SAES Getters S p A : 2020 Interim Consolidated Financial Statements

Interim Consolidated

Financial Statements 2020

0

		Taiwan Branch Office
		Zhubei City (Taiwan)
SAES Getters S.p.A.
Japan Technical Service
Lainate MI & Avezzano AQ (Italy)		Branch Office
		Tokyo (Japan)

100%		100%		100%		100%		100%		90%		100%		37.48%		100%		100%

49%

SAES Getters Export,		Memry GmbH		SAES Coated
Corp.		in liquidation		Films S.p.A.
Wilmington, DE (USA)		Weil am Rhein		Roncello MB &
			(Germany)		Lainate MI
						(Italy)
	SAES Getters/U.S.A., Inc.
	Colorado Springs, CO (USA)

100%		Spectra-Mat, Inc.
	Watsonville, CA (USA)

SAES		SAES Getters
Investments S.A.		(Nanjing) Co., Ltd.
Luxembourg		Nanjing (R.P. Cinese)
(Luxembourg)

SAES Getters International

Luxembourg S.A.10%

Luxembourg (Luxembourg)

					SAES Getters Korea
	62.52%				Corporation
					Seoul (South Korea)
					SAES Smart Materials,
	100%				Inc.
					New Hartford, NY (USA)
	100%				Memry Corporation
				Bethel, CT (USA)
	46.73%				Flexterra, Inc.
				Skokie, IL (USA)

E.T.C. S.r.l.				SAES Nitinol S.r.l.
in liquidation				Lainate MI (Italy)
Lainate MI (Italy)
					50%
		Actuator Solutions GmbH
			Gunzenhausen (Germany)
					100%
Memry Corporation					100%
Zweigniederlassung
Deutschland
Freiburg (Germany)

SAES RIAL Vacuum S.r.l.

Parma PR (Italy)

Actuator Solutions

Taiwan Co., Ltd.

in liquidation

Taoyuan City(Taiwan)

Actuator Solutions

(Shenzhen) Co., Ltd.

in liquidation

Shenzhen (P.R. of China)

			Flexterra Taiwan Co., Ltd.
100%		Zhubei City (Taiwan)

The present is the English translation of the Italian official report. For any difference between the two texts, the Italian text shall prevail.

Interim Condensed Consolidated

Financial Statements

at June 30, 2020

SAES Getters S.p.A.

Capital Stock of Euro 12,220,000 fully paid-in

Corporate Headquarters:

Viale Italia, 77 - 20045 Lainate (Milan), Italy

Registered with the Milan Court Companies Register no. 00774910152

Board of Directors
President	Massimo della Porta
Vice President and Managing Director	Giulio Canale
Directors	Alessandra della Porta (1)
	Luigi Lorenzo della Porta (1)
	Andrea Dogliotti (1)
	Luciana Rovelli (1) (2) (4) (5) (6) (8)
	Adriano De Maio (1) (3) (4)
	Stefano Proverbio (1) (2) (5) (6) (7) (8)
	Gaudiana Giusti (1) (2) (4) (5) (6) (8)
Board of Statutory Auditors
President	Vincenzo Donnamaria
Standing Auditors	Maurizio Civardi
	Sara Anita Speranza (8)
Alternate Auditors	Massimo Gabelli
	Mara Luisa Sartori
Audit Firm	Deloitte & Touche S.p.A. (9)
Representative of holders of savings shares	Massimiliano Perletti (10)
	(e-mail: [e-mail])

1. Non-executiveDirector
2. Independent Director, pursuant to the criteria of the Code of Conduct of the Italian Stock Exchange and according to article 147-ter, paragraph 4 and article 148, paragraph 3 of Legislative Decree 58/1998
3. Independent Director, pursuant to the combined provisions of article 147-ter, paragraph 4, and article 148, paragraph 3, of Legislative Decree 58/1998
4. Member of the Remuneration and Appointment Committee
5. Member of the Audit and Risk and Sustainability Committee
6. Member of the Committee for Transactions with Related Parties
7. Lead Independent Director
8. Member of the Supervisory Body
9. Appointed for the years 2013-2021 by the Shareholders' Meeting held on April 23, 2013
10. Appointed for the years 2020-2022 by the Special Meeting of Holders of Savings Shares on April 21, 2020

The mandate of the Board of Directors and the Board of Statutory Auditors, elected on April 24, 2018, will expire on the same date as the Shareholders' Meeting in which the financial statements for the year ended December 31, 2020 will be approved.

Powers of the company bodies

Pursuant to article 20 of the Articles of Association, the President and the Vice President and Managing Director are each of them separately entrusted with the legal representation of the Company, for the execution of Board of Directors' resolutions, within the limits of and for the exercise of the powers attributed to them by the Board itself.

Following the resolution adopted on April 28, 2015, the Board of Directors granted the President and the Vice President and Managing Director the powers of ordinary and extraordinary administration, with the exception of the powers strictly reserved to the competence of the Board or of those powers reserved by law to the Shareholders' Meeting.

The President Massimo della Porta is confirmed as Group Chief Executive Officer, with the meaning that such definition and role have in English- speaking countries. The Vice President and Managing Director Giulio Canale has been confirmed in the role of Deputy Group Chief Executive Officer and Group Chief Financial Officer, with the meaning that such definitions and roles have in English-speaking countries.

INDEX

Interim Group Financial Highlights	7
Interim Report on Operations of SAES Group	11
Interim Condensed Consolidated Financial Statements as at June 30, 2020	47
Interim consolidated statement of profit or loss	49
Interim consolidated statement of other comprehensive income	49
Interim consolidated statement of financial position	50
Interim consolidated cash flow statement	51
Interim consolidated statement of changes in equity	52
Explanatory notes	53
Certification of the Interim Condensed Consolidated Financial Statements as at June 30, 2020	119
drawn up pursuant to article 81-ter of the Consob Issuers' Regulation
Independent Auditors' Report on the Interim Condensed Consolidated Financial Statements as at
June 30, 2020	123

Interim Group Financial Highlights

7

8

INTERIM GROUP FINANCIAL HIGHLIGHTS

(thousands of euro)

Income statement figures	1st half	1st half	Difference	Difference
	2020	2019 (1)		%
NET SALES
- Metallurgy	33,539	33,217	322	1.0%
- Vacuum Technology	5,359	5,522	(163)	-3.0%
- Medical	40,145	41,272	(1,127)	-2.7%
- Specialty Chemicals	5,024	3,461	1,563	45.2%
- Advanced Packaging	5,032	5,015	17	0.3%
Total	89,099	88,487	612	0.7%
GROSS PROFIT (2)
- Metallurgy	17,085	17,206	(121)	-0.7%
- Vacuum Technology	3,285	2,853	432	15.1%
- Medical	15,851	16,542	(691)	-4.2%
- Specialty Chemicals	1,396	759	637	83.9%
- Advanced Packaging	609	460	149	32.4%
- Not Allocated Costs (3)	(3)	0	(3)	n.a.
Total	38,223	37,820	403	1.1%
% on net sales	42.9%	42.7%
EBITDA (4)	16,473	17,952	(1,479)	-8.2%
% on net sales	18.5%	20.3%
OPERATING INCOME (LOSS)	11,143	13,412	(2,269)	-16.9%
% on net sales	12.5%	15.2%
INCOME (LOSS) BEFORE TAXES	3,770	15,196	(11,426)	-75.2%
% on net sales	4.2%	17.2%
Group NET INCOME (LOSS)		9,140	(8,702)	-95.2%
438
% on net sales	0.5%	10.3%
Balance sheet and financial figures	June 30,	December 31,	Difference	Difference
	2020	2019		%
Tangible fixed assets	74,141	70,893	3,248	4.6%
Group shareholders' equity	243,988	252,530	(8,542)	-3.4%
Net financial position	95,644	115,316	(19,672)	-17.1%
Other information	1st half	1st half	Difference	Difference
	2020	2019		%
Cash flow from operating activities	2,780	2,281	499	21.9%
Research and development expenses	5,283	5,524	(241)	-4.4%
Number of employees as at June 30 (5)	1,078	1,072	6	0.6%
Personnel cost (6)	39,681	38,932	749	1.9%
Disbursement for acquisition of tangible assets	(6,827)	(10,525)	3,698	-35.1%

***

1. The revenues and costs by Division at June 30, 2019 presented for comparative purposes, do not coincide with what is set out in the 2019 Annual Financial Report, since they were reclassified to allow for a like-for-like comparison with June 30, 2020. In particular, from January 1, 2020, the Group was organized into the following technological competency areas (or "Divisions"):

• Metallurgy Division (which coincides with the previous Industrial operating sector, excluding Solutions for Vacuum Systems, Functional Chemical Systems and advanced getters for the consumer electronics market, the latter previously classified within the Electronic Devices Business);

9

• Vacuum Technology Division (which coincides with the Solutions for Vacuum Systems Business, included in the Industrial operating segment);
• Medical Division (unchanged);
• Specialty Chemicals Division (i.e. advanced getters for the consumer electronics market, classified within the Electronic Devices Business in the previous year, in addition to the Functional Chemical Systems segment and Flexterra business, the latter previously unallocated);
• Advanced Packaging Division (unchanged).

1. This item is calculated as the difference between the net revenues and the industrial costs directly and indirectly attributable to the products
   sold.

(thousands of euro)

	1st half 2020	1st half 2019
Net Sales	89,099	88,487
Raw materials	(16,854)	(15,767)
Direct labour	(14,452)	(14,426)
Manufacturing overhead	(23,019)	(21,224)
Increase (decrease) in work in progress and finished goods	3,449	750
Cost of sales	(50,876)	(50,667)
Gross profit	38,223	37,820
% on net sales	42.9%	42.7%

1. This item includes costs that cannot be directly attributed or allocated in a reasonable way to the Business Units, but which refer to the Group as a whole.
2. EBITDA is not deemed an accounting measure under International Financial Reporting Standards (IFRSs); however, it is believed that EBITDA is an important parameter for measuring the Group's performance and therefore it is presented as an alternative indicator. Since its calculation is not regulated by applicable accounting standards, the method applied by the Group may not be homogeneous with the ones adopted by other Groups. EBITDA is calculated as "Earnings before interest, taxes, depreciation and amortization".

(thousands of euro)

	1st half 2020	1st half 2019
Operating income	11,143	13,412
Depreciation and amortization	(4,161)	(3,902)
Right of use amortization	(1,035)	(662)
Write-down of assets	(115)	(1)
Bad debt provision (accrual) release	(19)	25
EBITDA	16,473	17,952
% on net sales	18.5%	20.3%

1. As at June 30, 2020 this includes:

• 999 employees (963 as at June 30, 2019);
• personnel employed in the Group's companies with contract types other than employment agreements, equal to 79 (109 as at June 30, 2019). This figure does not include the personnel (employees and temporary workers) of the joint ventures amounting, according to the percentage of ownership held by the Group, to 42 as at June 30, 2020 (58 at the end of the first half of the previous year, again according to the percentage of ownership held by the Group).

1. At June 30, 2019, the severance costs, included in personnel costs, amounted to 355 thousand euro, and are mainly related to the finalization of the staff reduction process in the Parent Company which began at the end of 2018, following the sale of the gas purification business. In the first half of 2020, there were no staff reduction costs.

10

Interim Report on Operations of SAES Group

11

12

REPORT ON OPERATIONS

A pioneer in the development of getter technology, the Company SAES Getters S.p.A., together with its subsidiaries, (hereinafter "SAES® Group") is the world leader in a variety of scientific and industrial applications where stringent vacuum conditions are required. In 80 years of activity, the Group's getter solutions have been supporting innovation in the information display and lamp industries, in sophisticated high vacuum systems and in vacuum thermal insulation, in technologies spanning from large vacuum power tubes to miniaturized silicon-based microelectronic and micromechanical (MEMS) devices.

Starting in 2004, by leveraging its core competencies in special metallurgy and in the materials sciences, the SAES Group has expanded its business into the advanced material markets, in particular the market of shape memory alloys, a family of materials characterized by super elasticity and by the property of assuming predefined forms when heated. These special alloys, which today are mainly applied in the biomedical sector, are also perfectly suited to the realization of actuator devices for the industrial sector (home automation, white goods industry, consumer electronics, automotive sector and luxury goods).

More recently, SAES has expanded its business by developing a technological platform which integrates getter materials in a polymeric matrix. These products, initially developed for OLED displays, are currently used in new application sectors, including implantable medical devices and solid-state diagnostics imaging. Among the new applications, advanced food packaging is a particularly strategic sector, where SAES offers new sustainable packaging products and intends to compete with completely recyclable and biodegradable solutions.

A total production capacity distributed in ten facilities, a global sales and service network, and over 1,000 employees allow the Group to combine multi-cultural skills and experience and to form a truly worldwide enterprise.

SAES Group is headquartered in Lainate, in the Milan area.

SAES Getters S.p.A. is listed on the Italian Stock Exchange Market, STAR segment, since 1986.

S.G.G Holding S.p.A. is a relative majority shareholder and does not exercise any management and coordination activity towards SAES Getters S.p.A. pursuant to article 2497 of the Italian Civil Code (as specified in the 2019 Report of corporate governance and ownership).

Group structure

The Group's business structure has five Divisions: Metallurgy, Vacuum Technology, Medical, Specialty Chemicals and Advanced Packaging. The corporate costs, i.e. those expenses that cannot be directly attributed or allocated in a reasonable way to the business units, but which refer to the Group as a whole, and the costs related to the basic research projects or aimed to diversify into innovative businesses, are shown separately from the five Divisions.

The business structure by Division is illustrated in the following table.

Metallurgy Division
Security & defence	Getters and metal dispensers for electronic vacuum devices
Electronic Devices	Getters for microelectronic, micromechanical systems (MEMS) and sensors
Healthcare Diagnostics	Getters for X-ray tubes used in image diagnostic systems
Thermal Insulated Devices	Products for thermal insulation

13

Lamps	Getters and metal dispensers used in discharge lamps and fluorescent lamps
Sintered Components for Electronic	Cathodes and materials for thermal dissipation in electronic tubes, lasers and solid-
Devices & Lasers	state devices
SMA Industrial	Shape Memory Alloy actuator devices for the industrial sector (home automation,
	white goods industry, consumer electronics, automotive sector and luxury goods)
Vacuum Technology Division
Solutions for Vacuum Systems	Getter pumps for vacuum systems with applications in the industrial sector, in
	research and in particle accelerators
Medical Division
Nitinol for Medical Devices	Nitinol raw material and components for the biomedical sector
Specialty Chemicals Division
Functional Dispensable Products	Getter materials integrated into polymeric matrices for organic and hybrid
	electronic applications, photonics and implantable medical devices
Advanced Packaging Division
Advanced Coatings	Advanced lacquers and plastic films for the sustainable packaging sector

Compared to the previous year, from January 1, 2020, the Group is organized in the following technological competency areas (or "Divisions"):

• Metallurgy Division (which coincides with the previous Industrial operating sector, excluding Solutions for Vacuum Systems, Functional Chemical Systems and advanced getters for the consumer electronics market, the latter previously classified within the Electronic Devices Business);
• Vacuum Technology Division (which coincides with the Solutions for Vacuum Systems Business, included in the Industrial operating segment);
• Medical Division (unchanged);
• Specialty Chemicals Division (i.e. advanced getters for the consumer electronics market, classified within the Electronic Devices Business in the previous year, in addition to the Functional Chemical Systems segment and Flexterra business, the latter previously unallocated);
• Advanced Packaging Division (unchanged).

The amounts for the first half of 2019 were reclassified according to the new operating structure so they are comparable with the 2020 figures.

Main events in the half-year period (January 1 - June 30, 2020)

The interim results confirm the solidity of the Group even in the situation of general instability caused by the COVID-19 emergency.

Revenues in the first half of 2020, amounting to 89.1 million euro, remained strongly stable with the first six months of the previous year (overall decrease of just -1%). After a first quarter that closed with a double-digit growth in revenue, in part aided by inventory movement that was also a consequence of the health emergency, the second quarter saw the gradual reabsorption of these changes in inventory, added to which was the slowing in certain sectors, particularly medical due to the postponement of elective surgeries, mainly in the USA.

The segments that recorded the strongest increases in the first half of the year were security and defense (higher sales of getters for infrared sensors and night-vision systems for defence applications) and advanced getters for the consumer electronics market. These growth figures offset the decline in other segments, more negatively impacted by the COVID-19 crisis (medical devices in Nitinol and industrial SMAs for automotive and consumer applications).

14

The total revenues of the Group for the first half of 2020, including the portion of revenue from the joint ventures1, amounted to 93.5 million euro, essentially in line (-0.8%) with the 94.2 million euro of the first six months of 2019, mainly thanks to the steady consolidated sales revenue (+0.7%), also assisted by the positive exchange rates effect, and the increase in revenue from the joint venture SAES RIAL Vacuum S.r.l. (+50.2%).

The stability of the consolidated revenue meant that all the operating indicators also remained steady. Note in particular the gross profit2 of 42.9% and consolidated EBITDA3 of 18.5% recorded in the first half of this year (42.7% and 20.3%, respectively, in the first half of 2019).

The consolidated net profit was instead only slightly positive, at 0.4 million euro (+9.1 million euro in the first half of 2019), penalized by the decrease in fair value of securities in the portfolio (-6.5 million euro) due to the effect of the COVID-19 crisis on the financial markets.

The main events that occurred in the first half of 2020 are set out below.

As part of the incentive plan based on phantom shares known as the "2018 Phantom Shares Plan", approved by the Shareholders' Meeting held on October 1, 2018, the Board of Directors of SAES Getters S.p.A. on February 13, 2020, upon the proposal of the Remuneration and Appointment Committee, assigned 195,618 phantom shares, from those still assignable pursuant to article 5 of the aforementioned plan, to Paolo Vacca, appointed Manager with Key Responsibilities effective January 1, 2020. The assignment value was calculated at 21.14 euro.

Accepting the provisions and recommendations issued by the Lombardy Region for precautionary containment of the COVID-19 epidemic, the Lainate offices of the Parent Company and the Roncello facility of SAES Coated Films S.p.A. were closed from the afternoon of February 24 to February 28, 2020, also in order to arrange the necessary risk containment measures and to draw up the COVID operations protocol.

Later, the two facilities returned to operations, whereas the other Group production plants in Italy and abroad had remained operative, complying with all regulatory provisions in force to guarantee workplace safety and, where possible, encouraging recourse to smart working.

Also note that, on March 26, 2020, the Group reached an agreement with the trade union representatives regarding the use, for nine weeks from March 30, 2020, of the social shock absorbers envisaged in the "Cura Italia" Decree, DPCM of March 17, 2020 (CIGO furlough scheme) for a number of employees at the Lainate facility, with salary integration 40% supported by the company.

Lastly, on May 14, 2020, an agreement was reached with the trade unions for the gradual return to work of employees at the Lainate operating unit (150 presences per day at Lainate in June and July, alternating shifts with smart working). All employees returned to work from the beginning of August and, again from that date, a smart working pilot project was launched on a voluntary basis for a period of 12 months, with maximum three days a week smart working for every employee participating in the project.

On March 6, 2020, SAES Getters S.p.A. signed a new line of credit with Unicredit S.p.A. for a maximum amount of 30 million euro as a revolving line, intended for general corporate, capex and acquisition uses. The duration of the credit line is set at thirty-six months. SAES may request its use in tranches of not less than 0.5 million euro and with a duration of one to three months. The contract provides for the payment of interest indexed at the one/three-month Euribor rate, plus a spread of 1.2%, and just one covenant (positive consolidated net financial position) subject to half-yearly review.

1. Actuator Solutions (50%), SAES RIAL Vacuum S.r.l. (49%) and Flexterra (46.73%).
2. Calculated as the ratio between the gross profit and the net consolidated revenues.
3. EBITDA is not deemed an accounting measure under International Financial Reporting Standards (IFRSs); however, it is believed that EBITDA is an important parameter for measuring the Group's performance and therefore it is presented as an alternative indicator. Since its calculation is not regulated by applicable accounting standards, the method applied by the Group may not be homogeneous with the ones adopted by other Groups. EBITDA is calculated as "Earnings before interest, taxes, depreciation and amortization".

15

On March 12, 2020, SAES Group decided to donate 0.5 million euro to research institutes working on the front lines against COVID-19, as well as to Civil Defense personnel. SAES is thus offering its contribution to overcome the emergency that the whole country is facing. The donation was specifically disbursed to the specialized research institutes IRCCS Ca' Granda Ospedale Maggiore Policlinico Foundation and the IRCCS Policlinico San Matteo di Pavia Foundation, as well as to Civil Defense. In addition, in the second quarter of 2020, note the donation of two ventilators to treat respiratory insufficiency and a video laryngoscope to the ICU of Avezzano Hospital, high quality equipment with sophisticated pulmonary monitoring systems to improve the safety of patients and health workers. The total value of the equipment was around 0.1 million euro.

On March 12, 2020, SAES Getters S.p.A., as Single Shareholder, resolved a capital payment of 800 thousand euro in favour of SAES Nitinol S.r.l., aimed at covering the losses recognized during 2019 and establishing a cash reserve of 21 thousand euro.

On April 30, 2020, SAES Getters S.p.A. signed a new revolving line of credit with Intesa Sanpaolo S.p.A. for a maximum amount of 30 million euro, intended as support for business operations or financial needs associated with capex and acquisitions. The duration of the credit line is set at thirty-six months. SAES can request its use in tranches, each with a minimum value of 1 million euro and thereafter in multiples of 0.5 million euro. The contract provides for the payment of interest indexed at the one/three- month Euribor rate, plus a spread of 1.10%, and just one covenant (positive consolidated net financial position) subject to half-yearly review.

In June, the Colussi food products group, through its proprietary brand Misura, launched a marketing campaign relating to the use of an innovative fully compostable packaging solution, created for Colussi through a partnership between Novamont, TicinoPlast, SAES Group, Sacchital and IMA. The new packaging, biodegradable and from 100% renewable sources, can be composted along with food waste and has a barrier against oxygen and damp, offered by the coating technology developed by SAES. The news emphasises the innovative strength of SAES Coated Films S.p.A.'s advanced solutions for compostable food packaging.

On June 23, 2020, an agreement was signed with EUREKA! Venture SGR S.p.A. which will see SAES invest in the EUREKA! Fund I - Technology Transfer venture capital fund (a closed alternative investment fund qualifying as a 'EuVECA' fund pursuant to Regulation (EU) 345/2013), established and managed by the SGR and with investors including Cassa Depositi e Prestiti (CDP) and the European Investment Fund (EIF). The investment in the Fund, finalized through the Parent Company SAES Getters S.p.A., will total 3 million euro with a ten-year duration (coinciding with the maturity of the Fund). The financial outlay for SAES will not be immediate, but rather in the form of drawdown transactions, based on investment opportunities that gradually arise and related calls for capital subscriptions from the SGR.

The Fund managed by EUREKA! Venture SGR will be specialized and focus solely on deeptech investments in start-ups and spin-offs of research centres and universities, in applications and technologies attributable to the science of materials, sensors, advanced electronics, photonics, IoT - the Internet of Things and Lab-on-a-chip applications, attentive to the principles of sustainability and ESG (Environmental, Social and Governance) criteria. In fact, the fund regulation envisages clear investment policies inspired by ESG principles. Similarly, also for the asset management company, procedures and processes will focus on compliance with these investment policies.

Based on the specific agreement signed, SAES will become an investor and strategic partner of EUREKA! in the advanced materials sector. SAES will have access to the Fund's deal flow in sectors and business areas of interest to the Group, with priority co-investment rights. Lastly, based on the exit strategies from target companies, SAES can formulate a right of first offer purchase proposal to be submitted to the asset management company for assessment.

There were no drawdowns in the period between June 23 and June 30, 2020.

16

Sales and economic results of the first half of 2020

In the first half of 2020 the SAES Group achieved consolidated net revenue of 89,099 thousand euro, up by 0.7% compared to 88,487 thousand euro in the corresponding period of 2019. The increase was entirely due to the positive exchange rate effect (+1.7%), related to changes in the US dollar rate against the euro in the first few months of the year. Without the exchange rate effect, consolidated revenue was essentially at break-even point with a very slight negative overall change of -1%. The segments that recorded the strongest increases in the first half of the year were security and defense (higher sales of getters for infrared sensors and night-vision systems for defence applications) and advanced getters for the consumer electronics market (Functional Dispensable Products business). These growth figures offset the decline in other businesses, more negatively affected by the COVID-19 crisis (medical devices in Nitinol and industrial SMAs for automotive and consumer applications).

Total revenues, including the portion of revenue from the joint ventures4, amounted to 93,522 thousand euro, compared to 94,245 thousand euro in the first six months of 2019, essentially remaining steady (-0.8%) largely due to the stability of consolidated revenues and the increase in revenue of the joint venture SAES RIAL Vacuum S.r.l. (+50.2%). The revenue of the joint venture Actuator Solutions was down, also penalized by the COVID-19 epidemic as well as by the automotive market crisis that had already begun in 2019.

(thousands of euro)
	1st half 2020	1st half 2019	Total	Total
	difference	difference %
Consolidated net sales	89,099	88,487	612	0.7%
50% Actuator Solutions' net sales	3,940	5,488	(1,548)	-28.2%
49% SAES RIAL Vacuum S.r.l.'s net sales	868	578	290	50.2%
46.73% Flexterra' s net sales	23	6	17	283.3%
Intercompany eliminations	(418)	(280)	(138)	49.3%
Other adjustments	10	(34)	44	-129.4%
Total revenues of the Group	93,522	94,245	(723)	-0.8%

The following chart compares the consolidated revenue from the first half of 2020 with that of the corresponding period of 2019, highlighting the effect of exchange rates and the variations due to the changes in selling prices and sales volumes (overall change).

4 Actuator Solutions (50%), SAES RIAL Vacuum S.r.l. (49%) and Flexterra (46.73%).

17

The graph below shows the percentage weight of the revenue for each Division for the first half of 2020 and for the corresponding period of 2019.

The percentage effect of the divisions remains in line with the previous year. Note the slight increase in the percentage weight of the Specialty Chemicals Division, due to higher sales of advanced components for the consumer electronics market in the first three months of the current year; vice versa, the Medical Division recorded a slight decline, penalized by the slowdown in scheduling surgeries in the USA, especially in the second quarter, adopted to focus hospital resources on COVID-19 cases. The percentage weight of the Metallurgy Division remained unchanged, as the drop in Industrial SMAs was offset by higher revenue, particularly in the security and defense sector. Also in line with the previous year were the percentage weights of the Vacuum Technology Division and the Advanced Packaging Division, both characterized by revenue in absolute terms that essentially coincided with those of the first half of 2019.

% Breakdown of net revenues by Division -		% Breakdown of net revenues by Division -
	1st half 2020			1st half 2019
	Advanced			Advanced
Specialty	Packaging		Specialty	Packaging
5.6%		5.7%
Chemicals		Chemicals
5.6%			3.9%
	Metallurgy			Metallurgy
	37.6%		Medical	37.5%
			46.6%
Medical	Vacuum			Vacuum
45.1%
	Technology			Technology
	6.0%			6.2%

The following table contains the breakdown of the consolidated revenues in both the first half of 2020 and the first half of 2019, for each business sector, with the relative percentage variation at current and comparable exchange rates.

(thousands of euro)
Businesses	1st half	1st half	Total	Total	Exchange rate	Organic
2020	2019	difference	difference	effect	change
				%	%	%
Security & Defense	9,524	6,365	3,159	49.6%	1.9%	47.7%
Electronic Devices	7,702	7,507	195	2.6%	1.0%	1.6%
Healthcare Diagnostics	2,752	2,450	302	12.3%	1.2%	11.1%
Lamps	1,946	2,274	(328)	-14.4%	1.2%	-15.6%
Thermal Insulated Devices	1,674	1,833	(159)	-8.7%	2.4%	-11.1%
Sintered Components for Electronic Devices & Lasers	3,733	4,542	(809)	-17.8%	2.0%	-19.8%
SMA Industrial	6,208	8,246	(2,038)	-24.7%	1.0%	-25.7%
Metallurgy Division	33,539	33,217	322	1.0%	1.4%	-0.4%
Solutions for Vacuum Systems	5,359	5,522	(163)	-3.0%	1.3%	-4.3%
Vacuum Technology Division	5,359	5,522	(163)	-3.0%	1.3%	-4.3%
Nitinol for Medical Devices	40,145	41,272	(1,127)	-2.7%	2.4%	-5.1%
Medical Division	40,145	41,272	(1,127)	-2.7%	2.4%	-5.1%
Functional Dispensable Products	5,024	3,461	1,563	45.2%	0.5%	44.7%
Specialty Chemicals Division	5,024	3,461	1,563	45.2%	0.5%	44.7%
Advanced Coatings	5,032	5,015	17	0.3%	0.0%	0.3%
Advanced Packaging Division	5,032	5,015	17	0.3%	0.0%	0.3%
Total consolidated net revenues	89,099	88,487	612	0.7%	1.7%	-1.0%

The consolidated revenues of the Metallurgy Division in the first half of 2020 amounted to 33,539 thousand euro, up by 1% compared to 33,217 thousand euro in the corresponding half-year period of

18

2019. The performance of the euro against the major foreign currencies led to a positive exchange rate effect equal to +1.4%, net of which the sales were in line (-0.4%).

