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Consolidated and Statutory Financial Statements for the year ended March 31, 2019 (Translation from the Italian original which remains the definitive version)

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Index ADMINISTRATION AND CONTROLLING BOARDS GROUP STRUCTURE MANAGEMENT REPORT TO THE CONSOLIDATE FINANCIAL STATEMENTS AND TO THE STATUTORY FINANCIAL STATEMENTS Main economic and financial data Performance for the period Overview of ongoing projects and main project acquisitions Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to The Group's organizational structure Research and Innovation Knowledge Sharing Group Information Technology Human Resources Shareholder Treasury shares Transactions with related parties Unconventional or unusual operations Significant events subsequent to year end and outlook Other disclosures Operating performance and financial position of Permasteelisa S.p.A. Approval of the Statutory Financial Statements and allocation of 2019 result

Permasteelisa Group – Consolidated Financial Statements as of March 31, 2019 Consolidated income statement Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of cash flows Consolidated statement of net equity changes Notes to the consolidated Financial Statements Appendix I: Permasteelisa Group’s companies

6 7 9 12 14 24 32 34 34 35 35 36 42 42 42 42 42 43 46 50

52 53 54 55 56 58 60 113

Permasteelisa S.p.A. – Statutory Financial Statements as of March 31, 2019 Income statement Statement of comprehensive income Statement of financial position Statement of cash flows Statement of net equity changes Notes to the Statutory Financial Statements Appendix I: Receivables and payables broken down by geographical area

118 119 120 121 122 124 126 181

PERMASTEELISA S.p.A. Auditors’ report on the Consolidated and Statutory Financial Statements 184

Company name Permasteelisa S.p.A. with soles Shareholder Subject to management and coordination by LIXIL Group Corporation 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

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Administration and Controlling Boards Board of Directors in charge as at April 1, 2018 up to July 26, 2018 Chairman

Davide Croff

Chief Executive Officer

Riccardo Mollo

Directors

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 Directors in charge from July 26, 2018 up to May 8, 2019 Chairman

Davide Croff

Chief Executive Officer

Riccardo Mollo

Directors

Sachio Matsumoto (CCI) (CRN) Harumi Matsumura (CRN) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Yutaka Nakamura (CCI) Motohiko Shintani (CCI) Member of the Internal Control Committee (CRN) Member of the Remuneration and Nominating Committee

Board of Directors in charge since May 8, 2019 Chairman

Davide Croff

Chief Executive Officer

Klaus Ernst Lother

Directors

Sachio Matsumoto (CCI) (CRN) Harumi Matsumura (CRN) Hwa Jin Song Montesano Daizo Motoyoshi (CCI) Yutaka Nakamura (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

Eugenio Romita Antonella Alfonsi Roberto Spada

Alternate Auditors

Michele Crisci Luigi Provaggi

Independent Auditors

Deloitte & Touche S.p.A.

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

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8


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

9


MANAGEMENT REPORT ON OPERATIONS Dear Shareholder, The following report accompanies the Consolidated Financial Statements and the Financial Statements of Permasteelisa S.p.A. as of March 31, 2019. 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. During the year and after long negotiations, it became impossible to complete the sale of the Permasteelisa Group by its Shareholder LIXIL in favor of Grandland Holding Group Limited. Since the 20th of December 2018 the company Permasteelisa S.p.A. is managed and coordinated by LIXIL Group Corporation, listed on the Tokyo Stock Exchange. The fiscal year 2019 (April 2018 – March 2019) has been characterized by a series of events that negatively affected Group performances, both in economic and financial terms; in particular, the EBIT is negative for Euro 383.7 million, including also the devaluation of the intangibles assets due to the impairment test, and the net result is a loss for Euro 413.6 million. The Shareholder LIXIL is therefore financially intervened recapitalizing the parent company Permasteelisa S.p.A. on several times during the year for a total amount of Euro 472 million, considering also the negative effect on consolidated net equity arising from applying the new IFRS 15, amounting to Euro 53.9 million. This recapitalization has enabled the company to repay all the financial debts and to have a positive consolidated cash balance at March 31, 2019 for Euro 82.3 million. The negative results achieved made it necessary to make a careful assessment of the going concern assumption by the Directors, after which, for the reasons better explained in the explanatory notes, it was considered appropriate for the preparation of these financial statements, despite the presence of significant elements of uncertainty, in the assumption of being able to count on the necessary support of the Shareholder to achieve the objectives of the 2020-2024 Business Plan. The order intake has been lower compared with the same period of previous year; this result is consistent with the Group strategy aimed at greater selectivity in the acquisition of new orders to ensure a more profitable backlog and to improve control of the order book, in particulary, in the North America area. Moreover, following the losses generated in the year, the management has identified some actions, with the support of a leading strategic consulting firm, aimed at reviewing its strategy on the markets, organisation, production capacity and fixed costs. The new orders acquired during the period April 2018 – March 2019 amount to Euro 959 million (March 2018 Euro 1,322 million) and the main projects have been awarded in Europe Region (United Kingdom and other European markets, such as France, Switzerland and Germany) and in North America area. The acquisition in the Asian area are the same as the previous year. The backlog remains unchanged compared to last year (March 31, 2018) and it is slightly lower than Euro 2 billion. The operating profit (EBIT) achieved in March 2019 is negative and equal to Euro 383.7 million (-34.3% on total Revenues), while in March 2018 it was equal to Euro 8.5 million (0.7% on total Revenues). The Group negative perfomance during the fiscal year 2019 (April 2018 – March 2019) was mainly due to: - a significant reduction in the margins of the major ongoing projects, in particular in the North America area, due to a set of operational problems that pushed the Group to start a wider process of cost analysis for the completion of ongoing projects. This analysis has been completed in March 2019 and it was also the basis for the redefinition of operational strategies reflected in the 2020-2024 Business Plan; - the negative result for some lawsuites, in particular in the European area; - a low value of new orders acquired during the period, which did not lead to a full coverage of the operating costs of some production centers. The application of the new international accounting standard IFRS 15, which provides for more stringent requirements in the recognition of revenues that arise from contractual changes and for variable amounts, also does not allow for any capitalization of the costs incurred in the tender preparation phase (Sales and Tender). Consequently, the costs of Sales and Tender have weighed more heavily on the income statement than the previous year for around Euro 5.6 million. In addition, revenues amounting to Euro 50.7 million recognized in previous periods, have been reversed and debited to the opening balance of shareholders' equity, against claims for which the conditions required by the new standard were not present. 10


The result before tax (EBT) achieved in March 2019 is negative for Euro 408 million (March 2018: negative for Euro 20.8 million) due to net financial expenses for Euro 24.4 million (March 2018: Euro 29.3 million) slightly lower than the previous year. The net result in March 2019 is negative for Euro 413.6 million (March 2018: negative for Euro 28.4 million) due to the impact of taxes for Euro 5.6 million (March 2018: Euro 7.6 million). As previously mentioned, thanks to the recapitalization occurred during the year, the consolidated balance sheet of Permasteelisa Group shows a positive net financial position for Euro 82.3 million, having fully repaid its financial debts, compared to a net debt as of March 31, 2018, equal to Euro 295.2 million.

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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 IFRS accounting figures have been adjusted for: - eliminating the effects of the merger (hereafter named Monnalisa) of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. into Permasteelisa S.p.A. occurred in the year 2010, with a decrease of the expenses at profit and loss for Euro 4,844 thousand (mainly related to depreciation of intangible and tangible assets, net of the related tax effect) and - eliminating the effects of the devaluation registered at the end of 2019 following the Impairment test on the Group's net invested capital and which led to the write-down of the entire amount of intangible fixed assets associated with the transaction named Monnalisa, for an amount of Euro 45,370 thousand, net of the related tax effect. The Group's results for the year 2019, adjusted and compared with previous period, are summarized here below:

March 31, 2019

March 31, 2018

Operating revenues

1,116,873

1,276,666

EBITDA %

(303,069) -27.1%

29,597 2.3%

EBIT %

(383,652) -34.3%

8,491 0.7%

Normalized EBIT %

(316,887) -28.4%

15,140 1.2%

Result before tax %

(408,017) -36.5%

(20,776) -1.6%

Normalized result before tax %

(341,252) -30.6%

(14,127) -1.1%

Net result %

(413,649) -37.0%

(28,418) -2.2%

Normalized net result %

(363,434) -32.5%

(23,574) -1.8%

â‚Ź thousands

March 31, 2019

March 31, 2018

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

94,901 (33,701)

174,193 279,555

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

(31,989)

(31,447)

29,211

422,301

(82,306) 0

71,490 223,661

â‚Ź thousands

Net invested capital Net financial debt/(Net cash surplus) (d) Shareholder’s loan (e)

12


Shareholder’s equity (including minority interests) (f) Coverage

111,517 29,211

127,150 422,301

Capital expenditure on tangible and intangible assets

8,524

12,289

Average workforce

5,756

5,852

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, 33, 34, 35, 36, 37; 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 notes 27 and 30, net of the Shareholder’s loan that as of March 31, 2019, is totally refund (Euro 223,661 thousand as of March 31, 2018); e) Caption included in the consolidated statement of financial position referring to note 30, but as already wrote as of March 31, 2019, the Shareholder’s loan is equal to zero because totally refund; f) Caption included in the consolidated statement of financial position referring to note 29.

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Performance for the period The C.T.B.U.H. (Council on Tall Buildings and Urban Habitat), in its report about skyscrapers completed during the past year, highlights that 2018 has definitely been a record year for the geographical distribution of these constructions, with 143 over 200 m tall buildings; around of 1,478 over 200 m tall buildings have been realized in the world, with an increase of 141% compared to 2010 year. Definitely Asia is the continent with the highest percentage of skyscrapers, as detailed in the graph below, of which China is obviously the main contributor.

During the period in comment, Permasteelisa Group won several major iconic projects for a total value of Euro 958.6 million, in particular in North America (31.4%) and Europe (46.2%), although greater selection has been placed on the North America market, in which have resulted that the orders of the year has been Euro 221.8 million lower than the previous year. In Europe too there has been a decrease for Euro 168 million although several projects are going to be acquired in the first months of the New Year. The order intake trend during this year is better highlighted in the graphic below, compared with the one of the previous year.

The effect of the decision concerning Brexit and the possible geographical reallocation of investments originally planned in the United Kingdom, should be carefully observed because it could derive an opportunity for the group that is well positioned in all European countries potential candidates to host investments ex-UK.

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The EBITDA as of March 31, 2019, negative per Euro 303 million, has been characterized by some events that have negatively contributed to the Group’s performance, amongst which: •

Like the previous year, the Group continued having a prudent approach in evaluating risks related to credit collection and project completion, especially in the areas of Asia and Middle Eastern. In particular, the company has managed to finalize the resume of the construction of an iconic project in Saudi Arabia that was suspended since several years. The resumption of this project with a different client will result in only partial payment under discussions, over the next years; therefore, although the company will aggressively enforce its rights by calling into question the previous Main Contractor, it was considered prudent to proceed to a major write-down of receivables and assets for work-in-progress not recognized by client for around 40 million of Euro. Besides, in China, as a result of the risk that two contracts are terminated by the customer, the related receivables and assets for work-in-progress amounting to approximately Euro 13 million have been devaluated.

Several lawsuits in Italy, Netherlands and United Kingdom ended with unexpected outcome unfavorable to the Group, the relative losses were therefore recognized based on the sentences issued.

Finally, following a depth review on some projects in the USA, it has been decided to revise the estimated costs to complete for several American projects absorbing so its losses in the income statement.

Due to the significant losses realized, it was necessary to proceed with an impairment test on the fixed assets recorded in the balance sheet. As result of this impairment test, the characteristics of which are more fully described in the context of the explanatory note, write-downs of intangible assets for Euro 59.6 million have been recognized. The normalized operating result (normalized EBIT) as of March 31, 2019 is negative for Euro 316.9 million (-28.4% on total revenues), while as of March 31, 2018, was equal to Euro 15.1 million (1.2% on total revenues). The normalized result before tax (normalized EBT) as of March 31, 2019, is negative for Euro 341 million (March 2018: negative for Euro 14.1 million) as a result of the net financial expense equal to Euro 24.4 million (March 2018: Euro 29.3 million), slightly lower than the previous year. The net financial costs, equal to Euro 24.4 million, are substantially linked to the forward points applied 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, in addition to the cost of debt. The normalized net result as of March 31, 2019, is negative for Euro 363.4 million (March 2018: negative for Euro 23.6 million) with a tax expenses amount equal to Euro 22.2 million (March 2018: Euro 9.4 million), having strongly reduced the credit for deferred tax assets related to tax losses in various countries. The net result after depreciations, write-downs and taxes is a loss of Euro 413.6 million against a loss of Euro 28.4 million in the previous year. The Group during the year continued, with a major consulting firm, a task aimed at defining strategic and organizational restructuring of the group which is the basis of the new Business Plan.

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 807 million (March 2018: Euro 1,171 million) and those for Interiors, Contract and Marine to Euro 151 million (March 2018: Euro 151 million). The acquisition of new orders is thus divided among the different products: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

162,857 16,341 179,198

330,933 1,475 332,408

Curtain walls-Aluminum Curtain walls-Steel Subtotal Curtain walls

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

786,333 20,819 807,152

82.0 2.2 84.2

1,073,490 97,372 1,170,862

81.2 7.4 88.6

(287,157) (76,553) (363,710)

-26.7 -78.6 -31.1

15


933 22,067 23,000

(58) 20,490 20,432

Glazed Metal Works Shops Subtotal Interiors

17,035 97,116 114,151

1.8 10.1 11.9

5,124 87,659 92,783

0.4 6.6 7.0

11,911 9,457 21,368

232.5 10.8 23.0

(8,228)

11,415

Contract

7,871

0.8

44,263

3.3

(36,392)

-82.2

1,580

3,479

Marine

29,425

3.1

14,205

1.1

15,220

107.1

195,550

367,734

958,599

100.0

1,322,113

100.0

(363,514)

-27.5

Total orders

The table above does not include new orders that are presently under finalization.

Breakdown of the Curtain walls segment (aluminum and steel) by geographical area: â‚Ź thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

29,201 (30)

100,230 (31)

109,599 632 3,558 1,167 1,147 226 19,934 260 136,523

165,931 179 4,029 9,374 0 3,930 8,665 181 192,289

228

(89)

0

49

7,095 6,012 1,154 244 (1,229) 13,276

8,901 1,094 30,013 330 (378) 39,960

179,198

332,408

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

North America South America

253,298 5,315

31.4 0.7

475,125 (48)

40.6 0.0

(221,827) 5,363

-46.7 n.a.

UK + Ireland France Germany Switzerland Italy Spain Russia Other Europe Subtotal Europe

176,595 49,512 15,332 53,363 17,147 24,952 20,666 15,671 373,238

21.9 6.1 1.9 6.6 2.1 3.1 2.6 1.9 46.2

357,082 24,692 25,524 46,629 0 12,687 40,475 34,219 541,308

30.5 2.1 2.2 4.0 0.0 1.1 3.5 2.9 46.3

(180,487) 24,820 (10,192) 6,734 17,147 12,265 (19,809) (18,548) (168,070)

-50.5 100.5 -39.9 14.4 n.a. 96.7 -48.9 -54.2 -31.0

Middle East

35,572

4.4

13,423

1.1

22,149

165.0

Central Asia

0

0.0

2,714

0.2

(2,714)

-100.0

Australia Hong Kong China Japan Other Asia (*) Subtotal Asia

29,119 10,658 94,193 8,056 (2,297) 139,729

3.6 1.3 11.7 1.0 -0.3

2.8 2.8 5.9 0.4 -0.1

17.3

32,235 33,344 68,898 5,188 (1,325) 138,340

11.8

(3,116) (22,686) 25,295 2,868 (972) 1,389

-9.7 -68.0 36.7 55.3 n.a. 1.0

Total Exteriors

807,152

100.0

1,170,862

100.0

(363,710)

-31.1

(*) The figure under "Other Asia" in March 2019 includes negative changes in contract amounts on projects acquired in prior years for Euro -1,632 thousand in Singapore (March 2018: -434 thousand) and-1,266 thousands in Mongolia (March 2018: -629 thousand).

