Farmacosmo S p A : Enters The World Of Pet Care And Launches The Marketing Strategy Of Own-Brand Products In The Sector

PRESS RELEASE

FARMACOSMO ENTERS THE WORLD OF PET CARE AND LAUNCHES THE MARKETING STRATEGY OF OWN-BRAND PRODUCTS IN THE SECTOR

THE AGREEMENT FOR THE ACQUISITION OF THE MAJORITY OF THE BAU

COSMESI PORTAL HAS BEEN SIGNED

IN 2022 THE BAU PORTAL REACHED circa 10 THOUSAND ORDERS (+143%

YoY) AND circa 25 THOUSAND FOLLOWERS ON ONE OF THE MAIN

SOCIAL NETWORK PLATFORMS (+290% YoY)

Naples, January 9th 2023

Farmacosmo S.p.A. ("Company", "Farmacosmo"), a company active in the Health, Pharma & Beauty sector, listed on the Euronext Growth Milan market of Borsa Italiana, announces that on today's day it has signed a binding agreement ("Agreement", "Transaction") for the establishment of a new company ("NewCo"), in which the 'baucosmesi.it'portal ("Bau Cosmesi", "Bau", "Portal") owned by the entrepreneur Andrea Bianchi ("AB") will be committed and which will be provided with adequate financial resources by Farmacosmo, in order to be able to support the related strategic plan.

The Bau Cosmesi portal has been active since April 2021 and sells natural, vegan products made in Italy for the care and hygiene of animals.

In 2022 the company recorded revenues of over Euro 300,000 with an increase of approximately 200% YoY. The growth path was supported by the improvement of all the main business indicators. In particular, for the year 2022: number of orders circa 9,700 (+143% YoY), number of loyal customers circa 1,600 (+201% YoY), conversion rate circa 2.4% (+18% YoY) and average cart of circa Euro 41 (vs. Euro 35 of 2021).1

Fabio de Concilio, President and CEO of Farmacosmo, declared: "We are inaugurating 2023 with an extraordinary transaction that sees Farmacosmo enter the world of pets with an innovative project that in just over a year of activity has already demonstrated excellent basics. The strategic plan that we have defined in the last months will make it possible to equip a young and brilliant entrepreneur with all the technology, experience and managerial skills of the Farmacosmo ecosystem. Bau Cosmesi thus becomes the fourth proprietary portal of Farmacosmo, after the acquisitions ofprofumeriaweb.comandpharmasi.it, thanks to which we will attack the pet market by commercializing own-brandproducts, to the benefit of the group brand awareness and profitability".

Andrea Bianchi, founder of the Bau Cosmesi portal, said: "I am happy to sign this agreement with Farmacosmo, which will accompany Bau in its phase of scaling and positioning on the Italian market. Bau will be supported by new important resources that will allow the portal to grow rapidly and at the same time to offer the best service ever. New synergies are about to emerge and they will lead the project towards new and important goals".

STRATEGIC RATIONALE

The Transaction, in line with the Company's industrial plan and in execution of the strategies represented in the Admission Document, broadens the value proposition of Farmacosmo, which proves itself as a point of reference for care and well-being within the e-commerce field, also in the pet care sector.

The main strategic rationales underlying the transaction are hereafter summarized:

1 Unaudited management data; average cart value including VAT.

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1. The entry into a niche market of the Pet sector presenting a very high expected growth rate and a very low market saturation level, with new high-margin references;

1. The possibility of expanding Bau Cosmesi's growth path through the exploitation of new traffic sources, both organic and paid, which are currently not active and the possibility of leveraging Farmacosmo's Pet user base through cross-selling and cross-fertilization marketing strategies;

1. The enhancement of the current structure through numerous cost synergies, determining between the two portals:
2. • either a single logistics center to exploit the technological know-how and best practice of Farmacosmo. By including Bau Cosmesi in the Farmacosmo distribution chain, significant benefits are expected, including a better experience for customers thanks to a reduction in delivery times, a reduction in transport costs and a more efficient management of working capital;
   • or a single strategic center for IT developments and marketing policies;
   • or economies of scale with a significant reduction in costs relating to commissions on electronic

payment methods and the use of shipment materials.

1. The development of the Pet business in both B2B and retail fields. In particular, the Bau brand products will also be distributed offline through selective commercial agreements.

