El. En Spa Ord New

Good afternoon to everyone and welcome to El.En.'s Conference Call to present the first half 2026 financial results. Today's call will be recorded and there will be an opportunity for questions and answers at the end of the presentation. With us on the call today are Andrea Cangioli, El.En.'s Chief Executive Officer, and Enrico Romagnoli, El.En.'s Chief Financial Officer and Investor Relations Manager. Before we begin, please note that during this conference call, management will make certain statements regarding future expectations, plans and prospects. These statements may include forward-looking statements and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Certain statements in this call, including those addressing the company's beliefs, plans, objectives, estimates, and Andrea Cangioli. These statements may be affected if our assumptions turn out to be inaccurate. Consequently, no forward-looking statement can be guaranteed, and that your future results, performance or achievements may vary materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update the contents or the forward-looking statements to reflect events or circumstances that may arise after the date hereof. At the end of the presentation, if you have any questions, please raise your virtual hand. You will be given the floor in order of which the requests are received. Thank you for joining us today. We will now begin the conference call, and I would like to give the floor to Andrea Cangioli. Andrea, please go ahead.

Thank you. Thank you, Nicola. Thank you, Bianca. And good afternoon, everyone. Thank you for joining us in this call. As usual, Enrico Romagnoli will hold the call with me. I'll try to limit the A number of figures, financial figures, and just to speak on a description of what has been going on in these six months and leave the financial part to Enrico. We have several interesting topics to talk about in this first half of 2026. On one side, the excellent performance of our current activities. and on the other one, they announced the divestiture of the laser cutting division. The first half confirms the strength of the group growth trajectory and the direction we have been pursuing for some time, an increasing focus on the medical sector. Following last year's sale of Penta Laser Zhejiang, we took a further step finalizing at the beginning of August an agreement for the sale of the majority stake of Catlett Penta and of the residual parts of our laser cutting business to the market leader TRUMPF. To put this deal in the appropriate frame, Catlight is leading the laser cutting division of the LEN Group which includes a few distribution companies including the long-term owned Catlight do Brasil and in 2025 accounted for 121 million euro in change in revenues and 2 million in EVs, basically breaking even in terms of net income also due to interest expense on a net financial debt of about 16 million of euro. In both the year 2025 and the first six months of 2026, the business has been somehow struggling amid a complex market situation. Among others, I would like to recall the uncertainties and fluctuation cast on our main market, the Italian domestic market, but the announcements of tax policies supporting CAPEX that have been not timely followed up by the actual implementation of such policies. But most important, it's now more than two years that CatLight and the company, the group, has been operating under an imminent M&A condition. At first, when it was supposed to be sold together with our Chinese business and based on such news, And recently, when word of mouth concerning the possible sale to Trump has been leveraged by competitors to undermine customers and potential customers' confidence in Catalyze. By having CatLife enter the Trump world, we are positive we are giving to CatLife and its more than 200 employees the best opportunity to enhance their unique capabilities within an organization which is fully focused on the same business area and that will create the right environment and synergies for CatLife to continue its growth with the success it deserves. The transaction itself provides a handover of the business in terms that take into consideration its low profitability and material indebtedness. Therefore, as the price will be set according to future performance also, the currently foreseeable price corresponds to a certain loss in terms of P&L, considering the current value of the asset. While on a merely financial profile, the net financial position impact is already widely positive as we are releasing the financial debt. What's more relevant for our future is the strategic repositioning effect of resale on our business scope, with the medical sector's weight within our revenues growing from 72% in 2025 to 92% in the first half of 2026, according to the new perimeter. This said on laser cutting, I will complete the industrial sector picture before moving to medical. Following the laser cutting divestment, our remaining activities in the industrial business are now organized around three pillars. Marking, laser sources and the conservation of artistic heritage. Marking is carried on by lasers that specialize in systems for identification and decoration, of typically small surfaces and by solid state laser sources. Small logos, barcodes, QR codes are the typical output of a laser marking system, where the outlet markers cover a range that goes from automotive to the promotional and the fashion world from medical devices to electronic consumer goods. OTLABS covers the large-surface systems for decoration and for selected practical applications. ELEN itself, with its industrial division, is providing mid-power CO2 laser sources and sophisticated scanning systems to OTLABS and also to third parties, also developing and engineering special-purpose systems which involve both our laser sources and our scanning know-how. The conservation of artistic heritage is by far the most exciting and rewarding business in terms not of financial satisfaction, but based on the beauty of the masterpieces that our technologies are returning to life. Business-wise, it is expanding, but it is and it will stay tiny. These businesses all together will contribute to consolidated revenues for around 40 million in 2026. and I mean for the whole year. In terms of sales, this business runs on margins that are more similar, sometimes even higher, than in the medical field. The same could apply to EBIT and EBIT margin upon achievement of certain volume thresholds that were not met this year, but that were met in the past. Also