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Gruppo B&C Speakers

Condensed Consolidated

Interim Financial Report

as at June 30, 2020

Issued in conformity with the

International Financial Reporting Standards

endorsed by the European Union

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Contents

THE B&C SPEAKERS GROUP – Corporate bodies .............................................................. 3

Condensed consolidated interim financial report at June 30, 2020 issued in conformity with the IFRSs endorsed by the European Union .................................................................... 5

Condensed consolidated interim financial statements at June 30, 2020 ........................... 17

Notes to the condensed consolidated interim financial report at June 30, 2020 prepared in compliance with the IFRSs adopted by the European Union ............................................ 21

Certification of the Condensed Consolidated Interim Financial Statements under the terms of Art. 154-bis of Italian Legislative Decree 58/98 .............................................................. 48

Independent Auditors’ Report ..................................................................................... 49

The present file is available on the Internet at this web address:

www.bcspeakers.com B&C Speakers S.p.A. Registered Office in Bagno a Ripoli (FI), via Poggiomoro 1 Paid-up share capital of Euro 1.100.000 Companies Register Florence Office – Tax Code– C.F. 01398890481

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THE B&C SPEAKERS GROUP – Corporate bodies

Board of Directors

Chairperson: Gianni Luzi

Chied Executive Officer: Lorenzo Coppini

Director: Simone Pratesi

Direcotr: Alessandro Pancani

Director: Francesco Spapperi

Indipendent Director: Raffaele Cappiello

Indipendent Director: Roberta Pecci

Indipendent Director: Gabriella Egidi

Indipendent Director: Patrizia Mantoan

Board of Auditors

Chairmen: Riccardo Foglia Taverna

Regular Auditor: Giovanni Mongelli

Regular Auditor: Sara Nuzzaci

Alternate Auditor: Placida Di Ciommo

Alternate Auditor: Antonella Rapi

Financial Reporting Manager

Francesco Spapperi

Indipendent auditing firm

PricewaterhouseCoopers S.p.A.

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Introduction to the condensed consolidated interim financial report at June 30, 2020

PREMISE

This Condensed Consolidated Interim Financial Report of the B&C Speakers Group at 30 June 2020 was issued observing the International Accounting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union and was drawn up in conformity with IAS 34 “Interim Financial Statements”. These condensed consolidated interim financial statements therefore do not include all the information required of the annual financial statements and must be read together with the annual financial statements prepared for the financial year ended on December 31, 2019.

The present report has been drawn up also in accordance with Italian Legislative Decree 58/1998, and with the Regulation for Issuers published by Consob.

During the first half of 2020 the Parent Company continued in its Buy-Back programme involving treasury shares in accordance with the resolution passed by the Shareholders’ Meeting held on April 29, 2020 which renewed the mandate to purchase treasury shares for another 12 months. At June 30, 2020, it held 95,304 treasury shares, equal to 0.87% of the share capital. The weighted average purchase price of shares in the portfolio is € 4.59.

At the date of this report (September 2020), the number of treasury shares held has been modified compared to June 30, 2020 and equal to no. 111,223 equal to 1.01% of the share capital. For information purposes, it should be noted that the Parent Company B&C Speakers S.p.A. is controlled by R&D International S.r.l. which exercises management and coordination activities.

The shareholding held by the parent Research & Development International S.r.l. it is equivalent, as at June 30, 2020, to 54.00% of the Share Capital; further information on relations with the parent company is reported in the course of the report.

The first half of 2020 was characterized by the worldwide spread of the SARS-CoV-2 virus (hereinafter also referred to as "Covid-19" or "Coronavirus") which led to the introduction of containment measures that in our country have become extremely stringent since the beginning of March 2020, first involving some northern areas and gradually the rest of the peninsula too. In particular, with various decrees of the President of the Council of Ministers issued in March 2020, the closure of almost all commercial and industrial activities was ordered throughout the national territory, except for shops for essential goods or personal services (food, pharmacies, etc.). This closure (so-called lockdown) was progressively extended through subsequent government interventions, until May 4, 2020, the date from whom it was possible to reopen the Group's production plants. For the economic impact of the lockdown on the first half of 2020, please refer to the commentary on the income statement for the half year in this condensed consolidated half-year financial report. It should be noted that the Shareholders' Meeting, held on April 29, 2020, approved the proposal of the Board of Directors, as amended and communicated to the market on April 14, 2020, not to distribute any dividend and to allocate the entire profit for the year to "retained earnings". The decision was taken following the persistence of the uncertain situation linked to the spread of Covd-19 and considering the future challenges linked to this situation, with the aim of containing financial outlays and prudentially strengthening the already solid economic-financial position of the group.

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Condensed consolidated interim financial report at June 30, 2020 issued in conformity with the IFRSs endorsed by the European Union

The B&C Speakers Group is one of the international reference points as regards the economic sector related to the production and sale of “professional loudspeakers in a high quality band”; the business of the Group, which operates both at the national and international level, is carried on entirely in the above mentioned sector (production and sale of Loudspeakers in a high quality band). Products are manufactured and assembled at the Italian production plants of the Parent Company and the subsidiary Eighteen Sound S.r.l., which also directly supervise marketing and sales in the various geographical areas covered.

Distribution in the US market is handled through the American subsidiary B&C Speakers NA LLC, which also offers support services for sales to local customers.

Distribution in the Brazilian market is handled through the subsidiary B&C Speakers Brasil LTDA.

Products are distributed on the Asian market through local distributors served directly by the Parent Company and the subsidiary Eighteen Sound S.r.l.

Highlights

The charts below show the economic and financial highlights of the half-year period::

Income statement highlights

(€ thousands) 1st half 1st half

2020 2019

Revenues 16,944 28,392

Ebitda 2,881 6,442

Ebit 1,776 5,282

Net profit 882 4,382

Balance sheet highlights

(€ thousands) 30 June 31 December

2019 2019

Non current Assets 10,536 11,429

Non current liabilities 17,564 10,992

Current assets 44,444 40,852

Current liabilities 11,742 15,676

Net working Capital 32,701 25,176

Net Equity 25,673 25,613

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Share performance

The B&C Speakers S.p.A. shares are listed on the Mercato Telematico Azionario organised and managed by Borsa Italiana S.p.A.

At June 30, 2020 (the last open market day of the half), the reference price for B&C Speakers S.p.A. (BEC) shares stood at € 11.15 and consequently the market capitalization amounted to about € 132.0 million.

The following provides the share performance of B&C Speakers SpA during the period from January - September 2020.

Macroeconomic Situation

As highlighted in the introduction, during the first months of 2020 a factor of macroeconomic instability arose due to the spread of the Coronavirus which, in the first weeks of 2020, initially impacted on the economic activity in China and subsequently that of other countries.

Cash flow statement highlights

(€ thousands) 1st half 1st half

2020 2019

Operating cash flow 2,938 3,616

Cash flow from investing activities (241) (463)

Cash flow from financial activities 4,442 (3,508)

Cash and cash equivalent at end of the year 7,139 (355)

Net financial position

(€ thousands) 30 June 31 December

2020 2019

Current net financial position 13,054 4,982

Total net financial position (3,554) (5,006)

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Following the health emergency proclaimed by the World Health Organization (W.H.O.), the government authorities of the various nations have issued measures in any order to suspend production and commercial activities, in some cases limiting also the freedom of movement of people.

During lockdown, business and consumer confidence rapidly deteriorated in Italy and in several European countries. The SME (small and medium-sized enterprises) Index reached its all-time low in Italy and in the Eurozone and the instability of the financial markets reached same peaks as of 2008-2009, even more quickly. Thanks to the more stringent policies implemented by Governments and supranational financial institutions, the outbreak of a new large-scale financial crisis has been avoided for the moment.

The effects of the pandemic resulting from the spread of Covid-19, currently slowing down in Europe but still affecting the United States and emerging countries more intensely, are therefore significantly influencing the world economy, which, due to the contraction in the first quarter of 2020, had another more pronounced one in the second one. In Italy, GDP in fact recorded a decline of 5.3% in the first quarter of 2020, followed by a reduction of 12.8% in the second quarter. This trend is due to the unfavourable performance recorded especially in the month of April, when the minimum levels were reached in all the main economic sectors.

With the end of the more stringent lockdown period, the first signs of recovery are being registered, although still minor. Nevertheless, the containment measures adopted that affected the live events, have caused and are still causing negative effects on the sector.

Industry scenario

The professional audio sector has been heavily affected by the crisis generated by the spread of Covid-19, the first effect of which remains the strong contraction in demand. In particular, the factor that makes the current crisis particularly harmful consists in the persistence of the ban on carrying out activities requiring proximity between individuals, which at the moment makes it very difficult to truly restart the reference market strongly characterized by live shows and concerts.

Given the current uncertainty on the duration and intensity of the health and socio-economic emergency related to Covid-19, it is not yet possible to estimate the overall negative effect on the reference sector, even if it is highly probable that, based on the information currently available, the current situation will last at least until the end of the financial year.

Group economic performance

The general economic trend of the first half of 2020 is strongly influenced by the spread of Coronavirus and the consequent containment actions taken by world governments, first of all the lockdown imposed by the Italian government. This scenario led to lower results compared to what was recorded in the first half of the previous year, both in terms of turnover and in terms of margins. The order book (relating to the Parent Company), equal to approximately Euro 3.2 million at June 30, 2020, is down (by approximately 51%) compared to the Euro 6.6 million at December 31, 2019.

For a better representation of the management performance relating to the first half of 2020 compared with the same period of the previous year, an explanatory chart of these results is shown here below:

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Note:

This interim report presents and comments on certain financial figures and certain reclassified schedules not defined within the IFRS. These amounts are defined below in compliance with the provisions in Consob Communication (DEM 6064293) of July 28, 2006, as subsequently amended (Consob Communication 0092543 of December 3, 2015, implementing the ESMA/2015/1415 guidelines). The alternative performance indexes listed below should be used as additional information with respect to that foreseen in the IFRS, to assist the users of the financial report to better comprehend the Group's economic, capital and financial performance. It is noted that the adjustment methods used by the Group to calculate these figures have remained constant over the years. We also note that they could differ from methods used by other companies. EBITDA (Earnings Before Interest Taxes Depreciation and Amortisation) is defined by the Issuer's Directors as the “before tax and financial income and expenses”, as resulting from the consolidated income statement before depreciation, amortization of fixed tangible assets, provisions and write-downs, as resulting from the aforesaid consolidated income statement. EBITDA is a measure that the Issuer uses to monitor and assess the Group’s operating performance. EBIT (Earnings Before Interest and Taxes) represents the consolidated profit/loss before taxes, financial expenses and income, as shown in the income statement charts prepared by the Directors in drawing up the financial statements in accordance with the IASs/IFRSs. EBT (Earnings Before Taxes) is the consolidated result before tax, as recorded in the income statement prepared by the Directors in preparing IAS/IFRS-compliant consolidated financial statements.

Revenues

After a good performance at the beginning of 2020, the containment measures adopted by the Italian Government led to the closure of the Group companies starting from March 20, 2020 in Florence and already from March 13, 2020 in Reggio Emilia

The Group's reference market is still heavily and negatively impacted by the consequences of Covid-19 (gatherings of people, including live events, are still prohibited in most of the reference markets), which have led to a significant decrease in turnover of Group which was equal to Euro 16.9 million at the end of the first half of 2020, so down by 40.32% compared to the same period of 2019.

In addition to this, it should be noted that the health provisions that have made it possible to resume production activities, resulted in a loss of production efficiency that can be measured in about 20% of normal capacity, due to the provisions on interpersonal distancing and sanitation of productive structures.

The decrease in the Group's turnover, compared to the first half of 2019, was particularly concentrated on the European market (-44% with a decrease in absolute value of Euro 5.89

Economic trends - Group B&C Speakers

(€ thousands) 1H 2020 Incidence 1H 2019 Incidence

Revenues 16,944 100.00% 28,392 100.0%

Cost of sales (10,849) -64.03% (17,324) -61.0%

Gross margin 6,095 35.97% 11,068 39.0%

Other revenues 141 0.83% 70 0.2%

Cost of indirect labour (1,561) -9.21% (1,976) -7.0%

Commercial expenses (248) -1.46% (534) -1.9%

General and administrative expenses (1,546) -9.13% (2,186) -7.7%

Ebitda 2,881 17.00% 6,442 22.7%

Depreciation of tangible assets (1,031) -6.09% (1,019) -3.6%

Amortization of intangible assets (74) -0.44% (141) -0.5%

Writedowns 0 0.00% 0 0.0%

Earning before interest and taxes (Ebit) 1,776 10.48% 5,282 18.6%

Financial costs (687) -4.06% (310) -1.1%

Financial income 120 0.71% 590 2.1%

Earning before taxes (Ebt) 1,208 7.13% 5,561 19.6%

Income taxes (174) -1.03% (1,124) -4.0%

Profit for the year 1,034 6.10% 4,438 15.6%

Minority interest 0 0.00% 0 0.0%

Group Net Result 1,034 6.10% 4,438 15.6%

Other comprehensive result (151) -0.89% (55) -0.2%

Total Comprehensive result 882 5.21% 4,382 15.4%

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million), on the Asian market (-56% with a decrease in absolute value of Euro 3.08 million) and on the South American market (-57% with a decrease in absolute value of Euro 1.11 million). This decrease is ascribable to the geographical spread of the Covid-19 pandemic, which first affected the Asian market and then the rest of the world.

