Cellularline — Interim / Quarterly Report 2023

Nov 8, 2023

PRESS RELEASE

CONSOLIDATED INTERIM FINANCIAL REPORT AS AT 30 SEPTEMBER 2023 APPROVED

GROUP REVENUE GROWTH CONTINUES, +17.6% OVER THE FIRST NINE MONTHS OF 2022

INCREASE ALSO SEEN IN ADJ. EBITDA, +17.9% COMPARED TO THE SAME PERIOD IN 2022

CONTINUED GROWTH IN THE STRATEGIC GERMAN MARKET THROUGH DISTRIBUTION AGREEMENT AND ACQUISITION IN EARLY 2023

EXCELLENT PERFORMANCE ALSO IN THE IBERIAN PENINSULA (+24% VS. THE FIRST NINE MONTHS OF 2022)

• Revenue from sales of EUR 112.1 million (EUR 95.3 million at 30 September 2022).
• Adjusted EBITDA¹ of EUR 12.9 million (EUR 10.9 million in the period ended 30 September 2022).
• Profit for the period of EUR -0.3 million (EUR -40.1 million at 30 September 2022).
• Adjusted Net Profit² of EUR 4.0 million (EUR 3.7 million in the period ended 30 September 2022).
• Net Financial Indebtedness amounted to EUR 45.6 million (EUR 40.4 million at 31 December 2022 and EUR 48.6 million at 30 June 2023)
• Operating cash flow of EUR 4.9 million in the period (EUR -1.1 million at 30 September 2022).

Reggio Emilia, 08 November 2023 - The Board of Directors of Cellularline S.p.A. (hereinafter "Cellularline" or the "Company"), a European leader in the sector of accessories for smartphones and tablets listed on the STAR Milan Euronext Market organised and managed by Borsa Italiana S.p.A., today examined and approved the Consolidated Interim Financial Report as at 30 September 2023.

***

Marco Cagnetta, Director and General Manager Sales and Marketing of the Cellularline Group, commented: "Cellularline's growth continued in the third quarter of the year. We are particularly pleased with the sales performance in two areas that are strategic for us, namely Germany and the Iberian Peninsula area. In terms of financial performance, we achieved adjusted net profit of EUR 4 million, higher than in the first nine months of last year, and generated operating cash flow of about EUR 5 million. We remain focused on the careful management of the Company, as evidenced by the improvement in EBITDA and the ratio of the major operating costs to revenues".

¹ Adjusted EBITDA is calculated as EBITDA adjusted for i) non-recurring charges/(income), ii) the effects of non-recurring events, iii), events relating to extraordinary transactions and iv) operating foreign exchange gains/(losses).

² Adjusted Net Profit is calculated as adjusted Result of the period of the i) adjustments in Adjusted EBITDA, ii) adjustments of depreciation relating to the Purchase Price Allocation, iii) adjustments of non-recurring financial expense/(income) and iv) the theoretical tax impact of these adjustments.

Analysis of consolidated revenue

In the first nine months of 2023, the Group's Revenue from sales totalled EUR 112.1 million, or 17.6% more than in the same period last year (EUR 95.3 million) thanks to the increase in sales both on the domestic and international markets. In particular, the latter is benefiting from the impetus of the recent distribution agreements signed with reference to the DACH and Spain and Portugal regions, the increase in sales by Worldconnect, and finally the consolidation of the newly acquired companies.

It should be noted that Peter Jäckel GmbH (acquired in January 2023) and Subliros SL (controlled as of the last quarter of 2022) contributed a total of EUR 4.1 million in the period under review; therefore, the likefor-like revenue development was +13.3%.

