FINANCIAL STATEMENT OF COMER INDUSTRIES S.P.A AS AT 31-12-2021

Financial Statements December 31, 2021 Comer Industries S.p.A. 1

Contents

Directors' Report Financial statements and explanatory notes Report of the Board of Statutory Auditors Auditors' Report

2

Directors' Report

3

Financial Statements at December 31, 2021

Comer Industries S.p.A. Registered Office and Administrative Offices: 42046 Reggiolo (RE) Italy - Via Magellano, 27 Reggio Emilia Business Register no. 07210440157 Approved share capital 18,487,338.60 euros entirely subscribed and paid-up Tax Number 07210440157 - VAT code IT 01399270352 Art. 2497 bis of the Italian Civil Code - The company is subject to management and coordination activities

by Eagles Oak S.r.l., with registered offices in 41126 Modena, Via del Sagittario 5 Share Capital 2,000,000 euros entirely paid-up - Modena Business Register no. 03699500363

DIRECTORS’ REPORT FOR THE YEAR 2021

1

Financial Statements at December 31, 2021

Summary of the results of Comer Industries S.p.A.

Comer Industries SpA at a glance (mil Euros)

12/31/2021 354,9

12/31/2020 267,3

Change in % 32,8%

EBITDA [adjusted] % on sales EBITDA % on sales

31,4 8,9% 32,9 9,3%

24,1 9,0% 22,1 8,3%

30,3%

Amortization and Depreciation

(13,6)

(12,7)

6,4%

EBIT % on sales NET PROFIT % on sales NET PROFIT [adjusted] % on sales COMMERCIAL WORKING CAPITAL % on sales

19,3 5,4% 15,9 4,5% 17,6 4,9% 46,5 13,1%

9,4 3,5% 14,4 5,4% 18,5 6,9% 53,0 19,8%

106,2%

INVESTED CAPITAL

467,8

118,8

REVENUE FROM SALES

ROI

[EBIT / Invested capital (%)]

NET FINANCIAL POSITION NET FINANCIAL POSITION [Adjusted] TOTAL CASH FLOW FROM OPERATIONS CAPEX

4,1%

7,9%

(193,5)

(15,4)

(15,6)

6,6

29,3

24,8

48,8%

10,3% (5,1%) (12,3%) 293,7%

11,5

7,0

% on sales

3,2%

2,6%

EQUITY Net Financial Position [adjusted] / Equity

276,9 0,06 -

103,9 0,06

ROE [Net Profit adjusted / Equity]

6,3%

17,8%

EPS [adjusted] [Net Profit adjusted / nr. Shares]

0,61

0,91

(32,5%)

AVERAGE PERSONNEL EMPLOYED IN THE PERIOD

877

800

9,6%

2

63,7% 166,6%

Financial Statements at December 31, 2021

1. SIGNIFICANT EVENTS IN THE 2021 FINANCIAL YEAR 2021 was a year of recovery for the global economy. The vaccination campaign initiated early in the year helped to limit the pandemic, fueling expectations of a return to normal in social and economic life.

In the course of 2021, Comer Industries carried out the analysis and assessment activities that led to the finalization of the acquisition of 100% of the share capital of WPG Holdco (WPG Acquisition), the parent company of Walterscheid Powertrain Group, an important player in the off-highway sector (drive systems and components for the agricultural, industrial, construction and mining equipment sectors), present in 75 countries, with 2021 turnover of 485 million euros.

Walterscheid Powertrain Group was founded by Jean Walterscheid in 1919 in Siegburg, in North RhineWestphalia, and after over 100 years of history, it is one of the main players in the industry of powertrain systems and services for off-highway and industrial applications.

The transaction was disclosed to the market on July 15, 2021 and was classified as a reverse take-over pursuant to article 14 of the AIM Italia Regulation. The acquisition of 100% of the share capital of WPG Holdco was completed on December 1, 2021, for consideration of roughly 203 million euros, with a cash outlay of 40 million euros and the investment of WPG Parent B.V., currently the sole shareholder of WPG Holdco controlled by the private equity fund One Equity Partners, in Comer Industries, with 28.00% of the share capital. To ensure that WPG Parent was the owner of a 28% of the share capital, the Shareholders' Meeting of Comer Industries S.p.A., in extraordinary session, approved on 14 September 2021 the capital increase of approximately 163 million euros (of which 5 million in nominal share capital and 158 million in share premium), corresponding to the issue of no. 8,029,865 new ordinary shares. As a result of the issue of the New Shares, the share capital of Comer Industries is equal to EUR 18,487,338.6 divided into no. 28,678,090 ordinary shares, without par value.

As a result of the finalization of the WPG Acquisition, as of December 1, 2021 the Board of Directors of Comer Industries S.p.A. now includes Joseph Patrick Huffsmith and Lee Merle Gardner, as approved by the shareholders’ meeting on September 14, 2021. Furthermore, a shareholders' agreement was concluded between Eagles Oak S.r.l. and WPG Parent B.V., governing their relationships as shareholders of Comer Industries. Please recall that the shareholders' agreement defines the commitment of WPG Parent B.V. to maintain ownership of at least 50% of the shares held in Comer Industries S.p.A. until six months from the finalization of the Transaction.

The union of the two companies resulted in the formation of a group which is one of the most important global players in mechanics for the agricultural sector, present in all of the main markets worldwide with pro-forma revenue in 2021 in excess of one billion euros.

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Financial Statements at December 31, 2021

Through this transaction, Comer Industries and Walterscheid Powertrain Group aim to achieve an industrial project intended to make the group resulting from the business combination a European champion, amongst the global leaders in agricultural sector mechanics, with long-term development outlooks.

Walterscheid Powertrain Group operates in a sector complementary to that of Comer Industries, as it also has significant experience in applying new solutions in the field of powertrain products and systems specialized for machines used in a number of industrial sectors, from agriculture to mining and energy.

In particular, Walterscheid Powertrain Group covers the entire OEM components cycle, including a broad range of after market services aside from manufacturing: the combination of both segments creates a particularly attractive offer for customers.

Walterscheid Powertrain Group enjoys a significant reputation in the market due to the high quality of its products, its engineering capabilities, its strong innovative bent and its long-term customer relationships.

Walterscheid Powertrain Group is capable of providing a broad range of services (distribution of components, on-site assistance, digital solutions, high value-added services) for machine operators, partners in workshops and construction machine retailers. Walterscheid Powertrain Group covers all channels and segments in the aftermarket market of powertrain services and PTO driveshafts and universal joints, with a strong brand positioning.

Lastly, in the course of 2021, the transfer of the “Planetary Drives” and “Axles” assembly lines from the factory in Cavriago to the Reggiolo industrial center was definitively concluded, as set forth within the internal efficiency plan oriented towards the re-balancing of production site footprints. Thanks to this reorganization, important expertise will be acquired in the Reggiolo plants, which will go towards integrating the local operating center, allowing it to become a center of key importance and strategic value for the Group.

2. THE GLOBAL MACROECONOMIC SCENARIO AND THE REFERENCE MARKET The global economy will need to face 2022 in a weaker position than the most recent IMF forecasts, which date back to October. Increasing energy prices and difficulties encountered in procurement have resulted in higher and more geographically widespread inflation than expected, particularly with regard to the United States, emerging markets and developing countries. The Chinese real estate market slump and lower than expected growth in private consumption are also resulting in more cautious growth outlooks.

Global growth is estimated at around 4.4% in 2022, 0.5 percentage points below last October’s IMF forecasts, and 5.9% in 2021, in line with the decreases in the growth forecasts of the two largest economies (See Figure 1.1). The estimate takes into consideration the effects of the restrictions on mobility and border closures that are expected to weigh down on growth in the first quarter of 2022. These negative effects should gradually recede starting from the second quarter. The estimates are based on information available at January 18, 2022.

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Financial Statements at December 31, 2021

Figure 1.1

Amongst the changes in economic estimates for 2022, the removal of the Build Back Better fiscal policy package from the reference parameters, the early withdrawal of monetary adjustment and continuous supply chain interruptions have contributed toward lowering estimates for the United States by 1.2 percentage points.

In Canada, the weaker results recorded at the end of 2021 and the expectation of flatter external demand for 2022 - linked to the revision of estimates for the United States - led to a lowering of 0.8 percentage points.

In the Eurozone, continuing procurement difficulties and the consequences of the pandemic, already highlighted previously, led to a revision of 0.4 percentage points, driven by the 0.8 percentage point decline in Germany, in large part due to the economy’s exposure to supply chain shocks.

In the United Kingdom, the slowdowns caused by the pandemic and procurement issues (particularly in the labor and energy markets) have translated into a downgrade in growth by 0.3 percentage points, to 4.7%.

The lowering of expectations for 2022 was driven by revisions of the estimates of several large emerging markets. In China, interruptions in the real estate sector triggered a broader slowdown. This led to the downward revision of estimates for 2022 to 4.8%, 0.8 percentage points lower than in October. Forecasts were also weaker in Brazil, where the fight against inflation required a strong response in terms of monetary policy, which will negatively influence domestic demand.

Supply chain interruptions, energy price volatility and wage pressures in certain geographical areas could boost uncertainty with respect to inflation. The increase in reference rates by more advanced economies could result in financial stability risks in emerging countries as well as in developing economies. Other global risks could also materialize should geopolitical tensions remain high.

The situation in Ukraine is developing rapidly, after Russia recognized two separatist republics in the Donbas region. The has West condemned the decision and imposed sanctions against Russia. The risk of an escalation could impact European energy supplies from Russia, thus increasing inflation.

As regards interest rates, in the United States, with the increase in pressures on prices and wages, the Federal Reserve decided to accelerate its asset buying plan and has signaled that it will increase rates in 2022 even more than previously forecast.

The European Central Bank (ECB) announced that it will discontinue its net asset purchases as part of the Pandemic Emergency Purchase Program in March 2022, but it will temporarily increase net purchases by a 5

Financial Statements at December 31, 2021

modest amount within its longer term asset purchase program. The ECB also committed to maintaining reference interest rates at current levels until adequate progress has been made toward stabilizing mediumterm inflation.

Agricultural sector.

The CEMA business climate index published in January 2022 has further stabilized at high levels after several months of slight downward correction, which began after the record peak reached in May and June, when it marked its highest level since 2008. In January 2022, the index rose slightly to 56 points, on a scale from -100 to +100.

In the first nine months of the year, sales of industrial units at global level increased across all key regions, albeit with uneven results by geographical area and product. In North America, sales in the market of tractors and combine harvesters increased by 49% and 10%, respectively, and in the European markets by 31% and 13%. In South America and the rest of the world, increases in demand for combine harvesters and tractors reached 38% and 12%, respectively.

In the fourth quarter, growth remained above 10% in all countries, although with lower results than in the earlier months of the year.

In the fourth quarter of 2021, on the other hand, there was a less decisive market recovery than in the initial months of the year. Demand continues to increase in most geographical areas. In North and South America, tractor demand increased 10% for tractors under 140 Hp and 23% for tractors over 140 Hp. In Europe, the tractors and combine harvesters market increased respectively by 16% and 17%.

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Financial Statements at December 31, 2021

Industrial sector and wind power.

As reported in the economic bulletins of VDMA (the main German association of leading players in the mechanical industry), the investment incentive programs promoted by the governments of the main industrialized countries and the fiscal policy measures implemented, in conjunction with the improved economic context, have led to a sharp recovery from the lows reached in the wake of the pandemic.

In the first nine months of the year, global demand for earthmoving machines remained stable with respect to the third quarter of 2020, recording an increase in North America and Europe of 10% and in South America of 86%, alongside a decline of 13% in the Rest of the World. In the fourth quarter of 2021, the recovery was stronger, global demand for construction equipment increased in all sub-segments, with compact and service machinery growing by 13% and construction machinery increasing by 16%. The greatest growth was confirmed especially in South America (+87%) and North America (+23%), while in Europe and the Rest of the World, it came to 19% and 6%, respectively. Comparing these results with the final months of 2019, it can be seen that machine production has already surpassed pre-pandemic levels.

As regards the wind sector, on the basis of what has been reported by the main wind tower manufacturers, 2021 saw a net increase in the commitments of more than 50 countries to combat climate change. These commitments, which in certain cases are linked to specific wind energy installation targets, constitute strong potential for the wind energy industry and are reflected in the continuous improvement of medium- and longterm demand outlooks.

As concerns the near future, forecasts therefore point to a positive outlook for 2022, especially in Latin America and Asia.

3. COMMENTS ON KEY PERFORMANCE INDICATORS Comer Industries S.p.A. monitors its performance using various indicators that may not be comparable to similar measurements adopted by other groups. Company Management considers that these indicators provide a comparable measurement of the results on the basis of standardized performance factors, facilitating 7

Financial Statements at December 31, 2021

the identification of operating trends and allowing management to take action also during the year with swift corrective actions whenever necessary.

3.1. DEFINITION OF THE INDICATORS. The performance indicators used by the Company and disclosed in this report are based on the following definitions:

“Capex”: indicates, for each Reference Period, the increase occurring in investments in tangible and intangible fixed assets (net of revaluations and capital grants) which, following International Accounting Standards, are recorded in the corresponding heading in the balance sheet, reduced by disinvestments and excluding (i) the equity effects of internal capitalizations of costs for internally generated development activities, and (ii) the impacts related to the application of the new IFRS 16.

“Commercial Working Capital”: indicates the algebraic sum of the following items: (+) non-current and current assets: Inventories; Trade Receivables; (-) non-current and current liabilities: Trade payables.

“Invested Capital”: is the algebraic sum of the following items: (+) Commercial working capital, (+) Tangible (including Rights of use), intangible and financial fixed assets (+) Tax and deferred tax assets, current tax assets (+) Other short and long-term receivables, of a non-financial nature (-) Other short and long-term payables, of a non-financial nature (+) Current and deferred tax liabilities (-) Severance Indemnity Fund (TFR) and provisions for liabilities and charges.

“EBITDA”: represents the value of Operating Profit (EBIT) adjusted by the amount of the following entries: (+) Amortization, Depreciation and Write-Downs of Receivables and other provisions for risks and charges, in particular: •

amortization of intangible fixed assets;

•

depreciation of tangible fixed assets;

•

other write-downs of fixed assets;

•

write-downs of receivables included in current assets and of cash equivalents;

•

provisions for contingent liabilities

8

Financial Statements at December 31, 2021

“EBITDA [adjusted]”: represents EBITDA as previously defined, adjusted by the impacts attributable to the accounting treatment provided for by standard IFRS 2 with relation to planned stock options and/or stock grants, listing and/or collection costs and by standard IFRS 16 in relation to lease contracts.

“EBIT”: is the Operating Profit in the income statement.

“EPS (Earning per share) adjusted”: Net profit [adjusted], as defined below, on total number of shares outstanding at the date of approval of the financial statements.

“Total operating cash flow”: represents the algebraic sum of Cash flow from operating activities and the Net cash flow from investing activities (excluding IFRS 16 impacts).

"Net Financial Position": indicates the net financial position calculate as the difference between cash and cash equivalents and debt of a financial nature as follows: (+) current assets (A): •

Other short-term financial receivables

•

Marketable securities at fair value

•

Cash and cash equivalents

(-) non-current and current liabilities (B): •

Long-term loans

•

Long-term derivative financial instruments

•

Short-term loans

•

Short-term derivative financial instruments

•

Other short- and long-term financial payables (including payables relating to lease contracts recognized in accordance with IFRS 16)

•

Short-term trade payables and other payables

A + B: Net Financial Position.

The above net financial position, as represented, achieved the same results that would have been obtained according with recommendation reported in the Consob Communication n. 5/21 as at April 29, 2021 and in the Recommendation ESMA 32-382-1138 as at March 4, 2021.

"Net Financial Position [adjusted]": this represents the net financial position as defined above, adjusted to neutralize the impact of the accounting treatment of lease contracts provided by IFRS 16, as well as to include non-current financial receivables.

“Equity”: indicates the algebraic sum of share capital, statutory reserves, profits/losses and other similar reserves corresponding to the total of the “Share capital and reserves” heading.

9

Financial Statements at December 31, 2021

“Average staff in the year”: simple average on the basis of the workforce employed, including temporary workers.

“ROE (Return on equity)”: Net profit [adjusted], as defined below, divided by Equity.

“ROI (Return on investment)”: EBIT divided by Invested Capital as defined above.

"Net profit": indicates the result of the income statement.

“Net Profit [adjusted]”: represents net profit as previously defined, adjusted for impacts traceable to the accounting treatment prescribed by IFRS 2 standards relating to stock option and/or stock grant plans, listing and/or collection costs net of their relative tax effect.

The Company prepares the income statement according to the nature of costs and the cash flow statement with the indirect method.

