Defence Tech S p A : Interim Consolidated Financial Statements 2023

Defence Tech Holding S.p.A. Società Benefit1

Condensed Consolidated Interim Financial Statements

as at 30 June 2023

Defence Tech Holding S.p.A. Società Benefit - Registered office in Rome, Via Giacomo Peroni 452

Fully paid-up share capital Euro 2,554,285.70

Rome Economic and Administrative Register No. 1276114

Tax ID and Rome Business Register No. 11065701002

• Benefit Corporation

CONTENTS

CORPORATE BODIES

REPORT ON OPERATIONS

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENT AS AT 30/06/2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

CORPORATE BODIES

BOARD OF DIRECTORS

Aurelio Regina	Chair
Emilio Gisondi	Chief Executive Officer
Stefania Panico	Director
Valerio Veronesi	Director
Pietro Forgione	Director
Marina Balzano	Independent Director
Michele Valensise	Independent Director

BOARD OF STATUTORY AUDITORS

Massimo Gentile	Chair
Annamaria Carpineta	Standing Statutory Auditor
Giovanni Guerriera	Standing Statutory Auditor

INDEPENDENT AUDITOR

PricewaterhouseCoopers S.p.A.

Defence Tech Holding S.p.A. Società Benefit

Registered office in ROME - Via Giacomo Peroni 452

Fully paid-up Share Capital Euro 2,554,285.70

Tax ID, VAT and Business Register No. 11065701002

Report on Operations of the Condensed Consolidated Interim

Financial Statements as at 30 June 2023

The reported amounts are expressed in units of euro

Dear Shareholders,

Your company has prepared, on a voluntary basis in accordance with the provisions of the Italian Civil Code on financial statements as amended by Italian Leg. Decree no. 139/15 implementing European Directive 2013/34, the condensed consolidated interim financial statements as at 30 June 2023 reporting a profit of Euro 1,549,844.

The notes to the consolidated financial statements set out the relevant basis of preparation as well as all information required to describe the line items from the statement of financial position and the income statement that comprise it.

Financial Position and Performance of the Group

As for the financial position and performance of the Group, see the information reported in the consolidated financial statements and the relevant notes as well as the separate financial statements of the entities included in the scope of consolidation.

Group Structure

The following entities are included in the scope of consolidation:

DONEXIT SRL

FO.RA.MIL. SRL

NEXT SPA

DEFENCE TECH HOLDING S.P.A. SOCIETÀ BENEFIT (Benefit Corporation)

Registered office in Rome, Via Giacomo Peroni 452

Fully paid-up share capital Euro 2,554,285.70

Equity Euro 26,558,481

Parent

DONEXIT S.r.l. unipersonale (single-member company)

Registered office in Rome, Via Giacomo Peroni 452

Fully paid-up share capital Euro 598,000

Equity Euro 4,067,045

Direct ownership interest Euro 598,000, equal to 100.00%

FO.RA.MIL. S.r.l. unipersonale (single-member company)

Registered office in Rome, Via Giacomo Peroni 452

Fully paid-up share capital Euro 86,700

Equity Euro 2,805,797

Direct ownership interest Euro 86,700, equal to 100.00%

NEXT S.p.A.

Registered office in Rome, Via Giacomo Peroni 452

Fully paid-up share capital Euro 4,450,000

Equity Euro 11,636,386

Indirect ownership interest Euro 4,450,000, equal to 100.00%

The above entities are included in the scope of consolidation and were consolidated on a line-byline basis.

Reference market

The Defence Tech Group operates in three main business areas:

• Cybersecurity & Technology for Intelligence

Proprietary solutions for secure communications, detection of critical infrastructure vulnerabilities, and big data & analytics solutions for intelligence operations.

• Communication & Control System

Development of complex application solutions for the following industries: Defence(CMS, Radar, SAR), Space(Satellite Navigation and Earth Observation), and Avionics (Air Traffic Control).

• Electronics

Hardware design services, from in-house design of electronic boards to the supply of test stations and VHDL design for FPGAs & SOCs.

Therefore, the reference markets are Cyber Security, for both government and corporate entities, as well as Defence and Space, and the Group operates mostly in Italy-also because of the status as national security strategic group conferred by Italy's Presidency of the Council of Ministers under the Decree of the President of the Council of Ministers (DPCM) dated 7 June 2018.

Our services are rendered through the Group's operating entities, with competence centres dedicated to the different lines of business and reference markets.

Market environment

The first half of 2023 saw a continuation of the trends already highlighted in 2022 for the three most important markets in which the company operates.

In particular, the geopolitical context in the area of Cyber Security remains uncertain due to the ongoing Russia-Ukraine conflict. This has led to an increase in cybercrime attacks targeting our country's critical infrastructure, particularly the healthcare sector.

The above facts increasingly determine the need for the public and private market to pay close attention to cyber protection as a priority in all areas.

Consequently, the institutional activities of the Agenzia per la Cyber Sicurezza Nazionale (ACN), i.e., National Cyber Security Agency, continue with the ultimate aim of establishing a National

Cybersecurity System in which it will play an important role.

