Page 1

PERMASTEELISA S.p.A.

Consolidated and Statutory Financial Statements for the year ended March 31, 2017


Consolidated and Statutory Financial Statements for the year ended March 31, 2017

2


Index 4

Administration and Controlling Boards

5

Group Structure

7

Management Report to the Consolidated Financial Statements and to the Statutory Financial Statements

8

- Main economic and financial data

10

- Performance for the period

19

- Overview of ongoing projects and main project acquisitions

45

- Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to

47 47 47 48 49 51 51

-

51

- Transactions with related parties

52

- Unconventional or unusual operations

52

- Significant events subsequent to year end and outlook

54

- Other disclosures

56

- Operating performance and financial position of Permasteelisa S.p.A.

59

- Approval of the Statutory Financial Statements and allocation of 2017 net result

The Group's organizational structure Research and innovation Knowledge Sharing Group Information Technology Human Resources Shareholder Treasury shares

60

Permasteelisa Group – Consolidated Financial Statements as of March 31, 2017

61

- Consolidated income statement

62

- Consolidated statement of comprehensive income

63

- Consolidated statement of financial position

64

- Consolidated statement of cash flows

66

- Consolidated statement of net equity changes

68 124

- Notes to the Consolidated Financial Statements - Appendix I: Permasteelisa Group’s companies

129

Permasteelisa S.p.A. – Statutory Financial Statements as of March 31, 2017

130

- Income statement

131

- Statement of comprehensive income

132

- Statement of financial position

133

- Statement of cash flows

135

- Statement of net equity changes

137

- Notes to the Statutory Financial Statements

191

- Appendix I: Receivables and payables broken down by geographical area

193

AUDITORS’ REPORT ON THE CONSOLIDATED AND STATUTORY FINANCIAL STATEMENTS

Company name Permasteelisa S.p.A. with soles Shareholder

Registered Office Viale E. Mattei, 21/23 31029 Vittorio Veneto (TV) - Italy

Share Capital Euro 6,900,000 fully paid in Treviso REA (Economic and Administrative Repertory) enrolment no. 169833

3


ADMINISTRATION AND CONTROLLING BOARDS Board of Directors in charge up to October 26, 2016 Chairman Chief Executive Officer Directors

Davide Croff Riccardo Mollo Laurence William Bates (CCI) Nicola Greco Toshimasa Iue (CCI) (CRN) Christopher Joseph Mack (CRN) Sachio Matsumoto (CCI) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Motohiko Shintani Yosuke Yagi (CRN) (CCI) Member of the Internal Control Committee (CRN) Member of the Remuneration and Nominating Committee

Board of Directors in charge up to November 30, 2016 Chairman Chief Executive Officer Directors

Davide Croff Riccardo Mollo Laurence William Bates (CCI) Nicola Greco Toshimasa Iue (CCI) (CRN) Sachio Matsumoto (CCI) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Motohiko Shintani Yosuke Yagi (CRN) (CCI) Member of the Internal Control Committee (CRN) Member of the Remuneration and Nominating Committee

Board of Directors in charge up to January 25, 2017 Chairman Chief Executive Officer Directors

Davide Croff Riccardo Mollo Laurence William Bates (CCI) Nicola Greco Sachio Matsumoto (CCI) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Motohiko Shintani (CCI) Member of the Internal Control Committee

Board of Directors in charge since January 25, 2017 Chairman Chief Executive Officer Directors

Davide Croff Riccardo Mollo Laurence William Bates (CCI) Nicola Greco Sachio Matsumoto (CCI) (CRN) Harumi Matsumura (CRN) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Motohiko Shintani (CCI) Member of the Internal Control Committee (CRN) Member of the Remuneration and Nominating Committee

Board of Statutory Auditors Chairman Standing Auditors Alternate Auditors

Independent Auditors

Eugenio Romita Antonella Alfonsi Roberto Spada Michele Crisci Luigi Provaggi Deloitte & Touche S.p.A.

4


GROUP STRUCTURE The following graph shows the companies controlled either directly or indirectly by the Parent Company Permasteelisa S.p.A.

5


PERMASTEELISA S.p.A. Management Report to the Consolidated Financial Statements and to the Statutory Financial Statements

6


MANAGEMENT REPORT Dear Shareholder, The following report accompanies the Consolidated Financial Statements and the Financial Statements of Permasteelisa S.p.A. as of March 31, 2017. We wish to illustrate the data related to the exercise of the Group and of the Parent Company, both with reference to the current financial year and to future prospects. The beginning of the year has been characterized by a low volume of order intake, which started already at the end of 2015, mainly due to Brexit decision, to USA presidential election as well as to the deep changes in the organization which are better explained here after in the management report. During the second half of the year important iconic projects have been awarded in particular in Europe and in the USA, strategic areas for the Group, reaching an overall order intake of Euro 1,524 million, much better than Euro 1,129 million as order intake achieved in the previous 12 months (April 2015 – March 2016). During the year the Group entered into new markets as well as new business sector. In particular the Colombian market, after the end of the historical internal political problems, seems to be very promising as well as the interior business for large cruise ships. During the year some negotiations to define the final account with some clients have been successfully reached, in particular on an iconic project in Qatar which will allow the Group to cash Euro 74 million at the beginning of the next year. During the first half of the year, the Group EBIT has been deeply affected by some provisions and by a reevaluation of the costs to complete on some projects in particular in the USA market. However in the fourth quarter the results have been boosted. both in terms of order intake and of profitability, reaching a consolidated EBITDA of 6% equal to Euro 20,414 thousand (EBITDA of the fourth quarter 2016 equal to a negative EBITDA of Euro 34,585 thousand) and a net profit of 1% equal to Euro 3,526 thousand (net loss of fourth quarter 2016 equal to Euro 53,101 thousand). It has to be noted that the decision adopted in 2015 to consider some assets operating in North Europe as an asset held for sale, has been reverted during the year due to the consolidated presence of this company in the UK market. This company, having a strong presence in the UK market, guarantees the continuity in the acquisition of new projects in the UK in particular in a period of uncertainty after Brexit decision. Furthermore, this company has been reorganized during 2016 year and its profitability has been restored. Therefore, at the end of September, the Board of Directors approved to maintain these activities among the asset of the Group. As such, these assets and liabilities have not been anymore treated as “activities for sale”, without a consequent reclassification as “Assets/Liabilities held for sale”. The “asset held for sale” refers to the book value of an old factory in Thailand, being the activities for the sale already started and the final sale is expected within 2017. st This management report refers to the financial data for the period 1 April 2016 to March 2017 compared to the st st st st first quarter 2016 (1 January to 31 March 2016) and those from 1 April 2015 to 31 March 2016.

The Holding Company Permasteelisa S.p.A has turned to profit, sustained by the growth in some markets such as France and Ireland, as well as from the new Colombia market.

7


Main economic and financial data To ensure a more precise and significant analysis of the performance of Permasteelisa Group, the economic figures presented in the table below have been appropriately normalized. The closing figures have been adjusted for: - the effects of the merger of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. occurred in the year 2010 (mainly depreciation of intangible and tangible assets) for Euro 6,649 thousand; - the effect of factories restructuring for Euro 2,334 thousand. The Group's results for the year 2017 are summarised here below: (€ thousands) IV IV Quarter IV Quarter 2016 2017 Quarter 2017 Normalized Normalized

IV Quarter 2016

(Jan-Mar (Jan-Mar 2017) 2017)

(Jan-Mar 2016)

338,139 338,139

Operating 305,113 305,113 revenues

March 31, March 31, 2017 2016 Normalized Normalized(*)

March March 31, 2016 (*) 31, 2017

(Jan-Mar 2016)

20,414 6.0%

20,414 6.0%

Ordinary activity result before depreciation (34,585) (34,585) (EBITDA) -11.3% -11.3% %

16,696 4.9%

14,427 4.3%

16,089 4.8%

1,286,482

1,494,317 1,286,482 1,494,317

20,940 1.6%

(3,383) -0.2%

20,940 1.6%

(3,383) -0.2%

EBIT (37,255) (40,478) Normalized -12.2% -13.3%

6,429 0.5%

(16,008) -1.1%

(2,554) -0.2%

(27,185) -1.8%

14,427 4.3%

(38,816) (40,478) Operating result -12.7% -13.3% %

4,095 0.3%

(20,536) -1.4%

(2,554) -0.2%

(27,185) -1.8%

16,089

14,427

(38,816) (40,478) EBIT

4,095

(20,536)

(2,554)

(27,185)

4.8%

4.3%

0.3%

-1.4%

-0.2%

-1.8%

10,704 3.2%

9,042 2.7%

(50,098) (51,760) Result before tax -16.4% -17.0% %

(22,880) -1.8%

(54,673) -3.7%

(29,529) -2.3%

(61,322) -4.1%

4,737 1.4%

3,526 1.0%

(51,890) (53,101) Net result -17.0% -17.4% %

(41,111) -3.2%

(82,633) -5.5%

(45,955) -3.6%

(87,477) -5.9%

-12.7%

-13.3% %

(*) Figures as of March 31, 2016 (April 1, 2015 – March 31, 2016), do not include any “asset and liabilities held for sale” and they have not been audited.

March 31, 2017

March 31, 2016

Non current assets (a) Net working capital (b)

187,006 369,930

198,166 346,567

Severance indemnity fund, pension funds and other employee benefits (c)

(32,386)

(30,983)

Net invested capital

524,550

513,750

(€ thousands)

8


Net financial debt/(Net cash surplus) (d) Shareholder’s loan (e) Shareholder's equity (including minority interests) (f)

126,978 255,093 142,479

62,667 260,137 190,946

Coverage

524,550

513,750

13,896

5,400

6,248

6,424

Investments in tangible and intangible assets Average workforce

a) Sum of the captions included in the consolidated statement of financial position referring to notes 15, 16, 18, 19, 20; b) Sum of the captions included in the consolidated statement of financial position referring to notes 21, 22, 23, 24, 25, 26, 28, 33, 34, 35, 36, 37, 38; c) Sum of the captions included in the consolidated statement of financial position referring to notes 31 and 32; d) Caption included in the consolidated statement of financial position referring to note 27 and 30, net of the Shareholder’s loan for Euro 255,093 thousand (Euro 260,137 thousand as of March 31, 2016); e) Caption included in the consolidated statement of financial position referring to note 30; f) Caption included in the consolidated statement of financial position referring to note 29.

9


Performance for the period The market context has been characterized by a prudent attitude of investors awaiting for Brexit results and US elections. The effect of this attitude, combined with some organizational changes, has been reflected in a low amount of new orders during the first months of the year 2017 as detailed in the graph below:

However the Group has been able to promptly react starting from July and the overall order intake awarded during the year is Euro 1,524 million versus last year Euro 1,129 million. It is worth to be noted that among the new orders the iconic second tallest building in the world has been awarded by the Group in Kuala Lampur, Malesia, for a value of around Euro 70 million. The negotiation on several projects is positively progressing despite the market difficulties that the Group has been able to promptly overcome, and the management is confident in maintaining a sustained level of order intake in the next year. The effect of a Brexit decision and the possible geographical re-allocation of the investments foreseen in the UK market, will have to be carefully evaluated since the Group can seize some good opportunities being present in all the potential European markets where investments could be repositioned from UK. The backlog over 2,200 million Euro and the level of the associated margins allow the management to look at future Group performance assuredly. The EBITDA of the period, equal to 20.9 million Euro, has been characterized by some events that have negatively contributed to the company’s performance, amongst which: •

The delay of the order intake due to Brexit and USA elections, have generated lower margins from new projects than expected;

•

Some claims towards clients have not been deemed to have reached an advanced negotiation stage and, therefore, have not been recorded as revenues according to IAS 11. However, since the costs have been already accounted for, a momentary imbalance has been generated. The management expects 10


these claims to reach an advanced negotiation stage in the following quarters and consequently, to be duly accounted for in the near future. The Company continued having a prudent approach, like in the previous year, in evaluating risks related to credit collection and project completion, expecially in the areas of Asia and Middle East. The final account reached for some projects, which allowed the collection of outstanding receivables, has generated a reduction in the revenues mainly related to some variations not fully recognized. We remind that some long lasting negotiations to define the final account with some clients have been successfully reached, in particular on an iconic project in Qatar which will allow the Group to cash Euro 74 million and on an iconic project in London which has allowed the Group to cash around 6 million pounds. Finally, following the assessment on the projects carried out by the new management of Permasteelisa North America Corp., a reevaluation of the costs to complete on some projects in the USA has been performed and the associated losses have been recognized. The net financial costs, equal to Euro 26.9 million, are substantially linked to the devaluation of the Mongolian currency, to the forward points linked to the currency hedging, in particular in Russian ruble and in US dollar, and due to the negative carry of the interest rates toward Euro. The net result after depreciation (including the effects of the merger of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. occurred in the year 2010) and after taxes (equal to Euro 16.4 million) is a loss of Euro 45.9 million. The Group continued to reimburse, as already started in the first quarter 2016, the installments of the Shareholder’s loan according to the amortizing plan of the Financing Agreement. During the year the Group has implemented a plan to reduce the overheads costs, reducing all external services costs with savings of 15-20%. Furthermore the Group has continued to streamline its Engineering and Production processes with a view to preserve and increase profitability, as well as its capacity to generate positive cash flows in the different geographic and market contexts. It has also continued to develop its decentralized organization, considered a strong point for the Group’s growth, allowing to accentuate its global vocation and to adopt, in different projects, a contract implementation method involving the joint participation of various Business Units, in line with a "low-low" cost plan supported by an increasingly evolved ICT platform. As part of the reorganization plan, the management of the Group intends to sell the first old factory in Thailand, whose quality and efficiency standards have been completely exceeded by the new factory.

Performance on the market: new orders, backlog, Group positioning ORDERS ACQUISITION The table here below provides a breakdown of new orders for the period April – March by product range. New orders for Curtain walls amounted to Euro 1,305 million (March 2016 restated: Euro 906 million) and those for Interiors, Contract and Marine to Euro 219 million (March 2016 restated: Euro 223 million). (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

387,600

145,918

1,082 388,682

19,976 165,894

90 20,255 20,345

325 33,045 33,370

Curtain wallsAluminum Curtain walls-Steel Subtotal Curtain walls Glazed Metal Works Shops Subtotal Interiors

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

1,212,026

79.5

879,428

77.9

332,598

37.8

92,744 1,304,770

6.1 85.6

26,251 905,679

2.3 80.2

66,493 399,091

253.3 44.1

6,999 121,074 128,073

0.5 7.9 8.4

12,987 176,618 189,605

1.2 15.6 16.8

(5,988) (55,544) (61,532)

-46.1 -31.4 -32.5

11


14,424

15,956

6,369

0

429,820

215,220

Contract

41,718

2.7

33,815

3.0

7,903

23.4

Marine

49,492

3.3

0

0.0

49,492

0.0

1,129,099 100.0

394,954

35.0

Total Orders

1,524,053 100.0

The table above does not include new orders that are presently under finalization (March 2016: Euro 96 million). Breakdown of the Curtain walls segment (aluminum and steel) by geographical area: (â‚Ź thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

125,396 280

79,252 314

77,469

17,761

11,100 1,327 0 1,430 54,891 (288) 145,929

(124) 2,890 0 (57) 1,337 23 21,830

1,100

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

North America South America

496,303 28,691

38.0 2.2

278,351 514

30.7 0.1

217,952 28,177

78.3 5,481.9

United Kingdom + Ireland Switzerland Germany Italy Spain France Other Europe Subtotal Europe

289,061

22.1

213,204

23.5

75,857

35.6

42,277 7,370 275 7,405 116,856 (238) 463,006

3.2 0.6 0.0 0.6 9.0 0.0 35.5

95,026 12,254 18 5,552 48,480 3,359 377,893

10.5 1.3 0.0 0.6 5.4 0.4 41.7

(52,749) (4,884) 257 1,853 68,376 (3,597) 85,113

-55.5 -39.9 1,427.8 33.4 141.0 -107.1 22.5

59

Middle East

111,924

8.6

53,341

5.9

58,583

109.8

2

1

Central Asia

196

0.0

1,067

0.1

(871)

-81.6

12,839 1,171

12,168 2,043

30,287 46,553

2.3 3.6

16,970 103,117

1.9 11.4

13,317 (56,564)

78.5 -54.9

5,725 3 70,795 25,899 (457) 115,975

41,319 1,576 0 6,636 696 64,438

26,358 1,321 70,468 25,095 4,568 204,650

2.0 0.1 5.4 1.9 0.4 15.7

56,902 3,904 0 10,588 3,032 194,513

6.3 0.4 0.0 1.2 0.3 21.5

(30,544) (2,583) 70,468 14,507 1,536 10,137

-53.7 -66.2 0.0 137.0 50.7 5.2

388,682

165,894

1,304,770

100.0

905,679

100.0

399,091

44.1

Australia Hong Kong + Macau China Singapore Malaysia Japan Other Asia Subtotal Asia Total Exteriors

Breakdown of the Interiors segment by geographical area: (â‚Ź thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

(1,688)

4,560

1,195

4,476

338 214

580 432

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

America

17,727

13.9

45,799

24.2

(28,072)

-61.3

United Kingdom+ Ireland Russia Italy

5,412

4.2

9,047

4.8

(3,635)

-40.2

2,346 2,484

1.8 2.0

2,935 5,358

1.5 2.8

(589) (2,874)

-20.1 -53.6

12


104 992

853 328

2,843

6,669

6,570

4,113

0

1

1,412

6,674

3,472 2,484 5,252 12,620

4,577 1,049 5,727 18,027

20,345

33,370

France Other Europe Subtotal Europe Middle East

824 2,687

0.6 2.1

3,618 2,713

1.9 1.4

(2,794) (26)

-77.2 -1.0

13,753

10.7

23,671

12.4

(9,918)

-41.9

15,078

11.8

7,959

4.2

7,119

89.4

0

0.0

163

0.1

(163)

-100.0

37,284

29.1

46,958

24.7

(9,674)

-20.6

21,903 7,965 14,363 81,515

17.1 6.2 11.2 63.6

25,338 27,097 12,620 112,013

13.4 14.3 6.7 59.1

(3,435) (19,132) 1,743 (30,498)

-13.6 -70.6 13.8 -27.2

128,073

100.0

189,605

100.0

(61,532)

-32.5

North Africa Hong Kong + Macau China Japan Other Asia Subtotal Asia Total Interiors

Breakdown of the Contract segment by geographical area: (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

2,139 1,758 579

15,151 326 305

(130)

7

(48)

167

10,126

0

14,424

15,956

America Italy United Kingdom Other Europe Middle East Hong Kong Total Contract

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

29,738 (452) 3,219

71.3 -1.1 7.7

31,660 992 806

93.6 2.9 2.4

(1,922) (1,444) 2,413

-6.1 -145.6 299.4

3,866

9.3

550

1.6

3,316

602.9

(4,779)

-11.5

(193)

-0.5

(4,586)

-2,376.2

10,126

24.3

0

0.0

10,126

0.0

41,718

100.0

33,815

100.0

7,903

23.4

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

37,000 10,172 2,320

74.8 20.5 4.7

0 0 0

0.0 0.0 0.0

37,000 10,172 2,320

0.0 0.0 0.0

49,492

100.0

0

0.0

49,492

0.0

Breakdown of the Marine segment by geographical area: (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

4,197 (148) 2,320

0 0 0

6,369

0

Italy France Norway Total Marine

During the period April 1, 2016 – March 31, 2017, the Group recorded order cancellations for 8 million Euro in Spain, 45 million Euro in Dubai, 54 million Euro in Saudi Arabia and 5 milion Euro in America (no orders cancellation was recorded in previous period April 1, 2015 – March 31, 2016). 13


Backlog Curtain Walls The economic backlog of curtain walls as of March 31, 2017 amounts to 2,094.5 million Euro, as detailed by geographical area in the table below:

(€ millions) Europe United Kingdom Middle East America Asia Total

March 31, 2017

%

March 31, 2016

%

370.0 340.0 135.6 838.1 410.8 2,094.5

17.7 16.2 6.5 40.0 19.6 100.0

305.9 324.8 157.6 731.4 423.5 1,943.2

15.8 16.7 8.1 37.6 21.8 100.0

Contract The economic backlog of contracts as of March 31, 2017 amounts to 60.2 million Euro, as detailed by geographical area in the table below:

(€ millions) Europe United Kingdom Middle East America Asia Total

March 31, 2017

%

March 31, 2016

%

3.3 2.7 4.7 39.3 10.2 60.2

5.5 4.5 7.8 65.3 16.9 100.00

12.0 7.7 10.4 29.0 0.0 59.1

20.3 13.0 17.6 49.1 0.0 100.0

Marine The economic backlog of marine as of March 31, 2017 amounts to 48.5 million Euro, as detailed by geographical area in the table below:

March 31, 2017

%

March 31, 2016

%

Italy France Norway

37.0 9.3 2.2

76.3 19.2 4.5

0.0 0.0 0.0

0.0 0.0 0.0

Total

48.5

100.0

0.0

0.0

(€ millions)

14


Operating performance - Results Operating revenues As detailed in the table below, operating revenues for the period April – March, by product and by geographical area, amounted to 1,286,482 thousand Euro, with a decrease of 13.9% compared to the previous year (March 31, 2016 restated: Euro 1,494,317 thousand). Operating revenues broken down by product are shown below: (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

290,228

267,662

8,659

3,791

298,887

271,453

7,591

3,654

20,727 28,318

24,865 28,519

9,999

5,141

935

0

338,139

305,113

Curtain wallsAluminum Curtain wallsSteel Subtotal Curtain walls Glazed Metal Works Shops Subtotal Interiors Contract Marine Total Operating Revenues

March 31, 2017

%

March 31, 2016

% Variation

Variation %

1,108,990

86.2

1,262,640

84.5 (153,650)

-12.2

22,815

1.8

21,621

1,131,805

88.0

1,284,261

20,983

1.6

13,241

0.9

7,742

58.5

103,282 124,265

8.0 9.6

164,252 177,493

11.0 11.9

(60,970) (53,228)

-37.1 -30.0

29,283

2.3

32,563

2.2

(3,280)

-10.1

1,129

0.1

0

0.0

1,129

0.0

1,286,482

100.0

1,494,317

100.0 (207,835)

-13.9

1.4

1,194

5.5

85.9 (152,456)

-11.9

Breakdown of the Curtain walls segment (aluminum and steel) by geographical area: (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

113,259 3,232

112,645 116

60,724

55,950

9,281 1,879 344 3,604 15,892 7,928 99,652

13,081 3,611 1,000 621 13,471 6,551 94,285

15,854

12,541

3,494

6,367

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

North America South America

463,227 4,417

40.9 0.4

533,344 1,091

41.4 0.1

(70,117) 3,326

-13.1 304.9

United Kingdom + Ireland France Germany Italy Spain Russia Other Europe Subtotal Europe

229,567

20.3

254,512

19.8

(24,945)

-9.8

42,974 15,625 3,373 7,651 64,448 18,418 382,056

3.8 1.4 0.3 0.7 5.7 1.6 33.8

50,774 28,076 3,057 5,881 55,735 30,270 428,305

4.0 2.2 0.2 0.5 4.3 2.4 33.4

(7,800) (12,451) 316 1,770 8,713 (11,852) (46,249)

-15.4 -44.3 10.3 30.1 15.6 -39.2 -10.8

Middle East

47,259

4.2

60,369

4.7

(13,110)

-21.7

Central Asia

14,122

1.2

23,870

1.9

(9,748)

-40.8

15


4,559 36,811

2,321 18,974

18,183 542 3,157 144 63,396

16,360 4,128 2,808 908 45,499

298,887

271,453

Australia Hong Kong + Macau China Singapore Japan Other Asia Subtotal Asia Total Exteriors

15,332 101,952

1.3 9.0

20,764 80,609

1.6 6.3

(5,432) 21,343

-26.2 26.5

77,245 6,851 11,920 7,424 220,724

6.8 0.6 1.1 0.7 19.5

70,502 30,542 33,146 1,719 237,282

5.5 2.4 2.6 0.1 18.5

6,743 (23,691) (21,226) 5,705 (16,558)

9.6 -77.6 -64.0 331.9 -7.0

1,284,261 100.0

(152,456)

-11.9

1,131,805 100.0

Breakdown of the Interiors segment by geographical area: (â‚Ź thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

6,224

4,953

3,235

3,128

149 7 264 471

471 671 1,092 334

4,126

5,696

2,603

939

Middle East

4

52

North Africa

8,806

7,174

4,855 707 993 15,361

6,047 1,485 2,173 16,879

28,318

28,519

March 31, 2017

%

March 31, 2016

%

Variation

Variation %

America

26,450

21.3

39,570

22.3

(13,120)

-33.2

United Kingdom + Ireland Russia Italy France Other Europe Subtotal Europe

15,323

12.3

11,474

6.5

3,849

33.5

2,521 1,985 1,146 1,793

2.0 1.6 0.9 1.5

2,147 5,058 3,401 2,479

1.2 2.8 1.9 1.4

374 (3,073) (2,255) (686)

17.4 -60.8 -66.3 -27.7

22,768

18.3

24,559

13.8

(1,791)

-7.3

6,760

5.4

5,092

2.9

1,668

32.8

2

0.0

681

0.4

(679)

-99.7

29,779

24.0

34,629

19.5

(4,850)

-14.0

21,791 2,294 14,421 68,285

17.5 1.9 11.6 55.0

35,040 27,743 10,179 107,591

19.8 15.6 5.7 60.6

(13,249) (25,449) 4,242 (39,306)

-37.8 -91.7 41.7 -36.5

124,265

100.0

177,493

100.0

(53,228)

-30.0

March 31, 2017

%

March 31, 2016

%

15,408 12,853

52.6 43.9

932 11,087

2.9 34.0

14,476 1,766

1,553.2 15.9

1,022

3.5

25

0.1

997

3,988.0

1,520

5.2

3,744

11.5

(2,224)

-59,4

Hong Kong + Macau China Japan Other Asia Subtotal Asia Total Interiors

Breakdown of the Contract segment by geographical area: (â‚Ź thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

7,242 2,004

483 3,448

512

25

1,263

109

America Italy United Kingdom Other Europe

Variation Variation %

16


(2,320) 1,293 5

1,064 12 0

9,999

5,141

Middle East Central Asia Hong Kong Total Contract

(3,134) 1,416 198

-10.7 4.8 0.7

14,596 2,179 0.0

44.8 6.7 0.0

(17,730) (763) 198

-121.5 -35.0 0.0

29,283 100.0

32,563

100.0

(3,280)

-10.1

Breakdown of the Marine segment by geographical area: (€ thousands) IV Quarter 2017 (Jan-Mar17)

IV Quarter 2016 (Jan-Mar16)

207

0

Italy

680 48 935

0 0 0

France Norway Total Marine

March 31, 2017

%

March 31, 2016

%

Variation Variation %

207

18.3

0,0

0.0

207

100.0

874 77.4 48 4.3 1,129 100.0

0,0 0,0 0,0

0.0 0.0 0.0

874 48 1,129

100.0 100.0 100.0

Profitability The normalized consolidated data of year ended on March 2017 show a positive EBITDA of Euro 20.9 million (March 2016 restated: loss of Euro 3.4 million), that corresponds to 1.6% of operating revenues (March 2016 restated: -0.2%), and a positive EBIT of Euro 4.1 million (March 2016 restated: loss of Euro 20.5 million), that corresponds to 0.3% of operating revenues (March 2016 restated: -1.4%).

Financial performance - Results The consolidated non-current assets amounted to Euro 187,006 thousands (March 2016: Euro 198,166 thousand); the decrease of Euro 11,160 thousand compared to the closing figures of the previous year is mainly due to: -

the positive effect of exchange rate (approximately Euro 1.8 million) and the increase given by new investments (approximately Euro 13.9 million), net of the amortization for the year (approximately Euro 23.5 million);

-

the negative effect of the reclassification of the site in Thailand under the “asset held for sale” (approximately Euro 5.2 million);

-

the positive effect of the reclassification of the activities in the north Europe from the “asset held for sale” to the asset of the Group (approximately Euro 2.7 million).

The consolidated net working capital presents a positive value for approximately Euro 369,930 thousand (March 2016: Euro 346,567 thousand), showing an increase compared to the closing figures of the previous year due to the rise in the operating working capital (i.e. the sum of the assets for contracts work-in-progress, inventories and trade receivables minus liabilities for contracts work-in-progress and trade payables and advances from customers) from Euro 421,038 to Euro 426,943. The Group net financial position shows at the year ended March 2017 a negative balance of Euro 382,070 thousand compared to the previous year negative balance of Euro 322,804 thousand (March 2016). The net financial expenses are equal to Euro 26,975 thousand at March 2017 compared to Euro 33,511 thousand for the previous year March 2016 restated. For more details, please refer to the comments under the caption “11 – Net financial expenses”. The net consolidated equity (including minority interests) decreases from Euro 190,946 thousands to Euro 142,479 thousands; the negative variation for Euro 48,467 thousands is mostly due to:

17


(â‚Ź thousands)

- loss for the period

Euro

(45,955)

- translation reserve variation

Euro

2,355

- hedging reserve variation

Euro

(4,474)

- gains/(losses) actuarial variation

Euro

(483)

- other variations

Euro

89

Investments The trend of technical investments at a Group level was the following: (â‚Ź thousands)

Land and buildings Machinery and equipment Equipment Other tangible fixed assets Fixed assets in progress Total technical investments

March 31, 2017

March 31, 2016

March 31, 2016 restated

520 1,565 4,132 2,946 838 10,001

1,172 124 406 1,366 907 3,975

1,969 7,919 2,985 7,066 841 20,780

The main increases were recorded in Germany for Euro 4.8 million (March 2016: Euro 0.5 million), in Russia for Euro 0.9 million (March 2016: Euro 0.2 million), in Italy for Euro 0.6 million (March 2016: Euro 2.1 million), in the Middle East for Euro 0.2 million (March 2016: Euro 0.8 million), in America for Euro 1.1 million (March 2016: Euro 0.1 million), in Asia for Euro 1.1 million (March 2016: Euro 0.1 million), in Netherlands for 0.6 million (March 2016: 0.2 million) and were mainly incurred to enhance production capacity and replace or renew plants and equipments. No major asset disposals occurred during the period.

18


Overview of acquisitions

ongoing

projects

and

main

project

Permasteelisa Group's main ongoing projects for the year ended March 2017 have been broken down into the Group's three main sectors: •

Curtain walls and Exteriors

Interiors

Contract

Business Unit Curtain Walls and Exteriors Projects are broken down into three subdivisions: •

Main project acquisitions as of March 31, 2017

Main ongoing projects as of March 31, 2017

Main completed projects as of March 31, 2017

within each area the projects are listed per Regions.

Main project acquisitions as of March 31, 2017

NORTH AMERICA REGION 45 PARK PLACE New York, NY / UNITED STATES 45 Park Place is a luxury residential tower which tops out 203 m (667 ft), located in Tribeca, Lower Manhattan. The glass skyscraper designed by SOMA Architects is a 43floors tower that includes at least 15 full-floor units of 297 to 344 sqm (3,200 to 3,700 sq ft) and features two penthouses sit on the uppermost floors of the tower, for a total of 50 luxury apartments. The scope of work consists in the design, production and installation of almost 13,900 sqm (149,650 sq ft) of unitized curtain walling system, comprising parapets, canopy and the internal vestibule area. The project, acquired by Permasteelisa North America Corp., will be developed in partnership with Permasteelisa S.p.A. and is due for completion in late 2018.

19


FOLSOM BAY TOWER San Francisco, CA / UNITED STATES Folsom Bay Tower is a 39-floors landmark tower located on the easternmost corner of the Transbay Redevelopment Area in San Francisco. The tower twists around the core, creating a spiraled façade that rises 122 m (400 ft). The tower, designed by Studio Gang, offers around 900 sqm (10,000 sq ft) of retail space fronting Folsom and Main Streets. The design is an evolution of the classic San Francisco bay window, twisting incrementally over the height of the tower to provide views, light and air to the residential units and, at the same time, improve its energy performance. The project aims to the certification goal of LEED Silver®. The project is acquired by Permasteelisa North America Corp. and is due for completion in late 2018. Ph.: Courtesy of Studio Gang

MUSEUM OF FINE ARTS HOUSTON Houston, TX / UNITED STATES The Museum of Fine Arts in Houston will face a transformation that comprises also the buildings designed by Steven Holl Architects. The project is acquired by Permasteelisa North America Corp. and involves the design, production and installation of almost 7,500 sqm (80,700 sq ft) of steel and glass façades, doors, cantilevered façade of semicircular curved glasses. The completion is due at the beginning of 2019.

20


SOUTH AMERICA REGION ATRIO NORTH TOWER Bogotà / COLOMBIA Atrio is a major mixed-use commercial development located at the intersection of Calle 26 and Avenida Caracas, in Bogotà that features two towers - North and South - which will redefine the city’s skyline. The North Tower (200 m / 656 ft) - designed by Rogers Stirk Harbour + Partners (RSHP) – will offer office, residential and retail space. The project is acquired by Permasteelisa

S.p.A.

and

it

will

be

developed

in

partnership with Permasteelisa Colombia S.A.S. The project involves the design, production and installation of almost 40,000 sqm (430,500 sq ft) of unitized façades, stick façades, glass parapets and canopies. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management and it shall be completed during the first months of 2019.

EUROPE REGION BOLAND'S QUAY (BSQ) Dublin / IRELAND Boland's Quay, designed by BKD Architects, will give to Dublin three new landmark buildings with commercial, shopping and cultural spaces. Towers 1 & 2 - Office towers clad with curtain walling system throughout comprised of terracotta or metal clad opaque and vision façade units, designed to obtain the LEED Gold Certification. Tower 3 - Residential tower clad with terracotta, aluminum rain screen systems, and double glazed punched windows, fully glazed winter gardens comprised of a double glazed inner skin and single glazed ‘transparent’ outer skin. The project, acquired by Permasteelisa Ireland Ltd, will be developed in partnership with Permasteelisa S.p.A. and is due for completion in late 2019.

21


DUO TOWERS Paris / FRANCE Designed by Jean Nouvel and located in the BruneseauMassena district, this mixed-use complex will host offices, hotels, commercial activities for a total area of about 105,250 sqm (1,132,901 sq ft). The project comprises two towers: DUO1 - 180 m / 591 ft tall - for commercial use and with shops at the group floor and DUO2 - 120 m / 400 ft tall - will be the seat for a hotel, shops and office spaces. The project, acquired by Permasteelisa France S.a.s., will be developed in partnership with Permasteelisa S.p.A. and is due for completion in 2020. The scope of work consists of 58,500 sqm (629,700 sq ft) of double and single stick façade, glass roofs and louvres.

ISLA CHAMARTÍN Madrid / SPAIN The project designed by EA3 is part of one of the biggest redevelopment projects ever planned in Spain, which consists in the construction of six towers in the Chamartìn district. The project acquired by Permasteelisa España S.A.U. features a 3-floors building and an 85-meters high tower (279 ft). The Group will provide the design, production and installation of 8,650 sqm (93,100 sq ft) of Interactive Wall©, 3,550 mq (38,200 sq ft) of aged zinc sheets and 1,750 sqm (18,850 sq ft) of perforated aluminum sheets. The completion is scheduled to be at the end of 2017. Ph.: Courtesy of EA3

SPORTING D'HIVER Monte Carlo / PRINCIPALITY OF MONACO The Sporting d'Hiver complex is located in the very heart of Monte Carlo and features a series of mixed-use pavilions that provide residential, office and retail space, together with a 3,000 sqm (32,300 sq ft) conference facility, new pedestrianized spaces with restaurants and an art gallery. The organization of the residential blocks is modular, allowing for a wide range of apartment fit-out options. A 22


contractible faรงade system installed on each module's exterior allows the interior living quarters of each apartment to open up into an external living space providing extraordinary views of the city. The magnificent Salle des Arts, an art deco major exhibition space, will be rebuilt identically inside the new building, which aims to be an example of sustainable development. The project features the design, production and installation of glass sliding doors, 6 m (17 ft) high shop windows, special metal works and wood cladding for a total area of about 44,000 sqm (473,600 sq ft). The project, acquired by Permasteelisa France S.a.s., will be developed in partnership with Permasteelisa S.p.A. and is due for completion in late 2018.

ASIA REGION 100 MOUNT STREET Sydney /AUSTRALIA Designed by the architecture studio Skidmore, Owings & Merrill

LLP

in

collaboration

with

Architectus,

the

commercial complex is situated on a prime location on the corner of Mount and Walker Street, in North Sydney. The office tower offers approximately 41,100 mq (442,400 sq ft) of commercial space subdivided in 34 floors and a large shopping area at ground level. The project aims to the certifications 5 Star Green Star and 5 Star NABERS Energy and to this end it incorporates the latest innovations in sustainable building. The project was acquired by Permasteelisa PTY Ltd and developed in collaboration with Global Architectural Co. Ltd.; it involves the design, provision and installation of 17,000 mq (183,000 sq ft) of mfreeS-CCF faรงade. Works are scheduled for completion in the second half of 2018.

KWG MALL Suzhou / CHINA KWG Mall is a 38 m (125 ft) high complex designed to house a large-scale shopping center located in the Mudu new urban development, in Suzhou. The mall will offer leisure and entertainment facilities to adults and children, such as restaurants and bars, a cinema and an ice-skating rink. The project was acquired by Josef Gartner Curtain Wall (Shanghai) Co., Ltd. and it involves the supply and installation of stick system for the main faรงade with glass, stone and aluminum panels covering a total surface area of 40,500 mq (435,900 sq ft). The project will be completed during 2017.

23


MERDEKA PNB 118 Kuala Lumpur / MALAYSIA KL118 is a 653 m (2,083 ft) high skyscraper which rises in Kuala Lumpur’s Golden Triangle. The development is comprised of a 118-floors tower sitting over a glass-domed covered podium housing a shopping mall. The project developer will occupy 60 floors of the tower which will become its global headquarters, while the remaining floors will house commercial spaces, a luxury hotel and they will also feature multiple observation decks. The project was acquired by Global Wall (Malaysia) Sdn Bhd. and consists of the design, manufacturing, supply and installation of both vertical and sloping façades covering a total surface of 150,530 mq (1,620,290 sq ft) included 27,000 mq (290,600 sq ft) of bomb-blast curtain wall, canopy, sloping glazing skylight, storefronts, column cladding and stick system glass wall for the podium; the tower supply consists of unitized curtain wall and GRP cladding for the top spire. The project is scheduled for 2020 completion.

MACHINING CENTER HUAWEI Shenzhen / CHINA Huawei headquarters in Shenzhen are located

in

Longgang District, a wide area which will house research and training centers. The project was acquired by Josef Gartner Curtain Wall (Shanghai) Co., Ltd., and involves the manufacturing, supply and installation of stone façades and five skylights for Building A covering a total surface of 22,600 mq (243,300 sq ft). The project is due for completion in the second half of 2017.

24


RETAIL, DINING AND ENTERTAINMENT BUILDING (RDE BUILDING – WEST KOWLOON CULTURAL DISTRICT) Hong Kong / CHINA The West Kowloon Cultural District (WKCD) project is being developed as an integrate arts and cultural district located on a reclamation area with

a surface of

approximately 30 ha. The 16-floors, 88 m (289 ft) high, transparent tower of M+ Museum houses in its upper floors dining and retail facilities along with entertainment spaces which aim to become an integrated part of the Cultural District. The project has been acquired by Permasteelisa Hong Kong Limited and involves the design, supply and installation of approximately 10,300 mq (110,900 sq ft) of curtain wall. It is due for completion in early 2018.

Main ongoing projects as of March 31, 2017

NORTH AMERICA REGION 1144 FIFTEENTH STREET Denver, CO / UNITED STATES Designed by Pickard Chilton, the building is designated exclusively for commercial use and will stand 188 m tall, making it one of the tallest buildings in Denver, Colorado. The project involves the realization of 33,900 smq (364,900 sq ft) of curtain walls. The work also includes the façades of both the shops and the garages and a skylight on top of the tower. The project, acquired by Permasteelisa North America Corp., will be the first Grade A office building in Denver. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management.

25


565 BROOME SOHO New York, NY / UNITED STATES The first

US

residential

tower

of

the

international

architectural firm Renzo Piano Building Workshop is planned to rise in the vibrant southern Manhattan district of Soho. Two towers of 30 stories each will offer 26,000 sqm (280,000 sq ft) of housing for a total of 115 apartments. The building is composed by two towers connected by a flat roof and the portal, made of a glass faรงade with steel cables. The scope of work consists of single skin curtain wall that composes the large and transparent faรงade featuring a smooth appearance due to rounded corners, for an overall area of 17,400 sqm (187,300 sq ft). The project, acquired by Permasteelisa North America Corp., will be developed in partnership with Josef Gartner GmbH and is due for completion in late 2017. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management.

CAPITOL CROSSING - NORTH BLOCK Washington, DC / UNITED STATES Capitol Crossing is one of the biggest projects ever undertaken in the district of Columbia. It is located just west of Capitol Hill in the heart of Washington D.C. The complex offers offices, housing and around 6,500 sqm (70,000 sq ft) of shopping space in five, new, mixed-use buildings. The project, acquired by Permasteelisa North America Corp, will be developed in partnership with Permasteelisa S.p.A. It includes the construction of two 12floors, mixed-use office buildings and it features tripleglazed floor to ceiling windows and water recapture systems combined with a cogeneration plant to generate electricity and heat at the same time. The North Block is enveloped in an insulated glass curtain wall - which improves thermal efficiency - and features green roofs with terraces offering panoramic views to the city. The works are scheduled for completion in the second half of 2019.