3.2. COMMENTS ON THE INDICATORS. Revenues of Comer Industries S.p.A. stand at 354.9 million euros, up by 32.8% compared with the previous year (267.3 million euros). This result was achieved thanks to an increase in demand and a price effect in the markets in which the Company operates. In this context, at geographical level, the increase was seen primarily outside national borders (34.9% compared with 2020) and particularly in Europe.

The agricultural sector, which had seen a contraction in 2020, experienced a strong recovery, entailing a 38% increase in turnover. Nonetheless, the industrial sector, in continuous growth, closed the year with +22% compared to the previous year, driven by the Asia Pacific market and the development of new products and ranges. On the basis of product type it is worth noting a growth linked to planetary gearboxes and wheel drives for the industrial construction market.

The Company has proven its ability to fully exploit market opportunities, besides benefiting from the full effects of the rationalization projects introduced in the past aimed at controlling overheads.

EBITDA [adjusted] came to 31.4 million euros equal to 8.9% of revenues from 2021, up in absolute value (+30.3%) but in line in percentage terms with last year (9% in 2020). This result is due to the combined effect of continuous process improvements, efficiency projects at production sites and the sales organization in Europe, as well as royalties received from subsidiaries in Asia Pacific.

Net financial position [adjusted] showed a negative balance of 15.6 million euros, a deterioration compared to December 31, 2020 due to the 40 million euro cash outlay resulting from the business combination described previously. The balance included 20.2 million euros in liquidity and 171.9 million euros in current and noncurrent financial receivables from WPG, offset by 199.5 million euros in short and medium/long-term financial payables to credit institutions (net of up-front commissions) and 8.2 million euros in financial payables to subsidiaries.

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Financial Statements at December 31, 2021

Comer Industries S.p.A. generated cash from operating activities for 34.6 million euros, and was able to distribute dividends of 10.2 million euros.

Net profit amounted to 15.9 million euros (equal to 4.5% of revenues, 5.4% in 2020), benefiting from dividend income from subsidiary companies equal to 2.7 million euros (8.1 million euros in 2020). The [adjusted] net profit, which for 2021 excludes only the impacts of the treatment of stock grants in accordance with IFRS 2, amounted to 17.6 million euros (18.5 million euros in 2020), corresponding to 4.9% of turnover (6.9% in 2020).

ROE, calculated on adjusted net profit, stood at 6.3% compared to 17.8% in the previous year. The reduction in the value of this indicator should not be understood as a decline in profitability but is highly influenced by the increase in asset values following the acquisition of the WPG equity investment and the disbursement of the relative loan.

4. INVESTMENTS During the year, Comer Industries S.p.A. invested 11.5 million euros in tangible and intangible fixed assets, excluding internal capitalizations and the impact of the IFRS 16 accounting standard. The ROI was 4% (7.9% in 2020).

The most significant assets developed in Italy included the entry into operation of a robot cell with a Gleason Phoenix 280 CX gear cutting machine and an anthropomorphic robot and a Gleason 475 GMS gear metrology system for the gear machining flow, completely interconnected with logistics systems in the factory in a closed loop, taking an Industry 4.0 approach. The new gear cutting machines do not use lubricants for gear cutting, confirming the choice of environmentally friendly technologies for steel processing.

Two Mazak HCN 6800 and HCN 10800 horizontal machining centers were purchased for working on gearboxes, which will begin operating in the first quarter of 2022 and, with a view to Industry 4.0, will be interconnected with factory logistics systems.

It is also necessary to note the entry into operation of the new industrial painting system equipped with mixing systems and a latest generation application robot. The machine is completely interconnected with factory logistics systems and is equipped with the most advanced systems for controlling and reducing energy consumption. The technical engineering decisions made and the adoption of water-based paint products ensure that the painting machine aligns with the environmentally friendly approach adopted.

In addition to the assets described above, new latest-generation semi-automatic assembly lines have been purchased, which were designed with cyber-physical system concepts to combine productivity with high quality standards.

Lastly, please note the project for the expansion of the Reggiolo production site, with the creation of the new logistics center adjacent to the production unit, resulting in an industrial center with a covered surface area of more than 40,000 m2. As part of this significant project, investments were made in general plant engineering and masonry works, in addition to new intensive warehouses, automated warehouses, latest generation loading/unloading systems and dedicated software, investments intended to improve internal and external roads to the production center and investments linked to the construction of new offices adjacent to the logistics areas served by a 225 kW photovoltaic system.

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Financial Statements at December 31, 2021

In terms of digitization, Comer Industries S.p.A. completed the extraordinary ERP consolidation project at the historical Cavriago plant in the Reggiolo industrial center, entailing the rationalization of the set-up of associated IT systems making up the network of Comer Industries applications.

5. RESEARCH AND DEVELOPMENT In 2021, Comer Industries continued with its innovation activities across all product ranges: in particular, for the agricultural market, a gearbox was introduced for auxiliary services (“pump drive”) for sugarcane harvesting machines and the validation of the first axle for agricultural tractors was completed.

On the other hand, in the industrial sector, the validation of a newly designed gearbox for earthmoving machines (“motorgrader”) was completed, in addition to wheel drive prototypes built for 20 ton excavators with integrated hydraulic engines with the partner NABTESCO and lastly the launch of a new axle size for aerial platforms from 18 to 23 meters (17 tons).

The Comer Industries cutting-edge systems are conceived inside the design department before being validated in the Mechatronics Research Center in Reggiolo (RE), a 2,100 sq m facility dedicated to product development activities such as type-approval and operating tests, static tests, component and devices characterization tests, endurance and fatigue tests, crash tests and structural tests.

All the cutting-edge engineering solutions and systems previewed at major trade-fair events are designed and produced to maximize machine efficiency in the business sectors where the Group operates.

6. SOCIAL RESPONSIBILITY Comer Industries has always adopted a people centric approach, placing all of its stakeholders at the center of its corporate values, be they employees, investors, suppliers or the communities in the areas where the Company operates. Indeed, during the year a number of initiatives were carried out not only regarding personnel training, considered a strategic competitive factor within the broader business plan, but also in favor of local development, bearing witness to the attention that the company pays to social matters. In fact, for Comer Industries the surrounding region and nearby communities are resources to be preserved, improved and valued in terms of economic, social, and cultural development. It is certainly worth noting the project for renovating Palazzo Sartoretti and the surrounding park, cultural symbols in Reggiolo (RE), which have been fully restored after the 2012 earthquake, also thanks to the financial contribution of Comer Industries. The project reflects both the strong desire on the part of the company to preserve historical roots while also looking to the future, and its attention to the surrounding area. Palazzo Sartoretti was also subject to a renovation and enhancement project thanks to a partnership between Comer Industries, the Municipality of Reggiolo and the Reggio Children Foundation, which brought into being a 360-degree educational path with a view to investigating the phenomena of mechanics and gears and to explain them in different languages (graphical, digital, etc.). The project is intended to create veritable workshops and laboratories that embrace many areas and aspects of education, using the technical specialization and expertise in the mechanical sector that the Company has developed from its inception to today. The local projects in which the company believes go beyond the places in which Comer Industries is rooted, as can be seen from its now long-term collaborations 12

Financial Statements at December 31, 2021

with FAI (National Trust for Italy) in favor of the protection of artistic and cultural assets throughout Italy and with the “Namaste, Onore a te” volunteer organization thanks to which the company provides concrete support to the community of Bangalore, India, providing 10 deserving female students with the resources they need to cultivate their talents and become nurses. The commitment of Comer Industries to sustainability also includes support for its stakeholders and the financing of projects dedicated to innovation and new technologies.

Participation in the Le Village by Crédit Agricole of Parma project and in the development of the Deep Tier platform, in partnership with Iungo and Gellify, go in this direction: Le Village is an incubator that favors knowledge and interaction between local start-ups, financial institutions and industrial businesses and offers opportunities for development and reciprocal exchange; Deep Tier is a fintech platform model that supports the entire supply chain, from supply chain leaders to sub-suppliers, both local and abroad, allowing every player in the chain to access a number of forms of advances and financing from financial institutions rapidly and under advantageous conditions.

Programs, initiatives and support activities and partnerships involving the arts and the landscape, supporting innovation, education, environmental sustainability, and more generally the creation of value for ourselves and for future generations, have been part of the DNA of Comer Industries for years now.

7. ENVIRONMENT AND SAFETY In continuity with the process already initiated in prior years, Comer Industries has extended the Occupational Health and Safety Management System according to the ISO 45001:2018 standard to all Group locations, guaranteeing uniform management of all aspects linked to health and safety. In the course of 2021, a total of 31 injuries were recorded, with the frequency indicator coming to 4.56, against more than 1,300,000 hours worked.

Faced with the persistence of an uncertain global health situation and the constant evolution of national regulations, Comer Industries continued to guarantee a work environment safe for everyone's health through an in-depth review and application, also on the basis of government provisions, of its corporate protocol in synergy with local health authorities. The various measures put in place to ensure the correct application of preventive measures include the installation of facial thermoscanners to detect body temperatures, the daily distribution of surgical masks, cleaning and sanitization procedures and the use of teleworking.

Thanks to the measures introduced, the control tools in place within the Integrated System, and the collective responsibility of employees, there were no outbreaks reported in 2021.

On the Environment front, the results achieved in 2021 highlight the additional steps taken in processes of boosting efficiency and transitioning towards the use of green energy. Production process optimization projects and the use of monitoring systems, including digital ones, available at all production sites, allowed for an overall reduction in energy consumption (-10%). Furthermore, in the course of 2021, Comer Industries significantly increased the percentage of clean energy used to fuel its processes: the final value of 32% out of total consumption (against 9% at the end of 2020) was reached thanks to progressive plan for the procurement of electricity from certified renewable sources and the expansion of photovoltaic systems, with an overall installed power of more than 2,100 kWp. 13

Financial Statements at December 31, 2021

The joint effect of these interventions translated into an overall reduction of more than 20% in CO2 equivalent emissions linked to internal processes. It is worth noting that, in the course of 2021, Comer Industries provided a further drive to its strategy for reducing its carbon footprint, also thanks to actions on activities outside the scope of the company, such as the impact linked to commuting.

No critical issues have emerged during the year with relation to the environment.

8. INTERGROUP RELATIONS AND DEALINGS WITH RELATED PARTIES. Comer Industries S.p.A. 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. Transactions between Comer Industries S.p.A. and its subsidiaries, in compliance with IAS 24, are disclosed below:

Company (thousand euros) Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries WPG German WPG US Total

Company (thousand euros) Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries Comer Industries WPG German WPG US Total

Components Inc (Shaoxing) Co. Ltd. (Jiaxing) Co. Ltd. UK Ltd GmbH Sarl India Pvt Ltd do Brasil EIRELI

Components Inc (Shaoxing) Co. Ltd. (Jiaxing) Co. Ltd. UK Ltd GmbH Sarl India Pvt Ltd do Brasil EIRELI

Sales of goods Purchases and other and services operating costs 8.599 57.213 64.693 252 7.527 1.305 28.613 2.504 234 212 1.607 1.572 1.941 41 80.650 95.160

Trade Receivables 5.420 10.089 2.503 634 1.377 355 20.379

Financial income 174 212 387

Financial charges 104 104

Other Other Payables Receivables 9.326 25 3.094 18.408 65 100 660 5 31.682 0 0

Trade Payables

Royalties 6.625 832 7.457

Financial Receivables 80.855 91.053 171.908

Dividends 1.000 1.273 350 2.623

Financial Payables 8.138 8.138

The “Financial income” and “Financial charges” headings refer to interest accruing in the period on intercompany loans. At December 31, 2021 the following intra-group loans were outstanding: •

Loan in favor of Comer Industries S.p.A. from Comer Industries (Jiaxing) Co. Ltd. for 8 million euros;

•

Loan in favor of WPG German Holdco Gmbh from Comer Industries S.p.A. for 80.7 million euros;

•

Loan in favor of WPG US Holdco LLC. from Comer Industries S.p.A. for 90.9 million euros.

Dealings with parent companies Comer Industries S.p.A. does not have commercial dealings with the majority shareholder, Eagles Oak S.r.l.

14

Financial Statements at December 31, 2021

Relations with other related parties It is disclosed that the “Other operating costs” heading includes professional consultancy provided by two Directors of the parent company Comer Industries S.p.A. for non-significant amounts.

9. THE COMPANIES IN THE GROUP At December 31, 2021, the Comer Industries Group is organized in a structure with Comer Industries S.p.A. at the top, possessing directly or indirectly 100% of 26 Italian and foreign subsidiaries that constitute the scope of consolidation.

The key figures of the consolidated subsidiary companies are summarized in the table below:

15

16

Walterscheid Cardan GmbH

GKN Ohio Inc.

Powertrain Rockford Inc.

Walterscheid Inc. Woodridge

Powertrain Services (UK Newco) Ltd.

Powertrain Services UK Limited

Walterscheid Russia LLC

Walterscheid Monguelfo S.p.A.

Powertrain Services France SAS

Walterscheid A/S

Walterscheid Powertrain (China) Co. Ltd.

Walterscheid Brasil Industria de Equipamentos Ag

Walterscheid Getriebe GmbH

Walterscheid GmbH

Off-Highway Powertrain Services Germany GmbH

WPG US Holdco LLC.

WPG UK Holdco Ltd.

WPG German Holdco GmbH

Comer Industries (Jiaxing) Co Ltd

Comer Industries India Pvt Ltd

Comer Industries (ShaoXing) Co Ltd

Comer Industries Components Srl

Comer Industries UK Ltd

Comer Industries do Brasil EIRELI

Comer Industries INC

Comer GMBH

Comer Industries SpA

Company

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Parent Company

% control

Design, Production and Sales activities in the industrial sector

$

$

Dormant company

$

Design, Production, Aftersales and Sales activities in the agricultural and industrial sector

£

£

$

£

£

$

£

25 €

-

$

1 $

1.757 $

-

16.039 £

0

2.580 €

2.139 €

2.367 DKK

20.799

1.933 BRL

26 €

17.895 €

2.050 €

51.446 $

3.450 £

10.495 €

11.700.000 €

145.090.000 INR

6.720.000 €

7.125.000 €

265.000 £

6.112.000 BRL

13.281.000 $

205.000 €

13.350.000 €

25 €

-

1

1.757

-

16.039

0

2.580 €

2.139 €

2.367 DKK

20.799

1.933 BRL

26 €

17.895 €

2.050 €

51.446

3.450

10.495 €

11.700.000 €

145.090.000 INR

6.720.000 €

7.125.000 €

265.000

6.112.000 BRL

13.281.000

205.000 €

18.487.339 €

Share capital as at of which paid as at 12/31/2021 12/31/2021

Design, Production and Sales activities in the agricultural sector

Holding company

Holding company

Aftersales and sales activities in the agricultural and industrial sector

Design, Production and Sales activities in the agricultural and industrial sector

Aftersales and sales activities in the agricultural and industrial sector

Aftersales and sales activities in the agricultural and industrial sector

Design, Production and Sales activities in the agricultural and industrial sector

Design, Production and Sales activities in the agricultural sector

Design, Production and Sales activities in the agricultural and industrial sector

Design, Production and Sales activities in the agricultural sector

Aftersales and sales activities in the agricultural and industrial sector

Holding company

Holding company

Holding company

Production and sales activities in the agricultural and industrial sector

Production and sales activities in the industrial sector

Sales activities in the agricultural sector

Production and sales activities in the agricultural and industrial sector

Sales with logistics services in the agricultural and industrial sector

Sales with logistics services in the agricultural sector

Sales with logistics services in the agricultural and industrial sector

Agency and trade activities in the agricultural and industrial sector

Design, production and sales activities in the agricultural and industrial sector

Main business

487

0

6.081

3.188

0

0

355

3.496

1.350

0

1.452

630

2.644

9.184

5.841

0

0

0

198,25

18,30

7,53

82,72

2,98

13,85

94,82

n.a

354,94

Turnover 12/31/2021 Eur/Mln*

0,0

0,0

0,3

0,3

0,0

0,3

0,1

0,3

0,1

0,0

0,2

-0,1

-0,4

-0,2

-0,7

-0,2

0,0

0,5

20,49

1,74

0,20

2,07

0,21

2,05

3,56

0,09

15,8838

Net profit 12/31/2021 Eur/Mln*

-0,1

0,0

46,6

19,1

-0,1

14,4

2,0

17,1

7,7

1,3

12,5

0,6

7,2

51,7

14,0

24,6

3,2

-18,4

48,69

7,44

11,09

15,56

0,92

4,45

23,18

0,35

276,91

Equity 12/31/2021 Eur/Mln*

25

0

157

166

0

0

9

206

31

0

106

47

221

733

357

0

0

0

278

66

2

286

4

7

30

0

877

Number of employees 12/31/2021

Financial Statements at December 31, 2021

Financial Statements at December 31, 2021

10. NON-FINANCIAL INFORMATION In 2021 Comer Industries established its strategy regarding sustainability and social responsibility, following the presentation in 2019 of the “Our Bright Impact” project.

