Cosmint S.p.A.

(sole shareholder company) Registered Office in Olgiate Comasco – Via XXV Aprile n,15 Share capital Euros 1,586,000 paid-in Como R.E.A. No. 240646 Subject to direction and coordination by INTERCOS S.p.A. Companies Register and Tax Code No. 02103130130

Separate Financial Statements at December 31, 2018

REPORT ON OPERATIONS

Cosmint S.p.A. is a leading company in the manufacture of cosmetics and in 2018 reported a profit of €4,940 thousand.

Orders received are up and revenues grew in 2018.

Highlights in 2018

	2018	2017	Change
(in € thousands)
Revenues from sales and services	142,130	133,741	8,389
EBITDA	13,009	14,460	(1,452)
Adjusted EBITDA	13,039	13,534	(495)
Adjusted EBITDA margin	9.2%	10.1%	-0.9%
Operating profit (EBIT) EBIT margin	7,363 5.2%	8,463 6.3%	(1,100) -1.1%
Profit before taxes (EBT)	6,675	8,057	(1,382)
EBT margin	4.7%	6.0%	-1.3%
Profit for the year Profit margin	4,940 3.5% 12/31/2018	5,469 4.1% 12/31/2017	(530) -0.6% Change
(in € thousands)
Net working capital	4,571	7,616	(3,045)
Net working capital turnover	0.03	0.06
Net invested capital	49,770	48,697	1,073
Non-current assets	47,883	45,027	2,856
Net financial position	17,782	18,890	(1,108)
	2018	2017	Change
Headcount (number)	367	355	12

This Financial Statement has been translated into English solely for the convenience of the international reader. In case of discrepancies, the Italian language document is the sole authoritative and universally valid version.

Earnings per share (basic and diluted) – in euro	1.62	1.79	(0)

(1) Adjusted EBITDA is calculated as profit for the year before depreciation, amortization and impairment reversals (losses), nonrecurring income (expenses), financial income and expenses, dividends and income taxes.

(2) Net invested capital is calculated as (+) total non-current assets (+) inventories (+) trade receivables (+) other current assets (-) provisions (-) deferred tax liabilities (-) trade payables and (-) other payables.

1. Economic Scenario

Macroeconomic picture

The world economy is advancing towards an inevitable slowdown which, however, should not be overly harsh (GDP from 3.7% in 2018 to 3.3% in 2019) thanks to solid American expansion and the stimulus and stabilization policies recently introduced by emerging countries to contrast turbulences. Also inevitable will be the downturn in world trade from 4.1% in 2018 to 2.9% in 2019.

After strong growth last year, the European manufacturing industry is passing through a particularly weak phase that is also affecting a large part of the chemical segment's customers: a significant portion of this weakness can be traced for the most part to the auto sector which, in past years, had stood as a driving force for many of Italy's industry sectors.

The Italian economy in the last quarter of 2018, as revealed by ISTAT, contracted by 0.2%. According to provisional data, this is the second consecutive quarter of declines after the -0.1% fall in the July to September quarter. In a comparison with the fourth quarter of 2017, GDP increased 0.1%. This contraction is the worst showing for the Italian economy in five years. ISTAT reports that only in the fourth quarter of 2013 was a similar drop like this recorded when GDP came it at an equivalent -0.2%.

According to government programs, the reduction in the debt to GDP ratio in the next three years would be 1.4% on average. The actual intensity of these effects will depend on the design, timing and way in which the measures are implemented. The effectiveness of the budget policies in sustaining the economy will also hinge on keeping the confidence of deposit holders and investors as the road is set to restore public finances. The position that Confindustria takes on these subjects is clear in asking for efforts to finance public works and construction sites, as a stimulus for domestic consumers as well.

2. Market Scenario

The online economic report by the Cosmetica Italia Research Center based on preliminary data on the second half of 2018 and forecasts for the first six months of 2019, reveal that the sector is holding its ground notwithstanding an economic environment shaped by an overall slowdown in the propensity to spend in many areas, both domestically and globally.

2 In year-end 2018 estimates, the value of production, that is, company sales, grew 2% or close to €11,200 million while forecasts for the current year show an expansion of 2.6%. Partly leading to this performance is the contribution by the domestic market, with a positive trend of just slightly under one percentage point, with predictions of further expansion for the end of 2019. Sales are still impacted to a noticeable extent by foreign sales which, in 2018, reached €4,800 million, up 3.5%. Never as in this period have considerations on the macroeconomic scenario, in evident recession, served to explain how the inelastic domestic cosmetic market holds firm.

As for the Italian cosmetic market, that is, the value of expenditures by Italians, the anti-cyclicality of recent years is confirmed, with purchases staying constant in terms of volume and diversified over the everincreasing types of retail. At the end of 2018, cosmetics bought in Italy reached €10,150 million, with a slight growth, thanks to the professional beauty and coiffure salons which have remained stable, the increases, always marginal but numerically important, in perfume shops and organized large retailers and thanks also to the dynamics of the expansion of e-business. Counterbalancing this is the contraction of direct sales and the drugstore channel, like the fairly flat purchases in herbalist shops. The evolution of the demand for products that are natural and the attention placed on new niche channels facilitates the development of new consumption, an expression of a new type of heterogenous consumers.

On the side of industry, there are important affirmations of stability, especially by manufacturing and, in general, there is a renewal of the values and indexes of development of the last few years. Cosmetic production contracted to third parties, which is upstream of the production chain and transversal compared to other channels, records a growth of 4% in 2018 and a further advance of 6% is expected for the first half of 2019. Constant attention to investments in both innovation and the internationalization of processes continues and, not least, a re-thinking of distribution strategies. In fact, the dynamics of the omni-channel of purchase, are leading to the definition of alternatives to B2C contact, which, in many cases, translate into strategies for the rationalization of the chain that brings the company to the consumer, generating in effect the elimination of the distributive intermediary.

3. Significant Events in 2018

The following significant events took place during the year 2018:

1. In the early months of 2018, in view of the coming into force on May 25, 2018 of EU Regulation 2016/679 issued by the European Parliament and by the Council on April 27, 2016 on the protection of natural persons with regard to the processing of personal data, and on the free movement of such data (General Data Protection Regulation - GDPR), Intercos S.p.A. and other companies in the Intercos Group (Intercos Europe S.p.A., Cosmint S.p.A., Vitalab S.r.l. and Ager S.r.l.), with the assistance of a privacy consultant engaged for such purpose, began a project in the early months of 2018. Each company drew up its own register for processing personal data and assessing the risks associated with the processing of personal data as established by the GDPR. They also wrote guidelines outlining the actions to guarantee an adequate mitigation of the risk, namely: Privacy Guidelines, Guidelines for Persons Authorized to Process Personal Data, Guidelines for Exercising the Rights of the Person Concerned, Guidelines for the Management of Personal Data Violations, Guidelines for Exercising the Right to Transfer Personal Data and Guidelines for Protecting the Data from the Projection Stage through the Manner of Protection to the Predefined Approach.

2. In July 2018, the companies Cosmint Group S.p.A., Sodisco S.r.l. and Cosmint S.p.A., in their respective shareholders' meetings, approved the merger of Cosmint Group S.p.A. and Sodisco S.r.l. with and into Cosmint S.p.A. (Cosmint Merger). The purpose of the Cosmint Merger was to bring Sodisco S.r.l.'s real estate assets into Cosmint S.p.A. so that it would acquire ownership of the properties used in its production and commercial activities. In addition, through the merger of the parent Cosmint Group S.p.A. in Cosmint S.p.A., the following was achieved: (i) a simplification and rationalization of the company's organization, resulting in a shortening of the chain of control reporting to Intercos S.p.A. aimed at facilitating decisional and operational processes within the Intercos Group, (ii) a better utilization of the potential synergies, particularly production and commercial synergies; as well as (iii) a reduction in total operating and administrative costs, all with a view towards an overall improvement in terms of operating efficiency.

The three merger resolutions were sent electronically to the Companies Register on July 24, 2018 and recorded therein on July 26, 2018. Since there was no opposition to the merger from the creditors of the respective companies within the deadlines established by law, the Cosmint Merger was executed according to art. 2503 of the Italian Civil Code and, therefore, the merger process decided for the merger of Cosmint Group S.p.A. and Sodisco S.r.l. with and into Cosmint S.p.A. was successfully concluded.

The Cosmint merger became effective under the Italian Civil Code on November 1, 2018. The accounting effects on the consolidated and separate financial statements are effective retroactively from January 1, 2018.

3. On November 5, 2018, following amendments to the law on the protection of whistleblowers working in public or private companies who report illegal activities or irregularities, Intercos S.p.A. and Intercos Europe S.p.A. on July 31, 2018 and subsequently Cosmint S.p.A. on November 5, 2018 updated their Organization, Management and Control Model adopted by each of them pursuant to Legislative Decree 231/2001, leaving the Supervisory Board to adopt the actions necessary to guarantee the circulation and implementation of the model.

4. Profit and Financial Performance in 2018

Revenues from sales and services total €142,130 thousand, up 6.27% compared to 2017.

Revenues from sales and services by geographical region based on the territory of residence of the customer indicated on the sales invoice are presented below.

			(in € thousands)
--	--	--	------------------

Revenues by geographical region	2018	2017
Americas	192	116
EMEA	140,789	132,921
Asia	1,149	703
Total	142,130	133,741

Adjusted EBITDA is €13,039 thousand, with a slight decrease of €495 thousand compared to the prior year mainly on account of the cessation of real estate revenues.

Operating profit is €7,363 thousand, down €1,100 thousand from 2017 due to nonrecurring items of the prior year.

Profit for the year comes to €4,940 thousand against €5,469 thousand in the prior year, with a decrease of €530 thousand, again partly due to nonrecurring items of the prior year.

Capital expenditures in property, plant and equipment and intangible assets total €7,679 thousand. The expenditures mainly focus on the purchase of machinery for manufacturing products, generic and specific plant and sundry equipment needed to boost, expand, renovate and automate the production system as a whole, all for the purpose of improving productivity and efficiency. The increase in Assets under construction and payments on account mainly refers to advances to provide specific production plants.

The Net financial position is €17,782 thousand compared to €18,890 thousand in 2017, and a reduction of €1,108 thousand.

Total Equity is €31,988 thousand compared to €29,807 thousand at December 31, 2017, with an increase of €2,181 thousand.

Costs for services and leases and rents in 2018 amount to €27,090 thousand compared to €21,465 thousand in 2017. The overall increase of €5,625 thousand refers primarily to €1,286 thousand for warehouse and logistics costs and €3,315 thousand for processing and packaging expenses.

Employee benefit expenses total €18,686 thousand in 2018. Of this amount, €2,349 thousand relates to temporary work. Employee benefit expenses as a percentage of revenues is 13% and in line with the prior year.

For purposes of commenting on the changes in the financial condition, the reclassified statement of financial position is presented below.

(in € thousands)	12/31/2018	12/31/2017

Fixed assets	43,134	41,301

Inventories	20,851	17,448
Trade receivables	18,491	20,354
Trade payables	(29,351)	(27,207)
Operating working capital	9,992	10,595
Other current assets and liabilities, net (*)	(5,420)	(2,979)
Net working capital	4,571	7,616

Other non-current assets and liabilities, net (**)	(1,127)	(3,413)

Investments accounted for using the equity method	3,192	3,192

Invested capital	49,770	48,697

Equity	31,988	29,807
Cash and cash equivalents	(4,991)	(4,701)
Financial payables, net	22,772	23,591
Net financial position	17,782	18,890
Total sources	49,770	48,697

Ratios
Fixed assets / Invested capital	86.67%	84.81%
Net financial position / Equity	0.56	0.63
Invested capital / Equity	1.56	1.63
Operating working capital / Revenues	7.03%	7.92%
Net working capital / Revenues	3.22%	5.69%

A reconciliation between the Reclassified Statement of Financial Position above and the Statement of Financial Position in the Financial Statements is as follows:

(*) Includes the captions Other current assets and Other current liabilities. (**) Includes the captions Deferred tax assets, Other non-current receivables, Non-current provisions for risks, Deferred tax liabilities, Other non-current liabilities and Employee benefits.

5. Share Capital

Share capital at December 31, 2018 is €1,586,000 and consists of 3,050,000 ordinary shares of par value €0.52 each.

There were no changes during the year, as illustrated in the following table at December 31, 2018:

Shareholders	Beginning balance	Ending balance	%
Cosmint S.p.A.	1,586,000	1,586,000	100%
SHARE CAPITAL	1,586,000	1,586,000	100%

Pursuant to the provisions of art. 2428 of the Italian Civil Code, it should be noted that the company neither holds nor has purchased or sold shares of the parent during the course of the year under examination, not even through fiduciaries or trustees.

In addition, the company neither holds nor has purchased or sold treasury shares during the course of the year under examination, not even through fiduciaries or trustees.

6. Related Party Transactions

Related party transactions do not qualify as either atypical or unusual but fall under the ordinary course of the business operations of the Group companies. Such transactions, when not concluded at standard conditions or dictated by specific laws, are nevertheless carried out on an arm's length basis.

The details of the effects of related party transactions on the income statement for 2018 and the statement of financial position at December 31, 2018 are described in the Notes.

7. Risk Management and Uncertainties

Cosmint S.p.A.'s business is exposed to various types of risks: market risk, credit risk and liquidity risk. The company's risk management strategy is focused on the unpredictability of the markets and aimed at minimizing potential negative effects on earnings.

The coordination and monitoring of major financial risks are centralized at the Group level.

Types of risks hedged

Market risks

Exchange rate risk

for PLN 11,732,000. Given the stability of the euro/PLN exchange rate and its constant monitoring by management, no hedges were put into place since the related risk is considered very low.

The following sensitivity analysis was performed to illustrate the exposure to exchange rate risk produced by an increase/decrease of 7.5% in exchange rates relating to trade receivables and payables:

(in € thousands)	2018
	-7.50%	+7.50%
U.S. dollar	(1)	1
British pound	(11)	10
Other currencies	(8)	7
Total	(20)	17

Interest rate risk

The company is exposed to interest rate risk mainly from long-term borrowings. Such borrowings are at variable interest rates. The Administration Function has no particular hedging policy regarding the risks originating from such contracts, maintaining that the risk is moderate.

The following sensitivity analysis was performed to illustrate the effects on profit produced by an increase/decrease of 50 basis points in interest rates compared to the effective interest rates at December 31, 2018, with all other variables remaining constant.

The potential effects reported below were calculated by taking the liabilities which represent the most significant part of the company's borrowings at the reference date and calculating, on that amount, the potential impact of a change in the interest rates on an annual basis.

This analysis includes financial payables and financial receivables at variable rates and cash and cash equivalents.

(in € thousands)	2018
	-0.5%	+0.5%
Euro (Euribor)	(120)	120
Total	(120)	120

Credit risk

Credit risk is associated with trade receivables, cash and cash equivalents, deposits at banks and other financial institutions.

Cosmint S.p.A. does not have significant concentrations of credit risk considering the proven solvency of its major customers.

When considered appropriate, the company may also sell non-recourse receivables to factoring companies.

Trade accounts receivables, the provision for impairment of receivables and an ageing analysis of receivables with third party customers are presented at December 31, 2018.

