Fila — Investor Presentation 2020

Nov 13, 2020

9M 2020 FILA Group Results

Disclaimer

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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3Q & 9M 2020 Highlights

• 3Q 2020 results:
  • ˗ Sales of 170,9mln € (185,1mln € in 3Q 2019), with comparable FX;
  • ˗ Adjusted EBITDA, without IFRS 16 effects and with comparable FX, of 31,9mln €, improving on Q3 2019 (29,9mln €);
  • ˗ EBITDA margin at 18,7% from 16,2% in 3Q2019;
  • ˗ Strong growth in Fine Art worldwide (+30% vs 3Q 2019), with positive contribution on margins, that partially offset the effects of the school lockdown in India and Mexico.
• 9M 2020 results:
  • ˗ Sales of 471,3mln € (535,9mln € in 9M 2019) with decline of -57,1mln € (-10,7%), with comparable FX, due to COVID-19 impacts and referred for 60% to India and Mexico. Fine Art +13,8% and School & Office -19,6% vs 9M 2019;
  • ˗ Adjusted EBITDA, without IFRS 16 effects, of 78,1mln € (88,2mln € in 9M 2019) with a decrease of 10,9mln € (-12,4%), with comparable FX;
  • ˗ EBITDA margin at 16,6 % from 16,5% in 9M2019;
  • ˗ Net Bank Debt of 470,3mln € (493,3mln € as at September 2019) with a decrease of 23,0mln € in the last 12 months, notwithstanding the cash out for ARCHES® acquisition of 43,6mln € and 4,2mln € related to consulting fees and other closing expense => Net Bank Debt decrease in last twelve months of 70,8mln € including positive FX effect of approx. 22,5mln €;
  • ˗ "Free Cash Flow to Equity" worse of 13,2mln compared 9M 2019 due to lower EBITDA, consultancy cash out for Arches consultancy fees and higher inventory level (in particular in North America and Mexico), but in line with expectations.

9M 2020 Highlights

COVID-19 impacts in the first 9M 2020 affected in particular India and Mexico for prolonged school lock-down and lack on line sales. Here under a 9M main economic and financial data comparison between 2020 and 2019:

€ million
3rd PARTIES SALES	Actual 2020 YTD September	Actual 2019 YTD September	Var vs PY
Dixon (Mexico)	12,1	34,5	(22,4)
DOMS Industries PVT Ltd (India)	28,7	53,6	(24,9)
EBITDA	Actual 2020 YTD	Actual 2019 YTD	Var vs PY
	September	September
Dixon (Mexico)	1,4	5,1	(3,6)
DOMS Industries PVT Ltd (India)	2,6	6,6	(4,0)
NFP IFRS 16 excluded	Actual 2020 YTD	Actual 2019 YTD	Var vs PY
	September	September
Dixon (Mexico)	(35,2)	(42,9)	7,8
DOMS Industries PVT Ltd (India)	(7,7)	(4,3)	(3,4)

9M 2020 Core Business Sales

• Core Business Sales of 471,3mln €, -64,5mln € (-12,0%) compared to 9M 2019 Results;

• Core Business Sales variation -57,1mln € (-10,7%), FX effects excluded, of which:
  • ‒ By Geographic Area: Asia -24,0mln € (-37,6%), Centre & South America -22,1mln € (-45,6%), Europe -7,1mln € (-4,2%), North America -4,2mln € (-1,6%) partially offset by Other Countries +0,3mln € (+14,4%);
  • ‒ By Product line: School & Office -75,1mln € (-19,6%), Industrial -1,1mln € (-7,3%) partially offset by Fine Art, Hobby & Digital +19,1mln € (+13,8%).

Core Business Sales for 2020 include since March 2020 Arches sales for 3,1mln € and for 2019 include Superior sales for 5,4mln €, business sold in October 2019.

5

SALES BY PRODUCT LINE SALES BY GEOGRAPHICAL AREA

Data in millions of euros; for precise data refer to 9M FILA financial report

9M 2020 EBITDA Adjusted (Excluded IFRS 16)

• Adjusted EBITDA of 78,1mln €, -10,1mln € (-11,5%) compared to 9M 2019 Results;
• Adjusted EBITDA variation -10,9mln € (-12,4%), FX effects excluded;
• 9,5mln € of extraordinary costs in 9M 2020 mainly related to Fila Arches acquisition (4,7mln €), COVID-19 pandemic (3,0mln €) and FILA Group reorganization costs (1,5mln €); 7,5mln € of extraordinary costs in 9M 2019 mainly due to reorganization costs;

Adjusted EBITDA for 2020 include since March 2020 Arches Ebitda for 1,5mln € and for 2019 include Superior Ebitda for 1,0 mln €, business sold in October 2019.

ADJUSTED EBITDA BY GEOGRAPHICAL AREA

Data in millions of euros; for precise data refer to 9M FILA financial report

5

9M 2020 Net Income Adjusted (Excluded IFRS 16)

• Adjusted Net Income of 21,5mln €, -35,1% compared to 9M 2019. Results mainly affected by higher financial costs related to negative FX effect;
• The adjustment of the Group Result in 9M 2020 for 6,8mln € mainly refers to extraordinary operating costs for Arches acquisition and COVID-19 pandemic, net of taxes effects;
• The adjustment of the Group Result in 9M 2019 for 6,0mln € mainly refers to group reorganization costs, net of taxes effects.

