Salcef Group

Quarterly Report • May 15, 2024

caz

(Translation from the Italian original which remains the definitive version)

ADDITIONAL FINANCIAL INFORMATION AT 31 MARCH 2024

Registered office: via Salaria 1027 - 00138 Rome - Italy

Salcef Group holding company

Fully paid-up share capital €141,544,532.20 Company registration number: 08061650589 | REA no.: RM – 640930 Tax code 08061650589 | VAT no. 01951301009 www.salcef.com

Additional financial information at 31 March 2024¹

TABLE OF CONTENTS

01

INTRODUCTION

Company officers	4
Group structure	5

02

DIRECTORS' REPORT

General Information	7
Financial figures and key	8
performance indicators
Human Resources	13
Key events of the period	14
Events after the reporting date	16
Outlook	16
Key risks and uncertainties	18
Related party transactions	20

03

INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 31 MARCH 2024

Statement of financial position	22
Income Statement	24
Statement of comprehensive	25
income
Statement of changes in equity	26

04

EXPLANATORY NOTES AT 31 MARCH 2024

General Information	28
Reporting standards	29
Basis of preparation	30
Accounting policies	31
Significant non-recurring	53
events and transactions
Statement of the manager in	54
charge of financial reporting

INTRODUCTION

Company officers

Board of Directors

appointed by the shareholders' meeting on 29 April 2022. In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024.

Remuneration and appointment committee

In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024

Audit and risk committee

In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024

Related parties committee

In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024

Sustainability committee

In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024

Board of statutory auditors

appointed by the shareholders' meeting on 29 April 2022. In office up until the date of the shareholders' meeting called to approve the financial statements as at and for the year ended 31 December 2024.

Manager in charge of financial reporting

Independent auditors appointed for the 2020/2028 nine-year period by the shareholders at their ordinary meeting of 5 October 2020.

Chairperson Gilberto Salciccia CEO Valeriano Salciccia Director Angelo Di Paolo Director (independent) Veronica Vecchi Director (independent) Bruno Pavesi Director (independent) Valeria Conti Director (independent) Emilia Piselli

Chairperson Emilia Piselli Member Bruno Pavesi

Member Emilia Piselli

Member Emilia Piselli

Chairperson Pier Luigi Pace

Fabio De Masi

KPMG S.p.A.

Member Veronica Vecchi

Chairperson Valeria Conti Member Veronica Vecchi Member Bruno Pavesi

Chairperson Bruno Pavesi Member Valeria Conti

Chairperson Veronica Vecchi Member Valeria Conti

Standing auditor Giovanni Bacicalupi Standing auditor Maria Assunta Coluccia Alternate auditor Carla Maria Melpignano Alternate auditor Maria Federica Izzo

Group structure

Additional financial information at 31 March 2024⁵

DIRECTORS' REPORT AT 31 MARCH 2024

Additional financial information at 31 March 2024⁶

General Information

Salcef Group S.p.A. (the 'Parent' or 'Company') is a company limited by shares with registered office in Rome (Italy) in Via Salaria 1027. It is the parent of a group of specialist companies active in the design, construction and maintenance of systems for railway infrastructure and tram and metro networks in Italy and abroad.

Salcef Group S.p.A.'s ordinary shares are traded on the Euronext STAR segment of the Euronext Milan market organised and managed by Borsa Italiana S.p.A.

This additional financial information at 31 March 2024 includes the interim financial statements of Salcef Group S.p.A. and its subsidiaries (together, the "Salcef Group" or the "Group"). The Parent's Board of Directors approved this information and authorised its publication during its meeting of 15 May 2024.

At the date of preparation of this additional financial information, Finhold S.r.l. (the "Ultimate Parent") holds the absolute majority of Salcef Group S.p.A. shares but does not manage or coordinate it.

On 6 October 2020, in accordance with articles 70.8 and 71.1-bis of the Issuers' Regulation, Salcef Group S.p.A.'s Board of Directors resolved to opt out of publishing the disclosures required by Annex 3B to the Issuers' Regulation for significant mergers, demergers, share capital increases through contribution in kind, acquisitions and sales.

Financial figures and key performance indicators

Salcef Group management assesses the Group's performance using certain performance measures not provided for by the IFRS. Although they are derived from the consolidated financial statements, they cannot be considered as substitutes of the IFRS indicators. Group management constructs the following alternative performance measures using the historical figures and they only relate to the reporting period covered by this report. They are not representative of the Group's future performance.

Reclassified income statement

(€'000)
	03.2024	03.2023	Var
Revenue	213,186	160,369	52,817
Operating costs	(177,060)	(130,175)	(46,885)
Other operating costs	(3,798)	(3,651)	(147)
Internal work capitalised	8,565	6,348	2,217
EBITDA	40,892	32,891	8,001
Amortisation, depreciation and impairment losses	(13,988)	(10,512)	(3,476)
EBIT	26,904	22,379	4,525
Adjusted financial income (expense)*	(3,388)	(2,851)	(537)
Adjusted pre-tax profit	23,516	19,528	3,988
Adjusted income taxes**	(7,677)	(5,707)	(1,970)
Adjusted profit for the period	15,840	13,821	2,019
*Changes in fair value of financial investments	1,414	1,669	(255)
** Deferred taxes on changes in fair value of financial investments and reversal of deferred tax assets on revaluation	(1,049)	(1,188)	139
Profit for the period	16,204	14,302	1,902

Key performance indicators

(€'000) 03.2024 03.2023 EBITDA Margin 19.18% 20.51% EBIT Margin 12.62% 13.95%

EBITDA: Operating profit before depreciation, amortisation and impairment losses EBIT: Pre-tax profit before net financial income (expense)

Key financial indicators

(€'000)
	31,032,024	31.12.2023
NFP	(2,164)	(7,209)
Adjusted equity	458,283	441,112

Where applicable, the alternative performance measures are presented in accordance with the ESMA Guidelines (Reference ESMA/2015/1415) as acknowledged by CONSOB (the Italian commission for listed companies and the stock exchange) communication no. 0092543 of 3 December 2015. In accordance with these documents, the criteria used to construct these measures are presented below.

• EBITDA is calculated by adjusting the profit or loss for the period to exclude taxation, net financial expense and amortisation, depreciation and impairment losses;
• EBIT is calculated by adjusting the profit or loss for the period to exclude taxation and net financial expense;
• adjusted pre-tax profit or loss is calculated by adjusting the profit or loss for the period to exclude taxation and other amounts, such as fair value gains or losses on short-term investments, related to non-recurring events, events unrelated to the core business and/or non-recurring transactions, as identified by the Group;
• adjusted profit or loss is calculated by adjusting the profit or loss for the period to exclude the effects related to non-recurring events, events unrelated to the core business and/or non-recurring transactions, as identified by the Group, such as fair value gains or losses on short-term investments as well as the tax impact arising from deferred taxes on the above-mentioned fair value gains or losses and the reversal of deferred tax assets recognised on tax revaluations, as detailed further on;
• the EBITDA margin is calculated as the ratio of EBITDA (as identified above) to total revenue;
• the EBIT margin is calculated as the ratio of EBIT (as identified above) to total revenue;
• the net financial position is calculated by deducting cash and cash equivalents and current financial assets from current and non-current financial liabilities. The net financial position is adjusted to exclude the effect of any events unrelated to the core business and/or related to non-recurring transactions with an impact on the net financial position;
• adjusted equity is calculated by deducting from equity the effects of the initial recognition in 2020 of deferred tax assets recognised on tax revaluations, as detailed further on, and the effects of the reversal of such deferred tax assets from 2021 onwards.

These indicators are shown at consolidated level in order to present the Group's financial performance, net of non-recurring events, events unrelated to the core business and non-recurring transactions, as identified by the Group. They reflect the main financial and operating figures net of non-recurring income and expense not directly related to core business activities and operations, thereby enabling an analysis of the Group's performance more consistent with that of previous periods.

