Sabaf

Investor Presentation • Nov 30, 2020

FINANCIAL PRESENTATION

Milan, 1st - 3 rd December 2020

Table of contents

• I. COMPANY PROFILE
• II. BUSINESS UPDATE AND 2020 OUTLOOK
• III. 9 MONTHS AND IV QUARTER 2020 PERFORMANCE
• IV. BUSINESS PLAN 2018 2022

COMPANY PROFILE

Sabaf Group Timeline and history

Sabaf Group Business diversification in three divisions

Diversification of profitability

Sabaf Group Product range

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

• Micro switches & Accessories

• Ovens

• Dishwashers
• Special applications
• Small compartments
• Catering appliance

GAS HINGES ELECTRONIC COMPONENTS

• Cooker Hoods
• Ovens
• Cookers
• Air Curtain
• Refrigerators/freezer
• Other products

Sabaf Group Industrial footprint

Total Group employees at 31 October 2020:

Sabaf Group Market

Global leader

• in the segment of components for domestic gas cooking appliances, with over 400 customers in 55 different countries. A strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%
• in the segment of hinges with estimated market share worldwide of about 35%

Weight of top 10 customers on total Group sales is 47% (45% in 2019)

Each top 10 customer represents less 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: about 90 active patents

Know-how:

• ➢ Mechanic: 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 (40+ R&D engineers)

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

Sabaf Group Stock price & main Shareholders

Paloma Rheem Investments

32.85 % Market

BUSINESS UPDATE

and

2020 OUTLOOK

Revenues - IIIQ 2020 and 9M 2020

Business update

Outlook 2020

Outlook 2020

CMI Sales 2020 CMI Sales 2019

15

Sabaf Group Operational impacts of health emergency

PRODUCTION STOP
March/ April	Production loss: on average 30% in all Italian plants due to the lockdown Partial slowdown in Turkey and Brasil	Lockdown Heavy recourse to Temporary Redundancy Fund (Cassa Integrazione)
May / June	General production decrease: on average 25% (cancellation or postponement of customers' orders) Sharper slowdown in Brasil	Work shifts reduction for social distancing Low absenteeism rate Lower recourse to Temporary Redundancy Fund
July / August	Production recovery in all the Group plants: production equal or higher than 2019 (excepted ARC)	Usual work shifts No recourse to Temporary Redundancy Fund
From September	Totally recovering COVID impact The new restrictive measures adopted in Italy and other Countries due to the recurrence of the pandemic are currently not significantly affecting operations

The Group estimates that, as a result of the pandemic, sales for the first half of the year were about 20% lower than expected, corresponding to a decrease in revenue of €19 million and operating profitability of €5.7 million

DIRECT COSTS

Protective equipment and sanitation activities: 400,000 euro Employees benefits: 150,000 euro

Total direct costs: 550,000 euro

9 MONTHS AND IV QUARTER 2020 FINANCIAL PERFORMANCE

Performance data Income statement – III quarter 2020

€ 000 x	III QUARTER	2020	III QUARTER 2019*		% Δ 20 - 19
Revenue	47 281 ,	100.0%	40 426 ,	100.0%	+17.0%
Other income	1 067 ,	2.3%	934	2.3%
Total operatig and income revenue	48 348 ,		41 360 ,
Materials	(21 057) ,	(44.5%)	(14 185) ,	(35.1%)
Personnel costs	(10 584) ,	(22.4%)	(8 946) ,	(22.1%)
Change in inventories	17	0.0%	(2 969) ,	(7.3%)
Other operating costs	(7 136) ,	(15.1%)	(7 708) ,	(19.1%)
EBITDA	9 588 ,	20.3%	552 7 ,	18.7%	+27.0%
Depreciation	(4 197) ,	(8.9%)	(4 048) ,	(10.0%)
Gains/losses fixed assets on	19	0.0%	(4)	(0.0%)
EBIT	5 410 ,	11.4%	3 500 ,	8.7%	+54.6%
Net financial expense	(302)	(0.6%)	(411)	(1.0%)
Exchange gains and losses rate	(3 004) ,	(6.4%)	891	2.2%
Profits and losses from equity investments	(31)	(0.1%)		0.0%
EBT	2 073 ,	4.4%	3 980 ,	9.8%	-47.9%
Income taxes	(124)	(0.3%)	(606)	(1.5%)
PROFIT FOR THE YEAR	1 949 ,	1.7%	3 374 ,	8.3%	-42.2%
Minority interests	(128)	(0.3%)	(95)	(0.2%)
PROFIT ATTRIBUTABLE TO THE GROUP	1 821 ,	3.9%	3 279 ,	8.1%	-44.5%