Growth was recorded as follows:

• in the Security & Defense Business(+47.7%), due to stronger sales of getter components for infrared sensors and night vision systems for defense applications, in addition to good sales performance linked to certain orders for avionic and satellite telecommunication devices;
• in the Electronic Devices Business(+1.6%), driven mainly by infrared applications in heat sensors for temperature and thermographic measurement, also aided by the recent COVID-19 crisis;
• in the Healthcare Diagnostics Business(+11.1%), due to stockpiling and the increase in demand in the image diagnostics sector from some major customers as a result of the COVID-19 crisis.
  All other segments, however, recorded a decline. In particular:
• the SMA Industrial Business(-25.7%), due to the effect of COVID-19 on the consumer electronics and automotive markets;
• the Sintered Components for Electronic Devices & Lasers Business(down -19.8% overall), due to lower sales of heat dissipation devices used in semiconductor lasers, higher than average in the first half of 2019, due to stock adjustments;
• the Thermal Insulated Devices Business(-11.1%) and Lamps Business(-15.6%). In the former, the decline is mainly due to slowing demand in vacuum bottles and insulated tubes for oil market applications due to COVID-19; in the latter, the decline is due to the structural crisis in the fluorescent lamps and high-intensity discharge lamps market.

The consolidated revenues of the Vacuum Technology Division in the first half of 2020 amounted to 5,359 thousand euro, down by 3% compared to 5,522 thousand euro in the corresponding half-year period of 2019. The positive exchange rates effect was +1.3%, net of which the sales saw an overall decrease of 4.3%. The decline is due to lower sales to research centres and universities, caused by COVID-19, partly offset by higher sales of pumps in the analytics instruments and particle accelerator sectors which were less affected by the crisis.

The consolidated revenues of the Medical Division in the first half of 2020 amounted to 40,145 thousand euro, down by 2.7% compared to 41,272 thousand euro in the corresponding half-year period of 2019. The exchange rate effect was positive for +2.4%, net of which the overall change was -5.1%, particularly resulting from the strong decrease of a major US customer whose stock levels were already high prior to the pandemic. Note that from the second half of the period, the demand slowed for medical devices due to hospitals' suspension of elective surgeries in order to focus resources on COVID-19 cases.

The consolidated revenues of the Specialty Chemicals Division in the first half of 2020 amounted to 5,024 thousand euro, up strongly (+45.2%) compared to 3,461 thousand euro in the corresponding half- year period of 2019. The exchange rates effect was positive for +0.5%, net of which the overall increase was +44.7%, driven by higher sales of advanced components for the consumer electronics market (in turn assisted by stronger market penetration of the SAES product, which more than offset the decline in the telecoms market caused by the pandemic) and, with distinctly lower values, by higher sales of dispensable dryers for passive matrix OLED applications to cover mass production in China and Taiwan.

The consolidated revenues of the Advanced Packaging Division in the first half of 2020 amounted to 5,032 thousand euro compared to 5,015 thousand euro in the corresponding period of 2019.

Sales are exclusively denominated in euro.

Revenues in the first half of the year was in line (+0.3%) with the corresponding period of the previous year, but the breakdown of the product portfolio is different and shows a prevalence of lacquered (rather than metallized) products for sustainable and compostable applications, confirming the repositioning strategy of the product mix with a higher added value.

The quarterly performance of the net consolidated revenues, with the details by Division is provided in the following chart and in the table below.

19

(thousands of euro)

Businesses	2nd quarter	1st quarter	4th quarter	3rd quarter	2nd quarter	1st quarter
2020	2020	2019	2019	2019	2019
Security & Defense	4,916	4,608	2,908	3,505	2,732	3,633
Electronic Devices	3,534	4,168	3,236	3,610	3,968	3,539
Healthcare Diagnostics	1,087	1,665	965	1,023	1,248	1,202
Lamps	893	1,053	804	995	1,204	1,070
Thermal Insulated Devices	712	962	847	697	888	945
Sintered Components for Electronic Devices & Lasers	1,660	2,073	2,091	1,819	2,149	2,393
SMA Industrial	2,333	3,875	3,537	5,186	4,591	3,655
Metallurgy Division	15,135	18,404	14,388	16,835	16,780	16,437
Solutions for Vacuum Systems	2,917	2,442	3,046	2,024	2,453	3,069
Vacuum Technology Division	2,917	2,442	3,046	2,024	2,453	3,069
Nitinol for Medical Devices	18,566	21,579	20,871	22,836	21,220	20,052
Medical Division	18,566	21,579	20,871	22,836	21,220	20,052
Functional Dispensable Products	749	4,275	3,873	5,000	2,543	918
Specialty Chemicals Division	749	4,275	3,873	5,000	2,543	918
Advanced Coatings	2,447	2,585	2,723	2,269	2,392	2,623
Advanced Packaging Division	2,447	2,585	2,723	2,269	2,392	2,623
Consolidated net revenues	39,814	49,285	44,901	48,964	45,388	43,099

Note the generally negative impact of COVID-19, which almost exclusively affected the second quarter of this year, after a first quarter assisted by stockpiling in various segments pending arrival of the imminent pandemic-related crisis.

The following table shows details of the consolidated revenues in the first two quarters of the current year for the various business sectors, along with information on the overall variation and the exchange rates effect.

20

(thousands of euro)

Businesses	2nd quarter	1st quarter	Total	Total	Exchange rate	Organic
2020	2020	difference	difference	effect	change
				%	%	%
Security & Defense	4,916	4,608	308	6.7%	-0.1%	6.8%
Electronic Devices	3,534	4,168	(634)	-15.2%	-0.1%	-15.1%
Healthcare Diagnostics	1,087	1,665	(578)	-34.7%	0.1%	-34.8%
Lamps	893	1,053	(160)	-15.2%	0.1%	-15.3%
Thermal Insulated Devices	712	962	(250)	-26.0%	0.3%	-26.3%
Sintered Components for Electronic Devices & Lasers	1,660	2,073	(413)	-19.9%	0.1%	-20.0%
SMA Industrial	2,333	3,875	(1,542)	-39.8%	0.0%	-39.8%
Metallurgy Division	15,135	18,404	(3,269)	-17.8%	0.0%	-17.8%
Solutions for Vacuum Systems	2,917	2,442	475	19.5%	0.2%	19.3%
Vacuum Technology Division	2,917	2,442	475	19.5%	0.2%	19.3%
Nitinol for Medical Devices	18,566	21,579	(3,013)	-14.0%	0.1%	-14.1%
Medical Division	18,566	21,579	(3,013)	-14.0%	0.1%	-14.1%
Functional Dispensable Products	749	4,275	(3,526)	-82.5%	0.0%	-82.5%
Specialty Chemicals Division	749	4,275	(3,526)	-82.5%	0.0%	-82.5%
Advanced Coatings	2,447	2,585	(138)	-5.3%	0.0%	-5.3%
Advanced Packaging Division	2,447	2,585	(138)	-5.3%	0.0%	-5.3%
Consolidated net revenues	39,814	49,285	(9,471)	-19.2%	0.1%	-19.3%

After a first quarter that closed with revenues up on the previous year, aided by inventory movement that was also a consequence of the COVID-19 emergency, the second quarter saw the gradual reabsorption of these changes in inventory, added to which was the slowing in certain sectors, particularly medical, due to the postponement of elective surgeries, mainly in the USA.

The comparison of revenues for the first two quarters of this year sees an overall negative change of - 19.3%, against an immaterial exchange rate effect (+0.1%). The decline was widespread in almost all business areas, except the security and defense business, which saw further consolidation in the second quarter, and in the vacuum systemsbusiness which benefited from higher revenues in the sector of accelerators for research. The overall decline is concentrated in the following sectors:

• SMA industrial(-39.8%), which in the first quarter saw stockpiling due to COVID-19 precautions in the consumer electronics sector and a second quarter strongly penalized by the pandemic;
• Electronic Devices(-15.1%) and Healthcare Diagnostics(-34.8%), where growth in the first quarter - also aided by the COVID-19 crisis - fell back in the second quarter;
• Nitinol for Medical Devices(-14.1%) for the previously mentioned postponement of elective surgeries due to COVID-19;
• Functional Dispensable Products(-82.5%), which after a first quarter characterized by early orders to overcome the COVID-19 crisis, in the second saw a strong overall decline, also due to the temporary stoppage of production for scheduled extraordinary maintenance work.

The breakdown of the consolidated revenues by geographic location of customers is provided below.

(thousands of euro)
	1st half	%		1st half	%		Total	Total
Geographic area	2020			2019			difference	difference
								%
Italy	2,008	2.3%		1,683	1.9%		325	19.3%
Europe	17,324	19.4%		17,448	19.7%		(124)	-0.7%
North America	48,382	54.3%		51,859	58.6%		(3,477)	-6.7%
Japan	3,923	4.4%		2,645	3.0%		1,278	48.3%
South Korea	876	1.0%		601	0.7%		275	45.8%
China	12,851	14.4%		11,285	12.8%		1,566	13.9%
Other Asian countries	2,887	3.2%		2,082	2.4%		805	38.7%
Others	848	1.0%		884	1.0%		(36)	-4.1%
Total net sales	89,099	100.0%		88,487	100.0%		612	0.7%

21

• Breakdown of net revenues by Geographic Area - 1st half 2020

		Other		Others		Italy
		Asian
		1.0%	2.3%
		countries
							Europe
China 3.2%
		19.4%
14.4%

South

Korea

1.0%

Japan

4.4%

North

America

54.3%

With regard to the geographic distribution of consolidated revenues, the first half of 2020 showed a decline in sales in North America, penalized by the COVID-19 crisis in the Nitinol sector for medical applications. Vice versa, revenues increased in China, Japan and other Asian countries, driven by security and defense business, the medical diagnostics segment and the sector of advanced getters for consumer electronics applications, which offset the declining sales of SMA wires for industrial applications.

The percentage weight of the European markets remained essentially stable.

Consolidated gross profit5 amounted to 38,223 thousand euro in the first half of 2020, compared to 37,820 thousand euro in the first half of 2019. The slight growth (+403 thousand euro in absolute terms and +1.1% in percentage terms) was mainly due to the exchange rates effect (+706 thousand euro, +1.9%), net of which the gross result would be essentially in line with the corresponding period of 2019 (- 303 thousand euro).

The gross profit margin6 was also aligned, with a slight increase (from 42.7% to 42.9%), despite the different contribution from the various Divisions. Please refer to an analysis on the operating sector for further details.

The following table shows the consolidated gross profit in the first half of 2020 by Division, compared with the corresponding period of the previous year.

5Calculated as the difference between the net revenues and industrial costs directly and indirectly attributable to the products sold.

6 Calculated as the ratio between the gross profit and the net consolidated revenues.

22

(thousands of euro)
Business	1st half 2020	1st half 2019	Total	Difference
difference	%
Metallurgy	17,085	17,206	(121)	-0.7%
% on the Division net sales	50.9%	51.8%
Vacuum Technology	3,285	2,853	432	15.1%
% on the Division net sales	61.3%	51.7%
Medical	15,851	16,542	(691)	-4.2%
% on the Division net sales	39.5%	40.1%
Specialty Chemicals	1,396	759	637	83.9%
% on the Division net sales	27.8%	21.9%
Advanced Packaging	609	460	149	32.4%
% on the Division net sales	12.1%	9.2%
Non Allocato	(3)	0	(3)	n.a.
% on the Division net sales	n.a.	n.a.
Gross profit	38,223	37,820	403	1.1%
% on net sales	42.9%	42.7%

Gross profit in the Metallurgy Division amounted to 17,085 thousand euro compared to 17,206 thousand euro in the first half of 2019. The gross profit margin declined slightly, from 51.8% to 50.9%. This difference is mainly due to the electronic device business, characterized by a different product mix, and the industrial SMA business, where COVID-19 penalized sales in the consumer electronics and automotive sectors and affected by the resulting narrower economies of scale.

Gross profit in the Vacuum Technology Division amounted to 3,285 thousand euro in the first half of 2020, up strongly (+15.1%) on the 2,853 thousand euro of the corresponding period of 2019. In particular, this growth is attributable to the different margins (from 51.7% to 61.3%), in turn due to the different product mix, with an increase in sales in the particle accelerators sector, characterized by higher margins.

In the Medical Division, the gross profit was 15,851 thousand euro, down on the 16,542 thousand euro of the first half of 2019, mainly due to the decline in sales, with an essentially steady profit margin (from 40.1% to 39.5%), despite production costs for the project still in progress to construct a new tubes department in Bethel and the related increase in indirect production costs.

The Specialty Chemicals Division closed the first half of 2020 with gross profit of 1,396 thousand euro, almost double (+83.9%) compared to 759 thousand euro, due to stronger sales of advanced getters for the mobile phones market and resulting saturation of the related production line, and to the different mix in the sales of dispensable organic getters.

The Advanced Packaging Division closed the current half year with a gross profit of 609 thousand euro (12.1% of revenues), compared to 460 thousand euro in the corresponding period of 2019 (9.2% of revenues): the increase, both in absolute terms and as a percentage of revenues, was mainly due to the consolidation of lacquered product sales, with a higher added value than metallized.

The following chart shows the quarterly trend of both the consolidated gross profit and gross margin.

23

Comparing the two quarters of the current year, note that despite the decline in gross profit penalized by the COVID-19 crisis, the increase in the profit margin in the second quarter compared to the first, driven by the Medical Division and the improved margins of the Specialty Chemicals Division (both divisions benefiting from temporary stock increases at Memry Corporation and the Parent Company's Avezzano facility, respectively).

Consolidated operating profit amounted to 11,143 thousand euro in the half year period (12.5% of consolidated revenues), compared to 13,412 thousand euro in the corresponding period of the previous year (15.2% of consolidated revenues): excluding the positive effect of the exchange rates (+527 thousand euro, +3.9%), the decrease (-2,796 thousand euro, -20.8%) is entirely attributable to non-recurring items recognized under "Other net income (expenses)", respectively as revenues in the first half of 2019 (gain due from a related party for 2,267 thousand euro for the sale of the joint venture Flexterra, Inc. of OLET patents owned by E.T.C. S.r.l. in liquidation) and as a cost in the current half year (donations to research centres and hospitals in relation to the COVID-19 crisis for 689 thousand euro).

The following table shows the consolidated operating profit for the first half of 2020 by Division, compared with the corresponding period of the previous year.

(thousands of euro)
			Total	Difference
Business	1st half 2020	1st half 2019	difference	%
Metallurgy	11,221	11,672	(451)	-3.9%
Vacuum Technology	1,417	958	459	47.9%
Medical	11,558	11,986	(428)	-3.6%
Specialty Chemicals	555	2,359	(1,804)	-76.5%
Advanced Packaging	(1,125)	(1,279)	154	-12.0%
Not Allocated Costs	(12,483)	(12,284)	(199)	1.6%
Operating income (loss)	11,143	13,412	(2,269)	-16.9%
% on net sales	12.5%	15.2%

Consolidated operating expenses were equal to 26,326 thousand euro (29.5% of revenues), compared to 26,752 thousand euro (30.2% of revenues) in the corresponding half year period of 2019. Excluding the effect of exchange rates (+179 thousand euro), operating expenses decreased by -605 thousand euro. The decrease is main concentrated in the cost of sales (-10.2% due to lower travel expenses and reduced marketing costs as a consequence of the COVID-19 pandemic, as well as the reduced commissions to

24

third parties due to lower SMA trained wire sales). Also down slightly (-5%) were the research and development costs, due to reduced consulting and lower patent management costs. Vice versa, general and administrative expenses increased slightly (by +2.1% overall) due to extraordinary expenses of around 0.3 million euro incurred to manage to COVID-19 emergency (in particular, costs for sanitization and adaptation of access points and work spaces to ensure employee safety, as well as healthcare and prevention expenses and consulting and training costs). Excluding the latter, the general and administrative expenses would be in line with the corresponding period of 2019 (the higher consulting costs, for special projects and for the IT system development, were offset by lower severance costs7, as well as by the lower travel expenses and savings related to the reduced physical presence of staff as a result of the recourse to smart working).

The chart below shows the trend for consolidated operating expenses in the first half of 2020, highlighting the effect attributable to exchange rates and extraordinary savings/costs associated with the COVID-19 emergency.

The total cost of labour was 39,681 thousand euro, compared to 38,932 thousand euro in the same period of last year. The increase (+749 thousand euro) is primarily attributable to the effect of exchange rates (+543 thousand euro) and the increase in the average number of employees at the US subsidiaries, the latter partly offset by reduced recourse to temporary work. Lastly, it should be remembered that the first half of 2019 was penalized by severance costs amounting to 0.3 million euro.

The profit for the half year takes account of the amortization/depreciation of intangible assets and property, plant and equipment and of rights of use on leased assets of 5,196 thousand euro, compared to 4,564 thousand euro in the corresponding period of the previous year: the increase is mainly related to amortization of the additional production floorspace leased by Memry Corporation with effect from the second half of 2019.

Consolidated EBITDA amounted to 16,473 thousand euro (18.5% of consolidated revenues) in the first half of 2020, compared to 17,952 thousand euro in the corresponding period of 2019 (20.3% of consolidated revenues): the decrease is entirely attributable to the above-mentionednon-recurring revenues items in 2019 (gain due from a related party for 2,267 thousand euro for the sale to the joint venture Flexterra, Inc. of OLET patents owned by E.T.C. S.r.l. in liquidation) and the cost in the current period (donations to research centres and hospitals in relation to the COVID-19 crisis for 689 thousand

7 0.3 million euro in the first half of 2019, related to completion of the downsizing process of the Parent Company staff that began at the end of 2018 following the sale of the purification business, versus zero costs in the first half of 2020.

25

euro). Net of these non-recurring items, EBITDA would be 17,162 thousand, up 9.4%, mainly driven by the Vacuum Technology and Specialty Chemicals Divisions.

The following table shows the reconciliation between EBITDA and operating profit in the first half of 2020, compared with the corresponding period of the previous year.

(thousands of euro)
	1st half 2020	1st half 2019	Total	Total
	difference	difference
				%
Operating income	11,143	13,412	(2,269)	-16.9%
Property, plant and equipment depreciation & intangible assets amortization	(4,161)	(3,902)	(259)	6.6%
Right of use amortization	(1,035)	(662)	(373)	56.3%
Write-down of assets	(115)	(1)	(114)	n.s.
Bad debt provision (accrual) release	(19)	25	(44)	-176.0%
EBITDA	16,473	17,952	(1,479)	-8.2%
% on net sales	18.5%	20.3%

The balance of other net income (expenses) was negative for 754 thousand euro, compared to a positive balance of 2,344 thousand euro in the first half of 2019. The decrease (-3,098 thousand euro) is related to the costs of 689 thousand euro for COVID-19 donations and to extraordinary income recognized in the first half of 2019 (income from a related party, equal to 2,267 thousand euro, for the sale to the joint venture Flexterra, Inc. of OLET patents owned by E.T.C. S.r.l. in liquidation, as well as other extraordinary revenues for 248 thousand euro for insurance reimbursements and a favourable settlement of legal disputes).

The net balance of financial income and expense was negative for -6,460 thousand euro, compared to a positive balance of +2,858 thousand euro in the corresponding period of 2019. The decrease (-9,318 thousand euro) is mainly attributable to the reduction in fair value of the securities portfolio caused by the COVID-19 financial crisis (in the first half of 2019 the securities value had increased by 2,316 thousand euro, whilst in this half year the fair value fell by 6,476 thousand euro).

Also note the higher interest on short and long-term loans8 and the higher bank charges (in total +704 thousand euro), only partly offset by the increased income from coupons (+322 thousand euro).

The loss deriving from measurement using the equity method of the jointly controlled companies amounted to a total of -884 thousand euro, almost exclusively attributable to the joint venture Flexterra, and compares with a cost of -1,043 thousand euro in the corresponding period of the previous financial period, again mainly attributable to Flexterra. For further details on the breakdown of these losses please refer to the paragraph "Performance of the joint ventures in the first half of 2020" and to Notes no. 8 and no. 17. Note that, despite the joint venture Actuator Solutions closing the first half of 2020 with a slight profit, the SAES share of this net profit was not recorded by the Group as the consolidated equity of the joint venture is still negative, against a SAES equity interest that has already been fully written off.

The sum of the exchange rate differences recorded a balance essentially equal to zero (-29 thousand euro) in the first six months of 2020, in line with the first half of 2019 (-31 thousand euro). Both these immaterial balances are mainly attributable to the effect of USD fluctuations against the euro on trade- related transactions, including intercompany.

The consolidated income before taxes amounted to 3,770 thousand euro, compared to 15,196 thousand euro for the first half of 2019. The decline is attributable to the previously mentioned non-recurring items that caused the decrease in operating profit and the decrease in value of the securities portfolio.

8 Higher interest expense associated with the loan signed in April 2019 to fund the purchase of treasury shares.

26

In the first half of the year, income taxes amounted to 3,332 thousand euro, compared to 6,232 thousand euro in the corresponding period of 2019, and mainly comprise taxes of the US companies. The decrease compared to the previous year is largely attributable to the reduction in US taxes against lower taxable amounts and the decrease in taxes of the subsidiary SAES Investments S.A., which closed the first half with a fiscal loss due to losses on securities resulting from the COVID-19 crisis.

The Group's tax rate was 88.4%, compared to 41% in the first half of 2019: this high tax rate is due to the fact that the Parent Company, SAES Coated Films S.p.A. and SAES Investments S.A. ended the first half of the year with a negative taxable income, not recorded as deferred tax assets.

The net profit from operating activities was equal to 438 thousand euro (0.5% of consolidated revenues), compared to 8,964 thousand euro (10.1% of consolidated revenues) in the first half of 2019.

The result for discontinued operations in the first half of 2020 was zero. In the first half of 2019, the profit from discontinued operations amounted to 176 thousand euro, mainly comprising the positive adjustment to the sale price for the gas purification business due to the settlement of the effective value of the tax credit of the companies that were sold - SAES Getters USA, Inc. and SAES Pure Gas, Inc. - resulting from the tax return for the period January 1 - June 24, 2018, filed in April 2019.

The consolidated net profit for the first half of 2020 amounted to 438 thousand euro (0.5% of consolidated revenues) compared to a net profit of 9,140 thousand euro for the first half of 2019 (10.3% of consolidated revenues). In addition to the above-mentioned extraordinary items9, the decrease is mainly due to the decrease in fair value of the securities in the portfolio.

Note that the negative effect on the value of securities (mainly due to the net loss of the first quarter of 2020) was partly reabsorbed in the second quarter and this allowed the half year to close with a slight profit.

Financial position - Investments - Other information

A breakdown of the items making up the consolidated net financial position is provided below.

9 Costs for COVID-19 donations of 689 thousand euro in the first half of 2020 and the capital gain from a related party for 2,267 thousand euro in the corresponding period of 2019.

27

(thousands of euro)
	June 30,	March 31,	December 31,
	2020	2020	2019
Cash on hands	11	10	11
Cash equivalents	31,212	45,941	48,623
Cash and cash equivalents	31,223	45,951	48,634
Related parties current financial assets	1	0	1
Securities - short term	70,125	67,767	70,779
Current financial assets	70,126	67,767	70,780
Bank overdraft	(27,066)	(27,282)	(27,195)
Current portion of long term debt	(5,237)	(5,629)	(5,365)
Derivative instruments evaluated at fair value	(40)	(47)	(50)
Other current financial liabilities	(1,679)	(1,889)	(900)
Current financial liabilities for leases	(1,771)	(1,882)	(1,876)
Current financial liabilities	(35,793)	(36,729)	(35,386)
Current net financial position	65,556	76,989	84,028
Related parties non current financial assets	49	49	49
Securities - long term	130,236	128,129	134,673
Non current financial assets	130,285	128,178	134,722
Long term debt, net of current portion	(98,125)	(99,933)	(100,724)
Non current financial liabilities for leases	(2,072)	(2,436)	(2,710)
Non current financial liabilities	(100,197)	(102,369)	(103,434)
Non current net financial position	30,088	25,809	31,288
Net financial position	95,644	102,798	115,316

The consolidated net financial position at June 30, 2020 was a positive amount of 95,644 thousand euro (cash equal to 31,223 thousand euro, securities portfolio of 200,361 thousand euro and net financial liabilities of -135,940 thousand euro) compared to a net financial position of +115,316 thousand euro as at December 31, 2019 (cash equal to 48,634 thousand euro, securities of 205,452 thousand euro and net financial liabilities of -138,770 thousand euro).

Compared to December 31, 2019, the decrease in the net financial position (-19,672 thousand euro) was attributable to the previously mentioned write-downof securitiesin the portfolio (-6,476 thousand euro), investments in intangible assets, property, plant and equipment(-6,933 thousand euro) and to the outlay for dividendspaid at the end of April 2020 (-9,198 thousand euro).

Self-financingin the first half of the year was almost completely absorbed by the increase in net working capital.In particular, note the increase in inventory in the Nitinol segment, due to the effect of inventories associated with completion of the new tubes department at Memry Corporation's Bethel (CT) facility and to advance purchase orders of raw materials and semi-finished goods to avoid potential supply delays caused by COVID-19. Similar fluctuations were also seen in procurement for the security and defense sector, with higher stocks of palladium. Lastly, note the increase in inventory also in the Specialty Chemicals Division, ready for orders in the second half of the year. As regards net working capital, in addition to the increase in inventory, also note the decrease in trade payables of the Parent Company and Memry Corporation, which at December 31, 2019, included amounts due for investments in new production lines (lacquering systems and other machinery for the packaging department, as well as drawing equipment for SMA wires).

Lastly, note under investment activitiesthe gains from securities (+1,292 thousand euro), net of management fees paid during the first half of the year (-122 thousand euro) and, among financing activities, financial debt for new leases signed in the period (including accrued interest) amounting to - 371 thousand euro.

The exchange rate impactwas immaterial (-77 thousand euro, mainly due to the effect of the lower value of the renminbi as at June 30, 2020, compared to the end of 2019, on cash and cash equivalents in this currency held by the Chinese subsidiary SAES Getters (Nanjing) Co., Ltd.).

The chart below shows the quarterly trend of the net financial position during the last three years.

28

Quarterly Net Financial Position

(thousands of euro)

280.000

240.000

200.000

160.000

120.000

80.000

40.000

0 -40.000

248,988	234,646	224,095
	223,310	111,846	115,316
-16,699			105,008	102,798 95,644	NFP
-17,730					Average NFP (129,747)

2017-31-Dec

2018-31-Mar

2018-30-Jun

2018-30-Sep

2018-31-Dec

2019-31-Mar

2019-30-Jun

2019-30-Sep

2019-31-Dec

2020-31-Mar

2020-30-Jun

The worsening net financial position in the first quarter of 2020 (-12,518 thousand euro) is mainly due to the above-mentionedwrite-down of securities in the portfolio (-10,302 thousand euro). In the second quarter, despite the partial recovery in the fair value of securities (+3,826 thousand euro), the decrease in net cash (-7,154 thousand euro) is a consequence of the payment of dividends at the end of April 2020 (- 9,198 thousand euro).

Investments				Operating cash flow

(thousands of euro)

25.000				22,143
20.000
15.000		13,942
		10,525
10.000	6,662			13,181	6,827
5.000	7,253	7,157
	2,281
0			2,780
	1H 2018	2H 2018	1H 2019	2H 2019	1H 2020

The cash flow from operating activities was a positive +2,780 thousand euro in the first half of 2020, in line with the corresponding period of the previous year (+2,281 thousand euro). As with self-financing,the highest increase in net working capital (particularly the previously mentioned increase in inventory, especially in the Nitinol and Specialty Chemicals segments) was offset by lower taxes paid due to the deferral of payments in the USA as part of the business support measures implemented to overcome the COVID-19emergency.

In the first half of 2020 the cash outlay for investments in property, plant and equipment was equal to 6,827 thousand euro (10,525 thousand euro in the corresponding period of 2019); instead, the investments in intangible assets were not significant (106 thousand euro compared to 433 thousand euro as at June 30, 2019). Capex in the first half of 2020 includes investments related with the construction of a new department to manufacture pipes in Nitinol at the Bethel plant of Memry Corporation (a project started last year), as well as investments in expansion of the production capacity of a number of existing lines, again in the Nitinol business. Lastly, note that the Parent Company capex in the Avezzano plant to adapt the line for the production of advanced getters for the consumer electronics market, as well as for the purchase of new machines at the Lainate plant especially dedicated to the electronic devices business (a new sputtering machine), in the industrial SMA sector (a new SMA extruder) and in the vacuum systems sector (NEG coatings department). The higher value for investments in the first half of 2019 was mainly due to the purchase of the property, located in Bethel, where the Memry Corporation has its manufacturing headquarters (4,938 thousand euro, net of the deposit of 258 thousand euro paid at the end of 2018). Please refer to Notes no. 14 and no. 15 for further details on the capex.