In the first three months of the year, the Group recognised revenue of €213,186 thousand, up €52,817 thousand (+32.9%%) on the figure of €160,369 thousand of the same period of 2023. This increase is mainly due to the Group's continuing remarkable organic growth as well as to the changes in the consolidation scope following the acquisition of Colmar Technik S.p.A. (in August 2023) which, therefore, did not contribute to the income statement for the comparative period.

EBITDA amounts to €40,892 thousand, a €8,001 thousand increase (+24.3%) over the €32,891 thousand of the corresponding period of 2023. The EBITDA margin is 19.18%, down with respect to the value for the first quarter of 2023 (20.51%) in line with the budget expectations, due to the expansion of the consolidation scope further to the latest acquisitions. The effects of global inflationary trends on profit margins - though partially diminished in the first three months of 2024 -, are substantially mitigated by both the cost-efficiency measures implemented by the Group and the regulatory amendments which have introduced price adjustment mechanisms for public tenders.

EBIT, of €26,904 thousand, rose by €4,525 thousand compared to the first three months of 2023 thanks to the growth in volumes already referred to and in spite of the increase in amortisation of intangible assets and the capital gains on property, plant and equipment recognised further to the purchase price allocation implemented with effect from June 2023.

The adjusted profit is €15,840 thousand (compared to €13,821 thousand for the same period of 2023). The adjustments to the profit for the first quarter 2024 of €16,204 thousand related to: (i) the fair value gains on financial investments of €1,414 thousand compared to 31 December 2023, (ii) the related deferred taxes of €339 thousand and (iii) the release of deferred tax assets on revaluations of €709 thousand. The financial income of Euro 1,414 thousand corresponds to the fair value gains on the Group's short-term investments. On the other hand, the tax expense, amounting to €709 thousand, derives from the release of the deferred tax assets recognised at 31 December 2020 (equal to €17,550 thousand) to offset the lower taxes recognised by the subsidiaries that revalued assets in their respective financial statements at 31 December 2020.

Specifically, the subsidiaries Salcef S.p.A., Euro Ferroviaria S.r.l. and Overail S.r.l. - which prepare their financial statements in accordance with OIC - revalued their assets in accordance with the "August Decree" in their financial statements at 31 December 2020 and decided to apply the substitute tax scheme, equal to 3% of the net balance of the revaluation, in order to apply the revaluation for tax purposes. This revaluation was reversed for consolidation purposes, but retained full effect for tax purposes.

Accordingly, the tax value of the assets revalued in the subsidiaries' financial statements is higher than their carrying amount in the Salcef Group's consolidated financial statements. This difference led to the recognition of deferred tax assets (IRES - corporate income tax and IRAP - regional productivity tax) in the consolidated financial statements at 31 December 2020 in accordance with IAS 12. The deferred tax assets reverse starting from 2021 as the subsidiaries that applied the revaluation fully deduct the greater depreciation arising from the revaluation in the calculation of current taxes (IRES and IRAP), while such greater depreciation is reversed in the Salcef Group's interim consolidated financial statements.

In the statement of financial position, the Salcef Group's net financial position as of 31 March 2024 is negative by €2,164 thousand, an improvement of €5,045 thousand compared to the negative net financial position of €7,209 thousand as of 31 December 2023. This improvement is mainly due to the liquidity generated by the Group during the quarter.

The table below provides a breakdown of the net financial position (and adjusted net financial position) at 31 March 2024 and at 31 December 2023 in accordance with the presentation method established in the ESMA Guidelines dated 4 March 2021.

(€'000)
NET FINANCIAL POSITION	31.03.2024	31.12.2023	Var
(A) Cash	157,124	140,929	16,195
(B) Cash equivalents	0	0	0
(C) Other current financial assets	87,759	88,495	(736)
(D) Liquidity (A + B + C)	244,883	229,424	15,459
(E) Current financial debt	(5,781)	(10,828)	5,047
(F) Current portion of non-current financial debt	(91,481)	(83,506)	(7,975)
(G) Current financial indebtedness (E + F)	(97,262)	(94,334)	(2,928)
(H) Net current financial position (G + D)	147,621	135,090	12,531
(I) Non-current financial debt	(149,785)	(142,299)	(7,486)
(J) Debt instruments	0	0	0
(K) Trade payables and other non-current financial liabilities	0	0	0
(L) Non-current financial indebtedness (I + J + K)	(149,785)	(142,299)	(7,486)
(M) Net financial position (indebtedness) (H + L)	(2,164)	(7,209)	5,045

Total adjusted equity at 31 March 2024 of €458,283 thousand is up €17,171 thousand on 31 December 2023. This change is due to the profit for the period, other comprehensive income (relating to the net actuarial gains/losses on defined benefit plans, changes in the fair value of hedging derivatives and financial assets measured at FVOCI as well as changes in translation reserve) and the recognition of the stock grant plans referrable to the first quarter 2024.

Total equity at 31 March 2024 includes the reserve for treasury shares of €28,081 thousand, corresponding to the 1,491,734 treasury shares held by the Parent (equal to 2.391% of its share capital). This situation is unchanged at the date of preparation of this report.

The Salcef Group's order backlog at 31 March 2024 exceeds €2.3 billion and includes track works (66.2%), energy sector works (23.1%), infrastructure works (5.9%), production of sleepers and prefabricated products (2.2%), machinery construction and maintenance contracts (2.2%) and grinding works (0.3%), which ensure continuity using the existing operating units active in the relevant geographical areas.

The Salcef Group's order backlog at 31 March 2024 is detailed by business unit below:

Human Resources

With respect to its workforce in first three months of 2024, the Salcef Group carries out its activities in full compliance with the relevant environmental and occupational hygiene regulations as well as applicable foreign legislation. A breakdown of the Salcef Group's workforce as at 31 March 2024 compared to the previous year is as follows:

Workforce by category

WORKFORCE	Italy	Abroad	TOTAL
Managers	41	21	62
White collars	455	114	569
Blue collars	1162	244	1,406
Total at 31 December 2023	1,658	379	2,037
Managers	41	21	62
White collars	479	121	600
Blue collars	1,238	252	1,490
Total at 31 March 2024	1,758	394	2,152

Key events of the period

Approval of 2023 Integrated Annual Report and dividend distribution

During their ordinary meeting of 22 April 2024, the shareholders approved the financial statements as at and for the year ended 31 December 2023, which showed a profit for the year of €39,068,251, and acknowledged the consolidated financial statements as at and for the year ended 31 December 2023, which showed a profit for the year attributable to the Group of €61,903,162, as well as the consolidated nonfinancial statement prepared in accordance with Legislative decree no. 254/206.

The Shareholders' Meeting also resolved to distribute a dividend of €0.55 per eligible ordinary share at the record date (i.e. 14 May 2024), with coupon detachment on 13 May 2024 and payment date on 15 May 2024. The Shareholders' Meeting then approved the allocation of the remaining profit for the year, allocating €1,953 thousand to the legal reserve and €3,615 thousand to the reserve for retained earnings.

The Shareholder's Meeting has also:

• i) examined the Report on remuneration policy and compensation paid, prepared in accordance with current legal and regulatory provisions, approved the Company's remuneration policy for the financial year 2024 included in the first section of such report, pursuant to art. 123-ter.3-bis/3 ter of Legislative decree no. 58/98 (the 'TUF', i.e. 'Consolidated Law on Finance') and resolved in favour of the second section of the report, pursuant to art. 123-ter.6 of the TUF;
• ii) approved the 2024 Stock Grant Plan, which provides for the free allocation of up to a maximum of 40,000 ordinary shares without nominal value if pre-established performance objectives are achieved. The beneficiaries are certain employees, including executives with strategic responsibilities ('key management personnel') of the Company and of the companies of the Salcef Group and other beneficiaries holding management positions in the Group who can have a significant impact on the Company's sustainable success. The Plan is functional to the shortterm incentive plan (Management by Objectives, MBO) and has one grant cycle for the allocation of shares for free if the performance objectives are achieved;
• iii) approved the 2024-2026 Performance Shares Plan, which provides for the free allocation of up to a maximum of 40,000 ordinary shares without nominal value if pre-established performance objectives are achieved. The beneficiaries are certain executives with strategic responsibilities of the Company and of the companies of the Salcef Group. The Plan consists of one grant cycle for the free-of-charge allocation of shares if the performance objectives are achieved.

