Sabaf

Quarterly Report • May 13, 2021

INTERIM MANAGEMENT STATEMENT

AT 31 MARCH 2021

SABAF S.p.A. Via dei Carpini, 1 – OSPITALETTO (BS) ITALY Fully paid-in share capital: € 11,533,450 www.sabafgroup.com

Table of contents

Group structure and corporate officers	3
Consolidated statement of financial position	4
Consolidated Income Statement	5
Consolidated statement of comprehensive income	6
Statement of changes in consolidated shareholders' equity	7
Consolidated statement of cash flows	8
Consolidated net financial position	9
Explanatory notes	10
Management Statement	12
Statement of the Financial Reporting Officer pursuant to Article 154-bis (2) TUF	14

Group structure and corporate officers

Parent company

SABAF S.p.A.

Subsidiaries and equity interest pertaining to the Group

Companies consolidated on a line-by-line basis
Faringosi Hinges s.r.l.		Italy	100%
Sabaf do Brasil Ltda.		Brazil	100%
Sabaf Beyaz Esya Parcalari	Sanayi Ve Ticaret Limited	Turkey	100%
Sirteki (Sabaf Turkey)
Sabaf Appliance Components (Kunshan) Co., Ltd.		China	100%
Okida Elektronik Sanayi ve Tickaret A.S.		Turkey	100%
Sabaf US Corp.		U.S.A.	100%
A.R.C. s.r.l.		Italy	70%
Sabaf India Private Limited		India	100%
C.M.I. s.r.l.		Italy	84.25%
C.G.D. s.r.l.		Italy	84.25%
C.M.I. Polska Sp. zoo.		Poland	84.25%
Companies consolidated using the equity method
Handan A.R.C. Burners Co., Ltd.		China	35.7%
Honorary Chairman	Giuseppe Saleri

Board of Directors

Chairman	Claudio Bulgarelli
Vice Chairman (*)	Nicla Picchi
Chief Executive Officer	Pietro Iotti
Director	Gianluca Beschi
Director	Alessandro Potestà
Director	Cinzia Saleri
Director (*)	Carlo Scarpa
Director (*)	Daniela Toscani
Director (*)	Stefania Triva
(*) independent directors

Board of Statutory Auditors

Chairman	Alessandra Tronconi
Standing Auditor	Maria Alessandra Zunino de Pignier
Standing Auditor	Mauro Vivenzi

Consolidated statement of financial position

(€/000)

31/03/2021 31/12/2020 31/03/2020

NON-CURRENT ASSETS Property, plant and equipment 78,827 76,507 73,803 Investment property 3,048 3,253 3,869 Intangible assets 41,816 43,017 49,324 Equity investments 164 173 185 Non-current financial assets 0 0 60 Non-current receivables 589 518 284 Deferred tax assets 7,800 8,075 6,583 Total non-current assets 132,244 131,543 134,108 CURRENT ASSETS Inventories 50,081 39,224 34,080 Trade receivables 73,020 63,436 53,136 Tax receivables 2,980 2,419 3,067 Other current receivables 2,865 3,167 2,694 Current financial assets 1,243 1,495 1,233 Cash and cash equivalents 11,843 13,318 12,956 Total current assets 142,032 123,059 107,166 ASSETS HELD FOR SALE 0 0 0 TOTAL ASSETS 274,276 254,602 241,274 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 11,533 11,533 11,533 Retained earnings, Other reserves 98,791 87,504 97,284 Net profit for the period 8,456 13,961 1,547 Total equity interest pertaining to the Parent Company 118,780 112,998 110,364 Minority interests 5,106 4,809 7,181 Total shareholders' equity 123,886 117,807 117,545 NON-CURRENT LIABILITIES Loans 33,552 32,153 42,979 Other financial liabilities 0 0 7,383 Post-employment benefit and retirement provisions 3,536 3,513 3,718 Provisions for risks and charges 1,138 1,433 988 Deferred tax liabilities 4,597 4,697 6,977 Non-current payables 0 0 68 Total non-current liabilities 42,823 41,796 62,113 CURRENT LIABILITIES Loans 31,045 30,493 19,562 Other financial liabilities 8,122 8,489 4,803 Trade payables 51,883 41,773 26,558 Tax payables 4,487 3,287 1,617 Other payables 12,030 10,957 9,076 Total current liabilities 107,567 94,999 61,616 LIABILITIES HELD FOR SALE 0 0 0 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 274,276 254,602 241,274	ASSETS

