Sabaf — Investor Presentation 2022

Nov 15, 2022

FINANCIAL PRESENTATION

BNP Paribas Exane

5 th MidCap CEO Conference

16 th November 2022

Table of contents

• I. COMPANY PROFILE
• II. 2022 STRATEGIC MOVES
• III. FINANCIAL PERFORMANCE
• IV. SUSTAINABILITY
• V. ATTACHMENTS

COMPANY PROFILE

4

Sabaf Group: product range

Sabaf Group: evolution

Sabaf Group: Revenues and EBITDA last 3 years

vs. 2019

7

Sabaf Group: leading producer of components for household appliances

▪ 2021: 10 production plants

Sabaf Group: industrial footprint

SABAF S.P.A. Valves and thermostats Standard burners Special burners

ARC S.R.L. Professional burners

FARINGOSI-HINGES S.R.L. Oven hinges Dishwasher hinges

CMI ITALY (2 PLANTS)

Oven hinges Dishwasher hinges

PGA Electronics for household appliances

NEW

SABAF MEXICO Burners and hinges SOP - Q1 2023

Why invest in Sabaf

Strategy for value creation

Sabaf Group Main shareholders

Pietro Iotti, CEO of Sabaf, owns 1.6%

2022 STRATEGIC MOVES

Strategic moves (becoming in facts)

Sabaf Induction: business strategy

2

3

4

5

1

14

The Sabaf Group aims to become a key player in the large induction cooking market

Through this strategic investment Sabaf intends to turn out as leader and innovator not only in the mechanical sector, but also in electronics and new technologies

The inclusion of induction technology will lead the Group to be one of the few players able to fully cover all the three cooking surface technologies (gas, radiant and induction)

Sabaf aims to carry on along the sustainable growth path in the respect of the environment

This project will push Sabaf to a further evolution and deep transformation in the next few years

2022

The Sabaf Group enters the

INDUCTION COOKING SECTOR

Sabaf Induction: business strategy

MARKET The European market of induction cooking components, estimated at around €500 million ▪ Steady growth for several years at a rate of over 10% ▪ Highly concentrated market with few players (Technological complexity) Investment plan ▪ About €5 million in R&D in the period 2021 – 2023 ▪ Setting up of a dedicated project team in Italy ▪ Sabaf has developed its own project know-how internally by filing proprietary patents, software and hardware ▪ Creation of innovative products which better meet manufacturers' needs and new consumer trends PROJECT R&D

• The Group benefits from the expertise gained from the acquisition of Okida the Turkish company of Sabaf Group already designated to electronics and where part of the induction cooking components will be produced
• Team of more than 50 electronic engineers

The project technological flexibility will enable Sabaf to offer to its clients customised products

Sabaf Induction: business strategy

• 5 product platforms which cover the whole market (high, medium and basic range) with customisation opportunities
• The first prototypes has been released since June 2022
• Production will start by the first half of 2023
• Sabaf network for sales and distribution
• Very positive customer feedback (agreements with some important players have been already signed)
• Objective: at least 5% of the non-captive European market by 2025, further expansion in the following years

P.G.A. acquisition

• Owned by brothers Andrea and Paolo Cennimo, each of whom held 50% of the capital
• Operating for over 25 years in the field of design and assembly of electronic control boards for the household

• Holds 100% of the share capital of PGA2.0 s.r.l., a business unit dedicated to the design and prototyping of innovative solutions based on interconnection and the Internet of Things

• 2021 SALES: €11.5 million

• 2021 EBITDA: €2.2 million
• Net financial debt at 30 June 2022: €1.3 million

P.G.A. acquisition

• 100% of the share capital
• Preliminary valuation amounting to €9.76 million → 5x EBITDA (average annual consolidated 2020 2022)
• The purchase price will be determined on the basis of the final P.G.A. Group 2022 EBITDA and of the net financial position at the date of completion of the transaction
• 75% paid in a single payment
• 25% paid through the sale of Sabaf treasury shares
• Possible further price adjustment ("earn-out"), linked to the achievement of the Sabaf Group Electronics Division objectives
• Andrea and Paolo Cennimo will remain at the head of P.G.A. as Chief Executive Officers

