Annual & Consolidated Financial Statements as of 31 December 2020

1. Directors' Report Giglio Group S.p.A.
2. Consolidated Financial Statement as of 31 December 2020
3. Consolidated Financial Statements as of 31 December 2020
- a. Consolidated Statement of Financial Position
- b. Consolidated Statement of Profit or Loss and Comprehensive Income
- c. Consolidated Statement of Cash Flow
- d. Consolidated Statement of Changes in Equity
4. Notes to the Consolidated Financial Statements
5. Certification in accordance with Art. 81-ter of Consob Regulation no. 11971

of 14 May 1999 and following amendments and integrations, as well as with

Art. 154-bis of Legislative Decree no. 58 of 24 February
6. Independent Auditors' Report
7. Annual Financial Statements as of 31 December 2020

8. Annual Reports of Accounts of Financial Statements as of 31 December 2020

a. Statement of Financial Position
b. Statement of Profit or Loss and Comprehensive Income
c. Statement of Cash Flows
d. Statement of Changes in Equity

9. Notes to the Consolidated Financial Statements

10.Certification in accordance with Art. 81-ter of Consob Regulation no. 11971

of 14 May 1999 and following amendments and integrations, as well as with

Art. 154-bis of Legislative Decree no. 58 of 24 February

11.Report of the Board of Statutory Auditors
12.Independent Auditors' Report

Directors' Report

Board of Directors
Alessandro Giglio	Chairman
Marco Belloni	Chief Executive Officer co-opted by the Board of Directors on 23 July 2020 and confirmed by the Shareholders' Meeting on 12 November 2020
Anna Lezzi	Executive Board Member
Silvia Olivotto	Independent Member
Francesco Gesualdi	Independent Member co-opted by the Board of Directors on 15 May 2020 and confirmed by the Shareholders' Meeting on 12 November 2020
Giorgio Mosci	Independent Member terminated on 23 July 2020
Massimo Mancini	Vice-chairman and General Manager terminated on 21 March 2020
Yue Zhao	Member terminated on 14 May 2020
Carlo Micchi	Executive Member terminated on 24 March 2020
Board of Statutory Auditors

Consolidated Financial Statements Overview as of 31 December 2020

The main balance sheet figures of the Group as of 31 December 2020 are specified below:

(Euro thousands)	31.12.2020	31.12 2019 restated**	Change
Intangible Assets	15,411	17,609	(2,198)
Property, Plant and Equipment	1,356	3,040	(1,684)
Financial Fixed Assets	671	842	(171)
Total Fixed Assets	17,438	21,491	(4,053)
Inventories	1,754	1,861	(107)
Trade receivables	9,951	12,179	(2,228)
Trade payables	(13,591)	(20,623)	7,032
Operating/Commercial Working Capital	(1,886)	(6,583)	4,697

Other current assets and liabilities	(4,072)	(3,773)	(299)
Net Working Capital	(5,958)	(10,356)	4,398
Provisions for risks and charges	(885)	(924)	39
Deferred tax assets and liabilities	442	465	(23)

Total Net Invested Capital	11,037	10,676	361
Equity	(345)	1,633	(1,958)
Net financial liabilities*	(10,712)	(12,309)	1,597
Total Sources	(11,037)	(10,676)	(361)

* For the composition of this entry, see the following table.

** The items "Intangible Assets", "Deferred tax assets and liabilities" and "Equity" reported in the reference period have been restated following the completion of the "Purchase Price Allocation" related to the purchase of E-commerce Outsourcing S.r.l..

The Net Invested Capital of the Group at 31 December 2020, equal to € 11 million, is mainly comprised of Net Fixed Assets (€ 17.4 million), of Net Working Capital (€ -6 million) and of the Provisions for risks and charges, mainly including the Post-employment benefit provisions.

Property, Plant and Equipment (which include also the right-of-use on existing leases), equal to € 1.4 million (€ 3 million at 31 December 2019).

Intangible Assets, equal to € 15.4 million, are mainly ascribable to the goodwill for the acquisition of Giglio Fashion, of the IBOX Group and of E-Commerce Outsourcing S.r.l.. The movement (net of the period's amortisations) refers to increases for capitalised development costs borne entirely for the implementation and integration of IT platforms and the decrease for the write-down of Giglio Fashion goodwill. With regard to the purchase of E-Commerce Outsourcing S.r.l., which took place on 2019 Q4, the value assessed on the acquisition had been temporarily allocated at goodwill, and its purchase price allocation, pursuant to IFRS3, was completed during the course of 2020. The higher value (€ 3.1 million) of the consideration disbursed for E-commerce Outsourcing S.r.l.'s equity is due for € 1.2 million to the know-how contribution of the company to the Group, that is the skill to design and create e-commerce platforms, while the tax impact is equal to € 0.3 million. The non-allocated goodwill, calculated on a residual basis, amounts to € 2.3 million.

Financial Fixed Assets, equal to € 0.7 million, can mainly be attributed:

for 0.3 million, to the down-payment disbursed for the purchase of company Salotto Brera - Duty Free S.r.l., which was completed on 12 January 2021;
for € 0.2 million, to the guarantee deposits paid relating to rental contracts for the buildings at Milan and Rome;
for € 0.1 million, to the long-term portion of the credit resulting from the transfer to GM Comunicazione S.r.l., finalised on 20 December 2018, of the authorisation to supply audiovisual media services associated to channel 65 of the digital terrestrial.

	(Euro thousands)	31.12.2020	31.12.2019	Change
A.	Cash	5,085	2,991	2,094
B.	Bank and short-term deposits and cheques	-	-	-
C.	Securities held for trading	2	3,523	(3,521)
D.	Cash & cash equivalents (A)+(B)+(C)	5,087	6,514	(1,427)
E.	Current financial receivables	480	3,980	(3,500)
F.	Current bank payables	(826)	(6,812)	5,986
G.	Current portion of non-current liabilities	(1,851)	(2,456)	605
H.	Current bond	(500)	(4,759)	4,259
I.	Other current financial payables	(919)	(4,990)	4,071
	of which Related Parties	(493)	(400)	(93)
J.	Current financial liabilities (F)+(G)+(H)	(4,096)	(19,017)	14,921
K.	Net current financial liabilities (I) + (E) + (D)	1,471	(8,524)	9,994
L.	Non-current bank payables	(6,412)	(607)	(5,805)
M.	Non-current bond	(4,304)	-	(4,304)
N.	Other non-current payables	(1,467)	(3,179)	1,712
	of which Related Parties	-	(1,698)	1,698
O.	Non-current financial liabilities (K)+(L)+(M)	(12,183)	(3,786)	(8,397)
P.	Net financial liabilities (J)+(N)	(10,712)	(12,309)	1,598

The Net Financial Debt at 31 December 2020 and at 31 December 2019 is as follows:

The Group net financial debt amounts to € -10.7 million, highlighting an improvement on 31 December 2019 (€ -12.3 million) of € 1.6 million. The increase relates principally to the following factors:

• Sale of Vertice 360 shares over the course of the fiscal year for € 3.5 million;

• Collection of Tributary Credit in favour of the VAT office for € 3.5 million; Said credit, which was classified among the Current Financial Receivables of the NFD was collected in the first days of January (€ 3.2 million) and February (€ 0.3 million) 2020;

New funding from UBS to Ibox SA following COVID-19 pandemic for € 0.5 million;
Renegotiation of funding with Carige and BancoBPM for € 0.5 million;
Debt repayment to Simest under the exercise of the put option on behalf of Simest itself for the minority quota in Giglio TV for € 1 million;

• Financial debt repayment with related parties Meridiana Holding S.r.l. and Azo Asia Limited for € 1.2 million;

• Paid capital increase for € 0.5 million;

• Repayment of last instalments, for € 1.4 million, of the minibond issued in 2016, and consequent discharge;

• Repayment of outstanding instalments in 2020's first nine months (€ 0.3 million);

• Cancellation of receivable for earn-out for € 1.5 million, of which € 0.6 million for reduction via renegotiation (as per agreements signed on 24 July 2020), € 0.7 million as reimbursement and € 0.2 million converted via capital increase;

• Minor financial debts on leasing related to the effects of the renegotiations in order to obtain contractual resolutions on real estate fees, following the COVID-19 pandemics and to the repayment of rental fees subject to IFRS 16, for € 0.8 million;

• Minor debts for advances on invoices for € 0.8 million.

As described above, the Company had the chance to halt the payments of the instalments of the outstanding mortgages (so-called moratorium) pursuant to Art. 56 of Legislative Decree 18/2020 ("Heal Italy" decree), renewed by Art. 65 of Legislative Decree 104/2020 (the so-called "August Decree") and extended by Art. 1, par. 248 of the Budget Law 2021 (Law no. 178 of 30 December 2020). Following the last extension, the suspension terms agreed upon by the credit institutions in the month of April 2020 shall move to 30 June 2021. Thus, in 2020, the Company shall benefit, on a cash basis, from minor postponed instalments repayment for about € 2.7 million.

The net financial debt recorded at 31 December 2019 amongst its short-term liabilities also the financial debt related to the EBB S.r.l. bond. The regulation governing the terms and conditions of said Bond includes also some commitments and limitations borne by the Company, including the financial covenants, which, should they occur, they would entail the loss of the benefit of the term, along with the obligation for the Company to fully reimburse in advance the Bond (the socalled events of major importance).

On 11 March 2020, the Company formalised with the bondholder the suspension of the application of the aforementioned financial covenants' thresholds with regard to 31 December 2019, with retroactive effect, as announced before the end of the fiscal year by the creditor itself. Moreover, on 30 June 2020, the bondholder resolved to authorise the suspension of the application of the thresholds for the financial covenants with regard to the Test dates of 30.06.2020 and 31.12.2020.

Therefore, in the light of the above, the payment shall be requested by the bondholder only upon the maturities originally agreed upon in the agreement. Nevertheless, in spite of the above, on 31 December 2019, the bond was classified among the short-term liabilities, in formal execution of the provisions set forth in IAS 1, par. 74. Following the suspension of the application of thresholds

for the aforementioned financial covenants, as notified before the end of the fiscal year by the creditor itself, the Financial Report as of 31 December 2020 includes again said financial debt among the long-term liabilities.

The Company has requested the suspension of the application of the financial covenants' thresholds with regard to Test Dates 30 June 2021 and 31 December 2021.

Consolidated Financial Activity Overview as of 31 December 2020

The key consolidated economic highlights are shown below.

It is stated that, under the provisions of IFRS 5 accounting standards "Non-current assets held for sale and discontinued operations", the economic results of the media sector related to the previous fiscal year have been represented as "Discontinued operations".

Reclassified Consolidated Statement of Profit or Loss

(Euro thousands)	31.12.2020	31.12 2019 restated*	Change
Revenues from contracts with customers	42,285	40,208	2,077
Operating Costs	(35,213)	(34,955)	(258)
Gross Margin	7,072	5,253	1,819
Gross Margin %	16.7%	13.1%	3.7%
Payroll expenses	(5,126)	(4,216)	(910)
EBITDA Adjusted	1,946	1,037	909
EBITDA%	4.6%	2.6%	2.0%
Non-recurring costs	0	(1,755)	1,755
Amortisation, depreciation & write-downs	(4,287)	(1,787)	(2,500)
EBIT	(2,341)	(2,505)	184
Net financial charges	(22)	(1,590)	1,568
PROFIT BEFORE TAXES	(2,363)	(4,095)	1,732
Income taxes	(284)	(700)	416
PROFIT FOR THE PERIOD
(CONTINUING OPERATIONS)	(2,647)	(4,795)	2,148
PROFIT FOR THE PERIOD DISCONTINUED OPERATIONS (adjusted)	0	(11,028)	11,028
PROFIT FOR THE PERIOD	(2,647)	(15,823)	13,176
			0
EBIT adjusted to non-recurring costs	(2,341)	(750)	(1,521)
EBIT adjusted to non-recurring costs %	(5.5)%	(1.9)%	(3.6)%
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS
adjusted to non-recurring costs	(2,647)	(3,040)	393
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS
adjusted to non-recurring costs	(6.3)%	(7.6)%	1.3%
PROFIT FOR THE PERIOD adjusted to non-recurring costs %	(2,647)	(14,068)	11,421
PROFIT FOR THE PERIOD adjusted to non-recurring costs %	(6.3)%	(35.0)%	28.7%

* The items "Amortisation, depreciation & write-downs" and "Income taxes" reported in the reference period have been restated following the completion of the "Purchase Price Allocation" related to the purchase of E-commerce Outsourcing S.r.l..

