Cembre S p A : 2021 Annual Financial Report

www.cembre.com

2021ANNUALFINANCIALREPORT

Cembre S.p.A.

Head Office: Via Serenissima 9, Brescia, Italy Share Capital: EUR 8,840,000 (fully paid-up).

Registration no: 00541390175 (Commercial Register of Brescia)

This document contains translations of the draft statutory annual financial statements and consolidated annual financial statements prepared in the Italian language for the purpose of the law.

This document is not compliant with the provisions of the

Commission Delegated Regulation (EU) 2019/815.

Contents
CONTENTS
REPORT ON OPERATIONS FOR THE 2021 FINANCIAL YEAR
Report on Operations for the 2021 Financial Year	1
Attachment 1: Comparative Consolidated Income Statement	24
Attachment 2: Corporate Boards	25
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2021
Consolidated Financial Statements at December 31, 2021
Consolidated Statement of Financial Position	27
Consolidated Statement of Comprehensive Income	28
Consolidated Statement of Cash Flows	29
Statement of Changes in the Consolidated Shareholders' Equity	30
Notes to the Consolidated Financial Statements	31
Certification pursuant to article 154-bis of Legislative Decree 58/98	74
CEMBRE S.P.A.'S DRAFT FINANCIAL STATEMENTS AT DECEMBER 31, 2021
Cembre S.p.A.'s Draft Financial Statements at December 31, 2021
Statement of Financial Position	75
Statement of Comprehensive Income	76
Statement of Cash Flows	77
Statement of Changes in the Shareholders' Equity	78
Notes to the Financial Statements	87
Attachment 1: Comparative Income Statement	117
Attachment 2: Compensation for auditing services and other services	118
Certification pursuant to article 154-bis of Legislative Decree 58/98	119
2021 Annual Financial Report

Report on Operations for the 2021 Financial Year

Operating Review

The year 2021 marked a sharp recovery in the markets after the heavy contraction experienced in 2020; however, growth was affected by the difficulty of finding raw materials and soaring energy costs, which led to higher prices. In addition, the spread of the Omicron variant has led to an increase in infections and has forced governments, in the last months of the year, to introduce new restrictions on travel, with economic effects, however, less severe than in 2020. The Cembre Group reported 21.7% revenue growth in 2021 compared to 2020, with a turnover of €166.8 million, and 14.0% growth compared to 2019.

The performance of consolidated sales by geographical areas shows 25.8% growth in the

Italian market, with sales of €70.4 million. Sales in the rest of Europe grew by 23.0% on the previous year to €78.8 million while sales in the rest of the World were 3.1% higher than in the previous year, reaching €17.7 million. In 2021, sales revenues to the Italian market represented 42.2% of the total (40.8% in 2020), sales to the rest of Europe 47.2%

(46.7% in 2020) and sales in the rest of the world represented 10.6% of total sales (12.5% in 2020).

Sales by geographical area:

(euro '000)	2021	2020	Change	2019	2018	2017	2016	2015	2014
Italy	70,406	55,955	25.8%	58,469	59,023	55,576	49,029	48,564	44,100
Rest of Europe	78,772	64,050	23.0%	68,757	62,649	54,319	51,516	52,210	51,204
Rest of the World	17,657	17,132	3.1%	19,070	22,424	22,742	22,060	20,603	17,601
Total	166,835	137,137	21.7%	146,296	144,096	132,637	122,605	121,377	112,905

Revenues by Group company (net of intragroup sales):

(euro '000)	2021	2020	Change	2019	2018	2017	2016	2015	2014
Parent Company	91,708	73,578	24.6%	76,917	77,955	74,966	67,134	65,725	58,554
Cembre Ltd. (UK)	22,633	16,688	35.6%	19,274	18,336	17,468	18,143	19,710	20,577
Cembre S.a.r.l. (F)	11,258	9,557	17.8%	10,654	10,089	9,502	8,976	8,677	8,354
Cembre España S.L.U. (E)	12,471	11,107	12.3%	11,765	10,853	9,549	7,979	8,200	7,016
Cembre GmbH (D)*	18,875	15,587	21.1%	15,149	12,987	8,217	7,866	7,775	7,558
Cembre AS (NOR) Liquidated in 2016	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	23	1,080	960
Cembre Inc. (USA)	9,890	10,620	-6.9%	12,537	13,876	12,935	12,484	10,210	9,886
Total	166,835	137,137	21.7%	146,296	144,096	132,637	122,605	121,377	112,905

* In May 2018, Cembre GmbH had acquired the German company IKUMA KG; in July 2020, said company was merged by incorporation in Cembre GmbH. For said reason, the tables show the 2019 and 2018 data in consolidated form, considering the data of the German companies involved in the merger jointly. It should be noted that the data until 2017, included, concern solely Cembre GmbH.

In 2021, the turnover figures of all Group companies, with the exception of Cembre Inc.,

recorded increases compared to both 2020 and 2019. The fall in turnover registered by

Cembre Inc is connected with the decline in sales to the company's main customer, which suffered serious repercussions from the COVID-19 pandemic in terms of revenues.

Overall, the contribution of subsidiaries to the Group's turnover went from €63.6 million in 2020, equal to an incidence of 46.3%, to €75.1 million in 2021, equal to an impact of 45.0% on consolidated turnover; overall, sales by foreign subsidiaries increased by 18.4% compared to 2020 and 8.3% compared to 2019.

Revenues from sales of the various companies prior to consolidation are outlined below:

Revenues from sales prior to consolidation
(euro '000)	2021	2020	Change	2019	2018	2017	2016	2015	2014
Cembre S.p.A.	125,696	101,410	23.9%	108,809	109,068	103,476	94,650	92,616	84,903
Cembre Ltd. (UK)	24,318	18,207	33.6%	21,254	20,937	18,916	19,633	21,130	22,271
Cembre S.a.r.l. (F)	11,532	9,748	18.3%	10,799	10,107	9,509	9,006	8,680	8,423
Cembre España S.L.U. (E)	12,518	11,111	12.7%	11,779	10,860	9,554	7,980	8,216	7,019
Cembre GmbH (D)	19,002	15,662	21.3%	15,237	13,187	8,328	7,960	7,889	7,685
Cembre AS (NOR) Liquidated in 2016	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.	198	1,080	960
Cembre Inc. (USA)	9,917	10,663	-7.0%	12,572	13,898	12,962	12,645	10,675	10,052

In 2021, Group companies reported the following results:

Net result prior to consolidation
(euro '000)	2021	2020	Change	2019	2018	2017	2016	2015	2014
Cembre S.p.A.	23,420	16,455	42.3%	22,600	21,257	24,444	15,932	14,438	12,202
Cembre Ltd. (UK)	2,113	1,408	50.1%	2,062	1,926	3,743	1,896	2,346	2,603
Cembre S.a.r.l. (F)	(327)	221	- 248.0%	338	545	169	160	277	194
Cembre España S.L.U. (E)	682	491	38.9%	443	585	740	(9)	414	305