Sabaf

Annual Report • Feb 11, 2020

INTERIM MANAGEMENT STATEMENT

AT 31 DECEMBER 2019

SABAF S.p.A. Via dei Carpini, 1 – OSPITALETTO (BS) ITALY Fully paid-in share capital: € 11,533,450 www.sabaf.it

Table of Contents

Group structure and corporate officers	3
Consolidated statement of financial position	4
Consolidated income statement	5
Consolidated statement of comprehensive income	6
Statement of changes in consolidated shareholders' equity	7
Consolidated statement of cash flows	8
Consolidated net financial position	9
Explanatory notes	10
Statement of the Financial Reporting Officer	16

Group structure

Parent company

SABAF S.p.A.

Subsidiaries and equity interest pertaining to the Group

Companies consolidated on a line-by-line basis
Faringosi Hinges s.r.l.	100%
Sabaf do Brasil Ltda.	100%
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited	100%
Sirteki (Sabaf Turkey)
Sabaf Appliance Components (Kunshan) Co., Ltd.	100%
A.R.C. s.r.l.	70%
Okida Elektronik Sanayi ve Tickaret A.S	100%
Sabaf US Corp.	100%
C.M.I. s.r.l.	68.5%
C.G.D. s.r.l.	68.5%
C.M.I. Polska Sp. Zoo.	68.5%
Companies consolidated using the equity method
Handan ARC Burners Co., Ltd.	35.7%

Board of Directors

Chairman	Giuseppe Saleri
Vice Chairman (*)	Nicla Picchi
Chief Executive Officer	Pietro Iotti
Director	Gianluca Beschi
Director	Claudio Bulgarelli
Director	Alessandro Potestà
Director (*)	Carlo Scarpa
Director (*)	Daniela Toscani
Director (*)	Stefania Triva

(*) independent directors

Board of Statutory Auditors

Chairman	Alessandra Tronconi
Statutory Auditor	Luisa Anselmi
Statutory Auditor	Mauro Vivenzi

Consolidated statement of financial position

	31/12/2019	30/09/2019	31/12/2018
(€/000)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	76,251	75,139	70,765
Investment property	3,610	4,083	4,403
Intangible assets	51,668	48,391	39,054
Equity investments	115	375	380
Financial assets	60	60	120
Non-current receivables	297	453	188
Deferred tax assets	6,094	4,440	6,040
Total non-current assets	138,095	132,941	120,950
CURRENT ASSETS
Inventories	35,343	37,641	39,179
Trade receivables	46,929	55,349	46,932
Tax receivables	5,249	4,218	3,043
Other current receivables	1,459	2,309	1,534
Financial assets	1,266	60	3,511
Cash and cash equivalents	18,687	11,002	13,426
Total current assets	108,933	110,579	107,625
ASSETS HELD FOR SALE	0	0	0
TOTAL ASSETS	247,028	243,520	228,575
SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY
Share capital	11,533	11,533	11,533
Retained earnings, Other reserves	92,579	92,897	90,555
Net profit for the period	10,296	6,792	15,614
Total equity interest pertaining to the Parent
Company	114,408	111,222	117,702
Minority interests	7,077	4,284	1,644
Total shareholders' equity	121,485	115,506	119,346
NON-CURRENT LIABILITIES
Loans	44,046	51,651	42,406
Other financial liabilities	7,383	6,379	1,938
Post-employment benefit and retirement
provisions	3,698	3,461	2,632
Provisions for risks and charges	995	614	725
Deferred tax liabilities	7,273	3,101	3,030
Total non-current liabilities	63,395	65,206	50,731
CURRENT LIABILITIES
Loans	19,015	19,790	18,435
Other financial liabilities	4,637	5,097	7,682
Trade payables	27,560	26,152	21,215
Tax payables	1,802	2,115	3,566
Other payables	9,134	9,654	7,600
Total current liabilities	62,148	62,808	58,498
LIABILITIES HELD FOR SALE TOTAL LIABILITIES AND SHAREHOLDERS'	0	0	0
EQUITY	247,028	243,520	228,575

