CONSOLIDATED FINANCIAL STATEMENT AS AT 31-12-2022

2022 ANNUAL REPORT CONSOLIDATED

FINANCIAL REPORT December 31, 2022

COMER INDUSTRIES S.P.A. Headquarters and Administrative Offices: Via Magellano 27, 42046 Reggiolo (RE), Italy Reggio Emilia Business Register no. 07210440157 Authorized share capital EUR 18,487,338.60 entirely subscribed and paid-up Tax Code 07210440157 – VAT code IT 01399270352 Art. 2497 bis of the Italian Civil Code - The company is subject to direction and coordination by Eagles Oak S.r.l., headquartered at 5 Via del Sagittario, 41126 Modena (MO), Italy Share Capital EUR 2,000,000 fully paid-up - Modena Business Register no. 03699500363

Comer Industries

3

CONTENTS Letter from the President

4

General information

7

1. Directors' report

10

1.1 Significant events in the 2022 financial year 1.2 The global macroeconomic scenario and the reference market 1.3 Comments on key performance indicators 1.4 Unaudited 2021 pro-forma income statement 1.5 Investments 1.6 Research and Development 1.7 Social responsibility 1.8 Environment, health and safety 1.9 Intergroup relations and dealings with related parties.

1.10 The companies in the Group 1.11 Non-financial information 1.12 Significant events after the close of the year and business outlook 1.13 Proposal for the allocation of profit 2. Consolidated financial statements and explanatory notes

42

2.1 General information 2.2 Scope of consolidation 2.3 Accounting standards adopted 2.4 Financial and non-financial risk management 2.5 Corporate information and industry-related information.

2.6 Notes to the consolidated financial statements 3. Report of the board of statutory auditors

110

4. Report of the audit firm

116

4

2022 Annual Report

LETTER FROM THE PRESIDENT Dear shareholders,

Sustainable with respect to the planet.

After a 2021 that saw us making an important

We are facing an ever-changing market, so now

strategic move with the acquisition of Walterscheid,

more than ever we want to be an international

2022 is destined to be remembered for our

Group, listed on the stock exchange, attentive to

company having achieved its best results ever.

the countries it competes in, always contemporary, open to the new needs of young people and new

At the same time, I am proud to announce that

ideas.

Benevelli and Sitem, acquired in January 2023, have given rise to e-comer, the new green-tech

This is our vision and way of doing business at

division of Comer Industries with which we will

Comer Industries.

make a major leap forward by offering the market the excellence of Italian technology applied to the

We want to preserve and develop this position,

Off-Highway segment.

which makes us proud and is at the same time precious, especially in those markets around the

With e-comer we are looking to tomorrow even

world that recognize great value in Italian ingenuity.

though we are already ready today, expanding the selection of products in our ranges and increasing

Strategy and investments reflected in the results

our target market. It is a choice that confirms our

of the 2022 Financial Statements that follow. These

vision of the future: the growth of a company that is

are important numbers, which take on tremendous

firmly rooted in its native land and at the same time

significance when considered in a context of

looking to compete in an increasingly challenging

national and international uncertainty, which

global market.

speak of a solid, healthy Comer Industries.

The goal we pursue every day: sustainable growth.

Growth understood not only as a mere goal of

Results expressing strong growth in volume and

increasing volumes and profitability but as a

profitability, the result of major reorganizations and

strategic vision of the future, in a market where

investments completed in recent years.

size and solidity represent a true competitive advantage, as well as a prerequisite for continuing

Numbers that are the result of the daily efforts

to invest and innovate over time.

of all those who are a part of our world and to whom go my sincerest thanks. An important 2022,

Sustainable toward our customers, who demand

with extraordinary results generated by the many

solutions that are always efficient.

people who, through their daily commitment or by

Sustainable in its attention to its stakeholders.

believing and investing in Comer Industries, have enabled us to make it so.

Reggiolo, March 21, 2023 Matteo Storchi President & CEO

Comer Industries

5

From the right Matteo Storchi and Cristian Storchi.

6

2022 Annual Report

Comer Industries

7

GENERAL INFORMATION

BOARD OF DIRECTORS

BOARD OF STATUTORY AUDITORS

Matteo Storchi

Luigi Gesaldi

President & CEO

Chairman

Cristian Storchi

Corrado Baldini

Vice President and Director

Standing Statutory Auditor

Arnaldo Camuffo

Massimiliano Fontani

Independent Director

Standing Statutory Auditor

Luca Gaiani Director

AUDIT FIRM

Lee M. Gardner

Deloitte & Touche S.p.A.

Director Joseph P. Huffsmith Director Matteo Nobili Director Paola Pizzetti Independent Director Marco Storchi Director

10

2022 Annual Report

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

2022

2021

CHANGE IN %

SALES REVENUES

1,237.6

598.1

106.9%

EBITDA % of sales revenue

180.0 14.5%

77.6 (*) 13.0%

132.0%

EBIT % of revenues

127.5 10.3%

56.8 9.5%

124.4%

NET PROFIT % of sales revenue

90.7 7.3%

39.4 6.6%

130.1%

Adjusted EBIT (**) % of sales revenue

142.8 11.5%

56.8 9.5%

151.2%

Adjusted NET PROFIT (***) % of sales revenue

101.8 8.2%

39.4 6.6%

158.2%

COMMERCIAL WORKING CAPITAL % of sales revenue

254.2 20.5%

203.1 34.0%

INVESTED CAPITAL

592.8

522.7

NET FINANCIAL POSITION

(148.9)

(177.0)

NET FINANCIAL POSITION / EBITDA

0.8

2.3

EBITDA / NET FINANCIAL EXPENSES

69.6

38.9

FREE CASH FLOW

60.0

46.6

CASH CONVERSION RATE

33.3%

60.0%

CAPEX % of sales revenue

34.1 2.8%

18.8 3.1%

SHAREHOLDERS’ EQUITY NET FINANCIAL POSITION / SHAREHOLDERS' EQUITY

443.9 0.3

345.6 0.5

ROI [EBIT / INVESTED CAPITAL (%)]

21.5%

10.9%

ROE [NET PROFIT / NET EQUITY (%)]

20.4%

11.9%

EPS [NET PROFIT / NO. OF SHARES]

3.2

1.4

AVERAGE PERSONNEL EMPLOYED IN THE PERIOD

3,668

3,505

(*) The figure as of 2021 was adjusted to include "Impairment of receivables and other Provisions for risks" to make it consistent with the 2022 figure in light of the new representation of this indicator. (**) Operating income adjusted for depreciation and amortization related to the WPG acquisition and resulting from the accounting of the Purchase Price Allocation. (***) Profit adjusted for depreciation and amortization and related theoretical tax effects attributable to the WPG acquisition and resulting from the accounting of the Purchase Price Allocation.

Comer Industries

11

1.1

SIGNIFICANT EVENTS IN THE 2022 FINANCIAL YEAR 2022 was marked by geopolitical factors that

On July 28, 2022 the deed of merger of the

increased the market volatility that began during

subsidiary WPG Holdco B.V. (non-operating parent

the year 2021.

company of WPG) into Comer Industries S.p.A.

Inflation is a global phenomenon, brought about

was signed, which had already been resolved by

by supply chain disruptions and the impact of

the Shareholders' Meeting of April 27, 2022. The

the Russia-Ukraine conflict on the prices of food,

transaction took effect on August 2, 2022 upon the

energy and raw materials among others, with

registration of the deed of Merger with the relevant

consequences for economies around the world.

company register of Reggio Emilia. Moreover, this

Note that the Group has no significant exposure

transaction did not have any accounting impact

in the areas affected by the conflict, as further

on the consolidated financial statements.

detailed in Section 2.6.7.

On December 6, 2022 the parent company Comer Demand has been particularly strong, especially

Industries S.p.A. purchased the shares representing

in the Agriculture sector where the Group holds a

100% of the share capital of Walterscheid Monguelfo

position of note. This context has forced everyone

S.p.A. owned by the subsidiary Powertrain Services

to approach situations differently, to ask some new

UK Ltd at a price of 19 million euros in order to pursue

questions and to question the status quo in order

the goal of integrating and simplifying the entire

to adapt to the new context.

Comer Industries Group (hereinafter the "Group") after the acquisition of WPG. This transaction did not

In 2022, actions aimed at integrating Comer

have any accounting impact on the consolidated

Industries and Walterscheid Powertrain Group

financial statements.

(hereinafter "WPG") began and are still ongoing.

The two companies have long histories – 50 years for Comer, 100 for Walterscheid – and, as a result, established traditions need to be brought back to a common vision, respecting cultural differences.

12

2022 Annual Report

1.2

THE GLOBAL MACROECONOMIC SCENARIO AND THE REFERENCE MARKET 1.2.1 MACROECONOMIC LANDSCAPE

the Covid-19 pandemic continues still (especially in China), the repercussions of the war between Russia and Ukraine (first and foremost rising energy

The year that just ended was a turbulent one. After

and commodity prices) and the related uncertainty

the pandemic there was a belief that we were on

have further impacted the global economy.

the road to recovery, but the geopolitical crisis

The table below shows the forecast published by

and the resulting economic consequences further

the Organization for Economic Co-operation and

complicated the international landscape.

Development (OECD)1 in its latest Market Outlook of

In a world where the economic crisis related to

November 2022.

AVERAGE 2013-2019

2021

Real GDP growth

2022

2023

2024

Percent

World

3.4

5.9

3.1

2.2

2.7

G20

3.5

6.2

3.0

2.2

2.7

OECD

2.2

5.6

2.8

0.8

1.4

United States

2.4

5.9

1.8

0.5

1.0

Euro area

1.9

5.3

3.3

0.5

1.4

Japan

0.8

1.6

1.6

1.8

0.9

Non-OECD

4.4

6.2

3.4

3.3

3.8

China

6.8

8.1

3.3

4.6

India

6.8

8.7

6.6

5.7

6.9

Brazil

-0.4

4.9

2.8

1.2

1.4

6.5

6.2

5.0

5.3

5.5

G20

3.0

3.9

8.1

6.0

5.4

OECD

1.6

3.8

9.4

6.5

5.1

United States

1.4

4.0

6.2

3.5

2.6

Euro area

0.9

2.6

8.3

6.8

3.4

Japan

0.9

-0.2

2.3

2.0

1.7

OECD unemployment rate Inflation

Source: OECD Economic Outlook, November 22, 2022 1 OECD Economic Outlook November 22, 2022

Comer Industries

13

In this particular economic environment, the OECD

the economic outlook because it corresponds to

estimates that the growth rate of the world Gross

higher production costs for businesses and lower

Domestic Product (GDP) for 2022 will decrease by

real income for households, and because it forces

2.8 p.p., compared to the 5.9% growth recorded in

central banks to tighten monetary policies, resulting

2021.

in slower economic activity in order to pursue their

One of the main factors in the global macroeconomic

statutory monetary policy objectives.

landscape is the rate of price growth, which has not

The global economy faces 2023 in an environment

been so high in advanced countries in decades.

in which growth has lost momentum, high inflation

The average inflation in OECD countries expected

is proving persistent, confidence is weakened, and

in 2022 is 9.4%, nearly six times the average of

uncertainty high.

1.6% for the 2013-2019 period. Inflation weighs on

30

Retail sales Industrial production Trade

22,5

15

7,5

0

-7,5 Jan-25 Mar-25 May-25 Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26 Jul-26 Sep-26 Feb-25 Apr-25 Jun-25 Aug-25 Oct-25 Dec-25 Feb-26 Apr-26 Jun-26 Aug-26

Source: OECD Global activity indicator, November 2022

103

OECD

United States

Euro area 100,75

98,5

96,25

94 01-01 2021

03-01 05-01 07-01 09-01 11-01 01-01 03-01 05-01 07-01 09-01 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 10-01 02-01 04-01 06-01 08-01 10-01 12-01 02-01 04-01 06-01 08-01 2022 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022

Source: OECD Consumer Confidence, November 2022

14

2022 Annual Report

Based on these assumptions, world GDP growth for 2023 is projected by the OECD to be 2.2%, slowing from the 3.1% estimated for the year just ended.

6%

5,9%

November 2022 projection

5% 4%

2,8% 3,1%

3%

2,7% 2,2%

2% 0 -2%

-3,2% -5% 2019

2020

2021

2022

2023

2024

Source: OECD Global GDP growth, November 2022 Annual inflation in OECD economies is expected to

inflationary pressures from demand, and the easing

decline, from 9.4% in 2022 to 6.5% in 2023.

of supply chain bottlenecks will allow inflationary

However,

many

pressures to gradually decline. Core inflation is

economies will remain higher for longer than

consumer

price

inflation

in

expected to return close to the Federal Reserve's

previously expected despite a broader and faster

2% target in late 2024, allowing for an easing of

tightening of monetary policy in much of the world,

monetary policy.

and the gradual loosening of some supply chain

The Canadian economy is subject to many of the

bottlenecks. This partly reflects the war in Ukraine,

same forces and is expected to see growth and

especially in Europe, where the implications of the

inflation curves similar to those of the United States.

sharp increase in the price of imported natural gas in 2022 will continue to be felt in 2023. However, with

EUROPE

official interest rates generally rising in 2023 and

Growth in Europe slowed sharply in late 2022 due to

energy price inflation slowing, inflation is expected

the war in Ukraine and weak external demand, with

to decline.

production expected to decline in several countries

In contrast, price pressures are expected to ease

over the winter. Restrained by high energy and food

significantly in 2023 in the United States, Canada,

prices, low household and business confidence,

Australia and Korea and remain moderate in Japan.

continued supply bottlenecks and the initial

However, the economic outlook for 2023 will be

impact of tighter monetary policy, annual growth

different for individual major economies.

in the Eurozone in 2023 is expected to stand at

NORTH AMERICA

0.5%, after having reached 3.3% in 2022. However, the implementation of Next Generation EU plans

In the United States, real wages have fallen and

is expected to sustain investment in the coming

tightening monetary policy has pushed up interest

years. Modest demand growth will help moderate

rates on all maturities, thus weakening investment,

inflation, but this effect will be offset by tensions

especially in the housing market. Rising interest

in labor markets and the prospect that surging

rates have also led to a strengthening of the dollar,

wholesale energy prices will continue to be more

braking exports. GDP growth is expected to slow

expensive than in the past, thus keeping inflation

from 1.8% in 2022 to 0.5% in 2023. Slower growth will

higher than in recent years.

ease the strain on labor markets by weakening

Comer Industries

15

ASIA

BRAZIL AND EMERGING COUNTRIES

In China, waves of lockdowns put in place due to the

Brazil's GDP is expected to grow 2.8% in 2022 and 1.2%

implementation of the zero Covid policy enforced

in 2023. Household consumption, private investment

by the Beijing government disrupted economic

and exports will remain the main drivers of growth,

activity in 2022. With weaker real estate investment

although export growth is expected to slow in 2023.

remaining a significant obstacle to recovery,

Inflation is expected to decline as the effects of

growth in 2023 will be supported by infrastructure

rising energy and food prices fade.

investment and other economic measures put

Expectations for other major emerging market

in place by the government to moderate the

economies, which are more resilient to global

correction in real estate. After the 3.3% in 2022, GDP

headwinds, are relatively positive next year and

growth is expected to rise to 4.6% in 2023. However,

will experience only modest and short-lived peaks

China will still be far from the 2013-2019 average

overshooting inflation targets.

growth rates of 6.8%. Consumer price inflation

Finally, with regard to labor market conditions, these

is expected to remain moderate, helped by the

remain generally tense. Wage increases have

government's energy and food price management

not kept pace with price inflation, weakening real

policies.

incomes despite actions taken by governments

Growth in Japan is expected to remain above

to cushion the impact of rising food and energy

potential, but slowing gradually. Higher energy

prices on households and businesses that have

prices have hampered real household income

seen their purchasing power significantly eroded.

growth and dented business confidence and

OECD expects the unemployment rate to rise to

investment, and a loss of economic momentum

about 5.5%, about 0.5 percentage points above the

in major trading partners is dampening export

low recorded in mid-2022.

growth. GDP growth is expected to be 1.8% in 2023 after recording 1.6% in 2022.

In India, growth is expected to fall from 6.6% in the current fiscal year to 5.7% in 2023 before rebounding to 6.9% in fiscal 2024, broadly in line with prepandemic trends.

12,00%

OECD

9,4% 9,00%

6,5% 6,00%

5,1% 3,00%

0,00%

2022

Source: OECD Inflation, November 2022

2023

2024

16

2022 Annual Report

1.2.2 MAJOR RISKS IN 2023

TIGHTENING OF MONETARY POLICY There are growing risks that rapidly rising interest

RISING ENERGY PRICES

rates, tighter global financial conditions and

European economies continue to face significant

significant asset repricing could expose long-

challenges

planned

standing financial vulnerabilities in advanced and

embargoes of Russian seaborne coal and oil

emerging economies. Rising private sector debt

imports and the diminishing supply of gas from

service burdens and lower bond market liquidity

Russia to the European market. A key risk related

are key risks in advanced economies.

due

to

ongoing

and

to the projections is that the associated rise in energy prices will prove much more disruptive and persistent than assumed

6

4,5

3

United States Euro area Japan

1,5

0

-1,5 2020

2021

2022

2020

2024

Source: OECD Policy interest rate, November 2022

FINANCIAL VULNERABILITIES IN EMERGING MARKET ECONOMIES

countries. In China, the resurgence of Covid-19

Tighter financing conditions, rising debt, the sharp

the heavily indebted real estate sector spreading

appreciation of the US dollar and slowing export

to the rest of the economy could result in a sharper-

market growth are exacerbating vulnerabilities in

than-expected

emerging market economies. Risk premiums have

developing and emerging market economies also

increased, capital outflows have accelerated,

face food security risks due to high food, energy

and international reserves have declined in many

and fertilizer prices and supply shortages.

outbreaks or the contagion of financial fragilities in

slowdown

in

growth.

Several

Comer Industries

17

1.2.3 TARGET MARKET

December business climate index) closed 2022 at

AGRICULTURAL SECTOR

upward trend after sharp declines in the first part of

The

overall

business

climate

+30 (on a scale of -100 to +100), showing a significant index

for

the

agricultural machinery industry in Europe (CEMA's

2022, particularly adversely affected by the start of the Russia-Ukraine conflict.

BUSI N ESS C LI MAT E INDEX DEVELOPMENT CEMA Business Climate Index (CBI) – Total

80 60 40

30

20 0 -20 -40 -60 -80 Fonte: CEMA Business Barometer

CBI

Present situation

Future expectation

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 favourable 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)

Regarding expectations for 2023, while early

range, those with 100+ hp are the only models that

indications in January remain consistent with the

recorded a positive performance of 11.3% year on

year-end values thus confirming the ongoing

year. Harvester production also showed 15.8%

recovery,

European

nevertheless

representatives

growth in 2022 compared to 2021.

cautious

about

future

Forecasts for 2023 released in November by John

prospects. Forty-five percent of survey respondents

Deere, one of the world's leading agricultural

expect stable sales in the first six months of 2023,

equipment companies along with CNH Industrial

while in terms of order intake over the same period

and AGCO, paint a two-speed North American

48% expect the same level as in 2022, as current

market for 2023: growth between 5% and 10% for

new and used machinery dealer inventories remain

the Large agriculture segment, while the Small

low across Europe and may still be below optimal

agriculture segment is expected to remain

levels in some markets. As for the US market, data

unchanged or down 5%. As for Europe and South

released in December 2022 by the Association

America, expectations are between a stable

of Equipment Manufacturers (AEM) for 2022 saw

or slightly growing market in the range of 5%. In

a contraction of the overall market in terms of

contrast, the Asian market is expected to shrink

units sold by 14.8% compared to 2021. In the tractor

slightly in 2023 compared to the year just ended.

2

remain

industry

Tractors with more than 100 horsepower

18

2022 Annual Report

INDUSTRY OUTLOOK (IN UNITS) - FY 2023

U.S and CANADA LARGE AG

U.S and CANADA

EUROPE AG

Flat to down 5%

Flat to up 5%

SMALL AG and TURF

5-10%

SOUTH AMERICA AG

ASIA AG

Flat to up 5%

Down moderately

(tractors and combine)

Source: Deere & Company forecast as of 23 November 2022

INDUSTRIAL SECTOR AND WIND POWER

and falling real incomes are expected to reduce

The Industrial sector in 2022 was characterized

affordability and reduce demand for private

by concerns about a global recession caused by

housing. These negative effects could be offset by

geopolitical tensions and soaring input prices in

support from the Next Generation EU program, the

the first part of the year, while there has been a

push for energy-saving green buildings, and the

gradual recovery in recent months. About half of

gradual reduction of the backlog built up in 2022.

the participants in the December 2022 Committee

Overall,

for the European Construction Equipment (CECE)

released in November 2022 forecasts a slowdown

Business Barometer expect to see a 3% to 10%

in construction investment growth from 5.1% in 2021

increase in construction equipment sales in 2023

to 2.8% in 2022, followed by a significant decline of

over 2022 driven by demand from countries such

0.1% in 2023.

the

CECE

macroeconomic

bulletin

as North America, Latin America and the Middle East.

Uncertainties

Finally, regarding the Wind Power sector, after a macroeconomic

record year of new offshore installations (in terms of

environment for 2023 are significant, particularly

due

to

the

megawatts) in 2021, 2022 saw a sharp deceleration

for residential and nonresidential construction due

mainly due to the economic slowdown. Medium to

to higher interest rates and recession fears that

long-term growth prospects remain positive driven

foreshadow a significant slowdown in construction

by the need to increase the use of sustainable

investment next year. Housing investment benefited

energy sources to combat climate change,

from the availability of low-cost mortgages and

while the sector is significantly impacted by

the accumulation of savings during the pandemic.

environmental policies and related regulation that

However, rising interest rates, higher cost to build

could slow its development.

Comer Industries

19

20

2022 Annual Report

1.3

COMMENTS ON KEY PERFORMANCE INDICATORS The Group monitors its performance using various

end of 2021 and related to the acquisition of WPG.

indicators that may not be comparable to similar measurements adopted by other groups. Group

"Adjusted Net Income": represents the Net Profit in

Management considers that these indicators

the Consolidated Income Statement adjusted for

provide a comparable measurement of the

depreciation and amortization and the related

results on the basis of standardized performance

theoretical tax effects arising from the accounting

factors, facilitating the identification of operating

– as required by IFRS 3 – of the purchase price

trends and allowing management to take action

in connection with the business combination

also during the year with swift corrective actions

transaction that took place at the end of 2021 and

whenever necessary.

related to the acquisition of WPG. "Commercial

1.3.1 DEFINITION OF THE INDICATORS

working

(+) current asset items:

and reported herein are based on the following

Trade Receivables;

definitions,

(-) current liability items:

year

resulting

the

items: Inventories;

this

indicates

algebraic sum of the following balance sheet

The performance indicators used by the Group revised

capital":

in

a

restatement of comparative data:

Trade payables.

