Sabaf

Interim / Quarterly Report • Sep 23, 2020

FINANCIAL PRESENTATION

Table of contents

• I. COMPANY PROFILE
• II. 1ST HALF 2020 AND 2019 PERFORMANCE
• III. BUSINESS PLAN 2018 2022

COMPANY PROFILE

Sabaf Group Timeline and history

Sabaf Group Business diversification in three divisions

6

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 30 June 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 2019)

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 Product & 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 )

Sabaf Group Stock price & main Shareholders

% OF SHARE CAPITAL

% OF VOTING RIGHTS

1ST HALF 2020 FINANCIAL PERFORMANCE

Sabaf Group Operational impacts of health emergency

PRODUCTION STOP
March/ April	Production loss: on average 30% in all Italian plants due to the lockdown Partial slowdown in Turkey and Brasil	Lockdown Heavy recourse to Temporary Redundancy Fund (Cassa Integrazione)
May / June	General production decrease: on average 25% due to the cancellation or postponement of customers' orders and stop of their activities Sharper slowdown in Brasil	Work shifts reduction for social distancing Low absenteeism rate Lower recourse to Temporary Redundancy Fund
July / August	Production recovery in all the Group plants: production equal or higher than 2019 (excepted ARC)	Usual work shifts No recourse to Temporary Redundancy Fund

The Group estimates that, as a result of the pandemic, sales for the first half of the year were about 20% lower than expected, corresponding to a decrease in revenue of €19 million and operating profitability of €5.7 million

DIRECT COSTS – First Half 2020

• Protective equipment and sanitation activities: 300,000 euro
• Employees benefits: 150,000 euro

Performance data Income statement – I half 2020

E-MARKET SDIR
CERTIFIED

€ x 000	6 MONTHS 2020		6 MONTHS 2019 *		Δ % 20 - 19		**	12 MONTHS 2019
Revenue	78,164	100.0%	74,826	100.0%	+4.5%	155,923		100.0%
Other income	1,969	2.5%	1,294	1.7%			3,621	2.3%
Total operatig revenue and income	80,133		76,120			159,544
Materials	(35,381)	(45.3%)	(27,878)	(37.3%)		(57,464)		(36.9%)
Personnel costs	(19,901)	(25.5%)	(17,659)	(23.6%)		(37,103)		(23.8%)
Change in inventories	3,677	4.7%	(3,687)	(4.9%)			(8,617)	(5.5%)
Other operating costs	(15,244)	(19.5%)	(14,002)	(18.7%)		(29,327)		(18.8%)
EBITDA	13,284	17.0%	12,894	17.2%	+3.0%	27,033		17.3%
Depreciation	(8,508)	(10.9%)	(6,689)	(8.9%)		(15,183)		(9.7%)
Gains/losses on fixed assets	4 1	0.1%	4 8	0.1%			4 6	0.0%
EBIT	4,817	6.2%	6,253	8.4%	-23.0%	11,896		7.6%
Net financial expense	761	1.0%	(554)	(0.7%)			(701)	(0.4%)
Exchange rate gains and losses	(1,837)	(2.4%)	(1,041)	(1.4%)			(1,380)	(0.9%)
Profits and losses from equity investments		0.0%		0.0%			(39)	(0.0%)
EBT	3,741	4.8%	4,658	6.2%	-19.7%		9,776	6.3%
Income taxes	(1,225)	(1.6%)	(1,024)	(1.4%)			407	0.3%
PROFIT FOR THE YEAR	2,516	3.2%	3,634	4.9%	-30.8%	10,183		6.5%
Minority interests	(92)	(0.1%)	(121)	(0.2%)			(268)	(0.2%)
PROFIT ATTRIBUTABLE TO THE GROUP	2,424	3.1%	3,513	4.7%	-31.0%		9,915	6.4%

Performance data Income statement – II quarter 2020

				Δ % 20 - 19
34,312		37,191	100.0%	-7.7%
920		622	1.7%
35,232		37,813
(16,243)		(13,599)	(36.6%)
(9,648)		(8,799)	(23.7%)
3,981		(2,422)	(6.5%)
(7,727)		(6,716)	(18.1%)
5,595		6,277	16.9%	-10.9%
(4,171)		(3,377)	(9.1%)
33		3	0.0%
1,457		2,903	7.8%	-49.8%
1,113		(322)	(0.9%)
(1,021)		(644)	(1.7%)
	0.0%		0.0%
1,549		1,937	5.2%	-20.0%
(713)		(459)	(1.2%)
836		1,478	4.0%	-43.4%
41		(80)	(0.2%)
877		1,398	3.8%	-37.3%
		II QUARTER 2020	100.0% 2.7% (47.3%) (28.1%) 11.6% (22.5%) 16.3% (12.2%) 0.1% 4.2% 3.2% (3.0%) 4.5% (2.1%) 1.1% 0.1% 2.6%	II QUARTER 2019*

Performance data Sales by market

€ x 000	6 MONTHS 2020	6 MONTHS 2019*
Italy	14,364	16,733	-14 2%
Western Europe	4,580	6,500	-29 5%
Eastern Europe (incl. Turkey)	28,355	24,286	8% +16
Middle East & Africa	5,508	3,196	+72 3%
Asia (excl. ME)	3,131	4,438	4% -29
Latin America	12,400	12,103	5% +2
North America	9,826	7,570	+29 8%
Total	78,164	74,826	.5% +4

€ x 000	6 MONTHS 2020	6 MONTHS 2019*
Gas parts	55,123	64,330	3% -14
Hinges	17,262	5,730	+201 3%
Electronic components	5,778	4,766	2% +21

