Emak — Investor Presentation 2019

Oct 21, 2019

Star Conference, London October 22-23, 2019

Table of contents

	Group overview	p.3
	A description of our business segments:
	Outdoor Power Equipment	p.6
	Pumps and High Pressure Water Jetting	p.9
	Components and Accessories	p.12
	Our strategy	p.15
	1H 2019 results	p.21
	Appendix	p.28

Emak at a glance

Direct presence in 14 countries Distribution network in five continents Efficient production footprint 2,000 employees

Seasonal business

Emak strengths

Outdoor Power Equipment

Main brands	Product range	End-users	Distribution channel	Strategic priorities
	• Hand held products: trimmers, chainsaws, blowers. • Wheeled products: lawnmowers, garden tractors, tillers, transporters. • Accessories and spare parts	• Professional users • High demanding private users (prosumer)	• Specialised dealers	• Product innovation • Distribution network • Cost and efficiency improvements

Pumps & High Pressure Water Jetting

Main brands	Product range	Application / End user	Clients / distribution channel	Strategic priorities
	• Agriculture products: diaphragm, centrifugal and piston pumps	• Agriculture: spraying and weeding	• Manufacturers of spraying and weeding machines	• Product innovation • Cost and efficiency improvements • Maximize synergies
	• Industrial products: piston pumps, hydrodynamic units and urban cleaning equipment.	• Several industries:  Oil & gas  Sugar cane  Shipyard  Cleaning	• Manufacturers of hydrodynamic units and high pressure washers, contractors, independent distributors	from acquisitions • Focus on key attractive segments
	• Cleaning products: complete range of high pressure washers, floor care equipment	• Professional • Hobby	• Specialised dealers and DIY

Pumps & High Pressure Water Jetting – Product range

Components & Accessories

Our strategy

Innovation

Product and process innovation represents more than 60% of total capex:

• New technologies
  • Battery products
  • Engine management
• Product efficiency and ergonomics
• Emission control
• Digitalization
  • IoT
  • Connectivity
  • Simulation software

Innovation – Cordless power tools

• For home owners and landscapers
• Ideal for maintenance of parks and gardens
• Environmental friendly
• Less noise
• Zero emission
• Easy to use

Innovation – IoT for power tools connectivity

Forecast optimization through data mining and predictive maintenance of machines

Smart growth

• Data mining from big data to smart data for know-how growth for all company departments
• Integration with smart city

Sustainable growth

• Machines managed with predictive maintenance increase the life of the machine and optimize consumption
• Optimizing the warehouse forecast allows to limit waste and limit transport.

Inclusive growth

New skilled people required such as data scientists, IT, electronic.

2019 events

Acquisition of 30% of Agres Components & Accessories - Precision Farming

• Headquarter in Pinais (Paranà), Brasil
• Activity: development and supply, mainly on the local market, of electronic systems (software, hardware and related services) for agricultural machines (spraying and weeding machines and seeders)
• Value of the transaction: 11.7 million Reais (approximately 2.8 €m)
• Further agreements: Put & Call Option on a further 55% stake to be exercised in 2023.
• 2018 company results: sales of 21.7 million Reais.

1H 2019 highlights

31.1

Net financial position €m

Financial income: 2018 figure included financial capital gain for 2.5 €m. 2109 figure includes a loss of 2.1€m for the reduction of goodwill valuation.

Outdoor Power Equipment

EBITDA Adjusted €m

Sales:

• Europe: weak first quarter due to high stocks in the network. Delayed start of the gardening season.
• Americas: increase in North America didn't offset the decrease in South America.
• Asia, Africa and Oceania: positive performance in China, slowdown in Turkey due to country's instability.

EBITDA adjusted

• Decline in sales volumes.
• 8.4% Reduction in structural and operating costs.

Pumps and High Pressure Water Jetting

Sales to third parties €m

Sales

• Europe: decrease due to overall slowdown in the reference market.
• Americas: substantially stable, with a slight recovery in the second quarter.
• Asia, Africa and Oceania: good performance, mainly in the Far East.

EBITDA adjusted

• Increase in raw materials.
• Higher costs to implement growth activities.

Components and Accessories

Sales

• Negative impact from Raico deconsolidation
• Europe: performance in line on the Italian market and down on the other continental markets.
• Americas :recovery of sales on the North American market in 2Q and good performance in Latin America.
• Asia, Africa and Oceania: significant recovery in 2Q.

