PanariaGroup Industrie Ceramiche : Press release of 15/03/2019 -The Board of Directors approves the Draft Financial Statement at 31 December 2018 - h.18.00

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PRESS RELEASE

PANARIAGROUP Industrie Ceramiche S.p.A.: the Board of Directors approves the Draft Financial Statements at 31 December 2018.

The uncertain Macro-Economic framework and some exogenous factors, in particular, the depreciation of the US dollars and the increase in energy costs, have contributed negatively on the financial results at 31 December 2018.

•  Net revenues for consolidates sales amounted to Euro 371.0 million ( Euro 383.7 million in 2017).

•  Gross operating profit was equal to to Euro 19.3 million ( Euro 42.0 million in 2017).

•  Net operating profit amounted to a negative Euro 5.3 million ( a positive Euro 18.2 million in 2017).

•  Net result amounted to a negative Euro 4.1 million ( a positive Euro 11.4 million in 2017).

The decrease in revenues has been in line with the general market trend, in which Panariagroup has been able to mantain its market share. It is reported the Portuguese Business Unit performance that recorded an increase in turnover of 3% compared to 2017.

The Board of Directors of Panariagroup Industrie Ceramiche S.p.A., a Group specialized in the production and distribution of ceramic material for high-end and luxury floor and wall coverings, today approved the Financial Statements at 31 December 2018, drafted in accordance with International Financial Reporting Standards (IFRS).

In a macro-economic framework less dynamic than expected at the ending of 2017, due to some exogenous factors, as the slowdown of the entire domestic ceramic sector, the increase in gas prices and the depreciation of US dollars, Panariagroup, in line with the general market trend, has achieved at 31 December 2018 lower results than in the previous year.

The factors above mentioned have determined, particularly, a decrease in the Italian Business Unit volumes compared to the previous period. The reduction in sales of the US Business Unit volumes was influenced by a significant competitive pressure of Spanish and Chinese operators. The Portuguese Business Unit increased its business volumes by 3% on 2017.

CONSOLIDATED FINANCIAL HIGHLIGHTS ( thousand Euros)

"Our sector - said Emilio Mussini, the Chairman of Panariagroup - is characterized, by its very nature, by cyclical factors and the negative economic results of 2018 have to be analysed in this context; we believe that

Panariagroup Industrie Ceramiche S.p.A. - Registered Office: No. 22/a, Via Panaria Bassa, ‐ 41034, Finale Emilia (MO) ‐ Italy

Company Capital 22,677,645.50 Euros fully paid ‐ R.E.A. 248427

VAT, Tax Code and Modena Companies Registry No. 01865640369

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the Group strategies must continue to proceed along a path of development. The significant growth in the business volumes in turnover and margins in the 2014-2017 four year-period, within an environment that is not always favourable, testifies to the fact that we have the resources to compete successfully and recover quickly the profitability of the recent past."

"The values and strengths of our Group like the significant internationalization, the positioning on the high-grade market, the knowhow and the innovative technology equipment, have few equals in our sector."

REVENUES

Revenues from sales decreased by Euro 12.7 million, from Euro 383.7 million as at 31 December 2017 to Euro 371.0 million as at 31 December 2018.

The turnover of the Group's foreign markets accounts for 80% of the total, with a share of non-European markets accounting for 44% of total turnover.

In terms of turnover, we observe the following trends in the main markets of the Group:

EUROPE - In Europe, the Group achieved business volumes in line with the previous year.

The best performance was achieved in Portugal, where, for several years now, the Group has managed to establish itself as the most important player in the sector and continues to grow at a rate of over 10%.

The other Mediterranean countries (Spain and Greece) also performed well, as did Eastern Europe, with an overall growth of 8%.

In the more traditional markets of continental Europe (France, Germany, Belgium, the Netherlands) slowdowns were recorded, which are also reflected in the data released by Confindustria Ceramica regarding the sector as a whole.

The impact of the European markets on total revenues was 36%.

USA - Turnover on the US market fell by 7% in Euro. This performance was partly due to the US dollar weakening against the Euro (-4.5%) and partly to a reduction in actual business volumes (-2.5%).

Within a stable market, the year was weighed down by a strong reinforcement of Spanish and Chinese competition, which above all, disadvantaged the other exporting countries, local producers were also not spared, especially in the channels of large distributors, the main target of operators working outside of the territory, The impact of the US market on total revenues was 34%.

ITALY - In 2018, the Italian market also witnessed a drop in consumption, although not significant. In this context, the Group achieved small but significant growth of 1 %.

In recent years, our strong presence in the Italian market has allowed us to achieve above-average performances in the sector and puts us at the forefront of taking advantage of any signs of recovery in activity in the construction sector.

