Sabaf

Investor Presentation • Jun 7, 2022

SABAF: the total cooking company for a quality life

www.sabafgroup.com

FINANCIAL PRESENTATION

Investors meeting

8 th June 2022

Table of contents

• I. COMPANY PROFILE
• II. I QUARTER 2022 RESULTS
• III. 2022 OUTLOOK
• IV. SABAF INDUCTION
• V. SUSTAINABILITY
• VI. BUSINESS PLAN 2021 2023

4

COMPANY PROFILE

Sabaf Group: evolution

Sabaf Group: product range

• Standard Burners
• Special Burners
• Professional Burners
• Oven and Grill Burners
• Gas Valves
• Gas Oven Thermostats

• Microswitches & Accessories

• Ovens

• Dishwashers
• Washing machines
• Special applications
• Small compartments
• Catering appliances

GAS HINGES ELECTRONIC COMPONENTS

• Cooker Hoods
• Ovens
• Cookers and hobs
• Vitroceramic hobs control cards
• Air Curtain
• Refrigerators/freezers
• Other products

Sabaf Group: industrial footprint

SABAF S.P.A. Valves and thermostats Standard burners Special burners

ARC S.R.L. Professional burners

FARINGOSI-HINGES S.R.L. Oven hinges Dishwasher hinges

CMI ITALY

Oven hinges Dishwasher hinges

• 2021: 10 production plants
• By 2022: 13 production plants (5 in Italy and 8 abroad)
• 1,510 employees

SABAF TURKEY Burners, valves, hinges and Electronics

OKIDA ELEKTRONIK Electronics for household appliances

SABAF APPLIANCE COMPONENTS (KUNSHAN) Wok burners

SABAF INDIA Valves and burners

NEW

SOP - H1 2022

Sabaf Group: business diversification

SALES by division GAS

EBITDA by division

HINGES

ELECTRONICS

Sabaf Group Market

Global leader in the segment of components for domestic appliances with 400 customers in 58 different countries:

• Gas components a strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%
• Hinges - Top Player. Market share above 30% worldwide.
• Electronics - New player, strong growth

Weight of top 10 customers on total Group sales is 47%

No customer represents more than 8% of total Group sales

Long -term agreements and strong relationships with all the main players in the household appliances business, based on mutual trust, technical cooperation, co -engineering and tailor -made products

Sabaf Group Product & technology

Product Innovation: 88 active patents

Know-how:

• ➢ Mechanical: forefront process technology internal development of special machinery, high performance molds for robotic die-casting, high speed and high precision tools not available on the market
• ➢ Electronic: strong skills in new product development

Intellectual capital: highly specialized and qualified staff (70+ R&D engineers)

Strong operational leverage: great flexibility in production volumes growth, ready to satisfy customers requests

Sabaf Group Main Shareholders

Pietro Iotti, CEO of Sabaf, owns 1.6%

Sabaf Group Stock price

		Dividends
Payout year	2021	2022
€ per share	0,55	0,60
Total amount	€ 6,1 mn	€ 6,7 mn
Dividend yield	2,4%	2,4%
Payout ratio	45,4%	30,2%

Performance (change)	SABAF	FTSE MIB	FTSE Italia All Share
1-month (%)	+ 4.29%	+ 1.04%	+ 0.94%
6-month (%)	+ 11.35%	- 5.07%	- 5.47%
12-month (%)	- 6.59%	- 2.64%	- 3.08%
YTD (%)	+ 6.25%	- 10.39%	- 10.62%

Consensus Overview	FY 2022E	FY 2023E
Price/EPS	11.32	10.35
EV/EBITDA	7.11	6.65
EV/EBIT	10.67	9.93

