Safilo Group — Investor Presentation 2020

Mar 11, 2020

FULL YEAR 2019 RESULTS

March 11, 2020

DISCLAIMER

1

This presentation may contain forward looking statements based on current expectations and projects of the Group in relation to future events. Due to their specific nature, these statements are subject to inherent risks and uncertainties, as they depend on certain circumstances and facts, most of which being beyond the control of the Group. Therefore actual results could differ, even to a significant extent, with respect to those reported in the statements.

▪ On July 1, 2019, Safilo closed the transaction to sell Solstice retail operations.

2019 results and comments are provided on the Group's Continuing Operations, which exclude the discontinued retail business.

▪ Safilo elected to implement IFRS 16 applying the modified retrospective approach, whereby the cumulative effect of adopting the standard has been recognized at its relevant effective date on January 1 st 2019, without the restatement of 2018 comparative information.

2019 results and comments are provided on a pre-IFRS 16 basis in order to allow for a proper comparison with the previous periods

▪ Safilo's economic results are impacted by non-recurring items in relation to the non-cash impairment of goodwill and write down of assets, and non-recurring costs.

2019 results and comments are provided on an adjusted basis, with non-recurring items detailed separately

IFRS 16 has a significant impact on the Group's consolidated balance sheet side due to the right of use assets and lease liabilities that are now recognized for contracts in which the Group is a lessee. In the consolidated statement of income, the majority of the current operating rental costs is now presented as depreciation of right of use assets and interest expenses on the lease liabilities, with a material positive impact in terms of EBITDA and a minor effect on EBIT and net income.

millions) (Euro in	CONTINUING OPERATIONS	DISCONTINUED OPERATIONS (SOLSTICE RETAIL BUSINESS)	TOTAL
Income Statement impacts
Reduction of operating rental expenses (additional EBITDA)	13 6	5 8	19 4
Increase in depreciation expenses	(14 2)	(5 4)	(19 6)
Increase in interest expenses	(1 5)	(0 7)	(2 2)
Reduction of result net	(2 1)	(0 3)	(2 4)
Net debt impact December 31 2019 as at ,
Increase of lease liabilities	(47 0)		(47 0)

2019 non-recurring items of the Continuing Operations, excluded from the Group's adjusted results, were Euro 295.9 million, related to:

• the impairment of the entire goodwill allocated to the Group's cash generating units of Euro 227.1 million;
• tax effects of Euro 20.4 million, being the net of the write-down of deferred tax assets of Euro 22.4 million and the tax effect on the non-recurring items themselves of Euro 1.9 million;
• the write-down of fixed assets of Euro 9.0 million for the restructuring plan in Italy, announced on December 10, 2019;
• non-recurring costs of Euro 39,4 million, related to the restructuring plan in Italy announced on December 10, 2019, for Euro 21 million, to the cost saving program undertaken by the Company during the year, and to activities linked to acquisitions and divestitures.

2018 non-recurring costs of the Continuing Operations, excluded from the Group's adjusted results, were Euro 5.8 million. In 2018, Group's adjusted results included an income of Euro 39.0 million, for the early termination of the Gucci license.

2019 KEY FACTS

In 2019, Safilo continued the work started in 2018, consolidating the business foundations to develop its medium-term strategies and ambitions.

CAPITAL INCREASE AND REFINANCING Recover a solid balance sheet

DISPOSAL OF SOLSTICE RETAIL BUSINESS Refocus investments and capabilities

RENEWAL OF CORE LICENSES/ SIGNING OF NEW Play a meaningful multi-segment strategy

ACQUISITION OF BLENDERS EYEWEAR

Accelerate digital strategy and relevance of own core brands

RENEWAL KERING SUPPLY AGREEMENT Confirmation of Made in Italy volumes and skills

GROUP BUSINESS PLAN 2020-2024

Lay down Safilo's medium term strategies and goals

A year of positive sales performance and further significant steps towards restoring a profitable Safilo

in millions of Euro, % on sales, %/bps change vs 2018

* vs 2018 adjusted² EBITDA, excluding the income of Euro 39 million for the early termination of the Gucci license

ECONOMIC HIGHLIGHTS OF THE CONTINUING OPERATIONS (pre-IFRS 16)

NET SALES OF THE CONTINUING OPERATIONS

Focus on strengthening Customer trust in Safilo, strenuously improving customer care and service levels, while reshaping the commercial organization around relevant eyewear competences and strong local accountability.

