YEARLY REPORT 2015

AMERICANORTH AMERICA

UTECO NORTH AMERICA INC.3400 Town Point Drive

Kennesaw GEORGIA - USA

UTECO CONVERTING S.p.A.Viale del Lavoro, 25 - 37030

Colognola ai Colli (Vr) - ITALIA

China Sales & Service Point

South East Asia Sales & Service Point

Headquarters

Plant 1

Plant 2 Plant 3

UTECO GroupYEARLY REPORT 2015

The Financial Statement for the year 2015 submitted for your approval by our Board of Directors shows a net profit of € 9,018,187 (net profit in 2014 was € 7,791,692), this figu-re takes into account the provision for tax and duties of € 3,850,459, recorded deferred tax liabilities of € 189,458 (as illustrated in detail in the explanatory notes) and also takes into account depreciation and write-downs of € 1,684,057 (compared to € 1,350,401 in 2014).It should be noted that the group’s yearly results have been considerably impacted on by the elevated profit obtained by its Uteco North America branch, as detailed in the fol-lowing paragraphs.The following contributory factors have had a significant impact on these results, which confirm forecasts made at the middle of 2015:- Increase in production volumes as a result a gradual growth in order collection, as shown throughout the year 2015.- The retention of sales margin averages.

The financial year 2015 closed with good re-sults regarding product value, sales value and margins.Order collection almost reached € 110 million which is a satisfying result even taking into account the fact that two orders from 2014 with the value of around €3 million were mo-ved into 2015.Production value figures rose from € 107 mil-lion in the previous financial year to €115mil-lion, resulting in an increase of € 8m (+7.47%)

Annual Invoiced Sales figures have shown a growth reaching € 112 million, an increase of 17.89% (compared to € 95 million in 2014).The difference between production value and costs increased from € 11.4 million in 2014 to € 14.4 million in 2015, an increase of 26.36%.

From a financial point of view the company’s liquid assets have grown from € 11.2 million at 31.12.2014 to € 22.2 million at 31.12.2015 showing a strong increase of € 11 million.In this context it is necessary to point out that the net financial position used in this pro-spectus differs to that shown in the cash flow statement inserted in the explanatory notes.The latter has in fact been determined based on the recommendations contained within the new Italian Accounting Standard OIC 10, meanwhile the former is ascribable to ma-nagement criteria and also includes in the cash and cash equivalents the investments in financial activities indicated in the currents assets with a value of € 8,000,000 (compared to € 6,000,000 in 2014) and net bank debts of € 170 (compared to € 3,700,089 in 2014).As can be seen from the prospectus below, the increase in liquidity has been generated by the following changes:Self-financing of € 9,597,893; a decrease in working capital of € 7,038,377; an increase in fixed assets of € 2,111,716; dividend payments of € 3,000,000; other negative variations of € 496,254

The improvement in working capital was mainly arrived at due to a reduction in cre-dit towards third party clients of € 1,188,826, a reduction in inter-company credit of € 833,740, a credit reduction towards others of € 248,812 and a reduction in accruals and de-ferrals of € 190,573. The following factors have also led to an improvement in working capital, an incre-ase in debt to suppliers of € 1,761,732, an increase in down payments from clients of € 3,732,842, an increase in debts to other parties of € 862,311 and an increase of inter-company debt of € 156,716.A decrease in working capital was noted as a result of an increase in inventory values of € 1,914,617 and an increase in down payments to suppliers of € 22,558.

REPORT ON OPERATION FOR THE FINANCIAL YEAR ENDED

31ST DECEMBER 2015 - UTECO CONVERTING S.P.A. (excerpt)

01

DATI DEL GRUPPO

02

The company, located in Town Point Drive, Kennesaw, Georgia, USA, has the function of guaranteeing commercial & technical assistance for UTECO large American Clients. As such they have their own warehouse in order to satisfy the requests of spare parts and compo-nents of our American clients as quickly as possible.