The consolidated revenues, equal to € 42.3 million, grew by € 2.1 million (+5.2%) if compared to the consolidated figures of the same period for the previous fiscal year (€ 40.2 million). This increase can be mainly ascribed to the consolidation for the full year of subsidiary E-Commerce Outsourcing, purchased on 2019 Q4, and to the launch of the healthcare sector, a non-repetitive activity that generated PPE sales for € 10.4 million with a margin of about 25%.

The total of operating costs accounts for € 35.2 million (€ 35 million consolidated pro-forma figures at 31 December 2019) and is in line with the previous fiscal year.

Payroll costs increased by € 0.9 million on the same period of the previous year, due to the combined effect of the acquisition of E-Commerce Outsourcing S.r.l. and of the costs related to the initiation of a corporate reorganisation plan aimed to focus the Media staff on the e-commerce sector.

The EBITDA, equal to € 2 million (€ 1 million consolidated figures at 31 December 2019 adjusted to non-recurring costs), is growing if compared to the same period of the previous year due to the integration of the newly-purchased E-Commerce Outsourcing S.r.l. and to the implementation of the Giglio Salute division for the supply of PPEs.

The EBIT, equal to -2.3 million (€ -0.7 consolidated figures at 31 December 2019 adjusted to nonrecurring costs), is dropping due to the writedown of trade and other receivables and of Giglio Fashion's goodwill for € 1.6 million following the result from the impairment test. For more information, see Par. 4 – Goodwill of the Explanatory Notes.

The Net Profit of the period, equal to € -2.6 (€ -3 million consolidated figures of the same period in the previous fiscal year adjusted to non-recurring costs), was influenced by non-recurring operations such as the renegotiation of E-Commerce Outsourcing S.r.l.'s earn-out, equal to € 0.6 million (as per agreements signed on 24 July 2020), and the foreign currency conversion gain related to the funding in dollars by Meridiana Holding S.r.l. (related party) for € 0.4 million and by Azo Asia Limited (related party) for € 0.1 million.

Parent Company's Consolidated Financial Position as of 31 December 2020

The main balance sheet figures of the Parent Company as of 31 December 2020 are as specified below:

(Euro thousands)	31.12.2020	31.12.2019	Change
Intangible Assets	3,452	4,301	(849)
Property, Plant and Equipment	671	1,817	(1,146)
Financial Fixed Assets	12,426	16,657	(4,231)
Total Fixed Assets	16,549	22,776	(6,227)
Inventories	1,596	1,697	(101)
Commercial receivables	4,568	9,310	(4,742)
Commercial payables	(4,498)	(8,868)	4,370
Operating/Commercial Working Capital	1,666	2,139	(473)
Other current assets and liabilities	(2,193)	(1,578)	(615)
Net Working Capital	(527)	561	(1,088)
Provisions for risks and charges	(389)	(324)	(65)
Deferred tax assets and liabilities	692	760	(68)
Net Invested Capital	16,326	23,773	(7,448)
Net Invested Capital of Sales Activities	-	-	-
Total Net Invested Capital	16,326	23,773	(7,448)
Equity	(1,385)	(3,781)	2,396
Net Financial Debt	(14,941)	(19,992)	5,051
Total Sources	(16,326)	(23,773)	7,447

The Net Invested Capital of the parent company at 31 December 2020, equal to € 16.3 million, is mainly comprised of Net Fixed Assets for € 16.5 million (decreasing by € 6.2 million if compared to 31 December 2019), the Net Working Capital, equal to € -2.1 million (€ 0.6 million in 31 December 2019) and the Provisions for risks and charges, mainly including the Post-employment benefit provisions.

Property, Plant and Equipment, equal to € 0.7 million (€ 1.8 million at 31 December 2019), refers mainly to the investment in fixed assets and activities for right of use.

Intangible Assets, equal to € 3.5 million, mainly refer to the goodwill related to the purchase of Giglio Fashion for € 2.5 million and to the goodwill arising from the merger by incorporation of Ibox S.r.l. for € 0.7 million. For more information see Par. 4 – Goodwill of the Explanatory Notes. Financial Fixed Assets, equal to € 12.4 million, can mainly be attributed:

for € 10 million, to shareholdings in subsidiaries (this value decreased mainly due to the write-downs of investments in Giglio TV HK for € 3 million and in Ibox SA for € 0.7 million);
for € 1.8 million, to credits in favour of subsidiaries Ibox SA and Giglio USA;
for 0.3 million, to the down-payment disbursed for the purchase of company Salotto Brera - Duty Free S.r.l., which was completed on 12 January 2021;
for € 0.2 million, to guarantee deposits;

for € 0.1 million, to the long-term portion of the credit resulting from the transfer to GM Comunicazione S.r.l., finalised on 20 December 2018, of the authorisation to supply audiovisual media services associated to channel 65 of the digital terrestrial.

Parent Company's Operating Overview as of 31 December 2020

The financial and economic highlights of Giglio Group S.p.A. are illustrated below:

(Euro thousands)	31.12.2020	31.12.2019	Change
Revenues from contracts with customers	29,791	26,136	3,655
Operating Costs	(26,292)	(23,516)	(2,776)
Gross Margin	3,499	2,620	879
Gross Margin %	11.7%	10.0%	1.7%
Payroll expenses	(2,497)	(2,528)	31
EBITDA Adjusted	1,002	92	910
EBITDA%	3.4%	0.4%	3.0%
Non-recurring charges	0	(1,208)	1,208
Amortisation, depreciation & write-downs	(9,630)	(677)	(8,953)
EBIT	(8,628)	(1,793)	(6,835)
Net financial charges	242	(1,149)	1,391
PROFIT BEFORE TAXES	(8,386)	(2,942)	(5,444)
Income taxes	(33)	(369)	336
PROFIT FOR THE PERIOD
(CONTINUING OPERATIONS)	(8,419)	(3,310)	(5,109)
PROFIT FOR THE PERIOD
(DISCONTINUED OPERATIONS)	0	(5,592)	5,592
PROFIT FOR THE PERIOD	(8,419)	(8,902)	483

EBIT adjusted to non-recurring costs	(8,628)	(585)	(8,043)
EBIT adjusted to non-recurring costs %	(29.0)%	(2.2)%	(26.7)%

PROFIT FOR THE PERIOD FROM CONTINUING
OPERATIONS adjusted to non-recurring costs	(8,419)	(2,102)	(6,317)
NET PROFIT
FROM CONTINUING OPERATIONS adjusted to non
recurring charges %	(28.3)%	(8.0)%	(20.2)%
NET PROFIT adjusted to non recurring charges	(8,419)	(7,694)	(725)
PROFIT FOR THE PERIOD adjusted to non-recurring costs
%	(28.3)%	(29.4)%	1.2%

Revenues in 2020 amounted to € 29.8 million, increasing if compared to 31 December 2019 (€ 26.1 million). This increase is mainly due to the conversion of some of the Group's platforms and logistics lines designed for the fashion sector for the purpose of finding medical masks and thus meet the demand of PPEs generated by COVID-19 pandemic, which in turn generated revenues for € 10.4 million.

The EBITDA, equal to € 1 million (€ 0.1 million adjusted to non-recurring costs in 2019), as commented above with regard to the revenues, the increase is closely related to the launch of the healthcare sector.

The EBIT equals to € 8.6 million (€ -0.6 adjusted to non-recurring costs in 2019).

The Net Profit amounts to € 8.4 (€ -2.1 million consolidated figures of the same period in the previous fiscal year adjusted to non-recurring costs).

4. Segment disclosure

IFRS 8 accounting standard – "Operating Segments" requires the disclosure of detailed information for each segment, understood as being a component of an entity (i) who is capable of carrying out an activity that generates revenues and costs, (ii) whose operating results are periodically reviewed by top management for the purposes of adopting decisions concerning resource allocation and performance assessment, and (iii) for which separate budget information are available.

The Group identified three business areas (Business Units) after segmenting its activities with reference to the types of products, production processes and target markets:

1. B2B e-commerce
1. B2C e-commerce
1. Corporate.

The operating units within the above business units are as follows:

1. B2B e-commerce: Giglio Group Spa, Giglio USA and Giglio Shanghai;
1. B2C e-commerce: IBOX, E-Commerce Outsourcing S.r.l. and Giglio Shanghai;
1. Corporate: includes centralised Group functions which can not be assigned to the business units and mainly carried out by Giglio Group S.p.A.

The individual sector results (net of inter-company eliminations) are as follows:

	B2B	B2C	Corporate	Total
(Euro thousands)	e-commerce	e-commerce
Revenues from contracts with customers	28,457	13,314	0	41,772
Other incomes	122	73	20	215
Capitalised costs		298		298
Total revenues	28,579	13,685	20	42,285

EBITDA	4,297	1,245	(3,595)	1,946
Amortisation, depreciation & write-downs	(1,724)	(714)	(1,850)	(4,287)
EBIT	2,573	531	(5,445)	(2,341)
EBT	2,487	358	(5,208)	(2,363)
Profit for the period	2,489	105	(5,241)	(2,647)

Over the course of 2020, in response to the COVID-19 emergency and its consequent lockdowns, the Group immediately diversified its digital strategies, converting part of its e-commerce activities in favour of the distribution of PPE, such as medical masks. This activity, which began in March, was included in the B2B business line, as the Company took its own position in the market. At the same time, the B2C sector, thanks to the consolidation for a full year of the subsidiary E-Commerce Outsourcing S.r.l., purchased on 2019 Q4, managed to keep its turnover in line with the previous fiscal year, despite the partial trade stop for goods such as clothing products, the severe logistics hardships and the reduced propensity to consume these products by the general public. The decrease affected all managed fashion brands. On the other hand, these minor revenues were partially compensated by the good performance of the food sector, whose volumes -albeit growing-, are still marginal if compared to the ones generated by the fashion sector.

The B2B e-commerce division highlights the write-down for goodwill of Giglio Fashion following the result of the impairment test. For more information, see Par. 4 – Goodwill of the Explanatory Notes.

	2019
	B2B
	e
	commerc	B2C	Corporat	Discontinued
(Euro thousands)	e	e-commerce	e	operations	Total
Revenues from contracts with customers	24,404	13,332	0		37,737
Other incomes	8	991	10		1,009
Capitalised costs		1,462	(0)		1,462
Total revenues	24,412	15,785	10		40,208
EBITDA Adjusted	1,630	3,610	(4,204)		1,037
Listing and non-recurring costs			(1,755)		(1,755)
Amortisation, depreciation & write-downs	(530)	(334)	(885)		(1,749)
EBIT	1,100	3,276	(6,844)		(2,467)
EBT	1,062	2,874	(7,993)		(4,057)
Profit for the period (Continuing Operations)	1,043	2,568	(8,380)		(4,768)
Profit for the period (Discontinued operations)				(11,028)	(11,028)
Profit for the period					(15,796)

The table below shows the sectors' results as of 31 December 2019; as highlighted above, the Media sector is represented as sector held for sale within the following discontinued operations.

As commented above, we highlight the increased performance in the B2B e-commerce area if compared to the same period of the previous fiscal year.

The Group does not use as an internal control driver the balance sheet data broken down by segment of activity and, consequently, segment assets and liabilities are not presented in this report.

5. Business seasonality

The Group's operations are affected by business seasonality, as reflected in the consolidated results. Specifically,in the e-commerce sector sales volumes are highly concentrated respectively in the first, third and fourth quarters at the winter and summer sales and during the Christmas period, also during the year affected by the COVID-19 emergency.

6. Human resources

The Group workforce, at 31 December 2020, totalled 83 employees of which 74 in Italy, 7 in Switzerland, 1 in the United States of America and 1 in China.

The following table illustrates the workforce of the Group for the year ended on 31 December 2020 and 31 December 2019.

