LU VE S p A : Interim financial report as of 31.03.2024

INTERIM FINANCIAL REPORT AS AT MARCH 31, 2024

1 FINANCIAL STATEMENTS

1.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Consolidated Statement of Financial Position		31/03/2024		31/12/2023
	(in thousand of Euro)
	ASSETS
	Goodwill	64,264		63,961
	Other intangible assets	27,909		28,902
	Property, plant and equipment	167,511		164,469
	Right-of-use assets	12,489		13,476
	Other tangible assets	24,362		27,467
	Deferred tax assets	11,315		11,039
	Investments	141		141
	Other non-current assets	797		828
	Non-current assets		308,788		310,283
	Inventories	113,748		110,831
	Trade receivables	106,640		87,790
	Current tax assets	8,810		9,356
	Current financial assets	39,066		50,387
	Other current assets	6,790		4,760
	Cash and cash equivalents	245,583		212,059
	Current assets		520,637		475,183
	Assets held for sale	-		-
	Assets held for sale		-		-
	TOTAL ASSETS		829,425		785,466

	Consolidated Statement of Financial Position		31/03/2024		31/12/2023
	(in thousand of Euro)
	LIABILITIES AND EQUITY
	Share capital	62,704	62,704
	Reserves and retained earnings (losses)	161,796	131,228
	Profit (loss) of the period	10,695	29,745
	Total equity of the Group		235,195		223,677
	Equity attributable to non controlling interest	5,855	5,554
	TOTAL EQUITY		241,050		229,231
	Loans	278,982	250,222
	Provisions	5,717	5,735
	Employee benefits obligations	5,479	5,363
	Deferred tax liabilities	14,034	14,109
	Other financial liabilities	12,992	14,410
	Non-current liabilities		317,204		289,839
	Trade payables	100,147	95,659
	Loans	124,622	119,005
	Tax liabilities	8,562	8,653
	Other financial liabilities	5,159	5,155
	Other current liabilities	32,681	37,924
	Current liabilities		271,171		266,396
	Liabilities held for sale	-	-
	Liabilities held for sale		-		-
	TOTAL LIABILITIES AND EQUITY		829,425		785,466

1.2 CONSOLIDATED INCOME STATEMENT

	Consolidated Income Statement		31/03/2024		31/03/2024
	(in thousand of Euro)
	REVENUES AND OPERATING INCOME
	Revenues	141,569	151.157
	Other operating income	346	284

Total revenues and other operating income	141,915	151,441
OPERATING EXPENSES
Purchase of materials	(71,978)	(80.780)
Changes in inventories	2,931	4.195
Costs for services	(18,729)	(21.556)
Personnel costs	(33,657)	(33.337)
Net reversal/ (write downs) of financial assets	(29)	84
Other operating expenses	(839)	(883)
Total operating expenses	(122,301)	(132,277)
Depreciation and amortization	(7,742)	(7.849)
Gain/(Losses) on the sale of non-current assets	52	18
Write-downs on non-current assets	-	-
OPERATING RESULT	11,924	11.333
Financial income	2,556	1.170
Financial expenses	(1,777)	(4.253)
Exchange gains (losses)	899	(579)
Gains/(Losses) from investments	-	-
PRE-TAX RESULT	13,602	7.671
Income taxes	(2,565)	(896)
NET RESULT	11,037	6.775
Of which attributable to non-controlling interests	342	445
Of which attributable to the GROUP	10,695	6,330

1.3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Statement of comprehensive income

(in thousand of Euro)

31/03/2024 31/03/2024

NET RESULT	11,037	6,775
Components that will not subsequently be reclassified to the Income Statement of
the period
Actuarial gains/(losses) from employee benefits obligations	40	200
Tax effect	(10)	(48)
	30	152
Components that will subsequently be reclassified to the Income
Statement of the period:
Exchange differences from translation of Financial Statements in foreign currency	792	(2,367)
TOTAL COMPREHENSIVE INCOME (LOSS)	11,859	4,560
of which:
Attributable to non-controlling interests	(342)	(445)
ATTRIBUTABLE TO THE GROUP	11,517	4,115

