Good morning, everyone. Today we'll be presenting TXT Group's fantastic nine months, especially an exceptional third quarter in the top-line growth. Today I have here TXT Group CEO, Daniele Misani.
Good morning.
Also our investor leader, Andrea Favini.
Good morning, everyone. Good morning.
And so we'll be going through the results. So I'll just see if we have any Q&A now. So what we'll do is if you can write your questions into the chat here, into the Q&A, and we'll endeavor to get back to you at the end of the call, and we'll answer all the questions there.
Okay. Thank you, Sanela. Thank you, everybody, for attending this conference. So we start from, let's say, the top-line results set by Sanela. These nine months, we recorded EUR 220 million revenues, and we are doing in nine months what we did last year as a consolidated value. So there is a strong growth that is plus 37.8% with respect to the same period of the last year, and it's driven by a solid organic growth. In nine months, we are recording, let's say, 26.5% increase in the top-line in an organic weight. This is due mainly to the synergies and the good work the team is doing in order to create opportunity for the sister company within the group and addressing the market more aggressively with respect to the past.
In this special organic growth, there is an influence of some, let's say, non-core activities that we decided to undertake because, let's say, position ourselves with a strong customer relationship. So there are EUR 10 million, moreover, in nine months of, let's say, growth that is non-core, so not recurrent also for the next year. But for this year, it's, let's say, giving us a boost in terms of top-line growth. In terms of EBITDA margin, we record EUR 28 million, so 31% better than the same period of the last year. This margin, we had some pressure about the margin in percentage, so we record 12.8%, more or less 13%. That is a little bit lower with respect to the guidance. This is due mainly to the fact that we are investing strongly to sustain the growth.
So we are investing in R&D. We are investing in commercial activities in order to be, let's say, more effective in transforming our sales pipeline in contracts and in orders. In terms of looking for the contribution coming from the different divisions, there is the positive fact that all the divisions are growing. So the most, let's say, fast growing, and it's important also for the margins in general, is the Smart Solutions division that is recording more or less 50% growth with respect to the same period of the last year. But also the Digital Advisory, Software Engineering are growing 35%, 38%. So the total turnover is EUR 220 million against EUR 160 million last year.
In terms of EBITDA, as I said, there is a pressure on EBITDA margin, but of course, in terms of absolute value, we are recording a strong growth, so 31% more than last year, 28 million EUR against 21.4 million EUR. Also in this, let's say, context, the contribution coming from the different divisions is strong, especially in the Smart Solutions with plus 53% more than last year, 8.4 million EUR with respect to 5.5 million EUR, with a good EBITDA margin also for our product, let's say, division, so almost 20%. In terms of growth and, let's say, pressure on margins, it's coming specifically by the Software Engineering divisions, so in which the average margin is lower with respect to the same period of the last year. So we recorded 10.5% against 12% last year.
But as I said before, there is a contribution of non-core activities with an EBITDA margin below the average of the overall, single digit. Okay. In terms of, let's say, investment, we are continuing to invest. So for us, it's strategic to have, let's say, always advanced solution in our Smart Solutions division. So we invested EUR 10.5 million entirely expanded during the nine months with a growth of 56% with the same period of the last year. And this, let's say, investment is generating value because the Smart Solutions revenues are growing, so EUR 43.9 million in nine months. That is almost 50% better than last year. So we are increasing our, let's say, market presence with new subscriptions, with, let's say, new recurrent revenues that will bring benefit not only for this year but also for the future.
In terms of international revenues, we are now 26% out of the total with EUR 56.7 million. There is a dilution of, let's say, the international revenues because we started to consolidate also the digital marketing division that is mainly Italian-based, so with respect to the six months, there is a little bit of dilution in terms of percentage, but there is a growth in terms of volumes, of course. In terms of debt, we have still a sustainable debt. We have more or less EUR 25 million in treasury shares and an adjusted net financial position of EUR 60 million debt. Okay. In terms of incidence of the market, also this picture is quite good because our diversification into different market segments and the synergies in terms of technological and commercial activities are bringing value across the different market divisions, so they are growing almost in each segment we are growing.