"EBITDA": represents the value of Operating Profit

"Invested capital": is the algebraic sum of the

(EBIT) adjusted by the amount of the following

following items:

entries:

(+) Commercial working capital,

(+) Amortization, Depreciation and other

(+) Tangible (including Rights of use),

write-downs of fixed assets, in particular:

intangible and financial fixed assets

• Amortization of intangible fixed assets;

(+) Tax assets and deferred tax

• Depreciation of tangible fixed assets;

assets, current tax assets

• Other write-downs of fixed assets;

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

"EBIT": is the Operating Profit in the Consolidated

( - ) Other short and long-term payables,

Income Statement.

of a non-financial nature; (+) Current and deferred tax liabilities

"Net profit": indicates the result of the Consolidated

( - ) Severance Indemnity Fund (TFR) and

Income Statement.

provisions for risks and charges.

"Net financial position": indicates the difference

"Adjusted EBIT": indicates the item Operating Income in the Consolidated Income Statement adjusted

between cash and cash equivalents and debt of a financial nature as follows:

for depreciation and amortization resulting from

(+) Current Asset items (A):

the accounting – as required by IFRS 3 – of the

• Other short-term financial receivables

purchase price in connection with the business

• Marketable securities at fair value

combination transaction that took place at the

• Cash and cash equivalents

Comer Industries

(-)

Non-current and current liabilities (B):

21

The Group prepares the income statement

• Long-term loans

according to the nature of costs and the Cash flow

• Long-term derivative financial instruments

statement with the indirect method.

• Short-term loans • Short-term derivative financial instruments

recognized in accordance with IFRS 16)

1.3.2 COMMENTS ON THE INDICATORS

• Non-current trade payables

For a better representation of the change in

• Other short- and long-term financial payables (including payables relating to lease contracts

economic results between 2022 and 2021, please The Net financial position, as represented, achieved

refer to the following section on the Proforma

the same results that would have been obtained

2021 unaudited data, as in 2021 WPG's economic

according with recommendation reported in

data were included in the consolidated financial

Reminder no. 5/21 of April 29, 2021 issued by Consob,

statements for the month of December only.

which refers to ESMA Guideline 32-382-1138 of March

Despite the market environment it operates in, the

4, 2021.

Group achieved consolidated revenues of 1,237.6 million euros (up 106.9% from the previous year,

"Free cash flow": Cash flow generated (absorbed)

a year that includes WPG's only for December),

by operations + Net cash flow from investing/

which includes revenues from the Comer Industries

disinvesting activities.

brands of 643.9 million euros and revenues from the Walterscheid brands of 593.7 million euros.

"Cash conversion rate": represents the ratio of Free

Revenues generated abroad represent 91% of the

Cash Flow to EBITDA.

total.

This performance has also been positively affected

"Capex": indicates the increase occurring in

by the revaluation of the main reference currencies

investments in tangible and intangible fixed

in which Comer Industries operates.

assets (net of revaluations, capital grants and the

More specifically, the appreciation of the US dollar

effects of currency conversion) which, following

and the Chinese yuan positively affected this figure

International Accounting Standards, are recorded

by 38.7 million euros. The amount of revenues on a

in the corresponding heading in equity, reduced

constant currency basis compared to the previous

by disinvestments and excluding the equity effects

year would have been 1,198.9 million euros (+100.5%).

(i) of internal capitalizations of costs for internally

Thanks to the consolidation of Walterscheid brands

generated development activities, excluding the

for 12 months, the Agricultural sector recorded a

impacts related to the application of IFRS 16.

152% increase in sales. The Industrial sector, on the other hand, closed the year with a +59% over the

"Equity": indicates the algebraic sum of Share

previous year.

capital, Statutory reserves, Profits/losses and Other

Therefore the Group demonstrated its ability to fully

similar reserves corresponding to the total of the

seize market opportunities in addition to benefiting

"Share capital and reserves" heading.

from the consolidation of the new brand acquired at the end of the previous year.

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

EBITDA stood at 180.0 million euros or 14.5% of sales

capital.

compared to 77.6 million euros (figure adjusted to

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

include the item "Write-downs of receivables and

Equity.

other risk provisions" to make it consistent with the

"EPS (Earnings per share)": ratio of Net Profit to total

new representation applied on 2022) in the previous

number of shares outstanding as of December 31,

year (equal to 13.0% of sales), an improvement

2022.

of 132.0%, again pointing out that the 2021 figure

"Average staff in the year": simple average on the

included WPG only for the month of December.

basis of the workforce employed by the Group,

The net financial position shows a negative balance

including temporary workers.

of 148.9 million euros, an improvement over the

22

2022 Annual Report

previous year of 28.1 million euros. The balance as

The parent company Comer Industries S.p.A.

of December 31, 2022 includes 151.3 million euros of

distributed dividends in the amount of 14.3 million

cash, gross of loans for 242.5 million euros and 57.8

euros in fiscal 2022.

million euros of financial payables arising from the

Net profit reached 90.7 million euros, corresponding

accounting treatment of leases in accordance

to 7.3% of turnover compared to 39.4 million euros

with IFRS 16. The Group generated cash from

in the previous year (6.6% of sales). The adjusted

operations of 94.1 million euros, which net of capital

net profit for 2022, which excludes depreciation,

expenditures of 34.1 million euros produced free

amortization and related theoretical tax effects

cash flow of 60.0 million euros. The Cash Conversion

attributable to the acquisition of WPG according

rate was 33.3% in the fiscal year just ended. In a year

to the Purchase Price Allocation accounting

marked by tensions throughout the supply chain

treatment, is 101.8 million euros.

and particularly sustained demand, the Group

ROE, calculated on net profit, stands at 20.4%

chose to protect relationships with key suppliers by

compared to 11.9% in the previous year and

significantly reducing payment terms compared

benefited from the growth in operating income.

to the previous year. Inventories also increased to

Earnings per share stand at 3.2 euros per share (1.4

better ensure on-time delivery.

euros per share in 2021).

Comer Industries

23

24

2022 Annual Report

1.4

UNAUDITED 2021 PRO-FORMA INCOME STATEMENT Below is the Group's unaudited proforma income

accounting

statement for fiscal year 2021, which is intended to

assumptions, if the WPG acquisition had actually

retroactively represent the WPG acquisition as if it

been carried out on the date taken as reference

had occurred on January 1, 2021.

for the preparation of the 2021 proforma income

The unaudited 2021 proforma income statement

statement, rather than on the effective date, the

was prepared based on the following historical

historical data would not necessarily have been

data:

the same as those reflected in the proforma

• Consolidated income statement included in the

income statement.

representations

based

on

Consolidated financial statements for 2021 of the

• The data of the 2021 proforma income statement

Comer Industries Group, prepared in accordance

do not in any way intend to represent a forecast

with International Financial Reporting Standards

of future results and therefore should not be used

as adopted by the European Union;

in this sense. The proforma data do not reflect

• Income statement as of January 1 - December

the prospective data as they are prepared in

31, 2021 of WPG, prepared according to the

such a way as to represent only the effects of the

International

Financial

Transaction that can be isolated and objectively

adopted

the

by

Reporting

European

Standards

Union.

WPG's

measured, without taking into account the

consolidated income statement of January

potential effects due to changes in the policies

1 - December 31, 2021 was prepared for internal

of the Comer Industries Group Management,

purposes since there is no legal obligation in this

which have a high component of discretionary

regard, and has not been audited.

power, and operational decisions resulting from the outcome of the WPG acquisition.

The unaudited 2021 proforma income statement was not examined by the audit firm Deloitte &

The

Touche S.p.A., as there is no requirement to do so.

preparation of the unaudited 2021 proforma

accounting

standards

adopted

for

the

income statement are the same as those used for The unaudited 2021 proforma income statement

the preparation of the Comer Industries Group's

was prepared solely for illustrative purposes by

2021 consolidated financial statements, specifically

making appropriate proforma adjustments to the

the International Financial Reporting Standards

historical data described above to retroactively

adopted by the European Union, it being understood

reflect the significant effects of the acquisition. The

that this income statement does not represent a

following aspects must be considered for proper

"complete set of financial statements" under IAS 1.

interpretation: • Given that these are historical and virtual

Comer Industries

25

UNAUDITED CONSOLIDATED INCOME STATEMENT (THOUSAND EUROS)

PROFORMA DECEMBER 31, 2021

Revenue from contracts with customers

1,048,486

Other operating revenues

7,623

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

72,009

Purchase costs

(664,486)

Personnel costs

(227,463)

Other operating costs

(105,132)

Write-downs of receivables and high risk provisions

(818)

Amortization

(49,142)

EBIT

81,077

Net financial income / (charges)

(8,655)

Profit before Tax

72,423

Income taxes

(22,523)

NET PROFIT

49,900

Some recalculated indicators considering proforma economic data are summarized below unaudited 2021 compared with the 2022 indicators discussed above.

(MILLION EUROS)

DECEMBER 31, 2022

PROFORMA DECEMBER 31, 2021

SALES REVENUES

1,237.6

1,048.5

18.0%

EBITDA % of sales revenue

180.0 14.5%

130.2 (*) 12.4%

38.2%

EBIT % of sales revenue

127.5 10.3%

81.1 7.7%

57.3%

Adjusted EBIT (**) % of sales revenue

142.8 11.5%

87.0 8.3%

64.2%

NET PROFIT % of sales revenue

90.7 7.3%

49.9 4.8%

81.8%

Adjusted NET PROFIT (***) % of sales revenue

101.8 8.2%

48.4

INVESTED CAPITAL

592.8

522.7

NET FINANCIAL POSITION

(148.9)

(177.0)

NET FINANCIAL POSITION / EBITDA

0.8

1.4

EBITDA / NET FINANCIAL EXPENSES

69.6

15.0

ROI [EBIT / INVESTED CAPITAL (%)]

21.5%

15.5%

ROE [NET PROFIT / NET EQUITY (%)]

20.4%

14.5%

EPS [NET PROFIT / NO. OF SHARES]

3.2

1.7

4.6%

CHANGE IN %

110.2%

(*) The figure as of 2021 was adjusted to include "Impairment of receivables and other Provisions for risks" to make it consistent with the 2022 figure in light of the new representation of this indicator. (**) Operating income adjusted for depreciation and amortization related to the WPG acquisition and resulting from the accounting of the Purchase Price Allocation. (***) Profit adjusted for depreciation and amortization and related theoretical tax effects attributable to the WPG acquisition and resulting from the accounting of the Purchase Price Allocation.

26

2022 Annual Report

The following table shows Sales Revenues by segment: DESCRIPTION (MILLION EUROS)

DECEMBER 31, 2022

INC. %

PROFORMA DECEMBER 31, 2021

INC. %

CHANGE IN %

Agricultural sector

776.3

62.7%

629.1

60.0%

23.4%

Industrial Sector

461.3

37.3%

419.4

40.0%

10.0%

Total sales by segment

1,237.6

100%

1,048.5

100%

18.0%

Revenue growth during 2022 was driven by both the Agriculture (+23.4%) and Industrial (+10.0%) segments.

The Agricultural sector (accounting for 62.7% of Total Revenues) was positively affected by both the increased demand for agricultural products as a result of population growth and the rise in agricultural commodity prices that prompted farmers to invest more in machinery and equipment. The Industrial sector performed well despite the fact that rising interest rates hurt the construction sector and reduced investment.

The following table shows Sales Revenues by geographical area:

DECEMBER 31, 2022

INC. %

PROFORMA DECEMBER 31, 2021

INC. %

CHANGE IN %

EMEA

694.6

56.1%

552.3

52.7%

25.8%

NORTH AMERICA

265.3

21.4%

219.1

20.9%

21.1%

ASIA PACIFIC

208.8

16.9%

225.6

21.5%

-7.5%

LATIN AMERICA

68.9

5.6%

51.5

4.9%

33.7%

Total turnover by geographic area

1,237.6

100%

1,048.5

100%

18.0%

DESCRIPTION (MILLION EUROS)

The EMEA market, which is the Group's main target

EBITDA

market with a 56.1% share of total revenues, grew

Operating profitability for the year was up both

25.8% year-on-year despite the fact that the region

in absolute values and as a percentage of Sales

saw a slowdown in the growth of economic activity

Revenues. EBITDA stood at 180.0 million euros

due to the outbreak of the Russia-Ukraine conflict

compared to 130.2 million euros in the previous

and rising energy prices.

year, achieving 38.2% year-on-year growth.

The North American market, whose impact reached

EBITDA as a percentage of Sales Revenues was

21.4%, was up 21.1% due to strong domestic demand

14.5%, an improvement of 2.1 percentage points

and favorable macroeconomic conditions.

from the previous year, due to the implementation

China

policy

of processes and synergies resulting from the

implemented by the Chinese government, the

suffered

from

the

zero-Covid

integration of WPG in 2022, higher absorption of

policy then being abandoned in early 2023.

fixed costs due to increased sales volumes, and the

The Latin American market, while still marginal at

Group's timely price adjustment policy.

the Group level, grew 33.7% aided by the Group's presence there.

Comer Industries

27

ADJUSTED EBIT

NET PROFIT

Adjusted EBIT, adjusted for depreciation and

FY 2022 closed with a Net Profit of 90.7 million euros,

amortization emerging from the Purchase Price

up 81.8% from the previous year.

Allocation (PPA) resulting from the acquisition of

Adjusted Net Profit, adjusted for depreciation and

WPG, stood at 142.8 million euros compared to 87.0

amortization emerging from the Purchase Price

million euros in the previous year, representing

Allocation (PPA) and the related theoretical tax

64.2% year-on-year growth.

effect, stood at 101.8 million euros compared to 48.4 million euros in the previous year, representing 110.2% year-on-year growth.

28

2022 Annual Report

1.5

INVESTMENTS During the year, the Group invested 33.9 million euros

Also worth mentioning is the green, sustainable

in tangible and intangible fixed assets acquired

investment in the purchase and installation of

from third parties, net of internal capitalizations

electric vehicle charging stations. The columns

and excluding the impact of the IFRS 16 accounting

were installed in the last quarter of 2022 in plants in

standard.

the northern and southern parts of Italy.

During fiscal year 2022, two new horizontal machining centers for the cast iron flow and a

During FY 2022, the German plants in Sohland

gear hobbing machining center came on line at

and Lohmar underwent several investments in

the Italian plant in Reggiolo.

production. Specifically, the former saw the arrival

Also as part of the multi-year plan to renew and

of an automated machining center for working

upgrade the machine inventory, two additional

steel components, the latter the commissioning

horizontal machining centers for cast iron flow

of a complex robotic cell, and the purchase of two

and a new robot cell for gear processing flow

special process plants that will come on line during

were purchased. The latter is equipped with

the next fiscal year.

an anthropomorphic robot and a numerically controlled lubricant-free gear cutting machine,

In 2022 in the Jiaxing plant in China, investments

confirming the choice of environmentally friendly

were made involving masonry works and general

technologies for working steel. These latter assets

plant engineering related to the production

will come into operation in Q2 2023.

building.

Additional Industry 4.0 investments were also made

automatic assembly lines for the production of

to optimize production processes and logistics flows

industrial axles and agricultural gearboxes and a

at the assembly and painting plant. Specifically,

new vertical warehouse were also purchased and

a new semiautomatic assembly line equipped

installed.

In

the

manufacturing

area,

semi-

with cyber-physical systems went into operation, and new vertical automated warehouses fully

A new production plant was built in India during

interconnected with factory logistics systems were

2022, and therefore investments were made

purchased.

concerning masonry and general plant works

With regard to the Italian plant in Monguelfo, two

related to process industrialization.

automated machining centers for processing steel components have come into operation.

Comer Industries

29

1.6

RESEARCH AND DEVELOPMENT In 2022, following the WPG acquisition, the Comer

Finally, in the field of digitization of the Group's

Industries

its

products, a new app for smartphones was

research and development capabilities for new

launched that enables real-time monitoring of the

products and services. These include a new axle for

use of agricultural gimbals equipped with sensors

hay balers with a capacity of up to 5 tons for the

developed entirely in-house.

Agricultural market, a new generation of gimbals –

Comer Industries Group's advanced systems are

the result of a collaboration between Walterscheid

developed in design offices located in Italy, Germany

and Comer Industries – with a static load capacity

and the United States, which are then validated and

increased by 15% and a maximum utilization length

approved in four different specialized validation

increased by 20%, and the design for a new front

centers

axle for tractors up to 120 kW power.

Monguelfo in Italy, Lohmar in Germany and Rockford

In the Industrial sector, on the other hand, of note is

in the United States.

Group

significantly

increased

the completion of a new transmission for electrically driven axles with power up to 45 kW, and the market launch of the new size 17C industrial gimbals for torques up to 120,000 Nm.

located

in

Reggiolo

and

Welsberg-

30

2022 Annual Report

1.7

SOCIAL RESPONSIBILITY For

about

employees took part in the initiative by waiving

sustainability reference was made to a concept

some

years

now,

their overtime pay for the cause, while company

that encompasses a variety of policy areas

management contributed to the project with cash

that companies are called upon to approach

donations. Additional funds were raised through

proactively

talking

Education,

various company initiatives, such as raffles and

Community, Innovation, Sports and Culture are

scrap metal collection and sales. From counseling

the key words underpinning Comer Industries'

to medical care and creative activities, these

social responsibility, all areas with one common

social organizations impact the local communities

denominator: people. In keeping with the United

around Comer Industries and Walterscheid.

Nations Sustainable Development Goals, Comer

The educational and training projects that the

Industries' concrete commitment begins with the

company believes in go beyond the places where

awareness of having an important responsibility

Comer Industries has its roots, as evidenced by

towards the environment and society. The regions

the now long-standing collaboration with the

the Company operates in and the communities

Volunteer Organization "Namaste, Honor to You,"

within are the starting point for programs, support

through which the company provides concrete

initiatives and partnerships related to creating

support to the community in Bangalore, India, by

value

for

and

when

ourselves

imperatively.

generations.

paying for the room, board, university expenses and

Realizing that only starting from one's roots can

and

future

all necessary resources so that some deserving

one continue to grow, Comer Industries invests first

girls can cultivate their talents and become nurses.

and foremost in the resources of the local area to

There is no shortage of collaborations with Italian

foster economic, social and cultural development.

and international universities and projects that

Examples include the project to upgrade Palazzo

espouse educational and social objectives, such

Sartoretti in Reggiolo, the seat of the municipal

as "ÜFA," the training company first established

government, and its adjacent park, and support for

in August 1985 at the Walterscheid - Lohmar

associations in the Lohmar area and North Rhine-

headquarters, supported by a well-established

Westphalia, where Walterscheid has its offices. In

flow of money and goods. Unlike normal companies

Reggiolo, home of Comer Industries headquarters,

that operate economically, the profit generated at

the partnership between the company, the

the end of the business year is donated to a social

Municipality of Reggiolo, the Reggio Children

project in the area. Thanks to the ÜFA project, young

Foundation and Azienda Servizi Bassa Reggiana

men and women have the opportunity to learn

has created a place where a variety of initiatives

about personal responsibility much more quickly

and disciplines converge through the creation

than usual and then transfer what they have

of true "Ateliers" for children, young people and

learned to real life.

adults: a complete educational program created

The company's commitment to sustainability is

with the aim of investigating the phenomena of

also evident in its support for projects that reflect

mechanics and gears, welcoming various other

a true culture of innovation. Examples include

collateral disciplines (graphic, digital, etc.) that

Comer Industries' participation in Le Village by

merge within workshops and embrace numerous

Crédit Agricole in Parma, one of the first European

aspects of education and experimentation. In

innovation hubs to receive such recognition, and

Lohmar, with the "Hearts of Gold" project, which

the development of the Deep Tier platform in

started in 2006, Walterscheid supported 13 social

partnership with Iungo and Gellify. Le Village is an

organizations in North Rhine-Westphalia with a

incubator that favors knowledge and interaction

donation of 65,000 euros in 2022. Walterscheid

between local start-ups, financial institutions and

Comer Industries

31

industrial businesses and offers opportunities for

and the Sessantallora amateur sports association

development and reciprocal exchange; Deep Tier

of Carpi, which promotes various activities in the

is a fintech platform model that supports the entire

areas of cycling, mountain biking and triathlon.

supply chain, from supply chain leaders to sub-

Sustainability also means preserving the scenic,

suppliers, both local and abroad, allowing every

artistic and cultural beauty of our country,

player in the chain to access a number of forms of

therefore for years now Comer Industries has been

advances and financing from financial institutions

supporting FAI by participating in the Corporate

rapidly and under advantageous conditions.

Golden Donor membership program.

In the area of sports, incentivizing its employees

For Comer Industries, sustainability is a key factor

to enjoy their leisure time in a healthy way is the

in long-term value creation and is increasingly an

objective behind the two partnerships put in place

integral part of the way it does business.

by Comer Industries with the Padel Club of Reggiolo

32

2022 Annual Report

1.8

ENVIRONMENT, HEALTH AND SAFETY Faced with a dynamic environment characterized

The Company's commitment to environmental

by rapid changes in production configurations

sustainability was developed throughout the

following the acquisition of Walterscheid, the

year through various energy efficiency and

Comer Industries Group has maintained high

environmental

impact

standards in protecting the health and safety of

Specifically,

machine

people in the workplace. In fact, in 2022 the value

program continued with the introduction of

of the employee injury frequency indicator across

production units that are more efficient in their

the new consolidated scope stood at 2.2, the

use of energy and lubricants. At the same time,

same as in 2021. Of note is the performance of the

to optimize energy consumption, the Group

Bangalore plant, which recorded no injuries for the

benefited from the digital monitoring systems

third consecutive year.

installed in previous periods, enabling real-time

the

reduction

projects.

inventory

renewal

analysis of trends and peaks and implementing Despite the uncertain albeit improving health

timely corrective actions where necessary.

situation for much of the year, the Group

These actions resulted in energy savings of more

continued to implement the company's Protocol

than 15% throughout Comer Industries. Moreover, in

for countering the spread of the Covid-19 virus,

2022 the Group significantly increased the share

updating it based on the changing environment

of electricity from renewable sources used to

and government regulations, and always ensuring

power its manufacturing processes by extending

a safe environment for all workers.

the supply of green energy to the Reggiolo and

With regard to the commitment to the well-being

Pegognaga plants.

of its people, the company's policy on teleworking

In 2022 the Group contributed to the development

was made official after the emergency, with

of sustainable mobility through the inclusion

important benefits in terms of work-life balance

of hybrid and electric models in the company

and commuting. In parallel, a human rights risk

fleet and through the development of products

assessment was conducted, involving internal

for electric vehicles that are innovative in terms

offices and the supply chain, laying the groundwork

of

for the subsequent definition and dissemination of

Furthermore, areas equipped with dual charging

an Integrated Human Rights Policy, also published

stations for electric cars were set up within the

on the company website.

company's perimeter .

weight

reduction,

lubrication,

and

noise.

No critical issues have emerged during the year In continuity with the process started in previous years, the Group has initiated a road map on a two-year horizon for the integration of the Health and Safety Management System according to the ISO 45001:2018 standard in all locations in the new scope ensuring uniform management of all health and safety aspects.

with relation to the environment.

Comer Industries

33

34

2022 Annual Report

1.9

INTERGROUP RELATIONS AND DEALINGS WITH RELATED PARTIES. REVENUE FROM CONTRACTS WITH CUSTOMERS

PURCHASE AND OTHER OPERATING COSTS

FINANCIAL INCOME

FINANCIAL EXPENSES

ROYALTIES

DIVIDENDS

Comer Industries S.p.A.

91,261

109,189

6,711

212

6,934

0

Comer Industries Components S.r.l.

106,132

7,280

0

39

0

1,900

52

109,883

49

0

0

3,358

Comer Industries (Shaoxing) Co. Ltd.