(in € thousands)
12/31/2018	Trade receivables	Current	Overdue 0-30 days	Overdue 31- 60 days	Overdue over 60 days	Provision for impairment
Cosmint S.p.A.	19,673	15,365	2,989	866	453	(43)

Liquidity risk

Prudent management of liquidity risk in the ordinary operations of the company implies maintaining an adequate level of cash.

The amount of cash and cash equivalents available at December 31, 2018 compared to the end of the prior year is as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Bank and postal deposits Cash and cash equivalents	4,990 0	4,700 1
Total	4,990	4,701

The following table presents an analysis of the maturities of borrowings and other liabilities on a net basis. Borrowings from banks in the following table are presented at their nominal amount:

	Within	1 to	Beyond 5
(in € thousands)	1 year	5 years	years	At 12/31/2018
Borrowings from banks and other lenders – medium/long-term	3,600	20,400		24,000
Finance leases payable	1,668	2,718		4,386
Medium/long-term debt	5,268	23,118	-	28,386
Borrowings from banks and other lenders – short-term
Trade payables	29,351			29,351
Short-term debt	29,351	-	-	29,351
Total	34,619	23,118	-	57,737

In order to complete the disclosure on financial risks, a reconciliation is presented below between the categories of financial assets and liabilities as identified in the statement of financial position format of Cosmint S.p.A. and the categories of assets and liabilities identified in accordance with the requirements of IFRS 7:

(in € thousands)

12/31/2018	Financial assets at fair value through profit or loss	Receivables and loans	Available for-sale financial assets	Held-to maturity assets	Financial liabilities at fair value through profit or loss	Other liabilities at amortized cost	Hedging derivatives
Available-for-sale financial assets	-	-	-	-	-	-	-
Derivatives (assets)	-	-	-	-	-	-	-
Trade receivables	-	18,491	-	-	-	-	-
Loans receivable		5,477
Other assets (*)	-	491	-	-	-	-	-
Borrowings from banks and other lenders	-	-	-	-	-	28,836	-
Trade payables	-	-	-	-	-	29,350	-
Loans payable						0
Other payables (*)	-	-	-	-	-	7,546	-
Derivatives (liabilities)	-	-	-	-	-	-	-
Total	-	24,459	0	0	0	65,282	-

Cash and cash equivalents	-	4,990	-	-	-	-	-

(*) Other assets and Other payables exclude items of a tax nature since they do not satisfy the definition of financial assets or liabilities.

With the reference to the assets and liabilities in the above table, the fair value approximates the carrying amount in the financial statements.

8. Environment and Employees

The headcount of Cosmint S.p.A. at December 31, 2018 is 367 compared to 355 at the end of 2017, with an increase of 12 units.

Matters associated with safety at work and protection and safeguarding of the environment are always of major concern to the Intercos Group.

For this reason, the commitment to social responsibility towards the community and the country is now an integral part of corporate principles and behavior. It is geared towards achieving technological excellence,

maintaining high levels of safety, safeguarding the environment and ensuring energy efficiency, as well as training employees, raising awareness and encouraging them to participate in aspects of social responsibility.

The company recognizes the fundamental importance of its human resources, respecting the rights of its employees and taking every possible precaution to protect their health and make the work environment safe. The company also pays special attention to the physical and psychological health of its collaborators and endeavors to ensure that, in every type of production facility, the work environment is healthy and interpersonal relations are based on mutual respect.

The activities conducted by the company in these areas have ensured that, during the year, there were no cases of accidents in the workplace causing serious injury involving employees, or charges that the company was harming the environment.

9. Research & Development

Cosmint offers a full new products development service.

The normal research and development activities designed for the development of new projects on behalf of customers can be summed up in:

development of new formulations on behalf of the company's customers that have already created or developed their own line but that require technical assistance for the completion of the final project like alternative search of raw materials, chemical tests and physical and practical tests of the product's pleasantness;
contacts with suppliers for the search of new raw materials and components;
active role in promoting new formulations with a high scientific profile and new productive technologies using basic research and the most advanced scientific know-how;
active role in selecting the best solutions for packaging to support the customer's requirements;
project work: quotation, set-up and shipment of the various samples, stability control, closing of the projects with transfer of the associated information to the various company departments, assistance with the start of production;
formula update: checking formulas entered, P&P standard request and samples, flow chart preparation;
solving unforeseen technical events connected with production;
technical and legal support in the document preparation phase for exports.

The scope of these activities is thus to obtain a beneficial connection between the sales and production development activities for the new products and the successive phase for the start of production on an industrial scale so that the client's full satisfaction is guaranteed not only from the standpoint of the product but also in terms of meeting the delivery programs received.

During 2018, the company continued its research and development activities and chiefly focused efforts on particularly innovative projects in the R&D program. These address the study and experimental testing of new product formulations and ideas in the cosmetic and personal care sector, together with the identification of innovative and specific processes as well as industrialization models, also based on market demands. The projects were carried out at the Olgiate Comasco (CO) factory. Research continues ino 2019.

10. Subsequent Events

During the beginning months of 2019, the sales trend was in line with budget and at this time there are no critical factors such as to require a revision of the anticipated outlook.

11. Secondary Offices

In compliance with article 2428 of the Italian Civil Code, the activities listed below are conducted in the location indicated in the following table:

Description	City	Address
Operating unit, Offices and Warehouse	Olgiate Comasco (CO)	Via XXV Aprile n. 15

12. Appropriation of the Profit for the Year

To the shareholders,

We ask you to approve the Directors' Report on Operations for the year 2018 and the financial statements for the year ended December 31, 2018 as submitted to you, appropriating the profit for the year of €4,940 thousand to retained earnings.

Olgiate Comasco, March 28, 2019

Cosmint S.p.A. On behalf of the Board of Directors

The Chairman MASU DECIO

___________________________

Cosmint S.p.A.

SEPARATE FINANCIAL STATEMENTS AT DECEMBER 31, 2018

PREPARED IN CONFORMITY WITH IFRS ADOPTED BY THE EUROPEAN UNION

Corporate Information

Cosmint S.p.A.

BOARD OF DIRECTORS

Name Office

Decio Masu	Chairman
Massimiliano Masu	CEO
Alessandro Masu	CEO
Renato Semerari	Director
Alessandro Recupero	Director
Maria D'Agata	Director
Pietro Oriani	Director

BOARD OF STATUTORY AUDITORS

Name Office

Matteo Tamburini	Chairman
Maurizio Nastri	Standing auditor
Maria Maddalena Gnudi	Standing auditor
Roberto Caramelli	Alternate auditor
Alessandro Albano	Alternate auditor

INDEPENDENT AUDITORS

EY S.p.A.

The separate financial statements at December 31, 2018 have been prepared in accordance with International Financial Reporting Standards ("IFRS"), issued by the International Accounting Standards Board ("IASB"), and adopted by the European Commission for the preparation of the consolidated and separate financial statements of companies with equity securities and/or debt listed on one of the regulated markets in the European Union.

Statement of Financial Position at December 31, 2018

(in € thousands)	Note	December 31, 2018	December 31, 2017 *	January 1, 2017 *
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	7	42,529	41,082	43,622
Intangible assets	8	580	195	141
Goodwill	9	-	-	-
Investments in subsidiaries	10	3,217	3,217	3,217
Deferred tax assets	11	1,554	530	18
Other non-current assets	12	3	3	3
Non-current assets		47,883	45,027	47,002

CURRENT ASSETS
Inventories	13	20,851	17,448	14,528
Trade receivables	14	18,491	20,355	20,586
Other current assets	15	3,756	4,320	3,254
Derivatives		-	-	-
Financial receivables - current		5,477	5,059	2,283
Cash and cash equivalents	16	4,991	4,701	1,907
Current assets		53,566	51,882	42,557
Assets held for sale		-	-	-
TOTAL ASSETS		101,449	96,909	89,559

* The comparative figures have been restated to take into account the effects of the merger and the adoption of IAS/IFRS.

(in € thousands)	Note	December 31, 2018	December 31, 2017 *	January 1, 2017*
EQUITY AND LIABILITIES
EQUITY
Share capital		1,586	1,586	1,586
Other reserves		25,463	22,751	8,550
Retained earnings		4,940	5,469	4,509
Equity attributable to owners of the parent		31,988	29,807	14,645
Equity attributable to non-controlling interests		-	-	-
TOTAL EQUITY	17	31,988	29,807	14,645

LIABILITIES
NON-CURRENT LIABILITIES
Borrowings from banks and other lenders – non-current	18	22,981	26,732	26,316
Provisions		173	200	655
Deferred tax liabilities	19	921	1,004	881
Other non-current liabilities	20	109	1,150	641
Employee benefit obligations	21	1,482	1,593	1,630
Non-current liabilities		25,666	30,679	30,123

CURRENT LIABILITIES
Borrowings from banks and other lenders - current	22	3,601	5	67
Other financial payables	23	1,668	1,913	14,039
Trade payables	24	29,351	27,207	24,558
Other current liabilities	25	9,176	7,299	6,127
Current liabilities		43,796	36,423	44,791
Liabilities relating to assets held for sale		-	-	-
TOTAL EQUITY AND LIABILITIES		101,449	96,909	89,559

* The comparative figures have been restated to take into account the effects of the merger and the adoption of IAS/IFRS.

Statement of Comprehensive Income for the year ended December 31, 2018 and 2017

(in € thousands)	Note	Year 2018	Year 2017*	Change
Revenues from sales and services	26	142,130	133,741	8,389
Other income	27	2,897	3,678	(781)
Purchases of raw materials, semifinished products and consumables	28	(90,611)	(87,183)	(3,428)
Change in inventories of raw materials, semifinished and finished products	29	3,404	2,920	484
Costs for services and leases and rents	30	(27,090)	(21,465)	(5,626)
Employee benefit expenses	31	(18,686)	(17,365)	(1,322)
Accruals	32	0	0	0
Other operating expenses	33	363	(793)	1,156
Capitalized internal construction costs		633	0	633
Operating profit before depreciation, amortization,
impairment reversals (losses) and nonrecurring income (expenses) (Adjusted EBITDA)		13,039	13,534	(495)

Depreciation, amortization and impairment reversals (losses)	34	(5,646)	(5,998)	352
Nonrecurring income (expenses)	35	(30)	926	(956)
Operating profit (EBIT)		7,363	8,463	(1,100)

Financial income	36	154	336	(181)
Financial expenses	37	(843)	(742)	(101)
(EBT) Profit before taxes		6,675	8,057	(1,382)
Income taxes	38	(1,735)	(2,587)	852
Profit for the year from continuing operations		4,940	5,469	(530)
Profit for the year from discontinued operations		0	0	0
Profit for the year		4,940	5,469	(530)

Consolidated Statement of Comprehensive Income
(in € thousands)	Note	Year 2018	Year 2017	Change
Profit for the Year		4.940	5.469	(530)
Other comprehensive income that will not be reclassified subsequently to the income statement, net of tax effect
- Actuarial gains (losses) on remeasurement of employee defined
benefit plans	39	54	5	49
- Tax Effect Total		(13) 41	-1 4	(12) 37,24

* The comparative figures have been restated to take into account the effects of the merger and the adoption of IAS/IFRS.

Comprehensive income for the year

4.981 5.473 (493)

Profit from continuing operations 4,940 5,469 Profit for the year attributable to owners of the parent 4,940 5,469 Depreciation, amortization and impairment reversals (losses) 5,642 5,997 Nonrecurring income (expenses) 30 (926) Change in provisions (98) (485) Financial income (expenses) (689) (406) Decrease / (Increase) in inventories (3,404) (2,920) Decrease / (Increase) in trade receivables, net 1,863 1,151 Increase / (Decrease) in trade payables 2,144 2,649 Decrease / (Increase) in other assets (878) (4,354) Increase / (Decrease) in other payables 754 1,804 Cash flows provided by operating activities ( a ) 10,304 7,978 Acquisition of property, plant and equipment (6,934) (4,120) Acquisition of intangible assets (745) (160) Goodwill 0 0 Disposal of property, plant and equipment and intangible assets 204 770 Acquisitions of investments 0 0 Change in assets held for sale/liabilities relating to assets held for sale 0 0 Cash flows (used in) investing activities ( b ) (7,476) (3,510) Increase / (Decrease) in borrowings from banks and other lenders 681 (11,102) Interest paid during the year (392) (264) Cash flows provided by (used in) financing activities ( c ) 289 (11,366) Change in equity (d) (2,829) 9,692 Net increase in cash and cash equivalents ( a )+( b )+ ( c ) + ( d ) 288 2,794 Cash and cash equivalents, at beginning of the year 4,701 1,907 Translation exchange differences 0 0 Cash and cash equivalents acquired 0 0 Cash and cash equivalents, at end of the year 4,990 4,701 Net increase in cash and cash equivalents during the year 288 2,794	(in € thousands)	Year 2018	Year 2017*

Statement of Cash Flows for the year ended December 31, 2018 and 2017

* The comparative figures have been restated to take into account the effects of the merger and the adoption of IAS/IFRS.

Statement of Changes in Equity

Description	Share capital	Legal reserve	Other reserves	Revaluation reserve	Reserve for treasury	Profit for the year	TOTAL
(in € thousands)					shares
Balances at December 31, 2016	1,586	317	10,503	1,004	0	3,942	17,352
Merger 1/1/2017			1,028	9,717	(15,644)		(4,899)
Adjustment for IFRS			2,192				2,192
Balances at January 1, 2017	1,586	317	13,723	10,721	(15,644)	3,942	14,645
Appropriation of profit 2016			3,942			(3,942)
Capital contribution payment			9,780				9,780
Other changes			(87)				(87)
Profit for the year 2017						5,469	5,469
Balances at December 31, 2017	1,586	317	27,358	10,721	(15,644)	5,469	29,807
Appropriation of profit 2017			5,469			(5469)	0
Profit for the year 2018						4,940	4,940
Adjustment for IFRS			(2,758)				(2,758)
Balances at December 31, 2018	1,586	317	30,069	10,721	(15,644)	4,940	31,989

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Cosmint S.p.A is a corporation organized under the laws of the Republic of Italy. The company was formed on January 3, 1994 and has its registered office in Olgiate Comasco (Como), Via XXV Aprile 15.

The company is controlled by Intercos S.p.A., which is required to prepare the consolidated financial statements of the Intercos Group.

