Fine Foods & Pharmaceuticals N T M S p A : 30 June 2020 Half-year Financial Report

FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Registered office: VIA BERLINO 39 VERDELLINO (BG)

Registered in the BERGAMO Companies Register

Tax code and company reference number: 09320600969

Registered in the BERGAMO REA no. 454184

Subscribed Share Capital € 22,601,209 fully paid up

VAT number: 09320600969

Half-year Financial Report

as at 30 June 2020

29 September 2020 Board of Directors

FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Table of contents

Corporate positions	page	3
Half-year Report on Operations	"	4
Balance Sheet	"	18
Income Statement	"	21
Cash Flow Statement	"	23
Explanatory Notes	"	25

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

CORPORATE POSITIONS

Board of Directors

Chairman and CEO

Marco Francesco Eigenmann

CEO

Giorgio Ferraris

Directors

Federico Oriani

Adriano Pala Ciurlo

Fulvio Conti

Marco Costaguta

Paolo Ferrario

Board of Statutory Auditors

Chairman

Paolo Villa

Statutory Auditors

Marco Antonio Manzoni

Barbara Castelli

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Half-year Report on Operations

30/06/2020 Interim Financial Statements

Dear shareholders, the 30 June 2020 Half-year Financial Report ("Half-year or Interim Financial Statements") of Fine Foods & Pharmaceuticals N.T.M. S.p.A. ("Fine Foods S.p.A." or the" Company") was prepared under article 18 of the of the AIM Italia Issuers' Regulations.

The Interim Financial Statements we submit for your approval show a net result for the period of € 3,116,544. This result was obtained after allocating amortisation and depreciation on intangible and tangible fixed assets for € 5,873,951 and allocating taxes for € 1,058,081.

The analysis of the company's situation, operating trend and result is reported in the following paragraphs dedicated explicitly to the market scenario, products and services, investments, and the main indicators of the economic and financial performance.

			Values expressed in €		30/06/2020	31/12/2019
	Balance sheet
	Assets
	A		Receivables from shareholders for unpaid called up share
		capital	-	-
	B		Fixed assets	93,434,663	92,782,222
	C		Current assets	118,857,138	113,453,958
	D		Accruals and deferrals	69,874	163,417
			Total assets
			212,361,675	206,399,597
	Liabilities
	A		Shareholders' equity	146,133,358	148,290,590
	B		Provisions for risks and charges	-	-
	C		Employee severance indemnity	920,878	972,595
	D		Payables	65,268,391	57,096,346
	E		Accruals and deferrals	39,048	40,066
			Total liabilities
			212,361,675	206,399,597

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			Values expressed in €			30/06/2020		30/06/2019
	Income Statement
	A		Production value	76,395,900		88,630,223
	B		Total production costs	73,848,127		84,324,063
			Difference between production value and costs
			2,547,773		4,306,160
	C		Financial income (charges)	1,626,852		403,934
	D		Adjustments to the value of assets:	-	(217,529)
			Earnings before taxes
			4,174,625		4,492,565
22		Financial year income taxes	956,736		1,316,458
			Deferred (prepaid) taxes	101,345	(41,442)
23		Profit (loss) for the financial year
	3,116,544		3,217,549

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General information and business performance

Fine Foods & Pharmaceuticals N.T.M. S.p.A., is the leading independent Italian Company in the contract development and manufacturing organisation (CDMO) of oral solid forms for the pharmaceutical and nutraceutical industries. The company is recognised on the market for its high- quality products and it generated approximately € 75 million turnover in the first half of 2020.

Economic background

Global growth is expected to be -4.9% in 2020 (source: IMF World Economic Outlook June 2020), 1.9 percentage points below previous April 2020 forecasts.

The Covid-19 pandemic had a more negative impact than expected in the first half of 2020, and recovery is likely to be more gradual than previously forecast. In 2021, global growth is forecast at +5.4%. Overall, this would mean a reduction in GDP in 2021 of about 6.5 percentage points less than projected in January 2020.

The pandemic has worsened in many countries and stabilised in others. Compared to early May 2020, the pandemic has rapidly intensified in several emerging markets and developing economies, making a shutdown necessary and causing greater than expected obstacles to economic activity. In other countries, however, infections and mortality rates were lower on a per capita basis, although the limited spread of serological testing means that there is considerable uncertainty about the pandemic's evolution. In many advanced economies, the pace of new infections and hospital occupancy rates in intensive care have declined thanks to weeks of shutdowns and voluntary suspension.

GDP in the first quarter of 2020 was worse than expected. Indicators suggest a severe contraction in the second quarter, except for China, where most of the country reopened in early April. Consumption and service production fell sharply. In most recessions, consumers use their savings or rely on social safety nets and household support to amortise spending, and consumption is relatively less affected than investment. But this time consumption and service production fell sharply. The model reflects a unique combination of factors, including voluntary social distancing, lockdowns used to slow transmission and enable health systems to cope with a rapidly growing workload, heavy income losses and weaker consumer confidence. Companies have reduced investment in the face of sharply declining demand, supply disruptions and uncertain future earnings. As a result, there is a considerable shock to aggregate demand, exacerbating supply disruptions due to lockdowns.

Mobility remains depressed. Globally, lockdowns were more intense and widespread from around mid-March to mid-May. With the gradual reopening of economies, mobility has recovered in some areas but remain low compared to pre-virus levels, suggesting that people are voluntarily reducing exposure to each other. There has been a severe blow for the labour market. The sharp drop in activity was accompanied by a catastrophic blow to the global labour market. Some countries (particularly in Europe) contained the consequences with effective short-term programmes. However, according to the International Labour Organisation, the global decline in working hours in 2020:Q1 compared to 2019:Q4 was equivalent to the loss of 130 million full-time jobs. The decrease in 2020:Q2 is equivalent to more than 300 million full-time jobs.

The synchronised nature of the recession has amplified worldwide internal imbalances. Trade contracted by almost -3.5%(year-on-year) in the first quarter, due to weak demand, the collapse of cross-border tourism and lockdown supply disruptions (exacerbated in some cases by trade restrictions).

Weaker inflation. Average inflation in advanced economies fell by around 1.3 percentage points since the end of 2019 to 0.4% (year-on-year) by April 2020. In emerging economies, average inflation fell by 1.2 percentage points to 4.2%. The downward pressure on prices due to the fall in

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aggregate demand, together with the effects of falling fuel prices, has widely offset the upward pressure on costs due to supply disruptions.

Euro Area

In the first quarter of 2020, real GDP in the Euro area fell by 3.8% compared to the previous period, and the new data shows a further marked decline in the second quarter. The most recent economic indicators and latest results of economic cyclical surveys confirm a drastic contraction in the Euro area economy and a rapid deterioration in labour market conditions. The coronavirus pandemic and the necessary containment measures had severe repercussions for manufacturing and service sectors, the area's economy production capacity and domestic demand. The most recent indicators suggest a slight reversal of the contraction in May, coinciding with the gradual restart of part of the economy. With the further easing of the containment measures, in the third quarter the Euro area's activity is expected to recover, supported by favourable financial conditions, the fiscal policies' expansionary approach and the restart of global activity, although overall the speed and extent of the recovery remain uncertain.

This assessment is substantially reflected in the June 2020 macroeconomic projections made by Eurosystem experts for the Euro area. In the projections' baseline scenario, annual real GDP would fall by 8.7% in 2020, rising by 5.2% in 2021 and 3.3% in 2022 (source: ECB).

Generally, the contraction's extent and recovery will depend crucially on the duration and effectiveness of the containment measures, the success of policies to mitigate the adverse impact on incomes and employment, and the extent to which production capacity and domestic demand will be permanently affected.

Significant events

On 30 April 2020, the Fine Foods Shareholders' Meeting resolved on the revocation of the unexecuted part of the authorisation to purchase treasury shares which were approved by the Shareholders' Meeting on 14 December 2018 and informed the market. It provided the Board of Directors with a new mandate to purchase and dispose of treasury shares under articles 2357 and 2357-ter of the Civil Code. This new treasury share buyback programme was launched on 15 May 2020 implementing the 30 April 2020 Shareholders' Meeting resolution.

Management Performance

After January 2020, the national and international scenario was influenced by the spread of the Coronavirus and the consequent restrictive measures for its containment, issued by the public authorities of the countries concerned.

Fine Foods actions focused on protecting its employees' health and safety. The company immediately and rigorously implemented safety and prevention regulations in compliance with government protocols. Another important objective was maintaining business continuity, guaranteeing production and service levels appropriate to the various market scenarios and rapidly implementing remote working solutions for office personnel.

From mid-March, activity was strongly influenced by Covid-19 escalation, with a consequent reduction in sales and financial performance in the first half of 2020.

In line with expectations, the commercial trend improved in May, following the suspension of lockdowns and restrictions in many countries.

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Given the contingent situation, we can consider the six months just ended positively, since the drop in turnover must be understood as a shift to the second half of the year. Considering the achieved results and orders in the portfolio acquired for the last four months, we expect the turnover will grow at the end of September compared to the same period of the previous year. The expansion trend, which the company has always recorded, will be confirmed at the end of the year.

Item A1 of the Income Statement (Revenues from sales and services) went from € 83.1 million in the first half of 2019 to € 75.3 million in the first half of 2020, decreasing by 9.4%. This change is mainly due to the reduction in turnover in the nutraceutical sector. The revenues of the "Food" Business Unit amounted to € 54.1 million in the first half of 2020 compared to € 63.1 million in the first half of 2019 and showed a decrease of 14 per cent. The "Pharma" segment sales in the first half of 2020 reached € 21.2 million with an increase of six per cent compared to € 20 million in the first half of 2019.

