1

GVS SPA GROUP

CONSOLIDATED INTERIM FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(un-audited)

GVS SpA

Headquarter in Via Roma, 50 - 40069 Zola Predosa (Bologna) - Italy

Share capital Euro 1,646,834 fully paid-up - fiscal code No. 03636630372 - VAT No. 00644831208

R.E.A 305386/BO - registered with the companies’ register of Bologna under No. 00644831208

2

DIRECTOR’S REPORT

The Directors of GVS SpA (hereinafter also the “Company” or “Parent Company”) present their Report

together with the Consolidated Interim financial information of GVS SpA and its subsidiaries (together the

“Group”) for the six-month period ended June 30, 2015 (hereinafter also referred to as the “Consolidated

Interim Financial Information”).

1 Highlights

Total Production value € 68.8M: 15% YTD growth on the previous year.

18% EBITDA Margin on Production value, 7% YTD growth on the same period of the previous year.

€ 6,9M of EBIT: 4% YTD growth on the same period of the previous year.

40,2 M€ as Net Financial Position: Gearing of 0,66 and NFP/EBITDA of 1,6.

2 Review of operations and financial results

Net sales for the six months period ended June 30, 2014 increased by 14% when compared with the same

period of prior year, in line with the beginning expectations.

Ebitda is some 18% on total production value and the 2015 profitability is actually a bit lower beginning

expectations mainly for the Brasilian economic crisis which is penalizing the local result

The consolidation area has changed compared to prior year. On 7 April 2015 a new company (Aero

Produtos de Seguranca Ltda) operating in Safety business (Personal Protective Equipment) and specifically

in manufacturing and marketing of disposable protective masks was purchased in Brazil. In addition in the

first semester GVS SpA acquired the Star Flyer Business Unit. Both acquisition did not affect significantly the

total consolidation result of the first semester.

The net financial position as at June 30, 2015 is negative of some 40,2 million of Euro and the projection for

the end of the year shows an expected negative net financial position of some 40 million of Euro. For the

cash flow movement of the period refer to consolidated cash flow statement.

3

CONSOLIDATED BALANCE SHEET

4

5

CONSOLIDATED INCOME STATEMENT

6

CONSOLIDATED CASH FLOW STATEMENT

7

3 General Information

The Group's main business is the production and sale of plastic filters for the medical and automotive

sectors, testing labs and filters for air applications.

4 Preamble

The Consolidated Interim financial information of GVS SpA (hereinafter also the “Company” or “Parent

Company”) and its subsidiaries (together the “Group”) for the six-month period ended June 30, 2015

(hereinafter also referred to as the “Consolidated Interim Financial Information”) have been prepared on a

voluntary basis in order to illustrate to all the GVS stakeholders the performance of its operations in the

first six months of the 2015 financial year, accordingly, the information reported in the Interim Financial

Information has the purpose indicated above.

The Consolidated Interim Financial Information are made up of the Balance Sheet, the Income Statement,

the Cash Flow Statements and these Notes to the financial statements, and were prepared in accordance

with Accounting Standard no. 30 “Interim Financial statements” issued by the Organismo Italiano di

Contabilità (“OIC”, Italian Accounting Board), according to financial statement formats consistent with

those making up the annual accounts.

The comparative data reported in the Consolidated Interim Financial Information refer for the income

statements to the six-month period ended June 30, 2014 and for the balance sheet to the data included in

the consolidated financial statements as at December 31, 2014.

The amounts in the Balance Sheet and the Income Statement are expressed in thousands of Euro as well as

the amounts in the Notes are reported in thousands of Euro.

The Balance Sheet and the Income Statement give a true and fair view of the Group’s asset and liability and

financial position, respectively, as well as of the economic result achieved in the period under

consideration.

The preparation of Consolidated Interim Financial Information in accordance with OIC 30 - Interim Financial

Statements requires judgments, estimates and assumptions to be made that have an effect on assets,

liabilities, costs and revenues. It should be noted that the final results calculated at the end of the financial

year may prove to be partially different from those obtained through these estimates.

