BUSINESS PLAN

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2 STAR CONFERENCE Milan, 1 March 2007 RECENT AND FUTURE DEVELOPMENTS, STRATEGIC GUIDELINES AND 2008 TARGETS Mr. Francesco Casoli, Executive Chairman Mr. Massimo Marchetti, CEO Mr. Vincenzo Maragliano, CFO 1

3 Disclaimer This presentation contains forwards-looking information and statements about Elica S.p.A and its Group. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Although the management of Elica S.p.A. believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Elica are cautioned that forward-looking information and statements are subject to various risk and uncertainties, many of which are difficult to predict and generally beyond the control of Elica S.p.A.; that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking statements. These risks and uncertainties include, but are not limited to, those contained in this presentation. Except as required by applicable law, Elica S.p.A. does not undertake any obligation to update any forward-looking information or statements. 2

4 Agenda Overview Strategic Guidelines Latest Achievements Final Remarks 3

5 Overview What we do We are a world leader in the manufacture of cooker hoods, and market leader in terms of units sold in the major European countries. Our business model leverages also on another strategic business unit: electric motors. Sales breakdown by SBU (K ) Hoods Motors

6 Overview What we do We are strong in design David Lewis, designer from Bang & Olufsen 5

7 Overview What we do We are strong in innovation 6

8 Overview What we do We are in the luxury field 7

9 Overview Where we are We are an innovative and dynamic worldwide player in a fast changing market Poland: New plant, opened in Nov 2005 Mexico: New plant, opened in Aug 2006 Italy Japan: Ariafina consolidated from 1 Jun Sales breakdown America 9% Elica active markets Other markets where Elica sells Elica s industrial facilities (9 sites, 7 of which in Italy) Rest of Europe 67% Italy 17% 8

10 Overview - Milestones Founded in 1970 by Ermanno Casoli Francesco Casoli appointed CEO in 1990; he is presently Executive Chairman Massimo Marchetti joins in He is CEO since 2006 Vincenzo Maragliano joins in February 2006 M&A and JV activities expand Elica s presence in Japan, US, Mexico and Poland IPO: 10 Nov. 2006, Borsa Italiana, STAR Segment Headquarters: Fabriano, Ancona Italy Core sales markets: IT, UK, D, F, E, CIS Expanding sales markets: USA 9

11 Agenda Overview Strategic Guidelines Latest Achievements Final Remarks 10

12 Business Strategy Two Business Units driving topline growth COOKER HOODS Own brands (20.6% of 2006 sales) mainly stem from core European markets and high-end products Client brands (full range products) ELECTRIC MOTORS 27% of demand coming from Elica Cooker Hoods b.u. Leading European player in electric blowers for wall gas heaters Electric motors for household appliances 11

13 Growth Strategy Two drivers for cooker hoods NEW GEOGRAPHIES IN PARTICULAR: NORTH AMERICA (local for local) Clear scope for expanding present 4% mkt share Market dominated by one large traditional player Elica promise: innovating technology and design at competitive price New production platform in Mexico cuts time-to-market from 4 weeks to 4 days MIX UPGRADE Strong increase expected in volumes of high-end products: Decorative Elica Collection (also enhanced by the completion of Air Force acquisition) Focus on core European markets 12

14 Growth Strategy Two drivers for electric motors NEW GEOGRAPHIES LOCAL-FOR-LOCAL DEVELOPMENT STRATEGY Move production capacity to stay close to OEM customers producing appliances in low-cost countries in Central Europe Logistic advantage: improvement in costs and in customer service PRODUCT INNOVATION GROWING DEMAND FOR INNOVATING ELECTRIC BLOWERS FOR HEATERS IN WESTERN EUROPEAN COUNTRIES: Innovation: high efficiency premixed condensation heaters exploiting a precombustion mix of air and gas 13

15 Gaining Efficiency Four main pillars to gain efficiency Contain weight of raw material costs Weight approx. 50% of sales We target to contain their weight around 52.3% throught the business plan time horizon Introduction of lower cost materials Continuous mix-enhancement (25% high value added products do not suffer from raw material price pressures) Localize production into low-cost countries (Mexico and Poland) Streamline the organisation Lower labour costs, but transfer of best practice know how. Competitiviness improved by logistic advantages 1 July 2007: merge of 4 companies into one Optimize tax structure Mainly through new facility locations 14

