Colt CZ : Condensed consolidated interim financial statements 9M 2023

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE NINE-MONTHS PERIOD ENDED 30 SEPTEMBER 2023 (unaudited)

Name of the company:	Colt CZ Group SE
Registered office:	náměstí Republiky 2090/3a, Nové Město, 110 00 Prague 1, Czech
	Republic
Legal form:	European Company
Id. no.:	291 51 961

Components of the condensed consolidated interim financial statements:Consolidated statement of profit and loss and other comprehensive income Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated cash flow statement

Notes to condensed consolidated interim financial statements

These condensed consolidated interim financial statements were prepared and approved on 22 November 2023.

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER

	Note	30 Sep 2023	30 Sep 2022
Revenues from the sale of own products,	CZK '000	CZK '000
9	9,910,546	10,219,903
goods and services
Other operating income		73,006	70,087
Change in inventories developed internally		981,676	1,130,239
Own work capitalized		129,248	122,437
Raw materials and consumables used		-5,613,904	-5,576,845
Services		-1,292,710	-1,379,589
Personnel costs		-2,246,009	-2,155,109
Depreciation and amortization		-582,526	-658,726
Other operating expenses		-174,769	-262,797
Allowances		-60,403	-22,210
Operating profit		1,124,155	1,487,390
Interest income	10.1	717,015	352,837
Interest expense	10.1	-737,325	-446,619
Other financial income	10.1	379,133	280,117
Other financial expenses	10.1	-59,233	-19,516
Gains or losses from derivative transactions	10.1	144,338	62,019
Share in the profit of associates after tax		2,671	14,113
Bargain purchase gain		320,842	-
Profit before tax		1,891,596	1,703,341
Income tax	10.2	-353,991	-375,445
Profit for the period		1,537,605	1,327,896

Items that may be subsequently reclassified to the statement of profit or loss

Cash flow hedges - remeasurement of effective portion of hedging instruments

Foreign currency translation of foreign operations

-156,142394,076

43,472-215,887

Other comprehensive income		-112,670	178,189
Comprehensive income for the period
	1,424,935	1,506,085
Profit for the period attributable to:
Owner of the parent company		1,537,605	1,327,896
Comprehensive income for the period
attributable to:
Owner of the parent company		1,424,935	1,506,085
Net earnings per share attributable to the
owner of the parent company (CZK per share)
Basic	22	44	39
Diluted	22	44	39

Notes are an integral part of these consolidated interim financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER	30 Sep 2023	31 Dec 2022
ASSETS	Note	CZK '000	CZK '000
Non-current assets
Intangible assets	11		3,283,281	3,462,131
Goodwill	9		2,457,416	2,457,416
Property, plant and equipment	12		4,055,320	3,066,251
Equity-accounted securities and investments	18		43,284	39,401
Financial derivatives	19		1,107,034	1,181,097
Trade and other receivables			37,133	35,515
Other receivables			2,567	6,560
Total non-current assets			10,986,035	10,248,371
Current assets
Inventories	13		5,549,815	3,797,557
Trade and other receivables			885,497	1,346,143
Provided loans			-	7,700
Other financial assets			1,107,828	756,834
Financial derivatives	19		73,026	217,123
Other receivables			283,811	304,005
Tax receivables			4,273	-
Cash and cash equivalents			3,349,972	2,825,781
Total current assets			11,254,222	9,255,143
Total assets			22,240,257	19,503,514
EQUITY AND LIABILITIES
Capital and reserves
Share capital			3,479	3,410
Share premium			1,749,635	1,366,386
Capital funds			1,641,512	1,641,512
Cash flow hedge reserve			912,072	1,068,214
Foreign exchange translation reserve			-282,961	-326,433
Accumulated profits			4,645,706	3,928,282
Equity attributable to the owner of the Company			8,669,443	7,681,371
Equity attributable to the owner of the Company			8,669,443	7,681,371
Total equity			8,669,443	7,681,371
Non-current liabilities
Bonds, bank loans and borrowings	17		9,086,632	6,972,898
Financial derivatives	19		114,654	28,684
Lease liabilities			56,588	46,796
Other financial liabilities	19		35,333	240,468
Trade and other payables			40,215	7,825
Other payables			16,054	21,169
Provisions	14		68,460	23,654
Deferred tax liability			736,947	731,308
Employee benefit liabilities	16		269,317	265,280
Total non-current liabilities			10,424,200	8,338,082
Current liabilities
Bonds, bank loans and borrowings	17		113,003	208,597
Financial derivatives	19		52,460	38,610
Lease liabilities			25,471	23,939
Other financial liabilities	19		239,986	238,593
Trade and other payables			1,694,459	1,154,955
Other payables			861,712	1,479,267
Provisions	14		32,482	51,371
Tax liabilities			108,491	269,096
Employee benefit liabilities	16		18,550	19,633
Total current liabilities			3,146,614	3,484,061
Total liabilities			13,570,814	11,822,143
Total equity and liabilities			22,240,257	19,503,514

