Prima Industrie — Investor Presentation 2016

Mar 21, 2017

Prima Group at a glance

• Founded in 1977, Prima Industrie is a global leader in high technology laser and sheet metal processing systems and electronic components for industrial applications
• Over 12,000 machines installed in more than 80 countries
• 1,664 employees worldwide
• Manufacturing sites in Italy, Finland, USA and China
• Broad direct commercial and after-sales presence in EU, NAFTA, BRIC and other emerging markets.
• 2016 sales were €394 millions, of which 84% outside Italy
• Strong commitment to innovation (R&D is ~6% of turnover)
• Listed on Italian Stock Exchange (STAR segment) since 1999

Prima Group business sectors: Prima Power

LASER MACHINES

SHEET METAL MACHINERY

Prima Group business sectors: Prima Electro

ELECTRONICS

LASER SOURCES

Industrial footprint: 1 plant=1 mission

Sales & service footprint

Direct presence in 25+ countries

• CANADA
• U.S.A.
• MEXICO
• BRAZIL
• CHILE
• ARGENTINA

• COLUMBIA

• ITALY

• FRANCE
• GERMANY
• UK
• SPAIN
• PORTUGAL
• SWITZERLAND
• AUSTRIA
• BELGIUM/ HOLLAND
• POLAND
• CZECH REP.

• HUNGARY

• RUSSIA

• LITHUANIA
• TURKEY
• U.A.E.
• FINLAND
• SWEDEN
• NORWAY
• DENMARK
• ISRAEL
• EGYPT

• S. AFRICA

• INDIA

• CHINA
• S. KOREA
• MALAYSIA
• AUSTRALIA
• NEW ZEALAND
• IRAN
• THAILAND
• VIETNAM
• INDONESIA
• JAPAN

subsidiaries or branch offices

Quarterly order intake since 2011

REVENUE DRIVERS

• Machine Tool market expected growth (Oxford Economics) – cagr 2016-2020: 3.5%
• Laser market expected growth (Optech Consulting) – cagr 2016- 2020: 7.6%
• Success of newly released products
• Strengthening of market coverage in China

• New HQTC (Headquarters &Tech Center) boosting order intake

• Higher volumes = Operational leverage

• Progressive increase in fiber laser in sourcing
• Diode Fab success in diodes development

Economic trends

Net financial position trend

0,94

2008 2009 2010 2011 2012 2013 2014 2015 2016 2019*

0,76

0,78

0,61

0,00

0,50

1,00

2017			2018			2019
	B. IMI	B. Akros	Consensus	B. IMI		B. Akros Consensus	B. IMI		B. Akros Consensus
tp	23,5	20,0		23,5	20,0		23,5	20,0
REVENUES	432,0	427,4	429,7	470	454,3	462,2	500	480,2	490,1
EBITDA	43,0	43,0	43,0	53,1	51,1	52,1	60	56,8	58,4
EBIT	27,5	27,5	27,5	37,1	35,9	36,5	44	41,7	42,9
NET RESULT	15,5	14,3	14,9	20,6	19,9	20,3	25,3	24,5	24,9
NFP	-79,8	-86,7	-83,3	-64,1	-85,3	-74,7	-44,9	-76,2	-60,6

CAGR 2017-2019 consensus: 6.8%

Released March 8, 2017

Released February 28, 2017

Machine revenues by application

Revenues by geography

Revenues by technology

Always at the cutting edge of technology

Always at the cutting edge of technology

A selection from our 2,000 customers ww

A selection from our 2,000 customers ww

Market trends: machine tool market – by Oxford Economics (update Autumn 2016)

CAGR 2016 -2020: 3.5%

Market trends: laser systems market – by Optech Consulting (January 2014)

Global market and forecast for high power laser systems

	Global market (€/mio)	CAGR (%)
2013	2016		2013-2016	2016-2020
3,707	4,682	6,282	8.1	7.6