The Sustainability Report referring to 2020 was published during the year with the objective of communicating in a transparent and comprehensive way the Group’s strategies, initiatives and performance with an economic, social and environmental impact. With regard to the 2021 financial year, consistent with this approach, Comer Industries is preparing to publish the Non-Financial Statement (NFS) pursuant to Leg. Decree 254/2016.

In line with its support of the UN 2030 Agenda and commitment to Sustainable Development Objectives, Comer Industries is implementing a concrete action plan aimed at contributing to the achievement of said objectives and a progressive integration of sustainability into its business model.

11. SIGNIFICANT EVENTS AFTER THE CLOSE OF THE YEAR AND BUSINESS OUTLOOK On February 21, 2022, the Comer Industries Board of Directors reviewed and approved the plan for the crossborder merger by incorporation into Comer Industries of the subsidiary WPG Holdco B.V. (non-operating parent company of the newly acquired Walterscheid Group).

This transaction is intended to help achieve the best operational efficiency, simplification and a shortening of the Comer Industries chain of control.

In relation to recent socio-political events currently under way, the Company highlights that revenues from the nations concerned by the crisis in Eastern Europe amount to just under 1% of 2021 revenues, that there are no significant outstanding credit positions and there are no relevant impact on supply chain.

No other specific significant events occurred after the close of the year.

12. PROPOSAL FOR THE ALLOCATION OF PROFIT The Board of Directors proposes to the Shareholders' Meeting the allocation of profit for the year of Comer Industries S.p.A. of 15,883,788.69 euros as follows: -

Dividends of 0.5 euros for each share existing at the approval date, corresponding to a total value of 14,339,045.00 euros, calculated on the basis of the number of shares outstanding at the draft financial statements’ approval date (i.e. 28,678,090 shares).

-

794,189 euros to the Legal Reserve (pursuant to art. 2430 of the Italian Civil Code), as it has not yet reached one-fifth of the share capital, increased in 2021 following the acquisition described previously.

-

The residual value of 750,554.69 euros to the Extraordinary Reserve.

The distribution of a dividend of 0.5 euros per share will take place with an ex-date of May 2, 2022 and payment date of May 4, 2022. In this case, all those registered as Comer Industries S.p.A. shareholders at the end of the accounting day of May 3, 2022 (the record date) will be entitled to the dividend.

Reggiolo, Italy, March 28, 2022

for the Board of Directors Matteo Storchi (President & CEO) 17

Financial Statements at December 31, 2021

Financial statements and explanatory notes

18

Financial Statements at December 31, 2021

Comer Industries S.p.A. Registered Office and Administrative Offices: 42046 Reggiolo (RE) Italy - Via Magellano, 27 Reggio Emilia Business Register no. 07210440157 Approved share capital 18,487,338.60 euros entirely subscribed and paid-up Tax Number 07210440157 - VAT code IT 01399270352 Art. 2497 bis of the Italian Civil Code - The company is subject to management and coordination activities

by Eagles Oak S.r.l., with registered offices in 41126 Modena, Via del Sagittario 5 Share Capital 2,000,000 euros entirely paid-up - Modena Business Register no. 03699500363

Contents:

Statement of Financial Position Income statement Statement of comprehensive income Statement of cash flows Statement of changes in equity Notes to the financial statements

19

Financial Statements at December 31, 2021

BALANCE SHEET (thousand Euros)

Notes

ASSETS Non-current assets Tangible fixed assets Intangible fixed assets Investments Tax assets and deferred tax assets Long-term financial receivables Other long-term receivables

53.317 3.461 232.837 5.559 154.165 605 449.945

49.043 3.361 33.117 4.516 68 90.105

5.7 5.8 5.8 5.4 5.5 5.9

71.224 86.552 1.691 4.909 17.743 20.201

45.733 60.212 1.002 2.665 16.577

202.320

126.189

652.265

216.294

Total TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY

Notes

Share capital and reserves Issued capital Share premium reserve Other reserves Net profit/(Loss) Total shareholders' equity Non-current liabilities Long-term financial loans Other long-term financial loans Tax liabilities and deferred taxes Post-employment benefits Other long-term payables Long-term provisions

Total TOTAL LIABILITIES

20

12/31/2021

12/31/2020

18.487 187.881 54.661 15.884 276.913

13.109 27.944 48.399 14.399 103.851

5.9 5.9 5.11 5.12 5.14 5.13

177.743 20.412 168 5.718 4.553 2.171 210.765

(290) 18.677 125 6.126 58 2.191 26.888

5.14 5.14 5.15 5.9 5.9 5.9 5.13

111.312 9.226 4.735 29.835 114 3.387 5.977 164.586

52.947 12.962 1.750 10.005 255 3.319 4.317 85.555

652.265

216.294

5.10

Total Current liabilities Trade payables Other short-term payables Current tax liabilities Short-term financial loans Short-term financial derivatives Other short-term financial loans Short-term provisions

12/31/2020

5.1 5.2 5.3 5.4 5.5 5.6 Total

Current assets Inventories Trade receivables Other short-term receivables Current tax assets Short-term financial receivables Cash and cash equivalents

12/31/2021

Financial Statements at December 31, 2021

INCOME STATEMENT

Notes

(thousand Euros)

12/31/2021

12/31/2020

Revenues from contracts with customers

5.17

354.936

267.301

Other operating revenues Variation in stock of fin. semi-fin. goods and work in progress Purchase costs Personnel costs Other operating costs Allowance for bad debts and other provisions for risks Depreciation/amortisation OPERATING PROFIT (EBIT)

5.18 5.7

11.931 25.492 (271.205) (56.082) (32.177) (425) (13.127) 19.343

7.760 2.560 (182.125) (50.794) (22.587) (62) (12.673) 9.379

5.23 5.23

(1.296) 2.748 20.796

(869) 8.136 16.645

5.24

(4.912)

(2.246)

15.884

14.399

Net financial income / (expenses) Dividends Pre-tax profit Income taxes

5.19 5.21 5.8-5.13 5.1-5.2 5.22

NET PROFIT/ (LOSS) Earnings/(loss) per share (in Euros)

5.25

0,55

0,71

Diluted earnings/(loss) per share (in Euros)

5.25

0,55

0,71

21

Financial Statements at December 31, 2021

COMPREHENSIVE INCOME STATEMENT

12/31/2021

(thousand Euros)

Net profit/(loss)

12/31/2020

15.884

14.399

0

31

0

31

(126)

(42)

(126)

(42)

15.757

14.387

Other components of the comprehensive income statement which will subsequently be reclassified in profit/loss for the period: (net of taxes) Net (loss)/gain on cash flow hedges of which fiscal impact Total other components in the comprehensive income statement that will subsequently be reclassified in profit(/(loss) for the period net of taxes Other components of the comprehensive income statement which will not subsequently be reclassified in profit/(loss) for the period: (net of taxes) (Loss)/profit from revaluation of defined benefit plans of which fiscal impact Total other components of the comprehensive income statement that will not subsequently be reclassified in profit/(loss) for the period net of taxes Total comprehensive profit /(loss) net of taxes

22

Financial Statements at December 31, 2021

CASH FLOW STATEMENT (thousand Euros) A - Operating activities Net profit for the year Reconciliation of net profit to operating cash flows: Depr. of tang. assets/invest. prop., amort. of intang. assets net of IFRS 16 impact Other impacts from IFRS 2 gross of deferred tax impact Provisions for employee benefits net of uses Provisions for risks and charges net of uses Net change in deferred taxes Changes in working capital Stocks Trade receivables Tax assets/liabilities Other receivables Trade payables Other liabilities Changes in severance indemnity net of provisions Changes in provisions for risks and charges net of write-downs A - Cash flow provided by operating activities B - Investing activities Net investments in tangible fixed assets Net investments in intangible fixed assets Divestments of tangible fixed assets Divestments of intangible fixed assets Investments in subsidiaries Divestments of subsidiaries B - Net cash flow provided by investing activities C - Net cash flow from IFRS 16 impact Increase in rights of use [IFRS 16] IFRS 16 asset impairment Depreciation on tangible fixed assets IFRS 16 Net charges IFRS 16 C - Net cash flow from IFRS 16 impact D - Business combinations Increase of intra-group financial credit Increase in company acquisition D - Cash flow from Business combination E - Financing activities Repayments of short-term loans Repayments of long-term loans New short-term loans New long-term loans Changes in capital and reserves from warrants Other changes in equity reserves Dividends paid in the period E - Net cash flows from financing activities VARIATION IN CASH AND CASH EQUIVALENTS (A+B+C+D+E) Opening balance of cash and cash equivalents Increase (decrease) in cash and cash equivalents Closing balance of cash and cash equivalents

23

Notes

5.1-5.2 5.10 5.12 5.13 5.4 5.7 5.8 5.4-5.11-5.15 5.6 5.14 5.14 5.12 5.13

5.1 5.2 5.1 5.2 5.3 5.3

5.1 5.1 5.1 5.1

5.5 5.3

5.9.3 5.9.4 5.9 5.9 5.10 5.10 5.10

12/31/2021

12/31/2020

15.884

14.399

9.476 2.194 2.023 3.292 (1.000)

9.457 2.807 1.958 4.476 544

(25.492) (26.340) 740 (1.226) 58.365 758 (2.431) (1.652) 34.592

(2.560) (4.901) 996 (284) 8.698 1.373 (2.302) (2.807) 31.855

(10.621) (1.504) 246 21 (419) 7.001 (5.277)

(6.891) (1.121) 661 88 0 191 (7.072)

(5.193) (450) 3.652 1.801 (190)

(374) 0 3.216 (2.737) 105

(171.908) (43.376) (215.284)

0 0 0

(7.792) (1.569) 27.483 179.602 2.389 (126) (10.205) 189.782 3.624 16.577 3.624 20.201

(8.600) (4.383) 7.000 0 0 (12) (7.143) (13.138) 11.750 4.828 11.750 16.577

Shareholder's equity at 01/01/2020 2020 Profit/(Loss) for the year IAS 19.93A - Actuarial gain Cash flow hedge reserve Subtotal: Other Comprehensive income Results Dividend distribution Allocation of 2019 result Stock grant impact Shareholder's equity at 12/31/2020 2021 Profit/(Loss) for the year IAS 19.93A - Actuarial gain Cash flow hedge reserve Subtotal: Other Comprehensive income Results Dividend distribution Allocation of 2020 result Acquisition impacts: share capital increase Warrant capital increase Warrant share premium reserve Share premium reserve from acquisition Stock grant impact Shareholder's equity at 12/31/2021

(thousand Euros)

24 18.487

187.881

2.151 157.787

-

-

5.139 239

27.944

-

13.109

-

13.109

Share capital

2.194 8.181

-

2.807 5.987

-

Share Stock Grant premium Reserve reserve 27.944 3.181

2.622

-

2.622

622

-

2.000

Legal Reserve

43.821

31.101 (7.143) 15.666 39.624 (10.205) 14.402

336

-

336

-

336

F.T.A. Reserve

Other Reserves Extraordinary Reserve

Statement of Changes in Equity

-

0

-

-

-

31 31

0

-

(2)

2

2

Retained earnings

(31)

C.F.H. Reserve

(298)

(126)

(126)

(172)

(42)

(42)

(129)

Others

15.884

(14.399)

15.884

14.399 15.884

(16.290)

14.399

16.290 14.399

93.801 14.399 (42) 31 14.387 (7.143) 0 2.807 103.851 15.884 (126) 15.757 (10.205) 5.139 239 2.151 157.787 2.194 276.913

Profit/(Loss) Total Equity for the period

Financial Statements at December 31, 2021

Financial Statements at December 31, 2021

1. GENERAL INFORMATION Comer Industries S.p.A. is an Italian company, with administrative and registered offices in Via Magellano 27 in Reggiolo (RE), Tax code and registration in the Business Register at no. 07210440157 with approved share capital of 18,487,338.60 euros entirely subscribed and paid-up at December 31, 2021. At the date of approval of these financial statements the share capital amounts to 18,487,338.60 euros subdivided into 28,678,090 shares.

The Company designs and produces advanced engineering systems and mechatronics solutions for power transmissions, supplied to important global manufacturers of agricultural and industrial machinery. Comer Industries S.p.A. is structured into three operating units specialized by product families spread over the provinces of Reggio Emilia, Modena and Mantua. For information on the Group’s operations, please refer to the “Directors' Report” presented along with the Consolidated financial statements.

In accordance with art. 2497 bis of the Italian Civil Code, Comer Industries S.p.A. is subject to management and coordination by Eagles Oak S.r.l. with headquarters in Modena, Viale del Sagittario 5, Share Capital of 2,000,000 euros entirely paid-up, Tax Code and company register no. 03699500363, which has control over it, as holder of the absolute majority of its shares.

The Company also prepares the Group’s Consolidated financial statements on the basis of legal requirements.

During the year, the business was run normally, and no events took place that significantly modified operating performance which would require applying any exemptions to IFRS. The financial statements as at December 31, 2021, drafted on a going concern basis, with respect to which there are no aspects of uncertainty, were approved by the Board of Directors on March 28, 2022.

At the date of approval of these financial statements the share capital amounts to 18,487,338.60 euros subdivided into 28,678,090 shares.

25

Financial Statements at December 31, 2021

2. ACCOUNTING STANDARDS ADOPTED 2.1.

DECLARATION OF COMPLIANCE WITH IFRS

The financial statements of Comer Industries S.p.A. have been drawn up in compliance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (“IASB”) and approved by the European Union and in force at the balance sheet date. The notes to the financial statements have been integrated, on a voluntary basis, with the additional information required by Consob and by the provisions issued by it in implementation of art. 9 of Italian Leg. Dec. 38/2005 (resolutions 15519 and 15520) of July 27, 2006 and the DEM/6064293 communication of July 28, 2006, pursuant to art. 78 of the Issuers’ Regulations, the EC document of November 2003 and, where applicable, the Italian Civil Code. “IFRS” also refers to the International Accounting Standards (“IAS”) still in force, as well as all the interpretive documents issued by the IFRS Interpretation Committee, previously called the International Financial Reporting Interpretations Committee (“IFRIC”) and before that, the Standing Interpretations Committee (“SIC”).

2.2.

CONTENTS AND FORM OF THE FINANCIAL STATEMENTS

The unit of currency used is the euro, and all values are expressed in thousands of euro unless otherwise indicated.

The presentation layout for the balance sheet makes a distinction between current and non-current assets and liabilities, in which: •

non-current assets include balances of assets realizable after more than one year and include intangible, tangible and financial assets and deferred tax assets;

•

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 debts, provisions for liabilities and charges and liabilities for employee benefits and deferred tax liabilities;

•

current liabilities include payables falling due within 1 year, including the short-term portion of medium-long-term loans and of provisions for liabilities and charges and liabilities for employee benefits.

The income statement is presented according to a “costs by nature” classification.

The cash flow statement has been drawn up on the basis of the indirect method and is presented in compliance with IAS 7, classifying cash flows between operating, investment and financing activities.

2.3.

RELEVANT ACCOUNTING STANDARDS

For the preparation of the financial statements, Comer Industries S.p.A. adopted International Accounting Standards and International Financial Reporting Standards as of 2018, with the transition date to IFRS effective January 1, 2017.

The financial statements as at December 31, 2021 were therefore drawn up according to the IAS / IFRS adopted by the European Union.

The financial statements are presented in thousands of euros and are prepared on a cost basis, except for financial instruments that are measured at fair value.

26

Financial Statements at December 31, 2021

The preparation of the financial statements in accordance with IFRS (International Financial Reporting Standards) requires judgments, estimates and assumptions that have an effect on the assets, liabilities, income and expenses. The actual results may differ from the results obtained using these estimates.

2.4.

INDUSTRY-RELATED INFORMATION

Industry-related information is given with reference to sectors of activity, exclusively in the consolidated financial statements.

2.5.

TREATMENT OF FOREIGN CURRENCY TRANSACTIONS

The functional and presentation currency of Comer Industries S.p.A. is the euro. Transactions in foreign currencies are converted into euro on the basis of the exchange rate at the transaction date. The monetary assets and liabilities are converted at the exchange rate on the balance sheet date. Any exchange rate differences arising out of conversion are recognized in the income statement. Non-monetary assets and liabilities measured at historical cost are converted at the exchange rate at the transaction date. The monetary assets and liabilities measured under fair value are converted into euro at the exchange rate on the date the fair value was determined.

2.6.

PROPERTY, PLANT AND EQUIPMENT

(i) Owned fixed assets Property, plant and equipment are measured at historical cost and are reported net of depreciation (see next point (iv)) and impairment losses (see para. 2.8). The cost of fixed assets manufactured internally includes materials, direct labor and a share of indirect manufacturing costs. The cost of fixed assets, whether purchased externally or manufactured internally, includes incidental costs directly chargeable and necessary to operate the asset and, when relevant and subject to contractual obligations, the current value of the estimated cost for the dismantling and removal of fixed assets.

