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Sabaf

Environmental & Social Information Jul 1, 2020

4440_sr_2020-07-01_9313fbe8-724f-4693-b261-bc24f8dd0cc9.pdf

Environmental & Social Information

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ITALIAN SUSTAINABILITY WEEK Borsa Italiana

Table of contents

  • I. A SUSTAINABLE BUSINESS
  • II. ESG PERFORMANCE
  • II. BUSINESS PLAN 2018 2022, MOST RECENT FIGURES AND CURRENT OUTLOOK

SABAF: A SUSTAINABLE BUSINESS

Sabaf: a sustainable business Values and vision

Sabaf: a sustainable business Business Model

«Consolidate the technological and market leadership in the design, production and distribution of a wide range of components for household appliances through constant attention to innovation, safety and the enhancement of internal expertise.

Associate business growth with social and environmental sustainability, promoting an open dialogue with the legitimate expectations of stakeholders»

STRATEGIC PILLARS
Innovation
Eco-efficiency
Safety
Partnerships with multinational
groups
Widening
the range of components
through
acquistions
Enhancement
of intangible
assets and
intellectual
capital

Sabaf Group Timeline and history

Sabaf Group Business diversification in three divisions

Sabaf Group Product range

  • Standards Burners
  • Special Burners
  • Professional Burners
  • Oven and Grill Burners
  • Gas Valves
  • Gas Oven Thermostats
  • Micro switches & Accessories

  • Ovens

  • Dishwashers
  • Special applications
  • Small compartments
  • Catering appliance

GAS HINGES ELECTRONIC COMPONENTS

  • Cooker Hoods
  • Ovens
  • Cookers
  • Air Curtain
  • Refrigerators/freezer
  • Other products

Sabaf Group Industrial footprint

Total Group employees at 31 March 2020:

Sabaf Group Market

Global leader

  • in the segment of components for domestic gas cooking appliances, with over 400 customers in 55 different countries. A strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%
  • in the segment of hinges with estimated market share worldwide of about 35%

Weight of top 10 customers on total Group sales is 47% (45% in 2018)

Each top 10 customer represents less than 8% of total Group sales

Long-term agreements and strong relationships with all the main players in the household appliances business, based on mutual trust, technical cooperation, co-engineering and tailor-made products

Sabaf Group R&D and Process Technology

Product Innovation: about 90 active patents

Know-how:

  • ➢ Mechanic: forefront process technology - internal development of special machinery, high performance molds for robotic die-casting, high speed and high precision tools not available on the market
  • ➢ Electronic: strong skills in new product development

Cost and quality leadership: highly automated plants and low incidence of direct labor, € 61 mn investments (8.8% of sales) in the past 5 years, to reinforce competitiveness and to ensure the highest quality standards

Strong operational leverage: great flexibility in production volumes growth, ready to satisfy customers requests

Intellectual capital: highly specialized and qualified staff (40+ R&D engineers)

ESG PERFORMANCE

ESG Performance COVID 19 - Sabaf Group Apprach

ESG Performance Reporting

PIONEER IN SUSTAINABILITY REPORTING

SINCE 2000 SOCIAL REPORTING

Socially responsible mangement for sustainable development

SINCE 2005 INTEGRATED REPORTING (Triple bottom line) 15TH EDITION (2019) INTEGRATED ANNUAL REPORT

ESG Performance Generated and distributed economic value

(thousand
of
Euro)
2019 2018 Change
ECONOMIC VALUE GENERATED BY THE GROUP 160.095 160.054 41
Revenue
Other income
155.923
3.556
150.642
3.298
5.281
258
Financial income 638 373 265
Value adjustment 1.859 1.600 259
Bad debt provision (509) (421) (88)
Exchange rate differences (1.379) 5.384 (6.763)
Income/expenses from sale of PPE and intangible assets 46 28 18
Value adjustments to PPE and intangible assets - (850) 850
Profit/losses from equity investments (39) - (39)
ECONOMIC VALUE DISTRIBUTED BY THE GROUP 140.762 137.515 3.247
Remuneration of suppliers 96.626 90.219 6.407
Remuneration of employees 37.103 34.840 2.263
Remuneration of lenders 1.339 1.206 133
Remuneration of shareholders 6.060 6.071 (11)

ESG Performance Environment - risks, objectives and actions

  • Full compliance with law requirements
  • Training and information system

ESG Performance Environment - most important innovations

17

*Estimation based on volumes manufactured by Sabaf

ESG Performance Environment - most important innovations

ESG Performance Environment - materials

Materials used and recyclability

Materials used (tons) 2019 2018 2017
Brass 481 789 540
Aluminium alloys 6,476 7,831 8,070
Zamak 11 33 91
Raw materials Steel 21,881 7,861 7,631
Cast iron 142 137 39
Enamel 193 189 189
Bronze 1 - -
Cardboard 397 454 482
Packaging Materials Plastic 136 140 143
Wood 479 503 521

80% of brass and 50% of aluminium alloys are produced by scrap recycling

Increase in steel consumption is due to the inclusion in the scope of consolidation of C.M.I.