Agreement signed between the Shareholders of Finhold S.r.l., the major shareholder of Salcef Group S.p.A., and Funds advised by Morgan Stanley Infrastructure Partners

On 24 April 2024 the shareholders of Finhold S.r.l. (hereinafter also the 'Founding Shareholders') and Funds advised by Morgan Stanley Infrastructure Partners (hereinafter also 'MSIP') published, through Salcef Group S.p.A., a press release in which they announced the signing of a binding investment and purchase agreement to: (i) demerge all the Salcef Group S.p.A. shares currently held by Finhold into a newly established company resulting from the demerger of Finhold executed by the Founding Shareholders ('NewCo'); and (ii) transfer approximately 42% of their shareholding in NewCo to Funds advised by MSIP, a leading global infrastructure investment platform, through a combination of primary and secondary transactions (the 'Transaction').

The closing of the Transaction is subject to customary conditions precedent, including antitrust and regulatory clearances in the relevant jurisdictions. The parties expect the Transaction to close by July 2024.

Upon closing of the Transaction, the Founding Shareholders will continue to hold a majority stake in NewCo and thus, indirectly, in Salcef Group S.p.A.. At the same time, the Founding Shareholders and Funds advised by MSIP will sign shareholders' agreements relating to the direct and indirect governance of Salcef Group S.p.A. and as such will be required to launch a mandatory tender offer (the 'MTO') to acquire all the remaining outstanding shares of Salcef Group S.p.A. (currently representing approximately 35.23% of the relevant share capital and 33.7% of the share capital net of treasury shares).

The purchase price of the MTO will be €26.55 per share (inclusive of dividend) (the 'MTO Price'), which incorporates a premium of 20% with respect to the official price of Salcef Group S.p.A. shares as of 23 April 2024 (the last trading day before publication of the aforesaid press release), and a premium of 17% and15% over Salcef's volume weighted average trading price over the past three (3) months and twelve (12) months, respectively. Furthermore, taking into account that, as of the date of approval of this document, the dividend of € 0.55 per share, as approved by the General Meeting of Salcef Group S.p.A. held on 22 April 2024, has already been distributed, the MTO Price will be reduced by the amount of such dividend distribution.

The aim of the MTO is to achieve the delisting of Salcef Group S.p.A. shares from the Euronext STAR Milan market managed by Borsa Italiana S.p.A.. If this delisting does not take place through the MTO, the Founding Shareholders and MSIP intend to achieve it by other means, including the merger of Salcef Group S.p.A. into the special purpose vehicle which will be launching the MTO on their behalf.

The shareholders' agreements relating to the governance and the stabilisation of the ownership of Salcef Group S.p.A. will be signed with the aim of generating long-term industrial value.

The Transaction values the equity of Salcef Group S.p.A. at about Euro 1,62 billion (inclusive of dividend, net of treasury shares).

Incorporation of Forail S.r.l.

Forail S.r.l. (100% owned by Salcef Group S.p.A.) was incorporated in May 2024; it will perform the maintenance of railway machinery within the Railway Machines business unit. The company's registered office is at Via Salaria, 1027 – Rome and its share capital is €10,000.

Legal proceedings under Italian Legislative Decree 231/2001

With reference to the ongoing criminal proceedings by the Milan Public Prosecutor's Office involving the subsidiaries Salcef S.p.A., Euro Ferroviaria S.r.l. and Francesco Ventura Costruzioni Ferroviarie S.r.l., together with other companies, as of the date of this document there have been no significant changes with regard to the information already provided in the 2023 Integrated Annual Report. Specifically, at the preliminary hearing on 9 May 2024 the Investigating Judge rejected all points raised with regard to territorial jurisdiction and thus ordered that the hearing should proceed in ordinary form.

Therefore, the criminal proceedings are still at the Preliminary Hearing stage before the competent Investigating Judge at the Milan Court and none of the Group companies has currently been charged for the alleged offences pursuant to Legislative decree no. 231/2001, as no decision has yet been taken by the judge on whether or not to charge. The next hearing in the proceedings is set for 23 May 2024.

Therefore, as things now stand, on the basis of the legal opinions acquired by the Group (which consider the documents of the proceedings, the charges and the conduct of the suspects), the opinions acquired on the validity of the Organisational, management and control model as per Legislative decree no. 231/2001 adopted by the companies, as well as the opinions acquired on the effectiveness of the services received, while not being able to exclude any procedural implications, it is believed that: (i) there is a remote chance that the Group companies involved will be charged, (ii) there is a remote chance that any liabilities linked to the proceedings apart from the amounts subject to preventive seizure will arise, and (iii) there is a remote risk that the proceedings may, to date, affect the companies' eligibility under the general requirements pursuant to the ineligibility regulations of the new Procurement Code.

The events described above, which took place after 31 March 2024, will not have any impact on the Group's financial position or its financial performance and cash flows. No further events have taken place from the reporting date to the date of preparation of this report that would have had a significant impact on the group's financial position at 31 March 2024 or its financial performance and cash flows for the three months then ended.

Outlook

In light of the results achieved during the first three months and of the solidity of the Group's backlog, 2024 revenue growth expectations reported in the Group's guidance are confirmed.

In the absence of further and unforeseeable deteriorations of the geopolitical scenario and of the inflationary tensions, the Group profitability for 2024 is expected to remain broadly in line with the one recorded in the first three months of the year.

Key risks and uncertainties

The main financial risks to which the Group is exposed are analysed below along with the related management methods.

Inflation and production cost risk

Like most of the operators in the public works construction and maintenance sector in Europe, the Salcef Group is exposed to the risk of increases in the direct costs linked to the significant inflationary phenomena affecting Italy and the majority of the countries in the world. Specifically, the cost of labour, raw materials, semi-finished and finished products has jumped, as have the costs of subcontractors and other service providers. Furthermore, the effects of the conflict in Ukraine are dire in terms of increases in many production costs, particularly energy sources. Most of the contracts in the Salcef Group's backlog do not include price revision clauses, although a series of legislative measures has been enacted in this respect in the past two years, particularly in Italy, the latest being the decree "Decreto Aiuti" converted into Law no. 91 of 15 July 2022, which introduced price adjustment mechanisms for processing and supplies, not only for new contracts, but above all for contracts that had already been entered into by 2021, along with the 2023 Budget Act no. 197/2022 which set out guidelines for adjusting prices for 2023. In 2024, Law no. 18/2024 ('Decreto Milleproroghe') (converting Decree law no. 215/2023) extended the price adjustment mechanism applied in 2023. As a result, no negative changes are expected for the Group's operations in Italy.

The Group has therefore partly offset the effects of the widespread increase in prices with the greater revenue from higher consideration, limiting the impact on consolidated profit margins.

The Group has not yet experienced any production slowdowns due to shortages of materials, transporters and service providers.

Risk of the loss of qualifications and certifications

Similarly to all the other operators in the public sector construction industry, the Salcef Group is exposed to the risk that its production activities could be restricted should its qualifications and inclusion in supplier lists, SOA (certification required in Italy to submit tenders for public works contracts) certification and other authorisations necessary for it to carry out its business be lost or limited, including as a result of measures taken by authorities and/or customers following disciplinary proceedings. These events would limit its operations and possible participation in calls for tenders.

Interest rate risk

The Salcef Group uses third party funding which mostly bears floating interest rates indexed to the short and medium to long-term Euribor. The risk arising from fluctuations in interest rates is growing due to the upwards trend in rates which accelerated compared to previous years. The Group's interest rate risk hedging

policy is to neutralise the effect of increases in interest rates by agreeing interest rate swaps for its main loans in place. The purpose of such interest rate swaps is solely to hedge interest rate risk; therefore, the Group does not hold derivatives for speculative purposes.

Currency risk

The Salcef Group carries out nearly all its main transactions, except for those in North America, using the Euro and only a minimal part using other currencies. Therefore, it does not hedge future cash flows on specific contracts to neutralise or mitigate the effect of fluctuations in exchange rates on foreign currency revenue or costs, which is limited to just a few contracts.

