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ADDCON Europe GmbH

Bitterfeld-Wolfen

Bekanntmachung nach §§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2015 bis zum 31.12.2015

Gesellschafterversammlung der ADDCON Europe GmbH

Die ADDCON Europe GmbH ist Enkelunternehmen eines nach § 290 HGB zur Aufstellung eines Konzernabschlusses verpflichteten Mutterunternehmens (Addcon Holding GmbH, Bonn) und soll die Erleichterungen gemäß § 264 Abs. 3 HGB in Anspruch nehmen.

Gem. § 264 Absatz 3 Nr. 1 HGB stimmt hiermit die ADDCON GmbH, Bonn, als 100%ige Gesellschafterin der Befreiung für das Geschäftsjahr 2015 zu. Dieser Beschluss wird gem. § 325 HGB offen gelegt.

Zwischen der Gesellschaft und der ADDCON GmbH, Bonn, besteht ein Ergebnisabführungsvertrag, der im Handelsregister der Gesellschaft veröffentlicht ist und aus dem sich die Verlustübernahmeerklärung und Anwendung der Regelungen des § 302 des Aktiengesetzes entsprechend der Voraussetzungen des § 264 Abs. 3 Nr. 2 HGB ergibt.

Bonn, den 22. September 2016

gez. Bernhard Kochannek

2d:T23e59,

Addcon Holding GmbH

Bonn

Konzernabschluss zum Geschäftsjahr vom 01.01.2016 bis zum 31.12.2016

Konzernlagebericht für das Geschäftsjahr 2016

ADDCON Konzern

1. Grundlagen des Konzerns

1.1 Geschäftsmodell des Konzerns

Der ADDCON Konzern entwickelt, produziert und vertreibt Produkte aus vier strategischen Betriebseinheiten: FEED, FOOD, De-Icer/Industrial und Oil-Field.

Das Prinzip der Gesellschaft "Green Chemistry" spiegelt sich in ihren Produkten wieder. Innovative Markenartikel, die sich durch eine hohe Umweltverträglichkeit und Ökoabbaubarkeit auszeichnen sind gesichert durch ein umfassendes Qualitätsmanagementprogramm, zertifiziert nach ISO 9001-2000, FAMI-QS, GMP+ und anderen Standards. Die Produktionsstandorte befinden sich in Deutschland und Norwegen.

FEED:

Eine der Kernkompetenzen ist die schonende und sichere Konservierung von Futtermitteln in der Landwirtschaft. Schwerpunkt ist die Entwicklung, Produktion und der Vertrieb von Silier- und Konservierungsmitteln für den europäischen und asiatischen Markt, die Herstellung von Säureadsorbaten/Säuremischungen für die Mischfutterindustrie sowie die Herstellung von Kalzium-Propionat für FEED- und FOOD- Anwendungen. Weiterhin ist die ADDCON Gruppe ein Hersteller von antibiotikafreien Wachstumsförderern für Nutztiere welche heute weltweit eingesetzt werden.

FOOD:

Die Lebensmittelindustrie wird mit qualitativ hochwertigem Amoniumbikarbonat (= Addcon ABC) beliefert. Dieser Zusatzstoff für Backwarenvormischungen wird von Großbäckereien und Snackproduzenten sehr stark nachgefragt, so dass die Nachfrage das Angebot in diesem Segment übersteigt. Die Hauptmärkte für Addcon für das Produkt sind derzeit Deutschland, Benelux, die Türkei und Südostasien. Es ist eine weltweite Expansion geplant und es werden in der ersten Stufe Absatzmärkte in Nord- und Mittelamerika bearbeitet.

De- Icing:

Organische Salze, sogenannte Formiate, zeichnen sich durch herausragende Enteisungsleistungen, eine hohe Materialkompatibilität und einzigartige Umwelteigenschaften aus. Kunden im Flughafenbereich und im kommunalen Bereich aber auch führende deutsche Technologieunternehmen wie auch der private Sektor schätzen die Zuverlässigkeit und die herausragenden Produkteigenschaften der Enteisungsmittel von ADDCON.

Speziell für die Enteisung von Start- und Landebahnen sowie Zubringer-Straßen auf dem Flughafengelände wurde die Produktlinie AVIFORM entwickelt. In 2016 wurde eine strategische

Partnerschaft mit einem weltweit führenden Unternehmen der Spezialchemie eingegangen. In dieser Partnerschaft wird in Lohnherstellung, rückwärts integriert zu kompetitiv favorablen Herstellungskosten produziert.

Für den kommunalen, privaten Bereich und für Industriebetriebe produziert ADDCON die Produktlinie VIAFORM.

Zwei Standorte mit flexiblen Strukturen und Produktionskapazitäten sowie einem professionellen Logistiknetzwerk garantieren unseren Kunden schnelle, termingerechte Lieferungen - auch unter extremen Witterungsbedingungen - während der Wintermonate, die die umsatzstärksten Monate des Konzerns darstellen.

Ferner vermarktet ADDCON unter dem eingetragenen Markennamen HYCOOL sekundäre Kühlmittel für den Einsatz in Groß-Kühlanlagen, wie sie in der Lebensmittelindustrie eingesetzt werden.

Oil-field:

Auf einer ähnlichen Basis wie Enteiser wird das Molekül in einer höheren Sättigung zunehmend in der Ölförderung als eine Hochleistungsbohr- und Komplettierungsflüssigkeit benutzt. Durch den Einsatz der Produkte Ecoform und Petroform können Öl- und Gasbohrungen im HPHT- (high pressure high temperature) Bereich wie auch im Hale & Shale Drilling schneller, sicherer und effektiver durchgeführt werden. Durch neueste Erkenntnisse aus den USA und Kanada, wird auf diesen Märkten Petroform verstärkt im Bereich Shale Drilling eingesetzt was zu verstärkten Vertriebsaktivitäten in diesem Bereich geführt hat.

1.2 Forschung und Entwicklung

Im Rahmen einer Neustrukturierung des Bereichs Produktion & Technik (Operations) wurden die Entwicklungsaktivitäten bereits 2015 in die Bereiche Prozessentwicklung & -verbesserung und Produkt- und Anwendungsentwicklung untergliedert. Für den Bereich Prozessentwicklung stehen 6 FTE zur Verfügung, gleichfalls stehen am Standort Bitterfeld auch erweiterte Laborkapazitäten für Entwicklungsprojekte zur Verfügung. Die Kooperationen mit Hochschulen und Instituten wurden weiter intensiviert. Hauptziel ist dabei die Entwicklung bzw. Weiterentwicklung von glykolbasierten Enteisungsmittel für Flugzeuge und damit eine Diversifizierung von Runway zu Airframe.

Im Bereich FOOD ist der von ADDCON weiterentwickelte Prozess zur Produktion von Calciumdipropionat als Patent erteilt worden. Die Vervierfachung der Produktionsleistung von ursprünglich 3,5 kt auf 12 - 14 kt p.a. in diesem Bereich wird aller Voraussicht nach im ersten Quartal 2018 erreicht werden.

Des Weiteren wird im Bereich der Ölbohrzusatzstoffe weiterhin mit hoher Intensität an Produktverbesserungen gearbeitet. Das Ziel hier ist die Erhöhung der spezifischen Dichte, was eines der Hauptmerkmale des Produktes ist und die Wettbewerbsfähigkeit verbessert.

2. Wirtschaftsbericht

2.1 Gesamtwirtschaftliche und branchenbezogene Rahmenbedingungen

Das Bruttoinlandsprodukt ist im Jahr 2016 nach Angaben des Statistischen Bundesamts um 1,9 % gestiegen. Ungeachtet des fragilen internationalen Umfelds setzt die deutsche Volkswirtschaft somit ihren Wachstumskurs fort, der auf wachsenden Konsumausgaben und zunehmenden Wohnungsbauinvestitionen basiert.

Infolge des weltweiten Megatrends eines generellen Verbots von Fütterungsantibiotika werden alle Alternativprodukte stark nachgefragt. Dieser Trend setzt sich weiter fort. Vor allem in asiatischen Märkten wie Vietnam, Indonesien, Philippinen und Japan spüren wir eine hohe Nachfrage, welche derzeit produktionsseitig nicht abgebildet werden kann. Aus diesem Grund hat die ADDCON Gruppe beschlossen im Bereich Di-Formiate die Produktion auszubauen. Eine erste Ausbaustufe wurde in 2016 mit einer Steigerung von 20 t pro Tag auf 40 t pro Tag bereits erreicht. Eine zweite Ausbaustufe auf 70 t pro Tag wird voraussichtlich im Q4 2017 erreicht. Auch diese Produktionskapazität ist bereits ausverkauft.

Eine stetig wachsende Anzahl von Flughäfen ist aus Umweltschutzgründen dazu verpflichtet, biologisch abbaubare Enteisungsmittel zu nutzen. Die ADDCON Gruppe profitiert deshalb vom Anstieg der Nachfrage an Produkten auf Basis von organischen Säuren. Auch in 2016 ist es der ADDCON Gruppe wieder gelungen eine erhöhte Anzahl an Flughäfen unter Vertrag zu nehmen. Der Rückblick zeigt, dass eine hohe Anzahl von Verträgen mit Flughäfen, nicht immer auch hoher Absatz bedeutet insbesondere bei milden Wintern. In den Monaten Januar und Februar 2017 konnten allerdings bereits erhebliche Mengen abgesetzt werden.

2.2 Geschäftsverlauf

Das Geschäftsjahr 2016 zeigt in allen Bereichen entweder eine Verbesserung oder ein ähnliches Niveau wie 2015. Im Bereich der Bohr- und Komplettierungsflüssigkeiten für die Öl- und Gasindustrie (2016: 7 kt, 2015: 7 kt). Der Rückgang des Rohölpreises in den Geschäftsjahren 2014 und 2015 wurde in 2016 gestoppt und es zeigt sich eine verhaltene Verbesserung der Rohölpreise. Dies beeinflusst auch den Absatz unserer Ölbohrzusatzstoffe positiv. Auch in 2017 geht die Prognose von einer Steigerung der Rohölpreise aus. Die geplanten Absatzmengen im ersten Halbjahr 2017 wurden bereits realisiert.

Das Enteisergeschäft ist im Vergleich zum Vorjahr stabil geblieben (2016: 18 kt, 2015: 18 kt). Das erste Quartal 2017 hat die Erwartungen im Bereich Deicer übertroffen und es gibt durch das Hinzugewinnen von wichtigen Flughäfen im deutschsprachigen Raum und in Dänemark deutliche Anzeichen für ein starkes Q4 2017 in diesem Bereich. Im Winter 2016/17 konnten erstmalig die Flughäfen in Leipzig, Dresden, Salzburg und Rostock mit glykolhaltige Wing-De-Icer beliefert werden. Es wird festgestellt, dass die ADDCON Gruppe als ernstzunehmender Marktspieler in diesem Segment wahrgenommen wird. Für den Winter 2017/18 gehen wir von steigenden Absatzmengen aus.

Der Gesamtbereich FEED bleibt der Kernbereich des Unternehmens mit hohen Margen. Alle Produktkategorien wachsen planmäßig. Die negative Entwicklung bei den Preisen für Schweinfleisch wurde in 2016 beendet. Aus diesem Grund konnten auch die Umsätze im Siliermittelbereich der deutschen Gesellschaft gesteigert werden (2016: TEUR 8.660; 2015: TEUR 7.923). Der Absatz der Fischkonservierungsprodukte, der in Norwegen produzierte Teil des FEED Bereichs, entsprach den Erwartungen und konnte gegenüber 2015 gesteigert werden.

Im Bereich FOOD wurden in 2016 enorme Anstrengungen unternommen, um den Produktionsausstoß für das Produkt ABC zu erhöhen. Durch cash-flow-finanzierte Debottlenecking-Maßnahmen konnte die Kapazität in 2016 um 1,2 kt auf 7,2 kt p.a. erhöht werden. Die erhöhte Produktionsmenge ist, mit überdurchschnittlichen Deckungsbeiträgen, bereits ausverkauft. Der Ausbau der Produktionskapazitäten auf 12 - 14 kt p.a. für das Produkt Calpro ist weiterhin unbefriedigend. Die Verzögerung beim Ausbau ist einerseits verursacht durch einen Lieferfehler des Reaktorherstellers andererseits durch noch nicht ganz bewältigte interne Probleme. Die ADDCON Gruppe arbeitet intensiv an der Lösung des Problems. Mitte 2017 wurde der Rechtsstreit mit dem Lieferanten vollumfänglich gewonnen, so dass wir nun mit der gerichtlich angeordneten Nachrüstung, welche in Q4 2017 durchgeführt wird, davon ausgehen, dass die erhöhte Produktionsmenge im Q1 2018 voll erreicht wird.

In den Bereichen FEED und FOOD konnte die ADDCON Gruppe ihre Position innerhalb der etablierten europäischen Märkte behaupten und stuft ihre Markstellung vergleichbar stark ein in Bezug auf die Vorjahre. Auch der asiatische Markt mit seinem enormen Potential konnte in 2016 weiter ausgebaut werden (Umsatz: TEUR 6.075; Vorjahr TEUR 4.700) und wird voraussichtlich auch in 2017 weiter steigen.

Ertragslage

	2014		2015		2016
	Ist		ist		Ist
ADDCON Konzern	T€	%	T€	%	T€	%
1 Umsatzerlöse	63.858	101,3	52.959	99,8	53.944	101,8
2 Bestandsveränderung FE und UE	-849	-1,3	121	0,2	-930	-1,8
3 Betriebsleistung	63.009	100,0	53.080	100,0	53.014	100,0
4 Sonstige Leistungen und Erträge	4.704	7,5	3.791	7,1	5.419	10,2
5 Gesamtleistung (1+2+4)	67.713	107,5	56.871	107,1	58.433	110,2
6 Materialaufwand	-42.202	-67,0	-34.299	-64,6	-31.930	-60,2
7 Personalaufwand	-8.525	-13,5	-8.408	-15,8	-8.703	-16,4
8 Abschreibung	-3.084	-4,9	-3.014	-5,7	-2.808	-5,3
9 Sonstige betrieblichen Aufwendungen	-12.856	-20,4	-11.584	-21,8	-10.479	-19,8
10 Betriebsergebnis (5+6+7+8+9)	1.046	1,7	-434	-0,8	4.513	8,5
11 Zinsen und ähnliche Erträge	93	0,1	107	0,2	147	0,3
12 Zinsen und ähnliche Aufwendungen	-1.544	-2,5	-1.574	-3,0	-1.988	-3,7
13 Finanzergebnis (11+12)	-1.452	-2,3	-1.467	-2,8	-1.841	-3,5
14 Ergebnis vor Steuern (10+11+14)	-405	-0,6	-1.901	-3,6	2.672	5,0
15 Steuern	274	0,4	1.334	2,5	923	1,7
16 Gewinnabführung	-21			0,0		0,0
17 Ergebnis	-152	-0,2	-567	-1,1	3.596	8,8

Die Betriebsleistung in 2016 ist im Vergleich zum Vorjahr in etwa gleich geblieben. Der De-Icing Bereich mit 18 kt in 2015 konnte in 2016 den gleichen Absatz verzeichnen. Auch der Bereich OIL weist, mit 7 kt, die gleiche Absatzmenge wie im Vorjahr aus. Die Bereiche FEED und FOOD waren wie im Vorjahr ausverkauft.

in TEUR	EU (ohne D)	DE	East Europe/Middle	Asia	Americas	Africa	Total
DEICER	8.233	4.571	980	10	19	0	13.814
FEED	13.139	6.616	940	4.642	427	63	25.827
FOOD	2.501	1.293	1.234	1.642	218	0	6.888
OIL	5.282	170	544	0	0	0	5.995
OTHER	573	769	6	6	66	0	1.420
Total	29.728	13.420	3.704	6.301	729	63	53.944

Auch im Jahr 2016 ist wieder ein Wachstum im Raum Asia um TEUR 1.728 auf TEUR 6.301 in 2016 zu beobachten.

Die sonstigen betrieblichen Erträge in Höhe von TEUR 5.419 beinhalten Erträge aus dem Abgang von Anlagevermögen in Höhe von TEUR 3.209, die Auflösung des passivischen Unterschiedsbetrages aus der Kapitalkonsolidierung von TEUR 1.191, Erträge aus Währungsdifferenzen in Höhe von TEUR 623 sowie weitere sonstige betriebliche Erträge und periodenfremde Erträge (TEUR 115). Im Vergleich zum Vorjahr ist der prozentuale Materialaufwand (Umsatz/Gesamtleistung zu MA) deutlich gesunken (2016: 60,2 %, 2015: 64,6 %) welches unter anderem dem veränderten Produktmix geschuldet ist. Die Ausgaben im Personalbereich sind um 3,5 % gestiegen. Die sonstigen betrieblichen Aufwendungen konnten im Vergleich zum Vorjahr um fast 10% reduziert werden. Insbesondere die Rechts - und Beratungskosten sind deutlich gesunken. Der Abschreibungsaufwand ist im Vergleich zum Vorjahr, bedingt durch den Verkauf von Anlagevermögen in Norwegen, um 6,8% gesunken. Das Betriebsergebnis hat sich im Vergleich zum Vorjahr um TEUR 4.947 auf TEUR 4.513 verbessert (Vj TEUR -434).

Das Finanzergebnis 2016 enthält, im Wesentlichen Zinsaufwand für Verbindlichkeiten gegenüber Kreditinstituten. Währungskursgewinne/und -verluste werden seit 2014 nach HGB im Betriebsergebnis ausgewiesen. Das Steuerergebnis weist infolge der Aktivierung von latenten Steuern einen Ertrag in Höhe von TEUR 939 auf.

Aufgrund der beschriebenen Effekte erzielte die Gesellschaft ein gegenüber dem Vorjahr stark verbessertes Jahresergebnis von TEUR 3.596.

Vermögenslage

	31.12.2014		31.12.2015		31.12.2016
	Ist		Ist		Ist
ADDCON Konzern	T€	%	T€	%	T€	%
A Anlagevermögen und langfristige Vermögenswerte	24.396	51,5	24.615	52,3	21.706	44,8
B. Umlaufvermögen	22.876	48,3	22.401	47,6	26.648	55,0
I. Vorräte	7.096	15,0	10.726	22,8	9.507	19,6
RHB Stoffe	1.836	3,9	3.510	7,5	3.427	7,1
halbfertige Erzeugnisse	50	0,1	128	0,3	633	1,3
FE und Waren	5.210	11,0	7.087	15,0	5.447	11,2
II. Forderungen	15.486	32,7	10.677	22,7	16.614	34,3
aus Lieferung und Leistungen	12.935	27,3	7.167	15,2	13.886	28,7
ggü. Gesellschaftern	1.398	3,0	2.201	4,7	805	1,7
gegen nahestehenden Unternehmen		0,0		0,0		0,0
sonstige Vermögensgegenstände	1.154	2,4	1.309	2,8	1.923	4,0
III. Liquide Mittel	293	0,6	998	2,1	526	1,1
C. Rechnungsabgrenzungsposten	95	0,2	76	0,2	87	0,2
Summe Aktiva	47.367		47.092		48.440

Die Branche ist grundsätzlich anlagenintensiv (44,8 %; Vj.: 52,3 %). Durch den Verkauf von nicht benötigten Tanks konnte das Anlagevermögen in 2016 um TEUR 2.909 reduziert werden. Im Bereich des Umlaufvermögens sind die Vorräte, Rohstoffe und Fertigwaren um 12,8 % gesunken (Gesamt TEUR 9.507; Vj.: TEUR 10.726). Dies ist maßgeblich bestimmt durch das Timing von Materialzu- und abflüssen. Die Kundenforderungen sind deutlich von TEUR 7.167 im Vorjahr auf TEUR 13.886 in 2016 gestiegen. Grund hierfür sind die hohen Umsätze im Dezember aus dem Deicing Bereich. Die Umschlagskennziffer der Vorräte (bezogen auf die Umsatzerlöse) hat sich im Vergleich zum Vorjahr von 74 Tagen auf 64 Tage verbessert.

	31.12.2014		31.12.2015		31.12.2016
	Ist		Ist		Ist
ADDCON Konzern	T€	%	T€	%	T€	%
A Eigenkapital	8.549	18,0	6.439	13,7	9.074	18,7
I. Stammkapital	38	0,1	38	0,1	38	0,1
II. Rücklagen	2.988	6,3	2.988	6,3	2.988	6,2
III. Diff. Währungsumrechnung	-919	-1,9	-1.273	-2,7	-1.044	-2,2
IV. Jahresüberschuss vor Anteilen anderer Gesellschafter	-146	-0,3	-566	-1,2	3.596	7,4
V. Ergebnisvertrag	478	1,0	333	0,7	-256	-0,5
VI. Anteile andere Gesellschafter	345	0,7	345	0,7	368	0,8
Unterschiedsbetrag aus Kapitalkonsolidierung	5.766	12,2	4.576	9,7	3.385	7,0
B. Rückstellungen	1.491	3,1	1.548	3,3	1.600	3,3
C. Verbindlichkeiten	34.160	72,1	37.309	79,2	36.840	76,1
I. ggü. Kreditinstituten	16.955	35,8	14.929	31,7	14.377	29,7
II. aus Lieferung und Leistung	12.292	26,0	13.213	28,1	16.574	34,2
III. ggü. Gesellschafter	563	1,2	1.184	2,5	0	0,0
IV. sonstige	4.349	9,2	7.982	17,0	5.888	12,2
D. Rechnungsabgrenzungsposten	0	0,0	0	0,0	0	0,0
E. Latente Steuern	3.167	6,7	1.797	3,8	927	1,9
Summe Passiva	47.367		47.092		48.440

Im Jahr 2016 ist das Eigenkapital im Vergleich zum Vorjahr um TEUR 2.634 gestiegen. Die Eigenkapitalquote hat sich im Berichtsjahr im Vergleich zum Vorjahr auf 18,7 % verbessert (2015 13,7 %). Die Verschuldungsquote gegenüber Banken ist in 2016 leicht gesunken (29,7 %; Vj. 31,7 %). Die Finanzierung des Umlaufvermögens erfolgt teilweise durch Lieferantenkredite (34,2 %; Vj.: 28,1 %). Mit den wesentlichen Lieferanten besteht eine enge, langjährige Zusammenarbeit.

Der Cash-Flow 2016 aus der laufenden Geschäftstätigkeit in Höhe von TEUR 4.023 finanzierte die Rückzahlungen im Finanzierungsbereich von TEUR 1.756 und reduzierte die Inanspruchnahme von Kontokorrentlinien.

Finanzlage

KONZERN-KAPITALFLUSSRECHNUNG FÜR DAS GESCHÄFTSJAHR 2016

	2016	2015
	EUR	EUR
Periodenergebnis	3.596.068,46	-565.978,26
+/- Abschreibungen/Zuschreibungen auf Gegenstände des Anlagevermögens	2.807.522,57	3.013.591,63
+/- Zunahme/Abnahme der Rückstellungen	52.053,93	56.563,79
+/- Sonstige zahlungsunwirksame Aufwendungen/Erträge	-1.190.847,55	-102.053,00
-/+ Zunahme/Abnahme der Vorräte, der Forderungen aus Lieferungen und Leistungen sowie anderer Aktiva, die nicht der Investitions- oder Finanzierungstätigkeit zuzuordnen sind	-6.124.762,98	1.198.956,65
+/- Zunahme/Abnahme der Verbindlichkeiten aus Lieferungen und Leistungen sowie anderer Passiva, die nicht der Investitions- oder Finanzierungstätigkeit zuzuordnen sind	1.588.057,05	2.322.655,87
-/+ Gewinn/Verlust aus dem Abgang von Gegenständen des Anlagevermögens	-3.208.649,76	16.552,83
+/- Zinsaufwendungen/Zinserträge	1.840.550,39	1.467.057,61
+/- Ertragsteueraufwand/-ertrag	-939.143,14	165.394,41
-/+ Ertragsteuerzahlungen	0,00	-16.772,93
Cash-Flow aus der laufenden Geschäftstätigkeit	-1.579.151,03	7.555.968,60
- Auszahlungen für Investitionen in das immaterielle Anlagevermögen	-26.290,25	-36.212,48
+ Einzahlungen aus Abgängen von Gegenständen des Sachanlagevermögens	4.673.130,69	25.420,17
- Auszahlungen für Investitionen in das Sachanlagevermögen	-1.371.609,32	-3.607.327,29
Cash-Flow aus Investitionstätigkeit	3.275.231,12	-3.618.119,60
+ Einzahlungen sonstige Darlehen inkl. angelaufene Zinsen	0,00	1.540.625,00
+ Einzahlungen von Unternehmenseigner	211.826,00	0,00
+ Einzahlungen aus der Begebung von Anleihen und der Aufnahme von (Finanz-) Krediten	1.941.500,00	82.000,00
+ Einzahlungen aus Mietkaufverbindlichkeiten	0,00	440.000,00
- Auszahlungen aus der Tilgung von Anleihen und (Finanz-) Krediten	-911.877,27	-1.778.063,58
- Auszahlungen aus der Tilgung von Mietkaufverbindlichkeiten	-82.922,87	-31.203,06
- Gezahlte Zinsen	-1.696.158,50	-1.346.572,67
- Gezahlte Dividenden an andere Gesellschafter	18.213,58	23.377,28
Cash-Flow aus Finanzierungstätigkeit	-519.419,06	-1.069.837,03
Zahlungswirksame Veränderung des Finanzmittelfonds	1.176.661,03	2.868.011,97
+/- Wechselkurs- und bewertungsbedingte Änderungen des Finanzmittelfonds	-150.171,58	-1.425.260,90
+ Finanzmittelfonds am Anfang der Periode	-4.576.932,37	-6.019.683,44
Finanzmittelfonds am Ende der Periode	-3.550.442,92	-4.576.932,37
Zusammensetzung des Finanzmittelfonds am Ende der Periode
Zahlungsmittel	526.324,84	998.056,29
Jederzeit fällige Bankverbindlichkeiten	-4.076.767,76	-5.574.988,66
	-3.550.442,92	-4.576.932,37

Die Ziele des Liquiditäts- und Finanzmanagements sind die Sicherung des Geschäftsbetriebs, die Steigerung des Unternehmenswerts, die Schaffung einer soliden Kapitalbasis zur Finanzierung des Wachstumskurses sowie die mögliche Gewährung künftiger Tilgungen und Ausschüttungen. Ziel des ordentlichen Liquiditätsmanagements ist es seinen finanziellen Verpflichtungen vertragsgerecht nachzukommen. Die Strategie des Unternehmens ist es, das Produktportfolio in der Art zu gestalten, dass über das Jahr hinweg ausreichende Liquiditätsreserven vorhanden sind.

Die freien Kreditlinien der Konzerngesellschaften betragen zum 31.12.2016 TEUR 1.439.

2.3 Finanzielle und nichtfinanzielle Leistungsindikatoren

Die ADDCON Gruppe nutzt diverse finanzielle Leistungsindikatoren als Steuerungsmittel, die aus operativen Kennzahlen der GuV und der Bilanz abgeleitet werden. Hauptaugenmerk gilt den beiden folgenden Indikatoren:

―	Rohmarge
―	Working Capital

Es ist aus Erfahrung angezeigt die relative und absolute Rohmarge in den einzelnen Segmenten in aller Regelmäßigkeit und Detailtiefe zu untersuchen. Eine frühzeitige Trenderkennung ermöglicht ein schnelles Einschreiten in den Bereichen in denen sich Menge bzw. Preise verändern: im negativen, wie im positiven. Dies gibt essentielle Aufschlüsse über Marktbewegung und deren Preissensitivität auf die die Unternehmung zeitnah reagieren muss.

Im Bereich Working Capital nutzt die Unternehmung extensiv die Kennzahl Reichweite des Bestandes als einen der Hauptleistungsindikatoren. Die Industrie zeichnet sich durch ihre hohe Kapitalintensität sowohl lang - als auch kurzfristig aus. Aufgrund der relativen hohen Durchschnittstonnage einer Verkaufstransaktion besteht eine verstärkte Kapitalbindung im Bestand für Rohstoffe sowie Fertigprodukte. Dies verlangt ein effektives Management der gesamten Wertschöpfungskette und hilft nachhaltig Bestände soweit wie möglich zu reduzieren. Im Jahr 2016 konnte wieder eine Reduzierung des Vorratsbestands erreicht werden.

Aufgrund der Witterungsabhängigkeit in den Bereichen De-Icing und FEED werden auch meteorologische Daten zur Steuerung der relevanten Prozesse mit hinzugezogen. Die im laufenden Jahr vorherrschende Trockenheit gab Aufschluss über den Bedarf von Silierungsmittel. Gleiches gilt für Prognosen in den Wintermonaten für die einzelnen Regionen in den sich De-Icing Kunden befinden. Auch hier verhilft dies zu einer effizienten Lagerhaltung an den verschiedenen Standorten.

3. Prognose-, Chancen- und Risikobericht

3.1 Prognosebericht

Bei dem Projekt Erweiterung der Kapazitäten im Bereich Di-Formiate wurde in 2016 die erste Erweiterungsstufe erreicht, die zweite Kapazitätsausweitung wird in 2017 erfolgen. Das Projekt Kapazitätsausweitung Calpro wird in 2017 finalisiert. Diese Projekte werden zu einer Erhöhung der Fertigungstiefe führen, die Prozesseffizienz deutlich steigern, im Wesentlichen durch Kapazitätssteigerungen bei den Di-Formiaten und beim Calciumpropionat, sowie für eine Verbesserung der Formulierung sorgen (zur Erarbeitung von Alleinstellungsmerkmalen und damit einer Sortimentserweiterung für neue Anwendungsbereiche).

Darüber hinaus wurde durch neu eingeführte Produkte - Derivate des existierenden Produktportfolios sowie Neuentwicklungen, wie die Produkte Glykole und NDF - das Umsatzwachstum gesteigert. Die Produktionsstätte für NDF ist auch für weitere Produkte der Grünfuttersilier und -Konservierung ausgelegt, so dass saisonentsprechend flexibel die Produktion geplant werden kann.

Durch die neue Unternehmensstruktur, in der die Funktionen Vertrieb und Logistik in der ADDCON GmbH fokussiert sind, sind flexible Reaktionen auf die Marktanforderungen möglich. Es kann "just in time" agiert und auftragsbezogen produziert werden. Es werden bewusst enge Kontakte zu Lieferanten und Kunden gepflegt, damit eine langfristige profitable Partnerschaft mit allen Teilnehmern des ADDCON Umfeldes gewährleistet ist. Ein Beispiel hierfür ist die strategische Partnerschaft mit einem Lieferanten, bei der durch Rückwärtsintegration die Herstellkosten gesenkt werden konnten.

Die Vertriebsaktivitäten des Konzerns werden auch zukünftig weiterhin stark in Asien und Mittel- und Südamerika ausgebaut.

Das Jahr 2017 wird die Gruppe aller Voraussicht nach, nach dem guten Start im Bereich De-Icing und der Budgeterreichung in den Bereichen FEED und OIL, mit einem deutlich positiven Ergebnis beenden. FOOD wird aufgrund der Verzögerung in den Projekten der Kapazitätserweiterung Calciumdipropionat unter den Erwartungen bleiben. Allerdings werden die Produktionsmengen dann ab Ende 2017 bzw. Anfang 2018 für den FOOD Bereich endlich zur Verfügung stehen und neben den per dato getätigten Investitionen keine weiteren Capex verursachen.

Im laufenden Jahr 2017 werden weitere kleinere Investitionen der ADDCON Gruppe mehr Kapazität und somit mehr Deckungsbeitrag im Bereich FOOD bescheren. Zusätzlich wird der Bereich OIL und DEICER einen moderaten Beitrag leisten. Zum jetzigen Zeitpunkt gehen wir von einem Vorsteuergewinn auf dem um die Erträge aus Anlagenverkäufen bereinigten Niveau wie in 2016 für das Jahr 2017 aus. Ziel ist es weiterhin mit dem zukünftig generierten Free Cash Flow die aus dem letzten Jahr erhöhte Fremdkapitalquote zu reduzieren. Der bestehende Fokus auf Margen und Working Capital wird weiterhin gelebt.

3.2 Risikobericht

Allgemeine Risikosituation

Aus heutiger Sicht sind, abgesehen von den allgemeinen Marktrisiken sowie von witterungsbedingt schwachem Absatz von De-Icer Produkten, die zu einer dauerhaft negativen Beeinflussung der Vermögens-, Finanz- und Ertragslage führen können, keine Risiken bekannt.

Risiken aufgrund unbeständiger Witterung im Agrarbereich begegnen wir mit einer weiter diversifizierten Produktpalette. Unser Produktportfolio umfasst dabei:

―	Eine Produktreihe zur Konservierung von Getreide, Nebenprodukten der Bioethanol-, Brauerei- und Mischfutterindustrie.
―	Siliermittel, mit der Aufgabe, eine Verbesserung des Silierergebnisses zu erzielen und somit Schmackhaftigkeit, Futteraufnahme, Energiegehalte und Futterhygiene zu verbessern.
―	Hochwertige Additive für die Tierernährung auf Basis organischer Säuren und Salze um eine leistungsgerechte, antibiotikafreie Versorgung der Tiere zu unterstützen.
―	Nachhaltige nichtantibiotische Wachstumsförderer für die Aquakultur.

Es ist aufgrund der Unternehmensgröße nicht möglich, das Risiko aus ungünstigen Witterungsverhältnissen durch Derivate am Kapitalmarkt abzusichern.

Risikomanagementziele und -methoden

Bei Fremdwährungen ist man bemüht einen Natural Hedge zu erzielen, d.h. Fälligkeiten von Forderungen und Verbindlichkeiten in Fremdwährungen in Einklang zu bringen. Hierbei ist die Hausbank unterstützend tätig, indem Fremdwährungsguthaben auf eine Kreditlinie anrechenbar sind. Ziel ist es, die Währungsrisiken möglichst gering zu halten. Es werden dementsprechend die Märkte beobachtet und den Empfehlungen der Capital Markets Abteilung der Hausbank gefolgt.

Trotz wesentlicher Abhängigkeit von wenigen Hauptlieferanten (Oligopole im Ameisensäure und KOH - Markt) werden kontinuierlich neue Bezugsquellen erschlossen. Dies führt weiterhin zu einer Reduzierung der Abhängigkeit von großen Lieferanten. Im Bereich des Bezugs von Rohmaterialien gehen wir derzeit aufgrund der Marktsituation von sinkenden Einkaufspreisen aus.

Die Ausfallrisiken im Debitorenbereich sind weiterhin gering (Ausfallquote: <1%). Delkredererisiken werden durch eine Warenkreditversicherung zusätzlich abgesichert.

Internes Kontrollsystem und Risikomanagementsystem

Die Einführung eines umfassenden Qualitätsmanagements (Zertifizierungen nach Standards ISO 9001-2000, FAMI-QS und GMP+) gewährleistet die hohe Qualität der Produkte. Als weitere Zertifizierung wird in 2017 die ISO 22000 (Standard für Managementsysteme zur Lebensmittelsicherheit) eingeführt. Damit ist die Erschließung neuer Märkte in Nord- und Mittelamerika im FOOD Bereich möglich.

Sämtliche relevanten Geschäftsprozesse werden durch ein integriertes ERP abgebildet. Darin verankert ist das Vieraugenprinzip in den Prozessabschnitten, in denen es opportun ist.

Dies beinhaltet die Sicherstellung der Regelungskonformität von Konzernabschluss und Konzernlagebericht sowie die Gewährleistung der Wirtschaftlichkeit von Kontrollen im Rechnungslegungsprozess.

Entwicklungsbeeinträchtigende Tatsachen

Die unterjährige Liquiditätssituation der Gesellschaft hat sich gegenüber 2015 deutlich verbessert. Es sind keine zusätzlichen Ausreichungen von der Hausbank notwendig gewesen.

Im 3. Quartal 2016 wurde ein von der Unternehmung nicht genutztes Grundstück nebst Gebäude veräußert. Außerdem wurde im 4. Quartal 2016 am Standort Norwegen ein Divestment im Infrastrukturbereich getätigt was zu wesentlichen Liquiditätszuflüssen geführt hat. Der Verkauf hat keine Beeinträchtigung des operativen Geschäftes dargestellt. Vielmehr werden durch die daraus resultierende Zusammenlegung der Infrastruktur am Standort mittelfristig Kosten reduziert.

Unter Berücksichtigung dieser und weiterer in Aussicht gestellter Finanzmittel für Investitionen wird die Fortführung der Unternehmenstätigkeit als gesichert eingeschätzt.

Die von der Unternehmung identifizierten Risiken haben aus jetziger Sicht auch in Zukunft Bestand und müssen dementsprechend weiterhin mit Nachdruck strategisch adressiert werden.

3.3 Chancenbericht

Das Prinzip ADDCON, der umweltverträglichen Chemie oder auch Green Chemistry, bekommt immer mehr Bedeutung je weiter man in die Zukunft blickt. In sämtlichen Bereich in den denen die Unternehmung agiert ist der Umweltgedanke mit wachsender Wichtigkeit vertreten. Dies ist der Grund aus dem das Geschäftsmodell bestand hat.

FEED, FOOD

Wachsende Bevölkerungszahlen werden den Bedarf an Lebensmittel weiter steigen lassen, sowohl pflanzlicher als auch tierischer Herkunft. Hier hat ADDCON absolut kompetitive Produkte, Markt - und Anwendungskenntnisse vorzuweisen. Außerdem führt die weltweite Abkehr von Fütterungsantibiotika zu großen Chancen im Bereich FEED. In diesen Wachstumsmärkten ist ADDCON vertreten und kann mit einer passablen Marktakzeptanz aufwarten.

OIL, DEICER

Auch die Bereiche, die sich derzeit als weniger berechenbar zeigen, bieten ein enormes Potential das die Unternehmung nutzen wird. Aufgrund der steigenden Unabhängigkeit der Unternehmung in Zukunft von diesen Bereichen werden diese als interessante Upside im Produktportfolio geführt werden können.

Bonn, 15.09.2017

Geschäftsführung

Dipl.-Ing. Bernd Kochannek

Konzernbilanz zum 31. Dezember 2016

AKTIVA

	31.12.2016		31.12.2015
	EUR		EUR
A. ANLAGEVERMÖGEN
I. Immaterielle Vermögensgegenstände
1. Selbst geschaffene gewerbliche Schutzrechte und ähnliche Rechte und Werte	658.914,91		706.341,82
2. Entgeltlich erworbene Konzessionen, gewerbliche Schutzrechte und ähnliche Rechte und Werte sowie Lizenzen an solchen Rechten und Werten	4.116.151,18		5.301.214,91
		4.775.066,09	6.007.556,73
II. Sachanlagen
1. Grundstücke, grundstücksgleiche Rechte und Bauten einschließlich der Bauten auf fremden Grundstücken	6.182.589,54		6.488.704,71
2. Technische Anlagen und Maschinen	7.020.580,23		7.966.563,44
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	284.459,52		322.663,69
4. Geleistete Anzahlungen und Anlagen im Bau	3.439.478,03		3.825.622,03
		16.927.107,32	18.603.553,87
III. Finanzanlagen
Anteile an verbundenen Unternehmen		3.907,78	3.907,78
		3.907,78	3.907,78
		21.706.081,19	24.615.018,38
B. UMLAUFVERMÖGEN
I. Vorräte
1. Roh-, Hilfs- und Betriebsstoffe	3.426.845,94		3.510.447,98
2. Unfertige Erzeugnisse, unfertige Leistungen	633.279,80		128.067,82
3. Fertige Erzeugnisse und Waren	5.447.156,42		7.087.063,86
		9.507.282,16	10.725.579,66
II. Forderungen und sonstige Vermögensgegenstände
1. Forderungen aus Lieferungen und Leistungen	13.886.325,18		7.167.099,35
2. Forderungen gegen Gesellschafter	804.726,38		2.200.743,42
3. Sonstige Vermögensgegenstände	1.923.001,71		1.309.487,96
		16.614.053,27	10.677.330,73
III. Kassenbestand, Bundesbankguthaben, Guthaben bei Kreditinstituten und Schecks		526.324,84	998.056,29
		26.647.660,27	22.400.966,68
C. RECHNUNGSABGRENZUNGSPOSTEN		86.785,40	76.464,50
		48.440.526,86	47.092.449,56
PASSIVA
	31.12.2016		31.12.2015
	EUR		EUR
A. EIGENKAPITAL
I. Gezeichnetes Kapital		37.500,00	37.500,00
II. Kapitalrücklage		2.987.500,00	2.987.500,00
III. Eigenkapitaldifferenz aus Währungsumrechnung		-1.043.920,29	-1.273.225,33
IV. Bilanzgewinn/-verlust
1. Verlust-/Gewinnvortrag	-256.214,93		333.140,61
2. Jahresüberschuss/-fehlbetrag	3.596.068,46		-565.978,26
3. Anteile Minderheitsgesellschafter am Jahresergebnis	-18.213,58		-23.377,28
		3.321.639,95	-256.214,93
V. Ausgleichsposten für Anteile anderer Gesellschafter		386.369,76	368.156,18
		5.689.089,42	1.863.715,92
B. UNTERSCHIEDSBETRAG AUS KAPITALKONSOLIDIERUNG		3.384.751,80	4.575.599,35
C. RÜCKSTELLUNGEN
1. Rückstellungen für Pensionen und ähnliche Verpflichtungen	308.432,00		310.027,28
2. Steuerrückstellungen	0,00		36.091,25
3. Sonstige Rückstellungen	1.291.353,82		1.201.613,36
		1.599.785,82	1.547.731,89
D. VERBINDLICHKEITEN
1. Verbindlichkeiten gegenüber Kreditinstituten	14.377.163,89		14.928.684,93
2. Erhaltene Anzahlungen auf Bestellungen	192.543,60		62.907,09
3. Verbindlichkeiten aus Lieferungen und Leistungen	16.574.289,54		13.213.458,24
4. Verbindlichkeiten gegenüber Gesellschaftern	0,00		1.184.191,04
5. Sonstige Verbindlichkeiten	5.695.917,34		7.919.342,97
- davon aus Steuern: EUR 720.652,04 (Vorjahr: EUR 710.382,18)
- davon im Rahmen der sozialen Sicherheit: EUR 0,00 (Vorjahr: EUR 0,00)
		36 839 914,37	37.308.584,.27
E. PASSIVE LATENTE STEUERN		926.985,45	1.796.818,13
		48.440.526,86	47.092.449,56

Konzern-Gewinn- und Verlustrechnung für das Geschäftsjahr 2016

	2016		2015
	EUR		EUR
1. Umsatzerlöse		53.944.163,43	52.856.638,30
2. Verminderung/Erhöhung des Bestands an fertigen und unfertigen Erzeugnissen		-930.319,82	121.372,64
3. Andere aktivierte Eigenleistungen		0,00	102.053,00
4. Sonstige betriebliche Erträge		5.419.053,72	3.790.894,13
5. Gesamtleistung		58.432.897,33	56.870.958,07
6. Materialaufwand
a) Aufwendungen für Roh-, Hilfs- und Betriebsstoffe und für bezogene Waren	-31.929.802,70		-36.538.320,37
b) Aufwendungen für bezogene Leistungen	0,00		2.239.242,29
		-31.929.802,70	-34.299.078,08
7. Rohergebnis		26.503.094,63	22.571.879,99
8. Personalaufwand
a) Löhne und Gehälter	-7.910.819,40		-7.570.712,36
b) Soziale Abgaben und Aufwendungen für Altersversorgung und für Unterstützung	-792.174,40		-837.080,37
		-8.702.993,80	-8.407.792,73
9. Abschreibungen
Abschreibungen auf immaterielle Vermögensgegenstände des Anlagevermögens und Sachanlagen		-2.807.522,57	-3.013.591,63
10. Sonstige betriebliche Aufwendungen		-10.478.893,67	-11.583.822,29
11. Betriebsergebnis		4.513.684,59	-433.326,66
12. Sonstige Zinsen und ähnliche Erträge		147.307,50	106.567,59
13. Zinsen und ähnliche Aufwendungen		-1.987.857,89	-1.573.625,20
14. Finanzergebnis		-1.840.550,39	-1.467.057,61
15. Ergebnis der gewöhnlichen Geschäftstätigkeit		2.673.134,20	-1.900.384,27
16. Steuern vom Einkommen und vom Ertrag
a) Erträge aus der Auflösung von RSt. für Steuer	36.091,25		-1.264,75
b) Latente Steuern	903.051,89		1.351.178,94
		939.143,14	1.349.914,19
17. Ergebnis nach Steuern		3.612.277,34	-550.470,08
18. Sonstige Steuern		-16.208,88	-15.508,18
19. Jahresüberschuss/-fehlbetrag		3.596.068,46	-565.978,26
20. Verlust-/Gewinnvortrag aus dem Vorjahr		-256.214,93	333.140,61
21. Anteile Minderheitsgesellschafter am Jahresergebnis		-18.213,58	-23.377,28
22. Bilanzgewinn		3.321.639,95	-256.214,93

Anhang zum Konzernabschluss für das Geschäftsjahr 2016

der ADDCON Holding GmbH

Amtsgericht Bonn (HR B 19496)

I. Allgemeine Angaben

Der Konzernabschluss der ADDCON Holding GmbH wurde zum 31. Dezember 2016 nach den Vorschriften der §§ 290 ff. des Handelsgesetzbuches erstellt. Die Abschlüsse der einbezogenen Unternehmen wurden grundsätzlich nach den jeweiligen Landesvorschriften aufgestellt. Für Zwecke des Konzernabschlusses wurden die Einzelabschlüsse auf eine einheitliche Bilanzierung und Bewertung nach den für die Muttergesellschaft anwendbaren Grundsätzen umgestellt. Die in den Konzernabschluss einbezogenen Unternehmen haben ausnahmslos den 31. Dezember als Bilanzstichtag. Für die Gliederung der Gewinn- und Verlustrechnung wurde das Gesamtkostenverfahren gewählt.

Im Geschäftsjahr 2016 wurden erstmalig die Regelungen des BilRUG angewendet. Durch die Anwendung des BilRUG werden insbesondere Erträge in die Umsatzerlöse umgegliedert. Analog hierzu werden die Aufwendungen, die im Vorjahr im sonstigen betrieblichen Aufwand ausgewiesen wurden, nun im Materialaufwand ausgewiesen. Die Aufwendungen aus den Übergangsvorschriften zum BilMoG in Höhe von TEUR 16 werden in den sonstigen betrieblichen Aufwendungen ausgewiesen.

Insofern ist der Konzernabschluss mit dem Vorjahr nur bedingt vergleichbar.

Abgrenzung des Konsolidierungskreises

(1) Konzern- und Beteiligungsunternehmen

Zum Konsolidierungskreis gehören folgende Unternehmen:

―	Addcon Holding GmbH, Bonn, Konzernmutter Konzernunternehmen:
―	ADDCON GmbH, Bitterfeld, 100%ige Tochtergesellschaft der Addcon Holding GmbH
―	ADDCON Europe GmbH, Bitterfeld-Wolfen, 94%ige Tochtergesellschaft der ADDCON GmbH
―	ADDCON Nordic AS, Porsgrunn (Norwegen), 100%ige Tochtergesellschaft der ADDCON GmbH

Per Kaufvertrag vom 14. September 2012 und Kapitalerhöhung mit Sacheinlage vom gleichen Datum und mit Wirkung zum 14. November 2012 hat die Addcon Holding GmbH sämtliche Geschäftsanteile an der ADDCON Group GmbH erworben. Die erstmalige Erstellung eines Konzernabschlusses erfolgte für das Geschäftsjahr 2013, da die Gesellschaft aufgrund der Unterschreitung der Größenkriterien des § 293 HGB grundsätzlich von der Pflicht zur Aufstellung eines Konzernabschlusses befreit war.

(2) Konsolidierungskreis und dessen Änderungen

In den Konzernabschluss der Addcon Holding GmbH werden folgende Unternehmen im Rahmen der Vollkonsolidierung einbezogen:

	Anteilsbesitz (%)
Addcon Holding GmbH, Bonn	Konzernmutter
ADDCON GmbH, Bitterfeld	100 % Tochtergesellschaft
ADDCON Europe GmbH, Bitterfeld-Wolfen	94 % Tochtergesellschaft der ADDCON GmbH);
ADDCON Nordic AS, Porsgrunn (Norwegen)	100 % Tochtergesellschaft der ADDCON GmbH)

Hinweis gemäß § 264 Abs. 3 Nr. 4 HGB auf Inanspruchnahme der Befreiung nach § 264 Abs. 3 HGB

Die Tochtergesellschaften ADDCON GmbH und ADDCON Europe GmbH sind aufgrund des Einbezugs in diesen Konzernabschluss und aufgrund der Erfüllung der sonstigen Voraussetzungen des § 264 Abs. 3 HGB von der Pflicht zur Erstellung eines Jahresabschlusses nach den für Kapitalgesellschaften geltenden Vorschriften (§ 264 ff. HGB) befreit.

Zu den beherrschten Unternehmen gehört die ADDCON AS, Porsgrunn/Norwegen (100% Anteilsbesitz). Da die Gesellschaft nicht operativ tätig ist und sich in der Abwicklung befindet, wird auf den Einbezug in den Konzernabschluss nach § 296 Abs. 2 HGB verzichtet. Die Angabe zur Höhe des Eigenkapitals und des Jahresergebnisses unterbleibt mit Verweis auf § 313 Abs. 3 S. 3 HGB.

Konsolidierungsgrundsätze

(1) Allgemeine Angaben

Die Vermögensgegenstände und Schulden der Tochterunternehmen ADDCON GmbH und ADDCON Europe GmbH wurden in den Konzernabschluss nach den geltenden Bilanzierungs- und Bewertungsmethoden einbezogen.

Alle zwischen den zu konsolidierenden Unternehmen existierenden Forderungen, Verbindlichkeiten, Aufwendungen und Erträge wurden eliminiert.

Die Berechnung der latenten Steuern berücksichtigt neben den Effekten aus der Konsolidierung auch die Abweichung der Handels- und Steuerbilanz aus den Einzelabschlüssen. Von dem Wahlrecht nach § 306 HGB zum saldierten Ausweis der latenten Steuern wird Gebrauch gemacht.

Eine Zwischenergebniseliminierung gemäß § 304 HGB wurde durchgeführt, sofern die sich ergebenden Ergebniseffekte nicht von untergeordneter Bedeutung sind.

(2) Abweichungen von den Konzernbilanzierungs- und -bewertungsmethoden (§ 308 Abs. 1 S. 3 HGB)

Die Vermögensgegenstände und Schulden der Tochtergesellschaft ADDCON Nordic AS sind nach norwegischen Bilanzierungs- und Bewertungsmethoden (NGAAP) bewertet und ohne Bewertungsanpassung in den nach handelsrechtlichen Grundsätzen erstellten Konzernabschluss der ADDCON Holding GmbH einbezogen worden. Der Effekt aus der unterlassenen Bewertungsanpassung ist insgesamt als unwesentlich einzuschätzen. Die Abweichung wird mit zeitlichen Gründen und der hohen Komplexität einer Umstellung begründet.

(3) Währungsumrechnung

Fremdwährungsposten werden zum Devisenkassamittelkurs am Bilanzstichtag bewertet. Die Währungsumrechnungen erfolgten nach dem Konzept der modifizierten Stichtagskursmethode gemäß § 308a HGB. Bilanzposten auf fremden Währungen wurden dabei zum Stichtagskurs, die Posten der Gewinn- und Verlustrechnung zum Durchschnittskurs und das Eigenkapital zum historischen Kurs umgerechnet. Zum Ansatz kamen dabei für Posten, die ursprünglich auf NOK lauten, ein Durchschnittskurs von 1 EUR = 9,2943 NOK und ein Stichtagskurs von 1 EUR = 9,0858 NOK.

(4) Kapitalkonsolidierung

Die ADDCON Holding GmbH wurde zum Erwerbszeitpunkt im Rahmen einer Vollkonsolidierung im Konzernabschluss entsprechend § 301 Abs. 1 HGB (Neubewertungsmethode) einbezogen.

Ein aus der nach den Grundsätzen im Rahmen der Neubewertungsmethode (§ 301 HGB) durchgeführten Kapitalkonsolidierung entstandener Unterschiedsbetrag wurde als Passivischer Unterschiedsbetrag aus der Kapitalkonsolidierung entsprechend § 301 Abs. 1 Nr. 3 HGB in der Bilanz unterhalb des Eigenkapitals ausgewiesen.

Die Folgebehandlung orientiert sich an DRS 4.41, wonach der negative Unterschiedsbetrag über die "durchschnittliche Nutzungsdauer der abnutzbaren Vermögenswerte aufzulösen" ist:

	TEUR
Passivischer Unterschiedsbetrag zum 01.01.2016	4.576
Auflösung passivischer Unterschiedsbetrag aus Kapitalkonsolidierung	1.191
Passivischer Unterschiedsbetrag zum 31.12.2016	3.385

Der passivische Unterschiedsbetrag entsteht im Zuge der Kapitalkonsolidierung, wenn das neubewertete Nettoreinvermögen den Kaufpreis für das erworbene Unternehmen übersteigt. Da nicht bilanzierungsfähige stille Lasten nicht erkennbar sind, hat dieser Eigenkapital-Charakter. Der Auflösungsbetrag ist in den sonstigen betrieblichen Erträgen enthalten.

II. Erläuterungen zur Konzernbilanz und Konzerngewinn- und Verlustrechnung

(1) Bilanzierungs- und Bewertungsmethoden

Erworbene und selbst geschaffene immaterielle Vermögensgegenstände des Anlagevermögens sind zu Anschaffungs- bzw. Herstellungskosten bilanziert und werden, sofern sie der Abnutzung unterliegen, entsprechend ihrer Nutzungsdauer um planmäßige Abschreibungen vermindert.

Die Vermögensgegenstände des Sachanlagevermögens sind mit den Anschaffungskosten zuzüglich Nebenkosten vermindert um die planmäßigen Abschreibungen angesetzt. Die bisherigen Abschreibungsmethoden werden fortgeführt. Die Zugänge des Jahres 2016 werden linear entsprechend der betriebsgewöhnlichen Nutzungsdauer abgeschrieben.

Das Finanzanlagevermögen wurde zu Anschaffungskosten bilanziert.

Die Roh-, Hilfs- und Betriebsstoffe sowie die Waren werden zu Anschaffungskosten unter Beachtung des Niederstwertprinzips bewertet.

Die Bewertung der unfertigen und fertigen Erzeugnisse erfolgt zu Herstellungskosten. Neben den Material- und Fertigungseinzelkosten werden angemessene Material- und Fertigungsgemeinkosten sowie Abschreibungen berücksichtigt. Verwaltungskosten werden nicht aktiviert. Zum Bilanzstichtag erfolgte bei Bedarf im Rahmen des Niederstwerttests eine Abschreibung auf den niedrigeren beizulegenden Wert.

Die Forderungen aus Lieferungen und Leistungen und sonstigen Vermögensgegenstände werden grundsätzlich zum Nennwert unter Berücksichtigung angemessener Abschreibungen angesetzt.

Flüssige Mittel sind zum Nennwert angesetzt.

Aktive Rechnungsabgrenzungsposten sind für Ausgaben vor dem Abschlussstichtag gebildet worden, die Aufwand für eine bestimmte Zeit nach dem Stichtag darstellen.

Rückstellungen für Pensionen und ähnliche Verpflichtungen werden nach versicherungsmathematischen Grundsätzen gemäß § 253 Abs. 2 S. 2 HGB mit dem Barwert (Projected Unit Credit Methode) bewertet. Als Rechnungsgrundlagen dienten die Richttafeln 2005G von Prof. Dr. Klaus Heubeck unter Ansatz einer monatlich vorschüssigen Zahlungsweise und einem Zinsfuß von 4,01 %. Für die Bewertung der Trendannahmen wurde ein Rententrend von 2,00 % p.a. getroffen.

Für die Darstellung der Pensionsverpflichtungen der inländischen Gesellschaften sind Brutto-Rückstellungen von TEUR 624 mit saldierungsfähigem Deckungsvermögen von TEUR 351 (Projected Unit Credit Methode) verrechnet worden. Daraus resultiert eine Ausschüttungssperre in Höhe von TEUR 95.

Sonstige Rückstellungen wurden in Höhe des voraussichtlichen Erfüllungsbetrags nach dem Grundsatz vernünftiger kaufmännischer Beurteilung dotiert und berücksichtigen alle ungewissen Verbindlichkeiten und erkennbaren Risiken.

Verbindlichkeiten sind mit den Erfüllungsbeträgen angesetzt.

Passive latente Steuern werden saldiert mit den aktiven latenten Steuern ausgewiesen. Der Berechnung wurde ein Steuersatz von 30 % für die deutschen und 28% für die norwegische Gesellschaft zugrunde gelegt. Die latenten Steuern resultieren im Wesentlichen aus den Neubewertungseffekt aus der Erstkapitalkonsolidierung bei der Addcon Nordic AS sowie aus körperschaft- und gewerbesteuerlichen Verlustvorträgen bei der Addcon Holding GmbH.

(2) Erläuterungen zur Konzernbilanz

Anlagevermögen

Die von den gesamten Anschaffungskosten ausgehende Darstellung der Entwicklung des Anlagevermögens in 2016 ist aus dem Anlagenspiegel (Ergänzung zum Anhang) ersichtlich.

Finanzanlagen

Die Anteile an verbundenen Unternehmen betreffen die 100% Anteile an der ADDCON AS, Porsgrunn/Norwegen. Diese Gesellschaft wurde als Vorratsgesellschaft gegründet, war aber nicht operativ tätig.

Umlaufvermögen

Sonstige Vermögensgegenstände

Sonstige Vermögensgegenstände in Höhe von TEUR 423 haben eine Restlaufzeit von über einem Jahr.

Eigenkapital

Das Eigenkapital und dessen Entwicklung sind aus dem Eigenkapitalspiegel zu entnehmen.

Bei der Kapitalrücklage handelt es sich um andere Zuzahlungen im Sinne von § 272 Abs. 2 Nr. 4 HGB.

Von dem Eigenkapital sind aufgrund der Aktivierung selbstgeschaffener immaterieller Vermögensgegenstände unter Berücksichtigung darauf entfallender passiver latenter Steuern TEUR 461 ausschüttungsgesperrt i.S.v. § 268 Abs. 8 HGB.

Passivischer Unterschiedsbetrag

Dieser Unterschiedsbetrag wird über einen Zeitraum von 7 Jahren erfolgswirksam aufgelöst.

Sonstige Rückstellungen

Zum 31. Dezember 2016 bestehen folgende wesentliche sonstige Rückstellungen:

	TEUR
Personal	323
Drohverlust	278
Provisionen	194
Variable Vergütungen	194
Abschluss und Prüfung	105
Gewährleistungen	50
Kundenboni	45
Ausstehende Rechnungen	30
Übrige	72
Summe	1.291

Verbindlichkeitenspiegel

	Gesamt		Bis 1 Jahr		Zwischen 1 und 5 Jahren		Länger als 5 Jahre
In TEUR	31.12.2016	31.12.2015	31.12.2016	31.12.2015	31.12.2016	31.12.2015	31.12.2016	31.12.2015
Verbindlichkeiten gegenüber Kreditinstitute	14.377	14.929	1.214	8.425	12.642	6.150	521	354
Erhaltene Anzahlungen auf Bestellungen	193	63	193	63	0	0	0	0
Verbindlichkeiten aus Lieferungen und Leistungen	16.574	13.213	16.574	13.213	0	0	0	0
Verbindlichkeiten gegenüber Gesellschaftern	0	1.184	0	0	0	1.184	0	0
Sonstige Verbindlichkeiten	5.696	7.919	768	1.132	4.928	6.787	0	0
Gesamt	36.840	37.309	18.749	22.833	17.570	14.121	521	354

Die Verbindlichkeiten gegenüber Kreditinstituten in Höhe von TEUR 14.377 sind durch Bürgschaften, Garantien, Grundschulden Grundstück Bitterfeld und Bürgschaften gesichert.

Von den Verbindlichkeiten gegenüber Kreditinstituten (stille Beteiligung) stellen TEUR 5.500 Nachrangdarlehen gegenüber allen anderen Verbindlichkeiten dar.