70% of cardboard and 100% of plastic come from recycling

ESG Performance Environment – energy

Energy sources

2019 2018 2017
Electricity from non-renewable sources (MWh) 28,526 30,225 30,841
YoY change $-6%$ $-2%$
Electricity from renewable sources (MWh) 50
Natural gas (m3 x 1000) 3,740 3,918 4,059
YoY change $-5%$ $-3%$
Diesel oil $(1 \times 1000)$ 51 21 5.5
Petrol (1 x 1000) 10
LPG (1 x 1000) 0.09
TOTAL CONSUMPTION (GJ) 238,887 249,866 272,329
TOTAL CONSUMPTION (MWh) 66,411 69,463 75,707
YoY change $-4%$ $-8%$

Energy intensity

Energy Intensity 2019 2018 2017
KWh on € of turnover 0.426 0.460 0.489
YoY change -7% -6%

ESG Performance Environment - water and emissions

Water

Water consumption (m3
)
2019 2018 2017
from municipal water supply 56,409 110,655 81,472
of which freshwater 56,409 110,655 81,472
of which other water - - -
from well 35,516 29,185 31,329
of which freshwater 35,516 29,185 31,329
of which other water - - -
TOTAL 91,925 139,840 112,801
YoY change -34% +24%

No industrial waste water

Water used in production processes at Ospitaletto is treated in concentration plants (also started up in Sabaf Brasil)

The improvement of the cooling system at Sabaf Turkey contributed to the reduction in water consumption

At Ospitaletto factory, there is a plant for the collection of rainwater for use in industrial activities

Emissions

CO
Emissions (tons)
2
2019 2018 2017
Scope 1 Direct emissions from refrigerant gases tCO
eq
2
59 - -
Scope 1 Direct emissions from fuel consumption tCO
2
7,734 8,022 8,508
Total direct emissions tCO
eq
2
7,793 8,022 8,508
Scope 2 Indirect emissions (location based) tCO
2
9,979 10,498 11,570
Scope 2 Indirect emissions (market based) tCO
2
12,484 13,133 n.a.
Total emissions (location based) tCO
eq
2
17,772 18,520 20,078
YoY change -4% -8%

ESG Performance Employees - risks, objectives and actions

  • Respect of human rights
  • Create a group of motivated people
  • Produce profits respecting rights of workers
  • Safer and comfortable workplaces
  • Avoid discrimination and favouritism
  • Value and respect diversity

  • Adopt criteria of merit and competence

  • Avoid harassment of workers
  • Enhance contribution of human capital
  • Clear and transparent information
  • Open dialogue with trade unions

ACTIONS

  • Full compliance with applicable laws, directives, regulations and other requirements
  • Full implementation of Charter of Values
  • Constant monitoring of human rights, health and safety aspects
  • Individual responsibility within shared rules of behaviour

SA8000 STANDARD

ESG Performance Employees - main figures

Employees by gender

2019 2018 2017
$9$ $39$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ đΫ $\circ$ ♂♀
Total 657 $378$ 1,035 506 254 760 496 260 756

Employees by contract

2019 2018 2017
đΫ đΫ ♂ዩ
Permanent 621 369 990 487 247 734 473 249 722
Temporary 36 9 45 19 26 23 34
Total 657 378 1.035 506 254 760 496 260 756

Employees by age

2019 2018 2017
$<$ 30 years old 17.2% 13.9% 16.0%
31-40 years old 35.1% 39.9% 40.5%
41 - 50 years old 31.8% 31.8% 30.7%
over 50 years old 15.9% 14.4% 12.8%
Total 100% 100% 100%

Employees by qualification

2019 2018 2017
Degree 14.9% 14.1% 12.3%
High school diploma 44.2% 45.5% 45.0%
Middle school diploma 39.7% 40.1% 41.5%
Elementary school diploma $1.2\%$ 0.3% 1.2%
Total 100% 100% 100%

Employees by length of service

2019 2018 2017
$< 5$ years 37.2% 26.7% 24.5%
$6 - 10$ years 12.3% 12.9% 18.9%
$11 - 20$ years 36.6% 46.7% 45.1%
over 20 years 13.9% 13.7% 11.5%
Total 100.0% 100.0% 100.0%

Turnover rate

2019 2018 2017
Total women $7.14\%$ $9.06\%$ $10.38\%$
Total men 10.19% 11.07% 13.31%
Total $9.08\%$ $10.39\%$ 12.30%

ESG Performance Employees - Health and Safety

ESG Performance Supply Chain Management

Purchase Analysis

Company Total 2019 purchases
(€/000)
% Local purchases
Sabaf S.p.A. 56,466 79%
Faringosi-Hinges S.r.l. 8,331 99%
ARC S.r.l. 3,466 83%
CMI Group 24,916 71%
Sabaf Turkey 10,242 72%
Okida 5,537 68%
Sabaf do Brasil 7,491 95%
Sabaf China 534 98%