Source: Bloomberg Consensus June 1 st , 2022

I QUARTER 2022 RESULTS

Performance data

Income statement - I quarter 2022 vs. I quarter 2021

€ x 000	IQ 2022		IQ 2021		% Δ 22 - 21	MONTHS 12	2021
Revenue	70 852	100.0%	64 825	100.0%	+9.3%	263 259	100.0%
Other income	, 2 585 ,	3.6%	, 1 888 ,	2.9%		, 8 661 ,	3% 3
Total operatig and income revenue	73 437 ,		66 713 ,			271 920 ,
Materials	(39 336) ,	(55 .5%)	(36 947) ,	(57 .0%)		(142 355) ,	(54 1%)
Personnel costs	(13 462) ,	(19 .0%)	(13 886) ,	(21 .4%)		(53 964) ,	(20 5%)
Change in inventories	5 943 ,	8.4%	11 535 ,	17.8%		29 922 ,	11 4%
Other operating costs	(13 558) ,	(19 .1%)	(12 307) ,	(19 .0%)		(51 383) ,	(19 5%)
EBITDA	13 024 ,	18.4%	15 108 ,	23.3%	-13.8%	54 140 ,	20.6%
Depreciation	(4 068) ,	(5 .7%)	(4 132) ,	(6 .4%)		(16 869) ,	(6 4%)
Gains/losses fixed assets on	129	0.2%	44	0.1%		237	0 1%
Write-downs/write backs of non-current assets -	-	0.0%	-	0.0%		-	0% 0
EBIT	9 085 ,	12.8%	11 020 ,	17.0%	-17.6%	37 508 ,	14.2%
financial Net expense	238	0.3%	289	0.4%		(429)	(0 2%)
Exchange gains and losses rate	(126)	(0 .2%)	(849)	(1 .3%)		(7 399) ,	(2 8%)
Profits and losses from equity investments	(48)	(0 .1%)	(46)	(0 .1%)		-	0% 0
EBT	9 149 ,	12.9%	10 414 ,	16.1%	-12.1%	29 680 ,	11.3%
Income taxes	(1 695) ,	(2 .4%)	(1 646) ,	(2 .5%)		(4 997) ,	(1 9%)
PROFIT FOR THE YEAR	454 7 ,	10.5%	8 768 ,	13.5%	-15.0%	24 683 ,	9.4%
Minority interests	-	0.0%	312	0.5%		780	3% 0
PROFIT ATTRIBUTABLE TO GROUP THE	7 454 ,	10.5%	8 456 ,	13.0%	-11.8%	23 903 ,	9.1%

Performance data Income statement - I quarter 2022 vs. IV quarter 2021

€ x 000	IQ 2022		IVQ 2021		% Δ 22 - 21	MONTHS 12 2021
Revenue	70 852 ,	100.0%	62 487 ,	100.0%	+13.4%	263 259 ,	100.0%
Other income	2 585 ,	3.6%	2 682 ,	4.3%		8 661 ,	3% 3
Total operatig and income revenue	73 437 ,		65 169 ,			271 920 ,
Materials	(39 336) ,	(55 .5%)	(33 168) ,	(53 .1%)		(142 355) ,	(54 1%)
Personnel costs	(13 462) ,	(19 .0%)	(13 042) ,	(20 .9%)		(53 964) ,	(20 5%)
Change in inventories	943 5 ,	8.4%	4 794 ,	7.7%		29 922 ,	4% 11
Other operating costs	(13 558) ,	(19 .1%)	(13 782) ,	(22 .1%)		(51 383) ,	(19 5%)
EBITDA	13 024 ,	18.4%	9 971 ,	16.0%	+30.6%	54 140 ,	20.6%
Depreciation	(4 068) ,	(5 .7%)	(4 151) ,	(6 .6%)		(16 869) ,	(6 4%)
Gains/losses fixed assets on	129	0.2%	111	0.2%		237	1% 0
Write-downs/write backs of non-current assets -	-	0.0%	-	0.0%		-	0 0%
EBIT	9 085 ,	12.8%	931 5 ,	9.5%	+53.2%	37 508 ,	14.2%
financial Net expense	238	0.3%	(340)	(0 .5%)		(429)	(0 2%)
Exchange gains and losses rate	(126)	(0 .2%)	(6 132) ,	(9 .8%)		(7 399) ,	(2 8%)
Profits and losses from equity investments	(48)	(0 .1%)	38	0.1%		-	0 0%
EBT	9 149 ,	12.9%	(503)	-0.8%	+1918.9%	29 680 ,	11.3%
Income taxes	(1 695) ,	(2 .4%)	1 129 ,	1.8%		(4 997) ,	(1 9%)
PROFIT FOR THE YEAR	7 454 ,	10.5%	626	1.0%	+1090.7%	24 683 ,	9.4%
Minority interests	-	0.0%	(14)	(0 .0%)		780	3% 0
PROFIT TO GROUP ATTRIBUTABLE THE	454 7 ,	10.5%	640	1.0%	+1064.7%	23 903 ,	9.1%