Below is the complete breakdown by geographic area for the first half of 2020 compared with the same period of 2019 (amounts in Euros):

Cost of sales

This category includes the consumption of materials (purchases, third party processing and changes in inventories), the cost of personnel directly involved in the production process, transport costs and costs for passive commissions, customs duties and other minor direct costs.

The cost sales, despite a decrease in absolute value of Euro 6.5 million (due to lower production volumes in the half year), showed a worsening of 3.01 percentage points in the first six months of 2020 in terms of incidence on revenues compared to the end of 2019, going from 61.02% to 64.03%. This worsening is due to the greater incidence of direct personnel costs on revenues, resulting from the sharp decline in production and sales volumes. The activation of social safety nets and other forms of public support, made it possible to limit the impact that this phenomenon would have had in the absence of interventions by the Group's Management.

Indirect Personnel

This category refers to costs for clerical staff, managers and workers not associated with the production process. The cost for indirect personnel, although decreasing by Euro 415 thousand compared to the first half of 2019 (-20.99%), increased its incidence on turnover which went from 6.96% to 9.21%. The increase in the incidence on revenues is due to the sharp decline in production and sales volumes not completely offset by the decrease in costs

Geographical Area 1st half 2020%

1st half 2019%

Change Change %

America Latina 828,329 4.9% 1,943,547 6.8% (1,115,218) -57%

Europa 7,558,944 44.6% 13,456,652 47.4% (5,897,708) -44%

Italia 1,336,308 7.9% 2,090,125 7.4% (753,817) -36%

Nord America 4,522,205 26.7% 5,244,840 18.5% (722,635) -14%

Medio Oriente & Africa 241,792 1.4% 113,406 0.4% 128,386 113%

Asia & Pacifico 2,456,902 14.5% 5,543,038 19.5% (3,086,136) -56%

Totale 16,944,480 100.0% 28,391,607 100.0% (11,447,127) -40.32%

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for indirect personnel resulting mainly from the activation of social safety nets and other forms of public support.

Commercial expenses

This category refers to costs for commercial consultancy, advertising and marketing expenses, travels and business trips and other minor charges relating to the commercial sector.

Commercial expenses show a sharp decrease in absolute value compared to the first six months of the previous year of Euro 286 thousand (-53.57%), along with a significant reduction in the incidence on turnover going from 1.88% to 1.46%. This important decrease in commercial expenses was affected, in addition to the cost containment policies implemented by the Group's management, by the cancellation, due to the pandemic in progress, of some important trade shows in this sector and the absence of the conditions for recognition of bonuses (MBO) as a result of the performance of the Group's economic results.

Administrative and General

General and administrative costs, despite a decrease in absolute value of Euro 640 thousand, increased their incidence on turnover by 1.4 percentage points compared to the same period of 2019. The aforementioned decrease was affected, in addition to the containment of costs put in place by Group Management, the absence of the conditions for the recognition of bonuses (MBO), as a result of the trend in the Group's economic results, the voluntary reduction of remuneration by executive directors and the fact that in first half of 2019 there were additional charges incurred for the closure of the tunneled division equal to Euro 235 thousand.

EBITDA and EBITDA Margin

Mainly due to the dynamics shown above, EBITDA for the first six months of 2020 was equal to € 2.88 million, with a decrease of Euro 3.56 million (- 55.28%) compared to the same period of 2019.

The EBITDA margin for the first six months of 2020 is equal to 17.00% of revenues (22.69% in the first six months of the previous year).

Depreciation

Depreciation of tangible and intangible fixed assets and rights of use are basically in line with the first half of the previous year and amount to € 1,105 thousand (€ 1,160 thousand in the corresponding period of 2019).

EBIT and EBIT margin

L’EBIT for the first six months of 2020 amounts to Euro 1.77 million, a decrease of 66.38% compared to the same period of 2019 (when it was equal to Euro 5.28 million). The EBIT margin is equal to 10.48% of revenues (18.60% in the corresponding period of 2019).

Group Net Profit

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The Group's net profit at the end of the first six months of 2020 amounts to € 1.03 million, representing a percentage of 6.10% of consolidated revenues with an overall decrease of 76.70% compared to the corresponding period of 2019..

Equity and financial trend

Below is the reclassified balance sheet according to the allocation of sources and uses:

Note:

Fixed Assets: these are defined by the Issuer's Directors as the value of multi-year assets (properties, plants and equipment, rights of use and other intangible assets). Net Operating Working Capital: is defined by the Issuer's Directors as the value of inventories, trade receivables and other receivables net of debts for supplies and other payables. Funds: the value of bonds linked to employees' severance indemnities and directors' severance pay. Invested net working capital: is the value of financial assets and other financial receivables as described above. Capital raised: is the value of Net Equity of the Group and the total indebtedness of the Group.

A number of comments on the classification of assets and liabilities according to their operational destination are presented below.

The Invested net working capital shows a decrease of Euro 1.4 million compared to December 31, 2019. This decrease is mainly due to the combined effect of the following factors:

- a decrease in fixed assets of approximately Euro 0.8 million due to the effect of depreciation for the period partially offset by investments made in this period;

- an increase in inventories of approximately Euro 1.2 million;

- a decrease in trade receivables of approximately Euro 4.4 million due to lower sales volumes in the half year. It should be noted that, despite the harmful effects of the pandemic on customer liquidity, at the date of drafting this half-year report, there were no

Reclassified Balance sheet 30 June 31 December

(€ thousands) 2019 2019 Change

Property, plant & Equipment 6,915 7,783 (868)

Inventories 14,677 13,492 1,184

Trade receivables 8,385 12,842 (4,457)

Other receivables 2,317 1,936 381

Trade payables (3,181) (4,960) 1,779

Other payables (1,970) (2,579) 609

Working capital 20,228 20,733 (505)

Provisions (956) (930) (26)

Invested net working capital 26,187 27,586 (1,399)

Cash and cash equvalents 12,102 5,277 6,825

Investments in associates 50 50 -

Goodwill 2,318 2,318 -

Short term securities 7,543 7,916 (373)

Other financial receivables 672 666 7

Financial assets 22,686 16,227 6,459

Invested net non operating capital 22,686 16,227 6,459

NET INVESTED CAPITAL 48,872 43,813 5,060

Equity 25,673 25,613 60

Short-term financial borrowings 6,591 8,138 (1,547)

Long-term financial borrowing 16,608 10,062 6,546

RAISED CAPITAL 48,872 43,813 5,060

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situations of significant doubtful credit;

- a decrease in trade and other payables of approximately Euro 2.4 million due to lower production volumes in the half year.

The Invested Net Non-Operating Capital shows an increase equal to Euro 6.5 million compared to December 31, 2019

The Net non-operating invested capital shows an increase of Euro 6.5 million compared to December 31, 2019. This increase is due to the significant increase in the Group's liquidity, resulting from setting up three new loans which guaranteed the Group revenue of funds for a total of Euro 7.5 million. The decrease in short-term securities is due to the negative trend of the markets recorded during the half-year in question. It should be noted that the trend in the market value of the Group's securities portfolio is gradually improving compared to the first quarter of 2020.

The other asset categories did not show any changes compared to December 31, 2019.

Financial Debt

Short-term financial debt decreases by Euro 1.5 million due to the rescheduling of some Group loans following the voluntary moratorium on mortgage maturities until September 2020 promoted by the Group's financial institutions.

Medium / long-term financial debt increases by Euro 6.5 million due to the effect following the activation of the three new loans mentioned above.

The overall Net Financial Position is negative and equal to Euro 3.55 million against a value of Euro 5.01 million at the end of 2019. The decision of the Shareholders' Meeting affected the improvement of the Net Financial Position, based on the updated proposal of the Board of Directors, not to proceed with the distribution of the dividend initially proposed in order to prudently maintain the balance sheet unchanged.

Corporate structure

At June 30, 2020, the Group's workforce amounted to 186 resources in line with December 31, 2019.

Investments

The investment activity in the first half of 2020 was mainly focused on activities aimed at improving the production lines. The cost containment policy implemented by the Group's management has led to focus the investment initiatives on strategic projects.

Significant events that occurred during the first half of 2020

Due to the persistence of the Covid-19 emergency and to the tightening of the related restrictive measures, all the Group's production plants remained compulsorily closed until May 4, 2020 when the Group was allowed to resume its activities although at “half-capacity", in order to comply with the health provisions in force and having a Group order portfolio of 6 million Euros.

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In light of the strongly negative effect on market demand, especially in live events, at the moment completely suspended, of the restrictive measures adopted by the government authorities in the various countries in order to face the Covid-19 emergency, the Group reacted decisively by implementing a series of actions aimed at mitigating its economic impact. In particular, the Group has identified and adopted the following cost-containment measures:

- Labor costs: activation of social safety nets and other forms of public support to protect workers, nets provided or extraordinarily issued in the countries where the Group operates, proportional reduction of the variable component, voluntary reduction of salary by management;

- Marketing costs: significant reduction of non-strategic initiatives; - Other costs: suspension of all non-strategic costs and renegotiation, where possible, of

outstanding contracts.

As regards financial decisions, in order to manage the company financial resources with the utmost prudence, the Group has carried out the following interventions:

- the Shareholders' Meeting of April 29, 2020 resolved, based on the updated proposal of the Board of Directors of April 14, 2020, not to proceed prudently with the distribution of the dividend initially proposed in order to keep the balance sheet unchanged

- in addition to this, the Group, as described above, has increased the financial resources by taking out new loans up to a maximum of Euro 7.5 million. Two of the three loans mentioned (for a total amount of Euro 5 million) are guaranteed by the Italian State and offer profitable economic conditions with reimbursement starting from 2022;

- lastly, has joined the voluntary moratorium, promoted by the reference financial institutions of the Group, on mortgage maturities of the loans until September 2020 equal to approximately Euro 1,140 thousand contractually due by June and Euro 500 thousand in August.

It is believed that the sum of the above listed interventions should guarantee liquidity and financial strength to meet all the needs that may arise during the current crisis.

Regarding the sanitary measures taken, the two Group production companies have approved a specific protocol, with consequent updating of the DVR (Risk Assessment Document), which provides for the application of all the protection and containment measures established by the various rules and regulatory interventions (national and regional) which occurred during the lockdown, representing the necessary precondition to allow the reopening of production activities, but also their continuation in a context of safety and respect for the workers’ health.

Events after June 30, 2020

At the moment, no events occurred after June 30, 2020 such as to require supplementary notes to this half-year report. For the sake of completeness, it should be noted that in the months of July and August 2020, the company activity was still strongly impacted by the crisis generated by the spread of Covid-19, the first effect of which remains the strong contraction in demand which resulted, even over the months summer, about 40% lower than in the same period of the previous year.

Business Outlook

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Given the current uncertainty on the duration and intensity of the health and socio-economic emergency relating to Covid-19, the Group believes that it is still not possible today to estimate the negative effect that will have on the whole year, even if, based on the information currently available, it is highly probable that the decrease in turnover and margins observed at June 30, 2020 will continue until the end of the year. In this scenario, the Group will keep working to meet its commitments and goals, keep on taking all necessary measures to manage the crisis resulting from this pandemic. The Group will also focus on containing any momentary loss of productivity due to the Coronavirus emergency that may occur in any case, confirming a strong focus on cost and investment efficiency and continuing to implement all the health safety measures necessary to protect its own workers.

Major shareholders and main data concerning the Issuer’s shares

As of the date these financial statements were prepared (September 2020), the official data reveals the following major shareholders:

• Research & Development International S.r.l, holding a 54.00% stake (parent company);

• Lazard Freres Banque holding 4.44%;

• Allianz Global Investors GmbH which holds 3.27%;

• Joh. Berenberg, Gossler & Co. KG which holds 3.01%

• Ostrum Asset Management SA which holds 2.15%

• Alboran S.r.l. which holds 2.07%;

Disclosure pursuant to Art. 79 of the Issuers’ Regulation no. 11971/99

In relation to the disclosure obligations laid down by Art. 79 of the Issuers’ Regulation no. 11971/99, with regard to holdings, in issuers themselves and their subsidiaries, pertaining to members of the administrative and auditing bodies, general managers and key managers, as well as by spouses (where not legally separated) and their under-age children, whether directly or through subsidiaries, trustees or third parties, as resulting from the book of members, communications received and other information acquired by the members of the administrative and auditing bodies, general managers and key managers, the following information is provided:

- as at June 30, 2020, the Director Lorenzo Coppini holds 50,000 shares in B&C Speakers S.p.A.;

- as at June 30, 2020, the Director Alessandro Pancani holds 3,617 shares in B&C Speakers S.p.A.;

- as at June 30, 2020, the Director Roberta Pecci holds 11,542 shares in B&C Speakers S.p.A.