The accounting schedules of Income Statement and Balance Sheet have been prepared in full form, and are

the same as those adopted for the annual accounts ended December 31, 2014. The Notes to the financial

statements reported below regard an interim report and do not therefore include all the information

required for annual year-end accounts. It should be noted, however, that apart from compliance with the

minimum disclosure requirements under OIC 30, additional information has been provided in relation to

those Income Statement and Balance Sheet components whose composition or variation, whether in terms

of amount, nature or because of its unusual character, are considered essential for the purposes of

understanding the Group’s economic, financial and asset and liability position for the six-month period

ended June 30, 2015.

8

5 Summary of significant accounting policies

To prepare these Consolidated Interim Financial information for the six-month period ended June 30 2015,

accounting standards and policies were adopted which are the same as those applied to the preparation of

the financial statements for the year ended December 31, 2014.These standards are those laid down in

Article 2423-bis of the Italian Civil Coded, as supplemented by the correct accounting standards issued by

the Consigli Nazionali dei Ragionieri e dei Dottori Commercialisti (National Councils of Certified Public

Accountants) and the Italian Accounting Board.

Specifically, the financial statement items were measured on the basis of general principles of prudence

and clarity, on a going-concern basis and taking account of the economic function of each of the elements

in the assets and liabilities, in order to give a true and fair view of the Company’s asset and liability and

financial position, and the economic result for the period.

The significant accounting policies applied in the preparation of these consolidated financial accounts and

related notes are set out below.

5.1 Consolidation

The consolidated financial figures reflect the accounts of GVS SpA and its subsidiaries (“Group”).

Subsidiaries are those entities which the Company controls by having the power to govern the financial and

operating policies. Subsidiaries are fully consolidated from the date of which control is transferred to the

Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances,

income and expenses on transactions between Group companies are eliminated.

Accounting policies of subsidiaries have been changed, where necessary, to ensure consistency with the

policies adopted by the Group.

5.2 Consolidation Area

The consolidated financial statements include the statements of the Parent company (GVS SpA) and of its

(directly or indirectly owned) subsidiaries. The list of the operative consolidated companies, the names of

their direct Shareholder and the percentage of shares directly or indirectly owned by GVS SpA is shown

below:

9

On 7 April 2015 a new company (Aero Produtos de Seguranca Ltda) operating in Safety business (Personal

Protective Equipment) and specifically in manufacturing and marketing of disposable protective masks was

purchased in Brazil. In addition in the first semester 2015 GVS SpA acquired the Star Flyer Business Unit.

Both acquisition did not affect significantly the total consolidation result of the first semester.

5.3 Foreign currency translation

Items included in the financial statements of each group’s entities are measured using the currency of the

primary environmental in which the entities operates (the “functional currency”). The consolidated

financial figures are presented in Euro, which is the Group’s functional currency.

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing

at the dates of the transactions or valuation where items are re-measured. Foreign exchange gain and

losses resulting from the settlement of such transactions and from the translation at year-end at the

exchange rates of monetary assets and liabilities denominated in foreign currency are recognized in the

income statement.

The result and financial position of all Group entities that have a functional currency different from the

presentation currency are translated into the functional currency as follows:

- Assets and liabilities for each balance sheet presented are translated at the closing rate at the date

of that balance sheet;

- Income and expenses for each income statements are translated at the average exchange rate;

- All resulting exchange differences are recognized in equity in the line “translation difference

reserve”.

5.4 Intangible assets

Intangible assets mainly relate to goodwill and consolidation difference.

Intangible assets, except for construction in progress, are amortized over their useful life based on the

timing of benefits, as described below:

10

An intangible asset’s carrying amount is written down immediately to its recoverable amount if the asset’s

carrying value amount is greater than its estimated recoverable amount.

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring

to use the specific software. These costs are amortized over their estimated useful life of 3 to 5 years.

5.5 Tangible assets

Property, plant and equipment are recognized at cost less accumulated depreciation. Historical cost

includes ancillary costs directly attributable to the acquisition of the items. The depreciable amount of an

asset, except for land or construction in progress, is calculated on a systematic basis over its expected

useful life.

