Biesse — Investor Presentation 2019

Apr 5, 2019

COMPANY PRESENTATION

APRIL 5TH 2019 PARIS, 37TH ESN EUROPEAN CONFERENCE

Disclaimer

• This presentation has been prepared independently by Biesse S.p.A. and can be used during meetings with investors and financial analysts. It's solely for information purposes and it may contain statements regarding future financial performances and Company's expectations
• Any forward looking statements are not guarantees of future performances and is related only of the date of this document. They are based on the Group's current state of knowledge, future expectations and projections about the future events. By their nature they are subject to inherent risks and uncertainties.
• Further information concerning the Group results, including factors that could materially affect the Company itself (i.e. IFRS) will be included and detailed in the Financial Statement of the Group.
• 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.
• 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.

3-YEAR BUSINESS PLAN EXTRACT

2019-2021

IT'S THE FUTURE THAT MAKES HISTORY.

WE HAVE BEEN DESIGNING INNOVATION FOR FIFTY YEARS, DRIVEN BY AN INCREDIBLE ENGINE, POWERED BY PEOPLE, PASSION AND PRECISION.

OUR IDENTITY

OUR VALUES 3 -Year Business Plan

Biesse Group is a global leader founded in Pesaro in 1969 by Giancarlo Selci. listed on the Borsa Italiana since 2001 – STAR segment. The Group has a strong Italian identity and strongly believe in:

INNOVATION

RELIABILITY

RESPECT

THE 3 -Year Business Plan VISION

Biesse Group's vision is embodied by the word THINKFORWARD:

a stimulus to LOOK AHEAD and ANTICIPATE THE FUTURE setting new standards to drive TECHNOLOGICAL INNOVATION and DIGITALtransformation.

ONE INDUSTRIAL 3 -Year Business Plan GROUP

We manufacture technology for processing wood, glass, stone, advanced materials and metal through specialised business units and 12 manufacturing sites in Italy and worldwide. We operate worldwide with our own key brands: Biesse, Intermac, Diamut, HSD.

MAIN BUSINESS DIVISIONS

4 12 PRODUCTION SITES

ALL OVER THE 3 -Year Business Plan WORLD

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.

39 SUBSIDIARIES AND REPRESENTATIVE OFFICES

+300

DISTRIBUTORS

SELECTED

SUPPORTING OUR 3 -Year Business Plan CUSTOMERS

Customers in 120 Countries. Manufacturers of furniture, design items and door/window frames, producers of elements for the building, nautical and aerospace industries.

CUSTOMERS IN

120 COUNTRIES

WITH OUR PEOPLE 3 -Year Business Plan

4400*

We acknowledge that Peopole are essential to our development, because the ability to innovate and pursue excellence in the realisation of products is the consequence of the passion and dedication of all those are part of the Biesse family.

EXCELLENCE

EXCELLENCE 3 -Year Business Plan

NET FINANCIAL POSITION CASH

3 -Year Business Plan

BUSINESS MODEL

PRODUCTS 3 -Year Business Plan

Machines 01

We design, manufacture and distribute a comprehensive range of machinery and technologies for processing wood, glass, stone, metal and advanced materials

We create engineered solutions, from plant design to production, Systems 02 We design, manufacture

implementation, installation and maintenance

Mechatronics 03

and deliver high-tech mechanical and electronic components for machinery INDUSTRY 4.0 ready.

Software 04 06

Tooling

We manufacture tools for the processing of glass, stone and ceramic. Its synergy with Intermac has enabled it to develop a range of tools, which in terms of reliability, have become a benchmark in the market.

Service 05

05 Through dedicated personnel, we provide professional pre-sale consulting services, and continuous after sales assistance to ensure the correct installation and startup of machinery, software and Systems.

05 We have developed our software solutions by closely observing the work carried out by the customer every day, with simple interfaces, designed to make everyday use of the machine practical.

FOOTPRINT 3 -Year Business Plan

DISTRIBUTION 3 -Year Business Plan

CUSTOMERS (BY SEGMENT) 3 -Year Business Plan

CUSTOMERS (BY SEGMENT) 3 -Year Business Plan

CUSTOMER SALES

3 -Year Business Plan

CUSTOMERS - MAIN REFERENCE MARKETS

% breakdown of Biesse machines sales by macro-sector

Advanced Material, Automotive Frames (doors, windows) Structural Woods

POLITICAL AND ECONOMIC UNCERTAINTIES

THE TIME OF UNCERTAINTY

3 -Year Business Plan

Trade War

China - U.S.A. (decoupling & custom duties)

Political uncertainties & turmoil

Russia - Turkey - Iran - Venezuela

Worldwide slowdown and downgrade in economic growth (i.e. China)

Internal Conflicts

(i.e. "Yellow Vest" protest)

Growing populism and nationalism

Change of economic Strategy

Brexit

RISK PERCEPTION

3 -Year Business Plan

In the Global Risks Perception Survey, nearly 1,000 decision-makers assess the risks facing the world. Nine out of 10 respondents expect worsening economic and political confrontations between major

powers.

