Recordati : Directors' report on the distribution of an interim dividend and interim financial statements at 30 June 2024

DISTRIBUTION OF AN INTERIM

DIVIDEND BY RECORDATI S.p.A. FOR THE FINANCIAL YEAR 2024 IN ACCORDANCE WITH ARTICLE 2433-BIS OF THE ITALIAN CIVIL CODE

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RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.p.A.

Company subject to management and co-ordination by Rossini Holdings S.à.r.l.

Registered Office: 1, Via Matteo Civitali, Milan Fully paid up share capital: € 26,140,644.50

Tax identification number and Milan Company Registration No. 00748210150

CONTENTS

Page

DIRECTORS' REPORT ON THE DISTRIBUTION OF AN INTERIM DIVIDEND

TO THE SHAREHOLDERS OF RECORDATI S.P.A.

-	Directors' considerations on the distribution of an	4
	interim dividend
-	Operating and financial review	6
	of Recordati S.p.A. in the first half of 2024
-	Business outlook for Recordati S.p.A.	9

INTERIM FINANCIAL STATEMENTS OF RECORDATI S.P.A. FOR THE PERIOD ENDED 30 JUNE 2024

-	Income statement	11
-	Balance sheet	12
-	Statement of comprehensive income	13
-	Statement of changes in equity	14
-	Cash flow statement	15
-	Notes to the financial statements	18
CERTIFICATION IN RESPECT OF THE FINANCIAL STATEMENTS UNDER
ARTICLE 154-BIS, PARAGRAPH 2 OF LEGISLATIVE DECREE 58/1998	57

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DIRECTORS' REPORT ON THE DISTRIBUTION OF AN INTERIM DIVIDEND FOR THE FINANCIAL YEAR 2024 TO THE SHAREHOLDERS OF RECORDATI S.p.A.

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Directors' considerations on the distribution of an interim dividend

An interim dividend may be distributed if the conditions specified in the relative legislation (Art. 2433-bis of the Italian Civil Code) are met.

Recordati S.p.A. ("Recordati") is in possession of the requirements to exercise that right for the following reasons:

1. the financial statements are subject by law to a statutory audit in accordance with the provisions of special laws for entities of public interest;
2. the distribution of interim dividends is permitted by Art. 29 of the Corporate By-Laws;
3. the external auditors have issued a positive opinion on the financial statements for the previous year, which were subsequently approved by the shareholders;
4. no losses relating to the current year or to prior years have been incurred since the last financial statements were approved.

The distribution of the dividend must be approved by the Board of Directors on the basis of financial statements and a report showing that the capital, operating and financial position of the Company would allow that distribution to be made. Additionally, an opinion of the external auditors on those documents must be obtained.

Art. 2433-bis of the Italian Civil Code also states that the amount of an interim dividend cannot be greater than the lower of the net income earned at the end of the previous financial year, less the amounts allocated to the statutory or by-law reserves, and the reserves available for distribution.

In Recordati's case, because net income for the period ended 30th June 2024, amounting to € 281,574 thousand, was greater than net income for the period ended 31st December 2023, but lower than the available reserves as at that same date, amounting to €224,017 thousand and € 431,495 thousand respectively, the distribution of the interim dividend has been determined on the basis of the accounts as at 30th June 2024 for the six-month period then ended, prepared according to IAS 34 "Interim Financial Statements" endorsed by the European Union.

We also report that the available reserves resulting from the accounts as at 30th June 2024 amounted to

• 471,670 thousand, while the net income available at 30th June 2024 amounted to € 281,574 thousand consisting of the net income earned, since an amount equal to one fifth of the share capital had already been allocated to the statutory reserve and no other obligations for allocations to reserves existed.

A summary of the relevant data for determining the amount of the interim dividend distributable is given in the following table:

 net income for the period ended 30th June 2024	€ 281,574 thousand
 net income available	€ 281,574 thousand
 reserves available as at 30th June 2024	€ 471,670 thousand

Therefore, in accordance with Art. 2433-bis, paragraph 4, of the Italian Civil Code, the maximum interim dividend distributable for the financial year 2024 is € 281,574 thousand, equivalent to € 1.35 per share calculated on total shares representing the share capital.