29

There were no sales of fixed assets in the first half of 2020. In the corresponding period of 2019, however, note the payment collected for the sale to the joint venture Flexterra, Inc. of the OLET intellectual property developed by E.T.C. S.r.l. in liquidation (2,291 thousand euro) and other collections on asset disposals for 5 thousand euro.

The following chart shows the maturity profile at June 30, 2020 of the consolidated bank debt compared with December 31, 2019.

The debt maturing in 3 to 4 years (4 to 5 years as at December 31, 2019) refers mainly to the long-term loan signed in April 2019 with Mediobanca - Banca di Credito Finanziario S.p.A. to cover the outlay for the purchase of treasury shares (voluntary partial public tender offer finalized at the end of May 2019). This five-year loan is scheduled to be repaid on a lump-sum basis on the due date.

30

The breakdown of sales revenues and costs (cost of sales and operating expenses) by currency is provided below.

	% Breakdown of revenues		% Breakdown of costs
		by currency - 1st half 2020		by currency - 1st half 2020
				JPY						JPY
		RMB					RMB
						0.5%
2.8%	2.4%	0.6%			Other
EUR				EUR	0.3%
25.9%					45.7%

						USD
KRW		USD	52.6%
0.8%
68.1%		KRW
			0.3%

Performance of the Parent Company and its subsidiaries in the first half of 2020

SAES GETTERS S.p.A. - Lainate, MI & Avezzano, AQ (Italy)

In the first half of 2020, the Parent Company reported revenues of 31,500 thousand euro, up by 3,176 thousand euro (+11.2%) compared to the corresponding period of the previous year (28,325 thousand euro), driven by Security & Defense Business and by the higher sales of advanced getters for the consumer electronics market (Functional Dispensable Products Business) and only partly offset by lower SMA Industrial sales which were more strongly affected by the COVID-19 crisis.

The Parent Company closed the first half of the current year with net profit of 4,522 thousand euro, compared to 12,497 thousand euro in the corresponding period of the previous year. Despite the increase in sales and lower operating expenses (general reduction on the different cost types following the COVID-19 restrictions to protect public health, and lower commissions on sales of trained wire SMAs as a result of the above-mentioned decline in industrial SMA business, as well as zero severance10, only partly offset by higher consulting costs for corporate projects), net profit declined due to lower dividends received from affiliates and higher financial expenses (particularly expenses associated with the fair value measurement of the securities portfolio and higher bank charges and interest expense on long-term loans). Lastly, during the current half year, note the extraordinary expenses of 689 thousand euro in donations to front-line research organizations and hospitals battling against COVID.

SAES GETTERS/U.S.A., Inc., Colorado Springs, CO (USA)

SAES Getters/U.S.A., Inc. was established in mid-May 2018 as part of the legal and corporate reorganization project aimed at selling the purification business, which was completed at the end of June 2018. On June 15, 2018, SAES Getters/USA, Inc. acquired all the assets (including the 100% stake in Spectra-Mat,Inc.) and the liabilities of SAES Getters USA, Inc., not including the

10 0.3 million euro in severance costs in the first half of 2019, related to completion of the downsizing process of the Parent Company staff that began at the end of 2018 following the sale of the purification business.

31

investment in SAES Pure Gas, Inc. Following that transfer, SAES Getters USA, Inc. and its subsidiary SAES Pure Gas, Inc. were sold to Entegris, Inc. on June 25, 2018.

The company reported consolidated revenues equal to 14,710 thousand USD (13,348 thousand euro) in the first half of 2020, compared to 16,036 thousand USD (14,193 thousand euro) in the corresponding period of the previous year, and consolidated net profit of 2,640 thousand USD (2,396 thousand euro) compared to consolidated net profit of 3,208 thousand USD in the first half of 2019 (2,839 thousand euro).

Further notes are provided below.

The US parent company SAES Getters/U.S.A., Inc., which operates primarily in the Metallurgy Division, particularly in security and defense, recorded revenues of 10,596 thousand USD (9,615 thousand euro) compared to 10,905 thousand USD (9,652 thousand euro) in the first half of the previous year: this increase in the defense business in the USA was fully offset by the structural decline in the lamps segment.

The company ended the half year with a net profit of 2,640 thousand USD (2,396 thousand euro) compared to a net profit of 3,208 thousand USD (2,839 thousand euro) in the corresponding period of the previous year: the decrease, despite revenues remaining stable, was due to the lower gain from the measurement at equity of the investment in Spectra-Mat, Inc. and the fact that in the first half of 2019 the US parent company had received an insurance refund of around 0.2 million USD.

The subsidiary Spectra-Mat,Inc., Watsonville, CA (USA), operating in the Sintered Components for Electronic Devices & Lasers Business, achieved revenues of 4,114 thousand USD (3,733 thousand euro) in the first half of 2020, compared to the 5,131 thousand USD (4,542 thousand euro) in the corresponding period of the previous year, due to reduced sales of thermal dissipation devices in the semiconductor lasers sector (defense-related applications) which in the first half of 2019 benefited from stock adjustments.

The company ended the half year with a net profit of 545 thousand USD (495 thousand euro) compared to 929 thousand USD (822 thousand euro) at June 30, 2019, mainly due to the above- mentioned decrease in revenues and the related narrower economies of scale.

SAES GETTERS EXPORT Corp., Wilmington, DE (USA)

The company, which is owned directly by SAES Getters S.p.A., operates with the objective of managing the exports of all the US Group's companies.

In the first half of 2020, it achieved a net profit of 2,526 thousand USD (2,292 thousand euro), up by 16.8% when compared to the corresponding period of 2019 (2,162 thousand USD, equal to 1,914 thousand euro) due to the higher commissions received by all the US companies, particularly by the affiliate Memry Corporation, which recorded a drop in revenues in North America but a slight increase in sales in Asia, especially in Japan.

SAES GETTERS (NANJING) Co., Ltd., Nanjing (P.R. of China)

The company manages the commercial activities of the Group in the People's Republic of China. SAES Getters (Nanjing) Co., Ltd. closed the first half of 2020 with revenues equal to 21,283 thousand RMB (2,746 thousand euro), compared to 21,845 thousand RMB (2,849 thousand euro) at June 30, 2019. The decline in the Electronic Devices sector, penalized the heaviest by the COVID-19 pandemic, was only partly offset by the growth in almost all the other business segments.

The drop in sales was offset by higher gross profit due to the different sales mix, but the lower dividends received by SAES Getters International Luxembourg S.A. (in which SAES Getters (Nanjing) Co., Ltd. owns a 10% stake) caused the decrease in net profit (from 7,057 thousand RMB, or 920 thousand euro, to 2,830 thousand RMB, i.e. 365 thousand euro).

32

MEMRY GmbH in liquidation, Weil am Rhein (Germany)

The company, which manufactures and sells shape memory alloy components for medical and industrial applications in the European market, in October 2017, after transferring all the manufacturing and sales activities to other companies of the Group11, started the liquidation process, which is expected to be finalized by the end of the current financial period.

Memry GmbH closed the first half of 2020 with a loss of -22 thousand euro (-37 thousand euro at June 30, 2019) due to certain residual costs - mainly consulting - in preparation for the liquidation.

SAES NITINOL S.r.l., Lainate, MI (Italy)

The company, 100% owned by SAES Getters S.p.A., has as its business purpose the design, production and sale of shape memory alloy instruments and actuators, getters and any other equipment for the creation of high vacuum, either directly or by means of interests and investments in other companies. In order to achieve its corporate purpose, on July 5, 2011, the company established the joint venture Actuator Solutions GmbH, together with the German group Alfmeier Präzision (for further details on the joint venture, please refer to the Notes no. 8 and no. 17 of the Interim condensed consolidated financial statements).

SAES Nitinol S.r.l. ended the first half of 2020 with a loss of -73 thousand euro, essentially in line with the -112 thousand euro loss at June 30, 2019, following the write-down in both years of the receivable corresponding to interest income accrued in the period on loans granted to Actuator Solutions GmbH (a write-off of -239 thousand euro in the first half of 2020 and -238 thousand euro as at June 30, 2019), fully written-off because it is considered to be non-recoverable (for further details on the loans granted to the joint venture, please refer to Note no. 21).

Lastly, note that on March 12, 2020, SAES Getters S.p.A. resolved a capital payment of 800 thousand euro in favour of SAES Nitinol S.r.l., aimed at covering the losses recognized during 2019 and establishing a cash reserve of 21 thousand euro.

E.T.C. S.r.l. in liquidation, Lainate, MI (Italy)

The company, a spin-off supported by the National Research Council (CNR), operated between 2010 and 2017 exclusively as a research centre to develop functional materials for applications in the Organic Electronics and in the Organic Photonics, as well as in the development of integrated organic photonic devices for niche applications. Following a review of the company's growth prospects and the suspension of the OLET (Organic Light Emitting Diodes) research project, on November 16, 2017, the Shareholders' Meeting of E.T.C. S.r.l. resolved to wind up the company in advance and place it in liquidation.

E.T.C. S.r.l. ended the first half of 2020 with a net profit of 12 thousand euro, compared to profit of 2,163 thousand euro in the corresponding period of the previous year. The decrease is due to the fact that as at June 30, 2019, the result mainly comprised the capital gain generated by the sale of the intellectual property developed in the OLET area to the joint venture Flexterra, Inc. (as no patents were included among balance sheet assets, the gain coincided with the sale price).

As reported in the paragraph "Subsequent events", note that on July 12, 2020 the cancellation of the liquidation status of E.T.C. S.r.l. became effective, as resolved by the Shareholders' Meeting of April 15, 2020. On that date, the company name was changed from E.T.C. S.r.l. into SAES Innovative Packaging S.r.l. and its corporate purpose modified to allow the company to directly or indirectly take on investments or shareholdings in the packaging sector and to scout for new technologies in that sector.

SAES COATED FILMS S.p.A. (formerly Metalvuoto S.p.A.) - Roncello, MB & Lainate12, MI (Italy)

1. Memry Corporation, SAES Smart Materials, Inc. and SAES Getters S.p.A. (Avezzano plant).
2. On June 1, 2018, SAES Coated Films S.p.A. opened a unit at Lainate, at the premises of the Parent Company.

33

SAES Coated Films S.p.A. (formerly Metalvuoto S.p.A.), based in the province of Monza Brianza, is a well-established player in the field of advanced packaging, producing metallised and innovative plastic films for food preservation. SAES Coated Films S.p.A. intends to compete in the "smart" food packaging sector, entering the market with a complete and innovative range of high- performance plastics, that are characterized by transparency, recyclability or compostability, and therefore with a low environmental impact.

In the first half of 2020, SAES Coated Films S.p.A. achieved revenues of 5,032 thousand euro compared to 5,015 thousand euro in the corresponding period of 2019. Though with a different breakdown including a prevalence of lacquered products rather than metallized, the revenues were essentially in line, confirming the repositioning strategy for the higher added value product mix.

The current half year closed with a loss of -748 thousand euro, more limited than the -1,250 thousand euro as at June 30, 2019. The increase in the gross profit margin, aided by the stronger impact from sales of lacquered products, and lower costs for services provided by the Parent Company and charged back to SAES Coated Films S.p.A. allowed the half year to close with a loss that was almost halved (-40.2%).

SAES INVESTMENTS S.A., Luxembourg (Luxembourg)

SAES Investments S.A., with registered office in Luxembourg, fully controlled by SAES Getters S.p.A., was established on October 23, 2018, and its purpose is to manage Group cash from the sale of the purification business with the goal of maintaining the capital in view of potential future commitments.

The company closed the first half of 2020 with a loss of -3,725 thousand, compared to profit of +2,310 thousand euro in the corresponding period of 2019. The decrease is mainly due to the reduction in fair value of SAES Investments S.A. securities caused by the COVID-19 financial crisis.

SAES GETTERS INTERNATIONAL LUXEMBOURG S.A., Luxembourg (Luxembourg)

The main objectives of SAES Getters International Luxembourg S.A. are the management and the acquisition of investments, the optimal cash management, the grant of intra-group loans and the coordination of the Group services.

At June 30, 2020, the company recorded a net loss of -82 thousand euro, compared with the net loss of -27 thousand euro in the corresponding period of the previous year. The smaller loss at June 30, 2019 was the result of interest income on the interest-bearing intercompany loan granted to SAES Getters S.p.A., which was repaid by the Parent Company in April 2019 to provide SAES Getters International Luxembourg S.A. the funds necessary to distribute dividends.

Some notes on the performance of the subsidiaries of SAES Getters International Luxembourg S.A. are provided below.

SAES Getters Korea Corporation, Seoul (South Korea) is 62.52% owned by SAES Getters International Luxembourg S.A., while the remainder of share capital is held directly by the Parent Company SAES Getters S.p.A. The company sold its production activities during 2011 and operates as the Korean distributor of products made by other Group companies.

In the first half of 2020 the company recorded revenues equal to 957 million KRW (720 thousand euro), up (+55%) compared to 617 million KRW (477 thousand euro) in the corresponding period of 2019, due to the higher sales in the field of security and defense. The period ended with a loss of -177 million KRW (-133 thousand euro) in line with the loss of -192 million KRW (-148 thousand euro) at June 30, 2019. The increase in sales, in fact, was completely offset by the different sales mix, with a penalizing effect on gross margins.

SAES Smart Materials, Inc., based in New Hartford, NY (USA), active in the development, production and sale of Nitinol semi-finished products, recorded revenues equal to 12,372 thousand USD (11,227 thousand euro) in the half-year period, up 11.1% on the figure of 11,134 thousand USD (9,854 thousand euro) in the corresponding period of the previous year, mainly for the medical

34

market. Thanks to the increase in sales and their more favourable mix, despite higher export commissions paid to the affiliate SAES Getters Export, Corp. and increased development costs, the period ended with a net profit of 3,216 thousand USD (2,918 thousand euro), up by 3.5% compared to 3,106 thousand USD (2,749 thousand euro) in the first half of 2019.

Memry Corporation, Bethel, CT (USA), is a technological leader in the new generation medical devices with high engineering value sector, made of Nitinol shape memory alloy.

The company achieved sales equal to 38,233 thousand USD (34,694 thousand euro) in the first half of 2020, compared to 41,940 thousand USD (37,121 thousand euro) in the corresponding period of the previous year: the decline (-8.8%) was mainly concentrated on one major US customer due to its high stock levels from prior to the pandemic. Note also that from the second half of the period, the demand slowed for medical devices due to hospitals' suspension of elective surgeries in order to focus resources on COVID-19 cases.

As a result of declining sales and a reduced gross profit margin, also penalized by production costs for the project, still in progress, to construct a new tubes department in Bethel, the net profit was 4,691 thousand USD (4,257 thousand euro), compared to profit of 6,233 thousand USD (5,517 thousand euro) in the first half of 2019.

Performance of the joint ventures in the first half of 2020

ACTUATOR SOLUTIONS GmbH, Gunzenhausen (Germany)

Actuator Solutions GmbH is based in Gunzenhausen (Germany) and is 50% jointly owned by SAES and Alfmeier Präzision, a German group operating in the fields of electronics and advanced plastic materials. This joint venture, which in turn consolidates its wholly owned subsidiaries Actuator Solutions Taiwan Co., Ltd. and Actuator Solutions (Shenzhen) Co., Ltd., both already in liquidation at the end of 2019, is focused on the development, production and commercialization of actuators using shape memory alloys in place of the engine. For both the Asian subsidiaries, the liquidation procedure is expected to be completed by the end of 2020.

Actuator Solutions recorded net revenues of 7,880 thousand euro in the first half of 2020, down by 28.2% compared to 10,976 thousand euro in the first half of 2019. The slowdown in the automotive sector that began last year slowed further in the first half of 2020 due to the COVID-19 crisis, which had a negative impact on end market sales and caused uncertainty in the supply chain, especially in China.

Note, however, that the pandemic has also opened an opportunity for Actuator Solutions in the medical market. Against a development, assembly and sales contract for rapid COVID-19 diagnostic test devices, revenues were recorded for a total of around 1 million euro in the first half of 2020.

The net profit for the first half of the year was 717 thousand euro, compared to a loss of 750 thousand in the first half of 2019. Despite the decline in sales, profit margins improved strongly, mainly thanks to income on engineering contracts signed with third parties, characterized by higher margins, and the decrease in operating expenses after the two Asian subsidiaries were placed in liquidation. Lastly, note that the loss as at June 30, 2019 included the extraordinary charges of around 0.4 million euro for a computer fraud suffered in the first part of the year by the German parent company.

35

(thousands of euro)
Actuator Solutions	1st Half 2020	1st Half 2019
	100%	100%
Total net sales	7,880	10,976
Cost of sales	(5,725)	(8,944)
Gross profit	2,155	2,032
% on net sales	27.3%	18.5%
Total operating expenses	(1,290)	(2,094)
Other income (expenses), net	164	(342)
Operating income (loss)	1,029	(404)
% on net sales	13.1%	-3.7%
Interests and other financial income, net	(304)	(294)
Foreign exchange gains (losses), net	(23)	(50)
Income taxes	15	(2)
Net income (loss)	717	(750)

The SAES Group's share of the joint venture's result for the first half of 2020 was +358 thousand euro (-375 thousand euro in the first half of 2019), but was not recorded by the Group as the equity of the joint venture is still negative for around 2.6 million euro13, against a SAES equity interest in Actuator Solutions that has already been full written off. It should also be remembered that, as at December 31, 2019, a provision for risks of 600 thousand euro was allocated, equal to the pro-rata financial resources necessary for Actuator Solutions to continue its operations over the next twenty-four months, in light of the update to the five-year plan of February 18, 2020.

Lastly, note that in the first half of 2020 the financial receivable related to the interest accrued in the period on interest-bearing loans granted by SAES Nitinol S.r.l. to the joint venture in previous years, amounting to 239 thousand euro, was written down as it was considered unlikely to be recovered.

SAES RIAL VACUUM S.r.l., Parma, PR (Italy)

SAES RIAL Vacuum S.r.l., established at the end of 2015, is jointly controlled by SAES Getters S.p.A. (49%) and Rodofil S.r.l. (51%). The company is specialized in the design and manufacture of vacuum chambers for accelerators, synchrotrons and colliders and combines at the highest level the competences of SAES in the field of materials, vacuum applications and innovation, with the experience of Rodofil in the design, assembling and fine mechanical productions, with the aim of offering absolutely excellent quality solutions and of successfully competing in the international markets.

SAES RIAL Vacuum S.r.l. ended the first half of 2020 with revenues of 1,772 thousand euro, up by 50.3% compared to 1,179 thousand euro in the corresponding period of 2019. After a first quarter strongly penalized by delays in certain major research projects, also due to the COVID-19 pandemic, in recent months revenues increased, returning to the ongoing levels originally forecast. Despite the increase in revenues, the half year recorded a gross profit margin and operating profit in line with the previous year, closing with a slight net profit of +48 thousand euro compared to +29 thousand euro at June 30, 2019.

13 Consolidated pro rata at 50%.

36

(thousands of euro)
SAES RIAL Vacuum S.r.l.	1st Half 2020	1st Half 2019
	100%	100%
Total net sales	1,772	1,179
Cost of sales	(1,459)	(972)
Gross profit	313	207
% on net sales	17.7%	17.6%
Total operating expenses	(260)	(193)
Other income (expenses), net	23	38
Operating income (loss)	76	52
% on net sales	4.3%	4.4%
Interests and other financial income, net	(14)	(14)
Foreign exchange gains (losses), net	0	0
Income taxes	(14)	(9)
Net income (loss)	48	29

The share of the SAES Group in the joint venture's results in the first half of 2020 amounted to +23 thousand euro (+15 thousand euro in the first half of 2019).

FLEXTERRA, Inc., Skokie, IL (USA)

Flexterra, Inc. based in Skokie (close to Chicago, Illinois, USA), was established at the end of 2016 as a start up with the purpose of the design, manufacturing and sale of materials and components for the manufacture of flexible displays.

Flexterra, Inc. owns 100% of Flexterra Taiwan Co., Ltd.

SAES holds 46.73% of the capital stock of the joint venture Flexterra, Inc.

In 2019 the Flexterra project had made strong progress, although with some delays compared to initial forecasts. In particular, the joint venture continued to develop its organic materials and its formulations were qualified by an important Taiwanese producer of OTFT (Organic Thin Film Transistors). The activities to industrialize OTFTs is at an advanced stage and, although it has taken longer than initial estimates, also because of the recent COVID-19 crisis, it should be completed after summer 2020, while the start of actual production and sales activities by Flexterra is expected by the end of the year.

Flexterra, which is classified as a joint venture, ended the first half of 2020 with a net loss of -2,022 thousand euro, essentially in line with a net loss of -2,266 thousand euro in the corresponding period of 2019 (mainly costs for employees engaged in research and general and administrative activities, costs related to the management of patents and the amortization of intangible assets, including intellectual property).

37

(thousands of euro)
Flexterra	1st Half 2020	1st Half 2019
	100%	100%
Total net sales	50	12
Cost of sales	(27)	(3)
Gross profit	23	9
% on net sales	46.0%	75.0%
Total operating expenses	(2,132)	(2,257)
Other income (expenses), net	1	(1)
Operating income (loss)	(2,108)	(2,249)
% on net sales	n.a.	n.a.
Interests and other financial income, net	(9)	2
Foreign exchange gains (losses), net	74	(42)
Income taxes	21	23
Net income (loss)	(2,022)	(2,266)

The SAES Group's share in the result of the joint venture in the first half of 2020 amounted to a loss of -945 thousand euro (a loss of -1,058 thousand euro at June 30, 2019).

The following table shows the total Group's profit (loss), obtained by incorporating the Group's joint ventures14 with the proportional method instead of the equity method.

					1st half 2020
(thousands of euro)	Consolidated profit		50% Actuator	Intercoy	49% SAES RIAL	Intercoy	46,73%	Intercoy	Total profit or loss
		eliminations &	eliminations &
		eliminations &
	or loss		Solutions	Vacuum S.r.l.	other	Flexterra	other	of the Group
		other adjustments
					adjustments		adjustments
Total net sales	89,099		3,940	(144)	868	(264)	23		93,522
Cost of sales	(50,876)		(2,863)	144	(715)	264	(13)		(54,059)
			1,077	0	153	0	10		39,463
Gross profit	38,223
% on net sales	42.9%								42.2%
Total operating expenses	(26,326)		(645)	0	(127)	0	(996)	38	(28,056)
Other income (expenses), net	(754)		82		11		0		(661)
			514	0	37	0	(986)	38	10,746
Operating income (loss)	11,143
% on net sales	12.5%								11.5%
Interest and other financial income, net	(6,460)		(152)	120	(7)	0	(4)	0	(6,504)
Income (loss) from equity method evalueted	(884)			0		(23)		907	0
companies
Write-downs of investements from equity	0			0				0	0
method evalueted companies
Foreign exchange gains (losses), net	(29)		(12)		0		35		(6)
			350	120	30	(23)	(955)	945	4,237
Income (loss) before taxes	3,770
			8		(7)		10		(3,321)
Income taxes	(3,332)
			358	120	23	(23)	(945)	945	916
Net income (loss) from continued operations	438
			0		0		0		0
Income (loss) from discontinued operations	0
Net income (loss) of the period	438		358	120	23	(23)	(945)	945	916
Net income (loss) pertaining to minority interest	0								0
Net income (loss) pertaining to the Group	438		358	120	23	(23)	(945)	945	916

Research, Development and Innovation activity

Research and development expenses amounted to a total of 5,283 thousand euro (5.9% of consolidated net revenues) in the first half of 2020 and they were substantially aligned in absolute and percentage of revenues terms to those of the corresponding period of 2019 (5,524 thousand euro, 6.2% of consolidated revenues).

The Group Research Labs activities continued the development of innovative systems to support the continuous growth of SAES Group technology platforms. The COVID-19 emergency has slowed a number of development projects, mainly due to delays in the supply of laboratory materials and

14 Actuator Solutions (50%), SAES RIAL Vacuum S.r.l. (49%) and Flexterra (46.73%).

38

components, but the use of digital platforms and smart working methods, together with the focus on high priority activities, have in any event allowed major results to be achieved in line with predefined timelines.

For the chemical (organic) materials, the scale-up was defined of a new chemical process for producing organic capsules and spheres that use materials of a different nature, prevalently 'bio'. This facility will sustain the development of core-shell structures able to introduce new functions to various industrial applications and to replace materials with a high environmental impact. The construction of this facility will be completed in September 2020 at the corporate research laboratories in Lainate, and will allow preproduction of spheres with barriers against oxygen, fundamental to the industrialization of new coatings.

As regards the other innovative capsules, functional tests have been completed to verify the efficacy of anti-oxidant systems in food packaging applications and the significant power to block oxidation mechanisms has been confirmed. Action continues for the filing of a new patent claim to guarantee the use of these capsules in different flexible packaging applications and, in parallel, a scale-up plan is being defined to allow use of these systems in the development of new coatings at the SAES Coated Films S.p.A. production facilities.

Again in the area of innovative coatings, development is in progress of functional materials, to be applied directly on paper substrates, capable of imparting new barrier properties and, at the same time, maintaining the paper's recyclable characteristics. Active partnership activity has been finalized in the production of paper substrates, to guarantee the availability of support means with suitable characteristics for the direct application of functional coatings.

With regard to new functional materials, development continues of innovative zeolites capable of ensuring different functions, from controlled release to the ability to coordinate/interact with different active molecules and block specific processes. This platform ensures extensive development flexibility and integration options in various packaging structures in operation.

In parallel with the development of new organic systems, the development of new dispensable getters also continued, based on integrating functional materials into organic polymer matrices with a new internal formulation. A new dispensable product, able to guarantee the absorption of hydrogen and water vapour, is currently at qualification stage for application in optoelectronic devices, whilst systems with new functions are being finalized for photonic device packaging, in order to ensure protection against various contaminants (volatile substances, damp, hydrogen).

Lastly, note that installation is almost complete of a roll-to-rollpilot line, delayed in recent months by the COVID-19 emergency due to restricted movement from other European countries. This line will allow the adoption of various wet deposition technologies for the construction of innovative flexible structures based on a combination of new SAES functional lacquers and different types of polymeric substrates, operating under the same operating conditions as an industrial line, but on a smaller scale. The line is one of the most advanced tools available in Europe for prototyping in the flexible packaging sector.

Product development activities of SAES Coated Films S.p.A. focus on consolidation of the Coathink® technology, able to transfer oxygen and damp barrier properties to compostable packaging, making them usable for long-life food products. Coathink is a water-based coating technology that enables the creation of active packaging and/or barrier, designed for the circular economy.

It is in this field that the new compostable packaging adopted by Colussi was fine-tuned for a new Misura product range, obtained through a pioneer innovation process that saw SAES Coated Films S.p.A. in active partnership with other Italian experts in this sphere, such as Novamont, TicinoPlast, Sacchital and IMA.

The Flexterra joint venture continued to develop its semiconductor and dielectric organic materials, and its formulations based on specific instructions from a major Taiwanese producer of OTFTs (Organic Thin Film Transistors) are nearing completion of the optimization process. Activities to industrialize these devices began a few months ago and should be completed by the end of 2020, and which will be followed by marketing activities.

39

In the metallurgy business, development activities continued on the new high-temperatureshape memory alloys. This feature will allow the adopted of SAES alloys in new application areas, particularly the industrial sector (4G-5G signal boosters). The recently developed skills have allowed successful hot- drawn testing (outsourced) and subsequent cold-drawn testing, obtaining wires of a different diameter (<300 microns). These systems are currently at functional characterization stage.

In parallel, new compositions have been identified for zero-hysteresisalloys in order to replace elements that can no longer be adopted for safety regulations. Today, development activities focus on two quaternary alloy systems capable of guaranteeing very low level hysteresis.

The activities carried out on SMA film confirmed the possibility of achieving shape memory-effectthin film systems. As regards the potential applications for these films as micro-actuators,in-depth study is in progress to verify the capacity of these systems to guarantee adequate functional targets compared to alternative technologies.

In the field of bio-absorbablematerials, activity is nearing completion which has allowed the development of know-how on a new class of metallic systems and led to two new patent claims being filed. Biodegradability tests are currently in progress with support from external partners.

Finally, all the basic research costs incurred by the Group are charged directly to the income statement in the period in which they are incurred, as they do not qualify for capitalization.

Impact of the COVID-19 pandemic on results as at June 30, 2020

The COVID-19 crisis that began in China at the beginning of the year and spread to Northern Italy from the second half of February, later extending to almost all corners of the globe, had an impact on SAES Group in several areas: economic, organizational, financial. This paragraph provides details of the impact, highlighting the main sectors of the SAES market where such effects were felt and the decisions adopted by the company.

In particular, after a first quarter that saw a limited impact from the COVID-19 crisis and was even aided by moving inventory associated with the emergency, the second quarter saw the gradual reabsorption of these changes in inventory, added to which was the slowing in certain sectors, particularly medical devices in Nitinol and Industrial SMAs: the first penalized by hospitals' suspension of elective surgeries in order to concentrate resources on COVID-19 cases; the second impacted by the negative effect of the pandemic on demand for high-end smartphone and in the automotive sector. Other segments where sales were negatively impacted by COVID-19 were vacuum pumps (lower sales to research centers and universities, which slowed their operations during the lockdown) and thermal insulation (in particular the slowing demand for vacuum bottles and insulated pipes for oil industry applications).