Financial charges relating to specific loans used for the acquisition of tangible fixed assets are charged to the income statement on an accrual basis. According to the provisions of IAS 20, any capital grants obtained as a result of investment incentives granted by the public administration are deducted from the historical cost of any related capitalized fixed assets, when put into operation.

No fixed assets are available for sale.

(ii) Fixed assets under finance leases Assets held by the Company under leasing contracts, including operating leases, in accordance with the new IFRS 16 standard in force since January 1, 2019, are recognized as assets with a balancing entry in financial payables. In particular, assets are recognized at a value equal to the current value of future payments at the date of signing the contract, discounted using the applicable incremental borrowing rate for each contract.

(iii) Subsequent costs The costs of replacing certain parts of the fixed assets are capitalized when it is probable that these costs will result in future economic benefits and can be reliably measured. All other costs, including the costs of maintenance and repairs, are attributed to the income statement as incurred.

27

Financial Statements at December 31, 2021

(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.

2.7.

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 (v)) and impairment losses (see para. 2.8)

(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 (v)) and impairment losses (see para. 2.8) 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.

28

Financial Statements at December 31, 2021

(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

(iv) Accessory financing costs Accessory financing costs are recognized as a reduction of the loans when they are disbursed.

(v) 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 in rates, where necessary, are made prospectively.

2.8.

IMPAIRMENT OF ASSETS

The book values of the assets, except for stocks, financial assets regulated by IFRS 9 and deferred tax assets, are subject to review at the balance sheet date, in order to determine if any impairment indicators exist, particularly with reference to equity investments. If the assessment reveals the presence of such indicators, the estimated realizable value of the asset is calculated in the manner indicated below.

A tangible or intangible asset suffers an impairment if it is not able to recover the book value at which the asset is recorded in the financial statements through the use or sale thereof. The purpose of the verification (impairment test) provided by IAS 36, is to ensure that non-current assets are not carried at a value higher than their realizable value, consisting of the net realizable value or value in use, whichever is higher.

Value in use is the current value of future cash flows expected to be derived from the asset or the cashgenerating unit to which the asset belongs. Expected cash flows are discounted using a pre-tax discount that reflects the current market estimate of the cost of money reported at the time and risks specific to the asset.

If the book value is higher that the realizable value, 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 income statement.

If the conditions that led to the impairment cease to exist, the assets previously written down are proportionally reversed. Reinstatements of values are recorded in the income statement.

The goodwill value previously written down can never be reinstated.

2.9.

EQUITY INVESTMENTS

Equity investments in subsidiary companies are measured at cost. If at the balance sheet date impairment with respect to the carrying amount is detected, applying the impairment methodology described in the previous paragraph, the equity investment is written down accordingly.

29

Financial Statements at December 31, 2021

Investments in associates and others are valued according to the equity method, as set forth in IAS 28, which requires initial recognition at acquisition cost and the subsequent write-down or revaluation of the carrying amount to recognize the share pertaining to the investor of the investee’s profits or losses after the acquisition date.

2.10.

CASH AND CASH EQUIVALENTS

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

2.11.

CURRENT FINANCIAL ASSETS, RECEIVABLES AND OTHER ASSETS

Financial assets, as provided for by the new IFRS 9 – “Financial Instruments: recognition and measurement” (as revised in July 2014) which replaces IAS 39 - "Financial Instruments: Recognition and Measurement", are classified, on the basis of the Company's management methods and the related contractual cash flow characteristics, in the following categories: o

Amortized cost: financial assets held exclusively for the purpose of collecting the contractual cash flows are classified in the Amortized cost category. They are valued using the amortized cost method, recording the income in the income statement using the effective interest rate method;

o

Fair value through other comprehensive income ("FVOCI"): financial assets whose contractual cash flows are represented exclusively by the payment of principal and interest and which are held in order to collect the contractual cash flows as well as the flows deriving from the sale of the same are classified in the FVOCI category. They are measured at fair value. Interest income, exchange rate gains/losses, impairment losses (and related write-backs) of financial assets classified in the category FVOCI, are recorded in the income statement; other changes in the fair value of assets are recorded among the other components of OCI. When these financial assets are sold or reclassified to other categories, due to a change in the business model, the cumulative gains or losses recognized in OCI are reclassified to the income statement;

o

Fair value through profit or loss ("FVTPL"): the FVTPL category is residual in nature by collecting financial assets that do not fall under the Amortized cost and FVOCI categories, such as financial assets purchased for trading or derivatives, or assets designated as FVTPL by management at the date of initial recognition. They are measured at fair value. Gains or losses resulting from this measurement are recognized in the income statement;

o

FVOCI for equity instruments: financial assets represented by equity instruments of other entities (i.e. investments in companies other than subsidiaries, associates and joint ventures), not held for trading purposes, can be classified in the FVOCI category. This choice can be made instrument by instrument and requires changes in the fair value of these instruments to be recognized in the OCI and not to be reversed to the income statement either on sale or on impairment of the same. Only dividends from these instruments will be recognized in the income statement. The fair value of financial assets is determined on the basis of quoted bid prices or through the use of financial models.

The fair value of unlisted financial assets is estimated using specific valuation techniques adapted to the specific situation. Valuations are regularly carried out in order to verify whether there is 30

Financial Statements at December 31, 2021

objective evidence that a financial asset or group of assets may be impaired. If there is objective evidence, the impairment loss is recognized as a cost in the income statement for the period.

2.12.

DERIVATIVE FINANCIAL INSTRUMENTS

Comer Industries S.p.A. holds derivative financial instruments subscribed for hedging purposes; however, in cases in which the derivative financial instruments do not meet all the conditions applicable to hedge accounting as per IFRS 9, the changes in fair value of these instruments are recorded in the income statement as financial charges and/or income.

Therefore, the derivative financial instruments are recorded in compliance with the hedge accounting regulations when: o

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

o

it is presumed that the hedge is highly effective;

o

the effectiveness can be reliably measured and the hedge itself is highly effective during the designated periods.

The fair value of derivative financial instruments against exchange risks (forward) is their market value on the balance sheet date, which coincides with the discounted market value of the forward.

The accounting method for derivative financial instruments varies depending on whether or not the conditions and requirements of IAS 9 are met. In particular:

(i) Cash flow hedges In the case of a derivative financial instrument for which the hedging ratio to variations in cash flows generated by an asset or liability or a future transaction (underlying hedged item) believed to be highly probable and that could affect the income statement is formally documented, the effective portion, originating from the adjustment of the derivative financial instrument to the fair value, is charged directly to a reserve under capital and reserves. When the underlying hedged cash flow occurs, any such reserve is removed from capital and reserves and assigned to the income statement as operating charges and revenues, while any non-effective portion or overhedging, portion is immediately allocated to the income statement as financial charges and/or income.

When a hedging instrument reaches maturity, is sold or exercised, or the company changes the relationship with the underlying hedged item, and the forecast transaction, though it has yet to take place, is still considered likely, the resulting profits or losses originating from the adjustment of the financial instrument to the fair value remain under capital and reserves and are charged to income statement when the transaction takes place as described above. If the probability of the underlying transaction occurring is no longer likely, the related profits or losses from the derivative contract, originally recorded under capital and reserves, are immediately charged to the income statement.

(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 31

Financial Statements at December 31, 2021

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.

2.13.

INVENTORIES

Stocks are recorded, in each homogeneous category, at the purchase cost, including incidental and production costs and the corresponding net realizable or market value at year-end, whichever is lowest. The cost is determined using the weighted average cost method.

As far as goods manufactured by the Company (semi-finished, work in progress and finished goods) are concerned, the cost of production includes all directly chargeable costs (raw materials, consumables, energy utilities, direct labor), and the cost of manufacturing (indirect labor, depreciation, etc.) in the amount reasonably attributable to the products.

Any stock impairment risks are hedged by the relevant stock depreciation allowance recorded as an adjustment to the corresponding assets item. Amounts thus obtained do not differ significantly from current costs on the closing date of accounts.

2.14.

INTEREST-BEARING FINANCIAL PAYABLES

All interest-bearing financial payables are valued with the amortized cost method. The difference between this value and the settlement value is charged to the income statement during the term of the loan.

2.15.

LIABILITIES FOR EMPLOYEE BENEFITS

(i) Defined contribution plans Comer Industries S.p.A. participates in public or private defined contribution pension schemes on a mandatory, contractual or voluntary basis. The payment of contributions fulfills Comer Industries S.p.A.'s obligation towards its employees. The contributions are costs recognized in the period in which they are due.

(ii) Defined benefit plans for employees The defined benefit plans for employees are payable on or after the termination of the period of employment in the Company. These mainly include the severance indemnities which are calculated separately for each plan using actuarial methods to estimate the amount of future benefit accrued to employees during the year and in previous years. The resulting benefit is discounted and recorded net of the fair value of any related assets. The interest rate used to calculate the present value of the obligation was determined in accordance with para. 78 of IAS 19, from the Iboxx Corporate A index with a duration of 10+ as recorded on the valuation date. To this end, the yield for a duration comparable to the overall duration of the worker's covered by the assessment was chosen.

In the case of increases in plan benefits, the portion of the increase relating to the previous employment period is charged to the income statement on a straight line basis over the period in which the related rights will be acquired. If the rights are acquired immediately, the increase is immediately recorded in the income statement.

The expected present value of benefits payable in the future related to the length of employment in the current period, conceptually similar to the accrued share of the employee severance indemnity, is classified under

32

Financial Statements at December 31, 2021

personnel costs in the income statement while the implicit financial charges are reclassified in the applicable financial section.

2.16.

INCOME TAXES

Income taxes recognized in the income statement include current and deferred taxes. Income taxes are generally charged to the income statement, unless they relate to items recognized directly under capital and reserves. In this case, the income taxes are also charged directly to capital and reserves, as a variation to the amount recorded.

Current taxes are taxes calculated by applying the tax rate in effect on the balance sheet date and adjustments to prior year taxes to taxable income.

Deferred taxes are calculated using the so-called liability method on timing differences between the amount of assets and liabilities recorded in the financial statements and the corresponding values recognized for tax purposes. Deferred taxes are calculated according to the designated method of reversal of timing differences, on the basis of realistic estimates of financial charges resulting from the application of the tax legislation in force at the date in which the financial statements were prepared.

Deferred tax assets are recognized only if it is probable that sufficient taxable income will be generated in future years to realize these deferred taxes.

2.17.

PROVISIONS FOR RISKS AND CHARGES

Provisions for risks and charges relate to costs and charges of a specific nature and certain or likely 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 reliably.

Provisions are recorded at the value reflecting the best estimate of the amount the company would reasonably pay to settle the obligation or transfer it to third parties at the end of the period.

The costs that Comer Industries S.p.A. expects to incur to carry out restructuring plans are recorded in the financial year in which the Company formally defines the plan and the interested parties have a valid expectation that the restructuring will happen.

The provisions are periodically updated to reflect any variations in estimates of costs and realization times.

Revisions of the provision estimates are charged in the same income statement item that had previously held the provision.

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

possible, but not probable, obligations arising from past events, the existence of which will be confirmed only by the occurrence or non-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 estimated or the fulfillment of which will probably not be burdensome.

33

Financial Statements at December 31, 2021

2.18.

CURRENT FINANCIAL LIABILITIES, TRADE PAYABLES AND OTHER PAYABLES

Trade payables and other payables, which mature within the normal commercial terms, are not discounted and are recognized at cost (identified by nominal value) reflecting their settlement value.

Current financial liabilities include the short-term portion of borrowings, including payables for cash advances and other financial liabilities. Financial liabilities are measured at amortized cost by recording charges in the income statement using the effective interest rate method, with the exception of financial liabilities purchased for trading purposes or derivatives, or those designated as FVTPL by management at the date of initial recognition, which are measured at fair value through profit or loss (see para. Financial derivatives).

2.19.

DE-RECOGNITION OF FINANCIAL ASSETS AND LIABILITIES

Financial assets A financial asset is derecognized when: o

the rights to receive cash flows from the asset are extinguished;

o

the Company retains the right to receive cash flows from the asset, but has assumed the contractual obligation to pay them in full and without delay to a third party;

o

the Company has transferred the right to receive cash flows from the asset and has transferred substantially all risks and rewards of ownership of the financial asset or has neither transferred nor retained all risks and rewards of ownership of the asset but has transferred control of the asset.

In cases where the Company has transferred the rights to receive cash flows from an asset and has neither transferred nor retained all the risks and benefits or has not lost control over it, the asset is recognized in the balance sheet to the extent of its residual involvement in the asset. The residual involvement that takes the form of a guarantee on the transferred asset is valued at the lower of the initial book value of the asset and the maximum amount that the Company could be required to pay.

In cases where the residual involvement takes the form of an option issued and/or purchased on the transferred asset (including options settled in cash or similar), the extent of the Company's involvement corresponds to the amount of the transferred asset that the Company may repurchase; however, in the case of a put option issued on an asset measured at fair value (including options settled in cash or similar), the extent of the Company's residual involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities A financial liability is derecognized when the obligation underlying the liability is extinguished, canceled or discharged.

In cases where an existing financial liability is replaced by another from the same lender, under substantially different conditions, or the conditions of an existing liability are substantially changed, this exchange or change is treated as a de-recognition of the original liability and the recognition of a new liability, with any differences between the carrying amounts recognized in the income statement.

34

Financial Statements at December 31, 2021

In the case of changes to financial liabilities defined as non-substantial, the financial liability is not derecognized and the value of the debt is recalculated keeping the original effective interest rate unchanged, discounting the modified cash flows, thus generating a positive or negative effect on the income statement.

2.20.

REVENUES

Revenues are recognized to the extent in which it is probable that the economic benefits will be achieved by the Company and the related amount can be reliably determined, regardless of the date of payment.

Revenues are measured at the fair value of the amount received or to be received, taking into account the contractually defined payment terms and excluding taxes and duties.

Revenue from the sale of goods is recognized when the Company has transferred all significant risks and rewards connected with ownership 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.

2.21.

COSTS

Costs are recognized when they relate to goods and services purchased and/or received during the period or by systematic allocation of an expense from which future benefits are spread over time.

2.22.

FINANCIAL INCOME AND CHARGES

The financial income and charges are reported on an accrual basis based on the interest accrued to the net value of the related financial assets and liabilities by applying the effective interest rate. The financial income and charges include gains and losses on exchange and gains and losses on derivative instruments that must be recognized in the income statement if they fail to meet the requirements to be considered hedging.

2.23.

DIVIDENDS

Dividends are recognized when, as a result of the resolution passed by the shareholders' meeting of the investee company to distribute the profit or possibly the reserves, the right to collect them arises for the investor. The dividend is recognized as financial income, irrespective of the nature of the reserves distributed.

The investor company verifies that, following distribution, the recoverable amount of the equity investment has not declined to such a point so as to require the recognition of an impairment loss.

2.24.

SHARE-BASED PAYMENTS - EQUITY-SETTLED PAYMENT TRANSACTIONS

Comer Industries S.p.A. has adopted an incentive plan based on ordinary shares of the Company (Stock Grant Plan), reserved to its C.E.O., which ended with year-end close in 2021.

The cost of transactions settled with capital instruments is determined by the fair value on the date on which the assignment is made, using an appropriate valuation method.

Such cost, corresponding to the increase in shareholders' equity, is recorded under personnel costs over the period in which the conditions relating to the achievement of objectives and/or the provision of the service are met. The cumulative costs recognized for these transactions at the end of each financial year up to the vesting date are commensurate with the expiry of the vesting period and the best estimate of the number of equity instruments that will actually accrue.

35

Financial Statements at December 31, 2021

Service or performance conditions are not taken into account when the fair value of the plan at the grant date is defined. However, the likelihood that these conditions are met in defining the best estimate of the number of equity instruments that will be accrued is considered. Market conditions are reflected in the fair value at the grant date. Any other condition linked to the plan, which does not involve a service obligation, is not considered as a maturity condition. Non-accruing conditions are reflected in the fair value of the plan and imply the immediate recognition of the cost of the plan, unless there are also service or performance conditions.

No cost is recognized for rights that do not accrue because the performance and/or service conditions are not met. When the rights include a market condition or a non-vesting condition, they are treated as if they had accrued regardless of whether or not the market conditions or other non-vesting conditions to which they are subject are met, it being understood that all other performance and/or service conditions must be met.

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 total fair value of the payment plan, or is otherwise favorable to employees; this cost is measured with reference to the date of the change.

When a plan is derecognized by the entity or the counterparty, any remaining element of the plan's fair value is immediately expensed to the income statement.

2.25.