Main risks and uncertainties to which the Group is exposed

To examine the main risks and uncertainties to which the group is exposed, the reader is referred to the full discussion on the matter in the report on operations of the Consolidated Financial Statements at December 31, 2019.

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Compared to December 31, 2019, the spread of the Covid-19 epidemic has led in particular to an increase in the level of risk in the field of health and safety at work. In this regard, the Group has put in place a series of measures aimed at containing and mitigating the risk of contagion within its plants, in compliance with the provisions of the national and regional reference regulations, guaranteeing social distancing and promoting smart working.

In particular, in addition to the integration of company signage, special procedures have been drawn up and disseminated to all staff for the production plants with the aim of summarizing and harmonizing in a single document all the measures adopted to combat and contain the spread of the Covid-19 virus. This procedure is integrated into the OSHAS 18001 system and has been shared with RSU (Unitary Trade Union Representation), RLS (Representation of workers' safety), Competent Doctor and RSPP (Head of the Prevention and Protection Service).

A "Committee for the application and verification of the regulatory protocol" was also established, consisting of the competent Doctor, RSPP, RSU, RLS, the HR Manager and the Plant Manager. The Committee is responsible for verifying the application and updating the procedure. At the same time, remote work was extended to all employees who have the opportunity to carry out their duties away from the office, thus reducing the potential for contagion. The Group has also taken steps to ensure the regular operation of the supply chain, both through careful management of warehouse stocks and through the management of relationships with suppliers. With reference to financial risks, please refer to the explanatory notes.

Corporate Governance

The Group abides by the Code of Corporate Governance of Italian Listed Companies currently in effect. In accordance with the legislative obligations a “Report on Corporate Governance”, which, in addition to providing a general description of the corporate governance system adopted by the Group, contains the information on the ownership structures and on acceptance of the single prescriptions of the Code of Corporate Governance and on observance of the consequent commitments. For a more detailed description of the elements that make up Corporate Governance see the complete document relating to the annual report available on the website www.bcspeakers.com, in the Corporate Documents section.

Art. 36 of the CONSOB Markets Regulation (adopted with CONSOB Resolution No. 16191/2007 and subsequent amendments): conditions for listing of companies that control companies incorporated and governed by the law of States not belonging to the European Union

In relation to the regulatory requirements regarding the conditions for the listing of companies that control companies incorporated and governed by the laws of States not belonging to the European Union and of significant relevance for the purposes of consolidated financial statements, it should be noted that:

- as of June 30, 2020 the regulatory requirements of Art. 36 of the Market Regulation apply to the subsidiaries B&C Speakers NA LLC and B&C Speakers Brasil LTDA.

- appropriate procedures were adopted to ensure complete compliance with the aforesaid regulations.

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Art. 37 of the CONSOB Market Regulation: Conditions inhibiting the listing of shares in subsidiaries subject to the direction and coordination of another company

We certify, under the terms of Art. 2.6.2. Section 13 of the Regulation for Markets Organised and Managed by Borsa Italiana S.p.A., the existence of the conditions pursuant to Article 37 of CONSOB Regulation No. 16191/2007.

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Condensed consolidated interim financial statements at June 30, 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT JUNE 30, 2020 PREPARED IN COMPLIANCE WITH THE IFRSs ADOPTED BY THE EUROPEAN UNION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Values in Euro)Notes

30 June

2020

31 December

2019

ASSETS

Fixed assets

Tangible assets 1 3,046,796 3,252,228

Right of use 2 3,585,001 4,179,283.42

Goodwill 3 2,318,181 2,318,181

Other intangible assets 4 283,020 351,582

Investments in non controlled associates 5 50,000 50,000

Deferred tax assets 6 580,489 612,160

Other non current assets 7 672,435 665,646

related parties 37 68,392 68,392

Total non current assets 10,535,922 11,429,080

Currents assets

Inventory 8 14,676,800 13,492,428

Trade receivables 9 8,385,075 12,842,205

Tax assets 10 1,172,611 843,794

Other current assets 11 8,107,291 8,396,516

Cash and cash equivalents 12 12,102,082 5,277,278

Total current assets 44,443,859 40,852,221

Total assets 54,979,781 52,281,301

LIABILITIES

Equity

Share capital 13 1,090,531 1,097,829

Other reserves 13 4,970,497 5,043,360

Foreign exchange reserve 12 409,638 560,962

Retained earnings 12 19,202,321 18,910,616

Total equity attributable to shareholders of the parent 25,672,987 25,612,766

Minority interest - 0

Total equity 25,672,987 25,612,766

Non current liabilities

Long-term borrowings 14 14,038,618 6,957,599

Long-term lease liabilities 15 2,569,609 3,104,267.26

related parties 37 1,887,545 2,290,500.19

Severance Indemnities 16 917,929 891,965

Provisions for risk and charges 17 38,238 38,238

Total non current liabilities 17,564,394 10,992,069

Current liabilities

Short-term borrowings 18 5,492,015 6,999,955

Short-term lease liabilities 15 1,099,181 1,138,074.94

related parties 37 839,079 867,957.01

Trade liabilities 19 3,181,281 4,959,909

related parties 37 1,791 4,377

Tax liabilities 20 404,945 720,077

Other current liabilities 21 1,564,978 1,858,449

Total current liabilities 11,742,400 15,676,465

Total Liabilities 54,979,781 52,281,301

18

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF THE FIRST HALF OF 2020 PREPARED IN COMPLIANCE WITH THE IFRSs ADOPTED BY THE EUROPEAN UNION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Values in Euro)Notes 1 half 2020 1 half 2019

Revenues 23 16,944,480 28,391,607

Cost of sales24

(10,849,376) (17,323,737)

Other revenues 25 141,219 69,880

Cost of indirect labour 26 (1,561,313) (1,976,060)

Commercial expenses 27 (247,805) (533,672)

General and administrative expenses 28 (1,546,295) (2,186,438)

Depreciation and amortization (1,105,361) (1,159,781)

Writedowns 29 0 0

Earning before interest and taxes 1,775,549 5,281,799

Financial costs 30 (687,421) (310,404)

related parties 37 (38,065) (46,471)

Financial income 30 120,094 590,082

Earning before taxes 1,208,221 5,561,477

Income taxes 31 (174,303) (1,123,896)

Profit for the year (A) 1,033,918 4,437,581

Other comprehensive income/(losses) for the year that will not be reclassified in

icome statement:

Actuarial gain/(losses) on DBO (net of tax) 13 (124) (15,185)

Other comprehensive income/(losses) for the year that will be reclassified in

icome statement:

Exchange differences on translating foreign operations 13 (151,324) (40,059)

Total other comprehensive income/(losses) for the year (B) (151,448) (55,244)

Total comprehensive income (A) + (B) 882,470 4,382,337

Profit attributable to:

Owners of the parent 1,033,918 4,437,581

Minority interest - -

Total comprehensive income atributable to:

Owners of the parent 882,470 4,382,337

Minority interest - -

Basic earning per share 13 0.09 0.40

Diluted earning per share 13 0.09 0.40

19

CONSOLIDATED CASH FLOW STATEMENT AT JUNE 30, 2020 PREPARED IN COMPLIANCE WITH THE IFRSs ADOPTED BY THE EUROPEAN UNION

Note 1: the liquidity absorbed by repayment of the lease liabilities includes absorption of liquidity attributable to transactions with the parent R&D International S.r.l. for EURO 460 thousand.

The following chart shows the composition of the balance of net cash at June 30, 2020 and at June 30, 2019:

Consolidated statement of cash flows

(Euro thousands)

2020 2019

A- Net current bank balances at the beginning of the period 4,963 2,547

B- Cash flow from operating activities

Profit/loss for the period (Including third parties Profit/loss) 882 4,382

Income tax expense 174 1,124

Depreciation and amortization 1,105 1,160

Sale of property, plant and equipment 0 0

Finance cost 687 310

Interest income (120) (590)

Net change in provisions for risk and charges and other provision relating to personell 18 27

Change in provigion for leaving indemnities

Allocations and revaluations 6 3.00

Actuarial gain/(losses) 5 21

(Use) (3) (72)

(increase) decrease in current trade and other current receivables 4,427 (1,450)

(increase) decrease in deferred tax assets and liabilities 32 14

(increase) decrease in inventory (1,184) (1,397)

Increase (decrease) in current trade and other payables (3,001) 360

Net cash from/(used in) operating activities 3,028 3,892

Paid interest costs (201) (113)

Collected interest income 111 89

Taxes paid 0 (252)

Total (B) 2,938 3,616

C- Cash flow from investing activities

(Investments) in non current tangible assets (229) (371)

Proceeds for sale of non current tangible assets 0 -

Net (investments) in non current intangible assets (5) (87)

Net (investments) in non current securities (7) (5)

(Investments) in current securities 0 0

Proceeds from sale of current securities 0 0

Total (C) (241) (463)

D- Cash flow from financing activities

(Outflow) from repayment of loans (1,613) (3,101)

Inflow from borrowing activities 7,500 6,000

(Outflow) from repayment of lease liabilities (623) (622) Note 1

Purchase of treasury shares (822) (293)

Dividend paid to shareholders 0 (5,492)

Total (D) 4,442 (3,508)

E- Cash flow for the period (B+C+D) 7,139 (355)

F- Cash and cash equivalents at end of the period 12,102 2,192

I half

30-Jun-20 30-Jun-19

Cash 12,102 2,827

Bank overdrafts (0) (635)

Total 12,102 2,192

20

STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY, PREPARED IN COMPLIANCE WITH THE IFRSs ADOPTED BY THE EUROPEAN UNION

Here below are shown the changes in net equity that occurred in the first half of 2020 and in the first half of 2019.

Share

Capital

Legal

Reserve

Share

premium

reserve

Extraordinary

reserve

Exchange

rate

reserve

Foreign

exchange

reserve

Retained

earnings

Net Group

Equity

Minority

interestTotal net Equity

Euro thousand

Balance at January 1, 2020 1,098 379 4,629 44 54 560 18,848 25,613 - 25,613

0

Result of the period 1,034 1,034 1,034

Other comprehensive income/expenses (151) () (151) (151)

Totale other comprehensive income/expenses - - - - - (151) 1,034 882 - 882

Shareholders

Allocation of previous year result - - - - -

Dividend distribution 0 0 - 0

Treasury shares allocation (7) (815) - (822) (822)

Other - - -

Balance at June 30, 2020 1,091 379 3,814 44 54 409 19,882 25,674 - 25,674

Share

Capital

Legal

Reserve

Share

premium

reserve

Extraordinary

reserve

Exchange

rate

reserve

Foreign

exchange

reserve

Riserve di

risultato

Net Group

Equity

Minority

interestTotal net Equity

Euro thousand

Balance January 1, 2019 1,100 379 4,890 44 54 500 0 15,733 22,700 - 22,700

Result of the period 4,438 4,438 4,438

Other comprehensive income/expenses (40) (15) (55) (55)

Totale other comprehensive income/expenses - - - (40) 4,422 4,382 - 4,382

Shareholders

Allocation of previous year result 0 - -

Dividend distribution (5,492) (5,492) (5,492)

Treasury shares allocation (2) (291) - (293) (293)

Balance June 30, 2019 1,098 379 4,599 44 54 460 14,664 21,298 - 21,298

21

Notes to the condensed consolidated interim financial report at June 30, 2020 prepared in compliance with the IFRSs adopted by the European Union

Criteri di redazione The present condensed consolidated interim financial statements were prepared in compliance with the International Accounting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union. The term “IFRS” is also used to refer to all revised International Accounting Standards (“IAS”) and all interpretations provided by the International Financial Reporting Interpretations Committee (“IFRIC”), previously named the Standing Interpretations Committee (“SIC”).

The condensed consolidated interim financial statements were drawn up in accordance with IAS 34 “Interim Financial Statements”. These condensed interim financial statements do not include, therefore, all the information required in the annual financial statements and must be read together with the annual financial statements prepared for the financial year ended 31 December 2019.

The accounting standards adopted to draw up these condensed consolidated interim financial statements are the same as those used to prepare the Group's annual consolidated financial statements for the year ending on December 31, 2019.

In the context of preparation of the condensed consolidated interim financial statements the Management of the Company and Group carried out valuations, estimates and assumptions impacting on the amounts of the revenues, costs and assets and liabilities, and also on the disclosure related to the potential assets and liabilities at the reference date thereof. It should be noted that, as these are estimates, they may differ from the actual results that could be obtained in the future. Some valuation processes, in particular the more complex ones, such as determining any impairment losses on non-current assets, are usually carried out thoroughly only on preparation of the year-end consolidated financial statements, when all the necessary information is available, except in cases when there is evidence of impairment requiring an immediate measurement of losses.