Revenue by product line

The table below shows sales by product line:

(In millions of Euro)	Reference period					Change
	9M 2023	% of revenue	9M 2022	% of revenue	Δ	%
Red – Italy	34.7	30.9%	33.1	34.7%	1.6	4.7%
Red – International	55.3	49.4%	43.0	45.1%	12.3	28.6%
Revenue from sales - Red	90.0	80.3%	76.1	79.8%	13.9	18.2%
Black – Italy Black – International	3.3 3.0	3.0% 2.6%	3.2 2.6	3.4% 2.7%	0.1 0.4	4.3% 15.8%
Revenue from sales - Black	6.3	5.6%	5.8	6.1%	0.5	9.4%
Blue – Italy Blue – International	14.8 1.0	13.2% 0.9%	11.0 2.5	11.5% 2.6%	3.8 (1.4)	34.8% -59.5%
Revenue from sales - Blue	15.8	14.1%	13.5	14.1%	2.3	17.3%
Total revenue from sales	112.1	100.0%	95.3	100.0%	16.7	17.6%

The analysis of sales for the individual product lines shows that:

• the Red Line recorded a year-on-year increase of 18.2% (EUR 13.9 million), accounting for approximately 80.3% of the whole Group's performance for the period. Growth was driven by increased demand in international markets due to the contribution of both Cellularline and Worldconnect products, as well as the positive effect of new acquisitions and new international sales agreements;
• the Black Line recorded sales of EUR 6.3 million, showing growth (EUR +0.5 million) on the same period of the previous year;
• the Blue Line recorded growth of EUR 2.3 million (+17.3%), mainly due to increased demand for products of non-Group owned brands distributed in Italy.

Revenue by geographical area

(In millions of Euro)	Reference period				Change
	9M 2023	% of revenue	9M 2022	% of revenue	Δ	%
Italy	52.8	47.0%	47.2	49.6%	5.5	11.7%
Main European markets3	35.8	32.0%	26.5	27.8%	9.3	35.0%
Other countries	23.5	21.0%	21.6	22.6%	1.9	9.0%
Total revenue from sales	112.1	100.0%	95.3	100.0%	16.7	17.6%

The table below shows sales by geographical area:

It should be noted that sales in foreign markets account for 53.0% of the Group's total sales, with an increase in the incidence of about 2.6 p.p. compared to the figure for the first nine months of 2022.

Analysis of operating profit and consolidated profit for the period

Turning to an analysis of costs in the first nine months of 2023:

• The cost of sales came to EUR 68.8 million (EUR 60.2 million at 30 September 2022) equating to 61.4% of revenues, down on the same period last year (63.2%);
• Selling and Distribution Costs, General and Administrative Costs and Other Non-Operating Costs and Revenues amounted to EUR 41.2 million in the period under review, compared to EUR 76.5 million as at 30 September 2022 (EUR 36.6 million net of the goodwill impairment, as a result of the impairment carried out, recognised in this period). The overall ratio of these items to revenue rose from 38.4% to 36.7% on a like-for-like basis, thereby showing marked improvement. The consolidation of Peter Jäckel GmbH and Subliros SL had an impact of EUR 1.0 million on the items "Selling and Distribution Costs" and "General and Administrative Costs".

The operating result was EUR 2.1 million (EUR - 41.5 million as of 30 September 2022, or EUR -1.5 million net of goodwill impairment).

Adjusted EBITDA, an indicator considered by management to be representative of the Group's operating profitability trend, amounted to EUR 12.9 million in the period under review, an increase of EUR 2.0 million compared to the same period of the previous year.

Adjustments made to EBITDA amounted to EUR 0.9 million during the first nine months of 2023 (EUR 3.1 million at 30 September 2022, of which EUR 1.7 million for non-recurring costs and EUR 1.4 million on operative exchange gains) and mainly consisted of: (i) non-recurring costs/(revenues) (Euro 1.0 million); (ii) operating exchange result (Euro -0.09 million). The improvements achieved on an operative level offset the absence of the positive factors related to the specific nature of the period (exchange gains) that had characterised the first nine months of 2022. The Adjusted EBITDA margin is therefore in line with the same period of the previous year.

Net financial income and expense for the first nine months of 2023 comes to a negative EUR 2.5 million, while in the same period of 2022, expense was recorded for EUR 0.3 million. The higher net financial expenses (EUR 2.2 thousand) recorded are mainly attributable to the increase in interest rates, as well as the absence of the positive effect of the change in the fair value of warrants that were outstanding in the previous period (EUR 1.2 million at 30 September 2022).

³ Germany/Austria, France, Spain/Portugal, Benelux and Switzerland.

