Biesse — Investor Presentation 2018

Jun 21, 2018

COMPANY PRESENTATION

JUNE 2018

Disclaimer

• This presentation has been prepared by Biesse S.p.A. for information purposes only and for use in presentations of the Group's results and strategies.
• For further details on the Biesse S.p.A. reference should be made to publicly available information. including the Quarterly Reports, the Half Annual Report, the Annual Reports and the Three Years Business Plan.
• Statements contained in this presentation, particularly the ones regarding any Biesse S.p.A. possible or assumed future performance, (business plan) are or may be forward looking statements and in this respect they involve some risks and uncertainties.
• Any reference to past performance of the Biesse S.p.A. shall not be taken as an indication of future performance.
• This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
• By attending the presentation you agree to be bound by the foregoing terms.

Biesse Group is a global leader in the technology for processing wood, glass, stone, advanced materials and metal. Founded in Pesaro in 1969 by Giancarlo Selci, the company has been listed on the Italian Stock Exchange (Star) since June 2001. Starting from October 2015 Biesse is included in the Mid-Cap segment.

OUR BELIEFS

We believe in challenging standards, in thinking forward and in acting differently.

Creating advanced technologies and beautifully -designed solutions is the key to transforming our beliefs into real value.

IN

Industrial Group Business Divisions Production Sites

1 5 12

5

We manufacture machines and components for wood, glass, stone, advanced materials and metal processing through specialised business units and 12 manufacturing sites in Italy and worldwide.

HOW

Growing investments in R&D have enabled us to create technological solutions that have simplified the management of CNC machines, improving our customers' processes revolutionizing market standards.

WHERE

We support our colleagues everywhere in the world, using the most advanced management, sales and support system. Our global network enables us to be always close to our customers.

7

WITH

Customers in 120 Countries .

Manufacturers of furniture, design items and door/window frames, producers of elements for the building, nautical and aerospace industries.

More than 4,100 employees throughout the world (temporary workers included) are our Human Capital Value

INNOVATION

Innovation is the driving force for the way we do business, continuously striving for excellence to support our customers' competitiveness.

Innovation is hard-wired in our DNA. Past, present and future.

RELIABILITY

Our main principles:

• Fairness to all stakeholders
• Mutual trust and transparency
• Unrestricted and clear communications
• Sharing of knowledge and experience

EXCELLENCE

02

03

Cash

01

Revenue

• Profit A virtuous circle of excellence
• for a constant growth

13

CASH

FOOTPRINT

DISTRIBUTION

CUSTOMERS

segments:

• JOINERS
• MAKERS OF LARGE FURNITURE ITEMS
• WINDOWS AND DOORS
• WOOD BUILDING COMPANIES AND MANUFACTURERS
• GLASS WORKERS
• MARBLE WORKERS
• WINDOWS
• FURNITURE
• KITCHEN MANUFACTURERS
• MACHINERY PRODUCERS:
• WOOD
• ALUMINUM
• PLASTIC METAL
• ADVANCED MATERIALS

a short selection of the companies we serve:

• AERO VODOCHODY
• ALLEN ORGANS
• AMERICAN WOODMARK
• BA KITCHEN
• BALLAY MENUISERIE
• BIGELLI MARMI
• BWF PROFILES
• CERVIGLAS
• CLOSET AMERICA
• COLOMBINI GROUP
• COSENTINO GROUP
• CUBO ITALIA
• DECORATIVE PANELS
• DEINSHRANK
• ELBAU
• ENSINGER
• FIAM
• FIDIA

• FRISIA

• GRUPPO LUBE

• HERMAN MILLER
• HEIAN HOWDENS
• IKEA
• ILCAM
• ITAB
• KNOLL
• LAGO
• LAGRANGE
• LEGAL AND GENERAL
• MARINELLI CUCINE
• MARMI FONTANELLI
• MASONITE
• MATON GUITARS
• MEIKEN KOGYO
• MIDWEST
• MODA LIFE
• MOLTENI GROUP
• NEW ROYAL PLASTIC
• 17 NOVARA COMPOSITI
• PACCALINI