26


CENTRAL PARK TOWER New York, NY | UNITED STATES The Central Park Tower rises along the southern border of the Park from which it takes the name and rises to 472 m / 1,549 ft. The building, designed by Adrian Smith + Gordon Gill, will include ultra-luxury condominium residences, dynamic amenity spaces, as well as a Nordstrom flagship department store at the 7-floors high podium. The faรงade is made of 56,700 sqm (610,192 sq ft) of aluminum and glass curtain wall with louvers and fins, while the podium is clad with a special 'serpentine' shaped aluminum and glass unitized curtain wall with a unitized louver faรงade system. The project, acquired by Permasteelisa North America Corp., will be developed in partnership with Permasteelisa S.p.A. and is due for completion at the beginning of 2019. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management. Ph.: Courtesy of Extell Development Company

ONE WATERLINE SQUARE New York, NY | UNITED STATES Residential tower designed by the archistar Richard Meier (Richard Meier & Partners Architects LLP) that is part of the new development at Waterline Square, between 59th and 61st street in New York. The 36-floors tower, which stands 139 m (456 ft) tall, will offer 290 luxury apartments. The building's amenities include an entertainment lobby, an indoor playground for children, a game room, a training studio and a lap pool besides a bar, an amphitheater, a music lounge and a sound room. A commercial gallery is thought at the podium. For this job, Permasteelisa Group is designing, producing and installing 17,000 sqm (183,000 sq ft) of curtain wall, with 210 punch windows set in brick. The project acquired by Permasteelisa North America Corp., is due for completion at the beginning of 2018.

27


EUROPE REGION 10 FENCHURCH AVENUE London / UNITED KINGDOM Project designed by Eric Parry Architects acquired by Permasteelisa (UK) Limited and developed in partnership with Josef Gartner GmbH. The iconic building provides commercial office space, retail use at the lower levels and a public passageway at street level, but it also incorporates a publicly accessible rooftop garden. Design, production and installation of 18,000 sqm (193,750 sq ft) of terracotta panels and sunscreen louvres with flipflop paint, mfreeS-CCF and stick system faรงade. The project is due to completion at the end of 2017.

22 BISHOPSGATE London / UNITED KINGDOM New commercial tower at the heart of the City of London, that will redefine the city skyline with its 278 m / 912 ft in height. The project has been acquired by Permasteelisa (UK) Limited and will be developed in partnership with Josef Gartner GmbH. Designed by the studio PLP Architecture, the building integrates social amenity spaces throughout the building shared by tenants. A restaurant and bar occupying the upper levels, a public viewing gallery offering free entry. The job includes the design, production and installation of around 70,000 sqm (753,500 sq ft) of mfreeS-CCF faรงade and stick system faรงade for level 00 - 02. The tower will be completed at the end of 2019.

28


52 LIME STREET London / UNITED KINGDOM 52 Lime Street, also known as The Scalpel, will be the Europen headquarters of the insurance company W. R. Berkley Corporation. Designed by Kohn Pedersen Fox Associates, is due to completion between the end of 2017 and the beginning of 2018. The tower is 192 m / 630 ft high, for 39 stories of office space. The main entrance in Lime Street will face to a new public square, included in the project package. Project acquired by Scheldebouw B.V. that features the design, production and installation of 30,350 sqm (326,600 sq ft) glass façades, stainless steel "fold" panels, roofs, bomb-blast cladding, internal columns panels, false ceilings and PV-cells.

THE CIRCLE AT ZÜRICH-AIRPORT Zurich / SWITZERLAND Project designed by Riken Yamamoto & Field Shop in collaboration with HRS Real Estate AG, Richter Dahl Rocha & Associés architectes SA e Fischer Architekten AG and acquired by Josef Gartner GmbH. Just steps away from the terminal buildings, "The Circle" externally echoes the shape and design language of the airport, but internally it is designed to give the impression of a small scale, high class city center. The 180,000 sqm (1,900,000 sq ft) of "The Circle" are divided into seven modules each representing a different business functions. The project comprises the design, production and installation of around 66,900 mq (720,100 sq ft) of mfreeS-CCF façade and the provision of approximately 150 different doors in different areas. The completion date is scheduled to be at the end of 2018. Ph.: zurich-airport.com

29


ASIA REGION 480 HAY STREET Perth / AUSTRALIA The project, designed by the architecture studio HASSELL, is located at the east end of Perth CBD. The mixed-use complex involves the development of Perth’s most luxurious hotel which will rise 107 m (351 ft) and will offer 368 rooms.

The scheme is also comprised of an over

1,000 mq (10,800 sq ft) large podium housing retail facilities and restaurants. The project, which is managed with PMF, was acquired by Permasteelisa PTY Ltd and is developed in partnership with Josef Gartner Curtain Wall (Suzhou) Co. Ltd.

The scope of work consists of the

production and installation of approximately 15,000 mq (161,450 sq ft) of curtain wall for the tower and the podium. The project is scheduled for completion in late 2017.

CRYSTAL PLAZA – LOT 22 & 24 Shanghai / CHINA Crystal Plaza is a new mixed-use development of over 305.000 mq (3,285,900 sq ft) located in the heart of the New Bund, the emerging business center in Shanghai. The project is designed by the architecture studio Kohn Pedersen Fox Associates and consists of six commercial towers, four residential blocks and an interconnected podium housing retail spaces. The project is managed with PMF and is acquired by Josef Gartner Curtain Wall (Shanghai) Co. Ltd. It involves the design, production and installation of approximately 52,300 mq (562,300 sq ft) of unitized curtain walls. Works will be completed in late 2017.

30


CRYSTAL PLAZA - LOT 28 & 30 Shanghai / CHINA Crystal Plaza is a new mixed-use development of over 305,000 mq (3,285,900 sq ft) located in the heart of the New Bund, the emerging business center in Shanghai. The project is designed by the architecture studio Kohn Pedersen Fox Associates and consists of six commercial towers, four residential blocks and an interconnected podium housing retail spaces. The project is managed with PMF and is acquired by Josef Gartner Curtain Wall (Shanghai) Co. Ltd. It involves the design, production and installation of approximately 30,200 mq (325,100 sq ft) of unitized curtain walls. Works will be completed in late 2017.

M+ MUSEUM Hong Kong / CHINA M+ Museum, designed by a Joint Venture between the renowned studio Herzog & de Meuron and TFP Farrels and Ove Arup & Partners Hong Kong Limited, is a world-class facility to house Hong Kong’s new museum for visual arts. It will be the flagship museum of the West Kowloon Cultural District. The museum building comprises two panes fused into the shape of an upside-down T: the slim and slender tower will house offices, education and research facilities and a restaurant, while the horizontal slab will be home to gallery spaces. The project has been acquired by Permasteelisa Hong Kong Limited and it consists of the design, manufacturing and installation of 31,000 mq (333,700 sq ft) of custom-made building envelope integrated with ceramic tile panels, glass, precast concrete panels, glass panels, LED media façade video display and lighting system. The completion is due at the beginning of 2019.

SHANGHAI FOXCONN PLAZA (FOXCONN HEADQUARTERS) Shanghai / CHINA Foxconn Headquarters is a new office development located in Shanghai, more precisely in the Lujiazui financial center by the Huang Pu River. The high-rise building, which has been designed by Kris Yao | Artech, comprises four underground floors and rises to 21 levels. The design 31


includes sustainable features as the building aims to the LEED certification goal. Besides other sustainable features, the building can boast solar panels, a rainwater harvesting system and a geothermal heat exchange system. The project – acquired by Josef Gartner Curtain Wall (Shanghai) Co., Ltd and managed with PMF, the program developed by Permasteelisa Group for project management – consists of the supply and installation of approximately 46,850 mq (504,300 sq ft) of unitized curtain walls. It is due for completion in late 2017.

Main completed projects as of March 31, 2017

NORTH AMERICA REGION 150 NORTH RIVERSIDE Chicago, IL / UNITED STATES Tower for commercial use, pre-certified with the LEED-CS Gold rating, with 54 floors for 221 m / 725 ft in height, that will offer almost 135,000 sqm (1,453,127.00 sq ft) of “Class A” office space. The project acquired by Permasteelisa North America Corp. in partnership with Scheldebouw B.V. and designed by the Goettsch Partners architecture studio, involves constructing approximately 45,900 sqm (494,000 sq ft) of curtain walls, 1,130 sqm (12,200 sq ft) of metal panels and 250 (2,700 sq ft) of handrails. Project acquired by Permasteelisa North America Corp. and developed with the collaboration of Scheldebouw B.V. The works were completed in the second half of 2016.

APPLE PARK Cupertino, CA / UNITED STATES The main building of the new and futuristic Apple Park is without any doubt the Spaceship, nicknamed for its round shape and exceptional size. With an outside circumference of about one mile, the 4-floors building designed by Lord Norman Foster is able to accommodate approximately 14,000 Apple employees. Thanks to the photovoltaic panels installed on the roof, the Park is intended to achieve energy self-sufficiency. The huge curved glass windows with an innovative system to allow natural ventilation, as well as all the canopies that characterize the structure also helping to reduce the solar radiation, have been designed, produced and installed by the Group through the collaboration of several entities. The cells and the architectural envelopes materials have been designed, produced and pre-assembled in Europe; then shipped to California via sea. The 32


project was acquired by Permasteelisa North America Corp. and developed in partnership with Josef Gartner GmbH. Ph.: ©Apple Inc.

DENVER VA MEDICAL CENTER Aurora, CO / UNITED STATES The project, acquired by Permasteelisa North America Corp. and developed in partnership with Bleu Tech Montreal Inc. is designed by the SOM architecture studio. The job includes the creation of 36,300 sqm (390,700 sq ft) of curtain walls, with external sunshades, roofs and structurally integrated solar panels. The project was completed in the second half of 2016.

LENFEST CENTER FOR THE ARTS (The University Forum) New York, NY | UNITED STATES Built on a triangular site, the Lenfest Center for Arts (the University Forum) consists of a transparent and permeable to light ground floor dedicated to public functions. At the upper levels there is an academic auditorium for around 430 people, with amenities such as foyer, meeting rooms, classrooms and offices. The auditorium, whose function requires opacity, is characterized by an exterior concrete prefabricated skin, while offices, to maximize the use of natural light, have a glazed façade. Along with other buildings, the Forum will be part of the first LEED® Platinum certified campus in the United States. Project acquired by Permasteelisa North America Corp. and ended in the second half of 2016. Ph.: ©Karin Jobst

33


MADISON SQUARE PARK TOWER New York, NY / UNITED STATES Positioned in one of the most iconic and culturally sophisticated neighborhoods in Manhattan, the Flatiron District, this 65-floors residential tower designed by Kohn Pedersen Fox Associates (KPF) has a sculptural glass silhouette that rises 237 m (777 ft) in the sky. The 17,200 sqm (185,100 sq ft) of unitized curtain wall offer an incomparable view on New York City. The project was acquired by Permasteelisa North America Corp. and developed in partnership with Bleu Tech Montreal Inc.

NORTHEASTERN UNIVERSITY ISEC Boston, MA | STATI UNITI The Interdisciplinary Science and Engineering Building (ISEC) is part of the Northeastern University in Boston. Designed by Payette studio, the new 6-floors laboratory hosts a vibrant interdisciplinary researching community. Thanks to the attention put on sustainability, the building has been designed to consume 50% less than a standard laboratory. This goal is reached also thanks to the faรงade and its high-tech specific solutions for the building exposure. The curved shout-west faรงade is characterized by sunshading elements that reduce the thermal storage and maximize the light. A "cascade" system for hot and cold air recovery and the use of high efficiency lighting, complete the energy efficiency systems. The project, acquired by Permasteelisa North America Corp. and developed in partnership with Bleu Tech Montreal Inc., was completed at the end of 2016. Ph.: Courtesy of Payette

34


RIVER POINT Chicago, IL / UNITED STATES 52-floors Grade A office tower located in Chicago's downtown West Loop. Designed by Kendall/Heaton Associates, the building has a convex structure which captures natural light for the interior as well as providing panoramic views outward. For this project the Group designed, produced and installed around 42,000 sqm (452,000 sq ft) of unitized curtain wall. Project acquired by Permasteelisa North America Corp. and completed in the second half of 2016.

EUROPE REGION CENTRO TECNOLÓGICO - AVENIDA DE AMÉRICA 79 Madrid / SPAIN The commercial building Avenida de América 79 in Madrid offers almost 20,000 sqm (215,300 sq ft) of office space distributed among its 6 stories. Thanks to its very high sustainability characteristics, the building has received the LEED Platinum pre-certification for the Core & Shell category, one of the few buildings in Spain to have such title. The project was acquired by Permasteelisa España S.A.U. and completed in the first half of 2016, with its 4,500 sqm (48,500 sq ft) of double skin Active Wall®.

35


CREECHURCH PLACE London / UNITED KINGDOM This new development - designed by Sheppard Robson - in the heart of the insurance district, provides over 25,000 sqm (around 271,000 sq ft) of office space over 17 floors plus around 300 sqm (3,000 sq ft) of ground floor retail space. Control of solar gain and optimization of natural daylight are achieved through an articulated cladding system enhanced by anodized aluminum vertical fins of varying colors and spacing. The building is targeting a BREEAM

Excellent

rating.

The

job

acquired

by

Scheldebouw B.V. included the installation of Interactive WallŠ cladding system from level 1 to level 17 for an overall area of approximately 21,400 sqm (230,300 sq ft). The Project is managed with PMF, the programme developed

by

Permasteelisa

Group

for

project

management and it was completed at the end of 2016.

MAINZERO Frankfurt / GERMANY The building designed by Studio Bollinger + Grohmann is a premium location within Frankfurt's financial district. The 9floors structure, with 3 floors underground, provides more than 18,000 mq (193,700 sq ft) of high-quality office space. Project acquired by Josef Gartner GmbH that required the provision of 11,000 sqm (118,400 sq ft) of unitized curtain wall from aluminum and steel, structural glazing, fulfilling the bomb blast requirements on site.

Ph.: Stephan Liebl

36


NOVOTEL CANARY WHARF London / UNITED KINGDOM 40-floors hotel tower with 332 rooms. The 119-meters high (390 ft) glazed building designed by Leach Rhodes Walker Architects comprises a projecting feature "yellow box" at lower seven levels using a mix of different glazing and frit types. The job awarded by Permasteelisa (UK) Limited and developed in collaboration with Permasteelisa S.p.A., provided the design, production and installation of around 11,500 sqm (123,800 sq ft) of unitized curtain wall. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management.

THE RUSSIAN ORTHODOX SPIRITUAL AND CULTURAL CENTER Paris / FRANCE The overall project consists of 4 separate units: an orthodox church, a parish, a school and a cultural centre. The project involved the construction of glass and curved glass faรงades, steel and stone structures and faรงades for a total of 8,800 mq (94,700 sq ft). The first and second skin, respectively, will be characterised by ribbon faรงades and stone faรงades and curved glass. The job was acquired by Permasteelisa France S.a.s. and implemented in collaboration with Permasteelisa S.p.A. The work ended in 2016.

37


VERDE SW1 London / UNITED KINGDOM Verde

SW1

is

an

innovative

regeneration

project

developing in London's West End. The 12 storey building designed by Aukett Swanke is characterised by 26,200 sqm (282,000 sq ft) of “Grade A” certified offices and six roof gardens. Acquired by Permasteelisa (UK) Limited and developed in collaboration with Josef Gartner GmbH, the project involved the design, provision and installation of 12.000 sqm (129,200 sq ft) of external façade and 2,000 sqm (21,500 sq ft) of internal façades for the lobby. The works ended at the beginning of 2017. Ph.: Simon Kennedy Photography

PARIS COURTHOUSE Paris / FRANCE The new Palais de Justice designed by Renzo Piano Building Workshop consolidates various courtrooms and offices around the capital thus becoming the largest law courts complex in Europe. The development is composed of four horizontally arranged parallelepipeds that decrease in size as the building rises reaching 160 m (525 ft) and offering an internal usable area of around 100,000 sqm (over 1 million sq ft). The terraces create around 7,000 sqm (75,300 sq ft) of rooftop planted areas which extend Martin Luther King park right onto the building. The façades, which incorporate photovoltaic panels, are fully glazed and offer a high level of natural lighting to the heart of the building; furthermore an external lift with panoramic views climbs a fissure on the eastern façade that captures the morning light. The project involves the creation of 29,000 m2 of façade and 3,800 m2 of stick system curtain walls. The building was acquired by Permasteelisa France S.A.S. and developed in collaboration with Permasteelisa S.p.A.

38


ASIA REGION CENTRAL POLICE STATION Hong Kong / CHINA The project, designed by the Swiss architecture studio Herzog & de Meuron, involves the development of two distinctive but simple volumes, developed in consideration of important contextual qualities: to maintain the horizontal character ot the site, to preserve the existing open spaces and to carefully insert new architectural elements within the fabric of the existing buildings. The project, developed by Josef Gartner & Co. (HK) Ltd, consists of the design, supply and installation of aluminum brick walls, glass walls, aluminum cladding, customized (noise-in/noise-out) soffit, grille, skylight. operable window system, BMU system at roof level for a total surface of approximately 8,400 mq (90,400 sq ft). The project was completed at the beginning of 2017.

WANGFUJING INTERNATIONAL LUXURY CENTRE Beijing / CHINA The project, designed by the architectural firm Kohn Pedersen Fox Associates, is comprised of an eastern block and a western block, both located on Wangfujing Street, in Beijing. The eastern building is a 6-level high development which will house a small luxury hotel and leading brands shopping spaces, while the western block is a 4-level high structure and will accommodate offices. The podium will offer high-end retail and commercial spaces. The complex also features a 4-level deep basement with the first underground floor for shops and the three remaining levels providing a large parking area with more than 600 carpark spaces. The project was acquired by Josef Gartner Curtain Wall (Shanghai) Co. Ltd. and it involved the supply and installation of almost 43,000 mq (482,200 sq ft) of unitized curtain walls. It has been completed during 2017.

39


WEST KOWLOON TERMINUS STATION NORTH – 810A Hong Kong / CHINA The West Kowloon Terminus Station North is the largest civil contract awarded for the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link. Located in the heart of Kowloon, the terminus will serve as Hong

Kong's

international

gateway

to

China.

Permasteelisa Hong Kong was awarded the project for the Exteriors as well as for interiors finishing glazed and metal works. Furthermore, we designed, supplied and installed the 3D aluminium cladding, glass lift enclosures, stainless steel cladding/ceiling, aluminum cladding, stainless steel/glass barrier, sliding/swinging doors/gates, for an overall area of approximately 65,000 sqm (700,000 sqft).

Interiors

NORTH AMERICA REGION During the course of the year ended March 31, 2017 the Group acquired 59 projects from new and existing clients. The main projects acquired include: •

Victoria's Secret: 24 shops

Brooks Brothers: 9 shops

Tiffany: 3 shops

Paradies: 2 shops

Prudential: production and installation of internal walls in 5 projects.

EUROPE REGION

40


EUROPE REGION During the course of the year ended March 31, 2017 the Group acquired 110 projects from new and existing clients. The main projects acquired include: •

Lumberjack: 27 shops

Victoria's Secret: 18 shops

Bally: 13 shops

Geox: 13 shops

Bose: 10 shops

Brooks Brothers: 7 shops

41


ASIA REGION During the course of the year ended March 31, 2017 the Group has acquired 113 projects from new and existing clients. The main acquired projects include: •

Ermenegildo Zegna: 17 shops

L'Oréal: 15 shops

Louis Vuitton: 11 shops

Tiffany: 11 shops

Salvatore Ferragamo: 10 shops

42


Contract Main project acquisitions as of March 31, 2017 FLORIM HEADQUARTERS Clarksville, TN / UNITED STATES Project designed by LR|A Luigi Romanelli Architetto that features the design, production and installation of curtain wall and partitions for a total area of 3,700 sqm (39,800 sq ft). Project acquired by Permasteelisa North America Corp. that will be developed in collaboration with Permasteelisa S.p.A. The completion date is scheduled in the first half of 2018.

Main ongoing projects as of March 31, 2017 VESSEL New York, NY / UNITED STATES Vessel is a new kind of public landmark of the Public Square and Gardens of Hudson Yards development in Manhattan signed by Heatherwick Studio, that stands 46 m (150 ft) tall, with a diameter of 15 m (50 ft) at its base, widening to 46 m (150 ft) at its top. Designed to be climbed and explored with its 16-floors steel pavilion, with 154 interconnecting flights of stairs, almost 2,500 steps and 80 landings, creates a pathway rising up above the public plaza. The work includes the design, engineering, production and installation of 6,600 sqm (71,000 sq ft) of cladding and 3,000 m (9,800 ft) of glass balustrade. Project awarded by Permasteelisa S.p.A. and developed together with Permasteelisa North America Corp. that will be completed at the end of 2018. Ph.: ŠHeatherwick Studio

43


Main completed projects as of March 31, 2017 AVC FIUMICINO Fiumicino, Rome / ITALY The Avancorpo building forms part of the expansion of Leonardo da Vinci Airport in Fiumicino and will have the function of a shopping mall to service the new terminal currently

under

construction.

Designed

by

ADR

Engineering together with the studio Muzi & Associates, the project involves the construction of approximately 9,300 sqm (100,100 sq ft) of cladding on the north and south faรงades of the new structure. The glass roof will also be constructed together with the walls of the tunnels that connect the new building to the existing terminal, covering a total of 3,600 sqm (38,750 sq ft). The project, acquired by Permasteelisa S.p.A., was completed at the end of 2016.

44


Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to No changes in the management approach or events that generate substantial changes in the risk profiles, to which the Group is exposed to, occurred in the year ended March 31, 2017: at the same time, the market fluctuation led the Management to increase the preventive attention to the risks connected to Permasteelisa Group activity. These risks are political, technical and technological, financial and credit, environmental and commercial. The main attention is focused on financial and credit risk: certainly the present growing markets have financial and credit risks higher than main historical markets of the Group (Europe and United States); this fact does not represent a real warning but only more attention.

Risks associated with general economic conditions On one hand, the Group’s global interface, characterized by a “network” structure, diversifies the Group’s risks, on the other hand, this very global disposition exposes the Group to other macro-economic risks it would otherwise not be affected by. At the present moment there are no threatening economic contexts the Group deems necessary to report, that being said, the company reaffirms its policy to promptly cover relevant exposures to exchange rates.

Risks associated with the Group's results Despite the constant fluctuations in the marketplace, the Group continues to prove its ability to hold consistent “market shares” year after year. Market prices are becoming more aggressive, as the business’ epicenter shifts towards emerging markets. Permasteelisa is intent on facing such disruption by repositioning its “Value Proposition”. The Group, previously held as the undisputed “Differentiation Leader”, has now positioned itself in a different prospective, not purely as a “Cost Leader” but more so as a “Cost Focused Differentiation Leader”. Therefore, the Group executes projects following a “low-low” approach, often distribuiting the different components to the different business units and choosing for each component the business unit best positioned to perform at the most competitive market prices. With this particular approach, Permasteelisa takes advantage of its global print (unique in the market) to create a competitive advantage which is not replicable by any of its major competitors. Of course, a proper system of Project Management and an avant-garde ICT support are unquestionably necessary elements. The combination of all these factors and synergies, which have been ongoing for several years with pleasing results, is what allows Permasteelisa Group and its Shareholder to look at future market evolutions assuredly.

Risks associated with financing requirements Permasteelisa Group’s financial position, is less brighter today than at the past, after years of decidedly positive results. The reasons have to be tracked in the growth process of the Group and in the resulting increase in working capital requirements, amplified by the greater exposure to the markets of the Middle and Far East. At the same time the latest year’s credit crunch has negativly impacted many of the Group’s main clients, with obvious repercussions on the economic activity of the Group itself. Still, it can be positively stated that the Group maintaines adequate financial resources to face day to day financial requirements assuredly.

Risks associated with fluctuations in exchange and interest rates, commodity prices and the cancellation of assigned projects orders Permasteelisa Group is naturally exposed to market risks associated with fluctuations in exchange rates, interest rates and with prices of commodities that are widely employed in its business (aluminum). As soon as a new project is assigned, these risks are readily covered with financial instruments aimed at fixing both exchange rates 45


(currency swaps) and commodity prices (commodities swaps). Risks deriving from unexpected fluctuation of commodity prices are also mitigated through favorable and commited relationships with suppliers. As mentioned before, because these market risks are immediately covered after the assignment of new projects, both “exchange rate risk” and “commodity price risk” are threatening for the sole period that lies in between the formulation of an offer until its potential assignment (except if the offer, but this only happens rarely, is formulated at current exchange rate/prices). To this extent, after the assignment of a project, the Group is exposed to “exchange risks” and “commodity price risks” only in the case in which a project becomes cancelled, leaving the hedging position uncovered. However, this risk is by every means considerably low and is duly taken care of by rights to reimbursements agreed upon with the client beforehand. Furthermore, in the framework of the consolidation of its accounts, Permasteelisa Group is exposed to "translation" risks as a result of the translation of foreign currency amounts to the Euro. This is, nevertheless, always a risk that is inherently part of a global company's income statement and has not become more critical as a result of the current general crisis of the markets.

Risks associated with relationships with suppliers Relationships with the suppliers have always been one of the main strength of the Permasteelisa Group. Suppliers are constantly monitored and, therefore, these risks, while potentially existing, are adequately covered by the activities performed by the Group, which help to manage any unusual situations that may arise.

Risks associated with management “Management risks” are alleviated by a strong bond with regard to the Group itself and are duly tended for throught various “retention policies”.

Risks associated with competitiveness in the areas the Group works in This risk, as already mentioned previously, naturally increases with the current transition of the costruction market towards the rising economies. Permasteelisa can hardly avoid to operate in these countries, as it would mean renouncing to its defining leadership in the sector. Such endeavor entails the Group to improve its competitive advantages arising from its unique global structure and core skills, other than continually refine its design, contruction, installation and Project Management processes. This risk, if faced responsibly and dedicatedly, can become an opportunity.

Risks associated with environmental policies Environmental policies are by no means a risk to the Group’s operations. Quite oppositely, the Group's environmental policy should be considered an opportunity rather than a risk. Indeed, more restrictive regulations and procedures, especially in the area of bioclimatic and environmentally sustainable architecture, will translate into more favorable market conditions for the company and the Group's products and advanced technologies. *** As Parent company, Permasteelisa S.p.A. is inherently exposed to the same risks and uncertainties previously described for the Group. Further details are provided in the dedicated notes to both the Consolidated Financial Statements and the Statutory Financial Statements, including more technical information on the management of some of the business risks illustrated here.

46


The Group's organizational structure The acquisition incurred during the period are the following: - Consorzio Marine Project Solutions with registered office in Italy, held by Permasteelisa S.p.A. for 55.5 %; - Permasteelisa Colombia S.a.S. with registered office in Colombia, held by Permasteelisa S.p.A. for 100%, and - Permasteelisa France Sas has established a Branch in Principality of Monaco.

Research and Innovation During the reporting period April 1, 2016 - March 31, 2017 Permasteelisa continued its organizational growth path through the consolidation of learning and application of processes within the Group and the introduction of those of Tender and Site Installation. New PMF releases with important improvements start to be released into production mode after development and testing. Monitoring on the way of working and effective usage of this instrument are continuing throughout the Group with the aim of achieving an uniform and solid implementation. At this time the Group activity is focused on the development of an interface with the BIM World. Other software tools, necessary and strictly bonded to our new I&S solutions, meant for internal usage, they found their main use in Building physics, structural calculation and acoustic. Other tools, such as the blind control system for the close cavity façade, are used to have an holistic evaluation of the façade system to be offered in the market. Training regarding all I&S solutions, relative usage of pertinent software, has been done and will continue in this year to guarantee successful project implementation. To guide Permasteelisa into an advanced and innovative technical environment, a new role was established: the LCD or Lead Concept Designer. Nowadays this new role requires more people dedicated not only as Senior LCD but also under the point of view of creating future LCD’s that will learn the experience from their tutors. The selection of the new candidates started in the first months of the year within all relevant technical offices of the Group. In January 2017 an additional training session was completed and now some more LCD are available to be nominated in the Companies that need them. In the current year there will be more meetings and training aimed to the consolidation of said important role. With reference to research and development costs, it should be noted that the overall cost for the financial year recorded in the profit and loss account by the Group was equal to Euro 2,289 thousands (March 2016 restated: Euro 3,181 thousands) of which Euro 250 thousands (March 2016 restated: Euro 325 thousands) for the amortisation of costs that were capitalised in previous financial years under the category “Development costs” included in the item “Intangible assets”.

Knowledge Sharing Group There are many activities ongoing that started in the beginning of this year. The primary are the following. With regards of the LCD’s and the selection of the new Candidates, a new path has been created for the proper training of them through the Kolding School of Southern Denmark based on the previous experience. The Permasteelisa Training Accademy or PTAc, has still an important role for the knowledge sharing in the Group. Currently there are a lot of documentation under preparation regarding the advanced courses for the PTAc II. It is a long process that requires time and experience from the top technical persons that have taken the duty to prepare such material. Design-Ability courses are still considered and will be repeated to complete and to cover 100% of the pertinent population of technical managers.

47


For better support the I&S solutions and their development internally, some courses had been undertaken: targets are specific technical persons, with high technical knowledge, to become the single point of accountability and support in the Companies for the technical matters and the Commercial Network.

Information Technology During the reporting period April 1, 2016 - March 31, 2017, Permasteelisa has developed several improvements in the Information Technology area. Some initiatives are linked to requirements coming from the ultimate parent company, LIXIL, others are linked to the need of enhancement and standardization for the services provided to the Group companies. With reference to the management systems area and in particular for SAP system, a relevant effort has been spent to share the standard solutions to manage the Vendor items processes, covering 15 new companies and implementing the following tools: Purchase Orders management, Contracts management, Vendor invoices management through business workflows and authorization processes fully carried out through SAP. SAP system has been implemented in four new legal entities and, as far as the new functionalities are concerned, during the reference period the Cash Pooling platform has been developed for the Group and the project aimed at the replacement of the current Treasury software has been put in place with the integrated solution SAP Treasury Management. In the operational field, in order to improve the operational processes, several new functionalities have been issued for the management by mobile phone of SAP features concerning warehouse management and site management. With reference to the IT infrastructures, the Group is going ahead to implement the multi-year plan, aimed to improve the overall quality and availability of the services provided and to respect the mandatory guidelines set out by the ultimate parent company under a J-SOX point of view. In particular, as regards IT Governance, the objective agreed at SOX level of having 53 active and effective IT controls has been reached and the new model of standard operative procedure (SOP) as well as the IT regulation have been defined and released, for the progressive adoption at Group level. Furthermore, with regard to the Group infrastructure, the following activities have been carried on: the strengthening of the new architecture of perimeter’s safety (new Firewalls, new systems for Web Filtering, etc.) which currently covers all the Group companies; the project of technological strengthening of the infrastructures and network services aimed at costs optimization; the project for the management and optimization of all IT assets (SAM in particular) always at Group level; and the implementation of new functionalities and advanced services both in the Group Datacenter and in the field of IT Disaster Recovery. Finally, as regards PMF system, during the reporting period April 1, 2016 – March 31, 2017, numerous projects have been carried out in order to make Permasteelisa solutions aligned with BIM standards, making the software consistent with the international standards and able to communicate at data level with the market solutions. A series of specific activities in innovative fields has been launched, thanks to the adoption of a new solution for the Business Process Automation, that will be integrated with the other core platforms of the Group (PMF,SAP, ENOVIA).

48


Human Resources The tables below provide the exact end-of-year and the average figures on the workforce employed by the Group compared with the previous year: Workforce at year end Area

March 31, 2017

March 31, 2016

Variation 2017-2016

Italy Other Europe Asia Middle East Australia USA Total

852 1,630 1,608 417 47 1,359 5,913

852 1,213 1,891 432 58 1,791 6,237

0 417 (283) (15) (11) (432) (324)

Average workforce during the period Area

March 31, 2017

March 31, 2016

Variation 2017-2016

Italy Other Europe Asia Middle East Australia USA Total

852 1,593 1,750 425 53 1,575 6,248

852 1,156 2,266 478 58 1,614 6,424

0 437 (516) (53) (5) (39) (176)

The tables below provide the exact end-of-year and the average figures on the workforce employed by the Parent Company Permasteelisa S.p.A. compared with the previous year:

Workforce at year end

Blue collars White collars Total

March 31, 2017

March 31, 2016

Variation 2017-2016

224 628 852

231 621 852

(7) 7 0

49


Average workforce during the period

Blue collars White collars Total

March 31, 2017

March 31, 2016

Variation 2017-2016

228 624 852

228 624 852

0 0 0

Human resources The current economic environment, characterized by the increasing complexity and competitiveness, have prompted Permasteelisa S.p.A. to further strengthen its integration and cooperation strategy within the Group Companies. Internationality and Global Vision, together with the ability to adapt to different and specific local markets and to drive the interaction between our Legal Entities in an accurate and rigorous way, are some of the factors that can allow us to compete on challenging and complex projects inside a global market. Permasteelisa S.p.A is proceeding with its own path of change, which have leed to the implementation of an organizational matrix structure, through the redefinition of positions and responsibilities (technical and managerial) and the hiring of new managers. In this context, the Human Resources Direction plays a key role in supporting the integration between different organizational department, responding to the business needs and in encouraging the offices’ synergy. Regarding to the Union Trade relationship, Permasteelisa reached an important target, signing a second-level agreement, which is composed by a variable bonus linked to the Company Performance and by a fixed bonus, through welfare services. This agreement is the result of new positive relations with the trade unions, linked to a daily support in front of employees needs/requests. The focus for the management of Permasteelisa employees remain the Education and Development programs presented below, specifically aimed at improving managerial skills, technical and professionals ability and the introduction of new young talents with an apprenticeship contract.

Managerial Training During the year 2017, Managerial Training played a key role, focusing on the improvement of soft skills and the ability of managing change, both at the top and middle management. Company Directors were involved in coaching programmes, with the goal of improving their managerial style in order to be more efficient in achieving strategic business objectives. The individual coaching sessions and the fact that managers were observed by the coach in their day by day activities, brought to light the need to develop specific training actions to improve public speaking and interpersonal communication skills. Permasteelisa also invested on the professional growth of a talented group of employees, to renew the company efforts towards development and improve technical know how, with regard to the acceleration and improvement of its business. An education programme, aimed at reinforcing their managerial skills and therefore upgrade of individual and team’s performances, allowed participants to develop the awareness of their role and to put into practice the subjects discussed in the class. Following the process started in the previous years, a lot of attention was given to performance management, which is crucial for the growth of the Organization and its employees, especially in a complex context such as the current one. Performance Appraisal is essential for a transparent communication and alignment on expected behaviors between managers and staff, staff motivation and results orientation, for leadership and values 50


evaluation and for the identification of training needs. The 90% of the employment population has been part of the evaluation process with the implementation of Lixil Values and Permasteelisa Leadership Model evaluation.

Technical and Specialist training The development plan of technical abilities was considerably reinforced during 2017 year. Specific actions and educational courses were implemented to give visibility to the more important technical topics and to increase specialized technical skills, with the aim of providing innovative technical solutions, guaranteeing the excellent quality standards of the Permasteelisa Group. Among the specific training activities, we point out the "high rise building" course, which is one of the most important focus linked to the design of façades in their interaction with the building structure. This course was developed thanks to the collaboration of important university professors, who shared their knowledge regarding methods of analysis adopted in the structural design of high-rise buildings, clarifing some aspects of the structural behavior of façades, that are fundamental for our designers/engineers. Permasteelisa also focused on other specific topics (Design process execution, planning tools, structural silicone process, cutting ect.) which have been dealt with thanks to the contributions of more experienced colleagues, encouraging an active debate on practical examples and real case studies.

Linguistic Training Permasteelisa’s global presence has become a “sine qua non conditions” for competing in international markets. In a context where the interaction between Legal Entities is strong and crucial in achieving business results, the knowledge of foreign languages becomes essential. An example of the increasing internationality of Permasteelisa is the new presence in the South American market by the acquisition of a project in Colombia for which we started and we will continue to train on the Spanish language.

IT training The several programmes used on a daily basis in addition to the more specific and technical development are extremely important and crucial for business operations. IT training has been characterised by a continuous growth, especially with regard to programmes such as SAP, Inventor, BIM and PMF.

Welfare In the local Business scenario, Permasteelisa is distinguished by an innovative Welfare system. The "Permasteelisa Welfare Box platform" through which Permasteelisa Employees can choose from various personal service offers, was launched at the beginning of 2017. Among the services offered, certainly the most used are vouchers, reimbursement for medical expenses and for education. The platform also offers the opportunity to buy entertainment and wellness services for individuals and on-line trainings. In addition, the Company's welfare policies that have been launched in recent years, such as the kindergarten and the inter-company child care school for the employees' children have been confirmed such as the "Prevenire è Vita" project, which provides free health Check for all employees with focus on oncological and cardiological pathologies.

Shareholder The Company is now owned by the sole Shareholder Lixil Corporation itself owned by Lixil Group Corporation.

Treasury shares As of March 31, 2017 the Company does not own any treasury shares.

Transactions with related parties The details of any transactions with related parties, including transactions with other Group companies, are provided in the dedicated section of the notes to the Consolidated Financial Statements and the Statutory Financial Statements for the year. 51


Unconventional or unusual operations There are no entries or transactions resulting from unconventional or unusual operations during the year 2017 having any relevance to the operating performance and the financial position for the period of the Group and of the Parent company Permasteelisa S.p.A..

Significant events subsequent to year end and outlook Significant events subsequent to year end There are no significant events subsequent to year end.

Business Outlook The European economy has already entered the fifth year of a recovery which is now involving all the countries members of the EU and that should continue at a pretty regular rate during this year and the following year. In the economical forecasts issued in spring, the Commission points out an increase of the GDP in the Euro-zone amounting to 1.7% in 2017 and to 1.8% in 2018. For the EU as a whole, the growth of the GDP should remain stable at 1.9% for both years (in the forecasts issued in winter it was equal to 1.8% for both 2017 and 2018). The world economy has registered an acceleration at the end of last year and at the beginning of this year, thanks to the simultaneous recovery in the growth of many advanced and emerging economies. The world growth (EU excluded) should strengthen, reaching 3.7% this year and 3.9% in 2018, compared to the 3.2% of 2016 (unchanged forecasts with respect to the winter forecasts), thanks to the Chinese economy which keeps being resilient in the short term and to the recovery of the prices of raw materials which supports other emerging economies. The perspectives for the U.S. economy are generally unchanged. The uncertainty about the economical perspectives remains high. Generally speaking, the risks are more balanced than the winter forecasts, but the probability of a deterioration is always present. The external risks are linked, for instance, to the future economical and commercial policy of the United States and, more in general, to the geopolitical tenseness. The economical adjustment of China, the state of health of the bank industry in Europe and the next negotiations with the United Kingdom about the exit from the EU are also considered as possible risks of a downward revision of the forecasts (source: European Commission, May 2017 bulletin). The Group has recently carried out an analysis from which arises that the geographical areas where it is present are those of higher development. A particular focus should be put during next year on the Chinese market.

52


(1)

Figures refer to China buildings statistics for 7 selected Chinese cities.

The Management believes that its own business has a good perspective of future growth, mainly thanks to: •

consolidated growth trend, such as the urbanization, the trend towards societies having high population density and buildings increasingly developed in height, the environmental sustainability, being all factors that require the demand of typical products by Permasteelisa Group;

attractive perspective about the growth of the US market and the new European economic recovery;

attentive selection of the growth opportunities in the emerging markets;

unique capabilities and certified quality which mark Permasteelisa Group lead to obtain offers for projects at global level;

consolidated cooperation of Permasteelisa Group with the major architects of the business sector for the construction of increasingly big and innovative buildings.

Permasteelisa Group has also identified numerous areas of potential expansion: •

the development of its own presence in new geographical areas (for example South America);

the introduction of new technologies, such as the D3 (Dual Dynamic Durable) and the Close Cavity façade (m-free®); 53


the introduction of new projects of expansion in the markets related to the latters;

the retro-fit building;

the further development in the Interiors market in the naval sector (which is a market experiencing a great growth);

the window wall system (it is a system strictly linked to the growth of the market segment in North America and Europe);

the further development of the Chinese market, where the cities are strongly growing.

The backlog level of Permasteelisa Group allows the company to have a good sight of the future development of the market, making it stronger against the volatility of purchase orders and the uncertainty of the current market; this aspect, combined with the long-term nature of the projects of Permasteelisa, considerably reduces the uncertainty about the trend of the future results. Furthermore, the backlog is highly diversified, both from a geographical point of view and per market sector, and it is based on long-term relationships with customers, contributing therefore to a reduction of material risks. As a consequence, the Group faces the financial year 2018 with confidence, counting on a continuously growing economic backlog, featured by a major influence, if compared to the recent past, of the markets within the Group which register higher profitability, such as United States and Europe. Even though lower revenues are expected for the next year due to a poor order intake of the first months of 2016, Permasteelisa keeps on implementing a strategy of profitability recovery. The continuation of a virtuous management as well as the confirmation of the capability demonstrated so far to properly react to the frequent and often quick markets’ fluctuations are entrusted to the attentive realization of the policies of commercial and strategic development.

