F.I.L.A. GROUP 2018 HALF-YEAR REPORT

F.I.L.A. – Fabbrica Italiana Lapis ed Affini S.p.A.

Via XXV Aprile 5 Pero (MI)

Corporate Bodies 4 Overview of the F.I.L.A. Group5 2018 Half-Year Report 7 Key Financial Highlights7 F.I.L.A Group Key Financial Highlights9 Adjusted operating performance9 Business seasonality11 Statement of Financial Position 12 Financial overview15 Disclosure by operating segment 18 Geographical Segments – Statement of Financial Position 19 Geographical Segments – Income Statement20 Geographical Segments – Other Information 21 Significant Events in the period22 Subsequent events23 Outlook 24 Related party transactions24 Condensed Interim Consolidated Financial Statements as at and for the six months ended June 30, 2018 26 Consolidated Financial Statements26 Condensed Consolidated Statement of Financial Position26 Statement of Comprehensive Income 27 Statement of Changes in Equity28 Statement of Cash Flows29 Condensed statement of financial position with indication of related parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 200631 Condensed Statement Comprehensive Income with indication of Related Parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 200632 Notes33 Attachments83 Attachment 1 – Related parties transactions83 Attachment 2 - List of companies included in the consolidation scope and other investments85 Attachment 3 - Changes to accounting standards86 Attachment 4 - Business combinations88 Transactions relating to Atypical and/or Unusual Operations90 Statement of the Manager in Charge of Financial Reporting and Corporate Boards 91 92	General Information4




































	Auditors' Report

DIRECTORS' REPORT

General Information

Corporate Bodies

Board of Directors

Chairman	Gianni Mion
Honorary Chairman	Alberto Candela
Chief Executive Officer	Massimo Candela
Executive Director	Luca Pelosin
Director (**)	Filippo Zabban
Director (**)	Annalisa Barbera
Director (*)	Sergio Ravagli
Director ()(**)	Gerolamo Caccia Dominioni
Director (*)	Francesca Prandstraller
Director (*)	Paola Bonini

(*) Independent director in accordance with Article 148 of the CFA and Article 3 of the Self-Governance Code. (**) Non-Executive Director. (***) Lead Independent Director.

Control and Risks Committee

Gerolamo Caccia Dominioni Paola Bonini Filippo Zabban Sergio Ravagli

Board of Statutory Auditors

Chairman	Gianfranco Consorti
Statutory Auditor	Elena Spagnol
Standing Auditor	Pietro Villa
Alternate Auditor	Stefano Amoroso
Alternate Auditor	Sonia Ferrero

Independent Auditors KPMG S.p.A.

Overview of the F.I.L.A. Group

The F.I.L.A. Group operates in the creativity tools market, producing colouring, design, modelling, writing and painting objects, such as pencils, crayons, modelling clay, chalk, oil colours, acrylics, watercolours, paints and paper for the fine arts, school and leisure.

The F.I.L.A. Group at June 30, 2018 operates through 20 production facilities and 39 subsidiaries across the globe and employs approx. 9,000, becoming a pinnacle for creative solutions in many countries with brands such as GIOTTO, DAS, LYRA, Canson, Maimeri, Daler & Rowney Lukas, Ticonderoga, Pacon, Strathmore and Princeton.

Founded in Florence in 1920, F.I.L.A. has achieved strong growth over the last twenty years, supported by a series of strategic acquisitions: the Italian Company Adica Pongo in 1994, the US Group Dixon Ticonderoga in 2005, the German Group LYRA in 2008, the Mexican Company Lapiceria Mexicana in 2010, the Brazilian Company Lycin in 2012 and the Maimeri business unit in 2014. In addition to these operations, on the conclusion of an initiative which began with the acquisition of non controlling interests in 2011, control was acquired in 2015 of the Indian company DOMS Industries Pvt Ltd.

In 2016, the F.I.L.A. Group has focused upon development on strategic art & craft sector acquisitions, seeking to become the leading market player. On February 3, 2016, F.I.L.A. S.p.A. acquired control of the Daler-Rowney Lukas Group, an illustrious brand producing and distributing since 1783 materials and accessories on the arts & crafts market, with a direct presence in the United Kingdom, the Dominican Republic, Germany and the USA.

In September 2016, the F.I.L.A. Group acquired St. Cuthberts, a highly-renowned English paper mill, founded in 1907, located in the south-west of England and involved in the production of high quality artist's papers.

In October 2016, F.I.L.A. S.p.A. acquired the Canson Group, founded in 1557 by the Montgolfier family, with headquarters in Annonay in France, production facilities in France and conversion and distribution centres in Italy, France, the USA, China, Australia and Brazil. Canson products are available in over 120 countries and the brand is the most respected globally involved in the production and distribution of high added value paper for the fine arts, design, leisure and schools, but also for artists' editions and technical and digital drawing materials.

In June 2018, F.I.L.A. S.p.A., through its US subsidiary Dixon Ticonderoga Co. (U.S.A.), consolidated its role as a leading player on the US market with the acquisition of the US Group Pacon, which through brands such as Pacon, Riverside, Strathmore and Princeton, is a US schools and Art&Crafts sector leader.

2018 Half-Year Report

Key Financial Highlights

The F.I.L.A. Group key financial highlights for H1 2018 are reported below.

								Normalizations
Euro thousands	First Half of 2018	% revenue	First Half of 2017	% revenue	Change 2018 - 2017		of which: IFRS 15 effect (3)	of which: IFRS 9 effect (3)	of which: Non-Recurring Charges
Core Business Revenue	259,140	100.0%	260,543	100.0%	(1,403)	-0.5%	(2,844)	-
EBITDA (1)	34,548	13.3%	38,988	15.0%	(4,440)	-11.4%	(231)	-	(9,823)
EBIT	23,491	9.1%	29,912	11.5%	(6,421)	-21.5%	(231)	(878)	(9,823)
Net financial expense	(9,909)	-3.8%	(7,580)	-2.9%	(2,329)	-30.7%	231	-	(1,377)
Total income taxes	(7,599)	-2.9%	(7,588)	-2.9%	(11)	-0.1%	-	221
Profit Attributable to the Owners of Parent	5,325	2.1%	14,038	5.4%	(8,713)	-62.1%	-	(657)	(10,135)
Earnings per share (€ cents)
basic	0.13		0.34
diluted	0.13		0.33
NORMALISED - Euro thousands	First Half of 2018	% revenue	First Half of 2017	% revenue	Change 2018 - 2017		of which: Pacon Group (4)
Core Business Revenue	261,984	100.0%	260,543	100.0%	1,441	0.6%	16,302
EBITDA (1)	44,602	17.0%	43,846	16.8%	756	1.7%	3,120
EBIT	34,423	13.1%	34,770	13.3%	(347)	-1.0%	2,650
Net financial expense	(8,763)	-3.3%	(8,570)	-3.3%	(193)	-2.3%	(598)
Total income taxes	(8,783)	-3.4%	(7,880)	-3.0%	(903)	-11.5%	(554)
Profit Attributable to the Owners of Parent	16,117	6.2%	17,614	6.8%	(1,497)	-8.5%	1,498
Earnings per share (€ cents)
basic	0.39		0.43
diluted	0.38		0.42
	First Half of		First Half of		Change
Euro thousands	2018		2017		2018 - 2017
Cash Flows from operating activities	(44,825)		(51,039)		6,214
Investments	10,252		8,445		1,807
% revenue	3.9%		3.2%
	June 30,		December 31,		Change		of which: IFRS 9 effect (3)	of which: Pacon Group (4)
Euro thousands	2018		2017		2018 - 2017
Net Invested Capital	856,029		479,191		376,838		(1,814)	190,516
Net Financial debt (4)	(612,657)		(239,614)		(373,043)		-	(86,735)
Equity	(243,372)		(239,577)		(3,795)		1,814	(103,781)

(1) The Gross Operating Profit (EBITDA) corresponds to the operating profit (loss) before amortisation and depreciation and impairment losses;

(2) Indicator of the net financial structure, calculated as the aggregate of the current and non-current financial liabilities, net of cash and cash equivalents and current financial assets and loans assets provided to third parties classified as non-current. The net financial position as per CONSOB Communication DEM/6064293 of July 28, 2006 excludes non-current financial assets. The non-current financial assets of the F.I.L.A. Group at June 30, 2017 amount to Euro 3,331 thousand, of which Euro 271 thousand included in the calculation of the net financial position; therefore the F.I.L.A. Group financial indicator does not match, for this amount, net financial position as defined in the above-mentioned Consob communication. For further (3)The Group has adopted IFRS 15 and IFRS 9 for the first time on January 1, 2018. According to first time adoption methods, the comparative information has not been restated. Please refer to the Annex - "Change of accounting standards - Impact of IFRS 15 and IFRS 9 on the consolidated financial statements" for more information about the effects related the

(4) Please refer to the Annex - "Business Combinations" for more information about the effects related the first consolidation of Pacon Group

2018 Normalization:

The Normalization to "Core Revenue" concerns the first-time adoption of IFRS 15, resulting in a reclassification which reduced revenue by Euro 2.8 million;
The Normalization on H1 2018 "EBITDA" concerns non-recurring charges of approx. Euro 9.8 million, principally concerning extraordinary consultancies for the M&A in H1 2018 and, residually, from the application of IFRS 15 (Euro 0.2 million);
The Normalization to "EBIT" relates to the first-time adoption in 2018 of IFRS 9 for Euro 0.9 million;
The Normalization to Net financial expenses concerns fees and financial charges relating to the funding activities for the M&A undertaken in the period;
The Normalization of the H1 2018 Profit attributable to the owners of the parent concerns the above-stated adjustments, net of the tax effect.

2017 Normalization:

The Normalization of the H1 2017 EBITDA relates to non-recurring operating costs of approx. Euro 4.9 million, principally for Group reorganisation plans and the Stock Grant Plan for specific Group employees.
The Normalization of the financial items relates to the financial income of the company Lyra KG (Germany) and deriving from the sale of the 30% stake held in FILA Nordic AB (Sweden) amounting to approx. Euro 1 million.
The Normalization of the H1 2017 Profit attributable to the owners of the parent concerns the above normalization, net of the tax effect.

F.I.L.A Group Key Financial Highlights

The F.I.L.A. Group Key Financial Highlights for H1 2018 are reported below.

Adjusted operating performance

The H1 2018 F.I.L.A. Group performance reports an increased EBITDA of 1.7% on H1 2017 (-0.9% excluding the M&A effect in the period).

NORMALIZED - Euro thousands	First Half of 2018	% revenue	First Half of 2017	% revenue		Change 2018 - 2017
Core Revenue	261,984	100%	260,543	100%	1,441	0.6%
Other Revenue and Income	4,951		11,977		(7,026)	-58.7%
Total Revenue	266,935		272,520		(5,585)	-2.0%
Total operating costs	(222,333)	-84.9%	(228,674)	-87.8%	6,341	2.8%
EBITDA	44,602	17.0%	43,846	16.8%	756	1.7%
Amortisation, depreciation and Impairment losses	(10,179)	-3.9%	(9,076)	-3.5%	(1,103)	-12.2%
EBIT	34,423	13.1%	34,770	13.3%	(347)	-1.0%
Net financial expense	(8,763)	-3.3%	(8,570)	-3.3%	(193)	-2.3%
Pre-tax profit	25,660	9.8%	26,200	10.1%	(540)	-2.1%
Total income taxes	(8,783)	-3.4%	(7,880)	-3.0%	(903)	-11.5%
Profit for the Period - Continuing Operations	16,877	6.4%	18,320	7.0%	(1,443)	-7.9%
Net Profit	16,877	6.4%	18,320	7.0%	(1,443)	-7.9%
Profit Attributable to Non Controlling Interests	760	0.3%	706	0.3%	54	7.6%
Profit Attributable to the Owners of Parent	16,117	6.2%	17,614	6.8%	(1,497)	-8.5%

The main changes compared to H1 2017 are outlined below.

"Core Revenue" of Euro 261,984 thousand increased on the previous year by Euro 1,441 thousand (+0.6% on the same period of the previous year).

Organic growth was Euro 1,759 thousand (+0.7% on H1 2017), calculated net of negative currency effects of approx. Euro 16,620 thousand (mainly due to the weakening of the US Dollar, the Indian Rupee and the currencies of the Central-South American countries) and the M&A effect of approx. Euro 16,302 thousand. This growth principally relates to Asia for Euro 6,436 thousand (+20.7% and mainly relating to the Indian subsidiary), Central-South America for Euro 1,552 thousand (+5.2%, in particular Chile, Argentina and Brazil), and was partially offset by the revenue contraction in Europe of Euro 5,555 thousand (-4.6%, Italy and France), in North America of Euro 241 thousand (-0.3%) and in the Rest of the World for Euro 433 thousand (-16.6%, Australia).

In order to better illustrate F.I.L.A. Group developments, reference should be made to the table below highlighting revenue compared with the previous period by "Strategic Segments":

Other Revenue and Income of Euro 4,951 thousand decreased on the previous year by Euro 7,026 thousand, mainly on the basis of reduced exchange rate gains on commercial operations.

"Operating Costs" in 2018 of Euro 222,333 thousand reduced by approx. Euro 6,341 thousand on 2017, mainly due to the weakening currencies of the main Group companies against the Euro and despite increased M&A related costs. Finally, raw material costs rose in the period - particularly for pulp, packaging and cedar wood - alongside higher transport costs (in particular in the U.S.A.) and overhead costs (in India and Mexico relating mainly to the expanded workforce and at F.I.L.A. S.p.A. for the introduction of SAP).

"EBITDA" amounted to Euro 44,602 thousand, increasing by Euro 756 thousand on 2017 (+1.7%). A contraction of 0.9% was reported at organic level, principally due to operating costs and the currency effects stated above.

Amortisation, depreciation and Impairment losses increased by Euro 1,103 thousand, principally due to larger losses on trade receivables in the period and the M&A effect.

Adjusted "Net Financial expenses" are substantially in line with the same period of the previous year.

Adjusted Group "Income taxes" amounted to Euro 8,783 thousand, increasing on H1 2017 by Euro 903 thousand.

Excluding Profit attributable to non-controlling interests, the F.I.L.A. Group adjusted net profit in H1 2018 was Euro 16,117 thousand, compared to Euro 17,614 thousand in the same period of the previous year.

Business seasonality

The Group's operations are affected by business seasonality, as reflected in the consolidated results.

The breakdown of the income statement by quarter highlights the concentration of sales in the second and third quarters for the "schools' campaign". Specifically, in June significant sales are made through the "school suppliers" traditional channel and in August through the "retailers" channel.

The key quarterly highlights for 2018 and 2017 are reported below.

		2017				2018
	First 3 mth.	First 6 mth.	First 9 mth.	FY 2017	First 3 mth.	First 6 mth.	First 6 mth.
Euro thousands	2017	2017	2017		2018	2018	2018
Core Revenue	117,613	260,543	391,548	510,354	104,796	259,140	242,838
Full year portion	23.05%	51.05%	76.72%	100.00%			100.00%
EBITDA	16,072	38,988	62,018	73,124	15,511	34,548	31,490
% core revenue	13.67%	14.96%	15.84%	14.33%	14.80%	13.33%	12.97%
Full year portion	21.98%	53.32%	84.81%	100.00%
Normalized EBITDA	17,106	43,846	67,959	80,605	16,200	44,602	41,482
% core revenue	14.54%	16.83%	17.36%	15.79%	15.46%	17.21%	17.08%
Full year portion	21.22%	54.40%	84.31%	100.00%
Net Financial Debt	(255,852)	(285,584)	(276,466)	(239,614)	(269,878)	(612,657)	NA

Statement of Financial Position

The statement of financial position of the F.I.L.A. Group as at June 30, 2018 is reported below.

	June 30,	December 31,	Change
Euro thousands	2018	2017	2018 - 2017
Intangible Assets	423,810	208,091	215,719
Property, plant and equipment	97,774	88,355	9,419
Financial Assets	3,902	4,725	(823)
Net Fixed Assets	525,486	301,171	224,315
Other Assets/Non-Current Liabilities	15,126	15,564	(438)
Inventories	264,162	178,699	85,463
Trade Receivables and Other Assets	237,650	132,768	104,882
Trade Paybles and Other Liabilities	(128,639)	(96,263)	(32,376)
Other Current Assets and Liabilities	(1,280)	241	(1,521)
Net Working Capital	371,893	215,445	156,448
Provisions	(56,476)	(52,989)	(3,487)
Net Invested Capital	856,029	479,191	376,838
Equity	(243,372)	(239,577)	(3,795)
Net Financial Debt	(612,657)	(239,614)	(373,043)
Net Funding Sources	(856,029)	(479,191)	(376,838)

The "Net Invested Capital" of the F.I.L.A. Group at June 30, 2018 of Euro 856,029 thousand is principally comprised of "Net Fixed Assets" of Euro 525,486 thousand (increasing on December 31, 2017 by Euro 224,315 thousand) and the "Net Working Capital" totalling Euro 371,893 (increasing on December 31, 2017 by Euro 156,448 thousand).

"Intangible assets" increased on December 31, 2017 by Euro 215,719 thousand, mainly due to the change in the consolidation scope. The acquisition of the Pacon Group in fact contributed to the consolidated financial statements intangible assets of Euro 100,576 thousand and Goodwill generated by the transaction of Euro 114,265 thousand.

"Property, plant and equipment" increased on December 31, 2017 by Euro 9,419 thousand. This is due both to the acquisition of the Pacon Group (contribution at the consolidation date of Euro 7,777 thousand) and net investments made in the period of Euro 7,893 thousand, principally by DOMS Industries Pvt Ltd (India), Canson SAS (France), Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and Daler Rowney Ltd (United Kingdom) to extend and develop production facilities and logistical offices. The variation is mainly offset by depreciation of Euro 5,712 thousand.

The reduction in "Financial Assets" on December 31, 2017 was Euro 823 thousand and principally concerned the settlement of derivatives (IRS) by the parent F.I.L.A. S.p.A. for Euro 1,053 thousand following the renegotiation of the underlying loan.

The increase in "Net Working Capital" of Euro 156,448 thousand relates to the following:

"Inventories" the increase of Euro 85,463 thousand is due both to inventories from the consolidation of the Pacon Group (contribution at the acquisition date of Euro 56,760 thousand) and the seasonality of the schools campaign business. The increase concerned in particular the US subsidiaries Dixon Ticonderoga Company and Canson Inc., Daler Rowney Ltd (United Kingdom), the Mexican Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and DOMS Industries Pvt Ltd (India);
"Trade Reveivables and Other Assets" increasing Euro 104,882 thousand, due to the consolidation of the Pacon Group (contribution at the acquisition date of Euro 45,293 thousand) and the seasonality of F.I.L.A. Group business, with receivables at their highest during the middle months of the year as revenue is principally generated during the "Schools campaign". The variation particularly concern F.I.L.A. S.p.A., Dixon Ticonderoga Company (U.S.A.) and Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico); in addition, "Trade Receivables and Other Liabilities" as per IFRS 9 reduced in adjustment to fair value by Euro 2,938 thousand;
"Trade Payables and Other Liabilities" increasing by Euro 32,376 thousand, principally due to the consolidation of the Pacon Group (contribution at the acquisition date of Euro 15,766 thousand) and business seasonality, with procurement concentrated in the initial months of the year in support of production and supplies for peak sales concentrated in the middle months of the year.

The increase in "Provisions" on December 31, 2017 of Euro 3,487 thousand principally concerns the:

Increase in "Provisions for Risks and Charges" of Euro 1,711 thousand, mainly due to the change in consolidation scope;
Increase in "Deferred tax liabilities" of Euro 3,106 thousand, also mainly due to the acquisition of the Pacon Group, with a contribution at the consolidation date of Euro 4,359 thousand, in part offset by the gradual release of deferred taxes on amortisation and depreciation valued using the Purchase Price Allocation on prior period acquisitions;
Reduction in "Employee benefits" of Euro 1,330 thousand, mainly due to the actuarial gains recorded in the period by the company Daler Rowney Ltd (United Kingdom).

The "Equity" of the F.I.L.A. Group, amounting to Euro 243,372 thousand, increased on December 31, 2017 by Euro 3,795 thousand. Net of the period profit of Euro 5,983 thousand (of which Euro 658 thousand concerning non-controlling interests) the residual variation principally concerns positive

currency effects of Euro 2,325 thousand, the release of the reserves set up for fair value changes to derivatives recognized by F.I.L.A. S.p.A. for Euro 1,053 thousand, the fair value adjustment of derivative hedging instruments held by Canson SAS (negative for Euro 15 thousand), the increase in the "Share Based Premium" reserve of Euro 262 thousand, the increase in the IAS 19 reserve for Euro 1,216 thousand and the negative effects from application of IFRS 9 for Euro 1,157 thousand.

The F.I.L.A. Group "Net Financial Debt" at June 30, 2018 was a net debt of Euro 612,657 thousand, worsening by Euro 373,043 thousand on December 31, 2017. For greater details, reference should be made to the "Financial Overview" paragraph.

Financial overview

The overview of the H1 2018 Group operating and financial performance is completed by the Group Net Financial Debt and Statement of Cash Flows reported below.

The Net Financial Debt at June 30, 2018 amount to Euro 612,657 thousand.

