The following discussion of the Group’s results of operations, liquidity and capital resources is based on information derived from the audited Consolidated Financial Statements and the notes thereto included in Item 18 of this Annual Report. These financial statements have been prepared in accordance with IFRS and are included in Item 18 of this Annual Report. All information that is not historical in nature and disclosed under “Item 5. Operating and Financial Review and Prospects” is deemed to be a forward-looking statement. See “Forward-Looking Information.” The consolidated financial statements of Natuzzi S.p.A. as at and for the years ended December 31, 2025 and 2024 have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”), including interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. Non-GAAP Financial Measures We monitor and evaluate our operating and financial performance using several non-GAAP financial measures including: Adjusted EBITDA, Adjusted EBITDA margin and Net Financial Position. We believe that these non-GAAP financial measures provide useful and relevant information regarding our performance and our ability to assess our financial performance and financial position. They also provide us with comparable measures that facilitate management’s ability to identify operational trends, as well as make decisions regarding future spending, resource allocations and other operational decisions. While similar measures are widely used in the industry in which we operate, the financial measures we use may not be comparable to other similarly titled measures used by other companies nor are they intended to be substitutes for measures of financial performance or financial position as prepared in accordance with IFRS. Adjusted earnings before interest, tax, depreciation and amortisation (Adjusted EBITDA) Management has presented the performance measure Adjusted EBITDA because it monitors this performance measure at a consolidated level and it believes that this measure is relevant to an understanding of the Group’s financial performance. Adjusted EBITDA is calculated by adjusting profit or loss from continuing operations to exclude the impact of taxation, net finance income/(costs), depreciation, amortisation, government grants only related to depreciation of property, plant and equipment (PPE) and share of profit of equity-method investees. Adjusted EBITDA is not a defined performance measure in IFRS. The Group’s definition of Adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities. The following tables show the reconciliation of Adjusted EBITDA to profit or loss for the years ended December 31, 2025, 2024 and 2023 (amounts in thousands of euro). 2025 2024 2023 Profit/(loss) for the year (30,592 ) (15,382 ) (16,162 ) Income tax expense 1,036 684 1,090 Profit/(loss) before tax (29,556 ) (14,698 ) (15,072 ) Adjustments for: - Addition (subtraction) of net finance income/(costs) 10,370 8,818 8,470 - Addition (subtraction) of share of profit/(loss) equity-method inv. 371 (389 ) (2,897 ) - Addition of depreciation 18,843 19,619 21,331 - Addition of amortisation 2,152 1,569 1,041 - Subtraction of government grants related to PPE (1,408 ) (1,455 ) (1,648 ) Adjusted EBITDA 772 13,464 11,225 In applying IFRS 16, in relation to the leases that were classified as operating leases, the Group recognizes depreciation and interest costs, instead of operating lease expense. In relation to those leases, the Group recognised €10.0 million of depreciation charges and €3.3 million of additional interest costs from leases in 2025 (€10.6 million and €3.8 million, respectively, in 2024; €12.0 million and €3.1 million, respectively, in 2023). Adjusted EBITDA is presented by management to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies. 39 Table of Contents Net Financial Position Net Financial Position is defined as “Cash and cash equivalents,” less “Bank overdrafts and short-term borrowings,” less “Current portion of long-term borrowings,” less “Non-current portion of long-term borrowings,” less “Current portion of lease liabilities,” less “Non-current portion of lease liabilities.” As of December 31, 2025, 2024 and 2023 our Net Financial Position was as reported in the following tables (amounts in thousands of euro): 31/12/2025 31/12/2024 31/12/2023 Cash and cash equivalents 20,320 20,322 33,610 Bank overdrafts and short-term borrowings (22,197 ) (23,327 ) (22,834 ) Current portion of long-term borrowings (7,251 ) (4,532 ) (5,200 ) Non-current portion of long-term borrowings (23,095 ) (14,188 ) (12,153 ) Net Financial Position before lease liabilities, positive (negative) (32,223 ) (21,725 ) (6,577 ) Current portion of lease liabilities (9,480 ) (10,350 ) (9,413 ) Non-current portion of lease liabilities (39,963 ) (47,400 ) (52,914 ) Net Financial Position (81,666 ) (79,475 ) (68,904 ) In June 2024, Natuzzi Singapore granted a loan of U.S.$1.4 million to TTF, a minority shareholder of Natuzzi Singapore, for a 12-month term, renewable for an additional 12 months. The agreed interest rate was set at U.S.$1-Month Libor minus 0.25%, matching the interest rate Natuzzi Singapore would have obtained from a bank deposit. This loan has been renewed for an additional 12-month term. See Notes 17 and 45 to the Consolidated Financial Statements included in this Annual Report. We believe our Net Financial Position provides useful information for investors because it gives evidence of our consolidated position either in terms of net indebtedness or net cash by measuring our capital resources based on cash and cash equivalents and the total level of our financial indebtedness. Results of Operations Summary — In 2025, similarly to 2024 and 2023, our results of operations were affected by persistent macroeconomic and industry-specific challenges, including high levels of inflation and interest rates, which resulted in a stagnant real estate market and affected clients’ disposable incomes, thus causing consumers to delay or decrease investments in their existing homes and making them more price conscious, resulting in a shift in demand to less expensive products. See “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position.” These factors contributed to a continued decline in sales in 2025, affecting the Company’s ability to adequately absorb fixed costs. The Company’s financial performance in 2025 was further impacted by structural challenges, particularly excess workforce capacity and high labor costs at its Italian operations. These difficulties were compounded by changes in global trade policies: the introduction of new tariffs by the U.S. administration in early 2025 on goods produced in China and Europe (including Italy) disrupted the commercial environment, as distributors and retailers prioritized inventory reduction over new orders, depressing sales volumes below expectations. During 2025, the Company manufactured its products in line with its new industrial footprint, including the relocation of its Chinese operations from Shanghai to Quanjiao and the partial transfer of production for the North American market to its Italian facilities, with the aim of eliminating its exposure to U.S. tariffs on goods sourced from China. However, the additional trade duties subsequently imposed by the U.S. presidential administration since April 2025 on products manufactured in Europe (including Italy) significantly diminished the expected benefits of the production shift to Italy. As a result, despite an improvement in sales compared to 2024, the Company incurred higher labor costs in Italy and was compelled to implement pricing adjustments to mitigate the impact of trade tariffs, leading to a significant compression of margins. Therefore, the current level of gross profit remains insufficient to adequately absorb selling and administrative expenses, which, although reduced, continue to be disproportionately high relative to revenues. Furthermore, the overall result for the year 2025 was burdened by €2.2 million in labor-related costs associated with the Group’s staff reduction program, of which €1.1 million were included in cost of sales, €0.7 million in selling expenses, and €0.4 million in administrative expenses. 