Safilo Group — Investor Presentation 2021

Mar 11, 2021

2020 RESULTS

March 11, 2021

DISCLAIMER

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.

1

"2020 presented the most challenging market conditions we have ever experienced and I want to express my utmost gratitude to all our people, in the plants and in our offices around the world, for their dedication and the excellent job accomplished in such a difficult period of our lives.

The health and safety of our people, including the opportunity to manage professional and personal needs with the greatest flexibility, were and continue to be our first priority.

Considering the unprecedented business environment due to the Covid-19 pandemic, I am satisfied with our economic and financial results."

Angelo Trocchia, CEO

AFTER Q3 REBOUND, RECOVERY OF SALES AND EARNINGS CONTINUED IN Q4

…NOTWITHSTANDING RENEWED EXTERNAL CHALLENGES DUE TO THE SECOND WAVE OF COVID-19 INFECTIONS

➢ FULL CONTRIBUTION OF OUR RECENT ACQUISITIONS:

• Strong online business continuing in a lower seasonal quarter

➢ SEQUENTIAL IMPROVEMENT OF OUR ORGANIC¹ BUSINESS:

• Rebound of US independent 3Os continuing
• Outstanding growth of Mainland China and Australia
• Still weak market environment in Europe
• Growth of prescription frames, while sunglasses lagging behind

➢ POSITIVE ADJUSTED² OPERATING PERFORMANCE

• Better operating leverage

2020 ECONOMIC AND FINANCIAL HIGHLIGHTS

FY RESULTS REFLECT BUSINESS REBOUND POST H1 AND DECISIVE COST AND NWC INTERVENTIONS

4

ADVANCING OUR MEDIUM-TERM STRATEGIC AGENDA

WE REMAINED FOCUSED ON THE KEY STRATEGIES OF OUR 2019 GROUP BUSINESS PLAN

RENEW OUR BRANDS/ CHANNELS/ PRODUCT MIX

• ✓ Launch Levi's, David Beckham, Missoni, Ports
• ✓ Prepare Isabel Marant and Under Armour for 2021
• ✓ Phase-out of Dior
• ✓ Blenders, Privé Revaux and Smith to boost D2C business
• ✓ State-of-the-art B2B and CRM to boost business with 3O customers

INITIATE THE OVERHAUL OF OUR PRODUCTION FOOTPRINT

• ✓ Sale of Martignacco plant
• ✓ Initial rightsizing of Longarone

SALES PERFORMANCE

TOTAL NET SALES

(in millions of Euro and % change vs same period of 2019)

H2 SALES REBOUND DRIVEN BY ACQUISITIONS AND THE SEQUENTIAL IMPROVEMENT OF THE ORGANIC¹ BUSINESS

	FY 2020	of which			H2 2020	of which			Q4 2020	of which
		M&A	ORGANIC1			M&A	ORGANIC1			M&A	ORGANIC1
NET SALES	780.3	61.8	718.5	WHOLESALE3	444.7	40.6	404.1	WHOLESALE3	225.6	14.1	211.5	WHOLESALE3
% change @current FX	-16.9%				+0.4%				-2.1%
% change @constant FX	-15.2%	+6.7%	-21.9%	-21.5%	+4.5%	+9.6%	-5.1%	-3.5%	+3.0%	+6.6%	-3.6%	-1.6%

	Q3 2020	of which			H1 2020	of which
		M&A	ORGANIC1			M&A	ORGANIC1
NET SALES	219.1	26.5	192.6	WHOLESALE3	335.6	21.2	314.4	WHOLESALE3
% change @current FX	+3.0%				-32.3%
% change @constant FX	+6.0%	+12.7%	-6.7%	-5.5%	-32.7%	+4.2%	-36.9%	-37.7%

OUR TOTAL ONLINE BUSINESS

SAFILO'S TOTAL ONLINE BUSINESS

(% change vs 2019)

AS CONSUMERS SHIFT TO DIGITAL/SOCIAL AND D2C ECOMMERCE, OUR TOTAL ONLINE BUSINESS SHARPLY GREW IN 2020, REACHING CA €100M OR 13% OF TOTAL NET SALES

NORTH AMERICA

(in millions of Euro and % change vs same period of 2019)

UNITED STATES OUR BEST PERFORMING REGION BEHIND THE SIGNIFICANT H2 REBOUND DRIVEN BY ACQUISITIONS & OUR ORGANIC¹ BUSINESS. LEVERAGING A DYNAMIC MARKET AND STRONG CAPABILITIES TO BETTER SERVE OUR WHOLESALE CUSTOMERS.