Consolidated Income Statement

	Q1 2021		Q1 2020		12M 2020
(€/000)
INCOME STATEMENT
COMPONENTS
OPERATING REVENUE AND INCOME
Revenue	64,825	100.0%	43,852	100.0%	184,906	100.0%
Other income	1,888	2.9%	1,049	2.4%	7,194	3.9%
Total operating revenue and income	66,713	102.9%	44,901	102.4%	192,100	103.9%
OPERATING COSTS
Materials	(36,947)	-57.0%	(19,138)	-43.6%	(82,966)	-44.9%
Change in inventories	11,535	17.8%	(304)	-0.7%	6,406	3.5%
Services	(12,286)	-19.0%	(7,570)	-17.3%	(34,264)	-18.5%
Personnel costs	(13,886)	-21.4%	(10,253)	-23.4%	(43,700)	-23.6%
Other operating costs	(704)	-1.1%	(379)	-0.9%	(1,981)	-1.1%
Costs for capitalised in-house work	683	1.1%	432	1.0%	1,502	0.8%
Total operating costs	(51,605)	-79.6%	(37,212)	-84.9%	(155,003)	-83.8%
OPERATING PROFIT BEFORE
DEPRECIATION & AMORTISATION,
CAPITAL GAINS/LOSSES AND	15,108	23.3%	7,689	17.5%	37,097	20.1%
WRITE-DOWNS/WRITE-BACKS OF NON-CURRENT ASSETS (EBITDA)
Depreciations and amortisation	(4,132)	-6.4%	(4,337)	-9.9%	(16,968)	-9.2%
Capital gains/(losses) on disposals of non
current assets	44	0.1%	8	0.0%	105	0.1%
Write-downs/write-backs of non-current		0.0%		0.0%		-0.1%
assets	0		0		(141)
OPERATING PROFIT (EBIT)	11,020	17.0%	3,360	7.7%	20,093	10.9%
Financial income	500	0.8%	72	0.2%	1,366	0.7%
Financial expenses	(211)	-0.3%	(424)	-1.0%	(2,146)	-1.2%
Exchange rate gains and losses	(849)	-1.3%	(816)	-1.9%	(4,812)	-2.6%
Profits and losses from equity investments	(46)	-0.1%	0	0.0%	8	0.0%
PROFIT BEFORE TAXES	10,414	16.1%	2,192	5.0%	14,509	7.8%
Income taxes	(1,646)	-2.5%	(512)	-1.2%	(149)	-0.1%
NET PROFIT FOR THE PERIOD	8,768	13.5%	1,680	3.8%	14,360	7.8%
of which
Minority interests	312	0.5%	133	0.3%	399	0.2%
PROFIT ATTRIBUTABLE TO THE
GROUP	8,456	13.0%	1,547	3.5%	13,961	7.6%

Consolidated statement of comprehensive income

(€/000)	Q1 2021	Q1 2020	12M 2020
NET PROFIT FOR THE PERIOD	8,768	1,680	14,360
Total profits/losses that will not be subsequently restated under profit (loss) for the period:
Actuarial evaluation of post-employment benefit	0	0	16
Tax effect	0	0	(3)
	0	0	13
Total profits/losses that will be subsequently reclassified under profit (loss) for the period: Forex differences due to translation of financial statements in foreign currencies	(2,367)	(4,836)	(12,564)
Total other profits/(losses) net of taxes for the year	(2,367)	(4,836)	(12,551)
TOTAL PROFIT	6,401	(3,156)	1,809
of which
Minority interests	312	133	407
TOTAL PROFIT ATTRIBUTABLE TO THE GROUP	6,089	(3,289)	1,402

