Fila — Investor Presentation 2019

Aug 6, 2019

H1 2019 FILA Group Results

Disclaimer

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This document has been prepared by F.I.L.A. S.p.A. ("F.I.L.A." or the "Company"), for information purposes only, exclusively with the aim of assisting you to understand and assess F.I.L.A.'s activities. Statements contained in this presentation, particularly regarding any possible or assumed future performance of the F.I.L.A. Group, are or may be forward-looking statements based on F.I.L.A.'s current expectations and projections about future events. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors that are in some cases beyond F.I.L.A.'s control. These risks, uncertainties and factors may cause F.I.L.A.'s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements (and from past results, performances or achievements). Forward-looking statements are not guarantees of future performance. Consequently, F.I.L.A. and its management can give no assurance regarding the future accuracy of the estimates of future performance set forth in this document or the actual occurrence of the expected developments. The data and information contained in this document are subject to changes and integrations. Although F.I.L.A. reserves the right to make such changes and integrations when it deems necessary or appropriate, F.I.L.A. assumes no affirmative obligation to update, change or integrate this document, except as and to the extent required by law. Any reference to the past performance of the F.I.L.A. Group shall not be taken as an indication of future performance. In addition, this presentation includes certain ''Adjusted'' financial and operating indicators and non-IFRS measures, which have been adjusted to reflect extraordinary events, non-recurring and/or non-monetary transactions and/or activities that are not directly related to the Group's ordinary business. These measures are not indicative of our historical operating results, nor are they meant to be predictive of future results. These measures are used by F.I.L.A.'s management to monitor the underlying performance of the business and the operations. Since not all companies calculate these measures in an identical manner, F.I.L.A.'s presentation may not be consistent with similar measures used by other companies. Such "Adjusted" information has been included to facilitate the comparison of financial information among different financial periods; however, it should be noted that such information is not recognized as a measure of financial performance or liquidity under IFRS and/or does not constitute an indication of the historical performance of the Company or the Group. Therefore, investors should not place undue reliance on such data and information. The information contained in this document does not constitute or form any part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell or subscribe for any securities in any jurisdiction and neither the issue of the information nor anything contained herein shall form the basis of or be relied upon in connection with, or act as any inducement to enter into, any investment activity. This document does not purport to contain all of the information that may be required to evaluate any investment in the Company or any of its securities and should not be relied upon to form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation is intended to present background information on F.I.L.A., its business and the industry in which it operates and is not intended to provide complete disclosure upon which an investment decision could be made. The merit and suitability of investment in F.I.L.A. should be independently evaluated and determined by investors. Analyses in this presentation are not, and do not purport to be, appraisals of the assets, stock or business of F.I.L.A., and do not form any publicity material relating to the securities. Any person considering an investment in F.I.L.A. is advised to obtain independent advice as to the legal, tax, accounting, regulatory, financial, credit and other related advice prior to making an investment.

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H1 2019 Highlights

FILA H1 2019: ASIAN GROWTH TREND CONTINUES AND STRONG RECOVERY IN NORTH AMERICA AND EUROPE IN THE SECOND QUARTER, OPERATIONS BACK TO EFFICIENCY

•Core Business Revenues of 350,7mln €, +37,4% compared to H1 2018 Results and +2,4% (-0,5% Net of FX) compared to H1 2018 Proforma Results of which 87,2mln € related to Pacon Group Core Business Sales;

•Sales growth in Asia, particularly in India (+23%) and South America (+4%) compared to the previous year, offset by, despite the second quarter strong recovery, the decrease in North America, due to a different seasonality of the school campaign, increasingly concentrated in the second and third quarters, and Europe, in particular Italy and France, mainly related to customers destocking process;

•Adjusted EBITDA of 58,2mln €, +31,2% compared to H1 2018 Results, registering a strong improvement in the second quarter, and +1,3% (-2,5% Net of FX) compared to H1 2018 Proforma Results (including 13,3mln € related to Pacon Group EBITDA). Adjustments are related to 6,3mln € of extraordinary income (IFRS 16 first time adoption) partially offset by 4,6mln € of extraordinary costs, mainly related to the reorganization costs;

•Adjusted Net Profit of 22,0mln €, +42,0% compared to H1 2018 Results, mainly due to M&A impact;

•Net Financial Position at -602,4mln € as at June 30, 2019 (including IFRS 16 negative effect of -80,5mln € and negative Mark to Market Interest Hedging of 10,6 mln €) compared with -452,8mln € as at December 31, 2018. This change is mainly linked to the impact of business seasonality.