Latente Steuern

Folgende Posten der Bilanz führen zu latenten Steuern:

Anlagevermögen	passive latente Steuern
Pensionsrückstellungen	aktive latente Steuern
Sonderposten für Investitionszuschüsse	passive latente Steuern
Sonstige Rückstellungen	aktive latente Steuern
Zwischenergebniseliminierung	aktive latente Steuern
Steuerliche Verlustvorträge	aktive latente Steuern

Dabei wurden die passiven latenten Steuern (TEUR 3.424) gemäß § 306 HGB mit den aktiven latenten Steuern (TEUR 2.497) saldiert.

Folgende Steuersätze zugrunde gelegt:

Deutschland:	30 % (KSt, SolZ, GewSt)
Norwegen:	28 %

in TEUR	aktive (+) und passive (-) latente Steuern
Neubewertungseffekte aus Erstkapitalkonsolidierung	-2.286
Bewertungsunterschied
Sonderposten/Pensionsrückstellungen	-85
Steuerliche Verlustvorträge Addcon Holding	2.497
Sonstiges	-1.053
Summe passivischer Überhang	-927

(3) Erläuterungen zur Konzerngewinn- und Verlustrechnung

Umsatzaufgliederung

Die Gesamtumsätze 2016 verteilen sich wie folgt:

	2016
	TEUR
Feed	25.827
Food	6.888
Enteisungsmittel (De-Icing)	13.814
Oil	5.995
Sonstiges	1.420
	53.944

Die Umsätze verteilen sich nach Regionen und Tätigkeitsbereichen wie folgt:

in TEUR	EU (ohne D)	DE	East Europe Middle	Asia	Americas	Africa	Total
DEICER	8.233	4.571	980	10	19	0	13.814
FEED	13.139	6.616	940	4.642	427	63	25.827
FOOD	2.501	1.293	1.234	1.642	218	0	6.888
OIL	5.282	170	544	0	0	0	5.995
OTHER	573	769	6	6	66	0	1.420
Total	29.728	13.420	3.704	6.301	729	63	53.944

Sonstige betriebliche Erträge

Die Position sonstige betriebliche Erträge umfasst Erträge aus dem Abgang von Anlagevermögen in Höhe von TEUR 3.209, periodenfremde Erträge von TEUR 115, die Erträge aus der Auflösung von Rückstellungen von TEUR 82 betreffen.

Die Erträge aus der Währungsumrechnung betragen TEUR 10.

Sonstige betriebliche Aufwendungen

Die Position sonstige betriebliche Aufwendungen in Höhe von TEUR 10.479 enthält

periodenfremde Aufwendungen in Höhe von TEUR 105, davon unter anderem für Aufwendungen aus den Übergangsvorschriften zum BilMoG TEUR 16, Forderungsverluste TEUR 26 und sonstige periodenfremde Aufwendungen TEUR 63.

Zinsen und ähnliche Aufwendungen

Die Position enthält insgesamt Aufwendungen in Höhe von TEUR 1.988. Hiervon betreffen TEUR 14 Zinsaufwendungen aus der Aufzinsung von Pensions-Rückstellungen, wobei Brutto-Aufwendungen von TEUR 24 mit Zinserträgen aus der verrechneten Rückdeckungsversicherung verrechnet worden sind. Aus der Abzinsung weitere langfristiger Rückstellungen ist ein Zinsaufwand von TEUR 17 berücksichtigt.

Forschungs- und Entwicklungskosten

Im Geschäftsjahr hat der Konzern das Wahlrecht zur Aktivierung von selbst erstellten immateriellen Vermögensgegenständen nach § 248 Abs. 2 HGB i.V.m. § 255 Abs. 2a HGB angewendet und einen Betrag von TEUR 7 aktiviert. Die Entwicklungen werden mit Vollendung des Entwicklungsprozesses über die betriebsgewöhnliche Nutzungsdauer von 15 Jahren abgeschrieben. Die Ansatzwerte erfolgen auf Basis der projektbezogenen Fremdleistungen. Der Gesamtbetrag der Forschungs- und Entwicklungskosten beträgt im Geschäftsjahr TEUR 433.

III. Ergänzende Angaben

(1) Kapitalflussrechnung

Der Finanzmittelfond gemäß der Kapitalflussrechnung setzt sich aus dem Kassenbestand und den Guthaben bei Kreditinstituten sowie jederzeit fälligen Bankverbindlichkeiten zusammen. Der Aufbau der Kapitalflussrechnung entspricht den Empfehlungen des Deutschen Rechnungslegungs Standards Comitees (DRS 21).

Die Kapitalflussrechnung ist Teil des Konzernabschlusses.

(2) Sonstige Angaben nach § 285 HGB

Außerbilanzielle Geschäfte/Sonstige finanzielle Verpflichtungen

Die Summe der sonstigen finanziellen Verpflichtungen betragen zum Bilanzstichtag bis zum Ende der Laufzeit TEUR 3.096 (2015: TEUR 3.437).

Die Miet- und Leasinggeschäfte dienen der Verbesserung der Liquiditätssituation und der Eigenkapitalposition. Dies sind auch die wesentlichen Vorteile des Geschäfts. Risiken bestehen in der Vertragsbindung durch die Verträge, da ein ggf. eintretender wesentlicher technischer Fortschritt bei den geleasten und gemieteten Wirtschaftsgütern nicht durch Neuanschaffungen kompensiert werden kann.

Zur Beschaffung liquider Mittel zur Finanzierung der operativen Geschäftstätigkeit werden laufend Forderungen aus Lieferungen und Leistungen im Rahmen eines echten Factorings verkauft, um ein kürzeres Zahlungsziel zu realisieren. Zum Stichtag bestanden Forderungen gegenüber der Factoringgesellschaft in Höhe von TEUR 201.

Arbeitnehmer

	Durchschnitt	Durchschnitt
	2016	2015
Gewerbliche	73	80
Angestellte	63	46
Summe	136	126

Geschäftsführung

Im Berichtsjahr wurde die Gesellschaft vertreten durch:

―	Bernd Kochannek, Kaufmann, Bonn

Die Angabe über Gesamtbezüge unterbleibt mit Verweis auf § 286 Abs. 4 HGB.

Angaben zum Abschlussprüferhonorar

Das Honorar für den Abschlussprüfer beträgt bei Abschlussprüferleistungen TEUR 105, bei Steuerberatungsleistungen TEUR 17 und sonstigen Leistungen TEUR 4.

Vorschüsse und Kredite an Organmitglieder

An Organmitglieder sind Kredite in Höhe von TEUR 805 (VJ. TEUR 2.201) geleistet worden .Der Zinssatz beträgt 6%.

Nachtragsbericht

Es gab im abgelaufenen Jahr 2016 keine nennenswerten Vorgänge. Allerdings wurde im Januar 2017 beschlossen den Standort in Bonn zu schließen und die Administration der ADDCON Gruppe nach Bitterfeld zu verlagern. Durch die Schließung des Standorts Bonn werden erhebliche Einsparungs- und Synergieeffekte erwartet, welche ab dem Geschäftsjahr 2018 das Ergebnis der ADDCON Gruppe positiv beeinflussen werden.

Darüberhinaus ist es der ADDCON Gruppe gelungen durch ein im Jahr 2017 eingegangenes Joint Venture ab dem Jahr 2018 positive Effekte durch die Nutzung von Synergien zu erzielen.

Bonn, den 15.09.2017

Geschäftsführung

Bernd Kochannek

Der Konzernabschluss wurde am 5. Dezember 2017 gebilligt.

ENTWICKLUNG DES ANLAGEVERMÖGENS IM GESCHÄFTSJAHR 2016

	ANSCHAFFUNGS-UNO HERSTELLUNGSKOSTEN
	1. Jan. 2016 EUR	Zugänge EUR	Abgänge EUR	31. Dez. 2016 EUR
I. IMMATERIELLE VERMÖGENSGEGENSTÄNDE
1. Selbst geschaffene gewerbliche Schutzrechte und ähnliche Rechte und Werte	820.259,90	10.701,01	0,00	830.960,91
2. Entgeltlich erworbene Konzessionen, gewerbliche Schulwechte und ähnliche Rechte und Werte sowie Lizenzen an solchen Rechten und Werten	9.468.286,93	3.613,78	8,00	9.471.892,71
	10.288.546,83	14.314,79	8,00	10.302.853,62
II. SACHANLAGEN
1. Grundstücke, grundstücksgleiche Rechte und Bauten einschließlich der Bauten auf fremden Grundstücken	7.649.034,67	246.263,68	175.430,98	7.719.867,37
2. Technische Anlagen und Maschinen	10.336.579,03	1.345.871,10	2.924.970,16	8.757.479,97
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	479.103,26	52.943,70	6.179,30	525.867,66
4. Geleistete Anzahlungen und Anlagen im Bau	3.825.622,03	1.036.687,17	1.422.831,17	3.439.478,03
	22.290.338,99	2.681.765,65	4.529.411,61	20.442.693,03
III. FINANZANLAGEN	3.907,78	0,00	0,00	3.907,78
	32.582.793,60	2.696.080,44	4.529.419,61	30.749.454,43

	AUFGELAUFENE ABSCHREIBUNGEN
	1. Jan. 2016 EUR	Zuführungen EUR	Auflösungen EUR	31. Dez. 2016 EUR
I. IMMATERIELLE VERMÖGENSGEGENSTÄNDE
1. Selbst geschaffene gewerbliche Schutzrechte und ähnliche Rechte und Werte	113.918,08	70.103,38	11.975,46	172.046,00
2. Entgeltlich erworbene Konzessionen, gewerbliche Schulwechte und ähnliche Rechte und Werte sowie Lizenzen an solchen Rechten und Werten	4.167.072,02	1.415.573,70	226.904,19	5.355.741,53
	4.280.990,10	1.485.677,08	238.879,65	5.527.787,53
II. SACHANLAGEN
1. Grundstücke, grundstücksgleiche Rechte und Bauten einschließlich der Bauten auf fremden Grundstücken	1.160.329,96	202.321,72	-174.626,15	1.537.277,83
2. Technische Anlagen und Maschinen	2.370.015,59	1.038.523,65	1.671.639,50	1.736.899,74
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	156.439,57	81.000,12	-3.968,45	241.408,14
4. Geleistete Anzahlungen und Anlagen im Bau	0,00	0,00	0,00	0,00
	3.686.785,12	1.321.845,49	1.493.044,90	3.515.585,71
III. FINANZANLAGEN	0,00	0,00	0,00	0,00
	7.967.775,22	2.807.522,57	1.731.924,55	9.043.373,24

	NETTOBUCHWERTE
	31. Dez. 2016 EUR	31. Dez. 2015 EUR
I. IMMATERIELLE VERMÖGENSGEGENSTÄNDE
1. Selbst geschaffene gewerbliche Schutzrechte und ähnliche Rechte und Werte	658.914,91	706.341,82
2. Entgeltlich erworbene Konzessionen, gewerbliche Schulwechte und ähnliche Rechte und Werte sowie Lizenzen an solchen Rechten und Werten	4.116.151,18	5.301.214,91
	4.775.066,09	6.007.556,73
II. SACHANLAGEN
1. Grundstücke, grundstücksgleiche Rechte und Bauten einschließlich der Bauten auf fremden Grundstücken	6.182.589,54	6.488.704,71
2. Technische Anlagen und Maschinen	7.020.580,23	7.966.563,44
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	284.459,52	322.663,69
4. Geleistete Anzahlungen und Anlagen im Bau	3.439.478,03	3.825.622,03
	16.927.107,32	18.603.553,87
III. FINANZANLAGEN	3.907,78	3.907,78
	21.706.081,19	24.615.018,38

KONZERN-KAPITALFLUSSRECHNUNG FÜR DAS GESCHÄFTSJAHR 2016

	2016	2015
	EUR	EUR
Periodenergebnis	3.596.068,46	-565.978,26
+/- Abschreibungen/Zuschreibungen auf Gegenstände des Anlagevermögens	2.807.522,57	3.013.591,63
+/- Zunahme/Abnahme der Rückstellungen	52.053,93	56.563,79
+/- Sonstige zahlungsunwirksame Aufwendungen/Erträge	-1.190.847,55	-102.053,00
-/+ Zunahme/Abnahme der Vorräte, der Forderungen aus Lieferungen und Leistungen sowie anderer Aktiva, die nicht der Investitions- oder Finanzierungstätigkeit zuzuordnen sind	-6.124.762,98	1.198.956,65
+/- Zunahme/Abnahme der Verbindlichkeiten aus Lieferungen und Leistungen sowie anderer Passiva, die nicht der Investitions- oder Finanzierungstätigkeit zuzuordnen sind	1.588.057,05	2.322.655,87
-/+ Gewinn/Verlust aus dem Abgang von Gegenständen des Anlagevermögens	-3.208.649,76	16.552,83
+/- Zinsaufwendungen/Zinserträge	1.840.550,39	1.467.057,61
+/- Ertragsteueraufwand/-ertrag	-939.143,14	165.394,41
-/+ Ertragsteuerzahlungen	0,00	-16.772,93
Cash-Flow aus der laufenden Geschäftstätigkeit	-1.579.151,03	7.555.968,60
- Auszahlungen für Investitionen in das immaterielle Anlagevermögen	-26.290,25	-36.212,48
+ Einzahlungen aus Abgängen von Gegenständen des Sachanlagevermögens	4.673.130,69	25.420,17
- Auszahlungen für Investitionen in das Sachanlagevermögen	-1.371.609,32	-3.607.327,29
Cash-Flow aus Investitionstätigkeit	3.275.231,12	-3.618.119,60
+ Einzahlungen sonstige Darlehen inkl. angelaufene Zinsen	0,00	1.540.625,00
+ Einzahlungen von Unternehmenseigner	211.826,00	0,00
+ Einzahlungen aus der Begebung von Anleihen und der Aufnahme von (Finanz-) Krediten	1.941.500,00	82.000,00
+ Einzahlungen aus Mietkaufverbindlichkeiten	0,00	440.000,00
- Auszahlungen aus der Tilgung von Anleihen und (Finanz-) Krediten	-911.877,27	-1.778.063,58
- Auszahlungen aus der Tilgung von Mietkaufverbindlichkeiten	-82.922,87	-31.203,06
- Gezahlte Zinsen	-1.696.158,50	-1.346.572,67
- Gezahlte Dividenden an andere Gesellschafter	18.213,58	23.377,28
Cash-Flow aus Finanzierungstätigkeit	-519.419,06	-1.069.837,03
Zahlungswirksame Veränderung des Finanzmittelfonds	1.176.661,03	2.868.011,97
+/- Wechselkurs- und bewertungsbedingte Änderungen des Finanzmittelfonds	-150.171,58	-1.425.260,90
+ Finanzmittelfonds am Anfang der Periode	-4.576.932,37	-6.019.683,44
Finanzmittelfonds am Ende der Periode	-3.550.442,92	-4.576.932,37
Zusammensetzung des Finanzmittelfonds am Ende der Periode
Zahlungsmittel	526.324,84	998.056,29
Jederzeit fällige Bankverbindlichkeiten	-4.076.767,76	-5.574.988,66
	-3.550.442,92	-4.576.932,37

KONZERNEIGENKAPITALSPIEGEL FÜR DAS GESCHÄFTSJAHR 2016

	Gezeichnetes Kapital	Kapitalrücklage	Erwirtschaftetes Eigenkapital	Ausgleichsposten aus der Fremdwährungsumrechnung
Stand 1.1.2016	37.500,00	2.987.500,00	-256.214,93	-1.273.225,33
Eigenkapitalzuführungen	0,00	0,00	0,00	0,00
Übrige Veränderungen	0,00	0,00	0,00	0,00
Konzernjahresüberschuss	0,00	0,00	3.577.854,88	229.305,04
Übriges Konzernergebnis	0,00	0,00	0,00	0,00
Konzerngesamtergebnis	0,00	0,00	3.577.854,88	229.305,04
Stand 31.12.2016	37.500,00	2.987.500,00	3.321.639,95	-1.043.920,29

	Eigenkapital	Minderheitenkapital	Konzerneigenkapital
Stand 1.1.2016	1.495.559,74	368.156,18	1.863.715,92
Eigenkapitalzuführungen	0,00		0,00
Übrige Veränderungen	0,00		0,00
Konzernjahresüberschuss	3.807.159,92	18.213,58	3.825.373,50
Übriges Konzernergebnis	0,00	0,00	0,00
Konzerngesamtergebnis	3.807.159,92	18.213,58	3.825.373,50
Stand 31.12.2016	5.302.719,66	386.369,76	5.689.089,42

Bestätigungsvermerk des Abschlussprüfers

Wir haben den von der Addcon Holding GmbH, Bonn, aufgestellten Konzernabschluss bestehend aus Konzernbilanz, Konzern-Gewinn- und Verlustrechnung, Konzernanhang, Kapitalflussrechnung und Eigenkapitalspiegel - und den Konzernlagebericht für das Geschäftsjahr vom 1. Januar 2016 bis 31. Dezember 2016 geprüft. Die Aufstellung von Konzernabschluss und Konzernlagebericht nach den deutschen handelsrechtlichen Vorschriften liegt in der Verantwortung der gesetzlichen Vertreter der Gesellschaft. Unsere Aufgabe ist es, auf der Grundlage der von uns durchgeführten Prüfung eine Beurteilung über den Konzernabschluss und den Konzernlagebericht abzugeben.

Wir haben unsere Konzernabschlussprüfung nach § 317 HGB unter Beachtung der vom Institut der Wirtschaftsprüfer (IDW) festgestellten deutschen Grundsätze ordnungsmäßiger Abschlussprüfung vorgenommen. Danach ist die Prüfung so zu planen und durchzuführen, dass Unrichtigkeiten und Verstöße, die sich auf die Darstellung des durch den Konzernabschluss unter Beachtung der Grundsätze ordnungsmäßiger Buchführung und durch den Konzernlagebericht vermittelten Bildes der Vermögens-, Finanz- und Ertragslage wesentlich auswirken, mit hinreichender Sicherheit erkannt werden. Bei der Festlegung der Prüfungshandlungen werden die Kenntnisse über die Geschäftstätigkeit und über das wirtschaftliche und rechtliche Umfeld des Konzerns sowie die Erwartungen über mögliche Fehler berücksichtigt. Im Rahmen der Prüfung werden die Wirksamkeit des rechnungslegungsbezogenen internen Kontrollsystems sowie Nachweise für die Angaben im Konzernabschluss und Konzernlagebericht überwiegend auf der Basis von Stichproben beurteilt. Die Prüfung umfasst die Beurteilung der Jahresabschlüsse der in den Konzernabschluss einbezogenen Unternehmen, der Abgrenzung des Konsolidierungskreises, der angewandten Bilanzierungs- und Konsolidierungsgrundsätze und der wesentlichen Einschätzungen der gesetzlichen Vertreter sowie die Würdigung der Gesamtdarstellung des Konzernabschlusses und des Konzernlageberichts. Wir sind der Auffassung, dass unsere Prüfung eine hinreichend sichere Grundlage für unsere Beurteilung bildet.

Unsere Prüfung hat zu keinen Einwendungen geführt.

Nach unserer Beurteilung aufgrund der bei der Prüfung gewonnenen Erkenntnisse entspricht der Konzernabschluss der Addcon Holding GmbH, Bonn, zum 31. Dezember 2016 den gesetzlichen Vorschriften und vermittelt unter Beachtung der Grundsätze ordnungsmäßiger Buchführung ein den tatsächlichen Verhältnissen entsprechendes Bild der Vermögens-, Finanz- und Ertragslage des Konzerns. Der Konzernlagebericht steht in Einklang mit dem Konzernabschluss, entspricht den gesetzlichen Vorschriften, vermittelt insgesamt ein zutreffendes Bild von der Lage des Konzerns und stellt die Chancen und Risiken der zukünftigen Entwicklung zutreffend dar.

Wuppertal, den 28. September 2017

Buth & Hermanns Partnerschaft mbB
Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft

gez. Michael Hermanns, Wirtschaftsprüfer

gez. i.V. Jens Krummen, Wirtschaftsprüfer

2e:T79b41,

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

ANNUAL FINANCIAL REPORT

2023

2023 Report and Consolidated Financial Statements

Amounts in thousands of Euros

Board of Directors:

Piero Nulli	Chairman
Francesco Nulli	CEO
Alberto Cambieri	Board Member
Fabio Mosca	Vice Chairman
Roberto Vagheggi	Board Member

Board of Statutory Auditors:

Mario Giusti	Chairman
Roberto Miazzo	Statutory Auditor
Alessandro Cinque	Statutory Auditor

Independent Auditors:

EY S.p.A.

ANNUAL FINANCIAL REPORT

31 DECEMBER 2023

ESSECO GROUP S.R.L.

Annual Financial Report as at 31 December 2023:

• Directors' Report.

• Balance Sheet, Income Statement and Cash Flow Statement.

• Explanatory Notes

• List of companies included in the consolidation area as at 31 December 2023

• Principal data extracted from the latest financial statements of subsidiaries and associates

• Report of the Independent Auditors to the consolidated financial statements of Esseco Group S.r.l. as at 31 December 2023...

REFERENCE ECONOMIC FRAMEWORK

In 2023, the global economy was affected by general uncertainty, which has been ongoing for some years now. In recent years there have been exceptional events, from the pandemic, to the conflicts in Ukraine and the Middle East, to the energy crisis, which have generated a slowdown in world trade with changes in macroeconomic conditions such as debt, inflation and interest rates. At the end of 2023, global economic activity weakened even more and manufacturing production continued to stagnate. In the United States, after the significant expansion in consumption in the third quarter of 2023, some signs of a slowdown in activity emerged; in China, the continuation of the crisis in the real estate sector held back growth, which remained well below the pre-pandemic period. International trade recorded a modest trend, which was affected by the weakness in demand for goods and the financial difficulty at global level.

In the fourth quarter of 2023, GDP in the United States increased by 3.4%, driven by consumption, which in the first few months of the year continued to expand in the services component. In China, economic activity has accelerated, but remains held back by the crisis in the real estate sector. In the United Kingdom, GDP contracted for the second consecutive quarter, due to the sharp reduction in foreign demand.

In the first few months of 2024, signs of improvement in the global economy emerged. In the United States, consumption remained stable and employment grew beyond expectations; in China, on the other hand, demand continues to be affected by the crisis in the real estate sector.

GDP growth and macroeconomic projections

(percentage changes, unless otherwise specified)

	Growth
	2023	2023 Q3 ⁽¹⁾	2023 Q4 ⁽¹⁾
World	3.2	-	-
Japan	1.9	-3.2	0.4
United Kingdom	0.1	-0.5	-1.2
United States	2.5	4.9	3.4
Brazil	2.9	2.0	2.1
China	5.2	4.9	5.2
India ⁽³⁾	77	8.1	8.4
Russia	3.6	5.6	5.1

	Forecasts		Revisions ⁽²⁾
	2024	2025	2024	2025
World	3.2	3.2	0.1	0.0
Japan	0.9	1.0	0.0	0.2
United Kingdom	0.6	1.6	0.0	0.0
United States	2.8	1.9	0.7	0.2
Brazil	2.2	2.1	0.5	0.2
China	4.6	4.1	0.0	0.0
India ⁽³⁾	6.8	6.5	0.3	0.0
Russia	3.2	1.8	0.6	0.7

Sources: National statistics for data on the growth of individual countries; for world GDP and for the forecasts, IMF, IMF World Economic Outlook, April 2024.

⁽¹⁾ Quarterly data. For Japan, the United Kingdom and the United States, annualized and seasonally adjusted percentage changes on the previous quarter; for the other countries, year-on-year percentage changes.-

⁽²⁾ Percentage points. Revisions compared with IMF, IMF World Economic Outlook Update, January 2024.

⁽³⁾ The actual data and the forecasts refer to the fiscal year starting in April.

According to projections published by the International Monetary Fund, global GDP will increase by 3.2% in 2024, as in 2023; the estimate was revised upwards slightly thanks to better than expected US GDP data. A possible worsening of the conflicts in Ukraine and the Middle East constitutes a downside risk for economic activity and for a rise in inflation.

Since the beginning of the year, consumer inflation has increased in the United States, mainly due to the dynamics of energy prices. In the United Kingdom, prices decelerated thanks to the contribution of all the main categories. In both countries, the decline in inflation, net of food and energy, was concentrated in the goods component, against the greater persistence of services. In Japan, core inflation decreased, but it is at high levels compared to the historical record.

With regard to GDP, in the Eurozone economic activity stagnates and disinflation continues due to the weakness of industry; consumer disinflation continues, especially for non-energy industrial goods and food, while it is on the rise for services.

Energy costs in 2023 remained at high levels. The occurrence of further tensions (conflict in the Middle East, very cold winter or drought) would expose the Eurozone and Italy to the risk of recession. To date, energy costs have been reduced, with the PUN between 85 and 100 Euro/MWh, due to a low overall demand in Europe, otherwise we would already find prices much more in line with the 2023 average, which was around at 138 Euro/MWh.

Euro-area GDP growth and inflation

(percentage changes)

	GDP growth			Inflation
	2023	2023 Q3 ⁽¹⁾	2023 Q4 ⁽¹⁾	2024 March ⁽²⁾
France	0.7	0.0	0.1	2.4
Germany	-0.3	0.0	-0.3	2.3
Italy	0.9	0.2	0.2	1.2
Spain	2.5	0.4	0.6	3.3
Euro area	0.4	-0.1	0.0	(2.4)

Sources: Based on national statistics and on Eurostat data.

⁽¹⁾ Quarterly data adjusted for seasonal and calendar effects; percentage changes on previous period. -

⁽²⁾ Monthly data; year-on-year percentage changes in the harmonized index of consumer prices (HICP). Estimates for the euro area are provisional.

At the end of 2023, the GDP of the Eurozone stagnated for the fifth consecutive quarter, expanding in all the main countries with the exception of Germany, where investments have fallen significantly and activity has not grown substantially since the end of 2022. In the Eurozone as a whole, the increase in fixed investments, and to a marginal extent in household consumption, was offset by the negative contributions of the change in inventory and net foreign demand. Value added decreased in industry in the strict sense and in construction, while it only rose in services.

According to the projections of ECB experts published in March, Eurozone GDP will grow by 0.6% in 2024, 1.5% in 2025 and 1.6% in 2026. In comparison with last December, the estimates were revised downwards by 2 tenths of a percentage point for 2024, mainly reflecting the carry-over effects deriving from the less favourable than expected data for 2023, as well as the weakening of the prospective framework.

Italian economic performance

GDP

In Italy, in the last quarter of 2023, GDP continued to grow, albeit to a limited extent. The decline in consumption was offset by the marked increase in investments. The slight growth on the previous period is mainly due to the increase in investments in construction (3.8%). While household consumption decreased due to a significant drop in purchases of services, in particular of accommodation and catering, spending on non-durable goods remained stable, while spending on durable goods rose. The latter increased in the construction sector, which benefited from the acceleration of works in view of the reduction of tax incentives. The reduced GDP growth continued in the first few months of 2024, with a positive contribution from services in the face of the continuing weakness of the manufacturing sector.

Value added increased especially in construction, while activity remained substantially stable both in industry in the strict sense and in services. Based on the annual accounts, GDP grew by 0.9% in 2023 (from 4.0% in 2022, revised from 3.7%). The performance in economic activity would benefit from the recovery in disposable income and foreign demand. Investments would be affected by high loan costs and, in the construction sector, by the reduction of incentives for home renovations, the effects of which would be only partially offset by the impetus of the NRRP (National Recovery and Resilience Plan) measures. GDP would then grow by 0.6% in 2024, 1.0% in 2025 and 1.2% in 2026.

Labour Market

In the fourth quarter of 2023, the expansion of employment continued, which however stagnated in the first few months of 2024, with an increase in permanent work offset by a decline in fixed-term and self-employed work. Participation and employment rates have stabilised at historically high values and unemployment remains low. At the end of 2023, wages in the private (non-agricultural) sector grew at lower rates than in the previous quarter. However, the wage trend should intensify in the coming months, supported both by the payments envisaged by contractual arrangements already signed, and by the expected renewals. Employment would grow at a rate corresponding to about half that of value added: productivity would rise again after three years of contraction. The unemployment rate is expected to decline slowly, standing at 7.4% in 2026.

In the January-February period, employment remained constant overall compared to the previous two-month period: the increase in permanent work was offset by the decline in fixed-term and selfemployed work. The number of employees in the 15-34 age group decreased, after the expansion recorded at the end of 2023.

Contractual wages in the private sector accelerated in the first few months of 2024, following the agreements reached in the chemical, wood and food sectors. In March, the trade contract was also renewed, which impacts almost 2 million workers: minimum wages will gradually increase, by about 10% by the end of the four-year period of validity. During the year, wage growth will continue to progressively intensify due to the expected renewals, in particular in tourism - where the national contract expired more than two years ago - and in metalworking, whose minimum wages will be increased in June in line with the inflation net of imported energy goods recorded in 2023.

Inflation rate

Consumer inflation in Italy, equal to 5.9% on average in 2023, would decrease sharply this year to 1.3%, and then rise moderately in the two-year period 2025-26, but remain well below 2%. The limited change in prices in the current year mainly reflects the negative contribution of the energy component, which would normalise over the next two years. Core inflation, still sustained by the dynamics of unit labour costs, would fall more gradually, to around 2% on average this year, then fall further over the next two years (around 1.7%).

GDP growth and inflation: forecasts of the Bank of Italy and other organizations (percentage change on previous period)

	GDP ⁽¹⁾
	2023	2024	2025	2026
Bank of Italy (April)	1.0	0.6	1.0	1.2
European Commission (February)	0.6	0.7	1.2	-
OECD (February)	0.7	0.7	1.2	-
IMF (April)	0.9	0.7	0.7	-
Consensus Economics (April)	0.9	0.7	1.0	-
Memorandum item: Bank of Italy (December)	0.7	0.6	1.1	1.1

	Inflation ⁽²⁾
	2023	2024	2025	2026
Bank of Italy (April)	5.9	1.3	1.7	1.7
European Commission (February)	5.9	2.0	2.3
OECD (February)	5.9	1.8	2.2	-
IMF (April)	5.9	1.7	2.0
Consensus Economics (April)	5.7	1.6	1.8	-
Memorandum item: Bank of Italy (December)	6.0	1.9	1.8	1.7

Sources: Banca d'Italia, 'Macroeconomic projections for the Italian economy', 5 April 2024; European Commission, European Economic Forecast, Winter 2024, February 2024; OECD, OECD Economic Outlook, February 2024; IMF, World Economic Outlook, April 2024; Consensus Economics, Consensus Forecasts, April 2024.

⁽¹⁾ The growth rates indicated in the forecasts of the Bank of Italy are adjusted for calendar effects. -

⁽²⁾ HICP. Consensus Economics forecasts refer to the consumer price index for the entire resident population (NIC).

Performance of the Italian chemical sector

After a decline in chemical production in Italy estimated at 7% for the whole of 2023, 2024 also promises to be a difficult year, with a marginal recovery predicted (+0.5%), subject to significant downside risks related first and foremost to uncertainties regarding energy costs.

In general, the European chemical sector is in difficulty, with particularly marked declines in Germany (-11% in 2023 after -12% in 2022). Non-competitive energy costs and weak demand hinder the relaunch of activities, with a consequent decrease in production. For Italy, one factor of relative stability, also in light of the partial recovery of gas prices, is the specialisation in specialty and consumer chemicals. The forecasts for 2024 are substantially stable, but new concerns cannot be ruled out in light of a worrying geo-political scenario that sees risks in the Middle East alongside the conflict in Ukraine.

With regard to basic inorganic chemicals, the Italian 2023 scenario saw a extremely different performance in the two half-year periods. Although, on the one hand, helped by partially decreasing energy costs, there was an unexpected increase in sales in the first part of 2023, the second part of the year saw the exact opposite, with a general collapse in demand and a decline in sales. The scenario in the last part of 2023 is characterised by the de facto entry into a recession. The situation abroad is also not favourable, as even in China there is talk of overcapacity, which further affects sales and market opportunities.

This situation has hit the chlor-alkali market, and led to a decrease in market prices as a result of the falling PUN and fluctuating market demand. As regards production, we have moved from regulating production to having to increase production rates to meet demand. Production did not resume so swiftly as to satisfy demand and foreign imports led the market. The caustic soda market fluctuated the most; at the beginning of the year, demand was high, allowing Italian producers to increase sales, while demand has stagnated since the third quarter and to date it is difficult to make forecasts for 2024. Hydrochloric acid sales slowed down at European level in 2023, the reduced presence of the product on the market made it possible to maintain stable volumes in Italy. Some large European production sites are showing signs of recovery.

The availability of sulphur on the Italian market in 2023 was certainly higher than in 2022, making it possible to direct purchases mostly to domestic sources. In particular, the refineries in the South performed well, especially as regards solid sulphur; vice versa, the availability of liquid product was rather low. As regards the purchase cost of sulphur, the first half year of 2023 saw prices remain at rather high levels, in continuity with the trend in the second quarter of 2022. However, as early as spring 2023, prices began to fall, reaching their lowest levels in July and then, from August, started to rise again, then decline in December. There was a slight increase in the first quarter of 2024.

During 2023, the international sulphuric acid market benefited from the easing of some tensions that had characterised 2022: from price increases, especially energy prices, to pressures on supply chains. Large Italian consumers recorded a reduction in consumption and production. The domestic market has therefore followed the global trend where the most affected sectors were the automotive, textile-tanning, ceramics, foundries, paper mills and some other sectors related to basic chemicals. The production of sulphuric acid in Italy, during the second half year of 2023, stood at around 450,000 tonnes, with a domestic consumption of approximately 310,000 tonnes. It is possible to assume a total annual production of around 900,000 tonnes, with a estimated domestic consumption of roughly 650,000 tonnes.

ESSECO GROUP - ESSECO INDUSTRIAL

General trend in 2023 and recent developments in the group

The sales volumes for the year 2023 of the Industrial Division of the Esseco Group showed a decrease compared to the consolidated volumes in 2022 (-11%); most of the companies in the Division recorded decreases in volumes, bucking the trend of Esseco do Brasil (+8%) and Addcon Nordic (+5%).

The Esseco Industrial market is mainly the European market, which accounted for 89% of total volumes sold in 2023. In Europe, the leading country in terms of volumes is Italy, which accounts for 57% of the total European market, followed by the United Kingdom (7%) and Germany (7%). Italy recorded a decrease in volumes of -12% compared to 2022.

An analysis of the European market in more detail shows that the most significant decreases were recorded in the volumes of chlorine derivatives, with -14,000 tonnes and -12,000 tonnes of ammonium salts compared to 2022. The products that instead generated increased volumes compared to the previous year are trading products and de-icers, albeit to a limited extent.

Considering the seasonal businesses, it should be noted that de-icers, intended for the defrosting of airport runways and more generally for public roads, recorded a year of growth in volumes of 8%, although some way off the exceptional result achieved in the 2021. In the first four months of the current year, excellent volumes were achieved, thanks to the favourable weather conditions for using the product.

Healthy product profitability was recorded, but clearly worsening with respect to the results achieved in 2022, an exceptional year due to favourable macroeconomic conditions. The total turnover of Esseco Industrial in 2023 decreased by 25%.

After the sharp increase in margins recorded in 2022, driven by rising prices, to counteract the sharp increase in the costs of raw materials and electricity, 2023 was a limited year, but in any case with solid margins, despite the decline in turnover, due to the decrease in sales prices and volumes brought about by the market performance.

Factory situation

During the year 2023, Esseco Industrial recorded investments of approximately Euro 34 million. The main uses concern the investments of Altair Chimica S.p.A. for the development of the renewable energy procurement strategy; the Renewability project is continuing. The photovoltaic park, in Abruzzo, has been operational since February 2024 and we are already receiving electricity; in the second half of 2024, the wind farms in Lazio and Sicily will also be operational.

At the Trecate site, Esseco S.r.l. made investments for the improvement of the sodium hydrosulphite packaging plant and for the enhancement of the potash polyaspartate plant for the wine market.

Esseco UK Ltd has carried out the expansion of the sulphur combustion furnace at the Wakefield site for the production of bisulfites.

Esseco Industrial's objective is based on an investment strategy aimed at energy improvement through the predominant use of energy from renewable sources and decarbonisation to further reduce CO ₂ emissions.

RAW MATERIALS PERFORMANCE

SULPHUR

During the first half year of 2023, the cost of sulphur was down on a trend basis with the last months of 2022, reaching its lowest point in July, and then rising again in October. In the last quarter of 2023, the cost of sulphur decreased slightly, and then rose again in the first months of 2024.

CAUSTIC SODA

Sharp increase in the cost of caustic soda, which saw a decrease from the second half of 2022, then remain quite stable over the central months of 2023, then increase in December 2023. In the first few months of 2024, the trend is decreasing.

CARBON SODA

After an all-time peak in the price of soda carbonate in 2023, which remained stable for the entire year, the price has fallen since February 2024, although it is still high compared to 2022.

POTASSIUM CHLORIDE

After the high prices recorded in 2022, the price of KCI gradually fell in 2023. The price was rather stable in the first few months of 2024.

AMMONIA

The energy crisis, combined with the war in Ukraine has pushed the price of this raw material to extremely high values, reaching peaks of over $ 1,200/ton. There was a drastic decline from the beginning of 2023, then it rose again in the last quarter of the year. Decreasing price in early 2024.

ESSECO GROUP - ESSECO ENOLOGY

General performance in 2023

World wine production in 2023, excluding juices and musts, stands at around 245 million hl (OIV data), the lowest figure in the last 60 years and down 7% compared to 2022. This negative scenario is attributable to the significant contraction observed in the main wine-producing countries in both hemispheres. In the southern hemisphere, Australia, Argentina, Chile, South Africa and Brazil recorded inter-year variations of between -10% and -30%, while in the northern hemisphere, Italy, Spain and Greece were the countries that suffered the most from adverse weather conditions during the growing season. Only the USA and a handful of EU countries, such as Germany, Portugal and Romania, were affected by favourable weather conditions resulting in average or above-average volumes.

The production volume in the EU this year is quantifiable at 150 million hl, excluding juices and musts, 7% less than in 2022 (-11.2 million hl). France became the leading global manufacturer with production of around 45.8 million hl, in line with the previous year but higher than its five-year average (+3%).

Italy loses its leadership as the main manufacturer in favour of France with production of around 43.9 million hl, down 12% compared to 2022. This negative result is attributable to a number of factors, in particular to heavy rainfall, which allowed late blight to flourish in the central and southern regions. In addition, part of the Italian vineyard was affected by floods, hail and drought.

Spain is confirmed as the third largest wine manufacturer in the world with a volume of 30.7 million hl, down 14% compared to 2022 and 19% compared to its five-year average. The low volume of the harvest is due to the severe drought and extreme temperatures that have severely affected the vines, particularly in the Castile-La Mancha area, the main Spanish wine region, where production fell by 15% compared to the previous year.

These three countries account for 50% of world wine production.

In Europe, we note slight growth in production in Germany of 1% (9 million hl), Portugal (7.4 million hl, + 8%/2022) and Romania (4.4 million hl, + 15%/2022). In these countries, production volumes are respectively 2%, 12% and 4% higher than the last five-year averages. Similar situation for Hungary (2.5 million hl, + 1%/2022), Bulgaria (0.9 million hl, + 7%/2022) and Slovenia (0.6 million hl, + 6%/2022), which have increased their production levels compared to 2022, although these remain below the last five-year averages.

In other European countries, on the other hand, a decrease in production is confirmed compared to 2022. Austria, the seventh largest wine manufacturer in Europe, has a volume of wine produced for 2023 of 2.4 million hl (-7%/2022). Greece recorded one of the worst decreases compared to 2022, with 2023 wine production of 1.1 million hl. This volume represents a significant drop not only compared to the previous year (-45%), but also compared to its last five-year average (-50%).

As regards the non-EU Eastern European countries, decreases were recorded compared to the previous year and the five-year average for Russia, Georgia and Moldova. An excellent result is recorded by Switzerland, where production is equal to 1 million hl, up by 4% compared to 2022 and by 14% compared to the average of the last 5 years.

In the USA, the fourth manufacturer in the world, wine production is around 25.2 million hl, a 13% higher volume than the previous year, while in China wine production continues to decline, a trend that took hold in 2016, for structural reasons (the final numbers have not yet been released).

In the southern hemisphere, there was a decline in wine production for the second consecutive year: production stands at 45 million hl, a drop of 19% compared to 2022 and 18% compared to the last five-year average.

Most of the main wine-producing countries in South America recorded a decline in production compared to 2022. Chile is the leading manufacturer in South America in 2023, with wine production reaching 10 million hl: 20% and 18% lower than the average of the last five years. Argentina recorded a reduction in its wine production to 8.8 million hl (-23% compared to 2022) due to the extremely variable weather conditions of 2022.

In Oceania in 2023, Australia produced 9.9 million hl (-24%/2022), while New Zealand also saw a drop in wine production with 3.6 million hl (-6%/2022).

In South Africa, harvests suffered greatly due to fungal diseases such as powdery mildew and downy mildew and the wine production recorded in 2023 stood at 9.3 million hl (-8% compared to 2022).

The world production performance in millions of hectoliters is shown below (source: OIV)

Enartis in the Esseco Enology Division and future prospects

The economic result of Enartis in 2023 shows a slight contraction for the first year in its history compared to the result of the previous year. This below expectation result is mainly due to external factors. The poor harvest in terms of quantities described above caused lower sales in the harvest months; added to this is the constant drop in red wine consumption which, combined with the general increase in raw material costs that began at the end of 2021, has meant that many wineries around the world sell less, achieve a lower margin and are consequently less inclined to spend.

As regards the first months of 2024, the first estimates of the harvest in the southern hemisphere point to a decline in production in South Africa, Australia and New Zealand, while in South America we should see better harvests than last year. However, the results of Enartis in the first quarter of the year are more than satisfactory. Research and development activities continue to focus increasingly more on consolidating the global leadership position as an innovative partner of the wine and fermented beverages industry.

Ever in the Esseco Enology Division and future prospects

Ever's turnover was close to the expected budget: result is the result of a now long-established strategy, geared towards the direct presentation to customers and "in the cellar" of innovative proposals with precise and personalised solutions aimed at supporting the oenological processes that, despite the low production, saw Ever as an "active" player recognised by the market.

Also in 2023, Ever adopted clear and thoughtful marketing policies from the first months of the year, with an approach that proved to be successful during the harvest.

For customers, 2023 was a difficult year from the point of view of economic price management, with a consequent reduction in their spending capacity; also taking into account the low production mentioned above; therefore, the turnover achieved in 2023 is highly satisfactory for Ever. It should be noted that the beginning of 2024 began with a slight decline in demand and with repercussions that will presumably last until July 2024, when we will start to look at the new harvest.

Ever's research activities continued in 2023 and are geared towards continuing investments in people and plants that make the use of oenological "solutions" that are easier to apply, safer and more controlled; the conclusion, in 2023, of the process for obtaining FSSC 22000 certification on food safety was confirmation of this.

The objectives and future development strategies cannot be separated from the continued dedication to the customer and its production processes, in order to guarantee ever higher levels of quality and safety to the entire production chain, through increasingly greater recognition on the market of its offer and of its approach.

Sofralab in the Esseco Enology Division and future prospects

The main market for Sofralab, despite the growing international presence, continues to be the French market. The context of 2023 was marked by a poor harvest in the South of France, offset by a harvest in line with the forecasts in the northern regions. The results of 2023 were supported above all by a particularly prosperous year in Champagne. On the other hand, the international situation slowed down the pace of growth, particularly in Italy and Spain, which had a poor harvest. In light of the developments in terms of both the climate and the needs of consumers, tomorrow's challenges will focus on the freshness and drinkability of the wines. The "Oenoterris" range is an innovative response to these developments. The concept is simple: to offer a personalised oenological path based on quality products, to assist the manufacturer starting from initiatives in the vineyard, with an approach aimed at immediately enhancing the oenological characteristics of the grapes entering the winery.

This new approach will be supported by the widespread presence of analytical centres of excellence in the main markets of interest.

Important organisational developments are supporting the process of consolidation and growth both within French borders, with a special focus on the Champagne area, and overseas; the decision to open a sales branch in Chile and to strengthen the sales organisation of the branch in Portugal, which led to a significant increase in sales volumes, was particularly important.

GROUP PERFORMANCE

The Consolidated Financial Statements for the year ended 31 December 2023 show the following summarised economic and financial data for the Group in the last two years below:

Summarised income statement

PROFIT & LOSS	31.12.2023		31.12.2022
	EUR / °°°	%	EUR / °°°	%
TOTAL REVENUE	685,755	100%	873,865	100%
GROSS MARGIN	305,573	45%	414,804	47%
TOTAL EXPENSES	(162,227)	(24%)	(160,435)	(18%)
EBITDA	139,515	20%	257,634	29%
EAT	66,707	10%	156,723	18%

The Group's income statement for the 2023 financial year closed with a value of sales of goods and services of Euro 685,755 thousand, distributed among the various areas of the Group's business, with a decrease by 21.5% compared to 2022, which was an exceptional year, attributable to both divisions, mainly owing to macroeconomic reasons.

The gross contribution margin fell significantly by 26.3% compared to 2022, accounting for 45% of total sales. In addition to this decrease, there was a general increase in overheads, in particular due to more maintenance at production sites in Italy and Europe and higher communication and marketing costs, resulting in a gross operating margin (EBITDA) of Euro 139,515 thousand (-45.8%). The net result (EAT) recorded a significant decrease (-57.4%) and stood at Euro 66,707 with a ROS of 10%.

Summarised balance sheet

The following table shows the Group's balance sheet in summary and reclassified form, highlighting the structure of the capital invested and the sources of funding.

BALANCE SHEET	31.12.2023		31.12.2022
	EUR / °°°	%	EUR / °°°	%
TOTAL WORKING CAPITAL	183,011	41%	228,537	46%
NET ASSETS	263,521	59%	264,761	54%
NET INVESTED CAPITAL	446,533	100%	493,297	100%
NET FINANCIAL POSITION	16,135	4%	(1,958)	(0%)
INTERCOMPANY FINANCIAL LIABILITIES	(58)	(0%)	(34,381)	(7%)
EQUITY	(462,609)	(104%)	(456,959)	(93%)

Total working capital came to Euro 183,011 thousand, a decrease of Euro 45,526 thousand compared to 2022, mainly linked to the decline in trade receivables due to the continuous decrease in market prices and warehouse inventory. Investments net of accumulated amortisation and inclusive of revaluations for the year totalled Euro 263,521 thousand, of which production investments of Euro 220,504 thousand, investments in intangible assets of Euro 50,653 thousand, equity investments for Euro 3,368 thousand, derivative assets for Euro 1,381 thousand, non-current receivables from third parties and associated companies for Euro 482 thousand and, for the remainder, the provision for deferred tax assets (Euro 12,867 thousand). The decrease in net investments compared to 31 December 2022 of Euro 1,240 thousand is mainly linked to the reduction in the fair value of derivative instruments, in contrast to the increase for the investment of the remaining 15% of the subsidiary Ever S.r.l. and the acquisition of 60% of Watgrid S.a..

With regard to sources of funding, the change in the net financial position (calculated as long and short-term financial payables net of bank and cash balances) shows an increase of Euro 18,093 thousand, from a debt balance of Euro 1,958 thousand in 2022 to a credit balance of Euro 16,135 thousand at the end of 2023.

Intercompany financial liabilities refer to the cash pooling payable to the parent company San Martino S.p.A. of Euro 58 thousand. Equity pertaining to the Group and to non-controlling interests amounted to Euro 462,609 thousand (Euro 456,959 thousand as at 31 December 2022).

INFORMATION ON THE ENVIRONMENT, PERSONNEL AND INVESTMENTS

In consideration of the social role of the companies belonging to the Group, as highlighted also in the "Document relative to Directors' Report issued by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (Italian Institute of Certified Accountants)", we provide the following information relating to personnel, the environment and investments.

Personnel

During the financial year, no fatal accidents occurred. During the financial year, no compensation claims were made by employees or ex-employees for professional illness or cases of mobbing, for which the Esseco group companies were found responsible.

Lastly, it should be noted that during the year the Group continued its investment programme for the improvement of plant safety and of the health of its employees, as well as projects linked to better environmental protection. In addition, the Group delivered various training courses relative to Health, Safety and the Environment. The Group participated in events promoted by universities and high schools with the aim of helping to match labour supply and demand.

Environment

No Esseco Group company was found to have caused damage to the environment during the year and therefore no sanctions or fines have been imposed upon any companies belonging to the Group for environmental crimes or damage.

Investments

The investments in property, plant and equipment made during the year 2023, amounting to approximately Euro 33,000 thousand, relate principally to investments in the Esseco Industrial division carried out by the Group. These regarded investments to improve automation and safety levels at the various industrial sites and investments for the realisation of new production plants for new products and for warehousing facilities. They were carried out mainly by the subsidiaries Esseco S.r.l. for Euro 7,648 thousand, Altair Chimica S.p.A. for Euro 6,086 thousand, Esseco UK Ltd for Euro 4,932 thousand, Hydrochem Italia S.r.l. for Euro 3,028 thousand, Addcon Nordic A.s. for Euro 1,597 thousand and Esseco Do Brasil Ltda for Euro 1,455 thousand.

Oenological investments are primarily made by Enartis Sepsa S.a.u., Sofralab and its subsidiaries and Ever S.r.l..

RESEARCH AND DEVELOPMENT

The Research and development activity carried out during the year 2023 regarded all areas of our business.

During the year 2023, the company Esseco S.r.l. continued to carry out research and development activities, concentrating in particular on the analysis, research, study, development and testing of projects that we consider innovative in industrial and oenological terms at the production site at Trecate (NO). In September 2018, the company launched a specific project relating to "product" research and development activities, also with the support of the Ministry for Economic Development ("MISE") through the "Fund for sustainable growth and revolving fund for support to businesses and investments in research - Sustainable Industry Tender FRI DM 18 10 2017" for which, in 2021 it collected a grant for the first stage of work progress amounting to Euro 1,140 thousand, and is now waiting to receive an additional operating grant for the balance of the activity.

Altair Chimica S.p.A. completed the R&D project referred to as GREEN Impact CAPACITY in 2018, awarded with regional funding POR FRSR 2014-2020 - Strategic Research and Development Projects, DD 3389 30/7/2014, which embraced all the productive sectors of the Company, leading it to qualitative excellence in almost all its inputs. This project was verified, both from an administrative and technical point of view, by experts appointed by the Tuscany Region, with more than positive results for the Company, with delivery of the final certification of the excellent work. At the end of 2020, it completed another R&D project - named "Green Field Peas". This new process regarded, and continues to regard, new ways of optimising energy consumption, with the recovery of CO ₂ and H2, in order to improve industrial costs and reduce the overall environmental impact of the Company. As part of the Green Field Peas project, the company has also constructed the new plant for energy self-production, in operation from November 2020. Within the above-mentioned projects, the Company also completed R&D projects typically falling under those known as "Smart Factory". The Company is maximising the levels of automation and use of robots within its production cycles; with regard to this automation in 2020, the SODA 4.0 variant was completed and was presented in November 2018, as part of the Green Field Peas project. The design variant, approved in 2019, has led to the company adopting a highly integrated and automatic management and decision-making system, which allows the elimination of human errors in non-routine activities, thereby enhancing the overall performance of any continuous production cycle of the plant, both in terms of energy consumption, safety in the workplace, and processing yield, by carrying out many of the current daily manual operations, in a completely automatic fashion. During 2021 and 2022, efforts were committed to the Enterprise project, an acronym for Enhanced Technological R&D of new Product and Processes for Innovation, Smart Factory and green Economy. This project was successfully completed at the end of 2022 and has already been inspected, both from an administrative and a scientific point of view.

During 2023, the company continued the ECCE Chlorine project, acronym for Research and Development of new chlorinated products and solid potash derivatives.

SUMMARISED FINANCIAL STATEMENTS OF ESSECO GROUP S.R.L.

Esseco Group S.r.l. acts as holding company of the Esseco Group, holding all of the share capital of the companies belonging to the Group. All the shares of Esseco Group S.r.l. are held by San Martino S.p.A.. Esseco Group S.r.l has its registered office in Trecate (NO) and does not have secondary offices. The schedules below have been prepared on the basis of the statutory financial statements of the Company as at 31 December 2023.

Summarised income statement

	31.12.2023	31.12.2022
PROFIT & LOSS	EUR / °°°	EUR / °°°
TOTAL REVENUE	1,553	842
GROSS MARGIN	0	(0)
TOTAL EXPENSES	(5,936)	(5,762)
EBITDA	(4,214)	(4,765)
FINANCIAL INCOMES	104,822	81,050
EAT	99,047	76,000

The sales refer to services provided to subsidiaries. The change in the gross operating margin (EBITDA), negative for Euro 4,214 thousand, is mainly attributable to the higher charge-backs, referring to management and IT services provided by Esseco Group S.r.l. to the subsidiaries and to the lower remuneration of directors, mitigated by higher IT costs and travel and business trips.

The result of financial management was positive for Euro 104,822 thousand, mainly by virtue of financial income from equity investments. The year 2023 closed with a net income of Euro 99,047 thousand (net income of Euro 76,000 thousand in 2022).

Summarised balance sheet

BALANCE SHEET	31.12.2023	31.12.2022
	EUR /°°°	EUR
TOTAL WORKING CAPITAL	(4,119)	895
NET ASSETS	261.403	233.131
NET INVESTED CAPITAL	257.284	234.026
NET FINANCIAL POSITION	(7,045)	(11,991)
INTERCOMPANY FINANCIAL LIABILITIES	(58,225)	(78,281)
TOTAL EQUITY	(192,013)	(143,754)

The Company's net invested capital as at 31 December 2023 amounted to Euro 257,284 thousand, an increase of Euro 23,258 thousand mainly due to the purchase of the remaining 15% of Ever S.r.l. for Euro 13,803 thousand and 60% of Watgrid S.a. for Euro 3,429 thousand and a reduction in the value of the provision for equity investments of Euro 4,067 thousand, due to the improvement in the economic situation of the subsidiaries Esseco do Brasil Ltda, Enartis Pacific Ltd and Italiana Biotecnologie S.r.l., and for the use of the provision following the liquidation of the equity investment in Albite S.r.l..

The Company's net financial position as at 31 December 2023 (calculated as long and short term financial debt net of cash at hand and in bank) amounts to Euro 7,045 thousand, marking a decrease of Euro 4,946 thousand, due principally to the decline of Euro 13,765 thousand in payables due to banks and the decrease of Euro 8,819 thousand in cash and cash equivalents.

Intercompany financial liabilities refer to the cash pooling payable to the subsidiaries and the parent company San Martino S.p.A. for a total of Euro 58,225 thousand. Total equity totalled Euro 192,013 thousand (Euro 143,754 thousand as at 31 December 2022).

TRANSACTIONS WITH PARENT, SUBSIDIARY AND ASSOCIATED COMPANIES AND OTHER RELATED PARTIES

It should be noted that the Group is subject to the control and coordination by San Martino S.p.A., in accordance with Article No. 2497 et seq. of the Italian Civil Code, as required by Article No. 2497 bis of the Italian Civil Code. Essential data in relation to the last approved financial statements of San Martino S.p.A., which carries out management and control activities, are reported in the explanatory notes.

Commercial and other transactions

All transactions and operations with companies cited below are carried out according to normal "arm's length" market conditions. Relations with Group companies mainly relate to management and IT services and insurance costs managed at parent company level in order to optimise said services. The receivable from the parent company San Martino S.p.A. of Euro 548 thousand refers to the compensation for the tax losses for IRES purposes relating to the years 2020 and 2021 not reimbursed, as a result of the consolidation agreements pursuant to art. 118, paragraph 2, of the Consolidation Act on Income Taxes (TUIR).

Commercial and other transaction	Costs	Revenues	Payables	Receivables
San Martino SpA	26	7	-	221
Total vs Parent	26	7	-	221
Esseco Srl	150	654	74	102
Essemar Spa	-	109	-	1
Oenofrance Italia Srl	-	49	6	-
Italiana Biotecnologie Srl	-	6	-	-
Esseco do Brasil Ltda	-	22	-	7
Ever Srl	-	9		1
Altair Chimica Spa	220	94	220	64
Enartis USA Inc	-	80	-	-
Oenofrance USA Llc	-	6	-	-
Esseco USA Llc	-	17	-	5
Esseco UK Ltd	-	346	-	52
Enartis Sepsa Sau	-	113	-	3
Making Vale in Enology SI	-	6	-	-
Sofralab Sas	-	39	-	3
Esseco France Sas	-	9	-	-
Oenovision Sas	-	3	-	-
Enartis Portugal Lda	-	12	-	2
Sofralab Portugal Lda	-	6	-	1
Esseco Chemicals de Mexico SA DE C.V.	-	6	-	1
Altair Chimica Iberica SI	-	12	-	6
Enartis Central Europe Sro	-	6	-	-
Enartis Pacific Pty Ltd	-	9	-	-
Enartis South Africa Pty Ltd	-	12	-	18
Enartis Chile Ltda	-	18	-	5
Hydrochem Italia Srl	-	101	-	38
Addcon Gmbh	27	408	27	355
Ever Trade Sro	-	2	-
Total vs Subsidiaries	397	2,155	327	664
Dual Srl	25	-	0
Total vs Other related parties	25	-	0	-

Financial transactions

Esseco Group S.r.l. has entered into an interest-bearing long-term financial agreement with some subsidiaries and associates, and also an interest-bearing centralised "cash pooling" Treasury agreement in "zero balance" mode with the parent company. These contracts have an annual duration and subject to tacit renewal between the parties, which make it possible to optimise the management of cash flows and the related financial charges both for Esseco Group S.r.l. and for the subsidiaries and the parent company. Please refer to the section of the explanatory notes "payables to parent companies" where the main financial transactions are commented on.

Financial transaction	Charges	Incomes	Dividends Received	Dividends Paid	Payables	Receivables
San Martino SpA	32	94	-	50,000	58	3
Total vs Parent	32	94	-	50,000	58	3
Esseco Srl	195	45	30,000	-	46,549	25,045
Essemar Spa	22	-	750	-	4,531	-
Oenofrance Italia Srl	11	-	-	-	1,878	-
Italiana Biotecnologie Srl	-	10	-	-	-	377
Esseco do Brasil Ltda	-	133	-	-	-	3,700
Ever Srl	-	73	4,000	-	-	3,940
Altair Chimica Spa	28	94	43,815	-	-	4,604
Enologica Friulana Srl	-	4	-	-	-	290
Esseco USA Llc	-	-	3,595	-	-	-
Esseco UK Ltd	-	-	6,877	-	-	-
Enartis Sepsa Sau	-	148	6,700	-	-	8,744
Sofralab Sas	-	343	2,503	-		12,875
Esseco France Sas	4	-	-	-	411	-
Petite Suisse Sarl	-	1		-	-	-
Enartis Portugal Lda	-	-	800	-	-	-
Esseco Chemicals de Mexico SA DE C.V.	-	13	-	-	-	495
Bluagri Srl	-	54	-	-	-	1,994
Altair Chimica Iberica SI	8	-	-	-	1,153	-
Enartis Central Europe Sro	-	15	-	-	-	537
Enartis Pacific Pty Ltd	-	6	-	-	-	301
Enartis Srl	-	-	-	-	-	1
Watgrid Sa	-	-	-	-	-	1,101
Hydrochem Italia Srl	20	555	-	-	953	22,111
Addcon Gmbh	27	988	-	-	2,412	24,000
Addcon Europe Gmbh	-	7	-	-	-	331
Ever Trade Sro	1	-	-	-	340	-
Ever Deutchland Gmbh	-	-	-	-	1	-
Ever France Sau	-	21	-	-	-	566
Total vs Subsidiaries	316	2,510	99,039		58,228	111,012
Centro per I'Enologia Srl	-	-	350	-	-	-
Enocompany Srl	-	4	-	-	-	161
Total vs Associates	-	4	350	-	-	161

INFORMATION DISCLOSED IN ACCORDANCE WITH POINT 6 bis OF THE SECOND PARAGRAPH OF ARTICLE NO. 2428 OF THE ITALIAN CIVIL CODE

In accordance with point 6 bis of the second paragraph of Article No. 2428 of the Italian Civil Code, below we disclose information concerning the use of financial instruments, as this is relevant for evaluating the Company's equity and financial situation. We also point out that all of the financial instruments utilised by the Group are disclosed in the relevant section of the explanatory notes.

