Fila — Investor Presentation 2019

Mar 25, 2020

FY2019 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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FY2019 Highlights

FILA FY2019: PERSISTING REVENUE GROWTH IN INDIA AND CENTRAL-SOUTH AMERICA; NORTH AMERICA SALES MAINLY AFFECTED BY LONG WAVE POOR SERVICE AND MAIN CUSTOMER DESTOCKING EFFECT. INCREASE IN NET PROFIT (+56,2%) AND IN OPERATING CASH-FLOW (+50,3MLN €) COMPARED TO FY2018 RESULTS, SAFE BASE TO MANAGE COVID-19 OUTBREAK EFFECTS

•FY 2019 Core Business Revenues of 687,4mln €, +16,7% compared to FY2018 Results and +1,3% compared to FY2018 Proforma Results (including full 12 months of Pacon Group Core Business Sales).

•Proforma Sales growth in Asia (+21,3%), particularly in India, and Central-South America (+2,8%), partially compensated by the decrease in North America (-5,9%) and in Europe (-2,1%).

•Adjusted EBITDA of 110,8mln €, +15,6% compared to FY2018 Results, and +0,4% compared to FY2018 Proforma Results (including full 12 months of Pacon Group EBITDA). Adjustments are related to 13,0mln € of extraordinary income (IFRS 16 first time adoption) partially offset by 17,9mln € of extraordinary costs, mainly related to reorganization costs;

•Adjusted Net Profit of 43,1mln €, +56,4% compared to FY2018 Results.

•Net Bank Debt decrease of 52,6mln € (403,5mln € as at December 31, 2019 compared 456,1mln € as at December 31, 2018). Operating Cash flow is positive for 100,9mln € (+50,3mln € compared to FY2018 results). Free cash Flow to Equity 57,9mln € (+56,4mln € compared to FY2018 results)

•Net Financial Position at -498,2mln € as at December 31, 2019 (including negative variations of -87,8mln € for IFRS 16 first time adoption and of -8,5mln € for negative Mark to Market Interest Hedging increase) compared to FY2018 Net Financial Position of 452,8mln €.

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FY2019 Core Business Sales

• Core Business Sales of 687,4mln €, +16,7% compared to FY2018 Results;

• Core Business Sales compared to FY2018 Proforma values: +8,8mln € (+1,3%) and -7,2mln € (-1,1%), net of FX and M&A, of which:
• ‒ By Geographic Area: North America -19,0mln € (-5,9%), Europe -4,5mln € (-2,1%), Other Countries -0,8mln € (-20,4%) partially offset by Asia +15,2mln € (+21,3%), Centre & South America +1,9mln € (+2,8%).
• ‒ By Product line: Fine Art, Hobby & Digital -13,0mln € (-6,6%), partially offset by Industrial +1,2mln € (+6,7%), School & Office +4,6mln € (+1,0%);
• 4,7mln € adjustment due to extraordinary customer claims for Dixon Ticonderoga Company (US);
• 89,9mln € for Pacon Group Core Business Sales of 6M 2018 (Proforma adjustment).

SALES BY PRODUCT LINE SALES BY GEOGRAPHICAL AREA

Data in millions of euros for precise data refer to 12M FILA financial report

FY2019 EBITDA

ADJUSTED EBITDA

• Adjusted EBITDA compared to FY2018 Proforma values: +0,5mln € (+0,4%) and -1,9mln €, (-1,7%), net of FX and M&A effect;
• 13,0mln € of extraordinary income in 12M 2019, related to IFRS 16 first time adoption offset by 17,9mln € of extraordinary costs in 12M 2019, mainly related to the reorganization costs;
• 22,3mln € of extraordinary costs in FY2018, mainly related to the Pacon Group acquisition and reorganization costs;
• 14,5mln € for Pacon Group EBITDA of 6M 2018 (proforma adjustment).

ADJUSTED EBITDA BREAKDOWN BY GEOGRAPHICAL AREA

FY2019 Net Income

ADJUSTED NET INCOME

• Adjusted Net Profit of 43,1mln €, +56,4% compared to FY2018 Results;
• The adjustment of the Group Result in FY2019 refers to extraordinary operating costs for reorganization and IFRS 16 first time adoption, net of taxes effects;
• The adjustment of the Group Result FY2018 refers to extraordinary operating costs net of taxes effects.

FY2019 Net Financial Position

NET FINANCIAL POSITION

	2018A	2019A
Cash and Cash Equivalents	146,8	85,6
Financial Liabilities	(602,9)	(489,1)
Net Bank Debt	(456,1)	(403,5)
Amortized cost	7,6	5,6
Financial Receivables	0,8	1,1
Financial Instruments	(5,1)	(13,6)
Net Financial Position w/o IFRS 16	(452,8)	(410,4)
IFRS 16	-	(87,8)
Net Financial Position with IFRS 16	(452,8)	(498,2)

Net Financial Position increase of 45,4mln € mainly due to IFRS 16 adoption.

