Monnalisa S p A : Financial Report 2024

MONNALISA

Monnalisa S.p.A.

Company Information

Registered Office Via Madame Curie, 7, 52100, Arezzo (AR)

Legal data Share Capital authorized, subscribed, and paid in 10.000.000 Euro

Tax Code and Company Registration Number with the Arezzo Companies Register: 01163300518 Chamber of Commerce Registration (Arezzo-Siena) No. R.E.A. AR-87271

Official Website https://group.monnalisa.eu

Management Report as of December 31, 2024

Consolidated Financial Statements as of December 31, 2024

Financial statements

Consolidated income statement p. 28

Consolidated statement of comprehensive income p. 29

Consolidated statement of financial position p. 30

Consolidated statement of changes in equity p. 31

Consolidated cash flow statement p. 32

Explanatory notes to the consolidated financial statements as of December 31, 2024 p. 33

General information p. 34

Main accounting policies applied p. 36

Use of estimates and discretionary evaluations in preparing the financial statements p. 54

Comments on the main items of the income statement p. 57

Comments on the main items of the statement of financial position p. 62

Other information p. 73

Significant events occurred during the year p. 75

Financial statements as of December 31, 2024

1. COMPOSITION OF CORPORATE BODIES

   Board of Directors

   The Board of Directors, appointed on April 29, 2024, will remain in office for three financial years, until the approval of the financial statements as of December 31, 2026. The Board of Directors is composed of:

   Chairperson Piero Iacomoni

   Chief Executive Officer Matteo Tugliani

   Directors Simone Pratesi

   Stefano Della Valle Fabrizio Dosi

   Board of Statutory Auditors

   Chairperson Alessandro Luzzi

   Statutory Auditors Gabriele Nardi Alberto Sodini

   Independent Auditing Firm EY S.p.A.

   Euronext Growth Advisor CFO Sim S.p.A.

   Dear Shareholders,

   the financial year ended December 31, 2024, shows a consolidated negative result of €6,904,868. The Holding Company, Monnalisa S.p.A., reports instead a net loss for the year of €12,303,721.

2. BUSINESS ACTIVITIES AND GROUP STRUCTURE

   Monnalisa S.p.A. (hereinafter "Monnalisa" or the "Company") designs, produces, and distributes high-end childrenswear for ages 0-16 under its own brand name through multiple distribution channels. From the very beginning, the company's philosophy has combined entrepreneurship, innovation, the exploration of new markets, original styling, and particular attention to the development of corporate resources and skills.

   The Monnalisa Group (hereinafter the "Group") operates through a centralized business structure where almost all activities related to its organizational model are carried out, except for distribution and retail store management in different geographical areas, which are directly handled by the Group's commercial entities in their respective markets.

   Monnalisa is therefore an operating holding company which - in addition to holding shares in foreign subsidiaries - manages all phases of the production process, from product design and creation to commercialization, outsourcing only certain stages of production.

   For 50 years, Monnalisa's philosophy has been based on a unique combination of entrepreneurship, innovation, research into new markets, and original styling. Today, the Group distributes its products in over 50 countries, through both directly operated flagship stores and the world's most prestigious department stores, as well as more than 400 multibrand points of sale.

   The internalization of the product design and manufacturing process - a key distinguishing feature of the Monnalisa Group - aims primarily at achieving a high level of industrialization. The Group is indeed able to oversee all strategic processes internally, resulting in positive effects on revenue management and profit margins.

   The Group is organized according to a model in which product strategy and communication activities are closely linked, ensuring consistency with the brand image and Monnalisa's distinctive style. It is characterized by constant and careful control of the value chain by the Company.

   Below is the Monnalisa Group organizational chart as of December 31, 2024, which also corresponds to the scope of consolidation. Compared to the structure as of December 31, 2023, no changes are reported:

   
   
   

   As of December 31, 2024, the Monnalisa Group includes Monnalisa S.p.A. and the fully consolidated subsidiaries listed below, in which the Holding Company directly or indirectly holds the majority of voting rights and exercises control:

   • Monnalisa Hong Kong Ltd: incorporated on August 25, 2015, and based in Hong Kong, it is 100% owned by Monnalisa S.p.A. and focuses on developing the local retail market. As of the date of this report, the subsidiary operates one mono-brand store.

   • Monnalisa Russia Llc: incorporated on January 14, 2016, with the purpose of improving the efficiency of the local wholesale market management and expanding into the retail market through the direct opening of mono-brand stores (four at year-end: two DOS and two DOO). The company is 99.99% owned.

   • Monnalisa China Ltd: incorporated on February 17, 2016, and based in Shanghai, it is 100% owned by Monnalisa S.p.A. The company was established to develop the local retail market through the opening of mono-brand stores in prestigious malls in Shanghai, Beijing, and other major Chinese cities. As further detailed later in this report, during the current financial year Monnalisa gradually closed several stores in the Chinese market. These closures were a direct consequence of the severe economic crisis affecting the country, which has prevented the Group from operating profitably in that market. As of the date of this report, the subsidiary manages two stores, both scheduled for closure within the first half of 2025.

   • ML Retail Usa Inc.: incorporated on September 22, 2016, and wholly owned by Monnalisa S.p.A., it manages retail operations in the U.S. market. The company operates four stores (three DOS and one DOO).

   • Monnalisa Korea Ltd: incorporated in December 2016 and wholly owned by Monnalisa S.p.A. The company is currently inactive.

   • Monnalisa Bebek Giyim Sanayi ve Ticaret A.Ş.: incorporated on December 11, 2018, and based in Turkey, it is 100% owned by Monnalisa S.p.A. The company operates a single store located in Istinye Park, inaugurated in January 2021. It should be noted that the company operates in an economy experiencing

     hyperinflation, which has led to a rapid increase in consumer prices. To address this situation, the Group has implemented flexible pricing strategies and continuously monitors cost fluctuations to maintain competitiveness.

   • Monnalisa UK Ltd: incorporated in January 2019 and based in London, the company currently manages a concession store within Harrods. It is 100% owned by Monnalisa S.p.A.

   • Monnalisa International Limited: incorporated in May 2019 and based in Taiwan, it is 100% owned by Monnalisa S.p.A. The company operates two stores.

   • Monnalisa Japan Co Ltd: 100% owned by Monnalisa S.p.A., incorporated in 2019 with the aim of developing the local retail market. After managing several temporary stores during 2020, the company is currently inactive.

   • Monnalisa Singapore Ltd.: 100% owned by Monnalisa S.p.A. The company operates a single store located in Marina Bay Sands.

   • Monnalisa San Marino S.r.l.: 100% owned by Monnalisa S.p.A., it focuses on developing the local retail market through its store located at The Market outlet in San Marino.