Turnover € 5.191.659

Gross Profit € 594.148

Net Profit € 596.057

REPORT ON OPERATION FOR THE FINANCIAL YEAR ENDED

31ST DECEMBER 2015 - UTECO CONVERTING S.P.A. (excerpt)

These results have contributed, along with those already summarized of Uteco Converting SpA, to the Group’s consolidated results reported below. Uteco North America Plant, Kennesaw, Georgia

Open House March 26 2015 at Uteco North America. Live demonstration on Diamond 108 HP

China Sales & Service Point

South East Asia Sales & Service Point

Plants 1,2,3&

CANADA

U.S.A. / 357 Installation

CENTRAL AMERICA

SOUTH AMERICA

AFRICA

AUSTRALIA / N.Z.

INDIA / 10 Installation

SOUTH EAST ASIA / 28 Installation

CHINA / 11 Installation

MIDDLE EAST

UTECO Germany / EUROPE 1012 Installation

UTECO Italy / 702 Installation

59 Installation

91 Installation

69 Installation

327 Installation

70 Installation

81 Installation

2818 INSTALLATIONS WW Dec 2015

MARKET POSITION SCENARIO03

Uteco’s excellence in flexographic printing.Max speed 600 m/min

DIAMOND HP

Throughout the course of 2015 the ma-chine production industry for flexible packaging and paper has continued to show diversified trends in macro-regions of the market, in single countries, in pro-duct/technology typologies and periods of the year.Export, with growth areas and others in “stand-by” (notwithstanding contradic-tory signals in emerging countries) has been confirmed as the current principle force in the world economy and for Ita-lian and European producers.Even at a client group level, investment trends vastly differ in packaging for Food & Beverage, Health, Animal Foods, Con-struction and Industry, Paper Industry, Security and all other possible sectors open to our Printing and Converting clients, in all world markets, as we await a global recovery and stability.

Within this above mentioned diverse market climate, the Uteco Group has strengthened its market leadership at volume and technological levels (which have undergone a continuous growth even in the recession years of 2008/2009 and also from 2010-2014), showing an ever more widespread presence in:- All the world macro-areas, including emerging countries.- All Clientele areas; from small and me-

dium Printing and Converting compa-nies in both European and non-Euro-pean countries to large multinational groups in Europe, America and Asia.- All the vast technological applications: Not only in the Flexo core-business (EB, UV e LED advanced, “green”, C.I. Drum and in line, high velocity, flexibility and automation for all formats, wide and me-dium and medium/narrow web), but also Rotogravure, Offset, Hybrid Flexo-Digital Ink Jet and other technological applica-tions which are unique and innovative in the many diverse sectors of packaging and extra-packaging.

Even in 2015 this continued trend in volume growth is built not only on the existing solid foundations in commer-cial Value Leadership and its renowned worldwide customer service but also:

• In the continued increase of production capacity made possible thanks to the new plant in Italy, investments in new modern machines (numerical control machine) for the mechanical production of high precision parts, manufacturing partnerships in Italy and abroad.• In the constant organisational improve-ments and developments.• In specific plans of efficiency optimisa-tion and the continued implementation

of quality and in the flexibility of the pro-cess and the product.• In the technological/planning/costing partnerships and co-makerships with strategic suppliers, making it possible to overcome the accompanying negative effects such as:a) multi-track demand which, as already highlighted, is difficult to plan for in the middle term.b) a strong revival of certain acquisition costs.c) the actions of our European and glo-bal competitors in pushing down market prices for machines.d) the problems facing our clients regar-ding access to credit, not only in Italy.

In more detail, the main factors of princi-ple importance are:

- The definitive consolidation in all mar-kets and for every clientele areas of the Flexographic central drum range: from Onyx (the highest selling flexographic machine in the world, of which nearly 40 units per year have been produced in the last 10 years) to the top of the range HP Diamond as always providing evermore performance based versions relating to quality, velocity, flexibility and automa-tion, from the entry level Topaz, to the new Crystal range and the most recent

Uteco’s excellence in flexographic printing.Max speed 600 m/min

MARKET POSITION SCENARIO 04

NEXT 450Peak performance in gravure printing for short and medium runs. Equipped by an efficient and noiseless ventilation/drying system Cube System® (Patented)