STRATEGY

FACING A DISRUPTIVE GROWTH (1)

……B2B companies will need a completely different approach to driving growth…..

what will impact our business over the next years:

Customer Insights & Analytics
Collect data across all touchpoints	81%
for a single view of customers	67%	←14%
Translate customer data into actions	80%
leveraging advanced customer analytics	69%	—11%→
Extract and translate customer	73%
insights from new technologies	61%	+12%→
Customer Experience Operations & Performance
Monitor and predict Sales/	80%
Service performance	67%	—13%→
	78%
Enable workforce through efficient tools	67%	∉11%
	79%
Deal with complexity	68%	—11‰

how Biesse is facing this phase:

•remain ahead of customer expectations •leverage digital technologies •sales and marketing organization fit

SYSTEMS

bSUITE ACHIEVEMENT

A complete platform fully implemented

The single, integrated platform to manage all machine processes has been fully implemented on machines.

SMART FACTORIES

The new era of digitisation for small and medium-sized companies

Our goal is to identify 4.0 Industry - oriented Customers in order to provide them with a new business model focused on software and integration.

In the smart factory of tomorrow, each component is traced and identifiable enabling automatic feedback and process statistics to be generated.

30%

Super Systems

70%

Smart for all

SOPHIA

Biesse chose Accenture's Industry X.0 to lead in the new

E R V I C E S	P T I M I Z A T I O N	R E D I C T I V I T Y	U M A N	N N O V A T I O N	N A L Y S I S

SOPHIA is the IoT platform, created by Biesse in collaboration with Accenture, which enables its customers to access a wide range of services to streamline and rationalise their work management processes.

Smart Products

Smart Services

New Customer Experiences

IIOT - SOPHIA

IoT Biesse Service Pack

• Priority service and extended coverage
• Continuous connection with the Biesse control center
• Direct monitoring of machine performance through a dedicated app
• Analysis of machine downtime, remote diagnostics and fault prevention
• On-site functional checks and technical inspections within the warranty period
• Proactive call after machine downtime notification
• Extended hours for service coverage from 8 to 12 hours per day

TO ACHIEVE GREAT RESULTS

20.000

Connected machines by 2020

Route to new Services

With its new IIOT platform, Biesse is transforming itself from product-oriented manufacturer to a digital business offering to its customers value added services

MORE PRODUCTS NEW TARGET ⁸%

"∕∼
-----

12%

40%

14%

A.M. Division Estimated

Tooling Division Estimated

Mechatronics Division Estimated

CAGR 2018-2020

CAGR 2018-2020

Wood Division Estimated CAGR 2018-2020

G&S Division Estimated

CAGR 2018-2020

CAGR 2018-2020

12.9%

4%

Market Estimated CAGR 2018-2020

7% Market Estimated CAGR 2018-2020

5%

Market Estimated CAGR 2018-2020

6%

Market Estimated CAGR 2018-2020

28

MORE SOLUTIONS NEW TARGET

WOOD-MARKET

The competition in the current market is consolidated. We are the second leading company in the sector. Main competitors are located in Germany and in Italy. The most important of these (easily comparable) are HOMAG in Germany (30.5% estimated market share) and SCM in Italy (7,5% estimated market share*).

Estimated worldwide market share 2017 Market Size

2017

Whole market potential €3.6bn

WOOD-TARGETS

Wood division Estimated CAGR 2018-2020 vs 2017

Improve product reliability, renew existing product range 8%

Renovation and completion of the range of machines

Market Estimated CAGR 2018-2020 vs 2017

03

Enhance R&D for innovative solutions (technologies and new materials)

Expand the product range of woodworking machines for the housing market

HOUSING-MARKET

COMPETITORS

The competition in the market is consolidated. Main competitors are located in Germany and in Italy. The most important of these are Hundegger (the Market Leader), HOMAG and Weinmann in Germany and SCM, Essetre in Italy.