40 Table of Contents In the last few years, the Group has started a thorough reorganization process covering its industrial, sales and service operations. In the current operating context, and with the aim of addressing both external challenges and Company-specific structural issues, management has prepared a comprehensive restructuring plan. Its key elements include a significant reduction in fixed costs, increased flexibility of production capacity, the divestment of selected non-strategic Italian assets, the outsourcing of low value-added activities, and a review of the capital structure, including potential strengthening measures. Similarly, in 2024, the overall result was burdened by €5.3 million in labor-related costs associated with the Group’s staff reduction program, of which €4.5 million were included in cost of sales, €0.5 million in selling expenses, and €0.3 million in administrative expenses. In 2023, net sales declined compared to 2022, which benefitted from a €58.4 million reduction in the order backlog accumulated through December 31, 2021, due to supply chain disruptions in 2021, which significantly constrained product deliveries in that year. As a result, part of such orders was recognised in 2022, thus contributing to increasing 2022 net sales. The following table sets forth selected financial highlights of the Group for the years ended December 31, 2025, 2024 and 2023. 2025 2024 2023 (millions of euro, except for percentages) Consolidated Statement of Profit or Loss Data: Revenue 308.2 318.8 328.6 YoY % change in Revenue -3.3 % -3.0 % -29.9 % Branded sales on main business* 94.9 % 92.7 % 92.5 % * Sales of upholstered and other home furnishings products Gross Profit 103.4 115.7 112.9 Gross Margin 33.6 % 36.3 % 34.3 % Operating Profit/(Loss) (18.8 ) (6.3 ) (9.5 ) Operating Margin -6.1 % -2.0 % -2.9 % Adjusted EBITDA 0.8 13.5 11.2 Adjusted EBITDA margin 0.3 % 4.2 % 3.4 % Group’s Cash and cash equivalents (as at Dec. 31) 20.3 20.3 33.6 For a description of how Adjusted EBITDA is computed, see “—Non-GAAP Financial Measures” above. Adjusted EBITDA margin is calculated as the ratio between Adjusted EBITDA and Revenue. The Company intends to continue to pursue its strategy for the future by focusing on some key cornerstones including: i) a confirmed focus on branded and controlled distribution through single-brand stores, both owned and franchised, in priority markets, such as the U.S., China and Europe, primarily the UK and Italy; ii) a review of the Group’s production allocation, including the collaboration with external industrial partners located in low-cost countries to further enhance overall efficiency; iii) the disposal of certain assets no longer in line with the strategic development adopted by the Group to obtain proceeds to be reinvested in retail expansion and restructuring programs; and iv) a generalized streamlining of processes and costs. 2025 Compared to 2024 The Consolidated Financial Statements have been prepared on a going concern basis, which assumes that the Group will be reasonably able to meet its obligations as they fall due within one year from the date of the approval of these consolidated financial statements. The board of directors believe that the One-Year Budget, combined with the cash and cash equivalents and unused credit facilities as of December 31, 2025, will be sufficient to allow the Group to meet its obligations. As of December 31, 2025, the Group’s cash and cash equivalents amounted to €20.3 million (€20.3 million as of December 31, 2024), while the unused portion of the credit facilities available to the Group (for further details, see Note 28 to the Consolidated Financial Statements) amounted to €4.4 million (€32.6 million as of December 31, 2024). The Annual Report shows that the Company’s liquidity condition raises substantial doubt about the Group’s ability to continue as a going concern for a reasonable period of time from the publication date of the Annual Report and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. See Note 3(f) to the Consolidated Financial Statements. 41 Table of Contents In 2025, the Company’s financial performance was adversely affected by a combination of unfavorable macroeconomic conditions and structural challenges, particularly excess workforce capacity and high labor costs at its Italian operations. See “Item 3. Key Information—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”. In particular, persistently high interest rates contributed to a slowdown in the real estate market by increasing mortgage costs, thereby reducing new construction and home improvement activity, particularly in the U.S., which represents approximately one-third of the Group’s annual turnover. In addition, adverse macroeconomic conditions in Europe and weakened consumer demand in China—exacerbated by a significant contraction in the local real estate market—further contributed to the overall decline in the Group’s revenue. Collectively, North America, China and Western Europe represent approximately 70% of the Group’s annual turnover. These factors had a direct negative impact on demand for the Company’s products, resulting in declining sales volumes. As a result, consolidated revenues in 2025 fell below expectations, limiting the Group’s ability to absorb fixed costs and placing pressure on margins and cash generation. Revenue for 2025, including sales of leather and fabric-upholstered furniture, home furnishings accessories and other sales (mainly sales of leather and other raw materials sold to third parties), were €308.2 million, down 3.3% from €318.8 million in 2024. Sales of upholstery furniture and home furnishing accessories (“main business”) were €298.7 million, down 3.8% from €310.5 million in 2024, as a result of a 1.5% decrease in sales of the Natuzzi branded products (Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) and a 33.2% decrease in sales in the unbranded products. Other sales (comprising sales of polyurethane foam, other raw materials to third parties and services) were €9.6 million in 2025, compared to €8.3 million in 2024. This increase is primarily attributable to €0.8 million in design services rendered in connection with the Trade & Contract business and recognized in 2025, compared to nil in 2024. To provide a better understanding of the different drivers of our operating model, invoiced sales from our main business (upholstered and other home furnishings sales) are hereafter described according to the main dimensions of the Group’s business: • A. Branded/unbranded business • B. Distribution channels A. Branded/unbranded business The Group operates in the branded business (with the Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi brands) and the unbranded business, the latter with collections dedicated to the large-scale distribution. A1. Branded business. Within the branded business, Natuzzi is pursuing a dual-brand strategy that focuses on the Natuzzi Italia and Natuzzi Editions brands. See “Item 4. Information on the Company—Strategy—The Brand Portfolio and Merchandising Strategy.” In 2025, Natuzzi’s branded invoiced sales amounted to €283.5 million, a decrease of 1.5% compared to 2024. In 2025, invoiced branded sales represented 94.9% of our main business, compared to 92.7% in 2024. The following is the contribution of each brand to 2025 invoiced sales: •Natuzzi Italia invoiced sales amounted to €119.5 million, a decrease of 0.8% compared to 2024; •Natuzzi Editions invoiced sales (including sales from “Divani&Divani by Natuzzi” in Italy) amounted to €164.0 million, a decrease of 2.0% compared to 2024. A2. Unbranded business. Invoiced sales from our unbranded business amounted to €15.1 million, a decrease of 33.2% compared to 2024. The Group’s strategy is to focus on selected large accounts and serve them with a more efficient go-to-market model. In order to increase production flexibility and competitiveness, in 2020 the Company started to outsource in Vietnam part of its unbranded production for some key accounts in the U.S. In 2025, the Group opened a new proprietary facility in Vietnam to serve the Indian market and the American wholesale free-market. The Company expects to gradually serve most of its mass-merchant distributors located in North America through its Vietnamese operations. As part of the general review of the Group’s manufacturing footprint, the Company continues to explore further external production capacity in low-cost countries to increase its production capacity and flexibility, particularly with regard to its unbranded production. 