Forestali S r l : Industrie Chimiche Forestali SpA - Investor Presentation September 2020

We are invisible!

But we are everywhere!

Industrie Chimiche Forestali S.p.A.

Investor presentation

September 2020

2

Disclaimer

This document has been prepared by Industrie Chimiche Forestali S.p.A. ("ICF").

This document does not constitute or form part of any offer or invitation to sell, or any solicitation to purchase any shares or any other kind of financial instruments issued or to be issued by ICF.

Not all the information contained and the opinions expressed in this document have been independently verified. In particular, this document contains forward-looking statements and declarations of pre-eminence that are based on current estimates and assumptions made by the management of ICF to the best of their knowledge. Such forward- looking statements and declarations of pre-eminence 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 ICF to differ materially from, or be more negative than, those expressed or implied by such forward-looking statements and declarations of pre-eminence. Consequently, ICF 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 ICF reserves the right to make such variations and integrations when it deems necessary or appropriate, ICF assumes no affirmative disclosure obligation to make such variations and integration and no reliance should be placed on the accuracy or completeness of the information contained in this document. To the extent permitted by applicable law, no person accepts any liability whatsoever for any loss howsoever arising from the use of this document or of its contents or otherwise arising in connection therewith.

This document has been provided to you solely for your information and may not be reproduced or redistributed, in

whole or in part, to any third party.

By accepting this document, you agree to be bound by the foregoing limitations.

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Industrie Chimiche Forestali, a public company listed on AIM Italia

ICF is a leading player in the technical adhesives and fabrics business with around 90% free float and the mission to pursue organic expansion of its operations while acting as an aggregator of companies operating in complementary businesses exploiting the robust Free Cash Flow generation

Market

Current shareholding structure

89.8%*

Management 3.6%

ICF

Equita

99.8%

Forestali de Mexico

1.9%

PEP

ICF Group and ICF merged on August 1, 2020

4.7%

1. Of which, First Capital and Value First SICAF 14.86%, SYNERGY SMALLER CIES 10.15% and Amundi SGR 5.55%

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Industrie Chimiche Forestali: a 100-year History

		The production of
Industrie Chimiche Forestali stops	The production of special	formaldehyde as a derivative
impregnated fabrics for the	of pyroligneous begins
producing basic chemicals and
footwear industry starts
finally focuses on the upstream
segment of the footwear industry		'20s	1918
	'30s

1941

'50s

1983

The production of adhesives begins

Forestali relocates production from the plant in Sesto S. Giovanni to the new plant in Marcallo con Casone in the province of Milan

1984

1987

2005

The Forestali activity is enhanced

with the establishment of the

Società Italiana Resine SIR for the production of phenolic resins in Sesto S. Giovanni

ICF completes the Business Combination with EPS Equita PEP SPAC (then renamed ICF Group), listed on the AIM Italia exchange

Industrie Chimiche

Forestali is founded and starts with the extraction of pyroligneous acid from wood

ICF Group merges into

Industrie Chimiche

Forestali, now listed on the AIM Italia Exchange

Adhesives for Furniture and Boating are formulated and introduced into the business

network: Durabond brand is born.

Besides the formulation of high-quality and ease of use adhesives, already existing brands are purchased

ABC (Adhesive Based Chemicals) begins its own activity in 2005, within Forestali, as a company fully dedicated to the polyurethane adhesives industry for industrial applications (Automotive, flexible packaging, graphic arts)

May 2018	Aug. 2020

EPS

EQUITA PEP SPAC

The «Invisible Power»

	Adhesives:
	•	Solvent-based
Footwear &	•	Solvent-free
Leather	•	Water-based

5

	Counter	The
Toe puff
Upper	«Invisible Power»
	Insole
	Sole Unit

Goods

Technical fabrics:

• Toe-puff, counters

/ stiffeners

• Linings and

reinforcing

Technical fabric is used in the toe puffs and counters of the shoe. Adhesive is used to put together mainly uppers, insoles and sole units

Technical fabric goes	Adhesive	is	used
to reinforce the handle,	to glue	different	Adhesives have a
bottom and sides of	components	of the	negligible impact
the bag. Adhesive is	upholstery
		on cost of
used to glue the linings
			production of the

final article…

Automotive

	Adhesives:
	•	Solvent-based
	•	Solvent-free
Packaging	•	Water-based

The layers of the headliner in a vehicle. It can be applied to light vehicles (passenger and commercial)

Adhesives are used to glue

…But a relevant

impact on the

performance. A

low quality

adhesive can lead to serious issues and costs (eg. destroyed shoes or stained car roof)

The	layers	of films	The plastic cover of	The pins used in the
comprising the package	magazines and	staplers and similar
for	various	applications	periodicals	objects
(food and non food)