The following table contains the depreciation rates considered representative of useful lives of the assets.

- Land and construction in progress Not depreciated

- Buildings 3%

- Light buildings 10%

- General plant and machinery 7.5%

- Specific plant and machinery 12.5%

- Molds and specific equipment 12.5%

- Furniture and fittings 12%

- Electronic office machinery 20%

- Sundry equipment 40%

- Internal transport machines and vehicles 20/25%

The assets useful lives are reviewed, and adjusted if appropriate, at each year end.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying

value amount is greater than its estimated recoverable amount.

11

5.6 Fixed financial assets

Fixed financial assets are mainly made up of receivables related to guarantee deposits which are entered at

their presumed realisable value. Own share are entered at their purchase cost, possibly deducting any long-

lasting decrease in value.

5.7 Inventories

Inventories are measured at the lower of cost and net realizable value. Cost is determined using the

weighted average method. The cost of finished goods and work in progress comprises raw materials, direct

labor, other direct cost and related production overheads. Net realizable value is the estimated selling price

less the estimated costs of completion and the applicable variable selling expenses.

5.8 Receivables and payable

Receivables are entered at their presumed realisable value, through the creation of a provision for bad

debts.Trade receivables are amounts due from customer for items sold in the ordinary course of business.

Payables are entered at their face value.

5.9 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, checks and cash at bank. Cash and cash equivalents are

entered at their face value.

5.10 Provision for risks and charges

Provisions for risks and charges are allocated to cover certain or probable losses or payables whose amount

or timing was however uncertain at the end of the period.

In measuring these provisions, the general principles of prudence and accruals have been complied with

and no provisions for general risks devoid of any economic justification have been allocated.

Potential liabilities are recognised in the accounts and entered in the provisions as they are deemed

probable and when the amount of the related charge can be reasonably estimated.

5.11 Staff leaving indemnity (TFR)

This represents the actual debt that has accrued towards the employees in accordance with law and the

current labour contracts, considering all forms of remuneration of a continuing nature.

The provision corresponds to the total of the individual indemnities accrued to the employees at the

reporting date, net of advances paid out, and corresponds to the amount that would have to be paid to the

employees in the event of the termination of their employment relationship on that date.

12

5.12 Income taxes

Current taxes are determined by applying the current tax regulations, on the basis of an estimate of the

taxable base for tax purposes. In particular, tax charges determined on the basis of the total taxable income

for the period are classified under “Taxes payable”, while assets consisting of receivables from the Tax

Authorities for tax refunds and/or tax to be offset in periods subsequent to the relevant period are

classified under “Tax receivables”.

Deferred tax assets and liabilities are also recognised on the basis of active or passive temporary

differences arising or reversed in the period between the amounts of assets and liabilities resulting from

the accounts and the corresponding values for tax purposes.

Deferred tax assets are not recognised when there is no reasonable certainty of there being a taxable

income in the periods in which the related temporary differences will be reversed that will be such as to

make it possible to recover their amount.

5.13 Revenue and costs

Revenues and costs are recognised in the Income Statement on an accruals basis at the time of

performance, which, for services, is the time when they were provided or received and, for the sale or

purchase of assets or goods, is the time of the transfer of ownership.

Financial income and charges are recognised on an accruals basis.

5.14 Leases

Leases in which a significant portion of risks and rewards of ownership are retained by the lessor are

classified as operating leases. Payment made under operating leases are charged to the income statements

on a straight-line basis over the period of the lease. Lease contracts in which the Group has substantially all

the significant risk and rewards of ownership are classified as finance leases. Finance leases are capitalized

at the leases’ commencement at the lower of the fair value of the leased property and the present value of

the minimum of the leases payments. Lease payments are allocated between the liabilities and finance

charges. The corresponding rental obligation, net of finance charges, are included in the other long term

payables. The interest elements of the finance costs are charged to the income statement over the lease

period so as to produce a constant periodic rate of interest on the remaining balance of the liabilities for

each period. The property, plant and equipment acquired under finance leases are depreciated over the

shorter of the useful life of the asset and the lease terms.