The impact of the Italian market on total revenues was 20%.

ASIA, CANADA, SUD AMERICA, OCEANIA E AFRICA - The other marketssuffered a loss of about 10%.

In Asia, the Group was able to partially offset the negative effects in the Middle East, which remains at the centre of political and economic tensions, thanks to positive results in other areas (India, China).

The scenario in Africa remains difficult, with the slowdown in the construction of "large works" (airports, shopping centres, tourist accommodation facilities, etc.), which represent the main outlet for European ceramic products. The impact of the other markets on total revenues was 10%.

Panariagroup Industrie Ceramiche S.p.A. - Registered Office: No. 22/a, Via Panaria Bassa, ‐ 41034, Finale Emilia (MO) ‐ Italy

Company Capital 22,677,645.50 Euros fully paid ‐ R.E.A. 248427

VAT, Tax Code and Modena Companies Registry No. 01865640369

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OPERATING RESULTS

Gross operating profit amounted to Euro 19.3 million, representing 4,9% of the Value of Production ( Euro 42.0 million as at 31 December 2017 representing al 10.1 % of the Value of Production).

The drop in margins, although to different extents and for different reasons, affected all the Business Units of the Group.

With the aim of effectively controlling market shares, the Italian Business Unit has adopted a more aggressive commercial policy, in terms of pricing, with a temporary margin squeeze in the launch of the most recent and distinctive collections, facilitating a more rapid affirmation for the near future.

The decision to contain the level of inventories has led to reduced usage of production plants compared to the previous year, mainly concentrated in the second half of the year; this has led to an increase in manufacturing costs, due to the greater impact of fixed and semi-fixed costs, to which a substantial increase in energy prices was added.

Furthermore, with a view to commercial and strategic development, organisational investments have been carried out, the positive effects of which will be felt in the mid-term.

The Portuguese Business Unit confirmed positive levels of profitability but did not repeat the performance of the previous year.

Margins were significantly affected by the increase in gas prices, but the start-up of the new Aveiro production line and the commercial costs incurred to service the sales development plan also contributed to the reduction in profitability.

The factor that has most disadvantaged the profitability of the US Business Unit is the reduction in volumes produced, which has allowed for the achievement of stabilising inventories, but at the same time has led to a significant increase in the impact of fixed and semi-variable costs.

The strengthening of the structure carried out in the previous two years, aimed at supporting the development programmes, has led to, in the presence of an unexpected and unlikely fall in turnover, an increased impact of these costs; despite the major initiatives for the resizing and optimisation of these expenses carried out from the second half of 2018.

Net operating profit was a negative Euro 5.3 million (a positive Euro 18.2 million at 31 December 2017).

The impact of amortisation/depreciation on value of production is substantially in line with the previous year.

The net financial income improved by Euro 1.9 million compared to 31 December 2017.

Of particular note is the limited impact of financial expenses on value of production (equal to 0.67 %, net of the "exchange rate"), thanks to current market conditions, characterised by low interest rates, but also by the careful and prudent management of treasury.

The consolidated net result amounted to a negative Euro 4.1 million (a positive Euro 11.4 million in 2017).

Panariagroup Industrie Ceramiche S.p.A. - Registered Office: No. 22/a, Via Panaria Bassa, ‐ 41034, Finale Emilia (MO) ‐ Italy

Company Capital 22,677,645.50 Euros fully paid ‐ R.E.A. 248427

VAT, Tax Code and Modena Companies Registry No. 01865640369

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NET FINANCIAL POSITION

The net financial position shows, in absolute terms, a slight improvement compared to the figure at the end of 2017.

Nonetheless, the limited cash generated by the fall in operating margins, the Group was able to take corrective action with regard to net working capital and the containment of investments, which made it possible to keep financial indebtedness in line with objectives.

The Group's management policy in 2019 will focus mainly on financial improvement, especially through initiatives to recover profitability, but we can also confirm the continuation of activities to be undertaken on inventory, trade receivables and payables as well as containment of investments.

SHAREHOLDERS' EQUITY

Group equity amounted to Euro 167.1 million as at 31 December 2018 compared to Euro 171.3 million as at 31

December 2017.

BUSINESS OUTLOOK

There are elements of confidence to expect a business volumes and margins recovery, also assuming not short time for an inversion in the global trends.

In terms of revenues, the Group expects positive results from the emerging synergies in the Italian Business Unit, between the "Sales", "Strategic Marketing" and "Product Research and Development" divisions, together with the policy of penetration into new distribution channels.

Sales expectations for the Portuguese Business Unit are positive, in line with recent years, also in view of a further improvement in competitiveness and an enhancement of product ranges, thanks to recent production investments.

