Aquafil — Investor Presentation 2018

Nov 14, 2018

Aquafil Group

Financial Results 30th September and III Quarter 2018

14th November 2018

This document has been prepared by Aquafil S.p.A. ("Aquafil" or "Company") solely to introduce the Company and its business.

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Index

1. Aquafil Group at Glance	4
2. 30th September and III Quarter 2018 Highlights	10
3. Key Performance Indicators	14
3a. Focus on Sales	17
4. 30th September and III Quarter 2018 Financial Statement	19

1. Aquafil Group at Glance

• Market Leader in Nylon Fibers and Polymers:

• Flooring solutions;
• Fashion and sportswear textile applications;
• Polymers for engineering plastics solutions;
• Technologies, processes and continuous innovation key to a successful business model
• R&D focus for a uniquely diversified commercial offer;
• Manufacturing and operational excellence;
• Focus on high-end segments for a premium positioning;

• Pioneers of circularity

• A true regeneration Group with almost 40% of fiber revenue coming from Nylon 6 waste regeneration;
• ECONYL® Regeneration System: high barriers to entry and cost effectiveness (www.econyl.com);
• Substantial opportunities ahead;
• A global company with a dedicated, local supply system
• Manufacturing presence in 8 countries
• Entrepreneurial talent and strong management team

USA

Cartersville (Georgia) Aquafil USA 1 & 2

Phoenix (Arizona) Aquafil Carpet Recycling #1

Sacramento (California) Aquafil Carpet Recycling #2

ITALY

Arco (TN) Aquafil (Headquarter)

Cares (TN) Rovereto (TN) Tessilquattro

CHINA

Jiaxing Aquafil Jiaxing

THAILAND

Rayong Aquafil Asia Pacific

GERMANY

Leuna Aqualeuna

UK

Kilbirnie Aquafil UK

SLOVENIA

Ljubljana AquafilSLO Ljubljana

Senozece AquafilSLO Senožeče

Store AquafilSLO Štore

Ajdovščina AquafilSLO Ajdovščina

CROATIA

Oroslavje Aquafil CRO

2. 30th September and III Quarter 2018 Highlights

	TURNOVER (€/mil)			EBITDA (€/mil)		NET RESULT (€/mil)			N.F.P. (€/mil)
	Q3YTD	Q3		Q3YTD	Q3		Q3YTD	Q3
Act18	430,9	139,6	Act18	60,9	16,4	Act18	24,4	4,7	Q3YTD	165
Act17	403,2	124,4	Act17	56,4	16,1	Act17	17,8	4,3	H1 - 18	146,9
% Var 18 to 17	6,9%	12,3%	% Var 18 to 17	7,9%	1,9%	% Var 18 to 17	37,2%	9,4%	Dic17	112,1

Revenues contribution of acquired Asia Pacific Invista Assets from May 2018 in accordance with the expectation (ca 50 \$/mil/y)

Revenues increase of US automotive fiber carpet of ca 90% vs Q3YTD 2017

Asia and US Market supported by European Operation (+120% vs Q3 2017) with impact on Q3 marginality

Summer holiday period in Europe Higher impact of Fixed Cost estimated in lower EBITDA Margin of ca 1,5% (as Q3 2017)

Slowdown of European BCF Market of ca 6,5% vs Q3 17 Impact on marginality due to lower saturation of reprocessing activity

Revenues contribution of acquired Asia Pacific Invista Assets from May 2018 in accordance with the expectation (ca 50 \$/mil/y)

12

Highlights

Due to structural market increase, ainly US market and also Asia has been supported by European Operation with impact on Q3 marginality due to transport and duties costs and also higher European production costs estimated on Q3 2018 in ca 1,0 €/mil. Group considers increase of US and Asia market consolidated and HAS LUNCHED NEW PROJECT OF CAPACITY INCREASE both in Asia and in US.