Consolidated Income Statement

	Q4 2019		Q4 2018		12M 2019		12M 2018
€ ( /000)
INCOME STATEMENT
COMPONENTS
OPERATING REVENUE AND INCOME
Revenue	40,671	100.0%	36,201	100.0%	155,923	100.0%	150,642	100.0%
Other income	1,393	3.4%	901	2.5%	3,621	2.3%	3,369	2.2%
Total operating revenue and		103.4%		102.5%		102.3%		102.2%
income	42,064		37,102		159,544		154,011
OPERATING COSTS
Materials	(15,401)	-37.9%	(13,725)	-37.9%	(57,464)	-36.9%	(62,447)	-41.5%
Change in inventories	(1,961)	-4.8%	(1,060)	-2.9%	(8,617)	-5.5%	4,603	3.1%
Services	(7,786)	-19.1%	(7,598)	-21.0%	(29,488)	-18.9%	(31,297)	-20.8%
Personnel costs	(10,498)	-25.8%	(8,496)	-23.5%	(37,103)	-23.8%	(34,840)	-23.1%
Other operating costs	(187)	-0.5%	376	1.0%	(1,698)	-1.1%	(1,670)	-1.1%
Costs for capitalised in-house	356	0.9%		1.2%				1.1%
work Total operating costs	(35,477)	-87.2%	448 (30,055)	-83.0%	1,859 (132,511)	1.2% -85.0%	1,599 (124,052)	-82.3%
OPERATING PROFIT BEFORE DEPRECIATION & AMORTISATION, CAPITAL GAINS/LOSSES, AND WRITE DOWNS/WRITE-BACKS OF NON-CURRENT ASSETS	6,587	16.2%	7,047	19.5%	27,033	17.3%	29,959	19.9%
(EBITDA)
Depreciations and amortisation	(4,446)	-10.9%	(3,368)	-9.3%	(15,183)	-9.7%	(12,728)	-8.4%
Capital gains/(losses) on
disposals of non-current assets	2	0.0%	16	0.0%	46	0.0%	28	0.0%
Write-downs/write-backs of non current assets	0	0.0%	(850)	-2.3%	0	0.0%	(850)	-0.6%
OPERATING PROFIT (EBIT)	2,143	5.3%	2,845	7.9%	11,896	7.6%	16,409	10.9%
Financial income	356	0.9%	148	0.4%	638	0.4%	373	0.2%
Financial expenses	(92)	-0.2%	(458)	-1.3%	(1,339)	-0.9%	(1,206)	-0.8%
Exchange rate gains and losses	(1,230)	-3.0%	1,609	4.4%	(1,380)	-0.9%	5,384	3.6%
Profits and losses from equity investments	(39)	-0.1%	0	0.0%	(39)	0.0%	0	0.0%
PROFIT BEFORE TAXES	1,138	2.8%	4,144	11.4%	9,776	6.3%	20,960	13.9%
Income taxes	2,418	5.9%	(838)	-2.3%	788	0.5%	(5,162)	-3.4%
NET PROFIT FOR THE
PERIOD	3,556	8.7%	3,306	9.1%	10,564	6.8%	15,798	10.5%
of which:
Profit attributable to minority interests	52	0.1%	62	0.2%	268	0.2%	184	0.1%
PROFIT ATTRIBUTABLE TO	3,504	8.6%	3,244	9.0%	10,296	6.6%	15,614	10.4%
THE GROUP

Consolidated statement of comprehensive income

€ ( /000)	Q4 2019	Q4 2018	12M 2019	12M 2018
NET PROFIT FOR THE PERIOD	3,556	3,306	10,564	15,798
Total profits/losses that will not be subsequently restated under profit (loss) for the period:
Actuarial evaluation of post-employment benefit	(26)	32	(26)	32
Tax effect	6	(8)	6	(8)
	(20)	24	(20)	24
Total profits/losses that will be subsequently reclassified under profit (loss) for the period: Forex differences due to translation of financial statements in foreign currencies	(2,706)	5,784	(3,323)	(3,940)
Total other profits/(losses) net of taxes for the year	(2,726)	5,808	(3,343)	(3,916)
TOTAL PROFIT	830	9,114	7,221	11,882

