IRCE

Interim / Quarterly Report • Sep 13, 2023

HALF-YEARLY FINANCIAL REPORT AS OF 30 JUNE 2023

TABLE OF CONTENTS

HALF-YEARLY FINANCIAL REPORT AS OF 30 JUNE 2023

Corporate Bodies

Interim report on operations

Condensed consolidated half-yearly financial statements as of 30 June 2023

Consolidated Statement of Financial Position Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the condensed consolidated half-yearly financial statements

Certification pursuant to Article 154-bis, paragraph 5, of Italian Legislative Decree no. 58 of 24 February 1998

Report of the independent auditors

CORPORATE BODIES

BOARD OF DIRECTORS

CHAIRMAN	MR	FILIPPO CASADIO
EXECUTIVE DIRECTOR	MR	FRANCESCO GANDOLFI COLLEONI
NON-EXECUTIVE DIRECTOR	MR	GIANFRANCO SEPRIANO
NON-EXECUTIVE DIRECTOR	MR	ORFEO DALLAGO
NON-EXECUTIVE DIRECTOR	MS	FRANCESCA PISCHEDDA
INDEPENDENT DIRECTOR	MS	GIGLIOLA DI CHIARA
INDEPENDENT DIRECTOR	MS	CLAUDIA PERI

BOARD OF STATUTORY AUDITORS

CHAIRMAN	MS	DONATELLA VITANZA
STANDING STATUTORY AUDITOR	MR	FABRIZIO ZAPPI
STANDING STATUTORY AUDITOR	MR	GIUSEPPE DI ROCCO
SUBSTITUTE STATUTORY AUDITOR	MR	FEDERICO POLINI
SUBSTITUTE STATUTORY AUDITOR	MS	DEBORA FREZZINI

INDEPENDENT AUDITORS

DELOITTE & TOUCHE SPA

CONTROL AND RISKS COMMITTEE

MS GIGLIOLA DI CHIARA MR GIANFRANCO SEPRIANO MS CLAUDIA PERI

REMUNERATION COMMITTEE

MS GIGLIOLA DI CHIARA MR GIANFRANCO SEPRIANO MS CLAUDIA PERI

RELATED PARTIES COMMITTEE

MS FRANCESCA PISCHEDDA MS GIGLIOLA DI CHIARA MS CLAUDIA PERI

FINANCIAL REPORTING OFFICER

MS ELENA CASADIO

INTERNAL AUDITOR

MR FABRIZIO BIANCHIMANI

SUPERVISORY BODY

MR FRANCESCO BASSI MR GABRIELE FANTI MR GIANLUCA PIFFANELLI

INTERIM REPORT ON OPERATIONS AS OF 30 JUNE 2023

The consolidated financial statements of IRCE Group (hereinafter also the "Group") for the first half year of 2023 closed with a profit of € 4.94 million

Consolidated turnover was € 218.96 million, down by 16.1% compared to € 261.00 million in the same period of 2022, a reduction due to lower volumes and to the drop in the copper price (LME average price in Euro, in the first half year of 2023, was 9,7% lower than in the same period of 2022).

In this first half year, we are witnessing a weak market demand in both business units. In the winding wires sector, sales volumes are down, with a worsening in the second quarter compared to the first. In the cables sector, sales volumes also decreased, if compared to the first half of 2022, but there was an improvement in the second quarter, thanks to the acquisition of some important public contracts relating to investments in infrastructure.

Trends of the EBITDA and EBIT are positively affected not only by the lower production costs but also by the contribution of the recent investments in high-efficiency plant and machinery.

In this context, turnover without metal¹ increased by 0.8%; the winding wires sector raised by 3.6% while the cables sector recorded a decrease by 6.6%.

Consolidated turnover without metal (€/million)	2023 st half year 1		2022 st half year 1		Change
	Value	%	Value	%	%
Winding wires	39.23	75.0%	37.87	73.0%	3.6%
Cables	13.07	25.0%	13.99	27.0%	-6.6%
Total	52.30	100.0%	51.86	100.0%	0.8%

The following table shows the changes in results compared to the first half of 2022, including adjusted EBITDA and EBIT.

Consolidated income statement data (€/million)	st half year 2023 1	st half year 2022 1	Change
Turnover2	218.96	261.00	(42.04)
EBITDA3	11.39	8.50	2.89
EBIT	7.60	4.78	2.82
Result before taxes	6.51	4.52	1.99
Result for the period	4.94	4.19	0.75
Adjusted EBITDA4	11.32	8.93	2.39
Adjusted EBIT4	7.53	5.21	2.32

¹ Turnover without metal corresponds to overall turnover after deducting the metal component.

² The item "Turnover" represents the "Revenues" reported in the income statement.

³ EBITDA is a performance indicator the Group's Management uses to assess the operating performance of the company and is not an IFRS measure; IRCE S.p.A. calculates it by adding depreciation/amortisation, provisions and write-downs to EBIT.

⁴Adjusted EBITDA and EBIT are calculated as the sum of EBITDA and EBIT and the gains/losses on copper and electricity derivatives transactions if realized (€ -0.07 million in the first half year of 2023 and € +0,43 million in the first half year 2022). These are indicators the Group's Management uses to monitor and assess its own operating performance and are not IFRS measures. Given that the composition of these measures is not regulated by the reference accounting standards, the criterion used by the Group may not be consistent with that adopted by others and is therefore not comparable.

Half-Yearly Financial Report as of 30 June 2023

Consolidated statement of financial position data (€/million)	As of 30.06.2023	As of 31.12.2022	Change
Net capital employed5	216.86	204.84	12.02
Shareholders' equity	150.68	144.79	5.89
6 Net financial position5	66.18	60.05	6.13

As at June 30, 2023 net financial debt was € 66.18 million, up from € 60.05 million as at December 31, 2022, due to the increase in working capital.

Investments

The Group's investments, in the first half of 2023, were € 5.11 million and they mainly concerned the parent company IRCE S.p.A and the English subsidiary FD Sims Ltd.

Main Risks and Uncertainties

The Group's main risks and uncertainties, as well as risk management policies, are detailed below:

Market risk

The Group is strongly focused on the European market; the risk of contractions in demand as well as of worsening of the competitive scenario may impact the results. To deal with these risks, the Group's medium-long term strategy provides for a geographic diversification in non-European countries.

Risk associated with changes in financial and economic variables

Exchange rate risk

The Group primarily uses the Euro as the reference currency for its sales transactions. It is subject to exchange rate risks in relation to its copper purchases, which it partly carries out in dollars; it hedges such transactions using forward contracts. It is also subject to foreign currency translation risks for its investments in Brazil, the UK, India, Switzerland, Poland, China and Czech Republic.

As for the foreign currency translation risk on the subsidiaries, the Group believes this risk mainly concerns the investment in Brazil due to the high volatility of the Real, which affects the carrying amount of the investment. As of June 30, 2023, the exchange rate of the Brazilian currency against the Euro appreciated by some 7%, resulting in an important positive effect on the translation reserve.

Interest rate risk

In the past the Group financed itself in the medium to long term by borrowing mainly at floating interest rate (linked to Euribor) thus exposing itself to the risk deriving from the rise in rates. The Group chose not to hedge given a relatively short average loan term (less than 3 years) and low interest rates. For the future, the Group will consider whether to implement hedges at the time of the conclusion of new financing on the basis of the economic conditions offered by the market and the expectations of interest rate developments. Short-term credit lines are always at floating rates.

Risks related to fluctuation in copper price

The main raw material used by the Group is copper. The changes in its price can affect margins as well as financial requirements. In order to mitigate the effects on margins of changes in the price of copper, a hedging policy is implemented, with forward contracts on the positions generated by the operating activity.

However, if copper prices fall, there is still a risk to write-down the final inventories at the expected realisable value, if lower than the weighted average cost for the period, with a negative impact on the result.