GROUP STRATEGY REGARDING THE MANAGEMENT OF FINANCIAL AND OTHER RISKS

Exchange rate risk

The exposure to the risk of fluctuations in foreign currency exchange rates derives from the Group's operations in currencies other than the Euro (in particular the US dollar and Pound Sterling), and the time lag between the recognition of revenues and costs denominated in foreign currency and the payment and collection thereof (transaction exchange risk). In general, the Group is exposed to exchange risk in those countries subject to significant fluctuations in the value of their currency and in which the Group is present with its own structures, in particular in Argentina, Brazil, South Africa and Chile.

Interest Rate Risk

The interest rate risk to which the Group is exposed derives mainly from medium- and long-term loans with interest at variable market rates (Euribor indexed), with a consequent risk of fluctuations in cash flows and in relative financial charges. Therefore, a rise in interest rates will have a negative effect on both the Group's results for the year and on its cash flows, and conversely a decrease in interest rates shall have a positive effect thereon. The Group hedges this risk, where it deems appropriate, through derivative instruments.

Commodities risk

The Group results are heavily influenced by fluctuations in raw material prices, in particular those of carbon soda, sulphur, potassium chloride, and in the price of methane gas and electricity commodities. With regard to methane gas and electricity, "portfolio management" was undertaken, which consists of carrying out interim hedging, based on the values of the relative stock exchanges (Italian and European). To make the most of the substantial new trend in the energy markets, the fixing strategy was adopted. This strategy paid off in 2019 and 2020. The lows reached in those periods helped us to fix very low prices for the year 2021, the year in which prices took off, but we were able to benefit from the prices fixed before the escalation: from mid-2021 a simultaneous policy was adopted to increase the Green energy portfolio, which has mitigated the effects of changes in electricity market prices starting from the end of 2022.

Credit risk

Credit risk is connected to the Group's normal trading operations, with heterogeneous counterparties and is monitored by a specific corporate department; therefore, the exposure to said risk is reduced.

At 31 December 2023, the provision for bad debts amounted to Euro 5,613 thousand, equivalent to 3.6% of the amount of trade receivables. Starting from 2017, a credit insurance policy was stipulated for the partial coverage of the Esseco Industrial division (both Italian and Foreign).

Liquidity risk

Country risk

The Group's revenues are distributed as follows: 24% from Italy, 56% from other European countries and 20% from the "rest of the world".

As regards the revenues achieved throughout the "rest of the world", it should be noted that they relate to sales spread throughout approximately 70 countries and include certain countries experiencing political, economic or monetary instability. In these cases, in order to avoid the possibility of future bad debts, the company sells exclusively with letter of credit, payment in advance or with other credit instruments that guarantee operational success.

The company does not hold any significant direct or indirect investments in geographic regions subject to political-institutional instability. The conflict between Russia and Ukraine, which began on 24 February 2022, and the conflict between Israel and Palestine, which started on 7 October 2023, have notable consequences at global level with economic effects on markets, reflected in increased transport times and costs, energy and raw material costs. The Esseco Group has discontinued the purchase of potassium Chloride in Belarus after the sanctions imposed by the international community, and 80% of supplies come from other producers, based on quarterly agreements. The situation is constantly monitored in order to be able to quickly react and adapt its activities to any further exacerbation of conflicts.

Hyperinflationary economy

Accounting standards state that the financial statements of an entity that reports in the currency of a hyperinflationary economy should be restated in order to take account of the effects of inflation. This approach is required because the currency loses purchasing power with such rapidity that the comparison between values relating to transactions and other events that occurred at different times, even in the same year, is misleading.

Italian Accounting Standards specify that the requirement to restate the financial statements should be a matter of judgement. The situations that indicate the existence of hyperinflation include the following:

a)	the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested in order to maintain purchasing power;
b)	the general population regards monetary amounts not in terms of the local currency, but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;
c)	sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;
d)	interest rates, wages and prices are linked to a price index;
e)	the cumulative inflation rate over three years approaches, or exceeds, 100%.

The Esseco Group came under point e) above with the subsidiary Enartis Argentina. The financial statements of this subsidiary were restated by applying a general price index of the country in whose currency it was prepared, prior to the inclusion thereof in the consolidated financial statements of the parent company.

BUSINESS OUTLOOK

The results of the first quarter of 2024 showed a positive performance both in terms of volumes and in terms of profit, therefore reaching the pre-established budget target. To date, no negative critical issue are expected on the business despite the uncertainty linked to the geopolitical scenario caused by the Russian-Ukrainian and Israeli-Palestine conflicts that are reflected in the economy and world trade, and which could continue to impact fixed costs as well as delay the planned reduction in interest rates by the Central Banks. The focus on the performance of the macroeconomic scenario is continuously monitored by the Group and guides the production and commercial management decisions in order to protect the company margins. It should also be noted that, in addition to the uncertainty linked to the geopolitical scenario, climate forecasts are also creating significant cause for alarm, upsetting the global geography of wine. A certain degree of pessimism could therefore be justified regarding the evolution of the coming months, up to the second quarter of the year, given the low level of global production in 2023, but operating in a highly dynamic sector allows us to envisage a generally stable 2024.

CONSOLIDATED FINANCIAL STATEMENTS AS AT 31/12/2023

BALANCE SHEET

ASSET	31.12.2023	31.12.2022
A Subscribed capital unpaid,with an indication of the part which has been called by company	-	-
B Fixed assets (with a separate indication of assets in leasing)
I. Intangible assets:
1 Formation and expansion expenses	-	-
2 Capitalise development and expenses	450	540
3 Industrial patents and rights to use patents of others	1,260	538
4 Concessions, licences, trademarks, and similar rights	31,432	33,502
5 Goodwill	17,076	11,406
6 Intangible assets in progress and payments on account	10,444	3,194
7 Other	426	330
Total intangible assets	61,088	49,508
II. Property and Equipment
1 Land and buildings	64,311	64,910
2 Plants and machinery	111,751	125,658
3 Other fixtures and fittings, tools and equipment	14,440	13,792
4 Other	5,167	4,739
5 Tangible assets in progress and payments on account	14,400	7,466
Total property and equipment	210,070	216,565
III Investments (with the separate indication, for each item, of the amounts realizable within the following financial year)
1 Equity investments in:	3,320	3,796
a) Subsidiary companies not consolidated	-	234
b) Associated companies	2,461	2,682
c) Parent companies	-
d) Associates controlled by the parent companies	-
d-bis) Other companies	859	880
2 Loans:	482	483
a) Subsidiary companies not consolidated	-	-
b) Associated companies	315	310
- within 12 months	150	150
- due beyond 12 months	165	160
c) Parent companies	-	-
d) Associates controlled by the parent companies	-	-
d-bis) Other companies	167	173
- due beyond 12 months	167	173
3 Other investments	48	-
4 Derivatives	1,114	4,746
Total investments	4,963	9,025
Total fixed assets	276,121	275,098
C Current assets
I Inventories:
1 Raw materials and consumables	43,409	81,043
2 Work in progress and components	1,417	940
3 Semifinished products and contracts in progress
4 Finished goods and goods for resale	73,389	83,933
5 Payments on account	3,121	2,130
Total inventories	121,336	168,046
II. Receivables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Trade receivables	148,785	221,905
- due within 12 months	148,685	221,772
- due beyond 12 months	100	133
2 Amounts owed by subsidiary companies not consolidated	-	-
3 Amounts owed by associated companies	1,210	1,257
- due within 12 months	1,210	1,257
4 Amounts owed by parent companies	11,331	1,261
- due within 12 months	11,331	1,261
5 Amounts owed by associates controlled by parent companies	39	19
- within 12 months	39	19
5-bis Tax receivables	41,337	36,792
- due within 12 months	32,947	34,772
- due beyond 12 months	8,390	2,020
5-ter Deferred tax assets	8,166	7,858
5-quater Other debtors	2,207	2,573
- due within 12 months	2,141	2,373
- due beyond 12 months	66	200
Total receivables	213,075	271,665
III. Non-permanent investments
1 Equity investments in subsidiary companies	-	-
2 Equity investments in associated companies	-	-
3 Equity investments in parent companies	-	-
3-bis Equity investments in associates controlled by the parent companies	-	-
4 Equity investments in other companies	-	-
5 Derivatives	268	4,475
6 Other investments	502	72
7 Financial Assets for cash pooling management	-	-
Total non-permanent investments	769	4,547
IV Cash and equivalents
1 Banks and postal current accounts	59,414	69,330
2 Bank cheques	55	61
3 Cash	1,888	132
Total cash	61,357	69,523
Total current assets	396,538	513,781
D Prepayments and accrued income	2,365	2,496
TOTAL ASSETS	675,024	791.375

LIABILITIES	31.12.2023	31.12.2022
A Capital and reserves
I Subscribed capital	10,000	10,000
II Share premium account	-	-
III Revaluation reserves	62,910	62,910
IV Legal reserves	2,000	2,000
V Reserves provided for by the article of association (statutory reserve)	-	-
VI Other reserves, with separate indication	84,708	61,055
Consolidation reserve	6.457	6,457
Other reserves	78,251	54,598
VII Reserves for hedge accounting	21	6.737
VIII Profit (loss) brought	231.837	149,059
IX Profit / (loss) for the financial period	66,531	155,095
X Treasury stock reserves		-
Group Equity	458,007	446,856
Minority interest	4.602	10.103
Total Equity	462,609	456,959
B Provisions
1 Provisions for pensions and similar obligations	3,144	3,018
2 Provisions for taxation (yet deferred)	12,867	14,813
3 Derivatives	1,387	-
4 Other provisions	2,278	2,768
Total	19,676	20,599
C Employee severance indemnity	5,725	6,171
D Loans and payables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Debenture loans and bonds	-	-
2 Convertible debenture loans	-	-
3 Amounts owed to shareholders for financing	-	-
4 Amounts owed to banks	44,771	71,136
- due within 12 months	19,754	26.727
- due beyond 12 months	25,017	44,409
5 Amounts owed to other financers	8,451	10,343
- due within 12 months	142	51
- due beyond 12 months	8,309	10.292
6 Advances received	28	15
- due within 12 months	28	15
7 Trade payable	81.631	119,838
- due within 12 months	81,631	119,838
8 Debts represented by bills of exchange	-
9 Amounts owed to subsidiary companies not consolidated	-	-
10 Amounts owed to associated companies	466	295
- due within 12 months	466	295
11 Amounts owed to parent companies	62	56,633
- due within 12 months	62	56.633
11-bis Amounts owed to associates controlled by the parent companies	1	1
12 Tax payables	24,453	26,401
- due within 12 months	24,439	26,388
- due beyond 12 months	14	13
13 Amounts owed to social security institutions	3,582	4.257
- due within 12 months	3,582	4,257
14 Others	16.570	13.632
- due within 12 months	16,556	13,622
- due beyond 12 months	14	10
Total	180,016	302,551
E Accruals and deferred income	6,998	5,095
TOTAL LIABILITIES	675,024	791,375

PROFIT AND LOSS	31.12.2023	31.12.2022
A Revenue
1 Net revenue from goods and services	685.755	873.865
2 Variation in stocks of finished goods and in work in progress	(8,619)	25.942
3 Variation in contracts in progress
4 Work performed for own purposes and capitalised	972	1.088
5 Other revenues and income	16.046	24.246
- grants received pertaining to the current year	4.487	17.682
Total value of production	694.153	925.141
B Cost of production
6 For raw materials, consumables and goods for resale	276.397	431.388
7 For services	133.050	155.870
8 Rental and leasing charges	12.482	9.222
9 Personnel costs:	86.814	87.812
a) wages and salaries	66,466	67.618
b) social security costs	17,029	16,405
c) provisions for severance indemnity	1,984	2,725
d) pension costs	565	89
e) other costs relating to staff	769	975
10 Value adjustments:	51,081	50,596
a) amortisation of intangible assets	11,281	8,956
b) depreciation of tangible assets	38,859	40,667
c) reduction in value of fixed assets	0	2
d) allowance for doubtful debtors	941	971
11 Variations in stocks of raw materials, consumables and goods for sale	34,863	(26,890)
12 Amounts provided for risk provisions	525	115
13 Other accruals	-	-
14 Other operating costs	7,675	8,785
Total cost of production	602,885	716,897
Difference between value and cost of production (A-B)	91,269	208,244
C Financial income and charges
15 Income from equity investments (with the separate indication for those in subsidiary companies, in parents company and in those controlled by this ones)	218	103
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	-	-
- by associates companies controlled by parent companies	-	-
- by other companies	218	103
16 Other financial income:	1,019	195
a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	11	6
b) from other permanent investments different from equity investments	-	-
c) from other investments that are not permanent	-	-
d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	1,008	189
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies		-
- by associates companies controlled by parent companies	-
- by other companies	914	189
17 Interest payable and similar charges	1.739	1.721
- by subsidiary companies	-
- by associated companies	-
- by parent companies	32	20
- by associates companies controlled by parent companies
- by other companies	1.707	1.701
17-bis Profit/(loss) for exchange rate	(6,558)	(1,185)
Total financial result (15+16-17+/-17 bis)	(7,060)	(2,608)
D Adjustment for investements and financial liabilities
18 Revaluation:	2.493	470
a) of equity investments	493	470
b) of other permanent investment which are not equity investments
c) of trading assets different from equity investments		-
d) of derivatives	2,000	-
19 Devaluation:	22	49
a) of equity investments	22	49
b) of other permanent investment which are not equity investments	-	-
c) of trading assets different from equity investments		-
d) of derivatives	-	-
Total adjustments (18-19)	2.471	421
Profit (loss) before taxes (A-B+/-C+/-D)	86,679	206,057
22 Income taxes espense	(19,973)	(49,334)
Profit/(Loss) for the period	66,707	156,723
23 Minority profit / (loss)	175	1,628
Net Income of the Group	66,531	155,095

	31.12.2023	31.12.2022
CASH FLOW STATEMENT, indirect method
A) Cash Flow from Operations
Net income	66.707	156.723
Income tax	19.973	49.334
Interest Expense/(Revenue)	720	1.525
(Dividends)		(102)
(Gain)/Losses on Activities sales	(325)	(361)
1) Income Pre tax, interests, dividends and gains	87.074	207.119
Changes of non cash items (out of the working capital)
Provisions	2.698	3.092
Depreciation and amortization	50.140	49.623
Investments write-offs		2
Non monetary changes of derivatives values	(2,000)
Other increase/(decrease) adjustment non monetary	2.132	9
Total adjustment non monetary changes	52.971	52.726
2) Adjusted Net Income	140.044	259.846
Changes in net vorking capital
Changes in inventory	42.305	(54,676)
Changes in receivables	70.311	(80,235)
Changes in account payables	(38,002)	27.228
Changes in accruals/(asset)	384	851
Changes in accruals/(liabilities)	1.945	905
Other non monetary changes	(15,025)	11.389
Total other non monetary changes	61.919	(94,537)
3) Cash flow after changes in net vorking capital	201.963	165.309
Other adjustment
Interest collected/paid	(720)	(1,525)
(Tax payments)	(38,284)	(28,299)
Dividends received		102
(Provisions reversals)	(4,799)	(1,808)
Total other adjustment	(43,802)	(31,531)
Cash Flow From Operations (A)	158.161	133.777
B) Investment activities
Property plant and equipments
(Acquisitions)	(33,496)	(25,121)
(Dismissal)	1.361	1.364
Intangibles
(Acquisitions)	(8,884)	(3,796)
(Dismissal)		104
Financial Assets		-
(Acquisitions)	(203)	(2,359)
(Dismissal)	2.923	19
Financial Assets - short term		-
(Acquisitions)	(463)	1
(Dismissal)
(Acquisition subsidiary company net of cash and cash equivalents)	(13,243)
Cash Flow from investing activities (B)	(52,006)	(29,786)
C) Cash Flow from financing
Minorities	-
Short term bank loan changes	(41,149)	(8,471)
Loans	172	13.821
(Loans repayments)	(21,764)	(31,916)
Own capital
Share capital increase (cash)
(Share capital reimbursements)
(Dividends paid)	(51,578)	(51,283)
Cash Flow from financing (C)	(114,319)	(77,850)
Increase (decrease) cash and equivalents (A ± B ± C)	(8,165)	26.141
Cash and equivalents at the beginning the period
Banks and postal current accounts	69.330	42.077
Bank cheques	61	877
Cash	131	427
Total cash and equivalents at the beginning the period	69.522	43.381
Cash and equivalents at the end the period
Banks and postal current accounts	59.414	69.330
Bank cheques	55	61
Cash	1.888	131
Total cash and equivalents at the end the period	61.357	69.522

EXPLANATORY NOTES

Esseco Group S.r.l. is a holding company of industrial equity investments whose subsidiaries are grouped by business area within the Esseco Industrial division (chemical products) and the Esseco Enology division (wine products).

PREPARATION CRITERIA

The criteria utilised in the preparation of the financial statements for the year ended 31 December 2023 take account of the changes introduced under Italian legislation by Legislative Decree no. 139/2015, which implemented the EU Directive 2013/34/EU, as well as in compliance with Legislative Decree 127/91. Legislative Decree 139/2015 introduced changes to the accounting standards issued by the Italian Accounting Standards Setter, the OIC (Organismo Italiano di Contabilita).

The financial statements contained herein correspond to the results of the regularly held accounting records and comply with the provisions of articles 2423 and thereafter of the Italian Civil Code, interpreted and integrated by the Italian accounting standards issued by the OIC, details of which are provided in these explanatory notes, prepared in accordance with article 2427 of the Italian Civil Code, and which constitutes, pursuant to and for the purposes of article 2423, an integral part of the financial statements.

The amounts shown in the explanatory notes are expressed in thousands of Euro, unless otherwise specified.

BUSINESS CONTINUITY

On the basis of the Group's future business plans, the Directors believe that the going concern principle adopted in the preparation of the consolidated financial statements of Esseco Group S.r.l. is justified, despite the difficulty in considering recent geo-political events. These financial statements have been prepared on the basis of the going concern assumption, which is consistent with the economic and financial indicators of the company and the Group, indicated in the Directors' Report of the Board of Directors. There are no elements of uncertainty regarding the Group's capital strength or its ability to meet social and tax obligations. Directors and management continue to monitor the developments of the conflict between Russia and Ukraine, and the war in the Middle East that broke out in the autumn of 2023, in addition to the constantly changing macroeconomic conditions, such as rising interest rates, inflation, debt, which expose our country and the European area increasingly more to a phase of recession. Taking into account the measures introduced by the States to contain the impacts of the war, the Group undertakes to comply with all applicable laws and regulations. Although there were no significant impacts on company operations, management continues to monitor the evolution of the contingent situation and its impact on the financial situation and results.

CONTENT AND FORM OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 December 2023 show the comparative figures for the year ended 31 December 2022.

The present financial statements include the financial statements of Esseco Group S.r.l. (the parent company) and of the Italian and foreign subsidiaries in which Esseco Group S.r.l. directly or indirectly holds the majority of voting rights, consolidated using the line-by-line (global integration) method. The associated companies, in which Esseco Group S.r.l. directly or indirectly holds between 20% and 50% of the share capital, have been recorded in the financial statements and measured using the "equity" method.

The companies in which Esseco Group S.r.l. holds, either directly or indirectly, less than 20% of the share capital are valued at cost, as also are those subsidiaries not yet operative due to the fact that they have only recently been constituted and subsidiaries in liquidation.

In accordance with paragraph 5 of Article No. 2427 of the Italian Civil Code, a list of the investments held in subsidiary and associated companies, together with the consolidation methods adopted for each company, are disclosed in the appendices "A" and "B" attached to these explanatory notes.

The following changes have taken place in the consolidation area with respect to the previous year:

―	line-by-line consolidation of the company Enartis S.r.l. with a direct stake of 100%, which was established in March 2019 and became operational at the end of 2023, previously excluded from the scope of consolidation by virtue of the principle of irrelevance referred to in art. 28 of Legislative Decree 127/91;
―	exclusion from consolidation of the subsidiary Albite S.r.l., as a liquidation procedure was launched for said company, which was concluded on 20 January 2023 with the striking off from the register of companies;
―	acquisition of the remaining 15% of the subsidiary Ever S.r.l. by Esseco Group S.r.l. in January 2023; the investment increased from 85% to 100%;
―	full disposal of the company Oenochene S.a.s., which took place in April 2023; the company was indirectly owned through Sofralab Sas with a percentage of 11.4%, which was consolidated at cost;
―	exclusion from consolidation of the Chinese subsidiary Addcon Nutrition Technology Co. Ltd., as a liquidation procedure was launched for said company, which ended on 4 May 2023 with the striking off from the register of companies;
―	acquisition of the remaining 31.86% of the company SBO S.a.S. by the subsidiary Sofralab S.a.s. in October 2023; the investment increased from 68.14% to 100%;
―	line-by-line consolidation of the company Watgrid S.a., directly owned by Esseco Group S.r.l ., against the purchase of 60% in November 2023; Lastly, please note:
―	that the voluntary liquidation procedure of the company Addcon Asia Co Limited, which began in 2021, is still in progress.

In order to render the financial statements comparable, at both Balance Sheet and Income Statement level, the effects of the above mentioned variations, where significant, are described in the Explanatory Notes. The financial statements of the Italian subsidiaries utilised for consolidation purposes are those approved by the respective Shareholders' Meetings. For the foreign subsidiary companies, the reporting packages specifically prepared for consolidation purposes in accordance with Group accounting principles, which are in line with both Italian legislation and with Italian accounting principles, were used.

CONSOLIDATION METHOD

The following consolidation principles have been adopted:

•	Assumption of the financial statements of consolidated companies according to the line-byline method and elimination of the book value of the equity investments as a contra-entry of the relevant portion of shareholders' equity.
•	The difference between the book value of the consolidated company and the relative equity value at the date in which the company is included in the consolidation is attributed, if positive, to the assets of the consolidated company, within the limits of fair value. The remaining difference is recorded in the assets side of the balance sheet under the heading "Goodwill" and is amortised in relation to its expected recoverability. Negative differences, not attributable to foreseeable future losses or representing adjustments to the equity of the consolidated company at the acquisition date, are recorded in shareholders' equity under the heading "Consolidation reserve".
•	Unrealised gains and losses, brought about by transactions between group companies, were removed as with items giving rise to payables and receivables, income and charges between consolidated companies. Any unrealised intra-group profits with respect to third parties were eliminated, taking account, as necessary, of deferred taxation;
•	The accounting principles adopted by the various Group companies are aligned with those of the holding company.
•	The elimination of write-downs of equity investments in consolidated companies and of dividends between Group companies.
•	The elimination of provisions made exclusively for fiscal purposes.
•	The financial statements of foreign subsidiary companies expressed in currency other than the Euro have been converted into Euro using the year-end exchange rate for the assets and liabilities in the balance sheet and the average exchange rate for the period for the income statement. The exchange differences deriving from the conversion of the opening shareholders' equity and of the income statement at the year-end exchange rates are charged or credited directly to shareholders' equity under the heading "Other reserves".

The following exchange rates were used for the conversion of the 2023 financial statements from foreign currency to Euro (local exchange rate value per Euro):

Currency	Country	Year-end exchange rate	Average exchange rate in the year
US dollar	USA	1.11	1.08
British Pound Sterling	Great Britain	0.87	0.87
Brazilian Real	Brazil	5.36	5.40
Argentine Peso	Argentina	892.92	312.07
Chilean Peso	Chile	979.77	908.24
Rand	South Africa	20.35	19,96
Australian Dollar	Australia	1.63	1.63
Mexican Peso	Mexico	18.72	19.19
Norwegian Krone	Norway	11.24	11.42
Chinese Renminbi	China	7.85	7.66
Thai Bath	Thailand	37.97	37.63
Hong Kong Dollar	Hong Kong	8.32	8.25

ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

The accounting criteria adopted in the preparation of the consolidated financial statements as of 31 December 2023 are consistent with those adopted in the drafting of the consolidated financial statements of the previous year ending on 31 December 2022.

Any amendments to accounting principles with respect to the previous year are disclosed in the relative notes to the financial statements in order to give a truer representation of the Group's economic activities.

The accounting principles and valuation criteria have been applied uniformly to all of the consolidated companies. The accounting criteria and valuation criteria adopted in the consolidated financial statements are those utilised by the parent company Esseco Group S.r.l and conform to the relevant current legislation mentioned above, supplemented and interpreted by the current accounting standards issued by the Order of Chartered Accountants and Accounting Experts (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili) and endorsed by the OIC.

The financial statements have been prepared on a going concern basis in compliance with the general concepts of prudence and accruals. The application of the prudence concept involved the individual evaluation of the elements comprising the various asset and liability headings in order to avoid any compensation between recognisable losses and unrealised profits not yet recognisable. In accordance with the accrual accounting principle, transactions and other events are recorded during the period to which they refer in respect of the cost and revenue matching principle, and not that in which the relative payment or receipt are effectively realised.

Therefore, income and gains are only recognised where realised or received within the balance sheet date, while account is taken of risks and losses even where these become known after the year end but before the date of the Board of Directors' approval of the financial statements.

In particular, the following accounting criteria were adopted in the preparation of the consolidated balance sheet as of 31 December 2023:

Intangible Assets

Intangible assets considered to be of benefit in future years are recorded at purchase or production cost, net of accumulated amortisation thereon. Amortisation is calculated on a straight-line basis taking account of the expected future useful life of the asset as reported in the table below:

Intangibles	from	to
Start-up costs	20.00%	- 50.00%
Software	20.00%	- 50.00%
Trademarks	5.00%	- 20.00%
Goodwill		20.00%

The above assets are assessed for indication of permanent losses in value (impairment) and where such a loss exists, regardless of the amortisation already accounted for, the Company estimates the recoverable value of the asset, which is then written down accordingly. Assets are reinstated to their original value, net of amortisation, should the reasons for the write-down cease to exist. This provision does not apply to value adjustments relating to goodwill and long-term charges.

Property, plant and equipment

Incremental maintenance expenditure that extends the useful lives of assets concerned, improves product quality or which clearly increases production capacity or reduces consumption and wastage is capitalised. Normal repair and maintenance costs are charged directly to the income statement in the period in which they are incurred.

As recommended by the Italian Accounting Standard OIC 16, in view of the changes introduced by the Italian Decree Law No. 223/2006 and following the revision of the estimated useful lives of our land and buildings, the cost of land has been separated from that of the relative buildings in the financial statements of the Group companies.

The values attributed to land by the single companies for the purposes of the above mentioned separation has been determined on the basis of the specific cost thereof, increased for directly attributable costs, given that such land was originally purchased separately prior to the construction of the buildings thereon.

Consequently, as from the year 2006, land is no longer subject to depreciation, given that this asset is considered to have an infinite useful life. This accounting policy is reflected in the Consolidated Financial Statements.

Property, plant and equipment are depreciated on a straight-line basis at the following annual depreciation rates, which reflect the useful economic lives of the assets:

Assets	from	to
Industrial buildings	5.00% -	7.00%
Commercial buildings	2.00% -	5.00%
Equipment and machinery	15.00% -	22.50%
Generic equipment and machinery	12.50% -	20.00%
Miscellaneous equipment	10.00% -	20.00%
Vehicles and rail tankers	20.00% -	25.00%
Electronic and EDP machines	20.00% -	33.33%
Office furniture and machines	10.00% -	12.00%
Oenological systems and equipment		15.50%
Cranes and forklifts		20.00%
Laboratory analysis equipment		40.00%
Turbine for the production of electricity		9.00%
Steam turbine for the production of electricity		12.50%
Electricity transport lines		4.00%

In compliance with the new requirements of OIC 16, depreciation is calculated also for those assets which are temporarily not in use.

The annual depreciation rates shown comply with the fiscal regulations regarding tax deductibility. These rates are reduced by 50% for the year in which the asset comes into use.

The above assets are assessed for indication of permanent losses in value (impairment) and where such a loss exists, regardless of the amortisation already accounted for, the Company estimates the recoverable value of the asset, which is then written down accordingly. Assets are reinstated to their original value, net of depreciation, should the reasons for the write-down cease to exist.

Assets purchased under financial leasing contracts are recorded solely for consolidation purposes using the financial leasing method.

The depreciation charges recorded on leased assets are in line with those of similar assets owned by the Group.

Financial fixed assets

Equity investments in associated companies are valued at equity, determined on the basis of the year-end financial statements. Equity investments in unconsolidated subsidiaries and other equity investments are recognised at purchase cost. The value of said investments is adjusted by accordingly writing down in the event of permanent losses in value.

Inventories

Inventories are stated at the lower of purchase or production cost, or net realisable value estimated taking account of market trends. To this end, the value obtained as such is adjusted based on the respective "stock obsolescence provision," in order to take account of goods for which the realisation value is provided for below the cost value. Cost is calculated in the consolidated financial statements using the weighted average cost method.

Receivables and payables

Receivables are recorded in the financial statements in accordance with the amortised cost criteria, taking account of the time factor and of estimated realisable value, and are classified as either financial fixed assets or current assets.

Payables are stated at amortised cost.

Accruals and prepayments

Accruals, prepayments and deferrals are recorded in order to match costs and revenues in the accounting periods to which they belong.

Provisions for Risks and Charges

The provisions for risks and charges cover contingencies in relation to known or likely losses, the extent and timing of which cannot be precisely determined at year-end. Valuations have been made in compliance with the general concepts of prudence and accruals, and no provisions for generic risks are considered without an economic reason.

Provisions have been recorded for potential liabilities where these are considered likely to occur and where the risk amount can be reasonably estimated Provisions reflect the best estimate of losses to be incurred based on the information currently available.

Employee severance indemnity

This provision covers the liability to employees for termination indemnities matured at the balance sheet date in accordance with existing legislation, labour contracts and in-house agreements and is calculated on the basis of all forms of continuous remuneration. The provision corresponds to the total of the single indemnity payable to each employee at the balance sheet date, net of cash advances previously paid, should he leave the company's employment at that date.

Income taxes

Current income taxes are calculated on the basis of the reasonable estimate of the tax liability for the period, determined in line with the fiscal legislation in force.

Deferred taxation is accrued relative to the timing differences between the book values of the assets and liabilities and the corresponding values recognised for tax purposes.

In particular, deferred tax assets are recorded in the financial statements only where there exists a reasonable certainty of their future realisation.

Revenue and cost recognition

Sales revenues are recognised on an accrual basis when the right to claim the related compensation arises for the company. As a rule, for the sale of goods, reference is made to the moment in which ownership of the goods is transferred, while for the provision of services, reference is made to the moment in which the service is rendered, that is, to the moment in which the supply was carried out. For financial statements for years beginning on or after 1 January 2024, the new accounting standard OIC 34 came into force. This standard applies to all transactions that involve the recognition of revenues deriving from the sale of goods and the provision of services regardless of their classification in the income statement. Management assessments for the impacts on the 2024 financial statements are still in progress; at present it is believed that the application of the aforementioned standard will not affect the economic result of the Group. Costs are recorded in accordance with the accrual principle.

Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate in force at the date of the transaction. Receivables and payables in foreign currency are converted into Euros using the exchange rates in force at the year-end on the basis of the official rates at 31 December 2023 published by the Ufficio Italiano Cambi (Italian Foreign Exchange Office) and the relative gains and losses are charged or credited to the income statement under the heading "C 17 bis"; the eventual net gain is recorded in a specific reserve under the heading "Reserve art. 2426 no. 8 bis of the Italian Civil Code", which is not available for distribution until the gain is realised.

BALANCE SHEET

•

ASSETS

RECEIVABLES FROM SHAREHOLDERS DUE TO SHARE CAPITAL YET TO BE PAID UP

Share capital has been fully paid up.

INTANGIBLE ASSETS

Total intangible assets, net of accumulated amortisation, amounted to Euro 61,088 thousand at 31 December 2023 (Euro 49,508 thousand at 31 December 2022).

The following movements took place during the year:

	HISTORICAL COST
Description	31.12.2022	Additions	Disposals	Other movements	31.12.2023
1) Formation and expansion expenses	563	-	-	-	563
2) Development costs	2,062	16	(279)	(29)	1,769
3) Industrial patents and intellectual property rights	8.572	1,306	(5)	186	10,059
4) Concessions, licences, trademarks and similar rights	42,680	82	-	(335)	42.427
5) Goodwill	62.924	13,664	(1,203)	(188)	75,196
6) Intangible assets in progress and payments on account	3,193	7,260	-	(9)	10,444
7) Other	2,891	221	(6)	(17)	3,088
Total	122,885	22,548	(1,493)	(392)	143,547

	ACCUMULATED AMORTISATION
Description	31.12.2022	Additions	Disposals	Other movements	31.12.2023
1) Formation and expansion expenses	(563)	-	-	-	(563)
2) Development costs	(1,520)	(106)	279	29	(1,319)
3) Industrial patents and intellectual property rights	(8,033)	(629)	5	(140)	(8,798)
4) Concessions, licences, trademarks and similar rights	(9,177)	(2,117)	-	299	(10,995)
5) Goodwill	(51,518)	(7,994)	1,203	188	(58,121)
6) Intangible assets in progress and payments on account	-	-	-	-	-
7) Other	(2,562)	(116)	6	10	(2,662)
Total	(73,373)	(10,962)	1,493	386	(82,459)

	NET BOOK VALUE
	31.12.2022	31.12.2023
1) Formation and expansion expenses	-	-
2) Development costs	540	450
3) Industrial patents and intellectual property rights	538	1,260
4) Concessions, licences, trademarks and similar rights	33,502	31,432
5) Goodwill	11,406	17,076
6) Intangible assets in progress and payments on account	3,194	10,444
7) Other	330	426
Total	49,508	61,088

The additions during the year amount to a total of Euro 22,548 thousand and relate mainly to the following:

a. Development costs for Euro 16 thousand as a result of costs for development projects and research incurred as part of the oenological products division in Enartis Sepsa S.a.u. for Euro 10 thousand and the remainder in the industrial products division in Addcon Europe Gmbh;

b. Purchase of industrial patents and intellectual property rights, for a total of Euro 1,306 thousand, mainly concerning the purchase of application software in Sofralab S.a.s. for Euro 750 thousand, in Addcon Nordic A.s. for Euro 139 thousand, in Esseco S.r.l. for Euro 64 thousand and in Enartis Sepsa S.a.u. for Euro 27 thousand;

c. Concessions, licences, trademarks and similar rights, for Euro 82 thousand, represented by costs relating to trademarks and their promotion incurred in Esseco S.r.l. for Euro 28 thousand, in Ever S.r.l. for Euro 27 thousand and in Addcon Gmbh for Euro 25 thousand;

d. Goodwill for Euro 13,664 thousand by Esseco Group S.r.l., of which Euro 9,966 thousand for surplus value at the time of the acquisition of the remaining 15% of the subsidiary Ever S.r.l. at the beginning of 2023 and for the remainder to goodwill generated by the acquisition, at the end of the year, of 60% of the shares of Watgrid S.a., a Portuguese company that has developed and patented a technology for monitoring wine production through sensors;

e. Intangible assets in progress and payments on account for Euro 7,260 thousand referring mainly to the payment made in 2023 to the company Renewability S.c.a.r.l. for the consideration for the procurement of electricity from renewable sources by Altair Chimica S.p.A. and Esseco S.r.l. for Euro 6,330 thousand and Euro 926 thousand respectively;

d. Other intangible assets for Euro 221 thousand, referring to improvements made to the building at the headquarters in California of Enartis USA Inc.

The item decreases for the year mainly refers to the derecognition of the goodwill pertaining to the subsidiary Oenofrance Italia S.r.l. for the term of the 5-year amortisation generated at the time of the merger with the company Art Enology S.r.l. for Euro 1,203 thousand.

The total amortisation charge for the year amounts to Euro 10,962 thousand and represents the normal amortisation of intangible assets.

The column "Other Movements" shows the increases and decreases relative to reclassifications, the opening exchange differences and the movements during the year.

PROPERTY, PLANT AND EQUIPMENT

The total value of property, plant and equipment, net of accumulated depreciation, amounted to Euro 210,070 thousand at 31 December 2023, compared with Euro 216,565 thousand at 31 December 2022. Property, plant and equipment are comprised mainly of production plants, buildings and offices, and are stated at purchase or construction cost, or at conferral value. The following movements took place during the year 2023:

	HISTORICAL COST
Description	31.12.2023	Additions	Disposals	Other movements	31.12.2023
1) Land and buildings (full property)	129,946	2,312	-	556	132,815
1) Land and buildings (leasing)	263	24	(35)	(25)	227
2) Plants and machinery (full property)	439,484	11,472	(1,432)	3,419	452,942
2) Plants and machinery (leasing)	8,683	-	-	-	8,683
3) Other fixtures and fittings, tools and equipment (full property)	51,906	4,152	(251)	849	56,655
4) Other (full property)	16,188	2,387	(1,158)	(439)	16,979
5) Tangible assets in progress and payments on account	7,466	13,069	(712)	(5,422)	14,400
Total	653,936	33,416	(3,589)	(1,063)	682,702

	ACCUMULATED DEPRECIATION
Description	31.12.2023	Additions	Disposals	Other movements	31.12.2023
1) Land and building (full property)	(65,114)	(3,209)	-	(227)	(68,549)
1) Land and building (leasing)	(186)	(48)	35	18	(181)
2) Plants and machinery (full property)	(313,826)	(29,437)	1,311	761	(341,192)
2) Plants and machinery (leasing)	(8,683)	-	-	-	(8,683)
3) Other fixtures and fittings, tools and equipment (full property)	(38,114)	(4,250)	198	(50)	(42,215)
4) Other (full property)	(11,450)	(1,732)	995	374	(11,812)
5) Tangible assets in progress and payments on account	-	-	-	-	-
Total	(437,373)	(38,676)	2,539	876	(472,632)

	NET BOOK VALUE
	31.12.2023	31.12.2023
1) Land and buildings	64,910	64,311
2) Plants and machinery	125,658	111.751
3) Other fixtures and fittings, tools and equipment	13,792	14,440
4) Other	4,739	5,167
5) Tangible assets in progress and payments on account	7,466	14.400
Total	216,565	210,070

The additions to gross property, plant and equipment during the year amounted to Euro 33,416 thousand and related to the industrial investments carried out by the Group.

The item "Land and buildings" increased by Euro 2,312 thousand during the year, mainly due to some structural improvement works carried out by the subsidiaries Altair Chimica S.p.A., Hydrochem Italia S.r.l., Enartis Sepsa S.a.u., Esseco S.r.l. and by Esseco UK Ltd.

Additions to plant and machinery totalled Euro 11,472 thousand. The change relates principally to Altair Chimica S.p.A. for Euro 4,120 thousand, Esseco S.r.l. for Euro 2,718 thousand, Hydrochem Italia S.r.l. for Euro 1,946 thousand and Enartis Sepsa S.a.u. for Euro 1,218 thousand.

The investments in Altair Chimica S.p.A. were made in Saline di Volterra and concern expenditure on renewable energy sources, the optimisation of existing processes and the enhancement of some production departments as well as important extraordinary maintenance work on plant parts with a longer production life than fourteen years. In Esseco S.r.l., at the Trecate site, several investment projects were carried out for improvements to the production plants, both in the chemical division and in the oenology division. In Hydrochem Italia S.r.l., in Pieve Vergonte, investments concerned initiatives at plants for the production of chlor-alkali.

Also during the year, the subsidiary Enartis Sepsa S.a.u. acquired new machinery relative to the winemaking process. The other additions relate to purchases of plant and machinery aimed at maintaining the current high standards of production quality.

Other fixtures and fittings, tools and equipment increased by Euro 4,152 thousand, attributable for Euro 1,397 thousand to fixed assets acquired from Esseco S.r.l ., for Euro 1,250 thousand from Enartis Sepsa S.a.u, for Euro 388 thousand from Ever S.r.l. and for Euro 138 thousand from Italiana Biotecnologie S.r.l ..

Other assets mainly include the value of vehicles, office machines and furniture, office furnishing and equipment, laboratory, warehouse and department for an increase of Euro 2,398 thousand in the year, mainly attributable to Sofralab and its subsidiaries for Euro 381 thousand, to Enartis Sepsa S.a.u. for Euro 360 thousand, Esseco S.r.l. for Euro 270 thousand and Ever S.r.l. for Euro 281 thousand.

Tangible assets in progress and payments on account relate to the increase in the value of plants under construction for a total of Euro 13,069 thousand, mainly attributable to the subsidiary Esseco UK Ltd for Euro 4,336 thousand for the expansion of the sulphur combustion furnace at the Wakefield site for the production of bisulphites, to the subsidiary Esseco S.r.l. for Euro 3,194 thousand for the expense incurred at the Trecate plant for the enhancement of the potash polyaspartate plant for the wine market that will be started up during the course in 2024, and for the improvement of the sodium hydrosulfite packaging plant as well as various revamping activities, to the subsidiary Addcon Nordic S.a. for Euro 1,578 thousand for the development of the plant for the production of potassium formate used by the oil industry, for the expansion of the ammonium bicarbonate plant applied in the food industry as well as new raw material storage tanks, to the subsidiary Essemar S.p.A. for Euro 1,519 thousand for the expansion of the suite of tanks dedicated to sulphuric acid and a new economiser and, finally, to the subsidiary Esseco do Brasil Ltda for Euro 1,196 thousand relating to instrumental and plant initiatives at the Araçariguama site needed for the expansion of production capacity and other projects for new sodium hydrosulfite and caustic potash plants.

The decreases for the year relate to the normal process of disposals of various areas of land and buildings, plant, machinery and equipment for a total of Euro 3,637 thousand.

The total depreciation charge for the year ended 31 December 2023 amounts to Euro 38,676 thousand and refers for 76.1% to plant and machinery, for 11.0% to industrial and commercial equipment, for 8.4% to buildings and for the remainder to other assets. The depreciation reflects the normal process of depreciation of assets due to usage, as indicated in the notes relative to the accounting principles adopted in the preparation of the financial statements, and the depreciation of the surpluses allocated to assets as a result of the consolidation of subsidiaries.

The column "Other Movements" shows the increases and decreases relative to the opening exchange differences and the movements during the year.

Capital grants

In the year ended 31 December 2023, the Group reflected in the financial statements the capital grants through the subsidiary Esseco S.r.l. for Euro 795 thousand as tax credits as a result of tax benefits on the new investments made during the previous year, for Euro 643 thousand as a tax benefit due to the new investments subsidised by the contribution of the merger with Zolfindustria S.r.l ., for Euro 439 thousand as tax credits as a result of tax concessions regarding the new investments completed during the year and for Euro 238 thousand as grants from Finpiemonte S.p.A. on the conclusion of a tender for energy efficiency and renewable energy, on the construction of a trigenerator. Through the subsidiary Essemar S.p.A. for Euro 27 thousand through the tender of the Piedmont Region for energy efficiency and renewable energy, for the construction of an inverter on the plant.

For the recognition of these contributions and the residual amount received in previous years, the indirect method was chosen, i.e. it was recognised under deferred income and is released to the income statement over the useful life of the asset to which it is related. For the remainder of the grants, the multi-year deferral method was used.

FINANCIAL FIXED ASSETS

Equity investments

These amounted to Euro 3,320 thousand at 31 December 2023, (Euro 3,796 thousand in the previous financial year).

Equity investments	31.12.2023	31.12.2022
(a) in subsidiary companies not consolidated	-	234
(b) in associated companies	2,461	2,682
(c) in parent companies	-	-
(d) in associates controlled by the parent companies	-	-
(d-bis) in others companies	859	880
Total	3.320	3,797

Investments in subsidiaries companies (a) not consolidated

Company name	Location	31.12.2023	31.12.2022
Addcon Nutrition Technology Co.Ltd.	Cina	-	214
Enartis S.r.l.	Italy	-	20
	Total	-	234

Investments in associated companies (b) valued at net equity

Company name	Location	31.12.2023	31.12.2022
Enocompany S.r.l.	Italy	46	33
Centro per l'enologia S.r.l.	Italy	2,116	2.393
Ronci S.r.l.	Italy	38	36
Enosfera S.r.l.	Italy	121	113
Vitis S.a.r.l.	France	71	87
Embouteillage 2000 S.a.S.	France	69	20
	Total	2,461	2.682

Other minor investments (d-bis) valued at cost

Company name	Location	31.12.2023	31.12.2022
Setras S.r.l.	Italy	351	352
Other		508	528
	Total	859	880

The decrease in "equity investments in subsidiaries not consolidated" of Euro 234 thousand is attributable to the line-by-line consolidation of Enartis S.r.l. when it became operational at the end of 2023 and the exit of Addcon Nutrition Technology Co Ltd. following the striking off from the register of companies on 4 May 2023 at the end of the liquidation process.

The decrease in "equity investments in associates companies" is the result of the change in shareholders' equity of the subsidiaries consolidated using the equity method. Decrease for the item "equity investments in other companies" valued using the purchase cost method for Euro 21 thousand to be attributed to the increase in the equity investments in the company Energy for Growth Scarl for Euro 59 thousand and Renewability Scarl for Euro 45 thousand through the subsidiary Altair Chimica S.p.A. and the decrease for the sale of the subsidiary Oenochene S.a.s., held indirectly through Sofralab S.a.s. for Euro 125 thousand.

Financial Receivables due from third parties

The item "financial receivables due from others" amounts to Euro 482 thousand at 31 December 2023, compared to Euro 483 thousand at 31 December 2022. The balance, unchanged compared to the previous year, refers to loans to others for Euro 167 thousand and loans disbursed to companies valued using the equity method for Euro 315 thousand.

Description	31.12.2023	31.12.2022
Financial receivables from others	482	483

Derivative financial instruments - assets

The amount of Euro 1,114 thousand as at 31 December 2023 refers to the part exceeding 12 months of IRS hedging derivatives on bank loans attributable to the parent company Esseco Group S.r.l. for Euro 1,007 thousand and to the subsidiary Esseco S.r.l. for Euro 107 thousand. The change refers to the elimination of a commodity swap on the price of natural gas attributable to the subsidiary Altair Chimica S.p.A. for Euro 2,240 thousand and to the subsidiary Hydrochem Italia S.r.l. for Euro 241 thousand and to the reduction in the fair value of IRS hedging derivatives on bank loans held by Esseco Group S.r.l. and Esseco S.r.l.

Description	31.12.2023	31.12.2022
Derivatives	1,114	4,746

CURRENT ASSETS

Inventories

These comprise the following:

Description	31.12.2023	31.12.2022
1) Raw materials and consumables	43,409	81,043
2) Work in progress and components	1,417	940
3) Semifinished products and contracts in progress	-	-
4) Finished goods and goods for resale	73,389	83,933
5) Payments on account	3,121	2,130
Total	121,336	168,046

Total "Inventories" as of 31 December 2023 amounted to Euro 121,336 thousand, marking a decrease of Euro 46,710 thousand compared to 31 December 2022 (-27.8%).

The change is mainly due to the combined effect of the decrease in the quantities of raw materials held at the end of the year and which, in the previous year, had been maximised to guarantee sufficient stock for the normal production rate, but above all by the decreasing trend in market prices that entailed a write-down to adjust the costs to the market value of the subsidiaries Altair Chimica S.p.A. and Hydrochem Italia S.r.l. for a total of Euro 7,432 thousand as well as the decrease in volumes and value of finished products and merchandise. The item "advances" includes payments on account paid to suppliers of industrial raw materials.

Closing inventories of raw, ancillary and consumable materials, work-in-progress, finished products and goods for resale are valued using the weighted average cost method. The value of closing inventories is shown net of a provision for write-downs of Euro 2,768 thousand.

RECEIVABLES

			Analysis by due date
Description	31.12.2023	31.12.2022	Within 1 year	From 2nd to 5th year	After the 5th year
1) Trade recevables	154,398	226,779	154,298	100	-
(-) provision for bad debts	(5,613)	(4,874)	(5,613)	-
Sub-Total	148,785	221.905	148.685	100	-
2) Amounts owed by subsidiary companies not consolidated	-	-	-	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	-	-	-	-	-
3) Amounts owed by associated companies	1,210	1,257	1,210	-	-
(-) provision for bad debts	-	-	-	-
Sub-Total	1,210	1,257	1,210	-	-
4) Amounts owed by parent companies	11,331	1,261	11,331	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	11,331	1,261	11,331	-	-
5) Amounts owed by associates controlled by parent companies	39	19	39	-	-
(-) provision for bad debts	-		-	-	-
Sub-Totale	39	19	39	-	-
5-bis) Tax receivables	41,337	36,792	37,575	3,762	-
5-ter) Deferred tax assets	8,166	7.858	-	-	-
5-quater) Other debtors	2,207	2,573	1,577	630	-
(-) provision for bad debts	-	-	-	-	-
Sub-total	2,207	2.573	1,577	630	-
Total	213,075	271,665	200,418	4,491	-

The breakdown of receivables as at 31 December 2023 by geographical area is shown in the table below:

Description	31.12.2023	31.12.2022
Italy	102,948	130,894
Europe	87,533	107,369
Other Areas	22,594	33,402
Total	213,075	271,665

"Trade receivables" amounted to Euro 148,785 thousand at 31 December 2023, compared to Euro 221,905 thousand in the same period of the previous financial year. This balance is shown net of a provision for bad debts of Euro 5,613 thousand, which is considered adequate to cover possible losses that could materialise in future years. The majority of trade receivables are due within the coming year. The sharp decrease in receivables follows the effect of the continuous decline in market prices compared to the previous year. The lowering of the costs of raw materials and utilities has pushed down the sales prices with a consequent effect on the sales performance.

"Amounts owed by associated companies" of Euro 1,210 thousand as of 31 December 2023 mainly relate to receivables due from Centro per l'Enologia S.r.l. for Euro 1,192 thousand, from Enosfera S.r.l. for Euro 13 thousand and from Emboutillage 2000 S.a.s for Euro 4 thousand relating to commercial transactions payable within the financial year.

"Amounts owed by parent companies" amounted to Euro 11,331 thousand at 31 December 2023 and related to the advance payment of income tax transferred to San Martino S.p.A. in accordance with the tax consolidation agreements as per Article No. 118, paragraph 2, of the Consolidation Act on Income Taxes (TUIR).

"Tax receivables" relate to VAT credits accrued during the year for a total of Euro 23,069 thousand, from the tax credit on research and development mainly in the subsidiaries Hydrochem Italia S.r.l. for Euro 785 thousand, Altair Chimica S.p.A. for Euro 613 thousand, Esseco S.r.l. for Euro 165 thousand, Ever S.r.l. for Euro 44 thousand, tax credit 110 in the subsidiary Esseco S.r.l. for Euro 3,375 thousand and Ever S.r.l. for Euro 389 thousand, tax credits deriving from investments in capital goods in the subsidiary Hydrochem Italia S.r.l. for Euro 4,628 thousand and Esseco S.r.l. for Euro 1,800 thousand, and the remainder to payments on account in excess of the tax for the period and other sundry Tax credits.

"Deferred tax assets" amounted to Euro 8,166 thousand (Euro 7,858 thousand at 31 December 2022) and included the tax effect of the timing differences between the book values of assets and liabilities recorded in the balance sheet and the relative values recognised for tax purposes.

"Other debtors" are stated at nominal value and show a balance of Euro 2,207 thousand as of 31 December 2023 against an amount of Euro 2,573 thousand as of 31 December 2022. They mainly refer to payments on account made to suppliers for future supplies, expense provisions, security deposits and receivables from personnel.

CURRENT FINANCIAL ASSETS

These comprise the following:

Description	31.12.2023	31.12.2022
1) Equity investments in subsidiary companies	-	-
2) Equity investments in associated companies	-	-
3) Equity investments in parent companies	-	-
3-bis) Equity investments in associates controlled by the parent companies	-	-
4) Equity investments in other companies	-	-
5) Derivatives	268	4,475
6) Other investments	502	72
7) Financial Assets for cash pooling management	-	-
Total	769	4,547

The derivative assets relate to transactions on the price of natural gas carried out by the subsidiaries Altair Chimica S.p.A. and Hydrochem Italia S.r.l., aimed at limiting the volatility brought about by the changes in market prices impacting business margins and the consequent stabilisation of the cash flows. The year-end value refers to the recognition of their fair value as at 31 December 2023. The change concerns the elimination of the part within 12 months of the commodity swaps on the price of natural gas equal to Euro 601 thousand attributable to the subsidiary Hydrochem Italia S.r.l. and the reduction of Euro 3,607 thousand pertaining to the subsidiary Altair Chimica S.p.A..

The fair value recorded was taken from the information statements communicated by the banking counterparty with which the commodity derivatives were negotiated. Given the satisfaction of the requirements for the application of hedge accounting, the fair value is recognised as a balancing entry to the "Reserve for hedging of expected cash flows", which includes the valuation effects deriving from the recognition of derivatives in the financial statements, classified as cash flow hedges for accounting purposes.

Other investments mainly relate to trading securities attributable to the subsidiary Enartis Chile Ltda for Euro 427 thousand.

CASH AND CASH EQUIVALENTS

Description	31.12.2023	31.12.2022
1) Banks and postal current accounts	59,414	69,330
2) Bank cheques	55	61
3) Cash	1.888	132
Total	61,357	69,523

The balance as of 31 December 2023 represents the available liquid assets in Italian and foreign current bank accounts at the reporting date and shows a decrease of Euro 8,166 thousand with respect to 31 December 2022 (-11.7%).

ACCRUED INCOME AND PREPAID EXPENSES

This item includes primarily the income and expenses whose accrual is early or deferred with respect to the actual date of the cash transaction and/or of the document; they disregard the date of payment or collection of the relevant income and expenses and are distributed over time.

Description	31.12.2023	31.12.2022
Prepayments and accrued income	2,365	2,496

These amount to Euro 2,365 thousand as of 31 December 2023 (Euro 2,496 thousand as of 31 December 2022), a decrease of Euro 131 thousand with respect to the previous financial year. The item relates principally to accrued income and prepaid expenses for EDP assistance, maintenance costs, rental charges and insurance premiums.

As at 31 December 2023, there were no accruals or deferrals with a duration exceeding five years.

BALANCE SHEET

•	LIABILITIES AND SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

The statement of changes in consolidated Shareholders' Equity for the past two financial years is provided below:

	Movements
Description	31.12.2022	Net income	Between reserves	Other movements	Dividends	Destination net income	31.12.2023
I) Subscribed capital	10,000	-	-	-	-	-	10,000
II) Share premium account	-	-	-	-	-	-	-
III) Revaluation reserve	62,910	-	-	-	-	-	62,910
IV) Legal reserve	2,000	-	-	-	-	-	2.000
V) Reserves provided for by the article of association (statutory reserve)		-	-	-		-
VI) Other reserves, with separate indication	61,055	-	-	(2,346)	(50,000)	76,000	84,708
VI a) Consolidation reserves	6,457	-	-	-	-	-	6,457
VI b) Other reserves	54,598	-	-	(2,346)	(50,000)	76,000	78,251
VII) Reserves for hedge accounting	6.737	-	-	(6,715)	-	-	21
VIII) Profit (loss) brought	149,059	-	-	3,682	-	79.096	231,837
IX) Profit / (loss) for the financial period	155,095	66,531	-	-	-	(155,095)	66,531
X) Treasury stock reserves	-	-	-	-	-	-	-
Group Equity	446,856	66,531	-	(5,380)	(50,000)	-	458.007
Minority interest	10.103	175	-	(4,138)	(1,538)	-	4,602

	Movements
Description	31.12.2021	Net income	Between reserves	Other movements	Dividends	Destination net income	31.12.2022
I) Subscribed capital	10,000	-	-	-	-	-	10.000
II) Share premium account	-	-	-	-	-	-	-
III) Revaluation reserve	62,900	-	-	10	-	-	62,910
IV) Legal reserve	2,000	-	-	-	-	-	2,000
V) Reserves provided for by the article of association (statutory reserve)	-	-	-	-	-	-	-
VI) Other reserves, with separate indication	100,246	-	-	(2,521)	(50,000)	13,330	61,055
VI a) Consolidation reserves	6,457	-	-	-	-	-	6,457
VI b) Other reserves	93,789	-	-	(2,521)	(50,000)	13,330	54,598
VII) Reserves for hedge accounting	3,679	-	-	3,058	-	-	6,737
VIII) Profit (loss) brought	124,493	-	-	2,488	-	22,078	149,059
IX) Profit / (loss) for the financial period	35,408	155,095	-	-	-	(35,408)	155,095
X) Treasury stock reserves	-	-	-	-	-	-	-
Group Equity	338,726	155,095	-	3,035	(50,000)	-	446,856
Minority interest	9,948	1,627	-	138	(1,611)	-	10,103

Group Shareholders' Equity amounted to Euro 458,007 thousand as of 31 December 2023 (Euro 446,856 thousand as of 31 December 2022). The change for the year is attributable to the "Result" for the year for Euro 66,531 thousand, the increase linked to "Other Movements" for Euro 5,380 thousand and the disbursement of the dividend by Esseco Group S.r.l. for Euro 50,000 thousand in favour of the Sole Shareholder San Martino S.p.A.. "Other movements" mainly refer to: (i) the change in the reserve for hedging of expected cash flows for Euro 6,715 thousand, which includes the valuation effects deriving from the recognition under assets in the financial statements, of the fair value of cash flow hedging derivatives, (ii) exchange rate differences for Euro 2,346 thousand; (iv) for the remainder to the effect of hyperinflation recorded by the subsidiary Enartis Argentina S.a..

The Legal Reserve amounts to Euro 2,000 thousand at 31 December 2023, following the allocation of 5% of the net income recorded by the parent company in accordance with Article No. 2430 of the Italian Civil Code.

Find below the reconciliation between the shareholders' equity and result for the year reported in the statutory financial statements of the parent company and those reported in these consolidated financial statements relating to the last two financial years:

Description	Net Income 2023	Equity 2023
Esseco Group Srl - Stand Alone	99,047	192,013
Pro-quota results of consolidated companies	80,865	80,865
Intragroup Dividends	(104,697)	-
Difference between the Value of the investment and Net Book Value(net of current income)	(648)	170.609
Elimination of the investments Plus/Minus value adjustments (net of tax)	(8,191)	22,948
Intercompany Margins (net of tax)	329	(6,855)
Other changes-adjustments	1	3,029
Elimination of Non-Controlling Interests	(175)	(4,602)
Esseco Group Consolidated Accounts	66,531	458,007

Description	Net Income 2022	Equity 2022
Esseco Group Srl - Stand Alone	76,000	143.754
Pro-quota results of consolidated companies	170,611	170.611
Intragroup Dividends	(80,767)	-
Difference between the Value of the investment and Net Book Value(net of current income)	(1,985)	130,787
Elimination of the investments Plus/Minus value adjustments (net of tax)	(6,201)	17,156
Intercompany Margins (net of tax)	(2,816)	(8,386)
Other changes-adjustments	1,880	3,037
Elimination of Non-Controlling Interests	(1,627)	(10,103)
Esseco Group Consolidated Accounts	155,095	446,856

The shareholders' equity of the parent company amounts to approximately Euro 192,013 thousand, compared to consolidated shareholders' equity of Euro 458,007 thousand. The difference refers for Euro 80,865 thousand to the results of the investees, for Euro 170,609 thousand to the spread between the value of the equity investments recorded in the parent company and the reference shareholders' equity of the subsidiaries, for Euro 22,948 thousand to the positive consolidation differences and for Euro 6,855 thousand to the netting of intercompany margins on inventories. "Other movements" include the adjustment to the provisions for the write-down of loans disbursed by the subsidiary Ever S.r.l. to Ever France S.a.u ., Blu Agri S.r.l. and Bluagri Industria e Comercio Fertilizantes L.t.d.a. for a total of Euro 2,533 thousand. The minority interest share of net equity amounts to Euro 4,602 thousand.

