Annual Report 2015

SUMMARY Annual Report 2015

05 • Cefla’s strength

06 • The power of working together

08 • Economic Financial Indexes

12 • Cefla Finishing

14 • Cefla Plant Solutions

16 • Cefla Medical Equipment

18 • Cefla Shopfitting

20 • C-LED

22 • Cefla in the World

24 • Organisation Chart of Group Companies

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“Doing Things Together” is one of Cefla’s main guiding prin-ciples. It is Cefla’s strength, inspiring our corporate culture and pre-cisely the reason why it is critically important to ensure con-tinuity for the integration and the development of different skills and business lines within our company, which certainly contributed to the excellent results achieved in 2015.

In this past year we were engaged in a considerable number of projects aimed at fostering the growth of our company in all our market sectors.

Value of Production significantly increased reaching 443 mil-lion Euro with an increase of 5.8% compared to 2014 - our record figure of all times in the history of the Group.Cefla’s Consolidated Financial Statements 2015 show a Net Result of 16 million Euro and Equity for 228 million Euro. Excellent figures also for the EBITDA - up to 54 million Euro, and the Group’s Net Financial Position, which showed a positive balance by 4 million Euro.

All these results were obtained thanks to the consistent commitment of us all. Cefla’s people are the company’s big-gest asset: investment in know-how and human resources are a necessary precondition for development.The growth recorded in recent years is also the result of the work carried out, striving to enhance efficiency in terms of products and processes - with a view to continuous im-provement.

Looking to the future, our main objective is to maximise em-ployment and profitability, pursuing the goals of excellence and innovation of our products and services. We will strive to make of Cefla an even more internationalised concern - able to make the most of the available business opportunities in every continent, thanks to an increasingly global mindset and abilities in various respects, including the choice of partners.

This encourages us to be mentally and culturally ready to take action, with an open-minded approach where local is-sues are just as important as the global vision.

Another important value for us is our outstanding diversity - a great opportunity and indisputably our strength in difficult times.

In 2015 we also created a new company. C-LED is the result of our determination to develop a new business in the field of LED lighting, by creating a player that has all the necessary skills and technological abilities to secure its own share of the market, by offering highly customised solutions for indus-trial lighting, public and retail area lighting, and with consider-able potential in many other fields.

Internally, 2015 was a year of significant investments in the development and innovation of products. A trend that will continue in 2016.

Riccardo Quattrini Chief Executive Officer

CEFLA’S STRENGTH

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“The power of working together” is more than just a catch-phrase: it is the spirit that has inspired us for the past 84 years and Cefla’s manifesto today; we have become aware that by working together and sharing abilities we can reach the goals and secure the advantages that no single compa-ny could achieve by itself.

In 2015 we made important steps forward, we have grown in terms of revenues and focussed on the process of inte-gration of our Business Units, to build an increasingly shared project.

We are very satisfied with our performance - confirming our growth trend that had begun four years ago. Between 2012 and 2015, Value of Production grew by 100 million and Net Equity by almost 17 million. This result is the fruit of the relentless commitment of so many people who work in our company and of our major investment effort in product and process innovation, which has allowed us to anticipate trends and confirm our role as key players in our reference markets.

Thanks to our growth in recent years and the change in our business approach, Cefla is perceived by outsiders as a changed company, more open, and bringing added value to its territory. In the Imola area alone, where Cefla has its head-quarters, in the past 3 years we have recruited 100 people and today, our workforce at the Imola headquarters exceeds one thousand units, out of a total of approximately 1,900.

Investing in human resources is one of our primary values, based on our heritage and looking forward to the future. In the same way, it is just as important to invest in all the strate-gic business areas in the world, such as the USA, Russia and China, with a targeted, medium- and long-term investment plan. We have a strong focus on our territory - the starting point of our work; and on our partners and suppliers: we are open to all possibilities, as our outlook is eminently global.