Other disclosures Pursuant to Leg. Decree 231/2001, Permasteelisa’s Board of Directors, by resolution of March 15, 2017, approved the current version of the Organizational, Management and Control Model that replaced the previous versions approved in 2005, 2007, 2009 and in 2014. With the adoption of this model, the Company intends to pursue the following main objectives: -

to promote the awareness of proper and transparent management of the Company, of the compliance with local regulations and of the fundamental principles of ethics in making business;

-

to confirm that any illicit action is strongly condemned by the Company, as contrary to the law regulations and to the ethical principles of which the Company is the carrier and which intends to follow in making business;

-

to allow the Company a continuous control and a careful monitoring on its activities, in order to promptly act where risk profiles appears and eventually apply the disciplinary measures provided by the Model itself;

-

to determine the awareness in people operating in the name and on behalf of the Company that any illegal actions provided by the Decree is punishable by penalties to the author and administrative fines to the Company.

The Model consists of a General and five Special Sections. In the General Section are described the contents and the impacts of the Leg. Decree 231/01, the general features of the Model, the categories of Offences that could result in the Company’s liability, the features, the 54


powers and functions of the Compliance Board (that must be named by the Board of Directors), the disciplinary system and the guiding principles of staff training. In the Special Section are indicated the sensitive activities for the Company pursuant to the Decree, i.e. those at risk of crime, the general principles of behavior, elements of prevention in defense of these activities and the control measures essential for the prevention or mitigation of the offences, to be transposed into the operational procedures and corporate practices, so as to make them suitable to prevent the commission of crimes. It is also integral part of the document the following: -

the list of sensitive activities identified during the risk and control self-assessment, available on file at the Company, and reported in the individual sections of the Special Part of the document;

-

the Code of Conduct that defines the principles and rules of conduct of Group;

-

all regulations, internal provisions, deeds and operating procedures which go to implement this document. These deeds and documents are available in the manner prescribed for their distribution within the Company.

The Model is available on the (www.permasteelisagroup.com).

section Financial

Info

-

Governance

of

the

corporate website

It is noted that the Permasteelisa’s Board of Directors, by resolution of 30 September 2016, approved the revision rd of the Group Code of Conduct previously approved at 23 April 2015, which fully replaces the previous Code of Ethics. The purpose of the Code is to trace a common line in order to operate according to shared principles of integrity, ethics in business activities, respect in the workplace, proper use of corporate assets and contribution to society (social responsibility). The code is aimed at all those who collaborate with the Group through any form of working relationship or partnership, and clearly and transparently defines the values through which the Group aims to achieve its objectives, as well as the related responsibilities both within the company and externally. Such conduct is essential for the correct function, reliability and reputation of the Group. In the course of its activities, Permasteelisa considers the respect for the law and relevant regulations of the countries in which it operates as its guiding principle, considering honesty, reliability, impartiality, loyalty, correctness and good faith as key factors for the Group's success. The Group acknowledges the importance of its ethical-social responsibility in business and it is committed to safeguarding the interests of its stakeholders and others with whom it interacts. The Code is available on the section Financial Info – Governance – Regulations & Codes of the corporate website: www.permasteelisagroup.com. Permasteelisa proceeded to update the minimum security measures for the protection of personal data processed in the exercise of its activity, thereby complying with the minimum obligations in relation to privacy protection. The Security Policy Document (DPS) continues to be prepared voluntarily by Permasteelisa, despite Italian Decree Law 9 February 2012, no. 5, removing the obligation to do so.

55


Operating performance and financial position of Permasteelisa S.p.A. The tables below were prepared based on the Statutory Financial Statements for the year ending as of March 31, 2017 which we address to. The Statutory Financial Statements were prepared in compliance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (“IASB”) and certified by the European Union, in addition to the provisions issued pursuant to Art. 9 of Leg. Decree no. 38/2005.

Operating performance The Parent Company's Income statement for the year 2017 shows a profit of Euro 7,129 thousand against the previous year that had closed with a loss of Euro 40,273 thousand. The summary results are as follows: (€ thousands)

Revenues Other operating income Total operating revenues Raw materials and consumables used Services expenses and use of third party assets Personnel expenses Net Depreciation, amortization and impairment losses Net Bad debts provision Net Provision for risks and charges Other operating expenses Cost Recovery In-house enhancement of fixed assets Total operating expenses Operating result

Financial income Financial expenses Net financial income Revaluation of equity investments Write-downs of equity investments Profit before tax Income tax expense Profit after tax

March 31, 2017

March 31, 2016 (*)

March 31, 2016 restated (**)

126,348 751 127,099

29,546 244 29,790

138,027 1,192 139,219

(42,881) (52,398) (53,995) (5,419) (1,172) (3,252) (336) 30,345 3 (129,105)

(14,643) (15,276) (13,056) (1,357) (195) 22 (126) 8,478 0 (36,153)

(64,317) (66,726) (59,780) (5,464) (687) 399 (374) 33,922 0 (163,027)

(2,006)

(6,363)

(23,808)

120,672 (105,614) 15,058

18,017 (24,426) (6,409)

63,964 (62,786) 1,178

1,000 (4,000) 10,052 (2,923) 7,129

0 (626) (13,398) (1,051) (14,449)

0 (14,641) (37,271) (3,002) (40,273)

(*) Audited figures as of March 31, 2016 – reporting period of three months. (**) Restated figures as of March 31, 2016 – reporting period of twelve months.

56


Financial position The Parent Company's Financial position is summarised in the table below: March 31, 2017

March 31, 2016 (*)

Non-current assets (a) Net working capital (b) Severance indemnity fund (c)

320,905 114,110 (3,452)

271,472 157,338 (3,452)

Net invested capital

431,563

425,358

Net financial debt /(Net cash surplus) (d) Shareholder’s loan (e) Shareholder’s equity (including minority interests) (f)

7,287 255,093 169,183

3,231 260,137 161,990

Coverage

431,563

425,358

4,327

3,484

852

852

(€ thousands)

Capital expenditure on tangible and intangible assets Average workforce

a) Sum of the captions included in the statement of financial position referring to notes 15, 16, 17, 18; b) Sum of the captions included in the statement of financial position referring to notes 19, 20, 21, 22, 23, 24, 26, 30, 31, 32, 33, 34 (in the notes 22 and 32 it should be considered only the amount related to trade receivables and trade payables from/to subsidiaries); c) Caption included in the statement of financial position referring to note 29; d) Caption included in the statement of financial position referring to note 22, 25, 28 and 32 net of the Shareholder’s loan for Euro 255,093 thousand (Euro 260,137 thousand as of March 31, 2016); e) Caption included in the statement of financial position referring to note 30. f) Caption included in the statement of financial position referring to note 29. (*) Audited figures as of March 31, 2016 – reporting period of three months and “assets held for sale” included in Net Working Capital.

57


Reconciliation between the result of the period and the net equity of the parent company and the correspondent amounts of the Group The reconciliation between the result and the net equity of the Group at the end of the period (share attributable to the Group) and the correspondent amounts of the Parent Company Permasteelisa S.p.A. is shown below:

(â‚Ź thousands)

Parent Company balances Share of consolidated subsidiaries’ equity and result net of book value of related equity interests Excess cost allocation Reversal of inter-group dividends Effect of other consolidation entries Share attributable to minority interests Group balances

Result March 31, 2017

Net equity as of March 31, 2017

Result March 31, 2016

Net equity as of March 31, 2016

7,129

169,183

(14,449)

161,990

(41,350)

(77,853)

(38,332)

(11,636)

(4,677)

47,603

(1,169)

53,493

(23,505)

0

0

0

16,449

3,546

25

(12,901)

678

(10,632)

368

(11,213)

(45,276)

131,847

(53,557)

179,733

58


Approval of the Statutory Financial Statements and allocation of 2017 result Shareholder, we submit to your approval the Statutory Financial Statements of the Company for the period ended March 31, 2017, that show a gain for the period of Euro 7,128,270 leaving to you any decision about its destination.

May 29, 2017

On behalf of the Board of Directors

The Chief Executive Officer

The Chairman of the Board of Directors

Riccardo Mollo

Davide Croff

59


Permasteelisa Group Consolidated Financial Statements as of March 31, 2017

60


Consolidated income statement as of March 31, 2017 31 marzo 2017

31 marzo 2016 (*)

1,279,416 7,066 1,286,482

304,660 1,425 306,085

(359,225) (477,326) (409,954) (23,494) (5,234) (8,094) (8,920) 2,899 312 (1,289,036)

(86,409) (130,826) (95,208) (5,740) (7,370) (18,903) (2,858) 910 13 (346,391)

Ordinary activity result

(2,554)

(40,306)

Financial income Financial expenses Net financial expenses

128,842 (155,817) (26,975)

35,115 (45,703) (10,588)

Revaluation of equity investments Write-downs of equity investments Profit before tax

0 0 (29,529)

0 (626) (51,520)

Income tax expense Profit after tax

(16,426) (45,955)

(1,676) (53,196)

Profit after tax from discontinued operations Profit after taxes

0 (45,955)

(729) (53,925)

Attributable to: Group Minority Profit for the period

(45,277) (678) (45,955)

(53,557) (368) (53,925)

(€ thousands) Operating revenues Other operating income Total operating revenues Raw materials and consumables used Services expenses and use of third party assets Personnel expenses Depreciation, amortization and impairment losses Bad debts provision Provision for risks and charges Other operating expenses Cost recovery In-house enhancement of fixed assets Total operating expenses

(*) Audited figures as of March 31, 2016 – reporting period of three months and the result of “assets held for sale” showed as discontinued operation.

61


Consolidated statement of comprehensive income as of March 31, 2017 March 31, 2017

March 31, 2016

(â‚Ź thousands) Profit/(Loss) for the period (A)

(45,955)

(53,925)

(4,474)

17,280

2,355

(6,741)

(2,119)

10,539

Actuarial gains/losses

(483)

(358)

Total items that will never be reclassified to the Income statement:

(483)

(358)

(2,602)

10,181

(48,557)

(43,744)

(47,886) (671) (48,557)

(42,863) (881) (43,744)

Items that may be reclassified to the Income statement: Hedging reserves for risks variation, net of tax Gains/(losses) on exchange differences on translating foreign operations Total items that may be reclassified to the Income statement

Items that will never be reclassified to the Income statement:

Total Other comprehensive income, net of tax (B) Total Comprehensive income (A)+(B)

Total Comprehensive income attributable to: Group Minority Total Comprehensive income (A)+(B)

62


Consolidated statement of financial position as of March 31, 2017 (â‚Ź thousands) Intangible assets Tangible assets Equity investments in not consolidated subsidiaries Equity investments in associated companies Other non-current assets Deferred tax assets Total non-current assets Contracts work-in-progress Inventories Trade receivables from third parties Trade receivables from not consolidated and associated subsidiaries Income tax receivables Other current assets Cash and cash equivalents Assets held for sale Total current assets Total assets Equity Share capital Legal reserve IAS 19 Reserve Hedging reserves for risks Translation reserve Other reserves Retained earnings Profit/(loss) for the period Total equity attributable to the Group Minority interests Total equity Liabilities Amounts payables to banks and other financial creditors Severance indemnity fund Pension funds and other employee benefits Provisions for risks and charges Deferred tax liabilities Total non-current liabilities Amounts payable to banks and other financial creditors Excess of progress billings over work-in-progress Advances from customers Trade payables to third parties Trade payables to not consolidated and associated subsidiaries Income tax payables Other current liabilities Liabilities held for sale Total current liabilities Total liabilities Total equity and liabilities

Notes 15 16 18 19 20 21 22 22 23 24 25 26 27 28

29 29 29 29 29 29 29 29 29

30 31 32 33 21 30 22 22 34 35 36 37 38

March 31, 2017 80,965 98,569 6,083 1,136 253 45,999 233,005 696,089 37,109 487,611 28 9,393 97,889 43,258 5,213 1,376,590 1,609,595

March 31, 2016 85,273 105,840 6,083 808 162 55,832 253,998 657,450 23,005 423,924 0 7,916 87,788 67,398 64,562 1,332,043 1,586,041

6,900 1,380 (7,064) (14,716) 23,315 199,611 (32,302) (45,277) 131,847 10,632 142,479

6,900 1,380 (6,146) (7,133) 17,858 199,611 20,820 (53,557) 179,733 11,213 190,946

205,040 3,452 28,934 47,953 55,913 341,292 220,289 269,566 260,672 263,655 1 29,305 82,336 0 1,125,824 1,467,116 1,609,595

217,473 3,452 27,531 20,968 65,655 335,079 172.729 214,378 237,551 231,412 0 33,014 88,146 82,786 1,060,016 1,395,095 1,586,041

63


Consolidated statement of cash flows as of March 31, 2017 (â‚Ź thousands)

March 31, 2017

March 31, 2016

(29,529)

(51,520)

0 0

(749) 177

0 0 (598) 5,827 23,494 344 8,094 5,234 0 (110) 110 (1,081) 1,405 (589) 1,018 43,148

(171) 47 (136) 1,372 5,740 57 18,903 7,370 626 0 0 (385) (111) 214 114 33,068

Changes in operating activities: - Changes in hedging reserve - Changes in IAS 19 reserve - Changes in contracts work-in-progress (net), inventories and advances - Changes in the other captions of working capital (1) (2) - Changes in the other captions of operating capital - Income tax paid - Interests paid - Interest received - Effect of exchange rate changes on operating activities cash flows Total changes

(7,583) (918) 48,984 (81,589) (5,103) (12,948) (5,716) 598 3,877 (60,398)

20,421 (358) 51,365 (23,882) (30,676) (1,680) (1,598) 136 (5,467) 8,261

Net cash flows generated by operating activities (A)

(46,779)

(10,191)

(16,088) 1,281 (289)

(5,669) 187 0

(15,096)

(5,482)

(18) 0 300 0

(8) (1) 0 0

Cash flows generated (absorbed) by operating activities

Result before tax Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Result before tax from discontinued operations - Depreciation and amortization expenses and impairment losses from discontinued operations - Provision for risks and charge from discontinued operations - Bad debts provision from discontinued operations - Interest income - Interest expense - Depreciation and amortization expenses and impairment losses - Gain/loss on disposal of tangible and intangible assets - Provision for risks and charge - Bad debts provision - Equity investments write-downs/(revaluations) - Severance indemnity fund payments to employees - Severance indemnity fund expenses - Pension fund payments - Other employee benefits payments - Pension fund expenses - Other employee benefits net variation Total adjustments

Cash flows generated (absorbed) by investing activities Purchases of tangible and intangible assets Proceeds from disposal of tangible and intangible assets Changes in not consolidated subsidiaries, associated companies and other equity investments Net cash flows absorbed by investing activities (B) Cash flows generated (absorbed) by financing activities Lease obligation (principal) Lease obligation (interest) Dividends received Other minority effects

64


Net cash flows absorbed by financing activities (C) Net increase/(decrease) in cash surplus/(deficit) (A+B+C) Net cash surplus/(deficit) as of April 1 (D) Effect of exchange rate changes on balances held in foreign currency (E) Net cash surplus/(deficit) as of March 31 (A+B+C+D+E)

Net cash surplus/(deficit) includes: Bank and post current accounts and deposits Cash in hand Bank overdrafts and other short-term loans Shareholder’s loan Bank and post current accounts and deposits from discontinued operations Cash in hand from discontinued operations

(1)

282

(9)

(61,593)

(15,682)

(322,268)

(305,089)

1,812

(1,497)

(382,049)

(322,268)

43,102 156 (170,214) (255,093) 0 0 (382,049)

67,206 192 (130,025) (260,137) 488 8 (322,268)

The other captions of working capital refer to the following captions included in the statement of financial position of the Group: trade

receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies. (2)

The other captions of operating capital refer to the following captions included in the statement of financial position of the Group: income

tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provisions for risks and charges.

65


Consolidated statement of net equity changes as of March 31, 2017 Share capital

Legal reserve

Share premium

Revaluation reserve

Translation reserve

Foreign exchange risk hedging reserve (*)

Commodities risk hedging reserve (*)

IAS 19 Reserve (**)

Other reserve

Retained earnings

Group net equity

Minority interest

Total

6,900

1,380

0

0

23,886

(27,177)

(377)

(5,788)

199,611

24,161

222,596

12,094

234,690

(6,028)

(213)

14

(6,227)

(514)

(6,741)

17,199

1

17,200

80

0

80

(â‚Ź thousands) Balance as of January 1, 2016 Income (expenses) recognized directly in equity: Translation differences

Foreign exchange risk hedging reserve variation Commodities risk hedging reserve variation Interest rate risk hedging reserve variation Changes in IAS 19 Reserve

Net result for the period Total Income (expenses) for the period Transactions with Shareholder: Increase of share capital Destination of operating result

17,199 80

(358)

0

0

0

(358)

0

(358)

0

0

0

0

(6,028)

16,986

94

(358)

0

0 (53,557)

10,694 (53,557)

(513) (368)

10,181 (53,925)

0

0

0

0

(6,028)

16,986

94

(358)

0

(53,557)

(42,863)

(881)

(43,744)

0

0

0

0

0

0

0 0

0 0

0 0

0

0

0

0 0

0 0

0 0

Dividends 0

0

0

0

0

0

0

0

0

0

Other net equity variations:

Minority interests acquisition Other variations

3,341

(3,341)

Roundings Balance as of March 31, 2016

0

0

0

0

0

3,341

0

0

0

(3,341)

0

0

0

6,900

1,380

0

0

17,858

(6,850)

(283)

(6,146)

199,611

(32,737)

179,733

11,213

190,946

66


Share capital

Legal reserve

Share premium

Revaluation reserve

Translatio n reserve

Foreign exchange risk hedging reserve (*)

Commodities risk hedging reserve (*)

IAS 19 Reserv e (**)

Other reserve

Retained earnings

Group net equity

Minority interest

Total

6,900

1,380

0

0

17,858

(6,850)

(283)

(6,146)

199,611

(32,737)

179,733

11,213

190,946

5,456

(3,129)

2,327

28

2,355

(5,157)

(5,157)

(22)

(5,179)

703

2

705

(â‚Ź thousands) Balance as of April 1, 2016 Income (expenses) recognized directly in equity: Translation differences

Foreign exchange risk hedging reserve variation Commodities risk hedging reserve variation Interest rate risk hedging reserve variation Changes in IAS 19 Reserve

703

(483) 0

0

0

0

5,456

(8,286)

703

(483)

0

Net result for the period Total Income (expenses) for the period Transactions with Shareholder: Increase of share capital

0

0

0

0

5,456

(8,286)

703

(483)

0

0

0

(483)

(483)

0

(2,610)

8

(2,602)

(45.276)

(45.276)

(678)

(45.954)

(45,276)

(47.886)

(670)

(48,556)

0

0

0

Destination of operating result

0

0

0

Dividends

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Other net equity variations: Minority interests acquisition Other variations

(435)

435

Roundings

Balance as of March 31, 2017

0 6,900

0 1,380

0 0

0 0

0 23,314

0 (15,136)

0 420

(435) (7,064)

0 199,611

435 (77,578)

0

0

0

0

89

89

0

0

0

0 131,847

89 10,632

89 142,479

67


Notes to the Consolidated Financial Statements Company’s information Permasteelisa S.p.A. (hereinafter referred to as the “Company” or “Parent Company”) is a company domiciled in Italy that operates internationally both directly and indirectly through its subsidiaries in the field of the design, production and installation of architectural components (curtain walls, partition walls and doors) and interior design. The Company’s Consolidated Financial Statements as of March 31, 2017 include the Company and its subsidiaries involved in the consolidation (hereinafter referred to as the “Group”) which are listed in the table annexed to the Notes to the Consolidated Financial Statements entitled “Permasteelisa Group’s companies”. This table also highlights the Group’s equity investments in non-consolidated subsidiaries, associated and other companies. The Consolidated Financial Statements of the Permasteelisa S.p.A. Group have been prepared in Euro, which is the currency of the economic area in which the Company operates. The Consolidated Financial Statements were approved by the Board of Directors on May 29, 2017 and will be submitted to the approval by the Shareholder meeting called on June 16, 2017. These financial statements are subject to audit by Deloitte & Touche S.p.A..

Financial tables The tables provided for the statement of financial position, the income statement, the statement of cash flows and of net equity changes are the same as those used for the Consolidated Financial Statements as of March 31, 2016. The statement of financial position, the income statement, the statement of cash flows and of net equity changes used for the period closed as of March 31, 2017 are prepared in thousands of Euro and are characterised as follows:

Statement of financial position The methods whereby assets and liabilities are broken down into “current and non-current” was adopted, with separate indication of assets and liabilities held for sale, if any. Current assets include assets (such as inventories, assets for contracts work-in-progress and trade receivables) which are sold, consumed or realised as part of the normal operating cycle, even when they are not expected to be realised within 12 months after the balance sheet date. Some current liabilities, such as trade payables and some accruals for employees and other operating costs, are part of the working capital used in the normal operating cycle. Such operating items are classified as current liabilities even if they are due to be settled more than 12 months after the balance sheet date.

Income statement The adopted method breaks costs down based on their nature.

Statement of cash flows The indirect method was employed.

Statement of net equity changes The statement that shows all the changes of the net equity was adopted.

Accounting principles (a) Statement of compliance The Permasteelisa Group adopts the IFRS International Accounting Standards issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union. IFRS is understood to include also the International Accounting Standards (“IAS”) that are currently in force in addition to the interpretations made 68


available by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”). These Consolidated Financial Statements were prepared in accordance with the accounting standards described in the paragraphs below, namely the same standards that were used to prepare the Consolidated Financial Statements as of March 31, 2016. (b) Basis of preparation The financial statements are presented in Euro, rounded to the nearest thousands. They are prepared on the historical cost basis except for the following assets and liabilities that, if any, are stated at their fair value: derivative financial instruments, financial instruments held for trading, financial instruments classified as available-for-sale. The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The accounting principles exposed in the following paragraphs have been consistently applied for all the periods included in this Consolidated Financial Statements. These accounting principles have generally been applied consistently by the Group companies in the preparation of the financial statements for consolidation purposes; but, where necessary, specific adjustments have been applied by the Company to make these financial statements in compliance with IFRS. (c) Basis of consolidation (i)

Subsidiaries

Subsidiaries are entities controlled directly or indirectly by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The subsidiaries are consolidated using the line by line method. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. All subsidiaries are included in the Consolidated Financial Statements, unless some considered not material. Not consolidated subsidiaries are stated at their fair value. Receivables and payables, income and expenses and all relevant transaction occurred between consolidated companies, are eliminated in preparing the Consolidated Financial Statements, unless they are immaterial; in particular intragroup gains deriving from contracts work-in-progress realized in the Group are eliminated. The minority interests and the result attributable to minority are indicated separately in the consolidated statement of financial position and in the consolidated income statement. st

Most of consolidated subsidiaries have changed the reporting period closing to 31 of March, except for Permasteelisa (India) Private Limited whose financial period already ends as of March 31. Specific financial statements for consolidation purposes are prepared by those residual subsidiaries whose reporting period closing remains as of December 31. They concern to Chinese, Russian, Azerbaijan and Turkey subsidiaries. (ii) Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies (generally accompanied by a percentage of ownership is between 20% and 50%). The 69


Consolidated Financial Statements include the Group’s share of the total recognized gains and losses of associated companies on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its equity investment in an associated company, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associated company. Unrealised gains arising from transactions with associated companies are eliminated to the extent of the Group’s equity investment in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (d) Basis of conversion of foreign currency (i)

Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on this translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Euro at foreign exchange rates ruling at the dates the fair value was determined. (ii) Subsidiaries Financial Statements The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Euro at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Euro at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity through the statement of comprehensive income. The exchange rates used for the closing as of March 31, 2017 and the comparative exchange rates of the previous year are as follows:

March 31, 2017 Currency

Thai Baht Danish Krone Norwegian Krone Dubai Dirham Australian Dollar Canadian Dollar Hong Kong Dollar Singapore Dollar Taiwan Dollar Usa Dollar Hungarian Forint Swiss Franc Croatian Kuna Pataca Macau Philippine Peso Chinese Renminbi Malasyan Ringitt Riyal Qatar Riyal Saudi Arabia

March 31, 2016

Exchange rate at the balance sheet date

Average exchange rate of the year

36.724000 7.437900 9.168300 3.924666 1.398200 1.426500 8.307400 1.494000 32.459852 1.069100 307.620000 1.069600 7.446500 8.556711 53.658000 7.364200 4.731300 3.891524 4.009296

38.568788 7.439046 9.156729 4.028349 1.457498 1.439896 8.514244 1.518078 34.842052 1.097343 310.709743 1.083519 7.496835 8.770815 52.840309 7.380853 4.611466 3.994329 4.115675

Exchange rate at the balance Average exchange rate of sheet date the year

40.018000 7.451200 9.414500 4.179434 1.480700 1.473800 8.828200 1.530400 36.599617 1.138500 314.120000 1.093100 7.525500 9.094110 52.284000 7.351400 4.40780 4.144140 4.269899

39.281524 7.460532 9.527591 4.044496 1.529612 1.515370 8.566471 1.546796 36.495872 1.101746 312.066095 1.095957 7.617670 8.825574 52.063875 7.209027 4.624657 4.010340 4.132627 70


Russian Ruble Indian Rupia Israeli Shekel Pound Sterling Korean Won Japanese Yen Polish Zloty Manat Azerbaigian Tugrik Mongolia Turkish Lira Vietnam Dong Brazil Real Peso Colombiano

60.313000 69.396500 3.885300 0.855530 1,194.540000 119.550000 4.226500 1.843556 2,616.568795 3.889400 24,329.160080 3.380000 3,088.452043

69.234071 73.578130 4.166112 0.841310 1,260.343587 118.807507 4.352367 1.801443 2,472.955659 3.515119 24,636.203495 3.621599 3,258.684320

76.305100 75.429800 4.295000 0.791550 1,294.8800 127.900000 4.257600 1.755681 2,332.672650 3.211800 25,382.857500 4.117400 N/A

82.473010 74.407533 4.305515 0.770124 1,324.07281 127.018413 4.365849 1.746953 2,230.319811 3.247422 24,618.478200 4.305610 N/A

(iii) Net investment in foreign operations Exchange differences arising from the translation of the net investment in foreign operations, and of related hedges are taken to a specific reserve through other comprehensive income statement. They are released into the income statement upon disposal. e)

Business combinations

Business combinations initiated before January 1, 2010 and completed before that date are recognized on the basis of IFRS 3 (2004). Such business combinations are recognized using the purchase method, were the purchase cost is equal to the fair value at the date of the exchange of the assets acquired and the liabilities incurred or assumed, plus costs directly attributable to the acquisition. This cost is allocated by recognizing the assets, liabilities and identifiable contingent liabilities of the acquired company at their fair values. Any positive difference between the cost of the acquisition and the fair value of the net assets acquired pertaining to the Shareholder Parent Company is recognized as goodwill. Any negative difference is recognized in profit or loss. If the fair value of the assets, liabilities and contingent liabilities can only be calculated on a provisional basis, the business combination is recognized using such provisional values. The value of the non-controlling interests is determined in proportion to the interest held by minority Shareholder in the net assets. In the case of business combination achieved in stages, at the date of acquisition of control the net assets acquired previously are remeasured to fair value and any adjustments are recognized in equity. Any adjustments resulting from the completion of the measurement process are recognized within twelve month of the acquisition date. Business combination carried out as from January 1, 2010 are recognized on the basis of IFRS 3 (2008). More specifically, business combination are recognized using the acquisition method where the purchase cost is equal to the fair value at the end of exchange of the assets acquired and the liabilities incurred or assumed as well as equity instruments issued by the purchaser. Costs directly attributable to the acquisition are recognized though profit or loss. This cost is allocated by recognizing the assets, liabilities and identifiable contingent liabilities of the acquired company at their fair values as at the acquisition date. Any positive difference between the price paid, measured at fair value as at the acquisition date plus the value of any non-controlling interests, and the net value of the identifiable assets and liabilities of the acquiree measured at fair value is recognized as goodwill. Any negative difference is recognized in profit or loss. The value of non-controlling interests is determined either in proportion to the interest held by minority Shareholder in the net identifiable assets of the acquiree or at their fair value as at the acquisition date. If the fair value of the assets, liabilities and contingent liabilities can only be calculated on a provisional basis, the business combination is recognised using such provisional values. Any adjustments resulting from the completion of the measurement process are recognized within twelve month of the date of acquisition, restating comparative figures. 71


In the case of business combination achieved in stages, at the date of acquisition of control the holdings acquired previously are remeasured to fair value and any positive or negative difference is recognized in profit or loss. (f)

Derivative financial instruments

The Group uses derivative financial instruments (generally forward exchange contracts and swaps) only to hedge its exposure to foreign currency risk, to commodities risk and interest risk coming from its operating and financial activities in currencies other than Euro. According to its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. Anyway, derivative financial instruments for which the criterion to record the operations as hedging operations are not respected, are recorded as trading instruments. Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss account. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see the accounting policy described in section “g�). The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price. (g) Hedging (i)

Cash flow hedging (foreign currency risk)

The Group uses derivative financial instruments to hedge its exposure to foreign currency risk coming from its operating and financial activities in currency other than Euro. In particular, the Group uses derivative financial instruments to hedge the foreign currency risk related to the contracts work-in-progress cash flows. When the Group acquires a job whose future cash flows are denominated in foreign currency, specific forward exchange contracts or swaps on foreign currency are concluded to hedge the foreign currency risk existing on those future cash flows; therefore these hedging operations are related to highly probable future transactions as the job that is hedged is effectively acquired when the hedging contract or contracts are concluded. Considering the length of the Group contracts, the estimation of the timing of the future cash flows is very difficult and subject to changes that can be also relevant; as a consequence, the Group policy consists in making an initial hedging of future cash flows based on a rough estimation of the future cash flows timing and subsequently in: - rolling over the forward exchange contracts or swaps on foreign currency if at the expiry date the correspondent cash flows related to the job does not occur; - in concluding another forward exchange contract or swap on foreign currency, of opposite sign and same expiry date of the existing hedging contracts, if the cash flow related to the job occurs in advance with respect to the expiry date of the existing hedging contracts. The gains and losses deriving from the roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement; they are included in the operating revenues or operating expenses if related to hedging operations of job contracts cash flows. The ineffective part of any profit or loss is recognized immediately in the income statement as financial components. On the basis of the method used for hedging the future cash flows related to contracts work-in-progress in foreign currency, the prospective effectiveness is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of a forward exchange contract or swap on foreign currency are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur.

72


If the hedged transaction is no longer expected to take place, the cumulative unrealised gains or losses recognized in equity are recognised immediately in the income statement as financial components. Finally, according to the Group policy the foreign currency risk hedging is made on the spot rate; as a consequence, the difference between spot rate and forward rate recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on foreign currency, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such. (ii) Hedge of monetary assets and liabilities The Group uses derivative financial instruments also to hedge economically the foreign exchange exposure of a recognised monetary asset or liability as the loans in foreign currency; in this case no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the income statement. (iii) Cash flow hedging (commodities price risk) The Group uses derivative financial instruments also to hedge price risk on commodities coming from its operating activities. In particular, the Group uses derivative financial instruments to hedge the price risk related to aluminum purchase for the contracts work-in-progress. When the Group acquires a job whose future cash flows are related to aluminum purchase, specific forward contracts or future on alluminium are concluded to hedge the price risk existing on this commodity; therefore these hedging operations are related to highly probable future transactions as the job that is hedged, with regard to the aluminum purchase, is effectively acquired when the hedging contract or contracts are concluded. In consideration of the variability of the price of aluminum, the aim of hedging is to freeze this price already since the acquisition of the order itself; subsequently, as the aluminum order as well as the relevant price are agreed with the supplier, the Group shall complete the aluminum forward purchase by completing a transaction of opposite sign. If, upon expiry of the transaction, the order has not been defined yet for the supplier, the hedging contract(s) shall be rolled over. The gains and losses deriving from the regulation of the operations on maturity, including the effect of the possible roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement (arrival of the goods); they are included in the operating expenses. The ineffective part of any profit or loss is recognized immediately in the income statement as financial components. On the basis of the method used for hedging of the price risk on the future cash flows payments related to aluminum purchases on contracts work-in-progress, the prospective effectiveness it always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of an hedging contract by operation of the opposite sign when the order to the supplier is fixed are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur. If the hedged transaction is no longer expected to take place, the losses or profits on the accumulated price difference recognized in equity are recognized immediately in the income statement as financial components. Finally, according to the Group policy the commodities price risk is made on the spot price; as a consequence, the difference between spot price and forward price recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on commodities, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such.

73


(iv) Hedge of net investment in foreign operation The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an effective hedge is recognised directly in equity. The ineffective portion is recognised immediately in income statement. (h) Tangible assets (i)

Owned tangible assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (depreciation criteria are reported below) and impairment losses (see accounting policy “o”). The cost of self-constructed assets includes the cost of materials, direct labour, and the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment according to the “component approach”. (ii) Leases assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The owner-occupied property acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation (depreciation criteria are reported below) and impairment losses. Lease payments are accounted for as described in accounting policy “w”. (iii) Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense when incurred. (iv) Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation is applied from the date the tangible assets are available for use. Land is not depreciated. The estimated useful lives are as follows: -

buildings

20-40 years

-

plant and machinery

5-25 years

-

equipment

4-5 years

-

other assets

4-8 years

The useful lives and the residual value, if significant, are annually revised. (i)

Intangible assets

(i)

Goodwill

Goodwill arising on business combinations is initially measured at cost as established at the acquisition date, as defined in the above paragraph. Goodwill is not amortised, but is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. On disposal of part or whole of a business which was previously acquired and which gave rise to the recognition of goodwill, the remaining amount of the related goodwill is included in the determination of the gain or loss on disposal. 74


(ii) Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “o”). (iii) Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “o”). Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred. (iv) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. (v) Amortization Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill, intangible assets with an indefinite useful life and intangible assets not yet available to be used are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: -

rights to use intellectual property (software)

3-5 years

-

trademarks and similar rights

3 years

-

capitalised development costs

5 years

-

customer relationship

20 years

(j)

Trade receivables to third parties

Trade receivables are recognised initially at fair value and subsequently recorded at the amortised cost, using the effective interest method, net of impairment losses related to amounts considered recoverable, recorded as provision. The estimation of the recoverable amounts is based on future expected cash flows. Trade receivables, whose expiry date is within ordinary trade terms, are not discounted. (k) Contracts work-in-progress Contracts work-in-progress are reported in accordance with the progress stage (or completion percentage) of the works, according to which the costs, revenues, and margin are recognised based on the progress of the productive activity. The policy adopted by the Group is the completion percentage determined by applying the “incurred cost” (cost to cost) criterion. The valuation reflects the best estimate of the contracts made as at the reporting date. Periodically, the assumptions underlying the evaluations are updated. Any economic effect is recorded in the year in which the updates have been made. 75


The contract revenues include the payments agreed upon by contract, work changes, price revision, incentives, and any claims, to the extent that these are likely to be reliably valuated. In particular, the valuation of claims was guided, based on certain technical and legal analysis, towards the positive results that could reasonably be achieved from disputes with the customers. The contracts costs include all the costs that refer directly to the project, the costs that may be attributed to the contract activity in general and that may be allocated to the said project, in addition to any other costs that may be specifically charged to the customer based on the contractual clauses. The contract costs also include the pre-operative costs, which is to say the costs incurred in the initial phase of the contract before the construction activity is began (costs or preparing, tenders, design costs, costs for organization and start-up of production, construction site installation costs) and the post-operative costs that are incurred after the contract is closed (removal of the construction site, return of plant/equipment to base, etc.). Should the completion of a project be forecast to lead to a loss, this shall be recognised in its entirety in the year in which it may be reasonably expected. The contracts in progress are set out net of any depreciation fund and/or final losses, as well as the progress billings for the contract being carried out. This analysis is carried out on a contract by contract basis: should the difference be positive (due to contracts in progress greater than the amounts of the progress billings), it is classified among the assets (contracts work-inprogress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-in-progress). Should the final losses fund for the individual contract exceed the value of the work entered in the assets, this excess is classified under the provision for risks and charges. Contracts with payment denominated in foreign currency other than the functional currency (Euro for the Group) are valuated by converting the accrued share of payments determined based on the completion percentage method, at the exchange rate ruling at the reporting date for the portion not invoiced yet, and at the exchange rate ruling at the transaction date for the portion already invoiced. (l) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost determining method selected as a Group principle is the weighted average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and works in progress, cost includes an appropriate share of overheads based on normal operating capacity. (m) Other financial assets Other financial assets that the Group intends and is able to hold until maturity are recorded at the fair value of the initial consideration given in exchange plus the related transaction costs. Subsequently, they are valued on an amortised-cost basis using the original effective interest method. Financial assets are derecognised when, following their sale or settlement, the Group is no longer involved in their management and has transferred all risks and rewards of ownership. (n) Cash and cash equivalents Cash and cash equivalents include bank and post current accounts and deposits. Bank overdrafts, advances and other short-term loans which are repayable on demand and form an integral part of the Group’s cash managements are considered as components of cash surplus or deficit for cash flow statement purposes. (o) Impairment of tangible and intangible assets The carrying amounts of tangible and intangible are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. 76


Even if there are no indication of impairment, for goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. (i) Calculation of recoverable amount The recoverable amount of an asset is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. (ii) Reversal of impairment An impairment loss, except if in respect of goodwill, is reversed and recorded in the income statement, only if the reasons for the impairment loss cease to exist. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised. (p) Equity (i)

Share capital

Share capital includes the subscribed and paid up Company’s share capital. (ii) Dividends Dividends are recognised as a liability in the period in which they are declared. (q) Amounts payable to banks and other financial creditor Amounts payable to banks and other financial creditors are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings or loans on an effective interest basis. (r) Pension funds and other employee benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. (ii) Defined benefit plans The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s obligations. The calculation is performed by a qualified actuary. (iii) Severance indemnity fund Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code, is deferred compensation and is based on the employees’ years of service and the compensation earned by the employee during the service period.