All the revenue and costs that Delta Railroad Construction Inc. invoices and incurs are in local currency (USD) and, accordingly, there is no currency risk on contract management.

Should this situation change in the future and make the use of hedges necessary given the size of the amounts subject to currency risk, the Group will decide whether to change its currency risk hedging policy. In this regard, the Group decided to neutralise fluctuations in exchange rates on a specific transaction, i.e., it entered into currency forwards to hedge the cash flows on the loan in US dollars that Salcef Group S.p.A. granted to its subsidiary Salcef USA Inc.. The purpose of such currency forwards is solely to hedge currency risk; therefore, as mentioned above, the group does not hold derivatives for speculative purposes.

Liquidity risk

In the short and medium term, the Group is not exposed to liquidity risk as it has access to both internal and external funds sufficient to meet its expected liquidity requirements both for its current operations and to carry out its medium to long-term contracts and the investments planned in order to complete them.

Risk of changes in contract consideration

The Group is not exposed to the risk of changes in the contract consideration for ongoing contracts except for variations which are yet to be approved (a minimal part).

Credit risk

The Parent and its subsidiaries monitor credit risk arising from the day-to-day performance of their normal activities. The Group has not encountered significant cases of counterparty default.

Operational and management risks

Given the productive and industrial nature of the operations carried out by the Italian and foreign companies of Salcef Group S.p.A., the Group is exposed to the risk of partial reductions in production capacity of its business lines, which could be caused by several factors, the main ones being: accidents or extraordinary events at work sites and facilities involving the destruction of machinery and/or injuries to employees;

customer's application of early termination clauses included in contracts with customers; measures issued by domestic, foreign and supranational bodies curbing the companies' bargaining and operating capacity; the cancellation, suspension or downgrading of the operating companies from state-owned or private customers' supplier databases and/or of authorisations to participate in calls for tender and the performance of public works.

The Group mostly operates through mobile work sites located in different geographical areas. Therefore, business interruption issues arising from natural disasters and/or external events are limited to the affected work sites. To the extent technically possible, business continuity is ensured by a risk management policy aimed at minimising the effects of operational risks, including the use of relevant insurance policies.

Related party transactions

Related party transactions do not qualify as either atypical or unusual, as they form part of the Group's normal operations. They are carried out in the Group's interest on an arm's length basis. The "Related party transaction procedure" is available on the parent's website (www.salcef.com).

INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 31 MARCH 2024

CONSOLIDATED FINANCIAL

2019, 2018 AND 2017

SCHEDULES AT 31 DECEMBER

Additional financial information at 31 March 2024²¹

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS	31.03.2024	31.12.2023
Non-current assets
Intangible assets with finite useful lives	33,428,409	35,447,767
Goodwill	99,247,705	98,692,353
Property, plant and equipment	232,566,624	228,729,417
Right-of-use assets	14,579,775	13,332,762
Equity-accounted investments	132,643	132,643
Other non-current assets	33,330,436	33,285,777
- of which, with related parties	1,321,453	1,321,453
Deferred tax assets	23,012,280	23,542,489
Total non-current assets	436,297,872	433,163,208
Current assets
Inventories	63,907,824	58,569,987
Contract assets	207,568,613	185,786,026
Trade receivables	133,884,735	177,201,127
- of which, with related parties	16,506,064	12,611,091
Current tax assets	1,155,304	1,286,657
Current financial assets	87,759,423	88,494,879
Cash and cash equivalents	157,123,740	140,929,019
Other current assets	51,910,876	46,382,739
Total current assets	703,310,515	698,650,434
TOTAL ASSETS	1,139,608,387	1,131,813,642

LIABILITIES	31.03.2024	31.12.2023
Equity attributable to the owners of the parent
Share capital	141,544,532	141,544,532
Other reserves	303,468,226	241,307,225
Profit for the year	16,182,795	61,903,162
Total equity attributable to the owners of the parent	461,195,553	444,754,919
Share capital and reserves attributable to non-controlling interests	2,864,966	2,650,300
Profit for the year attributable to non-controlling interests	21,670	214,666
TOTAL EQUITY	464,082,189	447,619,885
Non-current liabilities
Non-current financial liabilities	142,435,554	135,236,953
Lease liabilities	7,349,722	7,061,792
Employee benefits	4,155,586	4,569,178
- of which, with related parties	277,594	642,128
Provisions for risks and charges	4,499,855	4,444,266
Deferred tax liabilities	13,174,927	13,439,741
Other non-current liabilities	4,079,013	4,286,112
Total non-current liabilities	175,694,657	169,038,042
Current liabilities
Current financial liabilities	91,481,068	89,160,192
Current portion of lease liabilities	5,780,908	5,173,500
Current employee benefits	2,648,413	2,517,389
- of which, with related parties	1,167,164	1,208,653
Contract liabilities	89,891,775	104,136,021
Trade payables	244,967,542	254,695,363
- of which, with related parties	515,113	977,613
Current tax liabilities	25,320,695	16,794,490
Other current liabilities	39,741,140	42,678,760
- of which, with related parties	425,863	657,475
Total current liabilities	499,831,541	515,155,715
TOTAL LIABILITIES	675,526,198	684,193,757
TOTAL EQUITY AND LIABILITIES	1,139,608,387	1,131,813,642

CONSOLIDATED INCOME STATEMENT

	03.2024	03.2023
Revenue from contracts with customers	211,141,201	156,859,897
- of which, with related parties	10,042,306	707,043
Other income	2,044,368	3,508,674
Total revenue	213,185,569	160,368,571
Costs for purchase of raw materials, supplies and goods	(61,688,797)	(37,921,677)
Costs for services	(76,228,380)	(60,914,204)
- of which, with related parties	(593,825)	(448,140)
Personnel expense	(39,143,310)	(31,339,521)
- of which, with related parties	(354,603)	(531,663)
Amortisation, depreciation and impairment losses	(13,987,935)	(10,511,837)
Other operating costs	(3,798,155)	(3,650,613)
- of which, with related parties	(60,000)	(60,829)
Internal work capitalised	8,565,169	6,347,813
Total costs	(186,281,408)	(137,990,039)
Operating profit	26,904,161	22,378,532
Financial income (expense)	(1,974,429)	(1,181,145)
- of which, with related parties	0	(12,475)
Pre-tax profit (loss)	24,929,732	21,197,387
Income taxes	(8,725,266)	(6,894,310)
Profit (loss) for the year	16,204,466	14,303,077
Profit (loss) for the year attributable to:
Non-controlling interests	21,670	36,663
Owners of the parent	16,182,796	14,266,414

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	03.2024	03.2023
Profit (loss) for the year	16,204,466	14,303,077
Other comprehensive income/(expense) that will not be subsequently reclassified to profit or loss
Net actuarial gains/(losses)	(43,669)	36,966
Net fair value gains/(losses) on securities measured at FVOCI	76,817	(5,563)
Related tax	(6,069)	(9,134)
Total	27,079	22,269
Other comprehensive income/(expense) that will be subsequently reclassified to profit or loss
Net hedging gains/(losses)	(650,430)	(362,026)
Related tax	156,104	86,886
Net exchange gains/(losses)	621,080	(486,369)
Total	126,754	(761,509)
Other comprehensive income (expense), net of tax	153,833	(739,240)
Comprehensive income	16,358,299	13,563,837
Attributable to:
Non-controlling interests	21,670	36,663
Owners of the parent	16,336,629	13,527,174

STATEMENT OF CHANGES IN EQUITY

	Share capital	Other reserves	Reserve for treasury shares	Actuarial reserve	Hedging reserve	Translation reserve	Retained earnings	Profit (loss) for the year	Equity att. to non controlling interests	Equity
Balance at 1 January 2024	141,544,532	158,827,083	(27,976,928)		(280,296) (1,160,354)	(4,303,877)	116,201,597	61,903,162	2,864,966	447,619,885
Profit for the period								16,182,796	21,670	16,204,466
Other comprehensive income		58,381		(31,302)	(494,326)	621,080				153,833
Comprehensive income for the period	-	58,381	-	(31,302)	(494,326)	621,080	-	16,182,796	21,670	16,358,299
Allocation of prior year profit							61,903,162	(61,903,162)		-
Stock grant		104,005								104,005
Total owner transactions	-	104,005	-	-	-	-	61,903,162	(61,903,162)	-	104,005
Balance at 31 March 2024	141,544,532	158,989,469	(27,976,928)		(311,598) (1,654,680)	(3,682,797)	178,104,759	16,182,796	2,886,636	464,082,189

EXPLANATORY NOTES AT 31 MARCH 2024

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS AT 31

DECEMBER 2019, 2018 AND

2017

Additional financial information at 31 March 2024 27

General Information

This additional financial information at 31 March 2024 has been prepared in accordance with article 154 ter.5 of the Consolidated Act on Finance ('TUF') introduced by Legislative Decree no. 195/2007 implementing Directive 2004/109/EC. The Parent's Board of Directors approved this information and authorised its publication during its meeting of 15 May 2024.