3. MAIN STOCK MARKET DATA

   The most significant stock market data are presented below. On July 10, 2018, the ordinary shares of the Holding Company Monnalisa S.p.A. were admitted to trading on the Euronext Growth Milan market (previously known as AIM Italia / Alternative Capital Market), a multilateral trading facility organized and managed by Borsa Italiana S.p.A. Trading of the Company's ordinary shares began on July 12, 2018.

   The admission to listing followed the placement of 1,290,800 ordinary shares, of which 1,236,300 shares were issued as part of a paid capital increase, primarily placed with qualified institutional investors, both Italian and foreign, and 54,500 shares were offered for sale by the controlling shareholder, Jafin Due S.r.l. (formerly Jafin Due S.p.A.).

   The most significant stock market data are presented below.

   Main Stock Market Data
   Official price as of December 30, 2024	1,88
   Lowest price - October 3, 2024	0,515
   Highest price - January 9, 2024	2,06
   Market capitalization as of December 30, 2024	9.844.244
   N° of shares composing the share capital as of December 31, 2024	5.236.300

   The Group's current stock market capitalization reflects the performance of financial markets and the overall difficult economic situation, and exceeds the Group's net equity value. The Directors believe that this valuation does not represent the Group's actual value.

   Pursuant to Article 19 of the Euronext Growth Milan Issuers' Regulation, updated on August 19, 2024, the Company is required to publish the draft annual financial statements, the consolidated financial statements, or the annual report subject to statutory audit no later than six months after the end of the financial year to which they refer, together with the report of the statutory auditor or the independent auditing firm.

   Accordingly, the Board of Directors of Monnalisa S.p.A., after approving on May 29, 2025, the annual financial report for the year ended December 31, 2024, arranged for its publication in the Investor Relations section of Monnalisa S.p.A.'s website and through the channels provided by Borsa Italiana. The Board also scheduled the Shareholders' Meeting for the approval of the draft financial statements on June 26, 2025, on first call, and if necessary, on June 27, 2025, on second call.

4. MANAGEMENT REPORT

   In the 2024 fiscal year, the Monnalisa Group recorded consolidated revenues of EUR 35.6 million, compared to EUR 40.2 million in the previous year, representing a decrease of 11% at current exchange rates (10% at constant exchange rates).

   It should be noted that in this Consolidated Financial Statements, the Monnalisa China Cash Generating Unit, following the decision to proceed with its definitive closure within 12 months from December 31, 2024, has consequently been classified as a Discontinued Operation in accordance with IFRS 5 (paragraph 13 and subsequent paragraph 32(a)).

   This reclassification resulted in the restatement of the 2023 figures for comparative purposes, in accordance with the aforementioned standard.

   Reference is made in this regard to the detailed information provided in paragraphs "2.3 Application of IFRS 5" and "31. Assets and liabilities held for sale" of the Notes to the Consolidated Financial Statements.

   ****

   Monnalisa operates in the most important markets through both the DTC (Direct-to-Consumer) channel-comprising directly operated mono-brand stores (Directly Operated Stores - DOS and Directly Operated Outlets - DOO) and its own online store-and the wholesale channel, which includes multi-brand stores and online platforms specializing in the sale of luxury goods (e-tailers).

   Monnalisa's strategy aims to maintain control over its entire distribution chain-retail, wholesale, and digital-through a direct approach that leverages the companies within the Group's scope to reach all major markets.

   At the end of the 2024 fiscal year, the Monnalisa Group owned a total of thirty-six directly operated stores, including DOS and DOO, compared to fifty-one stores at the end of the previous fiscal year, 2023.

   The retail channel recorded revenues of EUR 14.7 million as of December 31, 2024, reflecting a 2% decrease compared to 2023 sales volumes. At constant exchange rates, channel revenues remained in line with the previous year, amounting to EUR 15,047 thousand as of December 31, 2024, versus EUR 15,037 thousand as of December 31, 2023.

   The comparison is also affected by the closures of directly operated stores that occurred during the current fiscal year. On a like-for-like basis, the channel shows growth, with sales increasing by 3.4%.

   Revenues from the direct e-commerce channel amounted to EUR 2.6 million, compared to EUR 2.2 million as of December 31, 2023, representing a significant increase of 17%.

   The contribution of the online channel, both direct and indirect, to total revenues reached 17% of total turnover (16% as of December 31, 2023). The percentage share of the direct online channel alone accounted for 7% of total revenues, up by 1.7 percentage points compared to the previous fiscal year. In 2024, the direct channel (retail and online) increased its share of the Group's total turnover, generating 49% of total revenues, compared to 43% in fiscal year 2023.

   Wholesale channel revenues amounted to EUR 18.3 million (EUR 22.9 million as of December 31, 2023). The share of the wholesale channel in the Group's total revenues was 51%, compared to 57% in the prior year. The trend reflects a decline in revenues from brands other than Monnalisa; wholesale sales of the Monnalisa brand alone, at constant exchange rates, decreased by 14% compared to a total contraction of 20%.

   Below is a breakdown of revenues by channel and geographic area (with variations at constant and current exchange rates):

   31 December at current exchange rates
   In thousands of €	2024	% of total	2023	% of total	change	% change
   Retail	14.746	41%	15.037	37%	(291)	-2%
   Wholesale	18.298	51%	22.979	57%	(4.681)	-20%
   Direct B2C	2.590	7%	2.220	6%	370	17%
   Total	35.633	100%	40.236	100%	(4.602)	-11%

   31 December at constant exchange rates
   In thousands of €	2024	% of total	2023	% of total	change	% change
   Retail	15.047	42%	15.037	37%	11	0%
   Wholesale	18.445	51%	22.979	57%	(4.534)	-20%
   Direct B2C	2.590	7%	2.220	6%	370	17%
   Total	36.083	100%	40.236	100%	(4.153)	-10%

   31 December at current exchange rates
   In thousands of €	2024	% of total	2023	% of total	change	% change
   Italy	12.929	36%	15.306	38%	(2.378)	-16%
   Europe	9.118	26%	11.537	29%	(2.419)	-21%
   Rest of the world	13.587	38%	13.392	33%	195	1%
   Total	35.633	100%	40.236	100%	(4.602)	-11%

   31 December at constant exchange rates
   In thousands of €	2024	% of total	2023	% of total	change	% change
   Italy	12.929	36%	15.306	38%	(2.378)	-16%

   Europe	9.329	26%	11.537	29%	(2.209)	-19%
   Rest of the world	13.826	38%	13.392	33%	433	3%
   Total	36.083	100%	40.236	100%	(4.153)	-10%

   Adjusted EBITDA amounts to EUR 2.1 million; the adjustments relate to extraordinary costs associated with non-recurring events during the 2024 fiscal year. Reported EBITDA stands at EUR 1.8 million, compared to EUR 3.3 million as of December 31, 2023.

