Colt CZ : Semi-annual financial report 2023

Semi-annual Financial Report

for the 1st Half of 2023

CONTENTS

1	ABOUT THE COMPANY	. 3
2	LETTER OF THE PRESIDENT OF THE COMPANY	. 4
3	KEY FINANCIAL INDICATORS	. 5
4	GROUP RESULTS FOR THE FIRST HALF OF 2023	. 6
	4.1Comments on the financial results for the first half of 2023	. 6
	4.2Strategy and outlook	. 8
	4.3Impact of the Russian invasion of Ukraine in the first half of 2023	. 9
5	BASIC INFORMATION ABOUT COLT CZ GROUP SE	10
	5.1Organisational chart and the Group's entities	11
	5.2Transactions with related parties	13
	5.3Subsequent events	14
6	DECLARATION OF PERSONS RESPONSIBLE FOR THE SEMI-ANNUALFINANCIAL REPORT	15
7	ALTERNATIVE PERFORMANCE MEASURES	16
8	CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JANUARY TO 30 JUNE 2023 (UNAUDITED)	20

SEMI-ANNUAL FINANCIAL REPORT

FOR THE 1ST HALF OF 2023

2

1 ABOUT THE COMPANY

Colt CZ Group SE (Colt CZ or the Company), together with its subsidiaries (the Group), 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, swissAA and 4M Systems brands.

The Company's history dates to 1836 when Samuel Colt registered the first patent for a Colt brand pistol and built the first factory. Colt has not only supplied its commercial, military and law enforcement firearms to customers in the USA, but also around the world for more than 185 years. Colt is a supplier to the US army and an exclusive supplier to the Canadian army. Colt is headquartered in West Hartford, Connecticut, and its Canadian subsidiary,

Colt Canada, is located in Kitchener, Ontario. Colt has been part of the Group since May 2021, when the Company

successfully completed the acquisition of a 100% share in Colt Holding Company LLC ("Colt"), the parent company of the US firearms manufacturer Colt's Manufacturing Company LLC, and its Canadian subsidiary Colt Canada Corporation ("Colt Canada").

In, the 1936 Česká zbrojovka firearms factory was built in the Czech city of Uherský Brod. It was built prior to WWII by the Czechoslovak state with the strategic aim of moving the production of firearms further away from the German border. It was one of the largest and most advanced armaments production facilities in Europe. The factory's production of a full range of firearms started to gradually develop after WWII, resulting in strong product positioning in major segments of the firearms market.

In October 2022, the Company acquired the remaining 75% stake in Spuhr I Dalby AB, a Swedish manufacturer of optical mounting solutions for firearms. At the end

of June 2023, the Company acquired a 100% stake in swissAA Holding AG ("swissAA") which owns ammunition production facilities in Switzerland and Hungary.

The Company has its registered office in the Czech Republic and manufacturing facilities in the Czech Republic, the United States, Canada, Sweden, Switzerland and Hungary. As at 30 June 2023, Colt CZ had an average FTE headcount of 2,019 employees. Since October 2020, the Company's shares have been traded on the Prague Stock Exchange. Česká zbrojovka Partners SE is the majority shareholder of the company with a 76% ownership interest and 24% is free float.

SEMI-ANNUAL FINANCIAL REPORT

FOR THE 1ST HALF OF 2023

3

2 LETTER FROM THE PRESIDENT OF THE COMPANY

Dear Shareholders,

With the first half of 2023 behind us, I am very pleased to announce that the Group's business performance significantly improved in the second quarter, compared to the first quarter of this year and the same period in 2022. This is a result of all the hard work our colleagues carry out day after day, especially considering the significant changes on the US commercial market. Financial results continue to reflect the increasing seasonality of our business that is related to growth in the share of sales within the military and law enforcement segment. In operating profit, we have been adversely affected by the strengthening of the Czech crown against the US dollar and the Euro. This is, however, compensated for in our financial performance, where the decision to hedge against exchange rate risks associated with our export business is proving to be correct.