31 DECEMBER 2020	31 DECEMBER 2019
Italy 74	Italy 77
Switzerland 7 (IBox)	Switzerland 18 (IBox)
U.S.A. 1 employee	U.S.A. 1 employee
China 1 employee	China 1 employee
Total 83 employees	Total 97 employees

Employees hired on temporary contracts are 4, and interns/trainees are 8.

Over the course of 2020, 20 resignations were recorded.

7. Investments

Group investments undertaken in 2020 refer to tangible and intangible fixed assets. As far as the latter are concerned, over the course of 2020, the subsidiary E-Commerce Outsourcing S.r.l.

incurred in development costs for its e-commerce platform, which were capitalised, against the negotiation of new brands in the pipeline.

The payroll costs incurred by the Group shall be reported in the following paragraph.

8. Research and development new products

The R&D costs include the development costs borne for the creation of I-box's technological platform. The costs have been capitalised only when the following could be proved:

The technical feasibility to complete the intangible asset so that it can be used or sold;
The intention to implement the intangible asset to use it or sell it;
The capability of using or selling the intangible asset;
The way in which the intangible asset shall generate probable future economic benefits;
The availability of technical, financial or other resources appropriate to complete the development and use or sell the intangible asset;
The capability to assess in a reliable way the cost of the intangible asset during its development.

In 2020, the subsidiary E-Commerce Outsourcing S.r.l. generated capitalised costs, inasmuch as they meet the aforementioned requirements.

These costs, totalling € 0.3 million, have been capitalised among the intangible fixed assets.

9. Significant Events During the Fiscal Year

On 20 January 2020, Giglio Group's Extraordinary Shareholders' Meeting resolved on the approval of the project of merger by incorporation of the wholly-controlled company Ibox s.r.l into Giglio Group S.p.A.. The merger project has been drafted jointly by the Incorporating company and the Merged one, pursuant to Art. 2501-ter of the Italian Civil Code, as well as approved by the respective Boards of Directors on 19 December 2019. On 20 January 2020, the project of merger has been approved also by Ibox S.r.l.'s Shareholders' Meeting. The merger is aimed at streamlining the Company structure by reducing management costs regarding its subsidiaries, as well as at centralising part of the business in the parent company. The merger , in implementation of Art. 2501-quater of the Italian Civil Code, was carried out using as reference the economic situations and assets as of 30 September 2019, both of the Incorporating and of the Merged Company. The merger deed was drafted on 3 June 2020 and, following the merger by incorporation, the

Company assumed all of the rights and obligations of Ibox S.r.l., continuing all relations that arose before the date of the merger, including those relating to legal proceedings. Pursuant to Art. 2504 bis, par. 3 of the Italian Civil Code, the transactions of the incorporated Ibox S.r.l. are recorded in the financial statements of the incorporating Giglio Group S.p.A. starting from 1 January 2020. The operation bears no weight on the consolidated financial statements.

On 27 January 2020, the company E-Volve Service USA was wound-up. At the time of the windingup, the company was not operating.

On 6 March 2020, Giglio signed an agreement with Simest S.p.A. (SIMEST), according to which Giglio Group S.p.A. purchased the ownership of the minority share of Giglio Tv Hong Kong shareholding, of which it already held 51% of the shares. The transfer was not yet registered in the Shareholders' Register nor with the competent offices, pursuant to Hong Kong's law.

It is noted that, by agreement, the application of the Italian law is provided, within the Italian jurisdiction in the Courts of Milan and Rome.

It must be pointed out that, also for joint-stock companies, especially in the event of no issue of stock, as allowed by Art. 2346 of the Italian Civil Code, for the transfer of shares' ownership, as well as for the shareholding of a limited company, the consent of both parties is enough, on the basis of the general principle set forth in Art. 1376 of the Italian Civil Code. As confirmed by a recent sentence (Court of Cassation, sec. I, no. 2041 of 26 January 2018), the fulfilment of formalities set forth in Art. 2022, par. 1 of the Italian Civil Code (transfer of sold stocks and necessary registrations in the Shareholders' Register) does not constitute a requirement for the completion of the purchase or for the actual transfer of ownership (for which, as stated above, consent is enough), but concerns only the executive, certification and disclosure stage of the transfer, thus having an impact on the legitimacy of the new shareholder; indeed, the latter cannot exercise any of his/her rights until the aforementioned formalities have been fulfilled.

On the basis of these premises, that is of the validity, effectiveness and execution of the transfer of Giglio TV HK shares held by SIMEST to Giglio Group S.p.A., the transfer between transferor and transferee was completed on 19 March 2020 with SIMEST's acceptance of Giglio Group S.p.A. proposal. Moreover, the relevant agreement, effective for all purposes, was followed by the full disbursement of the consideration by Giglio Group S.p.A..

As of today, due to the notorious political turmoil in Hong Kong and the subsequent COVID-19 pandemic, the Company did not have the chance to register said transfer in the Shareholders' Register nor with Hong Kong's Registration Office. Giglio Group S.p.A. has agreed with SIMEST (who, subsequently, has already released the sureties given by Giglio Group S.p.A. for its obligations towards SIMEST) to proceed, as promptly as possible, to the aforementioned formalities, appointing a local lawyer to support the offices.

On 10 March 2020, the Board of Directors approved an update to the Industrial Plan 2020-2024. With the new Industrial Plan, the Company updates its previous sales estimates for the future fiscal years, taking also into account the integration of the business carried out by its controlled company, ECO, the business prospects in China/Far East due to the effects of the COVID-19 outbreak, as well as the increased importance to the Distribution of products on e-commerce platforms worldwide and to marketplaces' new connection services.

On 11 March 2020, the bondholder of the bond issuing called EBB approved the request of the company, presented on 14 February 2020, to allow, by way of derogation form the regulation of the bond, the suspension of the application of the thresholds of the leverage ratio financial parameter and of the gearing ratio financial parameter, only with regard to the Test Date of 31 December 2019, with retroactive effect. For the purpose of said suspension, EBB Export S.r.l., the bondholder, received from Meridiana Holding, majority shareholder of Giglio Group, an indemnity and guarantee deed in its name for an amount of up to € 1 million.

On 12 March, Giglio Group S.p.A. acquired the direct control of its subsidiary Giglio (Shanghai) Technology company Limited through Giglio TV HK, in order to streamline the chain of control, a preparatory event for the following transfer of the company from Hong Kong, other than a chance to streamline the relations between the Italian and the Chinese companies in the context of the commercial transactions for the development of Chinese activities. On 22 April 2020, with notary deed with index no. 44206 and register no. 25676 of Notary Andrea Fusaro from Genoa, an amendment deed was signed for the authenticated private agreement concerning the transfer of Giglio Shanghai's shareholding between Giglio Group S.p.A. and Giglio TV HK Ltd (authenticated private agreement of 12 March 2020), whose price was erroneously recorded at € 6,398,214.43 instead of € 40,000.

On 21 and 24 March respectively, directors Massimo Mancini and Carlo Micchi resigned from their offices of executive directors.

On 2 April 2020, Giglio Group S.p.A. signed a half-year framework agreement with Confindustria for the supply of PPE (KN95 - FFP2 - CE masks included) to all of its member companies. Confindustria's member companies that can benefit from this agreement with Giglio Group are more than 150,000 on the national territory. The agreement is part of the activities of Confindustria's Emergency Management Programme, in collaboration with the Department of Civil Protection, which allows for a quick and safe customs clearing of the incoming medical products from abroad without the risk of products' requisition. As a matter of fact, the agreement provides for the acquisition of PPE without customs clearing problems, even for those companies that do not carry out public service activities.

On 20 April 2020, Giglio Group S.p.A. signed a framework agreement with Sinopharm, one of the most important pharmaceutical groups worldwide, allowing for the import of PPE such as FFP2 & FFP3 medical masks, sanitising gels, gloves, protectives suits and glasses, as well as for the supply of the innovative testing kits for the detection of Covid-19 antibodies, also known as Sars Cov-2 Antibody Assay kits. The Healthcare B2B and B2C platform of Giglio Group shall continue pursuing its activities regardless of the currently ongoing health emergency, offering a wide range of personal care products, which will become more and more sought-after in the near future. The agreement signed with Sinopham provides also for the export to China of pieces of medical equipment and items produced by Italian industries, thus contributing to their capillary distribution in the Asian market. Giglio Group thus launches its own B2C website at www.gigliosalute.it, where single privates, professionals, craft workers and small business will be able to purchase the main PPE.

On 23 April 2020, the Ordinary and Shareholders' Meeting of Giglio Group S.p.A. met under the chairmanship of Alessandro Giglio and in the presence of notary Aurelio Bonacci. The Ordinary Shareholders' Meeting approved the Annual Financial Report at 31 December 2019, in the terms proposed by the Board of Directors. The Civil Financial Statement showed a loss of € 8,902,417.64,

and the Meeting resolved to write off the loss by using available reserves, which, net of results carried forward from the previous financial year, amounted to € 9,022,201.43.

The Ordinary Shareholders' Meeting approved to reduce the number of members of the Board of Directors from seven to five, with consequent reduction of the overall annual remuneration from € 335,000 to € 295,000.

As reported in the Directors' Report as of 31 December 2019, amongst the "Significant Events After the End of the Fiscal Year", in March 2020 and in the following interim reports, in the context of the definitive exit from the Media sector, Giglio Group S.p.A. transferred its full shareholding in Giglio TV Hong Kong to a Chinese industrial group, against a payment of € 3.0 million, equal to the carrying value of the subsidiary, through the subscription of a relevant agreement. The transfer was regulated through the winding-up of the receivable that was due to Giglio Group S.p.A. by Giglio TV.

Upon subscription of the agreement, following a request from the purchaser, on 27 April 2020, the headquarters of Giglio TV and its Company Secretary were changed.

Subsequently, events that, to the reporting date, do not allow for the certain consideration of Giglio TV as external to the Group's scope for accounting purposes took place.

Indeed, as it emerged from in-depth analyses carried out in the first months of 2021 with a view to the Financial Statements' draft – also following the notice of a lawsuit against Giglio TV in 2021 for other reasons, deemed as "frivolous and vexatious" by the Hong Kong lawyer – the purchaser, who was prompted for this purpose also on September 2020, did not fulfil all required formalities, pursuant to local laws, for the registration of the shares' transfer.

The COVID-19 pandemic influenced said fulfilment, provoking in Hong Kong a harsh lockdown which lasted for the whole 2020 and due to which most offices remained closed and, to this day, have yet to recover their normal operation. For the same reason, the offices of the Company's accountants and financial auditors suffered from the same closures. In this context, another element of delay was the critical relationship between China and Hong Kong, which led, in May 2020, to new demonstrations, which cause most offices, transportation and roads to be closed. Hence, in light of the above, Giglio Group considered, as a conservative measure, with regard to the accounting sphere:

To consolidate Giglio TV as of 31 December 2020;

To reduce to zero in Giglio Group's Financial Statements as of 31 December 2020 the value of Giglio TV shareholding (equal to € 3.0 million) and of the receivable due by Giglio TV (equal to € 3.39 million), as well as to reduce the value of the shareholding in Giglio Shanghai by € 160,000. for a total write-down of € 6.56 million. These write-downs take into account also the results of Giglio TV's Financial Statements as of 31 December 2020 and do not have any effect on the Consolidated Financial Statements.

On 30 April 2020, Mr Massimo Mancini resigned from his office of General Manager, thus terminating his employment relation with the Group.

On 14 May 2020, director Yue Zhao resigned from her office of non-executive director.

On 15 May 2020, Mr Francesco Gesualdi was co-opted as new independent director of the Group.

On 18 May, Giglio Group S.p.A. signed an agreement with Confcommercio for the creation of the portal https://confcommercio.gigliosalute.it and the supply of KN95 - FFP2 valveless medical masks to all of its member companies.

With regard to the "EBB Export Programme" bond, on 30 June 2020, the bondholder resolved to authorise the suspension of the application of the thresholds for the financial covenants with regard to the Test dates of 30.06.2020 and 31.12.2020.

On 23 July 2020, Alessandro Giglio, the Group's majority shareholder through Meridiana Holding, announced to the Company his will to renounce to part of his operational powers while retaining his position of Chairman, as well as all of the powers related to the strategic management of the Group. On the same date, Giorgio Mosci resigned from his office, effective immediately. The Board of Directors co-opted Marco Riccardo Belloni as director of the company, vesting him with the powers of the CEO.