Reporting standards

This additional financial information at 31 March 2024 has been prepared pursuant to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Commission. The IFRS also include the International Accounting Standards (IAS) still in force and all interpretations of the International Financial Reporting Interpretations Committee (IFRIC), formerly the Standard Interpretations Committee (SIC), in force at the reporting date.

The provisions of IAS 34 (Interim financial reporting) were not applied in the preparation of the additional financial information at 31 March 2024. Indeed, the Group applies this standard to its half-year financial reports and not to quarterly reports. Moreover, although this additional financial information does not include all disclosures required for a full set of financial statements, it includes notes to explain the events and transactions relevant to understanding the variations in the Group's financial position and performance since the last annual financial statements.

The accounting policies applied in the preparation of the additional financial information at 31 March 2024 are described below.

Basis of preparation

The additional financial information at 31 March 2024 comprises an income statement, a statement of comprehensive income, a statement of financial position, a statement of changes in equity and these notes.

With reference to the statement of financial position, the Group opted to present assets and liabilities as current or non-current and to present the income statement items based on their nature. This approach is consistent with the Group's internal management reporting model and is therefore deemed more indicative than presenting the captions by use, as it provides more reliable and meaningful information according to the segment to which each caption belongs.

The income statement and the statement of comprehensive income are presented as two separate statements and, therefore, the Group has prepared a statement that presents the profit or loss components (the income statement) and another statement that starts with the profit or loss for the period and adds the other items of other comprehensive income thereto (the statement of comprehensive income). The latter shows changes in equity generated by transactions other than owner transactions.

Pursuant to Consob resolution no. 15519 of 28 July 2006, any income and expense on non-recurring transactions are recognised separately in profit or loss. Similarly, the balances of related party transactions are presented separately in the financial schedules.

The Group's presentation currency is the Euro, which is also the Parent's functional currency. Assets and liabilities are presented separately without offsetting. The figures in the interim consolidated financial statements and the notes thereto are in Euros, unless indicated otherwise. Therefore, the total balances in some schedules and tables may be slightly different from the sum of the individual items due to the rounding effect.

Accounting policies

The general principle adopted to prepare this additional financial information at 31 March 2024 is that of historical cost, except for those captions that the IFRS require be measured at fair value. The most significant accounting policies applied are described below.

The Group has prepared this additional financial information on a going concern basis and to give a true and fair view of its financial position, financial performance and cash flows for the period. Management has made use of estimates as described later.

Consolidation scope and basis of consolidation

The additional financial information at 31 March 2024 has been prepared by consolidating the Parent's separate interim financial statements at the same date and the interim financial statements of the Italian and foreign companies that it directly or indirectly controls.

The Group exercises control when it is exposed, or has rights, to variable returns from involvement with the investee or it has the power to directly or indirectly direct an investee's operating, management and administrative decisions and obtain benefits therefrom. Control is generally presumed to exist when the Group directly or indirectly holds more than half of an investee's voting rights.

The interim financial statements of subsidiaries are included in the interim consolidated financial statements from the date on which control commences and until the date on which control ceases. The interim financial statements of the consolidated companies prepared for consolidation purposes have been suitably adjusted and reclassified to comply with Group accounting policies, as detailed below. The reporting date of the subsidiaries' interim financial statements is the same as the Parent's.

The following table shows the companies included in the consolidation scope and the Parent's related direct and indirect investment percentages:

Consolidation scope at 31 March 2024
			Share/Quota	Investment percentage
COMPANY NAME	REGISTERED OFFICE	CURRENCY	capital	Indirect	Direct	Method
Subsidiaries
Salcef S.p.A.	Rome - Italy	Euro	60,000,000		100%	Consolidation
Euro Ferroviaria S.r.l.	Rome - Italy	Euro	100,000		100%	Consolidation
RECO S.r.l.	Rome - Italy	Euro	100,000		100%	Consolidation
SRT S.r.l.	Rome - Italy	Euro	100,000		100%	Consolidation
Overail S.r.l.	Rome - Italy	Euro	100,000		100%	Consolidation
Coget Impianti S.r.l.	Rome - Italy	Euro	1,000,000		100%	Consolidation
Francesco Ventura Costruzioni Ferroviarie S.r.l.	Rome - Italy	Euro	420,000		100%	Consolidation
Colmar Technik S.p.A.	Rovigo - Italy	Euro	1,000,000		100%	Consolidation
Colmar SK S.R.O.	Šahy - Slovak Republic	Euro	5,000	100%		Consolidation
Colmar USA Inc.	Niagara Falls (NY) - USA	USD	60,000	100%		Consolidation
Technik (UK) Limited	Richmond - Surrey - Great Britain	GBP	2	100%		Consolidation
Salcef Deutschland GmbH	Landsberg Am Lech - Germany	Euro	162,750		100%	Consolidation
Salcef Bau GmbH	Landsberg Am Lech - Germany	Euro	25,000	100%		Consolidation
Bahnbau Nord GmbH	Henstedt-Ulzburg - Germany	Euro	75,000	100%		Consolidation
Salcef USA Inc.	Wilmington (DE) - USA	USD	10,000,000		100%	Consolidation
Salcef Railroad Services Inc.	Wilmington (DE) - USA	USD	10,000	100%		Consolidation
Delta Railroad Construction Inc.	Ashtabula - Ohio - USA	USD	109,640	90%		Consolidation
Deltarr Holding Company, Corp.	Ashtabula - Ohio - USA	USD	500	90%		Consolidation
Delta Railroad Company of Canada, ULC	Toronto - Canada	CAD	1	90%		Consolidation
Salcef Nordic A.S.	Oslo (Norway)	NOK	30,000		60%	Consolidation
Consorzio Stabile Itaca S.c.a r.l.	Rome - Italy	Euro	40,000	98.03%		Consolidation
Consorzio Stabile Contese	Rome - Italy	Euro	30,000	55%		Consolidation
Associates and joint arrangements
Delta Railroad JV, LLC	Ashtabula - Ohio	USD	-	50%		Proportionate consolidation
Railworks/ Delta A Joint Venture	New York (NY) - USA	USD	-	45%		Proportionate consolidation
Sesto Fiorentino S.c.a r.l.	Imola - Italy	Euro	10,000	47.68%		Equity
Consorzio Armatori Ferroviari S.c.p.A.	Lecce - Italy	Euro	500,000	25%		Equity
RTS GmbH	Seevetal - Germany	Euro	12,500	50%		Equity

There were no changes in consolidation scope since 31 December 2023, in terms of companies in which the Group has acquired or lost control in the first three months of 2024.

