CONSOLIDATED FINANCIAL STATEMENT AS AT 31-12-2023

COMER INDUSTRIES

ANNUAL REPORT

CONSOLIDATED FINANCIAL REPORT

A

December 31, 2023

2023 ANNUAL REPORT

COMER INDUSTRIES S.p.A. via Magellano 27, 42046 Reggiolo (RE), Italia Tel. +39 0522 974111 Fax +39 0522 973249 Email: info@comerindustries.com www.comerindustries.com

COMER INDUSTRIES

2023 ANNUAL REPORT

COMER INDUSTRIES S.P.A. Headquarters and Administrative Offices: Via Magellano 27, 42046 Reggiolo (RE), Italy Registered in the Reggio Emilia Business Register no. 07210440157 Authorized Share capital 18,487,338.60 euros fully subscribed and paid up Tax Code 07210440157 – VAT code IT 01399270352

COMER INDUSTRIES

CONTENTS Letter from the President

4

General information

7

1. Directors' report

8

1.1 Significant events in the 2023 financial year 1.2 The global macroeconomic scenario and the reference market 1.3 Comments on key performance indicators 1.4 Investments 1.5 Research and Development 1.6 Social responsibility 1.7 Environment, health and safety 1.8 Intergroup relations and dealings with related parties 1.9 The companies in the Group 1.10 Non-financial information 1.11 Significant events after the close of the year and business outlook 1.12 Operational risk management 1.13 Proposal for the allocation of profit

2. Consolidated financial statements and explanatory notes

36

2.1 General information 2.2 Scope of consolidation 2.3 Accounting standards adopted 2.4 Financial risk management 2.5 Corporate information and industry-related information 2.6 Notes to the consolidated financial statements

3. Report of the Audit Firm

100

2023 ANNUAL REPORT

LETTER FROM THE PRESIDENT Dear shareholders,

The second event of 2023 dense in significance has little to

The results for the year illustrated in the document that follows

do with finance and markets, but then again not so distant in a

tell of a year of consolidated growth, which continued in 2023

world where the vision of companies is also measured by their

following a stable path and maintaining a steady pace in terms

Corporate Social Responsibility.

of sales, with a significant increase in profitability thanks to a

Last December our company donated two new next-generation

strategy consisting of investments and increased resource

ambulances to the Reggiolo Red Cross, both outfitted with the

efficiency, a process that will continue over time. A year in which

latest technology to ensure the most immediate and efficient

Comer Industries confirmed its position as a leading company in

rescue possible to people in need.

the industry, while at the same time successfully continuing the

Here again a large number of people, institutions and our own

work of reorganization and integration among the various souls

employees gathered at Comer Industries, applauding the

that make up our Group.

initiative and corporate policies of our company, which has long

Comer Industries has been transformed from a strategic idea

cultivated an ESG culture that over the years has developed deep,

to a reality: a platform of companies, each recognized and well

strong roots.

positioned in its own market, with its own distinctive product range and its own business culture, but with the decisive added

Two moments in the year that, along with many others, best

value of cooperation, of synergies of the entire Group.

represented what our and your company is today: a company

Of the many events we experienced in 2023 I want to mention two

of value and values, recognized by the market and all its

in particular, which I believe best represent what Comer Industries

stakeholders.

is today, aside from being a healthy, solid, profitable Group.

Two moments in a journey that Comer Industries embarked on

Last July Comer Industries S.p.A. began trading its ordinary

several years ago and that will continue in the current fiscal year.

shares on the Euronext Milan regulated market of Borsa Italiana,

Always with the same goal: to play the role of a market-leading,

the exchange where the country's most important companies

innovative and caring company. Focused on growth, people and

are listed, leaving the Euronext Growth Milan segment after four

environmental, social but also economic sustainability.

years.

This change in market, which represented a new stage in the

This is the company that, with your support, we have chosen

strategic growth that began a few years ago, gives even more

to be.

authority to our Group. During the "new listing" ceremony that took place at the stock exchange – some of the shareholders were present – Comer Industries was given a special welcome.

The market's admiration for our company and the industrial trajectory we have undertaken was perceptible.

Reggiolo, March 13, 2024 Matteo Storchi President & CEO

4

COMER INDUSTRIES

From the right Matteo Storchi and Cristian Storchi.

5

2023 ANNUAL REPORT

6

COMER INDUSTRIES

GENERAL INFORMATION BOARD OF DIRECTORS

CONTROL, RISK AND SUSTAINABILITY COMMITTEE

Matteo Storchi

Paola Pizzetti

President & CEO

Chairman

Cristian Storchi

Arnaldo Camuffo

Vice President and Director

Member

Arnaldo Camuffo

Luca Gaiani

Independent Director

Member

AUDIT FIRM Deloitte & Touche S.p.A.

Luca Gaiani Director

APPOINTMENT AND REMUNERATION COMMITTEE

Lee M. Gardner Director

Arnaldo Camuffo Chairman

Joseph P. Huffsmith Director

Paola Pizzetti Member

Matteo Nobili Director

Matteo Nobili Member

Paola Pizzetti Independent Director

RELATED-PARTY COMMITTEE Marco Storchi Director

Paola Pizzetti Chairman

BOARD OF STATUTORY AUDITORS

Arnaldo Camuffo Member

Luigi Gesaldi Chairman

FINANCIAL REPORTING OFFICER Francesca Folloni Standing Statutory Auditor

Stefano Palmieri

Massimiliano Fontani Standing Statutory Auditor

7

2022 Annual Report

01

DIRECTORS’ REPORT

Comer Industries

2023 ANNUAL REPORT

SUMMARY OF THE RESULTS OF COMER INDUSTRIES GROUP (MILLION EUROS)

2023

2022

CHANGE IN %

SALES REVENUES

1,223.9

1,237.6

-1.1%

EBITDA % of sales revenue

205.0 16.7%

180.0 14.5%

13.9%

EBIT % of sales revenue

144.4 11.8%

127.5 10.3%

13.3%

NET PROFIT % of sales revenue

94.0 7.7%

90.7 7.3%

3.7%

EPS [NET PROFIT / NO. OF SHARES]

3.3

3.2

3.7%

Adjusted EBIT (*) % of sales revenue

164.6 13.4%

142.8 11.5%

15.2%

Adjusted NET PROFIT (**) % of sales revenue

108.6 8.9%

101.8 8.2%

6.7%

COMMERCIAL WORKING CAPITAL % of sales revenue

233.6 19.1%

254.2 20.5%

-8.1%

INVESTED CAPITAL

602.4

592.8

1.6%

NET FINANCIAL POSITION

(94.8)

(148.9)

-36.3%

NET FINANCIAL POSITION / EBITDA

0.5x

0.8x

-44.1%

EBITDA / NET FINANCIAL EXPENSES (***)

15.4x

30.4x

-49.4%

FREE CASH FLOW

162.9

60.0

171.4%

CASH CONVERSION RATE FREE CASH FLOW / EBITDA

79.5%

33.3%

138.3%

CAPEX % of sales revenue

42.3 3.5%

34.1 2.8%

23.9%

SHAREHOLDERS’ EQUITY NET FINANCIAL POSITION / SHAREHOLDERS' EQUITY

507.6 0.19x

443.9 0.34x

14.4%

ROI [EBIT / INVESTED CAPITAL]

24.0%

21.5%

11.5%

Adjusted ROE [Adjusted NET PROFIT / NET EQUITY]

21.4%

22.9%

-6.7%

AVERAGE PERSONNEL EMPLOYED IN THE PERIOD

3,804

3,668

3.7%

(*) EBIT (Operating income) adjusted to exclude depreciation and amortization resulting from the accounting of business combinations. (**) Net profit adjusted to exclude depreciation and amortization and related theoretical tax effects arising from the accounting of business combinations. (***) Financial charges calculated according to the provisions of the Group's loan agreements for the purpose of calculating covenants, i.e., excluding financial charges attributable to the application of IFRS 16 and foreign exchange gains and losses.

10

COMER INDUSTRIES

1.1

SIGNIFICANT EVENTS IN THE 2023 FINANCIAL YEAR

In January 2023, Comer Industries S.p.A. along with its subsidiaries

On January 9, 2023, the parent company Comer Industries S.p.A.

(hereinafter the "Group") entered the market for electric vehicle

(the “Parent Company”) concluded the acquisition of e-comer

engines and transmissions through the acquisition of Benevelli

S.r.l., a newly established company that on December 27, 2022

Electric Powertrain Solutions and Sitem Motori Elettrici, later

absorbed the business units of Benevelli Electric Powertrain

merged into e-comer S.r.l.

Solutions and Sitem Motori Elettrici, for an Enterprise Value of 54 million euros plus a variable component (so-called earn out)

The deal, which came a year after the signing of an agreement

estimated at 3.4 million euros as of December 31, 2023. This

to acquire 100% of Germany's Walterscheid (hereinafter "WPG")

transaction resulted in a cash-out on the closing date of 50

– among the industry leaders in propulsion systems and services

million euros. The consideration paid for the transaction at the

for off-highway and industrial applications – allowed the Group

closing was financed by resorting to a medium- to long-term bank

to enter a fast-growing market, enriching the range of products

loan provided by Crédit Agricole Italia in the same amount. The

offered through investments in cutting-edge and sustainable

remaining 4 million euros will be paid in four constant annual

technologies.

installments without interest starting from the 12th month

Furthermore, during the year the Group began the process of

following the date of the closing. The newly acquired e-comer

listing on the regulated Euronext Milan market for medium-large

S.r.l. has been consolidated since January 1, 2023.

cap companies.

This transfer (so-called translisting from the Euronext Growth

In March 2023 the deed of merger by incorporation of Walterscheid

Milan multilateral trading system to Euronext Milan) that took

Monguelfo S.p.A. into Comer Components S.r.l. was signed, with legal

place on July 12, 2023 represents another strategic objective

effect as of April 1, 2023 and with accounting and tax effects backdated

in the Group's growth and is aimed at boosting the Company's

to January 1, 2023. The reason and justification for the merger is the

visibility in the financial markets and attracting more interest from

need to contain operating expenses and simplify the Group's corporate

institutional investors.

structure following the acquisition of WPG. The transaction has no

The main events that occurred during 2023 are detailed below:

accounting impacts on the consolidated financial statements.

11

2023 ANNUAL REPORT

On April 4, 2023, the Parent Company’s Board of Directors

On July 7, 2023, with document no. 0063331/23 the National

resolved to submit to the Shareholders' Meeting convened

Commission for Companies and the Stock Exchange ("Consob")

on April 20, 2023 the approval of i) the project for listing the

authorized the publication of the Prospectus (the "Prospectus")

Company's ordinary shares on Euronext Milan, ii) the adoption of

regarding the admission to trading of the Company's ordinary

new bylaws, with effect subject to the commencement of trading

shares on the Euronext Milan regulated market.

of the Company's ordinary shares on Euronext Milan, and iii) the proposal to grant the Board power to increase the share capital pursuant to Article 2443 of the Italian Civil Code.

On July 12, 2023 trading of the ordinary shares of Comer Industries S.p.A. began on the Euronext Milan regulated market organized

On April 20, 2023 the Ordinary and Extraordinary Shareholders'

and managed by Borsa Italiana S.p.A.

Meeting of the Parent Company approved all items on the

exclusion thereof from trading on the Euronext Growth Milan

agenda including: i) the Financial Statements for the year 2022

multilateral trading system.

with simultaneous

and the distribution of a dividend of 0.75 euros per share, ii) the appointment of the Board of Statutory Auditors for the three-

In July 2023 Evoluzione Comer s.r.l., a non-operating company

year period 2023-2025, iii) the project for listing the Company's

wholly owned by the parent company, was put into liquidation.

ordinary shares on Euronext Milan, iv) the delegation of authority

Also in July 2023, Comer GmbH was merged into the subsidiary

to the Board of Directors to increase the share capital pursuant

WPG German HoldCo GmbH. These operations were carried out

to Article 2443 of the Italian Civil Code, and v) the adoption of a

in pursuit of the goal of reducing operating costs and simplifying

new text of the Company's bylaws for the purpose of complying

the corporate structure, but without any accounting impact on the

with current regulations on companies with shares traded on

consolidated financial statements.

regulated markets, with effect subject to the commencement of trading of the Company's ordinary shares on Euronext Milan.

On August 3, 2023 the audited Consolidated half-yearly financial report as of June 30, 2023 was approved.

On May 4, 2023 the unaudited consolidated financial indicators for the first quarter ended March 31, 2023 were reviewed and

On September 7, 2023 14,640,089 shares achieved an increase in

approved.

voting rights (two voting rights for each share) pursuant to Article

On May 5, 2023 the shareholder Eagles Oak S.r.l. announced that

5 of the Bylaws.

as of the date of commencement of trading of Comer Industries S.p.A.'s shares on Euronext Milan it ceased to exercise direction

On October 17, 2023 1,700,000 shares achieved an increase in

and coordination over Comer Industries S.p.A.

voting rights (two voting rights for each share) pursuant to Article 5 of the Bylaws.

On June 21, 2023 the Ordinary Shareholders' Meeting of Comer Industries S.p.A. resolved to adjust and supplement the

On November 8, 2023 the unaudited Consolidated financial

assignment given to the Audit Firm with respect to the period

indicators for the first nine months ended September 30, 2023

2021-2029 in view of the admission of the Shares to trading on

were reviewed and approved.

Euronext Milan.

On July 5, 2023, with order no. 8958, Borsa Italiana S.p.A. ("Borsa Italiana") authorized admission to listing of the Company's ordinary shares (ISIN IT0005246191) on the Euronext Milan regulated market organized and managed by Borsa Italiana ("Euronext Milan") and ordered the simultaneous exclusion of trading on the Euronext Growth Milan multilateral trading system.

12

COMER INDUSTRIES

On November 16, 2023 the ordinary Shareholders' Meeting

As part of the project to rationalize the production footprint, the

approved the authorization to purchase treasury shares for a

Group informed trade unions that in May 2024 the staff of the

period of 18 months; on the same day, the Board of Directors

Pegognaga (MN) Plant will be transferred to the Reggiolo (RE)

approved the initiation of the first tranche of the share buyback

plants.

program for a maximum of 10 million euros.

13

2023 ANNUAL REPORT

1.2

THE GLOBAL MACROECONOMIC SCENARIO AND THE REFERENCE MARKET MACROECONOMIC SCENARIO Following the Covid-19 pandemic, Russia's invasion of Ukraine,

However, new surges in commodity prices due to geopolitical

and the sharp rise in inflation, the global economic recovery has

shocks – including continued attacks in the Red Sea – and supply

proven surprisingly resilient. In its January 2024 World Economic

disruptions or more persistent underlying inflation could prolong

Outlook the International Monetary Fund (IMF) forecasts global

tight monetary conditions to the detriment of the economic

growth of 3.1% in 2024 and 3.2% in 2025, with the forecast for

recovery. The worsening of the real estate sector's difficulties in

2024 being 0.2 percentage points higher than in October 2023.

China, as well as any drastic cuts in government spending and

However, the IMF points out that growth for the next two years

fiscal increases could have negative effects on the future outlook.

will be lower than the historical average (2000-2019) of 3.8% due to higher benchmark rates by central banks needed to combat

Economic growth was stronger than expected in H2 2023 in

inflation and a decrease in fiscal support amid high debt burdens

the United States and several major emerging markets and

on global economic activity.

developing economies. However, the growing momentum was

Inflation is falling faster than expected from its 2022 peak, with

not felt everywhere, with a particularly subdued recovery in the

less impact on the economy, reflecting favorable developments

euro area, reflecting weak consumer confidence, the lingering

both on the supply side – thanks to the resolution of pandemic-

effects of high energy prices, and weakness in manufacturing

era supply chain problems – and the tightening of central bank

and business investment, which are particularly sensitive to

monetary policies, which have kept inflation expectations

interest rates.

anchored.

As regards the main economies in which the group operates, the

Overall headline inflation is expected to fall from the current 6.8%

IMF expects America to grow by 2.1% in 2024, Europe by 0.9%

at the end of 2023 to 5.8% in 2024 and 4.4% in 2025.

(with Italy at +0.7% and Germany at +0.5%), China by 4.6%, India

With deflation and steady growth, the odds of an economic crisis

by 6.5% and Latin America by 1.9%, and in particular Brazil by

(hard landing) have decreased, while those in favor of gradual

1.7%.

global development (soft landing) have increased.

14

COMER INDUSTRIES

OVERVIEW OF THE WORLD ECONOMIC OUTLOOK PROJECTIONS YEAR OVER YEAR ESTIMATE

PROJECTIONS

2022

2023

2024

2025

World Output

3.5

3.1

3.1

3.2

Advanced Economies

2.6

1.6

1.5

1.8

United States

1.9

2.5

2.1

1.7

Euro Area

3.4

0.5

0.9

1.7

Germany

1.8

- 0.3

0.5

1.6

France

2.5

0.8

1.0

1.7

Italy

3.7

0.7

0.7

1.1

Spain

5.8

2.4

1.5

2.1

Japan

1.0

1.9

0.9

0.8

United Kingdom

4.3

0.5

0.6

1.6

Canada

3.8

1.1

1.4

2.3

Other Advanced Economies

2.7

1.7

2.1

2.5

Emerging Market and Developing Economies

4.1

4.1

4.1

4.2

Emerging and Developing Asia

4.5

5.4

5.2

4.8

China

3.0

5.2

4.6

4.1

India

7.2

6.7

6.5

6.5

1.2

2.7

2.8

2.5

- 1.2

3.0

2.6

1.1

4.2

2.5

1.9

2.5

Brazil

3.0

3.1

1.7

1.9

Mexico

3.9

3.4

2.7

1.5

World Consumer Prices

8.7

6.8

5.8

4.4

Advanced Economies

7.3

4.6

2.6

2.0

Emerging Market and Developing Economies

9.8

8.4

8.1

6.0

Emerging and Developing Europe Russia Latin America and the Caribbean

Source: World Economic Outlook, January 2024 Update

15

2023 ANNUAL REPORT

TARGET MARKET The Comer Industries Group designs and produces advanced

In contrast, during the second half of the year there was a

engineering systems and mechatronic solutions for power

rebalancing of the market after the business cycle highs reached

transmission, and divides its operations into two main areas

in the spring of 2023.

depending on the use of the machines on which the supplied

The December 2023 general business climate index for the

products are installed: (i) agricultural and (ii) industrial, which

agricultural machinery industry in Europe (CEMA's business

includes all other sectors including wind power and electricity.

climate index) closed 2023 at -48 compared to the highs reached in February 2023 of +36 (on a scale of -100 to +100), showing a

AGRICULTURAL SECTOR

significant downward trend. Although current confidence levels

As for the agricultural market, 2023 was a year traveling in two

for all European markets remain negative for the entire year of

different speeds. During the early part of the year the market

2024, respondents expect their company's revenues to decline

continued to benefit from the trends that have supported the

by an average of between 5% and 10%.

sector since the second half of 2021, i.e., after the end of the Covid-19 pandemic: (i) growth in farmers' demand for machinery and (ii) generalized price increases.

CEMA BUSINESS CLIMATE INDEX (CBI) - TOTAL

CBI

PRESENT SITUATION

FUTURE EXPECTATION

80

60

40

20

0

-20

-40 -48 -60

-80 2013-12 2014-12 2015-12 2016-12 2017-12 2018-12 2019-12 2020-12 2021-12 2022-12 2023-12 2014-06 2015-06 2016-06 2017-06 2018-06 2019-06 2020-06 2021-06 2022-06 2023-06 CBI = geometric mean of 1) evaluation of the current business situation and 2) turnover expectation; Index scale from -100 to +100; positive index for 1) = majority of respondents evaluates the current situation as favorable and vice versa; positive index for 2) = majority of respondents expects for the next six months an increasing turnover and vice versa (respectively compared to the previous year’s level) Source: CEMA Business Barometer December 2023

16

COMER INDUSTRIES

As for the North American market, however, the Association of

The figure below shows that the American market was more

Equipment Manufacturers AEM in its Ag Tractor and Combine

resilient than the European market with 2023 sales substantially

Report for December 2023 reported an 8.2% decline in agricultural

aligned with the average of the last 5 years (2018-2022) in the

equipment sales (despite a 5.2% increase in the sub-index for

second half of the year.

tractors over 100HP) and a 1.7% growth in sales of combines.

UNITED STATES UNIT RETAIL SALES 2-4WD TRACTORS & COMBINES 50

5 YR (18-22) AVERAGE

2020

2021

2022

2023

UNIT SALES (000)

40

30

20

10

0 GEN

FEB

MAR

APR

MAY

JUL

JUN

AUG

SEP

OCT

NOV

DEC

Source: AEM United States Ag Tractor and Combine Report December 2023

U.S and CANADA LARGE AG

10-15%

Leading agricultural OEMs are feeling cautious about the market’s

predicts a trend between -10% and -15% in the various

development in 2024. Specifically:

geographical areas, with Asia slightly less negative than the

• In its annual report issued in November 2023 John Deere

rest of the world.

U.S and CANADA SMALL AG and TURF

5-10%

EUROPE AG

SOUTH AMERICA AG (tractors and combine)

~10%

~10%

Source: Deere & Company Forecast as of 22 November 2023

17

ASIA AG

Down Moderately

2023 ANNUAL REPORT

• In its annual report issued in early February 2024 AGCO is slightly more positive than its competitor, estimating instead a market contraction between 5% and 10%.

NORTH AMERICA

WESTERN EUROPE

SOUTH AMERICA

106K

DOWN ~10%

133K

DOWN 5-10%

67K

DOWN ~10%

2023

2024E

2023

2024E

2023

2024E

Source: AGCO Fourth Quarter and Full Year 2023 Financial and Operational Results

• In its annual report issued in mid-February CNH estimates a 10% to 15% decline in overall sales for the agricultural sector in 2024.

INDUSTRIAL SECTOR The industrial sector, whose performance is most closely linked

Respondents’ expectations in terms of market trends for the next

to economic conditions and interest rate trends that favor

six months differ according to the different geographical areas: i)

investment, saw a slight improvement in early 2023 followed by a

65% expect the European market to be in the range of 0% to -10%;

negative trend for the remaining part of the year, as shown by the

ii) 71% expect the North American market to be in the range of

Business Index trend published by the Committee for European

0% to +10%; iii) 77% expect the Chinese market to be in the range

Construction Equipment (CECE) in December 2023 (Fig. A), which

of 0% to -10%; and iv) 78% expect the Indian market to be in the

was also confirmed by the decrease in orders in the second part of

range of 0% to +10%.

the year in both the European and non-European markets (Fig. B).

18

COMER INDUSTRIES

BUSINESS INDEX

Fig. A

CURRENT BUSINESS SITUATION

FUTURE EXPECTATION

100

80

60

40

20

0

-20

-40

-60

-80

-100 2018-12

Fig. B

2019-12

2020-12

2021-12

2022-12

2023-12

20

EUROPEAN MARKETS

NON-EUROPEAN MARKETS

15

10

5

0

-5

-10

-15

-20 Dec 22

Jan 23

Feb 23

Mar 23

Apr 23

May 23

Source: CECE Business Barometer January 2024

19

Jun 23

Jul 23

Aug 23

Sep 23

Oct 23

Nov 23

Dec 23

2023 ANNUAL REPORT

• Volvo, one of the leading OEM players in the industry, in its annual report issued in January 2024 for its Construction Equipment division sales for 2024 forecasts: i) Europe contracting between -10% and -20%, ii) North America in a range between 0% and -10%, iii) Asia (excluding China) contracting between -5% and -15%, and iv) China in a range between 0% and -10%; as indicated in the charts below.

250

250

2023 YTD Nov: +7% Forecast 2024: -10% to 0%

2023 YTD Nov: -1% Forecast 2024: -20% to -10%

NORTH AMERICA

200

200

150

150

100

100

50

50

0

EUROPE

0 04

06

08

10

12

14

16

18

20

22

24

250

04

06

08

10

12

14

16

18

20

22

24

250

2023 YTD Nov: +4% Forecast 2024: -15% to -5%

2023 YTD Nov: -40% Forecast 2024: -10% to 0%

ASIA

(Excl. China)

200

200

150

150

100

100

50

50

0

CHINA

0 04

06

08

10

12

14

16

18

20

22

24

04

Source: Volvo Fourth Quarter 2023

20

06

08

10

12

14

16

18

20

22

24

COMER INDUSTRIES

• CNH expects the Construction Equipment sector as a whole to contract by about 10% in revenues versus 2023.

