Interim Financial Report at 30 June 2017

Transcription

1 Interim Financial Report at 30 June 2017

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3 Interim Financial Report at 30 June 2017 Zignago Vetro SpA Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto 8 Share Capital: Euro 8,800,000 fully paid-in Tax and Venice Company Register No.:

4 Contents Group Structure pag. 3 Company bodies pag. 5 Directors Report: - The Zignago Vetro Group pag. 8 - The Company Zignago Vetro SpA pag The Consolidated Subsidiaries pag Significant events after 30 June 2017 pag Outlook pag. 49 Condensed Interim Consolidated Financial Statements: 1) Consolidated Financial Statements: - Statement of Financial Position pag Income Statement pag Statement of Comprehensive Income pag Statement of Cash Flows pag Statement of Changes in Equity pag. 56 2) Notes to the Financial Statements pag. 58 Statement as per Article 81-ter of CONSOB Reg. No of 14 May 1999 and subsequent modifications and integrations pag. 92 Independent Auditors Report pag. 94 2

5 ZIGNAGO VETRO GROUP STRUCTURE AT 26 JULY 2017 ACTIVITIES AND SHAREHOLDINGS ZIGNAGO VETRO SpA PRODUCTION AND SALE OF HOLLOW GLASS CONTAINERS 50% 100% 100% VERRERIES BROSSE SAS PRODUCTION AND SALE OF GLASS BOTTLES FOR LUXURY FRAGRANCES VETRI SPECIALI SpA PRODUCTION AND SALE OF SPECIALITY HOLLOW GLASS CONTAINERS HUTA SZKŁA CZECHY S.A. PRODUCTION AND SALE OF HOLLOW GLASS CONTAINERS 100% ZIGNAGO GLASS USA Inc. SALE OF GLASS CONTAINERS 30% VETRECO Srl TREATMENT AND SALE OF RECYCLED GLASS 3

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7 COMPANY BODIES Board of Directors Board of Statutory Auditors in office for the three-year period in office for the three-year period chairman Paolo Giacobbo vice chairman Nicolò Marzotto chief executive officer Paolo Giacobbo statutory auditors Alberta Gervasio - chairman Carlo Pesce Stefano Meneghini alternate auditors Cesare Conti Chiara Bedei directors Alessia Antonelli Ferdinando Businaro Giorgina Gallo Franco Grisan Daniela Manzoni Gaetano Marzotto Luca Marzotto Stefano Marzotto Franco Moscetti Manuela Romei Supervisory Board Alessandro Bentsik - chairman Massimiliano Agnetti Nicola Campana Independent Auditors Control and Risks Committee for the period Alessia Antonelli Luca Marzotto Giorgina Gallo Remuneration Committee Franco Moscetti Stefano Marzotto Daniela Manzoni Committee for Transactions with Related Parties KPMG SpA Management chief financial officer and investor relations manager Roberto Celot operations director Roberto Cardini commercial management Biagio Costantini Stefano Bortoli Manuela Romei Ferdinando Businaro Alessia Antonelli Lead Independent Director Franco Moscetti 5

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9 Directors Report 7

10 Directors Report THE ZIGNAGO VETRO GROUP The Zignago Vetro Group operates in the production and marketing of high quality hollow glass containers prevalently for the Food and Beverage, Cosmetics and Perfumery and Specialty Glass sectors (highly customised glass containers in small batches, typically used for wine, liquors and oils). The Zignago Vetro Group operates in the market with a business-to-business model, supplying containers to its clients, which are then used in their respective industrial activities. Specifically, in the Italian market, the Group is one of the leading producers and distributors of glass containers for the food and beverage sector, while at international level it has a strong market share in the cosmetics and perfumery and specialty glass sectors. * * * The Annual and Condensed Interim Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board ( IASB ) and endorsed by the European Union in accordance with Regulation No. 1606/2002 ( IFRS ). In particular, the condensed interim consolidated financial statements of the Group at 30 June 2017 (hereafter the Condensed Interim Financial Statements ) are prepared in accordance with IAS 34 Interim Reporting and Article 154-ter of the CFA, following the summary form permitted under the standard. The condensed interim financial statements therefore do not include all the information published in the annual report and must be read together with the financial statements at 31 December 2016 for full and complete disclosure of the Group financial position, results of operations and cash flow. The accounting policies adopted for the preparation of the Condensed Interim Financial Statements are the same as those utilised for the consolidated financial statements of the Zignago Vetro Group for the year ended 31 December 2016, except for the adoption of the new standards, amendments and interpretations approved by the IASB and endorsed for adoption in Europe and obligatory for accounting periods beginning 1 January

11 Directors Report IFRS 11 - Joint arrangements, applicable for the Group from 1 January 2014, replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers, and identifies, on the basis of the rights and obligations of the participants, two types of agreements - joint operations and joint ventures - and governs the consequent accounting treatment to be adopted for recognition in the financial statements, removing the option to consolidate jointly controlled companies proportionally and requiring jointly controlled companies defined as joint ventures to be recognised using the equity method. In the condensed interim consolidated financial statements of the Group at 30 June 2017 and the comparative financial statements at 30 June 2016 and the financial statements at 31 December 2016, the Group recognised the investments held in Vetri Speciali and Vetreco, which are classified as joint ventures, under the equity method, instead of the proportional consolidation method. However, in the Directors Report the figures (and the subsequent comments) are based on the management view of the Group business, which provides for the proportional consolidation of joint ventures, in continuity with the accounting policies adopted until 31 December These figures however must not be considered as an alternative to those provided for by IFRS, but rather exclusively for supplementary disclosure and reflective of management s view of the business. For this purpose, a reconciliation of the Statement of Financial Position and of the Income Statement, prepared according to IFRS in force from 1 January 2014 and those in force at 31 December 2013, is provided in the Directors Report. Pursuant to CONSOB communication DEM of 28 July 2006 and ESMA/2015/1415 recommendations on alternative performance indicators utilised by the Parent - which although not specifically defined by IAS/IFRS are considered particularly useful to monitor the business performance - we provide the following information: - net financial debt is defined by the Company as the sum of current loans and borrowings, cash and cash equivalents and non-current loans and borrowings, net of cash and cash equivalents and current financial assets. This net figure is the same as the net financial position as per CONSOB communication No. DEM/ of 28 July 2006; - value of production: the Company defines this as the arithmetical sum of revenues, the change in finished products, semi-finished products, and work-in-progress and the internal work capitalised; - value added: the Company defines this as the difference between value of production and raw materials consumed (purchase costs plus or minus the change in raw materials and service costs); 9

12 Directors Report - EBITDA: the Company defines this as a difference between value added and personnel expense (including those of temporary workers), plus the effect of the measurement of joint ventures using the equity method. EBITDA is a measure utilised by the issuer to monitor and measure operating performance although it is not an accounting measure under IFRS. The measurement criteria of this indicator may not be in line with that utilised by other entities and therefore it may not be entirely comparable. Within this context, the issuer utilised a calculation model in line with its core business which included the effects deriving from the application of IFRS 11. The Company considers the results deriving from its equity investments in joint ventures as operating items and nonfinancial items of the Group s business, related to a clearly defined investment strategy and as such classified within the Groups interim operating results; - EBIT: the Company defines this as the difference between EBITDA and depreciation & amortisation of property, plant and equipment and intangible assets and accruals to the provision for impairment; - Operating profit: this performance measure is also contained in IFRS and is defined as the difference between EBIT and the net balance of non-recurring operating costs and income. We point out that this latter item includes incidental income and costs, capital gains and losses on sales of assets, insurance compensation and other minor positive and negative items; - Free cash flow: the Company defines this as the sum of the cash flows from operating activities and cash flows from investing activities. The figures reported in the Directors Report and in the tables of the Notes are shown in thousands of Euro for greater clarity. The amounts in the Directors Report are expressed in millions of Euro, while those in the Notes are stated in thousands of Euro. * * * The Zignago Vetro Group, according to management s view, operates through six Business Units, each being a separate legal entity. Given this, information concerning the operating performance of the various business segments and geographical areas (segment reporting as per IFRS 8) is included in the illustration of the financial reporting data for each company and is an integral part of this Directors Report. Segment reporting which coincides with the various legal entities is provided below, independently of the respective consolidation method applied. Disclosure by region is not considered appropriate for the Group. 10

13 Directors Report The operating segments ( Business Units ) are identified as follows: - Zignago Vetro SpA: this Business Unit carries out the production of glass containers for food and beverages and for cosmetics and perfumery; - -Zignago Glass USA Inc.: this Business Unit carries out the sales promotion of glass containers for food and beverages and for cosmetics and perfumery in North America; - Verreries Brosse SAS: this Business Unit carries out the production of glass containers for perfumes; - Vetri Speciali SpA: this Business Unit includes the production of specialty containers, principally for wine, vinegar and olive oil; - Huta Szkla Czechy SA: this Business Unit undertakes the production of a wide range of customised containers for cosmetic and perfumery containers and also for food and beverage niche markets worldwide; - Vetreco Srl: this Business Unit is engaged in the processing of raw glass into the finished material ready for use by glassmakers. The consolidation scope of the Zignago Vetro Group at 30 June 2017 and 2016 and at 31 December 2016 was as follows: - Zignago Vetro SpA (parent) The companies consolidated using the line-by-line method are as follows: - Verreries Brosse SAS - Huta Szkła Czechy S.A. (HSC SA) - Zignago Glass USA Inc. The companies valued under the equity method are the following: - Vetri Speciali SpA - Vetreco Srl 11

14 Directors Report The basis of consolidation and measurement criteria, including the equity investments held by Zignago Vetro S.p.A. are outlined in the paragraph accounting principles and measurement criteria in the notes to the consolidated financial statements. In the Directors Report, as previously stated, the figures are based on the management view of the Group business, which provides for the proportional consolidation of joint ventures, in continuity with the accounting policies adopted until 31 December Legally-required audit The appointment for the legally-required audit of the Annual Financial Statements and the review of the condensed interim financial statements was awarded to KPMG SpA for the period. Significant events in the first half of 2017 Distribution of dividends The Shareholders Meeting of Zignago Vetro SpA on 27 April 2017 approved the distribution of a dividend of Euro per share, totalling Euro 21.8 million, with payment date of 10 May Treasury shares On 27 April 2017, the Shareholders Meeting of Zignago Vetro SpA revoked, for the part not executed, the resolution granted in favour of the Board of Directors to purchase and sell treasury shares, as approved by the Shareholders Meeting of 28 April 2016 and authorised the Board of Directors to purchase and sell treasury shares for a maximum number not exceeding the total nominal amount, including any shares held by subsidiaries, corresponding to one-fifth of the share capital. The new authorisation is proposed for a period of 18 months, commencing from 27 April The minimum purchase price shall not be less than 20%, and the maximum price not more than 20%, of the share price registered on the trading day prior to each transaction; the sale price shall not be 20% higher or lower than the share price registered on the trading day prior to each transaction. These price limits will not be applied where the sale of shares is to employees, including management, executive directors and consultants of Zignago Vetro and its subsidiaries in relation to incentive stock option plans. Within the share buy-back programme reported above, at 26 July 2017, 1,421,390 treasury shares, taking account, in respect of the number of treasury shares held and of the effect from the Scrip issue approved on 23 April 2012, had been acquired, corresponding to 1.615% of the share capital, for a payment of Euro 5 million. In the first six months of 2017, no treasury shares were sold or acquired. 12

15 Directors Report Operating performance In H1 2017, Beverage and Food glass container demand in Italy and Europe gradually improved thanks to good consumption levels, in particular on segments driven by finished product export demand. The Perfumery markets generally expanded further across all segments, with divergent performances among the various regions. The skincare segment continued to grow. Consolidated revenues in the first half of 2017 amounted to Euro 176 million, up 5.7% on the same period in the previous year (Euro million). Materials and external services in H1 2017, including changes in inventories and internal production, amounted to Euro 90.9 million compared to Euro 89.9 million in the first half of 2016 (+1.11%). These costs on revenues decreased from 54% to 51.6%. The consolidated added value in the first half of 2017 was Euro 85.1 million compared to Euro 76.6 million in the same period of the previous year (+11.2%). The margin was 48.4% compared to 46%. Personnel expense in the first half of 2017 amounted to Euro 40.6 million compared to Euro 38 million in the first half of 2016 (+7%). The increase is related to wage cost movements and higher personnel numbers. They increased from 22.8% of revenues in the first half of 2016 to 23.1% in H Consolidated EBITDA in the first half year of 2017 was Euro 44.5 million compared to Euro 38.6 million in the same period of 2016 (+15.3%), a 25.3% revenue margin (23.2% in H1 2016). Consolidated EBIT in H totalled Euro 24.9 million compared to Euro 21.2 million in the first half of 2016 (+17.8%). The EBIT margin was 14.2% (12.7% in the first half of 2016). The consolidated operating profit in the first half of 2017 was up 17% on the same period in the previous year (respectively Euro 25.4 million and Euro 21.7 million). The revenue margin was 14.4% in the first half of 2017 compared to 13% in H The consolidated profit before tax for the period was Euro 24.6 million compared to Euro 18.9 million in the same period of the previous year (+29.9%). The revenue margin was 14% in the first six months of 2017 compared to 11.4% in H The tax rate in the period was 25.9% compared to 33.5% in H The consolidated net profit in H was Euro 18.2 million compared to Euro 12.6 million in the same period of the previous year (+44.8%). The revenue margin was 10.4% compared to 7.6% in The cash flow generated from the profit and amortisation/depreciation in H amounted to Euro 37.2 million, compared to Euro 29.4 million in the same period of the previous year (+7.8%). 13

16 Directors Report The key data of the Zignago Vetro Group reclassified consolidated income statement in H and 2016, according to management s view as described previously, are shown below. Changes Euro thou. % Euro thou. % % Revenues 176, % 166, % 5.7% Changes in finished and semi-finished products and work in progress 2, % (1,579) (0.9%) n.a. Internal production of fixed assets and contributions on investments % % 49.2% Value of production 179, % 165, % 8.4% Cost of goods and services (94,262) (53.5%) (88,867) (53.4%) 6.1% Value added 85, % 76, % 11.2% Personnel expense (40,620) (23.1%) (37,968) (22.8%) 7.0% EBITDA 44, % 38, % 15.3% Amortisation & Depreciation (19,001) (10.8%) (16,831) (10.1%) 12.9% Accruals to provisions (556) (0.3%) (589) (0.4%) (5.6%) EBIT 24, % 21, % 17.8% Net recurring non-operating income % % (15.8%) O perating Profit 25, % 21, % 17.0% Net financial expense (816) (0.5%) (2,455) (1.5%) (66.8%) Net exchange rate gains/(losses) (298) (0.2%) n.a. Profit before taxes H H , % 18, % 29.9% Income taxes (6,365) (3.6%) (6,347) (3.8%) 0.3% (Tax-rate H1 2017: 27.9%) (Tax-rate H1 2016: 33.5%) Profit for the period 18, % 12, % 44.8% Consolidated net revenues for H and 2016 were as follows: (Euro thousands) H H Change % Zignago Vetro SpA 96,264 93, % Verreries Brosse SAS 29,548 27, % Vetri Speciali SpA 39,883 36, % HSC SA 13,469 11, % Vetreco 2,227 1, % Zignago Glass USA Inc (12.8%) Total aggregate 181, , % Elimination of intercompany sales (5,485) (4,128) 32.9% Total consolidated 176, , % 14