Notes are an integral part of these consolidated interim financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE-MONTHS ENDED 30 SEPTEMBER

				Cash flow	Foreign		Equity
CZK '000	Share	Share	Capital	hedge	exchange	Accumulated	attributable to	Total equity
capital	premium	funds	reserve	translation	profits	the owner of the
					reserve		parent company
Balance at 31 December	3,374	1,139,211	1,641,512	119,983	-201,398	2,593,146	5,241,828	5,241,828
2021
Profit for the period	-	-	-	-	-	2,034,192	2,034,192	2,034,192
Other comprehensive	-	-	-	948,231	-125,035	-	823,196	823,196
income
Total comprehensive	-	-	-	948,231	-125,035	2,034,192	2,857,388	2,857,388
income for the period
Dividends	-	-	-	-	-	-843,416	-843,416	-843,416
Issue of shares	36	227,175	-	-	-	-	227,211	227,211
Share-based payments	-	-	-	-	-	198,360	198,360	198,360
Balance at 31 December	3,410	1,366,386	1,641,512	1,068,214	-326,433	3,928,282	7,681,371	7,681,371
2022
Profit for the period	-	-	-	-	-	1,537,605	1,537,605	1,537,605
Other comprehensive	-	-	-	-156,142	43,472	-	-112,670	-112,670
income
Total comprehensive	-	-	-	-156,142	43,472	1,537,605	1,424,935	1,424,935
income for the period
Dividends*	-	-	-	-	-	-1,034,016	-1,034,016	-1,034,016
Issue of shares	69	383,249	-	-	-	-	383,318	383,318
Share-based payments	-	-	-	-	-	213,835	213,835	213,835
Balance at 30 September	3,479	1,749,635	1,641,512	912,072	-282,961	4,645,706	8,669,443	8,669,443
2023

*For detailed information about payment of dividends see note 20.

Notes are an integral part of these consolidated interim financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE-MONTHS ENDED 30 SEPTEMBER

							Equity
	Share	Share		Cash flow	Foreign	Accumulated	attributable
	Capital	hedge	to the owner
CZK '000	exchange	Total equity
capital	premium	funds	reserve	profits	of the parent
	translation
						company
					reserve
Balance at 31 December	3,374	1,139,211	1,641,512	119,983	-201,398	2,539,146	5,241,828	5,241,828
2021
Profit for the period	-	-	-	-	-	1,327,896	1,327,896	1,327,896
Other comprehensive	-	-	-	394,076	-215,887	-	178,189	178,189
income
Total comprehensive	-	-	-	394,076	-215,887	1,327,896	1,506,085	1,506,085
income for the period
Dividends	-	-	-	-	-	-843,416	-843,416	-843,416
Issue of shares	36	227,175	-	-	-	-	227,211	227,211
Share-based payments	-	-	-	-	-	123,170	123,170	123,170
Balance at 30 September	3,410	1,366,386	1,641,512	514,059	-417,285	3,146,496	6,254,878	6,254,878
2022

Notes are an integral part of these consolidated interim financial statements.

CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE-MONTHS ENDED 30 SEPTEMBER 2023

