Italian Sea S p A : Annual Financial Report at 31 December 2022

CONSOLIDATED ANNUAL FINANCIAL STATEMENTS AT 31 DECEMBER 2022 THE ITALIAN SEA GROUP S.P.A.

CONTENTS

LETTER FROM FOUNDER & CEO GIOVANNI COSTANTINO	4
SUMMARY DATA AND GENERAL INFORMATION	7
METHODOLOGICAL PREMISE	8
CORPORATE AND CONTROL BODIES	9
BOARD OF DIRECTORS	9
CONTROL, RISKS & SUSTAINABILITY AND RELATED PARTIES COMMITTEE	10
APPOINTMENT AND REMUNERATION COMMITTEE	10
BOARD OF STATUTORY AUDITORS	10
SUPERVISORY BODY PURSUANT TO ITALIAN LEGISLATIVE DECREE 231/01	10
INDEPENDENT AUDITORS	10
MANAGER RESPONSIBLE FOR PREPARING THE FINANCIAL REPORTS	10
GROUP PROFILE AND STRUCTURE	11
INFORMATION ABOUT THE GROUP	12
BRIEF HISTORY	14
SHAREHOLDING STRUCTURE	16
BUSINESS DEVELOPMENT	17
PRESENCE ON FINANCIAL MARKETS	18
THE TISG SHARE	18
INVESTOR RELATIONS	19
MARKET OUTLOOK	22
SHIPBUILDING DIVISION	22
REFIT DIVISION	24
INVESTMENTS	25
AWARDS AND ACKNOWLEDGMENTS	28
SUSTAINABILITY ROADMAP	29
RECLASSIFIED CONSOLIDATED INCOME STATEMENT	30
OPERATING REVENUES	31
CONSOLIDATED EBITDA	34
EBIT	35
OPERATING COSTS	36
BACKLOG	37
CONSOLIDATED RECLASSIFIED STATEMENT OF FINANCIAL POSITION	38
CONSOLIDATED NET FINANCIAL INDEBTEDNESS	40
ALTERNATIVE PERFORMANCE INDICATORS ("NON-GAAP MEASURES")	41
SIGNIFICANT EVENTS OF THE YEAR	46
SIGNIFICANT EVENTS AFTER YEAR END	49
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BUSINESS OUTLOOK	51
RISK MANAGEMENT	55
RISKS RELATED TO THE FINANCIAL SITUATION	55
RISKS RELATED TO OPERATIONS	57
RISKS RELATED TO MANAGEMENT OF RELATIONS WITH SUPPLIERS IN OUTSOURCED
PRODUCTION	58
RISKS RELATED TO THE STRUCTURE OF THE MARKET	59
RISKS RELATED TO ORDER MANAGEMENT	60
RISKS RELATED TO MANUFACTURING DEFECTS, NON-COMPLIANCE WITH CONTRACTUAL
SPECIFICATIONS AND PRODUCT LIABILITY, AND ACTIVATION OF GUARANTEES	61
RISKS RELATED TO LITIGATION AND TAX ASSESSMENTS	63
RISKS RELATED TO COMMERCIAL RELATIONS WITH THE INTERMEDIARY TISG Asia	66
OTHER INFORMATION	68
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2022	70
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	70
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT - BY NATURE	71
CONSOLIDATED CASH FLOW STATEMENT	72
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY	73
EXPLANATORY NOTES	74
COMMENTS ON THE MAIN CONSOLIDATED ASSET ITEMS	97
COMMENTS ON THE MAIN CONSOLIDATED LIABILITY ITEMS	111
COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME STATEMENT. 118
OTHER INFORMATION	127
PROPOSED RESOLUTION	132

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LETTER FROM FOUNDER & CEO

GIOVANNI COSTANTINO

Dear Shareholders,

Today we summarise the results of an extremely complex year, which brought challenges and changes not only to our Company, but to the entire world.

Completion of the acquisition of Perini Navi, the expansion of production capacity, the integration of new product lines and new exciting projects have transformed us into a completely different company from the one we listed on the Stock Exchange less than two years ago.

In particular, in 2022 we completed the acquisition of Perini Navi and integrated the related assets. The Perini brand, which has become iconic in the sailing world for its technical and stylistic innovation, already accounts for 14% of our order book just one year after the acquisition, and we expect a further boost in demand following the presentation of the new fleet, which we have entirely redesigned and innovated according to our aesthetic and research standards.

Currently, we have four Perini Navi sailing yachts under construction, including Art Explora, the largest sailing catamaran in the world, a project of extreme design, aesthetic and cultural value.

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Another important asset of the acquisition was the Picchiotti brand, which complements our product range. Founded in Limite sull'Arno in 1575, Picchiotti is perhaps the oldest brand in the nautical world at global level, and an expression of extreme class and timeless elegance. To honour this centuries-old history, we decided to create a new product line, consistent with the characteristics of the brand: the Picchiotti Gentleman, designed by the extraordinary architect Luca Dini and inspired by the American yachts of the 1960s.

The semi-custom project covers a size range from 24 meters to 55 meters and is experiencing great commercial success, particularly in North America.

Such an expansion of the product lines was also made possible by the increase in production capacity: in fact, we are completing the important investment plans "TISG 4.0" and "TISG 4.1" on the Marina di Carrara shipyard and completed small recovery interventions on the La Spezia and Viareggio sites integrated with the acquisition.

With the acquisition of TISG Turkey, we have also internalised a very important part of our production process, facilitating the flow of investments to Turkish facilities and intensifying control over the hull and superstructure metal carpentry phase.