Seri Industrial S p A : The Board of Directors approves Results at 31 December 2022

MUNICATOTAMPA

PRESS RELEASE

SERI INDUSTRIAL S.p.A.

BOARD OF DIRECTORS APPROVES RESULTS AS OF DECEMBER 31, 2022

REVENUES EQUAL TO EURO 204,120 THOUSAND WITH AN INCREASE OF 15% COMPARED TO

DECEMBER 31, 2021

S. Potito Sannitico, 22 March 2023 - The Board of Directors of SERI Industrial S.p.A. (the "Company" and, together with its subsidiaries, the "Group") has examined and approved (i) the annual and consolidated financial statements, (ii) the consolidated non-financial statements (Sustainability Report), (iii) the report on remuneration policy and compensation paid and (iv) the report on corporate governance system and ownership structure.

In addition, the Board of Directors has voted to propose to the Shareholders' Meeting scheduled for May 4, 2023 to examine the above documents and approve (i) the annual financial statements as of December 31, 2022 allocating the Profit of the year of euro 5,323,251, for euro 266,163 to the legal reserve and euro 5,078,088 to retained earnings, and (ii) the report on the remuneration policy and compensation paid.

As follows the main highlights of the Group's consolidated financial statements as of December 31, 2022:

Consolidated Financial Statements Highlights

Economic and financial results

Euro / 000	31/12/2022	31/12/2021	Change	Change %
Revenues, income and internal works	204,120	177,120	27,000	15%
Gross Operating Income - EBITDA	17,732	20,114	(2,382)	(12%)
Adjusted Gross Operating Income - Adjusted EBITDA	17,281	20,502	(3,221)	(16%)
Depreciation and amortisation	21,821	20,995	826	4%
Net Operating Income (Loss) - EBIT	(4,089)	(881)	(3,208)	n.a.
Adjusted Net Operating Income (Loss) - Adjusted EBIT	(4,540)	38	(4,578)	n.a.
Profit (Loss)	(4,442)	(1,494)	(2,948)	n.a.
Adjusted Profit (Loss)		(3,371)	462	(3,833)	n.a.

Balance Sheet Data

Euro / 000	31/12/2022	31/12/2021	Change	Change %
Net invested capital	247,811	218,951	28,860	13%
Equity	143,522	120,934	22,588	19%
Net Financial Position	104,289	98,018	6,271	6%
Adjusted Net Financial Position	79,018	75,047	3,971	5%

Adjusted Investment Activity

17,839

15,814 2,025 13%

Innovation, health, safety and environment

Innovation, health, safety and environment	31/12/2022	31/12/2021	Change	Change %
Waste recovery in tonnes	16,046	14,772	1,274	9%
Waste recovery (%)	80%	89%
Total registered injuries	11	21	(10)	(48%)
Direct GHG emissions (Scope 1)	3,422	3,961	(539)	(14%)
Electricity consumption (GigaJoule)	202,843	221,622	(18,779)	(8%)

During 2022, it is highlighted a 15% growth in Revenues, income and internal works compared to 2021, due to both increased sales volumes in some business segments, and higher average prices.

Adjusted EBITDA decreased by 16%, following the severe and sudden shock to commodity markets caused by the war in Ukraine, with significant and unexpected increases, among others, in energy costs,.

In relation to raw materials (plastic and lead), contracts are indexed to their cost and the prices are adjusted with an average time lag of about 60 days. This mechanism has allowed to contain the effects on the profitability of the Batteries sector, while in the Plastic Material sector there is a reduction in the profitability, even if limited, for pipes and fittings product segment. During the last quarter of 2022 and the first months of 2023, a significant increase in the profitability of these products can be noted, also compared to the 2021 financial year.

The energy market shock, on the other hand, caught the reference market operators unprepared and the adjustment of prices required lengthy negotiations with the Group's customers, in a negative competitive context, considering the higher increase in the energy cost in Italy compared to other countries. Finally, during the year, a commercial agreement was defined for major customers to continue to apply, also in the future, an energy surcharge, based on the energy cost and indexed to the single national electricity price.

The incidence of the energy cost purchase on revenues from customers and other operating income (net of grants) is varied from 5,0% in 2021 to 7,0% in 2022 (+2%), for an overall value of euro 3,6 million.

At consolidated level, the Group has registered an Adjusted Loss of Euro 3,371 thousand after depreciation and amortisation of Euro 21,661 thousand, of which 11,254 thousand related to the investment made and on-going for the Teverola 1 and 2 projects.

Adjusted total financial indebtedness is equal to euro 79,018 thousand, slightly up from 2021 (+ Euro 3,971 thousand) with Cash and cash equivalents equal to euro 24,817 thousand as of 31 December 2022, increased by euro 5,317 thousand compared to 2021. On one hand, the result is mainly impacted by Warrant 2017-2022 exercise, and on the other hand by the increase of inventories (equal to 75,753 thousand in 2022) for euro 12,146 thousand.