USE OF ESTIMATES

The preparation of the financial statements requires that the Directors apply accounting standards and methods that, in certain circumstances, are based on difficult and subjective valuations and estimates based on past experience and assumptions which are from time to time considered reasonable and realistic depending on the relative circumstances. The application of these estimates and assumptions affect the amounts reported in the schedules forming the financial statements, such as the Statement of financial position, the Income statement, the Statement of Comprehensive Income, the Cash flow Statement and the Statement of Changes in Shareholders' equity, as well as the information provided. The final values of the accounting items for which these estimates and assumptions were used may differ from those reported in the financial statements due to uncertainties regarding the assumptions and the conditions on which the estimates are based. Estimates and assumptions are reviewed periodically and the effects of each variation recognized in the period in which the estimate is revised if the revision affects only the current period, or even in subsequent periods if the revision affects the current period and those in the future. The financial statement items which, more than others, require a greater degree of discretion by the directors when making estimates and for which a change underlying the assumptions used could have a significant impact on the financial statements are: impairment of equity investments,

deferred

tax

assets,

allowance

for

doubtful

accounts, provisions for product warranty risks, other provisions for legal risks, the inventory write-down provision for semi-finished and finished products and transactions with payment settled with equity instruments.

2.26.

PUBLIC GRANTS

Public grants are recognized when there is reasonable certainty that they will be received and that all the conditions referring to them have been satisfied. Grants relating to components of cost are recognized as 36

Financial Statements at December 31, 2021

revenues but are systematically spread over a number of financial periods so as to match the recognition of the costs they are intended to offset. A grant relating to an asset is recognized as a revenue in constant amounts along the expected useful life of the asset in question.

In the event the Company receives a non-monetary grant, the asset and the relative grant are recognized at nominal value and released in the income statement in constant amounts along the expected useful life of the asset in question.

Law 124 of 2017 provides for compulsory disclosure of subsidies, grants, appointments or economic advantages received from the Public Administration or, in any case, involving public resources.

From a systematic reading of the regulation, the facilitating measures aimed at all companies have not been included (by way of example but not limited to tax facilitating measures such as hyper-amortization, superamortization, tax credit for research and development and facilitating measures such as the Wages Guarantee Fund) as these advantages are not aimed at a specific company.

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

2.27.

ACCOUNTING STANDARDS.

2.27.1. IFRS ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED WITH EFFECT FROM JANUARY 1, 2021 RELATING TO THE CORE BUSINESS OF THE COMPANY AND THE RELATIVE IMPACTS. The following IFRS accounting standards, amendments and interpretations have been applied for the first time by the Company starting from January 1, 2021:  On March 31, 2021, the IASB published an amendment called “Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)” by which it extends by one year the period of application of the amendment issued in 2020 which enabled lessees to account for rent reductions connected to Covid-19 without having to analyze the contracts to evaluate whether the definition of lease modification under IFRS 16 was met. Therefore, lessees applying this option in 2020 accounted for the effects of rent reductions directly in the income statement on the effective date of the reduction. The 2021 amendment, available only for entities that adopted the 2020 amendment, applies as of April 1, 2021 and early adoption is permitted. The adoption of these amendments had no effect on the Company’s financial statements.  On June 25, 2020, the IASB published an amendment called "Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)". The amendments allow the extension of the temporary exemption from applying IFRS 9 until January 1, 2023 for insurance companies.

The adoption of this amendment had no effect on the Company’s financial statements.  On August 27, 2020, the IASB, following the reform on interbank interest rates such as IBOR, published the document "Interest Rate Benchmark Reform-Phase 2" which contains amendments to the following standards: -

IFRS 9 Financial Instruments;

-

IAS 39 Financial Instruments:Recognition and Measurement; 37

Financial Statements at December 31, 2021

-

IFRS 7 Financial Instruments:Disclosures;

-

IFRS 4 Insurance Contracts; and

-

IFRS 16 Leases.

All amendments are effective on January 1, 2021. The adoption of this amendment had no effect on the Company’s financial statements.

2.27.2. NEW ACCOUNTING STANDARDS AND AMENDMENTS NOT YET APPLICABLE AND NOT YET ADOPTED IN ADVANCE BY THE COMPANY  On May 14, 2020, the IASB published the following amendments: o

Amendments to IFRS 3 Business Combinations: the amendments are intended to update the reference in IFRS 3 to the Conceptual Framework in the revised version, without resulting in any changes to the provisions of the standard.

o

Amendments to IAS 16 Property, Plant and Equipment: the purpose of the amendments is not to allow the deduction from the cost of property, plant and equipment of the amount received from the sale of goods produced during the testing phase of the asset itself. These sales revenues and related costs will therefore be recognized in the income statement.

o

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: the amendment clarifies that all ‘costs that relate directly to the contract’ must be considered when estimating whether a contract is onerous. Accordingly, the assessment of whether a contract is onerous includes not only incremental costs (such as the 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: the amendments were made to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples of IFRS 16 Leases.

All amendments will enter into force on January 1, 2022. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of these amendments.  On May 18, 2017, the IASB published IFRS 17 – Insurance Contracts, which is intended to replace IFRS 4 - Insurance Contracts.

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

The new standard also includes presentation and disclosure requirements to improve comparability between entities in this segment.

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

38

Financial Statements at December 31, 2021

The main features of the General Model are: o

the estimates and assumptions of future cash flows are always current;

o

the measurement reflects the time value of money;

o

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,

o

the expected profit is recognized in the contractual hedging period taking into account the adjustments resulting from changes in the cash flow assumptions relating to each group of contracts.

The PAA (Premium Allocation Approach) method involves measuring the liability for the residual coverage of a group of insurance contracts provided that, at the time of initial recognition, the entity expects the liability to reasonably represent an approximation of the General Model. Contracts with a coverage period of one year or less are automatically eligible for the PAA method. The simplifications arising from the application of the PAA method do not apply to the measurement of liabilities for outstanding claims, which are measured using the General Model. However, it is not necessary to discount those cash flows if it is expected that the balance to be paid or collected will occur within one year of the date on which the claim occurred.

An entity shall apply the new standard to insurance contracts issued, including reinsurance contracts issued, reinsurance contracts held and also investment contracts with a discretionary participation feature (DPF).

The standard applies from January 1, 2023 but early application is permitted only for entities that apply IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with Customers. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of this standard.

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

At the reference date of this document, the competent bodies of the European Union have not yet completed the approval process necessary for the adoption of the amendments and principles described below.  On January 23, 2020, the IASB published an amendment called “Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current”. The purpose of the document is to clarify how to classify debt and other short-term or long-term liabilities. The modification applies from January 1, 2023, however early application is permitted. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of this amendment.

39

Financial Statements at December 31, 2021

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

to

IAS

8”.

The

amendments

are

intended

to

improve disclosure about accounting policies so as to provide more useful information to investors and other primary users of financial statements as well as to help companies distinguish changes in accounting estimates from changes in accounting policy. The modification will be applied from January 1, 2023 however, early application is permitted. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of these amendments.  On May 7, 2021, the IASB published an amendment called “Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction”. The document clarifies how deferred taxes should be accounted for on certain transactions that can generate assets and liabilities of equal amounts, such as leases and decommissioning obligations. The modification will be applied from January 1, 2023 however, early application is permitted. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of this amendment.  On December 9, 2021, the IASB published an 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 information on financial assets presented at the date of initial application of IFRS 17. The amendment aims to avoid temporary accounting misalignments between financial assets and insurance contract liabilities, and therefore to improve the usefulness of comparative information for readers of financial statements. The modifications will be applied from January 1, 2023 along with the application of IFRS 17. The Directors do not expect a significant effect in the Company’s financial statements from the adoption of this amendment.

3. FINANCIAL AND NON-FINANCIAL RISK MANAGEMENT Comer Industries S.p.A.'s business is exposed to various financial risks: market risk (including exchange rate risk and interest rate risk), credit risk, liquidity risk, price and cash flow risk and other non-financial risks linked to climate change and IT security. The risk management program is based on the unpredictability of financial markets and aims to minimize any negative impact on the financial performance of the Company. The Company does not use financial derivatives for speculative purposes. Under this procedure financial risk hedging is planned by a central function of the Company which coordinates all the operating companies, reporting directly to the Chief Executive Officer.

(a)

Market risk

(i) Exchange rate risk Comer Industries S.p.A. operates internationally and is exposed to exchange rate risk due to exposure mainly to the US dollar, but also the Canadian dollar, Brazilian real, British Pound and the Chinese Yuan. The

40

Financial Statements at December 31, 2021

exchange rate risks are generated by forecasts of future commercial transactions and recognized assets or liabilities.

In order to manage the exchange rate risk generated by forecasts of future commercial transactions and recognized assets or liabilities denominated in a currency other than the functional currency (euro), Comer Industries uses repurchase agreements (forwards).

In particular, the Company is exposed in dollars for sales and purchases made with third parties primarily in the US currency; the Comer Industries S.p.A. policy is to manage collections and payments through current accounts in foreign currency, for natural hedging purposes.

If expected cash flows point to an excess of more than 70 percent between collections and payments, suitable forward derivative contracts are entered into to hedge the risk. (ii) Interest rate risk Interest rate risk is derived from medium-long term loans at variable rates. The Company's current policy is to use floating rate loans, monitoring the interest rate curve.

(b) Credit risk Comer Industries S.p.A.'s policy is to sell to customers after an evaluation of their credit capacity and therefore within pre-set credit limits. Historically, the Company has not suffered significant losses on receivables.

(c) Liquidity risk Prudent management of liquidity risk implies maintaining sufficient available cash and cash equivalents and sufficient credit lines from which to draw. Due to the dynamic nature of the business, Comer Industries S.p.A.'s policy is to have revolving standby credit facilities that can be utilized at short notice.

(d) Price and cash flow risk Comer Industries S.p.A is subject to the risk of fluctuations in metal prices, in particular, aluminum, copper and steel. The Group's policy is to cover the risk where possible, through commitments from suppliers in the medium term, with stockpiling policies when prices are at their lowest and agreements with customers.

Furthermore, the Company has no significant interest-generating activities towards third parties and the revenues and the related cash inflows are, therefore, independent of changes in interest rates.

For the operational management of the above risks, please refer to the “Information on financial assets” paragraph.

(e) Climate change risk Comer Industries S.p.A. manages risks linked to climate change, as well as the increase in regulatory restrictions relating to the reduction in greenhouse gas emissions and, more generally, the increasing focus of civil society and end consumers on the development of products and industrial processes with a lower environmental impact. As things currently stand, the Company has not identified a significant risk profile in relation to climate change. The Directors do not expect the progressive approach towards a low-carbon

41

Financial Statements at December 31, 2021

economy to have a significant impact on the business, and the possible ensuing technological change is not currently expected to have significant effects on the reference market.

(f) Information technology risk The Company believes that the operational continuity of its IT systems is of fundamental importance, and in this regard it has taken risk mitigation measures to guarantee network connectivity, data availability and security, while also guaranteeing the processing of personal data in compliance with the European GDPR and national regulations applicable in the individual EU Member States. To this end, it has implemented and continues to optimize an Information Security Management System (ISMS).

4. CORPORATE INFORMATION AND INDUSTRY-RELATED INFORMATION. 4.1.

CORPORATE INFORMATION

In the course of 2021, the consolidation scope changed compared to December 31, 2020, following the acquisition of the Walterscheid Group, as defined in more detail in the directors' report, and following the liquidation of the French subsidiary Comer Industries Sarl.

At December 31, 2021, Comer Industries S.p.A. did not hold treasury shares and, moreover, the subsidiaries do not hold shares in the Parent Company.

4.2.

INDUSTRY-RELATED INFORMATION

For sector information, please refer to the Group’s Consolidated Financial Statements.

42

Financial Statements at December 31, 2021

5.

NOTES TO THE FINANCIAL STATEMENTS OF COMER INDUSTRIES S.P.A.

5.1.

TANGIBLE FIXED ASSETS

The movements in technical fixed assets and the related accumulated depreciation during 2021 are described in the following tables, which show the values with a separate indication of grants received in the capital account, as a reduction of the investment value: Description (thousand Euros)

01/01/2020 Increase Impairment Decrease Depreciation Reclassification 12/31/2020 Increase Impairment Decrease Depreciation Reclassification

Land and buildings

Plant and machinery

102 228 0 0 (35) 0 295 290

16.788 1.194 0 (9) (3.051) 751 15.672 3.729

Fixtures and fittings, tools and other equip.

9.219 4.209 0 (638) (4.639) 252 8.403 4.207

(50) (3.263) 1.979 18.068

(16) (4.432) (308) 7.855

(65) 12/31/2021

519

Other assets 1.237 290 0 (14) (325) 0 1.189 809 (180) (332) 46 1.532

Tangible fixed assets Right of use in progress 2.211 24.147 971 374 0 0 0 0 (3.216) (1.002) 2.180 21.304 1.586 5.193 450 (3.652) (1.717) 2.048

23.296

Total 53.704 7.266 0 (661) (11.266) 0 49.043 15.814 450 (246) (11.744) 0 53.317

During the year, Comer Industries S.p.A. invested 10.4 million euros (2.9% of sales) in tangible fixed assets, net of decreases and excluding changes in "Rights of use".

Some of the most significant investments made by the Company include new gear cutting machines for processing steel that do not use lubricants, two Mazak horizontal machining centers for processing boxes, a robot cell with a Gleason gear cutting machine and an anthropomorphic robot and a Gleason gear metrology system for the gear machining flow, completely interconnected with logistics systems in the factory, taking an Industry 4.0 approach. It is also necessary to note the entry into operation of the new industrial painting system equipped with mixing systems and a latest generation application robot.

The value of the rights of use as at 31 December 2021, net of the accumulated depreciation, is equal to 23,296 thousand euros, of which: (i) 22,328 thousand euros for lease payments in industrial buildings; (ii) 651 thousand euros for lease payments on company cars; and (iii) 316 thousand euros for lease payments for forklifts.

5.2.

INTANGIBLE FIXED ASSETS

The variations in intangible fixed assets are shown below, indicating values net of government capital grants:

43

Financial Statements at December 31, 2021 Trademarks and knowhow 1.098 57

Development and certification costs

Description (thousand Euros)

01/01/2020 Increase Decrease

Amortization Reclassification 12/31/2020 Increase Decrease

Amortization Reclassification 12/31/2021

(446) 11 662 0

(13)

(362) 122 422

(13)

License and trademark concessions 2.322 781

44

31

(947) (116) 2.040 1.101 (1.009) 116 2.249

Other Intangible fixed intangible assets in fixed assets progress 1 257 0 340 (88) (1) 105 1 615 403 (21) (0) (238) 0 759

Total 3.735 1.121 (88) (1.407) (0) 3.361 1.504 (21) (1.383) 0 3.461

Intangible fixed assets are broken down as follows:

(i)

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 development costs of 403 thousand euro were capitalized under fixed assets in progress.

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 probable useful life generally estimated to be 3 to 5 years, depending on the sector they are intended for.

Decreases of 21 thousand euros refer to abandoned projects.

(ii)

Concessions, licenses and patents

The increases in the period relate to software licenses and applications for the logistics area and research and development and the capitalization of external costs for the realization of ERP consolidation projects in the Reggiolo industrial center.

5.3.

EQUITY INVESTMENTS

Equity investments are shown in detail below:

44

Financial Statements at December 31, 2021 Description (thousand Euros)

Comer Industries SARL Comer Industries INC Comer GMBH Comer Industries Component S.r.l.

Comer Industries (Shaoxing) Co., Ltd. Comer Industries (Jiaxing) Co., Ltd. Comer Industries do Brasil EIRELI Comer Industries India Private Limited Comer Industries UK Ltd WPG HoldCo B.V. Investments in Subsidiaries Deep Tier S.r.l.

Investments in Associated Companies FF Investments S.r.l.

Investments in Other Companies Investments

12/31/2021

12/31/2020

Change

0 9.218 152 7.812 226 4.000 2.016 1.883 810 206.302 232.419 100 100 319 319

501 9.218 152 7.812 6.726 4.000 2.016 1.883 810 0 33.117 0 0 0 0

(501) 0 0 0 (6.500) 0 0 0 0 206.302 199.301 100 100 319 319

232.837

33.117

199.720

The main change during the year in the item Investments in subsidiaries refers to the acquisition of 100% of the share capital of WPG HoldCo B.V. The acquisition transaction was completed on December 1, 2021, for consideration of roughly 203 million euros, broken down into a cash outlay of 40 million euros and a share capital increase of Comer Industries S.p.A. for the remaining 163 million euros, by issuing 8,029,865 new ordinary shares. Costs relating to professional consulting incurred for the finalization of the transaction were recognized as an increase in the equity investment for a total of 3,376 thousand euros. Details are given below: Description (thousand Euros)

Cash and cash equivalents Equity instruments Capitalization of charges Total Investment in WPG HoldCo B.V.

40.000.000 162.925.961 3.375.753 206.301.713

The additional changes in investments in subsidiaries relate to the liquidation of the French subsidiary Comer Industries Sarl for 501 thousand euros and the decrease in the equity investment in Comer Industries Shaoxing for 6,500 thousand euros.