So there is the Telco and Media, Gaming that is growing also by the non-core activities that I mentioned before. The main driver for the growth are the Aerospace and Defense division that is, let's say, capturing many opportunities in order to position ourselves always stronger than before, and also the Public Sector is an area that is growing fast because we are, let's say, implementing all the activity that are, let's say, in our backlog from the tenders we won in the past few months. The new segment, MarTech, is for the overall nine months only 3%, but because we started to consolidate this part just from the Q3, so at the end of the year, we'll be more balanced according to, let's say, our complete portfolio of offering.
In terms of business evolution, so after the closure of the nine months, we continue with our, let's say, M&A plan with our aggregations, and we signed an important deal last week, so with the acquisition of WebGenesys. This acquisition was made in order to balance our presence into the markets. As you know, we have an offering for the Public Sector mainly in the Digital Advisory segment, so in the consultancy part. And for us, it's strategic for each market segment to have Digital Advisory Software Engineering and proprietary products solutions. So WebGenesys is a software engineering company that is aggregating new competencies into our portfolio of offering and, let's say, strengthen our position in the Public Sector domain with many already signed contracts.
Because one strategic point of aggregating WebGenesys is to secure a robust order backlog because, let's say, the company has more than EUR 200 million of tenders won that will be, let's say, will generate revenue for the next three years. Of course, they are and we are working now together in order to capture more opportunity and to position the TXT Group as one of the emerging leaders also to serve the digitalization of the Public Sector segment in Italy. The company has a good top line of more or less EUR 40 million with a good EBITDA margin because it's 22%. It's a well-organized, good-performing company that will bring value to the overall group.
It's also for us strategic in order to cover better, let's say, the geography because the company is, let's say, present with the eight offices mainly in the center part of Italy and south of Italy, in which for now the group before WebGenesys was present but not in a strong way. So for us, it's also a geographical coverage that is increasing our presence on the Italian, let's say, on the Italian country. And they provide also a digital offering and expertise in terms of software engineering competencies, technologies like IoT, like blockchain, like cybersecurity that are complementary to the ones that we have already in the group. The acquisition of WebGenesys is important in terms of also investment. We agreed and signed a contract with a valuation of more or less seven times the EBITDA.
With respect to the EBITDA forecasted for 2024, the price for the acquisition is EUR 63 million, and EUR 53 million will be paid by TXT in order to buy the 85% more or less of WebGenesys, 70% in cash, and the remaining in treasury shares. Because for us, it's important to have the commitment, the strong commitment of the management team. So the management, the current management team will stay on board to drive also the growth of WebGenesys for the next few years. And this important part of shares makes them also a strong shareholder within the group with a strong commitment in order to create synergies and create value for all the shareholders, of course. The contract includes clawback and earn-out, so there is the possibility to adjust the price according to the performances of the WebGenesys Group.
We are working with them for a business plan that will bring continuity in terms of EBITDA margin and growth in terms of top line. The investment was made in this case, it's particular for us, it's the first one, but we made it also together with a technology fund, a private equity fund, because for us, it's also strategic to have this partner in order to continue to expand and do also future operation together because they are supporting us in scouting and finding technology companies that can be, let's say, aggregated within our portfolio and perimeter. The technology fund will have more or less 16% of the shares of WebGenesys, and we have also signed an agreement for a put and call option in order to buy the 100% according to results in the next five years.
WebGenesys was not the only, let's say, aggregation we did after the closing of the nine months because we also acquired a small boutique in order to empower our offering in the industrial and manufacturing sector. So we acquired 100% of Focus PLM, that is a small boutique in Italy with a good, let's say, presence in the market with a lot of recurrent customers. So it's contributing for EUR 2.5 million with an EBITDA adjusted margin of more or less 13.5% and double-digit growth expectation for the next future.
For us, it's strategic even if it's small because we bring competencies in an area that for now is not growing so fast for the TXT Group or for the market itself, but we plan together with TXT Tech and together with TeraTron and together with, let's say, DM Consulting to have a broader offering in order to address also the industrial and manufacturing market in a stronger way than before. So it's strategic in order to keep the positioning, bring the competencies, and have a customer base that is continuously increasing. These are, let's say, the main updates after the closure of the nine months. So I will ask now Andrea to introduce and explain a little bit more in detail the financials. Andrea, it's up to you now.