77


Starting from January 1, 2007, Italian Law introduced for employees the choice to direct their accruing indemnity either to supplementary pension funds or leave the indemnity as an obligation of the company. Companies that employ at least 50 employees should transfer the employee severance indemnity to the “Treasury fund” managed by INPS, the Italian Social Security Institute. Consequently, the Company’s obligation to INPS and the contributions to supplementary pension funds take the form, under IAS 19, of a “Defined contribution plan”. Under IAS 19 - Employee Benefits, the employee severance indemnity as calculated is considered a “Defined benefit plan” and the related liability recognized in the statement of financial position (Provision for employee severance indemnities) is determined by actuarial calculations. According to IAS 19 (Employee Benefits), the remeasurements of actuarial gains and losses are recognized in other components of other comprehensive income. Service cost of Italian companies that employ less than 50 employees, as well as interest expenses related to the “time value” component of the actuarial calculations (the latter classified as Finance expenses), are recognized in the separate income statement. (s) Provision for risks and charges A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimation of the obligation amount can be done. Provisions are recorded on the basis of the best estimation of the amount that the Group would pay to settle the obligation or to transfer it to third parties at the reporting period. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (t) Trade payables to third parties Trade payables are recorded at the amortised cost, using the effective interest method. Trade payables, whose expiry dates are within the ordinary trade terms, are not discounted. (u) Other financial liabilities The other financial liabilities are initially recorded at cost, net of any transaction costs directly attributable to their creation. Following initial recording, financial liabilities are valued on an amortised-cost basis using the effective interest method. Financial liabilities are derecognised when, following their sale or settlement, the Group is no longer involved in their management and has transferred all risks and rewards of ownership. (v) Revenue recognition (i) Contracts work-in-progress As soon as the outcome of a contract can be estimated reliably, contract revenue and expenses are recognised in the income statement in proportion to the stage of completion of the contract that is calculated based on the costs effectively incurred and total costs included in the contract budget. An expected loss on a contract is recognised immediately in the income statement. (ii) Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed checking the work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

78


(w) Expenses (i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense. (ii) Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. (iii) Net financial expenses Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends, foreign exchange gains and losses except for those related to cash flow hedging operations that are included in the operating revenues or expenses, and premiums and discounts related to all forward exchange contracts and swaps on foreign currency. Interest income is recognised in the income statement as it accrues, using the effective interest method. Dividends income is recognised in the income statement on the date the entity’s right to receive payments is established. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as defined under IAS 23 – Borrowing Costs), which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised and amortised over the useful life of the class of assets to which they refer. All other borrowing costs are expensed when incurred. (x) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes arising from the distribution of dividends are recognised when the liability associated to the payment of the same dividend is acknowledged. This is justified by the fact that the Group is able to manage the time plan for the distribution of the reserves and it is probable that they will not be reversed in the foreseeable future. (y) Non-current assets held for sale and discontinued operations Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRS. Then, on initial classification as held 79


for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement. A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify as discontinued operation if it meets the criteria mentioned above. (z) New accounting standards Accounting standards, amendments and interpretations applied since April 1, 2016 The following accounting standards and amendments have been adopted by the Group since April 1, 2016. Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” (published on November 21, 2013): relative to the inclusion in the financial statement of contributions made by employees or third parties to defined benefit plans. Amendment to IFRS 11 Joint Arrangements – “Accounting for acquisitions of interests in joint operations” (published on May 6, 2014): relative to the accounting for acquisitions of interests in joint operations whose activities constitute a business. Amendments to IAS 16 Property, plant and Equipment and IAS 38 Intangibles Assets – “Clarification of acceptable methods of depreciation and amortisation” (published on May 12, 2014): according to which an amortisation criterion based on revenue is considered inappropriate, in that revenue generated by an activity which includes the activity subject to amortisation generally reflects factors other than the simple use of economic benefits of said activity, a condition which is required for amortisation. Amendment to IAS 1 - “Disclosure Initiative” (published on December 18, 2014): the aim of the amendments is to provide clarifications in relation to disclosure that may be perceived as impediments to a clear and intelligible preparation of financial statements. Finally, in the context of the annual improvement process for standards, on December 12, 2013 the IASB published the documents “Annual Improvements to IFRSs: 2010-2012 Cycle” (including IFRS 2 Share Based Payments – Definition of vesting condition, IFRS 3 Business Combination – Accounting for contingent consideration, IFRS 8 Operating segments – Aggregation of operating segments e Reconciliation of total of the reportable segments’ assets to the entity’s assets, IFRS 13 Fair Value Measurement – Short-term receivables and payables) and on September 25, 2014 “Annual Improvements to IFRSs: 2012-2014 Cycle” (including IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 – Financial Instruments: Disclosure and IAS 19 – Employee Benefits) which partially integrate with pre-existing standards. The directors do not expect a significant effect on the Group's consolidated financial statements from the adoption of such amendments. Accounting standards, amendments and interpretations effective from April 1, 2016 and not relevant for the Group There are no accounting standards, amendments and interpretations effective from April 1, 2016 and not relevant for the Group. Accounting standards, amendments and interpretations not yet in force and applied in advance

80


The Group has not applied the following standards, both new and amended, which have been issued but are not yet in force. Accounting standards, amendments and interpretations not yet applicable and not adopted in advance by the Group Standard IFRS 15 – Revenue from Contracts with Customers (published on May 28, 2014) which is intended to replace the standards IAS 18 – Revenue and IAS 11 – Construction Contracts, as well as the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter Transactions Involving Advertising Services. The standard establishes a new model of recording revenues, which will be applied to all contracts entered into with customers excluding those which fall within the scope of application of other IAS/IFRS standards such as leases, insurance contracts and financial instruments. The essential steps for recording revenues in accordance with the new model are: •

the identification of the contract with the customer;

the identification of the performance obligations of the contract;

the determination of the price;

the allocation of the price to the performance obligations of the contract;

the criteria of recording the revenues when the entity satisfies each performance obligation.

The standard is applicable commencing from January 1, 2018 but may be applied in advance. The application of IFRS 15 may have a significant impact on the values reported as revenue and related information given in the Group's Financial Statement. However, it is not possible to provide a reasonable estimate of the effects until the Group has completed a detailed analysis of contracts held with clients. Final version of IFRS 9 - Financial Instruments (published on July 24, 2014). The document encompasses the results of the phases relating to Classification and Measurement, Impairment, and Hedge Accounting, of the IASB project aimed at replacing IAS 39: •

the standard introduces new criteria for the classification and measurement of financial assets and liabilities.

with reference to the impairment model, the new standard requires that the estimate of losses on receivables is performed on the basis of the expected losses model (and not on the incurred losses model used by IAS 39) using information supportable and available at no cost or unreasonable effort, which includes historical, current and prospective data;

introduces a new hedge accounting model (increase of the type of transactions eligible for hedge accounting, modification of the methods of accounting for forward contracts and options when included in a hedge accounting report, modifications to the effectiveness test).

The new standard, which replaces the previous versions of IFRS 9, must be applied to all financial statements commencing on or after January 1, 2018. The application of IFRS 9 may have a significant impact on the values reported as revenue and related information given in the Group's Financial Statement. However, it is not possible to provide a reasonable estimate of the effects until the Group has completed a detailed analysis.

81


Notes to the Consolidated Financial Statements Consolidated income statement as of March 31, 2017 Notes

March 31, 2017

March 31, 2016 (*)

March 31, 2016 restated (**)

1,279,416 7,066 1,286,482

304,660 1,425 306,085

1,484,302 10,015 1,494,317

(359,225) (477,326) (409,954) (23,494) (5,234) (8,094) (8,920) 2,899 312 (1,289,036)

(86,409) (130,826) (95,208) (5,740) (7,370) (18,903) (2,858) 910 13 (346,391)

(488,575) (560,033) (414,598) (23,802) (7,877) (14,531) (15,913) 1,720 2,107 (1,521,502)

Ordinary activity result

(2,554)

(40,306)

(27,185)

Financial income Financial expenses Net financial expenses

128,842 (155,817) (26,975)

35,115 (45,703) (10,588)

82,468 (115,979) (33,511)

(€ thousands) Operating revenues Other operating income Total operating revenues Raw materials and consumables used Services expenses and use of third party assets Personnel expenses Depreciation, amortization and impairment losses Bad debts provision Provision for risks and charges Other operating expenses Cost recovery In-house enhancement of fixed assets Total operating expenses

4 3 5 5 6 7 8 9 10

11

Revaluation of equity investments Write-downs of equity investments Profit before tax

12 12

0 0 (29,529)

0 (626) (51,520)

0 (626) (61,322)

Income tax expense Profit after tax

13

(16,426) (45,955)

(1,676) (53,196)

(26,155) (87,477)

Profit after tax from discontinued operations Profit after taxes

14

0 (45,955)

(729) (53,925)

0 (87,477)

(45,277) (678) (45,955)

(53,557) (368) (53,925)

(87,070) (407) (87,477)

Attributable to: Group Minority Profit for the period

(*) Audited figures as of March 31, 2016 – reporting period of three months and “Assets held for sale” included in Net Working Capital. (**) Restated figures as of March 31, 2016 – reporting period of twelve months and no “Assets held for sale” reclassification.

82


Consolidated statement of comprehensive income as of March 31, 2017 March 31, 2017

March 31, 2016

March 31, 2016 restated

(â‚Ź thousands) Profit/(Loss) for the period (A)

(45,955)

(53,925)

(87,477)

(4,474)

17,280

16,063

Items that may be reclassified to the Income statement: Hedging reserves for risks variation, net of tax Gains/(losses) on exchange differences on translating foreign operations Total items that may be reclassified to the Income statement

(6,741)

2,355

(11,057)

(2,119)

10,539

5,006

Actuarial gains/losses

(483)

(358)

(811)

Total items that will never be reclassified to the Income statement:

(483)

(358)

(811)

(2,602)

10,181

4,195

(48,557)

(43,744)

(83,282)

(47,886) (671) (48,557)

(42,863) (881) (43,744)

(81,757) (1,525) (83,282)

Items that will never be reclassified to the Income statement:

Total Other comprehensive income, net of tax (B) Total Comprehensive income (A)+(B)

Total Comprehensive income attributable to: Group Minority Total Comprehensive income (A)+(B)

83


Consolidated statement of financial position as of March 31, 2017 (â‚Ź thousands) Intangible assets Tangible assets Equity investments in not consolidated subsidiaries Equity investments in associated companies Other non-current assets Deferred tax assets Total non-current assets Contracts work-in-progress Inventories Trade receivables from third parties Trade receivables from not consolidated and associated subsidiaries Income tax receivables Other current assets Cash and cash equivalents Assets held for sale Total current assets Total assets Equity Share capital Legal reserve IAS 19 Reserve Hedging reserves for risks Translation reserve Other reserves Retained earnings Profit/(loss) for the period Total equity attributable to the Group Minority interests Total equity Liabilities Amounts payables to banks and other financial creditors Severance indemnity fund Pension funds and other employee benefits Provisions for risks and charges Deferred tax liabilities Total non-current liabilities Amounts payable to banks and other financial creditors Excess of progress billings over work-in-progress Advances from customers Trade payables to third parties Trade payables to not consolidated and associated subsidiaries Income tax payables Other current liabilities Liabilities held for sale Total current liabilities Total liabilities Total equity and liabilities

Notes 15 16 18 19 20 21 22 22 23 24 25 26 27 28

29 29 29 29 29 29 29 29 29

30 31 32 33 21 30 22 22 34 35 36 37 38

March 31, 2017 80,965 98,569 6,083 1,136 253 45,999 233,005 696,089 37,109 487,611 28 9,393 97,889 43,258 5,213 1,376,590 1,609,595

March 31, 2016 85,273 105,840 6,083 808 162 55,832 253,998 657,450 23,005 423,924 0 7,916 87,788 67,398 64,562 1,332,043 1,586,041

6,900 1,380 (7,064) (14,716) 23,315 199,611 (32,302) (45,277) 131,847 10,632 142,479

6,900 1,380 (6,146) (7,133) 17,858 199,611 20,820 (53,557) 179,733 11,213 190,946

205,040 3,452 28,934 47,953 55,913 341,292 220,289 269,566 260,672 263,655 1 29,305 82,336 0 1,125,824 1,467,116 1,609,595

217,473 3,452 27,531 20,968 65,655 335,079 172.729 214,378 237,551 231,412 0 33,014 88,146 82,786 1,060,016 1,395,095 1,586,041 84


Consolidated statement of cash flows as of March 31, 2017 (â‚Ź thousands)

March 31, 2017

March 31, 2016

(29,529)

(51,520)

0 0

(749) 177

0 0 (598) 5,827 23,494 344 8,094 5,234 0 (110) 110 (1,081) 1,405 (589) 1,018 43,148

(171) 47 (136) 1,372 5,740 57 18,903 7,370 626 0 0 (385) (111) 214 114 33,068

Changes in operating activities: - Changes in hedging reserve - Changes in IAS 19 reserve - Changes in contracts work-in-progress (net), inventories and advances (1) - Changes in the other captions of working capital - Changes in the other captions of operating capital (2) - Income tax paid - Interests paid - Interest received - Effect of exchange rate changes on operating activities cash flows Total changes

(7,583) (918) 48,984 (81,589) (5,103) (12,948) (5,716) 598 3,877 (60,398)

20,421 (358) 51,365 (23,882) (30,676) (1,680) (1,598) 136 (5,467) 8,261

Net cash flows generated by operating activities (A)

(46,779)

(10,191)

(16,088) 1,281 (289)

(5,669) 187 0

(15,096)

(5,482)

(18)

(8)

Cash flows generated (absorbed) by operating activities Result before tax Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Result before tax from discontinued operations - Depreciation and amortization expenses and impairment losses from discontinued operations - Provision for risks and charge from discontinued operations - Bad debts provision from discontinued operations - Interest income - Interest expense - Depreciation and amortization expenses and impairment losses - Gain/loss on disposal of tangible and intangible assets - Provision for risks and charge - Bad debts provision - Equity investments write-downs/(revaluations) - Severance indemnity fund payments to employees - Severance indemnity fund expenses - Pension fund payments - Other employee benefits payments - Pension fund expenses - Other employee benefits net variation Total adjustments

Cash flows generated (absorbed) by investing activities Purchases of tangible and intangible assets Proceeds from disposal of tangible and intangible assets Changes in not consolidated subsidiaries, associated companies and other equity investments Net cash flows absorbed by investing activities (B) Cash flows generated (absorbed) by financing activities Lease obligation (principal)

85


Lease obligation (interest) Dividends received Other minority effects Net cash flows absorbed by financing activities (C) Net increase/(decrease) in cash surplus/(deficit) (A+B+C) Net cash surplus/(deficit) as of April 1 (D) Effect of exchange rate changes on balances held in foreign currency (E) Net cash surplus/(deficit) as of March 31 (A+B+C+D+E)

Net cash surplus/(deficit) includes: Bank and post current accounts and deposits Cash in hand Bank overdrafts and other short-term loans Shareholder’s loan Bank and post current accounts and deposits from discontinued operations Cash in hand from discontinued operations

(1)

0 300 0 282

(1) 0 0 (9)

(61,593)

(15,682)

(322,268)

(305,089)

1,812

(1,497)

(382,049)

(322,268)

43,102 156 (170,214) (255,093) 0 0 (382,049)

67,206 192 (130,025) (260,137) 488 8 (322,268)

The other captions of working capital refer to the following captions included in the statement of financial position of the Group: trade

receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies. (2)

The other captions of operating capital refer to the following captions included in the statement of financial position of the Group: income

tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provisions for risks and charges.

86


1. Assets classified as held for sale As reported in the Management Report, the decision adopted in 2015 to consider some assets operating in North Europe as an asset for sale, has been reverted during the year due to the consolidated presence of this company in the UK market. This company having a strong presence in the UK market, guarantees the continuity in the acquisition of new projects in the UK in particular in a period of uncertainty after Brexit decision. Furthermore, this company has been reorganized during 2016 and profitability has been restored. Therefore, at the end of September 2016, the Board of Directors approved to maintain these activities among the asset of the Group. As such, these assets and liabilities have not been anymore treated as “activities for sale”, without a consequent reclassification as “Assets/Liabilities held for sale”. The “Assets held for sale” refers to the book value of an old factory in Thailand, being the activities for the sale already started and the final sale is expected within 2017.

2. Acquisitions of subsidiaries The acquisition incurred during the period are the following: - Consorzio Marine Project Solutions with registered office in Italy, held by Permasteelisa S.p.A. for 55.5 %, and - Permasteelisa Colombia S.a.S. with registered office in Colombia, held by Permasteelisa S.p.A. for 100%. Permasteelisa France Sas has established a Branch in Principality of Monaco.

3. Operating revenues Operating revenues broken down by product are shown below: March 31, 2017

March 31, 2016 restated

1,131,805 124,265 29,283 1,129 1,286,482

1,284,261 177,493 32,563 0 1,494,317

March 31, 2017

March 31, 2016 restated

North America South America

504,916 5,000

572,988 1,992

Benelux France Germany Italy Spain Switzerland United Kingdom Ireland

2,824 45,347 16,600 18,419 7,666 12,313 243,830 2,082

11,155 57,806 28,846 19,202 6,412 6,688 265,123 889

0

69

(€ thousands)

Curtain walls Interiors Contract Marine

Operating revenues broken down by geographical area are shown below: (€ thousands)

Georgia

87


Other European countries Other Central Asian countries Other African countries

5,284 15,539 2

13,605 25,981 680

United Arab Emirates Qatar Saudi Arabia Other Middle Eastern countries

10,519 10,998 29,166 202

4,153 33,215 42,141 549

15,943 99,035 14,214 127,340 594 831 66,982 7,116 10,709 1,728 4,588

21,541 105,542 60,889 109,487 (1,717) 212 57,995 35,595 (247) 5,520 5,751

6,695

2,255

1,286,482

1,494,317

Australia China Japan Hong Kong India Korea Russia Singapore Taiwan Thailandia Macau Other Asian countries Total

4. Other operating income The Other operating income included in the total operating revenues area is shown below:

(â‚Ź thousands)

Gains on tangible and intangible assets disposal Rental income Insurance indemnities Sale of scrap Other revenues

March 31, 2017

March 31, 2016 restated

303 1,007 30 1,756 3,970 7,066

460 1,091 156 2,423 5,885 10,015

The item "Other revenues" includes Euro 258 thousand concerning non recurring revenue from vendor, Euro 242 thousand for recovery staff costs and other personnel costs, Euro 104 thousand for cost recovery to the Ultimate Parent Company, Euro 603 thousand subsidies from the Chinese government and Euro 1,824 thousand related to other revenues from some projects.

5. Raw materials and consumables used and services expenses and use of third party assets With reference to the Group's activity, the comparison between different periods of the value of raw materials and consumables used and services expenses and use of third party assets is not very significant as it depends on the different costs mix of job orders executed in each period. The percentage impact of the item raw materials and consumables used over the total operating revenues is equal to 27.9%, while the percentage impact of the item services expenses and use of third party assets over the total operating revenues decreased from 37.5% to 37.1% compared to March 2016 restated. 88


It is worth to be highlight that the item services expenses and use of third party assets expenses includes remuneration due to auditors amounting to Euro 149 thousand.

6. Personnel expenses (€ thousands)

Wages and salaries Social contribution Contributions to defined contribution plans Increase in liability for severance indemnities fund Severance indemnities assigned to pension fund or Inps Increase in liability for defined benefit plans Increase in liability for other long-term benefits Termination benefits Other personnel costs

March 31, 2017

March 31, 2016 restated

343,759 40,999 1,083 30 2,598 (786) 446 840 20,985 409,954

346,498 42,694 934 0 2,811 (366) (160) 871 21,316 414,598

The Personnel expenses do not present a significant change compared to the same period in the previous year March 31, 2016 restated. The average workforce for the period was 6,248 units.

7. Depreciation, amortization and impairment losses (€ thousands)

Tangible assets depreciation Intangible assets amortization Impairment losses

March 31, 2017

March 31, 2016 restated

15,218 8,266 10 23,494

15,352 8,450 0 23,802

March 31, 2017

March 31, 2016 restated

5,234 5,234

7,877 7,877

8. Bad debts provision (€ thousands)

Bad debts provision

The variance of “bad deb provision” is due to the combined effects of provisions and releases occurred during the reporting period April 1, 2016 – March 31, 2017. In particular, the provisions are related to the European area for Euro 1.9 million, to American area for Euro 0.5 million and to Asian area for Euro 2.1 million. Please refer to note 23 relating to “Trade receivables from third parties” for a more detailed analysis.

9. Provision for risks and charges (€ thousands)

Provision for disputes and legal actions Provision for warranties Provision for jobs Provision for work in progress risk

March 31, 2017

March 31, 2016 restated

3,849 256 (940) 4,929 8,094

382 (11,380) 7,821 17,708 14,531 89


With reference to the item "Provision for work in progress risk", the ending balance as of March 31, 2017 is due to the combined effects of provisions and releases occurred during the reporting period April 1, 2016 – March 31, 2017. In particular the provisions are related to the Asian area for Euro 1,9 million, to the Middle Eastern area for Euro 3,5 million and to the European area for Euro 2,2 million. Releases are mainly related to the American area for Euro (2,7) million. Please refer to note 33 relating to “Provisions for risks and charges” for a more detailed analysis.

10. Other operating expenses (€ thousands)

Other taxes Losses on tangible and intangible assets disposal Utilization of Bad debts provision Trade receivables write-off Other expenses

March 31, 2017

March 31, 2016 restated

6,732 647 (172) 452 1,261 8,920

12,643 359 (823) 596 3,138 15,913

The decrease of the item “Other taxes” is mainly due to the reduction of the sales taxes in the American area.

11. Net financial expenses (€ thousands)

Dividends and other incomes Interest income Exchange rate gains Commodities gains on hedging without effectiveness Other commission income Financial income on foreign currency risk hedging Commercial income on foreign currency risk hedging Commercial income on commodities hedging Total financial income Bank interests expenses Exchange rate losses Commodity losses on hedging without effectiveness Lease interests expenses Bank charges Bond commissions Other interests expenses Financial expenses on foreign currency risk hedging Commercial expenses on foreign currency risk hedging Commercial expenses on commodities hedging Total financial expenses Total net financial expenses

March 31, 2017

March 31, 2016 restated

300 598 113,804 0 111 2,866 11,163 0 128,842 4,137 120,215 0 0 580 161 1,690 7,488 21,455 91 155,817 (26,975)

10 316 66,116 (5) 58 2,578 13,395 0 82,468 5,644 83,320 0 0 120 713 1,185 4,865 19,767 365 115,979 (33,511)

The profit and losses on foreign exchange rates reported in the table respectively include gains for Euro 36,730 thousand (March 2016 restated: Euro 21,583 thousand) and losses for Euro 13,860 thousand (March 2016 restated: Euro 27,653 thousand) arising from year end closing evaluation.

90


As of March 31, 2017, the net financial expenses amounted to Euro 26,975 thousand, while as of March 31, 2016 restated amounted to Euro 33,511 thousand. The net variation for Euro 6,536 thousand is mainly due to the combination of the variations of the following items: - exchange rate losses, net of gains, decreased from Euro 10,793 thousand as of March 2016 restated to Euro 6,411 thousand as of March 2017; - commercial and financial expenses on foreign currency risk hedging, net of incomes, increased from Euro 9,024 thousand as of March 2016 restated to Euro 15,005 thousand as of March 2017. This increase is related to the forward points applied to foreign currency sales hedging, particularly for Rublo and US Dollar, and due to the difference on interest rates against the Euro; - interest expenses, net of incomes, decreased from Euro 7,283 thousand as of March 2016 restated to Euro 5,559 thousand as of March 2017 with a negative variation for Euro 1,724 thousand.

12. Revaluation and write-downs of equity investments During the reporting period April 1, 2016 – March 31, 2017, as well as in 2016 year, there have not been any revaluations of equity investments. During the reporting period April 1, 2016 – March 31, 2017, there have not been any write-downs of equity investments (March 2016: Euro 626 thousand in Consorzio Dyepower as it is in liquidation).

13. Income tax expense Taxes recognised in the income statement (â‚Ź thousands)

Current tax expenses Current year Adjustments for prior years (**) Deferred tax expenses Origination and reversal of temporary differences Originary tax rates change Adjustments for prior years (***) Tax losses Total income tax expense in the income statement

March 31, 2017

March 31, 2016

12,768 1,088 13,856

7,712 (1,375) 6,337

2,031 (23) 2,211 (1,649) 2,570 16,426

(7,348) 31 (453) 3,109 (4,661) 1,676

(**) Includes appropriations for tax checks and inspections (***) Includes write-downs or advance taxes booked to previous periods

91


Reconciliation of effective tax rate (€ thousands)

Profit before tax

Income tax using the domestic corporation tax rate Effect of tax rates in foreign jurisdictions Non-deductible expenses Tax exempt revenues Tax incentives not recognised in the income statement Current year tax benefits not recognized Recognition of tax benefits not recognized in prior years Utilization of tax benefits not recognized in prior years Change in tax rate effect Under/(over) provision in prior years (current tax expense) Under/(over) provision in prior years (deferred tax expense) Irap Other taxes Other

March 31, 2017

March 31, 2016

(29,529)

(51,520)

27.5%

(8,120) 5,949 4,688 7,127 95 1,073 0 0 119 1,088 2,211 0 472 1,724

27.5%

(14,168) 5,537 2,001 3,232 (1) 3,955 (467) (722) (20) (1,375) 2,656 0 546 502

(55.6%)

16,426

(3.25)%

1,676

With reference to this caption, the restated figures as of March 2016 (April 1, 2015 – 31 March 2016), have not been calculated because not relevant.

14. Profit after tax from discontinued operations As reported in the Management Report, the decision adopted in 2015 to consider some assets operating in North Europe as an asset for sale, has been reverted during the year due to the consolidated presence of this company in the UK market. This company having a strong presence in the UK market, guarantees the continuity in the acquisition of mew projects in the UK in particular in a period of uncertainty after Brexit decision. Furthermore, this company has been reorganized during 2016 and profitability has been restored. Therefore, at the end of September, the Board of Directors approved to maintain these activities among the asset of the Group. As such, these assets and liabilities have not been anymore treated as “activities for sale”, without a consequent reclassification as “Assets/Liabilities held for sale”. The “Assets held for sale” refers to the book value of an old factory in Thailand, being the activities for the sale already started and the final sale is expected within 2017 year.

92


15. Intangible assets (â‚Ź thousands)

Balance as of January 1, 2016 Acquisitions Other increases Disposals Consolidation area variations Other decreases Amortization Impairment losses Exchange rate differences on translation Balance as of March 31, 2016

Balance as of April 1, 2016 Acquisitions Other increases Transfer from assets held for sale Disposals Consolidation area variations Other decreases Amortization Impairment losses Exchange rate differences on translation Balance as of March 31, 2017

Development costs

Rights to use intellectual property

Licences and trademarks

Other intangible assets

Intangible assets in progress and advances

Total

2

4,094 230 331

1

79,845

2,034 1,194

85,976 1,424 331 0 0 (331) (2,106) 0 (21) 85,273

(331) (447) (1) 1

(9) 4,199

1

4,199 2,254 583 22 (28)

(1,659)

1

1 2

(13) 78,173

2 2,899

78,173 388 254 43

2,899 1,252

(1)

(1,831)

(6,434)

85,273 3,896 837 65 (28) 3 (837) (8,266)

(0)

9 5,208

13 72,440

22 80,965

3 (837)

3

3,314

93


Carrying amounts As of January 1, 2016 attributable to: Cost Accumulated amortization

2,433 (2,431) 2

20,023 (15,929) 4,094

883 (882) 1

181,885 (102,040) 79,845

2,034 0 2,034

207,258 (121,282) 85,976

2,433 (2,432) 1

19,681 (15,482) 4,199

890 (889) 1

181,827 (103,654) 78,173

2,899 0 2,899

207,730 (122,457) 85,273

2,433 (2,432) 1

19,681 (15,482) 4,199

890 (889) 1

181,827 (103,654) 78,173

2,899 0 2,899

207,730 (122,457) 85,273

2,433 (2,433) 0

22,115 (16,907) 5,208

913 (910) 3

182,018 (109,578) 72,440

3,314 0 3,314

210,793 (129,828) 80,965

As of March 31, 2016 attributable to: Cost Accumulated amortization

As of April 1, 2016 attributable to: Cost Accumulated amortization As of March 31, 2017 attributable to: Cost Accumulated amortization

The items “Transfer from assets held for sale “ refers to the carrying amounts as of March 2016 of the North Europe assets reclassified in the previous year as “Assets held for sale” . The increase for the period referred to the caption “Rights to use intellectual property” (for Euro 2,136 thousand) is related to the acquisition of updated version of Office, Visio and Project for the Group (Euro 1,377 thousand), to the acquisition of new solutions for PMF (Euro 147 thousand), to the acquisition of new licenses SAP-Timesheet, SAP-Cash and Treasury Management, SAP- BPC and Engine DB Hana (Euro 307 thousand), to the extension of actual licenses for the Group backup system Simpana (Euro 30 thousand), to the implementation of Cash Pooling and DB Bond projects (Euro 94 thousand), to the upgrade of HRIS project, the HR software (Euro 24 thousand), and other developments (Euro 157 thousand). The increase referred to the caption “Intangible assets in progress and advances” for Euro 1,252 thousand is mainly related to the implementation and development of the project P3 (Euro 235 thousand), to the acquisition of new Enovia licenses (Euro 750 thousand), to additional development of the segregation of duties (SoD) project, to the implementation of IT controls linked to JSOX (Euro 131 thousand), to the acquisition of K2 software used for the realization of Workflow process on QHSE environment (Euro 60 thousand) and other developments (Euro 76 thousand).

94


Impairment losses and subsequent reversal During the year, the management has assessed the existence of indicators of impairment losses by considering both external sources and internal ones and has concluded that for the year ended as of March 31, 2017 there were no indications of impairment losses as a result of which it had been necessary for the Group to assess the recoverable amount of intangible assets, in particular with reference to the “customer relationship� identified during the allocation of the excess cost paid by Terre Alte S.p.A. for the acquisition of Permasteelisa Group.

95


16. Tangible assets Land and buildings

Plant and machinery

Equipments

Other tangible assets

Tangible assets in progress and advances

Total

Balance as of January 1, 2016 Acquisitions Other increases Disposals Consolidation area variations Other decreases Depreciation Impairment losses Exchange rate differences on translation Balance as of March 31, 2016

61,516 1,172 273

21,192 124 156 (22)

9,040 406 11 (21)

13,914 1,366 17 (144)

1,319 907

106,981 3,975 457 (187)

(457) (716)

(989)

(794)

(1,236)

(457) (3,735)

(311) 61,934

(417) 20,044

(118) 8,524

(342) 13,575

(6) 1,763

(1,194) 105,840

Balance as of April 1, 2016 Acquisitions Other increases Transfer from assets held for sale Transfer to assets held for sale Disposals Consolidation area variations Other decreases Depreciation Impairment losses Exchange rate differences on translation Balance as of March 31, 2017

61,934 520 115 1,988 (5,124) (91)

20,044 1,565 961 351

8,524 4,132 103 177 (7) (72)

13,575 2,946 143 84 (2) (269)

1,763 838

(3,184)

(4,230)

(4,555)

491 56,649

685 18,555

(3,249) (11) 187 9,784

105,840 10,001 1,322 2,600 (5,212) (1,253) 0 (1,322) (15,218) (11) 1,822 98,569

(â‚Ź thousands)

(821)

(79)

(1,322)

420 12,342

39 1,239

96


Carrying amounts

As of January 1, 2016 attributable to: Cost Accumulated depreciation

As of March 31, 2016 attributable to: Cost Accumulated depreciation

As of April 1, 2016 attributable to: Cost Accumulated depreciation

As of March 31, 2017 attributable to: Cost Accumulated depreciation

118,129 (56,613) 61,516

64,045 (42,853) 21,192

38,506 (29,466) 9,040

51,526 (37,612) 13,914

1,319 0 1,319

273,525 (166,544) 106,981

119,150 (57,216) 61,934

63,275 (43,231) 20,044

37,943 (29,419) 8,524

49,830 (36,255) 13,575

1,763 0 1,763

271,961 (166,121) 105,840

119,150 (57,216) 61,934

63,275 (43,231) 20,044

37,943 (29,419) 8,524

49,830 (36,255) 13,575

1,763 0 1,763

271,961 (166,121) 105,840

123,872 (67,223) 56,649

68,822 (50,267) 18,555

43,457 (33,673) 9,784

53,431 (41,089) 12,342

1,239 0 1,239

290,821 (192,251) 98,569

The item “Transfer from assets held for sale” is related to the carrying amounts as of March 31, 2016 of the assets in North Europe reclassified as “Assets held for sale” in the previous year. The item “Transfer to assets held for sale” is related to the carrying amounts as of March 31, 2017 related to an old factory in Thailand considering as “Assets held for sale” in this reporting period April 1, 2016 – March 31, 2017. The main increases were made in Germany for Euro 4.8 million (March 2016: Euro 0.5 million), in Russia for Euro 0.9 million (March 2016: Euro 0.2 million), in Italy for Euro 0.6 million (March 2016: Euro 2.1 million), in Middle East for Euro 0.2 million (March 2016: Euro 0.8 million), in United States of America for Euro 1.1 million (March 2016: Euro 0.1 million), in Asia for Euro 1.1 million (March 2016: Euro 0.1 million), in Netherlands for Euro 0.6 million (March 2016: Euro 0.2 million) and are mainly due to the increase in the production capacity and the replacement and innovation of the plants. No significant asset disposals occurred during the period. 97


Impairment losses and subsequent reversal At the reporting date there have not been particular indications of impairment losses related to tangible assets. Leased plant and machinery As of March 31, 2017 the Group holds leased plant and machinery for an amount of Euro 21 thousand (March 2016: Euro 40 thousand); please refer to note 30 related to payables to banks and other financial creditors. Tangible assets in progress As of March 31, 2017 the Group holds tangible assets under construction for the total amount of Euro 1,239 thousand (March 2016: Euro 1,763 thousand). The variation of Euro 0.5 million is due to the combined effects of some new investments for Euro 0.8 million (in Germany for Euro 0.7 million), and the realization of investments started in previous years for Euro 1.3 million mainly in Europe. Other information As of March 31, 2017 the Group doesn’t have mortgages on buildings or on other tangible assets; please refer to the note 42 related to contingencies.

17. Equity investments in not consolidated subsidiaries As of March 31, 2017 the Group doesn’t have any equity investments in not consolidated subsidiaries.

18. Equity investments in associated companies The Group has the following equity investments in associated companies: % ownership

(€ thousands)

Country

Mobil Project S.p.A.

Italy

Carrying amount

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

20%

20%

6,083 6,083

6,083 6,083

Summary financial information on associated companies – 100%: (€ thousands)

Assets

Liabilities

Net Equity

Revenues

Profit/(Loss)

16,601 16,601

7,107 7,107

9,494 9,494

21,342 21,342

537 537

March 31, 2017

Mobil Project S.p.A. (*)

(*) Latest available statement: December 31, 2015

98


19. Other equity investments The balance as of March 31, 2017 includes the Parent company's equity investment in Consorzio Interaziendale Prealpi for Euro 366.6 thousand (March 2016: Euro 77 thousand), the Group's 50% equity investment in the Consorzio Cladding Technology Italy (CTI) for Euro 25 thousand (March 2016: Euro 25 thousand), the Parent company's equity investment in Consorzio Dyepower for Euro 705.6 thousand (March 2016: Euro 705.6 thousand) and the equity investment in Interoxyd for Euro 39 thousand (March 2016: Euro 39 thousand reclassified as “Assets held for sale”).

20. Other non-current assets The caption amounting to Euro 253 thousand (March 2016: Euro 162 thousand) is related to investments in other secondary securities.

21. Deferred tax assets and deferred tax liabilities Deferred tax assets and liabilities are attributable to the following: Assets (-)

(€ thousands)

Tangible assets Intangible assets Other investments Inventories Trade receivables Financial payables Pension funds and other employee benefits Provisions for risks and charges Trade payables Hedging Other items Tax value of loss carryforwards Tax (assets)/liabilities Set off Net tax (assets)/liabilities

Liabilities (+)

Net

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

March 31, 2017

March 31, 2016

312 237 0 (6,486) 0 (2,268) (5,019)

964 200 0 (17,943) 0 (2,357) (5,583)

6,515 19,268 0 9,962 0 0 42

6,823 20,821 0 24,264 0 0 (69)

6,827 19,505 0 3,476 0 (2,268) (4,977)

7,787 21,021 0 6,321 0 (2,357) (5,652)

(4,619)

(10,493)

4,785

0

166

(10,493)

0 (3,920) (4,969) (19,267)

0 (2,361) (1,999) (18,238)

0 938 14,517 (114)

0 98 15,696 0

0 (2,982) 9,548 (19,381)

0 (2,263) 13,697 (18,238)

(45,999) 0 (45,999)

(57,810) 1,978 (55,832)

55,913 0 55,913

67,633 (1,978) 65,655

9,914 0 9,914

9,823 0 9,823

The deferred tax assets on tax losses included in the financial statements and entered in the table above are related to approximately Euro 6.1 million by the US subsidiary Permasteelisa North America Corp. and have expiry date between 2023 and 2033, and for the residual part to other subsidiaries of the Group and have no expiry date. With reference to the Group companies overall no deferred tax assets were recorded relating to tax losses for Euro 26 million (March 2016: Euro 5.2 million). The variation is mainly due to the different reclassification of “Assets held for sale”. The amount relating to tax losses for which deferred tax assets were not recorded refers in particular to the North European companies. The amount relating to tax losses for which deferred tax assets were not recorded refers to European companies for approximately Euro 39 million (March 2016: Euro 30 million), of which the major part can be used without expiry date, for Euro 53.5 million related to Asian companies (March 2016: Euro 40.2 million) of which Euro 41.1 million (March 2016: Euro 20.1 million) can be used before 2022 and Euro 4.4 (March 2016: Euro 3.2 million) related to American companies that can be used between the 2022 and the 2033. The residual amount has not time limitation. 99


The deferred tax assets had not been booked on the aforementioned temporary differences and tax losses as the required conditions were not in place, pursuant to the criteria envisaged by the international accounting principles, hinting at a probable future taxable income on which the Group may use the benefits arising there from. In addition, with reference to the retained earnings of subsidiaries taxable in Italy if they were repatriated through dividends distribution deferred tax liabilities were not recognized on the portion of them for which the distribution is not likely in the foreseeable future. Movement in deferred tax assets and liabilities during the year (â‚Ź thousands)

Tangible assets Intangible assets Inventories Other investments Trade receivables Financial payables Pension funds and other Provisions for risks and charges Trade payables Hedging Other items Tax value of loss carry-forwards

(â‚Ź thousands)

Tangible assets Intangible assets Inventories Other investments Trade receivables Financial payables Pension funds and other Provisions for risks and charges Trade payables Hedging Other items Tax value of loss carry-forwards

Balance as of January 1, 2016

Recognised in income statement

Recognised in equity

Exchange differences

Other changes

Balance as of March 31, 2016

7,954 21,526 10,890 0 0 (2,674)

(150) (490) (4,389) 0 0 316

0 0 0 0 0 0

(68) (15) (180) 0 0 1

51 0 0 0 0 0

7,787 21,021 6,321 0 0 (2,357)

(5,696) (9,686) 0 (2,752) 14,930 (22,761) 11,731

25 (616) 0 (2,016) (1,990) 4,278 (5,032)

0 (48) 0 (365) 0 0 (413)

19 64 0 (93) 249 245 222

0 (207) 0 2,963 508 0 3,315

(5,652) (10,493) 0 (2,263) 13,697 (18,238) 9,823

Balance Transfer from Recognised Exchange Exchange Other Balance as of assets/liabilities in income differences differences changes as of April 1, held for sale statement March 31, 2016 2017

7,787 21,021 6,321 0 0 (2,357) (5,652) (10,493) 0 (2,263) 13,697 (18,238)

(824) 0 0 0 0 0 0 0 0 (78) 0 0

(182) (1,538) (2,569) 0 0 91 882 10,818 0 (169) (3,246) (1,522)

0 0 0 0 0 0 (353) 0 0 238 (1,412) 0

46 22 (276) 0 0 (2) (17) (159) 0 (710) 611 (487)

9,823

(902)

2,565

(1,527)

(972)

0 6,827 0 19,505 0 3,476 0 0 0 0 0 (2,268) 163 (4,977) 0 166 0 0 0 (2,982) (102) 9,548 866 (19,381) 927

9,914

100


22. Assets and liabilities for contracts work-in-progress, inventories and advances from customers Assets for contracts work-in-progress and inventories (€ thousands)

March 31, 2017

March 31, 2016

696,089

657,450

3,359 75 153 33,522 37,109

3,179 69 149 19,608 23,005

March 31, 2017

March 31, 2016

269,566 260,672 530,238

214,378 237,551 451,929

March 31, 2017

March 31, 2016

6,209,876 761,921 (6,545,274) 426,523

5,965,795 597,446 (6,120,169) 443,072

696,089 (269,566) 426,523

657,450 (214,378) 443,072

Assets for contracts work-in-progress

Raw materials and consumables used Semi-processed goods Finished goods Advances Inventories Liabilities for contracts work-in-progress and advances from customers (€ thousands)

Liabilities for contracts work-in-progress Advances from customers

Contracts work-in-progress (€ thousands)

Costs incurred on uncompleted contracts Estimated earnings Less billings to date

Assets for contracts work-in-progress Liabilities for contracts work-in-progress

Contracts work-in-progress, equal to Euro 696,089 thousand (March 2016: Euro 657,450 thousand), are shown net of the provision for work in progress, equal to Euro 41,273 thousand (March 2016: Euro 29,301 thousand).

23. Trade receivables from third parties (€ thousands)

Trade receivables from third parties Bad debts provision

March 31, 2017

March 31, 2016

511,202 (23,591) 487,611

443,433 (19,509) 423,924

As of March 31, 2017 trade receivables include guarantee retentions for Euro 207,721 thousand (March 2016: Euro 183,385 thousand and Euro 6,134 thousand related to transfer from “Assets held for sale”) related to contracts work-in-progress, of which Euro 98,962 thousand expiring beyond year 2017 (March 2016: Euro 77,516 thousand and Euro 1,638 thousand related to transfer from “Assets held for sale”). The following table shows the changes of the provision for bad debts during the year. 101


(€ thousands)

Balance as of April 1 Transfer from “Assets held for sale” Increase due to the change in consolidation scope Reclassification Utilization Reversal Provision Exchange rate differences on translation Balance as of March 31

March 31, 2017 19,509 1,046 0 (2,685) (172) (88) 5,323 658 23,591

March 31, 2016 13,222 0 0 (699) 0 (131) 7,500 (383) 19,509

The provision for bad debts as of March 31, 2016 doesn’t include the balance of the bad debts provision related to the “Assets held for sale” amounted for Euro 1,046 thousand. This amount has been reported as “Transfer from “Assets held for sale” as of March 31, 2017. The item “reclassification” includes the amount of bad debts provision for Euro (2,685) related to other receivables showed in note 26 “Other current asset” as “Other receivables”.

24. Amounts receivable from not consolidated subsidiaries (€ thousands)

Receivables from non-consolidated subsidiaries Mobil Project SpA Consorzio Cladding Technology Italia Consorzio Dyepower

March 31, 2017

March 31, 2016

22 1 5 28

0 0 0 0

March 31, 2017

March 31, 2016

9,393 9,393

7,916 7,916

25. Income tax receivables (€ thousands)

Tax income receivables

The item “Income tax receivables” should be analysed in conjunction with the item 36 "Income tax payables".