5,944

0

20

47

0

6,916

Comer Industries (Jiaxing) Co. Ltd.

41,696

4,201

210

19

(6,048)

0

Comer Industries UK Ltd.

253

2,951

0

0

0

295

Comer Industries GmbH

0

0

0

0

0

0

Comer Industries India Pvt Ltd.

1,283

721

0

0

(886)

0

Comer Industries do Brasil EIRELI

107

12,609

0

0

0

0

WPG German Holdco GmbH

0

0

710

2,095

0

10,436

WPG UK Holdco Ltd.

0

0

497

194

0

0

WPG US Holdco LLC.

0

0

0

4,421

0

0

Off-Highway Powertrain Services Germany GmbH

1,983

3,047

0

470

0

0

Walterscheid GmbH

13,618

5,270

251

98

0

(9,566)

Walterscheid Getriebe GmbH

183

2,788

0

226

0

(870)

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda.

0

647

0

403

0

0

Walterscheid Powertrain (China) Co. Ltd.

274

1,086

0

0

0

0

Powertrain Services France SAS

1,448

1,224

0

0

0

0

Walterscheid Monguelfo S.p.A.

2,824

2,142

0

14

0

0

Walterscheid Russia LLC.

0

79

0

0

0

0

Powertrain Services UK Limited

0

0

446

679

0

0

Powertrain Services (UK Newco) Ltd.

0

0

0

41

0

0

Walterscheid Inc. Woodridge

759

2,054

11

0

0

0

Powertrain Rockford Inc.

1,084

3,370

124

70

0

0

0

359

0

0

0

0

268,900

268,900

9,028

9,028

0

12,469

COMPANY (THOUSAND EUROS)

Comer Industries INC

Walterscheid Cardan GmbH Total

Comer Industries

COMPANY (THOUSAND EUROS)

35

TRADE RECEIVABLES

TRADE PAYABLES

OTHER RECEIVABLES

OTHER PAYABLES

FINANCIAL RECEIVABLES

FINANCIAL PAYABLES

Comer Industries S.p.A.

27,541

25,109

4

0

159,206

15,342

Comer Industries Components S.r.l.

12,480

2,936

0

0

0

6,100

Comer Industries INC

137

26,507

0

0

7,008

0

Comer Industries (Shaoxing) Co. Ltd.

1,780

0

0

0

0

4,533

Comer Industries (Jiaxing) Co. Ltd.

19,563

2,401

0

0

12,867

0

Comer Industries UK Ltd.

34

556

0

0

0

0

Comer Industries GmbH

100

0

0

0

0

0

Comer Industries India Pvt Ltd.

691

1,018

0

4

0

0

Comer Industries do Brasil EIRELI

22

3,716

0

0

0

0

WPG German Holdco GmbH

0

0

0

30

18,473

113,925

WPG UK Holdco Ltd.

0

0

0

0

19,412

19,270

WPG US Holdco LLC.

0

0

0

0

0

127,918

Off-Highway Powertrain Services Germany GmbH

1,752

2,320

5

53

5,913

12,898

Walterscheid GmbH

14,422

2,014

614

0

65,404

382

Walterscheid Getriebe GmbH

165

2,120

0

318

160

4,764

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda.

0

6,392

0

0

0

7,373

Walterscheid Powertrain (China) Co. Ltd.

532

3,005

0

0

0

0

Powertrain Services France SAS

57

1,419

0

0

11,615

0

Walterscheid Monguelfo S.p.A.

3,483

156

0

0

0

812

Walterscheid Russia LLC.

0

29

0

0

0

0

Powertrain Services UK Limited

0

0

0

0

8,938

25,612

Powertrain Services (UK Newco) Ltd.

0

0

0

0

0

1,565

Walterscheid Inc. Woodridge

2,929

6,660

0

272

5,945

0

Powertrain Rockford Inc.

3,996

2,881

0

0

32,890

4,387

11

455

54

0

0

2,950

89,694

89,694

677

677

347,831

347,831

Walterscheid Cardan GmbH Total

36

2022 Annual Report

The Group has dealings with subsidiaries and other related parties at market conditions considered as normal in the respective reference market, taking account of the characteristics of the assets and the services provided.

• Loan to WPG German Holdco GmbH from Comer Industries S.p.A. for 39.8 million euros; • Loan to WPG US Holdco LLC from Comer Industries S.p.A. for 91.8 million euros; • Loan to WPG UK Holdco Ltd from Comer Industries

Transactions between Comer Industries S.p.A.

S.p.A. in the amount of 18.2 million euros (arising

and its consolidated subsidiaries, which are

from the merger by incorporation of WPG Holdco

entities related to the Company, are eliminated in the consolidated financial statements, and in compliance with IAS 24.

The "Financial income" heading refers mainly to

B.V.); • Loan to Comer Industries Components s.r.l. in the amount of 6.1 million euros.

interest accruing in the period on intra-group

DEALINGS WITH PARENT COMPANIES

loans. At December 31, 2022 the following intra-

The Group does not have commercial dealings

group loans were outstanding:

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

• Loan to Comer Industries (Shaoxing) Co. Ltd. by Comer Industries (Jiaxing) Co. Ltd. for 4.5 million

RELATIONS WITH OTHER RELATED PARTIES

euros;

It is disclosed that the "Other operating costs"

• Loan to Comer Industries S.p.A. from Comer

heading

includes

professional

consultancy

Industries (Jiaxing) Co. Ltd. for 8.0 million euros;

provided by three Directors of the parent company

• Loan to Comer Industries S.p.A. from WPG German

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

Holdco GmbH in the amount of 10.9 million euros (resulting from the merger by incorporation of WPG Holdco B.V.); • Financial payable to Comer Industries S.p.A. from Powertrain Services UK in the amount of 18 million euros (arising from the sale of the investment in the subsidiary Walterscheid Monguelfo S.p.A.);

Comer Industries

37

1.10

THE COMPANIES IN THE GROUP As of December 31, 2022, the Group is organized in

The key figures of the consolidated subsidiary

a structure with Comer Industries S.p.A. at the top,

companies are summarized in the table below:

possessing directly or indirectly 100% of 26 Italian and foreign subsidiaries that constitute the scope of consolidation.

COUNTRY

% OF CONTROL

MAIN ACTIVITY

SHARE CAPITAL DECEMBER 31, 2022

REVENUES DECEMBER 31, 2022 EUROS/MN*

NET EQUITY DECEMBER 31, 2022 EUROS/MN*

HEADCOUNT DECEMBER 31, 2022

Comer Industries S.p.A.

Italy

Parent company

Design, production and sales

€ 18,487,339

427.46

301.34

947

Comer Industries Components S.r.l.

Italy

100%

Production and sales

€ 7,125,000

104.04

16.35

272

Walterscheid Monguelfo S.p.A.

Italy

100%

Design, production and sales

€ 2,580,000

53.63

20.80

196

Evoluzione Comer S.r.l.

Italy

100%

Inactive

€ 10,000

-

0.10

0

Comer GmbH

Germany

100%

Sales

€ 205,000

n.a.

0.33

0

WPG German Holdco GmbH

Germany

100%

Holding company

€ 10,495,000

-

0.12

0

Off-Highway Powertrain Services Germany GmbH

Germany

100%

Sales and aftersales service

€ 2,050,000

112.46

25.58

358

Walterscheid GmbH

Germany

100%

Design, production and sales

€ 17,895,000

194.60

82.60

779

Walterscheid Getriebe GmbH

Germany

100%

Design, production and sales

€ 26,000

64.29

7.87

261

Walterscheid Cardan GmbH

Germany

100%

Production and sales

€ 25,000

8.24

- 0.16

31

Comer Industries UK Ltd.

UK

100%

Sales

£ 265,000

3.08

0.98

4

WPG UK Holdco Ltd.

UK

100%

Holding company

£ 3,093,000

-

3.39

0

Powertrain Services UK Limited

UK

100%

Holding company

£ 14,231,000

-

4.26

3

Powertrain Services (UK Newco) Ltd.

UK

100%

Holding company

£0

-

- 0.61

0

Powertrain Services France SAS

France

100%

Sales and aftersales service

€ 2,139,000

16.14

11.44

28

Walterscheid Russia LLC.

Russia

100%

Sales

RUB 10,000

1.04

1.40

3

COMPANY

Comer Industries INC

United States

100%

Sales

$ 13,281,000

118.00

26.30

30

WPG US Holdco LLC.

United States

100%

Holding company

$ 58,546,000

-

14.87

0

Walterscheid Inc. Woodridge

United States

100%

Production and sales

$ 2,000,000

68.56

27.16

199

Powertrain Rockford Inc.

United States

100%

Design, production and sales

$ 1,000

86.28

61.39

170

Comer Industries do Brasil EIRELI

Brazil

100%

Sales

BRL 6,112,000

18.35

8.23

8

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda.

Brazil

100%

Production and sales

BRL 8,410,000

17.31

0.19

96

Comer Industries (Jiaxing) Co Ltd.

China

100%

Production and sales

€ 11,700,000

185.38

70.29

241

Comer Industries (Shaoxing) Co Ltd.

China

100%

Production and sales

€ 6,720,000

5.94

5.17

2

Walterscheid Powertrain (China) Co. Ltd.

China

100%

Production and sales

CNY 162,618,000

30.30

18.34

113

Comer Industries India Pvt Ltd

India

100%

Production and sales

INR 145,090,000

20.61

8.50

67

* Values derived from individual financial statements translated into euros at the consolidation exchange rate.

The share capital of all Group companies is fully paid up.

38

2022 Annual Report

1.11

NON-FINANCIAL INFORMATION Launched in 2019, Comer Industries Group's Our

implementation obligations of Directive 2014/95/

Bright Impact sustainable development program

EU (Non-Financial Reporting Directive), it decided

is based on a commitment to contribute to the

to communicate its sustainability performance

achievement of the Sustainable Development

in a structured manner through the publication

Goals, an integral part of the United Nations 2030

of the Non-Financial Statement in accordance

Agenda and a point of reference for building a

with the provisions of Italian Legislative Decree

strategy based on sustainability.

no. 254/2016 and the Global Reporting Initiative

In

declaring

Industries

this

Group

commitment, has

chosen

the the

Comer path

of

Sustainability Standards.

The

2022

Non-Financial

Statement

contains

progressive integration of programs and actions

information relating to environmental, social,

within its business model, applying criteria based

personnel-related, respect for human rights, and

on sustainability to its strategic choices and

the fight against corruption, useful to ensure an

operations. Moreover, in order to give greater

understanding of the activities carried out by the

prominence to its commitment to a sustainable

Comer Industries Group, its performance, its results,

business model, while not falling under the

and their impact.

Comer Industries

39

40

2022 Annual Report

1.12

SIGNIFICANT EVENTS AFTER THE CLOSE OF THE YEAR AND BUSINESS OUTLOOK At the end of December 2022 the governing bodies

This transaction, which resulted in a cash-out at

of the subsidiary Comer Industries Components

the closing date of 50 million euros, is perfectly in

S.r.l. (hereinafter also "Acquirer") and the subsidiary

keeping with the Group's strategy to enter the fast-

Walterscheid Monguelfo S.p.A (hereinafter also

growing market for electric vehicle engines and

"Acquiree") drew up and approved the merger

transmissions, expanding the range of products

plan to be implemented through the incorporation

offered and further strengthening its leadership

of Walterscheid Monguelfo S.p.A into Comer

position in the market.

Industries Components S.r.l. pursuant to Art. 2501-

The consideration paid for the transaction at

ter of the Italian Civil Code. The Acquirer and the

closing was financed by resorting to a medium- to

Acquiree are both wholly and directly owned by

long-term bank loan provided by Crédit Agricole

the sole shareholder Comer Industries S.p.A. In

Italia of the same amount. The remaining 4 million

March 2023 the deed of merger by incorporation

euros will be paid in four interest-free annual

of Walterscheid Monguelfo S.p.A. into Comer

installments starting from the 12th month following

Components S.r.l. will be signed, with legal effect as

the closing date. The newly acquired e-comer S.r.l.

of April 1, 2023 and with accounting and tax effects

will be consolidated from January 1, 2023.

backdated to January 1, 2023.

The

current

macroeconomic

landscape

is

characterized by a high degree of uncertainty As previously discussed in the section on significant

resulting from several factors such as i) the

events in FY 2022, the prospective merger is justified

unfolding of the Russia-Ukraine conflict and

by the need to simplify the Group's corporate

consequent rise in energy prices; ii) tightening of

structure following the acquisition of WPG.

restrictive monetary policies by major Central Banks to slow the rise in inflation; and iii) a global

On January 9, 2023, the parent company Comer

economic slowdown with consequent impact on

Industries S.p.A. concluded the acquisition of

demand.

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

Taking

on December 27, 2022 absorbed the business units

environment, management is focused on the

of Benevelli Electric Powertrain Solutions and Sitem

Group's main strategic development directives: i)

Electric Motors, for an Enterprise Value of 54 million

integration of WPG and streamlining the business

euros plus a variable component (so-called earn

model in order to optimize synergies; ii) development

out).

of e-comer, the Group's newly established green-

E-comer S.r.l. is the new division dedicated to the

tech division dedicated to the electric vehicle

market of engines and transmissions for electric

engine and transmission market; and iii) continued

vehicles, a sector that the Comer Industries Group

R&D in order to always offer innovative solutions

intends to focus its growth and innovation in by

and be at the forefront of the market.

expanding the range of products offered to the

No other specific significant events occurred after

market.

the close of the year.

into

account

the

current

changing

Comer Industries

41

1.13

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

be entitled to the dividend.

Meeting to approve, in conjunction with the first coupon, the distribution of a dividend of 0.75

The remainder of the profit for the year of the

euros for each share held at the date of approval.

parent company Comer Industries S.p.A. will be

The dividend will be payable next May 17, 2023

allocated to the Legal Reserve in the amount of

(payment date) with an ex-date of May 15, 2023. In

281,422.40 euros, as envisaged by Art. 2430 of the

this case, all those registered as Comer Industries

Italian Civil Code, 4,199,664.90 euros to the Reserve

S.p.A. shareholders at the end of the accounting

for unrealized exchange gains, and the remainder

day of May 16, 2023 (the so-called record date) will

to the Extraordinary Reserve.

Reggiolo, March 21, 2023 For the Board of Directors

Matteo Storchi President & CEO

44

2022 Annual Report

CONSOLIDATED BALANCE SHEET ASSETS (THOUSAND EUROS)

NOTES

DECEMBER 31, 2022

DECEMBER 31, 2021 RESTATED

Tangible fixed assets

2.6.1

211,514

204,735

Intangible fixed assets

2.6.2

357,272

372,070 (*)

Equity investments in other companies

2.6.3

1,523

1,279

Tax assets and deferred tax assets

2.6.4

35,695

42,132 (*)

Other long-term receivables

2.6.5

1,407

829

607,411

621,045

Non-current assets

Total Current assets Inventories

2.6.6

244,906

225,628 (*)

Trade receivables

2.6.7

207,961

196,130

Other short-term receivables

2.6.7

8,250

8,896

Current tax assets

2.6.8

29,327

17,264

0

202

Other short-term financial receivables Short-term derivative financial instruments

2.6.9

0

601

Cash and cash equivalents

2.6.9

151,328

85,744

Total

641,772

534,464

TOTAL ASSETS

1,249,183

1,155,509

(*) Values restated in accordance with IFRS 3 to retrospectively take into account the effects resulting from the final measurement at fair value of WPG's assets and liabilities as of the acquisition date (Purchase Price Allocation), with respect to the provisional accounting carried out as of December 31, 2021. For more details see Section 2.5.1

Comer Industries

EQUITY AND LIABILITIES (THOUSAND EUROS)

45

DECEMBER 31, 2022

DECEMBER 31, 2021 RESTATED

Issued capital

18,487

18,487

Share premium reserve

187,881

187,881

Other reserves

54,495

32,071

Accumulated profit (loss)

183,021

107,173

- Retained earnings

92,305

67,744

- Net profit

90,716

39,429

443,884

345,612

-

-

2.6.10

443,884

345,612

Long-term loans

2.6.9

190,669

177,743

Other long-term financial payables

2.6.9

48,048

47,592

Deferred tax liabilities

2.6.11

62,371

62,524 (*)

Post-employment benefits

2.6.12

118,416

157,800

Other long-term payables

2.6.14

19,697

9,768

Long-term provisions

2.6.13

14,563

9,845

453,764

465,273

NOTES

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

198,630

218,611

Other short-term payables

2.6.14

34,758

40,375

Tax liabilities

2.6.15

23,173

21,816

Short-term loans

2.6.9

51,580

29,203

Short-term derivative financial instruments

2.6.9

234

114

Post-employment benefits short-term

2.6.12

5,792

7,379

Other short-term financial payables

2.6.9

9,744

8,739

Short-term provisions

2.6.13

27,624

18,387

Total

351,535

344,624

TOTAL LIABILITIES

1,249,183

1,155,509

46

2022 Annual Report

CONSOLIDATED INCOME STATEMENT CONSOLIDATED INCOME STATEMENT (THOUSAND EUROS)

NOTES

DECEMBER 31, 2022

DECEMBER 31, 2021

Sales revenues

2.6.17

1,237,576

598,110

Other operating revenues

2.6.18

6,929

5,778

19,279

45,090

(724,009)

(424,237)

Change in inventories of semi-finished and finished goods and WIP Purchase costs Personnel costs

2.6.19

(243,644)

(86,810)

Other operating costs

2.6.21

(114,369)

(59,710)

(1,754)

(627)

2.6.1 – 2.6.2

(52,491)

(20,764)

EBIT

2.6.22

127,517

56,831

Net financial income / (charges)

2.6.23

(2,588)

(1,996)

124,929

54,835

(34,213)

(15,406)

90,716

39,429

-

-

90,716

39,429

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/(loss) per share (in euros)

2.6.25

3.16

1.37

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (THOUSAND EUROS)

NOTES

DECEMBER 31, 2022

DECEMBER 31, 2021

90,716

39,429

Net (loss)/gain on cash flow hedges

(963)

(743)

of which fiscal effect

231

178

Translation differences on foreign financial statements

(3,866)

6,333

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

(4,598)

5,768

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

39,320

(316)

of which fiscal effect

2.6.12

(12,828)

50

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

26,492

(265)

Total comprehensive profit/(loss) net of taxes

112,610

44,932

Comer Industries

47

48

STATEMENT OF CASH FLOWS (THOUSAND EUROS)

2022 Annual Report

NOTES

DECEMBER 31, 2022

DECEMBER 31, 2021

90,716

39,429

2,588

1,996

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

17,942

2,390

Depreciation of tangible fixed assets

2.6.1

34,549

13,823

0

0

Impairment losses on assets Other non-monetary items

2,194

Capital gains from asset disposals

0

0

Net change in provisions for risks and charges

2.6.13

13,954

8,649

Net change in post-employment benefits

2.6.12

(1,651)

(58)

Net change in deferred taxes

(6,544)

(3,007)

Operating cash flow before changes in working capital

151,554

65,415

Change in inventories

2.6.6

(19,278)

(45,090)

Change in trade receivables

2.6.7

(11,832)

(33,098)

Change in trade payables

2.6.14

(19,981)

75,528

Change in other receivables (including current tax receivables)

(11,416)

(2,083)

Change in other payables (including current tax payables)

(4,260)

7,630

Net change in other non-current assets and liabilities

9,350

(799)

Cash flow generated (absorbed) by changes in working capital

(57,417)

2,087

Cash flow generated (absorbed) by operations

94,137

67,502

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

2.6.2

(3,144)

(1,788)

(Investments)/Divestments in tangible fixed assets

2.6.1

(30,735)

(19,150)

Comer Industries

49

STATEMENT OF CASH FLOWS (THOUSAND EUROS)

NOTES

DECEMBER 31, 2022

DECEMBER 31, 2021

(Investments)/Divestments in equity investments

2.6.3

(244)

0

(34,123)

(20,938)

60,014

46,564

Net cash flow from investment/disinvestment activities Free cash flow Net increases from business acquisition net of cash acquired

2.5.1

Business combinations

(190,514) 0

(190,514)

Net change in current financial assets

803

411

Net change in non-current financial assets

0

CASH FLOW FROM FINANCING ACTIVITIES:

Change in current payables due to banks and other lenders

2.6.9

12,910

20,505

Change in non-current payables due to banks and other lenders

2.6.9

13,382

174,866

(2,588)

(1,996)

Financial income and expenses and valuation exchange differences Dividends paid

2.6.10

(14,339)

(10,205)

Change in equity for translation reserve and other impacts

2.6.10

(4,598)

7,936

Cash flow generated (absorbed) by financial operations

5,570

191,516

Increase (Decrease) in cash and cash equivalents

65,584

47,567

Net cash and cash equivalents at the start of the year

85,744

38,177

151,328

85,744

65,584

47,567

Cash and cash equivalents at the end of the year Change in cash and cash equivalents

2.6.9

50

2022 Annual Report

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (THOUSAND EUROS)

SHARE CAPITAL

SHARE PREMIUM RESERVE

Net equity at January 01, 2021

13,109

27,944

STOCK GRANT RESERVE

LEGAL RESERVE

5,987

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: Result of comprehensive income/(loss) statement Distribution of dividends Allocation of 2020 profit Capital increase resulting from the exercise of warrants

239

Share premium reserves from exercise of warrants Effects of the acquisition: capital increase

2,151 5,139

Share premium reserves arising from the acquisition

157,787

Notional stock grant cost Net equity at December 31, 2021

2,194 18,487

187,881

8,181

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: Result of comprehensive income/(loss) statement Distribution of dividends Allocation of 2021 profit

794

Effects of the acquisition: capital increase Share premium reserves arising from the acquisition Net equity at December 31, 2022

18,487

187,881

8,181

3,416

Comer Industries

51

OTHER RESERVES EXTRAORD. RESERVE

TRANSLATION RESERVE

19,225

(2,256)

IAS 19 RESERVE

F.T.A. RESERVE

C.F.H. RESERVE

CONSOLIDATION RESERVE

(5,923)

910

3,543

RETAINED EARNINGS

PROFIT/ LOSS FOR THE YEAR

TOTAL NET EQUITY

56,448

21,765

143,375

39,429

39,429

(265)

(265)

6,333

6,333 (565)

6,333

(565)

(565)

(265)

39,429

(10,205)

(10,205) 21,765

44,932

(21,765) 239 2,151 5,139 157,787 2,194

19,225

4,078

(5,923)

345

3,543

26,227

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)

(14,339)

19,225

212

26,227

(5,923)

(387)

3,543

112,611

38,635

(39,429)

92,305

90,716

443,884

52

2022 Annual Report

2.1

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

Pursuant to Art. 2497 bis of the Italian Civil Code,

with headquarters and administrative offices in

note that Comer Industries S.p.A. is subject to

Via Magellano 27 in Reggiolo (RE), tax code and

direction and coordination by Eagles Oak S.r.l., with

registration in the Company Register no. 07210440157

registered office in Modena, Viale del Sagittario 5,

with resolved Share Capital of 18,487,338.60 euros

Share Capital 2,000,000 euros entirely paid-up, tax

fully subscribed and paid up as of December 31,

code and registration in the Company Register no.

2022, divided into 28,678,090 ordinary shares.