Compact Onyx XS range designed for short jobs which has an enormous im-mediate success in label printing. - The continued development of new versions of flexographic machines for diversified applications, of which we can use the following as examples: a) the Pre-Print Wide-Web range, b) The SIL Onyx - Crystal in line ranges also availa-ble with the inert UV curing system, c) The innovative, unique and patented “EB Green” new technology, which has alrea-dy been tested and installed with many of our clients including those who are global leaders in Sanitation and Health Care whose “skin contact” products re-quire the highest printing quality possi-ble. This machine has also been installed in other applicable packaging fields.- The huge success of the new range of rotogravure machines “NEXT 450”, a hi-ghly technological machine with advan-ced performance, amongst the principle rotogravure users in Italy and the rest of the world. This machine has been con-structed in our third Italian plant and flanks the “entry level” V-PRESS range constructed in Asia for emerging mar-kets.- The above success has been mirrored in the laminating field with the IZAR and MIRA ranges produced in Piacenza and the MISTRAL range produced in Verona.

- The increased diversification towards ranges and special machines, which consolidates UTECO’s place as a world leader in innovation in very specified markets, niche markets and to be able to meet the needs of any particular client, not only in Flexographic printing and Rotogravure printing of film, pa-per and tissue, but also for converting in general, in offset, in the integration of digital technology into their flexo-graphic printing for hybrid solutions or developing high performance digital lines for flexible packaging, in lamina-ting an coating in avant-garde markets, for example, the health sector, the ae-ronautic sector and the security sector.- The success in innovation in the fields of mechanics, electronics and techno-logy of the machines and printing processes (tested at Uteco’s Centre of Excellence “Converdrome”, recently enlarged in conjunction with the con-struction of the new Uteco 3 plant in Italy), which have allowed for a further increase in performances, finished pro-duct quality, operational-control-auto-mation system processes, productivity and flexibility, economical operations, time-savings, materials and consuma-bles (resulting in a contained energy and environmental impact), and con-sequently all other possible applicable

options in an ever expanding market in comparison to its traditional origins, with new innovative patents alongside those already recognised at international level and ensuring we remain integrated with the future Industry 4.0.Among the above mentioned issues it is not only the automated control sy-stems for the printing pressure or colour matching that are included, but also all developments in the systems for inking, the aforementioned UV and new genera-tion EB drying systems, laser applications for die-cutting, metallisation and other special operations and, finally, hybrid solutions such as Flexo/offset and Flexo/digital inkjet.-The uninterrupted development of our sales network which has a stronghold in all geographical areas, with the founda-tion in Europe and Asia (and in the near future also in other areas of the world) of branch offices and Service Centres, brings us important sales in these areas from local printing businesses to produc-tion sites of large multinational groups: with the latest being South-East Asia, South Africa and Germany (where we have signed up to the important DFTA Institute taking part in the first technolo-gical events and seminaries in Germany). Our objective is to duplicate the success experienced with Uteco North America,

05

Excellent quality and low waste flexo prin-ting

CRYSTALThe compact flexographic press for very short runs. Print width 600/1000 mm

ONYX XS

which in 2014 was doubled in size, worldwide.- The constant drive of our Research & Innovative Technology and Product Development team, which is a result of the investment made by our specialised staff, of means and instruments, along with strategized partnerships with sup-pliers, large packaging end-user groups, international and Italian businesses in the food & packaging sector, health sec-tor and possible new high-tech niche groups, along with research projects car-ried out in conjunction with Universities and Institutes both in Italy and throu-ghout the world (e.g. the optimisation of EB printing for products that come into direct contact with food or human skin, nanotechnology, electronic printing in the future new frontiers of home auto-mation and Smart-Active packaging).- Optimisation and growth in terms of quality, response times, flexibility and

efficiency of all internal procedures, with the continued implementation of systems such as 6Sigma/Lean, kan-ban, SAP, CRM..., and also massive in-vestments in highly precise machineries for our strategic internal production, for example the purchase of a new nume-rical controlled machine with movable crossbeam and 5 FTP axles.- The ability to further establish oursel-ves as champions of the “Made in Italy” symbol, with an export quota that exceeds 80%, as absolute leaders of printing technology and converting especially in flexible food packaging as underlined during our participation du-ring 2015 at the IpackIMa/Converflex Milan which was run in conjunction with the EXPO 2015 and during the events to celebrate the 30th anniversary of Uteco such as demonstrations/Open House/Partners and Suppliers Days and Family Day. All of these factors, along with a

sound financial standing, have allowed us to further consolidate the growth that was evident from 2010-2014 in 2015 and also launch massive investment plans in terms of human resources fully taking advantage of the recent Italian Jobs Act legislation.With regard to the investments, it must be remembered that, other than the financial figures reported in the following section, certain other factors must be taken into account such as the huge financial com-mitments undertaken and the amount of resources employed in the numerous above mentioned strategic technological developments, both in terms of machines built ad hoc for R&D trials and innovations – even if in some cases these machines were constructed with specific clients or users in mind and who would later use the machine – and in the related technological costs. In a global context, the level of in-vestment represents between 3% and 5% of the Groups turnover.