With reference to investments in associates and other companies, the changes refer to the subscription of 33.33% of the share capital of the newly established Deep Tier S.r.l., an innovative start-up that offers a fintech platform model aiming to support the entire supply chain in optimizing financial liquidity, and the subscription of 10.40% of the share capital of FF Investments S.r.l., an investment company and innovative start-up incubator in the digital realm.

A comparison is provided below between equity drafted in accordance with IAS of the subsidiaries and the relative carrying amount.

45

Financial Statements at December 31, 2021 Company name Comer GmbH Comer Industries Inc. Comer Industries U.K. Ltd. Comer Industries Components Srl Comer Industries (Shaoxing) Co. Ltd Comer Industries do Brasil EIRELI Comer Industries India Pvt Ltd Comer Industries (Jiaxing) Co. Ltd WPG Holdco B.V. Deep Tier S.r.l.

FF Investments S.r.l.

Share Capital(€k) 205 11.726 315 7.125 6.720 969 1.723 11.700 77.309 90 87

Net Equity Net Profit (€k) % control (€k) 353 89 100% 23.179 3.555 100% 922 215 100% 15.559 2.075 100% 11.093 205 100% 4.453 2.050 100% 7.444 1.743 95% 48.693 20.491 34,20% 45.910 5.052 100% 500 33,33% 3.064 10,40%

Share (€k) 353 23.179 922 15.559 11.093 4.453 7.072 16.653 45.910 167 319

Book Value (€k) 152 9.218 810 7.812 226 2.016 1.883 4.000 206.302 100 319

Change (€k) 201 13.961 112 7.748 10.867 2.436 5.189 12.653 (160.392) 67 (0)

Investments in subsidiaries are valued according to the cost method, which requires it to be reduced in the event of impairment losses, if the decrease in value suffered by the investee cannot be absorbed within a reasonable period of time. A loss should be considered impairment when, fundamentally, it is not expected that the reasons causing it can be eliminated within a brief period of time, that is within a short enough period of time to make it possible to formulate reliable forecast based on objective and reasonably identifiable facts.

The investment in WPG, equal to 206,302 million euros, was subjected to verification by management for the existence of any impairment, in consideration of the goodwill value inherent in it.

The impairment test, the criteria for which were approved by the Board of Directors on February 14, 2022, was carried out using the Discounted Cash Flow (DCF) method net of tax, provisionally assuming that the entire goodwill would be allocated to the Walterscheid Group. The expected cash flows used in the calculation of the DCF were determined on the basis of a 5-year business plan that takes account of various scenarios and expectations for development in the various markets. Based on information available at the end of 2021.

These flows were reduced by a discount factor in order to consider the risk of unrealizability of projected future plans. Specifically, the discount rate was calculated using the Weighted Average Cost of Capital ("WACC"), i.e., by weighting the expected rate of return on invested capital net of the costs of hedging for a sample of companies in the same industry. The average cost of capital (WACC) was calculated as 8.05% and the estimated g rate was conservatively set at a value lower than the expected long-term inflation rate.

The performance of the impairment test did not indicate the need to recognize any impairment of goodwill as of December 31, 2021.

In confirmation of this, the sensitivity analysis – carried out by increasing the cost of capital used to discount expected cash flows by 100 basis points – did not reveal any need to write down the item, nor a variation of ±10% in expected cash flows.

With regard to other Investments in subsidiaries the Company’s Directors do not believe that there are currently indicators of impairment on equity investments and, as a result, it was not necessary to perform any impairment testing.

Investments in associates and others are valued according to the equity method, which requires initial recognition at acquisition cost and the subsequent write-down or revaluation of the carrying amount to recognize the share pertaining to the investor of the investee’s profits or losses after the acquisition date.

With regard to the summary of economic-asset/liability relations with related parties of the Group, reference should be made to the details in the Directors’ Report.

46

Financial Statements at December 31, 2021

5.4.

CURRENT AND DEFERRED TAX ASSETS

The details of deferred tax assets are as follows: Description (thousand Euros)

12/31/2021

12/31/2020

5.559 5.559

4.516 4.516

Prepaid taxes Tax assets and deferred tax assets

The balance of deferred tax assets increased by 1,043 thousand euros, primarily following greater provisions for inventories and product warranties.

For the detailed breakdown of this item please refer to the table below: Prepaid taxes

12/31/2021

(thousand Euros)

Description Inventory write-down provision Provision for product warranty risks Comer Industries trademark Supplementary Agents Indemnity Adjustments foreign currency balance Impairment assets IFRS 16 Allowance for doubtful accounts Variable salary employees and director Risks funds IAS/IFRS impacts Other impacts Total Prepaid Taxes

12/31/2020

2021

Tot. Deferred Tot. Deferred Tax Tax 1.187 1.033 2.138 1.164 559 625 92 91 216 33 126 0 207 207 868 500 74 531 204 206 13 0 5.559 4.516

(decrease) increase 154 974 (66) 1 184 (126) 0 368 (458) (2) 13 1.043

Changes in current tax assets are shown below: Description (thousand Euros)

12/31/2020

VAT Current taxes Customs reimbursement for exports and sundry Current tax assets

Net Change

1.227 985 453 2.665

2.574 696 (445) 2.825

12/31/2021 3.801 1.100 8 4.909

The VAT credit at December 31, 2021 first and foremost reflects the increase in turnover.

The current tax receivables amounting to 1,100 thousand euros represent for 925 thousand euros the current share of tax credits for investments in new operating assets, of which 871 for Industry 4.0.

5.5.

SHORT AND LONG-TERM FINANCIAL RECEIVABLES

This item includes financial receivables for a total of 171,908 thousand euros, of which 17,743 within the year, connected to the finalization of the acquisition transaction. This is an intra-group loan agreement entered into by Comer Industries S.p.A. and the two WPG Group companies WPG US Holdco and WPG German Holdco, aiming to refinance and restructure existing debt within the acquired group.

The Loan agreement is broken down as follows: 1. Credit line amounting to 105.085 million US dollars, maturing on September 30, 2029, bearing interest at the rate of 2.5% on the 6-month Libor, entered into with the counterparty WPG US Holdco; 2. Credit line amounting to 82.196 million euros, maturing on March 31, 2027, bearing interest at the rate of 2.5% on the 6-month Euribor, entered into with the counterparty WPG German Holdco; 47

Financial Statements at December 31, 2021

3. Revolving line for a maximum amount of 15 million euros, for current cash requirements, used at December 31 for 7.8 million euros.

The changes are as follows: Description (thousand Euros)

Credit Facility WPG US HoldCo LLC Credit Facility WPG German HoldCo GmbH Current financial receivables Credit Facility WPG US HoldCo LLC Credit Facility WPG German HoldCo GmbH Non-current financial receivables Total financial receivables

5.6.

Value 12/31/2020

Currency USD EUR

-

USD EUR

Change 4.888 12.855 17.743 86.165 68.000 154.165 171.908

Value 12/31/2021

Nom. value 12/31/2021 (LC/000)

4.888 12.855 17.743 86.165 68.000 154.165 171.908

5.113 12.855 98.000 68.000

OTHER LONG-TERM RECEIVABLES

Description (thousand Euros)

12/31/2021

Receivables from La Fondiaria insurance Other sundry incl. guarantee deposits in Italy Tax credits Other long-term receivables

12/31/2020

-

44 24

24 581 605

68

The reduction in amounts owed by La Fondiaria relate to the extinction of an insurance policy covering a portion of the pension indemnity accrued by employees.

Other long-term debtors refer to guarantee deposits primarily for real estate in rental agreements and consumption.

Tax credits relate to the long-term share of tax credits for investments in new operating assets.

5.7.

INVENTORIES

The changes are as follows: Description

12/31/2020

Net changes / Increases

12/31/2021

Raw materials and packaging Raw materials, consumables and pckg

14.586 14.586

10.301 10.301

24.887 24.887

Semi-processed f. purchase and production Semi-proc. obsolescence prov. f.purchase and production Semi-processed

27.270 (2.056) 25.214

14.756 (203) 14.553

42.026 (2.259) 39.767

(thousand Euros)

Finished products and goods for resale

7.579

Finished goods obsolescence provision Finished goods Totale Inventories

(1.647) 5.932 45.733

875 (237) 638 25.492

8.454 (1.885) 6.570 71.224

The increase in inventories of 25.5 million euros (55.7%) can be attributed primarily to the increase in revenues earned during the year and the increased procurement required to meet rising demand.

Inventories are shown net of a provision for obsolescence for a total amount of 4,144 thousand euros. During the period this amount increased by 733 thousand euros for provisions and decreased by 292 thousand euros further to use for scrapping.

48

Financial Statements at December 31, 2021

5.8.

TRADE RECEIVABLES AND OTHER SHORT-TERM RECEIVABLES

The changes are as follows: Description (thousand Euros)

Short-term receivables from customers Short-term receivables from group entities Allowance for doubtful accounts Trade receivables Advances paid to suppliers Receivables from social security institutions Prepayments Trade receivables from suppliers Other short-term debtors Other short-term receivables

12/31/2020 Net Change

12/31/2021

20.081 5.992 267 26.340 (24) (63) 17 688 71 689

68.493 20.378 (2.319) 86.552 19 32 456 925 259 1.691

48.412 14.386 (2.586) 60.212 43 95 439 237 188 1.002

The balance of trade receivables is influenced by cyclical variability especially regarding the trend in turnover in the second half of the year. The change in the period was influenced by the increase in sales volumes in the last quarter of the year, which generated 27% of annual volumes, and an increase in the average collection period. Indeed, the latter amounted to 88 days at December 31, 2021, up by 7 days compared with the previous year.

The decrease in the allowance for doubtful accounts of 267 thousand euros consists of uses for 350 thousand euros and a generic write-down for 83 thousand euros calculated in accordance with IFRS 9. During the year, Comer Industries S.p.A. 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.

5.9.

FINANCIAL ASSETS AND LIABILITIES, GUARANTEES

The net financial position recorded at December 31, 2021 (calculated according to the provisions set forth in Consob Communication 5/21 of April 29, 2021 and ESMA recommendations 32-382-1138 of March 4, 2021) amounted to 193.5 million euros, a deterioration of 178 million euros compared to December 31, 2020 following the cash outlay of 40 million euros for the acquisition of WPG and the disbursement of a loan to that subsidiary, the non-current portion of which, amounting to 154.2 million euros, is not set forth in the scheme defined by the above-mentioned source. Furthermore, net debt includes the impact of the IFRS 16 accounting treatment applied on rental agreements for roughly 24 million euros, therefore the adjusted net financial position, inclusive of non-current financial receivables and excluding IFRS 16 financial payables, is only a negative 15.6 million euros.

The breakdown and movements compared to the previous year are shown below:

49

Financial Statements at December 31, 2021 Description

Increase

Decrease

0 (16.577) 10.118 0 (6.460)

(17.743) (3.928) 27.483 179.602 185.414

0 304 (7.000) 0 (6.696)

(17.743) (20.201) 30.601 179.602 172.259

0 255 (6.205) (112) (290) (6.607) 0 (6.607) 3.319 18.677 15.389

0 0 185.414 (764) (1.859) 182.792 (154.165) 28.627 66 1.735 184.593

0 (141) (6.837) 112 290 (6.434) 0 (6.434) 0 0 (6.434)

0 114 172.373 (764) (1.859) 169.750 (154.165) 15.585 3.385 20.412 193.548

12/31/2020

(thousand Euros)

Other short-term financial assets Cash and cash equivalents Short-term loans Medium/long-term loans Total current bank loans Assets for short-term derivative financial instruments Liabilities for short-term derivative financial instruments Total Net financial position including derivatives Transaction costs (Short-term portion) Transaction costs (Mediul/long-term portion) Total Net financial position including transaction costs Long-term financial assets Total Net financial position [adjustment] Other short term financial debt IFRS 16 Other long term financial debt IFRS 16 Total Net financial position

12/31/2021

Financial assets and liabilities, broken down on the basis of the categories identified by IFRS 9, can be summarized in the following table: 12/31/2021 Description (thousand Euros)

At fair value At fair value recog. through profit or in loss CFH reserve

Financial assets as at 12/31/21 Trade receivables Other short-term debtors Current tax assets Cash and cash equivalents Total assets Financial liabilities as at 12/31/21 Long-term loans Trade payables Other short-term creditors Current tax liabilities Short-term derivatives Short-term loans Other Short-term loans Other Long-term loans Total liabilities Total

0

At amortized cost

0

(255) 764

(255) (255)

141 141

Total book value

Fair value

86.552 1.691 4.909 20.201 131.096

86.552 1.691 4.909 20.201 131.096

86.552 1.691 4.909 20.201 131.096

(179.602) (111.312) (9.226) (4.735) 0 (30.599) (3.387) (20.412) (359.273) (228.177)

(177.743) (111.312) (9.226) (4.735) (114) (29.835) (3.387) (20.412) (356.764) (225.669)

(177.743) (111.312) (9.226) (4.735) (114) (29.835) (3.387) (20.412) (356.764) (225.669)

0 1.859

141

At nominal value

2.622 2.622

The total amount of the accounting values shown is equivalent to the fair value of the assets and liabilities previously shown.

5.9.1.

SHORT-TERM DERIVATIVE FINANCIAL INSTRUMENTS

Changes in the item short-term derivative financial instruments are shown below: Nominal value Notional value in local in Euro currency 12/31/2021 12/31/2021

Description (thousand Euros)

Fair Value 12/31/21

Derivatives on interest rates

10.500

10.500

(114)

Total derivates on interest rates

10.500

10.500

(114)

Total Short-term financial derivatives

10.500

10.500

(114)

With regard to derivatives on interest rates, it should be noted that an IRS contract is still in force to hedge part of the medium/long-term loan taken out in June 2017 that has now been extinguished early thanks to the generation of cash in the period. At December 31, 2021, it showed a negative fair value of a total of 114 50

Financial Statements at December 31, 2021

thousand euros, recorded at fair value through profit and loss due to the loss of the underlying asset, in accordance with the provisions of IFRS 9 on derivatives.

Reference should be made to the “Net financial income/(charges)” paragraph for more information.

5.9.2.

CASH AND CASH EQUIVALENTS

The value of 20,201 thousand euros at December 31, 2021 (16,577 thousand euros at December 31, 2020) can be readily converted into cash and is subject to an insignificant risk of a change in value. It is believed that the carrying value of Cash and cash equivalents approximates their fair value at the balance sheet date.

Further information can be found in the cash flow statement and in the table below.

Description

Currency

(thousand Euros)

Cash and cash equivalents Cash and cash equivalents Cash and cash equivalents

USD EUR GBP

Total cash and cash equivalents

5.9.3.

Value 12/31/2020

Change

Value 12/31/2021

4.885 11.671 21 16.577

(286) 3.928 (19) 3.624

4.600 15.599 2 20.201

Nom. value 12/31/2021 (LC/000) 5.209 15.599 2

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

The breakdown of current financial payables is provided below: Description

Currency

(thousand Euros)

Indexing

Crédit Agricole loan - short term portions UNICREDIT Loan short term instalment Total short-term bank loans

USD EUR

Libor6+Var Spread 0,00%

Transaction costs short term Current account overdrafts and advance accounts with banks Short-term intra-group financial loan Total short-term loans

EUR EUR EUR

Amortized cost n.a.

2,00%

Nom. value 12/31/2021 (LC/000)

Value 12/31/2020

Change

Value 12/31/2021

0 7.000 7.000

4.400 3.500 7.900

4.400 10.500 14.900

5.000 10.500

(112) 3.118 0 10.005

(651) 4.476 8.105 19.830

(764) 7.594 8.105 29.835

(764) 7.594 8.105

The item includes interest-bearing bank loans.

The value of 29,835 is made up of 14,900 thousand euros of short-term bank loans, shown net of the shortterm portion of transaction costs (equal to 764 thousand euros) treated according to the amortized cost method. The increase over the previous year of 7.9 million euros was due to the closure of a loan with UniCredit for 7 million euros and a new loan taken out also from UniCredit under particularly favorable conditions for 10.5 million euros, and the short-term portion of the Crèdit Agricole loan described in more detail below.

The remaining part of current financial payables, equal to 7.6 million euros, consists of: 3.1 million euros from the cash in transit balance linked to the payment of bills payable and direct remittances as at December 31; 4 million euros from the advance accounts balance with short-term maturities; and for the residual part from the adjustment to 31.12 of foreign currency loans and the debt for interest expense on loans accrued but not yet paid.

The Company has an intragroup financial payable to the Chinese subsidiary Comer Industries Jiaxing for 8.1 million euros.

5.9.4.

LONG-TERM LOANS.

The item includes the long-term portions of the loan taken out in the second part of the year with Crédit Agricole and linked to the completion of the acquisition.

