Seco — Investor Presentation 2022

Sep 12, 2022

S E C O : H 1 2 0 2 2 R e s u l t s a n d B u s i n e s s u p d a t e p r e s e n t a t i o n

Disclaimer

This document has been prepared by SECO S.p.A. ("SECO" or the "Company"), for information purposes only, exclusively with the aim of assisting you to understand and assess the activities of SECO. The information contained in this presentation does not purport to be comprehensive and may not have been independently verified by any independent third party.

Statements contained in this presentation, particularly regarding any possible or assumed future performance of the SECO Group, are or may be forward-looking statements based on SECO's current expectations and projections about future events.

Such forward-looking statements are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the actual results, including the financial condition and profitability of SECO to differ materially from, or be more negative than, those expressed or implied by such forward-looking statements, due to any number of several factors, many of which are beyond the ability of SECO to control or estimate precisely. Consequently, SECO and its management can give no assurance regarding the future accuracy of the estimates of future performance set forth in this document or the actual occurrence of the predicted developments.

The data and information contained in this document are subject to variations and integrations. Although SECO reserves the right to make such variations and integrations when it deems necessary or appropriate, SECO assumes no affirmative disclosure obligation to make such variations and integration, except to the extent required by law.

SECO does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation.

Any reference to past performance of the SECO Group shall not be taken as an indication of future performance.

In addition, this presentation includes or may include certain ''Adjusted'' financial and operating indicators and other measures, which have been adjusted to reflect extraordinary events, non-recurring transactions and activities which are not directly related to the Group's ordinary business.

Such "Adjusted" information has been included to allow a better comparison of financial information across the periods; however, it should be noted that such information is not recognized as measures of financial performance or liquidity under IFRS and/or do not constitute an indication of the historical performance of the Company or the Group. Therefore, investors should not place undue reliance on such data and information.

This presentation does not constitute a recommendation regarding the securities of the Company.

This document does not constitute or form part of any offer or invitation to purchase or subscribe any shares issued by the Company and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

By reading this presentation, you agree to be bound by the terms set out.

Here today

Massimo Mauri CEO

Marco Parisi Head of Investor Relations

Lorenzo Mazzini CFO

• GPM incidence substantially stable in H1 2022 vs. FY 2021, at 46.8%; Q2 2022: 80bps improvement vs. Q2 2021

• Critical components stocking: investments continued in Q2 2022, a strategic decision to secure future growth • >€3m cash generation in Q2 2022, despite €10m investment in inventory to secure critical components'

• CLEA business at €9.6m in H1 2022 (+965% vs. H1 2021), with further expansion in Q2 2022 (€5.9m, +61% vs. Q1

• FY 2022 Net sales guidance at €200m confirmed thanks to orders already in backlog

• Order backlog at €174m at 31.08.22, vs. €101M (August 2021), +73% on a like-for-like basis

• H1 2022: Net sales at €94.1m, +125% vs. H1 2021 (+61% organic growth, +49% on a like-for-like basis) • Adj. EBITDA at €20.1m (21.4% of sales), +116% vs. H1 2021 • Q2 2022: strong acceleration of revenue (+130%) and Adj. EBITDA (+146%) vs. Q2 2021

Key takeaways from 2022 YTD

Quarterly performance focus

How we are facing the components' shortage

Ensuring shipping continuity to strengthen our long-term competitive advantage and acquire new business opportunities

Continued in Q2 2022 to maximise availability of critical, high lead time components

shortage with available ones

Despite €6m overdue backlog as of June 30, 2022

+64%

Organic growth (Q2 2022 vs. Q2 2021)

Business growth, revenue mix and timely action helping profitability improve vs. earliest phase of the shortage

+0.8p.p. ∆ % Gross margin (Q2 2022 vs. Q2 2021)

Price increases

Targeted actions, combined with a resilient business model

Keeping growth and profitability up despite a still challenging market context

10% of net sales after 1.5 years from launch

Negotiations with customers to pass through components' extra-costs

H1 2022 financial highlights

• +61% organic growth, +49% like-for-like growth in H1 2022 vs. H1 2021 • Edge computing business growing at ~107% in H1 2022 vs. H1 2021 • CLEA revenue at ~€9.6m in H1 2022 (vs. ~€1.0m in H1 2021)

• Profitability substantially unchanged vs. Q1 2022, despite components shortage affecting all the

• Price increase actions adopted have helped maintain stability in the gross margin incidence

€9.3m €20.1m • Operating leverage in Q2 2022 thanks to business acceleration and OPEX control

• D&A: +€3.5m higher vs. H1 2021 • Financial expenses: +€1.9M higher vs. H1 2021, largely due to G&F acquisition financing • Taxes calculated with theoretical tax rate

Net sales breakdown (H1 2022)

• H1 2022 Net sales growing by +125% vs. H1 2021 (+61% organic, +49% on a like-for-like basis)
• Edge computing business at +107% in H1 2022, largely thanks to a growth in the Industrial, Fitness, Medical, Vending industries
• CLEA business continuting its expansion trend, hitting ~€9.6m revenue in H1 2022 (+965% vs. H1 2021) of which €5.9m in Q2 2022 (+61% vs. Q1 2022)
• EMEA, APAC, USA markets all showing growth trends

Net sales

Adjusted EBITDA

Adjusted Net financial position

Adjusted Net debt bridge (€m)

Business update

(cont'd)

Achieving our targets in a challenging environment

Digital transformation: a recession-resilient secular trend, reshaping a world that faces new challenges...