Statement of changes in consolidated shareholders' equity

l p f be To it a 3 1 De 2 0 1 9 ta t ro ce m r					( ) 3, 3 2 3	( ) 2 0		1 0, 2 9 6	6, 9 5 3	2 6 8	7, 2 2 1
Ot he ha r c ng es					5 1 8		( ) 5 1 3		5		5
C M I Gr ion ut t ou p p op							( 8, 7 0 0 )		( 8, 7 0 0 )		( 8, 7 0 0 )
C ha in he f c l i da ion t t ng e sc op e o on so							( 9 8 1 )		( 9 8 1 )	1 6 5, 5	4, 1 8 4
Sa le f tr ha o ea sur y s res				4, 6 0 0			2 0 8		4, 8 0 8		4, 8 0 8
I F R S k g lan 2 o toc t p n s ran							6 8 1		6 8 1		6 8 1
A l loc ion f 2 0 1 8 p f it at o ro d iv i de ds i d o ut n p a - ie d for d - c arr wa r							9, 4 5 5	( 6, 0 6 0 ) ( 9, 4 ) 5 5	( 6, 0 6 0 )		( 6, 0 6 0 )
lan be Ba 3 1 De 2 0 1 8 at ce ce m r	1 1, 5 3 3	1 0, 0 0 2	2, 3 0 7	( ) 6, 8 6 8	( ) 1 6, 1 3 4	( ) 5 2 6	1 0 1, 7 7 4	1 5, 6 1 4	1 1 7, 7 0 2	1, 6 4 4	1 1 9, 3 4 6
l p f it a be To 3 1 De 2 0 1 8 ta t ro ce m r					( ) 3, 9 4 0	2 4		15 6 1 4 ,	1 1, 6 9 8	1 8 4	1 1, 8 8 2
Ot he ha ng es r c							5 1 8		5 1 8		5 1 8
I F R S 2 o k g lan toc t p n s ran							3 2 1		3 2 1		3 2 1
ha f tr ha Pu rc se o ea sur y s res				( ) 2, 3 5 9					( ) 2, 3 5 9		( ) 2, 3 5 9
A l loc ion f 2 0 17 f it at o p ro d iv i de ds i d o ut n p a - ie d for d - c arr wa r							8, 7 6 4	( 6, 0 1 ) 7 ( ) 8, 7 6 4	( 6, 0 1 ) 7		( 6, 0 1 ) 7
Ba lan De be at 3 1 2 0 1 7 ce ce m r	1 1, 5 3 3	1 0, 0 0 2	2, 3 0 7	( ) 4, 5 0 9	( ) 1 2, 1 9 4	( ) 5 5 0	9 2, 1 7 1	1 4, 8 3 5	1 1 3, 5 9 5	1, 4 6 0	1 1 5, 0 5 5
( / ) € 0 0 0	S ha re ita l ca p	S ha re ium p rem res erv e	Le l g a res erv e	Tr ea sur y ha s res	Tr lat ion an s res erv e	loy nt em p me be f it ne d isc ing nt ou res erv e	Ot he r res erv es	Pr f it for o he t y ea r	l Gr To ta ou p ha ho l de ' s re rs ity eq u	M ino ity r int sts ere	l To ta ha ho l de ' s re rs ity eq u