We are proud of the fact that Cefla is, today, a solid com-pany, with a well balanced and differentiated portfolio which enables us to spread our risks evenly and with strong roots that remind us to be proactive but wise.

Our aim in the long term, as members of this newly reap-pointed Board of Directors, elected last May 30, is to main-tain the excellent results achieved so far, increasing in the coming years the turnover share of each Business line. A challenging goal, perhaps even more so than in the past, but one that we are ready and motivated to achieve thanks also to a united management team inspired by the spirit of “We Are Cefla - The Power Of Working Together”. This same spirit is shared and applied by all the company personnel today, starting from the membership base.

We will pursue the strongest continuity of intents and pur-poses for our project, also with the contribution of the new Directors who have brought to the team their wealth of pro-fessional experiences, abilities and skills. All this is necessary to address challenges and opportunities promptly and effec-tively, by also leveraging the younger age of our new team.

Cefla has the welfare and future of its people at heart, and in order to better respond to the challenges of globalisation, an alliance between the global world and the enterprise is a necessary condition. This, however, has always been our company’s strategy, and the link with our territory and our people has always been the driving force behind our growth from a small local business to large, international multi-busi-ness group.

On behalf of the Board of DirectorsThe President

Gianmaria Balducci

THE POWER OF WORKING TOGETHER

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Expo Milan 2015

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ECONOMIC FINANCIAL INDEXES

Value of Production

2012 343,079

2013 361,368

2014 418,950

2015 443,406

Revenues % growth

−4.5%

5.3%

15.9%

5.8%

EBITDA

2012 19,621

2013 27,021

2014 37,415

2015 54,346

% EBITDA

5.7%

7.5%

8.9%

12.3%

EBIT

2012 6,163

2013 11,927

2014 19,239

2015 27,177

% EBIT

1.8%

3.3%

4.6%

6.1%

Net Result

2012 4,323

2013 4,650

2014 9,699

2015 16,023

Net Result % growth

112.9%

7.6%

108.6%

65.2%

PROFIT AND LOSS

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Net Fixed Assets

2012 175,459

2013 176,584

2014 176,190

2015 183,393

Net Working Capital

2012 44,689

2013 36,971

2014 26,768

2015 39,858

NWC / Revenues incidence

13%

10.2%

6.4%

9.0%

Net Equity

2012 211,303

2013 211,326

2014 214,355

2015 228,016

CONSOLIDATED BALANCE SHEET

Net Financial Position

2012 −9,989

2013 −3,605

2014

2015 3,765

10,088

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CEFLA FINISHING

The mission of Cefla Finishing, presently the leading operator in the wood painting system industry, is to extend its leadership to all the wood components and similar materials finishing sector, as well as to diversify its supply in the fields of glass, plastics, metal, aluminium and composite materials.The continuous search for innovative but reliable solutions is the strategic choice adopted by this BU to achieve this ambitious result.

In terms of product development, in the course of 2015 the redesigning of the sprayer family was completed with the upgrading of the ROCTRE and the MITO series, to which two-arm models were also added. Developed in the course of 2015 and already available in China and Malaysia, iGiottoApp X2 was officially presented during Xylexpo 2016, as the flagship model of the range of anthropomorphic robots for horizontal painting.

Flat panel finishing equipment and systems

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These actions have helped Cefla offer today the most complete and up-to-date range in all product areas.In industrial terms, a project for the reorganization of production processes had already started in 2014 and was completed in 2015 - leading to significant gains in terms of production efficiency.Overall, the year 2015 ended with an increase in sales by over 13% - the best achievement in terms of per cent margins of recent years.