The strategy

The acquisition

• The acquisition of P.G.A. reflects the aim of diversification and expansion of the offer defined in our Business Plan
• P.G.A. integrates perfectly with Okida, the Sabaf Group's company which is already active in the electronics sector and which is increasingly contributing to the Group's results
• The Electronics Division plays a decisive role in Sabaf's strategic development into a group with a full-fledged presence in advanced technologies in the household appliance industry → Electronics allows to reach diversified future expansions and higher profitability level
• Through this acquisition the 2023 Electronic division turnover is expected to be around €35 - 40 million

Widening Industrial Footprint

• Production: valves and burners for local market and potential export
• Investments: € 5.2 mn in 3 years
• Area: 24,000 sqm (5,000 sqm covered)
• Expected capacity: € 6 mn
• Start of production: first half 2022

• Excellent outlook for growth in 2023

• Production: burners and hinges for North and Central America markets

• Investments: € 5 mn in 3 years
• Area: 23,300 sqm (12,950 sqm covered)
• Expected capacity: € 11 mn already fully booked
• Start of production: first quarter 2023

FINANCIAL PERFORMANCE

Performance data Income statement – 9 months 2022 vs. 9 months 2021

€ x 000	MONTHS 9	2022	MONTHS 9	2021	Δ % 22 - 21	MONTHS 12	2021
Revenue	201 623 ,	100.0%	200 772 ,	100.0%	+0.4%	263 259 ,	100.0%
Other income	6 473 ,	3.2%	5 979 ,	3.0%		8 661 ,	3.3%
Total operatig and income revenue	208 096 ,		206 751 ,			271 920 ,
Consumption	(98 820) ,	(49.0%)	(84 059) ,	(41.9%)		(112 433) ,	(42.7%)
Personnel costs	(38 316) ,	(19.0%)	(40 922) ,	(20.4%)		(53 964) ,	(20.5%)
Other operating costs	(37 504) ,	(18.6%)	(37 601) ,	(18.7%)		(51 383) ,	(19.5%)
EBITDA	33 456 ,	16.6%	44 169 ,	22.0%	-24.3%	54 140 ,	20.6%
Depreciation	(13 674) ,	(6.8%)	(12 718) ,	(6.3%)		(16 869) ,	(6.4%)
Gains/losses on fixed assets	242	0.1%	126	0.1%		237	0.1%
Write-downs/write-backs of non-current assets	-	0.0%	-	0.0%		-	0.0%
EBIT	20 024 ,	9.9%	31 577 ,	15.7%	-36.6%	37 508 ,	14.2%
Net financial expense	551	0.3%	(89)	(0.0%)		(429)	(0.2%)
Revenues (expenses from hyprinflation)	(7 664) ,	(3.8%)	-	0.0%
Exchange gains and losses rate	1 170 ,	0.6%	(1 267) ,	(0.6%)		(7 399) ,	(2.8%)
Profits and losses from equity investments	(48)	(0.0%)	(38)	(0.0%)		-	0.0%
EBT	14 033 ,	7.0%	30 183 ,	15.0%	-53.5%	29 680 ,	11.3%
Income taxes	(937)	(0.5%)	(6 126) ,	(3.1%)		(5 003) ,	(1.9%)
PROFIT FOR THE YEAR	13 096 ,	6.5%	24 057 ,	12.0%	-45.6%	24 677 ,	9.4%
Minority interests	-	0.0%	794	0.4%		780	0.3%
PROFIT ATTRIBUTABLE TO THE GROUP	13 096 ,	6.5%	23 263 ,	11.6%	-43.7%	23 897 ,	9.1%