	FY 2020	of which ORGANIC1	H2 2020	of which ORGANIC1	Q4 2020	of which ORGANIC1	Q3 2020	of which ORGANIC1	H1 2020	of which ORGANIC1
NET SALES	342.5		214.0		100.9		113.1		128.5
% change @current FX	+2.5%		+30.1%		+19.2%		+41.5%		-24.2%
% change @constant FX	+4.7%	-14.2%	+36.3%	+10.6%	+27.0%	+8.9%	+45.9%	+12.1%	-26.0%	-38.2%

EUROPE

(in millions of Euro and % change vs same period of 2019)

BUSINESS RECOVERY IN EUROPE SLOWER, IMPACTED BY SECOND WAVE OF THE COVID-19 PANDEMIC. Q4 STILL DRIVEN BY LOW SUNGLASSES AND TRADING IN BOUTIQUES AND TRAVEL RETAIL, WHILE IPP AND OPTICAL BUSINESS OUTPERFORMED.

	FY 2020	of which WHOLESALE3	H2 2020	of which WHOLESALE3	Q4 2020	of which WHOLESALE3	Q3 2020	of which 3 WHOLESALE	H1 2020	of which WHOLESALE3
NET SALES	330.4		165.4		86.1		79.3		165.0
% change @current FX	-26.4%		-18.3%		-19.4%		-17.0%		-33.0%
% change @constant FX	-25.9%	-25.8%	-17.3%	-15.6%	-18.0%	-16.0%	-16.4%	-15.2%	-32.9%	-34.0%

ASIA PACIFIC

(in millions of Euro and % change vs same period of 2019)

HEALTHY INTERNAL CONSUMPTION AND LAUNCH OF NEW BRANDS SUPPORTED SURGE OF BUSINESS IN CHINA. FY PERFORMANCE ALMOST COMPLETELY DRIVEN BY COLLAPSE OF TRAVEL RETAIL ACTIVITIES DUE TO BANS ON TRAVEL.

	FY 2020	H2 2020	Q4 2020	Q3 2020	H1 2020
NET SALES	60.7	36.9	21.1	15.9	23.7
% change @current FX	-22.2%	+7.1%	+24.1%	-9.4%	-45.4%
% change @constant FX	-20.9%	+10.6%	+28.1%	-6.4%	-45.9%

REST OF THE WORLD

(in millions of Euro and % change vs same period of 2019)

MILDER BUSINESS DECLINE IN Q4 SUPPORTED BY BRAZIL AND MEXICO AND FIRST SIGNS OF RECOVERY IN IMEA MARKETS.

	FY 2020	H2 2020	Q4 2020	Q3 2020	H1 2020
NET SALES	46.8	28.4	17.5	10.9	18.4
% change @current FX	-40.3%	-31.8%	-19.7%	-45.2%	-49.8%
% change @constant FX	-32.6%	-20.4%	-6.5%	-35.6%	-46.4%

ECONOMIC PERFORMANCE

2020 KEY DRIVERS OF OUR OPERATING RESULTS

• 1) OPERATING LEVERAGE STRONGLY IMPACTED BY SALES SETBACK IN H1, NORMALIZING IN H2 BEHIND BUSINESS RECOVERY
• 2) STRUCTURAL OVERHEAD COST SAVINGS OF €15M, OUT OF THE GROUP'S MEDIUM-TERM PLAN OF €20M
• 3) ONE-TIME COVID-19 RELATED SAVINGS OF APPROXIMATELY €28M ON TOP
• 4) NON-RECURRING COSTS OF €25.5M (€21.1M AT THE EBITDA LEVEL)

INDUSTRIAL PERFORMANCE

(in millions of Euro, %/bps change vs same period of 2019)