EBITDA Adjusted €m

EBITDA adjusted

• Lower sales volumes
• Increase in the costs of raw materials
• Unfavorable product mix

Consolidated income statement

FY 2018	€m	1H 2019 no IFRS 16	IFRS 16 impact	1H 2019 IFRS 16	1H 2018
	Revenues from sales	243.0		243.0	266.5
452.8 5.5		2.0		2.0	2.7
4.6	Other operating incomes	2.4		2.4	(3.6)
	Change in inventories
(243.2)	Raw materials, consumables and goods	(131.6)		(131.6)	(138.2)
(83.3)	Personnel expenses	(42.5)		(42.5)	(44.2)
(87.0)	Other operating costs and provisions	(45.6)	3.0	(42.7)	(46.5)
49.4	Operating result	27.8	3.0	30.7	36.7
-15.5	Amortization, depreciation and impairment losses	(10.2)	(2.7)	(12.9)	(7.2)
34.0	Operating result	17.6	0.3	17.9	29.5
5.3	Financial income	0.2		0.2	3.3
(4.8)	Financial expenses	(2.6)	(0.5)	(3.1)	(2.5)
0.1	Exchange gains and losses	0.7		0.7	(0.7)
0.3	Income from/(expeses on) equity investment	(0.1)		(0.1)	0.1
34.9	Profit before taxes	15.8	(0.2)	15.6	29.6
(9)	Income taxes			(5.1)	(7.5)
25.6	Net profit			10.5	22.1

31.12.2018	€m	30.06.2019	30.06.2018
	Non-current assets
75.4	Property, plant and equipment	76.2	73.0
20.2	Intangible assets	20.7	19.5
-	Rights of use	32.2	-
65.8	Goodwill	64.1	65.8
0.2	Equity investments in other companies	0.0	0.2
4.6	Equity investments in associates	7.3	4.4
8.5	Deferred tax assets	8.5	8.0
2.5	Other financial assets	2.3	1.5
0.1	Other assets	0.3	0.1
177.2	Total non-current assets	211.5	172.5
	Current assets
156.7	Inventories	159.8	147.4
108.3	Trade and other receivables	129.7	141.7
6.0	Current tax receivables	4.1	3.9
0.6	Other financial assets	1.1	2.0
0.3	Derivative financial instruments	0.2	0.2
62.6	Cash and cash equivalents	38.2	68.1
334.5	Total current assets	333.0	363.3
511.7	TOTAL ASSETS	544.5	535.8

31.12.2018	€m	30.06.2019	30.06.2018
	Shareholders' Equity
203.7	Shareholders' Equity of the Group	207.0	200.7
2.1	Non-controlling interests	2.0	2.0
205.8	Total shareholders' Equity	208.9	202.8
	Non-current liabilities
113.3	Loans and borrowings due to banks and others lenders	88.8	119.5
-	Liabilities for leasing	27.8	-
8.4	Deferred tax liabilities	8.4	8.7
8.8	Employee benefits	8.3	9.4
2.2	Provisions for risks and charges	2.3	2.2
0.5	Other non-current liabilities	0.5	0.5
133.1	Total non-current liabilities	136.0	140.3
	Current liabilities
95.9	Trade and other payables	97.3	105.6
4.9	Current tax liabilities	6.2	7.5
69.4	Loans and borrowings due to banks and others lenders	88.0	77.1
-	Liabilities for leasing	5.0	-
0.6	Derivative financial instruments	1.2	0.4
1.9	Provisions for risks and charges	1.9	2.1
172.7	Total current liabilities	199.6	192.7

	511.7	TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	544.5	535.8
--	-------	--------------------------------------------	-------	-------

