EL En S p A : Consolidated non financial statement 2023

El.En. Group

Sustainability Report 2023

Consolidated non-financial statment

pursuant to Italian Legislative Decree n. 254 of 2016

The English language version of this document is a courtesy translation of the original Italian document. Where possible differences in interpretation or errors in translation exist, the Italian text takes precedence

Consolidated Non-Financial Statement 2023

INDEX

LETTER TO OUR STAKEHOLDERS

HIGHLIGHTS 2023

1. SUSTAINABILITY

OUR STRATEGY FOR A SUSTAINABLE FUTURE

1. Sustainability for the El.En Group.
2. Our stakeholders
3. Materiality analysis
4. The sustainability plan

2. THE GROUP

A HISTORY OF CONCRETE AND SHARED VALUES

1. Our global presence
2. Our history
3. Our markets
4. Income tax
5. The economic value generated and distributed to our stakeholders

3. THE ORGANIZATIONAL SET-UP

RESPONSIBLE BUSINESS MANAGEMENT

1. The Corporate Governance Model
2. Ethics, integrity and compliance
3. Internal controls system and risk management

4. THE MANUFACTURING PROCESS

FROM THE ORIGINAL IDEA TO THE FINISHED PRODUCT

1. Research and Development as an instrument for innovation
2. Quality and safety of our products
3. Regulatory affairs activity
4. The supply chain
5. Our customers

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12

15

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24

32

46

54

56

60

62

64

66

68

74

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88

90

99

104

107

110

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Consolidated Non-Financial Statement 2023

INDEX

5. OUR BUSINESS

THE LASER AS A SUSTAINABLE INSTRUMENT

5.1 Uses and benefits of lasers in the medical sector

1. Uses and benefits of lasers in the industrial sector
2. Use of lasers in the conservation of the world's artistic heritage
3. Our support to the community

6. THE PEOPLE

PASSION AND TALENT TO GROW TOGETHER

1. Training and skills development
2. Health and safety in the workplace
3. The welfare of the people

7. ENVIRONMENTAL RESPONSIBILITY

COMMITMENT AND RESPECT FOR OUR PLANET

1. Energy consumption
2. Self-producedenergy
3. Waste
4. Emissions
5. Water consumption

APPENDIX

1. European Taxonomy
2. About our report
3. Performance indicators
4. GRI Content Index

AUDITOR'S REPORT

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132

140

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146

152

154

155

157

160

162

164

166

178

182

192

198

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Consolidated Non-Financial Statement 2023

LETTER TO STAKEHOLDERS

Dear stakeholders,

We present our Sustainability Report here to give everyone the opportunity to assess our commitment, objectives and actions undertaken during the year.The numbers, results and projects you will see recounted in this document are the fruit of constant work and give a sense of how much the El.En. Group's commitment generates concrete actions that benefit people, communities and the environment.

In a historically and economically complicated period, with market conditions made less favourable by the uncertainty induced by the wars in Ukraine and Palestine and the high level of interest rates which does not facilitate investment in capital goods, we would like to express great satisfaction with the Group's results in 2023.

The excellent performance, especially in the last quarter, confirmed a very positive development in most markets and an operational difficulty of the industrial sector's activities in China. The Chinese market showed a contraction during the year due to the failure to revive its economy, hindered by the crisis in the real estate sector and the difficult international relations that led to a decisive reduction in investments, particularly in the manufacturing sector. The medium-term outlook on the development of our target markets remains positive and encourages us to continue investing, aimed at creating the conditions to benefit from the expected growth.

The Group has once again demonstrated that it has the organisational and technical means to meet customer needs and to innovate its products. Over the years we have created the conditions for progressive, sustainable and far-reaching growth, and we have the right organisation and technology to meet market demands and to seize the opportunities that arise.

