Fila — Investor Presentation 2020

Aug 5, 2020

H1 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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• H1 2020 Revenue of Euro 307.6 million, -12.3% on the same period of the previous year (Euro 350.7 million in H1 2019), the contraction is due to the spread of COVID-19 and the consequent lockdown;
• Adjusted EBITDA, net of IFRS 16 effects in H1 2020, of Euro 46.2 million, -20.7% on H1 2019 (Euro 58.2 million), due to the COVID-19 impact;
• Adjusted Group Net Profit, net of IFRS 16 effects, in H1 2020 of Euro 9.5 million (Euro 21.9 million in H1 2019), mainly due to lower EBITDA and higher financial expense, exclusively due to currency losses;
• Net Bank Debt decrease of Euro 14.2 million in the last 12 months, notwithstanding the cash out for ARCHES® acquisition of Euro 43.6 million and Euro 4.1 million for related consulting fees and other closing expense => Net Bank Debt decrease in last twelve months of Euro 61.9 million, excluding the total cash out sustained for the acquisition of Arches;
• "Free Cash Flow to Equity" of Euro -60.2 million, including consultancy commissions and other expenses for the acquisition of ARCHES® for Euro 4.1 million (Euro -51 million in H1 2019);
• Net Financial Position at June 30, 2020, including the IFRS 16 effect, of Euro -611.3 million (Euro -498.2 million at December 31, 2019). This increase is mainly due to the acquisition of ARCHES® for Euro 43.6 million, Mark to Market Interest Hedging increase for Euro 10,2 million and business seasonality impact.

H1 2020 Core Business Sales

• Core Business Sales of 307,6mln €, -43,1mln € (-12,3%) compared to H1 2019 Results;

• Organic contraction -40,9mln € (-11,8%), FX and M&A effects excluded, of which:
• ‒ By Geographic Area: Europe -14,8mln € (-13,0%), Asia -14,0mln € (-33,9%), Centre & South America -8,2mln € (-29,3%), North America -4,1mln € (-2,5%), partially offset by Other Countries +0,2mln € (+17,1%);
• ‒ By Product line: School & Office -44,5mln € (-18,0%), Industrial -0,2mln € (-2,6%) partially offset by Fine Art, Hobby & Digital +3,8mln € (+4,2%).
• M&A effects related to Arches acquisition in March 2020 and Superior business sold in October 2019.

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SALES BY PRODUCT LINE SALES BY GEOGRAPHICAL AREA

Data in millions of euros; for precise data refer to 6M FILA financial report

H1 2020 EBITDA Adjusted (Excluded IFRS 16)

• Adjusted EBITDA of 46,2mln €, -12,0mln € (-20,7%) compared to H1 2019 Results;
• Organic variation -13,3mln € (-23,2%), FX and M&A effects excluded;
• 7,7mln € of extraordinary costs in H1 2020 related to Fila Arches acquisition (4,5mln €), COVID-19 pandemic (2,0mln €) and FILA Group reorganization costs (1,2mln €); 4,6mln € of extraordinary costs in H1 2019 mainly due to reorganization costs;
• M&A effects related to Arches acquisition in March 2020 and Superior business sold in October 2019.

ADJUSTED EBITDA BY GEOGRAPHICAL AREA

H1 2020 Net Income Adjusted (Excluded IFRS 16)

• Adjusted Net Income of 9,5mln €, -56,5% compared to H1 2019. Results mainly affected by higher financial costs related to negative FX effect;
• The adjustment of the Group Result in H1 2020 for 5,3mln € mainly refers to extraordinary operating costs for Arches acquisition and COVID-19 pandemic, net of taxes effects;
• The adjustment of the Group Result in H1 2019 for 3,7mln € mainly refers to group reorganization costs, net of taxes effects.

(€ million)	H1 2019A	2019A	H1 2020A
Net Cash and Cash Equivalents	13,2	85,6	67,2
Financial Liabilities	(531,3)	(489,1)	(571,1)
Net Bank Debt	(518,1)	(403,5)	(503,9)
Amortized cost	7,1	5,6	7,6
Financial Receivables	0,8	1,1	0,3
Mark to Market Hedging	(15,8)	(13,6)	(23,8)
NFP excluded IFRS 16	(526,0)	(410,4)	(519,9)
IFRS 16	(76,4)	(87,8)	(91,4)
NFP included IFRS 16	(602,4)	(498,2)	(611,3)

• Net Bank Debt decrease of 14,2mln € in the last twelve months, notwithstanding the cash out for Arches acquisition of 43,6mln € and related consultancy fees and other closing expense for 4,1mln € => Net Bank Debt decrease in last twelve months of 61,9mln € excluding Arches Acquisition cash out.

• H1 2020 Net Financial Position increase of 113,1mln €, below the main variations:

• M&A Arches acquisition price for 43,6mln €;
• Free Cash Flow to Equity negative for 60,2mln € (56,1mln € excluding consultancy fees and other closing expense for 4,1mln €).