The average price of copper in the first half of 2023 on the London Metal Exchange was 8.05 Euro/Kg, down some 9.75% compared to the same figure of 30 June 2022, equal to 8.92 Euro/Kg, and some 3.48% Euro/Kg

⁵ Net invested capital is the sum of net working capital, fixed assets, other receivables net of other payables, provisions for risks and charges and provisions for employee benefits.

⁶Net financial position is measured as the sum of short-term and long-term financial liabilities minus cash and current financial assets (see note n.17 of consolidated financial statements). It should be noted that the method for measuring net financial position comply with the one defined by the Consob's notice no. 5/21 attention recall of 29 April 2021, which takes over the ESMA guideline of 4 March 2021.

compared to the yearly average price of 31 December 2022, equal to 8.34 €/kg; the spot price as at 30 June 2023 was equal to 7.80 Euro/Kg, in line with the one as at 31 December 2022, equal to 7.86 Euro/Kg.

Risks associated with the procurement of raw materials at sustainable prices Uncertainty on the trend of cost of many raw materials, in particular plastics, insulation materials, electricity and gas, as well as the extent of the increases could make their absorption or their timely transfer to sales prices more complex.

Financial risks

These are risks associated with financial resources.

Credit risk

There are no significant concentrations of credit risk. The Group monitors this risk using adequate assessment and awarding procedures with respect to each credit position. In addition, considering that the Group's main customers are established, industry-leading firms, there are no particular risks that could cause days sales outstanding or credit quality to deteriorate, including those related to the Russian-Ukrainian conflict. Starting from 2023, the Group has also selectively taken out insurance coverage in order to limit the risk of insolvency.

Liquidity risk

The financial position and the available credit lines together with the high standing of the Group, which allows the acquisition of new loans at competitive prices in a short time, are such as to exclude difficulties in fulfilling the obligations associated with the liabilities.

Climate Change Risks

The Group assessed the climate change risks relevant to its activities and business. In particular, on the one hand it is expected that the sector to which it belongs can be positively impacted by an increase in demand both in specific fields such as home automation, industrial automation and automotive and, more generally, for the need to strengthen electricity networks, on the other hand, the strong demand for "green" raw materials (in particular, copper cathode and electricity) could lead to an increase in prices, making its timely and complete transfer to end customers potentially complex. At present, these scenarios are constantly monitored by the Group, which currently foresees in climate change greater opportunities than risks.

With reference to the flood that occurred in the second quarter of 2023, which mainly affected some provinces of Emilia Romagna, it is hereby stated that Irce SpA and in particular the Imola plant did not suffer damage or interruptions in production activities.

Risk associated with the Russian-Ukrainian conflict

The protracted war in Ukraine continues to entail possible downside risks in the Group's volumes and margins, although they are mitigated compared to the previous year.

Significant increases in the cost of electricity, the price of which is currently closely linked to the one of natural gas, make uncertainties about the Group's ability to transfer its costs completely and promptly to the market;

furthermore, temporary or permanent interruptions of natural gas supplies from Russia entail the risk of electricity quotas and, consequently, the need for the Group to reduce production volumes.

It should be noted, however, that Irce Group has so far managed to contain the negative economic effects on financial statements related to these risks thanks to both production diversification and extraordinary contributions paid by the Italian Government to energy-intensive companies.

Cyber Security risks

The spread of technologies allowing to transfer and share sensitive information virtually gives rise to computer vulnerabilities that could affect the business and compromise the business continuity of the Group.

Given the increasing frequency and spread of cyber-attacks in recent times, IRCE identified the potential issues inside and outside the company, and then implemented a Cyber Security plan as well as a recovery procedure.

In the current context, given the ongoing Russian-Ukrainian conflict, the Group has also intensified monitoring and

defensive activities in relation to possible malware attacks, adopting appropriate measures to mitigate risks.

Intra-Group Transactions and Transactions with Related Parties

The transactions between the Parent Company and the subsidiaries are of commercial and financial nature. With regard to transactions with related parties, including intra-group transactions, it should be noted that they can be classified neither as atypical nor unusual, as they are part of the normal course of business of the Group's companies and have been carried out at arm's length.

Pursuant to paragraph 8 of Article 5 of the "Related Party Transactions Regulation" adopted by Consob with resolution no. 17221 of 12 March 2010, as subsequently integrated and last amended by resolution no. 21624 of 10 December 2020, it should be noted that during the first half of 2023 the Company has not carried out "major transactions".

Outlook

The negative economic situation that is affecting the main world economies makes the recovery of market demand uncertain and difficult to forecast. To date, sales volumes are at low levels; for winding wires there are no signs of a trend reversal within the end of the year, except for products for generation and transport of energy. In the cables sector, on the other hand, the current order backlog should allow for a recovery in volumes in the coming months. The group continues its strategy of focusing on more highly specialized sectors and products with expected significant growth, including the automotive world.

In this context and in the absence of penalizing trends in the copper price, we expect a result by the end of the year in line with that of the previous year.

Imola, 13 September 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		2023	2022
(Thousand of Euro)	Notes	30 June	31 December
ASSETS
Non current assets
Goodwill and other intangible assets	4	94	49
Property, plant and machinery	5	35,475	37,961
Equipments and other tangible assets	5	1,371	1,374
Assets under constructions and advances	5	16,868	12,278
Non current financial assets		5	5
Deferred tax assets	6	2,685	2,357
Other non current non financial assets	7	1,753	2,813
NON CURRENT ASSETS		58,251	56,837
Current assets
Inventories	8	118,709	117,988
Trade receivables	9	80,056	61,498
Tax receivables	10	1,863	2,676
(of which related parties)		1,570	2,175
Other current assets	11	3,041	5,659
Current financial assets	12	210	490
Cash and cash equivalent		9,559	5,608
CURRENT ASSETS		213,438	193,919
TOTAL ASSETS		271,689	250,756

		2023	2022
(Thousand of Euro)	Notes	30 June	31 December
EQUITY AND LIABILITIES
Shareholders' equity
Share capital		13,792	13,802
Reserves		132,263	122,084
Profit (loss) for the period		4,944	9,224
Shareholders' equity attributable to shareholders of Parent company		150,999	145,110
Shareholders equity attributable to Minority interests		(324)	(325)
TOTAL SHAREHOLDERS' EQUITY	13	150,675	144,785
Non current liabilities
Non current financial liabilities	14	16,681	19,777
Deferred tax liabilities	6	295	338
Non current provisions for risks and charges	15	893	280
Non current provisions for post employment obligation	16	3,459	3,449
NON CURRENT LIABILITIES		21,328	23,844
Current liabilities
Current financial liabilities	17	59,263	46,366
Trade payables	18	31,269	27,240
Current tax payables	19	240	555
Social security contributions		2,059	2,001
Other current liabilities	20	6,613	5,708
Current provisions for risks and charges	15	242	257
CURRENT LIABILITIES		99,686	82,127
SHAREHOLDERS' EQUITY AND LIABILITIES		271,689	250,756

CONSOLIDATED INCOME STATEMENT

		2023	2022
(Thousand of Euro)	Notes	30 June	30 June
Sales revenues	21	218,956	261,000
Other revenues and income	22	663	1,572
TOTALE REVENUES AND INCOME		219,619	262,572
Raw materials and consumables	23	(181,049)	(225,112)
Change in inventories of work in progress and finished goods		8,817	12,648
Cost for services	24	(19,994)	(24,900)
Personnel costs	25	(15,456)	(15,930)
Amortization /depreciation/write off tangible and intangible assets	26	(3,545)	(3,620)
Provision and write downs	27	(243)	(95)
Other operating costs		(552)	(778)
EBIT		7,597	4,785
Financial income / (charges)	28	(1,087)	(266)
RESULT BEFORE TAX		6,510	4,519
Income taxes	29	(1,565)	(347)
NET RESULT FOR THE PERIOD		4,945	4,172
Net result attributable to non-controlling interests		1	(20)
Net result attributable to shareholders of the Parent Company		4,944	4,192

Earnings / (Losses) per shares

- basic EPS for the period attributable to shareholders of the parent company	30	0.1864	0.1579
- diluted EPS for the period attributable to shareholders of the parent company	30	0.1864	0.1579