This goal was reached thanks to the excellent sales performance in the North American and Chinese markets, and also thanks to the slow but steady recovery trend observed in the Italian market.The in-depth reorganisation of the R&D department, developed in the course of the year and implemented at the beginning of 2016, will ensure greater responsiveness to market needs and a more proactive approach to product and process innovation.

iGiottoApp X2

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Cefla is a manufacturer of civil, industrial and energy production plants; the wealth of experience acquired and the continuous application of technological and design innovation have enabled the company to implement complex, prestigious projects, characterised by solutions designed to optimise the quality of life and ensure environment protection.In an effort to meet the requirements of its customers, with its structure and organisation Cefla is able to suggest engineering solutions suitable for exactly fulfilling and implementing contract briefs, by offering at the same time a complete service ranging from feasibility studies to basic designing, from planning to construction all the way to plant running and after-sales service.Cefla Plant Solutions, presently among the Italian market leaders in the field of civil plant engineering, aims at maintaining its position and extending its presence over

the Italian territory in the energy and service sectors, as a global provider of plant engineering services for the most demanding, highly qualified customers.In this critical market, faced with the continuous shrinking of both private and public investment, Cefla wishes to make its approach evolve from ATI (Temporary enterprise associations)/subcontracting, by directly dealing with large global customers to whom a wider range of services should be offered, in line with their supplier pool streamlining strategies - in terms of both numbers and qualifications.Cefla’s service range will become increasingly integrated between construction in the civil, energy, and service fields and the brand-new field of global computerisation and regulation in which we are present with the company Euroges and with remote control (control room) implementation projects currently in progress.

CEFLA PLANT SOLUTIONS

Allianz Tower, Milan

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In 2015 the contribution margin exceeded by 2 percentage points the budget figure and by 3.6 percentage points the previous year’s figure. An extremely positive result in the current industrial scenario, heavily affected by the economic situation in Italy, achieved thanks to the work carried out in both the plant engineering and the service area. Additionally, this business unit recorded an increase in the civil service and energy sector by over 30% compared to the previous year, mainly as a result of the efficiency enhancement policies in the civil area and of the activities carried out within the Finmeccanica, ENI and Hera complex.As regards construction contracts, Cefla managed to successfully and timely finalise a contract as complex as Expo, complete the Allianz tower construction in the new Citylife area in Milan, the Data Centre of Assicurazioni Generali in Mogliano Veneto and begin the Fico/Eataly contract works in Bologna.

2015 was an important year in terms of investment on human resources, with the strengthening of the customer-dedicated technical and commercial structure in the strategic area of “energy plants” construction and the resulting increase of the company portfolio in the “energy service” area, based on multiannual contracts. Another critical investment area concerns the computerisation of internal structures and the development of Global IT Systems for major purchasers (Acea, General…) likely to revolutionise contract management activities.In addition to its focus on the domestic market, Cefla Plant Solutions has also been exploring for some time now international growth opportunities in the energy markets and evaluating possible actions in the civil plants segment.

Uffizi Gallery, FlorenceSystems active in the Botticelli Rooms

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Solidity, strong product know-how, customer orientation are the distinctive elements that have propelled Cefla Medical Equipment to a leadership position through a multi-brand approach.With its brands Anthos, Castellini, Stern Weber, MyRay, Mocom, NewTom and Victor, Cefla Medical Equipment develops and manufactures a wide range of products able to respond with the highest quality standards to the needs of doctors and dentists all over the world.

With its considerable investments in research and development, and a far-reaching network of highly experienced distributors, Cefla Medical Equipment is a global partner able to offer the best solutions in the Dental care and Radiology segments: dental units, dynamic instruments, intra-oral digital radiology, 2D and 3D extra-oral digital radiology, diagnostic image management software and sterilisation systems.

CEFLA MEDICAL EQUIPMENT

NewTom 5G XL

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In 2015 the BU achieved an important growth in volumes and obtained its best result in recent history - with an increase in revenues by 14% including over 80% in export.In the second half of 2015 new products were launched on the market in all three Business Lines:  Dental units, Radiology, and Sterilisation.The dental unit brands Anthos, Stern Weber and Castellini renewed their dynamic instrumentation and expanded the range with new designs and new ergonomics: Stern S380TRC, Anthos Classe L9 and L6, Puma ELI Ambidextrous.