In particular, in the first half of 2023, the implementation of the national strategy (which envisages the achievement of 82 measures by 2026) continued with access to funding for the creation of LAPs (Laboratori Accreditati di Prova, i.e., accredited test laboratories) to support the companies that are part of the National Cyber Perimeter and the issuing of new calls for tenders. The latter are aimed at funding the creation or strengthening of Computer Security Incident Response Teams (CSIRTs), to be set up or already set up in the Regions and Autonomous Provinces, in line with the minimum requirements identified by the "Guidelines for the implementation of a CSIRT", which have already been adopted by the Agency.

The Space and Defence markets in the first half of 2023 are also in line with the respective multi- annual plans of the national (ASI) and international (ESA) entities responsible for developing the technology infrastructure and services enabling the space economy, as well as the Defence Administration and the Defence and National Security Intelligence Department.

Space is a strategic area that cuts across sectors in the global geopolitical framework, which generates benefits in many sectors of primary interest to states and citizens, such as transport, security, agriculture, cultural heritage, and climate change monitoring.

Defence confirms its strategic role, whose centrality is further emphasised by the geopolitical context marked by the Russia-Ukraine conflict.

The availability of NRRP funds in both markets represents a significant opportunity for Italy to achieve its modernisation targets.

Operating Performance

Operations

During the first half of 2023, the Group maintained a significant focus on all business lines by strengthening the Electronics business line through an M&A transaction.

In particular, in the area of Cyber Security & Technology for Intelligence, which grew by 51%2 compared to the first half of 2022, attention and efforts were focused on:

1. completing release 4 of our End Point Protection agents aimed at protecting infrastructures and systems from malicious infections by providing a real-time snapshot of the state of the art of their IT infrastructure. In particular, the remediation workflow was also implemented on our EDR, the IoC (for EDR) and CVE (for our Vulnerability Management product) identification and analysis algorithms were optimised, automatic Knowledge Base update functions were introduced, and licence management functions were implemented with the creation of a portal for our customers to manage their installed licences.
2. completing the design of the final case of our "K-BOX" solution in Cyber Communication by finding what we believe to be the best balance between design, usability and space required for electronic housings.
3. achieving the objectives of the product roadmap shared between the Next S.p.A. Group company and Leonardo S.p.A on the IP Cipher for commercial applications, with the completion of the first HW prototype of the commercial cipher, the start of software porting from COTS HW to custom HW, and the start of firmware development on the debug HW kit (test board).
4. strengthening the commercial activities related to cyber products and services offered by

our CE.VA and LVS laboratories, already accredited by the DIS (Dipartimento delle

• The growth is also partly due to the inclusion of engineering activities and tasks in the Cyber Security & Technology for Data Intelligence business line, in addition to the existing activities and tasks, which were previously included in "other" and not accounted for. Today, they are part of the above-mentioned business line, enhancing strong technology and cross-selling complementarities to end customers who perceive the offer as unique.

Informazioni per la Sicurezza, i.e., Department of Security Information) and OCSI (Organismo di Certificazione della Sicurezza Informatica, i.e., Italy's Information Security Certification Body) at the ACN (Agenzia per la Cybersicurezza Nazionale, i.e., National Cybersecurity Agency),⁠ respectively. In this context, however, we are experiencing delays with regard to the LAP (Laboratorio Accreditato di Prova, i.e., accredited test laboratory) certification by ACN. In the first half of 2023, access to NRRP funding was achieved through the call for tenders by the ACN (, but final accreditation has not yet been granted.

1. strengthening the Group's offer in the Cyber Space area, including through access to competitive tenders under the ESA ARTES (Advanced Research on Telecommunication

Satellite Systems) programme, which aims to fund research and development activities for highly innovative products and services in the field of satellite telecommunications.

The Electronics component recorded a positive performance (+18%) compared to the first half of 2022 thanks to joint activities in partnership with Leonardo S.p.A. for the international market and without the contribution of the Group's newly-entered company, Innovation Design S.r.l. ("Innodesi"), which was not consolidated as at 30 June 2023.

The Communication & Control System line of business continues to represent a solid boost for the Group's revenues, with revenues of €4.5 million and 8% growth over the first half of the previous year.

In this market, which encompasses all of the Group's Space and Defence activities, there has been a shift forward in some of the activities planned by certain strategic initiatives such as:

1. the NRRP-IRIDEFOS programme in the Space area, the most important European low- altitude Earth Observation satellite space programme, which envisages the construction of a new satellite constellation. It will be built in Italy and completed within five years with the support of the ESA (European Space Agency) and the ASI (Italian Space Agency), using the NRRP funds. The activities related to this programme started during the second quarter of 2023 with the gathering of requirements and the design of technological solutions. Our primary focus will be on the implementation of two components of the Flight Operations Segment in Cyber Space.
2. Invitation to tender published in the Official Journal of the European Union no. S155 of 12 August 2022 and in the Italian Official Journal no. 94 of 12 August 2022. Restricted