PROVISIONS FOR RISKS AND CHARGES

These comprise the following at the year-end:

	Movements during the current financial year
Description	31.12.2022	P & L	Utilizations	Other movements	31.12.2023
1) Pensions and similar obligations	3,018	389	(63)	(198)	3,144
2) Provisions for taxation (yet deferred)	14,813	1,583	(3,520)	(8)	12,867
2) Derivatives	-	1,387	(0)	-	1,387
4) Other provisions	2,768	1,508	(1,998)	-	2.278
Total	20,599	4,866	(5,581)	(207)	19,676

The "provision for risks and charges" as of 31 December 2023 is equal to Euro 19,676 thousand. The entry in question is comprised as follows:

a.	Euro 3,144 thousand for "Pension and similar obligations". These relate to the value of the agents' leaving indemnity accrued in accordance with Article No. 1751 of the Italian Civil Code on agency contracts in place at 31 December 2023. This provision shows a net increase of Euro 127 thousand, deriving essentially from an increase of Euro 389 thousand due to the provisions accrued by Enartis Argentina S.a. (Euro 137 thousand), Ever S.r.l. (Euro 135 thousand) and Sofralab S.a.S. and its subsidiaries (Euro 61 thousand);
b.	Euro 12,867 thousand (Euro 14,813 thousand as of 31 December 2022), for the "Provision for taxation, including deferred taxation", fully relating to deferred taxation. These relate mainly to the deferred taxation accrued against timing differences between the taxable income and that shown in the individual financial statements prepared in accordance with the Italian Civil Code and utilised for consolidation. It also includes the provision for taxes that arise as a result of the consolidation transactions, the provision regarding the revaluation pursuant to Decree Law 104/2020 on intangible assets ("Trademarks") attributable to the subsidiary Esseco S.r.l. and the recognition of deferred taxes calculated on the positive balance of the reserve for hedging of expected cash flows.
c.	Euro 1,387 thousand for the provision for "derivatives" for the recognition at fair value of commodity derivatives, negotiated with a leading credit institution, in the subsidiary Altair Chimica S.p.A. for Euro 1,049 thousand and in Esseco S.r.l. for Euro 177 thousand.
d.	Euro 2,278 thousand from "other provisions" (Euro 2,768 thousand as at 31 December 2022), which include provisions for potential liabilities and risks recognised against probable legal, corporate and tax liabilities. The increase mainly refers to future costs for disposal of waste, solid and liquid materials held at the end of the year at the Pieve Vergonte plant in the subsidiary Hydrochem Italia S.r.l. for Euro 983 thousand, and the remainder to potential legal proceedings due to a legal dispute in progress. The decrease in the period is attributable to the use of Euro 1,384 thousand relating to the expenses and charges incurred as a result of the disposal of materials at the Pieve Vergonte site, and for Euro 500 thousand relating to the release of the provision following the favourable development of potential legal proceedings for a legal dispute at the subsidiary Enartis Sepsa S.a.u..

PROVISION FOR EMPLOYEE SEVERANCE INDEMNITY

This provision covers the Group's liability as of 31 December 2023 to the employees of the consolidated companies for leaving indemnities in accordance with current legislation and labour contracts. The provision shows a decrease of Euro 447 thousand with respect to the year 2022, representing the net difference between the increases deriving from allocations made during the year and the decreases due to the post-employment benefits paid out to employees who left the Group during the year 2023.

	Movements during the current financial year
Description	31.12.2022	P&L	Repayments	Other movements	31.12.2023
Employee severance indemnity	6,171	1,938	(2,371)	(13)	5,725

The provision for the Italian Group companies does not include the indemnity matured as from 01/01/2007 and destined to supplementary pension funds in accordance with Legislative Decree No. 252 of 05/12/2005.

PAYABLES

These comprise the following:

			Analysis by due date
Description	31.12.2023	31.12.2022	Within 1 year	From 2 to 5 years	After 5 years
1) Debenture loans and bonds	-	-	-	-	-
2) Convertible debenture loans	-	-	-	-	-
3) Amounts owed to shareholders for financing	-	-	-	-	-
4) Amounts owed to banks	44,771	71,136	7,631	37.141	-
5) Amounts owed to other financers	8,451	10,343	142	8.309	-
6) Advances received	28	15	28	-	-
7) Trade payables	81,631	119,838	81,631	-	-
8) Debts represented by bills of exchange	-	-	-	-	-
9) Amounts owed to subsidiary companies not consolidated	-	-	-	-	-
10) Amounts owed to associated companies	466	295	466	-	-
11) Amounts owed to parent companies	62	56,633	62	-	-
11-bis) Amounts owed to associates controlled by the parent companies	1	1	1	-	-
12) Tax payables	24,453	26,401	24,439	14	-
13) Amounts owed to social security institutions	3,582	4,257	3,582	-	-
14) Others	16,570	13,632	16,556	14	-
Total	180,016	302,551	134,539	45,477	-

Payables as of 31 December 2023 are analysed by geographical area in the table below:

Description	31.12.2023	31.12.2022
Italy	109,112	208,174
Europe	65,005	56,620
Other areas	5,899	37,757
Total	180,016	302,551

"Amounts owed to banks" came to Euro 44,771 thousand at 31 December 2023 (Euro 71,136 thousand at 31 December 2022) showing a decrease of Euro 26,365 thousand, attributable mainly to a lower short-term borrowing from banks. The amounts owed to banks to be paid by 2023 amount to a total of Euro 7,631 thousand, while the remaining part of Euro 37,141 thousand is payable within 2-5 years, relating to long-term loans taken out by Esseco Group S.r.l., Esseco S.r.l., Altair Chimica S.p.A. and Sofralab S.a.s..

The covenants underlying the loans of Esseco Group Sr.l. were determined and respected on the balances as at 31 December 2023.

The "Amounts owed to other financers", as of 31 December 2023, show a balance of Euro 8,451 thousand (Euro 10,343 thousand as of 31 December 2022). These payables refer to the financial debt of the subsidiary Hydrochem Italia S.r.l. with Tessenderlo Finance SA under liquidation, for an amount equal to Euro 8,000 thousand resulting from the complex operation to change the ownership structure and, for the remainder, to the finance repayments of the lease agreements entered into with other lenders.

"Trade payables" show a balance of Euro 81,631 thousand and Euro 119,838 thousand as at 31 December 2023 and 31 December 2022, respectively, and decreased due to the effect of the decline in prices and the procurement policy which, at the end of the previous year, made provision for an investment in stock at the end of the year; they are recorded at their nominal value and are payable within the next financial year.

"Amounts owed to associated companies", equal to Euro 466 thousand as at 31 December 2023, mainly refer to payables due to Vitis S.a.r.l. for Euro 169 thousand, Ronci S.r.l. for Euro 168 thousand, Enosfera S.r.l. for Euro 98 thousand and to Centro per l'Enologia S.r.l. for Euro 31 thousand relating to commercial transactions payable within the year.

"Amounts owed to parent companies" total Euro 62 thousand (Euro 56,633 thousand in the previous year) and refer to the payables for cash pooling and to the tax payments to be transferred to the parent company San Martino S.p.A. as result of the Group's participation in the tax consolidation scheme as per article 118, paragraph 2 of the Consolidation Tax on Income Taxes (TUIR).

"Tax payables" show a balance of Euro 24,453 thousand as of 31 December 2023 (Euro 26,401 thousand as of 31 December 2022), and include payables for IRES, tax withheld on wages and salaries, VAT payables, payables for substitute tax on revaluations pursuant to Decree Law 104/2020 and other sundry taxes. These tax liabilities mainly refer to the subsidiaries: Addcon Gmbh for Euro 10,597 thousand, Altair Chimica S.p.A. for Euro 2,200 thousand, Addcon Nordic A.s. for Euro 2,557 thousand, Esseco UK Ltd for Euro 1,410 thousand, Sofralab S.a.s and its subsidiaries for Euro 732 thousand and Esseco S.r.l. for Euro 660 thousand.

"Amounts owed to social security institutions" amount to Euro 3,582 thousand and relate to the social welfare contributions payable by the company and the contributions withheld from employees' wages and salaries for the month of December 2023, almost in line with balance at the previous year-end.

"Other payables" amount to Euro 16,570 thousand and relate mainly to salary, holiday pay and bonuses accrued by employees, reimbursements for damages and other minor payables.

ACCRUED EXPENSES AND DEFERRED INCOME

Description	31.12.2023	31.12.2022
Accruals and deferred income	6,998	5,095

The balance at 31 December 2023 consists principally of accrued expenses relative to insurance premiums, labour costs and multi-year deferrals, also relating to capital grants for capital goods investment projects.

As at 31 December 2023, there were no accruals or deferrals with a duration exceeding five years.

Off-balance sheet commitments, guarantees and potential liabilities

In compliance with Article no. 2427, first paragraph, point 9) of the Italian Civil Code below we disclose the following information regarding the off-balance sheet commitments, guarantees and potential liabilities.

Information relating to off-balance sheet agreements

The Group had no off-balance sheet agreements in force.

Description	31.12.2023	31.12.2022
Group Committments	-	-
Group Guarantee	3.795	4,612
Total	3,795	4,612

These amount to Euro 3,795 thousand as of 31 December 2023, compared to Euro 4,612 thousand as of 31 December 2022.

The "Guarantees" item refers to:

•	guarantees granted on behalf of Altair Chimica S.p.A. by banks or insurance companies for a total of Euro 2,886 thousand;
•	guarantees granted on behalf of Hydrochem Italia S.r.l. by banks or insurance companies for a total of Euro 788 thousand;
•	a bank surety to Esseco S.r.l ., issued to a customer for Euro 113 thousand and to the Agenzia delle Dogane - Customs Agency - for Euro 8 thousand.

INCOME STATEMENT

VALUE OF PRODUCTION

REVENUES FROM SALES AND SERVICES

Revenues from sales of goods and services as of 31 December 2023 decreased by 21.5%, and totalled Euro 685,755 thousand (Euro 873,865 thousand as of 31 December 2022). For more details on the change recorded during the year, please refer to the paragraph of the Directors' Report commenting on this phenomenon (paragraph "Esseco Industrial" and "Esseco Enology"). These include the sale of industrial chemical products, food additives, oenological adjuvants, the trading of elemental sulphur and the production of processed sulphur for industry and agriculture.

The analysis of revenues from sales of goods and services by geographic area shows that 73% of product sales took place outside of Italy, as indicated in the table below:

Description	31.12.2023	31.12.2022
Italy	187,489	251,967
Europe	360,406	424,877
Overseas	137,859	197,021
Total	685,755	873,865

The Group increased its market share primarily in Italy and Europe, both in the wine sector and in the basic chemicals sector.

These variations are closely linked to the situation discussed in the Directors' Report.

The table below shows the analysis of revenues by nature:

Description	31.12.2023	31.12.2022
Net revenue from goods	673,219	857,992
Net revenue from services	12.535	15,873
Total	685,755	873,865

The decrease in the item "revenues from sales and provision of services" is mainly affected by significantly lower prices and volumes compared to the previous year. The drop in the prices of raw materials, in particular, led to a decrease in prices on the sales of products of the Group's Esseco Industrial division. A significant decline in volumes sold was recorded at the end of 2023, due to the slowdown in demand from many customer industries. After two years of significant growth, the wine market reported a slowdown in 2023, recording a decline in the performance of the brands of the Group's Esseco Enology division, which had to contend with a poor harvest that resulted in less wine in the winery and so on the markets. Nevertheless, the Esseco Group maintained its market share in the sectors in which it operates.

"Sales revenues" are shown net of premiums, discounts and returns from customers.

"Revenues from services" decreased compared to the previous year due to lower sales of surplus electricity.

OTHER REVENUES AND INCOME

These comprise the following:

Description	31.12.2023	31.12.2022
Profit on adjustment	2,133	1,096
Other costs recovered	19	36
Other income and commissions received	13,894	23,114
Total	16,046	24,246

Other revenues and income amounted, as at 31 December 2023, to Euro 16,046 thousand, down compared to the same period of 2022 by Euro 24,246 thousand and consist mainly of: (i) energy bonuses deriving from the application of the Aid decrees approved in 2022 and 2023 in favour of energy-intensive and gas-intensive companies for Euro 3,424 thousand; (ii) tax credit for research and development mainly referring to Hydrochem Italia S.r.l. for Euro 785 thousand, to Altair Chimica S.p.A. for Euro 159 thousand, to Esseco S.r.l. for Euro 12 thousand and to Ever S.r.l. for Euro 29 thousand; (iii) capital grants for Euro 1,433 thousand; (iv) one-off amount of Euro 1,000 thousand through the subsidiary Esseco S.r.l. deriving from the sale of a complex of assets to a business line of the Esseco Industrial division; (v) insurance compensation for Euro 325 thousand at the Trecate production site; while for the remainder to other non-core revenues.

PRODUCTION COSTS

RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE

These are comprised essentially of purchases of raw materials, packaging, other consumables and goods for resale.

Description	31.12.2023	31.12.2022
Raw materials	174,496	292,923
Finished products	54,381	76,627
Other production costs	47,519	61,838
Total	276,397	431,388

The cost of raw, ancillary, consumable materials and goods for resale as of 31 December 2023 stood at Euro 276,397 thousand. There was a significant decrease of Euro 154,991 thousand compared to the same period of the previous year, mainly due to the exponential decrease in the prices of raw materials such as potassium chloride, sodium chloride, sulphur and ammonia, which form the basis of the production of the Group companies.

COSTS FOR SERVICES

These comprise the following:

Description	31.12.2023	31.12.2022
Transport	50,934	58,857
Maintenance	17.219	17,172
Travel and communications	8.370	7,370
Consulting and professional fees	24,701	25,126
Other services	31,827	47,345
Total	133,050	155,870

Costs for services amount to a total of Euro 133,050 thousand as of 31 December 2023 (Euro 155,870 thousand as of 31 December 2022), representing a total decrease by 14.6%. These costs relate to commercial services (such as transport, commission, publicity and marketing), to industrial services (comprised principally of maintenance, utilities and other services) and general services (such as professional consultancy, travel expenses, training courses, insurance costs and postal and telephone costs).

The decrease compared to the previous year was recorded in almost all types of costs for services and mainly in the costs of utilities, which fell significantly during the year (methane gas and electricity), and transport (-13.5%). On the other hand, higher costs were recorded for travel and communication expenses (+13.6%) and, in line with the previous year, production plant maintenance and repair costs.

LEASE EXPENSES

These comprise the following:

Description	31.12.2023	31.12.2022
Long term leasing	2.031	2.008
Rental of buildings	2,709	2,648
Industrial and commercial rent	7,741	4,566
Total	12,482	9,222

The balance of the lease expenses item amounted to Euro 12,482 thousand as of 31 December 2023 (+35.3% with respect to 31 December 2022) and related primarily to rental and hire charges for industrial and commercial vehicles, relating to the production sites at Trecate, Pieve Vergonte, Saline di Volterra and Epernay, rental of buildings, as well as the management of warehouses for the Italian and foreign sales network. The increases in items impacted all Group subsidiaries.

PERSONNEL COSTS

These comprise the following:

Description	31.12.2023	31.12.2022
a) wages and salaries	66,466	67,618
b) social security costs	17.029	16,405
c) provisions for employee severance indemnity	1,984	2,725
d) supplementary pensions and similar	565	89
e) other costs relating to staff	769	975
Total	86,814	87,812

Personnel costs amounted to Euro 86,814 thousand as of 31 December 2023 (Euro 87,812 thousand as of 31 December 2022) and consisted of wages and salaries for Euro 66,466 thousand and of social welfare contributions and provisions for employee severance indemnity and supplementary pension costs for the remainder. Personnel costs are equal to 12.7% of revenues.

The average number of employees, for the year 2023, is equal to 1,279.

Details of the activity occurring during the financial year are provided below:

	Movements of period
Description	31.12.2023	31.12.2022
Average number of employees	1,279	1,276
Managers/executive	55	58
Clerical staff/ manual workers	1,224	1,218

AMORTISATION, DEPRECIATION AND WRITE-DOWNS

These comprise the following:

Description	31.12.2023	31.12.2022
a) amortisation of intangible assets	11,281	8,956
b) depreciation of tangible assets	38,859	40,667
c) reduction in value of fixed assets	-	2
d) allowance for doubtful debtors	941	971
Total	51,080	50,596

Amortisation and depreciation of intangible assets and property, plant and equipment, which amount to Euro 51,080 thousand for the year 2023, are calculated on a straight-line basis over the economic lives of the assets, taking account of their residual useful lives. Said amortisation/depreciation relates mainly to the production plants at the Trecate and San Capriano Po (Esseco S.r.l.), Wakefield (Esseco UK Ltd), Saline di Volterra (Altair Chimica S.p.A.) and Epernay (Sofralab S.a.s.) sites, as well as the amortisation of the goodwill allocated as the difference between the value of the equity investment and the related shareholders' equity following the consolidation process of the companies belonging to the Group.

During the year 2023, the Group wrote down receivables included in current assets for a total of Euro 941 thousand, recorded under item B10 d) of the income statement.

OTHER OPERATING COSTS

These comprise the following:

Description	31.12.2023	31.12.2022
Other current taxes	2,298	2,236
Losses on adjustment	288	127
Bank charges	498	501
Consumable materials	862	829
Membership fees	520	449
Other expenses	3,208	4,643
Total	7,675	8,785

The item as at 31 December 2023 had a balance of Euro 7,675 thousand. It mainly refers to indirect taxes and duties for the year, laboratory and other consumables relating to ordinary operations, membership fees and bank charges accrued during the year. In particular, the item "Other charges" includes the extra costs for the decommissioning of the plants at the Pieve Vergonte site replaced by the new electrolysis plant with membrane technology, entertainment representation expenses, promotional material, charges on electricity, which fell considerably compared to the previous year, as well as other minor operating charges.

FINANCIAL INCOME AND CHARGES

OTHER FINANCIAL INCOME

"Other financial income" comprises the following:

Description	31.12.2023	31.12.2022
16 (a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	-
By parent companies	-	-
By associates companies controlled by parent companies	-	-
By other companies	11	6
Sub-Total	11	6

16 (d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	-
By parent companies	94	-
By associates companies controlled by parent companies	-	-
By other companies:	914	189
- banks	556	20
- others	358	169
Sub-Total	1,008	189
Total	1,019	195

The most significant component of these financial statement items consists of bank interest income for Euro 556 thousand, which was affected by the rise in interest rates recorded during the year.

INTEREST AND OTHER FINANCIAL CHARGES

Description	31.12.2023	31.12.2022
Interest charged by bank	752	823
Interest on loans:	33	21
- by subsidiary companies	-	-
- by parent companies	32	20
- by other companies	1	1
Other interest	955	877
Total	1,739	1,721

"Interest charged by banks" amounts to Euro 752 thousand (Euro 823 thousand at 31 December 2022), representing an decrease with respect to the same period in previous year for Euro 71 thousand, mainly attributable to the parent company Esseco Group S.r.l. due to the decreased exposure to the banking market.

"Other financial charges", equal to Euro 955 thousand (Euro 877 thousand as at 31 December 2022), increased by Euro 78 thousand compared to the previous year and refer to interest expense relating to financial discounts granted to customers for payments made earlier than the terms agreed contractually and the implicit financial charges.

PROFIT AND LOSS ON CURRENCY EXCHANGE

These comprise the following:

Description	31.12.2023	31.12.2022
Gains realised	3,403	3,740
Unrealised gains	3,914	1,795
Losses realised	(3,252)	(3,249)
Unrealised losses	(10,623)	(3,471)
Total	(6,558)	(1,185)

The financial management of foreign currencies generated net exchange losses of Euro 6,558 thousand.

In particular, the gains already realised, equal to Euro 3,403 thousand, are largely due to profits realised by Addcon Gmbh and its subsidiaries for Euro 1,479 thousand, Enartis Argentina S.a. for Euro 993 thousand, Esseco Usa Llc for Euro 241 thousand and Esseco S.r.l. for Euro 362 thousand.

The resulting gains and losses unrealised, respectively equal to a positive balance of Euro 3,914 thousand and a negative balance of Euro 10,623 thousand, are from the valuation of receivables and payables in foreign currency as of 31 December 2023.

The losses realised during 2023 amount to Euro 3,252 thousand, generated mainly by Enartis Argentina S.a. for Euro 1,153 thousand, by Addcon Gmbh and its subsidiaries for Euro 760 thousand, by Esseco S.r.l. for Euro 524 thousand, by Esseco UK Ltd for Euro 232 thousand and by Esseco Usa Lcl..

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS

Description	31.12.2023	31.12.2022
18) Revaluation
a) of equity investments	493	470
b) of other permanent investment which are not equity investments	-	-
c) of temporary investments which are not equity investments	-	-
d) of derivatives	2,000	-
Sub-Total	2.493	470

19) Devaluation
a) of equity investments	22	49
b) of other permanent investment which are not equity investments	-	-
c) of non permanent investments which are not equity investments	-	-
d) of derivatives	-	-
Sub-Total	22	49
Total	2,471	421

The revaluations of equity investments equal to Euro 493 thousand and the impairment of equity investments for Euro 22 thousand in 2023 relate entirely to the valuation at equity of the associated companies indicated in the paragraph "Equity investments" item b) associated companies, of this document. The revaluation of derivative financial instruments of Euro 2,000 thousand refers to a derivative instrument purchased in 2019 from Esseco Group S.r.l., at a value of Euro 1, as part of the acquisition of the subsidiary Hydrochem Italia S.r.l..

INCOME TAXES

The income tax charge for the year 2023 is comprised of the following:

Description	31.12.2023	31.12.2022
Income tax on Italian and foreign companies	21,154	45.877
Deferred and advance taxation	(1,706)	4,542
Deferred and advance taxation deriving from consolidation adjustments	116	(1,112)
Adjustment of direct taxes of previous years	409	27
Direct Tax relating to previous years	-	-
Total	19,973	49,334

Income tax is recorded in accordance with the accruals principle and therefore it represents:

―	the accruals for tax paid or payable for the year, determined on the basis of the tax rates and fiscal legislation in force;
―	the amount of deferred tax assets or liabilities deriving from timing differences which arose or reversed during the year;
―	the amount of deferred tax assets or liabilities deriving from consolidation entries.

INFORMATION ON THE FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

As required by art. 2427-bis, first paragraph, no. 1 of the Italian Civil Code, the following information is provided below for each category of derivative financial instruments subscribed by Esseco Group S.r.l ., Esseco S.r.l ., Altair Chimica S.p.A. and Hydrochem Italia S.r.l..

Esseco Group S.r.l.

•	purpose: speculative;
•	Notional value: Euro 1;
•	underlying financial risk: no financial risk identified;
•	duration: acquired on 28 March 2019 as part of the purchase of the company Hydrochem Italia S.r.l. and may generate the right to receive, under certain future conditions, up to a maximum of Euro 10,000 thousand. In 2023, the first portion of the receivable was accrued for a value of Euro 2,000 thousand.

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 10,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2023: positive Euro 44 thousand;
•	duration: 30 November 2019 - 30 November 2024.

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 10,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2023: positive Euro 108 thousand;
•	duration: 29 May 2020 - 31 May 2025.

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 20,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2023: positive Euro 427 thousand;
•	duration: 20 January 2020 - 20 January 2027.

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 20,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2023: positive Euro 427 thousand;
•	duration: 31 March 2020 - 20 January 2027.

Esseco S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 5,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2023: positive Euro 107 thousand;
•	duration: 30 July 2020 - 30 July 2026.

Esseco S.r.l.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: Euro 479 thousand;
•	underlying financial risk: risk of the variable component of the price of methane;
•	mark-to-market as at 31 December 2023: negative Euro 177 thousand;
•	duration: 1 October 2023 - 30 September 2026.

Altair Chimica S.p.A.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: Euro 4,418 thousand;
•	underlying financial risk: risk of the variable component of the price of methane;
•	mark-to-market as at 31 December 2023: negative Euro 781 thousand.

Hydrochem Italia S.r.l.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: Euro 535 thousand;
•	underlying financial risk: risk of the variable component of the price of naturalgas;
•	mark-to-market as at 31 December 2023: negative Euro 161 thousand.

SIGNIFICANT EVENTS AFTER YEAR'S END

The events that took place in the first few months of 2024 include the following:

―	On 1 January 2024, the spin-off of the wine division of Esseco S.r.l. in favour of the company Enartis S.r.l. took place. The transaction is part of the Group's project aimed at separating the activities relating to the industrial division from those relating to the wine division, as the two divisions operate in different sectors and markets, with the prospect of being able to develop greater operational and administrative efficiency;
―	On 1 January 2024, the merger by incorporation of the company Altair Chimica S.p.A. into the company Hydrochem Italia S.r.l. (both wholly-owned by Esseco Group S.r.l.) took effect and at the same time its company name was changed to Altair Chemical S.r.l .. The transaction makes it possible to continue the process of consolidation in the chlor-alkali market and aims to maximise production capacity, strengthen the company under a single organisation, enhance synergies with shared storage management and logistics planning for making sales processes more efficient;
―	On 13 May 2024, the company Esseco Industrial S.p.A. was established.

INFORMATION PURSUANT TO ART.1, PARAGRAPH 125, OF LAW No. 124 OF 4 AUGUST 2017

Pursuant to art. 1(125) of Italian Law 124 of 4 August 2017, in compliance with the transparency obligation, we hereby disclose that the following grants, contributions, paid positions and any other economic benefits of any nature were received from public authorities:

During the year Esseco S.r.l. recognised "energy-intensive" receivables for Euro 667 thousand deriving from the application of the various decrees issued by the State to undertake urgent measures to support the economy, to companies, to contain the effects of price increase in the electricity sector, social and industrial policies, NRRP (National Recovery and Resilience Plan). In addition, it was exempted from the payment of social security contributions for new permanent hires / transformations to permanent contracts (art. I Paragraphs 10-15, Law 178/2020); the instrument is "Tax relief/tax exemption" for an amount of aid of Euro 32 thousand. Lastly, it obtained confirmation and recognised the "tax credit for research and development, technological innovation, design and aesthetics" for Euro 112 thousand relating to the 2022 financial year. During the year, Altair Chimica S.p.A. collected Euro 3,334 thousand in "energy-intensive" and "gasintensive" contributions deriving from the application of the various decrees issued by the State to undertake urgent measures to support the economy and businesses, to contain the effects of price increase in the electricity sector, regarding social and industrial policies, NRRP, ..., specifically: Decree Law Sostegni-ter no. 4 of 27/01/2022, Decree Law Energy no. 17 of 01/03/22, Decree Law Aid-bis no. 115 of 9/8/2022, Decree Law Aid-ter 144 of 23/09/22 and Decree Law no. 176 'Urgent energy and financial support measures' of 18/11/22 and 2023 Budget Bill used as offsetting through F24 mandate and/or sale to other companies of the Group to which it belongs and Euro 476 thousand by way of "2021 State Aid". Through Sviluppo Toscana S.p.A. it also collected Euro 41 thousand as the balance on the Enterprise project. Lastly, from the sale of the White Certificates, it collected Euro 382 thousand for the portion relating to the year 2021 and Euro 1,091 thousand for the portion relating to the year 2022.

In 2023, Hydrochem Italia S.r.l. collected Euro 2,863 thousand in "energy-intensive" and "gasintensive" contributions deriving from the application of the various decrees issued by the State to undertake urgent measures to support the economy and businesses, to contain the effects of the price increase in the electricity sector, in the field of social and industrial policies, NRRP, ..., specifically: Decree Law Sostegni-ter no. 4 of 27/01/2022, Decree Law Energy no. 17 of 01/03/2022, Decree Law Aid-bis no. 115 of 9/8/22, Decree Law Aid-ter 144 of 23/09/22, Decree Law no. 176 'Urgent energy and financial support measures' of 18/11/22 and 2023 Budget Bill 1 used as offsetting through F24 mandate and/or sale to other companies of the Group to which it belongs.

It should be noted that the remaining Group companies have not received any significant grants or contributions from the public administration as specified in the above mentioned law.

DIRECTORS' AND STATUTORY AUDITORS' COMPENSATION

During the year 2023, the Directors of the parent company Esseco Group S.r.l. earned total emoluments of Euro 86 thousand for their services as members of the Board of Directors of the Group companies, and the Statutory Auditors earned Euro 186 thousand for their services as members of the Board of Statutory Auditors of the Group companies.

INDEPENDENT AUDITORS' FEES

Pursuant to the law, please note that the fees for the year 2023 for the services rendered by the Independent Auditors to the companies of the group equal to Euro 558 thousand for the statutory audit of the annual accounts and Euro 60 thousand relating to other audit services performed.

INFORMATION REGARDING THE CONTROL, MANAGEMENT AND COORDINATION OF THE GROUP

As required by the fourth paragraph of Article No. 2497 bis of the Italian Civil Code, the following schedule provides the principal data taken from the latest approved financial statements of San Martino S.p.A., the company that controls, manages and coordinates the Group:

Description	31.12.2022
BALANCE SHEET
ASSETS
A Amount due from shareholders for share capital yet to be paid up	0
B Fixed Assets	24,961
C Current Assets	72,499
D Accrued income and prepaid expenses	371
Total assets	97,831
LIABILITIES AND SHAREHOLDER EQUITY
A Shareholders' Equity:	79,579
- Share Capital	4,320
- Reserves	25,786
- Retained earnings	0
- Net Income (loss) for the period	49,472
B Provision for risk and charges	0
C Staff Leaving indemnity	0
D Payables	18,249
E Accrued expenses and deferred income	3
Total liabilities and shareholders' equity	97,831
INCOME STATEMENT
A Value of production	132
B Cost of production	508
C Financial income and expenses	50,037
D Adjustment to value of financial assets	0
Income tax for the year	189
Net income (loss) for the year	49,472

These consolidated financial statements, comprised of the balance sheet, income statement, cash flow statement and explanatory notes give a true and fair view of the Group's equity and financial situation and of the economic results for the year and correspond to the results of the holding company's accounting records and the information forwarded by those companies included in the consolidation. In addition, the consolidated financial statements comply with current legislation.

The following German subsidiaries included in the consolidated financial statements of Esseco Group S.r.l. are exempt from the obligation to communicate annual financial statements pursuant to art. 264 (3) HGB:

―	ADDCON GmbH, Bitterfeld-Wolfen;
―	ADDCON Europe GmbH, Bitterfeld-Wolfen.

APPENDIX A

LIST OF COMPANIES IN THE CONSOLIDATION AREA AS OF 31.12.2023

Company name	Registered offices	% owned directly	% owned indirectly	Consolidation method
Esseco Group Srl	Italy	Controllante	-	Line-by-line basis
Esseco Srl	Italy	100.00	100.00	Line-by-line basis
Essemar Spa	Italy	50.00	50.00	Line-by-line basis
Altair Chimica Spa	Italy	100.00	100.00	Line-by-line basis
Altair Chimica Iberica SI	Spain	100.00	100.00	Line-by-line basis
Hydrochem Italia Srl	Italy	100.00	100.00	Line-by-line basis
Esseco do Brasil Ltda	Brazil	100.00	100.00	Line-by-line basis
Esseco France Sas	France	100.00	100.00	Line-by-line basis
Esseco Chemicals de Mexico SA	Mexico	100.00	100.00	Line-by-line basis
Italiana Biotecnologie Srl	Italy	100.00	100.00	Line-by-line basis
Enartis Sepsa Sau	Spain	100.00	100.00	Line-by-line basis
Making Value in Enology SI	Spain	100.00	100.00	Line-by-line basis
Esseco Usa Llc	USA	100.00	100.00	Line-by-line basis
Enartis USA Inc	USA	100.00	100.00	Line-by-line basis
Oenofrance USA Llc	USA	100.00	100.00	Line-by-line basis
Esseco Uk Ltd	UK	100.00	100.00	Line-by-line basis
Enartis Chile Ltda	Chile	100.00	100.00	Line-by-line basis
Enartis Argentina Sa	Argentina	100.00	100.00	Line-by-line basis
Enartis Portugal Lda	Portugal	100.00	100.00	Line-by-line basis
Enartis South Africa (Pty) Ltd	South Africa	100.00	100.00	Line-by-line basis
Enartis Pacific (Pty) Ltd	Australia	100.00	100.00	Line-by-line basis
Enartis Central Europe Sro	Slovakia	100.00	100.00	Line-by-line basis
Enocompany Srl	Italy	40.00	40.00	Equity
Enotre Srl	Italy	100.00	40.00	Equity
Enartis Srl	Italy	100.00	100.00	Line-by-line basis
Watgrid SA	Portugal	60.00	60.00	Line-by-line basis
Centro per I'enologia Srl	Italy	35.00	35.00	Equity
Addcon Gmbh	Germany	100.00	100.00	Line-by-line basis
Addcon Europe Gmbh	Germany	100.00	100.00	Line-by-line basis
Addcon Nordic As	Norway	100.00	100.00	Line-by-line basis
Addcon Asia Ltd	Hong Kong	100.00	100.00	Line-by-line basis
Addcon Asia Co Ltd	Thailand	100.00	100.00	Line-by-line basis
Addcon Dalian Co	China	100.00	100.00	Line-by-line basis
Ever Srl	Italy	100.00	100.00	Line-by-line basis
Ever Brasil Ltda	Italy	90.00	90.00	Line-by-line basis
Ever Trade Sro	Brazil	100.00	100.00	Line-by-line basis
Enologica Friulana Srl	Slovakia	90.00	90.00	Line-by-line basis
Ever Deutschland Gmbh	Germany	80.00	80.00	Line-by-line basis
Bluagri Srl	Italy	80.00	80.00	Line-by-line basis
Ever Solution Pty Ltd	South Africa	100.00	100.00	Line-by-line basis
Ever France Sau	France	100.00	100.00	Line-by-line basis
Bluagri Industria e Comercio Fertilizantes Ltda	Brazil	80.00	80.00	Line-by-line basis
Enosfera Srl	Italy	33.33	33.33	Equity
Ronci Srl	Italy	25.00	25.00	Equity
Sofralab Sas	France	100.00	100.00	Line-by-line basis
SBO Sas	France	100.00	100.00	Line-by-line basis
Petite Suisse Sarl	France	100.00	100.00	Line-by-line basis
Oenovisions Sas	France	53.60	53.60	Line-by-line basis
Embouteillage 2000 Sas	France	47.60	25.51	Equity
Oenofrance Italia Srl	Italy	100.00	100.00	Line-by-line basis
Sofralab Unipessoal Lda	Portugal	100.00	100.00	Line-by-line basis
Vitis Sarl	France	36.00	36.00	Equity
Oceania Sas	France	100.00	100.00	Line-by-line basis
Oeno France Chile SpA	Chile	100.00	100.00	Line-by-line basis
SE.TRA.S. S.r.l.	Italy	15.00	15.00	Cost

APPENDIX B PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

SECTION 1 - COMPANIES VALUE IN EURO

Company name	Registered offices	Share Capital	Net Equity	Net income / loss for the year
Esseco Group Srl	Italy	EUR 10,000,000	EUR 190,488,354	EUR 97,522,187
Esseco Srl	Italy	EUR 10,000,000	EUR 114,132,410	EUR 19,221,275
Essemar Spa	Italy	EUR 3,000,000	EUR 9,019,780	EUR -11,275
Altair Chimica Spa	Italy	EUR 2,921,000	EUR 91,448,633	EUR 26,032,391
Altair Chimica Iberica SI	Spain	EUR 3.000	EUR 4,623,083	EUR 713,880
Hydrochem Italia Srl	Italy	EUR 6,904,208	EUR 32,374,707	EUR 1,883,652
Esseco France Sas	France	EUR 20,000	EUR 647,769	EUR 238,462
Italiana Biotecnologie Srl	Italy	EUR 110,000	EUR 259,539	EUR 22,581
Enartis Sepsa Sau	Spain	EUR 1,540,891	EUR 15,957,390	EUR 6,668,256
Making Value in Enology SI	Spain	EUR 5,000	EUR 520,678	EUR 114,834
Enartis Portugal Lda	Portugal	EUR 25,110	EUR 7,009,359	EUR 1,833,594
Enartis Central Europe Sro	Slovakia	EUR 100,000	EUR -418,011	EUR -113.941
Enocompany Srl	Italy	EUR 100,000	EUR 86,493	EUR 6,876
Enotre Srl	Italy	EUR 10,920	EUR 439,105	EUR 39,263
Enartis Srl	Italy	EUR 20,000	EUR 9,910	EUR -9,663
Watgrid Sa	Portugal	EUR 53,901	EUR -447,520	EUR -44,867
Centro per I'enologia Srl	Italy	EUR 50,000	EUR 3,311,610	EUR 1,116,511
Addcon Gmbh	Germany	EUR 25,000	EUR 3,563,199	EUR -165,181
Addcon Europe Gmbh	Germany	EUR 25,564	EUR 3,254,225	EUR 213.279
Ever Srl	Italy	EUR 500,000	EUR 27,553,312	EUR 4,770,342
Ever Trade Sro	Slovakia	EUR 10,000	EUR 876,964	EUR 53,950
Enologica Friulana Srl	Italy	EUR 20,000	EUR 757,446	EUR 33,586
Ever Deutschland Gmbh	Germany	EUR 50,000	EUR 465,985	EUR 159,454
Blu Agri Srl	Italy	EUR 20,000	EUR -203,574	EUR 111
Ever France Sau	France	EUR 140,000	EUR 277,509	EUR 413,173
Enosfera Srl ^*	Italy	EUR 21,000	EUR 362,475	EUR 6,473
Ronci Srl	Italy	EUR 20,000	EUR 153,228	EUR 8,732
Sofralab Sas	France	EUR 1,315,600	EUR 12,669,550	EUR 3,788,559
SBO Sas	France	EUR 164,800	EUR 682,374	EUR 54,356
Petite Suisse Sarl	France	EUR 2,000	EUR 1,667,309	EUR 321,687
Oenovision Sas	France	EUR 55,974	EUR 916,520	EUR 99,285
Oenofrance Italia Srl	Italy	EUR 100,000	EUR 5,403,957	EUR 767,626
Sofralab Portugal Lda	Portugal	EUR 5,000	EUR 94,705	EUR 46.997
Vitis Sarl	France	EUR 21,343	EUR 197,508	EUR 81,836
Océania Sas	France	EUR 133,400	EUR 691.048	EUR 116.712
Embouteillage 2000 Sas	France	EUR 80.000	EUR 145,392	EUR 105,313
SE.TRA.S. S.r.l. ^*	Italy	EUR 1,000,000	EUR 4,609,668	EUR 398,557

^* Most recently-available financial statements for 2022

SECTION 2 - COMPANIES VALUE IN CURRENCY DIFFERENT THAN EURO

Company name	Registered offices	Share Capital	Net Equity	Net income / loss for the year
Esseco do Brasil Ltda	Brazil	BRL 16,921,314	BRL 12,907,816	BRL 9,552,565
Esseco Chemicals de Mexico SA DE C.V.	Mexico	MXN 500,000	MXN -6,292,656	MXN -5,956,624
Esseco Usa Llc	USA	USD 1,000,000	USD 19,167,503	USD 1,979,089
Enartis USA Inc	USA	USD 889,308	USD 6,214,996	USD 1,755,569
Oenofrance USA Llc	USA	USD 1,100,000	USD 627,774	USD 208,601
Esseco Uk Ltd	UK	GBP 250,000	GBP 21,969,819	GBP 5,226,815
Enartis Chile Ltda	Chile	CLP 400,000,000	CLP 3,217,669,941	CLP 119,028,030
Enartis Argentina Sa	Argentina	ARS 209,759,261	ARS 792,524,872	ARS -948,568,780
Enartis South Africa (Pty) Ltd	South Africa	ZAR 12,119,842	ZAR 49,590,696	ZAR 15,827,142
Enartis Pacific (Pty) Ltd	Australia	AUD 4,321,632	AUD 2,623,085	AUD 362,810
Ever Brasil Ltda	Brazil	BRL 1,145,176	BRL 44,222,110	BRL 11,146,411
Ever Solution Pty Ltd	South Africa	ZAR 500	ZAR 3,247,617	ZAR -1,432,119
Bluagri Industria e Comercio Fertilizantes Ltda	Brazil	BRL 100,870	BRL -7,574,723	BRL -1,874,956
Addcon Nordic As	Norway	NOK 6,247,335	NOK 141,314,537	NOK 24,768,601
Addcon Asia Ltd	Hong Kong	HKD 187,042	HKD 2,575,342	HKD 112,116
Addcon Asia Co Ltd ^*	Thailand	THB 2,000,000	THB -13,141,674	THB -691,705
Addcon Dalian Co	China	CNY 2,500,000	CNY -454,613	CNY -1,727,728
Oeno France Chile SpA	Chile	CNY 212,972,560	CNY 52,088,377	CNY -131,819,271

^* Most recently-available financial statements for 2022

Consolidated financial statements as at December 31, 2023

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010

(Translation from the original Italian text)

To the Shareholder of

Esseco Group S.p.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of the Group Esseco Group (the Group), which comprise the balance sheet as at December 31, 2023, the income statement and consolidated statement of cash flows for the year then ended, and explanatory notes.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at December 31, 2023, and of its financial performance and its cash flows for the year then ended in accordance with the Italian regulations governing financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Esseco Group S.p.A. in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements

The Directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with the Italian regulations governing financial statements, and, within the terms provided by the law, for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Directors are responsible for assessing the Group's ability to continue as a going concern and, when preparing the consolidated financial statements, for the appropriateness of the going concern assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial statements on a going concern basis unless they either intend to liquidate the Parent Company Esseco Group S.p.A. or to cease operations, or have no realistic alternative but to do so.

The statutory audit committee ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have exercised professional judgment and maintained professional skepticism throughout the audit. In addition:

•	we have identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery. intentional omissions, misrepresentations, or the override of internal control
•	we have obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;
•	we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;
•	we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report However, future events or conditions may cause the Group to cease to continue as a going concern;
•	we have evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
•	we have obtained sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We have communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on compliance with other legal and regulatory requirements

Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39 dated 27 January 2010

The Directors of Esseco Group S.p.A. are responsible for the preparation of the Directors' Report as at December 31, 2023, including its consistency with the Group's consolidated financial statements and its compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Directors' Report with the Group's consolidated financial statements as at December 31, 2023 and on its compliance with the applicable laws and regulations, and in order to assess whether it contains material misstatements.

In our opinion, the Directors' Report is consistent with the Group's consolidated financial statements as at December 31, 2023 and comply with the applicable laws and regulations.

With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have no matters to report.

Milan, June 4th, 2024

EY S.p.A.

Aldo Alberto Amorese, Auditor

This report has been translated into the English language solely for the convenience of international readers.

2f:T6a3,

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

Gesellschafterversammlung der ADDCON Europe GmbH

Die ADDCON Europe GmbH ist Enkelunternehmen eines nach § 290 HGB zur Aufstellung eines Konzernab-schlusses verpflichteten Mutterunternehmens (Esseco Group S.r.l., Trecate / Italien) und soll die Erleichterungen gemäß § 264 Abs. 3 HGB in Anspruch nehmen.

Gem. § 264 Absatz 3 Nr. 1 HGB stimmt hiermit die ADDCON GmbH, Bitterfeld-Wolfen, als 100%iger Gesellschafter der Befreiung für das zum 31.12.2023 endende Geschäftsjahr zu. Dieser Beschluss wird gem. § 325 HGB offengelegt.

Ferner erklärt sich die ADDCON GmbH, Bitterfeld-Wolfen bereit, für die Verbindlichkeiten der 100% Tochtergesellschaft, der ADDCON Europe GmbH zum Bilanzstichtag 31.12.2023 im nachfolgenden zum 31.12.2024 endenden Geschäftsjahr entsprechend der Voraussetzungen des § 264 Abs. 3 Nr. 2 HGB einzustehen, soweit diese nicht durch die ADDCON Europe GmbH geleistet würden.

Bitterfeld-Wolfen, den 26. Mai 2023

gez. Alberto Cambieri und Luca Mantovani

30:T76c,

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Die ADDCON Europe GmbH ist Enkelunternehmen eines nach § 290 HGB zur Aufstellung eines Konzernabschlusses verpflichteten Mutterunternehmens (Esseco Group S.r.l., Trecate / Italien) und soll die Erleichterungen gemäß § 264 Abs. 3 HGB in Anspruch nehmen.

Gem. § 264 Absatz 3 Nr. 1 HGB stimmt hiermit die ADDCON GmbH, Bitterfeld-Wolfen, als 100%iger Gesellschafter der Befreiung für das zum 31.12.2022 endende Geschäftsjahr zu. Dieser Beschluss wird gem. § 325 HGB offengelegt.

Zwischen der Gesellschaft und der ADDCON GmbH, Bitterfeld-Wolfen, bestand bis zum 31.12.2022 ein Ergebnisabführungsvertrag, der im Handelsregister der Gesellschaft veröffentlicht ist und aus dem sich eine Einstandspflicht durch die Verlustübernahmeerklärung und Anwendung der Regelungen des § 302 des Aktiengesetzes entsprechend der Voraussetzungen des § 264 Abs. 3 Nr. 2 HGB ergibt.

Bitterfeld-Wolfen, den 05. Mai 2022

gez. Geschäftsführer

Alberto Cambieri

Kurt Wegleitner

31:T79762,

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

ANNUAL FINANCIAL REPORT 2021

Board of Directors:

Piero Nulli	Chair
Fabrizio Zenone	Director-Vice-Chair
Francesco Nulli	Director - Chief Executive Officer
Alberto Cambieri	Director - Director of Administration, Finance and Control
Fabio Mosca	Director

Board of Statutory Auditors:

Mario Giusti	Chair
Roberto Miazzo	Statutory auditor
Alessandro Cinque	Statutory auditor

Auditor:

E&Y S.p.A.

CONTENTS

ESSECO GROUP S.R.L

Consolidated Financial Statements as at 31 December 2021:

• Management Report

• Balance Sheet, Income Statement, Cash Flow Statement

• Notes to the Financial Statement

• List of companies included in the scope of consolidation as at 31 December 2021

• Key data from the last balance sheet of the subsidiaries and associated companies

• Auditor's Report on the Consolidated Financial Statements of Esseco Group S.r.l. as at 31 December 2021

ECONOMIC BACKGROUND

2021 saw a moderate global economic recovery, despite the spread of new variants of the Covid-19 virus and concerns about the progress of the vaccination campaign. Business activities returned to pre-pandemic levels, but during the final quarter of the year difficulties arose in the supply of raw materials, and the energy crisis emerged which saw gas and electricity prices rise sharply and transport costs increase.

Despite a faster-than-expected recovery, the overall outlook for 2022 remains fraught with uncertainty, due to both the spread of the Omicron variant of the Coronavirus and Russia's invasion of Ukraine which began in late February 2022. In the light of recent events, there is a general sense of concern about gas and oil supplies from Russia, as well as reduced trade from both Russia and Ukraine.

Inflation is rising globally as a result of higher electricity and gas prices, while increases in raw material and production costs have been somewhat reflected in final prices. In the first quarter of 2022, increases in retail prices began to become more noticeable; according to preliminary data, consumer price inflation reached 7.5 %.

The industry has taken a big step forward worldwide, quickly recovering to pre-pandemic levels, but since early 2022 there has been evidence of a slowdown; the widespread price increases that are now coming into effect are translating into a slowdown in demand. Assuming that the pandemic subsides, global industry may continue to expand in 2022 but at a more moderate pace than in 2021. Recovery will be left to the service industries, which have so far suffered most from restrictions.

GDP growth and inflation

(percentage changes)

	GDP growth		Inflation ⁽¹⁾
	2021	2021 Q3 ⁽²⁾	2021 Q4 ⁽²⁾	2022 February
Advanced countries
Japan	1.6	-2.8	4.6	0.9
United Kingdom	7.5	3.8	5.2	6.2
United States	5.7	2.3	6.9	7.9
Emerging countries
Brazil	4.6	4.0	1.7	10.5
China	8.1	4.9	4.0	0.9
India	8.1	8.5	5.4	6.1
Russia		4.3		9.2

Source: National statistics.

⁽¹⁾ Consumer price index, year-on-year change.

⁽²⁾ For the advanced countries, quarterly percentage changes, annualized and seasonally adjusted; for the emerging countries, year-on-year percentage changes.

In the third quarter of 2021, GDP slowed down in both the major advanced and emerging economies, with the exception of the Eurozone. The fourth quarter of 2021, on the other hand, experienced growth in all major advanced economies, with the exception of the Eurozone.

During the summer months, in the US, the deceleration of consumption due to the spread of the Delta variant had a significant impact, and in the UK, the business cycle was affected not only by the pandemic situation, but also by the continuing shortage of goods and labour in transport- related sectors. In Japan, GDP decreased mainly due to restrictions in many parts of the country which were imposed to contain the epidemic.

Subsequently, consumption in the US increased, recovering after the slowdown following the deteriorating pandemic situation in the summer months. In Japan, too, the removal of restrictions on movement in many parts of the country in October buoyed household spending. In the first quarter of 2022, GDP was affected by both the spread of the Omicron variant and the Ukraine-Russia conflict.

Macroeconomic projections

(percentage changes and points)

	2021 ⁽¹⁾	Forecasts ⁽²⁾		Revisions ⁽³⁾
		2022	2023	2022	2023
GDP
Advanced countries
Euro area	5.3	3.2	2.3	-0.8	-0.2
Japan	1.6	2.3	1.8	-0.8	0.3
United Kingdom	7.5	3.9	1.6	-0.4	-0.6
United States	5.7	3.3	2.4	-0.6	-0.2
Emerging countries
Brazil	4.6	0.5	1.6	-0.1	-0.4
China	8.1	5.0	5.2	0.0	-0.1
India ⁽⁴⁾	8.1	7.6	6.2	-0.3	-0.1
Russia	...	-9.9	-0.2	-12.5	-2.4
World trade	10.7	3.4	-	-1.4	-

Sources: Consensus Economics, Consensus Forecasts, March 2022 for GDP; Bank of Italy calculations based on national accounts and customs data for world trade.

⁽¹⁾ National accounts data.

⁽²⁾ Percentage changes.

⁽³⁾ Percentage points. Revisions compared with Consensus Economics, Consensus Forecasts, January 2022 and, for world trade, compared with the Bank of Italy's Economic Bulletin, 1,2022.

⁽⁴⁾ Data refer to the fiscal year starting in April.

In 2021, overall trade grew by 10.7 %, four-tenths of a percentage point less than expected in the previous forecast. Initially, the projected growth for 2022 was 3.4 %, but with the issues relating to the pandemic and the conflict in Ukraine, this figure was adjusted downwards by a total of -1.4 %.

Global GDP growth worsened, which is mainly explained by higher commodity prices and partly by a fall in demand.

Euro-area GDP growth and inflation

(percentage changes)

	GDP growth		Inflation
	2021	2021 Q3 ⁽¹⁾	2021 Q4 ⁽¹⁾	2022 March ⁽²⁾
France	7.0	3.1	0.7	(5.1)
Germany	2.9	1.7	-0.3	(7.6)
Italy	6.6	2.5	0.6	(7.0)
Spain	5.0	2.6	2.2	(9.8)
Euro area	5.3	2.3	0.3	(7.5)

Sources: Based on national statistics and Eurostat data. The figures in brackets indicate preliminary estimates.

⁽¹⁾ Quarterly data adjusted for seasonal and calendar effects; percentage changes on previous period.

⁽²⁾ Year-on-year percentage changes in the harmonized index of consumer prices (HICP); preliminary estimates.

In the Eurozone, after a strong expansion in the first three quarters of 2021, with GDP increasing by 2.3 % in the third quarter compared to the previous period, economic activity slowed down in the fourth quarter, both due to the rise in infections after the summer and the increase in prices of raw materials and utilities, which hindered production and, consequently, consumption.

Inflation reached high levels mainly due to exceptional increases in energy components. Consumer price inflation rose to 7.5 % in March, reaching its highest value since the creation of the European Union, with more than half of this increase stemming from the energy component and also from higher food prices.

The economic trend in Italy

Gross Domestic Product

From the beginning of 2021, Italy's growth continued at a rapid pace until the third quarter of 2021, but in the fourth quarter GDP slowed down, affected by difficulties in the supply of raw materials, rising energy costs and the worsening pandemic. In the first quarter of 2022, GDP declined, reflecting rising energy costs and an uncertain economic outlook in connection with the conflict in Ukraine.

Household consumption started to pick up again in the spring thanks to the easing of the restrictions that had been in place for the most acute phases of the pandemic. Spending on services, transport and housing increased the most, thereby boosting the expansion of the tertiary sector.

Based on the latest estimates, GDP in the first quarter of 2022 decreased by just over half a percentage point compared to the previous quarter. The economic information available so far, both qualitative and quantitative, points to a slowdown in activity in both the manufacturing and service sectors. Business operations in these sectors have been hindered due to difficulties in the supply of raw materials and intermediate products, although less so than in other countries.

High-frequency indicators suggest a marked decrease in gas consumption because industrial activity in the first quarter of 2022 decreased by about 2 % compared to the previous period on account of the increased uncertainty of the period, rising energy prices, and tensions in international trade.

The Labour Market

The number of employed persons in the last quarter of 2021 increased as did the number of hours worked, although at a lower rate than in the two previous periods, and the unemployment rate decreased slightly. Growth in employment slowed in the first two months of 2022 and the recent price increases were not reflected in contractual wages, the increase of which remains modest.

New hires net of terminations in the last quarter of 2021 and the first two months of 2022 mainly concern permanent contracts. With the recovery in the demand for labour, both recruitments and departures increased, driven somewhat by resignations. The number of redundancies is gradually returning to pre-pandemic levels.

Part of the recovery in hours worked is explained by the decreased use of wage subsidies, which continued in the first two months of 2022; however, authorised hours in energy-intensive sectors are reported to have increased. The unemployment rate continues to fall.

Inflation

Inflation reached high levels in the first quarter of 2022, mainly due to increased energy costs. In addition, gas and oil prices are rising due to the conflict in Ukraine and, consequently, high rates of inflation can be expected in the course of the year.

The pronounced drop in the energy component, which is reflected in higher fuel and utility prices, is driving up inflation; food prices are also rising, especially for fresh produce.

Inflation has thus reached 7 %, continuing the upward trend that began in the second half of 2020.

In order to cope with increased energy costs, the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) has announced that in the second quarter of 2022 it will implement initiatives to reduce gas and electricity tariffs. Furthermore, the Italian government has already decreased excise duties to help bring down fuel prices.

Performance of the Italian chemical sector

Italy's chemical sector experienced a rapid recovery in 2021, albeit in a fluctuating manner. By and large, the sector had never fully stopped given that its activities are essential for the production of substances that are indispensable to countless industries.

Overall, there are two main factors characterising the atmosphere of uncertainty which will continue throughout 2022: on the one hand, the rush to procure supplies to ensure the continuation of production activities and, on the other hand, order postponements or cancellations, which cause problems in operational management. Demand is still satisfactory but with some signs of slowing down; the energy shock is exacerbating production costs and customer prices are therefore increasing to tackle both the difficulties in finding raw materials and rising costs. In addition, there are difficulties in the transport and logistics sector linked to the pandemic and the shortage of drivers on the market. In the course of 2022, tensions may ease but costs, both energy and non-energy, will remain volatile and subject to fluctuation, in part due to the war in Ukraine.

The chemical-related industries find themselves in a different situation: while the demand for hygiene and safety chemicals is higher than in the past, the construction sector is in difficulty as demand is high but supplies are dwindling. As a result, there is a risk of hold-ups at construction sites. There has been a slight recovery in the cosmetics and fashion sector, but rising infection rates could give cause for concern. One of the most badly affected chemical-related sectors remains the automotive industry, which has been hit by the shortage of microchips. This has made production activities difficult, thereby reducing purchases of production-related chemicals.

As for basic inorganic chemicals, the availability of sulphur on the Italian market in 2021 was limited, forcing sulphur consumers to turn to the international market.

The cost of sulphur, which had already seen increases in 2020 due to the pandemic, followed a similar trend in 2021. The biggest increase occurred in the first quarter of 2021 with the doubling of the raw material cost, but increases were constant throughout the year. The first few months of 2022 have not seen any significant improvement: refinery performance is difficult to predict, however, production is on average around 40 % of total capacity. The cost of the raw material is continuously increasing.

CHEMICALS DIVISION

General trend in 2021 and recent developments in the group

The 2021 sales volumes of the Esseco Group's Chemicals Division showed a slight increase compared to the 2020 volumes (+8 %). This increase is partly attributable to the general improvement in the economy and markets, which have shown a recovery after the pandemic year of 2020, and partly to the commissioning of the new Alkali Chlorine plant at the recently acquired site in Pieve Vergonte with Hydrochem.

In 2021, the acquisition made in 2019 was consolidated with the commissioning of the Hydrochem electrolysis plant, which was constructed between April 2019 and April 2021.

Geographically speaking, the greatest improvements in 2020 were in the regions that had been most severely affected by the pandemic last year, namely Europe (+9 %) and South America (+26 %).

Analysing the European market in more detail, volumes in the Chlor-Alkali segment continued to grow steadily and, following on from the +8 % recorded in the previous financial year, achieved another +3 % in 2021 as a result of the investments made in this area.

Volumes of sulphites are also increasing: after a sharp decrease in 2020 due to the pandemic, there has been a 6 % increase in volumes sold. The main increase in volumes was recorded in South America (+26 %) due to both the increased local production in Esseco do Brasil and the higher volumes shipped directly from Italy to these markets.

Ammonia derivatives, on the other hand, bucked the trend with a 10 % decrease in volumes sold in 2021. This decrease in volumes was driven by both market factors and the difficulties in obtaining raw materials, as ammonia production begins with natural gas. From the second half of 2021, the energy crisis also affected the cost and availability of ammonia.

Speaking of seasonal business, it should be noted that de-icers, intended for de-icing airport runways and, more generally, public roads, had a positive year compared to 2020, with more than double the volumes sold (+130 %), consequently translating into better margins. On the other hand, the start of 2022 was not so promising for this product as the very mild and dry first quarter did little to benefit this business.

Production plant performance

Moving on to a more detailed analysis of the performance of the production plants, it should be noted that in 2021 the Altair plant in Saline di Volterra continued to consolidate the important developments made over the past few years and to implement some bottling operations including for potassium carbonate and chloroparaffins.

As previously mentioned, the new Hydrochem electrolysis plant in Pieve Vergonte for the production of Caustic Soda and Caustic Potash was opened in 2021. An investment in photochlorination within the chloroaromatic division of this site was also made.

As for the Esseco plant in Trecate, in 2021 the new, recently commissioned equipment (for sodium hydrosulphite and ammonium bicarbonate) was fine-tuned, and necessary maintenance work such as the replacement of key components of the turbines for electricity production was also carried out on site.

With regard to the two new plants acquired at the end of 2019, Addcon Europe in Bitterfeld (Lower Saxony, Germany) and Porsgrunn (Oslo area, Norway), no significant interventions have yet been carried out; in 2021, the group simply continued to make the investments undertaken by the previous ownership in 2019 and also carried out interventions aimed at making improvements, particularly in terms of safety. Esseco Group's first major investment in the Addcon Group will be made in 2022 with the installation of a solids production line.

In the course of the 2021 financial year, there were no special works carried out at Esseco do Brasil's plants, however at Esseco UK, the new Ammonium Carbonate plant, which is currently in the start-up phase, was constructed.

RAW MATERIALS TREND

SULPHUR

The cost of sulphur is rising sharply and steadily in line with the global trend of increasing raw material costs, especially those relating to the oil world.

SODIUM HYDROXIDE

Since the beginning of 2021, the market price of caustic soda has steadily been increasing, reaching its highest level in the last decade at the beginning of 2022. The increase in the production cost of sodium hydroxide was predominantly driven by higher production energy costs.

SODIUM CARBONATE

The cost of this product in 2021 followed the previous pattern. It increased at the beginning of 2022, although nowhere near to the same extent as the % increases recorded for other commodities. It should be noted, however, that from the end of 2021 onwards, suppliers of this product started to apply energy surcharges to final prices.

POTASSIUM CHLORIDE

In 2021, the price of this product stayed the same as in the second half of 2020. The increase in the cost of this salt in 2022 is mainly due to economic sanctions on Russia and Belarus (producers of 30 % of the global market).

AMMONIA

The energy crisis coupled with the war in Ukraine has driven the price of this raw material to unprecedentedly high values.

OENOLOGY DIVISION

General trend in 2021

Global wine production in 2021, excluding juices and musts, is estimated at 260 million hL (OIV data), down slightly on the previous year. Estimates for 2021 show a definable below-average production volume for the second year in a row; however, in the light of the current circumstances in which geopolitical tensions, climate change and the Covid-19 pandemic are generating a degree of volatility and uncertainty in the global wine market, this decrease should not necessarily be seen as bad news for the sector.