An essential element and the core of our strategy remains research and development for the constant increase in the technological innovation of our products: the demand on the markets grows in the presence of innovative solutions that meet customers' needs more and more effectively and stimulate new ones, opening up new scenarios. Research and development involves a commitment both from a technical point of view, aimed at the launch of new products, and from a documental and clinical point of view, in order to obtain the necessary certifications to sell medical systems worldwide. We have been working constantly both on clinical trials with medical centres and hospitals, and with facilities dedicated to the Regulatory, a rather complex but indispensable process to launch our systems on the market.

Our ability to innovate and the attractiveness of our product range, which we have continued to expand,confirm the Group's solid competitive positioning and its great ability to differentiate itself in the markets with technical and application innovations.The first few months of the year were characterised by intense activity aimed at the market release of a whole new range of products at the 25th World Congress of Dermatology (WCD), held in Singapore from 3 to 8 July 2023: on this occasion we presented the new Again PRO, RedTouch PRO and Onda PRO platforms, which represent a remarkable innovation in the field of high-end Energy Based Devices in the segments of hair removal, facial rejuvenation and body treatment, respectively. In the second half of the year, activities focused on the market release of further new products at the IMCAS 2024 (World Congress on Dermatology and Aesthetic and Plastic Surgery), held in Paris from 1 to 3 February 2024: the new Motus PRO, Tetra PRO, SmartXide PRO and TORO platforms complement the range launched at

Consolidated Non-Financial Statement 2023

the previous Congress in Singapore and represent significant innovation in the segments of hair removal, facial rejuvenation and treatment of benign pigmented lesions and tattoo removal, respectively.

In this year, once again the main architects of our development were the people: we continued to create jobs in the Group's Italian and European offices,increasing the number of people working with us by 10%. On the other hand, the number of employees in the Chinese companies that experienced unfavourable market conditions decreased: overall, the number of Group employees at the consolidated level is in line with the previous year. To each employee goes our commitment to provide a workplace not only where talent is fostered but also where the values of responsibility, respect, diversity and inclusion remain at the heart of working together.

This was a record year in terms of training: over 43,800 hours of training were delivered with an average of over 21 hours per employee. We continued to promote the dissemination and consolidation of the Group's ethics and values in all subsidiaries and increased the number of hours of technical and educational training, to promote the personal and professional growth of all employees, with targeted projects for specific managerial training in various companies.

During the year, the new five-year Sustainability Plan 2023 - 2027 was drafted, approved by the Board of Directors in November. The new plan identifies specific and measurable sustainability activities and objectives, on sensitive topics such as combating climate change, the circular economy, promoting a responsible supply chain, valuing people and contributing to the community. The new Plan confirms the Group's commitment to sustainable development in which environmental and social responsibility become an increasingly integral part of our business model.

Scope 2 GHG emission reduction targets have been included in the Plan, which are expected to decrease due to increased shares of renewable energy production and purchase. Our goal is to reduce GHG emissions by 30% by 2027 compared to the 2022 baseline under the Market-Based methodology and to reduce GHG emissions by 5% by 2027 compared to the 2022 baseline under the Location-Based methodology. We expect to reach the targets set by increasing the share of electricity purchased by the Group (out of total purchased electricity) to at least 30%, in order to achieve an estimated reduction of Scope 2 GHG emissions by about 30%, according to the Market-Based methodology. In addition, we plan to increase the electricity generated by our photovoltaic plants to cover at least 20% of the Group's electricity needs and reduce Scope 2 GHG emissions (Location-Based methodology) by about 11%, exceeding thus the initial objectives we set ourselves.

The targets set have already almost been achieved: in 2023, the El.En. Group achieved a reduction in Scope 2 GHG emissions according to the Market-based methodology of 26% compared to 2022 (the year identified as the baseline because the Group had not yet adopted strategies to reduce its carbon footprint).

For this reason, it plans to periodically monitor its performance and, if necessary, set more challenging targets before 2027.

