Ariston N : 2023 ANNUAL REPORT (ESEF PACKAGE)

Index | Table of contents

1.	About this report	3
2.	Key Highlights	4
3.	Corporate bodies	5
4.	Director's Report	7
	4.1	Reference Background and Investor information	7
	4.2	Significant business events in the year	9
	4.3	Subsequent events	12
	4.4	Brand|Product performance	13
	4.5	New Products, Services, Research and Development	15
	4.6	Manufacturing & Supply Chain operations	18
	4.7	Human Resources	19
	4.8	Regulation	21
	4.9	Group Financial Review	23
	4.9.1	Net Revenue Performance	23
	4.9.2	Condensed income statement	25
	4.9.3 Condensed statement of financial position	26
	4.9.4	Net Operating Working Capital	28
	4.9.5 Reclassified statement of Cash flows	29
	4.9.6	Net financial indebtedness	30
	4.9.7	Capital Expenditures	31
	4.9.8 Company and Group net profit and net equity	31
	4.10 Full year 2023 conclusion and outlook	32

4.11 Definition and reconciliation of the Alternative Performance Measures (APMs or non-GAAP measures) to

	GAAP measures	33
	4.12	Investor information	37
5.		Governance	38
	5.1	Risk management	38
	5.2	Non-Financial Disclosure	46
	5.3	Corporate Governance	94
	5.4	Remuneration report	113
6.	Ariston Holding N.V. Consolidated Report Financial Statements at 31 December 2023	125
7.	Ariston Holding N.V. Company - only Financial Statements at 31 December 2023	216
8.	Other Information	241

Disclaimer

This document was not made available to the public with a signed version, which is retained at the Group corporate office.

The Board report "bestuursverslag" consists of sections 2, 3, 4 and 5.

1. About this report

Note on presentation

The annual report at 31 December 2023 was prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), as adopted by the European Union and with Section 2:362 (8) of the Dutch Civil Code ('DCC'), pursuant to Part 9 of Book 2. The IFRS designation also includes the International Accounting Standards ('IAS') as well as all the interpretations of the International Financial Reporting Interpretations Committee ('IFRIC'), formerly the Standard Interpretations Committee ('SIC').

Adaptation plan pursuant to Articles 15 and 18 of the Market Regulations

In accordance with Articles 15 and 18 of Consob Regulation 20249 of 28 December 2017 and subsequent amendments concerning 'conditions for listing shares of companies that control companies established and governed by laws of non- EU countries', the parent company Ariston Holding N.V. (the 'Company' or 'Parent Company' or 'Ariston' and together with its subsidiaries 'Ariston Group' or the 'Group') has identified its significant subsidiaries as defined in Article 15 (2) of the above-mentioned Regulation, and verified that the conditions set out in paragraphs b) and c) of Article 15 have been met.

Information on the figures presented

All the figures in this annual report are expressed in millions of euro to one decimal place, whereas the original data is recorded and consolidated by the Group in euro. Similarly, all percentages relating to changes between two periods or to percentages of net revenue or other indicators are always calculated using the original data in euro. The use of amounts expressed in millions of euro may therefore result in apparent discrepancies in both absolute amounts and data expressed as a percentage.

The language of this annual report is English. Certain legislative references and technical terms have been cited in their original language in order to give them their correct technical meaning under applicable law.

European Single Electronic Format requirements

Pursuant to article 4 of the Transparency Directive, starting from 2021 reporting period, the financial statements schema in the annual financial report is prepared in XHTML format, in compliance with the European Single Electronic Format (ESEF) as a company listed on a European Union regulated market. In addition, issuers preparing IFRS consolidated financial statements shall mark those up using Inline XBRL. Ariston Group manages ESEF by leveraging a dedicated outsourced IT software that allows compliance with the regulation.

