GVS S p A : Interim Report on Operations at 31 March 2024

Interim report on operations

at 31 March 2024

GVS Group

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CONTENTS
INFORMATION ABOUT THE COMPANY AND INFORMATION FOR SHAREHOLDERS	3
GROUP STRUCTURE*	4
CORPORATE BODIES	5
DIRECTORS' REPORT ON OPERATIONS	6
Foreword	6
Group performance and analysis of the results for the period ending on 31 March 2024	6
Investments	13
Research and development	13
Additional information	13
Principal risks and uncertainties	14
Intergroup and related party transactions	14
Significant events occurring during the period	15
Events subsequent to the close of the period	15
Business outlook	15
FINANCIAL STATEMENTS AS AT 31 MARCH 2024	17
Consolidated statement of assets and liabilities*	17
Consolidated income statement*	18
Comprehensive consolidated income statement	19
Prospectus of changes in consolidated shareholders' equity	20
Consolidated statement of cash flows*	21
EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31
MARCH 2024	22
1.	General information	22
2. Structure and content of the consolidated financial statements	22
3.	Valuation criteria	25
4.	Estimates and assumptions	25
5. Explanatory Notes to the main consolidated income statement items	26
6. Non-recurring revenues and operating costs	30
Additional information	31
ATTACHED TABLES	32
Consolidated statement of financial position, with indication of the amount of positions with
related parties	32
Consolidated income statement, with indication of the amount of positions with related parties	33
Consolidated statement of cash flows, with indication of the amount of positions with related
parties	34
Consolidated income statement, with indication of the amount deriving from non-recurring
transactions	35
DECLARATION OF THE MANAGER RESPONSIBLE FOR THE PREPARATION OF THE
COMPANY'S ACCOUNTING DOCUMENTS PURSUANT TO ARTICLE 154-BIS
PARAGRAPH 2 OF LEGISLATIVE DECREE 58/98	36

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INFORMATION ABOUT THE COMPANY AND INFORMATION FOR SHAREHOLDERS

REGISTERED OFFICE

GVS S.P.A

Via Roma 50

40069 Zola Predosa

BOLOGNA, ITALY

Phone [phone]

Fax + 39 051 6176200

www.gvs.com

LEGAL INFORMATION

Share capital: Euro 1,750,000

Tax code 03636630372

VAT number 00644831208

REA of Bologna 0305386

Register of Companies of Bologna 45539

INVESTOR RELATIONS

E-mail:[e-mail]

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GROUP STRUCTURE*

*For information on the company name, registered office, the currency in which the Company operates, share capital of the GVS Group companies and the stake held by GVS SpA, please see the Explanatory Notes.

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CORPORATE BODIES

Board of Directors
Chairman (independent)	Alessandro Nasi
Chief Executive Officer	Massimo Scagliarini
Non-Executive Directors	Marco Pacini
	Grazia Valentini
	Marco Scagliarini
Independent Directors	Simona Scarpaleggia (1) (2)
	Anna Tanganelli (1)
	Pietro Cordova (1) (2)
	Michela Schizzi (2)
Board of Auditors
Chairman	Maria Federica Izzo
Standing auditors	Francesca Sandrolini
	Giuseppe Farchione
Alternate auditors	Alessia Fulgeri
	Mario Difino
Manager responsible for the preparation of the Company's
corporate accountants	Emanuele Stanco

Independent Auditors

PricewaterhouseCoopers SpA

1. Member of the Control, Risk and Sustainability and Related Party Transactions Committee
2. Member of the Nominations and Remuneration Committee

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DIRECTORS' REPORT ON OPERATIONS

Foreword

The Interim Report on Operations of GVS SpA (hereinafter "GVS", the "Company", or the "Parent Company" and together with its subsidiaries the "GVS Group" or the "Group") is presented together with the interim consolidated financial statements at 31 March 2024.

The Interim Report on Operations is intended to provide information on the situation of the GVS Group and on operations as a whole and in the various sectors in which it operates, including through subsidiaries.

The tables below have been prepared on the basis of the consolidated financial statements at 31 March 2024, to which reference should be made. The latter were prepared in accordance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and approved by the European Union, as well as with measures issued in implementation of Article 9 of Legislative Decree no. 38/2005.

Group performance and analysis of the results for the period ending on 31 March 2024.

The GVS Group is one of the world's leading suppliers of advanced filtering solutions for highly critical applications and offers advanced filtering solutions for a multitude of applications, primarily in the field of Healthcare & Life Sciences.

The table below breaks down revenues from contracts with customers by division in the periods ending on 31 March 2024 and 31 March 2023.

