Sabaf — Investor Presentation 2023

May 15, 2023

SABAF: THERE'S LIFE INSIDE

www.sabafgroup.com

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FINANCIAL PRESENTATION

Sabaf - Roadshow Paris

16th May 2023

Table of contents

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

COMPANY PROFILE

Sabaf Group: product range evolution in 4 Business Units

SINCE 1950

GAS

• Standard Burners
• Special Burners 1
• Professional Burners
• Oven and Grill Burners
• Gas Valves I
• Gas Oven Thermostats I
• =

ELECTRONICS

• Cooker Hoods
• Ovens
• Cookers and hobs
• Vitroceramic hobs control cards
• Refrigerators/freezers
• Other products

SINCE 2000, further expansion since 2019

HINGES

• Ovens .
• Dishwashers .
• Washing machines ■
• Refrigerators .
• . Special applications
• Small compartments ■
• Catering appliances ■

Sabaf Group: evolution

M&A track record

Sabaf Group: leading producer of components for household appliances and company evolution in 4 Business Units

Why invest in Sabaf Strategy for value creation

Sabaf Group Main shareholders

Pietro Iotti, CEO of Sabaf, owns 1.7%

STRATEGIC MOVES

Strategic moves (becoming in facts)

Sabaf Induction: business strategy

2

4

3

1

2022

enters the

INDUCTION COOKING SECTOR

The Sabaf Group

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

5

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

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)
PROJECT	Investment plan ■ About €5 million in R&D in the period 2021 – 2023 Setting up of a dedicated project team in Italy
R&D	Sabaf has developed its own project know-how internally by filing proprietary patents, software ■ Creation of innovative products which better meet manufacturers' needs and new consumer trends · The Group benefits from the expertise gained from the acquisitions of Okida and P.G.A. where part of the induction cooking components will be produced Team of more than 60 electronic engineers

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

Sabaf Induction: business strategy

• "
• The first prototypes were released in September 2022
• " All electronic parts are designed and manufactured inside the Group's factories
• = Production will start in the second 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

The company

• P.G.A. S.r.1. is based in Fabriano (AN)
• 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 appliances sector. 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

The acquisition

• 100% of the share capital
• " Preliminary valuation amounting to €9.76 million → 5X EBITIDA (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
• · Possible further price adjustment ("earn-out"), linked to the achievement of the Sabaf Group Electronics Division objectives
• Andrea and Paolo Cennimo remain at the head of P.G.A. as Chief Executive Officers

The strategy

• 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 Sabafs 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 €32/35 million

The numbers

• = 2022 SALES: €12.2 million
• = 2022 EBITDA: €2.6 million
• Net financial debt at 31 December 2022: €0.8 million
• = 48 employees

electronic at

Widening Industrial Footprint : Sabaf INDIA

SABAF INDIA

• = Production: valves and burners for local market and potential export
• Investments: € 5.2 mn in 3 years
• = Plot area: 24,000 sqm (built-up area 5,000 sqm)
• · Actual capacity: € 6 mn (expandable)
• = Start of production: 3Q 2022
• = Good outlook for growth in the next 3 years

Widening Industrial Footprint: Sabaf MEXICO

SABAF MEXICO

• = Production: burners for North and Central America markets
• Investments: € 6 mn in 3 years
• Plot area: 23,300 sqm (built-up area12,950 sqm)
• Expected capacity: € 11 mn already fully booked (expandable)
• " Start of production: 2Q 2023