• In contrast, Caterpillar instead announced sales for 2024 that would be substantially in line with those for 2023, but did not provide a breakdown by geographic area.

1.3

COMMENTS ON KEY PERFORMANCE INDICATORS Management uses certain performance indicators that are

“EBIT”: is the Operating Profit in the Consolidated Income

not identified as accounting measures under IFRS (non-GAAP

Statement.

measures) to enable a better assessment of the Group's economic, capital, and financial performance. The calculation performed by

"Net profit": indicates the result of the Consolidated Income

the Group may not follow the same method adopted by other

Statement.

groups, and therefore the indicators may not be comparable with those used by them. These performance indicators, determined

"Adjusted EBIT": indicates the item Operating Income in the

in accordance with the provisions of the Guidelines on

Consolidated Income Statement adjusted for depreciation and

performance indicators issued by ESMA/2015/1415 and adopted

amortization resulting from the accounting – as required by

by Consob with Communication no. 92543 of December 3, 2015,

IFRS 3 – of the purchase price in connection with the business

refer only to the performance of the accounting period covered

combination transaction that took place at the end of 2021

by this Consolidated Annual Financial Report and the periods

related to the acquisition of WPG and at the beginning of 2023

compared. The performance indicators should be regarded as

for the acquisition of e-comer.

complementary and not as a substitute for information prepared in accordance with IFRS. Below is a description of the main

"Adjusted Net Profit": represents the Net Profit in the Consolidated

indicators adopted.

Income Statement adjusted for depreciation and amortization and the related theoretical tax effects arising from the accounting

1.3.1 DEFINITION OF THE INDICATORS

– as required by IFRS 3 – of the purchase price in connection with the business combination transaction that took place at the end of 2021 related to the acquisition of WPG and at the beginning of 2023 for the acquisition of e-comer.

The performance indicators used by the Group and disclosed in this report are based on the following definitions:

“Commercial working capital”: indicates the algebraic sum of the following balance sheet items:

“EBITDA”: represents the value of Operating Profit adjusted by the

(+) Current asset items:

amount of the following entries:

Inventories;

(+) Amortization, Depreciation and other write-downs of fixed

Trade Receivables;

assets, in particular:

(-) Current liability items:

• Amortization of intangible fixed assets;

Trade payables.

• Depreciation of tangible fixed assets; • Other write-downs of fixed assets;

“Invested capital”: indicates the algebraic sum of the following balance sheet items: (+) Commercial working capital;

21

2023 ANNUAL REPORT

(+) Tangible (including Rights of use), intangible and equity

“Equity”: indicates the algebraic sum of Share capital, Share

investments in other companies;

premium reserve, Treasury share reserve in the portfolio, Other

(+) Tax and deferred tax assets, current tax assets;

reserves and Profits/losses corresponding to the total of the

(+) Other short and long-term receivables, of a non-financial

“Share capital and reserves” heading.

nature; ( - ) Other short and long-term payables, of a non-financial nature;

“ROI (return on investment)": ratio of EBIT to invested capital.

( - ) Current and deferred tax liabilities; ( - ) Post-employment benefits in the short and long term and

“Adjusted ROE (return on equity)": ratio of adjusted Net Profit to

short- and long-term provisions.

Net Equity.

“Net financial position”: indicates the algebraic sum of the

“EPS (Earnings per share)”: ratio of Net Profit to average number

following balance sheet items:

of shares outstanding in the period of reference.

(+) Current Asset items (A):

• Other short-term financial receivables;

“Average staff in the year”: simple average on the basis of the

• Marketable securities at fair value;

workforce employed by the Group, including temporary workers.

• Cash and cash equivalents.

(-) Non-current and current liabilities (B):

The Group prepares the income statement according to the

• Long-term loans;

nature of costs and the Cash flow statement with the indirect

• Long-term derivative financial instruments;

method.

• Short-term loans; • Short-term derivative financial instruments; • Other short- and long-term financial payables (including payables relating to lease contracts recognized in accordance

1.3.2 COMMENTS ON THE INDICATORS

with IFRS 16);

• Non-current trade payables.

The Group's consolidated revenues amounted to 1,223.9 million euros (-1.1% compared to the previous year), and this

The net financial position, determined in accordance with the

figure includes revenues from e-comer of 26.9 million euros,

provisions contained in Reminder no. 5/21 of April 29, 2021

consolidated as of January 1, 2023.

issued by Consob, which refers to ESMA Guideline 32-382-1138 of March 4, 2021.

Revenues generated abroad represent 90% of the total.

The depreciation of the US dollar and the Chinese yuan, the

"Free cash flow": Indicates the algebraic sum of cash flow

Group's main reference currencies, had a negative impact of 18.6

generated (absorbed) by operations and Net cash flow from

million euros. The amount of revenues at the same exchange

investing/disinvesting activities in the Statement of Cash Flows.

rates as the previous year would have been 1,242.5 million euros (+0.4%).

"Cash conversion rate": represents the ratio of Free Cash Flow

The agricultural sector experienced a 6.7% decline in revenues,

to EBITDA.

while the industrial sector closed the period with an 8.3% increase over the previous year. Net of the consolidation of e-comer, whose

"Capex": indicates the increase occurring in investments

revenues are fully attributed to the industrial sector, growth would

in tangible and intangible fixed assets (net of revaluations,

have been +2.5%.

capital grants and the effects of currency conversion) which,

EBITDA amounted to 205.0 million euros, equal to 16.7% of sales,

following International Accounting Standards, are recorded

compared to 180.0 million euros in the previous year (equal to

in the corresponding heading in equity, excluding (i) the equity

14.5% of sales), an improvement of 13.9%.

effects of internal capitalizations of costs for internally generated

FY2023 includes the final accounting for the acquisition of

development activities and excluding (ii) the impacts related to

e-comer in accordance with IFRS 3.

the application of IFRS 16.

Net profit reached 94.0 million euros, corresponding to 7.7% of turnover compared to 90.7 million euros in the previous year (7.3%

22

COMER INDUSTRIES

of sales). Adjusted net profit, which excludes depreciation and

million euros. The balance as of December 31, 2023 includes 68.3

amortization and the related theoretical tax effects attributable

million euros of cash, 98.6 million euros of loans, net of up-front

to the accounting of the business combinations of WPG and

expenses, and 58.3 million euros of financial payables arising

e-comer, amounted to 108.6 million euros (+6.7% compared to

from the accounting treatment of leases in accordance with IFRS

the previous year).

16, in addition to other items. Of note are the numerous voluntary

Earnings per share stand at 3.3 euros per share (3.2 euros per

early repayment activities that reduced the amount of bank loans

share in 2022).

by 144.4 million euros during the year, which considering the

Adjusted ROE, calculated on adjusted net profit, stood at 21.4%

increase in other financial debts by 6.8 million euros determines

compared to 22.9% in the previous year.

a decrease of indebtedness for 137.6 million euros.

Trade working capital was 19.1% of sales, lower than the 20.5% at

The net financial position as of December 31, 2023 is shown

the end of 2022, confirming the improvement of the operational

below:

processes implemented by the Group. The Group generated a Free Cash Flow of 162.9 million euros, which includes investments of 42.3 million euros. The Cash Conversion rate was 79.5% in the period just ended.

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

CHANGE

Cash and cash equivalents

(68,333)

(151,328)

82,995

Short-term loans

35,028

51,814

(16,786)

Long-term loans

69,833

190,669

(120,836)

IFRS 16 financial payables

58,304

57,792

512

Net Financial Position

94,831

148,947

(54,115)

The net financial position shows a negative balance of 94.8

The parent company Comer Industries S.p.A. distributed

million euros, an improvement over the previous year of 54.1

dividends in the amount of 21.5 million euros in fiscal year 2023.

1.4

INVESTMENTS During fiscal year 2023, two new horizontal machining centers

semi-automatic axle assembly line that will achieve full-speed

dedicated to cast iron flow and a new hobbing cell equipped with

production during the next fiscal year. This line is equipped with

green technology free of cutting oil came on line at the Italian plant

the latest production technology, i.e., cyber-physical system,

in Reggiolo. This hobbing cell is serviced by anthropomorphic

software management and supervision.

robots and was dedicated to the steel flow for gear toothing. Both

With regard to the Italian plant in Monguelfo, a measuring

investments were interfaced with factory systems following the

machine for mechanical machining integrated with the closed-

Industry 4.0 approach. As part of greening efforts, an investment

loop production process went into operation.

was also made for the purchase of an industrial water treatment

At that same production site a new investment was made for

system that will come on line in the first half of 2024.

an integrated steel component production line. This is a semi-

Also at the Reggiolo plant an investment was made in a new

automatic line that will come into operation in H1 2024.

23

2023 ANNUAL REPORT

In Germany during FY 2023, the plants in Sohland and Lohmar

In China during 2023 in the Jiaxing plant, investments were

underwent several industrial investments. Of particular note at

made in masonry works and general plant engineering related

the Sohland plant is the purchase of a high-tech semi-automatic

to production facilities in order to industrialize new products and

testing system for agricultural transmissions that will go into

new production processes.

operation in the first half of 2024.

In addition, of note is the full-speed production of new semi-

Also worth mentioning is the green, sustainable investment in the

automatic assembly lines for the production and testing of

purchase and installation of electric vehicle charging stations.

agricultural and industrial transmissions.

The columns were installed in H2 2023.

In the area of environmental sustainability, an investment was

At the Lohmar plant, a new robot cell for the production of

made to purchase an industrial water treatment system. This

mechanical steel components came on line during 2023, and a

facility will come into full operation during the next fiscal year.

new automatic line for surface treatments of agricultural gimbals was also installed.

In India, a new manufacturing plant in Bangalore dedicated to

An investment was also made for the purchase of a new

the production of axles, gearboxes and double couplings was

automated welding cell for mechanical components, which will

opened during 2023. Specifically, new assembly, machining, and

be put into operation during the next fiscal year.

quality control systems were installed for double joints and their

An investment was also made at the Lohmar plant for a new

components and assembly lines for axles and gearboxes.

semi-automatic paint plant using water-based paint products,

Of additional note is the commissioning of a new paint plant.

confirming the environmentally friendly approach adopted by the Group. The paint line is also equipped with all the latest paint

Finally, with regard to the US plants, several industrial investments

application and production management technologies in order

were made during 2023. These include the commissioning of

to optimize its output in terms of productivity, quality, and safety.

two machining cells for steel components and the purchase of

Investments were also launched for the purchase of semi-

additional machining centers that will enter full operation during

automatic agricultural gimbal assembly lines.

the next fiscal year.

1.5

RESEARCH AND DEVELOPMENT The Group's research and development is carried out in design

In the industrial field, the development of the category 2 axle

offices located in Italy, Germany and the United States, which

for aerial platforms was completed, and the development

are then validated and approved in four different specialized

of the category 3 axle for telescopic loaders began.

validation centers located in Reggiolo and Monguelfo in Italy,

Furthermore, the first prototype axles for electrified wheel

Lohmar in Germany and Rockford in the United States.

loaders were delivered.

For the agricultural market, especially for tractor applications,

Prototypes were then developed of two new sizes of the next-

the development and validation of the front axle for tractors

generation industrial driveshaft range (30kNm / 40kNm) and

up to 160hp and the development of a new size for machines

a new size of the double joint range with superior torque

up to 120hp have been completed. Also of note is the

performance (>10kNm).

completion of the next-generation stabilizer for the rear hitch

In the renewable energy sector, of note is the completion of

system.

the validation of new sizes of slewing drives (140kNm and

Also in the agricultural field, of note is the development of the

190kNm) and the fail-safe system developed specifically for

complete transmission system for combine harvesters, with

this application.

products belonging to different lines (gearboxes, planetary, driveshafts) and the development of the quick-connect

Finally, following the acquisition in early 2023 of the

solution (Quick-fit) for cutter bars.

complementary electric transmission and motor business

24

COMER INDUSTRIES

units, Benevelli Electric Powertrain Solutions and Sitem

excavator that will be supplied as a prototype during 2024 to

Motori Elettrici, which were merged into e-comer S.r.l., the

a major Group customer.

Group acquired the ability to further increase both its R&D

In the field of digitization, a new PLM (Product Lifecycle

capabilities and expertise and its product portfolio and

Management) system for the management of engineering

the ability to make integrated products and systems for

processes and documents was set up during 2023, a system

electrified transmissions and vehicles.

that will be extended to all the Group's engineering offices

An early example of this synergy was the development of

over the next year.

a gearbox equipped with an electric motor for rotating an

25

2023 ANNUAL REPORT

1.6

SOCIAL RESPONSIBILITY Over the past few years, Comer Industries has been committed

The projects related to education and training that the company

to supporting and advancing various sustainability and social

strongly believes in also involve territories beyond the borders

responsibility initiatives, in line with the Sustainable Development

as evidenced by the now long-standing collaboration with the

Goals defined by the United Nations Organization. Generating a

Volunteer Organization "Namaste, Honor to You," with which the

positive impact for economic, social and cultural development

Vidya Home project in Bangalore, India was initiated: a residence

is a priority for the Company. Therefore education, health,

for deserving girls for whom the company provides room, board,

innovation, environment, sports and culture are the main areas in

university expenses and all the necessary resources so that they

which the Company believes most and invests to create value and

can cultivate their talents and become nurses. The partnerships

opportunities for its employees and future generations.

with universities both in Italy and abroad and the Scuola2030

Realizing that only starting from one's roots can one continue to

project, in collaboration with the Gazzetta di Reggio and Modena,

grow, Comer Industries invests to develop the region it operates in

respond to that outlook inherent in the Company's DNA of looking

and the surrounding communities through initiatives, programs,

to the future and to the younger generations by allowing them to

support activities, and partnerships.

approach the world of metalworking while still in school.

The donation of two ambulances to the Reggiolo Committee of

The company's commitment to sustainability is also evident in its

the Italian Red Cross is part of this commitment, a symbol of

support of projects related to innovation, and Comer Industries'

the company's attention to such an important issue as health, as

participation in Le Village by Crédit Agricole in Parma, the first

well as a concrete gesture in support of the community and the

Benefit Company of the Crédit Agricole Italia Group, as well as one

local healthcare system, to make emergency services available

of the first European innovation hubs to earn such recognition, is

to citizens more effective and efficient. In fact, the two Mercedes

one more example of such support: an open ecosystem where

Sprinter 190hp ambulances are equipped with advanced medical

on the one hand start-ups can take advantage of services to

devices and electro-medical equipment making them suitable

accelerate their business and work alongside structured realities,

both for basic operations and as mobile resuscitation units.

and on the other hand already-established industrial realities

Support for the world of education also begins with the

benefit from the collaboration with the start-ups in terms of

awareness that we have an important responsibility to people,

know-how and innovative ideas implemented in their operations,

and Comer Industries' support of the International Industrial

taking advantage of new technologies as facilitators of business

Research Doctorate in Reggio Childhood Studies, sponsored

development.

by the Reggio Children's Foundation and the Department of

As for the territory development activities aimed at fostering

Education and Human Sciences at the University of Modena and

the well-being of employees, of note are the two partnerships

Reggio Emilia, helps to create know-how and value for the future.

in the field of sports with the amateur association of Carpi

It is an international research project dedicated to the Ateliers

(Modena) Sessantallora, which promotes initiatives involving

of Palazzo Sartoretti in Reggiolo, which complements and gives

cycling, mountain biking and triathlons, and Padel Club Reggiolo.

continuity to the now long-standing collaboration between Comer

The "Jobbike" initiative, which kicked off at the Walterscheid

Industries, Reggio Children, the Municipality of Reggiolo and

headquarters in Lohmar, also espouses the same objective

Azienda Servizi Bassa Reggiana, expanding the development

principles and values: a modern form of leasing bicycles for

possibilities of the educational and learning paths initiated in

employees to use for work and personal use, aimed at motivating

the past years, established with the aim of investigating the

employees to switch from cars or public transportation to

phenomena of mechanics and gears, welcoming various other

bicycles in order to have a positive impact on their health and

collateral disciplines (graphic, digital, etc.) that merge within

the planet. Also in the area of sports, Walterscheid GmbH, a

workshops and embrace numerous aspects of education and

Comer Industries Group company, supported the "Walterscheid

experimentation.

Cup," a youth soccer tournament organized by the SV 1919

26

COMER INDUSTRIES

club in Lohmar. Sustainability in Comer Industries also means

program. The ambition to do something tangible to promote

preserving the scenic, artistic and cultural beauty of our country,

sustainable development is strong and well integrated in the

therefore for years now the Company has been supporting FAI

company's vision, driven by a desire to make a positive mark and

by participating in the Corporate Golden Donor membership

create something new.

27

2023 ANNUAL REPORT

1.7

ENVIRONMENT, HEALTH AND SAFETY In light of further expansion through the acquisition of e-comer at

process of progressively improving energy efficiency undertaken

the beginning of the year, the Group confirmed its commitment to

several years ago and also extended to the new plants.

occupational health and safety by consolidating its performance.

The reduction in energy consumption combined with the

In fact, in 2023 there was a significant reduction in the number of

purchase of electricity from renewable sources in Italy (Matera

accidents, from 84 in 2022 to the current 54, with a corresponding

and Pegognaga) and China (Jiaxing) led to a parallel reduction

36% improvement in the frequency indicator. This was achieved

in the Group’s Scope 1 and Scope 2 greenhouse gas emission

by extending the preventive approach geared toward worker

intensity, which saw a 6% improvement.

awareness and involvement to all Group operations and

Finally, there was a positive trend compared to the previous year

implementing various initiatives globally. These include the

in the percentage of hazardous waste, with a 5% reduction.

provision of training supported by videos representative of actual hazardous conditions within manufacturing facilities, and

To promote the development of sustainable mobility, the Group

targeted actions to reduce the risks and improve the ergonomics

has upgraded the existing network of electric vehicle charging

of manufacturing infrastructure.

systems by building new charging points at the Sohland

Of note is the result achieved by the Bangalore plant, which

production site.

recorded no accidents for the third consecutive year.

No critical issues have emerged during the year with relation to During 2023 the Group intensified its commitment to

the environment.

environmental sustainability through various projects aimed at reducing its impact on the environment, which resulted in

Please see the 2023 Non-Financial Statement for a detailed

improved performance indicators.

description of the Group's standards, specifically in the Employee

With regard to energy consumption, there was a 17% reduction in

Health and Safety Management System and commitment to

the intensity index due to the reduction in electricity and natural

corporate sustainability.

gas consumption per unit worked. This achievement confirms the

28

COMER INDUSTRIES

1.8

INTERGROUP RELATIONS AND DEALINGS WITH RELATED PARTIES The Group has dealings with subsidiaries and other related parties

DEALINGS WITH PARENT COMPANIES

at market conditions considered as normal in the respective

The Group does not have commercial or financial dealings with

reference market, taking account of the characteristics of the

the majority shareholder, Eagles Oak S.r.l.

assets and the services provided.

Transactions between Comer Industries S.p.A. and its

RELATIONS WITH OTHER RELATED PARTIES

consolidated subsidiaries, which are entities related to the

It is disclosed that the "Other operating costs" heading includes

Company, are eliminated in the consolidated financial statements,

professional consultancy provided by two Directors of the parent

and in compliance with IAS 24.

company Comer Industries S.p.A. for non-significant amounts.

29

2023 ANNUAL REPORT

1.9

THE COMPANIES IN THE GROUP As of December 31, 2023, the Group is organized in a structure

The key figures of the consolidated subsidiary companies are

with Comer Industries S.p.A. at the top, possessing directly

summarized in the table below:

or indirectly 100% of 24 Italian and foreign subsidiaries that constitute the scope of consolidation.

SALES DECEMBER 31, 2023 MILLION EUROS

NET EQUITY DECEMBER 31, 2023 MILLION EUROS

HEADCOUNT DECEMBER 31, 2023

COUNTRY

% CONTROL

MAIN ACTIVITY

SHARE CAPITAL DECEMBER 31, 2023

Comer Industries S.p.A.

Italy

Parent company

Design, production and sales

€ 18,487,339

421.16

320.29

863

Comer Industries Components S.r.l.

Italy

100%

Production and sales

€ 7,125,000

164.95

45.95

421

e-comer S.r.l.

Italy

100%

Design, production and sales

€ 1,000,000

26.87

61.92

116

WPG German HoldCo GmbH

Germany

100%

Holding company

€ 10,495,000

-

25.89

0

Off-Highway Powertrain Services Germany GmbH

Germany

100%

Sales and after-sales service

€ 2,050,000

108.05

22.85

298

Walterscheid GmbH

Germany

100%

Design, production and sales

€ 17,895,000

193.74

77.44

758

Walterscheid Getriebe GmbH

Germany

100%

Design, production and sales

€ 25,600

63.48

6.93

239

Walterscheid Cardan GmbH

Germany

100%

Production and sales

€ 625,000

7.85

1.53

28

Comer Industries UK Ltd.

UK

100%

Sales

£ 265,000

2.92

1.37

4

WPG UK HoldCo Ltd.

UK

100%

Holding company

£ 3,093,000

-

21.00

0

Powertrain Services UK Limited

UK

100%

Holding company

£ 14,231,000

-

4.07

0

Powertrain Services (UK Newco) Ltd.

UK

100%

Holding company

-

-

0.82

0

Powertrain Services France SAS

France

100%

Sales and after-sales service

€ 2,139,000

16.48

15.39

27

Walterscheid Russia LLC.

Russia

100%

Sales

RUB 10,000

-

0.76

3

COMPANY

Comer Industries INC

United States

100%

Sales

$ 13,281,000

119.28

25.54

34

WPG US Holdco LLC.

United States

100%

Holding company

$ 58,546,000

-

19.33

0

Walterscheid Inc. Woodridge

United States

100%

Production and sales

$ 2,000,000

67.08

30.16

186

Powertrain Rockford Inc.

United States

100%

Design, production and sales

$ 1,000

90.49

72.59

197

Comer Industries do Brasil EIRELI

Brazil

100%

Sales

BRL 6,112,000

14.19

8.23

8

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda.

Brazil

100%

Production and sales

BRL 8,410,000

10.99

1.05

59

Comer Industries (Jiaxing) Co. Ltd.

China

100%

Production and sales

€ 11,700,000

148.00

81.08

284

Comer Industries (Shaoxing) Co. Ltd.

China

100%

Production and sales

€ 6,720,000

4.25

5.24

2

Walterscheid Powertrain (China) Co. Ltd.

China

100%

Production and sales

CNY 2,000,000

16.54

2.44

0

Comer Industries India Pvt. Ltd.

India

100%

Production and sales

145,090,000 INR

34.85

11.01

101

30

COMER INDUSTRIES

31

2023 ANNUAL REPORT

1.10

NON-FINANCIAL INFORMATION Launched in 2019, the Group's Our Bright Impact sustainable

the Group had decided to communicate its sustainability

development program is based on a commitment to contribute

performance in a structured manner through the publication of

to the achievement of the Sustainable Development Goals, an

the Non-Financial Statement in accordance with the provisions

integral part of the United Nations 2030 Agenda and a point of

of Italian Legislative Decree no. 254/2016 and the Global

reference for building a strategy based on sustainability.

Reporting Initiative Sustainability Standards.

In declaring this commitment, the Group has chosen the path

The 2023 Non-Financial Statement, now mandatory as a result of

of progressive integration of programs and actions within its

the translisting, contains information relating to environmental,

business model, applying criteria based on sustainability to

social, personnel-related, respect for human rights, and the fight

its strategic choices and operations. Moreover, in order to give

against corruption, useful to ensure an understanding of the

greater prominence to its commitment to a sustainable business

activities carried out by the Group, its performance, its results,

model, even in previous years when it was not required to do so

and their impact.

by Directive 2014/95/EU (Non-Financial Reporting Directive),

1.11

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE YEAR AND BUSINESS OUTLOOK

As concerns the significant events after the end of the financial

improvement in the second half of the year. On the other hand,

year, on February 3, 2024 the shareholders' agreement signed

the industrial sector, after benefiting from the economic recovery

on December 1, 2021 and subsequently amended on June 14,

to less of an extent, is expected to perform better than the

2023 between Comer Industries S.p.A., Eagles Oak S.r.l. and WPG

agricultural sector.