Appendix

Emak Group – Our History

Shareholders and Stock performance

Synthesis of results

€m	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2011 PF	2012	2013	2014	2015	2016	2017	2017 PF	2018
Sales	84.4	89.5	133.0	146.7	147.0	152.7	163.2	183.4	208.4	217.8	243.4	194.9	206.8	204.4	357.0	354.8	355.0	354.8	381.6	391.9	422.2	461.8	452.8
EBITDA adj	12.9	12.8	16.0	20.6	22.9	23.9	22.6	22.3	25.1	30.0	31.7	21.7	21.3	19.6	37.8	31.7	34.2	33.1	37.5	40.5	45.6	52.5	50.8
margin	15.3%	14.3%	12.0%	14.1%	15.6%	15.7%	13.9%	12.1%	12.1%	13.8%	13.0%	11.1%	10.3%	9.6%	10.6%	8.9%	9.6%	9.3%	9.8%	10.3%	10.8%	11.4%	11.2%
EBIT adj	9.3	8.1	10.6	14.8	16.8	17.5	16.3	17.0	19.8	24.5	24.9	14.9	13.9	12.5	25.8	19.6	22.4	21.7	25.0	22.9	31.7	38.1	36.3
margin	11.1%	9.0%	8.0%	10.1%	11.4%	11.5%	10.0%	9.3%	9.5%	11.2%	10.2%	7.6%	6.7%	6.1%	7.2%	5.5%	6.3%	6.1%	6.5%	5.8%	7.5%	8.2%	8.0%
Net profit	5.5	3.9	6.2	7.9	9.0	9.6	9.0	9.6	11.3	15.2	14.9	9.4	11.6	5.8	13.0	8.6	10.5	10.2	9.0	17.7	16.4	20.6	25.6
margin	6.5%	4.4%	4.7%	5.4%	6.1%	6.3%	5.5%	5.2%	5.4%	7.0%	6.1%	4.8%	5.6%	2.8%	3.6%	2.4%	3.0%	2.9%	2.4%	4.5%	3.9%	4.5%	5.7%
FCF from operations	9.1	8.6	11.6	13.7	15.1	16.0	15.3	14.8	16.7	20.8	21.6	16.2	19.0	12.9	25.0	20.8	22.4	21.7	21.5	35.3	30.4	35.0	40.1
Net Equity	42.1	44.8	48.8	53.8	59.3	65.1	69.8	75.4	81.9	91.4	99.4	104.6	114.0	140.1	140.1	145.0	150.8	160.1	168.5	181.7	187.5	187.5	205.8
Net fin. debt	3.2	5.5	14.3	26.4	19.1	21.1	16.4	25.8	37.9	31.0	61.8	38.0	27.4	97.3	97.3	99.9	76.4	79.0	99.4	80.1	125.3	125.3	117.4
Net capital employed	45.3	50.3	63.1	80.3	78.5	86.2	86.3	101.2	119.7	122.5	161.2	142.6	141.4	237.4	237.4	244.9	227.2	239.1	267.9	261.8	312.8	312.8	323.2
NWC	27.5	32.1	43.7	55.6	54.2	60.2	59.3	66.4	81.8	81.1	103.2	82.9	83.7	157.5	157.5	155.9	142.2	148.6	154.6	145.6	161.8	161.8	168.3
Debt/Equity	0.1	0.1	0.3	0.5	0.3	0.3	0.2	0.3	0.5	0.3	0.6	0.4	0.2	0.7	0.7	0.7	0.5	0.5	0.6	0.4	0.7	0.7	0.6
Debt/EBITDA adj	0.2	0.4	0.9	1.3	0.8	0.9	0.7	1.2	1.5	1.0	2.0	1.8	1.3	5.0	2.6	3.1	2.2	2.4	2.7	2.0	2.7	2.4	2.3

* Calculated by adding the items "Net profit" plus "Amortization, depreciation and impairment losses"

1998-1999: Creation of 5 commercial branches in Western Europe. 2004: Establishment of Emak Jiangmen, production plant in China. 2005: Creation of Victus, commercial branch in Poland. 2006: Creation of Emak U.S.A. commercial branch in USA. 2008: Aacquisition of Bertolini and Tailong (cylinder manufacturer) 2011: Acquisition of Epicenter (Ukraine), Tecomet, Comet, Sabart and Raico 2012: Start-up of Emak do Brazil, acquisition of Valley in USA 2014: Acquisition of Speed Industrie Sarl (Marocco), S.I.Agro Mexico, Geoline Electronic, Master Fluid, Speed South America (Chile) 2015: Acquisition of Lemasa (Brazil) 2016: Acquisition of 30% of Cifarelli S.p.A. 2017: Acquisition of Lavorwash Group 2018: Sale of Raico; acquisition of Spraycom

Aimone Burani, the executive responsible for the preparation of the corporate accounting documents, declares and certifies in accordance with article 154 bis, paragraph 2, of the Consolidated Finance Act, that the financial statements contained in this presentation correspond to the underlying accounting documents, records and accounting entries.

Emak Company Profile – update January 2018

Emak S.p.A 42011 Bagnolo in Piano (RE) Italy www.emakgroup.com www.linkedin.com/company/emap-s-p-a-