Product quality,

customized

solutions and

reliability are key

drivers to serve

clients

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Industrie Chimiche Forestali: a Leading Player in the Technical Adhesive World

Core activity	Manufacturing of
adhesives and technical
	fabrics

	Footwear
	Leather Goods
End market	Automotive
	Packaging
	Upholstery

Revenues

2019

€71.7m

ICF in numbers(1)

EBITDA		EBITDA Margin		NFP(2)
2019			2019

		12.6%		€4.4m
€9.1m		(2019)
	13.4%		0.5x leverage on
			2019 EBITDA
		(Average '15-'19)

Key products

Adhesives (water-based,solvent-free, solvent- based)

Technical Fabrics

(impregnated, coextruded)

129(1)

employees

More than	21,000	3.3
million
1,800	Tons
meters of
Adhesive/
products	technical
Year
	fabrics

HQs	Marcallo con Casone,	•	22 R&D
Milan (Italy)		employees
	(2)	•	60,000 sqm. plant

• 3 labs

• More than 800 industrial clients

• 20 new products per month

Note: (1) As of 31/12/2019 and compliant with IAS/IFRS accounting principles;

1. Around €6.2m of debt are represented by real estate leasing

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A Balanced Portfolio with a Global Exposure

The company is export-oriented, with a balanced exposure to the Automotive, Footwear and Packaging sectors

Geographic Area

	Africa
America	Middle
East
13%
10%
	East
		Europe
		14%

Business Line

ABC Division	ICF Division
46%	54%
Packaging
9%	Footwear -
	Adhesives
	20%

	€72m
Italy
33%	Europe
	CEE
	21%
	Far East
	9%

Automotive 37%

€72m

Other	-
Adhesives
12%
Fabrics
18%

Export makes up for c. 67% of

revenues for 2019

Other 4%

Forestali manufactures both

adhesives (c. 32%) and fabrics (c.

18%), while ABC manufactures

adhesives only

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From Italy to the rest of the world

From the headquarter of Marcallo con Casone ICF reaches 80 countries all over the world

Albania	Czech Republic	Hungary	Portugal	Sweden
Austria	Denmark	Latvia	Romania	Switzerland
Belarus	Estonia	Lithuania	Russia	Turkey
Benelux	France	Macedonia	Serbia	UK
Bulgaria	Finland	Malta	Slovakia	Ukraine
Croatia	Germany	Norway	Slovenia
Croatia	Greece	Poland	Spain

North

America

USA

South

America

Brazil

Chile

Colombia

Ecuador

Mexico

Europe

Marcallo con

Casone

Africa,

Middle East

Benin

Camerun

Egypt

Gabon

Gambia

Ghana

Guinea

Guinea Bissau

Iran

Israel

Ivory Coast

Jordan

Lebanon

Mali

Mauritania

Mauritius

Morocco

Far East

Bangladesh

China

Hong Kong

India

Japan

Pakistan

Philippines

South Korea

Thailand

Vietnam

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Substantial growth mainly based on Export

Historically, sales have been growing at mid single digit since 2009 with export accounting for 67% of ICF revenues in 2019

Guido Cami and Massimo Rancilio appointed as CEO and CFO, respectively

		60	64	60
	53
44				39
		39	44
	33
26			9.9%	9.9%
6.1%	6.0%	6.5%
18	20	21	20	21
2009	2010	2011	2012	2013
				Domestic

Export (% on revenues)

					€ million
			79	80
	69	72			72
65
42	45	47	54	55
		48
	15.5%	16.3%
11.5%			11.6%	10.7%	12.6%*
23	24	25	25	25	24
2014	2015	2016	2017	2018	2019
Export	EBITDA margin

59%		62%			65%		69%		65%		65%		65%		65%		68%		69%		67%
Domestic (% on revenues)
41%		38%			35%		31%		35%		35%		35%		35%		32%		31%		33%

Note: (*) Compliant with IAS/IFRS accounting principles

Source: Company financial statements

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Material Free Cash Flow Generation

Cumulative Free Cash Flow Generation above €36m over the last 8 years

Net debt

Key events

30.0

				27.1
25.0
20.0		17.7
15.0					16.7
			12.4			13.8			9.0 (3)
10.0
						9.7 (2)
10.9
5.0	8.2
			6.1			6.5	(2)
		5.3					(3)
						4.4
-
Dec-11	Dec-12	Dec-13	Dec-14	Dec-15	Dec-16	Dec-17	Dec-18Jun-19 Dec-19Jun-20

Capex for €13m due		Re-leverage of €21m		Despite the Covid emergency the cash absorption in 1H20 was
to the purchase of the		through merger with		around only €2.8m once deducting extra investments in real
plant building		918 Group
			estate and buy-back of shares. Cash flow improving in Jul.-Aug.
(Dec-2013)		(Jan-2016)