Income taxes are recognized on the basis of the best estimate of the average rate expected for the entire financial year.

The Group's activities are not subject to significant seasonal factors.

Limited auditing of the condensed consolidated interim financial report for the B&C Speakers Group at June 30, 2020 was entrusted to PricewaterhouseCoopers S.p.A.

Impacts of the Covid-19epidemic

At the end of January 2020, the World Health Organization declared the existence of the international emergency phenomenon linked to the spread of the SARS-CoV-2 virus (hereinafter also called Covid-19 or Coronavirus); in Italy, since the beginning of March 2020, increasingly strict measures have been adopted aimed at combating the spread of the virus and protecting health, first involving some areas of the northern Italy and progressively the rest of the peninsula.

Since the first spread of the virus, the Group has put in place all possible precautions to guarantee employees health safety within its plants. In compliance with what was

22

communicated by the President of the Council of Ministers on March 22, 2020, the production activities of the Group's Italian offices were suspended from March 20, 2020, for the Bagno a Ripoli (FI) office, and from March 13, 2020 for the Reggio Emilia plant, to then reopen on 4 May 4, 2020.

Distribution and sales activities in the United States and Brazil have not been suspended.

At the same time, remote work was extended to all employees who have the opportunity to carry out their duties away from the office.

In economic terms, the effect of the health emergency was therefore substantial.

In fact, it should be considered that in the months of January and February 2020 they improved compared to the corresponding period of the previous year. Then the lockdown periods and the crisis in the sector triggered by the pandemic in progress caused a cumulative loss of turnover, in comparison with the previous period, estimated at approximately Euro 11.5 million (-40.32% compared to the first half of 2019).

Considering that the average marginality of the group in terms of Ebitda was equal to approximately 22.35% in 2019, the contraction of this margin is estimated at June 30, 2020 at approximately Euro 2.4 million.

In this context, the Group promptly prepared a series of counter measures aimed at adapting costs to the reduction in turnover: after activating discussions with the trade union representatives in order to share the appropriate measures to be adopted, starting from the closing dates of the factories, the Group resorted to the Redundancy funds for all staff in force, by maintaining the minimum operational services and the reduction of the activities of administrative employees. The measure of the redundancy fund will be usable until December 31, 2020. After this date, the Group will eventually make use of the other social safety nets provided for by current regulations.

It is specified that the contraction in the results and margins reported above resulted in the absence of the conditions for the accrual of the variable part of the MBO linked to the medium-term results with consequent lower charges for Euro 242 thousand.

As for the containment of costs for services, the Management carried out an initial analysis of the contracts in place, identifying non-strategic cases and activating further initiatives with suppliers.

It should also be noted that the Shareholders' Meeting held on April 29, 2020, approved the proposal of the Board of Directors, as amended and communicated to the market on April 14, 2020, not to distribute any dividends and to allocate the entire profit in 2019 to "retained earnings". The decision was taken following the persistence of the situation of uncertainty linked to the spread of the epidemic, with the aim of containing financial outlays and prudentially strengthening the already solid economic and financial position of the Group.

In addition to this, the Group also increased its financial resources through the subscription of three new loans for a total amount of Euro 7.5 million. Two of the three loans mentioned (for a total amount of Euro 5 million) are guaranteed by the Italian State and offer profitable economic conditions with reimbursement starting from 2022.

The aforementioned decrease in turnover and margins did not affect the change in net operating working capital thanks to a careful and cautious management of trade receivables (which did not show significant problem situations), purchases and inventories. This amount went from Euro 20.7 million at December 31, 2019 to Euro 20.2 million at June 30, 2020. The increase in liquidity is instead a consequence of the assumption of the aforementioned loans. The Group's Net Financial Position passes from a negative value of Euro 5.0 million at December 31, 2019 to a value, always negative, of Euro 3.6 million, thus recording an

23

improvement compared to the end of 2019 thanks above all to the dividend policy above and to the generation of operating cash in the half year due to the management of working capital.

Taking into account the above, as well as the financial structure, the bank credit lines available, the order book in place in September 2020, there is no doubt about the existence of the going concern assumption.

Accounting standards, amendments and interpretations applied from January 1, 2020

All the data in this Report, the competent bodies of the European Union have approved the adoption of the following accounting standards and amendments applied by the Group as of January 1, 2020.

• In October 2018, IASB published an amendment to standard IFRS 3 that modify the

definition of "business" in the context of acquisitions of companies or groups of

activities. The application of the amendments is effective from January 1, 2020 and

did not have any significant effects on the condensed interim consolidated financial

statements at June 30, 2020.

• In October 2018, IASB published some amendments to IAS 1 and IAS 8, providing

clarifications regarding the definition of "material information". The application of

the changes is effective from January 1, 2020 and did not have any significant effects

on the condensed interim consolidated financial statements at 30 June 2020

• In September 2019, IASB published some amendments to IFRS 9, IAS 39 and IFRS 7

providing clarifications in light of the reform on interbank interest rates. The

application of the changes is effective from January 1, 2020 and did not have any

significant effects on the condensed interim consolidated financial statements at

June 30, 2020.

Accounting standards, amendments and interpretations not yet applied

All the data in this Report, the competent bodies of the European Union have approved the adoption of the following accounting standards and amendments not yet applicable by the Group.

• In May 2017, the IASB issued the new standard IFRS 17 “Insurance Contracts”. The

new standard will replace IFRS 4 and will be applicable starting from financial years

starting on, or after, January 1, 2023.

• In May 2020, the IASB published an amendment to IFRS 16 “Leases”. The

amendment makes it possible to neutralize the changes in fee payments resulting

from agreements between the parties, in consideration of the negative effects of

Covid-19. The amendment is applicable with effect from June 1, 2020.

• In January 2020, the IASB published an amendment to IAS 1 “Presentation of

financial statements” which provides clarifications on the classification as current

and non-current liabilities. The amendment is applicable with effect from January 1,

2022.

• In May 2020, the IASB published some amendments in reference to IFRS 3 "Business

combinations", to IAS 16 "Property, plant and equipment" and to IAS 37 "Provisions,

contingent liabilities and contingent assets". Furthermore, some amendments have

been published to IFRS 1 "First-time Adoption of IFRS", to IFRS 9 "Financial

24

instruments", to IAS 41 "Agriculture" and to the illustrative examples attached to

IFRS 16 "Leases". These changes will be applicable with effect from January 1, 2022.

The Group will adopt these new principles, amendments and interpretations, on the basis of the expected date of application, and will evaluate their potential impacts, once they are approved by the European Union.

Consolidation scope

The interim report at June 30, 2020 prepared according to the IFRSs, includes on a line-by-line basis the financial statements of the Parent Company and of the Companies of the B&C Speakers Group.

Then the companies within the scope of consolidation at June 30, 2020 are the following:

There were no changes relative to the scope of consolidation at 31 December 2019.

The exchange rates applied in the conversion of financial statements in currencies other than the euro in the first half of 2019, at 31 December 2019 and in the first half of 2020 are shown in the table below:

Segment Reporting

IFRS 8 requires precise identification of the areas of business in the internal reports used by the management in order to allocate resources to the various segments and control their performance. Based on the definition of the operating segments given by IFRS 8, the Group operates in a single sector (“acoustic transducers”) and consequently executive reporting pertains to this area of business alone.

Direct Indirect Total Direct Indirect Total

B&C Speaker S.p.A. Italy

Eighteen Sound S.r.l. Italy 100% 100% 100% 100%

Sound & Vision S.r.l. Italy 100% 100% 100% 100%

B&C Speaker NA LLC USA 100% - 100% 100% - 100%

B&C Speaker Brasil LTDA Brasil 100% - 100% 100% - 100%

Companies CountryGroup structure at 30 june 2020 Group structure at 31 december 2019

Parent Company Parent Company

Direct Indirect Total Direct Indirect Total

Silence Tech S.r.l. Italy 33% - 33% 33% - 33%

Related company CountryGroup structure at 30 june 2020 Group structure at 31 december 2019

Currency

Avg exch. Final exch. Avg exch. Final exch. Avg exch. Final exch.

EURO/USD 1.114 1.120 1.120 1.123 1.130 1.138

EURO/REAL 4.743 6.112 4.413 4.516 4.342 4.351

30-Jun-20 31-Dec-19 30-Jun-19

25

Analysis of the breakdown of the main items of the consolidated balance sheet at June 30, 2020

1. Property, plants and equipment

A breakdown of property, plants and equipment and the related changes during the period are highlighted in the following charts:

(In Euross)

The cost containment policy implemented by the Group's management has led to focus investment initiatives on strategic processes. Consequently, the most significant changes occurred during the first half of 2020 mainly refer to the investments made on the production lines in order to increase their efficiency

2. Rights of use

The Group has recognized assets for the right of use and lease liabilities of the same amount, discounting the value of the lease payments due. The Group at June 30, 2020 has a value of the Rights of Use equal to Euro 3,585 thousand (Euro 4,179 thousand at December 31, 2019), composed as follows:

• Rights of use for properties of Euro 3,496 thousand, related to medium/long-term property leasing contracts;

• Rights of use for equipments of Euro 66 thousand, related to medium/long-term leasing contracts for industrial, electronic and IT equipment;

• Rights of use for vehicles of Euro 23 thousand, related to medium/long-term leasing contracts for company cars.

Historic cost 31-Dec-19 Additions Reclassification Foreign exch. (Decreases) 30-Jun-20

Land and buildings 5,253 - - 17 - 5,270

Photovoltaic System and other minor 1,270,040 3,919 - - - 1,273,959

Lightweight construction 113,605 - - - - 113,605

Plants and machinery 8,253,150 102,578 42,400 300 (15,157) 8,383,272

Industrial equipment 7,495,500 63,338 7,620 (702) - 7,565,756

Various equipment 1,394,326 23,834 - (5,668) - 1,412,492

Fixed assets in progress 87,950 37,299 (50,020) - - 75,229

Total 18,619,824 230,969 - (6,053) (15,157) 18,829,583

Accumulated depreciation 31-Dec-19 Depreciation Reclassification Foreign exch. (Decreases) 30-Jun-20

Land and buildings 6,219 1 - 16 - 6,236

Photovoltaic System and other minor 718,767 35,841 - - - 754,608

Lightweight construction 48,944 5,185 - - - 54,129

Plants and machinery 6,374,551 205,849 - 189 - 6,580,590

Industrial equipment 7,000,807 141,542 - (526) - 7,141,823

Various equipment 1,218,157 35,022 - (8,004) - 1,245,175

Fixed assets in progress - - - - - -

- - -

Total 15,367,445 423,442 - (8,325) - 15,782,562

Net value 31-Dec-19 Net increases Reclassification Foreign exch. Depreciation

Accumulated

depreciation decrease 30-Jun-20

Land and buildings - - - 1 (1) - -

Photovoltaic System and other minor 551,273 3,919 - - (35,841) - 519,350

Lightweight construction 63,918 - - - (5,185) - 58,733

Plants and machinery 1,878,227 87,422 42,400 37 (205,849) - 1,802,236

Industrial equipment 494,692 63,338 7,620 (176) (141,542) - 423,932

Various equipment 176,167 23,834 - 2,336 (35,022) - 167,315

Fixed assets in progress 87,952 37,299 (50,020) - - - 75,231

- - - - - - -

Total 3,252,228 215,812 - 2,197 (423,442) - 3,046,797

26

The movement that took place in the half year is linked to the depreciation for the period. 3. Goodwill

A breakdown of this item is highlighted in the following chart:

(In Euros)

The item Goodwill saw no changes with respect to December 31, 2018 and refers to:

(i) the consolidation of the equity investment in B&C Speakers NA LLC, for Euro 1,394 thousand;

(ii) the consolidation of the equity investment in Eighteen Sound S.r.l. for Euro 924 thousand.

The value of the goodwill is the positive difference between the purchase cost and the Group’s share in the current values of the identifiable assets, liabilities and contingent liabilities of entities acquired, as of the date of acquisition.

Goodwill is subjected every year, or more frequently if specific events or changed circumstances indicate the possibility of having suffered a loss in value, to audits so to identify any reductions in value, in accordance with the provisions of IAS 36 - Impairment of assets (impairment test). The recoverability of the recognized values is verified by comparing the net book value of the individual cash generating units ("CGU") with the recoverable value (value in use). This recoverable value is represented by the current value of future cash flows, which are estimated to derive from continuous use of the assets referred to the cash generating unit and with a terminal value attributable to them.

The rapid spread of the Covid-19 pandemic caused a decrease in turnover and, subsequently, in the margins of the individual CGUs. Therefore, in view of the particular situation generated by the aforementioned health emergency, the recoverability of goodwill was also tested as at June 30, 2020

The Group’s Directors then have analysed the final trend of the CGUs relating to the goodwill shown in the consolidated statement of financial position, comparing them with the multi-year plans for the period 2020-2024 approved by the Board of Directors of the Parent Company on March 6, 2020 and with the changed outlook of business currently conceivable. Following the analysis conducted, the Group has proceeded to:

a) the definition and approval of a new multi-year plan for the Eighteen Sound CGU, with consequential redefinition of the related impairment test;

b) the preparation and approval of a new impairment test based on alternative scenarios for the B&C USA CGU, taking as reference the multi-year plan of the B&C USA CGU approved by the Board of Directors of the parent company on March 6, 2020.