	Note	30 Sep 2023	30 Sep 2022
Cash flows from principal economic activity (operating	CZK '000	CZK '000
activity)
Profit from ordinary activity before tax			1,891,596	1,703,341
Depreciation/amortization of non-current assets	11, 12
	582,526	658,726
Change in allowances and provisions	14		55,663	74,630
Gain/Loss on sale of fixed assets			-1,877	-
Interest expense and interest income	10		20,310	120,782
Share in the profit of associates	18		-2,671	-14,113
Unrealized foreign exchange gain and losses			-118,108	-536,046
Contingent consideration - remeasurement	19		17,807	-24,804
Partial earnout settlement			213,695	227,211
Change in other financial assets	10		-350,994	-
Cash flow hedging - remeasurement of the effective			-156,142	394,076
portion of hedging instruments
Bargain purchase gain	8		-320,842	-
Share-based payments	15		213,835	123,170
Adjustments for other non-cash transactions			18,422	55,048
Net operation cash flows before changes in working			2,063,220	2,782,021
capital
Change in working capital			-965,737	-914,471
Change in receivables and deferrals			723,762	-690,365
Change in liabilities and accruals			-423,312	1,425,275
Change in inventories	13		-1,266,187	-1,649,381
Net cash flow from operating activities			1,097,483	1,867,550
Paid interest	10		-624,322	-473,601
Interest received	10		769,760	309,677
Income tax paid for ordinary activity	10.2		-600,968	-212,563
Net cash flow from operating activities *			641,953	1,491,063
Cash flows from investing activities
Acquisition of non-current assets	11, 12		-424,376	-446,248
Income from the sale of non-current assets			1,934	-
Acquisition of subsidiaries - opening balance	8		-728,687	-
Acquisition of subsidiaries - cash and cash equivalents	8		150,863	-
Acquisition of equity-accounted securities and			-1,212	-
investments
Provided loans			7,700	177,181
Employee benefit liabilities			-	-7,477
Net cash flow from investing activities			-993,778	-276,544
Cash flows from financing activities
Proceeds from issue of bonds	17		1,917,756	1,984,796
Proceeds from issue of shares	20		169,623	-
Dividends paid to owners	20		-1,034,016	-843,416
Proceeds from loans	17		13,480	-
Loan repayment	17		-214,931	-2,317,579
Net cash flow from financing activities			851,912	-1,176,199
Net change in cash and cash equivalents			500,087	38,320
Opening balance of cash and cash equivalents			2,825,781	3,573,467
Effect of exchange rate on cash and cash equivalents			24,104	37,233
Closing balance of cash and cash equivalents			3,349,972	3,649,020

Notes are an integral part of these consolidated interim financial statements.

COLT CZ GROUP SE

Condensed consolidated interim financial statements for the period of nine-

months from 1 January to 30 September 2023 prepared under the

International Financial Reporting Standards as adopted by the European

Union

(unaudited)

CONTENTS
1.	PARENT COMPANY	9
2.	GROUP DESCRIPTION	10
3.	SIGNIFICANT EVENTS IN THE CURRENT REPORTING PERIOD	12
4.	BASIC PRINCIPLES FOR PREPARATION OF THE INTERIM REPORT	13
5.	SIGNIFICANT ACCOUNTING POLICIES	13
6.	ESTIMATES AND SOURCES OF UNCERTAINTY	13
7.	FINANCIAL RISK MANAGEMENT	13
8.	SWISSAA AQUISITION	14
9.	INFORMATION ABOUT SEGMENTS AND REVENUES	15
10.	PROFIT AND LOSS INFORMATION	17
11.	INTANGIBLE ASSETS	19
12.	PROPERTY, PLANT AND EQUIPMENT	21
13.	INVENTORIES	22
14.	CURRENT AND NON-CURRENT PROVISIONS	23
15.	SHARE-BASED PAYMENT ARRANGEMENTS	23
16.	EMPLOYEE BENEFIT LIABILITIES	24
17.	BONDS, BANK LOANS AND BORROWINGS	25
18.	INTEREST IN ASSOCIATES	25
19.	FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE	25
20.	PROFIT DISTRIBUTION	27
21.	TRANSACTIONS WITH RELATED PARTIES	28
22.	NET EARNINGS PER SHARE	29
23.	CONTINGENT LIABILITIES	29
24.	SUBSEQUENT EVENTS	30

1. PARENT COMPANY

Colt CZ Group SE (the "Consolidating Entity" or the "Company") is a European company recorded in the Register of Companies held by the Municipal Court in Prague on 10 January 2013, having its registered office at náměstí Republiky 2090/3a Nové Město, 110 00 Prague 1, Czech Republic, corporate ID No. 291 51 961. Company together with its subsidiaries, is one of the world's leading manufacturers of firearms, tactical accessories and ammunition for military and law enforcement, personal defense, hunting, sport shooting and other commercial use. Its products are marketed and sold mainly under the Colt, CZ (Česká zbrojovka), Colt Canada, CZ-USA, Dan Wesson, Spuhr, swissAA and 4M Systems brands.