Euro thousands	June 30, 2018	December 31, 2017	Change 2018 - 2017
Cash	146	67	79
A Other cash equivalents B	38,620	38,491	129
Securities held-for-trading C	-	-	-
D Liquidity ( A + B + C)	38,766	38,558	208
E Current Loan Assets	492	419	7 3
Current bank loans and borrowings F	(101,226)	(72,724)	(28,502)
Current portion of non-current debt G	(27,193)	(18,710)	(8,483)
Other current loans and borrowings H	(271)	(8,239)	7,968
I Current financial debt ( F + G + H )	(128,690)	(99,673)	(29,017)
J Net current financial debt (I + E+ D)	(89,432)	(60,696)	(28,736)
Non-current bank loans and borrowings K	(522,358)	(178,420)	(343,938)
Bonds issued L	-	-	-
M Other non-current loans and borrowings	(1,138)	(504)	(634)
N Non-current financial debt ( K + L + M )	(523,496)	(178,924)	(344,572)
O Net financial debt (J+N)	(612,928)	(239,620)	(373,308)
P Loans issued to third parties	271	6	265
Q Net financial debt (O + P) - F.I.L.A. Group	(612,657)	(239,614)	(373,043)
Note:

1) The net financial debt calculated at point "O" complies with Consob Communication DEM/6064293 of July 28, 2006, which excludes non-current financial assets. The net financial debt of the F.I.L.A. Group differs from the above communication by Euro 271 thousand in relation to the non-current loans granted to third parties by Omyacolor S.A and Pacon Corporation

2) At June 30, 2018 there were no transactions with related parties which impacted the net financial debt.

Compared to December 31, 2017 (debt of Euro 239,614 thousand), the Net Financial Debt worsening by Euro 373,043 thousand, as outlined below in the Statement of Cash Flows.

Euro thousands	First Half of 2018	First Half of 2017
Operating Profit	23,491	29,912
Non Monetary Adjustments	12,887	10,902
Addition for income taxes	(6,539)	(4,850)
Cash Flows from Operating Activities Before Changes in NWC	29,839	35,964
Change in NWC	(74,568)	(84,529)
Change in Inventories	(26,623)	(19,048)
Change in Trade Receivables and Other Assets	(61,646)	(71,799)
Change in Trade Paybles and Other Liabilities	15,755	6,648
Change in Other Assets/Liabilities	(2,054)	(331)
Net cash Flows from Operating Activities	(44,729)	(48,565)
Investments in Property, Plant and Equipment and Intangible Assets	(10,252)	(8,445)
Interest Income	(92)	44
Equity Investments	(215,188)	918
Net Cash Flows used in Investing Activities	(225,532)	(7,483)
Change in Equity	(3,762)	(3,838)
Financial Expense	(11,436)	(4,441)
Net Cash Flow used in Financing Activities	(15,198)	(8,279)
Other changes	833	(396)
Total Net Cash Flows	(284,627)	(64,723)
Exchange Differences	(1,693)	1,840
NFP from M&A Transactions (Change in Consolidation Scope)	(86,724)	736
Change in Net Financial Debt	(373,043)	(62,147)

"Net Cash Flows from Operating Activities" of Euro 44,729 thousand (cash flows used in H1 2017 of Euro 48,565 thousand) concerns:

Euro 29,839 thousand (Euro 35,964 thousand in H1 2017) inflows from "Operating Profit", based on the difference of the "Value" and the "Costs of Cash Generation" and the remaining ordinary income components, excluding financial income /expense;
Euro 74,568 thousand (Euro 84,529 thousand in H1 2017) outflows concerning "Working Capital" related to the seasonality of business and principally the increases both in inventories and "Trade Receivables and Other Assets".

"Net Cash Flows in Investing Activities" amount to Euro 225,532 thousand (Euro 7,483 thousand in H1 2017), of which:

Acquisition of the Pacon Group by the US subsidiary Dixon Ticonderoga Company (U.S.A.) for Euro 215,188 thousand;
Investments in Property, Plant and Equipment and Intangible Assets for Euro 10,252 thousand (Euro 8,445 thousand in H1 2017), mainly by DOMS Industries Pvt Ltd (India), Canson SAS (France), Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and Daler Rowney Ltd (United Kingdom);

"Net Cash Flows in Financing Activities" amount to Euro 15,198 thousand (Euro 8,279 thousand in H1 2017), of which:

Euro 11,436 thousand (Euro 4,441 thousand in H1 2017) concerning interest and other financial charges incurred by the Group companies concerning loans and credit lines granted, mainly concerning F.I.L.A. S.p.A. (Italy) and Dixon Ticonderoga Company (U.S.A.) with Euro 7,045 thousand of one-off charges concerning the new loan undertaken, and F.I.L.A. – Dixon, S.A. de C.V. (Mexico);
Euro 3,762 thousand (Euro 3,838 thousand in H1 2017) from the distribution of dividends to F.I.L.A. S.p.A. shareholders and Group non-controlling interests.

Excluding the Exchange Rate effect from the translation of the net financial positions in currencies other than the Euro (outflows of Euro 1,693 thousand) and from the change in the consolidation scope (cash outflows of 86,724 thousand) the increase in the Net Financial Debt was therefore Euro 373,043 thousand (Euro 62,147 thousand in H1 2017).

"Net Liquidity" movements are reported below.

	June 30,	December 31,
Euro thousands	2018	2017
Opening Cash and Cash Equivalents	20,425	53,973
Cash and cash equivalents	38,558	59,519
Bank overdrafts	(18,133)	(5,546)
Closing Cash and Cash Equivalents	26,173	20,425
Cash and cash equivalents	38,766	38,558
Bank overdrafts	(12,593)	(18,133)

Disclosure by operating segment

In terms of segment reporting, the F.I.L.A. Group has adopted IFRS 8, obligatory from January 1, 2009.

IFRS 8 requires an entity to base segment reporting on internal reporting, which is constantly reviewed by the highest level of management in order to allocate resources to the various segments and to analyse performance.

Geographical segments are the primary basis of analysis and of decision-making by F.I.L.A. Group Management, therefore fully in line with the internal reporting prepared for these purposes.

The products of the F.I.L.A. Group are similar in terms of quality and production, target market, margins, sales network and clients, even with reference to the different brands which the Group markets. No diversification is therefore deemed to be present within the Segment, in consideration of the substantial uniformity of the risks and benefits relating to the products produced by the F.I.L.A. Group.

The segment reporting standards are in line with those utilised for the consolidated financial statements.

Segment reporting was therefore based on the location of operations ("Entity Locations"), broken down as follows: "Europe", "North America", "Central and South America" and "Rest of the World". The "Rest of the World" includes the subsidiaries in South Africa and Australia.

The "Business Segment Reporting" of the F.I.L.A. Group aggregates companies by region on the basis of the "operating location".

For disclosure upon the association between the regions and F.I.L.A. group companies, reference should be made to the attachments to the report in the "List of companies included in the consolidation scope and other investments" paragraph.

The segment reporting required in accordance with IFRS 8 is presented below.

Geographical Segments – Statement of Financial Position

The key statement of financial position figures for the F.I.L.A. Group by Geographical Segment, at June 30, 2018 and December 31, 2017, are reported below:

June 30, 2018	Europe	North	Central & South	Asia	Rest	Consolidation	F.I.L.A. Group
Euro thousands		America	America		of the World
Intangible Assets	118,834	239,903	3,479	61,562	108	(76)	423,810
Property, plant & equipment	53,438	10,320	7,190	26,622	204		97,774
Total Intangible and Property, Plant and Equipment Assets	172,272	250,223	10,669	88,185	312	(76)	521,584
of which Intercompany	(76)						0
Inventories	86,109	118,235	36,007	26,003	2,992	(5,184)	264,162
Trade Receivables and Other Assets	114,105	110,384	65,529	17,245	1,226	(70,839)	237,650
Trade Payables and Other Liabilities	(97,988)	(58,796)	(18,908)	(19,157)	(3,076)	69,286	(128,639)
Other Current Assets and Liabilities	(894)	(450)	404	(507)	167		(1,280)
Net Working Capital	101,331	169,373	83,032	23,584	1,309	(6,737)	371,893
of which Intercompany	(4,566)	(1,280)	(529)	(204)	(157)
Net Financial Debt	(273,485)	(283,503)	(47,586)	(3,329)	(4,860)	106	(612,657)
of which Intercompany	106

December 31, 2017	Europe	North America	Central - South America	Asia	Rest of the World	Consolidation	F.I.L.A. Group
Euro thousands
Intangible Assets	124,612		3,746	62,760	108	(76)	208,091
Property, plant & equipment	53,216	2,571	6,338	25,973	257		88,355
Total Intangible and Property, Plant and Equipment Assets	177,828	19,512	10,084	88,733	365	(76)	296,446
of which Intercompany	(76)						0
Inventories	76,251	48,103	31,761	26,074	3,166	(6,656)	178,699
Trade Receivables and Other Assets	78,285	44,305	55,515	11,595	1,189	(58,121)	132,768
Trade Payables and Other Liabilities	(89,969)	(24,226)	(21,166)	(16,324)	(2,858)	58,280	(96,263)
Other Current Assets and Liabilities	(277)	1,077	(411)	(148)			241
Net Working Capital	64,290	69,259	65,699	21,197	1,497	(6,497)	215,445
of which Intercompany	(2,461)	(2,720)	(631)	(449)	(234)
Net Financial Debt	(181,937)	(22,207)	(28,537)	(2,571)	(4,479)	117	(239,614)
of which Intercompany	117

June 30, 2018 LIKE-FOR-LIKE CONSOLIDATION SCOPE	Europe	North America	Central - South America	Asia	Rest of the World	Consolidation	F.I.L.A. Group
Euro thousands
Intangible Assets	114,956	26,853	3,479	60,738	108	(76)	206,058
Property, plant & equipment	53,139	2,882	7,190	26,622	204		90,037
Total Intangible and Property, Plant and Equipment Assets	168,095	29,734	10,669	87,360	312	(76)	296,095
of which Intercompany	(76)0	0	0	0	0	0	0
Inventories	83,946	65,172	36,007	26,003	2,992	(4,991)	209,129
Trade Receivables and Other Assets	111,821	61,846	65,529	16,977	1,226	(70,459)	186,940
Trade Payables and Other Liabilities	(96,868)	(42,565)	(18,908)	(18,988)	(3,076)	68,905	(111,500)
Other Current Assets and Liabilities	(529)	686	404	(467)	167		261
Net Working Capital	98,365	85,139	83,032	23,525	1,309	(6,545)	284,830
of which Intercompany	(4,566) 0	(1,087) 0	(529) 0	(204) 0	(157) 0	0	0
Net Financial Debt	(267,798)	(202,229)	(47,586)	(3,555)	(4,860)	106	(525,922)
of which Intercompany	106

Geographical Segments – Income Statement

The "income statement" for the F.I.L.A. Group by Geographical Segment for H1 2018 and H1 2017 is reported below:

First Half of 2018	Europe	North America	Central - South America	Asia	Rest of the World	Consolidation	F.I.L.A. Group
Euro thousands
Core Business Revenue	147,947	92,300	43,703	55,223	2,111	(82,142)	259,140
of which Intercompany	(36,255)	(7,553)	(16,036)	(22,210)	(87)
EBITDA	10,326	14,246	2,237	6,440	(284)	1,583	34,548
Net financial Income (Expense)	4,459	2,419	(3,206)	(183)	(435)	(12,964)	(9,909)
of which Intercompany	(10,348)	(2,860)	157	-	8 8
Profit (loss) for the Period	6,008	12,303	(1,904)	2,763	(776)	(12,413)	5,983
Profit (loss) Attributable to Non Controlling Interests	(30)	-	-	730	(42)		658
Profit (loss) Attributable to the Owners of Parent	6,038	12,303	(1,904)	2,033	(734)	(12,413)	5,325

First Half of 2017	Europe	North	Central - South	Asia	Rest of the World	Consolidation	F.I.L.A.
Euro thousands		America	America				Group
Core Business Revenue	161,567	85,991	48,423	49,864	2,646	(87,948)	260,543
of which Intercompany	(41,686)	(8,818)	(18,570)	(18,838)	(36)
EBITDA	18,237	11,759	3,383	4,740	(846)	1,715	38,988
Net financial Income (Expense)	7,685	1,339	(2,190)	(171)	(133)	(14,110)	(7,580)
of which Intercompany	(11,447)	(2,817)	101	-	5 3
Profit (loss) for the Period	19,949	8,128	(766)	1,647	(1,044)	(13,170)	14,744
Profit (loss) Attributable to Non Controlling Interests	133	-	-	601	(28)		706
Profit (loss) Attributable to the Owners of Parent	19,816	8,128	(766)	1,046	(1,016)	(13,170)	14,038

First Half of 2018 LIKE-FOR-LIKE CONSOLIDATION SCOPE Euro thousands	Europe	North America	Central - South America	Asia	Rest of the World	Consolidation	F.I.L.A. Group
Core Business Revenue	147,454	76,500	43,703	55,212	2,111	(82,142)	242,838
of which Intercompany	(36,255)	(7,554)	(16,036)	(22,210)	(87)	-	-
EBITDA	10,001	11,513	2,237	6,440	(284)	1,583	31,490
Net financial Income (Expense)	4,607	2,867	(3,206)	(183)	(435)	(12,961)	(9,311)
of which Intercompany	(10,345)	(2,861)	157	-	8 8	-	-
Profit (loss) for the Period	5,900	10,957	(1,904)	2,766	(776)	(12,410)	4,533
Profit (loss) Attributable to Non Controlling Interests	(30)	-	-	730	(42)	-	658
Profit (loss) Attributable to the Owners of Parent	5,930	10,957	(1,904)	2,036	(734)	(12,410)	3,875

Revenue compared with the previous period by "Strategic Segments", broken by "Entity Location" according to IFRS 15, is presented below:

First Half of 2018 Euro thousands	Europe	North America	Central - South America	Asia	Rest of the World	F.I.L.A. Group
Fine Art, Hobby & Digital	39,047	28,483	2,556	2,263	1,418	73,767
Industrial	4,384	3,343	763	130	1	8,620
School & Office	68,776	52,404	24,348	30,620	604	176,753
Core Business Revenue	112,206	84,230	27,667	33,013	2,023	259,140

First Half of 2017	Europe	North	Central - South	Asia	Rest of the World	F.I.L.A.
Euro thousands		America	America			Group
Fine Art, Hobby & Digital	38,302	27,614	1,584	2,305	1,689	71,494
Industrial	4,197	3,682	766	4	2	8,649
School & Office	77,384	45,878	27,503	28,716	919	180,399
Core Business Revenue	119,883	77,174	29,852	31,025	2,610	260,543

Geographical Segments – Other Information

The "other information", concerning investments in Property, Plant and Equipment and Intangible assets investments of Group companies by Geographical Segment for H1 2018 and H1 2017 is reported below:

First Half of 2018 Euro thousands	Europe	North America	Central - South America	Asia	Rest of the World	F.I.L.A. Group
Intangible Assets	2,502		5	71	3	2,581
Property, Plant and Equipment Net Investments	2,535 5,037	530 530	1,412 1,417	3,179 3,250	15 18	7,671 10,252

* Allocation by "Entity Location"

Europe	North America	Central - South America	Asia	Rest of the World	F.I.L.A. Group

305	-	19	1	5	329
	30	814	2,047	13	8,116
	30	832	2,048	18	8,445
	5,212 5,516

* Allocation by "Entity Location"

Significant Events in the period

On January 18, 2018, F.I.L.A. S.p.A., on the basis of strong operating and financial developments both at company and Group level, negotiated with the lending banks a number of amendments to the medium/long-term loan, taken out on May 12, 2016 for a total maximum amount of Euro 236,900 thousand and agreed with Intesa Sanpaolo S.p.A., Mediobanca – Banca di Credito Finanziario S.p.A., Banca Nazionale del Lavoro S.p.A. and UniCredit S.p.A..

The amendments and supplements to the Loan Contract negotiated with the lending banks related to the approval of improved conditions and terms for the company and the other Group companies, both in terms of reducing the borrowing costs and with regard to lessening the commitments in terms of the associated financial documentation and covenants. In addition, these amendments included the undertaking by the company F.I.L.A. S.p.A. of an additional debt of a total maximum amount of Euro 30 million from Banca Popolare di Milano, maturing on February 2, 2022, increasing the total amount set out under the loan contract to Euro 266.9 million.

On March 7, 2018, 51% of the share capital of FILA Art and Craft Ltd (Israel) was acquired, a company involved in the sale of F.I.L.A. Group writing, art and design products in Israel;
On June 7, 2018, the acquisition of 100% of the shares of Pacon Holding Company ("Pacon") by the subsidiary Dixon Ticonderoga Company (U.S.A.) was completed at an Enterprise Value of USD 325 million, in addition to USD 15 million concerning tax benefits. For this purpose, on May 1, 2018 the vehicle company FILA Acquisition Company was incorporated, with registered office in Delaware (U.S.A.), held entirely by Dixon Ticonderoga Company (U.S.A.). Completion of the transaction was subject to antitrust approval as per the Hart-Scott-Rodino Antitrust Improvements Act in the United States of America, which was obtained on May 29, 2018.

The Pacon acquisition is further testament to the Group's overseas market development commitment and further expands F.I.L.A on the world's largest market. With Pacon - in addition - the Group will be in a position to complete its color and paper segment offer with a broad and recognised portfolio of recreational - educational - creative products and tools targeting a highly diversified audience.

Pacon, founded in 1951, is a leading schools and arts & craft operator on the US market, headquartered in Appleton in the state of Wisconsin. The range of products includes over 8,500 items produced at 8 facilities located in the United States (3 in Appleton and 3 in Neenah, in the state of Wisconsin), in Great Britain (1 facility in the West Midlands) and in Canada (1 facility in Barrie, in the state of Ontario). The transaction was funded by a medium/long-term bank loan obtained from a syndicate comprising Mediobanca - Banca di Credito Finanziario S.p.A., UniCredit S.p.A., Banca IMI S.p.A., Banco BPM S.p.A. and Banca Nazionale del Lavoro S.p.A., for a total amount of Euro 520 million, including also the refinancing of the existing FILA S.p.A. debt, accompanied by a Euro 50 million revolving line to cover any needs generated by Group working capital. Euro 150 million of the medium/long-term loan shall be repaid according to a 5-year settlement plan, with the residual settled through a single instalment (of which Euro 125 million with maturity at 5 years and Euro 245 million with maturity at 6 years). Interest matures on the loan at Euribor/LIBOR at 3 months, respectively for the amounts issued in Euro and USD. The Board of Directors, in order to optimise the capital structure, also submitted for the approval of the Shareholders' Meeting of F.I.L.A. S.p.A. a share capital increase for a maximum Euro 100 million (including any share premium), by way of a rights offering with pre-emption rights and earmarked for the early repayment of Group debt. Mediobanca - Banca di Credito Finanziario S.p.A. and UniCredit Corporate & Investment Banking will act as Joint Global Coordinator and Joint Bookrunner for the planned share capital increase and have signed a pre-underwriting agreement by which they have committed, in accordance with typical market conditions, to underwrite the subscription of any newly issued shares remaining unopted on conclusion of the auctioning of unopted rights for a maximum amount equal to the value of the share capital increase. Pacon Group H1 2018 revenues were USD 125.9 million, with adjusted EBITDA of USD 20.6 million. These figures, provided by Pacon management and not approved by F.I.L.A.'s Board of Directors or management, nor subject to audit or other checks by the latter, were included in the statement of cash flows for the period only from the acquisition date and therefore respectively for only Euro 16.3 million and Euro 3.1 million.

Subsequent events

On July 31, 2018, F.I.L.A. and Dixon Ticonderoga Company (U.S.A.) chose to hedge interest rates on Euro 420 million of a total Euro 520 million loan undertaken for the acquisition of the Pacon Group through Interest Rate Swaps (IRS), running from June 29, 2016 and concluding on loan maturity. The IRS contract was undertaken with the same lending banks and swaps the Euribor at 3 months for the

Euro denominated borrowings and the LIBOR at 3 months for the amount issued in Dollars with a fixed rate. The margin paid on the variable rates is not hedged.

Outlook

Management will closely focus again in the second half of 2018 on the production, commercial, logistics and IT level integration of the recently-acquired entities, which hinges on the introduction of SAP at the main Group companies and the restructuring of some of the principal Group warehouses including for example the establishment of a centralised European distribution Hub.

Scheduled investments for the current year concern new plant and production machinery and industrial equipment and the rolling out of the SAP system as per the Road Map.