H2 GROSS MARGIN STARTING TO RECOVER AFTER H1 IMPACT, REFLECTING A STRUCTURAL DECLINE IN D&A AND ACCRETIVE D2C ACQUISITION IMPACT. Q4 CONSTRAINED BY NEGATIVE SALES MIX AND NON-RECURRING COSTS

	FY 2020	H2 2020	Q4 2020	Q3 2020	H1 2020
Gross profit	362.5	213.9	101.3	112.6	148.6
% change	-24.0%	+1.5%	-0.4%	+3.3%	-44.2%
Margin %	46.5%	48.1%	44.9%	51.4%	44.3%
bps change	-430 bps	+50 bps	+70 bps	+20 bps	-940 bps

ADJUSTED² OPERATING PERFORMANCE

(in millions of Euro, %/bps,pps change vs same period of 2019)

IN H2 2020, SG&A EXPENSES BENEFITTED FROM LOWER ROYALTIES AND MARKETING CONTRIBUTIONS OFFSETTING ADDITIONAL COSTS ASSOCIATED WITH ACQUISITIONS, AND HIGHER LOGISTICS COSTS

ADJUSTED² NET PERFORMANCE

(in millions of Euro, %/bps,pps change vs same period of 2019)

BELOW THE ADJUSTED² OPERATING LINE, SAFILO'S ADJUSTED² NET RESULT REFLECTED:

• 1. HIGHER NET FINANCIAL CHARGES DUE TO NEGATIVE EXCHANGE RATES DIFFERENCES AND HIGHER AVERAGE GROSS DEBT;
• 1. POSITIVE ACCOUNTING ADJUSTMENT OF €19.8M DUE TO REDUCED OPTION LIABILITY ON MINORITY INTERESTS;
• 1. TAX BENEFIT OF €14.4M MAINLY FROM THE US CARES* ACT EXPECTED TO BE CASHED IN 2021;

FINANCIAL PERFORMANCE

FREE CASH FLOW

(in millions of Euro)

STRICT WORKING CAPITAL CONTROL - REDUCTION OF INVENTORIES AND NORMALIZATION OF CASH COLLECTION/ PAYABLES - DROVE FY POSITIVE OPERATING CASH FLOW. CASH ABSORPTION (EX M&A) STRONGLY IMPACTED BY THE COVID-19 PANDEMIC.

	FY 2020	FY 2019
CASH FLOW FROM OPERATING ACTIVITIES before change in WC	(41.6)	36.8
Change in WORKING CAPITAL	42.5	(10.2)
CASH FLOW FROM OPERATING ACTIVITIES	0.9	26.5
Organic CAPEX	(21.4)	(30.6)
Cash payments for the principal portion of lease liabilities IFRS 16	(10.7)	(16.9)
FREE CASH FLOW before acquisitions/disinvestments	(31.3)	(21.0)
CASH FLOW FOR/FROM ACQUISITIONS/DISINVESTMENTS	(111.8)	7.2
FREE CASH FLOW	(143.1)	(13.8)

GROUP NET DEBT

(in millions of Euro)

KEY COMPONENTS OF THE GROUP DEBT

	Dec.31, 2020	Dec.31, 2019
GROSS DEBT	311.0	139.0
- IFRS-16 effect	43.1	47.0
- Shareholder Loan for the acquisitions	93.5	-
- Term Loan facility, guaranteed by SACE	108.0	-
- "TL & RCF 2018" facility	65.0	85.0
- Other short/long-term borrowings	1.4	7.0
NET CASH POSITION *	(89.0)	(64.2)
NET DEBT	222.1	74.8
NET DEBT pre-IFRS 16 and acquisitions	67.2	27.8

* Cash position, net of 21.8M cash out for the acquisitions

17

BUSINESS EVOLUTIONS AFTER THE YEAR-END

FURTHER ACTIONS OF OUR INDUSTRIAL PLAN

IN LINE WITH THE BUSINESS OBJECTIVE OF IMPROVING THE EFFICIENCY OF THE GROUP MANUFACTURING FOOTPRINT, TO ENABLE GROSS MARGIN RECOVERY AND THE GROUP ECONOMIC & FINANCIAL SOLIDITY