Eighteen Sound CGU

As at June 30, 2020 a new multi-year plan was prepared for the period 2020-2024 and the impairment test was carried out on the net book value attributed to the Eighteen Sound CGU,

Goodwill 30-Jun-20 31-Dec-19

Goodwill on Eighteen Sound S.r.l. 924,392 924,392

Goodwill on B&C Speakers Usa NA LLC 1,393,789 1,393,789

Writedowns - -

Total goodwill 2,318,181 2,318,181

27

which includes goodwill and other assets relating to the subsidiary Eighteen Sound S.r.l. and to the (indirect) subsidiary Sound & Vision S.r.l .; these values have been identified by the directors as forming part of a single CGU, as the assets of the two subsidiaries are fully dedicated to the only identifiable business sector in the production and sale of "high quality professional loudspeakers".

For the purposes of the preparation of the new plan, it was considered the trend of the reference market in whom the Group operates during the months of June, July and August 2020, the order portfolio already acquired by the Group, as well as the additional initiatives launched by business development, assuming a significant reduction in demand for the years 2020 and 2021.

The main assumptions used by the Group to determine the future cash flows, and the resulting recoverable value (value in use) of the Eighteen Sound CGU refer to:

c) assumption of forecast cash flows that inferable from the five-year plan of Eighteen Sound for the period 2020-2024, approved by the Board of Directors of the parent company, together with the related impairment test, on September 7, 2020;

d) discount rate (WACC); e) in addition to the explicit period, a growth rate was estimated (g rate).

In particular, for the discounting of cash flows, the Group has adopted a discount rate (WACC) which reflects current market valuations, the cost of money and takes into account the specific risks of the business and the geographical area in which the CGU operates. In the model for discounting future cash flows, at the end of the cash flow projection period, a terminal value is entered to reflect the residual value that the cash generating unit should generate. The terminal value represents the current value, in the last year of the projection, of all subsequent cash flows calculated as a perpetual annuity, using a perpetual growth rate (g rate).

The CAGR of revenues for the years envisaged in the new Plan is higher than what shown in the plan approved on March 6, 2020 as the estimates and assumptions used provide that, in the face of the significant reduction in demand and revenues expected for 2020 and 2021, there is then a decisive recovery in turnover from the years 2022 and 2023.

WACC was determined in continuity with the previous year.

The Terminal Value growth rate (g rate) is specific to the CGU and reflects the growth potential of the reference area. In this case too, the rate construction logic has not been changed compared to the past.

The analyses carried out did not lead to highlighting losses in value. Therefore, no devaluation was recorded in the data as at June 30, 2020.

Furthermore, based also on the indications contained in the joint document of the Bank of Italy, Consob and Isvap no. 2 of February 6, 2009, the Group proceeded to elaborate the sensitivity analysis on the results of the test with respect to the variation of the basic assumptions (use of the growth rate in the processing of the terminal value and the discount rate) which affect the value in use of the CGU. Even in case of a positive or negative variation of 0.5% in the WACC and in the g-rate used, the analyses would not lead to evidence of impairment. In all cases processed, the present value of the expected cash flows generated by the CGU is higher than the net book value subject to impairment tests.

Considering that the recoverable value was determined on the basis of estimates, the Group

Main financial parameters on impairment tests 2020-2024 CAGR revenues WACC g

30-Jun-20 24% 8.86% 1.28%

31-Dec-19 4% 8.29% 1.28%Eighteen Sound

28

cannot ensure that there will be no impairment of goodwill in future periods. Given the current market context, the various factors used in the preparation of the estimates could be revised; the Group will constantly monitor these factors and the existence of impairment.

B&C USA CGU

Also with reference to the B&C USA CGU, in consideration of the particular situation created following the health emergency from Covid-19, the recoverability of the goodwill was tested at June 30, 2020, elaborating some alternative scenarios using the multi-year plan of the CGU as a reference B&C USA approved by the Parent Company's Board of Directors on March 6, 2020 and processing a new impairment test, the latter approved by the Parent Company's Board of Directors on September 7, 2020

Considering the uncertainty factors related to the Coronavirus epidemic, the Group has drawn up three alternative scenarios for the B&C USA CGU based on the trend observed in June, July and August 2020, assuming a different modulation of the revenue trend and of margins expecting a decline in the years 2020-2021 followed by a progressive recovery in the following years which allows to capture, in the last year of the plan, the revenue target set for 2024 in the plan approved by the Board of Directors on March 6, 2020.

The main assumptions used by the Group to determine the future cash flows in the various scenarios, and the consequent recoverable value (value in use) of the B&C USA CGU refer to:

a) an assumption of forecast financial flows for the scenarios developed referring to the five-year plan of B&C USA for the period 2020-2024 approved by the Board of Directors of the parent company on March 6, 2020;

b) the discount rate (WACC), determined in continuity with the previous year; c) in addition to the explicit period, a specific growth rate (g rate) for the CGU was

estimated, reflecting the growth potential of the reference area. Also in this case, the rate construction logic has not been changed compared to the past.

In particular, for the discounting of cash flows, the Group has adopted a discount rate (WACC) reflecting the current market valuations, the cost of money and which takes into account the specific risks of the business and the geographical area in which the CGU operates. In the model for discounting future cash flows, at the end of the cash flow projection period, a terminal value is entered so to reflect the residual value that the cash generating unit should generate. The terminal value represents the current value, in the last year of the projection, of all subsequent cash flows calculated as a perpetual annuity, using a perpetual growth rate (g rate).

The CAGR of revenues in each of the three drawn-up scenarios is higher than what was approved in the plan on March 6, 2020 as the assumptions used envisage that, in the face of the significant reduction in demand expected for 2020 and 2021, there will then be a recovery of turnover from 2022, achieving the same revenue target for 2024 as envisaged in the original plan.

All the scenarios developed would in any case determine a recoverable value of the cash generating unit not lower than the relative book value, without therefore highlighting any impairment. Considering that the recoverable value is in any case determined on the basis of estimates and assumptions, the Group cannot guarantee that there will be no impairment of goodwill in future periods. In addition, given the current context of uncertainty, the Group will constantly monitor the various factors and the existence of impairment

Main financial parameters on impairment tests 2020-2024 CAGR revenues WACC g

30-Jun-20 6,7%-11,4%-11,9% 8.52% 2.32%

31-Dec-19 1% 8.52% 2.32%B&C USA

29

4. Other Intangible assets

A breakdown of intangible assets and the related changes during the period are highlighted in the following chart:

(In Euros)

The item "Industrial patent rights and use of intellectual property" consists of software purchased from external suppliers, the registration costs of the B&C Speakers brand and the costs of patent registration. The increase in the period is essentially attributable to the purchase of management software for the Reggio Emilia subsidiary and software for the operation of the company servers. 5. Equity investments in associated companies

This item amounts to € 50 thousand, unchanged with respect to December 31, 2019 and reflects the value of the investment at 33% in the new company Silence Tech S.r.l. founded together with two other companies for the purpose of exploiting “Silence” technology developed along with the two other partners. The Company, established at the end of 2015 is still non-operational.

6. Deferred tax assets

This item reflects deferred tax assets as at June 30, 2020, net of deferred tax liabilities, equal to Euro 580 thousand (Euro 612 thousand at December 31, 2019).

These amounts mainly consist of prepaid taxes arising following the taxation of not-entirely-deductible costs during the period and prepaid tax arising following the abolition of intra-Group margins. Deferred tax assets have been recognized because the management expects the Company to generate future taxable income against which it can be used this positive balance.

7. Other non-current assets

The item is made up of:

(In Euros)

Other intangible fixed assets 31-Dec-19 Additions Reclassifications

Foreign

Exchange Depreciation 30-Jun-20

Patent rights 348,521 6,174 - (758) 73,353 280,584

3,061 625 2,436

Intangible assets in progress 0 - - - - -

Total 351,582 6,174 - (758) 73,978 283,020

Other non current assets 30-Jun-20 31-Dec-19 Change % Change

Insurance poilcies 533,688 533,688 - 0%

Guarantee deposits 60,525 60,525 - 0%

Ires refund receivables 68,392 68,392 - 0%

Others 9,830 3,041 6,789 223%

Total non current assets 672,435 665,646 6,789 1%

30

The item Insurance policies refers to receivables accrued in respect of the insurance companies Fondiaria Assicurazioni and Allianz, in relation to the capitalization policies signed in order to guarantee adequate financial cover of the Directors’ severance pay. The value of the assets relating to insurance policies recognized in the financial statements has been measured according to the value of the premiums paid. Guarantee deposits reflects the amount receivable for guarantee deposits issued based on contracts for the leasing of the Group's manufacturing and administrative offices. 8. Inventories

Warehouse inventories are calculated according to the F.I.F.O. method and can be broken down as follows:

(In Euros)

The value of inventories is shown net of provisions for inventory writedowns of € 598 thousand, with the following changes during the half year:

Provisions for inventory writedowns have been estimated as a result of an analysis on the recoverability of stock values.

The gross value of inventories as at June 30, 2020 is overall an increase of Euro 1.2 million compared to the figure as at December 31, 2019. This increase, particularly focused in the categories of raw materials and semi-finished products, is to be related to the need to maintain adequate warehouse stocks in view of a resumption of the flow of orders.

9. Trade receivables

Trade receivables relate to normal sales made to domestic and foreign customers and can be broken down as follows:

(In Euros)

The gross value of trade receivables decreased compared to December 31, 2019 mainly due to the contraction in the Group's turnover. It should be noted that, despite the deleterious effects of the pandemic on the liquidity of the Group's customers, at the date of drawing up this half-year report, no situation of significant doubtful credit have arisen.

Inventories 30-Jun-20 31-Dec-19 Change % Change

Row materials and consumables 4,046,216 3,839,242 206,974 5%

Work in progress and semi-finished 8,801,345 7,882,426 918,919 12%

Finished goods 2,427,479 2,354,067 73,412 3%

Gross Total 15,275,039 14,075,735 1,199,304 9%

Provision for inventory writedowns (598,239) (583,307) (14,932) 3%

Net Total 14,676,800 13,492,428 1,184,372 9%

Change in provision for inventory writedowns 31-Dec-19 Increase Use

Foreign

Exchange 30-Jun-20

Provision for inventory writedowns 583,307 25,000 - (10,068) 598,239

Total 583,307 25,000 - (10,068) 598,239

Trade receivables 30-Jun-20 31-Dec-19 Change Change %

Trade receivables 8,813,194 13,268,863 (4,455,669) -34%

(Provision for doubtful accounts) (428,119) (426,658) (1,461) 0%

Total 8,385,075 12,842,205 (4,457,130) -35%

31

10. Tax assets

Tax credits as at June 30, 2020, equal to Euro 1,172 thousand (Euro 844 thousand at December 31, 2019), mainly consist of VAT credits, current tax credits and tax credits of the foreign subsidiaries for the residual.

11. Other current assets

Other current assets are made up as follows:

(In Euros)

Securities held in the portfolio refer to asset management items denominated in € and held for short-term liquidity. These securities were measured at fair value and the estimated. These securities were valued at fair value and the presumed loss (equal to Euro 371 thousand), recognized in the income statement under financial income. It should be noted that the trend in the market value of the Group's securities portfolio is gradually improving compared to the first quarter of 2020 when the presumed loss amounted to Euro 969 thousand.

12. Cash and cash equivalents

As required by Consob Communication No. DEM/6064293 of 28 July 2006 and in accordance with the CESR recommendation of 10 February 2005 “Recommendations for the standardized implementation of the regulation of the European Commission on financial statements”, the Group's net financial position at June 30, 2019 is detailed below:

(In € thousands)

Other current assets 30-Jun-20 31-Dec-19 Change % Change

Receivables towards supplier 167,687 156,040 11,647 7%

Securities 7,544,675 7,916,385 (371,710) -5%

Other minor receivables 57,299 25,216 32,083 127%

Total other receivables 7,769,661 8,097,641 (327,980) -4%

Commercial fairs 14,239 68,629 -54,390 -79%

Assistance and assurance fees 164,674 142,280 22,394 16%

Specialist contract 17,613 2,250 15,363 683%

Other 141,104 85,716 55,388 65%

Total prepaid expenses and accrued income 337,630 298,875 38,755 13%

Total current assets 8,107,291 8,396,516 (289,225) -3%

30 June 31 December

2020 (a) 2019 (a) Change %

A. Cash 12,102 5,278 129%

C. Securities held for trading 7,543 7,916 -5%

D. Cash and cash equivalent (A+C) 19,645 13,194 49%

F. Bank overdrafts (0) (314) -100%

G. Current portion of non current borrowings (5,492) (6,686) -18%

H. Other financial current borrowings (1,099) 1,211.60-

I. Current borrowingse (F+G) (6,591) (8,211) -20%

J. Current net financial position (D+I) 13,054 4,982 162%

K. Non current borrowings (14,039) (6,958) 102%

M. Other financial non current borrowings (2,570) 3,031.00-

N. Non current borrowings (16,608) (9,989) 66%

O. Total net financial position (J+N) (3,554) (5,006) -29%

32

(a) Information taken and/or calculated from the financial statements prepared in compliance with IFRS adopted by the European Union.