42 Table of Contents B. Distribution As of December 31, 2025, the Group distributes its branded collections in approximately 100 countries, through a network comprising 51 DOS, three DOS in the U.S. managed in joint venture with a local partner, in addition to 15 DOS operated by our joint venture in China, 495 franchise mono-brand Natuzzi stores (“FOS”), and 1,043 wholesale points of sale, represented by 487 shop-in-shop Natuzzi galleries (including 12 concessions directly operated by the Group) and 556 smaller points of sale in multi-brand stores operated by third parties. See “Item 4. Information on the Company—Markets” for further information regarding our distribution network. In 2025, sales generated by the points of sales directly operated by the Group (DOS and concessions) were €69.2 million, down 9.0% compared to 2024, also due to the closure of two DOS located in each of Spain and the U.K. In 2025, invoiced sales from franchise mono-brand Natuzzi stores amounted to €125.3 million, an increase of 0.1% compared to 2024. In 2025, the Group also invoiced net sales of €3.3 million through its newly established “Contract” division, which serves real estate developers. The Group began accounting for net sales from this channel starting from 2025. The Group also sells its products through the wholesale channel, consisting primarily of Natuzzi-branded galleries in multi-brand stores as well as mass distributors selling unbranded products. In 2025, invoiced sales from the wholesale channel amounted to €100.8 million, a decrease of 7.7% compared to 2024. Cost of Sales in 2025 was €204.8 million (or 66.4% as a percentage of revenue), as compared to €203.1 million (or 63.7% of revenue) in 2024. The decrease in sales between 2025 and 2024 resulted in a higher incidence of fixed costs on sales. In 2025 and 2024, the Group continued to implement its program aimed at reducing its redundant workforce. See “Item 3. Key Information—Risk Factors— We have redundant workers at our Italian operations, which remains an unresolved issue, and have benefited in 2025 and in previous years from temporary work force reduction programs; if we continue to be unable to reduce our redundant workers and/or if such temporary work force reduction programs are not continued, our business, results of operations and liquidity may continue to be impacted or may be impacted at a greater extent.” In 2025, within the cost of sales, the Group recognized impairment of non-financial assets of €2.3 million, in connection with some of its factories located in Italy. In 2025, within the cost of sales, the Group also recognized labor-related costs of €1.1 million for its incentive program to reduce the redundant workforce at the Italian plants (€4.5 million in 2024). In addition, as in 2024, the Group experienced labor cost increases in Romania, as part of the government’s plan to increase the minimum wage, and in Italy, due to the renegotiation of national collective bargaining agreements. Gross Profit. In 2025, the Group’s consolidated gross profit was €103.4 million, or 33.6% as a percentage of revenue (“gross margin”), compared to €115.7 million or 36.3% of revenue in 2024. Excluding the €1.1 million related to its incentive program to reduce the redundant workforce, and the €2.3 million impairment of non-financial assets, the gross margin for 2025 would have been 32.4%. Similarly, in 2024, the gross margin, net of the €4.5 million related to its incentive program to reduce the redundant workforce, would have been 37.7% (no impairment of non-financial assets was recognized in 2024). In 2025, gross profit was adversely impacted by the decrease in revenue and by the planned reallocation of Natuzzi Editions production for the North American market from China to Italy, which resulted in higher labor costs and higher consumption of raw materials. In addition, lower sales from DOS contributed to margin pressure in 2025. These effects were partially offset by a more favorable sales mix compared to 2024, which helped mitigate the impact on gross margin. Selling expenses, administrative expenses, impairment on trade receivables and other income/expenses in 2025 were €122.2 million (or 39.7% on revenue) compared to €122.0 million (or 38.3% on revenue) in 2024. The increase in the percentage on revenue is mainly due to the deleveraging of fixed costs due to the decrease in revenue. In 2025, selling expenses amounted to €90.5 million, compared to €90.2 million in 2024. This increase was primarily attributable to: i) a €3.6 million increase in impairment losses recognized in 2025 on non-financial assets related to the Group's retail operations, principally in Europe and the U.S.; ii) a €1.0 million increase in customs duties resulting from trade tariffs imposed by the U.S. presidential administration since April 2025 on goods manufactured in Europe and delivered to the U.S.; iii) a €0.4 million increase in costs related to participation in trade fairs; and iv) a €0.3 million accrual in connection with the incentive program to reduce redundant employees. To counterbalance the negative effect of U.S. trade duties on Italian production, management implemented price list adjustments. These increases were partially offset by: i) a €1.2 million reduction in shipping and handling costs attributable to lower revenue; ii) a €1.4 million reduction in labor costs resulting from the closure of two non-performing DOS and a generalized 43 Table of Contents review of processes; iii) a €0.9 million reduction in depreciation and amortization following the decrease in the number of DOS; and iv) a €0.6 million decrease in sales representative commissions attributable to lower revenue, together with a generalized reduction in discretionary costs. In 2025, administrative expenses were €40.8 million, compared to €36.0 million in 2024. This increase is primarily attributable to: i) a €0.5 million increase in labor costs; ii) a €0.6 million increase in software license costs; iii) a €0.5 million increase in indirect taxes; iv) a €1.3 million decrease in government grants compared to 2024, and v) a €1.9 million accrual for impairment of non-financial assets. However, in 2025 the Group reported a €0.8 million reduction in other administrative expenses (in particular, travel expenses, general maintenance and other costs). In 2024, the Company also accounted for an accrual of €0.4 million for higher labor cost (€0.6 million in 2023), within selling and administrative expenses, based on an independent qualified third-party estimation of the fair value of the equity instruments granted under the stock option plan approved in July 2022 by the Company’s Board of Directors (the “SOP”). In 2025, no accrual was recorded as all beneficiaries of the SOP had left the Company. In 2025, impairment on trade receivables was not material, whereas in 2024 the Group accrued €0.3 million on trade receivables. See Notes 15 and 33 to the Consolidated Financial Statements. For further details, see Notes 37 and 38 to the Consolidated Financial Statements. Operating Result. The Group reported an operating loss of €18.8 million in 2025 compared to an operating loss of €6.3 million in 2024 due to the factors described above. Net finance income/(costs). The Group had net finance costs of €10.4 million in 2025 as compared to net finance costs of €8.8 million in 2024. The increase was primarily attributable to unfavorable currency movements, notwithstanding a partial decrease in interest rates during the period. See Notes 39 and 40 to the Consolidated Financial Statements. Net finance costs of 2025 include: —finance income of €0.6 million (€0.8 million in 2024); —finance costs of €8.7 million (€10.2 million in 2024); and —net exchange rate losses of €2.2 million (net exchange rate gains of €0.6 million in 2024). The net exchange rate gains in 2025 primarily reflected the following factors: —net realized gain of €0.0 million in 2025 (compared to net realized losses of €0.2 million in 2024) on domestic currency swaps due to the difference between the forward rates of the domestic currency swaps and the spot rates at which the domestic currency swaps were settled (the Group uses forward rate contracts to hedge its price risks against unfavorable exchange rate variations); —net realized losses of €1.0 million in 2025 (compared to net realized gains of €0.4 million in 2024 ), resulting from the difference between invoice exchange rates and collection/payment exchange rates; —net unrealized gains of €0.3 million in 2025 (compared to net unrealized losses of €0.4 million in 2024 ), resulting from the mark-to-market evaluation of domestic currency swaps; —net unrealized losses of €0.2 million in 2025 (compared to net unrealized gains of €1.0 million in 2024) on trade receivables and payables; and —net unrealized losses of €1.3 million in 2025 (compared to net unrealized losses of €0.2 million in 2024), from the translation of non-monetary assets for the Company’s Romanian subsidiary adopting Euro as its functional currency. The Group does not use hedge accounting and records all fair value changes of its domestic currency swaps in its statement of profit or loss. Profit/(loss) before tax and income tax expense. In 2025, the Group reported a loss before tax of €29.6 million and income tax expense of €1.0 million, compared to a loss before tax of €14.7 million and income tax expense of €0.7 million. For additional information about the Group’s income tax expense, see Note 41 to the Consolidated Financial Statements. 