Vice versa, COVID-19 aided the growth in revenues in the segments for electronic devices (sales driven by demand for thermoscanners) and medical diagnostics (increase in demand in the image diagnostics sector).

As precautionary containment of the COVID-19 epidemic, the Lainate offices of the Parent Company and the Roncello facility of SAES Coated Films S.p.A. were closed from the afternoon of February 24 to February 28, 2020, also in order to arrange the necessary risk containment measures and to draw up the COVID-19 operations protocol. Later, the two facilities returned to operations, whereas the other Group production plants in Italy and abroad had remained operative, complying with all regulatory provisions in force to guarantee workplace safety and, where possible, encouraging recourse to smart working.

Also note that, on March 26, 2020, the Group reached an agreement with the trade union representatives regarding the use, for nine weeks from March 30, 2020, of the social shock absorbers envisaged in the

40

"Cura Italia" Decree, DPCM of March 17, 2020 (CIGO furlough scheme) for a number of employees at the Lainate facility, with salary integration 40% supported by the company.

Lastly, on May 14, 2020, an understanding was reached with the trade unions for the gradual return to work of employees at the Lainate operating unit (150 presences per day at Lainate in June and July, alternating shifts with smart working). All employees returned to work, however, from the beginning of August, unless other emergency regulations are issued and in a matter compatible with the pandemic situation.

Due to the pandemic, the Group incurred extraordinary expenses of around 310 thousand euro. In particular, these were costs for sanitization and adaptation of access points and work spaces to ensure employee safety, as well as healthcare and prevention expenses and consulting and training costs. Vice versa, the saving resulting from recourse to the CIGO furlough scheme at the Lainate facility was 55 thousand euro, whilst for the US affiliates the support measures implemented by the US Government for businesses and households, partial reimbursement of missed working days caused by COVID-19, allowed a decrease in labour costs amounting to 167 thousand euro.

(thousands of euro)			1st half 2020
One-offCovid-19	Direct labour	Manufacturing	Research &	Selling	General &
development	administrative	Total
overhead	expenses
		expenses	expenses
Personnel cost	(101)	(53)	(44)	(11)	47	(162)	(*)
Maintenance and repairs					30	30
Various materials					103	103
Transports					3	3
Consultant fees and legal expenses					73	73
General services (canteen, cleaning, vigilance, etc.)					38	38
Training					3	3
Total cost of sales & operating expenses one-offCovid-19	(101)	(53)	(44)	(11)	297	88

(*) The amount is composed by:

- CIGO savings in the Lainate plant of the Parent Company, equal to -55 thousands of euro;

- savings for the US governmental misures to support companies and families, equal to -167 thousands of euro; - additional personnel costs, equal to +60 thousands of euro.

Lastly, note that in the first half of the year the SAES Group made donations for a total of 689 thousand euro to research organizations and hospitals operating on the front line in the battle against COVID-19, as well as to the Italian Civil Defense (the related costs are classified under "Other expenses").

(thousands of euro)

One-offCovid-19	1st half 2020
Other income	0
Other expenses	(689)
Total other income (expenses) one-offCovid-19	(689)

The impact of COVID-19 on the financial markets has led to a strong reduction in the fair value of securities held by the Group for investment in liquidity. The negative impact in the first quarter was partly reabsorbed in the second quarter, returning the value of securities as at June 30, 2020 to a level corresponding to the initial investment (i.e. around 200 million euro).

As regards the calculation of any impairment losses on non-currentassets, normally only conducted in complete form for preparation of the annual report, pursuant to paragraphs 9 and 12 of IAS 36 the Directors have assessed the effects of the COVID-19 pandemic as an impairment indicator and, therefore, property, plant and equipment, intangible assets (including goodwill) and rights of use on leased assets, as well as investments accounted for using the equity method were impairment tested as at June 30, 2020. For details of the tests conducted please refer to Notes no. 15 and no. 17. These tests did not reveal any need for write-downs.

As a result of the global economic and financial crisis caused by the COVID-19 pandemic, Management also considered it appropriate to carry out additional tests for potential impairment of inventories of raw materials, semi-finishedgoods and finished products, as well as trade receivables considered no

41

longer recoverable due to solvency problems of end customers. These tests did not reveal significant adjustments to either the net value of closing inventory or of the trade receivables (please refer to Notes no. 23 and no. 24 for further details).

Subsequent events

On June 22, 2020, the Parent Company signed a seven-yearlease, effective from July 1, 2020, and renewable for a further seven years under the same terms, for the use of a property for office use in Milan, at Piazza Castello 13, to house the Corporate and Management functions. When fully operative, the annual lease payable is set at 350 thousand euro, reduced for the first two years of the lease to facilitate start up.

On July 12, 2020 the cancellation of the liquidation status of E.T.C. S.r.l. became effective, as resolved by the Shareholders' Meeting of April 15, 2020. On that same date, the company name was changed from E.T.C. S.r.l. into SAES Innovative Packaging S.r.l. and its corporate purpose modified to allow the company to directly or indirectly take on investments or shareholdings in the packaging sector and to scout for new technologies in that sector.

With reference to the investment finalized on June 23, 2020, in the EUREKA! venture capital fund (for further details of the investment, please refer to the paragraph "Main events in the half-year period"), on July 14, 2020, the sum of 118 thousand euro was paid as subscription fees and to cover set-up costs and management fees for the period July 1 - September 30, 2020. The initial investment, with related call for funds of around 164 million euro by SAES, is scheduled for the second half of September 2020.

On July 16, 2020, SAES Getters International Luxembourg S.A. signed a convertible loan with a value of 3 million US Dollars in favour of the joint venture Flexterra, Inc., to be repaid in cash at the end of a predefined one-year maturity or earlier, if certain significant events occur, including the liquidation of Flexterra and change of control. The loan will accrue interest at 8% per year. As well as by cash, the repayment can be in the form of equity if Flexterra should arrange a qualified capital stock increase for a value of at least 6 million USD before the maturity date. In this case, SAES Getters International Luxembourg S.A. will receive a number of new shares equal to the quota obtained by dividing the balance of the loan at the conversion date by a value of 80% of the price per share paid by other shareholders at the time of the capital increase.

On August 10, 2020, the relative majority shareholder S.G.G. Holding S.p.A. acquired 35,000 ordinary shares of SAES Getters S.p.A. on the market. As a result of this purchase, S.G.G. Holding S.p.A. now holds 34.44% of the total ordinary shares, against voting rights of 45.01%.

Note that the fair value of the Group's securities portfolio, consisting primarily of "Buy & Hold" assets, at today's date has increased by around 0.7% compared to the value at June 30, 2020.

Business outlook

In the next few months, we can expect to see a gradual recovery of the medical market towards the end of the year and a slower recovery of the SMA Industrial segment, with particular attention on the EUR-USD exchange rate trend. For the remaining part of the year, we expect to have two quarters similar to each other and in line with the second quarter of 2020, at average exchange rates equal to those of the first half.

42

Group's main risks and uncertainties

For the analysis of the Group's main risks and uncertainties and the priority mitigation actions to overcome these risks and uncertainties please refer to the 2019 Consolidated Financial Statements.

In particular, with reference to the financial risks, the main financial risks for the SAES Group are the following ones:

• Interest-raterisk, associated with the volatility of interest rates, which may influence the cost of the use of debt financing and the return of investments in cash and cash equivalents and the securities portfolio;
• Exchange rate risk, associated with the volatility of exchange rates, which may influence the related value of the Group's costs and revenues denominated in currencies different from the euro and may thus have an impact on the Group's net income or loss; also the amount of financial receivables/payables denominated in currencies other than the euro depends on the value of exchange rates, with potential effects both on the net income and on the net financial position;
• Commodity price risk, which may affect the Group's product margins if these changes are not charged to the price agreed upon with customers;
• Credit risk, associated with the solvency of customers and, in general, the ability to collect and measure financial receivables;
• Liquidity risk, associated with the Group's ability to raise funds to finance its operating activities, or with the capacity of the sources of funding if the Group were to adopt strategic decisions involving some extraordinary expenditure (such as merger & acquisition transactions or organizational

rationalization and restructuring activities).

Added to these risks are those brought about by the spread of COVID-19, which can result in a drop in revenues, higher inventory to offset potential supply interruptions and a slowing in credit collection times, with subsequent need to finance a stronger working capital.

Interest rate risk

The Group's financial debts, both short- and long-term ones, are mainly structured on a variable interest rate basis, therefore they are subject to the risk of interest rate fluctuations.

With regard to long-term financial debt, the exposure to interest rate fluctuation is handled by entering into Interest Rate Swap or Interest Rate Cap agreements, with a view to guaranteeing a level of financial expenditure which is sustainable by the SAES Group's financial structure. For details of the contracts as at June 30, 2020 please refer to Note no. 36.

The Group also constantly controls the interest rate trend for the possible signing of further contracts to hedge the risk linked to interest rate fluctuations on the variable interest loans for which no hedging contracts have been signed.

The funding for the working capital is managed through short-term financing transactions and, as a consequence, the Group does not hedge against the interest rate risk.

Exchange rate risk

The Group is exposed to the exchange rate risk on foreign commercial transactions.

Such exposure is mainly generated by sales in currencies other than the reference currency: during the first half of 2020 around 74.1% of the Group's sales and only around 54.3% of the Group's operating costs were denominated in a currency other than the euro.

In order to manage the economic impact generated by the fluctuations in exchange rates versus the euro, primarily of the US dollar and of the Japanese yen, the Group can sign hedging contracts, whose values are determined by the Board of Directors at the start of the year according to the net currency cash flows expected to be generated by SAES Getters S.p.A. The maturities of any hedging derivatives tend to coincide with the scheduled date of collection of the hedged transactions.

Moreover, the Group can occasionally hedge specific transactions in a currency other than the reference currency, to mitigate the effect on profits and losses of the exchange rate volatility, with reference to

43

financial receivables/payables, also inter-company ones, denominated in a currency different from the one used in the financial statements, including those relating to the cash pooling (executed by foreign subsidiaries, but denominated in euro).

Finally, the Group constantly monitors exchange rate trends in order to decide whether to enter into further risk hedging contracts linked to exchange rate fluctuations in the foreign currency takings from extraordinary company transactions or for funding needed to purchase in other currencies besides the euro.

As explained in greater detail in Note no. 36, no forward sales contracts on the US dollar or yen were signed in the first half of 2020.

Commodity price risk

The Group's exposure to commodity price risks is usually moderate. The procurement procedure requires the Group to have more than one supplier for each commodity deemed to be critical. In order to reduce its exposure to the risk of price variations, it enters into specific supply agreements aimed at controlling the commodity price volatility. The Group monitors the price trends of the main commodities subject to the greatest price volatility and does not exclude the possibility of undertaking hedging transactions using derivative instruments with the aim of neutralizing the price volatility of its commodities.

Credit risk

The Group deals predominantly with well-known and reliable customers. The Sales and Marketing Department assesses new customers' solvency and periodically checks to ensure that credit limit conditions are met. The balance of receivables is constantly monitored so as to minimize the risk of potential losses, particularly given the current difficult macroeconomic situation caused by the COVID-19 epidemic.

The credit risk associated with other financial assets, including cash and cash equivalents and securities in the portfolio, is not significant due to the nature of the counterparties. The bank deposits are held with leading Italian and international financial institutions. Also with reference to the securities portfolio, investments are never made directly, but instead with leading specialist financial operators, mainly with the aim of maintaining capital in view of potential future loans. In addition, the Administration Finance and Control Division carefully and constantly monitors investments and the value of resources invested, periodically reporting on these monitoring activities to the Board of Directors.

Liquidity risk

This risk can arise from the incapacity to obtain the necessary financial resources to grant the continuity of the Group's operations.

In order to minimize such risk, the Administration Finance and Control Division acts as follows:

• constantly monitors the Group's financial requirements in order to obtain credit lines necessary to meet such requirements;
• optimizes the liquidity management through a centralized management system of available liquidity (cash pooling) in euro which involves nearly all of the Group's companies;
• manages the correct balance between short-term financing and medium/long-term financing depending on the expected generation of operating cash flows.
  For further information about the Group's financial debt as at June 30, 2020 and about the maturity date of these debts please refer to Note no. 28.
  As at June 30, 2020, the Group was not significantly exposed to liquidity risk, also considering the availability of bank deposits and liquid securities, as well as taking account of the unused credit lines to which it has access.
  The liquidity risks, heightened by the COVID-19 pandemic, were mitigated through two new credit lines obtained in the current half year for an additional 60 million euro. For more details please see the "Main events in the half-year period" and Note no. 26.

Equity management

The objective pursued by the Group is to maintain a solid credit rating and adequate capital ratios in order to support operations and maximise the value for shareholders.

44

No changes were made to equity management objectives or policies during the first half of 2020. Some performance indicators, such as the debt-to-equity ratio, defined as net debt over equity, are periodically monitored with the aim of keeping them at low levels, and in any case lower than what is required by the contracts signed with the financial institutions.

Business continuity

The financial statements are prepared on going concern assumptions given that, despite a difficult economic and financial environment caused by the Covid-19 epidemic, there are no significant uncertainties (as defined in paragraph no. 25 of IAS 1 - Presentation of Financial Statements) regarding business continuity.

In the light of the performance in the first half of the year and the outlook for sales in the second half of 2020, the Group has lowered its year-end forecasts but does not consider it necessary to change the business plans to bring forward the normal year-end maturities, also in view of the difficulties in existing forecasts. The duration and extent of the future spread of the COVID-19pandemic and its related economic and financial effects remain difficult to forecast and are subject to constant ongoing monitoring by the Group. However, it should also be noted that SAES' global presence, in terms of both manufacturing and sales, and its positioning in businesses considered essential, most importantly medical devices and food packaging, reduce the risk. In addition, the positive Net Financial Position as at June 30, 2020, along with the availability of unused credit lines, constitute a further guarantee of business continuity.

Related party transactions

With regard to the Group's related party transactions, please note that they fall within ordinary operations and are settled at market or standard conditions.

Complete disclosure on related party transactions incurred during the half year is provided in Note no. 41 of the interim condensed consolidated financial statements.

Consob regulatory simplification process

On November 13, 2012, the Board of Directors approved, pursuant to article 3 of Consob Resolution no. 18079/2012, to adhere to the opt-out provisions as envisaged by article 70, paragraph 8, and article 71, paragraph 1-bis of the Consob Regulation related to Issuer Companies, and it therefore avails itself of the right of making exceptions to the obligations to publish information documents required in connection with significant mergers, spin-offs and capital increases by contributions in kind, acquisitions and disposals.

45

46

Interim Condensed Consolidated Financial Statements at June 30, 2020

47

48

Consolidated statement of profit or loss

	(thousands of euro)	Notes	1st Half 2020	1st Half 2019 (*)
	Total net sales		89,099	88,487
	3
	Cost of sales	4	(50,876)	(50,667)
	Gross profit		38,223	37,820
	Research & development expenses	5	(5,283)	(5,524)
	Selling expenses	5	(5,656)	(6,277)
	General & administrative expenses	5	(15,368)	(14,976)
	Write-down of trade receivables	5	(19)	25
	Total operating expenses		(26,326)	(26,752)
	Other income (expenses), net	6	(754)	2,344
	Operating income (loss)		11,143	13,412
	Interests and other financial income	7	1,604	3,587
	Interests and other financial expenses	7	(7,877)	(571)
	Write-down of financial receivables and other financial assets	7	(187)	(158)
	Share of result of investments accounted for using the equity method	8	(884)	(1,043)
	Foreign exchange gains (losses), net	9	(29)	(31)
	Income (loss) before taxes		3,770	15,196
	Income taxes	10	(3,332)	(6,232)
	Net income (loss) from continued operations		438	8,964
	Net income (loss) from discontinued operations	11	0	176
	Net income (loss) for the period		438	9,140
	Minority interests in consolidated subsidiaries		0	0
	Group net income (loss) for the period		438	9,140
	Net income (loss) per ordinary share	12	0.00000	0.42137
	- from continued operations		0.00000	0.41315
	- from discontinued operations		0.00000	0.00000
	Net income (loss) per savings share	12	0.05936	0.43800
	- from continued operations		0.05936	0.42978
	- from discontinued operations		0.00000	0.02385

Consolidated statement of other comprehensive income

	(thousands of euro)	Notes	1st Half 2020	1st Half 2019
	Net income (loss) for the period from continued operations		438	8,964
	Exchange differences on translation of foreign operations	28	205	520
	Exchange differences on equity method evaluated companies	28	13	79
	Total exchange differences		218	599
	Total components that will be reclassified to the profit (loss) in the future		218	599
	Other comprehensive income (loss), net of taxes - continued operations		218	599
	Total comprehensive income (loss), net of taxes - continued operations		656	9,563
	Net income (loss) for the period from discontinued operations		0	176
	Other comprehensive income (loss), net of taxes - discontinued operations		0	0
	Total comprehensive income (loss), net of taxes - discontinued operations		0	176
	Total comprehensive income (loss), net of taxes		656	9,739
	attributable to:
	- Equity holders of the Parent Company		656	9,739
	- Minority interests		0	0

(*) Some amounts shown in the column do not correspond to the 2019 Interim consolidated financial statements because they reflect the reclassifications to give evidence in the Consolidated statement of profit or loss of the write-downs of the financial assets, in accordance with IAS 1.

49

Consolidated statement of financial position

(thousands of euro)	Notes	June 30, 2020	December 31, 2019
ASSETS
Non current assets	14	74,141	70,893
Property, plant and equipment
Intangible assets	15	44,814	45,216
Right of use	16	3,880	4,617
Investments accounted for using the equity method	17	3,929	4,800
Securities in the portfolio	18	130,236	134,673
Deferred tax assets	19	8,911	9,126
Tax consolidation receivables from the Controlling Company	20	128	272
Financial receivables from related parties	21	49	49
Other long term assets	22	1,466	1,528
Total non current assets		267,554	271,174
Current assets	23	31,845	25,547
Inventory
Trade receivables	24	22,873	21,755
Other receivables, accrued income and prepaid expenses	25	4,418	4,677
Cash and cash equivalents	26	31,223	48,634
Financial receivables from related parties	21	1	1
Securities in the portfolio	18	70,125	70,779
Total current assets		160,485	171,393
Total assets
	428,039	442,567
EQUITY AND LIABILITIES
Capital stock		12,220	12,220
Share issue premium		25,724	25,724
Treasury shares		(93,382)	(93,382)
Legal reserve		2,444	2,444
Other reserves and retained earnings		284,238	273,599
Other components of equity		12,306	12,088
Net income (loss) of the period		438	19,837
Group shareholders' equity	27	243,988	252,530
Other reserves and retained eanings of third parties		0	0
Minority interests in consolidated subsidiaries	27	0	0
Total equity		243,988	252,530
Non current liabilities	28	98,125	100,724
Financial debts
Financial liabilities for leases	29	2,072	2,710
Deferred tax liabilities	19	8,848	8,670
Staff leaving indemnities and other employee benefits	31	10,480	9,516
Provisions for risks and charges	32	849	1,001
Total non current liabilities		120,374	122,621
Current liabilities	33	11,896	15,694
Trade payables
Other payables	34	10,017	9,868
Accrued income taxes	35	1,531	602
Provisions for risks and charges	32	3,457	5,368
Derivative financial instruments measured at fair value	36	40	50
Current portion of medium/long term financial debts	28	5,237	5,365
Financial liabilities for leases	29	1,771	1,876
Other financial debts to third parties	30	1,679	900
Bank overdrafts	37	27,066	27,195
Accrued expenses and deferred income	38	983	498
Total current liabilities		63,677	67,416
Total equity and liabilities
	428,039	442,567

50

Consolidated statement of financial position

(thousands of euro)		1st Half 2020			1st Half 2019
Cash flows from operating activities	438	8,964
Net income (loss) from continued operations
Net income (loss) from discontinued operations	0	176
Current income taxes	2,921	4,626
Changes in deferred income taxes	411	1,550
Depreciation of financial leased assets	1,035	662
Depreciation	3,525	3,298
Write-down (revaluation) of property, plant and equipment	115	1
Amortization	636	604
Write-down (revaluation) of intangible assets	0	0
Net loss (gain) on disposal of fixed assets	0			(2,272)
Net gain on purification business disposal	0	(176)
Interest and other financial (income) expenses, net	7,344	(1,815)
Write-down of trade receivables	19	(25)
Other non-monetary costs (revenues)	1			0
Accrual for termination indeminities and similar obligations		1,294	1,304
Accrual for investment provision for risks	(2,087)	(1,798)
Working capital adjustments	15,652	15,099
Cash increase (decrease)
Account receivables and other receivables	(1,541)	(2,987)
Inventory	(6,321)	(434)
Account payables	(3,798)	(1,659)
Other current payables		632	(1,895)
	(11,028)	(6,975)
Payment of termination indemnities and similar obligations	(335)	(248)
Interests and other financial payments	(477)	(122)
Interests and other financial receipts	62	62
Taxes paid	(1,094)	(5,535)
Net cash flows from operating activities	2,780	2,281
Cash flows from investing activities
Disbursements for acquisition of tangible assets	(6,827)	(10,525)
Proceeds from sale of tangible and intangible assets	0	5
Disbursements for acquisition of intangible assets	(106)	(433)
Sale of intellectual property to related parties	0	2,291
Purchase of securities, net of disinvestments		(1,431)	(100,466)
Income from securities, net of management fees		1,170	877
Consideration for the acquisition of minority interests in subsidiaries
Price paid for the acquisition of businesses
Advances paid for the purchase of investments	0	(1,100)
Consideration for the purification business disposal, net of the disposed
cash
Ancillary monetary charges for the purification business disposal
Adjustment on the consideration for the purification business disposal	0	(383)
Net cash flows from investing activities	(7,194)	(109,734)
Cash flows from financing activities
Proceeds from long term financial liabilities, current portion included	0	92,735
Proceeds from short term financial liabilities	758	(470)
Dividends payment	(9,198)	(16,580)
Repayment of financial liabilities	(2,739)	(2,732)
Interests paid on long term financial liabilities	(618)	(84)
Interests paid on short term financial liabilities	(21)	(15)
Other costs paid	(15)	(16)
Financial receivables repaid (granted) from related parties	0	0
Interests receipts on financial receivables from related parties	1	1
Other financial payables	21	17
Repayment of financial liabilities for leased assets	(1,042)	(676)
Interests paid on leased assets	(88)	(24)
Purchase of treasury shares and related accessory costs	0	(93,382)
Net cash flows from financing activities	(12,941)	(21,226)
Net foreign exchange differences		23			150
Net (decrease) increase in cash and cash equivalents	(17,332)	(128,529)
Cash and cash equivalents at the beginning of the period	48,521	170,395
Cash and cash equivalents at the end of the period	31,189	41,866

51

Consolidated statement of changes in equity as at June 30, 2020

	(thousands of euro)						Other components
							of equity
			Capital stock	Share issue premium	Treasury shares	Legal reserve	Currency conversion reserve	Currency conversion reserve from	discontinued operations	Other reserves and retained earnings	Net income (loss)	Group shareholders' equity	Minority interests	Total equity
	December 31, 2019		12,220	25,724	(93,382)	2,444	12,088		0	273,599	19,837	252,530	0	252,530
	Distribution of 2019 result									19,837	(19,837)	0		0
	Dividends paid									(9,198)		(9,198)		(9,198)
	Net income (loss)										438	438	0	438
	Other comprehensive income (loss)						218					218		218
	Total comprehensive income (loss)						218		0	0	438	656	0	656
	June 30, 2020		12,220	25,724	(93,382)	2,444	12,306		0	284,238	438	243,988	0	243,988
		Consolidated statement of changes in equity as at June 30, 2019
	(thousands of euro)						Other components
							of equity
			Capital stock	Share issue premium	Treasury shares	Legal reserve	Currency conversion reserve	Currency conversion reserve from	discontinued operations	Other reserves and retained earnings	Net income (loss)	Group shareholders' equity	Minority interests	Total equity
	December 31, 2018		12,220	25,724	0	2,444	10,289		0	58,210	232,333	341,220	0	341,220
	Distribution of 2018 result									232,333	(232,333)	0		0
	Dividends paid									(16,580)		(16,580)		(16,580)
	Purchase of treasury shares				(89,700)							(89,700)		(89,700)
	Accessory costs on the purchase of treasury
	shares				(3,682)							(3,682)		(3,682)
	Net income (loss)										9,140	9,140	0	9,140
	Other comprehensive income (loss)						599					599		599
	Total comprehensive income (loss)						599		0	0	9,140	9,739	0	9,739
	June 30, 2019		12,220	25,724	(93,382)	2,444	10,888		0	273,963	9,140	240,997	0	240,997

52

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

SAES Getters S.p.A., the Parent Company with headquarters in Lainate, and its subsidiaries (hereinafter "SAES Group") operate both in Italy and abroad in the development, manufacturing and marketing of getters and other components for applications where stringent vacuum conditions are required (electronic devices, lamps, vacuum systems and thermal insulation solutions). The Group also operates in the field of advanced materials, particularly in the business of shape memory alloys for both medical and industrial applications. Finally, SAES has recently developed a technological platform that integrates getter materials in a polymeric matrix that spans numerous fields of application (advanced packaging, OLED displays, implantable medical devices and new diagnostics for solid state images).

The preparation of the financial statements is in compliance with the historical cost criterion, except when specifically required by the applicable standards, as well as on the going concern assumption, given that, despite a difficult economic and financial environment caused by the COVID-19 pandemic, there aren't any significant uncertainties (as defined in paragraph no. 25 of IAS 1 - Presentation of Financial Statements) regarding the business continuity.

S.G.G. Holding S.p.A.15 is a relative majority shareholder16 and does not exercise any management and coordination activity towards SAES Getters S.p.A. pursuant to article 2497 of the Italian Civil Code (as specified in the 2019 Report of corporate governance and ownership).

The Board of Directors approved and authorized the publication of the 2020 interim condensed consolidated financial statements with the resolution passed on September 10, 2020.

The interim condensed consolidated financial statements of the SAES Group are presented in euro (rounded to the nearest thousand), which is the Group's functional currency.

Foreign subsidiaries are included in the consolidated financial statements according to the standards described in Note no. 2 "Accounting standards".

Accounting schedules

The presentation adopted is compliant with the provisions of Revised IAS 1, that provides for the consolidated statement of profit (loss) and of other comprehensive income (the Group elected to present two different statements) and a statement of consolidated financial position that includes only the details of operations on the Group's shareholders' equity, while changes in the minority interests are presented in a separate line.

Moreover, we report that:

• the consolidated statement of financial position has been prepared by classifying assets and liabilities as current or non-current and by stating "Assets held for sale" and "Liabilities held for sale" in two separate items, as required by IFRS 5;
• the consolidated statement of profit or loss has been prepared by classifying operating expenses by allocation, inasmuch this form of disclosure is considered more suitable to represent the Group's specific business, is compliant with the internal reporting procedures and in line with the standard industry practice;
• the consolidated cash flow statement has been prepared by stating cash flows provided by operating activities according to the "indirect method" as allowed by IAS 7.

1. Based in Milan at Via Vittor Pisani, 27.
2. As at June 30, 2020, S.G.G. Holding S.p.A. held 34.21% of the ordinary shares of SAES Getters S.p.A. and, taking account of the shares with increased voting rights, has 44.81% of the total voting rights that can be exercised on that date (including the voting rights of the treasury stock held by SAES Getters S.p.A. in the calculation).

53

In addition, as required by Consob resolution no. 15519 of July 27, 2006, income and expenses arising from non-recurring transactions or from events that do not recur frequently during the normal conduct of operations are specifically identified in the consolidated statement of profit or loss pursuant to allocation and the related details are provided in the consolidated explanatory notes.

Non-recurring events and transactions are identified primarily on the basis of the nature of the transactions. In particular, non-recurring income/expenses include cases that by their nature do not occur consistently in the course of normal operating activities. In further detail:

• income/expenses arising from the sale of real property;
• income/expenses arising from the sale of business divisions and equity investments;
• income/expenses arising from reorganization processes associated with extraordinary corporate transactions (mergers, de-mergers, acquisitions and other corporate transactions);
• income/expenses arising from discontinued businesses.

On the basis of Consob resolution no. 15519 of July 27, 2006, the amounts of positions or transactions with related parties have been highlighted separately from the related items in the Explanatory Notes to the consolidated interim financial statements.

Reclassification of the financial values at June 30, 2019

Some reclassifications were made for not significant amounts, without any effects on the net profits or equity, to highlight the write-downs of financial receivables and other financial assets in application of IAS 1 in the consolidated Statement of Profit or Loss.

Segment information

The Group's financial reporting is broken down into the following business segments:

• Metallurgy;
• Vacuum Technology;
• Medical;
• Specialty Chemicals;
• Advanced Packaging.

