Star7 S p A : - Financial Statements as at 30 June 2023

STAR7 S.P.A.

Via Alessandria 37/B -

15122 Valle San Bartolomeo (AL), Italy

Share capital €599,340 fully paid up

Business Register 01255170050 - Rea number 208355

Tax ID code and VAT number 01255170050

Report on Operations

Consolidated Half-Year Report as at 30/06/2023

DEAR SHAREHOLDERS,

The Consolidated Half-Year Report as at 30/06/2023 show a profit of €989,276 (€1,493,401 as at 30/06/2022).

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OPERATING CONDITIONS AND BUSINESS DEVELOPMENT

The STAR7 Group operates in the fields of translation and interpreting, automation of translation processes and language technologies, technical authoring and content engineering, dedicated IT development, and print on demand.

Pursuant to Article 2428 of the Civil Code, we inform you that the Parent Company's activities are carried out at the head office of Alessandria, in the area of Valle San Bartolomeo, and at the local units in Asti, Turin, Pistoia, Maranello, La Spezia and Bolzano.

In legal terms, the Parent Company STAR7 S.p.A. directly or indirectly controls the following companies, which carry out activities that are complementary to and/or functional for the Group's core business:

Due to the business division lease agreement, the consolidated income statement as at 30/06/2023 also includes the figures of the following wholly-owned subsidiaries of C.A.A.R. S.p.A.:

• "C.A.A.R. do Brazil Consultoria Tecnica Ltda" based in Belo Horizonte (Brazil);
• "Abacaar Doo Kragujevac" based in Kragujevac - Miloja Pavlovica 9 (Serbia).

OPERATING PERFORMANCE

The first half of 2023 was characterised by the increase in reference interest rates by the

European Central Bank (ECB), which intervened no less than four times, raising the rate for main refinancing operations from 2% at the end of 2022 to 4% at the end of June (in September further increased to 4.50%) in order to combat inflation, the level of which is much higher than the 2% trend considered appropriate by the monetary authorities.

The Group has continued its programme to enhance its structure and reinforce the core values of the parent company, in line with the project initiated prior to listing. This includes strengthening and expanding the services provided, introducing innovative solutions, and promoting and encouraging its

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skilled workforce to adapt to a changing market, which is now leaning towards solutions that incorporate artificial intelligence.

As of 1 January 2023, two lease contracts are operational for business divisions of the companies C.A.A.R. S.p.A. (registered office in Turin, via Treviso 36) and S.T.I. s.r.l. (registered office in Bolzano, via Buozzi 14/16).

These companies are active in the same market as STAR7 but specialise in important complementary segments, specifically in the engineering sector. The leases are preparatory to the possible future acquisition of the two business divisions.

The above companies are strategic and complementary to the development of the engineering and defence business, with offices located both in Italy (Turin and Bolzano) and abroad (Brazil and Serbia). Given that the two companies were in a critical financial situation, a business leasing contract was envisaged at an early stage in order to minimise legal, financial and operational risks. As a modification to the business division lease agreements, in accordance with Law no. 103 introduced on 10 August 2023, C.A.A.R. S.p.A. and STI S.r.l. will be required to provide a blank agreement, giving our company the first option to purchase both business units.

Continuous market research for other companies that could potentially complement and benefit STAR7's business are always in progress. The prevailing atmosphere of market volatility and uncertainty may offer further acquisition opportunities.

To be prepared to capitalise on any opportunities, the Group maintains a focus on its available liquidity. This ensures it can swiftly embark on any significant transactions that may emerge.

The financial trend indicates a reduction in total debt, in spite of the efforts in the period to integrate the two companies C.A.A.R S.p.A and STI S.r.l.

Despite inflation, integration costs generated by the absorption of the CAAR Group business division and consequent inefficiencies, the STAR7 Group's EBITDA in the first half of 2023 amounted to €6.9 million. Meanwhile, Adjusted EBITDA (adjusted for the integration costs) reached €7.5 million. The EBITDA Margin therefore reached 13.6% and the Adjusted EBITDA Margin was 14.7%.

The Group is in a stable position, with bank debt structured over the medium to long term. It maintains sufficient liquidity to continue its growth trajectory and consistently meets the covenants stipulated by the bonds issued to facilitate the acquisition of LocalEyes.

On 21/7/2023, the Board of Directors gave their approval for the proposed merger of the subsidiary company, Vertere S.r.l., into STAR7 S.p.A. This transaction is expected to yield significant economic and organisational benefits. These include the reduction of unnecessary administrative expenses such as corporate vehicle management costs, tax expenses, legal obligations, and so on. Additionally, it will eliminate the duplication of roles that arise from managing the complexities associated with the technical and administrative handling of inter-company services.

The recent performance of the share on the EuroNext Growth Milan market suggests a stable trend, with its value hovering around the initial placement price.

Research and development remains centred on Virtual, Immersive, and Augmented Reality. This is achieved by developing products and solutions that cater to the growing need for virtualisation in our customers' businesses.

Today, the STAR7 Group is able to deliver increasingly cutting-edgesolutions in the areas of Virtual Training, Virtual Showrooms and Product Experience, by making the most of its technical information management skills acquired over time through engineering and technical authoring.

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