On 30 September 2020, the GIGLIO GROUP S.P.A. - 5.4% 2016-2022 BOND, with ISIN code IT0005172157, with nominal value of € 3.5 million, was fully reimbursed.

On 12 November 2020, the Ordinary and Extraordinary Shareholders' Meeting resolved:

1. to appoint two directors, pursuant to Art. 2386 of the Italian Civil Code: Marco Riccardo Belloni and Francesco Gesualdi
1. to vest the Board of Directors, pursuant to Art. 2443 of the Italian Civil Code and to Art. 6.7 of the By-laws, as well as to Art. 44, par. 3 of Decree Law no. 76/2020, converted by Law no. 120/2020, until 30 June 2021, with the power to increase the share capital upon payment, without option rights pursuant to Art. 2441, par. 4, second sentence of the Italian Civil Code, in separate issues pursuant to Art. 2439, par. 2 of the Italian Civil Code, within the limits of 20% (twenty percent) of the existing share capital, through the issue, also in more tranches, of ordinary shares without any nominal value, with the same characteristics of the ordinary shares already issued by the issue date, with regular dividend, to be offered in subscription to entities identified by the Board of Directors - including qualified industrial and/or financial Italian and international investors, and/or current shareholders and collaborators of the Company - possibly also through the conversion of loan payables into risk capital by shareholders, provided that the issue price of the shares corresponds to the market value of those already issued, taking into account the general context and the price at which the institutional investors would be willing to purchase said shares, and that this is confirmed by a specific report from a statutory auditor or an auditing company; moreover, to establish that the issue price of the conversion shares for the capital increase (and their division between share capital and share premium) shall be determined by the Board of Directors, provided that the issue price of the shares corresponds to the market value of those already issued, taking into account the general context and the price at which the institutional investors would be willing to purchase said shares, and that this is confirmed by a specific report from a statutory auditor or an auditing company. The Meeting also resolved to amend Art. 6 of the By-laws.
1. to give authorisation for the Board of Directors, pursuant to Art. 2443 of the Italian Civil Code and to Art. 6.7 of the By-laws, for a period of five years starting from the date of the meeting's resolution (and, hence, until 12 November 2025), to increase the share capital upon payment in separate issues, without option rights pursuant to Art. 2441, par. 4, first sentence, for an amount of € 366,133.70 in principal, to be settled through contributions in kind (more specifically, company's branches, businesses or plants organised for the performance of the activities included in the Company's object, as well as receivables,

investments in joint ventures, listed and not listed financial instruments and/or other assets considered as instrumental by the Board of Directors for the achievement of the Company's object may be object of a contribution on behalf of third parties.), through the issue, also in more tranches of a maximum of 1,830,668.50 ordinary shares without any nominal value, with the same characteristics of the ordinary shares already issued by the issue date, with regular dividend, in accordance with the criteria used to determine the issue price set forth by Art. 2441, par. 6 of the Italian Civil Code; moreover, to establish that the issue price of the conversion shares for the capital increase (and their division between share capital and share premium) shall be determined by the Board of Directors, provided that the issue price of the shares corresponds to value of the Net Equity, also taking into account the performance of the listings over the last six-months period. The Meeting also resolved to amend Art. 6 of the By-laws.

On 22 December 2020, Giglio Group S.p.A. completed the allocation of no. 2,439,790 ordinary, newly-issued shares, at a price of € 1.97 per share, for a total value of € 4,806,386. The value of the capital increase thus amounted to € 487,958 in nominal value and € 4,318,428 at share premium. This is a Transaction of Major Importance with related parties, as Meridiana Holding S.r.l., majority shareholder of the company (for more information on the relationship between the Company and Meridiana Holding S.r.l., see par. 35 - Transactions with subsidiaries and related parties), subscribed, through the conversion of claims, no. 2,097,050 shares, equal to 85.95% of the increase. With regard to the transactions of major importance with related parties, see chapter 2 of the Information Document prepared pursuant to Art. 5 of the Regulation adopted by Consob with resolution no. 17221 on 12 March 2010, available on the authorised storage mechanism and on the Company's website www.giglio.org in the "Corporate Governance/Shareholders' Meeting/Shareholders' Meeting 12 November 2020", together with the opinion of the Internal Control, Risks and Related-Parties Committee.

Other than Meridiana Holding S.r.l., another qualified shareholder, Antonio Lembo, related party as CEO of E-Commerce Outsourcing S.r.l. (company wholly owned by Giglio Group S.p.A.), joined the increase through the conversion of claims, purchasing no. 81,218 shares. Finally, the capital increase was subscribed by institutional investors for a total of no. 261,522, for a total of € 0.5 million.

10. Significant Events After the End of the Fiscal Year

On 12 January 2021, Giglio Group S.p.A. signed a binding agreement for the purchase of Salotto Brera - Duty Free S.r.l., a company engaged in a national and international level in the distribution and trading of fashion and food products. Stefania Mariani, who held the totality of the share capital of Salotto Vrera - Duty Free S.r.l., will form part of the team handling the Group's Distribution division, providing her expertise and her experience of more than 20 years in the international distribution sector of fashion, food and luxury products.

The countervalue of the transaction has been agreed as € 1,175,000, including a positive NFP of more than € 450,000 and a total earn-out of € 200,000 to be determined on the basis of the EBITDA recorded over the course of the following two fiscal years.

On 23 February 2021, E-Commerce Outsourcing S.r.l., owned by Giglio Group S.p.A., signed an agreement with 7Hype S.r.l. aimed at integrating a branch of 7Hype into its corporate structure. The agreement consists in the 30-month lease contract of a business unit of 7Hype focused solely on marketing automation activities. Upon the conclusion of the lease, E-Commerce Outsourcing S.r.l. will have the right to purchase said business unit. 7Hype is the first Italian company specialised in Marketing Automation activities and operates at an international level through its brands "7Hype – Marketing Automation" and "Marketing Automation Academy".

On 3 March 2021, the Board of Directors approved an update to its own Industrial Plan 2021-2025. With the new Industrial Plan, the Company updated the previous estimated sales for future fiscal years, taking into account the integration of the business of its subsidiary E-Commerce Outsourcing S.r.l., of the newly-purchased Salotto di Brera S.r.l., the integration of the 7Hype branch, the business prospects in China/Far East also in light of the effects of COVID-19 pandemic, the greater importance of products' distribution towards e-commerce platforms worldwide and the new connection services with marketplaces.

As noted in Par. 9 - Significant Events During the Fiscal Year, as reported in the Directors' Report as of 31 December 2019, amongst the "Significant Events After the End of the Fiscal Year", in March 2020 and in the following interim reports, in the context of the definitive exit from the Media sector, Giglio Group S.p.A. transferred its full shareholding in Giglio TV Hong Kong to a Chinese

industrial group, against a payment of € 3.0 million, equal to the carrying value of the subsidiary, through the subscription of a relevant agreement. The transfer was regulated through the winding-up of the receivable that was due to Giglio Group S.p.A. by Giglio TV.

Upon subscription of the agreement, following a request from the purchaser, on 27 April 2020, the headquarters of Giglio TV and its Company Secretary were changed.

Subsequently, events that, to the reporting date, do not allow for the certain consideration of Giglio TV as external to the Group's scope for accounting purposes took place.

To consolidate Giglio TV as of 31 December 2020;
To reduce to zero in Giglio Group's Financial Statements as of 31 December 2020 the value of Giglio TV shareholding (equal to € 3.0 million) and of the receivable due by Giglio TV (equal to € 3.39 million), as well as to reduce the value of the shareholding in Giglio Shanghai by € 160,000. for a total write-down of € 6.56 million. These write-downs take into account also the results of Giglio TV's Financial Statements as of 31 December 2020 and do not have any effect on the Consolidated Financial Statements.

11. Disclosure pursuant to Article 2428 paragraph 3 No. 6-bis of the Civil Code

Over the course of 2019, the Parent Company Giglio Group S.p.A. issued a non-convertible bond of € 5 million in principal, made up of 50 bearer bonds with a denomination per unit of € 100,000.00 each.

The issue of the non-convertible Bond took place in the context of the operation"EBB Export Programme", aimed at the retrieval of financial resources by selected Companies for funding and supporting the internationalisation projects of their core businesses.

The main characteristics of the Bond are:

Aggregate principal amount: equal to € 5 million;
Subscribers: the Bond was fully subscribed by the SPV;
Listing: the Bonds shall not be listed on any regulated market nor on any MTF;
Terms of issue: the Bonds shall be issued in a single tranche;
Form: the Bonds are bearer bonds issued in book-entry form and centralised at Monte Titoli S.p.A.;
Issuance Price: the issuance price equals to 100% of the nominal value of the Obligations; - Bonds' minimum value: the minimum value of each Bond amounts to € 100,000;
Custody and settlement: in case of subsequent negotiation, transfer shall be subscribed only to qualified investors, as per Art. 100 of Legislative Decree no. 58/1998 and Art. 34-ter, par. 1, letter b), of CONSOB Regulation no. 11971/1999, as amended and integrated;
Interests: the Bond shall bear interest at the fixed nominal gross annual rate of 4.572%, to be paid with a semi-annual coupon postponed until the expiration of the Bond (or, if earlier, until the date in which Bonds shall be fully redeemed).
Legal duration and expiration: the Bonds shall have a legal duration of 8 years and 6 months and the expiration date is set at the last interests' payment date of 2027;
Reimbursement: without prejudice to anticipated reimbursement's hypotheses adoptable by the Company or to the occurrence of specific events provided for in the Bond's regulation, adoptable by Bondholders, the Bonds shall be redeemed at par, i.e. at 100% of their nominal value, pursuant to the amortisation plan set forth in the regulation, with 13 semi-annual capital instalments, with a grace period of 2 years;

Paying agent, Bonds paying agent and bank agent: the functions of paying agent shall be carried out by Securitisation Services S.p.A. whereas the functions of Bonds paying agent and bank agent shall be carried out by Banca Finanziaria Internazionale S.p.A.;
Tax regime: the Bonds shall be subject to the tax regime set forth in Legislative Decree no. 239 of 1 April 1996, as amended and integrated;
Applicable law: Bonds issue and contractual obligations deriving by the issue shall be governed solely by the law of the Italian Republic and any dispute arising shall be presented exclusively to the Italian jurisdiction and adjudicated by the exclusive competence of the Court of Milan. Furthermore, the following credit enhancements were envisaged:
(i) the issue by SACE S.p.A. of an autonomous, first-demand guarantee in favour of the SPV as guarantee of the compliance with the obligations of payment made against the Company's capital and interests deriving from the Bond issued by the same. In the event of non-compliance by the Company with the obligations of payment made against the Company's capital and interests deriving from the Bond, the SPV shall be able to address the non-collection by levying execution on SACE's Guarantee. SACE's Guarantee shall be intended as a public support measure aimed at the development of production activities covered by the counter-guarantee of the Italian State, within the framework of application of Legislative Decree no. 123 of 31 March 1998 ("Provisions for the optimisation of the public support to the enterprises, as per Art. 4, par. 4, letter c) of Law no. 59 of 15 March 1997");
(ii) the establishment by the Company of a debt service reserve (the "DSR") on cash collateral in favour of the SPV, amounting to the sum due in the form of interests at the first interests' payment date concerning the Bond: (a) for the purpose of allowing the SPV to promptly comply with its payment obligations with Investors, in the event that the Company fails to promptly comply with its payment obligations in the form of interests concerning the Bond and pending the enforcement of the related SACE's Guarantee; as well as (b) for the purpose of covering the so-called negative carry of the SPV in the event of payment of amounts in principal on the Bond in different dates than the one provided for by the related regulation.

The issue of SACE's Guarantee and the establishment of the cash collateral on the debt service reserve are not incorporated in the securities representing the Bond and, therefore, in case of subsequent negotiation, shall not be negotiated together with the securities.