Thank you, Daniele, and welcome everyone to the financial section of this conference call.
We start on the profit and loss of the first nine months of 2024, showing revenues of EUR 220 million with an increase of 37.8% compared to the same period of the previous year. The organic growth was equal to 26.5%, and as mentioned by Daniele, there are also some, let's say, non-core activities accounting for approximately EUR 10 million, so we can say that a normalized, let's say, organic growth is more on the, let's say, range of 20% year over year. In terms of direct cost, we have an increase which outperformed the increase in revenues, 44%, and this is linked also to the lower gross margin on the activities mentioned before and also on the different mix of revenues compared to the previous year with a stronger incidence of service revenues against revenues coming from the Smart Solutions business.
For this reason, the gross margin decreased from 35.6% in the first nine months of 2023 to 32.6% in the first nine months of the current year. If we look at the indirect cost, we have a strong push in our, let's say, technology and the Smart Solutions portfolio, which is visible from the growth rate of the first nine months of our investment, which grew at 55.6% in outperform of the growth of revenues and especially also in outperform of the growth of revenues coming from Smart Solutions. Of course, those investments are fully expanding our P&L, and the return on the investment is expected already for the first quarter of this year and for the future years. Looking at the commercial cost, we recorded an increase of approximately 21%, and that also included the cost for marketing and management cost.
In terms of general and administrative cost, the increase was 9.5%, and in the incidence of 6.5%, there are still some inefficiencies related to the growth, which will be, let's say, reduced looking forward and especially from the future years. Given the fact of direct and indirect cost, the EBITDA of the period was at EUR 28 million with an EBITDA margin of 12.8%, 60 basis points lower compared to the same margin of the same period of the previous year. So EBITDA margin, EBITDA as an absolute value, grew by 31% versus the 37.8% of revenue growth. In terms of amortization, depreciation, and write-offs, in the first nine months of 2024, they recorded a value of EUR 8.7 million, and they are mainly related to depreciation of fixed asset for EUR 1.4 million, depreciation related to the IFRS 16, so financial lease, for EUR 3.4 million.
We have amortization of other intangibles for EUR 0.8 million and amortization of intangibles related to M&A. So intangibles related to goodwill allocated to other intangible assets for EUR 2.8 million in the first nine months of 2024. This value of PPA is expected to increase in the fourth quarter because TXT will also allocate part of the price of the recent acquisitions closed in the last 12 months. So there was Imille and Refine Direct for example. So due to the effect of the amortization and depreciation, the operating profit was at 8.8%, EUR 19 million, with a strong growth which is almost matching the growth recorded in revenue, so 37.6% growth year over year.
In terms of financial charges, the net financial result in the first nine months of 2024 had a negative net balance of EUR 2.6 million, mainly due to interest expenses, bank charges, and the result of minority interest. In the first nine months of 2023, the financial result showed a negative balance of EUR 0.1 million due to, let's say, the one-off income related to acquisition that happened in the previous year. Financial expenses in the first nine months of 2024 consist of EUR 3.5 million related to interest expenses and bank charges and EUR 0.5 million related to the share of negative results associated with not consolidating the financial statement of TXT. The net financial charges of the period are partially offset by financial income from the fair value of trade securities held in the portfolio and the earn-out for approximately EUR 1.2 million.
So the pre-tax profit was at EUR 16.7 million, 7.6% of revenues, and the tax rate was approximately 29%, slightly decreasing compared to the same period of 2023, bringing the net profit at EUR 12 million with a net profit margin of 5.5% in the first nine months of 2023, slightly below compared to the 6.1% recorded in the same period of the previous year. If we focus instead to the third quarter of the year, so revenue grew by 56.3% and we are at EUR 81.4 million with a stronger growth also from an organic point of view. So the organic growth was more than 35%. These non-core activities were, let's say, higher in the third quarter compared to the previous quarter. In fact, there was approximately EUR 5 million of those non-core activities accounted for in the third quarter of this current year.