3. Key Performance Indicators

The Key Performance Indicators of Aquafil Group at 30 September 2018 compared with same period of 2017 are here reported:

KPI	Q3YTD 2018 - Act	Q3YTD 2017 - Act	Act 18 vs Act 17
Turnover €/mil	430,93	403,23	6,9%
EBITDA €/mil	60,89	56,45	7,9%
EBITDA Margin %	14,13%	14,00%
EBIT €/mil	34,39	33,28	3,3%
EBIT Margin %	7,98%	8,25%
EBIT Adj €/mil	40,53	38,46	5,4%
EBIT Adj Margin %	9,41%	9,54%
EBT €/mil	30,56	25,30	20,8%
EBT Margin %	7,09%	6,27%
Net Result €/mil	24,35	17,76	37,2%
Net Result Margin %	5,65%	4,40%
	Q3YTD	Q3YTD	Act 18 vs
	2018 - Act	2017 - Act	Act 17
NFP €/mil	165,03	(112,70)	-246,4%

• a) Revenues grew 6.9%, amounting to €430,9 million compared to €403,2 million of same period 2017, mainly as a result of sale increase of BCF product in Asia and USA and Polymer in USA.
• b) EBITDA increased from €56,5 million to €60.9 million, up by 7,9% and EBITDA margin improved from 14.0% to 14.1%. Increase of EBITDA is mainly due to BCF product sold in Asia.
• c) Net profit at 30 September 2018 amounted to €24.4 million, up by 37.2% compared to the same period of the previous year (€17.76 million). Increase follows EBITDA trend and remain effect is mainly related to variation of D&A and exchange gains and losses.
• d) Net Financial Position grew to €165.3 million, compared to €112.1 million at December 31, 2017. The increase was mainly attributable to:
• 1. the investments made during the period, including
  2. payments to Invista for the acquisition of its assets related to the Polyamide 6 BCF Fiber business in Asia Pacific and
  3. acceleration of investment program in US and China
  4. acceleration of ACR#s investment program;
• 1. an higher level of Working Capital used, as a result of sales growth for Q3 2018 compared to Q4 2017, Invista asset acquisition, and also the increase of good in transit for market support from Europe to Rest of Word.
• 1. the dividend distribution of €12,2 millions.

The Key Performance Indicators of Aquafil Group of Q3 2018 compared with same period of 2017 are here reported:

KPI	Q3	Q3	Act 18 vs
	2018 - Act	2017 - Act	Act 17
Turnover €/mil	139,64	124,40	12,3%
EBITDA €/mil	16,40	16,10	1,9%
EBITDA Margin %	11,74%	12,94%
EBIT €/mil	7,32	8,52	-14,1%
EBIT Margin %	5,24%	6,85%
EBIT Adj €/mil	9,18	10,21	-10,2%
EBIT Adj Margin %	6,57%	8,21%
EBT €/mil	5,97	5,99	-0,4%
EBT Margin %	4,27%	4,82%
Net Result €/mil	4,74	4,33	9,4%
Net Result Margin %	3,39%	3,48%
	H1	FY	Act 18 vs
	2018 - Act	2017 - Act	Act 17
NFP €/mil	165,03	(112,70)	-246,4%

• a) Revenues grew by 12,3%, amounting to €139.6 million compared to €124.4 million for Q3 2017, mainly as a result of sale increase of BCF product in Asia and USA partially compensated by a reduction in EMEA, and a reduction of Polymer sold.
• b) EBITDA increased from €16.1 million to €16.4 million, up by 1,9%. EBITDA margin decrease from 12.9% to 11.7% mainly due to production lower saturation caused by European BCF market slowdown and a lower marginality of incremental US revenues because supported by European operation at higher cost (duties, transport, etc.)
• c) Net profit amounted to €4,7 million, up by 9.4% compared to the same period of the previous year (€4,3 million). Increase follows EBITDA trend and remain effect is mainly related to variation of D&A and exchange gains and losses.
• d) Net Financial Position grew to €165.3 million, compared to €112.1 million at December 31, 2017. Increase was mainly attributable to:
• 1. the investments made during the period, including
  2. payments to Invista for the acquisition of its assets related to the Polyamide 6 BCF Fiber business in Asia Pacific and
  3. acceleration of investment program in US and China
  4. acceleration of ACR#s investment program;
• 1. an higher level of Working Capital used, as a result of sales growth for Q3 2018 compared to Q4 2017, Invista asset acquisition, and also the increase of good in transit for market support from Europe to Rest of Word.
• 1. the dividend distribution of €12,2 millions.
• 16

3a. Focus on Sales

The following table compares the figures referring to the amount and percentage of sales broken down by Line of Product at 30 September and 3 rd Quarter 2018 to same period of 2017.