   After depreciation and amortization of EUR 6.1 million (EUR 6.7 million as of December 31, 2023), EBIT amounts to EUR -4.2 million (EUR -3.5 million as of December 31, 2023). Net Result is negative at EUR -6.9 million (negative EUR -6.7 million in 2023).

   Net Financial Debt (Net Financial Position), including the effects arising from the application of IFRS 16, amounts to EUR 23 million compared to EUR 28.5 million as of December 31, 2023. Adjusted Net Financial Debt, as defined in paragraph 5 under "Alternative Performance Indicators" and calculated excluding current and non-current liabilities relating to lease contracts, amounts to EUR 12.4 million (EUR 12.2 million as of December 31, 2023).

   The Group's Shareholders' Equity amounts to EUR 9.8 million. The Shareholders' Equity of the Holding Company, Monnalisa S.p.A., amounts to EUR 23.4 million.

   The 2024 fiscal year results, which were below expectations, were significantly impacted by adverse exogenous factors that rendered the global macroeconomic environment volatile, marked by uncertainties related to recession risks, persistent inflationary pressures, and geopolitical instability.

   These dynamics contributed to a decline in consumer confidence and, consequently, to a contraction in sell-out volumes and wholesale customer orders-already the weakest link in the supply chain-further compounded by a slowdown in consumption in key markets for the Group, such as the United States and China, as well as in Europe. Additionally, industry-specific factors played a role, including a radical transformation of the competitive landscape in the high-end children's fashion segment, which in recent years has been reshaped by the entry of major men's and women's brands launching their own children's collections.

   The climate of uncertainty, which had already characterized the previous fiscal year, persisted with a continued impact in 2024 on the demand for luxury goods, creating significant challenges for the Group and introducing obstacles to the continuation of its growth, revenue consolidation, and international expansion efforts.

   The 2024 performance was also affected by a decline in revenues from a licensed brand, which suffered a negative impact on its sales due to reputational risks arising from circumstances unrelated to its core business.

   In this context of uncertainty, the Group continued to implement its new industrial plan, the foundations of which were laid starting in May 2024, coinciding with the appointment of the new management team. This plan integrates growth through new licensing or production agreements with adult fashion brands-a

   strategy aimed not only at increasing volumes but, more importantly, at improving the Group's profitability by generating new revenue streams and achieving a more than proportional increase in profitability (EBITDA-to-revenue and EBIT-to-revenue ratios) relative to revenue growth, thanks to a significant operating leverage effect derived from greater utilization of the Group's existing organizational, production, logistics, and distribution capabilities.

   Building upon the awareness of these ongoing external changes and leveraging the Group's strong foundation of managerial, product development, production, logistics, and distribution expertise, new growth objectives have been established with the aim of restoring the Group's economic and financial balance.

   The Group has also continued to pursue its strategic direction focused on enhancing the quality of its distribution network, increasingly shifting toward a direct-to-consumer model. This includes the rationalization of the retail channel through optimized management of existing stores and a downsizing of operations in the Chinese market-which continues to experience severe recovery challenges-by progressively closing the six remaining stores managed by the Chinese subsidiary within the first quarter of 2025.

   All these actions are accompanied by a targeted strategy aimed at containing and reducing operating costs. As evidenced by the financial data presented below, this cost-optimization policy has already shown initial positive results in 2024 and is expected to produce even more significant effects starting from fiscal year 2025. This cost-review policy is designed to limit non-strategic or deferrable expenses without compromising product quality or the Group's medium-term business outlook.

5. ECONOMIC AND FINANCIAL ANALYSIS

   The Monnalisa Group uses certain alternative performance indicators, which are not recognized as accounting measures under the applicable accounting standards, in order to provide a better assessment of the performance of the Group and the Holding Company. The calculation criteria applied by the Group and the related results obtained may therefore not be consistent or directly comparable with those used by other groups.

   These indicators are derived exclusively from the historical data of the Group and the Holding Company for the financial reporting period covered by this report and for the comparative periods, without reference to the expected performance of the Group or Monnalisa S.p.A. They should not be regarded as substitutes for the indicators required under the relevant accounting standards (IFRS).

   Below is the definition of the alternative performance indicators used:

   EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization): It indicates the result before financial income and expenses, income taxes for the year, depreciation and amortization of fixed assets, and foreign exchange gains/losses. EBITDA, as defined above, represents the indicator used by Monnalisa's management to monitor and assess the company's operating performance. Since EBITDA is not identified as an accounting measure under the Accounting Standards, it should not be considered an alternative metric for evaluating

   the company's operating results. As the composition of EBITDA is not regulated by the applicable accounting standards, the calculation method applied by Monnalisa may differ from that adopted by other entities and, therefore, may not be directly comparable.

   EBITDA ADJUSTED (Ebitda Adjusted): It indicates the result before financial income and expenses, income taxes for the year, depreciation and amortization of fixed assets, and foreign exchange gains/losses, adjusted for one-off costs incurred, the negative margin of stores opened and closed during the year, capital losses, and any extraordinary items (i.e., extraordinary inventory write-downs).

   EBIT (Earnings Before Interest and Taxes): EBIT indicates the result before financial income and expenses, foreign exchange gains/losses, and income taxes for the year. EBIT, as defined above, represents the indicator used by Monnalisa's management to monitor and assess the company's business performance. Since EBIT is not identified as an accounting measure under the Accounting Standards, it should not be considered an alternative metric for evaluating Monnalisa's operating results. As the composition of EBIT is not regulated by the applicable accounting standards, the calculation method applied by the Company may differ from that adopted by other entities and, therefore, may not be directly comparable.

   Net Financial Debt: In accordance with CONSOB Communication No. DEM/6064293 of July 28, 2006, as supplemented by Consob Warning Notice No. 5/21, it is specified that Net Financial Debt is calculated as the algebraic sum of cash and cash equivalents, current financial assets, and short- and long-term financial liabilities (current and non-current financial liabilities).

   Adjusted Net Financial Debt: It is represented by the Net Financial Debt excluding current and non-current lease liabilities.

   1. Reclassified Income Statement

      The management areas of the reclassified income statement are structured by distinguishing between ordinary production management (operating and non-core) and financial management (financial expenses and foreign exchange management). For the purposes of the reclassification, financial management includes interest income and expenses, banking fees, and foreign exchange management.