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Having taken account of the facts outlined above, and in light of the information reported in the following pages concerning the operating, capital and financial performance of Recordati S.p.A. as at 30th June 2024, the Board of Directors intends to distribute an interim dividend for the financial year 2024 amounting to € 0.60 on each share outstanding to be paid through authorised intermediaries from 20th November 2024 on coupon No. 34 with ex-dividend date 18th November 2024 and record date 19th November 2024.

Milan, 8th November 2024

on behalf of the Board of Directors the Chief Executive Officer Robert Koremans

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Operating and financial review of Recordati S.p.A. for the first half of 2024

The income statement included in the statutory financial statements of Recordati S.p.A. as at and for the period ended 30th June 2024 shows net income of € 281,574 thousand.

The income statement reclassified by function is given below, showing the relative percentage of net revenue for each item and the change compared with the first half of the previous year. This presentation is different from that used for the statutory financial statements, in which the items are classified by nature.

€ (thousands)	First half	% of	First half	% of	Changes
	2024	revenue	2023	revenue	2024/2023	%
Net revenue (1)	351,530	100.0	287,879	100.0	63,651	22.1
Cost of sales	(142,135)	(40.4)	(119,371)	(41.5)	(22,764)	19.1
Gross profit	209,395	59.6	168,508	58.5	40,887	24.3
Selling expenses	(46,851)	(13.2)	(41,687)	(14.5)	(5,164)	12.4
R&D expenses	(37,029)	(10.5)	(24,702)	(8.6)	(12,327)	49.9
G&A expenses	(31,887)	(9.1)	(24,613)	(8.5)	(7,274)	29.6
Other income (expense), net	(875)	(0.3)	(930)	(0.3)	55	(5.9)
Operating Income	92,753	26.4	76,576	26.6	16,177	21.1
Dividends	258,209	73.5	39,005	13.5	219,204	562.0
Financial income (expense), net	(60,354)	(17.2)	(38,213)	(13.3)	(22,141)	57.9
Pre-tax income	290,608	82.7	77,368	26.9	213,240	275.6
Taxes	(9,034)	(2.6)	(5,149)	(1.8)	(3,885)	75.5
Net income	281,574	80.1	72,219	25.1	209,355	289.9

1. The net revenue reported in the reclassified income statement includes other income of € 91 thousand (€124 in thousand in 2023) relating in particular to training grants and rents, which in the statutory balance sheet are classified under the item Other revenue and income.

Net revenue in the first half of 2024 was € 351,530 thousand, up by € 63,651 thousand compared with the same period of the previous year. This increase was mainly attributable greater sales to subsidiaries in Europe relating to corporate products, especially in the urological segment. The trend for sales in Italy was also positive, with an increase of € 10,363 thousand compared with the first half of the previous year. More specifically, we report the positive impact on net revenues generated by the distribution agreement signed in July 2023 with GSK to market Avodart® (dutasteride) and Combodart®/Duodart® (dutasteride/tamsulosin) in 21 countries.

The reduction in the cost of sales as a percentage of net revenue, which fell from 41.5% to 40.4%, was due to a change in the mix of sales revenues compared with the same period last year.

Selling expenses increased by € 5,164 thousand (12.4%), due in particular to a stronger management support structure for sales development, higher advertising expenses and an increase in royalties payable, especially for sales of Eligard®.

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R&D expenses came to € 37,029 thousand, accounting for 10.5% of net revenue, up 49.9% compared with the first half of last year, due above all to higher depreciation in relation to the new Eligard® device and the new distribution agreement signed with GSK.

General and administrative expenses rose by € 7,274 thousand (29.6%), due to costs incurred to improve the general co-ordination of operations designed to manage an increasingly complex portfolio and in particular to support the management of corporate products.

Other net income and expense recorded a net expense of € 875 thousand, which was due primarily to costs for corporate reorganisation projects.

Operating income amounted to € 92,753 thousand, accounting for 26.4% of net sales, substantially in line with 26.6% of net sales recorded in the first half of the previous year.