BCF Product line's sales increase both at 30 September 2018 (8,1%) and Q3 2018 (20,2%) compared to the same periods of 2017 as effect of growth of quantity sold (a) in Asia Pacific area mainly derived from Invista acquisition and (b) in US in for the increase of the BCF automotive fiber. Polymers line's sales increase at 30 September 2018 (12,6%) and decrease in Q3 2018 (-15,2%), due to the necessity of internal use of polymers to produce fiber. Var% Q 3 Q 3

Sales (€/mil)	Q3 YTD	Q3 YTD				Var%
by Product Line	2018	2017		2018	2017
BCF	317,26	293,53	8,1%	106,96	88,97	20,2%
NTF	71,15	71,94	-1,1%	20,50	21,07	-2,7%
Polymers	42,53	37,76	12,6%	12,17	14,35	-15,2%
TOTALE	430,93	403,23	6,9%	139,64	124,40	12,3%

The following table compares the figures referring to the amount and percentage of sales broken down by Geographical Area at 30 September and 3 rd Quarter 2018 to same period of 2017.

Sales on Asia and Oceania market increase both at 30 September 2018 (45,5%) and Q3 2018 (76,3%) compared to same periods of 2018 as effect of growth of BCF product quantity sold in the area mainly derived from Invista acquisition. Sales on North America market increase both at 30 September 2018 (11,1%) and Q3 2018 (37,6%) compared to same periods of 2017 thanks to the increase of the BCF automotive fiber and also polymers line. Decreased of sales in Italy (-7,2%) and EMEA (-5-5%) in Q3 2018 is related, for EMEA, to less quantity BCF product due to market slowdown, partially also related to UK market for BREXIT, and for Italy of less Polymers sold during period due to the necessity of internal use of polymers to produce fiber. Var% Q 3 Q 3

Sales (€/mil)	Q3 YTD	Q3 YTD				Var%
Geographical Area	2018	2017		2018	2017
Italy	84,89	85,14	-0,3%	24,22	26,09	-7,2%
EMEA(*)	191,44	195,29	-2,0%	57,36	60,66	-5,5%
North America	76,60	68,92	11,1%	28,62	20,80	37,6%
Asia e Oceania	77,62	53,34	45,5%	29,30	16,62	76,3%
RoW	0,38	0,55	-30,4%	0,14	0,22	-36,6%
TOTALE	430,93	403,23	6,9%	139,64	124,40	12,3%

The Group's revenues from sales of ECONYL® branded products are growth of 8,3% in third quarter 2018 and of 6,9% at 30 September 2018 compared to same periods of 2017 and represent at 30 September the 37% of fiber sales. Without considering the turnover contribution of Invista acquisition, percentage of products branded ECONYL® would have been

4. 30th September and III Quarter 2018 Financial Statement

RECONCILIATION FROM NET PROFIT TO	At September 30,	At September 30,	Third	Third
EBITDA €/000	2018	2018	Quarter 2018	Quarter 2017
Net Profit (Including Portion Attr. to Minority )	24.355	17.755	4.741	4.334
Income Taxes	6.202	7.545	1.226	1.657
Investment income and charges	-	(50)	-	-
Amortisation & Depreciation	18.923	17.545	6.560	5.738
Write-downs & Write-backs of intangible and tangible assets	1.433	448	665	147
Financial items (*)	6.606	10.879	2.151	3.355
No recurring items (**)	3.369	2.326	1.057	867
EBITDA	60.888	56.448	16.400	16.098
Revenue	430.932	403.233	139.641	124.397
EBITDA Margin	14,1%	14,0%	11,7%	12,9%

At September 30,	At September 30,	Third	Third
2018	2018	Quarter 2018	Quarter 2017
60.888	56.448	16.400	16.098
18.923	17.545	6.560	5.738
1.433	448	665	147
40.531	38.455	9.175	10.213
430.932	403.233	139.641	124.397
9,4%	9,5%	6,6%	8,2%

(*) The financial items include: (i) financial income of Euro 0,2 million at the end of September 2017, (ii) financial charges of Euro 4.3 million at the end of September 2018, compared to Euro 4.8 million at the end of September 2017, (iii) cash discounts of Euro 2.7 million, compared to Euro 2.8 million, and (iv) exchange gains of Euro 0.4 million, against losses of Euro 3.4 million.