In compliance with market standards, the regulation governing the Bond's terms and conditions includes, other than the aforementioned elements, also (i) some commitments and limitations borne by the Company, including, by way of example but not limited thereto, financial commitments (the so-called financial covenants), as well as disclosure and industrial commitments and (ii) bondholders safeguards in the case of events detrimental to their interests, which shall activate the acceleration clause and thus oblige the Company to fully redeem the Bond in advance (the so-called events of major importance). The industrial commitments mentioned above include the obligation to finalise the internationalisation project, whose content is attached to the Regulation of the Bond. The financial covenants to be respected throughout the life of the Bond are as follows: a) a gearing ratio, and b) a leverage ratio, as defined by the Regulation of the Bond. In particular: (a) the leverage ratio shall not be greater than: (i) 4.5 for 2019 and 2020 and (ii) 3.5 starting from 2021 and until the expiration of the Bond; and (b) the gearing ratio shall not be greater than 2 for the whole duration of the Bond. On 11 March 2020, EBB S.r.l., the bondholder, following the request received by Giglio Group S.p.A. to waive the contractual provisions of the bond issuing, resolved to authorise a suspension of the application of the thresholds for the financial covenants with regard to the Test Data (31.12.2019), with retroactive effect at 31 December 2019, since the company was not respecting to that date the parameters set forth in the same covenants. Moreover, on 30 June 2020, the bondholder resolved to authorise the suspension of the application of the thresholds for the financial covenants with regard to the Test data of 30.06.2020 and 31.12.2020.

The Company requested a new suspension of the application of financial covenants' thresholds with regard to Test Dates 30 June 2021 and 31 December 2021.

12. Outlook

The permanence of risks and uncertainties related to COVID-19 pandemic requires further prudence in facing the near future. Even though, apparently, the e-commerce may seem to be aided by the forced slowdown of physical retail, and the ongoing cultural shift may reasonably lead towards the growth of digital stores (as seen also in the first months of 2021), the fact that the economic system is currently facing an incessant consumption crisis cannot be undervalued. It is evident, then, that the benefit of digital sales increases is not enough to support the decline of the other channels and, as such, productive companies will have to accelerate on the implementation of change, operational streamlining and digitalization processes. In this scenario,

out B2C - E-Commerce Service Provider division will inevitably become subject to pressure for the numerous technological updates requested by our clients in order to increase sales and services more than proportionally if compared to an organic channel evolution that should have happened were we in a normal context. This situation, which is obviously going to saturate the productive capacity of the Group, calling for a constant investment to support growth, also implies a constant analysis on the strategic nature of its role with partnering brands (clients), thus becoming more and more a technical and process partner, but also an outsourcing service provider. The challenge the Group has to face in the following months is to remain in line with the requests of its clients, giving them greater attention, and to focus on new projects only in order to build long-term relationship with an elevate added value for the client and the Group both. In this context, the Group shall differentiate between sectors so as to reduce its dependence on the fashion world, thus focusing also in those sectors were business is already operative, such as e-commerce for retail, design, home decor, healthcare and food products. The B2B division, enabler for the marketing of products towards the marketplaces and the international distribution, on the one hand, benefits from the growth of its clients' marketplaces that, in turn, increases its volumes and market share in a quick and constant way, and on the other hand, is subject to a constant pressure on prices brought about by consumers' impoverishment, that leads marketplaces to implement significant promotions in order to keep purchases on a constant basis. Along with said context, the duties applied by the USA in China for import goods further squeeze the division's chances of growth, which shall operate more and more strategically and selectively with its partnering brands, increasing the number of marketplaces and countries and integrating the processes so as to boost efficiency. The expectations for this division are of being driven by the growth of its clients, albeit more and more demanding, by investing in business development in order to constantly consider new operators and new channels, but also by increasing the product categories in which to operate (fashion sector aside).

From the sales analyses of 2021 Q1, a substantial stability of the B2C division and a slowdown of the B2B one were recorded, mainly ascribable to resettlements in goods deliveries to the clients, which are considered to be widely recoverable over the course of the year.

Going Concern

Pursuant to IAS 1, the assessments issued by the Directors regarding the existence of the assumption of the Company's going concern for the purpose of drafting the annual financial statements at 31 December 2020 are reported below.

The Group's Financial Statements as of 31 December 2020 record a Net Equity of € 345,000, including the loss for the period of € 2,627,000.

On 03 March 2021, the Board of Directors of Giglio Group S.p.A. approved the Industrial Plan 2021-2025, which provides for the integration of the business activities of its subsidiary E-Commerce Outsourcing S.r.l. (ECO), acquired at the end of 2019, and of the newly-acquired Salotto di Brera S.r.l., acquired on 15 January 2021.

The Industrial Plan considers a GMV (Gross Merchandise Value - reference value for e-commerce transactions) acceleration at a cumulative growth rate of about 16% both for organic growth - in line with the expectation of the reference market (online sales for luxury fashion) - and for new brand acquisitions.

During the time span of the Plan, the objective is to significantly increase revenues, quickly regaining a significant sustainable profitability (Ebitda/Revenues) on the long term, with an incidence of more than 10% in the last year of the plan. The objective is to obtain a balance between B2B activities -which include both the digital marketplaces' distribution (strongly developing as a stock demobilisation channel, especially in 2021 on the basis of the huge stocks that, due to the COVID-19 crisis, are being accumulated) and the newly-acquired Salotto di Brera, specialised in travel retail supplies (cruise ships on-board sales and duty-free shops in ports and

airports)-, and B2C activities, with the advanced technological solutions proposed by ECO's platform, integrated also for Ibox SA's clients, also for product categories outside the reach of the Fashion sector, such as design, electronics, DYI, food and beauty retail.

The Industrial Plan provides for an improvement from a financial and asset point of view, counting on the generation of positive cash flows, a working capital control to support B2B sales and minor financial needs fro investments than the previous fiscal years following the acquisition of the technological expertise of ECO and the internal investments carried out throughout 2020 on the platforms. The Directors carried out adequate sensitivity analyses on the main hypotheses of the Plan, also taking into account the cash profile. Finally, the Directors, with regard to the COVID-19 epidemic that quickly spread to many areas of the world, Europe included, believe that it is extremely hard to make reliable predictions on future developments. For this purpose, a monitoring group has been established, tasked with the objective of monitoring corporate functionality and any eventual criticality.

It is noted that 2021 budget used by the Directors for assessing the existence of the going concern provides for the generation of a positive cash flow against slightly positive economic results. The formulation of said prediction includes, however, some assumptions, whose eventual incomplete implementation (singularly and/or cumulatively) could give rise to a reduction of the plan's results The main assumptions made by the Directors for the assessment of 2021 cash flow are as follows:

Significant commercial and organic growth of the B2C division, characterised by the immediate payment from users and the deferred payment of goods and services to suppliers;
Increased efficiency of the processes generated and a reduction of the central costs due to the streamlining of the scope of corporate activities, as the disposal of an office in Milan and other saving activities;
Better management of the average collection times, mainly due to the potential implementation of the no-recourse factoring mechanism for the receivables arising from the sales of some major clients active in the B2B segment and to the better management of the commercial reliance on behalf of suppliers;
As pointed out in the Explanatory Notes regarding the debt owed to Vertice 360 of about € 2.5 million, it is noted that its payment is included in 2021 Plan, in the event of an adverse judicial

outcome, as repayable in the long-term, taking into account a reasonable prediction of settlement of the dispute.

2021 forecast of the possibility to renegotiate some multiannual agreements towards nonstrategic suppliers, also by obtaining deferred payments, in continuity with what has been done in the previous years.

With regard to the aforementioned assumptions, the Directors highlight that:

2021 budget and 2022-2025 Plan have been drafted with reference to concrete and specific actions to be undertaken over the course of the whole period of the Plan that, however, due to their inherent nature, include general and hypothetical assumptions, as well as discretionary, related to the usual characteristics of a multiannual plan, and that these actions could be implemented in different times and with different effects than the ones expected, albeit they do not expect, as of now, the failure to implement said plan;
Negotiations have been started with current suppliers in order to recover facilitation payments for the company, as well as with main credit institutions in order to gain new 72-months funding guaranteed by MCC, or to renegotiate existing funding with shorter expirations, bringing them to 72 months in order to improve the management of cash flows aimed at debt reimbursement;
EBB Export S.r.l., subscriber of the bond, has granted (on 30 June 2020) the waiver of the measurement of the financial covenants on 2020 deadlines (i.e. 30 June 2020 and 31 December 2020); in particular, the bondholder approved the request of the company to allow, by way of derogation form the regulation of the bond, the suspension of the application of the thresholds of the leverage ratio financial parameter and of the gearing ratio financial parameter, only with regard to the Test Date of 30 June 2020 and 31 December 2020. For the purpose of said suspension, EBB Export S.r.l., the bondholder, received from Meridiana Holding S.r.l., majority shareholder of Giglio Group, an indemnity and guarantee deed in its name for an amount of up to € 1 million. The Company requested an extension of the waiver of the test date of 30 June 2021 to EBB Export;
With regard to the aforementioned risk connected to the COVID-19 epidemic, the company has been actively working to obtain any economic or financial benefit in order to obtain additional liquidity beside its cash plan, in order to face any criticality that should arise as a consequence of said epidemic; on the other hand, the fashion sector, due to the simultaneous closure of the

brands' stores, can reserve to the Group interesting opportunities by using its unique distribution platform on the national territory for the purpose of facilitating the disposal of the stock that is currently being strongly accumulated with the producers.

The Directors, despite the aforementioned uncertainties, believe that the results set in the Plan will be achieved and consider that a reasonable expectation that the Group and the Parent Company will rely on adequate resources for the progress of their business for at least 12 months from the approval of these Financial Statements exists, thus drafting them in application of the assumption of going concern.

Moreover, the aforementioned also takes into account the Board of Directors' right to exercise the proxy vested to it on 12 November 2020 by the Shareholders' Meeting, aimed at increasing the share capital by issuing a maximum of no. 1,221,547 shares by 30 June 2021, as well as the Board's intention to exercise it. On 28 April 2021, the Board of Directors resolved to exercise the proxy vested to it by the Shareholders' Meeting n 12 November 2020 in order to execute a reserved share capital increase in kind, pursuant to Art. 2443 and 2441, par. 4, second sentence of the Italian Civil Code, within the limits of 6.67% of the pre-existing capital (equalling to the residual part of the proxy, as of the reporting date not yet exercised), for the purpose of strengthening the Company's economic and financial structure.

To this extent, the Company requested and obtained a favourable legal option for the use, also in the event of a relevant situation as per Art 2446, par. 1 of the Italian Civil Code, of the share capital increase already resolved upon, to be performed by 30 June 2021 (as provided by the Meeting's resolution and as prescribed by the emergency regulations set forth in Art. 44, par. 3 of the Legislative Decree no. 76/2020, converted with Law no. 120/2020). The execution of the proxy represents, as far as the Directors are concerned, a suitable and appropriate action for the full development of the Industrial Plan in the specific context mentioned above, and is in line with the reasons that led to the grant of said proxy in the first place (and, mainly, with the need to "find financial resources that could allow, on the one hand, for the strengthening of the Company's economic and financial position and, on the other hand, for the development and growth of the Company"). In the exercise of its proxy, the Company shall follow the procedure set forth in Art. 2446, par. 1 of the Italian Civil Code (not excluded by Art. 6 of the Law Decree no. 23/2020), which calls for the prompt involvement of the Shareholders' Meeting in a merely informational function

without imposing an immediate intervention for the writing-off of losses, which the emergency regulation requires only when the loss, higher than a third of the share capital, remains after five fiscal years from the year in which the losses were first recorded.

With regard to the proxy's exercise, the Company recorded the formal commitment of its majority shareholder to subscribe 50% of said capital increase, which, taking into account the market value of the Company's shares in November 2020, would equal to € 1.2 million, to be paid in cash. Moreover, the Board of Directors already contacted a first operator, who followed the Company as specialist in the first months of 2021, in order to support the Company for the preparatory measures and the necessary formalities for the execution of said capital increase.

In light of the majority shareholders' commitment and of the specialist's availability, the Board of Directors considers that the share capital increase will have a positive outcome, thus reconfirming the expectation that both the Group and the Parent Company will be able to rely on adequate resources for carrying forward its business in coherence with the assumption of going concern.

13. Information and Management of Principal Risks and Uncertainties

In this section of the report, we wish to report upon the risks - considered as those events which may impact the achievement of corporate objectives, and therefore upon value creation.