Economic confrontation / frictions between major powers

Erosion of multilateral trading rules

Political frictions between major powers

Cyber-attack: Theft of data-money

Cyber-attack: Disruption of operations and infrastructures

Loss of confidence in collective security alliances

Populist and nativist agenda

Media echo chambers and "fake news"

Domestic political polarization

Source: Accenture Survey

79%

85%

years?

76%

Complicated What will impact Business Model over next

NEW DIGITAL PARADIGM

Difficult Today The day after Tomorrow Automation Machine Learning Artificial intelligence Advanced Robotic Tomorrow Easy Predictive Maintenance Digital will provide significant opportunities to reduce cost Digital will help us engage our partner like never before Digital channels and technologies will significantly improve our interactions with business customer

How, When, What will impact our business

3 -Year Business Plan

Source: The changing landscape of disruptive technologies 2018, KPMG

DISRUPTIVE GROWTH

What are the top technologies that will drive business disruption over the next three years? A survey to 750 Global Industry Leaders (C-Level). Faster

The Internet of Things Connected devices are becoming intelligent things

Robotics

Robots and automation are changing the limitations of what humans can do 11%

10%

20%

Artificial Intelligence

AI is designed to simulate how humans brain learns, reasons and make decisions that results in an action

Impact on Business Model and Business Benefits

3 -Year Business Plan

CONTINUOUS GROWTH

OUR TRACK RECORD 32

OUR TRACK RECORD

STRATEGY

FUTURE IS NOW

3 -Year Business Plan

OUR STRATEGY IN FIGURES

#PRODUCTS

TARGETS

CORE SEGMENTS MARKET 2018

We are among leaders in our reference markets: Wood, Glass, Stone working machinery and Tooling

WOOD

Wood Estimated CAGR 2019-2021

Market Estimated CAGR 2019-2021 03

We defined guidelines of the Action Plan to achieve our targets:

Expand our product offering to meet Customers needs for more automation, more flexibility and easy-use machines

02

01

Enlarge our offering of Full Liner products and machines integrated with our handling and storage solutions

Strength our R&D on innovative solutions to process furnishing (new materials)

GLASS & STONE

We defined guidelines of the Action Plan to achieve our targets:

Full Liner.

01 Expand our offering in Automation and

02

Focus on the new product range for space, storage and handling needs of Ceramic working Factories

Protect our leading position in the 03 stand-alone machines segment.

G&S Division Estimated CAGR 2019-2021

Market Estimated CAGR 2019-2021

TOOLING

Tooling Division Estimated CAGR 2019-2021

Market Estimated CAGR 2019-2021

We defined guidelines of the Action Plan to achieve our targets:

01

02

Expand our presence in the U.S. market, through a dedicated production line inside the Biesse America Campus. In 2018 Biesse Group made its debut in the Ceramic sector. The Group approached this new segment through an innovative range of tools and solutions dedicated to the squaring, lapping and polishing of all ceramic materials. In next three years we want to enlarge our offering of tooling products for ceramic CNC machines.

NEW SEGMENTS MARKET 2018

important are Hundegger (the Market Leader), HOMAG and Weinmann.

3 -Year Business Plan

We entered in new market segment, we want to continue increase our market penetration.

STEPTEC.

Industrie, Breton, Mecanumeric, and Multicam.

STRUCTURAL WOOD

We defined guidelines of the Action Plan to achieve our targets:

Estimated CAGR 2019-2021

Expand our offering, introducing new products both in high–end and mid-end segment: RC and CLT series

01

Empower our salesforce team especially in Key Markets

03

Increase our production capacity (Italy)

MECHATRONICS

6%

Market Estimated CAGR 2019-2021 01

15%

metal spindle sales estimated CAGR 2019-2021

We defined guidelines of the Action Plan to achieve our targets:

• Introduce a new product category: rotary tables, that allows a more effective metal working process.
• Enlarge our product offering for metal working machines.

