Sit — Investor Presentation 2021

Mar 29, 2021

FY 2020 – Results presentation

March 29, 2021

Highlights

• Q4 consolidated revenues are € 93,8m, +4,9% vs Q4 2019 (+6,5% at same forex)
• Q4 Divisional sales:
  • Heating accounts €74,7m at +7,8% vs same period of 2019
  • Smart Gas Metering with €18,1m is -5,5% vs Q4 2019
• FY consolidated revenues are €320,7m, -8,9% vs previous year
• In the Heating business Q4 sales are +7,8%, +9,9% at same forex; Europe, excluding Italy, is up €3,5m, +10,5% with Turkey +€2,5m, +36,9% due to OEM demand in Central Heating; other central European markets grow in line with divisional trend
• Q4 EBITDA adjusted margin of 13,0% thanks to volumes and efficiencies brings FY EBITDA adjusted to €44,6m (13,9% of revenues) vs €48,3m (13,7% of revenues) of 2019
• Net debt at €115,8m, includes M&A (€31,0m) and IFRS 16 capital leases of €15,3m (+€11,6m). Cash flow from operations adjusted for M&A is €14,6m vs €10,0m of 2019

Key financial results

, unless otherwise stated €m	FY 20	%	FY 19	%	Chg YoY
Revenues	320 7 ,	100 0% ,	352 2 ,	100 0% ,	(8 9%) ,
EBITDA	43 6 ,	13 6% ,	48 7 ,	13 8% ,	(10 5%) ,
adjusted EBITDA	44 6 ,	13 9% ,	48 3 ,	13 7% ,	(7 7%) ,
EBIT	19 6 ,	6 1% ,	24 7 ,	7 0% ,	(20 7%) ,
EBT	16 0 ,	0% 5 ,	21 3 ,	6 1% ,	(25 0%) ,
income Net	13 2 ,	1% 4 ,	19 9 ,	7% 5 ,	(33 6%) ,
adjusted Net Income	13 4 ,	4 2% ,	14 9 ,	4 2% ,	(10 0%) ,
Cash flow from adjusted operations	14 6 ,		10 0 ,
NTWC	49 8 ,		35 0 ,
financial debt Net	115 8 ,		78 4 ,

€m , unless otherwise stated	Q4 20	%	Q4 19	%	Chg YoY
Revenues	93	100	89	100	4
	8	0%	4	0%	9%
	,	,	,	,	,
EBITDA adjusted	12 2 ,	13 0% ,	10 4 ,	11 7% ,	17 1% ,
EBITDA	2	12	6	13	(3
	11	0%	11	0%	4%)
	,	,	,	,	,
EBIT	4	8%	4	9%	2
	5	4	4	4	0%
	,	,	,	,	,

• Q4 revenues account +4,9%, (+6,5% at same forex) vs 2019
• FY revenues are -8,9% with the following divisional trend:
  • Heating: 4,2% (-3,5% at same forex)
  • Metering: -22,6%
• FY EBITDA adjusted of M&A costs stands at 13,9% vs 13,7% of previous year
• Q4 EBITDA adjusted at €12,2m vs €10,4m improves by 17,1%
• Net income adjusted at 4,2% of revenues in line with previous year
• Cash flow from operations adjusted for M&A is €14,6m after capex of €12,7m
• NTWC includes JANZ water metering for €5,6m
• Net financial debt includes M&A for €31,0m and IFRS16 capital leases for €15,3m (+€11,6m vs 2019)

Breakdown by Division

, unless otherwise stated €m	FY 20	%	FY 19	%	Chg . YoY
Heating	249 0 ,	77 6% ,	260 0 ,	73 8% ,	(4 2%) ,
Metering Smart Gas	68 6 ,	4% 21 ,	88 6 ,	2% 25 ,	(22 6%) ,
Total business sales	317,6	99,0%	348,7	99,0%	(8 ,9%)
Other revenues	3 1 ,	1 0% ,	3 6 ,	1 0% ,	(13 0%) ,
Total revenues	320,7	100,0%	352,2	100,0%	(8 ,9%)