Performance data Sales - Quarter Analysis

17

Performance data Sales by market

x 000	IQ	IQ
€	2022	2021
(excluding	26	24	0%
Turkey)	467	052	+10
Europe	,	,
Turkey	17	16	+9
	747	276	0%
	,	,
North America	10 145 ,	7 301 ,	0% +39
South America	8 743 ,	9 890 ,	-11 6%
Africa and Middle East	5 086 ,	3 908 ,	1% +30
Asia	2	3	6%
and	664	398	-21
Oceania	,	,
Total	70	64	+9
	852	825	3%
	,	,

18

Performance data Sales by product

€	IQ	IQ
x 000	2022	2021
Gas	45	44	0%
	032	589	+1
	,	,
Hinges	19	14	+36
	496	319	2%
	,	,
Electronics	6	5	9%
	324	917	+6
	,	,
Total	70	64	3%
	852	825	+9
	,	,

Performance data Balance Sheet

E-MARKET SDIR
CERTIFIED

€ 000 x	31/03/2022	31/12/2021	31/03/2021
Fixed assets	132 414 ,	130 093 ,	132 244 ,
Inventories	70 395 ,	64 153 ,	50 081 ,
Trade receivables	78 780 ,	68 040 ,	73 020 ,
Tax receivables	6 926 ,	6 165 ,	2 980 ,
Other receivables current	4 396 ,	3 136 ,	2 865 ,
Trade payables	(58 765) ,	(54 837) ,	(51 883) ,
Tax payables	(6 559) ,	(4 951) ,	(4 487) ,
Other payables	(12 493) ,	(13 075) ,	(12 030) ,
Net working capital	82 680 ,	68 631 ,	60 546 ,
Provisions for risks and severance indemnity	(8 177) ,	(8 681) ,	(9 271) ,
Capital Employed	206 917 ,	190 043 ,	183 519 ,
Equity	131 463 ,	122 436 ,	123 886 ,
debt Net	454 75 ,	67 607 ,	59 633 ,
Sources of finance	206 917 ,	190 043 ,	183 519 ,

Performance data Cash flow statement

€ x 000	IQ 2022	MONTHS 12 2021	IQ 2021
Cash the beginning of the period at	43 649 ,	13 318 ,	13 318 ,
Net profit Depreciation Other income adjustments statement	454 7 , 4 068 , 1 808 ,	24 683 , 16 869 , 5 810 ,	8 768 , 4 132 , 1 087 ,
Change in working capital net - Change in inventories - Change receivables in - Change in payables	(6 254) , (10 742) , 3 945 , (13 051) ,	(24 929) , (4 604) , 13 064 , (16 469) ,	(10 857) , (9 584) , 10 110 , (10 331) ,
Other changes in operating items Operating cash flow	(3 110) , (2 831) ,	(7 677) , 23 216 ,	324 3 980 ,
of disposals Investments , net Free Cash Flow	(5 812) , (8 643) ,	(23 752) , (536)	(6 718) , (2 738) ,
Cash flow from financial activity Own shares buyback Dividends CMI and ARC acquisitions Deconsolidation consolidation ARC Handan / Forex	(4 876) , - - - (97) 816	47 405 , - (6 172) , (6 393) , 97 (4 070) ,	1 637 , - - - - (374)
Net financial flow	(12 800) ,	30 331 ,	(1 475) ,
Cash the end of the period at	30 849 ,	43 649 ,	11 843 ,