And this is, of course, visible also in the gross margin, which went down from 37.1% in Q3 2023 to 32.2% in the same quarter of the current year. The same trend of the indirect cost is reflected also in the third quarter, let's say, comparable to the one recorded in the first nine months, so with a stronger push of R&D, which grew by 67.5%. A significant growth that will bring benefit to the future, let's say, period of the year. Looking at the EBITDA margin, of course, as discussed before by Daniele, also in this fourth quarter, we suffered some pressure in the EBITDA margin, but this pressure is to sustain the growth. So we are, let's say, pushing more on the top line by losing also some efficiency in terms of operating profit.
In terms of amortization and depreciation of the fourth quarter of the year, also in this case, we have a strong incidence of PPA, approximately EUR 1 million, and also, let's say, the effect of IFRS 16 is significant, EUR 1.2 million. The operating profit was same as per the nine months, so 8.8% of revenues. In terms of financial charges, there is a EUR 1.3 million of interest and bank charges partially offset by EUR 0.3 million of financial income. The result of minorities in the third quarter of the year was positive for approximately EUR 10,000. Net profit was at approximately 5% versus 5.8% in the same quarter of the previous year.
If we move to the next slide and we look at the net financial position of the period, we have, let's say, the adjusted net debt as of September 2024, which is equal to EUR 60 million, with an increase of EUR 28.5 million compared to EUR 31.4 million as of December 31st, 2023. The increase is primarily due to cash outflow for acquisition, net of the acquired net financial debt and earn-outs, and for EUR 19.2 million, mainly the Imille and Refine Direct. Earn-outs related to those acquisitions for approximately EUR 6.5 million. The cash outflow associated with the buyback of Treasury shares for EUR 4.6 million. Dividend payment for approximately EUR 3 million, and interest payment on loans net on financial income for approximately EUR 2.1 million.
The cash outflow was partially offset by cash generation from operations, which also slowed down in the third quarter due to a temporary delay in the collection of trade receivable associated with the business generated with one of the main customers of the TXT Group. If we look at the, let's say, items of the net debt, cash as of end of September 2024 were at EUR 25 million, mainly in euro, held with major Italian banks, down EUR 30 million compared to the year-end 2023, mainly due to the disbursement related to the acquisition. Financial instrument at fair value at EUR 26 million at September end of 2024, and with an increase of EUR 1.8 million, which is mainly related to the fair value adjustment of the trading securities.
If we look at the current financial debt, net of the current financial asset, is at EUR 58 million as of end of September 2024, mainly referring to the short-term portion of bank loans and stable, let's say, compared to the year-end 2023. If we look at the non-current financial debt as of end of September 2024, we have EUR 72 million, up EUR 15 million compared to the year-end of 2023. The adjusted net financial debt as of end of September includes EUR 10.3 million of net debt related to IFRS 16, stable compared to the year-end 2023, and EUR 12.5 million of debt for earn-outs and put-and-call options for the purchase of minority interest, an increase of approximately EUR 3 million compared to the year-end 2023.
The unadjusted net debt, so the reported net debt as of end of September 2024, amounted to approximately EUR 18 million, with EUR 19.3 million higher than the adjusted net debt as of the same date. The difference is mainly due to the investment in the Banca del Fucino, whose fair value of EUR 17.8 million was reclassified from fixed asset to financial asset to calculate the adjusted net debt. If we look at the next slide, the balance sheet of the period shows fixed asset of EUR 162 million, an increase of EUR 31 million, which is mainly related to the acquisition of the period. As we can see, the increase is driven by intangible assets. Within intangible assets, as of September end 2024, we have EUR 97 million of goodwill, some of which will be allocated through PPA by the end of the year.
The remaining, let's say, EUR 17 million are mainly related to IP or customer relationships acquired through the M&A plan implemented over the last five to six years. Of course, the increase of the period is to be attributed to the acquisition of Imille, Uasabi, and Refine, net of the amortizations. Also, in terms of tangible assets, we have a EUR 2 million increase, which is mainly related to the acquisition, plus the CapEx of the period offset by the depreciation of the period itself. If we look at the other fixed assets, they consist mainly of the investment in Banca del Fucino for a fair value of EUR 17.8 million, stable compared to the year-end 2023. The decrease is related to, let's say, the growth of TXT in a minority, which became, let's say, a majority. The difference is related to, let's say, the investment in minority.