Parent B.V. was terminated.

Overall, Management expects 2024 sales to be in line with the With regard to the foreseeable development of operations, note

forecasts of the market’s major OEM players mentioned above,

that the agricultural market has benefited from particularly

and a margin slightly lower than what was recorded in 2023.

sustained growth over the last year and a half, and is now facing

Lastly, net of extraordinary transactions, the Group is expected to

a phase of decline in this excess demand, moving towards more

continue on its path of improving its net financial position thanks

limited growth rates aligned with historical trends. The sector

to the continuous generation of cash.

was down in the final quarter of 2023 and is also expected to decrease in the first part of 2024, with expectations for a slight

32

COMER INDUSTRIES

1.12

OPERATIONAL RISK MANAGEMENT Below are the main operational risks inherent in the nature of

is assigned to the Quality, Sustainability & Lean Development

business, such as risks related to climate change and information

function. This function sets specific quantitative targets to be

technology.

achieved each year for each individual site and each indicator

Furthermore, the Group is exposed to different types of business

based on the results achieved in the previous year and the

risk, as described in the Notes to this Consolidated Financial

medium- to long-term sustainability development plan. Each site

Report in Section 2.4 "Financial Risk Management."

develops an improvement plan defining projects, resources, and responsibilities. Progress is monitored monthly to update and

CLIMATE CHANGE RISK

revise the action plans and to manage progress and performance.

The Group works to achieve its goal of contributing to the fight

The CEO receives monthly progress reports.

against climate change through progressive alignment and

Specific indicators related to climate risk management aimed at

adherence to the Recommendations of the TCFD-Task force on

monitoring and reporting quarterly to the CRSC and the BoD on

Climate-related Financial Disclosures.

the effectiveness of implemented mitigation plans are also being

In 2023 the spectrum of analysis was further expanded and

defined.

updated, incorporating instances from new operating locations

The Integrated Quality, Sustainability and Product Responsibility

in light of recent acquisitions.

Policy is the key document that defines the modus operandi of the Company and expresses its commitment to the Sustainable

(I) SCENARIO ANALYSIS

Development Goals.

The analysis was conducted considering the specifications of the 2017 Technical Supplement, The Use of Scenario Analysis in

(III) RISK MANAGEMENT

Disclosure of Climate-Related Risks and Opportunities.

The process is based on the scenario analysis described above

The first phase involved a mapping of the current state on which

in compliance with the Recommendations of the Task Force on

to construct scenario assessments in terms of economic growth

Climate-related Financial Disclosures. The risk management

and exogenous factors, correlating them with potential levels of

system was supplemented by a timely analysis of risk factors

climate-changing gases (GHGs) released into the atmosphere.

related to climate change. The scope of analysis includes all the

Using 2022 as the base year, a medium-long time horizon to

Group's sites.

2030 was assessed using two scenarios: the first corresponding

Risk weighting and related mitigation actions were carried

to the goal of limiting global warming to 1.5°C (Net Zero 2050);

out through the tools and criteria provided in the Group's risk

the second aligned with the preservation of current policies

management model. The prioritization of climate risks is based

(business as usual) and global warming greater than 2°C. The

on a specific Risk = Probability x Impact matrix, with which risks

analysis was developed for the countries the Group's sites are

are classified into high, significant, medium and low in light of

located in: Brazil, China, Germany, India, Italy, UK, USA.

any prevention or mitigation measures that have already been applied. In accordance with the internal risk management

(II) GOVERNANCE

procedure, specific mitigation plans are defined for risks

The BoD is responsible for strategic and organizational direction

classified as high and significant, while medium and low risks

with respect to climate change and for verifying the adequacy of

may be considered acceptable. Any action plans flow into the

the organizational structure and resources needed. To manage

corporate ERM monitoring system. The mapping and assessment

the related risks and impacts, it relies on the Control, Risk and

of significant physical climate risks relevant to the Group are

Sustainability Committee, which has proposing and support

carried out based on data and information inferred from specific

functions in setting environmental policies and monitoring the

models in the public domain and internationally recognized. For

proper implementation of the strategy. The authority for the

the classification of physical hazards reference was made to the

coordination of the strategy's implementation and assessment

table in Appendix A of Attachment I to Del. Reg. 2021/2139.

of risks and opportunities related to climate change management

The mapping and assessment of significant and relevant

33

2023 ANNUAL REPORT

transitional climate risks for the Group was made possible

sustainability performance measurement. This assessment took

through the direct involvement of function heads and

place during 2022, and the process of monitoring and mapping

management, as well as the characterization of sites according

risks and opportunities took this new arrangement into account.

to their geographic area. The classification of transition risks was

While no risks above the internal threshold of acceptability were

made considering those envisaged in the technical specification.

noted, a number of risks assessed as particularly financially

The regulatory framework applicable to the context and the

impactful were identified, along with the relevant scenario and

impact on the Company's processes and products were also

time horizon, for which see the chapter “Climate change and

considered, especially the recently published legislation by the

emissions management” in the Group's Non-Financial Statement.

European Union aimed at combating carbon emissions (Carbon Border Adjustment Mechanism).

(V) METRICS AND OBJECTIVES

Finally, each of the risks identified was assigned an estimate

The current climate change reporting system is summarized

of the related and residual financial impacts as a result of the

below:

application of the specific mitigation actions implemented.

• consumption of direct energy – GRI 302-1;

For the financial quantification of acute and chronic physical

• direct and indirect emissions: (Scope 1 and Scope 2 GHG

climate risks, two economic quantities related to the organization's

emissions) and other types of emissions relevant to the sector

operations were identified and used according to the specific type

of reference (specifically CO, NOx, PM and SOV) - GRI 305-1,

of risk:

GRI 305-2 and GRI 305-7;

• Value of buildings and their contents (e.g., equipment,

• Scope 3 GHG emissions: the areas currently measured

machinery, etc.) for each Group site. These values were derived

are logistics (limited to the route from the Italian plants to

from expert estimates or alternatively from the literature. In

the customers' premises), commuting (limited to the Italian

the latter case, the available values were updated considering

plants), Group-wide waste treatment, and fuel- and energy-

inflation for the years in question.

related activities at each site – GRI 305-3;

• Turnover of the various Group companies and EBITDA.

• energy and emission intensity indices – GRI 302-3 and GRI

The expected economic damage was assessed in prospective

305-4.

terms by calculating the increase in damage up to 2030 based

A summary indicator of climate change-related risk is being

on two scenarios: net zero 2050 (corresponding to a global

prepared based on which quantitative targets will be set starting

average temperature increase of 1.5°C) and delayed transition

next year.

(corresponding to a global average temperature increase of 2°C).

The objectives related to these indicators are reported and

The quantification of the financial impact related to transition

monitored in the 2030 Sustainable Development Plan.

climate risks was calculated using the proxy methodology based on the carbon price suggested by TCFD in the Guidance on

CYBER & INFORMATION TECHNOLOGY RISK

Metrics, Targets and Transition Plan (October 2021).

The Group considers the operational continuity of its IT systems

See the chapter “Climate change and emissions management”

to be of great importance and has implemented risk mitigation

in the Group's Non-Financial Statement for a more detailed

measures in this regard aimed at ensuring network connectivity,

discussion of the risks and opportunities identified.

data availability, and data security, while at the same time guaranteeing the processing of personal data in compliance

(IV) STRATEGY

with the European GDPR regulation and the national regulations

In a medium- to long-term perspective, the acquisition of

applicable in individual EU member states. To this end, it has

Walterscheid required a new reflection on objectives and

implemented and continues to optimize an Information Security

strategic choices, as it redefines the scope subject to corporate

Management System (ISMS).

34

COMER INDUSTRIES

Cybersecurity is a strategic priority for Comer Industries, which

The Group periodically provides training to personnel on the

operates in an increasingly digitized and competitive environment.

risks linked to the use of the Internet, social media and email

For this reason, a number of initiatives were implemented

and a process for assessing threats and the degree of resilience

during 2023 to strengthen the security of infrastructure, data

of existing systems against cyber attacks, also by performing

and processes, in accordance with ISO 27001 and the NIST

vulnerability testing.

framework.

1.13

PROPOSAL FOR THE ALLOCATION OF PROFIT The Board of Directors proposes the Shareholder’s Meeting to

shareholders at the end of the accounting day of May 14, 2024

approve the distribution of a dividend of 1.25 euros for each

(the record date) will be entitled to the dividend.

share held at the date of approval. The dividend will be payable

The remainder of the profit for the year of the parent company

next May 15, 2024 (payment date) with an ex-date of May 13,

Comer Industries S.p.A. equal to 4,854,003.36 euros will be

2024. In this case, all those registered as Comer Industries S.p.A.

allocated to the Extraordinary Reserve.

Reggiolo, March 13, 2024

For the Board of Directors Matteo Storchi President & CEO

35

02 CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES

2023 ANNUAL REPORT

CONSOLIDATED BALANCE SHEET ASSETS (THOUSAND EUROS)

Notes

DECEMBER 31, 2023

DECEMBER 31, 2022

Tangible fixed assets

2.6.1

234,275

211,514

Intangible fixed assets

2.6.2

385,369

357,272

Equity investments in other companies

2.6.3

1,760

1,523

Tax assets and deferred tax assets

2.6.4

42,881

35,695

Other long-term receivables

2.6.5

1,119

1,407

665,404

607,411

Non-current assets

Total

Current assets

Inventories

2.6.6

226,596

244,906

Trade receivables

2.6.7

205,797

207,961

Other short-term receivables

2.6.7

8,953

8,250

Current tax assets

2.6.8

19,927

29,327

Cash and cash equivalents

2.6.9

68,333

151,328

Total

529,606

641,772

TOTAL ASSETS

1,195,010

1,249,183

38

COMER INDUSTRIES

EQUITY AND LIABILITIES (THOUSAND EUROS)

Notes

DECEMBER 31, 2023

DECEMBER 31, 2022

Issued capital

18,487

18,487

Share premium reserve

187,881

187,881

Own shares in portfolio

(147)

0

Other reserves

58,162

54,495

Accumulated profit (loss)

243,211

183,021

Retained earnings

149,176

92,305

Net profit

94,035

90,716

507,594

443,884

-

-

2.6.10

507,594

443,884

Long-term loans

2.6.9

64,557

190,669

Other long-term financial payables

2.6.9

51,993

48,048

Deferred tax liabilities

2.6.11

54,338

62,371

Post-employment benefits

2.6.12

122,628

118,416

Other long-term payables

2.6.14

22,378

19,697

Long-term provisions

2.6.13

16,975

14,563

332,869

453,764

Share capital and reserves

Total

2.6.10

Portion pertaining to minority interests Total equity Non-current liabilities

Total Current liabilities Trade payables

2.6.14

198,842

198,630

Other short-term payables

2.6.14

32,168

34,758

Tax liabilities

2.6.15

29,966

23,173

Short-term loans

2.6.9

34,028

51,580

Short-term derivative financial instruments

2.6.9

0

234

Post-employment benefits short-term

2.6.12

7,859

5,792

Other short-term financial payables

2.6.9

12,586

9,744

Short-term provisions

2.6.13

39,098

27,624

Total

354,547

351,535

TOTAL LIABILITIES

1,195,010

1,249,183

39

2023 ANNUAL REPORT

CONSOLIDATED INCOME STATEMENT CONSOLIDATED INCOME STATEMENT (THOUSAND EUROS)

Notes

DECEMBER 31, 2023

DECEMBER 31, 2022

Sales revenues

2.6.17

1,223,938

1,237,576

Other operating revenues

2.6.18

5,922

6,929

Change in inventories of semi-finished and finished goods and WIP

(18,309)

19,279

Purchase costs

(648,127)

(724,009)

Personnel costs

2.6.19

(240,646)

(243,644)

Other operating costs

2.6.21

(115,174)

(114,369)

(2,623)

(1,754)

2.6.1 – 2.6.2

(60,553)

(52,491)

OPERATING RESULT

2.6.22

144,428

127,517

Net financial income / (charges)

2.6.23

(15,264)

(2,588)

129,164

124,929

(35,129)

(34,213)

94,035

90,716

-

-

94,035

90,716

Write-downs of receivables and high risk provisions Amortization

Profit before Tax Income taxes

2.6.24

NET PROFIT of which pertaining to minority interests of which pertaining to the Group Basic earnings per share (in euros)

2.6.25

3.28

3.16

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (THOUSAND EUROS)

Notes

DECEMBER 31, 2023

DECEMBER 31, 2022

94,035

90,716

Net (loss)/gain on cash flow hedges

509

(963)

of which fiscal effect

(122)

231

Translation differences on foreign financial statements

(5,344)

(3,866)

Total other components of the comprehensive income/(loss) statement that may be reclassified to the profit / (loss) in subsequent periods, net of taxes

(4,958)

(4,598)

Net profit Other components of the comprehensive income/(loss) statement that will be reclassified to the profit/ (loss) in subsequent periods (net of taxes)

Other components of the comprehensive income/(loss) statement that will not be reclassified to the profit / (loss) in subsequent periods, (net of taxes) Gain/(loss) on revaluation of defined benefit plans

2.6.12

(5,650)

39,320

of which fiscal effect

2.6.12

1,938

(12,828)

Total other components of the comprehensive income/(loss) statement that will not be reclassified to the profit / (loss) in subsequent periods, net of taxes

(3,712)

26,492

Total comprehensive profit after tax

85,365

112,610

40

COMER INDUSTRIES

41

2023 ANNUAL REPORT

CASH FLOW STATEMENT (THOUSAND EUROS)

Notes

DECEMBER 31, 2023

DECEMBER 31, 2022

94,035

90,716

15,264

2,588

Cash flow from operating activities Profit (Loss) for the year Adjustments for: Financial income and expenses and valuation exchange differences Amortization of intangible fixed assets

2.6.2

20,603

17,942

Depreciation of tangible fixed assets

2.6.1

39,950

34,549

Net change in provisions for risks and charges

2.6.13

13,887

13,954

Net change in post-employment benefits

2.6.12

16

(1,651)

Net change in deferred taxes

(21,226)

(6,544)

Operating cash flow before changes in working capital

162,528

151,554

Change in inventories

2.6.6

25,051

(19,278)

Change in trade receivables

2.6.7

4,926

(11,832)

Change in trade payables

2.6.14

(3,676)

(19,981)

Change in other receivables (including current tax receivables)

9,759

(11,416)

Change in other payables (including current tax payables)

2,227

(4,260)

Net change in other non-current assets and liabilities

3,009

9,350

Cash flow generated (absorbed) by changes in working capital

41,296

(57,417)

Cash flow generated (absorbed) by operations

203,825

94,137

(3,144)

CASH FLOW FROM INVESTMENT ACTIVITIES: (Investments) in intangible fixed assets

2.6.2

(3,462)

Disinvestments in intangible fixed assets

2.6.2

91

42

COMER INDUSTRIES

(Investments) in tangible fixed assets

2.6.1

(38,816)

Disinvestments in tangible fixed assets

2.6.1

1,460

(Investments)/Divestments in equity investments

2.6.3

(237)

(244)

Net cash flow from investment/disinvestment activities

(40,963)

(34,123)

Free cash flow

162,862

60,014

(49,830)

0

(49,830)

0

0

803

Net increases from business acquisition net of cash acquired

2.5.1

Business combinations

(30,735)

CASH FLOW FROM FINANCING ACTIVITIES: Net change in current financial assets Loans stipulated

2.6.9

0

69,000

Loans repaid

2.6.9

(147,495)

(33,200)

Net change in other current financial payables

2.6.9

(7,418)

(9,508)

(14,115)

(2,588)

Financial income and expenses and valuation exchange differences Dividends paid

2.6.10

(21,509)

(14,339)

Change in equity for translation reserve and other impacts

2.6.10

(5,490)

(4,598)

Cash flow generated (absorbed) by financial operations

(196,027)

5,570

Increase (Decrease) in cash and cash equivalents

(82,995)

65,584

Net cash and cash equivalents at the start of the year

151,328

85,744

68,333

151,328

(82,995)

65,584

Cash and cash equivalents at the end of the year

2.6.9

Change in cash and cash equivalents

43

2023 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (THOUSAND EUROS)

SHARE CAPITAL

Net equity at January 1, 2022

18,487

RESERVE FOR SHARE PREMIUM OWN SHARES IN RESERVE PORTFOLIO

187,881

LEGAL RESERVE 2,622

Profit/(Loss) for the period Components of the comprehensive profit/(loss): IAS 19.93A - Actuarial gains Components of the comprehensive profit/(loss): Changes in conversion reserve Components of the comprehensive profit/(loss): Change in CFH reserve Subtotal: Res of comprehensive income/(loss) statement Distribution of dividends Allocation of 2021 profit

794

Net equity at December 31, 2022

18,487

187,881

3,416

Profit/(Loss) for the period Components of the comprehensive profit/(loss): IAS 19.93A - Actuarial gains Components of the comprehensive profit/(loss): Changes in conversion reserve Components of the comprehensive profit/(loss): Change in CFH reserve Subtotal: Res of comprehensive income/(loss) statement Distribution of dividends Allocation of 2022 profit

281

Purchase of own shares

(147)

Net equity at December 31, 2023

18,487

44

187,881

(147)

3,697

COMER INDUSTRIES

OTHER RESERVES EXTRAORD. RESERVE

TRANSLATION RESERVE

27,406

4,078

IAS 19 RESERVE

F.T.A. RESERVE

C.F.H. RESERVE

CONSOLIDATION RESERVE

(5,923)

345

3,543

26,227

RETAINED EARNINGS

PROFIT/LOSS FOR THE YEAR

TOTAL NET EQUITY

67,744

39,429

345,612

90,716

90,716

265

26,492

(3,866)

(3,866) (732)

(3,866)

26,227

(732)

(732)

265

90,716

(14,339)

27,406

212

26,227

(5,923)

(387)

3,543

(14,339)

38,635

(39,429)

92,305

90,716

443,884

94,035

94,035

(3,712)

(3,712)

(5,344)

(5,344) 387

(5,344)

112,610

(3,712)

387

387

94,035 (21,509)

12,055

78,379

85,365 (21,509)

(90,716) (147)

39,461

(5,132)

22,515

(5,923)

0

45

3,543

149,176

94,035

507,594

2023 ANNUAL REPORT

2.1

GENERAL INFORMATION Comer Industries S.p.A. is an Italian company with headquarters

The Group consists of 24 companies, including 11 production

and administrative offices in Via Magellano 27 in Reggiolo

companies located in Italy, Germany, the United States, China,

(RE), tax code and registration in the Company Register no.

India and Brazil, 8 trading companies operating in Germany,

07210440157 with resolved Share Capital of 18,487,338.60 euros

France, the UK, Russia, China, Brazil and the United States, and

fully subscribed and paid up as of December 31, 2023, divided

5 holding companies.

into 28,678,090 ordinary shares. As of December 31, 2023, Comer Industries S.p.A. held 5,387 own shares equal to 0.02% of the

As of July 12, 2023, the date on which Comer Industries S.p.A.'s

share capital, purchased at a weighted average cost of 27.3625

shares begin trading on Euronext Milan, the exercise of direction

euros.

and coordination by Eagles Oak S.r.l. over Comer Industries S.p.A. ceased.

Comer Industries is the leading global player in the design and manufacture of advanced engineering systems and mechatronics

The consolidated Financial Statements as of December 31, 2023,

solutions for power transmissions. The company operates in the

drafted on a going concern basis, with respect to which there

fields of agricultural machinery, construction, wind power, and

are no aspects of uncertainty, were approved by the Board of

electric vehicle motors and transmissions.

Directors on March 13, 2024.

46

COMER INDUSTRIES

2.2

SCOPE OF CONSOLIDATION Below are the main changes that took place in 2023.

On September 25, 2023, the parent company purchased the

On January 9, 2023, the parent company Comer Industries S.p.A.

shares representing 100% of the share capital of Walterscheid

concluded the acquisition of e-comer S.r.l., a newly established

Brasil Industria de Equipamentos Agricolas Ltda owned by the

company that on December 27, 2022 absorbed the business

subsidiary Powertrain Services UK Ltd at a price of 100,000

units of Benevelli Electric Powertrain Solutions and Sitem Motori

euros. This transaction did not have any accounting impact on

Elettrici, for an Enterprise Value of 54 million euros plus a variable

the consolidated financial statements.

component ("Earn Out"), to be fully or partially recognized in a

On December 29, 2023, the Parent Company acquired the shares

tranche subject to the achievement of certain profitability targets

representing 100% of the share capital of Walterscheid Powertrain

of e-comer S.r.l. in the 2023-2026 Sales Plan Period.

(China) Co. Ltd owned by the subsidiary WPG UK HoldCo Limited

This transaction, which resulted in a cash-out at the closing

at a price of 10 Chinese renminbi. This transaction did not have

date of 50 million euros, is perfectly in keeping with the Group's

any accounting impact on the consolidated financial statements.

strategy to enter the fast-growing market for electric vehicle engines and transmissions, expanding the range of products

On July 10, 2023, the Shareholders' Meeting passed a resolution

offered and further strengthening its leadership position in the

to dissolve and put Evoluzione Comer S.r.l. into liquidation. The

market.

company ceased operations as of December 6, 2023, and was

The consideration paid for the transaction at closing was

removed from the Commercial Register on January 10, 2024.

financed by resorting to a medium- to long-term bank loan provided by Crédit Agricole Italia of the same amount. The

In July 2023 Comer GmbH was merged into WPG German HoldCo

remaining 4 million euros will be paid in four interest-free annual

GmbH, again with no impact on the consolidated financial

installments starting from the 12th month following the closing

statements.

date. The newly-acquired e-comer S.r.l. was consolidated as from January 1, 2023, while the estimated earn out reflected in

Walterscheid Russia LLC has been inactive since April 2022.

the consolidated financial statements as of December 31, 2023 based on information available as of that date amounts to 3.4

As of the date of these consolidated financial statements, the

million euros.

main shareholder of the Parent Company is Eagles Oak S.r.l. with a 51.05% stake in the share capital and 65.04% of the voting

In March 2023 the deed of merger by incorporation of

rights.

Walterscheid Monguelfo S.p.A. into Comer Components S.r.l. was signed, with legal effect as of April 1, 2023 and with

With regards to the summary of economic-asset/liability relations

accounting and tax effects backdated to January 1, 2023. The

with related parties of the Group, reference should be made to the

reason and justification for the merger is the need to simplify

details in the Director's Report.

the Group's corporate structure following the acquisition of the Walterscheid Group. The transaction has no accounting impacts

The scope of consolidation as at December 31, 2023 includes the

on the consolidated financial statements.

Parent company and the following subsidiaries:

47

2023 ANNUAL REPORT

REGISTERED OFFICE

CURRENCY

SHARE CAPITAL APPROVED

% CONTROL

PARENT COMPANY

Comer Industries S.p.A.

Reggiolo (RE), Italy

KEUR

18,487

Holding company

Eagles Oak S.r.l.

Comer Industries Inc.

Charlotte, NC, USA

KUSD

13,281

100

Comer Industries S.p.A.

Leicester, United Kingdom

KGBP

265

100

Comer Industries S.p.A.

Comer Industries Components S.r.l.

Matera, Italy

KEUR

7,125

100

Comer Industries S.p.A.

Comer Industries (Shaoxing) Co. Ltd.

Shaoxing, China

KEUR

6,720

100

Comer Industries S.p.A.

Comer Industries do Brasil EIRELI

Limeira (SP), Brazil

KBRL

6,112

100

Comer Industries S.p.A.

95

Comer Industries S.p.A.

Comer Industries India Pvt Ltd.

Bangalore, India

KINR

145,090

5

Comer Industries Components S.r.l.