44 Table of Contents Profit/(loss) for the year. As a result of the above-mentioned factors, the Group reported a loss of €30.6 million in 2025, as compared to a loss of €15.4 million in 2024. On a per-ordinary share basis, the Group had a loss of €0.54 in 2025, as compared to a loss of €0.28 in 2024 (see Note 42 to the Consolidated Financial Statements). On December 16, 2025, following the approval of the Company’s unaudited financial statements for the nine months and third quarter ended September 30, 2025, the board of directors noted that the Company had incurred losses resulting in a reduction of its share capital by more than one-third, thereby triggering the obligations set forth in Article 2446 of the Civil Code, which requires the board of directors of Italian joint-stock companies (società per azioni) to promptly convene a shareholders’ meeting to take appropriate actions. Notwithstanding the foregoing, the Company continues to operate in the ordinary course of business and any nominal reduction of its share capital is not expected to affect the Company’s ability to pursue its objectives or implement its restructuring plan. Accordingly, at the shareholders’ meeting held on February 16, 2026, the Company’s shareholders resolved to postpone any decision regarding the reduction of share capital pursuant to Article 2446 of the Civil Code to the shareholders’ meeting to be called to approve the Company’s stand-alone financial statements for the year ended December 31, 2025. 2024 Compared to 2023 Please refer to the Company’s annual report on Form 20-F filed with the SEC on April 30, 2025. Liquidity and Capital Resources Our business has relied on cash flows from operations as well as borrowings under our credit facilities as our primary sources of liquidity. Our liquidity may be adversely affected by uncertain global macro-economic and political conditions. See “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position”, “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations” and “Item 3. Key Information—Risk Factors—Our ability to generate the significant amount of cash needed to service our debt obligations and comply with our other financial obligations, and our ability to refinance all or a portion of our indebtedness or obtain additional financing, depend on multiple factors, many of which may be beyond our control.” In the ordinary course of business, our use of funds is for the payment of operating expenses, working capital requirements and capital expenditures. The Group’s principal source of liquidity has historically been its existing cash and cash equivalents and cash flow from operations, supplemented to the extent needed to meet the Group’s short term cash requirements by accessing the Group’s existing lines of credit. In 2025, the Group reported an operating loss of €18.8 million, compared to an operating loss of €6.3 million in 2024. See “Item 3. Key Information—Risk Factors—We have a history of operating losses and cannot assure you that we will be profitable in the future; our future profitability, financial condition and ability to maintain adequate levels of liquidity depend, to a large extent, on our ability to overcome operational challenges.” As of December 31, 2025, the Group’s cash and cash equivalents amounted to €20.3 million, its long-term borrowings amounted to €30.3 million, including the current portion of €7.2 million, and its bank overdrafts and short-term borrowings amounted to €22.2 million. Furthermore, as of December 31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amounts to €4.4 million. Such unused portion is mainly related to a non-recourse factoring agreement for export-related trade receivables (€3.4 million) and bank overdrafts (€1.0 million). See Note 28 to the Consolidated Financial Statements. As of December 31, 2025, the Group’s net financial position, which includes current and non-current lease liabilities, was negative at €81.7 million, compared to a negative net financial position of €79.5 million at the end of 2024. See Notes 18, 20, 21 and 28 to the Consolidated Financial Statements. Although we had €20.3 million in cash and cash equivalents as at December 31, 2025, €4.9 million of this amount is located at our Asian subsidiaries, of which €2.2 million at our Chinese subsidiaries, €1.8 million at our Singapore subsidiary and €0.7 at our Vietnamese subsidiary. If management intends to move this cash from China by way of a dividend distribution, a withholding tax of 5% under the 2019 Italy-China tax treaty (assuming the Company holds directly at least 25% of the capital of the paying subsidiaries throughout the required 365-day holding period) and the income taxes in Italy (equal to 24.0% on 5% of the dividends distributed) would have to be paid, although the Chinese withholding tax may be credited against Italian income taxes in accordance with applicable law. The Group’s management continues to apply and improve the stricter procedures introduced for some years to manage liquidity and working capital balances, to generate sufficient operating cash flows to meet its obligations as they fall due. The Group aims to 45 Table of Contents maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows for financial liabilities over the next 60 days. The Group also monitors the level of expected cash inflows from trade and other receivables together with expected cash outflows for trade and other payables. Specifically, in its cash flow forecasts for the 18-month period through June 2027, management has taken into account the following factors: ─ Disposal of certain assets no longer in line with the Group’s current strategy, including a business unit comprising six photovoltaic plants, in respect of which the Company entered into a preliminary agreement for its disposal in late November 2025 with a company specialized in the sector. The disposal transaction was finalized in late January 2026 and, on the closing date, the Company received total consideration for the sale amounting to €7.1 million. See Note 46 to the Consolidated Financial Statements. ─ The collection, in March 2026, of capital grants and subsidized loans from public incentive programs amounting to €2.7 million, and the utilization of the unused portion of available credit facilities. See “Item 4. Incentive Programs and Tax Benefits.” ─ Utilization of certain social safety net measures provided by the Italian government (such as CIGS), enabling the Company and certain of its subsidiaries in Italy to pay reduced salaries to workers for a specified period. ─ The disposal of two underutilized factories in Italy. ─ The outsourcing of low value-added activities. ─ Expected cash inflows from the joint venture, Natuzzi Trading Shanghai, in China, resulting from dividend distributions by such joint venture. ─ The collection of the residual €5.0 million granted in November 2025 by INVEST 2003 S.r.l. to the Company as a credit facility (See Note 3(f) to the Consolidated Financial Statements). ─ Stricter overall control over discretionary selling and administrative expenses. The actions outlined above delineate the strategies and executive plan that management intends to adopt to address the financial challenges and ensure the operational continuity of the Group, leveraging the strengths of the business, while maintaining a focus on improving profitability and protecting liquidity. In a worst-case scenario, as prepared by management, cash flow forecasts indicate that, with further anticipated actions such as reduced investments, potential reduction in the share capital of the Chinese joint venture, further saving actions on discretionary costs, the Group expects to have adequate funds to meet liabilities within one year from the approval of the Consolidated Financial Statements. Cash Flows — The Group’s cash and cash equivalents, net of bank overdraft repayable on demand, were €16.1 million as of December 31, 2025, compared to €17.0 million as of December 31, 2024. The most significant items in the Group’s cash flows in 2025 are described below. In 2025, net cash used in operating activities was €4.5 million (in 2024, €1.7 million of net cash provided by operations) as a result of: •a loss for the period of €30.6 million; •adjustments for non-monetary items of €30.8 million, of which depreciation and amortization of €21.0 million; •a positive contribution of €2.5 million from working capital change, primarily due to a €13.3 million decrease in inventories, a €4.0 million decrease in trade receivables and other assets, a €11.3 million decrease in trade payables and contract liabilities, a €2.4 million decrease in provisions and a cash out of €1.0 million in connection with the reduction of the Group’s employees; •interest and taxes paid of €7.2 million. During 2025, €2.8 million of net cash was provided by investing activities, mainly as a result of: •€10.1 million deriving from i) the final collection of €7.5 