1.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Consolidated Statement of													Postemployment							Profit				Total			Equity
	changes in equity																						equity
		Share		Share Premium		Legal		Treasury		Translation			benefits			Other				(loss)						attributable to				Total
	(in thousands of Euro)																attributabl
		Capital		reserve		reserve		Shares		reserve			discounting			reserves				for the						non controlling				equity
																	e to the
														reserve							period						interests
																							Group
	BALANCE AS AT 01/01/2022	62,704	24,762	3,745	(288)	(13,643)		(8)		81,762		47,714		206,748	4,712		211,460
	Allocation profit 2021
	Dividend	-		-		-		-		-			-			-		-			-	(72)			(72)
	Retained		-		-		-		-		-			-			47,714				(47,714)				-			-				-
	Purchase of treasury shares	-		-		-		-		-			-			-		-			-	-			-
	Other		-		-		-		-		-			-							-				-			(115)				(115)
	Statement of comprehensive income as	-		-		-		-		(2,367)			152		-		6,330		4,115	445		4,560
	at 31/03/2022
	BALANCE AS AT 31/03/2023		62,704		24,762		3,745		(288)		(16,010)			144			129,476				6,330				210,863			4,970				215,833
	BALANCE AS AT 31/12/2023	62,704	24,762	4,557	(288)	(17,938)		(91)		120,226		29,745		223,677	5,554		229,231
	Allocation profit 2022
	Dividend	-		-		-		-		-			-			-		-			-	(62)			(62)
	Retained		-		-		-		-		-			-			29,745				(29,745)				-			-				-
	Purchase of treasury shares	-		-		-		-		-			-			-		-			-	-			-
	Other		-		-		-		-		-			-			-				-				-			22				22
	Statement of comprehensive income as	-		-		-		-		792		30		-		10,695		11,517	342		11,859
	at 31/03/2023
	BALANCE AS AT 31/03/2024		62,704		24,762		4,557		(288)		(17,146)			(61)			149,971				10,695				235,194			5,856				241,050

1.5 STATEMENT OF CASH FLOWS

	Consolidated Statement of Cash Flows		31.03.2024				31.03.2023
	(in thousand Euro)
	A.	Cash and cash equivalents at the beginning of the period		212,059			177,258
		Profit (loss) for the period	11,037		6,775
		Adjustments for:
		- Depreciation and amortisation	7,742		7,849
		- (Gains)/losses, write-downs of non-current assets	(52)		(18)
		- (Gains)/losses on sales on investments	-	-
		- Net financial expenses	(635)		131
		- Income taxes	2,565		896
		- Changes in fair value	116		2,952
		Changes in employee benefits	156		24
		Changes in provisions	(18)		140
		Changes in trade receivables	(18,850)		(18,585)
		Changes in inventories	(2,931)		(4,195)
		Changes in trade payables	4,488		(745)
		Changes in net working capital	(17,293)		(23,525)
		Changes in other receivables and payables, deferred taxes	(3,691)		(2,851)
		Tax payment	(2,362)		(1,422)
		Net paid financial expenses	(1,220)		(1,345)
	B.	Cash flows from (used in) operating activities		(3,655)			(10,394)
		Investments in non-current assets:
		- intangible assets	(517)		(657)
		- property, plant and equipment	(7,587)		(5,114)
		- financial assets	-	-
		Investments in short-term financial assets	11,464		22,105
		Net cash paid Business combination	-	-
		Net cash flow generated from disposal of investments	-	-
	C.	Cash flows from (used in) investing activities		3,360			16,334
		Repayment of loans	(24,178)		(29,752)
		New loans	40,000		35,713
		Changes in other financial liabilities	(1,932)		(1,865)
		Sale/(purchase) of treasury shares	-	-
		Contributions/repayments of own capital	-	-
		Payment of dividends	(10)		(6)
		Other changes	-	-
	D.	Cash flows from (used in) financing activities		33,880			4,090
		Exchange differences	815		(2,482)
		Another non-monetary changes	(876)		1,778
	E.	Other changes		(61)			(704)
	F.	Net cash flows in the period (B+C+D+E)	33,524		9,326
		Cash and cash equivalents at the end of the period (A+F)		245,583			186,584
		Current financial debt	90,715		16,953
		Non-current financial debt	291,974		331,047
		Net financial debt		137,106			161,416

2 CONTENT AND FORM OF THE CONSOLIDATED FINANCIAL STATEMENTS

Introduction

The Interim Financial Report as at 31 March 2024, not audited, has been prepared in compliance with the International Financial Reporting Standards (IFRS) and for this scope the financial statements of the subsidiaries of the Group have been duly reclassified and amended.

The Interim Financial Report has been prepared in accordance with art. 154 Ter, comma 5 of D.Lgs. n. 58 dated 24/02/98 (T.U.F.) and subsequent amendments. Therefore, it does not include the information required in accordance with IAS 34 "Interim Financial Reporting".

Consolidation criteria

The criteria adopted for the consolidation are the same as those adopted for preparation of Consolidated Financial Statement of 31 December 2023.

Accounting standards

Accounting standards adopted in the Interim Financial Report as at 31 March 2024 are the same as those adopted for the Consolidated Financial Statement as at 31 December 2023.

The Interim Financial Report as at 31 March 2024 has been prepared on the basis of the assumption of going concern.

