Sabaf

Investor Presentation • Oct 12, 2021

www.sabafgroup.com

FINANCIAL PRESENTATION

STAR Conference 2021

Milan, 12 th 14 th October 2021

Table of contents

• I. COMPANY PROFILE
• II. 1ST HALF 2021RESULTS
• III. OUTLOOK
• IV. BUSINESS PLAN 2021 2023

COMPANY PROFILE

5

Sabaf Group Timeline and history

Sabaf Group Business diversification in three divisions

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: present and near future

Total Group employees at 30 September 2021 1,470

Q1 2022 Hinges

SABAF S.P.A. Valves and thermostats Standard burners Special burners 606 employees

A.R.C. S.R.L. Professional burners 21 employees

Oven hinges Dishwasher hinges 162 employees

FARINGOSI-HINGES S.R.L.

Oven hinges Dishwasher hinges 60 employees

8

SOP - H1 2022

Sabaf Group Market

Global leader in the segment of components for domestic gas

cooking appliances, with 400 customers in 64 different countries. A strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%

Weight of top 10 customers on total Group sales is 48%

No customer represents more than 11% 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: about 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 (50+ 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 1.5%

Sabaf Group Stock price

2021 DIVIDEND

• € 0.55 per share - Tot. amount 6.1 mn eur
• Ex-date: 31st May 2021
• Dividend yield: 2.4%
• Payout ratio: 45.4%

Sabaf performance
Change Jan 21
1-month (%)	- 4.94%
3-month (%)	- 12.83%
6-month (%)	+ 2.67%
12-month (%)	+68.00%
YTD (%)	+53.49%

Consensus Overview	Source Bloomberg Consensus Oct.12th, 2021
	FY 2021	FY 2022
Price/EPS	8.78	8.76
EV/EBITDA	5.66	5.71
EV/EBIT	8.05	8.36

FINANCIAL RESULTS

1ST HALF 2021

Business update

Performance data Income statement – H1 2021

Revenue 137 665 100 0% 78 164 100 0% +76 1% 184 906 , , , Other 3% 5% income 4 485 3 1 969 2 7 194 , , , Total operatig revenue and income 5% 142 150 80 133 102 192 100 , , , Materials (76 146) (55 3%) (35 381) (45 3%) (82 966) , , , Personnel (28 136) (20 4%) (19 901) (25 5%) (43 700) costs , , , Change in inventories 8% 7% 20 345 14 3 677 4 6 406 , , , Other operating (26 029) (18 9%) (15 244) (19 5%) (34 743) costs , , , EBITDA 32 184 23 4% 13 284 17 0% +142 3% 37 097 , , , (8 341) (6 1%) (8 508) (10 9%) (16 968) Depreciation , , , Gains/losses on fixed 1% 1% 117 0 41 0 105 assets Write-downs/write-backs of 0% 0 non-current assets 0% (141) 0 - -
	100 0%
	9% 3
	(44 9%)
	(23 6%)
	5% 3
	(18 8%)
	20 1%
	(9 2%)
	1% 0
	(0 1%)
EBIT 4% 2% 4% 23 960 17 4 817 6 +397 20 093 , , ,	9% 10
Net financial 23 0 0% 761 1 0% (780) expense	(0 4%)
Exchange and losses (1 853) (1 3%) (1 837) (2 4%) (4 812) gains rate , , ,	(2 6%)
Profits and losses from equity investments (49) (0 0%) 0% 0 8 -	0% 0
EBT 22 081 16 0% 3 741 4 8% +490 2% 14 509 , , ,	8% 7
Income (4 768) (3 5%) (1 225) (1 6%) (149) taxes	(0 1%)
, , PROFIT FOR YEAR 6% 2% 1% THE 17 313 12 2 516 3 +588 14 360 , , ,	8% 7
Minority interests (564) (0 4%) (92) (0 1%) (399)	(0 2%)
PROFIT TO GROUP 2% 1% 0% ATTRIBUTABLE THE 16 749 12 2 424 3 +591 13 961	6% 7

Performance data Sales - Quarter Analysis

Figures in euro million

Performance data Sales by market

Performance data Sales by Division

€ 000 x	H1 2021	H1 2020	H1 21 vs. H1 20	H1 2019	H1 21 vs. H1 19
Gas	97	124	+76	64	+50
	041	55	0%	330	8%
	,	,		,
Hinges	29	17	7%	5	1%
	114	262	+68	730	+408
	,	,		,
Electronics	11	778	+99	4	+141
	510	5	2%	766	5%
	,	,		,
Total	137	78	1%	74	0%
	665	164	+76	826	+84
	,	,		,

