ANNUAL REPORT 2018BILANCIO D’ESERCIZIO 2018

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54Annual Report 2018

Contents

Cefla: a year of expansion, a long-standing history of growth 07

Economic-financial indicators 08

BUSINESS UNITS

• Cefla Engineering 12• Cefla Shopfitting 14• Cefla Finishing 17• Cefla Medical Equipment 18• Cefla Lighting 21

Company organisation 22

Cefla in the world 24

76Annual Report 2018

Cefla:continuing to grow,meeting the new challengesof today and tomorrow

Another year of growth for Cefla. Group turnover exceeded 560 million euro with an EBITDA margin of nearly 9%and a Net Income of over 30 million euro.

2018 was a highly positive year for the Cefla Group and its five Business Units (Engineering, Shopfitting, Finishing, Medical Equipment and Lighting). Despite an uncertain global economic outlook, the Cefla Group remained extremely proactive. Each of the company's Business Units acquired major contracts while continuing with an investment and internal reorganisation strategy that aims to place Cefla in the best possible position to face the challenges of the present - and the future. In addition to systematic growth, 2018 also saw outward expansion. This included the takeover of Biosaf In, a producer of orthodontic implant systems, and Lucifero's, a specialist in the design and manu-facture of architectural lighting fixtures.

Macroeconomic instability requires a continued focus on cost struc-turing, whilst 2019 will see all BUs continue to pursue the develop-ments indicated in the 2018-2020 Business Plan along the key growth guidelines of internationalisation, digitalisation and servitisation.

Cefla is proud to be a cooperative enterprise, a legal status that lets the people who work for the company play an active role in the corporate framework.

Today, Cefla consists of several different divisions. While they work in different contexts and fields, they nonetheless share the same key goals. All belong to a collective project characterised by an intercon-nected web of mutually supportive skills and relationships. This, then, is the power of working together, a precious heritage to pass on to each new generation.

Over the coming years, Cefla will continue to draw on the distin-guishing values that have guided us since 1932: values that drive us to do ever-better and create value, values consistent with our mission to improve people's lives.

Gianmaria BalducciCefla BoD Chairman

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Economic-financialindicators

INCOME STATEMENT BALANCE SHEET

Annual Report 2018

183,393 €

187,923 €

160,551 €

175,925 €

8.8%

8.8%

40,860 €

58,336 €

38,975 €

NWC / Revenues incidence

7.9%

10.3%56,488 €

216,905 €

238,493 €

12,668 €

Net Fixed Assets

2015

2016

2017

2018

Net working capital

2015

2016

2017

2018

Net Equity

2015

2016

2017

2018

Net Financial Position

2015

2016

2017

2018 20,917 €

Values in thousands of €

228,018 €

240,786 €

3,765 €

13,888 €

436,971 €

550,151€

451,840 €

% Revenues growth.

3.8%

3.4%

21.8%

559,155 € 1.6%

12.4%

10.4%

8.6%

54,346 €

46,819 €

47,066 €

% ABITDA

8.9%49,711 €

% ABITDA

6.2%

5.9%

6.4%

27,177 €

26,833 €

35,141 €

6.3%35,205 €

16,023 €

17,483 €

% Net Result growth

65.2%

9.1%

27,894 € 59.5%

30,155 € 8.1%

Sale revenues

2015

2016

2017

2018

EBITDA

2015

2016

2017

2018

EBIT

2015

2016

2017

2018

Net Result

2015

2016

2017

2018

Values in thousands of €

1110

Business UnitsAnnual Report 2018

1312Annual Report 2018

Cefla Engineering:Expertise and technology at our customers' service.

Since 1932, Cefla has built technological plants for both industrial and civil applications. In the energy sector it has, for almost forty years now, built cogeneration and trigeneration plants, heat recovery plants and purification systems.