H1 2019 Core Business Sales

• Core Business Revenue of 350,7mln €, +37,4% compared to H1 2018 Results
• Core Business Sales compared to H1 2018 proforma values: +8,3mln € (+2,4%) and -1,7mln € (-0,5%) net of FX of which:
  • ‒ By Geographic Area: North America -7,3mln € (-4,5%), Europe -2,6mln € (- 2,2%) and Other Countries -0,6mln € (-30,9%), partially offset by Asia +7,7mln € (+23%) and Centre & South America +1,1mln € (+4,0%);
  • ‒ By Product line: Fine Art, Hobby & Digital -4,7mln € (-5,0%), partially offset School & Office +2,3mln € (+0,9%) by Industrial +0,7mln € (+8,0%);
• 87,2mln € for Pacon Group Core Business Sales of H1 2018 (proforma adjustment).

SALES BY PRODUCT LINE SALES BY GEOGRAPHICAL AREA

4

H1 2019 EBITDA

ADJUSTED EBITDA

• Adjusted EBITDA of 58,2mln €, +31,2% compared to H1 2018 Results;
• Adjusted EBITDA compared to H1 2018 proforma value: +0,7mln € (+1,3%) and –1,4mln € (-2,5%) net of FX;
• 6,3mln € of extraordinary income in H1 2019, related to IFRS 16 first time adoption partially offset by 4,6mln € of extraordinary costs in H1 2019, mainly related to the reorganization costs;
• 9,8mln € of extraordinary costs in H1 2018A, mainly related to the Pacon Group acquisition, reorganization, stock option costs;
• 13,3mln € for Pacon Group EBITDA of H1 2018 (proforma adjustment).

ADJUSTED EBITDA BREAKDOWN BY GEOGRAPHICAL AREA

H1 2019 Net Income and Net Financial Position

ADJUSTED NET FINANCIAL POSITION

• Adjusted Net Profit of Euro 22mln €, +42,0% compared to H1 2018 Results
• The adjustment of the Group Result in H1 2019 refers to extraordinary operating costs for reorganization and IFRS 16 first time adoption, net of taxes effects;
• The adjustment of the Group Result in H1 2018 refers to extraordinary operating costs net of taxes effects.

Net debt increase of 149,6mln € mainly due to:

• Extraordinary negative effect for 80,5mln € refers to IFRS 16 adoption
• Negative Mark to Market Hedging of 10,6mln €
• Operating CF negative for 30,1mln €
• Capex for 7,9mln €
• Net financial expenses for 13,1mln €
• Dividends paid for 4,3mln €
• Negative FX effect of 3,1mln €