      1. Reclassified Holding Company Income Statement

         (Euro)	31.12.2024	% of total	31.12.2023	% of total
         Revenues from Contracts with Customers	30.822.318		35.085.737
         Gross margin	17.683.559	57%	20.171.913	57%
         Service costs	(8.713.138)		(10.390.215)
         Personnel Costs	(8.671.287)		(8.877.163)
         Other operating costs	(529.311)		(417.601)
         Other income	1.090.872		1.388.267

         EBITDA	860.695	3%	1.875.202	5%
         Depreciation and amortization	(5.996.916)		(5.656.043)
         Financial expenses	(7.277.250)		(1.760.031)
         Financial income	632.749		328.930
         EBT	(11.780.722)	-38%	(5.211.942)	-15%
         Income taxes	(523.000)		111.470
         Net result for the year	(12.303.721)	-40%	(5.100.472)	-15%

      2. Reclassified Consolidated Income Statement

         (Euro)	31.12.2024	Inc %	31.12.2023*	Inc %
         Revenues from Contracts with Customers	35.633.490		40.236.221
         Gross margin	22.525.556	63%	25.346.041	63%
         Service costs	(10.346.024)		(11.784.133)
         Personnel Costs	(10.611.055)		(10.845.719)
         Other operating costs	(570.081)		(510.078)
         Other income	815.834		1.111.820
         EBITDA	1.814.231	5%	3.317.931	7%
         Depreciation and amortization	(6.101.572)		(6.780.227)
         Financial expenses	(2.553.145)		(2.609.968)
         Financial income	1.180.087		474.866
         EBT	(5.660.400)	-16%	(5.597.398)	-17%
         Income taxes	(428.474)		243.862
         Result for the year from continuing operations	(6.088.874)	-16%	(5.353.537)	-17%
         Net result from discontinued operations	(815.994)		(1.352.698)
         Net result for the year	(6.904.868)	-19%	(6.706.235)	-17%
         Group share of net result	(6.904.867)		(6.706.313)
         Non-controlling interests' share of net result	(1)		78

         (*) The 2023 figures have been restated in accordance with IFRS 5.

   2. Net Financial Position

      The Net Financial Position, which identifies the Group's and the Holding Company's net financial debt, provides a summary measure of the balance between financial sources and financial investments. It is calculated as the sum of cash and cash equivalents plus financial receivables, net of financial liabilities (not related to the commercial cycle), both short-term and medium/long-term.

      1. Net financial position of the Holding Company

         Amounts in thousands of Euro	31.12.2024	31.12.2023
         	519 -2.545	3.319 -2.401
         D. Liquidity A+B+C	3.064	5.720
         E. Current financial debt	6.931	9.430
         F. Current portion of non-current financial debt	2.870	2.590
         G. Current financial indebteness (E+F)	9.801	12.020
         H. Net Current financial indebtedness (G-D)	6.737	6.300
         I. Non-current financial debt	10.787	14.963
         J. Debt instruments	-	-
         K. Trade payables and other current liabilities	-	-
         L. Non-current financial indebtedness (I+J+K)	10.787	14.963
         M. Net financial indebtedness (H+L)	17.524	21.263
         Current lease liabilities	1.439	1.732
         Non-current lease liabilities	5.467	8.364
         Adjusted net financial indebtedness	10.618	11.168

         1. Cash on hand

         2. Cash equivalent instruments

         3. Other current financial assets

      2. Group net financial position

         Amounts in thousands of Euro	31.12.2024	31.12.2023
         	1.190 -87	4.401 -251
         D. Liquidity A+B+C	1.278	4.652
         E. Current financial debt	8.495	11.766
         F. Current portion of non-current financial debt	2.870	2.590
         G. Current financial indebtedness (E+F)	11.364	14.356
         H. Net Current financial indebtedness (G-D)	10.086	G.704
         I. Non-current financial debt	12.910	18.795
         J. Debt instruments	-	-
         K. Trade payables and other current liabilities	-	-
         L. Non-current financial indebtedness (I+J+K)	12.910	18.7G5
         M. Net financial indebtedness (H+L)	22.996	28.4GG
         Current lease liabilities	2.964	4.067
         Non-current lease liabilities	7.590	12.196
         Adjusted net financial indebtedness	12.442	12.236

         1. Cash

         2. Cash equivalent instruments

         3. Other current financial assets

         The Net Financial Position has been presented in accordance with the format set out in Consob Communication No. DEM/6064293 of July 28, 2006, as supplemented by Consob Warning Notice No. 5/21, which updates references to ESMA guidelines on disclosure obligations under EU Regulation 2017/1129. The comparative data have been restated; however, no differences arose from the adoption of the new presentation format for the Net Financial Position.

         If the Net Financial Position shows a negative value, it indicates that financial receivables and liquidity exceed financial liabilities.

         The Adjusted Net Financial Debt is calculated by excluding from the Net Financial Debt the current and non-current financial liabilities arising from lease contracts.

6. DESCRIPTION OF THE MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED

   In managing its operations and implementing its strategy, the Group is naturally exposed-like any company-to a range of risks which, if not properly managed and mitigated, may affect its economic performance as well as its current and future financial position. Monnalisa S.p.A. has developed procedures for risk management in the most exposed areas, with the aim of eliminating or reducing potential negative impacts on the Company's economic and financial situation.

   Business interruption risks caused by natural, economic, or geopolitical events, including pandemic events This risk relates to the possibility that natural, economic, or geopolitical events, including pandemics, may cause a significant interruption or complete halt in business continuity. Such events could have economic, financial, and/or reputational consequences due to the inadequacy of recovery strategies defined at the corporate level.

   Market risks

   The Monnalisa Group is responsible for the creation, development, industrialization, production, marketing, advertising, promotion, and global distribution of its products. Consequently, its business is exposed to the typical risks faced by manufacturers and distributors in the fashion industry. General market risks include competition, product market positioning, unfavorable demand conditions, and fluctuations in raw material costs. The fashion industry, in particular, is highly influenced by consumer preferences, which are constantly changing, as well as by consumers' spending capacity.

   Therefore, the Group is inevitably exposed to the risk that, for any reason, its collections may not be well received by the market. In addition, macroeconomic conditions affect consumers' disposable income and their willingness to spend on luxury goods. In both circumstances, the Group may experience sales lower than expected and is thus exposed to the risk that its revenue may be insufficient to cover operating expenses.

   This risk is further influenced by the economic and political conditions of the countries in which the company operates, especially those where the Group has a direct presence. These risks are managed through continuous investment in innovation and research, fostering creativity with ongoing challenges and stimuli.

   Moreover, the Group's widespread presence in a significant number of markets worldwide allows it to mitigate the impact of potential economic or political deterioration in specific regions.