In the US Business Unit, we expect a progression of results for the "Home Centres" channel, and more incisive policies in the Branches segment to increase margins will be implemented.

As for the Euro/dollar exchange rate, we point out a favourable start to 2019 compared to the first two months of 2018, with an average exchange rate of around 1.14, while in the previous year, during the same period, it stood at around 1.23.

From a production point of view, better results are expected in terms of productivity for the new Aveiro line, which in 2018 took on standard start-up costs, and greater efficiency in the Fiorano Modenese facility, dedicated to laminated stoneware, from which we expect, in 2019, positive commercial results.

Still on the subject of production costs, energy prices will remain at high levels in the first few months of 2019, but drives for growth have already been exhausted and forecasts are for a gradual decline over the year, to settle at values similar to those of 2017.

One of our key management cornerstones will be financial optimisation and an improvement in the financial situation, through a careful management of investments and of the level of net working capital and inventory stocks, with a focus on suitably balancing, according to sales volumes, the production schedule during the year.

The negative result in 2018, which, in our opinion, was a single setback on a generally positive path, must not allow us to forget the values and strengths of our Group, which have few equals in our sector.

Panariagroup Industrie Ceramiche S.p.A. - Registered Office: No. 22/a, Via Panaria Bassa, ‐ 41034, Finale Emilia (MO) ‐ Italy

Company Capital 22,677,645.50 Euros fully paid ‐ R.E.A. 248427

VAT, Tax Code and Modena Companies Registry No. 01865640369

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Strategic positioning, significant internationalization, widespread commercial distribution, innovative plant and technology equipment, our product portfolio, know-how and the experience and skills of our staff are key pillars that allow us to face future challenges with confidence.

NOTICE OF CALL OF THE SHAREHOLDERS' MEETING

The Panariagroup Board of Directors has approved the resolutions and assigned the necessary powers to arrange the ordinary Shareholders' Meeting of the Company, by notice of call to be published no later than 20 March 2019 on the Company's web site atwww.panariagroup.it, on the authorised storage device "1Info" atwww.1info.it, in the Official Gazette and on the web site of Borsa Italiana S.p.A. (the Italian Stock Exchange). The meeting is to be held on single call at 10:00 hours on 29 April 2019, at the registered office, Via Panaria Bassa 22/A, Finale Emilia (Modena).

The Shareholders' Meeting will be called to resolve on the following agenda:

1. presentation of the Panariagroup consolidated financial statements and approval of the separate financial statements at 31 December 2018; related and subsequent resolutions;

• 2. resolutions relating to the Report on Remuneration; related and subsequent resolutions;

• 3. appointment of Board of Statutory Auditors for the period 2019-2021, determination of the remuneration and consequent resolutions.

• 4. determination of Board of Directors remuneration; related and subsequent resolutions;

• 5. renewal of the authorization for the purchase and sale of treasury shares; related and subsequent resolutions.

RENEWAL OF THE AUTHORIZATION FOR THE PURCHASE AND SALE OF TREASURY SHARES

In the same meeting, the Board of Directors resolved, at the next Ordinary Shareholders' Meeting, to propose renewal of the authorization to purchase and sell treasury shares. To date, the Company directly holds 432,234 treasury shares (equal to 0.953% of the share capital) for a nominal value of 0.50 Euros per share. If authorized, the purchase and sale transactions may be made for a maximum number of ordinary shares representing overall not more than 20% of the existing share capital, excluding the treasury shares held, in accordance with article 2357 et seq. of the Italian Civil Code, article 132 of Legislative Decree No. 58/98, article 144-bis of the Issuers Regulation and all other applicable regulations, including the regulations referred to in Regulation (EU) No. 596/2014 and Delegated Regulation (EU) No. 2016/1052, as well as currently accepted market practices (if applicable) and the Regulations issued by Borsa Italiana S.p.A., before the meeting convened to approve the financial statement at 31 December 2019.

The purchases must be made (i) at a price of no more than 20% above or below the reference price recorded for the share on the trading day prior to each transaction, and in any event (ii) at a price not more than the higher between the last independent transaction and that of the highest current independent bid at the trading venue where the purchase is to be made.

The maximum number of treasury shares that can be purchased daily will not exceed 25% of the average daily volume of "Panaria" shares traded on the market.

The maximum potential purchase outlay will not exceed the available reserves resulting from the last regularly approved financial statement.

Panariagroup Industrie Ceramiche S.p.A. - Registered Office: No. 22/a, Via Panaria Bassa, ‐ 41034, Finale Emilia (MO) ‐ Italy

Company Capital 22,677,645.50 Euros fully paid ‐ R.E.A. 248427

VAT, Tax Code and Modena Companies Registry No. 01865640369