Pininfarina S p A : GROUP – INTERIM FINANCIAL REPORT AT 30 JUNE 2021

PRESS RELEASE

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

Pininfarina Group - First half 2021 Report

Reference markets, Coronavirus and going concern issues

Information required by Consob pursuant to art. 114.5 of Legislative decree no. 58/98

Outlook for 2021

Cambiano, 3 August 2021 - The Board of Directors of Pininfarina S.p.A. met today and approved the Group's interim financial report at 30 June 2021. The key financial figures of the Pininfarina Group as at 30 June 2021 and the relevant comparative figures 2020 are as follows:

* Variations in the statement of financial position figures relate to the corresponding figures at 31 December 2020.

EBITDA is the operating profit or loss gross of amortisation, depreciation and provisions. EBIT is the operating profit or loss.

Pursuant to article 154-bis. 2 of the Consolidated finance act, the manager in charge of financial reporting, Gianfranco Albertini, states that the financial disclosures provided in this press release are consistent with the relevant documentation, ledgers and accounting records.

Pininfarina group, the Coronavirus and the reference market

The conditions of the Pininfarina Group's reference market for the first half of 2021 were better than those of the corresponding period of 2020.

Design activities in all Group companies grew, with a generalized improvement in margins, while engineering activities in Germany show a decrease of approximately 6% compared to the first half of 2020.

The Group discontinued its engineering business in Italy, which was operated by Pininfarina Engineering S.r.l., as a result of the decision of 26 October 2020 to wind up the subsidiary. The winding up procedure should be completed in 2021.

The Group did not have to interrupt or restrict any of its activities during the quarter as a result of the Covid-19 pandemic.

Cash flows

The Group's cash and cash equivalents (€31.7 million) increased by €3.2 million compared to 31 December 2020, mostly due to the contribution from the share capital increase of Pininfarina S.p.A. ended on 25 June 2021.

At the end of the capital increase, the payments made by the shareholders amounted to a total of €23.6 million, of which €20 million already paid by the majority shareholder PF Holdings B.V. in November 2020. From this amount must be deducted the expenses incurred for the increase procedure of approximately € 0.4 million.

Bank overdrafts were all paid off. The non-current bank loans and borrowings increased by approximately €0.4 million, mostly due to the parent's unrealised interest expense arising from amortised-cost accounting.

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Pininfarina S.p.A.'s financial debt

The parent has continued to meet its obligations, without undue distress, including those under the debt rescheduling agreement (2016-2025) with certain banks. Such agreement provides for just one financial covenant (consolidated equity at a minimum of €30 million), compliance with which is assessed at 31 March each year up until repayment of the loan. At 31 March 2021, the covenant had been complied with. Should the minimum equity threshold not be complied with, the agreement would not be automatically terminated, as it provides for specific remedies and the lending banks can also waive their right to take action. The Mahindra Group has provided a surety that is enforceable if the parent fails to meet its obligations under the rescheduling agreement.

Pininfarina Group's financial performance and financial position

The Group recognised revenue of €31.9 million for the first half of 2021, in line with the corresponding period of 2020 (-1.5%). The contribution of the segments in the comparison between the two semesters was different, in fact, while the engineering segment show a decline of about 37%, the design segment increased by about 24%. Following the decision of 26 October 2020 to wind up Pininfarina Engineering S.r.l., the Group's revenue for the first half of 2021 does not include its contribution unlike in the first half of 2020.

The gross operating loss of €5.8 million for the first half of 2020 improved to gross operating profit of €1.1 million in H1 2021, thanks to the operating profitability achieved in the design segment, in addition to the considerable reduction in the loss compared to that induced in 2020 by the engineering segment, which is mostly due to discontinuance of the complete car development services previously offered by Pininfarina Engineering S.r.l. in liquidation.

The improvement to gross operating profit has positively affected the operating loss for the period, which went from €7.4 million in the first half of 2020 to €1 million.

Net financial expense at the reporting date amounts to €0.6 million, an improvement of approximately €0.3 million compared to the first half of the 2020 mainly due to a financial contingency affecting Pininfarina of America. In particular, as part of the aid deployed by the American government to counter the negative economic effects of the Covid-19 pandemic, the American subsidiary requested and obtained from the USA Administration the waiver of the repayment of a loan granted by a government body (value of the contingent assets of approximately €0.2 million).

The income tax expense amounts to €0.2 million compared with €0.3 million in the first half of the previous year.

As a result of the above, the Group recorded a loss for the period of €1.7 million compared to a loss of €8.7 million for the same period of the previous year.

The group's equity amounts to €35.9 million at the reporting date, up by €1.7 million on 31 December 2020, principally due to the combined effect of the share capital increase (net of costs) and the loss for the period.

The net financial position was €6.1 million at the reporting date, compared to €2.4 million at 31 December 2020, also this improvement is mainly due to the financial effects of the parent's share capital increase.