Performance data Income statement – III quarter 2022 vs. III quarter 2021

€ x 000	III Q 2022		III Q 2021		Δ % 22 - 21	12 MONTHS 2021
Revenue	55,939		100.0% 63,107	100.0%	-11.4%	263,259	100.0%
Other income	1,810	3.2%	1,494	2.4%		8,661	3.3%
Total operatig revenue and income	57,749		64,601			271,920
Consumption	(28,973)	(51.8%)	(28,258)	(44.8%)		(112,433)	(42.7%)
Personnel costs	(11,170)	(20.0%)	(12,786)	(20.3%)		(53,964)	(20.5%)
Other operating costs	(11,036)	(19.7%)	(11,572)	(18.3%)		(51,383)	(19.5%)
EBITDA	6,570		11.7% 11,985	19.0%	-45.2%	54,140	20.6%
Depreciation	(4,611)	(8.2%)	(4,377)	(6.9%)		(16,869)	(6.4%)
Gains/losses on fixed assets	2 0	0.0%	9	0.0%		237	0.1%
Write-downs/write-backs of non-current assets	-	0.0%	-	0.0%		-	0.0%
EBIT	1,979	3.5%	7,617	12.1%	-74.0%	37,508	14.2%
Net financial expense	220	0.4%	(112)	(0.2%)		(429)	(0.2%)
Revenues (expenses from hyprinflation)	(3,058)	(5.5%)	-	0.0%
Exchange rate gains and losses	823	1.5%	586	0.9%		(7,399)	(2.8%)
Profits and losses from equity investments	-	0.0%	1 1	0.0%		-	0.0%
EBT	(36)	-0.1%	8,102	12.8%	-100.4%	29,680	11.3%
Income taxes	124	0.2%	(1,358)	(2.2%)		(5,003)	(1.9%)
PROFIT FOR THE YEAR	88	0.2%	6,744	10.7%	-98.7%	24,677	9.4%
Minority interests	-	0.0%	230	0.4%		780	0.3%
PROFIT ATTRIBUTABLE TO THE GROUP	88	0.2%	6,514	10.3%	-98.6%	23,897	9.1%

Highlights - III quarter 2022

Negative effects Positive effects

• DROP IN VOLUMES:

• Sales volumes
• Production volumes

Causes: market slowdown after two years of strong growth, inflation, destocking.

• INCREASE IN ENERGY COSTS:

	Consumption	Cost
Electric Energy	-23%	+78%
Gas	-30%	+81%

• INCREASE IN RAW MATERIAL COSTS

• STRONG CASH GENERATION

• WORKING CAPITAL IMPROVEMENT

• PRICE INCREASE

• FOREIGN EXCHANGE RATE EFFECT

Performance data Sales by market

x 000 €	MONTHS 9 2022	MONTHS 9 2021
(excluding Turkey) Europe	68 286 ,	71 215 ,	1% -4
Turkey	51 619 ,	49 329 ,	+4 6%
North America	32 730 ,	23 134 ,	5% +41
South America	24 237 ,	30 452 ,	-20 4%
Africa and Middle East	15 409 ,	15 106 ,	0% +2
Asia and Oceania	9 341 ,	11 536 ,	0% -19
Total	201,623	200,772	+0 4%

25

Performance data Sales by product

€ x 000	9 MONTHS 2022	9 MONTHS 2021
Gas	126,670	141,014	2% -10
Hinges	55,751	43,002	+29 6%
Electronics	19,202	16,756	6% +14
Total	201,623	200,772	4% +0

Performance data Balance Sheet

€ x 000	30/09/2022	30/06/2022	31/12/2021	30/09/2021	30/06/2021
Fixed assets	158,336	154,593	130,093	136,489	136,192
Inventories	68 093 ,	72 962 ,	64 153 ,	63 404 ,	58 735 ,
Trade receivables	64 886 ,	90 189 ,	68 040 ,	75 688 ,	81 666 ,
Tax receivables	6 195 ,	4 452 ,	6 165 ,	3 821 ,	3 531 ,
Other receivables current	5 523 ,	5 556 ,	3 136 ,	2 530 ,	3 086 ,
Trade payables	(43 821) ,	(55 867) ,	(54 837) ,	(49 104) ,	(56 494) ,
payables Tax	(3 519) ,	(1 678) ,	(4 951) ,	(5 504) ,	(6 629) ,
Other payables	(12 011) ,	(12 972) ,	(13 075) ,	(12 478) ,	(13 463) ,
Net working capital	85,346	102,642	68,631	78,357	70,432
Provisions for risks and severance indemnity	(9 467) ,	(8 982) ,	(8 681) ,	(8 733) ,	(8 883) ,
Capital Employed	234,215	248,253	190,043	206,113	197,741
Equity Net debt	155,419 78,796	153,460 94,793	122,436 67,607	132,572 73,541	126,615 71,126
Sources of finance	234,215	248,253	190,043	206,113	197,741