Related party transactions

Related party transactions, including inter-company transactions, were not atypical or unusual and were part of ordinary Group company operations. These transactions are governed at normal market conditions. Disclosure on related party transactions in the period is provided in the Notes to the Condensed Interim Consolidated Financial Statements, to which reference should be made.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE SIX MONTHS ENDED JUNE 30, 2018

Condensed Interim Consolidated Financial Statements as at and for the six months ended June 30, 2018

Consolidated Financial Statements

Condensed Consolidated Statement of Financial Position

Euro thousands		June 30, 2018	December 31, 2017
Assets		1,094,601	675,970
Non-Current Assets		540,973	316,837
Intangible Assets	Note 1	423,810	208,091
Property, Plant and Equipment	Note 2	97,774	88,355
Non-Current Loan Assets	Note 3	3,331	3,918
Equity Accounted Investments	Note 4	811	782
Other Investments	Note 5	31	31
Deferred Tax Assets	Note 6	15,216	15,660
Current Assets		553,628	359,133
Current Loan Assets	Note 3	492	419
Current Tax Assets	Note 7	12,558	8,689
Inventories	Note 8	264,162	178,699
Trade Receivables and Other Assets	Note 9	237,650	132,768
Cash and Cash Equivalents	Note 10	38,766	38,558
Liabilities and Equity		1,094,601	675,970
Equity	Note 12	243,372	239,577
Share Capital		37,261	37,261
Reserves		27,558	23,872
Retained Earnings		148,939	138,049
Profit for the period/year		5,325	15,767
Equity Attributable to the Owners of the Parent		219,083	214,949
Equity Attributable to Non Controlling Interests		24,289	24,628
Non-Current Liabilities		575,834	229,092
Non-Current Loan and Borrowings	Note 13	523,446	178,889
Financial Instruments	Note 17	50	35
Employee Benefits	Note 14	7,406	8,736
Provisions for Risks and Charges	Note 15	2,495	2,095
Deferred Tax Liabilities	Note 16	42,347	39,241
Other Liabilities	Note 19	90	96

Current Liabilities		275,395	207,301
Current Loan and Borrowings	Note 13	128,690	99,673
Provisions for Risks and Charges	Note 15	4,228	2,917
Current Tax Liabilities	Note 18	13,838	8,448
Trade Payables and Other Liabilities	Note 19	128,639	96,263

Statement of Comprehensive Income

		First Half of 2018	First Half of 2017
Euro thousands
Revenue from Sales and Service	Note 20	259,140	260,543
Other Revenue and Income Total Revenue	Note 21	4,951 264,091	11,977 272,520
Raw Materials, Consumables Supplies and Goods
Services and use of Third Parties Assets	Note 22	(130,607)	(126,130)
Other Operating Costs	Note 23	(65,836)	(58,658)
Change in Raw Materials, Semi-Finished, Work-in-progress & Finished Prod.	Note 24 Note 22	(5,949) 27,135	(13,245) 20,187
Personnel expense	Note 25	(54,286)	(55,686)
Amortisation & Depreciation	Note 26	(9,468)	(8,870)
Impairment Losses	Note 27	(1,589)	(206)
Total Operating Costs		(240,600)	(242,608)
Operating Profit		23,491	29,912
Financial Income	Note 28	4,151	1,838
Financial Expense	Note 29	(14,120)	(9,413)
Income/Expense from Equity - Accounted Investments	Note 31	60	(5)
Net Financial Expense		(9,909)	(7,580)
Pre-Tax Profit		13,582	22,332
Income Taxes
Deferred Taxes		(7,245)	(8,378)
Income Taxes	Note 32	(354) (7,599)	790 (7,588)
Profit - Continuing Operations		5,983	14,744
Profit (loss) - Discontinued Operations		-	-
Profit for the Period		5,983	14,744
Attributable to:
Non-controlling interests		658	706
Owners of the parent		5,325	14,038

Other Comprehensive Income (Expense) which may be reclassified subsequently to profit or loss		1,257	(7,564)
Translation Difference recorded in Equity		2,325	(8,423)
Adjustment Fair value of Hedges		(1,068)	859
Other Comprehensive Income (Expense) which may not be reclassified
subsequently to profit or loss		1,216	746
Actuarial Gains for Employee Benefits recorded directly in Equity		1,456	1,016
Income Taxes on income and charges recorded directly in Equity		(240)	(270)
Other Comprehensive Income (Expense) - Net of tax effect		2,473	(6,818)
Comprehensive Income		8,456	7,926
Attributable to:
Non-controlling interests		(297)	101
Owners of the parent		8,753	7,825

Earnings per share:	basic	0.13	0.34
	diluted	0.13	0.33

Statement of Changes in Equity

Euro thousands	Share capital	Legal Reserve	Share Premium Reserve	IAS 19 Reserve	Other Reserves	Translation Difference	Retained Earnings	Profit/(loss) Attributable to the Owners of the Parent	Equity Attributable to the Owners of the Parent	Attributable to Non Controlling Interests Capital and Reserves	Attributable to Non Controlling Interests Non- Control. Int. Profit/Loss	Equity Attributable to Non Controlling Interests	Total Equity
December 31, 2017	37,261	7,434	65,349	(1,671)	(20,404)	(26,836)	138,049	15,767	214,949	23,028	1,600	24,628	239,577
Adjustment at first application of IFRS 15 (net of taxes)	-	-	-	-	-	-	-	-	-	-	-	-	-
Adjustment at first application of IFRS 9 (net of taxes)	-	-	-	-	-	-	(1,157)	-	(1,157)	-	-	-	(1,157)
January 1, 2018 restated	37,261	7,434	65,349	(1,671)	(20,404)	(26,836)	136,892	15,767	213,792	23,028	1,600	24,628	238,420
Net Profit								5,325	5,325		658	658	5,983
Other Changes in the period				1,221	(808)	3,273			3,686	(955)		(955)	2,731
Gains/(losses) recorded directly to equity	-	-	-	1,221	(808)	3,273	-	5,325	9,011	(955)	658	(297)	8,714
Allocation of the 2017 result							15,767	(15,767)	-	1,600	(1,600)	-	-
Dividends							(3,720)		(3,720)	(42)		(42)	(3,762)
June 30, 2018	37,261	7,434	65,349	(450)	(21,212)	(23,563)	148,939	5,325	219,083	23,631	658	24,289	243,372

Statement of Cash Flows

Euro thousands		First Half of 2018	First Half of 2017
Operating Profit		23,491	29,912
Non-Monetary and Other Adjustments:		14,925	12,434
Amortisation & Depreciation	Note 1 - 2	9,468	8,870
Reversal of (Impairment Losses) on Intangible Assets and Property, Plant and Equipment	Note 1 - 2	7	32
Allowance for Impairment and Inventory Write-Down	Note 9	1,071	174
Accruals for Post Employment and Other Employees Benefits		1,587	1,875
Provision for Risks and Charges		1,011	-
Net Exchange Rate Gains (losses) on Foreign Currency Trade Receivables and Payables	Note 24	2,037	1,532
Net Losses on the Sale of Intangible Assets and Property, Plant and Equipment	Note 21 - 24	(256)	(50)
Addition for:		(8,673)	(8,855)
Income Taxes Paid	Note 7 - 18	(6,540)	(4,850)
Net Unrealised Exchange Rate Gain (Losses) on Assets and Liabilities in Foreign Currency	Note 28 - 29	(3,162)	(1,705)
Net Realised Exchange Rate Gains (losses) on Assets and Liabilities in Foreign Currency	Note 28 - 29	1,029	(2,300)
Cash Flows from Operating Activities Before Changes in NWC		29,743	33,491
Changes in Net Working Capital:		(74,568)	(84,529)
Change in Inventories	Note 8	(26,623)	(19,048)
Change in Trade Receivables and Other Assets	Note 9	(61,647)	(71,799)
Change in Trade Payables and Other Liabilities	Note 19	15,755	6,648
Change in Other Assets/Liabilities	Note 15 - 16 - 6	(906)	713
Change in Post Employment and Other Employee Benefits	Note 14	(1,147)	(1,043)
Net Cash Flows from Operating Activities		(44,825)	(51,039)
Net Increase in Intangible Assets	Note 1	(2,581)	(329)
Net Increase in Property, Plant and Equipment	Note 2	(7,671)	(8,116)
Net Increase in Equity-Accounted Investments, Net Profi (Losses) and Impairment Losses		-	(65)
Net Increase/Decrease in Equity Investments measured at Cost	Note 5	(215,188)	985
Net Increase in Other Financial Assets	Note 3	(93)	303
Interests		(92)	44
Net Cash Flows used in Investing Activities		(225,625)	(7,178)
Change in Equity	Note 12	(3,762)	(3,838)
Interests Paid	Note 29	(11,436)	(4,441)
Net Increase/Decrease Loans and Borrowings and Other Financial Liabilities	Note 13	379,827	14,602
Cash Flows from Financing Activities		364,629	6,323
Translation difference	Note 12	2,325	(8,423)
Other Non-Monetary Equity Changes		(4,033)	13,450
NET CASH FLOW IN THE YEAR		92,456	(46,867)
Cash and Cash Equivalents net of Bank Overdrafts at beginning of the period		20,426	53,973
Cash and Cash Equivalents net of Bank Overdrafts at beginning of the period (change in		(86,724)	(39)
consolidation scope)
Cash and Cash Equivalents net of Bank Overdrafts at end of the year		26,173	7,067

1. Cash and cash equivalents in H1 2018 totalled Euro 38,766 thousand; current account overdrafts amounted to Euro 12,593 thousand net of relative interest.

2. Cash and cash equivalents in H1 2017 totalled Euro 29,608 thousand; current account overdrafts amounted to Euro 22,541 thousand net of relative interest.

3. The cash flows are presented using the indirect method. In order to provide a more complete and accurate presentation of the individual cash flows, the effects of non-cash operations were separated (including the translation of statement of financial position items in currencies other than the Euro), where significant. These effects were combined and included in "Other Non-Monetary Changes".

Euro thousands	June 30, 2018	December 31, 2017
Opening Cash and Cash Equivalents	20,425	53,973
Cash and cash equivalents Bank overdrafts	38,558 (18,133)	59,519 (5,546)
Closing Cash and Cash Equivalents	26,173	20,425
Cash and cash equivalents Bank overdrafts	38,766 (12,593)	38,558 (18,133)

Condensed statement of financial position with indication of related parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 2006

Euro thousands		June 30, 2018	of which: Related Parties	December 31, 2017	of which: Related Parties
Assets		1,094,601	-	675,970	-
Non-Current Assets		540,973	-	316,837	-
Intangible Assets	Note 1	423,810		208,091
Property, Plant and Equipment	Note 2	97,774		88,355
Non-Current Loan Assets	Note 3	3,331		3,918
Equity Accounted Investments	Note 4	811		782
Other Investments	Note 5	31		31
Deferred Tax Assets	Note 6	15,216		15,660
Current Assets		553,628	-	359,133	-
Current Loan Assets	Note 3	492		419
Current Tax Assets	Note 7	12,558		8,689
Inventories	Note 8	264,162		178,699
Trade Receivables and Other Assets	Note 9	237,650		132,768
Cash and Cash Equivalents	Note 10	38,766		38,558
Liabilities and Equity		1,094,601	1,312	675,970	1,191
Equity	Note 12	243,372	-	239,577	-
Share Capital		37,261		37,261
Reserves		27,558		23,872
Retained Earnings		148,939		138,049
Profit for the period/year		5,325		15,767
Equity Attributable to the Owners of the Parent		219,083		214,949
Equity Attributable to Non Controlling Interests		24,289		24,628
Non-Current Liabilities		575,834	-	229,092	-
Non-Current Loan and Borrowings	Note 13	523,446		178,889
Financial Instruments	Note 17	50		35
Employee Benefits	Note 14	7,406		8,736
Provisions for Risks and Charges	Note 15	2,495		2,095
Deferred Tax Liabilities	Note 16	42,347		39,241
Other Liabilities	Note 19	90		96
Current Liabilities		275,395	1,312	207,301	1,191
Current Loan and Borrowings	Note 13	128,690		99,673
Provisions for Risks and Charges	Note 15	4,228		2,917
Current Tax Liabilities	Note 18	13,838		8,448
Trade Payables and Other Liabilities	Note 19	128,639	1,312	96,263	1,191

Condensed Statement Comprehensive Income with indication of Related Parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 2006

		First Half of 2018	of which: Related Parties	of which: Non Recurring	First Half of 2017	of which: Related Parties	of which: Non Recurring
Euro thousands Revenue from Sales and Service				Charges			Charges
Other Revenue and Income	Note 20	259,140			260,543
Total Revenue	Note 21	4,951			11,977
		264,091			272,520-
Raw Materials, Consumables Supplies and Goods	Note 22	(130,607)	(1,438)		(126,130)	(1,225)
Services and use of Third Parties Assets	Note 23	(65,836)	(315)	(8,633)	(58,658)	(262)	(1,027)
Other Operating Costs	Note 24	(5,949)		(50)	(13,245)		(243)
Change in Raw Materials, Semi-Finished, Work-in-progress & Finished Prod.	Note 22	27,135			20,187
Personnel expense	Note 25	(54,286)		(1,140)	(55,686)		(3,588)
Amortisation & Depreciation	Note 26	(9,468)			(8,870)
Impairment Losses	Note 27	(1,589)			(206)
Total Operating Costs		(240,600)			(242,608)
Operating Profit		23,491			29,912
Financial Income	Note 28	4,151		1,433	1,838		990
Financial Expense	Note 29	(14,120)		(2,810)	(9,413)
Income/Expense from Equity - Accounted Investments	Note 31	60			(5)
Net Financial Expense		(9,909)			(7,580)
Pre-Tax Profit		13,582			22,332
Income Taxes		(7,245)		963	(8,378)		292
Deferred Taxes		(354)			790
Income Taxes	Note 32	(7,599)			(7,588)
Profit - Continuing Operations		5,983			14,744
Profit (loss) - Discontinued Operations		-			-
Profit for the Period		5,983			14,744
Attributable to:
Non-controlling interests		658		102	706
Owners of the parent		5,325			14,038
Other Comprehensive Income (Expense) which may be reclassified subsequently to profit or loss		1,257			(7,564)
Translation Difference recorded in Equity		2,325			(8,423)
Adjustment Fair value of Hedges		(1,068)			859
Other Comprehensive Income (Expense) which may not be reclassified subsequently to profit or loss		1,216			746
Actuarial Gains for Employee Benefits recorded directly in Equity		1,456			1,016
Income Taxes on income and charges recorded directly in Equity		(240)			(270)
Other Comprehensive Income (Expense) - Net of tax effect		2,473			(6,818)
Comprehensive Income		8,456			7,926
Attributable to:
Non-controlling interests		(297)			101
Owners of the parent		8,753			7,825

Earnings per share: basic diluted		0.13 0.13			0.34 0.33

Notes

Introduction

The Parent F.I.L.A. S.p.A., Fabbrica Italiana Lapis ed Affini (hereafter "the Company") is a company limited by shares with registered office in Pero (Italy), Via XXV April, 5. The ordinary shares of the Company were admitted for trading on the MTA, STAR Segment, organised and managed by Borsa Italiana S.p.A. from November 12, 2015. These condensed interim consolidated financial statements at June 30, 2018 include the financial statements of the company and its subsidiaries (collectively, the "Group").

The Condensed Interim Consolidated Financial Statements of the F.I.L.A. Group were prepared in accordance with IAS 34 Interim Financial Reporting, as established also by Article 154-ter of the Consolidated Finance Act (Legislative Decree No. 58/1998) and should be read together with the F.I.L.A. Group 2017 Annual Consolidated Financial Statements ("latest financial statements"). Although not presenting all the information required for complete financial statement disclosure, specific notes are included outlining the events and transactions central to understanding the changes to the F.I.L.A. Group's statement of financial position and performance since the latest financial statements.

These condensed interim consolidated financial statements are presented in Euro, as the functional currency in which the Group operates and comprise the Consolidated Statement of Financial Position, in which assets and liabilities are classified under current and non-current, the Statement of Comprehensive Income, the Statement of Cash Flows, the Statement of Changes in Equity and the these Notes and are accompanied by the Directors' Report.

All amounts reported in the Statement of Financial Position, the Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Statement of Changes in Equity and in these Notes are expressed in thousands of Euro, except where otherwise stated.

With reference to Consob Resolution No. 15519 of July 27, 2006 in relation to the format of the Financial Statements, significant transactions with related parties and non-recurring items are indicated separately.

Accounting policies

Except for that stated below, these Condensed Interim Consolidated Financial Statements were prepared according to the same accounting policies used for the preparation of the F.I.L.A. Group 2017 Consolidated Annual Financial Statements.

The Group adopted IFRS 15 Revenue from contracts with customers and IFRS 9 Financial instruments from January 1, 2018. The other new standards entering into force from January 1, 2018 did not have significant impacts on the Group's consolidated financial statements.

The changes to the accounting policies will impact also the Group's consolidated financial statements as at and for the year ending December 31, 2018.

Accounting standards, amendments and interpretations applied from January 1, 2018

IFRS 15 Revenue from Contracts with Customers

IFRS 15 introduces a single general model to establish whether, when and to what extent to recognise revenue. The standard replaces IAS 18 Revenues, IAS 11 Construction contracts and the relative interpretations.

On first-time application, IFRS 15 must be applied retrospectively. A number of simplifications are however permitted, in addition to an alternative approach which avoids the restatement of periods presented for comparative disclosure; in this latter case, the effects from the application of the new standard must be recognised to the open equity of the period of first-time application of IFRS 15.

The Group applied IFRS 15 retrospectively with cumulative effect (without the adoption of practical expedients) at the date of first-time application (January 1, 2018). Therefore, the 2017 figures were not restated i.e. they were presented as per IAS 18, IAS 11 and the relative interpretations. Reference should be made to "Attachment 3 - Changes to accounting standards" for further details on the effects from application of IFRS 15.

IFRS 9 – Financial instruments

The standard, issued by the IASB in July 2014 and endorsed by the European Commission in November 2016, replaces IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 introduces new provisions for the classification and measurement of financial instruments, including a new model for expected losses from impairments on financial assets, and new general provisions for hedge accounting. In addition, the standard includes provisions for the recognition and derecognition of financial instruments in line with the current IAS 39.

The Group applied IFRS 9 at the date of first-time application (January 1, 2018).

The analysis carried out in implementation of IFRS 9 concerned the valuation of the Expected Credit Losses of trade receivables, of tax receivables, of other receivables and of cash and cash equivalents.

Reference should be made to "Attachment 3 - Changes to accounting standards" for further details on the effects from application of IFRS 9.

Amendment to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts"

In September 2016, the IASB published "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts". The amendments clarify the considerations deriving from application of the new IFRS 9, before the replacement by the IASB of the current IFRS 4 with the new standard currently under preparation.

Amendment to IFRS 2 - Classification and Measurement of Share-based Payment Transactions

In June 2016, the IASB published amendments to IFRS 2 "Classification and measurement of sharebased payment transactions" which contains clarifications upon the recognition of the effects of vesting conditions in the presence of cash-settled share-based payments, on the classification of sharebased payments with characteristics of net settlement and the recognition of the amendments to the terms and conditions of a share-based payment which changes the classification from cash-settled to equity-settled.

Amendments to IAS 40 Investment Property: Transfers to Investment Properties

In December 2016, the IASB published the document "Amendments to IAS 40 Transfer of Investment Property". These amendments clarify the transfers of an asset to, or from, investment property. Based on these amendments, an entity must reclassify an asset to, or from, investment property only when the asset complies with or ceases to comply with the definition of "investment property" and there has been a clear change in the utilisation of the asset. This change must be attributable to a specific event and shall not therefore be limited to only a change in intention by management of the entity.

IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

In December 2016, the IASB published the "IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration" document. The interpretation provides guidelines for transactions in foreign currencies where advances or non-monetary payments on account are recorded in the financial statements, before the recognition of the relative asset, cost or revenue. This document provides indications on how an entity should determine the date of a transaction, and consequently, the exchange rate to be utilised concerning operations in foreign currencies concerning payments made or received in advance.

Improvements to IFRS: 2014-2016 Cycle

In December 2016, the IASB published the "Annual Improvements to IFRS Standards: 2014-2016 Cycle" document. The principal changes relate to:

IFRS 1 First-time adoption of International Financial Reporting Standards The amendments eliminate some exemptions within IFRS 1, as the benefit from these exemptions are no longer applicable.
IAS 28 Investments in associates and joint ventures The amendment clarifies that the option for risk capital investment companies or other similar companies to measure investments in associates and joint ventures at fair value through profit or loss (rather than through application of the equity method) is applied for each individual investment on initial recognition.

Accounting standards, amendments and interpretations endorsed by the EU and applicable from January 1, 2018

Amendment to IFRS 9 Financial instruments: "Prepayment Features with Negative Compensation"

In October 2017, the IASB published amendments to IFRS 9 Prepayment Features with Negative Compensation. The amendment proposes that financial instruments repaid early, which may give rise to negative offsetting, may apply the amortised cost or fair value through other comprehensive income method depending on the business model adopted. The amendments will be applicable from periods beginning January 1, 2019.

IFRS 16 – Leases

The standard, published by the IASB in January 2016, proposes substantial changes to the accounting treatment of leases in the lessee's financial statements, which must recognise the assets and liabilities

deriving from contracts, without distinction between operating and finance leases, in the statement of financial position. The new standard provides a new definition of leases and introduces a criterion based on control (right of use) of an asset to distinguish leases from service contracts, identifying essential differences: the identification of the asset, the right of replacement of the asset, the right to obtain substantially all the economic benefits from the use of the asset and the right to use the asset underlying the contract.

The IASB expects that the standard will be applied for years commencing from January 1, 2019. Advance application is permitted for entities applying IFRS 15 Revenue from Contracts with Customers.

The Group is undertaking analysis to define and assess the potential effects from application of IFRS 16 on the consolidated financial statements.

Accounting standards, amendments and interpretations not yet endorsed by the EU and applicable from January 1, 2018

IFRS 17 Insurance Contracts

In May 2017, the IASB published IFRS 17 Insurance Contracts which replaces IFRS 4, issued in 2014. The standard has the objective to improve investors' understanding of the exposure to risk, earnings and the financial position of insurers, requiring that all insurance contracts are recorded on a uniform basis, overcoming the problems created within IFRS 4.

The standard is applicable from January 1, 2021, however advance application is permitted.

IFRIC 23 – Uncertainty over income tax treatments

In June 2017, the IASB published interpretation IFRIC 23 – Uncertainty over Income Tax Treatments. The interpretation clarifies the application of the requirements for recognition and measurement established in IAS 12 Income Taxes when uncertainties exist on tax treatment. The amendments will be applicable from periods beginning January 1, 2019, although early application is permitted.

Amendment to IAS 28 Investments in associates: Long-term Interests in Associates and Joint Ventures

The amendment clarifies that IFRS 9 is applied to long-term receivables from an associate or joint venture which, in substance, are part of the net investment in the associate or joint venture. The amendment in addition establishes that IFRS 9 is applied to these receivables before the application of IAS 28, so that the entity does not take account of any adjustments to long-term interests from

application of the above IAS. The amendments will be applicable from periods beginning January 1, 2019, although early application is permitted.

Improvements to IFRS: 2015-2017 Cycle

In December 2017, the IASB published the "Improvements to IFRS: Cycle 2015-2017" document, with the principal amendments concerning:

IFRS 3 Business Combination and IFRS 11 Joint Arrangements The amendments to IFRS 3 clarify that when an entity obtains control of a joint operation, it should restate the fair value of the interest that it previously held in this joint operation. The amendments to IFRS 11 clarify that when an entity obtains joint control of a joint operation, the entity does not restate the fair value of the interest previously held in the joint operation.
IAS 12 Income tax consequences of payments on financial instruments classified as equity The proposed amendments clarify that the entity should recognise any tax effects from the distribution of dividends.
IAS 23 Borrowing costs eligible for capitalisation The amendments clarify that where loans specifically undertaken for the acquisition and/or construction of an asset remain in place even after the asset is ready for use or sale, these loans cease to be considered specific and therefore are included in the generic loans of the entity for the calculation of the capitalisation rate of the loans.