17 Directors Report Consolidated revenues by geographic segment for the first half 2017 and 2016 were broken down as follows: (Euro thousands) H H Change % Italy 109, , % European Union (Italy excluded) 55,356 51, % Other areas 11,348 11,639 (2.5%) Total consolidated 176, , % Consolidated revenues outside Italy for the first half 2017 amounted to Euro 66.7 million, compared to Euro 62.8 million in the first half of 2016 (+6.2%) and account for 37.9% of total revenues (37.7% in the first half 2016). The breakdown by Company was as follows: (Euro thousands) H H Change % Zignago Vetro SpA 19,896 20,072 (0.9%) Verreries Brosse SAS and its subsidiary 27,717 26, % Vetri Speciali SpA and its subsidiary 9,343 8, % HSC SA 9,748 7, % Total 66,704 62, % The contribution to the consolidated profit for the first half of 2017 and 2016 of each of the Companies included in the consolidation scope was as follows: (Euro thousands) H H Change % Zignago Vetro SpA 16,976 16, % Verreries Brosse SAS 2,194 (1,798) n.a. Vetri Speciali SpA 7,578 6, % HSC SA % Vetreco Srl 110 (158) (169.6%) Zignago Glass USA Inc. (65) (94) (30.9%) Total aggregate 27,599 21, % Consolidation adjustments (9,360) (9,031) 3.6% Profit attr. to owners of parent 18,239 12, % The consolidation adjustments relate principally to the elimination of the Vetri Speciali SpA dividends (Euro 9.2 million in 2017, Euro 9.1 million in 2016). 15

18 Directors Report The key data of the reclassified consolidated income statement of the Zignago Vetro Group in H and 2016, based on the application of international accounting standards, and therefore IFRS 11, are illustrated below. H H Changes Euro thou. % Euro thou. % % Revenues 135, % 129, % 4.4% Changes in finished and semi-finished products and work in progress (1,470) (1.1%) n.a. Internal production of fixed assets and contributions on investments % % 49.2% Value of production 136, % 128, % 5.8% Cost of goods and services (73,734) (54.5%) (71,580) (55.3%) 3.0% Value added 62, % 57, % 9.3% Personnel expense (31,366) (23.2%) (30,049) (23.2%) 4.4% Effect of measurement of JV using Equity method 7, % 6, % 13.8% EBITDA 38, % 33, % 14.6% Amortisation & Depreciation (15,831) (11.7%) (14,752) (11.4%) 7.3% Accruals to provisions (487) (0.4%) (464) (0.4%) 5.0% EBIT 22, % 18, % 20.7% Net recurring non-operating income % (28) --- n.a. O perating Profit 22, % 18, % 22.0% Net financial expense (631) (0.5%) (2,234) (1.7%) (71.8%) Net exchange rate gains/(losses) (302) (0.2%) n.a. Profit before taxes 21, % 15, % 37.8% Income taxes (3,687) (2.7%) (3,316) (2.6%) 11.2% (Tax-rate H1 2017: 16.8%) (Tax-rate H1 2016: 20.8%) Consolidated profit 18, % 12, % 44.8% 16

19 Directors Report For a better understanding of the performances for H1 2017, stated in accordance with management s view, a reconciliation is provided below of the reclassified income from joint ventures measured using the equity method and that utilising the proportional consolidation criteria, as adopted by the Group until 31 December H IAS/ IFRS Vetri Speciali SpA Proportional consolidation Vetreco Srl Adjustment to Parent principles Neutralisation JV using the equity criteria H pre- IFRS 11 (management view) Euro thou. Euro thou. Euro thou. Euro thou. Euro thou. Euro thou. Revenues 135,228 39,883 2,227 (1,289) 176,049 Changes in finished and semi-finished products and work in progress 25 1,809 (1) 696 2,529 Internal production of fixed assets and contributions on investments Value of production 136,072 41,692 2,225 (593) ,396 Cost of goods and services (73,734) (19,510) (1,600) 581 (94,263) Value added 62,338 22, (12) ,134 Personnel expense (31,366) (9,022) (232) (40,620) Effect of measurement of JV using Equity method 7,648 (7,648) --- EBITDA 38,620 13, (12) (7,648) 44,514 Amortisation & Depreciation (15,831) (3,015) (155) (19,001) Accruals to provisions (487) (69) (556) EBIT 22,302 10, (12) (7,648) 24,957 Net recurring non-operating income (44) Operating Profit 22,502 10, (56) (7,648) 25,379 Net financial expense (631) (110) (75) (816) Net exchange rate gains/(losses) 55 (14) Profit before taxes 21,926 10, (56) (7,648) 24,604 Income taxes (3,687) (2,640) (55) (6,365) Consolidated profit 18,239 7, (40) (7,648) 18,239 17

20 Directors Report Statement of financial position The reclassified statement of financial position of the Zignago Vetro Group at 30 June 2017, prepared according to management s view as described previously, is presented in condensed form and compared with 31 December and 30 June Euro thou. % Euro thou. % Euro thou. % Trade receivables 82,478 67,331 72,265 Other receivables 12,880 19,311 13,085 Inventories 84,974 82,458 73,961 Current non-financial payables (70,693) (70,004) (67,196) Payables on fixed assets (8,271) (18,996) (9,393) A) Working capital 101, % 80, % 82, % Net tangible and intangible assets 214, , ,507 Goodwill 40,810 40,784 40,780 Other equity investments and noncurrent assets 5,552 6,395 6,701 Non-current provisions and nonfinancial payables (17,074) (17,581) (17,761) B) Net fixed capital 243, % 231, % 199, % A+B= Net capital employed 345, % 311, % 281, % Financed by: Current loans and borrowings 112, , ,611 Cash and cash equivalents (22,785) (67,505) (79,217) Current net debt 89, % 40, % 30, % Non-current loans and borrowings 103, % 115, % 113, % C) Net financial debt 192, % 156, % 144, % Opening equity 155, , ,629 Dividends paid in the period (21,818) (20,346) (20,346) Change in translation reserve & other eq. changes 758 (955) (621) Cash Flow Hedge reserve Profit for the period 18,239 31,191 12,594 D) Closing equity 152, % 155, % 137, % C+D= Total financial debt and equity 345, % 311, % 281, % 18

21 Directors Report Working capital at 30 June 2017 increased overall by Euro 21.3 million on 31 December Trade receivables increased Euro 15.1 million, inventories Euro 2.5 million and current nonfinancial payables Euro 0.7 million. Other receivables reduced Euro 6.4 million and fixed asset payables by Euro 10.7 million. Net fixed capital at 30 June 2017 increased on 31 December 2016 by Euro 12 million. In particular, in the period investments (Euro 29.4 million), net of disposals, were higher than depreciation (Euro 19 million). Capital expenditure in the first half of 2017 amounted to Euro 29.4 million (Euro 27.4 million in H1 2016) and concerns: - Zignago Vetro SpA for Euro 11.8 million for the replacement of plant, machinery and equipment, including moulds and pallets (Euro 6.8 million in the same period of 2016 and mainly relating to the refurbishment of a kiln and the replacement of plant, machinery and equipment); - Verreries Brosse SAS for Euro 2 million (Euro 1.3 million in the first half of 2016) principally for plant and industrial equipment, including moulds; - Vetri Speciali SpA (for its share) for Euro 4.2 million (Euro 8.7 million in H1 2016) for payments on account on new plant and the replacement of plant and equipment; - HSC SA for Euro 11.4 million for new plant, in addition to equipment and moulds (Euro 8.1 million in H for new plant); At 30 June 2017, the Zignago Vetro Group had 2,273 employees. At 31 December 2016, there were 2,167 employees, while at 30 June 2016 employees numbered 2,088. The employees of Vetri Speciali SpA and Vetreco have been fully incorporated. The composition of Group personnel at 30 June 2017 is shown in the table below. Composition Executives White-collar Blue-collar T otal Men (number) ,415 1,777 Women (number) of which: - open-ended contracts 0 - fixed-term contracts 0 Average age --- Years worked

22 Directors Report Equity at 30 June 2017 amounted to Euro million (at 31 December 2016: Euro million; at 30 June 2016: Euro million). The decrease on 31 December 2016 is principally due to the distribution of dividends (Euro million), the increase in the translation reserve (Euro +0.8 million) and the profit for the period (Euro million). The consolidated net financial debt at 30 June 2017 was Euro million (Euro million at 31 December 2016, Euro million at 30 June 2016). The cash flow movements in the consolidated net financial debt at 30 June 2017 and at 31 December 2016 and 30 June 2016 were as follows: (Euro thousands) (Euro thousands) (Euro thousands) Net debt at January 1 (156,428) (128,960) (128,960) Self-financing: - profit for the period 18,239 31,191 12,594 - amortisation & depreciation 19,001 33,232 16,831 - net change in provisions (202) (605) (651) - net gains from sale of property, plant and equipment --- (333) (241) 37,038 63,485 28,533 Increase in working capital (20,415) (225) (2,865) Investments in property, plant and equipment (31,730) (76,974) (24,830) Investments in intangible assets (753) (214) (108) Net Decrease (increase) of other medium/long term assets 396 1,738 1,432 Sales price of property, plant and equipment 2,382 5,570 2,285 (50,120) (70,105) (24,086) Free cash flow (13,082) (6,620) 4,447 Distribution of dividends (21,818) (20,346) (20,346) Effect on equity of currency conversion of in foreign currencies and other changes (1,164) (502) 660 (22,982) (20,848) (19,686) Increase of net debt (36,064) (27,468) (15,239) Net debt at end of period (192,492) (156,428) (144,199) 20

23 Directors Report The reclassified statement of financial position of the Zignago Vetro Group at 30 June 2017, according to IFRS in force at 30 June 2017, including the effects from IFRS 11, as from 1 January 2014, compared with 31 December 2016 and 30 June 2016, is reported below: Euro thou. % Euro thou. % Euro thou. % Trade receivables 64,108 54,905 57,175 Other receivables 9,941 13,989 10,372 Inventories 69,979 69,600 64,217 Current non-financial payables (54,484) (54,125) (53,274) Payables on fixed assets (7,497) (13,250) (5,764) A) Working capital 82, % 71, % 72, % Net tangible and intangible assets 163, , ,916 Goodwill Equity investments measured using the equity method 62,704 64,210 57,956 Other equity investments & noncurrent assets 4,939 5,806 6,151 Non-current provisions and nonfinancial payables (14,086) (14,549) (14,771) B) Net fixed capital 218, % 208, % 182, % A+B= Net capital employed 300, % 280, % 255, % Financed by: Current loans and borrowings 90,308 96,271 92,741 Cash and cash equivalents (18,137) (59,361) (79,180) Current net debt 72, % 36, % 13, % Non-current loans and borrowings 75, % 87, % 104, % C) Net financial debt 147, % 124, % 117, % Opening equity 155, , ,629 Dividends (21,818) (20,346) (20,346) Other equity changes 758 (955) (621) Cash Flow Hedge reserve Profit for the period 18,239 31,191 12,594 D) Closing equity 152, % 155, % 137, % C+D= Total financial debt and equity 300, % 280, % 255, % 21

24 Directors Report For a better understanding of the statement of financial position at 30 June 2017, stated in accordance with management s view, a reconciliation is provided below of the financial position of joint ventures measured using the equity method and that utilising the proportional consolidation method, as adopted by the Group until 31 December IAS/IFRS Vetri Speciali SpA Proportional consolidation Vetreco Srl Adjustment to Parent principles Neutralisation JV using the equity criteria pre- IFRS 11 (management view) Euro thou. Euro thou. Euro thou. Euro thou. Euro thou. Euro thou. Trade receivables 64,108 18, (534) 82,478 Other receivables 9,941 2, ,880 Inventories 69,979 15, (630) 84,974 Current non-financial payables (54,484) (15,644) (1,124) 534 (70,718) Payables on fixed assets (7,497) (770) (4) (8,271) A) Working capital 82,047 19, (628) ,343 Net tangible and intangible assets 163,891 46,200 4, ,534 Goodwill , ,810 Equity investments measured using the equity method 62, (62,704) --- Other equity investments & non-current assets 4, ,552 Non-current provisions and non-financial payables (14,086) (2,968) (20) (17,074) B) Net fixed capital 218,172 83,750 4, (62,704) 243,822 A+B= Net capital employed 300, ,034 5,069 (453) (62,704) 345,165 Financed by: Current loans and borrowings 90,308 21, ,247 Cash and cash equivalents (18,137) (4,372) (276) (22,785) Current net debt 72,171 16, ,462 Non-current loans and borrowings 75,350 23,347 4, ,030 C) Net financial debt 147,521 40,207 4, ,492 Opening equity 155,519 64, (412) (64,213) 155,496 Dividends (21,818) (9,157) --- 9,157 (21,818) Other equity changes Cash Flow Hedge reserve Profit for the period 18,239 7, (41) (7,648) 18,237 D) Closing equity 152,698 62, (453) (62,704) 152,673 C+D= Total financial debt and equity 300, ,034 5,069 (453) (62,704) 345,165 22

25 Directors Report Research, development and advertising costs The companies of the Group undertook research and development focused on process and product innovation which resulted in, among other developments, the use of new materials, the introduction of new products and the application of new technical-production solutions for the food and beverages, cosmetics and perfumery and special containers sectors. The Parent also carried out research and development for the design and introduction of new information management systems, including improvements to the process IT set up, in order to create more efficient and effective operating instruments. Therefore, the Company availed of the tax credit under Law 190/2014, establishing this amount according to the methodologies communicated in the Tax Agency Circular. Environmental information In the first half of 2017, the commitment of the Zignago Vetro Group continued in the protection of the environment with the continual improvement of the policies of territorial protection and management of environmental issues with actions aimed to reduce atmospheric emissions and energy consumption in the utilisation of natural resources and the optimisation of the production cycle, while remaining continually attentive to new and future technology developed internationally. Risks related to personnel, safety and management The Companies of the Zignago Vetro Group implement plant management policies to minimise the risk of accidents ensuring high levels of security in line with best industrial practices, utilising insurance to guarantee an extensive degree of protection for company structures, third party risks and interruptions in production activity. The company trains and motivates the workforce to guarantee efficiency and normal operational continuity. Personal data security and protection Pursuant to rule 26 of Attachment B of Legislative Decree No. 196 of 30 June 2003 (Employee data protection code), the Companies of the Group adopted new security measures required by the abovementioned decree and updated the Security Programming Document. Financial instruments: Group objectives & policies and description of risks The main financial instruments used by the Zignago Vetro Group consist of trade receivables and payables, cash & cash equivalents, bank borrowing and interest rate swap contracts. 23