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Breakdown of the Interiors segment by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

1,916

6,096

America

243 1 244 139 94 721

127 (131) 185 30 (6) 205

UK + Irland Russia Italy France Other Europe Subtotal Europe

423

293

3,615 10,756 144 5,425 19,940

5,480 6,551 489 1,318 13,838

23,000

20,432

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

7,756

6.8

12,189

13.1

(4,433)

-36.4

13,245 503 1,630 479 108 15,965

11.6 0.4 1.4 0.4 0.1 13.9

7,556 1,122 978 154 795 10,604

8.1 1.2 1.1 0.2 0.9 11.5

5,689 (619) 652 325 (687) 5,360

75.3 -55.2 66.7 211.0 -86.4 50.5

998

0.9

2,850

3.1

(1,852)

-65.0

Hong Kong China Japan Other Asia Subtotal Asia

19,786 36,657 3,287 29,702 89,432

17.3 32.1 3.0 26.0 78.4

18,075 26,452 8,301 14,311 67,139

19.5 28.5 8.9 15.4 72.3

1,711 10,205 (5,014) 15,391 22,293

9.5 38.6 -60.4 107.5 33.2

Total Interiors

114,151

100.0

92,783

100.0

21,368

23.0

Middle East

Breakdown of the Contract segment by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

617 426 23 107 4 (9,405)

9,705 1,442 302 69 (103) 0

(8,228)

11,415

March 31, 2019

%

America Italy UK Other Europe Middle East Hong Kong

13,573 1,577 792 634 700 (9,405)

172.4 20.0 10.1 8.1 8.9 -119.5

Total Contract

7,871

March 31, 2018

%

Variation

Variation %

33,118 3,487 1,443 210 6,005 0

74.8 7.9 3.2 0.5 13.6 0.0

(19,545) (1,910) (651) 424 (5,305) (9,405)

-59.0 -54.8 -45.1 201.9 -88.3 n.a.

100.0

44,263

100.0

(36,392)

-82.2

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

Breakdown of the Marine segment by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

498 82 825 173 2

162 3,317 0 0 0

Italy France Norway Other Europe America

24,766 336 3,460 830 33

84.2 1.1 11.8 2.8 0.1

10,307 3,898 0 0 0

72.6 27.4 0.0 0.0 0.0

14,459 (3,562) 3,460 830 33

140.3 -91.4 n.a. n.a. n.a.

1,580

3,479

Total Marine

29,425

100.0

14,205

100.0

15,220

107.1

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During the period April 1, 2018 – March 31, 2019, the Group did not record order cancellations (Euro 43 million in America in the previous period April 1, 2017 – March 31, 2018).

Backlog - Curtain Walls The economic backlog of curtain walls segment as of March 31, 2019 amounts to 1,854.5 million Euro, as detailed by geographical area in the table below:

€ milioni

Europe UK Middle East America Asia Total

March 31, 2019

%

March 31, 2018

%

349.4 401.5 63.0 817.3 223.3 1,854.5

18.8 21.7 3.4 44.1 12.0 100.0

356.9 471.6 83.6 773.3 309.7 1,995.1

17.9 23.6 4.2 38.8 15.5 100.0

- Contract The economic backlog of contract segment as of March 31, 2019 amounts to 40.3 million Euro, as detailed by geographical area in the table below:

€ million Europe UK Middle East America Asia Total

March 31, 2019

%

March 31, 2018

%

0.4 0.3 2.1 37.5 0 40.3

1.0 0.7 5.2 93.1 0.0 100.00

2.1 1.5 3.6 44.1 8.7 60.0

3.5 2.5 6.0 73.5 14.5 100.00

- Marine The economic backlog of marine segment as of March 31, 2019 amounts to 56.7 million Euro, as detailed by geographical area in the table below:

€ million Italy France Norway Other Europe Total

March 31, 2019

%

47.5 7.2 1.8 0.2 56.7

83.8 12.7 3.2 0.3 100.00

March 31, 2018 31.5 8.9 2.6 0 43.0

% 73.3 20.7 6.0 0.0 100.0

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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 1,116,873 thousand Euro, with a decrease of 12.5% compared to the previous year (March 31, 2018: Euro 1,276,666 thousand). Operating revenues broken down by product are shown below: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

144,639

272,182

4,305 148,944

24,472 296,654

2,709 26,554 29,263

3,943 22,025 25,968

1,510

7,501

5,825

8,940

185,542

339,063

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

Curtain walls Alumium Curtain walls – Steel Subtotal Curtains walls

905,768

81.7

1,045,547

81.9

(139,779)

-13.4

69,772 975,540

7.0 88.7

55,330 1,100,877

4.3 86.2

14,442 (125,337)

26.1 -11.4

Glazed Metal Works Shops Subtotal Interiors

13,245 95,448 108,693

1.2 7.4 8.6

21,130 98,104 119,234

1.7 7.7 9.4

(7,885) (2,656) (10,541)

-37.3 -2.7 -8.8

Contract

14,480

1.4

36,217

2.8

(21,737)

-60.0

Marine

18,160

1.3

20,338

1.6

(2,178)

-10.7

1,116,873

100.0

1,276,666 100.0

(159,793)

-12.5

Total Operating Revenues

Breakdown of the Curtain walls segment (aluminum and steel) by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

(31,114) 1,381

106,936 3,374

56,896 14,798 2,794 21,446 1,671 3,395 6,516 4,263 111,779

64,302 16,568 1,125 10,745 2,219 1,850 16,115 1,494 114,418

11,151

23,748

373

710

12,741 15,326 15,475

7,555 20,442 14,148

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

North America South America

272,517 10,087

27.9 1.0

381,840 13,025

34.7 1.2

(109,323) (2,938)

-28.6 -22.6

UK + Ireland France Germany Switzerland Italy Spain Russia Other Europe Subtotal Europe

234,984 56,910 23,331 68,662 2,796 7,400 30,546 15,250 439,879

24.1 5.8 2.4 7.0 0.3 0.8 3.1 1.6 45.1

236,010 44,009 12,234 44,719 3,631 5,495 75,702 5,865 427,665

21.4 4.0 1.1 4.1 0.3 0.5 6.9 0.5 38.8

(1,026) 12,901 11,097 23,943 (835) 1,905 (45,156) 9,385 12,214

-0.4 29.3 90.7 53.5 -23.0 34.7 -59.6 160.0 2.9

Middle East

54,512

5.6

56,424

5.1

(1,912)

-3.4

Central Asia (*)

(1,636)

-0.2

3,189

0.3

(4,825)

-151.3

Australia Hong Kong China

33,899 58,051 68,704

3.5 6.0 7.0

21,747 107,061 70,240

2.0 9.7 6.4

12,152 (49,010) (1,536)

55.9 -45.8 -2.2

19


99 4,491 7,242 55,374

(107) 2,066 3,364 47,468

Singapore Japan Other Asia Subtotal Asia

344 16,856 22,327 200,181

0.1 1.7 2.3 20.6

148,944

296,654

Total Exteriors

975,540 100.0

790 8,230 10,666 218,734

0.1 0.7 1.0 19.9

(446) 8,626 11,661 (18,553)

-56.5 104.8 109.3 -8.5

1,100,877 100.0

(125,337)

-11.4

(*) The figure under “Central Asia” as of March 31, 2019 includes the reversal of pevious years revenues amounted to Euro -1,636 thousand related to a project in Azerbaijan.

Breakdown of the Interiors segment by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

1,405

1,392

1,016 187 947 46 2,111 4,307

1,700 296 770 (6) 57 2,817

604

821

0

2

4,034 8,532 615 9,766 22,947

8,599 7,321 1,858 3,158 20,936

29,263

25,968

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

America

14,384

13.2

13,633

11.4

751

5.5

UK + Ireland Russia Italy France Other Europe Subtotal Europe

5,637 563 1,296 345 4,743 12,584

5.2 0.5 1.2 0.3 4.4 11.6

6,978 1,339 2,015 149 1,968 12,449

5.9 1.1 1.7 0.1 1.6 10.4

(1,341) (776) (719) 196 2,775 135

-19.2 -58.0 -35.7 131.5 141.0 1.1

Middle East

1,722

1.6

8,660

7.3

(6,938)

-80.1

North Africa

0

0.0

5

0.0

(5)

-100.0

Hong Kong China Japan Other Asia Subtotal Asia

17,090 30,289 9,105 23,519 80,003

15.7 27.9 8.4 21.6 73.6

41,228 21,749 8,443 13,067 84,487

34.6 18.2 7.1 11.0 70.9

(24,138) 8,540 662 10,452 (4,484)

-58.5 39.3 7.8 80.0 -5.3

Total Interiors

108,693

100.0

119,234

100.0

(10,541)

-8.8

Breakdown of the Contract segment by geographical area: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan-Mar18)

989 337

2,396 717

America Italy

90 396 (189) (113) 1,510

563 684 3,136 5 7,501

UK Other Europe Middle East Hong Kong Total Contract

March 31, 2019

%

March 31, 2018

%

Variation

Variations %

8,797 2,142

60.8 14.8

23,168 3,139

64.0 8.7

(14,371) (997)

-62.0 -31.8

933 1,845 868 (105) 14,480

6.4 12.7 6.0 -0.7 100.0

1,924 2,246 5,733 7 36,217

5.3 6.2 15.8 0.0 100.0

(991) (401) (4,865) (112) (21,737)

-51.5 -17.9 -84.9 n.a. -60.0

20


Breakdown of Marine revenues by geographical area is shown below: € thousands IV Quarter 2019 (Jan-Mar19)

IV Quarter 2018 (Jan -Mar18)

3,227

5,908

738 1,216 612 32 5,825

1,883 1,149 0 0 8,940

March 31, 2019

%

March 31, 2018

%

Variation

Variation %

Italy

10,731

59.1

13,420

66.0

(2,676)

-20.0

France Norway Other Europe America Total Marine

2,041 4,543 813 32 18,160

11.2 25.0 4.5 0.2 100.0

4,975 1,943 0 0 20,338

24.4 9.6 0.0 0.0 100.0

(2,934) 2,600 800 32 (2,178)

-59.0 133.8 n.a. 0.0 -10.7

Profitability The normalized consolidated data of year ended on March 2019 show a negative EBITDA of Euro 303 million (March 2018: positive EBITDA of Euro 29.6 million), that corresponds to -27.1% of operating revenues (March 2018: 2.3%), and a negative normalized EBIT of Euro 316.9 million (March 2018: positive normalized EBIT of Euro 15.1 million), that corresponds to -28.4% of operating revenues (March 2018: 1.2%).

Financial performance - Results The consolidated non-current assets amounted to Euro 94,901 thousands (March 2018: Euro 174,193 thousand); the decrease of Euro 79,292 thousand compared to the closing figures of the previous year is mainly due to the increase given by new investments (approximately Euro 8.5 million) net of the depreciation for the year (approximately Euro 20.5 million), the devaluation on the intangible assets due to the impairment test (approximately 59.6 million), the sale of the investement on Mobil Project S.p.A. (approximately Euro 6.1 million) and the positive effect of exchange rates (approximately Euro 1.6 million). The consolidated net working capital presents a negative value for approximately Euro 33,701 thousand (March 2018: Euro 279,555 thousand), showing a decrease compared to the closing figures of the previous year due to the reduction 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 298,892 thousand to a negative value for Euro 12,585 thousand. The Group net financial position shows at the year ended March 2019 a positive balance of Euro 82,306 thousand compared to the negative balance of Euro 295,151 thousand of previous year (March 2018) thanks to the contributions received by the Shareholder Lixil, for a total amount of Euro 472 million, that made it possible the repayment of loans to the same and to the banks. The net financial expenses are equal to Euro 24,365 thousand at March 2019 compared to Euro 28,649 thousand for the previous year March 2018. For more details, please refer to the comments under the note “11 – Net financial expenses”. The net consolidated equity (including minority interests) decreases from Euro 127,150 thousand to Euro 111,517 thousand; the negative variation for Euro 15,633 thousand is mostly due to: € thousands - first adoption IFRS 9 effect

Euro

(2,183)

- first adoption IFRS 15 effect

Euro

(53,862)

- loss of the period

Euro

(413,649)

- translation reserve variation

Euro

(3,656)

- hedging reserve variation

Euro

(13,693)

- gain/(losses) actuarial variation

Euro

(589)

- Shareholder’s equity injection

Euro

472,000

21


Investments The investments as of March 31, 2019 were equal to approximately Euro 8.5 million of which approximately Euro 6.9 million for technical investments and the remaining for software and other intangible activities. â‚Ź thousands

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

March 31, 2019

March 31, 2018

300 1,543 1,855 2,377 860 6,935

640 2,098 1,895 3,889 2,617 11,139

The main increases were recorded in Germany for Euro 2.7 million (March 2018: Euro 5.1 million), in Italy for Euro 0.9 million (March 2018: Euro 0.9 million), in Great Britain for Euro 0.3 million (March 2018: 0.5 million), in America for Euro 0.7 million (March 2018: Euro 1.9 million), in Asia for Euro 1.4 million (March 2018: Euro 0.8 million), in Netherlands for 0.4 million (March 2018: 0.8 million) and were mainly incurred to enhance production capacity and replace or renew plants and equipments.

22


23


Overview of ongoing projects and main project acquisitions Permasteelisa Group's main ongoing projects for the year ended March 2019 have been broken down into the following paragraph: A) Curtain walls - Exteriors    

Lakhta Center, S. Pietroburgo (Region Europa) UTS Central, Sidney Australia (Region Asia) 3 World Trade Center, New York (Region America) Coca-Cola Arena, Dubai (Region Middle-East)

B) Interiors 

Royal Opera House - Open Up, Londra

C) Special projects (distinguished by their particular technical characteristics/acknowledgments received)  

200 George Street, Sidney Paris Courthouse, Parigi

24


Curtain walls - Exteriors Lakhta Center St. Petersburg / Russia PROJECT DESCRIPTION AND SCOPE OF WORK Designed by RMJM under the guidance of Tony Kettle and adapted by the Russian Architects ZAO Gorproject, the Lakhta Center rises in Primorsky District, about 10 km away from St. Petersburg city center. With a height of 462 m/1,516 ft, it is the tallest building in Europe so far. The façade has a typical unit sizes of 2.8x4.2 m (9x14 ft) that give the skyscraper a very high degree of transparency. At the lower levels, the façade is inclined outwards while at the upper levels glass panels are inclined inwards. All the glasses are cold-bend: the planar glass panes have been cold-bent by 40 mm at one corner in the frame yielding a flat twisted glass surface that creates an elegant overall twist of the façade at each floor level providing uniform reflections. At each of the five edges of the building, there are glazed atria that span over two storeys offering naturally ventilated lounge areas with operable wings integrated in the corner units of the tower. This makes Lakhta Center one of the tallest naturally ventilated skyscrapers in the world. During wintertime, the atria serve as a heat buffer and, together with other energysaving technologies, contributed to the achievement of LEED Platinum® certification. PROJECT MAIN CHALLENGES The last installed panels - at a height of about 300 meters - were those of the outer skin, in correspondence of the anchor points of the crane used for the construction of the tower. These panels, unlike all the others, were positioned on the curved aluminum profiles from the outside: a very complex operation, which required, in addition to highly skilled installers, also the intervention of some climbers on the ropes. Previously, the tower spire had been installed: a 13-meter steel structure preassembled in the factory and then installed in a single piece at the top of the building. Scope of work: 72,500 sqm of large external façade and 25,410 sqm of large internal façade.

Ph: press@lakhta.center / Ph: ©Victor Gusik KEY FACTS Architect: ZAO Gorprojekt Completion: 2018 Height: 462 m / 1,515 ft 87 stories tall Total surface: 97,910 sqm / 1,053,800 sq ft Energy Label: LEED® Platinum

25


UTS Central Sidney / Australia PROJECT DESCRIPTION AND SCOPE OF WORK The UTS Central project represents a significant component of the broader UTS City Campus master plan. Located on Broadway campus, in Sydney, the project redefines the campus creating additional connections within the facilities and further enhancing the student experience. It significantly supports the university’s long-term strategic plan including significant growth in research while positively contributing to the urban quality of the precinct. The 5-storey podium accommodates a new UTS Library, scholarly reading rooms, learning commons, collaborative classrooms and theaters, and student services hubs/counters, while a 9-level tower above the podium houses additional research spaces. PROJECT MAIN CHALLENGES One of UTS Central's most distinctive features is its glass-encased façade. The façade, in fact, brings a striking sense of openness and transparency to the center of campus. The Alumni Green façade facilitates views within and beyond the building, while allowing an abundance of natural light into the new Library and cavernous Reading Room, with its triple-height atrium. Large sections of glass, however, come with challenges – especially in terms of how the façade copes with Australia’s climate. The podium and tower façades present quite different challenges. At podium level, the biggest test has been managing the weight of two glass façade sections that hung from level 8, with just lateral supports to hold them in place. Meanwhile, the challenges of the remaining façade elements lie in the general sense of uniqueness the façade has, particularly when it comes to the bespoke curvature and immense size of some glass panels. Scope of work: The 10-story tower is made up of the mfree-SCCF technology, combined with soffits and ledges that give a "twisting" form to the building.