Significant events in 2018

The following significant events took place during the year 2018:

1. In the early months of 2018, in view of the coming into force on May 25, 2018 of EU Regulation 2016/679 issued by the European Parliament and by the Council on April 27, 2016 on the protection of natural persons with regard to the processing of personal data, and on the free movement of such data (General Data Protection Regulation - GDPR), Intercos S.p.A. and other companies in the Intercos Group (Intercos Europe S.p.A., Cosmint S.p.A., Vitalab S.r.l. and Ager S.r.l.), with the assistance of a privacy consultant engaged for such purpose, began a project in the early months of 2018. Each company drew up its own register for processing personal data and assessing the risks associated with the processing of personal data as established by the GDPR. They also wrote guidelines outlining the actions to guarantee an adequate mitigation of the risk, namely: Privacy Guidelines, Guidelines for Persons Authorized to Process Personal Data, Guidelines for Exercising the Rights of the Person Concerned, Guidelines for the Management of Personal Data Violations, Guidelines for Exercising the Right to Transfer Personal Data and Guidelines for Protecting the Data from the Projection Stage through the Manner of Protection to the Predefined Approach.
2. In July 2018, the companies Cosmint Group S.p.A., Sodisco S.r.l. and Cosmint S.p.A., in their respective shareholders' meetings, approved the merger of Cosmint Group S.p.A. and Sodisco S.r.l. with and into Cosmint S.p.A. (Cosmint Merger). The merger became effective under the Italian Civil Code on November 1, 2018. The accounting effects on the consolidated and separate financial statements are effective retroactively from January 1, 2018. In accordance with international accounting principles, the comparative figures have been restated to take into account the effects of the merger. The purpose of the Cosmint Merger was to bring Sodisco S.r.l.'s real estate assets into Cosmint S.p.A. so that it would acquire ownership of the properties used in its production and commercial activities. In addition, through the merger of the parent Cosmint Group S.p.A. in Cosmint S.p.A., the following was achieved: (i) a simplification and rationalization of the company's organization, resulting in a shortening of the chain of control reporting to Intercos S.p.A. aimed at facilitating decisional and operational processes within the

Intercos Group, (ii) a better utilization of the potential synergies, particularly production and commercial synergies; as well as (iii) a reduction in total operating and administrative costs, all with a view towards an overall improvement in terms of operating efficiency.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements for the year ended December 31, 2018 of Cosmint S.p.A. are expressed in euros. The financial statements consist of the statement of financial position, the statement of comprehensive income, the statement of cash flows and the statement of changes in equity and the notes thereto. All amounts in the notes are expressed in thousands of euros, unless otherwise indicated. The statement of comprehensive income format presents a classification according to costs by nature.

By IFRS is meant all "International Financial Reporting Standards", all International Accounting Standards ("IAS"), all interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"),

formerly the Standing Interpretations Committee ("SIC"), adopted by the European Union and contained in the relative European Union Regulations published up to the date on which the board of directors of Cosmint S.p.A. approved the draft financial statements of the company. Any future guidance and updated interpretations will be adopted in subsequent years in the manner established each time by the benchmark accounting standards.

The financial statements were approved for publication by the board of directors on March 28, 2019.

New accounting standards and interpretations adopted by the company

The accounting principles and interpretations adopted by Cosmint S.p.A. that became effective from January 1, 2018 are reported below.

Regulations 2016/1905 and 2017/1987, issued by the European Commission, respectively, on September 22, 2016 and October 31, 2017, adopted "IFRS 15 - Revenue from Contracts with Customers" and the document "Clarifications to IFRS 15 - Revenue from Contracts with Customers" that define the criteria for the recognition and measurement of revenues arising from contracts with customers.

IFRS 15 was adopted from January 1, 2018 and the company took advantage of the possibility allowed by the standard of recognizing the cumulative effect in equity at January 1, 2018, considering the situations existing at that date, without restating the prior years presented for comparison purposes. The application of the standard did not have significant accounting effects.

"IFRS 9 - Financial Instruments", adopted by Regulation 2016/2067 issued by the European Commission on November 22, 2016, was adopted beginning from January 1, 2018. As allowed by the transitional provisions of the standard, also due to the complexity of recalculating values at the beginning of the first year presented without the use of elements known afterwards, the effects of the first-time application of IFRS 9 as regards classification and measurement, including impairment, of financial assets, were recognized in equity at January 1, 2018, without restating the prior years presented for comparison purposes. As for hedge accounting, the adoption of the new provisions did not have significant effects.

Specifically, the adoption of IFRS 9 resulted in a reduction in equity of €32 thousand which refers to higher impairments due to the adoption of the expected credit loss model for trade receivables and other receivables.

Accounting standards and interpretations issued by the IASB/IFRIC and adopted by the European Commission, but not yet effective

Regulation 2017/1986, issued by the European Commission on October 31, 2017, adopted "IFRS - 16 Leases", which replaces IAS 17 and related interpretations. Specifically, IFRS 16 defines a lease as a contract that conveys to the lessee a right to use the asset for a specified period of time in exchange for consideration. The new standard eliminates the distinction between operating or finance lease for purposes of the preparation of financial statements by lessees; in particular, for all lease contracts with a lease term of more than 12 months the following is required:

in the statement of financial position, the recognition of an asset, representing the right to use the asset (hereafter "right-of-use asset") and a liability (hereafter "lease liability"), representing the obligation to make the payments established by the contract; in accordance with the standard, the right-of-use asset and the lease liability are recognized in separate captions of the balance sheet;
in the income statement, recognition of depreciation on the right-to-use asset and the interest expense on the lease liability, in lieu of the recognition of operating lease payments recorded in operating costs, if not capitalized, according to the provisions of IAS 17 in effect until the end of the year 2018. In the event the depreciation of the right-to-use asset and the interest expense on the lease liability are directly associated with the realization of assets, they are capitalized on such assets and later recognized in the income statement through depreciation;¹
in the statement of cash flows, the recognition of cash payments on the lease liability presented within financing activities and the interest expense presented within operating activities, if charged to the income statement, or in investing activities if they are capitalized if they refer to assets leased and used for the realization of other assets.

Instead, the lessor, in its financial statements, continues to classify its leases as operating leases or finance leases. IFRS 16 increases the disclosure of leases in the financial statements both for the lessor and lessee. IFRS 16 is effective for reporting periods beginning on or after January 1, 2019.

During 2018, the analyses have been completed for the identification of areas affected by the new provisions, for the updating of company processes and systems and for the calculation of the estimated relative effects.

Upon first-time application, the company intends to take advantage of the following practical exemption set out in the standard:

decision not to assimilate, on transition, leases with a remaining lease term of less than 12 months at January 1, 2019 with short-term leases and leases of low-value assets of less than USD 5 thousand according to the interpretation IFRS 16 Leases - IFRS Effects Analysis International Financial Reporting Standard (January 2016).

¹ . The income statement will also include: (i) lease payments relating to short-term leases and leases of low-value assets, as allowed by IFRS 16; and (ii) variable lease payments, not included in calculating the lease liability (e.g. payments based on the use of the leased asset).

Based on available information, the application of IFRS 16 will result in the recognition of a right-of-use asset and a lease liability of €506 thousand. This estimate could change depending on the possible evolution of interpretations according to indications by IFRIC, as well as perfecting the formulation process in anticipation of the first-time application of the standard in 2019.

Accounting standards, interpretations and amendments issued by the IASB/IFRIC and not yet adopted by the European Commission

Accounting standards, interpretations and amendments, which, at the date of the preparation of these financial statements, are in the process of being adopted by the European Commission are illustrated below.

On May 18, 2017, the IASB issued "IFRS 17 - Insurance Contracts", which defines the accounting for insurance contracts issued and reinsurance contracts held. The provisions of IFRS 17, which supersede those currently set out in "IFRS 4 - Insurance Contracts", are effective for reporting periods beginning on or after January 1, 2021.

On February 7, 2018, the IASB also amended "IAS 19 - Plan Amendment, Curtailment or Settlement" (hereafter amendments to IAS 19), aimed mainly at requiring the use of updated actuarial assumptions to calculate current service cost and net interest for the period following an amendment, curtailment or an existing defined benefit plan. The amendments to IAS 19 are effective for reporting periods beginning on or after January 1, 2019.

On March 29, 2018, the IASB issued the document "Amendments to References to the Conceptual Framework in IFRS Standards", containing amendments, mainly of a technical and editorial nature, to international standards aimed at supporting transition to the revised IFRS Conceptual Framework for Financial Reporting issued by the IASB on the same date. The amendments to the standards are effective for reporting periods beginning on or after January 1, 2020.

On October 22, 2018, the IASB issued amendments to "IFRS 3 - Business Combinations", to provide clarification on the definition of a business. The amendments to IFRS 3 are effective for reporting periods beginning on or after January 1, 2020.

On October 31, 2018, the IASB issued amendments to "IAS 1 and IAS 8 - Definition of Material" (hereafter amendments to IAS 1 and IAS 8) aimed at clarifying and rendering uniform within the IFRS and other publications, the definition of material for the purpose of providing support to companies in the formulation

of opinions. In particular, information must be considered material if it can reasonably be assumed that to omit, misstate or obscure it influences the primary users of general-purpose financial statements in making decisions on the basis of those statements. The amendments to IAS 1 and IAS 8 are effective for reporting periods beginning on or after January 1, 2020.

On December 12, 2017, the IASB issued the document "Annual Improvements to IFRS Standards 2015-2017 Cycle", containing amendments, mainly of a technical and editorial nature, of the international standards. effective for reporting periods beginning on or after January 1, 2019.

With EU Regulation 2018/1595 issued on October 23, 2018, the European Commission adopted "IFRIC 23 - Uncertainty over Income Tax Treatments", which contains indications on current and/or deferred accounting for income taxes when there is uncertainty over the application of the tax law. The provisions of IFRIC 23 are effective for reporting periods beginning on or after January 1, 2019. The effects of the new provisions are currently being assessed.

Furthermore, with EU Regulation 2019/237 issued by the European Commission on February 8, 2019, the amendments to "IAS 28 - Long-term Interests in Associates and Joint Ventures" (hereafter amendments to IAS 28) were adopted with the aim of clarifying that an entity applies IFRS 9, including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture. The amendments to IAS 28 are effective for reporting periods beginning on or after January 1, 2019.

The company is assessing these standards, where applicable, in order to evaluate whether their adoption will or will not have any significant impact on the financial statements.

Summary of significant accounting policies

The financial information, as stated, has been prepared in accordance with IFRS adopted by the European Union. The financial statements have been prepared under the historical cost convention except as specifically described in the following notes, in which case, fair value was used.

The financial statements have been prepared under the going concern concept.

The most significant accounting policies adopted are described below. The accounting polices described have been applied on a basis consistent with all periods presented.

These financial statements will be submitted for the approval of the shareholders' meeting, which is

authorized to make changes, if any, to the financial statements, where necessary.

Property, plant and equipment

Property, plant and equipment are stated at purchase or production cost less accumulated depreciation and impairment losses, if any. Purchase cost includes all directly attributable costs necessary to make the asset ready for use and any expenses for decommissioning and restoration that will be incurred as a result of contractual obligations that require the assets to be restored to their original condition.

Any borrowing costs incurred for the acquisition, production or construction of property, plant and equipment are capitalized to the relative asset up to the time such asset is ready for use. Ordinary and/or cyclical maintenance and repairs are charged directly to the income statement in the year in which they are incurred. Costs for the expansion, refurbishment or betterment of structural elements owned or leased are capitalized solely to the extent that they meet the requisites for being classified separately as assets or part of an asset under the component approach. Likewise, the replacement costs of identifiable components of complex assets are charged to assets and depreciated over their estimated useful lives; the remaining carrying amount of the component being replaced is charged to the income statement.

Spare parts of significant amount are capitalized and depreciated over the estimated useful life of the asset to which they refer.

The carrying amount of property, plant and equipment is adjusted by systematic depreciation, calculated on a straight-line basis from the date the asset is available and ready for use, over the estimated useful life of the asset. In particular, depreciation is recognized starting from the month in which the asset is available for use or is potentially able to provide the economic benefits associated with it and is charged on a monthly basis on a straight-line basis at rates designed to write off the assets up to the end of their useful life or, for disposals, up to the last month of utilization.

The annual depreciation rates representing the estimated useful lives of property, plant and equipment are as follows:

Description	Rate
Land and Buildings	0%/3%
Plant
o Generic	10%
o Specific	12.5%
Machinery	12.5%

Industrial equipment

	o	Laboratory, workshop	35%
Other assets
	o	Office furniture and fixtures	12%
	o	Electronic machines	20%
	o	Light constructions	5%/10%
	o	Internal transportation equipment	20%
	o	Motor vehicles	25%

The useful life of property, plant and equipment and the residual amount is reviewed and updated, where applicable, at the end of every year.

Whenever the depreciable asset is composed of distinctly identifiable elements whose useful life differs significantly from the other parts that compose the asset, depreciation is taken separately for each of the parts that compose the asset in accordance with the component approach.

Leasehold improvements are classified in property, plant and equipment, consistently with the nature of the cost incurred. The depreciation period of the cost relating to the expansion, renovation or improvement of the structural elements in use by third parties corresponds to the lower of the remaining estimated useful life of the property, plant and equipment and the remaining term of the lease contract.

Gains and losses on the sale or disposal of property, plant and equipment are calculated as the difference between the proceeds from the sale and the net carrying amounts of the assets sold or disposed of and are recognized in the income statement in the year to which they refer.

Land is not depreciated and is measured at cost, net of accumulated impairment losses.

Leased assets

Assets owned under finance lease contracts in which substantially all the risks and rewards of ownership are transferred to the company are recognized as property, plant and equipment at fair value or, if lower, at the present value of the minimum lease payments. The corresponding liability payable to the lessor is shown in the financial statements under financial payables. The assets are depreciated according to the policies and rates indicated for property, plant and equipment unless the term of the lease contract is shorter than the useful life represented by these rates and reasonable certainty of transferring ownership of the leased asset at the natural expiration of the contract is not assured. In that case, the depreciation period is represented by the term of the lease contract. The lease payment is divided into its components of financial expense, recognized in the income statement, and the repayment of principal, recorded as a reduction of the financial payables.

Leases in which the lessor retains substantially all the risks and rewards of ownership associated with ownership of the assets are classified as operating leases. Payments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease contract.

Intangible assets

Intangible assets are identifiable assets without physical substance, controlled by the company and able to produce expected future economic benefits, as well as goodwill, when acquired against payment. Identifiability of an intangible asset is defined as the possibility of distinguishing it from goodwill. This requisite is normally satisfied when: (i) the asset arises from contractual or other legal rights, or (ii) the asset is separable, i.e. is capable of being sold, transferred, rented or exchanged individually or as an integral part of other assets. An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others to those benefits. Such assets are recorded at the cost of purchase and/or production, including incidental expenses directly attributable to the preparation of the asset for its intended use, net of accumulated amortization, and any impairment losses. Any borrowing costs arising during and for the development of intangible assets are expensed in the income statement. Amortization starts when the asset is available for use and is charged on a straight-line basis over the remaining period of possible utilization, intended as the estimated useful life.

(i) Trademarks, licenses and similar rights

Licenses are amortized on a straight-line basis so as to allocate the cost incurred for the purchase of the right over the shortest period between the expected utilization period and the term of the relative contracts starting from the time in which the acquired right becomes exercisable. Software licenses are amortized on a straightline basis over their estimated useful lives (5 years).

(ii) R&D costs

Costs associated with research and development are charged to the income statement in the year incurred except for development costs recognized in intangible assets when all the following conditions are met:

a) the project can be clearly identified and the costs associated with it can be identified and measured reliably;
b) the technical feasibility of the project can be demonstrated;
c) the intention to complete the project and sell the intangible assets generated by the project can be demonstrated;
d) a potential market exists or, in the case of internal use, the utility of the intangible asset for the production of intangible assets generated by the project can be demonstrated;

e) the technical and financial resources for the completion of the project are available.