The following table shows individuals and legal entities with an equity interest greater than 10 percent:

Shareholder	Ownership percentage as at
	30 Sep 2023	31 Dec 2022
Česká zbrojovka Partners SE	76.20%	76.86%

Since 2017, the majority owner of the Company has been Česká zbrojovka Partners, SE, based at Opletalova 1284/37, Nové Město, 110 00 Prague 1, Czech Republic.

The Consolidating Entity and consolidated entities are part of a larger consolidation group of the ultimate parent company European Holding Company, SE, based at Opletalova 1284/37, Nové Město, 110 00 Prague 1, Czech Republic. The ultimate owner of the Company is René Holeček.

Members of the Board of Directors and Supervisory Board as at the balance sheet date:

Board of Directors

Chair:	Jan Drahota
Vice-chair:	Josef Adam
Member:	Jan Holeček
Member:	Dennis Veilleux
Member:	Jan Zajíc
	Supervisory Board
Chair:	David Aguilar
Vice-chair:	René Holeček
Vice-chair:	Lubomír Kovařík
Member:	Jana Růžičková
Member:	Vladimír Dlouhý

The consolidation group (the "Group") comprises the Company and the consolidated entities of the Group (subsidiaries). The consolidation group includes the Company and entities controlled by the Company.

All amounts in these financial statements and the related notes are reported in thousands of Czech crowns (CZK '000), which is also the functional currency.

9

2. GROUP DESCRIPTION

Place of foundation	Consolidation Share in voting rights held by the
Company name Principal activity and business
method	Group
operation
	30.Sep	30.Dec	30.Sep
	2023	2022	2022

	Production,
Česká zbrojovka	purchase and	Uherský Brod, Czech
a.s.	sale of firearms	Republic
	and ammunition
Česká zbrojovka	Production,
a.s.	purchase and	Regensburg,
Niederlassung	sale of firearms	Germany
Deutschland	and ammunition
	Production,
CZ BRASIL LTDA	purchase and	Brazil
sale of firearms
	and ammunition
Latin America	Holding company	Uherský Brod, Czech
Holding, a.s.	Republic
CARDAM s.r.o.	Research and	Dolní Břežany, Czech
development	Republic
ZBROJOVKA	Purchase and
sale of firearms	Brno, Czech Republic
BRNO, s.r.o.
and ammunition
	Production,
CZ - Slovensko	purchase and	Bratislava, Slovakia
s.r.o.	sale of firearms
Colt CZ Group	and ammunition
North America,	Holding company	Kansas City, USA
Inc.

Full	100%	100%	100%
Full	100%	100%	-
equity	49%	49%	49%
Full	100%	100%	100%
Equity	33%	33%	33%
Full	100%	100%	100%
Full	100%	100%	100%
Full	100%	100%	100%

CZ-USA, LLC

Colt Holding Company LLC

CDH II Holdco

Inc***

Colt Defence

LLC***

New Colt

Holding Corp.

Colt´s

Manufacturing

Company LLC

Purchase and
sale of firearms	Kansas City, USA
and ammunition
Production,
purchase and	West Hartford,
sale of firearms	Connecticut, USA
and ammunition

Holding company West Hartford, Connecticut, USA

Holding company West Hartford, Connecticut, USA

Holding company West Hartford, Connecticut, USA

Production,
purchase and	West Hartford,
sale of firearms	Connecticut, USA
and ammunition

Full	100%	100%	100%
Full	100%	100%	100%
Full	100%	100%	100%
Full	-	100%	100%
Full	100%	100%	100%
Full	100%	100%	100%

Manufacturing IP	Holds, maintains,	West Hartford,
Holding	and licenses Colt
Connecticut, USA
Company LLC	USA trademarks
Colt Defence		West Hartford,
Technical	Holding company
Services LLC*		Connecticut, USA
Purchase and
Four Horses	sale of clothing	West Hartford,
Apparel, Inc.	and fashion	Connecticut, USA
	accessories
	Production,
Colt Canada	purchase and	Kitchener, Ontario,
Corporation	sale of firearms	Canada
	and ammunition
Colt		Amsterdam,
International	Holding company
Netherlande
Cooperatief U.A.

Full	100%	100%	100%
Full	-	-	100%
Full	100%	100%	-
Full	100%	100%	100%
Full	100%	100%	100%

10