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Thousand of Euro)	Notes	2023 30 June	2022 30 June
Net result for the period		4,945	4,172
Translation difference on financial statements of foreign companies	13	2,676	5,885
Total items that will be reclassified to net result		2,676	5,885
Actuarial gain / (losses) IAS 19	16	(123)	849
Tax effect	6	23	(187)
Total IAS 19 reserve variance	13	(100)	662
Total items that will not be reclassified to net result		(100)	662
Total comprehensive income for the period		7,521	10,719
Attributable to shareholders of Parent company		7,520	10,739
Attributable to Minority interest		1	(20)

			Other reserves			Retained earnings			Equity	Equity Total attributable to minority equity interest
Thousand of Euro	Share capital	Share premium reserve	Other reserves	Legal reserve	Ias 19 reserve	Retained earnings	Translation reserve	Result for the period	attributable to parent company shareholders'		shareholders'
Opening balance previous year	13,802	40,474	45,923	2,925	(1,183)	54,617	(33,667)	9,376	132,267	(305)	131,962
Dividends	-	-	-	-	-	(1,327)	-	-	(1,327)	-	(1,327)
Sell / (purchase) own shares	-	(3)	-	-	-	-	-	-	(3)	-	(3)
Allocation of previous year net result	-	-	-	-	-	9,376	-	(9,376)	-	-	-
Other comprehensive income for the period	-	-	-	-	662	-	5,885	-	6,547	-	6,547
Net result for the period	-	-	-	-	-	-	-	4,192	4,192	(20)	4,172
Total comprehensive income for the period	-	-	-	-	662	-	5,885	4,192	10,739	(20)	10,719
Closing balance previous period	13,802	40,471	45,923	2,925	(521)	62,666	(27,782)	4,192	141,676	(325)	141,351
Opening balance current year	13,802	40,471	45,923	2,925	(424)	62,672	(29,483)	9,224	145,110	(325)	144,785
Dividends	-	-	-	-	-	(1,592)	-	-	(1,592)	-	(1,592)
Sell / (purchase) own shares	(10)	(29)	-	-	-	-	-	-	(39)	-	(39)
Allocation of previous year net result	-	-	-	-	-	9,224	-	(9,224)	-	-	-
Other comprehensive income for the period	-	-	-	-	(100)	-	2,676	-	2,576	-	2,576
Net result for the period	-	-	-	-	-	-	-	4,944	4,944	1	4,945
Total comprehensive income for the period	-	-	-	-	(100)	-	2,676	4,944	7,519	1	7,521
Closing balance current period	13,792	40,442	45,923	2,925	(524)	70,304	(26,807)	4,944	150,999	(324)	150,675

CONSOLIDATED STATEMENT OF CASH FLOW

		2023	2022
(Thousand of Euro)	Notes	30 June	30 June
OPERATING ACTIVITIES
Result of the period (Group and Minorities)		4,945	4,172
Adjustments for:
Depreciation / Amortization	26	3,545	3,620
Net change in deferred tax (assets) / liabilities	29	(336)	(228)
Capital (gains) / losses from disposal of fixed assets		(20)	(686)
Losses / (gains) on unrealised exchange rate differences	28	(287)	(328)
Provisions for risks	27	633	-
Income taxes	30	1,901	575
Financial (income) / expenses	29	1,133	(320)
Operating result before changes in working capital		11,514	6,805
Income taxes paid		(1,406)	(1,897)
Financial charges paid	28	(2,412)	(1,669)
Financial income collected	28	1,278	1,989
Decrease / (Increase) in inventories		650	(9,663)
Change in trade receivables		(17,308)	(24,391)
Change in trade payables		3,758	13,119
Net changes in current other assets and liabilities		3,064	447
Net changes in current other assets and liabilities - related parties		605	(226)
Net changes in non current other assets and liabilities		1,069	(349)
CASH FLOW FROM OPERATING ACTIVITIES		812	(15,835)
INVESTING ACTIVITIES
Investments in intangible assets	4	(76)	(13)
Investments in tangible assets	5	(5,036)	(5,039)
Investments in subsidiaries, associates, other entities		-	(50)
Disposals of tangible and intangible assets		28	701
CASH FLOW FROM INVESTING ACTIVITIES		(5,084)	(4,401)
FINANCING ACTIVITIES
Repayments of loans		(3,132)	(7,497)
Obtainment of loans		-	7,000
Net changes of current financial liabilities		12,832	16,918
Net changes of current financial assets		(27)	478
Other effects on shareholders' equity		-	-
Dividends paid to shareholders	13	(1,592)	(1,327)
Sell/(purchase) of own shares	13	(38)	(3)
CASH FLOW FROM FINANCING ACTIVITIES		8,043	15,569
NET CASH FLOW FROM THE PERIOD		3,771	(4,667)
CASH BALANCE AT THE BEGINNING OF THE PERIOD	17	5,608	10,678
Exchange rate differences		180	880
NET CASH FLOW FROM THE PERIOD		3,771	(4,667)
CASH BALANCE AT THE END OF THE PERIOD	17	9,559	6,891

GENERAL INFORMATION

The Half-Yearly Financial Report of IRCE S.p.A and its subsidiaries (hereafter referred to as "IRCE Group" or "Group") as of 30 June 2023 was approved by the Board of Directors of IRCE SpA (hereafter also referred to as the "Company" or the "Parent Company") on 13 September 2023.

IRCE Group owns 9 manufacturing plants and is one of the major players in the European winding wire industry, as well as in the Italian electrical cable sector.

Italian plants are located in the towns of Imola (Bologna), Guglionesi (Campobasso) and Umbertide (Perugia) while foreign operations are carried out by Smit Draad Nijmegen BV in Nijmegen (NL), FD Sims Ltd in Blackburn (UK), IRCE Ltda in Joinville (SC – Brazil), Stable Magnet Wire P.Ltd in Kochi (Kerala – India) and Isodra GmbH in Kierspe (D). In addition, the Group also owns a non-operational plant in Kochi (Kerala – India), headquarter of Fine Wire P. Ltd..

The distribution network consists of agents and the following commercial subsidiaries: Isomet AG in Switzerland, DMG GmbH in Germany, Isolveco 2 Srl in Italy, Irce S.L. in Spain, and IRCE SP.ZO.O in Poland.

Finally, have been recently established Irce Electromagnetic Wire (Jiangsu) Co. Ltd, with the headquarter in Haian (China) and Irce S.r.o. with the headquarter in Ostrawa (Rep. Ceca), and they are not currently operating.

GENERAL DRAFTING CRITERIA

The Half-Yearly Financial Report has been prepared in accordance with IAS 34 "Interim Financial Reporting", pursuant to the provisions for the condensed interim financial statements, and based on Article 154 ter of the Consolidated Financial Act. The Half-Yearly Financial Report does not therefore include all the information required for preparing the annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2022.

The financial statements have been prepared in accordance with the provisions of IAS 1; in particular:

• the statement of financial position was drafted by presenting current and non-current assets, and current and noncurrent liabilities, as separate classifications;
• the income statement was drafted by classifying the items by nature;
• the statement of cash flows was drafted, in accordance with IAS 7, by classifying cash flows during the period into operating, investing and financing activities. Cash flows from operating activities were presented using the indirect method.

The Directors have assessed the applicability of the going concern assumption in the preparation of the Half-Yearly Financial Report, concluding that this assumption is appropriate as there is no doubt about the company's ability to continue as a going concern.

ACCOUNTING PRINCIPLES

The accounting principles and criteria adopted for the preparation of the Half-Yearly Financial Report as at 30 June 2023 are consistent with those used for the preparation of the financial statements as at 31 December 2022 to which reference should be made for further information, with the exception of the new standards which have come into force, and which have been endorsed and became effective from 1 January 2023, subsequently summarized.