This result was the consequence of two unfavourable factors: in the European Union, spring frosts jeopardised the 2021 harvest, which was already one of the worst seen in recent years. This year's production volume is estimated at 154 million hL, excluding juices and musts, 8 % less than in 2020, the result of a situation that hit France (37.6 million hL) and Spain (35.3 million hL) particularly hard.

Italy maintained production levels at around 50 million hL.

Together with the other EU countries, these three nations account for 59 % of the world's wine production.

In non-EU Europe, the leading wine producers for 2021 were Russia (4.5 million hL), Georgia (2.1 million hL) and Moldova (1.2 million hL).

In the US, the preliminary estimate for wine production is stable at around 24 million hL. However, in China, wine production is continuing to decline, as it has been since 2016, due to structural reasons. In the southern hemisphere, on the other hand, there has been a strong increase in wine production among the main producing countries, with a few exceptions.

Australia and Chile show a strong increase in the volume of wine produced: +30 % compared to 2020. Argentina increased by 16 % with a volume of about 12.5 million hL and New Zealand stood at 2.7 million hL. it is worth bearing in mind that the Covid-19 pandemic spread during harvest season, although this does not seem to have affected production volumes much.

In South Africa, where drought has had a significant impact on harvests in recent years, wine production for 2021 is estimated at 10.6 million hL.

0IV: Wine production in 2021 in the main countries

Consumption and outlook

We are living at a time when there are many obstacles to sustaining the wine market from a consumption point of view: the Covid emergency, the war on customs duties between the US and Asia and between the US and the EU, and the handling of Brexit.

Despite this, there was a slight increase in consumption of around 1 % in 2021, a trend that had started to reverse in 2018.

In reality, the drop in consumption is localised in China, which suffered a loss of about 2 million hL, while the rest of the world shows an upward trend.

In fact, just 5 countries consume more than half of the world's wine: USA (14 %), France (11 %), Italy (10 %), Germany (8 %) and the UK (6 %).

Then there are areas where wine consumption is very low (Asia and Africa) for both economic and cultural reasons, which the industry is now targeting with 'alcohol free' products.

The volume and value of exported wine also increased: at over 111 million hL, wine exports increased by 4 % in volume and over 16 % in value.

The concept of 'premiumisation', i.e. an improvement in the quality of consumption, in this case also accompanied by an increase in quantity, is becoming more common.

This is where the main producing countries come into their own, albeit with reversed roles: Spain the largest exporter by volume (23 million hL) and France by value (€11bn). Italy remains in the middle (22 million hL and €7bn).

In the USA, on the other hand, special attention will be given to the 'ready-to-drink' phenomenon which concerns all alcoholic beverages, including wine, where new packaging formats that are more practical and ' smart', such as cans for example, are already growing in popularity among young people. This could encourage imports of bulk wines to be 'bottled' locally with a view to cutting costs and emissions at a time when the issue of environmental sustainability is increasingly important in every sector. At the global level, e-commerce, which saw a sharp increase during the lock-down months, will grow strongly and will also gain further ground in the wine market, especially in China, where 30 % of wine and spirit purchases are already made online.

The phenomenon of aggregation is continuing in Europe, including in Italy: increasing numbers of wineries are being purchased by Funds, with the aim of creating wine production centres of a size comparable to those already existing in the 'New World'.

2022 saw the return of trade fairs and in-person events, which should further boost international trade.

In the meantime, the Russian-Ukrainian conflict and the global raw materials shortage is making it difficult for wineries in their day-to-day operations, although future prospects look positive.

Esseco Group's strategy in the Oenology Division

The year 2021 ended with a very positive result that was well above budget which, although growing, was necessarily cautious due to the highly uncertain situation at the end of 2020 caused by the COVID pandemic. When compared with 2019, the last pre-pandemic year, the 2021 result is in line with the continuous growth trend of the last few years, an extremely positive result considering the still unfavourable general market situation.

A decisive factor for the profitability result is the continuing high % margin of sales, thanks to the ongoing development of innovative solutions.

A further positive indication of the strength of our brands in the market lies in the fact that the average credit collection time and the low level of insolvencies have been sustained, a result not to be taken for granted given the general context.

The response of the market and the entire Esseco Group's oenology division was therefore very positive in 2021, a year that was still fraught with uncertainty.

The main drivers of growth, even in difficult years like 2020 and 2021, are proximity to the market; a marketing strategy based on innovation and application development for targeted solutions; and the development of service proposals based on equipment that optimises the use of oenological products and maximises their effectiveness, an activity already present in past years but now extended to more markets.

The scope of human resources remained largely unchanged, with efforts focussed more on enhancing existing assets than on finding and hiring new resources. The commitment and dedication of everyone in the oenology division continues to be a key factor contributing to its success.

Consolidation and growth are continuing everywhere, but particularly in markets where direct distribution structures are present, which has made it possible to cope more effectively with the difficulties posed by the pandemic. Traditional European markets such as Italy, France and Spain remain strategic not only because of the size of the business and our historical presence, but also because they allow us to bring our innovative proposals to the market quickly thanks to our widespread presence and their receptivity. Proof of this is the excellent sales result despite poor vintages, particularly in France.

Among the non-European markets, our business in the USA is continuing to grow and the US is now our biggest market after the three traditional ones mentioned above. Through subsidiaries in the USA, but also through local distributors, we have started to sell large volumes in Canada, a country where few grapes are produced but a lot of wine is made or imported, a market that has become attractive to our business.

Positive results were achieved in South America, despite the continuing difficult economic and financial situation in Argentina, Australia and New Zealand, countries where expansion difficulties persist, although these are being gradually resolved.

Oenological products are confirmed as the core business of the oenology division, accounting for more than 90 % of its total sales. The largest contribution to total sales in 2021 is from products used to stabilise wine at the various stages of the production process, especially in the final prebottling stage; in second place are clarification and ageing products, which show great synergy with stabilisation products.

In terms of R&D, all brands developed new products, based on yeast derivatives in particular thanks to their versatility, as well as new products in the tannin range, which have a wide potential use.

Italiana Biotecnologie S.r.l., the group company dedicated to the development of biotechnology for the group's brands, played a key role in the research and development of these new products, particularly those containing yeast derivatives, thereby validating the strategic choice of having a dedicated structure with specific skills in this area.

GROUP RESULTS

With reference to the Consolidated Financial Statements as at 31 December 2021, the Group's main economic, equity and financial highlights for the last two years are presented below:

Summary of economic information

PROFIT & LOSS	31.12.2021		31.12.2020
	EUR/°°°	%	EUR/°°°	%
TOTAL REVENUE	542,332	100 %	442,956	100 %
GROSS MARGIN	234,329	43 %	199,455	45 %
TOTAL EXPENSES	(146,564)	(27 %)	(133,688)	(30 %)
EBITDA	91,532	17 %	71,460	16 %
EAT	36,743	7 %	26,765	6 %

The Group's income statement for the financial year 2021 closed with a value of production of goods and services of €542,332 thousand, distributed among the Group's various business sectors, an increase of 22.4 % compared to the year 2020 which was attributable to both divisions.

The gross contribution margin increased by almost 18 % compared to the year 2020, accounting for 43 % of total sales. This increase was partially absorbed by the generalised increase in structural expenses, in particular for increased maintenance at the Trecate and Saline di Volterra production sites (+17 %) and communication and marketing expenses (+14 %) for the resumption of travelling after a 2020 characterised by the Covid-19 pandemic, leading to a total EBITDA of €91,532 thousand (+28 %).

The net result increased significantly (+37 %) to €36,743 thousand with a ROS of 7 %.

Summary of Balance Sheet Data

The following table presents the Group's financial statements in a condensed and reclassified form, showing the structure of invested capital and financing sources.

BALANCE SHEET	31.12.2021		31.12.2020
	EUR/°°°	%	EUR/°°°	%
TOTAL WORKING CAPITAL	161,283	37 %	112,979	27 %
NET ASSETS	276.433	63 %	305.537	73 %
NET INVESTED CAPITAL	437.716	100 %	418.516	100 %
NET FINANCIAL POSITION	(76,647)	(18 %)	(79,812)	(19 %)
EQUITY	(361,069)	(82 %)	(338,703)	(81 %)

Working capital amounted to €161,283 thousand, an increase of €48,304 thousand compared to 2020, mainly due to the increase in trade receivables and inventories. Investments net of the amortisation fund and including revaluation amounted to a total of €276,433 thousand, attributable to production investments of €234,027 thousand; intangible investments of €54,282 thousand; equity investments of €1,392 thousand; non-current receivables from third parties of €481 thousand; and the remainder from the fund for deferred taxes of €13,749 thousand. The decrease in net investments, compared to 31 December 2020, of €29,104 thousand reflects the effect of the decision to revoke, for tax purposes, the revaluation of trademarks made in 2020 by the subsidiary S.r.l., maintaining the revaluation for statutory purposes only. In the course of the financial year, the Group continued with its industrial plan by allocating more than €33 thousand to production facilities predominantly in the industrial sites of Pieve Vergonte, Saline di Volterra, San Cipriano, Trecate and Porsgrunn.

With regard to sources of financing, the change in net financial debt (calculated as long-term and short-term financial debts net of bank and cash balances) shows a decrease of €3,165 thousand from €79,812 in the financial year 2020 to €76,647 at the end of 2021.

The Group's equity amounted to €361,069 thousand (€338,703 thousand as at 31 December 2020) and is calculated as the sum of the Group's shareholders' equity of €338,725 thousand, minority interest of €9,948 thousand, and the cash pooling debt to the parent company San Martino S.p.A. of €12,396 thousand.

Summary of financial data

Final net financial debt decreased from €79,812 thousand in 2020 to €76,647 thousand in 2021, a change of €3,165 mainly due to: (i) operations that generated a cash inflow of €49,640 thousand (determined by an EBITDA of €91,532 thousand and the change in net working capital of €41,892 thousand); (ii) industrial investment activities that absorbed €30,872 thousand; (iii) the change in shareholders' equity for a total of €12,420 thousand, which included the cash pooling debt for a balance of €12,396 thousand and the dividend distributed for €10 thousand, both to the parent company San Martino S.p.A. The remaining amount relates to financial income and expenses, and taxes of €1,653 thousand.

CASH FLOW	31.12.2021	31.12.2020
	EUR/°°°	EUR/°°°
NET FINANCIAL POSITION AT THE BEGINNING	(79,812)	(66,290)
EBITDA	91,532	71,460
Variation TWC & Other Provision	(41,892)	6,033
TOTAL CASH IN	49,640	77,493
Capex	(30,872)	(74,189)
Interest & Extraordinary	(1,530)	(2,952)
Equity	(12,420)	(8,931)
Tax	(1,653)	(4,943)
TOTAL CASH OUT	(46,475)	(91,015)
VARIATION NET FINANCIAL POSITION	3,165	(13,522)
NET FINANCIAL POSITION AT THE END	(76,647)	(79,812)

INFORMATION RELATING TO THE ENVIRONMENT AND PERSONNEL

In view of the social role of the companies belonging to the Group, as also highlighted in the 'Management Report Document of the National Council of Chartered Accountants and Accounting Experts', it is deemed appropriate to provide the following information concerning personnel and the environment.

Personnel

No fatal accidents occurred during the financial year. In addition, no occupational illnesses of employees or former employees nor mobbing cases for Group companies were reported during the financial year.

Finally, it should be noted that during the financial year, both the investment plan for activities related to plant safety and the health of staff members, and projects for reducing environmental impact were continued. In addition, training courses on Health, Safety and the Environment were provided within the Group for a total of 12,731 hours.

Environment

During the financial year, no damage was caused to the environment as a result of which companies belonging to the Esseco Group were declared definitively liable, i.e., no definitive sanctions or penalties were imposed on any company for environmental crimes or damage.

Investments

Investments in property, plant and equipment in the financial year 2021 in the amount of €33 thousand were mainly attributable to investments in the chemical division made by the Group. These consisted of investments to increase the level of automation and safety at the various industrial sites, and to build new production facilities for new products as well as dedicated storage facilities. They were mainly contributed by the subsidiaries Hydrochem S.r.l. (€9,034 thousand), Altair Chimica S.p.A. (€6,082 thousand), Esseco S.r.l. (€3,709 thousand), Esseco UK L.t.d. (€2,561 thousand), Addcon Nordic A.s. (€2,047 thousand) and Zolfindustria S.r.l. (€1,479 thousand).

Oenological investments were predominantly made by Enartis Sepsa S.a.u., Esseco S.r.l., Sofralab and its subsidiaries, and Ever S.r.l..

RESEARCH AND DEVELOPMENT

Research and development activities during the 2021 financial year involved all of our business areas.

During the 2021 financial year, Esseco S.r.l. continued its research and development activities and focused its efforts, in particular, on the analysis, research, study, development and experimentation of projects that we consider innovative in the industrial and oenological fields at the Trecate (NO) production site. In September 2018, the company launched a special project related to 'product' research and development activities, which was supported by the Ministry of Economic Development 'MISE' through the "Sustainable Growth Fund and Revolving Fund for Business Support and Research Investment - Sustainable Industry Call FRI DM 18 10 2017" for which the company received, upon conclusion of the reporting process and verification of the first progress report, a €1,140,429 grant for the current financial year.

Ever S.r.l., in the oenology division, also continued with its research and development activities and focused its efforts on projects that the group considers particularly innovative. The projects were developed at the plant in Pramaggiore (VE) and the company incurred eligible costs amounting to €221 thousand on which it intends to access the benefits provided by the Tax Credit for research, development, technological innovation, design and aesthetic conception activities pursuant to Article 1, paragraphs 198 - 209 of Law No. 160 of 27 December 2019.

In 2018, Altair Chimica S.p.A. completed the R&D project called GREEN Impact CAPACITY, awarded with regional funding POR FRSR 2014-2020 - Strategic Research and Development Projects, DD 3389 30/7/2014, which covered all the Company's production sectors and enabled it to achieve qualitative excellence in almost all of its inputs. At the end of 2020, it completed a further R&D project - called 'Green Field Peas'. This new process involved, and still involves, new energy optimisation initiatives including the recovery of CO ₂ and H ₂ , to improve industrial costs and decrease the company's overall environmental impact. As part of the Green Field Peas project, the company built the new energy self-generation plant, which was put into operation in November 2020. As part of the aforementioned projects, R&D projects typically of the Smart Factory type were also implemented. The company is automating and robotising as much as possible in its production cycles; with regard to this automation, in 2020, the SODA 4.0 variant, presented in November 2018, was completed as part of the Green Field Peas project. The design variant, approved in 2019, has enabled the company to equip itself with a highly integrated and automatic management and decision-making system, which prevents human errors in non-routine manoeuvres. This has helped improve the overall performance of any of the plant's continuous production cycles, in terms of energy consumption, safety at work, and processing yield, through the full automation of many of the current daily manual operations. In 2021, a commitment was made to the Enterprise project, which stands for Enhanced Technological R&D of new Products and Processes for Innovation, Smart Factory and green Economy.

FINANCIAL SITUATION OF ESSECO GROUP S.R.L.

Esseco Group S.r.l. acts as the holding company of the Esseco Group and holds all the companies in the group. All the shares of Esseco Group S.r.l. are held by San Martino S.p.A.. Esseco Group S.r.l. has its registered office in Trecate (NO) and has no branch offices.

The tables presented and discussed below have been prepared on the basis of the financial statements for the year ended 31 December 2021.

Summary of economic information

PROFIT & LOSS	31.12.2021	31.12.2020
	EUR/°°°	EUR/°°°
TOTAL REVENUE	4	286
GROSS MARGIN	(0)	0
TOTAL EXPENSES	(4,130)	(2,989)
EBITDA	(4,086)	(2,751)
FINANCIAL CHARGES / INCOMES	17,020	28,434
EAT	13,333	25,781

Sales refer to services rendered to subsidiaries. The change in EBITDA, negative by €4,086 thousand, is mainly attributable to the transfer of personnel from the subsidiary Esseco S.r.l., in the amount of €1,141 thousand.

The financial management result was positive by €17,020 thousand as a result of financial income from equity investments. The 2021 financial year closed with a net profit of €13,333 thousand (€25,781 thousand in 2020).

Summary of Balance Sheet Data

BALANCE SHEET	31.12.2021	31.12.2020
	EUR/°°°	EUR/°°°
TOTAL WORKING CAPITAL	(224)	(5,227)
NET ASSETS	225,574	200,326
NET INVESTED CAPITAL	225,350	195,100
NET FINANCIAL POSITION	(64,661)	(55,164)
TOTAL EQUITY	(160,690)	(139,936)

The Company's net financial debt as at 31 December 2021 (calculated as long-term and short-term financial payables net of cash and bank balances) amounted to €64,661 thousand and increased by €9,497 thousand, mainly due to the increase in bank payables of €1,259 thousand and cash payables of €8,238 thousand.

Shareholders' equity amounted to €160,690 thousand (€139,936 thousand as at 31 December 2020) and was calculated as the sum of the company's shareholders' equity in the amount of €116,109 thousand, and the cash pooling debt to subsidiaries and the parent company San Martino S.p.A. in the amount of €44,581 thousand.

RELATIONS WITH PARENT COMPANIES, SUBSIDIARIES, ASSOCIATES AND RELATED PARTIES

It should be noted that the Group is controlled and coordinated by San Martino S.p.A., pursuant to Article 2497 et seq. of the Italian Civil Code pursuant to Article 2497 bis of the Italian Civil Code. The Notes to the Financial Statements contain the essential data referring to the last approved financial statements of San Martino S.p.A., which exercises management and control over it.

Commercial and other transactions

All operations and transactions with the companies mentioned below are carried out under normal market conditions. Transactions with Group companies mainly relate to management services and insurance costs managed at the parent company level in order to optimise these services. The receivable from the parent company San Martino S.p.A. of €615 thousand refers to the compensation for tax losses for IRES (corporate income tax) purposes for the financial years 2020 and 2021, as a consequence of the consolidation agreements pursuant to Article 118, paragraph 2 of the Italian Consolidated Income Tax Act.

Commercial and other transaction	Costs	Revenues	Payables	Receivables
San Martino SpA	24	-	1	615
Total vs Parent	24	-	1	615
Esseco Srl	196	257	82	-
Essemar Spa	-	3	-	-
Zolfindustria Srl	-	67	-	-
Albite Srl	-	75	-	-
Altair Chimica Spa	-	4	-	1
Esseco UK Ltd	-	68	-	70
Sofralab Sas	-	75	-	28
Hydrochem Italia Srl	-	19	-	-
Total vs Subsidiaries	196	569	82	98
Dual Srl	79	-	22	-
Total vs Other related parties	79	-	22	-

Financial transaction	Charges	Incomes	Dividends Received
San Martino SpA	6	-	-
Total vs Parent	6	-	-
Esseco Srl	7	-	-
Essemar Spa	13	-	3,435
Zolfindustria Srl	-	5	-
Oenofrance Italia Srl	1	-	-
Italiana Biotecnologie Srl	-	2	-
Albite Srl	-	2	-
Esseco do Brasil Ltda	-	109	-
Ever Srl	1	-	3,400
Altair Chimica Spa	-	5	-
Enologica Friulana Srl	-	1	-
Ever Trade Sro	-	-	-
Esseco UK Ltd	-	45	1,621
Enartis Sepsa Sa	-	10	5,500
Sofralab Sas	-	27	2,503
Esseco France Sas	-	-	-
Petite Suisse Sarl	-	8	-
Enartis Portugal Lda	-	1	200
Esseco Chemicals de Mexico SA DE C.V.	-	4	-
Bluagri Srl	-	7	-
Altair Chimica Iberica SI	-	-	-
Enartis Central Europe Sro	-	2	-
Enartis Pacific Pty Ltd	-	6	-
Enartis South Africa Pty Ltd	-	10	-
Enartis Chile Ltda	-	-	-
Hydrochem Italia Srl	-	881	-
Addcon Gmbh	1	458	-
Addcon Europe Gmbh	-	2	-
Ever France Sau	-	-	-
Total vs Subsidiaries	22	1,125	16,658
Enocompany Srl	-	4	-
Total vs Associates	-	4	-
Setras Srl	-	-	299
Total vs Other companies	-	-	299

Financial transaction	Dividends Paid	Payables	Receivables
San Martino SpA	10,000	12,396	-
Total vs Parent	10,000	12,396	-
Esseco Srl	-	28,847	-
Essemar Spa	-	-	-
Zolfindustria Srl	-	-	2,385
Oenofrance Italia Srl	-	-	1,520
Italiana Biotecnologie Srl	-	-	465
Albite Srl	-	-	369
Esseco do Brasil Ltda	-	-	3,782
Ever Srl	-	573	-
Altair Chimica Spa	-	-	4,678
Enologica Friulana Srl	-	-	323
Ever Trade Sro	-	128	-
Esseco UK Ltd	-	-	1,785
Enartis Sepsa Sa	-	-	3,625
Sofralab Sas	-	-	11,133
Esseco France Sas	-	23	-
Petite Suisse Sarl	-	-	485
Enartis Portugal Lda	-	-	-
Esseco Chemicals de Mexico SA DE C.V.	-	-	188
Bluagri Srl	-	-	1,470
Altair Chimica Iberica SI	-	716	-
Enartis Central Europe Sro	-	-	266
Enartis Pacific Pty Ltd	-	-	302
Enartis South Africa Pty Ltd	-	-	402
Enartis Chile Ltda	-	-	-
Hydrochem Italia Srl	-	-	54,352
Addcon Gmbh	-	-	15,962
Addcon Europe Gmbh	-	-	837
Ever France Sau	-	-	192
Total vs Subsidiaries	-	30,288	87,530
Enocompany Srl	-	-	161
Total vs Associates	-	-	161
Setras Srl	-	-	-
Total vs Other companies	-	-	-

Esseco Group S.r.l. has entered into agreements with a number of companies:

―	a long-term interest-bearing financial contract;
―	an interest-bearing centralised cash pooling contract in zero balance mode. These contracts have a one-year duration with tacit renewal between the parties and allow both Esseco Group S.r.l. and its subsidiaries to optimise the management of cash flows and related financial charges.

INFORMATION PURSUANT TO ARTICLE 2428, Paragraph 2, point 6-bis OF THE ITALIAN CIVIL CODE

Pursuant to Article 2428, paragraph 2, point 6-bis of the Italian Civil Code, information is provided below on the use of financial instruments insofar as they are relevant for the purpose of evaluating the equity and financial situation. It should also be noted that all financial instruments used by the group are disclosed in a separate section of the notes to the financial statements.

GROUP POLICIES ON THE MANAGEMENT OF FINANCIAL AND OTHER RISKS

Foreign exchange rate risk

Exposure to the risk of exchange rate fluctuations arises from the company's operations in currencies other than the Euro (in particular, the US dollar and British Pound Sterling) and from the time lag between the recognition, on an accrual basis, of revenues and costs denominated in currencies other than the balance sheet currency and their financial realisation (transaction foreign exchange rate risk). In general, the Group is exposed to foreign exchange rate risk in those countries subject to strong currency fluctuations and where the Group has its own structure, particularly in Argentina, Brazil, South Africa and Chile.

Interest Rate Risk

The interest rate risk to which the Group is exposed mainly arises from medium- and long-term financial debts, indexed to a variable market rate (Euribor), with the resulting risk of fluctuations in cash flows and related financial expenses. Therefore, as rates rise, both the company's results and cash flows worsen (and vice versa). The Group hedges this risk, where it considers it appropriate, by means of derivative instruments.

Commodities Risk

The Group's results are heavily influenced by changes in the prices of raw materials, in particular sodium carbonate, sulphur, potassium chloride and the commodities of natural gas and electricity. With regard to natural gas and electricity, portfolio management was undertaken, which consists of interim hedging, based on the values of the relative (Italian and European) stock exchanges. To make the best of the major new development in the energy markets, a fixing strategy was adopted. Adopting this strategy paid off in 2019 and 2020. The lows reached in those periods helped us to make very low price fixings for the year 2021, the year in which prices escalated, meaning that we were able to benefit from the fixings made before the escalation: since mid- 2021, a parallel policy to increase the Green energy portfolio has also begun, which should also balance out the effects of changes in electricity market prices from the end of 2022.

Credit risk

Credit risk is inherent in the normal course of business operations and is monitored by a dedicated company department.

As at 31 December 2021, the provision for impairment losses amounted to €4,255 thousand, or 2.9 % of the total amount of trade receivables. Credit insurance has been in place since 2017 to partially cover the receivables of the industrial products division (both domestic and foreign).

Liquidity risk

Liquidity risk is the risk that available financial resources may be insufficient to cover maturing obligations. The Group finances its activities by generating cash flow, diversifying financing sources and by providing committed and uncommitted credit lines. There are no significant liquidity concentration risks in the group, either in terms of financial assets or sources of financing.

Country risk

The breakdown of the Group's revenues is as follows: Italy 28 %, other European countries 48 %, and 'rest of the world' 24 %.

With regard to revenues realised in the 'rest of the world', it must be specified that the corresponding sales, distributed among some 70 countries, also include countries that may be experiencing political, economic or monetary instability. When dealing with such countries, the company, in order to prevent possible future non-performing loans, undertakes sales mainly by means of letters of credit, advance payments or other means of guarantee to safeguard the successful completion of transactions.

The company has no significant direct or indirect investments in areas experiencing political or institutional instability. The major event to be reported, relating to the first months of 2022, is the ongoing conflict which began following Russia's invasion of Ukraine in February 2022. The Esseco Group is not directly active in either of these two countries. Nonetheless, the situation is becoming increasingly critical with regard to the supply of potassium chloride from Belarus, a country with which the subsidiary Altair Chimica S.p.A. has a long-term contract, as a result of sanctions imposed by Europe. On top of this difficulty are the sanctions imposed on the Russian producer Uralkali which were adopted after the outbreak of the Russia-Ukraine war.

Hyperinflated economy

Accounting standards require the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy to restate its operating results and financial position to account for the effects of inflation. This approach is necessary because money can lose purchasing power so quickly that comparing values for transactions and other events that occurred at different times, even in the same financial year, can be misleading.

The need to restate the values in the financial statement, in accordance with National Accounting Standards, must be taken into account. Situations indicative of hyperinflation include the following:

a)	the community prefers to invest its wealth in non-monetary assets or in a relatively stable foreign currency. The local currency held is invested immediately to maintain purchasing power;
b)	the community considers monetary values not so much against the local currency, but against a relatively stable foreign currency. Prices may be expressed in that currency;
c)	sales and purchases on credit take place at prices that compensate for expected losses in purchasing power during the credit period, even if the said period is short;
d)	interest rates, wages and prices are linked to a price index;
e)	the cumulative inflation rate over a three-year period approaches, or exceeds, 100 %.

The Esseco Group fell into category e) with its subsidiary Enartis Argentina. The latter's balance sheet was restated by applying a general price index of the country in whose currency it is drawn up, before it was included in the consolidated financial statements of the parent company.

ANNUAL FINANCIAL REPORT AS AT 31/12/2021

BALANCE SHEET

ASSET

	31.12.2021	31.12.2020
A Subscribed capital unpaid, with an indication of the part which has been called by company	-	-
B Fixed assets (with a separate indication of assets in leasing)
I Intangible assets:
1 Formation and expansion expenses	-	-
2 Capitalise development and expenses	566	691
3 Industrial patents and rights to use patents of others	498	327
4 Concessions, licences, trademarks, and similar rights	35,593	37,715
5 Goodwill	17,410	23,016
6 Intangible assets in progress and payments on account	12	-
7 Other	203	204
Total intangible assets	54,282	61,953
II Property and Equipment
1 Land and buildings	64,867	62,827
2 Plants and machinery	134,955	115,052
3 Other fixtures and fittings, tools and equipment	13,862	13,709
4 Other	4,378	4,589
5 Tangible assets in progress and payments on account	15,965	46,946
Total property and equipment	234,027	243,123
III Investments (with the separate indication, for each item, of the amounts realizable within the following financial year)
1 Equity investments in:	1,392	1,604
a) Subsidiary companies	233	215
b) Associated companies	286	560
c) Parent companies	-	-
d) Associates controlled by the parent companies	-	-
d-bis) Other companies	873	829
2 Loans:	467	3,290
a) Subsidiary companies	-	-
b) Associated companies	333	214
- within 12 months	173	54
- due beyond 12 months	160	160
c) Parent companies	-	-
d) Associates controlled by the parent companies	-	-
d-bis) Other companies	134	3,076
- within 12 months	-	3,000
- due beyond 12 months	134	76
3 Other investments	-	74
4 Derivatives	14	-
Total investments	1,873	4,968
Total fixed assets	290,182	310,044
C Current assets
I Inventories:
1 Raw materials and consumables	54,874	36,666
2 Work in progress and components	1,053	948
3 Semifinished products and contracts in progress	-	-
4 Finished goods and goods for resale	57,651	59,885
5 Payments on account	573	-
Total inventories	114,151	97,499
II Receivables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Trade receivables	142,904	103,033
- due within 12 months	142,777	102,808
- due beyond 12 months	127	225
2 Amounts owed by subsidiary companies	-	-
3 Amounts owed by associated companies	9	38
- due within 12 months	9	38
4 Amounts owed by parent companies	4,694	3,919
- due within 12 months	4,694	3,919
5 Amounts owed by associates controlled by parent companies	15	9
- within 12 months	15	9
5-bis Tax receivables	25,488	23,997
- due within 12 months	23,376	22,050
- due beyond 12 months	2,112	1,947
5-ter Deferred tax assets	11,838	7,380
- due within 12 months	4,598	5,883
- due beyond 12 months	7,240	1,497
5-quater Other debtors	2,174	1,603
- due within 12 months	1,960	1,353
- due beyond 12 months	214	250
Total receivables	187,122	139,981
III Non-permanent investments
1 Equity investments in subsidiary companies	-	-
2 Equity investments in associated companies	-	-
3 Equity investments in parent companies	-	-
3-bis Equity investments in associates controlled by the parent companies	-	-
4 Equity investments in other companies	-	-
5 Derivatives	5,216	233
6 Other investments	73	74
7 Financial Assets for cash pooling management	-	-
Total non-permanent investments	5,289	307
IV Cash and equivalents
1 Banks and postal current accounts	42,077	51,112
2 Bank cheques	877	983
3 Cash	427	1,010
Total cash	43,381	53,105
Total current assets	349,943	290,892
D Prepayments and accrued income	3,367	2,925
TOTAL ASSETS	643,492	603,861

LIABILITIES

	31.12.2021	31.12.2020
A Capital and reserves
I Subscribed capital	10,000	10,000
II Share premium account	-	-
III Revaluation reserves	62,900	69,318
IV Legal reserves	2,000	2,000
V Reserves provided for bv the article of association (statutory reserve)	-	-
VI Other reserves, with separate indication	100,246	82,426
Consolidation reserve	6,457	6,457
Other reserves	93,789	75,969
VII Reserves for hedge accounting	3,679	(702)
VIII Profit (loss) brought	124,493	124,651
IX Profit / (loss) for the financial period	35,408	25,460
X Treasury stock reserves	-	-
Group Equity	338,726	313,153
Minority interest	9,948	12,883
Total Equity	348,674	326,036
B Provisions
1 Provisions for pensions and similar obligations	2,820	2,648
2 Provisions for taxation (yet deferred)	13,749	4,507
3 Derivatives	122	704
4 Other provisions	2,088	2,171
Total	18,779	10,030
C Employee severance indemnity	5,966	6,314
D Loans and payables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Debenture loans and bonds	-	-
2 Convertible debenture loans	-	-
3 Amounts owed to shareholders for financing	-	-
4 Amounts owed to banks	119,641	132,421
- due within 12 months	53,444	42,051
-due beyond 12 months	66,197	90.370
5 Amounts owed to other financers	10,388	10,496
- due within 12 months	69	181
- due beyond 12 months	10,319	10,315
6 Advances received	113	26
- due within 12 months	113	26
7 Trade payable	92,429	75,475
- due within 12 months	92,429	75,475
8 Debts represented by bills of exchange	-	-
9 Amounts owed to subsidiary companies	-	-
10 Amounts owed to associated companies	183	81
11 Amounts owed to parent companies	12,421	12,869
- due within 12 months	12,421	12,869
11-bis Amounts owed to associates controlled by the parent companies	-	6
12 Tax payables	15,497	13,606
- due within 12 months	15,279	13,593
-due beyond 12 months	218	12
13 Amounts owed to social security institutions	3,521	3,585
- due within 12 months	3,521	3,585
14 Others	11,664	10,441
- due within 12 months	11,664	10,441
Total	265,857	259,006
E Accruals and deferred income	4,216	2,475
TOTAL LIABILITIES	643,492	603,861

PROFIT AND LOSS

	31.12.2021	31.12.2020
A Revenue
1 Net revenue from goods and services	542,332	442,956
2 Variation in stocks of finished goods and in work in progress	(972)	(5,535)
3 Variation in contracts in progress	-	-
4 Work performed for own purposes and capitalised	829	962
5 Other revenues and income	11,059	10,748
- grants received pertaining to the current year	1,086	1,729
Total value of production	553,248	449,131
B Cost of production
6 For raw materials, consumables and goods for resale	255,225	189,586
7 For services	124,355	101,552
8 Rental and leasing charges	8,784	8,213
9 Personnel costs:	81,125	74,751
a) wages and salaries	61,507	57,190
b) social security costs	16,013	14,853
c) provisions for severance indemnity	2,300	2,041
d) pension costs	139	126
e) other costs relating to staff	1,166	541
10 Value adjustments:	52,380	35,357
a) amortisation of intangible assets	8,914	4,392
b) depreciation of tangible assets	42,941	30,025
c) reduction in value of fixed assets	0	198
d) allowance for doubtful debtors	525	742
11 Variations in stocks of raw materials, consumables and goods for sale	(16,141)	(5,808)
12 Amounts provided for risk provisions	702	528
13 Other accruals	-	406
14 Other operating costs	7,618	8,493
Total cost of production	514,048	413,078
Difference between value and cost of production (A-B)	39,200	36,053
C Financial income and charges
15 Income from equity investments (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	300	-
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	-	-
- by associates companies controlled by parent companies	-	-
- by other companies	300	-
16 Other financial income:	290	117
a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	20	19
b) from other permanent investments different from equity investments	-	-
c) from other investments that are not permanent	-	-
d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	270	98
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	-	-
- by associates companies controlled by parent companies	-	-
- by other companies	270	98
17 Interest payable and similar charges	1,515	1,694
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	6	4
-by associates companies controlled by parent companies	-	-
- by other companies	1,509	1,690
17-bis Profit/(loss) for exchange rate	113	(3,045)
Total financial result (15+16-17+/-17 bis)	(812)	(4,622)
D Adjustment for investements and financial liabilities
18 Revaluation:	49	342
a) of equity investments	49	106
b) of other permanent investment which are not equity investments	-	-
c) of trading assets different from equity investments	-	-
d) of derivatives	-	236
19 Devaluation:	41	65
a) of equity investments	41	58
b) of other permanent investment which are not equity investments	-	7
c) of trading assets different from equity investments	-	-
d) of derivatives	-	-
Total adjustments (18-19)	8	277
Profit (loss) before taxes (A-B+/-C+/-D)	38,396	31,708
22 Income taxes expense	(1,653)	(4,943)
Profit/(Loss) for the period	36,743	26,765
23 Minority profit / (loss)	1,335	1,305
Net Income of the Group	35,408	25,460

CASH FLOW STATEMENT, indirect method

	31.12.2021	31.12.2020
CASH FLOW STATEMENT, indirect method
A) Cash Flow from Operations
Net income	36,743	26,764
Income tax	1,653	4,943
Interest Expense/(Revenue)	1,225	1,577
(Dividends)	(299)	0
(Gain)/Losses on Activities sales	(756)	(241)
1) Income Pre tax, interests, dividends and gains	38,566	33,044
Changes of non cash items (out of the working capital)	-	-
Provisions	3,247	2,932
Depreciation and amortization	51,855	34,417
Investments write-offs	-	197
Non monetary changes of derivatives values	1,316	(1,254)
Total adjustment non monetary changes	56,418	36,057
2) Adjusted Net Income	94,984	69,101
Changes in net vorking capital	-	-
Changes in inventory	(15,869)	(177)
Changes in receivables	(39,048)	(189)
Changes in account payables	16,541	8,932
Changes in accruals/(asset)	(413)	160
Changes in accruals/(liabilities)	1,705	449
Other non monetary changes	1,294	5,995
Total other non monetary changes	(35,790)	15,169
3) Cash flow after changes in net working capital	59,194	84,270
Other adjustment	-	-
Interest collected/paid	(1,225)	(1,577)
(Tax payments)	(7,102)	(7,760)
Dividends received	299	(0)
(Provisions reversals)	(3,369)	(6,832)
Total other adjustment	(11,397)	(16,169)
Cash Flow From Operations (A)	47,797	68,101
B) Investment activities	-	-
Property plant and equipments	-	-
(Acquisitions)	(33,835)	(64,257)
(Dismissal)	2,118	938
Intangibles	-	-
(Acquisitions)	(1,221)	(10,566)
(Dismissal)	1	13
Financial Assets	-	-
(Acquisitions)	3,251	(46)
(Dismissal)	(396)	10
Financial Assets - short term	-	-
(Acquisitions)	1	(233)
(Dismissal)	-	236
(Acquisition subsidiary company net of cash and cash equivalents)	-	-
Cash Flow from investing activities (B)	(30,081)	(73,906)
C) Cash Flow from financing	-	-
Minorities	-	-
Short term bank loan changes	26,739	(31,750)
Loans	1,767	83,510
(Loans repayments)	(41,681)	(20,169)
Own capital	-	-
Share capital increase (cash)	-	-
(Share capital reimbursements)	-	-
(Dividends paid)	(14,265)	(11,451)
Cash Flow from financing (C)	(27,440)	20,140
Increase (decrease) cash and equivalents (A ± B ± C)	(9,724)	14,335
Cash and equivalents at the beginning the period	-	-
Banks and postal current accounts	51,112	37,573
Bank cheques	983	717
Cash	1,010	481
Total cash and equivalents at the beginning the period	53,105	38,770
Cash and eauivalents at the end the period	-	-
Banks and postal current accounts	42,077	51,112
Bank cheques	877	983
Cash	427	1,010
Total cash and equivalents at the end the period	43,381	53,105

NOTES TO THE FINANCIAL STATEMENTS

Esseco Group S.r.l. is an industrial holding company whose subsidiaries operate in the fields of chemicals, oenology and sulphur.

BASIS OF PREPARATION

The criteria used in the preparation and evaluation of the financial statements for the year ending 31/12/2021 take into account the changes introduced into the national system by Legislative Decree no. 139/2015, through which Directive 2013/34/EU was implemented, and are pursuant to Legislative Decree no. 127/91. Pursuant to Legislative Decree no. 139/2015, the OIC national accounting standards were amended.

The following financial statements correspond to the results of the accounting records duly kept, and comply with the provisions of Articles 2423 et seq. of the Italian Civil Code, interpreted and supplemented by the OIC national accounting standards, as shown in these notes, drawn up in accordance with Article 2427 of the Italian Civil Code, which constitute, pursuant to Article 2423, an integral part of the financial statements.

Unless otherwise stated, the values indicated in the Notes to the Financial Statements are expressed in thousands of euros.

BUSINESS CONTINUITY

On the basis of future business plans, the Directors consider the going-concern principle to be respected in the preparation of the Consolidated Financial Statements of Esseco Group S.r.l., even though it is difficult to assess the effects of the ongoing health emergency and those of recent geopolitical events.

CONTENT AND FORM OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements as at 31 December 2021 are presented with a comparison of the figures contained therein with those reported in the financial statements as at 31 December 2020.

These financial statements consolidate the figures of Esseco Group S.r.l., the parent company, and its Italian and foreign subsidiaries in which Esseco Group S.r.l. directly or indirectly holds the majority of voting rights, on a line-by-line basis.

Associated companies, in which Esseco Group S.r.l. directly or indirectly holds an ownership percentage of between 20 % and 50 %, have been recorded in the financial statements and valued according to the so-called 'Shareholders' equity' method.

Companies in which Esseco Group S.r.l. directly or indirectly owns less than 20 %, as well as subsidiaries that are not yet operative due to their recent incorporation or liquidation, have instead been valued at cost.

The list of equity investments held in subsidiaries and affiliated companies pursuant to Section 5 of Article 2427 of the Italian Civil Code and the consolidation methods adopted are analytically identified in Annexes 'A' and 'B' of these Notes to the Financial Statements.

Compared to the previous financial year, the scope of consolidation changed as follows:

―	full consolidation of the company Bluagri Industria e Comercio Fertilizantes Ltda, which was acquired in March 2021 with an indirect shareholding through Ever S.r.l. of 80 %;
―	full consolidation of the company Ocèania Sas, the additional remaining 60 % of which was acquired in July 2021 through Sofralab Sas;
―	consolidation of the company Centro per l'Enologia S.r.l. using the equity method. The company is 35 % owned through Esseco Group S.r.l;
―	liquidation of the company Idroclar S.r.l., the dissolution of which was completed in early 2021; the company was owned by Esseco Group S.r.l.

As for the previous financial year, the following should be noted:

―	exclusion from the consolidation of the Italian company Enartis S.r.l., incorporated in February 2019, which is fully owned. The company was excluded from the scope of consolidation in 2021, by virtue of the principle of insignificance as defined by Article 28 of Legislative Decree no. 127/91;
―	exclusion from the consolidation of the Chinese company Addcon Nutrition Technology Co.Ltd. which was incorporated in December 2019 and is 60 % owned through Addcon Asia Ltd and 40 % owned through Addcon Dalian Co. The company was excluded from the scope of consolidation in 2019, by virtue of the principle of insignificance as defined by Article 28 of Legislative Decree no. 127/91.

Finally, it should be noted:

―	that a voluntary liquidation procedure was initiated for Addcon Asia Co Limited in 2021.

In order to ensure comparability of the financial statements, both in terms of equity and income, the effects of these changes, where significant, have been commented on in the notes to the financial statements.

The financial statements of the Italian subsidiaries used for consolidation purposes are those approved by their respective shareholders in accordance with current legislation. For foreign subsidiaries, reporting packages were used that were prepared for the purposes of consolidation in accordance with group accounting principles, which are in line with statutory regulations and Italian accounting principles.

CONSOLIDATION CRITERIA

The consolidation criteria adopted are set out below:

•	Recording of the financial statements of companies consolidated according to the full consolidation method and elimination of the book value of equity investments against the relevant portion of shareholders' equity;
•	The difference arising at the date on which the company is included in the consolidation between the book value of the investment and the related book value of shareholders' equity, if positive, is allocated, to the extent attributable, to the assets of the consolidated company. The remaining amount is entered under 'Goodwill' in the assets section and is amortised in relation to its expected recoverability. If negative, and not attributable to foreseeable future losses or adjustments to equity items of the investee at the date of acquisition, it is recognised in the Shareholders' equity item entitled 'Consolidation reserve';
•	Unrealised gains and losses arising from transactions between group companies are eliminated, as are items giving rise to payables and receivables and income and expenses between consolidated companies. Any unrealised intra-group profits vis-à-vis third parties are eliminated, taking into account deferred taxes where necessary;
•	The accounting principles adopted by the group companies have been homogenised with those of the parent company. The inventories of the subsidiary Altair Chimica S.p.A. accounted for under the FIFO method were valued according to the weighted average cost method;
•	The elimination of write-downs of long-term equity investments in consolidated companies and intra-group dividends;
•	The elimination of the effects of items having tax purposes only;
•	The translation into euros of the balance sheets of consolidated companies in other currencies is carried out by applying the exchange rate in force at the balance sheet date to assets and liabilities and the average exchange rate for the period to the items in the income statement. Exchange rate differences resulting from the translation of the opening shareholders' equity and the income statement at the end-of-period exchange rates are charged directly to shareholders' equity under the heading 'Other Reserves'.

The exchange rates of the currencies adopted for the translation into euros of the financial statements expressed in foreign currencies for the year 2021 are as follows (local currency for one euro):

Currency	Country	Exchange rate at year end	Average exchange rate for the year
US Dollar	USA	1.13	1.18
Great Britain Pound	Great Britain	0.84	0.86
Brasilian Real	Brasil	6.31	6.38
Argentin Peso	Argentina	116.36	112.43
Chilean Peso	Chile	963.78	898.50
Rand	South Africa	18.06	17.48
Australian Dollar	Australia	1.56	1.57
Mexican Peso	Mexico	23.14	23.98
Norwegian krone	Norway	9.99	10.16
Renminbi	China	7.19	7.63
Baht	Thailand	37.65	37.84
Hong Kong dollar	Hong Kong	8.83	9.19

ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

The criteria used for the preparation of the consolidated financial statements for the year ended 31 December 2021 do not differ, in substance, from those used for the preparation of the consolidated financial statements for the previous year ended 31 December 2020.

Any changes in the application of accounting principles with respect to the previous year have always been reported in the notes to the items to which they pertain in order to give a more accurate representation of the underlying economic activities.

The accounting principles and valuation criteria were applied uniformly to the consolidated companies. The valuation criteria adopted for the consolidated financial statements were those used by the parent company Esseco Group S.r.l. and comply with the aforementioned legal provisions in force. Furthermore, they are supplemented and interpreted by the Accounting Principles issued by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (National Council of Chartered Accountants), in the current version validated by the OIC.

The valuation of the items in the financial statements was based on the general criteria of prudence and accrual and on a going-concern basis. The application of the principle of prudence involved the individual evaluation of elements making up the single entries or items under assets and liabilities in order to avoid offsetting losses that had to be recognised and unrealised profits that did not have to be booked. In accordance with the accrual principle, the effect of transactions and other events has been recognised in the accounts and attributed to the financial year to which these transactions and events relate in accordance with the correspondence between costs and revenues, and not to the year in which the related cash movements (receipts and payments) materialise.

Profits are therefore included if realised or collected by the end of the financial year, while risks and losses are taken into account even if they become known after the end of the financial year, up to the date of approval by the Board of Directors.

More specifically, the valuation criteria adopted in the preparation of the consolidated financial statements as at 31 December 2021 were as follows:

Intangible fixed assets

Intangible fixed assets, considered to be of long-term use, are recorded at purchase or production cost and shown net of amortisation over the years. Amortisation is calculated taking into account the expected future utility as shown in the following table:

Fixed assets	from	to
Installation and expansion costs	20.00 % -	50.00 %
Application and Operating Software	20.00 % -	50.00 %
Trademarks	5.00 % -	20.00 %
Goodwill		20.00 %

If, irrespective of the amortisation already accounted for, an impairment loss arises, the company estimates the recoverable amount of the asset, which is written down accordingly. If, in future years, the conditions for the write-down no longer apply, the original value adjusted only by depreciation is restored. This provision does not apply to value adjustments related to goodwill and deferred charges.

Property, plant and equipment (non-recurrent tangible assets)

Property, plant and equipment items are recorded at production cost or purchase cost, including ancillary charges, or at transfer cost, adjusted if necessary to allocate the higher value recognised at the time of acquisition.

Costs incurred during the useful life of the asset for improvements, modernisations and transformations are capitalised if they result in a significant extension of the useful life of the asset, an improvement in the quality of the products or processing conditions, or a reduction in consumption and waste. Normal repair and periodic maintenance costs are charged directly to the income statement.

As suggested by accounting standard OIC 16, reinterpreted in the light of the changes introduced by Legislative Decree no. 223/2006, and also following a revision of the estimates of the useful life of capital properties, the portion of the cost referring to the underlying and appurtenant areas was separated in the financial statements of the group companies.

The value attributed to the land in the individual companies, for the purposes of the aforementioned separation, was identified on the basis of the specific cost of the land, increased by directly attributable expenses, since it was acquired independently and prior to the construction of the building.

Consequently, as of the 2006 financial year, no amortisation is applied to the value of the aforementioned land as it is deemed, based on updated company estimates, to be an asset not subject to deterioration and having an indefinite useful life. This approach is reflected in the consolidated figures.

The depreciation of the various categories of assets included in property, plant and equipment (non-recurrent tangible assets) was calculated using the straight-line method, which is considered representative of the useful life of the assets, as shown in the following table:

Assets	from	to
Industrial Buildings	5.00 %	- 7.00 %
Commercial Buildings	2.00 %	- 5.00 %
Plants and machinery	15.00 %	- 22.50 %
Generic plants and machinery	12.50 %	- 20.00 %
Miscellaneous equipment	10.00 %	- 20.00 %
Motor vehicles and rail tankers	20.00 %	- 25.00 %
Electronic and EDP equipment	20.00 %	- 33.33 %
Office furniture and equipment	10.00 %	- 12.00 %
Oenological plants and equipment		15.50 %
Cranes and forklift trucks		20.00 %
Analysis laboratory equipment		40.00 %
Turbine electricity generation		9.00 %
Steam turbine service for electricity generation		12.50 %
Electricity transmission lines		4.00 %

In accordance with the new requirements of OIC 16, depreciation has also been calculated for assets that are temporarily unused.

The depreciation plan adopted was based on compliance with the statutory criteria for the inclusion of property, plant and equipment in the production of services and complies with tax deductibility provisions.

The depreciation rate is reduced to half in the first year in which the assets are used and brought into operation.

If, irrespective of the depreciation already accounted for, an impairment loss arises, the company estimates the recoverable amount of the asset, which is written down accordingly. If, in future years, the conditions for the write-down no longer apply, the original value adjusted only by depreciation is restored.

Capital goods acquired under finance leases are recorded solely for consolidation purposes according to the financial method.

Depreciation allowances allocated to the value of assets acquired under leases and recognised in the income statement are consistent with those allocated to similar depreciable goods owned.

Financial fixed assets

Holdings in associated companies are valued according to the equity method, determined on the basis of the closing balance sheet. Holdings in non-consolidated subsidiaries and other holdings are recorded at acquisition cost. In the event of permanent losses, the value of these holdings is adjusted by means of appropriate write-downs.

Inventories

Inventories are recorded at purchase or production cost, or at realisable value based on the performance of the market, whichever is lower. To this end, the value thus obtained is adjusted by the 'inventory obsolescence provision' to account for goods for which the realisation value is expected to be lower than the cost. The cost is calculated using the weighted average cost method.

Receivables and Payables

Receivables are recorded at their amortised cost, taking into account the time factor and their estimated realisable value, and classified as financial fixed assets or current assets.

Payables are recorded using the amortised cost method.

Accruals and Deferrals

Shares of costs and income common to two or more financial years are entered under these headings on an accrual basis.

Provisions for risks and charges

Provisions for risks and charges are intended to cover losses or debts of a given nature, the existence of which is certain or probable, but whose amount or date of occurrence was unknown at the close of the financial year. The general principles of prudence and accrual were complied with in the valuation of these funds, and no generic provisions for liabilities were established without economic justification.

Contingent liabilities have been recognised in the balance sheets and provided for when they are deemed probable and when the amount of the related charge can be reasonably estimated. Provisions are quantified on the basis of estimates that take into account all available elements.

Severance indemnity provision

The severance indemnity provision is set aside to reflect the liability accrued to all employees in accordance with current legislation and collective bargaining agreements, considering all forms of remuneration of an ongoing nature. The provision corresponds to the total of the individual indemnities accrued in favour of employees as at the balance sheet date, net of advances paid, and is equal to the amount that would have been payable to employees had they terminated their employment on that date.

Income Tax

Current taxes are accrued on the basis of a reasonable estimate of the tax liability for the financial year calculated in accordance with current regulations.

Deferred tax assets and liabilities are calculated on temporary differences that arise between the value of assets or liabilities in the financial statements and the corresponding values for tax purposes.

In particular, deferred tax assets are recognised as assets only if there is reasonable certainty of their future recovery.

Recognition of costs and revenues

Sales revenue is recognised on an accrual basis at the time when the company's right to collect the related remuneration arises. As a rule, for the supply of goods, this refers to the moment at which ownership of the goods is transferred, whereas for the provision of services, this refers to the moment at which the service is rendered, i.e. the moment at which the service is performed.

Costs are recognised on an accrual basis.

Foreign currency transactions

Transactions in foreign currencies are accounted for at the exchange rate in force on the day on which they are executed. Assets and liabilities in foreign currencies, if any, are recognised at the spot exchange rate at the end of the financial year on the basis of the records made by the Italian Foreign Exchange Office as at 31 December 2021 and the related gains and losses are recognised in the income statement under item C 17 bis; any presumed net profit is set aside in a special non-distributable reserve called "Reserve art. 2426 no. 8 bis Civil Code" until it is realised.

BALANCE SHEET

• ASSETS

RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE

There are no receivables from shareholders for payments still due.

INTANGIBLE FIXED ASSETS

Total intangible fixed assets, net of accumulated amortisation, amounted to €54,282 thousand as at 31 December 2021 (€61,953 thousand as at 31 December 2020).

Changes in intangible fixed assets during the period under observation are shown in the following table:

	HISTORICAL COST
Description	31.12.2020	Additions	Disposals	Other movements	31.12.2021
1) Formation and expansion expenses	565	-	-	-	565
2) Capitalise development and expenses	1,894	123	(24)	22	2,015
3) Industrial patents and rights to use patents of others	7,662	542	-	171	8,375
4) Concessions, licences, trademarks and similar rights	42,577	34	-	71	42,682
5) Goodwill	61,063	436	-	1,004	62,503
6) Intangible assets in progress and payments on account	0	12	-	-	12
7) Other	2,518	73	-	13	2,604
Total	116,279	1,220	(24)	878	118,756

	ACCUMULATED AMORTISATION
Description	31.12.2020	Additions	Disposals	Other movements	31.12.2021
1) Formation and expansion expenses	(565)	-	-	-	(565)
2) Capitalise development and expenses	(1,203)	(248)	24	(22)	(1,449)
3) Industrial patents and rights to use patents of others	(7,335)	(385)	-	(157)	(7,877)
4) Concessions, licences, trademarks and similar rights	(4,862)	(2,162)	-	(65)	(7,089)
5) Goodwill	(38,047)	(6,284)	-	(762)	(45,093)
6) Intangible assets in progress and payments on account	-	-	-	-	-
7) Other	(2,314)	(74)	-	(13)	(2,401)
Total	(54,326)	(9,153)	24	(618)	(64,474)

	NET BOOK VALUE
	31.12.2020	31.12.2021
1) Formation and expansion expenses	-	-
2) Capitalise development and expenses	691	566
3) Industrial patents and rights to use patents of others	327	498
4) Concessions, licences, trademarks and similar rights	37,715	35,593
5) Goodwill	23,016	17,410
6) Intangible assets in progress and payments on account	-	12
7) Other	204	203
Total	61,953	54,282

The total gross increases recorded in the period amounted to €1,220 thousand and were mainly attributable to:

a.	Purchases of industrial patents and rights to use patents of others, totalling €542 thousand, primarily concerning the purchase of application software in Esseco S.r.l. for a total of €298 thousand;
b.	Goodwill in the amount of €436 thousand related to goodwill for €321 thousand following the acquisition of the remaining 60 % stake in Oceania Sas laboratory, and the remainder as goodwill generated by the purchase price adjustment relating to the acquisition of Addcon Gmbh and its subsidiaries by Esseco Group S.r.l;
c.	Other amounting to €73 thousand for improvements made to buildings at the production sites located in Italy and Spain.

Total amortisation amounted to €9,153 thousand and related to the normal depreciation process of intangible assets.

In the column 'Other Changes', increases and decreases relating to reclassifications and exchange rate differences at the opening of the year and price fluctuations during the year are recorded.

PROPERTY, PLANT AND EQUIPMENT

Total property, plant and equipment (non-recurrent tangible assets), net of the related amortisation fund, amounted to €234,027 thousand as at 31 December 2021, and €243,123 thousand as at 31 December 2020. Non-recurrent tangible assets mainly consist of production plants, buildings and offices, and are stated at purchase or construction cost, or at contribution cost. The changes that occurred in 2021 are shown below:

	HISTORICAL COST
Description	31.12.2021	Additions	Disposals	Other movements	31.12.2021
1) Land and buildings (full property)	121,487	1,710	(113)	3,954	127,038
1) Land and buildings (leasing)	260	1	-	2	263
2) Plants and machinery (full property)	366,052	11,947	(2,341)	45,096	420,754
2) Plants and machinery (leasing)	8,683	-	-		8,683
3) Other fixtures and fittings, tools and equipment (full property)	45,399	2,929	(1,147)	1,341	48,521
3) Other fixtures and fittings, tools and equipment (leasing)	-	-	-	-	-
4) Other (full property)	13,873	1,308	(661)	438	14,959
4) Other (leasing)	-	-	-	-	-
5) Tangible assets in progress and payments on account	46,946	15,797	-	(46,778)	15,965
Total	602,700	33,692	(4,262)	4,054	636,183

	ACCUMULATED DEPRECIATION
Description	31.12.2021	Additions	Disposals	Other movements	31.12.2021
1) Land and building (full property)	(58,851)	(3,329)	105	(227)	(62,302)
1) Land and building (leasing)	(69)	(64)	-	(1)	(132)
2) Plants and machinery (full property)	(251,674)	(33,649)	2,088	(2,612)	(285,847)
2) Plants and machinery (leasing)	(8,010)	(625)	-	-	(8,635)
3) Other fixtures and fittings, tools and equipment (full property)	(31,690)	(3,665)	763	(66)	(34,659)
3) Other fixtures and fittings, tools and equipment (leasing)	-	-	-	-	-
4) Other (full property)	(9,284)	(1,553)	578	(322)	(10,581)
4) Other (leasing)	-	-	-	-	-
5) Tangible assets in progress and payments on account	-	-	-	-	-
Total	(359,578)	(42,885)	3,534	(3,227)	(402,156)

	NET BOOK VALUE
	31.12.2021	31.12.2021
1) Land and buildings	62,827	6,867
2) Plants and machinery	115,052	134,955
3) Other fixtures and fittings, tools and equipment	13,709	13,862
4) Other	4,589	4,378
5) Tangible assets in progress and payments on account	46,946	15,965
Total	243,123	234,027

Increases in gross tangible assets amounted to €33,692 thousand and related to industrial investments made by the group.

The item´Land and buildings' increased by €1,711 thousand during the year, mainly due to (i) the construction of a new warehouse at a site in France by the subsidiary Sofralab S.a.s., (ii) some structural improvement works carried out by the subsidiary Altair Chimica S.p.A., and (iii) works carried out on buildings and the photovoltaic plant at Ever S.r.l.

Investments in company-owned 'Plants and Machinery' amounted to €11,947 thousand. The increase mainly relates to Group companies: Altair Chimica S.p.A. for €4,953 thousand; Esseco S.r.l. for €2,868 thousand; and Enartis Sepsa S.a.u. For €1,811 thousand.

The investments in Altair Chimica S.p.A. were made in Saline di Volterra in execution of the three-year industrial plan approved in 2020, and concern the optimisation of existing processes and the strengthening of some production departments, as well as major extraordinary maintenance work on parts of the plant with productive lives of more than thirteen years. At the Trecate site of Esseco S.r.l, the packaging line for the oenology division was completed, work began on replacing an electrical cabin, and several investment projects were carried out in both the chemical and oenology divisions.

The subsidiary Enartis Sepsa S.a.u., also during the year, acquired more equipment relating to the wine-making process. The remaining investments relate to purchases of 'plants and machinery' aimed at maintaining high quality standards of production.

Other fixtures and fittings, tools and equipment increased by €2,929 thousand, attributable for €2,064 thousand to fixed assets acquired from Esseco S.r.l.; €223 thousand from Italiana Biotecnologie S.r.l.; and €219 thousand from Ever S.r.l.

Tangible assets in progress and payments on account relate to the increase in the value of plants under construction for a total of €15,797 thousand, which is attributable, predominantly, to the subsidiary Hydrochem Italia S.r.l. for the year's portion of €9 thousand for the expansion and revamping of existing production lines and to orders relating to the hydrochloric acid storage project; to the subsidiary Addcon Nordic A.s. for €2,043 thousand for the purchase of a new solids production plant; to the subsidiary Esseco UK Ltd. for €1,802 thousand for the completion of a new plant at the Wakefield site; and to the subsidiary Zolfindustria S.r.l. for €1,230 thousand relating to the continuation of investments, started in previous years, in new production mills and a packaging line at the San Cipriano Po site which was partially completed during the year.

Decreases for the year refer to disposals relating to the items Land and Buildings, Machinery and Miscellaneous Equipment for a total of €4,262 thousand.