The wealth of experience acquired and the continu-ous application of innovative technology, engineering and IT have enabled us to implement complex, top-flight projects, designed to optimise quality of life and safeguard the environment. In 2018 the upward trend - in terms of both volumes and margins - continued across the Global Service sector (i.e. acquisition of job orders for the running and maintenance of man-ufacturing and managerial facilities, infrastructure and buildings of historic/artistic significance).

“By acting as a 'Technological Service Provider' - always forward-thinking and ever-more committed to the digitalisation of services - we supply innovative, efficient solutions that optimise both process manage-ment and customer relations, ensuring customers are able to keep all parameters under tight control.”

Modern facilities and streamlined organisation ensure Cefla is able to propose Engineering solutions that meet customers' needs in full. It does so by offering a comprehensive service that spans from feasibility studies to basic design, from planning and construction to plant management/running and after-sales services, by developing new IT tools and ensuring personnel are training accordingly.

Advanced mechanical, electrical and special systems solutions (with the close collaboration of our subsidiary Euroges, which specialises in regulation systems and building automation) are the result of years of experi-ence and the expertise of people who manage a vast array of day-to-day tasks: all this makes Cefla one of Italy's biggest names in the industry.

“In the private plant engineering sector, 2018 saw us involved in a major project, based entirely on the BIM platform, in the Milan (Porta Nuova) area: the Unipol Sai Tower (the new Unipol headquarters), an iconic 126-metre high building designed by Mario Cucinella Architects. At present, integrated design work is proceeding apace and actual construction will begin shortly.”

In the Rome area, instead, construction of a new shopping centre along the Via Laurentina - with a surface area of some 60,500 m2, about 135 shops, a multi-screen cinema, a fitness centre and a restaurant zone - is nearing completion.

In the Service sector, a continuation of upward trends in terms of both volumes and margins was observed, with expansion being driven by both the Civil Service and Energy Service.

In 2018 Construction Management saw develop-ment of the strategic Contract-related area with the “Zenith Contract” brand, which creates interiors and exteriors for the hospitality, medical and living sec-tors as well as shopping/business facilities. Lastly, the (4-star) Hotel Alexandre in Algeria, which has 95 rooms, a large conference hall, swimming pools and a wellness spa, is now nearing completion.

Installation of technological systems, new Coima headquarters, Milan

Cogeneration plantwith turbine, ceramic sector.

1514Annual Report 2018

Cefla Shopfitting:A global partner for complete Retail projects.

2018 saw Cefla Shopfitting launch several key initiatives aimed at strategically repositioning the Business Unit so it's industrial set-up is capable of merging personalised concepts with mass production.

Retail Design has become the centrepiece of the Cefla Shopfitting range, a key means of enhancing the latter's natural consumer-centricity. Cefla Shopfitting works alongside customers from the initial retail concept through the following stages of display unit design, production and installation, taking on the task of skilfully and creatively defining all functional and constructive aspects of the store: from layout to communication, from specialised shop equipment to lighting.

Market initiatives have been launched with the aim of increasing our presence in those European countries with the most sophisticated retail networks (France, Germany, Holland, Belgium) and differentiating sales channels, with growing penetration in non-food areas (notably DIY, Petfood/Petcare and Pharmacy). Moreover, 2018 saw Cefla lay the groundwork for further expansion in Africa and the Middle East.

Work also continued apace on the Innovation front during 2018, with a strong focus on digital transformation. Implementation of digital technology concerned both smart shelving (with emphasis on the development of frictionless systems) and payment/marketing systems. Compared to previous applications, Proximity Marketing solutions have been enhanced with HMIs that greatly simplify both the analysis of data and its use in expanding both customer numbers and profitability. These customer-dedicated applications have allowed Cefla Shopfitting to gain access to servitisation and expand its role as a solutions provider.

On the internal front, instead, major efficiency enhancement initiatives have been launched. For example, the entire Organisation has been re-sized to increase sustainability and key Processes have been re-engineered (e.g. Order-to-Delivery and Sales & Operation Planning).