The Radiology segment introduced new 2D and 3D extraoral digital systems: the new CBCT VGi evo for dentistry, maxillofacial and ENT applications and the new 2D panoramic imagers MyRay Hyperion X5 (winner of the Red Dot Design Award) and NewTom Go.Finally, a new Ultrasound Thermodisinfector Tethys H10 was added to the sterilization range in 2015.Product innovation was the driving force behind the investment effort made in 2015, with important R&D projects aimed at strengthening the 2016 range and consolidating the market shares acquired in 2015.

Stern Weber S380TRC

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Three years ago we set important goals for ourselves, summed up by a vision: “Be the privileged, innovative partner of OLSRT businesses internationally” which reflects, in a nutshell, all the efforts and objectives that we are pursuing with great drive and enthusiasm.In this scenario, our Shopfitting B.U., now going through a major internal reorganisation process, closed the year 2015 on a positive note, confirming an increase in sales volumes and margins.Sales forecasts in the Italian market were confirmed, although the expected delivery terms are increasingly challenging here, as happens also in the Spanish and French markets - in which we are obtaining excellent results, despite the strong competitive pressure.

Overall, we recorded positive results in other countries and this is the area where we focussed our main growth efforts. Growth was also confirmed in the Middle East - thanks to an important increase in local branch sales. Encouraging results also came from Africa - an area that we also cover commercially with our direct sales forces. Russia is going in the direction of a solid stabilisation, thanks to work process rationalization and product-targeted actions - also scheduled to continue in the course of 2016.

CEFLA SHOPFITTING

Fiorfood, Turin

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In terms of product range, in 2015 we pursued the process of streamlining our shelving system, and we implemented the planned investment in UNIVERSAL products, i.e. bases and columns produced internally both for the System25 and the System50 lines. In relation to the latter product, the first marketing phase was completed and the whole action will then be finalised in the course of 2016.

The industrialization of electrification and shelving-integrated LED lighting was implemented and we worked on the development of interactivity between displays and customer smartphones. This is our Smart Shelving System, a project linked to proximity marketing, extremely innovative, presented to the market at the beginning of 2016 and met with an extremely interested response.As regards the “Wire pole”, the transition to the new production plant was completed and we carried out the market launch of the new line of Filomarket-branded products.

Shopfitting in a pharmacy environment

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Officially founded in the month of April 2016, C-LED S.r.l. is a start-up created to add the “Lighting” business line to Cefla’s existing ones.Today, C-LED designs and manufactures lighting solutions - LED boards and modules, special finished products both for group companies and for other players - and targets businesses active in the areas of retail and visual merchandising, interior design, street and industrial lighting and in many other sectors.

This project is the last stage of a journey that had started within Elca Technologies, a historical Cefla company traditionally specialising in electronic systems for industrial automation, medical devices and lighting.

During 2015, a “Lighting business line” had already been created within Elca, focussed on the implementation of shelving-integrated LED lighting systems and on the finalisation of its Proximity marketing project. Then, at the Milan Expo 2015, the structure had been active in a Themed Area dedicated to Coop’s “Supermarket of the Future”, created in conjunction with Cefla Shopfitting Business Unit.

With its strong orientation toward innovation, C-LED now aims at boosting the development of illumination technology through advanced production techniques. The new company is staffed by 17 people who are developing the project on the basis of their many years of specific experience and design and manufacturing expertise.

C-LED

C-LED production

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C-LED’s purpose is to create products that combine excellent quality and competitive production costs, thanks to a highly technologically advanced and efficient production line. These key factors, combined with quick response to customer needs in a fast-evolving market, will be critically important for future growth.

In 2016 the facility is expected to be enlarged from the current 1600 square metres to 2300 square metres, and new qualified human resources will be added to the existing staff.These initiatives are part of a strategic development plan that includes the implementation of a number of products in the Lighting area and wireless connectivity to expand its market range and accelerate growth.