Starting from January 1, 2020, the Group is organized in the following technological competency areas (or "Divisions"):

• Metallurgy Division (which coincides with the previous Industrial operating sector, excluding Solutions for Vacuum Systems, Functional Chemical Systems and advanced getters for the consumer electronics market, the latter previously classified within the Electronic Devices Business);
• Vacuum Technology Division (which coincides with the Solutions for Vacuum Systems Business, included in the Industrial operating segment);
• Medical Division (unchanged);
• Specialty Chemicals Division (i.e. advanced getters for the consumer electronics market, classified within the Electronic Devices Business in the previous year, in addition to the Functional Chemical Systems segment and Flexterra business, the latter previously unallocated);
• Advanced Packaging Division (unchanged).

The amounts for the first half of 2019 were reclassified according to the new operating structure (see the table below), so they are comparable with the 2020 figures.

54

(thousands of euro)

Metallurgy

Vacuum Technology

Medical

Specialty Chemicals

Advanced Packaging

Not Allocated Costs

Total

Consolidated statement

(ex Industrial)

of profit or loss

1

st

half 2019

Reclass.

1st half 2019

1

st

half 2019

Reclass.

1st

half 2019

1

st

half 2019

Reclass.

1st half 2019

1

st

half 2019

Reclass.

1st half 2019

1

st

half 2019

Reclass.

1st

half 2019

1

st

half 2019

Reclass.

1st half 2019

1

st

half 2019

Reclass.

1st half 2019

reclassified

reclassified

reclassified

reclassified

reclassified

reclassified

reclassified

Total net sales		42,200	(8,983)	33,217		0	5,522	5,522	41,272	0	41,272	0	3,461	3,461	5,015	0	5,015	0	0	0	88,487	0	88,487
Cost of sales		(21,382)	5,371	(16,011)		0	(2,669)	(2,669)	(24,730)	0	(24,730)	0	(2,702)	(2,702)	(4,555)	0	(4,555)	0	0	0	(50,667)	0	(50,667)
Gross profit		20,818	(3,612)	17,206		0	2,853	2,853	16,542	0	16,542	0	759	759	460	0	460	0	0	0	37,820	0	37,820
% on net sales		49.3%		51.8%	n.a.			51.7%	40.1%		40.1%	n.a.	21.9%	21.9%	9.2%		9.2%	n.a.		n.a.	42.7%		42.7%
Total operating expenses		(8,374)	2,673	(5,701)		0	(1,997)	(1,997)	(4,556)	0	(4,556)	0	(668)	(668)	(1,709)	0	(1,709)	(12,113)	(8)	(12,121)	(26,752)	0	(26,752)
Other income (expenses), net		270	(103)	167		0	102	102	0	0	0	0	2,268	2,268	(30)	0	(30)	2,104	(2,267)	(163)	2,344	0	2,344
Operating income (loss)		12,714	(1,042)	11,672		0	958	958	11,986	0	11,986	0	2,359	2,359	(1,279)	0	(1,279)	(10,009)	(2,275)	(12,284)	13,412	0	13,412
% on net sales		30.1%		35.1%	n.a.			17.3%	29.0%		29.0%	n.a.	68.2%	68.2%	-25.5%		-25.5%	n.a.		n.a.	15.2%		15.2%
Interest and other financial income		(expenses), net																				3,016	0	3,016
Write-down of financial assets																					(158)	0	(158)
Gains (losses) from equity method evaluated companies																			(1,043)	0	(1,043)
Foreign exchange gains (losses), net																				(31)	0	(31)
Income (loss) before taxes																				15,196	0	15,196
Income taxes																				(6,232)	0	(6,232)
Net income (loss) from continued operations																			8,964	0	8,964
																									176
Net income (loss) from discontinued operations																			176	0
Net income (loss)																				9,140	0	9,140
Minority interests in consolidated subsidiaries																			0	0	0
Group net income (loss)																				9,140	0	9,140

Seasonality of revenues

Based on historical trends, the revenues of the different businesses are not characterized by significant seasonal circumstances.

Scope of consolidation

The following table shows the companies included in the scope of consolidation according to the full consolidation method as at June 30, 2020.

Company	Currency	Capital	% of Ownership
		Stock	Direct	Indirect
Directly-controlled subsidiaries:
SAES Getters USA, Inc.
Colorado Springs, CO (USA)	USD	33,000,000	100.00	-
SAES Getters (Nanjing) Co., Ltd.
Nanjing (P.R. of China)	USD	6,570,000	100.00	-
SAES Getters International Luxembourg S.A.
Luxembourg (Luxembourg)	EUR	34,791,813	90.00	10.00*
SAES Getters Export, Corp.
Wilmington, DE (USA)	USD	2,500	100.00	-
Memry GmbH in liquidation
Weil am Rhein (Germany)	EUR	330,000	100.00	-
E.T.C. S.r.l. in liquidation
Lainate, MI (Italy)	EUR	75,000	100.00	-
SAES Nitinol S.r.l.
Lainate, MI (Italy)	EUR	10,000	100.00	-
SAES Coated Films S.p.A.
Roncello, MB & Lainate, MI (Italy)	EUR	50,000	100.00	-
SAES Investments S.A.
Luxembourg (Luxembourg)	EUR	30,000,000	100.00	-
Indirectly-controlled subsidiaries:
Through SAES Getters/U.S.A., Inc.:
Spectra-Mat, Inc.
Watsonville, CA (USA)	USD	204,308	-	100.00
Through SAES Getters International Luxembourg S.A.:
SAES Getters Korea Corporation
Seoul (South Korea)	KRW	524,895,000	37.48	62.52
SAES Smart Materials, Inc.
New Hartford, NY (USA)	USD	17,500,000	-	100.00
Memry Corporation
Bethel, CT (USA) & Freiburg (Germany)	USD	30,000,000	-	100.00

* % of indirect ownership held by SAES Getters (Nanjing) Co., Ltd.

55

The following table shows the companies included in the scope of consolidation according to the equity method as at June 30, 2020.

Company	Currency	Capital	% of Ownership
		Stock	Direct	Indirect
Actuator Solutions GmbH
Gunzenhausen (Germany)	EUR	2,000,000	-	50.00*
Actuator Solutions Taiwan Co., Ltd. in liquidation
Taoyuan (Taiwan)	TWD	5,850,000	-	50.00**
Actuator Solutions (Shenzhen) Co., Ltd. in liquidation
Shenzhen (P.R. of China)	EUR	760,000	-	50.00***
SAES RIAL Vacuum S.r.l.
Parma, PR (Italy)	EUR	200,000	49.00	-
Flexterra, Inc.
Skokie, IL (USA)	USD	33,382,842	-	46.73****
Flexterra Taiwan Co., Ltd.
Zhubei City (Taiwan)	TWD	5,000,000	-	46.73*****

• % of indirect ownership held through SAES Nitinol S.r.l.
• • % of indirect ownership held through the joint venture Actuator Solutions GmbH (which holds a 100% interest in Actuator Solutions Taiwan Co., Ltd. in liquidation).
• % indirect ownership held through the joint venture Actuator Solutions GmbH (which holds a 100% interest in Actuator Solutions (Shenzhen) Co., Ltd. in liquidation).
• % of indirect ownership held through SAES Getters International Luxembourg S.A.
• % indirect ownership held through the joint venture Flexterra, Inc. (which holds a 100% interest in Flexterra Taiwan Co., Ltd.).

There were no changes in the scope of consolidation in the first half of 2020.

2. ACCOUNTING STANDARDS

Consolidation principles

Following the entry into force of the European Regulation no. 1606/2002, the SAES Group adopted the IAS/IFRS accounting standards starting from January 1, 2005.

The interim condensed consolidated financial statements for the six months ending June 30, 2020 have been prepared in accordance with the IFRSs issued by the International Accounting Standards Board ("IASB") and approved by the European Union ("IFRS"), CONSOB resolutions no. 15519 and no. 15520 of July 27, 2006, CONSOB communication no. DEM/6064293 of July 28, 2006 and article 149- duodecies of the Issuers' Regulation. The abbreviation "IFRS" includes all revised International Accounting Standards ("IAS") and all interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"), included those previously issued by the Standing Interpretations Committee ("SIC").

The interim condensed consolidated financial statements as at June 30, 2020 were prepared according to IAS 34 revised - Interim financial reporting, applicable to interim reporting and therefore has to be read jointly with the consolidated financial statements as at December 31, 2019, since they do not include all the disclosures required for the annual financial statements prepared according to IAS/IFRS.

For comparison purposes 2019 comparative figures have also been presented, in application of IAS 1 - Presentation of Financial Statements.

IFRS accounting standards, amendments and interpretations applicable from January 1, 2020

The accounting standards, amendments and interpretations which were applied for the first time starting from January 1, 2020 are set out below.

Definition of Material (amendments to IAS 1 and IAS 8)

56

On October 31, 2018, the IASB published the document "Definition of Material (Amendments to IAS 1 and IAS 8)". The document introduced an amendment to the definition of "material" contained in standards IAS 1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors. The aim of this amendment is to make the definition of "material" more specific and introduced the concept of "obscured information" as being close to the concepts of omitted or erroneous information already in the two standards being amended. The amendment clarifies that information is "obscured" if it was described in a way that produces an effect on the main readers of financial statements similar to the effect that would be produced if that information had been omitted or erroneous.

The adoption of the amendment did not have any effects on the Group's consolidated financial statements.

References to the Conceptual Framework in IFRS Standards (amendment)

On March 29, 2018, IASB published an amendment to "References to the Conceptual Framework in IFRS Standards". The conceptual framework defines the key concepts for financial disclosure and guides the Council in developing IFRS standards. The document helps to ensure that the standards are conceptually consistent and that similar transactions are handled in the same way, in order to provide useful information to investors, lenders and other creditors. The conceptual framework supports companies in developing accounting principles when no IFRS standard is applicable to a particular transaction and, more generally, helps the relevant parties to understand and interpret the standards.

The adoption of the amendment did not have any effects on the Group's consolidated financial statements.

Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform

On September 26, 2019, IASB published "Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform". This amendment modifies IFRS 9 - Financial Instruments and IAS 39 - Financial Instruments: Recognition and Measurement as well as IFRS 7 - Financial Instruments: Disclosures. In particular, the amendment modifies some of the requirements for applying hedge accounting, envisaging temporary waivers to these requirements in order to mitigate the impact deriving from uncertainty regarding the IBOR reform (still ongoing) on future cash flows in the period preceding its completion. Moreover, the amendment imposes that companies provide additional information in financial statements regarding their hedge relationships that are directly affected by the uncertainties generated by the reform and to which the aforementioned waivers apply.

The adoption of the amendment did not have any effects on the Group's consolidated financial statements.

Definition of a Business (amendments to IFRS 3)

On October 22, 2018, the IASB published the document "Definition of a Business (Amendments to IFRS 3)". The document provides some clarifications on the definition of business in order to correctly apply the standard IFRS 3. More specifically, the amendment clarifies that while a business usually produces output, the presence of output is not strictly necessary to identify a business if there is an integrated set of activities/processes and assets. However, in order to meet the definition of business, an integrated set of activities/processes and assets must include, as a minimum, an input and a substantial process that together significantly contribute towards the capacity to create output. To that end, the IASB replaced the term "capacity to create output" with "capacity to contribute towards the creation of output" to clarify that a business may also exist without the presence of all the inputs and processes needed to create output.

The amendment also introduced an optional test ("concentration test") for the entity to decide whether or not a set of activities/processes and assets acquired is a business. If the test gives a positive result, the set of activities/processes and assets acquired do not constitute a business and the standard does not require further checks. If the test provides a negative result, the entity will have to carry out further analyses on the activities/processes and assets acquired to identify the presence of a business. To that end, the amendment added numerous examples of the standard IFRS 3 in order to make the practical application of the new definition of business understood in certain cases.

The adoption of the amendment did not have any effects on the Group's consolidated financial statements.

57

IFRS accounting standards, IFRIC interpretations and amendments endorsed by the European Union, but whose application is not yet mandatory and were not adopted in advance by the Group

As at June 30, 2020 there were no IFRS accounting standards, IFRIC interpretations and amendments approved by the European Union but not yet mandatorily applicable at that date.

IFRS accounting standards, amendments and interpretations not yet endorsed by the European Union

At the date of these consolidated financial statements, the competent bodies of the European Union have not yet completed the endorsement process necessary for the adoption of the amendments and the principles described below.

IFRS 17 - Insurance Contracts

On May 18, 2017, IASB issued IFRS 17 - Insurance Contracts that will replace IFRS 4 - Insurance Contracts.

The objective of the new standard is to ensure that an entity provides relevant information that faithfully represents rights and obligations deriving from the insurance contracts it issues. The IASB developed this standard to eliminate inconsistencies and weaknesses in existing accounting practices, by providing a single principle-based framework to account for all types of insurance contracts, including reinsurance contracts that an insurer holds.

The new standard also envisages some submission and reporting requirements to improve the comparability between the entities of this sector.

The new standard measures an insurance contract based on a General Model or a simplified version of it, called Premium Allocation Approach ("PAA").

The main features of the General Model are as follows:

1. estimates and assumptions of future cash flows are always the current ones; o the measurement reflects the time value of money;
   o estimates provide for an extensive use of information available in the market; o there is a current and explicit risk measurement;
   o the expected profit is deferred and aggregated in groups of insurance contracts at the time of their initial recognition;
   o the expected profit is recognized in the hedging period taking into account the adjustments resulting from variations in the assumptions related to the cash flows of each group of contracts.
   The PAA envisages measurement of the liability for the residual coverage of a group of insurance contracts provided that, on initial recognition, the entity provides that such a liability represents a reasonable approximation of the General Model. Contracts with a coverage period of one year or less are automatically eligible for the PAA. The simplifications arising from application of the PAA method do not apply to the assessment of liabilities for existing claims that are measured using the General Model. However, it is not necessary to discount those cash flows if the balance to be paid or settled is expected to take place within one year from the date in which the claim was filed.
   The new standard must be applied to insurance contracts issued, including reinsurance contracts issued, reinsurance contracts held and also to investment contracts with a discretionary participation feature (DPF).
   This standard applies starting from January 1, 2023, but early application is allowed only for entities applying IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with Customers. The adoption of this standard is not expected to have any significant impact on the consolidated financial statements of SAES as there are no insurance companies in the Group.

Amendment to IAS 1 - Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

On January 23, 2020 the IASB published the document "Amendments to IAS 1 - Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current". The aim of the document is to clarify how to classify current or non-current payables and other liabilities. The amendments will

58

become effective from January 1, 2022 but the IASB has issued an exposure draft postponing the effective date to January 1, 2023. However, early application is still permitted. The adoption of this amendment is not expected to have any significant impact on the consolidated financial statements of the Group.

Amendments to IFRS 3 - Business Combinations, IAS 16 - Property, Plant and Equipment and IAS 37 - Provisions, Contingent Liabilities and Contingent Assets; Annual Improvements 2018-2020

On May 14, 2020, the IASB published the following amendments:

1. Amendments to IFRS 3 - Business Combinations: the amendments update the reference in IFRS 3

to the revised version of the Conceptual Framework, without changing the provisions of IFRS 3.

1. Amendments to IAS 16 - Property, Plant and Equipment: the amendments do not allow the amount received from goods produced in an asset's trial phase to be deducted from the cost of

property, plant and equipment. Such revenues from sales and the related costs are therefore recognized in the statement of profit or loss.

o Amendments to IAS 37 - Provisions, Contingent Liabilities and Contingent Assets: the amendment clarifies that all costs directly attributable to the contract must be considered when estimating any contract liabilities. Consequently, the measurement of any contract liability includes not only the incremental costs (e.g., the cost of material directly used in processing), but also all costs that the company cannot avoid in that it signed the contract (e.g., the percentage cost of personnel costs and depreciation of machinery used to fulfil the contract).

1. Annual Improvements 2018-2020: the amendments were made to IFRS 1 - First-time Adoption of International Financial Reporting Standards, IFRS 9 - Financial Instruments, IAS 41 - Agriculture and

the Illustrative Examples in IFRS 16 - Leases.

All these amendments will become effective from January 1, 2022. The adoption of these amendments is not expected to have any significant impact on the consolidated financial statements of the Group.

COVID-19-related Rent Concessions (Amendment to IFRS 16)

On May 28, 2020, the IASB published "COVID-19-related Rent Concessions (Amendment to IFRS 16)". For tenants, the document allows the option of accounting for decreases in lease payables related to COVID-19 without assessing, by analysing the contracts, whether the IFRS 16 definition of 'lease modification' is satisfied. Therefore, tenants applying this option will be able to account for the effects of decreases in rent instalments directly in the statement of profit or loss as at the effective date of the decrease.

This amendment, though applying to financial statements starting June 1, 2020, with the option of early application by companies in financial statements starting January 1, 2020, has not yet been endorsed by the European Union and therefore was not applied by the Group as at June 30, 2020. The adoption of this amendment is not expected to have any significant impact on the consolidated financial statements of the Group as, to date, there have been no significant changes to leases in relation to COVID-19.

Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)

On May 28, 2020, the IASB published "Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)". The amendments allow the temporary exemption from applying IFRS 9 to be extended to January 1, 2023.

These amendments will become effective from January 1, 2021. The adoption of these amendments is not expected to have any significant impact on the consolidated financial statements of the Group as IFRS 9 was already adopted without temporary exemptions with effect from 2018.

Use of estimates and subjective valuations

The preparation of the interim condensed consolidated financial statements and of the relative notes in application of IFRSs, requires the use of estimates and assumptions from management that have an effect on the values of assets and liabilities, as well as the disclosure of contingent assets and liabilities on the reporting date. If such estimates and assumptions, which are based on the best evaluation currently available, should differ from the actual circumstances in the future, they will be modified accordingly during the period in which said circumstances change.

59

In particular, estimates and subjective valuations are used to recognize provisions for credit risk, obsolete and slow-rotation inventory, depreciation and amortization, employee benefits, taxes, restructuring provisions as well as other accruals and provisions. The estimates are also used to define the duration and interest rate of the transactions that related to lease contracts. Estimates and assumptions are reviewed periodically and the effects of all changes are immediately reflected in the statement of profit or loss.

Note that some evaluation processes are generally conducted in complete form solely for the preparation of the annual report, when all the required information is available. For example, the actuarial valuations required to determine the provisions for employee benefits are normally conducted for the preparation of the annual report.

However, as regards the calculation of any impairment losses on non-current assets, normally only conducted in complete form for preparation of the annual report, pursuant to paragraphs 9 and 12 of IAS 36 the Directors have assessed the effects of the COVID-19 pandemic as an impairment indicator and, therefore, property, plant and equipment, intangible assets and rights of use on leased assets, as well as investments accounted for using the equity method were impairment tested as at June 30, 2020.

Please refer to the relative paragraphs of the Explanatory Notes for the main assumptions adopted and the sources used for making the estimates.

Criteria for translating items expressed in foreign currencies

The consolidated financial statements are presented in euro, which is the functional currency of the Group.

Each Group company defines the functional currency for its financial statements. Transactions in foreign currencies are initially recorded at the exchange rate (related to the functional currency) at the date of the transaction.

All of the assets and liabilities of foreign companies in currencies other than the euro that fall within the scope of consolidation are translated using the exchange rates in force as of the balance sheet data (current exchange rate method), whereas the associated revenues and costs are converted at the average exchange rates for the period. Translation differences resulting from the application of this method are classified as a shareholders' equity item until the equity investment is sold. In preparing the consolidated cash flow statement, the cash flows of consolidated foreign companies expressed in currencies other than the euro are translated using the average exchange rates for the period.

Non-current items measured at historical cost in a foreign currency (including goodwill and adjustments to the fair value generated during the purchase price allocation of a foreign company) are translated at the exchange rates at the date of their initial recording. At a later stage, these figures are translated at the exchange rate at period end.

The following table shows the exchange rates used for the translation of foreign financial statements.

expressed in foreign currency (per 1 euro)

	June 30, 2020	December 31, 2019	June 30, 2019
Currency	Average	Final	Average	Final	Average	Final
	rate	rate	rate	rate	rate	rate
US dollar	1.1020	1.1198	1.1195	1.1234	1.1298	1.1380
Japanese yen	119.2668	120.6600	122.0058	121.9400	124.2836	122.6000
South Korean won	1,329.5321	1,345.8300	1,305.3173	1,296.2800	1,295.1984	1,315.3500
Renminbi (P.R. of China)	7.7509	7.9219	7.7355	7.8205	7.6678	7.8185
Taiwan dollar	33.0702	33.0076	34.6057	33.7156	34.9981	35.2965

When the IFRS were first adopted, the combined translation differences generated by the consolidation of foreign companies outside the Eurozone were set at zero, as allowed by IFRS 1 (First-time Adoption of International Financial Reporting Standards) and therefore only the translation differences accumulated and recognized after January 1, 2004 contribute to determining capital gains and losses generated by their transfer, if any.

60

3. NET REVENUES

In the first half of 2020, consolidated net revenues were equal to 89,099 thousand euro, up by 0.7% compared to 88,487 thousand euro in the first half of 2019. Excluding the positive effect of exchange gains, equal to +1.7%, associated with appreciation of the US Dollar against the Euro and concentrated in the first few months of the current year, the overall change was slightly negative, at -1%. The segments that recorded the strongest increases in the first half of the year were security and defence (higher sales of getters for infrared sensors and night-vision systems for defence applications) and advanced getters for the consumer electronics market (Functional Dispensable Products business). These increases were offset by the decline in other business which was more affected by the COVID-19 crisis (medical devices in Nitinol and industrial SMAs for automotive and consumer applications).

The following table shows a breakdown of revenues by business sector.

(thousands of euro)
Businesses (*)	1st half	1st half	Total	Total	Exchange rate	Organic
2020	2019	difference	difference	effect	change
				%	%	%
Security & Defense	9,524	6,365	3,159	49.6%	1.9%	47.7%
Electronic Devices	7,702	7,507	195	2.6%	1.0%	1.6%
Healthcare Diagnostics	2,752	2,450	302	12.3%	1.2%	11.1%
Lamps	1,946	2,274	(328)	-14.4%	1.2%	-15.6%
Thermal Insulated Devices	1,674	1,833	(159)	-8.7%	2.4%	-11.1%
Sintered Components for Electronic Devices & Lasers	3,733	4,542	(809)	-17.8%	2.0%	-19.8%
SMA Industrial	6,208	8,246	(2,038)	-24.7%	1.0%	-25.7%
Metallurgy Division	33,539	33,217	322	1.0%	1.4%	-0.4%
Solutions for Vacuum Systems	5,359	5,522	(163)	-3.0%	1.3%	-4.3%
Vacuum Technology Division	5,359	5,522	(163)	-3.0%	1.3%	-4.3%
Nitinol for Medical Devices	40,145	41,272	(1,127)	-2.7%	2.4%	-5.1%
Medical Division	40,145	41,272	(1,127)	-2.7%	2.4%	-5.1%
Functional Dispensable Products	5,024	3,461	1,563	45.2%	0.5%	44.7%
Specialty Chemicals Division	5,024	3,461	1,563	45.2%	0.5%	44.7%
Advanced Coatings	5,032	5,015	17	0.3%	0.0%	0.3%
Advanced Packaging Division	5,032	5,015	17	0.3%	0.0%	0.3%
Total consolidated net revenues	89,099	88,487	612	0.7%	1.7%	-1.0%

(*) Starting from January 1, 2020, the Group is organized in the following technological competency areas (or "Divisions"):

• Metallurgy Division (which coincides with the previous Industrial operating sector, excluding Solutions for Vacuum Systems, Functional Chemical Systems and advanced getters for the consumer electronics market, the latter previously classified within the Electronic Devices Business);
• Vacuum Technology Division (which coincides with the Solutions for Vacuum Systems Business, included in the Industrial operating segment);
• Medical Division (unchanged);
• Specialty Chemicals Division (i.e. advanced getters for the consumer electronics market, classified within the Electronic Devices Business as at December 31, 2019, in addition to the Functional Chemical Systems segment and Flexterra business, the latter previously unallocated);
• Advanced Packaging Division (unchanged).

Please refer to the Interim Report on operations for further details and comments.

4. COST OF SALES

The cost of sales amounted to 50,876 thousand euro in the first half of 2020, compared to 50,667 thousand euro in the corresponding period of the previous year.

A breakdown of the cost of sales by category is provided below, compared with the actual figure of the first half of 2019.

61

(thousands of euro)
Cost of sales	1st half 2020	1st half 2019	Difference
Raw materials	16,854	15,767	1,087
Direct labour	14,452	14,426	26
Manufacturing overhead	23,019	21,224	1,795
Increase (decrease) in work in progress and finished goods	(3,449)	(750)	(2,699)
Total cost of sales	50,876	50,667	209

Excluding the increase due to exchange rates performance (+827 thousand euro), the percentage change in the cost of sales (-1.2%) was substantially in line with the overall decrease in revenues (-1%).

In detail, while the overall change in the cost of direct labour was essentially in line with revenue (- 1.5%), the cost of materials recorded a stronger decrease (overall change of -12.1%, including the change in inventory of semi-finished goods and finished products, as well as raw materials) compared to the overall change in revenues, due to the different and more favourable sales mix (particularly in the vacuum pumps and advanced packaging businesses). Indirect production costs instead saw a change in the opposite direction (overall increase of +6.7%) as they were penalized by a number of temporary production inefficiencies in the medical sector (in particular, increased personnel costs associated with the project, still ongoing, to construct a new tubes department at the Bethel plant) and the write-down of the residual value of an SMA furnace decommissioned during the first half of the year (-110 thousand euro).

5. OPERATING EXPENSES

Operating expenses amounted to 26,326 thousand euro in the first half of 2020, compared to 26,752 thousand euro in the same period of the previous year.

A breakdown by function of operating expenses, compared with the previous year, is given below.

(thousands of euro)
Operating expenses	1st half 2020	1st half 2019	Difference
Research & development expenses	5,283	5,524	(241)
Selling expenses	5,675	6,253	(578)
General & administrative expenses	15,368	14,975	393
Total operating expenses	26,326	26,752	(426)

Excluding the penalizing effect of the exchange rates (+179 thousand euro), operating expenses decreased by -605 thousand (-2.3%): the decrease is main concentrated in the cost of sales (-10.2% due to lower travel expenses and reduced marketing costs caused by the COVID-19 pandemic, as well as the reduced commissions to third parties as a result of lower SMA trained wire sales). Also down slightly (-5%) were the research and development costs, due to reduced consulting and lower patent management costs. Vice versa, general and administrative expenses increased slightly (by +2.1% overall) due to extraordinary expenses of around 0.3 million euro incurred to manage to COVID-19 emergency (in particular, costs for sanitization and adaptation of access points and work spaces to ensure employee safety, as well as healthcare and prevention expenses and consulting and training costs). Excluding the latter, the general and administrative expenses would be in line with the corresponding period of 2019. The higher consulting costs, for special projects and for the IT system development, were in fact offset by

62

lower severance costs17, as well as by the lower travel expenses and savings related to the reduced physical presence of staff as a result of recourse to smart working brought about by COVID-19.

A breakdown of costs by nature included in the cost of sales and operating expenses, compared with June 30, 2019, is given below.

(thousands of euro)
Total costs by nature	1st half 2020	1st half 2019	Difference
Raw materials	16,854	15,767	1,087
Personnel costs	39,681	38,932	749
Corporate bodies	2,445			2,498	(53)
Travel expenses	238	718	(480)
Maintenance and repairs	1,804	1,809	(5)
Various materials	4,355	4,285	70
Transports	976	960	16
Commissions	183	317	(134)
Licenses and patents	348	389	(41)
Consultant fees and legal expenses	3,464	2,825	639
Audit fees	306	307	(1)
Rent and operating leases	227	459	(232)
Insurances	565	559	6
Advertising costs	119	214	(95)
Utilities	1,919	1,812	107
Telephones and faxes	151	166	(15)
General services (canteen, cleaning, vigilance, etc.)	906	906	0
Training costs	53	131	(78)
Depreciation	3,525	3,298	227
Amortization	636	604	32
Right of use depreciation	1,035	662	373
Write-down of non current assets	115	1	114
Provision (release) for bad debts	19	(25)	44
Other	727		575	152
Total costs by nature	80,651	78,169	2,482
Increase (decrease) in work in progress and finished goods	(3,449)	(750)	(2,699)
Total cost of sales and operating expenses	77,202	77,419	(217)

All the expense types were in line with the previous year. The main changes are commented below.

The increase in the item "Raw materials" was offset by the decrease in "Increase (decrease) in work in progress and finished goods", the latter due to temporary stock increases in the Nitinol business and in the Specialty Chemicals Division.

The increase in the item "Personnel costs" is primarily attributable to the penalizing effect of exchange rates (+543 thousand euro) and the increase in the average number of employees at the US subsidiaries, the latter partly offset by reduced recourse to temporary work. It should also be remembered that the first half of 2019 was penalized by the above-mentioned severance costs, amounting to 0.3 million euro, related to completion of the downsizing process of Parent Company staff that began at the end of 2018 following the sale of the purification business.