Comer Industries (Jiaxing) Co. Ltd.

Jiaxing, China

KEUR

11,700

65.8

Comer Industries (Shaoxing) Co. Ltd.

34.2

Comer Industries S.p.A.

ENTITY NAME

Comer Industries U.K. Ltd.

e-comer S.r.l.

Reggiolo (RE), Italy

KEUR

1,000

100

Comer Industries S.p.A.

WPG German HoldCo GmbH

Lohmar, Germany

KEUR

10,495

100

Comer Industries S.p.A.

WPG UK HoldCo Ltd.

Leek, United Kingdom

KGBP

3,093

100

Comer Industries S.p.A.

WPG US HoldCo LLC

Rockford, IL, USA

KUSD

58,546

100

Comer Industries S.p.A.

Off-Highway Powertrain Services Germany GmbH

Lohmar, Germany

KEUR

2,050

Walterscheid GmbH

Lohmar, Germany

KEUR

17,895

Walterscheid Getriebe GmbH

Sohland, Germany

KEUR

26

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda

Cachoeirinha, Brazil

KBRL

Jiangsu, China

Powertrain Services France SAS

Walterscheid Russia LLC

Walterscheid Powertrain (China) Co. Ltd.

89.9

Walterscheid GmbH

10.1

WPG German HoldCo GmbH

100

WPG German HoldCo GmbH

89.84

Walterscheid GmbH

10.16

WPG German HoldCo GmbH

8,410

100

Comer Industries S.p.A.

KCNY

2,000

100

Comer Industries S.p.A.

Chanteloup-les-Vignes, France

KEUR

2,139

100

Off-Highway Powertrain Services Germany GmbH

50 Moscow, Russian Federation

KRUB

10

Powertrain Services UK Limited

50

Powertrain Services (UK Newco) Ltd.

Powertrain Services UK Limited

Leek, United Kingdom

KGBP

14,231

100

WPG UK HoldCo Ltd.

Powertrain Services (UK Newco) Ltd.

Leek, United Kingdom

KGBP

-

100

Powertrain Services UK Limited

Walterscheid Inc. Woodridge

Woodridge, IL, USA

KUSD

2,000

100

WPG US HoldCo LLC

Powertrain Rockford Inc.

Rockford, IL, USA

KUSD

1

100

WPG US HoldCo LLC

Walterscheid Cardan GmbH

Irxleben, Germany

KEUR

625

100

Walterscheid GmbH

Matsui Walterscheid Ltd.

Koga, Japan

KJPY

-

40

Walterscheid GmbH

48

COMER INDUSTRIES

2.3

ACCOUNTING STANDARDS ADOPTED 2.3.1 DECLARATION OF COMPLIANCE WITH IFRS

year, including the short-term portion of medium-longterm loans and of provisions for liabilities and charges and liabilities for employee benefits.

The consolidated financial statements of Comer Industries

The consolidated income statement is presented according

have been drawn up in compliance with the International

to a “costs by nature” classification.

Financial Reporting Standards (IFRS), issued by the

The cash flow statement has been drawn up on the basis

International Accounting Standards Board (“IASB”) and

of the indirect method and is presented in compliance

approved by the European Union and in force at the balance

with IAS 7, classifying cash flows between operating,

sheet date, as well as the Consob (Commissione Nazionale

investment and financing activities.

per le Società e la Borsa) orders issued in implementation of

It should be noted that, with reference to Consob

Article 9 of Italian Legislative Decree no. 38/2005 (resolutions

resolution no. 15519 of July 27, 2006 and the DEM6064293

15519 and 15520) of July 27, 2006 and the DEM/6064293

communication of July 28, 2006, details of significant

communication of July 28, 2006, pursuant to art. 78 of the

dealings with related parties are disclosed on the financial

Issuers’ Regulations, the EC document of November 2003

statements in order to provide more complete information.

and, where applicable, the Italian Civil Code. "IFRS" also refers to the International Accounting Standards ("IAS") still

International Financial Reporting Interpretations Committee

2.3.3 RELEVANT ACCOUNTING STANDARDS

("IFRIC") and before that, the Standing Interpretations

The Comer Industries S.p.A. Group adopted International

Committee ("SIC").

Accounting Standards and International Financial Reporting

in force, as well as all the interpretive documents issued by the IFRS Interpretations Committee, previously called the

Standards as of 2007, with the transition date to IFRS effective January 1, 2006.

2.3.2 CONTENTS AND FORM OF THE CONSOLIDATED FINANCIAL STATEMENTS

Continuing these principles, the consolidated financial statements as of December 31, 2023, were therefore drawn up according to the IAS / IFRS adopted by the European Union.

The unit of currency used is the Euro, and all values

The consolidated financial statements are presented in

are expressed in thousands of euros unless otherwise

thousands of euros. The financial statements are prepared

indicated.

on a cost basis, except for financial instruments that are

The presentation layout for the consolidated balance sheet

measured at fair value.

makes a distinction between current and non-current

The preparation of the financial statements in accordance

assets and liabilities, in which:

with IFRS (International Financial Reporting Standards)

• non-current assets include balances of assets realizable

requires judgments, estimates and assumptions that have

after more than one year and include intangible, tangible

an effect on the assets, liabilities, income and expenses.

and financial assets and deferred tax assets;

The actual results may differ from the results obtained using

• current assets include the balances of assets realizable

these estimates.

within 1 year;

The accounting policies have been applied consistently in all

• non-current liabilities include payables falling due after

Group companies and for all periods presented.

more than 1 year, including financial debts, provisions for liabilities and charges and liabilities for employee benefits and deferred tax liabilities; • current liabilities include payables falling due within 1

49

2023 ANNUAL REPORT

2.3.4 PRINCIPLES OF CONSOLIDATION

(iii) Transactions eliminated in the consolidation process Intercompany balances and profits and losses resulting from intercompany transactions are eliminated in the

(i) Subsidiaries

consolidated financial statements. Profits arising from

Companies are defined subsidiaries when the parent company

intercompany transactions with associated companies are

has the authority, directly or indirectly, to conduct business

eliminated as part of the valuation of the equity investment

so as to obtain benefits from such activities. In defining

using the equity method. Intercompany losses are eliminated

control, consideration is also given to potential voting rights

only if there is evidence that these were realized in detriment

that can currently be freely exercised or converted. These

to third parties.

potential voting rights are not taken into account for the minority shareholders of the results of operations and the

2.3.5 SEGMENT INFORMATION

share of capital and reserves they are entitled to.

Segment information is provided for the two business

The financial statements of subsidiaries are consolidated

segments with reference to income data only, as the

from the date on which the Group gains control and de-

related balance sheet data are not monitored by the Group’s

consolidated from the date that this controlling interest

Management. The information includes both costs directly

ceases.

attributable and costs allocated according to reasonable

The global integration method is adopted for the consolidation

assumptions. General and administrative costs, ICT and HR

of subsidiaries, involving undertaking the total amount of

services, fees for directors, statutory auditors and Group

assets and liabilities and all costs and revenues, irrespective

management departments, as well as costs relating to the

of the extent of the Group's interest. The book value of

global sourcing area (organized according to purchasing

consolidated equity investments is therefore offset against

group of product category) have been allocated to sectors

any relative capital and reserves. The shares of capital and

on the basis of revenues.

reserves and profits pertaining to minority shareholders are

The Group operates in the following sectors:

purposes of the consolidation process upon allocation to

shown separately under a specific capital and reserve item

• Agricultural sector. This mainly consists of speed

and on a separate line of the consolidated income statement.

increasers, speed reducers, bevel gearboxes, PTO

Intercompany dividends distributed by foreign subsidiaries

driveshafts, wheel drives and axles for agricultural use,

are eliminated in the consolidation process using the

especially manufacturers of combine harvesters and

proportionate approach provided for by IAS 21, since, even

tractors, haymaking, harvesting, irrigation and mixing, and

in the case of distribution of profit reserves generated in

land preparation and working machines.

previous years, the investor’s percentage equity ownership

• Industrial sector. This includes products such as

is not considered to be affected.

modular planetary drives, travel and hoist drives, slew drives and rigid and steering axles for construction and

(ii) Related companies

forestry machinery manufacturers, from the shipbuilding

Related companies are those companies over which the

to the airport building and mining industries. Components

Group has considerable influence but in which it does not

for municipalities, for the extraction industry and

exercise any control over the management. The consolidated

material handling sectors. Products for the wind power

financial statements include the accrued share of the profits

and renewable energy sector as well as for driving the

and losses of related companies, measured using the

augers of biogas machines. Electric motors for stationary

equity method from the date on which any such significant

industrial applications, transaxle and geared motors for

influence on operation started until its termination. Similar

e-Mobility, construction, material handling and logistics.

to that described above for the subsidiaries, the acquisition of related companies is also recorded under the purchase method; in this case, any acquisition cost in excess of the Group's share of the fair value of net assets acquired is included in the value of the equity investment.

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2023 ANNUAL REPORT

2.3.6 TREATMENT OF FOREIGN CURRENCY TRANSACTIONS

(ii) Conversion of financial statements drawn up in foreign

(i) Foreign currency transactions

currencies

The functional currency and reporting currency adopted by

The assets and liabilities of companies based in non-EU

Comer Industries Group is the Euro. Transactions in foreign

countries, including adjustments arising from the consolidation

currencies are converted into Euro on the basis of the exchange

process, relating to goodwill and fair value adjustments arising

rate at the transaction date. The monetary assets and liabilities

from the acquisition of a non-EU company, are converted at the

are converted at the exchange rate on the balance sheet date.

exchange rate prevailing on the closing date of the balance sheet.

Any exchange rate differences arising out of conversion are

Revenues and costs of these companies are converted at the

recognized in the income statement. Non-monetary assets

average exchange rate for the period, closest to the exchange

and liabilities measured at historical cost are converted at the

rates on the dates on which the individual transactions took

exchange rate at the transaction date. The monetary assets and

place. Foreign exchange differences arising from the conversion

liabilities measured under fair value are converted into euro at the

process are recorded directly in a special provision under capital

exchange rate on the date the fair value was determined.

and reserve called the conversion reserve.

Below is the table with the exchange rates applied for the conversion of financial statements:

EXCHANGE RATES SPOT EXCHANGE RATES

AVERAGE ANNUAL EXCHANGE RATES

DECEMBER 31, 2023

DECEMBER 31, 2022

2023

2022

€/GBP

0.869

0.887

0.870

0.853

€/USD

1.105

1.067

1.081

1.053

€/CNY

7.851

7.358

7.660

7.079

€/BRL

5.362

5.639

5.401

5.440

€/INR

91.905

88.171

89.300

82.686

€/CHF

0.926

0.985

0.972

1.005

€/CZK

24.724

24.116

24.004

24.566

€/DKK

7.453

7.437

7.451

7.440

€/JPY

156.330

140.660

151.990

138.027

€/NOK

11.241

10.514

11.425

10.103

€/RUB

115.484

115.484

88.397

88.397

€/SEK

11.096

11.122

11.479

10.630

€/HUF

382.800

400.870

381.853

391.287

€/PLN

4.340

4.681

4.542

4.686

Source: Bank of Italy The latest available exchange rates were used for the €/RUB exchange rate.

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2.3.7 ACQUISITIONS

removal of fixed assets.

Financial charges relating to specific loans used for the

Business combinations are recognized according to the

acquisition of tangible fixed assets are charged to the income

acquisition method.

statement on an accruals basis. According to the provisions of

According to this method, the consideration transferred in a

IAS 20, any capital grants obtained as a result of investment

business combination is measured at fair value, calculated as the

incentives granted by the public administration are deducted

sum of the fair values of the assets transferred and the liabilities

from the historical cost of any related capitalized fixed assets,

assumed by the Group at the acquisition date. Any transaction

when put into operation.

costs are recognized in the income statement at the time they

No fixed assets are available for sale.

are incurred.

Goodwill is determined as the excess of the sum of the

(ii) Fixed assets under finance leases

consideration transferred in the business combination, the

Assets held by the Group under leasing contracts, including

value of shareholders' equity pertaining to minority interests,

operating leases, in accordance with the IFRS 16 standard in force

and the fair value of any equity investment previously held in the

since January 1, 2019, are recognized as assets with a balancing

acquired company over the fair value of the net assets acquired

entry in financial payables. In particular, assets are recognized

and liabilities assumed at the acquisition date. If the value of

at a value equal to the current value of future payments at the

the net assets acquired and liabilities assumed at the date of

date of signing the contract, discounted using the applicable

acquisition exceeds the sum of the consideration transferred,

incremental borrowing rate for each contract.

the value of shareholders' equity pertaining to minority interests, and the fair value of any equity investment previously held in the

(iii) Subsequent costs

acquired company, this excess is immediately recognized in the

The costs of replacing certain parts of the fixed assets are

income statement as income from the transaction concluded.

capitalized when it is probable that these costs will result in future

The portions of shareholders' equity of non-controlling interests

economic benefits and can be reliably measured. All other costs,

at the date of acquisition may be measured at fair value or at

including the costs of maintenance and repairs, are attributed to

the pro-rata value of the net assets recognized for the acquired

the income statement as incurred.

company. The choice of valuation method is made on a transaction-by-transaction basis. If the initial values of a business

(iv) Depreciation

combination are incomplete at the balance sheet date that the

Depreciation is charged to the income statement on a straight-

business combination occurred on, in its consolidated financial

line basis and on the estimated useful life of fixed assets

statements the Group reports the provisional values of the items

and their residual possible use. Land is not depreciated. The

for which recognition cannot be completed. These provisional

estimated useful life results in the following depreciation rates

values are adjusted during the measurement period to reflect new

by homogeneous category:

information gathered about facts and circumstances existing at the acquisition date which, if known, would have affected the value of the assets and liabilities recognized at that date.

2.3.8 PROPERTY, PLANT AND EQUIPMENT (i) Owned fixed assets Property, plant and equipment are measured at historical cost

Buildings

2.5% - 3%

Light construction, general and specific equipment

10 - 15.5%

Equipment, models and molds

20 - 25%

Furniture and furnishings

12%

Electronic office equipment

18 - 20%

Motor vehicles and internal transport

20 - 25%

and are reported net of depreciation (see next point (iv)) and impairment losses (see para. 2.3.10). The cost of fixed assets manufactured internally includes materials, direct labor and a share of indirect manufacturing costs. The cost of fixed assets, whether purchased externally or manufactured internally, includes incidental costs directly chargeable and necessary to operate the asset and, when relevant and subject to contractual obligations, the current value of the estimated cost for the dismantling and

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2023 ANNUAL REPORT

The estimated useful life of assets is revised annually and any

(iv) Depreciation

changes in rates, where necessary, are made prospectively.

Amortization is charged to the income statement on a straight-

For assets purchased and/or that became operational during the

line basis based on the estimated useful life of the capitalized

year, depreciation is calculated using the rates set out above, but

fixed assets. The estimated useful lives are as follows:

adapted pro-rata temporis to any such set-up date.

2.3.9 OTHER INTANGIBLE FIXED ASSETS

Patents and trademarks

5 years

Development costs

3-5 years

Licensing of software

5 years

(i) Research and development costs The costs of research with the aim of acquiring new technical knowledge are charged in the income statement when incurred.

The development costs incurred for the creation of new products, versions, accessories or new production processes are

The useful life is reviewed annually and any changes in rates,

capitalized when:

where necessary, are made prospectively.

• these costs can be reliably determined; • these products, versions or processes are technically and • the expected volumes and realization values ​indicate that the

2.3.10 IMPAIRMENT OF ASSETS

costs incurred for development will generate future economic

The book values of the assets, except for stocks, financial assets

benefits;

regulated by IFRS 9 and deferred tax assets, are subject to review

• the resources to complete the development project exist.

at the balance sheet date, in order to determine if any impairment

The capitalized cost includes the materials and the mere cost of

indicators exist. If the assessment reveals the presence of such

direct labor. Other development costs are charged to the income

indicators, the estimated realizable value of the asset is calculated

statement when incurred. The capitalized development costs are

in the manner indicated below. Please note that the estimated

measured at cost, net of accumulated amortization, (see next

realizable value of goodwill and intangible fixed assets not yet

point (iv)) and impairment losses (see para. 2.3.10).

used is estimated at least once per year, or more frequently if

commercially feasible;

events indicate the possibility of a loss of value. (ii) Other intangible fixed assets

A tangible or intangible asset, including rights of use (as defined

Other intangible fixed assets, which all have finite useful lives,

by IFRS 16), suffers an impairment if it is not able to recover

are measured at cost and are recorded net of accumulated

the book value at which the asset is recorded in the financial

amortization, (see next point (iv)) and impairment losses (see

statements through the use or sale thereof. The purpose of the

para. 2.3.10).

verification (impairment test) provided by IAS 36, is to ensure

The use of software licenses is amortized over their period of

that tangible and intangible fixed assets are not carried at a value

use (3-5 years).

higher than their realizable value, consisting of the net realizable

The costs incurred internally for the creation of trademarks or

value or value in use, whichever is higher.

goodwill are charged to the income statement when incurred.

The value in use is the current value of future financial flows that are expected to be generated by the asset or by the cash

(iii) Subsequent costs

generating unit to which the asset belongs. Expected cash flows

Subsequent costs incurred for intangible fixed assets are

are discounted using a pre-tax discount that reflects the current

capitalized only if they increase the future financial benefits of

market estimate of the cost of money reported at the time and

the specific capitalized fixed asset, otherwise they are charged

risks specific to the asset. If the book value is higher that the

in the income statement as incurred. Incidental financing costs.

realizable value, the assets or cash-generating unit to which they

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belong are written down to reflect the realizable value. These

• Fair value through other comprehensive income ("FVOCI"):

impairment losses are recognized in the income statement.

financial assets whose contractual cash flows are represented

If the conditions that led to the impairment cease to exist, the

exclusively by the payment of principal and interest and which

assets previously written down are proportionally reversed until

are held in order to collect the contractual cash flows as well

reaching at most the value that the assets would have had in the

as the flows deriving from the sale of the same are classified

absence of previous impairments, net of amortization calculated

in the FVOCI category. They are measured at fair value. Interest

on the historical cost. Restorations of value are recognized in the

income, exchange rate gains/losses, impairment losses (and

income statement.

related write-backs) of financial assets classified in the

The goodwill value previously written down can never be

category FVOCI, are recorded in the income statement; other

reinstated.

changes in the fair value of assets are recorded among the other components of OCI. When these financial assets are sold or reclassified to other categories, due to a change in the

2.3.11 EQUITY INVESTMENTS

business model, the cumulative gains or losses recognized in OCI are reclassified to the income statement;

Equity investments in associates are measured using the equity method, as required by IAS 28.

• Fair value through profit or loss ("FVTPL"): the FVTPL category

If impairment with respect to the amount determined using the

is residual in nature by collecting financial assets that do not

above method is detected, the equity investment is written down

fall under the Amortized cost and FVOCI categories, such as

accordingly.

financial assets purchased for trading or derivatives, or assets designated as FVTPL by management at the date of initial

2.3.12 CASH AND CASH EQUIVALENTS

recognition. They are measured at fair value. Gains or losses resulting from this measurement are recognized in the income statement;

Cash and cash equivalents include cash on hand, bank and postal deposits and securities with an original maturity of less

• FVOCI for equity instruments: financial assets represented

than three months.

by equity instruments of other entities (i.e. investments in companies other than subsidiaries, associates and joint ventures), not held for trading purposes, can be classified in

2.3.13 CURRENT FINANCIAL ASSETS, RECEIVABLES AND OTHER ASSETS

the FVOCI category. This choice can be made instrument by instrument and requires changes in the fair value of these instruments to be recognized in the OCI and not to be reversed to the income statement either on sale or on impairment

Financial assets, as provided for by the new IFRS 9 – “Financial

of the same. Only dividends from these instruments will

Instruments: recognition and measurement” (as revised in

be recognized in the income statement. The fair value of

July 2014) which replaces IAS 39 - "Financial Instruments:

financial assets is determined on the basis of quoted bid

Recognition and Measurement", are classified, on the basis of

prices or through the use of financial models. The fair value of

the Group's management methods and the related contractual

unlisted financial assets is estimated using specific valuation

cash flow characteristics, in the following categories:

techniques adapted to the specific situation. Valuations are regularly carried out in order to verify whether there is objective

• Amortized cost: financial assets held exclusively for the

evidence that a financial asset or group of assets may be

purpose of collecting the contractual cash flows are classified

impaired. If there is objective evidence, the impairment loss is

in the Amortized cost category. They are valued using the

recognized as a cost in the income statement for the period.

amortized cost method, recording the income in the income statement using the effective interest rate method;

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2023 ANNUAL REPORT

2.3.14 DERIVATIVE FINANCIAL INSTRUMENTS

varies depending on whether or not the conditions and requirements of IAS 9 are met.

Specifically:

If the Group holds derivative financial instruments that do not meet all the conditions for hedge accounting as per

(i) Cash flow hedges

IFRS 9, the changes in the fair value of these instruments

In the case of a derivative financial instrument for which the

are recorded in the income statement as financial expenses

hedging ratio to variations in cash flows generated by an asset or

and/or income.

liability or a future transaction (underlying hedged item) believed

Therefore, the derivative financial instruments are recorded

to be highly probable and that could affect the income statement

in compliance with the hedge accounting regulations when:

is formally documented, the effective portion, originating from the

• the hedge ratio is formally designated and documented

adjustment of the derivative financial instrument to the fair value, is

at the beginning of the hedge;

charged directly to a reserve under capital and reserves. When the

• it is presumed that the hedge is highly effective;

underlying hedged cash flow occurs, any such reserve is removed

• the effectiveness can be reliably measured and the hedge

from capital and reserves and assigned to the income statement

itself is highly effective during the designated periods.

as operating charges and revenues, while any non-effective portion

The fair value of derivative financial instruments against

or over hedging, portion is immediately allocated to the income

exchange risks (forward) is their market value on the balance

statement as financial charges and/or income.

sheet date, which coincides with the discounted market

When a hedging instrument reaches maturity, is sold or exercised,

value of the forward.

or the company changes the relationship with the underlying

The accounting method for derivative financial instruments

hedged item, and the forecast transaction, though it has yet to

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take place, is still considered likely, the resulting profits or losses

corresponding assets item. Amounts thus obtained do not differ

originating from the adjustment of the financial instrument to the

significantly from current costs on the closing date of accounts.

fair value remain under capital and reserves and are charged to

no longer likely, the related profits or losses from the derivative

2.3.17 INTEREST-BEARING FINANCIAL PAYABLES

contract, originally recorded under capital and reserves, are

All interest-bearing financial liabilities are valued as per the

immediately charged to the income statement.

amortized cost method; the difference between this value and the

income statement when the transaction takes place as described above. If the probability of the underlying transaction occurring is

settlement value is charged to the income statement during the (ii) Hedges of monetary assets and liabilities (Fair value hedges)

term of the loan.

Where a derivative financial instrument is used to hedge changes in value of monetary assets or liabilities already recorded in the

financial instruments are immediately recorded in the income

2.3.18 LIABILITIES FOR EMPLOYEE BENEFITS

statement. Likewise, the profits and losses relating to the hedged

(i) Defined contribution plans

item modify the carrying amount of any such item and are recorded

The Group participates in public or privately defined contribution

in the profit and loss account.

pension schemes on a mandatory, contractual or voluntary basis.

financial statements that could affect the income statement, profits and losses related to changes in fair value of the derivative

The payment of contributions fulfills the Group's obligation towards its employees. The contributions are costs recognized in the period

2.3.15 OWN SHARES

in which they are due.