During 2023, the companies El.En, Deka and Quanta System activated a project to obtain ISO 14064 - Carbon footprint of organisation (covering data for the financial year 2022) that they have obtained in early months of 2024. By obtaining this certification, the El.En. Group

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Consolidated Non-Financial Statement 2023

once again demonstrates its commitment to meeting the demands of its stakeholders, who are increasingly attentive to these issues: in fact, the certification fully meets the need to outline a working methodology based on a scientific and systematic approach and aimed at quantifying, accounting for and verifying the reduction of GHG emissions.

Our commitment to doing business has also continued to be expressed through initiatives in favour of the community: every day we work to make a positive impact in people's lives and,with some targeted projects,we donate our skills and tools to non-profit organisations, foundations or cutting-edge scientific laboratories, at the service of patient health as well as in the preservation and restoration of cultural heritage.The Group's companies are also very closely linked to the territories in which they operate and, as always, are committed to participating in solidarity initiatives and through supporting cultural, social and educational initiatives with sponsorships, participation in associations and the promotion of alternating school-work projects, internships and apprenticeships.

The most significant change that the Group is facing in the area of sustainability reporting concerns the transposition of the new European CSRD (Corporate Sustainability Reporting Directive) in force as of the financial statements as at 31 December 2024. The new European Directive has in fact introduced new reporting obligations in line with the new European Sustainability Reporting Standards (ESRS), including in the reporting obligation also the preparation of information on activities identified as eligible with respect to the environmental objectives defined by EU Taxonomy 2020/852. In order to best implement the new requirements, the El.En. Group has set up specific projects during 2023 that will allow any gaps to be filled and documentation to be aligned with the new CSRD regulatory requirements for the financial statements as at 31 December 2024.

I am proud to say that the results achieved once again confirm our ability to continue along the path of sustainable development, combining economic growth and financial solidity with the principles of social and environmental sustainability.These elements have been part of our way of doing business for over forty years and we intend to enhance them more and more.

The Chairman

Gabriele Clementi

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Consolidated Non-Financial Statement 2023

HIGHLIGHTS 2023

Consolidated Non-Financial Statement 2023

HIGHLIGHTS 2023

SUSTAINABILITY

THE SUPPLY CHAIN

1

New Sustainability

Plan 2023-2027

12

Objectives approved by

the Board of Directors

40

Actions to be taken to achieve the stated objectives by 2027

507

Million Euro Value

of deliveries

Implemented one checklist for new supplier evaluation including also ESG issues for most subsidiaries

THE GROUP

10	14	8
Countries with El.En.	Production sites	Research and
Group Offices		development centres

THE ORGANIZZATION OF THE COMPANY

	THE COMMUNITY
712	2
Million Euro economic	donated laser systems
value generated

THE PEOPLE

489

Number of people trained on

the Code of Ethics in 2023

43%

The percentage of women on the Board of Directors

5

Meetings held in 2023 by the Risk and Control Committee related party-transactions and sustainability

50%		Approximately
	43.900
of employees have a		hours of training provided in 2023
Bachelor's or Master's degree		+11% by 2022

21%

Under 30

THE PRODUCTION PROCESS

ENVIRONMENT

328	228	63
Active patents and 83	People employed in research and	People in the Quality and
patents pending	development activities	Regulatory function

6

Active photovoltaic systems

of which 4 came into operation

during 2023

10%

Self-produced electricity

compared to the total electrical

energy demand in 2023

28%

Electricity purchased from

renewable sources out of the total

purchased energy in 2023

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SUSTAINABILITY

OUR STRATEGY FOR A SUSTAINABLE FUTURE

Consolidated Non-Financial Statement 2023

1. SUSTAINABILITY

1.1 SUSTAINABILITY FOR THE EL.EN. GROUP

Being sustainable means creating value over time and being ready to accept and successfully face the challenges of tomorrow. Continuing our development path, combining economic growth and financial solidity with the principles of social and environmental sustainability is the only way to be an innovative, sustainable and successful company.

Consolidated Non-Financial Statement 2023

1.2 OUR STAKEHOLDERS

The process of listening to one's stakeholders is a priority in order to understand the extent to which their interests and expectations are being met and to identify issues on which to increase one's efforts, with a view to continually improving the impact of the company's activities on the environment and society.