03699500363, which has control over it, as holder of the absolute majority of its shares.

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

The consolidated financial statements as of

systems and mechatronics solutions for power

December 31, 2022, drafted on a going concern

transmissions. It operates in the agricultural

basis, with respect to which there are no aspects

machinery, construction and forestry equipment,

of uncertainty, were approved by the Board of

energy and industrial sectors.

Directors on March 21, 2023.

The Group consists of 26 companies, including 12

At the date of approval of these financial statements

production companies located in Italy, Germany,

the share capital amounts to 18,487,338.60 euros

the United States, China and India, 8 trading

subdivided into 28,678,090 shares.

companies operating in Germany, France, the UK, Russia, China, Brazil and the United States, and 6 holding companies.

Comer Industries

53

2.2

SCOPE OF CONSOLIDATION Below are the main changes that took place in 2022.

impact on the consolidated financial statements.

In 2022 the process of closing subsidiaries GKN

On July 28, 2022 the deed of merger of the subsidiary

Ohio Inc. and Walterscheid A/S began as they were

WPG Holdco B.V. (non-operating parent company

no longer operational.

of the newly acquired Walterscheid Group) into Comer Industries S.p.A. was signed, which had

At the end of 2022, Evoluzione Comer S.r.l. was

already been resolved by the Shareholders'

established with share capital of 10,000 euros,

Meeting of April 27, 2022.

The transaction took

wholly owned by parent company Comer Industries

effect on August 2, 2022 upon the registration of the

S.p.A. The company will close its first fiscal year on

deed of Merger with the relevant company register

December 31, 2023 and is currently not operational,

of Reggio Emilia. This transaction did not have any

therefore it was excluded from consolidation as of

accounting impact on the consolidated financial

December 31, 2022.

statements.

Walterscheid Russia LLC has been inactive since On December 6, 2022, the parent company Comer

April 2022.

Industries S.p.A. purchased the shares representing 100% of the share capital of Walterscheid Monguelfo

At the reference date of these consolidated

S.p.A. owned by the subsidiary Powertrain Services

financial statements the parent company Comer

UK Ltd at a price of 19 million euros. Moreover, this

Industries S.p.A. is held by Eagles OAK S.r.l.

transaction did not have any accounting impact on the consolidated financial statements.

With regards to the summary of economic-asset/ liability relations with related parties of the Group,

On December 16, 2022, 0.001% of Walterscheid Brasil

reference should be made to the details in the

Industria de Equipamentos Agricolas LTDA. was

Management Report.

transferred from Powertrain Services (UK NEWCO) Limited to Powertrain Services UK Limited, which

The scope of consolidation as at December 31, 2022

becomes the sole shareholder, at a value of R$1.00 (1

includes the Parent company and the following

Real). This transaction did not have any accounting

subsidiaries:

54

2022 Annual Report

ENTITY NAME

REGISTERED OFFICE

CURRENCY

SHARE CAPITAL AUTHORIZED

% OF CONTROL

PARENT COMPANY

Comer Industries S.p.A.

Reggiolo (RE) – Italy

KEUR

18,487

Holding company

Eagles Oak S.r.l.

Comer GmbH

Pfullendorf – Germany

KEUR

205

100

Comer Industries S.p.A.

Comer Industries Inc.

Charlotte, NC – U.S.A.

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 – P.R.C.

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.

Comer Industries India Pvt Ltd.

Bangalore – India

KINR

145,090

95

Comer Industries S.p.A.

5

Comer Ind. Com. S.r.l.

Jiaxing – P.R.C.

KEUR

11,700

65.8

Comer Industries (Shaoxing) Co. Ltd.

34.2

Comer Industries S.p.A.

Monguelfo - Tesido, Italy

KEUR

2,580

100

Comer Industries S.p.A.

Evoluzione Comer S.r.l.

Reggiolo (RE) – Italy

KEUR

10

100

Comer Industries S.p.A.

WPG German Holdco GmbH

Lohmar, Germany

KEUR

10,495

100

Walterscheid Powertrain Holdco B.V.

WPG UK Holdco Ltd.

Leek, United Kingdom

KGBP

3,093

100

Walterscheid Powertrain Holdco B.V.

WPG US Holdco LLC.

Rockford, IL, USA

KUSD

58,546

100

Walterscheid Powertrain Holdco B.V.

Off-Highway Powertrain Services Germany GmbH

Lohmar, Germany

KEUR

2,050

89.9

Walterscheid GmbH

10.1

WPG German Holdco GmbH

Walterscheid GmbH

Lohmar, Germany

KEUR

17,895

100

Walterscheid Powertrain Holdco B.V.

Walterscheid Getriebe GmbH

Sohland, Germany

KEUR

26

Walterscheid Brasil Industria de Equipamentos Agricolas Ltda.

Cachoeirinha, Brazil

KBRL

Walterscheid Powertrain (China) Co. Ltd.

Jiangsu, China

Powertrain Services France SAS

Comer Industries U.K. Ltd.

Comer Industries (Jiaxing) Co. Ltd. Walterscheid Monguelfo S.p.A.

89.84

Walterscheid GmbH

10.16

WPG German Holdco GmbH

8,410

100

Powertrain Services UK Limited

KCNY

162,618

100

WPG UK Holdco Ltd.

Chanteloup-les-Vignes, France

KEUR

2,139

100

Off-Highway Powertrain Services Germany GmbH

Moscow, Russian Federation

KRUB

10

Powertrain Services UK Limited

Leek, United Kingdom

KGBP

Powertrain Services (UK Newco) Ltd.

Leek, United Kingdom

Walterscheid Inc. Woodridge Powertrain Rockford Inc.

Walterscheid Russia LLC

Walterscheid Cardan GmbH Matsui Walterscheid Ltd.

50

WPG UK Holdco Ltd.

50

Powertrain Services UK Limited

14,231

100

WPG UK Holdco Ltd.

KGBP

-

100

Powertrain Services UK Limited

Woodridge, IL, USA

KUSD

2,000

100

WPG US Holdco LLC.

Rockford, IL, USA

KUSD

1

100

WPG US Holdco LLC.

Hohe Börde OT Irxleben, Germany

KEUR

25

100

Walterscheid GmbH

Koga, Japan

KJPY

-

40

Walterscheid GmbH

Comer Industries

55

2.3

ACCOUNTING STANDARDS ADOPTED 2.3.1 EXPRESSION OF COMPLIANCE WITH IFRS

• current assets include the balances of assets realizable within 1 year; • non-current liabilities include payables falling due after more than 1 year, including financial

The consolidated financial statements of Comer

debts, provisions for liabilities and charges and

Industries have been drawn up in compliance with

liabilities for employee benefits and deferred tax

the International Financial Reporting Standards

liabilities;

(IFRS), issued by the International Accounting

• current liabilities include payables falling due

Standards Board ("IASB") and approved by the

within 1 year, including the short-term portion of

European Union and in force at the balance sheet

medium-long-term loans and of provisions for

date. The notes to the consolidated financial

liabilities and charges and liabilities for employee

statements have been integrated, on a voluntary

benefits.

basis, with the additional information required

The consolidated income statement is presented

by Consob and by the provisions issued by it in

according to a "costs by nature" classification.

implementation of Art. 9 of Italian Leg. Dec. 38/2005

The cash flow statement has been drawn up on

(resolutions 15519 and 15520) of July 27, 2006 and

the basis of the indirect method and is presented

the DEM/6064293 communication of July 28, 2006,

in compliance with IAS 7, classifying cash flows

pursuant to Art. 78 of the Issuers’ Regulations,

between operating, investment and financing

the EC document of November 2003 and, where

activities.

applicable, the Italian Civil Code. "IFRS" also refers to

It should be noted that, with reference to Consob

the International Accounting Standards ("IAS") still

resolution no. 15519 of July 27, 2006 and the

in force, as well as all the interpretive documents

DEM/6064293 communication of July 28, 2006,

issued by the IFRS Interpretations Committee,

details of significant dealings with related parties

previously

called

Financial

are disclosed on the financial statements on a

Reporting

Interpretations

("IFRIC")

voluntary basis in order to provide more complete

the

International Committee

and before that, the Standing Interpretations

information.

Committee ("SIC").

2.3.2 CONTENTS AND FORM OF THE CONSOLIDATED FINANCIAL STATEMENTS

2.3.3 RELEVANT ACCOUNTING STANDARDS The

Comer

Industries

International

S.p.A.

Accounting

Group

adopted

Standards

and

The unit of currency used is the Euro, and all

International Financial Reporting Standards as

values are expressed in thousands of euro unless

of 2007, with the transition date to IFRS effective

otherwise indicated.

January 1, 2006.

The presentation layout for the consolidated

Continuing these principles, the consolidated

balance sheet makes a distinction between current

financial statements as of December 31, 2022,

and non-current assets and liabilities, in which:

were therefore drawn up according to the IAS / IFRS

• non-current assets include balances of assets

adopted by the European Union.

realizable after more than one year and include

The

intangible, tangible and financial assets and

presented in thousands of euros. The financial

consolidated

financial

statements

are

deferred tax assets;

statements are prepared on a cost basis, except

56

2022 Annual Report

for financial instruments that are measured at fair

(ii)

value.

Related companies are those companies over which

The preparation of the financial statements in

the Group has considerable influence but in which it

accordance

Financial

does not exercise any control over the management.

Reporting Standards) requires judgments, estimates

The consolidated financial statements include the

and assumptions that have an effect on the assets,

accrued share of the profits and losses of related

liabilities, income and expenses. The actual results

companies, measured using the equity method from

may differ from the results obtained using these

the date on which any such significant influence on

estimates.

operation started until its termination. Similar to that

The

with

accounting

IFRS

(International

Related companies

applied

described above for the subsidiaries, the acquisition

consistently in all Group companies and for all

policies

have

been

of related companies is also recorded under the

periods presented.

purchase method; in this case, any acquisition cost in excess of the Group's share of the fair value of net

2.3.4 PRINCIPLES OF CONSOLIDATION (i)

assets acquired is included in the value of the equity investment.

Subsidiaries

(iii) Transactions eliminated in the consolidation

Companies are defined subsidiaries when the parent

process

company has the authority, directly or indirectly, to

Intercompany balances and profits and losses

conduct business so as to obtain benefits from such

resulting

activities. In defining control, consideration is also

eliminated in the consolidated financial statements.

given to potential voting rights that can currently be

Profits arising from intercompany transactions with

freely exercised or converted. These potential voting

associated companies are eliminated as part of

rights are not taken into account for the purposes of

the valuation of the equity investment using the

the consolidation process upon allocation to minority

equity method. Intercompany losses are eliminated

shareholders of the results of operations and the

only if there is evidence that these were realized in

share of capital and reserves they are entitled to.

detriment to third parties.

The

financial

statements

of

subsidiaries

are

from

intercompany

transactions

are

gains control and de-consolidated from the date

2.3.5 SECTORAL INFORMATION

that this controlling interest ceases.

Industry-related information is given with reference

The global integration method is adopted for the

to sectors of activity. The information includes both

consolidation of subsidiaries, involving undertaking

costs directly attributable and costs allocated

the total amount of assets and liabilities and all

according to reasonable assumptions. General and

costs and revenues, irrespective of the extent of

administrative costs, ICT and HR services, fees for

the Group's interest. The book value of consolidated

directors, statutory auditors and Group management

equity investments is therefore offset against any

departments, as well as costs relating to the global

relative capital and reserves. The shares of capital

sourcing area (organized according to purchasing

and reserves and profits pertaining to minority

group of product category) have been allocated to

shareholders are shown separately under a specific

sectors on the basis of turnover.

capital and reserve item and on a separate line of

The Group operates in the following sectors:

the consolidated income statement. Intercompany

-

dividends distributed by foreign subsidiaries are

increasers, speed reducers, bevel gearboxes, PTO

eliminated in the consolidation process using

driveshafts, wheel drives and axles for agricultural

the proportionate approach provided for by IAS

use, especially manufacturers of combine harvesters

21, since, even in the case of distribution of profit

and tractors, haymaking, harvesting, irrigation and

reserves generated in previous years, the investor’s

mixing, and land preparation and working machines.

percentage equity ownership is not considered to be

-

affected.

modular planetary drives, travel and hoist drives, slew

consolidated from the date on which the Group

Agricultural sector. This mainly consists of speed

Industrial sector. This includes products such as

drives and rigid and steering axles for construction

Comer Industries

57

and forestry machinery manufacturers, from the

Products for the wind power and renewable energy

shipbuilding to the airport building and mining

sector as well as for driving the augers of biogas

industries. Components for municipalities, for the

machines.

extraction industry and material handling sectors.

58

2022 Annual Report

2.3.6 TREATMENT OF FOREIGN CURRENCY TRANSACTIONS (i)

Foreign currency transaction

(ii) Conversion of financial statements drawn up in foreign currencies The assets and liabilities of companies based in non-EU countries, including adjustments arising

The functional currency and reporting currency

from the consolidation process, relating to goodwill

adopted by Comer Industries Group is the Euro.

and fair value adjustments arising from the

Transactions in foreign currencies are converted

acquisition of a non-EU company, are converted at

into Euro on the basis of the exchange rate at

the exchange rate prevailing on the closing date

the transaction date. The monetary assets and

of the balance sheet. Revenues and costs of these

liabilities are converted at the exchange rate on the

companies are converted at the average exchange

balance sheet date. Any exchange rate differences

rate for the period, closest to the exchange rates on

arising out of conversion are recognized in the

the dates on which the individual transactions took

income statement. Non-monetary assets and

place. Foreign exchange differences arising from

liabilities measured at historical cost are converted

the conversion process are recorded directly in a

at the exchange rate at the transaction date. The

special provision under capital and reserve called

monetary assets and liabilities measured under

the conversion reserve.

fair value are converted into euro at the exchange

Below is the table with the exchange rates applied

rate on the date the fair value was determined.

for the conversion of financial statements:

EXCHANGE RATES SPOT EXCHANGE RATES

AVERAGE ANNUAL EXCHANGE RATES

DECEMBER 31, 2022

DECEMBER 31, 2021

2022

2021

€/GBP

0.887

0.840

0.853

0.860

€/USD

1.067

1.133

1.053

1.183

€/CNY

7.358

7.195

7.079

7.628

€/BRL

5.639

6.310

5.440

6.378

€/INR

88.171

84.229

82.686

87.439

€/CHF

0.985

1.033

1.005

1.081

€/CZK

24.116

24.858

24.566

25.640

€/DKK

7.437

7.436

7.440

7.437

€/JPY

140.660

130.380

138.027

129.877

€/NOK

10.514

9.989

10.103

10.163

€/RUB

115.484

85.300

88.397

87.153

€/SEK

11.122

10.250

10.630

10.147

€/HUF

400.870

369.190

391.287

358.516

€/PLN

4.681

4.597

4.686

4.565

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

Comer Industries

2.3.7 ACQUISITIONS

59

Business combinations are recognized according

2.3.8 PROPERTY, PLANT AND EQUIPMENT

to the acquisition method.

(i)

According to this method, the consideration

Property, plant and equipment are measured at

transferred in a business combination is measured

historical cost and are reported net of depreciation

at fair value, calculated as the sum of the fair

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

values of the assets transferred and the liabilities

para. 2.3.10). The cost of fixed assets manufactured

assumed by the Group at the acquisition date. Any

internally includes materials, direct labor and a

transaction costs are recognized in the income

share of indirect manufacturing costs. The cost

statement at the time they are incurred.

of fixed assets, whether purchased externally or

Goodwill is determined as the excess of the sum

manufactured internally, includes incidental costs

of the consideration transferred in the business

directly chargeable and necessary to operate

combination, the value of shareholders' equity

the asset and, when relevant and subject to

pertaining to minority interests, and the fair value

contractual obligations, the current value of the

of any equity investment previously held in the

estimated cost for the dismantling and removal of

acquired company over the fair value of the net

fixed assets.

assets acquired and liabilities assumed at the

Financial charges relating to specific loans used

acquisition date. If the value of the net assets

for the acquisition of tangible fixed assets are

acquired and liabilities assumed at the date of

charged to the income statement on an accruals

acquisition exceeds the sum of the consideration

basis. According to the provisions of IAS 20, any

transferred, the value of shareholders' equity

capital grants obtained as a result of investment

pertaining to minority interests, and the fair value

incentives granted by the public administration are

of any equity investment previously held in the

deducted from the historical cost of any related

acquired company, this excess is immediately

capitalized fixed assets, when put into operation.

recognized in the income statement as income

No fixed assets are available for sale.

Owned fixed assets

from the transaction concluded. The portions of shareholders' equity of non-controlling interests at

(ii) Fixed assets under finance leases

the date of acquisition may be measured at fair

Assets held by the Group under leasing contracts,

value or at the pro-rata value of the net assets

including operating leases, in accordance with

recognized for the acquired company. The choice

the IFRS 16 standard in force since January 1, 2019,

of valuation method is made on a transaction-by-

are recognized as assets with a balancing entry

transaction basis. If the initial values of a business

in financial payables. In particular, assets are

combination are incomplete at the balance sheet

recognized at a value equal to the current value of

date that the business combination occurred

future payments at the date of signing the contract,

on, in its consolidated financial statements the

discounted using the applicable incremental

Group reports the provisional values of the items

borrowing rate for each contract.

for which recognition cannot be completed.

These provisional values are adjusted during the

(iii) Subsequent costs

measurement period to reflect new information

The costs of replacing certain parts of the fixed

gathered about facts and circumstances existing

assets are capitalized when it is probable that

at the acquisition date which, if known, would have

these costs will result in future economic benefits

affected the value of the assets and liabilities

and can be reliably measured. All other costs,

recognized at that date.

including the costs of maintenance and repairs, are attributed to the income statement as incurred.

60

2022 Annual Report

(iv) Depreciation Depreciation is charged to the income statement on a straight-line basis and on the estimated useful life of fixed assets and their residual possible use. Land is not depreciated. The estimated useful life results in the following depreciation rates by homogeneous category: 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%

The estimated useful life of assets is revised annually and any changes in rates, where necessary, are made prospectively.

For assets purchased and/or that became operational during the year, depreciation is calculated using the rates set out above, but adapted pro-rata temporis to any such set-up date.

2.3.9 OTHER INTANGIBLE FIXED ASSETS (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 capitalized when: o these costs can be reliably determined; o these products, versions or processes are technically and commercially feasible; o the expected volumes and realization values ​indicate that the costs incurred for development will generate future economic benefits; o the resources to complete the development project exist.

The capitalized cost includes the materials and the mere cost of direct labor. Other development costs are charged to the income statement when incurred. The capitalized development costs are measured at cost, net of accumulated amortization, (see next point (iv)) and impairment losses (see para. 2.3.10) (ii) Other intangible fixed assets Other intangible fixed assets, which all have finite useful lives, are measured at cost and are recorded net of accumulated amortization, (see next point iv) and impairment losses (see para. 2.3.10) The use of software licenses is amortized over their period of use (3-5 years).

The costs incurred internally for the creation of trademarks or goodwill are charged to the income statement when incurred. (iii) Subsequent costs Subsequent costs incurred for intangible fixed assets are capitalized only if they increase the future financial benefits of the specific capitalized fixed asset, otherwise they are charged in the income statement as incurred. Incidental financing costs

Comer Industries

61

(iv) Amortization Amortization is charged to the income statement on a straight-line basis based on the estimated useful life of the capitalized fixed assets. The estimated useful lives are as follows: Patents and trademarks

5 years

Development costs

3-5 years

Licensing of software

5 years

The useful life is reviewed annually and any changes

reported at the time and risks specific to the asset.

in rates, where necessary, are made prospectively.

If the book value is higher that the realizable value,

2.3.10 IMPAIRMENT OF ASSETS

the assets or cash-generating unit to which they belong are written down to reflect the realizable value. These impairment losses are recognized in

The book values of the assets, except for stocks,

the income statement.

financial assets regulated by IFRS 9 and deferred

If the conditions that led to the impairment cease

tax assets, are subject to review at the balance

to exist, the assets previously written down are

sheet date, in order to determine if any impairment

proportionally reversed until reaching at most the

indicators exist. If the assessment reveals the

value that the assets would have had in the absence

presence

estimated

of previous impairments, net of amortization

realizable value of the asset is calculated in

calculated on the historical cost. Restorations of

the manner indicated below. Please note that

value are recognized in the income statement.

the estimated realizable value of goodwill and

The goodwill value previously written down can

intangible fixed assets not yet used is estimated

never be reinstated.

of

such

indicators,

the

at least once per year, or more frequently if events indicate the possibility of a loss of value. use (as defined by IFRS 16), suffers an impairment

2.3.11 EQUITY INVESTMENTS

if it is not able to recover the book value at which

Equity investments in associates are measured

the asset is recorded in the financial statements

using the equity method, as required by IAS 28.

through the use or sale thereof. The purpose of

If

the verification (impairment test) provided by IAS

determined using the above method is detected,

36, is to ensure that tangible and intangible fixed

the equity investment is written down accordingly.

A tangible or intangible asset, including rights of

impairment

with

respect

to

the

amount

assets are not carried at a value higher than their realizable value, consisting of the net realizable

financial flows that are expected to be generated

2.3.12 CASH AND CASH EQUIVALENTS

by the asset or by the cash generating unit to

Cash and cash equivalents include cash on hand,

which the asset belongs. Expected cash flows are

bank and postal deposits and securities with an

discounted using a pre-tax discount that reflects

original maturity of less than three months.

value or value in use, whichever is higher.

The value in use is the current value of future

the current market estimate of the cost of money

62

2022 Annual Report

2.3.13 CURRENT FINANCIAL ASSETS, RECEIVABLES AND OTHER ASSETS

subsidiaries, associates and joint ventures), not held for trading purposes, can be classified in the FVOCI category. This choice can be made instrument by instrument and requires changes

Financial assets, as provided for by the new

in the fair value of these instruments to be

IFRS 9 – "Financial Instruments: recognition and

recognized in the OCI and not to be reversed

measurement" (as revised in July 2014) which

to the income statement either on sale or on

replaces IAS 39 - "Financial Instruments: Recognition

impairment of the same. Only dividends from

and Measurement", are classified, on the basis

these instruments will be recognized in the income

of the Group's management methods and the

statement. The fair value of financial assets is

related contractual cash flow characteristics, in

determined on the basis of quoted bid prices or

the following categories:

through the use of financial models. The fair value

• Amortized cost: financial assets held exclusively

of unlisted financial assets is estimated using

for the purpose of collecting the contractual cash

specific valuation techniques adapted to the

flows are classified in the Amortized cost category.

specific situation. Valuations are regularly carried

They are valued using the amortized cost method,

out in order to verify whether there is objective

recording the income in the income statement

evidence that a financial asset or group of assets

using the effective interest rate method;

may be impaired. If there is objective evidence,

• Fair value through other comprehensive income ("FVOCI"): financial assets whose contractual

the impairment loss is recognized as a cost in the income statement for the period.

cash flows are represented exclusively by the payment of principal and interest and which

of the same are classified in the FVOCI category.