Management and coordination activities

We certify that the Company is not subject to external management and coordination.

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Balance sheet and financial position

For a better understanding of the Company's balance sheet and financial position, a reclassified Balance Sheet is provided below.

Balance Sheet Assets

	Item			30/06/2020		%		31/12/2019			%			Absolute			%
									change			Changes
	WORKING CAPITAL			118,927,012		56%		113,617,375			55.05%			5,309,637			4.67%
	Immediate Liquidity	1,446,913	0.68%	2,671,684	1.29%	-1,224,771		-45.84%
	Liquid assets	1,446,913	0.68%	2,671,684	1.29%	-1,224,771		-45.84%
	Deferred liquidity	117,480,099	55.32%	110,945,691	53.75%	6,534,408		5.89%
	Short-term receivables under	26,388,752	12.43%	19,956,886	9.67%	6,431,866		32.23%
	Current Assets
	Financial assets	67,444,536	31.76%	68,337,564	33.11%	-893,028		-1.31%
	Accrued income and prepaid	69,874	0.03%	163,417	0.08%	-93,543		-57.24%
	expenses
	Inventories	23,576,937	11.10%	22,487,824	10.90%	1,089,113		4.84%
	FIXED ASSETS			93,434,664		44%		92,782,221			44.95%			652,443			0.70%
	Intangible fixed assets	3,238,932	1.53%	3,449,609	1.67%	-210,677		-6.11%
	Tangible fixed assets	90,195,732	42.47%	89,332,612	43.28%	863,120		0.97%
	TOTAL APPLICATION OF			212,361,675		100%		206,399,596			100%			5,962,079			2.89%
	FUNDS (Total Assets)

Balance Sheet Liabilities

	Item			30/06/2020		%		31/12/2019			%			Absolute			%
									Change			Changes
	THIRD-PARTY CAPITAL			66,228,318		31.19%		58,109,007			28.15%			8,119,311			13.97%
	Current liabilities	45,484,960	21.42%	36,516,868	17.69%		8,968,092		24.56%
	Short-term payables	45,445,911	21.40%	36,476,802	17.67%	8,969,109		24.59%
	Accrued expenses and deferred	39,048	0.02%	40,066	0.02%		-1,018		-2.54%
	income
	Consolidated liabilities	20,743,359	9.77%	21,592,139	10.46%		-848,780		-3.93%
	Medium/long-term payables	19,822,481	9.33%	20,619,544	9.99%		-797,063		-3.87%
	Severance Indemnity	920,878	0.43%	972,595	0.47%		-51,717		-5.32%
	OWNERS' EQUITY			146,133,357		68.81%		148,290,589			71.85%			-2,157,232			-1.45%
	Share Capital	22,601,209	10.64%	22,564,043	10.93%	37,166		0.16%
	Reserves	120,415,604	56.70%	119,656,961		57.97%	758,643		0.63%
	Profits (losses) carried forward				0%			0%		0			0%
	Profit (loss) for the financial year	3,116,544	1.47%	6,069,585	2.94%		-2,953,041		-48.65%
	TOTAL SOURCES (Total			212,361,675		100%		206,399,596			100%			5,962,079			2.89%
	Liabilities)

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Balance sheet and financial position main indicators

Based on the previous reclassification, the following Financial Statement indicators are calculated:

	INDEX			30/06/2020			31/12/ 2019			%
							Changes
	Fixed asset coverage
	= A) Shareholders' equity / B) Fixed assets	156.40 %	159.83 %	(2.14) %
	The index assesses the balance between the owners' equity and the company's fixed
	assets investments.
	Amounts payable to banks to working capital ratio
	= D.4) Bank Borrowing / C) Current assets	20.29 %	18.80%	7.91 %
	This index measures working capital obtained using bank financing
	Short-term payables to banks to working capital ratio
	= D.4.1) Payables to banks due within 12 months / C) Current assets	11.95 %	9.35 %	27.73 %
	The index is a percentage of how much the banks are financing the company's
	current assets in the short term
	Debt ratio
	= [TOTAL LIABILITIES - A) Shareholders' equity] / TOT. ASSETS	31.19%	28.15%	10.77 %
	This index expresses the ratio between third-party capital and total assets
	Equity on invested capital
	= A) Shareholders' equity / TOT. ASSETS	68.81%	71.85%	(4.23) %
	The index measures the company capitalisation degree and its financial
	independence from third-party financing
	Financial charges on turnover
	= C.17) Interest and other financial charges / A.1) Revenues from sales and	1.74 %	0.33 %	432.32 %
	services
	The index expresses the ratio between financial charges and the Company's
	turnover
	Financial debt ratio
	= [D.1) Bonds payable + D.2) Convertible bonds payable + D.3) Payables to
	shareholders for loans + D.4) Payables to banks + D.5) Payables to other lenders +
	D.8) Payables represented by debt securities + D.9) Payables to subsidiaries +	0.23	0.21	9.52 %
	D.10) Payables to associated companies + D.11) Payables to parent companies] /
	A) Shareholders' equity

The index measures the ratio between the use of third-party financing capital (third- party paid capital and subject to repayment) and the use of the Company's own resources

Current Ratio

= [A) Receivables from shareholders for unpaid called up share capital + B.III.2)

Receivables + C) Current assets - C.II) Receivables + D) Accruals and deferrals] /287.75 % 309.80 % (15.90) % [D) Payables + E) Accruals and deferrals]

It is the ratio, in percentage, between (immediate and deferred) liquidity and current liabilities. It expresses the company's ability to meet commitments using its current resources.

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INDEX

30/06/2020

31/12/ 2019

%

Changes

Capital structure primary margin

= [A) Shareholders' equity - (B) Fixed assets - B.III.2) Receivables #)]

52,698,695

55,508,368

(5.06) %

It is the difference between the Shareholders' equity and Net Fixed Assets. It

expresses, in absolute values, the Company's ability to cover its fixed asset

investments with its own resources.

Capital structure primary ratio

= [A) Shareholders' equity] / [B) Fixed assets - B.III.2) Receivables]

1.56

1.60

(2.25) %

It is the ratio between Shareholders' equity and Net Fixed Assets. It expresses, in

relative values, the portion of fixed assets covered by own resources.

Capital structure secondary margin

= [A) Shareholders' equity + B) Provisions for risks and charges + C) Employee

73,442,052

77,100,507

(4.75) %

severance indemnity + D) Payables] - [B) Fixed assets - B.III.2) Receivables]

It is the difference between the Consolidated Long-Term Capital (Shareholders'

equity plus Long-term payables) and Net Fixed Assets. It expresses, in absolute

values, the Company's ability to cover fixed asset investments with consolidated

resources.

Capital structure secondary ratio

= [A) Shareholders' equity + B) Provisions for risks and charges + C) Employee

1.79

1.83

(2.40) %

severance indemnity + D) Payables] / [B) Fixed assets - B.III.2) Receivables #]

It is the ratio between the Consolidated Long-Term Capital and the Net Fixed

Assets. It expresses, in relative values, the portion of fixed assets covered with

consolidated resources.

Net Working Capital

= [A) Receivables from shareholders for unpaid called up share capital + B.III.2)

Receivables + C.I) Inventories + C.II) Receivables + C.III) Current financial assets +

73,442,052

76,612,369

(4.14) %

C.IV) Liquid assets (Cash) + D) Accruals and deferrals] - [D) Payables + E) Accruals

and deferrals]

It is the difference between gross Working Capital and current liabilities. It expresses in absolute values, the ability of the company to face short-term commitments with existing resources

Primary treasury margin

= [A) Receivables from shareholders for unpaid called up share capital + B.III.2)

Receivables + C.II) Receivables + C.III) Current financial assets + C.IV) Liquid assets 49,865,115 54,124,545 (7.87) % (Cash) + D) Accruals and deferrals] - [D) Payables + E) Accruals and deferrals]

It is the difference, in absolute values, between immediate and deferred liquidity and current liabilities. It expresses the Company's ability to meet current commitments using its own liquidity

Secondary treasury margin

= [C.IV) Liquid assets (Cash) - (D) Payables + E) Accruals and deferrals)]

(44,038,047) (33,845,184) 30.12%

It is the difference, in absolute values, between immediate liquidity and current liabilities. It expresses the company's ability to meet current commitments using its immediate liquidity.

The Net Financial Position was positive, with about € 35 million, compared to € 39.8 million in 2019. The excellent cash generation deriving from operations fully supported the new investments

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made and the movement of working capital. The change from the previous financial year is due to the ongoing buy-back programme and the distribution of dividends.

Financial situation

To better understand the Company's operating results, a reclassification of the Income Statement is provided below.

