Servizi Italia

Earnings Release • Oct 6, 2020

Virtual STAR Conference

Fall Edition, 6 October 2020

¹ www.servizitaliagroup.com

BUSINESS OVERVIEW/1

WASH-HIRE SERVICES

Laundry business: washing and rental of textile material in Healthcare industry.

Minor current presence in other industries.

SURGICAL INSTRUMENTS STERILIZATION

Sterilization of surgical instruments and kits and related activities.

Design, Installation, Renovation and Management of CSSDs. Validation and control of sterilization processes.

TEXTILE STERILIZATION

Sterilization of textile (cotton fabrics and Reusable Technical Fabric) for beds and surgical gowns.

Supply of disposable material.

BUSINESS OVERVIEW/2 – Wash-hire services

7.6%

20 mln Eur

18.1%

48 mln Eur

WASH-HIRE

HEALTHCARE 74.3%

Washing and rental of flat linen (sheets, covers, blankets), tailored linen (gowns, uniforms for healthcare staff), mattresses and pillows.

HOMECAREAND HEALTH RESIDENCES

Supply, rental and washing of textile devices. A guarantee of quality, hygiene, safety and traceability.

HOTEL AND RESTAURANTS

Specific, high quality service for national and international hotels, restaurants and catering.

WORKWEAR

Supply, rental, washing and traceability of professional clothing and personal protective equipment (P.P.E.)

195 mln Eur

BUSINESS OVERVIEW/3 – Textile and Medical Devices Sterilization

18.1%

48 mln Eur

7.6%

20 mln Eur

SUPPLY OF NON WOVEN TEXTILE AND TEXTILE STERILIZATION

Sterilization of fabrics and Reusable Technical Fabric for beds and surgical gowns. Supply of procedural kits and surgical drapes. Supply of accessory parts made of disposable material.

STERILIZATION AND RENTAL OF MEDICAL DEVICES

Management of sterilization units providing sanitizing, packing and sterilization services for surgical equipment and accessories for operating theatres.

CLINICAL ENGINEERING

Services for the validation and systematic control of sterilization processes, equipment calibration and validation of surgical equipment sanitizing systems.

SURGICAL INSTRUMENTS STERILIZATION

TEXTILE STERILIZATION

74.3%

195 mln Eur

GROUP EVOLUTION

5

The earlydays 1986 - 2002

1986: Foundation of Servizi Italia, active in laundry sector.

2002: Coopservice acquires 100% of SI share capital.

Transformation into a multiservice company.

New perspectives 2006 - 2007

Start of sterilization activities.

2007: IPO at Milan Stock Exchange.

Presentation to the international financial

2012: Acquisition of the first laundry in Brazil (other transactions in 2013 and 2015).

2014: Start of sterilization business in Turkey.

2014: Start of greenfield laundry business in India.

2015: Achievement of a sterilization tender in Albania.

2015: Expansion in Turkey in laundry industry, through the acquisition of Ankateks.

International development 2012 - 2015

Growth in Italy 2008 - 2011

community. Acquisitions in Italy in laundry industry. Development of sterilization business. STAR qualification at Borsa Italiana.

Consolidation of the existing markets: Acquisitions in laundry industry in Italy (2016) and Albania (2018).

Expansion plans in Brazil.

Diversification in new business lines: Acquisition of Steritek (2017), start of non-healthcare laundry business (hotel and workwear) and acquisition of Wash Service and remaining 50% of Ekolav for entering homecare & nursing homes market (2019).

New Markets: Sterilization activity in Morocco (2017) and Joint Venture in Asia (constitution of idsMED Servizi Plus in 2018).

Consolidation and diversification 2016 - 2020

DEVELOPMENT PATH

GLOBAL PRESENCE

STRENGHTS

• Multi-service approach by offering a mix of customized services
• High barriers on entry due to know-how and investments needed

POSITIONED FOR CREATING VALUE

• Costs optimization
• Commercial synergies
• Future focus on high value-added services

MEET CUSTOMER NEEDS

• High control of Healthcare costs

LONG TERM CONTRACTS

4-year average contracts volume based OR monthly fixed fee

6-year average contracts

volume based OR monthly fixed fee

BUSINESS GROWTH STRATEGY

GROUP VALUES

Servizi Italia'sapproach is aimed at guaranteeing a high level of service to patients and citizens, as beneficiaries of assistance and health services.