• ➢ Forex tailwind mainly due to USD appreciation
• ➢ Wholesale business¹ +2.8% in 2019/+0.1% in Q4
  • Own core brands +5.7% in 2019/+8.8% in Q4
  • Positive performance of main licenses
  • Expected deceleration of Dior in Q4 after strong run in 9M
• ➢ Expected decline of Kering supply business, more evident in Q4

NET SALES BY GEOGRAPHY OF THE CONTINUING OPERATIONS

GROSS PROFIT OF THE CONTINUING OPERATIONS

Cost savings mainly in procurement activities, lower obsolescence costs and a more favourable sales mix drove improvement of Continuing Operations at the Gross Profit level

in millions of Euro, % on sales, %/bps change vs 2018

ADJUSTED² EBITDA OF THE CONTINUING OPERATIONS

Effective cost productivity plan allowing for Euro 15 million overhead savings and contributing to taking a significant step towards restoring higher operating margins

in millions of Euro, % on sales, %/bps change vs 2018

ADJUSTED² NET RESULT OF THE CONTINUING OPERATIONS

Lower financial charges and fiscal burden supporting progress to restoring a profitable Safilo

in millions of Euro, % on sales, %/bps change vs 2018

early termination of the Gucci license

FINANCIAL HIGHLIGHTS OF THE TOTAL OPERATIONS (pre-IFRS 16)

FREE CASH FLOW AND GROUP NET DEBT

Improved economic performance and lower NWC needs supporting better Free Cash Flow and contained Group Net Debt

	2018	2019
CASH FLOW FROM OPERATING ACTIVITIES, before change in WC	(11.2)*	19.5	➢ Higher EBITDA (incl. retail loss)
NET WORKING CAPITAL	(17.0)	(13.2)	➢ Intentionally higher inventories ➢ Normalized trade payables
CAPEX	(28.3)	(30.6)
OTHER CHANGES	30.9	10.5**
FREE CASH FLOW	(25.6)	(13.8)
GROUP NET DEBT	32.9	27.8	➢ Free Cash Flow and remaining proceeds from capital increase
& ADJUSTED2 LEVERAGE	0.7X	0.5x

* Excludes the income of Euro 39 million for early termination of Gucci licence, included in OTHER CHANGES

** Includes proceeds from disposal of retail business

SUBSEQUENT EVENTS

ACQUISITION OF PRIVÉ REVAUX ON FEBRUARY 10, 2020

A FAST-GROWING USA EYEWEAR BRAND, POWERED BY A CELEBRITY ECOSYSTEM AND SAVVY DIGITAL MARKETING

• Founded in 2017 in Miami by David Schottenstein;
• A business model empowered by strong social media engagement and digital marketing capabilities, fueled by a strategic network of celebrities;
• A repeatable and scalable strategy of distinctive capsule collection programs, co-branded by major celebrity influencers, that can be introduced into various markets around the world;
• A wide assortment of fashionable, affordable and quality sunglasses, blue light blocking and reading glasses, distributed through a broad set of channels and retail partners, both online and offline;
• 2019E Net sales of ~\$20m, up around 90% compared to the previous year and expected to continue strongly growing them in 2020.

• On Feb 10, 2020 Safilo simultaneously signed and closed the acquisition of 61.34% of the Company's equity for \$67.5 million (€61.6 million at the exchange rate on the announcement date).

• David Schottenstein retains ownership of approximately 15.5% of the equity, while the remainder is held by celebrities Jamie Foxx, Hailee Steinfeld and Ashley Benson, senior management of the Company, and certain other investors. David will remain CEO of Privé Revaux which will continue to run out of its Miami headquarters.

Full year global project linked to Music and Festival experiences. Capsule collection involving macro and micro influencers

CARRERA celebrates the third anniversary of its partnership with the Alfa Romeo Racing ORLEN Team by launching a special Capsule Collection

POSITIVE START TO THE YEAR

2020 OUTLOOK

On December 10, 2019, in the context of the Group Business Plan 2020-2024, Safilo communicated its 2020 outlook, which:

• ➢ includes the acquisition of Blenders, signed on December 8, 2019 and still to be closed at the present date
• ➢ does not include the acquisition of Privè Revaux, signed and simultaneously closed on February 10, 2020
• ➢ does not include any potential impact deriving from the current COVID-19 (coronavirus) outbreak and spread, whose evolution is currently uncertain. The Group is actively working to address the current challenges, and is closely monitoring potential impacts, while implementing mitigation actions.