17 0.3 million euro in the first half of 2019, related to completion of the downsizing process of the Parent Company staff that began at the end of 2018 following the sale of the purification business, versus zero costs in the first half of 2020.

63

Lastly, note that the Parent Company's use of the COVID furloughing scheme at the Lainate plant, along with support measures implemented by the US Government as part-reimbursement of non-working days by employees as a result of the pandemic, led to a saving of -222 thousand euro in the cost of labour.

The decrease in the items "Travel expenses", "Advertising costs" and "Training costs" is a direct consequence of COVID-19 restrictions imposed for health reasons and as employee health protection and, in more general terms, to protect society as a whole.

The decrease in "Commissions" is also related to COVID-19. In the first half of 2020 less commissions were paid on the sales of SMA trained wire for consumer electronics applications, the business worst hit by the pandemic.

The item "Consultant fees and legal expenses" went up due to special projects in the packaging sector and to activities launched by the Parent Company in the first half of this year for corporate IT system development.

The change in the item "Rent and operating leases" is associated with the purchase on May 1, 2019 of the property used as production plant in Bethel (CT) of the US subsidiary Memry Corporation. The building was rented prior to purchase, but the related contract had been excluded from the scope of first-time adoption of IFRS 16 as at January 1, 2019, since the residual duration was less than 12 months. The rental cost from January 1-April 30, 2019 was therefore included under rent.

The increase in the item "Right of use depreciation" relates mainly to the additional production floorspace, again in Bethel, leased to Memry Corporation with effect from July 1, 2019.

The item "Write-down of non-current assets" as at June 30, 2020, primarily includes the write-down of the residual value of an SMA furnace decommissioned during the first half by the affiliate SAES Smart Materials, Inc.

The breakdown by nature of extraordinary items related to the COVID-19 pandemic, included in the cost of sales and in operating expenses for the first half of 2020, is provided below.

(thousands of euro)			1st half 2020
		Manufacturing	Research &	Selling	General &
One-offCovid-19	Direct labour	development	administrative	Total
overhead	expenses
		expenses	expenses
Personnel costs	(101)	(53)	(44)	(11)	47	(162)	(*)
Maintenance and repairs					30	30
Various materials					103	103
Transports					3	3
Consultant fees and legal expenses					73	73
General services (canteen, cleaning, vigilance, etc.)					38	38
Training costs					3	3
Total cost of sales & operating expenses one-offCovid-19	(101)	(53)	(44)	(11)	297	88

(*) The amount is composed by:

- CIGO savings in the Lainate plant of the Parent Company, equal to -55 thousand euro;

- savings for the US governmental misures to support companies and families, equal to -167 thousand euro; - additional personnel costs, equal to +60 thousand euro.

The extraordinary expenses of around 310 thousand euro refer mainly to costs for sanitization and adaptation of access points and work spaces to ensure employee safety, as well as healthcare and prevention expenses and consulting and training costs. Also note the above-mentioned decrease in the cost of labour, in total -222 thousand euro, made possible by recourse to the government furlough scheme at the Parent Company's Lainate plant and the support measures implemented by the US Government that benefited all the US operating subsidiaries of the Group.

6. OTHER INCOME (EXPENSES)

64

The item "Other income (expenses)" as at June 30, 2020 recorded a negative balance of 754 thousand euro compared to a positive 2,344 thousand euro in the corresponding period of the previous year.

A breakdown of both half-year periods is provided below.

(thousands of euro)					of which:
	1st Half	1st Half	Difference		Covid-19
	2020	2019		Donations
Other income	226	2,604	(2,378)		0
Other expenses	(980)	(260)	(720)		(689)
Total other income (expenses)	(754)	2,344	(3,098)		(689)

The item "Other income" includes all the revenue that does not fall within the ordinary operations of the Group, such as, for example, the proceeds from the sale of scrap materials. The change compared to June 30, 2019 is related to the income from a related party, equal to 2,267 thousand euro, recorded in the first half of 2019 following the sale of the OLET-related patents owned by E.T.C. S.r.l. in liquidation to the joint venture Flexterra, Inc., as well as other extraordinary revenue for 248 thousand euro for insurance reimbursements and a favourable settlement of legal disputes that were still pending in the previous year. In the first half of this year, the item instead includes extraordinary revenue of 100 thousand euro for the release of a risk provision for a legal dispute, following the court's pronouncement in favour of the SAES Group (for further details please refer to Note no. 32).

The item "Other expenses", however, mainly includes the property taxes and other taxes, other than income taxes, mostly paid by the Group's Italian companies. The change compared to June 30, 2019, is attributable to donations amounting to 689 thousand euro made by the Parent Company in the first half of this year to research and hospital facilities working on the front line to overcome the COVID-19 emergency, as well as to the Italian Civil Defense.

7. FINANCIAL INCOME (EXPENSES) AND WRITE-DOWN OF FINANCIAL ASSETS

The following tables show the financial income (expenses) breakdown in the first half of 2020, compared to the corresponding period of the previous year.

(thousands of euro)
Financial income	1st Half	1st Half	Difference
2020	2019
Bank interest income	58	39	19
Other financial income	244	262	(18)
Gains from securities evaluated at fair value	0	2,316	(2,316)
Other income and coupons collected on securities	1,292	970	322
Gains from derivative instruments evaluated at fair value	10	0	10
Total financial income	1,604	3,587	(1,983)

65

(thousands of euro)
Financial expenses	1st Half	1st Half	Difference
2020	2019
Bank interests and other bank expenses	1,035	331	704
Other financial expenses	95	1	94
Losses from securities evaluated at fair value	6,476	0	6,476
Commissions and other securities costs	168	164	4
Interest on lease financial liabilities	88	24	64
Realized losses on derivative instruments	15	17	(2)
Losses from derivative instruments evaluated at fair value	0	34	(34)
Total financial expenses	7,877	571	7,306
Write-down of financial receivables and other financial assets	187	158	29
Total financial expenses & write-down of financial assets	8,064	729	7,335

The item "Other financial income" is mainly composed by interest income accrued on interest-bearing loans granted by the Group to the joint ventures Actuator Solutions GmbH and SAES RIAL Vacuum S.r.l., and as at June 30, 2020, was in line with the corresponding period of 2019.

The items "Gains/Losses from securities evaluated at fair value" are associated with the measurement at fair value of the securities subscribed18 at the end of 2018 and beginning of 2019 to invest the cash resulting from the extraordinary sale of the purification business completed at the end of June 2018. Whereas in the first half of 2019 there was an increase in the fair value of securities of +2,316 thousand euro, the decrease as at June 30, 2020, is an effect of the COVID-19 crisis on the financial markets. In particular, the negative effect recorded in the first quarter (-10,302 thousand euro) was partially reabsorbed in the second quarter (+3,826 thousand euro), allowing closure of the first half of this year with a decline in fair value of -6,476 thousand euro.

Again in relation to the securities portfolio, income from the collection of coupons ("Other income and coupons collected on securities") amounted to 1,292 thousand euro, up on the 970 thousand euro of June 30, 2019.

Lastly, "Commissions and other securities costs" include the management commissions on the above- mentioned securities portfolio (168 thousand euro as at June 30, 2020, compared to 164 thousand euro as at June 30, 2019, the latter including the 1 thousand euro net capital loss on securities sold).

Please refer to Note no. 18 for further details on the securities subscribed.

The item "Bank interests and other bank expenses" included interest expenses on both short term and long term loans granted to the Parent Company, SAES Coated Films S.p.A. and the US subsidiary Memry Corporation, as well as the bank fees related to the credit lines held by the Italian companies of the Group. The increase compared to the previous year is linked to upfront fees on the new revolving credit lines signed by the Parent Company in the first half of this year (for further details please refer to the paragraph "Main events in the half-year period"), as well as interest expense on the long-term loan signed in April 2019 with Mediobanca to cover outlay for the partial voluntary public tender offer finalised at the end of May in the previous year by SAES Getters S.p.A.

The items "Income/Losses from derivative instruments evaluated at fair value" represent the effect on the statement of profit or loss of the fair value measurement of the hedge contracts, including those embedded, on the long-term variable rate loans held by the Parent Company and SAES Coated Films S.p.A.

The items "Realized gains/losses on derivative instruments" instead include the interest spreads actually paid to banks for those contracts during the period.

18 Securities subscribed by the Parent Company and SAES Investments S.A.

66

The item "Write-down of financial receivables and other financial assets" in both half years is mainly made up of the write-down of the financial receivable that the Group granted to Actuator Solutions GmbH, for interest accrued in the period on interest-bearing loans that SAES Nitinol S.r.l. granted to the joint venture during previous years (from 2014 to 2018). The financial receivable, amounting to 239 thousand euro as at June 30, 2020 and 238 thousand euro as at June 30, 2019, was fully written-down as its recovery was deemed improbable.

The item "Write-down of financial receivables and other financial assets" includes the write-downs of financial assets, in particular cash and cash equivalents, in application of IFRS 9. The expected losses were calculated in accordance with a default percentage associated with each bank where the cash and cash equivalents are deposited, obtained on the basis of each bank's rating. Compared to December 31, 2019, given the riskiness associated with some of the banks with which the Group has essentially unchanged relationships, this calculation led to a reduction in the expected losses on cash and cash equivalents of 52 thousand euro, due to the reduced cash held by the Group (31.2 million euro at June 30, 2020 compared to 48.6 million euro at December 31, 2019). The decrease in expected losses as at June 30, 2019, was instead 80 thousand euro.

8. INCOME (LOSS) FROM EQUITY METHOD EVALUATED COMPANIES

The item "Income (loss) from equity method evaluated companies" includes the Group's share in the result of the joint ventures Actuator Solutions GmbH19, SAES RIAL Vacuum S.r.l. and Flexterra, Inc.20, consolidated with the equity method.

(thousands of euro)
	1st Half	1st Half	Difference
	2020	2019
Actuator Solutions	0	0	0
SAES RIAL Vacuum S.r.l.	23	15	8
Flexterra	(907)	(1,058)	151
Total income (loss) from equity method	(884)	(1,043)	159
evaluated companies

In the first half of 2020, the net loss deriving from measurement using the equity method amounted to - 884 thousand euro, and in accordance with the corresponding period of the previous financial period, was mainly attributable to Flexterra (-907 thousand euro). The company was established as a technological start-up and has made notable progress in the development of its proprietary chemical formulas over the last two years; in the first half of 2020 it recorded revenue that was still immaterial (50 thousand euro) mainly attributable to an initial purchase order received from a leading Taiwanese manufacturer of display panels, against operating expense of over 2.1 million euro (mainly research and development costs and, lower in absolute terms, to general and administrative expenses).

After a first quarter heavily penalized by the COVID-19 pandemic, SAES RIAL Vacuum S.r.l. recorded excellent results during the second quarter, closing the half year with a slight profit (+48 thousand euro), allowing the recognition of a gain from measurement at equity for 23 thousand euro.

Though Actuator Solutions closed the first half of 2020 in profit (+717 thousand euro), SAES' share (+358 thousand euro) was not recorded by the Group as the equity of the joint venture is still negative for

1. Actuator Solutions GmbH consolidates its wholly owned subsidiaries Actuator Solutions Taiwan Co., Ltd. in liquidation (established in June 2013) and Actuator Solutions (Shenzhen) Co., Ltd., in liquidation (established in September 2016).
2. Flexterra, Inc., in turn, consolidated the wholly owned subsidiary Flexterra Taiwan Co., Ltd. (established in January 2017).

67

around 2.6 million euro21, against a SAES equity interest in Actuator Solutions that had already been full written off.

For further details on the performance of the joint ventures please refer to the Interim Report on operations, paragraph "Performance of the joint ventures in the first half of 2020" and to Note no 17.

9. FOREIGN EXCHANGE GAINS (LOSSES), NET

In the first half of 2020, the exchange rate management recorded a balance that essentially broke even (a negative 29 thousand euro), in line with the corresponding period of the previous year (negative 31 thousand euro). The exchange rate result which was close to zero confirms the overall effectiveness of the hedging policies put in place by the Group, adopted in order to limit the impact of currency fluctuations.

Details of the foreign exchange gains and losses as at June 30, 2020 compared to the same period of the previous year are set out in the table below.

(thousands of euro)
Foreign exchange gains and losses	1st Half	1st Half	Difference
2020	2019
Foreign exchange gains	340	232	108
Foreign exchange losses	(369)	(263)	(106)
Foreign exchange gains (losses), net	(29)	(31)	2
Realized exchange gains on forward contracts	0	0	0
Realized exchange losses on forward contracts	0	0	0
Gains (losses) from forward contracts evaluated at fair value	0	0	0
Gains (losses) on forward contracts	0	0	0
Total foreign exchange gains (losses), net	(29)	(31)	2

In both financial periods, the exchange differences on commercial type transactions, intercompany included, generated in the first quarter were offset by opposite sign exchange differences in the second quarter. In particular, in 2020 the exchange gains for the first quarter were offset by losses as a result of the gradual depreciation of the US Dollar in the second quarter.

As in the previous year, as at June 30, 2020, the Group did not have any forward sales contracts in place and no derivative contracts on currencies were closed in the current half-year period.

21 Consolidated pro rata at 50%.

68

10. INCOME TAXES

As at June 30, 2020, income taxes amounted to 3,332 thousand euro, compared to 6,232 thousand euro in the corresponding period of the previous year.

The related details are provided below.

(thousands of euro)
	1st Half 2020	1st Half 2019	Difference
Current taxes	2,921	4,682	(*)	(1,761)
Deferred taxes	411	1,550		(1,139)
Total	3,332	6,232		(2,900)

(*) The current taxes of the 1st half 2019 do not correspond to the amounts shown in the Consolidated cash flow statement because they do not include the revenues for current taxes on adjustment on the consideration for the purification business disposal, classified under the item "Result from discontinued operations".

In the first half of the year, the item mainly includes the taxes of US companies. The decrease compared to the previous year is largely attributable to the reduction in US taxes against lower taxable amounts and the decrease in taxes of the subsidiary SAES Investments S.A., which closed the first half with a fiscal loss due to losses on securities resulting from the COVID-19 crisis.

The Group's tax rate was 88.4%, compared to 41% in the first half of 2019. This high tax rate is due to the fact that the Parent Company, SAES Coated Films S.p.A. and SAES Investments S.A. ended the first half of the year with a negative taxable income, not recorded as deferred tax assets.

As in the first half of 2019, no Group company recognized deferred tax assets on the fiscal losses realized at June 30, 2020. These fiscal losses totaled 6,813 thousand euro compared to fiscal losses equal to 5,641 thousand euro in the first half of 2019. The increase is mainly linked to the negative taxable amount of SAES Investments S.A., which closed the first half with a fiscal loss due to losses on securities associated with the COVID-19 financial crisis, and to the higher negative taxable amounts of the Parent Company, only partly offset by the decrease in fiscal losses of SAES Coated Films S.p.A.

11. INCOME (LOSS) FROM DISCONTINUED OPERATIONS

In the first half of 2019, the profit from discontinued operations amounted to 176 thousand euro, mainly comprising the positive adjustment to the sale price for the purification business due to the settlement of the effective value of the tax credit of the companies that were sold - SAES Getters USA, Inc. and SAES Pure Gas, Inc. - resulting from the tax return for the period January 1 - June 24, 2018, filed in April 2019.

The result for discontinued operations in the first half of 2020, however, was zero.

69

12. EARNINGS (LOSS) PER SHARE

As indicated in Note no. 27, SAES Getters S.p.A.'s capital stock is represented by two different types of shares (ordinary shares and savings shares) which bear different rights with regard to the distribution of dividends.

The pro-quota earning attributable to each type of shares is determined on the basis of the respective rights to receive dividends. Therefore, in order to calculate the earnings per share, the value of the preferred dividends contractually assigned to savings shares has been deducted from the net income of the period, assuming the theoretical distribution of the latter. The value obtained is divided by the average number of outstanding shares in the semester.

If the period ended with a loss, the latter would be instead allocated equally to each type of shares.

The following table shows the result per share in the first half of 2020, compared with the figure of the first half of 2019.

	Earning (loss) per share		1st half 2020			1st half 2019
			Ordinary	Savings	Total	Ordinary	Savings	Total
			shares	shares	shares	shares
	Profit (loss) attribuitable to shareholders (thousands of euro)			438			9,140
	Theoretical preference dividends (thousands of euro)		438	438		1,022	1,022
	Profit (loss) attributable to the different categories of shares (thousands of euro)	0	0	0	5,908	2,210	8,118
	Total profit (loss) attributable to the different categories of shares	0	438	438	5,908	3,232	9,140
	(thousands of euro)
	Average number of oustanding shares	10,771,350	7,378,619	18,149,969	14,021,350	7,378,619	21,399,969
	Basic earning (loss) per share (euro)	0.00000	0.05936		0.42137	0.43800
	- from continued operations (euro)	0.00000	0.05936		0.41315	0.42978	(*)
	- from discontinued operations (euro)	0.00000	0.00000		0.00000	0.02385
	Diluted earning (loss) per share (euro)	0.00000	0.05936		0.42137	0.43800
	- from continued operations (euro)	0.00000	0.05936		0.41315	0.42978	(*)
	- from discontinued operations (euro)	0.00000	0.00000		0.00000	0.02385

1. The sum of the earning per share from continued operations and that from discontinued operations differs from the basic earning per share because the net income from continued operations and the income from discontinued operations have been attributed considering both the preference dividend to savings shares and the higher dividend due to the latter (in accordance with article no. 26 of the By-laws).

The reduction in the average number of ordinary shares in issue in the first half of 2020 compared to the corresponding period of 2019 (10,771,350 compared to 14,021,350) is due to the voluntary partial public tender offer finalized by SAES Getters S.p.A. at the end of May 2019, the details of which can be found in the Consolidated Financial Statements as at December 31, 2019.

The table below illustrates the earnings per share for the first half of 2020, compared with that of the corresponding period in 2019, calculated on the assumption that the treasury stock was acquired at the beginning of the year and therefore with the average number of ordinary shares in issue in the current half year corresponding to what was actually in issue at June 30, 2019.

70

	Earning (loss) per share			1st half 2020			1st half 2019
			Ordinary	Savings	Total	Ordinary	Savings	Total
			shares	shares	shares	shares
	Profit (loss) attribuitable to shareholders (thousands of euro)			438			9,140
	Theoretical preference dividends (thousands of euro)		438	438		1,022	1,022
	Profit (loss) attributable to the different categories of shares (thousands of euro)	0	0	0	5,351	2,766	8,118
	Total profit (loss) attributable to the different categories of shares	0	438	438	5,351	3,789	9,140
	(thousands of euro)
	Average number of oustanding shares	10,771,350	7,378,619	18,149,969	10,771,350	7,378,619	18,149,969 (**)
	Basic earning (loss) per share (euro)	0.00000	0.05936		0.49682	0.51345
	- from continued operations (euro)	0.00000	0.05936		0.48712	0.50375	(*)
	- from discontinued operations (euro)	0.00000	0.00000		0.00000	0.02385
	Diluted earning (loss) per share (euro)	0.00000	0.05936		0.49682	0.51345
	- from continued operations (euro)	0.00000	0.05936		0.48712	0.50375	(*)
	- from discontinued operations (euro)	0.00000	0.00000		0.00000	0.02385

(*) The sum of the earning per share from continued operations and that from discontinued operations differs from the basic earning per share because the net income from continued operations and the income from discontinued operations have been attributed considering both the preference dividend to savings shares and the higher dividend due to the latter (in accordance with article no. 26 of the By-laws).

(**) Average number of ordinary shares outstanding in the first half of 2019, it is calculated assuming that the purchase of treasury shares took place at the beginning of the year, rather than at the end of May 2019.

13. SEGMENT INFORMATION

For management purposes, the Group is organised into five Divisions based on the reference technological area for products and services provided:

• Metallurgy - metallic-based getter and metal dispenser components used in a wide range of industrial applications (electronic vacuum devices, MEMS, image diagnostic systems, thermal insulation systems and lamps) and shape memory alloy components and devices for industrial applications (home automation, white goods industry, consumer electronics, the automotive sector and luxury goods);
• Vacuum Technology - actual devices based on getter materials for vacuum systems with applications in the industrial sector, in research and in particle accelerators;
• Medical - raw materials, semi-finished products and super-elastic components in Nitinol alloy for medical applications, mainly in the non-invasive surgical sector;
• Specialty Chemicals - getter materials integrated into polymeric matrices for organic and hybrid electronic applications, photonics and implantable medical devices;
• Advanced Packaging - advanced coating solutions for packaging, metallized films and innovative plastic films for the food packaging market, and more generally, for the sustainable packaging sector, also fully recyclable and biodegradable.

For changes in the operating structure compared to the previous year, please refer to Note no. 1, paragraph "Segment information".

The Top Management separately monitors the results of the various Divisions in order to make decisions concerning the allocation of resources and investments and to determine the Group's performance. Each sector is evaluated according to its operating result; financial income and expenses, foreign exchange performance and income taxes are measured at the overall Group level and thus they are not allocated to the operating segments.

Internal reports are prepared in accordance with IFRSs and no reconciliation with the carrying amounts is therefore necessary.

The "Not Allocated" column includes the corporate costs, i.e. those expenses that cannot be directly attributed or allocated in a reasonable way to the business units, but which refer to the Group as a whole, and the costs related to the basic research projects or aimed to diversify into innovative businesses.

The following table shows the breakdown of the main statement of profit or loss figures by operating segment.

71

(thousands of euro)

Consolidated statement

Metallurgy

Vacuum Technology

Medical

Specialty Chemicals

Advanced Packaging

Not Allocated Costs

Total

1

st

half 2019

1

st

half 2019

1

st

half 2019

1

st

half 2019

1

st

half 2019

1

st

half 2019

1

st

half 2019

of profit or loss

1st half 2020

1st half 2020

1st half 2020

1st half 2020

1st half 2020

1st half 2020

1st half 2020

(*)

(*)

(*)

(*)

(*)

(*)

(*)

Total net sales	33,539		33,217	5,359	5,522	40,145	41,272	5,024	3,461	5,032	5,015	0	0	89,099	88,487
Cost of sales	(16,454)		(16,011)	(2,074)	(2,669)	(24,294)	(24,730)	(3,628)	(2,702)	(4,423)	(4,555)	(3)	0	(50,876)	(50,667)
Gross profit	17,085		17,206	3,285	2,853	15,851	16,542	1,396	759	609	460	(3)	0	38,223	37,820
% on net sales	50.9%		51.8%	61.3%	51.7%	39.5%	40.1%	27.8%	21.9%	12.1%	9.2%	n.a.	n.a.	42.9%	42.7%
Total operating expenses		(5,908)		(5,701)	(1,882)	(1,997)	(4,309)	(4,556)	(800)	(668)	(1,740)	(1,709)	(11,687)	(12,121)	(26,326)	(26,752)
Other income (expenses), net		44		167	14	102	16	0	(41)	2,268	6	(30)	(793)	(163)	(754)	2,344
Operating income (loss)		11,221		11,672	1,417	958	11,558	11,986	555	2,359	(1,125)	(1,279)	(12,483)	(12,284)	11,143	13,412
% on net sales		33.5%		35.1%	26.4%	17.3%	28.8%	29.0%	11.0%	68.2%	-22.4%	-25.5%	n.a.	n.a.	12.5%	15.2%
Interest and other financial income		(expenses), net												(6,273)	3,016
Write-down of financial assets														(187)	(158)
Gains (losses) from equity method evaluated companies											(884)	(1,043)
Foreign exchange gains (losses), net														(29)	(31)
Income (loss) before taxes														3,770	15,196
Income taxes														(3,332)	(6,232)
Net income (loss) from continued operations												438	8,964
Net income (loss) from discontinued operations												0	176
Net income (loss)														438	9,140
Minority interests in consolidated subsidiaries												0	0
Group net income (loss)														438	9,140

(*) Starting from January 1, 2020, the Group is organized in the following technological competency areas (or "Divisions"):

- Metallurgy Division (which coincides with the previous Industrial operating sector, excluding Solutions for Vacuum Systems, Functional Chemical Systems and advanced getters for the consumer electronics market, the latter previously classified within the Electronic Devices Business);

- Vacuum Technology Division (which coincides with the Solutions for Vacuum Systems Business, included in the Industrial operating segment); - Medical Division (unchanged);

- Specialty Chemicals Division (i.e. advanced getters for the consumer electronics market, classified within the Electronic Devices Business as at December 31, 2019, in addition to the Functional Chemical Systems segment and Flexterra business, the latter previously unallocated);

- Advanced Packaging Division (unchanged).

Information on geographical areas

Please refer to the table and the comments in the Interim Report on Operations for the breakdown of revenues by customer location.

The split of consolidated net sales based on the countries where the Group's companies that generated the revenue are based, is provided below.

(thousands of euro)
Country in which the	1st half	%		1st half	%		Total
Group's entity is located	2020			2019			difference
Italy	31,699	35.6%		28,564	32.3%		3,135
Europe	0	0.0%		0	0.0%		0
North America	54,101	60.7%		56,779	64.2%		(2,678)
South Korea	713	0.8%		472	0.5%		241
China	2,518	2.8%		2,632	3.0%		(114)
Other Asian countries	68	0.1%		40	0.0%		28
Others	0	0.0%		0	0.0%		0
Total net sales	89,099	100%		88,487	100%		612

72

14. PROPERTY, PLANT AND EQUIPMENT

Net property, plant and equipment amounted to 74,141 thousand euro as at June 30, 2020, an increase of 3,248 thousand euro compared to December 31, 2019.

The changes that occurred during the half-year period are shown below.

(thousands of euro)

Property, plant and equipment	Land	Building	Plant and	Assets under	Total
construction and
machinery
			advances
December 31, 2019	4,851	24,147	28,987	12,908	70,893
Acquisitions	0	162	1,212	5,453	6,827
Disposals	0	0	0	0	0
Reclassifications	0	1,761	5,088	(6,849)	0
Depreciation	0	(785)	(2,740)	0	(3,525)
Write-downs	0	0	(115)	0	(115)
Revaluations	0	0	0	0	0
Translation differences	11	10	(11)	51	61
June 30, 2020	4,862	25,295	32,421	11,563	74,141
December 31, 2019
Historical cost	4,909	48,760	139,034	13,280	205,983
Accumulated depreciation and write-downs	(58)	(24,613)	(110,047)	(372)	(135,090)
Net book value	4,851	24,147	28,987	12,908	70,893
June 30, 2020
Historical cost	4,920	50,302	144,645	11,935	211,802
Accumulated depreciation and write-downs	(58)	(25,007)	(112,224)	(372)	(137,661)
Net book value	4,862	25,295	32,421	11,563	74,141

As at June 30, 2020 land and buildings were not burdened by mortgages or other guarantees.

In the first half of 2020, investments in property, plant and equipment amounted to 6,827 thousand euro and mainly include the construction of a new department to manufacture pipes in Nitinol at the Bethel plant of Memry Corporation (a project started last year), as well as investments in expansion of the production capacity of a number of existing lines, again in the Nitinol business. The item "Acquisitions" also includes Parent Company investments in the Avezzano plant to adapt the line for the production of advanced getters for the consumer electronics market, as well as those in the Lainate plant for the purchase of new machines dedicated to the electronic devices business (a new sputtering machine), in the sector of shape memory alloys for industrial applications (a new SMA extruder) and in the vacuum systems sector (NEG coatings department).

The depreciation for the period, equal to 3,525 thousand euro, is up compared to the first half of 2019 (3,298 thousand euro), in addition to the effect of exchange rates (+36 thousand euro) mainly due to the higher depreciation accounted for by the US affiliate SAES Getters U.S.A., Inc., by the Parent Company and by SAES Coated Films S.p.A. on investments made in the previous year.

The write-downs, amounting to 115 thousand euro, mainly refer to the residual value of an SMA furnace decommissioned during the first half by the US affiliate SAES Smart Materials, Inc.

The translation differences (gains of 61 thousand euro) relate to assets owned by the US companies and result from the revaluation of the US dollar as at June 30, 2020 compared to the exchange rate of December 31, 2019.

The item "Assets under construction and advances" mainly includes assets still under construction or for which the final testing process is not yet complete. As at June 30, 2020, this item includes the metallization system, the pilot line (advanced packaging business), testing for which is scheduled in the second half of 2020, as well as investments in the Nitinol segment for the above-mentioned new tubes department in Bethel and expansion of the existing production capacity.

73

All the property, plant and equipment described in this paragraph is owned by the SAES Group. Please refer to Note no. 16 for more details on the leased assets as at June 30, 2020, where the right of use was recognised under capital assets in application of IFRS 16 - Leases.

15. INTANGIBLE ASSETS

The net intangible assets amounted to 44,814 thousand euro as at June 30, 2020 and recorded an increase of 402 thousand euro compared to December 31, 2019.

The changes that occurred during the half-year period are shown below.