EFFICIENCY RESEARCH Services are based on a process of industrial production subjected to frequent analysis, in order to production efficiency goals	FOCUS ON CUSTOMER Investing in research of tailor solutions to propose and carry out together with customers	ORGANIZATIONAL SOLIDITY AND RELIABILITY Servizi Italia is a deep rooted company, with a wide production network
PRODUCT/PROCESS INNOVATION Backed by a strong cooperation with research centers and international university centers.	SAFETY AND TRANSPARENCY Guaranteed by the traceability of products and the quality system certification process	INTERNATIONALIZATION Being a multinational company for organization, culture, modes of presence and respect in global markets

INTEGRITY, ETHICS AND PROFESSIONALISM

Promotion of business ethics, prevention of corruption and protection of reputation. Enhance skills and talents, attracting the best resources

COVID-19 FOCUS

Covid-19 main implications . . .

• First effects in Italy: end of February 2020.
• First effects in other countries: first/second week of March 2020.
• Decrease of patients in the hospitals for non-Covid-19 and non-urgent reasons, causing a lower need of bed linen, but also an increase in need of garments/uniforms for hospital personnel.
• Increase need/attention of hospital employees in disinfection of uniforms and equipment.
• Strong decrease of interventions in the period, with direct effect on sterilization volumes.
• Changes in the provision and delivery of services at hospitals

• Up to early May 2020, lockdown in Italy closed industries and hotels. Gradual increase starting from May.

• No SI Laundry plant closed worldwide during the period, ensuring business continuity.

• Reorganization of operations (incl. transfer of production activities among sites, new working shifts of employees and use of residual holidays where possible) in order to maximize working of needed volumes.
• Remote working, when possible.
• Health and safety protocols established for all facilities. PPE in use at plants and offices.
• Contracts review for the supply of goods and services in order to guarantee emergency services and contain costs and/or investments in response to the contraction in demand for services and production volumes.
• Services provided by the Group are considered essential, crucial and of public utility.

. . . and actions taken

"The current health emergency - said Roberto Olivi, Chairman of the Executive Committee of Servizi Italia – has focused national attention on the services offered by the Group, highlighting the importance for the healthcare system of being assisted by reliable, financially sound industrial partners capable of offering adequate operational solutions even in critical moments such as the current one."

COVID-19 FOCUS: Impacts on sectors

WASH-HIRE IN HEALTHCARE

• Decrease of demand of bed linen, since hospitals reduced access to outpatient services.
• Increase of reconditioning of uniforms of Healthcare workers.
• Increase of equipment demand.
• A gradual increase of bed linen from May-2020.

INSTRUMENTS STERILIZATION

• Significant reduction of volumes started at the end of Feb-2020, due to reduction of scheduled surgical operations in ORs.
• Operating costs could not be reduced timely, causing a margin decrease.
• Temporary effect, with partial recovery of the lower volumes.
• A gradual increase of demand from Jun-2020

.

TEXTILE STERILIZATION

• Relevant reduction of volumes concerning in particular sterilization of Reusable Technical Textiles.
• Reduction due to lower surgical operations.
• Temporary effect, with potential recovery of part of the lower volumes of the period.

WASH-HIRE FOR HOMECARE AND HEALTH RESIDENCES

• Reduction in production volumes, due to deaths of elderly guests of residential facilities and prudential slowdown in access to the residential facilities.
• Temporary effect.

• In 2H 2020 a gradual increase of demand is expected.

• Significantly impacted in terms of volumes reduction starting from end of Feb-2020.

• Temporary effect.
• Sector represents a minority share in Group revenues.

Government's provisions for the lockdown of production activities of industrial companies have led to a temporary contraction in the volume of laundry services for community and industry.

WORKWEAR

• Temporary effect.
• Sector represents a minority share in Group revenues.