26 Directors Report As regards the Group s financial management, the cash flow from operating activities are considered to be consistent with objectives for repayment of existing debt and such as to assure appropriate financial balance and adequate return on equity via dividend flows. At 30 June 2017, the Zignago Vetro SpA Group had undertaken 6 interest rate swaps in order to hedge the interest rate risk on non-current loans undertaken by the parent Zignago Vetro SpA. The mark-to-market of these derivatives at 30 June 2017 were as follows (in thousands of Euro): Company Bank Underlying Date Notional Expiry Market of amount at value signing reference date Zignago Vetro SpA Unicredit Loan 21/01/ ,189 31/12/2020 (172) Zignago Vetro SpA Unicredit Loan 31/03/ ,251 31/12/2020 (229) Zignago Vetro SpA Mediobanca Loan 21/01/ ,391 31/12/2020 (131) Zignago Vetro SpA Mediobanca Loan 31/03/ ,189 31/12/2020 (174) Zignago Vetro SpA Banco Brescia Loan 18/12/2014 9,471 18/12/2019 (91) Zignago Vetro SpA BNL Loan 22/12/ ,000 22/06/2021 (293) Total 95,491 (1,090) The above-mentioned transactions were undertaken for hedging purposes. However, these transactions do not comply with all the requirements of IFRS to qualify for hedge accounting. For these transactions Zignago Vetro SpA does not use the so-called hedge accounting method and records the economic effects of hedging directly to profit or loss. We consider that the Zignago Vetro Group is not exposed to credit risk any higher than the industry average, given that most receivables relate to customers of well-established commercial reliability and that receivables are insured. Allowance for impairment has in any case been made to cover against any residual credit risks. We specify that such allowances were made in the period and in previous periods against specific positions involved in procedures or with longer past-due status than the Group companies average collection times. Collective allowances for impairment have also been made for potential bad debts. In relation to the currency risk, the Group did not subscribe to any currency hedging instruments and, in accordance with the Group policy to date, derivative financial instruments are not taken out for trading purposes. Therefore, the Group remains exposed to the currency risk on the assets and liabilities in foreign currencies at period-end, which is not considered significant. A number of Group subsidiaries are located in countries not within the Eurozone: the United States and Poland. As the Group s functional currency is the Euro, the income statements of these companies are translated into Euro at the average exchange rate and, on like-for-like basis for revenues and profit in the local currency, changes in the exchange rate may impact the value in Euro of revenues, costs and profit (loss). Zignago Vetro SpA is exposed to fluctuations in some commodity prices, in particular those relating to energy factors, such as fuel, utilised in the production process. In order to neutralise the price 24

27 Directors Report effect, as these fluctuations may significantly impact production costs, the Company assesses hedging operations through the use of derivative financial instruments. At 30 June 2017, Zignago Vetro did not have any fuel hedging derivative contracts. The Group s present reference market does not include areas possibly requiring country-risk management. Trade transactions substantially take place in western countries, primarily in the Euro and USD areas. * * * Pursuant to the Bank of Italy/ Consob /Isvap document No. 2 of 6 February 2009 and IAS , it is considered, based on the strong profitability, solid financial position and in spite of the current economic environment, that there are no uncertainties or risks with regard to the going concern of the business. 25

28 Directors Report Reconciliation between the Zignago Vetro Group and the Parent Zignago Vetro SpA profit for the period and equity The reconciliation between the profit for the period and equity at 30 June 2017 of the Parent and the Consolidated profit for the period and equity are summarised below: (Euro thousands) Profit H Equity 30/06/2017 Financial statements of the Parent 16,976 97,923 Consolidation adjustments: - interests in joint ventures measured under the equity method 7,648 36,322 - reversal of inter-group dividend (9,157) reversal of inter-company Profit (11) (46) - goodwill on acquisition of HSC SA investment Capitalisation by HSC SA of financial expense on loan from Zignago Vetro SpA (153) (153) - Other consolidation adjustments Carrying amount of equity investments: (1,673) 36,857 Verreries Brosse SAS --- (4,000) Zignago Glass USA Inc. --- (189) HSC SA --- (10,327) --- (14,516) Profit for the period and equity of the subsidiaries: Verreries Brosse SAS 2,194 14,694 Zignago Glass USA Inc. (65) (196) HSC SA ,936 2,936 32,434 Consolidated Financial Statements 18, ,698 * * * * It is considered that the information provided, together with the information illustrated below and relating to the performance of the individual companies, represents a true, balanced and exhaustive analysis of the situation of the Group and of the results of operations, overall and in the various sectors, in accordance with the size and complexity of the Group s business operations. For greater clarity, the result of operations and statement of financial position of the parent and subsidiaries are presented according to the contribution of each of them to the Condensed Interim Consolidated Financial Statements. They are shown according to normal reporting practices. 26

29 Directors Report THE COMPANY Zignago Vetro SpA Beverage and Food glass container demand both in Italy and the rest of Europe continued to improve thanks to recovering end-consumption from the previous year. Global demand for perfumery containers has continued to remain strong, particularly in specialist segments, while remaining weak for nail polish containers, impacted by the reduced sell-out in a number of regions, with the exception of the emerging economies. The skincare segment continued to grow. The Zignago Vetro SpA reclassified income statement for the first half of 2017 compared to the same period of the previous year is presented on the next page. Revenues Changes Euro thou. % Euro thou. % % 96, % 93, % 3.0% Changes in finished and semi-finished products and work in progress (819) (0.9%) (57) (0.1%) n.a. Internal production of fixed assets and contributions on investments % % n.a. Value of production 95, % 93, % 2.2% Cost of goods and services (55,684) (57.8%) (52,915) (56.6%) 5.2% Value added 40, % 40, % (1.7%) Personnel expense (18,222) (18.9%) (17,630) (18.9%) 3.4% EBITDA 21, % 23, % (5.6%) Amortisation & Depreciation (10,606) (11.0%) (10,175) (10.9%) 4.2% Accruals to provisions (110) (0.1%) (257) (0.3%) (57.2%) EBIT 11, % 12, % (12.4%) Net recurring non-operating income % (4) --- n.a. O perating Profit H H , % 12, % (11.2%) Investment income 9, % 9, % 1.1% Net financial expense (146) (0.2%) (2,011) (2.2%) (92.7%) Net exchange rate gains/(losses) % (61) (0.1%) n.a. Profit before taxes 20, % 19, % 3.5% Income taxes (3,399) (3.5%) (3,564) (3.8%) (4.6%) (Tax-rate H1 2017: 16.7%) (Tax-rate H1 2016: 18.1%) Profit for the period 16, % 16, % 5.3% 27

30 Directors Report Revenues in the first half of 2017 of Euro 96.3 million grew 3% on the first half of the previous year (Euro 93.4 million). Sales of glass containers and accessories (these latter referring to Zignago Vetro SpA services on the market) amounted to Euro 88.8 million, up 3% (Euro 86.8 million in the first half of 2016). Exports increased in H by 5% on the first half of the previous year, accounting for 23.9% of containers and accessories revenues (23.9% in 2016). Revenues by geographic segment, excluding sundry materials and services: (Euro thousands) H H Change % Italy 67,013 65, % European Union (Italy excluded) 16,248 15, % Other areas 4,747 4, % Total 88,008 86, % of which export 20,995 20, % % 23.9% 23.9% Raw material and service costs on revenues, net of changes in inventories and internal production, in H were 58.4% compared to 56.4% in H amounting to Euro 56.2 million in H and Euro 52.7 million in the first half of The added value was 41.6% of revenues in the first half of 2017 compared to 43.6% in the first half of Personnel expense increased 3.4% in H compared to the same period of They were unchanged on revenues compared to H (18.9%). EBITDA totalled Euro 21.8 million in H compared to Euro 23.1 million in the first half of 2016 (-5.6%), a margin of 22.7% (24.8% in H1 2016). EBIT in the first half of 2017 reduced 12.4% on the previous year (Euro 11.1 million compared to Euro 12.7 million), reporting a revenue margin of 11.6% (13.6% in H1 2016). Investment income in the first half of 2017 amounting to Euro 9.2 million comprises Vetri Speciali SpA dividends (Euro 9.1 million in 2016). Net financial expense in H amounted to Euro 0.15 million, compared to Euro 2 million in the same period of the previous year, principally due to the fair value measurement of interest rate derivatives, which in the first half of 2016 resulted in financial expenses of Euro 1 million, while in the first half of 2017 resulting in financial income of Euro 0.5 million. The profit before taxes in H was Euro 20.4 million compared to Euro 19.7 million in H (Euro +0.7 million; +3.5%). The margin was 21.2% compared to 21.1%. The tax rate in the period, taking account of the largely exempt investment income in the separate financial statements of Zignago Vetro, was 16.7%, compared to 18.1% in H

31 Directors Report The profit in H amounted to Euro 17 million compared to Euro 16.1 million in the first half of 2016 (+5.3%). The cash flow generated from the profit for the period and amortisation/depreciation in the first half of the year amounted to Euro 27.6 million, compared to Euro 26.3 million in the same period of the previous year (+4.9%). Cash flow as a percentage of revenues was 28.8% compared to 28.1%. The reclassified statement of financial position of Zignago Vetro SpA at 30 June 2017 and 31 December 2016 and 30 June 2016 was as follows: Euro thou. % Euro thou. % Euro thou. % Trade receivables 50,982 43,730 43,580 Other receivables 6,124 9,855 7,266 Inventories 44,611 46,362 42,077 Current non-financial payables (40,708) (41,263) (40,167) Payables on fixed assets (4,213) (4,173) (3,872) A) Working capital 56, % 54, % 48, % Net tangible and intangible assets 88,703 87,448 89,705 Investments 40,895 40,895 40,766 Non-consolidated investments and other non-current assets 3,078 3,975 4,042 Non-current provisions and nonfinancial payables (11,169) (11,928) (11,980) B) Net fixed capital 121, % 120, % 122, % A+B= Net capital employed 178, % 174, % 171, % Financed by: Current loans and borrowings 71,061 74,613 73,775 Cash and cash equiv. & fin. receivables (60,005) (84,592) (89,706) Current net debt 11, % (9,979) (5.7%) (15,931) (9.3%) Non-current loans and borrowings 69, % 82, % 94, % C) Net financial debt 80, % 72, % 78, % Opening equity 102,765 96,205 96,205 Dividends (21,818) (20,346) (20,346) Profit for the period 16,976 27,229 16,119 Cash Flow Hedge reserve Other changes --- (323) --- D) Closing equity 97, % 102, % 92, % C+D = Total financial debt and equity 178, % 174, % 171, % 29

32 Directors Report The working capital at 30 June 2017 rose on 31 December 2016 by Euro 2.3 million (+4.2%). Trade receivables increased Euro 7.3 million compared to 31 December 2016, due to seasonal effects and increased sales, with other receivables reducing Euro 3.7 million following the decrease in tax receivables, while inventories decreased Euro 1.8 million (-3.8%) compared to 31 December Current non-financial payables decreased Euro 0.5 million compared to 31 December 2016 and fixed asset payables decreased Euro 0.04 million. Net fixed capital at 30 June 2017 was Euro 1.1 million higher than 31 December 2016, mainly due to higher net investments (overall Euro 11.8 million) than amortisation and depreciation in the period (Euro 10.6 million). Net capital employed at 30 June 2017 increased Euro 3.4 million compared to 31 December The decrease in equity at 30 June 2017 of Euro 4.8 million on 31 December 2016 is due to the distribution of dividends of Euro 21.8 million greater than the profit for the period of Euro 16.9 million. Mainly due to investments in the period and dividends, the net financial debt at 30 June 2017 amounted therefore to Euro 80.4 million, rising Euro 8.3 million on 31 December 2016 and Euro 1.5 million on 30 June Employees of the Company at 30 June 2017 numbered 628, broken down as follows: 12 executives, 145 white-collar and 471 blue-collar. There were 54 fixed-term employees. At 31 December 2016, employees numbered 601: 11 executives, 141 white-collar and 449 bluecollar. There were 25 fixed-term employees. At 30 June 2016, there were 608 employees, of which: 11 executives, 141 white-collar and 456 bluecollar. There were 44 fixed-term employees. Based on information available, it would appear reasonable to forecast overall that the market growth evident in the first half will continue in the coming months of the year. 30

33 Directors Report THE CONSOLIDATED SUBSIDIARIES Verreries Brosse SAS Registered office: Vieux-Rouen-sur-Bresle (France) Business sector: glass bottles for luxury fragrances Chairman Board of Directors Paolo Giacobbo Maurizio Guseo - General Manager Roberto Celot Ovidio Dri Alberto Faggion Franco Grisan Nicolò Marzotto Michele Pezza In the first half of 2017, global luxury perfume demand continued to perform strongly, driven by emerging economy sales. In addition to the use of flankers for new initiatives, the number of new launches rose. Skincare container demand was again strong. 31

34 Directors Report The reclassified consolidated income statement of Verreries Brosse in H compared to the same period of the previous year is shown below: H H Changes Euro thou. % Euro thou. % % Revenues 29, % 27, % 7.0% Changes in finished and semi-finished products and work in progress % (876) (3.2%) n.a. Value of production 29, % 26, % 11.3% Cost of goods and services (14,444) (48.9%) (15,916) (57.6%) (9.2%) Value added 15, % 10, % 41.5% Personnel expense (9,419) (31.9%) (9,422) (34.1%) (0.0%) EBITDA EBIT 5, % 1, % 321.0% Amortisation & Depreciation (3,064) (10.4%) (3,256) (11.8%) (5.9%) Accruals to provisions (325) (1.1%) (160) (0.6%) n.a. 2, % (2,017) (7.3%) n.a. Net recurring non-operating income (charges) % (28) (0.1%) n.a. O perating Profit/(loss) 2, % (2,045) (7.4%) n.a. Net financial expense (156) (0.5%) (181) (0.7%) (13.8%) Net exchange rate gains/(losses) (48) (0.2%) (6) --- n.a. Profit/(loss) before taxes 2, % (2,232) (8.1%) n.a. Income taxes (132) (0.4%) % n.a. Profit/(loss) for the period 2, % (1,798) (6.5%) n.a. Revenues in the first half of 2017 of Euro 29.5 million increased 7% on the same period of the previous year (Euro 27.6 million). Revenues by geographic segment: (Euro thousands) H H change % Italy 1,784 1, % European Union (Italy excluded) 26,525 23, % Other areas 1,239 2,112 (41.3%) Total 29,548 27, % 32

35 Directors Report Material costs and external services, including inventory changes, in the first half of 2017 were 48.2% of revenues compared to 60.8% in the first half of The 2016 figure was partly impacted by the repeated strikes against the French Government s labour reform laws. Personnel expense in H was in line with the same period of These costs on revenues decreased from 34.1% to 31.9%. EBITDA in the first half of 2017 totalled Euro 5.9 million, compared to Euro 1.4 million in the same period of The margin was 19.9% compared to 5.1%. EBIT in H totalled Euro 2.5 million compared to a loss of Euro 2 million in the first half of the previous year. The profit before taxes in H was Euro 2.3 million (loss of Euro 2.2 million in the first half of 2016). The profit for the period was Euro 2.1 million. The cash flow generated from the profit for the period and amortisation/depreciation in the first half of 2017 and 2016 amounted to Euro 5.25 million and Euro 1.5 million respectively. 33