Breakdown by geography

, unless otherwise stated €m	FY 20	%	FY 19	%	Chg . YoY
Italy	107	33	135	38	(20
	7	6%	5	5%	5%)
	,	,	,	,	,
(excuding	128	40	129	36	(0
Italy)	8	2%	1	7%	2%)
Europe	,	,	,	,	,
America	58	3%	61	5%	(5
	5	18	8	17	3%)
	,	,	,	,	,
Asia/Pacific	25	8	25	3%	(0
	7	0%	8	7	5%)
	,	,	,	,	,
Total revenues	320,7	100,0%	352,2	100,0%	(8 ,9%)

Consolidated revenue bridge (€m)

Breakdown by Division

, unless otherwise stated €m	Q4 20	%	Q4 19	%	Chg . YoY
Heating	74 7 ,	79 6% ,	69 3 ,	77 5% ,	7 8% ,
Metering Smart Gas	18 1 ,	3% 19 ,	19 1 ,	4% 21 ,	(5 5%) ,
Total business sales	92,8	98,9%	88,4	98,9%	4,9%
Other revenues	1 0 ,	1 1% ,	1 0 ,	1 1% ,	(1 2%) ,
Total revenues	93,8	100,0%	89,4	100,0%	4,9%

Breakdown by geography

€m , unless otherwise stated	Q4 20	%	Q4 19	%	Chg . YoY
Italy	29	31	31	35	(7
	3	2%	7	5%	6%)
	,	,	,	,	,
(excuding	38	40	34	38	11
Italy)	0	5%	0	0%	8%
Europe	,	,	,	,	,
America	18	19	16	18	12
	4	7%	4	4%	3%
	,	,	,	,	,
Asia/Pacific	8	8	7	8	9
	1	6%	3	2%	9%
	,	,	,	,	,
Total revenues	93,8	100,0%	89,4	100,0%	4,9%

Q4 Consolidated revenue bridge (€m)

Q4 Heating sales by geography

€m , unless otherwise stated	Q4 20	%	Q4 19	%	Chg . YoY
Italy	12	17	13	19	(4
	8	1%	4	4%	8%)
	,	,	,	,	,
(excuding	35	47	32	46	10
Italy)	4	3%	0	2%	5%
Europe	,	,	,	,	,
America	18	24	16	23	11
	3	5%	4	6%	9%
	,	,	,	,	,
Asia/Pacific	8	11	7	10	9
	2	0%	5	8%	8%
	,	,	,	,	,
Total business sales	74,7	100,0%	69,3	100,0%	7,8%

FY Heating sales by geography

, unless otherwise stated €m	FY 20	%	FY 19	%	Chg . YoY
Italy	43	17	50	19	(13
	9	6%	9	6%	6%)
	,	,	,	,	,
(excuding	120	3%	120	5%	(0
Italy)	2	48	8	46	5%)
Europe	,	,	,	,	,
America	58	23	61	23	(5
	0	3%	5	6%	7%)
	,	,	,	,	,
Asia/Pacific	26	10	26	10	(0
	9	8%	9	3%	1%)
	,	,	,	,	,
Total business sales	249,0	100,0%	260,0	100,0%	(4 ,2%)

• Q4 Divisional sales are +7,8% vs previous year, +9,9% at same forex
• Italy. Q4 accounts a decrease of 4,8% vs previous year; FY is down 13,6% for Catering, Pellet Stoves and other heating applications affected by covid lockdown
• Europe. Q4 up €3,5m, +10,5% of which Turkey is + €2,5m, +36,9% due to OEM demand in Central Heating; other central European countries confirm divisional trend in the quarter vs previous year
• Europe FY in line with 2019. Turkey (11,6% of divisional sales) is up €3,0m, +11,2%; UK (8,4% of divisional sales) down 10,1% due to lock down effect; Other central European markets confirm trend bringing FY increase to €1,6m, +16,6% thanks to new products and boiler end-market
• America, Q4 is up €2,0m, +11,9%. FY is down €3,5m, -5,7% with Storage Water Heating +7,5% and Direct Heating -24,6% (impact of lockdown on fireplaces
• Asia/Pacific, FY is overall flat vs previous year; China, 5,9% of divisional sales, accounts -2,5% y/y