million in connection with the agreements entered into for the sale of a property located in High Point, North Carolina, USA, and ii) €2.4 million for the completion of the sale of a plot of a land in Romania; •€2.2 million received by the Company in October 2025 as dividends from its JV in China; 46 Table of Contents •€0.2 million grants received by the Italian government; •€7.7 million of cash invested in capital expenditures; •€2.0 million of liquidity invested by the Company’s Brazilian subsidiary. See Notes 7, 17 and 45 to the Consolidated Financial Statements. Cash provided by financing activities in 2025 was €1.4 million (compared to €12.8 million of cash used in financing activities in 2024), primarily attributable to €17.8 million of inflows received by the Group, comprising: i) a new financing of €4.6 million received by the Company’s Romanian subsidiary; ii) a new financing of €3.1 million received by the Company’s Brazilian subsidiary; and iii) €10.0 million received by the Company from the majority shareholder. These inflows were partially offset by: i) €4.7 million used for the repayment of long-term borrowings; ii) €9.5 million for lease repayments; iii) €2.0 million for short-term borrowing repayments; and iv) €0.4 million for the distribution of dividends to non-controlling interests. In addition, the Group received €0.1 million as a capital contribution from non-controlling interests. Bank overdrafts repayable on demand were €4.2 million as of December 31, 2025, compared to €3.3 million as of December 31, 2024. As a result, as of December 31, 2025, cash and cash equivalents in the statement of financial position was €20.3 million, the same as at December 31, 2024. As of December 31, 2025, the Group’s long-term contractual cash obligations and commercial commitments (whose amounts are gross and undiscounted and include contractual interest payments) amounted to €112.0 million, of which €41.4 million comes due in 2026. In particular, as of December 31, 2025, gross and undiscounted amounts related to the Group’s bank overdrafts and borrowings amounted to €56.1 million, of which €29.6 million comes due in 2026. The Group’s undiscounted value of total bank debt represented 244.3% of equity attributable to the owners of the Company as of December 31, 2025 (83.2% as of December 31, 2024). See Notes 19 and 33 to the Consolidated Financial Statements. As of March 2026, due to the Reclassification Agreement (as described below under “Contractual Obligations and Commitments”), the caption “Equity attributable to owners of the Company” will reflect the reclassification of €12.5 million in aggregate as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale). See Note 46 to the Consolidated Financial Statements. Furthermore, as of December 31, 2025, gross and undiscounted amount related to the Group’s lease liabilities amounted to €55.9 million, of which €11.8 million comes due in 2026. The Group’s undiscounted value of lease liabilities represented 243.2% of equity attributable to the owners of the Company as of December 31, 2025 (131.3% as of December 31, 2024). See Notes 19 and 33 to the Consolidated Financial Statements. See “Contractual Obligations and Commitments” below. The Group’s discounted value of long-term borrowings represented 132.1% of equity attributable to the owners of the Company as of December 31, 2025 (34.7% as of December 31, 2024). During 2025, the Company made all installment payments related to its long-term-borrowings. See Notes 19, 20 and 46 to the Consolidated Financial Statements. See also “Item 3. Key Information—Risk Factors—Uncertain global macro-economic and political conditions, as well as trading policies and tariffs, could materially adversely affect our business, operations and economic and financial position” and “Item 3. Key Information—Risk Factors—Increases in raw material, transportation and labor costs could have a material adverse effect on our results of operations” for a discussion of the impact of supply chain disruptions, increases in the price of raw materials, transportation and labor costs and uncertainties resulting from the global macro-economic and political conditions on our capital expenditures. Contractual Obligations and Commitments — The Group’s current policy is to fund its cash needs, accessing its cash on hand and existing lines of credit, consisting of short-term credit facilities and bank overdrafts, to cover any short-term shortfall. The Group’s policy is to procure financing and access to credit at the Company level, with the liquidity of certain Group companies managed through a cash-pooling zero-balancing arrangement with a centralized bank account at the Company level and sub-accounts for each subsidiary participating in the arrangement. Under this arrangement, cash is transferred to subsidiaries as needed on a daily basis to cover the subsidiaries’ cash requirements, but any positive cash balance at subsidiaries must be transferred back to the top account at the end of each day, thus centralizing coordination of the Group’s overall liquidity and optimizing the interest earned on cash held by the Group. As of December 31, 2025, the undiscounted Group’s long-term borrowings consisted of €33.9 million (including €7.4 million of the current portion of such debt) and its short-term borrowings consisted of €22.2 million outstanding under its existing lines of credit, 47 Table of Contents comprised entirely of bank overdrafts and short-term borrowings. The undiscounted lease liabilities amounted to €55.9 million (including €11.8 million as current portion). The Group maintains cash and cash equivalents in the currencies in which it conducts its operations, principally Euros, Chinese Yuan, U.S. dollars, New Romanian Leu, British pounds, Brazilian reais and Vietnamese dong. See “Item 3. Key Information—Risk Factors—Fluctuations in currency exchange rates and interest rates may adversely affect our results of operations”, “Item 4. Information on the Company—Management of Exchange Rate Risk” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” The following table sets forth the contractual obligations and commercial commitments of the Group as of December 31, 2025 (the amounts are gross and undiscounted and include contractual interest payments): Payments Due by Period (thousands of euro) Contractual Obligations Total Less than 1 year 1-2 years 2-5 years After 5 years Long-term borrowings 33,940 7,434 7,678 14,128 4,700 Bank overdrafts and short-term borrowings 22,197 22,197 — — — Total Debt 56,137 29,631 7,678 14,128 4,700 Leases liabilities (1) 55,897 11,788 10,639 21,437 12,033 Total Contractual Cash Obligations 112,034 41,419 18,317 35,565 16,733 (1)Lease liabilities relate to the Group’s lease contracts for buildings of its retail stores, warehouses, factory facilities and vehicles. See Notes 9 and 21 to the Consolidated Financial Statements. Under Italian law, the Company and its Italian subsidiaries are required to pay a termination indemnity to their employees when these cease their employment with the Company or the relevant subsidiary. Likewise, the Company and its Italian subsidiaries are required to pay an indemnity to their sales agents upon termination of the sales agent’s agreement. As of December 31, 2025, the Group accrued an aggregate employee’s leaving entitlement of €11.5 million. In addition, as of December 31, 2025, the Company accrued an aggregate sales agent termination indemnity of €1.2 million. See Notes 24 and 26 to the Consolidated Financial Statements. These amounts are not reflected in the tables above. In light of the extraordinary challenges imposed by COVID-19 on the Group, on February 28, 2020, the Company’s majority shareholder entered into an agreement with it setting forth its undertaking, should the Company so request, to make advance payments of up to €15.0 million to satisfy the subscription price of a future rights issue. On February 28, 2020, the Company requested an initial payment of €2.5 million which it received on March 2, 2020. Therefore, as at December 31, 2023, the amount of €2.5 million to be paid back to the majority shareholder has been included in the caption “Other payables” of the statement of financial position. On April 9, 2024, a new agreement was executed, terminating the previous agreement entered into on February 28, 2020 and converting the aforementioned €2.5 million into a loan agreement effective from March 31, 2024, with maturity on March 31, 2027, and subject to an interest rate of 2.5%. See Notes 20, 45 and 46 to the Consolidated Financial Statements. On November 21, 2025, the Company entered into a credit facility agreement with INVEST 2003 S.r.l. (the “Credit Facility Agreement”) to support the Company’s financial needs in connection with the implementation of its