   Image-related risks

   The market in which the Monnalisa Group operates is influenced by how both retail clients and end consumers perceive not only the company's creative offerings but also the intrinsic quality of its products and the reputation of its brand. To mitigate these risks, the Group carefully manages the image of its products and brand-covering brand, product, corporate, and group communication.

   The public relations function is handled internally to ensure more effective control over external messaging and to maintain consistency in terms of brand identity and corporate image.

   To protect the end consumer and safeguard against reputational risk, the Group places great emphasis on product and material safety through quality control, chemical and physical testing on specific items, compliance with REACH regulations, and adherence to the stringent product certification requirements necessary for access to major international shopping malls.

   Risks Related to the Distribution Network The risks associated with the wholesale channel concern the solvency and financial soundness of clients, which are regularly monitored-on one hand, by carefully assessing the credit limits to be granted, and on the other, by relying on credit insurance and management services. An additional real-time online commercial information service is also active to continuously monitor the reliability of the credit extended. The Group continually invests in the distribution channel, reinforcing a win-win logic between client and supplier, by offering personalized support for store layout and setup, assistance with initial order preparation, assortment mix monitoring, sales staff training, visual merchandising activities, in-store event management and co-management, product exchange services, and modular support for managing unsold goods.

   In the retail segment, obtaining and maintaining prime locations in the world's most important cities and prestigious department stores is essential. The main risks related to this channel concern lease contract duration, renewal options, and possible revisions of applicable terms.

   Risks Related to Relationships with Manufacturers and Suppliers Production is outsourced to small local workshops (façon) and manufacturers located in Italy and abroad (China, Turkey, Egypt). With key suppliers, collaboration follows a long-term partnership approach based on shared objectives and tools to identify high-quality professional solutions and achieve mutually satisfactory results. The Group aims to stabilize these relationships while limiting the risk of dependence on key suppliers by workload or by product/service type. Although the Group is not significantly dependent on any single supplier, the possibility of contract termination for any reason cannot be excluded. Consequently, supplier workloads are regularly monitored, and continuous scouting for new suppliers is conducted worldwide.

   Risks Related to the Loss of Know-How and Talent The Group's success strongly depends on its people-their skills, expertise, and professionalism. Therefore, efforts are made to prevent talent loss by ensuring a stimulating, challenging work environment rich in learning and growth opportunities. Knowledge sharing is encouraged through cross-functional development, direct peer training, and the publication of procedures and instructions on the company server.

   With the opening of new subsidiaries abroad in countries with cultures that differ significantly from that of the Holding Company, understanding the work dynamics and motivational drivers of employees of different

   nationalities becomes crucial. This requires developing specific policies that take into account varying attitudes toward long-term corporate loyalty.

   Risks Related to the Loss of Information and Data Although the obligation to draft and update the security program document is no longer in force, the Monnalisa Group has included data management and backup procedures within the ISO 9001 manual of the Holding Company. No complaints regarding privacy violations or data loss have ever been reported. One of the three IT department members is dedicated to the continuous updating of IT tools to prevent obsolescence, while a management-level technology development committee oversees software evolution. For online sales, the Group uses secure payment systems managed by certified companies employing the highest security protocols. Through its controls, the Group ensures the formal and substantive validity of all transactions.

   Environmental and Sustainability Risks From a strategic perspective, climate change and increased public attention to environmental issues could influence customer preferences, potentially affecting the purchase of certain product categories-though these remain marginal to the Group's core business-as well as the procurement of some raw materials, without currently impacting the quality of materials used in production. The Group actively monitors climate-related risks to mitigate any repercussions on its activities. At present, no significant operational impacts from climate change have been identified.

   Regarding financial risks, the Group could in the future face additional costs or investments related to adapting its production and distribution structures to mitigate the environmental impact of its business. To date, no significant costs or investments have been estimated in this regard. Concerning compliance risks, sustainability-related risks may arise from non-compliance with environmental laws and regulations to which the Group is subject. The Group closely monitors the continuous evolution of national and international regulatory frameworks and the potential introduction of new rules aimed at reducing environmental impacts.

   Liquidity Risks

   The Monnalisa Group plans its financial dynamics to minimize liquidity risk. Based on financial needs, the Group utilizes bank credit lines, selecting the most suitable sources in terms of duration relative to associated uses. To counter liquidity absorption caused by expanding working capital, its volume and composition are constantly monitored, with efforts made to control and balance its components (receivables, payables, inventories) in both volume and duration.

   Equity Risks

   Equity-related risks, understood as the possibility that the Group may be unable to withstand adverse events-either exogenous or endogenous-are effectively mitigated by the company's policy of long-term profit retention, as evidenced by the strong ratio of shareholders' equity to invested capital.

   Exchange Rate Risks The geographic diversification of the Group's production and commercial activities exposes it to both transactional and translational exchange rate risks. Transactional risk arises from commercial and financial transactions conducted by Group companies in currencies other than their functional currency, due to fluctuations in exchange rates between the initiation and completion (collection/payment) of such transactions.

   For the Holding Company, given that purchase volumes in U.S. dollars are not temporally aligned with the definition of sales price lists, hedging is implemented when deemed appropriate using flexible forward contracts-never speculative, but solely protective-to safeguard planned profit margins. Similarly, payment flows in foreign currencies relating to international sales are hedged when appropriate.

   Monnalisa also holds controlling interests in subsidiaries that prepare their financial statements in currencies other than the euro, the currency used for consolidated reporting. This exposes the Group to translational exchange rate risk arising from the conversion into euros of the assets and liabilities of subsidiaries operating in non-euro currencies.

   Corruption-Related Risks

   The Group does not conduct business with public administrations or large-scale retail organizations; therefore, the risk of corruption is considered low. This low level of risk is further supported by the governance system and company processes, which include general accountability controls, separation of duties, and clearly defined responsibilities for potentially sensitive management processes. Monitoring of anti-corruption risk management activities is also part of the assessment required by the Organizational, Management and Control Model pursuant to Legislative Decree No. 231 ("Model 231") adopted by the Company.

   Whistleblowing

   In 2023, the Company implemented all technical and administrative measures necessary to comply with Legislative Decree of March 10, 2023, by adopting a specific procedure for managing whistleblowing reports and appointing an individual with the appropriate qualifications to oversee such reports. A dedicated mailbox for whistleblowing reports has been established. During the fiscal year, as in previous years, no reports were received regarding potential acts or instances of corruption.

   Risks Related to Corporate Administrative Liability Since 2017, the Group has adopted a Code of Ethics and the Organizational, Management and Control Model pursuant to Legislative Decree No. 231 of 2001. Starting in 2024, the Supervisory Body function has been entrusted to a dedicated organizational unit composed of two external members and the HR manager. The risk assessment updates are carried out by the Compliance Team, composed of the aforementioned members, reporting directly to the CEO. The Compliance Team and the Supervisory Body periodically prepare reports on their activities for company management.

