjoy some relax holiday time with your friends and families. And looking forward to catch up with some of you over the next very few days and hours. And please come back for any questions. I understand that with the new profile there is more information and more complexity, but again, we are going to be even more ready to support. Thank you very much. Bye-bye.