Panariagroup Industrie Ceramiche S p A : Press release of 12/03/2021 -The Board of Directors approves the Draft Financial Statement at 31 December 2020 - h.19.55

PRESS RELEASE

Panariagroup Industrie Ceramiche S.p.A : the Board of Directors approves the Draft Financial Statements at 31st December 2020.

The pandemic penalizes the volume of business but the Gross Operating Margin and the Financial position improve.

•  Net revenues from sales amounted to Euro 357.3 million (Euro 382.0 in 2019, marking a decrease of 6.5%).

•  Gross operating profit amounted to Euro 37.5 million (Euro 32.4 million in 2019, marking growth of 15.7%).

•  Net operating result before-Impairment amounted to Euro a -0.1 million (Euro -4.9 million in 2019).

•  Net operating result amounted to Euro -6.0 million ( Euro -4.9 million in 2019).

•  Net Result amounted to Euro -5.8 million ( Euro -6.4 million in 2019).

•  Net Financial Position before-IFRS 16 was Euro 87.6 million (an improvement of Euro 18 million compared to 2019).

The Board of Directors of Panariagroup Industrie Ceramiche S.p.a, group specialized in the production and distribution of ceramic material for high-end and luxury floor and wall coverings, approved the Financial Statements at 31 December 2020, drafted in accordance with International Financial Reporting Standards (IFRS).

The Group's economic-results cannot be read without considering the particular context in which they were recorded, characterised by the global evolution of the pandemic.

In fact, the global health emergency has represented an unprecedented challenge for the economic system, owing to its unforeseeable, rapid and intense nature, and its spread on a global scale.

In order to deal with this unprecedented and critical situation, the Group rapidly took steps to preserve the company's economic and financial integrity, in addition to obviously ensuring the safety of its employees.

The result of this policy was an important improvement in the financial structure of the group, realised with a highly significant improvement in the Net Financial Position for Euro 18 million, by the obtainment of new medium/long-term loans, for a total of Euro 43 million, and the concession of "Covid moratoria" by the banking system for Euro 22.9 million.

On the revenues side, we noted a contraction in turnover, strictly related to the general slow down in the tile sector, due to effect of the pandemic.

Among the Business Units of the Group, Italy BU was impacted more by the pandemic since the difficulties of the domestic market, while Portuguese BU was able to absorbe completely the negative effects of Covid-19; USA BU has partially offset the slowdown in the volume of business in the traditional distribution channels, recovering with an increase in the large-scale distribution channels.

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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Gross operating profit came to Euro 37.5 million, representing 10.6% of the Value of production (Euro 32.4 million as at 31 December 2019 equal to 8.1%).

The improvement in the Gross operating profit is a significant result, especially in consideration of the difficult conditions in which it was recorded, the result both the structural and contingent optimization activities and external factors, including the drop in energy tariffs and measures of support activated by the governments of the countries in which the Group operates, which made it possible to balance the reduction in the volume of business and in the production activity.

Net operating profit came from negative value of Euro 4.9 million ( equal to 1.2% of the Value of production) to negative value of Euro 6.0 million ( equal to 1.7% of the Value of the Producion), influenced by the effect of the devaluations (Impairment) and provisions particularly relevant made in consideration of situation of uncertainty impacting the economic system.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(thousand euros)

"2020 was a year characterized by extraordinary phenomena - said Emilio Mussini, Chairman of Panariagroup - which saw the company immediately committed to managing its capital and financial integrity, as well as business continuity, always putting the health and safety of its employees comes first."

"The results have been obviously affected by a picture of general contraction - continued Mussini - but it should be noted that already during 2020 the bases were laid for a prompt relaunch, with initiatives aimed at both strengthening the financial position of the company, and at efficiency and strategic development, in order to be able to restart in the best possible way, together with what will be the desirable improvement in the context conditions ".

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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CONSOLIDATED REVENUES

Consolidated revenues of the Group amounted to Euro 357.3 million, marking a drop of 6.5% compared to December 2019.

The turnover of the Group's foreign markets is equal to 83% of the total, with the share of non-European markets equal to 45% of total turnover.

In the main business area following turnover trends are reported:

EUROPE - Turnover on the European markets fell by -2.2% compared to the previous year.

Close correlation was observed between the trend in the markets and the spread of the virus, with the most marked decreases concentrated in Spain, France and the United Kingdom.