26. Other current asset (€ thousands)

VAT receivables Advances to employees Other receivables Accrued income and deferred charges

March 31, 2017

March 31, 2016

17,904 411 61,544 18,030 97,889

8,485 323 60,454 18,526 87,788

March 31, 2017

March 31, 2016

15,359 46,155 30 61,544

41,621 18,803 30 60,454

The caption “Other receivables” includes: (€ thousands)

Forward assets Other receivables Loans to other third parties

102


The item “Forward assets” relates for Euro 15,335 thousand to foreign currency transactions (March 2016: Euro 41,621 thousand) and for Euro 24 thousand to the transactions on commodities (March 2016: Euro 0 thousand). The item “Other receivables”, increased compared to the last year, must be seen jointly with “Provisions for risks and charges “ item, as per note 33. It should also be noted that the item as of March 31, 2016 did not include the amount of Euro 3,506 thousand as it was classified under the category "Assets held for sale".

27. Cash and cash equivalents (€ thousands)

Bank and post current accounts and deposits Cash in hand

March 31, 2017

March 31, 2016

43,102 156 43,258

67,206 192 67,398

The balance of bank and post current accounts and deposits includes approximately Euro 3.5 million of time deposits related to Group’s German companies; in Germany the law provides, for companies operating in construction of buildings, the obligation to deposit a certain amount of financial deposit for its sub-contractors. It should also be noted that the item as of March 31, 2016 did not include the amount of Euro 496 thousand as it was classified under the category "Assets held for sale".

28. Non-current assets held for sale As regards of “Non-current assets held for sale” as of March 31, 2016, please refer to which already disclosed in the Management Report and in the paragraph 14. The amount of Euro 5,213 thousand reclassified as “Assets held for sale” refers to the book value of an old factory in Thailand, being the activities for the sale already started and the final sale is expected within 2017.

29. Net equity Net equity changes Please refer to the relevant table that precedes the notes to the consolidated financial statements related to March 31, 2017 and the comparative year March 31, 2016. Share capital As of March 31, 2017 the share capital amounted to Euro 6,900 thousand and includes 25,613,544 ordinary shares issued without nominal value. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are equal since there are no preference shares. Legal reserve, share premium reserve and revaluation reserve They refer to the legal reserve, share premium reserve and revaluation reserve of parent company Permasteelisa S.p.A.. Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the foreign subsidiaries.

103


Hedging reserve for risks This includes the foreign exchange risk hedging reserve, the commodities risk hedging reserve and the interest risk hedging reserve. The foreign exchange risk hedging reserve and the commodities risk hedging reserve include the effective portion of the net differences accumulated in the “fair value” of the hedging instruments respectively on foreign currencies and commodities, associated to hedged but not yet performed transactions. The changes in these reserves are stated in the following table: Foreign exchange risk hedging reserve (*)

(€ thousands)

Reserve as of March 31, 2016 Increase/(decrease) Currency translation differences Release to income statement

Reserve as March 31, 2017

Commodities risk hedging reserve (*)

Amount before tax

Tax

Amount after tax

Amount before tax

Tax

Amount after tax

(8,925)

2,075

(6,850)

(337)

56

(281)

(10,606) (3,838) 4,157

2,387 709 (1,132)

(8,219) (3,129) 3,024

440 (1) 347

(25) 1 (57)

415 0 290

(19,212)

4,039

(15,174)

450

(25)

424

(*) Minority portion included

IAS 19 Reserve Following the decision to apply in advance the revised IAS 19 - Employee benefits, the IAS 19 Reserve has been set up (for more details, please refer to the notes, letter “r”); in particular, this reserve includes the gains (losses) actuarial variations. This reserve, as of March 31, 2017, shows a negative balance of Euro 7,064 thousand, due to the recognition during the year of negative actuarial variation of Euro 918 thousand, net of related taxes amounted to Euro 353 thousand. Other reserves It includes the other consolidation reserves different from the previous ones and from retained earnings. Minority interests It includes the share capital and the other specific reserves of Group companies’ net equity in which there are some minority Shareholders, as well as the translation reserve for the minority portion. Capital management In the area of capital management, the Group aims at adding value for the Shareholder, safeguard the continuity of the business and support the development of the Group. The Group has thus tried to keep a suitable capitalisation level to enable both the achievement of a suitable return on capital for the Shareholder and ensure the accessibility in economic terms of external financing sources, also by achieving a suitable rating. The Group constantly monitors its level of indebtedness in reference to the net equity and especially the net level of indebtedness and the cash generation from operations. To this end, the Group pursues the ongoing improvement of profitability in its business areas. It may also sell part of its own assets to reduce the value of debt, while the Board of Directors may suggest to the Shareholder's Meeting to reduce or increase the share capital or, if legally viable, distribute the reserves. The capital is understood to be the value added by the Shareholder (share capital and the share-premium reserve, net of the value of the treasury share if any), and generated by the Group in terms of the results achieved by the management (legal reserve and profit carried over included the results for the year), excluding the profit and loss entered directly into the net equity and minority interests.

104


30. Amounts payable to banks and other financial creditors (€ thousands)

Amounts payable to banks and other financial creditors non-current Finance lease liabilities Medium-long term Shareholder’s loan

Amounts payable to banks and other financial creditors current Current portion of finance lease liabilities Current portion of the medium-long term Shareholder’s loan Bank current accounts, advances and other short term loans

March 31, 2017

March 31, 2016

3 205,037 205,040

21 217,452 217,473

18 50,056 170,214 220,288

19 42,685 130,025 172,729

The net financial position of the Company including Shareholder’s loan as of March 31, 2017, is negative for Euro 382 million considering a positive amount of Euro 43 million related to “cash & bank deposits”. The loan in use for an amount of Euro 425 million are related to: •

medium and long-term loan granted by the shareholder for Euro 255 million, and

short-term loan, for an amount of Euro 170 million, related to contracts for credit facilities on a rotating basis.

The aim of these loans is to cover the Group’s working capital requirements.. During the period from April 1, 2016 to March 31, 2017 have been repaid: - a Shareholder’s loan for the amount of Euro 10 million in the month of September, 2016 and - the first two tranches of Shareholder’s loan in USD with a countervalue of Euro 7 million. The cash pooling project has been finalized during the period in comment (April 1, 2016 - 31 March, 2017) for the main important Group companies in Europe and North America. This project consists of a physical aggregation between the participants and a notional pool-leader level on the parent company Permasteelisa S.p.A., ensuring maximum optimization of the excess liquidity for the participating companies. In terms of mortgages on real estate or other fixed assets owned by the Group, please refer to note 42.

105


Finance lease liabilities Finance lease liabilities as of March 31, 2017 are payable as follows: Minimum payments

Interest

Principal

Minimum payments

Interest

Principal

March 2017

March 2017

March 2017

March 2016

March 2016

March 2016

20 4

2 0

18 3

21 23

0 24

0 2

0 21

0 44

(€ thousands)

Expiry date: Less than 1 year Between 1 and 5 years More than 5 years

2 2 0 4

19 21 0 40

The weighted average effective interest rate in respect of lease obligation at the balance sheet date is 1.88% (March 2016: 1.94%).

Net financial position To complete the information reported in these notes, the Group financial position as of March 31, 2017 is reported below. (€ thousands)

March 31, 2017

March 31, 2016

Cash and cash equivalents Amounts payables to bank Shareholder’s loan Finance lease liabilities Net financial position – short term

43,258 (170,214) (50,056) (18) 177,030

67,398 (130,025) (42,685) (19) (105,331)

Finance lease liabilities Shareholder’s loan Net financial position – medium/long term

(3) (205,037) (205,040)

(21) (217,452) (217,473)

Total net financial position

(382,070)

(322,804)

The average rates recorded by the Group during the period are as follows: a) current account deposits and bank deposits: 0.39% (March 2016: 0.23%). b) short-term loans: 0.99% (March 2016: 1.39%). c) mortgages and medium-long-term loans: not reported because there were no these kind of loans during the year (same in March 2016); d) Shareholder loan: spread equal to 0.95% (March 2016: 0.95%); e) liabilities on financial leasing: 1.88% (March 2016: 1.94%). The actual average rate over overall indebtness stood at 1% (March 2016: 1.10%).

31. Severance indemnity fund In accordance with national regulations, the amount due to each employee accrues on the basis of the service performed and must be paid when the employee leaves the company. The payment due upon termination of the employment relationship is calculated on the basis of its duration and the taxable salary of each employee. The 106


liability, revalued annually based upon the official cost of living index and legal interest, is not associated with any condition or accrual period, or any funding obligation; therefore, there are no assets at the service of the fund. The regulations were supplemented by Italian Legislative Decree no. 252/2005 and by Italian Law no. 296/2006 (Finance 2007) which, for companies with at least 50 employees, established that the shares accrued since 2007 are used, at the option of employees, either for the INPS Treasury Fund or for other forms of supplementary pension schemes, assuming the nature of “defined contribution plan”. The revaluations of the amounts in existence at the dates of option are, however, still accounted to the severance indemnity fund, along with, for companies with less than 50 employees, also the shares accrued and not used for the supplementary pension scheme. In accordance with IAS 19 (2011), that fund is accounted for as “Defined benefits plan”. The table set out below refers exclusively to the severance indemnity fund share accrued prior to 2007.

(€ thousands)

Present value of the defined benefit obligation Unrecognised actuarial gains and losses Recognised liability for severance indemnity fund

March 31, 2017

March 31, 2016

3,452 0 3,452

3,452 0 3,452

March 31, 2017

March 31, 2016

3,452 0 3,452

3,424 28 3,452

March 31, 2017

March 31, 2016

3,452 (2) (110) 30 82 3,452

3,424 48 (20) 0 0 3,452

Movements of the severance indemnity fund (€ thousands)

Net recognised liability at the beginning of the period Net variation of the period Net recognised liability as of March 31 The severance indemnity fund net variation is detailed in the following table: (€ thousands)

Current service costs Other movements Payments Expenses recognized in the income statement Actuarial (Profit)/Loss Net recognised liability as of March 31

The item “Expense recognized in the income statement” included in the previous table is composed as follows: (€ thousands)

Current service costs Interest on obligation

March 31, 2017

March 31, 2016

0 82 82

0 0 0

Principal economic actuarial assumption

Discount rate as of March 31 Inflation rate Future salary increase rate

March 31, 2017

March 31, 2016

1.43% 1.50% 2.63%

0 0 0 107


The demographic technical data used is shown below: Probability of death

Mortality table RG48 published by the State General Accounting Tables

Probability of invalidity

INPS Tables split into age and gender

Probability of retirement

100% upon achieving AGO requirements

Set out below is the sensitivity analysis for each actuarial circumstance for the purposes of determining the yearend liability amount; the same shows the effects, expressed in absolute terms, of variations of the actuarial circumstances reasonably possible at that date. Variations in actuarial assumptions March 31, 2017

March 31, 2016

Inflation rate +0.25 p.p. -0.25 p.p.

3,489 3,360

0 0

Discount rate +0.25 p.p. -0.25 p.p.

3,322 3,531

0 0

The average financial duration of the obligation is 13 years.

32. Pension funds and other employee benefits (€ thousands)

Pension funds Other employee benefits

March 31, 2017

March 31, 2016

24,988 3,946 28,934

24,472 3,059 27,531

March 31, 2017

March 31, 2016

27,531 1,403 28,934

27,219 312 27,531

March 31, 2017

March 31, 2016

24,505 483 24,988

24,166 306 24,472

Movements of the severance indemnity fund (€ thousands)

Net recognised liability at the beginning of the period Net variation of the period Net recognised liability as of March 31

Pension funds (€ thousands)

Gartner GmbH pension fund Other minor pension funds

108


Gartner GmbH pension fund movements

(€ thousands)

Net recognised liability at the beginning of the period Net variation of the period Net recognised liability as of March 31

March 31, 2017

March 31, 2016

24,166 339 24,505

23,591 575 24,166

March 31, 2017

March 31, 2016

24,166 (1,079) 664 754 24,505

23,591 (269) 646 198 24,166

The net variation of Gartner GmbH pension fund is detailed in the following table: (€ thousands)

Net recognised liability at the beginning of the period Payments Actuatial gains/ losses Expense recognised in the income statement Net recognised liability as of March 31

The item “Expense recognized in the income statement” included in the previous table is composed as follows: (€ thousands)

Current service costs Interest on obligation

March 31, 2017

March 31, 2016

281 473 754

69 129 198

March 31, 2017

March 31, 2016

1.90% 1.75% 0.00%

2.00% 1.75% 0.00%

March 31, 2017

March 31, 2016

27,615 21,906

27,257 21,625

21,251 28,663

20,949 28,338

Principal economic actuarial assumption.

Discount rate as of March 31 Inflation rate Future TFR increase rate Variations in actuarial assumptions

Inflation rate +1 p.p. -1 p.p. Discount rate +1 p.p. -1 p.p. The average financial duration of the obligation is 13 years.

109


Other employee benefits (€ thousands)

Dutch "Jubilee" fund Other

March 31, 2017

March 31, 2016

440 3,506 3,946

0 3,059 3,059

March 31, 2017 3,059 458 429 3,946

March 31, 2016 2,983 0 76 3,059

Other employee benefits movements (€ thousands)

Net recognised liability at the beginning Assets / liabilities held for sale’s movements Net variation of the period Net recognised liability as of March 31

33. Provisions for risks and charges (€ thousands)

Balance as of January 1, 2016 Reclassifications Provisions made during the year Provisions used during the year Provisions reversed during the year Exchange rate differences on translation Balance as of March 31, 2016

(€ thousands)

Balance as of April 1, 2016 Reclassifications Transfer from liabilities held for sale movements Provisions made during the year Provisions used during the year Provisions reversed during the year Exchange rate differences on translation Balance as of March 31, 2017

Provision for losses on equity investments

Warranty provision

0

10,776

0

Provision Provision for risks on for tax risks ongoing jobs

Total

2,835 (542)

22,183 (474) 3,100 (2,924) (157) (760) 20,968

1,437

1,974 (1,878) (27) (253)

7,135 68 1,126 (995) 0 (424)

(65)

(51) (130) (18)

10,592

6,910

1,372

2,094

Provision for losses on equity investments

Warranty provision

0

10,592 605 865

6,910 (766) 0

11,417 (12,229) (470) 369 11,149

0

Other provision

Provision Provision for for risks tax risks on ongoing jobs

Other provision

Total

1,372 0 0

2,094 24,430 0

20,968 24,269 865

2,945 (395) (3,453) 271

30 (191) 0 110

5,632 (541) (1,262) (382)

20,024 (13,356) (5,185) 368

5,512

1,321

29,971

47,953

Warranty provision A warranty provision is booked in the Financial Statement based on an historical trend analysis of warranty costs incurred in the previous years. Such provision is done for all jobs subject to a fixed warranty period.

110


Provision for risks on ongoing jobs The utilization of the period arose from the occurrence of risks for which a dedicated provision had been made at the end of the previous year; as to the provisions for the period, the main allocations are related to the risks on jobs in Hong Kong (approximately 1.8 million). Provision for tax risks Provisions for tax risks include the provision for the Indian tax dispute for Euro 1,321 thousand. Other provisions The amount is related to provisions for risks on ongoing disputes that are considered probable. The item " Reclassifications" is mainly due to a legal risk fund booked in the United Kingdom, against which a receivable for insurance reimbursement was entered. Such item must be seen jointly with "other receivables" item, as per Note 26 "Miscellaneous receivables and other current assets".

34. Trade payables to third parties (€ thousands)

Trade payables to third parties

March 31, 2017

March 31, 2016

263,655 263,655

231,412 231,412

As of March 31, 2017, trade payables include invoices to be received for Euro 89,035 thousand (March 2016: Euro 101,782 thousand) and retentions for Euro 18,112 thousand (March 2016: Euro 16,182 thousand), expiring mostly within the year ended March 2018. It should also be noted that the item as of March 31, 2016 did not include the amount of Euro 54,709 thousand as it was classified under the category "Liabilities held for sale".

35. Trade payables to not consolidated and associated subsidiaries (€ thousands)

Trade payables to not consolidated and associated subsidiaries Consorzio Cladding Technology Italia

March 31, 2017

March 31, 2016

1 1

0 0

March 31, 2017

March 31, 2016

29,305 29,305

33,014 33,014

36. Income tax payables (€ thousands)

Tax income payables

The income tax payables, net of the income tax receivables reported under note 25, showed a decrease of liabilities position from Euro 25,098 thousand to Euro 19,912 thousand. The increase for Euro 5,186 thousand is mainly due to the income taxes paid during the reporting period April 1, 2016 – March 31, 2017 in North Europe.

111


37. Other current liabilities (€ thousands)

VAT payables Employees taxation payables Other indirect taxes payables Amounts payable to social agencies Amounts payable to employees Other liabilities Accrued liabilities and deferred income

March 31, 2017

March 31, 2016

7,655 3,496 270 4,479 35,724 25,910 4,802 82,336

6,688 3,436 313 3,372 32,238 40,682 1,417 88,146

March 31, 2017

March 31, 2016

21,066 4,844 25,910

37,382 3,300 40,682

The caption “Other liabilities” includes: (€ thousands)

Forward liabilities Other liabilities

Forward liabilities are referred for Euro 21,066 thousand to foreign currency transactions (March 2016: Euro 37,067 thousand) and for Euro 0 thousand to commodity transactions (March 2016: Euro 315 thousand). It should also be noted that the item as of March 31, 2016 did not include the amount of Euro 7,877 thousand as it was classified under the category "Liabilities held for sale".

38. Non-current liabilities held for sale As regards of “Non-current liabilities held for sale” as of March 31, 2016, please refer to which already disclosed in the Management Report and in the note 14.

39. Risk management Exposure to credit interest rate, commodity price and currency risks arises in the normal course of the Company’s business. Historically, derivative financial instruments are used by the Company to hedge its exposure to fluctuations in foreign exchange rates. The Group also hedges itself against commodity price risks. Credit risk Credit risk is the risk that arises when a customer or counterparty may fail to meet his commitments when they become due and cause the Company to incur in a financial loss. The Company’s primary exposure to credit risk arises from its contract receivables. The Company has implemented a specific Risk management system to analyze each specific tender and a rating is given to each project and customer. Specific measures are applied to minimize the company’s risk and the system in place also allows to subsequently monitor the credit risk exposure on an ongoing basis. Other financial assets of the Company with exposure to credit risk include cash and cash equivalents and derivative financial instruments to hedge the Company exposure to foreign currency risk. Cash and cash equivalents are held with banks with high credit ratings. Transactions involving derivative financial instruments are allowed only with counterparties that are of high credit quality. As such, the management does not expect any counterparty to fail to meet their commitments. As of the balance sheet publication date, there were no significant concentrations of credit risk on specific customers or on specific geographical areas. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position. 112


With reference to trade receivables, the maximum exposure to credit risks broken down by geographical area is shown below: (€ thousands)

March 31, 2017

March 31, 2016

129,259 61,905 1,753 149,324 58 97 168,249 92 510,737

108,186 61,902 2,210 152,463 1 81 115,223 88 440,154

March 31, 2017

March 31, 2016

(23,591) 465 487,611

(19,508) 3,278 423,924

Europe Asia Australia North America Central America South America Middle East North Africa Total gross receivables broken down by geographical area

Provision for bad debts Exchange rate differences on translation Total net receivables broken down by geographical area

In the following table the trade receivables from third parties broken down by maturity:

Gross receivables

Provision for bad debts

Net receivables

March 31, 2017

March 31, 2017

March 31, 2017

Not past due Past due 0-180 days Past due 181-365 days More than one year

363,994 59,076 11,015 76,652

(2,777) (155) (1,073) (19,586)

Total Exchange rate adjustment

510,737

(23,591)

(€ thousands)

Provision for bad debts

Net receivables

March 31, 2016

March 31, 2016

March 31, 2016

361,217 58,921 9,942 57,066

295,827 100,457 12,652 31,218

(3,542) (1,839) (1,117) (13,010)

292,285 98,618 11,535 18,208

487,146

440,154

(19,508)

420,646

465 487,611

Gross receivables

3,278 423,924

As of March 31, 2017 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 74% of the total (March 2016: 69%) and the credit due for over one year amounted to 12% (March 2016: 4%). Interest rate risk The Group’s exposure to changes in interest rates relates primarily to interest-earning assets and interestearning liabilities (amounts receivable from banks and other financial institutions or amounts payable to banks and other financial institutions). Interest rate risk is actively managed at central level to guarantee that interests payments are within acceptable levels and consistent with the Group’s business strategies. The Group does not generally use derivative financial instruments to hedge its exposure to interest rate risk. Sensitivity analysis The impact of a variation of 100 basis points in interest rates on the year end date would have determined an increase (decrease) of the net equity and of the results for the period for the amounts shown below. The analysis 113


was done assuming that all the other variables, in particular the exchange rate to foreign currencies, remain stable. On the same basis has been done also the analysis of previous year. (€ thousands)

March 31, 2017 Variable rate loans

(€ thousands)

March 31, 2016 Variable rate loans

Result for the period +100 bp - 100 bp

(4,307) (4,307)

4,307 4,307

Result for the period +100 bp - 100 bp

(1,002) (1,002)

1,002 1,002

Net equity +100 bp - 100 bp

(4,307) (4,307)

4,307 4,307

Net equity +100 bp - 100 bp

(1,002) (1,002)

1,002 1,002

Please note that the Group does not have any fixed rate loans ongoing. Liquidity risk Policies and procedures have been established to monitor and control liquidity, at both central level and individual subsidiary level, on a daily basis adopting a cash flow management approach. The table below shows the detail of the future contractual flows of financial liabilities held by the Group, broken down into financial liabilities not associated to derivative tools and financial liabilities associated to derivative tools. Exposure to the liquidity risk associated to financial liabilities other than derivative instruments March 31, 2017

(€ thousands) Carrying value

Contractual Cash Flows

Contractual Cash Flows less than 1 year

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

Financial liabilities other than derivatives Trade payables Financial leasing payables Other financial payables Amounts payables to banks

263,655 21 255,093 170,215

263,655 24 255,093 170,215

252,442 20 50,056 170,215

1,508 4 205,037 0

9,705 0 0 0

Total booked value

688,984

688,987

472,733

206,549

9,705

March 31, 2016

(€ thousands)

Financial liabilities other than derivatives Trade payables Financial leasing payables Other financial payables

Carrying value

Contractual Cash Flows

Contractual Cash Flows less than 1 year

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

231,412 40 260,137

231,412 44 260,137

211,652 21 42,685

18,617 23 217,452

1,143 0 0

114


Amounts payables to banks

130,025

130,025

130,025

0

0

Total booked value

621,614

621,618

384,383

236,092

1,143

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments March 31, 2017 (â‚Ź thousands)

Carrying value

Contractual Contractua Contractua Contractual Cash Flows l Cash l Cash Cash Flows Flows less Flows exceeding than 1 year between 1 5 years and 5 years

Assets (-) / Liabilities (+) Assets from fair-value valuation on forward contracts on currencies - in flows - out flows Liabilities from fair-value valuation on forward contracts on currencies - in flows - out flows Assets from fair-value valuation of commodities - in flows - out flows Liabilities from fair-value valuation of commodities

(15,335)

(15,335)

(15,335)

0

0

21,066

(703,898) 688,563 21,066

(703,898) 688,563 21,066

0

0

(733,027) 754,093

(733,027) 754,093

(24) (536) 512 0 0 0

(24) (536) 512 0 0 0

0

0

0

0

5,707

5,707

0

0

(24)

0

- in flows - out flows Total booked value

5,707

March 31, 2016 (â‚Ź thousands)

Carrying value

Contractual Contractual Contractua Contractua Cash Flows Cash Flows l Cash l Cash less than 1 Flows Flows year between 1 exceeding and 5 5 years years

Assets (-) / Liabilities (+) Assets from fair-value valuation on forward contracts on currencies - in flows - out flows Liabilities from fair-value valuation on forward contracts on currencies - in flows - out flows Assets from fair-value valuation of commodities - in flows - out flows Liabilities from fair-value valuation of commodities - in flows

(41,621)

(41,621)

(41,621)

0

37,067

(972,145) 930,524 37,067

(972,145) 930,524 37,067

0

(614,128) 651,195

(614,128) 651,195

0 0 0 315 (1,437)

0 0 0 315 (1,437)

0

315

0

0

115


- out flows (4,239)

Total booked value

1,752

1,752

(4,239)

(4,239)

0

Please note the value of assets and liabilities shown in the tables above are provided for information only; indeed, the derivative contracts do not in fact lead to the actual outlay or collection of the stated amounts which, on the contrary, are subject to the settlement of the difference between the two outflows. Also note that to correctly assess the liquidity risk, it is necessary to bear in mind the financial assets held by the Group to offset the future cash flows arising from the aforementioned financial liabilities: a) cash and cash equivalents for Euro 43,258 thousand and Euro 67,398 thousand respectively as of March 31, 2017 and as of March 31, 2016; b) trade receivables for Euro 487,611 thousand and Euro 423,924 thousand respectively as of March 31, 2017 and as of March 31, 2016. Foreign currency risk The Group incurs foreign currency risk on contract revenues and purchases and on borrowings and loans denominated in a currency other than Euro. The foreign currencies giving rise this risk are primarily United State dollars, British pounds, Singapore dollars and Hong Kong dollars. Generally the contracts are hedged for the total amount denominated in foreign currency or for a percentage higher than 90%; see paragraph “g” for a detailed description of the way used by the Group to hedge its job contracts in foreign currency. In respect to monetary assets and liabilities held in foreign currency other that those related to the contracts, the Group’s policy consists in minimizing the net exposure to change in currency rates by specific medium/short-term forward exchange contracts, rolled over at maturity if necessary. A 10% decrease of the Euro against the following currencies as of March 31, 2017 would have led to the following increase (decrease) of the results for the period and the net equity. The analysis has been performed considering that all the other variables, more specifically the interest rates, had remained constant. The analysis was performed on the same basis compared to the previous period.

(€ thousands)

Result for the period

Net equity

March 31, 2017

GBP USD HKD SGD THB AUD QAR Others

(30) 1,556 (360) (999) 98 10 (2) 123 396

(30) 1,556 (360) (999) 98 10 (2) 123 396

116


(€ thousands)

Result for the period

Net equity

March 31, 2016

GBP USD HKD SGD THB AUD QAR Others

(1,547) (1,002) (97) (1,067) (17) (1) (1) 372 (3,360)

(1,547) (1,002) (97) (1,067) (17) (1) (1) 372 (3,360)

A 10% increase of the Euro against the following currencies as of March 31, 2017 and as of March 31, 2016 would have led to the same but opposite effect, again supposing that all other variables had remained constant. Please note that the analysis did not take into account receivables, payables and future trade flows against which the hedging operations were performed. It is reasonable to believe that the variation of the exchange rates may lead to an opposite financial effect for this item, for a same or higher amount, on the hedged transactions. Commodities price risk The Group has a price risk exposure, including the relevant foreign exchange risk, particularly on aluminum purchases, which are one of the main work order cost items for the Group. As far as managing the aluminum price risk is concerned, the Group’s policy is oriented towards minimizing the need to resort to financial markets for hedging, by conducting relations with the suppliers in order to fix the price for specific time frames. However, in the past the rather swinging trend of the aluminum price has encouraged the Group to launch a limited and selective aluminum price hedging policy for a few specific orders, where freezing the price with the supplier, for the whole period of the order, was merely impossible or not immediate in any case. For a detailed description of the Group’s practices of commodity hedging management on its own orders, please refer to paragraph “g” of accounting principles.

40. Fair value measurement There are no financial assets or liabilities whose fair value significantly differs from their carrying amount. IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement. Levels used in the hierarchy are as follows: -

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets and liabilities.

Assets and liabilities that are measured at fair value on a recurring basis: The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2017:

117


(€ thousands) Equity investments in not consolidated subsidiaries Assets at fair value available for sale or held to maturity Financial assets at fair value through profit or loss Cash and cash equivalents

Notes (17)

Level 1

(26) (27)

Total assets Financial liabilities at fair value through profit or loss Amounts payables to banks and other financial creditors

Level 3

15,359 43,258 0

(37) (30)

Total liabilities

Level 2

58,617

15,359 43,258 0

21,066 425,328 0

446,394

Total

58,617 21,066 425,328

0

446,394

In the reporting period April 1, 2016 – March 31, 2017, there were no transfers between levels in the fair value hierarchy. Assets and liabilities not measured at fair value on recurring basis: The carrying amount of Current receivables and Other current assets and of Trade payables and Other current liabilities approximates their fair value and are categorized in Level 2. The main methods and assumptions used to estimate the “fair value” of the assets and liabilities recorded in the statement of financial position according to this principle or for which its disclosure is requested by the accounting principles in the notes, are as follows: Not consolidated subsidiaries As of March 31, 2017, the Group does not hold investments in non consolidated subsidiaries. Securities The Group presently does not hold significant amounts of securities held for trading or available for sale or held until their maturity. Cash and cash equivalents The carrying amount of Cash and cash equivalents usually approximates the fair value due to the short maturity of these instruments, which consist primarily of bank current accounts and time deposits. The fair value of Cash equivalents is determined with discounted expected cash flow techniques, using observable market yields. Derivative contracts They are evaluated using listed market prices. Amounts payables to banks and other financial institutions The fair value is calculated based on discounting of future cash flows with reference to principal and interest amounts. Financial leases As described in note 30, the Group does not hold significant liabilities for financial leases. Trade receivables and payables and other receivables and payables Receivables and payables with expiring date less than one year, their carrying amount is considered to approximate their fair value. All the other receivables and payables with expiring date greater than one year are discounted to determine their fair value, except for those related to contracts monies retention; the Groups considers that retentions do not represent in any way a financing transaction with the customer due to the fact that the payments terms are beyond one year, as retentions, in the different geographical areas in which the Group operates, are within the normal applied trade conditions; consequently there is no necessity to apply any discounting. As of March 31, 2017 the Group considers that there are not retentions out of normal market conditions. 118


41. Commitments At the balance sheet date, the Group has the followings commitments:

Operating leases (€ thousands)

Payable: less than 1 year within 1 to 5 years after 5 years

March 31, 2017

March 31, 2016

13,808 26,399 4,528 44,735

17,100 20,340 6,852 44,292

The Group leases a number of production sites, offices, warehouse and factory facilities under operating leases. The leases have variable length, some of them with an option to renew the lease after the expiry date. Usually lease payments are periodically increased to reflect market rental conditions. Forward contracts (€ thousands)

March 31, 2017

March 31, 2016

Commitments for forward foreign exchange contracts Commitments for forward contracts on commodities

1,445,003 512 1,445,515

1,649,484 1,752 1,651,236

Commitments for forward foreign exchange contracts (buy) Commitments for forward foreign exchange contracts (sell)

532,633 912,370 1,445,003

690,757 958,727 1,649,484

512 0 512

1,752 0 1,752

Commitments for forward contracts on commodities (buy) Commitments for forward contracts on commodities (sell)

As described in the section on the accounting standards, hedging derivative transactions on foreign currency and commodities are assessed on their “fair value”. As of March 31, 2017, the assessment of the “fair value” of currency hedging brought to the entry of profit for Euro 15,335 thousand (March 2016: Euro 41,621 thousand) and loss for Euro 21,066 thousand (March 2016: Euro 37,067 thousand), booked respectively under the items forward assets (note 26) and forward liabilities (note 37). Note that these amounts refer respectively for Euro 2,605 thousand (March 2016: Euro 16,670 thousand) and Euro 4,536 thousand (March 2016: Euro 18,070 thousand) to the valuation of financial currency hedging transactions, namely those covering foreign currency assets and liabilities of financial nature. On the same date, the “fair value” valuation of hedging transactions on commodities brought to the entry of profit for Euro 24 thousands (March 2016: Euro 0 thousand) and loss for Euro 0 thousands (March 2016: Euro 315 thousand), entered respectively under the items forward assets (note 26) and forward liabilities (note 37). Other commitments As of March 31, 2017 the Group has no other significant commitments to highlight.

42. Contingent assets and liabilities The principle liabilities for third parties issued by the group are listed below: •

Guarantees for works: for the value of Euro 1,257.8 million (Euro 1,118.7 million as of March 31, 2016) and issued by Credit Institutes and Insurance Companies to clients for the proper completion of works 119


(Euro 904,8 million), contractual advances (Euro 304,2 million) and retentions withheld as guarantee (Euro 48,8 million). •

Guarantees issued following VAT repayment requests issued by Credit Institutions and Insurance Companies: for the value of Euro 16.3 million (Euro 19.5 million as of March 31, 2016).

Other guarantees for a total of Euro 8.4 million (Euro 8.9 million as of March 31, 2016) which include payment guarantees for values owed to third counterparties.

In respect of some guarantees issued to clients, companies of the Group benefit from guarantees given by suppliers and subcontractors for Euro 154.3 million as of March 31, 2017. It is also noted that in December 2016 Permasteelisa S.p.A was served a tax assessment for alleged omission of retention upon dividends distributed in 2011 to the parent company at that time. The Company, supported by its consultants, believes that there are strong legal arguments about the unlawfulness of said assessment and therefore the risk of losing the case is unlikely.

43. Transactions with related parties Relationships with not consolidated subsidiaries and associated companies During the reporting period April 1, 2016 – March 31, 2017, the Parent Company and other Group companies entered into relationships with non-consolidated subsidiaries. The economic effects are detailed in the below table, while for the balance sheet items please refer to Note 24 “amounts receivables from not consolidated subsidiaries” and Note 35 “trade payables to third parties”. These are commercial relationships made under normal business management, normally regulated by market conditions. Operating revenues with not consolidated subsidiaries and associated companies (€ thousands)

Mobil Project S.p.A. Consorzio Dyepower Total Total operating revenues

March 31, 2017

300 4 304

March 31,2016

0.0% 0.0% 0.0%

156 0 156

0.0% 0.0% 0.0%

1,286,482 100.0%

306,085

100.0%

There are no financial charges and income from not consolidated subsidiaries and associated companies. As evident from the amounts reported, the incidence of these transactions on the financial position and the Group's business is irrelevant in percentage terms.

120


Other relationships with other related parties in the context of the Permasteelisa Group The table below shows the operating and financial consequences of a number of relationships entered into during the period by Group companies with related parties, other than those described above. They refer to trade transactions entered into as part of the normal management and were administered as normal, at normal market conditions. Amounts are stated in units. Group Company

Transaction type

Related party

Local Revenue/(Cost) in Currency local currency As of March 31, 2017

Permasteelisa S.p.A.

Costs backcharge

Permasteelisa S.p.A.

Offices rental

Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA

Fees for administrative and accounts support

Permasteelisa Gartner Fees for sales support Middle East LLC (Abu Dhabi Branch)

Permasteelisa Gartner Fees for sales support Middle East LLC (Dubai Branch)

Permasteelisa Gartner Fees for sales support Middle East LLC and services

Permasteelisa Gartner Fees for VISA services Middle East LLC

N° 6 Manager of Permasteelisa S.p.A. Ugo e Olga Levi Onlus Foundation Cicero Augusto Oliveira De Alencar (Executive Officer of the associate Permasteelisa Do Brasil) by way of the company Acal Consultoria e Auditoria S/S

Receivable/(Payable) in local currency

Revenue/(Cost) in Euro

Receivable/(Paya ble) in Euro

As of March 31, 2017

As of March 31, 2017

As of March 31, 2017

EURO

9,042.35

3,671.71

9,042.35

3,671.71

EURO

(309,532.88)

(160,332.41)

(309,532.88)

(160,332.41)

BRL

(143,089.80)

(11,745.29)

(39,510.12)

(3,474.94)

The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links Group, AED holds the 51% of Permasteelisa Gartner Middle East Llc) The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links Group, AED holds the 51% of Permasteelisa Gartner Middle East Llc) The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links Group, AED holds the 51% of Permasteelisa Gartner Middle East Llc) The Links Group Ltd (Links AED Commercial Brokers LLC,

(88,200.00)

(21,894.83)

(33,075.00)

(8,210.56)

(275,000.00)

(68,266.18)

(29,815.00)

(7,401.30) 121


subsidiary of the Links Group, holds the 51% of Permasteelisa Gartner Middle East Llc) Permasteelisa Gartner Fees for sales support Qatar LLC

Permasteelisa Gartner Supply of Engineer- Sub Contract for Electrical & Qatar LLC Mechanical Systems

Links Commercial Brokers WLL (Shareholder of the Company at 51% Permasteelisa Gartner Qatar LLC) Sitie Impianti Gulf Contracting Co.(subsidiary of Sitie Group Impianti Industriali Spa, in which the Director lng. Nicola Greco is a Director and holds an indirect partecipation)

Permasteelisa Gartner Saudi Arabia LLC (1)

Supply and installation of Salini Impregilo Spa (company in "canopy" which Ing Nicola Greco is a Director)

Permasteelisa France Sas

Consultancy purchase

Marine Project Solutions Consorzio

Good purchases on behalf of Marine Project Solutions Consorzio, site hours and travelling expenses, mockup on Norway site.

MAGEC (company controlled by Etienne Gory, Permasteelisa France S.a.s. Board of Directors's Chairman) Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Legal Representative for the Marine Project Solutions Consorzio)

QAR

(209,633.00)

USD

SAR

(52,482.66)

(16,500.00)

(15,433.54)

23,907,399.35

1,360,495.35

5,808,864.73

339,335.22

EURO

(120,000.00)

(12,000.00)

(120,000.00)

(12,000.00)

EURO

(140,372.16)

(861,855.00)

(140,372.16)

(861,855.00)

5,817,907.08 (767,670.68)

343,006.93 (1,053,095.89)

revenue/receivable (cost)/(payable)

The highlighted costs and revenues do not significantly affect the total, respectively, of the Group's operating expenses and operating revenues; the same is valid for the highlighted receivables and payables with respect to the total trade receivables and payables of the Group. (1)

With reference to supply and installation of “canopy� related to a project in Riyad, the commitments as of March 31, 2017 amounted to SAR 31,427,496.00 equal to revenues for Euro 7,636,049.01 and receivables for Euro 7,838,656.96.

122


Transactions with key management personnel The key management personnel compensations, as defined by IAS 24, are as follows: (â‚Ź thousands)

March 31, 2017

March 31, 2016

6,165 251 297 6,713

1,684 37 47 1,768

March 31, 2017

March 31, 2016

2,768 1,582 2,363

680 542 546

6,713

1,768

Benefits for salaries, wages, compensations, bonus Post-employment benefits Other benefits

Total remuneration is included in personnel expenses and is as follows: (â‚Ź thousands)

General manager Chief executive officer and other members of the Board of Directors Holding function manager

44. Fees payable to the statutory auditors or audit firm of Group companies The amount of fees payable to the statutory auditors or audit firm of each Group company (Deloitte & Touche S.p.A. which is the main auditor and other local auditors) amounts to Euro 1,782 thousand of which Euro 1,425 thousand for audit services, Euro 203 thousand for tax services and Euro 154 thousand for other services. The fees of Statutory Auditors amount to Euro 248 thousand of which Euro 133 thousand for fees for the statutory audit, Euro 17 thousand for tax services, Euro 22 thousand for other services related to the J-SOX audit required by Shareholder and Euro 76 thousand for other consultancy fees.

45. Significant, non-recurring events and transactions There are no events or significant non-recurring transactions to mention.

46. Positions or transactions deriving from unconventional and/or unusual operations There are no entries or transactions resulting from unconventional or unusual operations during the year 2017 having any relevance on the operating performance and the financial position for the period of the Group and of the Parent company Permasteelisa S.p.A.

47. Subsequent events There are not subsequent events to mention.

123


PERMASTEELISA S.p.A.

Appendix to the Consolidated Financial Statements

124


Appendix I: Permasteelisa Group’s companies Following the list of companies and equity investments that are significant for the Group is reported. Companies are listed broken down by type of controlling relationship and consolidation method. For each company, information is also provided on its scope, headquarters, nation of origin and share capital in the original currency. The percentage of consolidation in the Group is also shown in addition to the percentage ownership held by Permasteelisa S.p.A. or other subsidiaries. List of subsidiaries consolidated using the line-by-line method:

COMPANY NAME

REGISTERED OFFICE

SHARE CAPITAL

CURRENCY

% OF CONSOLIDATION

OWNERSHIP

% OWNERSHIP REGISTRATION

100.00 Scheldebouw B.V.

100.00

Parent Company Vittorio Veneto (TV) Italy

6,900,000

Bleu Tech Montreal Inc.

Laval, Quebec (Canada)

100

CAD

Dongguan Permasteelisa Curtain Wall Co. Ltd. Global Architectural Co. Ltd. Global Wall Malaysia Sdn. Bhd.

Guang Dong (R.P.C.) Chonburi Province (Thailand) Kuala Lumpur (Malaysia)

20,387,460

CNY

110,000,000

THB

1,000,000

MYR

Josef Gartner & Co. UK Ltd.

Londra (UK)

20,000

GBP

10,000,000

CNY

22,000,000

CNY

25,000

MOP

Permasteelisa S.p.A.

EURO

Subsidiary companies

Josef Gartner Curtain Wall Shanghai (R.P.C.) (Shanghai) Co. Ltd. Josef Gartner Curtain Wall Taicang City (Suzhou) Co. Ltd. (R.P.C.) Josef Gartner (Macau) Ltd. Josef Gartner Switzerland AG Josef Gartner GmbH

Macao (R.P.C.) Arlesheim (Switzerland) Gundelfingen (Germany)

OOO Josef Gartner

San Pietroburgo (Russia)

Permasteelisa Colombia SAS

Bogotà (Colombia)

Permasteelisa Do Brasil Construção, Indústria, Comèrcio Ltda

San Paolo (Brazil)

Permasteelisa Espaňa S.A.U.