For a better representation, as highlighted in the table below, starting from this half-yearly financial report, the items "Financial accrued liabilities and financial deferred income" and "Advances from customers", shown at 31 December 2022 under "Other current liabilities", have been reclassified respectively under "Current payables due to banks" and under "Trade receivables".

Items reclassified in comparative balances as at 31.12.2022	€/000	Previous classification	Present classification
Financial accrued liabilities and financial deferred income	142	Other current liabilities	Current payables due to banks
Advances from customers	90	Other current liabilities	Trade payables

ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED FROM 1 JANUARY 2023

Accounting standard, Amendment, Interpretation	Issued date	Effective date	Endorsement date
IFRS 17 Insurance Contracts including Amendments to IFRS 17	18/05/2017 / 25/06/2020	01/01/2023	19/11/2021
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates	12/02/2021	01/01/2023	02/03/2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current	12/02/2021	01/01/2023	02/03/2022
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction	07/05/2021	01/01/2023	11/08/2022
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information	09/12/2021	01/01/2023	08/09/2022

The adoption of these amendments did not have any impact on the Group consolidated financial statements.

ACCOUNTING STANDARDS, AMENDMENTS AND IFRS INTERPRETATIONS NOT YET ENDORSED BY THE EUROPEAN UNION AS OF 30 JUNE 2023

Accounting standard / Amendment / IFRS Interpretation	Issued date	Effective date	Expected endorsement date
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements	25/05/2023	01/01/2024	Indeterminate
Amendments to IAS 12 Income taxes: International Tax Reform – Pillar Two Model Rules	23/05/2023	31/12/2023	Indeterminate
Amendments to IAS 1 Presentation of Financial Statements: • Classification of Liabilities as Current or Non-current Date; • Classification of Liabilities as Current or Non-current - Deferral of Effective Date; and • Non-current Liabilities with Covenants	23/01/2020 15/07/2020 31/10/2022	01/01/2024	Indeterminate
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback	22/09/2022	01/01/2024	Indeterminate

The Directors do not expect a significant impact on the Group's consolidated annual financial statements from the adoption of said Accounting standards, Amendments and IFRS Interpretations.

USE OF ESTIMATES

The drafting of the condensed consolidated half-yearly financial statements pursuant to IFRSs requires to make estimates and assumptions which affect the amounts of the assets and liabilities recognised in the financial statements as well as the disclosure related to contingent assets and liabilities at the reporting date. The final results could differ from these estimates. Estimates are mainly used to assess the recoverability of fixed assets, recognise the provisions for bad debt, realisable value, inventory obsolescence, depreciation and amortisation, impairment of assets, employee benefits, and taxes. The estimates and assumptions are reviewed periodically and the effects of each change are reflected in the income statement.

SCOPE OF CONSOLIDATION

The following table shows the list of companies included in the scope of consolidation as of 30 June 2023:

Company	% of investment	Registered	Currency	Share capital	Consolidation
		office
Isomet AG	100%	Switzerland	CHF	1,000,000	line by line
Smit Draad Nijmegen BV	100%	Netherlands	EUR	1,165,761	line by line
FD Sims Ltd	100%	UK	GBP	15,000,000	line by line
Isolveco Srl	75%	Italy	EUR	46,440	line by line
DMG GmbH	100%	Germany	EUR	255,646	line by line
Irce S.L.	100%	Spain	EUR	150,000	line by line
Irce Ltda	100%	Brazil	BRL	157,894,223	line by line
ISODRA GmbH	100%	Germany	EUR	25,000	line by line
Stable Magnet Wire P.Ltd.	100%	India	INR	335,516,340	line by line
Irce SP.ZO.O	100%	Poland	PLN	200,000	line by line
Isolveco 2 Srl	100%	Italy	EUR	10,000	line by line
Irce Electromagnetic Wire	100%	China	CNY	16,684,085	line by line
(Jiangsu) Co. Ltd
Irce s.r.o	100%	Czech Republic	CZK	5,700,000	line by line
Fine Wire P. Ltd	100%	India	INR	820,410	line by line

EXCHANGE RATE

The exchange rates used to translate in Euro the figures of the subsidiaries as at 30 June 2023 as well as comparative periods were as follows:

	Current period		Previous year		Previous period
Currency	Average	Spot	Average	Spot	Average	Spot
GBP	0.8766	0.8582	0.8525	0.8872	0.8421	0.8581
CHF	0.9856	0.9781	1.0051	0.9854	1.0320	0.9951
BRL	5.4834	5.2693	5.4498	5.6362	5.5711	5.3833
INR	88.8879	89.0507	82.7205	88.3048	83.3112	82.1088
CNY	7.4895	7.8901	7.0805	7.3650	7.0837	6.9657
PLN	4.6264	4.4384	4.6849	4.6843	4.6329	4.6869
CZK	23.6801	23.7420	24.5603	24.1160	24.6364	24.7390

1. CLIMATE CHANGE - UPDATES

Paragraph 2 of the consolidated financial statements as at 31 December 2022 summarizes the main aspects that emerged from the internal assessment carried out at year end by the management of the Irce Group in relation to the possible impacts that climate change could have on its business and activities.

With respect to this analysis, the updates that took place in 2023 are summarized below.

The Group is still continuing to determine its "Carbon Footprint" and the activities to be implemented to reduce CO2 emissions. In this context, it should be noted that:

• investments in new machinery and plants aimed at saving and improving energy efficiency and reducing CO2 emissions continued also in the first half of 2023, also obtaining energy efficiency certificates (TEE);
• during July 2023 the photovoltaic system for self-consumption came into operation at the Imola plant;
• the incidence of purchases of copper from primary production (mining extraction) has further decreased in favour of that from secondary production (recycled metal).

With regard to the EV (Electric Vehicle) sector, the Irce Group continues to develop winding conductors for new generation electric motors as well as the acquiring of new orders, with the aim of becoming one of the main European suppliers in the sector.

Finally, during the semester quantitative and qualitative information was also included in the CDP (Carbon Disclosure Project) platform in order to acquire a rating on its environmental sustainability.

2. SEGMENT REPORTING

IFRS 8 defines an operating segment as follows. An operating segment is a component of an entity: a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity);

b) whose operating results are reviewed regularly by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and c) for which discrete financial information is available.

In accordance with IFRS 8, the companies of the IRCE Group were grouped in the following 3 operating segments, considering their similar economic characteristics:

• Italy: Irce SpA, Isolveco 2 Srl and Isolveco Srl in liquidation;
• EU: Smit Draad Nijemegen BV, DMG Gmbh, Irce S.L., Isodra Gmbh and IRCE SP. ZO.O., Irce S.r.o.
• Non-EU: FD Sims Ltd, Irce Ltda, Isomet AG, Stable Magnet Wire Ltda, Fine Wire P. Lyd, Irce Electromagnetic Wire (Jiangsu)

Below is the income statement broken down by operating segments of the Irce Group, compared with the period 30 June 2022, as well as the balance sheet balances of intangible and tangible fixed assets, compared with 31 December 2022:

(Thousand of Euro)	Italy	UE	Extra UE	Consolidation entries	Irce Group
Current period
Sales revenues	143,039	23,527	63,540	(11,149)	218,956
Ebitda	7,680	793	2,855	58	11,385
Ebit	5,805	159	1,575	58	7,597
Financial income/(charge)	-	-	-	-	(1,087)
Income taxes	-	-	-	-	(1,565)
Net result for the period	-	-	-	-	4,945
Intangible assets	71	-	23	-	94
Tangible assets	32,503	6,354	14,858	-	53,714
Previous period
Sales revenues	179,240	20,992	68,548	(7,780)	261,000
Ebitda	4,495	(115)	4,269	(150)	8,498
Ebit	2,653	(483)	2,764	(150)	4,784
Financial income/(charge)	-	-	-	-	(266)
Income taxes	-	-	-	-	(347)
Net result for the period	-	-	-	-	4,171
Intangible assets	22	-	27	-	49
Tangible assets	30,612	6,452	14,549	-	51,613

3. DERIVATE INSTRUMENTS

The Group uses the following types of derivative instruments:

Derivative instruments related to metal forward purchase and sale transactions with maturity after 30 June 2023. These transactions do not qualify as hedging instruments for the purposes of hedge.