Ongoing projects

During the last two months of 2022, the Group completed the start-up of the Teverola 1 lithium cell and battery production plant, which was delayed compared to management's forecasts due to the upgrading and improvement of production processes required for product innovation (battery with LFP active material in aqueous solution, fully recyclable and with production without the use of solvents and pollutant emissions). The plant is currently operating at a monthly capacity of approximately 30% of the theoretical production capacity (approximately 28 MWh/month) and is expected to gradually increase to the maximum installed capacity within the third quarter of the current year.

Management, as result of a strong market demand, will update the 2023-2026 business plan in the next months, taking into account the reduction of the expected capacity for 2023 and the higher average selling prices for lithium batteries, as of today +37,5% higher compared to prices expected in the current business plan (2022-2026).

With reference to the Gigafactory of Teverola 2, initial investments have been started up. The activities related to the choice of the new plant technology, identification of the supplier and technological partners, as well as the related supply agreements are in an advanced phase. The Ministry of Economic Development has communicated an additional integration of the grant for research and development investments up to 100% of the overall expenditure for the investment program approved by the European Commision. Supply contracts are under definition.

For the project with Unilever (P2P), Invitalia has formally started the preliminary assessment for the granting of subsidies and the plant design has been completed, and the demolition and dismantling of the site disused by Unilever is on going.

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Economic and financial results review

Consolidated economic trend

As follows the Group's Income Statement as of December 31, 2022 compared to the results registered in the previous year:

Euro / 000	31/12/2022	31/12/2021	Change	Change %
Revenues from contract with customers	175,452	157,704	17,748	11%
Other operating income		17,435	11,643	5,792	50%
Internal works		11,233	7,773	3,460	45%
Total revenues, income and internal works		204,120	177,120	27,000	15%
Operating costs		186,388	157,006	29,382	19%
Gross operating income - EBITDA		17,732	20,114	(2,382)	(12%)
Depreciation and amortisation		21,661	20,184	1,477	7%
Write-downs/write-backs		160	811	(651)	(80%)
Net Operating Income (loss) - EBIT		(4,089)	(881)	(3,208)	364%
Finance income (expense)		(5,853)	(3,823)	(2,030)	53%
Profit (Loss) before tax		(9,942)	(4,704)	(5,238)	111%
Income taxes		(5,500)	(3,210)	(2,290)	71%
Profit (Loss)		(4,442)	(1,494)	(2,948)	197%

Net operating income amounted to negative euro 4,089 thousand, after depreciation and amortization of euro 21,821 thousand. It should be noted that the amortization of the Batteries segment are related for euro 11,254 thousand to the investment made and on-going related to the Teverola 1 and 2 projects, of which euro 8,857 thousand for amortization of investments realized (Teverola 1 and 2) and euro 2,397 thousand for rights of use related to the lease of the Teverola 1 (euro 1,030 thousand) and Teverola 2 (euro 1,367 thousand) properties.

In relation to the increase in electricity costs recorded in 2022, in addition to what has been described above, there is a greater impact on operating costs estimated at approximately euro 8,819 thousand. The higher charges incurred due to the increase in the cost of energy have been partially offset by grants received during the year, amounting to euro 3,681 thousand, under the facilitation introduced by the Sostegni-ter Decree for energy-intensive companies.

The assessment of the Group's economic performance also takes into account certain Alternative Performance Measures (hereinafter also referred to as 'APMs') as required by the European Securities and Markets Authority (ESMA). The management believes that the MAPs allow a better analysis of the business performance, ensuring a clearer comparability of the results over time, isolating non-recurring events, to also make the reporting consistent with the forecast trends. These indicators should not be considered as a substitute for the conventional ones envisaged by IFRS. APMs are not required by IFRS and, although derived from the consolidated financial statements, are not subject to audit. Therefore, the reading of the APMs must be carried out together with the financial information of the Group as reported in the Consolidated Financial Statements.

In particular, the alternative performance indicators refer to the adjustment of the main balance sheet indicators from non-recurring and/or non-repetitive items, the so-called"special item" 1.

1 Income components are classified among the special items when: (i) they are related to events or non-repetitive operations, or from operations that are not repeated frequently in the Group's recurring management; (ii) they derive from operations that are not representative of the normal characteristic activity of the Group, such as in the case of extraordinary restructuring charges, environmental charges, charges related to the disposal and valuation of an asset, charges related to extraordinary operations, even if they have occurred in previous years or are likely to occur in subsequent years, charges related to the start-up of new plants, etc.; (iii) any capital gains or losses, write-downs or revaluations of equity investments and/or assets, value adjustments/reversals and amortisations related to extraordinary operations.

