EL En S p A : Consolidated non financial statement 2020

El.En. Group

Sustainability Report 2020

Consolidated Non-financial Statement 2020

pursuant to Italian Legislative Decree n. 254 of 2016

Consolidated Non-Financial Statement 2020

INDEX

LETTER TO OUR STAKEHOLDERS

HIGHLIGHTS 2020

1. SUSTAINABILITY

OUR STRATEGY FOR A SUSTAINABLE FUTURE

1. Sustainability for the El.En Group.
2. Our stakeholders
3. Materiality matrix
4. The sustainability plan

2. THE GROUP

A HISTORY OF CONCRETE AND SHARED VALUES

1. Our global presence
2. Our history
3. Our markets
4. The economic value generated and distributed to our stakeholders

3. THE ORGANIZATIONAL PROFILE OF THE GROUP

RESPONSIBLE BUSINESS MANAGEMENT

1. The Corporate Governance model
2. Ethics, integrity and compliance
3. Internal controls system and risk management

4. THE MANUFACTURING PROCESS

FROM THE ORIGINAL IDEA TO THE FINISHED PRODUCT

1. Research and Development as an instrument for innovation
2. Quality and safety of our products
3. The supply chain
4. Our customers

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Consolidated Non-Financial Statement 2020

INDEX

5. OUR BUSINESS

THE LASER AS A SUSTAINABLE INSTRUMENT

5.1 Uses and benefits of lasers in the medical sector

1. Uses and benefits of lasers in the industrial sector
2. Use of lasers in the conservation of the world's artistic heritage
3. Our support to the community

6. THE PEOPLE

PASSION AND TALENT TO GROW TOGETHER

1. Training and skills development
2. Health and safety in the workplace
3. The welfare of the people

7. ENVIRONMENTAL RESPONSIBILITY

COMMITMENT AND RESPECT FOR OUR PLANET

1. Energy consumption
2. Self-producedenergy
3. Emissions
4. Water consumption

APPENDIX

1. About our report
2. Performance indicators
3. GRI Content Index

AUDITOR'S REPORT

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Consolidated Non-Financial Statement 2020

Letter to our Stakeholder

In one of the periods which has been historically and economically the most difficult we have ever faced, we wish to present the Sustainability Report of the El.En. Group and in this way give the public an opportunity to judge our commitment, our objectives and the results that we have obtained in this troubled year which demonstrate the solidity of our technical, financial and operative structures.

The El.En. Group has demonstrated their ability to resist with determination the adverse conditions without sacrificing their potential for future growth and maintain unchanged their plans for development thanks to the solidity of their business model which is aimed at sustainable growth over a mid- to long-term period. In the first part of the year we were impacted by the closure of our Chinese companies and, in particular, those located in Wuhan, while in the second quarter the Italian and European activities were hit by the restrictions imposed in the western world and by their effects on our markets; in the third quarter we returned to a growing volume of business although the trends were not uniform and differed according to the various geographic areas and segments of the market, and then, in the last part of the year we achieved excellent results, in which some of the sectors were drivers and others showed more difficulty and the Group was again able to resume the growth rate and the revenue which had been expected at the beginning of the year.

From the start of the spread of the pandemic all of the subsidiary companies adopted procedures which were meant to guarantee the safety of their employees and allow them to go to work confidently, and "smart working" was widely implemented. The emergency situation required that our first priority was the protection of our employees while working; even now the safety procedures are still being applied according to protocols which have been previously agreed upon and are periodically up-dated. Even during the year of the pandemic we continued to create jobs and in fact the number of people who work for us throughout the world increased by 9%.This number represents an important sign of growth not only at a numerical level but also as a symbol of solidity and safety. During this year we never came to a halt even in the field of training; in fact, we continued to promote the adoption and consolidation of the ethics and values of the Group in all of the subsidiary companies and increased the number of hours of technical and occupational training most of which was conducted on-line, to promote the personal and professional growth of all of the employees.

The basis underlying our strategy remains the constant commitment to the research and development activities which represent the essence of our Group: this commitment is aimed not only at the technical aspects for the launch of new products but also the documentary and clinical factors required for obtaining the certifications necessary for the sale of medical systems all over the world. We have worked constantly on clinical experimentation with medical centers and hospitals as well as on the regulatory structures which involve a complex but necessary procedure for launching our innovative products on the market.The difficult context did not affect our capacity to innovate and increase the attractiveness of our range of products which we continued to amplify, thus confirming the solid competitive position of the Group and its ability to differentiate itself on the market

Consolidated Non-Financial Statement 2020

with technical and applicative innovations.The launching of new products represents one of the strong points of our strategy: in the industrial sector this year we introduced systems with laser cutting powers of up to 30kW while in the medical sector in the second half of the year we launched the new Again system for hair removal, the Schwarzy system which introduced the technology of high intensity magnetic fields for body contouring and q-switch technology was configured at its highest potential for the treatment of pigmented and vascular lesions with the greatest effectiveness.

In some of the companies we continued to invest in the enlargement of their manufacturing structures, most of which has been completed in previous years: during the pandemic we completed the work at the german subsidiary Asclepion and at the headquarters of Lasit in Torre Annunziata, continued construction at the manufacturing center located in Calenzano, finished the third Chinese manufacturing unit located in the city of Lin Yi and built the second factory of the Chinese subsidiary in Wenzhou. This work was conducted bearing in mind a high level of energy efficiency and planned with an aim to raise the quality of working life: in fact, we are convinced that working in an environment that is built to size promotes an increased sense of belonging and for this reason we have decided to dedicate ample space to the welfare of the personnel, to complete the training and career factors with an investment which promotes the creation of a work environment that is dynamic and satisfying and stimulates team work.

In the factory of the Parent Company El.En. we have installed systems for the production of prototype and small series electronic boards and for the rapid prototyping of mechanical parts and we have completed the equipping of a new production line of mid-powered sealed sources for manufacturing applications, all of which qualify as facilitations for Industria 4.0.These are only the first of a series of innovations which,in the next few years,will transform our factories: increasingly,the technological mix of robotics,sensors and internet connections will modify the management of the company and of the production models as we now know them and the factory will lose the concept of an immobile physical entity thanks to the sharing of data online, by exploiting the opportunities offered by "big data" and by the "Internet of things". We want this transformation to be a tangible reality for the El.En. Group that will continue in the next few years in all of the factories..

The interruptions caused by the pandemic have created a situation in which, in order to continue to keep working, we have made use of virtual means of communication, in particular for sales and marketing, for the purpose of keeping in touch with our clients: in a dramatic moment like the one we are now experiencing, in which sales continue to be obstructed by the restrictions in travel, our philosophy has continued to be in contact with the clients, by means of the telephone rather than by innovative instruments like the virtual booth, the webinar and live chat. Among the various types of impact generated by the pandemic on the company models of the Group, there is certainly a strong desire to continue to count on the channels of direct communication which are more useful in building a personal human relationship with all clients including those at a great distance. The pandemic and economic crisis have generated significant changes in our marketing

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