22 (**) This includes (i) non-recurring charges related to the expansion of the Aquafil Group and other corporate transactions for Euro 2.4 million and 0.1 million respectively in the periods ending Septembre 30, 2018 and September 30, 2017, (ii) listing charges for Euro 0.8 million in the periods ending Septembre 30, 2017, (iii) costs for restructuring and the regularization of expatriated personnel for Euro 0.5 million and Euro 1.4 million respectively in the periods ending September 30, 2018 and September 30, 2017 (iv) other non-recurring charges of Euro 0.5 million in the period ending September 30, 2018.

CONSOLIDATED INCOME STATEMENT	September	of wich	September	of wich	Third Quarter	of wich	Third Quarter	of wich
€/000	2018	non-current	2017	non-current	2018	non-current	2017	non-current
Revenue	430.932		403.233		139.641		124.397
of which related parties	204		244		16		92
Other Revenue	419	419	43	43	274	274	40	40
Total Revenue and Other Revenue	431.350	419	403.276	43	139.915	274	124.437	40
Raw Material	(224.130)	(211)	(204.507)		(75.978)	(110)	(63.102)
Services	(73.639)	(2.281)	(69.578)	(876)	(24.219)	(696)	(22.300)	(749)
of which related parties	(2.685)		(2.719)		(895)		(922)
Personel	(77.236)	(1.182)	(76.568)	(1.441)	(24.389)	(524)	(24.094)	(136)
of which related parties			(714)				(238)
Other Operating Costs	(1.718)	(114)	(1.830)	(52)	(671)	(3)	(705)	(22)
of which related parties	(52)		(51)		(17)		(51)
Depreciation and Amorti zation	(18.923)		(17.545)		(6.560)		(5.738)
Provi s ions and Write-downs	(1.433)		(448)		(665)		(147)
Capitalization of Internal Construction Costs	122		485		(116)		166
EBIT	34.393	(3.369)	33.284	(2.326)	7.319	(1.057)	8.517	(867)
Income (loss) from Investments			50
Other Financial Income	31		169		14		(11)
of which related parties			144
Interest Expenses	(4.269)		(4.787)		(1.242)		(1.428)
FX Gains and Losses	401		(3.416)		(124)		(1.087)
Profit Before Taxes	30.556	(3.369)	25.300	(2.326)	5.967	(1.057)	5.991	(867)
Income Taxes	(6.202)	-	(7.545)		(1.226)		(1.657)
Net Profit (Including Portion Attr. to Minority )	24.355	(3.369)	17.755	(2.326)	4.741	(1.057)	4.334	(867)
Net Profit Attributable to Minority Interest			38				12
Net Profit Attributable to the Group	24.355		17.717		4.741		4.322
Basic earnings per share	0,48		0,39		0,09		0,10
Diluted earnings per share	0,48		0,39		0,09		0,10

CONSOLIDATED BALANCE SHEET	At September 30,	At December 31,
€/000	2018	2017
Intangible Assets	15.478	7.782
Tangible Assets	175.134	153.927
Financial Assets	369	408
of which related parties	79	79
Other Assets	2.189
Deferred Tax Assets	7.710	11.356
Total Non-Current Assets	200.880	173.472
Inventories	161.916	153.499
Trade Receivable	52.020	34.870
of which related parties	40	116
Financial Current Assets	1.658	988
Current Tax Receivables	2.567	524
Other Current Assets	14.941	12.517
of which related parties	1.566	1.688
Cash and Cash Equivalents	95.368	99.024
Total Current Assets	328.471	301.422
Total Current Assets	529.351	474.895
Share Capital	49.715	49.673
Reserves	63.017	54.772
Group Net Profit for the year	24.120	20.569
Group Shareholders Equity	136.852	125.014
Net Equity attributable to minority interest	1	386
Net Profit for the year attributable to minority interest	0	99
Total Sharholders Equity	136.853	125.499
Employee Benefits	5.700	5.876
Non-Current Financial Liabilities	208.442	159.973
Provisions for Risks and Charges	2.473	1.516
Deferred Tax Liabilities	3.218	3.533
Other Payables	10.091	7.858
Total Non-Current Liabilities	229.924	178.755
Current Financial Liabilities	53.610	52.111
Current Tax Payables	3.347	5.134
Trade Payables	84.679	94.477
of which related parties	849	716
Other Liabilities	20.939	18.919
of which related parties	233	457
Total Current Liabilities	162.574	170.641
Total Equity and Liabilities	529.351	474.895