REALIGNING OUR MANUFACTURING CAPACITY TO THE CURRENT AND FUTURE PRODUCTION NEEDS

➢ FURTHER ACTION REQUIRED • Intended closure of Ormož production site, in Slovenia ➢ KEY IMPLICATIONS • 557 expected redundancies

BUSINESS UPDATE IN RELATION TO THE COVID-19 PANDEMIC

• ✓ The business environment at the beginning of 2021 remained affected by the containment actions still in place in many countries to halt the spread of Covid-19 and the uncertainties over the scale and timing of the expected rebound in consumer demand across the different geographies.
• ✓ Our business activity in January and February was in line with our expectations for a more moderate start to the year compared to the very positive sales trends recorded at the beginning of 2020, while the first ten days of March confirm a significant acceleration compared to the same period last year, the first to be highly impacted by the consequences of the pandemic.
• ✓ Based on the current visibility on the order book, the Group expects its total net sales for the first quarter of 2021 to grow, at constant exchange rates, in a high-single to low-double digit range compared to Q1 2020.
• ✓ As we continue to maintain a prudent stance on the prospects for the current year awaiting further market evidence of a solid sun season, the main assumption of our work today rests on the opportunity for our business, both owned and licensed, to effectively compensate for discontinued and exiting activities, and on the continuation of our cost reduction plan to recover this year a more positive economic profile.

FULL YEAR 2020 APPENDICES

¹ The organic business excludes the acquisitions of Privé Revaux and Blenders Eyewear, reported in the geographical area of North America, and the impact of exchange rates. In 2020, Safilo Group consolidated the above businesses as per the respective acquisition dates of February 10, 2020 and June 1, 2020.

2 In 2020, the adjusted economic results exclude non-recurring costs for Euro 25.5 million (Euro 21.1 million at the EBITDA level and Euro 22.8 million at the net result level) due to restructuring expenses related to the ongoing cost saving plan for Euro 16.6 million, and to charges due to the termination of activities related to exiting license brands, such as write-offs of industrial assets, for Euro 8.9 million. In Q4 2020, the adjusted EBITDA excludes non-recurring costs for Euro 9.3 million, the corresponding part of the above indicated Euro 21.1 million.

In 2019, the adjusted economic results excluded: (i) the impairment of the entire goodwill allocated to the Group's cash generating units of Euro 227.1 million, (ii) the writedown 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 Euro 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 excluded non-recurring costs for Euro 29.0 million, the corresponding part of the above indicated Euro 39.4 million.

³ The wholesale business excludes the acquisitions of Privé Revaux and Blenders Eyewear, and the supply agreement with Kering, reported in the geographical area of Europe.

⁴ Safilo Group has consolidated Privé Revaux and Blenders Eyewear in 2020, as per the respective acquisition dates of February 10, 2020 and June 1st, 2020. Privé Revaux and Blenders Eyewear 2020 pro-forma sales performance is calculated on a full year basis.

(Euro in millions)	FY 2020	%	FY 2019	%	change % at current forex	change % at constant forex
Europe	330 4	42.3	448 8	47.8	4% -26	9% -25
North America	342 5	43.9	334 0	35.6	+2 5%	+4 7%
Asia Pacific	60 7	7.8	78 0	8.3	2% -22	9% -20
Rest of the world	46 8	6.0	78 3	8.3	-40 3%	-32 6%
Total	780.3	100.0	939.0	100.0	-16.9%	-15.2%

(Euro in millions)	H2 2020	%	H2 2019	%	change % at current forex	change % at constant forex
Europe	165 4	37.2	202 5	45.7	-18 3%	3% -17
North America	214 0	48.1	164 5	37.1	+30 1%	+36 3%
Asia Pacific	36 9	8.3	34 5	7.8	1% +7	+10 6%
of the world Rest	28 4	6.4	41 6	9.4	-31 8%	-20 4%
Total	444.7	100.0	443.1	100.0	0.4%	+4.5%