ITALY

• Italian Wash-hire Healthcare marketturnover: Euro 747mln
• HighestInternational quality standards
• SI's customers are main Public hospitals and Healthcare Institutions
• Outsourcing rate is high in laundry market but still low in sterilization area
• Undisputed marketleaderin all the segments
• Well positioned in the areas of the Country
• Servizi Italia manages more than 60,000 beds and about 500,000 interventions/year
• Fullrange of services and customizations
• Constant search and identification of growing and diversification strategies in order to keep and to improve margins

Market overview**

*2019 consolidated revenues in Italy

BRAZIL

4 laundry plants

Fully consolidated

Revenues of Euro 31.9 mln*

First CSSD to be opened in 2021

• Wash-hire potential marketis estimated in Reais 840mln
• Over 700,000Kg/day of potential linen only in Sao Paulo
• ~1,000 healthcare facilities totaling over 92,500 beds
• New potential outsourcing: only 45% of wash-hire is currently outsourced and no sterilization service provideris present Market
• Primary player: first playerin Sao Paulo, second in Brazil
• Recognized in the market as high quality provider
• Well positioned in both private and public areas
• Leaderin identifying new solutions forthe clients
• Deepmarket knowledge of local team and partners
• Rental model improved successfully

overview

• MARKET CONSOLIDATION IN SÃO PAOLO
• START OF STERILIZATION BUSINESS
• ORGANIZATION AND MANAGEMENT EFFICIENCIES
• IDENTIFY FURTHER M&A DEVELOPMENT

TURKEY

5 laundry plants

4 CSSDs

Laundry Fully consolidated

Sterilization Equity consolidated

Revenues of Euro 11.0 mln*

• About 6,000,000 surgical intervention/year
• Construction of new PPP hospitals, increasing the nr of beds up to about 250,000 overthe next few years
• ~1,400 healthcare facilities totaling over 195,000 beds
• Low outsourcing rate in both laundry and sterilization businesses
• Main player of both laundry (Ankateks/Ergulteks) and sterilization (SAS) markets
• Recognized by the market as high quality provider
• Achieved multiple high-complexity PPP contracts, requiring International standards and with long term duration
• Good margins and volumes market

Market overview

• GROWTH IN THE WHOLE COUNTRY
• ACHIEVEMENT OF NEW PPPs
• BE THE REFERENCE SERVICE PROVIDER
• IMPROVE LOCAL STANDARDS
• MANAGEMENT EFFICIENCY

*Sum of (i) 2019 consolidated revenues of Ankateks(laundry) equal to 7.9 mln EUR or 50.0 mln TRY (included in SI consolidated revenues) and (ii) 100% of 2019 revenues of SAS (sterilization) equal to 3.1 mln EUR or 20.0 mln TRY (not included in consolidated revenues of SI group).

INDIA

1 laundry plant

Equity consolidated

Revenues of Euro 5.4 mln*

Market

overview

• The Indian market has recently started to outsource wash-hire activities
• About 90,000 beds only in Delhi NCR,totaling about kg 200,000,000 of linen
• Over 195,000 healthcare facilities throughoutIndia
• Low outsourcing rate
• Business developed greenfield and first volumes started in Oct-2015
• Main player in healthcare laundry business in India
• Technologically advanced laundry plant (Delhi area)
• Recognized by the market as high quality provider
• Volumes steadily increasing
• High capacity plant (45 tons/day, not fully reached)

*100% of revenues of Shubhram (not included in consolidated revenues of SI group). Revenues equal to 422.1 mln INR.

ALBANIA

8 CSSDs

Equity consolidated

Revenues of Euro 12.8 mln*

• Total value of contract awarded include all public and private hospitals of Albania
• More than 70,000 surgical intervention/year
• Servizi Wash-hire market is expected to have interesting growth prospects in terms of both revenues and profitability
• Unique playerin healthcare sterilization business
• Recognized by the market as high quality provider
• Good margins and volumes market

Market overview

Goals

• Laundry market still fragmented: target is to consolidate it starting from 2021

• COMPLETE THE DEVELOPMENT OF STERILIZATION ACTIVITIES

• BECOME THE LAUNDRY MARKET LEADER
• IMPROVEMENT OF THE STANDARDS

*Sum of 100% 2019 SaniService and Sanitary Cleaning revenues (both not included in consolidated revenues of SI group). Equal to 1,568 mln ALL.