If we look at the net working capital, as discussed by Daniele during the first section of the call, we have a slowdown in the cash generation in the fourth quarter, which is also, let's say, reflected in the growth of the net working capital, especially inventories, which includes the work in progress. Let's say, customer projects that are ongoing and not yet invoiced grew by approximately EUR 7 million to be added to the EUR 11 million growth of the trade receivable. Those effects have been only partially offset by the growth of payables. This effect is expected to be somehow reduced, so an absorption of net working capital in the fourth quarter, but mostly in the fourth quarter of 2025.
So we already expect, let's say, some benefit from, let's say, cash receivable collection in this quarter, but the real positive effect is expected for the first two quarters of the next year. Severance and other non-current liability grew by EUR 1.4 million, and also in this case, the growth is to be allocated to the acquisition of the period. While the growth of the shareholder equity is to be attributed to the net profit of the period, plus the effect of the transfer of Treasury shares to the seller in the context of the M&A plan, while the net financial debt report was widely discussed before. If we move to the next slide, we have the shareholding structure of TXT as of September 30, 2024, showing Laserline, the financial vehicle of the Chairman and Enrico Magni, holding 30% of the shares.
We have managers with a 19% stake, increasing from, let's say, end of first half because of the transfer of share in the context of M&A. This is an impact also in the Treasury shares that were about the 10% by end of the first half of the year, and they went down to the 7%. The market is only in the 40%, and within the managers, there is also a stake more than 3% related to the acquisition of Refine. Dividend and Treasury shares repurchase in the first nine months of the year show a disbursement of approximately EUR 3 million for the dividend of EUR 0.25 per share that was paid out on May 22nd. Then we have also, let's say, the repurchase of Treasury shares for approximately EUR 4.6 million in the period.
In terms of performance of the TXT stock, in the first nine months of 2024, the TXT share price recorded an official high of 28.25 as of September 19, 2024, and the low of 18.48 as of January 5, 2024. As of September 30, 2024, the price was at EUR 27.3 per share. In terms of Treasury shares as of September 30, 2024, they were equal to 920,000 approximately, representing 7% of the issued shares. Treasury shares were 1.3 million as of December 31, 2023, and the decrease is to be attributed to the consideration paid in TXT share in the context of the 2023 and 2024 M&A plan, net of share repurchase in the context of the buyback plan.
In particular, in the first nine months of 2024, approximately 577,000 shares were transferred to the vendor and current manager of TXT, and approximately 197,000 shares were repurchased at the average price of EUR 23.14 per share. So I think we are done for the financial section of this conference call. Thank you for your attention, and now is the time for the Q&A section.
Thank you, Andrea.
Thank you very much. And so we did receive quite a few questions, so we'll get to them now. So we have a question from an anonymous messenger. So what would be the TXT margin excluding the one-off sales for EUR 10 million? And what can we expect on the margin assuming the growth in 2025 normalizes at 10%?
Yes. So considering, let's say, the non-core activities of about EUR 10 million, the EBITDA margin will be slightly, let's say, better than 13%.
It's 13.2, more or less, okay? Because the EUR 10 million were, let's say, one-off, let's say, projects, including resale of third-party software or resale of hardware also, so with the low margins. As I said before, we decided to undertake this opportunity in order to strengthen the customer relationship. In terms of, let's say, future growth, probably, let's say, these nine months are incredibly strong in terms of organic growth. It's driven, as I said before, by the Aerospace and Defense and the Public Sector domain, for which we have long-term engagement with the customers in terms of tenders, backlog, and activities ongoing. The, let's say, expectation for the next future, of course, will be in some way reduced in terms of total growth, excluding the M&A, of course. Let's say our goal this year is to position ourselves for the market.