36 Directors Report The reclassified statement of financial position of Verreries Brosse at 30 June 2017 and 31 December 2016 and 30 June 2016 was as follows: Euro thou. % Euro thou. % Euro thou. % Trade receivables 10,812 8,728 11,867 Other receivables 2,446 2,664 2,031 Inventories 17,739 17,747 17,007 Current non-financial payables (11,372) (10,240) (11,537) Payables on fixed assets (475) (797) (665) A) Working capital 19, % 18, % 18, % Net tangible and intangible assets 20,538 21,639 22,776 Equity investments and other noncurrent assets 1,165 1,146 1,610 Non-current provisions and nonfinancial payables (1,536) (1,361) (1,662) B) Net fixed capital 20, % 21, % 22, % A+B= Net capital employed 39, % 39, % 41, % Financed by: Current loans and borrowings 27,369 27,495 26,825 Cash and cash equivalents (8,756) (7,567) (6,644) Current net debt 18, % 19, % 20, % Non-current loans and borrowings 6, % 7, % 8, % C) Net financial debt 24, % 27, % 29, % Opening equity 12,500 14,110 14,110 Other equity changes Profit for the period 2,194 (1,610) (1,798) D) Closing equity 14, % 12, % 12, % C+D = Total financial debt and equity 39, % 39, % 41, % 34

37 Directors Report Working capital at 30 June 2017 increased Euro 1 million on 31 December 2016 (+Euro 1.1 million concerning increased current non-financial payables and increased trade receivables of Euro 2 million, with payables on fixed assets reducing Euro 0.3 million). Compared to 30 June 2016, working capital increased Euro 0.4 million due to the increase in other receivables (Euro +0.4 million), the decrease in receivables (Euro -1 million), the increase in inventories (Euro +0.7 million) and the decrease in current non-financial payables (-Euro 0.2 million). Net fixed capital at 30 June 2017 decreased on 31 December 2016 by Euro 1.2 million, owing principally to investments (Euro 2 million) lower than amortisation/depreciation (Euro 3 million). The net financial debt amounted to Euro 24.6 million at 30 June 2017 (Euro 27 million at 31 December 2016 and Euro 29.1 million at 30 June 2016). At 30 June 2017, there were 308 employees (at 31 December and 30 June 2016 respectively 338 and 329 employees). It is forecast that the company in the second half of the year will continue the recovery in sales and profitability seen in the first six months. 35

38 Directors Report Huta Szkła Czechy S.A. (HSC SA) Registered office: Trabkj (Poland) Business sector: glass containers Chairman: Management Board : Paolo Giacobbo Ovidio Dri General Manager Roberto Cardini Roberto Celot Alberto Faggion Franco Grisan Nicolò Marzotto Stefano Marzotto Supervisory Board : Paolo Nicolai - chairman Stefano Perosa Carlo Pesce In the first half of 2017, the European hollow glass market for Beverages and Food reported good container demand amid a generally buoyant consumer market. The global Perfumery market again performed well, particularly the specialised categories, while cosmetic market demand again appears weak, impacted by the reduced sell-out, with the exception of emerging economies. The skincare segment continued to grow. 36

39 Directors Report The reclassified income statement of HSC SA in the first half of 2017 compared to the previous year is shown below: H H Changes Euro thou. % Euro thou. % % Revenues 13, % 11, % 18.2% Changes in finished and semi-finished products and work in progress 1, % % n.a. Internal production of fixed assets % % n.a. Value of production 15, % 11, % 30.7% Cost of goods and services (8,435) (62.6%) (6,392) (56.1%) 32.0% Value added 6, % 5, % 29.2% Personnel expense (3,567) (26.5%) (2,785) (24.4%) 28.1% EBITDA 3, % 2, % 30.4% EBIT Amortisation & Depreciation (2,168) (16.1%) (1,321) (11.6%) 64.1% Accruals to provisions (52) (0.4%) (47) (0.4%) 10.6% 1, % 1, % (6.5%) Net recurring non-operating income (charges) % n.a. Operating Profit 1, % 1, % (5.8%) Net financial expense (114) (0.8%) (42) (0.4%) n.a. Net exchange rate gains/(losses) % (235) (2.1%) n.a. Profit before taxes 1, % % 12.5% Income taxes (214) (1.6%) (191) (1.7%) 12.0% Profit for the period % % 12.7% Revenues in H totalled Euro 13.5 million, compared to Euro 11.4 million in H (+18.2%). Exports accounted for 68.9% of revenues. Revenues include, in addition to glass containers, also decoration services and the contribution charged to clients for the creation of moulds for specific products and other services. Revenue by geographic segment (Euro thousands) H H change % Italy 3,688 3, % European Union (Italy excluded) 7,947 6, % Other areas 1, % Total 13,469 11, % 37

40 Directors Report Materials and external services, including changes in inventories and internal production of fixed assets, amounted in the first six months of 2017 to Euro 6.6 million 48.9% of revenues (Euro 6.1 million and 53.2% in H1 2016). Personnel expense amounted to Euro 3.6 million % of revenues (24.4% in the same period of the previous year). The increase in the first six months of 2017 compared to the same period of 2016 (+28%) is principally due to the expanded workforce, related to the installation of the new furnace. EBITDA in H amounted to Euro 3.3 million % revenue margin (H Euro 2.5 million % revenue margin). EBIT totalled Euro 1.1 million in H compared to Euro 1.2 million in H1 2016, with a 8.2% revenue margin compared to 10.4% in the previous year. The profit before taxes in H was Euro 1 million (7.6% revenue margin) compared to Euro 0.9 million in H (8% revenue margin). The first half of 2017 reported a profit of Euro 0.8 million compared to Euro 0.7 million in H1 2016, with respective margins of 6% and 6.3%. The cash flow generated by the profit for the period and amortisation/depreciation amounted to Euro 2.9 million, 22.1% of revenues (in H Euro 2 million, 17.9% of revenues). 38

41 Directors Report The reclassified statement of financial position of HSC SA at 30 June 2017 and at 31 December and 30 June 2016 is as follows: Euro thou. % Euro thou. % Euro thou. % Trade receivables 4,617 3,907 3,319 Other receivables 1,362 1,467 1,074 Inventories 7,679 5,540 5,191 Current non-financial payables (4,795) (4,026) (3,223) Payables on fixed assets (2,809) (8,280) (1,227) A) Working capital 6, % (1,392) (3.3%) 5, % Net tangible and intangible assets 54,859 43,637 20,435 Non fully consolidated eq. investments & other medium/long term assets Non-current provisions and non-financial payables (1,358) (1,260) (1,129) B) Net fixed capital 54, % 43, % 19, % A+B= Net capital employed 60, % 41, % 24, % Financed by: Current loans and borrowings 5,884 3,155 1,139 Cash and cash equivalents (786) (3,888) (3,404) Current net debt 5, % (733) (1.8%) (2,265) (9.1%) Non-current loans and borrowings 37, % 25, % 12, % C) Net financial debt 42, % 25, % 9, % Opening equity 16,405 15,010 15,010 Other equity changes 724 (518) (591) Profit for the period 807 1, D) Closing equity 17, % 16, % 15, % C+D= Total liquidity and equity 60, % 41, % 24, % The working capital at 30 June 2017 increased Euro 7.4 million compared to 31 December Net fixed capital amounted to Euro 54.2 million at 30 June 2017, increasing Euro 11.1 million on 31 December 2016, principally due to amortisation/depreciation (Euro 2.2 million) lower than investments (Euro 11.4 million). The debt at 30 June 2017 was Euro 42.3 million, while at 31 December 2016 and 30 June 2016 respectively Euro 25.2 million and Euro 9.8 million. At 30 June 2017 employees numbered 554, while at 31 December and 30 June 2016 respectively 418 and 441. Over the coming months, the market conditions seen in the initial part of the year are expected to continue, further boosting company business volumes and supported also by expanded production capacity. 39

42 Directors Report Vetri Speciali SpA Registered office: Trento Via Manci, 5 Business sector: specialty glass containers Chairman: Vice Chairman: Chief Executive Officer: Directors: Statutory Auditors: Vitaliano Torno Stefano Marzotto Giorgio Mazzer Luca Marzotto Massimo Noviello Carlo Pesce - chairman Lorenzo Buraggi Stefano Meneghini In H1 2017, special container demand remained at strong levels across all market segments and in particular for export driven consumer segments. The reclassified consolidated income statement of Vetri Speciali SpA for H compared to the same period of the previous year, for the share pertaining to Zignago Vetro SpA (50%), is summarised below: Revenues Changes Euro thou. % Euro thou. % % 39, % 36, % 10.6% Changes in finished and semi-finished products and work in progress 1, % (691) (1.9%) (361.8%) Value of production 41, % 35, % 17.9% Cost of goods and services (19,510) (48.9%) (16,046) (44.5%) 21.6% Value added 22, % 19, % 14.8% Personnel expense (9,022) (22.6%) (7,707) (21.4%) 17.1% EBITDA 13, % 11, % 13.3% Amortisation & Depreciation (3,015) (7.6%) (1,926) (5.3%) 56.5% Accruals to provisions (69) (0.2%) (125) (0.3%) (44.8%) EBIT 10, % 9, % 5.3% Net recurring non-operating income % % (41.7%) O perating Profit H H , % 10, % 3.2% Net financial expense (110) (0.3%) (146) (0.4%) (24.7%) Net exchange rate gains/(losses) (14) n.a. Profit before taxes 10, % 9, % 3.4% Income taxes (2,640) (6.6%) (3,043) (8.4%) (13.2%) (Tax-rate H1 2017: 25.8%) (Tax-rate H1 2016: 30.8%) Profit for the period 7, % 6, % 10.8% 40

43 Directors Report The portion of consolidated revenues in the first half of 2017 amounted to Euro 39.9 million, an increase of 10.6% compared to Euro 36.1 million in the first half of the previous year. Exports accounted for 23.4% of revenues (24.7% in the same period of 2016). Revenues by geographic segment: (Euro thousands) H H change % Italy 30,539 27, % European Union (Italy excluded) 6,057 4, % Other areas 3,287 3,919 (16.1%) Total 39,883 36, % The portion of material costs and external services in the first half of 2017, including the changes in the share of inventory, account for 44.4% of revenues compared to 46.4% in the first half of The portion of personnel expense in H compared to the same period in 2016 increased by 17.1%, following the increase in the workforce also due to the new kiln currently being installed and wages increases. The portion of EBITDA amounted to Euro 13.2 million in H1 2017, an increase of 13.3% compared to the same period of 2016 (Euro 11.6 million), and a margin of 33% on revenues (32.2% in H1 2016). The portion of EBIT in the period was Euro 10 million, up 5.3% (Euro 9.6 million in the same period of 2016), with a margin of 25.3% compared to 26.5%. The relevant portion of profit in H rose 3.4% to Euro 10.2 million (25.6% revenue margin) compared to Euro 9.9 million in H (27.4% revenue margin). The tax rate in the first six months of 2017 was 25.8%, compared to 30.8% in H The profit in H amounted to Euro 7.6 million compared to Euro 6.8 million in the first half of 2016 (+10.8%), with a similar margin to H (19%). The cash flow generated from the profit for the period and amortisation/depreciation in the first half of the year amounted to Euro 10.6 million compared to Euro 8.8 million in the same period of

44 Directors Report The reclassified consolidated statement of financial position of Vetri Speciali SpA at 30 June 2017 and 31 December 2016 and 30 June 2016, for the share pertaining to Zignago Vetro SpA (50%), was as follows: Euro thou. % Euro thou. % Euro thou. % Trade receivables 18,030 11,616 14,533 Other receivables 2,343 4,332 1,714 Inventories 15,325 13,114 9,940 Current non-financial payables (15,644) (14,733) (12,548) Payables on fixed assets (770) (5,713) (3,604) A) Working capital 19, % 8, % 10, % Net tangible and intangible assets 46,200 44,945 31,903 Goodwill 40,086 40,086 40,086 Equity investments and other non-current assets Non-current provisions and non-financial payables (2,968) (3,015) (2,978) B) Net fixed capital 83, % 82, % 69, % A+B= Net capital employed 103, % 91, % 79, % Financed by: Current loans and borrowings 21,232 10,896 11,745 Cash and cash equivalents (4,372) (8,093) (30) Current net debt 16, % 2, % 11, % Non-current loans and borrowings 23, % 23, % 9, % C) Net financial debt 40, % 26, % 21, % Opening equity 64,406 60,501 60,501 Dividends paid in the period (9,157) (9,056) (9,056) Other equity changes --- (100) --- Profit for the period 7,578 13,062 6,840 D) Closing equity 62, % 64, % 58, % C=D Total financial debt and equity 103, % 91, % 79, % The portion of trade receivables at 30 June 2017 increased 55.22% (Euro +6.4 million) compared to 31 December 2016 and Euro +3.5 million on 30 June The portion of inventories at 30 June 2017 increased Euro 2.2 million (+16.86%) compared to 31 December 2016 and Euro 5.4 million (+54.2%) compared to 30 June The portion of net fixed capital of Euro 83.8 million at 30 June 2017 was Euro 1.3 million higher than 31 December 2016 and Euro 14.3 million higher than 30 June 2016, due to greater capital expenditure than depreciation. 42

45 Directors Report The portion of debt at 30 June 2017 amounted to Euro 40.2 million, an increase of Euro 13.6 million (+51.13%) on 31 December 2016 and increasing Euro 19 million (+90%) on 30 June During the period, the portion of dividends paid was Euro 9.2 million (Euro 9.1 million in 2016). At 30 June 2017 employees numbered 761 (100% of the data), while at 31 December and 30 June 2016 respectively 617 and 684. Results for the current year are expected to remain at good levels, once again benefitting from strong demand. * * * For completeness, the reclassified consolidated income statement and statement of financial position of Vetri Speciali SpA (100% of the relative data) are presented below. The reclassified consolidated income statement of Vetri Speciali SpA (100% of the data) for H and H is shown below: Revenues H H Changes Euro thou. % Euro thou. % % 79, % 72, % 10.6% Changes in finished and semi-finished products and work in progress 3, % (1,382) (1.9%) (361.8%) Value of production 83, % 70, % 17.9% Cost of goods and services (39,019) (48.9%) (32,092) (44.5%) 21.6% Value added 44, % 38, % 14.8% Personnel expense (18,044) (22.6%) (15,414) (21.4%) 17.1% EBITDA 26, % 23, % 13.3% Amortisation & Depreciation (6,030) (7.6%) (3,851) (5.3%) 56.6% Other accruals to provisions (138) (0.2%) (250) (0.3%) (44.8%) EBIT 20, % 19, % 5.3% Net recurring non-operating income % % (41.7%) Operating Profit 20, % 20, % 3.2% Net financial expense (220) (0.3%) (291) (0.4%) (24.4%) Net exchange rate gains/(losses) (28) n.a. Profit before taxes 20, % 19, % 3.4% Income taxes (5,282) (6.6%) (6,088) (8.4%) (13.2%) Profit for the period 15, % 13, % 10.8% 43