Sabaf Group – Interim management statement at 31 December 2019 7

Consolidated statement of cash flows

€ ( /000)	Q4 2019	Q4 2018	12M 2019	12M 2018
Cash and cash equivalents at beginning of period	11,062	18,405	13,426	11,533
Net profit/(loss) for the period	3,556	3,306	10,564	15,798
Adjustments for:
- Depreciation and amortisation for the period	4,446	3,368	15,183	12,728
- Write-downs of non-current assets	0	850	0	850
- Realised gains/losses	(2)	(16)	(46)	(28)
- Profits and losses from equity investments	39		39	0
- Financial income and expenses	(264)	310	701	833
- IFRS 2 measurement stock grant plan	247	128	681	321
- Income tax Payment of post-employment benefit provision	(2,418) 237	838 (55)	(788) 300	5,162 (241)
Change in risk provisions	381	(573)	270	340
Change in trade receivables	8,420	1,172	10,148	(3,003)
Change in inventories	2,298	129	9,090	(4,374)
Change in trade payables	1,408	(1,953)	(2,901)	556
Change in net working capital	12,126	(652)	16,337	(6,821)
Change in other receivables and payables,
deferred tax liabilities	2,109	3,223	1,344	2,537
Payment of taxes	(1,570)	(3,406)	(2,952)	(4,860)
Payment of financial expenses	(106)	(451)	(1,339)	(1,178)
Collection of financial income	356	148	638	373
Cash flows from operations	19,137	7,018	40,932	25,814
Net investments	(4,874)	(2,931)	(12,014)	(11,467)
Free cash flow	14,263	4,087	28,918	14,347
Repayment of loans	(7,417)	(11,465)	(29,682)	(19,579)
New loans	(332)	6,754	18,271	52,972
Change in financial assets	(1,206)	10	2,245	(3,384)
Purchase/sale of treasury shares	3,146	(273)	3,146	(2,359)
Payment of dividends	0	0	(6,060)	(6,071)
Cash flows from financing activities	(5,808)	(4,974)	(12,080)	21,579
Okida acquisition	0	(1,195)	(317)	(24,077)
C.M.I. acquisition	0	0	(10,475)	0
Foreign exchange differences	437	(2,897)	482	(9,956)
Net cash flows for the period	8,892	(4,979)	6,528	1,893
Cash and cash equivalents at end of period	19,954	13,426	19,954	13,426
Current financial debt	23,652	22,606	23,652	22,606
Non-current financial debt Net financial debt	51,430 55,128	44,344 53,524	51,430 55,128	44,344 53,524

Consolidated net financial position

	€ ( /000)	31/12/2019	30/09/2019	31/12/2018
A.	Cash	19	18	19
B.	Positive balances of unrestricted bank accounts	18,590	10,778	7,067
C.	Other cash equivalents	79	206	6,340
D.	Liquidity (A+B+C)	18,688	11,002	13,426
E.	Current financial receivables	1,266	60	3,511
F.	Current bank payables	3,313	6,432	7,233
G.	Current portion of non-current debt	14,653	12,194	10,741
H.	Other current financial payables	5,686	6,261	8,143
I.	Current financial debt (F+G+H)	23,652	24,887	26,117
J.	Net current financial debt (I-E-D)	3,698	13,825	9,180
K.	Non-current bank payables	40,569	48,163	41,097
L.	Other non-current financial payables	10,861	9,867	3,247
M.	Non-current financial debt (K+L)	51,430	58,030	44,344
N.	Net financial debt (J+M)	55,128	71,855	53,524

Explanatory notes

Accounting standards and scope of consolidation

The Interim Management Statement of the Sabaf Group at 31 December 2019 was prepared in pursuance of the Italian Stock-exchange regulations that establish the publication of interim management statements as one of the requirements for maintaining a listing in the STAR segment of the MTA (Electronic Stock Market).

This report does not contain the information required in accordance with IAS 34.

Accounting standards and policies are the same as those adopted for the preparation of the consolidated financial statements at 31 December 2018, which should be consulted for reference, with the exception of the new IFRS 16 "Leases", which came into force on 1 January 2019 and the effects of which are shown below. All the amounts contained in the statements included in this Interim Management Statement are expressed in thousands of euro.