In 2022, the company Bau by A. Bianchi, a sole-shareholder company owned entirely by AB and proprietary of the Portal, scored over Euro 300,000 of revenue, reaching a substantial break-even level in terms of EBITDA, with a net debt equal to zero at the end of the year.

STRUCTURE OF THE TRANSACTION

The Transaction foresees:

1. the establishment of the NewCo, as a Limited Liability Company, where (i.) AB, who will be appointed Chief Executive Officer of the same, will make a contribution in kind of the Bau Cosmesi portal, valued at Euro 350,000, and (ii.) Farmacosmo will make a contribution in cash of Euro 350,000.
2. At the same time, in compliance with the terms and conditions of the Agreement, AB undertakes to transfer to Farmacosmo a part of its share equal to 17% of the share capital of the NewCo, upon payment of the purchase price of Euro 119,000. Half of the equivalent will be paid in cash ("cash consideration"), and the other half in Farmacosmo shares ("in kind consideration") valued Euro 2.28 each (target price equity research). Farmacosmo's shares will be subject to a lock-up obligation of 36 months following the effective transfer to AB.

The value, paid for 67% of the share capital of the NewCo, will therefore be equal to Euro 469,000. The part of the transaction relating to the contribution in cash and the Consideration in Cash will be completed with the exclusive use of the Company's own resources.

Moreover, the Agreement provides for mutual purchase and sale options after (i) three and (iii) five years, aimed at transferring the Target's remaining share capital to AB. For both options, the evaluation of the residual quota at the moment of the exercise date will be determined according to a value released by an independent expert. If the AB option is exercised, Farmacosmo will pay half of the relative purchase price in cash and half through the assignment of treasury shares valued at the target price by the latest equity research available to date.

The legal aspects of the transaction were handled by PwC TLS with a team consisting of lawyers Cristina Cengia and Pietro Negroni, who oversaw the contractual aspects of the same, while lawyer Paola Furosi oversaw the aspects relating to intellectual property.

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This press release is available on the www.farmacosmoinvestors.comwebsite, section "Investors/Press Releases" and on the authorized storage mechanism "eMarket Storage" (www.emarketstorage.com)."

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THE SOCIETY

Farmacosmo is a company active in the Health, Pharma & Beauty sectors. The company's business model is based on the circular

PRESS RELEASE

model of the l(ea)n strategy, and is divided into three main business areas: Logistics, Intelligence and Node. Logistics: enables the management and fulfilment of up to 12,000 orders per day, with delivery times of up to 20 hours from carrier picking and just-intime procurement ('zero warehouse' policy). Intelligence: includes strategy definition, competitive positioning and customer journey activities, which enabled the company to intercept c. 188,000 customers in 2021. Recurring customers contributed 74% of the annual retail stream turnover. The average cart value of active customers in the retail stream amounted to €92 (€109 related to recurring customers). Node: R&D activities, process innovation and IT infrastructure of the company. Over the past five years, Farmacosmo's sales value has grown by 54% (CAGR 2016-2021) and will be around €58 million in 2021. The Farmacosmo ecosystem aims to pursue standards of excellence in every part of its value chain, being inspired by compliance with ESG principles at all stages of the logistics process (from the packaging used for online orders to carbon compensation initiatives) and in the valorisation of its employees, the company's strategic asset. Farmacosmo's commitment to ESG is also underlined by the publication of its Sustainability Report 2021.

IDENTIFICATION CODES

Ordinary Shares: ISIN IT0005487670 (Ticker COSMO)

Warrant Farmacosmo 2022-2025: ISIN IT0005487415 (Ticker WCOSMO)

FOR FURTHER INFORMATION:
INVESTOR RELATIONS MANAGER	EURONEXT GROWTH ADVISOR	INVESTOR & MEDIA RELATIONS ADVISOR
Farmacosmo	Illimity Bank	IR Top Consulting
Via Crispi, 51 - 80121 Naples	Via Soperga, 9 - 20124 Milan	Via Bigli, 19 - 20121 Milan
Tel. [phone]	Tel. [phone]	Tel. [phone]
Paolo [e-mail]	[e-mail]	Pietro Autelitano [e-mail]
		Domenico [e-mail]