So we are pushing a lot in order to capture opportunity and increase the top line with some impact, of course, on the EBITDA margin. Of course, there is the absolute value of the EBITDA that is growing because it's growing the top line. For the next year, assuming to normalize the growth at 10%, we will go back to our guidance of more or less 14% or better because we are growing also for the Smart Solutions divisions that are in average higher margin division. And also, we will have the contribution of good-performing companies that are included in our portfolio, like Refine, like WebGenesys itself, that with the volumes and the EBITDA margin that is strong, will put benefit on the overall EBITDA margin of the group.
So for the next year, we think that after this phase of strong and accelerated growth with, let's say, still growth, but at different levels, we are capable to go back to our guidance of 14% or better for the next year.
Fantastic. And we have another question from Andrea Randone. So after the impressive growth recorded this year, what can we expect for 2025? And can you please explain to us what is included in your order backlog?
As discussed before, so the growth will normalize. So we are, let's say, now in phase of budgeting for the next year. So we see a growth that is more double-digit, but not 20% is more slightly above 10%, 12%, something like that.
There will be a reduction of the steepness of the growth with respect to this year because, let's say, we are positioning and we have the possibility to continue to grow, but with a slower, yes, with a slower, let's say, impact with respect to this year. In terms of, let's say, the second part of the question is related to the order backlog. In general, we start the next year with from 70%-80% of business that is already secured for the next year. The stronger part of the backlog is related to Public Sector, for which the tenders in digital innovation are multi-year, let's say, contracts. We are speaking about a total, let's say, backlog in the Public Sector of EUR 300 million to be transformed in revenue in the next three years.
So more or less from EUR 70 million to EUR 100 million per year that we will, let's say, register as revenue. So this part has a strong backlog for the future. That is the sum up of the backlog coming from WebGenesys and the backlog that is already in mainly from HSPI and PGMD for the Public Sector. We have a backlog, of course, related to our software because most we have different business models according to the kind of software. Sometimes we have upfront licenses with maintenance. Sometimes we have subscriptions. So there is the business related to Smart Solutions that has already a strong backlog of continuity for the next year because there is the renewal of the subscription or the impact of the maintenances. And for the other division, in general, we are engaged on long-term programs, on core activities, and core business of customers.
Mostly there is no already the order in because also for the Aerospace and Defense and the banking and finance, most of the activities are renewed year by year, but there is a recurring business because we are involved on long-term projects. Overall, let's say our backlog is in continuity with the present year in all the division and in all the market segment. As an estimation, it is from 70%-75% of the total revenue already in for the next year as a recurrent business.
Fantastic. We have another question here. Again from Andrea. You closed a number of acquisitions this year, with the last one significant in terms of size. Can you help us to summarize the impact on your net financial position from these deals, such as cash flows, future obligations, earnouts, transfer of Treasury Shares?
Yes.
I will ask maybe Andrea to support me in this question if you can, but I think that is more related to WebGenesys because it's quite, let's say, impactful in terms of cash out, in terms of Treasury shares that we transfer. So the Treasury shares that we will transfer for WebGenesys are already in, so are already Treasury shares that we have in our portfolio. So it will be transferred and will decrease the number of Treasury shares and increase, let's say, the management shares in our shareholding structure. In terms of price, I asked Andrea if you can explain a little bit more the details of the deal.
Yes, for sure, Daniele. So we said that the part in cash is about 37 million EUR, let's say. We will also get some cash, net cash.
We can imagine that our, let's say, net cash out, let's say, considering also the cash that we will acquire, will be on the range of EUR 30 million, for which we have already agreed on a, let's say, loan and which will bring us to a, let's say, net debt that goes close, let's say, to EUR 100 million, I would say. In terms of earnouts and clawback options, we did not disclose yet in our financial report. If we will do the closing by the year end, we will for sure, let's say, make a full disclosure with the full year, let's say, financial report. It's important to say that you mentioned before the put call option for a possible acquisition of the 15% that will be acquired at closing by HAT. In this case, it is not, let's say, closed as a put and call option.
We have some option distributed between the approval of 2025 financial statements and 2028 financial statements, but are only option. And so we will not reflect the, let's say, estimated value of this option in our financial debt. Let's say as of the end of September 2023, we have all the acquisitions ordered, the Focus PLM, which is not really relevant in terms of, let's say, investment and this WebGenesys. We can imagine our cash position also depending, of course, on the trend in the collection of outstanding receivables to be as per guidance. Two times the pro forma EBITDA of 2024. I don't know if I answered completely.