Bottom - Ph.: ©FJMT via CTBUH

KEY FACTS Architect: Francis-Jones Morehen Thorp (FJMT) Completion: 2019 Total surface: 9,000 sqm / 96,800 sq ft

26


3 World Trade Center New York, NY / USA PROJECT DESCRIPTION AND SCOPE OF WORK Designed by Rogers Stirk Harbour + Partners, 3 World Trade Center is located just opposite the WTC Memorial and Cultural Center and represents a central part of the World Trade Center master plan in NYC's financial district. The central zone of the 80-story tower reduces in mass as it rises towards the sky in order to complement its relationship to the main space between the memorial water pools. The podium houses retail and trading levels, while smaller floor plates accommodate various office spaces. The entirely glass-clad tower consists of a reinforced concrete core encased by an external structural steel frame. The building features floor-to-ceiling glass, and all four corners and each floor plate of the tower are columnfree to create an open workspace environment. Sustainable features have been included in the design to significantly reduce energy use and costs. PROJECT MAIN CHALLENGES Designed to the highest energy efficiency ratings, 3 World Trade Center is a model of transparency and sustainability and it will be a LEED-certified Gold office tower. Among many building enhancements, the tower has a reinforced concrete core and columns with steel girders and beams. Full-height glazing is provided on all façades of the building to maximize natural daylight to access the occupied spaces and provide exceptional views of Lower Manhattan and the surrounding region. In order to maximize energy performance, the curtain wall units are double-glazed with a specific transparent low-“e” coating on the inside surface and are provided with specially designed insulated window frames. Scope of work: Glass and single skin curtain wall system plus façade podium with oversized units and cable net wall for a total of 93,600 sqm (over 1 million sq ft), around 2,700 sqm (29,000 sq ft) of ornamental metal and glass work..

Ph.: ©Joe Woolhead / Ph.: Courtesy of Silverstein Properties, Inc

KEY FACTS Architect: Rogers Stirk Harbour + Partners Architect of Records: Adamson Associates Architects Completion: 2018 Height: 328 m / 1,076 ft (nel sito 1,079 ft) 80 stories tall Total surface: 93,600 sqm / 1,007,500 sq ft Energy Label: LEED® Gold certification

27


Coca-Cola Arena Dubai / Emirati Arabi Uniti PROJECT DESCRIPTION AND SCOPE OF WORK Coca-Cola Arena is a large, world-class, indoor, multipurpose venue in Citywalk, the design-inspired open-air lifestyle neighbourhood by Meraas, off of Sheikh Zayed Road and opposite Downtown Dubai. The 46,500-square-meter (500,000 sq ft) scheme is able to seat approximately 17,000 guests and is set to accommodate mega music concerts, sports events like athletic meetings and football tournaments as well as other national and international events. The state-ofthe-art, fully air-conditioned Arena, which enhances Dubai's leisure and entertainment offering, is designed to be transformed from a theatre to a stadium according to the size of the event being held; it also boasts automated, malleable seats which enables the structure to adapt depending on the scale of the hosted performance. PROJECT MAIN CHALLENGES Dubai's new arena has a faรงade with integrated lighting that can be programmed to create striking visual displays. The faรงade system is a unitized curtain wall with feature angled projecting inclined fins with a sophisticated integrated LED light system. It also includes stick entry systems and canopy cladding. Scope of work: approx. 15,000 sqm (161,500 sq ft) of unitized faรงade. Main Entrance, VIP Entrance and Royal Entrance faรงade including the corresponding canopy claddings as well as approx. 2,000 sqm (21,500 sq ft) of decorative aerofoil louvers to the Back of House area and various mechanical louvers.

Ph: Courtesy of Meraas

KEY FACTS Architect: Populous Completion: 2019 Total surface: 18,900 sqm / 203,400 sq ft

28


Interiors Royal Opera House - Open Up London / UK PROJECT DESCRIPTION AND SCOPE OF WORK Royal Opera House is a Grade 1 listed building in the heart of London. The structure has undergone refurbishment works as part of "Open Up", a scheme to engage the public with the inside and back of house area of the theatre. This complex project has been a three-year journey to bring the historic building into the 21st century and open it up to a whole new generation of theatregoers. To this aim, the main foyer at ground level has been enlarged and opened up, thus creating a better connection to the neighboring Linbury Studio Theatre. Furthermore, a new glazed extension and entrance on Bow Street provide passers-by with views of the activities taking place inside. On top of that, part of the terrace at Amphitheatre level is glazed in order to create additional seating covers for the restaurant overlooking the Covent Garden Plaza. PROJECT MAIN CHALLENGES Permasteelisa Group developed and built the redesigned Bow Street entrance, a completely new glazed extension providing greater access to the building and more natural light, while retaining the charm of the iconic Victorian iron-and-glass faรงade. A projecting glazed pavilion has been introduced at ground-floor level to replace the solid base beneath the much-loved Floral Hall elevation. Bespoke bronze-finish door screens, comprising automatic swing doors, provide access to the building from the Bow Street entrance. A staircase has been added between the main foyer and the glazed conservatory. Scope of work: Glass and single skin curtain wall system. Blast engineered podium with oversized units and cable net wall. KEY FACTS Architect: Stanton Williams Architects Completion: 2018 Total surface: 350 sqm / 3,700 sq f

29


Special projects 200 George Street Sidney / Australia

PROJECT DESCRIPTION AND SCOPE OF WORK The workplace tower at 200 George Street has quickly become a landmark building in Sydney. The play of warm soft light reflecting off and into the 37-stories building has been made possible by its special façade, a state-ofthe-art high-transparency glass skin whose double-glazed cavity contains motorized timber venetian blinds that adjust automatically with the changing angle of the sun’s rays. In the podium, vertical timber shading elements provide further solar protection and contribute to the overall appearance. 200 George Street’s plan is the result of intersecting and overlapping two rounded-edge rectangles on a central rectangular core. PROJECT MAIN CHALLENGES The technology used makes this new office tower one of the most advanced and sustainable buildings in Australia. Natural materials like wood and sandstone combine with cutting-edge technological features, like the customized glazed façades, to produce a unique, avant-garde building that has quickly become a new benchmark in Australia. The key feature of 200 George Street is the architectural envelope. The outer skin gives the building its unmistakable appearance. Even if wood and glass are widely used building materials, here they have benefited from ingenious customized engineering, making the new office tower extremely efficient and comfortable for its occupants. The project’s underlying challenge - but also the winning concept - was to create a wooden tower: the timber elements are an integral part of the façade, and the timber blinds inside the cavity contribute to the overall appearance. Scope of work: Design, engineering, manufacturing and installation of architectural envelope comprising approximately 20,000 m2 (215,300 sq ft) of mfree-SCCF façade with timber blinds within the cavity..

Ph.: ©Matthew Longden

KEY FACTS Architect: Francis-Jones Morehen Thorp (fjmt) Completion: 2015 Height: 155 m / 509 ft 37 stories tall Total surface: 20,000 sqm / 215,200 sq ft Energy Label: 6 Star Green Star - Office Design 3 6 Star Green Star - Office As Built 3 5 Star NABERS Energy rating 30


Paris Courthouse Paris / France

PROJECT DESCRIPTION AND SCOPE OF WORK Located on the northeastern edge of Paris, Paris Courthouse is part of a larger plan for the revitalization of the Clichy-Batignolles neighborhood. The development is composed of four horizontally arranged parallelepipeds that decrease in size as the building rises reaching the height of 160 m (525 ft) and offering an internal area of around 100,000 sqm (over 1 million sq ft). The building is equipped with around 7,000 sqm (75,300 sq ft) of green terraces. 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. PROJECT MAIN CHALLENGES The project was structured around a precise energy strategy that took into account thermal inertia, natural ventilation, the integration of photovoltaic panels on the façade and heat recovery devices, as well as the use of an automatic system for optimising building management. Glass façades play a prominent role in this building, both in maximising natural light and in achieving first-class levels of energy efficiency, soundproofing and protection against terrorist attacks. Despite the apparent simplicity of its form, the façade conceals many technical complexities. For example, on the east and west façades, the value of thermal transmittance (U=0.95 W/m2K) was incredibly difficult to achieve, due to the need to minimise plastic components to meet the fire protection requirement of 80 MJ/m2; the same requirement applied to the photovoltaic panels and the PVB contained in the laminated glass. Scope of work: 29,000 m2 (312,100 sq ft) of curtain wall; 3,800 m2 (40,900 sq ft) of stick system façade. Ph.: © RPBW, Ph.: Sergio Grazia

KEY FACTS Architect: Renzo Piano Building Workshop, architects Completion: 2017 Height: 160 m / 524 ft Total surface: 32,800 sqm / 353,000 sq ft

31


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, 2019: in fact, although the economic result of the Group could have generated doubts about business continuity, the immediate recapitalization of the Group by its sole shareholder within the end of the year prevented this risk. At the same time, the market fluctuation and the circumstances that deeply affected the Group results, 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. During this year, the procedures of risk analysis have been improved. Activities aimed at deepening and managing financial risks have also been implemented.

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 result The losses recognized by the Group during the year, equal to Euro 413.6 million, were covered by the sole shareholder through capital injections that also permitted to repay the Group's financial debts implying then a significant capital and financial strengthening of the Group. This Group's reinforcement has been a prerequisite for actions aimed at achieving in the medium term a return to profitability objectives as defined in the strategic plan (2020-2024 Business Plan). The promptness and the significant amount of the mentioned recapitalisation demonstrate the will of the sole Shareholder to continue supporting the Group; this event assumes an important value considering that among the factors that define the riskiness perceived by the market, the credit ratings assigned to the group play a key role as they affect its ability to access sources of funding and related economic conditions.

Risks associated with financing requirements This category includes the risks associated with the Group's capital availability, which is connected with credit and liquidity management. The financial position of the Permasteelisa Group was obviously affected by the losses produced, which were however financially offset by capital injections from the shareholder that enabled to reach at the year end a positive cash balance of approximately Euro 82.3 million. The Group, thanks also to the support of the shareholder, is confident that it will have access to financial resources to cover the funding necessary to support the business outlook outlined in the medium-term plan for the period 2020-2024. In particular, liquidity management pursues the objective of financial autonomy for contracts in progress, taking into account the currency constraints of certain countries that may generate restrictions on the availability of financial resources for the Group. The governance of financial risks provides for the definition of a system of operating limits, at the Group and individual company level, with intragroup debt limits monitored periodically. With regard to creditworthiness, reference should be made to the previous paragraph.

Risks associated with fluctuations in exchange and interest rates, commodity prices and the cancellation of assigned projects orders As already mentioned in the Consolidated and Statutory Financial Statements of last year, Permasteelisa Group, which operates on different markets worldwide, 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 (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 32


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 situation 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.

33


The Group’s organizational structure With regard to the Group's structure, it should be noted that during the reporting period April 1, 2018 – March 31, 2019, the liquidation process of the subsidiary Permasteelisa Taiwan Ltd was concluded on August 24, 2018, while the cancellation process of the subsidiary Permasteelisa Participations S.r.l. ended on March 28, 2019, following the sale of the investment it held in the associate Mobil Project S.p.A., which took place in August 2018.

Research and Innovation During the reporting period April 1, 2018 – March 31, 2019, Permasteelisa Group has continued organizational growth and consolidation through continued technical education & training, implementation of Group-wide processes (including the introduction of the Tender and Site Installation processes) and application of R&D innovations into projects, providing Permasteelisa Group with a market distinction. The Group has continued to develop, refine and release new applications of its project realization set of tools (PMF) through proprietary curtain wall configuration management, optimization and project control tools & BIM integration. These tools are continuously implemented across the Group and have enabled a standardized and integrated project management process and execution platform across all design, procurement and production centres. The PMF suite of tools is also interfaced with standardized Group process across all facets of project execution including design, procurement, production and site installation. In order to streamline and improve project execution efficiency, the innovations and solutions team (I&S) has continued the development of accurate analytical software and tools that enable early stage project decision making particularly in areas of structural adequacy, safety and security, energy performance, life-cycle assessment and occupant comfort. Research and development has endeavoured to meet market design and construction trends and continued to deliver onto the market new innovative applications and technologies in the fields of physical protection, energy and sustainability, occupant comfort and intelligent facades and control systems. Research, development and commercialization of patented dissipative façade systems and components have resulted in advancements in blast enhanced façade systems with numerous project applications. Further development of advanced dynamic facades systems such as the MFreeS-CCF integrated with proprietary building management and control systems has resulted in award-winning, holistic energy efficient and occupant comfort focused buildings. In response to market gaps identified as well as trends, future developments and research are being focused in the fields of additive manufacturing such as 3D printing technologies, fire protection, sustainable materials and modularization systems. Group-wide implementation of the research innovations has continued through specialist training in R&D application technologies and associated proprietary developed software tools. Recognition that design is at the core of the Permasteelisa Group has resulted in the establishment and further implementation of innovative training in design-ability and design management with the establishment of the new Lead Concept Designer role. This role is focused on streamlining the role and impacts of design across all aspects of project execution, providing initial conceptual pre-construction services support to architects and clients through to final project delivery and close out. The development of this role and training required has been undertaken with world-leading design schools and universities and subsequently resulted in the commissioning of a number of LCD’s across all regions where the Group is present. The LCD role aims to ensure that projects are undertaken holistically by focusing on design impacts & influences across all aspects of the project delivery stream. With reference to research and development costs, overall cost for the financial year recorded in the profit and loss account by the Group equated to Euro 1,986 thousands (March 2018: Euro 2,120 thousands) of which Euro 157 thousands (March 2018: Euro 255 thousands) for amortization of costs capitalized over previous financial years under the category “Development costs” included in the item “Intangible assets”.

34


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 external consultants based on the previous positive 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. 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. To better share and take advantage of the knowledge and work carried out by I&S (Innovation & Solutions) on new products, workshops are constantly being held by I&S members. Each company provides a technician by "project" to whom it is transferred what is necessary to know in detail the new product, through direct discussion, real application examples and final test.

Information Technology During the Fiscal Year 2019, Permasteelisa has implemented many development and consolidation plans regarding the Information Technology activity, with the goal of improving and standardizing the perimeter of the services provided to the Group companies, through the adoption of new technologies and solutions concerning the following fields.

IT GROUP ORGANIZATION In order to answer to the Business and Market’s requests, the IT organization model has been redesigned through the definition and the formalization of the Permasteelisa Group IT skills model. After this activity, the roll-out of the new policies in the field of Information Technology and Security has been carried out in all the companies of the Group, in accordance with the principles of the GDPR.

GROUP IT INFRASTRUCTURE Coherently with the actions held in the previous years, the new plan for the technological renovation of all the Core Group Infrastructure has been analyzed and defined for the period 2019-2023. Some enforcement systems of Group infrastructure standardization and governance criteria have been put in place (Firewall, Antivirus, NAC, etc.) and the general system of the Group geographical network architecture has been redesigned with the purpose of saving, while maintaining the same level of Service. During the Fiscal Year 2019, they have carried out the project of roll-out of the new Web Content Filtering system on the Group companies, and the project of the common and centralized managing (through Software Asset Management solution) of all the licences for the main brands and solutions adopted by the Group. Always in the field of technological renewal, new evolved services and functions have been introduced for Disaster Recovery and primary Datacenter Infrastructure. By reference to the activities of Group’s standards definition, it has been enacted the upgrade of the Windows 10 Operating System and, consequently, it has been released the first tranche of around 1000 devices.

SAP By specific reference to the managing systems and solutions areas, in particular in SAP, new processes of digitalization in revenues and receivable and in purchasing and payable have been delivered in UK, Russia, Netherlands, China, Spain and Germany. The new system for Travel & Expenses management has been implemented in Italy and Netherlands and, finally, the new Timesheet system has been implemented in Italy, Netherlands and Germany. During the period it has been completed the upgrade project of HANA infrastructure in SAP landscape. 35


They have delivered new functions for the management of the Order Book on SAP BOPC, a new Mobile APP for the management of the approvals of the payments to suppliers on SAP, the new PSR dashboard for the project status management and control, with 3D views on the building status and new SAP transactions covering above all the fields of production and Supply Chain on Mobile Neptune platform.

ENTERPRISE APPLICATIONS Concerning enterprise applications, new actions have been adopted for the enforcement of security and authentication criteria relating to the Google APP Group platform. During 2019, the processes of consolidation and migration of data on CRM Salesforce.com platform have been completed, with the subsequent implementation of new functions of reporting and managing of the BOND. They have carried out some activities in order to improve and strengthen the abilities in BIM area (Building Information Modeling) of PMF, both through the release of new functions, as for example the Common Data Environment for the Battersea project, and through the activation of new projects using BIM360 Autodesk solution. Always in regard to PMF, some activities of predisposition of the new template called RCE have been started with the aim of making automatic and transparent for users the data transaction from PMF environment to Autodesk Revit. In the Autodesk field, it has been activated an experimental project to start using the new Cloud solutions (Forge). By reference to the management of the processes of non-conformity and issue management, the Business Process Automation (K2) platform has been extended to all the Group companies. Finally, it has been started-up the 3D Printing center and its related Service, in favor of all the companies of the Group.