Q4 Smart Gas Metering sales by application

unless otherwise €m, stated	Q4 20	%	Q4 19	%	Chg . YoY
Residential	17,0	94,2%	18,0	94,1%	(5 ,5%)
Commercial Industrial &	1,0	5,4%	1,0	5,4%	(6 ,3%)
Other	0,1	0,4%	0,1	0,5%	(21 ,4%)
Total business sales	18,1	100,0%	19,1	100,0%	(5 ,5%)

2013 – 2020 Smart Gas Metering sales trend and 2021 backlog (€m)

FY Smart Gas Metering sales by application

unless otherwise stated €m,	FY 20	%	FY 19	%	Chg . YoY
Residential	64 6 ,	94 ,1%	84 ,5	95 ,4%	(23 6%) ,
Commercial & Industrial	3 8 ,	5,5%	3 8 ,	4,3%	(2 ,1%)
Other	0 3 ,	,5% 0	0 3 ,	3% 0 ,	,5% 9
Total business sales	68,6	100,0%	88,6	100,0%	(22 ,6%)

EBITDA adjusted bridge

Euro millions

From EBITDA to net income

, unless otherwise stated €m	FY 20	of % sales	FY 19	of % sales	Chg YoY
EBITDA	43 6 ,	13 6% ,	48 7 ,	13 8% ,	(10 5%) ,
D&A impairment of assets ,	24 0 ,		24 0 ,
EBIT	19 6 ,	6 1% ,	24 7 ,	7 0% ,	(20 7%) ,
(charges)/income financial Net	(3 1) ,		(2 1) ,
forex (charges)/income Net	(0 5) ,		(1 3) ,
EBT	16 0 ,	0% 5 ,	21 3 ,	6 1% ,	(25 0%) ,
Taxes	(2 8) ,		(1 4) ,
income Net	13 2 ,	4 1% ,	19 9 ,	5 7% ,	(33 6%) ,
(charges)/income financial adjusted Net	(3 6) ,	(1 1%) ,	(3 6) ,	(1 0%) ,	0% 1 ,
Net income adjusted	13 4 ,	4 2% ,	14 9 ,	4 2% ,	(10 0%) ,

• 2020 EBITDA includes €1,0m non recurring costs related to M&A
• Increase in Net financial charges/income reflects change in FV of Warrants (€0,9m)
• Net forex charges of €0,5m
• 2020 tax rate at 17,6% vs 2019 of 6,5% due to one off tax revenue in 2019 of €3,7m
• Net financial charges adjusted are net of FV accounting effects of equity instruments
• Net income adjusted is 4,2% of revenues in line with previous year

Net trade working capital €m, unless otherwise stated 2020.12 2019.12 2020.12 vs 2019.12

E-MARKET SDIR
CERTIFIED

payables Accounts	72 2 , Reported	73 3 ,	(1 1) ,	70 5 , of Adj JANZ	(2 9) ,
Trade Working Capital Net , unless otherwise stated €m NTWC/Revenues	49 8 , 2020 12 5% 15 ,	35 0 , 2019 12 9 9% ,	14 8 , 2020 12 vs 6% 5 2019 12 ,	44 2 , 2020 12 10 9% ,	9 3 , 2020 12 vs 0% 1 2019 12 ,
Inventory	56 5 ,	51 1 ,	5 4 ,	52 5 ,	1 4 ,
recourse factoring Non Accounts receivables	9 6 65 5 , ,	10 7 57 2 , ,	(1 1) 8 3 , ,	9 6 62 2 , ,	(1 1) 5 0 , ,
payables Capex account payables Accounts	3 0 72 2 , ,	5 1 73 3 , ,	(2 1) (1 1) , ,	3 0 70 5 , ,	(2 1) (2 9) , ,
Trade Working Capital adjusted Net Trade Working Capital Net	62 4 49 8 , ,	50 8 35 0 , ,	11 7 14 8 , ,	56 9 44 2 , ,	6 1 9 3 , ,
adjusted/Revenues NTWC NTWC/Revenues	19 5% 15 5% , ,	14 4% 9 9% , ,	5 0% 5 6% , ,	15 8% 10 9% , ,	1 8% 1 0% , ,
(adjusted for AR non recourse recourse factoring Non factoring)/Revenues payables Capex account	9 6 4% 23 , , 3 0 ,	10 7 3% 19 , , 5 1 ,	(1 1) 1% 4 , , (2 1) ,	9 6 2% 21 , , 3 0 ,	(1 1) 1% 3 , , (2 1) ,