in the recent past by Lasix, which is the largest of this organization, which is worth just shy of 30 million of revenues per year. Now let's look at our main business. Within the medical sector, performance was strong and broad-based across our operating units, ECA, Quanta Systems, Asclepion, ASA, and our application segments, they all contributed positively. The aesthetic segment stood out with double-digit growth, driven particularly by anti-aging applications, where we hold an international leadership position thanks to our micro-ablative CO2 technologies and other innovative non-invasive platforms like OncaPro and RedTouchPro, and also a variety of of Pico and NanoCircle short puller systems that are extensively used for betonine application, especially in the forest areas. The growth in the aesthetic segment is especially meaningful given the headwinds we face in the hair removal segment, a trend that is now taking place for several years and that in this 2026 has continued, also due to uncertainties that the wars are imposing on the Middle East area which is one of the most important markets for us. And believe me, we are not leaving any stone unturned to relaunch this segment which still represents roughly one-third of our aesthetic systems sales. Just to give you an example, we had planned months ago to participate to the Dubai Derm Exhibit this week, exhibition, Investing both in the exhibition booth and in the travelling of our staff and our selected KOLs. But the booth had to stay with our distributor only in a barely visited venue and our staff could not fly to the area. Also, it's not written in my notes, I would like to tell you that the success of Honda in this moment, which for sure is one of the main drivers of the growth in last year, It is so strong that for the first time we are experiencing a large number of competitors that are trying to blatantly copy our device. Especially certain Far East manufacturers made great effort in trying to copy Honda and they are trying to distribute systems which are really I mean, they try to copy Honda without even getting close in terms of performance, but of course by creating lots of confusion on the market. I just received a report, this is why I'm mentioning to you, which lists 19 copies available on the market to Honda. Of course, we are fighting with the appropriate legal means Andrea Cangioli, Andrea Cangioli, Andrea Cangioli, Andrea Cangioli, Andrea Cangioli, Andrea Cangioli, Andrea Cangioli, Notwithstanding the decline in the hair removal sales, I have to add that the good news here is that even with the declining performance of hair removal, we are doing very well. And furthermore, the overall margins in the segment are improving since the declining revenues involve the most competitive application segment, while our flagship innovative anti-aging systems bear higher margins and their value proposition is well accepted on the market, as I just mentioned. Surgical applications also perform strongly, supported by urology and by CO2 laser solutions both for ENT and gynecology. Urology system sales achieve by far the largest sales volume within the surgical segment, and the continuous expansion of the installed base is also the driver for future sales of consumables. Each surgical procedure performed by an urology laser system requires a sterile optical fiber and we provide such consumables to our customer base. Therefore, in combination to system sales, fiber sales are nicely aligning to a growth trend which is materially accretive to our profitability as the sales and marketing operation expense involved in the sales of sterile fiber are much lower. In the first half of 2026, we started up an important activity in the urology field. At the expiration of the distribution agreement with its historical distributor in the United States, Quanta System moved to establish its own distribution and logistics hub in the United States, which started its operation in the second quarter. The positive effects of the subsidiary operation on our business and our P&L are evident from the very beginning, with Quanta US providing additional sales volume, gross margin and EBIT, and consolidating Quanta Systems' leadership within the ELAM group in terms both of sales volume and profitability. The therapy segment contributed positively as well, with a minor growth. A very significant agreement with our US distributor was signed in July, moving to a closer cooperation between our company, in charge of the therapy business, ASSA, and its historical distributor, and the far largest customer. ASSA, jointly with the LEN, funded the distributor with a convertible loan that is expected to convert at first in 20% of the shares of the distributor, also triggering an option to further increase equity stakes in the future. It's a small transaction for the group, but it's a very relevant one for the ASA business and for the therapy business. We also experienced in the six months a very important organizational change, with the resignation for personal reasons of our general manager Paolo Santadeo, whose employment was concluded in this month of July. I would like to thank him for the valuable contribution he made to our activities and also for his excellent job in improving the managerial performance of several individuals working close to him. Based on these new capabilities, we were able to design a new organizational structure, particularly in ELEN, in DECA Business Unit, where Paolo was operating here in our premises in Florence. where certain managers emerged to higher responsibility reporting directly to the executive directors without the need of replacing the general manager position. The outlook on our markets remains positive. I'm not telling you anything new. We feel very confident in our capabilities and in the organization that we have crafted for pursuing the growth that our outlet markets seem to be able to sustain. We are now experiencing a phase of high profitability, and this is not taking place at the expense of the investment, and I mean also P&L investment, especially in R&D. I see the products that are granting our current success, like Honda Prop, I know how they have been designed, built, generated and brought to success on the market, and I know that we have the capabilities to bring to the markets new products that, based on new technologies or on improvements of the effectiveness of existing technologies, will be able in the future to replicate the success of our flagship devices. I give this floor to Enrico for the comments on our financial performance.

