SOL S p A : Half-yearly financial report of the SOL Group as at June 30th, 2023

SOL S.p.A.

Half-yearly financial report of the SOL

Group as at 30 June 2023

TABLE OF CONTENTS

1. Administrative and controlling bodies
2. Directors' Interim Report

9. Condensed half-yearly consolidated financial statements as at 30 June 2023

15. Notes to the financial statements

58. Certification of the Condensed half-yearly consolidated financial statements pursuant to Article 154-bis of Italian Legislative Decree 58/98

BOARD OF DIRECTORS

Chairman and Managing Director

ALDO FUMAGALLI ROMARIO

Deputy Chairman and Managing Director

MARCO ANNONI

Director with special powers

GIOVANNI ANNONI

Director with special powers

GIULIO FUMAGALLI ROMARIO

Powers granted to the Directors

(CONSOB Communication No. 97001574 dated 20 February 1997)

To the Chairman and Deputy Chairman: legal representation before third parties and the court; several powers of ordinary administration; joint powers of extraordinary administration, it being understood that for the implementation of the relevant acts the signature of one of the two is sufficient with written authorisation from the other; without prejudice to some specific acts of particular importance that are reserved to the competence of the Board of Directors.

To Directors with special appointments: powers of ordinary administration relevant to Legal and Corporate Business (Mr. Giulio Fumagalli Romario) and the Organisation of Information Systems (Mr. Giovanni Annoni) with single signature.

Half‐yearly financial report of the SOL Group

as at 30 June 2023

Directors' Interim Report

Introduction

This Half‐yearly financial report as at 30 June 2023 was drawn up pursuant to Italian Legislative Decree 58/1998 as amended, as well as with the Issuers' Regulation issued by Consob.

This Half‐yearly financial report was prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and approved by the European Union, and was drawn up according to IAS 34 - Interim Financial Reporting, applying the same accounting standards adopted to prepare the consolidated financial statements as at 31 December 2022, with the exception of those illustrated in the Notes to the financial statements.

It has been prepared on a going concern basis in that it has been checked that there are no indicators that the SOL Group will not be able to meet its obligations in the next 12 months.

General context

The SOL Group is mainly engaged in production, applied research and distribution activities pertaining to industrial, pure and medicinal gases, in door‐to‐door medical care, as well as in the sector for related medical equipment in Europe, Turkey, Morocco, India, Brazil, China, Ecuador and Peru.

The products and services of companies belonging to the Group are used in the chemical, electronics, iron and steel, engineering and foodstuff industries, as well as in sectors such as environmental protection, research and health.

In the first half of 2023, the war in Ukraine continued, leading to considerable economic uncertainty and continuous changes in commodity prices.

Inflation remained high, although lower than in 2022.

The fall in natural gas and energy prices has so far had little impact on inflation, while the continued rise in interest rates adopted by the central banks has led to a slight cooling of the economies of the various countries, although they have continued to grow, albeit at lower rates than in the past.

However, this economic trend was already widely expected in the final months of 2022.

The persistence of restrictive monetary policy by central banks could further dampen economic activity, leading to lower growth in advanced countries in 2024.

Highlights of SOL Group results

Net sales achieved by the SOL Group in the first half of 2023 amounted to Euro 735.7 million (up by 11.8% when compared to Euro 658.2 million in the first half of 2022.

On a like‐for‐like basis, sales increased by 7.8%.

The gross operating margin was Euro 193.6 million, equating to 26.3% of sales, up by 22.7% when compared with the first half of 2022 (Euro 157.8 million, or 24% of sales).

The operating result came to Euro 118.9 million, equating to 16.2% of sales, up by 28.1 million compared to the figure for the same period of 2022 (Euro 92.8 million, or 14.1% of sales).

Net profit, net of estimated taxes, amounted to Euro 79.6 million, compared with Euro 64.7 million in the first half of 2022.

Cash flow amounted to Euro 152.9 million, up compared to the first half of 2022 (Euro 128.7 million).

Capital expenditure recorded in the financial statements totalled Euro 82.0 million (Euro 53.9 million in the same period of 2022).

The average number of staff employed as at 30 June 2023 totalled 5,957 (5,235 in the first half of 2022).

The Group's net financial indebtedness was equal to Euro 420.5 million (Euro 389.7 million as at 31 December 2022). Net of rental payables, net financial indebtedness was equal to Euro 350.5 million.

Operating performance and significant events during the half‐year

In this context, the SOL Group achieved a good increase in sales of 11.8% (7.8% on a like‐for‐like basis) compared to the first half of 2022.

The half‐yearly result was positive both in Italy, where sales grew by 5.4%, and abroad, where there was an increase of 16.6%.

The Technical Gas Division achieved sales of Euro 397.5 million, up 9.1% compared to the first half of 2022.

The Home Care Service Division, in which the Group operates through Vivisol, achieved sales of Euro 338.3 million, up 15.1% on the first half of 2022.

Profit margins increased compared to the first half of 2022.

Compared to the first half of 2022, the Gross Operating Margin increased in absolute terms by 22.7% and the Operating Result by 28.1%.

Technical gas reserves always remained within the safety levels and the sites ran at high loads.

Research activities, which have traditionally characterised, justified and supported the Group's development, continued during the first six months of 2023.

With regard to M&A, it should be noted that during the first half of the year, the subsidiary Airsol Srl acquired the majority of the capital of Swissgas and ICP ‐ Industrias Criogenica del Peru, companies active in the technical gas sector in Ecuador and Peru.

Intra‐group transactions and transactions with related parties

Transactions carried out with related parties, including intra‐group transactions, cannot be considered as atypical or unusual, as they are part of the normal activities of Group companies. These transactions are settled at arm's length, taking into account the characteristics of the supplied goods and services.

Information on transactions with related parties, including those required by the Consob communication of 28 July 2006, are shown in the notes to the Financial Statements of this Half‐yearly financial report as at 30 June 2023.