Net Trade Working Capital adjusted 62,4 50,8 11,7 56,9 6,1 NTWC adjusted/Revenues 19,5% 14,4% 5,0% 15,8% 1,8%

factoring)/Revenues 23,4% 19,3% 4,1% 21,2% 3,1%

Inventory 56,5 51,1 5,4 52,5 1,4 Accounts receivables 65,5 57,2 8,3 62,2 5,0

Reported Adj of JANZ

Adjusted of JANZ

2020.12 vs 2019.12

2020.12

• Reported NTWC increase of €14,8m vs previous year includes JANZ (€5,6), water metering acquisition consolidated on 31 dec 20
• Adjusted NTWC reflects industry seasonality
• Adjusted NTWC increase of €9,3m due to:
  • Inventory for higher sales outlook in Q12021
  • AR due to higher Q4 sales vs 2019

AR (adjusted for non recourse

Cash flow and net debt

Change in net debt

, unless otherwise €m stated	FY 20	FY 19
cash flow Current	47,6	48 9 ,
Change in NTWC	(10 ,5)	(5 ,7)
Inventory	(2 9) ,	1 0 ,
Receivables Accounts	(6 1) ,	(5 2) ,
Payables Accounts	(1 6) ,	(1 5) ,
Other working capital	(9 8) ,	(10 ,4)
Capex , net	(12 ,7)	(23 0) ,
Cash flow from operations current	14,6	9 9 ,
M&A	(28 ,4)	-
Cash flow from operations	(13 8) ,	9 9 ,
Financial charges	(3 0) ,	(2 7) ,
Dividends paid	(3 5) ,	(7 0) ,
IFRS 16 - Leases	(11 6) ,	(0 7) ,
Other	(5 5) ,	0 6 ,
Change in debt net	(37 ,4)	0 ,1
debt Net - BoP	78 ,4	78 ,5
debt Net - EoP	115,8	78 ,4

• FY change in NTWC reflects seasonal trend and pick up in volumes as expected; Inventory absorption is higher than previous year due to positive sales outlook into 2021; Q4 NTWC generates €12,7m
• FY booked Capex slightly lower than forecasted (≈€15,0m), project pipeline is on track; y/y reflects lockdown effect in H1
• M&A includes JANZ water metering and Tunisian supplier acquisition
• Dividends paid are 50% lower than previous year for covid contingency plan decided during lockdown
• Increase in IFRS 16 leases refer to renewals and impact of Tunisian plant
• 2020 Other items include €(1,9m) for translation reserve and M&A debt (€2,6m)

Net financial position

€m, unless otherwise stated	31/12/2020	31/12/2019
(Cash equivalents) & cash	(42 ,3)	(34 ,1)
Current debt , net	47,3	19,7
Non debt current	91,9	85,0
derivatives & M&A debt MTM	3,5	2,0
IFRS 16 - Leases	15,3	5,7
debt Net - EoP	115,8	78,4

• Net Debt/EBITDA adjusted: 2,6 vs 1,6 of 2019FY

ESG picture – Corporate governance

E-MARKET SDIR
CERTIFIED

Does the company have a combined Chair/CEO?	Yes
Percentage of independent directors	57.1% (4 out of 7)
Percentage of female directors	42.9% (3 out of 7)
Does the company have loyalty shares?	No
Does major shareholders (if any) have a "shareholders pact" in place?	No
Has the company adopted a "poison pill" or "change of control" clauses?	No
Potential dilution from stock options outstanding + not yet granted?	No
CEO remuneration detail (fixed salary)	Euro 0.66 million
Chairman remuneration detail (fixed salary)	Combined Chair/CEO
Is the share price included in the MBO criteria?	No
Percentage of treasury shares	1,6056% (at 3/29/21)

ESG picture – Climate risk & Social responsabilities

Has the company defined GHG-emissions targets? No

How does the company assess climate-related risk?