46 Directors Report The reclassified consolidated statement of financial position of Vetri Speciali SpA (100% of the data) at 30 June 2017, 31 December 2016 and 30 June 2016 is summarised below: Euro thou. % Euro thou. % Euro thou. % Trade receivables 36,060 23,231 29,066 Other receivables 4,686 8,663 3,428 Inventories 30,649 26,227 19,879 Current non-financial payables (31,288) (29,466) (25,095) Payables on fixed assets (1,540) (11,425) (7,208) A) Working capital 38, % 17, % 20, % Net tangible and intangible assets 92,399 89,889 63,805 Goodwill 80,171 80,171 80,171 Investments Non-current provisions and nonfinancial payables (5,935) (6,025) (5,955) B) Net fixed capital 167, % 164, % 138, % A+B= Net capital employed 206, % 182, % 158, % Financed by: Current loans and borrowings 42,462 21,792 23,490 Cash and cash equivalents (8,744) (16,185) (60) Current net debt 33, % 5, % 23, % Non-current loans and borrowings 46, % 47, % 18, % C) Net financial debt 80, % 53, % 42, % Opening equity 128, , ,001 Dividends paid in the period (18,313) (18,112) (18,112) Other equity changes --- (199) --- Profit for the period 15,156 26,123 13,681 D) Closing equity 125, % 128, % 116, % C+D= Total financial debt and equity 206, % 182, % 158, % 44

47 Directors Report Vetreco Srl Registered office: Supino (FR) Via Morolense Business sector: treatment and sale of recycled glass Chairperson: Vice Chairman: Directors: Statutory Auditors: Germana Signa Roberto Celot Rocco Furia Dario Lorenzon John Gerard Sadlier Maria Gabriella Spinelli Alberto Faggion - chairman Riccardo Bolla Augusto Valchera The company returned satisfying results for the first half of 2017, thanks both to ongoing technical and organisational improvements and also a stabilising raw glass market. The availability and quality of this latter however is always a key factor for the achievement of strong operating results. 45

48 Directors Report The reclassified income statement of Vetreco Srl (100% of the data) for H and 2016 is reported below: Revenues H H Change Euro % Euro % % 7, % 6, % 15.3% Changes in finished and semi-finished products and work in progress (4) (0.1%) (110) (1.7%) n.a. Value of production 7, % 6, % 17.2% Cost of goods and services (5,333) (71.9%) (5,485) (85.2%) (2.8%) Value added 2, % % 147.3% Personnel expense (773) (10.4%) (707) (11.0%) 9.3% EBITDA 1, % % 864.7% Amortisation & Depreciation (516) (7.0%) (511) (7.9%) 1.0% EBIT % (375) (5.8%) (312.3%) Net recurring non-operating income O perating Profit/(loss) % (375) (5.8%) (312.3%) Net financial expense (250) (3.4%) (250) (3.9%) --- Profit/(loss) before taxes % (625) (9.7%) (187.4%) Income taxes (182) (2.5%) % (285.7%) Profit/(loss) for the period % (527) (8.2%) (169.1%) In the first half, the company reported revenues of Euro 7.4 million, principally concerning the sale of raw glass for furnaces, raw glass third party processing and metal waste sales. 46

49 Directors Report The reclassified statement of financial position of Vetreco Srl (100% of the data) at 30 June 2017, 31 December 2016 and 30 June 2016 was as follows: Euro % Euro % Euro % Trade receivables 2,914 3,005 2,162 Other receivables 1,975 3,241 3,329 Inventories 1,000 1, Current non-financial payables (3,746) (4,128) (4,888) Payables on fixed assets (12) (110) (82) A) Working capital 2, % 3, % 1, % Net tangible and intangible assets 14,809 15,266 15,625 Other eq. investments & non-current assets Non-current provisions & non-financial payables (64) (53) (38) B) Net fixed capital 14, % 15, % 15, % A+B = Net capital employed 16, % 18, % 17, % Financed by: Current loans and borrowings 2,355 3,362 17,082 Cash and cash equivalents (920) (169) (23) Current net debt 1,435 3,193 17,059 Non-current loans and borrowings 14,443 14, C) Net financial debt 15, % 17, % 17, % Opening equity Shareholder capital payments Other equity changes Profit for the period 364 (272) (527) D) Closing equity 1, % % (30) (0.2%) C+D = Total financial debt and Equity 16, % 18, % 17, % Working capital amounted to Euro 2.1 million, a decrease of Euro 0.9 million on 31 December 2016, principally due to the decrease in other receivables (Euro -1.3 million), trade receivables (Euro -0.1 million) and current non-financial payables (Euro -0.4 million). Net fixed capital at 30 June 2017 was Euro 0.5 million lower than 31 December

50 Directors Report Net capital employed at 30 June 2017 decreased Euro 1.3 million compared to 31 December The increase in equity at 30 June 2017 compared to 31 December 2016 was Euro 0.4 million, relating to the profit in the period. The net financial debt at 30 June 2017 amounted to Euro 15.9 million, a decrease of Euro 1.8 million on 31 December The workforce at 30 June 2017 totalled 20, of which 13 contract workers. At 31 December 2016, the workforce numbered 17, of which 12 temporary personnel. At 30 June 2016, employees numbered 31, of which 14 contract workers. It is expected that the company will continue to report good results, in line with those reported in the first half of 2017, although this will depend on the procurement costs of raw scrap, its quality and its availability. * * * Atypical and/or unusual transactions There were no atypical and/or unusual transactions for the period ended 30 June 2017 as defined by Consob Communication DEM/

51 Significant events after 30 June 2017 Outlook Significant events after 30 June 2017 There were no significant events after 30 June Outlook Based on the information available, demand in the sectors in which the Group operates is overall expected to remain at a good level. Fossalta di Portogruaro, 26 July 2017 For the Board of Directors The Chairman Mr. Paolo Giacobbo 49

52

53 Condensed Interim Consolidated Financial Statements Interim Consolidated Financial Statements 51

54 Condensed Interim Consolidated Financial Statements Statement of financial position (Euro thousands) Note ASSETS Non-current assets Property, plant and equipment 163, , ,795 (1) Goodwill (2) Intangible assets Equity-accounted Joint Ventures 62,704 64,210 57,956 (3) Equity investments Other non-current assets 2,782 2,536 2,433 (4) Deferred tax assets 1,803 2,883 3,331 Total non-current assets 232, , ,717 Current assets Inventories 69,979 69,600 64,217 (5) Trade receivables 64,108 54,905 57,175 (6) Other current assets 8,069 11,402 7,982 (7) Tax Assets 2,475 2,587 2,390 Cash and cash equivalents 18,133 59,361 79,180 (8) Total current assets 162, , ,944 TO TAL ASSETS 395, , ,661 EQUITY & LIABILITIES EQ UITY Share capital 8,800 8,800 8,800 Reserves 35,521 35,521 35,521 Treasury shares (5,027) (5,027) (5,027) Retained earnings and profit for the period 115, , ,254 Other equity items (1,868) (2,626) (1,798) TO TAL GRO UP EQ UITY 152, , ,750 (9) NO N-CO NTRO LLING INT. EQ UITY TO TAL EQ UITY 152, , ,750 LIABILITIES Non-current liabilities Provisions for risks and charges 3,422 3,541 3,636 (10) Post-employment benefits 5,115 5,164 4,732 (11) Non-current loans and borrowings 75,351 87, ,361 (12) Other non-current liabilities 3,230 3,528 3,820 (13) Deferred tax liabilities 2,298 2,316 2,583 Total non-current liabilities 89, , ,132 Current liabilities Bank loans and borrowings - current portion 90,309 96,271 92,741 (14) Trade and other payables 45,248 50,033 42,145 (15) Other current liabilities 17,247 16,606 16,194 (16) Current income taxes (17) Total current liabilities 152, , ,779 TO TAL LIABILITIES 242, , ,911 TO TAL EQ UITY AND LIABILITIES 395, , ,661 52

55 Condensed Interim Consolidated Financial Statements Income Statement (Euro thousands) H H Note Revenues 135, ,520 (18) Raw material, ancillary, consumables and goods (35,541) (37,707) (19) Service costs (37,048) (33,941) (20) Personnel expense (31,366) (29,952) (21) Amortisation & Depreciation (15,831) (14,752) (22) Other operating costs (2,201) (2,480) Other operating income 1,612 1,038 Effect of measurement of Joint Ventures using equity method 7,648 6,720 (3) Operating Profit 22,501 18,446 Financial income Financial expense (708) (2,328) (23) Net exchange rate gains/(losses) 55 (302) Profit before taxes 21,925 15,910 Income taxes (3,686) (3,316) (24) Profit for the period 18,239 12,594 Earnings per share: Basic earnings (and diluted) per share

56 Condensed Interim Consolidated Financial Statements Statement of Comprehensive Income (Euro thousands) H H Profit for the period 18,239 12,594 Items that will be subsequently reclassified to profit or loss Translation difference for foreign operations Profit/(loss) cash flow hedge Tax effect 758 (621) (226) 758 (127) Total items that will be subsequently reclassified to profit or loss 758 (127) Items that will not be subsequently reclassified to profit or loss Actuarial gains/(losses) on defined benefit plans Tax effect Total items that will not be subsequently reclassified to profit or loss Other comprehensive income (expense) for the period, net of taxes Total comprehensive income for the period 758 (127) 18,997 12,467 Attributable to: Owners of the parent 18,997 12,467 Non-controlling interests

57 Condensed Interim Consolidated Financial Statements Statement of Cash Flow (Euro thousands) CASH FLOW FROM OPERATING ACTIVITIES: H H Profit before taxes 21,925 15,910 Adjustments to reconcile net profit with cash flow generated from operating activities: Amortisation & Depreciation 15,838 14,752 Losses/(gains) on sale of property, plant & equipment (241) Accrual to allowance for impairment Net changes to post-employment benefits (49) (106) Net changes to other provisions (119) (231) Change in assets and liabilities items due to translation effect (1,908) --- Financial income and exchange gains (77) (94) Financial expenses and exchange losses 653 2,630 Income taxes paid in the period (4,249) (4,638) Measurement of joint ventures at equity (7,648) (6,720) Dividends distributed by equity-accounted joint ventures 9,157 9,056 Changes in operating assets and liabilities: Decrease/(increase) in trade receivables (9,515) (3,841) Decrease/(increase) in other current assets 3,333 1,238 Decrease/(increase) in inventories (379) 2,270 Increase/(decrease) in trade & other payables 968 (712) Increase/(decrease) in other current liabilities 641 (359) Change in other non-current assets and liabilities 565 1,571 Total adjustments and changes 7,523 14,717 Net Cash Flows from operating activities (A) 29,448 30,627 CASH FLOW FROM INVESTING ACTIVITIES: Investments in intangible assets (45) (92) Investments in property, plant & equipment (27,911) (16,182) Increase/(decrease) in trade payables for purchases of non-current assets (5,754) (1,556) Proceeds from sales of property, plant and equipment 2,895 2,280 Net cash flow used in investing activities (B) (30,815) (15,550) CASH FLOWS FROM FINANCING ACTIVITIES: Interest paid in the period (688) (2,660) Interest received in the period Net change in current loans and borrowings (12,933) (9,575) Net change in non-current loans and borrowings --- Repayments of non-current loans and borrowings (5,257) (4,133) Dividends distributed (21,818) (20,346) Net cash flow used in financing activities Change in assets and liabilities items due to translation effect Net change in cash and cash equivalents (C) (40,619) (36,620) (D) (A+B+C+D) (41,228) (20,883) Cash & cash equivalents at beginning of period 59, ,063 Cash & cash equivalents at end of period 18,133 79,180 55

58 Condensed Interim Consolidated Financial Statements Statement of Changes in Equity Share capital Legal reserve Revaluation reserve Other reserves Capital paid-in Treasury shares Translation reserve Actuarial gains/(losses) on deferred ben. plans Retained earnings Profit for the period Total Equity - owners of parent Bal. at 31 Dec ,800 1,760 27,334 6, (5,027) (1,096) (575) 78,960 29, ,629 Consolidated profit ,594 12,594 Other comp. income, net of tax (621) (127) Total comprehensive profit (loss) (621) ,594 12,467 Allocation of result ,046 (29,046) Distribution of dividends (20,346) (20,346) Bal. at 30 June ,800 1,760 27,334 6, (5,027) (1,717) (575) 87,660 12, ,750 Consolidated profit ,597 18,597 Other comp. income, net of tax Total comprehensive profit (loss) ,597 18,687 Allocation of result ,046 (29,046) Distribution of dividends (20,346) (20,346) Bal. at 31 Dec ,800 1,760 27,334 6, (5,027) (1,627) (999) 87,660 31, ,519 Consolidated profit ,239 18,239 Other comp. income, net of tax Total comprehensive profit (loss) ,239 18,997 Allocation of result ,191 (31,191) Distribution of dividends (21,818) (21,818) Bal. at 30 June ,800 1,760 27,334 6, (5,027) (869) (999) 97,033 18, ,698 56

59 Notes to the financial statements 57

60 Notes SUMMARY OF THE IFRS INTERNATIONAL ACCOUNTING STANDARDS USED FOR THE PREPARATION OF THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2017 Group activities Zignago Vetro SpA is a joint stock company limited by shares domiciled at Fossalta di Portogruaro via Ita Marzotto No. 8. The publication of the condensed interim consolidated financial statements at 30 June 2017 of Zignago Vetro S.p.A. was approved by the Board of Directors on 26 July General preparation criteria The condensed interim consolidated financial statements at 30 June 2017 and for the period ended at that date are presented in accordance with IAS 34 Interim financial reporting, which relates to the reporting of interim financial information and data (the Condensed Interim Consolidated Financial Statements ). Accounting standard IAS 34 provides for a minimum level of information significantly lower than that required by IFRS, where information has already been published on the complete Financial Statements prepared in accordance with IFRS. Therefore, the present condensed interim consolidated financial statements, which were prepared in condensed form and include the minimum disclosures required by IAS 34, should be read together with the Group consolidated financial statements for the year ended 31 December 2016, prepared in accordance with the International Accounting Standards ( IFRS ) issued by the International Accounting Standards Board ( IASB ) and approved by the European Union. IFRS include all the revised international accounting standards (IAS) and all interpretations of the International Financial Reporting Interpretations Committee ( IFRIC ), previously known as the Standing Interpretations Committee ( SIC ). The Condensed Interim Consolidated Financial Statements at 30 June 2017 consist of the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the statement of changes in equity and these notes. The accounting policies adopted for the preparation of the condensed interim consolidated financial statements are the same as those utilised for the consolidated financial statements of the Zignago Vetro Group for the year ended 31 December 2016, except for the adoption of new standards, amendments and interpretations approved by the IASB and endorsed in Europe, application of which is obligatory for accounting periods beginning 1 January 2017, as follows: - Amendments to IAS 7 (Disclosure Initiative): disclosure is required which enables the reader of the financial statements to understand the changes to liabilities (and any related assets) recorded to the 58