For purchases of own shares, the price paid, including any directly

(ii) Defined benefit plans for employees for Italian companies

attributable ancillary charges, is deducted from the Company's

The defined benefit plans for employees are payable on or after

Equity until the shares are canceled, reissued, or disposed of. When

the termination of the period of employment in the Group. These

said own shares are resold or reissued, the price received net of

mainly include the severance indemnities which are calculated

any directly attributable ancillary charges and the related tax effect

separately for each plan using actuarial methods to estimate the

is accounted for as Company Equity. Therefore no gain or loss is

amount of future benefit accrued to employees during the year and

recognized in the Income Statement with the purchase, sale, or

in previous years. The resulting benefit is discounted and recorded

cancellation of own shares.

net of the fair value of any related assets. The interest rate used to calculate the present value of the obligation was determined in accordance with para. 78 IAS 19, of the Iboxx Corporate A index

2.3.16 INVENTORIES

with duration 7-10 determined at the date of valuation. To this end, the yield for a duration comparable to the overall duration of the

Stocks are recorded, in each homogeneous category, at the

worker's covered by the assessment was chosen.

purchase cost, including incidental and production costs and

In the case of increases in plan benefits, the portion of the

the corresponding net realizable or market value at year-end,

increase relating to the previous employment period is charged to

whichever is lowest. The cost is determined according to the

the income statement on a straight line basis over the period in

weighted average cost method.

which the related rights will be acquired. If the rights are acquired

As far as goods manufactured by the Company (semi-finished,

immediately, the increase is immediately recorded in the income

work in progress and finished goods) are concerned, the cost of

statement.

production includes all directly chargeable costs (raw materials,

The expected present value of benefits payable in the future related

consumables, energy utilities, direct labor), and the cost of

to the length of employment in the current period, conceptually

manufacturing (indirect labor, depreciation, etc.) in the amount

similar to the accrued share of the employee severance indemnity,

reasonably attributable to the products.

is classified under personnel costs in the income statement while

Any stock impairment risks are hedged by the relevant stock

the implicit financial charges are reclassified in the applicable

depreciation allowance recorded as an adjustment to the

financial section.

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2023 ANNUAL REPORT

Certain group companies offer defined benefit, post-employment,

2.3.20 PROVISIONS FOR RISKS AND CHARGES

and other long-term pension plans. The cost of providing benefits

Provisions for risks and charges relate to costs and charges of

under the plan is determined using the projected unit credit method.

a specific nature and certain or likely existence, the amount and

The companies' net obligation is calculated separately for each

date of occurrence of which are not known at the close of the

plan by estimating the amount of future benefit that employees

period. Provisions are recognized when:

(iii) Employee defined benefit plans for German and American subsidiaries

have accrued in the current and prior periods, discounting that

• the existence of a pending liability arising from a past event

amount and deducting the fair value of any plan assets.

is probable;

Measurements, including actuarial gains and losses and the return

• it is likely that the obligation will be burdensome;

on plan assets (excluding interest), are recognized immediately in

• the amount of the obligation can be estimated reliably.

the balance sheet, with a corresponding debit or credit to retained

Provisions are recorded at the value reflecting the best estimate

earnings, through comprehensive income for the period they

of the amount the company would reasonably pay to settle the

occur in. Remeasurements are not reclassified to earnings in

obligation or transfer it to third parties at the end of the period.

subsequent periods.

The costs that the Group expects to incur to carry out restructuring

Costs for past services are recognized in earnings on the date

plans are recorded in the financial year the Company formally

of the plan amendment or reduction. Interest is calculated by

defines the plan and the interested parties have a valid expectation

applying the discount rate to the defined benefit liability.

that the restructuring will happen.

The companies' obligation with respect to other long-term

The provisions are periodically updated to reflect any variations

employee benefits is equal to the future benefit that employees

in estimates of costs and realization times. Revisions of the

have received in exchange for their current work and in prior

provision estimates are charged in the same income statement

periods. This benefit is discounted to determine its present value.

item that had previously held the provision.

The notes to the consolidated financial statements illustrate the contingent liabilities consisting of:

2.3.19 INCOME TAXES

• possible, but not probable, obligations arising from past events, the existence of which will be confirmed only by the

Income taxes recognized in the income statement include current

occurrence or non-occurrence of one or more uncertain future

and deferred taxes. Income taxes are generally charged to the

events not wholly under the control of the company;

income statement, unless they relate to items recognized directly

• present obligations arising from past events the amount of

under capital and reserves. In this case, the income taxes are

which cannot be reasonably estimated or the fulfillment of

also charged directly to capital and reserves, as a variation to the

which will probably not be burdensome.

amount recorded.

Current taxes are taxes calculated by applying the tax rate in effect

on timing differences between the amount of assets and liabilities

2.3.21 CURRENT FINANCIAL LIABILITIES, TRADE PAYABLES AND OTHER PAYABLES

recorded in the financial statements and the corresponding

Trade payables and other payables, which mature within the

values recognized for tax purposes. Deferred taxes are calculated

normal commercial terms, are not discounted and are recognized

according to the designated method of reversal of timing

at cost (identified by nominal value) reflecting their settlement

differences, on the basis of realistic estimates of financial charges

value.

resulting from the application of the tax legislation in force at the

Current financial liabilities include the short-term portion of

date in which the financial statements were prepared.

borrowings, including payables for cash advances and other

Deferred tax assets are recognized only if it is probable that

financial liabilities. Financial liabilities are measured at amortized

sufficient taxable income will be generated in future years to

cost by recording charges in the income statement using the

realize these deferred taxes.

effective interest rate method, with the exception of financial

on the balance sheet date and adjustments to prior year taxes to taxable income.

Deferred taxes are calculated using the so-called liability method

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liabilities purchased for trading purposes or derivatives, or

the conditions of an existing liability are substantially changed,

those designated as FVTPL by management at the date of initial

this exchange or change is treated as a de-recognition of the

recognition, which instead are measured at fair value through

original liability and the recognition of a new liability, with any

profit or loss (see para. Financial derivatives).

differences between the carrying amounts recognized in the income statement.

In the case of changes to financial liabilities defined as non-

2.3.22 DE-RECOGNITION OF FINANCIAL ASSETS AND LIABILITIES

substantial, the financial liability is not derecognized and the value of the debt is recalculated keeping the original effective interest rate unchanged, discounting the modified cash flows, thus generating a positive or negative effect on the income statement.

FINANCIAL ASSETS A financial asset is derecognized when: • the rights to receive cash flows from the asset are extinguished;

2.3.23 REVENUE

• the Group retains the right to receive cash flows from the asset, but has assumed the contractual obligation to pay them

SALES REVENUES

in full and without delay to a third party;

Revenues are recognized to the extent in which it is probable

• the Group has transferred the right to receive cash flows

that the economic benefits will be achieved by the Group and

from the asset and has transferred substantially all risks and

the related amount can be reliably determined, regardless of the

rewards of ownership of the financial asset or has neither

date of payment. Revenues are measured at the fair value of

transferred nor retained all risks and rewards of ownership of

the amount received or to be received, taking into account the

the asset, but has transferred control of the asset.

contractually defined payment terms and excluding taxes and

In cases where the Group has transferred the rights to receive

duties.

cash flows from an asset and has neither transferred nor retained

Revenue from the sale of goods is recognized when the Company

all the risks and benefits or has not lost control over it, the asset

has transferred control of the goods to the purchaser. Revenue is

is recognized in the balance sheet to the extent of its residual

measured at the fair value of the consideration received or to be

involvement in the asset. The residual involvement that takes the

received, net of returns and rebates, commercial discounts and

form of a guarantee on the transferred asset is valued at the lower

volume reductions.

of the initial book value of the asset and the maximum amount that the Group could be required to pay. an option issued and/or purchased on the transferred asset

2.3.24 COSTS

(including options settled in cash or similar), the extent of

Costs are recognized when they relate to goods and services

the Group's involvement corresponds to the amount of the

purchased and/or received during the period or by systematic

transferred asset that the Group may repurchase; however, in the

allocation of an expense from which future benefits are spread

case of a put option issued on an asset measured at fair value

over time.

In cases where the residual involvement takes the form of

(including options settled in cash or similar), the extent of the Group's residual involvement is limited to the lower of the fair

FINANCIAL LIABILITIES

2.3.25 FINANCIAL INCOME AND CHARGES

A financial liability is derecognized when the obligation underlying

The financial income and charges are reported on an accrual

the liability is extinguished, canceled or discharged.

basis based on the interest accrued to the net value of the related

In cases where an existing financial liability is replaced by another

financial assets and liabilities by applying the effective interest

from the same lender, under substantially different conditions, or

rate. The financial income and charges include gains and losses

value of the transferred asset and the option exercise price.

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2023 ANNUAL REPORT

on exchange and gains and losses on derivative instruments that

demographic parameters, such as for example mortality rates.

must be recognized in the income statement if they fail to meet

Specifically, the discount rates taken as reference are rates or

the requirements to be considered hedging (see para.2.3.13 and

rate curves of high quality corporate bond rates (Euro Composite

following).

AA rate curve) in the respective markets of reference. Expected asset returns are determined based on various data provided by some experts on the long-term expectations of capital market

2.3.26 USE OF ESTIMATES

returns, inflation, current bond yields, and other variables, and are adjusted as necessary to account for asset investment strategies.

The preparation of the consolidated financial statements requires

The rates of future pay increases reflect the Group's long-term

that the Directors apply accounting standards and methods that,

expectations based on the relevant markets and inflation trends.

in certain circumstances, are based on difficult and subjective

Changes in any of these parameters could have effects on future

valuations and estimates based on past experience and

contributions to the funds.

assumptions which are from time to time considered reasonable and realistic depending on the relative circumstances. The

Impairment test.

application of these estimates and assumptions affect the

The allocation of goodwill to cash-generating units, the

amounts reported in the financial statements, as well as the

determination of those units, and the forecasting of future cash

information provided. The final values of the accounting items

flows involve making estimates.

for which these estimates and assumptions were used may

The Group has based its estimates and assumptions on

differ from those reported in the financial statements due to

parameters available at the time of preparing the Consolidated

uncertainties regarding the assumptions and the conditions on

Financial Statements. However, current circumstances and

which the estimates are based. Estimates and assumptions are

assumptions about future developments may change due to

reviewed periodically and the effects of each variation recognized

changes in the market or events beyond the Group's control. If

in the period in which the estimate is revised if the revision

they occur, such changes are reflected in the assumptions. Note

affects only the current period, or even in subsequent periods

that with regard to this particular aspect, given its significance, a

if the revision affects the current period and those in the future.

sensitivity analysis was also performed, for which please refer to

The financial statement items which, more than others, require

paragraph "2.6.2 Intangible fixed assets."

a greater degree of discretion by the Directors when making estimates and for which a change underlying the assumptions

Purchase Price Allocation.

used could have a significant impact on the financial statements

The estimation of the fair values of the net assets acquired of the

are: defined benefit plans for employees, provision for bad debts,

subsidiary e-comer, done by appointing an independent expert,

provisions for product warranty risks, other provisions for legal

resulted in the quantification of higher values compared to the

risks, the inventory write-down provision for semi-finished and

balance sheet figures inferred from the accounting situation as

finished products, the recoverable value of non-current assets

of the date of acquisition.

with an indefinite useful life ("impairment") and the estimate

The valuations were determined based on a final report prepared

of the fair value of the net assets acquired ("Purchase Price

by an independent expert.

Allocation").

The differential between the total purchase consideration and the fair value of the net assets acquired was allocated to goodwill,

Pension plans and other post-employment benefits / Provisions

which in turn was allocated to a CGU subject to verification by

for employee benefits.

impairment test.

The related net financial assets, costs, and expenses are valued using an actuarial method that requires the use of estimates and

Provision for bad debts.

assumptions to determine the net value of the obligation or asset.

The provision reflects the risks calculated on specific positions

The actuarial method considers financial parameters such as for

both in relation to insolvency proceedings in progress and cases

example the discount rate or expected long-term return on plan

for which legal action has been taken, or simply receivables

assets and payroll growth rates, and considers the probability

outstanding for more than 360 days, as well as the estimate of

of occurrence of potential future events through the use of

expected losses on receivables, also in the absence of events that

60

COMER INDUSTRIES

already indicate clear risks of loss, as provided for by international accounting standard IFRS 9.

2.3.27 PUBLIC GRANTS Public grants are recognized when there is reasonable certainty

Provision for product warranty risks.

that they will be received and that all the conditions referring to

The provision includes amounts for both specific risks, estimated

them have been satisfied. Grants relating to components of cost

on the basis of specific technical analyses, and generic risks. The

are recognized as revenues, but are systematically spread over a

latter are calculated on the production values of single plants,

number of financial periods so as to match the recognition of the

using the average warranty costs as a percentage of turnover

costs they are intended to offset. A grant relating to an asset is

in the last 5 years applied to the turnover of the period. The

recognized as a revenue in constant amounts along the expected

warranties granted are in line with legal provisions.

useful life of the asset in question.

In the event the Group receives a non-monetary grant, the asset

Provision for legal risks.

and the relative grant are recognized at nominal value and

These refer to specific cases assigned to legal attorneys with

released in the income statement in constant amounts along the

relation to ongoing litigation.

expected useful life of the asset in question.

Law 124 of 2017 provides for compulsory disclosure of subsidies,

Inventory write-down provision.

grants, appointments or economic advantages received from the

A generic amount has been set aside, calculated by applying a

Public Administration or, in any case, involving public resources.

specific percentage write-down for bands of rotation indices in a

From a systematic reading of the regulation, the facilitating

systematic fashion, and a specific amount (especially for foreign

measures aimed at all companies have not been included (by

subsidiaries) relating to the real possibility of disposal of the

way of example but not limited to tax facilitating measures such

products.

as hyper-amortization, super-amortization, tax credit for research and development and facilitating measures such as the Wages Guarantee Fund) as these advantages are not aimed at a specific company.

During the year, the Group Italian companies only received State Aid that targeted all companies, and therefore for any details reference should be made to the National Register of State Aid.

61

2023 ANNUAL REPORT

2.3.28 ACCOUNTING STANDARDS

• On February 12, 2021, the IASB published two amendments called "Disclosure of Accounting Policies—Amendments to IAS 1 and IFRS Practice Statement 2" and "Definition

IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED FROM JANUARY 1, 2023

of Accounting Estimates—Amendments to IAS 8." The amendments regarding IAS 1 require an entity to disclose relevant information about the accounting standards applied by the Group. The amendments are intended to improve the

The following IFRS accounting standards, amendments and

disclosure of accounting policies applied by the Group so

interpretations have been applied for the first time by the Group

as to provide more useful information to investors and other

starting from January 1, 2023:

primary users of financial statements as well as to help companies distinguish changes in accounting estimates from

• On May 18, 2017, the IASB published IFRS 17 – Insurance

changes in accounting policy. The amendments were applied

Contracts, which is intended to replace IFRS 4 - Insurance

from January 1, 2023. The adoption of these amendments

Contracts. The standard was applied from January 1, 2023.

has not had any effect on the Group’s consolidated financial

The objective of the new standard is to ensure that an entity

statements.

provides relevant information that faithfully represents the rights and obligations arising from insurance contracts issued.

• On May 23, 2023, the IASB published an amendment called

The adoption of this principle and its amendment has not had

“Amendments to IAS 12 Income taxes: International Tax

any effect on the Group’s consolidated financial statements.

Reform – Pillar Two Model Rules.” The document introduces a temporary exception to the recognition and disclosure

• On May 7, 2021, the IASB published an amendment called

requirements for deferred tax assets and liabilities related to

“Amendments to IAS 12 Income Taxes: Deferred Tax related

the Pillar Two Model Rules (effective in Italy as of December

to Assets and Liabilities arising from a Single Transaction”.

31, 2023, but applicable as from January 1, 2024) and provides

The document clarifies how deferred taxes should be

specific disclosure requirements for entities affected by the

accounted for on certain transactions that can generate

related International Tax Reform.

assets and liabilities of equal amounts at the date of first

The document provides for the immediate application of the

registration, such as leases and decommissioning obligations.

temporary exception, while the disclosure requirements will

The amendments were applied from January 1, 2023.

apply only to annual financial statements on or after January

The adoption of this amendment has not had any effect on the

1, 2023, but not to interim financial statements with a closing

Group’s consolidated financial statements.

date prior to December 31, 2023.

62

COMER INDUSTRIES

2023 FINANCIAL STATEMENTS DISCLOSURES

RELEVANT FOR 2023

PARAGRAPHS IAS 12

As a Multinational Group that exceeds the revenue threshold of 750 million euros for two

YES

88A [An entity shall disclose that it has

out of the previous four fiscal years, effective 1/1/2024 the Comer Group falls under the

applied the exception to recognizing and

Pillar II income taxation envisaged in Directive 2022/2523, adopted in Italy by Legislative

disclosing information about deferred tax

Decree 209/2023 aimed at ensuring a global minimum level of taxation for multinational

assets and liabilities related to Pillar Two

business groups and large-scale domestic groups in the Union.

income taxes (see paragraph 4A).]

In accordance with paragraph 4.A of IAS 12, which as an exception to the provisions of that standard provides that information on deferred tax assets and liabilities relating to Pillar II income taxes are not recognized or disclosed, no deferred tax assets or liabilities relating to Pillar II income taxes are recognized.

With respect to all Group companies (and any jointly controlled entities) that are located

YES

88C [In periods in which Pillar Two legislation

in each individual jurisdiction, exposure to Pillar II income taxes derives from the level

is enacted or substantively enacted but not

of effective taxation, which for each of those jurisdictions depends on various and

yet in effect, an entity shall disclose known or

even interrelated factors such as primarily the income produced there, the level of the

reasonably estimable information that helps

nominal tax rate, the tax rules for determining the tax base, and the provision, form, and

users of financial statements understand

enjoyment of incentives or other tax benefits.

the entity’s exposure to Pillar Two income

Moreover, given the newness of the regulation and complexity underlying the

taxes arising from that legislation.].

determination of the level of effective taxation, for the first effective periods (so-called transitional regime valid for periods beginning before December 31, 2026 and ending no later than June 30, 2028) the second pillar legislation provides for the possibility of applying a simplified regime (safe harbor transitional country-by-country reporting) based primarily on accounting information available for each relevant jurisdiction that results in reduced compliance burdens and zero taxes under Pillar II if at least one of three tests is passed.

Based on known or reasonably estimable information, no jurisdictions with an ETR of less

YES

88D [To meet the disclosure objective in

than 15% have currently been identified.

paragraph 88C, an entity shall disclose

With the support of external consultants, the Group is organizing and preparing for

qualitative and quantitative information

the fulfillments related to Pillar II legislation, also in order to manage its exposure in

about its exposure to Pillar Two income

subsequent periods, through the preparation of appropriate systems and procedures

taxes at the end of the reporting period.

aimed at:

This information does not have to reflect

• Identifying, locating and characterizing all Group enterprises (or jointly controlled

all the specific requirements of the Pillar

entities) for the purposes of Pillar II legislation, even on an ongoing basis.

Two legislation and can be provided in the

• Computing the simplified tests (so-called country-by-country safe harbor transitional

form of an indicative range. To the extent

reporting) for each relevant jurisdiction in order to enjoy the related benefits in terms

information is not known or reasonably

of reduced compliance burden and zero taxation under Pillar II.

estimable, an entity shall instead disclose

• Making full and detailed calculations of relevant quantities as required by Pillar II

a statement to that effect and disclose

legislation for any jurisdictions that fail any of the above tests.

information about the entity’s progress in assessing its exposure.]

63

2023 ANNUAL REPORT

IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS ENDORSED BY THE EUROPEAN UNION AS OF DECEMBER 31, 2023, NOT YET MANDATORILY APPLICABLE AND NOT ADOPTED EARLY BY THE GROUP AS OF DECEMBER 31, 2023

ACCOUNTING STANDARDS, AMENDMENTS AND IFRS INTERPRETATIONS NOT YET APPROVED BY THE EUROPEAN UNION AS OF DECEMBER 31, 2023

The following IFRS accounting standards, amendments, and

necessary for the adoption of the amendments and principles

interpretations have been approved by the European Union but

described below.

At the reference date of this document, the competent bodies of the European Union have not yet completed the approval process

are not yet mandatory and have not been adopted in advance by

• On May 25, 2023 the IASB published an amendment called

the Group as of December 31, 2023:

“Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance

• On January 23, 2020, the IASB published an amendment

Arrangements.” The paper requires an entity to provide

called "Amendments to IAS 1 Presentation of Financial

additional information on reverse factoring arrangements

Statements: Classification of Liabilities as Current or Non-

that will enable financial statement users to assess how

current" and on October 31, 2022 published an amendment

financial arrangements with suppliers may affect the entity's

entitled

liabilities and cash flows and to understand the effect of such

“Amendments to IAS 1 Presentation of Financial Statements:

arrangements on the entity's exposure to liquidity risk. The

Non-Current Liabilities with Covenants.” The purpose of these

modification will be applied from January 1, 2024, however,

documents is to clarify how to classify debt and other short-

early application is permitted. The Directors do not expect a

term or long-term liabilities. Furthermore, the amendments

significant effect in the consolidated financial statements of

also improve the information that an entity must provide when

the Group from the adoption of this amendment.

its right to defer settlement of a liability for at least 12 months is subject to meeting certain parameters (i.e., covenants).

• On August 15, 2023, the IASB published an amendment

The modification applies from January 1, 2024, however

called "Amendments to IAS 21 The Effects of Changes in

early application is permitted. The Directors do not expect a

Foreign Exchange Rates: Lack of Exchangeability." The

significant effect in the consolidated financial statements of

document requires an entity to apply a methodology to

the Group from the adoption of this amendment.

be applied consistently in order to ascertain whether one currency can be converted into another, and when this is

• On September 22, 2022, the IASB published an amendment

not possible how to determine the exchange rate to be used

called "Amendments to IFRS 16 Leases: Lease Liability in

and the disclosure to be made in the notes to the financial

a Sale and Leaseback." The document requires the seller-

statements. The amendment will apply from January 1, 2025,

lessee to measure the lease liability arising from a sale-and-

but earlier application is allowed. The Directors do not expect

leaseback transaction so as not to recognize income or loss

a significant effect in the consolidated financial statements of

that relates to the retained right of use. The modification will

the Group from the adoption of this amendment.

be applied from January 1, 2024, however, early application is permitted. The Directors do not expect a significant effect in

• On January 30, 2014, the IASB published IFRS 14 -

the consolidated financial statements of the Group from the

Regulatory Deferral Accounts, which allows only first-time

adoption of this amendment.

adopters of IFRS to continue to recognize amounts related to activities subject to regulated rates ("Rate Regulation Activities") under the previous adopted accounting standards. As the Group is not a first-time adopter, this principle is not applicable.

64

COMER INDUSTRIES

2.4

FINANCIAL RISK MANAGEMENT The Group's business is exposed to various financial risks: market

(b) CREDIT RISK

risk (including the exchange rate risk and interest rate risk), credit

The Group's policy is to sell to customers after an evaluation of

risk, liquidity risk, price and cash flow risk. The risk management

their credit capacity and therefore within pre-set credit limits.

program aims to minimize any negative impacts on the Group's

Historically, the Group has not suffered significant losses on

financial performance and is planned by a central function of

receivables.

the Parent Company that coordinates all operating companies, reporting directly to the Chief Executive Officer.

(c) LIQUIDITY RISK

The Group uses derivative financial instruments to hedge its

Prudent management of liquidity risk implies maintaining

exposure to foreign exchange risk and does not subscribe to

sufficient available cash and cash equivalents and sufficient

derivative financial instruments for speculative purposes.

credit lines from which to draw. Due to the dynamic nature of the business, the Group's policy is to have revolving standby credit

(a) MARKET RISK

facilities that can be utilized at short notice.

(i) Exchange rate risk

The Group follows stringent rules to distribute its deposits and

The Group operates internationally and is exposed to exchange

liquid assets in a balanced manner among an adequate number

rate risk due to exposure mainly to the US dollar and the Chinese

of banking institutions with ratings of high standing.

yuan, and secondarily to the Indian rupee, the Brazilian real and the British pound. The exchange rate risks are generated by

(d) PRICE AND CASH FLOW RISK

forecasts of future commercial transactions and recognized

The Group is subject to the risk of fluctuations in metal prices,

assets or liabilities.

in particular aluminum, copper and steel. The Group's policy is

In order to manage the exchange rate risk generated by

to cover the risk where possible, through commitments from

forecasts of future commercial transactions and recognized

suppliers in the medium term, with stockpiling policies when

assets or liabilities denominated in a currency other than the

prices are at their lowest and agreements with customers.

functional currency of the Group (euro), the Group companies

For the operational management of the above risks, please refer

use repurchase agreements (forward), under the coordination of

to paragraph 2.6.16.

the central Treasury.