Thank you, Andrea. Good afternoon to everybody. We will briefly comment the first half financial result released yesterday. The half-yearly report has been prepared in accordance with IFRS accounting standard, classifying the contribution of the industrial cutting division of Catalan Penta in the discounted asset liabilities and income statement result according to the IFRS 5 for the current year. While for the previous year, the reclassification concerned only the income statement due to the binding agreement signed and communicated on August 7, which provides for the sales of 80% of the Ladder Captain Business Division. In the first half of 2026, the group closed with revenues exceeding 246 million, up more than 9%, compared to the same period in 2025, 226, confirming the positive performance of the first quarter. In the first half of the year, the medical segment posted growth over 10%, driven by strong performance in the second quarter, plus 11.4% versus 9.2% in the Q1. Convertibly, revenue in the remaining industrial sector declined. Gross margin for the first half stood at €122.8 million, up 12.4%, compared to the €109.2 million on June 2025. The improved sales margin recorded in the quarter reflects the more favorable business mix supported by the growing impact of the medical sector, which following the sales of the laser cutting business now represent over 92% of the revenue. Operating expenses to 26.9 million of euro are substantially unchanged from the 26.5 million in 2025 with their impact on revenue decreasing from 11.8 to 10.9% and highlighting a positive operating leverage effect. Staff costs amounting to 47.1 million of Euro increased by 4.4% compared to the 45.1 million of Euro in 2025, while the impact on revenue decreased from 20 to 19.1%. National costs for employee stock option plans amounted to 0.5 million For the period compared to 1 million in 2025. EBITDA amounted to 48.7 million of euro up over 30% from 37.5 in first half 2025. EBITDA margin increased from 16.6 in 2025 to 19.8 in 2026. Depreciation, amortization and provision decreased from €5.9 million in 2025 to €5.3 million in June 2026 and this change is the net effect of higher depreciation and provision for risk alongside lower provision for credit risk. EDIT stood at €43.4 million, a significant improvement compared to the €31.6 million in the first half of 2025 with an EBIT margin rising from 14 to 17.6%. In the context of the presentation of the consolidated income statement according to IFRS 5, due to a purely accounting technique, EBIT bears a penalty of approximately 1.4 million of euro, net of which the half-year result would have been approximately 45 million. The impact of this cost on the income statement is then neutralized by revenue of unequal value recorded in the line of discontinued operation, ensuring that the accounting technique has no effect on the net result. Financial income amounted to €1.7 million compared with a loss of €2 million recorded in the corresponding period of the previous year. The improvement was primarily attributable to the net foreign exchange result, which shifted from a loss of 3.4 million in June 2025 to a gain of 0.3 million for the current period. The residual amount was generated by returns on the group's cash holdings, which are invested in short- and mid-term financial instruments. The share of profit and loss of associated company was mainly attributable to the combined effect of the group's shares in Elesta, positive result amounting to 93,000 euros, and the share of loss reported by Pentalazio Zhejiang in China, 0.6 million, and with us, Japan, 0.3 million loss. The majority interest of these two companies were disposed during 2025. However, they continue to report negative results also in 2026. The negative balance of other net income and expenses was attributable to the full impairment of the investment in Epic International Inc. held by the parent company, Elen. Pre-tax income showed a positive balance of 43.4 million, a significant increase compared to the 29.3 million of euro on June 2025. Result from this continued operation is primarily attributable to the contribution of the current division Calculate Penta in accordance with IFRS 5. Specifically, it includes the net loss of the business unit and an extraordinary loss of €3.9 million attributable to the impairment of the current amount of the discontinued operation based on the price to be received under the existing agreement. Finally, as a positive component, the item includes the more different accounting classification to the application IFRS 5 which requires that economic effect of the sale need to be summarized regardless of their nature in a single entry of the income statement result from this continued operation immediately before the period result. This