61 Notes statement of financial position, whose cash flows are or in the future will be recognised to the statement of cash flows as cash flows from financing activities; - Amendments to IAS 12 (Recognition of Deferred Tax Assets for Unrealised Losses): it was clarified that a difference between the book value and tax value of an asset always creates a temporary difference at the reporting date. In addition, it is established that the future assessable income supporting the recognition of deferred tax assets should be calculated before the reversal of all the temporary differences; - Improvements to International Financial Reporting Standards ( cycle) The amendments are within the ordinary improvement cycle to remove any inconsistencies and provide clarifications on terminology. In particular, the amendments concern IFRS 12: it was established that the disclosure obligations under this standard apply also to investments classified in accordance with IFRS 5. The adoption of the above-mentioned standards, amendments and interpretations did not have any significant impact on the Group condensed interim financial statements. Below we report the international accounting standards, interpretations and amendments to existing accounting standards and interpretations, or specific provisions within the standards and interpretations approved by the IASB, which have not yet been approved for adoption in Europe at the approval date of the present interim financial statements. Document title Issue date by IASB Effective entry date of the IASB document Standards IFRS 9 Financial Instruments July January 2018 IFRS 15 Revenue from Contracts with Customers (including amendments to effective date issued in September 2015) May January 2018 IFRS 16 Leases January 2016 January January 2019 Amendments Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) June January 2018 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4) Transfer of Investment Property (Amendments to IAS 40) Annual Improvements to IFRSs Cycle various standards (Amendments to IFRS 1 and IAS 28) IFRIC 22 Foreign Currency Transactions and Advance Consideration Amendments to IFRS 10 and IAS 28 (2011): Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (including amendment to effective date issued in December 2015) September 2016 December 2016 December 2016 December 2016 September January January January January 2018 not determined 59

62 Notes The Company is analysing the content and will adopt the standards and improvements upon entry into force, although a material impact on the consolidated financial statements is not expected. In terms of potential impacts from application of IFRS 15 on revenue recognition, the Group launched a project for the analysis of contracts with customers, identifying the affected areas in terms of accounting, disclosure and process impacts. The analysis carried out thus far, although presently not permitting precise quantification, preliminarily indicates a limited impact on key Group indicators such as equity. However, a reasonable estimate of the effects may be provided once the Group has concluded the current project. With regards to the application of IFRS 9, although investigations are being undertaken to establish possible impacts upon financial statement balances and disclosure, no significant effects are expected. In the second half of 2017, the parent company will assess the impacts, also in support of the operational planning necessary for the adoption of the new standards from financial year 2018 and the drawing up of the relative guidance. The income statement and the statement of cash flows for the period ended 30 June 2017 are shown in comparative form with the period ending 30 June The statement of financial position is presented in comparative form with 31 December 2016 and 30 June The results reported were consistent in the three periods presented and show the consolidated statement of financial position of the Zignago Vetro Group, with the full consolidation of Verreries Brosse SAS and of HSC SA and application of the equity method to Vetri Speciali SpA and Vetreco Srl.. These Condensed Interim Consolidated Financial Statements of the Zignago Group as at and for the six months ended 30 June 2017 were prepared under the historical cost method, except for investments in financial assets and in derivative instruments, which are recorded at fair value. These Condensed Interim Consolidated Financial Statements Financial Statements were prepared in Euro, the currency of the area in which the Group operates. All the amounts reported in the statements and notes to the condensed interim consolidated financial statements are expressed in thousands of Euro, unless otherwise indicated. Consolidation scope and basis of consolidation The main consolidation criteria adopted were as follows: - the elimination of the carrying amount of equity investments against the recognition of the assets and liabilities of the subsidiary according to the line-by-line method or at equity; - the recognition of any possible non-controlling interest in equity; - the elimination of all intergroup transactions, consisting of payables and receivables, sales and purchases, and unrealised profits and losses. 60

63 Notes The assets and liabilities, expenses and income of the companies consolidated using the line-by-line method are fully included in the consolidated financial statements; the book value of the investments is eliminated against the corresponding portion of equity of the investees. At the control acquisition date, the equity of the investees is established attributing to the relevant assets and liabilities their present value. Any positive difference between the acquisition cost and the fair value of the net assets acquired is recognized in Goodwill ; if negative, it is recognised in profit and loss. The share of the equity and of profit and loss for the period relating to non-controlling interests is recognised in specific accounts in equity and in profit and loss. In the case of full control not being acquired the non-controlling interest equity is established based on the share of the present value attributable to the assets and liabilities at the date of acquisition of control, excluding any attributable goodwill (so-called partial goodwill method). Alternatively, in the case of full control not being acquired, the entire amount of goodwill (negative goodwill) generated by the acquisition is recorded considering therefore also the shareholding of non-controlling interests (so-called full goodwill method); they are expressed at their overall fair value including therefore the share of goodwill (negative goodwill). The goodwill calculation method (negative goodwill) is chosen on a case by case basis for each business combination. With regard to equity investments acquired subsequent to the acquisition of control (non-controlling interest acquisitions), any difference between the acquisition cost and the corresponding portion of equity acquired is recognised to equity; similarly, the effects from the sale of the non-controlling share without loss of control are recognised to equity. If the acquisition value of the investments is above the pro-rata value of the equity of the investment, the positive difference is attributed, where possible, to the net assets acquired based on the fair value of the same while the residual is recorded in the account Goodwill. Goodwill is not amortised but is subject to verification, at least annually, of an impairment test when events or changes occur indicating that the carrying value can no longer be recovered. The goodwill is stated at cost net of any impairment losses. If the carrying value of the investments is lower than the share of the value of the equity of the investment, the negative difference is recorded in the statement of profit and loss. The acquisition costs are expensed to profit and loss. The interim financial statements of the subsidiaries utilised for the preparation of the condensed interim consolidated financial statements are those approved by the respective Board of Directors. The data of the consolidated companies are adjusted, where necessary, in line with the accounting principles utilised by the Parent, which are in accordance with the IFRS adopted by the European Union. 61

64 Notes The companies included in the consolidation scope at 30 June 2017 and 2016 and at 31 December 2016 are shown below; the percentage holdings refer to 30 June CONSOLIDATION SCOPE Company Registered office Share capital (in Units of local currency) Percentage holding of the Group Zignago Vetro SpA (Parent) Fossalta di Portogruaro (VE) 8,800, Companies consolidated using the line-by-line method: Verreries Brosse SAS Vieux-Rouen-sur-Bresle (France) 4,000, % Huta Szkła Czecky SA (HSC SA) Trabkj (Poland) PNL 3,594, % Zignago Glass USA Inc. New York (U.S.A.) USD 200, % Equity-accounted investees: investees: Vetri Speciali SpA Trento (TN) 10,062,400 50% Vetreco Srl Supino (FR) 400,000 30% Translation of financial statements in currencies other than the Euro The rules for the translation of financial statements of Companies which operate in a currency other than the Euro are the following: - the assets and the liabilities were translated using the exchange rate at the balance sheet date; - the costs and revenues, and income and charges, were translated using the average exchange rate for the period; - the Translation reserve includes both the exchange rate differences generated from the translation of foreign currency profit and loss items and at a rate different from the closing rate exchange, and also those generated from the translation of opening equity at a closing rate exchange which is a different from the closing exchange; - goodwill related to the acquisition of a foreign entity is treated as assets and liabilities of the foreign entity and translated at the closing date. 62

65 Notes For the conversion of the Financial Statements expressed in foreign currencies, the rates indicated in the following table are applied (foreign currency for every 1 Euro). Description USD US Dollar PLN Polish Zloty Average exchange rate: - January/June January/December January/June Closing exchange rate at: - 30 June December June Use of estimates The preparation of the Condensed Interim Consolidated Financial Statements and the relative notes in application of IFRS require that management make estimates and assumptions on the values of the assets and liabilities in the consolidated interim report and on the information relating to the assets and potential liabilities at the balance sheet date. The actual results may differ from those estimated. The estimates are used to determine the accruals to the allowance for impairment, provision for inventory write-down, depreciation and amortisation, impairment losses on assets, employee benefits, income taxes, other provisions and funds. The estimates and assumptions are reviewed periodically and the effects of all variations are immediately recognized in profit or loss. The estimate criteria are the same for all periods presented. IFRS 13 requires that the financial instruments measured at fair value are classified based on three fair value hierarchy levels which reflect the significance of the input utilised in the determination of fair value. Based on the standard, the three fair value levels are as follows: Level 1 of fair value: the measurement inputs of the instruments are listed prices for identical instruments in active markets with access at the measurement date; Level 2 of fair value: the measurement inputs of the instruments are different than the prices listed at the previous point, which are directly or indirectly observable on the market; Level 3 of fair value: the measurement inputs of the instruments are not based on observable market data. As indicated by the regulation, the hierarchy of the approaches adopted for the determination of all financial instruments (shares, units, bonds and derivatives), attributes priority to official prices available on active market for the assets and liabilities to be measured and, in their absence, to the measurement of assets and liabilities based on significant quotations, where they refer to similar assets and liabilities. On a residual basis, measurement techniques may be utilised based on nonobservable inputs, and, therefore, more discretional. 63

66 Notes Assets and liabilities measured at fair value on a recurring basis: breakdown by fair value level The following table shows the assets and liabilities measured at fair value at 30 June 2017 by fair value hierarchy level. Financial assets not measured at Fair Value Cash and cash equivalents (*) 18,133 Trade receivables (*) 64,108 Financial assets measured at Fair Value Hedges Financial liabilities not measured at Fair Value Carrying Fair Value Level Value Total Non-current loans and borrowings (*) 75,351 75,351 75,351 Bank loans & borrowings and current portion of non-current loans & borrowings 90,309 1,090 89,219 90,309 Other non-current payables (*) 3,230 3,230 3,230 Trade and other payables (*) 45,248 45,248 45,248 (*) The amounts refer to current financial assets and liabilities whose book value reasonably approximates fair value, which consequently has not been stated. 64

67 Notes NOTES TO THE MAIN STATEMENT OF FINANCIAL POSITION ACCOUNTS NON-CURRENT ASSETS Property, plant and equipment 163, , ,795 Property, plant and equipment at 30 June 2017 amounted to Euro 163,720 thousand, after depreciation in the period of Euro 19,001 thousand and capital expenditure of Euro 29,351 thousand, net of fixed assets in progress items (gross of decreases in the period). The table below shows the historical cost, accumulated depreciation and carrying amount of property, plant and equipment in the two periods: (Euro thousands) Balance at 30/06/2017 Balance at Historical Accumulated Net Historical Accumulated Carrying Cost Depreciation Value Cost Depreciation amount Land and buildings 54,900 (32,457) 22,443 51,709 (31,187) 20,522 Plant & machinery 266,995 (195,387) 71, ,955 (176,780) 85,175 Industrial & commercial equipment 70,117 (65,044) 5,073 70,554 (59,774) 10,780 Other assets 7,668 (5,428) 2,239 5,840 (4,740) 1,100 Assets in progress 62, ,357 15, ,218 Total 462,037 (298,316) 163, ,276 (272,481) 132,795 Balance Acquisitions & Decreases Depreciation Exchange rate Balance (Euro thousands) capitalisation difference Land and buildings 23,184 5,153 (54) (852) ,569 Plant and machinery 81,067 5,581 (40) (12,138) ,837 Industrial and commercial equipment 9,386 6,018 (2,258) (2,577) 39 10,608 Other assets 2, (35) (246) 15 2,515 Assets in progress 36,446 10, ,345 48,191 Total 152,553 27,463 (2,387) (15,813) 1, ,720 Assets in progress principally refer to payments on account to suppliers for the purchases of plant by Huta Szkla Czechy. 65

68 Notes Goodwill The Euro 724 thousand recognised as goodwill at 30 June 2017 relates to the higher value paid for the acquisition in 2011 of Huta Szkła Czechy SA (HSC SA). The changes in the period stem from exchange rate movements. No impairment test on goodwill was carried out as no indicators existed of a long-term loss in value in the first half year Equity accounted Joint Ventures 62,704 64,210 57,956 The Group holds two investments in jointly-controlled companies: - Vetri Speciali SpA; - Vetreco Srl Vetri Speciali SpA derives from a corporate restructuring operation undertaken in 2004 and is involved in the production and sale of specialty glass containers. The company s registered offices are at via Manci 5, Trento. Production is carried out at the Spini di Gardolo (TN), Pergine Valsugana (TN), Ormelle (TV) and San Vito al Tagliamento (PN) facilities. The JV is a strategic investment for the Group, undertaken as part of the production diversification pursued by the Parent. The Zignago Group holds 50% of ordinary company shares; all shares guarantee equal rights. In 2017, the Company distributed dividends totalling Euro 18.3 million to shareholders. Vetreco Srl is an Italian limited company domiciled in Supino (FR), incorporated in July 2010 as a joint venture, involved in the processing of raw glass and the supply of cullet ready for re-use in production. The holding of Zignago Vetro SpA is 30%. As previously stated, in accordance with IAS 31 Interests in joint ventures (before passage to IFRS 11), the share of assets, liabilities, revenues and costs of the Group in both companies were consolidated proportionally until 31 December Since the adoption of IFRS 11 they have been valued at equity. 66

69 Notes The valuation of both joint ventures at equity and the movements in the period are summarised below: (Euro thousands) Value of Vetri Speciali SpA investment in Zignago Vetro 25,320 25,320 25,320 Vetri Speciali Equity at 100% 125, , ,570 Vetri Speciali Equity at 50% 62,828 64,407 58,285 Difference between value of investment and share of Eq. of the subsidiary 37,508 39,087 32,965 Valuation using the equity method of Vetri Speciali investment Share of equity 62,828 64,406 58,285 Uniform accounting principles (431) (393) (320) Total valuation using the equity method 62,397 64,013 57,965 Increase/(decrease) of carrying amount of investment compared to valuation using the equity method 37,077 38,693 32,645 Movement in valuation using the equity method Valuation using the equity method at beginning of period 64,015 60,143 60,142 Profit: pro quota 7,578 13,062 6,840 Other statement of comprehensive income items in period: IAS 19 effect --- (100) --- Dividends (9,157) (9,056) (9,056) Uniform accounting principles (39) (34) 39 Valuation using the equity method at end of period 62,397 64,015 57,965 P&L effect of valuation using the equity method of the investment 7,539 13,028 6,879 67