Total depreciation and amortisation as at 31 December 2021 amounted to €42,885 thousand, of which 79.9 % related to plant and machinery, 8.5 % to industrial and commercial equipment, 7.9 % to buildings, and the remainder to other assets. Depreciation relates to the normal process of depreciation of assets as a result of their use, as indicated in the section on the preparation of financial statements, and to the depreciation of capital gains allocated as a result of the consolidation of investee companies.

In the column 'Other Changes', increases and decreases relating to reclassifications and exchange rate differences at the opening of the year and price fluctuations during the year are recorded.

Capital grants

During the year ended 31/12/2021, the Group received capital grants through the subsidiary Esseco S.r.l. in the amount of €795 thousand by way of tax credits as a result of tax concessions for new investments made during the year, and through Zolfindustria S.r.l. in the amount of €83 thousand as a tax benefit as a result of new subsidised investments (formerly known as 'super ammortamenti') and €643 thousand as a tax benefit as a result of new subsidised investments (formerly known as 'iper ammortamenti').

The indirect method of accounting for these contributions and the remainder received in previous years was chosen, i.e. they are recognised in deferred income and released to the income statement over the useful life of the asset to which they relate. The long-term deferral method has been retained for the remaining contributions.

FINANCIAL FIXED ASSETS

Equity investments

The balance as at 31 December 2021 was €1.392 thousand, and €1.604 thousand in the previous year.

Equity investments	31.12.2021	31.12.2020
(a) in subsidiary companies	233	215
(b) in associated companies	286	560
(c) in parent companies	-	-
(d) in associates controlled by the parent companies	-	-
(d-bis) in others companies	873	829
Total	1,392	1,604

Investments in associated companies (b) valued at net equity

Company name	Location	31.12.2021	31.12.2020
Enocompany S.r.l.	Italy	(96)	(91)
Enotre S.r.l.	Italy	123	119
Centro per I'enologia S.r.l.	Italy	23	-
Ronci S.r.l.	Italy	20	89
Enosfera S.r.l.	Italy	101	446
Vitis S.a r.l.	France	48	103
Embouteillage 2000 S.a.S.	France	67	263
Océania S.a.	France	-	-
	Total	286	560

Other minor investments (d-bis) valued at cost

Company name	Location	31.12.2021	31.12.2020
Setras S.r.l.	Italy	352	352
Other	-	521	477
	Total	873	829

The increase in 'Equity investments in subsidiaries' of €18 thousand is attributable to equity investments in currently non-operational companies held by Esseco Group S.r.l. in the amount of €233 thousand and valued at purchase cost. With reference to these companies, it should be noted that the subsidiary Idroclar S.r.l. was removed from the Company Register in 2021 upon completion of its voluntary liquidation, and the subsidiary Enartis S.r.l. underwent a revaluation in the amount of €3 thousand, aligning its value with Shareholders' equity. The decrease in 'investments in associated companies' is the result of the change in shareholders' equity of consolidated subsidiaries, using the so-called equity method, and the full consolidation of Oceania S.a.s., of which the remaining 60 % was acquired in July 2021 through Sofralab S.a.s.

The increase in the item 'Investments in other companies', valued at purchase cost in the amount of €44 thousand, is attributable exclusively to the investment in the company Energy for Growth Scarl through the subsidiary Altair Chimica S.p.A.

Financial receivables from others

The item 'Financial receivables from others' amounted to €467 thousand as at 31 December 2021, compared to €3,290 thousand as at 31 December 2020. The reduction in the amount refers to the repayment in the last quarter of 2021 of three interest-bearing loans totalling €3 thousand granted by Essemar S.p.A. to Marchi Industrial S.p.A.. The remaining sum relates to loans granted to companies accounted for using the equity method for an increase of €177 thousand.

Description	31.12.2021	31.12.2020
Financial receivables from others	467	3,290

CURRENT ASSETS

Inventories

This item is broken down as follows:

Description	31.12.2021	31.12.2020
1) Raw materials and consumables	54,874	36,666
2) Work in progress and components	1,053	948
3) Semifinished products and contracts in progress	-	-
4) Finished goods and goods for resale	57,651	59,885
5) Payments on account	573	-
Total	114,151	97,499

Total Inventories as at 31 December 2021 amounted to €114,151 thousand, an increase of €16,652 thousand compared to 31 December 2020 (+17.1 %).

This increase is mainly attributable to a significant increase in volume and value of raw materials, as a result of the strategic purchase of potassium chloride and sodium chloride, raw materials necessary for the production of products related to the Chemical Division, due to the increasing price dynamic.

The valuation of final inventories of raw materials, consumables and products in progress, as well as finished goods and commodities, is carried out using the weighted average cost method. The value of inventories was recorded net of a provision for inventory impairment losses of €2,178 thousand.

RECEIVABLES

			Analysis by due date
Description	31.12.2021	31.12.2020	Within 1 year	From 2nd to 5th year	After the 5th year
1) Trade receivables	147,160	107,541	147,032	128	-
(-) provision for bad debts	(4,256)	(4,508)	(4,256)	-	-
Sub-Total	142,904	103,033	142,776	128	-
2) Amounts owed by subsidiary companies	-	-	-	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	-	-	-	-	-
3) Amounts owed by associated companies	9	38	9	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	9	38	9	-	-
4) Amounts owed by parent companies	4,694	3,919	4,694	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	4,694	3,919	4,694	-	-
5) Amounts owed by associates controlled by parent companies	15	-	15	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Totale	15	-	15	-	-
5-bis) Tax receivables	25,488	23,997	23,376	2,112	-
5-ter) Deferred tax assets	11,838	7,380	-	-	-
5-quter) Other debtors	2,174	1,603	1,960	214	-
(-) provision for bad debts	-	-	-	-	-
Sub-total	2,174	1,603	1,960	214	-
Total	187,122	139,981	172,830	2,454	-

The breakdown of receivables as at 31 December 2021 by geographical area is shown in the table below:

Description	31.12.2021	31.12.2020
Italy	90,320	67,159
Europe	72,378	54,931
Other Areas	24,424	17,893
Total	187,122	139,981

'Trade receivables' as at 31 December 2021 amounted to €142,904 thousand, compared to €103,033 thousand for the same period of the previous year. This value is shown net of the provision for impairment losses of €4,256 thousand, which is deemed adequate in view of possible losses that may be incurred in future years. The majority of trade receivables are due within the next financial year. The increase in receivables is mainly due to the sharp rise in product sales prices recorded in the last two months as a result of higher raw materials and utilities costs.

'Amounts owed by associated companies', which amounted to €9 thousand as at 31 December 2021, mainly refer to receivables from Enosfera S.r.l. and concern commercial transactions due within the financial year.

'Amounts owed by parent companies', amounting to €4,694 thousand as at 31 December 2021, relate to tax advances transferred to San Martino S.p.A. as a result of consolidation agreements pursuant to Article 118, paragraph 2 of the Italian Consolidated Income Tax Act.

'Tax receivables' relate to VAT credits accrued during the year for a total of €17,030 thousand; the tax credit for research and development predominantly for the subsidiaries Altair Chimica S.p.A. (€1,783 thousand), Esseco S.r.l. (€130 thousand), and Ever S.r.l. (€44 thousand); the tax credit for the sports bonus for the subsidiary Altair Chimica S.p.A. (€986 thousand); and the remainder to advances paid in excess of the tax for the period and other miscellaneous tax credits.

'Deferred tax assets' surpluses amounted to €11,838 thousand (€7,380 thousand as at 31 December 2020) and include the tax effect of temporary differences between the balance sheet values of assets and liabilities and their values recognised for tax purposes. During the year, deferred tax assets were recognised in connection with tax losses of the subsidiary Hydrochem Italia S.r.l., which are expected to be utilised in the medium term. The item also includes receivables for the so-called 'Patent Box' tax advantage for Ever S.r.l. companies (annuities 2020-2021).

'Others debtors' are recorded at their nominal value and had a balance of €2,174 thousand as at 31 December 2021, compared to a balance of €1,603 thousand as at 31 December 2020. They mainly relate to the allocation of the proceeds deriving from the hedging transactions for the price of electricity and natural gas at year-end (for a total of €780 thousand) stipulated by the subsidiaries Altair Chimica S.p.A. and Hydrochem Italia S.r.l., as well as to the allocation of the receivable for insurance reimbursements for €233 thousand claimed by Altair Chimica S.p.A., and, finally, to receivables from personnel and advances to suppliers.

FINANCIAL ASSETS THAT DO NOT CONSTITUTE FIXED ASSETS

This item is broken down as follows:

Description	31.12.2021	31.12.2020
1) Equity investments in subsidiary companies	-	-
2) Equity investments in associated companies	-	-
3) Equity investments in parent companies	-	-
3-bis) Equity investments in associates controlled by the parent companies	-	-
4) Equity investments in other companies	-	-
5) Derivatives	5,216	233
6) Other investments	73	74
7) Financial Assets for cash pooling management	-	-
Total	5,289	307

Derivative financial instruments receivable are related to energy and natural gas pricing operations put in place by the subsidiaries Altair Chimica S.p.A. and Hydrochem Italia S.r.l., aimed at containing the impact caused by changes in market prices on business margins and the consequent stabilisation of cash flows. The year-end value refers to the recognition of their fair value as at 31 December 2021. The fair value recorded was derived from the prospectuses provided by the banking counterparty with which the commodity derivatives were negotiated. In view of the existence of the conditions for the application of hedge accounting treatment, the fair value is recognised with a balancing entry in the 'Reserve for expected cash flow hedging transactions', which includes the valuation effects arising from the recognition of derivatives in the financial statements, which are classified as cash flow hedges.

CASH AND CASH EQUIVALENTS

Description	31.12.2021	31.12.2020
1) Banks and postal current accounts	42,077	51,112
2) Bank cheques	877	983
3) Cash	427	1,010
Total	43,381	53,105

The balance as at 31 December 2021 represents the cash and cash equivalents on Italian and foreign bank accounts as of the closing date of the financial year and shows a decrease of €9,724 thousand compared to 31 December 2020 (-18.3 %).

PREPAID EXPENSES AND ACCRUED INCOME

This item mainly includes income and expenses whose accrual is anticipated or deferred with respect to the cash and/or documentary event; they are irrespective of the date of payment or collection of the related income and expenses and are allocated on a time basis.

Description	31.12.2021	31.12.2020
Prepayments and accrued income	3,367	2,925

The balance as at 31 December 2021 was €3,367 thousand (€2,925 thousand as at 31 December 2020), an increase of €442 thousand compared to the previous year. This item mainly refers to accrued income and prepaid expenses concerning EDP, maintenance and rental fees, as well as insurance premiums, sponsorships and incentives expected from green and white certificates.

As at 31 December 2021, there were no accruals or deferrals with a duration exceeding five years.

BALANCE SHEET

• LIABILITIES

SHAREHOLDERS' EQUITY

The following table shows the changes in consolidated shareholders' equity for the last two financial years:

	Movements
Description	31.12.2020	Net income	Between reserves
I) Subscribed capital	10,000	-	-
11) Share premium account	-	-	-
III) Revaluation reserve	69,318	-	-
IV) Legal reserve	2,000	-	-
V) Reserves provided for by the article of association (statutory reserve)	-	-	-
VI) Other reserves, as indicated	82,426	-	-
VI a) Consolidation reserves	6,457	-	-
VI b) Other reserves	75,969	-	-
VII) Reserves for hedge accounting	(702)	-	-
VIII) Profit (loss) brought	124,651	-	-
IX) Profit / (loss) for the financial period	25,460	35,408	-
X) Treasury stock reserves	-	-	-
Group Equity	313,153	35,408	-
Minority interest	12,883	1,336	-

	Movements
Description	Other movements	Dividends	Destination net income	31.12.2021
I) Subscribed capital	-	-	-	10,000
11) Share premium account	-	-	-	-
III) Revaluation reserve	(6,418)	-	-	62,900
IV) Legal reserve	-	-	-	2,000
V) Reserves provided for by the article of association (statutory reserve)	-	-	-	-
VI) Other reserves, as indicated	2,039	(10,000)	25,781	100,246
VI a) Consolidation reserves	-	-	-	6,457
VI b) Other reserves	2,039	(10,000)	25,781	93,789
VII) Reserves for hedge accounting	4,381	-	-	3,679
VIII) Profit (loss) brought	163	-	(321)	124,493
IX) Profit / (loss) for the financial period	-	-	(25,460)	35,408
X) Treasury stock reserves	-	-	-	-
Group Equity	165	(10,000)	-	338,726
Minority interest	(98)	(4,172)	-	9,948

	Movements
Description	31.12.2019	Net income	Between reserves
I) Subscribed capital	10,000	-	-
II) Share premium account	-	-	-
III) Revaluation reserve	11,749	-	-
IV) Legal reserve	2,000	-	-
V) Reserves provided for by the article of association (statutory reserve)	-	-	-
VI) Other reserves, as indicated	83,238	-	-
VI a) Consolidation reserves	6,462	-	-
VI b) Other reserves	76,776	-	-
VII) Reserves for hedge accounting	(70)	-	-
VIII) Profit (loss) brought	97,372	-	-
IX) Profit / (loss) for the financial period	38,937	25,460	-
X) Treasury stock reserves	-	-	-
Total	243,226	25,460	-
Minority interest	8,488	1,305	-

	Movements
Description	Other movements	Dividends	Destination net income	31.12.2020
I) Subscribed capital	-	-	-	10,000
II) Share premium account	-	-	-	-
III) Revaluation reserve	57,569	-	-	69,318
IV) Legal reserve	-	-	-	2,000
V) Reserves provided for by the article of association (statutory reserve)	-	-	-	-
VI) Other reserves, as indicated	(2,806)	(10,000)	11,994	82,426
VI a) Consolidation reserves	(5)	-	-	6,457
VI b) Other reserves	(2,801)	(10,000)	11,994	75,969
VII) Reserves for hedge accounting	(632)	-	-	(702)
VIII) Profit (loss) brought	336	-	26,943	124,651
IX) Profit / (loss) for the financial period	-	-	(38,937)	25,460
X) Treasury stock reserves	-	-	-	-
Total	54,467	(10,000)	-	313,153
Minority interest	4,541	(1,451)	-	12,883

The Group's shareholders' equity as at 31 December 2021 amounted to €338,725 thousand (€313,153 thousand as at 31 December 2020). The increase for the financial year can be attributed to the Annual Result in the amount of €35,408 thousand, which is partially offset by an increase in 'Other Movements' for €165 thousand. These 'Other movements' refer mainly to: (i) the significant reduction, in the amount of €6,418 thousand, of the revaluation reserve recorded by the subsidiary Esseco S.r.l. following the introduction of Article 1, paragraph 622 of the Budget Law 2022 that amended Legislative Decree no. 104/2020, with the consequent effect of revoking for tax purposes the revaluation carried out in the previous year exclusively in relation to intangible fixed assets ('Trademarks') by claiming the substitute tax already paid, maintaining the revaluation carried out solely for statutory purposes; (ii) exchange rate differences for €2,039 thousand; (iii) the change in the reserve for expected cash flow hedging transactions for €4,381 thousand, which includes the valuation effects arising from the recognition, among assets, of the fair value of cash flow hedging derivatives; (iv) the effect of hyperinflation recorded by the subsidiary Enartis Argentina Sa, for the remaining amount.

During the year, Esseco Group S.r.l. paid out dividends in the amount of €10 thousand to the Sole Shareholder San Martino S.p.A.

As at 31 December 2021, the Legal Reserve had a balance of €2 thousand, resulting from the allocation of 5 % of the parent company's profits, as provided for by Article 2430 of the Italian Civil Code.

Below is the reconciliation between the parent company's annual financial statements and the consolidated financial statements, with regard to shareholders' equity and the result for the last two years:

Description	Net Income 2021	Equity 2021
Esseco Group Sri - Stand Alone	13,333	116,109
Pro-quota results of consolidated companies	46,078	46,078
Intragroup Dividends	(18,523)	-
Difference between the Value of the investment and Net Book Value(net of current income)	1.279	167,422
Elimination of the investments Plus/Minus value adjustments (net of tax)	(5,959)	23,038
Intercompany Margins (net of tax)	(281)	(5,990)
Other changes-adjustments	817	2,017
Elimination of Non-Controlling Interests	(1,336)	(9,948)
Esseco Group Consolidated Accounts	35,408	338,726

Description	Net Income 2020	Equity 2020
Esseco Group Srl - Stand Alone	25,781	112,195
Pro-quota results of consolidated companies	33,665	33,665
Intragroup Dividends	(32,398)	-
Difference between the Value of the investment and Net Book Value(net of current income)	1,946	155,420
Elimination of the investments Plus/Minus value adjustments (net of tax)	(3,659)	28,558
Intercompany Margins (net of tax)	(1,225)	(5,799)
Other changes-adjustments	2,655	1,997
Elimination of Non-Controlling Interests	(1,305)	(12,883)
Esseco Group Consolidated Accounts	25,460	313,153

The shareholders' equity of the parent company amounted to approximately €116,109 thousand, compared to a consolidated shareholders' equity of €338,727 thousand. Of this difference, approximately €167,442 thousand is attributable to the difference between the value of the equity investments recognised in the parent company and the reference shareholders' equity of the subsidiaries. There were also positive consolidation differences of €23,038 thousand and eliminations of inter-company margins on inventories amounting to €5,990 thousand. Other changes include the consolidation reserve arising from the acquisition of Hydrochem Italia S.r.l. in 2019 in the amount of €1,897 thousand. Minority interests amounted to €9,948 thousand.

PROVISIONS FOR LIABILITIES AND CHARGES

The balances of these funds at the end of the year were as follows:

	Movements during the current financial year
Description	31.12.2020	P & L	Utilizations	Other movements	31.12.2021
1) Pensions and similar obligations	2,648	397	(159)	(66)	2,820
2) Provisions for taxation (yet deferred)	4,507	9,592	(452)	102	13,749
2) Derivatives	704	-	(582)	-	122
4) Other provisions	2,171	1,448	(1,405)	(126)	2,088
Total	10,030	11,437	(2,598)	(90)	18,779

As at 31 December 2021, the 'provision for liabilities and charges' amounted to €18,779 thousand.

The item in question is broken down as follows:

a.	€2,820 thousand for 'pensions and similar obligations'. These provisions refer to the value of the goodwill indemnity accrued, pursuant to Article 1751 of the Italian Civil Code, on agency contracts in force as at 31 December 2021. The balance shows a net increase of €171 thousand, mainly due to the increase of €397 thousand attributable to the provisions of Ever S.r.l. (€120 thousand), Esseco S.r.l. (€102 thousand) and Sofralab and its subsidiaries (€24 thousand);
b.	For €13,749 thousand (€4,507 thousand as at 31 December 2020) from the provision 'For Taxes, including deferred taxes', entirely relating to deferred taxes. This provision has been allocated to cover differences, of a temporary nature, between the results taxable for fiscal purposes in accordance with tax regulations and those reported in the individual financial statements, prepared in accordance with the provisions of the Italian Civil Code and used for consolidation purposes. It also includes tax provisions that arise as a result of consolidation operations. The significant increase in the same period was due to the different tax treatment, compared to the previous year's valuations, regarding the revaluation of intangible fixed assets ('Trademarks'), under Decree Law no. 104/2020, attributable to the subsidiary Esseco S.r.l. for €6,812 thousand and the recognition of deferred taxes calculated on the positive balance of the reserve for expected cash flow hedging transactions, for €1,455 thousand. Details of the composition of the tax provision can be found in the relevant section of these notes to the financial statements entitled 'Income Taxes'.
c.	For €122 thousand from 'derivative financial instruments payable' arising from the fair value valuation of IRS hedging derivatives relating to financing contracts entered into by the subsidiaries Esseco Group S.r.l. and Esseco S.r.l.
d.	For €2,088 thousand from 'other provisions' (€2,171 thousand as at 31 December 2020), which include: (i) accruals, for contingent liabilities and risks, mainly related to future costs for the disposal of wastewater, solid and liquid materials in stock at the end of the financial year at the Pieve Vergonte site of the subsidiary Hydrochem Italia S.r.l. for €746 thousand, and for potential disputes with customers and employees; (ii) €853 thousand related to expenses and charges incurred as a consequence of the disposal of materials at the Pieve Vergonte site, and €159 thousand related to expenses incurred during the financial year for the safety of the production plant located in Novara.

EMPLOYEE SEVERANCE INDEMNITY PROVISION

This provision reflects the group's liabilities as at 31 December 2021 to the employees of the consolidated companies and has been allocated in accordance with current legislation and collective bargaining agreements. The balance, down by €348 thousand compared to the financial year 2020, relates to the difference between increases resulting from provisions made during the year and decreases due to the payment of severance benefits for employees who terminated their employment in the financial year 2021.

	Movements during the current financial year
Description	31.12.2020	P & L	Repayments	Other movements	31.12.2021
Employee severance indemnity	6,314	1,983	(2,331)	-	5,966

The provision, for companies incorporated under Italian law, does not include indemnities accrued as from 01/01/2007 and allocated to supplementary pension schemes pursuant to Legislative Decree no. 252 of 05/12/2005.

LIABILITIES

This item is broken down as follows:

			Analysis by due date
Description	31.12.2021	31.12.2020	Within 1 year	From 2 to 5 years	After 5 years
1) Debenture loans and bonds	-	-	-	-	-
2) Convertible debenture loans	-	-	-	-	-
3) Amounts owed to shareholders for financing	-	-	-	-	-
4) Amounts owed to banks	119,641	132,421	53,444	64,818	1,379
5) Amounts owed to other financers	10,388	10,496	69	10,319	-
6) Advances received	113	26	113	-	-
7) Trade payables	92,429	75,475	92,429	-	-
8) Debts represented by bills of exchange	-	-	-	-	-
9) Amounts owed to subsidiary companies	-	-	-	-	-
10) Amounts owed to associated companies	183	81	183	-	-
11) Amounts owed to parent companies	12,421	12,869	12,421	-	-
11-bis) Amounts owed to associates controlled by the parent companies	-	6	-	-	-
12) Tax payables	15,497	13,606	15,279	218	-
13) Amounts owed to social security institutions	3,521	3,585	3,521	-	-
14) Others	11,664	10,441	11,664	-	-
Total	265,857	259,006	189,123	75,354	1,379

The breakdown of liabilities by geographical area as at 31 December 2021 is presented in the table below:

Description	31.12.2021	31.12.2020
Italy	204,356	197,393
Europe	48,363	57,574
Other areas	13,138	4,039
Total	265,857	259,006

The item 'Amount owed to banks', which amounted to €119,641 thousand as at 31 December 2021 (€132,421 thousand as at 31 December 2020), decreased by €12,780 thousand, mainly due to lower long-term bank exposure. Bank payables due within 2021 amounted to a total of €53,444 thousand, while the remaining portion of €66,197 thousand is due within 2-5 years in the amount of €64,818 thousand, mainly for long-term loans taken out by Esseco Group S.r.l., Esseco S.r.l., Altair Chimica S.p.A., and Sofralab S.a.s., and over five years in the amount of €1,379 thousand for Esseco Group S.r.l.

'Amount owed to other financers', as at 31 December 2021, had a balance of €10,388 thousand (€10,496 thousand as at 31 December 2020). These payables refer to the financial debt of the subsidiary Hydrochem Italia S.r.l. to Tessenderlo Finance SA in liquidation, in the amount of €10 thousand, arising from the complex operation of changing the corporate structure, and to the financing portions of the leasing contracts entered into with other lenders.

As at 31 December 2021 and 31 December 2020, 'Trade payables' had a balance of €92,429 thousand and €75,475 thousand, respectively; these amounts are recorded at their nominal value and are payable within the next financial year.

'Amounts owed to parent companies', which totalled €12,421 thousand (€12,869 thousand in the previous year), refer to the cash pooling debt and taxes to be transferred to the parent company San Martino S.p.A. as a result of the group's adhesion to the tax consolidation system pursuant to Article 118, paragraph 2 of the Italian Consolidated Income Tax Act.

'Tax payables', the balance of which as at 31 December 2021 was €15,497 thousand (€13,606 thousand as at 31 December 2020), include payables for withholding taxes on wages and salaries, VAT payables, substitute tax payables relating to the revaluation of Legislative Decree no. 104/2020 and sundry tax payables. These tax liabilities mainly relate to the following subsidiaries:

Addcon Gmbh (€5.285 thousand), Esseco UK L.t.d. (€1.718 thousand), Esseco S.r.l. (€688 thousand), Addcon Nordic A.s. (€769 thousand), Essemar S.p.A. (€574 thousand) and Esseco Usa L.l.c. (€483 thousand).

'Amounts owed to social security institutions´, which amounted to €3,521 thousand, refer to the social security liability of companies and employees with regard to salaries and wages for the month of December 2021 and are in line with the previous year.

'Others', which amounted to €11,664 thousand, mainly relate to accrued employee salaries, holidays and bonuses to be paid.

ACCRUED EXPENSES AND DEFERRED INCOME

Description	31.12.2021	31.12.2020
Accruals and deferred income	4,216	2,475

As at 31 December 2021, this item mainly included accrued liabilities for insurance premiums, personnel accruals and deferred income, including those related to capital grants for projects to improve the energy efficiency of company production processes and investments in capital goods. As at 31 December 2021, there were no accruals or deferrals with a duration exceeding five years.

Off-balance sheet guarantees, commitments and liabilities

In compliance with the provisions of Article 2427, first paragraph, n. 9) of the Italian Civil Code the following information on off-balance sheet guarantees, commitments and liabilities is provided.

Information on off-balance sheet agreements

The Group has no off-balance sheet agreements.

Description	31.12.2021	31.12.2020
Group Committments	-	-
Group Guarantee	16,085	15,887
Total	16,085	15,887

The balance as at 31 December 2021 amounted to €1.085 thousand, while as at 31 December 2020 it amounted to €15.887 thousand.

The item 'Guarantees' refers to:

•	a series of guarantees given by Esseco Group S.r.l. to other group companies for a total amount of €10,566 thousand;
•	a surety that the company Esseco Group S.r.l. granted to the subsidiary Hydrochem Italia S.r.l. for the amount of €695 thousand;
•	the recognition of sureties issued on behalf of Altair Chimica S.p.A. by banks or insurance institutions for the amount of €2,671 thousand;
•	the recognition of sureties issued on behalf of Hydrochem Italia S.r.l. by banks or insurance institutions for the amount of €1,894 thousand;
•	a bank surety, in favour of Zolfindustria S.r.l., issued to a raw material supplier for the amount of €260 thousand.

INCOME STATEMENT

PRODUCTION VALUE

REVENUES FROM SALES AND SERVICES

Revenues from sales and services as at 31 December 2021 had increased by +22.4 %, and totalled €542,332 thousand (€442,956 thousand as at 31 December 2020). These include the sale of industrial chemicals, food additives, oenological aids, the trading of elemental sulphur and the production of processed sulphur for industry and agriculture.

The breakdown of revenues from sales and services by geographical area shows that about 72 % of product sales took place outside Italy, as shown in the table below:

Description	31.12.2021	31.12.2020
Italy	153,502	114,545
Europe	262,344	219,474
Overseas	126,486	108,937
Total	542,332	442,956

The Group increased its market share, mainly in Italy and Europe, in both the wine and basic chemicals sectors.

The changes are closely related to what is set out in the Management Report.

Revenues by category of activity are broken down as follows:

Descrizione	31.12.2021	31.12.2020
Net revenue from goods	531,434	434,256
Net revenue from services	10,898	8,700
Totale	542,332	442,956

The upward trend in sales revenue was achieved progressively during the financial year, partly thanks to the recovery of the wine market, both in Italy and abroad, after the difficulties caused by the pandemic, which resulted in the brands of the Group's oenology division performing well. 2021 can also be considered a fresh start on account of the commissioning of the new membrane electrolysis process at the chlor-alkali plant in Pieve Vergonte, with significant effects on sales of inorganic products. Turnover also reflected an increase in volumes combined with the increase in sales prices that characterised the last months of the year, generating a significant increase in revenues from products belonging to the Group's chemicals division.

'Sales revenues' are expressed net of premiums, allowances and returns from customers.

'Service revenues' increased compared to the previous year due to the acquisition of Océania S.a.s. laboratory analysis activities.

OTHER REVENUES AND INCOME

The item consists of the following:

Description	31.12.2021	31.12.2020
Profit on adjustment	1,376	535
Other costs recovered	127	7
Other income and commissions received	9,556	10,206
Total	11,059	10,748

Other revenues and income amounting to €11,059 thousand as at 31 December 2021, an increase of €311 thousand compared to the same period in 2020, and mainly derived from: (i) incentives from green certificates, revenues from white certificates, the hydroelectric power transmission service and other revenues relating to hydroelectric management and utility charges to tenants of leased properties in the amount of €2,829 thousand; (ii) insurance claims in the amount of €1,172 thousand at the Saline di Volterra production site; (iii) operating grants of €1,140 thousand for a project relating to 'product' research and development activities through the "Sustainable Growth Fund and Revolving Fund for Business Support and Research Investment - Sustainable Industry Call FRI DM 10.10.2017" (iv) an operating grant of €736 thousand provided by the Region of Tuscany for research and development projects; (v) €320 thousand in capital grants; (vi) a research and development tax credit mainly attributable to Esseco S.r.l. for €150 thousand, to Altair Chimica S.p.A. For €58 thousand and to Ever S.r.l. for €44 thousand, with the remainder attributable to miscellaneous non-recurring revenues.

PRODUCTION COSTS

FOR RAW MATERIALS, CONSUMABLES AND GOODS

This item consists mainly of purchases of raw materials, packaging, production aids and products purchased for resale.

Description	31.12.2021	31.12.2020
Raw materials	167,876	117,597
Finished products	44,095	40,634
Other production costs	43,254	31,355
Total	255,225	189,586

The amount of costs for raw materials, consumables and goods as at 31 December 2021 was €255,225 thousand. There was a significant increase of €65,639 thousand compared to the same period of the previous year, mainly due to the increase in the prices of raw materials such as sulphur, ammonia, potassium chloride, sodium carbonate, and sodium chloride, which form the basis of the production of the Group's companies.

COSTS FOR SERVICES

The breakdown of costs is as follows:

Description	31.12.2021	31.12.2020
Transport	50,886	42,803
Maintenance	15,840	11,775
Travel and communications	5,098	4,167
Consulting and professional fees	22,161	20,220
Other services	30,370	22,587
Total	124,355	101,552

Costs for services had a balance of €124,355 thousand as at 31 December 2021 (€101,552 thousand as at 31 December 2020), with an overall increase of 22.5 %. These costs relate to commercial services (such as transport, commissions, advertising and marketing), industrial services (mainly comprising maintenance, consumption and services) and general services (such as professional consulting, travel, training, insurance and postal and telephone expenses).

The increase over the previous year was observed in all types of service costs and most notably in transport costs (+18.9 %) and utilities (natural gas and electricity). As a result of soaring energy costs, the Group has taken special care to carefully monitor the energy balance of production sites in order to minimise the effects of price increases.

There were higher maintenance costs at all production sites (+34.5 %), a recovery in travel and communication costs (+22.3 %) after the drop in 2020, and increases in technical, professional and legal consultancy costs.

COSTS FOR USE OF THIRD PARTY ASSETS

These consist of the following:

Description	31.12.2021	31.12.2020
Long term leasing	1,850	1,678
Rental of buildings	2,148	1,943
Industrial and commercial rent	4,786	4,592
Total	8,784	8,213

The balance of costs for the use of third-party assets, as at 31 December 2021, was €8,784 thousand (+7 % compared to 31 December 2020) and was primarily related to costs for car rentals, industrial and commercial leases for the production sites of Trecate, Pieve Vergonte, Volterra and Epernay, property rentals, and the management of warehouses of the Italian and foreign sales network. The increase in this item is generalised across all Group subsidiaries and partly relates to the entry of Ocèania S.a.s. laboratories into the Group.

PERSONNEL COSTS

These costs are broken down as follows:

Description	31.12.2021	31.12.2020
a) wages and salaries	61,507	57,190
b) social security costs	16,013	14,853
c) provisions for employee severance indemnity	2,300	2,041
d) supplementary pensions and similar	139	126
e) other costs relating to staff	1,166	541
Total	81,125	74,751

Personnel costs as at 31 December 2021 amounted to €81.125 thousand (€74.751 thousand as at 31 December 2020), of which €61.507 thousand related to wages and salaries and the remainder to social security charges and provisions for severance indemnities and pensions. Personnel costs amounted to 15 % of revenues.

The average number of employees in 2021 was 1,300.

Details of the movements that took place during the year are given below:

	Movements of period
Description	31.12.2021	31.12.2020
Average number of employees	1,300	1,286
Managers/executive	61	56
Clerical staff/ manual workers	1,239	1,230

AMORTISATION, DEPRECIATION AND IMPAIRMENT

The item consists of the following:

Description	31.12.2021	31.12.2020
a) amortisation of intangible assets	8,914	4,392
b) depreciation of tangible assets	42,941	30,025
c) reduction in value of fixed assets	0	198
d) allowance for doubtful debtors	525	742
Total	52,380	35,357

Depreciation of tangible and intangible fixed assets, for the year 2021, which amounted to €52,380 thousand and was calculated on a straight-line basis based on the economic-technical life of the assets and taking into account their remaining useful life. The said depreciation mainly refers to the production plants of the Trecate (Esseco S.r.l.) and San Cipriano Po (Zolfindustria S.r.l.), Wakefield (Esseco UK L.t.d.), Volterra (Altair Chimica S.p.A.) and Epernay (Sofralab S.a.s.) sites, as well as to the depreciation of goodwill allocated as the difference between the value of the investment and the relative shareholders' equity, following the consolidation process of the companies belonging to the Group.

It should also be noted that, during the 2021 financial year, the Group wrote off receivables included in current assets for a total of €525 thousand, shown in item B10 d) of the income statement.

OTHER OPERATING EXPENSES

The item consists of the following:

Description	31.12.2021	31.12.2020
Other current taxes	1,948	2,065
Losses on adjustment	266	192
Bank charges	450	474
Consumable materials	888	785
Membership fees	475	2,044
Other expenses	3,591	2,933
Total	7,618	8,493

The item as at 31 December 2021 showed a balance of €7,618 thousand. This mainly relates to taxes and duties for the year, laboratory and miscellaneous consumables related to the core business, membership fees and bank charges accrued during the year. In particular, the item 'Other expenses' includes the extra costs for the decommissioning of the plants at the Pieve Vergonte site replaced by the new electrolysis plant with membrane technology, as well as entertainment expenses, promotional material, and other minor miscellaneous operating expenses.

FINANCIAL INCOME AND BORROWING COSTS

OTHER FINANCIAL INCOME

'Other financial income' includes:

Description	31.12.2021	31.12.2020
16 (a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	-
By parent companies	-	-
By associates companies controlled by parent companies	-	-
By other companies	20	19
Sub-Total	19	19
16 (c) from other investments that are not permanent	-	-
16 (d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	-
By parent companies	-	-
By associates companies controlled by parent companies	-	-
By other companies:	270	98
- banks	111	14
- others	159	84
Sub-Total	270	98
Total	290	117

The largest component of this balance sheet item, which consists of other interest income in the amount of €159 thousand (€84 thousand as at 31 December 2020).

INTEREST AND OTHER BORROWING COSTS

Description	31.12.2021	31.12.2020
Interest charged by bank	980	1,160
Interest on loans:	6	63
- by subsidiary companies	-	-
- by parent companies	6	4
- by other companies	-	59
Other interest	529	471
Total	1,515	1,694

'Interest charged by bank, which amounted to €980 thousand (€1,160 thousand as at 31 December 2020), decreased by €179 thousand compared to the same period of the previous year, and was mainly attributable to the parent company Esseco Group S.r.l. due to the decrease in exposure to the banking market.

CURRENCY EXCHANGE PROFITS AND LOSSES

The item consists of the following:

Description	31.12.2021	31.12.2020
Gains realised	1,728	1,759
Unrealised gains	1,151	160
Losses realised	(1,737)	(2,553)
Unrealised losses	(1,029)	(2,411)
Total	113	(3,045)

The management of financial transactions relating to currencies other than the euro, resulting in a positive balance of €113 thousand.

In particular, the profits already achieved, amounting to €1,728 thousand, were mainly generated by profits realised by Addcon Gmbh and its subsidiaries for €891 thousand; by Enartis Argentina S.a. for €125 thousand; by Esseco UK L.t.d. for €59 thousand; and by Esseco S.r.l. for €330 thousand.

Profits and losses to be realised, respectively amounting to a positive balance of €1,151 thousand and a negative balance of €1,029 thousand, resulted from the valuation of receivables and payables in foreign currency as at 31 December 2021.

In 2021, losses already realised amounted to €1,737 thousand, generated mainly by Addcon Gmbh and its subsidiaries for €855 thousand, Enartis Argentina S.a. for €292 thousand, Esseco S.r.l. for €143 thousand and Esseco UK L.t.d. for €243 thousand.

ADJUSTMENTS OF FINANCIAL ASSETS

Description	31.12.2021	31.12.2020
18) Rivaluation
a) of equity investments	49	106
b) of other permanent investment which are not equity investments	-	-
c) of temporary investments which are not equity investments	-	-
d) of derivatives	-	236
Sub-Total	49	342
19) Devaluation
a) of equity investments	41	58
b) of other permanent investment which are not equity investments	-	7
c) of non permanent investments which are not equity investments	-	-
d) of derivatives	-	-
Sub-Total	41	65
Total	8	277

Revaluations of equity investments in the amount of €49 thousand and write-downs of equity investments in the amount of €41 thousand in 2021 relate entirely to the equity valuation of the associated companies indicated in the section 'Equity investments' item b) associated companies, in this document.

INCOME TAX

Income taxes for the financial year 2021 are detailed as follows:

Description	31.12.2021	31.12.2020
Income tax on Italian and foreign companies	7,213	5,843
Deferred and advance taxation	(5,283)	496
Deferred and advance taxation deriving from consolidation adjustments	(237)	(624)
Adjustment of direct taxes of previous years	(6)	(772)
Direct Tax relating to previous years	(34)	-
Total	1,653	4,943

Taxes are allocated according to the principle of accrual; they therefore consist of:

•	provisions for taxes paid or to be paid for the year, determined in accordance with the rates and regulations in force;
•	the amount of deferred or prepaid taxes in connection with temporary differences that arose or were reversed during the year;
•	the amount of deferred and prepaid taxes arising from consolidation entries.

Deferred Tax Assets and Liabilities as at 31.12.2021

Deferred Tax Assets
	31.12.2021	31.12.2020
Italian Companies Deferred Tax Assets	8,657	4,096
Foreign Companies Deferred Tax Assets	652	898
Deferred Tax Assets from Consolidation	2.529	2,386
Total	11,838	7,380

Provision for deferred tax liabilities

	31.12.2021	31.12.2020
Italian Companies Deferred Tax Liabilities	8,306	153
Foreign Companies Deferred Tax Liabilities	2,870	1,722
Deferred Tax Liabilities from Consolidation	2,573	2,632
Total	13.749	4,507

INFORMATION ON THE FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

As required by Article 2427-bis, first paragraph, no. 1 of the Italian Civil Code, information is provided below for each category of derivative financial instruments subscribed by Esseco Group S.r.l., Esseco S.r.l., Altair Chimica S.p.A., and Ever S.r.l.

It should be noted that the derivative contract to hedge the risk of changes in interest rates (IRS) entered into by the subsidiary Ever S.r.l. in 2018 with Unicredit, was terminated with the recognition of a positive income component of €1 thousand, recorded under income.

Esseco Group S.r.l.

•	purpose: speculative;
•	notional value: €1;
•	underlying financial risk: no financial risk identified;
•	duration: acquired on 28 March 2019 as part of the acquisition of Hydrochem Srl and may generate the right to obtain, under certain future conditions, a maximum of €10 thousand.

Esseco Group S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €10 thousand;
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: negative €33 thousand;
•	duration: 29 November 2019 - 30 November 2024.

Esseco Group S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €10 thousand;
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: negative €48 thousand;
•	duration: 29 May 2020 - 31 May 2025.

Esseco Group S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €20 thousand;
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: negative €21 thousand;
•	duration: 20 January 2020 - 20 January 2027.

Esseco Group S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €19 thousand
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: negative €21 thousand;
•	duration: 31 March 2020 - 20 January 2027.

Esseco S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €5 thousand;
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: €14 thousand;
•	duration: 30 July 2020 - 30 July 2026.

Altair Chimica S.p.A.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: €4,509 thousand;
•	underlying financial risk: risk of the variable component of the price of electricity and natural gas;
•	mark-to-market as at 31 December 2021: €5,067 thousand.

Hydrochem Italia S.r.l.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: €1,070 thousand;
•	underlying financial risk: risk of the variable component of the price of natural gas;
•	mark-to-market as at 31 December 2021: €571 thousand.

Ever S.r.l.

•	derivative contract type: IRS;
•	purpose: hedging;
•	notional value: €1,126 thousand;
•	underlying financial risk: risk of changes in interest rates;
•	mark-to-market as at 31/12/2021: €0 thousand;
•	duration: 19 January 2018 - 31 December 2021.

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE FINANCIAL YEAR

Events occurring in early 2022 include:

―	On 19 February, the purchase of 35 % of Centro per l'Enologia S.r.l., a company located in Piedmont, operating in the field of trading oenology products, with a focus on the Piedmontese oenological areas, was finalised for €2,330 thousand. The purchase agreement provides for an option to purchase the remaining share of the Company, provided that certain conditions are met, in future years.
―	On 2 May, the voluntary liquidation of the company Albite S.r.l. was initiated at the notary's office. The plan is to conclude the disposal of the production plant located in Novara in the financial year 2022.
―	On 10 May, the shareholders' meetings of Esseco S.r.l. and Zolfindustria S.r.l. were held at the notary's office in preparation for the merger deed between the two companies (both wholly-owned subsidiaries of Esseco Group S.r.l.), which will take place on 21 June 2022.

OPERATING OUTLOOK

The first quarter of 2022, in an already extremely complex macro-economic environment due to various issues relating to the pandemic, the availability and price increases of raw materials, inflationary pressures, and rising logistics and energy costs, was exacerbated by the military events relating to Russia's invasion of Ukraine. The Esseco Group is not directly active in either of these two countries.

It is difficult to predict how this macro-economic context will develop in the coming months and the effects thereof. One consequence of the high level of inflation, which is still rising, will certainly be an increase in interest rates and, consequently, the cost of money in the course of 2022. Global growth is therefore expected to slow down in 2022 and, towards the end of the year, inflation is expected to fall slightly from the peaks reached in recent months.

This situation, which has been carefully monitored by the Esseco Group, has not to date had a significantly negative effect on the Group's business and, consequently, there is no indication to report any impairment indicators on the value of the assets recognised in the financial statements as at 31 December 2021. The start of 2022 seems to confirm a continuation of the positive trend of the past year, particularly in continuation of Q4 2021. Sales and contribution margins for both Group Divisions were excellent and in line with forecasts thanks to the Group's ability to pursue its growth strategy, which is aimed at strengthening its leadership in its reference markets.

From the point of view of raw material costs, the current shortages of raw materials could lead to further increases in procurement prices, compared to those already recorded throughout the financial year 2021. In order to protect margins, at the end of 2021 the Group worked to secure large volumes of the raw material potash used in its processes to guarantee high business profitability at the beginning of 2022.

In addition to the rising prices of raw materials and utilities, there is also the climate issue which is characterised by the droughts that have been plaguing our country since last autumn; hydroelectric power generation from the power plants serving the Pieve Vergonte production site has provided much needed support in this period of rising energy resource prices, whilst it has remained at historically low values.

The Group, aware of the issue of energy efficiency, aims to fully secure its own energy production through future investments in photovoltaic parks as a strategy to improve its competitiveness and sustainability in Italy and Europe.

INFORMATION PURSUANT TO ARTICLE 1, PARAGRAPH 125 OF LAW NO. 124 OF 4 AUGUST 2017

Pursuant to Article 1, paragraph 125 of Law no. 124 of 4 August 2017, in compliance with the obligation of transparency, it is reported that the following grants, paid assignments and any other economic advantages of any kind have been received from public administrations:

Esseco S.r.l. obtained approval to receive the 'Tax credit for advertising investments in favour of sports leagues and societies' in the amount of €50 thousand, and consequently recorded it in the current year. In addition, it is participating in the MISE project 'FCS Major Projects 'Sustainable Industry - Intervention of the Sustainable Growth Fund for major research and development projects in the area of specific topics relevant to 'sustainable industry' Esseco 2021: product innovation'. In connection with this project, €1,140 thousand was received during the year as a non-repayable operating grant. Finally, during the first months of the 2022 financial year, the company obtained and cashed in, through a primary credit institute, a subsidised loan for €3,820 thousand, also related to the facilitation project.

During the year, Altair Chimica S.p.A. obtained €810 thousand from the sale of White Certificates for the year 2020 and €9 thousand from Fondimpresa for employee training in the year 2020. Through Sviluppo Toscana S.p.A., it also received €24 thousand as the final balance for the 'Green Field Peas' project, €207 thousand as a first advance on the Enterprise project, €176 thousand as a second advance on the Enterprise project and, through Simest, the sum of €320 thousand for a non-repayable grant pursuant to Law no. 133/058 Article 6, paragraph 2, letter c.

During the 2017 financial year, Essemar S.p.A. adhered to the Region of Piedmont's P.O.R. Call for Proposals. ERDF 2014/2020 - Axis IV Action IV.4b.2.1 - Energy Efficiency and Renewable Energy in Enterprises, for which it obtained a soft loan in the same financial year.

The company, in fact, obtained a five-year loan with Mediocredito Italiano S.p.A. (merged into Banca Intesa S.p.A. on 27 September 2017) for €187 thousand, of which €140 thousand through resources made available by Finpiemonte S.p.A. at zero rate, and €47 thousand at a floating rate (Euribor 3M increased by a spread of 1 %); the loan was repaid in full during the period.

In 2021, the company received formal confirmation of €4 thousand as an incremental IRAP credit as 'State Aid', as emerging from the IRAP 2020 tax return sent (credit already recognised in the previous year and for which the relevant information had already been provided).

In 2021, Hydrochem Italia S.r.l. partially collected €3,039 thousand for green certificate incentives (gross of withholding taxes of 4 %) provided by G.S.E. (Gestore dei Servizi Energetici).

It should be noted that the remaining Group companies did not receive any subsidies from public administrations significant for the purposes of this law.

DIRECTORS' COMPENSATION AND AUDITORS' FEES

As required by law, we inform you that the directors of the parent company Esseco Group S.r.l. accrued for the year 2021 emoluments in the amount of €285 thousand for their positions held in the Board of Directors of Group companies and that the statutory auditors accrued emoluments in the amount of €159 thousand for their positions held in the Board of Statutory Auditors of Group companies.

LEGAL AUDITOR OR AUDITING COMPANY FEES

As required by law, we inform you that the fees accrued for the year 2021 for services rendered by the statutory auditor in respect of group companies amounted to €480 thousand.

DISCLOSURE OF GROUP MANAGEMENT AND COORDINATION ACTIVITIES

Pursuant to Article 2497 bis, paragraph 4 of the Italian Civil Code, the following table shows the essential data of San Martino S.p.A., the company exercising management and coordination activities, with reference to the last approved financial statements:

Description	31.12.2020
BALANCE SHEET
ASSETS
A Amount due from shareholders for share capital yet to be paid up	0
B Fixed Assets	19,655
C Current Assets	22,243
D Accrued income and prepaid expenses	48
Total assets	41,946
LIABILITIES AND SHAREHOLDER EQUITY
A Shareholders' Equity:	37,885
- Share Capital	4,320
- Reserves	24,057
- Retained earnings	0
- Net Income (loss) for the period	9,507
B Provision for risk and charges	0
C Staff Leaving indemnity	0
D Payables	4,060
E Accrued expenses and deferred income	1
Total liabilities and shareholders' equity	41,946
INCOME STATEMENT
A Value of production	61
B Cost of production	514
C Financial income and expenses	10,004
D Adjustment to value of financial assets	0
Income tax for the year	44
Net income (loss) for the year	9,507

These consolidated financial statements, consisting of the balance sheet, income statement, cash flow statement and notes to the financial statements, give a true and accurate view of the financial position and results of operations and correspond to the accounting records of the parent company and the information provided by the companies included in the consolidation. They also comply with legal requirements.

The following German subsidiaries included in the consolidated financial statements of Esseco Group S.r.l. are exempt from the obligation to disclose annual financial statements pursuant to Article 264 (3) of the HGB:

―	ADDCON GmbH, Bitterfeld-Wolfen;
―	ADDCON Europe GmbH, Bitterfeld-Wolfen.

APPENDIX A

LIST OF COMPANIES IN THE CONSOLIDATION AREA AS OF 31.12.2021

Company name	Registered offices	% owned directly	% owned indirectly	Consolidation method
Esseco Group Srl	Italy	Controllante	-	Line-by-line basis
Esseco Srl	Italy	100.00	100.00	Line-by-line basis
Zolfindustria Srl	Italy	100.00	100.00	Line-by-line basis
Essemar Spa	Italy	50.00	50.00	Line-by-line basis
Altair Chimica Spa	Italy	100.00	100.00	Line-by-line basis
Altair Chimica Iberica SI	Spain	100.00	100.00	Line-by-line basis
Hydrochem Italia Srl	Italy	100.00	100.00	Line-by-line basis
Albite Srl	Italy	100.00	100.00	Line-by-line basis
Esseco do Brasil Ltda	Brazil	100.00	100.00	Line-by-line basis
Esseco France Sas	France	100.00	100.00	Line-by-line basis
Esseco Chemicals de Mexico SA	Mexico	100.00	100.00	Line-by-line basis
Italiana Biotecnologie Srl	Italy	100.00	100.00	Line-by-line basis
Enartis Sepsa Sau	Spain	100.00	100.00	Line-by-line basis
Making Value in Enology SI	Spain	100.00	100.00	Line-by-line basis
Esseco Usa Llc	USA	100.00	100.00	Line-by-line basis
Enartis USA Inc	USA	100.00	100.00	Line-by-line basis
Oenofrance USA Llc	USA	100.00	100.00	Line-by-line basis
Esseco Uk Ltd	UK	100.00	100.00	Line-by-line basis
Enartis Chile Ltda	Chile	100.00	100.00	Line-by-line basis
Enartis Argentina Sa	Argentina	100.00	100.00	Line-by-line basis
Enartis Portugal Lda	Portugal	100.00	100.00	Line-by-line basis
Enartis South Africa (Pty) Ltd	South Africa	100.00	100.00	Line-by-line basis
Enartis Pacific (Pty) Ltd	Australia	100.00	100.00	Line-by-line basis
Enartis Central Europe Sro	Slovakia	100.00	100.00	Line-by-line basis
Enocompany Srl	Italy	40.00	40.00	Equity
Enotre Srl	Italy	80.00	32.00	Equity
Enartis Srl	Italy	100.00	100.00	Cost
Centro per I'enologia Srl	Italy	35.00	35.00	Equity
Addcon Gmbh	Germany	100.00	100.00	Line-by-line basis
Addcon Europe Gmbh	Germany	100.00	100.00	Line-by-line basis
Addcon Nordic As	Norway	100.00	100.00	Line-by-line basis
Addcon Asia Ltd	Hone Kong	100.00	100.00	Line-by-line basis
Addcon Asia Co Ltd	Thailand	100.00	100.00	Line-by-line basis
Addcon Dalian Co	China	100.00	100.00	Line-by-line basis
Addcon Nutrition Technology Co Ltd	China	60.00	60.00	Cost
Ever Srl	Italy	85.00	85.00	Line-by-line basis
Ever Brasil Ltda	Italy	90.00	76.50	Line-by-line basis
Ever Trade Sro	Brazil	100.00	85.00	Line-by-line basis
Enologica Friulana Srl	Slovakia	90.00	76.50	Line-by-line basis
Ever Deutschland Gmbh	Germany	80.00	68.00	Line-by-line basis
Bluagri Srl	Italy	80.00	68.00	Line-by-line basis
Ever Solution Pty Ltd	South Africa	100.00	85.00	Line-by-line basis
Ever France Sau	France	100.00	85.00	Line-by-line basis
Bluagri Industria e Comercio Fertilizantes Ltda	Brazil	80.00	68.00	Line-by-line basis
Enosfera Srl	Italy	33.33	28,33	Equity
Ronci Srl	Italy	25.00	21.25	Equity
Sofralab Sas	France	100.00	100.00	Line-by-line basis
SBO Sas	France	68.14	68.14	Line-by-line basis
Petite Suisse Sarl	France	100,00	100.00	Line-by-line basis
Oenovisions Sas	France	53.60	53.60	Line-by-line basis
Embouteillage 2000 Sas	France	47,60	25.51	Equity
Oenofrance Italia Srl	Italy	100.00	100.00	Line-by-line basis
Sofralab Portugal Lda	Portugal	100.00	100.00	Line-by-line basis
Vitis Sarl	France	36.00	36.00	Equity
Océania Sas	France	100,00	100.00	Line-by-line basis
Oenochene Sas	France	11.40	11.40	Cost
SE.TRA.S. S.r.l.	Italy	15.00	15.00	Cost

APPENDIX B

PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

SECTION 1 - COMPANIES VALUE IN EURO

Company name	Registered offices	Share Capital	Net Equity	Net income / loss for the year
Esseco Group Srl	Italy	EUR 10,000,000	EUR 116,108,887	EUR 13,333,031
Esseco Srl	Italy	EUR 10,000,000	EUR 109,340,127	EUR 4,247,131
Zolfindustria Srl	Italy	EUR 800,000	EUR 7,977,958	EUR 62,099
Essemar Spa	Italy	EUR 3,000,000	EUR 9,598,904	EUR 609,650
Altair Chimica Spa	Italy	EUR 2,921,000	EUR 72,375,083	EUR 9,333,279
Altair Chimica Iberica SI	Spain	EUR 3,000	EUR 3,332,175	EUR 1,334,633
Hydrochem Italia Srl	Italy	EUR 6,904,208	EUR 14,818,806	EUR 3,868,097
Albite Srl	Italy	EUR 100,000	EUR 3,317	EUR -1,177,579
Esseco France Sas	France	EUR 20,000	EUR 518,895	EUR 125,318
Italiana Biotecnologie Srl	Italy	EUR 110,000	EUR 220,056	EUR 19,397
Enartis Sepsa Sau	Spain	EUR 1,540,891	EUR 15,608,112	EUR 6,844,678
Making Value in Enology SI	Spain	EUR 5,000	EUR 625,719	EUR 227,027
Enartis Portugal Lda	Portugal	EUR 25,110	EUR 5,413,630	EUR 1,537,718
Enartis Central Europe Sro	Slovakia	EUR 100,000	EUR -285,990	EUR -5,823
Enocompany Srl	Italy	EUR 100,000	EUR 64,103	EUR -12,000
Enotre Srl	Italy	EUR 10,910	EUR 383,363	EUR 10,333
Enartis Srl	Italy	EUR 20,000	EUR 20,381	EUR 3,107
Centro per I'enologia Srl	Italy	EUR 50,000	EUR 2,583,220	EUR 939,305
Addcon Gmbh	Germany	EUR 25,000	EUR 2,104,272	EUR 1,576,346
Addcon Europe Gmbh	Germany	EUR 25,564	EUR 3,040,945	EUR 282,139
Ever Srl	Italy	EUR 500,000	EUR 31,271,221	EUR 4,501,493
Ever Trade Sro	Slovakia	EUR 10,000	EUR 742,398	EUR 94,491
Enologica Friulana Sri	Italy	EUR 20,000	EUR 671,859	EUR -21,959
Ever Deutschland Gmbh	Germany	EUR 50,000	EUR 289,299	EUR 127,314
Blu Agri	Italy	EUR 20,000	EUR -269,238	EUR 38,265
Ever France Sau	France	EUR 20,000	EUR -445,540	EUR -262,965
Enosfera Srl	Italy	EUR 21,000	EUR 302,668	EUR 36,474
Ronci Sri	Italy	EUR 20,000	EUR 81,827	EUR 61,827
Sofralab Sas	France	EUR 1,315,600	EUR 10,874,981	EUR 1,452,445
SBO Sas	France	EUR 180,800	EUR 694,261	EUR 93,246
Petite Suisse Sarl	France	EUR 2,000	EUR 1,183,094	EUR 289,505
Oenovision Sas	France	EUR 55,974	EUR 905,427	EUR 128,159
Oenofrance Italia Srl	Italy	EUR 100,000	EUR 4,557,145	EUR 688,831
Sofralab Portugal Lda	Portugal	EUR 60,000	EUR 40,873	EUR 35,486
Vitis Sarl	France	EUR 21,343	EUR 201,985	EUR 128,859
Océania Sas	France	EUR 133,400	EUR 536,333	EUR -7,057
Embouteillage 2000 Sas	France	EUR 80,000	EUR 141,913	EUR -73,996
Oenochene Sas	France	EUR 415,400	EUR 975,900	EUR -50,000
SE.TRA.S. S.r.l. ^*	Italy	EUR 1,000,000	EUR 6,220,224	EUR 545,891

^* Last balance available 2020

APPENDIX B (follow)

PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

SECTION 2 - COMPANIES VALUE IN CURRENCY DIFFERENT THAN EURO

Company name	Registered offices	Share Capital	Net Equity	Net income / loss for the year
Esseco do Brasil Ltda	Brazil	BRL 16,921,314	BRL -6,876,246	BRL -1,929,949
Esseco Chemicals de Mexico SA DE C.V.	Mexico	MXN 500,000	MXN -1,774,261	MXN -530,801
Esseco Usa Llc	USA	USD 1,000,000	USD 17,411,963	USD 2,354,120
Enartis USA Inc	USA	USD 889,308	USD 4,479,694	USD 1,578,677
Oenofrance USA Llc	USA	USD 1,100,000	USD 316.408	USD -116,818
Esseco Uk Ltd	UK	GBP 250,000	GBP 16,629,543	GBP 3,699,239
Enartis Chile Ltda	Chile	CLP 400,000,000	CLP 2,625,073,128	CLP 461,289,862
Enartis Argentina Sa	Argentina	ARS 36,663,859	ARS 311,012,879	ARS 64,707,313
Enartis South Africa (Pty) Ltd	South Africa	ZAR 12,119,843	ZAR 20,426,841	ZAR 7,955,061
Enartis Pacific (Pty) Ltd	Australia	AUD 4,321,632	AUD 1,855,652	AUD 296,733
Ever Brasil Ltda	Brazil	BRL 1,145,176	BRL 25,331,995	BRL 9,937,134
Ever Solution Pty Ltd	South Africa	ZAR 500	ZAR 235,435	ZAR 2,176,207
Bluagri Industria e Comercio Fertilizantes Ltda	Brazil	BRL 100,871	BRL -1,167,589	BRL -1,083,691
Addcon Nordic As	Norway	NOK 6,247,335	NOK 86,926,166	NOK 1,200,461
Addcon Asia Ltd	Hong Kong	HKD 250,000	HKD -405,594	HKD 2,280,943
Addcon Asia Co Ltd	Thailand	THB 2,000,000	THB -13,141,674	THB -691,705
Addcon Dalian Co	China	CNY 2,500,000	CNY 1,166,746	CNY 1,575,597
Addcon Nutrition Technology Co Ltd	China	CNY 1,704,471	CNY -107,462	CNY -35,355

Consolidated financial statements as at December 31, 2021

Independent auditor's report in pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010

To the Sole Quota Holder of Esseco Group S.r.l.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Esseco Group S.r.l. (the Group), which comprise the balance sheet as at December 31, 2021, the income statement and consolidated statement of cash flows for the year then ended, and explanatory notes.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at December 31, 2021, and of its financial performance and its cash flows for the year then ended in accordance with the Italian regulations governing financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Esseco Group S.r.l. in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements

The Directors are responsible for assessing the Group's ability to continue as a going concern and. when preparing the consolidated financial statements, for the appropriateness of the going concern assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial statements on a going concern basis unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The statutory audit committee ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

•	we have identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
•	we have obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;
•	we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;
•	we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;
•	we have evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
•	we have obtained sufficient appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

Report on compliance with other legal and regulatory requirements

Opinion pursuant to article 14, paragraph 2. subparagraph e), of Legislative Decree n. 39 dated 27 January 2010

The Directors of Esseco Group S.r.l. are responsible for the preparation of the Report on Operations of Esseco Group S.r.l. as at December 31, 2021, including its consistency with the related consolidated financial statements and its compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Report on Operations, with the consolidated financial statements of Esseco Group S.r.l. as at December 31, 2021 and on its compliance with the applicable laws and regulations, and in order to assess whether it contains material misstatements.

