KME S p A : The BoD of KME Group SpA has approved the draft financial stamements for the year 2022

KME Group SpA

Registered office: 20121 Milan (MI) - Foro Buonaparte 44

Share capital Euro 200,072,198.28, fully paid-up

Tax Code and Milan Companies Register no. 00931330583

www.itkgroup.it

PRESS RELEASE

THE BOARD OF DIRECTORS OF KME GROUP SPA (FORMERLY INTEK GROUP SPA) HAS APPROVED

THE DRAFT OF THE SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER

2022.

Separate financial statements

• Profit for the year of Euro 5.2 million (profit of Euro 65.3 million in 2021).
• Equity of Euro 494.3 million (Euro 551.7 million as at 31 December 2021).
• Net financial debt of Euro 117 million (Euro 93.6 million as at 31 December 2021).
• Proposed for the approval of the shareholders the distribution of a dividend of Euro 0.217230 for each savings share, with payment starting from 24 May 2023, ex dividend no. 6 on 22 May 2023 and record date on 23 May 2023.

Consolidated financial statements

The data is comparable with the year 2021 only to a limited extent due to the expansion of the scope of consolidation (Total equity of Euro 569.5 million; Profit for the period of Euro

• 35.5 million and Net Financial Debt of Euro 267.5 million).

• TREND IN MAIN EQUITY INVESTMENTS:
• • With regard to KME SE, also in 2022 and the first few months of 2023, important transactions were carried out aimed to implement the concentration strategy on copper and copper alloy rolled products, in which the group is the European leader and it intends to focus and further develop, given the interesting growth rates expected for the main reference markets. Cash in from extraordinary/M&A activities allowed a significant improvement in the net financial position of KME SE (from Euro 249.5 million as at 31 December 2021 to Euro 102.4 million as at 31 December 2022, of which Euro 90.0 million deriving from the effects of recognition, pursuant to IFRS, of the sale and lease back transaction) and the early repayment of the EURO 300 million KME SE Bond maturing in 2023.
    In 2022, the KME SE group's results showed significant growth: revenues from sales amounting to Euro 2,082.5 million (+4.1% compared to 2021 on a like-for-likebasis); revenues net of raw materials equal to Euro 437.6 million (+30.6% compared to 2021, again on a like-for-likebasis); EBITDA of Euro 112.6 million compared to Euro 95.5 million for the previous year.
  • The progress of CULTI Milano SpA in its reference markets continues: of particular importance in 2022 was the launch of the revolutionary BAKEL® 3D technology, through the subsidiary Bakel Srl. In 2022, the CULTI Milano group reached, at consolidated level, revenue of Euro 23.1 million and EBITDA of Euro 5.1 million (respectively Euro 20.9 million and Euro 5.0 million in 2021). Negotiations are currently underway for the sale of this equity investment.
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Milan, 28 March 2023 - The Board of Directors of KME Group SpA (formerly Intek Group SpA), a diversified investment holding company, today approved the parent company's draft financial statements as at 31 December 2022, the consolidated financial statements and the Report on corporate governance and ownership structure prepared pursuant to article 123-bis of Italy's Consolidated Law on Finance (TUF, Testo Unico della Finanza) and the Report on Remuneration prepared pursuant to article 123-ter of the TUF. The Annual Financial Report as at 31 December 2022, inclusive of the above-mentioned reports as well as the reports of the Independent Auditors and the Board of Statutory Auditors, will be made public within legal terms and will be available at the registered office as well as on the website www.itkgroup.itand the authorised storage system "eMarket STORAGE" (www.emarketstorage.it).

Taking into account the launch in 2022 of a new strategic process of concentration of activities on the industrial management of the equity investment in KME SE, in order to ensure better comparability, analysis continues to be focused on the Parent Company, on the individual equity investments and their results, in continuity with the disclosures in previous financial report reports.

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Most significant events occurred in 2022 and the first quarter of 2023

The main events characterising the operations of the KME Group and its investees in 2022 and in the early months of 2023 are described below.

