Safilo S p A : Illustrative Report of the Directors for the Extraordinary Shareholders' Meeting on Item 1

BOARD OF DIRECTORS REPORT TO

THE EXTRAORDINARY SHAREHOLDERS MEETING

OF

SAFILO GROUP S.P.A.

CONVENED FOR

JULY 30, 2021 IN SINGLE CALL

This document and the information contained herein does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase or subscribe for securities, in the United States of America, Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would require the approval of local authorities or otherwise be unlawful (the "Other Countries"). Any public offering will be conducted in Italy pursuant to a prospectus, duly authorized by Consob in accordance with applicable regulations. Neither this document nor any part of it nor the fact of its distribution may form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. The securities referred to herein have not been registered and will not be registered in the United States of America under the U.S. Securities Act of 1933, as subsequently amended (the "Securities Act"), or pursuant to the corresponding regulations in force in the Other Countries. The securities may not be offered or sold in the United States of America except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offering of securities in the United States of America. The distribution of this document in certain countries might be forbidden pursuant to the law.

This document contains certain forward-looking statements, estimates and forecasts reflecting management's current views with respect to certain future events. Forward-looking statements, estimates and forecasts are generally identifiable by the use of the words "may," "will," "should," "plan," "expect," "anticipate," "estimate," "believe," "intend," "project," "goal" or "target" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding the issuer's future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where the Safilo Group (the "Group") participates or plans to participate.

Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction of actual results. The issuer's ability to achieve its projected objectives or results is dependent on many factors which are outside management's control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward- looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. All forward-looking statements included herein are based on information available as of the date hereof. No undertaking or obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law is accepted.

This illustrative report is made available to the public at the registered office of Safilo Group S.p.A. in Padua - Settima Strada no. 15, on the Safilo Group S.p.A. website https://www.safilogroup.com/en/governance/shareholders-meetingand on the authorised storage mechanism 1INFO.

ILLUSTRATIVE REPORT DRAWN UP BY THE DIRECTORS PURSUANT TO ARTICLE 125-TER OF LEGISLATIVE DECREE No. 58 of 24 FEBRUARY 1998 AND ARTICLE 72 AND ANNEX 3A TO CONSOB REGULATION NO. 11971 OF 14 MAY 1999 AND SUBSEQUENT AMENDMENTS, REGARDING THE ONLY ITEM ON THE AGENDA OF THE EXTRAORDINARY SHAREHOLDERS MEETING CONVENED FOR JULY 30, 2021 IN SINGLE CALL.

AGENDA

1. Share capital increase for consideration and divisibly, up to a maximum amount of Euro 135 million including any share premium, through the issue of new ordinary shares without any indication of par value, having regular dividend entitlement, to be offered in option to the Company's shareholders pursuant to Article 2441, subsections 1, 2 and 3 of the Italian Civil Code. Subsequent amendments of the Company Bylaws; related and consequent resolutions.

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Dear Shareholders,

with this report (the "Report") we illustrate the item on the agenda of the extraordinary Shareholders Meeting of Safilo Group S.p.A. ("Safilo" or the "Company"), convened on July 30, 2021 at 10:00, in single call (the "Shareholders' Meeting").

The purpose of this Report is the proposal to increase the share capital for consideration, up to a maximum amount of Euro 135 million, including any share premium, to be performed divisibly, by and not later than 30 April 2022, through the issue of new ordinary shares without any indication of par value with the same characteristics as those already issued, to be offered in option to the Company's shareholders pursuant to Article 2441, subsections 1, 2 and 3 of the Italian Civil Code ("Share Capital Increase").

As regards the proposed Share Capital Increase, a prospectus prepared in accordance with the applicable regulation (the "Prospectus") must be drafted and, subject to Consob's prior approval, published.

1 Reasons and allocation of the capital increase

The Share Capital Increase for a maximum of Euro 135 million, which is submitted to your approval is aimed at (i) the redemption of the unsecured and subordinated facility, having a maturity date on December 31, 2026, entered into on February 6, 2020 between Safilo S.p.A. and Multibrands Italy B.V. ("Multibrands"), a subsidiary of HAL Holding NV ("HAL") and main shareholder of Safilo, and subsequently amended on September 14, 2020 (the "Multibrands Facility"), granted in a total original principal amount of Euro 90 million, together with the related capitalised interests (equal to approximately Euro 6.5 million as at June 30, 2021) and any additional interests accrued until the date of redemption; and (ii) to further strengthen the Groups capital structure .

In particular, as already communicated in the information document that was lastly updated on September 21, 2020, the Multibrands Facility was granted to the indirect subsidiary Safilo S.p.A. that, by means of intragroup transactions, provided Safilo America with the necessary funds to complete the acquisitions of a shareholding equal to 61.34% of the capital of Prive Goods LLC and a shareholding equal to 70% of the capital of Blenders Eyewear LLC by Safilo America. The original maturity of the Multibrands Facility was extended from 2023 to December 31, 2026 in the context of the entry by Safilo S.p.A., on September 15, 2020, into a new Euro 108 million facility guaranteed by SACE S.p.A. pursuant to Law Decree 23/2020 with maturity date on June 30, 2026, aimed at providing Safilo S.p.A. with additional liquidity to finance working capital and investment needs for activities located in Italy, supporting the business in a period still characterized by a high level of uncertainty surrounding the recovery of the industry following the first part of the Covid-19 pandemic.