industrial restructuring plan. Under the Credit Facility Agreement, INVEST 2003 S.r.l. committed to make available to the Company an interest-free loan of up to €15.0 million, in one or more tranches upon the Company’s request, until December 31, 2026. Any disbursed loan tranches may be converted into equity contributions in the event of a future capital increase resolved by the Company; in the absence of such a capital increase, any disbursed amounts shall be repayable by December 31, 2028. The Company requested and received two tranches of €5.0 million each—on November 27, 2025 and on December 18, 2025, respectively—for an aggregate amount of €10.0 million. On March 31, 2026, the Company and INVEST 2003 S.r.l. entered into a further agreement pursuant to which the total outstanding amount owed by the Company to INVEST 2003 S.r.l. as at that date, amounting to €12.5 million in aggregate (comprising the €2.5 face value million principal outstanding under the loan agreement entered into on April 9, 2024 and the €10.0 million disbursed under the Credit Facility Agreement), was irrevocably reclassified as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale) (the “Reclassification Agreement”). See Notes 20, 45 and 46 to the Consolidated Financial Statements. As at December 31, 2025, within the provision for legal claims, €1.4 million (€3.8 million as at December 31, 2024) refers to the probable contingent legal liability related to legal procedures initiated by certain workers against the Company for the misapplication of the social security procedure called CIGS (Cassa Integrazione Guadagni Straordinaria). According to the CIGS procedure, the Company pays a reduced salary to the workers for a certain period of time based on formal agreements signed with the trade unions and other public social parties. In particular, these workers are claiming in the legal procedures that the Company applied CIGS during the period from 2004 to 2016 without foreseeing any time rotation. In May 2017, the Company received from the Italian 48 Table of Contents Supreme Court of Justice (“Corte di Cassazione”) an adverse decision for the above litigation related to only two workers. See Note 26 to the Consolidated Financial Statements. The Group is involved in a number of claims (including tax claims) and legal actions arising in the ordinary course of business. As of December 31, 2025, the Group had accrued total provisions relating to these contingent liabilities in the amount of €3.3 million. See “Item 8. Financial Information—Legal and Governmental Proceedings” and Note 26 to the Consolidated Financial Statements. Off-Balance Sheet Arrangements — As of December 31, 2025, neither Natuzzi S.p.A. nor any of its subsidiaries was a party to any off-balance sheet arrangements. Research and Development For a description of the Company’s research and development policies, see “Item 4. Information on the Company—Products” and “Item 4. Information on the Company—Innovation.” See also “Item 4. Information on the Company—Incentive Programs and Tax Benefits” for a description of certain government programs and policies related to our operations. Trend information The recovery of the global economy remains subject to a number of factors, many of which are uncertain and beyond the Company’s control. Commodity markets experienced heightened volatility during 2025 and into 2026, driven by geopolitical tensions, supply chain disruptions and fluctuations in global demand, and such volatility is expected to remain elevated through 2026. Ongoing conflicts in the Middle East region (including the Israel-Hamas conflict and the recent military operations involving Iran), and the potential escalation thereof, have adversely affected the global economy, resulting in a sharp increase in energy and oil prices. Concerns regarding potential disruptions to shipments through the Strait of Hormuz—which accounts for approximately 20% of global oil supply—as well as potential adverse effects on Iran’s oil production and regional energy infrastructure, have contributed to a surge in oil prices above U.S.$100 per barrel and to significant price volatility. These developments have been partially mitigated by policy responses, including the announcement by OPEC+ of increased output starting in April 2026 and the partial release of strategic reserves by OECD countries under the coordination of the International Energy Agency. Geopolitical risks have also materially affected natural gas markets. European gas prices have risen by 98%, reflecting both the vulnerability of supply routes—as approximately 20% of global liquefied natural gas, primarily from Qatar, transits through the Strait of Hormuz—and historically low storage levels in Europe, which have increased exposure to potential supply disruptions. At the same time, disruptions to key maritime routes have affected global logistics. High-frequency shipping data indicate a decline in tanker traffic through the Strait of Hormuz and increased rerouting of vessels via the Cape of Good Hope, following disruptions in the Suez Canal. These developments have contributed to higher global shipping costs and longer transit times. These developments, together with tighter financial conditions and increased geopolitical and trade policy uncertainty, have weighed on the global economy, partially offsetting the positive effects of prior investment growth—particularly in artificial intelligence—and accommodative economic policies. Current estimates suggest that the ongoing conflicts in the Middle East region will reduce global real GDP growth by approximately 0.4 percentage points over the next two years, reflecting the expected trajectory of energy commodity prices. This negative effect is expected to partially offset the positive carry-over from stronger-than-anticipated growth in late 2025, as well as the moderate boost from lower U.S. tariffs. In addition, according to the European Central Bank (“ECB”), the associated energy price shock has led to upward revisions in headline consumer price index (CPI) inflation projections over the same period. In the United States, real GDP growth slowed sharply to 0.2% in the fourth quarter of 2025, compared to 1.1% in the third quarter. The U.S. government shutdown in October and November, which lasted 43 days, dampened economic activity through a marked decline in government spending. However, consumer spending remained relatively resilient and continued to support domestic demand in the fourth quarter, notwithstanding a slight slowdown compared with the third quarter. The savings rate declined further to 3.6% in the fourth quarter, its lowest level in the past four years. Growth is expected to have strengthened in the first quarter of 2026, primarily reflecting increased government spending related to back pay for federal workers following the shutdown. Headline personal consumption expenditures (PCE) inflation—the Federal Reserve System’s preferred measure—has shown a modest upward trend since early 2025. In China, household demand remains subdued amid elevated precautionary savings. Real GDP growth exceeded expectations at 1.2% in the fourth quarter of 2025, broadly in line with the 1.1% recorded in the previous quarter, and was primarily supported by 49 Table of Contents resilient exports, which are also expected to have sustained growth in the first quarter of 2026. However, more recent data suggest some softening in consumption, as consumer confidence remains low—well below pre-COVID-19 levels—and retail sales continue to underperform. The Chinese authorities have set a relatively modest growth target of 4.5–5% for 2026 under the new five-year plan (2026–2030) and continue to prioritize supply-side policies. While they have reiterated their intention to rebalance growth towards consumption, concrete measures remain limited. Fiscal support for investment is expected to remain significant, particularly in high-tech and strategic sectors such as artificial intelligence, microchips, advanced manufacturing, biotechnology and the digital economy. At the same time, China remains exposed to rising energy commodity prices. In the United Kingdom, economic growth remained subdued in the fourth quarter of 2025, with real GDP increasing marginally by 0.1%, while inflation eased significantly in early 2026. Private demand was weak, reflecting softer consumption and lower private investment, while net exports made a negative contribution, as exports declined and imports rose. Public spending, particularly public investment, provided some support. Although economic activity is expected to have strengthened moderately in the first quarter of 2026, rising energy prices may weigh on growth momentum in subsequent quarters. In the Eurozone, economic activity strengthened during 2025, with