1. Copper sector
   In this area, in the course of 2022 and the early months of 2023, significant transactions were carried out in order to implement the KME SE group's strategy of concentrating in copper and copper alloy rolled products, in which the group is the European leader and in which it intends to focus and further develop in the future, given the attractive growth rates expected for the main reference markets.
   In January 2022, the agreement was executed with Paragon Partners GmbH ("Paragon"), a
   German private equity fund, for the transfer of control of the Special Products business. The agreement called for the creation of a company 55% held by Paragon and 45% by KME SE, to which the above-mentioned business was transferred. This transaction enabled KME SE to cash in around Euro 200 million, plus the repayment of around Euro 20 million in intragroup loans, relating to working capital, and after a Euro 32 million loan was granted to the newly-established company;
   An additional disposal was completed in February 2022 with the sale of the Wires business (cables), which entered into KME portfolio with the acquisition of MKM in 2019. This transaction allowed a cash in of approximately Euro 20 million, in addition to the value of inventory;
   In July 2022, the acquisition of part of the flat rolled products (FRP) activities of Aurubis AG was completed. The scope of the transaction includes the FRP plant in Zutphen (Netherlands) and the slitting centres in Birmingham (United Kingdom), Dolný Kubín (Slovakia) and Mortara (Italy). The consideration for the transaction was Euro 8 million, in addition to the repayment to Aurubis of an intercompany loan of Euro 63 million corresponding to the value of the net working capital of the acquired companies.
   In December 2022, the contract, signed in September 2022, for the sale and lease back transaction on the Osnabrück plant was executed, which allowed the cash in of Euro 90 million. The related lease agreement, which provides for an annual rent of Euro 7.08 million, has a duration of 30 years, with a 10-year extension that can be exercised twice. A repurchase option is also envisaged at the end of 2026.
   Also in December 2022, KME SE signed a contract for the sale of its 50% interest in the KMD joint venture ("KMD (HK) Holdings Limited") and one for the repurchase of 100% of the share capital of KMD Connectors Stolberg GmbH ("Stolberg"), which was transferred by KME to the KMD joint venture in 2014. The sale price of 50% of the KMD joint venture is approximately USD 50 million and Stolberg's repurchase price is approximately USD 17 million. KME will also cash in the intercompany positions and the shareholder loan currently in place for a total amount of around USD 20 million. The transaction is expected to close in the coming months.

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Revenues from sales amounted to Euro 2,082.5 million (+4.1% compared to 2021 on a like-for- like basis), while those net of the value of raw materials totalled Euro 437.6 million (+30.6% compared to 2021, again on a like-for-like basis). This performance allowed for a significant improvement in EBITDA, up to Euro 112.6 million compared to Euro 95.5 million in the previous year.

The cash in of the extraordinary/M&A activties above mentioned enabled a significant improvement in KME SE's net financial position (from Euro 249.5 million as at 31 December 2021

to Euro 102.4 million as at 31 December 2022, of which Euro 90.0 million deriving from the effects of recognition, pursuant to IFRS, of the sale and lease back transaction) and the early redemption of the Euro 300 million KME SE Bond maturing in 2023.