   Governance-Related Risks

   The Holding Company is a first-generation family business, with the founders still actively involved in providing direction and leadership. Consequently, potential risks related to continuity and long-term sustainability are evident. To mitigate these risks, a Board of Directors was established in 2010 and renewed in 2024. The current board includes, in addition to Chairman Piero Iacomoni and CEO Matteo Tugliani, three external members unrelated to the founding family-all three serving as independent directors.

   Accounting and Tax-Related Risks The Holding Company's accounting is managed internally by highly experienced personnel, supported by ongoing professional development and external consulting from top-tier firms. Statutory auditing has been entrusted to EY S.p.A., responsible for certifying both the Holding Company's and the consolidated financial statements.

   For subsidiaries, accounting activities are carried out by local consulting firms with international experience. The subsidiaries with the highest revenue volumes (Russia and China) are subject to audits by local auditors. No monetary or non-monetary penalties have been imposed for non-compliance with laws or regulations.

   As of the date of preparation of this financial report, there are no pending disputes with the tax authorities. In early 2021, the Italian Revenue Agency initiated an audit of Monnalisa S.p.A. concerning the R&D tax credit claimed for the years 2015-2019. After several exchanges, the audit was suspended for over a year until April 20, 2023, when a Tax Audit Report (PVC) was issued by the Florence Provincial Directorate. Believing the findings to be entirely unfounded, the Company submitted a detailed defense memorandum with observations on June 20, 2023.

   To date, no tax assessment notice has been issued. While the Company maintains that its actions were correct, it acknowledges that this audit, though representing a possible contingent liability, is neither probable nor quantifiable.

   Furthermore, the Group operates in multiple countries (both within and outside Europe), engaging in intercompany transfers of goods and services across jurisdictions. In particular, transactions between the Holding Company and its foreign subsidiaries fall under transfer pricing regulations. According to management, all intercompany transactions are conducted in the ordinary course of business and comply with the "arm's length principle" as defined by Italian law and the OECD Transfer Pricing Guidelines.

   Inventoy Risk

   Inventory risk refers to the potential accumulation of unsold goods due to changes in consumer preferences or other factors that may reduce the value of stock. This risk is limited because Monnalisa primarily operates based on specific production orders (except for blind orders for certain raw materials), allowing it to define production quantities in advance. With the expansion of the retail channel, this risk could potentially increase but is managed through physical and online outlet channels.

   As the entity responsible for industrialization, production, and commercialization, Monnalisa requires its retail stores to display a representative mix of the entire collection to promote sales across all product categories globally. Consequently, Group distribution companies are granted the option to return unsold products at their original purchase price, unless these are sold through their outlet channels. At the end of each season, excess inventory is managed differently depending on whether an outlet exists in the local market:

   1. in countries without an outlet, end-of-season returns are mainly reallocated to Monnalisa;

   2. in countries with an outlet, returns are sold through the local outlet. In the first case, the Group is exposed to unsold inventory risk.

   Risks Related to the Integration of Sustainability into Business Processes Monnalisa adheres to leading social responsibility and integrated management standards (ISO 26000, SA8000, ISO 9001, ISO 14001). This commitment requires ongoing improvement and oversight of activities and processes, periodically evaluated by independent external bodies. The publication of the Integrated Report demonstrates the Group's intention to engage stakeholders-both as beneficiaries and contributors-in its sustainability, quality, and environmental policies. The adoption of materiality analysis as a "management tool" for sustainability enhances reporting effectiveness and stakeholder engagement.

   Growth Management Risks As part of its financial and strategic planning tools, Monnalisa prepares a three-year development plan, updated annually. The plan outlines, in both descriptive and numerical form, the strategies, actions, and related expected economic and financial impacts aimed at consolidating existing operations and seizing new growth opportunities.

   Product Distinctiveness Risks Creativity-the ability to make the product distinctive-represents Monnalisa's key competitive lever and one of its most valuable intangible assets. Oversight of this strategic area is entrusted to Barbara Bertocci and Diletta Iacomoni, respectively the founder's wife and daughter, symbolizing the company's commitment to preserving product identity and distinctiveness. With the same care and attention, Monnalisa approaches its licensing business, effectively interpreting, producing, and distributing third-party brands.

   Product Safety and Quality Assurance Risks Each Monnalisa garment is designed and assessed with attention to health and safety-particularly important given that the final users are children. Materials and finished products are tested for the presence of harmful substances, and the design and industrialization processes comply with child garment safety regulations. Requirements and restrictions may vary from country to country, as do lists of substances considered hazardous to consumers' health. Therefore, close monitoring of regulatory developments is necessary to ensure compliance with even the most stringent standards.

   This area is managed by raising awareness throughout the supply chain that contributes to Monnalisa's production. All product health and safety requirements are formally included in supplier relations through a Code of Conduct, which forms an integral part of supply contracts. By signing this code, suppliers commit to adhering to the principles embraced by the commissioning company.

   Employee Health and Safety Risks Health and safety in the workplace are fundamental rights of every employee. Although Monnalisa's activities are not inherently hazardous, the company's focus extends beyond legal compliance to include "soft" aspects such as workplace climate and work-life balance policies. During the COVID-19 health emergency, employee well-being and safety were central to the Group's initiatives and policies. As the pandemic spread globally, it became necessary to rethink workspaces and schedules to ensure safe working conditions, maintain operational continuity, and protect the health of all individuals interacting with the Group-customers, consumers, and suppliers alike.

   Supply Chain Management Risks Monnalisa does not have internal production; therefore, control over its supply chain is essential in all respects-quality, labor practices, human rights, environment, and product safety. Supplier selection and evaluation are crucial, given that raw materials, finished products, and services are sourced from various countries, which may change over time due to macroeconomic factors.

   Monnalisa's collaboration philosophy with key suppliers is based on building long-term partnerships grounded in shared objectives and tools to achieve high-quality, efficient, and mutually beneficial outcomes. Supplier selection and evaluation processes are based not only on product-related aspects but also on ethical criteria, fostering long-lasting cooperation founded on shared values. The effectiveness of this process is

   demonstrated by the continuity and stability of relationships with key suppliers. The Company prioritizes suppliers that collaborate in research, development, and innovation.

   Geopolitical Risks from Conflicts Geopolitical risks, primarily stemming from armed conflicts-particularly the Russia-Ukraine and Israel-Palestine conflicts-and political tensions, can negatively impact supply chains by causing delays in material deliveries and increasing operating costs. Moreover, geopolitical uncertainty may reduce consumer and investor confidence, affecting sales and profitability. The Group continuously monitors the international situation to ensure business continuity and safeguard corporate interests.