2.3.14 DERIVATIVE FINANCIAL INSTRUMENTS

They are measured at fair value. Interest income,

The Group holds derivative financial instruments

exchange rate gains/losses, impairment losses

subscribed for hedging purposes; however, in

(and related write-backs) of financial assets

cases in which the derivative financial instruments

classified in the category FVOCI, are recorded in

do not meet all the conditions applicable to hedge

the income statement; other changes in the fair

accounting as per IFRS 9, the changes in fair value

value of assets are recorded among the other

of these instruments are recorded in the income

components of OCI. When these financial assets

statement as financial charges and/or income.

are sold or reclassified to other categories, due to

Therefore, the derivative financial instruments are

a change in the business model, the cumulative

recorded in compliance with the hedge accounting

gains or losses recognized in OCI are reclassified

regulations when:

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

to the income statement; • Fair value through profit or loss ("FVTPL"): the

o the hedge ratio is formally designated and documented at the beginning of the hedge;

FVTPL category is residual in nature by collecting

o it is presumed that the hedge is highly effective;

financial assets that do not fall under the Amortized

o the effectiveness can be reliably measured

cost and FVOCI categories, such as financial

and the hedge itself is highly effective during the

assets purchased for trading or derivatives, or

designated periods.

assets designated as FVTPL by management at

The fair value of derivative financial instruments

the date of initial recognition. They are measured

against exchange risks (forward) is their market

at fair value. Gains or losses resulting from this

value on the balance sheet date, which coincides

measurement are recognized in the income

with the discounted market value of the forward.

statement;

The accounting method for derivative financial

• FVOCI for equity instruments: financial assets

instruments varies depending on whether or not

represented by equity instruments of other

the conditions and requirements of IAS 9 are met.

entities (i.e. investments in companies other than

Specifically:

Comer Industries

63

In the case of a derivative financial instrument

2.3.15 INVENTORIES

for which the hedging ratio to variations in cash

Stocks are recorded, in each homogeneous

flows generated by an asset or liability or a future

category, at the purchase cost, including incidental

transaction (underlying hedged item) believed

and production costs and the corresponding net

to be highly probable and that could affect the

realizable or market value at year-end, whichever

income statement is formally documented, the

is lowest. The cost is determined according to the

effective portion, originating from the adjustment

weighted average cost method.

of the derivative financial instrument to the fair

As far as goods manufactured by the Company

value, is charged directly to a reserve under capital

(semi-finished, work in progress and finished goods)

and reserves. When the underlying hedged cash

are concerned, the cost of production includes

flow occurs, any such reserve is removed from

all directly chargeable costs (raw materials,

capital and reserves and assigned to the income

consumables, energy utilities, direct labor), and the

statement as operating charges and revenues,

cost of manufacturing (indirect labor, depreciation,

while any non-effective portion or overhedging,

etc.) in the amount reasonably attributable to the

portion is immediately allocated to the income

products.

statement as financial charges and/or income.

Any stock impairment risks are hedged by the

When a hedging instrument reaches maturity, is

relevant stock depreciation allowance recorded as

sold or exercised, or the company changes the

an adjustment to the corresponding assets item.

relationship with the underlying hedged item, and

Amounts thus obtained do not differ significantly

the forecast transaction, though it has yet to take

from current costs on the closing date of accounts.

(i)

Cash flow hedges

place, is still considered likely, the resulting profits or losses originating from the adjustment of the

statement when the transaction takes place as

2.3.16 INTEREST-BEARING FINANCIAL PAYABLES

described above. If the probability of the underlying

All interest-bearing financial liabilities are valued

transaction occurring is no longer likely, the related

as per the amortized cost method; the difference

profits or losses from the derivative contract,

between this value and the settlement value is

originally recorded under capital and reserves, are

charged to the income statement during the term

immediately charged to the income statement.

of the loan.

financial instrument to the fair value remain under capital and reserves and are charged to income

(ii)

Hedges of monetary assets and liabilities (Fair value

hedges)

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

that

could

affect

the

income

statement, profits and losses related to changes in fair value of the derivative financial instruments are immediately recorded in the income statement.

Likewise, the profits and losses relating to the hedged item modify the carrying amount of any such item and are recorded in the profit and loss account.

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2022 Annual Report

2.3.17 LIABILITIES FOR EMPLOYEE BENEFITS (i)

Defined contribution plans

plan is determined using the projected unit credit method. The companies' net obligation is calculated separately for each plan by estimating the amount of future benefit that employees

The Group participates in public or privately defined

have accrued in the current and prior periods,

contribution pension schemes on a mandatory,

discounting that amount and deducting the fair

contractual or voluntary basis. The payment

value of any plan assets.

of contributions fulfills the Group's obligation

Measurements, including actuarial gains and losses

towards its employees. The contributions are costs

and the return on plan assets (excluding interest),

recognized in the period in which they are due.

are recognized immediately in the balance sheet, with a corresponding debit or credit to retained

(ii)

Defined benefit plans for employees for Italian

earnings, through comprehensive income for the

companies

period they occur in. Remeasurements are not

The defined benefit plans for employees are

reclassified to earnings in subsequent periods.

payable on or after the termination of the period

Costs for past services are recognized in earnings

of employment in the Group. These mainly include

on the date of the plan amendment or reduction.

the severance indemnities which are calculated

Interest is calculated by applying the discount rate

separately for each plan using actuarial methods

to the defined benefit liability.

to estimate the amount of future benefit accrued

The companies' obligation with respect to other

to employees during the year and in previous years.

long-term employee benefits is equal to the future

The resulting benefit is discounted and recorded

benefit that employees have received in exchange

net of the fair value of any related assets. The

for their current work and in prior periods. This

interest rate used to calculate the present value of

benefit is discounted to determine its present value.

the obligation was determined in accordance with para. 78 IAS 19, of the Iboxx Corporate A index with To this end, the yield for a duration comparable to

2.3.18 INCOME TAXES

the overall duration of the worker's covered by the

Income taxes recognized in the income statement

assessment was chosen.

include current and deferred taxes. Income taxes

In the case of increases in plan benefits, the

are generally charged to the income statement,

portion of the increase relating to the previous

unless they relate to items recognized directly

employment period is charged to the income

under capital and reserves. In this case, the income

statement on a straight line basis over the period

taxes are also charged directly to capital and

in which the related rights will be acquired. If the

reserves, as a variation to the amount recorded.

rights are acquired immediately, the increase is

Current taxes are taxes calculated by applying the

immediately recorded in the income statement.

tax rate in effect on the balance sheet date and

The expected present value of benefits payable

adjustments to prior year taxes to taxable income.

in the future related to the length of employment

Deferred taxes are calculated using the so-called

in the current period, conceptually similar to

liability method on timing differences between the

the accrued share of the employee severance

amount of assets and liabilities recorded in the

indemnity (TFR), is classified under personnel costs

financial statements and the corresponding values

in the income statement while the implicit financial

recognized for tax purposes. Deferred taxes are

charges are reclassified in the applicable financial

calculated according to the designated method

section.

of reversal of timing differences, on the basis of

(iii) Employee defined benefit plans for German

realistic estimates of financial charges resulting

and American subsidiaries

from the application of the tax legislation in force

Certain group companies offer defined benefit,

at the date in which the financial statements were

post-employment, and other long-term pension

prepared.

plans. The cost of providing benefits under the

Deferred tax assets are recognized only if it is

duration 7-10 determined at the date of valuation.

Comer Industries

65

probable that sufficient taxable income will be

o possible, but not probable, obligations arising

generated in future years to realize these deferred

from past events, the existence of which will

taxes.

be confirmed only by the occurrence or non-

2.3.19 PROVISIONS FOR RISKS AND CHARGES

occurrence of one or more uncertain future events not wholly under the control of the company; o present obligations arising from past events the amount of which cannot be reasonably

Provisions for risks and charges relate to costs and

estimated or the fulfillment of which will probably

charges of a specific nature and certain or likely

not be burdensome.

existence, the amount and date of occurrence of which are not known at the close of the period.

Provisions are recognized when: o the existence of a pending liability arising from a past event is probable; o it is likely that the obligation will be burdensome; o the amount of the obligation can be estimated

2.3.20 CURRENT FINANCIAL LIABILITIES, TRADE PAYABLES AND OTHER PAYABLES

reliably.

Trade payables and other payables, which mature

Provisions are recorded at the value reflecting the

within the normal commercial terms, are not

best estimate of the amount the company would

discounted and are recognized at cost (identified

reasonably pay to settle the obligation or transfer it

by nominal value) reflecting their settlement value.

to third parties at the end of the period.

Current financial liabilities include the short-

The costs that the Group expects to incur to carry

term portion of borrowings, including payables

out restructuring plans are recorded in the financial

for cash advances and other financial liabilities.

year the Company formally defines the plan and

Financial liabilities are measured at amortized cost

the interested parties have a valid expectation that

by recording charges in the income statement

the restructuring will happen.

using the effective interest rate method, with

The provisions are periodically updated to reflect

the exception of financial liabilities purchased

any variations in estimates of costs and realization

for trading purposes or derivatives, or those

times. Revisions of the provision estimates are

designated as FVTPL by management at the date

charged in the same income statement item that

of initial recognition, which instead are measured at

had previously held the provision.

fair value through profit or loss (see para. Financial

The notes to the consolidated financial statements

derivatives).

illustrate the contingent liabilities consisting of:

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2022 Annual Report

2.3.21 DE-RECOGNITION OF FINANCIAL ASSETS AND LIABILITIES FINANCIAL ASSETS

the transferred asset is valued at the lower of the initial book value of the asset and the maximum amount that the Group could be required to pay.

In cases where the residual involvement takes the form of an option issued and/or purchased on the

A financial asset is derecognized when:

transferred asset (including options settled in cash

• the rights to receive cash flows from the asset

or similar), the extent of the Group's involvement

are extinguished;

corresponds to the amount of the transferred

• the Group retains the right to receive cash flows

asset that the Group may repurchase; however,

from the asset, but has assumed the contractual

in the case of a put option issued on an asset

obligation to pay them in full and without delay

measured at fair value (including options settled in

to a third party;

cash or similar), the extent of the Group's residual

• the Group has transferred the right to receive

involvement is limited to the lower of the fair value

cash flows from the asset and has transferred

of the transferred asset and the option exercise

substantially all risks and rewards of ownership

price.

of the financial asset or has neither transferred

Financial liabilities

nor retained all risks and rewards of ownership

A financial liability is derecognized when the

of the asset, but has transferred control of the

obligation underlying the liability is extinguished,

asset.

canceled or discharged.

In cases where the Group has transferred the

In cases where an existing financial liability is

rights to receive cash flows from an asset and has

replaced by another from the same lender, under

neither transferred nor retained all the risks and

substantially different conditions, or the conditions

benefits or has not lost control over it, the asset is

of an existing liability are substantially changed, this

recognized in the balance sheet to the extent of

exchange or change is treated as a de-recognition

its residual involvement in the asset. The residual

of the original liability and the recognition of a new

involvement that takes the form of a guarantee on

liability, with any differences between the carrying

Comer Industries

67

In the case of changes to financial liabilities

2.3.23 COSTS

defined as non-substantial, the financial liability

Costs are recognized when they relate to goods

is not derecognized and the value of the debt is

and services purchased and/or received during the

recalculated keeping the original effective interest

period or by systematic allocation of an expense

rate unchanged, discounting the modified cash

from which future benefits are spread over time.

amounts recognized in the income statement.

flows, thus generating a positive or negative effect on the income statement.

2.3.22 REVENUE

2.3.24 FINANCIAL INCOME AND CHARGES

(i) Sales revenues

The financial income and charges are reported on

Revenues are recognized to the extent in which

an accrual basis based on the interest accrued to

it is probable that the economic benefits will be

the net value of the related financial assets and

achieved by the Group and the related amount can

liabilities by applying the effective interest rate.

be reliably determined, regardless of the date of

The financial income and charges include gains

payment. Revenues are measured at the fair value

and losses on exchange and gains and losses on

of the amount received or to be received, taking

derivative instruments that must be recognized

into account the contractually defined payment

in the income statement if they fail to meet the

terms and excluding taxes and duties.

requirements to be considered hedging (see

Revenue from the sale of goods is recognized

para.2.3.13 and following).

when the Company has transferred control of the goods to the purchaser. Revenue is measured at the fair value of the consideration received or to be received, net of returns and rebates, commercial discounts and volume reductions.

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2022 Annual Report

2.3.25 SHARE-BASED PAYMENTS TRANSACTIONS WITH PAYMENT SETTLED WITH CAPITAL INSTRUMENTS

If the conditions of the plan are modified, the minimum cost to be recognized is the fair value at the grant date in the absence of the modification, assuming that the original conditions of the plan are satisfied. In addition, a cost is recognized for each change that results in an increase in the

The incentive plan based on the Parent Company's

total fair value of the payment plan, or is otherwise

ordinary shares (Stock Grant Plan), reserved for

favorable to employees; this cost is measured with

CEO of Comer Industries S.p.A., was terminated.

reference to the date of the change. When a plan

The cost of transactions settled with capital

is derecognized by the entity or the counterparty,

instruments is determined by the fair value on the

any remaining element of the plan's fair value is

date on which the assignment is made, using an

immediately expensed to the income statement.

appropriate valuation method.

Such cost, corresponding to the increase in costs over the period in which the conditions

2.3.26 USE OF ESTIMATES

relating to the achievement of objectives and/or

The preparation of the consolidated financial

the provision of the service are met. The cumulative

statements requires that the Directors apply

costs recognized for these transactions at the

accounting standards and methods that, in

end of each financial year up to the vesting date

certain circumstances, are based on difficult and

are commensurate with the expiry of the vesting

subjective valuations and estimates based on

period and the best estimate of the number of

past experience and assumptions which are from

equity instruments that will actually accrue.

time to time considered reasonable and realistic

shareholders' equity, is recorded under personnel

depending on the relative circumstances. The Service or performance conditions are not taken

application of these estimates and assumptions

into account when the fair value of the plan at

affect the amounts reported in the financial

the grant date is defined. However, the likelihood

statements, as well as the information provided.

that these conditions are met in defining the best

The final values of the accounting items for which

estimate of the number of equity instruments that

these estimates and assumptions were used

will be accrued is considered. Market conditions

may differ from those reported in the financial

are reflected in the fair value at the grant date.

statements due to uncertainties regarding the

Any other condition linked to the plan, which does

assumptions and the conditions on which the

not involve a service obligation, is not considered

estimates are based. Estimates and assumptions

as a maturity condition. Non-accruing conditions

are reviewed periodically and the effects of each

are reflected in the fair value of the plan and imply

variation recognized in the period in which the

the immediate recognition of the cost of the plan,

estimate is revised if the revision affects only the

unless there are also service or performance

current period, or even in subsequent periods if the

conditions.

revision affects the current period and those in the future. The financial statement items which, more

No cost is recognized for rights that do not

than others, require a greater degree of discretion

accrue because the performance and/or service

by the Directors when making estimates and for

conditions are not met. When the rights include a

which a change underlying the assumptions used

market condition or a non-vesting condition, they

could have a significant impact on the financial

are treated as if they had accrued regardless of

statements are: deferred taxes, allowance for

whether or not the market conditions or other non-

doubtful accounts, provisions for product warranty

vesting conditions to which they are subject are

risks, other provisions for legal risks, and the

met, it being understood that all other performance

inventory write-down provision for semi-finished

and/or service conditions must be met.

and finished products.

Comer Industries

69

The provision reflects the risks calculated on

2.3.27 PUBLIC GRANTS

specific positions both in relation to insolvency

Public grants are recognized when there is

proceedings in progress and cases for which

reasonable certainty that they will be received and

legal action has been taken, or simply receivables

that all the conditions referring to them have been

outstanding for more than 360 days, as well as the

satisfied. Grants relating to components of cost

estimate of expected losses on receivables, also

are recognized as revenues, but are systematically

in the absence of events that already indicate

spread over a number of financial periods so as

clear risks of loss, as provided for by international

to match the recognition of the costs they are

accounting standard IFRS 9.

intended to offset. A grant relating to an asset is

ALLOWANCE FOR DOUBTFUL ACCOUNTS.

PROVISION RISKS.

FOR

PRODUCT

WARRANTY

recognized as a revenue in constant amounts along the expected useful life of the asset in question.

In the event the Group receives a non-monetary

The provision includes amounts for both specific

grant, the asset and the relative grant are

risks, estimated on the basis of specific technical

recognized at nominal value and released in the

analyses, and generic risks. The latter are calculated

income statement in constant amounts along the

on the production values of single plants, using

expected useful life of the asset in question.

the average warranty costs as a percentage of

Italian Law 124 of 2017 provides for compulsory

turnover in the last 5 years applied to the turnover

disclosure of subsidies, grants, appointments or

of the period. The warranties granted are in line

economic advantages received from the Public

with legal provisions.

Administration or, in any case, involving public

PROVISION FOR LEGAL RISKS.

resources.

From a systematic reading of the regulation, the

These refer to specific cases assigned to legal

facilitating measures aimed at all companies

attorneys with relation to ongoing litigation.

have not been included (by way of example but

INVENTORY WRITE-DOWN PROVISION.

not limited to tax facilitating measures such as hyper-amortization, super-amortization, tax credit

A generic amount has been set aside, calculated

for research and development and facilitating

by applying a specific percentage write-down for

measures such as the Wages Guarantee Fund)

bands of rotation indices in a systematic fashion,

as these advantages are not aimed at a specific

and a specific amount (especially for foreign

company.

subsidiaries) relating to the real possibility of

During the year, the Group Italian companies only

disposal of the products.

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

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2022 Annual Report

2.3.28 ACCOUNTING STANDARDS IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED FROM JANUARY 1, 2022 The

following

IFRS

accounting

IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS ENDORSED BY THE EUROPEAN UNION, NOT YET MANDATORY AND NOT EARLY ADOPTED BY THE GROUP AS OF DECEMBER 31, 2022

standards,

amendments and interpretations have been

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

applied for the first time by the Group starting from

Insurance Contracts, which is intended to replace

January 1, 2022:

IFRS 4 - Insurance Contracts.

The objective of the new standard is to ensure

On May 14, 2020, the IASB published the following

that an entity provides relevant information that

amendments:

faithfully represents the rights and obligations

o Amendments to IFRS 3 Business Combinations:

arising from insurance contracts issued. The

the amendments are intended to update the

IASB has developed the standard to eliminate

reference in IFRS 3 to the Conceptual Framework

inconsistencies

in the revised version, without resulting in any

accounting policies by providing a single principle-

changes to the provisions of the standard.

based framework for all types of insurance

o Amendments to IAS 16 Property, Plant and

and

weaknesses

in

existing

contracts, including reinsurance contracts that an

Equipment: the purpose of the amendments is not

insurer holds.

to allow the deduction from the cost of property,

The new standard also includes presentation and

plant and equipment of the amount received from

disclosure requirements to improve comparability

the sale of goods produced during the testing

between entities in this segment.

phase of the asset itself. These sales revenues and

The new standard measures an insurance contract

related costs will therefore be recognized in the

on the basis of a General Model or a simplified

income statement.

version of it, called the Premium Allocation

o Amendments to IAS 37 Provisions, Contingent

Approach ("PAA").

Liabilities and Contingent Assets: the amendment

The main characteristics of the General Model are:

clarifies that all ‘costs that relate directly to the

o the estimates and assumptions of future cash

contract’ must be considered when estimating whether a contract is onerous. Accordingly, the

flows are always current; o the measurement reflects the time value of

assessment of whether a contract is onerous

money;

includes not only incremental costs (such as the

o

cost of direct material used in the work), but also all costs that the company cannot avoid because it has entered into the contract (such as the portion of the depreciation of machinery used to fulfill the contract). o Annual Improvements 2018-2020: amendments

the

estimates

make

extensive

use

of

information observable on the market; o there is a current and explicit measurement of risk; o the expected profit is deferred and aggregated into groups of insurance contracts at the time of initial recognition; and,

were made to IFRS 1 First-time Adoption of

o the expected profit is recognized in the

International Financial Reporting Standards, IFRS

contractual hedging period taking into account

9 Financial Instruments, IAS 41 Agriculture, and

the adjustments resulting from changes in the

Illustrative Examples of IFRS 16 Leases.

cash flow assumptions relating to each group of contracts.

The adoption of these amendments has not had

The PAA method involves measuring the liability

any effect on the Group’s consolidated financial

for the residual coverage of a group of insurance

statements.

contracts provided that, at the time of initial recognition, the entity expects the liability to

Comer Industries

71

reasonably represent an approximation of the

about accounting policies so as to provide more

General Model. Contracts with a coverage period

useful information to investors and other primary

of one year or less are automatically eligible for the

users of financial statements as well as to help

PAA method. The simplifications arising from the

companies distinguish changes in accounting

application of the PAA method do not apply to the

estimates from changes in accounting policy. The

measurement of liabilities for outstanding claims,

modification will be applied from January 1, 2023,

which are measured using the General Model.

however, early application is permitted.

However, it is not necessary to discount those cash

The Directors do not expect a significant effect in

flows if it is expected that the balance to be paid or

the consolidated financial statements of the Group

collected will occur within one year of the date on

from the adoption of these amendments.

which the claim occurred.

An entity shall apply the new standard to

On May 7, 2021, the IASB published an amendment

insurance contracts issued, including reinsurance

called "Amendments to IAS 12 Income Taxes:

contracts issued, reinsurance contracts held and

Deferred Tax related to Assets and Liabilities arising

also investment contracts with a discretionary

from a Single Transaction". The document clarifies

participation feature (DPF).

how deferred taxes should be accounted for on certain transactions that can generate assets and

The standard applies from January 1, 2023 but early

liabilities of equal amounts, such as leases and

application is permitted only for entities that apply

decommissioning obligations. The modification

IFRS 9 - Financial Instruments and IFRS 15 - Revenue

will be applied from January 1, 2023, however, early

from Contracts with Customers.

application is permitted.

The Directors do not expect a significant effect

The Directors do not expect a significant effect in

in the Group’s consolidated financial statements

the consolidated financial statements of the Group

from the adoption of this standard.

from the adoption of this amendment.

On December 9, 2021, the IASB published an

ACCOUNTING STANDARDS, AMENDMENTS AND IFRS INTERPRETATIONS NOT YET APPROVED BY THE EUROPEAN UNION

amendment called "Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information". The amendment is a transition option relating to comparative

At the reference date of this document, the

information on financial assets presented at the

competent bodies of the European Union have not

date of initial application of IFRS 17. The amendment

yet completed the approval process necessary for

aims to avoid temporary accounting misalignments

the adoption of the amendments and principles

between financial assets and insurance contract

described below.

liabilities, and therefore to improve the usefulness of comparative information for readers of financial

On January 23, 2020, the IASB published an

statements. The modifications will be applied from

amendment

January 1, 2023 along with the application of IFRS 17.

Presentation of Financial Statements: Classification

The Directors do not expect a significant effect in

of Liabilities as Current or Non-current" and on

the consolidated financial statements of the Group

October 31, 2022 published an amendment entitled

from the adoption of this amendment.

"Amendments to IAS 1 Presentation of Financial

called

"Amendments

to

IAS

1

Statements: Non-Current Liabilities with Covenants."

On February 12, 2021, the IASB published two

The purpose of the documents is to clarify how to

amendments called "Disclosure of Accounting

classify debt and other short-term or long-term

Policies—Amendments to IAS 1 and IFRS Practice

liabilities. The modification applies from January 1,

Statement

2024, however early application is permitted.