(in thousands of Euro)	Period ended 31 March
2024	2023
Healthcare Liquid	53,678	54,265
Healthcare Air & Gas	7,501	7,135
Laboratory	7,964	9,116

Healthcare & Life Sciences	69,142	70,516
Powertrain & Drivetrain	7,155	7,702
Safety & Electronics	5,010	5,006
Sport & Utility	4,303	4,473

Energy & Mobility	16,468	17,181
Personal Safety	17,106	15,317
Air Safety	1,170	942
Health & Safety	18,275	16,259
Revenue from contracts with customers	103,886	103,956

During the three months of 2024, GVS generated consolidated revenues of Euro 103.9 million. One highlight is the positive performance of the Health & Safety division, which reported a 12.4% year-on- year increase in turnover, driven by favourable sector dynamics and the achievement of commercial synergies with the RPB Group, which was acquired in September 2021.

Revenues from the Healthcare & Lifesciences division, compared with the same period last year, recorded growth in the Healthcare Air & Gas business (+5.1%) and a decline in the Laboratory and Healthcare Liquid businesses, respectively amounting to Euro 8 million and Euro 53.7 million.

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The Energy & Mobility division recorded a decrease of 4.2% in terms of revenues compared with the same period of the previous year, and also showed a trend of gradual recovery of the business compared with the previous quarters, characterised by the impact of the destocking policies implemented by its customers.

The breakdown of revenues from contracts with customers as at 31 March 2024 is as follows:

• the Healthcare & Life Sciences division, which represents 66.6% of the total, recorded revenues of Euro 69.1 million and grew by 1.9% compared to the first three months of 2023;
• the Energy & Mobility division, which represents 15.9% of the total, recorded a decrease in turnover level of 4.2% compared to the same period of 2023, reaching Euro 16.5 million;
• the Health & Safety division represents 17.6% of the total and settled at Euro 18.3 million with an increase of 12.4% compared to the same period of the previous year.

Financial statements for the period closing at 31 March 2024 are shown below in comparison with those of the same period of the previous year, reclassified on the basis of current practice in financial analysis.

Analysis of reclassified financial position

			The 3-month period closed on 31 March
		of which					of which
		non-		2024			non-	2023
(in thousands of Euro)	2024	recurring		Adjusted	%	2023	recurring	Adjusted	%
Revenue from sales and services	103,886			103,886	100.0%	103,956		103,956	100.0%
Other operating income	1,505	250		1,255	1.2%	985	319	666	0.6%
Total revenues	105,391	250		105,141	101.2%	104,941	319	104,622	100.6%
Raw materials purchases costs and variation in
inventories	(31,780)	-		(31,780)	-30.6%	(32,186)	-	(32,186)	-31.0%
Services costs	(14,199)	-		(14,199)	-13.7%	(14,704)	-	(14,704)	-14.1%
Other operating costs	(1,593)	(250)		(1,343)	-1.3%	(1,493)	-	(1,493)	-1.4%
Added value	57,819	-		57,819	55.7%	56,558	319	56,239	54.1%
Personnel costs	(33,537)	(27)		(33,510)	-32.3%	(33,940)	(267)	(33,673)	-32.4%
EBITDA	24,282	(27)		24,309	23.4%	22,618	52	22,566	21.7%
Amortisation and depreciation	(10,961)	(4,006)		(6,955)	-6.7%	(10,205)	(4,038)	(6,167)	-5.9%
Provisions and writedowns	(191)			(191)	-0.2%	(344)	-	(344)	-0.3%
EBIT	13,130	(4,033)		17,163	16.5%	12,069	(3,986)	16,055	15.4%
Financial income and costs	(633)	(772)		139	0.1%	(8,611)	(892)	(7,719)	-7.4%
Pre-tax result	12,496	(4,805)		17,302	16.7%	3,458	(4,878)	8,336	8.0%
Income tax	(3,054)	1,254		(4,308)	-4.1%	(910)	1,330	(2,240)	-2.2%
Group's and minority shareholders' net profit or loss	9,443	(3,551)		12,994	12.5%	2,548	(3,548)	6,096	5.9%

The consolidated economic results of operations of the period closing at 31 March 2024 were as follows: total revenues from ordinary operations amounted to Euro 105.1 million (Euro 104.6 million in the first three months of 2023); EBITDA from ordinary operations amounted to Euro 24.3 million (Euro 22.6 million in the first three months of 2023); EBIT from ordinary operations came to Euro 17/2 million (Euro 16.1 million in the first three months of 2023).