Amortization of any capitalized development costs recorded in intangible assets starts from the date in which the result generated by the project can be marketed. Amortization is charged on a straight-line basis over a period of five years, which represents the estimated useful life of capitalized expenditures.

Impairment of property, plant and equipment and intangible assets

At each balance sheet date, property, plant and equipment and intangible assets with a finite life are reviewed to identify the existence of any indicators of an impairment in their value. When the presence of these indicators is identified, the recoverable amount of such assets is estimated and any impairment is recognized in the income statement. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use where the value in use is the present value of the estimated future cash flows for such asset. The value in use is determined by discounting the estimated future cash flows from the use of the asset to present value at a pretax rate which reflects current market assessments of the time value of money, in relation to the period of the investment and the risks specific to the asset. For an asset that does not generate independent financial flows, the recoverable amount is determined by reference to the cash-generating unit to which such asset belongs.

An impairment loss is recognized in the income statement when the carrying amount of the asset, or the cash-generating unit to which it is allocated, is higher than the recoverable amount. Where an impairment loss on assets subsequently no longer exists or has decreased, the carrying amount of the asset, except for goodwill, is increased and the reversal is recognized in the income statement. The asset is increased to the net carrying amount that would have been recorded and reduced by the depreciation and amortization that would have been charged had no impairment loss been recognized.

Financial instruments

Financial assets

Financial assets mainly relate to accounts receivable from customers, with fixed or determinable payments, that are non-derivative and are not listed on an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified in non-current assets. Such assets are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method. Where there is objective evidence of an indication of impairment, the asset is reduced so that it equals the present value of estimated future cash flows. The impairment loss is recognized in the income statement. Where an impairment loss on assets subsequently no longer exists or has decreased, the carrying amount of the asset is increased up to the carrying amount that would have been recorded under the amortized cost method had no impairment loss been recognized.

Financial assets are derecognized from the financial statements when the right to receive cash flows from the instrument is extinguished or when the company has substantially transferred all the risks and rewards relating to the receivable and the relative control.

Financial liabilities

Purchases and sales of financial liabilities are recognized on the trade date, that is, the date on which the company commits to purchase or sell the financial instrument.

Financial liabilities are borrowings, trade payables and other obligations payable. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method. When there is a change in estimated cash flows and it is possible to estimate them reliably, the amount of the borrowings is recalculated to reflect this change on the basis of the present value of the new estimated cash flows and the internal rate of return determined initially. Financial liabilities are classified in current liabilities unless the company has an unconditional right to defer settlement of the liabilities for at least 12 months after the balance sheet date.

Financial liabilities are derecognized from the financial statements when they are extinguished or when all the risks and expenses relating to the liability have been transferred to third parties.

Inventories

Inventories are stated at the lower of purchase or production cost, determined using the weighted average cost method, and estimated realizable value.

Inventories, where necessary, are adjusted to take into account obsolete or slow-moving goods. When the circumstances which previously led to the adjustment no longer exist or when there is a clear indication of an increase in net realizable value, the adjustments are reversed in whole or in part so that the new carrying amount is the lower of purchase or production cost and net realizable value at the balance sheet date.

Cash

Cash and cash equivalents include bank deposits, postal deposits, cash and valuables in cash. They are stated at nominal value.

Provisions

Provisions include accruals for present legal or constructive obligations as a result of past events for which it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The accrual is measured using the best possible estimate of the amount that the company would be expected to pay to extinguish the obligation. Where the effect of the time value of money is material and the dates of payment can be reliably estimated, the accrual is measured at present value. The rate used to determine the present value of the liability reflects fair value and includes the additional effects relating to the specific risk that can be associated with each liability. The change in the amount of the provision connected with the passage of time is recognized in the income statement in Financial expenses.

Risks associated with liabilities that are only considered possible are disclosed under Guarantees and other commitments.

Employee benefit obligations

Defined benefit pension plans, which also included until December 31, 2006 the employee severance indemnities due to Italian employees as set forth in art. 2120 of the Italian Civil Code, are based on the working life and the compensation received by the employee over a predetermined service period. In particular, the liability relating to employee severance indemnities is recognized in the financial statements based on actuarial calculations since it qualifies as an employee benefit due on the basis of a defined benefit plan. Recognition of a defined benefit plan in the financial statements requires actuarial techniques to estimate the amount of benefits accruing to employees in exchange for work performed during the current and prior years and the discounting of such benefits in order to determine the present value of the company's commitments. The determination of the present value of such commitments is calculated using the Projected Unit Credit Method. This method, which is one of the actuarial techniques used for calculating accrued benefits, considers each active service period by the employee in the company as an additional unit which gives the right to benefits: the actuarial liability must therefore be quantified on the basis of only the service life accrued at the date of measurement; therefore, the total liability is normally recalculated on the basis of the ratio of the number of years of service accrued at the measurement date to the total estimated service life that will be reached at the time of settlement. Furthermore, this method calls for considering future increases in compensation, for whatever reasons (inflation, career, contract renewals, etc.) up until the time of termination of employment.

The cost accrued during the year for defined benefit plans and recognized in the income statement under employee benefit expenses is equal to the sum of the average present value of the defined benefits accrued

by active employees for the work performed during the year and the annual interest accrued on the present value of the company's commitments at the beginning of the year, calculated using the discount rate of future cash outflows adopted for the estimate of the liability at the end of the preceding year.

Remeasurements of employee defined benefit plans comprise actuarial gains and losses expressing the effects of differences arising from experience adjustments and changes in actuarial assumptions. Such actuarial gains and losses are recorded in the statement of comprehensive income.

Following the Reform of Supplementary Pension Benefits, as amended by the Budget Law 2007 and subsequent decrees and regulations issued during the early months of 2007, employee severance indemnities that accrue starting from the date of January 1, 2007 are assigned to pension funds or to a treasury fund managed by INPS or, in the case of companies with less than 50 employees, may be retained in the company and calculated similarly to the method used in past years. Employees have the right to choose the destination of their employee severance indemnities up to June 30, 2007.

To this end, account was taken of the effect of the new provisions and only the liability relating to employee severance indemnities that is retained in the company is measured in accordance with IAS 19, since the amount of employee severance indemnities accruing from 2007 is assigned to alternative forms of pension or paid into a treasury fund managed by INPS, according to the choice of destination made by each single employee.

Consequently, the portion of employee severance indemnities accruing and assigned to pension funds or to the INPS-managed fund is classified as a defined contribution plan since the company's obligation is only represented by the payment of contributions to the pension fund or to INPS. The liability for severance indemnities previously accrued continues to be considered as a defined benefit plan and is measured on the basis of actuarial assumptions.

Translation of foreign currency balances and transactions

Transactions in foreign currency are translated to Euro using the exchange rate in effect at the dates of the relative transactions. Foreign exchange gains and losses realized on the receipt or the payment of the above transactions and the translation of monetary asset and liability balances denominated in foreign currencies are recognized in the income statement.

Revenues and costs

Revenues and costs are recognized according to the accrual and matching principles.

Revenues are recognized net of returns, discounts, allowances, rebates, taxes and directly related promotional contributions. Revenues are recognized upon delivery of the goods to the final customer when all the risks and rewards of ownership are transferred.

Revenue recognition

Sales of products

Revenues from the sale of products are recorded when all the following conditions are met:

the significant risks and rewards of ownership are transferred to the customer;
effective control over the assets in the transaction and the normal continuing level of business associated with ownership have ceased;
the revenues can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the company;
the costs incurred or to be incurred can be measured reliably;
in the event the nature and the extent of the seller's involvement is such that the risks and rewards relating to ownership are not in fact transferred, the time of revenue recognition is deferred until the date when such transfer can be considered to have taken place.

Performance of services

Revenues from services are recognized only when the results of the transaction can be estimated reliably, with reference to the stage of completion of the transaction at the closing date of the financial statements.

The results of a transaction can be estimated reliably when all the following conditions are met:

the amount of revenues can be determined with reliability;
it is probable that any future economic benefit associated with the item of revenue will flow to the entity;
the stage of completion at the date of the financial statements can be measured reliably;
the costs incurred for the transaction and the costs to be incurred to complete the transaction can be measured reliably.

Financial expenses

Financial expenses are recorded as expenses in the year incurred. They include interest on bank overdrafts and loans, financial expenses on finance leases, actuarial losses and financial expenses on the actuarial valuation of employee severance indemnities.

Income taxes

Current income taxes are determined on the basis of a realistic estimate of the tax expense to be paid under the existing tax laws.

Deferred income taxes are calculated by applying the full liability method to the temporary differences between the tax bases of the assets and liabilities and their corresponding carrying amounts, except for goodwill. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax liabilities are determined based on enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In the calculation of deferred income taxes, account was taken of the reduction in the IRES tax rate to 24% starting from the year 2017 in accordance with Law 208 of December 28, 2015 (Budget Law 2016).

Current and deferred income taxes are recognized in the income statement except to the extent that they relate to items directly charged or credited to equity, in which case the related income tax effect is recognized in equity. Current and deferred income taxes are offset when the income taxes are levied by the same taxing authority and where there is a legally enforceable right of offset and there are expectations of settling the net balance.

3. DIRECTION AND COORDINATION ACTIVITIES

Pursuant to art. 2497 bis, paragraph 4 of the Italian Civil Code, since the company is subject to the direction and coordination of the parent Intercos S.p.A., the highlights of its latest approved financial statements are presented in these Notes; these have been prepared in conformity with IFRS adopted by the European Union. Intercos S.p.A. also prepares the consolidated financial statements.

For a meaningful and complete understanding of the financial condition and cash flows of said company at December 31, 2018, as well as the results of operations for the year then ended, reference should be made to the financial statements which, accompanied by the independent auditors' report, are available in the form and manner established by law.

4. RISK MANAGEMENT

Cosmint S.p.A.'s business, in fact, is exposed to various types of risks: market risk, credit risk and liquidity risk. The company's risk management strategy is focused on the unpredictability of the markets and aimed at minimizing potential negative effects on earnings.

The coordination and monitoring of major financial risks are centralized at the Group level.

Types of risks hedged

Markets risks

Exchange rate risk

Cosmint S.p.A. is very active on an international level but is only marginally exposed to exchange rate risk. In fact, almost all sales and purchases are denominated in euro; an intragroup loan is in a non-euro currency for PLN 11,732,000. Given the stability of the euro/PLN exchange rate and its constant monitoring by management, no hedges were put into place since the related risk is considered very low.

in € thousands	2018
	-7.50%	7.50%
U.S. dollar	-1	1
British pound	-11	10
Other currencies	-8	7
Total	-20	17

Interest rate risk

The company is exposed to interest rate risk mainly from long-term borrowings. Such borrowings are at variable interest rates The Administration Function has no particular hedging policy regarding the risks originating from such contracts, maintaining that the risk is moderate.

The following sensitivity analysis was performed to illustrate the effects on consolidated profit produced by an increase/decrease of 50 basis points in interest rates compared to the effective interest rates at December 31, 2018, with all other variables remaining constant.

The potential effects reported below were calculated by taking the liabilities which represent the most significant part of the Group's borrowings at the reference date and calculating, on that amount, the potential impact of a change in the interest rates on an annual basis.

The liabilities in this analysis include variable-rate financial payables and receivables and cash and cash equivalents.

(in € thousands)	2018
	-0.5%	+0.5%

Euro (Euribor)	(120)	120
Total	(120)	120

Credit risk

Credit risk is associated with trade receivables, cash and cash equivalents, deposits at banks and other financial institutions.

Cosmint S.p.A. does not have significant concentrations of credit risk considering the proven solvency of its major customers.

When considered appropriate, the company may also sell non-recourse receivables to factoring companies.

Trade accounts receivables, the provision for impairment of receivables and an ageing analysis of receivables are presented at December 31, 2017 and December 31, 2018.

(in € thousands)
12/31/2017	Trade receivables	Current	Overdue 0-60 days	Overdue 61-90 days	Overdue over 90 days	Provision for impairment
Cosmint S.p.A.	16,535	13,792	1,841	283	619	(724)
(in € thousands)
12/31/2018	Trade receivables	Current	Overdue 0-60 days	Overdue 61-90 days	Overdue over 90 days	Provision for impairment
Cosmint S.p.A.	19,673	15,365	2,989	866	453	(43)

Liquidity risk

Prudent management of liquidity risk in the ordinary operations of the Group implies maintaining an adequate level of cash.

The amount of liquidity reserves available at December 31, 2018 is as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Bank and postal deposits	4,990	4,700
		24

Total	4,990	4,701
Cash and cash equivalents	0	1

The following tables present an analysis of the maturities of borrowings and other liabilities on a net basis. Borrowings from banks in the following table are presented at their nominal amount:

(in € thousands)				Total
	Within 1 year	From 1 to 5 years	Beyond 5 years	December 31, 2018
Borrowings from banks and other lenders – medium/long-term	3,600	20,400		24,000
Finance leases payable	1,668	2,718		4,386
Medium/long-term debt	5,268	23,118	-	28,386
Borrowings from banks and other lenders – short-term
Trade payables	29,351			29,351
Short-term debt	29,351	-	-	29,351
Total	34,619	23,118	-	57,737

(in € thousands)

12/31/2018	Financial assets at fair value through profit and loss	Receivables and loans	Available for-sale financial assets	Held-to maturity assets	Financial liabilities at fair value through profit and loss	Other liabilities at amortized cost	Hedging derivatives
Available-for-sale financial
assets	-	-	-	-	-	-	-
Derivatives (assets)	-	-	-	-	-	-	-
Trade receivables	-	18,491	-	-	-	-	-
Loans receivable		5,477
Other assets (*)	-	491	-	-	-	-	-
Borrowings from banks and other lenders
	-	-	-	-	-	28,386	-
Trade payables	-	-	-	-	-	29,350	-
Loans payable						-
Other payables (*)	-	-	-	-	-	7,546	-
Derivatives (liabilities)	-	-	-	-	-	-	-
Total	-	24,459	0	0	0	65,282	-

Cash and cash equivalents - 4,990 - - - - -

(*) Other assets and Other payables exclude items of a tax nature since they do not satisfy the definition of financial assets or liabilities.

With reference to the assets and liabilities in the above tables, the fair value is considered to approximate the carrying amounts in the financial statements.

5. USE OF ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements requires management to apply accounting principles and methods which at times are based upon complex subjective judgments and estimates connected with past experience as well as reasonable and realistic assumptions according to the relevant circumstances. The use of these estimates and assumptions can affect the amounts reported in the financial statements, such as the statement of financial position, the statement of comprehensive income and the statement of cash flows, in addition to the disclosure provided. Those accounting policies which particularly require critical judgments by management in making estimates and for which a change in the conditions underlying the assumptions used could have a significant impact on the financial statements are briefly described below.

Goodwill

In accordance with the accounting policies adopted for the preparation of the financial statements, goodwill is tested annually for any impairment that requires recognition in the income statement. The test specifically requires the allocation of goodwill to cash-generating units and the subsequent determination of the recoverable amount, being the higher of the fair value and the value in use. When the value in use is lower than the carrying amount of the cash-generating unit, an impairment of goodwill should be recognized. The allocation of goodwill to the cash-generating unit and the determination of the value in use require the use of estimates that depend upon subjective judgments and factors which over time could be different from management's estimates and have consequent effects that could be significant.

Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets are tested for any impairment that requires recognition of an impairment loss, whenever there are indications that the carrying amount through use may not be recoverable. Verification of the existence of such indications requires management to exercise subjective judgment based on information available from within the company and from the market and from historical experience. Moreover, whenever an impairment may exist, the company determines the impairment loss on the basis of appropriate measurement techniques. The proper identification of the factors indicating that an impairment may exist and the estimates used depend on factors which could vary over time and affect management's judgments and estimates.

Depreciation of property, plant and equipment

Depreciation of property, plant and equipment constitutes a significant cost for the company. The cost of buildings, plant and machinery is depreciated over the estimated useful lives of the assets on a straight-line basis. The economic useful life of these assets is determined by management when the assets are purchased; it is based on the historical experience of similar assets, market conditions and anticipation of future events which could have an impact on the useful life, including changes in technology. Therefore, the effective economic life could differ from the estimated useful life. The company periodically reviews technological and sector changes, evaluates decommissioning costs and the recoverable amount in order to update the residual useful life. This periodical update could entail a change in the period of depreciation and therefore a change in the depreciation charge of future years.

Deferred taxes

Deferred tax assets are recognized on the basis of expectations of future earnings. The estimate of future earnings for purposes of the recognition of deferred taxes depends on factors which could vary over time and significantly affect the amount of deferred taxes.

Provisions

Accruals are made to provisions for probable liabilities relating to disputes with employees, suppliers, third parties and, generally, the expenses which the company might be obliged to incur for obligations undertaken in the past. These accruals also include an estimate of the liabilities which could arise from disputes concerning the terms of fixed-term labor contracts used in the past, mainly for delivery activities. The determination of such accruals requires the assumption of estimates which depend on the current knowledge of factors which could change over time and which could produce effects that differ from the final outcomes estimated by management in preparing the financial statements.

6. FIRST-TIME ADOPTION OF IFRS

First-time adoption of IFRS

The financial statements of Cosmint S.p.A. (hereafter company) at December 31, 2018 have been prepared for the first time in accordance with international financial reporting standards (hereafter IAS/IFRS) adopted by the European Union including all interpretations of the Financial Reporting Interpretation Committee (hereafter UE IFRS).

The international financial reporting standards IAS/IFRS have been applied in the preparation of the financial statements for the year ended December 31, 2018 (reference date of the financial statements), the comparative figures at December 31, 2017 represented by the above statements and in the preparation of the IFRS opening financial statements at January 1, 2017 (hereafter Transition Date).

In preparing the IAS/IFRS opening financial statements, the company adjusted the amounts reported in the financial statements previously prepared according to Italian accounting principles (Italian GAAP).

These notes describe the effects of the transition to IAS/IFRS on the financial statements previously published (prepared in accordance with Italian GAAP) and the reconciliations with the corresponding amounts restated in relation to the adoption of IAS/IFRS.

The measurement criteria adopted in the preparation of the opening Statement of Financial Position at January 1, 2017, the Statement of Comprehensive Income for the year ended December 31, 2017 and the Statement of Financial Position at December 31, 2017 according to IAS/IFRS are disclosed in the Notes to the financial statements. Instead, below, a description is provided of any accounting treatments selected among the accounting options provided by EU IFRS.

The statement of financial position at January 1, 2017 and at December 31, 2017 have been prepared according to the provisions of IFRS 1 - First-time Adoption of International Reporting Standards. Specifically, IAS/IFRS accounting standards have been used that are already applicable from January 1, 2018.

These notes disclose the information required by IFRS 1 and, in particular, report the description of the impacts that the transition to EU IFRS have on the financial condition and results of operations of the company. To this end, the following have been prepared:

the reconciliation schedule between the statements of financial position of the company at January 1, 2017 (Transition Date) and December 31, 2017 (closing date of the last financial statements prepared on the basis of Italian GAAP) prepared according to Italian GAAP and on the basis of EU IFRS;
the reconciliation schedule between the statement or comprehensive income for the year ended December 31, 2017 drawn up according to Italian GAAP and on the basis of EU IFRS;
the reconciliation schedule of equity at January 1, 2017 and December 31, 2017 determined on the basis of Italian GAAP and EU IFRS;
the reconciliation schedule of total comprehensive income for the year ended December 31, 2017 determined in accordance with Italian GAAP and with EU IFRS;
the notes relating to adjustments and reclassifications included in the aforementioned reconciliation schedules that describe the significant effects of the transition, with regard to both the classification of the various items of the financial statements and their different measurement and, therefore, the consequent effects on the financial position, operating results and cash flows.
the notes relating to the description of the most important adjustments made to the statement of cash flows.

The statements of financial position and statement of cash flows at the Transition Date to EU IFRS was drawn up according to the following criteria:

all assets and liabilities whose recognition was required by EU IFRS were recognized;
assets and liabilities were not recorded unless recognition was permitted by EU IFRS;
EU IFRS were applied for the measurement of all assets and liabilities recognized.

Optional exemptions to the full retrospective application of EU IFRS

The companies that adopt EU IFRS for the first time have the option of applying for certain exemptions to the full retrospective application of EU IFRS.

Adoption of IAS/IFRS after the adoption of EU IFRS by the parent Intercos S.p.A.

Cosmint S.p.A. is adopting IAS/IFRS for the first time after the adoption of EU IFRS by its parent, Intercos S.p.A., which took place in the year ended December 31, 2005. Intercos S.p.A. prepares the consolidated financial statements. The company opted to measure the assets and liabilities in its separate financial statements at the accounting values that would have been recorded in the consolidated financial statements at the date of transition to IAS/IFRS.

Investments in subsidiaries

Cosmint S.p.A. chose the accounting value determined on the basis of Italian GAAP at the Transition Date (deemed cost) for the carrying amount for the investment in Tatra.

Mandatory exemptions to the full retrospective adoption of EU IFRS

The only mandatory exemption applicable to Cosmint S.p.A. for this transition regards the measurement estimates used to restate the information at the Transition Date which conform to those used in the preparation of the relative financial statements according to the previous Italian GAAP (after the adjustments necessary to reflect any differences in accounting principles).

The other optional exemptions prescribed in IFRS 1 have not been applied since they refer to situations that are not applicable to the company.

Statement of financial position at January 1, 2017

Appendix 1 presents the reconciliation of the statement of financial position at January 1, 2017 of Cosmint S.p.A. prepared in conformity with Italian GAAP and reclassified on the basis of criteria chosen by the company for the EU IFRS financial statements and the statement of financial position prepared in conformity with EU IFRS.

Statement of financial position at December 31, 2017

Appendix 2 presents the reconciliation of the statement of financial position at December 31, 2017 of Cosmint S.p.A. prepared in conformity with Italian GAAP and reclassified on the basis of classification criteria chosen by the company for the EU IFRS financial statements and the statement of financial position prepared in conformity with EU IFRS.

Statement of comprehensive income for the year ended December 31, 2017

Appendix 3 presents the reconciliation of the statement of comprehensive income for the year ended December 31, 2017 of Cosmint S.p.A. prepared in conformity with Italian GAAP and reclassified on the basis of classification criteria chosen by the company for the EU IFRS financial statements and the statement of comprehensive income prepared in conformity with EU IFRS.

Equity at January 1, 2017 and December 31, 2017 and comprehensive income for the year ended December 31, 2017

Below are the reconciliations between the equity of Cosmint S.p.A. at January 1, 2017 and at December 31, 2017 and comprehensive income for the year December 31, 2017 prepared in conformity with Italian GAAP with the corresponding amounts prepared in conformity with EU IFRS.

		EQUITY 1/1/2017	COSMINT GROUP+SODISCO MERGER	PROFIT FOR THE YEAR 2017	OTHER COMPREHENSIVE INCOME	EQUITY 12/31/2017
	Note
COSMINT S.p.A. - ITALIAN GAAP FINANCIAL STATEMENTS		17,352	(4,899)	5,227	9,780	27,460

Elimination of intangible assets	A	(33)		33
Accounting for leases IAS 17	B	460	1,762	189		2,411
Employee benefit obligations IAS 19	C	(35)	(47)	18		(64)

COSMINT S.p.A. – IFRS FINANCIAL STATEMENTS		17,744	(3,184)	5,467	9,780	29,807

Notes to the reconciliation schedules of equity at January 1, 2017 and at December 31, 2017 and comprehensive income for the year ended December 31, 2017

The following is a description of the adjustments to equity at January 1, 2017 and at December 31, 2017 and comprehensive income for the year ended December 31, 2017 for the purpose of the adoption of EU IFRS.

For each of the adjustments described below, the relative tax effect was also recognized, where applicable.

A. Elimination of intangible assets not capitalizable

Intangible assets that do not meet the criteria of IAS 38 are recorded in the income statement when the purchase cost is incurred. On transition to EU IFRS, the company therefore eliminated certain costs capitalized in prior years or in 2017 (mainly leasehold improvement or deferred charges). The related amortization was also eliminated from the income statement (see column b in Appendices 1-2-3).

B. Accounting for leases IAS 17

The company entered into lease contracts mainly for machinery and motor vehicles, pursuant to IAS 17. These contracts are considered finance leases. On transition, therefore, it was necessary for the company recognize the leased assets and record the finance lease payable in liabilities for the amount due. The income statement thus reflects the effect of the depreciation and finance charges connected with the transaction and the adjustment to the lease payments previously recorded in the income statement as required by Italian GAAP (see column b in Appendices 1-2-3 and column d in Appendix 2).

C. Employee benefit obligations IAS 19

In accordance with regulations and Italian GAAP, post-employment benefits are recognized during the relative period of the employment relationship, in compliance with legislation and applicable labor contracts.

IAS 19 makes a distinction for post-employee benefits such as pensions, life insurance and health care, etc. between defined contribution plans and defined benefit pans.

Employee severance indemnities is considered a defined benefit plan up to December 31, 2006, measured on the basis of statistical and demographic assumption in addition to actuarial valuation methods. Following the change in Italian legislation, employee severance indemnity accrued beginning January 1, 2007 was considered, whenever the suppositions occur that were established by changes in the law, to a defined contribution plan (see column c in Appendices 1-2-3).

On transition to the IFRS, therefore, the value of employees' severance indemnity, as well as the cost for each year was restated. Specifically, the actuarial losses were recognized in other comprehensive income, the service cost was recorded in employee benefit expenses and the interest cost was recorded in financial expenses.

Furthermore, the company has applied IAS 19 for all periods presented.

D. Application of IAS 16

IAS 16 states that fixed assets can be measured at cost less accumulated depreciation and impairment losses or by determining the market value periodically and adjusting the accounting amount to such value (revaluation method). The company has decided to maintain cost as its criterion for the measurement of property, plant and equipment and intangible assets which, in this specific case, reflects the criterion adopted for such assets in the consolidated financial statements of the parent Intercos S.p.A.

E. Inventory adjustment

IAS 2 – Inventories provides that inventories should be valued using the FIFO method or the weighted average cost method. For purposes of consistency with prior years, the criterion adopted by the company is the weighted average cost.

F. Application of the amortized cost method IAS 39

The adoption of IAS 39 requires the application of the amortized cost method for the accounting of financial liabilities represented by outstanding loans. The amortized cost is calculated using the effective interest rate criterion, that is, that rate which links the accounting amount to future payments over the life of the financial instrument. For purposes of the calculation of the effective interest rate consideration must be given to all the contractual aspects of the financial instrument, including all commissions, transaction costs and any premiums or discounts.

On transition to EU IFRS this methodology was applied to all outstanding loans at the reference date.

Details of the main reclassifications and adjustments that were made to the statement of financial position at January 1, 2017 and December 31, 2017, as well as the 2017 statement of comprehensive income.

Statement of financial position

Leasehold improvements and deferred charges

Leasehold improvements and deferred charges which, under Italian GAAP were classified as intangible assets, under EU IFRS were reclassified to the specific classes of Property, plant and equipment.

Notes describing the significant adjustments made to the statement of cash flows

The company did not believe it necessary to present the reconciliation between the statement of cash flows prepared in accordance with Italian GAAP and EU IFRS, as permitted by IFRS 1, paragraph 25, since the operating, investing and financing cash flows represented are substantially in line under both accounting principles.

Appendix 1: Reconciliation between the Cosmint S.p.A. statement of financial position at January 1, 2017 prepared in conformity with Italian GAAP and reclassified on the basis of criteria chosen by the company for the EU IFRS financial statements and the statement of financial position prepared in conformity with EU IFRS

(in € thousands)	Statement of financial position Italian GAAP January 1, 2017	Cosmint Group merger	Sodisco merger	Total Cosmint+Cosmint Group+Sodisco	Intercompany eliminations	Civ Group in HFM CON eliminations (NO IAS)	a) Elimination Intangible assets	B) Accounting for Leases IAS 17	C) Employee Benefit Obligations IAS 19	Total Consolidated + IAS
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	14,459.80	6.73	18,363.85	32,830.38	-	32,830.38	636.51	10,155.35		43,622.24
Intangible assets	821.96	2.82	-	824.77	-	824.77	-683.41			141.37
Goodwill	-	-	-	-	-	-				-
Investments	24.47	19,456.92	-	19,481.39	-16,264.57	3,216.82				3,216.82
Deferred tax assets	-	4.11	-	4.11	-	4.11	13.09	1.18	1.04	18.41
Other non-current assets	3.08	-	-	3.08	-	3.08				3.08
Non-current assets	15,309.31	19,470.57	18,363.85	53,143.73	-16,264.57	36,879.16	-33.82	10,156.53	1.04	47,001.92

CURRENT ASSETS				- -		- -				- -
Inventories	14,527.72	-	-	14,527.72	-	14,527.72				14,527.72
Trade receivables	20,023.60	1,774.36	1,341.30	23,139.26	-2,553.33	20,585.92				20,585.92
Other current assets	2,451.41	3,036.54	107.23	5,595.19	-1,828.14	3,767.05		-513.49		3,253.56
Derivatives	-	-	-	-	-	-				-
Current financial Receivables	-	2,282.58	-	2,282.58	-	2,282.58				2,282.58
Cash and cash equivalents	1,197.63	701.27	7.95	1,906.85	-	1,906.85				1,906.85
Current assets	38,200.36	7,794.75	1,456.49	47,451.60	-4,381.47	43,070.12	-	-513.49	-	42,556.63
Assets held for sale	-	-	-	-	-	-				-
TOTAL ASSETS	53,509.67	27,265.32	19,820.34	100,595.33	-20,646.04	79,949.28	-33.82	9,643.04	1.04	89,558.54