Appendix

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H1 2019 Income Statement

(€ million)	H1 2018A	% on Sales	H1 2019A	% on Sales
PROFIT & LOSS - REPORTED
Core Business Sales	259,1		350,7
Other revenues	5,0		3,7
Total revenues	264,1		354,4	-
Cost for Raw Materials and Supplies net Increase(decrease) inventory	(103,5)	(39,9%)	(158,1)	(45,1%)
Costs for Services and Use of Third-Party Assets	(65,8)	(25,4%)	(61,2)	(17,5%)
Personnel Costs	(54,3)	(20,9%)	(71,4)	(20,3%)
Other Operating Costs	(5,9)	(2,3%)	(3,8)	(1,1%)
Total operating costs	(229,5)	(88,6%)	(294,5)	(84,0%)
EBITDA	34,5	13,3%	59,9	17,1%
Depreciation and Amortization	(9,5)	(3,7%)	(19,5)	(5,6%)
Write-Downs	(1,6)	(0,6%)	(0,8)	(0,2%)
EBIT	23,5	9,1%	39,7	11,3%
Financial income/expenses	(10,0)	(3,8%)	(15,3)	(4,4%)
Income/expenses from associates at equity method	0,1	0,0%	0,1	0,0%
PBT	13,6	5,2%	24,5	7,0%
Taxes	(7,6)	(2,9%)	(6,4)	(1,8%)
Net profit (loss) of continuing operating activities	6,0	2,3%	18,0	5,1%
Net profit (loss) of discontinued operating activities	-	0,0%	-	0,0%
Total net profit (loss) of the period	6,0	2,3%	18,0	5,1%
Total net profit (loss) attributable to non controlling interests	0,7	0,3%	1,1	0,3%
Fila Group's total net profit (loss) of the period	5,3	2,1%	17,0	4,8%
(€ million)	H1 2018A	% on Sales	H1 2019A	% on Sales
P&L ADJUSTMENTS
REPORTED CORE BUSINESS SALES	259,1		350,7
Total Adjustments	(3,9)
ADJUSTED CORE BUSINESS SALES	255,2		350,7
REPORTED EBITDA	34,4	13,3%	59,9	17,1%
Total Adjustments	9,8		(1,7)
ADJUSTED EBITDA	44,3	17,3%	58,2	16,6%
FILA GROUP REPORTED NET PROFIT	5,3	2,1%	17,0	4,8%
Total Adjustments	10,1		5,0
FILA GROUP ADJUSTED NET PROFIT	15,5	6,1%	22,0	6,3%

H1 2019 Balance Sheet

(€ million)	2018A	H1 2019A
BALANCE SHEET - REPORTED
Intangible assets	441,9	437,7
Tangible Assets	104,5	175,8
Financial Fixed Assets	3,6	4,0
Fixed Assets	550,0	617,5
Other Non Current Assets/Liabilities	20,8	20,5
Trade Working Capital	308,5	393,6
Other Current Assets and Liabilities	2,1	(2,0)
Net Working Capital	310,6	391,7
Provisions & Funds	(89,8)	(84,0)
NET CAPITAL EMPLOYED	791,6	945,7
Shareholders equity	(338,8)	(343,3)
Net Financial Position	(452,8)	(602,4)
TOTAL NET SOURCES	(791,6)	(945,7)

H1 2019 Cash Flow Statement

(€ million)	H1 2018A	H1 2019A
CASH FLOW - REPORTED
EBIT	23,5	39,7
Adjustments for non monetary costs	12,9	15,5
Adjustments for taxes	(6,5)	(3,6)
Cash-flow from operating activities before changes in NWC	29,8	51,6
Changes in inventories	(26,6)	(15,5)
Changes in trade receivables & others	(61,6)	(78,2)
Changes in trade payables & others	15,8	14,7
Changes in other current assets/liabilities	(2,1)	(2,8)
Changes in net working capital	(74,6)	(81,7)
Operating cash-flow	(44,7)	(30,1)
Investments in tangible and intagible assets	(10,3)	(7,9)
Other changes	0,8	0,2
Free Cash Flow	(54,2)	(37,9)
Capital increase/reimbursement/dividends	(3,8)	(4,3)
Net financial expenses	(11,4)	(13,1)
Participation acquisition and disposal	(215,2)	-
Adjustment mark to market hedging	-	(10,7)
Adoption IFRS 16	-	(80,5)
Net financial position due to consolidation area changes	(86,7)	-
Effect of FX rate movements	(1,7)	(3,2)

FILA Shareholders

Total shares * Ordinary shares only

*Total shares 50.933.917 of which : Ordinary shares 42.852.061; Class B shares 8.801.856 (enjoy three votes each in accordance with Article 127 sexies of Legislative Decree No. 58/1998). Last update July 2019

Investor Relations F.I.L.A. Stefano De Rosa CFO/IR Officer – Francesca Cocco IR ir@fila.it (+39) 02 38105206