Expand abroad, especially in Asian (Taiwan) and Western Europe Market

02

03

Increase our production capacity (Italy)

ADVANCED MATERIALS

30%

Estimated CAGR 2019-2021

3 -Year Business Plan

We defined guidelines of the Action Plan to achieve our targets:

Invest in Commercial development, empowering our sales organization worldwide with special focus on the American market

Invest to increase our production capacity 03 of Advanced Materials Machines

Enlarge our product offering for Advanced Materials working also in Full Liner 02 solutions

*Advanced

materials

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

01

ENLARGE OUR PRODUCT OFFERING

New thermoforming machine.

Development of System for Advanced Material working.

Expansion and complete renewal of the Rover and Materia product lines.

New projects based on additive manufacturing from 2021.

#SOLUTIONS

SYSTEM TARGETS

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

Systems Sales Estimated CAGR 2018-2021 The guiding strategy of the Biesse Systems team is based on clear key concepts:

• Define lead times
• Increase Automation
• Improve Stock Management
• Solutions modularity
• Total Quality

SYSTEM ACTION PLAN

We defined guidelines of the Action Plan to achieve our targets:

Automaction: strong focus on Industry 4.0 oriented solutions

Introduce and integrate new software solution (MES - Manufacturing Execution System) to manage the entirefactory production processes

Approach the market with Global Key Accounts for large manufacturing companies Becoming leader in the engineering solutions sector, focusing also on small and medium Clients

AUTOMACTION

3 -Year Business Plan

Automaction

Automaction is a Biesse's new concept that represents the concreteness of the new technological innovations developed by the company.

Robot

The company's spirit of innovation takes a huge step forward in the evolution of robotic systems for panel handling

B_Avant

Automated supervisor (software) for the integrated and efficient management of all production flows according to machining requirements.

SERVICE TARGETS

21.5%

Expected Service Contribution to net sales in 2021

We will focus on Services development, increasing covering and efficiency.

We defined guidelines of the Action Plan to achieve our targets:

Increase services sales using SOPHIA and Predictive Maintenance Services

Services market place development: Parts

Target of Spare Parts Orders made with Sophia in 2021

<1^h 2021 target response

time on machine down for Sophia Customers

02

01

03

Establish the Academy Service in Headquarter (Italy), Asia and America

Integration of Self Diagnostic Systems on machines

52

ONE SERVICE One Company

Empower corporate culture to achieve greater results.

3 -Year Business Plan

"One Service" wants to be the way to work well and efficiently together and with Lean processes.

Training, through the Biesse Academy we intend to manage the skills of the Services resources and to increase knowledge about products and processes. After the successful experience of the CRM project for the Commercial Area,

Biesse has also activated Salesforce

teams to support the Service

processes.

04

01

New Global Organization, to simplify the relation with our Client introducing the Customer Care Manager

PARTS

3 -Year Business Plan

Parts Sophia is the easy, intuitive and personalized new tool for ordering Biesse spare parts

The main features of Parts services are:

• the automatic creation of a spare parts basket following an IoT maintenance task
• the opening of a technical intervention request via the portal or PARTS - SOPHIA app

#DIGITAL

LEADING THE CHANGE

With SOPHIA, Biesse is defining new standards in digital technologies that enable Smart Factory.

SOPHIA is Biesse's IIoT (Industrial Internet of Things) platform, developed with Accenture and Microsoft, that enable new services: long distance diagnostics, analysis and proactive maintenance, analysis of manufacturing events in order to optimize our Client's production.

SOPHIA is made up of two integrated areas: IoT and Parts. They're linked with

two apps so that the customer can easily access the functions offered by the platform.

3 -Year Business Plan

SOPHIA TO SUPPORT BIESSE CUSTOMERS

3 -Year Business Plan

SERVICES

Biesse supports its customers, offering technological connectivity, sharing of expertise, professional consulting services, training and ongoing assistance.

PREDICTIVE

SOPHIA helps to prevent problems that could damage customer production. Biesse takes proactive steps to contact customers, reducing machine downtime and inefficient wasted time.

ANALYSIS

The information gathered and analysed is transformed into useful indications for optimising customer production and product quality, providing extremely opportunities for growth. Source: Biesse estimations

SOPHIA TARGETS

Machines already sold having SOPHIA package

Route to the future

Digital innovation creates the future: an inevitable process, that is yet to be developed in machinery industry. SOPHIA paves the way for the future of Industry 4.0, starting now.