2017 Market Size

Estimated worldwide market share 2017

HOUSING-TARGET

15 €/mln

2020 Target in wood construction

Biesse Group will continue to extend its product range, increasing penetration in the high potential segment (actually forecasted the best one) yet highly-strategic industry of timber carpentry (beams and structural façades).

materials machines market 01 Expand our offering in other timber carpentry segments (minor complexity and higher volumes)

02 Leverage on Biesse capillarity to boost sales and after-sales worldwide

GLASS-MARKET

COMPETITORS

We are currently the industry leader in the glass processing market in which we operate. Main competitors are located in Italy and Germany, Austria:

they are CMS, Bottero, Lisec, Hegla

STONE-MARKET

COMPETITORS

The competition in the current market is consolidated. We are among the leading companies in the sector and we intend to reinforce our positioning. Main competitors are located in France and in Italy and they are CMS, Breton,Denver and Thibaut,Comandulli

Estimated 2017 Stone Market Size

worldwide market share 2017

Whole market potential €650mln

GLASS & STONE TARGET

G&S Division Estimated CAGR 2018-2020 vs 2017

Market Estimated CAGR 2018-2020 vs 2017

01

Maintain and reinforce our leading 12% position in the glass sector

Expand our offering in new product segments

Increase our market share in the stone segment, reinforcing our leadership in 03 this area

TOOLING – GLASS – STONE & CERAMIC MARKET

TOOLING - TARGET

Tooling Division Estimated CAGR 2018-2020 vs 2017

6%

Market Estimated CAGR 2018-2020 vs 2017

01 Maintain and reinforce our leading position in the glass sector

02

Expand our offering in new product segments

03

Increase our market share in the stone segment, reinforcing our leadership in this area

MECHATRONICS TARGET

Mechatronics Unit Estimated CAGR 2018-2020 vs 2017

Market Estimated CAGR 2018-2020 vs 2017

01 Maintain and reinforce our leading positioning in the Wood- Aluminum-Plastic (WAP) sector

Enlarge our product offering for metal working machines

2020 target in metal sector

03 Continue to expand abroad, especially in Asian and Western Europe Market

ADVANCED MATERIALS

COMPETITORS

The advanced material* processing machinery market is highly fragmented worldwide, main competitors are Geiss, HG Grimme, Belotti CMS Industrie, Breton, Mecanumeric, Multicam and Flow Corporation

*Advanced materials Carbon Fiber Foam Composite Alluminium Titanium

ADVANCED MATERIALS*

40 mln/€

2020 target In advanced material segment

*Advanced materials

• Carbon Fiber
• Foam
• Plastics
• Composite
• Alluminium
• Titanium

Expand our plastic working machineries in order to 01 meet the needs of the entire market.

Extend our product range drawing on the expertise of Uniteam to enhance its range of products and applications for machining advanced composite materials for several industries

application

Packaging

Devices

Defense and Ballistics

SERVICE

Our network supports our customers worldwide. Through Biesse service and Biesse parts. we offer technical services and machine/component spares to businesses anywhere in the world onsite. as well as on-line - 24/7.

Our Service will evolve to Service 2.0

incidence on Net Sales Predicitve: leave "break-and -fix" service as is logics and anticipate the needs moving onto predictive services thanks .

Digital: Fully implement On Line Sophia Services platform to offer advanced remote assistance, Spare Parts purchasing, Intelligent Troubleshooting, software update distribution and machines connection to Customer ERP

Master in Competence: Structure Training Academy supporting product and process competence to our Customers and Service team

SYSTEMS

We increased our market share becoming a leading company in the engineering solutions sector.

The guiding strategy of the Biesse Systems team is based on clear key concepts:

• Automation
• Stock Management
• Modularity
• Total Quality

bSUITE

Potential Software Fees contribution to Net Sales

01

Consolidation. reliability and rationalization. Superior technology for creating synergies in machine automation.

Technological superiority and sustainability. Ensuring advanced. sustainable know-how in order to develop intelligent machines.

Simple. smart software. Meeting growing technological needs through application software and smart apps.

04 Business software. Business-oriented software to enhance collaboration with our customers' businesses.

CLOSE TO CUSTOMERS

Subsidiaries

To expand our global presence to be close to our customers.

