Salcef S p A : 2023 Integrated Report

2023 INTEGRATED REPORT

( T r a n s l a t i o n f r o m t h e I t a l i a n o r i g i n a l w h i c h r e m a i n s t h e d e f i n i t i v e v e r s i o n )

Salcef Group S.p.A.

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

This report, prepared in PDF format for ease of consultation, is not the official version published in accordance with Directive 2004/109/EC (the "Transparency Directive") as subsequently amended.

2023 Integrated Annual Report

2

1

OVERVIEW

Letter to the stakeholders	6
Highlights	8
Guide to the report	10
Methodological note	11

2

DIRECTORS' REPORT

2.1 - Part I - Presentation of the group

Profile and operations	17
Structure	21
The history of a key player in the	23
railway sector
Company officers	24

2.2 - Part II - The group's performance

Financial figures and key	28
performance indicators - group
Economic value generated and	34
distributed
Government grants and subsidies	35
Financial figures and key	36
performance indicators - parent
Performance of consolidated	39
companies
Share performance	44
Key events of the year	45

2.3 - Part III - Consolidated non-financial statement

Business model and strategy	52
Salcef Group materiality	70
Risk management	95
Governance and responsible	112
business conduct

2023 Integrated Annual Report

2.4 - Part IV - Other information

Events after the reporting date	263
Treasury share repurchase	263
programme
2023-2026 stock grant plan	264
Outlook	264
Related party transactions	267
Corporate governance and	267
ownership structure report
Disclosure required by articles 70	267
and 71 of the Issuers' Regulation
Other information	268
Proposal for the approval of the	271
separate financial statements and
allocation of the profit for the year

3

CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2023

Consolidated financial statements

Statement of financial position	274
Income statement	276
Statement of comprehensive	277
income
Statement of changes in equity	278
Statement of cash flows	279

Notes to the consolidated financial statements

General information on the	281
reporting entity
Basis of preparation and	282
compliance with the IFRS
Basis of presentation	283
Accounting policies	285
Key risks and uncertainties	311
Notes to the main statement of	315
financial position captions
		3

Notes to the main income statement captions

Other notes to the consolidated financial statements

Significant non-recurring events and transactions

Events after the reporting date

358	Events after the reporting date	438
364	Attestation on the separate	439

377financial statements

377 5

Attestation on the

378

consolidated financial statements

4

SEPARATE FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2023

Separate financial statements

Statement of financial position	381
Income statement	383
Statement of comprehensive	383
income
Statement of changes in equity	384
Statement of cash flows	385

Notes to the separate financial statements

General information on the	387
reporting entity
Basis of preparation and	388
compliance with the IFRS
Basis of presentation	389
Accounting policies	390
Notes to the main statement of	394
financial position captions
Notes to the main income	425
statement captions
Other notes to the separate	431
financial statements
Significant non-recurring events	438
and transactions

INDEPENDENT AUDITORS' REPORTS

Independent auditors' report on the consolidated financial statements

Independent auditors' report on the separate financial statements

Independent auditors' report on the 2023 consolidated non- financial statement

6

REPORT OF THE BOARD OF STATUTORY AUDITORS

7

ANNEXES

GRI Content Index

SASB - GRI matrix

EU Taxonomy tables

2023 Integrated Annual Report

4

1

OVERVIEW

Letter to the stakeholders

Highlights

Guide to the report

Methodological note

2023 Integrated Annual Report

5

Letter to the stakeholders

GRI 2-22 Statement on sustainable development strategy

Dear stakeholders,

We present to you our second Integrated Annual Report, which recaps a very positive year for us. Indeed, the group successfully seized numerous opportunities stemming from the huge investments currently being made in Italy and abroad in the development of rail mobility. The order backlog significantly outperformed the previous year, reaching a group record of €2.2 billion at 31 December 2023, providing visibility for continued growth, investment and innovation.

In line with group strategy, which combines organic growth with acquisitions of railway sector companies, the Salcef Group completed the acquisition of a new company, Colmar Technik S.p.A., in August 2023. This company has been designing and manufacturing machinery used in building and maintaining railway lines since 1963. This was the group's first acquisition in the railway machinery segment where it already operates with the subsidiaries SRT and Delta in the US, boosting its production capacity in the specific Railway Machines business unit.

In terms of financial performance, 2023 was a particularly excellent year. Revenue shot up by over 40%, including 27% through organic growth, reaching almost €800 million, a new record for the group. Despite the impact of the usual and necessary post-acquisition activities to integrate the companies that recently joined the group, and an inflationary trend that was more contained but not yet at previous levels, profit margins were maintained at around 20%, in line with expectations. To support future growth, the group invested €61 million during the year to upgrade and modernise the machinery fleet, develop new products and solutions and boost the production capacity at its plants.