Madrid (Spain)

Permasteelisa France S.a.s.

Courbevoie (France)

Permasteelisa Gartner Middle East Llc Permasteelisa Gartner Qatar Llc

Dubai (United Arabian Emirates) Doha (Qatar)

Permasteelisa Gartner Saudi Arabia Llc

Riyadh (Saudi Arabia)

Permasteelisa Hong Kong

Hong Kong

100,000 10,000,000

Permasteelisa Pacific Holdings Ltd. Permasteelisa Pacific 99.52 Holdings Ltd. Permasteelisa Pacific 69.66 Holdings Ltd. 99.52

100.00 Josef Gartner GmbH Permasteelisa Pacific Holdings Ltd. Permasteelisa Pacific 99.52 Holdings Ltd. Permasteelisa Hong Kong Limited 99.52 Permasteelisa Pacific Holdings Ltd 74.64

100.00 99.99 70.00 100.00 75.00 100.00 96.00 4.00

CHF

100.00 Josef Gartner GmbH

100.00

EURO

100.00 Permasteelisa S.p.A.

100.00

Josef Gartner GmbH

99.00

4,000,000

RUB

100.00

100,000,000

COP

100.00 Permasteelisa S.p.A.

100.00

Permasteelisa S.p.A.

99.00

30,000

BRL

100.00

Permasteelisa North America Corp.

1.00

Josef Gartner Switzerland AG

1.00

174,290

EURO

100.00 Permasteelisa S.p.A.

100.00

1,644,336

EURO

100.00 Permasteelisa S.p.A.

100.00

300,000

AED

100.00 Josef Gartner GmbH

49.00 (*)

200,000

QAR

97.00 Josef Gartner GmbH

49.00 (**)

300,000

SAR

2,000,000

HKD

Permasteelisa Gartner Qatar Llc 100.00 Permasteelisa Gartner Middle East Llc 99.52 Permasteelisa Pacific

5.00 95.00 100.00

125


Limited Permasteelisa Ireland Ltd

(R.P.C.) Dublino (Ireland)

50,000

Permasteelisa (India) Private Limited

Bangalore (India)

1,999,999,900

Permasteelisa Japan K.K.

Permasteelisa Macau Limited Permasteelisa Mongolia Llc Permasteelisa North America Corp.

Tokyo (Japan)

165,000,000

Singapore

Permasteelisa Participations S.r.l.

Vittorio Veneto (Italy)

Permasteelisa Philippines Inc. Permasteelisa Projects (Thailand) Ltd

Pasig City (Philippines) Chonburi Province (Thailand)

Permasteelisa PTY Limited

Chipping Norton (Australia)

Permasteelisa S.p.A. Azerbaijan Branch Office

Baku (Republic of Azerbaijan)

130,000,000,00

MNT

30,132

USD

75,380,800 50,000

Permasteelisa Taiwan Ltd. Taipei (Taiwan) Permasteelisa Turkey İnşaat Tіcaret Limited Şirketi

Smirne (Turkey)

Permasteelisa UK Ltd.

Londra (UK)

RI.ISA d.o.o.

Rijeka (Croatia)

JPY

MOP

Windsor (USA)

Permasteelisa Pacific Holdings Ltd.

INR

100,000

Macao (R.P.C.)

Ulaanbaatar (Mongolia)

EURO

SGD EURO

Holdings Ltd. 100.00 Permasteelisa S.p.A. Permasteelisa Pacific Holdings Ltd. 99.40 Permasteelisa Hong Kong Limited Permasteelisa Pacific Holdings Ltd. 99.52 Permasteelisa PTY Ltd. Permasteelisa Hong Kong Limited 99.52 Permasteelisa Pacific Holdings Ltd Permasteelisa Pacific 99.52 Holdings Ltd

0.01 99.80 0.20 99.00

1.00 100.00

100.00 Permasteelisa S.p.A.

100.00

Permasteelisa S.p.A.

54.25

Josef Gartner GmbH 100 Permasteelisa S.p.A.

45.27 99.00

99.52

Permasteelisa North America Corp. Permasteelisa Pacific 99.51 Holdings Ltd Global Architectural 48.76 Co. Ltd Permasteelisa Pacific Holdings Ltd. 99.52 Permasteelisa Hong Kong Limited

10,200,000

PHP

4,000,000

THB

15,434,956

AUD

N/A

AZN

42,600,000

TWD

99.51

22,275

TRY

100.00

3,510,000 55,200

Middelburg Scheldebouw B.V. 3,040,326 (Holland) Middelburg Scheldebouw UK Ltd. 1,000 (Holland) (*) 100% in terms of the right to the sharing of profit and of losses

100.00 99.87

1.00 99.99 48.998 54.17 45.83

100.00 Permasteelisa S.p.A

100.00

Permasteelisa Hong Kong Limited

99.99

Permasteelisa S.p.A.

100.00

GBP

100.00 Permasteelisa S.p.A.

100.00

HRK

98.55 Pemasteelisa S.p.A.

98.55

EURO

100.00 Permasteelisa S.p.A.

100.00

100.00 Scheldebouw B.V.

100.00

GBP

(**) 97% in terms of the right to the sharing of profit and of losses

List of jointly controlled subsidiaries: COMPANY NAME

REGISTERED OFFICE

Cladding Technology Italia (CTI) – winding up

Milano (Italy)

Marine Project Solutions (Consorzio)

Vittorio Veneto (Italy)

SHARE CAPITAL

CURRENCY

% OF CONSOLIDATION

OWNERSHIP

% OWNERSHIP REGISTRATION

N/A (***)

EURO

- Permasteelisa S.p.A.

50.00

N/A (****)

EURO

100.00 Permasteelisa S.p.A.

55.50

(***)The Consortium Capital Fund amounts to Euro 50,000 (****)The Consortium Capital Fund amounts to Euro 200,000

126


Considering the not relevant impact as of March 31, 2016 and as of March 31, 2017, the Group's investment in the consortium Cladding Technology Italia (CTI) was entered into the financial statements under the item other equity investments for Euro 25 thousand. List of associated companies: COMPANY NAME

REGISTERED OFFICE

Mobil Project S.p.A.

San Vendemiano (Italy)

SHARE CURRENCY CAPITAL 500,000

EURO

OWNERSHIP

Permasteelisa Partecipations S.r.l.

% OF REGISTRATION 20.00

List of other subsidiaries in more than 10% measure: COMPANY NAME

REGISTERED OFFICE

Interoxyd AG Dyepower Consorzio – winding up

Altenrhein (Switzerland) Roma (Italy)

SHARE CURRENCY CAPITAL 50,000 N/A (****)

CHF EURO

OWNERSHIP

Scheldebouw B.V. Permasteelisa S.p.A.

% OF REGISTRATION

18.00 49.90

(****)The Consortium Capital Fund amounts to Euro 1,506,481

The Dyepower Consorzio is a non-profit association of companies aiming at promoting, planning and implementing of research & development activities in organic/hybrid photovoltaics, particularly concerning solar cells dye-sensitized on glass or other rigid, non-metallic products. It can also provide services for its associate members in the development, assessment and implementation of research projects in photovoltaics, both within the national territory and in an international context. Please note that: - As of May 5, 2016 the Marine Project Solutions Consorzio has been established; it was initially held by Permasteelisa S.p.A. for 51% then, starting from July 6, 2016, the percentage has been increased to 55.5% due to the withdrawal of one of the consortium member. - The subsidiary Unifront B.V. has been deleted as of August 01, 2016. - As of October 27, 2016, Permasteelisa Colombia S.a.s. has been established in BogotĂ , Colombia. - As of March 29, 2017, the Shareholders' Meeting of the Marine Project Solutions Consortium decided for the transformation of the consortium into a limited liability company, with a share capital of 500,000 Euro. This transformation is not effective at the closing date of the financial statements in comment.

127


PERMASTEELISA S.p.A.

128


Permasteelisa S.p.A.

Statutory Financial Statements as of March 31, 2017

129


Income Statement as of March 31, 2017 Notes

March 31, 2017

March 31, 2016

126,348,444 750,614 127,099,058

29,545,453 244,224 29,789,677

(42,881,382) (52,397,880) (53,995,110) (5,419,186) (1,172,342) (3,251,602) (335,373) 30,344,979 2,572 (129,105,324)

(14,643,271) (15,276,283) (13,055,522) (1,357,258) (195,233) 22,208 (125,697) 8,477,735 0 (36,153,321)

(2,006,266)

(6,363,644)

120,671,987 (105,614,357) 15,057,630

18,017,311 (24,426,062) (6,408,751)

1,000,000 (4,000,000) 10,051,364 (2,923,094) 7,128,270

0 (626,033) (13,398,428) (1,050,740) (14,449,168)

In Euro

Revenues Other operating incomes Total operating revenues Raw materials and consumables used Services expenses and use of third party assets Personnel expenses Depreciation, amortization and impairment losses Bad debts provision Provision for risks and charges Other operating expenses Costs Recovery In-house enhancement of fixed assets Total operating expenses

4 1

5 5 6 7 8 9 10

Operating result

Financial incomes Financial expenses Net financial expenses Revaluation of equity investments Write-downs of equity investments Profit/(loss) before tax Income tax expenses Profit/(loss) after tax

11

12 13

14

130


Statement of Comprehensive Income as of March 31, 2017 March 31, 2017

March 31, 2016

7,128,270

(14,449,168)

(228,612)

558,019

316,404

167,196

87,792

725,215

Gains/(losses) on actuarial evaluation

(23,162)

0

Total comprehensive income/(loss) that will never be reclassified to Income Statement

(23,162)

0

64,630

725,215

7,192,900

(13,723,953)

In Euro

Profit/(loss) of the period (A)

Items that may be reclassified to Income Statement: Hedging reserves for risks variation, net of tax Gains / (losses) from the translation of the Branch Total comprehensive income/(loss) that may be reclassified to Income Statement

Items that will never be reclassified to Income Statement:

Total Other comprehensive income, net of tax (B) Total Comprehensive income/(loss) (A)+(B)

131


Statement of Financial Position as of March 31, 2017 In Euro

Assets Intangible assets Tangibles assets Equity investments in subsidiaries Other equity investments Deferred tax assets Total non-current assets Contracts work-in-progress and inventories Trade receivables from third parties Trade receivables from subsidiaries Financial receivables from subsidiaries Income tax receivables Other current assets Cash and cash equivalents Assets held for sale Total current assets

Notes

15 16 17 18 19

20 21 22 22 23 24 25 26

Total assets Equity Share capital Legal reserve IAS 19 Reserve Translation reserve Foreign Exchange Risk Hedging Reserve Other reserves Retained earnings Profit/(loss) for the period Total equity Liabilities Amounts payable to banks and other financial creditors Severance indemnity fund Deferred tax liabilities Provisions for risks and charges Total non-current liabilities Amounts payable to banks and other financial creditors Excess of progress billings over work-in-progress Advances from customers Trade payables to third parties Trade payables to subsidiaries Financial payables to subsidiaries Current tax liabilities Other current liabilities Total current liabilities Total equity and liabilities

27 27 27 27 27 27 27 27

28 29 19 30

28 20 20 31 32 32 33 34

March 31, 2017

March 31, 2016

12,521,517 24,599,620 282,686,835 1,097,180 12,695,869 333,601,021 52,388,836 35,353,485 87,931,935 284,786,117 3,747,376 15,856,736 4,819,866 0 484,884,351

11,281,942 26,970,153 232,411,976 808,071 11,981,281 283,453,423 73,636,864 32,660,848 65,454,815 290,201,973 2,397,076 33,927,109 20,056,237 53,133,050 571,467,972

818,485,372

854,921,395

6,900,000 1,380,000 (404,877) 2,912,988 (443,681) 163,999,280 (12,289,344) 7,128,270 169,182,636

6,900,000 1,380,000 (381,716) 2,596,260 (214,720) 163,999,280 2,159,823 (14,449,168) 161,989,759

205,036,595 3,452,323 6,058,876 3,804,636 218,352,430 218,585,496 3,329,153 11,850,477 36,753,735 14,604,609 128,363,951 0 17,462,885 430,950,306 818,485,372

217,452,180 3,451,664 5,997,975 3,553,034 230,454,853 172,709,582 3,889,471 6,231,206 59,111,683 5,120,307 183,464,265 0 31,950,269 462,476,783 854,921,395

132


Statement of cash flows as of March 31, 2017 (â‚Ź thousands)

March 31, 2017

March 31, 2016

10,051

(13,398)

(4,099) 4,982 5,419 (20) 3,252 1,172 3,000 (110) 110 13,706

(884) 1,404 1,357 (8) (22) 195 626 0 0 2,668

(229) (23) 23,307 (26,223) (12,993) 210 (1,445) (5,091) 4,083 335 (18,069)

558 0 2,926 1,203 27,220 (11,129) 0 (1,182) 884 166 20,646

5,688

9,916

Cash flows generated (absorbed) by investing activities Net investment in tangible and intangible assets Proceeds from disposal of tangible and intangible assets Changes in subsidiaries equity investments Changes in other equity investments Net cash flows absorbed by investing activities (B)

(4,300) 31 (142) (289) (4,700)

(3,469) 0 0 0 (3,469)

Cash flows generated (absorbed) by financing activities Change in intercompany current accounts

(49,684)4)

Cash flows generated (absorbed) by operating activities

Result before tax Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Interest income - Interest expense - Depreciation and amortization expenses and impairment losses - Gain/loss on disposal of tangible and intangible assets - Provision for risks and charge - Bad debts provision - Equity investments write-downs/(revaluations) - Severance indemnity fund payments to employees - Severance indemnity fund expenses Total adjustments Changes in operating activities: - Changes in foreign exchange risk hedging reserve - Changes in IAS19 reserve - Changes in the other captions of working capital (1) - Changes in trade receivables/payables to third parties - Changes in trade receivables/payables to subsidiaries - Changes in other captions of operating capital (2) - Income tax paid - Interests paid - Interest received - Effect of exchange rate changes on operating activities cash flows Total changes Net cash flows generated by operating activities (A)

(14,600)

Net cash flows absorbed by financing activities (C)

(49,684)

(14,600)

Net increase/(decrease) in cash surplus/(deficit) (A+B+C)

(48,696)

(8,153)

(370,106) 0

(361,953) 0

Net cash surplus/(deficit) as of April 1 (D) Effect of exchange rate changes on balances held in foreign currency (E)

133


Net cash surplus/(deficit) as of March 31 (A+B+C+D+E)

Net cash surplus/(deficit) includes: Bank and post current accounts and deposits Cash in hand Bank overdrafts and other short-term loans Shareholder’s loan

(1)

(418,802)

(370,106)

4,815 5 (168,529) (255,093) (418,802)

20,049 7 (130,025) (260,137) (370,106)

The other captions of working capital refer to the following captions included in the statement of financial position of the Company: trade

receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies. (2)

The other captions of operating capital refer to the following captions included in the statement of financial position of the Company: income

tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provision for risks and charges.

134


Statement of Net Equity Changes For the year ended March 31, 2016 Share capital

Legal reserve

6,900

1,380

Share Revalutation premium reserve

Merger surplus reserve

Other merger reserve

IAS conversion reserve (not available)

Other IAS conversion reserve

Translation reserve

Foreign exchange risk hedging reserve

Commodities risk hedging reserve

IAS 19 Reserve

Other reserves

Retained earnings

Net equity

4

163,785

312

(103)

2,430

(773)

0

(381)

1

2,159

175,714

(â‚Ź thousands) Balance as of January 1, 2016

0

0

Income (expenses) recognized directly in equity: Translation differences

167

167

Foreign exchange risk hedging reserve variation Commodities risk hedging reserve variation Interest rate risk hedging reserve variation Changes in IAS 19 Reserve

558

0

0

0

0

0

0

0

0

167

558

558

0

0

0

Net result for the period Total Income (expenses) for the period Transactions with Shareholder: Destination of operating result

0

0

0

0

0

Other changes Altre variazioni

0

0

0

167

558

0

0

0

0

725

(14,449)

(14,449)

(14,449)

(13,724)

(4)

4

0

Dividends

Rounding

Balance as of March 31, 2016

0

0

0

0

0

4

0

0

0

0

0

0

(4)

0

0

6,900

1,380

0

0

4

163,789

312

(103)

2,597

(215)

0

(381)

(3)

(12,290)

161,990

135


As of March 31, 2017 Share capital

Legal reserve

Share premium

Revalutation reserve

Merger surplus reserve

Other merger reserve

IAS conversion reserve (not available)

Other IAS conversion reserve

Translation reserve

Foreign exchange risk hedging reserve

Commodities risk hedging reserve

IAS 19 Reserve

Other reserves

Retained earnings

Net equity

6,900

1,380

0

0

4

163,789

312

(103)

2,597

(215)

0

(381)

(3)

(12,290)

161,990

(â‚Ź thousands) Balance as of April 1, 2016 Income (expenses) recognized directly in equity: Translation differences

316

Foreign exchange risk hedging reserve variation Commodities risk hedging reserve variation Interest rate risk hedging reserve variation Changes in IAS 19 Reserve

316 (229)

(229)

(23) 0

0

0

0

0

0

0

0

316

(229)

0

(23)

(23) 0

Net result for the period Total Income (expenses) for the period Transactions with Shareholder: Destination of operating result

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

6,900

1,380

0

0

4

163,789

312

(103)

316

(23)

0

0

64

7,129

7,129

7,129

7,193

(229)

0

0

0

0

0

0

0

0

2,913

(444)

0

(404)

(3)

(5,161)

169,183

Other changes

Dividends Rounding

Balance as of March 31, 2017

136


Notes to the Statutory Financial Statements Company’s information Permasteelisa S.p.A. (hereinafter referred to as the “Company”) is a company domiciled in Italy that operates internationally both directly and indirectly through its subsidiaries in the field of the design, production and installation of architectural components (curtain walls, partition walls and doors) and interior design. The Statutory Financial Statements of the Permasteelisa S.p.A. have been drawn up in Euro, which is the currency of the economic area in which the Company operates. Permasteelisa S.p.A., as Parent Company, has also prepared the Consolidated Financial Statements of Permasteelisa Group as of March 31, 2017. These financial statements are subject to audit by Deloitte & Touche S.p.A.

Financial tables The tables provided for the statement of financial position, the income statement, the statement of cash flows and of net equity changes used for the period closed as of March 31, 2017 are the same as those used for the Consolidated Financial Statements as of March 31, 2016. The statement of financial position, the income statement, the statement of cash flows and of net equity changes used for the period closed as of March 31, 2017 are characterised as follows:

Statement of financial position The methods whereby assets and liabilities are broken down into “current and non-current” were adopted, with separate indication of assets and liabilities held for sale, if any. The current assets include assets (such as inventories, assets for contracts work-in-progress and trade receivables) that are sold, consumed or realised as part of the normal operating cycle, even when they are not expected to be realised within 12 months after the balance sheet date. Some current liabilities, such as trade payables and some accruals for employees and other operating costs, are part of the working capital used in the normal operating cycle. Such operating items are classified as current liabilities even if they are due to be settled more than 12 months after the balance sheet date.

Income statement The adopted method breaks costs down based on their nature.

Statement of cash flows The indirect method was employed.

Statement of net equity changes The statement that shows all the changes of the net equity was adopted.

Accounting principles (a) Statement of compliance The Statutory Financial Statements as of March 31, 2017 represent the separate financial statements of the Parent Company Permasteelisa S.p.A. and have been prepared according to IFRS International Accounting Standards issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union. IFRS is understood to include also the International Accounting Standards (“IAS”) that are currently in force in addition to the interpretations made available by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”). 137


According to the European Regulation n. 1606 dated 19 July 2002, the Company adopted the International Accounting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) for the preparation of the separate financial statements and for the preparation of the Consolidated Financial Statements too. These Statutory Financial Statements were prepared in accordance with the accounting standards described in the paragraphs below, namely the same standards that were used to prepare the Statutory Financial Statements as of March 31, 2016. (b) Basis of preparation The financial statements are presented in Euro on the historical cost basis except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, financial instruments held for trading, financial instruments classified as available-for-sale. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The accounting principles exposed in the following paragraphs have been consistently applied for all the periods included in this Statutory Financial Statements. (c) Basis of conversion of foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on this translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Euro at foreign exchange rates ruling at the dates the fair value was determined. The exchange rates used for the closing as of March 31, 2017, and the comparative exchange rates of the previous year March 31, 2016, are as follows: March 31, 2017 Currency

Thai Bath Danish Krone Norwegian Krone Dubai Dirham Australian Dollar Canadian Dollar Hong Kong Dollar Singapore Dollar Taiwan Dollar United States Dollar Hungarian Forint Swiss Franc

March 31, 2016

Exchange rate at the balance sheet date

Average exchange rate of the year

Exchange rate at the balance sheet date

Average exchange rate of the year

36.724000 7.437900 9.168300 3.924666 1.398200 1.426500 8.307400 1.494000 32.459852 1.069100 307.620000 1.069600

38.568788 7.439046 9.156729 4.028349 1.457498 1.439896 8.514244 1.518078 34.842052 1.097343 310.709743 1.083519

40.018000 7.451200 9.414500 4.179434 1.480700 1.473800 8.828200 1.530400 36.599617 1.138500 314.120000 1.093100

39.281524 7.460532 9.527591 4.044496 1.529612 1.515370 8.566471 1.546796 36.495872 1.101746 312.066095 1.095957

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Croatian Kuna Pataca Macau Philippine Peso Chinese Renminbi Malayan Ringitt Riyal Qatar Riyal Saudi Arabia Russian Ruble Indian Rupia Israeli Shekel Pound Sterling Korean Won Japanese Yen Polish Zloty Manat Azerbaigian Mongol Tugrik Turkish Lira Vietnam Dong Brazil Real Colombian Pesos

7.446500 8.556711 53.658000 7.364200 4.731300 3.891524 4.009296 60.313000 69.396500 3.885300 0.855530 1,194.540000 119.550000 4.226500 1.843556 2,616.568795 3.889400 24,329.160080 3.380000 3,088.452043

7.496835 8.770815 52.840309 7.380853 4.611466 3.994329 4.115675 69.234071 73.578130 4.166112 0.841310 1,260.343587 118.807507 4.352367 1.801443 2,472.955659 3.515119 24,636.203495 3.621599 3,258.68432

7.525500 9.094110 52.284000 7.351400 4.40780 4.144140 4.269899 76.305100 75.429800 4.295000 0.791550 1,294.8800 127.900000 4.257600 1.755681

7.617670 8.825574 52.063875 7.209027 4.624657 4.010340 4.132627 82.473010 74.407533 4.305515 0.770124 1,324.07281 127.018413 4.365849 1.746953

2,332.672650 3.211800 25,382.857500 4.117400 N/A

2,230.319811 3.247422 24,618.478200 4.305610 N/A

(d) Derivative financial instruments The Company uses derivative financial instruments (generally forward exchange contracts and swaps) only to hedge its exposure to foreign currency risk, to commodities risk and interest risk coming from its operating and financial activities. According to its treasury policy, the Company does not hold or issue derivative financial instruments for trading purposes. Anyway, derivative financial instruments for which the criterion to record the operations as hedging operations are not respected, are recorded as trading instruments. Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss account. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see the accounting policy described in “e�). The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price. (e) Hedging (i) Cash flow hedging (foreign currency risk) The Company uses derivative financial instruments to hedge its exposure to foreign currency risk coming from its operating and financial activities. In particular, the Company uses derivative financial instruments to hedge the foreign currency risk related to the contracts work-in-progress cash flows. When the Company acquires a job whose future cash flows are denominated in foreign currency, specific forward exchange contracts or swaps on foreign currency are concluded to hedge the foreign currency risk existing on those future cash flows; therefore these hedging operations are related to highly probable future transactions as the job that is hedged is effectively acquired when the hedging contract or contracts are concluded. Considering the length of the Company contracts, the estimation of the timing of the future cash flows is very difficult and subject to changes that can be also relevant; as a consequence, the Company policy consists in making an initial hedging of future cash flows based on a rough estimation of the future cash flows timing and subsequently in:

139


-

rolling over the forward exchange contracts or swaps on foreign currency if at the expiry date the correspondent cash flows related to the job does not occur; concluding another forward exchange contract or swap on foreign currency, of opposite sign and same expiry date of the existing hedging contracts, if the cash flow related to the job occurs in advance with respect to the expiry date of the existing hedging contracts.

The gains and losses deriving from the roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement; they are included in the operating revenues or operating expenses if related to hedging operations of job contracts cash flows. The ineffective part of any gain or loss is recognised immediately in the income statement. The Company does not measure the prospective effectiveness of its hedging operations as, on the basis of the method used for hedging the future cash flows related to contracts work-in-progress in foreign currency, the Company considers that it is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of a forward exchange contract or swap on foreign currency are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur. If the hedged transaction is no longer expected to take place, the cumulative unrealised gains or losses recognised in equity are recognised immediately in the income statement as financial components. Finally, according to the Company policy the foreign currency risk hedging is made on the spot rate; as a consequence, the difference between spot rate and forward rate recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on foreign currency, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such. (ii) Hedge of monetary assets and liabilities The Company uses derivative financial instruments also to hedge economically the foreign exchange exposure of a recognised monetary asset or liability as the loans in foreign currency; in this case no hedge accounting is applied and any gain or loss on the hedging instrument is recognised directly in the income statement. (iii) Cash flow hedging (Commodities Risk) The Company uses derivative financial instruments also to hedge price risk on commodities coming from its operating activities. In particular, the Company uses derivative financial instruments to hedge the price risk related to aluminium purchase for the contracts work-in-progress. When the Company acquires a job whose future cash flows are related to aluminium purchase, specific forward contracts or future on alluminium are concluded to hedge the price risk existing on this commodity; therefore these hedging operations are related to highly probable future transactions as the job that is hedged, with regard to the aluminium purchase, is effectively acquired when the hedging contract or contracts are concluded. In consideration of the variability of the price of aluminium, the aim of hedging is to freeze this price already since the acquisition of the order itself; subsequently, as the aluminium order, as well as the relevant price are agreed with the supplier, the Company shall complete the aluminium forward purchase by completing a transaction of opposite sign. If, upon expiry of the transaction, the order has not been defined yet for the supplier, the hedging contract(s) shall be rolled over. The gains and losses deriving from the regulation of the operations on maturity, including the effect of the possible roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement (arrival of the goods); they are included in the operating expenses.

140


The ineffective part of any profit or loss is recognised immediately in the income statement as financial components. The Company does not measure the prospective effectiveness of its hedging operations as, on the basis of the method used for hedging of the price risk on the future cash flows payments related to aluminium purchases on contracts work-in-progress, the Company considers that it is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of an hedging contract by operation of the opposite sign when the order to the supplier is fixed are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur. If the hedged transaction is no longer expected to take place, the losses or profits on the accumulated price difference recognized in equity are recognized immediately in the income statement as financial components. Finally, according to the Company policy the price risk on commodities is made on the spot price; as a consequence, the difference between spot price and forward price recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on commodities, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such. (f) Tangible assets (i) Owned tangible assets Items of property, plant and equipment are stated at cost less accumulated depreciation (depreciation criteria are reported below) and impairment losses (see accounting policy “n”). The cost of self-constructed assets includes the cost of materials, direct labour, and the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment according to the “component approach”. (ii) Subsequent costs The Company recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred. (iii) Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation is applied from the date the tangible assets are available for use. Land is not depreciated. The estimated useful lives are as follows: -

buildings plant and machinery equipment other assets

33 years 7-25 years 4-5 years 4-8 years

The useful lives and the residual value, if significant, are annually revised. (g) Intangible assets (i) Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

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Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Company has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “n”). (ii) Other intangible assets Other intangible assets that are acquired by the Company are stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “n”). Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred. (iii) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as income statement when incurred. (iv) Amortization Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and intangible assets not yet available to be used are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: -

rights to use intellectual property (software) capitalised development costs customer relationship

3-5 years 5 years 20 years

(h) Investments in subsidiaries and associate companies Investments in subsidiaries and associate companies are stated at cost adjusted for any impairment losses. Any positive difference, arising on acquisition, between the purchase cost and the fair value of net assets acquired by the Company in the investee company is, accordingly, included in the carrying amount of the investment. Investments in subsidiaries and associate companies are tested annually, or more often if necessary, for impairment. Where evidence of impairment exists, an impairment loss is recognized directly in the income statement as devaluation. If the company’s share of losses of the investee exceeds the carrying amount of the investment and if the company has an obligation or intention to cover these losses, the value of the investment is reduced to zero and the share of additional losses is recognized as a provision in the liabilities. If the impairment loss subsequently no longer exists or is reduced, a reversal is recognized in the income statement up to the limit of the cost of the investment. (i)

Trade receivables to third parties

Trade receivables are recognised initially at fair value and subsequently recorded at the amortised cost, using the effective interest method, net of impairment losses related to amounts considered recoverable, recorded as provision. The estimation of the recoverable amounts is based on future expected cash flows. Trade receivables, whose expiry date is within ordinary trade terms, are not discounted.

142


(j)

Contracts work-in-progress

Contracts work-in-progress are reported in accordance with the progress stage (or completion percentage) of the works, according to which the costs, revenues, and margin are recognised based on the progress of the productive activity. The policy adopted by the Company is the completion percentage determined by applying the “incurred cost� (cost to cost) criterion. The valuation reflects the best estimate of the contracts made as at the reporting date. Periodically, the assumptions underlying the evaluations are updated. Any economic effect is recorded in the year in which the updates have been made. The contract revenues include the payments agreed upon by contract, work changes, price revision, incentives, and any claims, to the extent that these are likely to be reliably valuated. In particular, the valuation of claims was guided, based on certain technical and legal analysis, towards the positive results that could reasonably be achieved from disputes with the customers. The contracts costs include all the costs that refer directly to the project, the costs that may be attributed to the contract activity in general and that may be allocated to the said project, in addition to any other costs that may be specifically charged to the customer based on the contractual clauses. The contract costs also include the pre-operative costs, which is to say the costs incurred in the initial phase of the contract before the construction activity is began (costs or preparing, tenders, design costs, costs for organization and start-up of production, construction site installation costs) and the post-operative costs that are incurred after the contract is closed (removal of the construction site, return of plant/equipment to base, etc.). Should the completion of a project be forecast to lead to a loss, this shall be recognised in its entirety in the year in which it may be reasonably expected. The contracts in progress are set out net of any depreciation fund and/or final losses, as well as the progress billings for the contract being carried out. This analysis is carried out on a contract by contract basis: should the difference be positive (due to contracts in progress greater than the amounts of the progress billings), it is classified among the assets (contracts work-inprogress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-in-progress). Should the final losses fund for the individual contract exceed the value of the work entered in the assets, this excess is classified under the provision for risks and charges. Contracts with payment denominated in foreign currency other than the functional currency (Euro for the Company) are valuated by converting the accrued share of payments determined based on the completion percentage method, at the exchange rate ruling at the reporting date for the portion not yet invoiced, and at the exchange rate ruling at the transaction date for the portion already invoiced. (k) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost determining method is the weighted average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and works in progress, cost includes an appropriate share of overheads based on normal operating capacity. (l)

Other financial assets

Other financial assets that the Company intends and is able to hold until maturity are recorded at the fair value of the initial consideration given in exchange plus the related transaction costs. Subsequently, they are valued on an amortised-cost basis using the original effective interest method. Financial assets are derecognised when, following their sale or settlement, the Company is no longer involved in their management and has transferred all risks and rewards of ownership.

143


(m) Cash and cash equivalents Cash and cash equivalents include bank and post current accounts and deposits. Bank overdrafts, advances and other short-term loans which are repayable on demand and form an integral part of the Company’s cash managements are considered as components of cash surplus or deficit for cash flow statement purposes. (n) Impairment of tangible and intangible assets The carrying amounts of tangible and intangible are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Even if there are no indication of impairment, for goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. (i) Calculation of recoverable amount The recoverable amount of an asset is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. (ii) Reversal of impairment An impairment loss, except if in respect of goodwill, is reversed and recorded in the income statement, only if the reasons for the impairment loss cease to exist. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised. (o) Equity (i) Share capital Share capital includes the subscribed and paid up Company’s share capital. (ii) Dividends Dividends are recognised as a liability in the period in which they are declared. (iii) Treasury shares Treasury shares are entered as write-down of the Shareholder’s equity. The original cost of treasury shares and the income arising from their subsequent sale, if pertinent, are entered as movements in the Shareholder’s equity. (p) Amounts payable to banks and other financial creditors Amounts payable to banks and other financial creditors are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings or loans on an effective interest basis.

144


(q) Pension funds and other employee benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. (ii) Severance indemnity fund Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code, is deferred compensation and is based on the employees’ years of service and the compensation earned by the employee during the service period. Starting from January 1, 2007, Italian Law introduced for employees the choice to direct their accruing indemnity either to supplementary pension funds or leave the indemnity as an obligation of the company. Companies that employ at least 50 employees should transfer the employee severance indemnity to the “Treasury fund” managed by INPS, the Italian Social Security Institute. Consequently, the Company’s obligation to INPS and the contributions to supplementary pension funds take the form, under IAS 19, of a “Defined contribution plan”. Under IAS 19 - Employee Benefits, the employee severance indemnity as calculated is considered a “Defined

benefit plan” and the related liability recognized in the statement of financial position (Provision for employee severance indemnities) is determined by actuarial calculations. According to IAS 19 (Employee Benefits), the remeasurements of actuarial gains and losses are recognized in other components of other comprehensive income. Service cost of Italian companies that employ less than 50 employees, as well as interest expenses related to the “time value” component of the actuarial calculations (the latter classified as Finance expenses), are recognized in the separate income statement. The discount rate is that attributable to obligations with “AA” rating with due date similar to that relating to the obligation of the Company. The calculation is done by an independent qualified actuary. (r) Provision for risks and charges A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimation of the obligation amount can be done. Provisions are recorded on the basis of the best estimation of the amount that the Company would pay to settle the obligation or to transfer it to third parties at the reporting period. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (s) Trade payables to third parties Trade payables are recorded at the amortised cost, using the effective interest method. Trade payables, whose expiry dates are within the ordinary trade terms, are not discounted. (t) Other financial liabilities The other financial liabilities are initially recorded at cost, corresponding to the “fair value” of the liability net of transaction costs that are directly attributable to the issuance of that financial liability. Following initial recording, financial liabilities are valued on an amortised-cost basis using the effective interest method. Financial liabilities are derecognised when, following their sale or settlement, the Company is no longer involved in their management and has transferred all risks and rewards of ownership.

145


(u) Revenue recognition (i) Contracts work-in-progress As soon as the outcome of a contract can be estimated reliably, contract revenues and expenses are recognised in the income statement in proportion to the stage of completion of the contract that is calculated based on the costs effectively incurred and total costs included in the contract budget. An expected loss on a contract is recognised immediately in the income statement. (ii) Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed checking the work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (v) Expenses (i) Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense. (ii) Net financial expenses Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends, foreign exchange gains and losses except for those related to cash flow hedging operations that are included in the operating revenues or expenses, and premiums and discounts related to all forward exchange contracts and swaps on foreign currency. Interest income is recognised in the income statement as it accrues, using the effective interest method. Dividends income is recognised in the income statement on the date the entity’s right to receive payments is established. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as defined under IAS 23 – Borrowing Costs), which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised and amortised over the useful life of the class of assets to which they refer. All other borrowing costs are expensed when incurred. (w) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

146


A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. This is justified by the fact that the Company is able to manage the time plan for the distribution of the reserves and it is quite possible that they will not be distributed in the foreseeable future. (x) Non-current assets held for sale and discontinued operations Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale are included in profit and loss, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement. A discontinued operation is a component of the Company’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify as discontinued operation if the criteria mentioned above are observed. (y) New accounting standards Accounting standards, amendments and interpretations applied since April 1, 2016 The following accounting standards and amendments have been adopted by the Company since April 1, 2016. Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” (published on November 21, 2013): relative to the inclusion in the financial statement of contributions made by employees or third parties to defined benefit plans. Amendments to IAS 16 Property, plant and Equipment and IAS 38 Intangibles Assets – “Clarification of acceptable methods of depreciation and amortisation” (published on May 12, 2014): according to which an amortisation criterion based on revenue is considered inappropriate, in that revenue generated by an activity which includes the activity subject to amortisation generally reflects factors other than the simple use of economic benefits of said activity, a condition which is required for amortisation. Amendment to IAS 1 - “Disclosure Initiative” (published on December 18, 2014): the aim of the amendments is to provide clarifications in relation to disclosure that may be perceived as impediments to a clear and intelligible preparation of financial statements. Amendment to IAS 27 - Equity Method in Separate Financial Statements (published on August 12, 2014): introducing the option of using the equity method for the measurement of investments in subsidiary companies, joint control companies and associated companies in the separate financial statements of an entity. “Investment Entities” document: applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)”, (published on December 18, 2014) containing amendments relating to issues that emerged following the application of the consolidation exception granted to investment entities. Finally, in the context of the annual improvement process for standards, on December 12, 2013 the IASB published the documents “Annual Improvements to IFRSs: 2010-2012 Cycle” (including IFRS 2 Share Based Payments – Definition of vesting condition, IFRS 3 Business Combination – Accounting for contingent

147


consideration, IFRS 8 Operating segments – Aggregation of operating segments e Reconciliation of total of the reportable segments’ assets to the entity’s assets, IFRS 13 Fair Value Measurement – Short-term receivables and payables) and on September 25, 2014 “Annual Improvements to IFRSs: 2012-2014 Cycle” (including IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 – Financial Instruments: Disclosure and IAS 19 – Employee Benefits) which partially integrate with pre-existing standards. The directors do not expect a significant effect on the Company's consolidated financial statements from the adoption of such amendments. Accounting standards, amendments and interpretations effective from April 1, 2016 and not relevant for the Company There are no accounting standards, amendments and interpretations effective from April 1, 2016 and not relevant for the Company. Accounting standards, amendments and interpretations not yet in force and applied in advance The Company has not applied the following standards, both new and amended, which have been issued but are not yet in force. Accounting standards, amendments and interpretations not yet applicable and not adopted in advance by the Company Standard IFRS 15 – Revenue from Contracts with Customers (published on May 28, 2014) which is intended to replace the standards IAS 18 – Revenue and IAS 11 – Construction Contracts, as well as the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter Transactions Involving Advertising Services. The standard establishes a new model of recording revenues, which will be applied to all contracts entered into with customers excluding those which fall within the scope of application of other IAS/IFRS standards such as leases, insurance contracts and financial instruments. The essential steps for recording revenues in accordance with the new model are: •

the identification of the contract with the customer;

the identification of the performance obligations of the contract;

the determination of the price;

the allocation of the price to the performance obligations of the contract;

the criteria of recording the revenues when the entity satisfies each performance obligation.

The standard is applicable commencing from January 1, 2018 but may be applied in advance. The application of IFRS 15 may have a significant impact on the values reported as revenue and related information given in the Company's Financial Statement. However, it is not possible to provide a reasonable estimate of the effects until the Company has completed a detailed analysis of contracts held with clients. Final version of IFRS 9 - Financial Instruments (published on July 24, 2014). The document encompasses the results of the phases relating to Classification and Measurement, Impairment, and Hedge Accounting, of the IASB project aimed at replacing IAS 39: •

the standard introduces new criteria for the classification and measurement of financial assets and liabilities.

with reference to the impairment model, the new standard requires that the estimate of losses on receivables is performed on the basis of the expected losses model (and not on the incurred

148


losses model used by IAS 39) using information supportable and available at no cost or unreasonable effort, which includes historical, current and prospective data; •

introduces a new hedge accounting model (increase of the type of transactions eligible for hedge accounting, modification of the methods of accounting for forward contracts and options when included in a hedge accounting report, modifications to the effectiveness test).

The new standard, which replaces the previous versions of IFRS 9, must be applied to all financial statements commencing on or after January 1, 2018. The application of IFRS 9 may have a significant impact on the values reported as revenue and related information given in the Company's Financial Statement. However, it is not possible to provide a reasonable estimate of the effects until the Company has completed a detailed analysis.

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Notes to the Statutory Financial Statements Income Statement as of March 31, 2017 Notes

March 31, 2017

March 31, 2016

March 31, 2016 restated (*)

126,348,444 750,614 127,099,058

29,545,453 244,224 29,789,677

138,027,080 1,192,085 139,219,165

(42,881,382) (52,397,880) (53,995,110) (5,419,186)

(14,643,271) (15,276,283) (13,055,522) (1,357,258)

(64,317,243) (66,726,179) (59,780,311) (5,464,502)

(1,172,342) (3,251,602) (335,373) 30,344,979 2,572 (129,105,324)

(195,233) 22,208 (125,697) 8,477,735 0 (36,153,321)

(686,711) 399,286 (373,553) 33,921,796 0 (163,027,417)

(2,006,266)

(6,363,644)

(23,808,252)

120,671,987 (105,614,357) 15,057,630

18,017,311 (24,426,062) (6,408,751)

63,964,065 (62,786,260) 1,177,805

1,000,000 (4,000,000) 10,051,364 (2,923,094) 7,128,270

0 (626,033) (13,398,428) (1,050,740) (14,449,168)

0 (14,640,874) (37,271,321) (3,001,880) (40,273,201)

In Euro

Revenues Other operating incomes Total operating revenues Raw materials and consumables used Services expenses and use of third party assets Personnel expenses Depreciation, amortization and impairment losses Bad debts provision Provision for risks and charges Other operating expenses Costs Recovery In-house enhancement of fixed assets Total operating expenses

4 1

5 5 6 7 8 9 10

Operating result

Financial incomes Financial expenses Net financial expenses Revaluation of equity investments Write-downs of equity investments Profit/(loss) before tax Income tax expenses Profit/(loss) after tax

11

12 13

14

(*) Restated figures as of March 31, 2016 in order to make them comparable to those of March 31, 2017 (reporting period from April 1, 2016 to March 31, 2017 twelve months). Restated figures as of March 31, 2016 are un-audited.