(Euro million)	Q4 2020	%	Q4 2019	%	change % at current forex	change % at constant forex
Europe	86 1	38.2	106 9	46.4	-19 4%	-18 0%
North America	100 9	44.7	84 7	36.8	+19 2%	+27 0%
Asia Pacific	21 1	9.3	17 0	7.4	+24 1%	+28 1%
of the world Rest	17 5	7.8	21 8	9.5	-19 7%	-6 5%
Total	225.6	100.0	230.4	100.0	-2.1%	+3.0%

(Euro in millions)	H1 2020	%	H1 2019	%	change % at current forex	change % at constant forex
Europe	165 0	49.2	246 3	49.7	0% -33	9% -32
North America	128 5	38.3	169 5	34.2	-24 2%	-26 0%
Asia Pacific	23 7	7.1	43 5	8.8	4% -45	9% -45
of Rest the world	18 4	5.5	36 7	7.4	-49 8%	-46 4%
Total	335.6	100.0	495.9	100.0	-32.3%	-32.7%

22

INCOME STATEMENT

(Euro in Millions)	2020	%	2019	Change % %	H2 2020	%	H2 2019 %	Change %
Net sales	780.3	100.0	939.0 100.0	-16.9%	444.7	100.0	443.1 100.0	0.4%
Cost of sales	(417.8)	(53.5)	(462.1) (49.2)	-9.6%	(230.8)	(51.9)	(232.4) (52.4)	-0.7%
profit Gross	362.5	46.5	476.9 50.8	-24.0%	213.9	48.1	210.7 47.6	1.5%
Selling and marketing expenses	(311.9)	(40.0)	(367.0) (39.1)	-15.0%	(162.0)	(36.4)	(174.2) (39.3)	-7.0%
General and administrative expenses	(114.0)	(14.6)	(120.7) (12.9)	-5.5%	(57.3)	(12.9)	(59.8) (13.5)	-4.3%
Other operating income (expenses)	(16.4)	(2.1)	(33.8) (3.6)	-51.4%	(6.1)	(1.4)	(29.7) (6.7)	-79.4%
loss on goodwill Impairment	-	-	(227.1) (24.2)	-100.0%	-	-	- -	-
profit/(loss) Operating	(79.8)	(10.2)	(271.7) (28.9)	-70.6%	(11.4)	(2.6)	(52.9) (11.9)	-78.5%
Gains/(losses) on liabilities for options on non-controlling interests	19.8	2.5	-	n.s. -	19.8	4.5	- -	n.s.
Financial charges, net	(24.1)	(3.1)	(7.3) (0.8)	n.s.	(12.5)	(2.8)	(4.4) (1.0)	n.s.
Profit/(Loss) before taxation	(84.1)	(10.8)	(279.0) (29.7)	-69.9%	(4.1)	(0.9)	(57.3) (12.9)	-92.8%
Income taxes	14.4	1.9	(22.9) (2.4)	n.s.	8.8	2.0	2.3 0.5	n.s.
profit/(loss) of the period Net	(69.7)	(8.9)	(302.0) (32.2)	-76.9%	4.6	1.0	(55.0) (12.4)	n.s.
Non-controlling interests	(0.3)	(0.0)	(0.1) (0.0)	n.s.	(0.7)	(0.2)	(0.1) (0.0)	n.s.
profit/(loss) attributable to owners of the Net Parent	(69.4)	(8.9)	(301.9) (32.2)	-77.0%	5.4	1.2	(55.0) (12.4)	n.s.
EBITDA	(20.1)	(2.6)	26.1 2.8	n.s.	18.5	4.2	(10.2) (2.3)	n.s.
Adjusted2 economic indicators	2020	%	2019	Change % %	H2 2020	%	H2 2019 %	Change %
Adjusted2 EBITDA	1.0	0.1	65.4 7.0	-98.4%	29.3	6.6	24.2 5.5	21.0%
Adjusted2 profit/(loss) Operating	(54.3)	(7.0)	3.7 0.4	n.s.	0.9	0.2	(9.6) (2.2)	n.s.
Adjusted2 profit/(loss) Net attributable to the Group	(46.5)	(6.0)	(6.0) (0.6)	n.s.	17.2	3.9	(14.5) (3.3)	n.s.