• ‣ ~6% OF REVENUES INVESTED IN R&D
• ‣RANKED BY EU IN THE TOP 500 KNOWLEDGE-BASED COMPANIES IN THE CONTINENT
• ‣LONG HISTORY OF INNOVATION, 1ST LASER MACHINE FOR AUTOMOTIVE APPLICATION IN 1979
• ‣PIONEERS IN SERVO-ELECTRIC PUNCHING AND BENDING SYSTEMS- EFFICIENCY AND SUSTAINABILITY
• ‣ABOUT 15% OF GROUP STAFF EMPLOYED IN R&D
• ‣PRODUCT RANGE ALWAYS AT THE CUTTING EDGE OF TECHNOLOGY

Prima Power Solutions for Industry 4.0 and Smart Manufacturing

INTELLIGENT MACHINES & FACTORIES SMART SOFTWARE REMOTE DIAGNOSTICS &

Intelligent machines and automated factories collecting real-time and historical data through sensors and cameras

Prima Power software comprehensive portfolio of modular software-based systems

MAINTENANCE

Data-driven machine diagnostics and predictive maintenance services. Production performance analysis, monitoring of machines status and condition.

Innovation

Competence Center on Laser Based Manufacturing

Industry 4.0 European machine tool builder

• Showroom with training rooms, conference rooms and hospitality area for customers
• Permanent expo of entire product range

• Built with green technologies: photovoltaic and solar panels, geothermal wells, home automation systems

• Training and awareness on Industry 4.0

• Live demo on new technologies and best practices for Industry 4.0
• Accelerator of new innovative projects

Financial statements as at Dec. 31, 2016: Balance sheet

CONSOLIDATED BALANCE SHEET

Values in Euro	31/12/2016	31/12/2015	Values in Euro	30/09/2016	31/12/2015
Property, plant and equipment	35.281.369	28.465.557	Property, plant and equipment Capital stock	34.578.130 26.208.185	28.465.557 26.208.185
Intangible assets	155.713.399	157.770.974	Intangible assets Legal reserve	156.804.302 4.565.082	157.770.974 4.494.745
Investments accounted for using the equity method	1.009.341	1.223.555	Investments accounted for using the equity method Other reserves	1.163.429 70.738.752	1.223.555 72.243.694
Other investments	139.051	121.358	Other investments Currency translation reserve	121.358 6.848.598	121.358 5.965.409
Non current financial assets	9.578	35.000	Non current financial assets Retained earnings	35.000 19.276.926	35.000 14.786.376
Deferred tax assets	11.555.324	9.845.765	Deferred tax assets Net result	11.350.721 10.102.304	9.845.765 6.016.715
Other non current assets	-	19.703	Other non current assets Stockholders' equity of the Group	- 137.739.847	19.703 129.715.124
NON CURRENT ASSETS	203.708.062	197.481.912	NON CURRENT ASSETS Minority interest	204.052.940 1.212.065	197.481.912 1.196.407
Inventories	98.561.165	93.992.707	Inventories STOCKHOLDERS' EQUITY	108.252.017 138.951.912	93.992.707 130.911.531
Trade receivables	88.376.748	86.413.895	Trade receivables Interest-bearing loans and borrowings	90.571.054 111.675.762	86.413.895 117.805.350
Other receivables	6.425.617	8.019.131	Other receivables Employee benefit liabilities	9.343.981 8.100.353	8.019.131 7.912.782
Current tax receivables	5.053.888	7.029.222	Current tax receivables Deferred tax liabilities Derivatives	4.543.075 8.340.653 55.415	7.029.222 10.518.305 47.225
Derivatives	-	47.225	Provisions Financial assets	162.684 791.509	150.551 791.509
Financial assets	791.509	791.509	Derivatives Cash and cash equivalents	220.866 28.331.645	414.635 41.365.408
Cash and cash equivalents	62.679.901	41.365.408	NON CURRENT LIABILITIES CURRENT ASSETS	128.500.318 241.888.696	136.801.623 237.659.097
CURRENT ASSETS	261.888.828	237.659.097	Trade payables Assets held for sale	88.448.383 284.000	78.323.460 284.000
Assets held for sale	318.812	284.000	Advance payments TOTAL ASSETS	26.029.170 446.225.636	21.385.159 435.425.009
TOTAL ASSETS	465.915.702	435.425.009	Other payables Capital stock	22.076.067 26.208.185	19.218.309 26.208.185
			Interest-bearing loans and borrowings Legal reserve	34.894.444 4.565.082	25.700.281 4.494.745
			Current tax payables Other reserves	7.695.264 70.959.273	7.257.725 72.243.694