13

6 Balance Sheet information

6.1 Intangible assets

The change of the period is as follow:

Start-up and expansion costs mainly refer to start-up costs for the Japanese subsidiaries which has been

acquired in 2012 and to incorporation expenses of GVS North America Corporation, which have been

amortized starting from 2013.

Patent rights mainly refer to costs for the registration of new industrial applications or pre-existing

applications in new countries.

Concessions, licenses, trademarks and similar rights include trademarks and licenses for use mainly

concerning GVS SpA..

Consolidation differences and Goodwill have mainly changed in the first semester for the amortization cost

posted for some 2,196 thousand Euros (Euro 2,085 thousand Euros in the first semester 2014).

Construction in progress and advances mainly refer to leasehold improvements in plant located in Sanford

following the shout-down of production previously situated in Indianapolis and the move of the production

in Sanford. The transfer of machines and inventory was completed at the end of June 2015.

Other intangible assets mainly refer to leasehold improvements related to GVS Filter Technologies UK LTD

and Maine Manufacturing LLC building premises and to up-front fees and ancillary costs on bond

procedures completed in January 2014 which will be amortized in 10 years.

6.2 Tangible assets

The change of the period is as follow:

14

6.3 Long term Financial assets

6.3.1 Other long- term receivables

The item, amounting to 248 thousand Euros, mainly refers to guarantee deposits with third parties.

6.3.2 Own shares

On 15th January 2015 the Company acquired own shares from a minority shareholder, the Mandarin

Capital Partner Fund, according to the resolution of 18th December 2014. Following such transaction, the

relevant unavailable reserve was set up. The price was agreed between the parties and the transfer was

completed with the deed of Notary Carlo Vico.

6.4 Inventory

A summary of inventories at June 30, 2015 is presented below

15

Inventory is not subjected to constraints or other restrictions of title.

The amount of 2.394 thousand Euros refers to order WIPs, concerning molds and equipment that will be

sold to customers, mainly from the automotive sector. These are indicated separately from semi-finished

goods as to give a better overview and ensure a more correct interpretation of data.

The above-specified values are entered net of the relevant reserve for obsolescence, which, during the

period, has changed as follows:

6.5 Receivables

A summary of receivables at June 30, 2015 is presented below:

16

6.5.1 Trade receivables

Trade receivables have increased mainly as a consequence of the raise in sales in the last period compared

to prior year.

The above-mentioned trade receivables are posted net of the provision for bad debts, which, during the

period, has changed as follows:

6.5.2 Receivables from Parent Companies

Receivables from parent companies amount to 2,264 thousand Euros and include for 803 thousand Euros

the Ires receivables due to the Holding company and transferred to GVS Corporate SpA for relying on tax

consolidation.

6.5.3 Tax receivables

Tax receivables mainly pertain to the Parent company for 940 thousand Euros, GVS Sud Srl for 484

thousand Euros, the British subsidiary for 376 thousand Euros and American subsidiaries for 151 thousand

Euros. The balance is mainly made up of VAT receivables and tax receivables to be reimbursed or

compensated in the next months.

6.5.4 Deferred tax assets

Deferred tax assets mainly refer for 198 thousand Euros (213 thousand Euros at 31st December 2014) to

the subsidiary GVS do Brasil Ltda for previous losses, and deferred tax assets relating to the American

subsidiaries for 367 thousand Euros, mainly due to temporary differences between the tax value and the

book value of net assets.

6.5.5 Other receivables

Other receivables includes receivables for about 231 thousand Euros concerning a syndicated loan for a

potential enlargement of GVS Sud Srl premises, as well as advances to suppliers for an overall amount of

537 thousand Euros. The light increase during the period is mainly related to advances received by

suppliers.

17

6.6 Financial assets not held as fixed assets

The amount of 1,068 thousand Euros refers to GVS do Brasil Ltda and its direct subsidiary Aero Produtos de

Seguranca Ltda. It is composed of short term securities and certificates of deposit purchased thanks to

temporary liquidity surpluses.