Below is a statement of reconciliation between the cash and cash equivalents at end of the period highlighted in the consolidated cash flow statement and the net financial position shown above.

For further details concerning the change in cash and cash equivalents, please refer to the enclosed consolidated cash flow statement.

13. NET EQUITY

Share Capital

The share capital is equal to Euro 1,090 thousand at June 30, 2020 and is decreased by Euro 7 thousand for the purchase of treasury shares. As a result of the continuation of the treasury share buy-back plan, on June 30, 2020 B&C Speakers S.p.A. held 95,304 shares, equal to 0.87% of share capital. At the date of this report (September 2020), the number of Treasury shares owned has changed with respect to June 30, 2020 and amounts to 111,223, equal to 1.01% of the share capital. The following table shows the changes, in the first half of 2020, to the number of shares outstanding of the Parent Company:

Other reserves

This item, equal to Euro 4.970 thousand as at June, 30 2020, is made up of the legal reserve for € 379 thousand, the extraordinary reserve for € 44 thousand, the reserve for unrealized exchange gains for € 54 thousand and the share premium reserve for € 3,814 thousand.

In particular, the share premium reserve, which originated on placing of the Parent Company's ordinary shares, decreased by Euro 815 thousand during the half-year period following the recognition of the transactions carried out on treasury shares.

Foreign Exchange reserve

30-Jun-20 31-Dec-19

Cash and cash equivalents at end of the period 12,102 4,964

Current portion of non current borrowings (5,492) (6,686)

Non current borrowings (14,039) (6,958)

Securities held for trading (1,099) 1,211.60-

Other financial current borrowings (2,570) 3,031.00-

Other financial non current borrowings 7,543 7,916

Total net financial position (3,554) (5,006)

Reconciliation of the number of outstanding shares

Outstanding shares

(n.)

December 31, 2019 10,978,285

Treasury shares purchased (73,589)

Treasury Shares sold -

June 30, 2020 10,904,696

33

This item amounted to € 410 as at June 30, 2020 and includes the exchange differences arising from conversion of the financial statements in foreign currencies. This reserve fell by € 151 thousand due to the recognition of other statement of comprehensive income items relating to the conversion of financial statements into foreign currency.

Retained earnings reserves

This item includes the following reserves:

Retained earnings This includes the results of previous year’s net of distribution of dividends.

Actuarial measurement reserve for employee benefit funds This item includes the effects on net equity of the discounting component of severance indemnity.

Result of the period

This item includes the net result for the period for € 1,034 thousand and other profits / (losses) for the period for a negative value of € 15 thousand relating to the component deriving from the actuarial valuation of the severance indemnity. This financial component is shown, net of the related tax effect, in the other components of the comprehensive income statement.

The following charts show the effects recognised in the other components of the Statement of Comprehensive Income:

Foreign exchange

reserveRetained earnings Total Group Minority interests

Total other

comprehensive

income/(losses)

Euro Thousand

June 30, 2020

Other comprehensive income/(losses) for the year that

will not be reclassified in icome statement:

Actuarial gain/(losses) on DBO (net of tax) () () ()

Total - () () - ()

Other comprehensive income/(losses) for the year that

will be reclassified in icome statement:

Exchange differences on translating foreign operations (151) (151) - (151)

Total (151) - (151) - (151)

Other comprehensive income/(losses) for the year: (151) () (151) - (151)

June 30, 2019

Other comprehensive income/(losses) for the year that

will not be reclassified in icome statement:

Actuarial gain/(losses) on DBO (net of tax) (15) (15) (15)

Total - (15) (15) - (15)

Other comprehensive income/(losses) for the year that

will be reclassified in icome statement:

Exchange differences on translating foreign operations (40) (40) - (40)

Total (40) 0 (40) - (40)

Other comprehensive income/(losses) for the year: (40) (15) (55) 0 (55)

Gross value Fiscal effect Net value Gross value Fiscal effect Net value

Euro thousand

Actuarial gain/(losses) on DBO - - - (21) 6 (15)

Exchange differences on translating foreign operations (151) (151) (40) (40)

Other comprehensive income/(losses) (151) - (151) (61) 6 (55)

June 30, 2020 June 30, 2019

34

Earnings per share

Earnings per share have been calculated as per IAS 33. The value of this indicator is Euro 0.09 per share (Euro 0.40 in the first half of 2019). This indicator has been calculated by dividing the profit or loss attributable to the shareholders of the Parent company by the weighted average of the ordinary shares in issue during the period (no. 10,904,696 in the first half of 2020).

14.Long-term borrowings

This item is made up of:

(In Euros)

The item “CRF 2 loan” of € 2,000 thousand at June 30, 2020 includes the portion due beyond the following year of the long-term loan agreed with Cassa di Risparmio di Firenze S.p.A. on October 26, 2017, aimed at obtaining part of the financial resources necessary for the acquisition of shares in Eighteen Sound S.r.l. In parallel with the signing of this loan agreement, the Company also signed an Interest Rate Swaps (IRS) hedging contract with CR Firenze S.p.A., aimed at keeping the interest rate of the loan fixed.

The item “Finanziamento BNL 1” loan is equal to Euro 1.005 thousand and includes the portion due beyond the following year of the long-term financing agreement with Banca Nazionale del Lavoro S.p.A. on November 23, 2017 aimed at obtaining part of the financial resources necessary for the acquisition of shares in Eighteen Sound S.r.l.

The item “BNL Loan 4” of € 2,000 thousand at 30 June 30, 2020 includes the portion due beyond the following year of the long-term loan agreed with Banca Nazionale del Lavoro S.p.A. on April 18, 2019. In parallel with the signing of this loan agreement, the Company also signed an Interest Rate Swaps (IRS) hedging contract, again with Banca Nazionale del Lavoro S.p.A., aimed at keeping the interest rate of the loan fixed.

The item “Mediocredit Italiano loan” for € 1,500 thousand at June 30, 2020 includes the portion due beyond the following year of the long-term financing agreement with Mediocredito Italiano S.p.A. on April 17, 2019. In parallel with the signing of this loan agreement, the Company also signed an Interest Rate Swaps (IRS) hedging contract, again with Banca Nazionale del Lavoro S.p.A., aimed at keeping the interest rate of the loan fixed.

The item "Unicredit 2 loan" equal to Euro 2,500 thousand includes the portion due beyond the following year of the long-term loan contracted with Unicredit S.p.A. on May 31, 2020.

The item “Finanziamento Banca Intesa Garantito” guaranteed loan equal to Euro 2,500 thousand includes the portion due beyond the following year of the long-term loan contracted with Intesa San Paolo S.p.A. on April 17, 2020. This loan falls within the category of loans guaranteed by Medio Credito Centrale S.p.A. pursuant to Legislative Decree n. 23/2020, art.

Long-term borrowings 30-giu-20 31-dic-19 Change % Change

Long-term loan CRF 2 2,000,031 2,000,031 - 0%

Long-term loan Unicredit 1 - 418,980 (418,980) -100%

Long-term loan BNL 1 1,005,254 1,005,254 - 0%

Long-term loan BNL 2 - - -

Long-term loan BNL 4 2,000,000 2,000,000 - 0%

Long-term loan Mediocredito 1,500,000 1,500,000 - 0%

Long-term loan BNL 5 33,333 33,333 - 0%

Long-term loan Unicredit 2 2,500,000 - 2,500,000

Long-term loan Banca Intesa garantito 2,500,000 - 2,500,000

Long-term loan BNL garantito 2,500,000 - 2,500,000

Total long-term borrowing 14,038,618 6,957,599 7,081,020 102%

35

13, paragraph 1. Parallel to the stipulation of the loan agreement, the Group entered into, again with the same bank, an Interest Rate Swap (IRS) type hedging contract aimed at making the interest rate of the loan fixed.

The item "Guaranteed BNL loan" equal to Euro 2,500 thousand includes the portion due beyond the following year of the long-term loan contracted with Banca Nazionale del Lavoro S.p.A. on June 20, 2020. This loan also falls within the category of loans guaranteed by Medio Credito Centrale S.p.A. pursuant to Legislative Decree n. 23/2020, art. 13, paragraph 1. Parallel to the stipulation of the loan agreement, the Company entered into, again with the same bank, an Interest Rate Swap (IRS) type hedging agreement aimed at making the interest rate of the loan fixed.

The chart below outlines the changes in financial debt for both the current and non-current portions:

The following tables show the main features and conditions of said loans and the Interest Rate Swap hedging contract.

(In Euros)

Change in borrowings 31-Dec-19 Refunds New borrowings

Reclassification

current portion 30-giu-20

Non current portion

Bank borrowings 6,957,599 - 7,500,000 (418,980) 14,038,619

Total non current borrowings 6,957,599 - 7,500,000 418,980- 14,038,619

Curent portion

Bank borrowings 6,685,782 (1,612,822) - 418,980 5,491,939

Total current borrowings 6,685,782 (1,612,822) - 418,980 5,491,939

Loans details CRF 2 Unicredit 1 BNL 1 BNL 2 BNL 3

Lender Banca CR Firenze S.p.A. Unicredit S.p.A.Banca Nazionale del

Lavoro S.p.A.

Banca Nazionale del

Lavoro S.p.A.

Banca Nazionale del

Lavoro S.p.A.

Original amount 5,000,000 5,000,000 4,000,000 3,000,000 500,000

Contract date 26 October 2017 18 April 2017 23 November 2017 31 March 2018 10 October 2018

Due date 26 April 2023 30 April 2021 23 May 2022 30 September 2020 10 March 2020

N. installments 20 48 16 20 18

Advance instalments - - - 5 3

Periodicity Quarterly Monthly Quarterly Monthly Monthly

Interest rate

Euribor 3M (base 360) with

floor at zero + spread

0,33%

0.35% 0.35% 0.10% 0.55%

Current portion 750,000 1,047,446 751,636 142,857 500,000

Non current portion 2,000,031 - 1,005,254 - -

Loans details BNL 4 Mediocredito Italiano BNL 5 Finanziamento Unicredit 2Finanziamento Banca

Intesa garantito

Finanziamento BNL

garantito

LenderBanca Nazionale del

Lavoro S.p.A.

Mediocredito Italiano

S.p.A.

Banca Nazionale del

Lavoro S.p.A.Unicredit S.p.A. Intesa S. Paolo S.p.A.

Banca Nazionale del

Lavoro S.p.A.

Original amount 3,000,000 3,000,000 500,000 2,500,000 2,500,000 2,500,000

Contract date 18 April 2019 17 April 2019 19 July 2019 31 May 2020 17 June 2020 22 June 2020

Due date 13 March 2023 15 December 2022 19 January 2021 30 April 2022 17 June 2025 16 June 2025

N. installments 6 6 12 16 10 7

Advance instalments 1 1 3 12 3 3

Periodicity Half yearly Half yearly Monthly Quarterly Half yearly Half yearly

Interest rate Euribor 6M + spread

0,65%

Euribor 6Mi + spread

0,65%

0.25% 0.60%

Euribor 6M+ spread 0,7% Euribor 6M+ spread 0,7%

- - - - - -

Current portion 500,000 1,000,000 300,000 - - -

Non current portion 2,000,000 1,500,000 33,333 2,500,000 2,500,000 2,500,000

36

These loans are not subject to covenants nor do they involve any negative pledges relative to the Group. There are no financial payables with maturity dates exceeding five years.

15. Financial liabilities for rights of use (current and non-current portions)

As of June 30, 2020 the Financial liabilities for rights of use calculated by discounting the value of the leasing instalments to expire, amount to Euro 3,670 million, of which Euro 2,569 million classified among non-current liabilities and Euro 1,099 million among current liabilities.

The reduction compared to December 31, 2020 is linked to the payment of the instalments due in the half year.

Non-current liabilities include financial liabilities due beyond five years for Euro 572 thousand.

16. Provisions for personnel and similar

The item includes liability accrued in relation to employee severance indemnity and liability accrued against the severance indemnity envisaged for Directors at end of their mandate.

In order to recognize the severance indemnity appropriately, the financial-actuarial value of the liabilities was recalculated, for each employee, to determine a liability similar to that which arises in defined benefit pension plans, in accordance with the guidelines of IAS 19. These provisions are stated net of any advances paid and cash disbursed following resignations which occurred during the period in question.

The present value of liabilities for severance indemnity, in accordance with IAS 19, is equal to Euro 918 thousand (Euro 892 thousand at December 31, 2019).