…opening up numerous edge computing and AI opportunities…

…and increasing our visibility on 2023 and beyond

August '22 backlog

Increased visibility on H2 2022 and 2023; investments in inventory as key to secure deliveries continuity

(±…%) Change vs. Aug. 2021

14 ¹ Considering also Garz & Fricke Group figures as of August 31, 2021 Note: percentages may not sum to 100% due to rounding

Edge computing business

CLEA business

Devices installed base continues to generate revenues for the years to come

Customers/leads currently testing CLEA (vs. ~10 in H1 2021)

>50

Devices in pipeline ~500k

Increasing installed base of connected devices, fueled by growing pipeline and conversions

SECO Northern Europe update

Building on H1 performance: new CEO and legal entities merger to boost long-term value generation

Dirk Finstel appointed SECO Northern Europe CEO starting August 1, 2022

• 30+ years experience in running global business units in several Tech companies
• Previously served as executive in several leading edge computing companies (Advantech, Adlink, Kontron)

Key short-term action areas

• Accelerate SECO N.E. synergies and growth path
• Complete integration at Sales, R&D, Operations, IT level
• SAP go-live since Q1 2023

What's next?

Google Cloud shutting down its IoT Core service opening large business opportunities

About Google Cloud IoT Core

• Fully managed service allowing to connect, manage, and ingest data from multiple devices

What is happening?

What opportunities for other IoT players?

• Big chance for medium-sized IoT players to acquire market share, becoming trusted IoT partners to medium-large customers

What's next?

AI accelerator: adding new edge platforms to our linecard for Machine Learning

High-end edge platform

No-code AI development tool based on CLEA

Main development frameworks supported

Neural networks data inference

Q & A

(cont'd)

A N N E X

Financials overview

Income Statement

€mln	H1 2021	H1 2022
Net Sales	41,8	94,1
Consumption Costs	(21,7)	(50,1)
Gross Margin	20,1	44,0
% on Net Sales	48,0%	46,8%
Other revenues	1,4	2,2
Personnel costs	(9,2)	(16,8)
Other Opex	(4,4)	(11,1)
Exchange gains/losses	0,3	0,2
EBITDA	8,2	18,4
% on Net Sales	19,7%	19,6%
EBITDA ADJ	9,3	20,1
% on Net Sales	22,3%	21,4%
Depreciation	(3,0)	(6,5)
EBIT	4,9	11,8
% on Net Sales	11,7%	12,5%
Financial expenses	(0,3)	(2,2)
Tax	(1,4)	(3,0)
Net Income	3,6	6,8
% on Net Sales	8,6%	7,2%

Balance Sheet
€mln	FY 2021	H1 2022
Net Working Capital	52,5	76,1
Total Fixed Assets	233,3	245,7
Other non-current assets	3,1	3,0
Provisions and other non-current liabilities	(16,4)	(17,9)
Net Invested Capital	272,5	306,8
Net Financial Position	109,5	132,4
Net Financial Position ADJ.	97,5	122,6
Total Equity	163,0	174,5
Total Funds	272,5	306,8

Revenue and cost model

Business model

Adjusted Net Income

Minority interests Effect of rising to 100% of SECO Asia

• Minority stakes attributed to key people of some subsidiaries for incentivization purposes
• In H1 2022, most of minority interests concentrated into Fannal, in which SECO SpA holds a 28% share (= 51% * 55%) as illustrated below:

• Put/Call option systems in place for SECO to rise to 100% of all companies at single-digit EBITDA multiples

• Remaining 49% of SECO Asia, owned by Simest SpA, can be bought by SECO at the Simest SpA entry valuation (~€3,4m)

~€0.8m positive effect on post-minorities Net income after acquisition of SECO Asia minority share

Adj. Net income 2 3

• D&A: +€3.5m higher vs. H1 2021
• Financial expenses: +€1.9M higher vs. H1 2021, largely due to G&F acquisition financing
• Taxes calculated with theoretical tax rate

1

~ 300 R&D people of which ~180 in AI algorithms development

10 R&D centers 5 production plants

~ 8-10% of revenue invested in R&D every year

>900k devices manufactured every year

€200M 2022 FY expected revenue

SECO at a glance

A worldwide spread center of excellence, with top-tier capabilities…

A highly committed management team

Carlos Valeiras CEO SECO USA

20+ years experience as executive in several Tech companies

Former CFO of SECO USA from 2020

Michael Duhamel Vice President of Sales

SECO USA

20+ years of experience in sales and marketing for the largest industrial, embedded and automation solution providers