(thousands of euro)

		Research and	Industrial and	Concessions,	Other	Assets under
Intangible assets	Goodwill	licenses,	Total
development	other patent	construction and
trademarks and	intangible assets
		expenses	rights	similar rights		advances
December 31, 2019	38,416	0	4,549	686	1,404	161	45,216
Additions	0	0	7	46	4	49	106
Disposals	0	0	0	0	0	0	0
Reclassifications	0	0	0	19	0	(19)	0
Amortization	0	0	(251)	(190)	(195)	0	(636)
Write-downs	0	0	0	0	0	0	0
Revaluations	0	0	0	0	0	0	0
Translation differences	117	0	1	2	9	(1)	128
June 30, 2020	38,533	0	4,306	563	1,222	190	44,814
December 31, 2019
Historical cost	46,102	183	10,382	11,295	22,659	900	91,521
Accumulated depreciation and write-downs	(7,686)	(183)	(5,833)	(10,609)	(21,255)	(739)	(46,305)
Net book value	38,416	0	4,549	686	1,404	161	45,216
June 30, 2020
Historical cost	46,219	183	10,399	11,301	20,181	929	89,212
Accumulated depreciation and write-downs	(7,686)	(183)	(6,093)	(10,738)	(18,959)	(739)	(44,398)
Net book value	38,533	0	4,306	563	1,222	190	44,814

Investments of the period amounted to 106 thousand euro and mainly refer to the purchase of new software licenses by the Parent Company and by the US affiliate Memry Corporation.

The amortization for the period, equal to 636 thousand euro, is essentially in line with the first half of 2019 (604 thousand euro), net of the effect of exchange rates (+9 thousand euro).

The translation differences (gains of 128 thousand euro) relate to the intangible assets owned by the US companies and result from the revaluation of the US dollar as at June 30, 2020 compared to the exchange rate of December 31, 2019.

All intangible assets, except for goodwill, are considered to have finite useful lives and are systematically amortized to account for their expected residual use.

Goodwill is not amortized, rather, on an annual basis or more frequently if there are impairment loss indicators, its recoverable value is reviewed based on the expected cash flows of the related Cash Generating Unit - CGU (impairment test).

Goodwill

The changes in the item "Goodwill" and the Cash Generating Unit to which the goodwill is allocated are highlighted below.

74

(thousands of euro)
Divisions	December 31, 2019	Change in	Write-downs	Other movements	Translation	June 30, 2020
consolidation area	differences
Metallurgy	945	0	0	0	0	945
Vacuum Technology	0	0	0	0	0	0
Medical	37,471	0	0	0	117	37,588
Specialty Chemicals	0	0	0	0	0	0
Advanced Packaging	0	0	0	0	0	0
Not allocated	0	0	0	0	0	0
Total goodwill	38,416	0	0	0	117	38,533

The increase for the first half of the year is exclusively due to the effect of exchange rates (especially related to the revaluation of the US Dollar at June 30, 2020 compared to the end of the previous year) on goodwill in currencies other than euro.

The following table shows the gross book values of goodwill and their accumulated write-downs for impairment from January 1, 2004 to June 30, 2020 and as at December 31, 2019.

(thousands of euro)
Divisions			June 30, 2020		December 31, 2019
	Gross value	Write-downs	Net book value	Gross value	Write-downs	Net book value
Metallurgy	1,008	(63)	945	1,008	(63)	945
Vacuum Technology	0	0	0	0	0	0
Medical (*)	40,988	(3,400)	37,588	40,871	(3,400)	37,471
Specialty Chemicals	0	0	0	0	0	0
Advanced Packaging	2,409	(2,409)	0	2,409	(2,409)	0
Not allocated	358	(358)	0	358	(358)	0
Total goodwill	44,763	(6,230)	38,533	44,646	(6,230)	38,416

(*) The difference between the gross value as at June 30, 2020 and the gross value as at December 31, 2019 is due to the translation differences on goodwill amounts denominated in currencies other than euro.

Impairment testing of non-current assets

Pursuant to IAS 36, impairment testing of non-current assets (property, plant and equipment, intangible assets, goodwill included, and rights of use of leased assets) is normally carried out in full only when preparing the annual report, or more frequently if specific events or circumstances occur that could be assumed to cause impairment.

As at June 30, 2020, though there were no particular indicators to suggest impairment losses in relation to goodwill or other assets recognized in the financial statements, whether property, plant and equipment or intangible, in line with paragraphs 9 and 12 of IAS 36, impairment testing was carried out in the light of specific assessments by the Directors of economic impact deriving from the global spread of COVID-19.

Investments accounted for using the equity method, whose recoverability is normally assessed when preparing the annual report, were also impairment tested as at June 30, 2020 because of the COVID-19epidemic. For details, please refer to Note no. 17.

For the purpose of impairment testing, non-current assets are allocated to Cash Generating Units (CGUs) or groups of CGUs, in accordance with the maximum aggregation limits established by IFRS 8, according to which the latter may not be larger than the operating segment identified. More specifically, the CGUs identified by the SAES Group for impairment testing coincide with the following operating segments (as indicated in Note no. 13):

• Metallurgy;
• Vacuum Technology;
• Medical;
• Specialty Chemicals;
• Advanced Packaging.

The operating structure is unchanged with respect to that used for impairment testing purposes as at December 31, 2019.

75

The impairment testing, whose assumptions and procedures were approved by the Board of Directors on July 16, 2020 and whose results were approved by the same Board on September 10, 2020, involves estimating the recoverable value of each Cash Generating Unit (CGU) and comparing it with the net book value of the property, plant and equipment and intangible assets allocated to that CGU, including goodwill.

The recoverable amount is verified by calculating the value in use, which corresponds to the present value of future cash flows which are expected to be associated to each Cash Generating Unit on the basis of the plans drawn up by top management for the period July 1, 2020-December 31, 2022 and approved by the Board of Directors on July 16, 2020, and on the terminal value.

Specifically, in reference to explicit period forecasts, for the Metallurgy, Vacuum Technology and Specialty Chemicals CGUs the 2020-2022 estimates already approved by the Board of Directors on February 13, 2020 were confirmed, whilst for the Medical and Advanced Packaging divisions the forecasts were updated to take into account, respectively, the negative effects of the COVID-19 pandemic and business development in the first half of the year.

When preparing these forecasts, Management made use of numerous assumptions based on the following key variables:

• developments in the macroeconomic variables;
• estimated future sales volumes by business / product category / customer;
• price and profit margin trends;
• cost of materials and of sales by product category;
• production costs, operating expenses and investments plan;
• inflation rates estimated by Management.

The expected growth in sales is based on Management forecasts, whilst the profit margins and operating expenses for the various businesses were estimated on the basis of time series, adjusted according to expected results and on the basis of expected market price changes. The value of investments and working capital were determined according to different factors, such as the forecast levels of future growth and the product development plan. These assumptions were influenced by future expectations and market conditions.

The discounting rate used to discount the cash flows represents an estimate of the rate of return expected for each Cash Generating Unit on the market. To select an adequate discount rate to apply to future cash flows, an indicative interest rate was considered to calculate indebtedness, which would be applied to the Group in event that it requested new medium-long term loans and, to calculate the cost of own capital, the yield curve of long-term government bonds, both US and Italian, weighted by the geographical area that generating Group income was adopted. The capital structure was instead established by identifying specific comparable players for each business. The Weighted Average Cost of Capital (WACC) applied to future cash flows was estimated at 6.8% and is considered representative of all Group CGUs. The WACC used is net of taxes, consistent with the cash flows used.

In the discounting model of future cash flows, a terminal value is considered to reflect the residual value that each Cash Generating Unit should generate beyond the end of the plans (December 31, 2022); this value has been estimated prudentially at a growth rate (g-rate) of zero and a time horizon considered representative of the estimated duration of the various businesses, as indicated in the following table.

	Metallurgy	Vacuum Technology	Medical		Specialty
		Chemicals
Years estimated after December 31, 2022	10,5 (*)	12.5	12.5		12.5
(*) Calculated as a weighted average of the years	assumed for each business	on the estimated forward	sales in the second half	2020:
- 12,5 years for SMA Industrial Business;

- 10,5 years for Security & Defense , Electronic Devices , Healthcare Diagnostics e Sintered Components for Electronic Devices & Lasers Business ; - 6,5 years for Thermal Insulated Devices Business ;

- 2,5 years for Lamps Business .

76

For the Advanced Packaging operating segment, more recently introduced with respect to the others, an explicit forecasting period covered by a more extended plan was used, i.e. until December 31, 2024, and a time horizon estimated after that date of 10.5 years.

	Advanced
	Packaging
Years estimated after December 31, 2024	10.5

No further potential impairment of assets was detected from this first level of testing.

Furthermore, conducting a sensitivity analysis by increasing the WACC by up to 2 percentage points over the Group's reference value, no critical issues were found in relation to the net asset value recognized in the financial statements as at June 30, 2020.

Lastly, second-level testing was conducted, including on the assets not allocated to any operating segment and, in the recoverable amount, the costs relating to corporate functions, as well as the economic values that cannot be uniquely allocated or allocated through reliable drivers to primary sectors, which include some of particular importance, such as the basic research costs, sustained by the Group to identify innovative solutions. No further potential impairment of assets emerged at this level.

The estimated recoverable amount of the various Cash Generating Units and of investments measured using the equity method required discretion and the use of estimates by management. The Group cannot therefore ensure that no impairment losses will emerge in the future. In fact, a number of different factors, also related to changes in the market and in demand, could require the value of the assets in future periods to be redetermined.

In particular, in relation to the COVID-19 epidemic, note that forecasts regarding the potential effects of this phenomenon on performance of the various sectors and, consequently, on estimates of the Group's future cash flows, are highly uncertain and will be constantly monitored over the coming months, also to identify any future impairment of Group assets.

16. RIGHT OF USE

The right of use assets, resulting from lease, rental or use of third-party asset contracts, were recognized separately, and amounted to 3,880 thousand euro at June 30, 2020, decreasing by 737 thousand euro compared to December 31, 2019.

The changes that occurred during the half-year period are shown below.

77

(thousands of euro)

Right of use	Building	Plant and	Cars		Total
machinery
December 31, 2019	3,878	126		613	4,617
New leases agreements subscribed in the	0	37		247	284
Early termination of leases agreements	0	0		(10)	(10)
Reclassifications	0	0		0	0
Amortization	(798)	(69)		(168)	(1,035)
Translation differences	22	1		1	24
June 30, 2020	3,102	95		683	3,880
December 31, 2019
Historical cost	4,965	304		881	6,150
Accumulated depreciation and write-downs	(1,087)	(178)		(268)	(1,533)
Net book value	3,878	126		613	4,617
June 30, 2020
Historical cost	4,974	341		1,076	6,391
Accumulated depreciation and write-downs	(1,872)	(246)		(393)	(2,511)
Net book value	3,102	95		683	3,880

The new contracts entered into in the period, that fall within the scope of application of the accounting standard IFRS 16, mainly refer to the car fleet of the Parent Company.

The amortization for the period, equal to 1,035 thousand euro, is up compared to the first half of 2019 (662 thousand euro) in addition to the effect of exchange rates (+18 thousand euro), mainly due to the higher amortization accounted for by US affiliate Memry Corporation on the new lease signed in the second half of 2019 for additional 60,000 square feet of production floorspace (around 5,600 square metres) in Bethel (CT).

The translation differences (gains of 24 thousand euro) relate to rights of use owned by the US companies.

17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

As at June 30, 2020 the item includes the share of equity attributable to the Group in the joint venture Actuator Solutions GmbH22, SAES RIAL Vacuum S.r.l. and Flexterra, Inc.23

The following table shows the changes in this item during the first half of 2020.

(thousands of euro)
Investments accounted for using the	December 31,		Capital	Share of the	Share of other			Other
Additions	comprehensive	Dividends paid	Write-downs	June 30, 2020
equity method	2019		payments	net result	income (loss)			variations
Actuator Solutions	0	0	0	0	0	0	0	0	0
SAES RIAL Vacuum S.r.l.	1,844	0	0	23	0	0	0	0	1,867
Flexterra	2,956	0	0	(945)	13	0	0	38	2,062
Total	4,800	0	0	(922)	13	0	0	38	3,929

The change in the period is mainly due to the adjustment of the value of each investment to SAES's share of the result and other comprehensive income (loss) achieved by the joint ventures in the first half of 2020 (-909 thousand euro). Furthermore, in the column "Other variations", the reversal (+38 thousand euro) of the unrealized pro-rata share of the Group's gain in the previous year from the

1. Please note that Actuator Solutions GmbH, consolidates its wholly-owned subsidiaries Actuator Solutions Taiwan Co., Ltd. in liquidation and Actuator Solutions (Shenzhen) Co., Ltd. in liquidation.
2. Flexterra, Inc. (USA), in turn, consolidates its wholly owned subsidiary Flexterra Taiwan Co., Ltd.

78

sale of some patents owned by E.T.C. S.r.l. in liquidation to Flexterra, Inc., derecognized from the consolidated financial statements (in accordance with IAS 28, the income from the related party was recognized only for the portion pertaining to third parties in the joint venture).

With reference to Actuator Solutions, note that, in compliance with the provisions of IAS 28, SAES' share of the total profit for the first half of 2020 (+360 thousand euro24) was not recorded by the Group as the equity of the joint venture is still negative for around 2.6 million euro25, against a SAES equity interest in Actuator Solutions already fully written off.

Actuator Solutions

Actuator Solutions GmbH is based in Gunzenhausen (Germany) and is 50% jointly owned by SAES and Alfmeier Präzision, a German group operating in the fields of electronics and advanced plastic materials. This joint venture, which consolidates its wholly owned subsidiaries Actuator Solutions Taiwan Co., Ltd. in liquidation26 and Actuator Solutions (Shenzhen) Co., Ltd. in liquidation27, is focused on the development, production and commercialization of actuators using shape memory alloys in place of the engine.

The table below shows the SAES Group interest in Actuator Solutions' assets, liabilities, revenues and costs.

	(thousands of euro)
	Actuator Solutions	June 30, 2020	December 31,
			2019
	Statement of financial position	50%	50%
	Non current assets	3,246	3,488
	Current assets	1,698	1,343
	Total assets	4,944	4,831
	Non current liabilities	4,444	4,625
	Current liabilities	3,110	3,176
	Total liabilities	7,554	7,801
	Capital stock, reserves and retained earnings	(2,970)	(1,553)
	Net income (loss) for the period	358	(1,408)
	Other comprehensive income (loss) for the period (*)		(9)
	2
	Total equity	(2,610)	(2,970)

1. Currency translation difference reserve arising from the conversion in euro of the financial statements of the subsidiary Actuator Solutions Taiwan Co., Ltd. in liquidation and Actuator Solutions (Shenzhen) Co., Ltd. in liquidation.

1. In the first half of 2019, the share of the total loss not recognized, because it exceeded the investment (already fully written off), was -365 thousand euro.
2. Consolidated pro rata at 50%.
3. The liquidation process of the Taiwanese subsidiary was launched at the beginning of October 2019 and is expected to be completed by the end of 2020.
4. The liquidation process of the Chinese subsidiary began in March 2019 and is expected to be completed in the second half of 2020.

79

(thousands of euro)
Actuator Solutions	1st Half 2020	1st Half 2019
Statement of profit or loss and of other comprehensive income	50%	50%
Net sales	3,940	5,488
Cost of sales	(2,863)	(4,472)
Gross profit	1,077	1,016
Total operating expenses	(645)	(1,047)
Other income (expenses), net	82	(171)
Operating income (loss)	514	(202)
Interest and other financial income, net	(152)	(147)
Foreign exchange gains (losses), net	(12)	(25)
Income taxes	8	(1)
Net income (loss)	358	(375)
Exchange differences	2	10
Total comprehensive income (loss)	360	(365)

Overall28, Actuator Solutions recorded net revenues of 7,880 thousand euro in the first half of 2020, down by 28.2% compared to 10,976 thousand euro in the first half of 2019. The slowdown in the automotive sector that began last year slowed further in the first half of 2020 due to the COVID-19 crisis, which had a negative impact on end market sales and caused uncertainty in the supply chain, especially in China.

Note, however, that the pandemic has also opened an opportunity for Actuator Solutions in the medical market: against a development, assembly and sales contract for rapid COVID-19 diagnostic test devices, revenues were recorded for a total of around 1 million euro in the first half of 2020.

The net profit for the first half of the year was 717 thousand euro, compared to a loss of -750 thousand in the first six months of the previous year. Despite the decline in sales, profit margins improved strongly, mainly thanks to income on engineering contracts signed with third parties, characterized by higher margins, and the decrease in operating expenses after the two Asian subsidiaries were placed in liquidation. Lastly, note that the loss as at June 30, 2019 included the extraordinary charges of around 0.4 thousand euro for a computer fraud suffered in the first part of the year by the German parent company.

For further details on the developments in Actuator Solutions, please refer to the paragraph dedicated to the joint venture in the Interim Report on Operations of the SAES Group.

The share of the SAES Group (equal to 50%) in the result of the joint venture in the first half of 2020 amounted to 358 thousand euro (-375 thousand euro in the first half of 2019), to be added to the other positive components of the comprehensive income statement for 2 thousand euro (+10 thousand euro at June 30, 2019), consisting of the translation differences generated by the consolidation of Actuator Solutions Taiwan Co., Ltd. and Actuator Solutions (Shenzhen) Co., Ltd. in liquidation into Actuator Solutions GmbH.

As reported previously, SAES' share of the total profit for the first half of 2020 (+360 thousand euro) was not recorded by the Group as the equity of the joint venture is still negative, against a SAES equity interest in Actuator Solutions that has already been fully written off.

As the investment in Actuator Solutions GmbH had already been completely written off, no specific impairment test was performed as at June 30, 2020.

Given the joint venture's difficult financial situation, a provision for risks on the equity investment of 600 thousand euro was allocated, equal to the pro-rata funding necessary for the company to continue its operating activities over the next twenty-four months, according to the revised

28 Values at 100%.

80

version29 of the five-year plan presented to shareholders during the Extraordinary Shareholders' Meeting on February 18, 2020. This provision is still considered sufficient and, therefore, no additional allocation was recognized as at June 30, 2020 (for further details on the risk provision, see Note no. 32).

Please refer to Note no. 21 for information on the recoverability of the financial receivable owed to the Group by the joint venture.

The following table provides the number of employees of the joint venture Actuator Solutions as at June 30, 2020 split by category, based on the percentage of ownership held by the Group (equal to 50%).

Actuator Solutions	June 30,	December 31,
2020	2019
	50%	50%
Managers	1	1
Employees and middle	12	14
Workers	8	10
Total (*)	21	25

(*) The figure excludes the personnel employed with contract other than salaried employment, equal to 1 unit as at June 30, 2020 and equal to 1 unit at December 31, 2019 (according to the percentage held by the Group).

The number of employees is down compared to the end of 2019, principally due to the German joint venture's focus on product development activities and the subsequent suspension of production activities in the automotive sector.

SAES RIAL Vacuum S.r.l.

SAES RIAL Vacuum S.r.l., established at the end of 2015, is jointly controlled by SAES Getters S.p.A. (49%) and Rodofil S.r.l. (51%). The company specializes in the design and manufacture of vacuum chambers for accelerators, synchrotrons and colliders and combines the expertise of SAES in the field of materials, vacuum applications and innovation, with the experience of Rodofil in the design, assembling and fine mechanical productions, with the aim of offering absolutely excellent quality products and of successfully competing in the international markets.

The Group's equity investment is accounted for using the equity method since the transaction qualifies as a joint control arrangement and, specifically, as a joint venture. In this regard, please note that a key factor in qualifying the agreement is the signing of shareholders' agreements that envisage that the decisions on some significant activities are taken with the unanimous consent of the parties, irrespective of their ownership percentage in the capital stock.

There is a put & call option in place between the shareholders SAES Getters S.p.A. and Rodofil S.r.l. for which, on September 20, 2019, the terms for exercise were redefined, delaying it by one year (from mid-2020 to mid-2021) and, solely for the put option, the calculation methodologies for the exercise price were also redefined with respect to the agreement signed by both parties upon establishing the company (at the end of 2015).

In particular, in the period between May 1, 2021 and May 31, 2021, Rodofil S.r.l. will be able to sell its shares in a single tranche to SAES Getters S.p.A. by exercising the put option for a minimum of 2% up to 51% of the capital stock of SAES RIAL Vacuum S.r.l. at a price relating to

29 The five-year plan was originally developed between October and November 2019 and was approved by the Supervisory Board on November 25, 2019.

81

the company's performance at the sale date, estimated for any extraordinary costs and non- recurring investments, identified as useful for the future development30 of the company31.

If Rodofil S.r.l. does not exercise this put option, SAES Getters S.p.A. has the right to exercise, from June 1 - June 30, 2021, a call option in a single tranche for a percentage of shares equivalent to 30% of the capital stock, at a price calculated with a similar mechanism, but without adjustments for any extraordinary costs or investments.

Please note that as, at June 30, 2020, the Management did not have enough information to perform an accurate fair value measurement of the above options, the latter are not valued in the financial statements.

The table below shows the SAES Group interest in SAES RIAL Vacuum S.r.l.'s assets, liabilities, revenues and costs.

(thousands of euro)
SAES RIAL Vacuum S.r.l.	June 30, 2020	December 31,
		2019
Statement of financial position	49%	49%
Non current assets	323	325
Current assets	1,488	983
Total assets	1,811	1,308
Non current liabilities	190	192
Current liabilities	1,147	665
Total liabilities	1,337	857
Capital stock, reserves and retained earnings	451	249
Net income (loss) for the period	23	198
Other comprehensive income (loss) for the period (*)	0	4
Total equity	474	451

(*) Actuarial differences on the employee severance indemnities (TFR), in accordance with the IAS 19.

(thousands of euro)
SAES RIAL Vacuum S.r.l.	1st Half 2020	1st Half 2019
Statement of profit or loss and of other comprehensive income	49%	49%
Net sales	868	578
Cost of sales	(715)	(476)
Gross profit	153	102
Total operating expenses	(127)	(95)
Other income (expenses), net	11	19
Operating income (loss)	37	26
Interest and other financial income, net	(7)	(7)
Foreign exchange gains (losses), net	0	0
Income taxes	(7)	(4)
Net income (loss)	23	15
Actuarial gain (loss) on defined benefit plans, net of taxes	0	0
Total comprehensive income (loss)	23	15

Overall32, SAES RIAL Vacuum S.r.l. ended the first half of 2020 with revenue of 1,772 thousand euro, up by 50.3% compared to 1,179 thousand euro in the corresponding period of 2019. After a first quarter strongly penalized by delays in certain major research projects, also due to the COVID-19 pandemic, in recent months revenue increased, returning to the ongoing levels originally forecast. The increase in sales and an essentially stable profit margin, both gross and operating profit, offered a slight increase in net profit from 29 thousand euro to 48 thousand euro.

1. Understood as subsequent to 2020.
2. Note that, following the redefinition of the procedures for calculating the exercise price of only the put option, the company's performance indicators (EBITDA and Net Financial Position) will be understood as net of any extraordinary costs and eliminating the effects from the financial realisation of investments (in property, plant and equipment and intangible assets) that SAES RIAL Vacuum S.r.l. will incur during 2020 but referring to future growth.
3. Values at 100%.

82

The share of the SAES Group (49%) in the joint venture's profit in the first half of 2020 amounted to +23 thousand euro (+15 thousand euro in the first half of 2019).

The difference, equal to 1,393 thousand euro, between the investment recognition value (1,867 thousand euro) and the value of the share of the SAES Group in the company's net assets (474 thousand euro) represents the implicit goodwill included in the carrying value of the investment.

As reported previously, due to the COVID-19 pandemic, the value of the investment in SAES RIAL Vacuum S.r.l. was impairment tested as at June 30, 2020. To this end, the value in use was calculated using the Free Operating Cash Flow method, using a WACC of 6.8% (aligned to that of the Group) and based on the July 1, 2020-December 31, 2022 plan approved by the Board of Directors of SAES Getters S.p.A. on July 16, 2020, which confirmed the estimates previously approved by the Board of Directors of SAES RIAL Vacuum S.r.l. on October 28, 2019, considering them reliable despite the COVID-19 emergency.

In the discounting model of future cash flows, a terminal value was considered to reflect the residual value that the company should generate beyond the period covered by the plans (i.e. beyond December 31, 2022); this value was estimated prudentially at a growth rate (g-rate) of zero and a time horizon of 12.5 years estimated after the period envisaged by the plan (time horizon consistent with that used for the Vacuum Technology CGU).

No potential impairment of assets emerged from the test conducted.

A sensitivity analysis was also conducted, increasing the discounting rate by up to 2 percentage points more than the reference value; no issues were identified from this.

The following table provides the number of employees of the joint venture SAES RIAL Vacuum S.r.l. as at June 30, 2020 split by category, based on the percentage of ownership held by the SAES Group (49%).

SAES RIAL Vacuum S.r.l.	June 30,		December 31,
2020		2019
	49%		49%
Managers	1		1
Employees and middle	6		5
Workers	4		4
Total (*)	11		10

1. The figure excludes the personnel employed with contract other than salaried employment, equal to 1 unit as at June 30, 2020 and equal to 1 unit at December 31, 2019 (according to the percentage held by the Group).

The number of employees is essentially aligned with the end of 2019.

Flexterra

Flexterra originated from a technological partnership activated in the previous years between SAES and the US company Polyera in the field of flexible thin film transistors for new generation displays. More specifically, Flexterra, Inc. based in Skokie (close to Chicago, Illinois, USA), was established at the end of 2016 as a development start up by SAES (through the subsidiary SAES Getters International Luxembourg S.A.) and the previous shareholders and lenders of Polyera, with the purpose of the design, manufacturing and sale of materials and components for the manufacture of flexible displays.

Flexterra, Inc. owns 100% of Flexterra Taiwan Co., Ltd.

In 2019, the Flexterra project had already made strong progress, although with some delays compared to initial forecasts. In particular, the joint venture continued to develop its organic materials and its formulations were qualified by an important Taiwanese producer of OTFT (Organic Thin Film Transistors). The activities to industrialize OTFTs is at an advanced stage and,

83

although it has taken longer than initial estimates, also because of the recent COVID-19 crisis, it should be completed after summer 2020, while the start of actual production and sales activities by Flexterra is expected by the end of the year.

SAES currently holds 46.73% of the capital stock of Flexterra, Inc.

The Group's equity investment is accounted for using the equity method since, irrespective of the ownership percentage in the capital stock, the operation is classified as a joint control agreement and, specifically, a joint venture, based on the Board's composition (five members, two of which appointed by SAES) and the shareholder agreements (that provide that the decisions on relevant matters are taken with the consent of at least 4 of the 5 Board members).

The value of the investment as at June 30, 2020 is the initial overall contribution (8,146 thousand euro, equal to 8,500 thousand USD) of SAES Getters International Luxembourg S.A. in the capital stock of Flexterra, Inc., increased by the capital stock increases in the final part of 2018 (for a total value of 6,201 thousand euro, corresponding to 7,100 thousand US dollars), adjusted for the SAES Group's share in the result and in the total other profits (loss) from previous year (2017, 2018 and 2019) and the first half of 2020. The latter includes the expenses related to the issue of equity instruments, as well as the currency translation difference reserve arising from the conversion in euro of the financial statements of Flexterra, Inc. and its subsidiary Flexterra Taiwan Co., Ltd. (respectively expressed in US Dollars and Taiwanese Dollars).

The relative write-downs for impairment are included for purposes of calculating the final value of the equity investment, recognized, respectively, in 2018 (-4,300 thousand euro) and at December 31, 2019 (additional write-down of -555 thousand euro).

Lastly, as in the previous year, the investment value was also adjusted for the unrealized pro-rata share of the Group's gain from the sale of certain patents owned by E.T.C. S.r.l. in liquidation to the Flexterra, Inc. joint venture (-1,059 thousand euro), as well as for reversal of the corresponding portion of amortization of the gain eliminated at consolidated level (+114 thousand euro, of which +76 thousand euro relating to 2019 and +38 thousand euro to the first half of 2020).

The table below shows the SAES Group interest in Flexterra's assets, liabilities, revenues and costs.

(thousands of euro)
Flexterra	June 30, 2020	December 31,
		2019
Statement of financial position	46.73%	46.73%
Non current assets	6,503	6,837
Current assets	563	1,261
Total assets	7,066	8,098
Non current liabilities	66	92
Current liabilities	179	255
Total liabilities	245	347
Capital stock, reserves and retained earnings	7,595	9,465
Reserve for stock option plans	158	156
Net income (loss) for the period	(945)	(2,031)
Other comprehensive income (loss) for the period (*)	13	161
Total equity	6,821	7,751

1. Currency translation difference reserve arising from the conversion in euro of the financial statements of Flexterra, Inc. and of Flexterra Taiwan Co., Ltd.

84

(thousands of euro)
Flexterra	1st Half 2020	1st Half 2019
Statement of profit or loss and of other comprehensive income	46.73%	46.73%
Net sales	23	6
Cost of sales	(13)	(1)
Gross profit	10	5
Total operating expenses	(996)	(1,055)
Other income (expenses), net	0	0
Operating income (loss)	(986)	(1,050)
Interest and other financial income, net	(4)	1
Foreign exchange gains (losses), net	35	(20)
Income taxes	10	11
Net income (loss)	(945)	(1,058)
Exchange differences and capital expenditure costs	13	79
Total comprehensive income (loss)	(932)	(979)

In total33, Flexterra closed the first half of 2020 with a net loss of -2,022 thousand euro, in line with the -2,266 thousand euro loss in the corresponding period of 2019 (mainly costs for employees engaged in research and general and administrative activities, consulting, costs related to the management of patents and the amortization of intangible assets, including intellectual property).