Moreover, in the first nine months of 2023, there was a negligible foreign exchange loss (approximately EUR 7 thousand) compared to foreign exchange gains of EUR 1.7 million in the same period of the previous year. The decrease of EUR 1.7 million is mainly due to the trend of the EUR/USD exchange rate.

Adjusted profit/(loss) attributable to owners of the parent for the first nine months of 2023 amounted to EUR 4.0 million (EUR 3.7 million as at 30 September 2022). The adjustments made to the Group's economic result, in addition to non-recurring costs and revenues and operating exchange rate differences (see Adjusted EBITDA above) and amortisation and depreciation related to the Purchase Price Allocation amounting to EUR 5.0 million, mainly refer to the tax effects of the items being adjusted.

Analysis of consolidated net financial indebtedness and operating cash flow

Net Financial Indebtedness at 30 September 2023 is EUR 45.6 million (EUR 40.4 million at end 2022) and showing improvement on the balance recorded at 30 June 2023 (EUR 48.6 million).

Excluding the effects of the acquisition of Peter Jäckel GmbH - EUR 6.9 million, including the disbursement already made in January 2023, the valuation of the put/call options for the purchase of the remaining capital shares and the net indebtedness of the acquired company - the net financial debt would be lower at 31 December 2022 and equal to EUR 38.7 million.

Period operating cash-flow amounted to EUR 4.9 million (EUR -1.1 million in the first nine months of 2022); the positive difference is attributable to both the trend in working capital and the increase in EBITDA; these effects are contrasted by the increase in financial expenses paid.

Cash and cash equivalents (EUR 10.9 million), the committed credit facility for M&As inherent in the existing medium/long-term loan agreement (EUR 10.0 million) and unused available trade credit facilities and factors (EUR 17.7 million) ensure the Group's high level of equity and financial solidity.

Significant events in the first nine months of 2023

• 9 January: the Board of Directors appointed Marco Cagnetta as interim Investor Relater of the Company;
• 11 January: signing of the closing for the acquisition of 60% of the company Peter Jäckel GmbH, a major German player operating for over 25 years with leading consumer electronics companies in the smartphone accessories segment. The stipulated agreement provides for the right to exercise put-andcall options on the minority shareholding of a total of 40% divided into two tranches, the amount of which for each tranche will be calculated taking into account economic-financial parameters recorded by Peter Jäckel GmbH during the financial years 2024 and 2025.
• 12 January 2023: Mauro Borgogno appointed as the new Group Chief Financial Officer and Manager in charge of drafting corporate accounting documents, pursuant to Article 154-bis of the Consolidated Law on Financial Intermediation, to replace Davide Danieli, who had tendered his resignation for personal reasons, while maintaining his position as member of the Company's Board of Directors.
• 28 February 2023: formalisation of a three-year agreement with MediaMarktSaturn Germany, the leading retail distributor of consumer electronics products in Germany, strategically focused on the shopping experience, with services and a selection of related accessories; the agreement expands the distribution of Cellularline's range of products dedicated to charging and protecting smartphones in MediaMarktSaturn Germany's approximately 400 German shops.
• 28 April: the Shareholders' Meeting approval of all the items on the agenda and, in particular:
  • o the separate and consolidated financial statements as at 31 December 2022, as proposed by the Board of Directors on 15 March 2023;
  • o the distribution of a dividend through the assignment of treasury shares held in the portfolio at a ratio of 1 share for every 28 ordinary shares of Cellularline S.p.A., for a maximum of 743,499

shares (corresponding to 3.40% of the share capital; dividend yield 3.6%) that can be entirely withdrawn from the treasury shares held by the Company, with a consequent reduction in the related Reserve (a total of 741,108 shares have been distributed, post-rounding);