MOROCCO

Revenues of Euro 0.8 mln*

• Market with more than 315,000 surgical intervention/year
• Around 3,000 healthcare facilities totaling over 21,000 beds
• Primary Healthcare destination in Africa

Market overview

• Sterilization industry still almostfully insourced
• First and unique operator offering sterilization services and CSSDmanagement in the Country
• Constitution of Centre Marocain de Sterilisation
• Direct financial and quality benefits for the local Healthcare
• Cooperation with local universities for starting sterilization courses
• CONSOLIDATION OF THE MARKET
  • NEW AREAS AND PUBLIC HOSPITALS
• SUPPLY OF STERILIZATION - RELATED SERVICES
• SERVICE DIVERSIFICATION Goals

* 100% of 2019 Servizi Italia Marocco revenues (not included in consolidated revenues of SI Group). Equal to 9,0 mln MAD.

SOUTH-EAST ASIA

CSSD under study

Laundry target analysis

Equity consolidated

• Access to over 10,000 healthcare institutions throughout the Asian-Pacific area
• No main players in Laundry business

Market overview

Goals

• Sterilization services fully insourced

• Established IdsMED ServiziPlus in Singapore, which will operate for identifying and developing new business opportunities in the sterilization and wash-hire services
• Joint venture targets firstly Asian-Pacific area and secondly whole Asian market
• Local partner with large Healthcare network

• START STERILIZATION PILOT PROJECTS

• M&A LAUNDRY TARGETS
• BECOME THE REFERENCE AREA LEADER

CONSOLIDATED ECONOMICS RESULTS

Servizi Italia P&L Consolidated ('000 Euro)	FY 2018	FY 2019	FY 2019 (excl. IFRS16)	1H 2019	1H 2020
Revenues	250.908	262.403	262.403	131.745	117.943
Var. %		4,6%	4,6%		-10,5%
EBITDA	64.423	68.387	62.797	34.068	27.466
%	25,7%	26,1%	23,9%	25,9%	23,3%
EBIT	14.354	13.849	12.492	6.217	233
%	5,7%	5,3%	4,8%	4,7%	0,2%
Net income	12.120	9.514	10.246	4.804	-214
%	4,8%	3,6%	3,9%	3,6%	-0,2%

ECONOMIC AND FINANCIAL HIGHLIGHTS IN 2019 AND 1H 2020:

• Surgical instruments sterilization registered ^a relevant growth in ²⁰¹⁹ vs ²⁰¹⁸ (+2.1%), with high margins: EBITDA % of 30.2% and EBIT % of 17.6%.

Relevant organic growth of Brazilian perimeter (+12.0% in 2019 and +3.8% in 1H 2020) and of Turkish area (+33.0% in 2019 and +13.2.% in 1H 2020), without considering FX effects.

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Relevant margins achieved by Brazilian activities: in 2019 EBITDA % was equal to 32.7% (23.7% of previous period) and EBIT % equal to 8.7% (4.8%). Improvements continued in 1H 2020, with EBITDA % equal to 33.9% (31.3%) and EBIT % equal to 7.3% (8.6%).

Relevant margins achieved by Turkish activities: in 2019 EBITDA % was equal to 32.2% (29.9% of previous period) and EBIT % equal to 24.8% (24.7%). Strong resilience during Covid-19 period and improvements continued in 1H 2020, with EBITDA % equal to 31.3% (32.1%) and EBIT % equal to 22.1% (26.0%).

Management considers that negative effect on sterilization volumes of Covid-19 could be partially recovered from 3Q 2020 (in 1H 2020 many interventions were postponed, not cancelled). Covid-19had a positive impact in terms of revenues for Brazil on wash-hire segments (increase in volumes of uniforms washed, etc.).

New acquisitions accounted on revenues growth for +5.3% in 2019 and +2.8% in 1H 2020. Management considers that transactions done in 2019 put the basis for future results improvements both in terms of sales and margins.

– Laundry business in Italy registered ^a slow down, in particular due to critical issues of the industry, bringing the Group to achieve contracts with significant margin discount orto lose them.