Note: (1) Adjusted for extraordinary outflow given by the share buyback program;

1. compliant with ITA GAAP reporting standards
2. compliant with IAS/IFRS reporting standards and including real estate leasing

H1 2020 financial highlights ICF

	€m	H1 2019	H1 2020*
1	Revenues	36.5	28.6
2	EBITDA	4.4	3.0
	Margin (%)	11.9%	10.5%
	Adj. EBIT	3.2	1.8
	Margin (%)	8.8%	6.2%
3	Net Debt	6.5	9.0
	Net Debt/EBITDA LTM	0.8x	1.2x

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ICF's monthly revenues (2020 vs. 2019 )

8

4

0

Jan

Feb

Mar

Apr

May

Jun

11. In the first half of 2020, ICF recorded €28.6m in revenues. Sales declined by -13.5% to €17.1m in the manufacturing and footwear area, by -37% to €8.5m in the automotive and -9% to €3m in the packaging area. The decline was almost entirely attributable to the collapse in sales in the two months of April and May when most of the global clients were closed because of the lockdown. Revenues started to recover in June 2020 with progression toward stabilization during the summermainly driven by automotive.

22. EBITDA margin confirmed at double digit level (10.5%) also thanks to management actions for efficiency enhancement while tackling Covid 19 emergency

33. The small increase in debt is also attributable to an extraordinary investment in a real estate asset (once rented) for around €1m

and the execution of the buy-back program for €0.8m. The rest is attributable to working capital.

Note: (*) compliant with IAS/IFRS accounting principles

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ICF stock performance (as of 25th September 2020)

ICF stock performance since IPO(1)

95
85
75
65
IPO day=100
55
45
May-18	Aug-18	Nov-18	Feb-19	May-19	Aug-19	Nov-19	Feb-20	May-20	Aug-20

Comparison with main chemical players(1)

Last 3m	- 6.6%	+ 31.4%	- 1.0%	+ 19.9%	+ 13.5%	+ 4.9%	+ 7.4%	+ 6.3%	+ 21.4%
YTD	- 20.3%	+ 6.7%	- 26.5%	- 11.5%	- 3.1%	- 12.8%	- 5.2%	- 6.2%	+ 21.9%
Last 24m	- 41.4%	- 39.0%	- 38.0%	- 23.9%	- 22.2%	- 21.5%	- 18.2%	- 16.1%	+ 56.0%
Mkt cap.	€37m	€8.1bn	€45.5bn	€4.7bn	€10.4bn	€2.3bn	€6.9bn	€35.2bn	€31.4bn

Note: (1) IPO date: 14/05/2018, as of 25/09/2020

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Recent events: COVID-19 crisis and new product lines

COVID-19: ICF never stopped operations despite lockdown policies implemented in Italy as it is active in an industrial segment deemed necessary by the Italian Government. Rigid safety measures have been adopted in the plant in order to avoid the contagion and prevent the spreading of the virus among workers. All employees adopted the smart working.

Despite the first signs of the global crisis emerged already since last January, ICF business achievements have been

positive in Q1 '20 in terms of sales, margins and FCF. In Q2, however, the global spread of the virus and the lockdown

policies adopted in many countries created temporary plant closures by several clients with a severe contraction of business concentrated in April and May and with clear signs of progressive return to stability starting from June. The company has a solid Financial position and a quite low incidence of fixed costs (around 30%).

Thanks to the quick reaction of the R&D and production department, ICF started the manufacturing and marketing of hand sanitizer (VIP & TOP)

as well as surface sanitizer (GULP and WOW) and SMS fabrics

(Freedom M1) for the production of protective masks in collaboration

with the Finnish multinational corporation Ahlstrom Munksjö.

These developments, coupled with the launch of ICF e-commerceplatformin September 2020, could represent an attractive long-term strategic opportunity for ICF in the sanitizing products business.

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Adhesives & Sealants Industry: A Fragmented Market Space

Major Players	Adhesives industry - Market value ($bn)

More than 100 companies with sales < €100m

			Henkel
						HB Fuller
$50 bn
					Bostik
						Sika
						Dow
	Other large players

with sales > €100m

70

The adhesives industry
is expected to reach	50
approx. $70bn in 2027

1980

1986

1992

1997

2002

2007

2012

2017

2027

• A 50 billion dollar market with strong growth drivers (3% to 3.5% a year), which is expected to reach $70bn by 2027

ICF has been and will be active in selecting M&A opportunities both domestically and abroad with a strict discipline in terms of value creation.