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, 2019

March 31, 2018

Variation 2019-2018

Italy Other Europe Asia Middle East Australia USA Total

797 1,614 1,203 394 56 1,657 5,721

843 1,666 1,367 435 56 1,422 5,789

(46) (52) (164) (41) 0 235 (68)

Average workforce during the period Area

March 31, 2019

March 31, 2018

Variation 2019-2018

Italy Other Europe Asia Middle East Australia USA Total

820 1,640 1,285 415 56 1,540 5,756

847 1,648 1,488 426 52 1,391 5,852

(27) (8) (203) (11) 4 149 (96)

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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, 2019 212 570 782

March 31, 2018 229 605 834

Variation 2019-2018 (17) (35) (52)

March 31, 2019

March 31, 2018

Variation 2019-2018

221 588 809

226 617 843

(5) (29) (34)

Average workforce during the period

Blue collars White collars Total

As of March 31, 2019, the workforce is composed for the 78% by resources employed in technical and manufacturing functions, the remaining 22% by resources employed in staff functions. The 89% of technical and manufacturing functions employees is dedicated to the main business area of the Company that consists in design, production and installation of architectural envelopes and curtain wall. The 7% is dedicated to the development of Contract projects, and the remaining 4% to the design and installation of museum stands and interior systems of high target shops. The 97% of employees is hired with an indeterminate-time contract; the remaining 3% is divided into the 2% with professional apprenticeship scheme and the 1% with determined-time contract. In the Fiscal Year 2019 the turnover (entry) was equal to 5% while the turnover (exit) in the same period was equal to 5,3%. This last data also includes the resources transaction towards other Companies of the Group worldwide.

Human resources The current economic environment is characterized by an increasing complexity and high level of competitiveness, as well as by a deceleration of investments in the construction field. These aspects impose to pursue with more attention the strategy of integration and of rethinking to our business model, that will be necessarily adapted to the market framework. In relation to this, internationality and global vision, with the capability of adapting to the differences and to the peculiarities of each local market, and with a specific focus on guiding the interaction among the different realities of the Group in an accurate and rigorous way, are some of the factors that allow us to compete in a very efficient way in big complexity projects and in a wide range of business areas Furthermore, Permasteelisa Group is continuing to implement an important process of organizational change through the strengthening of its matrix structure, with an activity of roles and responsibilities redefinition, both in technical and management fields, with a strong attention to the growth in responsibility roles of high potential young resources. In this context, the Human Resources Direction had an increasingly key role in supporting the integration between the various departments within the Organization, focused on providing a careful assistance to business needs and improving the synergies between the different disciplines / areas and the management of internal relations. The management of Company’s employees is performed in accordance with principles and values defined in the Ethic Code that the Group has recognized and in compliance with the laws and regulations of the countries in which the Group operates.

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Permasteelisa continues its strategy of investment in young resources, as it considers human capital a strategic factor for the business development and for the growth of the enterprise value. The following actions resume the key aspects of this strategy: - attracting talented people, young graduated people in particular, through employer branding programs and partnerships with universities that have relevant aspects for the corporate business; - investing in development and training programs with the aim of valuing and improving personal skills of the employees; - promoting the application of the Performance Appraisal process with the aim of orienting the individual performances; - adopting incentive plans that are based on meritocracy and on performance sustainability; - promoting and updating the corporate welfare policies referred to the well-being of the employees and of their families.

Recruitment and Employer Branding The recruitment moment represents a key aspect in the planning and organization of the process that successfully pursue the corporate business strategies and objectives. Launched in 2017 year by the Italian Parent Company Permasteelisa S.p.A., “Permasteelisa Campus” represents a flagship of the HR Department in the field of Talent Acquisition. The objective of the project is to offer, to brilliant just graduated engineers and architects, an integration in the workplace and a professional growth, linking in this way the Company with the Academic world. The Permasteelisa Group operates at international level in the area of design, production and installation of architectural envelopes, curtain wall and interior systems, with a leadership placement in the global market. The value of our know-how allows us to turn into reality the ideas of architects and to accomplish the most representative and iconic buildings in the world. The first two editions of Permasteelisa Campus, held in 2013 and 2015, have brought participants into Permasteelisa Group with an apprenticeship scheme in the headquarter located in Vittorio Veneto and have promoted international experiences in some of the 50 locations of Permasteelisa companies worldwide, included Dubai, Singapore, Hong Kong and London. The current program of the Campus, which is at its third edition, is implemented in partnership with some of the most important Italian universities institutes, as the Politecnico of Milano and the Udine University, and provides the presence of university professors and managers that share their know-how and their professional expertise with the students, promoting an active confrontation on practical examples and case studies. In this program the students, that come from Italian Universities, are involved in a wide development plan made up of a first technical phase with 500 classroom training hours and a following stage with a senior tutor. The recruitment of the 15 participants has been the result of an accurate selection process that has consisted in technical, logic and language knowledge tests and in an assessment center to observe the individual soft skills, as well as an individual motivational interview. The Project Manager Master called Managing Complexity, is accredited by the University of Udine as II level university master and by the MIP. The main objective is to train professional figures specialized in the project management, as to have in the future professionals in the field of architectural envelopes that are able to manage complex works and to operate in the phases of planning, building and controlling of projects both at national and international level. The master also allows a fast entry in the world of work with the possibility of development in the main roles of a project, from the the tendering to the site. One of the most significant news of the Campus is a larger training proposal that has given wider space to the practical aspects and to the “learning by doing”, through exercises and case study analysis, and teambuilding activities, as that one done on the rugby field of the sportive centre “La Ghirada” in Treviso, with professionals in the sport field. In addition to an innovative mix of didactic methodologies, they have also introduced new sharing instruments, as the Web App Campus, a social Platform reserved to students and teachers involved in the project, where there are both the didactic program and info and the regional events info, to facilitate the aggregation dynamics. As HR Department, we claim that the Corporate sustainability is also ensured by recruiting young resources with high growth potential that will be able, in the future, to invest top roles in the Organization.

Training Activities Permasteelisa defines and implements an annual Training Plan based on training requirements and on the related intervention actions taking into account the corporate business needs. In this year the training activity has involved the 60% of the entire workforce and has mainly concerned managerial training and technical and informatics training. 38


Managerial Training The managerial training activity continues through “coaching� sessions, therefore supporting the management differently from the classroom courses. In this context, besides team projects, some individual interventions have been carried out on determinate key figures as supporting actions in case of change of function and acquisition of more organizational responsibilities. It also continues the intervention of development of the Project Management team to consolidate the management and technical skills. Permasteelisa Group operates in an increasingly competitive environment in terms of productivity and quality of the products and services provided; therefore, it is crucial to point the work of individuals towards business objectives. Performance Appraisal is born to satisfy this need. The Performance Appraisal process, or in other words, the performance evaluation system, helps to address employees to reach their goals towards achieving business targets. The "PA" process, even in this past exercise, involved 90% of the population.

Linguistic training To operate in an international and globalized context, the knowledge of foreign languages is a conditio sine qua non for the Company. In addition to the English language, which represents the Group’s mother tongue, the French and Spanish languages are particulary important to support the business areas in which the Company is consistently investing and working. In the Fiscal Year 2019 the hours spent in language courses have been 560

IT and technical training In response to the continuous challenges concerning orders planning and design, Permasteelisa has decided to consistently strengthen the development plan of informatics and technical skills necessary to operate in an efficient way to achieve business objectives. Granting the quality and the excellence of the technical solutions represents a fundamental element of our business; this result can be also obtained through a continuous professional updating focused on innovation. Consequently, it is necessary for the technical Department to develop basic skills related to 3D modeling using advanced parametric instruments as for example Catia, Digital Project and visual programmatic environments (Visual Programming) as Dynamo in BIM environment. The training course hours provided are 1,822, involving all the professional figures of the IT and theTechnical Department.

Specialized training Concerning the specialized training required by CCNL, in Year 2019 the Company has provided 608 training course hours, of which 242 hours have been focused on personal computer courses for blue collar workforce.

H&S training Permasteelisa S.p.A. main prerogative is the health and safety protection on the workplace. The Company, in fact, ensures a safe and healthy workplace to its employees, clients, visitors, contractors, suppliers and whoever is into the Company structures. The primary objective of the enterprise is to remove and/or reduce the risk of accidents through the adoption of prevention and protection plans extended to every operating business area, in respect of laws, regulations, standards, guide lines and related requirements for health and safety safeguard in the field of its activity. Another important initiative that is oriented to the employees wealth started in the first months of Year 2019 in the framework of the health and safety training updating that has been focused on the activity of prevention of musculoskeletal pains in the workplace This initiative has been undertaken thanks to the cooperation with GymHub, a spin-off of the Padua University Department of Medicine, specialized in postural techniques, and has been concretized through a training intervention divided into a theoretical introduction part on ergonomics and a part with practical exercises. The training course, two hours lasting, has been led by two teachers and has involved all the people employed in Permasteelisa S.p.A. with the aim of educating and sensitizing on the positive effect of physical activity and postural exercises, through the use of specific exercises to prevent musculoskeletal pains. During the Fiscal Year 2019, the obligatory training in the areas of Prevention, Safety, Environment and Internal Audit, has involved the whole workforce for a total amount of hours equal to 352. 39


It is worth clarifying that the number of hours can significantly change from year to year because of the pluriannual cyclicity of some training courses. During the period 2015-2018 the total amount of training hours in HSE area has been equal to 7,906, on an overall amount of 38.807 hours, equal to the 20% of the total.

Corporate Welfare 2018-2019 The corporate welfare is usualy considered as the ensemble of products and services that the Company provides to its employees with the aim of improving their private and professional life. It concerns instruments that support family incomes, supplementary pension and health care provision, training and study incentives, mobility support, balance between work and private life and free-time proposals. Recent studies have shown that welfare systems improve the enterprise environment and, as direct consequence, the enterprise productivity. The Permasteelisa welfare system also covers the employees’ families, which can benefit from several initiatives. In particular, the following services are provided: - Nursery and kindergarten. - Flexible working hours in the morning entry addressed to office employees, thus paying particular attention to the employees' family management. - The annual fiscal program, referred to all the employees. Every year the Company provides the tax declaration service in its offices. - Heath care assistance, which consists in a free and full check-up. The project, named “Prevenire è Vita”, has the mission to propagate the culture of prevention in the health care field and it is addressed to all the employees. It is one of the most forefront medical prevention programs in Italy in the corporate framework. The initiative, born in 2009, offers to Permasteelisa S.p.A.’s employees the possibility to use for free periodical cardiovascular and oncologic screening with a highly qualified equipe. 40


This medical prevention program is developed in collaboration with a very high-level medical equipe and represents one of the main excellencies of our welfare system. The unique features of “Prevenire è Vita” are as following: - it covers all the main clinical risks areas; - it offers to employees a multidisciplinary and constant medical staff; - it is held in a highly specialized medical center in Treviso, “Centro di Medicina”; - screening takes place during working hours. From year 2009, when the program was born, to year 2019, 781 employees have joined it with an amount of more than 1.900 visits. Almost all employees subjected to the first screening cycle, have had a follow up for subsequent visits (85%). “Prevenire è Vita” has contributed to reduce the main oncologic and cardiovascular risk factors of the employees and has allowed the early diagnosis of seven malignant neoplasms, 53 benign neoplasms and more than 2.000 non-neoplasms findings. These data show the value of this program and the consequent appreciation from employees. In addition to what already reported, Permasteelisa has provided to employees a virtual platform, called “Permasteelisa Welfare Box”. By entering in PWB, the employee can choose among several options, such as: - Shopping area: here it is possible to buy many different vouchers of the most diffused supermarkets and commercial chains and of the most renowned local and national stores. There are also large possibilities to buy e-commerce voucher as, for example, in Amazon and Zalando; - Recreation area: here it is possible to find: Hotels and vacations: employees have the possibility to use specific services to book hotels plus a travel agency which can support them in their holidays organitation considering their specific requirements; Relax, wellness and free time: in this section it is possible to find wellness centers for body and mind care, sport, relax and gastronomic experiences; Sport and fitness: there is a broad range of options, from relaxing to challenging solutions; Culture and entertainment: it includes many guided tours of the most beautiful Italian art cities, tickets for famous museums and prestigious theaters: Courses and training: there are many options as, for example, language, cooking and photography courses; Prevention and assistance: These services aim to place the person in the center; - Welfare: this service aims to think at the future; - Refunds: this solution allows to ask for refunds in the areas of education, assistance and mobility; What actually makes this platform interactive is that it is continuously evolving. Employees can ask to add new partnerships with suppliers for which they are interested. Once the administrative procedure is completed, the new supplier takes part of the provider network and it will be available to all users of the same partner. This management system allows an enlargement and a growth of the offered products, with the aim to be closer to the employees providing the solution to their needs. During the Fiscal Year 2019, labor relations have taken place in a collaborative climate. A concrete cooperation between the Company and the labour union has allowed valuing the projects of the second level agreement, achieving very good results. Collaboration has involved the training courses management and planning, improving the employees training. Therefore, the parking logistics has been facilitated and a stronger flexibility in the working time and in the “PAR” (paid annual leave) requests has been achieved, as defined in the second level agreement. The Company has defined new improvements for those who travel for business, taking into account the discomfort of staying far from home. Good relations between the Company and the labour parties have been also ascertained in the field of safety, where extra “PAR” hours have been accorded, in comparison to the hours granted in the CCNL, for special meetings between the Company and safety representatives. These sensitiveness and openness to dialogue have built favorable basis that allow a positive cooperation that can bring to anticipate possible future problems.

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Shareholder The Company is now owned by the sole Shareholder Lixil Corporation itself owned by Lixil Group Corporation, quoted at the stock exchange in Tokyo.

Treasury shares As of March 31, 2019 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. The company Permasteelisa S.p.A. it is subject to management and coordination by the parent company LIXIL Group Corporation starting from December 20, 2018.

Unconventional or unusual operations There are no entries or transactions resulting from unconventional or unusual operations during the year 2019 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 On 8 May 2019, Permasteelisa S.p.A.’s Board of Directors duly acknowledged the resignation with immediate effect of the Chief Executive Officer Riccardo Mollo. As of the same date, Permasteelisa S.p.A.’s Board of Directors appointed via co-option Mr. Klaus Ernst Lother as member of the Board with the favourable opinion of the Board of Statutory Auditors. Again on 8 May 2019, Mr. Klaus Ernst Lother was appointed, with immediate effect, as Chief Executive Officer of the Permasteelisa Group. In April 2019, Group management finalised the negotiation with a new customer regarding the resumption of the work for an iconic project in Saudi Arabia, which had been suspended for several years. In June 2019 the Group received the first tranche of payments relating to amounts receivable for work already carried out, amounting to around Euro 18 million. There were no other significant events after the end of the year to be reported.

Business Outlook 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:

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   

the introduction of new technologies, such as the D3 (Dual Dynamic Durable) and the Close Cavity façade (mfree®); the introduction of new projects and the expansion in the related markets; the retro-fit building; the window wall system (it is a system strictly linked to the growth of the market segment in North America and Europe).

If on the one hand the backlog level of the Permasteelisa Group and the activities aimed at reducing the risks make it possible to gain a satisfactory vision with regard to the future evolution of the market, rendering it stronger in the face of the volatility of the orders and the uncertainties of the current market, on the other hand management remains highly committed to the definition of the closure of a number of old projects, both in terms of execution and attainment of the amounts owed, as well for the settlement of a number of legal disputes underway whose outcome is uncertain. Furthermore, management will be heavily involved in an organisational and strategic overhaul plan aimed at returning the Permasteelisa Group to levels of satisfactory profitability by means of action aimed to considerably reducing both the direct and the indirect costs, reviewing its current industrial and organisational set-up. Therefore, the Group looks to 2020 as a year of changeover and heavy commitment aimed at concluding the action mentioned above and pursuing a profitability recovery strategy over the mid-term. The accurate implementation of the organisational and strategic change lines has been entrusted with the continuation of virtuous management, as well as the confirmation of the ability demonstrated so far of suitably reacting to the frequent and often sudden market fluctuations.

Other disclosures The Permasteelisa Group Internal Control System is composed of instruments, rules, regulations and organisational structures designed to safeguard Company assets and ensure the effectiveness and efficiency of Company processes, reliable financial reporting, as well as compliance with laws and regulations. Permasteelisa S.p.A. Board of Directors has set up an Internal Control Committee and appointed the actual Committee members on July 26, 2018. The Committee assists the Board of Directors with consulting and advisory functions, it is comprised of three Directors, and it assists the Board of Directors in fulfilling its responsibilities vis-à-vis the Internal Control System. In particular, the Committee:  assists in setting guidelines for the Internal Control System;  periodically checks that the Internal Control System is adequate and operates effectively;  oversees Internal Audit activities;  analyzes the issues related to the Internal Control System with the support of the functions and bodies involved in the management and control of the system itself. The Internal Audit function is responsible for independently verifying that internal control system of Permasteelisa Group is properly functioning and is fit for purpose. The function reports hierarchically to the Board of Directors and, on its behalf, to the CEO, and functionally to the Internal Control Committee. In particular, the Internal Audit function is as following:  supervises the verification of the Internal Control System operation and appropriateness in Permasteelisa S.p.A. and in its subsidiaries, through the integrated planning of audit and Model 231 compliance interventions and the execution of interventions, including the unplanned ones, and the monitoring of implementation of corrective measures;  ensures specialised support to the Management on Internal Control fields in order to facilitate the effectiveness, the efficiency and the integration of controls within company processes;  ensures the management of investigation activities in relation to submissions received, also anonymous, through whistleblowing systems;  ensures support to the Internal Control Committee and the Supervisory Board;  maintains relations and ensures proper information flows with the Internal Control Committee, the Supervisory Board, the Board of Statutory Auditors and the External Auditor.