The Group's policy is to hedge a portion of future currency transactions that are expected to occur in the next 12 months.

Where necessary, derivative contracts previously stipulated are renewed at maturity in relation to the evolution of the business.

The Group is exposed to the conversion risk of net assets of subsidiaries in North America, Great Britain, China, India and Brazil. Considering the strategic importance of the subsidiaries for which the implementation of this activity is foreseen in the short term, the Group did not consider the signing of hedging contracts necessary for this purpose. (ii) Interest rate risk The interest rate risk is derived from medium-long term loans at variable rates. Given the limited financial exposure, the Group's current policy is to use floating rate loans, monitoring the interest rate curve.

65

2023 ANNUAL REPORT

2.5

CORPORATE INFORMATION AND INDUSTRY-RELATED INFORMATION 2.5.1 ACCOUNTING IMPACTS OF THE PURCHASE PRICE ALLOCATION DERIVED FROM THE ACQUISITION OF E-COMER S.R.L.

The amounts related to the final accounting of the aforementioned acquisition through the application of the so-called purchase method are summarized below, that is, the measurement at

On January 9, 2023, Comer Industries S.p.A. acquired 100% of

fair value of all assets and liabilities (including contingent

e-comer S.r.l., a newly established company that on December

liabilities) acquired as of January 1, 2023, and the determination

27, 2022 received in contribution the business units of Benevelli

of any goodwill to the extent of the excess of the sum of the

Electric Powertrain Solutions and Sitem Motori Elettrici, operating

consideration transferred in the business combination over these

in the market of motors and transmissions for electric vehicles.

values:

(VALUES IN EUROS) Net equity acquired

30,103,313

Fair value measurement of assets and liabilities

0

Other intangible fixed assets

6,281,000

Tangible fixed assets

9,115,000

Inventories

564,000

Payables for deferred taxes

(4,453,000)

Fair value of net assets acquired

A

41,610,313

Total consideration transferred

B

55,906,000

B-A

14,295,687

Goodwill at the date of acquisition

The valuation process was finally completed as of December 31, 2023

• The tangible fixed assets, the fair value of which is equal to

and was approved by the Board of Directors on February 7, 2024. The

9,115 thousand euros, generating deferred tax liabilities of 2,543

final Purchase Price Allocation was prepared with the support of a major

thousand euros.

consulting firm.

The results of this valuation are summarized below:

Deferred taxes were calculated considering a tax rate of 27.90%.

• The value of inventory, the fair value of which is higher than the book value by 564 thousand euros, generating deferred tax liabilities of 157

As a result of the above, goodwill of 14,296 thousand euros

thousand euros.

was calculated, subjected to an impairment test at the end

• The list of customers, the fair value of which is equal to 6,281 thousand

of the year as described below in paragraph 2.6.2.

euros, generating deferred tax liabilities of 1,752 thousand euros.

66

COMER INDUSTRIES

The following details the amount of net equity acquired and the amount resulting from the provisional Purchase Price Allocation.

NET EQUITY ACQUIRED SITEM BUSINESS UNIT

NET EQUITY ACQUIRED BENEVELLI BUSINESS UNIT

PURCHASE PRICE ALLOCATION

TOTAL CONSIDERATION TRANSFERRED

0

0

14,295,687

14,295,687

Other intangible fixed assets

12,430,607

12,330,180

6,281,000

31,041,787

Tangible fixed assets

3,135,894

2,151,078

9,115,000

14,401,972

Net working capital

2,773,504

2,081,995

564,000

5,419,499

Net Financial Position

320,693

170,000

0

490,693

Receivables for prepaid taxes/Payables for deferred taxes

(1,822,847)

(1,822,847)

(4,453,000)

(8,098,694)

Other current and non-current assets/ liabilities

(1,407,126)

(237,818)

0

(1,644,944)

Total

15,430,726

14,672,587

25,802,687

55,906,000

(IN EUROS) Goodwill

the financial statements of the subsidiary e-comer and

2.5.2 SEGMENT INFORMATION

resulting from the acquisition appraisal and therefore already

Industry-related information is given with reference to sectors of

expressed at fair value.

activity. The information includes both costs directly attributable

Note that the allocation process did not involve valuations of know-how, a value that was already accounted for in

and costs allocated according to reasonable assumptions.

The fair value of the customer list was determined using the Multi-

General and administrative costs, ICT and HR services, fees

period Excess Earnings Method ("MEEM"), applying a discount

for directors, Statutory Auditors and Group management

rate of 11.2% (corresponding to the WACC value specifically

departments, as well as costs relating to the global sourcing area

calculated by Group Management plus a Risk Premium of 0.8%).

(organized according to purchasing group of product category) have been allocated to sectors proportionally to the turnover.

With regard to the values of tangible fixed assets, a sworn

The Group operates in the following sectors:

appraisal was made after the acquisition, from which surpluses

Agricultural sector. Products mainly consists of speed increasers,

in value emerged with respect to the relevant carrying amounts,

speed reducers, bevel gearboxes, PTO driveshafts, wheel

resulting in a higher valuation.

drives and axles for agricultural use, especially manufacturers of combine harvesters and tractors, haymaking, harvesting, irrigation and mixing, and land preparation and working machines.

Industrial sector. This includes products such as modular planetary drives, travel and hoist drives, slew drives and rigid and steering axles for construction and forestry machinery manufacturers, from the shipbuilding to the airport building and mining industries. Components for municipalities, for the extraction industry and material handling sectors. Products for the wind power and renewable energy sector as well as for driving the augers of biogas machines. Electric motors for stationary industrial applications, transaxle and geared motors for e-Mobility, construction, material handling and logistics.

67

2023 ANNUAL REPORT

AGRICULTURAL SECTOR

INDUSTRIAL SECTOR

TOTAL

SECTORAL INDICATORS (THOUSANDS OF EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

CHG. %

DECEMBER 31, 2023

DECEMBER 31, 2022

CHG. %

DECEMBER 31, 2023

DECEMBER 31, 2022

Revenue from contracts with customers

724,131

776,262

-6.7%

499,807

461,314

8.3%

1,223,938

1,237,576

EBITDA

120,298

109,219

10.1%

84,682

70,789

19.6%

204,981

180,008

EBITDA on revenues (%)

16.6%

14.1%

16.9%

15.3%

16.7%

14.5%

Amortization

(34,800)

(32,621)

(25,753)

(19,869)

(60,553)

(52,491)

EBIT

85,498

76,598

58,930

50,919

144,428

127,517

11.6%

15.7%

The Agricultural sector, which now accounts for 59.2% of total

(EBITDA). In contrast the performance of the industrial segment

revenues (62.7% in 2022), experienced a -6.7% decrease in

was positive (+8.3%), improving its operating profitability partly

revenues during the year, with an increase in operating profitability

due to the acquisition of e-comer.

68

COMER INDUSTRIES

2.6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2.6.1 TANGIBLE FIXED ASSETS Changes in technical fixed assets and related accumulated depreciation during FY 2023 are illustrated in the following tables:

LAND AND BUILDINGS

PLANT AND MACHINERY

INDUSTRIAL AND COMMERCIAL EQUIPMENT

OTHER ASSETS

TANGIBLE FIXED ASSETS IN PROGRESS

RIGHTS OF USE

TOTAL

January 01, 2022

43,241

87,118

10,659

7,119

2,636

53,963

204,736

Increases

569

16,974

6,062

3,999

4,829

10,592

43,025

Decreases

(10)

(881)

(33)

(98)

(1,437)

(170)

(2,629)

Amortization

(2,486)

(15,772)

(5,176)

(1,178)

(9,937)

(34,549)

1,378

229

(1,093)

(514)

DESCRIPTION (THOUSAND EUROS)

Reclassifications

0

Translation reserve

178

367

129

99

(184)

342

931

December 31, 2022

41,492

89,185

11,870

8,848

5,330

54,791

211,514

Acquisition balances

2,119

2,278

581

235

83

Increases

983

13,938

5,880

11,535

15,595

17,537

65,467

Decreases

(19)

(1,144)

(147)

(96)

(53)

(5,455)

(6,915)

Amortization

(3,004)

17,481

6,018

(3,129)

0

(10,318)

(39,950)

Reclassifications

814

3,674

198

105

(4,791)

Translation reserve

(146)

(131)

(24)

(41)

(61)

(734)

(1,138)

December 31, 2023

42,240

90,318

12,339

17,457

16,103

55,821

234,275

Acquisition balances refer to balances arising from the transfer of the Benevelli Electric Powertrain Solutions and Sitem Motori Elettrici businesses to e-comer.

69

5,295

0

2023 ANNUAL REPORT

The rights of use heading, relating to the application of the

renting of the Group’s operating plants and can be broken down

IFRS 16 international accounting standard, mainly refers to the

as follows:

DESCRIPTION (THOUSAND EUROS)

LAND AND BUILDINGS

OTHER ASSETS

TOTAL

January 01, 2022

49,959

4,005

53,963

Increases

9,123

1,469

10,592

Decreases

(137)

(33)

(170)

Amortization

(8,022)

(1,915)

(9,937)

Translation reserve

304

38

342

December 31, 2022

51,227

3,565

54,790

Increases

16,050

1,486

17,537

Decreases

(5,473)

18

(5,455)

Amortization

(8,501)

(1,817)

(10,318)

Translation reserve

(815)

81

(734)

December 31, 2023

52,489

3,332

55,820

70

COMER INDUSTRIES

2.6.2 INTANGIBLE FIXED ASSETS Changes in intangible fixed assets are shown below:

DESCRIPTION (THOUSAND EUROS)

GOODWILL

DEVELOPMENT AND APPROVAL COSTS

TRADEMARKS AND KNOWHOW

CONCESSIONS, LICENSES AND TRADEMARKS

OTHER INTANGIBLE FIXED ASSETS

INTANGIBLE FIXED ASSETS IN PROGRESS

TOTAL

155,689

422

23,994

4,189

187,016

758

372,070

2,780

35

275

3,144

(5)

7

(68)

(66)

(2,249)

(13,747)

January 01, 2022 Increases

54

Decreases Amortization

(232)

(1,713)

(17,942)

Reclassifications

0

Translation diff.

(16)

December 31, 2022

155,673

Acquisition balances Increases

14,296

63

18

244

22,281

4,778

173,329

0

24,656

47

61

1,607

7,851

278

24,038

(41)

(50)

(91)

7

Decreases Amortization

(166)

Reclassifications

167

(4,276)

Translation diff.

December 31, 2023

169,968

65

252

42,661

(1,177)

(14,985)

289

0

(8)

(4)

5,537

166,212

965

357,272 24,763

(20,603) (457)

0 (12)

736

385,368

Acquisition balances refer to balances arising from the transfer

(ii) Development and approval costs and intangible fixed assets

of the Benevelli Electric Powertrain Solutions and Sitem Motori

in progress

Elettrici businesses to e-comer.

These capitalizations are mainly related to internal orders associated with the development of new products. During the

The item breaks down as follows:

period mainly development costs of 174 thousand euros were capitalized under fixed assets in progress. These projects meet

(i) Goodwill

the requirements of paragraph 57 of IAS 38, as the Group analyzed

Goodwill arises from business combinations in accordance with

the technical feasibility of the same, as well as the intention to

IFRS 3 and represents the excess of the cost of the acquisition

complete the project, to introduce new products on the market

over the Group's stake in the fair value of the acquirer's identifiable

and the availability of technical and financial resources, as well as

assets, liabilities and contingent liabilities existing at the time of

a reliable identification of own costs and their ability to produce

the acquisition.

future economic benefits. These expenses are amortized on the basis of the probable useful life generally estimated to be 3 to 5 years, depending on the sector they are intended for.

71

2023 ANNUAL REPORT

(iii) Concessions, licenses and patents

organizational and control structure of the business that the

The increases in the period relate to the capitalization of external

Group introduced from 2023, three CGUs have been identified,

costs for the realization of projects already described in the

and the process of internal reorganization and simplification of

report on operations or to software licenses and applications

the organizational and control structure of the Group’s business

for the logistics and research and development area.

has entailed a revisiting of the CGUs given the merger between the former Comer Group and the Walterscheid Group acquired

(iv) Other intangible fixed assets

at the end of 2021.

The item includes developed technology, customer relationships, software and other fixed assets with finite useful lives resulting

Prepared with the support of a leading consulting firm, the

from the acquisition of the German group. These fixed assets

impairment tests were approved by the Board of Directors on

are amortized on a straight-line basis over a period defined by

February 7, 2024, and were calculated using the Discounted Cash

the following amortization rates:

Flow (DCF) method after tax. The expected cash flows used in the DCF calculation were determined based on the business plans (of

• Brand: 20 years

e-comer, of the Agricultural and Industrial sectors) with a duration

• Technology developed: 10-13 years

of five years. The business plans take into consideration the

• Relationships with customers: 9-13 years.

various scenarios and development expectations of the various markets, based on the information available at the end of 2023.

Goodwill As of December 31, 2023, this item amounted to 169,968

These flows were discounted at a discount rate calculated using

thousand euros.

the Weighted Average Cost of Capital ("WACC"), i.e., by weighting the expected rate of return on invested capital net of the costs

Impairment losses on intangible fixed assets with an indefinite

of hedging for a sample of companies in the same industry. The

useful life and goodwill

average cost of capital (WACC) was calculated to be 11.5% for

At each reporting date the Group checks for the existence of

e-comer, 9.5% for Agricultural, and 9.7% for Industrial, and the

events or circumstances that cast doubt on the recoverability

estimated g rate was set at a value consistent with the expected

of the value of tangible and intangible fixed assets with a finite

long-term inflation rate of 2%.

useful life, and if there are any indicators of loss it estimates

The performance of the impairment tests did not indicate the

the recoverable value of the fixed assets in order to quantify

need to recognize any impairment of goodwill as of December

the extent of any impairment losses. In contrast, goodwill, other

31, 2023 and the level of coverage is very significant.

intangible assets with indefinite lives, and current intangible

Sensitivity analyses performed considering changes in the WACC

fixed assets are tested annually and whenever there is an

discount rate and changes in the long-term growth rate g also

indication of possible impairment.

revealed no need to write down the item.

The recoverable amount of goodwill is determined by the Directors by calculating the value in use of the cash generating

independent cash inflows from the continued use of assets

2.6.3 EQUITY INVESTMENTS IN OTHER COMPANIES

attributable to them. In line with the requirements of the relevant

The item mainly refers to the equity valuation in Matsui

accounting standards, and consistent with the changes to the

Walterscheid Ltd., a 40% subsidiary of Walterscheid GmbH.

units the goodwill is allocated to. Cash Generating Units are defined as homogeneous aggregations that generate

72

COMER INDUSTRIES

2.6.4 DEFERRED TAX ASSETS The details are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Deferred tax assets

42,881

35,695

Deferred tax assets

42,881

35,695

The balance of deferred tax assets increased by 7,186 thousand

For the detailed breakdown of this item please refer to the table

euros.

below:

DEFERRED TAX ASSETS BY COMPANY (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

2023

Total Taxes Deferred

Total Taxes Deferred

Used (allocated)

Temporary differences Italian companies

13,000

9,336

3,664

Temporary differences foreign subsidiaries

23,395

22,062

1,334

Total prepaid taxes company

36,395

31,398

4,998

Total prepaid taxes consolidation

6,486

4,297

2,189

Total prepaid taxes in the financial statements

42,881

35,695

7,187

Description

The increase in deferred tax assets refers mainly to the subsidiary

The following aspects were taken into account in the calculation

e-comer’s exercise of the option to exempt the goodwill that

of deferred tax assets:

emerged with the acquisition of the Benevelli Electric Powertrain

• The tax laws of the countries that the Group operates in and

Solutions and Sitem Motori Elettrici business units, with reference

their impact on temporary differences, and any tax benefits

to which it was decided to record the entire amount as a credit

from the use of tax loss carryforwards, considering their

that will be charged to the income statement in the period in

possible recoverability over a three-year time horizon.

which the tax benefit from the tax deductibility of this asset item

• The Group's profit forecast in the medium and long term.

recorded in the financial statements will be realized.

Based on the above, the Group believes that it can recover the

The balance of temporary differences for foreign subsidiaries

recognized deferred tax assets with reasonable certainty.

is mainly attributable to the pension fund of the German subsidiaries.

73

2023 ANNUAL REPORT

2.6.5 OTHER LONG-TERM RECEIVABLES The changes are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Security deposits for foreign rentals

371

377

Other minor receivables including security deposits Italy

423

287

Other long-term receivables

325

743

Other long-term receivables

1,119

1,407

The item refers to guarantee deposits primarily for real estate in rental agreements and consumption.

2.6.6 INVENTORIES The changes are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

NET CHANGE

TRANSLATION RESERVE

DECEMBER 31, 2023

Raw materials and Packaging

90,752

3,951

(1,121)

93,582

Provision for write-down of raw and ancil. mats. and consumables

(8,578)

1,545

85

(6,947)

Raw and ancillary materials and packaging

82,175

5,496

(1,036)

86,635

Semi-finished products purchased and produced

102,674

(15,798)

(126)

86,750

Provision for write-down of semi-finished products purchased and produced

(5,673)

1,494

0

(4,179)

Work in progress

97,001

(14,304)

(126)

82,571

Finished products and Goods

76,610

(6,528)

(647)

69,435

Provision for write-down of finished products

(10,880)

(1,213)

48

(12,045)

Finished products

65,730

(7,741)

(599)

57,390

INVENTORIES

244,906

(16,548)

(1,761)

226,596

The decrease in inventories amounting to 18,310 thousand

last quarter. The decrease in inventories net of the effect of the

euros compared to December 31, 2022 comes mainly from the

acquisition of e-comer would amount to 24,487 thousand euros.

optimization policies implemented during the year and is also

Inventories are shown net of a provision for obsolescence for a

affected by the decline in sales volumes that occurred during the

total amount of 23,171 thousand euros, a decrease compared to

74

COMER INDUSTRIES

December 31, 2022 by 1,960 thousand euros net of the use for scrapping.

2.6.7 TRADE RECEIVABLES AND OTHER SHORT-TERM RECEIVABLES The changes are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

NET CHANGE

TRANSLATION RESERVE

DECEMBER 31, 2023

Short-term receivables from customers

214,003

2,665

(3,567)

213,101

Provision for bad debts

(6,042)

(1,316)

54

(7,304)

Trade receivables

207,961

1,349

(3,514)

205,797

Advances to suppliers

(86)

1,738

(11)

1,640

Accrued income and prepaid expenses

785

548

(1)

1,332

Trade receivables from suppliers

34

41

(1)

74

Other short-term receivables

7,517

(1,615)

4

5,907

OTHER SHORT-TERM RECEIVABLES

8,250

712

(8)

8,953

The balance of trade receivables is influenced by the trend in

release provisions set aside in previous years.

turnover, especially in relation to the last few months of the year.

Note that there are no trade receivables due after the year.

Trade receivables from the acquisition of e-comer impact the net change by 2,761 thousand euros.

The Group is not particularly exposed to the nations currently

Average collection days calculated on aggregate revenues for the

involved in the conflict, Russia, Belarus, Ukraine and Israel. Note

last quarter stood at 68 days, a drop versus the previous year

that consolidated receivables from customers residing in these

(62 days). This deterioration was caused by the late payment of

countries correspond to less than 1%, and there are no significant

overdue receivables at the end of the year by some of the Group's

accounts receivable positions as payments are normally made in

customers.

advance. Note that the Moscow-based commercial branch has

The provision for bad debts mainly reflects the generic write-down

been inactive since April 2022.

calculated in accordance with IFRS 9, influenced by indicators

As of December 31, 2023, the presentation of trade receivables

representing greater macroeconomic risk. During the year, the

(net of the related provision for bad debts) by maturity bracket is

Group did not record any significant losses on receivables or

shown in the following table.

75

2023 ANNUAL REPORT

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Current

200,197

202,489

30-60 days past due

6,474

5,673

60-90 days past due

558

228

More than 90 days past due

5,872

5,613

Provision for bad debts

(7,304)

(6,042)

Trade receivables

205,797

207,961

Note that loans that are less than 30 days past due are classified in the bracket called "Current."

2.6.8 CURRENT TAX ASSETS The changes are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

NET CHANGE

DECEMBER 31, 2023

Italian and foreign VAT

20,645

(7,557)

13,088

Other tax receivables

8,682

(1,843)

6,839

Current tax assets

29,327

(9,400)

19,927

The current VAT credit of 13,088 thousand euros is attributable to

The item Other tax receivables for 6,839 thousand euros mainly

the parent company Comer Industries S.p.A. for 1,979 thousand

represents the excess of advances paid with respect to current

euros (it was 8,007 thousand euros on December 31, 2022) and

taxes calculated on the profit generated during the year by some

to the subsidiary Comer Industries Components S.r.l. for 4,415

companies of the German group. The balance includes a tax

thousand euros (it was 7,795 thousand euros on December 31,

credit related to the parent company Comer Industries S.p.A. for

2022). The remaining part relates to foreign companies and in

investments in new capital goods of 856 thousand euros mostly

particular to the GST credit held by the Indian subsidiary for 4,481

related to Industry 4.0, and 502 thousand euros related to the

thousand euros. During the year the VAT receivable related to the

estimated research and development tax credit.

year 2022 of Comer Industries S.p.A. in the amount of 5,593

In relation to the above mentioned subsidiaries, it should be

thousand euros and the VAT receivable related to the year 2022

noted that the tax system provides for the payment of advance

and the first quarter of 2023 of Comer Industries Components

payments for income taxes already withheld on commercial

S.r.l. respectively in the amount of 6,595 thousand euros and

transactions, thus unavoidably generating tax credits during the

2,000 thousand euros were partially collected.

financial period.

76

COMER INDUSTRIES

2.6.9 FINANCIAL ASSETS AND LIABILITIES, GUARANTEES

euros, a slight increase compared to December 31, 2022 (57,791 thousand euros).

Cash and cash equivalents dropped by 82,995 thousand euros,

The net financial position as of December 31, 2023 was negative

moving from 151,328 thousand euros at December 31, 2022

and amounted to 94,831 thousand euros.

to 68,333 thousand euros at December 31, 2023, mainly due to

The value of prepayments deriving from accounting for up-

the voluntary early repayment of some loans in the amount of

front expenses according to amortized cost amounts to 1,269

144,390 thousand euros.

thousand euros. The value of other financial liabilities attributable to the accounting treatment of leasing contracts according to

Below is the composition of the net financial position as of

IFRS 16 at December 31, 2023 amounts to 58,304 thousand

December 31, 2023 and changes compared to the previous year:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

CHANGE

% CHANGE

68,333

151,328

(82,995)

-54.8%

B) Cash equivalents

-

-

-

0.0%

C) Other current financial assets

-

-

-

0.0%

D) Liquidity (A+B+C)

68,333

151,328

(82,995)

-54.8%

E) Current financial debt (including debt instruments, but excluding the current portion of non-current financial debt)

13,802

10,593

3,209

30.3%

F) Current part of non-current financial debt

32,811

50,964

(18,153)

-35.6%

G) Current financial debt (E+F)

46,614

61,558

(14,944)

-24.3%

-

-

-

0.0%

of which not secured

46,614

61,558

(14,944)

-24.3%

H) Net current financial debt (G-D)

(21,719)

(89,770)

68,051

-75.8%

I) Non-current financial debt (excluding current portion and debt instruments)

116,551

238,717

(122,166)

-51.2%

J) Debt instruments

-

-

-

0.0%

K) Trade and other non-current payables

-

-

-

0.0%

L) Non-current financial debt (I+J+K)

116,551

238,717

(122,166)

-51.2%

-

-

-

0.0%

of which not secured

116,551

238,717

(122,166)

-51.2%

M) Gross Financial Debt (G+L)

163,164

300,275

(137,110)

-45.7%

N) Net Financial Debt (Net financial position) (D+M)

94,831

148,947

(54,115)

-36.3%

A) Cash and cash equivalents

of which secured

of which secured

77

2023 ANNUAL REPORT

Current and non-current financial payables as of December 31, 2023 amounted to 163,164 thousand euros as detailed below:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

INCREASES

DECREASES

DECEMBER 31, 2023

Short-term loans

52,272

8,253

(25,352)

34,566

Medium/long-term loans

191,971

288

(126,971)

65,288

Financial payables to banks

244,243

8,541

(152,930)

99,854

234

-

(234)

0

Financial payables including financial instruments

244,477

8,541

(153,164)

99,854

Up-front commissions for structured loans (current portion)

(692)

(538)

692

(538)

Up-front commissions for structured loans (M/LT portion)

(1,302)

(731)

1,302

(731)

Debt to third parties for acquisition (current portion)

0

1,000

0

1,000

Debt to third parties for acquisition (ML/T portion)

0

5,276

0

5,276

Other short-term financial payables IFRS 16

9,744

2,647

(805)

11,586

Other long-term financial payables IFRS 16

48,048

10,431

(11,762)

46,718

Total short-term and long-term financial payables

300,275

26,626

(163,737)

163,164

Liabilities for short-term derivative financial instruments MTM

It should be noted, as required by paragraph 186 of ESMA

material elements in terms of indirect indebtedness to be brought

Communication 32-382-1138 of 4 March 2021, that there are no

to attention in these consolidated financial statements.