Risks are broken down between financial and non-financial and therefore according to the source of the risk. The risks may be broken down into two macro-categories: internal and external risks, according to whether stemming from internal group operating processes or from external developments.

Non-financial risks

Among the internal risks we highlight:

Efficiency/efficacy of the processes: the organisational processes are currently being completed, especially with reference to the monitoring and implementation of the internal company procedures.

Delegation: within the growth of our company, it would be beneficial to assign a wider distribution of duties and responsibilities within the organisation in order to favour IT processes and internal efficiencies;

Human resources: our activities require resources with high skill-sets: the workforce will require continual upskilling in order for our divisions to step up to the changed marketplace.

Among the external sources we highlight:

Market: the normal risks related to our activities, highly correlated to trends in market demand.

Regulations: the company's organisation permits the prompt compliance with stringent regulations especially in the Italian and foreign e-commerce sector which represents a significant level of complication.

Catastrophic Events: 2020 was characterised by the COVID-19 pandemic, which peaked throughout the fiscal year and, as of now, despite the countermeasures adopted by the authorities, it is extremely hard to make reliable projections about the near future.

IT risks: the widespread and growing use of digital identity-SPID, of ature and of certified electronic email addresses may increase the risk of digital identity theft as well as the fraudulent use of these identities. Any undue and/or elicit utilisation of such information could result in, among other matters, a violation, attributable to the Issuer and/or to the Group, of the data protection regulation, with possible negative effects on the activities and on the prospects of the Issuer and/or of the Group, as well as on the equity and financial situation of the Issuer and/or of the Group. During the years 2013-2019 and the current year, there were no information system attacks nor, to the knowledge of the company, any occurrences of embezzlement of data and/or sensitive information. Where the Group is unable to adopt technological controls in order to meet these possible risks they may be liable for economic and financial damages incurred by third parties with negative effects on the economic, financial and equity situation of the Group.

Financial risks

For financing and investing operations the company adopted prudent and risk limitation criteria and no operations were taken of a speculative nature.

In order to monitor financial risks through an integrated reporting system and ensure analytical planning of future activities, the company is currently implementing a management control system. In addition, the company did not utilise derivative financial instruments to hedge against risks regarding its funding requirements.

Currency risk

As of 31 December 2020, the Company has an outstanding debt of USD 979,000 in favour of Meridiana Holding S.r.l., a company fully-owned by the majority shareholder Meridiana Holding S.r.l. (related party), disbursed to the parent company, Giglio Group S.p.A., aimed at facing the financial commitments of the Group, which shall be reimbursed by 2022.

Credit risk

Credit risk is the risk that a counterparty does not fulfil its obligations relating to a financial instrument or a commercial contract, resulting therefore in a financial loss. The Group is exposed to credit risks deriving from operations (particularly with regards to trade receivables and credit notes) and financing activities, including deposits at banks and financial institutions.

Payment terms for key clients that dictate terms and conditions make it necessary for the Group to primarily finance working capital through bank debt, especially for self-liquidating lines. The need to finance working capital entails different types of charges for the Group, which is mainly interest payable on loans.

Liquidity risk

Liquidity risk is the risk that financial resources may be insufficient to meet obligations on maturity. The company manages liquidity risk by maintaining a constant balance between funding sources, deriving from operating activities, from recourse to credit institution financing, and resources employed. Cash flow, funding requirements and liquidity are constantly monitored, with the objective of ensuring efficient management of financial resources. In order to meet its obligations, in the event cash flows generated from ordinary activities are insufficient, or in the case of timing differences, the company has the possibility to undertake operations to source financial resources, through, for example, bank advances on receivables and bank lending.

14. Reconciliation Group net equity and net result

The table below reports the reconciliation between the net equity and net result of the parent company and the consolidated net equity and net result at 31 December 2020 and 31 December 2019:

(Euro thousands)	Net Equity 31.12.2020	Profit 31.12.2020	Net Equity 31.12.2019	Profit 31.12.2019
Net Equity and Net Result of Giglio Group S.p.A.	1,385	(8,419)	3,781	(8,902)
Net equity of subsidiaries and difference between equity investment value and subsidiaries' equity share	(1,060)	5,722	(5,385)	(6,892)
Group Total Net Equity and Result	325	(2,647)	(1,604)	(15,794)

For more information on the changes in Equity, please see the table included in the financial statements, as well as Note 12.

15. Relations with Related Parties

In accordance with the Consob Regulation concerning related parties adopted with resolution no. 17221 of 12 March 2010 as amended, Giglio Group S.p.A. adopted a Procedure for Transactions with Related Parties ("Related-Parties Procedure") available on the Company's Website www.giglio.org, section "Corporate Governance/Governance System and Rules/Related-Parties Procedure". The Company shall update continuously the provisions contained in the Related-Parties Procedure so as to ensure that they are coherent with the regulations in force from time to time, as well as keep up to date the Register of Related Partied Transactions, where related parties shall be identified or removed if no longer applicable.

16. Share Performance

The share performance of the Company on the market and volumes traded in 2020 are as follows:

The market capitalisation as at 31 December 2020 resulted equal to € 49.2 million, thus showing a far superior value to the Shareholders' Equity book value of the Group resulting from the last approved consolidated statement of financial position. At the same date, the outstanding shares are 20,746,475.

The following table shows Giglio Group S.p.A. stock performance in the market, as well as the volumes exchanged in 2021 Q1:

17. Information on Corporate Governance and Ownership Structure

As per Art. 123-bis of Legislative Decree no. 58/1998 (CFA)

On 10 May 2021, Giglio Group S.p.A.'s Board of Directors approved the annual Corporate Governance Report (the "Report"), created also as per Art. 123-bis of the Consolidated Financial Act.

The Report includes the description of the Corporate Governance system adopted by Giglio Group S.p.A. (the "Company"), provides information on the ownership structure and on the acceptance of the Corporate Governance Code, shows the main governance practices of the Company and the characteristics of the Internal Control and Risk Management system in relation to the financial reporting process.

Corporate Governance

For more information on the Corporate Governance, see the Corporate Governance Report, created pursuant to Art. 123-bis of the CFA and approved by the Company's Board of Directors together with the Company's Financial Statement

available in its registered office as well as on the Group's Website (www.giglio.org – Corporate Governance section).

Main characteristics of the internal control and risk management system

The Internal Control and Risk Management System of Giglio Group S.p.A. is structured to ensure the achievement of corporate objectives through the identification and management of the Company's main risks, thus contributing to attain efficient and effective corporate operations, reliable financial reporting and conformity with current laws and regulations.

For more information on the Internal Control and Risk Management System, see the Corporate Governance Report, created pursuant to Art. 123-bis of CFA, approved by the Company's Board of Directors together with the Company's Financial Statement and available in its registered office as well as on the Group's Website (www.giglio.org - Corporate Governance section).

18. More Information

Number and value of treasury shares and of shares in parent companies held by the company

The Company does not hold treasury shares or shares of the parent company.

Number and nominal value of treasury shares and shares or quotas of holding companies purchased or sold by the company in the year

The Company did not purchase or sell during the year treasury shares or shares of the parent company.

Significant shareholders and shares of the Issuer

At the date of the present financial statements (May 2021) the official data indicates the following significant shareholders:

56.59% of shares held by Meridiana Holding S.r.l. (company held 99% by Mr Alessandro Giglio and 1% by his wife Ms Yue Zhao);

Investments held by Directors, Statutory Auditors, and Managers with Strategic Responsibilities

For more information on the investments held by Directors, Statutory Auditors, and Managers with Strategic Responsibilities, see the Remuneration Report created pursuant to Art. 123-ter of the CFA, Art. 84-quater and Annex 3A, scheme 7-bis of Consob Regulation no. 11971/1999 as amended (the "Issuers' Regulation") and to Art. 6 f the Corporate Governance Code, available on the Company's Website www.giglio.org, in the Corporate Governance section.

19. Giglio Group S.p.A.'s Financial Statement as of 31 December 2020 - Resolution Proposal

Dear Shareholders,

The Board of Directors of the Company, called on 10 May 2021, resolved on 11 May 2021 upon the following.

The Net Result of the Parent Company equals to € -8.4 million but, net of the write-downs carried out on Giglio TV and due to the uncertainty arising from the Pandemic, it amounts to € 8.9 million. The aforementioned write-downs are as follows (Euro thousands):

Write-down due to the execution of the impairment test on Giglio Fashion's	1,607
goodwill following its acquisition
Write-down due to the execution of the impairment test on the book value of	704
the shareholding in Ibox SA
Write-down of the book value of the shareholding in Giglio TV HK	3,000

Write-down of the receivables from Giglio TV HK	3,398
Write-down of the book value of the shareholding in Giglio Shanghai	160
Provisions for risks and doubtful accounts	97
Total write-downs	8,966

The Company is thus recording a reduction of more than a third of its share capital due to losses, as set forth in Art. 2446, par. 1 of the Italian Civil Code. Pursuant to the law, the Shareholders' Meeting must be called "to take appropriate measures", however, the law also provides for the postponement of the measures aimed at offsetting the loss, which are required (as per par. 2 of the same article) only in the event that the loss does not diminishes within a third of the capital by the following fiscal year.

Said deadline for the losses accrued as of 31 December 2020, shall be postponed to the following fifth fiscal year, pursuant to the provisions set forth in Art. 6 of Legislative Decree no. 23 of 8 April 2020 (the so-called "Liquidity Decree", converted with amendments in Law no. 40 of 5 June 2020) "Temporary provisions on capital reductions", as amended by Law no. 178 of 30 December 2020, which allows listed companies to temporarily suspend some provisions on capital reductions for losses (Art. 2446 and 2-bis), postponing to the following fifth fiscal year the obligation to offset the losses.

However, the Board of Directors believes that, in order to strengthen the business of the Group, a prompt share capital increase is needed (to be carried out before 30 June 2021), and as such is planning to exercise its relevant proxy, vested to it pursuant Art. 2441 and 2443, par 4, second sentence of the Italian Civil Code on 12 November 2020 by the Shareholders' Meeting. The proxy has already been exercised, leaving a remaining 6% if compared to the pre-existing capital. Meridiana Holding, the majority shareholder of the Group, irrevocably guaranteed to subscribe up to 50% of any remaining share capital arising from the future share capital increase, identifying Integrae Sim as global coordinator for the operation. Moreover, in the coming days, Meridiana will decide on the terms and conditions for the share capital increase that will be carried out before the end of 2021 H1.

As a consequence, the recorded losses of € 8,914.120 mainly arise from the aforementioned situations, and shall be offset over the course of the following five fiscal years.

Milan, 11 May 2021

Board of Directors The Chairman

GIGLIO GROUP S.p.A. Registered office in Milan, Piazza Diaz, 6 Share capital € 4,149,295 Economic & Admin. Register no. 1028989 Tax no. 07396371002 Registered at Milan Companies Registration Office with no. 07396371002

Consolidated Financial Statement as of 31 December 2020

FINANCIAL STATEMENTS

Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss and Comprehensive Income
Consolidated Statement of Cash Flow
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements

Consolidated Statement of Financial Position

restated* Non-current assets (1) Property, plant & equipment 404 1,137 (2) Right-of-use assets 952 1,903 (3) Intangible assets 3,058 3,649 (4) Goodwill 12,353 13,960 (5) Investments 8 7 (6) Receivables 663 835 (7) Deferred tax assets 829 783 Total non-current assets 18,267 22,274 Current assets (8) Inventories 1,754 1,861 (9) Trade and other receivables 9,951 12,179 (10) Financial receivables 2 3,523 (11) Tax receivables 1,061 6,367 (12) Other assets 2,310 2,220 (13) Cash and cash equivalents 5,085 2,991 Total current assets 20,163 29,141 Total Assets 38,430 51,415 (14) Equity Issued capital 4,149 3,661 Reserves 20,376 16,171 FTA Reserve 4 4 Retained earnings (21,542) (5,650) Foreign Currency Translation reserves (15) 4 Net profit (2,647) (15,823) Total Group Equity 325 (1,633) Minority interest in equity - - Total Equity 325 (1,633) Non-current liabilities (15) Provisions for risks and charges 155 211 (16) Post-employment benefit funds 730 713 (17) Deferred tax liabilities 387 318 (18) Financial payables (non-current portion) 12,183 3,786 Total non-current liabilities 13,445 5,028 Current liabilities (19) Trade payables 13,591 20,623 (18) Financial payables (current portion) 4,096 19,017 (20) Tax payables 3,219 4,108 (21) Other liabilities 3,744 4,272 Total current liabilities 24,650 48,020 Total liabilities and Shareholders' Equity 38,430 51,415	Consolidated Statement of Financial Position (Euro thousands)	31.12.2020	31.12 2019

* The items "Intangible Assets", "Goodwill", "Net profit" and "Deferred tax liabilities" reported in the reference period have been restated following the completion of the "Purchase Price Allocation" related to the purchase of E-commerce Outsourcing S.r.l..