2"

and

"Definition

of

Accounting The

The Directors do not expect a significant effect in

amendments are intended to improve disclosure

the consolidated financial statements of the Group

Estimates—Amendments

to

IAS

8".

72

2022 Annual Report

from the adoption of this amendment.

and-leaseback transaction so as not to recognize income or loss that relates to the retained right of

On September 22, 2022, the IASB published an

use. The modification will be applied from January 1,

amendment called "Amendments to IFRS 16

2024, however, early application is permitted.

Leases: Lease Liability in a Sale and Leaseback."

The Directors do not expect a significant effect in

The

the consolidated financial statements of the Group

document

requires

the

seller-lessee

to

measure the lease liability arising from a sale-

from the adoption of this amendment.

Comer Industries

73

74

2022 Annual Report

2.4

FINANCIAL AND NON-FINANCIAL RISK MANAGEMENT The Group's business is exposed to various financial

the implementation of this activity is foreseen in the

risks: market risk (including the exchange rate risk

short term, the Group did not consider the signing

and interest rate risk), credit risk, liquidity risk, price

of hedging contracts necessary for this purpose.

and cash flow risk and other non-financial risks such as the risk related to climate change and

(ii) Interest rate risk

cybersecurity. The risk management program aims

The interest rate risk is derived from medium-long

to minimize any negative impacts on the Group's

term loans at variable rates. The Group's current

financial performance and is planned by a central

policy is to use floating rate loans, monitoring the

function of the Parent Company that coordinates

curve of interest rates.

all operating companies, reporting directly to the Chief Executive Officer.

Comer

Industries

uses

(b) Credit risk derivative

financial

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

instruments to hedge exposure to currency risk.

evaluation of their credit capacity and therefore

The Group does not use financial derivatives for

within pre-set credit limits. Historically, the Group

speculative purposes.

has not suffered significant losses on receivables.

(a) Market risk

(c) Liquidity risk

(i) Exchange rate risk

Prudent management of liquidity risk implies

The Group operates internationally and is exposed

maintaining sufficient available cash and cash

to exchange rate risk due to exposure mainly to the

equivalents and sufficient credit lines from which

US dollar and the Chinese yuan, and secondarily

to draw. Due to the dynamic nature of the business,

to the Brazilian real and the British pound. The

the Group's policy is to have revolving standby

exchange rate risks are generated by forecasts of

credit facilities that can be utilized at short notice.

future commercial transactions and recognized assets or liabilities.

(d) Price and cash flow risk

In order to manage the exchange rate risk

The Group is subject to the risk of fluctuations in

generated by forecasts of future commercial

metal prices, in particular aluminum, copper and

transactions and recognized assets or liabilities

steel. The Group's policy is to cover the risk where

denominated in a currency other than the

possible, through commitments from suppliers

functional currency of the Group (euro), the Group

in the medium term, with stockpiling policies

companies use repurchase agreements (forward),

when prices are at their lowest and agreements

under the coordination of the central Treasury.

with customers. Furthermore, the Group has no

The Group's policy is to hedge a portion of future

significant interest-generating activities towards

currency transactions that are expected to occur

third parties and the revenues and the related cash

in the next 12 months. Where necessary, derivative

inflows are, therefore, independent of changes in

contracts previously stipulated are renewed at

interest rates.

maturity in relation to the evolution of the business.

For the operational management of the above

The Group is exposed to the conversion risk of

risks, please refer to paragraph 2.6.16.

net assets of subsidiaries in North America, Great Britain, China, India and Brazil. Considering the

(e) Climate change risk

strategic importance of the subsidiaries for which

With the goal of contributing to the fight against

Comer Industries

75

climate change and in keeping with European-

Over the next few years, following the gradual

level guidelines on reporting, Comer Industries has

refinement of the methodology and the completion

embarked on a path of gradual approximation

of the mapping of the new consolidated scope, the

and implementation of the Recommendations of

framework of risks and opportunities will be linked

the TCFD - Task Force on Climate-related Financial

to an assessment of financial impacts based on

Disclosures, aimed at developing a harmonized

the models proposed by the relevant guidelines.

climate change risk mitigation plan in the Integrated Management System.

Compared

with

the

(f) Information technology risk qualitative

assessment

The Group considers the operational continuity of

developed in the previous fiscal year, in 2022 the

its IT systems to be of great importance and has

spectrum of analysis was further broadened and

implemented risk mitigation measures in this regard

evolved, incorporating instances from the new

aimed at ensuring network connectivity, data

operating locations in light of the acquisition of

availability, and data security, while at the same

Walterscheid Powertrain Group, and evolving in

time guaranteeing the processing of personal data

the direction of a scenario study and a medium-

in compliance with the European GDPR regulation

to long-term quantitative analysis.

and the national regulations applicable in individual

The application of the methodology also led to

EU member states. To this end, it has implemented

an assessment of strategy resilience based on

and continues to optimize an Information Security

a representation of risks and opportunities. The

Management System (ISMS).

design of the climate change risk analysis followed the guidelines of the Carbon Disclosure Project (according to the CDP Technical Note on the TCFD Disclosing in line with the TCFD's recommendations) and was developed in line with internal procedures and integrated into the Company's existing risk assessment model.

76

2022 Annual Report

2.5

CORPORATE INFORMATION AND INDUSTRY-RELATED INFORMATION 2.5.1 RESTATEMENT OF THE PURCHASE PRICE ALLOCATION RESULTING FROM THE ACQUISITION OF WPG

• Assets subject to final allocation as early as December 31, 2021: o The value of inventory, the fair value of which was higher than the book value by 3,004 thousand euros, generating deferred tax liabilities of 822 thousand euros.

On December 1, 2021, Comer Industries S.p.A.

• Assets with provisional allocation as of December

acquired 100% of WPG Holdco B.V., parent company

31, 2021 and subject to final allocation in the

of Walterscheid Powertrain Group, a leader in

current fiscal year 2022:

the Off-Highway sector (components and drive

o The provision for inventory write-down, the value

systems for the agricultural, industrial, construction,

of which was understated by 4,192 thousand euros,

and mining equipment sectors), as reported in the

generating deferred tax assets of 1,146 thousand

section "Significant events in the 2021 financial

euros (following the final allocation, the amount

year" in the consolidated financial statements as

was increased by other 3,000 thousand euros and

of December 31, 2021.

the deferred tax assets by 821 thousand euros compared to the provisional allocation as of

With regard to the acquisition made, note that the

December 31, 2021).

Group made use of the option provided by IFRS 3, which allows the final allocation of the acquisition

• Assets not valued for the purpose of provisional

price to the assets, liabilities, and intangible assets

allocation as of December 31, 2021 and subject to

not recognized in WPG's financial statements,

final allocation in the current fiscal year 2022:

within the limits of their fair value, within 12 months

o The list of customers, the fair value of which

from the date of acquisition.

is equal to 110,839 thousand euros, generating

Therefore, as of December 31, 2021 this allocation

deferred tax liabilities of 30,314 thousand euros.

was defined as provisional, and based on it there

o The technologies, the fair value of which is equal

was a "provisional" goodwill of 154,967 thousand

to 65,589 thousand euros, generating deferred tax

euros, increasing the value already present in the

liabilities of 17,938 thousand euros.

financial statements of the acquired group by

o The trademarks, the fair value of which is 33,999

108,786 thousand euros, thus bringing the amount

thousand euros, generating deferred tax liabilities

of this item to a net value of 263,753 thousand

of 9,299 thousand euros.

euros.

As a result of the above, compared to the provisional The allocation process was finally concluded as

allocation to goodwill of 263,753 thousand euros as

of June 30, 2022, and all items impacted by this

of December 31, 2021, a final allocation to goodwill

process are summarized below:

in the amount of 155,689 thousand euros was determined.

Comer Industries

77

As required by IFRS 3, the comparative balance sheet figures as of December 31, 2021 were restated to retrospectively reflect the effects resulting from the final Purchase Price Allocation ("PPA") process.

Below are the changes:

CONSOLIDATED BALANCE SHEET (THOUSAND EUROS) ASSETS

DECEMBER 31, 2021 PUBLISHED

FINAL FAIR VALUE MEASUREMENT

RESTATEMENT DECEMBER 31, 2021

Non-current assets Tangible fixed assets

204,735

Intangible fixed assets

328,058

44,012

372,070

of which goodwill

263,968

(108,279)

155,689

Investments

1,279

Tax assets and deferred tax assets

41,311

Other long-term receivables

829

Total

204,735

1,279 821

42,132 829

576,212

44,833

621,045

Inventories

228,628

(3,000)

225,628

Trade receivables

196,130

196,130

Other short-term receivables

8,896

8,896

Current tax assets

17,264

17,264

Other short-term financial receivables

202

202

Short-term derivative financial instruments

601

601

Cash and cash equivalents

85,744

85,744

Total

537,464

(3,000)

534,464

TOTAL ASSETS

1,113,676

41,833

1,155,509

Current assets

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2022 Annual Report

CONSOLIDATED BALANCE SHEET (THOUSAND EUROS) EQUITY AND LIABILITIES

DECEMBER 31, 2021 PUBLISHED

FINAL FAIR VALUE MEASUREMENT

RESTATEMENT DECEMBER 31, 2021

Share capital and reserves Issued capital

18,487

18,487

Share premium reserve

187,881

187,881

Other reserves

32,071

32,071

Accumulated profit (loss)

107,173

107,173

- Retained earnings

67,744

67,744

- Net profit

39,429

39,429

Total

345,612

Portion pertaining to minority interests Total equity

0

345,612

345,612 -

0

345,612

Non-current liabilities Long-term loans

177,743

177,743

Other long-term financial payables

47,592

47,592

Tax liabilities and deferred tax liabilities

20,692

Post-employment benefits

157,800

157,800

Other long-term payables

9,768

9,768

Long-term provisions

9,845

9,845

Total

423,440

41,833

41,833

62,524

465,273

Current liabilities Trade payables

218,611

218,611

Other short-term payables

40,375

40,375

Tax liabilities

21,816

21,816

Short-term loans

29,203

29,203

Short-term derivative financial instruments

114

114

Post-employment benefits short-term

7,379

7,379

Other short-term financial payables

8,739

8,739

Short-term provisions

18,387

18,387

Total

344,624

0

344,624

TOTAL LIABILITIES

1,113,676

41,833

1,155,509

Comer Industries

79

The valuation techniques used to determine the fair value of the major assets acquired are shown below.

Assets acquired

Valuation technique

Customer list

Multi-period Excess Earnings Method, which considers the present value of the net cash flows expected to be derived from the acquired group's customers

Trademarks and Technologies

Relief from Royalty Method, on the basis of which flows are linked to the recognition of a royalty percentage applied to the amount of revenue the trademark is able to generate.

A defined useful life was considered as the basis for the valuation.

Deferred tax liabilities were calculated on the assets identified in the Purchase Price Allocation, considering a tax rate of 27.35%.

The final Purchase Price Allocation was prepared by Comer Industries S.p.A. with the support of a major consulting firm.

Note that the restatement from data as of December 31, 2021 due to the final allocation only involved the restatement of balance sheet balances, while no adjustments were accounted for on the opening equity as of January 1, 2022 given the insignificance of the amounts with respect to the numerical amounts in the consolidated financial statements of the Comer Industries Group.

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2022 Annual Report

2.5.2 SECTORAL INFORMATION Industry-related information is given with reference to sectors of activity. The information includes both costs directly attributable and costs allocated according to reasonable assumptions. General and administrative costs, ICT and HR services, fees for directors, Statutory Auditors and Group management departments, as well as costs relating to the global sourcing area (organized according to purchasing group of product category) have been allocated to sectors proportionally to the turnover.

The Group operates in the following sectors: Agricultural sector. Products mainly consists of speed increasers, speed reducers, bevel gearboxes, PTO driveshafts, wheel 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.

AGRICULTURAL SECTOR

INDUSTRIAL SECTOR

TOTAL

December 31, 2022

December 31, 2021

Dev. %

December 31, 2022

December 31, 2021

Dev. %

December 31, 2022

December 31, 2021

Revenue from contracts with customers

776,262

307,708

152%

461,314

290,402

59%

1,237,576

598,110

EBITDA (*)

109,219

38,875

70,789

38,720

180,008

77,595

14.1%

12.6%

15.3%

13.3%

14.5%

13.0%

Amortization

(32,621)

(12,221)

(19,869)

(8,543)

(52,491)

(20,764)

EBIT

76,598

27,265

50,919

29,565

127,517

56,831

EBIT on revenues (%)

9.9%

8.9%

11.0%

10.2%

10.3%

9.5%

Net financial income / (expenses)

(1,623)

(1,027)

(964)

(969)

(2,587)

(1,996)

Income taxes

(20,535)

(7,374)

(13,679)

(8,032)

(34,213)

(15,406)

NET PROFIT

54,440

18,865

36,276

20,564

90,716

39,429

7.0%

6.1%

7.9%

7.1%

7.3%

6.6%

Sectoral indicators (thousand euros)

EBITDA on revenues (%)

Net profit on revenues (%)

181%

189%

72%

76%

(*) The figure as of 12/31/2021 was adjusted for the item Provisions for risks and bad debts to make it consistent with 12/31/2022.

The Agricultural sector, which now accounts for 63% of total revenues (51% in 2021), experienced a 152 percent increase in revenues during the year, with an increase in operating profitability due to both Comer and the consolidation of the German group acquired in December 2021. The performance of the industrial division was also positive, improving its operating profitability (EBITDA) as a result of the growth in business volume (+59%).

Comer Industries

81

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 2022 are illustrated in the following tables: DESCRIPTION (THOUSAND EUROS)

LAND AND BUILDINGS

PLANT AND MACHINERY

INDUSTRIAL AND COMMERCIAL EQUIPMENT

OTHER ASSETS

TANGIBLE FIXED ASSETS IN PROGRESS

RIGHTS OF USE

TOTAL

January 01, 2021

9,251

28,594

10,711

3,089

2,252

22,583

76,481

Balances from acquisition

34,021

54,581

30,132

121,680

Increases

568

7,361

5,561

2,327

6,175

24,211

Decreases

(296)

(251)

(16)

(260)

(482)

(1,304)

Amortization

(829)

(6,664)

(5,419)

(910)

(4,549)

(18,372)

Reclassifications

184

2,102

(196)

(253)

Translation reserve

343

1,396

18

180

December 31, 2021

43,241

87,118

10,659

7,119

Increases

569

16,974

6,062

Decreases

(10)

(881)

Amortization

(2,486)

December 31, 2022

2,219

(1,836)

(0) 103

2,040

2,636

53,963

204,736

3,999

4,829

10,592

43,025

(33)

(98)

(1,437)

(170)

(2,629)

(15,772)

(5,176)

(1,178)

(9,937)

(34,549)

1,378

229

(1,093)

(514)

178

367

129

99

(184)

342

931

41,492

89,184

11,870

8,848

5,330

54,790

211,514

Reclassifications Translation reserve

2,946

0

The rights of use heading, relating to the application of the IFRS 16 international accounting standard, mainly refers to the renting of the Group’s operating plants and can be broken down as follows:

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2022 Annual Report

DESCRIPTION (THOUSAND EUROS)

LAND AND BUILDINGS

OTHER ASSETS

TOTAL

21,371

1,212

22,583

Acquisition balances

27,302

2,832

30,134

Increases

5,892

726

6,618

Decreases

(934)

(75)

(1,009)

Amortization

(3,774)

(691)

(4,465)

101

2

103

49,959

4,005

53,963

Increases

9,123

1,469

10,592

Decreases

(137)

(33)

(170)

Amortization

(8,022)

(1,915)

(9,937)

304

38

342

51,227

3,565

54,790

January 01, 2021

Translation reserve December 31, 2021

Translation reserve December 31, 2022

Comer Industries

83

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 ASSETS

INTANGIBLE FIXED ASSETS IN PROGRESS

TOTAL

January 01, 2021

-

662

44

2,281

3

614

3,605

Balances from acquisition

108,786

1,948

59,337

Increases

46,903 (*)

891

128,327 (*)

23,964 (*)

Decreases Amortization

(362)

Reclassifications

122

Translation diff.

December 31, 2021

(13)

(1,365)

170,071 709

200,794

(21)

(21)

(650)

421

(2,390) (543)

0

0

0

0

13

(1)

0

12

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)

Increases

54

Decreases Amortization

(232)

(1,713)

(17,942)

Reclassifications Translation diff.

December 31, 2022

0 (16) 155,673

244

22,281

63

18

4,778

173,329

65 965

357,272

(*) Values restated from December 31, 2021 in accordance with IFRS 3, to retrospectively take into account the effects resulting from the final fair value measurement of WPG's trademarks and customer list, technologies, and brand as of the acquisition date (values previously considered provisional, see Section 2.5 "Acquisition of Walterscheid Powertrain Group").

The item breaks down as follows: (i)

Goodwill

Goodwill arises from business combinations in accordance with IFRS 3 and represents the excess of the cost of the acquisition over the Group's stake in the fair value of the acquirer's identifiable assets, liabilities and contingent liabilities existing at the time of the acquisition. For further details see paragraph 2.5.1 and following of this document. (ii) Development and approval costs and intangible fixed assets in progress These capitalizations are mainly related to internal orders associated with the development of new products. During the period intangible fixed assets in progress have been capitalized development costs of 275 thousand euros; 68 thousand euros however represent the decreases for waived projects. These projects meet the requirements of paragraph 57 of IAS 38, as the Group analyzed the technical feasibility of the same, as well as the intention to complete the project, to introduce new products on the market and the availability of technical and financial resources, as well as a reliable identification of own costs and their ability to produce future economic benefits. These expenses are amortized on the basis of the

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2022 Annual Report

probable useful life generally estimated to be 3 to

(of the Agricultural and Industrial sectors) with a

5 years, depending on the sector they are intended

duration of three years. The business plan takes

for.

into consideration the various scenarios and development expectations of the various markets,

(iii) Concessions, licenses and patents

based on the information available at the end of

The increases in the period relate to the capitalization

2022.

of external costs for the realization of projects already described in the report on operations or to

These flows were discounted at a discount rate

software licenses and applications for the logistics

calculated using the Weighted Average Cost of

and research and development area.

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

(iv) Other intangible fixed assets

of hedging for a sample of companies in the same

The item includes developed technology, customer

industry. The average cost of capital (WACC) was

relationships, software and other fixed assets with

calculated as 8.60% and the estimated g rate

finite useful lives resulting from the acquisition of the

was conservatively set at a value lower than the

German group. These fixed assets are amortized on

expected long-term inflation rate.

a straight-line basis over a period defined by the

The performance of the impairment test did not

following amortization rates:

indicate the need to recognize any impairment of

- Brand: 20 years

goodwill as of December 31, 2022 and the level of

- Technology developed: 13 years

coverage is very significant.

- Relationships with customers: 13 years.

In confirmation of this, the sensitivity analysis –

GOODWILL

carried out by increasing the cost of capital used to discount expected cash flows by 100 basis points

As of December 31, 2022, this item amounted to

– did not reveal any need to write down the item,

155,673 thousand euros. See Section 2.5.1 of this

nor a variation of ±10% in expected cash flows.

document for further details.

IMPAIRMENT LOSSES ON INTANGIBLE FIXED ASSETS WITH AN INDEFINITE USEFUL LIFE AND GOODWILL

Note also that the market capitalization of the Company, based on the average Comer Industries share price in 2022, shows a significant positive differential from the Group's book equity.

Goodwill, amounting to 155,673 thousand euros, was not amortized in accordance with IAS 36, but was subject to impairment testing by management.

carried out using the Discounted Cash Flow (DCF)

2.6.3 EQUITY INVESTMENTS IN OTHER COMPANIES

method after tax, allocating the amount of goodwill

The item mainly refers to the equity valuation

to WPG's Agricultural and Industrial sectors. The

in Matsui Walterscheid Ltd., a 40% subsidiary of

expected cash flows used in the DCF calculation

Walterscheid GmbH.

The result of the impairment was approved by the Board of Directors on March 21, 2023, and was

were determined based on the business plans

Comer Industries

85

2.6.4 DEFERRED TAX ASSETS The details are as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021 RESTATED

Prepaid taxes

35,695

42,132 (*)

Deferred tax assets

35,695

42,132

(*) Values restated from December 31, 2021 in accordance with IFRS 3, to retrospectively take into account the tax effects resulting from the final accounting of the WPG acquisition transaction (values previously considered provisional, see Section 2.5 "Acquisition of Walterscheid Powertrain Group").

The balance of deferred tax assets decreased by 6,436 thousand euros.

For the detailed breakdown of this item please refer to the table below: PREPAID TAXES BY COMPANY (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021 RESTATED (*)

Total Prepaid

Total Prepaid

Used

Taxes

Taxes

(allocated)

Inventory write-down provision

5,042

5,846

(805)

Provision for product warranty/contract risks

8,344

8,394

(51)

Temporary differences – Italian companies

5,291

2,436

2,855

Temporary differences – Foreign subsidiaries

12,722

23,750

(11,027)

Total prepaid taxes of the company

31,398

40,427

(9,027)

Total prepaid taxes consolidation

4,297

1,706

2,591

Total prepaid taxes in the financial statements

35,695

42,132

(6,436)

Description

2022

(*) Values restated from December 31, 2021 in accordance with IFRS 3, to retrospectively take into account the tax effects resulting from the final accounting of the WPG acquisition transaction (values previously considered provisional, see Section 2.5 "Acquisition of Walterscheid Powertrain Group").

The balance of foreign subsidiary temporary differences is mainly attributable to the pension fund of the acquired German WPG group, and the reduction mainly refers to the reduction in pension funds during the year due to the increase in the discount rate.

The following aspects were taken into account in the calculation of deferred tax assets: • The tax laws of the countries that the Group operates in and their impact on temporary differences, and any tax benefits from the use of tax loss carryforwards, considering their possible recoverability over a three-year time horizon.

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

Based on the above, the Group believes that it can recover the recognized deferred tax assets with reasonable certainty.

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2022 Annual Report

2.6.5 OTHER LONG-TERM RECEIVABLES DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Security deposits for foreign rentals

377

177

Other minor receivables including security deposits Italy

287

33

Other long-term receivables

743

619

Other Long-term receivables

1,407

829

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, 2021 RESTATED (*)

NET CHANGE/INCREASES

TRANSLATION DIFFERENCES

DECEMBER 31, 2022

Raw materials and Packaging

80,736

10,219

(203)

90,752

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

(6,231)

(2,362)

15

(8,578)

Raw and ancillary materials and packaging

74,505

7,857

(188)

82,175

Semi-finished products purchased and produced

96,719

6,020

(65)

102,674

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

(5,568)

(105)

0

(5,673)

Work in progress

91,151

5,915

(65)

97,001

Finished products and Goods

72,422

2,949

1,239

76,610

Provision for write-down of finished products

(12,451)

1,647

(76)

(10,880)

Finished products

59,971

4,596

1,163

65,730

Inventories

225,628

18,368

910

244,906

(*) Values restated from December 31, 2021 in accordance with IFRS 3 to retrospectively take into account the effects resulting from the final valuation of WPG's inventory write-down provision as of the acquisition date (value previously considered provisional, see Section 2.5 "Acquisition of Walterscheid Powertrain Group").