1. CULTI Milano SpA
   Also in 2022, CULTI Milano and its subsidiaries recorded significant commercial growth, confirming their differentiation and complementary channel strategy. The CULTI Milano group has also been involved with its subsidiary Bakel Srl in the market launch of the revolutionary BAKEL® 3D technology, which allows a much higher absorption than traditional cosmetics.
   In 2022, the CULTI Milano group achieved revenues of Euro 23.1 million and an EBITDA of Euro
   5.1 million, an improvement compared to the same indicators in 2021, equal to Euro 20.9 million and Euro 5.0 million, respectively.
2. Extraordinary finance transactions
   During 2022, three public exchange offers were made on the Company's shares; this in light of the fact that it is believed that the new Group structure, also with respect to the expected greater cash generation capacity, requires a lower level of capital and to allow holders of financial instruments to transform their investments into instruments characterized by a lower degree of risk and a value incorporating a premium compared to previous prices.
   From 25 July 2022 to 13 September 2022, the total public exchange offer on the Intek Group savings shares and the partial public exchange offer on the "Intek Group SpA 2021-2024Warrants" were carried out. On the other hand, the partial public exchange offer on Intek Group ordinary shares was concluded on 16 September 2022.
   A total of 1.08 million savings shares (equal to 6.6% of the share capital included in the offer), 20.2 million warrants (equal to 28.1% of the warrants included in the offer) and 82.3 million ordinary shares (equal to 61.6% of the ordinary shares initially included in the relative offer and 48.5% considering the ordinary shares deriving from the claw back mechanism).
   Against these subscriptions, as consideration, on 23 September 2022, 63,533,259 "KME Group SpA 2022-2027" bonds were issued, listed on the MOT, for a total value of Euro 63.5 million; on the same date, the Company cancelled ordinary shares, savings shares and warrants, and changed the company name to KME Group SpA.
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Summary of the Group's corporate structure at 31 December 2022

KME Group SpA held the following principal shareholdings as at 31 December 2022:

• KME Group Srl (now KMH SpA): newco established in April 2022 to which were transferred - partly through conferment and partly through sale - 89% of the investment in KME SE and 100% of the investment in KME Germany Bet. GmbH. It should be remembered that KME SE is the head of a global leading group in the production and marketing of semi-finished products in copper and its alloys focused on the Copper sector, following the transfer of control of the Special Products business of which it retains 45%.
• CULTI Milano SpA: company listed on the EGM market, increasingly geared towards personal well-being, in addition to the consolidation of its traditional business in the environmental fragrance segment;
• Intek Investimenti SpA: corporate vehicle in which the investment and private equity activities of the Company have been concentrated in the last few years;
• Ducati Energia SpA: a non-controlling equity investment (6.77% of the share capital through all special shares) active in a number of attractive business segments (condensers, industrial power factor correction, railway signalling, measurement tools, sustainable mobility, Intelligent Transportation Systems).
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KME Group SpA financial highlights

KME Group SpA's financial highlights as at 31 December 2022, compared to 31 December 2021, can be summarised as follows:

Condensed separate statement of financial position

(in thousands of Euro)	31 Dec 2022	31 Dec 2021
KME SE investment	58,410		578,300
KME Group Srl investment	480,000		-
Receivables from KME Group Srl	43,723		-
KME Germany Bet. GmbH investment	-		1,700
Other	2,528		1,546
Total KME	584,661	89.47%	581,546	90.43%
CULTI Milano	37,980	5.81%	28,904	4.49%
Ducati Energia	16,700	2.56%	16,700	2.60%
Intek Investimenti	12,694	1.94%	11,984	1.86%
Other investments	2,070	0.32%	1,995	0.31%
Other assets/liabilities	(660)	-0.10%	1,990	0.31%
Net investments	653,445	100.00%	643,119	100.00%
Outstanding bonds (*)	160,469		95,988
Net cash	(1,316)		(4,572)
Holding company net financial debt	159,153	24.36%	91,416	14.21%
Total shareholders' equity	494,292	75.64%	551,703	85.79%

Notes:

• Investments are expressed net of any financial receivable/payable transactions outstanding with the Company.
• It should be noted that the values of the equity investments held by the Company until 22 April 2022, based on the Company's
  qualification of investment entity, represented equity investments determined according to the fair value method; as a result of the change of status of "investment entity", the fair value method was replaced by the cost method with regard to controlling equity investments.

(*) Including accruing interest.

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Investments

The Net investments held by the Company amounted to Euro 653.4 million as at 31 December 2022 (Euro 643.1 million at the end of 2021), of which around 90% concentrated in KME SE.

Shareholders' Equity

The holding company's equity amounted to Euro 494.2 million, compared to Euro 551.7 million as at 31 December 2021; the most significant change is related to the effects of the Public Exchange Offers (Euro 64.7 million, including transaction costs).

Equity per share was Euro 1.57 (Euro 1.38 at the end of December 2021).

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