150


Statement of Comprehensive Income as of March 31, 2017 March 31, 2017

March 31, 2016

March 31, 2016 restated (*)

7,128,270

(14,449,168)

(40,273,201)

(228,612)

558,019

1,103,634

Gains / (losses) from the translation of the Branch

316,404

167,196

1,305,836

Total comprehensive income/(loss) that may be reclassified to Income Statement

87,792

725,215

2,409,470

Gains/(losses) on actuarial evaluation

(23,162)

0

132,588

Total comprehensive income/(loss) that will never be reclassified to Income Statement

(23,162)

0

132,588

64,630

725,215

2,542,058

7,192,900

(13,723,953)

(37,731,143)

In Euro

Profit/(loss) of the period (A)

Items that may be reclassified to Income Statement: Hedging reserves for risks variation, net of tax

Items that will never be reclassified to Income Statement:

Total Other comprehensive income, net of tax (B) Total Comprehensive income/(loss) (A)+(B)

(*) Restated figures as of March 31, 2016 in order to make them comparable to those of March 31, 2017 (reporting period from April 1, 2016 to March 31, 2017 twelve months). Restated figures as of March 31, 2016 are un-audited.

151


Statement of Financial Position as of March 31, 2017 In Euro

Assets Intangible assets Tangibles assets Equity investments in subsidiaries Other equity investments Deferred tax assets Total non-current assets Contracts work-in-progress and inventories Trade receivables from third parties Trade receivables from subsidiaries Financial receivables from subsidiaries Income tax receivables Other current assets Cash and cash equivalents Assets held for sale Total current assets

Notes

15 16 17 18 19

20 21 22 22 23 24 25 26

Total assets Equity Share capital Legal reserve IAS 19 Reserve Translation reserve Foreign Exchange Risk Hedging Reserve Other reserves Retained earnings Profit/(loss) for the period Total equity Liabilities Amounts payable to banks and other financial creditors Severance indemnity fund Deferred tax liabilities Provisions for risks and charges Total non-current liabilities Amounts payable to banks and other financial creditors Excess of progress billings over work-in-progress Advances from customers Trade payables to third parties Trade payables to subsidiaries Financial payables to subsidiaries Current tax liabilities Other current liabilities Total current liabilities Total equity and liabilities

27 27 27 27 27 27 27 27

28 29 19 30

28 20 20 31 32 32 33 34

March 31, 2017

March 31, 2016

12,521,517 24,599,620 282,686,835 1,097,180 12,695,869 333,601,021 52,388,836 35,353,485 87,931,935 284,786,117 3,747,376 15,856,736 4,819,866 0 484,884,351

11,281,942 26,970,153 232,411,976 808,071 11,981,281 283,453,423 73,636,864 32,660,848 65,454,815 290,201,973 2,397,076 33,927,109 20,056,237 53,133,050 571,467,972

818,485,372

854,921,395

6,900,000 1,380,000 (404,877) 2,912,988 (443,681) 163,999,280 (12,289,344) 7,128,270 169,182,636

6,900,000 1,380,000 (381,716) 2,596,260 (214,720) 163,999,280 2,159,823 (14,449,168) 161,989,759

205,036,595 3,452,323 6,058,876 3,804,636 218,352,430 218,585,496 3,329,153 11,850,477 36,753,735 14,604,609 128,363,951 0 17,462,885

217,452,180 3,451,664 5,997,975 3,553,034 230,454,853 172,709,582 3,889,471 6,231,206 59,111,683 5,120,307 183,464,265 0 31,950,269

430,950,306 818,485,372

462,476,783 854,921,395

152


Statement of cash flows as of March 31, 2017 (â‚Ź thousands)

March 31, 2017

March 31, 2016

10,051

(13,398)

(4,099) 4,982 5,419 (20) 3,252 1,172 3,000 (110) 110 13,706

(884) 1,404 1,357 (8) (22) 195 626 0 0 2,668

(229) (23) 23,307 (26,223) (12,993) 210 (1,445) (5,091) 4,083 335 (18,069)

558 0 2,926 1,203 27,220 (11,129) 0 (1,182) 884 166 20,646

5,688

9,916

Cash flows generated (absorbed) by investing activities Net investment in tangible and intangible assets Proceeds from disposal of tangible and intangible assets Changes in subsidiaries equity investments Changes in other equity investments Net cash flows absorbed by investing activities (B)

(4,300) 31 (142) (289) (4,700)

(3,469) 0 0 0 (3,469)

Cash flows generated (absorbed) by financing activities Change in intercompany current accounts

(49,684)

(14,600)

Net cash flows absorbed by financing activities (C)

(49,684)

(14,600)

Net increase/(decrease) in cash surplus/(deficit) (A+B+C)

(48,696)

(8,153)

(370,106) 0

(361,953) 0

(418,802)

(370,106)

Cash flows generated (absorbed) by operating activities

Result before tax Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Interest income - Interest expense - Depreciation and amortization expenses and impairment losses - Gain/loss on disposal of tangible and intangible assets - Provision for risks and charge - Bad debts provision - Equity investments write-downs/(revaluations) - Severance indemnity fund payments to employees - Severance indemnity fund expenses Total adjustments Changes in operating activities: - Changes in foreign exchange risk hedging reserve - Changes in IAS19 reserve (1) - Changes in the other captions of working capital - Changes in trade receivables/payables to third parties - Changes in trade receivables/payables to subsidiaries (2) - Changes in other captions of operating capital - Income tax paid - Interests paid - Interest received - Effect of exchange rate changes on operating activities cash flows Total changes Net cash flows generated by operating activities (A)

Net cash surplus/(deficit) as of April 1 (D) Effect of exchange rate changes on balances held in foreign currency (E) Net cash surplus/(deficit) as of March 31 (A+B+C+D+E)

153


Net cash surplus/(deficit) includes: Bank and post current accounts and deposits Cash in hand Bank overdrafts and other short-term loans Shareholder’s loan (1)

4,815 5 (168,529) (255,093) (418,802)

20,049 7 (130,025) (260,137) (370,106)

The other captions of working capital refer to the following captions included in the statement of financial position of the Company: trade

receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies. (2)

The other captions of operating capital refer to the following captions included in the statement of financial position of the Company:

income tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provision for risks and charges.

154


1. Operating revenues Operating revenues by geographical segments are shown in the following table: (â‚Ź thousands)

United Kingdom United States France Italy Azerbaijan Colombia Russia Hong Kong Ireland United Arab Emirates Principality of Monaco Denmark Japan Qatar Germany Turkey Saudi Arabia Netherlands Switzerland Canada Jordan Panama Norway Czech Republic Thailand Spain Finland Poland Malta Singapore Portugal Austria South Africa Greece Bharain Kenya Zambia China Abu Dhabi Paraguay India Nigeria Marocco Egypt Sweden Georgia Mongolia Malaysia

March 31, 2017

March 31, 2016 restated

34,616 27,374 21,682 16,992 7,026 4,139 2,600 2,200 1,424 1,366 1,299 1,184 1,180 1,090 728 418 398 292 263 210 177 152 134 87 86 50 18 18 9 7 7 2 2 0 0 0 0 0 0 0 0 0 0 0 0 (1) (1) (2)

50,779 16,855 31,675 17,587 2,734 128 8,963 36 275 582 10 0 1,136 2,144 979 196 1,917 82 468 10 17 0 129 45 293 411 3 0 0 65 119 140 402 6 404 132 75 28 95 1 4 1 2 69 135 69 0 0

155


Kuwait Kazakhstan Total

(3) (124) 127,099

18 0 139,219

2. Non-current assets classified as held for sale The Company doesn’t have Non-current assets held for sale.

3. Acquisitions of subsidiaries The acquisition incurred during the period are the following: - Consorzio Marine Project Solutions with registered office in Italy, held by Permasteelisa S.p.A. for 55.5 %, and - Permasteelisa Colombia S.a.S. with registered office in Colombia, held by Permasteelisa S.p.A. for 100%.

4. Other operating income (â‚Ź thousands)

Gains on tangible and intangible assets disposals Insurance indemnities Rental income Sale of scraps Indemnity from suppliers Other revenues

March 31, 2017

March 31, 2016 restated

1 7 18 191 0 534 751

44 0 6 258 0 884 1,192

5. Raw materials and consumables used and services expenses and use of third party assets With reference to the Company's activity, the comparison between different periods of the value of raw materials and consumables used and services expenses and use of third party assets is not very significant as it depends on the different costs mix of the job orders executed in each period. The percentage impact of the sum of the two captions over the total operating revenues decreased from 94% as of March 31, 2016 restated, to 75% as of March 31, 2017. As of March 31, 2017, the item services expenses and use of third party assets includes remuneration due to the auditors amounting to Euro 146 thousand (Euro 90 thousand as of March 31, 2016 restated).

6. Personnel expenses (â‚Ź thousands)

Wages and salaries Social contributions Severance indemnities Other personnel costs

March 31, 2017

March 31, 2016 restated

37,951 10,986 2,628 2,430 53,995

43,356 11,169 2,811 2,444 59,780

The caption includes directors remunerations for Euro 1,582 thousand (March 2016 restated: Euro 3,685 thousand). The average workforce for the period was 852 unit (March 2016: 852 units). The personnel expenses as of March 31, 2017, compared to the same period as of March 31, 2016 restated, have not changed.

156


7. Depreciation, amortization and impairment losses (€ thousands)

Intangible assets depreciation Tangible assets depreciation

March 31, 2017

March 31, 2016 restated

2,495 2,924 5,419

2,340 3,125 5,465

March 31, 2017

March 31, 2016 restated

1,172 1,172

687 687

March 31, 2017

March 31, 2016 restated

(130) (118) 500 3,000 3,252

(230) (34) (135) 0 (399)

8. Bad debts provision (€ thousands)

Bad debts provision

9. Provision for risks and charges (€ thousands)

Provision for disputes and legal actions Provision for warranties Provision for jobs Provision for work in progress risk

The variation on the caption " Provision for work in progress risk " is mainly due to the provisions recognized on Italian market jobs. A more detailed analysis is provided in Note 30, relating to provisions for risks and charges.

10. Other operating expenses (€ thousands)

Other taxes Loss on tangible and intangible assets disposals Other expenses

March 31, 2017

March 31, 2016 restated

268 21 46 335

259 0 115 374

March 31, 2017

March 31, 2016 restated

20,000 3,989 110 94,154 0 2,370 49 120,672

19,665 2,616 13 39,764 45 1,807 54 63,964

11. Net financial expenses (€ thousands)

Dividends from subsidiaries Interest income from subsidiaries Interest income Exchange rate gains Other commissions Financial income on foreign currency risk hedging Commercial income on foreign currency risk hedging Total financial income

157


Interest expenses from subsidiaries Bank interests expenses Loan charges Exchange rate losses Bank charges Other interests expenses Financial expenses on foreign currency risk hedging Commercial expenses on foreign currency risk hedging Total financial expenses Total net financial expenses

675 4,118 0 94,012 96 189 5,774 750 105,614 15,058

997 4,922 0 52,632 269 237 3,030 699 62,786 1,178

As of March 31, 2017, the net financial expenses amounted to Euro 4,942 thousand, while as of March 31, 2016 restated, excluding dividends from subsidiaries, amounted to Euro 18,487 thousand. The net positive variation for Euro 13,545 thousand is mainly due to the combination of the variations of the following items: - commercial and financial expenses on foreign currency risk hedging, net of incomes, decreased from Euro 1,868 thousand (March 2016 restated) to Euro 4,105 thousand (March 2017) with a negative variation for Euro 2,237 thousand; - exchange rate losses, net of gains, decreased from Euro 12,868 thousand (March 2016 restated) to Euro (142) thousand (March 2017) with a positive variation for Euro 13,010 thousand; - interest expenses, net of incomes, decreased from Euro 3,751 thousand (March 2016 restated) to Euro 979 thousand (March 2017) with a positive variation for Euro 2,772 thousand.

12. Revaluation of equity investments The 2017 revaluation for Euro 1 million refers to the equity investment in the subsidiary Permasteeelisa France S.a.s.. The devaluation occurred in year 2014 has been revised because the profitability of such company has been restored.

13. Write-downs of equity investments The 2017 write-down for Euro 4 million of the equity investment in the subsidiary Permasteelisa Pacific Holdings Ltd. (Singapore) was necessary due to the existence of permanent impairment losses of such company.

14. Income tax expense Taxes recognised in the Income Statement (â‚Ź thousands)

Current tax expense Income/(Expenses) for Italian national tax consolidation (Ires) Adjustments for prior years Deferred tax expense Origination and reversal of temporary differences Adjustments for prior years Total income tax expense in the income statement

March 31, 2017

March 31, 2016

2,595 922 3,517

0 (359) (359)

(594) 0 (594) 2,923

(116) 1,526 1,410 1,051

158


Reconciliation of effective tax rate (€ thousands)

March 31, March 31, March 31, March 31, 2017 2017 2016 2016 Profit before tax Income tax using the domestic corporation tax rate (Ires) Non-deductible expenses Effect of majored tax rate on specific gains Tax exempt revenues Current tax benefits not recognised in the income statement

27.5%

10,051 2,764 3,359 0 (5,500) 1,063

27.5%

(13,398) (4,006) 819 785 (5) 3,796

Tax benefits recognised on losses

0

(722)

Write-down of prepaid/deferred taxes recorded in previous years Under/(over) provision for prior year taxes Other

0

1,526

922 315 2,923

(1,144) 2 1,051

29.1%

-7.8%

With reference to this caption, the restated figures as of March 2016 (April 1, 2015 – 31 March 2016), have not been calculated because not relevant.

15. Intangible assets (€ thousands)

Balance as ofJanuary 1, 2016 Acquisitions Other increases Other decreases Amortization Balance as of March 31, 2016

Development costs

Rights to use intellectual property

2

3,766 210 330

(1) 1

Licenses and Other intangible trademarks assets

Intangible assets in progress and advances

Total

2,034 1,194

10,482 1,404 330 (330) (604) 11,282

0

4,680

(399) 3,907

0

(204) 4,476

2,433 (2,431) 2

15,674 (11,908) 3,766

0 0 0

12,662 (7,982) 4,680

2,034 32,803 0 (22,321) 2,034 10,482

2,433 (2,432) 1

16,215 (12,308) 3,907

0 0 0

12,663 (8,187) 4,476

2,898 34,209 0 (22,927) 2,898 11,282

(330) 2,898

Carrying amounts As of January 1, 2016 attributable to: Cost Accumulated amortization

As of March 31, 2016 attributable to: Cost Accumulated amortization

159


(€ thousands)

Balance as of April 1, 2016 Acquisitions Other increases Decrease Other decreases Amortization Balance as of March 31, 2017

Development costs

Rights to use intellectual property

Licenses and trademarks

Other intangible assets

Intangible assets in progress and advances

Total

1

3,907 2,136 583 (18)

0

4,476 364 254

2,898 1,252

(1) 0

(1,651) 4,957

0

(843) 4,251

11,282 3,752 837 (18) (837) (2,495) 12,521

2,433 (2,432) 1

16,215 (12,308) 3,907

0 0 0

12,663 (8,187) 4,476

2,898 34,209 0 (22,927) 2,898 11,282

2,433 (2,433) 0

18,904 (13,947) 4,957

0 0 0

13,281 (9,030) 4,251

3,313 37,931 0 (25,410) 3,313 12,521

(837) 3,313

Carrying amounts As of April 1, 2016 attributable to: Cost Accumulated amortization

As of March 31, 2017 attributable to: Cost Accumulated amortization

The increase for the period referred to the caption “Rights to use intellectual property” (for Euro 2,136 thousand) is related to the acquisition of updated version of Office, Visio and Project for the Group (Euro 1,377 thousand), to the acquisition of new solutions for PMF (Euro 147 thousand), to the acquisition of new licenses SAPTimesheet, SAP-Cash and Treasury Management, SAP- BPC and Engine DB Hana (Euro 307 thousand), to the extension of actual licenses for the Group backup system Simpana (Euro 30 thousand), to the implementation of Cash Pooling and DB Bond projects (Euro 94 thousand), to the upgrade of HRIS project, the HR software (Euro 24 thousand), and other developments (Euro 157 thousand). The increase referred to the caption “Intangible assets in progress and advances” for Euro 1,252 thousand is 3 mainly related to the implementation and development of the project P (Euro 235 thousand), to the acquisition of new Enovia licenses (Euro 750 thousand), to additional development of the segregation of duties (SoD) project, to the implementation of IT controls linked to JSOX (Euro 131 thousand), to the acquisition of K2 software used for the realization of Workflow process on QHSE environment (Euro 60 thousand) and other developments (Euro 76 thousand). Impairment losses and subsequent reversal The management considered that, with respect to the 31st of March 2016, no specific impairment losses occurred which would have led the Company to measure the recoverable value of intangible assets through the relevant impairment tests.

160


16. Tangible assets (â‚Ź thousands)

Balance as of January 1, 2016 Acquisitions Other increases Other decreases Amortization Exchange rate adjustment Balance as of March 31, 2016

Land and buildings

Plant and machinery

Equipments

Other tangible assets

Tangible assets in progress and advances

Total

17,691 1,172

5,384 38 11

144 19

2,125 80 16

306 769

(221)

(12) (3) 148

(190)

18,642

(329) (3) 5,101

2,031

1,048

25,650 2,078 27 (27) (752) (6) 26,970

28,899 (11,208) 17,691

25,525 (20,141) 5,384

3,861 (3,717) 144

9,333 (7,208) 2,125

306 0 306

67,924 (42,274) 25,650

30,070 (11,428) 18,642

25,568 (20,467) 5,101

3,865 (3,717) 148

9,363 (7,332) 2,031

1,048 0 1,048

69,914 (42,944) 26,970

(27)

Carrying amounts

As of January 1, 2016 attributable to: Cost Accumulated amortization

As of March 31, 2016 attributable to: Cost Accumulated amortization

(â‚Ź thousands)

Balance as of April 1, 2016 Acquisitions Other increases Decrease Other decreases Amortization Exchange rate adjustment Balance as of March 31, 2017

Land and buildings

Plant and machinery

Equipments

Other tangible assets

Tangible assets in progress and advances

Total

18,642

5,101 169 792 (10)

148 78

1,048 26

17,889

(1,275) (4) 4,773

(53) (3) 170

2,031 301 136 (3) 0 (728) 1,737

31

26,970 574 1,043 (13) (1,043) (2,924) (7) 24,600

30,070 (11,428) 18,642

25,568 (20,467) 5,101

3,865 (3,717) 148

9,363 (7,332) 2,031

1,048 0 1,048

69,914 (42,944) 26,970

30,185 (12,296) 17,889

26,511 (21,738) 4,773

3,934 (3,764) 170

9,758 (8,021) 1,737

31 0 31

70,419 (45,819) 24,600

115

(868)

(1,043)

Carrying amounts

As of April 1, 2016 attributable to: Cost Accumulated amortization

As of March 31, 2017 attributable to: Cost Accumulated amortization

161


The investments as regards: -

“Plant and Machinary” to the improvement of heating and fire system on Vittorio Veneto plant (Euro 62 thousand), to the acquisition of equipments for handling panels robotic area (Euro 23 thousand), to the acquisition of aerial engine for the Test Lab (Euro 14 thousand) and other minor machinaries for Vittorio Veneto plant (Euro 70 thousand).

-

“Equipments” to the acquisition of 1 “profilometro”, 1 “spettrofotometro” and other tools for the plant (Euro 45 thousand), some equipment for the heating system (Euro 13 thousand) and other investments for Euro 20 thousand on Vittorio Veneto plant.

-

“Other tangible assets” to the acquisition of office furnitures (Euro 38 thousand), of hardwares (Euro 247 thousand) and other office tools (Euro 16 thousand).

Impairment losses and subsequent reversal At the reporting date there have not been particular indications of impairment losses related to tangible assets. Leased plant and machinery The Company has no leased plant and machinery. Tangible assets in progress The increase of the period for Euro 26 thousand is due to the compliance with fire regulation on “Quaternario Q2-Q3” in San Vendemiano (Euro 16 thousand) and other minor activities in progress (Euro 10 thousand). Other information As of March 31, 2017 the Company doesn’t have mortgages on buildings and other tangible assets.

17. Equity investments in subsidiaries The Company has the following equity investments in subsidiaries : % ownership

(€ thousands) Country

March 31, 2017

March 31, 2016

Germany Spain France USA UK Ireland Singapore Holland Turkey Italy Brazil Croatia Colombia Italy

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% 100.00% 100.00% 99.00% 99.00% 98.55% 100.00% 55.50%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% N/A 100.00% 99.00% 99.00% 98.55% 0.00% 0.00%

Carrying amount March 31, 2017

March 31, 2016 restated

151,544 2,560 6,462 33,884 754 (50) 34,104 53,133 10 50 18 76 31 111 282,687 Please note that the value of the equity investment in Scheldebouw B.V. for Euro 53,133 thousands and held 100%, as of March 31, 2016 was classified as “Non current assets held for sale”. Josef Gartner GmbH Permasteelisa Espana S.A.U. Permasteelisa France S.a.s. Permasteelisa North America Corp. Permasteelisa UK Ltd. Permasteelisa Ireland Ltd. Permasteelisa Pacific Holdings Ltd. Scheldebouw B.V. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Permasteelisa Participations S.r.l. Permasteelisa Do Brasil Construcao, Industria, Comercio Ltda RI.ISA d.o.o Permasteelisa Colombia Consorzio Marine Project solution

151,544 2,560 5,462 33,884 754 (50) 38,104 N/A 10 50 18 76 0 0 285,545 for

162


Summary financial information on subsidiaries: (€ thousands)

March 31, 2017 Josef Gartner GmbH Permasteelisa Espana S.A.U. Permasteelisa France S.a.s. Permasteelisa North America Corp. Permasteelisa UK Ltd. Permasteelisa Ireland Ltd. Permasteelisa Pacific Holdings Ltd. Scheldebouw B.V. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Permasteelisa Participations S.r.l. Permasteelisa DoBrasil,Industria,Comercio Ltda RI.ISA d.o.o. Permasteelisa Colombia Consorzio Marine Project solution

(€ thousands)

March 31, 2016 Josef Gartner GmbH Permasteelisa Espana S.A.U. Permasteelisa France S.a.s. Permasteelisa North America Corp. Permasteelisa UK Ltd. Permasteelisa Ireland Ltd. Permasteelisa Pacific Holdings Ltd. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Scheldebouw B.V. Permasteelisa Participations S.r.l. Permasteelisa DoBrasil,Industria,Comercio Ltda RI.ISA d.o.o.

Assets

Liabilities

Net Equity

Revenues

Profit/(loss)

358,434 8,218 17,994 261,042 146,848 4,019 138,554 102,689 31 6,099 568 947 8,827 5,250 1,059,520

218,678 4,626 15,193 171,478 148,051 2,112 118,917 107,146 1,285 5,385 629 315 8,777 5,012 807,604

139,756 169,905 3,592 7,680 2,801 46,280 89,564 438,837 (1,203) 242,925 1,907 827 19,637 7,756 (4,457) 114,182 (1,254) 6 714 0 (61) (57) 632 1,235 50 11 238 941 251,916 1,030,528

7,463 139 948 2,793 (2,791) 158 (13,441) 5,818 (344) 285 (126) 119 17 38 1,076

Assets

Liabilities

Net Equity

Revenues

Profit/(loss)

380,341 5,863 30,963 280,373 107,564 2,366 148,670 320 97,562 6,102 561 756 1,061,441

223,829 2,410 29,110 198,608 107,060 617 112,456 1,462 107,441 5,673 500 240 789,406

156,512 3,453 1,853 81,765 504 1,749 36,214 (1,142) (9,879) 429 61 516 272,035

53,870 622 11,885 126,250 47,172 389 4,302 (17) 21,740 0 5 292 266,510

4,386 (433) 258 (1,303) (1,171) 101 (4,025) (38) 6,730 (5) (19) 48 4,529

The following table shows the comparison of the net equity held with respect to the carrying amount of the investments held: (€ thousands)

March 31, 2017 Josef Gartner GmbH Permasteelisa Espana S.A.U. Permasteelisa France S.a.s. Permasteelisa North America Corp. Permasteelisa UK Ltd. Permasteelisa Ireland Ltd. Permasteelisa Pacific Holdings Ltd. Scheldebouw B.V. PermasteelisaTurkeyInsaatTicaretLimitedSirketi Permasteelisa Participations S.r.l. Permasteelisa DoBrasil,Industria,ComercioLtda

Net Equity

% ownership

Pro rata equity

Equity investment

Differential

139,756 3,592 2,801 89,564 (1,203) 1,907 19,637 (4,457) (1,254) 714 (61)

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% 100.00% 100.00% 99.00% 99.00%

139,756 3,592 2,801 89,564 (1,203) 1,907 10,653 (4,457) (1,254) 707 (60)

151,544 2,560 6,462 33,884 754 (50) 35,104 53,133 10 50 18

(11,788) 1,032 (3,661) 55,680 (1,957) 1,957 (24,451) (57,590) (1,264) 657 (78)

163


632 98.55% 50 100.00% 238 55.50% 251,916

RI.ISA d.o.o. Permasteelisa Colombia Consorzio Marine Project solution

623 50 132 242,811

76 31 111 283,687

547 19 21 (40,876)

Due to the impairment test based on the subsidiaries company’s business plan, the equity investment on Permasteelisa Pacific Holdings Ltd. (Singapore) has been devaluated and the one of Permasteeelisa France S.a.s. has been revaluated. No other impairment losses have been detected for the other subsidiaries equity investments. Please refer to the Consolidated Financial Statements Appendix for the complete list of subsidiaries either directly or indirectly controlled by the Company.

18. Other equity investments The balance as of March 31, 2017 includes for Euro 366 thousand (March 2016: Euro 77 thousand) the Parent company’s equity investment in Consorzio Interaziendale Prealpi, for Euro 25 thousand (March 2016: Euro 25 thousand) the equity investment in the Consorzio Cladding Technology Italia (CTI) and for Euro 706 thousand (March 2016: 706 thousand) the equity investment in the Consortium Dyepower.

19. Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to: Assets (-)

(€ thousands)

Tangible assets Intangible assets Inventories Trade receivables Financial liabilities Provision for risks and charges Hedging Other items Tax value of loss carry-forwards Tax (assets) / liabilities Set off Net tax (assets) / liabilities

Liabilities (+)

Net (-)

2017

2016

2017

2016

2017

2016

(79) (1) (973) 0 (2,265) (993) (140) (608) (7,637) (12,696)

(83) (2) (136) 0 (2,265) (888) (87) (883) (7,637) (11,981)

58 850 0 0 0 0 0 5,151 0 6,059

58 927 0 0 0 0 0 5,013 0 5,998

(21) 849 (973) 0 (2,265) (993) (140) 4,543 (7,637) (6,637)

(25) 925 (136) 0 (2,265) (888) (87) 4,130 (7,637) (5,983)

(12,696)

(11,981)

6,059

5,998

(6,637)

(5,983)

Movement in deferred tax assets and liabilities during the year Balance January 1, 2016

Taxes Taxes Other recognised recognised in movements in income equity statement

Balance March 31, 2016

(€ thousands)

Tangible assets Intangible assets Inventories Financial liabilities Provision for risks and charges Hedging Other items Tax value of loss carry-forwards

(16) 1,050 (153) (2,595) (1,009)

(9) (125) 17 330 121

3,875 (8,751) (7,599)

(38) 1,114 1,410

206

(293) 293

206

0

(25) 925 (136) (2,265) (888) (87) 4,130 (7,637) (5,983)

164


Balance April 1, 2016

Taxes recognised in income statement

(25) 925 (136) (2,265) (888) (87) 4,130 (7,637) (5,983)

4 (76) (837)

Taxes recognised in equity

Other movements

Balance March 31, 2017

(€ thousands)

Tangible assets Intangible assets Inventories Financial liabilities Provision for risks and charges Hedging Other items Tax value of loss carry-forwards

(105) 420

(53) (7)

(594)

(60)

0

(21) 849 (973) (2,265) (993) (140) 4,543 (7,637) (6,637)

20. Assets for contracts work-in-progress and inventories Assets for contracts work-in-progress and inventories (€ thousands)

Assets for contracts work-in-progress Raw materials and consumables Advances

March 31, 2017

March 31, 2016

48,663 550 3,176 52,389

72,544 653 440 73,637

March 31, 2017

March 31, 2016

3,329 11,850 15,179

3,889 6,231 10,120

March 31, 2017

March 31, 2016

602,321 21,381 (578,368) 45,334

622,937 27,986 (582,268) 68,655

48,663 (3,329) 45,334

72,544 (3,889) 68,655

Liabilities for contracts work-in-progress and advances from customers (€ thousands)

Liabilities for contracts work-in-progress Advances from customers

Contract work-in-progress (€ thousands)

Costs incurred on uncompleted contracts Estimated earnings to date on uncompleted contracts Less billings to date on uncompleted contracts

Assets for contracts work-in-progress Liabilities for contracts work-in-progress

165


21. Trade receivables from third parties (€ thousands)

Trade receivables from third parties Bad debts provision

March 31, 2017

March 31, 2016

41,850 (6,497) 35,353

38,058 (5,397) 32,661

As of March 31, 2017 trade receivables include guarantee retentions for Euro 3,195 thousand (March 2016: Euro 4,470 thousand) related to contracts work-in-progress. With reference to currency trade receivables from third parties, the following table summarizes the outstanding balance accounts at year end (in Euro units): March 31, 2016

March 31, 2017

Currency CHF GBP JPY QAR USD

Receivable in foreign currency 22,223 4,220 (300,000) 131,635 14,495,610

Counter-value in Euro at the end of the period 20,777 4,933 (2,509) 33,826 13,558,704

Currency CHF GBP JPY QAR USD

Receivable in foreign currency 22,223 6,837 (300,000) 0 10,642,092

Counter-value in Euro at the end of the period 20,331 8,638 (2,346) 0 9,347,468

The following table shows the changes of the provision for bad debts during the year end as of March 31, 2017: (€ thousands)

Balance as of April 1 Utilizations Reversal Provision Balance as of March 31

March 31, 2017

March 31, 2016

5,397 (72) 0 1,172 6,497

5,202 0 0 195 5,397

March 31, 2017

March 31, 2016

23,426 12,781 7,507 7,004 4,854 4,273 3,534 3,416 3,359 2,670 2,490 2,171

12,434 13,557 4,418 6,440 7,841 481 1,831 2,038 2,523 2,453 1,708 1,447

22. Amounts receivables from subsidiaries (€ thousands)

Trade receivables – current Permasteelisa Gartner Qatar Llc Permasteelisa UK Ltd. Permasteelisa North America Corp. Global Architectural Co. Ltd. Permasteelisa France S.a.s. Scheldebouw B.V. Permasteelisa Gartner Saudi Arabia Llc. OOO Josef Gartner Josef Gartner Curtain Wall (Shanghai) Ltd. Permasteelisa (India) Private Limited Josef Gartner GmbH Permasteelisa Gartner Middle East Llc

166


Permasteelisa Hong Kong Limited Permasteelisa Pacific Holdings Ltd. Permasteelisa Philippines Inc. Josef Gartner Curtain Wall (Suzhou) Ltd. Permasteelisa Mongolia Llc Permasteelisa Project (Thailand) Ltd. Bleu Tech Montreal Inc. Dongguan Permasteelisa Curtain Wall Josef Gartner Taiwan (Josef Gartner & Co. (HK) Ltd. branch) Global Wall Malaysia Sdn. Bhd. RI.ISA d.o.o. Permasteelisa PTY Limited Marine Project Solutions Permasteelisa Ireland Ltd. Permasteelisa España S.A.U. Josef Gartner Switzerland AG Permasteelisa Participations S.r.l. Permasteelisa Macau Limited Josef Gartner (Macau) Ltd. Permasteelisa Turkey Permasteelisa Taiwan Ltd. Josef Gartner & Co. UK Ltd. Permasteelisa Japan K.K. Commercial exchange rate adjustment

Financial receivables – current Permasteelisa Gartner Qatar Llc Permasteelisa Gartner Middle East Llc Permasteelisa Pacific Holdings Ltd. Scheldebouw B.V. Permasteelisa Participations S.r.l. Permasteelisa Turkey Permasteelisa España S.A.U. Permasteelisa Gartner Saudi Llc Permasteelisa North America Corp. Financial exchange rate adjustment

1,653 1,305 759 756 735 655 576 506 340 240 207 115 93 91 70 54 7 5 4 3 0 0 (101) 2,374 87,932

662 964 688 670 647 587 918 485 172 192 142 349 0 153 67 25 5 47 28 3 57 5 163 1,255 65,455

80,465 72,178 71,977 15,375 5,377 1,671 870 0 0 36,873

62,851 0 76,216 11,521 5,669 1,619 436 89,621 37,881 4,388

284,786

290,202

Current financial receivables mainly include balance amounts concerning intercompany current account positions, which highlight the role of central treasury function played by the Parent company. Current account positions are regulated according to market rates (three-month Euribor/Libor rate + 0.50% spread). Average rates on the intercompany current accounts in this year have been as follows:

Current account currency

March 2017 Rate

Current account currency

March 2016 Rate

EURO

0.20%

EURO

0.31%

USD

1.36%

USD

1.12%

GBP

0.94%

GBP

1.09%

AUD

2.36%

AUD

2.80%

0.47%

JPY

0.53%

JPY

167


SGD

1.44%

SGD

1.74%

THB

2.09%

THB

2.11%

HKD

1.20%

HKD

1.07% 1.36%

HRK

1.41% 1.04%

CAD HRK

1.17%

DKK

0.31%

DKK

0.43%

CHF

CAD

-0.24%

CHF

-0.26%

RUB

11.32%

RUB

12.40%

QAR

2.07%

QAR

1.88%

1.39%

AED

1.36%

AED

With reference to currency trade receivables from subsidiaries, the following table summarizes the outstanding balance accounts at year end (in Euro units):

Currency AUD CAD CHF CNY GBP HKD HRK JPY QAR SGD USD THB

March 31, 2017 Counter-value in Receivable in Euro at the end of foreign currency the period 161,860 115,763 844,873 592,270 58,183 54,397 325,388 44,185 4,881,278 5,705,560 13,833,415 1,665,192 1,563,362 209,946 (10,201,529) (85,333) 0 0 1,658,122 1,109,854 42,071,121 39,351,904 110,918,472 3,020,327

March 31, 2016

Currency AUD CAD CHF CNY GBP HKD HRK JPY QAR SGD USD THB

Receivable in foreign currency 526,137 1,355,295 27,027 2,278,054 4,775,813 6,208,278 1,077,820 22,128,970 4,602,468 1,290,908 23,111,764 110,901,472

Counter-value in Euro at the end of the period 355,330 919,593 24,725 309,880 6,033,496 703,233 143,222 173,018 1,110,597 843,510 20,300,188 2,771,290

With reference to currency financial receivables from subsidiaries, the following table summarizes the outstanding balance accounts at year end (in Euro units):

March 31, 2017

Currency JPY CAD SGD USD

Receivable in foreign currency 761,156,614 0 80,029,708 210,332,060

Counter-value in Euro at the end of the period 6,366,847 0 53,567,408 196,737,499

March 31, 2016

Currency JPY CAD SGD USD

Receivable in foreign currency 700,893,975 1,754,922 74,286,827 241,454,310

Counter-value in Euro at the end of the period 5,480,015 1,190,746 48,540,791 212,081,080

168


23. Income tax receivables (€ thousands)

March 31, 2017

March 31, 2016

3,747 3,747

2,397 2,397

Tax income receivables

The item “Income tax receivables” should be analysed in conjunction with the item 33 "Current tax liabilities".

24. Other current assets (€ thousands)

VAT receivables Other receivables Accrued income and deferred charges

March 31, 2017

March 31, 2016

698 8,430 6,729 15,857

2,185 22,204 9,538 33,927

March 31, 2017

March 31, 2016

2,232 6,198 8,430

15,968 6,236 22,204

The caption “Other receivables” includes:

Assets for the fair value assessment of derivatives instruments Other receivables

Assets for the fair value assessment of derivatives instruments are referred to foreign currency transactions for Euro 2,232 thousand (March 2016: Euro 15,968 thousand). The item “Other receivables” includes Euro 5.7 million related to repayments owed from a supplier for damages. The company, in respect of its rights which have previously been legally recognised, has taken action to receive this sum. The company's position for the right to said damages is sufficiently supported by law.

25. Cash and cash equivalents (€ thousands)

March 31, 2017

March 31, 2016

4,815 5 4,820

20,049 7 20,056

Bank and post current accounts and deposits Cash and cash equivalents

With reference to currency cash and cash equivalents, the following table summarizes the outstanding balance accounts at year end (in Euro units): March 31, 2017

Currency CHF CNY

Receivable in foreign currency 12,703 1,167

Counter-value in Euro at the end of the period 11,877 158

March 31, 2016

Currency CHF CNY

Receivable in foreign currency 18,994 0

Counter-value in Euro at the end of the period 17,376 0

169


GBP HKD SGD EUR USD

694,026 20,995 9,135 65 3,563,790

811,224 2,527 6,115 65 3,333,449

GBP HKD SGD EUR USD

3,768,019 2,671 512 0 172,258

2,982,575 23,576 783 0 196,115

26. Non-current assets held for sale (â‚Ź thousands)

March 31, 2017

March 31, 2016

0 0

53,133 53,133

Non-current assets held for sale

The balance as of March 31, 2016, relates to the value of the investment in the company to be sold. For further information please refer to the comment included in the Management Report.

27. Net equity Net equity changes Please refer to the relevant table that precedes the notes to the Statutory Financial Statements. Share capital As of March 31, 2017, the share capital amounted to Euro 6,900 thousand and includes 25,613,544 ordinary shares issued without nominal value. The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are equal since there are no preference shares. Please refer to the Management Report concerning the net result allocation proposal made by the Board of th Directors on May 29 , 2017 which approved the Statutory Financial Statements and the Consolidated Financial Statements as of March 31, 2017. Legal reserve The legal reserve, amounting to Euro 1,380 thousand, was restored after the merger of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. into Permasteelisa S.p.A. occurred in October 2010 with fiscal and civil effect backdated to January 1, 2010. Foreign exchange risk hedging reserve, commodities risk hedging reserve and interest risk hedging reserve The foreign exchange risk hedging reserve includes the effective portion of the net differences accumulated in the “fair value� of the hedging instruments on currencies, associated to hedged and not yet performed transactions. The changes in these reserves are stated in the following table: Foreign exchange risk hedging reserve

Tax

Amount after tax

(1,066)

293

(773)

(112) 876

(85) (121)

(197) 755

Amount before tax Reserve as of December 31, 2015 Increase/(decrease) Release to income statement

170


Reserve as of March 31, 2016

(302)

87

(215)

Foreign exchange risk hedging reserve Amount before tax

Tax

Amount after tax

Reserve as of April 1, 2016

(302)

87

(215)

Increase/(decrease) Release to income statement Reserve as of March 31, 2017

(491) 209 (584)

107 (54) 140

(384) 155 (444)

As of March 31, 2017 there are no commodities and interest risks. Other reserves They include merger surplus reserve, the non-available IAS conversion reserve and other IAS conversion reserves and other merger reserves. The relevant statement of net equity changes highlights variations of these items during the year. In particular: -

the item “other merger reserve” arose during the period due to the merger of holding companies Terre Alte S.p.A. and Montrachet S.p.A. into Permasteelisa S.p.A. occurred on 22 October 2010 with fiscal and Italian law effects backdated on 1 January 2010; due to the kind of merger (reverse merger) the share capital and all the reserves of Permasteelisa S.p.A. existing at the merger date were maintained and the remaining components of the merged companies (share capital, share premium and losses carried forward) were incorporated in the item “other merger reserve”. As of March 31, 2017 the reserve amounts to 163,789 thousand (March 2016: 163,789 thousand), the same compared to the previous year March 31,2016.

-

the item "IAS 19 Reserve" which had, as of March 31, 2016, a negative balance of Euro 381 thousand, was increased to a balance of Euro 404 thousand as of March 31, 2017, following the actuarial valuation of the period.

Information on reserve The following table reports information on net equity items sorted by origin, available amounts for use, distribution and amounts already used in the previous three years.