Such a possible development will exploit:

•	The high level of certifications of its products and processes	•	Substantial free cash flow generation
•	The distribution platform as it exports worldwide 67% of	•	Public company status allowing also potential stock
	sales		for shares deals

Source: Arkema Capital Markets Day 2017; HB Fuller Capital Markets Day 2019

ICF ESG Priorities

Governance

ICF governance model is investor friendly and quite unique

among companies of similar size listed on the AIM segment of Borsa Italiana:

• The free float is around 90% making the market the dominant shareholder
• The BoD is composed of 7 members, of which 2 qualify as independent directors (Mrs. Balzano and Mr. Rettani)
• The interests of ICF top management are aligned with those of the shareholders: 12 ICF managers, including the CEO Guido Cami, hold 3.6% of the Company's share capital
• Top management incentive scheme: ICF top management holds c. 30k special shares that will be converted into ordinary shares based on ICF's stock performance (at a price of at least €11/share)

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Enviromental

• ISO 14001 Cerification
• EMAS Certification
• OHSAS 18000 Certification
• IATF 16949 Certification
• Compliance with the European REACH regulation(1)
• Publication of the Enviromental Report (every 3 years)
• Increase in the production of water-based adhesives (14% of total production) and reduction of solvent-based.
• Carbon Foot Print reduction on CO2 emissions to optimize energy consumption
• Recycling of the process wash water
• From 2019, Sustainability report in line with Global Reporting Initiative starndards

ICF Board of Directors

Guido Cami Giuliano Tomassi Marinangeli

Giovanni Campolo	Marina Balzano
	Independent
Stefano Lustig	Roberto Rettani
Vincenzo Polidoro	43% of AIM listed companies featured 2 or more
independent directors in 2019

Social impact

ICF supports the community by sponsoring local organizations:

• Bambini delle Fate

• Marcallo con Casone local sport team	Winner of:
AIM ESG
•	Mesero oratory
AIM Investor
•	Valcaselle tamburello team	Day 2018

• Alatha

Note: (1) Registration, Evaluation, Authorization and Restriction of Chemicals (18 December 2006)

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Relevant Certifications

To maintain a high commercial standing with clients, ICF obtained all the relevant certifications in the sector

Certification		Field	Obtained in:
UNI EN ISO		Quality	1997
9001
UNI EN ISO		Environmental	1998
14001
Registration		Integrated	2001
EMAS
OHSAS 18001		Safety	2009
Modello 231		Auditing	2013
IATF 16949		Automotive	2019

In addition:

• Three managers fully dedicated to HSE activity
• Compliant with REACH EU Regulation («Registration, Evaluation, Authorization and Restriction of Chemicals»)

Renewal costs of certifications

+

3 dedicated resources

=

€400k / 500k per year to maintain commercial

certifications

ICF complies with the high standards to maintain business relationship with multinational clients and differentiate from smaller competitors

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Organizational Structure and Key Management

Organizational structure with 129(1) people coordinated

by…

…an experienced management

Guido Cami Chief Executive Officer

Sales

Guido Cami

COO

Marcello

Taglietti

CFO

Massimo

Rancilio

HR

Monica

Moiraghi

CEO

Guido Cami

General Manager

Forestali de

Mexico

Teresa Navarro

• Graduated in Management Engineering at Politecnico di Milano
• Vice-Chairmanof AVISA - Federchimica (Confindustria)
• Chairman of the Adhesive and Sealant division of AVISA
• Vice-Chairmanin FEICA (European Adhesives and Sealant Association)
• 30+ years of experience in industrial companies (Pirelli, Manifattura di Legnano, Vibram, Pechiney, Crespi, Forestali)
• Expertise: Production, Logistics, Operations, R&D, Commercial, Managing Direction
• 10 years in Forestali as CEO

Marcello Taglietti Chief Operating Officer

• 26+ years of experience in the Operations function (Ashland Chemicals, Air Products and Chemicals, KMG Chemicals)
• 2 years in Forestali

Massimo Rancilio Chief Financial Officer

• 19 years of experience in the Finance function (Oracle, Accenture, Hexon Specialty Chemicals, MPG Plast)
• 10 years in Forestali

Monica Moiraghi Human Resources

• 27 years of experience in the HR function
• 20+ years in Forestali

Teresa Navarro General Manager

Note: (1) As of 31/12/2019

• General Manager at Forestali de Mexico
• 21+ years in Forestali de Mexico

Industrie Chimiche Forestali S.p.A.

www.forestali.it

Sede legale in Marcallo con Casone, via Fratelli

Kennedy, n. 75

Investor relations:

Massimo Rancilio, CFO & Investor Relations Manager

[e-mail]

Please visitwww.forestali.it/#ambienteto download

your copy of ICF Environmental Report!