Auchan La Cloche d’OrLuxembourgAntico Forno Tre Marie - Grancia (Lugano)

1716Annual Report 2018

iGiottoApp X2 | Spraying robot

Smartedge | Edge coating J-Print | Digital Printing

Cefla Finishing: Innovation in every sector.

The mission of this Business Unit, presently the world's leading provider of wood coating systems, is to strengthen its leadership in the wood components and wood-like materials finishing sector and extend its range of solutions to the plastic, metal, glass and inert materials fields.

The strategy implemented by Cefla Finishing to achieve this ambitious result is simple: an unceasing quest for both innovation and reliability.

The year 2018 closed with a significant increase in turnover compared to the year 2017 (+10.8%), largely due to good performance on foreign markets.

Orders related to non-wood sectors also contributed to the increase in turnover, confirming Cefla Finishing's growing competitiveness in this area.

The Operation Area confirms the achievement of greater production efficiency and tighter purchasing cost control.

At product development level 2018 saw an upgrade of the roller coater range and development of inno-vative inert-atmosphere drying solutions to obtain super-opaque high performance surfaces. The result of these R&D investments were presented at Ligna 2019.

Work also continued on the development and launch of Ubiquo after-sales services, which make use of the Industry 4.0-focused software tools developed over recent years.

Record-breaking profitability was achieved thanks to the simultaneous occurrence of the following condi-tions: record sales volumes, improved sales margins, improved product engineering, fixed cost control and process efficiency enhancement.

Outlook

With regard to the year in progress, the global mac-roeconomic scenario and the relevant markets con-tinue to be affected by the slowdown first observed in the second half of 2018.

Given this situation, the continued efficiency en-hancement of all processes and product industriali-sation is recommended in order to increase the con-tribution margin and thus lower the Business Unit's break-even point.

All this will be done while maintaining a sharp focus on product and process innovation, a key Cefla Finishing strategy for maintaining global market leadership.

For nearly 70 years, we've been the world-leading designer and manufacturer of industrialcoating, decoration, digital printing and veneering solutions for wooden and wood-derived panelsand profiles, glass and plastic, fibre cement and composite material surfaces.The strategy implemented by Cefla Finishing to achieve this ambitious result is simple: an unceasing quest for both innovation and reliability. The year 2018 closed with a significant increase in turnover with respect to 2017.

1918

Myray X9 ProThe best 3D technology combined with a vast range of 2D projections

Skema 8:the revolution re-writing the future

of dental practice.

Annual Report 2018

Cefla Medical Equipment: New products and manufacturing platforms to maintain outstanding industrial standards.

Cefla Medical Equipment is a well-established multibrand business that provides health workers with support at all stages of clinical treatment.

International scope, ever-stronger far-reaching distribution partnerships and uninterrupted com-mitment to the development of new markets make Cefla Medical Equipment a key global partner to the medical sector.

Throughout 2018 the Anthos, Stern Weber, Castellini, MyRay, NewTom and Mocom brands worked tirelessly to develop and launch new prod-ucts.

Progress was made on several fronts, ending with a sales agreement with Biosafin which, with the Winsix implantology brand, is highly active on the research front together with leading universities.

An expansion of the product range - which in-cludes implants, invisible aligner lines and implant planning software - allowed Cefla Medical Equip-ment to provide dentists with an effective response to the bulk of their clinical needs.

Innovation also extended to the development and introduction of new dental unit models and new X-ray solutions with CBCT technology, de-signed for clinical applications in the dental, medical and veterinary fields.

Considerable resources were also channelled into the design of new products and new produc-tion platforms to ensure the highest industrial and productivity standards.

With increased volumes and margins, perfor-mance continued to rise throughout 2018.

Revenues exceeded 192 million euro (+3.4% compared to 2017), over 80% of which was ac-counted for by exports.

2019 will see the launch of numerous new prod-ucts (i.e. Dental Unit, Sterilization and Radiology lines), with 70 models intended to consolidate competitiveness and increase market shares.

The year 2018 saw expansion continue with increased volumes and margins; skills, know-how and dynamism ensured Cefla Medical Equipment was able to respond to fast-changing market requirements. Continuous improvement was pursued via across-the-board commitment to product and process innovation.