Δ % 20 - 19

+9.3%

+17.1%

+41.6%

-55.3%

-46.3%

-47.4%

Performance data Income statement – 9 months 2020

€ x 000	9 MONTHS 2020		9 MONTHS 2019 *		% Δ 20 - 19	12 MONTHS 2019 *
Revenue	125 445 ,	100.0%	115 252 ,	100.0%	+8.8%	155 923 ,	100.0%
Other income	3 036 ,	2.4%	2 228 ,	1.9%		3 621 ,	2.3%
Total operatig and income revenue	128 481 ,		117 480 ,			159 544 ,
Materials	(56 438) ,	(45.0%)	(42 063) ,	(36.5%)		(57 464) ,	(36.9%)
Personnel costs	(30 485) ,	(24.3%)	(26 605) ,	(23.1%)		(37 103) ,	(23.8%)
Change in inventories	3 694 ,	2.9%	(6 656) ,	(5.8%)		(8 617) ,	(5.5%)
Other operating costs	(22 380) ,	(17.8%)	(21 710) ,	(18.8%)		(29 327) ,	(18.8%)
EBITDA	22 872 ,	18.2%	20 446 ,	17.7%	+11.9%	27 033 ,	17.3%
Depreciation	(12 705) ,	(10.1%)	(10 737) ,	(9.3%)		(15 183) ,	(9.7%)
Gains/losses fixed assets on	60	0.0%	44	0.0%		46	0.0%
EBIT	10 227 ,	8.2%	9 753 ,	8.5%	+4.9%	11 896 ,	7.6%
Net financial expense	459	0.4%	(965)	(0.8%)		(701)	(0.4%)
Exchange gains and losses rate	(4 841) ,	(3.9%)	(150)	(0.1%)		(1 380) ,	(0.9%)
Profits and losses from equity investments	(31)	(0.0%)	-	0.0%		(39)	0.0%
EBT	5 814 ,	4.6%	8 638 ,	7.5%	-32.7%	9 776 ,	6.3%
Income taxes	(1 349) ,	(1.1%)	(1 630) ,	(1.4%)		407	0.3%
PROFIT FOR THE YEAR	4 465 ,	3.6%	008 7 ,	6.1%	-36.3%	10 183 ,
Minority interests	(220)	(0.2%)	(216)	(0.2%)		(268)	(0.2%)
PROFIT ATTRIBUTABLE TO GROUP THE	4 245 ,	3.4%	6 792 ,	5.9%	-37.5%	9 915 ,	6.4%

Δ % 20 - 19

-4.9%

-0.7%

-1.6%

-37.9%

-40.6%

-40.5%

Performance data Sales by market

9 MONTHS 2020	9 MONTHS 2019*
23,291	24,016	0% -3
7,567	9,292	-18 6%
46,942	38,750	1% +21
8,518	5,953	+43 1%
5,015	7,136	7% -29
18,170	17,822	+2 0%
15,942	12,283	8% +29
125,445	115,252	+8.8%

€ x 000	III Q 2020	III Q 2019
Italy	8,927	7,283	6% +22
Western Europe	2,987	2,792	0% +7
Eastern Europe (incl. Turkey)	18,587	14,464	+28 5%
Middle East & Africa	3,010	2,757	2% +9
Asia (excl. ME)	1,884	2,698	-30 2%
Latin America	5,770	5,719	9% +0
North America	6,116	4,713	+29 8%
Totale	47,281	40,426	+17.0%