Performance data Balance Sheet

E-MARKET SDIR
CERTIFIED

€ 000 x	30/06/2021	31/12/2020	30/06/2020
Fixed assets	136 192 ,	131 543 ,	133 599 ,
Inventories	58 735	39 224	37 599
Trade receivables	, 81 666 ,	, 63 436 ,	, 48 964 ,
Tax receivables	3 531 ,	2 419 ,	3 081 ,
Other receivables current	3 086 ,	3 167 ,	2 147 ,
Trade payables	(56 494) ,	(41 773) ,	(26 338) ,
payables Tax	(6 629) ,	(3 287) ,	(1 165) ,
Other payables	(13 463) ,	(10 957) ,	(10 836) ,
working capital Net	70 432 ,	52 229 ,	53 452 ,
Provisions for risks and severance indemnity	(8 883) ,	(9 643) ,	(11 425) ,
Capital Employed	197 741 ,	174 129 ,	175 626 ,
Equity debt Net	126 615 , 71 126 ,	117 807 , 56 322 ,	114 980 , 60 646 ,
Sources of finance	197 741 ,	174 129 ,	175 626 ,

19

Performance data Cash flow statement

€ x 000	H1 2021	MONTHS 12 2020	H1 2020
Cash the beginning of the period at	13 318 ,	18 687 ,	18 687 ,
Net profit Depreciation Other income adjustments statement	17 313 , 8 341 , 4 310 ,	14 360 , 16 968 , 1 873 ,	2 516 , 8 508 , 140
Change in working capital net - Change in inventories - Change in receivables - Change in payables	(19 511) , (18 230) , 14 721 , (23 020) ,	- (3 881) , (16 507) , 14 213 , (6 175) , -	(2 256) , (2 035) , (1 141) , (5 432) ,
Other changes in operating items	(115)	(1 959) ,	(845)
Operating cash flow	6 829 ,	25 067 ,	4 887 ,
Investments of disposals , net Free Cash Flow	(15 162) , (8 333) ,	(17 296) , 7 771 ,	(8 345) , (3 458) ,
Cash flow from financial activity Own shares buyback Dividends CMI Acquisition Forex	13 545 , - (6 172) , - 562	(2 136) , (2 073) , (3 924) , (3 063) , (1 944) , -	(2 677) , (1 264) , - - (986) -
financial flow Net	(398)	(5 369) ,	(8 385) ,
Cash the end of the period at	12 920 ,	13 318 ,	10 302 ,

Working capital

• Increase in working capital due to the increase in inventories, as a result of the need to ensure continuity of supplies and to limit the impact of changes in raw material prices
• Nevertheless lower incidence of NWC on turnover: 25.6% compared to 34.2% at 30 June 2020 and 28.2% at 31 December 2020

Investments

The high levels of activity led the Group to anticipate to 2021 some investments originally planned for 2022, where growth is considered structural, in order to be able to guarantee continuity in supplies to customers and full production efficiency

Performance data Financial Indicators

E-MARKET SDIR
CERTIFIED

	H1 2021	H1 2020	MONTHS 12 2020
Change in turnover (vs year) . previous	1% +76	5% +4	6% +18
Change in - Organic turnover (vs . previous year)	1% +76	5% -12	4% +8
ROCE (return capital employed) on	2% 24	5% 5	5% 11
debt/EBITDA Net	1 10	2 80	1 52
Net working capital/Turnover	6% 25	2% 34	2% 28
debt/equity Net	2% 56	7% 52	8% 47
Days of Sales Outstanding	107	106	111
of Payables Outstanding Days	99	93	98
Days of Inventory Outstanding	96	101	97

OUTLOOK

Outlook

These forecasts assume a macroeconomic scenario not affected by unpredictable events. If the economic situation were to change significantly, actual figures might diverge from the forecasts.

Revenues: 2019 – 2021E

REVENUES euro mn

BUSINESS PLAN 2021 - 2023

Business plan 2021 – 2023

around

SALES

€ 57 mn

EBITDA by 2023

at least

+100 bps

€300 mn 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

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

Business plan 2021 - 2023 Organic growth

CAGR: +10.6%

Figures in euro million

Business plan 2021 - 2023 Organic growth - Market development

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

5,3
6,0
5,0
13,8
30,1

New Manisa Electronic Plant unvealed in May 2021

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

33

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