Item	30/06/2020	%	30/06/2019	%	Absolute change	%
Changes

	Revenues from sales and services		75,350,182		100%		83,140,551			100%			-7,790,369		-9.37%
	+ Change in inventories	1,650,346	2.19%	9,079,514	10.92%	-7,429,168	-81.82%
	- Raw materials	46,657,254	61,92%	58,247,492	70.06%	-11,590,238	-19.90%
	VALUE ADDED		30,343,273		40.27%		33,972,573			40.86%			-3,629,300		-10.68%
	+ Other revenues	873,530	1.16%	797,903	0.96%	75,627	9.48%
	- Overheads	7,395,108	9.81%	8,874,305	10.67%	-1,479,197	-16.67%
	- Personnel cost	14,138,682	18.76%	15,174,047	18.25%	-1,035,365	-6.82%
	- Other operating charges	580,342	0.77%	958,708	1.15%	-378,366	-39.47%
	EBITDA		9,102,670		12.08%		9,763,416			11.74%			-660,746		-6.77%
	ADJUSTED EBITDA		9,799,827		13.01%		11,149,695			13.41%			-1,349,868		-12.11%
	- Amortisation, depreciation, and	6,554,898	8.70%	5,457,256	6.56%	1,097,642	20.11%
	write-downs
	EBIT		2,547,772		3.38%		4,306,160			5.18%			-1,758,388		-40.83%
	ADJUSTED EBIT		3,244,929		4.31%		5,692,439			6.85%			-2,447,510		-43%
	+ Financial income	2,938,843	3.90%	675,882	0.81%	2,262,961	334.82%
	- Financial charges	1,316,997	1.75%	253,727	0.31%	1,063,270	419.06%
	- Foreign currency exchange gains	5,006	0.01%	18,221	0.02%	-13,215	-72.52%
	and losses
	- Adjustments to the value of assets	0		0%	217,529	0.26%	-217,529	-100%
	INCOME BEFORE TAXES		4,174,625		5.54%		4,492,565			5.40%			-317,940		-7.08%
	ADJUSTED INCOME BEFORE		4,871,782		6.47%		5,878,844			7.07%			-1,007,062		-17.13%
	TAXES
	- Financial year income taxes	1,058,081	1.40%	1,275,016	1.53%	-216,935	-17.01%
	NET INCOME		3,116,544		4.14%		3,217,549			3.87%			-101,005		-3.14%
	ADJUSTED NET INCOME		3,637,002		4.83%		4,210,394			5.06%			-573,392		-13.62%

In the first half of 2020, non-recurring costs of € 559,000 were incurred due to the Covid 19 pandemic. These costs relate to the purchase of personal protective equipment, workplace sanitisation, the implementation of smart working, and for direct personnel deriving from a reorganisation of shifts.

In the event of the translisting to MTA (Italian Equities Market), the company incurred extraordinary consultancy costs for € 139,000.

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Key economic indicators

Based on the previous reclassification, the following Financial Statement indicators are calculated:

	INDEX			30/06/2020			30/06/2019			%
							Changes
	ROE
	= 23) Profit (loss) for the year / A) Shareholders' equity	2.13 %	2.17 %	(47.9) %
	The index measures the return on equity invested in the company
	ROI
	= [A) Production value - A.5) Other revenues and income - B) Production costs + B.14) Other	1.06 %	2.16 % (50.95) %
	operating expenses] / TOT. ASSETS
	The index measures the profitability and the efficiency of the invested capital for company
	ordinary operations
	ROS
	= [A) Production value - B) Production costs] / A.1) Revenues from sales and services	3.38%		5.18%		(34.75) %
	The index measures the Company's ability to generate profits from sales or the operating
	income for each unit of revenue
	ROA
	= [A) Production value - B) Production costs] / TOT. ASSETS	1.20 %	2.09 %	(42.58) %
	The index measures the return on investment with reference to the result before financial
	management
	EBIT
	= [A) Production value - B) Production costs + C.15) Income from equity investments + C.16)
	Other financial income + C.17a) Foreign currency exchange gains and losses + D) Adjustments	5,491,622		4,746,292		15.70 %
	to the value of assets + E) Extraordinary income and charges]

The income margin measures the result for the year, taking into account the ancillary, financial (excluding financial expenses) and extraordinary areas.

Main risks and uncertainties for the Company

The main risks and uncertainties for the Company are described below. The Board of Directors must diligently monitor and implement risk containment policies:

• the price risk is managed using a solid cost accounting procedure which can identify the production cost, through which remunerative and competitive prices can be offered to the customer;
• the exchange rate risk is kept under control by avoiding exposures over time in currencies other than the Euro;
• the liquidity risk is mitigated by adopting policies and procedures which maximise the efficiency of financial resource management. This is carried out through the centralised management of incoming and outgoing flows, assessment of prospective liquidity conditions, obtaining adequate credit lines, and preserving an adequate cash and cash

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equivalent level. Current liquidity and credit lines are enough to meet future financial needs, along with resources generated by operating and financing activities.

• the product risk is spread over a large portfolio of products that annually pass through plants. This ensures that the Company is not dependant on a single product. A competent and timely Quality Assurance service safeguards product quality;
• the risk of changes in cash flows is not considered significant in view of the Company's balance sheet. It is considered that the risks to which the business activity is exposed are not higher than those physiologically connected to the overall business risk;
• the credit risk represents the Company's exposure to potential losses deriving from the non- fulfilment of the obligations assumed by counterparties. Experience has proved that this risk never significantly occurred for Fine Foods. However, the Company would implement the appropriate hedging if necessary.

Key non-financial indicators

For a better understanding of the Company situation, the operating trend and result, it is useful to present the following non-financial indicators:

• Fine Foods maintains consolidated and continuous relationships with more than 100 customers;
• The Company can count on 102 production lines located in the various plants;
• Fine Foods produces more than 1,300 Stock-Keeping Units (SKUs) annually;
• The Company has more than 590 employees, of which about 10 per cent are dedicated to quality control activities.

Environmental information

The environmental objectives and policies, including the measures adopted and the improvements made to the business activity that had the greatest impact on the environment, can be summarised as follows:

In May 2020, the Company underwent an environmental certification audit under the UNI EN ISO 14001:2015 standard, which certifies the presence of a management system to prevent air and water environmental issues.

The next maintenance visit is planned for mid-May 2021.

A management system illustrates how to intervene if harmful events occur.

During the year, there were no events that caused damage to the environment for which the Company was found guilty, nor were sanctions or penalties imposed for environmental crimes or damages.

To protect the environment and follow the provisions of current legislation, the Company gives all the types of waste that are generated by the Zingonia - Verdellino and Brembate sites to authorised third parties.

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Work Risk Assessment Document

Under Legislative Decree no. 81 of 09/04/2008 of Legislative Decree 106/09 and subsequent amendments, which contain reference standards for workplace health and safety, the Company has drawn up the Risk Assessment Document (DVR - Documento di Valutazione dei Rischi) filed at its registered office and revised on 13 April 2020, version no. 13.

The Company holds the OHSAS 18001:2007 certification, which is the international standard for a safety and health management system for workers.

In April 2020, an audit was scheduled to obtain certification under UNI EN ISO 45001:2018, which will replace the old OHSAS 18001:2007. Due to the COVID-19 pandemic, the audit was rescheduled for September 2020.

During the year there were no serious accidents at work that resulted in serious injuries to personnel enrolled in the employee register for which corporate responsibility was ascertained.

Personnel Management Information

To better understand the Company situation and management performance, some information relating to personnel management is provided.

Attention was paid to the professional growth of personnel. In the first half of 2020, 78 training courses and seminars were held, involving 548 participants, for a total of 1,963 hours of training. These aimed at increasing technical skills and maintaining an adequate level of quality, safety, hygiene and environment skills.

Plant	Number of courses	Number of participants	Total hours
ZINGONIA	43	339	1,369
BREMBATE	35	209	593
TOTAL	78	548	1,963

During the first half of 2020 there were no serious accidents at work that resulted in serious injuries to personnel enrolled in the employee register for which corporate responsibility was ascertained or charges relating to occupational illnesses on employees or former employees and mobbing cases.

Research and development

Fine Foods works in the contract development and manufacturing of solid oral forms for the pharmaceutical and nutraceutical industries. The research and development work stems from a structured collaboration with customers aimed at providing them with new formulations for their products, guaranteeing their effectiveness, quality and innovation.

The costs incurred for product research and development are not capitalised but are included in operating costs and charged to the income statement.

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Relationships with subsidiary, associated, parent companies and companies controlled by the parent companies

In the first half of 2020, no subsidiary, associated, parent companies or companies controlled by the parent companies' transactions took place, except for the dividend paid to the parent company of € 0.12 for each share held, as resolved by the 30 April 2020 Shareholders' Meeting.

Treasury shares

The table below summarises the situation regarding treasury shares as at 30/06/2020 and the movements during the year.

		Number		Total nominal value		%			Fees Euro
Initial balance	-	-	-		-
Purchased shares	676,840	-	2.87%	7,279,715
Shares allocated free of charge	-	-	-		-
Shares sold	-	-	-		-
Shares cancelled due to excess capital	-	-	-		-
Shares cancelled to cover losses	-	-	-		-

Final balance

676,840

0

2.87%

7,279,715

Under at. 2357-ter of the Civil Code, the purchase of treasury shares involved booking a "Negative reserve for treasury shares in the portfolio" in balance sheet liabilities. The number of treasury shares held by the Company having recourse to the risk capital market does not exceed one-fifth of the share capital, as required by art. 2357 of the Civil Code.

The purchase of treasury shares provides the Company with a useful strategic investment opportunity for purposes permitted by current regulations.

Parent Company shares

The Company has never owned parent Company shares.

Business outlook

Considering the overall positive result achieved by the company in the first half of 2020, when the Covid 19 pandemic reached its peak and having noted an ever-increasing recovery in the market, a second half of the year is expected to strongly expand.

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Significant events after the end of the period

On 15 September 2020, Fine Foods purchased 711,974 treasury shares, equal to 3.0214% of the share capital, on AIM Italia, organised and managed by Borsa Italiana S.p.A., at a weighted average price of € 10.7693, totalling € 7,667,460.

On 22 July 2020, the company purchased a property complex adjacent to the pharmaceutical production plant located in via Grignano in Brembate (BG) as part of its continuous organic growth plan and to secure additional space for future development.

Branch offices

The Company's branch operating offices are shown below:

	Address		Location
	VIA GRIGNANO 43		BREMBATE
	VIA LOMBARDIA 8/B/C		NEMBRO

GDPR Privacy Policy

Under EU Regulation 2016/679, General Data Protection Regulation ("GDPR"), the Company has implemented a corporate organisation system for the protection of personal data to comply with the EU regulatory framework, which strengthens Privacy and the individuals' data protection rights.