				-		-				-
EQUITY				-		-				-
Share Capital	1,586.00	10.20	10.00	1,606.20	-20.20	1,586.00				1,586.00
Other reserves	11,823.98	1,154.29	10,053.51	23,031.78	-16,244.37	6,787.41	-36.40	1,803.21	-3.30	8,549.91
Retained earnings	3,942.48	5.27	131.75	4,079.50	-	4,079.50		511.96	-82.38	4,509.07
Total equity attributable to owners of the parent	17,352.46	1,169.76	10,195.27	28,717.48	-16,264.57	12,452.91	-36.40	2,315.17	-85.68	14,644.98
Equity attributable to non-controlling interests	-	-	-	-	-	-	-36.40	2,315.17	-85.68	-
TOTAL EQUITY	17,352.46	1,169.76	10,195.27	28,717.48	-16,264.57	12,452.91	-36.40	2,315.17	-85.68	14,644.98
				-		-				-
LIABILITIES				-		-				-
NON-CURRENT LIABILITIES				-		-				-
Borrowings from banks and other lenders	2,479.77	11,047.29	8,944.03	22,471.09 -		22,471.09	99.52			26,316.04
Provisions	200.00	455.14	-	655.14 -		655.14				655.14
Deferred tax liabilities	9.10	-	44.80	53.90 -		53.90		826.71		880.60
Other non-current liabilities	640.90	-	-	640.90 -		640.90				640.90
Employee benefit obligations	1,094.85	448.52	-	1,543.37 -		1,543.37			86.73	1,630.09
Non-current liabilities	4,424.63	11,950.95	8,988.82	25,364.40	-	25,364.40	99.52	826.71	86.73	30,122.78
				-		-				-
CURRENT LIABILITIES				-		-				-
Borrowings from banks and other lenders -current Other financial payables	4.36 -	- 11,380.01	62.59 -	66.95 - 11,380.01 -		66.95 11,380.01		6,404.24		66.95 14,038.82
Trade payables	27,000.91	41.74	68.32	27,110.96 -2,553.33		24,557.63				24,557.63
Other current liabilities	4,727.30	2,722.87	505.35		7,955.53 -1,828.14	6,127.39				6,127.39
Current liabilities	31,732.58	14,144.62	636.25	46,513.45	-4,381.47	42,131.97	-	6,404.24	-	44,790.78

Liabilities relating to assets held for sale TOTAL EQUITY AND LIABILITIES	- 53,509.67	- 27,265.32	- 19,820.34	100,595.33 -20,646.04	- -	- 79,949.28	63.12	9,546.11	1.05	- 89,558.54

Appendix 2: Reconciliation between the Cosmint S.p.A. statement of financial position at December 31, 2017 prepared in conformity with Italian GAAP and reclassified on the basis of criteria chosen by the company for the EU IFRS financial statements and the statement of financial position prepared in conformity with EU IFRS

Statement of C) Employee Total Civ Group in HFM Total financial position Cosmint Group Sodisco Intercompany a) Elimination B) Accounting for Benefit d) (in € thousands) Cosmint+Cosmint CON eliminations consolidated Italian GAAP merger merger eliminations Intangible assets Leases IAS 17 Obligations Reclassifications Group+Sodisco (NO IAS) + IAS December 31, 2017 IAS 19 ASSETS NON-CURRENT ASSETS Property, plant and equipment 12,959.45 6.97 18,871.05 31,837.47 31,837.47 31,837.47 500.58 8,443.09 301.05 41,082.19 Intangible assets 693.18 2.01 - 695.19 695.19 695.19 -500.58 194.61 Goodwill - - - - - - - Investments 24.47 19,456.92 - 19,481.39 19,481.39 3,216.82 3,216.82 Deferred tax assets 483.92 7.00 - 490.92 490.92 490.92 - 38.81 0.68 530.42 Other non-current assets 3.13 - - 3.13 3.13 3.13 3.13 Non-current assets 14,164.16 19,472.90 18,871.05 52,508.10 52,508.10 36,243.53 - 8,481.90 0.68 301.05 45,027.18 - - - CURRENT ASSETS - - - Inventories 17,447.61 - - 17,447.61 17,447.61 17,447.61 17,447.61 Trade receivables 20,240.55 853.56 1,339.47 22,433.58 22,433.58 20,354.31 - 20,354.31 Other current assets 2,703.17 4,607.06 207.73 7,517.96 7,517.95 4,911.53 -290.62 -301.05 4,319.85 Derivatives - - - - - - - Current financial Receivables - 14,524.56 - 14,524.56 14,524.56 5,058.53 5,058.53 Cash and cash equivalents 3,541.74 1,148.33 11.21 4,701.29 4,701.29 4,701.29 4,701.29 Current assets 43,933.07 21,133.51 1,558.42 66,624.99 66,624.99 52,473.27 - -290.62 - -301.05 51,881.60 Assets held for sale - - - - - - - TOTAL ASSETS 58,097.22 40,606.41 20,429.46 119,133.10 119,133.09 88,716.81 - 8,191.28 0.68 - 96,908.77 - - - EQUITY - - - Share Capital 1,586.00 50.00 10.00 1,646.00 1,646.00 1,586.00 1,586.00 Other reserves 15,766.46 10,899.77 10,185.27 36,851.49 36,851.49 20,646.92 -33.81 2,220.47 -82.10 22,751.48 Retained earnings 4,819.81 2.90 404.74 5,227.45 5,227.75 5,227.45 33.81 189.81 18.07 - 5,469.14 Total equity attributable to owners of the parent 22,172.27 10,952.67 10,600.01 43,724.95 43,725.24 27,460.38 - 2,410.28 -64.03 - 29,806.62 Equity attributable to non-controlling interests - - - - - - - 2,410.28 -64.03 - - TOTAL EQUITY 22,172.27 10,952.67 10,600.01 43,724.95 43,725.24 27,460.38 - 2,410.28 -64.03 - 29,806.62 - - - LIABILITIES - - - NON-CURRENT LIABILITIES - - - Borrowings from banks and other lenders - 23,804.53 - 23,804.53 23,804.53 23,804.53 2,927.97 26,732.50 Provisions 200.00 0.00 - 200.00 200.00 200.00 200.00 Deferred tax liabilities 3.73 14.18 44.80 62.71 62.71 62.71 939.82 1.49 1,004.01 Other non-current liabilities 640.90 508.79 - 1,149.69 1,149.69 1,149.69 1,149.69 Employee benefit obligations 1,065.76 463.25 - 1,529.01 1,529.01 1,529.01 63.95 1,592.96 Non-current liabilities 1,910.40 24,790.75 44.80 26,745.94 26,745.94 26,745.94 - 3,867.79 65.44 - 30,679.16 - - - CURRENT LIABILITIES - - - Borrowings from banks and other lenders - current 4.87 - - 4.87 4.87 4.87 4.87 Other financial payables - - 9,466.03 9,466.03 9,466.03 - 1,912.51 1,912.51 Trade payables 29,180.64 8.17 96.96 29,285.77 29,285.77 27,206.50 27,206.50 Other current liabilities 4,829.04 4,854.53 221.67 9,905.24 9,905.24 7,298.81 7,298.81				IAS/IFRS adjustments

Current liabilities	34,014.55	4,862.70	9,784.66	48,661.91	48,661.91	34,510.19	-	1,912.51	-	-	36,422.70
Liabilities relating to assets held for sale	-	-	-		- -	-					-
TOTAL EQUITY AND LIABILITIES	58,097.22	40,606.12	20,429.46		119,132.80 119,133.09	88,716.51	-	8,190.57	1.40	-	96,908.48

Appendix 3: Reconciliation between the Cosmint S.p.A. statement of comprehensive income at December 31, 2017 prepared in conformity with Italian GAAP and reclassified on the basis of classification criteria chosen by the company for the EU IFRS financial statements and the statement of comprehensive prepared in conformity with EU IFRS

Conto Economico Riclassificato Cosmint S.p.A.		Income Statement ITALIAN GAAP 12/31/2017	Income Statement ITALIAN GAAP Cosmint Group	Income Statement ITALIAN GAAP Sodisco	Total Income Statement ITALIAN GAAP Aggregate	Eliminations Intercompany	ITALIAN GAAP 12/31/2017	A) Elimination Intangible assets	B) Accounting for Leases IAS 17	C) Employee benefit obligations IAS 19	Income Statement IAS IFRS 12/31/2017
(in € thousands)	Note
Revenues from sales and services	27	133,741.0	0.0	0.0	133,741.0	0.0	133,741.0				133,741.0
Other income	28	2,976.7	2,708.5	1,738.3	7,423.5	-3,745.2	3,678.3				3,678.3
Purchases of raw materials, semifinished products and consumables Change in inventories of raw materials, semifinished and finished	29	-87,182.9	-0.6	0.0	-87,183.4	0.3	-87,183.1				-87,183.1
products	30	2,919.9	0.0	0.0	2,919.9	0.0	2,919.9				2,919.9
Costs for services and leases and rents	31	-26,920.4	-345.3	-89.7	-27,355.4	3,732.7	-23,622.6		2,157.8		-21,464.8
Employee benefit expenses	32	-15,222.9	-2,142.2	-43.9	-17,409.0	0.0	-17,409.0			44.4	-17,364.6
Accruals	33	0.0	0.0	0.0	0.0	0.0	0.0				0.0
Other operating expenses	34	-514.6	-7.8	-282.3	-804.8	12.1	-792.6				-792.6
Capitalized internal construction costs		0.0	0.0	0.0	0.0	0.0	0.0				0.0
Operating profit before depreciation, amortization, impairment reversals (losses) and nonrecurring income (expenses) (Adjusted EBITDA)		9,796.8	212.7	1,322.3	11,331.8	0.0	11,331.8	0.0	2,157.8	44.4	13,534.0
					0.0		0.0				0.0
Depreciation, amortization and impairment reversals (losses)	35	-3,773.1	-2.6	-519.4	-4,295.1	0.0	-4,295.1		-1,702.7		-5,997.8
Nonrecurring income (expenses)	36	974.6	-46.6	-1.5	926.5	0.0	926.5				926.5
Operating profit (EBIT)		6,998.3	163.5	801.4	7,963.2	0.0	7,963.2	0.0	455.1	44.4	8,462.7
					0.0		0.0				0.0
Financial income	37	228.0	138.7	0.0	366.7	-31.0	335.7				335.7
Financial expenses	38	-215.8	-217.9	-168.9	-602.6	31.0	-571.6		-144.0	-26.3	-741.8
Profit before taxes		7,010.4	84.4	632.5	7,727.3	0.0	7,727.3	0.0	311.1	18.1	8,056.6
					0.0		0.0				0.0
Income taxes	39	-2,190.6	-81.2	-227.7	-2,499.6	0.0	-2,499.6		-86.8		-2,587.1

Profit from continuing operations	4,819.8	3.2	404.7	5,227.7	0.0	5,227.7	0.0	224.3	18.1	5,469.4
Profit from discontinued operations	0.0	0.0	0.0	0.0	0.0	0.0				0.0
Profit for the year	4,819.8	3.2	404.7	5,227.7	0.0	5,227.7	0.0	224.3	18.1	5,469.4

7. Property, plant and equipment

(in € thousands)	December 31, 2017	Increases / Depreciation	Translation differences/ Reclassifications	Change in the scope of consolidation	Mergers	Decreases/ Utilization	December 31, 2018
Historical cost
Land and buildings	-	37	2,912		26,697	0	29,646
Plant and machinery	51,217	1,662	1,899		0	(1,083)	53,695
Industrial equipment	3,335	36	208		0	(58)	3,520
Office furniture and equipment	2,394	12	131		0	(0)	2,538
Motor vehicles and internal transportation equipment	64	0	0		167	0	231
Cell phones	2,272	0	(2,272)		11	0	11
Assets under construction and	463	5,187	(2,347)		0	0	3,303
payments on account
Total	59,745	6,934	531	0	26,875	(1,141)	92,944
Accumulated depreciation
Land and buildings	0	(708)	(597)		(5,547)	0	(6,852)
Plant and machinery	(34,062)	(4,617)	(384)		0	957	(38,106)
Industrial equipment	(3,005)	(229)	0		0	58	(3,176)
Office furniture and equipment	(1,966)	(147)	(8)		0	0	(2,121)
Motor vehicles and internal transportation equipment	(61)	(43)	0		(50)	0	(153)
Cell phones	(844)	(2)	844		(4)	0	(6)
Assets under construction and
payments on account	0	0	0	0	0	0	0
Total	(39,938)	(5,746)	(145)	0	(5,601)	1,015	(50,415)
Net carrying amount	19,807	1,188	385	0	21,274	(126)	42,529

Movements in Property, plant and equipment in 2018 are as follows:

The increases during the year mainly refer to the purchase of machinery for the manufacture of products, generic and specific plant, as well as sundry equipment needed to boost, expand, renovate and automate the production plants as a whole. The increases in Assets under construction and payments on account largely refer to machinery and plant that will become ready in 2019 or delivery is scheduled for next year. The decreases are due to fixed assets completed during the year and reclassified to the proper class in the balance sheet as well as eliminations for scrapping or sales to third parties or subsidiaries.

7.1 Leased assets

Assets acquired under finance lease contracts entered into by Cosmint S.p.A. are included in the respective classes of property, plant and equipment. The following table gives details of these assets that mainly refer to motor vehicles and specific plant and a comparison with December 31, 2017:

(in € thousands)	December 31, 2017	Increases / Depreciation	Translation differences/ Reclassifications	Change in the scope of consolidation	Mergers	Decreases/ Utilization	December 31, 2018
Historical cost
Land and buildings	0	0	0		5,000	0	5,000
Plant and machinery	13,150	1,596	0		0	(7)	14,738
Motor vehicles and internal transportation equipment	0	0	0		164	0	164
Total	13,150	1,596	0	0	5,164	(7)	19,902
Accumulated depreciation
Land and buildings	0	(126)	0		(1,451)	0	(1,577)
Plant and machinery	(7,095)	(1,737)	0		0	(3)	(8,835)
Motor vehicles and internal transportation equipment	0	(41)	0		(48)	0	(89)

Total	(7,095)	(1,904)	0	0	(1,499)	(3)	(10,502)
Net carrying amount	6,055	-308	0	0	3,664	(11)	9,401

Required disclosure in accordance with IAS 17, paragraph 31, is as follows: the depreciable amount of leased assets is €9,401 thousand and total future lease payments due at the end of the year amount to €4,151 thousand. Lease installments recorded as expenses during the year come to €2,261 thousand.

8. Intangible assets

Movements in Intangible assets in 2018 are as follows:

(in € thousands)	December 31, 2017	Increases	Decreases/ Adjustments/ Translation differences	Reclassifications	Amortization	Change in the scope of consolidation	Mergers	December 31, 2018

Capitalized development costs	0	632	0	0	(127)	0	0	506
Patent rights	49	1	0	46	(43)	0	0	52
Concessions and licenses	12	0	0	1	(1)	0	0	12
Assets under development and payments on account	131	112	(71)	(163)	0	0	0	10
Other intangible assets	1	0	(7)	7	0	0	0	0
TOTAL	194	745	(78)	(110)	(171)	0	0	580

9. Goodwill

There is no goodwill.

10. Investments in subsidiaries

Movements in Investments in subsidiaries are as follows:

	December 31, 2018

Beginning balance	3,216
Disposals	0
Impairments	0
Acquisitions	0

Total	3,216

Of the total, €3,192 thousand refers to the investment in the subsidiary Tatra Spring Polska Sp. Z.o.o.

11. Deferred tax assets

Deferred tax assets amount to €1,553 thousand at December 31, 2018, with a decrease of €192 thousand compared to December 31, 2017.

The following table gives details according to the source of deferred tax assets at December 31, 2018 and 2017.