Continue to promote the "Roadmap to success" for our subsidiaries: moving from reactive to proactive, fostering entrepreneurship at all levels, defining market and customer-oriented strategies 01

02 Invest in new and innovative technological complexes, "Biesse Campus", to better contain our expansion in selected areas

Invest in human resources and capabilities as growth drivers

STABILIZE PROFITABILITY

9.5% Net sales CAGR 2018-2020 vs 2017

< 39% Target COGS incidence on Net Sales

< 30% Target Labor Cost

incidence on Net Sales

< 20%

Target Overhead Cost on Incidence on Net Sales

Continue our growth path

Optimize our production cost

Invest in human resources and capabilities as growth driver, controlling incidence on net sales

Optimize Overhead cost

2018-2010: the 3 years plan recap

(approved Feb 28th 2018)

Continuing to pursue an organic growth.

• . Increasing our sales force. subsidiaries. agents and distributors worldwide
• Growing not only in the woodworking machine sector. but also in the areas of glass. stone, mechatronics and advanced materials especially considering the after -sales services
• Continuing to diversify into new sectors: advanced materials and metal working through the mechatronics division especially

NET SALES

€/mln

• In 2017 we went beyond our targets, anticipating plan execution
• We yearn to achieve higher targets in 2020 leveraging on our strategy: more products, more solutions, more customers

EBITDA

Generation of value.

• Decreasing incidence of COGS on Net Sales through world production optimization and efficiency
• Maintaining Labour Cost incidence on Net Sales below 30%
• Maintaining Overhead incidence on Net Sales below 20%

Positive cash flow.

• Starting point: huge, positive Net Financial Position at the end of 2017
• Continuing to invest in R&D around 1.5% of Net Sales (capitalized) – effective 4%
• Cash Flow finances the projected increasing CAPEX to support our growth forecast
• Already paid yearly dividends (since 2014 for four years) for a total amount of > € 34 mln projected dividend policy 30% of the expected Group net profit 2019e

OPERATIVE NET WORKING CAPITAL

control our Operating Net Working Capital.

• Maintaining Operating Net Working Capital incidence on Net Sales below 9-10%
• Maintaining our Group inventories below 22% incidence on Net Sales
• Maintaining our Group DSO around 50 -55 days max
• Maintaining our Group DPO around 110-120 days

CAPEX*

^*potential growth strategy through M&A not included

continue our growth path through investments.

2018e

tangible: € 27.4mln intangible: € 17.6mln

main investments drivers:

• Indian investimentin durable goods
• Uniteam improvement of the production plant
• Mechatronics Italian plant (HSD S.p.A.) components production machines
• Metal Working (internal phase): improvement of the components production
• I.T.: digital factory PLM & CRM Oracle Subsidiaries implementation
• R&D constant investment. Around 1.5% on net sales every year

CAPEX: TANGIBILES

Indian Manufacturing durable goods investments to meet the projected productive expansion improving the quality

Housing ( Uniteam Wood Division): improvement production plant – durable goods investments ,

tables) and production plant TANGIBLE ASSETS

continue our growth path

through investments

Mechatronics Italian plant (HSD S.p.A.) components production machines (rotary

Metal working (internal phase): improvement of the components production – durable goods investments ,

EXTRACT OF THE P&L

€/mln	2013	2014	2015	2016	2017		2020e	Targets
Net sales year -1	378.4 -1.2%	427.1 +12.9%	519.1 +21.5%	618.5 +19.1%	690.1 +11.6%	CAGR 9.5%	906.2
Cost of good sold	155.9 41.2%	177.6 41.6%	206.1 39.8%	245.1 39.6%	270.1 39.1%		348.1 38.4%
Value added %	147.0 38.8%	167.8 39.3%	212.4 40.9%	252.4 40.8%	288.6 41.8%	CAGR 10.8%	393.1 43.4%
Labour cost	112.7 29.8%	128.2 30.0%	148.2 28.6%	176.6 28.6%	199.1 28.9%		266.0 29.3%	< 30% incidence
overhead	81.8 21.6%	91.0 21.3%	104.7 20.2%	124.5 20.1%	136.1 19.7%		167.7 18.5%	< 20% incidence
EBITDA %	34.3 9.1%	39.6 9.3%	64.1 12.4%	75.8 12.3%	89.5 13.0%	CAGR% 12.4%	127.1 14.0%
EBIT %	18.1 4.8%	24.8 5.8%	43.7 8.4%	55.1* 8.9%	63.6* 9.2%	CAGR 14.6%	95.7 10.6%