FINANCIAL PERFORMANCE

Performance data Income statement - IQ 2023

€x 000	1Q 2023		IV Q 2022		△ % IQ 23 - IV Q 22	I TRIM 2022		△ % IQ 23- IQ 22	12 MONTHS
Revenue	58,063	100.0%	51,430	100.0%	+12.9%	70,852	100.0%	-18.1%	253,053	100.0%
EBITDA Start-up costs Hyperinflation - Turkey	6,529 354 251	11.2%	6,636 274 (802)	12.9%	-1.6%	13,024 56	18.4%	-49.9%	40,092 705 (4,469)	15.8%
Adjusted EBITDA	7,134	12.3%	6,108	11.9%	+16.8%	13,080	18.5%	-45.5%	36,328	14.4%
EBIT Start-up costs Hyperinflation - Turkey	1,497 483 898	2.6%	1,864 321 (488)	3.6%	-19.7%	9,085 79	12.8%	-83.5%	21,887 821 (2,838)	8.6%
Adjusted EBIT	2,878	5.0%	1,697	3.3%	+69.6%	9,164	12.9%	-68.6%	19,870	7.9%
Net result Start-up costs Hyperinflation - Turkey	(791) 438 1,769	(1.4%)	2,153 294 2,159	4.2%	n.a.	7,454 73 I	10.5%	n.a.	15,249 756 6,077	6.0%
Adjusted Net result \	1,416	2.4%	4,606	9.0%	-69.3%	7,527	10.6%	-81.2%	22,082	8.7%

Sabaf Group: Revenues and EBITDA last 4 years

REVENUES

FY 2022 EBITDA at € 40.1 mn

Sabaf Group: revenues by quarter

Amounts in € mn

23

I quarter 2023 highlights

POSITIVE

• · Sales of the quarter show a clear upward trend compared to 4Q2022 (double-digits growth)
• · Incoming orders back to normal
• · · 1H 23 market demand better than 2H 22 even if the visibility is low
• · Trend of lower energy and raw material costs
• Strong actions for costs reduction .
• · Sales prices: in the current context of market downturn we're keeping sales prices despite pressure from customers, determined to strongly reduce costs

NEGATIVE

• · Household appliances market still weak
• Profitability lower than normal due to lower activity levels, but in recovery on a monthly base
• · Inflation: personnel costs increase , especially in Turkey

INVESTMENTS

• · 1Q 2023: €5.4 million, with the largest share going to the start-up of the Mexican plant scheduled for June
• · Planned FY 2023: €15 million (mainly for Mexico, India and Induction)

Performance data Sales by market

€ × 000	IQ 2023	IVO 2022
Europe (excluding Turkey)	19.746	18.994	+4.0%
Turkey	16,861	15.226	+10.7%
North America	7,715	7.070	+9.1%
South America	6,729	4.266	+57.7%
Africa and Middle East	5.318	3.689	+44.2%
Asia and Oceania	1,694	2.184	-22.4%
Total	58.063	51,430	+12.9%

€ x 000	IQ 2023	IQ 2022
Europe (excluding Turkey)	19.746	26.467	-25.4%
Turkey	16,861	17.747	-5.0%
North America	7,715	10.145	-24.0%
South America	6.729	8.743	-23.0%
Africa and Middle East	5,318	5.086	+4.6%
Asia and Oceania	1,694	2,664	-36.4%
Total	58,063	70,852	-18.1%

Europe (excluding Turkey) 34%

Performance data Sales by product

€ x 000	IQ 2023	IVQ 2022
Gas	36,160	31,670	+14.2%
Hinges	15,305	12,876	+18.9%
Electronics	6,598	6,884	-4.2%
Total	58,063	51,430	+12.9%

€ x 000	IQ 2023	IQ 2022
Gas	36,160	45,032	-19.7%
Hinges	15,305	19.496	-21.5%
Electronics	6,598	6,324	+4.3%
Total	58,063	70,852	=18.1%

Performance data Balance Sheet

€ x 000	31/03/2023	31/12/2022	31/03/2022
Fixed assets	176,217	171,276	158,336
Inventories Trade receivables	65,826	64,426	68,093
Tax receivables	62, 799 7.166	59,159 8,214	64,886 6, 195
Other current receivables Trade payables	3.546 (43,932)	2.910 (39,628)	5,523 (43,821)
Tax payables Other payables	(2,823) (13,326)	(2,545) (13,156)	(3,519) (12,011)
Net working capital	79,256	79,380	85,346
Provisions for risks and severance indemnity	(9,478)	(10,128)	(9,467)
Capital Employed	245,995	240,528	234,215
Equity Net debt	159.643 86,352	156.162 84,366	155.419 78,796
Sources of finance	245,995	240,528	234,215