Like-for-like consolidation scope	9M ∆ % 20 - 19	IIIQ ∆ % 20 - 19
Italy	-14.0%	+15.7%
Western Europe	-18.6%	+7.0%
Eastern Europe (incl. Turkey)	+1.3%	+18.1%
Middle East & Africa	+43.1%	+9.2%
Asia (excl. ME)	-30.6%	-30.2%
Latin America	-0.9%	+0.1%
North America	-10.3%	+7.3%
Total	-4.9%	+9.3%

* C.M.I. Group has been consolidated since August 2019

Performance data Sales by product

x 000 €	MONTHS 9 2020	MONTHS 2019* 9
Gas parts	87 521 ,	94 320 2% -7 ,
Hinges	28 737 ,	8% 13 569 +111 ,
Electronic components	9 188 ,	363 +24 8% 7 ,
Total	125,446	8% 115,252 +8

€ x 000	III Q 2020	III Q 2019
Gas parts	32 397 ,	29 990 ,	0% +8
Hinges	11 475 ,	7 839 ,	4% +46
Electronic components	3 410 ,	2 597 ,	+31 3%
Total	47,281	40,426	+17 0%

Performance data Balance Sheet

30 09 2020 000 € 000 € 000 x x	30 31 09 12 2019 2020	30 30 31 09 09 12 2020 2019 2019	31 30 09 12 2019 2019
Fixed Fixed Fixed 129 441 assets assets assets ,	138 129 441 506 , ,	129 132 138 441 941 506 , , ,	138 132 941 506 , ,
Inventories Inventories Inventories 36 585 ,	35 36 343 585 , ,	36 37 35 641 585 343 , , ,	35 37 343 641 , ,
receivables Trade receivables Trade receivables 54 431 ,	46 54 929 431 , ,	46 54 55 431 929 349 , , ,	46 55 929 349 , ,
receivables Tax receivables Tax receivables 2 095 ,	4 2 458 095 , ,	4 2 4 095 458 218 , , ,	4 4 458 218 , ,
receivables Other receivables Other 2 258 current current current ,	receivables 2 1 459 258 , ,	2 2 1 258 459 309 , , ,	2 1 459 309 , ,
payables Trade payables Trade (29 900) payables ,	(27 (29 900) 560) , ,	(29 (26 (27 900) 560) 152) , , ,	(27 (26 560) 152) , ,
payables payables (2 payables 053) Tax Tax ,	(1 (2 802) 053) , ,	(2 (2 (1 053) 802) 115) , , ,	(1 (2 802) 115) , ,
payables Other payables Other (10 874) payables ,	(10 (9 874) 134) , ,	(10 (9 (9 874) 654) 134) , , ,	(9 (9 654) 134) , ,
working capital Net working capital Net working capital 52 542 ,	49 52 693 542 , ,	49 61 52 693 542 596 , , ,	49 61 693 596 , ,
for risks and Provisions for risks and Provisions for severance severance (10 764) indemnity indemnity ,	risks and severance (11 (10 966) 764) , ,	(10 (11 (7 966) 764) 176) , , ,	(11 (7 966) 176) , ,
Employed Capital Employed Capital Employed 171 219 ,	176 171 233 219 , ,	171 187 176 219 233 361 , , ,	176 187 233 361 , ,
Equity Equity 107 618 , debt debt Net Net 63 601 ,	121 107 618 105 , , 63 601 128 55 , ,	107 115 121 618 506 105 , , , 63 71 601 855 128 55 , , ,	121 115 506 105 , , 71 855 128 55 , ,
of finance Sources of finance Sources of finance 171 219 ,	176 171 233 219 , ,	171 187 176 219 233 361 , , ,	176 187 233 361 , ,