Human Resources

The principles of sustainability for the El.En. Group have always been the pillars underpinning the development and growth that has characterised the Group over the years and are proof that value is created through responsible management that respects economic, social and environmental balances.

The Group embarked on this path in a structured manner and in a short time it has gained awareness, managing to define the activities to be carried out in a timely manner: this is because the issues addressed and the aspects reported on have always been part of its cultural baggage and the drafting of this document is proof that in addition to economic results, the Group's performance has always been excellent on environmental, social and governance issues.

and through the disclosure of the new objectives contained in the Plan and the actions to be taken to achieve them for all Group companies.

In 2018, the Board of Directors of the parent company El.En. S.p.A. entrusted the Control and Risk Committee with the review of the company's sustainability policies and goals and the supervision of the related Plan; in 2021, this body changed its name to Control and Risk,Related Party Transactions and Sustainability Committee. Also in 2021, the desire to operate in a more responsible and integrated manner led to the decision to entrust the Executive Director in charge of the internal control system with the definition of the strategic sustainability guidelines, the Sustainability Plan and the review of the Consolidated Non- Financial Statement, in order to even more strongly guarantee an adequate oversight and monitoring

Agents and	Universities and
distributors	research centers

OUR

Clients and	STAKEHOLDERS	Istitutions
consumers		and regulatory
		bodies

Shareholders	Suppliers
and investors
	Local Communities

This financial year has once again confirmed the Group's commitment to ESG issues: the concrete goals we had set ourselves within the first Sustainability Plan, which was completed at the end of 2022, were achieved and the Five-year plan was completed1.The Board of Directors of El.En. then approved a new 2023

- 2027 Group Sustainability Plan in 2023.

The new Plan presents more challenging objectives than in the past, concerning the fight against climate change, the circular economy, the promotion of a responsible supply chain, valuing people and contributing to the community, confirming the Group's greater commitment to contribute to sustainable development and a greater awareness of how environmental and social responsibility are increasingly an integral part of the business model.

During this past year, we increased our initiatives to raise awareness of the impact and importance of sustainability issues, both through the dissemination to key stakeholders of the documents drawn up

of processes.. From the outset, there is a Global Sustainability Manager who plays a coordinating role in the entire process of defining preliminary activities, preparing the Sustainability Report and carrying out related activities. The Sustainability Manager proposes the Group-wide sustainability strategy by sharing it with the Executive Director in charge of Internal Control and then with the Top Management and sets the Sustainability Plan, defining its goals and coordinating all activities to fulfil the commitments, identifying areas and projects for improvement at Group level and monitoring the progress of existing projects.

The function supports the function managers identified in each subsidiary in the compilation of the data collection forms, verifies the consistency of the information and prepares the draft Sustainability Report by drawing up the outlines to be published, writing and/or updating the texts of this document and coordinating and managing relations with the external auditors.

For many years, we have implemented a process of mapping and identifying our stakeholders, which has enabled the identification of the Group's stakeholders, both internal and external, summarised in the chart above.

Also during this financial year, in order to collect and assess the expectations and issues of greatest interest to stakeholders, we continued to carry out stakeholder engagement activities by submitting questionnaires to a selected sample of internal stakeholders (employees of some Group companies) and external stakeholders (main suppliers of some subsidiaries).

Already last year, we started an initial ESG monitoring of the supply chain: the project, carried out by the parent company El.En. and some of its main subsidiaries, involved new suppliers and suppliers of critical components by administering a questionnaire to assess their social commitment, environmental protection and enhancement, good

enable the players in the supply chain to be more involved in achieving common sustainability goals. The sustainable supply chain theme is divided into three main sections: decarbonisation and reduction of direct and indirect emissions, respect for human and labour rights, and management of the circular economy. (For further details, see paragraph 4.4 - The supply chain, of this document).