Germany bucked the trend, one of the main markets of the ceramics sector, in which markedly positive results were recorded.

The impact of the European markets on total revenues was 38%.

USA - In the US market, the Group recorded a drop of 3.6% in dollars in revenues compared to the previous year, also managing, in this case, to contain the negative effects of the pandemic on the volume of business, thanks to its growth on the larges-scale distribution channels.

The impact of the US market on total revenues was 36%.

ITALY - The Italian market was, without doubt, the one hit hardest by the epidemic; we should point out that Italy was the first European nation, in chronological order, to be impacted by the virus and to impose strict containment measures, therefore with more significant negative effects, only partly recovered in subsequent months.

On this market, net of the uncertainty deriving from the Covid emergency, there are healthy expectations of a recovery connected with the building incentives set forth for 2021 (so-called "superbonus 110%").

The impact of the Italian market on total revenues was 17%.

ASIA, CANADA, SOUTH AMERICA, OCEANIA AND AFRICA - In the other markets it is recorded a drop of 20% in the volume of business. The main difficulties were encountered in the Far East; following the decrease in the first half, no appreciable improvements were registered in the second part of the year.

The impact of the "other markets" on total revenues was 9%.

OPERATING RESULTS

Gross operating profit came to Euro 37.5 million, representing 10.6% of the Value of production (Euro 32.4 million as at 31 December 2019 equal to 8.1%);

The Group, in addition to being able to rely on the improvement initiatives already incorporated in the 2020 operating programmes, counteracted the unexpected decrease in activities, by implementing an extremely purposeful plan, to offset the negative effects on profitability in other aspects of company management.

The operating programme of 2020 already incorporated the important choices and initiatives in all the Group's Business Units and in all business segments, aimed at recovering profitability, which have actually produced good results.

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

2

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It was necessary to support the development of these planned activities with extraordinary initiatives, aimed at incisively and promptly dealing with the significant impacts that suddenly materialised due to the pandemic.

The main objective of these initiatives was the reduction in operating costs, with particular reference to personnel costs and expenses of a commercial nature.

In relation to personnel costs, the reduction in hours worked, both at production and services level, was accompanied by the benefits deriving from the measures made available in Italy, Portugal and the USA by the respective national governments to protect employment.

Commercial costs were also reduced considerably, also taking into account their low level of effectiveness in a period of poor receptivity of the market.

The cancellation of traditional trade fair events (Cersaie and Coverings above all), meetings and trips, has also allowed other significant savings with respect to normal operations.

In 2020, the Group benefitted from the reduction in gas and electricity tariffs for the European Business Units, factors that, in the previous two-year period, had a significant impact on the Group's income statement; the expectations are positive for 2021, with tariffs aligned with those of 2020.

Net operating result amounted to Euro -6.0 million (loss of Euro 4.9 million as at 31 December 2019); a significant part of the worsening in the results is attributable to the devaluations of Assets of USA BU as a result of the impairment test carried out in application of international accounting standard, which took account of the more conservative company plans, in consideration, in particular, of the uncertain evolution of the market in the pandemic context; it is important to note this was merely an accounting write-down of a non-recurring nature.

Further provisions were also recorded (mainly for credit and inventory risk) for a total of Euro 5.1 million, which involved all the companies of the Group.

The Net Result amounted to a negative Euro 5.8 million (negative Euro 6.4 million as at 31 December 2019).

NET FINANCIAL POSITION

The Net Financial Position before-IFRS 16 came to Euro 87.6 million, an improvement of Euro 18 million compared to 31 December 2019.

The Group has successfully operated in the financial management, realizing on the one hand an improvement in the Net Financial Position, thanks to a notable activity of reducing Net Working Capital; on the other hand a repositioning of the financial debt in the medium-long term, made possible by the obtaining of new medium/long terms loans and moratoria granted by the banking system, generating a consistent reserve of liquidity at year end, useful for setting up medium/long term development programs, even in the current uncertain and changeable context.

SHAREHOLDERS' EQUITY

Shareholders' Equity went from Euro 157.3 million as at 31 December 2019 to Euro 146.4 million as at 31 December 2020, marking a decrease of Euro 10.9 million, deriving from the loss for the period (Euro 5.8 million) and the negative exchange rate effect on the shareholders' equity of the US companies (Euro 5.1 million).

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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