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During the year, the Internal Audit function carried out the audit activities in line with the Audit Plan approved by the Board of Directors on July 26, 2018, and reported its progress to the Internal Control Committee, the Supervisory Board, the Board of Statutory Auditors and the External Auditor periodically. The Internal Audit function has full access at all data, documents and information required to carry out its duties. Permasteelisa S.P.A. has set up a Supervisory Board since 2005.The Supervisory Board was appointed by the Board of Directors on July 26, 2017, for a period of three years and until the approval of the financial statement as of March 31, 2020. The Supervisory Board is composed by 3 members, one external – the Chairman – and two internal. During the fiscal year 2019, the Supervisory Board met on 4 occasions and reported regularly to the Company’s Board of Directors and Board of Statutory Auditors on the activities carried out. In particular it reports them with regard to both revision of the Organisational, Management and Control Model (pursuant to Legislative Decree 231/2001) and monitoring of effective application of the Model and of the Code of Conduct. Permasteelisa S.p.A. has adopted an Organizational, Management and Control Model to prevent commission of the offences referred to in Legislative Decree 231/2001. During the year 2017, the Supervisory Board completed its assessment of the legislative changes made to legislative Decree 231/01 in the period following approval of the previous revision of the Organizational, Management and Control Model (September 2014). Permasteelisa’s Board of Directors, by resolution of March 15, 2017, approved the current version of the Organizational, Management and Control Model. 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 appear 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 Legislative Decree 231/01, the general features of the Model, the categories of Offences that could result in the Company’s liability, the features, the 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 offenses, 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 company website at the URL: https://www.permasteelisagroup.com/financial-infogovernance/governance/regulations-codes/. Moreover, the Company provided all employees and third parties an e-mail address organismodivigilanza@permasteelisagroup.com – to report directly to the Supervisory Board possible breaches of the Model and of the Code of Conduct, guaranteeing safeguard and confidentiality of whistleblowers. Further reports of possible abuses can be addressed, through the company whistleblowing system, to the Supervisory Board and managed accordingly. Permasteelisa Group management is deeply engaged in sensitizing and spreading Compliance in the company culture in different ways (training programs, specific company communications, company events, etc …). 44


Permasteelisa Group adopted the Code of Conduct of the shareholder LIXIL since 2015. The Code of Conduct represents a set of rules to be adhered to by all Group members with the aim 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 of Conduct has been translated in 18 languages and is available on the company website at the following URL: https://www.permasteelisagroup.com/financial-info-governance/governance/regulations-codes/. Every year all Group members are required to participate in training on the Code of Conduct and acknowledge they will comply with its terms. Moreover, to integrate and clarify in detail the Code of Conduct across the Group, as of May 2018, the shareholder LIXIL established Global Policies for high-priority areas, including Anti-Corruption, Conflict of Interest, Anti-discrimination and Harassment and Personal Data Protection. These policies, translated into major languages, were adopted by Pemasteelisa Group and then implemented through specific education and training programs for Group members to facilitate their understanding of the policies. Permasteelisa Group adopted the Supplier Code of Conduct issued by shareholder LIXIL which requires all its suppliers to comply with this Code and to acknowledge that the standards in this Code are being met upon the commencement and renewal of a contractual relationship. Permasteelisa Group requires its suppliers to comply with all applicable laws and regulations which apply to them and similar ethic standards with this Code. In particular, Permasteelisa Group requires its suppliers to comply, among others, with anti-corruption and antitrust laws, labor laws, human rights laws, environmental protection laws. The Supplier Code of Conduct is available on the company https://www.permasteelisagroup.com/sustainability/supplier-code-of-conduct.

website

at

the

following

URL:

During the fiscal year 2019, Permasteelisa S.p.A. organized a Compliance Event, a training/ information week for all employees to raise their awareness on the importance of Compliance and to share with them the activities carried out and documents issued by LIXIL Compliance department. Moreover, Internal Audit function submitted to all employees of some companies an anonymous survey with the aim to measure the compliance awareness of all employees and to promote the activities carried out at Group level referring to compliance with laws and regulations. Following the entry into force of the General Data Protection Regulation UE 679/16 on May 24, 2019, which became applicable in all the European countries by May 25, 2018, Permasteelisa S.p.A. started a project to align Permasteelisa Group European companies with the new GDPR Regulation, which ended in FY 2019. The project was divided in two phases: the first one was a privacy risk assessment and the second one was focused on the implementation of the GDPR requirements. Moreover, in order to be compliant with GDPR regulation, a specific training on Personal Data Protection was launched with target all Group employees who deal with personal data (mainly white collars). It should be noted that the Personal Data Protection Policy, issued by shareholder LIXIL, was adopted. Permasteelisa Group has established a concern-raising system (“whistleblowing�), available to all employees and external stakeholders, with the aim of gathering information on possible compliance breaches, taking measures to prevent fraudulent and unlawful behavior, and responding quickly where action is required. The concern-raising system, called Speak Up!, is available 24-hours a day, 7 days a week and in several languages. Internal Audit function is in charge of conducting necessary analysis on the reports received taking all the needed steps to guarantee the confidentiality of the reporter. Permasteelisa Group, since 2009, signed up to the Global Compact of United Nations, a sustainability initiative that implies the commitment of the Group to align its operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. In June 2018, the new COP relevant to 2017 was prepared and addressed to United Nations Global Compact. The document is available on the company website at the URL: https://www.permasteelisagroup.com/sustainability/unglobal-compact/.

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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, 2019 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 2019 shows a loss of Euro 362,343 thousand against the previous year that had closed with a profit of Euro 3,090 thousand. The summary results are as follows: € thousands

March 31, 2019

March 31, 2018*

97,994 3,780 101,774

121,513 814 122,327

(38,901) (56,329) (55,766) (4,337) (2,558) (11,570) (753) (1,830) 31,795 379 (139,870)

(49,281) (54,683) (51,191) (4,965) 0 (2,193) 76 (302) 28,454 5 (134,080)

Operating result

(38,096)

(11,753)

Financial income Financial expenses Net financial income (expenses)

67,852 (46,547) 21,305

89,994 (71,567) 18,427

0 (342,329) (359,120) (3,223) (362,343)

0 (4,367) 2,307 783 3,090

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 Devaluation of intangible assets Net Bad debts provision Net Provision for risks and charges Other operating expenses Cost Recovery In-house enhancement of fixed assets Total operating expenses

Revaluation of equity investments Write-downs of equity investments Profit before tax Income tax expense Profit after tax

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

Compared to the previous fiscal year, the turnover has been decreased for the fiscal year April 1, 2018 – March 31, 2019 (from Euro 122 million to Euro 102 million), contributing to the reduction in the operating income. The performance referred to the operational activities in Vittorio Veneto site was heavily influenced by the conclusion of a settlement agreement, which closed a dispute concerning a project acquired in 2011, the closure of other legal disputes that arose in previous periods and the operating result of the Azerbaijan branch. 46


With regard to the net financial result, the positive balance benefited from the dividends distributed by subsidiaries for approximately Euro 25 million (2018: Euro 25 million). During the year, it was necessary to write-down investments totaling Euro 342 million based on the impairment tests carried out as at March 31, 2019, in relation to the losses accrued by the subsidiaries and the differentials between the book value and the shareholders' equity of the same.

47


Financial position The Parent Company's Financial position is summarised in the table below: March 31, 2019

March 31, 2018*

214,000 29,940 (3,225)

318,659 75,151 (3,380)

Net invested capital

240,715

390,430

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

(37,437) 0 278,152

(33,773) 223,661 170,542

Coverage

240,715

390,430

2,312

1,712

809

843

€ thousands

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

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 and 18;

b) Sum of the captions included in the statement of financial position referring to notes 19, 20, 21, 22, 23, 24, 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 that has been completly reimbursed as of March 31, 2019 (Euro 223,661 thousand as of March 31, 2018); e) Caption included in the statement of financial position referring to note 28, it regards Shareholder’s loan that has been completly reimbursed as of March 31, 2019; f) Caption included in the statement of financial position as total equity. * The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

48


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:

Result March 31, 2019

Net Equity as of March 31, 2019

Result March 31, 2018(*)

Net Equity as of March 31, 2018(*)

(362,343)

278,152

3,090

170,542

16,586

(159,437)

9,315

(97,157)

Excess cost allocation

(48,293)

(4,414)

(4,677)

45,557

Reversal of inter-group dividends

(25,000)

0

(40,809)

0

Effect of other consolidation entries

5,401

(2,784)

4,663

8,208

Share attributable to minority interests

1,804

(7,604)

(148)

(10,108)

(411,845)

103,913

(28,566)

117,042

â‚Ź thousands

Parent Company balances Share of consolidated subsidiaries’ equity and result net of book value of related equity interests

Group balances

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

49


Approval of the Statutory Financial Statements and allocation of 2019 result Shareholder, We submit to your approval the Statutory Financial Statements of the Company for the period ended March 31, 2019, that show a loss for the period of Euro (362,343,127.41) leaving to you any decision about its destination.

June 4, 2019

On behalf of the Board of Directors

The Chairman of the Board of Directors Davide Croff

50


51


Permasteelisa Group Consolidated Financial Statements as of March 31,2019

52


Consolidated income statement as of March 31, 2019 March 31, 2019

March31, 2018*

1,104,747 12,126 1,116,873

1,262,537 14,129 1,276,666

(392,308) (506,576) (427,972) (20,948) (59,635) (49,545) (35,660) (15,054) 6,613 560 (1,500,525)

(350,790) (482,088) (389,600) (21,106) 0 (4,372) (9,274) (12,995) 1,059 991 (1,268,175)

(383,652)

8,491

56,442 (80,807) (24,365)

83,893 (112,542) (28,649)

â‚Ź 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 Devaluation of intangible assets 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 7 8 9 10

Ordinary activity result Financial income Financial expenses Net financial income/(expenses)

11

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

12 12

0 0 (408,017)

0 (618) (20,776)

Income tax expense Profit after tax

13

(5,632) (413,649)

(7,642) (28,418)

(411,845) (1,804) (413,649)

(28,566) 148 (28,418)

Attributable to: Group Minority Profit for the period

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

53


Consolidated statement of comprehensive income as of March 31, 2019 March 31, 2019

March 31, 2018*

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

(413,649)

(28,418)

(13,693)

23,251

(3,656)

(10,224)

(17,349)

13,027

(589)

(73)

(589)

(73)

(17,938)

12,954

(431,587)

(15,464)

(430,005) (1,582) (431,587)

(14,806) (658) (15,464)

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

Actuarial gains/(losses): Total 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

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

54


Consolidated statement of financial position As of March 31, 2019 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 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 Loss on construction contract Fund Advances from customers Trade payables to third parties Trade payables to not consolidated and associated subsidiaries Income tax payables Other current liabilities Total current liabilities Total liabilities Total equity and liabilities

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

29 29 29 29 29 29 29 29 29

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

March 31, 2019 8,380 86,066 0 406 49 36,756 131,657 327,521 34,618 389,117 1 12,833 75,378 82,617 922,085 1,053,742

March 31, 2018* 74,090 93,570 6,083 406 44 51,317 225,510 466,834 31,932 423,772 64 12,016 88,814 51,938 1,075,370 1,300,880

6,900 1,380 (7,726) (3,087) 7,947 671,611 (161,267) (411,845) 103,913 7,604 111,517

6,900 1,380 (7,137) 10,270 12,162 199,611 (77,578) (28,566) 117,042 10,108 127,150

0 3,270 28,719 47,550 21,110 100,649 311 275,980 31,938 156,724 274,030 1 11,478 91,114 841,576 942,225 1,053,742

158,480 3,392 28,055 26,730 50,632 267,289 188,609 194,730 0 177,144 251,835 1 20,294 73,828 906,441 1,173,730 1,300,880

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

55


Consolidated statement of cash flows As of March, 31 2019 â‚Ź thousands

March 31, 2019

March 31, 2018 (3) (4)

(413,649)

(28,418)

5,632 (462) 4,963 (300) 20,948 59,635 1,529 0 35,660 49,545 0 (300) 178 (1,027) 2,344 (85) 180 178,440

7,642 (524) 6,639 0 21,106 0 6 (2,411) (15,029) 4,372 618 (232) 100 (1,057) 800 (1,670) 1,069 21,429

Changes in operating activities: - Changes in hedging reserve - Changes in IAS 19 reserve - Changes in IFRS 15 reserve - Changes in contracts work-in-progress (net), inventories and advances - Changes in the other captions of working capital (1) - Changes in the other captions of operating capital (2) - Changes in the fair value evaluation of derivatives instruments - Income tax paid - Interests paid - Interest received - Effect of exchange rate changes on operating activities cash flows Total changes

(13,694) (589) (53,862) 216,010 7,367 (7,807) 16,343 (9,899) (5,312) 462 (5,129) 143,890

24,986 (73) 0 70,670 52,823 17,608 (10,608) (36,622) (6,860) 524 (12,109) 100,339

Net cash flows absorbed by operating activities (A)

(91,319)

93,350

(11,446) 2,548 0 3,900

(12,082) 649 7,414 0

(4,998)

(4,019)

(123,117)

(46,786)

Profit (loss) for the period Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Income tax expenses - Interest income - Interest expense - Dividends income - Depreciation and amortization expenses and impairment losses - Devaluation of intangible assets - Gain/(loss) on disposal of tangible and intangible assets - Gain on disposal of asset held for sale - 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 Proceeds from disposal of asset held for sale 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 Bank overdrafts and other short-term loans

56


Shareholder’ loan Lease obligation (principal) Payment / receipt of dividends to / from third parties Capital injection Net cash flows generated by financing activities (C)

(223,661) 0 300 472,000 125,522

(31,432) (21) 625 0 (77,614)

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

29,205

11,717

Net cash surplus/(deficit) as of 1 April (D)

51,938

43,258

1,474

(3,037)

82,617

51,938

82,508 109 82,617

51,802 136 51,938

Effect of exchange rate changes on balances held in foreign currency (E) Net cash surplus/(deficit) as of 31 March (A+B+C+D+E)

Net cash surplus/(deficit) includes: Bank and post current accounts and deposits Cash in hand

(1)

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. (3)

Starting from the fiscal year 2019, the Group has decided to modify the cash flow statement, with respect to the approach adopted in previous years, to allow a clearer representation of the change in net cash and cash equivalents accordingly to IAS 7. The comparative data has therefore restated uniformly. (4) The Group has adopted the modified retrospective method in the first-time application of IFRS 15. The comparative table has therefore not been subject to restatement.

57


Consolidated statement of net equity changes As of March, 31 2019 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

23,314

(15,136)

420

(7,064)

199,611

(77,578)

131,847

10,632

142,479

(11,152)

1,567

(32)

(9,617)

(607)

(10,224)

23,836

(222)

23,614

(386)

23

(363)

â‚Ź thousands Balance as of April 1, 2017 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

23,836 (386)

(73) 0

0

0

0

(11,152)

25,403

(418)

(73)

0

0

0

0

(73)

0

(73)

0

13,761

(806)

12,954

(28,566)

(28,566)

148

(28,418)

(28,566)

(14,806)

(658)

(15,464)

Increase of share capital

0

0

0

Destination of operating result

0

0

0

Dividends

0

0

0

0

0

0

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

0

0

0

0

0

0

0

0

(11,152)

0

25,403

0

(418)

(73)

0

0

0

0

0

Other net equity variations: Minority interests acquisition

0

0

0

Other variations

0 0

134 0

134 0

0 117,042

134 10,108

134 127,150

Roundings Balance as of March 31 2018*

0 6,900

0 1,380

0 0

0 0

0 12,162

0 10,267

0 2

0 (7,137)

0 199,611

0 (106,144)

* The Group has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

58


Share capital

Legal reserve

Share premium

Translation reserve

Foreign exchange risk hedging reserve (*)

Commodities risk hedging reserve (*)

IAS 19 Reserve (**)

Other reserve

Retained earnings

Group net equity

Minority interest

6,900

1,380

0

12,162

10,267

2

(7,137)

199,611

Total

(106,144)

117,042

10,108

127,150

(52,940)

(52,940)

(922)

(53,862)

(2,183)

(2,183)

0

(2,183)

(161,267)

61,919

9,186

71,105

(3,802)

146

(3,656)

(13,767)

97

(13,670)

(2)

(21)

(23)

â‚Ź thousands Balance as of April 1, 2018 IFRS 15 first time application IFRS 9 first time application Equity investment devaluation in associated companies Adjusted balance as of April 1, 2019 Income (expenses) recognized directly in equity: Translation differences

6,900

1,380

0

12,162

10,267

2

(4,215)

414

(1)

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

(7,137)

199,611

(13,767) (2) (589) 0

0

0

(4,215)

(13,353)

(3)

(589)

0

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

0

0

0

(4,215)

(13,353)

(3)

(589)

Capital injection

0

(589)

0

(589)

0

(18,160)

222

(17,938)

(411,845)

(411,845)

(1,804) (413,649)

(411,845)

(430,005)

(1,582) (431,587)

472,000

0

472,000

Increase of share capital

472,000

0

0

0

Destination of operating result

0

0

0

Dividends

0

0

0

472,000

0

472,000

0

0

0

0

0

0

0

0

0

0

472,000

0

Other net equity variations: Minority interests acquisition Other variations

0

Roundings Balance as of March 31 2019

0

0 0

0 0

0

0

0

0

0

0

0

0

0

0

0

0

6,900

1,380

0

7,947

(3,086)

(1)

(7,726)

671,611

(573,112)

103,914

7,604

111,518

59


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) and interiors systems. The Company’s Consolidated Financial Statements as of March 31, 2019 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 June 4, 2019 and will be submitted to the approval by the Shareholder meeting called on July 24, 2019. 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, 2018. 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, 2019 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. Starting from the financial year 2019, the Group decided to modify the cash flow statement, with respect to the approach adopted in previous years, to allow a clearer representation of the change in net cash accordingly to IAS 7. Therefore, to make homogeneous the financial data, it has decided to restate also the comparative figure.