In a year of transition before the Corporate Sustainability Reporting Directive comes into force, the Salcef Group continued to improve its ESG reporting, putting it in a good position to be compliant with the new requirements as of the 2024 annual report. In terms of environmental performance, despite sharply increasing business volumes, the group's energy intensity and Scope 1 and Scope 2 emissions were reduced by 8% and 10%, respectively. Furthermore, Salcef Group filled out the CDP Climate Change questionnaire, an international benchmark for environmental disclosure to numerous financial and non- financial stakeholders, for the first time in 2023. It received a "B", which is the highest score in the management bracket. This places Salcef Group in the average range both at European and Construction sector level, with an above-average performance in the "Emission reduction initiatives and low carbon products", "Energy", "Risk Management processes", and "Scope 1 & 2 emissions" categories. Thanks mainly to the acquisition of Colmar, the group's headcount exceeded 2,000 for the first time, with 19% outside Italy, confirming the group's international scope. In March 2023, the board of directors officially set up an internal sustainability committee, a further step towards establishing even stronger and more integrated ESG oversight in the group's strategies and operations. The group's ESG performance has also been recognised by leading third-party assessment bodies. These include MSCI, which confirmed its A rating, and Ecovadis, which awarded the seven group companies assessed five platinum medals, one gold medal and one silver medal.

In the year that marked 75 years since the foundation of the company that created to the group, we feel an even deeper connection to our roots and a sense of gratitude to all the people who have contributed to the group's growth over the decades. A lot has changed since then, but what certainly remains is the determination to continue to grow and improve, standing on solid foundations and relying on a unique capacity for innovation, summed up by the group's new payoff "Leading the Railway".

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Gilberto Salciccia

(Chairperson of the board of directors)

Valeriano Salciccia (Chief executive officer)

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Highlights

We are leaders in the railway infrastructure sector. We have always worked to enhance railway infrastructures on a global level, increasing speed and safety in the movement of goods and people, through projects with the best quality standards that not only facilitate today's mobility, but define tomorrow's. We operate with the awareness that railways offer sustainable transport to safeguard future generations, ensuring less pollution and greater liveability for our cities. We are constantly committed to offering a highly specialised service to meet the needs of the railway market. We are at our clients' side through all the work phases, including design, construction and the supply of materials and machinery to ensure efficient, high quality customised solutions.

Over the years, the group has expanded to work on four continents, directly acquiring the skills needed for every element of our projects: from research and design to construction.

Our key performance indicators are set out below:

€m

Revenue

€m

	440.1	565.6	794.7
340.3
2020	2021	2022 6	2023

EBIT

€m

100.7

58.3 68.2 77.8

2020 2021 2022 62023

EBITDA

€m

78.9	97.3	115.0	160.5
2020	2021	20226	2023

Profit for the year
€m	56.3	64.0
52.2
41.7

20201.2

20211.2

2022 2,3,6

2023 2.3

1. Excludes the effect on financial expense of changes in fair value of the additional conversion warrants
2. Excludes the effect on income taxes of the recognition/reversal of deferred tax assets on fiscally-driven revaluations and the recognition of non-recurring tax expense
3. Excludes the effect on financial expense of changes in fair value of financial investments

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Net financial position

€m

114.5

		55.5
20.0			(7.2)
2020 4	2021	2022	2023

Equity

€m

408.8 432.5 441.1

273.4

20204.5 2021520225.6 20235

4 Excludes the effect of recognising the additional conversion warrants

5. Excludes the effect of the recognition in 2020 and reversal in subsequent years of deferred tax assets on fiscally-driven revaluations

6 Restated to retrospectively reflect the effects of the purchase price allocation during the year of the acquisitions of the PSC business unit and Francesco Ventura Costruzioni Ferroviarie S.r.l.

				2023 results (compared to 2022)
				+11% Consumption of electrical energy from renewable sources (23% of the total)
				-8% Energy intensity
	Environmental			-10% Scope 1 + Scope 2 emissions intensity rate
			"B" score in the group's first participation in CDP Climate Change questionnaire
				89.1% EU taxonomy-aligned turnover
				Mapping of Scope 3 emission completed
				Over 2,000 employees (+6%)
				+110% women in non-construction/manufacturing activities (41% of total vs. 28% in
	Social		2022)
			+91% Health and Safety training hours
				UNI/PDR 125:2022 certification for gender equality
				89.3% Purchases from local suppliers
				Sustainability committee set up
	Governance			Environmental and DE&I KPIs included in the STI and LETI remuneration of the
				Chairperson, CEO and key management personnel
				+26% audits carried out

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