Socially responsible approach along the supply chain

Priority to suppliers with certified Quality and Environmental Systems

Sabaf Charter of values shared with suppliers

Very short payment terms (mainly 30 days) agreed for small suppliers

ESG Performance Public Administration and Community

  • Transparency
  • Fairness
  • Open dialogue
  • Promotion of shared and sustainable industrial developement

INDUSTRIAL ASSOCIATIONS

  • Founder of APPLiA Italia, the Italian association of household appliance component manufacturers
  • Member of Associazione Industriale Bresciana

UNIVERSITIES & STUDENT WORLD

  • Company visits
  • Conferences about best practices on social responsibility

CHARITABLE INITIATIVE & DONATIONS

  • In 2019 Sabaf joined the Fondazione Spedali Civili of Brescia contributing to the purchase of a system that automates the preparation of chemotherapy drugs (Apotecachemo)
  • In 2019 donation to Fondazione IRCCS Istituto Nazionale dei Tumori di Milano (National Cancer Institute of Milan)
  • In 2020 donations for the fight against COVID-19
  • Support to AVSI (we support 20 children living in different countries of the world)

ESG Performance Corporate governance

Strict separation between Shareholders and Management

High profile of Indipendent Directors

Full compliance with the Corporate Governance Code of Listed Companies

are responsibility of the BoD

ESG Performance Stock price and main shareholders

Market cap: € 131 mn at 25 June 2020

% OF SHARE CAPITAL

BUSINESS PLAN 2018 – 2022, MOST RECENT FIGURES AND CURRENT OUTLOOK

Business plan 2018 - 2022 Where we are 1/2

Business plan 2018 - 2022 Where we are 2/2

Total
projects
Main
projects
Estimated additional
annual sales
Period Markets
Burners and
valves
31 6 15 - 18 mn € 2019 - 2021
2022
North America, Europe,
South America. Far East
Electronic
components
48 30 4 - 6 mn € 2019 - 2021
2022
Europe and Middle East,
South and Nord America
(new markets)
Hinges 19 9 3 - 4 mn € 2019 - 2021
2022
Europe
Total 9
8
4
5
22 - 28 mn €

COVID-19 All main projects are confirmed

Estimated delay of about 6 months

Basis for organic growth in the near future

Financial performance

Income statement

I Q 2020 I Q 2019* ∆ % 20 - 19
TURNOVER 43,852 100% 37,635 100% +16.5%
EBITDA 7,689 17.5% 6,617 17.6% +16.2%
EBIT 3,360 7.7% 3,350 8.9% +0.3%
EBT 2,192 5.0% 2,721 7.2% -19.4%
PROFIT FOR THE YEAR 1,680 3.8% 2,156 5.7% -22.1%
PROFIT OF THE GROUP 1,547 3.5% 2,115 5.6% -26.9%

SALES BY MARKET SALES BY PRODUCT

Financial performance Balance Sheet and NFP

I Q 2020 I Q 2019* FY 2019*
FIXED ASSETS 134,108 118,200 138,506
NET WORKING CAPITAL 55,726 57,090 49,693
PROVISIONS (11,751) (6,402) (11,966)
CAPITAL EMPLOYED 178,083 168,888 176,233
EQUITY 117,545 120,395 121,105
NET DEBT 60,538 48,493 55,128
SOURCES OF FINANCE 178,083 168,888 176,233
I Q 2020 I Q 2019* FY 2019*
Liquidity and current financial assets (14,189) (12,538) (19,954)
Current
financial
debt
24
365
,
17
578
,
23
652
,
financial
debt
Non-current
50
362
,
43
453
,
51
430
,
Financial debt 74,727 61,031 75,082
Net financial position 60,538 48,493 55,128
I Q 2020 I Q2019 FY 2019
Unsecured loans 54,354 54,069 55,222
Short-term bank liabilities 4,138 2,453 3,689
Leases out of IFRS 16 scope 1,270 1,423 1,309
Other financial debts 1,293 180 1,293
Put Options 10,350 1,818 10,350
IFRS 16 leases 3,322 1,088 3,219
Financial debt 74,727 61,031 75,082

Outlook 2020

In many of the main markets, demand and production levels have been strongly impacted by restrictions imposed by local authorities leading to postponement or cancellation of orders by customers.

In April, sales fell by 18% (30% taking into consideration the same scope of consolidation), while a partial recovery is expected as early as May.

Based on the information currently available, the Group expects to close the first half of the year with sales of between € 78 and € 82 million (up 4% - 9% compared with the first half of 2019).

For the rest of the year, visibility is still extremely limited. In the absence of events that would have a further lasting impact on consumption in its main target markets, the Group expects a gradual recovery with sales in the second half of the year higher or, in the worst-case scenario, in line with those of the first half.

The Group believes that the strategy aimed at strengthening its international presence remains valid and has therefore not deemed it appropriate to revise the plan of organic investments for the current year, although some investments will be delayed due to current restrictions on mobility.

DISCLAIMER

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

The Company's business is in the domestic appliance industry, with special reference to the gas cooking sector, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forwardlooking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.

Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.

For further information, please contact

Gianluca Beschi - +39.030.6843236 [email protected]

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