Covid-19 had a significant negative impact on revenues and margins of instruments and textile sterilization, directly reducing group consolidated margins. Covid-19 negatively impacted also on revenues of wash-hire business for hotels and workwear.

Covid-19 had a negative impact in terms of wash-hire margins, especially in Italy, due to a change in the mix of service. The management considers this effecttemporary.

Despite a positive start of 2020, in Turkish businesses, management recorded a negative impact on volumes due to Covid-19 starting from Apr-2020, however a gradualrecover since June-2020.

After a positive 2018, textile sterilization registered a negative 2019 and 1H 2020.

In 2019 and 1H 2020 FX negative impact on both Brazilian and Turkish areas, connected with consolidation of abroad operations. In 1H 2020 FX impacted significantly also on results of some equity consolidated subsidiaries (in particular in India and Albania).

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20 One-off costs impacted relevantly on 2019 results, in particular due to start-up period of acquisitions longer than expected.

ECONOMICS RESULTS – Sector breakdown

SALES BREAKDOWN PER BUSINESS LINE

ECONOMICS RESULTS – Geographic breakdown

CONSOLIDATED FINANCIAL RESULTS

Balance Sheet ('000 Euro)*	31.12.2018	1.1.2019	31.12.2019	30.06.2020
Operating Net Working Capital	7.957	7.957	6.644	-1.390
Other net current assets (liabilities)	-13.102	-13.102	-18.852	-12.400
Net Working Capital	-5.145	-5.145	-12.208	-13.790
Fixed assets - Medium/long term provis.	225.578	259.727	277.873	269.163
'- of which IFRS16	0	34.149	35.783	33.132
Invested Capital	220.433	254.582	265.665	255.373
Shareholders' Equity (B)	138.238	138.238	138.257	119.491
Net financial debt (A)	82.195	116.344	127.408	135.882
'- of which IFRS16	0	34.149	36.258	34.498
Invested Capital	220.433	254.582	265.665	255.373
Gearing (A/A+B)	0,37x	0,46x	0,48x	0,53x
Gearing (A/A+B) - Excl. IFRS16	0,37x	0,37x	0,40x	0,46x
D/E (A/B)	0,59x	0,84x	0,92x	1,14x
Debt/E (A/B) - Excl. IFRS16	0,59x	0,59x	0,66x	0,85x

*Starting from 1.1.2019, IFRS16 accounting principle was adopted.

NET DEBT HISTORICAL TREND

Operational investments and acquisitions of Servizi Italia are conducted with specific focus on keeping a balanced and healthy

STOCK EXCHANGE – Main details

SHAREHOLDING	STRUCTURE			Analyst Coverage					Reccomend.		TP (Euro)				Date
				Intermonte	SIM				Outperform			2.80			13/08/2020
	4.58%	5.9%	MidCap		Partners				Hold			3.00			10/08/2020
55.33%		4.61%	0,3			0.25
		4.57% Treasury shares	0,25
			0,2	0.16	0.18					0.16			0.17	0.16
	Others 25.11%	0,15				0.11	0.13	0.14		0.15	0.15			0.14
		0,1
		0,05
			0	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

Details on shares as at 30 September2020
Share Capital ('000)	31,809
Share Price (Euro)	2.10
Market Capitalization ('000 Euro)	66,799

Average PAYOUT RATIO of last 5 years equalto >40%

Average DIVIDEND YIELD of last 5 years equalto >4.2%

DISCLAIMER

This presentation has been prepared by Servizi Italia S.p.A. ("Servizi Italia" or the "Company") and must be read in conjunction with its oral presentation.

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Via S. Pietro, 59/b 43019 Castellina di Soragna (PR) Italy Tel.+39 0524 598511 - Fax+39 0524 598232 Share capital: Euro 31,809,451 fully paid-up Founded: 1986 Tax ID Number and Parma Business Registry Code: 08531760158 Market: MTA – STAR segment

Sector: Industrial ISIN code for ordinary shares: IT 0003814537 Reuters: SRI.MI --- Bloomberg: SRI IM Specialist: Intermonte SIM Investor Relations Department: Giovanni Manti (IRM), Pietro Giliotti Email: investor@si-servizitalia.com web site: www.servizitaliagroup.com