Founded in 1994, Isabel Marant is an iconic French luxury brand designing and distributing Ready-To-Wear and Accessories

"We are pleased to welcome to our portfolio one of the coolest French designer brands whose unique expression and iconic style ensure it stands out within the advanced luxury design segment. This positioning between contemporary and traditional luxury allows design-driven, trend-setting brands, such as Isabel Marant, to captivate and engage Gen Z and Millennials with their originality, recognition and authenticity,"

"We will focus on reflecting the brand's distinctive Parisian style through its eyewear collections to appeal to women both in France and throughout the world and expand the brand in this important product category." Angelo Trocchia, CEO

Appendices

• 1. The wholesale business excludes Kering supply business, recorded within the geographical area of Europe.
• 1. In 2019, the adjusted economic results of the Continuing Operations exclude: (i) the impairment of the entire goodwill allocated to the Group's cash generating units of Euro 227.1 million, (ii) the write-down of deferred tax assets of Euro 22.4 million, (iii) the write-down of fixed assets of Euro 9.0 million for the restructuring plan in Italy, announced on December 10, 2019, (iv) non-recurring costs of 39.4 million, related to the above-mentioned restructuring plan in Italy for Euro 21 million, to the cost saving program undertaken by the Company during the year, and to activities linked to acquisitions and divestitures. At the net result level, there was a positive tax effect on the non-recurring costs themselves of Euro 1.9 million.

In Q4 2019, the adjusted EBITDA excludes non-recurring costs for Euro 29.0 million, the corresponding part of the above indicated Euro 39.4 million.

In 2018, the adjusted economic results excluded non-recurring costs for Euro 5.8 million, mainly related to the CEO succession plan and reorganization costs in North America and Europe, and included an income of Euro 39.0 million, annual portion of the total Euro 90 million accounting compensation for the early termination of the Gucci license.

In Q4 2018, the adjusted EBITDA excluded non-recurring costs for Euro 1.3 million and included an income of Euro 9.8 million, as pro-rata portion of the annual accounting compensation for the early termination of the Gucci license.

1. In 2019, the adjusted economic results of the Total Operations also exclude non-recurring items related to the retail discontinued operations: (i) Euro 17.3 million for the loss on disposal and (ii) non-recurring costs for Euro 1.3 million.

(Euro in millions)	2019 FY	%	2018 FY	%	Change % forex at current	Change % forex at constant
Europa	448 8	8% 47	452 0	49 6%	-0 7%	-0 7%
North America	334 0	35 6%	319 1	35 0%	+4 6%	-0 6%
Asia Pacific	78 0	8 3%	63 3	7 0%	+23 1%	+9 2%
Rest of the world	78 3	8 3%	76 3	8 4%	+2 7%	1% +1
Total	939 0	100 0%	910 7	100 0%	+3 1%	+0 9%
(Euro in millions)	Q4 2019	%	Q4 2018	%	% Change forex at current	% Change forex at constant
Europa	106 9	46 4%	120 4	50 8%	-11 2%	-11 8%
North America	84 7	36 8%	78 7	33 2%	+7 6%	+4 2%
Asia Pacific	17 0	7 4%	15 4	6 5%	+10 1%	+8 9%
of the world Rest	21 8	9 5%	22 4	9 5%	-2 7%	-3 4%
Total	230 4	100 0%	236 9	100 0%	-2 8%	-4 3%

Economic highlights of the Continuing Operations

(Euro in millions)	2019	2019	2018	% Change
	reported	pre-IFRS 16		pre-IFRS 16
Net sales	939.0	939.0	910.7	+3.1%
Gross profit	476.9	477.2	453.2	+5.3%
% on net sales	50.8%	50.8%	49.8%
EBITDA	26.1	12.4	51.5	-75.8%
% on net sales	2.8%	1.3%	5.7%
Adjusted2 EBITDA	65.4	51.8	57.3	-9.6%
% on net sales	7.0%	5.5%	6.3%
Operating result	(271.7)	(271.2)	7.6	n.s.
% on net sales	-28.9%	-28.9%	0.8%
Adjusted2 operating result	3.7	4.2	13.5	-68.6%
% on net sales	0.4%	0.5%	1.5%
Group net result	(301.9)	(299.8)	(19.8)	n.s.
% on net sales	-32.2%	-31.9%	-2.2%
Adjusted2 Group net result	(6.0)	(4.0)	(14.0)	+71.8%
% on net sales	-0.6%	-0.4%	-1.5%

(Euro in millions)	Q4 2019 reported	Q4 2019 pre-IFRS 16	Q4 2018	% Change pre-IFRS 16
Net sales	230.4	230.4	236.9	-2.8%
Gross profit % on net sales	101.8 44.2%	102.1 44.3%	108.3 45.7%	-5.8%
EBITDA % on net sales	(17.9) (7.8%)	(21.1) (9.2%)	12.0 5.1%	n.s.
Adjusted2 EBITDA % on net sales	11.1 4.8%	7.9 3.4%	13.3 5.6%	-40.9%