Performance data Cash flow statement

€ x 000	3 MONTHS	12 MONTHS	3 MONTHS
	2023	2022	2022
Cash at the beginning of the period	20,923	43,649	43,649
Net profit	(791)	16,239	7,454
Depreciation	5,032	18,266	4,068
Other income statement adjustments	1,953	965	1,808
Change in net working capital	(949)	3,890	(6,254
- Change in inventories	(3,640)	10,253	(10,742
- Change in receivables	4,304	(17,157)	3,945
- Change in payables	(285)	(3,014)	(13,051
Other changes in operating items	(306)	(8,135)	(3,110
Operating cash flow	5,603	24,321	(2,831)
Investments, net of disposals	(5,426)	(20,856)	(5,812
Free Cash Flow	177	3,465	(8,643)
Cash flow from financial activity Own shares buyback Dividends PGA acquisition CMI and ARC acquisitions Deconsolidation / consolidation ARC Handan Forex	2,260 (445) (97) (1,050)	(8,334) (1,862) (6,690) (4,948) (97) (4,260)	(4,876 (97 816
Net financial flow	845	(22,726)	(12,800)
Cash at the end of the period	21,768	20,923	30,849

2023 Outlook

Despite a weak market environment, a more favourable trend of sales and orders is expected in the 2Q 2023

The second half of the year will also be characterized by the contributions deriving from the start of the first sales of induction cooking components and from the production of the new plants in India and in Mexico

The Group expects, along with the stabilization of sales volumes, a recovery in profitability as a result of the lower energy and raw material prices and efficiency measures on operating costs

International footprint: an increasingly important factor for relationships with large customers

The transformation of cooking from gas to electric, in the European market, is taking place faster than expected Increasingly clear signs of the beginning of a similar trend also in the USA

This confirms the strategic relevance of the diversification set out in the Group's Business Plan and of its implementation speed

SUSTAINABILITY

S SABAF

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

66 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 99

Sabaf: a sustainable business KPI measurement

	KPI	Unit of measurement	2023 Target vs. 2020	2020 ACTUAL	2021 TARGET	2021 ACTUAL	2022 TARGET	12M 2022 ACTUAL	2023 TARGET	1Q 2023 ACTUAL
1	CO2 emissions/Reven ue	tCO2eq / million of Euro	-14%	132	<128	111	<120	91	<114	110
2	Hours of training per capita	h	+40%	13.9	>11.0	20.4	>13	25.7	>15	6.2
3	Summary indicator of injuries		-44%	177	<140	327	<120	106.8	<100	39.76

NOTES

• KPI 1 CO₂emissions/Revenue = CO₂emissions 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 PLAN
Emissions into the atmosphere	CO2emissions scope 1 + scope 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%

EMARKET SDIR CERTIFIED

ESG Performance - Environment

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

	EMISSIONS	ENERCY SOURCE
	g CO2eq /kWh	Renewable	Fossil	Nuclear
Italy	315	33%	67%
France	56	19%	11%	70%
Europe	298	29%	50%	21%
വട	374	16%	64%	20%
China	609	26%	70%	4%
India	684	18%	79%	3%
World	521	24%	65%	11%

Source: Terna International comparison

EMARKET SDIR CERTIFIED

ESG Performance - Environment

CO, 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 º, Daniele Landi º, Marco Mengarelli º, Marta Rossi b

² Università degli Studi di Parma · Università Politecnica delle Marche · 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 CO20 / 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

ESC Performance - Environment

Hydrogen: project Hy4Heat

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Hydroge

Sabaf strategic partner in the Hy4Heat Project with zero Co2 emissions in cooking appliances

SABAF ISSOUP

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 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 for durable goods; general economic conditions in the Group's markets; actions of 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 Ganluca Beschi declares that the financial 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