9M 2020 Net Financial Position

79,4
(549,6)
(470,3)
7,0
0,1
(20,8)
(483,9)
(85,1)
(569,0)

• Net Bank Debt decrease of 23,0mln € in the last twelve months, notwithstanding the cash out for Arches acquisition of 43,6mln € and related consultancy fees and other closing expenses for 4,2mln € => Net Bank Debt decrease in last twelve months of 70,8mln € excluding Arches Acquisition cash out, but including positive fx effect of approx. 22,5mln €;

• 9M 2020 Net Financial Position increase of 70,8mln € compared to FY2019, below the main variations:
  • M&A Arches acquisition price for 43,6mln €;
  • Free Cash Flow to Equity negative for 30,7mln € (26,5mln € excluding consultancy fees and other closing expenses for 4,2mln €).

9M 2020 Cash Flow Statement

(€ million)	9M 2019A	9M 2020A
CASH FLOW
EBIT	57,7	43,7
Adjustments for non monetary costs	25,3	25,6
Adjustments for taxes	(8,6)	(5,5)
6 Cash-flow from operating activities before changes in NWC S 1	74,4	63,8
Changes in net working capital R F	(62,0)	(73,8)
I Operating cash-flow D	12,4	(10,0)
DE Investments in tangible and intagible assets	(14,1)	(7,5)
U Free Cash Flow CL	(1,6)	(17,5)
X Net financial expenses E	(17,7)	(16,0)
Other changes	(3,4)	(2,4)
IFRS 16 Impact	5,2	5,2
Free Cash Flow to Equity	(17,5)	(30,7)*
Capital increase/reimbursement/dividends	(4,3)	(0,3)
Adjustment mark to market hedging	(13,6)	(7,6)
Effect of FX rate movements	(14,6)	17,6
IFRS 16 Net Financial Position	(78,2)	(6,3)
M&A - Acquisition: 2019 Minority acquisition - 2020 Arches	(2,8)	(43,6)
Changes in Net Financial Position	(131,0)	(70,8)

*Including cash out of 4,2mln € for consultancy fees and other closing expenses related to Arches acquisition.

Appendix

9M 2020 Income Statement Reported

E-MARKET SDIR
CERTIFIED

(€ million)	9M 2019A	% on Sales	9M 2020A	% on Sales
PROFIT & LOSS
Core Business Sales	535,9		471,1
Other revenues	5,5		6,8
Total revenues	541,4		477,9
Cost for Raw Materials and Supplies net Increase(decrease) inventory	(248,3)	(46,3%)	(215,8)	(45,8%)
Costs for Services and Use of Third-Party Assets	(91,2)	(17,0%)	(79,4)	(16,9%)
Personnel Costs	(106,2)	(19,8%)	(98,2)	(20,8%)
Other Operating Costs	(5,5)	(1,0%)	(6,0)	(1,3%)
Total operating costs	(451,2)	(84,2%)	(399,4)	(84,8%)
EBITDA	90,2	16,8%	78,5	16,7%
Depreciation and Amortization	(29,8)	(5,6%)	(31,4)	(6,7%)
Write-Downs	(1,0)	(0,2%)	(1,5)	(0,3%)
EBIT	59,5	11,1%	45,6	9,7%
Financial income/expenses	(21,2)	(4,0%)	(27,7)	(5,9%)
Income/expenses from associates at equity method	0,1	0,0%	(0,0)	(0,0%)
PBT	38,4	7,2%	17,8	3,8%
Taxes	(11,9)	(2,2%)	(5,5)	(1,2%)
Total net profit (loss) of the period	26,5	4,9%	12,3	2,6%
Total net profit (loss) attributable to non controlling interests	1,3	0,2%	(0,5)	(0,1%)
Fila Group's total net profit (loss) of the period	25,2	4,7%	12,8	2,7%

9M 2020 Income Statement Adjusted

(€ million)	9M 2019A	% on Sales	9M 2020A	% on Sales
P&L ADJUSTMENTS
REPORTED CORE BUSINESS SALES	535,9		471,1
Total Adjustments			0,2
ADJUSTED CORE BUSINESS SALES	535,9		471,3
REPORTED EBITDA	90,2	16,8%	78,5	16,7%
IFRS 16 Impact	(9,6)		(9,9)
Total Adjustments	7,5		9,5
ADJUSTED EBITDA EXCLUDED IFRS 16	88,2	16,5%	78,1	16,6%
REPORTED FILA GROUP NET PROFIT	25,2	4,7%	12,8	2,7%
IFRS 16 Impact	1,9		1,9
Total Adjustments	6,0		6,8
ADJUSTED FILA GROUP NET PROFIT EXCLUDED IFRS 16	33,1	6,2%	21,5	4,6%

9M 2020 Balance Sheet Reported

(€ million) 2019A 9M 2020A BALANCE SHEET Intangible assets 430,6 449,6 Tangible Assets 186,0 175,2 Financial Fixed Assets 3,7 3,5 Fixed Assets 620,3 628,2 Other Non Current Assets/Liabilities 18,3 19,4 Trade Working Capital 291,1 341,6 Other Current Assets and Liabilities 3,8 1,3 Net Working Capital 294,9 343,0 Provisions & Funds (78,0) (80,1) NET CAPITAL EMPLOYED 855,5 910,5 Shareholders equity (357,3) (341,5) Net Financial Position (498,2) (569,0) TOTAL NET SOURCES (855,5) (910,5)

FILA Shareholders

Total shares * Ordinary shares only Ordinary 68,1% Shares 84,2% Class B Shares 15,8%

*Total shares 51.040.048 of which : Ordinary shares 42.958.192; Class B shares 8.801.856 (enjoy three votes each in accordance with Article 127 sexies of Legislative Decree No. 58/1998).

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