H1 2020 Cash Flow Statement

	(€ million)	H1 2019A	H1 2020A
	CASH FLOW
	EBIT	38,8	21,2
6	Adjustments for non monetary costs	15,5	17,5
	Adjustments for taxes	(3,6)	(1,4)
	Cash-flow from operating activities before changes in NWC	50,7	37,3
RS 1 F	Changes in net working capital	(81,7)	(81,6)
I D	Operating cash-flow	(31,0)	(44,3)
DE	Investments in tangible and intagible assets	(8,0)	(6,1)
U CL X E	Free Cash Flow	(39,0)	(50,4)
	Net financial expenses	(13,0)	(10,9)
	Other changes	(2,1)	(2,2)
	IFRS 16 Impact	3,0	3,3
	Free Cash Flow to Equity	(51,0)	(60,2)*
	Capital increase/reimbursement/dividends	(4,3)	(0,3)
	Adjustment mark to market hedging	(10,7)	(10,2)
	Effect of FX rate movements	(3,1)	9,9
	IFRS 16 Net Financial Position	(80,5)	(8,7)
	M&A - Arches acquisition	-	(43,6)
	Changes in Net Financial Position	(149,6)	(113,1)

*Including cash out of 4,1mln € for consultancy fees and other closing expense related to Arches acquisition.

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Appendix

H1 2020 Income Statement Reported

(€ million)	H1 2019A	% on Sales	H1 2020A	% on Sales
PROFIT & LOSS
Core Business Sales	350,7		307,5
Other revenues	3,7		6,0
Total revenues	354,4		313,5	0,0%
Cost for Raw Materials and Supplies net Increase(decrease) inventory	(158,1)	(45,1%)	(142,9)	(46,5%)
Costs for Services and Use of Third-Party Assets	(61,2)	(17,5%)	(53,0)	(17,2%)
Personnel Costs	(71,4)	(20,3%)	(66,9)	(21,8%)
Other Operating Costs	(3,8)	(1,1%)	(5,5)	(1,8%)
Total operating costs	(294,5)	(84,0%)	(268,3)	(87,3%)
EBITDA	59,9	17,1%	45,2	14,7%
Depreciation and Amortization	(19,5)	(5,6%)	(21,6)	(7,0%)
Write-Downs	(0,8)	(0,2%)	(1,3)	(0,4%)
EBIT	39,7	11,3%	22,3	7,3%
Financial income/expenses	(15,3)	(4,4%)	(17,2)	(5,6%)
Income/expenses from associates at equity method	0,1	0,0%	(0,1)	(0,0%)
PBT	24,5	7,0%	5,0	1,6%
Taxes	(6,4)	(1,8%)	(2,9)	(0,9%)
Total net profit (loss) of the period	18,0	5,1%	2,2	0,7%
Total net profit (loss) attributable to non controlling interests	1,1	0,3%	(0,6)	(0,2%)
Fila Group's total net profit (loss) of the period	17,0	4,8%	2,8	0,9%

H1 2020 Income Statement Adjusted

(€ million)	H1 2019A	% on Sales	H1 2020A	% on Sales
P&L ADJUSTMENTS
REPORTED CORE BUSINESS SALES	350,7		307,5
Total Adjustments			0,1
ADJUSTED CORE BUSINESS SALES	350,7		307,6
REPORTED EBITDA	59,9	17,1%	45,2	14,7%
IFRS 16 Impact	(6,3)		(6,7)
Total Adjustments	4,6		7,7
ADJUSTED EBITDA EXCLUDED IFRS 16	58,2	16,6%	46,2	15,0%
REPORTED FILA GROUP NET PROFIT	17,0	4,8%	2,8	0,9%
Total Adjustments	3,7		5,3
ADJUSTED FILA GROUP NET PROFIT	20,7	5,9%	8,1	2,6%
IFRS 16 Impact	(1,2)		(1,4)
ADJUSTED FILA GROUP NET PROFIT EXCLUDED IFRS 16	21,9	6,2%	9,5	3,1%

H1 2020 Balance Sheet Reported

(€ million)	2019A	H1 2020A
BALANCE SHEET
Intangible assets	430,6	463,1
Tangible Assets	186,0	185,2
Financial Fixed Assets	3,7	3,4
Fixed Assets	620,3	651,7
Other Non Current Assets/Liabilities	18,3	19,0
Trade Working Capital	291,1	357,2
Other Current Assets and Liabilities	3,8	1,0
Net Working Capital	294,9	358,2
Provisions & Funds	(78,0)	(82,3)
NET CAPITAL EMPLOYED	855,5	946,7
Shareholders equity	(357,3)	(335,4)
Net Financial Position	(498,2)	(611,3)
TOTAL NET SOURCES	(855,5)	(946,7)

FILA Shareholders

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). Last update June 2020

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