SIT Group monitors on continuous basis the production activities commissioning to external laboratories to analize and report the compliance to the environmental regulation, especially with regard to monitoring emissions of ozone-depleting and dangerous gases.

Does the company publish a separated Sustainability report?	Yes
Does the company have a Chief SRI/CSR officer (or a committee)? Committee made o 3 independent BOD Members + CSR Director (SIT employee)	Yes
Does the Chief SRI/CSR officer votes in any of the company's committee?	No
Is the Investor Relation officer a different person from CFO (or other officers)?	No
Is the ESG strategy integrated in the Business Plan (or in the group strategy)?	Yes
Does the company have an ethical code?	Yes

How is the cybersecurity issue managed?

The group constantly updates antivirus tools, including ransomware prevention and detection, keeps strong firewall policies, conducts periodical vulnerability assessment and intrusion prevention checks. Recently it has enforced password policies and it is progressively introducing MFA (Multi Factor Authentication).

Final comments and outlook

• Macrotrend in Heating: confirmed strong current trading
• Q1 2021: exceptional growth will be reported in Heating
• Water metering macrotrend confirms consistent and steady growth
• Q1 2021 starting of consolidation and integration process
• Gas metering: domestic market first roll-out is in final stage; new replacement will include different communication technologies; 2021FY: ≈10% of revenues are expected from foreign markets
• Q1 2021 sales slightly lower than previous year
• FY2021 consolidated sales outlook is in mid/high digit growth range vs previous year
• Consolidated profit is expected to increase vs previous year
• External factors such as increase in commodity prices are monitored and actively managed with high priority by the Group

ANNEXES

Non recurring operating items

Reported EBITDA includes the following non recurring items:

	Q4 20	Q4 19
shopfloor relocation Captive	-	0 0 ,
reimbursement Insurance	-	-
for bonus Provision CEO IPO post	-	(1 3) ,
Change in previous provisions years	-	0 0 ,
M&A	1 0 ,	0
Total recurring operating items non	1 0 ,	(1 2) ,

Reported EBITDA includes the following non recurring items:

	FY 20	FY 19
Captive shopfloor relocation	-	0,8
Insurance reimbursement	-	(0,8)
Provision for CEO post IPO bonus	-	(0,8)
Change in previous years provisions	-	0,2
M&A	1,0	0,0
Total non recurring operating items	1,0	(0,4)

Regulatory statement

The manager responsible for the preparation of the company's accounts, Paul Fogolin, hereby declares, as per article 154 bis, paragraph 2, of the "Testo Unico della Finanza", that all information related to the company's accounts contained in this presentation are fairly representing the accounts and the books of the company.

Paul Fogolin Chief Financial Officer paul.fogolin@sitgroup.it

Investor Relations Mara Di Giorgio +39 335 773 7417 investorrelations@sitgroup.it

Disclaimer

This presentation has been prepared by SIT S.p.A. only for information purposes and for the presentation of the Group's results and strategies.

For further details on the SIT Group, reference should be made to publicly available information.

Since at the moment there is no existing reliable market research which provide the required level of detail, nor any official data, the statements of key information, the assessments concerning the positioning of SIT Group and the assessments regarding the market and the market segments of the reference market are based exclusively on assessments carried out by SIT's management, in accordance to its own knowledge of the market and its analysis of the data gathered. For such reason, these statements and assessments may not be updated and/or may also be quite approximate. Due to the lack of reliable and standardized data and of market data provided by third parties, these assessments are necessarily subjective and are provided, unless otherwise specified, by SIT on the basis of the analysis of the data it, as a company, has gathered. These evaluations and the performance of the industries in which SIT operates could prove to be different from those assumed due to the known and unknown risks, the uncertainties and other causes.

Statements contained in this presentation, particularly those regarding any SIT Group possible or assumed future performance, are or may be forward looking statements and in this respect they involve some risks and uncertainties.

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

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

By attending or reading this presentation you agree to be bound by the foregoing terms.