2. Key Highlights

	2023	2022	Total Change
(€ Mln)
Net revenue	3,091.8	100.0%	2,378.8	100.0%	713.0	30.0%
EBITDA adjusted1	422.2	13.7%	305.3	12.8%	116.9	38.3%
EBITDA1	417.1	13.5%	283.5	11.9%	133.6	47.1%
EBIT adjusted1	314.2	10.2%	222.6	9.4%	91.6	41.2%
EBIT	285.7	9.2%	193.7	8.1%	92.0	47.5%
PBT	253.6	8.2%	179.8	7.6%	73.8	41.0%
Group net profit adjusted1	211.8	6.9%	162.9	6.8%	48.9	30.0%
Group net profit	191.2	6.2%	140.3	5.9%	50.9	36.3%

Profitability Ratios	2023	2022
Net capital employed (€ mln)	2,077.5	913.3
Earnings per shares - (Basic €)	0.52	0.43
Earnings per shares - (Diluted €)	0.51	0.42
Headcount	10,769	7,975
Free cash flow2	111.6	31.7
Net financial indebtedness adjusted1 (*)	575.0	-98.9
Net equity	1,502.5	1,012.2

* Negative figures represent net cash

• refer to paragraph 4.11 for the reconciliation of the APM
  2 refer to paragraph 4.11 for further information

3. Corporate bodies

Board of Directors

Paolo Merloni	Executive Chair
Maurizio Brusadelli	CEO
Antonia Di Bella
Roberto Guidetti
Laurent Jacquemin
Guido Krass
Francesco Merloni
Maria Francesca Merloni
Lorenzo Pozza
Ignazio Rocco di Torrepadula
Marinella Soldi
Enrico Vita

External auditor

Ernst & Young Accountants LLP

Driving our sustainable future

Paolo Merloni, Executive Chairman

Dear Shareholder,

2023 marked a turning point in the history of Ariston Group - a multinational group that today approaches its 95th anniversary as a leading player in the sustainable thermal comfort industry, with more than 10,000 people worldwide and revenues exceeding 3 billion euros.

The year commenced with the completion of the acquisition of Wolf-Brink, which has been the biggest M&A in our history and is now effectively evolving into a transformative partnership. We have been focusing on seamless integration, collaborating with new colleagues across various workstreams while harmonizing our heritages and diverse cultures, in line with Ariston Group's spirit. As we build on our shared system of values, we capitalize on differences to reshape our organizations into one and lay the groundwork of the future of our group. I take pride in noticing that synergies generated to date already gave positive contribution to margins, and that Germany has driven our financial performance this year, corroborating the strength of our vision.

In March we released our ESG manifesto "Road to 100", defining clear-cut objectives in the fields of Solutions, Operations, People & Community, Customers and Governance, and shaping our sustainability roadmap to 2030. As the energy transition in the building sector is critical to reach Europe's decarbonization targets, we further invested in product innovation to accelerate this transformation through our solutions and today with our unique, extensive portfolio of renewable and high-efficiency technologies we cover all our customers' needs for sustainable thermal comfort. Additionally, as a global manufacturer, we concentrated on progressively decarbonizing our operations, also by expanding the Word Class Manufacturing methodology, focusing on production capacity and efficiency for strategic categories, and implementing the digital transformation across the entire value chain.

We then welcomed Maurizio Brusadelli as the new CEO of Ariston Group. He brought to the group his vision, as well as a wealth of experience and competencies acquired over the course of his robust career. Extending my deepest gratitude to Laurent Jacquemin for his 30+ years dedication, and as he assumed the role of a non-executive board member, I acknowledge how the solidity of our governance guaranteed a smooth succession. The strong cohesion of our Executive Team secured stability and maintained our strategic course. All our people - through their commitment, strategic focus, passion, entrepreneurship, and integrity - were the true protagonists of a special year of shared success.