Consolidated Statement of Profit or Loss

Consolidated Statement of Profit or Loss (Euro thousands)		31.12.2020	31.12 2019
			restated*
Total revenues from contracts with customers	(22)	41,291	37,737
Other revenues	(22)	696	1,009
Capitalised costs	(23)	298	1,462
Change in inventories		(158)	(3,309)
Purchase of raw materials, ancillary, consumables and goods	(24)	(22,384)	(17,421)
Service costs	(25)	(12,334)	(14,764)
Rent, lease and similar costs	(26)	(93)	(252)
Operating costs		(34,811)	(32,437)
Salaries and wages	(27)	(3,978)	(3,303)
Social security charges	(27)	(931)	(761)
Post-employment benefits	(27)	(217)	(151)
Payroll expenses		(5,126)	(4,215)
Amortisation	(28)	(1,048)	(512)
Depreciation	(28)	(828)	(1,295)
Write-downs	(28)	(2,411)	20
Amortisation, depreciation & write-downs		(4,287)	(1,787)
Other operating costs	(29)	(244)	(490)
Operating profit		(2,341)	(2,030)
Financial income	(30)	1,542	24
Net financial charges	(30)	(1,564)	(1,613)
Profit before taxes		(2,363)	(3,619)
Income taxes	(31)	(284)	(1,176)
Profit for the period (continuing operations)		(2,647)	(4,795)
Profit for the period (discontinued operations)		0	(11,028)
Profit for the period		(2,647)	(15,823)
Of which minority interest		-	-
Basic and diluted profit from continuing operations		(0.1276)	(0.2989)
Basic and diluted profit from discontinued operations		0.0000	(0.6875)
Profit per share – basic and diluted		(0.1268)	(0.9849)

* The items "Amortisation" and "Income taxes" reported in the reference period have been restated following the completion of the "Purchase Price Allocation" related to the purchase of E-commerce Outsourcing S.r.l..

Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income (Euro thousands)	31.12.2020	31.12 2019
		restated*
Profit for the period	(2,647)	(15,823)
Other comprehensive income
Other comprehensive income that may be reclassified to profit/(loss) in
subsequent periods (net of tax)
Exchange differences on translation of foreign operations	(19)	4
Total other comprehensive income that may be reclassified to profit/(loss) in
subsequent periods (net of tax)	(19)	4
Other comprehensive income that will not be reclassified to profit/(loss) in
subsequent periods (net of tax)
Actuarial loss on employee benefits obligations	(16) 36	20
Total other comprehensive income that will not be reclassified to profit/(loss)
in subsequent periods (net of tax)	36	20
Total Comprehensive Income for the period	(2,631)	(15,799)
Of which minority interest	0	0

Consolidated Statement of Changes in Equity

Description (Euro thousands)	Issued capital	Reserves	FTA Reserve	Foreign Currency Translation	Retained earnings	Net profit	Total
Balance at 31 December 2018	3,208	10,859	4	reserves -	2,602	(8,264)	8,409
Effect of first application IFRS 16;					(65)		(65)
Balance at 01 January 2019	3,208	10,859	4	-	2,537	(8,264)	8,344
Issue of share capital	453						453
Share premium reserve		5,771					5,771
Charges for share capital increase		(410)					(410)
Retained earnings					(8,264)	8,264	-
Nautical Channel exit from consolidation scope					8		8
IAS 19 Reserve		20					20
Exchange rate effect				4			4
Group profit/(loss)						(15,796)	(15,796)
Balance at 31 December 2019	3,661	16,240	4	4	(5,719)	(15,796)	(1,606)

Description (Euro thousands)	Issued capital	Reserves	FTA Reserve	Foreign Currency Translation reserves	Retained earnings	Net profit	Total
Balance at 31 December 2019	3,661	16,240	4	4	(5,719)	(15,796)	(1,606)
E-Commerce Outsourcing PPA adjustment						(27)	(27)
Balance at 31 December 2019 restated*	3,661	16,240	4	4	(5,719)	(15,823)	(1,633)
Issue of share capital	488						488
Share premium reserve		4,100					4,100
Shareholders contributions to the corporate funds (or assets)		-					-
Retained earnings					(15,823)	15,823	-
IAS 19 Reserve		36					36
Exchange rate effect				(19)			(19)
Group profit/(loss)						(2,647)	(2,647)
Balance at 31 December 2020	4,149	20,376	4	(15)	(21,542)	(2,647)	325

* The item "Loss for the year" reported in the Financial Statements as of 31 December 2019 has been restated following the completion of the "Purchase Price Allocation" related to the purchase of E-commerce Outsourcing S.r.l..

Consolidated Statement of Cash Flows

Euro thousands		31.12.2020	31.12.2019
			restated*
Cash flows from operating activities
Net profit from continuing operations		(2,647)	(4,768)
Net profit from discontinued operations		-	(11,028)
Adjustments to reconcile profit before tax to net cash flow:
Depreciation and impairment of property, plant and equipment	(1)	162	526
Amortisation of right-of-use assets	(2)	666	769
Amortisation and impairment of intangible assets	(3)	1,048	475
Non-cash changes of provisions	(15);(16)	(50)	120
Write-downs/(Revaluations)	(28)	2,411	(20)
Net foreign exchange differences	(30)	22	1,590
Income taxes	(31)	284	1,186
Changes in:
Inventories	(8)	108	3,456
Trade and other receivables	(9)	2,229	2,958
Tax receivables	(11)	5,306	3,851
Current financial receivables	(10)	3,521	(3,449)
Other assets	(12)	(84)	499
Deferred tax liabilities	(17)	70	-
Trade payables	(19)	(7,032)	(5,945)

Tax payables	(20)	(1,173)	(86)
Right-of-use assets	(2)	285	(2,461)
IFRS16 financial payables	(18)	(892)	1,682
Other liabilities	(21)	(528)	2,804
Change in net working capital		1,810	3,309
Changes in assets/liabilities held for sale/Discontinued operations		-	9,923
Cash flow generated from operating activities		3,706	2,082
Interest paid	(30)	(347)	(530)
Net cash flow generated from operating activities		3,359	1,552
Cash flows from investing activities
Investments in property, plant & equipment	(1)	(184)	(53)
Investments in intangible assets	(2)	(502)	(2,328)
Acquisition of E-Commerce Outsourcing net of cash acquired		-	564
Changes in other intangible assets	(6); (7)	126	1,176
Increase in investments	(5)	(1)	1
Change in consolidation scope
Net cash flow used in investing activities		(561)	(640)
Cash flow from financing activities
Share capital increase	(14)	3,069	3,591
Change in Shareholders' Equity	(14)	15	(33)
New financing	(18)	8,450	8,336

Repayment of loans	(18)	(4,170)	(8,900)
Change in financial liabilities	(18)	(8,067)	(3,805)
Net cash flow used in financing activities		(703)	(811)
Net increase/(decrease) in cash and cash equivalents		2,095	101
Cash and cash equivalents at 1 January		2,991	2,889
Cash and cash equivalents at 31 December		5,085	2,991

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

GENERAL INFORMATION

A. Corporate information

The publication of the consolidated financial statements of Giglio Group S.p.A. (the Company) for the period ended 31 December 2020 was approved by the Board of Directors on 11 May 2021. The postponement of the approval of the Financial Statements was due to the delayed reception of the Audit Report for Giglio TV Hong Kong's Financial Statements. Indeed, as mentioned in the Directors' Report as of 31 December 2019, amongst the "Significant Events After the End of the Fiscal Year", in March 2020, and in the following interim reports, in the context of the definitive exit from the Media sector, Giglio Group S.p.A. transferred its full shareholding in Giglio TV Hong Kong to a Chinese industrial group, against a payment of € 3.0 million.

Following the accounting/administrative assessments carried out over the last months, as reported in the previous Press Release published on 29 March 2021, it emerged that some necessary fulfilments for the registration of the transfer had not been fully completed.

Moreover, other than the time-consuming financial audit of Giglio TV Hong Kong's Financial Statements and the failure to complete the aforementioned fulfilments, COVID-19 pandemics too concurred in delaying the assessment. Indeed, a harsh lockdown was established in Hong Kong for the whole 2020 and most offices remained closed and, to this day, have yet to recover their normal operation. For the same reason, the offices of the Company's accountants and financial auditors suffered from the same closures. In this context, another element of delay was the critical relationship between China and Hong Kong, which led, in May 2020, to new demonstrations, which cause most offices, transportation and roads to be closed.

Hence, the Directors proceeded with the consolidation of Giglio TV Hong Kong as of 31 December 2020.

The registered office of the parent company Giglio Group S.p.A. is Piazza Diaz No. 6, Milan. The activities of the company and its subsidiaries are described in these Explanatory Notes while the Group's structure is outlined in the Directors' Report. The information on transactions of the Group with the other related parties are presented in Note 35.

B. Accounting standards

The consolidated financial statements of Giglio Group S.p.A as of 31 December 2020 were prepared in accordance with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and endorsed by the European Union.

EU-IFRS includes all "International Financial Reporting Standards", all "International Accounting Standards" (IAS), all interpretations of the International Reporting Interpretations Committee (IFRIC), previously called "Standing Interpretations Committee" (SIC) which, at the approval date of the Consolidated Financial Statements, were endorsed by the European Union pursuant to EU Regulation No. 1606/2002 of the European Parliament and European Council of July 19, 2002. The EU-IFRS were applied consistently for all the periods presented in the present document.

The consolidated financial statements are comprised of the Statement of Financial Position, the Statement of Profit or Loss and Comprehensive Income, the Statement of Cash Flows, the Statement of Changes in Equity (all stated in Euro thousands) and the Explanatory Notes.

The consolidated financial statements are presented in Euro and all the amounts are rounded to the nearest thousandth, unless otherwise specified.

The Euro is the functional and presentation currency of the parent company and that in which the majority of Group operations are conducted, with the exclusion of the activities relating to the subsidiary Giglio USA and of the activities of Giglio Shanghai, expressed in Chinese Yuan.

The consolidated financial statements provide comparative figures from the previous year.

The main accounting standards and policies utilised to prepare the consolidated financial statements are described below. The policies are in line with those utilised for the preparation of the comparative financial statements, with the exception of newly-adopted policies, which should be consulted in the "Accounting standards, amendments and interpretations in force from 01 January 2020" paragraph.

The consolidated financial statements were prepared in accordance with the historical cost criterion on a going-concern basis, as the Directors verified the absence of financial, operating or other indicators which may suggest difficulties with regards to the Group's capacity to meet its obligations in the foreseeable future and in particular in the next 12 months. In particular the Giglio Group adopted international accounting standards from the year 2015, with transition date to IFRS at 1 January 2014.

C. Basis of presentation

In particular:

in the Statement of Financial Position, the current and non-current assets and liabilities are shown separately;
in the Statement of Comprehensive Income, the analysis of the costs is based on their nature;
for the Statement of Cash Flows, the indirect method is used.

In particular, the assets and liabilities in the financial statements of the Group are classified as current or non-current.

An asset is considered current where:

it is expected to be realised, or is intended for sale or consumption, in the normal operating cycle;
it is held principally for trading;
It is expected to be realised within twelve months from the balance sheet date; or
it comprises cash or cash equivalents, upon which no prohibition exists on their exchange or utilisation to settle a liability for at least 12 months from the reporting date.

All other assets are classified as non-current.

A liability is considered current where:

it is expected to be settled within the normal operating cycle;
it is held principally for trading;
it is expected to be settled within 12 months from the reporting date; or
the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

The amounts indicated in the financial statements and the explanatory notes, unless otherwise stated, are in thousands of Euro.