(Euro Millions) in	Q4 2020	%	Q4 2019	%	% Change
sales Net	225 6	100 0	230 4	100 0	1% -2
profit Gross	101 3	44 9	101 8	44 2	-0 4%
EBITDA	5 7	2 5	(17 9)	(7 8)	n.s.
Adjusted2 EBITDA	15 0	6 6	11 1	4 8	34 5%

(Euro Millions) in	December 31 2020 ,	December 31 2019 ,	Change
working	188	250	(62
capital	5	8	3)
Net
Tangible Right of and Intangible fixed Use assets , ,	316 5	240 6	76 0
Goodwill	30	0	30
	3	0	3
for held sale Non-current assets	6 6	5 5	1 0
/ (liabilities) Other assets net ,	(133 5)	(80 1)	(53 4)
invested	408	416	(8
capital	4	8	4)
Net
financial	(222	(74	(147
position	1)	8)	2)
Net
Shareholders'	(147	(342	194
equity	3)	1)	7
Group
Non-controlling interests	(39 0)	0 1	(39 1)

(Euro in Millions)	December 31, 2020	December 31, 2019	Change
Trade receivables	172.6	188.2	(15.5)
Inventories	197.3	235.8	(38.5)
Trade payables	(181.4)	(173.1)	(8.3)
Net working capital	188.5	250.8	(62.3)
% on net sales	24.2%	26.7%

(Euro Millions) in	2020	2019
flow from before Cash changes working capital operating activities in	(41 6)	36 8
Changes working capital in	42 5	(10 2)
flow Cash operating activities	0 9	26 5
Cash flow investing activities	(21 4)	(30 6)
flow from of Cash principal lease liabilities portion IFRS 16 repayment	(10 7)	(16 9)
acquisitions/disinvestments) (before Cash Flow Free	(31 3)	(21 0)
for/from acquisitions/disinvestments Cash flow	(111 8)	2 7
Cash Flow Free	(143 1)	(13 8)

EXCHANGE RATES

Currency		of As		(Appreciation) /Depreciation	for Average		(Appreciation) /Depreciation
	Code	December 31 , 2020	December 31 2019	, %	2020	2019	%
Dollar US	USD	2271 1	1234 1	9 2%	1422 1	1195 1	2 0%
Dollar	HKD	9 5142	8 7473	8 8%	8 8587	8 7715	0% 1
Hong-Kong Swiss Franc	CHF	0802 1	0854 1	-0 5%	0705 1	1125 1	-3 8%
Canadian Dollar	CAD	1 5633	1 4598	1% 7	1 5300	1 4855	3 0%
Japanese Yen	YEN	126 4900	121 9400	3 7%	121 8458	122 0058	-0 1%
British Pound	GBP	0 8990	0 8508	5 7%	0 8897	0 8778	1 4%
Swedish Krown	SEK	10 0343	10 4468	-3 9%	10 4848	10 5891	-1 0%
Australian Dollar	AUD	1 5896	1 5995	-0 6%	1 6549	1 6109	2 7%
South-African Rand	ZAR	18 0219	15 7773	14 2%	18 7655	16 1757	16 0%
Ruble Russian	RUB	91 4671	69 9563	30 7%	82 7248	72 4553	14 2%
Brasilian Real	BRL	6 3735	4 5157	41 1%	5 8943	4 4134	33 6%
Indian Rupee	INR	89 6605	80 1870	8% 11	84 6392	78 8361	4% 7
Singapore Dollar	SGD	1 6218	1 5111	3% 7	1 5742	1 5273	1% 3
Malaysian Ringgit	MYR	4 9340	4 5953	4% 7	4 7959	4 6374	4% 3
Chinese Renminbi	CNY	8 0225	8205 7	2 6%	8747 7	7355 7	8% 1
Korean Won	KRW	336 0000 1 ,	296 2800 1 ,	3 1%	345 5765 1 ,	305 3173 1 ,	3 1%
Mexican Peso	MXN	24 4160	21 2202	15 1%	24 5194	21 5565	13 7%
Turkish Lira	TRY	9 1131	6 6843	36 3%	8 05472	6 35777	26 7%
Dirham UAE	AED	4 5065	4 1257	9 2%	4 19472	4 11127	2 0%