Leveraging on our vision Sustainable Comfort for Everyone, we put significant steps in the driving of our future. From these standpoints, we look ahead remaining focused on our scale and profitability. Despite the challenges affecting some of our key markets, in 2023 we achieved an unprecedented net turnover of 3.092 billion euros, which represents a 30% year-over-year growth, factoring in the acquisitions of Wolf and Brink (+1% proforma). And we were able to protect margins, increasing our adjusted EBITDA by 38% year-over-year (+9% proforma) and delivering once again a double-digit adjusted EBIT. Our vision is for the long term: we will continue to pursue our profitable growth, elevating our organic ambitions while exploring inorganic opportunities consistent with our development strategy, to stay true to the commitment to our stakeholders.

I express my thanks to all individuals who have played a role in contributing to this collective journey.

Sincerely,

Paolo Merloni

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4. Director's Report

4.1 Reference Background and Investor information

Macroeconomic scenario

After reaching 3.5% in 2022, in the latest estimates released in October 2023, the International Monetary Fund (IMF) projected global GDP growth at 3.0% in 2023 and 2.9% in 2024.

The IMF outlined that the global economy continues its slow recovery from the effects of the pandemic, the outbreak of the conflict in Ukraine, and the cost-of-living crisis. Growth remains weak, nonetheless resilience has been higher than expected. Despite disruptions in energy and food markets caused by the war, and tight monetary policies, the global economy has slowed down, but not stopped completely.

Global production bottomed out at the end of 2023, while inflation is gradually being brought under control. However, currently, a full recovery toward pre-pandemic levels appears very challenging, especially in emerging markets and developing economies.

In this context, Italy's forecast is to move from 3.7% in 2022 to 0.7% in 2023 and 0.7% in 2024, Germany from 1.8% to a negative -0.5% and then +0.9% respectively, and France from 2.5% to 1.0% and 1.3% respectively.

This growth slowdown will also affect Saudi Arabia, shifting from 8.7% in 2022 to 0.8% in 2023 and 4.0% in 2024, and the United States, moving from 2.1% to 2.1% and 1.5% respectively. China is the only economy that is expected to record a positive trend in 2023 compared to 2022.

Growth projections (GDP), annual percentage changes

World Output

Belgium

China

France

Germany

India

Indonesia

Italy

Mexico

Poland

Romania

Saudi Arabia

South Africa

Spain

Switzerland

United Arab Emirates

United Kingdom

United States

Vietnam

Actual

2022

3.5%

3.2%

3.0%

2.5%

1.8%

7.2%

5.3%

3.7%

3.9%

5.1%

4.7%

8.7%

1.9%

5.8%

2.7%

7.9%

4.1%

2.1%

8.0%

	Projections
2023	2024
3.0%	2.9%
1.0%	0.9%
5.0%	4.2%
1.0%	1.3%
-0.5%	0.9%
6.3%	6.3%
5.0%	5.0%
0.7%	0.7%
3.2%	2.1%
0.6%	2.3%
2.2%	3.8%
0.8%	4.0%
0.9%	1.8%
2.5%	1.7%
0.9%	1.8%
3.4%	4.0%
0.5%	0.6%
2.1%	1.5%
4.7%	5.8%

Source: IMF, World Economic Outlook, October 2023

Exchange rates

After the depreciating trend in 2022, during the last quarter of 2023 the Euro was subject to significant appreciation against many of the main currencies relevant to the Ariston Group.

In comparison with the average exchange rates for the last quarter of 2022, only a few cases of depreciation were recorded - against the Swiss Franc (-2.9%), Mexican Peso (-5.9%), and Pound Sterling (-0.3%). Against the other currencies, the Euro registered an increase of between 5% and 7%.

As regards to the average for 2023, the trends registered in the last quarter are confirmed, apart from the Pound Sterling against the Euro, which appreciated at 2%.