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 available by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”).

60


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, 2018, except for those described in the paragraph “new accounting standards�. (b) Basis of preparation The consolidated financial statements have been prepared based on the going concern assumption. When assessing the appropriateness of this assumption, the Directors - having taken into account the significant losses generated by the Group during the accounting period - have considered the current financial situation of the Group, considerably strengthened by the contributions made by the Shareholder during the period, as well as the economic and financial projections included in the Business Plan prepared with reference to the period 2020-2024, which foresee the need for additional financial resources over the mid-term, which the Group trust being able to fund with the support of the Shareholder. Moreover, the preparation of the financial statements requires management to make evaluations, estimates and assumptions which have an effect on the application of the accounting standards and on the book values of the assets and liabilities, costs and revenues. The evaluations made are the best possible on the basis of the information currently available. The estimates and related assumptions are based on past experience and on several other factors which have been deemed reasonable considering the circumstances, the results of which form the basis for the measurement of the book value of the assets and liabilities which cannot be accurately inferred from other sources. The effective results may be different with respect to the estimates made, characterised by material uncertainty due to their nature as well as in consideration of the specific sector in which the Company operates and the moment of discontinuity which the Group is facing. The items which are affected the most by estimates and the use of hypothetical assumptions are the fixed assets, in particular in relation to the impairment test carried out which, as mentioned, is based on forecasts regarding the future performance of the Group and therefore aleatory under many aspects. For the same reasons, a similar consideration concerns the deffered tax assets, whose recoverability depends on future results. Other items subject to a significant use of estimates are the recoverability of the receivables, the valuation of the work-in-progress - in relation to the estimates of the related costs which influence the stage of completion - the contigent liabilities relating to warranty works, projects’ risks and outstanding disputes, the outcome of which is uncertain and whose measurement is based on available information. The estimates and the underlying assumptions are periodically reviewed. The changes of accounting estimates are recognised during the period in which the estimate is revised if the change concerns just that period, or in the period of the change and in future ones if the change concerns both the current period and futures ones. The Directors, having assessed the circumstances illustrated above, have deemed that suitable elements exist for supporting the ability of the Group to fulfil its obligations in the foreseeable future and in particular over the next 12 months and have therefore considered it appropriate to adopt the going concern assumption when preparing the consolidated financial statements. The annual financial statements have been prepared on the basis of the general principle of the historical cost, with the exception of the financial statement items which, in compliance with the IFRS, are measured on the basis of fair value as indicated further on in the measurement criteria. The accounting standards illustrated further on have been applied consistently for all the periods presented in these consolidated financial statements. These accounting standards have generally been applied on a uniform basis by the Group companies when drawing up the accounts for consolidation purposes; however, where necessary, the Parent Company has made the necessary adjustments to adapt them to the 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. 61


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. Most of consolidated subsidiaries have changed the reporting period closing to 31st 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, Turkey and Colombia subsidiaries and Azerbaijan branch. (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 that is between 20% and 50%). The 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 average exchange rates of the year, approximating 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, 2019 and the comparative exchange rates of the previous year are as follows: Currency

Thai Baht Danish Krone Norwegian Krone Dubai Dirham Australian Dollar Canadian Dollar Hong Kong Dollar Singapore Dollar Taiwan Dollar

March 31, 2019 Exchange rate at the Average exchange balance sheet date rate of the year 35.632000 7.465200 9.659000 4.126100 1.582100 1.500000 8.819500 1.521400 34.659000

37.441139 7.457398 9.627554 4.252937 1.587549 1.519018 9.081716 1.572170 35.340238

March 31, 2018 Exchange rate at the Average exchange rate balance sheet date of the year 38.478000 7.453000 9.677000 4.524900 1.603600 1.589500 9.669600 1.615800 35.928300

38.630060 7.441515 9.491200 4.297707 1.512588 1.500682 9.141240 1.586516 35.078307

62


Usa Dollar Hungarian Forint Swiss Franc Croatian Kuna Pataca Macau Philippine Peso Chinese Renminbi Malasyan Ringitt Riyal Qatar Riyal Saudi Arabia 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

(iii)

1.123500 321.050000 1.118100 7.433800 9.084100 59.075000 7.539700 4.583800 4.089500 4.213100 72.856400 77.719000 4.076400 0.858300 1,276.460000 124.450000 4.300600 1.910000 2,956.500000 6.344600 26,064.000000 4.386500 3,570.250000

1.158037 320.527324 1.146763 7.413991 9.354154 61.255463 7.769098 4.719519 4.215275 4.342687 75.289531 80.956819 4.213975 0.881976 1,289.341587 128.400393 4.291264 1.968687 2,927.726786 6.052780 26,789.000000 4.380395 3,499.805079

1.232100 312.130000 1.177900 7.432300 9.959700 64.374000 7.746800 4.765800 4.484800 4.620400 70.889700 80.296000 4.326200 0.874900 1,310.890000 131.150000 4.210600 2.094600 2,949.450000 4.897600 28,112.000000 4.093800 3,439.760000

1.170468 309.772574 1.135464 7.457202 9.415505 59.478733 7.746634 4.872652 4.260484 4.389451 67.744317 75.462448 4.131364 0.882046 1,298.568532 129.689943 4.220926 1.991155 2,835.881468 4.309918 26,595.939286 3.765271 3,434.826468

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 combinations 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. 63


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. 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, swap and future) 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 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 is not respected, are recorded as trading instruments. Derivatives are initially recognized at cost on the date a derivative contract is entered into and are subsequently remeasured 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, swap or future 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 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 satisfied; 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 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 64


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 rollover 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 is always satisfied; 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. (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. No hedging of this type are in place in the Group, during the reporting period of analysis. (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”.

65


(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 plant and machinery equipment other assets

20-40 years 5-25 years 4-5 years 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. At the closing date of the reporting period the Group assets do not include any goodwill amounts. (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. 66


(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:     (j)

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

3-5 years 3 years 5 years 20 years

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 operating 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. The contract revenues include the payments agreed upon by contract, work changes, price revision, incentives, and any claims, to the extent that it is highly probable these items are 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 contract 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 begun (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-in-progress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-inprogress). 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. 67


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 fixed assets 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. At the closing date and in the previous years reporting periods, there are not any goodwill or assets with indefinite useful life recognized. (i) Calculation of recoverable amount The recoverable amount of an asset is the greater of its 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 cash-generating 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.

68


(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. 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 more 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 over-time in proportion to the stage of completion of the contract that is calculated based on the costs 69


effectively incurred and total costs included in the contract budget (cost-to-cost). 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 at a point in time 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. (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

Finance 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.

70


(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 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, 2018 IFRS 15 – Revenue from Contracts with Customers. Published on May 28, 2014 and integrated with further clarifications published on 12 April 2016. The IASB issued IFRS 15 with the intent of replacing 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 key 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.

In addition to the five-step model, IFRS 15 also covers contract costs, contract modifications and financial statements disclosures. The standard must be applied for reporting periods beginning on or after January 1, 2018 but may be applied in advance. The Group did not apply for early application of this standard, but it has been opted for applying as from the reporting period beginning on April 1, 2018 using retrospective approach and accounting the cumulative effect of initially applying at the date of initial application (modified retrospective approach). This effect has been recognised as corresponding adjustment to the opening balance of retained earnings in the reporting period that includes the date of initial application that, for Permasteelisa Group, is April 1, 2018 - March 31, 2019. Under transition method, the Group has applied this Standard retrospectively only to contracts that were not completed at the date of initial application (April 1, 2018). As part of the IFRS 15 project, the Group has defined the effects of applying IFRS 15 for the first time on its consolidated financial statements as required by IAS 8. The implementation project has led to identification of the following key differences compared to the provisions included in the standards previously applied by the Group, in particular compared to IAS 11. Costs to obtain a contract: the Group shall recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. It showed that, for the Group, the costs incurred for the preparation of the offers could not be included in the contract costs and not be accounted as a year-end asset, if the contract with the customer is not obtained. Contract modifications: a contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. If both sides have approved change in the scope of a contract without having determined the corresponding change in price, the entity shall estimate changes in the transaction price, due to modification, in accordance with this Standard to estimate of variable consideration and its constraints. In particular, an entity has to 71


include in the transaction price the amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur once the uncertainty related to the variable consideration is subsequently resolved. The adoption of IFRS 15 has entailed a reduction on consolidated equity at April 1, 2018 equal to Euro 53,862 thousand, net of the related tax effect, due to: -

costs to obtain contracts (tender costs) non incremental and capitalized as of March 31, 2018, equal to Euro 11,753 thousand;

-

revenues from contract modifications or subject to estimate of variable considerations (claims and variations) that must be deferred as recognition, equal to Euro 42.109 thousand.

As already described above, this negative effect has been recognized as adjustment to the opening balance of retained earnings of reporting period of initial application and corresponding to April 1, 2018. Comparative figures are not restated according to the modified retrospective approach. IFRS 9 – Financial Instruments (and Amendment to IFRS 9 - Prepayment Features with negative compensation). Published on July 24, 2014, the standard is the result of the IASB’s work that intended to replace IAS 39 and the main features are: -

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 an hedge accounting relationship, 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 had not a significant impact on the Group's Financial Statement and no effects have been recognized as adjustments to the opening balance of retained earnings for the reporting period April 1, 2018 – March 31, 2019. In particular, referring to trade receivables and to contract assets, representative of most of the Group’s credit exposure, current accounting procedures of impairment are basically equated to new Standards’ rules, whose application should not involve key effects. This is based on the fact that the indicators used to quantify credit risk previously used under IAS 39, such as client risk, country risk and the assessment of relevant macroeconomic information already reflects a valuation method based on expected risk. Credit risk is that deriving from the Group’s exposure to potential losses arising from the customers’ noncompliance with their obligations. Management of this risk starts as early as the assessment of offers, through a careful analysis of the characteristics of the countries in which the Group’s activities should be carried out and the customers requesting an offer, and continues during the whole project execution. Regarding to the existing hedging relationships, the current accounting procedures satisfies the hedge accounting requirements regulated by the new Standard IFRS 9. Amendments to IFRS 4 - Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts. This amendment is addressed to those entities whose primary business is the insurance activity. The adoption of this amendment had no impact on the scope of consolidation of the Group. Amendments to IFRS 2 Share-based payment - Classification and measurement of share-based payments. The adoption of this amendment had no impact on the scope of consolidation of the Group. Annual Improvements to IFRS Standards 2014-2016. The adoption of this amendment had no impact on the scope of consolidation of the Group. Amendments to IAS 40 - Transfers of investment property. The adoption of this amendment had no impact on the scope of consolidation of the Group. IFRIC 22 - Foreign currency transactions and advance consideration. The adoption of this amendment had no impact on the scope of consolidation of the Group. 72


Accounting standards, amendments and interpretations not yet in force and applied in advance The Group has not applied in advance standards, both new and amended, which have been issued but are not yet in force.

Accounting standards, amendments and interpretations approved by the European Union, not yet mandatorily applicable and not adopted in advance by the Group IFRS 16 – Leases. The IASB issued this standard in January 2016. IFRS 16 replaces the current standards on leases, including IAS 17 - Leases, IFRIC 4 - Determining whether an arrangement contains a lease, SIC 15 - Operating leases - Incentives and SIC 27 Evaluating the substance of transactions in the legal form of a lease. The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset to differentiate between lease and service agreements specifically referring to: asset identification, right to replacement of the asset, right to obtain all the economic benefits arising out of use of the asset and right to control the use of the asset underlying the agreement. The standard introduces a single lessee accounting model for recognising and measuring lease agreements, which provides for the underlying asset – including assets underlying operating leases – to be recognised in the statement of financial position as assets and lease financial liability. On the contrary, the standard does not provide significant changes for lessor accounting. The new standard is applicable from January 1, 2019 but the early adoption is allowed. The Group completed a preliminary assessment in order to identify the potential impacts deriving from the first application of the new Standard (April 1, 2019). This process included the mapping of all the contracts in scope of IFRS 16 and an analysis of the main relevant clauses. The Group adopted the practical expedient prescribed by IFRS 16:C3 that allows the company to not reassess whether a contract is, or contain, a lease at the date of the initial application but use the conclusions previously identified applying IAS 17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease. In accordance with the IFRS 16:C4, this practical expedient has been applied to all contracts. The process for the implementation of the new Standard is ongoing and it includes the fitting of an IT infrastructure that is aimed at the management of the accounting matters, alignment of the administrative processes and related controls. The Group has decided to adopt the practical expedient envisaged by IFRS 16 paragraph C5 point b) and paragraph C8, based on which the Group will record, on 1 April 2019 (date of first adoption), a financial liability corresponding to the current value of the remaining payments due for the leases in existence at the date of first application, with an asset of the same value, reflecting the right of use of the leased asset, as the contra-entry. The Group elects to apply the practical expedient prescribed by the IFRS 16:5(a) to the short-term lease (contracts with lease term of 12 months or less). Moreover, the Group elects to apply the practical expedient prescribed by IFRS 16:5(b) that refers to the low-value asset (leases of underlying assets with a value, when new, in the order of magnitude of Euro 5,000 or less). For these contracts the application of IFRS 16 does not require the recognition of a lease liability and a right of use asset at the commencement date of the lease. Lease payments are recognized as an expense over the lease term on a straight-line basis and when incurred. With reference to the transition rules, the company is going to apply the following practical expedients available for the modified retrospective approach: -

classify the contracts with lease term of 12 months or less as short term lease and accounted for by simply recognizing an expense, typically straight-line, over the lease term;

-

rule out the initial direct costs from the value of the right-of-use assets at April 1, 2019;

-

use of all the information available at the transition date for the definition of the lease term with particular reference to the extension options and early termination options.

The following table shows the estimated impact of the first application of IFRS 16 at the transition date:

73


€ thousand Impact at transition date (01.04.2019) ASSETS Non Current Assets Right of use – lands and buildings

37,695

Right of use – machinery and plants Right of use – vehicles Right of use – office equipment Total

888 2,312 4,247 45,142

EQUITY AND LIABILITIES Non Current Liabilities Non current lease liabilities

32,114

Current Liabilities Current lease liabilities Total

13,028 45,142

IFRIC 23 - Uncertainty over income tax treatment. On June 7, 2017, the IASB published interpretation “Uncertainty over Income Tax Treatments (IFRIC Interpretation 23)”. The interpretation applies to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments. An entity is required to use judgement to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity is to assume that a taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, that it used or plans to use in its income tax filing. IFRIC 23 is effective for annual reporting periods beginning on or after 1 January 2019 but the earlier application is permitted. Directors are evaluating the potential impact on the consolidated financial statements of the Group resulting from the application of the amendment. On October 12, 2017, the IASB issued the amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”). The amendments clarify that a company applies IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture, including impairment requirements. These amendments are to be applied for financial periods beginning on January 1, 2019, though early adoption is allowed. Accounting standards, amendments and interpretations not yet endorsed by the European Union IFRS 17- Insurance Contracts. The IFRS 17 replaces the IFRS 4 Insurance Contracts. The entity has to apply the new standard to the insurance contract issued, including the reinsurance contracts, to the reinsurance contracts held and to the investment contracts with a discretionary participation feature (DPF). IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. Earlier application is permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments have also been applied. Directors do not expect any significant effect on the consolidated financial statements of the Group when this amendment is adopted. Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following amendments to IFRSs: -

IFRS 3 Business Combinations and IFRS 11 Joint Arrangements — The amendments clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

-

IAS 12 Income Taxes — The amendments clarify that an entity should recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized the transactions that generated the distributable profits. This is the case irrespective of whether different tax rates apply to distributed and undistributed profits. 74


-

IAS 23 Borrowing Costs — The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

Amendment to IAS 19 - Plant amendment, curtailment or settlement. Amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. Directors do not expect any significant effect on the consolidated financial statements of the Group when this amendment is adopted. Amendments to IFRS 3 - Definition of a Business. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 but the early adoption is allowed. Directors do not expect any significant effect on the consolidated financial statements of the Group when this amendment is adopted. Amendments to IAS 1 and IAS 8 - Definition of Material. The document introduced a revised definition of “material” which is quoted in the IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies, changes in Accounting Estimates and Errors. The purpose of the amendment is to give a more specific definition of material; it introduced the “obscured information” concept. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Directors do not expect any significant effect on the consolidated financial statements of the Group when this amendment is adopted.