D. Discretional valuations and significant accounting estimates also in the light of COVID-19 effects

The preparation of the consolidated financial statements of the Giglio Group S.p.A. requires estimates and assumptions on the values of the assets and liabilities in the financial statements and on the disclosures on the assets and contingent liabilities at the reporting date: consequently, the actual results may differ from such estimates.

The estimates are used to determine the provisions for doubtful accounts, depreciation and amortisation, write-downs, employee benefits, income taxes and other provisions. The estimates and assumptions are periodically reviewed and the effects of any variation are reflected in the statement of profit or loss and comprehensive income.

The principal data subject to estimates refer to:

- Identification of Cash Generating Unit (CGU):

In application of the requirements in "IAS 36 - Impairment of assets", the goodwill recorded in the Group's Consolidated Financial Statement, by virtue of business combination transactions, was assigned to single CGUs or to groups of CGUs that are expected to benefit from this combination. A CGU is the smallest identifiable group of assets that generates a largely independent cash flow. In the process of identification of the aforementioned CGUs, the management kept note of the specific nature of the activity and the business to which it belongs, verifying that the cash flows generated by a group of activities were strictly independent and largely autonomous from the ones resulting from other activities (or group of activities). The activities included in every CGU were identified also on the basis of the procedures by which the management monitors and manages them.

- Assessment of control requirements' existence:

Pursuant to the provisions of IFRS 10 accounting standard, control is attained when the Group is exposed or is entitled to variable yields resulting from the relation with its subsidiary and has the capacity, through its power over the subsidiary, to influence its yields. The power is the actual capacity to direct the subsidiaries' relevant activities by virtue of substantial existing rights. The existence of control does not depend exclusively on the possession of the voting rights' majority, but on the substantial rights of the investor on the subsidiary. Consequently, the assessment of the management is requested in order to assess specific situations determining substantial rights that attribute to the Group the power to direct the subsidiary's relevant activities so much so as to influence its yields. For the purposes of the assessment of the control requirement, the

management shall analyse all facts and circumstances, including all agreements with investors, the rights resulting from other contractual agreements and from potential voting rights (call options, warrants, put options assigned to minority shareholders etc.). These facts and circumstances can be particularly relevant in the context of this assessment, especially when the Group holds less than the majority of the subsidiary's voting right, or similar rights. The Group shall reassess the existence of control requirements on a subsidiary when the facts and circumstances point at a variation of one or more of the elements taken into account for the assessment of its existence.

- Provision for inventory write-down of raw materials and accessories and inventories of finished products:

Since the Group deals with products that are influenced by market trends and fashion, product inventories may be subject to impairment. In particular, the provision for inventory write-down of finished products reflects management's estimate on the impairment losses expected on the products of various seasonal collections in stock, taking into account the ability to sell them through the various distribution channels in which the Group operates. Indicatively, write-down assumptions provide for devaluation percentages that increase according to the ageing of the products purchased (it should be noted that the Group deals with both in-season and off-season collections and distributes them among the most important digital retailers in the world) in such a way as to reflect the decrease in selling prices and the reduction in the probability of their sale over time. Underpinning the calculation of this percentage is a statistical analysis on the variation of the ageing product in stock and a constancy assessment of the percentages in use over time. If a change in available information is noted, percentages are re-analysed and possibly adjusted.

- Provision for doubtful accounts:

Through the ageing list and based on the collection of receivables and the assessments provided by the Legal Department, management carefully assesses the status of receivables and overdue receivables and carries out a recoverability analysis; these estimates could also be found to be incorrect since they are subject to a natural degree of uncertainty;

The recoverability analysis of commercial credits is undertaken on the basis of the so-called expected credit loss model.

More specifically, expected credit losses are determined on the basis of the product between: (i) the exposure to the counterpart net of relevant mitigating guarantees (so called Exposure At Default or EAD); (ii) the chance that the counterpart does not comply with its payment obligation (so called Probability of Default or PD); (iii) the estimate, in percentage, of the quantity of credit

that shall not be recovered in case of default (Loss Given Default or LGD), defined on the basis of previous experiences (historical series of recovery capacity) and of the possible recovery actions to be undertaken (e.g. out-of-court proceedings, litigations, etc.).

- Payments based on shares or options:

The cost of work includes, consistently to the substantial nature of the compensation, the cost of the incentive stock option plan. The incentive cost is determined with regards to the fair value of the financial instruments assigned and to the intended number of shares/options to be assigned; the pertinent share is determined pro-rata temporis over the vesting period, i.e. during the period between the grant date and the assignment date. The fair value shares/options underlying the incentive plan is determine on grant date taking into account the forecasts regarding the achievement of performance parameters associated with market conditions, and cannot be adjusted in the following fiscal years; if obtaining the benefit is linked to conditions other than the market's, the forecast regarding these conditions is reflected by adjusting over the vesting period the number of shares that shall be assigned. At the end of the vesting period, in the event that the plan does not assign shares to the beneficiaries due to the failure t reach performance conditions, the share of the cost concerning market conditions cannot be reversed into the statement of profit or loss and comprehensive income.

It is noted that, on 29 October 2018, the ordinary and extraordinary Shareholders' Meeting took place.

The Meeting, in ordinary session, approved the Stock Option Plan 2018-2021 reserved to executive directors and/or managers with strategic responsibilities, in order to keep high and improve their performance and to contribute to boost the Company and the Group's growth and success.

The extraordinary Meeting delegated to the Board of Directors the authority to increase Giglio Group S.p.A. share capital against payment, pursuant to Art. 2443 of the Civil Code, in separate issues, excluding option rights, pursuant to Art. 2441, par. 8 and as far as applicable - par. 5 of the Civil Code, for a maximum amount of € 138,000.00 in nominal value, through the issue, also in more tranches, of a maximum of no. 690,000.00 ordinary shares without nominal value, to be used only within the scope of the "Stock Option Plan 2018-2021".

The options thus assigned shall be exercised over a three-year vesting period divided in three tranches (up to 20% on the first year, up to 30% on the second year and up to 50% on the third

year) and shall accrue only if the objectives set in the plan are achieved (in terms of performance conditions).

It is noted that the objectives related to 2020 were not met, and that no provision was made necessary.

Employee Benefits, whose values are based on actuarial estimates; refer to Note 16 for the main actuarial assumptions;
Goodwill: the recoverability of Goodwill is tested annually and, where necessary, also during the year. The allocation of goodwill to CGUs or groups of CGUs and the calculation of the latter's recoverable value involves the assumption of estimates that depend on subjective valuations and factors that may change over time with consequent effects that are also significant with regard to the valuations carried out by the Directors. These valuations are carried out at the level of cashgenerating units to which the value of goodwill is attributed and assume the higher of the fair value as the recoverable value, if this is available or calculable, and its value in use obtainable from the long-term plans approved by the Boards of Directors.

It is worth nothing that the necessity to carry out some goodwill write-downs emerged from the assessments carried out , as better described in Note 4.

Intangible Rights: the Directors did not identify impairment indicators at the balance sheet date with reference to the value of intangible fixed assets. Further details are available in the notes to the intangible fixed assets. In this regard, it should also be stressed that intangible fixed assets are tested annually for permanent write-downs when there are indications that the carrying amount may not be recovered. When the calculations of the value in use are prepared, Directors must estimate the cash flows expected from the asset or from the cash-generating units and choose an appropriate discount rate so as to calculate the present value of these cash flows. The correct identification of the indicators of the existence of a potential reduction in value as well as the estimates for their determination depends on factors which may vary over time impact upon the valuations and estimates made by the
Deferred tax assets are recognised to the extent where it is likely there will be adequate future tax profits against which temporary differences or any tax losses can be utilised. In this regard, the Group's management estimates the probable timing and the amount of the future taxable profits.

- Business combinations and valuation of acquired assets and liabilities:

In the case of business combinations, the process of allocating the transaction's cost involves estimates and assumptions based on Management's professional judgement and makes it necessary to identify the most suitable methodologies for the valuation of assets acquired and liabilities assumed; The complexity of estimation processes is mitigated by the use, where necessary, of provisional allocation, as permitted by the relevant accounting standard. For more information on the acquisition of E-Commerce Outsourcing S.r.l., see "Business combinations".

- Contingent liabilities:

The Group recognises a liability for disputes and risks arising from ongoing legal cases when it considers it probable that a financial outlay will occur and when the liability amount can be reasonably estimated. In the case in which a payment is considered possible, but is not yet determinable, such is reported in the explanatory notes.

E. Segment disclosure

IFRS 8 accounting standard – "Operating Segments" requires the provision of detailed information for each operating segment, understood as being a component of an entity (i) who is capable of carrying out an activity that generates revenues and costs, (ii) whose operating results are periodically reviewed by top management for the purposes of adopting decisions concerning resource allocation and performance assessment, and (iii) for which separate budget information are available.

The Group identified three business areas (Business Units) after segmenting its activities with reference to the types of products, production processes and target markets:

1. B2B e-commerce
1. B2C e-commerce
1. Corporate.

The operating units within the above business units are as follows:

1. B2B e-commerce: Giglio Group Spa, Giglio USA and Giglio Shanghai;
1. B2C e-commerce: IBOX, E-Commerce Outsourcing S.r.l. and Giglio Shanghai;
1. Corporate: includes centralised Group functions which can not be assigned to the business units and mainly carried out by Giglio Group S.p.A.

The individual sector results (net of inter-company eliminations) are as follows:

2020
	B2B	B2C	Corporate	Total
(Euro thousands)	e-commerce	e-commerce
Revenues from contracts with customers	28,457	13,314	0	41,772
Other incomes	122	73	20	215
Capitalised costs		298		298
Total revenues	28,579	13,685	20	42,285
EBITDA	4,297	1,245	(3,595)	1,946
Amortisation, depreciation & write-downs	(1,724)	(714)	(1,850)	(4,287)
EBIT	2,573	531	(5,445)	(2,341)
EBT	2,487	358	(5,208)	(2,363)
Profit for the period	2,489	105	(5,241)	(2,647)

For a better representation, the sectors' results at 31 December 2019 are as follows:

	2019
	B2B	B2C
	e	e		Discontinued
(Euro thousands)	commerce	commerce	Corporate	operations	Total
Revenues from contracts with customers	24,404	13,332	0		37,737
Other incomes	8	991	10		1,009
Capitalised costs		1,462	(0)		1,462
Total revenues	24,412	15,785	10		40,208
EBITDA Adjusted	1,630	3,610	(4,204)		1,037
Listing and non-recurring costs			(1,755)		(1,755)
Amortisations	(530)	(334)	(885)		(1749)
EBIT	1,100	3,276	(6,844)		(2,467)
EBT	1,062	2,874	(7,993)		(4,057)
Profit for the period (Continuing Operations)	1,043	2,568	(8,380)		(4,768)
Profit for the period (Discontinued operations)				(11,028)	(11,028)
Profit for the period					(15,796)

The Group does not use as an internal control driver the balance sheet data broken down by segment of activity and, consequently, segment assets and liabilities are not presented in this report.

F. Management of capital and financial risks

Financial risk objectives and criteria

Group financial liabilities include loans and bank loans, loans from related parties, trade payables, trade and other payables and financial guarantees. The main objective of these liabilities is to fund

Group operations. The Group has financial and other receivables, trade and non-trade receivables, cash and cash equivalents and short-term deposits which directly stem from operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Management of the Group is responsible for the management of these risks.

The Board of Directors reviews and approves the management policies of each of the risks illustrated below.

For financing and investing operations the company adopted prudent and risk limitation criteria and no operations were taken of a speculative nature.

Financial risks are monitored through an integrated reporting system aimed at allowing the analytic planning of future activities.

In addition, the company did not utilise derivative financial instruments to hedge against risks regarding its funding requirements.

The financial risks to which the Giglio Group is exposed are illustrated below.

Market risk

Market risk is the risk that the fair value of the future cash flows of a financial instrument will alter on the basis of market price movements. The market price includes three types of risk: currency risk, interest rate risk and other price risks. Considering the Group's business sector, other price risks such as, for example, the price risk on securities (equity risk) and the commodity price risk do not arise.