The amendments will be applicable from periods beginning January 1, 2019. Earlier application is permitted.

Amendment to IAS 19 - Plan Amendment, Curtailment or Settlement (published in February 2018)

The amendments clarifies how current service costs and net interest is calculated where there is a change to the defined benefit plan. The amendments will be applicable from periods beginning January 1, 2019. Earlier application is permitted.

Amendment to IFRS 10 and IAS 28 "Sales or Contribution of Assets between an Investor and its Associate or Joint Venture" (published on September 11, 2014)

The document was published in order to resolve the current conflict between IAS 28 and IFRS 10 relating to the measurement of the gain or loss from the sale or contribution of a non-monetary asset to a joint venture or associate in exchange for a share of the capital of this latter. Currently, the IASB has suspended the application of this amendment.

In accordance with IFRS 2 - Share-based payments, the key data regarding the "2017-2019 Performance shares plan" and the "One-off Extraordinary bonus", approved by the Shareholders' Meeting of F.I.L.A. S.p.A. on April 27, 2017 and based on the free awarding of shares of the parent F.I.L.A. S.p.A to managers and senior executives of the FILA Group, is presented below.

The free awarding of shares to beneficiaries of the extraordinary bonus was made and concluded in the year ended December 31, 2017, while the "2017-2019 Performance shares plan" covers a medium/long-term period.

With regard to the variables underlying the allocation of equity instruments, specifically the extraordinary bonus, the achievement of quantitative or qualitative performance objectives was not required.

On the other hand, for the "2017-2019 Performance Shares Plan" the right to receive F.I.L.A. S.p.A. shares is subject to the maintenance of the beneficiaries position as an employee or director of the company until the conclusion of the vesting period of the plan (December 31, 2019) and the achievement of performance objectives (average ROI over the 2017-2019 three-year period).

The total number of shares to be assigned to beneficiaries of the "One-off Extraordinary Bonus" was established as 100,181. This number is calculated on the basis of the average closing price of the share over the trading days before the date of March 21, 2017 excluded.

The total maximum number of shares to be assigned to beneficiaries of the "2017-2019 Performance Shares Plan" was established as 94,765. This number was also calculated according to the average share closing price over the trading days prior to March 21, 2017 excluded and taking account of the shares which may be assigned by the Board of Directors to any additional Plan beneficiaries.

Exchange rates adopted for translation

The exchange rates utilised for the translation of local currencies into Euro are illustrated below:

EXCHANGE RATES
	Average Exchange Rate Fist Half of 2018	Fixed Exchange Rate First Half of 2018
Argentinean Peso	26.025	32.705
Canadian Dollar	1.546	1.544
Chilean Peso	740.170	757.260
Renminbi Yuan	7.710	7.717
Euro	1.000	1.000
Pound	0.880	0.886
Mexican Peso	23.080	22.882
US Dollar	1.211	1.166
Indonesian Rupiah	16,671.740	16,654.040
Swedish Krona	10.152	10.453
Singapore Dollar	1.606	1.590
Turkish Lira	4.955	5.339
Brazilian Real	4.141	4.488
Indian Rupee	79.512	79.813
Russian Ruble	71.980	73.158
South Africa Rand	14.890	16.048
Polish Zloty	4.220	4.373
Dominican Peso	59.386	57.570
Australian Dollar	1.569	1.579
Swiss Franc	1.170	1.157
Shekel	4.260	4.263
Source: Bank of Italy

Note 1 - Intangible assets

Intangible assets at June 30, 2018 amount to Euro 423,810 thousand (Euro 208,091 thousand at December 31, 2017) and are comprised for Euro 237,502 thousand of intangible assets with an indefinite useful life – goodwill ("Note 1.B - Intangible Assets with indefinite useful lives) and for Euro 186,308 thousand intangible assets with a finite useful life ("Note 1.D – Intangible Assets with finite useful lives").

		Note 1.A - INTANGIBLE ASSETS
Euro thousands	Goodwill	Industrial Patents & Intellectual Property Rights	Concessions, Licenses, Trademarks & Similar Rights	Other Intangible Assets	Assets Under Development	Total
Change in Historical Cost
December 31, 2017	77,208	190	107,862	48,604	2,007	235,870
Increases in the year	160,294	1 0	76,081	7,109	(154)	243,340
Increases (Investments)	114,265	10	356	1,103	1,107	116,841
Transfer from Assets Under Development	-	-	-	1,261	(1,261)	-
Change in consolidation scope	43,531	-	75,310	4,745	-	123,587
Increase in Translation Differences	2,498	-	415	-	-	2,913
Decreases in the year	-	-	-	(527)	-	(527)
Decreases (Divestments)	-	-	-	(15)	-	(15)
Decrease in Translation Differences	-	-	-	(512)	-	(512)
June 30, 2018	237,502	200	183,943	55,186	1,852	478,684
Change in Amortisation
December 31, 2017	-	(147)	(19,823)	(7,809)		(27,779)
Increases in the year	-	(5)	(25,714)	(1,507)		(27,226)
Amortisation in Year	-	(5)	(2,615)	(1,137)		(3,757)
of which Change in Consolidation Scope	-	-	(273)			(273)
Change in consolidation scope	-	-	(22,641)	(370)		(23,011)
Increase in Translation Differences	-	-	(458)	-		(458)
Decreases in the year	-	-	-	131		131
Decreases (Divestments)	-	-	-	15		15
Decrease in Translation Differences	-	-	-	116		116
June 30, 2018	-	(152)	(45,537)	(9,185)		(54,874)
Carrying amount at December 31, 2017	77,208	4 3	88,039	40,795	2,007	208,091
Carrying amount at June 30, 2018	237,502	4 8	138,406	46,001	1,853	423,810
Change	160,294	5	50,367	5,206	(154)	215,719

Intangible assets with indefinite useful lives

"Intangible assets with indefinite useful lives" are comprised entirely of goodwill for a total amount of Euro 237,502 thousand (Euro 77,208 thousand at December 31, 2017). The movement on the previous year is due to the acquisition of the Pacon Group which resulted in the consolidation of Goodwill already recognised in the financial statements of the Group companies (Euro 43,531 thousand) and of Goodwill of Euro 114,265 thousand generated by the transaction. At June 30, 2018, in line with IFRS 3, the values of the acquisition were preliminarily allocated to Goodwill and within 12 months from the acquisition date the PPA will be made.

Goodwill is not amortised but subject to an impairment test at least annually and whenever facts or circumstances arise which indicate an Impairment loss.

In accordance with the provisions of IAS 36, goodwill is allocated to the various cash generating units (CGU's) and at least on an annual basis subject to recoverability analysis through an impairment test.

NOTE 1.B INTANGIBLE ASSETS AT INFINITE USEFUL LIVES
Euro thousands		June 30, 2018 December 31, 2017	Change	Increase (Investment)	Exchange Rate Difference	Consolidation Area Change
Pacon Group (7)	160,207	-	160,207	114,265	2,411	43,531
DOMS Industries Pvt Ltd	33,276	33,281	(5)	-	(5)	-
Canson Group (4)	10,875	10,875	-	-	-	-
Daler-Rowney Lukas Group (5)	1,647	1,647	-	-	-	-
Dixon - Nord America Group(2)	23,683	23,646	37	-	37	-
Dixon - Centro/Sud America Group(1)	1,867	1,812	55	-	55	-
Industria Maimeri S.p.A. (Italy)	1,695	1,695	-	-	-	-
Omyacolor S.A. (France)	1,611	1,611	-	-	-	-
St. Cuthberts Holding(6)	1,323	1,323	-	-	-	-
Lyra Group(3)	1,217	1,217	-	-	-	-
FILA SA (South Africa)	101	101	-	-	-	-
Totale	237,502	77,208	160,294	114,265	2,498	43,531

Goodwill allocated to the CGU's is reported below:

(1) - Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico); F.I.L.A. Chile Ltda (Chile); FILA Argentina S.A. (Argentina).

(2) - Dixon Ticonderoga Company (U.S.A.); Dixon Ticonderoga Inc. (Canada); Canson Inc (U.S.A); Daler USA Ltd (U.S.A); Brideshore Srl (Dominical Republic) as CGU North America; Eurholdam USA Inc. (U.S.A).

(3) - Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG (Germany); FILA Nordic AB (Sweden); PT. Lyra Akrelux (Indonesia).

(4) - Canson SAS (France); Lodi 12 SAS (France); Canson Brasil I.P.E. LTDA (Brasil); Canson Australia PTY LTD (Australia); Canson Qingdao Ltd.(China); Canson Italy (Italy).

(5) - Renoir Topco Ltd (UK); Renoir Midco Ltd (UK); Renoir Bidco Ltd (UK); Daler Rowney Group Ltd (UK); FILA Benelux SA (Belgium); Daler Rowney Ltd (UK); Longbeach Arts Ltd (UK); Daler Board Company Ltd (UK); Daler Holdings Ltd (UK); Daler Designs Ltd (UK); Daler Rowney GmbH (Germany); Lukas-Nerchau GmbH (Germany); Nerchauer Malfarben GmbH (Germany); Lastmill Ltd (UK); Rowney & Company Pencils Ltd (UK); Rowney (Artists Brushes) Ltd (UK); Brideshore srl (Dominican Republic) as CGU Daler.

(6) - St. Cuthberts Holding (UK); St. Cuthberts Mill (UK).

(7) - Pacon Holding Company (U.S.A.); Pacon Corporation (U.S.A.), Pacon Canadian Holding Co (U.S.A.); Baywood Paper ULC (Canada); Castle Hill Craft (UK); Creativity International (UK), Princeton Hong Kong (Hong Kong).

No potential indicators of Impairment of goodwill were reported at June 30, 2018 due to the strong results recorded in the first half of the year and on the basis of the medium-term outlook. Therefore, no specific impairment test on the caption was carried out when preparing the condensed interim consolidated financial statements.

Intangible assets with finite useful lives

The movements at June 30, 2018 of "Intangible Assets with finite Useful Lives" are reported below.

Note 1.D - INTANGIBLE ASSETS WITH FINITE USEFUL LIVES
Euro thousands	Industrial Patents & Intellectual Property Rights	Concessions, Licenses, Trademarks & Similar Rights	Other	Assets Under Development	Total
Change in Historical Cost
December 31, 2017	190	107,862	48,604	2,007	158,663
Increases in the year	1 0	76,082	7,109	(154)	83,046
Increases (Investments)	10	356	1,103	1,107	2,576
Transfer from Assets Under Development	-	-	1,261	(1,261)	-
Change in consolidation scope	-	75,310	4,745	-	80,055
Increase in Translation Differences	-	415	-	-	415
Decreases in the year	-	-	(527)	-	(527)
Decrease Translation Differences	-	-	(15)	-	(15)
Decrease in Translation Differences	-	-	(512)	-	(512)
June 30, 2018	200	183,943	55,186	1,853	241,181
Change in Amortisation
December 31, 2017	(147)	(19,823)	(7,809)		(27,779)
Increases in the year	(5)	(25,714)	(1,507)		(27,226)
Amortisation in Year	(5)	(2,615)	(1,137)		(3,757)
of which Change in Consolidation Scope	-	(273)	-		(273)
Change in consolidation scope	-	(22,641)	(370)		(23,011)
Increase in Translation Differences	-	(458)	-		(458)
Decreases in the year	-	-	131		131
Decreases (Divestments)	-	-	15		15
Decrease in Translation Differences	-	-	116		116
June 30, 2018	(152)	(45,537)	(9,185)	-	(54,874)
Carrying amount at December 31, 2017	4 3	88,039	40,795	2,007	130,884
Carrying amount at June 30, 2018	4 8	138,406	46,001	1,853	186,308
Change	5	50,367	5,206	(154)	55,424

"Industrial Patents and Intellectual Property Rights" amount to Euro 48 thousand at June 30, 2018 (Euro 43 thousand at December 31, 2017).

The average residual useful life of the "Industrial Patents and Intellectual Property Rights", recorded in the financial statements at June 30, 2018, is 6 years.

"Concessions, Licenses, Trademarks and Similar Rights" amount to Euro 138,406 thousand at June 30, 2018 (Euro 88,039 thousand at December 31, 2017).

The carrying amount increased over December 31, 2017 by Euro 50,367 thousand, mainly against the initial consolidation of the Pacon Group, with a contribution at the consolidation date of Euro 52,669 thousand; this increase was partly offset by amortisation in the period of Euro 2,615 thousand (of which Euro 273 thousand concerning the acquired companies). In addition, a significant amount of the amortisation relates to the "Business combinations" undertaken in 2016 and relating to the

trademarks held by the English Group Daler Rowney-Lukas (Euro 40,223 thousand) and by the Canson Group (Euro 32,400 thousand).

The other historical trademarks subject to amortisation refer principally to "Lapimex" held by F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and the brands "Lyra" held by Lyra KG (Germany) and "DOMS" held by DOMS Industries Pvt Ltd (India).

The average useful life of the "Concessions, Licenses, Trademarks and Similar Rights", recorded in the financial statements at June 30, 2018, is 30 years.

"Other" amounts to Euro 46,001 thousand at June 30, 2018 (Euro 40,795 thousand at December 31, 2017). The increase on the previous year of Euro 5,206 thousand is due to the contribution of the Pacon Group companies (Euro 4,375 thousand) and investments and the entry into use of assets under development for a total of Euro 2,364 thousand. Investments in the period principally concerned the installation and roll out of the new ERP system at some Group companies. The amortisation of Euro 1,137 thousand concerns in particular the value of the "Development Technology" recorded by the companies of the Daler-Rowney Lukas Group (Euro 30,532 thousand), the Canson Group (Euro 1,500 thousand) and St. Cuthberts (Euro 2,462 thousand), identified as strategic assets through the "Purchase Price Allocation" within the business combinations undertaken in 2016.

The average useful life of "Other", recorded to the financial statements at June 30, 2018, is 13 years.

Assets under development totalled Euro 1,853 thousand and mainly relate to investments for the installation of the new ERP system.

Note 2 - Property, plant and equipment

At June 30, 2018, "Property, Plant and Equipment" amounted to Euro 97,774 thousand (Euro 88,355 thousand at December 31, 2017).

The movements in the period are shown below:

Note 2.A - PROPERTY, PLANT AND EQUIPMENT
Euro thousands	Land	Buildings	Plant and Machinery	Industrial & Commercial Equipment	Other Assets	Assets Under Development	Total
Change in Historical Cost
December 31, 2017	13,639	53,519	104,884	19,055	11,502	8,208	210,807
Increases in the year	6 6	1,451	18,176	442	2,034	4,587	26,756
Increases (Investments)	66	332	3,552	274	421	3,940	8,585
of which Change in Consolidation Scope	-	-	-	-	-	75	75
Transfer from Assets Under Development	-	5	200	12	10	(227)	-
Change in consolidation scope	-	1,114	14,518	-	1,590	859	18,081
Increase Translation Differences	-	-	16	46	13	15	90
Reclassification	-	-	(110)	110	-	-	-
Decreases in the year	(370)	(642)	(2,557)	(515)	(96)	-	(4,180)
Decreases (Divestments)	(207)	(525)	(2,557)	(514)	(90)	-	(3,893)
Impairment Losses	-	-	-	(1)	(6)	-	(7)
Decrease Translation Differences	(163)	(117)	-	-	-	-	(280)
June 30, 2018	13,335	54,328	120,503	18,982	13,440	12,795	233,383
Change in Depreciation
December 31, 2017	-	(29,965)	(66,286)	(17,024)	(9,176)		(122,452)
Increases in the year		(1,674)	(13,586)	(449)	(649)		(16,358)
Depreciation in Year		(907)	(3,899)	(332)	(574)		(5,712)
of which Change in Consolidation Scope		(17)	(212)	-	(1)		(230)
Change in consolidation scope		(739)	(9,476)	-	(89)		(10,304)
Increase in Translation Differences		(28)	(266)	(62)	14		(342)
Reclassification		-	55	(55)	-		-
Decreases in the year		246	2,363	502	9 0		3,201
Decreases (Divestments)		246	2,363	502	90		3,201
June 30, 2018		(31,393)	(77,509)	(16,971)	(9,735)		(135,609)
Carrying amount at December 31, 2017	13,639	23,554	38,598	2,031	2,326	8,208	88,355
Carrying amount at June 30, 2018	13,335	22,935	42,993	2,011	3,705	12,795	97,774
Change	(304)	(619)	4,395	(20)	1,379	4,587	9,419

"Land" at June 30, 2018 amounts to Euro 13,335 thousand (Euro 13,639 thousand at December 31, 2017) and includes the land relating to the buildings and production facilities owned by the company F.I.L.A. S.p.A. (Rufina Scopeti – Italy), by the subsidiary Lyra KG (Germany), by DOMS Industries Pvt Ltd (India), Daler Rowney Ltd (UK) and by Canson SAS (France). The movement in the period is due to, in addition to negative currency effects of Euro 163 thousand, the sale of land as part of the disposal of a warehouse by Daler Rowney Ltd (United Kingdom) for Euro 207 thousand and an additional purchase of Euro 66 thousand by DOMS Industries Pvt Ltd (India).

"Buildings" at June 30, 2018 amount to Euro 22,935 thousand (Euro 23,554 thousand at December 31, 2017) and principally concern the buildings of the Group production facilities. A reduction on

December 31, 2017 of Euro 619 thousand is reported. Net investments amount to Euro 53 thousand and were principally made by Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and St. Cuthberts Mill (United Kingdom), offset by the sale by Daler Rowney Ltd (United Kingdom) of buildings belonging to the Wareham warehouse disposed of for a net value of Euro 236 thousand. The increase from the acquisition of the Pacon Group was Euro 375 thousand, relating to buildings held principally by the company Pacon Corporation (U.S.A.).

Depreciation of Euro 907 thousand particularly concerns Canson SAS (France), F.I.L.A. S.p.A. and DOMS Industries Pvt Ltd (India).

"Plant and Machinery" amounts to Euro 42,993 thousand (Euro 38,598 thousand at December 31, 2017). The increase on the previous year of Euro 4,395 thousand is mainly due to the contribution from the acquisition of the Pacon Group for a carrying amount of Euro 5,042 thousand. Net investments by the Group in the period amounted to Euro 3,358 thousand and principally concerned DOMS Industries Pvt Ltd (India) for Euro 1,952 thousand, regarding the development of production, with particular regard to the Art Division and Daler Rowney Ltd (United Kingdom) for Euro 819 thousand, for the setting up of the new warehouse. The movement also includes negative currency effects of Euro 250 thousand and Euro 3,899 thousand of depreciation, of which Euro 212 thousand concerning the companies acquired in the period.

"Industrial and Commercial Equipment" amounted to Euro 2,011 thousand at June 30, 2018 (Euro 2,031 thousand at December 31, 2017). The decrease for Euro 20 thousand principally concerns depreciation in the period of Euro 332 thousand, partly offset by net investments of Euro 262 thousand, made in particular by F.I.L.A. S.p.A. and Daler Rowney Ltd (United Kingdom).

"Other Assets" amount to Euro 3,705 thousand at June 30, 2018 (Euro 2,326 thousand at December 31, 2017) and include furniture and office equipment, EDP and motor vehicles. The increase of Euro 1,379 thousand mainly relates to the contribution at the acquisition date of the Pacon Group for Euro 1,501 thousand. Net of M&A effects, Group investments amount to Euro 421 thousand and principally concern DOMS Industries Pvt Ltd (India), Dixon Ticonderoga Company (U.S.A.), Brideshore srl (Dominican Republic) and Canson Brasil I.P.E. LTDA (Brazil). The movement was partially offset by depreciation in the period of Euro 574 thousand.

"Assets under Development" include internal constructions undertaken by the individual companies of the Group which are not yet operational. The increase in the carrying amount at June 30, 2018 was Euro 4,587 thousand, principally concerning the French company Canson SAS (Euro 1,380 thousand) for residual investments in progress concerning the setting up of the new European logistics "Hub" at

Annonay, Grupo F.I.L.A.-Dixon, S.A. de C.V. (Euro 890 thousand) and DOMS Industries Pvt Ltd (Euro 768 thousand), for the development and extension of local production facilities. There is no property, plant and equipment subject to restrictions.

Note 3 – Loan Assets

"Loan Assets" amount to Euro 3,823 thousand at June 30, 2018 (Euro 4,337 thousand at December 31, 2017).

Note 3.A - LOAN ASSETS
Euro thousands		Loans and Receivables	Derivative Financial Instruments	Other Financial Assets	Total
December 31, 2017		358	1,053	2,926	4,337
	non-current portion current portion	6 352	1,053 -	2,859 67	3,918 419
June 30, 2018		714	-	3,109	3,823
	non-current portion current portion	271 443	- -	3,060 49	3,331 492
Change		356	(1,053)	183	(514)
	non-current portion current portion	265 91	(1,053) -	201 (18)	(587) 73

Loans and Receivables

These amount to Euro 714 thousand and concern the issue of a loan to third parties by F.I.L.A. S.p.A. for Euro 274 thousand, Pacon Corporation (U.S.A.) for Euro 434 thousand and Omyacolor SA for Euro 6 thousand.

Derivative Financial Instruments

Financial instruments presented in the consolidated financial statements at December 31, 2017 concerned the fair value measurement of derivative hedging instruments related to the loan (hedged instrument) issued in favour of F.I.L.A. S.p.A. in 2016 for the acquisition of the Daler-Rowney Lukas Group, the Canson Group and St. Cuthberts Holding. With the settlement of the loan in question in the first half of the year, the related derivative instruments were terminated. Considering that the accounting treatment adopted was that for derivative hedging instruments (hedge accounting), the settlement of the IRS opened for Euro 1,053 thousand was entirely offset by the simultaneous elimination of the equity reserve established to incorporate the fair value changes.