MARKET POSITION SCENARIO

06

Significant events that have taken pla-ce after the close of the business year and foreseeable management evolu-tion

The first few months of 2016 have conti-nued to show, and indeed further acce-lerate, a strong growth in sales volumes.This growth is evident not only throu-ghout our vast and ever growing flexo-graphic core-business lines - which was further enhanced during the course of 2015 by the addition of the already men-tioned new machines and technology – but also in innovative developments, such as EB Green Advanced which has been expanded to new applicable sec-tors, LED medium-web and again in our Rotogravure range where the success of the new generation NEXT line is continu-ing to sell well both in Italy and abroad.The Group’s dedication to the deve-lopment of new products and techno-logies will receive the acclamation it de-serves when it is showcased at the very important international DRUPA exhibi-tion in Dusseldorf in May/June 2016. For the very first time Uteco has been wel-comed to situate its stand in the main pavilion thus taking its place alongside the large multinationals recognising its place as a leader of the Made In Italy symbol as already recognised in Ger-many, thanks to our registration to the DFTA Institute and for our participation as speaker in various field conventions. During this exhibition the Uteco Group,

in conjunction with its “Converdrome” plant - will present all of the aforemen-tioned innovations, some of which will be being utilised in the stands of our strategic technological partners.The DRUPA exhibition represents a lit-mus test for verifying worldwide market trends which in some cases are show-ing signs of stagnation or recession and growth in others particularly in food packaging.

The Uteco Group is ready and is further equipping itself to take on all market and technology challenges that lie ahead by following through with the already cited strengthening of Human Resources – in particular in Sales and Services in addi-tion to Engineering – in R&D investments and in its industrial structures (a new NC Mazak turning centre for high preci-sion mechanical processing, in order to obtain the best possible printing perfor-mance of the machine).

TREND 2016 - BUSINESS PLAN 2016-2018

LASER APPLICATION

07 EVENTS AND NEWS 2015

Ergonomics, efficiency and ecocompatibility. Equipped with Thermilox® patented system, in order to guarantee the accurate and continuous con-trol of ink temperature during the print run

FLEXO EB2

“Il Cibo Racconta”, Expo Milan event October 28 2015

Uteco Family Day: September 12 2015, 30th anniversary

Uteco at ConverFlex/Ipack-Ima May 19-23 2015

Open House October 27-28-29, 2015: the new Onyx XS

Uteco Plant 3 inauguration, October 2014

08

HORIZON 4.0 Top Level machine on completion of the coaters/laminators range, fully automa-tic. Maximum speed 600 m/min, introduced at the Drupa exhibition

HORIZON 4.0

MIRAThe “entry model” into the solvent-less world and it is targeted to those converters approaching lamination for the first time

IZARThis machine is perfect for short and long runs in solvent-less lamination

New

MISTRALThe new coating/laminating machine, with new technological and innova-tive solutions, suitable for working with all kin of materials

New

New ventilation/drying Cube System® (Pa-tented)

Thermilox® System (Patented)

UDD®: Uteco Direct-Drive (Patented)

New ONYX XS EB super compact 8 color for printing repeats up to 650mm with 4 “IN LINE” technologies

NXS 300 New rotogravure press on comple-tion of the NEXT range, compact and dedi-cated to short runs. Maximum speed 300 m/min, introduced at the Drupa exhibition

09 ADVANCED INNOVATIONS IN PRINTING

Kiss&Go® System (Patented)

New UV-LED system, in collaboration with Air Motion System

New

SUPPLIER PARTNERS DAYS

10NEW TECHNOLOGIES

New SAPPHIRE & SAPPHIRE EVO, shown at the Drupa exhibition. Digital print on plastic film at high speed