EBITDA from ordinary operations grew by 7.7% compared to the first three months of 2023, with a 23.4% margin on revenues, a significant improvement compared to the 21.7% margin recorded in the first three months of 2023. The result for the period is supported by the contribution of actions aimed at recovering the profitability implemented by the Group.

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EBIT from ordinary operations with a margin on revenues of 16.5% is equal to Euro 17.2 million (+6.9%) compared to Euro 16.1 million in the same period of the previous year and in line with the growth achieved at the level of EBITDA from ordinary operations.

Net financial costs from ordinary operations (net of exchange rate gains of Euro 4,114 thousand recorded in the first three months of 2024 and exchange rate losses of Euro 4,036 thousand recorded in 2023) increased in the period in question, going from Euro 3,683 thousand in the period ended 31 March 2023 to Euro 3,975 thousand in the period ended 31 March 2024. This was mainly due to the increase in market interest rates some loans are related to.

The pre-tax result of the recurring activities reached Euro 17.3 million in the period in question, with a decrease of Euro 9 million compared to Euro 8,3 million in 2023, mainly due to the exchange gain in 2024 compared to the exchange loss recognised in 2023.

Non-recurrent proceeds and charges in the period ending on 31 March 2024 represent: (i) income resulting from the partial release of the provision for risks set aside in previous years for a specific dispute arising before the acquisition relating to Haemotronic SpA (Euro 250 thousand); (ii) costs relating to Group personnel following the ongoing reorganisation process (totalling Euro 27 thousand),

1. the cost relating to the downsizing of the indemnity to be obtained from the seller of Haemotronic SpA, for a specific dispute, for which the specific provision for risks was released for the same amount (Euro 250 thousand); (iv) amortisation of intangible and tangible assets recognised following the purchase price allocation of the Kuss, RPB, Haemotronic and STT groups (Euro 4,006 thousand) and finally (v) interest recognised following the discounting of payables for earn out for acquisitions of the STT and Haemotronic groups (Euro 772 thousand), net of the related tax effect.

Non-recurrent proceeds and charges in the period ending on 31 March 2023 represent: (i) grants obtained from the Chinese government for the relocation of the Suzhou production site (Euro 319 thousand); (ii) costs relating to Group personnel following the reorganisation process going on (for a total of Euro 267 thousand, (iv) the depreciation of intangible and tangible assets recorded following the purchase price allocation of the Kuss, RPB, Haemotronic and STT groups (for a total of Euro 4,038 thousand) and finally (v) to the interest recorded following the discounting of payables for earn out for the acquisitions of the STT and Haemotronic groups (Euro 892 thousand), net of the related tax effect.

Analysis of reclassified equity position

	As at 31 March 2024	As at 31 December 2023
(in thousands of Euro)
Net intangible fixed assets	473,928	471,701
Right of use assets, net	23,309	20,207
Net tangible fixed assets	127,239	122,884
Financial fixed assets	3,568	3,531
Other fixed assets	10,920	10,718

Fixed capital (A)	638,964	629,041
Net trade receivables	62,447	54,114
Inventories	85,805	84,808
Payables to suppliers	(44,417)	(38,452)

Net commercial working capital (B)	103,835	100,470
Other current assets	25,031	21,203
Other current liabilities	(41,535)	(40,465)
Total current assets/liabilities (C)	(16,504)	(19,263)
Net working capital (D)= (B) + (C)	87,332	81,207
Other non-current liabilities (E)	(36,606)	(35,447)

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Employee termination indemnity and end of service indemnity (F)	(3,227)	(3,120)
Provisions for risks and charges (G)	(8,048)	(8,529)
Net invested capital (H) = (A+D+E+F+G)	678,415	663,152
Shareholders' equity	(347,132)	(334,478)
Consolidated shareholders' equity (I)	(347,132)	(334,478)
(Short-term financial indebtedness)/Liquidity	39,964	60,503
(Net medium-/long-term financial indebtedness)	(371,247)	(389,178)
Net financial indebtedness (L)	(331,283)	(328,675)
Own funds and net financial indebtedness (M) = (I+L)	(678,415)	(663,152)

Fixed capital at 31 March 2024 shows an increase of Euro 9,923 thousand, mainly as a result of investments made in relation to tangible assets, rights of use and intangible assets, and for positive exchange rate conversion, net of depreciation and disposals during the period. Specifically, net intangible assets increased by Euro 2,227 thousand, of which € 1,896 thousand for investments in the period and € 5,309 thousand for the positive exchange rate conversion reserve, net of depreciation and amortisation for Euro 4,897 thousand. Tangible fixed assets recorded and increase of Euro 4,355 thousand, of which Euro 7,543 thousand relating to investments capitalised during the period and Euro 845 thousand for the positive exchange rate conversion reserve net of depreciation, equal to Euro 4,098 thousand. The net increase in rights of use of Euro 3,102 thousand is mainly due to increases in the period of Euro 4,967 thousand net of amortisation for the period totalling Euro 1,965 thousand. Lastly, other fixed assets increased by Euro 202 thousand mainly due to the change in deferred tax assets of Euro 1,285 thousand net of the decrease in the fair value of active derivatives of Euro 833 thousand.