CASH FLOW STATEMENT	At September 30,	At September 30,
€/000	2018	2017
Operation Activities
Net Profit (Including Portion Attr. to Minority )	24.355	17.755
of which related parties	-1.637	-3.095
Income Taxes	6.202	7.546
Income (loss) from Investments		-50
Other Financial Income	-31	-169
of which related parties		-144
Interest Expenses	4.269	4.787
FX Gains and Losses	-401	3.416
Gain/Loss on non - current asset Disposals	-52	55
Provisions & write-downs	1.433	449
Amortisation, depreciation & write-downs	18.923	17.545
Cash Flow from Operating Activities Before Changes in NWC	54.698	51.334
Change in Inventories	-8.417	-7.023
Change in Trade and Other Receivables	-9.798	-5.666
of which related parties	133	102
Change in Trade and Other Payables	-18.732	-14.206
of which related parties	76	-146
Change in Other Assets/Liabilities	-2.981	-2.825
of which related parties	-102	-876
Net Interest Expenses paid	-3.421	-4.395
Income Taxes paid	-3.595	-5.211
Change in Provisions for Risks and Charges	-470	-1.546
Cash Flow from Operating Activities (A)	7.284	10.462
Investing activities
Investment in Tangible Assets	-38.867	-24.148
Disposal of Tangible Assets	917	1.251
Investment in Intangible Assets	-9.665	-3.225
Disposal of Intangible Assets	23
Investment in Financial Assets	39
Disposal of Financial Assets		1.483
Cash Flow used in Investing Activities (B)	-47.553	-24.639
Financing Activities Increase in no current Loan and borrowing	90.000	65.000
Decrease in no current Loan and borrowing	-39.496	-61.299
Net variation in current fiancial Assets and Liability	-1.692	9.383
Dividends Distribution	-12.241	-13.819
of which related parties	-7.369	-13.675
Increase (decrease) Share Capital	42
Cash Flow from Financing Activities ( C)	36.612	-735
Net Cash Flow of the Year (A)+(B)+(C)	-3.657	-14.912

NET FINANCIAL DEBT	At September 30, At December 31,
€/000	2018	2018
A. Cash	95.368	99.024
B. Other cash equivalents	-	-
C. Securities held-for-trading	-	-
D. Liquidity ( A + B + C)	95.368	99.024
E. Current financial receivables	1.658	988
F. Current bank loans and borrowing	(51)	(72)
G. Current portion of non-current loans and borrowing	(51.647)	(50.199)
H. Other current loans and borrowing	(1.911)	(1.840)
I. Current financial debt ( F + G + H )	(53.610)	(52.111)
J. Net current financial debt (I + E+ D)	43.417	47.901
K. Non-current bank loans and borrowing	(142.015)	(91.597)
L. Bonds issued	(53.099)	(53.820)
M. Other non-current loans and borrowing	(13.328)	(14.556)
N. Non-current financial debt ( K + L + M )	(208.442)	(159.973)
O. Net financial debt (J+N)	(165.025)	(112.071)

AQUAFIL INVESTORS CONTACT

Karim Tonelli Investor Relations and Performance Management Director investor.relations@aquafil.com - mob: +39 348 6022.950

Barabino & Partners IR T: +39 02 72.02.35.35 Stefania Bassi - s.bassi@barabino.it - mob: +39 335 6282.667 Agota Dozsa - a.dozsa@barabino.it - mob: +39 338 7424.061