Euro exchange rates against major currencies

CHF CNY GBP RON USD CAD VND INR MXN

2023

Avg. Q4		Avg. YTD		31.12.2023
0.95	0.97	0.93
7.77	7.66	7.85
0.87	0.87	0.87
4.97	4.95	4.98
1.08	1.08	1.11
1.47	1.46	1.46
26,204	25,770	26,808
89.54	89.31	91.90
18.89	19.18	18.72

2022

Avg. Q4		Avg. YTD		31.12.2022
0.98	1.00	0.98
7.26	7.08	7.36
0.87	0.85	0.89
4.92	4.93	4.95
1.02	1.05	1.07
1.39	1.37	1.44
24,810	24,630	25,183
83.86	82.69	88.17
20.08	21.19	20.86

Δ

vs. Avg. Q4		vs. Avg. YTD		vs. 31.12
-2.9%	-3.3%	-6.0%
7.1%	8.2%	6.7%
-0.3%	2.0%	-2.0%
1.0%	0.3%	0.5%
5.4%	2.7%	3.6%
5.8%	6.6%	1.4%
5.6%	4.6%	6.5%
6.8%	8.0%	4.2%
-5.9%	-9.5%	-10.2%

Source: ECB

Raw materials

After strong inflationary trends in 2021 and equally strong declining trends in 2022, the most important raw materials for the Ariston Group continued their price decrease over the whole of 2023, except for some small signs of an increase in the last quarter (both end-of-period spot and average prices). More specifically, in the fourth quarter of 2023, polypro- pylene, polyurethane and aluminium recorded the biggest decrease, with a quarter average of 10%, 9% and 6% respec- tively, compared to the average price for the fourth quarter of the previous year.

Average monthly market prices of main raw materials (per ton)

Steel [€/ton]

Polypropylene [€/ton]

Copper [USD/ton]

Polyurethane [€/ton]

Aluminium [USD/ton]

	2023
31.12.2023	Avg. Q4	Avg. YTD
696	653	714
1,470	1,477	1,494
8,476	8,170	8,475
2,206	2,181	2,428
2,335	2,191	2,249

	2022
31.12.2022	Avg. Q4	Avg. YTD
669	657	898
1,648	1,648	1,946
8,387	8,009	8,807
2,391	2,406	2,600
2,360	2,324	2,703

Δ

vs. Last Day vs. Avg. Q4vs. Avg. YTD

4% -1%-20%

-11%-10%-23%

1% 2% -4%

-8%-9%-7%

-1%-6%-17%

Note: For steel, the price of hot rolled steel for the European market was considered; for copper and aluminium the average daily "cash" prices, and for polyurethane the mix of isocyanate and polyol based on the Group's policies.

Source: Metal Bulletin, ICIS LOR, LME

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4.2 Significant business events in the year

January

Following the fulfillment of all condition precedents, the Ariston Group completed the acquisition of 100% of the share capital of CENTROTEC Climate Systems (now called Wolf-Brink) for €625.8 million in cash, plus 41,416,667 Ariston Holding N.V. shares. The transaction, announced in September 2022, was the biggest deal in the Group's history and contributed to the increase in the Ariston Group's ESG focus, reinforcing its portfolio of brands and its mid- to high-end offer of climate solutions, and further consolidating its positioning in Europe, with Germany becoming its first market.

The global Ariston brand launched One Team in Romania, the reserved digital area that caters to Ariston Professional Partners, offering informative contents and tools to attract, engage, support, and retain Installers, Planners and Service Centres.

February

The Ariston Group participated in the annual convention promoted by the Politecnico di Milano Internet of Things Observatory , joining the conversation on Smart Homes, and deepening the impact that thermal comfort solutions with connectivity features have on energy saving and emissions reduction.

The Ariston Group participated in AHR Expo 2023, taking place in Atlanta (US), with a dedicated booth showcasing the new heat-pump water heater for the North American market, together with its wider offer of heating and water heating solutions.

March

As part of the Company Report 2022, Ariston Group released its Sustainability Report 2022, tracking the Group's ESG journey and reporting its annual ESG performance.