The increase in inventories of 19,278 thousand euros compared to December 31, 2021 is closely related to the increase in sales volumes achieved during the year. In particular, an increase in raw materials is recorded as an effect of the stock procurement campaign as a consequence of the general tension in the supply chain. Inventories are shown net of a provision for obsolescence for a total amount of 25,131 thousand euros, an increase compared to December 31, 2021 by 881 thousand euros net of the use for scrapping.

Comer Industries

87

2.6.7 TRADE RECEIVABLES AND OTHER SHORT-TERM RECEIVABLES The changes are as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2021

NET CHANGE

TRANSLATION DIFFERENCES

DECEMBER 31, 2022

Short-term receivables from customers

201,726

11,988

288

214,003

Provision for bad debts

(5,597)

(436)

(9)

(6,042)

Trade receivables

196,130

11,552

280

207,961

Advances to suppliers

2,454

(2,549)

9

(86)

Receivables from Social Security Institutions

35

29

Accrued income and prepaid expenses

454

331

(0)

785

Trade receivables from suppliers

26

9

(1)

34

Other short-term receivables

5,927

1,526

(0)

7,453

Other short-term receivables

8,896

(654)

8

8,250

64

The balance of trade receivables is influenced by the trend in turnover, especially in relation to the last few months of the year. Average collection days calculated on aggregate revenues for the last quarter stood at 62 days, an improvement versus the previous year (66 days).

The allowance for doubtful accounts mainly reflects the generic write-down calculated in accordance with IFRS 9, influenced this year by indicators representing greater macroeconomic risk. During the year, the Group did not record any significant losses on receivables or release provisions set aside in previous years.

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

The Group is not particularly exposed to the nations currently involved in the conflict, Russia, Belarus and Ukraine. Note that consolidated revenue from customers residing in these countries corresponds to around 1%, and there are no significant accounts receivable positions as payments are normally made in advance. Note that the Moscow-based commercial branch has been inactive since April 2022.

As of December 31, 2022, the presentation of trade receivables (net of the related allowance for doubtful accounts) by maturity bracket is shown in the following table.

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Not overdue

202,489

190,187

30-60 days past due

5,673

3,107

60-90 days past due

228

2,876

More than 90 days past due

5,613

5,557

Allowance for doubtful accounts

(6,042)

(5,597)

Trade receivables

207,961

196,130

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2022 Annual Report

2.6.8 CURRENT TAX ASSETS The changes are as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2021

NET CHANGE

2022

Italian and foreign VAT

12,831

7,814

20,645

Other tax receivables

4,433

4,250

8,682

Current tax assets

17,264

12,064

29,327

The current VAT credit of 20,645 thousand euros

paid with respect to current taxes calculated

is attributable to the parent company Comer

on the profit generated during the year by some

Industries S.p.A. for 8,007 thousand euros (it was

companies of the German group. The balance

3,801 thousand euros on December 31, 2021) and to

includes a tax credit related to the parent

the subsidiary Comer Industries Components S.r.l.

company Comer Industries S.p.A. for investments in

for 7,795 thousand euros (it was 6,024 thousand

new capital goods of 256 thousand euros mostly

euros on December 31, 2021). The remaining part

related to Industry 4.0, and 560 thousand euros

relates to foreign companies and in particular to

related to the estimated energy and gas tax credit

the GST credit held by the Indian subsidiary for 3,175

for Q4 2022.

thousand euros. During the year, the VAT credit

In relation to the above mentioned subsidiaries, it

of Comer Industries Component S.r.l. for the year

should be noted that the tax system provides for the

2021 in the amount of 5,000 thousand euros was

payment of advance payments for income taxes

partially recovered.

already withheld on commercial transactions,

The item Other tax receivables for 8,682 thousand

thus unavoidably generating tax credits during the

euros mainly represents the excess of advances

financial period.

Comer Industries

89

2.6.9 FINANCIAL ASSETS AND LIABILITIES, GUARANTEES

Cash and cash equivalents improve by 65,584 thousand euros, moving from 85,744 thousand euros at December 31, 2021 to 151,328 thousand

The net financial position as of December 31, 2022

euros at December 31, 2022. The increase is mainly

was negative and amounted to 148,946 thousand

due to the loan agreement signed with Crédit

euros.

Agricole Italia in December 2022 for a total amount

The value of prepayments deriving from accounting

of 50,000 thousand euros, maturing on December

for up-front expenses according to amortized cost

16, 2027. This financing will provide the funding for

amounts to 1,994 thousand euros. The value of other

the acquisition of e-comer, which will be finalized

financial liabilities attributable to the accounting

in January 2023.

treatment of leasing contracts according to IFRS 16 at December 31, 2022 amounts to 57,791 thousand

The breakdown and movements compared to the

euros, an increase compared to December 31, 2021

previous year are shown below:

(56,331 thousand euros).

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2021

INCREASES

DECREASES

DECEMBER 31, 2022

Cash and cash equivalents

(85,744)

(65,584)

0

(151,328)

Short-term loans

29,966

47,013

(24,706)

52,272

Medium/long-term loans

179,602

40,000

(27,631)

191,971

Total net current financial debt to banks

123,824

21,428

(52,338)

92,915

Assets for short MTM derivative financial instruments

(601)

-

601

0

Liabilities for short-term derivative financial instruments MTM

114

-

120

234

Total Debt including financial instruments

123,337

21,428

(51,617)

93,149

Up-front commissions for structured loans (short-term portion)

(763)

(692)

763

(692)

Up-front commissions for structured loans (M/LT portion)

(1,859)

(1,302)

1,859

(1,302)

Other short-term financial payables IFRS 16

8,739

1,225

(220)

9,744

Other long-term financial payables IFRS 16

47,592

9,706

(9,250)

48,048

Total net financial position

177,046

30,365

(58,465)

148,946

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2022 Annual Report

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, 2022 Trade receivables

207,961

207,961

Other short-term receivables

8,249

8,249

Current tax assets

29,327

Short-term derivative financial instruments

0

Cash and cash equivalents Total assets

216,211

29,327 0

151,328

151,328

180,656

396,866

Liabilities at December 31, 2022 Long-term loans

(190,669)

(190,669)

Trade payables

(198,630)

(198,630)

Other short-term payables

(34,758)

(34,758)

Current tax liabilities

(23,173)

(23,173)

Short-term derivative financial instruments

(234)

(234)

Short-term loans

(51,580)

(51,580)

Other short-term financial payables

(9,744)

(9,744)

Other long-term financial payables

(48,048)

(48,048)

Post-employment benefits short-term

(5,792)

(5,792)

Total liabilities

(533,429)

(29,199)

(562,627)

Total

(317,218)

151,457

(165,761)

It should be noted, as required by paragraph 186 of ESMA Communication 32-382-1138 of March 4, 2021, that there are no material elements in terms of indirect indebtedness to be brought to attention in these consolidated financial statements.

Comer Industries

91

SHORT-TERM DERIVATIVE FINANCIAL INSTRUMENTS Details follow: NOMINAL VALUE IN CURRENCY DECEMBER 31, 2022

NOTIONAL VALUE IN EUROS DECEMBER 31, 2022

FAIR VALUE DECEMBER 31, 2022

Short-term derivative financial instruments on exchange rates with positive fair value

-

-

-

Short-term derivative financial instruments on exchange rates with negative fair value

USD 12,000

11,251

(234)

Net value of financial instruments

USD 12,000

11,251

(234)

Net value of financial instruments

12,000

11,251

(234)

DESCRIPTION (AMOUNTS IN THOUSANDS)

On December 31, 2022 expected cash flows by

change in value. It is believed that the carrying

Chinese subsidiaries totaling USD 12 million were

value of Cash and cash equivalents approximates

covered with a negative fair value of 234 thousand

their fair value at the balance sheet date. More

euros recognized in the CFH reserve.

information can be gleaned from the cash flow

Most of the financial assets and liabilities in force

statement.

reflect short-term financial assets and liabilities, for

of fair value.

SHORT-TERM LOANS AND CURRENT PORTION OF MEDIUM/LONG TERM LOANS

For more information, reference should be made

The item includes interest-bearing bank loans.

to para. 2.5.15 regarding the management of

The value of 51,580 is made up of 52,272 thousand

exchange risks.

euros of short-term bank loans, shown net of the

which, in consideration of their nature, their book value is considered as a reasonable approximation

CASH AND CASH EQUIVALENTS

short-term portion of transaction costs treated according to the amortized cost method (IFRS 9)

The amount of 151,328 thousand euros compares

equal to 691 thousand euros.

with 85,744 thousand euros last year. This increase

The increase of 22,376 thousand euros compared

relates, in the amount of 50,000 thousand euros,

to the previous year is mainly due to the short-term

to the taking out of the medium- to long-term

portion of a new loan taken out in H1 2022 from

loan with Crédit Agricole Italia for the purpose of

Unicredit for a total amount of 19,000 thousand

the acquisition of e-comer S.r.l. that took place in

euros (repaid during the year for 9,500 thousand

January 2023 (see section on subsequent events).

euros) and to the short-term portion relating to the

The difference is also linked to the time flow of

taking out of a medium-long term loan by Comer

collections and payments and should be analyzed

Industries S.p.A. from Crédit Agricole Italia to acquire

by combining the cash and cash equivalents of

e-comer S.r.l., which took place in January 2023 (see

some companies with the bank payables of others,

subsequent events) for 50,000 thousand euros.

and partly due to the liquidity acquired through the

The current account debt at December 31, 2022

consolidation of the German group. Liquidity is well

of Comer Industries S.p.A. and Comer Industries

distributed in all subsidiaries worldwide to meet the

Components S.r.l. relates to the balance of cash in

financing of core business and investments.

transit linked to the payment of bills payable and

The values stated can be readily converted into

direct remittances on December 31.

cash and are subject to an insignificant risk of

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2022 Annual Report

CURRENCY

CONT. VAL. DECEMBER 31, 2021

CHANGE

CONT. VAL. DECEMBER 31, 2022

NOM. VAL. DECEMBER 31, 2022 (LC/000)

Bank accounts payable and advances Comer Ind S.p.A.

EUR

7,779

(2,206)

5,574

5,574

Bank accounts payable and advances Comer Comp. S.r.l.

EUR

7,287

(2,501)

4,786

4,786

Loan Unicredit Comer Ind. S.p.A.

EUR

10,500

(10,500)

0

0

Loan Unicredit Comer Ind. S.p.A.

EUR

0

9,500

9,500

9,500

Loan CAI Comer Ind. S.p.A.

EUR

0

10,076

10,076

10,076

Loan Crédit Agricole M/L current portion

EUR

0

15,469

15,469

15,469

Loan Crédit Agricole M/L current portion

USD

4,400

2,468

6,868

7,325

29,966

22,305

52,272

(763)

71

(692)

29,203

22,376

51,580

DESCRIPTION (THOUSAND EUROS)

Total gross short-term loans Up-front commissions for short-term structured loans

EUR

Total net short-term loans

(692)

LONG-TERM LOANS

2. Loan agreement signed with Unicredit in H1

This item includes the long-term portions of the

2022 for a total amount of 19,000 thousand euros,

following loans:

residual value of 9,500 thousand euros maturing on

1. Loan agreement entered into with Crédit Agricole

December 31, 2023.

in December 2021 and divided as follows:

3. Loan agreement signed with Crédit Agricole

- 140,000 thousand euros remaining, of which

Italia in December 2022 for a total amount of

126,000 thousand euros due March 31, 2027 and

50,000 thousand euros, maturing on December 16,

14,000 thousand euros is short-term.

2027. This financing will provide the funding for the

- 30,000 thousand euros, usable in cash and intended to support general revolving financial

acquisition of e-comer, which will be finalized in January 2023.

requirements, to be repaid in a lump-sum at the end of the relative interest period as set forth in the

Note that during 2022 a portion of the loan with

utilization request, with a maximum duration of 5

Crédit Agricole, originally of USD 50,000 thousand,

years.

was repaid in advance in the amount of 13,200

- 32,816 thousand euros remaining, of which

thousand euros. Moreover, the Unicredit loan of

25,971 thousand euros due March 31, 2027 and 6,845

10,500 thousand euros, which matured, and 9,500

thousand euros is short-term.

thousand euros of the Unicredit loan taken out in 2022 were repaid.

This loan requires compliance with consolidated

Further information can be obtained from the

operating management covenants, which were

specific tables provided below.

met as of December 2022.

Comer Industries

93

CURRENCY

CONT. VAL. DECEMBER 31, 2021

CHANGE

CONT. VAL. DECEMBER 31, 2022

NOM. VAL. DECEMBER 31, 2022 (LC/000)

Loan CAI M/L long-term portion

EUR

0

40,000

40,000

40,000

Loan Crédit Agricole M/L long-term portion

EUR

140,000

(14,000)

126,000

126,000

Loan Crédit Agricole M/L long-term portion

USD

39,602

(13,631)

25,971

27,701

Total gross long-term borrowings

179,602

12,369

191,971

Up-front commissions for M/L structured loans

(1,859)

557

(1,302)

Total long-term borrowings

177,743

12,926

190,669

DESCRIPTION (THOUSAND EUROS)

(1,302)

Reported below is the breakdown of bank loans by nature, short and medium/long-term existing as at December 31, 2022: DESCRIPTION (THOUSAND EUROS)

BALANCE AS AT DECEMBER 31, 2021

Unicredit

10,500

Unicredit

0

NEW REPAYMENTS DISBURSEMENT

19,000

BALANCE AS AT DECEMBER 31, 2022

< 1 YEAR

OF WHICH > 5 YEARS

> 1 YEAR

EXPIRY July 31, 2022

(10,500)

0

(9,500)

9,500

9,500

December 31, 2023

CA-CIB Line A1

20,000

20,000

2,000

18,000

March 31, 2027

CA-CIB Line A2

120,000

120,000

12,000

108,000

March 31, 2027

CA-CIB Line A3 $

44,002

30,802

6,845

23,957

March 31, 2027

50,000

10,000

40,000

December 16, 2027

230,302

40,345

189,957

(13,200)

CAI

0

50,000

Total

194,502

69,000

(33,200)

0

OTHER SHORT AND MEDIUM/LONG-TERM FINANCIAL PAYABLES The heading refers to payables deriving from the application of the international accounting standard IFRS 16. The detail for the breakdown of the item payables on December 31, 2022 and its variation is provided below: DECEMBER 31, 2021

INCREASES

DECREASES

FOREIGN EXCHANGE IMPACT

DECEMBER 31, 2022

Short-term payables IFRS 16

8,739

1,225

(153)

(68)

9,744

Long-term payables IFRS 16

47,592

9,706

(8,970)

(280)

48,048

Total

56,331

10,931

(9,123)

(348)

57,791

DESCRIPTION (THOUSAND EUROS)

COMMITMENTS AND GUARANTEES Guarantees given amount to 32,990 thousand euros (38,916 thousand euros in 2021) and consist of commitments of Comer Industries S.p.A. in the total amount of 23,149 thousand euros, all relating to the granting of local credit facilities in favor of subsidiaries.

The Group has no commitments to finance leasing companies.

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2022 Annual Report

2.6.10 NET EQUITY The Parent Company's share capital as of December 31, 2022 consists of 28,678,090 shares with no par value and fully subscribed and paid up for 18,487,338.60 euros.

On May 3, 2022 dividends of 0.5 euros per share relating to the result for the 2021 financial year were paid for a total of 14,339 thousand euros.

Other reserves include OTHER RESERVES (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Legal reserve

3,416

2,622

Extraordinary reserves available

19,225

19,225

Stock grant reserve

8,181

8,181

Consolidation reserve

3,543

3,543

FTA reserve (IAS/IFRS first time adoption)

(5,923)

(5,923)

Translation reserve

212

4,078

CFH reserve (Cash Flow Hedge)

(387)

345

IAS 19 reserve

26,227

Total other reserves

54,495

32,071

Information regarding the distributability of the reserves can be found in the notes to the financial statements of the Parent Company Comer Industries S.p.A. The increase in the legal reserve relates to the allocation of the 2021 result of the parent company Comer Industries S.p.A. net of dividend distribution.

The decrease in the conversion reserve of 3,866 thousand euros is mainly attributable to the revaluation of the euro against the US dollar and the Chinese renminbi compared to the exchange rates reported at December 31, 2021.

It should be noted that during the period dividends relating to available reserves of some subsidiaries were distributed in favor of the parent company Comer Industries S.p.A. and in particular for a total of 12,469 thousand euros by Comer Industries INC, Comer UK, Comer Jiaxing and Comer Industries Component S.r.l.

On December 31, 2022 the cash flow hedge reserve includes the fair value of contracts to hedge expected cash flows in foreign currency, as well as contracts to cover interest rate risks, considered effective according to the requirements of IFRS 9 concluded in the first half of 2022.

The IAS 19 reserve includes the change of 26,227 thousand euros relating to the recognition of actuarial gains on pension funds described in detail in Section 2.6.12.

Reconciliation between the amount of capital and reserves and the result of operations of the Parent Company Comer Industries S.p.A. in compliance with the IAS/IFRS international accounting standards as at December 31, 2022, and the amounts reported in this consolidated financial report, drawn up in compliance with international standards, on the same date is as follows:

Comer Industries

95

DECEMBER 31, 2022

DECEMBER 31, 2021

DESCRIPTION (THOUSAND EUROS)

NET EQUITY

NET PROFIT/LOSS FOR THE YEAR

NET EQUITY

NET PROFIT/LOSS FOR THE YEAR

Impact of the result for the year on Equity of the Parent Company

314,958

38,044

119,735

15,884

Other changes: Share capital increase

5,378

Increase in share premium reserve

159,937

Net increase in stock grant reserve

2,194

Effects IAS 19 rev. Actuarial losses net of tax effect

726

(126)

Dividends approved

(14,339)

(10,205)

Statutory net equity of Comer Industries S.p.A. IAS/IFRS

301,344

38,044

276,913

15,884

Differences between the adjusted net equity of consolidated equity investments and their value in the financial statements of the Parent Company

251,113

84,240

166,873

30,337

(106,824)

(12,469)

(94,355)

(2,748)

Reversal of intercompany dividends Change in the Cash Flow Hedge Reserve IAS 38 Comer Industries Jiaxing

(328)

345

Elimination of exchange rate differences from translation reserve calculation

212

4,078

Effects IAS 19 rev. Actuarial losses net of the tax effect

25,478

(491)

Equity contribution of subsidiaries to the Parent Company

169,652

71,771

76,451

27,589

Effects deriving from consolidation entries

(27,111)

(19,099)

(7,752)

(4,044)

-

-

-

-

443,885

90,716

345,612

39,429

Net equity attributable to minority interests Total net equity IAS/IFRS

It should be noted that during the year dividends

Actuarial earnings from recalculating the pension

were distributed in favor of the holding company

provision for the year 2022 have been reported after

Comer Industries S.p.A., relating to profits for the

changes in the reserves for retained earnings (as

year and available reserves of some subsidiaries,

required by the revised IAS 19.93 A) and amounted

mainly by Comer Industries Inc., Comer Industries

to 26,492 thousand euros, gross of the tax effect.

Components s.r.l., Comer Industries UK Ltd. and

All the effects of the above are shown net of the

Comer Industries (Jiaxing) Co. Ltd. for a total of

related taxes.

12,469 thousand euros.

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2022 Annual Report

2.6.11 DEFERRED TAX LIABILITIES The deferred taxes are related to the tax effect of timing differences between the profit and loss for the year for statutory purposes of each company, and any associated taxable income.

The amounts so defined are detailed in the following table:

DECEMBER 31, 2022

DECEMBER 31, 2021 RESTATED (*)

2022

TOTAL DEFERRED TAXES

TOTAL DEFERRED TAXES

(USED) ALLOCATED

Temporary differences Italian companies

1,605

175

1,430

Temporary differences foreign subsidiaries

60,146

61,729

(1,583)

Total deferred taxes

61,751

61,904

(153)

Total deferred taxes consolidation

620

620

0

Total deferred taxes in the financial statements

62,371

62,524

(153)

DESCRIPTION (THOUSAND EUROS)

(*) Values restated from December 31, 2021 in accordance with IFRS 3, to retrospectively take into account the tax effects resulting from the final accounting of the WPG acquisition transaction (values previously considered provisional, see Section 2.5 "Acquisition of Walterscheid Powertrain Group").

The balance of temporary differences Italian companies is mainly attributable to the adjustment of foreign currency items.

The balance of foreign subsidiary temporary differences mainly includes the deferred tax provision resulting from the final Purchase Price Allocation process.

Comer Industries

97

2.6.12 POST-EMPLOYMENT BENEFITS Variations in the provision were as follows:

CHANGES (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Opening balance

165,179

9,228

Acquisition balances

155,996

Use for discharges and advances

(5,533)

(619)

Settlements of complementary pensions and treasury funds

(1,945)

(1,942)

Allocation for the year

5,827

2,473

Effects of IAS 19 recalculation period (gross of taxes)

(39,320)

43

Closing balance

124,208

165,179

Short term

5,792

7,379

Medium/long term

118,416

157,800

Closing balance

124,208

165,179

The economic and equity effects of the period, compared with the previous year, are detailed below: This item refers to: DESCRIPTION: (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Current service cost

(2,431)

(409)

Actuarial losses/(gains)

(39,320)

315

Financial expenses

1,708

195

Tax effect on income statement

202

74

Equity tax effect

12,828

(117)

Overall effect

(27,014)

58

- Employee benefits governed by the rules and regulations in force in Italy and recorded in the financial statements of Italian companies - Benefit plans defined after employment calculated on the basis of the final salary for all employees of its WPG subsidiaries in Germany and the USA. The positive effect for the period of 39,320 thousand euros before taxes is mainly reflected in the recognition of the actuarial gain accrued as a result of the adjustment of discount rates, as explained below.

With regard to the Italian branches, the total value of which amounts to 7,608 thousand euros, based on the actuarial valuation and interpretations available at the date of preparation of the financial statements, the Group has made the following distinction: • Employee severance indemnity (TFR) installments accruing as from January 1, 2007: considered a "defined

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2022 Annual Report

contribution plan" in the case of both the option for complementary social security schemes as well as the option for the treasury fund of the National Security Institution (INPS). The accounting treatment is therefore the same as that in place for other types of contribution payments.

• Employee severance indemnity (TFR) provision as at December 31, 2006: remains a "defined benefit plan" for which actuarial calculations must be made, although, compared to the calculations made to date (and reflected in the financial statements for the year ending December 31, 2006), excludes the component relating to future salary increases.

Liabilities for defined benefit plans have been determined on the basis of the following Group actuarial assumptions with value scales from 2020 to 2023:

ITALIAN ACTUARIAL ASSUMPTIONS

MEASURING UNIT

DECEMBER 31, 2022

DECEMBER 31, 2021

Discount rate

%

4.11

0.73

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

%

2.3

1.8

Annual rate of employee severance indemnity (TFR) increase

%

3.2

2.8

In accordance with new regulations of IAS 19, the values of the employee severance indemnity (TFR) provision that would have been obtained by changing the above actuarial assumptions are as follows:

CHANGES (THOUSAND EUROS)

DISCOUNTED SEVERANCE INDEMNITY PROVISION (TFR)

Turnover rate +1.0%

7,668

Turnover rate -1.0%

7,533

Annual cost of living increase rate +0.25%

7,706

Annual cost of living increase rate - 0.25%

7,505

Discount rate + 0.25%

7,462

Discount rate - 0.25%

7,751

The companies maintain defined benefit plans in the balance sheet at the end of the employment relationship calculated with the last salary. Employees generally receive a fixed pension for each year they work. Benefits vary based on date of entry, length of employment, and worker's compensation. With respect to the US subsidiaries, the entire value of the plans is fully funded by assets.