Description	12/31/2018			12/31/2017
	Taxable	IRES	IRAP	Taxable	IRES	IRAP
Provision for inventory obsolescence	2,444	587	-	2,016	484	-
Provision for sundry risks	260	58	8	552	128	8
Exchange losses	22	5	-	0	0	0
Accumulated amortization - trademarks	3	0	0	3	0	0
IFRS 9	32	8	1	32	8	1
IFRS 15	3,222	773	126	3,976	954	155
IAS 17	2	0	0	2	0	0
IAS 19	-54	-13	-	0	0	-
Other	0	0	-	30	7	0
Total	5,931	1,418	135	6,611	1,581	164

The company, at this time, also in light of the budgets forecasting future earnings approved by the board of directors, believes that it can generate taxable income sufficient to recover the deferred tax assets recorded in the financial statements.

12. Other non-current assets

Details of Other non-current assets at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017

VAT receivables	0	0
Interest on VAT receivables	0	0
Security deposits	3	3
Other receivables	0	0

Total	3	3

13. Inventories

Details of Inventories at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Raw materials, packaging and consumables	15,918	13,637
Semifinished products Finished products and merchandise	- 4,933	- 3,810
Total	20,851	17,448

Inventories are influenced by various operational factors, including the seasonality of sales, the evolution of orders and their delivery terms. Compared to the prior year, total inventories increased by €3,403 thousand. This increase can be traced to a trend of growth in sales during the year and a confirmation of the trend also for next year.

Inventories are presented net of the provision for inventory writedowns, which shows the following movements during 2018:

	December 31, 2017	Accrual	Utilization	December 31, 2018

Provision for semifinished and finished products writedowns	684	912	(200)	1,395
Provision for raw materials writedowns	1,333	439	(722)	1,049
Total	2,016	1,351	(923)	2,444

The ending balance increased by 21% compared to the prior year, in line with the increase in total inventories.

14. Trade receivables

Details of Trade receivables at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017

Receivables from third parties	17,437	18,722
Receivables from Group companies	1,096	2,356
Provision for impairment of receivables	(43)	(724)
		43

Total	18,491	20,354

In order to provide an indication of estimated realizable value, the nominal amount of receivables is adjusted by the recognition of a provision for impairment, based on an analysis of the balances. The movements in the provision account are presented as follows:

	December 31, 2018

Beginning balance	(756)
Accrual	(11)
Utilization	724
Ending balance	(43)

Additional details on credit risk are described in the introduction to the notes under Risk management.

A non-recourse receivables factoring transaction was entered into on December 17, 2018 for €6,493 thousand. As a result, all the risks and rewards of the receivables were transferred to the factoring company and the receivables were derecognized from the financial statements at December 31, 2018.

Taxes receivable

(in € thousands)	December 31, 2018	December 31, 2017

IRES receivable	2,231	1,615
IRAP receivable	449	318
VAT receivable	273	518
Other taxes receivable	312	468

Total	3,265	2,918

15. Other current assets

Details of Other current assets at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017

Taxes receivable	3,265	2,918
Sundry receivables	233	872
		44

Advances to suppliers Accrued income and prepaid expenses and other receivables from Group companies	3 255	385 144
Total	3,756	4,320

Sundry receivables include €110 thousand from Assicurazioni Generali for the severance indemnity policy and €76 thousand from Conai for export reimbursements.

16. Cash and cash equivalents

Details of Cash and cash equivalents at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Bank and postal deposits Cash on hand	4,990 0	4,700 1
Total	4,990	4,701

Cash and cash equivalents are available for immediate use; at this date there are no restricted cash balances.

A complete financial analysis is presented in the statement of cash flows.

17. Equity

Equity amounts to €31,988 thousand compared to €29,807 thousand at December 31, 2017.

The composition and changes in equity are presented in the statement of changes in equity.

Share capital

Share capital amounts to €1,586,000 and consists of 3,050,000 shares of par value €0.52 each.

The following table summarizes the individual items of equity according to their source and nature:

Nature/Description (in € thousands)	Balance at December 31, 2018	Possibility of utilization
Share capital	1,586

Equity at 12/31/2018	31,988
Profit for the year (*)	4,939	-
Restricted reserve	302	-
Legal reserve	317	B
Other reserves () (*)	4,343	A,B,C
Revaluation reserve	10,721	A,B
Capital contribution payment	9,780	A, B, C

A: Available for capital increases

B: Available to cover losses

C: Distributable to shareholders

(*) Pursuant to art. 2431 of the Italian Civil Code, the entire amount of this reserve may be distributed only on condition that the legal reserve has reached the limit established by art. 2430 of the Italian Civil Code.

(**) These include the reserves formed following the adoption of IFRS and the merger reserve.

18. Borrowings from banks and other lenders – non-current

The following table provides details of medium/long-term debt outstanding at December 31, 2018 together with the relative due date on the loan from the banking syndicate:

	Bank	Amount (in € thousands)	Internal rate of return	Year due
Cosmint S.p.A.	Bank syndicate	24,000	1.60%	2021
Total (*)		24,000

(*) Debt secured by the pledge on shares and special liens.

Pursuant to IAS 39 the incidental charges incurred in connection with the loan were included in the calculation of the effective interest rate on the loan and are amortized over the remaining term of the liability.

Details of Borrowings from banks and other lenders with an indication of the relative due dates are provided in the following table:

December 31, 2017

(in € thousands)	Within 1 year	1 to 5 years	Beyond 5 years	December 31, 2017
Banca IMI loan account		23,805		23,805
Finance leases payable	1,913	2,928		4,840
Credit card account	5	-		5
Total	1,917	26,732	-	28,650

December 31, 2018

(in € thousands)	Within 1 year	1 to 5 years	Beyond 5 years	December 31, 2018
Banca IMI loan account	3,600	20,264		23,864
Finance leases payable	1,668	2,718		4,386
Credit card account	1
Total	5,269	22,981	-	28,249

19. Deferred tax liabilities

Deferred tax liabilities amount to €921 thousand, with a decrease of €43 thousand compared to the prior year. Details of the temporary differences that gave rise to the calculation of deferred income taxes are provided in the following table.

Description	December 31, 2018 December 31, 2017
in € thousands)	Taxable	IRES	IRAP	Taxable	IRES	IRAP
Temporary differences on depreciation	199	48	-	199	48	-
Exchange gains	0	0	0	63	15	0
IAS 19	0	0	0	0	0	0
IAS 17	3130	751	122	3231	775	126
Other	0	0	0	0	0	0
Total	3,329	799	122	3,493	838	126

20. Other non-current liabilities

Movements in Other non-current liabilities refer to the payment from the mandate termination provision accrued up to 2018.

(in € thousands)	December 31, 2018	December 31, 2017
Mandate termination provision	109	1,150
Total	109	1,150

21. Employee benefit obligations

Movements during the year in Employee benefit obligations are as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Beginning balance	1,593	1,639
Service cost	30	(27)
Interest cost	27	26
Utilization	(114)	(41)
Actuarial gains/ losses	(54)	(5)
Total	1,482	1,593

The following table presents the main assumptions used in determining the actuarial cost to be accrued for Employee benefit obligations at December 31, 2018.

	December 31, 2018	December 31, 2017
Discount rate	1.97%	1.61%
Annual inflation rate	1.50%	1.50%
Annual rate of increase in employee severance indemnities	2.62%	2.62%
Annual rate of increase in salaries	1.50%	1.50%

The annual discount rate used to calculate the present value of the obligation was determined, consistently with IAS 19, paragraph 78, on the basis of the IBoxx Eurozone Corporate A Index for durations of more than 10 years (in line with the collective duration).

The following sensitivity analysis was performed to illustrate the effects produced by an increase/decrease in the main assumptions used on the data at December 31, 2018.

Deferred Benefit Obligation at December 31, 2018
	in € thousands) (
Inflation rate +0.25%	1,496
Inflation rate -0.25%	1,467
Discount rate +0.25%	1,458
Discount rate -0.25%	1,505
Turnover rate +1%	1,480
Turnover rate -1%	1,482

As regards the workforce, the headcount at year-end 2018 is 367 compared to 355 at year-end 2017. The following table provides a breakdown of headcount at December 31, 2018 by category and type of contract:

Group headcount	December 31, 2018	December 31, 2017

Executive and mid-level managers	22	21
White-collars	117	104

		48

Blue-collars	160	166
Total	299	291

Temporary	68	64

Total	367	355

Group headcount	December 31, 2018	December 31, 2017

Permanent	270	270
Fixed-term	29	21
Total	299	291

During the year, there were no deaths or accidents in the workplace which caused serious injury to personnel.

The company has not been charged with harming the environment nor has it received fines or penalties in this regard.

The environmental impact on the territory by the company's production process, especially in terms of the disposal of expired cosmetics and various other types of waste, is duly managed with the assistance of an outside services and environmental technologies company.

22. Borrowings from banks and other lenders - current

Details of Borrowings from banks and other lenders - current are provided in the following table:

(in € thousands)	December 31, 2018	December 31, 2017

Banca IMI loan account	3,600	-
Credit card account	1	5

Total	3,601	5

23. Other financial payables

(in € thousands)	December 31, 2018	December 31, 2017
Leasing companies payable	1,668	1,913
Total	1,668	1,913

The above refers to the current portion of lease liabilities.

24. Trade payables

Trade payables at December 31, 2018 and December 31, 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017
Trade payables to third-party suppliers Trade payables to Group companies	29,334 17	25,950 1,257
Total	29,351	27,207

Trade payables to third-party suppliers increased by €3,384 thousand (+13%) from the end of the prior year due mainly to:

increased purchase volumes in achieving higher revenues;
structural investments concentrated in the last quarter.

Purchases management is always focused on reducing cash flows for trade payables and increasingly geared to a policy directed at improving the company's payment terms.

25. Other current liabilities

Details of Other current liabilities at December 31, 2018 and 2017 are as follows:

(in € thousands)	December 31, 2018	December 31, 2017

Payables to employees	1,680	1,717
Social security agencies payable	880	1,019
Payables to tax authorities	1,788	2,982
Advances from customers	188	311
Accrued liabilities and deferred income	4,161	68
Sundry payables	259	982
Derivatives (liabilities)	-	0
Other payables to Group companies	220	220
Total	9,176	7,299

Payables to tax authorities of €1,788 thousand refer to payables for 2018 IRES taxes of €1,240 thousand, 2018 IRAP taxes of €350 thousand and 2018 IRPEF withholding taxes of €198 thousand, the latter referring to employees and self-employed persons.

The difference compared to December 31, 2017 is primarily due to a reduction in the amount of IRES and IRAP taxes due of €1,032 thousand at December 31, 2018.

Accrued liabilities and deferred income of €4,161 thousand beginning this year include deferred income of €3,897 thousand as a result of the application of IFRS 15.

Sundry payables of €259 thousand include €190 thousand of amounts deposited by third parties as security.

25 bis. Guarantees and other commitments

Guarantees provided refer to the following:

Beneficiary	Type of Guarantee	Description	Guarantee amount in Euros	Due
Customs Agency	Surety	Fiscal deposit guarantee for payment of excise tax	€25,822.84	Indefinite period
Alto Lura	Surety	Service contract guarantee	€9,789.00	8/27/2019
Colline Comasche	Surety	Supply contract guarantee	€7,996.00	8/5/2019
Banca IMI and bank syndicate + Bondholders	Corporate Guarantee	Corporate Guarantee (1) on behalf of the bank syndicate to guarantee repayment of the loan granted on March 24, 2015 (as amended) and (ii) on behalf of the bondholders of the bonds issued on March 27, 2015 (as amended)	The amount is equal to the outstanding amount of the loan and bonds	3/28/2023
Albea Deutschland Gmbh	Letter of guarantee on behalf of Tatra Spring Polska Sp. Z O. O.	Payment guarantee to the supplier Albea Deutschland supplier	€125,000.00	Supply contract expiration date
Heinz-Glas Gmbh & Co.	Letter of guarantee on behalf of Tatra Spring Polska Sp. Z O. O.	Payment guarantee to the supplier Heinz-Glas	€500,000.00	3/31/2019

26. Revenues from sales and services

Details of Revenues from sales and services at December 31, 2018 and 2017 are the following:

(in € thousands)	December 31, 2018	December 31, 2017
Revenues from sales to third-party customers	137,048	131,875
Revenues from sales to Group companies	5,081	1,866
Total	142,130	133,741

Revenues from sales and services increased by € 8,389 thousand (+6.3%) compared to the prior year. Additional details are provided in the Report on Operations.

For the breakdown of Revenues from sales to Group companies, reference should be made to the Note on Related party transactions, whereas details of revenues divided by product line and commercial geographical region are provided below:

	2018	2017
Make-up line	1,052	7,945
Hair & Body line	127,706	115,415
Skincare line	8,290	8,515
Total	137,048	131,875

Sales by geographical region are based on the territory of residence of the customers indicated on the sales invoice, as follows:

(in in € thousands)
Sales by geographical region	2018	2017
Americas	192	116
EMEA	140,789	132,921
Asia	1,149	703
Total	142,130	133,741

27. Other income

Details of Other income at December 31, 2018 and 2017 are as follows:

(in € thousands)	2018	2017*

Other revenue and expenses recharged	2,786	3,662
Insurance compensation	111	16
Prior period income	-	-
Rent income	-	-
Total	2,897	3,678

28. Purchases of raw materials, semifinished products and consumables

Details of Purchases of raw materials, semifinished products and consumables at December 31, 2018 and 2017 are as follows:

(in € thousands)

	2018	2017

Purchase of raw materials	29,152	27,881
Purchase of packaging materials	56,410	56,052
Purchase of semifinished products and consumables	4,741	2,459
Cost recovery on destroyed materials	(2,410)	(1,657)
Purchase of sundry materials	2,717	2,448

Total	90,611	87,183

These purchases increased from 2017 by a total of € 3,428 thousand, or +3.9%, while the increase in sales of 6.3% can be considered substantially in line with the prior year.

29. Change in inventories of raw materials, semifinished and finished products

The positive change in the balance of inventories of Raw materials, semifinished and finished products, net of the provision for inventory writedowns, is analyzed in the following table:

(in € thousands)	2018	2017

Change in raw materials, consumables and packaging	(2,005)	(2,812)
Change in work in process, semifinished and finished products and merchandise	(1,827)	(108)
Inventory writedowns	428
	(3,404)	(2,920)

30. Costs for services and leases and rents

Details of Costs for services and leases and rents in 2018 and 2017 are as follows:

(in € thousands)	2018	2017

Outside processing	11,496	8,492
Stocking, analyses and other external services	6,619	5,023
Consulting and audit fees	789	584
Utilities	1,911	1,720
Maintenance	1,007	731
Costs for services and leases and rents	551	546
Shipping on purchases	1,228	1,064
Shipping on sales	839	716
		53

Internal transportation	52	67
Other shipping	96	105
Commissions	36	26
Other selling expenses	63	94
Waste disposal	707	491
Legal and notary fees	109	117
Board of statutory auditors' compensation	27	63
Insurance	196	246
Cleaning	296	253
Trips and transfers	156	234
Security	225	219
Information technology	176	171
Software maintenance	-	-
Search and selection of personnel and training	51	38
Other employee-related services	333	393
Other general expenses	128	71
Total	27,090	21,465

Costs for services and leases and rents increased by €5,625 thousand compared to 2017. Such increase is mainly due to variable costs directly associated with higher production and sales volumes, such as processing and packaging, maintenance, laboratory analyses, as well as commissions and royalties. Fixed costs, on the other hand, have remained essentially in line with the previous year.