Statement of changes in consolidated shareholders' equity

(€/000)	Share capital	Share premium reserve	Legal reserve	Treasury shares	Translation reserve	Post employment benefit discounting reserve	Other reserves	Profit for the year	Total Group shareholders' equity	Minority interests	Total shareholders' equity
Balance at 31 December 2019	11,533	10,002	2,307	(2,268)	(18,939)	(546)	102,024	9,915	114,028	7,077	121,105
Allocation of 2019 profit - carried forward							9,915	(9,915)
IFRS 2 measurement stock grant plan							658		658		658
Hedge accounting for derivatives							240		240	7	247
Purchase of treasury shares				(2.073)					(2.073)		(2,073)
Change in the scope of consolidation							2,657		2,657	(2,657)
Dividends paid out							(3,924)		(3,924)		(3,924)
Other changes							10		10	(25)	(15)
Total profit at 31 December 2020					(12,564)	5		13,961	1,402	407	1,809
Balance at 31 December 2020	11,533	10,002	2,307	(4,341)	(31,503)	(541)	111,580	13,961	112,998	4,809	117,807
Retained earnings FY 2020							13,961	(13,961)	0		0
Hedge accounting for derivatives							(297)		(297)	(7)	(304)
Other changes							(10)		(10)	(8)	(18)
Total profit at 31 March 2021					(2,367)			8,456	6,089	312	6,401
Balance at 31 March 2021	11,533	10,002	2,307	(4,341)	(33,870)	(541)	125,234	8,456	118,780	5,106	123,886

Consolidated statement of cash flows

(€/000)	Q1 2021	Q1 2020	12M 2020
Cash and cash equivalents at beginning of period	13,318	18,687	18,687
Net profit/(loss) for the period	8,768	1,680	14,360
Adjustments for:
- Depreciation and amortisation for the period	4,132	4,337	16,968
- Write-downs of non-current assets	0	0	141
- Realised gains/losses	(44)	(8)	(105)
- Valuation of the stock grant plan	0	247	658
- Profits and losses from equity investments	46	0	(8)
- Net financial income and expenses	(289)	352	780
- Income tax	1,646	512	149
Change in post-employment benefit	23	20	(180)
Change in risk provisions	(295)	(7)	438
Change in trade receivables	(9.584)	(6.207)	(16.507)
Change in inventories	(10.857)	1,263	(3,881)
Change in trade payables	10,110	(902)	14,213
Change in net working capital	(10,331)	(5,846)	(6,175)
Change in other receivables and payables, deferred taxes	778	371	2,115
Payment of taxes	(345)	(1,293)	(2,999)
Payment of financial expenses	(190)	(191)	(1,235)
Collection of financial income	81	72	160
Cash flows from operations	3,980	246	25,067
Net investments	(6,718)	(3,339)	(17,296)
Free cash flow	(2,738)	(3,093)	7,771
Repayment of loans	(5,568)	(2,376)	(18,413)
Raising of loans	7,205	1,385	16,216
Current financial assets	0	0	60
Purchase/sale of treasury shares	0	(722)	(2,073)
Payment of dividends	0	0	(3,924)
Cash flow absorbed by financing activities	1,637	(1,713)	(8,133)
C.M.I. acquisition	0	0	(3,063)
Foreign exchange differences	(374)	(925)	(1,944)
Net cash flows for the period	(1,475)	(5,731)	(5,369)
Cash and cash equivalents at end of period	11,843	12,956	13,318

