F I L A Fabbrica Italiana Lapis ed Affini S p A : .I.L.A. Group Y2022 Annual Report

(Translation from the Italian original which remains the definitive version)

F.I.L.A. GROUP 2022 ANNUAL REPORT

F.I.L.A. S.p.A. 2022 ANNUAL REPORT

F.I.L.A. - Fabbrica Italiana Lapis ed Affini S.p.A.

Via XXV Aprile 5 Pero (MI)

F.I.L.A. Group 2022 Annual Report
F.I.L.A. S.p.A 2022 Annual Report.
CONTENTS
I - General information	3
Corporate Bodies	3
Overview of the F.I.L.A. Group	4
Organisational structure	6
II - Directors' Report	8
Macroeconomic overview	8
Financial Highlights	9
F.I.L.A. Group's Financial Highlights	15
Adjusted financial performance	15
Business seasonality	17
Statement of Financial Position	18
Financial overview	21
Investments	24
Other information	25
Management and control	25
Treasury shares	25
Research and development and Quality Control	26
Related party transactions	28
Significant events in the year	29
Subsequent events	33
Outlook	33
Going Concern	33
Risk Management	34
Environment and Safety	50
Personnel	54
Corporate Governance	56
Reconciliation between Parent and Consolidated Equity	57
III - Consolidated Financial Statements as at and for the year ended December 31, 2022	60
Consolidated Financial Statements	60
Statement of Financial Position	60
Statement of Comprehensive Income	61
Statement of Changes in Equity	62
Statement of Cash Flows	63
Statement of financial position with indication of related party transactions pursuant to
CONSOB resolution No. 15519 of July 27, 2006	65
Statement of Comprehensive Income with indication of related party transactions pursuant to
CONSOB resolution No. 15519 of July 27, 2006	66
Notes to the Consolidated Financial Statements of the F.I.L.A. Group	67
Segment reporting	95
Business Segments - Statement of financial position	96
Business Segments - Statement of comprehensive income	97
Business Segments - Other Information	98
Subsequent events	156
Commitments and guarantees	156
Transactions with Related Parties	159
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F.I.L.A. Group 2022 Annual Report

F.I.L.A. S.p.A 2022 Annual Report.

Disclosure pursuant to Article 149-duodecies of the Consob Issuers' Regulation	165
Attachments	166
Attachment 1 - List of companies included in the consolidation scope and other equity
investments	166
Attachment 2 - Business combinations	167
Atipycal and/or Unusual Transaction	169
Statement of the Manager in Charge of financial reporting and the Corporate Bodies	170
Independent Auditors' Report pursuant to Article 14 of Legislative Decree No. 39 of January 27,
2010	171
IV - Separate financial statements of F.I.L.A. S.p.A. at December 31, 2022	177
Separate financial statements of F.I.L.A. S.p.A	177
Statement of Financial Position	177
Statement of Comprehensive Income	178
Statement of Changes in Equity	179
Statement of Cash Flows	180
Statement of Financial Position pursuant to CONSOB Resolution No. 15519 of July 27,
2006	182
Statement of Comprehensive Income pursuant to CONSOB Resolution No. 15519 of July 27,
2006	183
Notes to the Separate Financial Statements of F.I.L.A. S.p.A	184
Subsequent events	249
Atipycal and/or Unusual Transactions	250
Final Considerations	251
Statement of the Manager in Charge of financial reporting and the Corporate Bodies	252
Board of Statutory Auditors' Report on the separate financial statements at December 31, 2022
prepared as per Article 153 of Legislative Decree No. 58/1998	253
Independent Auditors' Report pursuant to Article 14 of Legislative Decree No. 39 of January 27,
2010	268

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F.I.L.A. Group 2022 Annual Report

F.I.L.A. S.p.A 2022 Annual Report.