The following are the technical and economic bases used for the assessment of Severance Indemnity:

With regard to the evaluation of the discount rate, the reference used was the IBoxx Corporate AA index of June 2020 with a duration from 7 to 10 years (in line with the average duration of the evaluated group)

In compliance with the provisions of IAS 19, the following tables provide:

Derivative instruments details CRF 2 BNL 4 Mediocredito Italiano Banca Intesa (garantito) BNL (garantito)

Counterpart Banca CR Firenze S.p.A. Banca Nazionale del Lavoro S.p.A. Mediocredito Italiano S.p.A. Intesa S.Paolo S.p.A. BNL Group

Type of contract Interest Rate Swap (IRS) Interest Rate Swap (IRS) Interest Rate Swap (IRS) Interest Rate Swap (IRS) Interest Rate Swap (IRS)

Purpose

Hedging of interest

variability risk associated

with the Banca CR Firenze

S.p.A. loan (CRF 2)

Hedging of interest variability risk

associated with the Banca

Nazionale del Lavoro S.p.A. loan

(BNL 3)

Hedging of interest variability risk

associated with Mediocredito

Italiano S.p.A. loan

Hedging of interest

variability risk associated

with Banca Intesa S.p.A.

loan

Hedging of interest

variability risk associated

with BNL Group loan

Original amount 4,750,000 3,000,000 3,000,000 2,500,000 2,500,000

Periodicity Quarterly Half yearly Half yearly Half yearly Half yearly

Bank Interest Rate Euribor 3 months Euribor 6 months Euribor 6 months Euribor 6 months Euribor 6 months

Company Interest Rate 0.09% 0.07% 0.07% 0.09% 0.05%

Contract date 12 December 2017 9 May 2019 9 May 2019 17-giu-20 22-giu-20

Due date 26 October 2022 13 September 2022 15 June 2022 17-dic-24 16-dic-24

Mark to market amount at June 30, 2018 (17,707) (16,256) (9,338) (24,609) (24,392)

30-Jun-20

Technical annual discounting rate 0.30%

Annual inflation rate 1.20%

Tasso annuo incremento TFR 2.40%

Technical parameters

37

- sensitivity analyses for each relevant actuarial hypothesis at the end of the period, showing the effects that would have been seen following the changes made to the actuarial hypotheses reasonably possible at that date, in absolute terms;

- indication of the contribution for the following financial year; - indication of the average financial term of the obligation for defined benefit plans.

Provisions for Directors’ Severance Pay at June 30, 2020 amounted to € 522 thousand (€ 473 thousand at December 31, 2019) and, in order to recognize them, for each Director, provisions were set aside for the portion matured during the period on the basis of the existing agreement.

The provision for end of mandate indemnity at June 30, 2020 amounts to Euro 552 thousand (Euro 533 thousand at December 31, 2019) and, for the purposes of its registration, the allocation to the fund of the quota accrued during the period was made for each Director under the existing agreement.

17. Provisions for risks and charges

As at June 30, 2020 this item, equal to Euro 38 thousand (unchanged from December 31, 2019), contains provisions to cope with the risk of warranty support for the Group's products.

18. Short-term borrowings

The item is made up of:

(In Euross)

DBO 30-june-2020

Turnover rate +1% 338,015

Turnover rate -1% 343,880

Inflation rate + 0,25% 345,104

Inflation rate - 0,25% 336,548

Discount rate + 25% 334,097

Discount rate - 25% 347,716

Sensitivity analysis

Year Amount

1 32,664

2 49,391

3 25,529

4 26,067

5 27,937

Estimated future payments

Service Cost 0.00

Duration 9.20

Service Cost and Duration

38

For details on the conditions of outstanding loans, one should refer to Note 14.

For more details on the cash flows that have determined the change in short-term financial borrowings, please refer to the attached consolidated statement of cash flows.

19. Trade payables

This item includes amounts due to suppliers and provisions for invoices to be received.

(In Euross)

The decrease in trade payables is due to the lower volumes of purchases made in the period due to the decreased production volumes resulting from the crisis triggered by the spread of the pandemic underway.

20. Debiti tributari

This item as at June 30, 2020 is equal to Euro 405 thousand (Euro 720 thousand at 31 December 2019) and includes tax payables for withholding taxes made in June 2020 and subsequently paid.

21. Other current liabilities

As at June 30, 2020, this item is made up as follows::

(In Euros)

Short term borrowings 30-Jun-20 31-Dec-19 Change % Change

Short-term loan CRF 2 750,000 999,998 (249,998) -25%

Short-term loan Unicredit 1 1,047,446 1,255,469 (208,023) -17%

Short-term loan BNL 1 751,636 1,001,743 (250,107) -25%

Short-term loan BNL 2 142,857 428,571 (285,714) -67%

Short-term loan BNL 4 500,000 1,000,000 (500,000) -50%

Short-term loan Mediocredito 1,000,000 1,000,000 - 0%

Short-term loan BNL 3 500,000 100,000 400,000 400%

Short-term loan BNL 5 300,000 400,000 (100,000) -25%

Hot money BNL 500,000 500,000 - 0%

Short-term loan Unicredit 2 - - -

Short-term loan Banca Intesa guarantee - - -

Short-term loan BNL guarantee - - -

Total short term borrowings 5,491,939 6,685,782 (1,193,842) -18%

Bank overdrafts 76 314,173 (314,097) -100%

Total 5,492,015 6,999,955 (1,993,654) -28%

Trade payables 30-Jun-20 31-Dec-19 Change % Change

Trade payables 3,181,281 4,959,909 (1,778,628) -36%

Total trade payables 3,181,281 4,959,909 (1,778,628) -36%

Other current liabilities 30-Jun-20 31-Dec-19 Change % Change

Due to social security funds 134,039 427,827 (293,788) -69%

Unused vacation time and holidays 777,364 580,506 196,858 34%

Due to personnel 418,458 456,697 (38,239) -8%

Other liabilities 235,120 393,420 (158,300) -40%

Total current liabilities 1,564,979 1,858,449 (293,470) -16%

39

The item “Unused vacation time and holidays” includes accruals for the thirteenth month bonus as well as the payable for remaining holidays as at June 30, 2020. The increase in the payable compared with December 31, 2019 was due to the greater accumulation of holidays recorded normally at the end of the first half of the financial year compared with the end of the previous financial year.

Within the "payables to personnel for salaries" category are contained the payables for wages and salaries not yet paid as of June 30, 2020 and paid by the third working day of the following month.

The item “Other payables” mainly includes the payable for directors' fees (€ 48 thousand), the payable for the fair value measurement of outstanding IRS derivative contracts (€ 92 thousand) and other minor amounts.

22. Guarantees given to third parties

As of June 30, 2020, as well as December 31, 2019, there is no guarantee given to third parties by companies belonging to the Group.

As regards the disputes, there is a lawsuit pending with a former director of a subsidiary of the Group. The dispute is in the initial phase and, at the date of preparation of these financial statements, the risk of losing was estimated, also with the support of external lawyers appointed by the Group, as possible.

Analysis of the breakdown of the main items of the consolidated income statement closed at June 30, 2020

Summary of the impacts of the Covid-19 epidemic on the consolidated income statement

It should be noted as a premise that the differences between the first half of 2020 and the same period of the previous year, both in absolute value and as a percentage set out below, are mainly due to the contraction in demand, revenues and cost containment measures resulting from the national and world health emergency resulting from the Covid-19 pandemic, as also reported in the management report.

The negative impacts on the income statement for the period were recorded to a greater extent in the second quarter. In particular, the following phenomena are reported:

1. The reduction in revenues of Euro 11.5 million consequent not only to the production stop from March 13, 2020 (for the Reggio Emilia plant) and from 20 March 2020 (for the Bagno a Ripoli plant) until May 4, 2020 but also the contraction of the sector due to the effects of the pandemic;

2. The important cost containment actions in the second quarter that the Group has adopted more consistently since April, for which reference should be made to the contents of the management report. In particular, it is noted here that the use of social safety nets has resulted in a reduction in the cost of direct and indirect labor for approximately Euro 959 thousand.

3. The increase in overheads due to the costs incurred for the purchase of medical equipment for the protection of workers. Overall, the additional costs incurred for materials are approximately Euro 71 thousand

4. The absence of the conditions for the accrual of the variable part of the MBO linked to medium-term results resulting in the recognition of lower charges for Euro 242 thousand.

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5. The waiver, by the executive Directors, of 25% of the remuneration due to them in 2020, saving approximately Euro 75 thousand.

6. The decrease in commercial expenses mainly linked to the absence of trade shows and to lower costs for travel and business trips for Euro 264 thousand.

23. Revenues

(In Euros)

The item can only be broken down in relation to the geographical area for the sales, as the Group's business segment is identifiable exclusively as the manufacture and sale of “top-quality professional loudspeakers”.

The decrease in the Group's turnover compared to the first half of 2019 was particularly concentrated on the European market (-44% with a decrease in absolute value equal to Euro 5.89 million), on the Asian market (-56% with a decrease in absolute value of Euro 3.08 million) and on the South American market (-57% with a decrease in absolute value of Euro 1.11 million). This decrease is attributable to the geographical spread of the Covid-19 pandemic, which first hit the Asian market and then the rest of the world.

In the first half of 2020, two customers achieved a turnover of more than 10% of the total: their incidence on the half-year turnover was 17% and 15%.

24. Cost of sales

The item is made up of (amounts in Euros):

Geographical Area 1st half 2020%

1st half 2019%

Change Change %

America Latina 828,329 4.9% 1,943,547 6.8% (1,115,218) -57%

Europa 7,558,944 44.6% 13,456,652 47.4% (5,897,708) -44%

Italia 1,336,308 7.9% 2,090,125 7.4% (753,817) -36%

Nord America 4,522,205 26.7% 5,244,840 18.5% (722,635) -14%

Medio Oriente & Africa 241,792 1.4% 113,406 0.4% 128,386 113%

Asia & Pacifico 2,456,902 14.5% 5,543,038 19.5% (3,086,136) -56%

Totale 16,944,480 100.0% 28,391,607 100.0% (11,447,127) -40.32%

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As highlighted in the report on operations, the cost of sales, despite a decrease in absolute value of € 6.5 million (due to lower production volumes in the half year), showed a deterioration of 2.65 percentage points in the first six months of 2020 in terms of incidence on revenues, going from 61.02% to 63.07%. This worsening is due to the greater incidence of direct personnel costs on revenues resulting from the sharp decline in production and sales volumes. The activation of social safety nets and other forms of public support made it possible to limit the impact that this phenomenon would have had in the absence of interventions by the Group Management.

25. Other revenues

This category of Euro 141 thousand in the first half of 2020 (Euro 70 thousand in the first half of 2019) mainly refers to the recovery of expenses.

26. Indirect Personnel

This category refers to costs of R&D staff, office personnel, top executives and workers not directly involved in the production process. The item is made up of (amounts in Euros):

The decrease in the cost of indirect personnel compared to the first half of 2019 is the direct consequence of the activation of social safety nets and other forms of public support by Management to cope with the crisis currently underway.

27. Commercial expenses

Commercial expenses of Euro 247 thousand (Euro 534 thousand in the first half of 2019) decreased mainly due to the cost containment policies implemented by the Group's Management, the cancellation, due to the pandemic in progress, of some important trade shows and the absence of the conditions for the recognition of bonuses (MBO) as a result of the trend of the Group's economic results.

28. Administrative and General expenses

General and administrative costs equal to Euro 1,546 thousand decreased by approximately Euro 640 thousand compared to the first six months of the previous year, mainly due to the cost containment policies implemented by the Group's Management, the absence of the conditions for the recognition of bonuses (MBO) (Euro -150 thousand) as a consequence of the performance of the Group's economic results, the voluntary reduction of remuneration

Cost of sales I half 2020 I half 2019 Change Change %

Consumption of production materials 7,791,397 13,180,725 (5,389,328) -41%

Direct labour 2,563,297 3,368,366 (805,069) -24%

Freight 412,814 629,566 (216,752) -34%

Duties, commissions and other minor costs 81,869 145,081 (63,212) -44%

Totale Cost of Sales 10,849,376 17,323,738 (6,474,361) -37%

Cost of indirect labour I half 2020 I half 2019 Variazione Variazione %

Retribution 1,215,591 1,540,504 (324,913) -21%

Social charges 294,148 377,472 (83,325) -22%

Severance indemnity 51,574 58,084 (6,510) -11%

Total cost of indirect labour 1,561,312 1,976,060 (414,748) -21%

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by executive directors and the fact that, in the first half of 2019, there were additional charges incurred for the closure of the “Tunneled” division equal to Euro 235 thousand.

29. Amortization, depreciation and writebacks (net write downs) for trade and other receivables

The item is made up of (amounts in Euros):

The increase in amortization/depreciation is basically due to amortization of rights of use recognized after first time application of IFRS 16.