We also draw attention to the following points:

• The Interim Management Statement was prepared according to the "discrete method of accounting" whereby the quarter in question is treated as a separate financial period. In this respect, the quarterly income statement reflects the income statement components pertaining to the period on an accruals basis;
• the financial statements used in the consolidation process are those prepared by the subsidiaries for the period ended 31 December 2019, adjusted to comply with Group accounting policies, where necessary;
• the parent company, Sabaf S.p.A., and the subsidiaries Faringosi-Hinges S.r.l., A.R.C. S.r.l., Sabaf do Brasil Ltda, Sabaf Turkey, Okida Elektronik, Sabaf Appliance Components (Kunshan) Co., Ltd, Sabaf US Corp and the companies of the C.M.I. group (C.M.I. s.r.l., C.G.D. s.r.l. and C.M.I. Polska Sp. Zoo) were consolidated on a line-by-line basis;
• on 29 November 2019, the merger through incorporation into Sabaf S.p.A. of Sabaf Immobiliare s.r.l., previously a wholly-owned subsidiary and consolidated on a line-by-line basis, became effective. The tax and accounting effects of this transaction are retroactive to 1 January 2019;
• at 31 December 2019, the financial data of the C.M.I. group and the results of operations only for the period for which the Group held control (31 July - 31 December 2019) were consolidated;
• starting from this Interim Management Statement, Handan A.R.C. Ltd was consolidated using the equity method and Sabaf US Corp was consolidated on a line-by-line basis.

The Interim Management Statement at 31 December 2019 has not been independently audited.

Acquisition of C.M.I. s.r.l. - Information related to IFRS 3

As from 31 July 2019, the C.M.I. Group, one of the main players in the design, production and sale of hinges for household appliances was consolidated. The allocation of the price paid for the acquisition of the C.M.I. Group on the net assets acquired (Purchase Price Allocation) was completed during 2019. Specifically, in accordance with IFRS 3 revised, the fair value of assets, liabilities and contingent liabilities was recognised at the acquisition date, the effects of which are shown in the table below:

	Or l v lue ig ina t a s a	ha Pu Pr ice rc se	Ca f t o rve ou	lue f a d Fa ir v ts a o sse an
	3 1 / 0 7 / 2 0 1 9	l loc A ion at	dw l l i g oo	l b l d ia i it ies ire ac q u
As ts se
Pr lan d e ip d int i b le ert t a nt ets op y, p n q u me an an g ass	8, 27 6	1 2, 8 0 6		2 1, 0 8 2
Inv ies tor en	5, 25 4	17		5, 27 1
Tr de iva b les a re ce	1 0, 1 45			1 0, 1 45
Ot he iva b les r r ec e	1, 25 3			1, 25 3
Ca h a d c h e iva len ts s n as q u	1, 25 5			1, 25 5
l To As ta ts se	2 6, 1 8 3	1 2, 8 2 3		3 9, 0 0 6
ia b i l it ies L
loy be f Po it p is ion st- nt em p me ne rov	( ) 7 6 6	( ) 1 6 6		( ) 9 3 2
is ion for is ks d c ha Pr ov s r an rg es	-	( ) 4 0 0		( ) 4 0 0
De fer d t l ia b i l it ies re ax	( ) 2 17	( ) 3, 5 2 8		( ) 3, 7 45
F ina ia l de bt nc	( ) 6, 5 1 1			( ) 6, 5 1 1
Tr de b les a p ay a	( 9, 2 4 6 )			( 9, 2 4 6 )
Ot he b les r p ay a	( 1, 3 3 ) 7			( 1, 3 3 ) 7
l l ia b i l it ies To ta	( ) 1 8, 4 7 3	( ) 4, 0 9 4		( ) 2 2, 5 6 7
lue f n ire d Va et ts o as se ac q u	7, 7 1 0	8, 7 2 9		1 6, 4 3 9
% in ing Sa ba f ( % ) ( ) 6 8. 5 ert to p a a -	5, 2 8 1			1 1, 2 6 0
Ca f g dw i l l re de d in C M I ( b ) t o rve ou oo co r			( ) 1, 7 8 8	( ) 1, 7 8 8
To l c f a is it ion ( ) ta t o os cq u c	1 3, 3 9 2			1 3, 3 9 2
Go dw i l l de iv ing fro is it ion ( d = b-a ) o r m ac q u c-	8, 1 1 1	( 9 9 ) 5, 7	1, 8 8 7	3, 9 2 0
Ac ire d c h a d c h e iva len ( ) ts q u as n as q u e	1, 25 5			1, 25 5
Sa le f tr ha in ha ( f ) o ea sur y s res ex c ng e	1, 6 6 2			1, 6 6 2
h o lay ( -f ) Ne t c ut as c-e	1 0, 47 5			1 0, 47 5