• o appointment of the new Board of Directors and new Board of Statutory Auditors, which will remain in office for three financial years, until the Shareholders' Meeting to be convened for the approval of the parent financial statements at 31 December 2025. Antonio Luigi Tazartes confirmed as Chairman of the Board of Directors.
• 4 May: inauguration of the new Board of Directors for the attribution of powers and appointment of Committees, which, in view of continuity, confirmed Christian Aleotti as Deputy Chairman and Chief Executive Officer, with the office also of General Manager, and attributed operating powers to Marco Cagnetta; Independent Directors were identified and members of the board committees were appointed.
• 17 May: New operational hub in Dubai to speed up the company's growth in the Middle East in line with one of the Company's development guidelines, i.e. growth in international markets, announcement of the creation of an operational hub in the Jebel Ali Free Zone, in Dubai, in order to better serve the Middle East region, drastically reducing delivery times, facilitating operations and improving service quality.
• 5 June: according to the provisions of the Cellularline Warrant Rules, on 5 June 2023 the deadline for the exercise of Warrants (the "Deadline") expired and therefore any Warrants not exercised by such Deadline are extinguished.
• 26 June: a general audit was started by the Tax Authorities on the Parent Company with reference to the year 2019, and subsequently extended to the years 2018 and 2017 on specific matters; today, the Tax Authorities have served a Notice of Dispute regarding a Tax Credit used in 2017 for approximately 350 thousand euros. The company, after consulting its advisor, considers the claim to be unfounded and will take action in the appropriate venues to protect its rights.
• 1 July: Commercial agreement signed with Spanish department store chain El Corte Inglés.
• 27 July: The ESG report was published for the third consecutive year, reaffirming the company's new course based on an all-round sustainable business model. Inside are best practices and outstanding performances the Group has achieved in six main areas of action - Governance, People, Community, Suppliers, Environment and Customers.

Significant events after 30 September 2023

• 16 October The Board of Directors convened the Ordinary Shareholders' Meeting - to be held on 22 November 2023 - to resolve on the proposal to authorise the purchase and disposal of treasury shares.

Outlook

On the basis of the growth recorded in the first nine months of 2023, the actions taken by management, and the performance of the end markets, the Group expects a positive development of the company's results compared with the previous year.

***

Legal statements

The Manager responsible for preparing the financial information, Mauro Borgogno, states, pursuant to paragraph 2 of article 154-bis of the Consolidated Finance Act, that the financial reporting in this press release corresponds with the documentary records, ledgers and accounting entries.

The following are appended:

• Annex A: Schedules of the IFRS Consolidated Interim Financial Report as at 30 September 2023, examined and approved by the Board of Directors today, compared with those as at 30 September 2022 (consolidated income statement and cash flow statement) and with those as at 31 December 2022 (consolidated statement of financial position);
• Annex B: the Consolidated income statement relative to the first nine months of 2023, reclassified as deemed more representative of the Group's operating profitability by the management.

Analyst conference call

Management will present the consolidated results as at 30 September 2023 to the financial community during a conference call to be held on 09 November 2023 at 09:30 CET.

***

To participate in the conference call, dial: +39 02 36213011

The slides from the presentation and any supporting material will be available before the start of the conference call, on the website https://investors.cellularlinegroup.com/it/relazioni/#presentazioni.

This press release is available on the Company's website www.cellularlinegroup.com, Investors/Press Releases section and on the authorised storage system .

***

***

Cellularline S.p.A., founded in Reggio Emilia in 1990, is, together with its brands Cellularline, PLOOS, AQL, MusicSound, Interphone, Nova, Skross, Coverlab, Allogio and Peter Jäckel, the leading company in the smartphone and tablet accessories sector.

The Group is at the technological and creative forefront of the multimedia device accessories industry, striving to deliver products synonymous with outstanding performance, ease of use and a unique user experience. The Group currently has 250 employees. Cellularline brand products are sold in over 60 countries.