Currency translation reserve 4.475.919 5.965.409 Retained earnings 19.396.357 14.786.376 Net result 5.584.130 6.016.715 Stockholders' equity of the Group 131.188.946 129.715.124

Provisions 18.424.370 15.796.491 Derivatives 895.774 30.430 CURRENT LIABILITIES 198.463.472 167.711.855 TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES 465.915.702 435.425.009

Financial statements as at Dec. 31, 2016: P & L

Values in Euro	31/12/2016	31/12/2015
Net revenues	393.885.774	364.465.523
Other income	4.217.630	4.773.331
Change in inventories of finished goods and WIP	(1.295.770)	9.667.276
Increases in fixed assets for internal work	10.450.001	11.751.310
Use of raw materials, consumables, supplies and goods	(179.095.944)	(173.263.011)
Personnel cost	(102.699.067)	(100.223.151)
Depreciation	(15.853.684)	(13.507.132)
Impairment - Write-off	(1.027.682)	(407.924)
Other operating expenses	(90.053.657)	(85.769.211)
OPERATING PROFIT	18.527.601	17.487.011
of which: non recurring items	(1.752.995) -	(1.017.205)
Financial income	626.831	693.514
Financial expenses	(8.507.194)	(9.472.762)
Net exchange differences	(349.409)	(531.702)
Net result of investments accounted for using the equity method	1.057.207	-
Net result of other investments	(7.729)	(44.300)
RESULT BEFORE TAXES	11.347.307	8.131.761
of which: non recurring items	(703.517) -	(3.425.832)
Taxes	(1.187.184)	(2.525.917)
NET RESULT	10.160.123	5.605.844
- Attributable to Group shareholders	10.102.304	6.016.715
- Attributable to minority shareholders	57.819	(410.871)
RESULT PER SHARE - BASIC (in euro)	0,96	0,57
RESULT PER SHARE - DILUTED (in euro)	0,96	0,57

Financial statements as at Dec. 31, 2016: P & L by destination

Values in €/mil	ACT 31.12.16
Sales of machines/products	302,12
Sales of spare parts	55,82
Sales of services	35,95
Gross sales	393,89
Selling expenses	(11,43)
Net sales	382,46
COGS	(286,66)
Gross margin - statutory	95,80
Gross margin - statutory %	24,3%
R&D	(10,76)
Sales & Marketing	(27,93)
G&A and Management	(21,70)
EBITDA	35,41
EBITDA %	9,0%
Depreciation & Amortization	(16,88)
EBIT	18,53
EBIT %	4,7%
Net Financial Result of Investments	1,05
Financial income	0,63
Financial expenses	(8,51)
Net Exchange Differences	(0,35)
EBT	11,35
Taxes	(1,19)
Net Result	10,16
- Attributable to Group shareholders	10,10
- Attributable to minority shareholders	0,06

As from 1/1/2017 the Company will report P&L figures with a view by destination .

Financial statements as at Dec. 31, 2016: Cash Flow Cash Flows from (used in) operating activities (A) 40.046.125 3.846.245 Cash flow from investments Acquisition of tangible fixed assets (*) (3.176.344) (4.403.766)