The financial debt of the C.M.I. Group at the acquisition date amounted to €6.511 million, of which €2.398 million deriving from the application of IFRS 16

according to the modified retrospective approach.

Adoption of the accounting standard IFRS 16 "Leases"

The standard, applied as from 1 January 2019, provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset in order to distinguish lease agreements from service agreements, identifying as discriminating factors the identification of the asset, the right to replace it, the right to obtain substantially all of the economic benefits deriving from the use of the asset and the right to direct the use of the asset underlying the contract. The standard establishes a single model of recognition and measurement of the lease agreements for the lessee which requires the recognition of the asset to be leased (operating lease or otherwise) in assets offset by a financial debt, while also providing the opportunity not to recognise as leases the agreements whose subject matter are "low-value assets" and leases with a contract duration equal to or less than 12 months. By contrast, the Standard does not include significant changes for the lessors.

The following table shows the effects on the consolidated statement of financial position at 31 December 2019 and on the income statement for 2019 and for the fourth quarter of 2019 of the application of IFRS 16 according to the modified retrospective approach:

	Book value at 31/12/2019 in case of non-adoption of IFRS 16	Effect of IFRS 16	Book value at 31/12/2019
Assets
Property, plant and equipment	73,108	3,143	76,251
Liabilities
Loans beyond 12 months	49,174	2,255	51,429
Loans within 12 months	22,688	964	23,652
Shareholders' equity
Retained earnings, Other reserves	92,491	23	92,514
2019 Income Statement
Costs for services	30,230	(742)	29,488
Depreciations	14,478	705	15,183
Financial expenses	1,249	90	1,339
Income Statement Q4 2019
Costs for services	7,505	(223)	7,282
Depreciations	3,827	221	4,048
Financial expenses	436	21	457
Economic and financial indicators
Shareholders' equity	121,514	(29)	121,485
Net financial debt	51,909	3,219	55,128
12 m 2019
EBITDA	26,291	742	27,033
EBIT	11,859	37	11,896
Net profit for the period	10,348	(52)	10,296
Q4 2019
EBITDA	7,329	223	7,552
EBIT 9	3,497	3	3,500
Net profit for the period	3,301	(22)	3,279

Sales breakdown by geographical area (Euro x 1000)
----------------------------------------------------	--	--	--

(amounts in € 000)	Q4 2019	Q4 2018	% change	12M 2019	12M 2018	% change
Italy	7,145	7,090	+0.8%	31,161	31,579	-1.3%
Western Europe	2,985	3,324	-10.2%	12,277	12,337	-0.5%
Eastern Europe	16,309	11,818	+38.0%	55,059	46,301	+18.9%
Middle East and Africa	1,097	2,169	-49.4%	7,050	12,303	-42.7%
Asia and Oceania	2,062	2,080	-0.9%	9,198	7,590	+21.2%
South America	5,629	5,937	-5.2%	23,451	25,461	-7.9%
North America and Mexico	5,444	3,783	+43.9%	17,727	15,071	+17.6%
Total	40,671	36,201	+12.3%	155,923	150,642	+3.5%

Sales breakdown by product category (Euro x 1000)

(amounts in € 000)	Q4 2019	Q4 2018	% change	12M 2019	12M 2018	% change
Valves and thermostats	8,638	10,543	-18.1%	39,989	48,463	-17.5%
Burners	15,084	15,287	-1.3%	63,858	66,953	-4.6%
Accessories	2,904	3,318	-12.5%	12,924	15,422	-16.2%
Total gas parts	26,626	29,148	-8.7%	116,771	130,838	-10.8%
Professional burners	1,259	1,145	+10.0%	5,434	5,331	+1.9%
Hinges	10,205	2,777	+267.5%	23,774	10,436	+127.8%
Electronic components	2,581	3,131	-17.6%	9,944	4,037	+146.3%
Total	40,671	36,201	+12.3%	155,923	150,642	+3.5%