The consolidation process applied in the preparation of the additional financial information at 31 March 2024 is as follows:

• subsidiaries are consolidated on a line-by-line basis, whereby:
  • the carrying amounts of their assets, liabilities, costs and revenue are included in full, regardless of the investment percentage held;
  • the carrying amount of the investment is eliminated against the group's share of the investee's equity;
  • the effects of intragroup transactions, including dividends distributed among the Group entities, are eliminated;
  • non-controlling interests are classified in the specific equity caption. Likewise, the profit or loss for the period attributable to non-controlling interests is presented separately in the income statement.
• Investments in joint operations are consolidated using the proportionate method whereby:
  • the carrying amounts of their assets, liabilities, costs and revenue are included in full in proportion to the investment percentage held;
  • the carrying amount of the investment is eliminated against the group's share of the investee's equity;
  • the effects of transactions among the companies consolidated on a proportionate basis,

including dividends distributed among the group companies, are eliminated;

• investments in associates and joint ventures are measured using the equity method, whereby their carrying amount is adjusted to consider the following:
  • consistency with Group accounting policies, where necessary;
  • the investor's share of the investee's profit or loss realised after its acquisition;
  • changes in the investee's equity that are not recognised in profit or loss under the IFRS;
  • dividends distributed by the investee;
  • any differences identified upon acquisition (measured using the criteria set out in the Business combinations section) and recognised in accordance with the IFRS;
  • the Group's share of equity-accounted investees' profit or loss is recognised in the income statement.

Dividends, impairment gains and losses and losses on consolidated investments, the gains or losses from intragroup sales of consolidated investments and the related tax are eliminated. Profits or losses from transactions among consolidated companies that have not been directly or indirectly realised with third parties are eliminated. Unrealised intragroup losses are recognised if the underlying transaction shows evidence of impairment of the transferred asset.

Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

The consideration transferred in the business combination is measured at fair value, which is the sum of the fair values of the assets acquired and the liabilities assumed at the acquisition date.

Contingent consideration, considered part of the transfer price, is measured at its acquisition-date fair value and the obligation to pay contingent consideration is classified as other current or non-current financial liabilities.

Any subsequent fair value gains or loss are recognised in profit or loss. The identifiable net assets acquired are generally measured at fair value at the acquisition date. Any goodwill that arises, calculated as the difference between the consideration transferred and the fair value of the net assets acquired, is tested annually for impairment. Any gain on a bargain purchase is immediately recognised in profit or loss while business combination's transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships, which are generally recognised in profit or loss.

If the fair value of the assets, liabilities and contingent liabilities can only be determined provisionally, the business combination is recognised on the basis of such provisional amounts. Any adjustments arising from the completion of the measurement process are recognised within 12 months of the acquisition date, increasing (decreasing) the provisional amount recognised for an identifiable asset (liability) with a corresponding increase (decrease) in goodwill. These adjustments are recognised as if the business combination had been completed at the acquisition date.

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Translation of foreign currency items and financial statements

Transactions in foreign currencies

Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences are generally recognised in profit or loss and presented within net financial income/(expense).

However, exchange differences arising from the translation of the following items are recognised in other comprehensive income:

• an investment in equity securities designated as at fair value through other comprehensive income (FVOCI) except on impairment, in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss;
• a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective;
• qualifying cash flow hedges to the extent that the hedges are effective.

Foreign operations

The assets and liabilities of foreign operations, including any goodwill and fair value adjustments arising on acquisition, are translated into Euros at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Euros at the average exchange rates of the period which approximate the exchange rates ruling at the dates of the transactions. Exchange differences are recognised in other comprehensive income and accumulated in the translation reserve, except for any exchange difference to be allocated to non-controlling interests.

		31.03.2024
CURRENCY	Code	Spot closing rate	Average rate
British Pound (Great Britain)	GBP	0.8551	0.8563
Egyptian lira (Egypt)	EGP	51.1202	38.4156
Romanian leu (Romania)	RON	4.9735	4.9735
UAE dirham (Abu Dhabi)	AED	3.9703	3.9876
US dollar (USA)	USD	1.0811	1.0858
Saudi riyal (Saudi Arabia)	SAR	4.0541	4.0717
Norwegian krone (Norway)	NOK	11.6990	11.4159
Swiss franc (Switzerland)	CHF	0.9766	0.9491
Australian dollar (Australia)	AUD	1.6607	1.6511

Exchange rates used by the Group at 31 March 2024

Intangible assets with finite useful lives and goodwill

An intangible asset is an identifiable non-monetary asset without physical substance that generates future benefits for the company.

Intangible assets acquired or developed internally are recognised when it is probable that the use of the asset will generate future economic benefits and the cost of the asset can be determined reliably.

They are recognised at acquisition and/or development cost including costs incurred to ready the asset for its intended use less accumulated amortisation and any accumulated impairment losses.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.

Amortisation begins when the asset that the Group has acquired is available for use and is allocated on a systematic basis over its useful life based on its residual use. The amortisation criteria, useful lives and residual use of the assets are reviewed at least at every annual reporting date to consider any significant variations. Specifically, patents, intellectual property rights, concessions, licences and trademarks are amortised over the shorter between the legal or contractual term and their residual use (from 3 to 5 years). Intangible assets with finite useful lives include the costs to fulfil a contract, i.e., costs that (i) directly refer to a contract into which the Group has entered, (ii) generate and/or enhance the resources that will be used to satisfy the contractual obligations and (iii) are recoverable through the future economic benefits of the contract. Considering the contractual obligations in the Salcef Group's contracts with customers, these costs

are usually pre-operating costs for contracts that do explicitly provide for their compensation (through specific items underlying the same contract) and they are recovered through the overall contract profit margin. The costs to fulfil a contract are recognised as intangible assets when incurred. They are amortised systematically according to the progress of the contract to which they refer.

When recognised as part of a business combination, goodwill is calculated as the positive difference between the consideration transferred in the acquisition, the share of the acquiree's equity attributable to non-controlling interests and the acquisition-date fair value of the acquirer's previously held equity interest in the net assets acquired and liabilities assumed. After initial recognition, goodwill is not amortised but is tested for impairment at least annually or more frequently if specific events or changes in circumstances indicate that it may be impaired. Reference should be made to the 'Impairment of non-financial assets' section for information on impairment testing.

There were no impairment indicators at 31 March 2024, consequently no impairment test were necessary.

Property, plant and equipment

Items of property, plant and equipment are measured at acquisition or production cost, less accumulated depreciation and any accumulated impairment losses. Cost includes costs incurred directly to move the asset and prepare it for its intended use in its final location and any costs of dismantling and removing the asset and restoring the site on which it was located.

Subsequent expenditure is recognised in the carrying amount of property, plant and equipment only if it is probable that the future economic benefits associated with the expenditure will flow to the Group. Costs incurred for regular maintenance are expensed when incurred.

Items of property, plant and equipment are depreciated systematically over their useful life. When the depreciable asset comprises separately identifiable parts, with different useful lives, they are depreciated separately using the component approach.

Land, including appurtenance land, is not depreciated.

The Group reviews the depreciation criteria and useful lives at least at each annual reporting date to incorporate any significant changes.

Depreciation starts when the asset is available for use. The following table shows the estimated useful lives of the various asset categories, shown as annual depreciation rates:

Average rate
Buildings	3%
Plant and machinery	15%
Industrial and commercial equipment	30%
Other assets	20%

The Group tests the carrying amount of items of property, plant and equipment for impairment when events or changes in circumstances indicate that the asset may be impaired. Reference should be made to the Impairment of non-financial assets section for information on impairment testing.

Gains and losses on the sale of assets or groups of assets are calculated by comparing the net disposal proceeds to the assets' carrying amount.

The cost of internally-produced assets is calculated using the same criteria as those applied to purchased assets. If the Group regularly produces similar assets for sale, the cost is generally the production cost of the asset produced for sale. Accordingly, any internal profits are deducted from the cost. Similarly, the cost of unusual waste of materials, work or other resources incurred in the internal production of an asset is not included in its cost.

Right-of-use assets and lease liabilities

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16. At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price. However, for the leases of property, the Group has elected not to separate non-lease components and to account for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The rightof-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-ofuse asset is periodically reduced by impairment losses, if any, and adjusted for any remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and adjusts it to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following: (i) fixed payments, including in-substance fixed payments; (ii) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; (iii) amounts expected to be payable under a residual value guarantee; and (iv) the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured, the Group adjusts the rightof-use asset accordingly.