(Euro in millions)	2019 reported	2019 pre-IFRS 16	2018	% Change pre-IFRS 16
Net sales	964 7	964 7	962 9	+0 2%
Gross profit % sales on net	487 3 50 5%	487 7 50 6%	481 5 50 0%	+1 3%
EBITDA % sales on net	23 0 2 4%	3 6 0 4%	41 7 3% 4	-91 5%
Adjusted2,3 EBITDA % sales on net	63 7 6 6%	44 3 6% 4	47 5 9% 4	-6 8%
Operating result % sales on net	(294 5) -30 5%	(294 3) -30 5%	9) (5 -0 6%	n.s.
Adjusted2,3 operating result % sales on net	(4 1) 4% -0	(3 9) -0.4%	0 0 0 0%	n.s.
Group result net % sales on net	(328 3) -34 0%	(325 9) -33 8%	(32 4) -3 4%	n.s.
Adjusted2,3 Group result net % sales on net	(13 7) -1 4%	(11 4) -1 2%	(26 7) -2 8%	+57 5%

	December 31 ,	December 31 2019 ,	December 31 ,	Change
	2019 reported	pre-IFRS 16	2018	pre-IFRS 16
Net working capital	250 8	250 8	251 3	(0 5)
Tangible Right of Use , and Intangible fixed assets ,	240 6	198 4	461 6	(263 3)
Financial fixed assets	0 0	0 0	0 0	0 0
held for sale Non-current assets	5 5	5 5	0 0	5 5
Other (liabilities) / assets , net	(80 1)	(82 9)	(33 7)	(49 2)
invested capital Net	416 8	371 8	679 2	(307 4)
financial position Net	(74 8)	(27 8)	(32 9)	5 1
Group Shareholders' equity	(342 1)	(344 1)	(646 3)	302 2
Non-controlling interests	0 1	0 1	0 0	0 1

	December 31 2019 ,	December 31 2018 ,	Change
Trade receivables	188 2	184 4	3 8
Inventories	235 8	237 7	(1 9)
Trade payables	(173 1)	(170 8)	(2 4)
working capital Net	250 8	251 3	(0 5)
% sales net on	26 7%	26 1%

	2019	2019	2018
(Euro in millions)	reported	pre-IFRS 16
Cash flow from operating activities before changes in working capital	36 8	19 5	27 8
Changes in working capital	(10 2)	(9 9)	(25 1)
Cash flow from operating activities	26 5	9 6	2 7
Cash flow for investment activities	(41 0)	(23 4)	(28 3)
Cash Flow Free	(14 5)	(13 8)	(25 6)

Exchange Rates

		As of		(Appreciation)/ Depreciation	Average for		(Appreciation)/ Depreciation
		December 31 ,	December 31 ,		December 31 ,	December 31 ,
Currency	Code	2019	2018	%	2019	2018	%
US Dollar	USD	1.1234	1.1450	-1.9%	1.1195	1.1810	-5.2%
Dollar Hong-Kong	HKD	8 .7473	8 9675	-2 .5%	8 .7715	9 2559	-5.2%
Swiss Franc	CHF	1.0854	1.1269	-3 .7%	1.1125	1.1550	-3 .7%
Canadian Dollar	CAD	1.4598	1.5605	-6 .5%	1.4855	1.5294	-2 9%
Japanese Yen	YEN	121 9400	125 8500	-3 .1%	122 0058	130 3959	-6 .4%
British Pound	GBP	0 8508	0 8945	-4.9%	0 8778	0 8847	-0 8%
Swedish Krown	SEK	10 .4468	10 2548	1.9%	10 .5891	10 2583	3 2%
Australian Dollar	AUD	1.5995	1.6220	-1.4%	1.6109	1.5797	2 0%
South-African Rand	ZAR	15.7773	16 .4594	-4.1%	16 .1757	15.6186	3 6%
Russian Ruble	RUB	69 9563	79 .7153	-12 2%	72 .4553	74.0416	-2 .1%
Brasilian Real	BRL	4.5157	4.4440	1.6%	4.4134	4.3085	2 .4%
Indian Rupee	INR	80 .1870	79 .7298	0 6%	78 8361	80 .7332	-2 3%
Singapore Dollar	SGD	1.5111	1.5591	-3 .1%	1.5273	1.5926	-4.1%
Malaysian Ringgit	MYR	4.5953	4.7317	-2 9%	4.6374	4.7634	-2 6%
Chinese Renminbi	CNY	7.8205	7.8751	-0 .7%	7.7355	7.8081	-0 9%
Korean Won	KRW	1,296 2800	1,277 9300	1.4%	1,305 3173	1,299 0713	0 .5%
Mexican Peso	MXN	21 2202	22 .4921	-5.7%	21 .5565	22 .7054	-5.1%
Turkish Lira	TRY	6 6843	6 0588	10 3%	6 35777	5.70767	11.4%
Dirham UAE	AED	4.1257	4.205	-1.9%	4.11127	4.33706	-5.2%

Brand Portfolio

* from 2021

** signed and communicated on December 8, 2019 and still to be closed at the present date