2000,0 Number of Machines sold with SOPHIA Packages and average revenues per package 2018-2021

OUR FUTURE IN FIGURES

GROUP ORDERS INTAKE & BACKLOG

STABILIZE THE PROFITABILITY

CAGR 2018-2020

EBITDA

2018-2020 plan

3 -Year Business Plan

• COGS on Net Sales below 40%
• labour Cost on Net Sales less than 30%
• overhead on Net Sales less than 20%

VALUE ADDED

Value Added margin 2018-2020 plan

€/mln - %

3 -Year Business Plan

EBIT margin 2018-2020 plan

NET RESULT

Net Result Net Result %

3 -Year Business Plan

EPS – TAX RATE

3 -Year Business Plan

68

EXTRACT OF THE P&L

Net sales year -1

Cost of goods sold ¹⁷⁸

							3 -Year	Business Plan
€/mln	2014	2015	2016	2017	2018		2021e
Net sales year -1	427 +12.9%	519 +21.5%	618 +19.1%	690 +11.6%	740 +7.3%	CAGR 2009-2018 11.9%	882
	41.6%	206 39.8%	245 39.6%	270 39.1%	295 39.9%		349 39.6%
%	168 39.3%	212 40.9%	252 40.8%	289 41.8%	307 41.5%		370 42.0%
Labour cost	128 30.0%	148 28.6%	177 28.6%	199 28.9%	214 29.0%		256 29.0%	< 30.0% incidence
Overhead	91 21.3%	105 20.2%	125 20.1%	136 19.7%	144 19.5%		168 19.0%	< 20.0% incidence
EBITDA %	40 9.3%	64 12.4%	76 12.3%	89 13%	93 12.5%		114 13.0%
EBIT %	25 5.8%	44 8.4%	55 8.9%	64 9.2%	64* 8.6%		80 9.0%

Value added %	168 39.3%	212 40.9%	252 40.8%	289 41.8%	307 41.5%
Labour	128	148	177	199	214
cost	30.0%	28.6%	28.6%	28.9%	29.0%
Overhead	91	105	125	136	144
	21.3%	20.2%	20.1%	19.7%	19.5%
EBITDA	40	64	76	89	93
%	9.3%	12.4%	12.3%	13%	12.5%
EBIT	25	44	55	64	64*
%	5.8%	8.4%	8.9%	9.2%	8.6%

*after non recurring items

NET FINANCIAL POSITION

3 -Year Business Plan

€ 77 mln the positive 2019e PFN in the previous plan

-56,2

70

CASHFLOW 3 -Year Business Plan

€/mln	2014	2015	2016	2017	2018	2021e
Gross Cashflow(*)	38	46	47	74	53	69
% net sales	9.0%	8.9%	7.4%	10.9%	7.1%	7.9%
Capex	-21	-25	-32	-39	-45	-48
% net sales	4.9%	4.9%	5.2%	5.7%	6.1%	5.4%
Net Cashflow	17	21	15	35	8	21
% net sales	4.1%	4.1%	2.2%	5.2%	1.1%	2.4%
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	-13.1 0.48 per share	-14.0 30% of net profit(e)

(*) Gross Cashflow calculated: net profit + amortization + provisions +/- delta operative CCN +/- delta funds (taxes)

OPERATIVE NET WORKING CAPITAL

inventories below 22% incidence on Net Sales

Group DSO around 50-60 days max

3 -Year Business Plan

Group DPO around 105-110 days

OPERATIVE NET WORKING CAPITAL

€/mln	2014	2015	2016	2017	2018	2021e
Inventories % net sales	23.0%	21.5%	21.1%	20.8%	22.0%	21.3%
Receivables % net sales	18.9%	20.3%	20.8%	17.3%	18.1%	19.0%
Payables % net sales	28.8%	29.5%	31.1%	32.4%	32.9%	31.2%
operative Net Working Capital % net sales	56 13.0%	63 12.2%	67 10.8%	39 5.6%	53.1 7.2%	81 9.2%

74

CAPEX

3 -Year Business Plan

2019e

tangible: € 32.9mln intangible: € 18mln

main investments items:

• Mechatronics HSD takeover of the Bi.Fin srl leasing (existing site in Gradara)
• Wood stand alone machines vertical authowarehouse (traslo)
• Subsidiary Biesse America campus
• ComponentsCosmec working centers
• I.T. Service CRM product configurator I.I.o.T.
• R&D (4% of the net sales)

EMPLOYEES

PEOPLE DISTRIBUTION (without interim people)