real GDP growing on average by 1.5%, compared to 0.9% in 2024. However, short-term indicators, including monthly production data, weakened towards the end of 2025 and into early 2026, pointing to only modest growth in the first quarter of 2026. The evolving situation in the Middle East region has increased uncertainty, particularly from the second quarter onwards. Past energy-related shocks suggest that rising prices may erode real incomes and weaken consumer confidence, thereby weighing on private consumption, although the magnitude of these effects will depend on the duration and intensity of the conflicts. At the same time, several mitigating factors—such as solid household balance sheets, relatively high savings levels, fiscal support (including the Next Generation EU program), ongoing digital investment and the impact of prior interest rate cuts—may help cushion these effects. According to the ECB, Eurozone growth projections have been revised downward, particularly for 2026, reflecting the effects of geopolitical tensions on commodity markets, real incomes and confidence. These headwinds may be partially offset by resilient private sector balance sheets and increased public spending, including on defence and infrastructure. The escalation of conflicts in the Middle East region has significantly increased uncertainty in the global outlook, creating upside risks for inflation and downside risks for growth, with the ultimate impact depending on the duration and severity of such conflicts. Considering the uncertainties surrounding the ongoing war in Ukraine, the recent escalation of conflicts in the Middle East region, the associated increase in energy prices and inflationary pressures on raw materials, and the consequent repercussions on household purchasing power, as well as continuing trade policy uncertainty, it is difficult to determine the likely extent of the economic and social effects of these factors on international markets and, consequently, on the Group’s results for the remainder of 2026. Total Group’s order flow through the first 18 weeks of 2026 — The robust trend of orders that characterized the post-pandemic period through the first quarter of 2022 gave way to a period of sustained weakness throughout 2023, 2024, 2025 and the first 18 weeks of 2026, primarily attributable to a confluence of adverse geopolitical and macroeconomic developments—including the war in Ukraine, the escalation of the ongoing conflicts in the Middle East region, elevated energy prices, reduced consumer disposable income and stock market volatility—that have adversely affected the overall economies of the principal regions in which the Group operates. In addition, the furniture sector continued to be adversely affected by sector-specific factors, including the continued weakness in the housing market and increased consumer caution with respect to expenditure on durable goods. In the first 18 weeks of 2026, the sell-in order flow of our branded business (i.e., Natuzzi Italia, Natuzzi Editions and Divani&Divani by Natuzzi) decreased by 17% compared to the same period in 2025. During the first 18 weeks of 2026, the sell-in order flow of our direct retail network (DOS and concessions) decreased by 24% compared to the same period in 2025, also due to the closure of two DOS. During the same period, the sell-in order flow from our contract business (dealing with real estate developers) is up 2%, and represented less than 4% of total sell-in order flow in the first 18 weeks of 2026. The Group’s unbranded business, which represented 4% of our total sell-in in the first 18 weeks of 2026, compared to 6% in the same period in 2025, was down by 51% compared to the same period in 2025, mainly due to the progressive refocusing of the Company on its branded business. As a result of the above, the total sell-in order flow in the first 18 weeks of 2026 decreased by 19% compared to the first 18 weeks of 2025, as well as high-single digit lower than our internal estimates, due to the factors mentioned above. We have implemented and continue to implement a number of initiatives to support our sales, including revamping our merchandising, advertising, in-store communication, sale-staff training, strengthening our commercial organization of both retail and wholesale channels, as well as the Project division. The Company remains firmly committed to developing new projects and 50 Table of Contents collections and to engaging in promotional events—including international trade fairs and design shows, Natuzzi Congresses and targeted initiatives with real estate developers and designers—in order to consolidate the Natuzzi brand’s positioning and support commercial performance. However, if the current negative trend persists, global trade relations worsen as a result of any development regarding the actual or potential imposition of new or increased import tariffs by the U.S. administration, and our order levels remain low, it might adversely impact our margin and other results of operations in 2026. Critical Accounting Estimates Use of Estimates — The accounting policies used by the Group to prepare its financial statements are described in Note 4 to the Consolidated Financial Statements. The application of certain significant accounting policies requires management to make estimates, judgments and assumptions that are subjective and complex, and which affect the reported amounts of assets and liabilities as of any reporting date and the reported amounts of revenues and expenses during any reporting period. The Group’s financial results could be materially different if different estimates, judgments or assumptions were used. The following discussion addresses the estimates, judgments and assumptions that the Group considers most material based on the degree of uncertainty and the likelihood of a material impact if a different estimate, judgment or assumption were used. Actual results could differ from such estimates, due to, among other things, uncertainty, lack or limited availability of information, variations in economic inputs such as prices, costs, and other significant factors including the matters described under “Risk Factors.” Impairment of property, plant and equipment right-of-use assets, goodwill and interest in joint ventures — Management reviews property, plant and equipment and right-of use assets (herewith also “non-financial assets” or “assets”) for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable and would record an impairment charge, if necessary. The Company analyzes its overall valuation and performs an impairment analysis of its non-financial assets in accordance with IAS 36 “Impairment of Assets”. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (“CGUs”). Recoverability of assets or CGUs to be held and used is measured by a comparison of the carrying amount of an asset or a CGU to the recoverable amount, which is the higher of its value in use, determined using a discounted cash flow method, and its fair value less cost to sell. Discounted cash flow is significantly impacted by the estimates of the annual sales growth rate, the weighted average cost of capital rate and the long-term growth rate. If the carrying value of an asset or CGU is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the asset or CGU exceeds its estimated recoverable amount. The identified CGUs are the sofa manufacturing facilities located in Italy, Brazil, Romania, China and Vietnam, as well as each of the retail stores directly operated by the Group. In addition, the Group performed an impairment test on its interest in the joint venture located in China, Natuzzi Trading Shanghai. In particular, with respect to the Italian plant, the Company determined the recoverable amount of property, plant and equipment on the basis of fair value less costs of disposal, as supported by appraisals performed by independent third-party valuation specialists. Such specialists assessed the fair value of land and buildings using the market comparable approach, and the fair value of plant and machinery using the depreciated replacement cost method, adjusted for obsolescence and marketability factors. With reference to directly operated stores CGUs, in 2025 the Company performed an impairment assessment of property, plant and equipment, right-of-use assets and goodwill included in certain directly operated retail stores that presented indicators of impairment. The Company performed the impairment assessment in accordance with its accounting policy discussed above and described in further detail in Note 4(i) to the Consolidated Financial Statements. Further, the significant assumptions used by the Company in estimating the value in use for such CGUs were the annual sales growth rates used to estimate the forecasted revenue for the years 2026–2028, with 