In our opinion, the Report on Operations is consistent with the consolidated financial statements of Esseco Group S.r.l. as at December 31, 2021 and comply with the applicable laws and regulations.

Milan, 1 June 2022

EY S.p.A.

Aldo Alberto Amorese, Auditor

This report has been translated into the English language solely for the convenience of international readers.

32:T664,

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

Gem. § 264 Absatz 3 Nr. 1 HGB stimmt hiermit die ADDCON GmbH, Bitterfeld-Wolfen, als 100%iger Gesellschafter der Befreiung für das zum 31.12.2021 endende Geschäftsjahr zu. Dieser Beschluss wird gem. § 325 HGB offengelegt.

Zwischen der Gesellschaft und der ADDCON GmbH, Bitterfeld-Wolfen, besteht ein Ergebnisabführungsvertrag, der im Handelsregister der Gesellschaft veröffentlicht ist und aus dem sich eine Einstandspflicht durch die Verlustübernahmeerklärung und Anwendung der Regelungen des § 302 des Aktiengesetzes entsprechend der Voraussetzungen des § 264 Abs. 3 Nr. 2 HGB ergibt.

Bitterfeld-Wolfen, den 30. August 2021

gez. Alberto Cambieri und Kurt Wegleitner

33:T712b9,

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

ESSECO GROUP S.R.L

Consolidated Financial Statements as at 31 December 2020:

• Directors' Report

• Balance Sheet, Income Statement and Statement of Cash Flows

• Explanatory Notes

• List of companies included in the consolidation area as at 31 December 2020

• Principal data extracted from the latest financial statements of subsidiary and associated companies

• Independent auditors' report on the consolidated finance statements of the Esseco Group S.r.l. as at 31 December 2020

DIRECTOR'S REPORT

REFERENCE ECONOMIC FRAMEWORK

The global economic situation in 2020 was fluctuating, after the first wave of the COVID-19 pandemic determined by uncertain economic prospects, the fear of the gradual increase in contagion and the consequence of the containment measures, but a recovery that was better than expected was recorded in the summer months. With the arrival of a new pandemic wave after the summer, the economy was partly affected, especially in Europe, in the fourth quarter of 2020.

At the beginning of 2021, vaccination campaigns were launched that give hope for a recovery in the medium/long term. The continuation of the vaccination campaigns in the first quarter of 2021, and the support of the economic policies implemented by the governments, are reflected in global improvement prospects, despite the various trends. The vaccination campaign is in fact more sustained in the United States and in the United Kingdom, slower in Europe and more delayed in emerging countries. In the short term, uncertainties remain linked to the evolution of the pandemic and its repercussions on the economy, due to the delays in the vaccination campaign and the spread of new virus variants.

Despite the recovery of the pandemic, the global economic recovery was considerable in the fourth quarter of 2020 and continued in the first quarter of 2021, mainly in the manufacturing sector in the main advanced economies, to the detriment of the slowdown in the services sector. Only in China, where the contagions have almost disappeared since last spring, is there an increase in all sectors. In Europe and especially in Italy, the recovery of the pandemic was intense and the strengthening of the containment measures led to a slowdown in economic activity.

	GDP growth and inflation (percentage changes)
	GDP growth			Inflation (1)
	2019	2020 Q3 (2)	2020 Q4 (2)	2021 March (3)
Advanced countries
Japan	0.3	22.8	11.7	-0.4
United Kingdom	1.4	87.1	5.2	0.4
United States	2.2	33.4	4.3	2.6
Emerging countries
Brazil	1.4	-3.9	-1.1	6.1
China	6.0	4.9	6.5	0.4
India	4.8	-7.4	0.4	5.5
Russia	2.0	-3.5	-1.8	5.8

Source: National statistics.

(1) Consumer price index, year-on-year change. - (2) Quarterly changes, annualized and seasonally adjusted for the advanced countries; year-on-year changes for the emerging countries. - (3) February 2021 data for Japan and the United Kingdom.

At the end of 2020, GDP in the United States, Japan and the United Kingdom was still below the prepandemic levels. In China, pre-crisis levels had already been recovered in the third quarter, with increased growth.

In the first few months of 2021, consumer inflation in the main advanced economies rose, but now remains generally contained. There was positive change also in the Eurozone, which was affected by temporary factors, in addition to the performance of the energy component, whose impact will be absorbed during the year.

	Macroeconomic projections (changes and percentage points)
	2020	Forecasts (1)		Revisions (2)
		2021	2022	2021	2022
GDP
World	-3.3	6.0	4.4	0.5	0.2
of which:
Advanced countries
Euro area	-6.6	4.4	3.8	0.2	0.2
Japan	-4.8	3.3	2.5	0.2	0.1
United Kingdom	-9.9	5.3	5.1	0.8	0.1
United States	-3.5	6.4	3.5	1.3	1.0
Emerging countries
Brazil	4.1	3.7	2.6	0.1	0.0
China	2.3	8.4	5.6	0.3	0.0
India (3)	-8.0	12.5	6.9	1.0	0.1
Russia	-3.1	3.8	3.8	0.8	-0.1
World trade	-8.4	9.3	-	2.1	-

Sources: IMF. World Economic Outlook, April 2021, and Banca d'Italia, based on national accounts and customs data for world trade. (1) Percentage changes. - (2) Percentage points. For GDP, revisions compared with IMF. World Economic Outlook Update, January 2021. For world trade, revisions compared with the forecasts published in January 2021 (see Banca d'Italia, Economic Bulletin, 1,2021. - (3) The data refer to the fiscal year starting in April.

The forecasts relating to global economic activity have been revised upwards by 0.5 percentage points in 2021 and 0.2 percentage points in 2022 thanks to the ongoing progress in immunizations and the approval of the plan prepared in the United States, which provides for a budget stimulus of USD 1,900 billion over the next ten years. Global output is therefore expected to grow by 6% in 2021, surpassing the pre-pandemic levels by the end of the year, and by 4.4% in 2022.

Euro-area GDP growth and inflation (percentage changes)
	GDP growth			Inflation
	2020	2020 Q3(1)	2020 Q4 (1)	2021 March (2)
France	-8.1	18.5	-1.4	(1.4)
Germany	-4.9	8.5	0.3	(2.0)
Italy	-8.9	15.9	-1.9	(0.6)
Spain	-10.8	17.1	0.0	(1.2)
Euro area	-6.6	12.5	-0.7	(1.3)

Sources: Based on national statistics and Eurostat data.

(1) Quarterly data adjusted for seasonal and calendar effects: percentage change on previous period. - (2) Year-on-year percentage changes in the harmonized index of consumer prices (HICP).

In the Eurozone, GDP rose more than expected in the third quarter of 2020 (by 12.5%), after a cumulative loss of 15% in the first half of the year. Output grew in all the main economies, but did not return to the values prior to the onset of the epidemic in any of them. In the fourth quarter of 2020, on the other hand, we had a relapse due to new fears of contagion and new production and trade activities closures, reflecting the negative contribution of the services sector, against a positive contribution from manufacturing. GDP grew slightly in Germany, remained constant in Spain, and decreased in France and Italy.

Inflation stood at 1.3 in March 2021 with an increase compared to December 2020, a projection of 1.5% in 2021, 1.2% in 2022, and 1.4% in 2023.

To maintain favourable financial conditions in the Eurozone, the Governing Council of the European Central Bank decided to increase purchases of securities as part of the pandemic emergency program. It was a decision taken to counter the risk that the rise in yields observed on international markets would translate into a premature tightening of financial conditions in the area.

In the course of 2020, lending to businesses increased at a high rate in the first half of the year with the aim of ensuring the main operational functions and financing investments, and then remained substantially stable in October and November. On the other hand, there was a growing trend in the first quarter of 2021, with significant credit expansion in Italy, France and Germany.

Italian economic performance

GDP

Overall, in 2020, Italian GDP decreased by 8.9%.

GDP decreased by -1.9% in the fourth quarter of 2020 compared to the third quarter, which had recorded a performance well above expectations. The decrease in activities, less accentuated than expected, is mainly attributable to the services sector and marginally to the manufacturing sector, an effect resulting from the actions taken by the State to contain the contagion and from people fearing to expose themselves to the risk of contagion. In the first quarter of 2021, production remained unchanged compared to the last quarter of 2020, albeit with uncertainty in the services sector.

After the peak recorded in the summer months, industrial production weakened in the last few months of the year. This trend is reflected in the lower use of gas and electricity in production sites and the decrease in motorway traffic, as shown in the chart relative to "economic indicators".

From the surveys carried out by the Bank of Italy, the fears slowing down households' consumption are mainly linked to contagion, rather than to restrictive measures. In 2021, households indicate a recovery in the intention to consume, but propensity to save remains high.

Labour Market

In the third quarter of 2020, hours worked significantly increased due to the reopening of many activities, as did the number of people in employment, with a decrease in the use of hours of the Wage Guarantee Fund (Cassa Integrazione Guadagni - CIG) and of other salary integration measures. Production activity and therefore, hours worked, fell again in the fourth quarter of 2020, with a consequent increase in the use of CIG. Specifically, the hours worked fell by 1.5%, both in the manufacturing sector and in private services. The numbers in employment rose, but employment levels remain below those recorded prior to the COVID emergency. The resilience of employment also derives from the freezing of redundancies and from the Wages Guarantee Fund (CIG), with more than one billion authorised hours and solidarity funds, requests in any case lower than the first pandemic wave.

In the first few months of 2021, the creation of new jobs is stable and wage growth remains low.

Inflation

Inflation was negative in the last months of 2020, while in the first few months of 2021 it returned to being positive, thanks to the trend in energy prices. Based on preliminary data, in March 2021, inflation was 0.6%. An average inflation of 0.8% is expected for 2021.

Performance of the Italian chemical sector

Despite the health crisis, the chemical sector in Italy shows a greater resilience than the industry in general and has continued its production activities, proving to be an essential activity for the production of substances useful for countless industries. During the first lockdown, which began in mid-March 2020, the chemical sector continued to serve essential industries such as food and pharmaceuticals, despite the fact that many activities were stopped by containment measures. The demand for all chemical products essential for health has grown significantly. In addition, safety requirements have driven the demand for plastics used for personal protective equipment.

In the summer months, there was a gradual recovery in demand, also from the customer sectors most penalised by the health emergency. Recovery was recorded mainly in the construction and automotive sectors, while the textile and leather sectors were weak. The persistent difficulties in the fashion system and of some typical specialisations in the Made in Italy sector, together with a more restrictive closure, explain a more negative trend in chemicals in Italy than the European average (down 3.6%) after four consecutive years when domestic production had recorded a much more sustained growth (+6% in 2015-2019 compared to +1% in Europe).

In the light of the second wave in the fourth quarter, chemical production in Italy closed with a 9% contraction. In a 2021 perspective, where the scenario remains uncertain and linked to the evolution of the health crisis, tension situations emerge in relation to the shortage of certain raw materials (including sulphur, also in relation to the lower production levels of refineries) which, together with the consumption recovery, is generating upward pressure on the prices of finished products.

The continuation of the crisis also risks exacerbating the liquidity problems of the most fragile customers in the form of delayed payments and possible insolvencies. In any case, the chemical sector is one of the most solid from an economic-financial point of view.

CHEMICAL PRODUCTS

General trend in 2020 and recent developments in the group

Sales volumes for the year 2020 for the Chemical Products Division of the Esseco Group showed a decrease compared to 2019 volumes (-2.8%). This decline is attributable almost exclusively to the effects of the pandemic, which had a significant impact due to a sharp drop in consumption, especially for all "non-essential" markets. Specifically, the products linked to FOOD production were not particularly affected by the COVID effect as consumption continued normally if not to a greater extent. On the other hand, all products used in most industrial or non-essential consumer sectors, such as automotive and textiles, suffered a serious reduction in volumes.

After a very intense 2019 characterised by the acquisition of six companies within the Chemical Division, during 2020 acquisitions were consolidated, both through an integration of the group's systems and processes (Addcon group) and through the completion of the investment in Pieve Vergonte (Hydrochem Italia S.p.A.) which was completed in the first quarter of 2021.

From a geographical point of view, sales followed the pandemic incidence in the world, therefore it should be noted that in 2020 the greatest loss in volumes sold compared to 2019 was recorded in Europe (-3.5%) and Mexico (-28%), while in other areas of the world the pandemic effect did not have an impact on volumes, with an even better result in North America (+ 2.7%) and Asia (+ 3.6%), even if the Asian case is almost entirely to be attributed to the Asian companies of the Addcon group which, being in the full development phase, record significant increases every year as the full allocation of the productions available in these markets has not yet been achieved.

A case very similar to that of Asia is South America, where in 2020 there was an increase in volumes of 27%. This anomalous increase in volumes, also in relation to the health emergency, is due to the resolution of the plant problems that had characterised Esseco do Brasil in 2019, and therefore in 2020, albeit within the COVID difficulties that have heavily impacted Brazil, it was possible to return to a normal production regime. These higher volumes are therefore attributable to liquid products manufactured on site and intended for the cellulose processing and water treatment sector.

Looking more closely at the European market, the growth in volumes in the Chlor-Alkali area continues, in line with 2019 (and in contrast to the macroeconomic situation of 2020), with an increase in volumes in this sector of + 7% compared to 2019, mainly thanks to the increase in growth in Italy (+ 11%) and France (+ 24%), driven by both caustic potash and chlorinated products.

On the other hand, the volumes of sulphites, which probably represent the product category most affected by the pandemic crisis, declined, with an overall decrease of 6% in volumes compared to 2019. These products recorded the greatest losses in volumes in Italy, with regard to liquid products (-15%), and Mexico, with regard to solid products (-38%), where shipments were interrupted for six months. On the other hand, the UK went against the trend, with a + 1.5% increase, mainly due to the reinvigorated sales due to new trade agreements, as did Brazil with a + 24% increase, where, however, the already mentioned improvement of the on-site production plant played a part.

The ammonia derivatives, after two years of decreasing trend in the volumes - mainly due to the opening of a large plant in Northern Europe by a competitor, recorded an increase of + 3% volume, although this product family's portfolio has changed dramatically, with a 14% increase compared to 2019 in products for the Food and Oil Drilling markets and a 9% decrease in products for the agricultural sector, with a sharp decrease in volumes in France.

Speaking of seasonal businesses, it should be noted that de-icers, intended for the defrosting of airport runways, aircraft wings and more generally for public roads, experienced a very negative year compared to 2019, with a decrease of essentially 50% of the total volumes, due to both a very mild January-February 2020 and a very late 2020-2021 winter. On the other hand, we did very well in the first few months of 2021, where we benefited from cold temperatures and heavy snowfalls.

Factory situation

In this difficult context, the group fully continued its activities of plants at production sites, while at the same time continuing with planned maintenance activities. It is reported that the Altair Chimica S.p.A. plant in Saline di Volterra continued to develop production during the year and, therefore, after one year of consolidation in 2019, significant investments were made for site energy efficiency improvements and to increase the production capacity of solid products derived from potash, as well as the optimisation of the production of chlorinated products, in particular for Ferric Chloride. During 2020, investment activities continued at the Pieve Vergonte site, where, following the acquisition of Hydrochem Italia S.p.A., which took place in 2019 from the German group ICIG, the construction of a new membrane electrolysis plant began, similar to the one already in operation in Saline di Volterra and completed at the beginning of 2021.

As regards the Esseco S.r.l. plant in Trecate, in 2020 there was the start-up of the new plant for the production of ammonium bicarbonate and the fine tuning of the sodium hydroxide plant.

With regard to the two new plants acquired at the end of 2019, Addcon Europe Gmbh in Bitterfeld (Lower Saxony, Germany) and Addcon Nordic Sa in Porsgrunn (Oslo area, Norway), no significant interventions have yet been carried out, but in 2020 the group simply continued with the investments started by the previous owner in 2019.

In the 2020 financial year, there were no particular works carried out in the Esseco UK and Esseco do Brasil plants.

Raw materials performance

Sulphur

Following the sharp decrease in cost recorded in 2019, in 2020 the cost of sulphur was stable for the first 3 quarters, without showing any impact from the pandemic. Starting from the beginning of the last quarter of 2020, there was a strong increase in the cost of this raw material, a trend that was confirmed in the first part of 2021, also with very high values outside of the range observed in the last decade, values experienced only after the Subprime crisis of 2008.

Caustic Soda

As both producers and consumers of this raw material, we have a different approach to assessing the evolution of its cost.

In the first part of 2020, caustic soda showed an increasing trend, but after the pandemic event that led, as described above, to a strong increase in the consumption of chlorine derivatives (produced in the same process as caustic soda), which caused a decrease in cost due to increased availability.

Sodium Carbonate

There was a slight increase in cost at the beginning of 2020 for soda ash, even though the succession of momentous events of 2020 meant that this product, generally stable throughout the entire calendar year, showed a drop in cost in the second half of the year.

Potassium Chloride

Also in this case, the incidence of COVID meant that starting from the second quarter of 2020 there was a sharp drop in the price of this raw material (used to produce caustic potash and all its derivatives), which led to the lowest price of the decade at the end of 2020.

Ammonia

This product, which has the particular characteristic of being the most widely used raw material in the production sites of Esseco Group, not so much in terms of volumes but in terms of presence, given its use in 5 out of 8 production sites, maintained a constant value throughout 2020, a value that had decreased considerably in 2019. At the end of 2020, there was a slight increase, also confirmed by significant increases in the first months of 2021.

OENOLOGICAL PRODUCTS DIVISION

General performance in 2020

2020 wine production

World production of wine in 2020, excluding juices and must, is estimated at around 258 million hl, in line with the previous year. The first estimates for 2020 show a production volume that can be defined below average for the second consecutive year; the reduction is not necessarily bad news for the wine sector, given the current context in which geopolitical tensions, climate change and the COVID-19 pandemic are generating a high degree of volatility and uncertainty in the global wine market. In the European Union, the good weather conditions favoured a potentially abundant 2020 harvest, albeit limited by various measures both at government level and at producer association level, aimed at mitigating the negative direct and indirect effects of the COVID-19 pandemic on the global wine market. This year's production volume is estimated at 159 million hl, excluding juices and must, about 5% higher than in 2019, the result of a heterogeneous situation in the various countries. Italy (47.2 million hl), France (43.9 million hl) and Spain (37.5 million hl) accounted for 49% of world wine production and 81% of EU wine production.

Outside the EU, the most significant 2020 wine productions were in Russia (4.7 million hl), Ukraine (1.0 million hl), Georgia (1.7 million hl) and Moldova (1.2 million hl). In the USA, the preliminary estimate for wine production is around 25 million hl and is stable, while in China wine production continues to show a contraction, which began in 2016 due to structural reasons. In the southern hemisphere, there was a sharp decline in wine production among the main producing countries, with few exceptions. Australia recorded a sharp decline in the volume of wine production in 2020, at 10.6 million hl (-11% compared to 2019) due to drought and fires. New Zealand produces more than 3 million hl. It is worth remembering that the COVID-19 pandemic spread during the harvest season, although this difficulty does not seem to have significantly affected production volumes. South America is the southern hemisphere region that recorded a sharper decline compared with the 2019 production level. In Argentina, wine production in 2020 dropped significantly to 10.8 million hl (-17% compared to 2019) due to the unfavourable weather conditions caused by "El Nino". Chile, with 10.3 million hl, recorded a decline of 13% compared to 2019, mainly due to drought. Brazil has an estimated volume of wine production of 2.2 million hl, in line with last year, 15% lower than the five-year average. In South Africa, where the drought had a significant impact on harvests in 2018 and 2019, wine production in 2020 was estimated at 10.4 million hl.

Consumption and future prospects

We are living in a period where there are many obstacles to maintaining wine market stability in terms of consumption: the COVID emergency, the tariff war between the US and Asia and between the US and the European Union, as well as the management of Brexit. In 2020, there was a clear drop in consumption of around 3%, mainly due to the pandemic.

The global wine industry will have to deal with the many challenges underway, starting with the adaptation of viticulture and oenology to climate change. After the decline in 2020, a significant rebound is expected in 2021, and then few changes until 2024, when the quantities of wine consumed in the world are expected to be substantially the same as in 2019. However, a full recovery is not expected, because, if the data between 2014 and 2019 show an aggregate growth in wine consumption of + 0.2% in the world, a decrease of -0.9% is expected between now and 2024. This trend is forecasted globally, with few differences in numbers in Europe, North America and Asia.

The EU represents 53% of world consumption in line with recent years, the result of countries with different trends. The United States confirmed its position as the largest wine-consuming country in the world (33.0 million hl). With regard to China, the consumption of wine is estimated at 17.8 million hl, with a drop of 3.3%. In light of this drop for the second consecutive year, the rapid growth in consumption characterising the last 20 years seems to have come to an end. Japan is the second country in Asia with the highest consumption, with a stable level for the sixth consecutive year at 3.5 million hl.

With regard to trends in European markets, the phenomenon of "premiumisation", i.e. an improvement in the quality of consumption at the expense of quantity, is expected to become more marked. In the USA, on the other hand, particular attention is expected to be given to the entire "ready to drink" phenomenon, for all alcoholic beverages, including wine, where new, more practical and smart packaging formats, such as cans, for example, are already showing a significant growth among young people, and which could encourage imports of bulk wines to be "bottled" on site, to cut costs and also emissions, in a context where the environmental sustainability issue is becoming increasingly important in every sector. Globally, e-commerce is expected to grow considerably, although in many countries, from Italy to the USA, it has seen a very strong acceleration in the months of the lockdown, and to increase its market share also in wine, especially in China, where already 30% of wine and spirits sales are online.

Overall, a world of wine emerges that is able to face the geopolitical difficulties of 2020 and prepared to face future ones.

The Esseco Group strategy in the Oenological Division

The year 2020 ended slightly better than 2019, but it is certainly a positive result given the general situation caused by COVID. Sales and especially the final profitability of the division are slightly higher than in 2019, the latter thanks to a net saving in sales and marketing expenses, unfortunately not by choice but because of the constraint dictated by the pandemic situation.

The response of the market and of the entire Esseco Group oenology division was very positive. 2020 was an important testing ground for the strength of our brands on the market and for our ability to adapt to the new situation, which required maximum flexibility and creativity.

In particular, proximity to the market was a key factor, to collaborate with customers in the required times and methods, proposing suitable solutions that only a constant relationship over time can identify and enhance. This factor was also decisive in the positive result relating to collections: in 2020 there were no significant differences in the average collection and unpaid times compared to previous years.

The result of the oenology division in 2020 therefore confirms the trend of recent years beyond the numbers, thanks to the marketing strategy based on innovation and application development for targeted solutions. Never before as in 2020 were human resources the key factor for the positive result of the oenology division, everyone faced the difficult year with a spirit of great collaboration and dedication: professionalism and passion are confirmed as the levers on which to rely for the future of our business. In 2020, the new branch in South Africa (Ever Solution Pty Ltd) was fully operational, consolidating the activities previously carried out through a local distributor and giving full impetus to the sales and marketing strategy of the parent company and of the Esseco Group. A new branch was also established in France (Ever France Sasu) with the primary objective of approaching the wine market with Bluvite products.

With regard to the markets in which the Group operates, growth and consolidation continued in the most important wine-growing countries. Traditional European markets such as Italy, France and Spain are always strategic not only for the size of the business and our historical presence but also because they allow us to quickly bring our innovative proposals to the market thanks to our widespread presence and their receptivity. The results on all other markets were also positive, obviously with specific distinctions. Among non-European markets, our business continued to grow in the USA, which has now become the most important after the three traditional markets mentioned above. Of note is the disposal of the laboratory analysis activities of ENARTIS USA, sold to a local company leader in this sector, a disposal due to the need to focus on the core wine products business in relation to the importance and potential represented by the US market. Results were positive in South America, especially in Argentina, which continues to achieve excellent results despite the country's difficult economic conditions. Performance continues, albeit slowly, in Australia and New Zealand, countries that confirm the considerable difficulties for our group to gain significant market space. Our business' consolidation and expansion program continued with the strengthening of human resources, especially in the sales area in Italy and France, in the Pacific area, and in the USA.

Oenological products are confirmed as the oenology division's core business, representing more than 90% of the total sales of the oenology division, enhancing where possible the proposal of equipment and services to implement the greatest possible synergy with the oenological products themselves. The contribution of product families to total sales in 2020 is similar to previous years, confirming the group's strategy that aims to cover all the market potential, from the grape harvesting to bottling. Each brand independently develops its own marketing strategy both in terms of target market (winemaking, ageing, clarification, equipment) and in terms of communication to the market. Communication activities were carried out mainly through non-traditional and less common channels in our sector such as the internet and social networks, forced by the pandemic. This made it possible to experiment with new methods of interacting with customers which, properly refined and adapted, will prove to be useful even at the end of the pandemic.

Italiana Biotecnologie S.r.l., the group's company whose mission is the development of biotechnologies for the group brands, increased its structure both in terms of human resources and in laboratory equipment, expanding its capacity to develop new knowledge and producing new results.

GROUP PERFORMANCE

The Consolidated Financial Statements for the year ended 31 December 2020 show below the following summarised economic and financial data for the Group in the last two years:

Summarised income statement

PROFIT & LOSS	31.12.2020		31.12.2019
	EUR/°°°	%	EUR/°°°	%
TOTAL REVENUE	442,956	100%	409,537	100%
GROSS MARGIN	199,455	45%	183,066	45%
TOTAL EXPENSES	(133,688)	(30%)	(118,563)	(29%)
EBITDA	71,460	16%	72,160	18%
EAT	26,765	6%	40,805	10%

The Group's income statement for the 2020 financial year closed with a production value for goods and services of Euro 442,956 thousand, distributed among the various areas of the Group's business, with an increase by 8.2% compared to 2019. The increase mainly originated from the change in the scope due to the joining of Hydrochem Italia S.r.l. (from April 2019) and Addcon Gmbh and its subsidiaries (from November 2019) for a total of Euro 49,659 thousand.

Within the same perimeter, there was also a decrease in turnover for Group companies operating in the Basic Chemicals market, which was partially offset by an increase in companies operating in the Oenological business. The poorest performance was experienced in the Chemical Division due to the competitive market situation which experienced drops in volumes, strong competition on sales prices and difficulties in the procurement of sulphur, one of the strategic raw materials for the group. The results in the Oenology Division were more than satisfactory despite the significant reduction in wine consumption through the Horeca channel and small/medium-sized wineries, partly offset by an increase in online sales and in large-scale distribution.

The gross contribution margin increased by almost 9% compared to 2019, accounting for 45% of total sales. The extent of change in the scope of consolidation was Euro 29,278 thousand.

The gross operating margin (EBITDA) stood at Euro 71,460 thousand, equal to 16% of turnover, essentially in line with the previous year.

The net result, affected by the increase in amortisation and depreciation, financial charges and exchange losses, amounted to Euro 26,765 thousand.

Summarised balance sheet

The following table shows the Group's balance sheet in summary and reclassified form, highlighting the structure of the capital invested and the sources of funding.

BALANCE SHEET	31.12.2020		31.12.2019
	EUR/°°°	%	EUR/°°°	%
TOTAL WORKING CAPITAL	112,979	27%	133,812	41%
NET ASSETS	305,536	73%	203,250	62%
NET INVESTED CAPITAL	418,516	100%	327,062	100%
NET FINANCIAL POSITION	(79,812)	(19%)	(66,290)	(20%)
EQUITY	(338,703)	(81%)	(260,772)	(80%)

Working capital amounted to Euro 112,979 thousand, a decrease of Euro 20,833 thousand compared to 2019, linked to the increase in payables mainly for the new plant at the Pieve Vergonte site and for the completion of the acquisition of Addcon Gmbh and its subsidiaries. Assets net of amortisation and inclusive of revaluations for the year amounted to a total of Euro 305,537 thousand, of which property, plant and equipment for Euro 243,122 thousand, intangible assets for Euro 61,954 thousand, equity investments for Euro 1,677 thousand, non-current receivables from third parties for Euro 3,290 thousand and deferred tax assets for the remainder (Euro 4,507 thousand). The increase compared to 31 December 2019, equal to Euro 102,276 thousand, reflects the effect of the revaluations of trademarks and tangible assets carried out in application of Legislative Decree 104/2020. During the year, despite the climate of uncertainty, the Group decided to continue with its business plan by committing more than Euro 63,000 thousand in production plants mainly in the industrial sites of Pieve Vergonte, Saline di Volterra, San Cipriano and Trecate. With regard to sources of funding, the change in net financial indebtedness (calculated as long and short-term financial payables net of bank and cash balances) shows an increase of Euro 13,522 thousand from Euro 66,290 in 2019 to Euro 79,812 thousand at the end of 2020.

Group equity amounted to Euro 338,703 thousand (Euro 260,772 thousand as of 31 December 2019) representing the sum of: group shareholders' equity for Euro 313,152 thousand, that pertaining to minority interests for Euro 12,883 thousand and of the balance payable for cash pooling towards the parent company San Martino S.p.A. for Euro 12,668 thousand.

Summarised cash flow

Final net financial debt went from Euro 66,290 thousand in 2019 to Euro 79,812 in 2020, with a change of Euro 13,522 due mainly to: (i) cash flows from operations for Euro 77,493 thousand (determined by an EBITDA of Euro 71,460 thousand and by an change in net working capital of Euro 6,033 thousand); (ii) investment in industrial property, plant and equipment for Euro 74,189 thousand; (iii) movements in net equity for a total of Euro 8,931 thousand which includes the balance payable for cash pooling for Euro 12,668 thousand and the dividend of Euro 10,000 thousand, both distributed to the parent company San Martino S.p.A. The balance refers to income and charges, and taxes for Euro 4,943 thousand.

CASH FLOW	31.12.2020	31.12.2019
	EUR/°°°	EUR/°°°
NET FINANCIAL POSITION AT THE BEGINNING	(66,290)	(31,268)
EBITDA	71,460	72,160
Variation TWC & Other Provision	6,033	(15,714)
TOTAL CASH IN	77,493	56,445
Capex	(74,189)	(80,781)
Interests & Extraordinary	(2,952)	(127)
Equity	(8,931)	(8,201)
Tax	(4,943)	(2,359)
TOTAL CASH OUT	(91,015)	(91,468)
VARIATION NET FINANCIAL POSITION	(13,522)	(35,022)
NET FINANCIAL POSITION AT THE END	(79,812)	(66,290)

INFORMATION RELATIVE TO EMPLOYEE HEALTH AND SAFETY AND TO ENVIRONMENTAL PROTECTION

In consideration of the social role of the companies belonging to the Group, as evidenced also in the "Document relative to directors' reports issued by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (Italian Institute of Certified Accountants)", we provide the following information relative to personnel and to the environment.

Personnel

Lastly, it should be noted that during the year the Group continued its investment programme for the improvement of plant safety and of the health of its employees, as well as projects linked to better environmental protection. In addition, the Group held various training courses relative to Health and Safety and to Environmental Protection for a total of approximately 4,908 hours.

Environment

No Esseco group company was found to have caused damage to the environment during the year and therefore no sanctions or fines have been inflicted upon any companies belonging to the Group for environmental crimes or damage.

Investments

The investments in property, plant and equipment made during the year 2020, amounting to approximately Euro 64,000 thousand, relate principally to investments in the chemical division carried out by the Group (Euro 56,000 thousand). These regarded investments to improve automation and safety levels at the various industrial sites and investments for the realisation of new production plants for new products and for warehousing facilities. These investments were carried out mainly by the following subsidiaries: Hydrochem S.r.l. for approximately Euro 31,400 thousand, Altair Chimica S.p.A. for approximately Euro 10,496 thousand, Esseco UK Ltd. for approximately Euro 4,655 thousand, Zolfindustria for approximately Euro 5,000 thousand and Esseco S.r.l. for approximately Euro 3,242 thousand.

Investments for the oenological division amounted to Euro 8,000 thousand and were carried out principally by Esseco S.r.l. for approximately Euro 2,086 thousand, Enartis Sepsa S.a.u. for Euro 1,934 thousand, Ever S.r.l. for Euro 1,064 thousand and its subsidiaries for Euro 797 thousand.

RESEARCH AND DEVELOPMENT

The research and development activity carried out during the year 2020 regarded all areas of our business.

During the year 2020, the company Esseco S.r.l. continued to carry out research and development activities, concentrating in particular on the analysis, research, study, development and testing of projects that we consider innovative in industrial and oenological terms at the production site at Trecate (NO).

The company Ever S.r.l in the oenological division also continued its research and development activities and has concentrated its efforts in particular on those projects which we consider to be extremely innovative. Projects were developed at the Pramaggiore (VE) plant and the company incurred eligible costs of Euro 328 thousand on which it intends to access the tax credit for research, development, technological innovation, design and conception activities pursuant to art. 1, paragraphs 198 - 209 of Law no. 160.

Altair Chimica S.p.A. completed in 2018 the R&D project referred to as G.R.E.E.N Impact C.A.P.A.C.I.T.Y, awarded with regional funding POR FRSR 2014-2020 - Strategic Research and Development Projects, DD 3389 30/7/2014, which embraced all the productive sectors of the Company, leading it to qualitative excellence in almost all its inputs. At the end of 2020 it completed another R&D project - named Green Field Peas. This new process regarded, and continues to regard, new ways of optimising energy consumption, with the recovery of CO2 and H2, in order to improve industrial costs and reduce the overall environmental impact of the Company. As part of Green Field Peas, the company has also planned a new plant for energy self-production. During the above- mentioned projects, the Company also carried out R&D projects of a "Smart Factory" nature. The Company is maximising the levels of automation and use of robots within its production cycles; with regard to this automation in 2020, the S.O.D.A 4.0 variant was completed and was presented in November 2018, as part of the Green Field Peas project. The design variant, approved in 2019, has led to the company adopting a highly integrated and automatic management and decision-making system, which allows the elimination of human errors in non-routine activities or errors that naturally occur when acting in an emergency, thereby increasing the overall performance of any continuous production cycle of the plant, both in terms of energy consumption, safety in the workplace, and processing yield, by carrying out many of the current daily manual operations, in a completely automatic way.

SUMMARISED FINANCIAL STATEMENTS OF ESSECO GROUP S.R.L.

Esseco Group S.r.l. acts as holding company of the Esseco Group, holding all of the share capital of the companies belonging to the Group. All of the stakes are held by San Marino S.p.A. Esseco Group S.r.l has its registered office in Trecate (NO) and does not have secondary offices.

The schedules below have been prepared on the basis of the statutory financial statements of the Company as at 31 December 2020.

Summarised income statement

PROFIT & LOSS	31.12.2020	31.12.2019
	EUR/°°°	EUR/°°°
TOTAL REVENUE	286	354
GROSS MARGIN	0	(0)
TOTAL EXPENSES	(2,989)	(3,187)
EBITDA	(2,751)	(2,746)
FINANCIAL CHARGES/INCOMES	28,434	14,416
EAT	25,781	11,993

The sales refer to services provided to subsidiaries. The gross operating margin, negative for Euro 2,751 thousand, is in line with the previous year.

Net financial income amounts to Euro 28,434 thousand, due mainly to income from equity investments for Euro 29,723 thousand in part offset by interest and other financial charges for Euro 1,252 thousand and exchange losses of Euro 37 thousand. The year 2020 closed with a net income of Euro 25,781 thousand (net income of Euro 11,993 thousand in 2019).

Summarised balance sheet

BALANCE SHEET	31.12.2020	31.12.2019
	EUR/°°°	EUR/°°°
TOTAL WORKING CAPITAL	(5,227)	(228)
NET ASSETS	200,326	168,238
NET INVESTED CAPITAL	195,100	168,010
NET FINANCIAL POSITION	(55,164)	(47,661)
TOTAL EQUITY	(139,936)	(120,349)

The Company's net financial indebtedness (calculated as long and short term financial debt net of cash at hand and in bank) amounts to Euro 55,164 thousand as at 31 December 2020, representing an increase by Euro 7,503 thousand, due principally to the effect of the increase of Euro 14,685 thousand in payables due towards banks offset by the increase by Euro 7,182 thousand in cash and cash equivalents.

Net equity amounts to Euro 139,936 thousand (Euro 120,349 thousand at 31 December 2019) and represents the sum of the shareholders' equity of the Company for Euro 112,195 thousand, of the cash pooling payable due towards subsidiary companies and towards the parent company San Martino S.p.A. and the debt payable due towards the company Essemar S.p.A.

TRANSACTIONS WITH SUBSIDIARY, ASSOCIATED, PARENT COMPANIES AND OTHER RELATED PARTIES

It should be noted that the Group is subject to the control and coordination by San Martino S.p.A., in accordance with Article No. 2497 onwards of the Italian Civil Code. As required by Article No. 2497 bis of the Italian Civil Code. Essential data in relation to the last approved financial statements of San Martino S.p.A. are reported in the explanatory notes.

	Costs	Revenues	Dividend	Payables	Receivables
San Martino SpA	-	-	-	-	118
Esseco Srl	151	274	10,000	97	-
Essemar Spa	-	3	600	-	-
Zolfindustria Srl	-	67	-	-	-
Oenofrance Italia Srl	-	1	-	-	-
Albite Srl	-	81	-	-	7
Esseco do Brasil Ltda	-	-	-	-	-
Ever Srl	-	-	3,400	-	-
Altair Chimica Spa	-	4	10,224	-	1
Enologica Friulana Srl	-	-	-	-	-
Esseco UK Ltd	-	66	-	-	4
Enartis Sepsa Sa	-	-	5,500	-	-
Esseco Chemicals de Mexico SA DE C.V.	-	-		-	1
Hydrochem Italia Srl	-	24	-	-	-
Addcon Gmbh	-	3	-	-	-
TOTALE	151	522	29,724	97	131

INFORMATION DISCLOSED IN ACCORDANCE WITH POINT 6 bis OF THE SECOND PARAGRAPH OF ARTICLE NO. 2428 OF THE ITALIAN CIVIL CODE

GROUP STRATEGY REGARDING THE MANAGEMENT OF FINANCIAL AND OTHER RISKS

Exchange rate risk

The exposure to the risk of fluctuations in foreign currency exchange rates derives from the Group's operations in currencies other than the Euro (in particular the US dollar and Pound Sterling ), and the time lapse between the recording of revenues and costs denominated in foreign currency and the payment and collection thereof (transaction exchange risk). In general, the Group is exposed to exchange risk in those countries subject to significant fluctuations in the value of their currency and in which the Group is present with its own structures, in particular in Argentina, Brazil, South Africa and Chile.

Interest rate risk

The interest rate risk to which the Company is exposed derives mainly from medium- and long-term loans with interest at variable market rates (Euribor indexed), with a consequent risk of fluctuations in cash flows and in relative financial charges. Therefore, a rise in interest rates will have a negative effect on both the Company's results for the year and on its cash flows, and conversely a decrease in interest rates shall have a positive effect thereon. The Company utilises any derivative instruments to cover this risk.

Commodities risk

The Group results are significantly influenced by fluctuations in raw material prices, in particular those of hydrated soda, potassium chloride, sulphur and in the price of methane gas and of electricity

Credit risk

Credit risk is generally connected to the Group's normal trading operations and is monitored by a specific credit control department.

At 31 December 2020, the provision for bad debts amounts to Euro 4,408 thousand, equivalent to approximately 4.2% of the total value of trade receivables. Starting from 2017, a credit insurance policy was stipulated for the partial coverage of the receivables of the industrial products division.

Liquidity risk

Liquidity risk represents the risk that the available financial resources may be insufficient to cover commitments due. The Group finances its activities through the generation of cash flows, the diversification of funding sources and the availability of committed and uncommitted credit lines. Following the spread of the COVID-19 pandemic and the drastic prevention and containment measures at global level, the Group's debt level is higher, the reversal of which may take place through a recovery of the economy. During the 2020 financial year, sufficient new loans were taken out to meet the planned financial needs.

Country risk

The Group's revenues are distributed as follows: 26% from Italy, 50% from other European countries and 24% from the "rest of the world".

As regards the revenues realised throughout the "rest of the world", it should be noted that they relate to sales spread throughout approximately 70 countries and include certain countries experiencing political, economic and/or monetary instability. In these cases, in order to avoid the possibility of future bad debts, the company sells exclusively with letter of credit, payment in advance or with other credit instruments that guarantee operational success.

The Group does not hold any significant direct or indirect investments in geographic regions subject to political-institutional instability.

Hyperinflationary economy

a)	the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency. Amounts of local currency held are immediately invested in order to maintain purchasing power;

b)	the general population regards monetary amounts not in terms of the local currency, but in terms of a relatively stable foreign currency. Prices may be quoted in that currency;
c)	sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;
d)	interest rates, wages and prices are linked to a price index;
e)	the cumulative inflation rate over three years approaches, or exceeds, 100%.

BALANCE SHEET, INCOME STATEMENT AND STATEMENT OF CASH FLOWS

BALANCE SHEET

ASSET	31.12.2020	31.12.2019
A Subscribed capital unpaid,with an indication of the part which has been called by company	-	-
B Fixed assets (with a separate indication of assets in leasing)
I Intangible assets:
1 Formation and expansion expenses	-	-
2 Capitalise development and expenses	691	806
3 Industrial patents and rights to use patents of others	327	432
4 Concessions, licences, trademarks, and similar rights	37,715	414
5 Goodwill	23,016	16,591
6 Intangible assets in progress and payments on account	-	1
7 Other	204	406
Total intangible assets	61,953	18,650
II Property and Equipment
1 Land and buildings	62,827	62,554
2 Plants and machinery	115,052	96,606
3 Other fixtures and fittings, tools and equipment	13,709	8,765
4 Other	4,589	3,852
5 Tangible assets in progress and payments on account	46,946	12,547
Total property and equipment	243,123	184,324
III Investments (with the separate indication, for each item, of the amounts realizable within the following financial year)
1 Equity investments in:	1,604	1,636
a) Subsidiary companies	215	245
b) Associated companies	560	547
c) Parent companies	-	-
d) Associates controlled by the parent companies	-	-
d-bis) Other companies	829	844
2 Loans:	3,290	3,205
a) Subsidiary companies	-	-
b) Associated companies	214	178
- within 12 months	54	78
- due beyond 12 months	160	100
c) Parent companies	-	-
d) Associates controlled by the parent companies	-	-
d-bis) Other companies	3,076	3,027
- within 12 months	3,000	3,000
- due beyond 12 months	76	27
3 Other investments	74	73
4 Derivatives	-	-
Total investments	4,968	4,914
Total fixed assets	310,044	207,888
C Current assets
I Inventories:
1 Raw materials and consumables	36,666	29,639
2 Work in progress and components	948	1,169
3 Semifinished products and contracts in progress	-	-
4 Finished goods and goods for resale	59,885	68,164
5 Payments on account	-	23
Total inventories	97,499	98,995
II Receivables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Trade receivables	103,033	104,560
- due within 12 months	102,808	104,277
- due beyond 12 months	225	283
2 Amounts owed by subsidiary companies	-	-
3 Amounts owed by associated companies	38	17
- due within 12 months	38	17
4 Amounts owed by parent companies	3,919	4,741
- due within 12 months	3,919	4,741
5 Amounts owed by associates controlled by parent companies	9	2
- within 12 months	9	2
5-bis Tax receivables	23,997	15,400
- due within 12 months	22,050	15,293
- due beyond 12 months	1,947	106
5-ter Deferred tax assets	7,380	8,186
- due within 12 months	5,883	5,642
- due beyond 12 months	1,497	2,544
5-quater Other debtors	1,603	6,301
- due within 12 months	1,353	5,869
- due beyond 12 months	250	432
Total receivables	139,981	139,207
III Non-permanent investments
1 Equity investments in subsidiary companies	-	-
2 Equity investments in associated companies	-	-
3 Equity investments in parent companies	-	-
3-bis Equity investments in associates controlled by the parent companies	-	-
4 Equity investments in other companies	-	-
5 Derivatives	233	-
6 Other investments	74	73
7 Financial Assets for cash pooling management	-	-
Total non-permanent investments	307	73
IV Cash and equivalents
1 Banks and postal current accounts	51,112	37,573
2 Bank cheques	983	717
3 Cash	1,010	480
Total cash	53,105	38,770
Total current assets	290,892	277,045
D Prepayments and accrued income	2,925	3,107
TOTAL ASSETS	603,861	488,040

LIABILITIES	31.12.2020	31.12.2019
A Capital and reserves
I Subscribed capital	10,000	10,000
II Share premium account	-	-
III Revaluation reserves	69,318	11,749
IV Legal reserves	2,000	2,000
V Reserves provided for by the article of association (statutory reserve)	-	-
VI Other reserves, with separate indication	82,426	83,238
Consolidation reserve	6,457	6,462
Other reserves	75,969	76,776
VII Reserves for hedge accounting	(702)	(70)
VIII Profit (loss) brought	124,651	97,372
IX Profit / (loss) for the financial period	25,460	38,937
X Treasury stock reserves	-	-
Group Equity	313,153	243,226
Minority interest	12,883	8,488
Total Equity	326,036	251,714
B Provisions
1 Provisions for pensions and similar obligations	2,648	2,345
2 Provisions for taxation (yet deferred)	4,507	4,637
3 Derivatives	704	74
4 Other provisions	2,171	6,909
Total	10,030	13,965
C Employee severance indemnity	6,314	6,396
D Loans and payables (with the separate indication, for each item, of the amounts realizable after the following financial year)
1 Debenture loans and bonds	-	-
2 Convertible debenture loans	-	-
3 Amounts owed to shareholders for financing	-	-
4 Amounts owed to banks	132,421	104,261
- due within 12 months	42,051	60,978
- due beyond 12 months	90,370	43,283
5 Amounts owed to other financers	10,496	10,799
- due within 12 months	181	163
- due beyond 12 months	10,315	10,636
6 Advances received	26	172
-due within 12 months	26	172
7 Trade payable	75,475	67,363
- due within 12 months	75,475	67,363
8 Debts represented by bills of exchange	-	-
9 Amounts owed to subsidiary companies	-	-
10 Amounts owed to associated companies	81	118
11 Amounts owed to parent companies	12,869	9,066
- due within 12 months	12,869	9,066
11-bis Amounts owed to associates controlled by the parent companies	6	-
12 Tax payables	13,606	8,703
- due within 12 months	13,593	8,078
- due beyond 12 months	12	625
13 Amounts owed to social security institutions	3,585	3,271
- due within 12 months	3,585	3,271
14 Others	10,441	10,164
- due within 12 months	10,441	10,164
Total	259,006	213,917
E Accruals and deferred income	2,475	2,048
TOTAL LIABILITIES	603,861	488,040

PROFIT AND LOSS	31.12.2020	31.12.2019
A Revenue
1 Net revenue from goods and services	442,956	409,537
2 Variation in stocks of finished goods and in work in progress	(5,535)	10,029
3 Variation in contracts in progress	-	-
4 Work performed for own purposes and capitalised	962	758
5 Other revenues and income	10,748	10,624
- grants received pertaining to the current year	1,729	2,983
Total value of production	449,131	430,948
B Cost of production
6 For raw materials, consumables and goods for resale	189,586	189,572
7 For services	101,552	94,210
8 Rental and leasing charges	8,213	6,616
9 Personnel costs:	74,751	65,204
a) wages and salaries	57,190	49,055
b) social security costs	14,853	13,594
c) provisions for severance indemnity	2,041	1,841
d) pension costs	126	114
e) other costs relating to staff	541	600
10 Value adjustments:	35,357	29,538
a) amortisation of intangible assets	4,392	1,632
b) depreciation of tangible assets	30,025	27,400
c) reduction in value of fixed assets	198	10
d) allowance for doubtful debtors	742	496
11 Variations in stocks of raw materials, consumables and goods for sale	(5,808)	(3,993)
12 Amounts provided for risk provisions	528	219
13 Other accruals	406	240
14 Other operating costs	8,493	5,521
Total cost of production	413,078	387,127
Difference between value and cost of production (A-B)	36,053	43,821
C Financial income and charges
15 Income from equity investments (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	-	188
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	-	-
- by associates companies controlled by parent companies	-	-
- by other companies	-	188
16 Other financial income:	117	86
a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	19	18
b) from other permanent investments different from equity investments	-	-
c) from other investments that are not permanent	-	-
d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)	98	68
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	-	-
- by associates companies controlled by parent companies	-	-
- by other companies	98	68
17 Interest payable and similar charges	1,694	814
- by subsidiary companies	-	-
- by associated companies	-	-
- by parent companies	4	6
- by associates companies controlled by parent companies	-	-
- bv other companies	1,690	808
17-bis Profit/(loss) for exchange rate	(3,045)	(271)
Total financial result (15+16-17+/-17 bis)	(4,622)	(811)
D Adjustment for investements and financial liabilities
18 Revaluation:	342	160
a) of equity investments	106	160
b) of other permanent investment which are not equity investments	-	-
c) of trading assets different from equity investments	-	-
d) of derivatives	236	-
19 Devaluation:	65	6
a) of equity investments	58	6
b) of other permanent investment which are not equity investments	7	-
c) of trading assets different from equity investments	-	-
d) of derivatives	-	-
Total adjustments (18-19)	277	154
Profit (loss) before taxes (A-B+/-C+/-D)	31,708	43,164
22 Income taxes espense	(4,943)	(2,359)
Profit/(Loss) for the period	26,765	40,805
23 Minority profit / (loss)	1,305	1,868
Net Income of the Group	25,460	38,937

	31.12.2020	31.12.2019
CASH FLOW STATEMENT, indirect method
A) Cash Flow from Operations
Net income	26,765	40,805
Income tax	4,943	2,359
Interest Expense/(Revenue)	1,577	728
(Dividends)	-	(165)
(Gain)/Losses on Activities sales	(241)	(170)
1) Income Pre tax, interests, dividends and gains	33,044	43,557
Changes of non cash items (out of the working capital)	-	-
Provisions	2,932	2,409
Depreciation and amortization	34,417	29,032
Investments write-offs	197	10
Non monetary changes of derivatives values	(1,254)	13,267
Total adjustment non monetary changes	36,057	44,717
2) Adjusted Net Income	69,101	88,275
Changes in net vorking capital	-	-
Changes in inventory	(177)	(13,991)
Changes in receivables	(189)	6,709
Changes in account payables	8,932	(12,056)
Changes in accruals/(asset)	160	337
Changes in accruals/(liabilities)	449	(634)
Other non monetary changes	5,995	(4,367)
Total other non monetary changes	15,169	(24,003)
3) Cash flow after changes in net vorking capital	84,270	64,272
Other adjustment	-	-
Interest collected/paid	(1,577)	(728)
(Tax payments)	(7,760)	(8,090)
Dividends received	-	165
(Provisions reversals)	(6,832)	(1,651)
Total other adjustment	(16,169)	(10,304)
Cash Flow From Operations (A)	68,101	53,968
B) Investment activities	-	-
Property plant and equipments	-	-
(Acquisitions)	(64,257)	(30,084)
(Dismissal)	938	922
Intangibles	-	-
(Acquisitions)	(10,566)	(17,491)
(Dismissal)	13	22
Financial Assets	-	-
(Acquisitions)	(46)	(1,483)
(Dismissal)	10	2,271
Financial Assets - short term	-	-
(Acquisitions)	(233)	(1)
(Dismissal)	236	-
(Acquisition subsidiary company net of cash and cash equivalents)	-	(23,006)
Cash Flow from investing activities (B)	(73,906)	(68,850)
C) Cash Flow from financing	-	-
Minorities	-	-
Short term bank loan changes	(31,750)	19,080
Loans	83,510	30,249
(Loans repayments)	(20,169)	(17,363)
Own capital	-	-
Share capital increase (cash)	-	-
(Share capital reimbursements)	-	-
(Dividends paid)	(11,451)	(6,832)
Cash Flow from financing (C)	20,140	25,134
Increase (decrease) cash and equivalents (A ± B ± C)	14,335	10,252
Cash and equivalents at the beginning the period	-	-
Banks and postal current accounts	37,573	27,369
Bank cheques	717	873
Cash	481	276
Total cash and equivalents at the beginning the period	38,770	28,518
Cash and equivalents at the end the period	-	-
Banks and postal current accounts	51,112	37,573
Bank cheques	983	717
Cash	1,010	481
Total cash and equivalents at the end the period	53,105	38,770

EXPLANATORY NOTES

Esseco Group S.r.l. is a holding company for industrial companies, whose subsidiaries operate in the chemicals, oenological and sulphur sectors.

PREPARATION CRITERIA

The criteria utilised in the preparation of the financial statements for the year ended 31 December 2020 take account of the changes introduced under Italian legislation by Legislative Decree no. 139/2015, which implemented the EU Directive 2013/34/UE, as well as in compliance with Legislative Decree 127/91. Legislative Decree 139/2015 introduced changes to the accounting standards issued by the Italian Accounting Standards Setter, the OIC (Organismo Italiano di Contabilità).

The amounts shown in the explanatory notes are expressed in thousands of Euro, unless otherwise specified.

BUSINESS CONTINUITY

On the basis of the Group's future business plans, the Directors believe that the going concern concept adopted in the preparation of the consolidated financial statements of Esseco Group S.r.l. is justified, although it is difficult to determine the effects deriving from the continuation of the health emergency.

FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31 December 2020 show the comparative figures for the year ended 31 December 2019.

The present financial statements include the financial statements of Esseco Group S.r.l. (the holding company) and of the Italian and foreign subsidiaries in which Esseco Group S.r.l directly or indirectly holds the majority of voting rights, consolidated using the line-by-line (global integration) method.

The associated companies, in which Esseco Group S.r.l directly or indirectly holds between 20% and 50% of the share capital, have been recorded in the financial statements at net equity value.

- consolidation on a line-by-line basis of the company Ever France Sasu, constituted in April 2020, with an indirect stake of 100% through Ever S.r.l.;

As in the previous year, please note:

- removal from consolidation of the Italian companies Idroclar S.r.l. and Enartis S.r.l., established in February 2019, both 100% owned. The companies were removed from the scope of consolidation for 2019, by virtue of the principle of irrelevance set forth by art. 28 of Legislative Decree 127/91. It should also be noted that the company Idroclar S.r.l. is subject to liquidation procedure and has been cancelled from the register of companies in the first months of 2021;

- exclusion from the consolidation of the Chinese company Addcon Nutrition Technology Co. Ltd., established in December 2019 and 60% held through Addcon Asia Ltd. The company were removed from the scope of consolidation for 2019, by virtue of the principle of irrelevance defined by art. 28 of Legislative Decree 127/91.

The financial statements of the Italian subsidiaries utilised for consolidation purposes are those approved by the respective Shareholders' Meetings. For the foreign subsidiary companies, the reporting packages specifically prepared for consolidation purposes in accordance with Group accounting principles, which are in line with both Italian legislation and with Italian accounting principles, were used.

CONSOLIDATION METHOD

The following consolidation principles have been adopted:

•	The book value of the investments held, both directly and indirectly, by the parent company in consolidated companies is eliminated against the relative shareholders' equity.
•	The difference between the book value of the consolidated company and the relative net equity value at the date of purchase, or at the date in which the company is included in the consolidation is attributed, if positive, to the assets of the consolidated company, within the limits of fair value. The remaining difference is recorded in the assets side of the balance sheet under the heading "Goodwill" and is amortised in relation to its expected recoverability. Negative differences, not attributable to foreseeable future losses or representing adjustments to the equity of the consolidated company at the acquisition date, are recorded in shareholders' equity under the heading "Consolidation reserve".
•	Unrealised gains and losses, brought about by transactions between group companies, were removed as with items giving rise to payables and receivables, income and charges between consolidated companies. Any unrealised intra-group profits with respect to third parties were eliminated, taking account, as necessary, of deferred taxation;
•	The accounting principles adopted by the various Group companies were aligned with those of the parent company. The warehouse inventories of the subsidiary Altair Chimica S.p.A. accounted for using the FIFO method were valued according to the weighted average cost method;
•	The elimination of write-downs of equity investments in consolidated companies and of dividends between Group companies.
•	The elimination of provisions made exclusively for fiscal purposes.
•	The financial statements of foreign subsidiary companies expressed in currency other than the Euro have been converted into Euro using the year-end exchange rate for the assets and liabilities in the balance sheet and the average exchange rate for the period for the income statement. The exchange differences deriving from the conversion of the opening shareholders' equity and of the income statement at the year-end exchange rates are charged or credited directly to shareholders' equity under the heading "Other reserves".

The following exchange rates were used for the conversion of the 2020 financial statements from foreign currency to Euro (local exchange rate value per Euro):

Currency	Country	Exchange rate at year end	Average exchange rate for the year
US Dollar	USA	1.23	1.14
Great Britain Pound	Great Britain	0.90	0.89
Brasilian Real	Brasil	6.37	5.89
Argentin Peso	Argentina	103.25	80.83
Chilean Peso	Chile	873.92	903.29
Rand	South Africa	18.02	18.76
Australian Dollar	Australia	1.59	1.66
Mexican Peso	Mexico	24.42	24.52
Norwegian krone	Norway	10.47	10.73
Renminbi	China	8.02	7.87
Baht	Thailand	36.73	35.71
Hong Kong dollar	Hong Kong	9.51	8.86

ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

The accounting principles adopted in the preparation of the consolidated financial statements as of 31 December 2020 are substantially consistent with those adopted in the preparation of the consolidated financial statements of the previous year ending on 31 December 2019.

Eventual changes to accounting principles with respect to the previous year are disclosed in the relative note to the financial statements in order to give a truer representation of the Group's activities.

The accounting principles and valuation criteria have been applied uniformly to all of the consolidated companies. The accounting principles and valuation criteria adopted in the consolidated financial statements are those utilised by the parent company Esseco Group S.r.l and conform to the relevant current legislation mentioned above, integrated and interpreted by the current accounting standards issued by the Italian Institute of Accountants (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili) and endorsed by the OIC.

The financial statements have been prepared on a going concern basis in compliance with the general concepts of prudence and accruals. The application of the prudence concept involved the individual evaluation of the elements comprising the various asset and liability headings in order to avoid any compensation between recognisable losses and unrealised profits not yet recognisable. In accordance with the accruals concept, operations and other events are recorded during the period to which they refer, and not that in which the relative payment or receipt are effectively realised.

In particular, the following accounting principles were adopted in the preparation of the consolidated balance sheet as of 31 December 2020:

Intangible assets

Intangibles	from	to
Start-up costs	20.00% -	50.00%
Software	20.00% -	50.00%
Trademarks	5.00% -	20.00%
Goodwill		20.00%

Property, plant and equipment

Property, plant and equipment are recorded at production or purchase cost, including directly related charges, or other independent appraisal value determined at the time of assessment or at conferral value adjusted to take account of higher value recognised at the time of acquisition. Incremental maintenance expenditure that extends the useful lives of assets concerned, improves product quality or which clearly increases production capacity or reduces consumption and wastage is capitalised. Normal repair and maintenance costs are charged directly to the income statement in the period in which they are incurred.

As recommended by the Italian Accounting Standard OIC 16, in view of the changes introduced by the Italian Legislation Decree No. 223/2006 and following the revision of the estimated useful lives of our land and buildings, the cost of land has been separated from that of the relative buildings in the financial statements of the Group companies.

Property, plant and equipment are depreciated on a straight-line basis at the following annual depreciation rates, which reflect the useful economic lives of the assets:

Assets	from	to
Industrial buildings	5.00% -	7.00%
Commercial buildings	2.00% -	5.00%
Equipment and machinery	15.00% -	22.50%
Generic equipment and machinery	12.50% -	20.00%
Miscellaneous equipment	10.00% -	20.00%
Vehicles and rail tankers	20.00% -	25.00%
Electronic and EDP machines	20.00% -	33.33%
Office furniture and machines	10.00% -	12.00%
Oenological systems and equipment		15.50%
Cranes and forklifts		20.00%
Laboratory analysis equipment		40.00%
Turbine for the production of electricity		9.00%
Steam turbine for the production of electricity		12.50%
Electricity transport lines		4.00%

In compliance with the new requirements of OIC 16, depreciation is calculated also for those assets which are temporarily not in use.