78

COMER INDUSTRIES

The financial treatment of assets and liabilities broken down by the categories identified by IFRS 9, is summarized in the following table:

DESCRIPTION (THOUSAND EUROS)

AT AMORTIZED COST

FAIR VALUE

TOTAL BOOK VALUE

Assets as at December 31, 2023 Trade receivables

205,797

205,797

Other short-term receivables

8,953

8,953

Current tax assets

19,927

19,927

Cash and cash equivalents

68,333

68,333

88,260

303,010

Total assets

214,750

Liabilities at December 31, 2023 Long-term loans

(64,557)

(64,557)

Trade payables

(198,842)

(198,842)

Other short-term payables

(32,168)

(32,168)

Current tax liabilities

(29,966)

(29,966)

Short-term loans

(34,028)

(34,028)

Other short-term financial payables

(12,586)

(12,586)

Other long-term financial payables

(51,993)

(51,993)

Post-employment benefits short-term

(7,859)

(7,859)

Total liabilities

(394,174)

(37,825)

(431,999)

Total

(179,424)

50,435

(128,989)

Most of the financial assets and liabilities in force reflect short-

CASH AND CASH EQUIVALENTS

term financial assets and liabilities, for which, in consideration of their nature, their book value is considered as a reasonable

The amount of 68,333 thousand euros compares with 151,328

approximation of fair value.

thousand euros last year. This decrease is mainly related to the early repayment of some loans. It is believed that the carrying

SHORT-TERM INSTRUMENTS

DERIVATIVE

FINANCIAL

value of Cash and cash equivalents approximates their fair value at the balance sheet date.

The Group follows stringent rules to distribute its deposits and

As of December 31, 2023, there were no short-term derivative

liquid assets in a balanced manner among an adequate number

financial instruments.

of banking institutions with ratings of high standing.

For more information, reference should be made to para. 2.5.15

More information can be gleaned from the cash flow statement.

regarding the management of exchange risks.

79

2023 ANNUAL REPORT

SHORT-TERM LOANS AND CURRENT PORTION OF MEDIUM/LONG TERM LOANS

by Crédit Agricole (in USD and EUR) for a total of 11,750 thousand euros, and the repayment of a Unicredit Loan granted to Comer Industries S.p.A. for 9,500 thousand euros.

The item includes interest-bearing bank loans.

The current account debt at December 31, 2023 of Comer

The value of 34,028 is made up of 34,566 thousand euros of

Industries S.p.A. and Comer Industries Components S.r.l. relates

short-term bank loans, shown net of the short-term portion

to the balance of cash in transit linked to the payment of bills

of transaction costs treated according to the amortized cost

payable and direct remittances on December 31. Due to the

method (IFRS 9) equal to 538 thousand euros.

dynamic nature of the business, the Group's policy is to have

The decrease from the previous year of 17,554 thousand euros is

revolving standby credit facilities that can be utilized at short

mainly due to the total and partial repayment of two loans granted

notice.

CURRENCY

BOOK VALUE DECEMBER 31, 2022

CHANGE

BOOK VALUE DECEMBER 31, 2023

NOM. VAL. DECEMBER 31, 2023 (LC/000)

Bank accounts payable and advances Comer Ind S.p.A.

EUR

5,574

7,522

13,097

13,097

Bank accounts payable and advances Comer Comp.

S.r.l.

EUR

4,786

(4,714)

72

72

Bank account overdrafts Comer India Pvt

INR

0

607

607

55,805

MSME loan Comer India Pvt

INR

0

26

26

2,408

Simest loan e-comer S.r.l.

EUR

0

96

96

96

Loan Unicredit Comer Ind. S.p.A.

EUR

9,500

(9,500)

0

0

Loan CAI Comer Ind. S.p.A.

EUR

10,076

4

10,081

10,081

Loan Crédit Agricole M/L current portion

EUR

15,469

(4,882)

10,587

10,587

Loan Crédit Agricole M/L current portion

USD

6,868

(6,868)

0

0

52,272

(17,708)

34,566

(692)

154

(538)

51,580

(17,554)

34,028

DESCRIPTION (THOUSAND EUROS)

Total gross short-term loans Up-front commissions for short-term structured loans

EUR

Total net short-term loans

LONG-TERM LOANS

(538)

forth in the utilization request, with a maximum duration of 5 years. This line was unused as of December 31, 2023.

This item includes the long-term portions of the following loans:

2. Loan agreement signed with Crédit Agricole Italia in

1. Loan agreement entered into with Crédit Agricole in

December 2022 for a total amount of 50,000 thousand euros,

December 2021 and divided as follows:

maturing on December 16, 2027. This financing provided the

- Originally 140,000 thousand euros, including 45,000 thousand

funding for the acquisition of e-comer, finalized in January

euros remaining as of December 31, 2023 with a maturity date

2023. The above was partially repaid during the year in the

of March 31, 2027. Installments repaid during the year totaled

amount of 10,000 thousand euros. The outstanding amount

95,000 thousand euros.

as of December 31, 2023 was 40,000 thousand euros, of which

- 30,000 thousand euros, usable in cash and intended to

30,000 thousand euros is long-term.

support general revolving financial requirements, to be repaid

The loans above require compliance with consolidated operating

in a lump-sum at the end of the relative interest period as set

management covenants, which were met as of December 2023.

80

COMER INDUSTRIES

Note that in 2023 the remaining debt of 30,802 thousand euros

Further information can be obtained from the specific tables

of the loan with Crédit Agricole, originally for 50,000 thousand

provided below.

dollars, was repaid in advance.

CURRENCY

BOOK VALUE DECEMBER 31, 2022

CHANGE

BOOK VALUE DECEMBER 31, 2023

NOM. VAL. DECEMBER 31, 2023 (LC/000)

Loan CAI M/L long-term portion

EUR

40,000

(10,000)

30,000

30,000

Simest loan long-term portion

EUR

0

288

288

288

Loan Crédit Agricole M/L long-term portion

EUR

126,000

(91,000)

35,000

35,000

Loan Crédit Agricole M/L long-term portion

USD

25,971

(25,971)

0

0

Total gross long-term borrowings

191,971

(126,683)

65,288

Up-front commissions for M/LT structured loans

(1,302)

571

(731)

Total long-term borrowings

190,669

(126,112)

64,557

DESCRIPTION (THOUSAND EUROS)

(731)

Reported below is the breakdown of bank loans by nature, short and medium/long-term existing as at December 31, 2023:

DESCRIPTION (THOUSAND EUROS)

BALANCE AS AT DECEMBER 31, 2022

ACQUISITION BALANCES

NEW DISBURSEMENT

BALANCE AS AT REPAYMENTS DECEMBER 31, 2023

<1 YEAR

>1 YEAR

OF WHICH > 5 YEARS

EXPIRY December 31, 2023

Unicredit

9,500

(9,500)

0

CA-CIB Line A1

20,000

(13,571)

6,429

1,429

5,000

March 31, 2027

CA-CIB Line A2

120,000

(81,429)

38,571

8,571

30,000

March 31, 2027

30,802

(30,802)

0

CAI

50,000

(10,000)

40,000

10,000

30,000

December 16, 2027

Simest

0

2,524

(2,141)

384

96

288

December 31, 2027

Total

230,302

2,524

(147,443)

85,384

20,096

65,288

CA-CIB Line A3

$

0

81

March 31, 2027

0

2023 ANNUAL REPORT

OTHER SHORT AND MEDIUM/LONG-TERM FINANCIAL PAYABLES

annual installments starting in 2024, and recorded net of the amortized cost resulting from the discounting of the debt for 188 thousand euros; and 3.4 million euros from the portion of variable

The heading refers to payables deriving from the application of

consideration (earn-out) determined based on the value of the

the international accounting standard IFRS 16. It also includes

newly acquired company's sales in the period 2023-2026, and

financial debt of 6.3 million euros (including 1 million euros due

recorded net of the amortized cost resulting from the discounting

within 12 months) for the acquisition of e-comer consisting of:

of the debt for 920 thousand euros.

4 million euros arising from the portion of fixed consideration

Details of the payables and movements in the period are

unpaid as of the closing date, which will be repaid in four constant

shown below:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

INCREASES

DECREASES

FOREIGN EXCHANGE IMPACT

DECEMBER 31, 2023

Short-term payables IFRS 16

9,744

2,647

(735)

(70)

11,586

Long-term payables IFRS 16

48,048

10,431

(11,150)

(612)

46,717

Short-term acquisition payables

0

1,000

0

0

1,000

Long-term acquisition payables

0

5,276

0

0

5,276

57,791

19,354

(11,885)

(682)

64,579

Total

82

COMER INDUSTRIES

COMMITMENTS AND GUARANTEES

consists of 28,678,090 shares with no par value and fully subscribed and paid up for 18,487,338.60 euros. It consists of

Guarantees given amount to 23,758 thousand euros (32,990

a total number of 28,678,090 ordinary shares, of which 5,387

thousand euros in 2022) and consist of commitments of Comer

are held as treasury shares with a market value of 147 thousand

Industries S.p.A. in the total amount of 21,817 thousand euros,

euros, so that the shares outstanding as of December 31, 2023

all relating to the granting of local credit facilities in favor of

are 28,672,703.

subsidiaries.

The Group has no commitments to finance leasing companies.

On May 17, 2023 dividends of 0.75 euros per share relating to the result for the 2022 financial year were paid for a total of about 21.5 million euros.

2.6.10 NET EQUITY

Other reserves include:

The Parent Company's share capital as of December 31, 2023

OTHER RESERVES (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Legal reserve

3,697

3,416

Extraordinary reserves available

39,461

27,406

Consolidation reserve

3,543

3,543

FTA reserve (IAS/IFRS first time adoption)

(5,923)

(5,923)

Translation reserve

(5,132)

212

0

(387)

IAS 19 reserve

22,515

26,227

Total other reserves

58,162

54,495

CFH reserve (Cash Flow Hedge)

Information regarding the distributability of the reserves can

The IAS 19 reserve refers to the recognition of actuarial gains on

be found in the notes to the financial statements of the parent

pension funds described in detail in Section 2.6.10.

company.

The increase in the legal reserve relates to the allocation of the

The Stock Grant Reserve has been reclassified to Extraordinary

2022 result of the parent company net of dividend distribution.

Reserve for the purpose of a more concise presentation

The decrease in the conversion reserve of 5,344 thousand euros

of Other Reserves, considering that this incentive plan was

is mainly attributable to the revaluation of the euro against the US

completely concluded in the previous

dollar and the Chinese renminbi compared to the exchange rates

financial years.

reported at December 31, 2022.

It should be noted that during the period dividends relating to

Reconciliation between the amount of capital and reserves and

available reserves of some subsidiaries were distributed in favor

the result of operations of the Parent Company Comer Industries

of the parent company Comer Industries S.p.A. and in particular

S.p.A. in compliance with the IAS/IFRS international accounting

for a total of 7,648 thousand euros by Comer Industries INC,

standards as at December 31, 2023, and the amounts reported

Comer Industries do Brasil and Comer Industries Components

in this consolidated financial report, drawn up in compliance with

S.r.l.

international standards, on the same date is as follows:

83

2023 ANNUAL REPORT

DECEMBER 31, 2023

DECEMBER 31, 2022

DESCRIPTION (THOUSAND EUROS)

NET EQUITY

NET PROFIT/LOSS FOR THE YEAR

NET EQUITY

NET PROFIT/LOSS FOR THE YEAR

Impact of net income for the year on Parent Company Net equity

342,046

40,702

314,958

38,044

Other changes: Share capital increase Increase in share premium reserve Increase in treasury stock reserve

(147)

Effects IAS 19 rev. Actuarial losses net of tax effect

(104)

726

Dividends approved

(21,509)

(14,339)

Statutory net equity of Comer Industries S.p.A. IAS/IFRS

320,287

40,702

301,344

38,044

Differences between the adjusted net equity of consolidated equity investments and their value in the financial statements of the Parent Company

327,866

76,752

251,113

84,240

Reversal of intercompany dividends

(114,472)

(7,648)

(106,824)

(12,469)

Change in the Cash Flow Hedge Reserve IAS 38 Comer Industries Jiaxing

387

(328)

Elimination of exchange rate differences from translation reserve calculation

(5,132)

212

Effects IAS 19 rev. Actuarial losses net of tax effect

21,840

25,478

Equity contribution of subsidiaries to the Parent Company

230,489

69,104

169,652

71,771

Effects deriving from consolidation entries

(43,181)

(15,771)

(27,112)

(19,099)

Net equity attributable to minority interests

-

-

-

-

507,594

94,035

443,884

90,716

Total net equity IAS/IFRS

the year 2023 have been reported after changes in the reserves

2.6.11 DEFERRED TAX LIABILITIES

for retained earnings (as required by the revised IAS 19.93 A) and

The deferred taxes are related to the tax effect of timing

amounted to 3,712 thousand euros, gross of the tax effect.

differences between the profit and loss for the year for statutory

All the effects of the above are shown net of the related taxes.

purposes of each company, and any associated taxable income.

Actuarial earnings from recalculating the pension provision for

The amounts so defined are detailed in the following table:

84

COMER INDUSTRIES

DECEMBER 31, 2023

DECEMBER 31, 2022

YEAR 2023

TOTAL DEFERRED TAXES

TOTAL DEFERRED TAXES

(USED) ALLOCATED

Temporary differences Italian companies

594

1,605

(1,010)

Temporary differences foreign subsidiaries

53,123

60,146

(7,023)

Total deferred taxes

53,717

61,751

(8,033)

Total deferred taxes consolidation

621

620

0

Total deferred taxes in the financial statements

54,338

62,371

(8,033)

DESCRIPTION (THOUSAND EUROS)

attributable to the adjustment of foreign currency items.

2.6.12 POST-EMPLOYMENT BENEFITS

The balance of foreign subsidiary temporary differences mainly

Variations in the provision were as follows:

The balance of temporary differences Italian companies is mainly

includes the deferred tax provision resulting from the Purchase Price Allocation process and increased in the year due to what was previously described with respect to the acquisition of e-comer.

CHANGES (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Opening balance

124,208

165,179

Acquisition balances

613

Use for discharges and advances

(6,241)

(5,564)

Settlements of complementary pensions and treasury funds

(2,525)

(1,965)

Allocation for the year

4,389

4,817

Effects of IAS 19 recalculation period (gross of taxes)

10,043

(38,259)

Closing balance

130,487

124,208

Short term

7,859

5,792

Medium/long term

122,628

118,416

130,487

124,208

85

2023 ANNUAL REPORT

The economic and equity effects of the period, compared with the previous year, are detailed below:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Current service cost

(1,160)

(2,431)

Actuarial losses/(gains)

5,650

(39,320)

Financial expenses

4,505

1,708

Tax effect on income statement

(877)

202

Equity tax effect

(1,938)

12,828

Overall effect

6,180

(27,014)

This item refers to:

• Employee severance indemnity installments accruing as

- employee benefits governed by the rules and regulations in

from January 1, 2007: considered a "defined contribution

force in Italy and recorded in the financial statements of Italian

plan" in the case of both the option for complementary social

companies.

security schemes as well as the option for the treasury fund

- Benefit plans defined after employment calculated on

of the National Security Institution (INPS). The accounting

the basis of the final salary for all employees of its WPG

treatment is therefore the same as that in place for other types

subsidiaries in Germany and the USA.

of contribution payments.

• Employee severance indemnity provision as at December

The negative effect for the period of 5,650 thousand euros

31, 2006: remains a "defined benefit plan" for which actuarial

before taxes is mainly reflected in the recognition of the actuarial

calculations must be made, although, compared to the

gain accrued as a result of the adjustment of discount rates, as

calculations made to date (and reflected in the financial

explained below.

statements for the year ending December 31, 2006), excludes the component relating to future salary increases.

With regard to the Italian branches, the total value of which amounts to 9,039 thousand euros, based on the actuarial

Liabilities for defined benefit plans have been determined on the

valuation and interpretations available at the date of preparation

basis of the following Group actuarial assumptions with value

of the financial statements, the Group has made the following

scales from 2020 to 2023:

distinction:

ITALIAN ACTUARIAL ASSUMPTIONS

MEASURING UNIT

DECEMBER 31, 2023

DECEMBER 31, 2022

Discount rate

%

3.30

4.11

Expected rate of wage growth

%

0.50

0.50

Expected % of employees who will resign before pension (turnover)

%

5.0

5.0

Annual cost of living increase rate

%

2.0

2.3

Annual rate of TFR increase

%

3.0

3.2

86

COMER INDUSTRIES

In accordance with new regulations of IAS 19, the values of the

obtained by changing the above actuarial assumptions are as

employee severance indemnity provision that would have been

follows:

CHANGES (THOUSAND EUROS)

DISCOUNTED SEVERANCE INDEMNITY PROVISION

Turnover rate +1.0%

9,079

Turnover rate -1.0%

8,995

Annual cost of living increase rate +0.25%

9,164

Annual cost of living increase rate - 0.25%

8,918

Discount rate + 0.25%

8,868

Discount rate - 0.25%

9,217

The companies maintain defined benefit plans in the balance

US subsidiaries, the entire value of the plans is fully covered by

sheet at the end of the employment relationship calculated with

assets.

the last salary. Employees generally receive a fixed pension for each year they work. Benefits vary based on date of entry, length

Liabilities for defined benefit plans have been determined using

of employment, and worker's compensation. With respect to the

the following actuarial assumptions:

GERMAN ACTUARIAL ASSUMPTIONS

MEASURING UNIT

DECEMBER 31, 2023

DECEMBER 31, 2022

Discount rate

%

3.30

3.70

Expected rate of wage growth

%

2.75

2.75

Annual rate of TFR increase

%

2.25

2.25

The interest rate used for discounting is based on the yields of

the end of the reporting period, holding all other assumptions

high-grade corporate bonds with an average AA rating, decreased

constant:

for Europe from 3.7% as of December 31, 2022 to 3.3% as of

• If the discount rate is 0.5% higher, the defined benefit

December 31, 2023, and for the United States from 5.37% as of

obligation will decrease by 7.7 million euros (7.7 million euros

December 31, 2022 to 4.70% as of December 31, 2023.

in 2022).

The significant actuarial assumptions in determining the defined

• If the projected future salary growth decreases by 0.5%, the

benefit obligations are discount rate and future salary growth.

defined benefit obligation would increase by 0.8 million euros

The sensitivity analysis was determined based on reasonable

(0.9 million euros in 2022).

possible changes in the respective assumptions occurring at

87

2023 ANNUAL REPORT

The composition of personnel by category, based on average data, is as follows:

AVERAGE NUMBER 2023

AVERAGE NUMBER 2022

Senior executives

31

34

White Collar and Managers

1,074

1,114

Blue Collar and Outsourced workers

2,588

2,520

Total

3,693

3,668

DECEMBER 31, 2023

DECEMBER 31, 2022

Provision for product warranty risks

26,555

20,200

Other provisions for risks

12,543

7,424

Short-term provisions

39,098

27,624

Provision for product warranty risks

9,865

8,786

Other provisions for risks

4,889

3,726

Other provisions for risks and legal charges

1,985

1,805

Agents provisions

236

247

Long-term provisions

16,975

14,563

CONTRACT CATEGORY

As of December 31, 2023, the Group had 3,628 resources (including temporary workers), a decrease of 180 from December 31, 2022.

2.6.13 SHORTAND PROVISIONS

LONG-TERM

The provisions include:

DESCRIPTION (THOUSAND EUROS)

88

COMER INDUSTRIES

The product warranty provision includes the estimation of specific risks reported before preparation of the financial statements and relating to past productions. It also refers to coverage of general risks (the result of a calculation based on historical data)

2.6.14 TRADE PAYABLES AND OTHER SHORT- AND LONG-TERM PAYABLES

for repairs or replacement of products that did not conform to expectations. The balance at the end of the year is due to the

(i) Trade payables

best estimate of these risks in relation to open claims, not yet

The balance of 198,842 thousand euros shows a slight increase

settled at year end.

of 212 thousand euros from the previous year. The average

The Supplementary Agents Indemnity Fund includes provisions

payment days as of December 31, 2023 (calculated on the cost

for reimbursements recognized in the event of termination of

of the last quarter's came) amounted to 102 days compared to

the agency relationship, quantified according to the methods

91 days in the previous year.

indicated in the collective economic agreement signed March

There are no payables expiring after more than one year or

20, 2002 for the regulation of agency relations and commercial

expired for more than 12 months.

representation in the industrial sectors and cooperation.

The provision for contingent liabilities and legal expenses

(ii) Other long and short-term payables

represents the reasonable risk calculated in relation to litigation

The balance of other short- and long-term payables is 54,546

or potential liabilities still pending in court.

thousand euros.

Lastly, the other short-term and long-term provisions for risks

The short-term balance amounting to 32,168 thousand euros

and charges cover the estimated liabilities mainly related to

includes amounts due to employees for services accrued and

the completion of Group reorganizations also in relation to the

not paid as of the year-end closing, as well as the best estimate

acquisition of the German Group at the end of 2021.

of long-term benefits for directors and employees.

2.6.15 CURRENT TAX LIABILITIES The details are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Tax authority balance for current taxes

27,543

17,731

Tax authority for IRPEF withholdings

2,333

1,722

Other amounts due to tax authorities for withholding tax and VAT owed by foreign companies

90

3,720

29,966

23,173

Current tax liabilities

At the end of the year there were liabilities with tax authorities for

employee and self-employed income increased from the previous

current taxes calculated on income for the period.

year by 611 thousand euros.

The amount due to the tax authorities for withholding taxes on

89

2023 ANNUAL REPORT

2.6.16 INFORMATION ON FINANCIAL ASSETS AND LIABILITIES

MANAGEMENT OF EXCHANGE RATE RISK In addition to that already written in the previous paragraph, it should be noted that the Group has significant transactions in the currency of non-EU countries (mainly USD and CNY).

MANAGEMENT OF LIQUIDITY RISK

The exchange rate risk is hedged through purchase and sale of

Liquidity risk is related to the difficulty in raising funds to meet

foreign currencies contracts (forwards).

commitments.

Counterparties in these operations are the banks with which the

The control and implementation of appropriate policies for the

Group normally operates.

management of liquidity risk in the presence of contingency

The currencies involved are the USD and CNY, and any such

guarantee the Company's survival and minimize the cost of

transactions carried out to hedge cash inflows connected with

funding.

budgeted sales transactions, scheduled on a monthly basis,

This particular risk, unlike the others, manifests its effects in a

may well fall within those defined as “highly effective” on “highly

very short time, with devastating consequences for companies.

probable” future transactions, and their economic effect is

It can result from insufficient resources available to meet

recorded on an accrual basis.

financial obligations under the terms and deadlines set in the

The efficacy assessment is aimed at proving the high correlation

case of sudden revocation of uncommitted credit lines or of the

existing between the technical-financial characteristics of the risk

possibility that the Company must honor its financial liabilities

being hedged (maturity, amount, etc.) and those of the hedging

before their natural expiry.

instrument, by carrying out specific retrospective and prospective

As previously commented, the treasury activities of the Group are

tests.

substantially centralized at the parent company.