At the same time, C-LED will attend the biggest industry trade fairs to present its range of products and solutions.

Elca Technologies will continue its micro-electronic and micro-mechanical appliance production activity, in particular for the Cefla Medical Equipment B.U., while C-LED will also be appointed to manufacture the Bluetooth sensors named ‘Beacon’ with integrated environmental sensors and systems designed to improve energy efficiency.

LED bars for shelving

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CEFLA IN THE WORLD

ITALYSites: 9 Prod.: 8

USASites: 1 Prod.: 1

EUROPESites: 9 Prod.: 2

Finishing

Medical E.

Finishing

Medical E.

Shopfitting

C-LED

Finishing

Medical E.

Shopfitting

Plant S.

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RUSSIASites: 2 Prod.: 1

MIDDLE EASTSites: 1

ASIASites: 4 Prod.: 2

Finishing

Medical E.

Finishing

Medical E.

Shopfitting

Finishing

Shopfitting

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ORGANISATION CHART OF GROUP COMPANIES

Cefla s.c.

Estate S.r.l.100% Cefla s.c.

Mocom S.r.l.100% Cefla s.c.

CCSFR Sarl99% Cefla s.c.1% Sorbini S.r.l.

Cefla Gest S.r.l.95% Cefla s.c.

5% Cefla Capital Services S.p.A.

C.I.T.I.80.28% Cefla s.c.

Techno Gest S.r.l.33% Cefla s.c.

Elca Technologies S.r.l.100% Cefla s.c.

QR S.r.l.100% Cefla s.c.

Elettrica Roma Nord soc. cons. a r.l.51% Cefla s.c.

Malpensa 3.3 soc. cons. a r.l.69.577% Cefla s.c.

Primavera S.r.l.51% Estate S.r.l.

Estate US, Inc.100% Estate S.r.l.

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Bryo S.p.A.25% Cefla Capital Services S.p.A.

Cefla Polska Sp. Zo.o.100% Cefla Capital Services S.p.A.

Sorbini S.r.l.93.6% Cefla Capital Services S.p.A.

Cefla Capital Services do Brasil Ltda.100% Cefla Capital Services S.p.A.

Cefla Finishing India, Pte Ltd.99.999% Cefla Capital Services S.p.A.

0.001% Cefla s.c.

Cefla Deutschland GmbH99% Cefla Capital Services S.p.A.

Düspohl Maschinenbau GmbH70% Cefla Capital Services S.p.A.

Euroges S.r.l.70% Cefla Capital Services S.p.A.

Eurogescomm S.r.l.100% Euroges S.r.l.

Cefla Capital Services S.p.A.100% Cefla s.c.

Cefla Finishing Equipment(Suzhou) Co., Ltd.

100% Cefla Capital Services S.p.A.

CCS LUX S.A.100% Cefla Capital Services S.p.A.

Evaliber Holdings Ltd100% CCS LUX S.A.

OOO Trading House Vitrina100% ZAO PO Vitrina

OOO Fabrica Vitrina100% ZAO PO Vitrina

ZAO PO Vitrina98% Evaliber Holdings Ltd

1% OOO Trade House Vitrina1% OOO Fabrica Vitrina

Cefla Middle East (FZE)100% Cefla Capital Services S.p.A.

Cefla North America, Inc.100% Cefla Capital Services S.p.A.

Suzhou Victor Medical Equipment Co., Ltd

100% Cefla Capital Services S.p.A.

Zenith Shop Design S.r.l.100% Cefla Capital Services S.p.A.

Cefla Iberica S.A.U.100% Cefla Capital Services S.p.A.

Zenith Retail Solutions LLC.99% Cefla Capital Services S.p.A.

1% Zenith Shop Design S.r.l.

www.cefla.com

la forza del fare insiemethe power of working together