Cellularline S.p.A. - Investor Relations Close to Media – Press Office ir@cellularlinegroup.com Enrico Bandini +39 335 8484706

enrico.bandini@closetomedia.it Alberto Selvatico +39 334 6867480 alberto.selvatico@closetomedia.it Davide Casi davide.casi@closetomedia.it

ANNEX A

CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30 SEPTEMBER 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(In thousands of Euro)	Balance as at	Of which	Balance as at	Of which
ASSETS	30 September 2023	related parties	31 December 2022	related parties
Intangible assets	52,129		54,826
Goodwill	37,946		34,272
Property, plant and equipment	7,739		7,726
Equity investments in associates and other	71		71
companies
Right-of-use assets	4,282		4,388
Deferred tax assets	5,616		5,122
Financial assets	53		-
Total non-current assets	107,836		106,405
Inventories	51,609		41,400
Trade receivables	57,384	3,102	53,291	3,707
Current tax assets	844		970
Financial assets	237		75
Other assets	1,738		3,371
Cash and cash equivalents	10,924		9,916
Total current assets	122,736		109,023
TOTAL ASSETS	230,572		215,428
Share capital	21,343		21,343
Other reserves	106,235		168,737
Retained earnings	2,826		15,554
Profit for the period attributable to owners of	(330)		(75,166)
the parent Equity attributable to owners of the parent	130,074		130,468
Equity attributable to non-controlling interests	-		-
Total Equity	130,074		130,468
LIABILITIES
Financial liabilities	15,284		15,709
Deferred tax liabilities	3,328		2,762
Employee benefits	481		524
Provisions for risks and charges	2,437		1,356
Other financial liabilities	12,920		9,457
Total non-current liabilities	34,450		29,808
Financial liabilities	27,098		23,788
Trade payables	29,798	1	23,580	1
Current tax liabilities	624		772
Provisions for risks and charges	0		-
Other liabilities	7,027		5,591
Other financial liabilities	1,501		1,421
Total current liabilities	66,048		55,152
TOTAL LIABILITIES	100,498		84,960
TOTAL EQUITY AND LIABILITIES	230,572		215,428

ANNEX A

CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30 SEPTEMBER 2023 CONSOLIDATED INCOME STATEMENT

(thousands of Euro)	9M 2023	of which with related parties	9M 2022	of which with related parties
Revenue from sales	112,066	3,532	95,325	2,749
Cost of sales	(68,787)		(60,244)
Gross operating profit	43,279		35,081
Sales and distribution costs	(21,860)		(19,028)
General and administrative costs	(20,265)	(9)	(58,687)	(9)
Other non-operating costs/(revenue)	959		1,172
Operating profit/(loss)	2,113		(41,462)
Financial income	140		1,227
Financial expense	(2,676)		(1,549)
Foreign exchange gains/(losses)	(7)		1,728
Gains/(losses) on equity investments	-		38
Profit/(loss) before taxes	(430)		(40,018)
Current and deferred taxes	100		(41)
Profit for the period before non-controlling interests	(330)		(40,059)
Profit (loss) for the period attributable to non-controlling interests	-		-
Profit for the period attributable to owners of the parent	(330)		(40,059)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(thousands of Euro)	9M 2023	of which with related parties	9M 2022	of which with related parties
Profit for the period attributable to owners of the parent	(330)		(40,059)
Other components of comprehensive income that will not be reclassified to profit or loss
Actuarial gains (losses) on defined benefit plans	15		233
Actuarial gains (losses) on provisions for risks	32		58
Gains/(losses) on translation of foreign operations	299		1,310
Income taxes	(13)		(81)
Total other components of comprehensive expense for the period	333		1,519
Total comprehensive economic results for the period	4		(38,540)

ANNEX A

CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE PERIOD ENDED 30 SEPTEMBER 2023 CONSOLIDATED STATEMENT OF CASH FLOWS