Below is a summary of the metal derivative contracts outstanding as at 30 June 2023:

	Notional amount		Fair value as of 30/06/2023
			Current Assets	Current Liabilities	Net carrying
	Assets (Ton)	Liabilities (Ton)	(€/000)	(€/000)	amount (€/000)
Copper forward sales
and purchases	625	1,060	72	(267)	(194)

Derivative instruments related to currency forward purchase and sale transactions with maturity after 30 June 2023. These transactions do not qualify as hedging instruments for the purposes of cash flow hedge accounting.

Below is a summary of the currency derivative contracts outstanding as at 30 June 2023:

	Notional amount		Fair value as of 30/06/2023
			Current Assets Current Liabilities		Net carrying
	Assets (Ton)	Liabilities (Ton)	(€/000)	(€/000)	amount (€/000)
GBP forward sales		6,000		(236)	(236)

COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

4. GOODWILL AND OTHER INTANGIBLE ASSETS

This item refers to intangible assets from which future economic benefits are expected. The following table shows the changes in their net carrying amount for the first half of 2023:

(Thousand of Euro)	Patents and intellectual property rights	Licenses, trademarks, similar rights and multi-year charges	Total
Closing balance - previous period	31	18	49
Changes - current period
Purchase	57	19	76
Depreciation	(25)	(6)	(31)
Exchange rate differences	1	0	1
Closing balance - current period	64	31	94

It should be noted that research costs are incurred periodically and, in the absence of the conditions required by IAS 38 for their possible capitalisation, they are recognised in the income statement.

5. TANGIBLE ASSETS

(Thousand of Euro)	Lands	Buildings	Plant and machinery	Equipments	Other tangible assets	Assets under construction s and advances	Total
Closing balance - previous period	14,593	10,537	12,831	973	401	12,278	51,613
Changes - current period
Purchase	-	102	334	240	62	4,382	5,120
Depreciation	(15)	(545)	(2,641)	(224)	(89)	-	(3,514)
Reclass	-	0	(173)	(27)	27	173	0
Disposals	(5)	0	(664)	(50)	(25)	(8)	(752)
Disposals - Depreciation fund	5	-	664	50	25	-	744
Exchange rate differences	69	195	189	2	5	42	503
Closing balance- current period	14,647	10,288	10,540	965	406	16,868	53,714

Investments of the Group in the first half of 2023 have been equal to € 5,120 thousand of which € 85 thousand related to Right-of-use assets and mainly concerned the investments in machinery of IRCE SpA and FD Sims Ltd.

The item "Reclass" refers to investments carried out in previous years or in the current year, initially recorded in the category "Assets under constructions and advances" and finally allocated, once completed, to the specific categories to which they belong.

The "Exchange rate differences" mainly refer to the Brazilian subsidiary following the revaluation of the Real against the Euro.

Assets under constructions and advances, amounting to Euro 16.8 million, mainly refer to investments for the renewal of the plant stock, which will be mainly come to operation during the second half of 2023.

The Directors consider the medium/long-term outlook for the Group to be substantially confirmed, as reflected in the 2023- 2027 plan used for the preparation of the impairment test at 31 December 2022.Therefore, also taking into account the positive results reported by the Group at 30 June 2023 and the expected trend for the second half of the year, they believe that there are no indicators of impairment compared to the values recorded in the financial statements, with particular reference to tangible and intangible assets and, consequently, did not consider it necessary to update the impairment test as at 30 June 2023.

6. DEFERRED TAX ASSETS AND LIABILITIES

A breakdown of deferred tax assets and liabilities is shown below:

	2023	2022
(Thousand of Euro)	30 June	31 December
Deferred tax assets	2,685	2,357
Deferred tax liabilities	(295)	(338)
Total net deferred tax	2,390	2,019

Here below is the changes of the period of Deferred tax assets and Deferred tax liabilities.

(Thousand of Euro)	Opening balance	Increase	Decrease	Reclass	Net equity effect	Exchange rate differences	Closing balance
Deferred tax assets Deferred tax liabilities	2,357 (338)	563 (50)	(290) 13	50 50	(9) 31	13 (2)	2,685 (295)
Total	2,019	513	(277)	100	23	11	2,390

The changes of deferred tax assets and liabilities is mainly due to the items Provision for obsolescence fund, Provision for Bad Debts and Provision for risks and charges.

The Directors believe that deferred taxes will be reasonably recovered through the generation of taxable income in future financial years.

7. OTHER NON CURRENT ASSETS

	2023	2022
(Thousand of Euro)	30 June	31 December
Other non current assets	1,753	2,813
Total other non current assets	1,753	2,813

The balance refers to the Brazilian subsidiary and essentially concerns ICMS, PIS and Cofins tax receivables.

8. INVENTORIES

Inventories, broken down as follows, are not pledged nor used as collateral.

	2023	2022
(Thousand of Euro)	30 June	31 December
Raw materials, ancillary and consumables - gross value	42,497	50,565
Work in progress and semi-finished goods - gross value	20,919	16,642
Finished products and goods - gross value	62,727	56,697
Provision for write down of raw material	(4,333)	(3,388)
Provision for write down of work in progress and semi-finished goods	(1)	(1)
Provision for write down of finished products and goods	(3,100)	(2,527)
Total inventories	118,709	117,988

The quotation of copper on the London Metal Exchange, compared to the price of 7.86 €/kg as at 31 December 2022, grew in the first months of the year while from April a downward trend began and reached 7.80 €/kg at the end of June.. The average price of copper in the first half of the year was 8.05 €/Kg, significantly lower than the average of the first half of 2022, equal to 8.92 €/Kg.

On the basis of the above and taking into account the expected trend in the price of copper and the expectations regarding the sales time of inventories the Group, as required by its policies and in line with IFRS principles, has written down copper in stock at the net realisable value as it is lower than the weighted average cost of the first half of 2023.

The table below shows the changes in the provision for write-down of inventories in the first half of 2023:

(Thousand of Euro)	Opening balance	Provision	Reversal	Exchange rate differences	Closing balance
Provision for write down of raw material Provision for write down of work in progress and semi-finished goods Provision for write down of finished	(3,388) (1)	(986) -	49 -	(8) -	(4,333) (1)
products and goods Total	(2,527) (5,916)	(553) (1,539)	- 49	(20) (28)	(3,100) (7,434)

The provision for write-down of raw materials corresponds to the amount deemed necessary to cover the risks of obsolescence, mainly of packaging, whilst the provision for write-down of work in progress and finished products and goods is set aside against slow-moving or non-moving finished products. The increase of "Provision for write down" for Euro 1.5 million is mainly due to the Parent Company and, to a lesser extent, to the subsidiaries Irce Ltda and Isomet AG.

9. TRADE RECEIVABLES

The breakdown of trade receivables is shown below:

	2023	2022
(Thousand of Euro)	30 June	31 December
Current trade receivables - third parties	81,610	63,464
Current bad debt provision - third parties	(1,554)	(1,966)
Total trade receivables	80,056	61,498

Trade receivables sold without recourse during the first six months amounted to € 31.5 million while the invoices sold but not yet due as at 30 June 2023 are equal to € 24.9 million (€ 32.3 million at December 31, 2022). The change of trade receivables is substantially attributable to the raise of Group's turnover in the second quarter 2023 compared to the last quarter of 2022 as well as the decrease of trade receivables sold without recourse not yet due as at 30 June 2023 compared to 31 December 2022.