I - General information

Corporate Bodies

Board of Directors
Chairperson (*)	Giovanni Gorno Tempini
Honorary Chairperson	Alberto Candela
Chief Executive Officer (**)	Massimo Candela
Executive Director (**)	Luca Pelosin
Non-executive Director	Annalisa Matilde Barbera
Non-executive Director (*)	Giorgina Gallo
Non-executive Director (*)	Carlo Paris
Non-executive Director (*)	Donatella Sciuto

1. Independent director in accordance with Article 148 of the Consolidated Finance Act and Article 3 of the Code of Conduct. (**) Executive Director

Control, Risks and Related Parties Committee

Donatella Sciuto

Annalisa Matilde Barbera

Carlo Paris

Remuneration Committee

	Carlo Paris
	Annalisa Matilde Barbera
	Giorgina Gallo
Board of Statutory Auditors
Chairperson	Gianfranco Consorti
Standing Auditor	Sonia Ferrero
Standing Auditor	Pietro Michele Villa
Alternate Auditor	Stefano Amoroso
Independent Auditors	KPMG S.p.A.

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F.I.L.A. Group 2022 Annual Report

F.I.L.A. S.p.A 2022 Annual Report.

Overview of the F.I.L.A. Group

The F.I.L.A. Group (hereafter also the "Group") operates in the creativity tools market, producing and marketing colouring, design, modelling, writing and painting objects, such as pencils, crayons, modelling clay, chalk, oil colours, acrylics, watercolours, paints and paper for the fine arts, school and leisure.

The F.I.L.A. Group at December 31, 2022 operates through 25 production facilities and 33 subsidiaries across the globe and employs approx. 11,300 people, becoming a pinnacle for creative solutions in many countries with brands such as GIOTTO, DAS, LYRA, Canson, Maimeri, Daler-Rowney Lukas, Ticonderoga, Pacon, Strathmore, Princeton and Arches.

Founded in Florence in 1920 by two noble Tuscan families, della Gherardesca and Marchesi Antinori, F.I.L.A. S.p.A. (hereafter also the "Parent") has achieved strong international growth in the past 20 years, supported by a series of strategic acquisitions. Over the years, the Parent has acquired: (i) the Italian firm Adica Pongo in 1994, a leading producer of modelling clay for children; (ii) the Spanish firm Spanish Fila Hispania S.L. (formerly Papeleria Mediterranea S.L.) in 1997, the Group's former exclusive distributor in Spain; (iii) the French firm Omyacolor S.A. in 2000, a leading manufacturer of modelling putties and clays; (iv) the U.S. Dixon Ticonderoga Group in 2005, a leading producer and distributor of pencils in North America, with subsidiaries operating on the Canadian, Mexican, Chinese and European markets; (v) the German LYRA Group in 2008, which allowed the Group to enter the German, Scandinavian and Eastern Asian markets; (vi) the business unit operated by Lapiceria Mexicana in 2010, one of the main local competitors in the budget coloured and graphite pencils market; and (vii) the business unit operated by Maimeri S.p.A. in 2014, a manufacturer and distributor of paints and accessories for fine arts. In addition to these transactions, on the conclusion of an initiative which began with the acquisition of a significant influence in 2011, control of the Indian company DOMS Industries Pvt Ltd. was acquired in 2015 (viii). In 2016, the F.I.L.A. Group focused upon development through strategic Art&Craft sector acquisitions, seeking to become the leading market player. On February 3, 2016, F.I.L.A. S.p.A. acquired control of the Daler-Rowney Lukas Group, an illustrious brand producing and distributing materials and accessories on the arts and crafts market since 1783, with a direct presence in the United Kingdom, the Dominican Republic, Germany and the USA (ix). In September 2016, the F.I.L.A. Group acquired the entire share capital of St. Cuthberts Holding Limited and the operating company St. Cuthberts Mill Limited, a highly-renowned English paper mill, founded in 1907, located in the south-west of England and involved in the production of high quality artist's papers (x). In October 2016, F.I.L.A. S.p.A. acquired the Canson Group, founded in 1557 by the Montgolfier family, with headquarters in Annonay in France, production facilities in France and conversion and distribution centres in Italy, France, China, Australia and Brazil. Canson products are

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