2029 and 2030 held equal to 2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at CGU level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions could have a significant effect on the value in use. Specifically, such assumptions are based on the Group’s future business performance and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. Finally, cash flow projections for the years 2026–2028 have been derived from business forecasts determined by the Board of Directors, which were developed taking into account the actual results achieved by the Group. The significant assumptions that were used in performing the impairment test for the Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs are as follows: 51 Table of Contents — Italian upholstered furniture plant CGU: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -13.03% and annual sales growth rate (average of 2027-2030 period) equal to +6.30%. — Directly operated retail stores CGUs located in the U.S.: weighted average cost of capital rate 9.39%, long-term growth rate 2.56%, annual sales growth rate for 2026 equal to -7.71% and annual sales growth rate (average of 2027-2030 period) equal to +3.55%. — Directly operated retail stores CGUs located in Italy: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -0.31% and annual sales growth rate (average of 2027-2030 period) equal to +2.43%. — Directly operated retail stores CGUs located in Spain: weighted average cost of capital rate 9.09%, long-term growth rate 2.13%, annual sales growth rate for 2026 equal to -0.33% and annual sales growth rate (average of 2027-2030 period) equal to +1.36%. — Directly operated retail stores CGUs located in the UK: weighted average cost of capital rate 9.05%, long-term growth rate 2.87%, annual sales growth rate for 2026 equal to +3.45% and annual sales growth rate (average of 2027-2030 period) equal to +4.16%. The significant assumptions that were used in performing the impairment test for the interest in Natuzzi Trading Shanghai are as follows: weighted average cost of capital rate of 10.35%, long-term growth rate of 1.74%, annual sales growth rate for 2026 equal to -5.40% and annual sales growth rate (average of 2027-2030 period) equal to +% 8.97%. As of December 31, 2025, the Company recorded an impairment loss for its property, plant and equipment, right-of-use assets and goodwill of €8.9 million, partially offset by an impairment reversal of €0.7 million in the same year. No impairment loss arose for the Group's interest in the joint venture, Natuzzi Trading Shanghai. See Notes 8, 9, 10 and 11 to the Consolidated Financial Statements. The following tables show a breakdown of property, plant and equipment based on the cash generating units in which they are included (amounts in thousands of Euro). 31/12/25 31/12/24 Italian upholstered furniture plant 25,631 29,279 Romanian upholstered furniture plant 16,879 17,856 Brazilian upholstered furniture plant 2,782 2,862 Chinese upholstered furniture plant 1,409 2,353 Vietnamese upholstered furniture plant 262 — Others 17,151 21,839 Total 64,114 74,189 Instead, the following tables show a breakdown of right-of-use assets based on geographical location of the cash generating units (mainly directly operated retail stores) in which they are included (amounts in thousands of Euro). 31/12/25 31/12/24 United States of America 17,019 21,810 Italy 10,628 12,008 Spain 823 1,424 United Kingdom 914 4,591 China 2,665 2,923 Others 1,592 1,622 Total 33,641 44,378 The deterioration of the macroeconomic environment, the upward pressure on inflation and the reduced household spending power, the ongoing conflict in Ukraine, the extension of conflicts in the Middle East region, any development regarding the actual or potential imposition of new or increased import tariffs by the U.S. administration, could affect our Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs. Recoverability of Deferred Tax Assets — Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the accounting in the consolidated financial statements of existing assets and liabilities and their respective tax bases, as well as for losses available for carrying forward in the various tax jurisdictions. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available. Deferred tax assets and liabilities are calculated using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be 52 Table of Contents recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date. In assessing the feasibility of the realization of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and the tax loss carried-forward are utilized. Estimating future taxable income requires estimates about matters that are inherently uncertain and requires significant management judgment, and different estimates can have a significant impact on the outcome of the analysis. In 2025, because some domestic companies and some of foreign subsidiaries realized significant pre-tax losses and were in a cumulative loss position, management did not consider it probable that the deferred tax assets of those companies would be realized in the scheduled reversal periods (see Note 41 to the Consolidated Financial Statements). In making its determination that a deferred tax asset was required, management considered the scheduled reversal of deferred tax liabilities and tax planning strategies but was unable to identify any relevant tax planning strategies available to recognise the deferred tax assets. Changes in the assumptions and estimates related to future taxable income, tax planning strategies and scheduled reversal of deferred tax liabilities could affect the recoverability of the deferred tax assets. If actual results differ from such estimates and assumptions the Group financial position and results of operation may be affected. Provisions — The Group makes estimates and judgements in relation to the provisions for legal claims, service warranties and one time termination benefits for certain employees. Provisions for legal claims, service warranties and one-time termination benefits for certain employees are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any item included in the same class of obligations is small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. Actual results related to such provisions may differ significantly from the estimates, due to, among other things, uncertainty, lack or limited availability of information and variation in economic inputs. New Accounting Standards under IFRS The standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) that will have mandatory application in 2026 or subsequent years are listed below. In April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” which replaces IAS 1. The new principle establishes the structure for the statements of profit or loss, requires disclosures in the financial statements for some profit or loss performance measures that are reported (Management performance measures), introduces limited changes to the statement of cash flows and to the balance sheet, introduces new criteria for aggregation and disaggregation of information presented in the primary financial statements or disclosed in the notes. IFRS 18 is effective on or after January 1, 2027, with early adoption. In May 2024 the IASB issued IFRS 19 “Subsidiaries without Public Accountability: Disclosures” which simplifies the preparation for the subsidiary’s financial statements by allowing it to apply group accounting principles in the preparation of its local financial statements. Further, in August 2025, the IASB issued the amendments to IFRS 19. IFRS 19 is effective on or after January 1, 2027, with early adoption. In May 2024 the IASB issued the Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7. These amendments are effective on or after January 1, 2026. In July 2024, the IASB published the document “Annual Improvements to IFRS – Volume 11”, which mainly includes technical and editorial amendments to existing standards. The amendments are effective from January 1, 2026. In November 2025 the IASB issued the Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency. These amendments are effective on or after January 1, 2027. On December 18, 2024, the IASB issued amendments to enhance companies’ reporting of the financial effects of contracts for the purchase of electricity from natural sources, often structured as Power Purchase Agreements (PPAs). The IASB made targeted changes to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures in order to improve the information provided in financial statements regarding these contracts. The amendments are effective from January 1, 2026. 53 Table of Contents The Group is currently reviewing the IFRSs not yet effective in order to determine the likely impact on the consolidated Financial Statements. 54 Table of Contents