The workforce numbered 529 at the reporting date (30 June 2020: 694; -24%). The decrease is mainly due to the restructuring that affected Pininfarina Engineering S.r.l. in liquidation and Pininfarina Deutschland GmbH.

Going concern issues in the light of the Covid-19 pandemic

The estimated effects of Covid-19 on the first half of 2021

The Group has not been affected by downturns in activities and/or cancellations of orders due to the coronavirus during the first half of 2021. The outlook for the entire year - which also considers the poor performance of the reference markets seen in 2020 - does not currently incorporate significant worsening

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effects due to Covid-19, however it remains completely impossible to predict what the actual evolution of the pandemic will be and any further economic and financial effects it may have in the coming months.

Group's performance, outlook and going concern issues

In their comments on the 2020 figures, the directors had explained that the sluggish conditions of the Group's reference markets were due to two factors: the continuation of the negative economic cycle of the global automotive industry and the Covid-19 pandemic, which put additional constraints on commercial projects, slowing down the acquisition of new contracts and/or reducing expected contract profit margins.

In this environment of weak reference markets and given the expectations about their future performance, the parent is tackling three closely related issues:

• maintaining an appropriate level of liquidity for the Group's requirements;
• protecting the capitalisation level required by the law and bank agreements;
• creating the conditions for restoring profitability as soon as possible.

In order to strengthen the parent's liquidity and capitalisation, in November 2020, the majority shareholder, PF Holding B.V., irrevocably injected €20 million to be used for the parent's capital increase (for which the company has recorded additional approximately €3.2 million in its equity) resolved by the shareholders on 16 March 2021 and concluded on 25 June 2021. Moreover, the subsidiary Pininfarina Deutschland Holding GmbH collected, in the first quarter of 2021, the considerable amount of roughly €4.1 million, as the consideration for the sale of one of its buildings. According to the cash budget for the rest of the year prepared by the directors, the parent's and Group's financial resources at the reporting date are adequate to cover the expected operating cash outflows for 2021 even if significantly lower than in 2020, as well as the outlays necessary to complete the winding up procedure of Pininfarina Engineering S.r.l., to implement the parent's planned restructuring measures and to repay the current portion of loans and borrowings when they become due.

Not only in order to comply with the requirements of the Italian Civil Code governing share capital protection, the parent must monitor its equity at consolidation level closely. Indeed, the only financial covenant provided for by the existing debt restructuring agreement is a minimum level of €30 million, compliance with which is assessed at 31 March each year (at 31 March 2021, the covenant had been complied with). The Mahindra Group has provided a surety that is enforceable if the parent fails to meet its obligations under the rescheduling agreement.

The recent conclusion of the share capital increase in order to strengthen the financial position has already been discussed.

In order to tackle their performance issues and return to a profit-making position, considering the market performance of the last two years and currently foreseeable outlook, the parent and the Group adopted various measures in 2020, including winding up of the subsidiary Pininfarina Engineering S.r.l., given the market conditions and its no longer sustainable performance; implementation of a redundancy plan for Pininfarina Deutschland GmbH, involving 46 people (approximately 20% of its workforce); reduction of the number of direct and indirect staff working at Pininfarina S.p.A. in 2020 and in the first half of 2021, in order to bring the professional skills and number of resources into line with the current market requirements and a plan to reduce operating expense and overheads, also by increasing resort to outsourcing in some cases.

With reference to the winding up of the subsidiary Pininfarina Engineering S.r.l., the restructuring provision established as at 31 December 2020, has been recognised to fully cover the obligations reasonably foreseeable to date on the basis of the collective trade union agreements, the legal requirements, the individual agreements signed and, given the usual outcome of these procedures, the possible refusal to participate in the plan envisaged by the collective agreements by employees who oppose the agreement. The winding up process continued during the first half of 2021, part of the personnel involved in the restructuring plan terminated their employment relationship according to the guidelines mainly outlined when the restructuring provision was established. It should be emphasized that, however, the process and the risks associated with it have not been completed and therefore the restructuring provision not yet used remains recognized in the financial statements.

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As part of the redundancy plan for Pininfarina Deutschland GmbH, involving 46 people, at the reporting period the subsidiary has already signed almost all of the individual agreements stipulating the related financial terms.

Operating profit margins improved considerably in the first half of 2021 compared to the same period of the previous year, confirming the soundness of the actions taken in this respect in the previous year. Business opportunities and prices offered were stable during the period, in line with the directors' forecasts for 2021.

In 2020 Annual Financial Report, it was noted how the market situation in the reference year - which reflected social difficulties that are well known throughout the world - was one of the most difficult in recent decades, particularly in the market sectors in which the Pininfarina Group operates. The demand for services continues to be strong in design-related activities (much less so in pure engineering based on technical deliverables); certainly there are no longer the downward trends in prices offered by customers seen in 2020.