2120Annual Report 2018

The Lighting Business Unit is Cefla's lighting and wireless connectivity ambassador all over the world, providing a wealth of know-how developed during years of experience in the design and manufacture of Made-in-Italy LED-powered products.The Lighting Business Unit was born out of close cooperation between the companies C-LED and Lucifero’s following the takeover of the latter in 2018. It designs and manufactures high-tech components and products for the lighting market, with a strong focus on the horticulture sector.

C-LED designs and manufactures technologies for the Lighting world and has three main business lines: LED modules, Smart Lighting and horticulture lighting products.

The company offers outstanding expertise in elec-tronics, especially the design and production of circuit cards/boards. Two ultra-modern SMD lines provide the output capacity that allows efficiency while main-taining the flexibility that is in such high demand in this sector.

During 2018 there was a sharp focus on developing components for Smart Lighting technologies; for ex-ample, a miniaturised low voltage driver and wireless connector were designed to control lighting via mobile devices.

Revolutionary LED lighting solutions for the growing of plants - in greenhouses and on vertical farms - were also developed. By studying the effect that the light (and light intensity) emitted by LED lamps has on plant growth, C-LED has expanded its range of high-tech lamps and - thanks to experience, scientific partner-ships and its own network - has taken on the broad role of 'solutions provider'.

LUCIFERO’S, which joined the Cefla Group in July 2018, is a company that has specialised in the de-velopment of archi-tech lighting solutions for over 40 years by designing and manufacturing lighting fixtures for the interior design, outdoor and retail design sec-tors. Lucifero’s smoothly integrates lighting fixtures into their surroundings, not just physically but also in terms of the used materials, providing designers with outstanding versatility.

The two main business lines are: standard products (profiles and systems, spotlights, outdoor products) and project-specific products.

Continuing a policy implemented some time ago, 2018 saw close collaboration with other Cefla Busi-ness Units, especially the Engineering and Shopfitting BUs. The year was also characterised by investment in innovation, with an emphasis on ideas that improve people's well-being where they live and work, “creating lighting solutions that are both interconnected and make people feel good”.

Teamwork with partners was - and continues to be - essential to growth and innovation.

Economic performance over 2018 was decidedly positive in terms of both revenues and EBITDA.

Algae growing LED lamps Tunable white technology

Top Light Lamp

Cefla Lighting: Putting your business in the spotlight.

2322Annual Report 2018

An organisation with a shared visionCefla is made up of different business units that share the same goals of excellence, sustainability and performance. Each BU is part of a shared vision consisting of mutually supportive, interlinked networks of teams and talent. Shareholdings in Italian companies

Shareholdings in European companies

Shareholdings in Extra-European companies

Real Estate Company

2524Annual Report 2018

25Annual Report 2017

Italia

Mosca

Varsavia

Dubai

Russia

Polonia

Emirati Arabi Uniti

Suzhou

Cina

Imola CEFLA HEADQUARTER

AnconaBergamo

BolognaCastel Maggiore

Milano

Pesaro

Roma

Valvasone

Verona

24

Charlotte

Madrid

USA

Spagna

Meckenheim

Schloß Holte - Stukenbrock

Germania

Bischwiller

Melun

Francia

SOCIETÀ PRODUTTIVE Manufacturing sites

SOCIETÀ COMMERCIALI Sales offices

Vicini ai nostri Clienti

La vicinanza ai nostri Clienti è per noi un valore fondamentale.Consolidata a livello mondiale, con sedi produttive in Italia, Germania, Russia,

Cina e USA, Cefla oggi conta più di 2000 dipendenti, 26 sedi nel mondo - di cui 14 stabilimenti produttivi.

We see closeness to customers as essential.Firmly established worldwide, with factories in Italy, Germany, Russia, China and the USA, Cefla now has more than 2000 employees and 26 facilities around the globe, including 14 production plants.

Close to our customers

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