30. Financial income and expenses

Financial income amounts to Euro 120 thousand (Euro 590 thousand in the first half of 2019) and mainly includes the positive exchange differences realized for Euro 97 thousand and unrealized for Euro 9 thousand. The decrease compared to the first half of 2019 is essentially due to the negative trend in the price of the securities in the portfolio which, as indicated above, showed a negative effect equal to Euro 371 thousand, while in the same period of 2019 it had shown income equal to Euro 430 thousands.

Financial charges amount to € 687 thousand (€ 310 thousand in the first half of 2019) and mainly include the presumed loss deriving from the fair value valuation of securities held for use of liquidity for € 371 thousand, the negative exchange differences realized for € 175 thousand and unrealized for Euro 64 thousand, interest expense on loans, bank overdrafts and rights of use for Euro 85 thousand (of which Euro 50 thousand relating to financial charges related to the valuation of rental contracts according to IFRS 16) and financial charges deriving from the fair value valuation of IRS contracts for Euro 48 thousand.

31. Taxes for the period

The item, including current and deferred taxes, is equal to Euro 174 thousand (Euro 1,124 thousand in the first half of 2019). The significant decrease is entirely due to the contraction in the Group's turnover.

32. Transactions with related parties and subsidiaries under their management

The transactions that took place during the first half of 2019 with related parties and information on relations with related parties are summarized below, based on the requirements of Consob Communication no. DEM / 6664293.

The related parties have been identified by the Directors in the Parent company Research & Development International S.r.l., a company that exercises management and coordination activities on the issuer based in Florence, Viale dei Mille n. 60, Tax Code 02342270481, Share

Amortization, depreciation and writedowns I half 2020 I half 2019 Change Change %

Amortization of intangibles assets 73,978 140,827 (66,849) -47%

Depreciation of tangible assets 434,517 423,629 10,888 3%

Depreciation of right of use 596,867 595,325 1,542

Total amortizations and depreciations 1,105,361 1,159,781 (55,962) -5%

Total value write-backs (write-downs) of trade and other

receivables - - -

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Capital Euro 90 thousand, which owned, at 30 June 2020, 54% of the shares of B&C Speakers S.p.A .

Economic transactions

(In Euros)

These financial charges (accounted for following the application of IFRS 16) refer to the implicit interests of the outstanding financial liability towards "Research & Development International S.r.l." for the rental contracts of the aforementioned properties.

Financial Relationships

(In Euros)

The creditor position of Research & Development International S.r.l. existing at June 30, 2020, is related to the credit for an IRES rebate which arose in 2012 following the rebate application made by the Holding for the financial years in which the Group companies availed themselves of tax consolidation.

Financial costs Total

Research &

Development

Intl. Srl

Total related

parties Incidence %

I half 2020 (687,421) (38,065) (38,065) 6%

I half 2019 (310,404) (46,471) (46,471) 15%

Other non current assets Total

Research &

Development

Intl. Srl

Total related

parties Incidence %

30 june 2020 672,435 68,392 68,392 10%

31 december 2019 665,646 68,392 68,392 10%

Long-term lease liabilities Total

Research &

Development

Intl. Srl

Total related

parties Incidence %

30 june 2020 (2,569,609) (917,929) (917,929) 36%

31 december 2019 (3,104,267) (891,965) (891,965) 29%

Short-term lease liabilities Total

Research &

Development

Intl. Srl

Total related

parties Incidence %

30 june 2020 (1,099,181) (839,079) (839,079) 76%

31 december 2019 (1,138,075) (867,957) (867,957) 76%

Trade liabilities Total

Research &

Development

Intl. Srl

Total related

parties Incidence %

30 june 2020 (3,181,281) (1,791) (1,791) 0%

31 december 2019 (4,959,909) (4,377) (4,377) 0%

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Existing financial liabilities relative to Research & Development International S.r.l. refer to the implicit financial payable in the above noted leasing contracts, recognised following application of IFRS 16. We certify, under the terms of Art. 2.6.2. Section 13 of the Regulation for Markets Organised and Managed by Borsa Italiana S.p.A., the existence of the conditions pursuant to Article 37 of Consob Regulation No. 16191/2007. Transactions with related parties were made on terms equivalent to those prevailing in free transactions between unrelated parties.

33. Transactions deriving from non-recurring operations Pursuant to the Consob Communication of 28 July 2006, it is noted that during the first half of 2020 no non-recurring operations occurred.

34. Transactions deriving from atypical and/or unusual operations

Under the terms of Consob Communication of 28 July 2006, we can specify that during the first half of 2019 the Group did not engage in any atypical and/or unusual operations, as defined in the said Communication.

35. Information on financial risks

The Company’s activities are exposed to a variety of financial risks: market risk (including foreign exchange risk and price risk), credit risk, interest rate risk and liquidity risk. The strategy adopted by the Group with regard to the management of financial risks is based on the impossibility of being able to influence the external markets and consequently the strategy focuses on an attempt to reduce the adverse effects on the financial performance of the Group itself.

Currency exchange risks

The Group operates internationally and is exposed to exchange risk arising from changes in exchange rates for foreign currencies, primarily the US dollar, Canadian dollar and the Brazilian real. The exchange risk will manifest in future transactions. The Company does not make provision for coverage of this risk, except to seek a long term balance between its sales and purchases, especially in the U.S. dollar zone.

In the first half of 2020, the Group continued to make significant purchases abroad, particularly in Asia; the value of purchases made in foreign currencies (USD and CAD) is summarised as follows:

- Purchases in US dollars equal to 5.6 million whose corresponding value in euros (calculated according to the average exchange rate for the period) is equal to € 5.0 million.

- Purchases in CAD, Canadian dollars, equal to € 97 thousand whose corresponding value in Euros (calculated according to the average exchange rate for the period) is equal to € 65 thousand.

Meanwhile, during the first half of 2020, the Group invoiced clients in foreign currency. More specifically, within the item revenues, the elements paid in foreign currency (USD and Brazilian real) are listed below:

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- Turnover in US dollars equal to 6.3 million whose corresponding value in euros (calculated according to the average exchange rate for the period) is equal to € 5.6 million;

- Turnover in Brazilian real equal to 0.9 million whose corresponding value in euros (calculated according to the average exchange rate for the period) is equal to € 0.2 million.

Purchases in foreign currency represent approximately 50% of total purchases (31% in the first half of 2019), while sales in foreign currencies represent approximately 34% of the turnover achieved by the Group (40% in the first half of 2019).

Considering that which is set out above, an increase/decrease of 3% in the euro would generate potential gains of € 18 thousand and losses of € 17 thousand, respectively.

Within the balance sheet items, the value in Euros of trade receivables denominated in dollars amounts to Euro 2.6 million as at June 30, 2020 (the total value at December 31, 2019 amounted to Euro 7.9 million), while the counter value of trade payables denominated in dollars it amounts to Euro 1.0 million at June 30, 2018 (the total value at December 31, 2019 amounted to Euro 2.3 million).

Trade Receivables and Payables in other currencies are negligible.

Considering that which is set out above, an increase/decrease of 3% in the euro would generate potential gains of € 48 thousand and losses of € 45 thousand, respectively.

Based on the above data, the impact of tax receivables in currency reaches approximately 34% of the overall trade value, while the impact of trade payables in currency accounts for 32% of the total value of corporate debt.

The balance sheet assets in a currency other than the euro were adequate to the exact exchange rate on June 30, 2020, with the associated costs and profits entered in the income statement.

Credit Risk

The Company does not have significant concentrations of credit risk, since the strategy adopted has aimed at working with customers who have good credit standing. When transactions entailed a higher risk margin or information on the customer was insufficient, the Company demanded to receive advance payment before supplying the products.

Despite the effects of the pandemic in progress, at the date of drawing up this half-yearly report there are no situations of significant doubtful loans. Nevertheless, it cannot be ruled out that this may happen in the future.

Interest rate risk

The Group does not have any financial assets or liabilities whose size is such as to significantly influence the profitability of the Company. Therefore, although the Company is not significantly influenced by the trend in interest rates, the management has equipped itself with adequate instruments to hedge the risk of interest rate fluctuations, in particular on some medium-long term loans through the signing of contracts of the type IRS (Interest Rate Swap). For further details in this regard, reference should be made to the detailed description in Note 14.

Liquidity risk

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As of June 30, 2020, the Company has a negative Net Financial Position equal to Euro 3.55 million (Euro 5.01 million at December 31, 2019). It is the result of a positive current NFP of approximately € 13.01 million (€ 4.98 million at December 31, 2019) and a non-current financial debt of € 16.61 million (€ 9.99 million at December 31, 2019 ). For the characteristics of the loans in question, please refer to the contents of Note 14.

As highlighted in the management report, in response to the increased level of liquidity risk caused by the contraction in the Group's turnover following the ongoing Covid-19 epidemic, the Group has implemented specific initiatives:

- taking a series of counter measures aimed at adapting costs to the reduction, as also illustrated in the paragraph "Impacts of the Covid-19 epidemic" of these explanatory notes;

- the Shareholders' Meeting resolved, based on the updated proposal of the Board of Directors, not to proceed prudently with the distribution of the dividend initially proposed in order to keep the balance sheet unchanged

- in addition to this, the Group, as described above, has increased the financial resources by taking out new loans up to a maximum of Euro 7.5 million. Two of the three loans mentioned (for a total amount of Euro 5 million) are guaranteed by Medio Credito Centrale S.p.A and offer profitable economic conditions with reimbursement starting from 2022;

- lastly, has joined the voluntary moratorium, promoted by the reference financial institutions of the Group, on mortgage maturities of the loans until September 2020. In addition, note the presence of available revocable credit lines held by the Group at June 30, 2020 for a total of Euro 4 million.

The Group believes that the short and medium / long-term lines of credit and the funds currently in place, in addition to those that will be generated by operating activities, will allow, despite the reduction in turnover due to the aforementioned health emergency, to meet its needs and fulfil its obligations related to investment activities, the management of working capital and the repayment of debts at their contractual maturity.

36. Hierarchical levels of the fair value measurement

For financial instruments recorded on the statement of financial position at fair value, IFRS 7 requires these values to be classified according to a hierarchy of levels that reflects the significance of the inputs used in determining their fair value. The following levels are established: level 1 - listings taken from an active market for the assets or liabilities being measured; level 2 – inputs other than listed prices as per the point above, which can be observed directly (prices) or indirectly (price derivatives) on the market; level 3 – inputs not based on observable market data.

The table below shows the assets and liabilities measured at fair value as at June 30, 2020, according to the hierarchical level of fair value measurement:

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It is specified that, with respect to June, 30 2020, there were no movements between the varius fair value value levels.

The Group evaluates its financial assets and liabilities at amortized cost with the exception of the asset management shown under other current assets and IRS hedging contracts which are measured at fair value through profit and loss.

37. Subsequent events

At the moment there have been no events occurring after June 30, 2020 such as to require supplementary notes to these condensed interim financial statements. For the sake of completeness, it should be noted that in the months of July and August 2020, the company activity was still strongly impacted by the crisis generated by the spread of Covid-19, the first effect of which remains the strong contraction in demand which resulted, even over the months summer, about 40% lower than in the same period of the previous year.

38. Publication authorisation

This document was published on September 10, 2020, authorized by the Director with financial delegation.

Hierarchical level of Fair Value measurement Level 1 Level 2 Level 3

Financial assets

Other current assets 7,544,675 - -

Total 7,544,675 - -

Financial liabilities

Interest Rate Swap - (92,302) -

Total - (92,302) -

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Certification of the Condensed Consolidated Interim Financial Statements under the terms of Art. 154-bis of Italian Legislative Decree 58/98

1. The undersigned Simone Pratesi, as Chief Executive Officer and Francesco Spapperi, as Financial Reporting Manager of B&C Speakers S.p.A., hereby certify, also in view of the provisions of Art. 154-bis, paragraphs 3 and 4, of Italian Legislative Decree No. 58 of February 24, 1998:

- the adequacy with regard to the characteristics of the company, and

- the effective application of the administrative and accounting procedures for formation of the condensed interim financial statements during the first half of 2020.

2. We can also confirm that::

2.1 the condensed consolidated interim financial statements:

- are drawn up in accordance with the applicable international accounting standards endorsed by the European Union pursuant to Regulation (EC) No. 1606/2002 of the European Parliament and the Council, of 19 July 2002, as well as the measures enacted to implement Art. 9 of Italian Legislative Decree No. 38/2005;

- correspond to the information in the accounting ledgers;

- are capable of providing a fair and correct representation of the situation of the assets and liabilities, and the economic and financial situation, of the issuer and of all the companies included in the consolidation scope..

2.2 The interim report on operations includes a reliable analysis of references to significant events that occurred in the first six months of the year and their impact on the condensed interim financial statements, together with a description of the main risks and uncertainties for the remaining six months of the year. The interim report on operations also includes a reliable analysis of information on significant transactions with related parties..

Florence (Italy), September 10, 2020

Simone Pratesi Francesco Spapperi

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Independent Auditors’ Report

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