Verdellino-Zingonia, 29/09/2020

For the Board of Directors

Chairman

Marco Francesco Eigenmann

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Financial Statements

Balance Sheet

			30/06/2020		31/12/2019
	Assets
	B) Fixed assets
	I - Intangible fixed assets	-	-
	3) industrial patent and intellectual property rights	1,469,512	1,273,296
	7) other	1,769,420	2,176,313
	Total intangible fixed assets		3,238,932		3,449,609
	II - Tangible fixed assets	-	-
	1) land and buildings	36,962,570	37,314,959
	2) plant and machinery	46,556,398	45,314,549
	3) industrial and commercial equipment	1,844,359	2,040,227
	4) other tangible assets	2,824,434	2,830,441
	5) Fixed assets under construction and payments on account	2,007,970	1,832,437
	Total tangible fixed assets		90,195,731		89,332,613
	Total fixed assets (B)		93,434,663		92,782,222
	C) Current assets
	I - Inventories	-	-
	1) raw materials, ancillary materials, and consumables	13,214,602	12,297,677
	2) work in progress and semi-finished products	2,779,540	3,030,866
	4) finished products and goods	7,582,796	7,159,281
	Total inventories		23,576,938		22,487,824
	II - Receivables	-	-
	1) from customers	24,590,725	17,093,400
	due within 12 months	24,590,725	17,093,400
	5-bis) tax receivables	870,876	2,150,075
	due within 12 months	870,876	2,150,075
	5-ter) deferred tax assets	386,793	488,138
	5-quater) from others	540,357	225,273
	due within 12 months	540,357	225,273
	Total receivables		26,388,751		19,956,886

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

		30/06/2020			31/12/2019
III - Current financial assets	-		-
6) other securities	67,444,536		68,337,564
Total current financial assets		67,444,536			68,337,564
IV - Liquid assets	-		-
1) bank and postal deposits	1,440,966		2,664,126
3) cash and cash equivalents on hand	5,947	7,558
Total liquid assets		1,446,913			2,671,684
Total current assets (C)		118,857,138			113,453,958

	D) Accruals and deferrals		69,874		163,417
	Total assets		212,361,675		206,399,597
	Liabilities
	A) Shareholders' equity		146,133,358		148,290,590
	I - Capital	22,601,209		22,564,043
	II - Share premium reserve	86,743,750		86,743,750
	IV - Legal reserve	5,000,000		5,000,000
	VI - Other reserves, indicated separately	-		-
	Extraordinary reserve	9,398,219		6,072,106
	Merger surplus reserve	26,553,351		26,553,351
	Total other reserves		35,951,570		32,625,457
	IX - Profit (loss) for the year	3,116,544		6,069,585
	X - Negative reserve for treasury shares in the portfolio	(7,279,715)	(4,712,245)
	Total Shareholders' Equity	146,133,358		148,290,590
	C) Employee severance indemnity		920,878		972,595
	D) Payables
	1) bonds	9,911,375		9,896,567
	due after 12 months	9,911,375		9,896,567
	4) Bank Borrowing	24,111,650		21,334,924
	due within 12 months	9,911,106		10,611,947
	due after 12 months	14,200,544		10,722,977
	7) trade payables	24,676,048		20,608,429
	due within 12 months	24,676,048		20,608,429
	12) taxes payable	1,826,742		907,303
	due within 12 months	1,826,742		907,303
	13) payables due to pension and social security institutions	2,080,296		1,851,465
	due within 12 months	2,080,296		1,851,465

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

		30/06/2020		31/12/2019
14) other payables	2,662,280	2,497,658
due within 12 months	2,662,280	2,497,658
Total payables		65,268,391		57,096,346

	E) Accruals and deferrals		39,048		40,066
	Total liabilities		212,361,675		206,399,597

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Income Statement

			30/06/2020			30/06/2019
	A) Production value
	1) revenues from sales and services	75,350,182			83,140,551
	2) changes in inventories of work in progress, semi-finished and finished products	172,188			4,691,769
	5) other revenues and income	-			-
	other	873,530			797,903
	Total other revenues and income		873,530			797,903
	Total production value		76,395,900			88,630,223
	B) Production costs
	6) raw materials, ancillary materials, consumables, and goods	46,657,254			58,247,492
	7) services	7,156,689			8,331,565
	8) use of third-party assets	238,419			542,740
	9) personnel	-			-
	a) wages and salaries	10,265,755			11,192,171
	b) social security contributions	3,240,760			3,391,471
	c) severance indemnity	632,167			586,155
	e) other costs	-			4,250
	Total personnel costs		14,138,682			15,174,047
	10) amortisation, depreciation, and write-downs	-			-
	a) amortisation of intangible assets	683,456			746,283
	b) depreciation of tangible assets	5,190,495			3,840,162
	d) write-downs of receivables included in current assets and liquid assets	119,714			120,811
	Total amortisation, depreciation, and write-downs		5,993,665			4,707,256
	11) changes in inventories of raw materials, ancillary materials, consumables, and	(916,925)		(3,637,745)
	goods
	14) other operating charges	580,343			958,708
	Total production costs		73,848,127			84,324,063
	Difference between production value and costs (A - B)		2,547,773			4,306,160
	C) Financial income and charges
	16) other financial income	-			-
	c) from securities included in current assets other than equity investments	2,936,671			674,060
	d) income other than the above	-			-
	Other	2,172		1,822
	Total income other than the above		2,172			1,822
	Total other financial income		2,938,843			675,882

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

			30/06/2020			30/06/2019
	17) interest and other financial charges	-		-
	Other	1,316,997		253,727
	Total interest and other financial charges		1,316,997			253,727
	17-bis) foreign exchange gains and losses	5,006	(18,221)
	Total financial income and charges (15 + 16-17 + -17-bis)		1,626,852			403,934
	D) Adjustments to the value of assets and liabilities
	19) write-downs	-		-
	c) from securities included in current assets other than equity investments	-		217,529
	Total write-downs		-			217,529
	Total adjustments to the value of assets and liabilities (18-19)		-			(217,529)
	Earnings before taxes (A-B + -C + -D)		4,174,625			4,492,565
	20) Current, deferred, and prepaid income taxes for the year
	current taxes	956,736		1,316,458
	deferred and prepaid taxes	101,345		(41,442)
	Total current, deferred, and prepaid income taxes		1,058,081			1,275,016
	21) Profit (loss) for the year		3,116,544			3,217,549

Cash Flow Statement, indirect method

Amount as at Amount as at

30/06/2020 30/06/2019

A) Cash flows from operating activities (indirect method)

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

				Amount as at		Amount as at
				30/06/2020		30/06/2019
	Profit (loss) for the financial year	3,116,544	3,217,549
	Income taxes	1,058,081	1,275,016
	Interest expenses (Income)	(1,621,846)	(422,155)
	(Gains)/Losses deriving from asset disposals	(1,564,205)	(449,729)
	1) Profit (loss) for the year before income taxes, interest, dividends and capital gains/losses on			988,574		3,620,681
	disposals
	Adjustments for non-monetary items with no impact on the net working capital
	Allocation to Provisions	8,701	14,888
	Depreciation of fixed assets	5,873,951	4,586,445
	Write-downs for permanent losses in value				217,529
	Total adjustments for non-monetary items with no impact on the net working capital			5,882,652		4,818,862
	2) Cash flow before changes in net working capital			6,871,226		8,439,543
	Changes in net working capital
	Decrease/(Increase) in inventories	(1,089,114)	(8,329,514)
	Decrease/(increase) in trade receivables	(7,497,325)	(1,968,524)
	Increase/(Decrease) in trade payables	4,067,619	5,425,739
	Decrease/(increase) in accrued income and prepaid expenses	93,543	(8,405)
	Increase/(Decrease) in accrued expenses and deferred income	(1,018)	(2,409)
	Other decreases/(increases) of net working capital	2,378,352	2,553,078
	Total changes in net working capital			(2,047,943)		(2,330,036)
	3) Cash flow after changes in net working capital			4,823,283		6,109,507
	Other adjustments
	Interest received/(paid)	1,621,846	422,155
	(Income taxes paid)	(1,058,081)	(1,275,016)
	Other collections/(payments)	(60,418)	(16,300)
	Total other adjustments			503,347		(869,161)

	Cash flow from operating activities (A)		5,326,630		5,240,346
	B) Cash flows deriving from investments
	Tangible fixed assets
	(Investments)	(6,080,185)	(8,038,324)
	Disposals	42,111	44,848
	Intangible fixed assets
	(Investments)	(472,779)	(292,671)
	Current financial assets
	(Investments)				(67,725,745)

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

		Amount as at		Amount as at
		30/06/2020		30/06/2019
Disposals	2,441,694
Cash flow from investments (B)		(4,069,159)		(76,011,892)
C) Cash flows deriving from financing
Third-party financing
Increase/(Decrease) of short-term payables to banks	4,562,367	4,422,711
New financing				1,746,679
(Funding repayment)	(1,770,833)	(2,770,833)
Equity
Paid increase in share capital	37,166	65
Sale/(purchase) of treasury shares	(2,567,470)	(2,668,716)
(Dividends and advances on paid dividends)	(2,743,472)	(2,232,218)
Cash flow from financing (C)		(2,482,242)		(1,502,313)
Increase (decrease) in liquid assets (A ± B ± C)		(1,224,771)		(72,273,857)
Liquid assets at the beginning of the financial year
Bank and postal deposits	2,664,126	74,764,972
Cash and cash equivalents on hand	7,558	6,656
Total liquid assets at the beginning of the financial year	2,671,684	74,771,628
Liquid assets at the end of the financial year
Bank and postal deposits	1,440,966	2,489,841
Cash and cash equivalents on hand	5,947	7,930
Total liquid assets at the end of the financial year	1,446,913	2,497,771
Balance difference

Explanatory Notes

Introduction

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Fine Foods & Pharmaceuticals N.T.M. S.p.A. is a company listed on the Alternative Investment Market Italia (hereafter "AIM Italia"), managed by Borsa Italiana S.p.A., since 1 October 2018.

