Somec S p A : Annual Financial Report 2023

ANNUAL REPORT 2023

INDICE

1. Directors' Report for the Consolidated Financial Statements and Separate Financial Statements as at 31 December 2023
2. Letter from the Chairman to Shareholders

1. Introduction
2. Corporate bodies and company information
3. General information

10 Somec Group

1. Somec Group structure

1. Scope of consolidation

18 Significant events

1. During the year end 2023
2. After year end 2023
3. Order backlog

1. Somec Group operating performance

1. Trends of single divisions

1. Statement of financial position

1. Net financial position

30 Business performance

of Parent Company, Somec S.p.A.

34 Other informations

1. Disclosure of risks

1. Operational risks

1. Financial risks

41 Reconciliation of result and Shareholders' equity

1. Reconciliation of result and Shareholders' equity of the Group Parent with
   the consolidated figures
2. Business outlook

1. Consolidated Financial Statements as at 31 December 2023
2. Consolidated Statement of Financial Position

1. Consolidated Statement of Comprehensive Income

1. Consolidated Statement of Cash Flows

1. Consolidated Statement of Changes in Equity

52 Notes to the Consolidated Financial Statements as at 31 December 2023

1. General information
2. Basis of preparation
3. Scope of consolidation

1. Basis of consolidation

1. Summary of main accounting standards

1. New accounting standards, interpretations and amendments adopted by the Group
2. Principles issued but not yet in force
3. Discretionary measurements
   and significant accounting estimates

1. Business combinations and acquisition of minority shareholdings

1. Operating segment reporting

88 Financial highlights

112 Key income statement items

119 Other informations

119 Financial risk management: objectives and criteria

1. Fair value measurement and hierarchy
2. Related-partytransactions

1. Financial debt
2. Commitments and risks
3. Significant events after year end 2023
4. Management representation
5. Review report of independent auditing firm

4

DIRECTORS' REPORT CONSOLIDATED FINANCIAL STATEMENTS AND SEPARATE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2023

LETTER

FROM THE CHAIRMAN

TO SHAREHOLDERS

5

Dear Shareholders,

2023 was a year that brought considerable satisfaction to the Somec Group, but also fresh challenges, which we faced up to with great determination.

Once again, stability was not helped by the general economic and geopolitical context.

The Russia-Ukraine and Middle East conflicts, combined with tensions among major trading powers, contributed to a climate of uncertainty in international markets. This was compounded by significantly rising inflation, leading central banks to counter price hikes by raising interest rates. The combination of these and other factors helped to create an extremely complex and rapidly evolving picture. It is clear that the ability to adapt and respond to these challenges will continue to be a key factor for the future of our economies and businesses.

Looking in particular at Somec, I am pleased to say that our business model has proven to be a success. The reorganization of our business into three Business Units is now complete, allowing us to focus energy and resources on core business, with measurable results in all areas of activity. Following on from the success of Mestieri, we decided to give names to the other two Business Units. Engineered systems for naval architecture and building façades became "Horizons", while Professional kitchen systems and products was christened "Talenta".

Thanks to the soundness of strategies put in place and the constant commitment of our team, we have remained highly competitive, causing the turnover of our Group to grow by 12.8%, reaching 371 million Euro in 2023, notwithstanding the complexity of the situation described above.

In greater detail, Horizons posted revenues of 214.6 million Euro, 10.8% up on 2022 (193.6 million Euro). This progress was favored by growing new building and refitting activities as well as the dynamism of the civil glazing market in the United States.

Somec Group	Directors'	Letter from the Chairman
FY 2023	Report	to Shareholders

Revenues for the Talenta division were down slightly, by 7.2% to 60.8 million Euro compared with

65.5 million Euro in the previous year. This trend is due to a slight slowdown in the production of kitchen systems for the naval sector, plus a drop in volumes of bespoke professional kitchens and refrigeration products. On a brighter note, there was a rise in revenue for the industrial pizza oven sector from higher volumes, thanks in part to penetration in the US market.

Finally, Mestieri posted a significant hike in revenues, up 37.3% to 95.7 million Euro, thanks to thriving projects and activities in the European market and the contribution of recent acquisitions.