Other financial assets

"Other Financial Assets" totalled Euro 3,109 thousand (Euro 2,926 thousand at December 31, 2017), increasing by Euro 183 thousand. They principally concern the guarantee deposits required for goods and service supply contracts of the various Group companies, including in particular Canson SAS (Euro 794 thousand), DOMS Industries Pvt Ltd (Euro 854 thousand) and Grupo F.I.L.A.-Dixon, S.A. de C.V. (Euro 314 thousand). In relation to the amount of Euro 741 thousand recorded by Dixon Ticonderoga Company (U.S.A.), the caption concerns financial assets subject to a portion of the indemnity plans to be paid to personnel.

The current portion of "Other Financial Assets" also concerns guarantee deposits on supply contracts maturing within 12 months.

The carrying amount of financial assets represents their "Fair Value" at the reporting date.

Note 4 – Equity-Accounted Investments

Note 4.A EQUITY-ACCOUNTED INVESTMENTS
Euro thousands	Inv. in Associates
December 31, 2017	782
Increases in the year	6 0
Movement in Investments at Equity	60
Decreases in the year	(31)
Translation Differences	(31)
June 30, 2018	811
Change	2 9

Equity-Accounted Investments amount to Euro 811 thousand (Euro 782 thousand at December 31, 2017).

The increase in the period relates to the investments in associates held by DOMS Industries Pvt Ltd (India), consolidated under the Equity Method. At June 30, 2018, the "Carrying amount" of the investments was adjusted in line with the share of Equity held in the associates.

Note 5 - Other investments

Other Investments, amounting to Euro 31 thousand, relate to the investments in Maimeri S.p.A. by F.I.L.A. S.p.A. for a value of Euro 28 thousand, corresponding to 1% of the share capital, and the quota held in the consortiums Conai, Energia Elettrica Zona Mugello and Energia Elettrica Milano by F.I.L.A. S.p.A. at June 30, 2018. The carrying amount reflects the fair value of the investments.

Note 6 – Deferred Tax Assets

"Deferred Tax Assets" amount to Euro 15,216 thousand at June 30, 2018 (Euro 15,660 thousand at December 31, 2017).

The movement of "Deferred Tax Assets" is illustrated in the table below with indication of the opening balance, changes during the period and the closing balance at June 30, 2018.

Note 6.A - CHANGES IN DEFERRED TAX ASSETS
Euro thousands
December 31, 2017	15,660
Provisions	2,329
Utilisations	(3,458)
Translation differences	58
Change in Equity	627
June 30, 2018	15,216
Change	(444)

The caption at June 30, 2018 mainly includes deferred tax assets calculated on "Intangible Assets and Property, Plant and Equipment", taxed provisions for "Risk and Charges", "ACE" and "Inventories".

With regard to the change recognised in equity of Euro 627 thousand, Euro 903 thousand concerns the estimated tax effect on the opening balance (first-time adoption) from the IFRS 9 adjustments to the equity reserve; the amount is partially offset by the tax effect concerning the actuarial gain/loss recognised to the pension provisions of various Group companies and amounting to Euro 276 thousand.

Deferred tax assets recognised at the reporting date concerned the amounts of probable realisation on the basis of management estimates on future assessable income.

Note 7 - Current Tax Assets

At June 30, 2018, the tax assets relating to income taxes amount overall to Euro 12,558 thousand (Euro 8,689 thousand at December 31, 2017) and refer principally to the parent F.I.L.A. S.p.A. for Euro 2,676 thousand, Dixon Ticonderoga Co. (U.S.A.) for Euro 4,491 thousand and DOMS Industries Pvt Ltd (India) for Euro 1,985 thousand.

Note 8 - Inventories

Inventories at June 30, 2018 amount to Euro 264,162 thousand (Euro 178,699 thousand at December 31, 2017).

Note 8.A - INVENTORIES
Euro thousands	Raw Materials and Consumables Supplies	Work-in-progress and Semi-finished Products	Finished Products and Goods	Total
December 31, 2017	43,895	22,895	111,909	178,699
June 30, 2018	61,066	28,918	174,178	264,162
Change	17,171	6,023	62,269	85,463

The caption increased by Euro 85,463 thousand, due both to the contribution from the consolidation of the Pacon Group and the seasonality related to the school's campaign. The increase concerned in particular the US subsidiaries Dixon Ticonderoga Company and Canson Inc., Daler Rowney Ltd (United Kingdom), the Mexican Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) and DOMS Industries Pvt Ltd (India).

Inventories are presented net of the allowance for inventory write-down relating to raw materials (Euro 1,360 thousand), work-in-progress (Euro 217 thousand) and finished products (Euro 5,410 thousand). The accruals refer to obsolete or slow moving materials for which it is not considered possible to recover their value through sale.

Note 8.B- CHANGE IN THE ALLOWANCE FOR INVENTORY
Euro thousands	Raw Materials and Consumables Supplies	Work-in-progress and Semi-finished Products	Finished Products and Goods	Total
December 31, 2017	1,578	328	2,947	4,853
Provisions	1	-	1,142	1,143
Utilisations	(49)	(82)	(1,040)	(1,171)
Release	(166)	(28)	(290)	(484)
Change in consolidation scope	-	-	2,617	2,617
Translation differences	(4)	(0)	34	30
June 30, 2018	1,360	217	5,410	6,988
Change	(218)	(111)	2,463	2,135

The allowance for inventory write-down at June 30, 2018 increased by Euro 2,135 thousand, principally due to the change in the consolidation scope.

Note 9 – Trade Receivables and Other Assets

Trade receivables and other assets amount to Euro 237,650 thousand (Euro 132,768 thousand at December 31, 2017).

Note 9.A - TRADE RECEIVABLES AND OTHER ASSETS
Euro thousands	June 30, 2018	December 31, 2017	Change
Trade Receivables	221,431	118,701	102,730
Tax Assets	4,674	5,198	(524)
Other Assets	6,168	5,560	608
Prepayments and Accrued Income	5,377	3,309	2,068
Total	237,650	132,768	104,882

Trade receivables increased on December 31, 2017 by Euro 102,730 thousand, which, net of the positive exchange rate effects for Euro 952 thousand and net of the change in the consolidation scope of Euro 47,950 thousand, amounts to Euro 53,828 thousand, mainly concerning F.I.L.A. S.p.A., Dixon Ticonderoga Company (U.S.A.) and Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico). This is in line with business seasonality and receivables at their highest during the middle months of the year as

revenue is principally generated during the "Schools campaign". In addition, application of IFRS 9 to the Group financial statements resulted in a reduction in trade receivables of Euro 2,938 thousand.

The changes in credit loss allowance to cover difficult recovery positions are illustrated in the table below.

Note 9.B - CHANGES IN CREDIT LOSS ALLOWANCE
Euro thousands
December 31, 2017	5,262
Provisions	1,502
Utilisations	(95)
Release	(2)
Translation differences	43
Other variation - IFRS 9	2,060
June 30, 2018	8,770
Change	3,508

The movement in credit loss allowance is mainly due to the effects of application of IFRS 9 on the F.I.L.A. Group companies. IFRS 9 replaces the 'incurred loss' model under IAS 39 with an 'expected credit loss' forecast model. The Group measures the credit loss allowance at an amount reflecting the expected loss over the entire life of the receivable. In order to assess whether the credit risk relating to a financial asset has increased significantly after initial recognition in order to estimate expected losses on receivables, the Group considers reasonable and demonstrable information which is pertinent and available without excessive cost or burden. Quantitative and qualitative information and analysis, based on historic Group experience, to measure the receivable - in addition to information indicative of expected developments - is included. On the basis of the analysis carried out by the Group, the application of the new standard impacted the opening balance by Euro 2,060 thousand and the period income statement for Euro 878 thousand. The initial movement was recognised as a counter-entry as a change in Equity reserves.

"Tax Assets" totalled Euro 4,674 thousand (Euro 5,198 thousand at December 31, 2017) and include VAT assets (Euro 3,054 thousand) and other tax assets for local taxes other than direct income taxes (Euro 1,620 thousand).

"Other Assets" amount to Euro 6,168 thousand (Euro 5,560 thousand at December 31, 2017) and mainly concern employee receivables (Euro 198 thousand), social security institutions (Euro 49 thousand) and advances paid to suppliers (Euro 4,447 thousand), principally concerning the Indian

and Chinese subsidiaries. The carrying amount of "Other Assets" represents the "fair value" at the reporting date.

All of the above receivables are due within 12 months.

Note 10 - Cash and Cash Equivalents

"Cash and Cash Equivalents" at June 30, 2018 amount to Euro 38,766 thousand (Euro 38,558 thousand at December 31, 2017).

	Bank and Post Office	Cash in hand and	Total
Euro thousands	Deposits	similar
December 31, 2017	38,491	6 7	38,558
June 30, 2018	38,620	146	38,766
Change	129	7 9	208

"Bank and post office deposits" consist of temporary liquidity positions generated within the treasury management and mainly relating to ordinary current accounts of F.I.L.A. S.p.A. for Euro 13,768 thousand and current accounts of the subsidiaries for Euro 24,852 thousand, in particular: the Canson Group companies (Euro 2,080 thousand), F.I.L.A.-Dixon, S.A. de C.V. (Euro 1,421 thousand), FILA Dixon Stationery (Kunshan) Co. Ltd (Euro 1,720 thousand), FILA Hellas S.A (Euro 901 thousand), Dixon Ticonderoga Company (Euro 1,485 thousand), the German subsidiary Lyra KG (Euro 627 thousand) and the companies of the Pacon Group (Euro 3,210 thousand).

"Cash in hand and similar" amount to Euro 146 thousand, of which Euro 8 thousand relates to the Parent F.I.L.A. S.p.A and Euro 138 thousand to the various subsidiaries.

The carrying amount approximates the "Fair Value" at the reporting date.

Bank and post office deposits are remunerated at rates indexed to inter-bank rates such as Libor and Euribor.

There are no bank and postal deposits subject to restrictions.

Reference should be made to the paragraph: "Statement of Financial Position" for comments relating to the Net Financial Debt of the F.I.L.A. Group.

Note 11 - Net Financial Debt

The F.I.L.A. Group "Net Financial Debt" at June 30, 2018 was Euro 612,657 thousand, worsening by Euro 373,043 thousand on December 31, 2017.

Euro thousands	June 30, 2018	December 31, 2017	Change
Cash A	146	67	79
Other cash equivalents B	38,620	38,491	129
Securities held-for-trading C	-	-	-
D Liquidity ( A + B + C)	38,766	38,558	208
E Current Loan Assets	492	419	7 3
Current bank loans and borrowings F	(101,226)	(72,724)	(28,502)
Current portion of non-current loans and borrowings G	(27,193)	(18,710)	(8,483)
Other current loans and borrowings H	(271)	(8,239)	7,968
I Current financial debt ( F + G + H )	(128,690)	(99,673)	(29,017)
J Net current financial debt (I + E+ D)	(89,432)	(60,696)	(28,736)
Non-current bank loans and borrowings K	(522,358)	(178,420)	(343,938)
Bonds issued L	-	-	-
M Other non-current loans and borrowings	(1,138)	(504)	(634)
N Non-current financial debt ( K + L + M )	(523,496)	(178,924)	(344,572)
O Net financial debt (J+N)	(612,928)	(239,620)	(373,308)
P Loans issued to third parties	271	6	265
Q Net financial debt (O + P) - F.I.L.A. Group	(612,657)	(239,614)	(373,043)
Note:

1) The net financial debt calculated at point "O" complies with Consob Communication DEM/6064293 of July 28, 2006, which excludes non-current loan assets.The net financial debt of the F.I.L.A. Group differs from the above communication by Euro 6 thousand in relation to the non-current loans granted to third parties by Omyacolor S.A and Pacon Corporation

2) At June 30, 2018 there were no related parties transactions which impacted the net financial debt.

Reference should be made to the paragraph: "Statement of Financial Position" for comments relating to the Net Financial Debt of the F.I.L.A. Group.

Note 12 - Share Capital and Equity

Share Capital

The subscribed and fully paid-in share capital at June 30, 2018 of the parent F.I.L.A. S.p.A., fully paid-in, comprises 41,332,477 shares, as follows:

34,765,969 ordinary shares, without nominal value;
6,566,508 class B shares, without nominal value, which attribute 3 votes exercisable at the Shareholders' Meeting (ordinary and extraordinary) of F.I.L.A. S.p.A..

The breakdown of the share capital of F.I.L.A. S.p.A. is illustrated below.

		No. of Shares % of Share Capital	Listing
Ordinary shares	34,765,969	84.11%	MTA - STAR Segment
Class B Shares (multiple votes)	6,566,508	15.89%	Unquoted Shares

According to the available information, published by Consob and updated to June 30, 2018, the main shareholders of the parent were:

Shareholder	Ordinary shares	%
Pencil S.p.A.	13,133,032	37.78%
Venice European Investment Capital S.p.A.	3,741,799	10.76%
Space Holding S.r.l.	597,150	1.72%
Market Investors	17,293,988	49.74%
Total	34,765,969

Shareholder	Ordinary shares	Class B Shares	Total	Voting rights

Pencil S.p.A.	13,133,032	6,566,508	19,699,540	60.28%
Venice European Investment Capital S.p.A.	3,741,799		3,741,799	6.87%
Space Holding S.r.l.	597,150		597,150	1.10%
Market Investors	17,293,988		17,293,988	31.75%
Total	34,765,969	6,566,508	41,332,477

Each ordinary share attributes voting rights without limitations.

Each class B share attributes three votes, in accordance with Article 127-sexies of Legislative Decree No. 58/1998.

Legal Reserve

At June 30, 2018, this caption amounted to Euro 7,434 thousand.

Share premium reserve

The caption amounts to Euro 65,349 thousand at June 30, 2018 (Euro 65,349 thousand at December 31, 2017).

We highlight in addition the restriction on the distribution of a portion of the share premium reserve related to the revaluation of the investment held in the company DOMS Industries Pvt Ltd (Euro 15,052 thousand), in accordance with Article 6, paragraph 1, letter a) of Legislative Decree No. 38 of February 28, 2015, following the purchase of the majority shareholding.

Sponsor Warrants

At June 30, 2018, no sponsor warrants had been exercised.

Actuarial gains/(losses)

Following the application of IAS 19, the equity reserve is negative for Euro 450 thousand, increasing in the period to Euro 1,221 thousand, limited to the share of the F.I.L.A. Group.

Other Reserves

At June 30, 2018, the reserve is negative for Euro 21,212 thousand, increasing Euro 808 thousand on December 31, 2017. The increase concerns the following factors:

The IRS fair value reserve on contracts entered into by F.I.L.A. S.p.A. and Canson SAS at June 30, 2018 was negative for Euro 50 thousand, recording a decrease of Euro 1,068 thousand compared to December 31, 2017. The movement relates for Euro 15 thousand to the fair value adjustment of the derivative of Canson SAS and, for Euro 1,053 thousand, the elimination of the reserve recorded by F.I.L.A. S.p.A. following the settlement of derivative contracts and the underlying loan.
"Share Based Premium" reserve of Euro 2,571 thousand, increasing Euro 262 thousand, set up against the incentive plan for F.I.L.A. Group Management. The accounting treatment applied is in line with the accounting standards which establish that for equity share based payments, the Fair Value at the vesting date of the share options granted to employees is recorded under personnel expenses, with a corresponding increase in equity within the caption "Other reserves and retained earnings", over the period in which the employees will obtain the unconditional right to the incentives. The amount recorded as cost is adjusted to reflect

the effective number of incentives (options) for which the conditions have matured and the achievement of "non-market" conditions, in order that the final cost recorded is based on the number of incentives which will mature. Similarly, in the estimate of the fair value of the options assigned, consideration must be taken of the non-vesting conditions. With reference to the non-vesting conditions, any differences between the assumptions at the vesting date and the effective conditions will not produce any impact on the financial statements.

Translation difference

The caption refers to the exchange differences relating to the translation of the financial statements of subsidiaries prepared in local currencies and translated into Euro as the consolidation currency.

The changes in the "Translation Difference" concerning only the Group Equity for H1 2018 is as follows:

TRANSLATION RESERVE
Euro thousands
December 31, 2017	(26,836)
Changes in the year:
Difference between Period Average Rate and Year-End Rate	765
Difference between Historical Rate and Year-End Rate	2,508
June 30, 2018	(23,563)
Change	3,273

Retained earnings

The reserve totalled Euro 148,939 thousand and increased on the previous year by Euro 10,890 thousand, principally due to:

The distribution of dividends to F.I.L.A. S.p.A. shareholders for Euro 3,720 thousand, as per Shareholders' Meeting resolution of April 27, 2018;
The allocation of profit 2017 of Euro 15,767 thousand;
The first-time application of IFRS 9 which resulted in a fair value adjustment to trade receivables of the Group companies, with an estimated effect on opening equity of Euro 1,157 thousand (Euro 2,060 thousand concerning the adjustment of receivables offset by the relative tax effect estimated at Euro 903 thousand).

Equity attributable to non-controlling interests

The caption decreased by Euro 339 thousand, principally due to:

Profit of Euro 658 thousand;
Distribution of dividends to Non-controlling investors of Euro 42 thousand;

Exchange rate losses of Euro 948 thousand.

Basic and diluted earnings per share

The basic earnings per share is calculated by dividing the profit (loss) of the Group by the weighted average number of ordinary shares outstanding during the year, excluding any treasury shares in portfolio.

The diluted earnings/(loss) per share is calculated by dividing the profit (loss) of the company by the weighted average number of ordinary shares outstanding during the year and those potentially arising from the conversion of all potential ordinary shares with dilutive effect.

The basic and diluted earnings per share is reported in the Statement of Comprehensive Income, to which reference should be made.

The table below illustrates the reconciliation between the equity of the Parent F.I.L.A. S.p.A. and the consolidated equity and the reconciliation between the profit of the Parent F.I.L.A. S.p.A. and the consolidated profit:

Euro thousands
F.I.L.A. S.p.A. Equity	166,143
Effect of elimination of Intragroup margins and consolidation entries	(3,105)
Consolidation effect Omyacolor S.A. (France)	8,173
Consolidation effect F.I.L.A. Hispania S.A. (Spain)	2,731
Consolidation effect FILA Art and Craft (Israel)	(83)
Consolidation effect Dixon Ticonderoga Group	70,005
Consolidation effect Lyra Group	612
Consolidation effect FILA Stationary and Office Equipment Industry Ltd. Co. (Turkey)	(2,477)
Consolidation effect FILA Stationary O.O.O. (Russia)	(739)
Consolidation effect FILA Hellas (Greece)	1,420
Consolidation effect Industria Maimeri S.p.A. (Italy)	(557)
Consolidation effect FILA SA (South Africa)	(970)
Consolidation effect Fila Polska Sp. Z.o.o (Poland)	768
Consolidation effect DOMS Industries Pvt Ltd (India)	20,858
Consolidation effect Daler-Rowney Lukas Group	(12,987)
Consolidation effect St Cuthberts Holding (UK)	725
Consolidation effect FILA Iberia S.L. (Spain)	2,514
Consolidation effect Canson Group	(10,825)
Consolidation effect FILA Art Product AG (Switzerland)	(151)
Consolidation effect Pacon Group	1,317
Total Equity	243,372
"Non-controlling interests" consolidation effect	24,289
Consolidated Equity	219,083

Reconciliation June 30, 2018 between Parent Equity and F.I.L.A. Group Equity

Reconciliation at June 30, 2018 between Parent Result and F.I.L.A. Group Result

Euro thousands
F.I.L.A. S.p.A. Profit	3,591
Profit of Subsidiaries of the Parent	14,804
Elimination of the effects of transactions between consolidated companies:
Dividends	(13,082)
Net Inventory Profit Margins	1,003
Other Net Revenue	120
Adjustments to Group accounting policies:
Stock Option Plan	(111)
First-Time Adoption - IFRS 9	(342)
Total Profit	5,983
Non-controlling interests	658
F.I.L.A. Group Profit	5,325

Note 13 – Loans and Borrowings

The balance at June 30, 2018 amounts to Euro 652,136 thousand (Euro 278,562 thousand at December 31, 2017), of which Euro 523,446 thousand long-term and Euro 128,690 thousand shortterm. The caption refers to both non-current and current portions of the loans granted by banking institutions, other lenders and bank overdrafts.

The breakdown at June 30, 2018 is illustrated below.

			Note 13.A - LOAN AND BORROWINGS: Third Parties
	Banks		Other Lenders		Bank Overdrafts
Euro thousands	Principal	Interest	Principal	Interest	Principal	Interest	Total
December 31, 2017	254,695	(3,146)	8,762	(54)	18,133	172	278,562
non-current portion	181,820	(3,400)	513	(44)	-	-	178,889
current portion	72,875	254	8,249	(10)	18,133	172	99,673
June 30, 2018	644,055	(5,921)	1,408	(49)	12,593	5 0	652,136
non-current portion	528,534	(6,176)	1,132	(44)	-	-	523,446
current portion	115,521	255	276	(5)	12,593	50	128,690
Change	389,360	(2,775)	(7,354)	5	(5,540)	(122)	373,574
non-current portion	346,714	(2,776)	619	(0)	-	-	344,557
current portion	42,646	1	(7,973)	5	(5,540)	(122)	29,017

Bank Loans and Borrowings

With reference to "Bank Loans", the total exposure of the Group amounts to Euro 638,134 thousand, of which Euro 115,776 thousand considered as current (Euro 73,129 thousand at December 31, 2017) and Euro 522,358 thousand as non-current (Euro 178,420 thousand at December 31, 2017).

The main change concerns the agreement of a new loan by F.I.L.A. S.p.A. and Dixon Ticonderoga Company (U.S.A.) on June 4, 2018. The structured loan in question was entered into by the two companies with a bank syndicate comprising Mediobanca - Banca di Credito Finanziario S.p.A., UniCredit S.p.A., Banca IMI S.P.A., Banco BPM S.P.A. and Banca Nazionale del Lavoro S.P.A., and in support of the acquisition of Pacon Holding Company, parent of the Pacon Group. In addition, part of the loan granted to F.I.L.A. S.p.A. was utilised to repay the previous loan entered into in 2016 (in support of M&A regarding the acquisition of the Daler-Rowney Lucas Group, the Canson Group and St. Cuthberts Holding) and was subsequently increased in the initial months of 2018 with a further extension of Euro 30,000 thousand. On signing a new Senior Facility Agreement on June 4, 2018, the existing loan was settled for a total amount of Euro 220,276 thousand.