3 -Year Business Plan

	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018
Production % of total people	1,250 46%	1,265 45%	1,175 44%	1,201 42%	1,335 42%	1,482 41%	1,494 39%	1,621 38%
Service & After sale % of total people	577 21%	574 21%	613 22%	628 22%	690 22%	803 22%	894 23%	1,001 24%
R&D % of total people	316 12%	338 12%	321 12%	361 13%	383 13%	436 12%	479 12,5%	551 13%
Sales & Marketing % of total people	361 13%	364 13%	351 13%	439 15%	495 15%	587 16%	641 17%	715 17%
G&A % of total people	233 9%	242 9%	235 9%	252 9%	273 9%	310 8,5%	338 8,8%	339 8%
ITALY % of total people	1,656 61%	1,646 59%	1,547 57%	1,605 56%	1,780 56%	2,009 56%	2,176 56%	2,483 59%
OUTSIDE ITALY % of total people	1,081 39%	1,136 41%	1,148 43%	1,276 44%	1,396 44%	1,609 44%	1,670 44%	1,744 41%
TOTAL	2,737	2,782	2,695	2,881	3,176	3,618	3,846	77 4,227

77

PEOPLE EVOLUTION

	FY 2017	FY 2018	DELTA %
Production	1,494	1,621	+8.5
Service & After Sales	894	1,001	+12.0
R&D	479	551	+15.0
Sales & Marketing	641	715	+11.5
G&A	338	339
ITALY	2,176	2,483	+ 14.1
OUTSIDE ITALY	1,670	1,744	+ 44.3
TOTAL	3,846	4,227	+9.9

3 -Year Business Plan

the labour cost increase is EURO 16.3 mln (2018 vs 2017)

interim people at the end of Dec 2018: 170 interim people at the end of Dec. 2017: 196 interim people at the end of Dec. 2016: 181

employees 4,397

including interim people

BY MAIN COUNTRIES – 2018 PEOPLE DISTRIBUTION

people outside Italy: nr. 1,744 people in Italy: nr 2,483

BY MAIN COUNTRIES – 2019e PEOPLE DISTRIBUTION

3 -Year Business Plan

a) staff outside Italy: nr. 1,915 b) staff in Italy: nr 2,831 a+b (4,746)= +7.9% vs 2018

MACROECONOMIC CONTEXT - GDP BY COUNTRY GDP YoY Growth (%) 3 -Year Business Plan

MACROECONOMIC CONTEXT - GDP BY COUNTRY 3 -Year Business Plan

World, Advanced Economies & EMDEs YoY Growth (%)

Source: Bloomberg, January 2019

MACROECONOMIC CONTEXT - BIESSE PERFORMANCE 3 -Year Business Plan

83

Source: Bloomberg, January 2019, Biesse

WORLD GDP & PMI BY MAIN MACRO AREA

FURNITURE

Furniture demand by countries

China U.S.A. Germany Italy India Other

Furniture consumption. Countries grouped by geographical region, 2019. Forecast of yearly changes in real terms.

CRESME & CSIL VIEW (1) 3 -Year Business Plan

Building Investments World trends

Building Investments comparing China, Italy, World

CRESME & CSIL VIEW (2) 3 -Year Business Plan

% breakdown of world furniture production, 2018

Main furniture exporting countries 2012-2018

CRESME & CSIL VIEW (3) 3 -Year Business Plan

World trade of furniture and annual percentage changes.

China – Main furniture trading partners

Origin of furniture imports		Destination of furniture exports
Italy	18,8%	USA	36,9%
Germany	14,8%	Japan	5,6%
Vietnam	8,5%	UK	4,9%
Poland	7,0%	Australia	3,8%
USA	6,0%	Germany	3,7%
JAPAN	5,7%	Hong Kong	3,3%
South Korea	4,4%	South Korea	3,2%
Taiwan	2,9%	Canada	3,1%
China	2,7%	France	2,4%
UK	2,6%	Singapore	2,2% 88

Source: CSIL 2018

ANNEXES IFRS IMPACTS (INITIAL EVALUATION)

ORDERS (INTAKE & BACKLOG)

IFRS 16 IMPACTS 3 -Year Business Plan

"…..IFRS 16 is an International Financial Reporting Standard (IFRS) providing guidance on accounting for leases. IFRS 16 was issued in January 2016 and will be effective for most companies that report under IFRS in 2019. Upon becoming effective, it will replace the earlier leasing standard, IAS 17. ….The new standard will provide much-needed transparency on companies' lease assets and liabilities, meaning that off balance sheet lease financing is no longer lurking in the shadows. It will also improve comparability between companies that lease and those that borrow to buy……"

EBITDA WITH THE IFRS 16 IMPACTS

€/mln

NET FINANCIAL POSITION WITH THE IFRS 16 IMPACTS €/mln

3 -Year Business Plan