Liabilities for defined benefit plans have been determined using the following actuarial assumptions:

Comer Industries

GERMAN ACTUARIAL ASSUMPTIONS

99

MEASURING UNIT

DECEMBER 31, 2022

DECEMBER 31, 2021

Discount rate

%

3.70

1.00

Expected rate of wage growth

%

2.75

2.00

Annual rate of employee severance indemnity (TFR) increase

%

2.25

1.75

The interest rate used for discounting is based on the yields of high-grade corporate bonds with an average AA rating, increased for Europe from 1.1% as of December 31, 2021 to 3.7% as of December 31, 2022, and for the United States from 2.44% as of December 31, 2021 to 5.37% as of December 31, 2022.

The significant actuarial assumptions in determining the defined benefit obligations are discount rate and future salary growth. The sensitivity analysis was determined based on reasonable possible changes in the respective assumptions occurring at the end of the reporting period, holding all other assumptions constant: • If the discount rate is 0.5% higher (lower), the defined benefit obligation will decrease by 7.7 million euros (12.7 million euros in 2021).

• If the projected future salary grows (decreases) by 0.5%, the defined benefit obligation would increase by 0.9 million euros (1.8 million euros in 2021).

The composition of personnel by category, based on average data, is as follows:

CONTRACT CATEGORY

AVERAGE NUMBER 2022

AVERAGE NUMBER 2021

Senior executives

34

49

White Collar and Managers

1,114

1,081

Blue Collar and Outsourced workers

2,520

2,375

Total

3,668

3,505

As of December 31, 2022, the Group had 3,808 resources (including temporary workers), an increase of 198 from December 31, 2021.

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2022 Annual Report

2.6.13 SHORT AND LONG-TERM PROVISIONS The provisions include: PROVISIONS FOR RISKS AND CHARGES (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Provision for product warranty risks

20,200

17,051

Other provisions for risks

7,112

1,165

Contingent liabilities for tax risks

311

172

27,624

18,388

Contingent liabilities for tax risks

8

8

Agents provision

247

428

Other provisions for risks and legal charges

1,805

2,235

Provision for long-term product warranties

8,786

6,217

Other provisions for risks

3,718

958

Long-term provisions

14,563

9,845

Short-term provisions

The product warranty provision includes the

provisions for risks and charges cover the estimated

estimation

before

liabilities mainly related to the completion of Group

preparation of the financial statements and relating

of

specific

risks

reported

reorganizations also in relation to the acquisition of

to past productions. It also refers to coverage of

the German Group at the end of 2021.

general risks (the result of a calculation based on historical data) for repairs or replacement of

not yet settled at year end.

2.6.14 TRADE PAYABLES AND OTHER LONG AND SHORT-TERM PAYABLES

The provision for contingent tax liabilities refers to

(i)

potential liabilities relating to audits in progress not

The balance of 198,630 thousand euros shows a

yet concluded abroad.

decrease of 20 million from the previous year. The

The Supplementary Agents Indemnity Fund includes

average payment days as of December 31, 2022

provisions for reimbursements recognized in the

(calculated on the cost of the last quarter's came)

event of termination of the agency relationship,

amounted to 91 days compared to 113 days in the

quantified according to the methods indicated in

previous year.

the collective economic agreement of 20 March,

There are no payables expiring after more than one

2002 for the regulation of agency relations and

year or expired for more than 12 months.

products that did not conform to expectations. The balance at the end of the year is due to the best estimate of these risks in relation to open claims,

Trade payables

commercial representation in the industrial sectors and cooperation.

(ii) Other long and short-term payables

The provision for contingent liabilities and legal

The short-term balance amounting to 34,758

expenses represents the reasonable risk calculated

thousand

in relation to litigation or potential liabilities still

employees for services accrued and not paid as of

pending in court.

the year-end closing, as well as the best estimate

Lastly,

the

other

short-term

and

long-term

euros

includes

amounts

due

to

of long-term benefits for directors and employees.

Comer Industries

101

2.6.15 CURRENT TAX LIABILITIES The details are as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Tax authority balance for current taxes

17,731

15,009

Tax authority for IRPEF withholdings

1,722

1,703

Other amounts due to tax authorities for withholding tax and VAT owed by foreign companies

3,720

5,105

Current tax liabilities

23,173

21,816

At the end of the year there were liabilities with tax authorities for current taxes calculated on income for the period.

The amount due to the tax authorities for withholding taxes on employee and self-employed income is in line with the previous year.

2.6.16 INFORMATION ON FINANCIAL ASSETS AND LIABILITIES MANAGEMENT OF LIQUIDITY RISK Liquidity risk is related to the difficulty in raising

and a substantial balance between the short and medium/long-term lines. This is necessary in order to avoid liquidity strains in the case of requests for any reimbursement by the relevant financial partners.

• Maintaining the average financial exposure for the

funds to meet commitments.

year within an amount substantially equivalent

The control and implementation of appropriate

to 80% of the total amount committed by the

policies for the management of liquidity risk in the

banking system.

presence of contingency guarantee the Company's survival and minimize the cost of funding.

This particular risk, unlike the others, manifests

• Maintaining adequate liquidity derived from the cash flow generated by economic, characteristic and current operations.

its effects in a very short time, with devastating

It should be added that in managing this type of risk,

consequences for companies.

the Group always tries to finance its investments

It can result from insufficient resources available

with medium- to long-term unsecured claims (in

to meet financial obligations under the terms and

addition to equity) in the breakdown of net debt,

deadlines set in the case of sudden revocation of

while covering current expenses using the short-

uncommitted credit lines or of the possibility that

term credit lines above.

the Company must honor its financial liabilities As previously commented, the treasury activities

MANAGEMENT OF THE INTEREST RATE RISK

of the Group are substantially centralized at the

The Group is exposed to the risk of changes in

parent company.

interest rates associated with outstanding financial

In FY 2022 the Group developed a cash pooling

assets and liabilities. The objective of interest

project with leading financial institutions in order

rate risk management is to limit and stabilize the

to optimize the cash flows of companies residing

negative effects on cash flows subject to changes

in foreign countries.

in interest rates. As of December 31, 2022, the Group

This project is expected to be completed in fiscal

had no interest rate risk hedging instruments in

year 2023.

place given its limited financial debt.

The management of liquidity risk implies:

The risk is related to financial instruments on which

• Maintaining credit lines defined as primary risk

interest accrues that are at a variable rate and

within a total of more than 80% of total credit lines

which are not hedged through other financial

before their natural expiry.

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2022 Annual Report

instruments, for which reference should be made

The fair value of a derivative contract is calculated

to paragraph 2.6.16 in relation to the sensitivity

using the official listing prices for instruments

analysis.

traded in regulated markets. The fair value of instruments that are not listed on regulated

MANAGEMENT OF EXCHANGE RATE RISK

markets is calculated using valuation models that

In addition to that already written in the previous

are appropriate for each category of financial

paragraph, it should be noted that the Group has

instrument, with market data related to the balance

significant transactions in the currency of non-EU

sheet date (such as interest rates, exchange rates,

countries (mainly USD and CNY).

and volatility), discounting the expected cash

The exchange rate risk is hedged through purchase

flows based on interest rate curves and converting

and sale of foreign currencies contracts (forwards).

amounts in other currencies to the Euro through

Counterparties in these operations are the banks

exchange rates provided by the European Central

with which the Group normally operates.

Bank.

The currencies involved are the USD and CNY,

Additional information, along with the sensitivity

and any such transactions carried out to hedge

analysis, was provided in the relevant parts of the

cash inflows connected with budgeted sales

notes to the financial statements, in accordance

transactions, scheduled on a monthly basis, may

with IFRS 7, to which reference should be made.

well fall within those defined as "highly effective"

It provides details on the amounts of the

on "highly probable" future transactions, and their

outstanding derivative transactions on December

economic effect is recorded on an accrual basis.

31, 2022, specifying the fair value and notional value

The efficacy assessment is aimed at proving the

in euros for each instrument class.

high correlation existing between the technicalfinancial characteristics of the risk being hedged (maturity, amount, etc.) and those of the hedging instrument, by carrying out specific retrospective and prospective tests.

RESIDUAL COVERAGE 2022 (AMOUNTS IN THOUSANDS) NOMINAL VALUE

NOTIONAL VALUE

FAIR VALUE

Amounts in currency

Amounts in euros

Amounts in euros

USD 12,000

11,251

(234)

Total residual coverage 2022

11,251

(234)

Short-term derivative financial instruments

11,251

(234)

OPERATION TYPE

CURRENCY

Hedges deemed effective Term hedging

USD/CNY

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SENSITIVITY ANALYSIS The following analysis has been prepared in order to better identify the economic risks and changes in equity arising from possible changes in exchange rates.

The analysis is performed on year-end and average exchange rates for the period adjusted with the maximum and minimum values recorded over an observation period of 52 weeks in 2022, the volatility index of the main currencies used by the Group.

The aim of the simulation is to show the impacts on the Group’s net profit and equity deriving from the translation of the financial statements of subsidiaries into the currency of the consolidated financial statements according to potential maximum fluctuations predicted by the analysis.

IMPACT ON EQUITY (THOUSAND EUROS)

IMPACT ON NET PROFIT (THOUSAND EUROS)

LOCAL CURRENCY

RANGE LAST 52 WEEKS 2022

RANGE LAST 52 WEEKS 2022

Source: UIC

Net equity

Net Profit

min

max

Spot 12.31.2022

min

max

US dollar

138,353

22,260

0.957

1.146

1.067

14,931

(9,029)

British pound

7,103

- 10,115

0.824

0.903

0.887

613

Chinese renminbi

631,014

222,749

6.752

7.533

7.358

Indian rupee

749,171

122,179

78.266

88.230

Brazilian real

47,487

21,035

4.968

Russian ruble

119,250

- 13,260

84.531

2022 AVG 365 DAYS

RANGE LAST 52 WEEKS 2022 min

max

1.053

2,132.7

(1,722.3)

(140)

0.853

(415.8)

655.9

7,702

(1,985)

7.079

1,524.0

(1,895.7)

88.171

1,075

(6)

82.686

83.5

(92.8)

6.442

5.639

1,136

(1,050)

5.440

367.1

(601.5)

117.201

85.300

13

(381)

88.397

(6.9)

36.9

The Group considers that it is not subject to significant economic and equity impacts deriving from the management of transactions of the single legal entities forming part of the scope of consolidation in foreign currency.

With regard to interest rates, the risk of which derives from financial instruments with interest accruing at a floating rate that are not hedged via other financial instruments, a sensitivity analysis was performed in which the effects of a change in interest rates of ±50 basis points with respect to the spot interest rates at December 31, 2022 were considered, all other variables remaining constant.

Potential impacts were calculated on floating rate financial liabilities as of December 31, 2022. The aforementioned change in interest rates would result in a higher (or lower) net pre-tax charge, as discussed below:

Index

min

max

(-50 bps)

(+50 bps)

Spread

Rate

Capital

Interest

Rate

Economic effect

Rate

Economic effect

Loan Unicredit

Euribor 3 months

2.132%

0.50%

2.63%

€ 9,500

€ 250

2.132%

€ -48

3.132%

€ 48

CA-CIB Line A1

Euribor 6 months

2.693%

1.00%

3.69%

€ 120,000

€ 4,432

3.193%

€ -600

4.193%

€ 600

CA-CIB Line A2

Euribor 6 months

2.693%

1.00%

3.69%

€ 20,000

€ 739

3.193%

€ -100

4.193%

€ 100

CAI

Euribor 6 months

2.693%

1.15%

3.84%

€ 50,000

€ 1,922

3.343%

€ -250

4.343%

€ 250

CA-CIB Line A3 $

Libor 6 months

4.170%

1.15%

5.32%

$ 35,000

€ 1,757

4.820%

€ -165

5.820%

€ 165

Total

€ 9,098

€ -1,163

€ 1,163

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MANAGEMENT OF CREDIT RISK The Group's policy is to sell to customers after an evaluation of their credit capacity and therefore within pre-set credit limits.

Historically, the Group has not suffered significant losses on receivables.

With reference to the changed economic conditions that marked the year 2022, it is believed that the risk connected to the reference value is higher. Consequently, the Group has strengthened its procedures for the selection of customers, monitoring of recoveries of credit and has set up a specific insurance coverage for 95% of receivables generated by the Holding company (with the exception of several historical customers with a grade of highly reliable), in respect of the credit lines assigned. The risk of insolvency has been adequately reflected in the accounts by the allocation of the specific allowance for doubtful accounts.

MANAGEMENT OF THE PRICE RISK The Group is subject to the risk of fluctuation in the price of raw materials, particularly that of: aluminum, cast iron, copper and steel. Group companies review the sales prices of the products annually, transferring to customers increases in purchase costs in percentage terms compared to forecast indices, on the basis of specific trade indexing agreements.

2.6.17 SALES REVENUES The breakdown of revenues by geographic area is as follows (2021 included WPG's revenues only in the month of December):

DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

INC. %

DECEMBER 31, 2021

INC. %

CHANGE %

EMEA

694,634

56.1%

248,526

41.6%

179.5%

NORTH AMERICA

265,315

21.4%

129,851

21.7%

104.3%

ASIA PACIFIC

208,751

16.9%

190,128

31.8%

9.8%

LATIN AMERICA

68,875

5.6%

29,604

4.9%

132.7%

Total turnover by geographical area

1,237,576

100%

598,110

100%

106.9%

The Group closed 2022 with an increase of 106.9% in total sales volumes, which stand at 1,237,576 thousand euros. The most significant growth was in Europe and North America, especially in the agricultural sector, as well as in the change in the scope of consolidation.

The turnover generated outside national borders reached 91% of the total, a figure that confirms the continuous expansion of the internationalization process.

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105

2.6.18 OTHER OPERATING REVENUES The breakdown of other operating revenues is as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Recovery of manufacturing, repair, service and transportation expenses

1,979

1,534

Scrap sales

665

707

Capital gains, photovoltaic refund

230

172

Capitalized costs

275

403

Income from insurance claims

0

475

Other revenues and income including out-of-period income

3,779

2,486

Total other revenues and income

6,929

5,778

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 275 thousand euros.

Other income and revenues increased in 2022 compared to the previous year also due to the amounts attributable to the German WPG Group.

2.6.19 PERSONNEL COSTS Personnel costs in absolute terms increased by 156,834 thousand euros compared to 2021 and related almost entirely to the values of the German WPG group.

The heading also contains the annual production bonus and provision of the variable salary in all the subsidiaries in the world, as the Group managed to meet the profitability targets established for 2022.

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, 2022

DECEMBER 31, 2021

2,299

1,211

Chief Executive Officer (service cost value share-based payment stock grant plan)

-

2,194

Statutory Auditors

50

50

2,349

3,455

Directors

Total compensation

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The amounts include fees payable for the period

15915 of May 3, 2007 published in Official Gazette no.

resolved by the Shareholders’ Meeting and the

111 of May 15, 2007 (SO 115), the remuneration for the

remunerations established by the Board of Directors

year 2022 for services provided by the audit firm

for Directors attributed particular responsibilities,

Deloitte & Touche S.p.A. relating to the certification

including bonuses. The values do not include social

of the 2021 financial statements is as follows:

security and insurance contributions.

The Group does not have any stock grant and/or stock option plans in place as of today.

o annual and infra-annual audit engagements on Italian companies for 111 thousand euros; o annual and infra-annual engagements for the audit of subsidiary companies for 350 thousand

2.6.21 OTHER OPERATING COSTS AND WRITE-DOWNS

euros; All the above-described fees are included in the "other operating costs" heading.

charges associated with turnover, production and

2.6.22 OPERATING RESULT

the corporate organizational structure such as

The operating result achieved, in absolute terms, is

rentals, utilities, leases and maintenance, insurance

equivalent to 127,517 thousand euros, corresponding

expenses, sales commissions, expenses related to

to 10.3% of the consolidated turnover, increasing

product quality as well as losses in value related to

compared to 9.5% of the previous year. This result is

impairment tests on rights of use relating to leased

mainly due to the combined effect of the increase

properties.

in sales volumes and the ongoing efficiency

Write-downs include provisions for bad debts and

drive in production and management processes

warranty for the year, before any uses.

throughout the Group. Further information can be

As required by Art. 149-duodecies of the Issuer

found in the Directors’ Report on operations.

The item other operating costs includes indirect

Regulation amended by Consob Resolution no.

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2.6.23 NET FINANCIAL INCOME / (CHARGES) The details are as follows: DESCRIPTION (THOUSAND EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Exchange gain (loss)

4,842

(731)

Exchange gains and losses

4,842

(731)

Bank interest receivable

445

189

Other interest income

558

11

Total financial income from cash management

1,003

199

Interest on advances, loans and other short-term bank borrowings

(1,810)

(12)

Interest on medium/long-term loans

(2,770)

(382)

Interest on loans amortized cost

(781)

(486)

Interest expense on discounted pension funds

(1,708)

(195)

137

13

Total financial costs from cash management

(6,933)

(1,062)

Interest resulting from the application of IFRS 16

(1,500)

(403)

Interest and other Net financial charges

(7,430)

(1,265)

Financial income balance

(2,588)

(1,996)

Economic result of interest rate hedging transactions fair value as at 12/31

EXCHANGE GAIN (LOSS) This item includes both realized differences

INTEREST AND OTHER NET FINANCIAL CHARGES

between the historical exchange rates of the

The value of interest payable on advances

relevant transactions and the reference exchange

and loans of a banking nature, both long- and

rates of receipts and payments in foreign currency,

short-term (equal to 4,581 thousand euros) has

and unrealized differences due to the translation

deteriorated compared to the previous period (394

of monetary items at the spot exchange rate at

thousand euros) as a result of the loan contracts

the end of the financial year. The profit is mainly

stipulated in the year.

attributable to the latter case, and in particular

The Interest payable heading for discounting the

to the revaluation of the Chinese yuan and of the

pension funds refers to the recalculation according

dollar against the euro.

to IAS 19 of the amount allocated to provisions for

The figure is shown net of the negative effect

severance pay by Italian, German and American

resulting from the revaluation of the dollar loan

companies.

commented on above.

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2022 Annual Report

2.6.24 INCOME TAXES

operates in and to the absence in 2022 of

The total tax charge of 34,213 thousand euros

respect to the WPG acquisition booked to the

includes current income taxes of 22,755 thousand

income statement in the consolidated financial

euros (18,250 thousand euros in 2021), a positive

statements, as required by IFRS 3. In order to better

change in deferred tax assets of 3,335 thousand

understand the reconciliation between the tax

euros, lower deferred tax liabilities of 4,160 thousand

burden recognized in the financial statements and

euros, and withholding taxes on dividends from

the theoretical tax burden, the following explanatory

foreign companies for 816 thousand euros.

table is provided wherein the IRAP (regional tax

The consolidated tax charge calculated net of

on productive activities) is not considered as this,

withholding tax on dividends from subsidiaries and

being a tax with a tax base different from income

tax credits, stands on December 31, 2022 at around

before taxes, would generate distortions between

26.7% against 28.0% calculated correspondingly on

one year and another. The reconciliation was

the 2021 period.

therefore determined with reference to the single

This improvement is mainly attributable to the

IRES (corporate income tax) tax rate in force in Italy,

different taxation in the countries the Group

equal to 24.0%.

DESCRIPTION (THOUSAND EUROS)

nondeductible costs as present in 2021 with

DECEMBER 31, 2022

DECEMBER 31, 2021

124,929

54,835

24%

24%

Theoretical income taxes

29,983

13,160

Tax effect of permanent differences – Italian companies

(629)

780

Effect of foreign tax rates different from the theoretical Italian tax rates

(3,208)

813

Tax effect of taxation of dividends from consolidated companies

150

142

Bonus tax credit – Italian Legislative Decree 91/2014

(25)

(25)

Tax effect of tax relief for Italian companies ACE

(113)

(84)

Tax effect of R&D credit (Italian Law 190/2014 Art.1, para. 35) and energy credit

(1,776)

(191)

Tax effect of super-amort/depr (Italian Law 208/2015) and hyper-amort/depr (Italian Law 232/2016)

(453)

(590)

Prior-year taxes and provisions

(332)

(61)

Tax impact on consolidation entries and IRAP impact on deferred taxes

7,588

(261)

Income taxes recorded in the financial statements, excluding IRAP

31,185

13,683

Current IRAP

3,029

1,723

Income taxes posted to the financial statements (current, deferred)

34,214

15,406

Consolidated profit before taxes Parent Company theoretical tax rate

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109

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 (EUROS)

DECEMBER 31, 2022

DECEMBER 31, 2021

Consolidated net income for the period attributable to Parent Company shareholders

90,716,070

39,428,960

Number of shares outstanding

28,678,090

28,678,090

Earnings per share (EPS) (€)

3.16

1.37

The means of calculation of the basic earnings (loss) per share and the diluted earnings (loss) per share are defined by IAS 33 – Earnings per share. The basic earnings (loss) per share is defined as the ratio between the economic result or the results of continuing operations of the Group attributable to the holders of ordinary shares and the number of ordinary shares outstanding at the end of the fiscal year.

Reggiolo, Italy, March 21, 2023

For the Board of Directors Matteo Storchi (President & CEO)

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Deloitte & Touche S.p.A. Piazza Malpighi, 4/2 40123 Bologna Italia Tel: +39 051 65811 Fax: +39 051 230874 www.deloitte.it

INDEPENDENT AUDITORS’ REPORT PURSUANT TO ARTICLE 14 AND 19-BIS OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

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 “Comer Group”), which comprise the consolidated statement of financial position as at December 31, 2022, and the consolidated comprehensive income statement, consolidated statement of changes in equity and consolidated cash flows statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Comer Group as at December 31, 2022, 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.

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.

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, 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.

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

In preparing the consolidated financial statements, the Directors are responsible for assessing the Comer 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 Comer 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 Comer Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• 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 Comer 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 Comer Group to cease to continue as a going concern.

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Annual Report 2022

3

• 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 Comer 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 communicated with those charged with governance 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.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Opinion pursuant to art. 14 paragraph 2 (e) of Legislative Decree 39/10 The Directors of Comer Industries S.p.A. are responsible for the preparation of the Directors’ Report of the Comer Group as at December 31, 2022, including its consistency with the related consolidated financial statements and its 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 Directors’ Report , with the consolidated financial statements of the Comer Group as at December 31, 2022 and on its compliance with the law, as well as to make a statement about any material misstatement.

In our opinion, the above-mentioned Directors’ Report is consistent with the consolidated financial statements of the Comer Group as at December 31, 2022 and is 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 Comer Group and of the related context acquired during the audit, we have nothing to report.

Statement pursuant to art. 4 of the Consob Regulation for the implementation of Legislative Decree December 30, 2016, no. 254 The Directors of Comer Industries S.p.A. are responsible for the preparation, on voluntary basis, of the non-financial statement pursuant to Legislative Decree December 30, 2016, no. 254.

We verified the approval by the Directors of the non-financial statement.

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4

Pursuant to art. 3, paragraph 10 of Legislative Decree December 30, 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 24, 2023

This 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.