Working capital

• The growth in working capital reflects higher levels of activity; and the need to temporarily increase stock levels to ensure continuity of production and deliveries
• At 31 March 2022, the impact of the NWC on revenue was 29.2% compared to 26.1% at 31 December 2021

Financial Debt

• In December 2021 Sabaf issued a € 30 mn 10 year bond, fully subscribed by PRICOA Private Capital
• Such placement allows us to diversify our sources of funding and support our organic and external growth

Performance data Financial Indicators

	IQ 2022	IQ 2021	MONTHS 12 2021
Change in turnover (vs year) . previous	3% +9 IQ 21 vs.	8% +47 IQ 20 vs.	4% +42 12M 20 vs.
ROCE (return capital employed) on	6% 17	0% 24	7% 19
debt/EBITDA Net	1 45	0 99	1 25
working capital/Turnover Net	2% 29	3% 23	1% 26
Net debt/equity	4% 57	1% 48	2% 55
Days of Sales Outstanding	100	101	101
of Payables Outstanding Days	99	95	96
of Outstanding Days Inventory	105	87	99

2022 OUTLOOK

The increase in sales from new projects is continuing in line with forecasts, although the uncertainty caused by the prolongation of the conflict between Russia and Ukraine.

Outlook 2022 - Previous forecasts confirmed

SABAF INDUCTION

Extract form Business Plan 2021-2023 released in March 2021

100+ R&D engineers

Sabaf Induction

The Sabaf Group enters the Induction cooking sector

and

becomes a global manufacturer in all cooking technologies:

▪ Gas

▪ Traditional electric (radiant)

▪ Induction

Diversification in 4 divisions

Research and development activities

• Sabaf has developed its own project know-how internally by filing proprietary patents, software and hardware
• Creation of innovative products which better meet manufacturers' needs and new consumer trends
• The Group benefits from the expertise gained from the acquisition of Okida the Turkish company of Sabaf Group already designated to electronics and where part of the induction cooking components will be produced
• Team of more than 50 electronic engineers

The project technological flexibility will enable Sabaf to offer to its clients customised products

• Sabaf network for sales and distribution
• Very positive customer feedback (agreements with some important players have been already signed)
• Objective: at least 5% of the non-captive European market by 2025, further expansion in the following years

Sabaf Group: technological evolution and widening of the industrial footprint

Sabaf Group designs its FUTURE through the technological evolution and the widening of the industrial footprint

The starting point is our history, a solid and strong base, mainly in metalworking, which continues with an electronical evolution:

• 2018: Electronics (Okida acquisition)
• 2020: production of radiant cooktops components (vitroceramic)
• 2022: design, development and sale of induction cooktops components

Investments and projects to become a global company, able to offer cooking systems for every market

• Emerging countries: gas cooking (evolution of the industrial footprint: after Turkey and Brazil also China, India and Mexico)
• Western countries (mainly Europe): electric cooking (radiant and induction)

Next steps: hydrogen

Hy4Heat trial project (UK) which is going on with the starting of Phase 2

SUSTAINABILITY

Sustainability Business Model

Sustainability Business plan 2021 – 2023 KPI

"

The Sabaf Group has always considered sustainability to be an integral part of its Business Model. With the Business Plan 2021 - 2023, the Group promotes the improvement of the quality of the environment and the community in which it operates so that the basic needs

of all are met in an environmentally sustainable way. "

		2021 TARGET
AREA	KPI	PLANNED	ACHIEVED
Development of resources and skills	Hours of training per capita	11	YES	20,4
Health and safety	Accident frequency rate Accident severity rate	140	NO	327
Eco-efficiency and Emissions into the atmosphere	tCO emissions on 2eq sales	126	YES	111

Sustainability CDP rewards Sabaf's commitment

In its second year of participation, Sabaf received a B- rating in CDP's Climate Change section, on a scale ranging from A to F. In its second year of participation, Sabaf received a B- rating in CDP's Climate Change section, on a scale ranging from A to F.