Taking into account the performance of the business and the market situation, the Board of Directors believes that the conditions exist to carry out a transaction which would enable the redemption of the Multibrands Facility, leading to a substantial reduction of the financial charges for interest expenses, currently equal to 9% annually (capitalizable) for each year of the residual duration of the financing. As of June 30, 2021, the outstanding amount of the Multibrands Facility is equal to approximately Euro 96.5 million (including the capitalised interests).

The residual part of the proceeds of the Share Capital Increase (net of costs of the Shares Capital Increase, which on a preliminary basis have been estimated at about Euro 3 million) will be aimed at strengthening the capital structure as well as supporting its investments and drivers of future growth, including new opportunities that may come available in the sector.

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2 Analysis of the structure of the Company's net financial indebtedness

The following tables illustrate the structure of the Company's and Group's net financial indebtedness in the short and medium/long term as of March 31, 2021, December 31, 2020 and June 30, 2020.

Company's short and medium/long term net financial indebtedness

			Net financial position
			thousands of Euro	March 31, 2021	December 31, 2020	June 30, 2020
A	Cash and cash equivalents	1.283	3.054	911
B	Cash and cash equivalents included as Assets held for sale	-	-	-
C		Current securities (securities held for trading)	-	-	-
D Liquidity (A+B+C)	1.283	3.054	911
E		Receivables from financing activities	-	-	-
F	Bank overdrafts and short-term bank borrowings	-	-	-
G	Current portion of long-term borrowings	-	-	-
G	Current portion of long-term lease liability IFRS 16	(120)	(127)	(117)
H		Other short-term borrowings	-	-	-
I	Debts and other current financial liabilities (F+G+H)	(120)	(127)	(117)
J		Current financial position, net (D)+(E)+(I)	1.163	2.927	795
K	Long-term bank borrowings	-	-	-
L	Bonds	-	-	-
M Other long-term borrowings	-	-	-
M Long-term lease liability IFRS 16	(93)	(118)	(140)
N Debts and other non current financial liabilities (K+L+M)	(93)	(118)	(140)
			Net financial position (J)+(N)	1.070	2.809	655

Consolidated short and medium/long term net financial indebtedness

	Net financial position	March 31, 2021	December 31, 2020	June 30, 2020
	thousands of Euro
A	Cash and cash equivalents	83.805	88.966	110.875
B	Cash and cash equivalents included as Assets held for sale	-	-	-
C	Current securities (securities held for trading)	-	-	-
D	Liquidity (A+B+C)	83.805	88.966	110.875
E
Receivables from financing activities	-	-	-
F
Bank overdrafts and short-term bank borrowings	(26)	(3.000)	(3.895)
G	Current portion of long-term borrowings	(20.000)	(20.000)	(143.230)
G	Current portion of long-term lease liability IFRS 16	(9.407)	(9.605)	(10.431)
H	Other short-term borrowings	-	-	(102.463)
I	Debts and other current financial liabilities (F+G+H)	(29.434)	(32.605)	(260.020)
J	Current financial position, net (D)+(E)+(I)	54.371	56.362	(149.144)
K
Long-term bank borrowings	(151.641)	(151.453)	-
L	Bonds	-	-	-
M	Other long-term borrowings	(93.474)	(93.474)	-
M	Long-term lease liability IFRS 16	(33.108)	(33.504)	(39.389)
N	Debts and other non current financial liabilities (K+L+M)	(278.222)	(278.431)	(39.389)
	Net financial position (J)+(N)	(223.851)	(222.069)	(188.533)

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3 Pro-forma economic, equity and financial effects

The following pro-forma consolidated financial statements have been prepared to illustrate retroactively, for illustration purposes and based on the information currently available, the relevant economic and financial effects of the Share Capital Increase, starting from the Consolidated Annual Financial Report as at December 31, 2020 (the "Pro-formaInformation") and subsequently applying the pro forma adjustments.

The pro-forma adjustments were made in order to detect the effects associated with the Share Capital Increase, as if the Share Capital Increase had virtually taken place on December 31, 2020, for the balance sheet effects only and on 1 January 2020 for the economic effects.

The accounting principles and assessment criteria adopted for preparing the Pro-forma Information, albeit with the limitations implied in the assumptions made, are consistent with those applied for preparing the Consolidated Annual Financial Report as at December 31, 2020.

The Share Capital Increase is represented as if it had already been executed and completed on the reference date for the preparation of the Pro-forma Information, without thereby wishing to represent that any of the effects related to this transaction should have been correctly reflected on that date and that such effects should be necessarily reflected in the subsequent periods. The underlying assumptions represent a conventional element: if the Share Capital Increase had really taken place on the reference date for the preparation of the Pro-forma Information, the same effects presented in the Pro-forma Information would not necessarily have been obtained. Therefore, in consideration of the different purposes, the Pro-forma Information could differ significantly from the representation that the Share Capital Increase could have in the consolidated financial statements of the Company at December 31, 2021 and in those referring to the subsequent periods, as these will be prepared on the basis of the methods, terms and conditions relating to the dates of reference.

It is worth underlying that the Pro-forma Information are not by their nature capable of representing the future economic and financial situation of the Group, given that they are prepared: (i) based on hypothesis and to retroactively reflect the effects of subsequent, irrelevant transactions as at the dates of the periods subject to pro-forma, despite compliance with the widely accepted accounting principles and the use of reasonable assumptions; and (ii) only to represent the isolated and objectively measurable effects of the execution of the Share Capital Increase, without taking into account the potential effects due to variations in the policies of the Group and operational decisions subsequent to the execution of the Share Capital Increase.

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