New MP 4.0 multi-process middle-web shown at the Drupa exhibition. The integration and combination of a wide range of technologies in a single integrated system

Hybrid “Flexo-Inkjet” Technology in collaboration with Kodak

Printed Electronics developed with Swansea University

RFID FOR PACKAGING

On November 18 and 19 the third Supplier Partners Days took place at UtecoThe spotlight was on Uteco Group and their main Suppliers and Partners who had the opportunity to

share the development plans and projects for the next year and to analyze what achieved in the last

three years

New

New

Uteco Group Consolidated financial statement 2014-2015

11

Balance Sheet 2011 2012 2013 2014 2015

(values shown in Thousand/Euro)

Net Intangible assets 2.567 2.227 1.506 1.604 1.586

Net Tangible assets 1.284 1.182 1.354 2.837 3.936

Industrial sharehold. and other assets 563 565 1 1 1

Total assets medium and long term 4.415 3.975 2.860 4.477 5.522

Net inventories 26.389 26.878 33.147 46.893 48.131

Trade receivables and other assets 19.936 24.945 22.333 25.519 24.578

Cash and market. secur. 3.030 6.065 17.120 15.059 22.986

Total assets short term 49.355 57.888 72.600 87.471 95.695

Total assets 53.769 61.863 75.461 91.948 101.216

Liabilities

Equity 15.620 19.609 24.869 29.758 37.104

Other reserves 3.543 3.624 7.103 7.315 6.495

Severance reserves 2.553 2.441 2.426 2.292 2.212

Financial debt 375 36 0 3.700 0

Other liabilities 31.678 36.154 41.063 48.883 55.406

Total liabilities 53.769 61.863 75.461 91.948 101.216

The present 2016...

...and the future 2018

Uteco Group Consolidated financial statement 2014-2015

12

GROUP CEOUteco Converting SpA

(& President Uteco North America)

GROUP CFOUteco Converting SpA

(& Vice President Uteco North America)

Aldo Peretti

Simone Quinto

CHAIRMAN Bruno Chivilò

GROUP COOUteco Converting SpA

GROUP CMOUteco Converting SpA

Stefano Russo

Davide Cucinella

Profit and Loss 2011 2012 2013 2014 2015

(values shown in Thousand/Euro)

Order intake 81.142 101.186 100.851 102.242 109.124

Production value 69.187 77.693 103.538 107.334 115.607

EBITDA 7.516 7.969 16.067 13.705 17.488

EBIT 6.002 5.807 12.694 11.853 15.454

Gross profit 5.523 6.036 13.012 11.696 14.112

Net profit 3.745 3.963 8.284 8.342 9.912

Cash flow 13.418 3.375 11.091 (5.761) 11.627

Coverage level 2011 2012 2013 2014 2015

(values shown in Euro)

Capital employed 12.967 13.580 7.749 18.399 14.119

Equity 15.620 19.609 24.869 29.758 37.104

Financial debt 2.654 6.029 17.120 11.359 22.985

Indexes 2011 2012 2013 2014 2015

EBITDA 10,9% 10,3% 15,5% 12,8% 15,1%

EBIT 8,7% 7,5% 12,3% 11,0% 13,4%

ROE 24,0% 20,2% 33,3% 28,0% 26,7%

ROI 46,3% 42,8% 163,8% 64,4% 109,5%

Other figures 2011 2012 2013 2014 2015

Workers 227 231 249 251 282

Member of the International Associations:

Future event 2018:

China Sales & Service Point

South East Asia Sales & Service Point

WorldWide Plants, Branch Offices & Service Centers

Plants 1,2,3&

Sales & Service - Spare parts - Upgrade - Training - Hot-line 24/7

CANADA

U.S.A.

CENTRAL AMERICA

SOUTH AMERICA

AFRICA

AUSTRALIA / N.Z.

INDIA

SOUTH EAST ASIA

CHINA

MIDDLE EAST

UTECO Germany UTECO Italy

Federazione della Filiera della Carta e della Grafica

U.S.A.

Flexodruck Fachverband e.V.Deutschland

ASSOCIAZIONE COSTRUTTORI ITALIANI MACCHINE PER L’INDUSTRIA GRAFICA, CARTOTECNICA, CARTARIA DI TRASFORMA-ZIONE E AFFINI