The process of listening to customers and distributors took place mainly through Customer Satisfaction surveys by monitoring appropriate company indicators, administering questionnaires relating to the surveys carried out rather than through the analysis of deficiencies. The measurement of the customer experience is done through feedback obtained during dialogues with customers in which opinions, comments, expressions of interest in a product or service,or in interactions with both internal and external sales representatives are collected. Already since last year, the Parent company and

1 All goals have been completed with the exception of one point within GOAL 6 "Promoting a sustainable procurement culture and policies", which envisaged the drafting of a Group-wide "Supplier Code of Conduct"; this action has been repeated in the 2023-2027 Sustainability

Plan. The reasons for the non-achievement were mainly due to the procurement difficulties of the past few years, that kept the purchase departments of all subsidiaries, the main owners involved in this action, very busy.The timing of the target in the new Sustainability Plan has been revised: the Code of Conduct will be drafted after the monitoring analysis of the sustainable supply chain.

corporate governance and respect for human rights. In the course of 2023, we started to set up a model for sustainable supply chain management, which will be proposed at the consolidated level, and which will

some subsidiaries have included questions related to sustainability issues in the Customer Satisfaction process. (For further details, see paragraph 4.5 - Our Customers, of this document).

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Consolidated Non-Financial Statement 2023

In order to intensify the process of listening to	Meeting, in direct contact between the Company
employees and to collect anonymous suggestions,	and investors through the organisation of events,
opinions and evaluations on the corporate climate,	roadshows, meetings (one-to-one or collective)
some Group subsidiaries carried out surveys on	and conference calls with institutional investors,
part or all of the company population. During the	shareholders and financial	analysts rather than
coming year, this activity will also be offered to other	through presentations of the main performance
subsidiaries. (For further details, see Chapter 6 -	drivers and the main messages conveyed to the
People, of this document).			market and the financial	community (for more
During the year, numerous initiatives were carried out	details see "Policy of dialogue with shareholders of
to increase the process of listening to communities	El.En. S.p.A. at https: //elengroup.com/uploads/
and local authorities,	both	through	participation	pdfshareholder/POLITICA-DI-DIALOGO-DI-EL.EN.-
in events promoted by these institutions where we	S.P.A..pdf).
spoke about our current projects and the main	Establishing and maintaining partnerships with
sustainability initiatives carried out in the area, and	universities and research centres is crucial to
by responding positively to requests for discussion	maintaining a constant dialogue, both nationally
and collaboration to develop concrete sustainability	and internationally. All Group companies consider
activities together with the territory. The dialogue	these exchanges to be crucial both in research and
with local communities is also expressed through	development and for their own success in the talent
the numerous school-to-work projects promoted	search and selection process. Maintaining these
and through participation in career day events (For	channels is essential to increase opportunities to get
further details, see paragraph 5.4 - Our contribution	to know people and to promote the development
to the community, of this document).		of technical and scientific skills in the areas where
In 2023, we	also received important national	companies and societies operate, including through
sustainability	awards	and,	at the	request of	curricular and extracurricular university internships.
shareholders and investors, obtained sustainability	(For further discussion see paragraph 4.1 Research
ratings2 from leading independent agencies. The	and Development as a tool for Innovation and
policy of dialogue with shareholders is ensured	paragraph 5.4 - Our contribution to the community,
through the publication on the company website of	of this document).
regulated information, with the publication of press	Below are our main channels of communication and
releases and documents, through the Shareholders'	dialogue with the Group's stakeholders:

2 In 2023, the El.En. Group achieved: the A rating for MSCI ESG rating (last year we were in the BBB range, improving performance in both the Governance and Social sections), a score of 20.7 for the Sustainalytics ESG Risk rating Report (a clear improvement on the 2022 score of 23.8. The result obtained is close to the "Low" risk threshold of 10 to 20). We achieved a B score for the CDP climate change rating, a very important result that places us in the "management" bracket of responsible environmental management.

Consolidated Non-Financial Statement 2023

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