In its second year of participation, Sabaf received a B- rating in CDP's Climate Change section, on a scale ranging from A to F. "This excellent rating is an important acknowledgement of the Sabaf Group's ongoing commitment to the challenge of combating climate change: priority in the management of environmental issues, also through product and process innovation, is an integral part of our strategy."

CDP is the world's leading environmental performance reporting programme: more than 13,000 companies, representing 64% of global market capitalization, published their environmental data through CDP in 2021. CDP requires companies to report information on environmental governance, related risks and opportunities performance in terms of energy consumption and emissions and reduction targets.

Sustainability Hydrogen: Sabaf Group partner in the Hy4Heat project

In its second year of participation, Sabaf received a B- rating in CDP's Climate Change section, on a scale ranging from A to F. The SABAF Group is one of the key strategic suppliers to the British Government's hydrogen feasibility project Hy4Heat.

The project aims to establish whether it is technically possible, safe and convenient to replace natural gas with 100% hydrogen in residential and commercial buildings and gas appliances. The project is financed by BEIS, (UK governments Department for Business, Energy, and Industrial Strategy) and involves ten separate work packages.

The Sabaf Group, through its subsidiary ARC, is involved in the Work Package 4, which covers cooking and heating appliances. ARC has developed and produced the burners that are included in the world's first ranges of 100% hydrogen powered hobs and cookers.

These were installed on Glen Dimpex cooking appliances at HyHome, two houses featuring hydrogen appliances in a "real life" scenario in Low Thornley, near Gateshead, Northern England.

Immediately following the Hy4Heat project, the cooking appliances with ARC burners will be specified for the Community Trial involving 300 homes commencing in 2022. Beyond the Community Trial, the UK Government intends to commission a 'Village Trial' with around 2,500 homes in 2025 and a 'Town Trial' (10,000 homes) in the latter part of the decade prior to potentially converting the whole UK gas grid to hydrogen over future years

CLICK HERE

ARC is involved also in Work Package 5B (Development of hydrogen commercial appliances, which includes catering equipment) and has developed burners for Falcon Foodservice Equipment Ltd.

BUSINESS PLAN 2021 - 2023

Business plan 2021 – 2023 (released in March 2021 and overcome by 2021 actual results)

TOTAL SALES by 2023 +62% vs. 2020 CAGR > 17.5%

• Organic CAGR >10%: around € 250 mn sales by 2023
• M&A: € 50 mn sales by 2023

KEY POINTS

at least

+100 bps

EBITDA at least 19% on sales

ROI 12.5% Compared to 11.5% in 2020

FINANCIAL LEVARAGE ~ 2.0 Net debt/EBITDA around 2.0

INVESTMENTS in 3 years

• Organic: € 58 mn capex, of which € 46 mn for growth and € 12 mn in maintenance
• M&A: up to € 72 mn investment

€ 20 mn

DIVIDENDS in 3 years

• Total amount higher than previous years (2018 - 2020: € 16 mn)
• Lower payout to support future growth

FINANCED with:

• OPERATING CASH FLOW € 85 mn in 3 years
• NEW FINANCIAL DEBT up to € 65 mn by 2023

40

Business plan 2021 - 2023 Organic growth

(released in March 2021 and overcome by 2021 actual results)

CAGR: +10.6%

Figures in euro million

Business plan 2021 - 2023 Organic growth - Market development (released in March 2021 and overcome by 2021 actual results)

MARKET	2020	2021	2022	2023	Var % 2023 vs. 2020	CAGR
EUROPE (excl. Turkey)	69.6	76.3	80.3	86.6	5% +24	7.6%
TURKEY	44.8	51.6	55.6	56.6	3% +26	8.1%
NORTH AMERICA	22.7	27.5	32.2	37.2	6% +63	17.8%
SOUTH AMERICA	27.6	29.0	30.4	32.9	9% +18	5.9%
AFRICA AND MIDDLE EAST	12.2	14.1	14.1	16.1	5% +32	9.8%
CHINA AND FAR EAST	6.8	10.3	11.5	14.2	1% +101	28.1%
INDIA	1.2	1.7	4.3	6.9	0% +468	78.4%
TOTAL	184.9	210.5	228.4	250.5	5% +35	10.6%
Growth previous vs year		9% +13	5% +8	7% +9