The explanatory notes on the 30 June 2020 Half-year Report refer to the Balance Sheet, Income and Cash Flows Statement on 30 June 2020.

The Cash Flow Statement shows the positive or negative changes in the cash and cash equivalents that took place in the first half of 2020. It was prepared using the OIC 10 accounting standard, adopting the "cash flow from operating activities determined using the indirect method" layout.

The 30 June 2020 Interim Financial Statements consisted of the Balance Sheet, Income and Cash Flow Statement and Explanatory Notes corresponding to the regularly kept accounting records and are prepared using OIC principles.

The 30 June 2020 Interim Financial Statements show a net profit of € 3,116,544 after amortisation and depreciation of € 5,873,951 and provision of income taxes of € 1,058,081.

Based on the economic performance and the sound financial position, the directors believe that the Company can continue its operations and have prepared the 30 June 2020 Half-year Report based on the going concern principle.

Drafting and valuation criteria and principles

The Interim Financial Statements are based on criteria and principles used for the preparation of the 31 December 2019 Financial Statements to which reference should be made.

The valuation principles adopted for the 30 June 2020 Interim Financial Statements comply with applicable civil law.

The Interim Statements preparation follows the OIC 30 Accounting Standard relating to Interim Statements.

The book values are represented in units of Euro by rounding off the related amounts.

When reviewing the Company's economic, financial and operational performance in the first half of 2020, the Company's activities, relations with the Parent Company, significant events that took place during the first half of the year, and the business outlook, reference should be made to the Report on Operations, prepared by the Company's Directors to accompany these Half-yearly Interim Financial Statements.

Description of the main items in the Balance Sheet and Income Statement

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

The notes on the Company's items in the 30 June 2020 Interim Financial Statements are set out below, with the corresponding 31 December 2019 values for the Balance Sheet items and 30 June 2019 for the Income Statement items.

Assets

Fixed assets

Intangible fixed assets

Under article 10 of law 19 March 1983, no. 72, and mentioned by the subsequent monetary revaluation laws, no monetary revaluation has been carried out on balance sheet intangible assets. It was unnecessary to write-down these fixed costs as required by the OIC 9 accounting standard, no indicators of potential permanent losses in the value of intangible assets were found.

Movements in intangible fixed assets

After booking the amortisation of € 683,456 in the Income Statement, the intangible assets were € 3,238,932.

The table shows the movements in fixed assets.

		Industrial patents			Other intangible			Total intangible
		and intellectual
				fixed assets			fixed assets
		property rights
Value as at 31 December 2019
Cost	2,786,414	4,716,743		8,668,054
Amortisation	1,513,118	2,540,431		5,218,446
Book value	1,273,296	2,176,312		3,449,609
Changes during the period
Increases resulting from acquisitions	472,779				472,779
Amortisation for the period	276,563	406,893		683,456
Other - Cost	0		0		0
Other - Accumulated Amortisation	0					0
Total changes		196,216			-406,893			-210,677
Value at end of the period
Cost	3,259,193	4,716,743		9,140,833
Amortisation	1,789,681	2,947,324		5,901,902
Book value as at 30 June 2020	1,469,512	1,769,420		3,238,932

Industrial patents and intellectual property rights

The "Industrial patents and intellectual property rights" item mainly refers to the purchase of software licenses, to development projects for the "Microsoft Dynamics AX" ERP information system and MES software for a better production control and management.

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Other intangible fixed assets

The "Other intangible fixed assets" item includes the costs incurred by the company to carry out the "Business Combination", i.e. the merger between Innova Italy 1 S.p.A. and Fine Foods & Pharmaceuticals N.T.M. S.p.A. consisting of a merger by incorporation of Fine Foods & Pharmaceuticals N.T.M. S.p.A. into Innova Italy 1 with a subsequent change of company name to "Fine Foods & Pharmaceuticals N.T.M. S.p.A." that can be abbreviated to "Fine Foods N.T.M. S.p.A."

These are costs for legal, notary, tax, corporate and financial assistance relating to the transaction.

Tangible fixed assets

The assets belonging to tangible fixed assets are booked on the date on which the transfer of the risks and benefits connected to the acquired asset took place. They are booked in the Financial Statements at purchase cost, increased by any additional charges incurred until the assets are ready for use and within the limits of their recoverable value.

These assets are shown in the Balance Sheet assets net of accumulated depreciation.

The depreciation of tangible fixed assets, the use of which is limited in time, was carried out using the following rates:

Table of annual depreciation rates
	Food		Pharma
Industrial buildings based on their type		3%	5.5%
Light construction		10%	10%
Generic plant, based on their type		7.5%	10%
Specific plant and machinery, based on their type		14%	12%
Industrial and commercial equipment, based on their type		20%	40%
Other assets: Furniture and furnishings		12%
Other assets: Electronic office machines		20%
Other assets: Transport vehicles		20%
Other assets: Cars		25%

Any disposal of assets (sales, scrapping, etc.) that occurred during the period resulted in the cancellation of their residual value. Any difference between the book value and the disposal value was recorded in the Income Statement.

Any write-down was unnecessary, as required by the OIC 9 accounting standard, no indicators of potential permanent losses in the value of tangible assets were found.

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Movements in tangible fixed assets

Tangible fixed assets, including the related accumulated depreciation, are € 169,741,011; the accumulated depreciation is € 79,545,279.

The table below shows the movements in fixed assets.

																Tangible fixed
				Land and			Plant and			Industrial and			Other			assets under			Total tangible
								commercial			tangible fixed			construction
				buildings			machinery									fixed assets
								equipment			assets			and payments
																on account
	Value as at 31 December
	2019
	Cost	54,440,216	92,929,265	7,742,500		6,929,391	1,832,437		163,873,810
	Depreciation	17,125,259	47,614,717	5,702,273		4,098,951	0		74,541,199
	Book value	37,314,958	45,314,549	2,040,227		2,830,440	1,832,437		89,332,611
	Changes during the
	period
	Increases resulting from	459,661	2,298,005		178,318		417,714	2,836,314		6,190,012
	acquisitions
	Reclassifications (of the	144,667	2,377,336		9,950		19,000		-2,550,953		0
	net book value)
	Decreases deriving from
	disposals and divestments				195,894	17,090								212,984
	- Cost
	Decreases deriving from
	disposals and divestments				181,046	5,369								186,414
	- Accumulated
	depreciation
	Depreciation for the	956,715	3,418,643		372,415		442,720				5,190,494
	period
	Other changes - Cost													-109,828		-109,828
	Other changes -
	Accumulated																-
	Depreciation
	Total changes			-352,387			1,241,850			-195,869			-6,006			175,534			863,121
	Value at end of the
	period
	Cost	55,044,544	97,408,712	7,913,678		7,366,106	2,007,970		169,741,011
	Depreciation
	(Accumulated	18,081,974	50,852,314	6,069,320		4,541,671	0		79,545,279
	Depreciation)
	Book value as at 30 June	36,962,570	46,556,398	1,844,359		2,824,434	2,007,970		90,195,732
2020

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FINE FOODS & PHARMACEUTICALS N.T.M. S.p.A.

Buildings

The increase recorded in the "Buildings" item in the first half of 2020 is due to reorganisation and expansion works at the Zingonia-Verdellino and Brembate production sites.

Plant and Machinery

The acquisitions recorded in the period involve a new stripline with packaging machine that came into operation at the nutraceutical plant in Zingonia and a new envelope line installed at the pharmaceutical plant in Brembate.

Equipment

The acquisitions refer to production and laboratory equipment for the Zingonia nutraceutical plant and the Brembate pharmaceutical plant.

Other fixed assets

The acquisitions refer to new furnishings, implementations of the data processing system (e.g. SAN - Storage Area Network-, servers, switches etc...) and the purchase of cars/vehicles.

Tangible fixed assets under construction and payments on account

The above 30 June 2020 item included advances to suppliers for the purchase of tangible assets totalling € 2,007,970 and refer to plant and machinery purchases.

Amount of revaluations of tangible assets included in the Financial Statement balances

During 2008, the Verdellino and Brembate operating properties were revalued based on paragraphs 16 to 23 of Article 15 of Decree-Law no. 185 of 29 November 2008, converted with amendments by Law no. 2 of 28 January 2009, which permitted revaluing properties of companies that do not adopt international accounting standards in the preparation of their Financial Statements, as described below.

Previously, the Company had carried out a revaluation based on law no. 266/05 with related realignment. Fixed assets consisting of "land and buildings" were previously subjected to voluntary revaluation, which was limited to the maximum objectively determined asset use-value.

The revaluation made in 2008 permits a higher value attributed to the assets to become valid for tax purposes starting from the 2013 financial year. If there is a disposal, the tax validity starts from 01/01/2014.

As of 2013, depreciation on the revaluation started to be deducted for tax purposes. Portions from previous years will be deducted after the end of the statutory depreciation process.

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Revaluation

Financial

Revaluation

Total

Tangible assets subject to revaluation

under law

under Decree-

revaluation

revaluations

266/05

Law 185/08

Land and buildings

3,127,545

158,660

3,440,000

6,726,205

Financial leases

At the end of the period, the Company had no financial leasing contracts in place.