   Tariff Risks

   The new U.S. administration has imposed trade tariffs on imports into the United States starting in April 2025. Consequently, the Group is exposed to risks associated with high internationalization, such as exposure to local economic and political conditions, compliance with varying tax regimes, the introduction of more restrictive laws or regulations, and the impact of customs barriers. The new tariffs could lead to additional costs and supply chain complications, negatively affecting the Group's economic, financial, and equity position.

   The global economy is experiencing moderate growth. Central banks such as the Federal Reserve and the European Central Bank are pursuing monetary policies aimed at balancing inflation control with growth promotion. In this context, customs tariffs play a significant role, as they influence trade flows and, consequently, the Group's competitiveness in international markets. The Group is closely monitoring these policy developments and assessing strategies to mitigate potential negative impacts on sales and market positioning in the United States.

7. RELATIONSHIPS WITH FINANCIAL INSTITUTIONS

   The indebtedness primarily concerns the Holding Company. The activities covered by the bank-corporate relationship include the execution of loan agreements, foreign exchange hedging, receivables financing, cash management, payments, financing and credit lines, and the opening of letters of credit. The structure of the debt shows a sound balance between short-term and long-term components. For further details, reference should be made to the section of this financial report titled "Directors' Assessment of the Going Concern Assumption."

   Use of Financial Instruments

   Derivative financial instruments may be used for the purpose of hedging financial risks related to exchange rate fluctuations on foreign currency commercial transactions, or to hedge financial risks arising from variable interest rate fluctuations on specific medium- to long-term financing transactions. At present, the Group has in place only hedges against risks associated with interest rate fluctuations.

8. INVESTMENTS

   During the period, the Group made investments in the following areas:

   Fixed assets	Investments for the year
   Industrial rights and patents	15.000
   Plant and machinery	4.300
   Industrial and commercial equipment	24.434
   Other assets	69.457
   Improvements on third-party assets	87.569
   Total	200.761

9. INFORMATION ON ENVIRONMENTAL AND EMPLOYEE RELATIONS

   In compliance with Article 2428, paragraph 2 of the Italian Civil Code, the following is specified:

   • No complaints have been filed for damages caused to the environment;

   • No sanctions or final penalties have been imposed for environmental crimes or damages;

   • No violations of environmental protection regulations have been reported.

     The Group has not implemented specific environmental impact policies, as these are not deemed necessary given the nature of its business activities. The Holding Company has an environmental management system certified under ISO 14001. Each year, environmental improvement objectives are defined, and their achievement is reported in the Integrated Report, along with environmental indicators required by the GRI (Global Reporting Initiative).

     In addition to the information provided in the Notes to the Consolidated Financial Statements as of December 31, the following is specified:

   • No work-related fatalities have occurred among registered employees;

   • No serious or very serious work-related injuries have occurred among registered employees;

   • No charges have been brought for occupational illnesses or cases of workplace harassment ("mobbing") for which the Company has been declared definitively liable;

   • The Company has implemented employee safety measures to ensure compliance with legal requirements.

   The Holding Company adopts all appropriate measures to protect health and safety in the workplace through the application of standard procedures (risk assessment, health surveillance plan) and with the support of qualified professionals (Managers, Supervisors, Occupational Physician, and Head of the Prevention and Protection Service, pursuant to Legislative Decree No. 81/2008).

   Occupational risk prevention is a fundamental principle guiding the Company and represents an opportunity to improve quality of life within its facilities and offices. In this regard, the Company has continued initiatives to train and raise awareness among employees and all workers on workplace safety issues. These activities have been carried out through training and information sessions (via dedicated courses), implementation of the health surveillance plan, and dissemination of notices and circulars as required by applicable regulations.

   In compliance with Legislative Decree No. 81/2008, further investments have been made to improve the adequacy of systems and equipment in accordance with the provisions of the aforementioned legislation.

10. RESEARCH AND DEVELOPMENT ACTIVITIES

    Pursuant to and for the purposes of point 1), paragraph 3 of Article 2428 of the Italian Civil Code, it is hereby stated that no research and development activities were carried out during the year 2024.

11. RELATED PARTY TRANSACTIONS

    The exchange relationships between the various companies are governed by current market conditions. Below is a summary of the significant transactions carried out in 2024, detailing the nature of each exchange relationship by company:

    • Jafin S.r.l.: financial company with which Monnalisa has lease agreements for certain properties used for the company's operations.

    • Fondazione Monnalisa: a non-profit entity engaged in philanthropic activities within the Arezzo area.

    • Barbara Bertocci: Creative Director of Monnalisa.

    • Diletta Iacomoni: Fashion Coordinator of Monnalisa.

    • Monnalisa Hong Kong Ltd: company responsible for retail development in Hong Kong.

    • Monnalisa China Ltd: company responsible for retail development in China.

    • Monnalisa Rus LLC: company responsible for retail and wholesale development in Russia.

    • ML Retail USA Inc: company responsible for retail development in the United States.

    • Monnalisa Bebek Gygim Sanayi Ve Ticaret A.S.: company responsible for retail development in Turkey.

    • Monnalisa Japan: company responsible for retail development in Japan.

    • Monnalisa International: company responsible for retail development in Taiwan.

    • Monnalisa UK Ltd: company responsible for retail development in the United Kingdom.

    • Monnalisa Singapore: company responsible for developing the retail channel in the local market.

    • Monnalisa San Marino S.r.l.: company responsible for developing the retail channel in the local market.

    The following table provides details of the economic and financial aspects of the related-party transactions as of December 31, 2024:

    Related part	Receivables	Financial receivables	Payables	Revenues	Costs
    Jafin S.r.l.	12.200		62.449	10.000	149.564
    Fondazione Monnalisa	177.725			163.827
    Barbara Bertocci			97.004		65.002
    Diletta Iacomoni			8.310		253.260
    Monnalisa Hong Kong Ltd	1.674.037	970.000	224.778	97.387	24.427
    Monnalisa China LLC	1.874.737		92.089	26.644	64.899
    Monnalisa Rus OOO	1.195.409			1.498.015
    ML Retail Usa Inc	3.091.304	1.950.095	627.848	938.419	139.620

    Monnalisa Bebek Giyim Sanayi	225.399		57.075	227.913	37.858
    Monnalisa UK Ltd	840.932	414.043		232.242
    Monnalisa Taiwan	608.684	130.000	46.226	189.965
    Monnalisa Japan	32.365	86.883		1.107
    Monnalisa Singapore Ltd	534.718	20.000	90.462	77.863
    Monnalisa San Marino S.r.l.	364.790			162.550	1.994
    Total	10.632.300	3.571.021	1.306.242	3.625.930	736.625

    Monnalisa's shares are 75% owned by Jafin Due S.r.l., which, pursuant to Article 2497-sexies of the Italian Civil Code, exercises management and coordination activities.