positive amount neutralized the negative amount mentioned before when we are talking about about credit. The group net result amounted to 26.1 In this chapter, we can see the pro forma income statement without the IFRS file, so with the consolidation of the cut in division that are discontinued in the previous version. Without the application after S5, revenue for the first half of 2026 would have been 300 million of euro, compared to 285 million of the first half of 2025, plus 5.2%. Under this income statement configuration, the industrial sector would have seen a poorer performance, minus 8% versus minus 4%, due to the cutting segment. As regards gross margin, the same drivers highlighted in the previous version of the income statement continue to apply, particularly the higher contribution of medical revenue to the total turnover and the more favourable sales mix within the medical segment. Even including the cutting segment EBITDA and EBIT recorded, Strong double-digit growth of 23.6% and 29.7% respectively, together with an improvement in both margins as impact on sales. Moving now to the balance sheet, the comparisons with the beginning of the year are affected by the fact that the cutting business unit was reclassified as discontinued operation only on June 30, 2026. In terms of invested capital, there is a slight decrease. The networking capital sale ratio is in line with the last year's figure, while Roche shows a significant improvement. Investments during the first six months were 7.5 million euros. Moving now to the analysis of the cash flow and net financial position, the group net financial position increased by approximately 12 million during the first half of the year, rising from 172.2 million as of December 2025 to 184.5 million as of June 2026. As illustrated in the chart, the increase in networking capital is a recurring feature of the group's business cycle during the first half of the year, and absorbed approximately 15 million of cash. Capital expenditure, already mentioned, amounted to 7.5, while dividends distributed in May by parent companies and certain subsidiaries amounted to 21.3 million of euros. The contribution to the net financial position arising from the asset L4C reflects the recognition of the net financial debt on December 2025 for $16 million relating to the discontinued business. Revenues increase across all medical application segments. The aesthetic segment performs strongly, plus 11%, driven by anti-aging system, despite weakness in high removal. Surgical activities recorded the most significant performance, plus 15%, mainly supported by the growth of system for urology. The therapy segment also performed positively, plus 1%. The slower revenue growth for after-sales service and sales of consumables reflect the loss of revenue from WIDAS last year, 1.5 million of euro. Net of which growth would have amounted to 6.2%. Within the segment, nearly 60% of revenues is attributable to sterile optical fibers for urological surgical procedures, which recorded a 12.1% increase in revenue over the half year. For the industrial application sector, revenues for the period were significantly lower, Then, in the previous year, mainly due to the disposal of the laser cutting division, which reduced the scope of the operation. For the industrial application sector, the chart doesn't show the discontinued cutting division anymore. The performance of the residual division were negative, marking minus 17% and laser sources minus 15%, while after-sales service and components revenue was particularly positive, recording a turnover of 5.7 million euros in the first half of 2026, up 34%, on the 4.3 million in the corresponding period of last year. The contribution of these activities also reached 30% of the residual overall industrial turnover, confirming the growing weight of the most recurring and visible revenue component. A more complete representation of the business trend, it should be noted that the turnover for the first half of 2026 attributable to the laser cutting sector was equal to 53.8 million of euro down from the 60.2 million of euro recorded in the first half of 2025, minus 10.6%. Geographically, The medical sector declined of 16% in Italy compared to the robust growth in Europe, plus 8%, and particularly strong performance in non-European market, plus 17%, which accounted for the main growth area in the consolidated revenue during the period. In Europe, a slight and extensive network supported the encouraging result in the DAC region, while non-European market growth was driven primarily by the Far East. The industrial sector showed a strong recovery in Italy, plus 8% thanks to Lazit, while it registered a decline in Europe, minus 15%. In the European market, the trend is stable. Andrea, please go ahead on the guidance.