Business plan 2021 - 2023 Organic growth – Sales By division

HUGE NEW PROJECTS PIPELINE

ORGANIC GROWTH +35.5% on 2020

STRONG RELATIONSHIPS WITH GLOBAL PLAYERS

Business plan 2021 - 2023 Organic growth – Investments

(Amounts in mn Eur)

Production Capacity Increase
India Plant	5.2
Turkey Plant	6.0
Mexico Plant	5.0
Tot New Plants	16.2

Maintenance 12.5

New Projects
Electronics	5.3
Other Projects	6.0
Hinges	5.0
Gas	13.8
Tot new projects	30.1

Total investments in organic growth € 58.8 mn in 3 years

Business plan 2021 - 2023 Organic growth - New facilities

Business plan 2021 - 2023 Organic growth - Sustainability

Sabaf's strategy and governance model are aimed towards ensuring long-term sustainable growth. For Sabaf, sustainability is primarily based on sharing values with its stakeholders; compliance with common values increases mutual trust and encourages knowledge development. " "

1 Area KPI 2023 TARGETS (VS.2020) Development of resources and skills Hours of training per capita +40% Health and safety Accident frequency rate -44% Accident severity rate Eco-efficiency and Emissions into the atmosphere tCO2eq emissions on sales -14% SDGs 2 3

SABAF GROUP VISION

«We believe in a world in which all people's basic needs, such as home, food and reliable energy, are fulfilled in an environmentally sustainable way.

We promote a company that improves the quality of the environment and the communities where we live and work»

BUSINESS PLAN KPI

Business plan 2021 - 2023 Growth by acquisitions - M&A Strategy

M&A as a tool for achieving longterm targets through:

• the acquisition of know-how and technologies
• the expansion of the product offer
• the opening to new markets
• the risk diversification
• the ability to scale the business quickly

Growth of the competitive advantage by differentiating the Sabaf value proposition from competitors

Preservation of the identity of acquired companies, which maintain their brand, local supply chain and workforce

Retention of talents and soft skills

Achievement of significant commercial and industrial synergies

From an entrepreneurial to an industrial approach

Joint effort for growth and positives influence on margins

Preferably seller is taken onboard as a director and/or minority shareholder

INVESTMENT SECTORS

Business plan 2021 - 2023 Growth by acquisitions - Target profile

TARGET PARAMETERS

TURNOVER	€ 5 - 70 mn sales
EBITDA	Steady positive results over past years No turnarounds
SHAREHOLDING	Preference for entrepreneurial ownership
EBITDA MULTIPLES	Non-dilutive
M&A TEAM	Dedicated to scouting and development of business contacts, creation of an internal Data Base, analysis and evaluation of opportunities, management of negotiations

Data Base, analysis and evaluation of opportunities, management of negotiations

Business plan 2021 - 2023 Summary - Targets

Around € 300 mn sales

Total growth: 62% by 2023 vs. 2020 (Organic and by acquisitions growth) (CAGR 17.5%)

Total investments € 130 mn of which:

• ✓ € 58 mn organic growth
• ✓ € 72 mn growth by acquisitions ROI > 12.5%

✓ Dividends: € 20 mn

Investments and dividends, for a total amount of € 150 mn financed with:

• ✓ Operating cash flow: € 85 mn
• ✓ New financial debt: € 65 mn

Sustainability targets:

• ✓ Hours of training per capita
• ✓ Accident frequency and severity rates
• ✓ CO2 emissions reduction

COMPARED TO 11.5% IN 2020

DISCLAIMER

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

The Company's business is in the domestic appliance industry, with special reference to the gas cooking sector, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forwardlooking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.

Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.

For further information, please contact

Gianluca Beschi - +39.030.6843236 gianluca.beschi@sabaf.it