12. TREASURY SHARES AND SHARES/INTERESTS IN PARENT COMPANIES

    At the close of the fiscal year, Monnalisa S.p.A. held 18,075 treasury shares with a total value of EUR 149,915, purchased under the Company's share buyback and disposal program approved by the Board of Directors on January 16, 2019, in execution of the shareholders' resolution dated June 15, 2018.

    The treasury shares may be sold at any time, in whole or in part, in one or more transactions, through sales on the market, off-market block trades, accelerated bookbuilding, or through the transfer of any real and/or personal rights related to them (including, by way of example, securities lending). They may also be used within the framework of industrial projects or extraordinary financial transactions-such as exchanges, swaps, or contributions-or through other methods involving the transfer of treasury shares, at a price or value deemed appropriate and consistent with the transaction, taking into account prevailing market conditions.

13. OTHER INFORMATION

    In order to comply with the provisions of the Euronext Growth Milan Issuers' Regulations (formerly AIM Italia

    / Alternative Capital Market), updated on October 25, 2021, the Company has adopted specific corporate governance procedures, including:

    • Internal Dealing Procedure, aimed at regulating disclosure obligations concerning certain transactions carried out by the Company's directors;

    • Regulation for the Management and Processing of Corporate Information and the External Disclosure of Inside Information;

    • Related Party Transactions Procedure, designed to govern the identification, approval, and execution of transactions conducted by the Company with related parties, ensuring transparency and fairness in both substance and procedure;

    • Procedure for Fulfilling Communication Obligations to the Euronext Growth Advisor.

14. SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD AND OUTLOOK FOR FUTURE OPERATIONS

Pursuant to point 5), paragraph 3 of Article 2428 of the Italian Civil Code, no significant events occurred after the end of the period that could materially affect the Group's performance.

The global macroeconomic environment remains volatile, marked by uncertainties related to recession risks, persistent inflationary pressures, and geopolitical instability. The year 2024 was a complex one, characterized by significant challenges that had a considerable impact on the demand for luxury goods-particularly affecting the Wholesale channel, traditionally the weakest link in the value chain. Consumption slowed in key markets for the Group, such as the United States, China, and also Europe. The economic conditions in Asian markets, especially in China, combined with an uncertain and unfavorable global context, have created significant challenges for the Group.

The 2024 results continued to be affected by the aforementioned adverse external factors, which reduced consumer confidence and, consequently, customer orders. Moreover, a radical transformation occurred in the competitive landscape of the high-end children's fashion sector, which in recent years has seen an influx of men's and women's brands launching children's collections. Performance in 2024 was also influenced by a decline in the revenue of a licensed brand, which suffered a negative impact on its sales due to reputational risks arising from causes unrelated to its core business. All these factors resulted in financial results below expectations for the year, both in terms of revenue and profitability; the latter was also affected by non-monetary write-downs, particularly linked to the closure of the Chinese subsidiary.

In light of this uncertainty and unpredictability, the Group has continued to operate in line with its development strategies, maintaining a clear and targeted vision, despite an unstable and challenging consumption environment. The new management team, appointed in May of the current fiscal year, has been working on a comprehensive business turnaround plan, the effects of which will become evident starting in 2025, as well as on a stricter cost-containment plan, whose effects were already visible in 2024 and are expected to become even more significant in the next fiscal year.

Management has conducted in-depth analyses across all strategic areas of the Company's business model, with the support of external advisors, and has developed a restructuring and relaunch plan, the key guidelines of which were approved by the Board of Directors on September 25, 2024. Specifically, the strategic plan is based on the following pillars:

• consolidation of revenues in the Wholesale channel, also through new sales related to already signed licensing agreements, with the first revenues expected in 2025;

• continuation of the strategy aimed at securing new licensing or production agreements with adult fashion brands, with the objective of increasing not only volumes but also profitability, by generating new revenue streams and improving margins;

• rationalization of the retail channel through optimized management of existing stores.

  All these initiatives are accompanied by a targeted strategy to contain and reduce operating costs through:

• reduction of general expenses via a dedicated cost-saving plan;

• closure of underperforming stores;

• optimization of "non-strategic" costs.

The plan thus defines a comprehensive strategy aimed, on the one hand, at improving the efficiency and sustainability of the existing cost structure in light of current revenue volumes, and on the other, at developing new business lines that will strengthen the Group's revenues through new growth drivers.

The environment in which the Group operates calls for a prudent short-term outlook; nevertheless, the Group continues to pursue its strategic plan with determination and optimism, aiming to restore the foundations for a return to economic and financial balance within a reasonable timeframe-leveraging its historical DNA and its enduring commitment to innovation and creativity.

For the Board of Directors of Monnalisa S.p.A.

Chairman Piero Iacomoni

Monnalisa S.p.A.

Consolidated financial statements as at December 31, 2024

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010

EY S.p.A.

Piazza della Libertà, 9 50129 Firenze

Tel: +39 055 552451

Fax: +39 055 5524850

ey.com

To the Shareholders of Monnalisa S.p.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Monnalisa Group (the Group), which comprise the consolidated statement of financial position as at 31 December 2024, and the consolidated income statement, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2024, and of its financial performance and its cash flows for the year then ended in accordance with IFRS accounting standards issued by International Accounting Standards Board as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

We are independent of the Group in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements

The Directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS accounting standards issued by International Accounting Standards Board as adopted by the European Union, and, within the terms provided by the law, for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Directors are responsible for assessing the Group's ability to continue as a going concern and, when preparing the consolidated financial statements, for the appropriateness of the going concern assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial statements on a going concern basis unless they either intend to liquidate the Parent Company Monnalisa S.p.A. or to cease operations, or have no realistic alternative but to do so.

EY S.p.A.

Sede Legale: Via Meravigli, 12 - 20123 Milano Sede Secondaria: Via Lombardia, 31 - 00187 Roma Capitale Sociale Euro 3.000.000 i.v.

Iscritta alla S.O. del Registro delle Imprese presso la CCIAA di Milano Monza Brianza Lodi

Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. di Milano 606158 - P.IVA 00891231003 Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998

A member firm of Ernst & Young Global Limited

The statutory audit committee ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have exercised professional judgment and maintained professional skepticism throughout the audit. In addition:

• we have identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• we have obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;

• we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;

• we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;

• we have evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

• we have obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We have communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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