Consolidated net financial position

	(€/000)	31/03/2021	31/12/2020	31/03/2020
A.	Cash	17	13	26
B.	Positive balances of unrestricted bank accounts	11,353	12,789	12,628
C.	Other cash equivalents	473	516	302
D.	Liquidity (A+B+C)	11,843	13,318	12,956
E.	Current financial receivables	1,243	1,495	1,233
F.	Current bank payables	14,202	13,297	3,596
G.	Current portion of non-current debt	15,364	15,801	14,779
H.	Other current financial payables	9,601	9,884	5,990
I.	Current financial debt (F+G+H)	39,167	38,982	24,365
J.	Net current financial debt (I-E-D)	26,081	24,169	10,176
K.	Non-current bank payables	30,136	28,647	39,575
L.	Other non-current financial payables	3,416	3,506	10,787
M.	Non-current financial debt (K+L)	33,552	32,153	50,362
N.	Net financial debt (J+M)	59,633	56,322	60,538

Explanatory notes

Accounting standards and scope of consolidation

The Interim Management Statement of the Sabaf Group at 31 March 2021 is prepared in compliance with the Stock Exchange (Borsa) Regulation that establishes, among the requirements for maintaining the listing on the STAR segment of the MTA, the publication of interim management reports.

This statement, prepared in continuity with the past, does not contain the information required under IAS 34.

Accounting standards and policies are the same as those adopted for preparation of the consolidated financial statements at 31 December 2020, which should be consulted for reference. All the amounts contained in the statements included in this Interim Management Statement are expressed in thousands of euro.

We also draw attention to the following points:

• ➢ The Interim Management Statement was prepared according to the "discrete method of accounting" whereby the quarter in question is treated as a separate financial period. In this respect, the quarterly income statement reflects the income statement components pertaining to the period on an accrual basis;
• ➢ the financial statements used in the consolidation process are those prepared by the subsidiaries for the period ended 31 March 2021, adjusted to comply with Group accounting policies, where necessary;
• ➢ the parent company Sabaf S.p.A., the subsidiaries Faringosi Hinges, Sabaf Brazil, Sabaf Turkey, Sabaf China, A.R.C., Okida Elektronik, Sabaf U.S., Sabaf India and the companies of the C.M.I. Group (C.M.I., C.G.D. and C.M.I. Poland), were consolidated on a line-by-line basis;
• ➢ the subsidiary Handan A.R.C. Burners Co. was consolidated using the equity method;
• ➢ the scope of consolidation did not change compared to 31 December 2020.

The Interim Management Statement at 31 March 2021 has not been independently audited.

(amounts in €000)	Q1 2021	%	Q1 2020	%	Change %	12M 2020	%
Europe (excluding Turkey)	24,052	37.1%	16,587	37.8%	+45.0%	69,618	37.7%
Turkey	16,276	25.1%	11,099	25.3%	+46.6%	44,806	24.2%
North America	7,301	11.3%	5,543	12.6%	+31.7%	22,700	12.3%
South America	9,890	15.3%	6,778	15.5%	+45.9%	27,639	14.9%
Africa and Middle East	3,908	6.0%	2,329	5.3%	+67.8%	12,177	6.6%
Asia and Oceania	3,398	5.2%	1,516	3.5%	+124.1%	7,966	4.3%
Total	64,825	100.0%	43,852	100.0%	+47.8%	184,906	100.0%

Sales breakdown by geographical area (Euro x 1000)

Sales breakdown by product category (Euro x 1000)

(amounts in €000)	Q1 2021	%	Q1 2020	%	Change %	12M 2020	%
Gas parts	44,589	68.8%	30,722	70.1%	+45.1%	129,834	70.2%
Hinges	14,319	22.1%	9,931	22.6%	+44.2%	41,326	22.3%
Electronic components	5,917	9.1%	3,199	7.3%	+85.0%	13,746	7.4%
Total	64,825	100.0%	43,852	100.0%	+47.8%	184,906	100.0%

Management Statement

Consolidated results for the first quarter 2021

In the first months of 2021, the Sabaf Group is continuing to increase its market share, thanks to the significant contribution of new projects with strategic customers and the industrial and commercial synergies created with the most recently acquired companies. At the same time, the household appliance market is confirming the decidedly positive trend that began in the second half of 2020, with consumers allocating a greater share of their budgets to household goods.

