Gentili Mosconi S p A : ANNUAL FINANCIAL REPORT 2023 – ENG

GENTILI MOSCONI S.P.A.

Registered office VIA TEVERE 7/9 - 22070 - CASNATE CON BERNATE (CO)

Tax Code and number of registration: 01768380139 in the Register of Companies of: COMO-LECCO

Economic and Administrative Index No. 214593

Share capital 150,000.00 - Paid-up share capital 150,000.00

VAT Reg. No. 01768380139 - Tax Code 01768380139

ANNUAL FINANCIAL REPORT

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CONTENTS

LETTER TO THE SHAREHOLDERS

REPORT ON OPERATIONS

Composition of corporate bodies

Group structure

Summary of the Group's results

Main stock market indicators

1. Group activities
2. Macroeconomic scenario
3. Group operating performance
4. Operating performance of the main Group companies
5. Significant events during the year
6. Research and development activities
7. Main risks and uncertainties
8. Human Resources, Environment and Safety
9. Related party transactions
10. Other information
11. Significant events after the end of the year
12. Business outlook
13. Financial statements - resolution proposal

CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements

Explanatory Notes

Independent Auditors' Report

PARENT COMPANY'S FINANCIAL STATEMENTS

Financial Statements

Explanatory Notes

Report of the Board of Statutory Auditors

Independent Auditors' Report

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LETTER TO THE SHAREHOLDERS

Dear Shareholders,

The financial statements submitted for your approval illustrate our company's current situation. In light of the results contained therein, we are pleased with the results achieved during the last financial year, which ended on 31 December 2023, which brought a net profit of Euro 4,093,293 for the parent company and a consolidated net profit for the Group of Euro 5,214,220.

This report concerns the analysis of management, taking into account the provisions of Article 2428 of the Italian Civil Code, and is intended to provide an overview of the company's situation and operating performance during the year, with particular regard to costs, revenues and investments.

In 2023, the luxury market experienced a year of normal adjustment after a period that had seen double-digit growth trends. Despite this, our company was able to contain the drop in revenue and increase margins in percentage terms thanks to our ability to optimally and quickly manage the creativity side and production.

In spite of the general concerns, I think that talking about a crisis for the luxury sector is incorrect. I am optimistic as the luxury market has always proven to be particularly resilient. We are a healthy company that is ready to face 2024 with the same energy and determination, and resume the path of growth. Nevertheless, this will certainly be a very busy and challenging year, in which we will have to do even better in creating new articles and fabrics that will appeal to end customers.

A year after the listing we are very satisfied; it was a transaction done in record time and with a large participation of investors, including Palladio Holding and Mahrberg as cornerstone investors. The demand was more than double the capital offered, half of which came from France. And this, too, is an indicator of success since foreign investors are normally more attracted to large companies.

By listing on the Italian stock exchange, the company had set itself three objectives

The first was to gain more visibility and prestige, also internationally, to send a message of "strength" to our customers and suppliers. Stock Exchange listing is synonymous with transparency and reliability. Our effort was appreciated. The listing also allowed us to attract talent and professionalism and to be invited by customers and suppliers to participate in technological development, digitalisation and sustainability projects.

The second was to accelerate the growth and integration path of Gentili Mosconi through strategic transactions and acquisitions by boosting the capital raised.

One year after listing on the stock exchange, we marked the first step in our development project by acquiring 70% of Tintoria Comacina in early March.

We aim to become a central hub of synergies in which the necessary skills and expertise can be pooled, while keeping the DNA of each affiliated company intact.

Beyond the economic value, this acquisition is strategic and substantial for us due to the skills and strong technical values that are well suited to Gentili Mosconi's process requirements. Furthermore, Tintoria Comacina is also a company that symbolises the ancient craftsmanship traditions that characterise Como's textile industry and that we have always strived to protect and grow in an economic climate that is certainly not easy.

As already done with Stamperia Emme, Tintoria Comacina will also be made available to all operators in the sector.

We also have other files on the table in other areas, which I hope to close within the year. The current economic situation has allowed us to spot new opportunities, which we are evaluating with due care

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and attention.

The third was to lay a first brick on the future of the company. My dream is to preserve society and make it thrive. The listing was the first brick to build this design for the Gentili Mosconi of the future.

True to its sustainability journey and to the values that have always distinguished us, Gentili Mosconi established the FONDAZIONE GENTILI MOSCONI Ente del Terzo Settore in February 2024, which will be based in Como in Via Pannilani, 59; the Foundation is a non-profit organisation and pursues civic, solidarity and socially useful purposes, and specifically aims to pursue and preserve the Made in Italy textile tradition, as an inexhaustible source of research and inspiration for new fashion and design collections, and to encourage and promote Italian textile culture in its various expressions, in art and fashion design, supporting the creativity of young talents.

I would like to thank all of our employees, customers and shareholders for their support and commitment to achieving corporate objectives and promoting sustainability in our sector.

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COMPOSITION OF CORPORATE BODIES

BOARD OF DIRECTORS

The Board of Directors, appointed by the ordinary shareholders' meeting of 11 November 2022 and 20 January 2023, will remain in office until the approval of the financial statements for the year ended 31 December 2025.

The members of the Board of Directors are indicated in the table below.

Name and Surname	Office
Francesco Gentili	Chairman of the Board of Directors and Chief
	Executive Officer
Patrizia Mosconi	Director

Paolo Daviddi

Director

Elia Kuhnreich

Director

Giovanni Casartelli (**)

Independent Director

1. Director meeting the independence requirements set forth in Article 148, third paragraph, of the Consolidated Finance Act.