The loan was issued through three differing Facilities with a set repayment plan and a total amount of Euro 520,000 thousand, in addition to a Revolving Credit Facility with a maximum Euro 50,000 thousand.

Note 13.C - BANKS LOANS AND BORROWINGS:DETAIL
Euro thousands	Principal F.I.L.A. S.p.A.	Principal Dixon Ticonderoga Company (U.S.A.)	Total
Facility A	75,000	75,000	150,000
Facility B	90,000	155,000	245,000
Facility C	125,000	0	125,000
RCF(1)	5,662	20,708	26,370
Total	295,662	250,708	546,370

(1) Revolving Credit Facility usable for a maximum value equal to 50,000 thousand Euro

The Facility A line (Euro 150,000 thousand) provides for a repayment plan consisting of 8 half-yearly instalments from December 2019, while the two lines Facility B (Euro 245,000 thousand) and Facility C (Euro 125,000 thousand) are Bullet loans, with single repayments respectively on June 4, 2024 and June 4, 2023. The Revolving Credit Facility however provides for the issue of short-term tranches of 1, 3 or 6 months, for a maximum amount of Euro 50,000 thousand.

The repayment plans by Facility are outlined below:

Note 13.D - BANKS LOANS AND BORROWINGS REPAYMENT PLAN
Euro thousands	Facility	Principal F.I.L.A. S.p.A.	Principal Dixon Ticonderoga Company (U.S.A.)	Total
December 4, 2019	Facility A	3,750	3,750	7,500
June 4, 2020	Facility A	3,750	3,750	7,500
December 4, 2020	Facility A	5,625	5,625	11,250
June 4, 2021	Facility A	5,625	5,625	11,250
December 6, 2021	Facility A	7,500	7,500	15,000
June 6, 2022	Facility A	7,500	7,500	15,000
December 5, 2022	Facility A	11,250	11,250	22,500
June 2, 2023	Facility A	30,000	30,000	60,000
Total - Facility A		75,000	75,000	150,000
Bullet Loan - June 4, 2024	Facility B	90,000	155,000	245,000
Total - Facility B		90,000	155,000	245,000
Bullet Loan - June 4, 2023	Facility C	125,000	0	125,000
Totale - Facility C		125,000	-	125,000

The loan was initially recognised at fair value, including directly associated transaction costs. The initial carrying amount was subsequently adjusted to account for repayment of principal, any

impairment loss and amortisation of the difference between the repayment value and initial carrying amount. Amortisation is made on the basis of the internal effective interest rate represented by the rate equal to, at the moment of initial recognition, the present value of expected cash flows and the initial carrying amount (amortised cost method). The effect at June 30, 2018 of the amortised cost method is Euro 188 thousand of interest (Euro 89 thousand concerning F.I.L.A. S.p.A. and Euro 99 thousand concerning Dixon Ticonderoga U.S.A.).

Net of the loan of F.I.L.A. S.p.A. (Euro 290,000 thousand) and Dixon Ticonderoga (Euro 231,206 thousand, including Euro 1,206 thousand of currency conversion effects) and considering an adjustment in application of the Amortised Cost of Euro 6,176 thousand, the residual value of noncurrent loans and borrowings amounts to Euro 7,328 thousand and principally relates to the noncurrent portion of the loans granted to:

Industria Maimeri S.p.A. (Italy) by BPER and Creval for Euro 114 thousand;
DOMS Industries Pvt Ltd (India) by HDFC Bank for Euro 735 thousand;
Lyra KG (Germany) by Hypo Real Estate for Euro 129 thousand;
Canson SAS (France) by Intesa Sanpaolo S.p.A. for Euro 6,350 thousand.

The current portion of banks loans and borrowings amounts to Euro 115,776 thousand, increasing by Euro 42,647 thousand on 2017, and is mainly due to the greater utilisation of the credit lines granted to the companies of the Group and to the seasonality of business activities which concentrate funding requirements in the middle of the year, against an improvement in cash flows at the end of the year. The main exposure of the Group companies to credit institutions concerns:

Credit Line issued by Unicredit S.p.A., Intesa Sanpaolo and Bank of the West and the Revolving Credit Facility described previously, in favour of Dixon Ticonderoga Company (U.S.A.), with a total exposure at June 30, 2018 of Euro 51,882 thousand, increasing by Euro 34,292 thousand on December 2017 and including negative currency effects of Euro 505 thousand;
Credit Lines granted by Banamex S.A., Grupo Financiero BBVA Bancomer S.A., Banco Santander S.A., Banco Sabadell S.A. and Scotiabank Inverlat S.A. to Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico) for a total of Euro 40,637 thousand. During the period, total bank loans and borrowings increased by Euro 19,288 thousand, of which Euro 727 thousand due to the negative exchange rate effect;
Credit Lines issued to Lyra KG (Germany) by Commerzbank and HVB for Euro 7,400 thousand. The current debt of the German company in addition comprises the current portion of loans issued by Hypo Real Estate for Euro 229 thousand. The company's total financial exposure increased by Euro 1,902 thousand on 2017.
Tranche of the Revolving Credit Facility issued in favour of F.I.L.A. S.p.A. of Euro 5,662 thousand;
Credit line granted in favour of Fila Dixon Stationery (Kunshan) Co., Ltd. (China) by Intesa Sanpaolo S.p.A. and UniCredit S.p.A. for Euro 2,463 thousand, decreasing on December 2017 for Euro 971 thousand;
The current portion of the loan and the credit lines granted to DOMS Industries Pvt Ltd (India) by HDFC Bank for Euro 1,845 thousand; the exposure increased by Euro 613 thousand on December 2017;
Short-term loan granted to FILA Stationary and Office Equipment Industry Ltd. Co. (Turkey) by TEB for Euro 1,888 thousand;
Credit line granted by Intesa Sanpaolo to Xinjiang for Euro 1,315 thousand, increasing by Euro 18 thousand on December 31, 2017.

Covenants

The F.I.L.A. Group, against the loan agreed with leading credit institutions (UniCredit S.p.A., Intesa Sanpaolo S.p.A., Mediobanca Banca di Credito Finanziario S.p.A. and Banca Nazionale del Lavoro S.p.A.) is subject to commitments and "covenants".

Covenants are verified half-yearly and annually. In particular, the covenants on the loan contracts concern: Net Financial Debt (NFD), EBITDA ("Earnings Before Interest, Tax, Depreciation and Amortisation") and Net Financial Charges (NFC), calculated on the F.I.L.A. Group interim and annual consolidated financial statements prepared as per IFRS.

The criteria for the calculation of the NFD, the EBITDA and the NFC are established by the relative loan contract.

The covenants for the loan agreed by F.I.L.A. S.p.A. and Dixon Ticonderoga Company (U.S.A.) are outlined below, although applied from December 31, 2018:

NFD / EBITDA < 5.50 (where a share capital increase in excess of Euro 90 million is not made). NFD / EBITDA < 4.50 (where a share capital increase in excess of Euro 90 million is not made). EBITDA / NFC > 3.50

As required by Consob Communication No. DEM/6064293 of 28/07/2006, we report that the impact of non-compliance with the covenants as established by the underlying contracts essentially concerns the possibility that the lending banks may revoke the loan contract and/or declare forfeiture of the repayment conditions upon all or part of the loans.

Loans and Borrowings - Other

"Loans and Borrowings - Other" at June 30, 2018 totalled Euro 1,359 thousand (Euro 8,708 thousand at December 31, 2017), with the current portion totalling Euro 271 thousand at June 30, 2017 (Euro 8,239 thousand at December 31, 2017).

The decrease on the previous year end relates mainly to the settlement of loans and borrowings of Euro 7,500 thousand of F.I.L.A. S.p.A. in 2017 following the application of the price adjustment mechanism on the Canson Group, based on the achievement of earnings objectives.

Loans and Borrowings - Overdrafts

"Overdrafts" amounted to Euro 12,643 thousand (Euro 18,305 thousand at December 31, 2017) and concern the overdrafts principally of F.I.L.A. S.p.A. (Euro 3,017 thousand), Industria Maimeri S.p.A. (Euro 5,367 thousand), Canson SAS (Euro 3,156 thousand) and Fila Stationary O.O.O. (Euro 824 thousand).

The movement on December 2017 mainly relates to F.I.L.A. S.p.A. against the use for Euro 5,662 thousand of the Revolving Credit Facility under the loans signed on June 4, 2018 and classified to "Bank Loans and Borrowings".

Note 14 - Employee Benefits

The F.I.L.A. Group companies guarantee post-employment benefits for employees, both directly and through contributions to external funds.

The means for accruing these benefits varies according to the legal, fiscal and economic conditions of each Country in which the Group operates. These benefits are based on remuneration and years of employee service.

The benefits paid to employees of the Parent F.I.L.A. S.p.A. concern salary-based Post-Employment Benefits, governed by Italian legislation and in particular Article 2120 of the Italian Civil Code. The amount of these benefits is in line with the contractually-established remuneration agreed between the parties on hiring.

The other Group companies, particularly Omyacolor S.A. (France), Dixon Ticonderoga Company (U.S.A.), Grupo F.I.L.A.-Dixon, S.A. de C.V. (Mexico), Daler Rowney Ltd (United Kingdom) and Canson SAS (France), guarantee post-employment benefits, both through defined contribution and defined benefit plans.

In the case of defined contribution plans, the Group companies pay the contributions to public or private insurance institutions based on legal or contractual obligations, or on a voluntary basis. With

the payment of contributions, the companies fulfill all of their obligations. The cost is accrued based on employment rendered and is recorded under personnel expense.

The defined benefit plans may be unfunded, or they may be partially or fully funded by the contributions paid by the company, and sometimes by its employees to a company or fund, legally separate from the company which provides the benefits to the employees. The funds provide for a fixed contribution by the employees and a variable contribution by the employer, necessary to at least satisfy the funding requirements established by law and regulation in the individual countries.

Finally, the Group pays to employees other long-term benefits, generally issued on the reaching of a fixed number of years of service or in the case of invalidity. In this instance, the obligation recognized in the financial statements reflects the probability that the payment will be issued and the duration for which payment will be made. The amount of these plan is calculated on an actuarial basis, utilising the "projected unit credit" method.

The amounts at June 30, 2018 were as follows:

Euro thousands	Post-employment benefits (Italy)	Other Employee benefits	Total
December 31, 2017	2,391	6,345	8,736
Disbursements	(230)	(918)	(1,147)
Financial Expense	4	(11)	(7)
Pension Cost for Service	213	1,112	1,325
IAS 19 Reserve	65	(1,593)	(1,528)
Translation differences	-	28	28
June 30, 2018	2,443	4,963	7,406
Change	5 2	(1,382)	(1,330)

The "Actuarial Losses" totaled Euro 1,528 thousand, recognised net of the fiscal effect directly in equity.

The following table outlines the amount of employee benefits, broken down by funded and unfunded by plan assets over the last two years:

EMPLOYEE BENEFIT PLANS
1. Employee Benefits Obligations	June 30, 2018	December 31, 2017
Present Value of Obligations Not Covered by Plan Assets	2,443	2,391
	2,443	2,391
Present Value of Obligations Covered by plan assets	8,115	9,507
Fair Value of Plan Assets Relating to the Obligations	(3,152)	(3,162)
	4,963	6,345
Total	7,406	8,736

The loan assets at June 30, 2018 invested by the F.I.L.A. Group to cover loans and borrowings related to "Employee Benefits" amount to Euro 3,152 thousand (Euro 3,162 thousand at December 31, 2017) and refer to Dixon Ticonderoga Company (Euro 2,102 thousand) and F.I.L.A.-Dixon, S.A. de C.V. (Euro 1,050 thousand). The financial investments have an average yield of 4.5% on invested capital (equally broken down between investments in the "Ticket PFG" fund and investments in guaranteed yield contracts). The "structure" of financial investments at June 30, 2018 did not change on the previous year.

The table below highlights the net cost of employee benefit components recognised to the income statement:

2. Cost Recognised in profit or loss	June 30, 2018	December 31, 2017
Pension Cost for Service	1,325	2,911
Financial Expense	(7)	194
Cost Recognised in profit or loss	1,318	3,105

The principal actuarial assumptions used for the estimate of the post-employment benefits were the following:

3. Main Actuarial Assumptions at Reporting Date (average values)	June 30, 2018	December 31, 2017
Annual Technical Discounting Rate	3.3%	3.3%
Increase in Cost of Living index	3.7%	3.7%
Future Increase in Salaries	3.2%	3.2%
Future Increase in Pensions	2.1%	2.7%

Note 15 - Provision for Risks and Charges

"Provision for Risks and Charges" at June 30, 2018 amount to Euro 6,723 thousand (Euro 5,012 thousand at December 31, 2017), of which Euro 2,495 thousand (Euro 2,095 thousand at December 31, 2017) concerning the non-current portion and Euro 4,228 thousand (Euro 2,917 thousand at December 31, 2017) concerning the current portion.

Note 15A - PROVISIONS FOR RISKS AND CHARGES
	Provisions for Tax Disputes	Provisions for Legal Disputes	Provisions for Agents	Restructuring Provisions	Other Provisions	Total
Euro thousands
December 31, 2017	159	213	794	1,957	1,889	5,012
non-current portion current portion	- 159	- 213	761 33	- 1,957	1,334 555	2,095 2,917
June 30, 2018	159	200	741	1,950	3,673	6,723
non-current portion current portion	- 159	- 200	695 46	- 1,950	1,800 1,873	2,495 4,228
Change	-	(13)	(53)	(7)	1,784	1,711
non-current portion current portion	- -	- (13)	(66) 13	- (7)	466 1,318	400 1,311

The movement in "Provision for Risks and Charges" at June 30, 2018 was as follows:

Note 15.B PROVISION FOR RISKS AND CHARGES: CHANGES IN YEAR
	Provisions for Tax Disputes	Provisions for Legal Disputes	Provisions for Agents	Restructuring Provisions	Other Provisions	Total
Euro thousands
December 31, 2017	159	213	794	1,957	1,889	5,012
Utilisation of Provisions	-	-	(180)	(828)	(126)	(1,134)
Provisions Accrued	-	-	55	832	284	1,171
Release provision for risks and charges	-	-	-	-	-	-
Discounting	-	-	72	-	-	72
Change in consolidation scope	-	-	-	-	1,600	1,600
Exchange Differences	-	(13)	-	(11)	26	2
June 30, 2018	159	200	741	1,950	3,673	6,723
Change	-	(13)	(53)	(7)	1,784	1,711

Provisions for Tax Disputes

This provision represents the best estimate by management of tax liabilities concerning:

F.I.L.A. S.p.A., concerning the 2004 tax period and relating to direct and indirect taxes (Euro 39 thousand);
Lyra KG (Germany), penalty regarding the current tax audit (Euro 120 thousand).

Provisions for Legal Dispute

The provision concerns accruals made in relation to:

Legal proceedings arising from ordinary operating activities;
Legal proceedings concerning disputes with employees or former employees and agents.

The provision remained unchanged compared to the previous year, with the exception of Euro 13 thousand deriving from exchange differences.

Pensions and Similar Provisions

The caption includes the agents' supplementary indemnity provision at June 30, 2018 of the parent F.I.L.A. S.p.A. and of the subsidiaries Industria Maimeri S.p.A. and Canson Italia S.r.l.. The actuarial loss for H1 2018 was Euro 72 thousand. The actuarial changes in the year, net of the tax effect, are recognised directly in equity.

Restructuring Provisions

For the integration and alteration of the Group structure following the corporate transactions of recent years, a number of companies established provisions for risks and charges concerning personnel mobility plans for a total of Euro 1,950 thousand. The plans involved in particular Canson SAS (France), Industria Maimeri S.p.A., Lukas-Nerchau GmbH (Germany) and Daler Rowney GmbH (Germany), as per the structural reorganisation projects drawn up by the parent.

Other Provisions

The caption totals Euro 3,673 thousand and principally concerns the subsidiaries Dixon Ticonderoga Company (U.S.A.) and Pacon Corporation (U.S.A.) and F.I.L.A. S.p.A.. Dixon Ticonderoga Company (U.S.A.) recognized provisions for risks concerning environmental reclamation (Euro 391 thousand) relating to actions undertaken in the US in the period prior to acquisition by F.I.L.A. S.p.A.. Reclamation times and estimates will be revised by management until completion. No further disposal and environmental reclamation costs are expected following the reorganisation process involving the F.I.L.A. Group sites.

Pacon Corporation (U.S.A.), part of the Pacon Group acquired on June 7, 2018, reports employee liabilities totalling Euro 1,625 thousand in its financial statements.

The parent F.I.L.A. S.p.A. accrued, taking account of the information available and the best estimate made by management, Euro 1,449 thousand against liabilities deriving from the medium/long-term variable remuneration plan for a number of strategic executives of the company. The plan, approved by the Remuneration Committee and ratified by the Board of Directors, is indexed to quantitative and qualitative parameters. The Provision, discounted at December 31, 2017, was not subject in the period to discounting as maturing within 12 months.

In order to establish the best estimate of the contingent liability, each F.I.L.A. Group company assesses legal proceedings individually to estimate the probable losses which generally derive from similar events. The best estimate considers, where possible and necessary, the opinion of legal consultants and other experts, the prior experience of the company, in addition to the intention of the company itself to undertake further actions in each case. The provision in F.I.L.A. Group's consolidated financial statements concerns the sum of the individual accruals made by each Group company.

Note 16 - Deferred tax liabilities

"Deferred Tax Liabilities" amount to Euro 42,347 thousand at June 30, 2018 (Euro 39,241 thousand at December 31, 2017).

Note 16.A CHANGES IN DEFERRED TAX LIABILITIES
Euro thousands
December 31, 2017	39,241
Provisions	479
Utilisations	(1,254)
of which Change in Consolidation Scope	(4)
Translation differences	(442)
Change in Equity	(36)
Variation in Consolidation Scope	4,359
June 30, 2018	42,347
Change	3,106

The movement on the previous year is principally due to the release of deferred taxes provisioned on the higher value of property, plant and equipment and intangible assets recorded through the "purchase price allocation" on the companies acquired during the preceding years (in particular the Canson Group, the Daler-Rowney Lukas and DOMS Industries PVT Ltd). Against the gradual amortisation and depreciation of the assets so calculated, the company gradually released the relative deferred taxes.

The change in the Equity represents the tax effect of the "Actuarial Gains/Losses" calculated on the "Post-Employment Benefits and Employee Benefits" and recognised, in accordance with IAS 19, as an Equity reserve.

Note 17 - Financial Instruments

"Financial Instruments" amount to Euro 50 thousand at June 30, 2018 (Euro 35 thousand at December 31, 2017) and concern the fair value of the derivatives on the loan (hedged instrument) issued in favour of Canson SAS (France) in 2017. The financial instrument (Interest Rate Swap) classified as a hedge, present characteristics in line with those of the hedged instrument, such as the same maturity and the same repayment plan broken down into quarterly instalments with interest in arrears, in addition to a variable interest rate indexed to the Euribor at 3 months.

The accounting treatment adopted for the hedging instruments, based on IAS 39, is based on hedge accounting and in particular that concerning "cash flow hedges" and involving the recognition of a financial asset or liability and an equity reserve.

Note 18 - Tax Liabilities

"Tax liabilities" total Euro 13,838 thousand at June 30, 2018 (Euro 8,448 thousand at December 31, 2017), relating mainly to the parent (Euro 1,123 thousand), Dixon Ticonderoga Company (Euro 3,823 thousand), the Indian company DOMS Industries Pvt Ltd (Euro 2,382 thousand) and Pacon Corporation (Euro 1,943 thousand).

Note 19 - Trade Payables and Other Liabilities

"Trade Payables and Other Liabilities" at June 30, 2018 amount to Euro 128,639 thousand (Euro 96,263 thousand at December 31, 2017). The breakdown of "Trade Payables and Other Liabilities" of the F.I.L.A. Group is reported below:

Note 19.A TRADE PAYABLES AND OTHER LIABILITIES
Euro thousands	June 30, 2018	December 31, 2017	Change
Trade Payables	96,744	68,374	28,370
Tax Liabilities	7,211	7,096	115
Other Liabilities	23,282	19,416	3,866
Accrued Expenses & Def.Income	1,402	1,377	25
Total	128,639	96,263	32,376

The increase in "Trade Payables" (Euro 28,370 thousand) is partly due to the acquisition of the Pacon Group, the payables of companies subject to M&A at June 30, 2018 amount in fact to Euro 11,910 thousand, and partly due to business seasonality, with procurement concentrated in the initial months of the year in support of production and supplies for peak sales concentrated in the middle months of the year.

The carrying amount of trade payables at the reporting date approximates their "fair value".

The trade payables reported above are due within 12 months.

"Tax Liabilities" to third parties amount to Euro 7,211 thousand at June 30, 2018 (Euro 7,096 thousand at December 31, 2017), of which Euro 5,305 thousand refers to VAT liabilities and Euro 1,906 thousand to tax liabilities other than current taxes. The VAT liabilities principally concerns the Mexican subsidiary (Euro 2,003 thousand).

"Other Liabilities" amount to Euro 23,282 thousand at June 30, 2018 and principally include:

Employee salary payables of Euro 13,032 thousand (Euro 9,671 thousand at December 31, 2017);
Social security contributions to be paid of Euro 4,584 thousand (Euro 4,946 thousand at December 31, 2017);
Payables for agent commissions of Euro 313 thousand (Euro 241 thousand at December 31, 2017);
The residual payables of Euro 5,353 thousand principally concerning advances to clients (Euro 4,558 thousand at December 31, 2017).

The carrying amount of "Tax Liabilities", "Other Liabilities" and "Accrued Expenses and Deferred Income" at the reporting date approximates their fair value.