The Group's final figures for the first quarter of 2021 show for the third consecutive quarter record results and a progressive growth: revenue amounted to €64.8 million, up 47.8% from €43.9 million in the first quarter of 2020. The sales figure is significantly higher (+9%) also compared to €59.5 million of the last quarter of 2020, which had already represented an all-time high. In the first quarter of 2021, the electronics division recorded the most significant growth rate (+85% compared to the first quarter of 2020), thanks to the development of international sales and the launch of products for new applications, such as electric hob boards.

The EBITDA of the period was €15.1 million, equal to 23.3% of sales, up 96.5% compared to the €7.7 million (17.5% of sales) of the first quarter of 2020.

The full utilisation of production capacity made it possible to maintain a high level of profitability and to absorb the negative impact of the increase in raw material costs.

After depreciations and amortisation of €4.1 million (€4.3 million in the first quarter of 2020), EBIT was €11 million, corresponding to 17% of turnover, up 228% on the same period of 2020 (7.7% of turnover). During the quarter, the Group recorded negative exchange differences of €0.8 million (as in the first quarter 2020). Net profit for the period was €8.5 million, up 447% on the figure of €1.5 million for the first quarter of 2020.

At 31 March 2021, net working capital1 amounted to €60.5 million, compared to €52.2 million at the end of 2020: the increase was mainly due to the increase in inventories, as a result of the need to ensure continuity of supplies and to limit the impact of changes in raw material prices. Average days for collection from customers and for payment to suppliers

¹ Net working capital is the sum of Inventories, Trade receivables, Tax receivables, Other current receivables, Trade payables, Tax payables and Other payables.

remained substantially unchanged. At 31 March 2021, the impact of the net working capital on annualised revenue was 23.3% compared to 31.8% at 31 March 2020 and 28.2% at 31 December 2020.

Net investments for the quarter came to €6.7 million (€3.3 million in the first quarter of 2020 and €17.3 million for the whole of 2020). The high levels of activity led the Group to bring forward some investments originally planned for 2022, where growth is considered structural, in order to be able to guarantee continuity in supplies to customers and full production efficiency.

At 31 March 2021, net financial debt was €59.6 million (€56.3 million at 31 December 2020), of which €6.8 million related to the valuation of put options granted to minority shareholders of some subsidiaries.

Significant non-recurring, atypical and/or unusual transactions

During the first quarter of 2021, the Group did not engage in significant transactions qualifying as non-recurring, atypical and/or unusual, as envisaged by the Consob communication of 28 July 2006.

Outlook

Activity in the second quarter remained on the high side, in line with that of the first months of the year, with all markets continuing to show a very strong demand. This trend is expected to continue in the second half of the year.

Therefore, for the whole of 2021, the Sabaf Group expects to achieve revenues of more than €240 million, up at least 30% from €184.9 million in 2020 and from €155.9 million in 2019 (previous forecasts indicated revenues of more than €210 million). The Group also expects that offer diversification, the favourable trend in sales prices and the full utilisation of the production capacity will be able to balance the increase in the cost of raw materials and expects an operating profitability (EBITDA %) of more than 21% (previous forecasts indicated an EBITDA of at least 20%).

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

Statement of the Financial Reporting Officer pursuant to Article 154-bis (2) TUF

The Financial Reporting Officer, Gianluca Beschi, declares that, pursuant to paragraph 2, Article 154-bis of Legislative Decree 58/1998 (Consolidated Finance Act), the accounting information contained in the Interim Management Statement at 31 March 2021 of Sabaf S.p.A. corresponds to the Company's records, books and accounting entries.

Ospitaletto (BS), 13 May 2021

Financial Reporting Officer Gianluca Beschi