Thank you, Andrea.
Okay. Thank you.
Again, we'll go on to the next question.
So what do you expect in terms of net working capital evolution, and how are newly acquired companies in terms of working capital?
Yes. Also for this question, I will ask help from Andrea, but in general, as said already by Andrea, so we had some pressure on the third quarter about cash in. So we recorded a bad performance in terms of payments of one of our main customers that will be compensated in Q4. So we already are putting in place all the actions in order to have the cash in. So there will be for sure an improvement on the year basis. But I ask also Andrea to give more flavor to the answer.
Yes. So I mean, in this nine months, as of end of September 2023, as we mentioned, the net working capital increased more than we expected.
We have a significant, let's say, amount of overdue receivable, more than 90 days. The new acquired companies actually have a leaner working capital, especially Refine and Imille. Of course, the explosion of the working capital is not to be attributed to the acquisition of Refine and Imille, but more to the delay in the collection of the receivables with the, let's say, historical customer. And looking forward, also WebGenesys, according to the due diligence analysis that we did, has a leaner, let's say, working capital because they also work with some suppliers and subcontractors. So they are somehow able also to compensate, let's say, receivable with payables, while in, let's say, the typical, let's say, TXT business with the vast majority of costs being, let's say, internal activities. Let's say the payment is, of course, due on a monthly basis.
WebGenesys also has leaner net working capital compared to the TXT Group with, let's say, net working capital relative to sales, which is between 10%-15%. Looking forward, we can expect net working capital, which will represent more or less 20% of sales. It's not a super, let's say, low value, but it's somehow historical and also discount effect that we have some, let's say, larger, let's say, payment terms with one of the main customers in the defense, but also the fact that we are growing with the Public Sector and that somehow compensate also the better, let's say, performances in terms of the SO of, for example, Refine and Imille. So all these effects, we expect that will keep us on an incidence of net working capital on sales of approximately 20%.
Fantastic. And we do have a few other questions.
From Jonathan, can you comment on the surplus in the organic growth regarding the software engineering division? And your previous guidance were about low double-digit growth. Also, can you comment on the 10 million EUR in non-core activities regarding the telco? Because without those 10 million EUR, the organic growth is more or less 16.5%.
Yeah. Without this 10 million EUR, the organic growth is more or less 20%. So it's a relatively tight call. I also was reading the question. I don't know if he's referring to the telco segment or to the overall. Yes. For the telco segment, it will be around 16.5%-15%. Yes. So this, as I said before, these non-core activities are activities in the telco and, let's say, gaming industry, in our, let's say, section related to telco and gaming.
We're related mainly to one of the projects we decided to undertake in order to strengthen the customer relationship. We are speaking about one of the projects of reselling services, hardware, and software of third parts. The marginality is quite also low. It's one of the projects of serving this customer that is finished. Okay. The surplus in general for the software engineering division is driven by these non-core activities, but also by our capability to address the market more strongly. In particular, the Aerospace and Defense has a strong component of software engineering that is growing in a sustainable way, so very strongly.
Also above the expectation because we were able to, let's say, take some market shares more than the expectation of the beginning of the year because our competencies and our positioning allowed us to be more effective in, let's say, capturing opportunities on the market. So these are the main, let's say, drivers of this kind of growth.
Thank you very much, and another question from Jonathan. So the R&D budget will decrease next year to go back to the 14% or 15% EBITDA margin.
Let's say the go back to 14% to 15% of EBITDA margin will be driven not only by, let's say, a more accurate R&D investment, but also by several factors. One of them is mainly the efficiency because, let's say, the impact of the pressure on the margin is mainly on the Software Engineering division, for which we are growing fast.