Previously in Eurotech USA

Founder and General Manager of Fannal Electronics (2011 – present)

Lesen Ding

CEO Fannal Electronics

Davide Catani CTO

Joined SECO in 2006 CTO since 2020, after serving as Hardware developer and ARM-based platforms R&D manager

Daniele Conti President & Co-Founder

Co-founder of SECO. He has been serving as president of the company for over 40 years

Under his leadership, the Group has grown in terms of technological expertise, human resources and financial performances

Vincenzo Difronzo CSO

15+ years sales experience in worldwide leading hardware and software companies

Joined SECO in 2015

Angelo Peloni COO

20+ years experience in Operations & Supply chain management Joined SECO in 2003

Simona Agostinelli

Chief Marketing Officer

20+ years experience in Marketing, Communication consulting and management In SECO since 2010

12+ years

CFO

Served as CFO in several public and private companies

Strong experience in IPO and M&A transactions

10+ years experience in business development, sales, innovation and internationalization for SECO Group

15+ years

30+ years experience in running global business units in several Tech companies

Former executive in Kontron, Adlink, Advantech

20+ years experience as executive in several Tech companies

Massimo Mauri CEO

Strong experience in IPO and M&A transactions

Dario Freddi CEO SECO Mind

Previously founder and CEO

of Ispirata Srl Strong data orchestration background in primary worldwide leading companies

Previously co-Founder and CEO of AidiLab

Joined SECO in 2018 as IoT BU Product Manager and R&D Project Manager

Maurizio Caporali Chief Product Officer Marco Parisi Head of IR

Business Manager of SECO

from September 2019

Financial advisor of SECO from September 2016 to

September 2019

30+ years experience in high-tech, IoT and AI

Former executive in Google, Cisco, Qualcomm, Motorola

Ajay Malik US

Alessandro Guido

Group Corporate and Legal Affairs Director

10+ years experience in legal advisory, with particular focus on Corporate law

In SECO since 2020

# years in SECO

SECO at a glance

SECO at a glance

Edge computing: integrated, plug-and-play solutions powered by SECO

SECO at a glance

Our customers' devices… …are transformed into smart objects…

…bringing intelligence into several industrial fields

SECO added value pillars

R&D and Design

Manufacturing

System integration

Native compatibility with:

Videoconferencing

systems Smart fitness machines Medical devices

Coffee & Vending machines

On-board infotainment systems

Parking machines

Digital billboards

Voting machines

Bowling scoring equipment

Industrial equipment

Passenger information systems

Vertical Applications of CLEA How customers can generate higher margins, recurring

revenues, better differentiation

Recipe Sales Trends Analysis App

CLEA Vending Machine Apps

Boiler Predictive Maintenance

Fault Detection & Machine Downtime Reduction AI Smart Refill Landing Page

CLEA Boiler App

CLEA UPS App

CLEA AI EV Charging Station Apps
AI Remote And Predictive Assistant CMS for age Landing Page

Vertical Applications of CLEA How customers can generate higher margins, recurring

revenues, better differentiation

Remote Setup and Management

Smart Dumbell

Exercise Recognition & AI Personal Trainer

CLEA Healthcare App

AI Tooth Cavity Detection App

AI Driver concentration App

CLEA Automotive App

	Client '을 People Appliances		Account
(CLEA Driving control RU 1234 5678 9000 PRO	Client List Add Client
	Car insurance Home insurance Life insurance
O	Client profile	Events
	ID: 368279191AA	Dangerous driving events Last week	192
O Online Car Policy	Address 61 Mulkern Rd Customer rating Last year 5/10 City Boston, MA Phone +01 2345678910 Birthday 12/02/1995	Car accidents	Fatigue detected 4 Last week
Client A		Last year	Driving with phone 60 Last week
	Insurance status AA123BB Plate	Day	Month Week Year
	Insurance 090230239018AA 01/01/2021 - 01/01/2022 Period	Driving with phone · Fatigue detected	Today, 18th Sep 2021
	591,9€ 462,66 Current price Suggested price at

BLE Audience Analysis

People Counter and Tracking

-

"Apple-like" successful approach based on an ecosystem of applications and connected devices with proprietary hardware and software

An innovative strategy for a long-term growth path

Deeply understanding customers' needs proves crucial when it comes to customizing AI algorithms

Strong value creation opportunity from introducing specific functionalities for each vertical

Each sector has its own KPIs to watch, making AI customization change significantly across each vertical

Cross-sector experience generating strong IP for each vertical: launching the CLEA App store

Edge computing CLEA CLEA App store

Customer base Geographies New technologies

and functionalities

New Apps

M&A: key focus areas by segment

What's next? Complementing organic growth with additional, value-accretive transactions to further expand our competitive

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advantage

An innovative strategy for a long-term growth path

T h a n k y o u