The annual depreciation rates shown comply with the fiscal regulations regarding tax deductibility. These rates are reduced by 50% for the year in which the asset comes into use.

The above assets are assessed for indication of permanent losses in value (impairment) and where such a loss exists, regardless of the amortisation already accounted for, the Company estimates the recoverable value of the asset, which is then written down accordingly. Assets are reinstated to their original value, net of depreciation, should the reasons for the write-down cease to exist.

Assets purchased under financial leasing contracts are recorded solely for consolidation purposes using the financial leasing method.

The depreciation charges recorded on leased assets are in line with those of similar assets owned by the Group.

Financial fixed assets

Equity investments in associated companies are valued at net equity, determined on the basis of the year-end financial statements. Equity investments in unconsolidated subsidiaries and other equity investments are recognised at purchase cost. The value of said investments is adjusted by accordingly writing down in the event of permanent losses in value.

Inventories

Inventories are stated at the lower of purchase or production cost, and net realisable value estimated taking account of market trends. To this end, the value obtained as such is adjusted based on the respective "stock obsolescence provision," in order to take account of goods for which the realisation value is provided for below the cost value. Cost is calculated in the consolidated financial statements using the weighted average cost method.

Receivables and payables

Payables are stated at amortised cost.

Accruals and prepayments

Accruals, prepayments and deferrals are recorded in order to match costs and revenues in the accounting periods to which they belong.

Provisions for Risks and Charges

Provisions have been recorded for potential liabilities where these are considered likely to occur and where the risk amount can be reasonably estimated

Provisions reflect the best estimate of losses to be incurred based on the information currently available.

Employee severance indemnity

Income taxes

Current income taxes are calculated on the basis of the reasonable estimate of the tax liability for the period, determined in line with the fiscal legislation in force.

Deferred taxation is accrued relative to the timing differences between the book values of the assets and liabilities and the corresponding values recognised for tax purposes.

In particular, deferred tax assets are recorded in the financial statements only where there exists a reasonable certainty of their future realisation.

Revenue and cost recognition

Costs are recorded in accordance with the accrual principle.

Foreign currency transactions

Foreign currency transactions are recorded at the exchange rate in force at the date of the transaction. Receivables and payables in foreign currency are converted into Euros using the exchange rates in force at the year-end on the basis of the official rates at 31 December 2020 published by the Ufficio Italiano Cambi and the relative gains and losses are charged or credited to the income statement under the heading "C 17 bis"; the eventual net gain is recorded in a specific reserve under the heading "Reserve art. 2426 no. 8 bis of the Italian Civil Code", which is not available for distribution until the gain is realised.

BALANCE SHEET

• ASSETS

RECEIVABLES FROM SHAREHOLDERS DUE TO SHARE CAPITAL YET TO BE PAID UP

Share capital has been fully paid up.

INTANGIBLE ASSETS

Total intangible assets, net of accumulated amortisation, amounted to Euro 61,953 thousand at 31 December 2020 (Euro 18,650 thousand at 31 December 2019).

The following movements took place during the year:

	HISTORICAL COST
Description	31.12.2019	Additions	Disposals	Other movements	31.12.2020
1) Formation and expansion expenses	565	-	-	-	565
2) Capitalise development and expenses	1,922	-	-	(28)	1,894
3) Industrial patents and rights to use patents of others	7,528	343	(98)	(111)	7,662
4) Concessions, licences, trademarks and similar rights	5,416	21	(146)	37,286	42,577
5) Goodwill	52,196	10,117	(370)	(880)	61,063
6) Intangible assets in progress and payments on account	1	-	(1)	-	0
7) Other	3,048	84	(9)	(605)	2,518
Total	70,676	10,565	(624)	35,662	116,279

	ACCUMULATED AMORTISATION
Description	31.12.2019	Additions	Disposals	Other movements	31.12.2020
1) Formation and expansion expenses	(565)	-	-	-	(565)
2) Capitalise development and expenses	(1,116)	(113)	-	26	(1,203)
3) Industrial patents and rights to use patents of others	(7,096)	(437)	91	107	(7,335)
4) Concessions, licences, trademarks and similar rights	(5,002)	(84)	143	81	(4,864)
5) Goodwill	(35,605)	(3,692)	370	880	(38,047)
6) Intangible assets in progress and payments on account	-	-	-	-	-
7) Other	(2,642)	(65)	7	386	(2,314)
Total	(52,026)	(4,391)	611	1,480	(54,326)

	NET BOOK VALUE
	31.12.2019	31.12.2020
1) Formation and expansion expenses	-	-
2) Capitalise development and expenses	806	691
3) Industrial patents and rights to use patents of others	432	327
4) Concessions, licences, trademarks and similar rights	414	37,715
5) Goodwill	16,591	23,016
6) Intangible assets in progress and payments on account	1	-
7) Other	406	204
Total	18,650	61,953

The additions during the year amount to a total of Euro 10,565 thousand and relate mainly to the following:

a. Purchases of industrial patents and intellectual property utilisation rights, for a total of Euro 343 thousand, principally regarding the purchase of applications software in Esseco S.r.l. for a total of Euro 228 thousand;

b. Goodwill of Euro 10,117 thousand relating to goodwill recognised by the subsidiary Enartis Portugal for Euro 660 thousand following the acquisition of the business of new wine products from Oeno Vation Lda and for the remaining part to goodwill generated by the adjustment of the purchase price relating to the acquisition of Addcon Gmbh and its subsidiaries by Esseco Group S.r.l.

c. Other assets for Euro 84 thousand, relative to improvements carried out to buildings at various production plants situated in Italy, France, and Spain.

The total amortisation charge for the year amounts to Euro 4,391 thousand and represents the normal amortisation of intangible assets.

The column "Other changes" includes increases and decreases relating to reclassifications, opening and changing exchange rate differences for the year, and includes statutory and tax revaluations of trademarks carried out in application of Legislative Decree 104/2020 on the revaluation of company assets for a total of Euro 37,262 thousand recognised in the financial statements by the subsidiaries Esseco S.r.l. and Ever S.r.l.

PROPERTY, PLANT AND EQUIPMENT

The total value of property, plant and equipment, net of accumulated depreciation, amounted to Euro 243,123 thousand at 31 December 2020 compared with Euro 184,324 thousand at 31 December 2019. Property, plant and equipment are comprised mainly of production plants, buildings and offices, and are stated at purchase or construction cost, or at conferral value. The following movements took place during the year 2020:

	HISTORICAL COST
Description	31.12.2020	Additions	Disposals	Other movements	31.12.2020
1) Land and buildings (full property)	118,031	1,293	(382)	2,545	121,487
1) Land and buildings (leasing)	287	35	(27)	(35)	260
2) Plants and machinery (full property)	341,851	14,215	(1,556)	11,542	366,052
2) Plants and machinery (leasing)	8,799	-	-	(116)	8,683
3) Other fixtures and fittings, tools and equipment (full property)	43,019	2,060	(404)	724	45,399
3) Other fixtures and fittings, tools and equipment (leasing)	-	-	-	-	-
4) Other (full property)	13,182	2,254	(1,423)	(140)	13,873
4) Other (leasing)	-	-	-	-	-
5) Tangible assets in progress and payments on account	12,546	44,112	(168)	(9,544)	46,946
Total	537,715	63,968	(3,960)	4,976	602,700

	ACCUMULATED DEPRECIATION
Description	31.12.2020	Additions	Disposals	Other movements	31.12.2020
1) Land and building (full property)	(55,727)	(3,238)	212	(98)	(58,851)
1) Land and building (leasing)	(37)	(60)	27	1	(69)
2) Plants and machinery (full property)	(246,826)	(21,917)	1,206	15,863	(251,674)
2) Plants and machinery (leasing)	(7,219)	(892)	-	99	(8,009)
3) Other fixtures and fittings, tools and equipment (full property)	(34,254)	(2,435)	382	4,617	(31,690)
3) Other fixtures and fittings, tools and equipment (leasing)	-	-	-	-	-
4) Other (full property)	(9,329)	(1,431)	1,231	245	(9,284)
4) Other (leasing)	-	-	-	-	-
5) Tangible assets in progress and payments on account	-	-	-	-	-
Total	(353,391)	(29,973)	3,058	20,727	(359,577)

	NET BOOK VALUE
	31.12.2020	31.12.2020
1) Land and buildings	62,554	62,827
2) Plants and machinery	96,606	115,052
3) Other fixtures and fittings, tools and equipment	8,765	13,709
4) Other	3,852	4,589
5) Tangible assets in progress and payments on account	12,546	46,946
Total	184,324	243,123

The additions during the year amounted to Euro 63,968 thousand and related to the industrial investments carried out by the Group.

The item "Land and buildings" increased during the year by Euro 1,293 thousand, mainly due to (i) the completion of works at the warehouse of a site in Spain, (ii) some energy improvement and structural works carried out by the subsidiary Altair Chimica S.p.A. and (iii) light constructions by Ever S.r.l.

Additions to plant and machinery amount to a total of Euro 14,215 thousand. These relate principally to Altair Chimica S.p.A. for Euro 8,822 thousand, Esseco S.r.l. for Euro 2,116 thousand and Enartis Sepsa S.a.u. for Euro 1,299 thousand.

The investments in Altair Chimica S.p.A. were carried out in execution of the three-year business plan approved in 2019, in Saline di Volterra, and concern energy savings with the construction of a new high-efficiency cogenerator, circular economy through the recovery of secondary raw materials of companies in the area, optimisation of existing processes, and strengthening of some production departments thanks to the doubling of the capacity of the caustic flake potash plant. At the Trecate site of the company Esseco S.r.l., two new packaging lines were created as part of the chemical and oenology divisions. Also during the year, the subsidiary Enartis Sepsa S.a.u. acquired new machinery relative to the winemaking process. The other additions relate to purchases of plant and machinery aimed at maintaining the current high standards of production quality.

Industrial and commercial equipment has increased by Euro 2,060 thousand, of which Euro 1,157 thousand relative to equipment purchased by Esseco S.r.l. and Euro 260 thousand purchased by Italiana Biotechnologie S.r.l.

Other (owned) assets mainly include the value of vehicles, office machines and furniture, office furnishing and equipment, laboratory, warehouse and department for an increase of Euro 2,254 thousand in the year, mainly attributable to Enartis Sepsa S.a.u. for Euro 500 thousand, Esseco S.r.l. for Euro 450 thousand, Altair Chimica S.p.A. and Ever S.r.l. for Euro 200 thousand respectively.

Fixed assets in progress and advances related to the increase in the value of the plants under construction for a total of Euro 44,112 thousand, mainly to be attributed to the subsidiary Hydrochem Italia S.r.l., for the portion of the year equal to Euro 31,404 thousand relating to the construction of the new electrolysis plant and to orders falling within the corporate restructuring process, and to the subsidiary Zolfindustria S.r.l. for Euro 4,962 thousand for the construction of new production mills and a packaging line at the San Cipriano Po site, and to the subsidiary Esseco UK Ltd., for Euro 4,963 thousand for the construction of a new plant at the Wakefield site for the production of ammonium carbonate.

The decreases during the year relate to the normal process of disposals of various land and buildings, plant, machinery and equipment for a total of Euro 3,960 thousand. The change mainly relates to the subsidiary Enartis Usa for Euro 830 thousand following the sale of the oenological laboratory to ETS Laboratories and for the remaining part to the subsidiaries Esseco S.r.l., Zolfindustria S.r.l. and Enartis Sepsa S.a.u., determining a total capital gain of Euro 345 thousand and a capital loss of Euro 104 thousand.

The total depreciation charge for the year ended 31 December 2020 amounts to Euro 29,973 thousand and refers for 76.1% to plant and machinery, for 11.0% to buildings, for 8.1% to industrial and commercial equipment and for the remainder to other assets. The depreciation reflects the normal process of depreciation of assets due to usage, as indicated in the notes relative to the accounting principles adopted in the preparation of the financial statements, and the depreciation of the surpluses allocated to assets as a result of the consolidation of subsidiaries.

The column "Other changes" includes increases and decreases relating to reclassifications, opening and changing exchange rate differences for the year, and includes the reduction in the amortisation/depreciation provisions carried out in application of Legislative Decree 104/2020 on the revaluation of company assets for Euro 19,160 thousand recognised in the financial statements by the subsidiaries Esseco S.r.l., Ever S.r.l. and Essemar S.p.A., and the increases for the historical cost due to the effect of revaluation of plants recognised by Hydrochem Italia S.r.l. for Euro 7,960 thousand and on vehicles recognised by Ever S.r.l. for Euro 126 thousand. These revaluations had both statutory and tax value.

Capital grants

During the year ended 31 December 2020, the Group received capital grants through the subsidiary Esseco S.r.l. for Euro 238k from Finpiemonte S.p.A. at the conclusion of tender POR FESR 2014/202 - Axis IV Action IV.4b .2.1 - Energy efficiency and renewable energy in companies, on the construction of a trigenerator; the indirect method was chosen for the recognition of these grants, i.e. it was recognised under deferred income and was released to the income statement over the useful life of the asset to which it is related. For the remainder of the grants, the multi-year deferral method was used.

FINANCIAL FIXED ASSETS

Equity investments

These amounted to Euro 1,604 thousand at 31 December 2020, against Euro 1,636 thousand in the previous financial year.

Equity investments	31.12.2020	31.12.2019
(a) in subsidiary companies	215	245
(b) in associated companies	560	547
(c) in parent companies	-	-
(d) in associates controlled by the parent companies	-	-
(d-bis) in others companies	829	844
Total	1,604	1,636

Investments in associated companies (b) valued at net equity

Company name	Location	31.12.2020	31.12.2019
Enocompany S.r.l.	Italy	(91)	35
Enotre S.r.l.	Italy	119	-
Ronci S.r.l.	Italy	(4)	77
Enosfera S.r.l.	Italy	89	434
Vitis S.a.r.l.	France	81	150
Embouteillage 2000 S.a.S.	France	103	218
Oceania S.a.	France	263	-
	Total	560	547

Other minor investments (d-bis) valued at cost

Company name	Location	31.12.2020	31.12.2019
Setras S.r.l.	Italy	352	352
Other	-	477	492
	Total	829	844

The decrease in "equity investments in subsidiaries" of Euro 30 thousand is attributable to the equity investments in currently non-operating companies held by Esseco Group S.r.l. for Euro 215 thousand and valued at purchase cost. With reference to these companies, please note that the subsidiary Idroclar S.r.l. was fully written down following its placement in liquidation during the year, and the subsidiary Enartis S.r.l. suffered a write-down of Euro 3 thousand, aligning its book value to its equity. The increase in "equity investments in associates" is the result of the change in shareholders' equity of the subsidiaries consolidated using the equity method.

Decrease for the item "equity investments in other companies" valued using the purchase cost method for Euro 15 thousand are be attributed exclusively to the equity investment in the company Energy for Growth Scarl through the subsidiary Altair Chimica S.p.A.

Financial Receivables due from third parties

The item "financial receivables dues from third parties" amounts to Euro 3,290 thousand at 31 December 2020, compared to Euro 3,205 thousand at 31 December 2019. These are comprised principally of the interest-bearing loan of Euro 3,000 thousand granted by Essemar S.p.A. to the associated company Marchi Industrial S.p.A., and to loans for a total of Euro 290 thousand granted to companies valued at net equity.

Description	31.12.2020	31.12.2019
Financial receivables	3,290	3,205

CURRENT ASSETS

Inventories

These comprise the following:

Description	31.12.2020	31.12.2019
1) Raw materials and consumables	36,666	29,639
2) Work in progress and components	948	1,169
3) Semifinished products and contracts in progress	-	-
4) Finished goods and goods for resale	59,885	68,164
5) Payments on account	-	23
Total	97,499	98,995

Total Inventories as of 31 December 2020 amounted to Euro 97,499 thousand, with an decrease of Euro 1,496 thousand compared to 31 December 2019 (-1.5%). The change is mainly due to a sharp reduction in inventories of products relating to the Chemical Division linked to the effects of the pandemic, with a drop in the volumes requested by the market. This reduction in volumes was partially offset by an increase in the value of inventories by the affiliates in the Oenology Division due to the development of new businesses.

RECEIVABLES

			Analysis by due date
Description	31.12.2020	31.12.2019	Within 1 year	From 2nd to 5th year	After the 5th year
1) Trade recevables	107,541	108,250	107,316	225	-
(-) provision for bad debts	(4,508)	(3,690)	(4,508)	-	-
Sub-Total	103,033	104,560	102,808	225	-
2) Amounts owed by subsidiary companies	-	-	-	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	-	-	-	-	-
3) Amounts owed by associated companies	38	17	38	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	38	17	38	-	-
4) Amounts owed by parent companies	3,919	4,741	3,919	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Total	3,919	4,741	3,919	-	-
5) Amounts owed by associates controlled by parent companies	9	-	9	-	-
(-) provision for bad debts	-	-	-	-	-
Sub-Totale	9	-	9	-	-
5-bis) Tax receivables	23,997	15,400	22,050	1,947	-
5-ter) Deferred tax assets	7,380	8,186	-	-	-
5-quter) Other debtors	1,603	6,301	1,353	250	-
(-) provision for bad debts	-	-	-	-	-
Sub-total	1,603	6,301	1,353	250	-
Total	139,981	139,207	130,177	2,422	-

The table below shows the analysis of trade receivables by geographic area as of 31 December 2020:

Description	31.12.2020	31.12.2019
Italy	67,159	61,475
Europe	54,931	59,243
Other Areas	17,893	18,489
Total	139,981	139,207

"Trade receivables" amounted to Euro 103,033 thousand at 31 December 2020, compared to Euro 104,560 thousand in the same period of the previous financial year. This balance is shown net of a provision for bad debts of Euro 4,508 thousand, which is considered adequate to cover eventual future bad debts. The majority of trade receivables are due within the coming year. The decrease in receivables is essentially due to the combined effect, linked to the spread of COVID-19, of the reduction in sales and of the consumption of products used in more industrial or non-essential consumer sectors and of the drop in market prices.

"Amounts owed by associated companies" of Euro 38 thousand as of 31 December 2020 mainly relate to receivables due from Enosfera S.r.l. and to commercial transactions payable within the financial year.

"Amounts owed by parent companies" amounted to Euro 3,919 thousand at 31 December 2020 and related to the advance payment of income tax transferred to San Martino S.p.A. in accordance with the tax consolidation agreements as per Article No. 118, paragraph 2, of the Italian Tax Law (TUIR).

"Tax receivables" refer to VAT credits accrued during the year totalling Euro 16,208 thousand euros, from the tax credit on research and development mainly in the subsidiaries Altair Chimica S.p.A. for Euro 2,736 thousand, Esseco S.r.l. for Euro 130 thousand, Ever S.r.l. for Euro 141 thousand. The remainder relates to advances paid in excess of the applicable tax and other miscellaneous tax credits.

"Deferred tax assets" amounted to Euro 7,380 thousand (Euro 8,186 thousand at 31 December 2019) and included the tax effect of the timing differences between the book values of assets and liabilities recorded in the balance sheet and the relative values recognised for fiscal purposes. The future realisation thereof appears reasonably certain. The item includes receivables for the tax relief "Patent Box" for the companies Ever S.r.l. (year 2019-2020) and Altair Chimica S.p.A. (year 2019).

"Other debtors" are stated at nominal value and show a balance of Euro 1,603 thousand as of 31 December 2020 against an amount of Euro 6,301 thousand as of 31 December 2019. These mainly refer to the allocation of the receivable for insurance reimbursements of Euro 400 thousand due to Hydrochem Italia S.r.l. from the insurance company following the closure of the claims relating to the Megolo hydroelectric plant and to the flood event that took place in October 2020, with the remainder of receivables from personnel and advances to suppliers.

CASH AND CASH EQUIVALENTS

Description	31.12.2020	31.12.2019
1) Banks and postal current accounts	51,112	37,573
2) Bank cheques	983	717
3) Cash	1,010	480
Total	53,105	38,770

The balance as of 31 December 2020 represents the available liquid assets in Italian and foreign current bank accounts at the reporting date and shows an increase of Euro 14,335 thousand with respect to 31 December 2019 (+37.0%).

ACCRUED INCOME AND PREPAID EXPENSES

These comprise accrued income and prepaid expenses recorded to match costs and revenues in the accounting periods to which they relate.

Description	31.12.2020	31.12.2019
Prepayments and accrued income	2,925	3,107

These amount to Euro 2,925 thousand as of 31 December 2020 (Euro 3,107 thousand as of 31 December 2019), an increase of Euro 182 thousand with respect to the previous financial year. The item relates principally to accrued income and prepaid expenses for EDP assistance, maintenance costs, rental charges and insurance costs, as well as insurance premiums and expected green certificate incentives.

As of 31 December 2020, the Group had no accrued income and prepaid expenses with a duration of more than five years.

BALANCE SHEET

• LIABILITIES AND SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

The statement of changes in consolidated Shareholders' Equity for the past two financial years is provided below:

	Movements
Description	31.12.2019	Net income	Between reserves	Other movements
I) Subscribed capital	10,000	-	-	-
II) Share premium account	-	-	-	-
III) Revaluation reserve	11,749	-	-	57,569
IV) Legal reserve	2,000	-	-	-
V) Reserves provided for by the article of association (statutory reserve)	-	-	-	-
VI) Other reserves, as indicated	83,238	-	-	(2,806)
VI a) Consolidation reserves	6,462	-	-	(5)
VI b) Other reserves	76,776	-	-	(2,801)
VII) Reserves for hedge accounting	(70)	-	-	(632)
VIII) Profit (loss) brought	97,372	-	-	336
IX) Profit / (loss) for the financial period	38,937	25,460	-	-
X) Treasury stock reserves	-	-	-	-
Total	243,226	25,460	-	54,467

	Movements
Description	Dividends	Destination net income	31.12.2020
I) Subscribed capital	-	-	10,000
II) Share premium account	-	-	-
III) Revaluation reserve	-	-	69,318
IV) Legal reserve	-	-	2,000
V) Reserves provided for by the article of association (statutory reserve)	-	-	-
VI) Other reserves, as indicated	(10,000)	11,994	82,426
VI a) Consolidation reserves	-	-	6,457
VI b) Other reserves	(10,000)	11,994	75,969
VII) Reserves for hedge accounting	-	-	(702)
VIII) Profit (loss) brought	-	26,943	124,651
IX) Profit / (loss) for the financial period	-	(38,937)	25,460
X) Treasury stock reserves	-	-	-
Total	(10,000)	-	313,153

	Movements
Description	31.12.2018	Net income	Between reserves	Other movements
I) Subscribed capital	10,000	-	-	-
II) Share premium account	-	-	-	-
III) Revaluation reserve	11,749	-	-	-
IV) Legal reserve	2,000	-	-	-
V) Reserves provided for by the article of association (statutory reserve)	-	-	-	-
VI) Other reserves, as indicated	61,547	-	-	6,038
VI a) Consolidation reserves	1,146	-	-	5,316
VI b) Other reserves	60,401	-	-	722
VII) Reserves for hedge accounting	-	-	-	(70)
VIII) Profit (loss) brought	78,250	-	-	536
IX) Profit / (loss) for the financial period	39,238	38,937	-	-
X) Treasury stock reserves	-	-	-	-
Total	202,784	38,937	-	6,504

	Movements
Description	Dividends	Destination net income	31.12.2019
I) Subscribed capital	-	-	10,000
II) Share premium account	-	-	-
III) Revaluation reserve	-	-	11,749
IV) Legal reserve	-	-	2,000
V) Reserves provided for by the article of association (statutory reserve)	-	-	-
VI) Other reserves, as indicated	(5,000)	20,653	83,238
VI a) Consolidation reserves	-	-	6,462
VI b) Other reserves	(5,000)	20,653	76,776
VII) Reserves for hedge accounting	-	-	(70)
VIII) Profit (loss) brought	-	18,585	97,372
IX) Profit / (loss) for the financial period	-	(39,238)	38,937
X) Treasury stock reserves	-	-	-
Total	(5,000)	-	243,226

Group Shareholders' Equity amounted to Euro 313,153 thousand as of 31 December 2020 (Euro 243,226 thousand as of 31 December 2019). The change in the financial year is attributable to the Net Profit for the Financial Year of Euro 25,460 thousand, partially offset by an increase linked to "Other Movements" for Euro 54,467 thousand. These "Other movements" mainly refer to exchange differences of Euro 2,801 thousand, to the effect of hyperinflation recorded by the subsidiary Enartis Argentina Sa of Euro 430 thousand, to the change in the reserve for hedging transactions of expected cash flows of Euro 632 thousand and to the revaluation reserve pursuant to Legislative Decree 104/2020 following the revaluations of assets recorded by the subsidiaries Esseco S.r.l., Essemar S.p.A., Ever S.r.l. and Hydrochem Italia S.r.l. and revaluation of the brand attributable to Esseco S.r.l. and Ever S.r.l. for a total of 57,569 thousands.

The company, Esseco Group S.r.l., disbursed dividends in the financial year of Euro 10,000 thousand to the Sole Shareholder, San Martino S.p.A.

The Legal Reserve amounts to Euro 2,000 thousand at 31 December 2020, following the allocation of 5% of the net income recorded by the holding company Esseco Group S.r.l. in accordance with Article No. 2430 of the Italian Civil Code.

Please find below the reconciliation between the shareholders' equity and result for the year reported in the statutory financial statements of the holding company and those reported in these consolidated financial statements relating to the last two financial years:

Description	Net Income 2020	Equity 2020
Esseco Group Srl - Stand Alone	25,781	112,195
Pro-quota results of consolidated companies	33,665	33,665
Intragroup Dividends	(32,398)	-
Difference between the Value of the investment and Net Book Value(net of current income)	1,946	155,420
Elimination of the investments Plus/Minus value adjustments (net of tax)	(3,659)	28,558
Intercompany Margins (net of tax)	(1,225)	(5,799)
Other changes-adjustments	2,655	1,997
Elimination of Non-Controlling Interests	(1,305)	(12,883)
Esseco Group Consolidated Accounts	25,460	313,153

Description	Net Income 2019	Equity 2019
Esseco Group Srl - Stand Alone	11,993	97,018
Pro-quota results of consolidated companies	44,820	44,820
Intragroup Dividends	(16,034)	-
Difference between the Value of the investment and Net Book Value (net of current income)	817	90,092
Elimination of the investments Plus/Minus value adjustments (net of tax)	(521)	22,867
Intercompany Margins (net of tax)	(1,093)	(5,023)
Other changes-adjustments	823	1,940
Elimination of Non-Controlling Interests	(1,868)	(8,488)
Esseco Group Consolidated Accounts	38,937	243,226

The holding company's shareholders' equity amounts to approximately Euro 112,195 thousand, compared to a consolidated shareholders' equity of Euro 313,142 thousand. The difference is due for approximately Euro 155,420 thousand to the differential between the carrying value of the equity investments in the financial statements of the holding company and the net equity values of the subsidiaries. In addition, the Company recorded positive consolidation differences for approximately Euro 28,558 thousand and eliminations of intercompany margins on inventories for Euro - 5,799 thousand. The minority interest share of net equity amounts to Euro 12,883 thousand.

PROVISIONS FOR RISKS AND CHARGES

These comprise the following at the year-end:

	Movements during the current financial year
Description	31.12.2019	P & L	Utilizations	Other movements	31.12.2020
1) Pensions and similar obligations	2,345	332	(3)	(26)	2,648
2) Provisions for taxation (yet deferred)	4,637	505	(530)	(105)	4,507
2) Derivatives	74	633	(3)	-	704
4) Other provisions	6,909	934	(4,846)	(826)	2,171
Total	13,965	2,404	(5,382)	(957)	10,030

The "provision for risks and charges" as of 31 December 2020 is equal to Euro 10,030 thousand. The entry in question is comprised as follows:

As to Euro 2,648 thousand for "Pension and Similar Obligations". These relate to the value of the agents leaving indemnity accrued in accordance with Article No. 1751 of the Italian Civil Code on agency contracts in existence at 31 December 2020. This provision shows a net increase of Euro 303 thousand, deriving essentially from an increase of Euro 332 thousand due principally to the provision accrued by Ever S.r.l. (Euro 111 thousand), Esseco S.r.l. (Euro 83 thousand), and Sofralab and its subsidiaries (Euro 83 thousand);

As to Euro 4,507 thousand (Euro 4,637 thousand as of 31 December 2019), from the provision "For taxation, including deferred taxation", fully relating to deferred taxation. These relate mainly to the deferred taxation accrued against timing differences between the taxable income and that shown in the individual financial statements prepared in accordance with the Italian Civil Code and utilised for consolidation. This provision also includes the provisions for taxation, which emerged as a result of the consolidation operations.

Detail of the composition of the provision for taxation is shown in the relative "Income tax" section of these explanatory notes.

For Euro 704 thousand for "derivative financial instruments payable" deriving from fair value measurement of IRS hedging derivatives relating to loan agreements signed by the subsidiaries Esseco Group S.r.l., Esseco S.r.l. and Ever S.r.l.

For Euro 2,171 thousand from "other provisions" (Euro 6,909 thousand as at 31 December 2019), which include: (i) provisions, for contingent liabilities and risks, mainly relating to future costs of disposal of waste, solid and liquid materials stored at the end of the year at its plant in Pieve Vergonte of the subsidiary Hydrochem Italy S.r.l. for Euro 406 thousand and a dispute with employees of the subsidiary Esseco UK Ltd. for Euro 394 thousand; (ii) use of Euro 1,208 thousand relating to expenses and charges incurred as a result of the shutdown of the electrolysis plant with mercury technology at the Pieve Vergonte site, and the release of Euro 2,456 thousand of the consolidation provision previously recognised following the negative goodwill for the amount of Euro 3,253 thousand arising from the purchase of Hydrochem Italia S.r.l.

PROVISION FOR EMPLOYEE SEVERANCE INDEMNITY

This provision covers the Group's liability as of 31 December 2020 to the employees of the consolidated companies for leaving indemnities in accordance with current legislation and labour contracts. The provision shows a decrease of Euro 82 thousand with respect to the year 2019, representing the net difference between the increase deriving from indemnity accrued during the year and the decrease due to the indemnities paid out to employees who left the Group during the year 2020.

	Movements during the current financial year
Description	31.12.2019	P & L	Repayments	Other movements	31.12.2020
Employee severance indemnity	6,396	1,841	(1,923)	-	6,314

PAYABLES

These comprise the following:

			Analysis by due date
Description	31.12.2020	31.12.2019	Within 1 year	From 2 to 5 years	After 5 years
1) Debenture loans and bonds	-	-	-	-	-
2) Convertible debenture loans	-	-	-	-	-
3) Amounts owed to shareholders for financing	-	-	-	-	-
4) Amounts owed to banks	132,421	104,261	42,051	80,350	10,020
5) Amounts owed to other financers	10,496	10,799	181	10,315	-
6) Advances received	26	172	26	-	-
7) Trade payables	75,475	67,363	75,475	-	-
8) Debts represented by bills of exchange	-	-	-	-	-
9) Amounts owed to subsidiary companies	-	-	-	-	-
10) Amounts owed to associated companies	81	118	81	-	-
11) Amounts owed to parent companies	12,869	9,066	12,869	-	-
11-bis) Amounts owed to associates controlled by the parent companies	6	-	6	-	-
12) Tax payables	13,606	8,703	13,593	12	-
13) Amounts owed to social security institutions	3,585	3,271	3,585	-	-
14) Others	10,441	10,164	10,441	-	-
Total	259,006	213,917	158,308	90,677	10,020

Total payables as of 31 December 2020 are analysed by geographical area in the table below:

Description	31.12.2020	31.12.2019
Italy	197,393	165,271
Europe	57,574	42,637
Other areas	4,039	6,009
Total	259,006	213,917

The "Amounts owed to banks" amount to Euro 132,421 thousand as of 31 December 2020 (Euro 104,261 thousand as of 31 December 2019) showing an increase of Euro 28,160 thousand, attributable mainly to a greater short-term borrowing from banks. The amounts owed to banks to be paid by 2021 amount to a total of Euro 42,051 thousand, while the remaining part of Euro 90,370 thousand is payable within 2-5 years for Euro 80,350 thousand mainly relating to loans taken out by Esseco Group S.r.l., by Esseco S.r.l., Altair Chimica S.p.A. and Sofralab S.a.s. and beyond the fifth year for Euro 10,020 thousand by Esseco Group S.r.l. and Petite Suisse Sarl.

The "Amounts owed to other financer", as of 31 December 2020, show a balance of Euro 10,496 thousand (Euro 10,799 thousand as of 31 December 2019). These payables refer to the financial debt of the subsidiary Hydrochem Italia S.r.l. with Tessenderlo Finance SA under liquidation, for an amount equal to Euro 10,000 thousand resulting from the complex operation to change the ownership structure and to the finance repayments of the lease agreements entered into with other lenders.

"Trade payables" amount to Euro 75,475 thousand and Euro 67,363 thousand respectively as of 31 December 2020 and 31 December 2019; they are stated at nominal value and are due within twelve months from the balance sheet date.

"Amounts owed to parent companies" amount to a total of Euro 12,869 thousand (Euro 9,066 thousand at the previous year-end) ,and refer to the payables for cash pooling and to the tax payments to be transferred to the parent company San Martino S.p.A. as result of the Group's adhesion to the tax consolidation scheme as per article 118, sub paragraph 2 of the TUIR.

"Tax payables" show a balance of Euro 13,606 thousand as of 31 December 2020 (Euro 8,703 thousand as of 31 December 2019), and include tax withheld on wages and salaries, VAT payables, substitute tax on payables on revaluations pursuant to Legislative Decree 104/2020 and other sundry taxes. These tax liabilities mainly refer to the subsidiaries: Addcon Gmbh for Euro 3,673 thousand, Esseco UK Ltd for Euro 1,186 thousand, Essemar S.p.A. for Euro 861 thousand, Esseco S.r.l. for Euro 933 thousand, Addcon Nordic As for Euro 968 thousand, and Hydrochem Italia S.r.l. for Euro 677 thousand. These payables are all due within twelve months from the balance sheet date.

"Amounts owed to social security and pensions institutions" amount to Euro 3,585 thousand and relate both to the social welfare contributions payable by the company and the contributions withheld from employees' wages and salaries for the month of December 2020, in line with balance at the previous year-end.

"Others" amount to Euro 10,441 thousand and relate mainly to salary, holiday pay and bonuses matured by employees.

ACCRUED EXPENSES AND DEFERRED INCOME

Description	31.12.2020	31.12.2019
Accruals and deferred income	2,475	2,048

The balance at 31 December 2020 consists principally of accrued expenses relative to insurance premiums, labour costs, and deferred income relative to environmental requalification projects.

At December 31 the Group has no accrued expenses and deferred income with a duration of more than five years.

Commitments, guarantees and potential liabilities not shown in the balance sheet

In conformity with Article no. 2427, first paragraph, point 9) of the Italian Civil Code below we disclose the following information regarding the commitments, guarantees and potential liabilities not included in the balance sheet.

Information relative to off-balance sheet agreements

The Group had no off-balance sheet agreements in force.

Description	31.12.2020	31.12.2019
Group Committments	-	-
Group Guarantee	15,887	17,660
Total	15,887	17,660

These amount to Euro 15,887 thousand as of 31 December 2020, compared to Euro 17,660 thousand as of 31 December 2019.

The "Guarantees" item refers to:

•	a series of guarantees granted by the company Esseco Group S.r.l. to other Group companies for a total of Euro 10,554 thousand;

•	guarantees granted on behalf of Altair Chimica S.p.A. by banks or insurance companies for a total of Euro 3,174 thousand;
•	guarantees granted on behalf of Hydrochem Italia S.r.l. by banks or insurance companies for a total of Euro 1,899 thousand;
•	a bank guarantee, in favour of the company, Zolfindustria S.r.l., granted to a raw materials supplier for a sum of Euro 260 thousand.

INCOME STATEMENT

VALUE OF PRODUCTION

REVENUES FROM SALES OF GOODS AND SERVICES

Revenues from sales of goods and services as of 31 December 2020 increased by approximately +8.2%, and totalled Euro 442,956 thousand (Euro 409,537 thousand as of 31 December 2019). These include the sale of industrial chemical products, food additives, oenological adjuvants, the trading of elemental sulphur and the production of processed sulphur for industry and agriculture.

The analysis of revenues from sales of goods and services by geographic area shows that approximately 74% of product sales took place outside of Italy, as indicated in the table below:

Description	31.12.2020	31.12.2019
Italy	114,545	116,207
Europe	219,474	196,613
Overseas	108,937	96,717
Total	442,956	409,537

The increase in revenues is due to the entry in the scope of consolidation during 2019 of Addcon Gmbh and its subsidiaries, of Hydrochem Italia S.r.l. and Ever Solution (Pty) Ltd for a total of Euro 51,203 thousand. There was a decrease of -4.6% in revenues from products for the other Group companies in all macro-areas, particularly in Europe (-6.6%). These variations are closely linked to the situation discussed in the Directors' Report.

The table below shows the analysis of revenues by nature:

Descrizione	31.12.2020	31.12.2019
Net revenue from goods	434,256	399,576
Net revenue from services	8,700	9,961
Totale	442,956	409,537

Sales revenues are shown net of premiums, discounts and returns.

Services decreased compared to the previous year due to the disposal of the analysis laboratory activity of Enartis USA Inc, sold to a local company leader in this sector, while revenues of products on a like-for-like basis showed a decrease of - 4.0% compared to the previous year, determined by a strong reduction of the companies of the Chemicals Division, offset by the increase of the companies of the Oenology Division.

OTHER INCOME AND REVENUES

These comprise the following:

Descrizione	31.12.2020	31.12.2019
Plusvalenze e sopravvenienze	535	637
Recupero spese diverse	7	49
Ricavi diversi e commissioni	10,206	9,938
Totale	10,748	10,624

Other revenues and income amounted, to Euro 10,748 thousand as at 31 December 2020, up compared to the same period of 2019 (124 thousand euro) and consist mainly of: (i) incentives from green certificates, revenue from white certificates, the transmission of hydroelectric energy service and other revenues related to hydroelectric management and charges of utilities to the leased properties for Euro 2,572 thousand; (ii) release of the consolidation provision recorded in the previous year relating to the purchase of Hydrochem Italia S.r.l. to cover future losses of Euro 2,456 thousand (iii) operating grants of Euro 986 thousand for the Sport Bonus , (iv) tax credit for research and development mainly referring to Altair Chimica S.p.A. for Euro 641 thousand; (v) insurance compensation for Euro 400 thousand (vi) capital grants for Euro 140 thousand; while for the remainder to other non-core revenues.

PRODUCTION COSTS

RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE

These are comprised essentially of purchases of raw materials, packaging, other consumables and goods for resale.

Description	31.12.2020	31.12.2019
Raw materials	117,597	112,277
Finished products	40,634	43,967
Other production costs	31,355	33,328
Total	189,586	189,572

The costs for raw materials, consumables and goods as at 31 December 2020 was almost in line with the previous year, deriving from the change in the scope of consolidation due to acquisitions in the previous period (Hydrochem Italia S.r.l and Addcon Gmbh and its subsidiaries). On a like-for-like basis, a decrease of Euro 24,907 thousand was recorded compared to the same period of the previous year, mainly due to both the decrease in prices and the decrease in quantities purchased, due to the spread of the COVID-19 epidemic.

COSTS FOR SERVICES

These comprise the following:

Description	31.12.2020	31.12.2019
Transport	42,803	37,385
Maintenance	11,775	11,883
Travel and communications	4,167	6,427
Consulting and professional fees	20,220	16,915
Other services	22,587	21,600
Total	101,552	94,210

Costs for services amount to a total of Euro 101,552 thousand as of 31 December 2020 (Euro 94,210 thousand as of 31 December 2020), representing a total increase by 7.8%. These costs relate to commercial services (such as transport, commission, publicity and marketing), to industrial services (comprised principally of maintenance, utilities and other services) and general services (such as professional consultancy, travel expenses, training courses, insurance costs and postal and telephone costs).

The increase compared to the previous financial year was recorded in all types of costs for services and related to the joining of the Group by the new acquisitions in 2019 for a total of Euro 11,518 thousand. On a like-for-like basis, there was a decrease in costs of approximately 4,176, mainly referring to lower costs for travel and communication followed by lower costs for maintenance, partly offset by an increase in transport costs recorded in almost all of the Group's subsidiaries.

LEASE EXPENSES

These comprise the following:

Description	31.12.2020	31.12.2019
Long term leasing	1,678	1,490
Rental of buildings	1,943	1,446
Industrial and commercial rent	4,592	3,680
Total	8,213	6,616

The balance of the lease expenses item amounted to Euro 8,213 thousand as of 31 December 2020 (+24.1% with respect to 31 December 2019) and related primarily to rental and hire charges for vehicles industrial and, relative to the production sites at Trecae, Pieve Vergonte, Volterra and Epernay, rental of buildings, as well as the management of warehouse costs for the Italian and foreign sales network. The increase in the item is partly linked to the change in the scope of consolidation of Addcon Gmbh and its subsidiaries and Hydrochem Italia S.r.l. for Euro 1,038 thousand, and in part to the increase in the costs of the other Group companies for Euro 558 thousand, with particular reference to the increase in fees due to custodians for the safekeeping of products linked to the oenology business.

PERSONNEL COSTS

These comprise the following:

Description	31.12.2020	31.12.2019
a) wages and salaries	57,190	49,055
b) social security costs	14,853	13,594
c) provisions for employee severance indemnity	2,041	1,841
d) supplementary pensions and similar	126	114
e) other costs relating to staff	541	600
Total	74,751	65,204

Personnel costs amounted to Euro 74,751 thousand as of 31 December 2020 (Euro 65,204 thousand as of 31 December 2019) and consisted of wages and salaries for Euro 57,190 thousand and of social welfare contributions and provisions for employee severance indemnity and supplementary pension costs for the remainder. Personnel costs are equal to 16.9% of revenues.

The average number of employees, for the year 2020, is equal to 1,286.

Details of the activity occurring during the financial year are provided below:

	Movements of period
Description	31.12.2020	31.12.2019
Average number of employees	1,286	1,280
Managers/executive	56	50
Clerical staff/ manual workers	1,230	1,230

AMORTISATION, DEPRECIATION AND WRITE-DOWNS

These comprise the following:

Description	31.12.2020	31.12.2019
a) amortisation of intangible assets	4,392	1,632
b) depreciation of tangible assets	30,025	27,400
c) reduction in value of fixed assets	198	10
d) allowance for doubtful debtors	742	496
Total	35,357	29,538

Amortisation and depreciation, which amount to Euro 35,357 thousand for the year 2020, are calculated on a straight-line basis over the economic lives of the assets, taking account of their residual useful lives. They relate mainly to the depreciation of the production plants at the Trecate (Esseco S.r.l.), Macchiareddu and San Cipriano Po (Zolfindustria S.r.l.), Wakefield (Esseco UK Ltd.), Volterra (Altair Chimica S.p.A.) and Epernay (Sofralab S.a.s.) factories and to the amortisation of the goodwill allocated as the difference between the value of the equity investment and the related shareholders' equity following the consolidation process of the companies belonging to the group. During the year 2020 the Group wrote down receivables included in current assets for a total of Euro 742 thousand, recorded under item B10 d) of the income statement.

OTHER OPERATING COSTS

These comprise the following:

Description	31.12.2020	31.12.2019
Other current taxes	2,065	1,651
Losses on adjustment	192	454
Bank charges	474	438
Consumable materials	785	703
Membership fees	2,044	402
Other expenses	2,933	1,873
Total	8,493	5,521

The item featured a balance of Euro 8,493 thousand as of 31 December 2020, representing an increase of Euro 2,972 thousand with respect to 31 December 2019, and mainly related to sundry taxes and duties for the year, association fees and bank charges matured during the year; in particular, "Other expenses" include additional costs for the disposal of equipment at the Pieve Vergonte site, replaced by the new membrane technology electrolysis plant due to an insufficient amount in the charge provisions, representation expenses, and stationery and printing, promotional material and other normal operating costs. The increase in sundry operating expenses is mainly represented by the "sport bonus" contribution disbursed by the subsidiary Altair Chimica S.p.A. to the municipality of Saline di Volterra for the amount of Euro 1,600 thousand, the remaining increase is linked to the change in the scope of consolidation for the entry into the Group of Addcon Gmbh and its subsidiaries and of Hydrochem Italia S.r.l.

FINANCIAL INCOME AND EXPENSES

OTHER FINANCIAL INCOME

"Other financial income" comprises the following:

Description	31.12.2020	31.12.2019
16 (a) from loans receivable part of fixed assets (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	2
By parent companies	-	-
By associates companies controlled by parent companies	19	16
By other companies	-	-
Sub-Total	19	18
16 (c) from other investments that are not permanent	-	-
16 (d) other income different from the previous one (with the separate indication for those in subsidiary and associated companies, in parents company and in those controlled by this ones)
By subsidiary companies	-	-
By associated companies	-	-
By parent companies	-	-
By associates companies controlled by parent companies	-	-
By other companies:	98	68
- banks	14	6
- others	84	62
Sub-Total	98	68
Total	117	86

These are comprised principally of sundry interest income for Euro 84 thousand (Euro 62 thousand as of 31 December 2019).

INTEREST AND OTHER FINANCIAL CHARGES

Description	31.12.2020	31.12.2019
Interest charged by bank	1,160	426
Interest on loans:	63	26
- by subsidiary companies	-	-
- by parent companies	4	6
- by other companies	59	20
Other interest	471	362
Total	1,694	814

"Interest charged by banks" amounts to Euro 1,160 thousand (Euro 426 thousand at 31 December 2019), representing an increase with respect to the same period in previous year for Euro 734 thousand, mainly attributable to the parent company Esseco Group S.r.l. for the increase to exposure to the banking market.

PROFIT AND LOSS ON CURRENCY EXCHANGE

These comprise the following:

Description	31.12.2020	31.12.2019
Gains realised	1,759	1,081
Unrealised gains	160	598
Losses realised	(2,553)	(1,491)
Unrealised losses	(2,411)	(459)
Total	(3,045)	(271)

The financial management of foreign currencies generated net exchange losses of Euro 3,045 thousand.

In particular, the profits already realised, equal to Euro 1,759 thousand, are mainly due to profits realised by Addcon Gmbh and its subsidiaries for Euro 990 thousand, Enartis Argentina S.a. for Euro 178 thousand, Esseco UK Ltd. for Euro 326 thousand and Esseco S.r.l. for Euro 131 thousand.

The resulting profits and losses to be realised, respectively equal to a positive balance of Euro 160 thousand and a negative balance of Euro 2,411 thousand, are from the valuation of receivables and payables in foreign currency as of 31 December 2020.

The losses already realised during 2020 amount to Euro 2,553 thousand, generated by Addcon Gmbh and its subsidiaries for Euro 921 thousand, Enartis Argentina S.a. for Euro 490 thousand, Esseco S.r.l. for Euro 293 thousand and Esseco UK Ltd. for Euro 184 thousand.

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS

Description	31.12.2020	31.12.2019
18) Rivaluation
a) of equity investments	106	160
b) of other permanent investment which are not equity investments	-	-
c) of temporary investments which are not equity investments	-	-
d) of derivatives	236	-
Sub-Total	342	160
19) Devaluation
a) of equity investments	58	6
b) of other permanent investment which are not equity investments	7
c) of non permanent investments which are not equity investments	-	-
d) of derivatives	-	-
Sub-Total	65	6
Total	277	154

The revaluations of equity investments equal to Euro 106 thousand and the impairment of equity investments for Euro 58 in 2020 relate entirely to the valuation at net equity of the associated companies indicated in the paragraph "Equity investments" item b) associated companies, of this document.

The revaluation of derivative financial instruments of Euro 236 thousand refers to the derivative to hedge the risk of the variable component of the electricity price stipulated by the subsidiary Altair Chimica S.p.A. for Euro 233 thousand and to the derivative to hedge the risk of changes in interest rates subscribed by the subsidiary Ever S.r.l. for Euro 3 thousand.

INCOME TAX

The income tax charge for the year 2020 is comprised of the following:

Description	31.12.2020	31.12.2019
Income tax on Italian and foreign companies	5,843	9,134
Deferred and advance taxation	496	(1,815)
Deferred and advance taxation deriving from consolidation adjustments	(624)	(497)
Adjustment of direct taxes of previous years	(772)	(4,466)
Direct Tax relating to previous years	-	3
Total	4,943	2,359

Income tax is recorded in accordance with the accruals principle and therefore it represents:

•	the accruals for tax paid or payable for the year, determined on the basis of the tax rates and fiscal legislation in force;
•	the amount of deferred tax assets or liabilities deriving from timing differences which arose or reversed during the year;
•	the amount of deferred tax assets or liabilities deriving from consolidation entries.

Deferred Tax Assets and Liabilities as at 31.12.2020

Deferred Tax Assets

	31.12.2020	31.12.2019
Italian Companies Deferred Tax Assets	4,096	5,391
Foreign Companies Deferred Tax Assets	898	798
Deferred Tax Assets from Consolidation	2,386	1,997
Total	7,380	8,186

Provision for deferred tax liabilities

	31.12.2020	31.12.2019
Italian Companies Deferred Tax Liabilities	153	514
Foreign Companies Deferred Tax Liabilities	1,722	1,431
Deferred Tax Liabilities from Consolidation	2,632	2,692
Total	4,507	4,637

INFORMATION ON THE FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS

As required by art. 2427-bis, first paragraph, no. 1 of the Italian Civil Code, the following information is provided below for each category of derivative financial instruments subscribed by the subsidiaries Esseco Group S.r.l., Esseco S.r.l., Altair Chimica S.p.A. and Ever S.r.l.

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 10,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2020: negative Euro 85 thousand
•	duration: 29 November 2019 - 30 November 2024

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 10,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2020: negative Euro 133 thousand
•	duration: 29 May 2020 - 31 May 2025

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 20.000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31 December 2020: negative Euro 227 thousand
•	duration: 20 January 2020 - 20 January 2027

Esseco Group S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 19,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31 December 2020: negative Euro 227 thousand
•	duration: 31 March 2020 - 20 January 2027

Esseco S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 5,000 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2020: Euro 29 thousand
•	duration: 30 July 2020 - 30 July 2026

Altair Chimica S.p.A.

•	type of derivative contract: commodity swap;
•	purpose: hedging;
•	notional value: Euro 1,080 thousand;
•	underlying financial risk: risk of the variable component of the price of electricity;
•	mark-to-market as at 31/12/2020: Euro 233 thousand

Ever S.r.l.

•	type of derivative contract: IRS;
•	purpose: hedging;
•	notional value: Euro 1,126 thousand;
•	underlying financial risk: interest rate risk;
•	mark-to-market as at 31/12/2020: Euro 1 thousand;
•	duration: 19 January 2018 - 31 December 2021

SIGNIFICANT POST-BALANCE SHEET EVENTS

Despite the persistence of the health emergency resulting from the spread of the "COVID-19" virus, there are no negative effects from the valuation processes, including those from the impairment testing of values recorded in the financial statements as at 31 December 2020.

The first four months for the Esseco Group ended in line with the year just ended and presents for both Divisions results are essentially in line with budget expectations. The business plan implemented starting from the previous year, which involves the subsidiary Hydrochem Italia S.r.l. with the start-up in April 2021 of the new chlorosoda production plant with membrane technology, continued in 2020. From the point of view of raw material costs, please note the reduction in the availability of sulphur, the main raw material used in production, and consequent increase in prices, as well as of transport costs by ship, which may have an impact on the margins of Group companies. Furthermore, starting from December 2020, the subsidiary Albite S.r.l. is exclusively involved in providing logistics and subcontracting services for chemical products to fully support the Esseco Group, with the simultaneous definitive transfer, in February 2021, of 21 employees to Esseco S.r.l. The effect of the pandemic should decrease as from summer 2021 but it will be necessary to continue to monitor the evolution of operations during the year, also in order to promptly take the most appropriate decisions to combat any negative phenomena.

Lastly, it should be noted that the seller of Addcon Gmbh and its subsidiaries, acquired at the end of 2019, exercised the option of verifying the accounting data for the year 2020, a preliminary verification for the payment of the "premium price" adjustment as established in the purchase contract.

INFORMATION PURSUANT TO ART.1, PARAGRAPH 125, OF LAW No. 124 OF 4 AUGUST 2017

In accordance with the requirement introduced by Law no. 124 of August 4, 2017 for certain "transparency" obligations we disclose the following grants, contributions, paid positions and any other economic benefits of any nature" received from public authorities:

During the 2017 financial year, Esseco S.r.l. took part in the Piedmont Regional Tender FESR 2014/2020 - Axis IV Action IV4.b.2.1 - Energy efficiency and renewable energy in companies, for which it obtained a loan at preferential interest rates in the financial year. In fact, on 25 January 2018 the company obtained a five-year loan from Mediocredito Italiano S.p.A. (now merged into Banca Intesa S.p.A.) for Euro 1,045 thousand, of which 784 thousand funded by Finpiemonte S.p.A. at zero interest, and for Euro 261 thousand at a variable interest rate (Euribor 3M plus a spread of 1%). During the year, Euro 238 thousand was collected as a non-repayable portion of the same tender.

The company also obtained a long-term bank loan with the support of the "COVID-19: SME guarantee fund - Italian Legislative Decree no. 23 of 8 April 2020, Urgent measures regarding access to credit and tax obligations for companies, special powers in strategic sectors, as well as "interventions in the field of health and work, extension of administrative and procedural deadlines".

In 2020, it obtained the "Sanitation Bonus and DPI (art. 125 Legislative Decree 34-2020)" tax credit from the Inland Revenue for Euro 28 thousand and recognised in the year Euro 56 thousand as a "figurative IRAP 2020 advance" pursuant to Article 24 of Legislative Decree 34/2020.

Lastly, the subsidiary participates in the "FCS Grandi Progetti" "Sustainable industry - Intervention of the Fund for sustainable growth in favour of large research and development projects in the context of specific issues relevant to "sustainable industry" Esseco 2021: product innovation" of the MISE (Ministry for Economic Development). However, this project has not generated any benefit for the Company to date.

During the year, Altair Chimica S.p.A. collected Euro 697 thousand from the sale of 2019 White Certificates and Euro 6 thousand from Fondoimpresa for employee training in 2019. The amount of the 2019 subsidy was also published on the energy portal in March 2020, from which the company benefited in the same year in compensation for the cost of electricity. The subsidy amounts to Euro 5,290 thousand.

During the 2017 financial year, Essemar S.p.A. took part in the Piedmont Region Tender FESR 2014/2020 - Axis IV Action IV4.b.2.1 - Energy efficiency and renewable energy in companies, for which it obtained a loan at preferential interest rates in the same financial year.

In fact, the company obtained a five-year loan from Mediocredito Italiano S.p.A., now merged with Banca Intesa S.p.A., on 27 September 2017 for Euro 187 thousand, of which Euro 140 thousand funded sources made available by Finpiemonte S.p.A at zero interest, and for Euro 47 thousand at a variable interest rate (Euribor 3M plus a spread of 1%).

In the course of 2020, following the final balance of the aforementioned subsidised project, the subsidiary collected Euro 27 thousand as a non-repayable portion. Lastly, it repaid in advance the portion of the excess subsidized loan, as a result of lower incentive costs recognised, with respect to the company estimate presented at the time of the application. As a result, in light of this repayment, the loan will be fully repaid before the natural contractual maturity.

During the year, Ever S.r.l. accrued incentive contributions from GSE S.p.A., relating to the energy produced by the photovoltaic plant, totalling Euro 15 thousand, of which Euro 11 thousand already collected.

In 2020, Hydrochem Italia S.r.l. collected Euro 206 thousand for the sale of white certificates (TEE) through ESCO and Euro 2,539 thousand for incentives from green certificates (gross of 4% withholdings) disbursed by the G.S.E. (Energy Services Manager). The amount of the 2019 subsidy was also published on the energy portal in March 2020, from which the company benefited in the same year in compensation for the cost of electricity. The subsidy amounts to Euro 30 thousand.

It should be noted that the remaining Group companies have not received any significant grants or contributions from the public administration as specified in the above mentioned law.

DIRECTORS' AND STATUTORY AUDITORS' COMPENSATION

During the year 2020 the Directors of the parent company Esseco Group S.r.l. earned total emoluments of Euro 40 thousand for their services as members of the Board of Directors of the Group companies, and the Statutory Auditors earned Euro 130 thousand for their services as members of the Board of Statutory Auditors of the Group companies.

INDEPENDENT AUDITORS' FEES

As required by Italian legislation, we point out that the fees paid to the Group companies' independent auditors for services rendered for the year 2020 amounted to Euro 534 thousand.

INFORMATION REGARDING THE CONTROL, MANAGEMENT AND COORDINATION OF THE GROUP

Description	31.12.2019
BALANCE SHEET
ASSETS
A Amount due from shareholders for share capital yet to be paid up	0
B Fixed Assets	17,196
C Current Assets	15,960
D Accrued income and prepaid expenses	25
Total assets	33,182
LIABILITIES AND SHAREHOLDER EQUITY
A Shareholders' Equity:	28,377

ADDCON Europe GmbH

Bitterfeld-Wolfen

Bekanntmachung nach §§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2015 bis zum 31.12.2015

Addcon Holding GmbH

Bonn

Konzernabschluss zum Geschäftsjahr vom 01.01.2016 bis zum 31.12.2016

Konzernlagebericht für das Geschäftsjahr 2016

ADDCON Konzern

1. Grundlagen des Konzerns

2. Wirtschaftsbericht

KONZERN-KAPITALFLUSSRECHNUNG FÜR DAS GESCHÄFTSJAHR 2016

3. Prognose-, Chancen- und Risikobericht

Konzernbilanz zum 31. Dezember 2016

Konzern-Gewinn- und Verlustrechnung für das Geschäftsjahr 2016

Anhang zum Konzernabschluss für das Geschäftsjahr 2016

der ADDCON Holding GmbH

Amtsgericht Bonn (HR B 19496)

I. Allgemeine Angaben

II. Erläuterungen zur Konzernbilanz und Konzerngewinn- und Verlustrechnung

III. Ergänzende Angaben

ENTWICKLUNG DES ANLAGEVERMÖGENS IM GESCHÄFTSJAHR 2016

KONZERN-KAPITALFLUSSRECHNUNG FÜR DAS GESCHÄFTSJAHR 2016

KONZERNEIGENKAPITALSPIEGEL FÜR DAS GESCHÄFTSJAHR 2016

Bestätigungsvermerk des Abschlussprüfers

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

ANNUAL FINANCIAL REPORT

2023

ANNUAL FINANCIAL REPORT

31 DECEMBER 2023

TABLE OF CONTENTS

GDP growth and macroeconomic projections

(percentage changes, unless otherwise specified)

Euro-area GDP growth and inflation

(percentage changes)

GDP growth and inflation: forecasts of the Bank of Italy and other organizations (percentage change on previous period)

CONSOLIDATED FINANCIAL STATEMENTS AS AT 31/12/2023

APPENDIX A

LIST OF COMPANIES IN THE CONSOLIDATION AREA AS OF 31.12.2023

APPENDIX B PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

Gesellschafterversammlung der ADDCON Europe GmbH

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

GDP growth and inflation

(percentage changes)

Macroeconomic projections

(percentage changes and points)

Euro-area GDP growth and inflation

(percentage changes)

ANNUAL FINANCIAL REPORT AS AT 31/12/2021

CASH FLOW STATEMENT, indirect method

APPENDIX A

LIST OF COMPANIES IN THE CONSOLIDATION AREA AS OF 31.12.2021

APPENDIX B

PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

APPENDIX B (follow)

PRINCIPAL DATA OBTAINED FROM THE LATEST FINANCIAL STATEMENTS OF THE SUBSIDIARY AND ASSOCIATED COMPANIES

SECTION 2 - COMPANIES VALUE IN CURRENCY DIFFERENT THAN EURO

ADDCON Europe GmbH

Bitterfeld-Wolfen

§§ 264 Abs. 3, 264b HGB zum Geschäftsjahr vom 01.01.2021 bis zum 31.12.2021

Esseco Group S.r.l.

San Martino Trecate (NO)

Konzernabschluss zum Geschäftsjahr vom 01.01.2020 bis zum 31.12.2020

CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

BALANCE SHEET

BALANCE SHEET