Current assets

Inventories

Asset inventories are valued at the lower of purchase or production cost and realisable value based on market trends.

The purchase cost includes any directly attributable ancillary charges.

The production cost does not include indirect costs as they were objectively unattributable.

On 30 June 2020, a write-down was made of the inventory relating to goods expiring, not moving, "rejected" or destroyed during July and August 2020. The write-down was € 561,233.

The following table shows information on inventory changes.

			30/06/2020			31/12/2019			Changes
	raw materials, ancillary materials, and	13,214,602		12,297,677	916,925
	consumables
	work in progress and semi-finished products	2,779,540		3,030,866	-251,326
	finished products and goods	7,582,796		7,159,281	423,515
	Total		23,576,938			22,487,824			1,089,114

Receivables booked in current assets

Receivables under current assets are booked in the Financial Statements using the amortised cost method, based on the time factor and the estimated realisable value.

The presumable realisable value adjustment was carried out through the allocation of a bad debt provision.

For those receivables for which the application of the amortised cost or discounting method was irrelevant, the recording has been maintained using the presumed realisable value to represent the company's equity and financial situation correctly. This happened for receivables due within 12 months or, using the amortised cost method, when the transaction costs, commissions or any other difference between the initial value and the due date value were insignificant or, in the case of discounting, when there was an interest rate inferable from the contractual conditions that is not significantly different from the market interest rate.

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Changes and due date of receivables booked in current assets

The following table shows information relating to changes in receivables booked in current assets.

													Amount as at
				30/06/2020			31/12/2019			Changes			30/06/2020 payable
													within 12 months
	Trade receivables	24,590,725	17,093,400		7,497,325		24,590,725
	Tax receivables	870,876	2,150,075		-1,279,199		870,876
	Deferred tax assets	386,793	488,138	-101,345		386,793
	Receivables from others	540,357	225,273	315,084		540,357
	Total			26,388,752			19,956,886			6,431,866			26,388,752

The receivables shown in the table above are due within 12 months.

Breakdown of receivables booked in current assets by geographical area

The following table shows the breakdown of the receivables booked in current assets by geographical area.

				Trade receivables		Tax receivables		Deferred tax assets			Receivables from		Total Receivables
	Geographical area			booked in current		booked in current		booked in current			others booked in		booked in current
				assets		assets		assets			current assets		assets
	Italy	10,637,407	870,876	386,793	540,357	12,435,434
	Abroad	13,953,318	-	-	-	13,953,318
	Total			24,590,725		870,876		386,793			540,357		26,388,752

Trade receivables

The "Trade Receivables" item increased compared to the previous year's Financial Statements due to the crediting of some collections in the first days of July.

The nominal value adjustment of trade receivables to the presumed realisable value was obtained by recording a specific bad debt provision, the movements of which are shown below:

	Movements in the bad debt provision under Article 71 of Presidential Decree			30/06/2020
	917/1986
	Balance at the beginning of the financial year		592,102
	Merger contribution
	Uses during the year
	Provisioning		119,714
	Balance at the end of the financial year		711,816

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Tax receivables

The following table shows the breakdown of the "Tax receivables" item.

	Tax receivables detail			30/06/2020			31/12/2019
	VAT Credit	548,117		1,805,008
	IRAP credit				140,661
	Receivables for withholding tax on collected coupons, dividends and realised capital gains	293,475		173,924
	Receivables for IRES repayment for IRAP deduction on personnel costs	27,929	27,929
	Receivables for energy account withholdings	1,356	2,553
	Balance at the end of the financial year	870,876		2,150,075

The change in VAT credit during the first half of 2020 is due to the ability to purchase tax-free, as a regular exporter, through the issue of declarations of intent, under the available limit.

Deferred Tax Assets

The temporary differences that led to the recording of prepaid income tax, determined by applying the tax rates in force, related to the inventory write-down and goodwill amortisation. The tax effect booked in the Financial Statements is € 156,584 for the inventory write-down and € 230,209 for goodwill amortisation.

Receivables from others

The following table shows the breakdown of the "Receivables from others" item.

	Receivables from others detail			30/06/2020			31/12/2019
	Advances for participation in exhibitions	219,288		82,166
	INAIL Credit	197,007		12,989
	Receivables from FASA	17,306		6,812
	From suppliers for advances not on fixed assets	105,235		121,086
	Deposits	1,521		-
	Other receivables	-	2,220
	Total	540,357		225,273

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Current financial assets

Changes in current financial assets

Other Securities

The following table shows information on current asset changes.

Item description	30/06/2020	31/12/2019	Changes
Investment Securities Account	67,444,536	68,337,564	-893,028

A leading Credit Institution is managing a discretionary and individualised management service on an investment portfolio that includes financial instruments and liquidity. Fine Foods entered a total of € 67 million in the Financial Statements against the above investment portfolio, as at 30 June 2020; this includes the higher/lower liquidity deriving from the realisation of capital gains/losses during the period and dividends on shares and bond coupons.

It should be noted, however, that at 30 June 2020 the total Fair Value of the portfolio amounted to € 69.2 million.

Liquid assets

Liquid assets are valued at nominal value.

The following table shows the information on liquid asset changes from 31 December 2019 to 30 June 2020.

		30/06/2020	31/12/2019	Changes
	Bank and postal deposits	1,440,966	2,664,126	-1,223,160
	Cash and cash equivalents on hand	5,947	7,558	-1,611
	Total	1,446,913	2,671,684	-1,224,771

For more details on liquid asset changes, please refer to the Cash Flow Statement.

Accrued income and prepaid expenses

Accruals and deferrals have been calculated on an accrual basis, by allocating revenues and costs common to two or several years.

The following table shows information on changes in prepaid expenses and accrued income.

			30/06/2020		31/12/2019			Changes
	Accrued income	10,912	107,846	-96,934
	Prepaid expenses	58,962	55,571	3,391
	Total		69,874		163,417			-93,543

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The following tables show the items' composition:

	Accrued income detail			30/06/2020			31/12/2019
	Energy account accrued amount	10,912	107,846
	Balance	10,912	107,846
	Prepaid expenses detail			30/06/2020			31/12/2019
	R&D technical consulting	434		950
	Exhibitions and meetings	-	12,191
	Advertising	27		172
	Nembro rentals	3,607		17,826
	EDP fees	54,894		24,432
	Balance	58,962		55,571

Liabilities and Shareholders' equity

Shareholders' equity

The following table details the movements in Shareholders' equity:

	Balance as at	Allocation of		Other	Operating	Balance as at
	operating	Dividends
	31/12/2019	movements	result	30/06/2020
	result
I- Share Capital	22,564,043			37,166		22,601,209
II- Share premium reserve	86,743,750					86,743,750
III - Revaluation reserve						-
IV - Legal reserve	5,000,000					5,000,000
V - Statutory reserves	-					-
VI - Other reserves:						-
- Merger reserve	26,553,351					26,553,351
- Extraordinary reserve	6,072,106	6,069,585	(2,743,472)			9,398,219
VIII - Profits (losses) carried
forward						-
IX - Profit (loss) for the year	6,069,585	(6,069,585)			3,116,544	3,116,544
X - Negative reserve for treasury	(4,712,245)			(2,567,470)		(7,279,715)
shares in the portfolio
Total	115,665,133	-	(2,743,472)	(2,530,304)	3,116,544	146,133,358

The increase in Share Capital recorded in 2020 derives from the issue of new shares following the conversion of warrants.

All subscribed shares (with no nominal value) have been fully paid up.

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Employee severance indemnity

The severance indemnity has been calculated under art. 2120 of the Civil Code, considering the legal provisions, contract specifications and professional categories. It includes the accrued annual instalments and the revaluations made using ISTAT coefficients.

The provision amount is booked net of the advances paid and the quotas used for the employment termination during the period and represents the amount owed to employees at the Financial Statements closing date.

The following table shows information on changes in the employee severance indemnity.

Substitute tax

on the

Severance indemnity provision

31/12/2019

Paid on

Accrued on

revaluation of

30/06/2020

movement detail

30/06/2020

30/06/2020

employee

severance

indemnity

972,595

-59,229

8,701

-1,189

920,878

The movements of the severance indemnity paid to INPS and the complementary social security funds are shown below:

													Substitute tax
													on the
	Detail of severance indemnity			31/12/2019			Paid on			Accrued on			revaluation of			30/06/2020
	paid to funds					30/06/2020			30/06/2020			employee
													severance
													indemnity
	INPS Treasury	4,203,212	204,477		369,138	5,214		4,362,659
	Private pension funds	3,292,905				284,999				3,577,904
	Total	7,496,117	204,477		654,137	5,214		7,940,563

Payables

Payables have been booked in the Financial Statements according to the amortised cost method, as defined by art. 2426 par. 2 of the Civil Code, considering the time factor. For those payables for which the application of the amortised cost or discounting method was irrelevant, the recording has been maintained using the nominal value to represent the company's equity and financial situation correctly. This happened for payables due within 12 months or, using the amortised cost method, when the transaction costs, commissions or any other difference between the initial value and the due date value were insignificant or, in the case of discounting, when there was an interest rate inferable from the contractual conditions that is not significantly different from the market interest rate.

Based on the provisions of article 12, paragraph 2 of Legislative Decree 139/2015, the Company applied the amortised cost method exclusively to payables booked in the Financial Statements from 2016.

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Payables changes and due date

The following table shows information relating to changes in payables and any information on their due date.