The breakdown of "Current trade receivables" by "Due dates" and "Risk level" is detailed below:

Due dates	2023	2022
(Thousand of Euro)	30 June	31 December	Change
Not yet due	53,568	41,000	12,568
0 - 30 days	25,478	19,101	6,377
30 - 60 days	1,020	989	31
60 - 120 days	161	1,023	(862)
> 120 days	1,383	1,351	32
Total trade receivables	81,610	63,464	18,146

Risk level (Thousand of Euro)	2023 30 June	2022 31 December	Change
Minimum	62,300	47,071	15,229
Medium	16,290	13,217	3,073
Above average	1,800	2,143	(343)
High	1,220	1,033	187
Total trade receivables	81,610	63,464	18,146

(Thousand of Euro)	Opening balance	Provision	Reversal	Utilization	Exchange rate differences	Closing balance
Current bad debt provision - third parties	(1,966)	(8)	400	26	(6)	(1,554)

The item "Reversal" is attributable to the re-assessment of the "expected losses" on the trade receivables at 30 June 2023 of the Parent Company following the conclusion of a credit insurance starting from 1 January 2023 for the most of the Company's customers.

10. TAX RECEIVABLES

	2023	2022
(Thousand of Euro)	30 June	31 December
Tax receivables	293	501
Tax receivables – Aequafin	1,570	2,175
Total tax receivables	1,863	2,676

The item "Direct tax credits" refers to the advance payments of direct taxes net of the tax allocation for the half-year; the balance refers mainly to the IRAP of the Parent Company.

The item "Tax receivables vs Aequafin" highlights the net balance at 30 June 2023 to its Parent company Aequafin with which a tax consolidation agreement is in place.

11. OTHER CURRENT ASSETS

Below is the item detailed:

	2023	2022
(Thousand of Euro)	30 June	31 December
Accrued income and prepaid expenses	257	126
Social securities receivables	56	58
Other current assets	1,119	1,154
VAT receivables	1,609	4,321
Total receivables due from others	3,041	5,659

The increase in "Accrued income and prepaid expenses" is due to services pertaining to the entire year invoiced in advance at beginning of the period.

The decrease in "VAT receivables" is mainly attributable to Irce SpA and Irce Ltda.

12. CURRENT FINANCIAL ASSETS

The item is broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	31 December
Mark to market gains derivatives on metal	-	117
Guarantees deposits	17	15
Mark to market gains derivatives exchange rate	-	25
Other current financial assets	193	333
Total current financial assets	210	490

The items "Mark to market gains derivatives on metal" and "Mark to market gains derivatives exchange rate" refer to the fair value of forward contracts on copper and on foreign exchange open at 30 June 2023 by the Parent Company.

The item "Other current financial assets" principally encloses the energy efficiency certificates "TEE".

13. SHAREHOLDERS' EQUITY

The item "Shareholders' equity" amounts to € 150.7 million as of 30 June 2023 (€ 144,8 million as of 31 December 2022) and is detailed in the following table.

	2023	2022
(Thousand of Euro)	30 June	31 December
Share capital	14,627	14,627
Own share capital	(834)	(825)
Share premium reserve	40,539	40,539
Revaluation reserve	22,328	22,328
Own share premium	(97)	(68)
Legal reserve	2,925	2,925
IAS 19 Reserve	(524)	(424)
Extraordinary reserve	53,496	49,300
Other reserve	23,595	23,595
Profit (losses) of previous years	16,807	13,372
Translation Reserve	(26,807)	(29,483)
Profit (loss) for the period	4,944	9,224
Total shareholders' equity attributable to Parent company	150,998	145,110
Shareholders' equity attributable to Minority interests	(324)	(325)
Total shareholders' equity	150,675	144,785

Share capital

The following table shows the breakdown of the share capital.

	2023	2022
(Thousands of Euro)	30 June	31 December
Subscribed share capital	14,627	14,627
Treasury share capital	(835)	(825)
Total share capital	13,792	13,802

The share capital is made up of 28,128,000 ordinary shares worth € 14,626,560 without par value. The shares are fully subscribed and paid up and bear no rights, privileges or restrictions as far as dividend distribution and capital distribution, if any, are concerned.

Treasury share capital refers to the nominal value of the treasury shares held by the Company and, as required by IFRS, are deducted from Subscribed share capital. Treasury share capital as of 30 June 2023 amounted to 1,604,688, corresponding to 5.70% of the share capital. The total number of outstanding shares is then 26,523,312.

IAS 19 reserve

This reserve includes actuarial gains and losses accumulated as a result of the application of IAS 19 Revised. The change in the reserve, in thousand, is as follows:

Balance as of 31/12/2022	(424)
Actuarial valuation	(123)
Tax effect on actuarial valuation	23
Balance as of 30/06/2023	(524)

Extraordinary reserve

The extraordinary reserve is increased annually by the retained earnings of the Parent Company and decreased by the dividends distributed, in the first half of 2023 equal to € 1,6 million.

Translation reserve

The positive change in the translation reserve, equal to € 2,7 million, is mainly due to the revaluation of the Brazilian real against the Euro.

14. NON-CURRENT FINANCIAL LIABILITIES

The item is broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	31 December
Non current Financial liabilities due to banks	16,477	19,601
Non current Financial liabilities - IFRS 16	203	174
Other non current financial liabilities	1	2
Total non current financial liabilities	16,681	19,777

The table below shows the breakdown of non-current loans outstanding at the of the period, highlighting, in particular, the type of rate and due date.

Thousand of Euro	Currency	Rate	Company	30.06.2023	31.12.2022	Due date
Banca di Imola	EUR	Floating	IRCE SPA	2,843	3,473	2026
Mediocredito	EUR	Floating	IRCE SPA	923	1,385	2025
Banco Popolare	EUR	Fixed	IRCE SPA	1,512	1,886	2026
Deutsche Bank	EUR	Fixed	IRCE SPA	5,250	6,125	2027
BPER	EUR	Floating	IRCE SPA	4,722	5,000	2032
Credit Suisse	EUR	Zero	Isomet AG	259	296	2025
Banco Popolare	EUR	Fixed	Isomet AG	968	1,436	2026
Total				16,477	19,601

It should be noted that as at 31 December 2022 all the financial constraints relating to existing loans, where envisaged, were fully satisfied. At 30 June 2023, however, the compliance with financial constraints is not envisaged as the "testing date" is contractually at the end of the year.

15. PROVISIONS FOR RISKS AND CHARGES

The movements of the provisions for risks and charges – current and non current – as at 30 June 2023 are shown below:

(Thousand of Euro)	Opening		Utilization		Closing
Other provision for risks and charges - current	257		(15)		242
Total provision for risk and charges current	257		(15)		242
(Thousand of Euro)	Opening	Provision	Utilization	Effetti cambi	Closing

Provision for severance payments to agents - non current Other provision for risks and charges - non current	130 150	- 633	(22) -	- 2	108 785
Total provision for risk and charges - non current	280	633	(22)	2	893

The items "Provision for severance payments to agents" refers to the Parent Company and to Smit Draad Nijmegen.

The provision for the period of the item "Other provision for risks and charges" refers respectively for Euro 230 thousand to the risk of enforcement of a surety by a customer of the Parent Company and for Euro 403 thousand to disputes with customers of FD Sims and Smit Draad Nijmegen for alleged product defects.

16. PROVISIONS FOR EMPLOYEE DEFINED BENEFITS

The item refers for € 2,843 thousand to the Parent Company, for € 450 thousand to Isomet, for € 49 thousand to Magnet Wire, for € 65 thousand to Isolveco in liquidation, for € 50 thousand to Isolveco 2 as well as for € 2 thousand to DMG.

Due to the number of employees involved and the value of the defined benefit plans, the actuarial evaluation is prepared for the half-yearly basis only for the Parent Company and Isomet.