Consulting fees include fees for services rendered by highly qualified technical-professional external specialists and companies lending support in administration, tax, IT and technical areas.

31. Employee benefit expenses

Details of Employee benefit expenses in 2018 and 2017 are as follows:

(in € thousands)	2018	2017

Salaries and wages	11,823	11,513
Temporary work	2,557	1,820
Coordinated and continual and occasional collaboration work	146	141
Social security	2,887	2,650
Defined benefit plan costs	819	773
Board of directors' compensation	462	482
Other-employee related costs	83	65
Recovery of employee costs	-90	-80

Total	18,686	17,365

Employee benefit expenses show a total increase of €1,321 thousand compared to 2017 and are in line with the increase in sales.

For a more correct representation in the financial statements, employee benefit expenses include compensation to the board of directors' and compensation for coordinated and continual and occasional collaboration work.

32. Accruals

Accruals have a zero balance during the year as it was not necessary to set aside funds to provisions.

33. Other operating expenses

Details of Other operating expenses in 2018 and 2017 are as follows:

(in € thousands)	2018	2017

Accrual to provision for impairment of receivables	11	90
Losses on receivables	0	2
Release of provision for impairment of receivables	(724)	0
Losses on disposals of fixed assets	0	56
Indirect taxes and duties	(95)	260
Association membership dues	80	79
Other costs	365	306

Total	(363)	793

The provision for impairment of receivables was released after a recalculation following an analysis of receivables.

34. Depreciation, amortization and impairment reversals (losses)

Details of Depreciation, amortization and impairment reversals (losses) in 2018 and 2017 are as follows:

(in € thousands)	2018	2017
Depreciation of property, plant and equipment	5,474	5,892
		55

Amortization of intangible assets	171	106

Total	5,646	5,998

Additional information is provided in Notes 7 and 8 relating to Property, plant and equipment and Intangible assets.

35. Nonrecurring income (expenses)

The nonrecurring expenses of €30 thousand refer to accruals to the long-term incentive plan.

36. Financial income

Details of Financial income in 2018 and 2017 are as follows:

(in € thousands)	2018	2017

Interest from the tax authorities	0	0
Bank interest income	(23)	(40)
Other financial income	0	0
Derivatives (assets)	0	0
Interest from Group companies	(99)	(48)
Foreign exchange gains	(32)	(248)
Total financial income	(154)	(336)

37. Financial expenses

Details of Financial expenses in 2018 and 2017 are as follows:

(in € thousands)	2018	2017

Interest on short-term borrowings and other	62	193
Interest on medium/long-term borrowings	389	203
Derivatives (liabilities)	0	0
Interest under IAS 19 application	27	26
Interest under IAS 23 application	0	0
Effective interest IAS 39 application	59	24
Interest on leases under IAS 17 and IFRS16 application	91	144
Bank charges	62	66
		56

Foreign exchange losses	152	85
Total financial expenses	843	742

38. Income taxes

Details of Income taxes in 2018 and 2017 are as follows:

(in € thousands)	2018	2017
Current income taxes	1,590	2,619
Deferred income taxes	136	(391)
Prior years' taxes	8	360
Total	1,735	2,587

Current income taxes refer to the tax charge of €1,590 thousand relating to 2018 IRAP and IRES taxes. With regard to deferred taxes, reference should be made to Notes 11 and 19.

The reconciliation between the theoretical and effective tax rate is as follows:

(in € thousands)
IRES
Pre-tax profit	6,675
Theoretical IRES (24%)	1,602
Temporary differences deductible in future years	1,394
Non-deductible costs	458
Temporary differences taxable in future years	(1)
Reversal of temporary differences of prior years	(1,998)
Other deductions and recoveries	(1,360)
Taxable income	5,168
IRES (18.58%)	1,240

IRAP
Difference between production value and costs	7,363
Theoretical IRAP (3.9%)	287
Costs not considered for IRAP purposes	1,612
Taxable for IRAP purposes	8,975
IRAP (4.8%)	350

39. Actuarial gains (losses)

The actuarial gain of €54 thousand refers to the year-end measurement of employee severance indemnities in accordance with IAS 19.

40. Related party transactions

Related party transactions do not qualify as either atypical or unusual but fall under the ordinary course of business operations. Such transactions, when not concluded at standard conditions or dictated by specific laws, are nevertheless carried out on an arm's length basis.

The effects of related party transactions on the statement of comprehensive income for 2018 and the statement of financial position at December 31, 2018 are presented in the following tables. All amounts are in thousands of euros.

Transactions with Group companies

Revenues from sales and services
divided as follows:
CRB S.A.	826		Mainly
INTERCOS S.p.A.	3	5,077	revenues from
INTERCOS EUROPE S.p.A.	3645		sales
INTERCOS TECHNOLOGY (SIP) LTD	27
TATRA SPRING POLSKA SP. Z.O.O.	576

Other revenues and income			Mainly
divided as follows:			revenues from
Arterra Bioscience S.r.l.	1	449	expenses recharged and
CRB S.A.	1		revenues other
INTERCOS EUROPE S.p.A.	1		than sales
TATRA SPRING POLSKA SP. Z.O.O.	446		revenues

Financial income
entirely from:			Interest on loan
TATRA SPRING POLSKA SP. Z.O.O.	98	98	to subsidiary

Management services income			Revenues from
entirely from:			management services
TATRA SPRING POLSKA SP. Z.O.O.	407	407	provided to the subsidiary

Purchases of raw materials, consumables and merchandise divided as follows:			Mainly purchases of
Arterra Bioscience S.r.l. CRB S.A.	2 1	1,664	raw materials, packaging, consumables
INTERCOS EUROPE S.p.A. TATRA SPRING POLSKA SP. Z.O.O.	1,661 0		and finished products

Costs for services and leases and rent
divided as follows:		58	Processing costs and other
CORNELLI GABELLI ASSOCIATI	26		residual costs
TATRA SPRING POLSKA SP. Z.O.O.	32

Other operating expenses
divided as follows:			Mainly costs
CRB S.A.	0		recharged and
INTERIOR 18.66 S.r.L.	1	46	prior period
TATRA SPRING POLSKA SP. Z.O.O.	45		items

Trade receivables			Mainly
divided as follows:			receivables
CRB S.A.	241		connected with
INTERCOS EUROPE S.p.A.	365	1,096	the primary activities of the
TATRA SPRING POLSKA SP. Z.O.O.	490		company

Trade payables
divided as follows:			Mainly payables
Arterra Bioscience S.r.l.	1		connected
CORNELLI GABELLI ASSOCIATI	18		with the
CRB SA.	1	37	supply of goods and
INTERCOS EUROPE S.p.A.	16		services

Financial receivables
as follows:			Tatra Spring
TATRA SPRING POLSKA SP. Z.O.O.	5,477	5,477	Polska loan

INTERIOR 18.66 S.r.L. 1

41. Compensation to the boards for the year ended December 31, 2018

Compensation ( ) in € thousands
462
27
489

42. . Independent auditors' fees

	Fees ( ) in € thousands
Audit fees	95
Total	95

3. Subsequent events

During the first months of 2019, the sales trend was in line with budget and at this time there are no critical factors such that would cause a revision of the anticipated outlook.

44. Appropriation of the profit for the year

The financial statements for the year ended December 31, 2018 show a profit after taxes of €4,939,620 and a motion is proposed to appropriate €4,939,620 to retained earnings.

Milan, March 28, 2019

These financial statements, consisting of the statement of financial position, the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and the notes thereto, present a true and correct view of the financial condition, the results for the year and the cash flows of the company and correspond to the accounting books and records.

COSMINT S.p.A.

On behalf of the Board of Directors

Appendix 1

INTERCOS S.p.A. FINANCIAL STATEMENTS AT DECEMBER 31, 2017

Statement of Financial Position

	(in euros)	December 31, 2017
	ASSETS
	NON-CURRENT ASSETS
5	Property, plant and equipment	23,374,320
6	Intangible assets	21,106,373
7	Goodwill	33,653,547
8	Investments in subsidiaries	178,900,979
9	Deferred tax assets	1,486,632
10	Other non-current assets	3,059,459
	Non-current assets	261,581,310
	CURRENT ASSETS
11	Trade receivables	37,885,700
12	Taxes receivables	2,187,727
13	Other current assets	3,615,587
14	Loans receivable from Group companies – short-term	41,000,393
15	Cash and cash equivalents	20,782,576
	Current assets	105,471,983
	TOTAL ASSETS	367,053,293

INTERCOS S.p.A. FINANCIAL STATEMENTS AT DECEMBER 31, 2017

(in euros)		December 31, 2017
	EQUITY AND LIABILITIES
	EQUITY
	Share capital	10,818,377
	Legal reserves	2,142,038
	Other reserves	62,329,429
	Retained earnings	40,463,587
16	TOTAL EQUITY	115,753,432
	LIABILITIES
	NON-CURRENT LIABILITIES
17	Borrowings from banks and other lenders – non-current	177,150,863
18	Provisions	161,358
19	Deferred tax liabilities	4,938,021
20	Employee benefit obligations	1,212,778
	Non-current liabilities	183,463,020
	CURRENT LIABILITIES
21	Borrowings from banks and other lenders - current	8,295,397
22	Loans payable to Group companies – short-term	8,193,744
	23 Other financial liabilities	25,697,450
24	Trade payables	6,452,839
25	Other payables	19,197,410
	Current liabilities	67,836,841
	TOTAL EQUITY AND LIABILITIES	367,053,293

INTERCOS S.p.A. FINANCIAL STATEMENTS AT DECEMBER 31, 2017

STATEMENT OF COMPREHENSIVE INCOME

	(in euros)	2017
26	Revenues	44,548,261
27	Other income	18,711,777
28	Purchases of raw materials, semifinished products and consumables	(1,057,145)
29	Costs for services and leases and rents	(13,837,496)
30	Employee benefit expenses	(18,320,009)
31	Accruals	(30,000)
32	Other operating expenses	(898,206)
33	Capitalized internal construction costs	4,991,186
	Operating profit before depreciation, amortization, impairment reversals
	(losses) and nonrecurring income expenses	34,108,369
34	Depreciation, amortization and impairment reversals (losses)	(8,499,490)
35	Valuation adjustments to financial assets	0
36	Nonrecurring income (expenses)	(1,185,188)
	Operating profit	24,423,691
37	Financial income	2,439,675
38	Financial expenses	(8,627,873)
39	Income taxes	(1,626,540)
	Profit for the year from continuing operations	16,608,952
	Profit for the year from discontinued operations	0
	Other comprehensive income	0
	Other comprehensive income that will not be reclassified subsequently to the
	income statement	0
	Profit for the year	16,608,952
40	Actuarial gains (losses) on remeasurement of employee defined benefit plans	(75,078)
	Total Other components of comprehensive income	(75,078)
	Total comprehensive income for the year	16,533,874

Cosmint S.p.A.

Financial statements as at December 31, 2018

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

EY S.p.A. Via Meravigli, 12 20123 Milano

Tel: +39 02 722121 Fax: +39 02 722122037 ey.com

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010 (Translation from the original Italian text)

To the Shareholder of Cosmint S.p.A.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Cosmint S.p.A. (the Company), which comprise the statement of financial position as at December 31, 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, thefinancial statements give a true and fair view of the financial position of the Company as at December 31, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

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

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

Other matters

The financial statements present for comparative purposes the corresponding figures of prior year in conformity with International Financial Reporting Standards which have been derived from the financial statements as of December 31, 2018, prepared in accordance with the Italian regulations governing financial statements (Italian GAAP). Note 6 describes the effects of the transition to the International Financial Reporting Standards as adopted by the European Union and presents the reconciliation schedules as required by IFRS 1.

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

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

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

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

Auditor's Responsibilities for the Audit of the Financial Statements

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

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

we have identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
we have obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control;
we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;
we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;
we have evaluated the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

Report on compliance with other legal and regulatory requirements

Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39 dated 27 January 2010

The Directors of Cosmint S.p.A. are responsible for the preparation of the Report on Operations of Cosmint S.p.A. as at December 31, 2018, including its consistency with the related financial statements and its compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Report on Operations, with the financial statements of Cosmint S.p.A. as at December 31, 2018 and on its compliance with the applicable laws and regulations, and in order to assess whether it contains material misstatements.

In our opinion, the Report on Operations is consistent with the financial statements of Cosmint S.p.A. as at December 31, 2018 and comply with the applicable laws and regulations.

With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have no matters to report.

Milan, April 5, 2019

EY S.p.A. Signed by: Paolo Zocchi, Partner

This report has been translated into the English language solely for the convenience of international readers.

AI assistant

Intercos — Annual Report 2018

4306_rns_2019-05-13_f768999e-d6d4-4ea3-b0f8-d17dd29ee4b0.pdf

Cosmint S.p.A.

Separate Financial Statements at December 31, 2018

REPORT ON OPERATIONS

Highlights in 2018

1. Economic Scenario

Macroeconomic picture

2. Market Scenario

3. Significant Events in 2018

5. Share Capital

6. Related Party Transactions

7. Risk Management and Uncertainties

Types of risks hedged

Market risks

Exchange rate risk

Interest rate risk

Credit risk

Liquidity risk

8. Environment and Employees

9. Research & Development

10. Subsequent Events

11. Secondary Offices

12. Appropriation of the Profit for the Year

Cosmint S.p.A.

SEPARATE FINANCIAL STATEMENTS AT DECEMBER 31, 2018

Corporate Information

Cosmint S.p.A.

BOARD OF DIRECTORS

Name Office

BOARD OF STATUTORY AUDITORS

Name Office

INDEPENDENT AUDITORS

Statement of Financial Position at December 31, 2018

Statement of Comprehensive Income for the year ended December 31, 2018 and 2017

Statement of Cash Flows for the year ended December 31, 2018 and 2017

Statement of Changes in Equity

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Significant events in 2018

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

New accounting standards and interpretations adopted by the company

Accounting standards and interpretations issued by the IASB/IFRIC and adopted by the European Commission, but not yet effective

Accounting standards, interpretations and amendments issued by the IASB/IFRIC and not yet adopted by the European Commission

Summary of significant accounting policies

Property, plant and equipment

Leased assets

Intangible assets

(i) Trademarks, licenses and similar rights

(ii) R&D costs

Impairment of property, plant and equipment and intangible assets

Financial instruments

Financial assets

Financial liabilities

Inventories

Cash

Provisions

Employee benefit obligations

Translation of foreign currency balances and transactions

Revenues and costs

Revenue recognition

Sales of products

Performance of services

Financial expenses

Income taxes

3. DIRECTION AND COORDINATION ACTIVITIES

4. RISK MANAGEMENT

Types of risks hedged

Markets risks

Exchange rate risk

Interest rate risk

Credit risk

Liquidity risk

(in € thousands)

5. USE OF ESTIMATES AND ASSUMPTIONS

Goodwill

Impairment of property, plant and equipment and intangible assets

Depreciation of property, plant and equipment

Intercos Annual Report 2018