*after non recurring items tax rate 29.6%

OPERATIVE NET WORKING CAPITAL

€/mln	2013	2014	2015	2016	2017	2020e	Targets
Inventories % net sales	22.8%	23.0%	21.5%	21.1%	20.8%	20.0%	<22%
Receivables % net sales	20.1%	18.9%	20.3%	20.8%	17.3%	19.2%	DSO 55 days
Payables % net sales	29.4%	28.8%	29.5%	31.1%	32.4%	31.4%	DPO 120 days
Operating Net Working Capital % net sales	51.4 13.6%	55.6 13.0%	63.4 12.2%	66.9 10.8%	38.7 5.6%	70.2 7.7%

RECEIVABLES PAYABLES INVENTORIES

CASHFLOW

Net Debt	-23.9	-11.3	0.0	4.0	30.4	104.7 59
Δ Net Debt		12.7	11.3	4.0	26.4	€ 28.1 vs 2019e
dividends		-4.8 0.18 per share	-9.8 0.36 per share	-9.8 0.36 per share	-9.8 0.36 per share	-16.6 30% of net profit
Net Cashflow % net sales	32.2 8.5%	17.5 4.1%	21.1 4.1%	13.8 2.2%	36.2 5.2%	44.7 4.9%
Investments % net sales	-19.8 5.2%	-20.8 4.9%	-25.2 4.9%	-32.0 5.2%	-39.2 5.7%	-50.5 5.6%
Gross Cashflow % net sales	52.0 13.8%	38.3 9.0%	46.3 8.9%	45.8 7.4%	75.4 10.9%	95.2 10.5%
€/mln	2013	2014	2015	2016	2017	2020e

VALUE ADDED

EBIT

post-non recurring items

^{116 116 113 128} 148 177 199 222 244 266 29,7% 30,4% 29,8% 30,0% 28,6% 28,6% 28,9% 29,2% 29,3% 29,4% labour cost labour cost margin €/mln - % 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e

LABOUR COST

MACHINES MARKET VALUE

MAIN REFERENCE MARKETS:HOUSING

MAIN REFERENCE MARKETS:FURNITURE

MAIN REFERENCE MARKETS:

furniture consumption by countries

where Biesse is insisting - % of sales per macro-sectors:

HOUSING-FURNITURE GDP-BIESSE 2 2 2 4

- 4 - 2 0 2 4 6 8 1 0 1 2 1 4 1 6 1 8 2 0 3,6% 3,4% 5,0% 19,1% 4,0% 2011 3,5% 4,4% 2012 -1,2% 1,9% 12,9% 3,1% 4,3% 3,9% 11,6% 22,2% 7,2% 18,6% 2,8% 4,6% 2010 5,4% 3,7% 2017 3,7% 4,3% 2016 3,5% 3,2% 2,4% 3,4% -1,4% 2014 1,0% -2,8% 11,6% 2013 2015 21,5% GDP world housing world investments GDP average growth rate 3.8% (2010-2017) expected average rate 2018e-2020e: +3.8% FURNITURE average growth rate 3.8% (2010-2017) expected average rate 2018e-2020e: +3.5% HOUSING average growth rate 3.7% (2010-2017) expected average rate 2018e-2020e: +2.6% consolidated NET SALES BIESSE average growth rate 11.2% (2010-2017) expected average rate 2018e-2020e: +9.5%

furniture world production

consolidated net sales Biesse

first quarter 2018

Biesse highlights IQ 2018

orders intake: +10.5% backlog: +24.2% group: nr. 4,161 (including temporary people) ebitda: € 19.8 (incidence on sales 12.2%) ebit: € 13.9 (incidence on sales 8.6%) net result: € 8,1 (incidence on sales 5.0%) net sales: € 162.3 (+0.5%) net financial position.: positive € 18.9