70 Notes (Euro thousands) Value of Vetreco Srl investment in Zignago Vetro 1,059 1, Vetreco Equity at 100% 1, (30) Vetreco Equity at 30% (9) Difference between value of investment and share of Eq. of the subsidiary (754) (863) (939) Valuation under the equity method of Vetreco Srl investment Share of equity (9) Uniform accounting principles Total valuation using the equity method (9) Increase/(decrease) of carrying amount of investment compared to valuation using the equity method (754) (863) (939) Movement in valuation under the equity method Valuation under the equity method at beginning of period Net Profit: pro quota 109 (82) (158) Other statement of comprehensive income items in period: IAS 19 effect Dividends paid in the period Increase of share capital portion Uniform accounting principles Valuation using the equity method at end of period (9) P&L effect of valuation using the equity method of the investment 109 (82) (158) The key financial and performance indicators of the jointly-controlled companies recognised to the consolidated financial statements and valued at equity are also reported. These figures relate also to the Parent interim reporting date and incorporate the totality of investments held. All investments operate on a going concern basis. The figures do not take account of the effects, although contained, from the standardisation of the accounting principles adopted by the individual investee companies with the Parent. 68

71 Notes The statement of financial position and income statement of Vetri Speciali SpA is summarised below: Vetri Speciali SpA Group (100%) (Euro thousands) Goodwill 80,171 80,171 80,171 Other non-current assets 93,263 90,734 64,601 Non-current assets 173, , ,772 Cash and cash equivalents 8,744 16, Other current assets 71,395 58,121 52,373 Current assets 80,139 74,306 52,433 TOTAL ASSETS 253, , ,205 Capital and Reserves 125, , ,570 Equity 125, , ,570 Non-current bank loans and borrowings 46,692 47,690 18,887 Other non-current liabilities 5,935 6,025 5,955 Non-current liabilities 52,627 53,715 24,842 Bank loans & borrowings and current portion of medium/long-term loans 42,462 21,792 23,490 Other current liabilities 32,828 40,891 32,303 Current liabilities 75,290 62,683 55,793 TOTAL LIABILITIES 253, , ,205 Vetri Speciali SpA Group (100%) (Euro thousands) H H Revenues 80,298 72,128 Costs of production (53,583) (48,226) Amortisation & Depreciation (6,030) (3,851) Operating Profit 20,685 20,051 Financial Income Financial Charges (219) (291) Exchange rate gains/(losses) (28) 8 Profit before taxes 20,438 19,768 Income taxes (5,282) (6,088) Profit for the period 15,156 13,680 Other positive (negative) statement of comprehensive income items Total comprehensive income 15,156 13,680 69

72 Notes The balance sheet and income statement of Vetreco Srl is summarised below: Vetreco (100%) (Euro thousands) Other non-current assets 14,828 15,286 15,645 Non-current assets 14,828 15,286 15,645 Cash and cash equivalents Other current assets 5,889 7,296 6,415 Current assets 6,809 7,465 6,415 TOTAL ASSETS 21,637 22,751 22,060 Capital and Reserves 1, (30) Equity 1, (30) Other non-current liabilities 14,507 14, Non-current liabilities 14,507 14, Bank loans & borrowings and current portion of medium/long-term loans 2,355 3,362 17,082 Other current liabilities 3,756 4,238 4,970 Current liabilities 6,111 7,600 22,052 TOTAL LIABILITIES 21,637 22,751 22,060 Vetreco (100%) (Euro thousands) H H Revenues 7,479 6,438 Costs of production (6,166) (6,302) Amortisation & Depreciation (516) (511) Operating Profit/(loss) 797 (375) Financial Charges (251) (250) Profit/(loss) before taxes 546 (625) Income taxes (182) 98 Profit/(loss) for the period Total comprehensive income 364 (527) 364 (527) 70

73 Notes Neither joint venture is listed, while a fair value deriving from a listed market price is not available for either. Relating to the goodwill which constitutes part of the book value attributed to the Vetri Speciali joint venture following the application of the equity method, it should be noted that this was not subject separately to an impairment test, but is included within any impairment test undertaken on the investment. In relation to this there was no indication of an impairment loss on the joint venture Other non-current assets 2,782 2,536 2,433 The account principally includes the tax asset related to investments in the second half of 2014 and first half of 2015 (capital grants based on Article 18 of Legs. Decree 91/2014) and receivables for guarantee deposits provided to suppliers and for lease companies, the duration of which correlates to that of the contract, normally between one and five years. In particular, the majority concerned a tax asset on investment expenditure of a unitary amount above Euro 10 thousand, incurred in the second half of 2014 and first half of 2015 in excess of the average investment in core assets in the five preceding tax years, excluding from the calculation the period in which the investments were higher. The receivable may be used as an offset over three equal annual portions from the second tax period subsequent to which the investment was made. CURRENT ASSETS Inventories 69,979 69,600 64,217 The table below shows the composition of inventories: (Euro thousands) Balance at Balance at Balance at Raw material, ancillaries and consumables 10,476 11,088 9,640 Work-in-progress and semi-finished products 8,341 6,813 7,262 Finished products 53,598 53,438 50,065 Inventory provision (2,436) (1,739) (2,750) Total 69,979 69,600 64,217 71

74 Notes Trade receivables 64,108 54,905 57,175 The table below illustrates the trade receivables and the relative doubtful debt provision: (Euro thousands) Balance at Balance at Balance at Trade receivables - Italy 35,083 35,565 35,618 Trade receivables - foreign 21,864 17,124 21,265 Receivables from parent companies Bills 9,597 5,350 3,801 Doubtful debt provision (2,436) (3,335) (3,509) Total 64,108 54,905 57,175 At 30 June 2017 and 31 December 2016, the overdue trade receivables, but not individually written down were as follows: (Euro tho us ands ) Not overdue < 30 days other Total days days 30 June ,777 9,036 1, ,733 66, December ,407 5,047 1,924 1,220 1,873 56, June ,413 9, , ,684 The largest part of the receivables of Zignago Vetro SpA, representing 78% of the Group receivables, are covered by insurance policies. The Company does not have significant concentrations of credit risk at the balance sheet date. 72

75 Notes The movements during the period in the doubtful debt provision were as follows: (Euro thousands) Balance at Balance at Balance at Provision at beginning of period 3,335 3,426 3,426 Provisions Utilisations (1,176) (130) (98) Total 2,436 3,335 3,509 The doubtful debt provision at reported significant utilisations of Euro 1,176 thousand; the utilisation relates to a commercial case in which payment was judged against the company at second level, while an appeal was subsequently presented at the Court of Cassation. The table below shows the breakdown of trade receivables by geographical segment: (Euro thousands) Balance at Balance at Balance at Italy 42,195 37,987 36,313 E.U. 18,652 13,795 18,213 Other countries 3,261 3,123 2,649 Total 64,108 54,905 57,175 73

76 Notes Other current assets 8,069 11,402 7,982 The table below shows the composition of Other current assets : (Euro thousands) Balance at Balance at Balance at VAT receivables 2,533 4,084 2,487 Advances to social security institutions and receivables from employees and agents Tax receivables as per Law 91/ ,793 1,842 Other receivables 3,648 4,985 3,259 Accrued income for: sub) 7,884 10,923 7,728 - interest on bank deposits services Prepayments: - insurance premiums rent expenses and leases services sub) Total 8,069 11,402 7,982 The account Other receivables principally includes receivables for the energy consumption contribution and for white certificates Cash and cash equivalents 18,133 59,361 79,180 The table below shows the composition of cash and cash equivalents: (Euro thousands) Balance at Balance at Balance at Time deposits 8,738 8,905 8,892 Bank and postal accounts 9,376 50,435 70,267 Cash in hand and similar Total 18,133 59,361 79,180 For the cash flow performance of the company, reference should be made to the interim consolidated statement of cash flows. 74

77 Notes EQUITY Group Equity 152, , ,750 Equity at 30 June 2017 decreased on 31 December 2016 by Euro 2,821 thousand and is attributable to the profit for the period (Euro +18,239 thousand), the distribution of dividends (Euro -21,818 thousand) and the change in the translation reserve (Euro +758 thousand). An analysis of the movements in consolidated equity is shown in the condensed interim consolidated financial statements. Non-controlling interest equity was not recorded in the periods considered. NON-CURRENT LIABILITIES Provisions for risks and charges 3,422 3,541 3,636 The table below shows the composition of the provisions for risks and charges: (Euro thousands) Balance at Balance at Balance at Agents' supplementary indemnity provision Provision for contractual risks Provision for industrial risks 1,487 1,253 1,293 Post-employment benefits provision 1,285 1,262 1,472 Provision for emission trading risks Total 3,422 3,541 3, Post-employment benefits 5,115 5,164 4,732 The table below shows the movements in the provision in the periods considered: (Euro thousands) Balance at Balance at Balance at Balance at 1 January 5,164 4,838 4,838 Interest Actuarial profit/(loss) Payments (120) (280) (144) Provision at end of period 5,115 5,164 4,732 75

78 Notes Non-current bank loans 75,351 87, ,361 and borrowings The table below shows the composition of non-current bank loans and borrowings: (Euro thousands) Balance at Balance at Balance at Unsecured loan, nominal value Euro 30 million, BNL, Euribor 3 months variable rate, maturity (A) 22 June 2021, repayment by quarterly instalments in arrears 23,879 26,844 29,827 Unsecured loan, nominal value Euro 70 million, Unicredit / Mediobanca, Euribor 3 months (B) variable rate, maturity 31 December 2020, repayment by half-yearly instalments 61,678 69,498 69,435 Unsecured loan, nominal value Euro 15 million, Banco di Brescia, Euribor 3 months variable (C) rate, maturity 18 December 2019, repayment by half-yearly instalments in arrears 9,448 11,282 13,117 French banking system loan to Verreries (D) Brosse SAS 567 1,006 1,362 (E) Bank Pekao Loan HSC SA 559 1,490 1,645 (F) HSC SA finance leases (G) BNP Paribas Loan (H) BPI Paribas Loan 1,000 1,000 1,000 (I) BNL loan 3,888 4,462 5,000 (J) Societè Generale Loan (K) Casse D Epargne Loan (L) CRCA Loan Total non-current loans & borrowings 103, , ,828 Less current portion (28,471) (31,156) (20,467) Non-current portion 75,351 87, , Other non-current liabilities 3,230 3, The account includes at 30 June 2017 and 31 December 2016 and 30 June 2016 the deferred income recognised against the tax asset for investments in new machinery under Legislative Decree 91/2014, which will be recognised to the income statement on the basis of the depreciation calculated on the investments. 76

79 Notes CURRENT LIABILITIES Bank payables and current portion medium/long loans 90,309 96,271 92,741 The table below shows the composition of bank payables and the current portion of non-current loans and borrowings: (Euro thousands) Balance at Balance at Balance at Current accounts Loan advances 34,839 44, Advances on bank drafts 9,597 3,003 3,801 Current loans 16,308 16,000 66,175 Fin. Liabilities for fair value interest rate derivatives 1,090 1,601 2,298 Current portion of non-current loans 28,471 31,156 20,467 Total 90,309 96,271 92,741 For further details on leases and non-current loans, the current portion of which is included under bank loans and borrowings, reference should be made to the paragraph Non-current loans. The following table highlights the composition of the net financial debt at 30 June 2017, 31 December 2016 and 30 June 2016 in accordance with CONSOB communication No.DEM/ of July 28, 2006: (Euro thousands) A. Cash B. Other cash equivalents 18,114 59,340 79,159 C. Securities held for trading D. Liquidity (A) + (B) + (C) 18,133 59,361 79,180 E. Current financial assets F. Current bank loans & borrowings 60,748 63,514 69,976 G. Current portion of non-current debt 28,471 31,156 20,467 H. Other current fin. payables (derivatives) 1,090 1,601 2,298 I. Current financial debt (F) + (G) + (H) 90,309 96,271 92,741 J. Net current financial position (I) - (E) - (D) 72,176 36,910 13,561 K. Non-current bank loans & borrowings 75,351 87, ,361 L. Bonds issued M. Other non-current payables N. Non-current financial debt (K) + (L) + (M) 75,351 87, ,361 O. Net financial debt (J) + (N) 147, , ,922 77

80 Notes Trade and other payables 45,248 50,033 42,145 The table below shows the breakdown of trade payables by geographic area: (Euro thousands) Balance at Balance at Balance at Italy 33,301 33,809 31,230 E.U. 11,911 13,911 10,871 Other countries 36 2, Total 45,248 50,033 42,145 Included among trade payables are capital expenditure payables of Euro 7,497 thousand at 30 June 2017 (Euro 13,250 thousand at 31 December 2016; Euro 5,764 thousand at 30 June 2016) Other current liabilities 17,247 16,606 16,194 The table below shows the composition of Other current liabilities : (Euro thousands) Balance at Balance at Balance at Social security institutions 3,702 3,483 2,987 Employees and consultants withholding taxes 1,436 1,355 1,335 Employee payables 10,881 9,650 10,511 Contribution payables Advances from customers Current portion of tax credit on Law 91/2014 investment Other payables VAT payables Accruals and deferred income - employees interest Total 17,247 16,606 16, Current tax liabilities Tax liabilities relate to Income tax for the period for some Group Companies. The Parent Zignago Vetro SpA, where applicable, complied with the option exercised by its Parent Zignago Holding SpA in relation to the national fiscal consolidation. 78

81 Notes NOTES TO THE MAIN INCOME STATEMENT ACCOUNTS H H Revenues 135, ,520 The following table shows the breakdown of revenues by product line: (Euro thousands) H H Core business products 126, ,245 Various materials 5,286 5,497 Service revenue 567 1,397 Other revenues 2,410 1,381 Total 135, ,520 Further information on revenues is reported in the Directors Report. H H Raw materials, consumables and goods 35,541 37,707 The table below shows the costs for raw materials, ancillaries, consumables and goods: (Euro thousand) H H Purchases 35,945 36,255 Changes in inventories of raw materials, ancillaries, consumables and finished goods (2,333) 753 Changes in inventory of work-in-progress, semi-finished and finished products 2, Increase in fixed assets from internal works (297) (154) Total 35,541 37,707 H H Service costs 37,048 33,941 The following table shows service costs: (Euro thousand) H H Energy and industrial services 19,805 22,994 Transport and other trading costs 6,865 6,360 Conai contribution 1,403 1,540 Other costs 8,975 3,047 Total 37,048 33,941 79

82 Notes It should be noted that the account Energy and industrial services includes energy costs acquired from the related party Zignago Power for Euro 2,310 thousand (in H Euro 2,422 thousand). H H Personnel expense 31,366 29,952 The following table reports personnel expense: (Euro thousands) H H Wages and salaries 22,855 21,646 Social security charges 7,687 7,512 Defined contribution plans Total 31,366 29,952 H H Amortisation & Depreciation 15,831 14,752 The following table reports amortisation & depreciation: (Euro thousands) H H Depreciation of fixed assets 15,780 14,681 Amortisation of intangible assets Total 15,831 14,752 H H Financial expense 708 2,328 The following table shows financial expense: (Euro thousands) H H Interest on current accounts Loan interest Financial charges on interest rate hedges Derivative fair value measurement effect (511) 965 Other Total 708 2,328 80