In order to deal with this situation, the parent, through the above listed countermeasures, is rapidly redirecting its available resources towards those activities considered most likely to generate profits. Indeed, upon completion of the cost containment and personnel redundancy plans mentioned above that the Group has already launched, together with the completion of the remaining planned measures, the parent and the Group will have a new strategic profile, focused on the design sector, which is considered to have greater potential in terms of profitability and volumes in the medium term.

The current uncertainty related to the pandemic situation and the turbulence in the automotive market are having a negative impact on the short-term outlook. Nevertheless, the Group is making every effort to be ready to seize market opportunities, which will inevitably be better than the current ones, once the pandemic ends.

In this scenario, the directors have drawn up forward-looking scenarios that show that the restructuring and refocusing actions undertaken by the Group starting from 2020 will still require the use of operating cash flows in 2021, in tandem with expected sales volumes at the levels recorded in 2020.

The expectations in the foreseeable future for the value of production have been elaborated prudentially considering the probable evolution of the current order backlog. The projected costs take into account the new post-restructuring cost positioning, the streamlining of internal resources aimed at eliminating inefficiency in the revised group structure and the use of outsourcing at competitive prices of part of the engineering activities in the design and engineering market served by the German subsidiary, as a means of further reducing costs and consequently increasing profit margins. The simulations indicate the possibility of a restore of the financial stability together with an expected partial upswing in sales volumes, which are expected to remain at current levels at least in the near future. The Group's ability to continue as a going concern will require significant efforts in terms of sales volumes, cost containment and costs to win future contracts given the situation outlined above.

According to the directors, given the issues described above, there is significant uncertainty about the achievement of the production volumes and profitability goals, as they depend on the recovery of the markets in which the Group and the parent operate in the coming years and the success of the actions taken to create the conditions for them to return to be profitable. This uncertainty may cast material doubts as to their ability to continue as going concerns.

Notwithstanding the above, the directors deem that all measures to limit operating cash outflows and all possible measures to contain costs have been implemented. They have assessed existing and prospective projects based on commercial relationships with customers, as well as the Group's available financial resources. After having carried out all relevant checks and evaluated the above uncertainty, also considering the figures at 30 June 2021, management reasonably expects that the parent and the Group have sufficient resources available to continue their operations for the foreseeable future, as provided for by the IFRS. Due to the above reasons, the directors deem it correct to prepare this interim financial report at 30 June 2021 on a going concern basis.

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Information required by Consob (the Italian Commission for listed companies and the stock exchange) pursuant to article 114.5 of Legislative decree no. 58/98

1. The net financial position of the Pininfarina Group and Pininfarina S.p.A., with separate classification of current and non-current items, are attached hereto;
2. The Group has no past-due liabilities (of a commercial, financial, tax or social security nature). No actions against the Group have been filed by creditors;
3. The Group's and parent's related party transactions are attached hereto. Except for a major trading transaction (supply of design and engineering services) between the parent and its associate Automobili Pininfarina GmbH whose activities continued during the period, the related party transactions are unchanged from those reported in the separate and consolidated financial statements at 31 December 2020. Revenue from related party transactions accounted for 7.1% of the Group's total revenue for the first half of 2021, compared to 20.7% for 2020;
4. Under the existing Rescheduling Agreement between the parent and the banks, there is just one financial covenant, to be checked annually beginning from 31 March 2018: consolidated equity at a minimum level of €30 million. At 31 March 2021, it had been complied with. The Group has no further loans and borrowings carrying clauses that limit its use of financial resources;
5. On 12 May 2021, when the Board of Directors approved the Interim financial report at 31 March 2021, Pininfarina S.p.A. announced that its outlook for 2021 was revenue in line with 2020, along with an operating loss and a loss for the year, albeit better that those of 2020. On the basis of the consolidated figures for the first half of 2021, these expectations are confirmed. Other than the above, the parent has not disclosed any other financial forecasts.

Support and relief measures

In accordance with ESMA recommendations (Public Statement 32-63-972 of 20 May 2020), the support and relief measures already enjoyed in the first half of 2021 or that will be enjoyed by the Group are summarised below:

• in Italy, the Covid-19-government-sponsoredlay-off scheme for 69 employees for a total of 22,653 hours;
• in Germany, the government-sponsoredlay-off scheme (Kurzarbeit) for 60 workers for a total of 16,073 hours;
• in 2020, in the US, the subsidiary Pininfarina of America Corp. received a loan of approximately €0.2 million, bearing interest at 1% p.a. and repayable in 18 monthly instalments starting from January 2021.

On 23 April 2021, the subsidiary was notified of the Small Business Administration's acceptance of its application for the non-repayment of the loan as part of the measures for helping businesses to overcome the negative effects of the spread of the coronavirus.

The Group plans to continue to use the social shock absorbers made available by governments in Italy and Germany.

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