The SAES Group's share (46.73%) in the result of the joint venture in the first half of 2020 amounted to a loss of -945 thousand euro (a loss of -1,058 thousand euro at June 30, 2019), to which the other components of the statement of comprehensive income have to added, a positive amount of 13 thousand euro from the translation differences generated by the translation into euro of other currency financial statements of Flexterra, Inc. and Flexterra Taiwan Co., Ltd. (+79 thousand euro in the first half of 2019).

As reported previously, due to the COVID-19 pandemic, the value of the investment was impairment tested as at June 30, 2020. To this end, the value in use was calculated using the Free Operating Cash Flow method, starting from the plans for the period July 1, 2020 - December 31, 2024 approved by the Board of Directors of SAES Getters S.p.A. on July 16, 2020. These estimates are included in an updated version of the five-year plans already approved by the Board of Directors of Flexterra, Inc. on February 12, 2020, in the light of business developments during the first half of this year.

The weighted average cost of capital (WACC) applied to future cash flows was 30%, in line with the joint venture's current pilot production phase.

In the discounting model of future cash flows, a terminal value was considered to reflect the residual value that the company should generate beyond the period covered by the plans; this value was estimated prudentially at a growth rate (g-rate) of zero and a time horizon of 10.5 years estimated after the period envisaged by the plans.

No potential further impairment of assets emerged from the test conducted.

The following table provides the number of employees of the joint venture Flexterra broken down by category, based on the percentage of ownership held by the Group at June 30, 2020 (46.73%).

Flexterra	June 30,		December 31,
2020		2019
	46.73%		46.73%
Managers		3	3
Employees and middle		5	6
Workers		0	0
Total		8	9

33 Values at 100%.

85

The number of employees was essentially the same as at the end of 2019.

18. SECURITIES IN THE PORTFOLIO

The "Securities in the portfolio" at June 30, 2020, amounted to a total of 200,361 thousand euro compared to 205,452 thousand euro at December 31, 2019.

(thousands of euro)
Securities in the portfolio	June 30, 2020	December 31, 2019	Difference
Securities in the portfolio classified under non current assets	130,236	134,673	(4,437)
Securities in the portfolio classified under current assets	70,125	70,779	(654)
Totale	200,361	205,452	(5,091)

The decrease is mainly due to the reduced fair value of the securities portfolio (-6,476 thousand euro in the first half of this year), caused by the COVID-19 epidemic and the negative effect it has had on the financial markets. In the first half of the year, also note the additional net investments in the "Buy & Hold" bond portfolio for around 1.4 million euro34.

The following table provides the details of securities subscribed and their fair value as at June 30, 2020 compared to December 31, 2019.

Description	Details	Underwriting company	Initial investment	Value as at June 30, 2020	Value as at December 31,
2019
(thousands of euro)
				(thousands of euro)
Bond portfolio "Buy & Hold "	portfolio with a
	conservative
	investment profile and	SAES Investments	70.4 million euro	70,125	70,779
	mainly with high	S.A.
	flexibility and liquidity.
Credit Linked Certificates (CLC )	financial instruments
	linked to the
	performance of
	underlying bonds and	SAES Getters S.p.A.	30 million euro	29,492	30,884
	debt securities issued
	by leading Italian
	banks; due to mature
	at five years from the
	subscription.
Cardif Lux Vie Multiramo policy
	minimum guaranteed
	rate (of 0.5%, net of
	the management fees,
	up to the end of 2019)
	and a return from the
- Branch I	policy equal to the net		40 million euro	40,665	40,665
	return made by the
	separately managed
	General Fund if higher	SAES Investments
	than the minimum
	S.A.
	guaranteed rate.
	dynamic multi-line
	mandate, with the goal
	of conserving the
	invested capital value
- Branch III	through a		60 million euro	60,079	63,124
	conservative volatility
	profile in the
	construction of the
	portfolio.
Total				200,361	205,452

Apart from the "Buy & Hold" bond portfolio, classified under current assets, all the other financial assets of the Group were classified under non-current assets since they were the subject of a guarantee for the medium/long-term loan obtained by the Parent Company to cover the payment to

34 Investments equal to 4.4 million euro, net of 3 million euro in disinvestments.

86

acquire the ordinary shares under the partial voluntary tender offer finalized at the end of May 2019 (see Note no. 28 for the details on the loan).

With regard to the fair value measurement of the securities in the portfolio as at June 30, 2020, note that the fair value, calculated by an independent third party, coincides with the market prices on the reporting date for all securities listed in an active market (Level 1 of the fair value hierarchy) and, where there is no active market, the fair value has been calculated by using the most common measurement models and techniques available on the market or by referring to prices of comparable securities (Level 2 of the fair value hierarchy). In particular, the fair value used to measure the bond portfolio and the Credit Linked Certificates was Level 1, whereas that for the Cardif Policy was Level 2.

19. DEFERRED TAX ASSETS AND LIABILITIES

As at June 30, 2020 the net balance of deferred tax assets and deferred tax liabilities was positive and equal to 63 thousand euro, compared to a positive amount of 456 thousand euro at December 31, 2019.

The related details are provided below.

(thousands of euro)
Deferred taxes	June 30, 2020	December 31, 2019	Difference
Deferred tax assets	8,911	9,126	(215)
Deferred tax liabilities	(8,848)	(8,670)	(178)
Total	63	456	(393)

Since deferred tax assets and liabilities have been recognized in the consolidated financial statements in consideration of the offsetting for legal entities, when appropriate, the following table shows deferred tax assets and liabilities before the offsetting process.

(thousands of euro)
Deferred taxes	June 30, 2020	December 31, 2019	Difference
Deferred tax assets	11,457	11,751	(294)
Deferred tax liabilities	(11,394)	(11,295)	(99)
Total	63	456	(393)

The following tables provide a breakdown by nature of the temporary differences that comprise deferred tax assets and liabilities, compared with the figures as at December 31, 2019.

87

(thousands of euro)
	June 30, 2020	December 31, 2019
Deferred tax assets	Temporary	Fiscal effect	Temporary	Fiscal effect
differences	differences
Intercompany profit eliminations	24,463	6,234	25,366	6,438
Differences on depreciation/amortization and write-downs	2,053	488	2,029	481
IAS 19 effect	220	64	220	64
Bad debts and financial assets write-down	481	117	503	125
Inventory provisions	4,872	1,148	4,024	961
Provisions	1,699	404	1,542	382
Cash deductable expenses	8,599	2,059	9,489	2,292
Deferred taxes on recoverable losses	1,673	401	1,673	401
Exchange differences and other	802	542	1,048	607
Totale		11,457		11,751

The decrease in deferred tax assets compared to the end of the previous financial period (-294 thousand euro) is mainly due to the issue of deferred tax assets recorded on the bonuses matured in the 2019 financial period and owed to the Executive Directors and the employees of the Parent Company, paid in the first half of 2020.

As at June 30, 2020 the Group had 150,831 thousand euro in fiscal losses eligible to be carried forward, mainly related to the Parent Company, to the subsidiary SAES Getters International Luxembourg S.A. and to E.T.C. S.r.l. in liquidation (fiscal losses eligible to be carried forward amounted to 145,595 thousand euro as at December 31, 2019).

The fiscal losses eligible to be carried forward that were taken into account when determining deferred tax assets were equal to 1,673 thousand euro (unchanged compared to December 31, 2019) and were exclusively related to SAES Coated Films S.p.A. These assets were recognized on the basis of recoverability tests performed by the Directors, which confirmed that the assumptions in the 2019 Annual Report are still valid.

(thousands of euro)
	June 30, 2020	December 31, 2019
Deferred tax liabilities	Temporary	Fiscal effect	Temporary	Fiscal effect
differences	differences
Tax due on distribution of earnings accumulated by the subsidiaries	(51,979)	(4,610)	(52,835)	(4,277)
Differences on depreciation/amortization and assets fair value revaluations	(27,320)	(6,601)	(24,044)	(5,943)
Securities fair value revaluations	(179)	(45)	(3,795)	(947)
IAS 19 effect	(455)	(109)	(455)	(109)
IFRS 16 leasing effect	(51)	(12)	(31)	(8)
Other	(71)	(17)	(48)	(11)
Total		(11,394)		(11,295)

The deferred tax liabilities recorded in the consolidated financial statements as at June 30, 2020 included in addition to the fiscal provision on taxes due in the event of distribution of the net income and the reserves of the subsidiaries for which a distribution is expected in a foreseeable future, also the temporary differences on the gains identified during the purchase price allocation of the US companies acquired in the past years and the more recently acquired company, SAES Coated Films S.p.A.

The increase in deferred tax liabilities compared to December 31, 2019 (+99 thousand euro) is mainly due to temporary differences between fiscal and statutory amortization of the US affiliate Memry Corporation and the provision for taxes due in the case of distribution of profits and reserves of the subsidiaries, only partly offset by the release of deferred tax liabilities recognized in the previous year on the revaluation at fair value of securities in the portfolio held by SAES Investments S.A.

20. TAX CONSOLIDATION RECEIVABLES FROM THE CONTROLLING COMPANY

88

The item "Tax consolidation receivables from the Controlling Company" (128 thousand euro) refers to the residual receivable, originally due to SAES Advanced Technologies S.p.A. and now due to the Parent Company35, from S.G.G. Holding S.p.A., following a claim for a refund that the latter had presented as consolidating entity of the tax consolidation scheme in place until December 31, 2014.

The decrease compared to December 31, 2019 (-144 thousand euro) is due to the partial reimbursement in May from the Tax Authorities, transferred from S.G.G. Holding S.p.A. to the Parent Company in June.

Starting from January 1, 2015, following the decrease of the stake of S.G.G. Holding S.p.A. in SAES Getters S.p.A. below the threshold of 50%, the prerequisite to access to the tax consolidation scheme with S.G.G. Holding S.p.A. as consolidating company ended, as envisaged by the combined provisions of articles 117 and 120 of the Consolidated Law on Income Tax ("TUIR"). The Italian companies of the Group36 currently participate in a new tax consolidation scheme with the Parent Company as consolidator.

There is no credit or debit balance with SAES Getters S.p.A. since the positive taxable income was offset with the negative income. For more details, please see Note no. 35.

21. FINANCIAL RECEIVABLES FROM RELATED PARTIES

The item "Financial receivables from related parties" amounted to 50 thousand euro as at June 30, 2020, and refers to the interest-bearing loan granted by SAES Group to the joint venture SAES RIAL Vacuum S.r.l. The portion expected to be repaid by the joint venture within one year is classified under current assets (1 thousand euro, equal to the interest accrued in the first half of 2020 and not yet collected at June 30, 2020), while the remaining portion was recognized under non-current assets (49 thousand euro, equal to the principal portion).

The financial receivable, equal to a total of 9,858 thousand euro, which arose against the loans granted to the joint venture Actuator Solutions GmbH, was entirely written off since it is considered to be irrecoverable.

The related details are given in the tables below.

Actuator Solutions GmbH

1. Please note that SAES Advanced Technologies S.p.A. merged into SAES Getters S.p.A. effective from January 1, 2016 from an accounting point of view.
2. SAES Getters S.p.A., SAES Nitinol S.r.l. and E.T.C. S.r.l. in liquidation. In October 2017, the option to also include Metalvuoto S.p.A. (later renamed SAES Coated Films S.p.A.) within the scope of the national tax consolidation was exercised, effective from January 1, 2017.

89

Description		Currency	Principal	Timing of capital reimbursement	Interest rate	Value	Value
	as at June 30, 2020 (*)	as at December 31, 2019 (*)
			(thousands of euro)			(thousands of euro)	(thousands of euro)
Loan granted in October 2014		EUR	1,200	flexible, with maturity date October 2018	6% annual	74	74
	extended to December 2020 (°)	fixed rate
Loan granted in April 2016		EUR	1,000	flexible, with maturity date April 2019	6% annual	99	99
	extended to December 2020 (°)	fixed rate
Loan signed in July 2016:		EUR	2,000	flexible, with maturity date April 2019	6% annual
- first tranche granted in July 2016				3,697	3,607	(#)
			extended to April 2024 (°°)	fixed rate
- second tranche granted in September 2016		EUR	1,000
		EUR	1,000
Loan signed in November 2016:		EUR	1,000
- first tranche granted in November 2016;
- second tranche granted in January 2017;		EUR	1,000	flexible, with maturity date April 2019	6% annual
- third tranche granted in February 2017;				5,988	5,839
			extended to April 2024 (°°)	fixed rate
- fourth tranche granted in March 2017;		EUR	1,000
- fifth tranche granted in April 2017;
- sixth tranche granted in February 2018.		EUR	500
		EUR	500
Total			10,200			9,858	9,619
Financial receivables from related parties provision					(9,858)	(9,619)
Total net of write-downs					0	0

(*) Interests included; on December 17, 2019 SAES Nitinol S.r.l. and Actuator Solutions GmbH have signed an agreement under which the payment of all interest accrued from 2016 to 2019 has been postponed to December 31, 2020.

(°) The value includes only the portion of interest accrued in the 2016-2018 period.

(°°) In January 2019, the duration of the loan was extended by five years, delaying the expiry from April 30, 2019 to April 30, 2024.

(#) On January 15, 2019, SAES Nitinol S.r.l. irrevocably waived the guarantee granted jointly by Alfmeier S.E. and SMA Holding GmbH, by means of a letter of patronage, on 50% of the loan.

All financial receivables (both principal and interest) owed to the Group by the joint venture at December 31, 2019 (9,619 thousand euro) had already been fully written off at the end of the previous year, following the letter of postponement issued by SAES Nitinol S.r.l., in order to guarantee business continuity for Actuator Solutions.

The financial receivable corresponding to the interest accrued in the current half-year period was also written-off as at June 30, 2020 (239 thousand euro) since SAES management does not consider it recoverable.

SAES RIAL Vacuum S.r.l.

Description	Currency	Principal	Timing of capital	Interest rate	Value as at	Value as at
reimbursement	June 30, 2020 (*)	December 31, 2019 (*)
		(thousands of euro)			(thousands of euro)	(thousands of euro)
Loan granted in January 2016	EUR	49	flexibile	Three-months Euribor, plus	50	50
2.50% spread
(*) Interests included.

22. OTHER LONG TERM ASSETS

The "Other long-term assets", at June 30, 2020, amounted to 1,466 thousand euro compared to 1,528 thousand euro at December 31, 2019.

This item, in addition to the deposits paid by the various Group companies, within the scope of its operating activities, includes the advance, of 1,100 thousand euro, for a potential minority investment still being evaluated. As regards the latter, note that, in the context of general uncertainty caused by the spread of the COVID-19 epidemic, all activities associated with this extraordinary transaction were prudentially suspended until at least mid-September. If the transaction is not successful, the advance paid will be reimbursed to the SAES Group.

23. INVENTORY

90

The inventory amounted to 31,845 thousand euro as at June 30, 2020, with an increase of +6,298 thousand euro compared to December 31, 2019.

The following table shows the breakdown of inventory as at June 30, 2020 compared with December 31, 2019.

(thousands of euro)
Inventory	June 30, 2020	December 31,	Difference
		2019
Raw materials, auxiliary materials and spare parts	11,455	8,639	2,816
Work in progress and semi-finished goods	12,313	10,735	1,578
Finished products and goods	8,077	6,173	1,904
Total	31,845	25,547	6,298

Without the negative effect of exchange rates (-23 thousand euro), inventory would have increased by 6,321 thousand euro. The growing volumes of stocks in the Nitinol segment, associated with completion of the new tubes department of Memry Corporation and in view of early purchases of raw materials and semi-finished goods to avoid potential supply delays caused by COVID-19, should be added to the higher stocks of palladium in the security and defense sector, again linked to COVID risks, as well as the higher inventories in the Specialty Chemicals Division ready for orders in the second half of the year.

Inventory is stated net of any provision for write-down, which in the first half of 2020 recorded the changes shown in the table below.

(thousands of euro)

Inventory provision

	December 31, 2019	2,919
	Accrual	631
	Release into income statement	(91)
	Utilization	(197)
	Translation differences	1
	June 30, 2020	3,263

The provision (+631 thousand euro) refers mainly to the write-down of raw materials, semi- finished goods and finished products characterized by slow turnover or no longer used in the production process, in particular by the Parent Company and by the US affiliates SAES Smart Materials, Inc. and Memry Corporation.

The release to the income statement (-91 thousand euro) was a consequence of a recall into production of warehouse codes that were written down in the previous year in the Nitinol division and by the affiliate SAES Getters USA, Inc.

The utilization (-197 thousand euro) is related to the scrapping of items that had already been written down in previous years by the Parent Company, particularly in the lamps business.

As a result of the global economic and financial crisis caused by the COVID-19 pandemic, Management considered it appropriate to carry out additional tests for potential impairment of inventories of raw materials, semi-finished goods and finished products no longer sellable due to solvency problems associated with the end customers. This analysis did not bring to light a need to include dedicated and additional adjustments to the net value of inventory.

91

24. TRADE RECEIVABLES

Trade receivables, net of the bad debt provision, were equal to 22,873 thousand euro as at June 30, 2020 and increased by 1,118 thousand euro compared to December 31, 2019.

If the effect of exchange rate fluctuations is removed (+46 thousand euro), the increase (+1,072 thousand euro) is mainly due to the higher trade receivables of the US affiliate SAES Getters U.S.A., Inc., explained by the strong overall growth recorded in the security and defense business in the second quarter of 2020 compared to the last quarter of 2019, and of the Parent Company (penalized by a slight increase in average collection times in the Specialty Chemicals Division).

The breakdown of the item as at June 30, 2020 and December 31, 2019 is shown in the following table.

(thousands of euro)
Trade receivables	June 30,	December 31,	Difference
	2020	2019
Gross value	23,195	22,071	1,124
Bad debt provision	(322)	(316)	(6)
Net book value	22,873	21,755	1,118

Trade receivables are not interest-bearing and generally are due after 30-90 days.

The bad debt provision recorded the following changes during the period.

(thousands of euro)
Bad debt provision	June 30,	December 31,
2020	2019
Opening balance	316	416
Accrual	20	6
Release into income statement	(1)	(32)
Utilization	(12)	(75)
Translation differences	(1)	1
Closing balance	322	316

The accrual to income statement (+20 thousand euro) was mainly related to the write-down of a specific credit position of the affiliate SAES Coated Films S.p.A., estimated by Management as non-recoverable.

This item also includes the generic write-down recognized as at June 30, 2020 (+6 thousand euro), made according to the Expected Credit Loss model envisaged by IFRS 9 and based on the calculation of the expected average non-recoverability using historic and geographical indicators. The same calculation as at December 31, 2019, had resulted in release of the bad debt provision for -6 thousand euro (included in the line "Release into income statement").

Release into income statement (-1 thousand euro) is a result of the partial collection of a receivable fully written down by SAES Coated Films S.p.A. in previous years.

The utilization (-12 thousand euro) refers almost exclusively to the part not collected, and later permanently written off, of the above-mentioned receivable of the affiliate SAES Coated Films S.p.A. and the write-off by the Parent Company of a trade receivable considered non-recoverable and already written down as at December 31, 2019.

92

The following table provides a breakdown of trade receivables, by those not yet due and past due as at June 30, 2020, compared with the previous year.

(thousands of euro)

Ageing	Total	Not yet due		Due not written down		Due written
					down
			< 30 days	30 - 60 days	60 - 90 days	90 - 180 days	> 180 days
June 30, 2020	23,195	17,083	3,353	1,265	827	321	24	322
December 31, 2019	22,071	16,236	3,507	1,613	320	58	21	316

Receivables past due more than 30 days and not written down, since they are considered recoverable, represent an insignificant percentage if compared to the total trade receivables, and are constantly monitored. The higher impact of these receivables on total trade receivables (from 9.1% as at December 31, 2019 to 10.5% as at June 30, 2020) was mainly due to some specific credit positions of the Parent Company and the affiliate SAES Coated Films S.p.A., which was partly collected in July.

The table below illustrates the calculation of the average number of days for the Group to collect trade receivables after sale (Days of Sales Outstanding, or DSO), as at June 30, 2020 and December 31, 2019, respectively.

	June 30,	December 31,	Difference
	2020	2019
Days of Sales Outstanding - DSO (*)	46	44	2

1. DSO is an average collection time indicator for trade receivables and it is calculated as follow: Trade receivables / Annualized net revenues * 365.

The DSO as at June 30, 2020, was essentially in line with December 31, 2019, and therefore shows no significant delays in payments from customers.

As a result of the COVID-19 pandemic, Management considered it appropriate to carry out additional tests, at Group level, for potential impairment of trade receivables considered not recoverable due to solvency difficulties of the end customers.

In particular, in addition to updating the expected loss calculation (see previous comments), an in- depth analysis was conducted of individual positions past due by more than 90 days to assess the probability of their collection by the Group.

From this analysis, further supported by the fact that the DSO is essentially aligned to that of December 31, 2019, no need emerged for an additional write-down.

Management considers the forecasts generated to be reasonable and sustainable, though current circumstances are a cause of uncertainty.

In relation to credit risk management on trade receivables, in order to understand how the Group monitors and manages credit quality in the event that the relative trade receivables are not past due or written down, please refer to the Interim Report on Operations.

25. OTHER RECEIVABLES, ACCRUED INCOME AND PREPAID EXPENSES

This item, which includes current non-trade receivables from third parties, along with prepaid expenses and accrued income, showed a balance of 4,418 thousand euro as at June 30, 2020, compared to 4,677 thousand euro as at December 31, 2019.

A breakdown of this item is provided below.

93

(thousands of euro)
Prepaid expenses, accrued income and other	June 30, 2020	December 31,	Difference
		2019
Income tax and other tax receivables	1,139	1,863	(724)
VAT receivables	1,140	1,236	(96)
Social security receivables	32	32	0
Personnel receivables	4	1	3
Receivables for public grants	89	63	26
Other receivables	10	5	5
Total other receivables	2,414	3,200	(786)
Accrued income	0	0	0
Prepaid expenses	2,004	1,477	527
Total prepaid expenses and accrued income	2,004	1,477	527
Total prepaid expenses, accrued income and other	4,418	4,677	(259)

The item "Income tax and other tax receivables" includes the receivables for tax advances paid and other tax credits of the Group's companies with local authorities. Compared to December 31, 2019, the decrease (-724 thousand euro) is mainly related to the tax advances paid by the affiliate SAES Getters/U.S.A., Inc. on its own behalf and on behalf of the other American affiliates (Spectra-Mat, Inc., Memry Corporation and SAES Smart Materials, Inc.), the payment of which was deferred to July 2020 as a COVID-19 government measure in support of businesses. This decrease was only partially offset by the Parent Company's higher tax credits for recoverable withholding taxes applied mainly on royalties and intercompany dividends.

The decrease in "VAT receivables" was mainly due to offsetting by the Italian companies of the receivable generated in 2019 against other taxes and contributions relating to 2020. These decreases were only partially offset by the receivable generated in SAES Getters S.p.A. in the first half of 2020 due to the surplus of the taxable purchasing transactions over sales transactions and not yet subject to offsetting.

The item "Receivables for public grants" was composed of receivables accrued by the Parent Company as at June 30, 2020 in grants for outstanding research projects.

During the first half of the year, income from public funding amounted to 30 thousand euro (79 thousand euro in the first half of 2019).

The increase in the item "Prepaid expenses" was mainly due to all the cost items (particularly, insurance costs) which were paid in advance at the beginning of the year but which refer to the entire period (at December 31, 2019, these costs were not deferred since the respective invoices applied to the year).

Please note that there are no receivables due after more than five years.

Public grants - disclosure pursuant to the Law no. 124 of August 4, 2017, article 1, paragraphs 125-129

Law no. 124 of August 4, 2017 - article 1, paragraphs 125-129 - "Fulfilment of transparency and disclosure obligations" introduced, starting from the 2018 financial statements, a series of disclosure and transparency obligations by parties who have financial dealings with the Public Administration. In light of the guidelines expressed by industry sources, the disclosure requirement is not deemed to apply to:

• general measures that can be used by all companies that fall under the general structure of the applicable system defined by the State (e.g., ACE);

94

• selective economic benefits, received in application of an aid regime, accessible to all companies that meet certain conditions, on the basis of general pre-determined criteria (e.g., contributions for research and development products and tax incentives);
• public resources that can be related to public parties of other states (European or non-European) and European institutions;
• contributions for training received by inter-professional funds, since they are funds for association purposes and for entities governed by private law, funded with contributions paid by the companies themselves.
  In accordance with the above, the analysis made showed that the Group, in the first half of 2020, similarly to the previous financial period, did not receive public grants that would fall under the application of law no. 124/2017 (article 1, paragraphs 125-129) as amended.

26. CASH AND CASH EQUIVALENTS

The item includes the liquid funds for the cash flow management necessary for the operating activities.

The following table shows a breakdown of this item as at June 30, 2020 and December 31, 2019.

(thousands of euro)
Cash and cash equivalents	June 30, 2020	December 31,	Difference
	2019
Bank accounts	31,212	48,623	(17,411)
Petty cash	11	11	0
Total	31,223	48,634	(17,411)

The item "Bank accounts" consists of short-term deposits with some leading financial institutions, denominated primarily in euro, US dollars and Chinese renminbi.

"Bank accounts" are shown net of the write-down, amounting to -26 thousand euro, determined in application of IFRS 9. In particular, the expected losses were calculated in accordance with a default percentage associated with each bank where the cash and cash equivalents are deposited, obtained on the basis of each bank's rating.

At December 31, 2019, the write-down amounted to -78 thousand euro and the reduction of the expected losses at June 30, 2020 (52 thousand euro) was mainly a result of the lower amount of cash held by the Group, whilst the riskiness associated with the banks with which the Group operates essentially remained unchanged.

For a detailed analysis of the changes occurred in cash and cash equivalents during the period please refer to the comments on the cash flow statement (Note no. 39).

As at June 30, 2020 the Group has unused credit lines equal to 84.2 million euro compared to 25.7 million euro as at December 31, 2019.

The increase is due to the Parent Company's signing of two new revolving cash credit lines, respectively with Unicredit S.p.A. on March 6, 2020, and with Intesa Sanpaolo S.p.A. on April 30, 2020, each for a maximum of 30 million euro and with a fixed duration of thirty-six months.

Both the credit lines provide for compliance with only one financial covenant (positive consolidated net financial position) subject to half-yearly verification. As better shown in the table below, as at June 30, 2020, all of the covenants had been met.

95

				RCF Unicredit		RCF Intesa Sanpaolo
			(*)	(**)
		Covenant		June 30, 2020		June 30, 2020
Net financial position	k	> 0		99,477		99,487
euro

1. Net financial position calculated excluding financial receivables from related parties, receivables
   (payables) for derivative financial instruments evaluated at fair value and financial liabilities for leasing contracts pursuant to IFRS 16.
   (**) Net financial position calculated excluding financial liabilities for leasing contracts pursuant to IFRS 16.

Reconciliation of net financial debt

Details on the Group's net financial debt are provided below, drafted in accordance with Consob Communication no. DEM/6064293 of July 28, 2006.

	(thousands of euro)
		June 30,	March 31,	December
		2020	2020	31, 2019
A.	Cash	11	10	11
B.	Other cash and cash equivalents	31,212	45,941	48,623
C.	Securities held for trading	70,125	67,767	70,779
D.	Cash and cash equivalent (A)+(B)+(C)	101,348	113,718	119,413
E.	Current financial receivables	1	0	1
F.	Bank overdraft	(27,066)	(27,282)	(27,195)
G.	Current portion of long term debt	(5,237)	(5,629)	(5,365)
H.	Other current financial liabilities	(3,490)	(3,818)	(2,826)
I.	Current financial liabilities (F)+(G)+(H)	(35,793)	(36,729)	(35,386)
J.	Current net financial position (I)+(E)+(D)	65,556	76,989	84,028
K.	Long term debt, net of current portion	(98,125)	(99,933)	(100,724)
L.	Bonds issued	0	0	0
M.	Other non-current payables	(2,072)	(2,436)	(2,710)
N.	Non current financial liabilities (K)+(L)+(M)	(100,197)	(102,369)	(103,434)
O.	Net financial debt (J)+(N)	(34,641)	(25,380)	(19,406)

The table below shows the reconciliation of the net financial debt in accordance with Consob Communication no. DEM/6064293 of July 28, 2006 and the net financial position indicated in the Report on Operations.

(thousands of euro)
	June 30,	March 31,	December
	2020	2020	31, 2019
Net financial debt included in the Explanatory notes	(34,641)	(25,380)	(19,406)
Related parties non current financial assets	49	49	49
Securities - long term	130,236	128,129	134,673
Net financial position included in the Management Report	95,644	102,798	115,316

96