				30/06/2020			31/12/2019		Changes			Amount as at		Amount as at
												30/06/2019		30/06/2019
												payable within		payable after
												12 months		12 months
	Bonds payable	9,911,375	9,896,567	14,808			9,911,375
	Bank Borrowing	24,111,650	21,334,924	2,776,726	9,911,106	14,200,544
	Trade payables	24,676,048	20,608,429	4,067,619	24,676,048
	Taxes payable	1,826,742	907,303	919,439	1,899,608
	Payables due to pension and	2,080,296	1,851,465	228,831	2,080,296
	social security institutions
	Other payables	2,662,280	2,497,658	164,622	2,662,280
	Total			65,268,392			57,096,346		8,172,046			41,229,338		24,111,919

Bonds

The main features of Bonds, which amount to € 9,911,375, are described below:

• Total principal: € 10,000,000 (ten million);
• Issue method: the securities are issued dematerialised, in a tranche and bearer format under the TUF and the "Consob" Regulation - "Banca d'Italia" Decree-Law 22 February 2008, and deposited and managed by the "Monte Titoli S.p.A." centralised system;
• Currency: Euro;
• Number of bonds and value: 100 bonds with a unit value of € 100,000 (one hundred thousand);
• Coupon: half-yearly, at a fixed interest rate of 0.82% (zero-pointeighty-two per cent) under

the regulation.

These Bonds require compliance with certain covenants (economic and financial parameters) that had been fully complied with at the Financial Statements' date.

The Bonds payable originated in 2016 with a duration of seven years with interest payments as indicated above, and the related costs were initially booked at the value determined by discounting future cash flows at the contractual interest rate. The difference between the initial book value of the debt in the 2016 Financial Statements (€ 9,788,000) and the forward value (€ 10,000,000) is booked in the Income Statement as a financial charge over the debt duration using the effective interest rate method.

Bank Borrowing

The following table shows the items' composition:

	Bank Borrowing detail			30/06/2020			31/12/2019
		Within 12 months

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	Current accounts and invoice advances	11,626,602		5,601,886
	Financing and bank loans	2,573,942		5,010,062
	Total payable within 12 months	14,200,544		10,611,948
	After 12 months			30/06/2020			31/12/2019
	MedioCredito mortgage loan	9,911,106		10,722,977
	Total payable after 12 months	9,911,106		10,722,977
	Total	24,111,650		21,334,925

The debt for the mortgage loan subscribed in 2016 by the acquired Company Fine Foods expiring on 30 June 2027, for which interest is payable as indicated below, and the related costs, were initially booked at the value determined by discounting future cash flows at the estimated contractual interest rate.

The difference between the initial booked value of the debt, net of capital repayments already made as at 31 December 2019 and 30 June 2020 (€ 11,546,000) and the forward value (€ 11,667,000) is booked in the Income Statement as a financial charge over the debt duration using the effective interest rate method.

Below are the 06 August 2016 mortgage loan contract main features:

• Total amount € 15,000,000;
• Amount disbursed at signing € 5,000,000;
• Amount disbursed during 2017 € 5,000,000;
• Amount disbursed during 2018 € 3,500,000;
• Amount disbursed during 2019 € 1,500,000;
• Rate: Six-month Euribor + 1%.

Trade payables

The following table shows the breakdown of the "Trade payables" item.

	Trade payables detail			30/06/2020			31/12/2019
	Trade payables in Italy and abroad	21,889,791		19,013,448
	Payables for invoices to be received	2,948,542		1,910,339
	From suppliers for credit notes to be received	-162,284		-315,358
	Total	24,676,048		20,608,429

Taxes payable

The following table shows the breakdown of the "Taxes payable" item.

	Taxes payable detail			30/06/2020			31/12/2019

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Substitute tax on severance indemnity	20,624	20,336
Fasi social security institute	1,295	0
Payables for withholding taxes on employees	711,871	630,096
Payables for withholding taxes on self-employment	26,686	4,127
Payables for IRES	948,284	252,744
Payables for IRAP	117,981
Total	1,826,742	907,303

Payables due to pension and social security institutions

The following table shows the breakdown of the "Payables due to pension and social security institutions" item.

	Payables due to pension and social security institutions detail			30/06/2020			31/12/2019
	Payables to INPS	1,223,470		1,024,540
	Payables to INPS for solidarity contribution	1,813		1,952
	Payables to Cassa Vita (life insurance fund)	1,132		1,086
	Payables to Previndai	44,474	47,752
	Payables to Inail	0		34,762
	Payables to private funds	30,181	29,207
	Payables for Trade Union membership	4,207		2,519
	Payables to Alifond	88,460	87,114
	Accrued contributions on thirteenth and fourteenth-month salary	199,559		174,939
	Accrued contributions on accrued holidays	487,000		447,594
	Total	2,080,296		1,851,465

Other payables

The following table shows the breakdown of the "Other payables" item.

	Other payables detail			30/06/2020			31/12/2019

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Remuneration to be paid	115,027	63,575
Payables for thirteenth-month salary accrued	624,623	897
Payables for fourteenth-month salary accrued	513	542,234
Payables for unused accrued holidays	1,586,031	1,457,459
Payables for salary-deducted loans	12,065	11,003
Payables for compensation to directors	90,000	140,000
Advances from customers	56,993	45,193
Payables for exemption contribution for disabled people	50,000	47,064
Insurance payables	90,004	118,675
Payables for the Board of Statutory Auditors' remuneration	32,760	65,520
Other payables	4,263	6,038
Total	2,662,279	2,497,658

Breakdown of payables by geographical area

The following table shows the breakdown of payables by geographical area

												Payables due
	Geographical		Bonds		Bank			Trade		Taxes payable		to pension and			Other		Payables
	area			Borrowing			payables			social security			payables
												institutions
	Italy	9,911,375	24,111,650	17,232,631	1,826,742	2,080,296	2,662,280		57,824,975
	Abroad					7,443,417								7,443,417
	Total		9,911,375		24,111,650			24,676,048		1,826,742		2,080,296			2,662,280		65,268,392

Payables secured by collateral on corporate assets

The following table, separately for each item, shows the payables secured by collateral on the corporate assets, with an indication of the guarantees' nature.

				Payables backed by		Total payables			Payables unsecured
				Total
				mortgages		secured by collateral			by collateral
	Bonds payable	9,911,375	9,911,375			9,911,375
	Bank Borrowing	11,547,548	11,547,548	12,564,102	24,111,650
	Trade payables	-				24,676,048	24,676,048
	Taxes payable	-				1,826,742	1,826,742
	Payables due to pension and social	-				2,080,296	2,080,296
	security institutions
	Other payables	-				2,662,280	2,662,280
	Total			21,458,923		21,458,923			43,809,469		65,268,392

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Accrued expenses and deferred income

The following table shows the composition of the items resulting from the Financial Statements.

	Accrued expenses detail			30/06/2020			31/12/2019
	Interest payable on Bonds	38,653	39,267
	Interest payable on unsecured loans	395	799
	Total	39,048	40,066

Income Statement

The Income Statement shows the net result for the half-year.

It provides a representation of management operations, through a summary of revenues and expenses that have contributed to determining the net result. The revenues and expenses are distinguished according to the relevant management: operating, ancillary, and financial activities.

Ordinary activities create income components through ongoing operations and in the sector relevant to their performance. These components identify and qualify the distinctive aspect of the Company's financial activity.

The financial activity consists of transactions that generate financial income and charges.

The marginal ancillary activities consist of transactions that generate income which is part of ordinary activities but are not part of operating or financial activities.

The analysis of the composition of the Income Statement items and the comments on the general income and charges trend is described in the Half-year Report on Operations.

Production value

Revenues are booked in the Financial Statements on an accrual basis, net of returns, rebates, discounts, and premiums, and related taxes.

The asset sales revenues are booked when the substantial and non-formal transfer of ownership has taken place, assuming the transfer of risks and benefits as the reference parameter for the substantial transfer.

Revenues deriving from the provision of services are booked when the service is provided or performed. If there are ongoing services, the related revenues are booked for the accrued portion.

	Production value detail			30/06/2020			30/06/2019			Changes

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Revenues from sales and services	75,350,182	83,140,551	-7,790,369
Changes in product inventories	172,188	4,691,769	-4,519,581
Other revenues and income	873,530	797,903	75,627
Total	76,395,899	88,630,223	-12,234,324

Breakdown of revenues from sales and service by business category

The following table shows the breakdown of revenues from sales and services by business category.

	Business category		Current period value
	Product sales	75,192,782
	Revenues from services	157,400
	Total		75,350,182

Breakdown of revenues from sales and services by geographical area

The following table shows the breakdown of revenues from sales and services by geographical area.

	Geographical area		Current period value
	Italy	29,501,995
	Abroad	45,848,187
	Total		75,350,182

The effect of foreign turnover on the total for the period was approximately 61%.

Item A1 of the Income Statement went from € 83.1 million in the first half of 2019 to € 75.3 million in the first half of 2020, decreasing by 9.4%. This change is mainly due to the reduction in turnover in the nutraceutical sector. The revenues of the "Food" Business Unit amounted to € 54.1 million in the first half of 2020 compared to € 63.1 million in the first half of 2019 and showed a decrease of 14 per cent. The "Pharma" segment sales in the first half of 2020 reached € 21.2 million with an increase of six per cent compared to € 20 million in the first half of 2019.

	Other Revenues detail			30/06/2020			30/06/2019			Changes
	Press Expenses	88,719	46,706	42,013
	Laboratory Tests	20,629	60,055	-39,426
	Packaging charges	38,344	58,450	-20,107

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Charges for other expenses	406,671	509,895	-103,224
Capital gains	21,261	23,814	-2,553
Contingencies	297,906	98,983	198,923
Total	873,530	797,903	244,699

The "Other revenues" item includes income deriving from the invoicing of costs incurred on behalf of customers, capital gains and contingent assets.