We have made several deliveries to military and law enforcement customers, including the Army of the Czech Republic, the Ukrainian armed forces (as part of the Canadian government's military aid package to Ukraine), and to African and Asian countries. I am glad that we have managed to strengthen our position in this segment, as, among other things, evidenced by the signing of a

framework agreement in August between Colt Canada and the Royal Danish Army for the supply of rifles and spare parts. The situation in the US commercial market continues to be unsatisfactory in some product groups, with the

CZ brand, in particular, failing to gain market share at the expense of its competitors. With respect to the above, the Colt CZ's management has decided to narrow the communicated guidance for 2023 to one scenario.

At the end of June, we also completed the acquisition of a 100% share in swissAA Holding AG, a Swiss producer of top-quality ammunition with plants in Switzerland and Hungary. SwissAA specializes in small caliber ammunition, specifically in 5.56mm, 7.62mm, 9mm, and 12.7mm, and in cartridges for 40mm under-barrel grenade launchers. The Company is a partner of the Swiss, Belgian, and German armies, as well as many other customers from the military and law enforcement segment. This acquisition is an important part of our vision to become the recognized undisputed leader of the small arms industry. I am convinced that swissAA Holding's capabilities will provide new opportunities for Colt CZ Group on the military and law enforcement market. Our teams will work together on the integration of swissAA Holding into our Group to not only maximize the potential and synergies in business, but also in R&D, where professional customers expect us

to provide the best systems in terms of functionality. This cooperation is also crucial because the next technological leap in the small arms sector will be closely linked to new types of ammunition.

At the end of June, we reached another milestone by issuing the first Sustainability Report of Colt CZ Group. The report identifies key areas in which our Group's activities have a significant impact on the environment and society and sets out relevant and attainable goals within four pillars titled Environment, People, Products, and Governance. Sustainability has long been an integral part of our business. Today, we are more structured, systematic, and above all, more readable in our approach to our partners and investors. We approach sustainability as an opportunity to transform our business, support changes, accelerate innovations, and develop cooperation. At the same time, we want to reinforce the trust our employees, our customers, and society have in us.

Jan Drahota

President and Chairman of the Board of Directors

Colt CZ Group SE

SEMI-ANNUAL FINANCIAL REPORT

FOR THE 1ST HALF OF 2023

4

3 KEY FINANCIAL INDICATORS

Consolidated income statement and statement of comprehensive income

	For six months
(in CZK thousand)	ended 30 June	Change
		in %
	2023	2022
	(unaudited)
Revenues from the sale of own products, goods and services	6,860,236	7,049,170	(2.7%)
Operating profit (loss)	924,719	1,303,619	(29.1%)
EBITDA	1,298,152	1,725,203	(24.8%)
Adjusted EBITDA1	1,464,196	1,794,731	(18.4%)
Profit (loss) before tax	1,352,073	1,392,797	(2.9%)
Profit for the year	1,046,155	1,104,705	(5.3%)
Profit for the year adjusted2:	1,198,473	1,182,805	1.3%
Net earnings per share attributable to the owner of the parent company
(CZK per share)
Basic	30	33	(7.2%)
Diluted	30	32	(6.2%)
Adjusted2	35	35	(0.8%)

Consolidated statement of financial position

		As of
(in CZK thousand)
30 Jun	31 Dec
	2023	2022	Change in %
	(unaudited)	(audited)
Total assets	21,876,633	19,503,514	12.2%
Total equity	8,052,715	7,681,371	4.8%
Total liabilities	13,823,918	11,822,143	16.9%
Total equity and liabilities	21,876,633	19,503,514	12.2%

1 In the first half of 2023, EBITDA was adjusted by one-off items related to acquisitions and payments related to the employee stock option plan which are unrelated to operational performance and value creation in the given period. In the first half of 2022, EBITDA was adjusted by one-off items related to acquisitions in 2022 and payments related to the employee stock option plan, which are unrelated to operational performance and value creation in the given period.

2 In the first half of 2023, profit for the year was adjusted by one-off items related to acquisitions and payments related to the employee stock option plan, costs of revaluation of equity earnout related to the Colt acquisition and by financing cost related to bond issue which are unrelated to operational performance and value creation in the given period. In the first half 2022, net profit was adjusted by one- off items related to acquisitions in 2022, payments related to the employee stock option plan and costs of revaluation of equity earnout related to the Colt acquisition.

SEMI-ANNUAL FINANCIAL REPORT		5
FOR THE 1ST HALF OF 2023