With reference to the other non-current liabilities, the balance at June 30, 2018 amounted to Euro 90 thousand and refers to deposits paid by clients to guarantee long-term supply contracts of the Indian company DOMS Industries Pvt Ltd (India).

Note 20 – Core Revenue

Core revenue in the first half of 2018 amounted to Euro 259,140 thousand (Euro 260,543 thousand in H1 2017).

Note 20.A - CORE REVENUE
Euro thousands	First Half of 2018	First Half of 2017	Change
Revenue from Sales and Services	273,704	274,200	(497)
Adjustments on Sales	(14,563)	(13,657)	(906)
Returns on Sales	(8,799)	(6,611)	(2,188)
Discounts, Allowances and Bonuses	(5,765)	(7,046)	1,281
Total Revenue	259,140	260,543	(1,403)

"Core Revenue" of Euro 259,140 thousand decreased on the previous year by Euro 1,403 thousand (- 0.5%).

The decrease relates to the combined impact of application of IFRS 15 which reduced revenues by Euro 2,844 thousand and negative currency effects of Euro 16,620 thousand, offset by the change in the consolidation scope, with revenue generated by the Pacon Group in H1 2018 of Euro 16,302. Net of these changes, Core Business Revenue was up Euro 1,759 thousand.

For further details, reference should be made to the "Adjusted operating result" and "Disclosure by operating segment" paragraphs of the Directors' Report.

Note 21 – Other Revenue and Income

The account other income relates to ordinary operations and does not include the sale of goods and provision of services, in addition to realised and unrealised exchange gains on commercial operations.

For further details on currency differences, reference should be made to "Note 30 - Foreign currency transactions".

"Other Revenue and Income" in H1 2018 amounted to Euro 4,951 thousand (Euro 11,977 thousand in H1 2017).

Note 21 – OTHER REVENUE AND INCOME
Euro thousands	First Half of 2018	First Half of 2017	Change
Gains on Sale of Property, Plant and Equipment	256	50	206
Unrealised Exchange Rate Gains on Commercial Transactions	1,957	7,983	(6,026)
Realised Exchange Rate Gains on Commercial Transactions	1,663	3,175	(1,512)
Other Revenue and Income	1,075	769	306
Total	4,951	11,977	(7,026)

"Other Revenue and Income" in H1 2018 of Euro 1,075 thousand principally includes income from the sale of production waste by Group companies and government grant repayments obtained by DOMS Industries Pvt Ltd (India).

Note 22 - Raw Materials, Consumables Supplies and Goods and Change in Raw Materials, Semi-Finished, Work-in-progress and Finished Products

The caption includes all purchases of raw materials, semi-processed products, transport for purchases, goods and consumables for operating activities.

"Raw Materials, Consumables Supplies and Goods" in H1 2018 totalled Euro 130,607 thousand (Euro 126,130 thousand in H1 2017).

The breakdown is provided below:

Note 22 - COSTS FOR RAW MATERIALS, CONSUMABLES SUPPLIES AND GOODS
Euro thousands	First Half of 2018	First Half of 2017	Change
Raw materials, Consumables Supplies and Goods	(110,547)	(105,619)	(4,928)
Shipping Expenses on Purchases	(6,075)	(5,777)	(298)
Packaging	(5,083)	(4,472)	(611)
Import Charges and Customs Duties	(2,905)	(2,877)	(28)
Other Accessory Charges on Purchases	(5,670)	(6,964)	1,294
Materials for Maintenance	(464)	(463)	(1)
Adjustments on Purchases	137	42	95
Returns on Purchases	1 6	-	1 6
Discounts, Allowances and Bonuses	120	4 2	7 8
Total	(130,607)	(126,130)	(4,477)

The increase in H1 2018 was Euro 4,477 thousand and mainly relates to the change in the consolidation scope - costs incurred by the Pacon Group in H1 2018 in fact amounted to Euro 6,898 thousand. This increase was offset by the significant weakening of the main Group currencies against the Euro.

The increase in inventories at June 30, 2018 totalled Euro 27,135 thousand, of which:

decrease of "Raw Materials, Consumables Supplies and Goods" for Euro 1,947 thousand (increase of Euro 1,805 thousand in H1 2017);
increase in "Contract Work in Progress and Semi-Finished products" of Euro 3,540 thousand (increase of Euro 2,924 thousand in H1 2017);
increase in "Finished Products" of Euro 25,542 thousand (increase of Euro 15,458 thousand in H1 2017).

For further details, reference should be made to the "Adjusted operating result" paragraph of the Directors' Report.

Note 23 - Services and Use of Third Parties Assets

"Services and Use of Third Parties Assets" amounted in H1 2018 to Euro 65,836 thousand (Euro 58,658 thousand in H1 2017).

Services are broken down as follows:

Note 23 - SERVICE AND USE OF THIRD PARTIES ASSETS
Euro thousands	First Half of 2018	First Half of 2017	Change
Sundry services	(3,433)	(5,437)	2,004
Transport	(10,760)	(10,100)	(661)
Warehousing	(862)	(820)	(42)
Maintenance	(5,109)	(4,389)	(721)
Utilities	(4,038)	(4,090)	52
Consulting	(12,447)	(4,699)	(7,748)
Directors' and Statutory Auditors' Fees	(2,309)	(2,366)	57
Advertising, Promotions, Shows and Fairs	(3,587)	(3,424)	(163)
Cleaning	(405)	(288)	(117)
Bank Charges	(450)	(501)	51
Agents	(3,634)	(3,736)	103
Sales representatives	(2,630)	(3,027)	397
Sales Commissions	(6,166)	(6,351)	185
Insurance	(924)	(1,106)	182
Other Service Costs	(2,420)	(1,942)	(477)
Hire Charges	(4,061)	(4,003)	(57)
Rental	(721)	(765)	44
Operating Leases	(1,592)	(1,308)	(284)
Royalties and Patents	(288)	(306)	18
Total	(65,836)	(58,658)	(7,178)

The increase on H1 2017 was Euro 7,178 thousand and principally concerned consultancy costs incurred by the parent F.I.L.A. S.p.A for the M&A regarding the acquisition of the Pacon Group (Euro 7,877 thousand) and the weakening of the main Group currencies against the Euro.

Note 24 – Other Operating Costs

These totalled in H1 2018 Euro 5,949 thousand (Euro 13,245 thousand in H1 2017).

The caption principally includes realised and unrealised exchange rate losses on commercial transactions. For further details on currency differences, reference should be made to "Note 30 - Foreign currency transactions".

"Other Operating Costs" are broken down as follows:

	Note 24 – OTHER OPERATING COSTS
Euro thousands	First Half of 2018	First Half of 2017	Change
Unrealised Exchange Rate Losses on Commercial Transactions	(3,193)	(7,740)	4,547
Realised Exchange Rate Losses on Commercial Transactions	(2,464)	(4,951)	2,487
Other Operating Charges	(293)	(554)	261
Total	(5,949)	(13,245)	7,295

The increase in "Other Operating Costs" in the first half of 2018 following the change in the consolidation scope was Euro 41 thousand, with a net decrease at like-for-like consolidation scope of Euro 302 thousand. The amounts mainly concern non-recurring costs incurred by the Chinese subsidiary FILA Dixon Stationery (Kunshan) Co., Ltd and the parent F.I.L.A. S.p.A..

Note 25 – Personnel Expense

"Personnel Expense" includes all costs and expenses incurred for employees. It Amounts in H1 2018 to Euro 54,286 thousand (Euro 55,686 thousand in H1 2017).

These costs are broken down as follows:

Note 25 – PERSONNEL EXPENSE
Euro thousands	First Half of 2018	First Half of 2017	Change
Wages and Salaries	(40,730)	(39,982)	(748)
Social Security Charges	(9,271)	(8,948)	(323)
Employee Benefits	(1,112)	(1,357)	244
Post-Employment Benefits	(213)	(53)	(159)
Other Personnel Expenses	(2,960)	(5,346)	2,386
Total	(54,286)	(55,686)	1,400

"Personnel Expense" decreased on the first half of 2017 by Euro 1,400 thousand, mainly due to increased reorganisational costs and for the Long Term Incentive incurred in the first half of 2017 and the weakening of the main Group currencies against the Euro. The caption decreased despite the M&A effect from the acquisition of the Pacon Group in the first half of 2018, which amounts to Euro 2,071 thousand, and higher personnel expenses at the Indian and Mexican production facilities.

The following table reports the breakdown of the F.I.L.A. Group workforce at June 30, 2018 and December 31, 2017 by region.

	Europe	North America	Central - South America	Asia	Rest of the World	Total
December 31, 2017	1,099	206	1,836	5,263	3 5	8,439
June 30, 2018	1,135	765	1,968	5,444	3 0	9,342
Change	3 6	559	132	181	(5)	903

The increase on December 31, 2017 was 903 and in particular concerned North America as a result of the above-stated M&A effect. The total increase due to the acquisition of the Pacon Group was 623.

Note 26 – Amortisation and Depreciation

"Amortisation & Depreciation" in H1 2018 amounted to Euro 9,468 thousand (Euro 8,870 thousand in H1 2017). The breakdown for H1 2018 and H1 2017 was as follows:

Note 26 – AMORTISATION AND DEPRECIATION
Euro thousands	First Half of 2018	First Half of 2017	Change
Depreciation of Property, Plant and Equipment Amortisation of Intangible Assets	(5,712) (3,757)	(5,465) (3,405)	(247) (351)
Total	(9,468)	(8,870)	(598)

The movement in "Amortisation and depreciation" on June 30, 2017 principally concerns the M&A effect of Euro 464 thousand.

For further details, reference should be made to "Note 1 – Intangible Assets" and "Note 2 – Property, Plant and Equipment".

Note 27 – Impairment Losses

"Impairment Losses" in H1 2018 totalled Euro 1,589 thousand (Euro 206 thousand in H1 2017).

The Impairment losses recorded in H1 2018 and H1 2017 are illustrated below:

Note 27 – IMPAIRMENT LOSSES
Euro thousands	First Half of 2018	First Half of 2017	Change
Impairment Losses on Property, Plant and Equipment	(7)	(32)	25
Impairment Losses on Intangible Assets	(1,582)	(174)	(1,408)
Of Which direct Impairment Losses on trade receivables	(80)	-	(80)
Total	(1,589)	(206)	(1,383)

The Credit loss allowance increased significantly on the previous year, principally as a result of first time application of IFRS 9. The application of the new standard had an impact in the period of Euro 878 thousand. Net of this effect, the increase was Euro 505 thousand, principally due to the higher accrual made by the US subsidiary Dixon Ticonderoga Company (U.S.A.).

Note 28 – Financial Income

The caption in H1 2018 amounted to Euro 4,151 thousand (Euro 1,838 thousand in H1 2017).

Financial income, together with the comment on the main changes on the previous period, was as follows:

Note 28 – FINANCIAL INCOME
Euro thousands	First Half of 2018	First Half of 2017	Change
Interest on Bank Deposits	55	34	21
Financial Income from Disposal of Non-Current Financial Assets	6	-	6
Other Financial Income	29	1,064	(1,036)
Unrealised Exchange Rate Gains on Financial Transactions	1,757	712	1,045
Realised Exchange Rate Gains on Financial Transactions	2,305	27	2,278
Total	4,151	1,838	2,313

The main change within "Other Financial Income" for a negative Euro 1,036 thousand relates to the income of the German subsidiary Lyra KG in H1 2017 generated from the sale of the non-controlling (30% of the share capital) held in FILA Nordic AB (Sweden) for Euro 990 thousand.

Note 29 - Financial Expense

"Financial Expense" in H1 2018 amounted to Euro 14,120 thousand (Euro 9,413 thousand in H1 2017).

Financial Expense, together with the comment on the main changes on the previous year, was as follows:

Note 29 - FINANCIAL EXPENSE
Euro thousands	First Half of 2018	First Half of 2017	Change
Interest on Bank Overdrafts	(84)	(90)	6
Interest on Bank Loans and borrowings	(5,712)	(4,658)	(1,054)
Interest to Other Lenders	(25)	(11)	(14)
Other Financial Expenses	(4,141)	(1,443)	(2,698)
Unrealised Exchange Rate Losses on Financial Transactions	(3,683)	(2,660)	(1,023)
Realised Exchange Rate Losses on Financial Transactions	(476)	(551)	76
Total	(14,120)	(9,413)	(4,707)

The increase in "Financial Expenses" in H1 2018 was Euro 4,707 thousand, net of the considerations regarding exchange differences, and principally concerned increased costs incurred by the parent F.I.L.A. S.p.A. for the settlement of the loan raised in 2016 and the opening of a new structured loan to support the M&A performed in the period.

In particular, the caption includes also the costs for the release of the Amortised cost on the structured loans.

In 2018, the loan signed in 2016 by F.I.L.A. S.p.A. was repaid and consequently the entire amount of the amortized cost take as a reduction of the loan liability for a total of Euro 2,534 thousand was released.

In addition, the portion of Amortised Cost on the new loan agreed by F.I.L.A. S.p.A. and Dixon Ticonderoga Company (U.S.A.) at June 30, 2018 amounted to Euro 188 thousand (for further details, reference should be made to Note 13).

Note 30 - Foreign Currency Transactions

Exchange differences on financial and commercial transactions in foreign currencies in H1 2018 are reported below.

Note 30 - FOREIGN CURRENCY TRANSACTIONS
Euro thousands	First Half of 2018	First Half of 2017	Change
Net Unrealised Exchange Gains on Trade Receivables and Payables	1,957	7,983	(6,027)
Net Realised Exchange Gains on Trade Receivables and Payables	1,663	3,175	(1,512)
Net Unrealised Exchange Losses on Trade Receivables and Payables	(3,193)	(7,740)	4,547
Net Realised Exchange Losses on Trade Receivables and Payables	(2,464)	(4,951)	2,487
Net exchange losses on foreign currency Trade Receivables and Payabales	(2,037)	(1,533)	(505)
Net Unrealised Exchange Gains on Financial Transactions	1,757	712	1,045
Net Realised Exchange Gains on Financial Transactions	2,305	27	2,278
Net Unrealised Exchange Losses on Financial Transactions	(3,683)	(2,660)	(1,023)
Net Realised Exchange Losses on Financial Transactions	(476)	(551)	76
Net exchange gains on financial transactions	(96)	(2,472)	2,376
Net exchange losses	(2,133)	(4,005)	1,871

Exchange differences in 2018 principally arose from the movement of local currencies (principally due to the weakening of the US Dollar, the Indian Rupee and the South American currencies) against the Euro, in addition to the movement in the period of assets and liabilities in foreign currencies, following trade and financial transactions.

Note 31 – Income/Expense from Equity-Accounted Investments

"Income/Expense from Equity-Accounted Investments" report income of Euro 60 thousand (expense of Euro 5 thousand in H1 2017), due to the adjustment of the investments in associates held by DOMS Industries Pvt Ltd (India), consolidated under the Equity method.

Note 32 - Income Taxes

They amount to Euro 7,599 thousand in H1 2018 (Euro 7,588 thousand in the second half of 2017) and concern current taxes for Euro 7,245 thousand (Euro 8,378 thousand in 2017) and net deferred tax liabilities of Euro 354 thousand (assets of Euro 790 thousand in H1 2017).

Note 32.A – Current Income Taxes

	Note 32.A - INCOME TAXES
Euro thousands	First Half of 2018	First Half of 2017	Change
Current Income Taxes - Italy	(299)	(364)	65
Current Income Taxes - Foreign	(6,946)	(8,014)	1,068
Total	(7,245)	(8,378)	1,133

Current Italian taxes concern F.I.L.A. S.p.A. and Canson Italia S.r.l..

Note 32.A.1 - FOREIGN INCOME TAXES
Euro thousands	First Half of 2018	First Half of 2017	Change

OMYACOLOR S.A. (France)	(700)	(674)	(26)
FILA Hispania S.L. (Spain)	(239)	(244)	5
DOMS Industries Pvt Ltd (India)	(1,084)	(844)	(240)
FILA (Russia)	18	0	18
Fila Hellas SA (Greece)	(115)	(96)	(19)
Fila Polska Sp. Z.o.o (Poland)	(60)	(56)	(4)
Fila Iberia S. L. (Spain)	(371)	(263)	(108)
Canson Brasil I.P.E. LTDA (Brasil)	51	(62)	113
Canson SAS (France)	(140)	(682)	542
Canson Inc. (USA)	(1)	(53)	52
Canson Qingdao Ltd. (China)	0	(76)	76
Dixon Ticonderoga Company (U.S.A.)	(1,968)	(3,823)	1,855
Dixon Ticonderoga Inc. (Canada)	(138)	(156)	18
Grupo F.I.L.A.-Dixon, S.A. de C.V.(Mexico)	(198)	(495)	297
F.I.L.A. Chile Ltda (Chile)	(28)	(245)	217
FILA Argentina S.A. (Argentina)	0	(1)	1
FILA Dixon Stationery (Kunshan) Co., Ltd. (China)	(286)	(66)	(220)
FILA Dixon Art & Craft Yixing Co. Ltd (China)	1	(30)	31
Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG (Germany)	(58)	(110)	52
St.Cuthberts Mill Limited Paper (UK)	(90)	0	(90)
Lyra Bleistift-Fabrik Verwaltungs GmbH (Germany)	(1)	(1)	0
F.I.L.A. Nordic AB (Sveden)	0	(5)	5
PT. Lyra Akrelux (Indonesia)	(30)	(37)	7
FILA Benelux SA (Belgium)	(214)	5	(219)
Daler Rowney Group Ltd (Jersey - UK)	(7)	0	(7)
Daler Rowney Ltd (UK)	(130)	0	(130)
Daler Rowney USA Ltd (USA)	(613)	0	(613)
Pacon Corporation (USA)	(441)	0	(441)
Baywood Paper ULC (Canada)	(37)	0	(37)
Creativity International (UK)	(67)	0	(67)
Total	(6,946)	(8,014)	1,068

Income taxes also include the tax charge relating to F.I.L.A S.p.A. concerning the tax representation of the subsidiary Lyra KG (Euro 16 thousand) and the tax under Article 167 of Presidential Decree 917/1986 concerning "Controlled Foreign Companies" (Euro 16 thousand).

Note 32.B – Change in Deferred Taxes

The breakdown is provided below:

Note 32.B CHANGE IN DEFERRED TAX
Euro thousands	First Half of 2018	First Half of 2017	Change
Change in Deferred Tax Assets Change in Deferred Tax Liabilities	775 (1,129)	4,126 (3,336)	(3,350) 2,207
Total	(354)	790	(1,145)

Attachments

Attachment 1 – Related parties transactions

For the procedures adopted in relation to related parties transactions, also in accordance with Article 2391-bis of the Italian Civil Code, reference should be made to the procedure adopted by the Parent pursuant to the Regulation approved by CONSOB with resolution No. 17221 of March 12, 2010 and subsequent amendments, published on the website of the company www.filagroup.it in the "Governance" section.

In accordance with CONSOB Communication No. 6064293 of July 28, 2006, the following table outlines the commercial and financial related parties transactions for the first half of 2018:

				F.I.L.A. GROUP RELATED PARTIES - 2018
				June 30, 2018							First Half of 2018
				Statement of Financial Position							Income Statement
Euro thousands			ASSETS			LIABILITIES			REVENUE			COSTS
Company	Nature	Intangible Assets	Trade Receivables	Cash and Cash Equivalents	Loans and Borrowings (Banks)	Loans and Borrowings (Other)	Trade Payables	Revenue from sales	Other Revenue (Services)	Financial Income	Operating Costs (Products)	Operating Costs (Services)	Financial Expense
Nuova Alpa Collanti S.r.l.	Trade Supplier	-	-	-	-	-	1,050	-	-	-	1,251	0.4	-
Studio Legale Salonia e Associati	Legal Advisor	-	-	-	-	-	63	-	-	-	-	170	-
Studio Zucchetti	Tax Advisor	-	-	-	-	-	97	-	-	-	-	129	-
ARDA S.p.A.	Trade Supplier	-	-	-	-	-	102	-	-	-	84	-	-
Pinturas y Texturizados S.A. de C.V. Trade and Services Supplier		-	-	-	-	-	-	-	-	-	103	9	-
HR Trustee	Services Supplier	-	-	-	-	-	-	-	-	-	-	7	-
Total		-	-	-	-	-	1,312	-	-	-	1,438	315	-

F.I.L.A. GROUP RELATED PARTIES - 2017
			December 31, 2017								First Half of 2017
				Statement of Financial Position							Income Statement
Euro thousands			ASSETS			LIABILITIES			REVENUE			COSTS
Company	Nature	Intangible Assets	Trade Receivables	Cash and Cash Equivalents	Loans and Borrowings (Banks)	Loans and Borrowings (Other)	Trade Payables	Revenue from sales	Other Revenue (Services)	Financial Income	Operating Costs (Products)	Operating Costs (Services)	Financial Expense
Nuova Alpa Collanti S.r.l.	Trade Supplier	-	-	-	-	-	944	-	-	-	1,158	-	-
Studio Legale Salonia e Associati	Legal Advisor	-	-	-	-	-	35	-	-	-	-	167	-
Studio Zucchetti	Tax Advisor	-	-	-	-	-	119	-	-	-	-	74	-
Beijing Mjestic	Trade Supplier	-	-	-	-	-	92	-	-	-	-	-	-
Autogrill SpA	Trade Supplier	-	-	-	-	-	1	-	-	-	2	-	-
Pinturas y Texturizados S.A. de C.V. Trade and Services Supplier		-	-	-	-	-	-	-	-	-	65	6	-
HR Trustee	Services Supplier	-	-	-	-	-	-	-	-	-	-	15	-
Total		-	-	-	-	-	1,191	-	-	-	1,225	262	-

Studio Legale Salonia e Associati

Studio Legale Salonia e Associati, with which a partner is related to the majority shareholder of the company, principally provides legal consultancy.

Nuova Alpa Collanti S.r.l.

Nuova Alpa Collanti S.r.l., in which a shareholder is a Board member of F.I.L.A. S.p.A., supplies glue.