The table below shows the changes in the Provision for employee defined benefits in the first half of 2023:

(Thousand of Euro)	Opening	Provision	Net equity effect	Utilization	Exchange rate differences	Closing
Provision for employee defined benefit - non current	3,449	39	123	(155)	3	3,459
Total	3,449	39	123	(155)	3	3,459

17. CURRENT FINANCIAL LIABILITIES

Current financial liabilities are broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	31 December
Current Financial liabilities due to banks	52,950	40,973
Mark to market losses derivatives on metal	194	-
Current Financial liabilities - IFRS 16	105	121
Mark to market losses derivatives exchange rate	235	-
Long term loans- current portion	5,779	5,272
Total current financial liabilities	59,263	46,366

The following table highlights the net financial position of Irce Group, determined on the basis of the scheme envisaged by Consob attention call no. 5/21 of 29 April 2021, which incorporates the ESMA guideline published on 4 March 2021:

	2023	2022
(Thousand of Euro)	30 June	31 December
Cash and cash equivalents	9,559	5,608
Current financial assets	210	490
Cash and cash equivalents	9,769	6,098
Other current financial liabilities	(53,484)	(41,094)
Long term loans - current portion	(5,779)	(5,272)
Current net financial position	(49,494)	(40,268)
Non current financial liabilities third parties	(16,681)	(19,777)
Net financial position	(66,175)	(60,045)

Net financial position at 30 June 2023 amounted to € 66.2 million, up from € 60.0 million at 31 December 2022 mainly due to cash utilization deriving from the change in working capital, in particular trade receivables.

The Irce Group also has contractual commitments in place at 30 June 2023 for a total of € 64,7 million relating mainly to the purchase of copper and machinery, as well as for the construction of a building in Europe, which will be realized over the next 18 months.

It should also be noted that the Group is proceeding with the development of a project to enter the Asian market.

18. TRADE PAYABLES

	2023	2022
(Thousand of Euro)	30 June	31 December
Trade payables	31,269	27,240
Total trade payables	31,269	27,240

Trade payables are all due in the following 12 months.

The change is attributable both to the Parent Company and to some subsidiaries, in particular FD Sims, Irce Ltda, Smit Draad and Isomet and is mainly due to the early interruption of copper deliveries following the Christmas closing on December for which their payments have been made, unlike the deliveries made closely to the end of June, within the month of delivery.

19. TAX PAYABLES

	2023	2022
(Thousand of Euro)	30 June	31 December
Tax payables-current	240	555
Total tax payables	240	555

This item, equal to Euro 240 thousand, refers to income tax payables of certain subsidiaries, net of advances paid. The reduction compared to 31 December 2022 is attributable to Irce Ltda.

20. OTHER CURRENT LIABILITIES

Other payables are broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	31 December
Payables due to employees	3,924	3,120
Accrued liabilities and deferred income	437	615
Other payables	639	903
VAT payables	1,220	548
Income taxes withheld on income from employees	393	522
Total other current liabilities	6,613	5,708

The "Payables due to employees" include the liabilities for the thirteenth month's salary, for holiday accrued and not taken and for production premiums. The increase compared to 31 December 2022 is attributable to accrued holidays and the allocation of the thirteenth month's salary, which will be paid in December 2023.

The change of VAT payables is essentially due to the Parent Company and Smit Draad Nijmegen.

COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME STATEMENT

21. REVENUES

The item refers to revenues from the sale of goods, net of returns, rebates and the return of packaging.

(Thousand of Euro)	2023 30 June	2022 30 June	Change
Sales revenues	218,956	261,000	(42,044)

The consolidated turnover in the first half of 2023, equal to € 219,0 million, decreased by 16.1% compared to the same period of the prior year.

The following tables highlight revenues broken down by product and by geographical area of destination of finished products.

	Current period			Previous period
(Thousand of Euro)	Winding wires	Cables	Total	Widing wires	Cables	Total
Revenues	177,486	41,470	218,956	206,198	54,802	261,000
% of total	81.1%	18.9%	100.0%	79.0%	21.0%	100.0%

	Current period			Previous period
(Thousand of Euro)	Italy	UE	Extra UE	Total	Italy	UE	Extra UE	Total
Revenues	76,068	72,188	70,700	218,956	108,666	79,074	73,260	261,000
% of total	34.7%	33.0%	32.3%	100.0%	41.6%	30.3%	28.1%	100.0%

For further details please refer to paragraph 2 "Segment reporting" and to "Report on Operations".

22. OTHER REVENUES AND INCOME

Other revenues and income are broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	30 June	Change
Increase in internally generated fixed assets	43	214	(171)
Capital gains on assets disposals	20	691	(671)
Insurance reimbursement	86	2	84
Contingent assets	224	47	177
Other revenues	290	618	(328)
Total other revenues and income	663	1,572	(909)

"Capital gains on asset disposals" included as at 30 June 2022 the capital gain of € 665 thousand for the sale of the business unit "Miradolo".

The item "Contingency assets" mainly includes the collection of receivables previously written off, supplies never claimed and currently time-barred, reversal of invoices to be received over-estimated in previous years.

"Other revenues and income" mainly include revenues from the sale of energy efficiency certificates "TEE", leases receivable, contributions received for training courses, chargebacks to customers for reimbursement of expenses as well as the charge of damages and penalties to suppliers. The change in the period is mainly due to a significant charge to a service provider, made in the comparative period, in relation to damages suffered for the theft of a wire rod truck.

23. COSTS FOR RAW MATERIALS AND CONSUMABLES

Costs for raw material and consumables are detailed as follows:

(Thousand of Euro)	2023 30 June	2022 30 June	Change
Raw materials and consumables	(166,571)	(218,666)	52,095
Change in inventory of raw materials and consumables	(9,467)	(2,147)	(7,320)
Purchasing finished goods	(5,011)	(4,299)	(711)
Total raw materials and consumables	(181,049)	(225,112)	44,063

The item "Raw material and consumables", equal to € 166.6 million, includes the cost of purchasing of raw materials, the most significant of which are copper, aluminium, insulating materials, materials for packaging and maintenance The change in the period compared to first half 2022 is due both to a reduction in the volumes purchased and to a decrease in the average price of copper.

24. COSTS FOR SERVICES

"Costs for services" are detailed as follows:

	2023	2022
(Thousand of Euro)	30 June	30 June	Change
External processing	(4,953)	(3,662)	(1,291)
Utility expenses	(7,099)	(13,744)	6,645
Maintenance	(1,310)	(1,068)	(242)
Transport of sales and purchase	(3,100)	(3,200)	100
Payable fees	(78)	(86)	8
Statutory auditors compensation	(35)	(34)	(1)
Other services	(3,274)	(3,004)	(270)
Operating leasing (in scope for IFRS 16)	(145)	(102)	(43)
Total cost for services	(19,994)	(24,900)	4,906

The change in "External processing" is mainly attributable to the significant increase in the cost for transforming the metal cathode into wire rod.

It should be noted that also during the first half of 2023 the Company benefited from the contribution paid to energyintensive companies in the form of a tax credit, accounted for by nature to reduce the related cost "Expenses for utilities". The change in "Utility expenses" is due both to a reduction of MWh of electricity consumed following the drop in production and to the significant decrease in the market of the unit cost per MWh.

The item "Other services" includes primarily technical, legal and tax consulting fees as well as R&D, insurance and business expenses.

The item "Operating leasing" includes lease payments to which IFRS 16 does not apply because the underlying asset has a low value (less than € 5 thousand) or the lease term is 12 months or less.

25. PERSONNEL COSTS

Personnel costs are detailed as follows:

	2023	2022
(Thousand of Euro)	30 June	30 June	Change
Salaries and wages	(10,745)	(10,974)	229
Social security charges	(2,510)	(2,544)	34
Pension costs	(913)	(879)	(34)
Other personnel costs	(1,288)	(1,533)	245
Total personnel costs	(15,456)	(15,930)	474

The item "Other personnel costs" includes costs for temporary work, contract work, and the compensation of Directors.

The reduction in personnel costs is attributable to the Parent Company, in particular to the sale of the Miradolo business unit in the first half of 2022.

The Group's average number of personnel for the period and the current number at the reporting date is shown below:

	2023 30 June	2023 30 June	2022 30 June
(Number of employees)	Closing	Average	Closing
Executives	25	26	27
Whitecollars	142	138	143
Bluecollars	443	446	477
Total Employees	610	610	647
Executives (temporary)	1	1	1
Whitecollars (temporary)	3	4	3
Bluecollars (temporary)	43	39	68
Total Temporary workers	47	44	72
Total headcount	657	654	719

The number of employees is calculated according to the Full-Time Equivalent method and includes both internal and external (temporary and contract) staff. Personnel is classified according to the type of employment contract.