2.1 REVENUES

As stated in the budget, sales of products in Q1 2024, equal to €141.3 million, decreased by 6.2% compared to the same period of 2023, in which in the month of March it was recorded the highest turnover in the history of the Group. The order backlog at the end of March was equal to €168.8 million, with an increase of 8.1% compared to the end of December 2023.

At SBU level, continued the growth trend (+9.5%) of the Cooling System SBU with a total turnover equal to €67.0 million mainly related to important projects in the applications linked both to Datacentre conditioning and to Industrial cooling in general.

Despite an important increase of order intake and sales in the refrigeration business, in the "mobile" applications and a recovery, more than expected, in the segment of the tumble dryers, in the first quarter the Business Unit Components suffered a decrease by 16.9% with a total turnover of €74.3 million due to the expected strong slowdown in the heat exchangers sales for heat pumps, that, in Q1 2023, reached the highest peak.

The breakdown of turnover by SBU, by product type and application are given below:

	Revenues by SBU		Q1/2024		%			Q1/2023		%				Change		% Change
	(in thousands of Euro)
	SBU COOLING SYSTEMS	66,964	47.4%	61,141	40.6%	5,823	9.5%
	SBU COMPONENTS	74,334	52.6%	89,503	59.4%	(15,169)	-16.9%
	TOTAL PRODUCT TURNOVER		141,298		100.0%		150,644		100.0%		(9,346)		-6.2%
	Revenues by product			Q1/2024		%		Q1/2023			%		Change
	(in thousands of Euro)								%
	Heat exchangers		70,071		49,4%			85,929			56.7%		-18.5%
	Air Cooled Equipment	66,964		47.2%			61,141		40.4%		9.5%
	Doors				4,263		3.0%			3,574			2.4%		19.3%
	TOTAL PRODUCT TURNOVER	141,298		99.6%			150,644		99.5%		-6.2%
	Other				617		0.4%			797			0.5%		-22.6%
	TOTAL	141,915		100.0%			151,441		100.0%		-6.3%
	APPLICATIONS			Q1/2024		%		Q1/2023		%		Change
	(in thousands of Euro)							%
	Refrigeration			68,200		48.1%			71,989		47.5%	-5.3%
	Air-conditioning	33,690		23.7%			47,550		31.4%	-29.1%
	Special application			23,987		16.9%			19,319		12.8%	24.2%
	Industrial cooling	15,421		10.9%			11,786		7.8%	30.8%
	TOTAL APPLICATION TURNOVER			141,298		99.6%			150,644		99.5%	-6.2%
	Other				617		0.4%			797		0.5%	-22.6%
	TOTAL			141,915		100.0%			151,441		100.0%	-6.3%

At geographic level, Germany was the most penalized market by the negative trend of heat pumps market and sales in Italy, for the first time in a long time, suffered a decrease too. Very positive, instead, the trend of sales in Poland and Scandinavian countries.

The chart below shows the geographical breakdown of turnover in the first 3 months of 2024:

24,6%20,2%

55,2%

Italy EU RoW

The total turnover doesn't depend, in a significant way, on single commercial or industrial agreements. As at March 31, 2024, sales of the first 10 customers accounted for 31.8% of total turnover and the main customer represented 4.7% of total sales.

2.2 EBITDA

EBITDA was €19.6 million (13.8% of revenues) compared to €19.2 million (12.7% of revenues) in the first 3 months of 2023. No impact, in the income statement of Q1 2024 and Q1 2023, of costs not falling under ordinary management. The EBITDA variation compared to EBITDA in the first three months of 2023 (+€0.4 million) was generated by €2.2 million for the decrease of costs of the main raw materials and other production costs, net of €0.5 million for the decrease in sale prices and of €1.3 million related to the volume effect.

2.3 NET INCOME

Net income for the period amounted to €11.0 million (7.8% of revenues), compared to €6.8 million for the first 3 months of 2023 (4.5% of revenues). Applying the tax effect to the net effect of the positive change in the fair value of derivatives (€0.3 million) and to the net positive impact of amortized cost (€1.1 million), the net income for the first 3 months of 2024 ("Adjusted net income for the period") would have been €9.6 million, 6.8% of revenues (€8.0 million last period, 5.3% of revenues).

2.4 NET FINANCIAL POSITION

The net financial position was negative by €137.1 million (€126.3 million as at December 31, 2023) with a difference of €10.8 million mainly due for €8,1 million to capital expenditures, €0.1 million to dividends, €17.3 million to the increase in operating working capital and €3.7 million related to changes in other payables and receivables, net of €18.4 million of positive cash flow from operations. The comparison with the net financial position as at March 31, 2023 (negative for €161.4 million) shows a positive impact of €24.3 million. In the period April 1, 2023 - March 31, 2024 the cash flow generated, net of the non-operative components, was about €48.5 million.