BOARD OF STATUTORY AUDITORS

The Board of Statutory Auditors, appointed by the Shareholders' Meeting of 11 November 2022, will remain in office for a period of three years until the approval of the financial statements for the year ended 31 December 2025.

The members of the Board of Statutory Auditors of the Company are indicated in the table below.

Name and Surname		Office
Luigi Caccia		Chairman of the Board of Statutory
	Auditors
Antonia Maria Fiorella		Statutory Auditor
Turba
Luca Castoldi		Statutory Auditor

Andrea Sormani

Alternate Auditor

Cristina Pivotto

Alternate Auditor

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INDEPENDENT AUDITORS

Deloitte & Touche S.p.A., appointed by the shareholders' meeting on 11 November 2022 for the financial years 2022-2024.

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GROUP STRUCTURE

Below is a graphical representation of the Group, with an indication of the equity investments held in the subsidiaries and investees.

Gentili Mosconi S.p.A. controls 98% of Emme S.r.l., a company acquired in 2015, a long-established company specialising in the printing of top-quality textiles that builds on expertise, tradition and technological innovation. The remaining 2% is equally divided between Francesco Gentili and Patrizia Mosconi.

The Company also holds 100% of Gentili Mosconi New York Inc., a US company that owns the showroom located in New York, in the 7th Street area known as the fashion district, today one of the most iconic areas in the world of creativity and innovation in the fashion sector, and 15% of the capital of Elle.A.Ci.Ti, a company based in Lurate Caccivio (CO), which is a chemical, physical and ecological analysis laboratory.

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SUMMARY OF THE GROUP'S RESULTS

(Amounts in thousands of Euro)
	31.12.2023	31.12.2022
Revenues from sales and services	50,529	53,122
Cost of sales	(25,364)	(28,882)
Industrial margin	25,165	24,240
Operating costs	(16,523)	(14,079)
EBITDA	8,642	10,161

For a better understanding of the Group's performance, in order to correctly compare it with the previous year and with future years, the following transactions were identified, the effects of which we intend to neutralise through alternative adjusted performance indicators:

• in the financial year 2022, the Textile-Fashion Credit of Euro 777 thousand, this is a non-recurring revenue as it is a temporary measure introduced for the financial years 2021 and 2022 only by a specific regulation to support the sector in order to mitigate the negative effects of the COVID-19 pandemic
• in 2023, following the listing on the Euronext Growth Milan regulated market of the Italian Stock Exchange:
• • the capitalisation of the consulting costs incurred related to the transaction for Euro 2,692 thousand in intangible assets and the correspondent amortisation charge of Euro 898 thousand;
  • the recognition of a tax credit on the capitalised charges related to the listing, deferred on the basis of the useful life of the same for an amount of Euro 333 thousand
  • the disbursement of a Bonus equal to one gross monthly salary to all Group employees for Euro 598 thousand, recognised under Personnel costs.

The table below shows the reconciliation between the consolidated profit for the period and the Adjusted EBIT and the consolidated Adjusted EBITDA of the Gentili Mosconi Group for the year 2023, compared with the same metrics of the Group for the year 2022:

(Amounts in thousands of Euro)

31.12.2023 31.12.2022	%	change

Consolidated profit (loss) for the period Income taxes for the year, current, deferred and prepaid

exchange rates gains and losses Interest and other financial charges Income from equity investments Other financial income

5,235	6,828	-1,593	-23%
1,727	2,185	-458	-21%
58	-62	120	(>100%)
79	49	30	61%
-8	-12	5	-38%
-351	-81	-270	> 100%

EBIT	6,741	8,907	-2,166	-24%
Textile-fashion tax credit		-777
Costs and revenues ancillary to the listing	1,329
Adjusted EBIT	8,070	8,130	-60	1%

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Write-downs of receivables included in current assets and cash and cash equivalents

Depreciation of tangible fixed assets and intangible fixed assets

71	84	-13	-15%
922	862	60	7%

Other provisions	10	308	-298	-97%
Adjusted EBITDA	9,073	9,384	-311	-3%

Therefore, for the purposes of a correct comparison, the table below summarises the most significant results adjusted for the effect of these transactions.

(Amounts in thousands of Euro)
	31.12.2023	31.12.2022
Revenues from sales and services	50,529	53,122
Industrial margin	25,165	24,240
Industrial margin as a % of revenues from sales and services	49.8%	45.6%
Adjusted EBITDA	9,073	9,384
Adjusted EBITDA Margin	18.0%	17.7%
Adjusted EBIT	8,070	8,130
Adjusted EBIT Margin	16.0%	15.3%
Profit for the year / period	5,235	6,828
Profit for the year / period as a % of revenues from sales and	10.4%	12.9%
services
Net Financial Indebtedness	(17,142)	352
Cash generation	5,761	9,149
Cash conversion rate	63.5%	90.0%

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MAIN STOCK MARKET INDICATORS

Official price at the beginning of trading (7 February 2023) in Euro 3.75

Minimum price as at 17 January 2024 in Euro 3.09

Maximum price as at 20 April 2023 in Euro 3.90

Stock market capitalisation at the start of trading (7 February 2023) in Euro 71,250,000 No. of shares making up the share capital as at 7 February 2023 19,000,000

No. of outstanding shares (free float) 4,800,000

The market performance of the Gentili Mosconi share since the listing date of 7 February 2023 is shown below.

STOCK PERFORMANCE CHART

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