The reduction in the workforce is mainly due to the sale of Miradolo Terme (PV) plant, which employed about 40 people and temporary workers. A further reduction is due to the decline in the last half in production activity, which required less recourse to temporary workers in the Italian plants.

26. DEPRECIATION/AMORTISATION AND IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS

Here is the breakdown of depreciation/amortisation:

(Thousand of Euro)	2023 30 June	2022 30 June	Change
Amortization of intangible assets	(31)	(16)	(15)
Depreciation of tangible assets	(3,429)	(3,504)	75
Depreciation of tangible assets - IFRS 16	(85)	(100)	15
Total amortization/depreciation and write-down	(3,545)	(3,620)	75

27. PROVISIONS AND WRITE-DOWNS

Provisions and write-downs are broken down as follows:

	2023	2022
(Thousand of Euro)	30 June	30 June	Change
Bad debt provision	392	(2)	394
Receivables losses	(2)	(93)	91
Provision for risks	(633)	-	(633)
Total provisions and write-downs	(243)	(95)	(148)

With reference to the change of the items "Bad debt provision" and "Provision for risks", please refer respectively to paragraphs "9 - Trade receivables" and "15 - Provision for risks and charges".

28. FINANCIAL INCOME AND CHARGES

Financial income and charges are broken down as follows:

	2023	2022	Change
(Thousand of Euro)	30 June	30 June
Financial income	1,278	1,989	(711)
Financial charges	(2,412)	(1,669)	(743)
Foreign exchanges	47	(586)	633
Total financial income and charges	(1,087)	(266)	(821)

The item "Financial income" includes € 1.2 million of interest income on payment extension granted to customers mainly by the Brazilian subsidiary. The change compared to the previous period is largely due to the impact of copper derivatives whose impact in the present half was negative for € 0.1 million, while in the previous period it was positive for € 0.4 million.

The item "Financial charges" includes for € 1.0 million the charges relating to the discount without recourse of trade receivables mainly by the Brazilian subsidiary as well as interest expense on financial payables of approximately € 1.2 million.

The increase compared to the previous period is mainly attributable to the higher market interest rates.

"Foreign exchange" includes for € 240 thousand negative realized exchange differences and for € 287 thousand positive unrealized exchange differences. The change of the item "Foreign exchange" is mainly due to Irce SpA and Irce Ltda.

29. INCOME TAXES

Below is the detail of income taxes:

	2023	2022
(Thousand of Euro)	30 June	30 June	Change
Current taxes	(1,746)	(575)	(1,170)
Income taxes related to previous years	(155)	1	(156)
Deferred tax	336	227	109
Total income tax	(1,565)	(347)	(1,218)

It should be noted that, consistently with the previous period, the Parent Company's tax base incorporates significant permanent tax decreases, related both to "hyper/super-depreciation" and to contributions for the electricity tax credit granted to energy-intensive companies.

The increase in the tax rate at 30 June 2023 compared to the comparative period is mainly attributable to the Parent Company and in particular to the lower incidence of the permanent tax decreases described above on the pre-tax result.

It should be noted that the Parent Company at 30 June 2022, despite having reported a "Result before taxes" equal to over 60% compared to one of the Group, recorded a "negative" tax base on which deferred taxes were counted.

30. EARNINGS PER SHARE

As required by IAS 33, here below are the disclosures on the data used to calculate basic and diluted earnings per share.

For the purposes of calculating the basic earnings per share, the profit or loss for the period less the portion attributable to non-controlling interests was used as the numerator. In addition, it should be noted that there were no preference dividends, settlements of preference shares, and other similar effects to be deducted from the profit or loss attributable to the ordinary equity holders. The weighted average number of ordinary shares outstanding was used as the denominator; this figure was calculated by deducting the average number of own shares held during the period from the overall number of shares composing the share capital.

Basic and diluted earnings per share were equal, as there are no ordinary shares that could have a dilutive effect and no shares or warrants that could have a dilutive effect will be exercised.

	2023	2022
	30 June	30 June
Result for the period (Thousand of Euro)	4,944	4,192
Average weighted number of ordinary shares outstanding	26,523,312	26,541,612
Basic earnings/(loss) per Share	0.1864	0.1579
Diluted earnings/(loss) per Share	0.1864	0.1579

31. RELATED PARTY DISCLOSURES

In compliance with the requirements of IAS 24, the half-yearly compensation for the members of the Board of Directors of the Parent Company is shown below:

(Thousand of Euro)	Compensation for the office held	Compensation for other tasks	Total
Directors	124	144	268

This table shows the compensation paid for any reason and in any form, excluding social security contributions.

In addition, it should be noted that Irce SpA has a tax receivables vs the Parent company Aequafin SpA of € 1,6 million deriving from the National Tax Consolidation Agreement.

32. COMMITMENTS AND GUARANTEES

In relation to the guarantees provided, the parent company IRCE S.p.A. issued five sureties for a total of € 1,484 thousand in favour of a publicly owned company to guarantee the supply of electrical cables. With reference to outstanding commitments, please refer to note 17 – Current financial liabilities.

33. EVENTS AFTER THE REPORTING PERIOD

No significant subsequent events occurred between the reporting date of first half of 2023 and the date of preparation of these financial statements.

Certification of the condensed consolidated half-yearly financial statements pursuant to Article 154-bis, paragraph 5, of Italian Legislative Decree no. 58 of 24 February 1998:

We, the undersigned, Mr Filippo Casadio, Chairman, and Ms Elena Casadio, Manager responsible for preparing the corporate accounting documents of IRCE S.p.A., hereby certify, taking into account the provisions of Article 154-bis, paragraph 5, of Italian Legislative Decree No. 58 of 24 February 1998:

• the adequacy in relation to the company's characteristics, and
• the effective implementation of the administrative and accounting procedures used to prepare the IAS/IFRS halfyearly consolidated financial statements.

In addition, it is hereby certified that the IAS/IFRS half-yearly financial statements:

• a) are consistent with accounting books and records;
• b) are prepared in accordance with IAS/IFRSs and give a true and fair view of the financial position, financial performance and cash flows of the Issuer as well as of the group of companies included within the scope of consolidation; and
• c) that the interim report on operations contains a reliable analysis of the information pursuant to Article 154-ter, paragraph 4 of Italian Legislative Decree no. 58 of 24 February 1998.

Imola, 13 September 2023

Deloitte & Touche S.p.A. Piazza Malpighi, 4/2 40123 Bologna Italia

Tel: +39 051 65811 Fax: +39 051 230874 www.deloitte.it

REPORT ON REVIEW OF THE HALF-YEARLY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To the Shareholders of Irce S.p.A.

Introduction

We have reviewed the accompanying half-yearly condensed consolidated financial statements of Irce S.p.A. and subsidiaries (the "Irce Group"), which comprise the statement of financial position as of June 30, 2023 and the income statement, statement of comprehensive income, statement of changes in equity and cash flow statement for the six month period then ended, and a summary of significant accounting policies and other explanatory notes. The Directors are responsible for the preparation of the half-yearly condensed consolidated financial statements in accordance with the International Accounting Standard applicable to the interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to express a conclusion on the half-yearly condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with the criteria recommended by the Italian Regulatory Commission for Companies and the Stock Exchange ("Consob") for the review of the half-yearly financial statements under Resolution n° 10867 of July 31, 1997. A review of half-yearly condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA Italia) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying half-yearly condensed consolidated financial statements of the Irce Group as at June 30, 2023 are not prepared, in all material respects, in accordance with the International Accounting Standard applicable to the interim financial reporting (IAS 34) as adopted by the European Union.

DELOITTE & TOUCHE S.p.A.

Signed by Giovanni Fruci Partner

Bologna, Italy September 13, 2023

This independent auditor's report has been translated into the English language solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.

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