Information on impairment test prepared during the year Due to the significant losses generated by the Group in the accounting period, the Directors have recognised the presence of indicators of possible impairment of the value of the assets recorded and have subjected the entire consolidated net invested capital as of 31 March 2019 to an impairment test. For the performance of said test, the Directors have been supported by qualified external professionals, suitably appointed. The method adopted for the preparation of the Impairment Test and the related results are illustrated below: • a single cash generating unit (CGU) has been identified, corresponding to the Group in consideration of the high operational inter-relationship existing between the Group companies and the various sectors in which the Group operates. • the recoverable amount compared with the consolidated net invested capital was determined as the value in use, defined as the current value of the expected cash flows using a rate which reflects the specific risks of the CGU as of the measurement date (so-called Discounted Cash Flow method). • the expected cash flows derived from the 2020-2024 Business Plan (hereinafter also the “Plan”), were used, a plan drawn up also with the support of qualified external professionals, suitably appointed, as approved by the Board of Directors on 4 June 2019. The plan includes strategic actions, launched and to be launched, identified by the Directors for the recovery of satisfying Group performances and therefore includes lines of intervention also characterised by elements of decisive discontinuity with respect to the situation existing as of 31 March 2019. At this regard, it is hereby specified that the expected cash flows used for the purpose of the impairment test have been taken from the Plan however taking into account just the actions for which the requirements state by the accounting standard IAS 36.44 have been met as of the date of closing. • the discount rate used is the weighted average cost of the capital (so-called WACC post-tax), calculated considering the structure of the capital of a panel of comparable companies. The method applied is the Capital Asset Pricing Model, on the basis of which the rate is determined using a mathematical model provided by the sum of the return of a risk-free asset, to which the risk premium is added. The market risk premium is provided by the result of the average market risk for the specific sector beta. The WACC used is 12.1%. • the “g” growth rate for the determination of the cash flows beyond the explicit period of the Plan is aligned to the expected inflation in the countries in which the Group operates. The g-rate used is 2.14%. It is hereby specified that the estimates used are based on internal evaluations relating to future events which may not occur or may occur with different results and timing with respect to forecasts, therefore determining the possibility of differences even significant with respect to the forecast data considered, which could therefore lead to adjustments in values, not quantifiable and not predictable as of today. The recovery of the net invested capital therefore depends on the achievement of the objectives defined by the Plan from which the projections used in the evaluation have been taken. In this connection it is emphasised that the Plan on which the test is based is in turn based on hypothetical assumptions regarding the future performance of the Group characterised by material uncertainty due to their nature as well as in 75


relation to the sector in which the Group operates and the elements of discontinuity enclosed in the challenges which the Group is facing to return to positive profitability. It is specified that, as in previous years, there are no assets with an indefinite useful life. On conclusion of the impairment test, it became necessary to proceed with the write-down of the Other intangible fixed assets for Euro 59,635 thousand, corresponding to the net value of the customer relationship recognised among assets as a result of the Monnalisa transaction, already mentioned previously.

76


Notes to the Consolidated Financial Statements 1. Assets classified as held for sale As of March 31, 2018, the Group does not hold non-current assets and liabilities held for sale.

2. Acquisitions of subsidiaries During the year ended as of March 31, 2019, there were no company acquisitions.

3. Operating revenues Operating revenues broken down by product are shown below: â‚Ź thousands

March 31, 2019

March 31, 2018

Curtain walls Interiors Contract Marine

975,540 108,693 14,480 18,160 1,116,873

1,100,877 119,234 36,217 20,338 1,276,666

March 31, 2019

March 31, 2018

297,619 8,198

418,594 13,075

161 59,298 28,151 16,965 8,012 68,666 223,696 17,937

2,399 49,403 12,660 22,185 5,766 45,235 234,695 10,233

Other European countries Other Central Asian countries Other African countries

21,522 (1,637) (5)

7,652 3,189 5

United Arab Emirates Qatar Saudi Arabia Other Middle Eastern countries

13,739 3,218 40,005 140

14,258 12,464 43,534 561

Australia China Japan Hong Kong India Korea Russia Singapore

36,767 98,993 25,961 70,330 377 4,637 31,108 11,024

22,766 91,989 16,674 145,647 (111) 2,764 77,534 2,616

Operating revenues broken down by geographical area are shown below: â‚Ź thousands

North America South America Benelux France Germany Italy Spain Switzerland United Kingdom Ireland

77


Taiwan Thailandia Macau Other Asian countries Total

1,345 3,722 4,708 22,216 1,116,873

3,137 6,654 2,649 8,439 1,276,666

March 31, 2019

March 31, 2018

385 1,292 81 1,601 8,767 12,126

2,605 1,268 152 1,677 8,427 14,129

4. Other operating income The Other operating incomes included in the total operating revenues are the followings: â‚Ź thousands

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

The item "Other revenues" includes Euro 604 thousand concerning non recurring revenues due to reversal of cost provisions made in the previous year and Euro 590 thousand related to small jobs for maintenance and visual mock-up in China. The item also includes the utilization of project funds which were been accrued in previous years: Euro 1,055 thousand in Russia, Euro 3,000 thousand in Italy and Euro 2,434 thousand in Mongolia.

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 35.1% (27.5% in previous year). The increase in the percentage impact on the total revenues is due both to an increase in absolute value of the costs incurred in the year, particularly in the North America area, and to the reduction in revenues. In fact, the operating revenues are determined based on the progress of project costs, and that are affected by the revision of the estimates of costs to terminate the contracts. The percentage impact of the item services expenses and use of third party assets over the total operating revenues increased from 37.8% to 45.36% compared to March 2018. The increase in the percentage impact on expenses and use of third party assets over the total operating revenues is mainly due to the decrease of revenues amount. It highlights that the item services expenses and use of third party assets expenses includes remuneration due to statutory auditors amounting to Euro 93 thousand.

6. Personnel expenses â‚Ź 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, 2019

March 31, 2018

361,025 43,829 1,314 0 2,716 (596) 508 213 18,963 427,972

326,135 41,253 1,300 56 2,368 (732) (5) 427 18,798 389,600

78


The Personnel expenses increased for 10% compared to previous year. This is mainly due to the North America area, where the employees increased for 149 units to meet the needs of site installation and site management for projects in progress. The average workforce for the period was 5,756 units.

7. Depreciation, amortization and impairment losses € thousands

Tangible assets depreciation Intangible assets amortization Devaluation of intangible assets Impairment losses

March 31, 2019

March 31, 2018

12,752 7,716 59,635 480 80,583

13,114 7,992 0 0 21,106

The item Devaluation of intangible assets represents the impairment loss recognized following the results of the Impairment Tests prepared by the Directors as of March 31, 2019. Because of this test, it was necessary to write-down the Other Intangible Assets for Euro 59,635 thousand, corresponding to the net value of the customer relationship entered under the assets following the operation Monnalisa as already above mentioned. For the valuations used preparing the impairment test, see the appropriate section Information on impairment test prepared during the year.

8. Bad debts provision € thousands

March 31, 2019

March 31, 2018

49,545 49,545

4,372 4,372

Bad debts provision

The variance of “bad debts provision” is due to the combined effects of provisions and releases occurred during the reporting period. In particular, the provisions are related to the European area for Euro 11.6 million, to American area for Euro 1.8 million and to Middle Eastern area for Euro 38.4 million, of which Euro 33.8 million are related to KAFD job as analyzed in the note 22. 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 risks Provision for work-in-progress risks

March 31, March 31, 2019 2018 4,090 11,271 6,913 13,386 35,660

417 1,974 1,486 5,397 9,274

The item “Provision for disputes and legal actions” includes provisions in America area for Euro 3.1 million, in Europe area for 0.9 million and in the Middle Eastern area for Euro 0.6 million. With reference to the item “Provision for warranties”, it is mainly due to the combine effect of provisions made in the North America area for Euro 17.9 million and utilization for Euro 8.7 million. In fact, in this area, critical issues emerged during the year 2019 in relation to some projects completed or under completion. Therefore, it was necessary to estimate and provide for the related restoration costs. With reference to the item “Provision for jobs risks”, it is mainly due to the provisions made in the Asian area for Euro 3.4 million and the Middle Eastern area for Euro 0.6 million. With reference to the item "Provision for work-in-progress risk", the ending balance as of March 31, 2019 is due to the combined effects of net provisions and releases occurred during the reporting period equal to Euro 4.9 million in the Middle Eastern area (March 2018: Euro 0.8 million), Euro 3.7 million in the European area (March 2018: Euro 4.2 million), 79


and Euro 2.9 million in the American area (March 2018: net release for Euro 0.4 million). As of March 31, 2019, there are net provisions in the Asian area for Euro 22.7 million (March 2018: no provisions) related, in particular, to a project whose prosecution is currently under discussion. 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 Trade receivables write-off Other expenses

March 31, 2019

March 31, 2018

9,286 1,914 506 3,348 15,054

10,438 199 742 1,616 12,995

11. Net financial expenses € thousands

Dividends and other incomes Interest income Exchange rate gains 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 Interest expenses on financial leases 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, 2019

March 31, 2018

300 462 48,520 33 2,665 4,461 1 56,442 3,891 51,798 0 367 1,132 1,072 10,383 12,031 133 80,807 (24,365)

625 524 72,830 64 1,742 8,108 0 83,893 4,165 79,364 2 612 1,169 2,471 8,471 16,206 82 112,542 (28,649)

The profit and losses on foreign exchange rates reported in the above table respectively include gains for Euro 26,401 thousand (March 2018: Euro 17,320 thousand) and losses for Euro 20,684 thousand (March 2018: Euro 31,151 thousand) arising from year end closing evaluation. As of March 31, 2019, the net financial expenses amounted to Euro 24,365 thousand, while as of March 31, 2018 amounted to Euro 28,649 thousand. The positive variation for Euro 4,284 thousand is mainly due to the combination of the variations of the following items: - Exchange rate losses, net of gains, decreasing for Euro 3,256 thousand: net losses on exchange decreased from Euro 6,534 thousand (March 2018) to Euro 3,278 thousand (March 2019). - Commercial and financial expenses on foreign currency risk hedging, net of incomes, increased from Euro 14,909 thousand (March 2018) to Euro 15,420 thousand (March 2019). This financial item 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.

80


- Interest expenses, net of incomes, decreased from Euro 7,206 thousand (March 2018) to Euro 5,667 thousand (March 2019) with a variation for Euro 1,838 thousand related to provisions for interests on a legal action in the Middle Eastern area.

12. Revaluation and write-downs of equity investments During the reporting period April 1, 2018 – March 31, 2019, there have not been any revaluations of equity investments while in the previus reporting period April 1, 2017 – March 31, 2018, there were equity investement devaluations for Euro 618 thousand.

13. Income tax expenses Taxes recognised in the income statement € thousands

March 31, March 31, 2018 2019

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 expenses in the income statement

3,603 (846) 2,757

23,785 5,278 29,063

(3,881) 0 0 6,756 2,875 5,632

(14,413) (2) (5,093) (1,913) (21,421) 7,642

Reconciliation of effective tax rate € thousands

March 31, 2019

March 31, 2018

Profit before tax

(408,016)

(20,776)

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) Other taxes Others

(97,924) 24% 28,411 82,552 (81,091) 0 69,493 63 1,774 0 (846) 0 1,366 1,834 5,632 (1.4%)

(4,986) 4,319 2,297 3,369 (174) 3,042 (1,049) (3,094) 1,871 5,277 (5,093) 826 1,037 7,642

81


15. Intangible assets Development costs

Rights to use intellectual property

Licences and trade-marks

Other intangible assets

Intangible assets in progress and advances

Total

Balance as of April 1, 2017 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, 2018

0

5,208 719 157

3 10

72,440 60 60

3,314 361

(1,672)

(1)

(6,320)

80,965 1,150 217 0 0 0 (217) (7,993) 0 (32)

0

4,394

12

66,226

3,458

74,090

Balance as of April 1, 2018 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, 2019

0

4,394 524 351

12 2

66,226 35

3,458 1,030

(1,676)

(1)

(6,039) (59,635) 5

74,090 1,591 351 0 0 0 (317) (7,716) (59,635) 16

â‚Ź thousands

(217)

(18)

(14)

(317)

11 0

3,604

13

592

4,171

8,380

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

2,433 (2,433) 0

22,509 (18,115) 4,394

855 (843) 12

182,031 (115,805) 66,226

3,458 0 3,458

211,286 (137,196) 74,090

2,433 (2,433) 0

22,509 (18,115) 4,394

855 (843) 12

182,031 (115,805) 66,226

3,458 0 3,458

211,286 (137,196) 74,090

2,433 (2,433) 0 0

23,066 (19,462) 0 3,604

909 (896) 0 13

182,062 (121,835) (59,635) 592

4,171 0 0 4,171

212,641 (144,626) (59,635) 8,380

Carrying amounts As of April 1, 2017 attributable to: Cost Accumulated amortization As of March 31, 2018 attributable to: Cost Accumulated amortization

As of April 1, 2018 attributable to: Cost Accumulated amortization As of March 31, 2019 attributable to: Cost Accumulated amortization Impairment losses

82


The increase for the period referred to the caption “Rights to use intellectual property” equal to Euro 524 thousand is mainly due to the increasing of the Holding (Euro 400 thousand) linked to: - The acquisition of new licenses of Simpana for the back up of company data (Euro 45 thousand). -The extension to all Group companies of the K2 Business Process Automation platform for the realization of Workflow processes in the QHSE area (Euro 85 thousand). - The acquisition of the Dyepower patent in the main Europeean countries (Euro 29 thousand). - The completion of the project to upgrade the HANA infrastructure of SAP landscape (Euro 48 thoudand) and the completion of the data consolidation and migration processes on the Salesforce CRM platform (Euro 29 thousand. - The purchase and the implementation of a new "Neptune" mobile application currently used in the areas of Production, Supply Chain and Site Management (Euro 19 thousand). - The new developments in document management related to electronic invoicing and automatic payments to suppliers (Euro 52 thousand). - The implementation of measures to enforce security and authentication criteria related to the Google APPS Group platform (Euro 38 thousand), and others developments for Euro 55 thousand. The increase for the period referred to the caption “Assets in progress and advances“ equal to Euro 1,030 thousand is mainly due to the development of the “Nomaad” housing module prototype (Euro 731 thousand), new developments for the PMF solution (Euro 87 thousand), further development of the new CRM solution to support Sales & Tender processes (Euro 25 thousand), advisory services and implementation of the new group website (Euro 70 thousand), developments on some software for the technical department (Catia, Autocad, Inventor for Euro 38 thousand), SAP developments both in the administrative area (new tools to manage the leases accordingly to the new IFRS16) and logistic area (management and traceability of materials) for Euro 37 thousand, in addition to other developments for Euro 42 thousand. Impairment losses and subsequent reversals The item Other intangible assets has been affected during the year for the write-down recognized following the results of the impairment test prepared by the Directors as at March 31, 2019. Due to these impairment test, it has been recognized a loss for Euro 59,635 thousand. It corresponds to the net value of the customer relationship which was identified and booked under the intangible assets during the Monnalisa operation as above mentioned. For the valuations used preparing the impairment test, see the appropriate section Information on impairment test prepared during the year.