Below main variations:

• Extraordinary negative effect of 84,6mln € of which:
  • Negative effect of 87,8mln € refers to IFRS 16 adoption
  • Net positive effect of 3,2mln € refers to the following extraordinary operations: Superior business sold (+8,9mln €), Ferrario brand and Arches inventory purchase (-2,9mln €), Participation increase for minority acquisition (-2,8mln €);
• Operating CF positive for 100,9mln € (Cash out for extraordinary expenses: 13,9mln €);
• Net financial expenses for 23,8mln €;
• Capex for 19,0mln €;
• Dividends paid for 4,3mln €;
• Negative Mark to Market Hedging of 8,5mln €;
• Negative FX effect of 6,0mln €.

Appendix

FY2019 Income Statement

(€ million)	2018A	% on Sales	2019A	% on Sales
PROFIT & LOSS
Core Business Sales	588,7		682,7
Other revenues	8,6		6,8
Total revenues	597,4		689,4	-
Cost for Raw Materials and Supplies net Increase(decrease) inventory	(268,7)	(45,6%)	(317,9)	(46,6%)
Costs for Services and Use of Third-Party Assets	(125,5)	(21,3%)	(116,1)	(17,0%)
Personnel Costs	(120,4)	(20,5%)	(142,4)	(20,9%)
Other Operating Costs	(9,2)	(1,6%)	(7,2)	(1,1%)
Total operating costs	(523,8)	(89,0%)	(583,6)	(85,5%)
EBITDA	73,5	12,5%	105,9	15,5%
Depreciation and Amortization	(23,5)	(4,0%)	(41,0)	(6,0%)
Write-Downs	(0,9)	(0,2%)	(4,9)	(0,7%)
EBIT	49,0	8,3%	60,0	8,8%
Financial income/expenses	(26,4)	(4,5%)	(30,5)	(4,5%)
Income/expenses from associates at equity method	0,0	0,0%	0,19	0,0%
PBT	22,6	3,8%	29,8	4,4%
Taxes	(12,1)	(2,1%)	(3,7)	(0,5%)
Net profit (loss) of continuing operating activities	10,5	1,8%	26,1	3,8%
Net profit (loss) of discontinued operating activities	-	0,0%	-	0,0%
Total net profit (loss) of the period	10,5	1,8%	26,1	3,8%
Total net profit (loss) attributable to non controlling interests	1,8	0,3%	2,2	0,3%
Fila Group's total net profit (loss) of the period	8,7	1,5%	24,0	3,5%
(€ million)	2018A	% on Sales	2019A	% on Sales
P&L ADJUSTMENTS
REPORTED CORE BUSINESS SALES	588,7		682,7
Total Adjustments			4,7
ADJUSTED CORE BUSINESS SALES	588,7		687,4
REPORTED EBITDA	73,5	12,5%	105,9	15,5%
Total Adjustments	22,3		4,9
ADJUSTED EBITDA	95,8	16,3%	110,8	16,1%
FILA GROUP REPORTED NET PROFIT	8,7	1,5%	24,0	3,5%
Total Adjustments	18,9		19,1
FILA GROUP ADJUSTED NET PROFIT	27,6	4,7%	43,1	6,3%

FY2019 Balance Sheet

(€ million)	2018A	2019A
BALANCE SHEET
Intangible assets	442,6	430,6
Tangible Assets	104,5	186,0
Financial Fixed Assets	3,6	3,7
Fixed Assets	550,0	620,3
Other Non Current Assets/Liabilities	20,8	18,3
Inventory	262,4	258,4
Trade Receivables and Other receivables	151,6	141,3
Trade Payables and Other Payables	(105,5)	(108,7)
Trade Working Capital	308,5	291,1
Other Current Assets and Liabilities	2,1	3,8
Net Working Capital	310,6	294,9
Provisions & Funds	(90,5)	(78,0)
NET CAPITAL EMPLOYED	791,6	855,5
Shareholders equity	(338,8)	(357,3)
Net Financial Position	(452,8)	(498,2)
TOTAL NET SOURCES	(791,6)	(855,5)

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FY2019 Cash Flow Statement

(€ million)	2018A	2019A
CASH FLOW
EBIT	49,0	60,0
Adjustments for non monetary costs	30,0	38,2
Adjustments for taxes	(16,9)	(12,7)
Cash-flow from operating activities before changes in NWC	62,2	85,6
Changes in net working capital	(11,6)	15,3
Operating cash-flow	50,6	100,9
Investments in tangible and intagible assets	(23,4)	(19,0)
Other changes	(0,6)	(0,2)
Free Cash Flow	26,6	81,7*
Net financial expenses	(25,2)	(23,8)
Free Cash Flow to Equity	1,5	57,9
Capital increase/reimbursement/dividends	97,7	(4,3)
Adjustment mark to market hedging	(6,1)	(8,5)
Participation acquisition and disposal	(215,0)	(2,8)
Effect of FX rate movements	(4,5)	(6,0)
Adoption IFRS 16	-	(87,8)
NFP from M&A operations	(86,7)	6,0
Changes in Net Financial Position	(213,2)	(45,4)

*Cash out for extraordinary expenses: 13,9mln €.

Total shares * Ordinary shares only

Pencil 31,9% Market investor 68,1%

*Total shares 50.948.796 of which : Ordinary shares 42.866.940; Class B shares 8.801.856 (enjoy three votes each in accordance with Article 127 sexies of Legislative Decree No. 58/1998). Last update August 2019

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

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