The fair value of a derivative contract is calculated using the official

In FY 2023 the Group finalized a cash pooling project with

listing prices for instruments traded in regulated markets. The fair

leading financial institutions in order to optimize the cash flows

value of instruments that are not listed on regulated markets is

of companies of the Group.

calculated using valuation models that are appropriate for each

The management of liquidity risk implies:

category of financial instrument, with market data related to the

• Maintaining credit lines defined as primary risk within a total

balance sheet date (such as interest rates, exchange rates, and

of no more than 80% of total credit lines and a substantial

volatility), discounting the expected cash flows based on interest

balance between the short and medium/long-term lines. This

rate curves and converting amounts in other currencies to the

is necessary in order to avoid liquidity strains in the case of

Euro through exchange rates provided by the European Central

requests for any reimbursement by the relevant financial

Bank.

partners.

• Maintaining adequate liquidity derived from the cash flow

SENSITIVITY ANALYSIS

generated by current operations.

The following analysis has been prepared in order to better

It should be added that in managing this type of risk, the Group

identify the economic risks and changes in equity arising from

always tries to finance its investments with medium- to long-term

possible changes in exchange rates.

unsecured claims in the breakdown of net debt, while covering

The analysis is performed on year-end and average exchange

current expenses using the short-term credit lines above.

rates for the period adjusted with the maximum and minimum values recorded over an observation period of 52 weeks in 2023,

MANAGEMENT OF INTEREST RATE RISK

the volatility index of the main currencies used by the Group.

The Group is exposed to the risk of changes in interest rates

The aim of the simulation is to show the impacts on the Group’s

associated with outstanding financial assets and liabilities. The

net profit and equity deriving from the translation of the financial

objective of interest rate risk management is to limit and stabilize

statements of subsidiaries into the currency of the consolidated

the negative effects on cash flows subject to changes in interest

financial statements according to potential maximum fluctuations

rates. As of December 31, 2023, the Group had no interest rate

predicted by the analysis.

risk hedging instruments in place given its limited financial debt.

90

COMER INDUSTRIES

IMPACT ON EQUITY (THOUSAND EUROS)

IMPACT ON NET PROFIT (THOUSAND EUROS)

RANGE LAST 52 WEEKS 2023

RANGE LAST 52 WEEKS 2023

LOCAL CURRENCY

RANGE LAST 52 WEEKS 2023

Source: UIC

NET EQUITY

NET PROFIT

MIN

MAX

SPOT 12.31.2023

MIN

MAX

2023 AVG 365 days

MIN

MAX

US dollar

163,126

18,946

1.047

1.126

1.105

8,193

(2,689)

1.081

575.3

(688.6)

British pound

22,276

14,798

0.851

0.893

0.869

541

(698)

0.870

373.6

(449.2)

Chinese renminbi

599,254

126,712

7.205

8.101

7.851

6,848

(2,360)

7.660

1,045.9

(901.2)

India rupee

1,011,445

262,275

86.421

92.449

91.905

698

(65)

89.300

97.8

(100.0)

Brazilian real

38,513

3,888

5.186

5.776

5.362

243

(515)

5.401

29.8

(46.7)

Russian ruble

87,203

(74,218)

84.531

117.201

115.484

276

(11)

88.397

(38.4)

206.3

The Group considers that it is not subject to significant

recoveries of credit and has set up a specific insurance coverage

economic and equity impacts deriving from the management of

for 95% of receivables generated by the Holding company (with

transactions of the single legal entities forming part of the scope

the exception of several historical customers with a grade of

of consolidation in foreign currency.

highly reliable), in respect of the credit lines assigned. The risk of insolvency has been adequately reflected in the accounts by the

MANAGEMENT OF CREDIT RISK

allocation of the specific provision for bad debts.

The Group's policy is to sell to customers after an evaluation of their credit capacity and therefore within pre-set credit limits.

MANAGEMENT OF PRICE RISK

Historically, the Group has not suffered significant losses on

The Group is subject to the risk of fluctuation in the price of raw

receivables.

materials, particularly that of: aluminum, cast iron, copper and

With reference to the changed economic conditions that marked

steel. Group companies review the sales prices of the products

the year 2023, it is believed that the risk connected to the reference

annually, transferring to customers increases in purchase costs

value is higher. Consequently, the Group has strengthened

in percentage terms compared to forecast indices, on the basis

its procedures for the selection of customers, monitoring of

of specific trade indexing agreements.

91

2023 ANNUAL REPORT

2.6.17 REVENUE FROM CONTRACTS WITH CUSTOMERS The breakdown of revenues by geographic region is as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

INC. %

DECEMBER 31, 2022

INC. %

CHANGE %

EMEA

724,853

59.2%

694,634

56.1%

4.4%

NORTH AMERICA

270,872

22.1%

265,315

21.4%

2.1%

ASIA PACIFIC

178,198

14.6%

208,751

16.9%

-14.6%

LATIN AMERICA

50,015

4.1%

68,875

5.6%

-27.4%

1,223,938

100%

1,237,576

100%

-1.1%

Total turnover by geographical area

The Group closed 2023 with a decrease of -1.1% in total sales volumes, which stand at 1,223,938 thousand euros. At constant exchange rates, sales increased by 0.4% over 2022. The reduction in volumes is mainly due to contractions seen in Asia Pacific and Latin America, especially the Agricultural sector.

The turnover generated outside national borders remained around 90% of the total, a figure that confirms the continued propensity for international expansion.

2.6.18 OTHER OPERATING REVENUES The breakdown of other operating revenues is as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Recovery of manufacturing, repair, service and transportation expenses

1,758

1,979

Scrap sales

968

665

Capital gains, photovoltaic refund

373

230

Capitalized costs

267

275

Income from insurance claims

20

0

Other revenues and income including out-of-period income

2,536

3,779

Total other revenues and income

5,922

6,929

92

COMER INDUSTRIES

The recovery of production, repairs, services and transport costs heading includes, among other things, bonuses and volume awards on supplies, charges for design and endurance test expenses, and the recovery of logistical and repair costs.

Costs capitalized during the year for industrial product development projects amount to 267 thousand euros.

Overall, other income and revenues decreased in 2023 compared with the previous year.

2.6.19 PERSONNEL COSTS Personnel costs in absolute terms stood at 240,646 thousand euros, decreasing by 2,998 thousand euros compared to 2022.

The heading also contains the annual production bonus and provision of the variable salary recognized upon the achievement of the financial and profitability objectives established for 2023.

2.6.20 REMUNERATION OF DIRECTORS AND STATUTORY AUDITORS The fees of the Directors and Statutory Auditors of Comer Industries S.p.A. for the performance of their offices in the Parent Company and in the other enterprises included in the consolidation are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Directors

1,426

2,299

Statutory Auditors

50

50

Total compensation

1,476

2,349

The amounts include fees payable for the period resolved by the Shareholders’ Meeting and the remunerations established by the Board of Directors for Directors attributed particular responsibilities, including bonuses. The values do not include social security and insurance contributions.

The Group does not have any stock grant and/or stock option plans in place as of today.

93

2023 ANNUAL REPORT

2.6.21 OTHER OPERATING COSTS AND WRITE-DOWNS

• other non-audit services for Italian companies amounting to 210 thousand euros.

All the above-described fees are included in the “other operating costs” heading.

The item other operating costs includes indirect charges associated with turnover, production and the corporate organizational structure such as rentals, utilities, leases and maintenance, insurance expenses, sales commissions, expenses

2.6.22 OPERATING RESULT

related to product quality as well as losses in value related to impairment tests on rights of use relating to leased properties.

The operating result achieved is equivalent to 144,428 thousand

Write-downs include provisions for bad debts and warranty for

euros, corresponding to 11.8% of the consolidated turnover,

the year, before any uses.

increasing compared to 10.3% of the previous year. The adjusted

As required by Art. 149-duodecies of the Issuer Regulation

operating result, which excludes depreciation and amortization

amended by Consob Resolution no. 15915 of May 3, 2007

attributable to the accounting of the business combinations of

published in Official Gazette no. 111 of May 15, 2007 (SO 115),

WPG and e-comer, amounted to 164,560 thousand euros (+15.2%

the remuneration for the year 2023 for services provided by the

compared to the previous year).

audit firm Deloitte & Touche S.p.A. is as follows:

This result is mainly due to the effect of the ongoing efficiency drive in production and management processes throughout the

• annual and infra-annual audit engagements on Italian

Group. Further information can be found in the Directors’ Report

companies for 229 thousand euros;

on operations.

• annual and infra-annual engagements for the audit of subsidiary companies for 446 thousand euros;

94

COMER INDUSTRIES

2.6.23 NET FINANCIAL INCOME / (CHARGES) The details are as follows:

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Exchange gain (loss)

(429)

4,842

Exchange gains and losses

(429)

4,842

Bank interest receivable

609

445

Other interest income

247

558

Total financial income from cash management

856

1,003

Interest on advances, loans and other short-term bank borrowings

(854)

(1,810)

Interest on medium/long-term loans

(7,924)

(2,770)

Interest on loans amortized cost

(924)

(781)

Interest expense on discounted employee severance indemnities

(4,505)

(1,708)

Economic result of interest rate hedging transactions fair value as at 12/31

137

Total financial costs from cash management

(14,207)

(6,933)

Interest resulting from the application of IFRS 16

(1,484)

(1,500)

Interest and other Net financial charges

(14,835)

(7,430)

Financial income balance

(15,264)

(2,588)

Exchange gain (loss)

Interest and other net financial charges

This item includes both realized differences between the historical

The amount of interest payable on advances and loans of

exchange rates of the relevant transactions and the reference

a banking nature, both long- and short-term (equal to 8,778

exchange rates of receipts and payments in foreign currency, and

thousand euros) has deteriorated compared to the previous

unrealized differences due to the translation of monetary items

period (4,197 thousand euros) as a result of the sharp rise in the

at the spot exchange rate at the end of the financial year. The

six-month Euribor during the year.

loss is mainly attributable to the latter case, and in particular to

The Interest payable heading for discounting the pension funds

the devaluation of the Chinese yuan and of the US dollar against

refers to the recalculation according to IAS 19 of the amount

the euro.

allocated to provisions for severance pay by Italian, German and American companies.

95

2023 ANNUAL REPORT

2.6.24 INCOME TAXES

German tax burden. For more details on changes in deferred tax assets and liabilities, see Sections 2.6.4 and 2.6.11.

The total tax burden is 35,129 thousand euros (34,213 thousand

In order to better understand the reconciliation between the tax

euros in 2022).

burden recognized in the financial statements and the theoretical

The consolidated tax charge calculated net of withholding

tax burden, the following explanatory table is provided wherein

tax on dividends from subsidiaries and tax credits, stands on

the IRAP is not considered as this, being a tax with a tax base

December 31, 2023 at around 26.9% against 26.7% calculated

different from income before taxes, would generate distortions

correspondingly on the 2022 period.

between one year and another. The reconciliation was therefore

This difference is mainly attributable to the different taxation in

determined with reference to the single IRES tax rate in force in

the countries where the Group operates, especially the higher

Italy, equal to 24.0%.

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2023

DECEMBER 31, 2022

129,164

124,929

Parent Company theoretical tax rate

24%

24%

Theoretical income taxes

30,999

29,983

Tax effect permanent differences Italian companies

(1,438)

(629)

Effect of foreign tax rates different from the theoretical Italian tax rates

(2,518)

(2,605)

Tax effect of taxation of dividends from consolidated companies

92

150

Bonus tax credit Legislative Decree 91/2014

0

(25)

Tax effect of tax relief for Italian companies ACE

(162)

(113)

Tax effect R&D credit Law 190/2014 art.1, para. 35 and energy credit

(1,398)

(1,776)

Tax effect super-amort/depr (Law 208/2015) and hyper-amort/depr (Law 232/2016)

(366)

(453)

Prior-year taxes and provisions

(61)

(332)

Tax effect of actuarial gain (loss) IAS 19

(25)

0

Deferred tax effect Withholding tax

366

817

Deferred taxes recognized in the income statement

(2,360)

(1,419)

Tax impact on consolidating entries

8,118

7,588

Income taxes recorded in the financial statements, excluding IRAP

31,248

31,184

Current IRAP

3,881

3,029

Income taxes posted to the financial statements (current, deferred)

35,129

34,213

Consolidated profit before taxes

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2.6.25 EARNINGS PER SHARE At the bottom of the income statement, the earnings/(loss) per share is reported, determined according to that manner provided in IAS 33, as summarized below.

DESCRIPTION (EURO UNITS)

DECEMBER 31, 2023

DECEMBER 31, 2022

Consolidated net income for the period attributable to Parent Company shareholders

94,034,636

90,716,070

Average number of shares in circulation

28,677,304

28,678,090

Basic earnings per share (EPS) (€)

3.28

3.16

Diluted earnings per share (€)

3.28

3.16

The means of calculation of diluted earnings (loss) per share are

With regard to the foreseeable development of operations, note

defined by IAS 33 – Earnings per share. The basic earnings (loss)

that the agricultural market has benefited from particularly

per share is defined as the ratio between the economic result

sustained growth over the last year and a half, and is now facing

or the results of continuing operations of the Group attributable

a phase of decline in this excess demand, moving towards more

to the holders of ordinary shares and the average number of

limited growth rates aligned with historical trends. The sector

ordinary shares outstanding during the year.

was down in the final quarter of 2023 and is also expected to decrease in the first part of 2024, with expectations for a slight

2.6.26 SIGNIFICANT EVENTS AFTER THE CLOSE OF THE YEAR AND BUSINESS OUTLOOK

improvement in the second half of the year. On the other hand, the industrial sector, after benefiting from the economic recovery to less of an extent, is expected to perform better than the agricultural sector.

Overall, Management expects 2024 sales to be in line with the forecasts of the market’s major OEM players mentioned above,

As concerns the significant events after the end of the financial

and a margin slightly lower than what was recorded in 2023.

year, on February 3, 2024 the shareholders' agreement signed

Lastly, net of extraordinary transactions, the Group is expected to

on December 1, 2021 and subsequently amended on June 14,

continue on its path of improving its net financial position thanks

2023 between Comer Industries S.p.A., Eagles Oak S.r.l. and WPG

to the continuous generation of cash.

Parent B.V. was terminated.

Reggiolo, March 13, 2024

For the Board of Directors Matteo Storchi President & CEO

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2023 ANNUAL REPORT

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 154-BIS OF ITALIAN LEGISLATIVE DECREE 58/98

3. We further attest that: 3.1 The consolidated financial statements: a) were prepared in accordance with the applicable international accounting standards recognized in the European Community pursuant to Regulation (EC) no. 1606/2002 of the European

1. The undersigned Matteo Storchi, in his capacity as Chair of

Parliament and of the Council of July 19, 2022;

the Board of Directors and Chief Executive Officer, and Stefano

b) correspond to the figures in the books and records;

Palmieri, in his capacity as Financial Reporting Officer of Comer

c) provide a true and fair view of the asset, economic and

Industries S.p.A., also taking into account the provisions of Article

financial situation of the issuer and all the companies included

154-bis, paragraphs 3 and 4, of Italian Legislative Decree no. 58

in the consolidation.

of February 24, 1998, attest to: • the adequacy of the financial statements with respect to the

3.2 The management report includes a reliable analysis of the

company’s characteristics, and

trends and results of operations as well as the situation of the

• the effective application of administrative and accounting

issuer and all companies included in the consolidation.

procedures for the preparation of the consolidated financial statements for 2023.

2. No issues worthy of note emerged in this regard.

Reggiolo, March 13, 2024

Financial Reporting

Chairman of the Board of Directors

Officer

and Chief Executive Officer

Stefano Palmieri

Matteo Storchi

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2023 ANNUAL REPORT

03

REPORT OF THE AUDIT FIRM

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2023 ANNUAL REPORT

Deloitte & Touche S.p.A. Piazza Malpighi, 4/2 40123 Bologna Italia Tel: +39 051 65811 Fax: +39 051 230874 www.deloitte.it

INDEPENDENT AUDITOR ’S REPORT PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010 AND ARTICLE 10 O F THE EU REGULATION 537/2014

To the Shareholders of Comer Industries S.p.A. REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Opinion We have audited the consolidated financial statements of Comer Industries S.p.A. and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at December 31, 2023 and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and explanatory notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at December 31, 2023 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Comer Industries S.p.A. in accordance with the ethical requirements applicable under Italian law to the audit of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v.

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2

Goodwill Impairment test Description of the key audit matter

The consolidated financial statements include values of goodwill for a total amount of Euro 170 million, allocated to the three cash generating units (“CGUs”) identified by the Group as “Industrial Sector”, “Agricultural Sector” and “e-comer”.

During the year, in connection with the process of internal reorganization and simplification of the organizational and control model of the Group’s business, as well as the finalized integration of Walterscheid Group, acquired at the end of 2021, the Management identified a new CGU as a result of the acquisition of e-comer S.r.l. and reassessed the existing ones.

As required by the International Accounting Standard IAS 36, goodwill is not amortized and is subject to impairment test at least annually, by comparing the recoverable amounts of the CGUs identified by Group, determined according to the value-of-use methodology, and the related accounting values of net invested capital as at December 31, 2023.

The evaluation process provided for in IAS 36 is complex and is based on assumptions concerning, inter alia, the forecast of expected CGUs cash flows, the definition of an appropriate discount rate (WACC) and of a longterm growth (g-rate). The assumptions underlying the impairment tests are, by nature, influenced by future expectations about the evolution of the external market conditions connected also to the business, which determine elements of physiological estimation uncertainty.

In view of the subjectivity and uncertain nature of the estimates relating to the determination of CGUs cash flows and of the key variables of the impairment model, we considered the impairment tests as a key audit matter for the audit of Comer Group consolidated financial statements audit.

The explanatory notes to the consolidated financial statements in paragraph “2.6.2 Intangible fixed assets” describe the valuation process applied by Management and the significant assumptions used in the tests, including the results of the sensitivity analysis effects of changes in key variables used for impairment tests.

Audit procedures performed

In the context of our audit we have carried out the following procedures, also using the support of our network experts:  understanding of the process and relevant controls designed and implemented by Management for the preparation and approval of the impairment tests, including the revisiting work of CGUs;  analysis of the reasonableness of the main assumptions adopted for the formulation of cash flow forecasts;  analysis of the actual results 2023 compared to the related expectations in order to assess the nature of the deviations and the reliability of the planning process of the forecast data;

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3

 assessing the reasonableness of the discount rate (WACC) and long-term growth rate (g-rate) applied, by identifying and observing external sources usually used in the practice;  test of the clerical accuracy of the model used to calculate the value in use for the CGUs;  analysis of the report prepared by the expert used by Management, in order to evaluation the independence and professional credentials;  test of the accurate determination of the carrying amount of the CGUs;  test of the sensitivity analysis prepared by the Management.

Finally, we examined the adequacy and compliance of the disclosure provided by the Directors on impairment tests with respect to IAS 36.

Accounting of the acquisition of e-comer S.r.l.

Description of the key audit matter

The consolidated financial statements of the Comer Group include the income statement and financial position arising from the purchase of 100% of e-comer S.r.l., which was finalized on January 9, 2023.

The acquisition was recognized in the consolidated financial statements in accordance with the international accounting standard IFRS3 “Business combinations” following the acquisition method and involved the purchase price allocation process that required Management to evaluate the acquisition-date fair value of the assets acquired and liabilities assumed. In consideration with the inherent estimation uncertainty that exists in fair value measurements mentioned above, we identified the Business Combination as a key audit matter for the audit of the Group’s consolidated financial statements.

The explanatory notes to the consolidated financial statements in the paragraph 2.5.1 “Accounting impacts of the Purchase Price Allocation derived from the acquisition of e-comer S.r.l.” describe in detail the accounting process applied by Management.

Audit procedures performed

In the context of our audit, we have carried out the following procedures, also using the support of our network experts:  discussion with Group management focused on understanding the structure of the operation and its purposes;  analysis of the agreements between the parties and minutes of the corporate bodies in which the deal was discussed and deliberated;  verification of the accounting treatment adopted by the Group in accordance with the accounting standards applicable in the circumstance;  examination of the criteria of determining the cost of acquisition, for the identification of acquired assets and liabilities assumed, for the estimate of fair values and for the method of determining the residual goodwill, including by reviewing documentation prepared by the Management;  analysis of the report prepared by the expert used by Management, in order to evaluation the independence and professional credentials;  verification of the accuracy of the accounting entries.

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4

Finally, we examined the adequacy of the disclosure provided by the Directors on the operation of business aggregation and its compliance with the provisions of the IFRS 3.

Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated Financial Statements The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05, and, within the terms established by law, for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the Company or the termination of the business or have no realistic alternatives to such choices.

The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

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 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements.

We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence applicable in Italy, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report.

Other information communicated pursuant to art. 10 of the EU Regulation 537/2014 The Shareholders' Meeting of Comer Industries S.p.A. appointed us on May 31, 2023 as auditors of financial statements and consolidated financial statements of the Company for the years until December 31, 2029.

We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU Regulation 537/2014 and that we have remained independent of the Company in conducting the audit.

We confirm that the opinion on the financial statements expressed in this report is consistent with the additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11 of the said Regulation.

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REPORT ON OTHER LEGAL AND REGULATORY REQUIREME NTS Opinion on the compliance with the provisions of the Delegated Regulation (EU) 2019/8 15 The Directors of Comer Industries S.p.A. are responsible for the application of the provisions of the European Commission Delegated Regulation (EU) 2019/815 with regard to the regulatory technical standards on the specification of the single electronic reporting format (ESEF – European Single Electronic Format) (hereinafter referred to as the “Delegated Regulation”) to the consolidated financial statements as at December 31, 2023, to be included in the annual financial report.

We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 700B in order to express an opinion on the compliance of the consolidated financial statements with the provisions of the Delegated Regulation.

In our opinion, the consolidated financial statements as at December 31, 2023 have been prepared in XHTML format and have been marked up, in all material respects, in accordance with the provisions of the Delegated Regulation.

Due to certain technical limitations, some information contained in the explanatory notes to the consolidated financial statements, when extracted from XHTML format in an XBRL instance, may not be reproduced in the same way as the corresponding information displayed in the consolidated financial statements in XHTML format.

Opinion pursuant to art. 14 paragraph 2 (e) of Legislative Decree 39/10 and art. 123-bis, paragraph 4, of Legislative Decree 58/98 The Directors of Comer Industries S.p.A. are responsible for the preparation of the report on operations and the report on corporate governance and the ownership structure of Comer Group as at December 31, 2023, including their consistency with the related consolidated financial statements and their compliance with the law.

We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an opinion on the consistency of the report on operations and some specific information contained in the report on corporate governance and the ownership structure set forth in art. 123-bis, n. 4 of Legislative Decree 58/98, with the consolidated financial statements of Comer Group as at December 31, 2023 and on their compliance with the law, as well as to make a statement about any material misstatement.

In our opinion, the above-mentioned report on operations and some specific information contained in the report on corporate governance and the ownership structure are consistent with the consolidated financial statements of Comer Group as at December 31, 2023 and are prepared in accordance with the law.

With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on the basis of the knowledge and understanding of the entity and of the related context acquired during the audit, we have nothing to report.

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Statement pursuant to art. 4 of the Consob Regulation for the implementation of Leg islative Decree 30 December 2016, no. 254 The Directors of Comer Industries S.p.A. are responsible for the preparation of the non-financial statement pursuant to Legislative Decree 30 December 2016, no. 254.

We verified the approval by the Directors of the non-financial statement.

Pursuant to art. 3, paragraph 10 of Legislative Decree 30 December 2016, no. 254, this statement is subject of a separate attestation issued by us.

DELOITTE & TOUCHE S.p.A. Signed by Stefano Montanari Partner Bologna, Italy March 20, 2024

This independent auditor’s report has been translated into the English language solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.

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