The Group has opted to use the following practical expedients permitted by IFRS 16:

• it applied the same discount rate to leases with similar characteristics in terms of residual term for classes of similar underlying assets in similar locations;
• it excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application;
• it determined the contractual variables (especially the lease term) using hindsight;
• upon initial application of IFRS 16, for contracts previously classified as operating leases, the parent recognised a right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position before the date of initial application;
• upon initial application of IFRS 16, for contracts previously classified as finance leases, the parent deemed the carrying amount of the right-of-use asset and the lease liability to be the carrying amount of the lease asset and lease liability immediately before that date measured applying IAS 17.

The Group also applies the practical expedients for low-value assets and short-term leases (less than 12 months). Accordingly, the Group has elected not to recognise right-of-use assets and lease liabilities for leases for which the underlying asset, new and considered individually, is worth less than €5,000, and leases with terms of less than 12 months. The Group recognises the related lease payments as an expense over the term of the lease.

In the statement of financial position, right-of-use assets and lease liabilities are presented separately from other assets and other liabilities, respectively.

Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested at least annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cashgenerating units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss for the period. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation or depreciation, if no impairment loss had been recognised.

Inventories

Inventories are recognised at the lower of cost and fair value which is their net realisable value. The cost of raw materials, consumables and supplies is determined using the weighted average cost method. Cost includes the related charges.

Revenue from contracts with customers and contract assets/liabilities

Revenue from contracts with customers is recognised when (or as) control of a promised good or service is transferred to the customer for an amount reflecting the amount of consideration the Group expects to be

entitled to receive for such goods and services. Transfer of control of the good or service to the customer may be over time or at a point in time.

For contracts that meet the requirements for recognition over time, revenue is recognised on the basis of the stage of completion (or percentage of completion) of the contract whereby the costs, revenue and contract profit or loss are recognised by reference to the stage of completion of the contract activities. The percentage of completion is measured using the output method. The contract output is measured at the reporting date and reflects the best estimate of the work performed at the reporting date. The underlying assumptions are updated periodically. Any revenue or costs are recognised in the year in which the updates are made.

Conversely, when the requirements for revenue recognition over time are not met, revenue is recognised at a point in time.

The difference between the Group's performance and the customer's payments is recognised in the statement of financial position under contract assets or contract liabilities. In particular:

• net contract assets are the right to consideration for goods or services already transferred to the customer;
• contract liabilities are the Group's obligation to transfer goods or services to the customer for which consideration has already been received (or for which the right to consideration has already arisen).

Contract assets are shown net of any allowances.

The transaction price reflects the contract consideration, variations, price adjustments and any additional consideration resulting from claims. With respect to the latter, revenue is recognised when it relates to an enforceable right and it is highly probable that its inclusion will not result in a significant revenue reversal in the future. Furthermore, in determining the transaction price, the Group considers the effect of the following elements:

• a. variable consideration;
• b. the existence of a significant financing component in contracts;
• c. non-monetary consideration;
• d. consideration payable to the customer.

When, during the progress of contracts, the review of plans reveals that the costs to perform the obligations exceed contract revenue, the portion of costs in excess of the economic benefits generated by the contract is expensed entirely in the period the relevant amount becomes reasonably foreseeable and accrued in a provision for onerous contracts, under the current portion of provisions for risks and charges.

Financial assets and liabilities

Measurement and recognition

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus or minus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Financial assets - classification and subsequent measurement

Upon initial recognition, financial assets are classified into the following three categories, depending on their characteristics and the business model used to manage them: (i) at amortised cost; (ii) at fair value through other comprehensive income (hereinafter also referred to as "FVOCI"); (iii) at fair value through profit or loss (hereinafter also referred to as "FVTPL").

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and;
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Under the amortised cost method, after initial recognition, the financial asset's carrying amount is adjusted for principal repayments, any loss allowance and the cumulative amortisation of any difference between the maturity amount and the initial carrying amount. Amortisation is calculated using the effective interest rate, which is the rate that discounts the estimated cash flows associated with the financial asset to its carrying amount at initial recognition. Loans, receivables and other financial assets measured at amortised cost are presented net of the related loss allowance in the statement of financial position.

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal

and interest on the principal amount outstanding.

On initial recognition of an equity instrument that is not held for trading, the Group may irrevocably elect to present subsequent changes in the instrument's fair value in OCI. This election is made on a case-by-case basis. Fair value gains or losses on a financial instrument measured at FVOCI are recognised in equity, under other comprehensive income. Any fair value gain or loss accumulated is recognised in the equity reserve that includes other comprehensive income. Any interest income measured using the effective interest rate, exchange differences and impairment losses are recognised in profit or loss.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets.

On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. For the purposes of this assessment, "principal" is defined as the fair value of the financial asset on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g., liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: (i) contingent events that would change the amount or timing of cash flows; (ii) terms that may adjust the contractual coupon rate, including variable rate features; (iii) prepayment and extension features; and (iv) terms that limit the Group's claim to cash flows from specified assets (e.g., non-recourse features).

Financial liabilities – classification and subsequent measurement

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost under the effective interest method. Interest expense and exchange differences are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. For information on financial liabilities designated as hedges, reference should be made to that described below about derivatives.

Financial assets – derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

Financial liabilities – derecognition

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Reference should be made to the Impairment losses section for information on the expected credit losses on financial assets.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Financial instruments, derivatives and hedge accounting

The Group holds derivatives specifically for hedging interest rate risks. At the inception of designated hedging relationships, the Group documents the economic relationship between the hedged item and the hedging instrument, the risk management objective and strategy for undertaking the hedge, the identification of the hedging instruments, the hedged item or transaction and the nature of the hedged risk. At the inception of the transaction and subsequently on an ongoing basis, the Group also documents whether the hedging instrument meets the effectiveness requirements, i.e., whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

Hedging policies are considered on the basis of risk management objectives. The derivatives that do not meet the IFRS 9 requirements for hedge accounting are classified as at FVTPL.

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in other comprehensive income is limited to the cumulative change in fair value of the hedged item, determined on

a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

Cash and cash equivalents

Cash and cash equivalents include cash-in-hand and demand bank deposits. They are recognised at their fair value which is usually their nominal amount. Any bank deposits with a negative balance at the reporting date are classified under 'bank loans and borrowings'.

Impairment losses on financial assets

The Group recognises loss allowances for expected credit losses (ECLs) on:

• financial assets measured at amortised cost;
• contract assets.

This is based on a forward looking expected credit losses (ECL) model. Indeed, irrespective of an identified or latent specific trigger event, the expected losses determined under the ECL model shall be recognised for all financial assets (except for those measured at FVTPL). An impairment model based on the simplified approach permitted by IFRS 9 has been implemented for trade receivables. Specifically, they are divided into similar clusters based on the type of receivable, the customer's credit rating and the related geographical segment. To calculate the lifetime expected credit losses, the reference parameters (probability of default - PD, loss given default - LGD and exposure at default - EAD) were subsequently determined for each grouping based on the information obtained. For receivables due from customers with a high credit risk (speculative grade, non-investment grade or high yield) and/or with significant delays in payment, individual impairment losses are recognised in line with the parameters identified from time to time. For the other assets to be impaired, analyses were performed based on the general approach provided for by the standard, whereby a stage allocation was performed for the impaired items estimating the expected losses with the PD, LGD and EAD risk parameters. In this regard, the parent uses the low credit risk exemption provided for in the standard whereby low-risk receivables (investment grade) are allocated directly in stage 1.

Equity

When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.

The costs incurred for issuing equity instruments are recognised as a decrease in equity to the extent they are marginal costs directly attributable to the performance of the transaction, which would have otherwise been avoided.

Employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably.

Contributions to be paid to defined contribution plans are recognised as costs in profit or loss over the period of employee service. Contributions paid in advance are recognised under assets to the extent that the advance payment will decrease the future payments or generate a repayment.

The Group's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss.

Provisions for risks and charges

The Group recognises provisions for risks and charges in the following circumstances:

• it has a present obligation (legal or constructive) at the reporting date which will require an outflow of financial resources to settle past events;

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
• a reliable estimate can be made of the amount of the obligation (best possible estimate of the future expenditure).