Performance data Cash flow statement

E-MARKET SDIR
CERTIFIED

€ x 000	III QUARTER 2022	6 MONTHS 2022	9 MONTHS 2022	9 MONTHS 2021	12 MONTHS 2021
Cash at the beginning of the period	12,343	43,649	43,649	13,318	13,318
Net profit Depreciation Other income statement adjustments	88 4,611 1,595	13,008 9,063 3,668	13,096 13,674 5,263	24,057 12,718 6,011	24,683 16,869 5,810
Change in net working capital - Change in inventories - Change receivables in - Change payables in	3 724 , 25 303 , (12 046) , 16,981	(6 037) , (22 151) , 1 047 , (27,141)	(2 313) , 3 152 , (10 999) , (10,160)	(24 180) , (12 252) , 7 331 , (29,101)	(24 929) , (4 604) , 13 064 , (16,469)
Other changes in operating items	(1,418)	(6,807)	(8,225)	(3,898)	(7,677)
Operating cash flow	21,857	(8,209)	13,648	9,787	23,216
Investments, net of disposals Free Cash Flow	(5,085) 16,772	(11,018) (19,227)	(16,103) (2,455)	(19,501) (9,714)	(23,752) (536)
Cash flow from financial activity Own shares buyback Dividends CMI and ARC acquisitions Deconsolidation / consolidation ARC Handan Forex	6,636 (585) - - (650)	(4,314) (1,189) (6,690) - (97) 211	2,322 (1,774) (6,690) (97) (439)	18,138 - (6,172) - - (257)	47,405 - (6,172) (6,393) 97 (4,070)
Net financial flow	22,173	(31,306)	(9,133)	1,995	30,331
Cash at the end of the period	34,516	12,343	34,516	15,313	43,649

	MONTHS 9 2022	MONTHS 6 2022	MESI 9 2021	MONTHS 12 2021
Change in turnover (vs . previous year)	4% +0 9m 2021 vs.	8% +5 6m 2021 vs.	0% +60 9m 2020 vs.	4% +42 12m 20 vs.
ROCE (return capital employed) on	4% 11	5% 14	4% 20	7% 19
Net debt/EBITDA	1 77	1 76	1 25	1 25
working capital/Turnover Net	7% 31	2% 35	3% 29	1% 26
Net debt/equity	50 7%	61 8%	5% 55	2% 55
Days of Sales Outstanding	87	111	102	101
of Payables Outstanding Days	83	96	90	96

Days of Inventory Outstanding 105 106 105 99

Outlook

In the current quarter:

• Demand remains generally weak in the main markets in which the Group operates
• The impact of destocking seems to have worn off in recent weeks
• Commodity and energy prices show a downward trend compared to recent peaks

For the whole of 2022:

the Group expects to achieve sales of between €253 million and €256 million (including the consolidation of the fourth quarter results of the newly acquired P.G.A.)

The Board of Directors confirms the worth of the internationalization and diversification path that the Group has undertaken and which has led, compared to the first 9 months of 2019, to an increase in turnover of 74.9% (from €115.3 million to €201.6 million) and in EBITDA of 63.6% (from €20.4 million to €33.5 million)

The Group is confident that the strategic projects launched in implementation of the Business Plan, aimed at diversifying the product range, increasing its international presence and at a substantial production processes efficiency, can significantly contribute to the growth and strengthening of its competitive position

• Sales of induction cooking components (for which the Group has already signed some significant contracts) will start in 2023
• P.G.A. will be integrated into the Electronics Division
• A few months after the successful start-up of the Indian plant, the production of gas components in Mexico will also be started and will contribute to further growth in the important North American market

SUSTAINABILITY

Sabaf: a sustainable business Sustainability in the Business plan 2021 - 2023

Sabaf's strategy and governance model are aimed towards ensuring long-term sustainable growth. For Sabaf, sustainability is primarily based on sharing values with its stakeholders; compliance with common values increases mutual trust and encourages knowledge development " "