The balance of trade net working capital at 31 March 2024 shows an increase of Euro 3,366 thousand compared to 31 December 2023, due in the amount of Euro 8,333 thousand to trade receivables and Euro 997 thousand to inventories, net of the change in trade payables, the final balance of which rose from Euro 38,452 thousand at 31 December 2023 to Euro 44,417 thousand at 31 March 2024.

The increase in other current assets at 31 March 2024, amounting to Euro 3,828 thousand, is mainly attributable to prepaid expenses, advances to suppliers and receivables from government agencies for contributions to be collected.

The increase in other current liabilities at 31 March 2024 compared with 31 December 2023, amounting to Euro 1,069 thousand, is mainly attributable to the increase in payables to employees, directors and deferred income, net of the reduction in payables for direct and indirect taxes.

Shareholders' equity at 31 March 2024 increased by Euro 12,655 thousand, mainly due to the overall result for the period equal to Euro 12,183 thousand.

The reader is referred to the next section for information on changes in net financial indebtedness.

Analysis of net financial indebtedness and net financial position

Trends in net financial indebtedness and net financial position are analysed below.

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	(in thousands of Euro)	As at 31 March 2024 As at 31 December 2023
(A)	Cash and cash equivalents	96,240	191,473
(B)	Cash equivalents	-	-
	Term deposits	75,000	-
	Financial assets held for trading	2,945	2,317
	Financial lease receivables	125	168
(C)	Other current financial assets	78,071	2,485
(D)	Liquidity (A)+(B)+(C)	174,310	193,958
	Current bank debts	-	-
	Financial payables to parent companies	2,059	1,531
	Financial lease liabilities to other companies in the GVS Group	2,411	1,475
	Financial lease liabilities	5,993	5,909
	Other financial liabilities	18,973	20,789
(E)	Current financial indebtedness	29,436	29,704
(F)	Current portion of non-current indebtedness	104,910	103,751
(G)	Current financial indebtedness (E)+(F)	134,346	133,455
(H)	Net current financial indebtedness (G)-(D)	39,964	60,503
	Non-current bank borrowings	255,497	275,715
	Other financial liabilities	25,748	25,299
	Other financial liabilities to GVS Group	75,000	75,000
	Financial lease liabilities to other companies in the GVS Group	1,927	1,430
	Non-current financial lease liabilities	13,076	11,734
(I)	Non-current financial indebtedness	371,247	389,178
	Passive derivative financial instruments	-	-
(J)	Debt instruments	-	-
(K)	Trade payables and other non-current payables	-	-
(L)	Non-current financial indebtedness (I)+(J)+(K)	371,247	389,178
(M)	Total net financial indebtedness (H)-(L)	(331,283)	(328,675)

The increase in net financial debt at 31 March 2024 compared with 31 December 2023, totalling Euro 2,608 thousand, is mainly due to the cash used for net investments in tangible and intangible assets for the period (totalling Euro 9,440 thousand), net financial expenses (Euro 4,747 thousand), the payment of taxes (Euro 4,207 thousand) and the signing/renewal of lease agreements (Euro 4,967), net of the cash generated by current operations. More specifically, the cash generated by operations, equal to Euro 25,182 thousand net of the liquidity absorbed by changes in working capital for Euro 4,703 thousand, was slightly less than the amount used for the payment of financial charges, taxes, investments and for the subscription/renewal of leasing agreements, resulting in an increase of overall net financial debt. Net current financial debt, equal to a positive Euro 60,503 thousand as at 31 December 2023, amounted to a positive Euro 39,964 thousand as at 31 March 2024. Non-current financial debt, equal to a negative Euro 389,178 thousand as at 31 December 2023, amounts to a negative Euro 371,247 thousand as at 31 March 2024.

The Group's net financial position (including non-current active derivatives and non-current active loans, and excluding net current and non-current leasing liabilities recorded in accordance with the provisions of IFRS 16) are equal to negative Euro 303,576 thousand at 31 March 2024 and negative Euro 303,046 thousand at 31 December 2023.

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