The Group's total order book also allows us to look to the future with confidence: the backlog at 31 December 2023 stood at 752.4 million Euro, of which 26.2% relating to option contracts.

Despite these good performances, 2023 was also marked by two extraordinary, non-recurring events that had an impact on our margins and net result. EBITDA fell to 18.2 million Euro, compared to 23.2 million Euro in 2022, and the year ended with a loss of 10.4 million Euro.

The first non-recurring item relates to an order from the subsidiary Total Solution Interiors Srl. We incurred significantly higher costs than expected due to some critical issues arising during the

6 execution phase. A second extraordinary event concerned the subsidiary Bluesteel Srl which, as the financial year came to an end, revised some variants relating to a contract signed in 2019, incurring higher costs not recognized by the client. These circumstances prevented us from achieving the goals that we had set ourselves and communicated to the market as guidance for the year.

We know that we have taken all the measures needed to remedy these issues, including an internal reorganization and significant investments in processes and their digitization. I might mention, for example, the development of the "IT - Digital Transformation" project, entailing the adoption of a next-generation cloud ERP. The steps taken will ensure our gradual recovery, and results will already be seen this year.

Looking ahead to the future, the likely macroeconomic situation in coming months means we will focus mainly on further consolidating our activities.

For the Horizons division we are counting on a progressive stabilization of raw material costs, with a return to pre-pandemic levels. We have every confidence in our growth potential, given the burgeoning naval and construction sectors, in the United States in particular, where our presence through overseas subsidiary Fabbrica offers significant opportunities. For Talenta too the progressive drop in commodity costs will favor a general recovery of the business and allow this division to fully express its potential. As far as Mestieri is concerned, the desire for Made in Italy all over the world daily confirms the soundness of our intuition. We therefore expect business to grow further, driven by luxury segments and the US market.

The great Steve Jobs held perseverance to be one of the most important virtues for an entrepreneur, and I can but agree with him. I am convinced that investing one's time and thoughts in a long-term project is essential for those in our profession. It is with this spirit that we will continue to lead the Somec Group towards achievable and increasingly ambitious goals.

Thank you,	7
Oscar Marchetto
Chairman of Somec S.p.A.

Somec Group	Directors'
FY 2023	Report

INTRODUCTION

The Parent Company, Somec S.p.A. has prepared a single Directors' Report for both the separate financial statements of Somec S.p.A and the consolidated financial statements of the Group, as permitted under article 40, paragraph 2a of Legislative Decree No. 127 dated 09/04/91 approved by the Board of Directors on 27 March 2024. The consolidated financial report was drawn up in compliance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and approved by the European Union. "IFRS" also includes all amended International Accounting Standards ("IAS") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), previously known as the Standing Interpretations Committee ("SIC").

	ALTERNATIVE PERFORMANCE INDICATORS
	Somec's management measures the performance of the Group and its business units partly based
	on some performance indicators not required by IFRS. More specifically, EBITDA and EBIT are used
	to measure the Group's profitability.
8	As required by Consob Notice no. 0092543 of 3 December 2015, which transposes the ESMA/
2015/1415 guidelines on alternative performance indicators, the components of each indicator are

described below:

• EBT is obtained by adding income taxes to net result for the period, as reported in the financial statements
• EBIT is obtained by adding to EBT net financial income/expense, i.e. the sum
  of financial income and charges, net exchange rate gains and losses and net income from associates to income before taxes
• EBITDA is obtained by adding amortisation, depreciation and other write-downs to EBIT, as reported in the financial statements
• EBITDA margin is obtained from the ratio of EBITDA to the sum of Revenues from contracts with customers and Other revenues and income
• Backlog is the residual value of the orders that have yet to be completed. This amount accounts for the difference between the total nominal value of an order (including additions or modifications) on a certain date and the value on the same date of revenues from contracts with customers relating to orders associated with such contracts
• Backlog under Option is the total value of the contractual options on orders that are held but have yet to be exercised by customers on a certain date
• Total Backlog is the sum of Backlog and Backlog under option
• Net Financial Debt is determined as defined by the new ESMA Guidelines dated 4 March 2021 (see Consob Notice No. 5/21 of 29 April 2021)
• Net Financial Position is determined by adding fair value of current and non-current derivative assets to net financial debt