The Loan agreement entered into is broken down as follows: 51

Financial Statements at December 31, 2021

1. Medium-term loan for a maximum principal amount of 170 million euros, broken down into 3 lines as follows: -

20 million euros used in cash maturing on March 31, 2027, to finance the transaction;

-

120 million euros used in cash maturing on March 31, 2027, to refinance and restructure existing debt of the WPG Group by means of intra-group loans granted by Comer;

-

30 million euros, usable in cash and intended to support general revolving financial requirements, to be repaid in a lump-sum at the end of the relative interest period as set forth in the utilization request, with a maximum duration of 5 years;

2. Medium/long-term loan for a maximum principal amount of 50 million US dollars, maturing on March 31, 2027, to refinance and restructure existing debt of the WPG Group by means of intra-group loans granted by Comer.

Description

Currency

(thousand Euros)

Crédit Agricole loan - long term portions Crédit Agricole loan - long term portions Transaction costs long term Total long-term loans

EUR USD EUR

Indexing Eur6+Var Spread Libor6+Var Spread Amortized cost

Value 12/31/2020

Change

Value 12/31/2021

0 0 (290) (290)

140.000 39.602 (1.569) 178.033

140.000 39.602 (1.859) 177.743

Nom. value 12/31/2021 (LC/000) 140.000 45.000 (1.859)

Reported below is the breakdown of bank loans by nature, short and medium/long-term existing as at December 31, 2021: Description (thousand Euros)

Unicredit loan Unicredit loan Cacib Line A1 Cacib Line A2 Cacib Line A3 Total

Balance 12/31/2020

New disbursement

7.000 7.000

Repayments

10.500 20.000 120.000 44.002 194.502

Balance 12/31/2021

(7.000) (7.000)

10.500 20.000 120.000 44.002 194.502

< 1 year

> 1 year

10.500 4.400 14.900

20.000 120.000 39.602 179.602

Of which > 5 years 4.000 24.000 4.400 32.400

Maturity 31/10/2021 31/07/2022 31/03/2027 31/03/2027 31/03/2027

The CACIB Line A3 loan with a balance of 50 million US dollars at December 31, 2021 is shown in the previous table at the equivalent value in euro of 44 million.

5.9.5.

OTHER SHORT AND MEDIUM-TERM FINANCIAL PAYABLES

The heading refers primarily to payables deriving from the application of the new international accounting standard IFRS 16 and also to payables to shareholders for coupons not collected (2 thousand euros).

Details and changes in payables at December 31, 2021 are shown below: Description (thousand Euros)

12/31/2020

Increase

Decrease

3.319 0 3.319 18.677 18.677 21.996

0 2 2 8.798 8.798 8.800

(3.319) (0) (3.319) (3.678) (3.678) (6.997)

Other short-term IFRS 16 financial payables Shareholders for dividends Other short-term financial loans Other long-term IFRS 16 financial payables Other long-term financial loans Total Other financial loans

5.9.6.

Reclass 12/31/2021 3.385 0 3.385 (3.385) (3.385) 0

3.385 2 3.387 20.412 20.412 23.799

COMMITMENTS AND GUARANTEES

Guarantees given amount to 29.8 million euros (14.5 million euros in 2020) and consist of commitments relating to the granting of loan credit facilities in favor of subsidiaries: roughly 20.5 million euros in favor of 52

Financial Statements at December 31, 2021

Comer Industries Jiaxing, around 6.5 million euros to Comer Industries Components S.r.l. and around 2.8 million euros to other branches in India and Brazil.

The following are complete details of the system of commitments and risks for Comer Industries S.p.A.:

12/31/2021 Guarantees to third parties

Expiry

(thousand Euros)

Guarantees granted by Comer Industries S.p.A. Surety to Italian Revenue Agency for Comer Industries S.p.A. Banco BPM for loan to Comer Industries Components S.r.l.

Credem for loan to Comer Industries Components S.r.l.

Surety to Mediocredito for Comer Components Banca Nazionale del Lavoro for loan to Comer India Banca Nazionale del Lavoro for loan to Comer do Brazil Banca Nazionale del Lavoro for loan to Comer Ind (Jiaxing )Co Ltd Crédit Agricole for loan to Comer do Brazil Crédit Agricole for loan to Comer Ind (Jiaxing )Co Ltd Total guarantees to third parties

30/06/2021 until revocation until revocation 15/06/2021 until revocation until revocation until revocation 30/11/2022 until revocation

12/31/2020

Amount

Amount

2.500 4.000 0 1.496 837 8.800 475 11.703 29.811

221 2.500 0 311 1.417 828 8.800 471 0 14.548

56

498

Total guarantees received from third parties

Comer Industries S.p.A. has no commitments to finance leasing companies.

5.10.

SHARE CAPITAL AND RESERVES

The share capital of Comer Industries S.p.A. as at December 31, 2021 consisted of 28,678,090 shares without nominal value and is entirely subscribed and paid-up for 18,487,338.60 euros.

The increase in the share capital for a total of 5,378 thousand euros refers for 5,139 thousand euros to the acquisition of Walterscheid Powertrain Group and for 239 thousand euros to the exercise of 238,945 warrants in July 2021 at a strike price of 10.00 euros each.

The share premium reserve increased as a result of the WPG acquisition by 157,787 thousand euros and the exercise of warrants by an additional 2,151 thousand euros.

The increase in the extraordinary reserve relates to the allocation of the profit for 2020, net of the distribution of dividends settled on April 28, 2021 at 0.5 euros per share, for a total of 10.2 million euros.

The stock grant reserve refers exclusively to the Comer Industries 2019 Stock Grant Plan. In the period it increased by 2,194 thousand euros as the last tranche of the plan, in relation to the accounting treatment of the service cost according to IFRS 2.

The item Others refers to actuarial gains and losses from the recalculation of the provision for employee severance indemnity, as required by the revision of IAS 19.93A. The change in 2021 amounted to 126 thousand euros (gross of the fiscal impact).

The classification of reserves according to their origin, as well as changes in the course of previous years, is illustrated in the table as well as in the following notes.

Other reserves (thousand Euros) Legal reserve Available extraordinary reserves Stock grant reserve FTA reserve (first time adoption IAS/IFRS) Retained earnings Other reserves Total other reserves

53

12/31/2021

12/31/2020

2.622 43.821 8.181 336 0 (298) 54.661

2.622 39.624 5.987 336 2 (172) 48.399

Financial Statements at December 31, 2021

The classification of equity based on the possibility of use is shown in the table below:

Description

Summary of the uses made in the previous three years Possibility

(thousand Euros)

Amount

of use

Share capital Share premium reserve Stock Grant Reserve Legal Reserve Extraordinary Reserve F.T.A. Reserve C.F.H. Reserve Retained earnings Other Reserves Profit/(Loss) for the period Total non-distributable share distributable share

18.487 187.881 8.181 2.622 43.821 336 0 0 (298) 15.884

B A, B, C A, B, C B A, B, C B B A,B A, B A, B, C

(1) A:

for capital increase

(1)

Available amount

to cover losses others

0 187.881 8.181 0 44.298 0 0 0 (298) 15.884 255.946 0 255.946

B: for loss coverage

22.853

C: for distribution to

shareholders

5.11.

DEFERRED TAX LIABILITIES

Tax liabilities and deferred taxes (thousand Euros)

12/31/2021

12/31/2020

168 168

125 125

Deferred tax liabilities Tax liabilities and deferred taxes

Deferred tax liabilities are related to the tax effect of timing differences between the profit and loss for the year for statutory purposes and taxable income.

The amounts so defined are detailed in the following table: Deferred tax liabilities (thousand Euros)

Description Difference in full rate - pro rata new goods purchased and entered into operation 2008 C S.p.A. Foreign currency adj.

Total deferred taxes

5.12.

12/31/2021 12/31/2021 Temporary Tot. Deferred Differences Tax

12/31/2020 12/31/2020 Temporary Tot. Deferred Differences Tax

208

58

311

87

457 665

110 168

160 471

38 125

2021 (increase) decrease (29) 71 43

POST-EMPLOYMENT BENEFITS

Variations in the provision were as follows: Changes (thousand Euros)

Opening balance Utilizations for resignations and prepayments Settlement of complementary pension schemes and treasury fund Appropriation in the current year IAS 19 recalculation effects for the year (before taxes) Closing balance

54

12/31/2021

12/31/2020

6.126

6.470

(553) (1.916) 2.023 39 5.718

(430) (1.857) 1.958 (15) 6.126

Financial Statements at December 31, 2021

The economic and equity effects of the period, compared with the previous year, are summarized in the following: Description (thousand Euros)

12/31/2021 12/31/2020

Current service cost Actuarial losses/(gain) Financial charges Tax effect on income statement Tax effect on balance sheet Total effect

(186) 126 20 47 (36) (28)

(71) 42 43 8 (12) 11

The employee severance indemnity refers to employee benefits governed by the rules and regulations in force in Italy and recorded in the financial statements of the Company.

Comer Industries S.p.A, on the basis of actuarial valuations and interpretations available on the closing date of accounts, adopted the following distinctions: -

Employee severance indemnity installments accruing as from January 1, 2007: considered a "defined 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 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 actuarial assumptions with value scales from 2020 to 2023: Unit of measure

Italian actuarial assumptions

12/31/2021

12/31/2020 0,22 0,50 5,0 0,8 2,1

Discount rate Expected rate of wage growth Expected percentage of employees who resign prior to retirement (turnover)

% % %

0,73 0,50 5,0

Increase in annual cost of living rate Employee severance indemnity annual rate of increase

% %

1,8 2,8

In accordance with new regulations of IAS 19, the values of the employee severance indemnity provision that would have been obtained by changing the above actuarial assumptions are as follows: Discounted severance indemnity 5.684 5.756 5.782 5.655 5.617 5.823

Changes (thousand Euros)

Turnover rate +1.0% Turnover rate -1.0% Increase in annual cost of living rate +0.25% Increase in annual cost of living rate -0.25% Discount rate +0.25% Discount rate -0.25%

The negative effect of the period amounting to 126 thousand euros, gross of the fiscal impact, is reflected in the actuarial loss accrued in part as a result of the increase in the discount rate, from 0.22% to 0.73%, and in part the substantial changes in the group subject to assessment in terms of new hires, resignations, retirement and requests for advances.

55

Financial Statements at December 31, 2021

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

Contractual category Executives Managers and white-collars Labourers and temporary staff Total

12/31/2021 12/31/2020 27 263 587 877

27 269 566 862

Average number 2021 27 265 585 877

Average number 2020 27 261 512 800

As at December 31, 2021, Comer Industries S.p.A. had 877 resources (862 at December 31, 2020) and the average number of resources went from 800 in 2020 to 877 in 2021.

5.13.

SHORT AND LONG-TERM PROVISIONS

The provisions include: Provisions for risks and charges (thousand Euros) Provision for product warranty risks Other provisions for risks Short-term provisions Supplementary Agents Indemnity Fund Other provisions for contingent liabilities and legal expenses Provision for long-term product warranty risks Other provisions for risks Long-term provisions

12/31/2021

12/31/2020

5.821 157 5.977 421 100 1.642 8 2.171

2.871 1.447 4.317 428 450 1.301 13 2.191

The provision for product warranty risks includes the estimation of specific risks reported before the preparation of the financial statements and relating to past productions. It also refers to coverage of general risks (the result of a calculation based on historical data) for repairs or replacement of 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, not yet settled at year end.

The Supplementary Agents Indemnity Fund includes provisions for reimbursements recognized in the event of termination of the agency relationship, quantified according to the methods indicated in the collective economic agreement of March 20, 2002 for the regulation of agency relations and commercial representation in the industrial sectors and cooperation.

The provision for contingent liabilities and legal expenses represents the reasonable risk calculated in relation to litigation or potential liabilities still pending in court regarding dismissed workers or providers of services.

Lastly, the decrease recorded in the item other provisions derives from the completion of activities linked to the Group reorganization.

5.14.

TRADE PAYABLES AND OTHER LONG AND SHORT-TERM PAYABLES

The changes are as follows:

56

Financial Statements at December 31, 2021 Description (thousand Euros)

12/31/2020

Net Change

12/31/2021

Trade payables to third parties

(42.632)

(36.998)

(79.630)

Trade payables to group entities Total trade payables Short-term payables to personnel Payables to pension and social securities institutions Other payables Accrued liabilities and deferred income short term Total other short-term payables Long-term payables to personnel Accrued liabilities and deferred income long term Total other long-term payables

(10.315) (52.947) (9.225) (2.530) (394) (812) (12.962) (58) 0 (58)

(21.368) (58.365) 3.757 558 (141) (438) 3.736 (3.186) (1.308) (4.494)

(31.683) (111.312) (5.469) (1.972) (535) (1.249) (9.226) (3.244) (1.308) (4.553)

(i) Trade payables The balance of 111,312 thousand euros, which includes advances from customers, increased by roughly 58 million euros compared to the previous year, primarily due to the increase in acquisitions linked to rising turnover.

There are no payables expiring after more than one year or expired for more than 12 months.

(ii) Other long and short-term payables The short-term balance amounting to 9,226 thousand euros primarily includes amounts due to employees (amounting to 5,469 thousand euros) for services accrued and not paid as at year-end close and payables to pension and social security institutions (1,972 thousand euros). The long-term balance, of 4,553 thousand euros, includes for 3,244 thousand euros payables to directors and top managers with strategic responsibilities, relating to long-term loyalty plans correlated with business performance.

The balance of short and long-term accrued liabilities and deferred income mainly represents the suspended share of revenues for tax credits recognized in the financial statements linked to investments in new operating assets.

5.15.

CURRENT TAX LIABILITIES

The details are as follows: Description (thousand Euros) Tax balance for current taxes Taxes for IRPEF withholdings Current tax liabilities

12/31/2021

12/31/2020

3.227 1.508 4.735

66 1.684 1.750

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

The amount owed to the tax authorities for IRPEF (personal income tax) is in line with the previous year.

5.16.

INFORMATION ON FINANCIAL ASSETS AND LIABILITIES

5.16.1. MANAGEMENT OF LIQUIDITY RISK Liquidity risk is related to the difficulty in raising funds to meet commitments.

The control and implementation of appropriate policies for the management of liquidity risk in the presence of contingency guarantee the Company's survival and minimize the cost of funding.

57

Financial Statements at December 31, 2021

This particular risk, unlike the others, manifests its effects in a very short time, with devastating consequences for companies.

It can result from insufficient resources available to meet financial obligations under the terms and deadlines set in the case of sudden revocation of uncommitted credit lines or of the possibility that the Company must honor its financial liabilities before their natural expiry.

As previously commented, the treasury activities of the Group are substantially centralized at Comer Industries S.p.A. The management of liquidity risk implies: •

Maintaining credit lines defined as primary risk within a total of more than 80% of total credit lines 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 reimbursement by the relevant financial partners.

•

Maintaining the average financial exposure for the year within an amount substantially equivalent to 80% of the total amount committed by the banking system.

•

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

It should be added that in managing this type of risk, the Company always tries to finance its investments with medium- to long-term unsecured loans (in addition to equity) in the breakdown of net debt, while covering current expenses using the short-term credit lines above.

To this end, Comer Industries S.p.A. has long used appropriate tools to provide reliable predictions on the future trends in the net financial position (difference between income and expenditure in a given period) and implemented a maturity ladder, which enables the constant evaluation of expected cash flows, through the juxtaposition of cash inflows from operations, with outflows (repayment of loans, payment of operating costs, investments, etc.) within each time band. It is also pointed out that in the calculation of the net financial position, the counter-balancing effect from the nominal value of all those assets that are readily convertible into cash is added to incoming cash flow items generated by the operational management. In fact, in the latter case, the cash generated from the sale of these assets may be used immediately to meet the imminent financial commitments.

The actual quantification of Comer Industries S.p.A.'s exposure to liquidity risk is made possible by simulating different scenarios, based on assumptions that may actually occur and then assessing the impact of the latter on the maturity ladder, or the occurrence of certain events that may affect the liquidity of the Company.

The Company analyzes monthly the information obtained from the formulated scenarios regarding the trend of the net financial position, managing all conditions / positions of bank credit and, through a dedicated algorithm, evaluates the risk of an increase in the average cost of loans or any emergence of tensions/critical issues in relationships.

This analysis is carried out monitoring the quality of banking services and the corresponding costs on a regular basis.

All Cash Management activities are organized so as to reap the greatest benefit from banking products and the liquidity and funding are effectively managed under the best conditions, while limiting exposure to liquidity risk.

58

Financial Statements at December 31, 2021

It should be noted that during the year the credit lines have been used on average by Comer Industries S.p.A. for around 64%, a figure influenced by the medium/long-term loan taken out. Management believes that the funds and credit lines currently available will enable the Company to satisfy its requirements arising from its investment activities, the repayment of debts at their natural expiration and management of working capital.

Total credit lines amount to 426.8 million euros, of which 309.2 million euros related to potential short- and long-term cash requirements that the Company can use for investments and/or working capital management.