Production costs

Costs and charges are allocated on an accrual and type basis, net of returns, rebates, discounts, and premiums, following the principle of correlation with revenues, and booked in the respective items under the OIC 12 accounting principles. The costs related to goods purchase are booked when the substantial and non-formal transfer of ownership has taken place, assuming the transfer of risks and benefits as the reference parameter for the substantial transfer. The costs for purchased services are booked when the service is provided or performed. If there are ongoing services, the related costs are booked for the accrued portion.

	Production costs detail			30/06/2020			30/06/2019			Changes
	Raw materials, ancillary materials, consumables, and goods	46,657,254	58,247,492		-11,590,238
	Services	7,156,689	8,331,565		-1,174,876
	Use of third-party assets	238,419	542,740		-304,321
	Personnel	14,138,682	15,174,047		-1,035,365
	Amortisation, depreciation, and write-downs	5,993,665	4,707,256		1,286,409
	Changes in inventories of raw materials and goods	-916,925	-3,637,745		2,720,820
	Other operating charges	580,342	958,708		-378,366
	Total	73,848,127	84,324,063		-10,475,936

The incidence of costs for raw materials, ancillary materials, consumables and goods, net of the change in inventories of raw materials and goods, on the Value of Production, is about 60% which is in line with that booked in the first half of 2019.

	Services Detail			30/06/2020			30/06/2019			Changes
	Industrial services	4,672,680	5,801,600		-1,128,920
	Business services	532,469	747,553		-215,083
	Administrative and general services	1,951,539	1,778,705		172,834
	Total	7,156,689	8,327,858		-1,171,169

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In addition to the pro rata remuneration of Directors and Statutory Auditors, costs for Services include: ordinary maintenance, utilities, transport, consulting, outsourcing, cleaning, waste disposal, luncheon vouchers, promotional expenses and Insurance.

The "Use of third-party assets" item includes the rental costs for third-party warehouses, forklifts, and pallet truck rental costs.

	Other operating charges detail			30/06/2020			30/06/2019			Changes
	Ordinary losses	5,721		5,475		246
	Non recurring losses	161,749		282,240		-120,491
	Indirect taxes, duties, and contributions	287,322		271,905		15,417
	Fines and penalties	2,047		2,844		-797
	Other costs and charges	123,503		396,244		-272,741
	Total	580,342	958,708		-378,366

Financial income and charges

Financial income and charges are booked on an accrual basis for the portion accrued during the period.

	Financial income detail			30/06/2020			30/06/2019			Changes
	Interest income on bank accounts				-		-
	Dividends on other Securities	322,357		230,383		91,974
	Gains on the sale of other Securities	2,614,314	443,677		2,170,637
	Other income	2,172		1,822		350
	Total	2,938,843		675,882		2,262,961

	Financial charges detail			30/06/2020			30/06/2019			Changes
	Interest expenses on bank accounts	13,432		35,935		-22,503
	Interest expenses on bonds	126,361		129,406		-3,045
	Interest expenses on financing and bank loans	107,883		74,292		33,591
	Interest expenses for deferments	-		40		-40
	Losses on the sale of other Securities	1,065,649	12,286		1,053,363
	Rebates and discounts payable	3,672		1,768		1,904
	Total	1,316,997		253,727		1,063,270

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Breakdown of interest and other financial charges by type of debt

The following table shows interest and other financial charges with a breakdown between those related to bonds, bank debts and other cases.

	Bonds	Bank Borrowing	Other	Total
Interest and other financial charges	126,361	121,315	1,069,321	1,316,997

Foreign currency exchange gains/losses

The Foreign currency exchange gains/losses are shown below

	Exchange rate differences details			30/06/2020			30/06/2019			Changes
	Realised foreign currency exchange gains	10,439		1,855		8,584
	Realised foreign currency exchange losses	-5,433	-20,076		14,643
	Total	5,006		-18,221		23,227

Current, deferred and prepaid income taxes

Current taxes

The Company has estimated the taxes based on the application of current tax regulations.

Deferred taxation

This item includes the impact of deferred taxation on these Financial Statements. This is due to the temporary differences between the values attributed to an asset or liability following statutory criteria and the corresponding values recognised for tax purposes.

The Company determined the deferred taxation for IRES and IRAP.

The following tables provide:

• a description of the temporary differences that led to the recording of deferred tax assets and liabilities, specifying the rate applied and the changes from the previous year, the amounts credited or debited to the Income Statement or Shareholders' equity;
• the amount of deferred taxes booked in the Financial Statements relating to losses for the year or previous years and the reasons, the amount not yet booked and the reasons for the failure to record it;
• the items excluded from the calculation and the related reasons.

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Recording of deferred and prepaid taxes and consequent effects

			IRES			IRAP
	A) Temporary differences
	Total deductible temporary differences	1,386,361	1,386,361
	Net temporary differences	-1,386,361	-1,386,361
	B) Tax effects
	Deferred tax (assets)/liabilities at the beginning of the financial year	-419,907	-68,231
	Deferred or prepaid (income)/expenses for the financial year	87,178	14,167
	Deferred tax (assets)/liabilities at the end of the financial year	-332,729	-54,064

Deductible temporary differences detail

				Amount at			Changes			Amount at
				the end of			which
								the end of
				the			occurred								IRES tax						IRAP tax
	Description							the			IRES rate					IRAP rate
			previous			during the							effect					effect
								financial
				financial			financial
								year
				year			year
	Inventory write-down provision	875,938	314,705	561,233	24	134,696		3.9	21,888
	Goodwill accumulated	873,665	48,537	825,128		24	198,033		3.9	32,176
	amortisation
	Total deductible temporary	1,749,603	363,242	1,386,361		24	332,729		3.9	54,064
	differences

Cash Flow Statement

The Company has prepared a Cash Flow Statement, which is the summary document linking the changes occurred during the period in the company's assets with the changes in the financial situation. It highlights the values relating to the financial resources that the company needed during the period and the related uses.

Under the OIC 10 provision, the Company has adopted the indirect method where the cash flow is reconstructed by adjusting the period result of the non-monetary components.

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Other information

Employment data

The following table shows the average number of employees, broken down by category and calculated considering the daily average.

	Executives	White-collar employees	Blue-collar employees		Total employees
Average number	14	256	313	583

The number of employees is growing in line with previously planned investment initiatives.

The following is precise data on employment at the end of the period:

Employment data (expressed in units)	30/06/2020	31/12/2019
Executives	14	13
White-collar employees	267	245
Blue-collar employees	310	312
Total	591	570

Categories of shares issued by the Company

The following table shows the number of Company shares and any movements that occurred during the period.

				Initial number			Shares subscribed during the			Final number
						period, number
	Ordinary Shares	18,142,929	671,661	18,814,590
	Redeemable Shares	1,200,000	-		1,200,000
	Multiple voting Shares	3,500,000	-		3,500,000
	Special Shares	100,000	-50,000	50,000
	Total			22,942,929			621,661			23,564,590

In January 2020, in compliance with the provisions of article 6.4 (d) (i) of Fine Foods & Pharmaceuticals N.T.M. S.p.A. Articles of Association, 50,000 special shares (without voting

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rights), equal to 25 per cent of their total, were converted into 300,000 ordinary shares, without nominal value.

The remaining increase of 371,661 ordinary shares derives from the conversion of listed warrants during the first half of 2020.

For the features of each category of Shares listed above, please refer to Article 6 of the Fine Foods

• Pharmaceuticals N.T.M. S.p.A. Articles of Association published on the Company's websitehttp://www.finefoods.it.

Securities issued by the Company

The Company has not issued any security or similar included in art. 2427 no. 18 of the Civil Code.

Details on other financial instruments issued by the Company

We confirm that the Company has issued the following financial instruments:

• 5,000,000 Warrants, of which 1,858,418 were exercised as of 30 June 2020, exercisable under Article 3 of the "Fine Foods & Pharmaceuticals N.T.M. S.p.A. Warrant Regulation" published on the Company's website http://www.finefoods.it These instruments were issued for subscribing shareholders and are listed on the AIM Italia trading system organised and managed by Borsa Italiana S.p.A.
• 4,000,000 unlisted and non-transferable warrants up to 20 months from the Effective Merger Date, which grant the right to subscribe newly issued shares of the merger-resulting Company and exercisable under the methods and terms indicated in the 7 June 2018 Board of Directors Report accompanying the Merger Plan as published on the Company's website http://www.finefoods.it

The conditions for exercising the Warrants are linked to a formula that includes the following variables: average monthly price, strike price and subscription price.

The possible transfer methods and the financial and administrative rights of these instruments follow the Articles of Association, Warrant Regulations and the related legal provisions.

Commitments, guarantees and contingent liabilities not resulting from the Balance Sheet

The following table shows the information on the guarantees.

	Amount
Guarantees	25,000,000

Collateral securities (mortgage on the property of Verdellino

in favour of Mediocredito and Sace)

25,000,000

Related party transaction information

Other than the remuneration of directors, certain categories of employees and the Stock Grant plan approved on 14 December 2018, the Company has no relationships with related parties.

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Information on agreements not resulting from the Balance Sheet

During the period, no agreement was made that did not result from the Balance Sheet.

Companies preparing the Financial Statements of the largest/smallest group of subsidiaries to which the company belong

The Parent Company that prepares the Consolidated Financial Statements is EIGENFIN S.r.l. with its registered office in Zingonia-Verdellino, where the 31 December 2019 Consolidated Financial Statements are filed.

Zingonia/Verdellino, 29/09/2020

For the Board of Directors

Chairman

Marco Francesco Eigenmann

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