Management Statement

Results of operations

During the fourth quarter of 2019, the Sabaf Group recorded sales of €40.7 million, an increase of 12.3% versus the figure of €36.2 million in the corresponding period of the previous year. The increase in revenue is attributable to the acquisition of the C.M.I. Group, whose sales contributed €7.4 million during the period. The organic component (sales down by 8.2% taking into consideration the same scope of consolidation) confirmed the weakness already highlighted in the other quarters of the year and related to the slowdown in some important markets, including the Middle East.

EBITDA for the fourth quarter of 2019 was €6.6 million, or 16.2% of sales, down by 6.5% compared to the figure of €7 million in the fourth quarter of 2018.

EBIT was €2.1 million, equivalent to 5.3% of sales, and 24.7% lower than the €2.8 million recorded in the same quarter of 2018 (7.9% of sales). The net profit for the period was €3.5 million, up by 8% compared to the figure of €3.2 million in the fourth quarter of 2018. During the quarter, the Group recognised non-recurring tax income of €1.1 million following the favourable outcome of a tax dispute in Turkey and other tax benefits relating to investments made in Italy and Turkey.

In the whole of 2019, revenue totalled €155.9 million, up by 3.5% over the same period of 2018 (-8.9% taking into consideration the same scope of consolidation). EBITDA was €27 million (or 17.3% of turnover), down by 9.8%, EBIT totalled €11.9 million (or 7.6% of turnover) down by 27.5%, and the net profit attributable to the Group was €10.3 million, down by 34.1% compared to 2018.

Free cash flow, investments and financial position

In 2019, positive free cash flow¹ , which benefited from a reduction in net working capital of €16.3 million, was €28.9 million (€14.3 million in 2018). In addition to the lower levels of activity, the improvement in net working capital was achieved as a result of structural actions on internal logistics, which made it possible to significantly reduce stocks of work in progress.

Quarter investments totalled €4.9 million, bringing total investments for the year to €12 million (€11.5 million in 2018).

At 31 December 2019, net financial debt was €55.1 million, compared with €71.9 million at 30 September 2019 and €53.5 million at 31 December 2018. The strong improvement in the financial position compared to 30 September is mainly due to the reduction in net working capital, amounting to €12 million in the fourth quarter, and the sale of treasury shares of €3.1 million.

¹ Free cash flow is defined as the algebraic sum of cash flows from operations and from investment activities, as shown in the Cash Flow Statement.

Significant non-recurring, atypical and/or unusual transactions

During the fourth quarter of 2019, the Group did not engage in significant transactions qualifying as non-recurring, atypical and/or unusual, as envisaged by the CONSOB communication of 28 July 2006.

Outlook

The trend in sales and orders in the first quarter of 2020 shows a strong recovery in the Group's level of activity. The improved tone of strategic markets is accompanied by a significant increase in our supply shares to some large customers, following the implementation of projects developed by the Group in recent years. The markets where the highest growth rates are expected are North America and South America.

Based on the negotiations concluded with its main customers, the Group estimates that it can achieve sales of €185 million for the entire 2020 financial year and a solid improvement in gross operating profitability (EBITDA %) compared with 2019.

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.

Statement of the Financial Reporting Officer pursuant to Article 154-bis (2) TUF

The Financial Reporting Officer, Gianluca Beschi, declares that, pursuant to paragraph 2, Article 154 bis of Legislative Decree 58/1998 (Consolidated Finance Act), the accounting information contained in the Interim Management Statement at 31 December 2019 of Sabaf S.p.A. corresponds to the Company's records, books and accounting entries.

Ospitaletto (BS), 11 February 2020

Financial Reporting Officer Gianluca Beschi