The following tables summarize the movements of credit and bank uses divided by type and by type of risk.

Analysis of bank loans and bank-related credit lines (excluding the credit line for foreign exchange and interest rate hedges) 12/31/2020

(thousand Euros)

Total bank loans by cash and cash equivalents Total bank loans by guarantees Total loans by insurance receivables Total loans Total bank utilizations by cash and cash equivalents Total bank utilizations by guarantees Total utilizations by insurance receivables Total utilizations % bank loan utilization by cash and cash equivalents % total loan utilization

Decrease Increase

12/31/2021

165.350 16.199 75.971 257.520

(4.000) (12.228) 0 (16.228)

147.850 27.690 9.976 185.516

309.200 31.661 85.947 426.808

7.000 11.737 29.393 48.130

0 (221) 0 (221)

191.937 11.795 10.296 214.028

198.937 23.311 39.689 261.937

4% 19%

64% 61%

The term “primary risk” refers to the total of all the credit lines of ready cash and the financial sources not subject to any guarantee (overdraft, cash advances and medium/long-term unsecured loans), while the term “secondary risk” groups together all other forms of loans (credit line subject to collection, leasing, etc.).

The detail for the breakdown of the credit lines by risk is provided below.

Loans broken down by risk level

12/31/2020 Decrease

(thousand euros)

Total bank loans by cash and cash equivalents primary risk Total bank loans by guarantees primary risk Total loans by insurance receivables primary risk Total loans primary risk Total bank loans by cash and cash equivalents secondary risk Total bank loans by guarantees secondary risk Total bank loans by insurance receivables secondary risk Total loans secondary risk % primary risk loans on total % secondary risk loans on total

12/31/2021

150.700 16.199 75.971 242.870

(4.000) (12.228) 0 (16.228)

147.850 27.690 9.976 185.516

294.550 31.661 85.947 412.158

14.650 0 0 14.650

0 0 0 0

0 0 0 0

14.650 0 0 14.650

94% 6%

59

Increase

97% 3%

Financial Statements at December 31, 2021

5.16.2. MANAGEMENT OF INTEREST RATE RISK The company is exposed to the interest risk associated with existing financial assets and liabilities. The objective of interest rate risk management is to limit and stabilize the negative effects on cash flows subject to changes in interest rates. At 31 December 2021 the company presents the following risks: -

The risk attributable to the trend in interest rates on the future value, compared to the MTM valuation of 31 December 2021, of the IRS contracts (nominal value of 10.5 million euros) still outstanding, the underlying of which was repaid early in 2020. They are accounted for according to the fair value through profit and loss method.

-

The risk related to financial instruments with interest accruing at a floating rate that are not hedged via other financial instruments.

With regard to interest rates, 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, 2021 were considered, all other variables remaining constant.

Potential impacts were calculated on floating rate financial liabilities as of December 31, 2021. The mentioned change in interest rates would result in a higher (or lower) net pre-tax charge, as presented below: ±50 bps min. val. (-50bps) Loan Crédit Agricole loan Euro Crédit Agricole loan US Dollar

Interest rate applied as of 12/31/2021 Indexing Amount of capital Euribor 6 months -0,537 1,75% 140.000 € Libor 6 months 0,19918 2,099% $ 50.000

Rate 1,75% 1,900%

Economic effect - € $ -8.576

max val. (+50 bps) Rate 1,75% 2,599%

Economic effect - € $ 21.528

5.16.3. MANAGEMENT OF CREDIT RISK Comer Industries S.p.A.'s policy is to sell to customers after an evaluation of their credit capacity and therefore within pre-set credit limits.

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

The maximum theoretical exposure to credit risk for Comer Industries S.p.A. as at December 31, 2021 is represented by the book value of financial assets in the financial statements.

With reference to the changed economic conditions that marked the year 2021, it is believed that the risk connected to the reference value is higher. Consequently, the Company 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 (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.

As at December 31, 2021, the representation by ranges of expired trade receivables (net of the allowance for doubtful accounts) is represented by the following table.

Description (thousand Euros)

Not yet due 30 - 60 days past due 60 - 90 days past due More than 90 days past due Allowance for doubtful accounts Trade receivables

12/31/2021

12/31/2020

81.026 3.363 1.678 2.804 (2.319) 86.552

59.906 643 2.250 (2.586) 60.212

60

Financial Statements at December 31, 2021

5.16.4. MANAGEMENT OF PRICE RISK Comer Industries S.p.A. is subject to the risk of fluctuations in the price of raw materials, particularly that of: aluminum, cast iron, copper and steel. Comer Industries S.p.A. reviews the sales prices of the products annually, transferring to customers increases in purchase costs in percentage terms compared to forecast indexes, on the basis of specific trade indexing agreements.

5.17.

REVENUES FROM CONTRACTS WITH CUSTOMERS

The breakdown of revenues by geographic region is as follows: Description

12/31/2021

12/31/2020

12.730 239.184 23.280 79.742 354.936

13.167 182.683 10.451 61.000 267.301

(thousand Euros)

ASIA PACIFIC EMEA LATIN AMERICA NORTH AMERICA Total turnover by geographic area

The Company closed the year 2021 with an increase in revenues of 32.8%, reaching 355 million euros, with respect to 267 in the previous year, driven primarily by agricultural sector growth. Export turnover represents 82% of the total, in line with 2020. At geographical level, there was a reduction of the market in Asia and growth in the North American and European markets.

5.18.

OTHER OPERATING REVENUES

The breakdown of other operating revenues is as follows: Description (thousand Euros) Recovery of production, repair, service and transport costs Sales of scraps Capital gains, photovoltaic remboursement Capitalized costs net of disposal costs Other income and revenues Total other operating revenues

12/31/2021

12/31/2020

1.692 489 33 382 9.336 11.931

1.337 231 18 252 5.923 7.760

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. The figure is on the whole aligned with the previous year. The item sales of scraps rose compared with 2020, but in proportion with the increase in sales and production volumes.

Costs capitalized during the year for industrial product development projects amount to 382 thousand euros, net of decreases for abandoned projects of 21 thousand euros.

The item Other income and revenues includes royalties received from subsidiaries of 7,457 thousand euros (4,691 thousand euros in 2020). The increase is linked to the increase in turnover of the subsidiary Comer Industries Jiaxing.

5.19.

PERSONNEL COSTS

Personnel costs increased by 18.68% compared with the previous year, net of the cost for the stock grant plan. This increase reflects the combined effect of the higher number of employees employed during the year following the increase in volumes, and the increased use of temporary personnel.

61

Financial Statements at December 31, 2021

This item also includes the provision recognized for variable salary and the annual production bonus, as well as a long-term loyalty plan linked to the achievement of pre-determined and measurable consolidated performance targets for the CEO and several top figures with strategic responsibilities.

5.20.

REMUNERATION OF DIRECTORS AND STATUTORY AUDITORS

The fees of the Directors and Statutory Auditors of Comer Industries S.p.A. are as follows: Description (thousand Euros)

12/31/2021 12/31/2020

Directors

1.211

861

C.E.O. service cost payment value based on shares stock grant plan

2.194

5.389

Statutory Auditors

50

Total remuneration

3.455

52 6.303

The amounts include fees payable for the period resolved by the Shareholders’ Meeting, the remuneration established by the Board of Directors for directors attributed particular responsibilities, including bonuses, and the share of long-term incentive schemes that has become certain during the year. The values do not include social security and insurance contributions.

With reference to the incentive plan based on ordinary shares of Comer Industries S.p.A. called "Comer Industries 2019 Stock Grant Plan" approved on May 29, 2019, we point out the achievement of the Group's performance targets and the confirmation of the accounting treatment according to IFRS 2.

5.21.

OTHER OPERATING COSTS AND WRITE-DOWNS

Other operating costs break down as follows: Description (thousand Euros) Rent Insurance Agency and brokerage commissions Consulting Membership fees IMU Maintenance Communication, Marketing and Fairs Transport Utilities Travel Others Total other operating costs

12/31/2021

12/31/2020

87 1.862 901 2.313 24 17 2.576 522 15.628 2.641 194 5.412 32.177

334 741 1.347 1.696 33 18 2.529 425 8.176 2.419 163 4.708 22.587

The item other operating costs includes indirect charges associated with turnover, production and the corporate organizational structure such as rentals, utilities, leases and maintenance, insurance expenses, sales commissions, expenses related to product quality as well as losses in value related to impairment tests on rights of use relating to leased properties.

The change in the item Agency and brokerage commissions reflects the combined effect of the decline in foreign commissions, following foreign turnover trends, and the increased efficiency of the European sales organization. The item other operating costs includes, inter alia, provisions recognized as described in more detail in paragraph 5.13 Short and long-term provisions.

62

Financial Statements at December 31, 2021

As required by Article 149-duodecies of the Issuer Regulation amended by Consob Resolution no. 15915 of May 3, 2007 published in Official Gazette no. 111 of May 15, 2007 (SO 115), the remuneration for the year 2021 for services provided by the independent auditors Deloitte & Touche S.p.A. relating to the certification of the 2021 financial statements is as follows: o

annual and interim auditing engagements for 73 thousand euros;

o

certification of compliance certificate on financial loans and asseveration of R&S credit calculation schedules R&D LD145/2013 and L. 145/2018 for 6 thousand euros;

All the above-described fees are included in the “other operating costs” heading.

5.22.

OPERATING RESULT

The operating result achieved, in absolute terms, is equivalent to 19,343 thousand euros, corresponding to 5.4% of turnover (3.5% in the previous year). A better representation of the Company’s operating performance is provided by the [adjusted] EBITDA commented on previously in the Directors' Report.

5.23.

NET FINANCIAL INCOME / (CHARGES)

The details are as follows: Description (thousand Euros) Exchange gain (loss) Exchanges gains and losses Banking interest income Interest income from group companies and parent company Other interest income Total financial income from cash management Interest expense towards group companies and parent company Interest on advances, loans and other short-term banking items Interest on mortgages and medium/long-term loans Interest on mortgages from amortised cost Interest expense for discounting staff severance indemnity Losses from disposal of equity investments Profit on fair value interest-rate hedging transactions as at 12/31 Total financial charges from cash management Interest from IFRS 16 adoption Interest from IFRS 16 adoption Interests and other net financial expenses Dividens from subsidiaries

12/31/2021 (335) (335) 3 387 51 440

12/31/2020 (164) (164) 1 1 27 29

(105) (4) (459) (486) (20) (196) 141 (1.128)

(31) (185) (197) (43) (5) (462)

(273) (273)

(272) (272)

(1.296)

(869)

2.748

8.136

(i) Exchange gains and losses This item includes both realized differences between the historical exchange rates of the relevant transactions and the reference exchange rates of receipts and payments in foreign currency, and unrealized differences due to the translation of monetary items at the spot exchange rate at the end of the financial year.

The balance of exchange rate management is the result of changes in the euro with respect to the main currencies of the countries in which the Company operates (US dollar, Canadian dollar, British pound and Brazilian real).

63

Financial Statements at December 31, 2021

(ii) Interest and other net financial charges The interest charge on mortgages and loans, both long and short-term, has inevitably increased due the medium/long-term loan agreement entered into in 2021.

(iii) Dividends from subsidiaries In the course of 2021, the Company accounted for dividends from subsidiaries for a total of 2,748 thousand euros, of which 1,273 thousand euros from the US subsidiary, 350 thousand euros from the German subsidiary, 1,000 thousand euros from the Italian subsidiary and 125 thousand euros from the French subsidiary. With respect to dividends from the French subsidiary, they relate to the distribution of the positive result deriving from the company’s liquidation. In 2020, it accounted for dividends for a total of 8,136 thousand euros.

5.24.

INCOME TAXES

The total tax charge of 4,912 thousand euros primarily includes current income taxes of 6,102 thousand euros (2,246 thousand euros in 2020), a net revenue from the recalculation of deferred tax liabilities of 1,000 thousand euros, withholdings for dividends equal to 60 thousand euros, revenues for taxes from previous years of 60 thousand euros and R&D contributions for 191 thousand euros.

The tax charge net of withholding tax on dividends from subsidiaries and R&D tax credits, calculated on the item Pre-tax profit excluding dividends from subsidiaries, stands at around 28.1% at December 31, 2021 (27.1% in 2020). Please note that following the acquisition of Walterscheid Powertrain Group, Comer Industries S.p.A. is categorized as a non-financial holding company subject to the regulations laid out in art.

162-bis of the Consolidated Income Tax Act, Italian Presidential Decree 917/86, where inter alia it is subject to an increased IRAP rate of 4.65%.

In order to better understand the reconciliation between the tax burden recognized in the financial statements and the theoretical tax burden, the following explanatory table is provided wherein the IRAP is not considered as this, being a tax with a tax base different from income before taxes, would generate distortions between one year and another. The reconciliation was therefore determined with reference to the only IRES tax rate in force in Italy, equal to 24% applied to the pre-tax profit already as of 2017.

64

Financial Statements at December 31, 2021 Description (thousand Euros) Pre-tax profit Hypothetical parent company tax rate Hypothetical income taxes on the income of the period Tax effect of permanent differences Tax effect of taxing dividends from consolidated companies Bonus tax credit It. Leg. Decree 91/2014 Tax effect of tax subsidies for Italian companies ACE Tax effect receivable for R&D L.190/2014 art.1c.35 Tax effect super-amortization (L. 208/2015) and hyper-amortization (L. 232/2016) Taxes from previous years Tax effect IAS 19 actuarial gain (loss) Other Italian and foreign minor amounts including IRAP impact on deferred tax Income taxes on the income of the period recorded in the financial statements, excl. IRAP (regional tax on production act.)

Current IRAP Income taxes on the income of the period recorded in the financial statements (current, deferred)

5.25.

12/31/2021

12/31/2020

20.796 24% 4.991 (257) (566) (25) (84) (191) (525) (60) (30) 125

16.645 24% 3.995 191 (1.523) (25) (149) (526) (506) (4) 0 14

3.378

1.467

1.534

779

4.912

2.246

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 (thousand Euros)

12/31/2021

Consolidated profit for the year pertaining to parent company shareholders Number of shares making up the share capital Basic earnings per share for the current year in euro Number of ordinary shares outstanding at the date of approval of the financial statements Basic earnings per share on the number of shares outstanding at the date of approval of the financial statements

12/31/2020

15.883.789 28.678.090 0,55 28.678.090

14.399.233 20.409.280 0,71 20.409.280

0,55

0,71

The means of calculation of 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 Comer Industries S.p.A. attributable to the holders of ordinary shares and the average weighted ordinary shares in circulation during the financial period (28,678,090).

The diluted earnings per share correspond to the basic earnings per share, as there are no anti-dilutive effects.

5.26.

ECONOMIC AND BALANCE SHEET DATA OF THE COMPANY EXERCISING DIRECTION AND COORDINATION OF THE COMPANY

In compliance with the provisions of art. 2497 bis of the Italian Civil Code, Comer Industries S.p.A. presents in this section the schedule of the essential data of the parent company Eagles Oak S.r.l.

As mentioned in the introduction, this company has exercised management and coordination activities over the parent company, Comer Industries S.p.A. The last approved financial statements of Eagles OAK S.r.l. date back to December 31, 2020, already set out in the previous financial statements.

65

Financial Statements at December 31, 2021

EAGLES OAK S.R.L. Tax number and VAT code 03699500363 VIALE DEL SAGITTARIO 5 - 41126 MODENA MO Economic and Administrative Index (R.E.A) 410236 MODENA Business Register no. 03699500363 Share Capital 2,000,000.00 euros, entirely paid-up

66

Financial Statements at December 31, 2021

These financial statements give a true and fair view and correspond to the accounting records.

Reggiolo, Italy, March 28, 2022

for the Board of Directors

Matteo Storchi (President & CEO)

67

Report of the Board of Statutory Auditors

68

Auditors' Report

69

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

INDEPENDENT AUDITOR’S REPORT PURSUANT TO ARTICLE 14 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 FINANCIAL STATEMENTS Opinion We have audited the financial statements of Comer Industries S.p.A. (the “Company”), which comprise the statement of financial position as at December 31, 2021, and the comprehensive income statement, statement of changes in equity and cash flows statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 2021, and of its financial performance and its 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 Financial Statements section of our report. We are independent of the Company 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 Financial Statements The Directors are responsible for the preparation of 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’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.

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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The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 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 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 Company'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 Company’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 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 Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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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 Company as at December 31, 2021, including its consistency with the related 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 financial statements of the Company as at December 31, 2021 and on its compliance with the law, as well as to make a statement about any material misstatement.

In our opinion, the Directors’ Report is consistent with the financial statements of Comer Industries S.p.A. as at December 31, 2021 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 entity and of the related context acquired during the audit, we have nothing to report.

DELOITTE & TOUCHE S.p.A. Signed by Stefano Montanari Partner

Bologna, Italy April 1, 2022

This report has been translated into the English language solely for the convenience of international readers.