As follows a description of the main alternative performance measures:

-EBITDA (or Gross Operating Income): represents an indicator of operating performance and is calculated by adding to the Operating Result to the Amortisation, Depreciation and Write-downs/Write- backs;

-Adjusted EBITDA (or Adjusted Gross Operating Income): represents an indicator of recurring operating performance and is calculated by adding up EBITDA and special items, i.e. non-recurring or non- repetitive operating revenues and costs;

-Adjusted Net Operating Result (or Adjusted EBIT): it is calculated by adding up the Operating Result and the special items, i.e. revenues, operating costs, Amortisation, Depreciation and non-recurring or non-repetitiveWrite-downs/write-backs;

-Adjusted Profit (Loss): it is calculated by adding the special items to Profit (Loss);

-Total financial indebtedness or Net Financial Position: represents an indicator of the financial structure and is calculated in accordance with the provisions of guideline no. 39 issued on 4 March 2021, applicable from 5 May 2021 and in line with the attention call no. 5/21 issued by Consob on 29 April 2021;

-Adjusted total financial indebtedness or Adjusted Net Financial Position: it is calculated by deducting from the Total financial indebtedness (or Net Financial Position) the financial debt relating to the application of the IFRS 16 accounting standard;

-Cash flow from operating activities: it is calculated by adding to EBITDA changes in inventories, trade receivables, trade payables and other current assets/liabilities.

- Adjusted investment activities: it is calculated by deducting from the investment activity the increases relating to the rights of use recognised in accordance with IFRS 16.

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As follows the reported and adjusted economic situation of the Group as of December 31, 2022:

Profit and loss		31/12/2022		Special		31/12/2022		31/12/2021	Special	31/12/2021
		items		Adjusted		items	Adjusted
Revenues from contract with		175.452				175.452		157.704		157.704
customers
Other operating income		17.435		(1.610)		15.825		11.643	(2.105)	9.538
Internal works		11.233				11.233		7.773		7.773
Total Revenues		204.120		(1.610)		202.510		177.120	(2.105)	175.015
Purchase of materials		121.652		(22)		121.630		102.575	(118)	102.457
Change in inventories		(14.692)				(14.692)		(11.059)		(11.059)
Services expense		47.202		(284)		46.918		33.353	(1.056)	32.297
Other operating costs		2.975		(854)		2.121		3.232	(1.009)	2.223
Personnel costs		29.251				29.251		28.905	(310)	28.595
Operating costs		186.388		(1.159)		185.229		157.006	(2.493)	154.513
Gross operating Income - EBITDA		17.732		(451)		17.281		20.114	388	20.502
Depreciation and amortisation		21.661				21.661		20.184	0	20.184
Write-downs/write-backs		160				160		811	(531)	280
Net Operating Income (Loss) -		(4.089)		(451)		(4.540)		(881)	919	38
EBIT
Finance income		425				425		753	0	753
Finance expense		6.277				6.277		4.580	0	4.580
Profit (Loss) from equity-		(1)				(1)		4	0	4
accounted investments
Profit (Loss) before tax		(9.942)		(451)		(10.393)		(4.704)	919	(3.785)
Income taxes		(5.500)		(1.391)		(6.891)		(3.210)	(1.277)	(4.487)
Theoretical tax effect		0		(131)		(131)		0	240	240
Profit (Loss)		(4.442)		1.071		(3.371)		(1.494)	1.956	462

The impact of the special items on Profit (Loss) before taxes is equal to euro 451 thousand, due to non-recurring income of euro 1,610 thousand and non-recurring operating costs euro 1,159 thousand.

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Consolidated balance sheet and financial position

Euro / 000		31/12/2022		31/12/2021	Change	Change %
Net fixed assets:
Property, plant and equipment, intangible		118,687		114,421	4,266	4%
assets and rights of use
Goodwill		55,042		55,042	0	0%
Equity-accounted investments		538		554	(16)	(3%)
Other non-current assets and liabilities		(22,797)		(25,857)	3,060	(12%)
Total net fixed assets		151,470		144,160	7,310	5%
Net working capital
Trade receivables		32,270		37,015	(4,745)	(13%)
Inventories		75,753		63,606	12,147	19%
Trade payables		(46,520)		(47,930)	1,410	(3%)
Other current assets and liabilities		15,387		9,280	6,107	66%
Net working capital		76,890		61,971	14,919	24%
Gross invested capital		228,360		206,131	22,229	11%
Other provisions:
Provisions for employee benefits		(4,235)		(4,676)	441	(9%)
Provisions for risks and charges		(823)		(1,261)	438	(35%)
Provisions for net deferred taxes		24,509		18,757	5,752	31%
Total provisions		19,451		12,820	6,631	52%
Net Invested Capital		247,811		218,951	28,860	13%
Equity		(143,522)		(120,934)	(22,588)	19%
Net Financial Position		(104,289)		(98,017)	(6,272)	6%
Coverage		(247,811)		(218,951)	(28,860)	13%

The Net Invested Capital at December 31, 2022 is equal to euro 247,811 thousand and it is covered by equity of euro 143,522 thousand and Net Financial Position of euro 104,289 thousand.

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