16 Capital Strategy Investment efficiency will reduce capex needs 2006 In FY06 Elica Capex was approx mn. Acquisition and start-up investments played a sizeable role Over the coming two years capex will remain well below that level. Our plan includes some 42.7 mn of capex, out of which roughly 60% will be innovation / capacity increasing items. No acquisition has been included in our plan. Air Force S.p.A. will be consolidated since 1st Feb

17 Finance Strategy Net cash to provide flexibility in case of M&A activity Net Cash accumulation expected Elica is presently cash positive Extected cash flow generation in excess of capex needs Stable weight of NWC Net cash will furtherly grow Pay-out We forecast to be able to distribute 30% of earnings over the coming two years Acquisition criteria Should external growth require a sizeable cash absorption, we are allowed to reach a gearing of % (Net Debt / Equity) We will consider only earnings accretive deals. 16

18 Agenda Overview Strategic Guidelines Latest Achievements Final Remarks 17

19 Latest Achievements M&A, start-up ElicAmex S.A. de C.V. ElicAmex activities are on track Star-up costs in Q4 06 amounted to 494 K Air Force S.p.A. On 23rd Jan 2007 bought the majority stake Strengthening of kitchen makers channel Focus on high-end products in Europe Merger announcement On 22nd Jan 2007 announcement of merger in cooker hoods b.u. Four companies will merge into one Gain in efficiency is expected 18

20 Latest Achievements Q4 06 results Q4 06 results prove that strategic drivers work GROWTH DRIVEN BY BOTH HOODS AND MOTORS Both business unites contributed to the 21.2% growth (6.6% organic) Cooker hoods: +19.0%; Motors: +31.3% NEW GEOGRAPHIES BOOSTING HEADLINE North America posted a dramatic increase in sales turnover (+65.3%) HIGH-END SEGMENTS IN OWN BRAND LEADING EXPANSION Decorative line revenues: +53%; Elica Collection: +100% EUROPE REMAINS ELICA S CORE MARKET 92.2% of sales in Q4 06; strong leadership re-affirmed SHORT-TERM MARGINS STABLE IN A HARD ENVIRONMENT Operating margins before non-recurring items remain stable even with demanding investments and unfavourable exchange rates (EBITDA bnri Q4 05 of 8.42 mn vs. Q4 06 of 8.46 mn). 19

21 Agenda Overview Strategic Guidelines Latest Achievements Final Remarks 20

22 Brand Strategy Enhancing Brand Value means investing on it A brand value built over time Quality, innovation, cutting-edge technology, luxury image Focus on high-end segments requires further investments E R&D expenses (as % of sales) Sales & Marketing exp. (as % of sales) 2% per year 3.5% per year 21

23 2008 Targets ITEM Cagr Net Sales 2008 TARGETS +10% Cagr EBITDA +21% Cagr EBIT +25% CAPEX 42.7 mn RONIC * 25% (it was 20% in FY06) PAYOUT RATIO Around 30% * EBIT/Net Operating Invested Capital, as at year end 22

24 Final remarks Drawing conclusions in order to build our future growth we can leverage on: a strong brand a leading positioning in core markets a proven business model Our development path is clear and healthy: We mean to boost profitability through: a topline growth led by volume expansion and mix upgrade efficiency gains MOST OF ACTIONS INCLUDED IN OUR PLAN ARE ALREADY UNDERWAY therefore 23

25 Final remarks Commitments we are confident and strongly committed to achieve the 2008 targets we have presented Consider that the floatation has provided Elica with - an even better standing - as well as with attractive flexibility in order to fund future external growth, which has not been included in calculating our 2008 targets 24

26 Q&A Thank you for your attention. We welcome your questions. 25

27 Appendix Plan Assumptions 26

28 Appendix FY 06 results Data in K FY 05 % FY 06 % Growth Revenues ,1% EBIT DA bnri ,9% ,8% 14,9% EBIT bnri ,6% ,9% 20,1% Non recurring items 0,0% ,1% EBIT DA ,9% ,7% 3,4% EBIT ,6% ,8% 1,1% Net interests expense ,8% ,7% 11,7% Currency translations 737 0,2% ,2% Income Taxes ,2% ,0% 8,4% Net Profit ,0% ,0% -22,7% Net Profit bnri ,0% ,7% 3,2% 27