Sabaf: a sustainable business

KPI measurement

KPI	Unit of measurement	2023 Target vs. 2020	2020 ACTUAL	2021 TARGET	2021 ACTUAL	9M 2022 ACTUAL	2022 TARGET	2023 TARGET
CO 2 emissions/Reven ue	tCO / million 2eq of Euro	-14%	132	<128	111	91.52	<120	<114
Hours of training per capita	h	+40%	13.9	>11.0	20.4	14.9	>13	>15
Summary indicator of injuries	-	-44%	177	<140	327	90	<120	<100

NOTES

• KPI 1 CO2 emissions/Revenue = CO² emissions scope 1 + scope 2 market-based / Revenue
• KPI 3 Summary indicator of injuries = injury rate x injury lost day rate x 100
• injury rate = number of injuries x 1,000,000/total hour worked
• injury lost day rate = days of absence x 1,000/hours worked

ESG Performance - Corporate Governance

Remuneration policy

MATERIAL TOPIC	KPI	IMPACT ON THE LTI PLAN
Emissions into the atmosphere	CO emissions scope 1 + scope 2 2 market based/Revenue	15%
Development of resources and skills	Hours of training per capita (by collaborator)	5%
Health and safety of personnel	Summary indicator of injuries (injury rate x injury lost da rate x 100)	5%
	Impact of sustainability objectives on total LTI	25%

ESG Performance - Environment

CO² Emissions for the production of electric power (2019 energy mix)

ESG Performance - Environment

CO² Emissions of gas hobs vs. induction hobs in Italy (from Journal of Cleaner production)

Source: https://www.sciencedirect.com/science/article/abs/pii/S0959652618308011 Journal of Cleaner production

Article «Comparative life cycle assessment of cooking appliances in Italian kitchens»

Claudio Favi ^a , Michele Germani ^b , Daniele Landi ^b , Marco Mengarelli ^c , Marta Rossi ^{b a} Università degli Studi di Parma ^b Università Politecnica delle Marche ^c Energy Research Institute, Nanyang Technological University

ESG Performance - Environment

CO² Emissions of gas hobs vs. electric induction hobs

• Gas hob emission 1,050 / induction hob emission 1,590 = 1.51
• CO² emissions Break-Even Point Gas vs. Induction is:

315 / 1.51 = 208 g CO2eq /kWh → equivalent to ~70% of electric power generated by renewable energy sources

A necessary condition for an induction hob to generate lower CO² emissions than a gas hob is that the electricity is produced with a % of renewable sources (or nuclear energy) greater than 70%.

Countries that have less than 70% renewable energy pollute more if they use electric induction hobs than gas.

ESG Performance - Environment High efficiency burners

ESG Performance - Environment Hydrogen: project Hy4Heat

The Hy4Heat project aims to establish whether it is technically possible, safe and convenient to replace natural gas (methane) with 100% hydrogen in residential and commercial buildings and gas appliances. The Hy4Heat project is financed by BEIS, (the UK governments Department for Business, Energy, and Industrial Strategy) and involves ten separate work packages

The SABAF Group, through its subsidiary ARC, is involved in Work Package 4, which covers cooking and heating appliances. ARC has developed and produced the burners that have now been specified on the world's first UKCA Certified ranges of 100% hydrogen hobs and cookers.

These have been installed on the cooking appliances Glen Dimpex at HyHome, two purpose built houses demonstrating hydrogen appliances in a 'real life' scenario at Low Thornley, near Gateshead in the North of England

Immediately following the Hy4Heat project, cooking appliances incorporating ARC burners will be specified for the Community Trial involving 300 homes commencing in 2022. Beyond the Community Trial, the UK Government intends to commission a 'Village Trial' with around 2,500 homes in 2025 and a 'Town Trial' (10,000 homes) in the latter part of the decade prior to potentially converting the whole UK gas grid to hydrogen over future years

ARC is involved also in Work Package 5B (Commercial hydrogen gas appliance development) which , includes commercial catering equipment where ARC has developed commercial hob burners for Falcon Foodservice Equipment Ltd

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