Dividends from subsidiaries amounted to € 258,209 thousand, up € 219,204 thousand due to a change in the timing of distributions by subsidiaries compared with the same period of the previous year.

Net financial expenses amounted to € 60,354 thousand, up € 22,141 thousand compared with the same period in 2023. This change is due both to new loans taken out in the second quarter of 2023, with a limited impact on financial expenses in the first half of 2023, and to an increase in interest rates, as well as the depreciation of the Russian rouble.

The increase in taxes compared with the first half of 2023, amounting to € 3,885 thousand, was due above all to an increase in pre-tax income resulting mainly from the performance by dividends recorded in the period under review, as well as to the estimated impact of Pillar II regulations.

Net income was € 281,574 thousand, accounting for 80.1% of net revenue, a significant increase compared with 25.1% reported in the first half of the previous year, due to the increase in dividends received from subsidiaries in the current year.

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NET FINANCIAL POSITION

The net financial position as at 30th June 2024 was debt of € 2,199 million, down € 150 million compared with debt of € 2,349 million as at 31st December 2023.

Details of the item and changes during the period are shown in the table below.

	€ (thousands)		30.06.2024		31.12.2023		Changes
				2024/2023
	Current account sight deposits and other cash and cash	43,350	28,562	14,788
	equivalents
	Short-term receivables from Group companies	45,838	113,087	(67,249)
	Cash and cash equivalents and other short-term	89,188	141,649	(52,461)
	receivables
	Short-term payables to banks	(45,291)	(96,213)	50,922
	Loans due within one year	(221,558)	(315,727)	94,169
	Short-term payables to Group companies	(662,995)	(709,227)	46,232
	Current debt	(929,844)	(1,121,167)	191,323
	Net current financial position (1)	(840,656)	(979,518)	138,862
	Receivables - due after one year	83	83	-
	Loans - due after one year	(1,265,365)	(1,323,964)	58,599
	Long-term loans due to Group companies	(93,414)	(45,249)	(48,165)
	Non-current debt	(1,358,696)	(1,369,130)	10,434
	Net financial position (2)	(2,199,352)	(2,348,648)	149,296

1. Current debt includes loans due within one year, amounts payable to banks and other short-term payables.
2. Inclusive of the fair value of derivatives to hedge foreign exchange rate risk (cash flow hedges), recognised within asset item 23 and liability item 35 with an overall net positive impact of € 5,780 thousand as at 30th June 2024.

We report the following during the period: dividend payments of € 128,8 million; the purchase of treasury shares for € 37,6 million and the sale of treasury shares due to the exercise of stock options with a cash flow of € 29,8 million net of the loss recognised against the book value.

MANAGEMENT REVIEW

In view of the importance of Recordati S.p.A. within the results achieved by the Group, it is considered that an exhaustive report on operating performance and financial analysis can be obtained from the section "Management Review" in the Half-year Management Review of the Recordati Group as at and for the period ended 30th June 2024, published on 30th July 2024, to which reference is made.

OTHER INFORMATION

The company is subject to management and co-ordination by Rossini Luxembourg S.à.r.l, in accordance with Art. 2497 and following of the Italian Civil Code.

Key figures from the financial statements for the year ended 31st December 2023 approved by the company that exercises management and co-ordination are furnished in Attachment 5.

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Business outlook for Recordati S.p.A

The financial results for the first half of the year were in line with expectations and enabled us to confirm expectations for 2024.

Considering the sector to which the Company belongs and recent operating performance, no specific significant events were observed subsequent to 30th June 2024, which might require modifications to be made to the value of assets and liabilities recognised in the balance sheet or which might affect the positive performance in the first half of the year for the achievement of the results forecast for 2024.

Lastly, the results expected for the financial year 2024 are forecast to be greater than the interim dividend currently being approved.

Milan, 8th November 2024

on behalf of the Board of Directors the Chief Executive Officer Robert Koremans

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INTERIM FINANCIAL STATEMENTS OF RECORDATI S.P.A. FOR THE PERIOD ENDED 30TH JUNE 2024

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