€/mln

Extract of the P&L – IQ 2018

€/mln	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	IQ 2017	IQ 2018
Net sales year -1	378.4 -1.2%	427.1 +12.3%	513.1 +21.5%	618.5 +19.1%	690.1 +11.6%	161.5	162.3
Value added %	143.5 37.3%	163.1 33.6%	212.4 40.3%	252.4 40.8%	288.6 41.8%	69.7 43.2%	69.7 43.0%
Labour cost %	112.7 23.8%	128.2 30.0%	148.2 28.6%	176.6 28.6%	199.1 28.9%	48.2 29.8%	50.0 30.8%
EBITDA %	30.3 8.2%	40.3 3.6%	64.1 12.4%	75.8 12.3%	89.5 13.0%	21.6 13.4%	19.8 12.2.%
EBIT %	18.1 4.8%	26.5 6.2%	43.8 8.4%	55.1 8.9%	63.6 9.2%	16.1 10.0%	13.9 8.6%
					tax rate	36.8%	37,2%

70

GROUP ORDERS INTAKE & BACKLOG

IQ 2018 Group orders intake +10.5% (vs. IQ 2017) IQ 2018: Group backlog +24% (vs. IQ 2017)

NET DEBT

Net Financial Position – first quarters trend

IQ 2009 IQ 2010 IQ 2011 IQ 2012 IQ 2013 IQ 2014 IQ 2015 IQ 2017 FY 2003 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 IQ 2016 FY 2016 FY 2017 IQ 2018

CASHFLOW NET DEBT

€/mln	2013	2014	2015	2016	2017	IQ 2018	2020e
Gross Cashflow % net sales	52.0 13.8%	38.3 9.0%	46.3 8.9%	45.8 7.4%	75.4 10.9%	-2.5 -1.6%	95.2 10.5%
Investments % net sales	-19.8 5.2%	-20.8 4.9%	-25.2 4.9%	-32.0 5.2%	-39.2 5.7%	-8,9 5.5%	-50.5 5.6%
Net Cashflow % net sales	32.2 8.5%	17.5 4.1%	21.1 4.1%	13.8 2.2%	36.2 5.2%	-11.4 -7.0%	44.7 4.9%
dividends		-4.8 0.18 per share	-9.8 0.36 per share	-9.8 0.36 per share	-9.8 0.36 per share	0	-16.6 30% of net profit
Δ Net Debt		12.7	11.3	4.0	26.4	-11.5
Net Debt	-23.9	-11.3	0.0	4.0	30.4	18.9	104.7 74

Sales breakdown- March 2018

People distribution (without interim people)

	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2016	FY 2016	FY 2017	IQ 2018
Production % of total people	965 41%	1.250 46%	1.265 45%	1.175 44%	1.201 42%	1.335 42%	1.482 41%	1.494 39%	1.550 39%
Service & After sale % of total people	568 24%	577 21%	574 21%	613 22%	628 22%	690 22%	803 22%	894 23%	920 23.2%
R&D % of total people	293 12%	316 12%	338 12%	321 12%	361 13%	383 13%	436 12%	479 12.5%	498 12.5%
Sales & Marketing % of total people	340 13%	361 13%	364 13%	351 13%	439 15%	495 15%	587 16%	641 17%	654 16%
G & A % of total people	202 9%	233 9%	242 9%	235 9%	252 9%	273 9%	310 8.5%	338 8.8%	346 8.7%
ITALY % of total people	1.660 70%	1.656 61%	1.646 59%	1.547 57%	1.605 56%	1.780 56%	2.009 56%	2.176 56%	2.296 58%
OUTSIDE ITALY** % of total people	708 30%	1.081 39%	1.136 41%	1.148 43%	1.276 44%	1.396 44%	1.609 44%	1.670 44%	1.672 42%
TOTAL	2.368	2.737	2.782	2.695	2.881	3.176	3.618	3.846	3.968	76

Alberto Amurri Investor Relator Manager 0039 - 0721439107 0039 - 3351219556