CORPORATE BODIES

AND COMPANY INFORMATION

BOARD

OF DIRECTORS

Oscar Marchetto

Chairman of the Board of Directors

Alessandro Zanchetta

Director and Executive Officer

Giancarlo Corazza

Director and Executive Officer

Davide Callegari

Director and Executive Officer

Gianna Adami

Lead Independent Director

Elena Nembrini

Independent Director

Giuliana Borello

Independent Director

The term of office of the Board of Directors ends with the approval of the financial statements as at 31 December 2025.

BOARD

OF STATUTORY AUDITORS

Michele Furlanetto

Chairman of the Board of Statutory Auditors

Annarita Fava

Standing Auditor

Luciano Francini

Standing Auditor

Lorenzo Boer

Alternate Auditor

Barbara Marazzi

Alternate Auditor

The term of office of the Board of Statutory Auditors ends with the approval of the financial statements as at 31 December 2025.

MANAGER RESPONSIBLE
FOR PREPARING FINANCIAL REPORTS
Federico Puppin
COMMITTEES
Gianna Adami (Chairman),
Elena Nembrini and Giuliana Borello
Remuneration and Appointment Committee
Elena Nembrini (Chairman),
Gianna Adami and Giuliana Borello
Control, Risk and Sustainability Committee
Gianna Adami (Chairman),
Elena Nembrini and Giuliana Borello	9
Related party Committee
INDEPENDENT AUDITING FIRM
EY S.p.A.

The statutory audit will be performed by the auditing firm EY S.p.A. up until the approval of the financial statements as at 31 December 2028.

REGISTERED OFFICE

AND CORPORATE DETAILS

Somec S.p.A.

Via Palù, 30

31020 San Vendemiano (TV) Italy Tel: [phone]

Share Capital EUR 6,900,000.00 fully paid in VAT no. IT 04245710266 www.somecgruppo.com

INVESTOR RELATIONS ADVISORS

TWIN [e-mail]

Somec Group	Directors'
FY 2023	Report

GENERAL

INFORMATION

	SOMEC GROUP
	specialises in the engineering, design and deployment of complex turnkey projects in civil and
	naval engineering by relying on three Business Units: Horizons: engineered systems for naval
	architecture and building façades; Talenta: professional kitchen systems and products; Mestieri:
	design and production of bespoke interiors. The Group's companies operate in an integrated and
	synergetic manner, according to strict quality and safety standards while guaranteeing a high level
	of customisation and specific know-how on the processing of different materials, a key requirement
	when delivering high value-added projects. In over forty years of history and by relying on rigorous
	certification and accreditation processes, Somec has achieved a reputation for quality and
	operational and financial reliability on a global scale.
	The Group operates through three Business Units:
10	 Horizons: engineered systems for naval architecture and building façades
The Somec Group is one of the largest players in Europe and North America
regarding the design, careful selection of materials, production, installation and

maintenance of innovative solutions and original engineered systems for naval architecture and building façades, ensuring the highest certified standards of quality and durability

• Talenta: professional kitchen systems and products
  The Somec Group designs and produces integrated and customisable systems
  for professional kitchens, harmoniously combining aesthetics with top performance, as well as turnkey projects in the restaurant and hospitality sectors.
  All its products are backed by certified standards of high efficiency and durability for international clients whose needs and expectations are always satisfied
• Mestieri: design and production of bespoke interiors
  The Somec Group rolls out turnkey projects for high-end interiors, making the most of the skills and know-how of Italian craftsmen able to work with a wide range of materials, from metals and marbles to precious woods, leathers and fabrics. A history of excellence, with a portfolio of unique references, coordinated by a lead company that takes charge of the general management of the most complex and sophisticated projects in the following sectors: cruising and yachting, hospitality and restaurant, high-end residential
  and first-class retail

SOMEC GROUP STRUCTURE

The following graph shows the Group's structure at 31 December 2023.