The amount recognised as a provision represents the best estimate of the expenditure required to settle the obligation existing at the reporting date.

When the effect of the time value of money is material and the payment dates of the obligation can be reliably estimated, the amount of the provision is equal to the pre-tax future cash flows (the expected expenditures) discounted using a rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as financial expense in profit or loss.

Financial income and expense

The Group's financial income and expense include:

• interest income;
• interest expense;
• the net gain or loss on financial assets at FVTPL;
• the exchange gain or loss on financial assets and financial liabilities;
• impairment losses (and gains) on investments in debt securities carried at amortised cost or FVOCI.

Interest income and expense are recognised using the effective interest method.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

• the gross carrying amount of the financial asset; or
• the amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Income taxes

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current taxes are calculated on the taxable profit for the period in accordance with the tax laws applicable to each in-scope company at the rates enacted at the reporting date. They are shown net of payments on account, withholdings and tax assets as current tax liabilities if the balance is negative, or as current tax assets if the balance is positive.

As the parent and consolidator, Salcef Group S.p.A. has set up a domestic tax consolidation scheme for IRES (corporate income tax). The tax consolidation agreement governs the income/expense and financial transactions and the mutual responsibilities and obligations between the parent and the consolidated companies. It has a three-year term and was signed with the subsidiaries Salcef S.p.A., Euro Ferroviaria S.r.l., RECO S.r.l., SRT S.r.l., Overail S.r.l. and Coget Impianti S.r.l..

Deferred taxes are recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future;
• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax assets and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans of the individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Any unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax liabilities are calculated on all temporary differences between the tax base of an asset and its carrying amount (liability method). Deferred taxes are calculated using the tax rates expected to be enacted in the years in which the temporary differences will be recovered or settled.

Current and deferred taxes are recognised in profit or loss, except for those related to items recognised directly in equity which are also accounted for directly in equity. Deferred tax assets and liabilities are not discounted.

Fair value measurement

The Group relies on observable market data to the greatest extent possible in measuring an asset or liability at fair value. Based on the observable significant inputs used in measurement, the assets and liabilities measured at fair value in the interim consolidated financial statements are measured and classified based on the fair value hierarchy established by IFRS 13:

• level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• level 2 inputs: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
• level 3 inputs: unobservable inputs for the asset or liability.

The classification of the entire fair value of an asset or liability is based on the hierarchy level corresponding to the lowest significant input used for the measurement.

Share-based payments

In share-based payment transactions settled with equity instruments of the parent, the grant-date fair value of the incentives granted to employees (rights to receive shares) is recognised under personnel expense, with a corresponding increase in equity. The expense is allocated over the vesting period, during which the satisfaction of the performance conditions is assessed and the beneficiary must continue to satisfy the service condition in order to have the right to the incentives. The vesting period commences at the grant date, i.e., the date on which the parent and the employee accept the share-based payment agreement, acknowledging its terms and conditions.

The relevant cost is adjusted to reflect the actual number of incentives for which the service and performance conditions have been met and the non-market results achieved, so that the final cost recognised is based on the number of incentives that meet the above conditions at the vesting date.

Changes in accounting policies, errors and changes in accounting estimates

The Group only changes an accounting policy if the change is required by an IFRS or it results in the financial statements providing more reliable and more relevant information about the effects of transactions on the Group's financial position, financial performance and cash flows.

Changes in accounting policies are applied retrospectively and the Group adjusts the opening balance of the affected component of equity for the earliest prior period presented. The other comparative amounts disclosed for each prior period presented are adjusted as if the new accounting policy had always been applied.

The prospective approach is only applied when it is impracticable to reconstruct the comparative information.

Application of a new or amended IFRS is recognised as required by the standard. If the standard does not include specific transitional provisions, the change is recognised retrospectively or, if impracticable, prospectively. The Group treats material errors in the same manner as changes in accounting policies described above. Immaterial errors are corrected in profit or loss in the year in which the error is identified. The effect of a change in an accounting estimate is recognised prospectively by including it in profit or loss in the period of the change if the change affects that period only, or the period of the change and future periods, if the change affects both.

Use of estimates

Preparation of this additional financial information at 31 March 2024 in accordance with the IFRS requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, costs and revenue. Estimates are based on the most recent information available to management when preparing this additional financial information.

The accounting policies and the financial statements captions that required a higher degree of judgement in making estimates are as follows:

• Goodwill: goodwill is tested for impairment annually (or more frequently if there are impairment indicators) in order to determine whether an impairment loss is to be recognised in profit or loss. Specifically, impairment testing involves determining the recoverable amount of the CGUs to which goodwill is allocated by estimating their value in use or fair value less costs to sell. Calculating the recoverable amount of the CGUs involves the use of estimates that depend on factors that may change over time, with potentially significant effects on the valuations made by management.
• Contract assets and contract liabilities: in measuring contract assets and liabilities, the Group determines whether revenue is to be recognised over time or at a point in time and estimates the percentage of completion based on the actual progress of the work performed. Furthermore, any additional consideration for variations, price revisions, incentives and claims above those contractually agreed are estimated, as well as the plans of contracts from which provisions for onerous contracts may arise.
• Purchase price allocation: as part of business combinations, in exchange for the consideration transferred to obtain control of a company, the identifiable assets acquired and liabilities assumed

are recognised in the interim consolidated financial statements at the acquisition-date fair value, based on a purchase price allocation process. During the measurement period, management calculates these fair values based on estimates according to the information available on all facts and circumstances that existed as of the acquisition date that would have affected the measurement of the amounts recognised as of that date.

• Impairment of non-current assets: property, plant and equipment and intangible assets with a finite useful life are tested for impairment. Any impairment losses are to be recognised when there are elements indicating that there may be difficulties in recovering the assets' carrying amount through use. Impairment testing requires management to make subjective assessments based on information available within the Group and the market and on historical experience. In addition, a potential impairment loss is determined using appropriate valuation techniques. The correct identification of the elements indicating potential impairment and the estimates to calculate it depend on factors that may vary over time influencing management valuations and estimates.
• Fair value measurement: when measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as described in the Fair value measurement section.
• Measurement of lease liabilities: this is affected by the lease term, being the non-cancellable contract period, to which both of the following periods should be added: (a) periods covered by extension options, if the lessee is reasonably certain to exercise the options; and (b) periods covered by the option to terminate the lease early, if the lessee is reasonably certain that it will not exercise the option. Assessing the lease term involves the use of estimates that depend on factors that may change over time with potentially significant effects compared to the assessments made by management.
• Measurement of the loss allowances for expected credit losses: in the event of impaired positions (customers with high credit risk or significant past due amounts), the Group tests them individually using historical experience in order to estimate the expected losses on these positions. Estimates and assumptions are reviewed periodically and the effects of each change are reflected in profit or loss.
• Measurement of defined benefit plans: actuarial valuations require the development of various scenarios that may differ from actual future developments. The results depend on the technical parameters adopted including, inter alia, the discount rate, the inflation rate, the rate of wage increases and expected turnover. All assumptions are reviewed annually.

Actual results may differ from those reported in this additional financial information as of 31 March 2024 due to the uncertainty that characterises the assumptions on which the estimates are based. Estimates and assumptions are periodically reviewed and the effects of any changes are reflected in the period of change.

Significant non-recurring events and transactions

The Group's additional financial information was not affected by significant non-recurring events and transactions in the first three months of 2024. Moreover, the Group did not carry out any atypical or unusual transactions during the period.

CEO

(Valeriano Salciccia)

Statement of the Manager in charge of financial reporting as per article 154-bis.2 of Legislative decree no. 58/1998 (the Consolidated Act on Finance) 58/1998 (TUF)

Pursuant to article 154-bis.2 of the Consolidated Act on Finance, the manager in charge of financial reporting of Salcef Group S.p.A. states that the disclosure included in this additional financial information at 31 March 2024 is consistent with the supporting documentation, ledgers and accounting records.

Rome, 15 May 2024

Manager in charge of financial reporting Fabio De Masi

Additional financial information at 31 March 2024 53