83 Notes H H Income taxes 3,686 3,316 The table below shows the composition of the income taxes between deferred and current taxes: (Euro thousands) H H Current taxes 3,668 3,304 Net deferred tax charge/(income) Total 3,686 3,316 81

84 Notes OTHER INFORMATION Earnings per share The share capital of Zignago Vetro SpA at 30 June 2017 consists of 88,000,000 ordinary shares with a par value of Euro 0.10 each, fully subscribed and paid-in. As outlined on pages 12 and 13, Zignago Vetro SpA, as part of its purchase programmes, at 30 June 2017 held a total of 1,421,390 treasury shares for a total value of Euro 5,027 thousand. No acquisitions or sales were made in the first half of 2017 and until the date of the approval of these interim financial statements. Information is shown below concerning the results for the period and the calculation of the basic and diluted earnings per share: Profit attributed to ordinary shareholders of the Parent for the basic earnings and the diluted earnings per share (in Euro thousands) 18,239 12,594 Weighted average number of ordinary shares, including treasury shares, to calculate basic earnings per share 88,000,000 88,000,000 Weighted average number of treasury shares (1,421,390) (1,421,390) Weighted average number of ordinary shares, excluding treasury shares, to calculate basic earnings per share 86,578,610 86,578,610 Earnings per share - basic, for profit attributed to the ordinary shareholders of the parent diluted, for profit attributed to the ordinary shareholders of the parent The basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders of the parent by the average weighted number of ordinary shares outstanding during the period, excluding the average weighted number of treasury shares. No capital transactions which would have dilutive effects on the profits attributable to each share were noted. 82

85 Notes Segment disclosure Segment reporting which coincides with the various legal entities is provided below. The information on the secondary segment (geographic area) is not significant in relation to the Group. In particular, the Business Units identified are reported at pages 10 and 11. The criteria applied for the identification of the segment reporting were based on, among other issues, the manner in which management directs the Group and attributes managerial responsibility. The segment disclosure is provided below: (Euro thousands) H Zignago Vetro SpA Verreries Brosse HSC Zignago Glass USA (Elims.) Consolidated Revenues 96,264 29,548 13, (4,196) 135,228 Amortisation & Depreciation (10,606) (3,064) (2,168) 7 (15,831) Operating Profit/(loss) 11,281 2,530 1,115 (65) 7,640 22,501 Net result 16,976 2, (65) (1,673) 18,239 Assets 294,999 61,456 69, (31,550) 395,023 Liabilities 197,075 46,762 52, (53,890) 242,325 Investments in: Intangible assets Tangible assets 11,277 1,891 11, ,677 (Euro thousands) H Zignago Vetro SpA Verreries Brosse HSC Zignago Glass USA (Elims.) Consol. Revenues 93,439 27,613 11, (3,092) 129,520 Amortisation & Depreciation (10,175) (3,256) (1,321) --- (14,752) Operating Profit/(loss) 12,699 (2,045) 1,184 (93) 6,701 18,446 Net result 16,119 (1,798) 716 (94) (2,349) 12,594 Assets 317,142 61,935 33, (4,423) 408,661 Liabilities 224,670 49,623 18, (22,267) 270,911 Investments in: Intangible assets Tangible assets 6,780 1,348 8, ,182 83

86 Notes Related party transactions In accordance with Consob letter of July , the disclosure concerning transactions with related parties, the events and significant non-recurring and/or atypical and unusual transactions are outlined below. The table below shows the composition of the receivables of the Zignago Vetro Group with related party companies at the reporting date: (Euro thousands) Balance at Balance at Balance at Zignago Holding SpA 1,235 1,235 3,707 Zignago Immobiliare Srl Santa Margherita SpA and its subsidiaries 1, ,191 Total receivables from related parties 2,687 2,186 4,898 The receivables from Zignago Holding SpA relate to the payments on account and repayment of taxes for previous years, in relation to the Group tax consolidation, while the receivables from Santa Margherita and its subsidiary and from New High Glass Inc. derive from commercial operations. The table below shows the composition of the payables of the Zignago Vetro Group with related party companies at the balance sheet date: (Euro thousands) Balance at Balance at Balance at Zignago Holding SpA Zignago Immobiliare Srl Santa Margherita SpA and its subsidiaries La Vecchia Scarl Zignago Servizi Srl Zignago Power Srl Vetreco Srl Multitecno Srl Total payables to related parties 1,559 1,261 1,498 The payables to Zignago Immobiliare Srl, La Vecchia Scarl and Zignago Servizi Srl are related to services received. The payables to Zignago Power Srl relate to the purchase of electricity. 84

87 Notes The table below shows the composition of the revenues of the Zignago Vetro Group from related parties in the period: (Euro thousands) H H Santa Margherita SpA and its subsidiaries 2,646 2,203 Zignago Power Srl Total revenues from related companies 2,646 2,204 The revenues from Santa Margherita and its subsidiaries derive from commercial operations. The table below shows the composition of the costs of the Zignago Vetro Group from related parties in the period: (Euro thousands) H H Zignago Holding SpA Zignago Immobiliare Srl 2, Santa Margherita SpA and its subsidiaries La Vecchia Scarl Zignago Servizi Srl Zignago Power Srl 4,928 2,422 Multitecno Srl Vetreco Srl 1,939 1,351 Total costs from related parties 10,778 5,398 In particular, the costs in the first half of 2017 amounting to Euro 2,310 thousand include those of Zignago Power Srl concerning the supply of electricity to the Fossalta di Portogruaro production site. For Zignago Power, this includes also the acquisition cost of land and buildings as part of an intercompany property reorganisation. The costs in the first half of 2017 of Euro 1,939 thousand concerning Vetreco Srl relate to the purchase of scrap glass. Zignago Immobiliare Srl costs include also the cost for the disposal of buildings as part of an intercompany reorganisation. 85

88 Notes Management of capital The share capital includes the shares and the equity attributable to owners of the parent. The primary capital management objective of the Group is to guarantee the maintenance of a strong credit rating in order to support operations and to maximise value for shareholders. In order to achieve this objective, the management of Group capital aims, among other matters, to ensure compliance with covenants, related to interest bearing loans, based on financial performance indicators. Breaches in the covenants would permit the banks to request immediate repayment of the loans. There were no breaches of the covenants in the current year in relation to interest bearing loans for any of the Group companies. The Zignago Vetro Group has payables to financial intermediaries and has a financial debt position related to the business development plan. The high generation of operating cash flows enables Group Companies not only to repay existing loans, but also to guarantee an adequate dividend to Shareholders and pursue a growth strategy. In this context, the Group, in order to maintain or amend the capital structure, may pay dividends to Shareholders, acquire treasury shares on the market or issue new shares. No substantial amendments were made to these objectives, to policies or to processes in the first half of 2017 and 2016 or for the year

89 Notes Risk management policies The Group will continue to prudently manage risks in all departments with careful monitoring in order to identify, reduce and eliminate such risk, therefore extensively protecting shareholder interests. Currency risk The currency risk is the risk that the fair value or the future cash flows of a financial instrument are altered following changes in exchange rates. The exposure of the Group to changes in exchange rates principally concerns the operating activities of the Group (when revenues and costs are denominated in a currency other than the presentation currency of the Group). Where these transactions are significant, the Group Companies assess the possibility of undertaking currency hedges in order to mitigate these fluctuations. During the years presented the Group has not undertaken exchange risk hedge operations, as such transactions undertaken by the companies of the Group are not considered significant. Credit and country risks The credit risk represents the exposure of the Group to potential losses deriving from noncompliance with obligations by trading partners; this activity is subject to ongoing monitoring within the normal management of business operations, in order to minimise the exposure to counterparty credit risk, also utilising appropriate insurance instruments to protect the solvency of the client or of the country risk in which this latter operates. The Group Companies constantly assess political, social and economic risks in the areas in which they operate. No significant cases of non-fulfilment by trading partners have occurred and no significant credit risk by individual segment and/or client exists. The Group in fact only deals with established and reliable clients. Customers that request extensions of payment are subject to a credit rating check. Moreover, the collection of receivables is monitored during the year so that the exposure to losses is not substantial. Finally, in the case of new clients operating in non-eu countries, the Group companies obtain letters of credit and advance payments. Interest rate risk The interest rate risk is a risk that the fair value of the future cash streams of a financial instrument alters due to changes in market interest rates. The Companies of the Group are exposed to the risk of fluctuations in interest rates principally in relation to the medium/long-term debt, negotiated at variable interest rates, and amount to Euro 95,5 million. Where these risks are considered significant, the Companies of the Group undertake interest rate swaps in order to convert the floating rate of the non-current loans into fixed rates, which reduces the impact of the fluctuations in interest rates Therefore, the Parent undertook interest rate swaps in order to hedge the interest rate risk on medium-long term loans for a notional value of Euro 95.5 million. 87

90 Notes The characteristics of the derivative contracts, their notional value and the market value at 30 June 2017, are as follows (in Euro thousands): Company Bank Underlying Date Notional Expiry Market of at the value Signing reference date Zignago Vetro SpA Unicredit Loan 21/01/ ,189 31/12/2020 (172) Zignago Vetro SpA Unicredit Loan 31/03/ ,251 31/12/2020 (229) Zignago Vetro SpA Mediobanca Loan 21/01/ ,391 31/12/2020 (131) Zignago Vetro SpA Mediobanca Loan 31/03/ ,189 31/12/2020 (174) Zignago Vetro SpA Banco Brescia Loan 18/12/2014 9,471 18/12/2019 (91) Zignago Vetro SpA BNL Loan 22/12/ ,000 22/06/2021 (293) Total 95,491 (1,090) Liquidity risk The Group monitors the risk of a deficiency in liquidity utilising liquidity planning instruments. The Group objective is to maintain a balance between continuity of available funds, flexibility of utilisation through utilisation of instruments such as bank overdrafts, bank loans, finance leases and adequate remuneration of its liquidity, temporarily investing exclusively with banking counterparties. In particular the profile of the financial liabilities at 30 June 2017, 31 December 2016 and 30 June 2016 on the basis of the non-discounted contractual payments, including trade payables and other current liabilities, is summarised as follows: (Euro thousands) 2017 Less than 3 3 to 12 1 to 5 Beyond Total 30 June 2017 months months years Non-current bank loans and borrowings , ,351 Other non-current liabilities , ,230 Bank loans & borrowings and current portion of non-current loans 69,748 28,471 1, ,309 Trade and other payables 45, ,248 Other current liabilities 17, ,247 Current income taxes Total 132,348 28,471 70, ,490 88

91 Notes (Euro thousands) 2016 Less than 3 3 to 12 1 to 5 Beyond Total 30 June 2016 months months years Non-current bank loans and borrowings ,378 2, ,361 Other non-current liabilities , ,820 Bank loans & borrowings and current portion of non-current loans 69,974 20,469 2, ,741 Trade and other payables 42, ,145 Other current liabilities 16, ,194 Current income taxes Total 128,313 21, ,496 2, ,960 (Euro thousands) 2016 Less than 3 3 to 12 1 to 5 Beyond Total 31 December 2016 months months years Non-current bank loans and borrowings ,972 11,607 87,579 Other non-current liabilities , ,528 Bank loans & borrowings and current portion of non-current loans 39,212 55,458 1, ,271 Trade and other payables 50, ,033 Other current liabilities 16, ,606 Current income taxes Total 105,851 56,194 81,101 11, ,753 The terms and conditions of financial liabilities are listed below: There is no interest on trade payables and they are normally paid at 60 days; Other payables are normally paid within the month following recognition. Risks related to the fluctuation in energy prices The Group is exposed to fluctuations in energy purchase costs, a significant cost component in the glass sector. Where this risk is considered as significant, hedging operations may be undertaken in order to convert the variable cost into a fixed cost, which reduces the impact of fluctuations. From 2012 the supply of energy at Fossalta di Portogruaro of the Parent has been guaranteed by Zignago Power Srl, a company wholly-owned by the parent Zignago Holding SpA., which started up a natural biomass energy production plant. The risk concerning energy cost fluctuation is therefore greatly reduced. In 2017, the Parent also agreed supply contracts at fixed prices, in line with its production programmes. In the first half of 2017, Zignago Vetro did not undertake any fuel hedging derivative contracts. In the first half of 2016 Zignago Vetro signed two commodity swap contracts, with a primary Italian banking institution, to hedge the risk of fluctuation in the cost of fuel, whose mark-to-market at 30 June 2016 was Euro +720 thousand, gross of the tax effect. 89

92 Notes The exposure of the Group to the risk of fluctuations in energy prices is therefore considered marginal. Significant non-recurring events or transactions arising from atypical and/or unusual transactions There were no significant non-recurring atypical and/or unusual transactions for the period ended 30 June 2017 as defined by Consob Communication DEM/

93 Statement as per Article 81-ter, CONSOB Regulation No /

94 Statement of the Condensed Interim Consolidated Financial Statements STATEMENT Statement of the Condensed Interim Consolidated Financial Statements as per Article 81-ter of CONSOB Regulation No of 14 May 1999 and subsequent modifications and integrations. 1) The undersigned Paolo Giacobbo, CEO, and Roberto Celot, Executive Officer for Financial Reporting of Zignago Vetro SpA, also in consideration of Article 154-bis, paragraphs 3 and 4, of Legislative Decree No. 58 of 24 February 1998 state: the accuracy of the information on company operations and the effective application, of the administrative and accounting procedures for the condensed interim consolidated financial statements for the period from 1 January to 30 June ) No significant aspects emerged concerning the above. The adequacy of the administrative and accounting procedures for the compilation of the condensed interim consolidated financial statements at 30 June 2017 was evaluated through an Internal Control System based on the Internal Control Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission which represents a standard framework generally accepted at international level. 3) We also state that: 3.1) The condensed interim consolidated financial statements: a) are drawn up in conformity with the applicable international accounting standards endorsed by the European Union in conformity with Regulation (CE) No. 1606/2002 of the European Parliament and the Commission of 19 July 2002; b) correspond to the underlying accounting documents and records; c) provide a true and fair view of the financial position, financial performance and cash flows of the issuer and of the other companies in the consolidation scope. 3.2) The Directors Report on operations includes a reliable analysis of the significant events in the first six months of the year and their impact on the condensed interim consolidated financial statements, with a description of the principal risks and uncertainties for the remaining six months. This Directors Report also contains a reliable analysis of the significant transactions with related parties. Fossalta di Portogruaro, 26 July 2017 Mr. Paolo Giacobbo Mr. Roberto Celot Chairman & Chief Executive Officer Executive Officer for Financial Reporting 92

95 Independent Auditors Report on the Condensed Interim Consolidated Financial Statements The attached auditors report and the related condensed interim consolidated financial statements are in accordance with the original version in the Italian language filed at the registered office of Zignago Vetro SpA and published in accordance with law and, subsequent to this date, KPMG SpA has not undertaken any further audit work. 93

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98 ZIGNAGO VETRO SpA Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto n. 8