6.7 Cash and Cash equivalent

A summary of cash and cash equivalent at June 30, 2015 is presented below:

During the early months of 2015, various contracts were executed with various banks, which allowed the

Parent Company GVS SpA on one hand to renegotiate the interest rates on existing loans in order to reduce

the average cost for the supply of money and bring it to the current financial market levels and on the

other hand to measure the available cash and cash equivalent consistently with the future industrial

development plan. Refer to the cash flow statement.

6.8 Shareholder’s equity

A summary of the change in net equity during the period is presented below:

6.9 Provision for risk

The provisions for risks and charges are detailed as follows:

18

The Retirement provision refers to the compensation to Parent Company's Directors in case of retirement.

Deferred tax liabilities mainly includes the deferred taxes deriving from consolidation entries and the

deferred taxes deriving from the temporary differences between the accounting value and the fiscal value

of tangible assets of the American and British subsidiaries. The provision was increased last year also as a

result of the audit carried out on GVS SpA by the Italian tax authorities. Although the Parent Company did

not receive any notification from the tax Authorities and there are reasonable grounds to believe that the

assessment risk is limited, such provision has been made exclusively for prudential reasons.

The item other provision for risks and charges decreased as a result of the partial use of the provisions for

restructuring and onerous contracts, which were both known at the time of acquisition of Maine

Manufacturing LLC and taken into account when determining the purchase price of its shares.

6.10 Staff leaving indemnity provision

The amount the staff leaving indemnity provision is 1,660 thousand Euros, and represents the debt as at

June 30, 2015 owed to the employees of the Italian companies belonging to GVS Group employed at that

date, net of any advance paid and of the credit toward INPS treasury.

6.11 Payables

A summary of payables at June 30, 2015 is presented below:

19

6.11.1 Bonds

On the 10th January 2014 the Company completed the issuing of a senior bond, secured and not

convertible, for an amount of 35 million USD at the interest rate equal to 6.50 on the nominal value in USD.

On the same date, a cross currency swap was entered into, under which the loan was converted into Euros

at a fixed Euro/Dollar exchange rate and at a fixed rate of interest of 5.65 on the nominal value in EUR

(initial nominal value equal to 25,649 thousand Euros). The loan has a 10 year duration with a pre-

amortization period of 3 years.

6.11.2 Bank overdrafts, borrowings and loans

Amount of bank overdrafts and loans due to banks in the short term is in total 13,739 thousand Euros:

11,890 thousand Euros of which pertaining to the Parent Company, 568 thousand Euros relating to GVS UK

and 1,283 thousand Euros pertaining to the American company acquired in the previous financial year.

Amounts due to banks over 12 months, equal to 29,977 thousand Euros, mainly refer for 25,040 thousand

Euros to the Parent company and for 4,764 thousand Euros to GVS North America Corp.

Therefore, the amounts due to banks are as follows:

20

Amounts due to other lenders consist of the following loans:

Maturities of long term debts outstanding at June 30, 2015 are as follows (in Euro thousand):

2015 8.682

2016 11.105

2017 10.668

2018 13.884

2019 and thereafter 26.582

70.921

21

6.11.3 Advances

The increase in the item mainly refers to the Parent Company, following receipt of advance payments from

customers during the first semester 2015 for molds and equipment to manufacture.

6.11.4 Accounts payables

Trade payables, equal to 12,212 thousand Euros, refer to supplies of goods and services falling within the

normal scope of business of the Group.

6.11.5 Payables to Parent Companies

The item Due to Parent Companies mainly includes payables to GVS Group and to GVS Corporate for

corporate income taxes for 1,552 thousand Euros, as a result of the tax consolidation.

6.11.6 Taxes

Tax payables relate to income taxes payable and withholding taxes on employees.