Studio Zucchetti

Studio Zucchetti, in which a partner of the firm is a member of the Board of Directors of F.I.L.A. S.p.A., principally provides tax and administrative consultancy.

Pynturas y Texturizados S.A. de C.V.

Pynturas y Texturizados S.A. de C.V., a shareholder of which is related to the management of a F.I.L.A. Group company, is a company specialised in the production and sale of paint, coating paints and anti-corrosion products.

HR Trustee

HR Trustee, a shareholder of which is related to the management of a F.I.L.A. Group company, is a United Kingdom based company specialised in the provision of professional pension plan services.

ARDA S.p.A.

ARDA S.p.A., a shareholder of which is related to the management of a F.I.L.A. Group company, is an Italian based company specialised in the production and sale of school and office items.

F.I.L.A. Group transactions with related parties refer to normal transactions and are regulated at market conditions, i.e. the conditions that would be applied between two independent parties, and are undertaken in the interests of the Group. Typical or normal transactions are those which, by their object or nature, are not outside the normal course of business of the F.I.L.A. Group and those which do not involve particular critical factors due to their characteristics or to the risks related to the nature of the counterparty or the time at which they are concluded; normal market conditions relate to transactions undertaken at standard Group conditions in similar situations.

On this basis, the exchange of goods, services and financial transactions between the various group companies were undertaken at competitive market conditions.

Attachment 2 - List of companies included in the consolidation scope and other investments

Company	Country of residence of company	Segment IFRS 81	Year of acquisition of the company	% held directly (F.I.L.A. S.p.A)	% held indirectly	% held by F.I.L.A. Group	Investing Company	Consolidation Method	Non- Controlling interests
Omyacolor S.A.	France	EU	2000	94,94%	5,06%	100,00%	FILA S.p.A. Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG Lyra Bleistift-Fabrik Verwaltungs GmbH	Line-by-line	0,00%
F.I.L.A. Hispania S.L.	Spain	EU	1997	96,77%	0,00%	96,77%	FILA S.p.A.	Line-by-line	3,23%
FILALYRA GB Ltd.	UK	EU	2005	0,00%	100,00%	100,00%	Daler Rowney Ltd	Line-by-line	0,00%
Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG	Germany	EU	2008	99,53%	0,47%	100,00%	FILA S.p.A. Lyra Bleistift-Fabrik Verwaltungs GmbH	Line-by-line	0,00%
Lyra Bleistift-Fabrik Verwaltungs GmbH	Germany	EU	2008	0,00%	100,00%	100,00%	Johann Froescheis Lyra Bleistift-Fabrik GmbH &	Line-by-line	0,00%
F.I.L.A. Nordic AB2	Sweden	EU	2008	0,00%	50,00%	50,00%	Co. KG Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG	Line-by-line	50,00%
FILA Stationary and Office Equipment Industry Ltd. Co.	Turkey	EU	2011	100,00%	0,00%	100,00%	FILA S.p.A.	Line-by-line	0,00%
Fila Stationary O.O.O.	Russia	EU	2013	90,00%	0,00%	90,00%	FILA S.p.A.	Line-by-line	10,00%
Industria Maimeri S.p.A.	Italy	EU	2014	51,00%	0,00%	51,00%	FILA S.p.A.	Line-by-line	49,00%
Fila Hellas SA2	Greece	EU	2013	50,00%	0,00%	50,00%	FILA S.p.A.	Line-by-line	50,00%
Fila Polska Sp. Z.o.o	Poland	EU	2015	51,00%	0,00%	51,00%	FILA S.p.A.	Line-by-line	49,00%
Dixon Ticonderoga Company	U.S.A.	N A	2005	100,00%	0,00%	100,00%	FILA S.p.A.	Line-by-line	0,00%
Dixon Ticonderoga Inc.	Canada	N A	2005	0,00%	100,00%	100,00%	Dixon Ticonderoga Company	Line-by-line	0,00%
Grupo F.I.L.A.-Dixon, S.A. de C.V.	Mexico	CSA	2005	0,00%	100,00%	100,00%	Dixon Ticonderoga Inc. Dixon Ticonderoga Company	Line-by-line	0,00%
F.I.L.A. Chile Ltda	Chile	CSA	2000	0,79%	99,21%	100,00%	Dixon Ticonderoga Company FILA S.p.A.	Line-by-line	0,00%
FILA Argentina S.A.	Argentina	CSA	2000	0,00%	100,00%	100,00%	F.I.L.A. Chile Ltda Dixon Ticonderoga Company	Line-by-line	0,00%
Beijing F.I.L.A.-Dixon Stationery Company Ltd.	China	AS	2005	0,00%	100,00%	100,00%	Dixon Ticonderoga Company	Line-by-line	0,00%
Xinjiang F.I.L.A.-Dixon Plantation Company Ltd.	China	AS	2008	0,00%	100,00%	100,00%	Beijing F.I.L.A.-Dixon Stationery Company Ltd. Line-by-line		0,00%
PT. Lyra Akrelux	Indonesia	AS	2008	0,00%	52,00%	52,00%	Johann Froescheis Lyra Bleistift-Fabrik GmbH & Co. KG	Line-by-line	48,00%
FILA Dixon Stationery (Kunshan) Co., Ltd.	China	AS	2013	0,00%	100,00%	100,00%	Beijing F.I.L.A.-Dixon Stationery Company Ltd. Line-by-line		0,00%
FILA SA PTY LTD	South Africa	RM	2014	90,00%	0,00%	90,00%	FILA S.p.A.	Line-by-line	10,00%
Canson Art & Craft Yixing Co., Ltd.	China	AS	2015	0,00%	100,00%	100,00%	Beijing F.I.L.A.-Dixon Stationery Company Ltd. Line-by-line		0,00%
DOMS Industries Pvt Ltd	India	AS	2015	51,00%	0,00%	51,00%	FILA S.p.A.	Line-by-line	49,00%
Renoir Topco Ltd	UK	EU	2016	100,00%	0,00%	100,00%	FILA S.p.A.	Line-by-line	0,00%
Renoir Midco Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Renoir Topco Ltd	Line-by-line	0,00%
Renoir Bidco Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Renoir Midco Ltd	Line-by-line	0,00%
Daler Rowney Group Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Renoir Bidco Ltd	Line-by-line	0,00%
FILA Benelux SA	Belgium	EU	2016	0,00%	100,00%	100,00%	Renoir Bidco Ltd Daler Rowney Ltd Daler Board Company Ltd	Line-by-line	0,00%
Daler Rowney Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Renoir Bidco Ltd	Line-by-line	0,00%
Longbeach Arts Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Daler Rowney Group Ltd	Line-by-line	0,00%
Daler Board Company Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Daler Rowney Group Ltd	Line-by-line	0,00%
Daler Holdings Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Longbeach Arts Ltd	Line-by-line	0,00%
Daler Designs Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Daler Board Company Ltd	Line-by-line	0,00%
Daler Rowney GmbH	Germany	EU	2016	0,00%	100,00%	100,00%	Daler Rowney Ltd	Line-by-line	0,00%
Lukas-Nerchau GmbH	Germany	EU	2016	0,00%	100,00%	100,00%	Daler Rowney GmbH	Line-by-line	0,00%
Nerchauer Malfarben GmbH	Germany	EU	2016	0,00%	100,00%	100,00%	Daler Rowney GmbH	Line-by-line	0,00%
Lastmill Ltd Rowney & Company Pencils Ltd	UK UK	EU EU	2016 2016	0,00% 0,00%	100,00% 100,00%	100,00% 100,00%	Daler Rowney Ltd Daler Rowney Ltd	Line-by-line Line-by-line	0,00% 0,00%
Rowney (Artists Brushes) Ltd	UK	EU	2016	0,00%	100,00%	100,00%	Daler Rowney Ltd	Line-by-line	0,00%
Brideshore srl	Dominican Rep.	CSA	2016	0,00%	100,00%	100,00%	Daler Rowney Ltd	Line-by-line	0,00%
St. Cuthberts Holding Limited	UK	EU	2016	100,00%	0,00%	100,00%	FILA S.p.A.	Line-by-line	0,00%
St. Cuthberts Mill Limited	UK	EU	2016	0,00%	100,00%	100,00%	St. Cuthberts Holding Limited	Line-by-line	0,00%
Fila Iberia S. L.	Spain	EU	2016	0,00%	99,99%	99,99%	F.I.L.A. Hispania S.L.	Line-by-line	0,01%
Eurholdam USA Inc.	U.S.A.	N A	2016	100,00%	0,00%	100,00%	FILA S.p.A.	Line-by-line	0,00%
Canson Inc.	U.S.A.	N A	2016	0,00%	100,00%	100,00%	Eurholdam USA Inc.	Line-by-line	0,00%
Canson SAS	France	EU	2016	100,00%	0,00%	100,00%	FILA S.p.A. Canson SAS	Line-by-line	0,00%
Canson Brasil I.P.E. LTDA	Brasil	CSA	2016	0,19%	99,81%	100,00%	FILA S.p.A.	Line-by-line	0,00%
Lodi 12 SAS Canson Australia PTY LTD	France Australia	EU RM	2016 2016	100,00% 0,00%	0,00% 100,00%	100,00% 100,00%	FILA S.p.A. Lodi 12 SAS	Line-by-line Line-by-line	0,00% 0,00%
Canson Qingdao Ltd.	China	AS	2016	0,00%	100,00%	100,00%	Lodi 12 SAS	Line-by-line	0,00%
Canson Italy S.r.l.	Italy	EU	2016	0,00%	100,00%	100,00%	Lodi 12 SAS	Line-by-line	0,00%
FILA Art Products AG	Switzerland	EU	2017	52,00%	0,00%	52,00%	FILA S.p.A.	Line-by-line	48,00%
FILA Art and Craft Ltd	Israele	AS	2018	51,00%	0,00%	51,00%	FILA S.p.A.	Line-by-line	49,00%
Pacon Holding Company	U.S.A.	N A	2018	0,00%	100,00%	100,00%	Dixon Ticonderoga Company	Line-by-line	0,00%
Pacon Corporation	U.S.A.	N A	2018	0,00%	100,00%	100,00%	Pacon Holding Company	Line-by-line	0,00%
Pacon Canadian Holding Co	U.S.A.	N A	2018	0,00%	100,00%	100,00%	Pacon Corporation	Line-by-line	0,00%
Baywood Paper ULC	Canada	N A	2018	0,00%	100,00%	100,00%	Pacon Canadian Holding Co	Line-by-line	0,00%
Castle Hill Crafts	UK	EU	2018	0,00%	100,00%	100,00%	Pacon Corporation	Line-by-line	0,00%
Crativity International	UK	EU	2018	0,00%	100,00%	100,00%	Castle Hill Crafts	Line-by-line	0,00%
Princeton Hong Kong	Hong Kong	AS	2018	0,00%	100,00%	100,00%	Pacon Corporation	Line-by-line	0,00%
Pioneer Stationery Pvt Ltd.	India	AS	2015	0,00%	51,00%	51,00%	DOMS Industries Pvt Ltd	Equity Method	49,00%
Uniwrite Pens and Plastics Pvt Ltd	Inida	AS	2016	0,00%	60,00%	60,00%	DOMS Industries Pvt Ltd	Equity Method	40,00%
1 - EU - Europe; N A - North America; CSA - Central South America; AS - Asia; RM - Rest of the World 2 - Although not holding more than 50% of the share capital considered a subsidiary under IFRS 10

Attachment 3 - Changes to accounting standards

Impact of IFRS 15 and IFRS 9 on the consolidated financial statements

The effects from application of IFRS 15 and IFRS 9 on the consolidated financial statements at June 30, 2018 are presented below.

Statement of Financial Position

	June 30, 2018	IFRS	June, 2018
Euro thousands	as reported	Adjustment	(no IFRS Adjustment)

Assets	1,094,601	1,814	1,096,415
Non-Current Assets	540,973	(1,124)	539,849
Intangible Assets	423,810		423,810
Property, Plant and Equipment	97,774		97,774
Non-Current Loan Assets	3,331		3,331
Equity Accounted Investments	811		811
Other Investments	31		31
Deferred Tax Assets	15,216	(1,124)	14,092
Current Assets	553,628	2,938	556,566
Current Loan Assets	492		492
Current Tax Assets	12,558		12,558
Inventories	264,162		264,162
Trade Receivables and Other Assets	237,650	2,938	240,588
Cash and Cash Equivalents	38,766		38,766
Liabilities and Equity	1,094,601	1,814	1,096,415
Equity	243,372	1,814	245,186
Share Capital	37,261		37,261
Reserves	27,558	1,157	28,715
Retained Earnings	148,939		148,939
Profit for the period/year	5,325	657	5,982
Equity Attributable to the Owners of the Parent	219,083	1,814	220,897
Equity Attributable to Non Controlling Interests	24,289		24,289
Non-Current Liabilities	575,834	-	575,834
Non-Current Loan and Borrowings	523,446		523,446
Financial Instruments	50		50
Employee Benefits	7,406		7,406
Provisions for Risks and Charges	2,495		2,495
Deferred Tax Liabilities	42,347		42,347
Other Liabilities	90		90
Current Liabilities	275,395	-	275,395
Current Loan and Borrowings	128,690		128,690
Provisions for Risks and Charges	4,228		4,228
Current Tax Liabilities	13,838		13,838
Trade Payables and Other Liabilities	128,639		128,639

Statement of Comprehensive Income

			First Half of 2018
	First Half of 2018 as reported	IFRS Adjustment	(no IFRS
Euro thousands Revenue from Sales and Service			Adjustment)
Other Revenue and Income	259,140 4,951	2,844 -	261,984 4,951
Total Revenue	264,091	2,844	266,935
	-		-
Raw Materials, Consumables Supplies and Goods Services and use of Third Parties Assets	(130,607)	-	(130,607)
Other Operating Costs	(65,836)	(2,613)	(68,449)
Change in Raw Materials, Semi-Finished, Work-in-progress & Finished Prod.	(5,949) 27,135	- -	(5,949) 27,135
Personnel expense	(54,286)	-	(54,286)
Amortisation & Depreciation	(9,468)	-	(9,468)
Impairment Losses	(1,589)	878	(711)
Total Operating Costs	(240,600)	(1,735)	(242,337)

Operating Profit	23,491 -	1,109	24,599 -
Financial Income	4,151	-	4,151
Financial Expense	(14,120)	(231)	(14,351)
Income/Expense from Equity - Accounted Investments	60	-	60
Net Financial Expense	(9,909)	(231)	(10,140)
Pre-Tax Profit	13,582 -	878	14,458 -
Income Taxes	(7,245)	-	(7,245)
Deferred Taxes	(354)	(221)	(575)
Income Taxes	(7,599)	(221)	(7,819)
Profit - Continuing Operations	5,983	657	6,640
Profit (loss) - Discontinued Operations	-	-	-
Profit for the Period	5,983 -	657	6,640
Attributable to:
Non-controlling interests	658		658
Owners of the parent	5,325		5,982
Other Comprehensive Income (Expense) which may be reclassified subsequently to profit or loss	1,257	-	1,257
Translation Difference recorded in Equity	2,325	-	2,325
Adjustment Fair value of Hedges	(1,068) -	-	(1,068)
Other Comprehensive Income (Expense) which may not be reclassified subsequently to profit or loss	1,216	-	1,216
Actuarial Gains for Employee Benefits recorded directly in Equity	1,456	-	1,456
Income Taxes on income and charges recorded directly in Equity	(240) -	-	(240)
Other Comprehensive Income (Expense) - Net of tax effect	2,473	-	2,473
Comprehensive Income	8,456	657	9,113
Attributable to:	-
Non-controlling interests	(297)		(297)
Owners of the parent	8,753		9,410

In the first half of 2018, the application of IFRS 15 had the effect of reducing revenues on the basis of reclassifications for Euro 2,844 thousand, with an impact on the operating profit of Euro 231 thousand. There were no adjustments to the profit for the period.

The application of IFRS 9 had a negative impact on equity at January 1, 2018 of Euro 1,157 thousand, concerning the 2017 impact net of the tax effect, while the impact on the H1 2018 profit was Euro 657 thousand. Simultaneously, a reduction in "Trade Receivables and Other Assets" of Euro 2,938 thousand was recorded, with an increase in deferred tax assets of Euro 1,124 thousand.

Attachment 4 - Business combinations

Pacon Group

On June 7, 2018, the acquisition was completed of 100% of the shares of Pacon Holding Company (U.S.A.), parent of the Pacon Group, by the subsidiary Dixon Ticonderoga Company (U.S.A.).

From June 7, 2018, the companies of the US Group were consolidated in the financial statements of the F.I.L.A. S.p.A. Group under the "line by line" method and at June 30, 2018 contributed to the financial performance of the period only to the extent of the profits/losses for the period between June 7, 2018 and June 30, 2018.

The acquisition of 100% of Pacon Holding Company (U.S.A.) involved total consideration of USD 254.7 million (Euro 215.2 million at the acquisition date), against Consolidated Equity at June 7, 2018 of USD 119.5 million (Euro 100.9 thousand at the acquisition date). The difference between the carrying amount of the investment and Equity at that date resulted exclusively in the recognition of Goodwill, as the company was permitted to make the PPA within one year from the acquisition as established by IFRS 3; the calculation of Goodwill on the basis of the above figures translated at the exchange rate at the transaction date is reported below:

Carrying amount of Dixon Ticonderoga Company (U.S.A.)* investment in Pacon Group	215,418
Equity of Pacon Group	100,923
Difference between acquisition price of the equity investment and Carring amount of Pacon Group (Goodwill) at June 7, 2018	114,495

* Company owned by F.I.L.A. S.p.A.

The assets and liabilities of the Pacon Group at the acquisition date was as follows:

Pacon Group as at June 7, 2018

Assets	215,935

Non-Current Assets	108,780
Intangible Assets	100,575
Property, Plant and Equipment	7,777
Non-Current Loan Assets	428
Current Assets	107,155
Current Tax Assets	830
Inventories	56,760
Trade Receivables and Other Assets	45,293
Cash and Cash Equivalents	4,272
Liabilities and Equity	215,935
Equity	100,923
Non-Current Liabilities	97,383
Non-Current Loan and Borrowings	91,424
Provisions for Risks and Charges	1,600
Deferred Tax Liabilities	4,359
Current Liabilities	17,628
Current Tax Liabilities	1,863
Trade Payables and Other Liabilities	15,766

Note: The figures are translated at the exchange rate at June 7, 2018

Transactions relating to Atypical and/or Unusual Operations

In accordance with Consob Communication of July 28, 2006, during H1 2018 the F.I.L.A. Group did not undertake any atypical and/or unusual operations as defined by this communication, whereby atypical and/or unusual operations refer to operations which for size/importance, nature of the counterparties, nature of the transaction, method in determining the transfer price or time period (close to the period-end) may give rise to doubts in relation to: the correctness/completeness of the information in the financial statements, conflicts of interest, the safeguarding of the company's assets and the protection of non-controlling investors.

The Board of Directors THE CHAIRMAN Gianni Mion

Statement of the Manager in Charge of Financial Reporting and Corporate Boards

AI assistant

Fila — Interim / Quarterly Report 2018

4343_ir_2018-09-14_6a8fa092-9be4-42c1-af4c-3badd2c6526d.pdf

F.I.L.A. GROUP 2018 HALF-YEAR REPORT

DIRECTORS' REPORT

General Information

Corporate Bodies

Board of Directors

Control and Risks Committee

Board of Statutory Auditors

Overview of the F.I.L.A. Group

2018 Half-Year Report

Key Financial Highlights

2018 Normalization:

2017 Normalization:

F.I.L.A Group Key Financial Highlights

Adjusted operating performance

Business seasonality

Statement of Financial Position

Financial overview

Disclosure by operating segment

Geographical Segments – Statement of Financial Position

Geographical Segments – Income Statement

Geographical Segments – Other Information

Significant Events in the period

Subsequent events

Outlook

Related party transactions

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE SIX MONTHS ENDED JUNE 30, 2018

Consolidated Financial Statements

Condensed Consolidated Statement of Financial Position

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Condensed statement of financial position with indication of related parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 2006

Condensed Statement Comprehensive Income with indication of Related Parties transactions pursuant to CONSOB resolution No. 15519 of July 27, 2006

Notes

Introduction

Accounting policies

Accounting standards, amendments and interpretations applied from January 1, 2018

IFRS 15 Revenue from Contracts with Customers

IFRS 9 – Financial instruments

Amendment to IFRS 4 "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts"

Amendment to IFRS 2 - Classification and Measurement of Share-based Payment Transactions

Amendments to IAS 40 Investment Property: Transfers to Investment Properties

IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration

Improvements to IFRS: 2014-2016 Cycle

Amendment to IFRS 9 Financial instruments: "Prepayment Features with Negative Compensation"

IFRS 16 – Leases

IFRS 17 Insurance Contracts

IFRIC 23 – Uncertainty over income tax treatments

Amendment to IAS 28 Investments in associates: Long-term Interests in Associates and Joint Ventures

Improvements to IFRS: 2015-2017 Cycle

Amendment to IAS 19 - Plan Amendment, Curtailment or Settlement (published in February 2018)

Amendment to IFRS 10 and IAS 28 "Sales or Contribution of Assets between an Investor and its Associate or Joint Venture" (published on September 11, 2014)

Exchange rates adopted for translation

Note 1 - Intangible assets

Intangible assets with indefinite useful lives

Intangible assets with finite useful lives

Note 2 - Property, plant and equipment

Note 3 – Loan Assets

Loans and Receivables

Derivative Financial Instruments

Other financial assets

Note 4 – Equity-Accounted Investments

Note 5 - Other investments

Note 6 – Deferred Tax Assets

Note 7 - Current Tax Assets

Note 8 - Inventories

Note 9 – Trade Receivables and Other Assets

Note 10 - Cash and Cash Equivalents

Note 11 - Net Financial Debt

Note 12 - Share Capital and Equity

Share Capital

Legal Reserve

Share premium reserve

Sponsor Warrants

Actuarial gains/(losses)

Other Reserves

Translation difference

Fila Interim / Quarterly Report 2018