(thousands of Euro)	9M 2023	9M 2022
Gains/(losses) of the period	(330)	(40,059)
Amortisation, depreciation and impairment of goodwill	9,888	49,150
Net impairment losses and accruals	(505)	68
Accrued financial (income)/expense	2,472	203
Current and deferred taxes	(100)	41
Other non-monetary changes	67	84
Flow generated (absorbed) by operating activities before NWC	11,493	9,487
(Increase)/decrease in inventories	(8,975)	(16,374)
(Increase)/decrease in trade receivables	(2,472)	(3,449)
Decrease in trade payables	6,063	6,837
Increase/(decrease) in other assets and liabilities	1,786	5,140
Payment of employee benefits and change in provisions	43	(106)
Cash flow generated (absorbed) by operating activities	7,937	1,536
Interest paid and other net charges paid	(2,180)	(1,549)
Income taxes paid	(899)	(1,044)
Net cash flows generated by operating activities	4,858	(1,057)
Acquisition of subsidiaries, net of cash acquired	(2,552)	-
Purchase of property, plant and equipment and intangible assets	(3,205)	(2,912)
Net cash flows generated (used) by investing activities	(5,757)	(2,912)
(Dividends distributed)	-	(1,012)
Other financial assets and liabilities	(908)	(1,145)
Other changes in equity	(432)	209
Decrease in bank loans and borrowings and loans and borrowings from other financial backers	2,885	5,640
Payment of transaction costs relating to financial liabilities	63	80
Net cash flows generated (used) by financing activities	1,609	3,772
Increase/(decrease) in cash and cash equivalents	709	(197)
Effect of exchange rate fluctuations (*)	299	(531)
Total cash flow	1,009	(728)
Opening cash and cash equivalents	9,916	8,138
Closing cash and cash equivalents	10,924	7,410

ANNEX B

RECLASSIFIED CONSOLIDATED INCOME STATEMENT

(thousands of Euro)	9M 2023	Of which	% of revenue	9M 2022	Of which related parties	% of revenue
		related parties
Revenue from sales	112,066	3,532	100%	95,325	2,749	100.0%
						-63.2%
Cost of sales	(68,787)		-61.4%	(60,244)
Gross operating profit	43,279		38.6%	35,081		36.8%
Sales and distribution costs	(21,860)		-19.5%	(19,028)		-20.0%
General and administrative costs	(20,265)	(9)	-18.1%	(58,687)	(9)	-61.6%
Other non-operating	959		0.9%	1,172		1.2%
(expense)/revenue
Operating profit/(loss)	2,113		1.9%	(41,462)		-43.5%
* of which PPA amortisation	4,990		4.5%	4,845		5.1%
* of which impairment of goodwill	-		0.0%	39,925		41.9%
* of which non-recurring	982		0.9%	1,697		1.8%
expense/(revenue)
* of which foreign exchange	(94)		-0.1%	1,425		1.5%
gains/(losses)
Adjusted operating profit/loss (Adjusted EBIT)	7,991		7.1%	6,429		6.7%
* of which depreciation and
amortisation (excluding PPA	4,886		4.4%	4,495		4.7%
amortisation)
Adjusted EBITDA	12,878		11.5%	10,924		11.5%
Financial income	140		0.1%	1,227		1.3%
Financial expense	(2,676)		-2.4%	(1,549)		-1.6%
Foreign exchange gains/(losses)	(7)		0.0%	1,728		1.8%
Gains/(losses) on equity investments	0		0.0%	38		0.0%
Profit/(loss) before taxes	(430)		-0.4%	(40,018)		-42.0%
* of which PPA amortisation	4,990		4.5%	4,845		5.1%
* of which impairment test on
goodwill	-		0.0%	39,925		41.9%
* of which non-recurring
expense/(revenue)	982		0.9%	1,697		1.8%
* of which fair value impact on the
warrant and put&call	0		0.0%	(1,226)		-1.3%
Adjusted profit/loss before taxes	5,543		4.9%	5,223		5.5%
Current and deferred taxes	100		0.1%	(41)		0.0%
Profit (loss) for the period
attributable to owners of the parent	(330)		-0.3%	(40,059)		-42.0%
* of which PPA amortisation	4,990		4.5%	4,845		5.1%
* of which impairment test on
goodwill	-		0.0%	39,925		41.9%
* of which non-recurring
expense/(revenue)	982		0.9%	1,697		1.8%
* of which fair value impact on the	0		0.0%	(1,226)		-1.3%
warrant
* of which tax effect on the above	(1,643)		-1.5%	(1,506)		-1.6%
items
Adjusted profit (loss) for the period	4,000		3.6%	3,676		3.9%
attributable to owners of the parent

NB: for the purpose of a better presentation of the company's results, the transport costs associated with material purchases were subdivided from transport on sales and classified under "Cost of Sales"; for consistency, the 2022 figures have been reclassified accordingly.