6.11.7 Debts vs welfare institutes and social security

Payables to these institutions (INPS, INAIL, INPDAI and more), equal to 1,073 thousand Euros, refer to the

amounts due for social security contributions accrued as at June 30, 2015 and duly paid in next month as

required by law, as well as the deferred contributions due on accrued but not taken holidays, of which 556

thousand Euros refer to GVS SpA.

6.11.8 Other debts

A summary of other current payables at June 30, 2015 is presented below:

Payables to employees refer to wages of the month of June 2015 as well as deferred wages.

22

7 Income statement information

The details of the main items of 2015 and 2014 income statements are listed below.

7.1 Value of Production

This item breaks down as follows:

7.1.1 Revenue from sales and services

Revenue from sales and services, equal to 65,839 thousand Euros, can be split up by business as follows:

Revenue from sales and services increased by 8,246 thousand Euros when compared to the same period of

prior year. Percentage of increase by business units has been summarized in the table below.

Revenue from sales and services, can be split up by geographical area as follows:

23

7.1.2. Other revenue

Other revenue and income for 1,185 thousand Euros, include government grants for 587 thousand Euros,

291 thousand Euros for expense recoveries and recharges and 75 thousand Euros for resale of work waste.

7.2 Cost of Production

This item breaks down as follows:

7.3 Financial income and charges

This item breaks down as follows:

Unrealized exchange gain for 1,985 thousand Euros refer to Parent Company for 958 thousand Euros and to

the American subsidiaries for 812 thousand Euros.

24

7.4 Exceptional income and expenses

Extraordinary expenses as at June 30, 2015 primarily reflect the effects of non-recurring costs relating to

the American subsidiary re-organization process completed during first semester 2015, which resulted in

the recognition of extraordinary charges for 545 thousand Euros. Extraordinary expenses as at June 30,

2014 mainly reflect out of period expenses for some 152 thousand Euros.

7.5 Income Taxes

Current taxes (for 2,455 thousand Euros) mainly consist of IRES and IRAP recorded by GVS SpA for 1,510

thousand Euros, IRES and IRAP recorded by GVS SUD for 144 thousand Euros and corporate income taxes

taxes of GVS do Brasil for 235 thousand Euros and of GVS UK Technology Ltd for 76 thousand Euros. Also

for 2015, we agreed to rely on the Italian tax consolidation rule for the holdings GVS Corporate SpA and

GVS Group S.p.A., as well as the subsidiaries GVS SpA and GVS Sud.

8 Financial risks

During the first six months of 2015, the nature and the structure of exposures to risk listed below and the

related policies adopted by the Company did not change substantially compared to the previous financial

year.

The Group is exposed to financial risks connected with its operations, in particular referable to the

following cases:

- credit risks arising from normal commercial operations. Credit risk arises from the risk of default

that the Group could incur as a result of any partial or total inability of a counterparty to meet its

commitments. The Group manages business risks with regard to customers directly (there are no

assignments of receivables to third parties);

- liquidity risks arising from the availability of financial resources and access to the credit market. In

order to support the growth of the relevant business, the Company has equipped itself with a series of

instruments that are aimed at optimising the management of its financial resources. The Group assures

itself of sufficient liquidity by paying constant attention to the shortening of the duration of the active cycle

(invoicing/collection) and by means of financial planning tools. Its management considers that the funds

and credit facilities available at present, in addition to those that will be generated by operating and

financing activities, will allow the Group to meet its needs arising from its investment activities, the

management of its working capital and the repayment of debts on their natural expiry dates;

- market risks attached to the Group’s exposure to interest-bearing financial instruments (interest

rate risks). The Company is exposed to changes in interest rates on its variable-rate debt instruments

referable to the Euro and GBP area. Any changes in interest rates could materially affect rises or falls in

funding costs. The Group is also exposed to exchange risks. Since the Group operates on international

markets, it is exposed to the risk of fluctuations in exchange rates.

25

9 Subsequent event

No significant events occurred after June 30, 2015 so to impact materially the Group’s result of operations

and its financial position as at June 30, 2015.

Zola Predosa, July 23, 2015 On behalf of the Board of Directors

Mario Saccone