Devaluation of other investments 7.729 50.000

VALUES IN EURO	31/12/2016	31/12/2015 (**)	Purchase/Capital increases in Other investments VALUES IN EURO Cash Flows from (used in) investing activities (B)	(25.422) 31/12/2016 (12.465.371)	- 31/12/2015 (**) (16.356.657)
Net result	10.160.123	5.605.844	Net result Cash flow from financing activities	10.160.123	5.605.844
			Change in other financial assets/liabilities and other minor items	651.232	(3.127.350)
Adjustments (sub-total)	29.886.002	(1.759.599)	Adjustments (sub-total) Increases in loans and borrowings (including bank overdrafts)	29.886.002 11.514.175	(1.759.599) 138.290.097
Depreciation, impairment & write-off	16.881.366	13.915.056	Depreciation, impairment & write-off Repayment of loans and borrowings (including bank overdrafts)	16.881.366 (16.203.858)	13.915.056 (120.076.216)
Gain from sales of shares in investments accounted for using the equity method	(1.057.207)	-	Gain from sales of shares in investments accounted for using the equity method Repayments in financial lease liabilities	(1.057.207) (170.909)	- (447.874)
Net change in deferred tax assets and liabilities	(3.887.211)	(192.229)	Net change in deferred tax assets and liabilities Dividends paid	(3.887.211) (2.620.818)	(192.229) (2.096.655)
Change in employee benefits	187.571	(769.590)	Change in employee benefits Change in currency translation reserve	187.571 883.189	(769.590) 4.325.559
Change in inventories	(4.568.458)	(16.488.757)	Change in inventories Other variations	(4.568.458) (277.111)	(16.488.757) 684.827
Change in trade receivables	(1.962.853)	(749.988)	Change in trade receivables Cash Flows from (used in) financing activities (C)	(1.962.853) (6.224.100)	(749.988) 17.552.388
Change in trade payables and advances	14.768.934	5.181.126	Change in trade payables and advances Cash Flows from (used in) change of minority shareholders (D)	14.768.934 (42.161)	5.181.126 456.924
Net change in other receivables/payables and other assets/liabilities	9.523.860	(2.655.217)	Net change in other receivables/payables and other assets/liabilities Net change in cash and equivalents (E=A+B+C+D) Cash Flows from (used in) operating activities (A)	9.523.860 21.314.493 40.046.125	(2.655.217) 5.498.900 3.846.245
Cash Flows from (used in) operating activities (A)	40.046.125	3.846.245	Cash and equivalents beginning of period (F) Cash flow from investments	41.365.408	35.866.508
Cash flow from investments			Cash and equivalents end of period (G=E+F) Acquisition of tangible fixed assets (*)	62.679.901 (3.176.344)	41.365.408 (4.403.766)
Acquisition of tangible fixed assets (*)	(3.176.344)	(4.403.766)	(*) not included the acquisition of real estate assets by means of a financial lease and included assets held for sale Acquisition of intangible fixed assets	(904.090)	(1.334.088)
Acquisition of intangible fixed assets	(904.090)	(1.334.088)	(**) for a better comprehension, the 2015 figures have been re-exposed Capitalization of development costs	(9.710.945)	(10.337.511)
Capitalization of development costs	(9.710.945)	(10.337.511)	Net disposal of fixed assets	72.280	133.191
Net disposal of fixed assets	72.280	133.191	Devaluation of other investments	7.729	50.000
Devaluation of other investments	7.729	50.000	Sale/Purchase of shares in investments accounted for using the equity method	1.271.421	(464.483)
Sale/Purchase of shares in investments accounted for using the equity method	1.271.421	(464.483)	Purchase/Capital increases in Other investments	(25.422)	-
Purchase/Capital increases in Other investments	(25.422)	-	Cash Flows from (used in) investing activities (B)	(12.465.371)	(16.356.657)
Cash Flows from (used in) investing activities (B)	(12.465.371)	(16.356.657)	Cash flow from financing activities

Financial statements as at Dec. 31, 2016: Net financial position

	Net financial Position	31/12/16	31/12/15	change
A	CASH ON HAND	62.680	41.365	21.315
B	CURRENT FINANCIAL RECEIVABLES	792	839	(47)
C	CURRENT BANK PAYABLES	5.454	9.222	(3.768)
D	CURRENT PART OF NON-CURRENT INDEBTNESS	24.993	14.328	10.665
E	BONDS ISSUED	871	869	2
F	OTHER CURRENT FINANCIAL PAYABLES	4.472	1.312	3.160
G	CURRENT FINANCIAL INDEBTNESS (C+D+E+F)	35.790	25.731	10.059
H	NET CURRENT FINANCIAL INDEBTNESS (G-A-B)	(27.682)	(16.473)	(11.209)
I	NON-CURRENT BANK PAYABLES	59.195	74.077	(14.882)
J	BONDS ISSUED	39.660	39.591	69
K	OTHER NON-CURRENT FINANCIAL PAYABLES	13.042	4.552	8.490
L	NON-CURRENT FINANCIAL INDEBTNESS (I+J+K)	111.897	118.220	(6.323)
M	NET FINANCIAL POSITION (H+L)	84.215	101.747	(17.532)

Source: latest dividend payment (May 2016)