Total 78,164 74,826 +4.5%

Performance data Sales by product

Performance data Ebitda bridge IH 2020 vs. IH 2019

E-MARKET SDIR
CERTIFIED

Performance data Balance Sheet

E-MARKET SDIR
CERTIFIED

€ x 000	30.06.2020	31.03.2020	31.12.2019	30.06.2019	31.03.2019
Fixed assets	133,599	134,108	138 506	116,061	118,200
			,
Inventories	37 599 ,	34 080 ,	35 343 ,	35 141 ,	37 676 ,
Trade receivables	48 964 ,	53 136 ,	46 929 ,	46 712 ,	44 769 ,
receivables Tax	3 081 ,	3 067 ,	4 458 ,	2 958 ,	3 438 ,
Other receivables current	2 147 ,	2 694 ,	1 459 ,	2 114 ,	1 776 ,
Trade payables	(26 338) ,	(26 558) ,	(27 560) ,	(21 450) ,	(20 746) ,
Tax payables	(1 165) ,	(1 617) ,	(1 802) ,	(1 703) ,	(2 768) ,
Other payables	(10 836) ,	(9 076) ,	(9 134) ,	(8 289) ,	(7 055) ,
Net working capital	53,452	55,726	49,693	55,483	57,090
Provisions for risks and severance indemnity	(11 425) ,	(11 751) ,	(11 966) ,	(6 162) ,	(6 402) ,
Capital Employed	175,626	178,083	176,233	165,382	168,888
Equity Net debt	114,980 60,646	117,545 60,538	121,105 55,128	115,064 50,318	120,395 48,493
Sources of finance	175,626	178,083	176,233	165,382	168,888

Performance data Cash flow statement

€ x 000	30.06.2020	30.06.2019	31.12.2019
Cash at the beginning of the period	18,687	13,426	13,426
Net profit Depreciation Other income statement adjustments	2,516 8,508 140	3,634 6,689 1,807	10,183 15,183 1,538
Change in net working capital - Change in inventories - Change in receivables - Change in payables	(2,256) (2,035) (1,141) (5,432)	4,038 220 235 4,493	9,090 10,148 (2,901) 16,337
Other changes in operating items	(845)	(2,146)	(2,309)
Operating cash flow	4,887	14,477	40,932
Investments, net of disposals Free Cash Flow	(8,345) (3,458)	(4,118) 10,359	(12,014) 28,918
Cash flow from financial activity Own shares buyback Dividends CMI Acquisition OKIDA acquisition Forex	(2,677) (1,264) - - - (986)	(6,805) - (6,060) - (317) 298	(10,433) 3,146 (6,060) (10,475) (317) 482
Net financial flow	(8,385)	(2,525)	5,261
Cash at the end of the period	10,302	10,901	18,687
Current financial debt Non-current financial debt	31,397 39,551	22,463 38,756	22,386 51,430
Net financial debt	60,646	50,318	55,130

€ x 000	30.06.2020	30.06.2019	31.12.2019
Liquidity and current financial assets	(11,579)	(10,961)	(19,954)
Current financial debt financial debt Non-current	32 674 , 39 551 ,	22 523 , 38 756 ,	23 652 , 51 430 ,
Financial debt	72,225	61,279	75,082
NET FINANCIAL DEBT	60,646	50,318	55,128

	30.06.2020	30.06.2019	31.12.2019
Unsecured loans	52,156	47,568	55,222
Short-term bank liabilities	4,893	9,373	3,689
Leases out of IFRS 16 scope	1,230	1,386	1,309
Other financial debts	1,233	120	1,293
Put Options	8,913	1,818	10,350
IFRS 16 leases	3,800	1,014	3,219
Financial debt	72,225	61,279	75,082

Performance data Financial Indicators

	30.06.2020	30.06.2019**		31.12.2019
				pro-forma***
Change in turnover*	+ 4.5%		+3.5%
Change in turnover same scope of consolidation*	-12.5%		-8.9%
ROCE (return on capital employed)	5.5%	7.6%	6.8%	7.1%
Net debt/EBITDA	2.28	1.95	2.04	1.86
Net working capital/Turnover	34.2%	37.1%	31.9%	28.7%
Net deb/equity	52.7%	43.7%		45.5%
Days of Sales Outstanding	113	112	108	97
Days of Payables Outstanding	93	91	114	90
Days of Inventory Outstanding	101	100	96	74

* For the 6 months 2020 the change in turnover has been calculated vs. the first half of 2019 For the 12 months 2020 the change in turnover has been calculated vs. the 12 months 2019

• ** Datas do not consider the C.M.I. Group contributions. The C.M.I. Group has been consolidated from August 2019
• *** The return on capital employed and the pro-forma net debt/EBITDA ratio are calculated considering, for the companies acquired and included in the scope of consolidation during the year, the EBIT and EBITDA for the entire year

Outlook 2020 – Information released on 6th August 2020

Revenue in July and the orders portfolio for August and September show a strong recovery in business, with a return to moderate organic growth rates

On 6 th August 2020 the Sabaf Group expected:

during the third quarter to achieve sales of between €43 million and €46 million (€40.7 million in the third quarter of 2019) to be able to close 2020 with sales revenue ranging from €162 to €167 million (4-7% higher than €155.9 million of 2019). On a longer time horizon, uncertainties remain, mainly related to the development of the

These forecasts assume a macroeconomic scenario not affected by unpredictable events. If the economic situation were to change significantly, actual figures might diverge from the forecasts.

global health situation

BUSINESS PLAN 2018 – 2022

Business plan 2018 - 2022 Where we are 1/2

Business plan 2018 - 2022 Where we are 2/2

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 gianluca.beschi@sabaf.it