Software Engineering is a service-based activity, so based also on teams of people. This year, we hired a lot of new, let's say, competencies and a lot of new resources within our teams. So, of course, when you hire a lot and you grow by inserting people, you lose in efficiency because you have to train people. And before they became, let's say, capable of delivering projects, it takes time. So it means that we have also investments in terms of recruitment training that is impacting the performances of the Software Engineering division together with one of, let's say, low-margin projects. So, let's say, the growth for the next year will be driven mostly by more efficiency in the organization. Moreover, let's say, we have an impact of all the M&A activity we are doing. So this year, we already did five extraordinary, let's say, operations in terms of acquisitions.
And so this is an impact in terms of cost, of course, that are fully expanded during the year because there are advisors, there are, let's say, working time related to the team that is actively, let's say, working for this. So, let's say, with this increase in terms of big, let's say, acquisitions and, let's say, increase in terms of resources within the team, we forecast a more, let's say, efficient operational efficiency for the next year. And together with, let's say, a more, let's say, focused R&D investment, we want to regain the 14%-15% EBITDA margin.
Fantastic. And the final question we have here, can you comment on WebGenesys acquisition, so the synergies and strategies? And what about the exit for the PE fund? Why is the price fixed at EUR 20 million and not a multiple?
And if I'm right, to avoid any dilution, the EBITDA must be multiplied by two. Can you do it in two years?
Okay. So, commenting WebGenesys, so for us, it's strategic, as I said before, because it brings the software engineering capability in a market like the Public Sector one, for which we were present only with the consultancy pathway, so with the Digital Advisory part. So, of course, there will be synergies in terms of go-to-market because we put together two strong players, so HSPI, WebGenesys in a market that, let's say, is a particular market. So we have good managers and organization in order to apply to tenders and organization in order to manage and deliver complex projects of digital transformation in Public Sector. And we see a lot of capabilities also for synergies with the other software engineering companies.
We have like SPS that is working in the Roman area with more than 100 resources specialized in software engineering activities. So there are technical synergies with the other companies of the group and commercial synergies in order to bring and to win bigger tenders also because you know that in Public Sector, it's very important to have references in order to get, let's say, more probability to get new business with the Public Sector. So putting together two strong players like HSPI and WebGenesys and PGMD also in this kind of market segment brings us value in order to capture more opportunity than before. About the exit, as said by Andrea, we will be more, let's say, detailed in all the options and the structure of the option after the closing. So for now, we signed with WebGenesys.
There are some, let's say, conditions and authorization that must be implemented before the closing that for now is planned by the end of the year, okay, if everything is okay. And so we will be more, let's say, detailed about the options and the price and the earnout also for the seller and the agreement with the HAT as soon as we proceed with the closure of the operation. And the last part of the question, if I'm right, to avoid any dilution of EBITDA?
Yeah. No, I think because it's not two years, so this is not a fixed price. And I guess it's not two years, so we have a forced call option to be executed within two years. But then it goes up to five-year plan.
So it's, let's say, somehow also from a timing perspective also aligned with the plan that we share with the seller. So yeah, the expectation is not that the multiple double in two years, but yes, within five years, possibly, yes.
Okay. Fantastic. And so we have the final question here. Okay. So thank you very much. Now that you have acquired WebGenesys, will you plan to organize a CMD?
Capital Markets Day, I think that is CMD. Sorry, it's full of abbreviation. It's difficult to understand. Now, yes. So as we said before, we were planning already to do before the end of the year, but we were working very strongly on the WebGenesys, let's say, acquisition. And it's transformative in some way for the size, for the price in terms of volumes, EBITDA margins, and so on. And we decided to postpone.
We will announce the date of the Capital Market Day that will be in the first quarter of the next year. So in the next few days, we will communicate the date and save the date for the Capital Market Day that will be in the first quarter of the next year. So I confirm that we are arranging and organizing it.
Fantastic. And so I think we're out of questions now, but if anyone does have any other questions, feel free to email through, and we'll endeavor to get back to them.
Thank you very much to everybody for, let's say, attending this meeting. Thank you, Andrea. From Berlin, he's a senior member of everybody. Thank you, everyone.
Always a pleasure. Thank you.
We have to make happy birthday to Sanela because it's her birthday today, so.
Thank you.
Happy birthday, Sanela.
Thank you very much.
See you for the next call for the yearly result. Bye-bye.
Thank you. Bye-bye.
Bye.