2017 Amount

Possibility of use (*)

Share capital

6,900,000

Legal reserve

Available amount 2017

1,380,000

B

Share premium

0

A,B,C

Revaluation reserve

0

A,B

Extraordinary reserve

0

A,B,C

3,815

A,B,C

Merger surplus reserve

Notavailable amount 2017

Amounts used in the previous 3 years to hedge losses

Amounts used in the previous 3 years for other reasons

1,380,000

3,815

171


Other merger reserve

163,786,313

A,B,C

163,786,313

Retained earnings

(12,289,344)

A,B,C

(12,289,344)

311,948

-

IAS conversion reserve severance IAS 19 reserve Other reserves

25,137,452 311,948

(404,877)

(404,877)

0

Other IAS conversion reserves IAS conversion reserve - land

0

IAS conversion reserve goodwill IAS conversion reserve - web costs IAS conversion reserve - IAS 39 Total other IAS conversion reserve items

(16,545)

(16,545)

(86,251)

(86,251)

Foreign exchange risk hedging reserve Commodities Risk hedging reserve Risk hedging reserve on interest Translation reserve Total reserves Not-distributable amount Distributable remaining amount

0 (102,796)

A,B,C

(443,681)

-

0

-

0

-

2,912,988

-

155,154,366

(102,796)

(443,681)

2,912,988 151,394,173

3,760,193

25,137,452

4,556,102 146,838,071

(*) A: for share capital increase; B: for hedging losses; C: for distribution to the partners.

Capital management In the area of capital management, the Company aims at adding value for the Shareholder, safeguard the continuity of the business and support the development of the Group. The Company has thus tried to keep a suitable capitalisation level to enable both the achievement of a suitable return on capital for the Shareholder and ensure the accessibility in economic terms of external financing sources, also by achieving a suitable rating. The Company constantly monitors its level of indebtedness in reference to the net equity and especially the net level of indebtedness and the cash generation from operations. To this end, the Company pursues the ongoing improvement of profitability in its business areas. It may also sell part of its own assets to reduce the value of debt, while the Board of Directors may suggest to the Shareholder's Meeting to reduce or increase the share capital or, if legally viable, distribute the reserves. In this framework the Company also proceeds to buy back treasury shares, clearly within the limits authorised by the Shareholder's Meeting, following the same approach aimed at adding value compatible with the aims of achieving a balanced financial standing and improve the rating. The capital is understood to be the value added by the Shareholder (share capital and the share-premium reserve, net of the value of the treasury share), and generated by the Company in terms of the results achieved by the management (legal reserve and retained earnings, included the results for the year), excluding the profit and loss entered directly into the net equity, except for the revaluation reserve, the merger surplus reserve and the IAS/IFRS conversion reserve.

172


28. Amounts payable to banks and other financial creditors (€ thousands)

Amounts payable to banks and other financial creditors non-current Medium and long term Shareholder’s loan

Amounts payable to banks and other financial creditors current Medium and long term Shareholder’s loan (current portion) Bank accounts, advances and other short-term loans

March 31, 2017

March 31, 2016

205,037 205,037

217,452 217,452

50,056 168,529 218,585

42,685 130,025 172,710

The net financial position of the Company including Shareholder’s loan as of March 31, 2017, is negative for Euro 262 million including a positive amount of “cash & bank deposits” for Euro 5 million. The short-term bank loans in use, for a negative amount of Euro 169 million, relate to contracts for credit facilities on a rotating basis, to cover the Group’s cash requirements. During the period from April 1, 2016 to March 31, 2017 have been repaid: - a Shareholder’s loan for the amount of Euro 10 million in the month of September, 2016 and - the first two tranches of Shareholder’s loan in USD with a countervalue of Euro 7 million. During the period April 1, 2016 - 31 March, 2017, the cash pooling project has been finalized for the main important Group companies in Europe and North America. This project consists of a physical aggregation between the participants and a notional pool-leader level on the parent company Permasteelisa S.p.A., ensuring maximum optimization of the excess liquidity for the participating companies. In terms of mortgages on real estate or other fixed assets owned by the Group, please refer to note 37 “Commitments”. Net financial position To complete the information reported in these notes, the Company financial position as of March 31, 2017 is below reported. (€ thousands)

March 31, 2017

March 31, 2016

Cash and cash equivalents Financial receivables from subsidiaries Financial payables to subsidiaries Amounts payables to bank Shareholder’s loan Net financial position - short term

4,820 284,786 (128,364) (168,529) (50,056) (57,343)

20,056 290,202 (183,464) (130,025) (42,685) (45,916)

Shareholder’s loan Net financial position - medium/long term

(205,037) (205,037)

(217,452) (217,452)

Total net financial position

(262,380)

(263,368)

The average rates recorded by the Company during the period are as follows: a. current account deposits and bank deposits: not detected as there were no such financing during the year 2017 (same of March 2016); b. short-term loans: 0.97% (March 2016: 1.34%);

173


c.

mortgages and medium- long term loans: not detected as there were no such financing during the year 2017 (same of March 2016); d. Shareholder’s loan: spread applied equal to 0.95% (March 2016: 0.95%) e. liabilities on financial leasing: not detected as there are not financial leases. The actual average rate over overall indebtness stood at 1% (March 2016: 1.08%).

29. Severance indemnity fund In accordance with national regulations, the amount due to each employee accrues on the basis of the service performed and must be paid when the employee leaves the Company. The payment due upon termination of the employment relationship is calculated on the basis of its duration and the taxable salary of each employee. The liability, revalued annually based upon the official cost of living index and legal interest, is not associated with any condition or accrual period, or any funding obligation; therefore, there are no assets at the service of the fund. The regulations were supplemented by Italian Legislative Decree no. 252/2005 and by Italian Law no. 296/2006 (Finance 2007) which, for companies with at least 50 employees, established that the shares accrued since 2007 are used, at the option of employees, either for the INPS Treasury Fund or for other forms of supplementary pension schemes, assuming the nature of “defined contribution plan”. The revaluations of the amounts in existence at the dates of option are still, however, accounted to the severance indemnity fund, along with, for companies with less than 50 employees, also the shares accrued and not used for the supplementary pension scheme. In accordance with IAS 19 (2011), that fund is accounted for as “Defined benefits plan”. The table reported above refers exclusively to the severance indemnity accrued before 2007.

(€ thousands)

Present value of the defined benefit obligation Unrecognised actuarial gains and losses Recognised liability for severance indemnity fund

March 31, 2017

March 31, 2016

3,452 0 3,452

3,452 0 3,452

March 31, 2017

March 31, 2016

3,452 (2) (110) 30 82 3,452

3,424 48 (20) 0 0 3,452

March 31, 2017

March 31, 2016

82 82

0 0

Movements of the severance indemnity fund (€ thousands)

Net recognised liability as of April 1 Other movements Payments Actuarial (gains)/losses Expenses recognised in the income statement Net recognised liability as of March 31 Expenses recognised in the income statement (€ thousands)

Interest on obligation

174


Principal economic actuarial assumption:

Actuarial rate as of March 31 Inflation rate Future TFR increase rate

March 31, 2017

March 31, 2016

1.43% 1.50% 2.63%

0% 0% 0%

Principal demographic actuarial assumption: Mortality table RG48 published by the State General Accounting Tables INPS Tables split into age and gender 100% upon achieving AGO requirements

Probability of death

Probability of invalidity Probability of retirement

As of March 31, 2016, due to the immaterially amount, the actuarial valuation has not been provided. Set out below is the sensitivity analysis for each actuarial circumstance for the purposes of determining the amount of year-end liability; the same shows the effects, expressed in absolute terms, of variations of the actuarial circumstances reasonably possible at that date. Variations in actuarial assumptions March 31, 2017

March 31, 2016

Inflation rate +0.25 p.p. -0.25 p.p.

3,489 3,360

0 0

Discount rate +0.25 p.p. -0.25 p.p.

3,322 3,531

0 0

The average financial duration of the obligation amounts to 13 years.

30. Provisions for risks and charges (â‚Ź thousands)

Balance as of January 1, 2016 Provisions made during the year Provisions used during the year Balance as of March 31, 2016

(â‚Ź thousands)

Balance as of April 1, 2016 Provisions made during the year

Provision for losses in a subsidiary

0

0

Provision for losses in a subsidiary

0

Warranty Provision provision for risks on ongoing jobs

Other provision s

Total

2,025

1,346

2,025

1,346

3,576 79 (102) 3,553

Warranty Provision provision for risks on ongoing jobs

Other provision s

Total

1,346 1,000

3,553 1,795

205 79 (102) 182

182 295

2,025 500

175


Provisions used during the year Provisions reversed during the year Balance as of March 31, 2017

(413) 0

64

(1,130) 1,216

2,525

(413) (1,130) 3,805

31. Trade payables to third parties (â‚Ź thousands)

Trade payables to third parties

March 31, 2017

March 31, 2016

36,754 36,754

59,112 59,112

As of March 31, 2017, trade payables includes invoice to be received for Euro 8,857 thousand (March 2016: Euro 11,343 thousand) and retentions for Euro 939 thousand (March 2016: Euro 1,110 thousand). With reference to currency trade payables to third parties, the following table summarizes the outstanding balance accounts at year end (in Euro): March 31, 2016

March 31, 2017

Currency AED AUD CAD CHF GBP JPY QAR KWD PLN AZN USD EUR

Payable in foreign currency

Counter-value in Euro at the end of the period

0 3,855 2,006 37,936 104,229 2,646,188 0 23,409 0 0 2,061,737 6,871

0 2,757 1,406 35,467 121,830 22,135 0 71,833 0 0 1,928,479 6,871

Currency AED AUD CAD CHF GBP JPY QAR KWD PLN AZN USD EUR

Payable in foreign currency

Counter-value in Euro at the end of the period

(743) 3,855 5,456 11,638 64,773 269,884,606 60,332 23,409 (93) 686,210 801,773 0

(178) 2,603 3,702 10,647 81,830 2,110,122 14,558 68,113 (22) 390,851 704,237 0

32. Trade payables to subsidiaries (â‚Ź thousands)

Trade payables Scheldebouw B.V. Permasteelisa Hong Kong Limited RI.ISA D.o.o. Permasteelisa Pacific Holdings Ltd. Permasteelisa (India) Private Ltd. Permasteelisa Gartner Middle East Llc Permasteelisa Gartner Saudi Llc Permasteelisa Gartner Qatar Llc Permasteelisa UK Ltd. Global Architectural Co. Ltd. Josef Gartner GmbH Permasteelisa North America Corp. Permasteelisa PTY Ltd

March 31, 2017

March 31, 2016

1,251 1,180 738 233 205 203 149 121 121 103 102 86 43

738 1,364 624 199 517 178 115 66 31 140 208 133 155

176


Josef Gartner Curtain Wall (Shangai) Co. Ltd. Josef Gartner Switzerland AG OOO Josef Gartner Permasteelisa France S.a.s. Josef Gartner Curtain Wall (Suzhou) Co. Ltd. Permasteelisa Ireland Ltd. Permasteelisa España S.A.U. Permasteelisa Turkey Commercial exchange rate adjustment Financial payables Josef Gartner GmbH Permasteelisa Pacific Holdings Ltd. Permasteelisa North America Corp Permasteelisa France S.a.s. Permasteelisa UK Ltd. Permasteelisa Ireland Ltd. Permasteelisa Gartner Saudi Llc Permasteelisa Gartner Middle East Llc Financial exchange rate adjustment

33 26 14 5 4 1 1 0 9,986 14,605

9 46 7 11 4 4 1 2 568 5,120

92,670 13,626 9,676 7,584 5,292 3,560 3,084 0 (7,128) 128,364

136,149 18,298 0 9,441 13,873 2,113 0 9,331 (5,741) 183,464

As far as financial payables are concerned, the same applies as for financial receivables as per item 22 “Amounts receivables from subsidiaries”. With reference to currency trade payables to subsidiaries, the following table summarizes the outstanding balance accounts at year end (in Euro):

Currency AUD CAD CHF CNY GBP HKD QAR USD THB

March 31, 2017 Counter-value in Payable in foreign Euro at the end currency of the period 206,865 1,309 28,182 170,443 104,603 1,453,647 207,924 2,470,474 3,346,646

147,951 918 26,348 23,145 122,267 174,982 53,430 2,310,798 91,130

March 31, 2016

Currency AUD CAD CHF CNY GBP HKD QAR USD THB

Payable in foreign currency

Counter-value in Euro at the end of the period

398,429 1,309 49,666 0 23,966 966,872 0 2,751,275 5,435,751

269,081 888 45,436 0 30,277 109,521 0 2,416,579 135,833

With reference to currency financial payables to subsidiaries, the following table summarizes the outstanding balance accounts at year end (in Euro):

Currency AUD

March 31, 2017 Counter-value in Payable in foreign Euro at the end currency of the period 8,560,235

6,122,325

March 31, 2016

Currency AUD

Payable in foreign currency

Counter-value in Euro at the end of the period

8,609,746

5,814,646

177


GBP HKD

4,419,965 105,478,552

5,166,347 12,696,939

GBP HKD

8,662,964 135,696,424

10,944,304 15,370,792

With reference to paybles in foreign currency to third parties, the following table summarizes the outstanding balance accounts as at March 31, 2017 (in Euro):

March 31, 2016

March 31, 2017

Currency

Counter-value in Payable in foreign Euro at the end currency of the period

USD

25,971,667

24,293,019

Currency USD

Payable in foreign currency

Counter-value in Euro at the end of the period

33,400,000

29,336,847

33. Current tax liability (€ thousands)

Current tax liability

March 31, 2017

March 31, 2016

0 0

0 0

The item “Current tax liabilities” should be analysed in conjunction with the item 23 " Income tax receivables”.

34. Other current liabilities (€ thousands)

Employees taxation payables Amounts payable to social agencies Amounts payable to employees Other liabilities Accrued liabilities and deferred income

March 31, 2017

March 31, 2016

1,456 2,924 9,116 3,685 282 17,463

1,950 2,706 8,611 18,439 244 31,950

March 31, 2017

March 31, 2016

3,416 269 3,685

16,731 1,708 18,439

Other liabilities (€ thousands)

Forward liabilities Other liabilities

Forward liabilities are referred for Euro 3,416 thousand to foreign currency transactions (March 2016: Euro 16,731 thousand).

35. Risk management The exposure to credit, interest rate, commodity price and currency risks, arises in the normal course of the Company’s business. Historically, derivative financial instruments are used by the Company to hedge its exposure to fluctuations in foreign exchange rates. The Company also hedges itself against commodity price risks.

178


Credit Risk Credit risk is the risk that arises when a customer or counterparty may fail to meet his commitments when they become due and cause the Company to incur in a financial loss. The Company’s primary exposure to credit risk arises from its contract receivables. The Company has implemented a specific Risk management system to analyze each specific tender and a rating is given to each project and customer. Specific measures are applied to minimize the company’s risk and the system in place also allows to subsequently monitor the credit risk exposure on an ongoing basis. Other financial assets of the Company with exposure to credit risk include cash and cash equivalents and derivative financial instruments to hedge the Company exposure to foreign currency risk. Cash and cash equivalents are held with banks with high credit ratings. Transactions involving derivative financial instruments are allowed only with counterparties that are of high credit quality. As such, the management does not expect any counterparty to fail to meet their commitments. At the balance sheet date there were no significant concentrations of credit risk on specific customers or on specific geographical areas. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position. With reference to trade receivables from third parties, from subsidiaries and associated companies, as well as financial receivables from subsidiaries recorded in the financial statements, the maximum credit risk exposure by geographical area is listed in Appendix I. In the following table the trade receivables from third parties broken down by maturity: (€ thousands)

Not past due Past due 0-180 days Past due 181-365 days More than one year Total Exchange rate adjustment

Gross Receivables

Bad debts provision

Net Receivables

Gross Receivables

Bad debts provision

Net Receivables

March 31, 2017

March 31, 2017

March 31, 2017

March 31, 2016

March 31, 2016

March 31, 2016

14,490 15,696 765 9,089 40,040

(646) (1) (5) (5,845) (6,497)

13,844 15,695 760 3,244 33,543 1,810 35,353

16,091 4,302 1,116 11,542 33,051

(714) (50) (91) (4,542) (5,397)

15,377 4,252 1,025 7,000 27,654 5,007 32,661

As of March 31, 2017 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 41% of the total (March 2016: 56%) and the credit due for over one year amounted to 9% (March 2016: 25%). Interest rate risk The Company’s exposure to changes in interest rates relates primarily to interest-earning assets and interestearning liabilities (amounts receivable from banks and other financial institutions or amounts payable to banks and other financial institutions). Interest rate risk is actively managed at central level to guarantee that interests payments are within acceptable levels and consistent with the Company’s business strategies. The Company does not generally use derivative financial instruments to hedge its exposure to interest rate risk. Sensitivity analysis The impact of a variation of 100 basis points in interest rates on the year end date would have determined an increase (decrease) of the net equity and of the results for the period for the amounts shown below. The analysis was done assuming that all the other variables, in particular the exchange rate to foreign currencies, remain stable. On the same basis has been done also the analysis of previous year.

179


(€ thousands)

March 31, 2017 Variable rate loans

(€ thousands)

March 31, 2016 Variable rate loans

Result for the period +100 bp - 100 bp

Net equity +100 bp - 100 bp

(4,307)

4,307

(4,307)

4,307

(4,307)

4,307

(4,307)

4,307

Result for the period +100 bp - 100 bp

Net equity +100 bp - 100 bp

(1,002)

1,002

(1,002)

1,002

(1,002)

1,002

(1,002)

1,002

Please note that the Company does not have any fixed rate loans. Liquidity risk Policies and procedures have been established to monitor and control liquidity, at both central level and individual subsidiary level, on a daily basis adopting a cash flow management approach. The table below shows the detail of the future contractual flows of financial liabilities held by the Company, broken down into financial liabilities not associated to derivative tools and financial liabilities associated to derivative tools. Exposure to the liquidity risk associated to financial liabilities other than derivative instruments March 31, 2017

(€ thousands)

Financial liabilities other than derivatives Trade payables Trade payables to subsidiaries Amounts payable to banks Financial payables to subsidiaries Financial payables to sharesholder Total

Carrying value

Contractual Cash Flows

Contractual Cash Flows less than 1 year

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

36,754 14,605 168,529 128,364 255,093 603,345

36,754 14,605 168,529 128,364 255,093 603,345

36,754 14,605 168,529 128,364 50,056 398,308

0 0 0 0 205,037 205,037

0 0 0 0 0 0

Carrying value

Contractual Cash Flows

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

59,112 5,120 130,025 183,464 260,137 637,858

59,112 5,120 130,025 183,464 260,137 637,858

0 0 0 0 217,452 217,452

0 0 0 0 0 0

March 31, 2016

(€ thousands)

Financial liabilities other than derivatives Trade payables Trade payables to subsidiaries Amounts payable to banks Financial payables to subsidiaries Financial payables to sharesholder Total

Contractual Cash Flows less than 1 year

59,112 5,120 130,025 183,464 42,685 420,406

180


Exposure to the liquidity risk associated to financial liabilities related to derivative instruments

(€ thousands)

Carrying Contractu value al Cash Flows

March 31, 2017 Contractua Contractual l Cash Cash Flows Flows less between 1 than 1 year and 5 years

Contractual Cash Flows exceeding 5 years

Assets (-) / Liabilities (+) Assets from fair-value valuation on forward contracts on currencies - in flows - out flows Liabilities from fair-value valuation on forward contracts on currencies - in flows - out flows Total booked value

(€ thousands)

Assets (-) / Liabilities (+) Assets from fair-value valuation on forward contracts on currencies - in flows - out flows Liabilities from fair-value valuation on forward contracts on currencies - in flows - out flows Total booked value

(2,232)

(2,232)

(2,232)

0

0

3,416

(231,427) 229,195 3,416

(231,427) 229,195 3,416

0

0

1,184

(205,845) 209,261 1,184

(205,845) 209,261 1,184

0

0

Carrying Contractu value al Cash Flows

March 31, 2016 Contractual Contractual Cash Flows Cash Flows less than 1 between 1 year and 5 years

Contractual Cash Flows exceeding 5 years

(15,968)

(15,968)

(15,968)

0

0

16,731

(408,611) 392,643 16,731

(408,611) 392,643 16,731

0

0

(289,842) 306,573

(289,842) 306,573

763

763

0

0

763

Please note the value of assets and liabilities shown in the tables above are provided for information only; indeed, the derivative contracts do not in fact lead to the actual outlay or collection of the stated amounts which, on the contrary, are subject to the settlement of the difference between the two outflows. Also note that to correctly assess the liquidity risk, it is necessary to bear in mind the financial assets held by the Company to offset the future cash flows arising from the aforementioned financial liabilities: a) cash and cash equivalents for Euro 4,820 thousand and Euro 20,056 thousand respectively as of March 31, 2017 and as of March 31, 2016; b) trade receivables from third parties for Euro 35,353 thousand and Euro 32,661 thousand respectively as of March 31, 2017 and as of March 31, 2016; c) trade receivables from subsidiaries for Euro 87,932 thousand and Euro 65,455 thousand respectively as as of March 31, 2017 and as of March 31, 2016; d) financial receivables from subsidiaries for Euro 284,786 thousand and Euro 290,202 thousand respectively as of March 31, 2017 and as of March 31, 2016. Foreign currency risk The Company incurs foreign currency risk on contract revenues and purchases and on borrowings and loans denominated in a currency other than Euro. The foreign currencies giving rise this risk are primarily United State dollars and Great Britain pounds. Generally the contracts are hedged for the total amount denominated in foreign currency; see paragraph “e” for a detailed description of the way used by the Company to hedge its job contracts in foreign currency. In respect

181


to monetary assets and liabilities held in foreign currency other that those related to the contracts, the Company’s policy consists in minimizing the net exposure to change in interest rates by specific medium/shortterm forward exchange contracts, rolled over at maturity if necessary. Sensitivity analysis A 10% decrease of the Euro against the following currencies as of March 31, 2017 would have led to the following increase (decrease) of the results for the period and the net equity. The analysis has been performed considering that all the other variables, more specifically the interest rates, had remained constant. The analysis was performed on the same basis compared to the previous period.

(€ thousands)

March 31, 2017 GBP USD HKD SGD AUD THB YEN Others

(€ thousands)

March 31, 2016 GBP USD HKD SGD AUD THB YEN Others

Result for the period

206 2,929 136 109 (8) (2) 4 55 3,429 Result for the period

(752) (274) 54 157 8 (7) 4 96 (714)

Net equity

206 2,929 136 109 (8) (2) 4 55 3,429 Net equity

(752) (274) 54 157 8 (7) 4 96 (714)

A 10% increase of the Euro against the following currencies as of March 31, 2017 and as of March 31, 2016 would have led to the same but opposite effect, again supposing that all other variables had remained constant. Please note that the analysis did not take into account receivables, payables and future trade flows against which the hedging operations were performed. It is reasonable to believe that the variation of the exchange rates may lead to an opposite financial effect for this item, for a same or higher amount, on the hedged transactions. Commodities price risk The Company has a price risk exposure, including the relevant foreign exchange risk, particularly on aluminium purchases, which are one of the main work order cost items. As far as managing the aluminium price risk is concerned, the Company’s policy is oriented towards minimizing the need to resort to financial markets for hedging, by conducting relations with the suppliers in order to fix the price for specific time frames.

182


For a detailed description of the Company’s practices of commodity hedging management on its own orders, please refer to paragraph “Accounting principle” included at the beginning of the notes.

36. Fair value measurement There are no financial assets or liabilities whose fair value significantly differs from their carrying amount. IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement. -

Levels used in the hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets and liabilities.

Assets and liabilities that are measured at fair value on a recurring basis. The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2017: (€ thousands) Not consolidated subsidiaries Assets at fair value available for sale or held to maturity Financial assets at fair value through profit or loss Financial receivables from subsidiaries Cash and cash equivalents

Notes

Level 1

(24) (22) (25)

Total Assets

Financial liabilities at fair value through profit or loss Amounts payables to banks and other financial creditors (current) Amounts payables to banks and other financial creditors (non current) Financial payables to subsidiaries

Level 2

Level 3

2,232 284,786 4,820 0

291,838

Total

2,232 284,786 4,820 0

291,838

(34) (28)

3,416 218,585

3,416 218,585

(28)

205,037

205,037

(32)

128,364

128,364

Total Liabilities

0

555,402

0

555,402

During the year 2017, there were no transfers between Levels in the fair value hierarchy. Assets and liabilities not measured at fair value on recurring basis: The carrying amount of Current receivables and Other current assets and of Trade payables and Other current liabilities approximates their fair value and are categorized in Level 2. The main methods and assumptions used to estimate the “fair value” of the assets and liabilities recorded in the statement of financial position according to this principle or for which its disclosure is requested by the accounting principles in the notes, are as follows:

183


Securities The Company presently does not hold significant amounts of securities held for trading or available for sale or held until their maturity. Cash and cash equivalents The carrying amount of Cash and cash equivalents usually approximates the fair value due to the short maturity of these instruments, which consist primarily of bank current accounts and time deposits. The fair value of Cash equivalents is determined with discounted expected cash flow techniques, using observable market yields. Derivatives contracts They are evaluated using listed market prices. Amounts payables to banks and other financial institutions The fair value is calculated based on discounting of future cash flows with reference to principal and interest amounts. Finance leases As described in note 28, the Company does not hold significant liabilities for financial leases. Trade receivables and payables and other receivables and payables Receivables and payables with expiring date of less than one year, are considered to have a carrying value that approximates their fair value. All the other receivables and payables with expiring dates greater than one year are discounted to determine their fair value, except for those related to contracts with retentions; the Company considers that retentions do not represent in any way a financing transaction with the customer due to the fact that the payments terms are beyond one year, as retentions, in the different geographical areas in which the Company operates, are within the normal applied trade conditions; consequently there is no necessity to apply any discounting. As of March 31, 2017, the Company considers that there are not retentions out of normal market conditions.

37. Commitments At the balance sheet date, the Company has the followings commitments: Operating leases (â‚Ź thousands)

Payable: less than 1 year within 1 to 5 years after 5 years

March 31, 2017

March 31, 2016

1,711 1,755 0 3,466

1,577 2,054 34 3,665

The Company leases a number of production sites, offices, warehouse and factory facilities under operating leases. The leases have variable length, some of them with an option to renew the lease after the expiry date. Usually lease payments are periodically increased to reflect market rental conditions.

184


Forward contracts March 31, 2017

March 31, 2016

Commitments for forward foreign exchange contracts Commitments for forward contracts on commodities

458,181 0 458,181

717,940 0 717,940

Commitments for forward foreign exchange contracts (buy) Commitments for forward foreign exchange contracts (sell)

108,919 349,262 458,181

242,691 475,249 717,940

(€ thousands)

As described in the section on the accounting standards, hedging derivative operations on currency and commodities are assessed on their “fair value”. As of March 31, 2017 the assessment of the fair value of currency hedging brought to the entry of profits for Euro 2,232 thousand (March 2016: Euro 15,968 thousand) and losses for Euro 3,416 thousand (March 2016: Euro 16,731 thousand) booked respectively under the items forward assets (note 24) and forward liabilities (note 34). Note that the stated amounts of Euro 2,004 thousand (March 2016: Euro 14,150 thousand) and Euro 2,386 thousand (March 2016: Euro 15,711 thousand) refer, respectively, to the valuation of financial currency hedging transactions, namely those covering foreign currency assets and liabilities of financial nature. Other commitments As of March 31, 2017 the Company has no other significant commitments to highlight.

38. Contingent assets and liabilities The main liabilities for third parties issued by the Company are listed below: •

Guarantees for works: amounting to Euro 15.2 million (Euro 14.6 million as of March 31, 2016) and issued by Credit Institutions and Insurance Companies to clients for the proper completion of works (Euro 14.2 milion), contractual advances (0.4 million) and retentions withheld as guarantee (Euro 0.6 million).

Guarantees issued following VAT repayment requests and other guarantees to third parties issued by Credit Institutions and Insurance Companies: for the value of Euro 12.9 million (Euro 12.1 million as of March 31, 2016)

Counter-guarantees issued by Credit Institutions and Insurance Companies in the interests of subsidiary and/or affiliated companies for a total of Euro 685.4 million (Euro 571.6 million as of March 31, 2016) for the correct execution of works, contractual advances and retentions withheld as guarantees.

Against some guarantees issued to clients, the Parent Company benefits from suppliers guarantees which amounted to Euro 0.8 million as of March 31, 2017. It is also noted that in December 2016 Permasteelisa S.p.A was served a tax assessment for alleged omission of retention upon dividends distributed in 2011 to the parent company at that time. The Company, supported by its consultants, believes that there are strong legal arguments about the unlawfulness of said assessment and therefore the risk of losing the case is unlikely.

185


39. Transaction with related parties Relationships with subsidiaries During the year, the Company entered into significant relationships with direct and indirect subsidiaries, concerning trade and financial transactions entered into as part of the normal management activities usually regulated by market conditions. As for the financial effects of these transactions, they are already described in explanatory notes 22 and 32 on payables and receivables concerning subsidiaries. The following is a summary table highlighting the impact of these positions on financial statement items of the same nature. (€ thousands)

March 31, 2017 Total

Trade receivables Financial receivables – current Other receivables Trade payables Financial payables – current Financial payables – non current Other payables

Versus third parties

Related parties

%

123,285

35,353

29%

87,932

71%

284,786

0

0%

284,786

100%

15,857

15,853

100%

4

0%

51,359

36,754

72%

14,605

28%

128,364

0

0%

128,364

100%

205,037

205,037

100%

0

0%

17,463

17,131

98%

332

2%

(€ thousands)

March 31, 2016 Total

Trade receivables Financial receivables – current Other receivables Trade payables Financial payables – current Financial payables – non current Other payables

%

Versus third parties

%

Related parties

%

98,116

32,661

33%

65,455

67%

290,202

0

0%

290,202

100%

33,927

33,910

100%

17

0%

64,232

59,112

92%

5,120

8%

183,464

0

0%

183,464

100%

217,452

217,452

100%

0

0%

31,950

30,172

95%

1,778

5%

As far as the economic effects of these relations, they are included in the relevant column “Related parties” of the income statement, and they are detailed in the following table which also highlights the impact of these positions on the financial statement item total they belong to. Operating revenues to subsidiaries (€ thousands)

Permasteelisa UK Ltd. Permasteelisa France S.a.s. Permasteelisa North America Corp. Scheldebouw B.V. Permasteelisa Colombia Sas Josef Gartner GmbH Permasteelisa Hong Kong Limited Permasteelisa Ireland Ltd.

March 31, 2017

28,347 22,417 15,836 5,950 4,247 2,222 2,218 1,333

March 31, 2016 restated

22.4% 17.7% 12.6% 4.8% 3.3% 1.7% 1.7% 1.0%

56,538 27,737 11,877 108 0 4,138 44 168

40.6% 19.9% 8.5% 0.1% 0.0% 3.0% 0.0% 0.1%

186


Permasteelisa Gartner Qatar Llc OOO Josef Gartner Permasteelisa Gartner Middle East Llc Permasteelisa Gartner Saudi Llc Permasteelisa España S.A.U. Bleu Tech Montreal Inc. Permasteelisa (Pacific) Holdings Ltd. Global Architectural Co. Ltd. Consorzio Marine Project Solutions Permasteelisa Japan K.K. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Permasteelisa Philippines Inc. Permasteelisa Projects (Thailand) Ltd. Permasteelisa PTY Limited J. Gartner Curtain Wall (Shanghai) Ltd. Permasteelisa (INDIA) Private Ltd. RI.SA. D.o.o. Total Total operating revenues

1,200 1,116 679 272 52 40 28 18 8 2 2 1 1 0 0 0 0 85,989 127,099

0.9%

67.7%

3,184 2,598 1,337 810 266 1 52 306 0 1 0 0 0 16 5 5 1 109,192

78.4%

100.0%

139,219

100.0%

0.9% 0.5% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

2.3% 1.9% 1.0% 0.6% 0.2% 0.0% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Operating costs from subsidiaries (€ thousands)

Permasteelisa North America Corp. Josef Gartner GmbH Permasteelisa Hong Kong Limited Permasteelisa Gartner Middle East Llc Permasteelisa Pacific Holdings Ltd. Permasteelisa UK Ltd. Josef Gartner Curtain Wall (Shanghai) Co. Ltd. OOO Josef Gartner Scheldebouw B.V. Permasteelisa France S.a.s. Global Architectural Co. Ltd. Bleu Tech Montreal Inc. Permasteelisa Gartner Saudi Llc Permasteelisa Gartner Qatar Llc Permasteelisa (India) Private Limited Dongguan Permasteelisa Curtain Wall Ltd. Permasteelisa Japan K.K. Permasteelisa España S.A.U. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Consorzio Marine Project Solutions Permasteelisa Mongolia Llc. Josef Gartner Curtain Wall (Suzhou) Co. Ltd. Permasteelisa Philippines Inc. Permasteelisa Projects (Thailand) Co. Ltd Global Wall Malaysia Sdn. Bhd. Gartner Taiwan Permasteelisa Ireland Ltd.

March 31, 2017

(6,501) (3,635) (2,721) (2,041) (1,924) (1,886) (1,083) (914) (782) (580) (448) (445) (445) (424) (380) (251) (248) (157) (120) (91) (88) (87) (70) (62) (47) (17) (16)

March 31, 2016 restated

-5.1% -2.9% -2.2% -1.6% -1.5% -1.5% -0.8% -0.7% -0.6% -0.4% -0.3% -0.3% -0.3% -0.3% -0.3% -0.2% -0.2% -0.1% -0.1% -0.1% -0.1% -0.1% -0.1% 0.0% 0.0% 0.0% 0.0%

(5,947) (4,887) (1,210) (5,115) (2,230) (774) (750) (3,944) 2,609 (642) (359) (694) (542) (938) 63 (142) 0 605 3 0 (96) (172) (117) (42) (32) (53) (10)

-3.6% -3.0% -0.7% -3.1% -1.4% -0.5% -0.5% -2.4% 1.6% -0.4% -0.2% -0.4% -0.3% -0.6% 0.0% -0.1% 0.0% 0.4% 0.0% 0.0% -0.1% -0.1% -0.1% 0.0% 0.0% 0.0% 0.0%

187


Permasteelisa Macau Limited Josef Gartner (Macau) Ltd Josef Gartner & Co. UK Ltd. Josef Gartner Switzerland AG Permasteelisa PTY Limited RI.ISA D.o.o. Permasteelisa Japan K.K. Total

(5) (4) 0 33 68 1,004 0

0.0%

(24,367)

Total operating costs

129,105

-18.9%

(5) (10) 3 47 (1) 1,083 (795) (25,094)

-15.4%

100.0%

163,027

100.0%

0.0% 0.0% 0.0% 0.1% 0.8% 0.0%

0.0% 0.0% 0.0% 0.0% 0.0% 0.7% -0.5%

The operating costs highlighted in the table above are mainly included in the items “raw materials and consumables used”, “services expenses and use of third party assets” and “costs recovery”.

Financial income to subsidiaries (€ thousands)

Josef Gartner GmbH Permasteelisa Gartner Qatar Llc Permasteelisa Pacific Holdings Ltd. Permasteelisa Gartner Saudi Llc Permasteelisa Gartner Middle East Llc Permasteelisa North America Corp. Scheldebouw B.V. Permasteelisa Participations S.r.l. Permasteelisa Turkey Insaat Ticaret Limited Sirketi Permasteelisa UK Ltd. Permasteelisa España S.A.U. Permasteelisa France S.a.s. Total Total financial income

March 31, 2017

March 31, 2016 restated

20,000 1,205 1,174 823 429 309 31 11 3 2 1 0 23,988

16.6%

120,672

100.0%

1.0% 1.0% 0.7% 0.4% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 20.0%

19,665 685 889 296 163 342 181 24 7 27 0 1 22,280

30.7% 1.1% 1.4% 0.5% 0.3% 0.5% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 34.8%

63,964 100.0%

Financial expenses from subsidiaries (€ thousands)

Permasteelisa Pacific Holdings Ltd. Josef Gartner GmbH Permasteelisa UK Ltd. Permasteelisa France S.a.s. Permasteelisa Gartner Middle East Llc Permasteelisa North America Corp. Permasteelisa Ireland Ltd. Permasteelisa Espana S.A.U. Total Total financial expenses

March 31, 2017

March 31, 2016 restated

310 221 99 24 8 8 5 0

0.3%

675 105,614

0.7%

0.6%

422 380 132 14 34 1 9 6 998

100.0%

62,786

100.0%

0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%

0.6% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 1.6%

188


Other relationships with other related parties in the context of the Permasteelisa S.p.A. Expenses incurred for the members of the Board of Directors and for the Company’s managers with strategic responsibilities are included under “Personnel expenses” and they amount to Euro 4,151 thousand whereas remuneration for Auditors is included in item “Services expenses and use of third-party assets” and they amount to Euro 146 thousand. As of March 31, 2017 the Company showed a debit balance towards other related parties of Euro 310 thousand. During the year, the Company has not entered directly into relations with related parties other than its subsidiaries: Group company

Transaction type

Related parties

Revenue/ (Cost) in Euro

Permasteelisa S.p.A.

Costs backcharge

Nr 6 Managers of Permasteelisa S.p.A.

9,042.35

3,671.71

Permasteelisa S.p.A.

Offices rental

Ugo and Olga Levi Onlus Foundation

(309,532.88)

(160,332.41)

revenues/receivables (expenses)/(payables)

9,042.35 (309,532.88)

3,671.71 (160,332.41)

2017

Receivable/ (Payable) in Euro as of March 31, 2017

The transaction with Ugo and Olga Levi Onlus Foundation concerns the lease contract for Venice’s offices that provides an annual fee of Euro 310,000 for 6 years with ISTAT adjustment. These transactions are regulated at normal market conditions Transactions with key management personnel The remuneration of top managers that have a key function within the Company amounted in total to Euro 4,151 thousand, of which Euro 1,582 thousand can be referred to specific members of the Company’s Board of Directors, Euro 2,128 thousand concern Managers with Holding functions and Euro 441 thousand for the Company’s Business Unit Manager functions.

40. Emoluments of Statutory Auditors The fees of Statutory Auditors amount to Euro 248 thousand of which Euro 133 thousand for statutory audit fees, Euro 17 thousand for tax services, Euro 22 thousand for other services related to the J-SOX audit required by Shareholder and Euro 76 thousand for other consultancy fees.

41. Positions or transactions deriving from unconventional and/or unusual operations There are no positions or transactions deriving from unconventional and/or unusual operations to highlight.

42. Subsequent events No major events have occurred after the end of the financial year.

189


PERMASTEELISA S.p.A. Appendix to the Statutory Financial Statements

190


Appendix I: Receivables and payables broken down by geographical area Receivables and payables, included in the Statement of financial position as of March 31, 2017, are reported in the following tables broken down by geographical area: a) b) c) d)

Trade receivables from subsidiaries; Financial receivables from subsidiaries; Trade payables from subsidiaries; Financial payables from subsidiaries.

Trade receivables from subsidiaries (â‚Ź thousands)

Saudi Arabia Australia Azerbaijan Canada China Croatia United Arab Emirates Philippines France Germany Japan Jordan Hong Kong India Irland Italy Macao Malaysia Mongolia Netherlands Principality of Monaco Qatar United Kingdom Russia Singapore Spain United States Switzerland Taiwan Thailand Turkey

March 31, 2017 3,625 116 271 590 5,114 210 2,186 888 3,495 2,490 (100) 49 1,662 2,670 91 101 9 240 865 4,272 1,359 24,472 12,396 3,416 1,328 70 7,677 54 342 7,971 3

March 31, 2016 1,796 355 0 918 3,957 143 1,445 766 7,841 1,708 162 0 659 2,453 153 5 82 192 728 481 0 13,320 13,452 2,038 967 67 4,419 25 230 7,090 3

87,932

65,455

March 31, 2017 1,925 (2,758) 90,357 5,264

March 31, 2016 85,149 2,641 0 5,021

Financial receivables from subsidiaries (â‚Ź thousands)

Saudi Arabia Azerbaijan United Arab Emirates Italy

191


Netherlands Qatar United Kingdom Singapore Spain United States Turkey

15,375 95,120 126 75,868 870 968 1,671

11,521 74,239 0 75,512 436 34,063 1,620

284,786

290,202

March 31, 2017 7,255 2,147 44 37 738 676 6 102 122 1,419 205 2 7 1,251 123 14 237 1 87 26 106 0

March 31, 2016 118 0 159 13 624 177 11 208 30 2,019 517 4 (98) 738 65 7 197 1 147 45 136 2

14,605

5,120

March 31, 2017 3,084 (7,128) 0 7,584 92,668 5,292 3,561 13,627 9,676

March 31, 2016 0 1,960 4,559 9,441 136,149 10,944 2,113 18,298 0

128,364

183,464

Trade payables from subsidiaries (â‚Ź thousands)

Saudi Arabia Azerbaijan Australia China Croatia United Arab Emirates France Germany United Kingdom Hong Kong India Irland Italy Netherlands Qatar Russia Singapore Spain United States Switzerland Thailand Turkey

Financial payables from subsidiaries (â‚Ź thousands)

Saudi Arabia Azerbaijan United Arab Emirates France Germany United Kingdom Irleland Singapore United States

192


PERMASTEELISA S.p.A. Auditors’ report on the Consolidated and Statutory Financial Statements

193


Annual Report 2017  
Annual Report 2017  

Permasteelisa Group Consolidated and Statutory Financial Statement for the year ended March 31, 2017