The Ariston Group presented its ESG vision and goals to 2030 - the year of its 100th Anniversary - in the Road to 100, a strategic plan and manifesto of the Group's commitment to sustainability, defining ambitious objectives in the fields of Solutions, Operations, People & Communities, Customers, Governance, and identifying a roadmap of concrete supporting initiatives.

The Ariston Group's global brand Wolf, ventilation brand Brink, and components brand Thermowatt participated in ISH 2023, taking place in Frankfurt, to present respectively the latest innovations in heating and ventilation technology, and electric components for heat pumps for heating.

Global brand Wolf presented the new CHA-16/20 mono-blockair-to-water heat pump, an extension of the CHA-07 and CHA-10 product ranges, working with natural refrigerant R290. The additional power rating is specifically suitable for installation in large, detached houses, apartment buildings, and the commercial sector.

April

Global brand Ariston hosted an event in Singapore to showcase the new Andris, a full range of Wi-fi electric storage water heaters now equipped with voice control functions, and Aures 2.0, the new range of electric instant water heaters that combine innovative technology with excellent design features.

In India, leading local water heating brand Racold launched the Omnis and Altro ranges, standing out for their innovative technology, high efficiency, quality as well as particular design features.

May

When releasing FY23 Q1 results, the Ariston Group announced the succession in its Chief Executive Officer position, with Laurent Jacquemin stepping down for personal reasons, effective 27 July 2023, and Maurizio Brusadelli identified as the new CEO candidate, to be nominated by the Board at its 3 August 2023 meeting.

In recognition of its commitment to the country, Ariston South Africa was awarded Business Enterprise of the Year at the 25th edition of the Business Excellence Awards, the event hosted in Johannesburg by the Italian-SA Chamber of Trade and Industries to recognise business excellence and solidarity within the longstanding Italian-South African business commu- nity.

June

Global brand Elco was in the limelight at the Red Dot Design Award 2023, as the air-to-water heat pump AEROTOP SX was honoured with the Red Dot for its modern simplicity, perfectly combined with innovative technology and an eye for sus- tainability.

In Spain, global brand Ariston hosted an event to celebrate the integration of the Fleck brand, and introduced its new premium ranges, the DUO range and FLECK range, as well as the Velis Wi-fi series.

Following the launch in Romania in January, global brand Ariston introduced the One Team platform in France.

Global brand Wolf hosted an event with all employees and their families to mark its 60th anniversary, celebrating the years of history that have made it a leading expert for a healthy indoor environment.

Global brand Ariston introduced Nuos Plus S2 Wi-Fi, the latest addition to its heat-pump water heater ranges, working with propane, certified with A+ energy class, guaranteeing an extremely low noise performance and equipped with advanced connectivity features.

July

Global brand Ariston participated in the 2023 edition of IndoBuildTech Expo, the leading building and interiors exhibition in Indonesia, showcasing its full range of water heating solutions, including the Wi-fi series, solar water heaters and heat- pump water heaters suitable for both commercial and residential use.

The Ariston Group inaugurated in Follina, Italy, the new Thermowatt Professional site, a plant of 10,000 square metres that testifies to the Group's commitment to continue to strengthen its international footprint, while leveraging components of its own manufacture as a key competitive edge.

The Ariston Group inaugurated its new offices in Ho Chi Minh, Vietnam, welcoming local teams in brand new spaces designed to foster teamwork and collaboration.

August

Following the succession announcement in May, the Board appointed Maurizio Brusadelli as the new Chief Executive Officer of the Ariston Group.

While refreshing its key facilities around the world, the Ariston Group opened the doors of its new offices in Dubai, UAE, expanding its local hub and renewing its commitment to the Middle East and Africa.

September

Our burners division brand Ecoflam celebrated its 50th anniversary, hosting an event in Resana, Italy, to retrace its history, acknowledge the results achieved and renew the company's ambitions for the future.

The Ariston Group completed a business sustainability assessment through EcoVadis and earned a bronze medal, recording a significant improvement in its performance over the previous year, positioning at the higher end of its band and at the 68th percentile if compared to other companies' scores.

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