Performance data Cash flow statement

€ x 000	30.09.2020	30.09.2019	31.12.2019
Cash the beginning of the period at	18,687	13,426	13,426
Net profit Depreciation Other income adjustments statement	4,465 12,705 581 -	7,008 10,737 2,937 -	10,183 15,183 1,538 -
Change in working capital net - Change in inventories - Change in receivables - Change payables in	(1 ,242) (7 ,502) 2,340 (6 ,404) -	6,792 1,728 (4 ,309) 4,211 -	9,090 10,148 (2 ,901) 16,337 -
Other changes in operating items	(344) -	(3 ,098) -	(2 ,309) -
Operating cash flow	11,003	21,795	40,932
of disposals Investments , net Cash Flow Free	(12 ,354) (1,351)	(7 ,141) 14,654	(12 ,014) 28,918
Cash flow from financial activity Own shares buyback Dividends CMI Acquisition OKIDA acquisition Forex	(1 ,914) (1 ,737) - (3 ,063) - (1 ,478) -	(211) - (6 ,060) (10 ,475) (317) 45 -	(10 ,433) 3,146 (6 ,060) (10 ,475) (317) 482 -
financial flow Net	(9,543)	(2,364)	5,261
Cash the end of the period at	9,144	11,062	18,687
Current financial debt Non-current financial debt	35,146 37,599	24,887 58,030	22,386 51,430
Net financial debt	63,601	71,855	55,130

€ x 000	30.09.2020	30.09.2019	31.12.2019
Liquidity and current financial assets	(10 ,481)	(11 ,062)	(19 ,954)
Current financial debt financial debt Non-current	36,483 37,599	24,887 58,030	23,652 51,430
Financial debt	74,082	82,917	75,082
NET FINANCIAL DEBT	63,601	71,855	55,128

	30.09.2020	30.09.2019	31.12.2019
Unsecured loans	50,049	60,360	55,222
Short-term bank liabilities	8,150	7,276	3,689
Dividend liabilty shareholders to	3,928	-	-
Leases of IFRS 16 out scope	1,192	1,347	1,309
Other financial debts	1,233	120	1,293
Put Options	5,850	10,518	10,350
IFRS leases 16	3,680	3,296	3,219
Financial debt	74,082	82,917	75,082

Performance data Financial Indicators

E-MARKET SDIR
CERTIFIED

	30	2019** 09 2020 30 09		31 12	2019
				actual	pro-forma***
Change in turnover*	8% +8			5% +3
Change in - Organic* turnover	9% -4			9% -8
ROCE (return capital employed) on	8 0%	6 9%		6 8%	1% 7
debt/EBITDA Net	2 09	2 64		2 04	1 86
working capital/Turnover Net	4% 31	1% 40		9% 31	7% 28
Net debt/equity	1% 59	2% 62		45	5%
Days of Sales Outstanding	117	130		108	97
Days of Payables Outstanding	102	111		114	90
of Outstanding Days Inventory	94	105		96	74

• * For the 9 months 2020 the change in turnover has been calculated vs. the 9 months 2019 For the 12 months 2020 the change in turnover has been calculated vs. the 12 months 2019
• ** Figures do not consider the C.M.I. Group contributions. The C.M.I. Group has been consolidated since August 2019
• *** The return on capital employed and the pro-forma net debt/EBITDA ratio are calculated considering, for the companies consolidated during the year, the EBIT and EBITDA for the full year

BUSINESS DEVELOPMENT

Business development Where we are 1/2

Business development Where we are 2/2

	Total projects	Main projects	Estimated additional annual sales	Period	Markets
and Burners valves	31	6	€ 15 - 18 mn	2020-2022 2022	North America Europe , , South America Far East ,
Electronic components	48	30	€ 4 - 6 mn	2022 2019 - 2021	and Middle Europe East , South and North America (new markets)
Hinges	19	9	€ 3 - 4 mn	2022 2019 - 2021	Europe
Total	9 8	4 5	€ 22 - 28 mn

COVID-19 All main projects are confirmed

Estimated delay of about 6 months

A further step in organic growth: Sabaf India

SABAF INDIA – a new production facility for valves and burners targeting the local market

Production start-up: IVQ 2021

€ 4.5 mn investment in 4 years

• In August 2020 land (23,500 Sqm) and building (3,000 Sqm) were acquired - € 1.6 mn capex

Expected capacity: 5 mn units of valves

Expected sales in 2023: € 5 mn

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