83


16. Tangible assets â‚Ź thousands

Balance as of April 1, 2017 Non-current assets held for sale as of April 1, 2017 Balance as of April 1, 2017, including noncurrent assets held for sale Acquisitions Other increases Disposals relating to non-current assets held for sale Disposals Other decreases Depreciation Exchange rate differences on translation Balance as of March 31, 2018

Balance as of April 1, 2018 Acquisitions Other increases Transfers Disposals Other decreases Depreciation Impairment loss Exchange rate differences on translation Balance as of March 31, 2019

Land and buildings

Plant and machinery

Equipments

Other tangible assets

Tangible assets in progress and advances

Total

56,649

18,555

9,784

12,342

1,239

98,569

5,124

0

7

2

79

5,212

61,773

18,555

9,791

12,344

1,319

103,782

640 58

2,098 212

1,895 166

3,889 88

2,617

11,139 524

(4,871)

(28)

(7)

(2)

(76)

(4,984)

(148)

(54)

(298)

(171)

(4) (524)

(2,739) (567) 54,146

(3,762) (830) 16,191

(2,602) (280) 8,665

(4,010) (880) 11,258

(675) (524) (13,113) (2,579) 93,570

54,146 300 1,789

16,191 1,543 858

8,665 1,855 363

11,258 2,377 171

3,310 860

(664)

(1,490)

(39)

(10) (3,053)

(2,743) (481) 169 52,516

(3,447)

(2,491)

(345) (160) (4,071)

526 14,181

177 8,530

489 9,719

13 1,121

(22) 3,310

93,570 6,935 3,181 0 (2,548) (3,213) (12,752) (481) 1,374 86,066

Carrying amounts As of April 1, 2017 attributable to: Cost Accumulated amortization

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

122,875 (68,729) 54,146

68,284 (52,094) 16,191

41,115 (32,450) 8,665

50,561 (39,303) 11,258

3,310 0 3,310

286,145 (192,576) 93,570

122,875 (68,729) 54,146

68,284 (52,094) 16,191

41,115 (32,450) 8,665

50,561 (39,303) 11,258

3,310 0 3,310

286,145 (192,576) 93,570

As of March 31, 2018 attributable to: Cost Accumulated amortization

As of April 1, 2018 attributable to: Cost Accumulated amortization

84


As of March 31, 2019 attributable to: Cost Accumulated amortization

121,712 (69,196) 52,516

67,373 (53,193) 14,181

42,397 (33,867) 8,530

50,704 (40,985) 9,719

1,121 0 1,121

283,307 (197,241) 86,066

The main increases were made in Germany for Euro 2.7 million (March 2018: Euro 5.1 million), in Italy for Euro 0.9 million (March 2018: Euro 0.9 million), in United Kingdom for Euro 0.3 million (March 2018: 0.5 million), in America for Euro 0.7 million (March 2018: 1.9 million), in Asia for 1.4 million (March 2018: 0.8 million), in Netherlands for 0.4 million (March 2018: 0.8 million) and are mainly due to the increase in the production capacity and the replacement and innovation of the plants. Impairment losses and subsequent reversal At the reporting date there have not been particular indications of impairment losses related to tangible assets. For the valuations used preparing the impairment test, see the appropriate section Information on impairment test prepared during the year. Leased plant and machinery As of March 31, 2019 the Group does not hold leased plant and machinery (same as March 2018); please refer to note 30 related to payables to banks and other financial creditors. For information related to the estimate of the impacts deriving from the first application of the new accounting standard IFRS 16 Leases, see the introduction on the new accounting principles. Tangible assets in progress As of March 31, 2019 the Group hold leased plant and machinery for Euro 1,121 thousand (March 2018: Euro 3,310 thousand). The decrease of Euro 2,189 is mainly due to the investments made in Germany during the previous year (Euro 2.5 million) and now allocated to the corresponding asset class. Other information As of March 31, 2019 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, 2019 the Group doesn’t have any equity investments in not consolidated subsidiaries.

18. Equity investments in associated companies As of March 31, 2019, the Group doesn’t hold any equity investments in associated companies. The associated company Mobil Project S.p.A. has been sold during the reporting period. Following the first application of the new accounting standard IFRS 9 and considering the introduced criteria for expected losses, a reduction of Euro 2,183 thousand has been recognized on the equity investements in the associated company Mobil Project. The mentioned write down affected the opening balance as of April 1, 2018, because the Company has used the modified retrospective method, as illustrated in the introductive paragraph of this note. % ownership

€ thousands

Country

Mobil Project S.p.A.

Iatly

Carrying amount

March 31, 2019

March 31, 2018

March 31, 2019

March 31, 2018

0

20%

0 0

6,083 6.083

85


19. Other equity investments The balance as of March 31, 2019 includes the Parent company's equity investment in Consorzio Interaziendale Prealpi for Euro 367 thousand (March 2018: Euro 367 thousand) and the equity investment in Interoxyd for Euro 39 thousand (March 2018: Euro 39 thousand). With reference to the investment in the Consorzio Dyepower, whose value is zero at 31 March 2019, no significant events occurred during the reporting period.

20. Other no-current assets The caption amounting to Euro 49 thousand (March 2018: Euro 44 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 (-)

â‚Ź thousands

Tangible assets Intangible assets Inventories Financial payables Pension funds and other employee benefits Provisions for risks and charges Hedging Other items IFRS15 Tax value of loss carry-forwards Tax (assets)/liabilities

Liabilities (+)

March 31, 2019

March 31, 2018

March 31, 2019

March 31, 2018

(711) (103) (5,809) (906) (5,397) (1,475) (1,059) (1,080) (5,710) (14,506) (36,756)

(72) 117 (13,442) (2,277) (6,344) (4,280) (397) (4,948) 0 (19,674) (51,317)

5,984 1,530 3,348 0 (125) 3,983 (3,771) 15,150 (4,989) 0 21,110

6,235 17,727 3,574 0 (73) 7,500 462 15,207 0 0 50,632

With reference to the deferred tax assets on tax losses carryforward, included in the financial statements for Euro 14.5 million, it is noted as following: - Euro 9.7 million are related to tax losses with expiry date between the 2023 and the 2033 and are reffered to the German subsidiary, Josef Gartner GmbH, for Euro 3.8 million, to the Australian subsidiary Permasteelisa PTY Limited for Euro 3.0 million and to the European subsidiary Scheldebouw BV for Euro 2.9 million. - the residual amount for Euro 4.7 million is reffered to tax losses carryforward with not time limitation and related to other subsidiaries of the Group. With reference to the Group companies overall, no deferred tax assets were recognized relating to tax losses carryforward comprehensively equal to Euro 42 million (March 2018: Euro 20 million). This amount refers in particular to the North European companies. The amount relating to tax losses carryforward for which deferred tax assets were not recognized amounted to Euro 181 million and it refers to European companies for approximately Euro 99 million (March 2018: Euro 102 million), of which the major part can be used without expiry date, for Euro 48.2 million related to Asian companies (March 2018: Euro 46.8 million) of which Euro 45.1 million (March 2018: Euro 36.5 million) can be used before 2024 and Euro 27.3 (March 2018: Euro 3.0 million) related to American companies of which the major part can be used whitout expiry date. The residual amount relates to other Group companies and has not time limitation. The deferred tax assets had not been booked on the aforementioned temporary differences and tax losses carryforward based on the evalautions performed by the management of each Group entities’ that, in the last periods, has deemed appropriate to adopt a prudent approach when considering the existence of conditions for deferred tax utilization based on future taxable income. 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.

86


Movement in deferred tax assets and liabilities during the year â‚Ź thousands

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

â‚Ź thousands

Tangible assets Intangible assets Inventories Financial payables Pension funds and other Provisions for risks and charges Hedging Other items IFRS15 Tax value of loss carry-forwards

Balance as of April 1, 2017

Recognised in income statement

Recognised in equity

Exchange differences

Other changes

Balance as of March 31, 2018

6,827 19,505 3,476 (2,268) (4,977) 166 (2,982) 9,548 (19,381) 9,914

(552) (1,617) (13,400) (9) (1,391) 2,628 (130) (4,714) (2,235) (21,420)

0 0 0 0 (13) 0 3,739 4,198 (281) 7,643

(112) (44) 56 0 77 148 351 190 1,267 1,933

0 0 0 0 (113) 278 (913) 1,037 956 1,245

6,163 17,844 (9,868) (2,277) (6,417) 3,220 65 10,259 (19,674) (685)

Balance as of April 1, 2018

Recognised in income statement

Recognised in equity

Exchange differences

Other changes

Balance as of March 31, 2019

6,163 17,844 (9,868) (2,277) (6,417) 3,220 65 10,259 0 (19,674)

(125) (16,187) 9,341 1,359 1,014 (5,126) 1 52,717 589 (40,709)

0 0 0 0 (147) 0 (5,343) 0 (12,156) 0

83 29 7 (1) 102 (164) 129 1,311 (163) (1,577)

(848) (259) (1,941) 13 (74) 4,578 318 (50,217) 1,031 47,454

5,273 1,427 (2,461) (906) (5,522) 2,508 (4,830) 14,070 (10,699) (14,506)

(685)

2,874

(17,646)

(244)

55

(15,646)

87


22. Assets and liabilities for contracts work-in-progress, inventories and advances from customers Assets for contracts work-in-progress and inventories â‚Ź thousands

March 31, 2019

March 31, 2018

Assets for contracts work-in-progress

327,521

466,834

Raw materials and consumables used Semi-processed goods Finished goods Advances Inventories

2,509 218 54 31,837 34,618

2,801 155 49 28,928 31,933

March 31, 2019

March 31, 2018

275,980 31,938 156,724 464,642

194,730 0 177,144 371,874

Liabilities for contracts work-in-progress and advances from customers â‚Ź thousands

Liabilities for contracts work in progress Loss on construction contracts fund Advances from customers

The loss on construction contracts fund refers to the portion of final losses exceeding the percentage of completion related to contracts already onerous or getting onerous during the reporting period. It is mainly related to the North American area, because of the revision of the estimated completion costs. Contracts work-in-progress â‚Ź thousands

Costs incurred on uncompleted contracts Estimated earnings Less billings to date

Assets for contracts work-in-progress Liabilities for contracts work-in-progress Loss on construction contracts fund

March 31, 2019

March 31, 2018

6,612,761 525,957 (7,119,115) 19,603

5,740,793 774,007 (6,242,696) 272,104

327,521 (275,980) (31,938) 19,603

466,834 (194,730) 0 272,104

Contracts work-in-progress, equal to Euro 327,521 thousand (March 2018: Euro 466,834 thousand), are shown net of the provision for work in progress, equal to Euro 51,691 thousand (March 2018: Euro 45,144 thousand). The total net change in contract work in progress, which went from Euro 272,104 thousand in the previous financial year (March 2018) to Euro 19,603 thousand in financial year 2019, is mainly due to the following factors: - first application of the new accounting standard IFRS15, as a result of which adjustments were made to the caption which resulted in a reduction of Euro 61,762 thousand, recorded with effect on the opening balance as at April 1, 2018, since the Company decided to use the modified retrospective method, as illustrated in the introductory paragraph of this note. The reduction includes Euro 50,727 thousand for the recognition of receivable claims for which, in the light of the analyses carried out, not all the conditions required by the new standard for the recognition of revenue and assets were met, and Euro 11,035 thousand for pre-contractual and tendering costs, which on the basis of the same standard must be charged to the income statement and no longer suspended in the work-in-progress.

88


- increase in the final estimates of costs for completion activities relating to some American projects, which led to a reduction in the percentage of completion calculated at year-end using the cost-to-cost method, and therefore to a reduction in revenues and net assets for contract work-in-progress. - write-down of assets for contract work-in-progress, in particular to some projects in the Middle East and Asia, based on the probable evolution of negotiations with main contractors on some major projects. We recall, among the significant projects in progress, the KAFD contract for the construction of thirteen buildings in the financial district of Riyadh, Saudi Arabia. Work on this project was interrupted starting in 2016 due to the difficulties of the main contractor in meeting its obligations and therefore the Group was exposed to this operator as at 31 March 2018 for approximately Euro 90 million, of which Euro 56 million for receivables and Euro 34 million for work in progress not yet invoiced. During the year, the Group's management achived to negotiate the resumption of work with a new client, which, however, only partially acknowledged the receivables due from the previous main contractor. Therefore, the subsidiary in Saudi Arabia prudently wrote down the receivables not recognised in the new agreement, recognizing a provision of Euro 33.8 million in the income statement for the period. Nevertheless, the company will undertake to recover from the previous counterparty the unpaid amounts as well as the additional amounts requested under the claim for extension of time and the costs incurred in the suspension period, amounts which in any case were not booked in view of the uncertainties associated with the aforementioned difficult situation of the customer - and will take appropriate legal action before the competent local courts.

23. Trade receivables from third parties € thousands

Trade receivables from third parties Bad debts provision

March 31, 2019

March 31, 2018

456,473 (67,356) 389,117

447,836 (24,064) 423,772

As of March 31, 2019 trade receivables include guarantee retentions for Euro 221,786 thousand (March 2018: Euro 201,743 thousand) related to contracts work-in-progress, of which Euro 74,205 thousand expiring beyond fiscal year 2020 (March 2018: Euro 76,920 thousand expiring beyond 31 March 2019). The following table shows the changes of the provision for bad debts during the year.

€ thousands

Balance as of April 1 Transfer from “Assets held for sale” Reclassification Utilization Reversal Provision Exchange rate differences on translation

March 31, 2019 24,064 3,606 (11,945) (3,541) 53,086 2,086 67,356

March 31, 2018 23,591 (946) (1,400) (978) 5,567 (1,769) 24,064

The item “Reclassification”, amounted to Euro 3,606 thousand, is related to the devaluation of the inventories; therefore, the amount has been reclassified under the item “Asset and liabilities for contract work-in-progress and inventories” following its proper nature. The provision, for Euro 53,086 thousand, is mainly related to risks on receivables in the Middle Eastern Area for Euro 38,196 thousand (Euro 33.8 million refers to the project KAFD as detailed in note 22) and in the European area for Euro 11.6 million.

89


24. Amounts receivable from not consolidated subsidiaries € thousands

Receivables from non-consolidated subsidiaries Mobil Project SpA Permasteelisa Partecipation S.r.l. Consorzio Cladding Technology Italia

March 31, 2019

March 31, 2018

0 0 1 1

58 6 0 64

March 31, 2019

March 31, 2018

12,833 12,833

12,016 12,016

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, 2019

March 31, 2018

17,862 298 47,701 9,517 75,378

17,095 453 59,083 12,183 88,814

March 31, 2019

March 31, 2018

9,203 38,461 37 47,701

12,975 46,074 34 59,083

The caption “Other receivables” includes: € thousands

Forward assets Other receivables Loans to other third parties

The item “Forward assets” relates for Euro 9,187 thousand to foreign currency transactions (March 2018: Euro 13,151 thousand) and for Euro 17 thousand to the transactions on commodities (March 2018: Euro -176 thousand). The item “Other receivables” includes the receivables for Euro 24.3 million related to an insurance reimbursement in the United Kingdom. The decrase of the item “oter receivables” compared to previous year is mainly due to the partial writedown of a receivable for damages from an Italian supplier and the definition of some credit positions towards suppliers in Europe, North America and Asia.

27. Cash and cash equivalents € thousands

Bank and post current accounts and deposits Cash in hand

March 31, 2019

March 31, 2018

82,508 109 82,617

51,802 136 51,938

The balance of bank and post current accounts and deposits includes approximately Euro 14.1 million (March 2018: Euro 11.4 million) of time deposits related to Group’s German companies. In Germany the law (Act for Securing of Receivables

90


under Construciton Agreement – BaufordSiG) provides, for companies operating in construction of buildings, the obligation to deposit a certain amount of financial deposit for its sub-contractors.

28. Non-current assets held for sale As of March 31, 2019, the Group does not hold no-current assets held for sale.

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, 2019 and the comparative year March 31, 2018. Share capital As of March 31, 2018 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. 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:

€ thousands

Reserve as of March 31, 2018 Increase/(decrease) Currency translation differences Release to income statement Reserve as of March 31, 2019

Foreign exchange risk hedging reserve (*) Amount Tax Amount before after tax tax

Commodities risk hedging reserve (*) Amount Tax Amount before tax after tax

13,993

(3,988)

10,005

67

(40)

27

(8,626) 563

2,743 (149)

(5,883) 414

(38) 0

8 (1)

(30) (1)

(10,381)

2,586

(7,795)

(32)

33

1

(4,451)

1,192

(3,259)

(3)

0

(3)

(*) Minority portion included

IAS 19 Reserve This reserve is related to the application of 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, 2019, shows a negative balance of Euro 7,726 thousand, due to the recognition during the year of negative actuarial variation of Euro 589 thousand, net of related taxes amounted to Euro 147 thousand.

91


Other reserves It includes the other consolidation reserves different from the previous ones and from retained earnings. In the reporting period, considering the negative results archived by the Griup, the Shareholder LIXIL intervened financially for total Euro 472 million. This recapitalization allowed the capital reinforcement and the improvement of the financial position of the Group; in particular, it has enabled the company to repay all the loans towards banks and the same Shareholder as described in the note “Amounts payable to banks and other financial creditors”. The item “Other reserves” includes the capital injection eqaul to Euro 472 million, totally paid by the Shareholder in the fiscal year 2019. Retained earnings The item includes the effect of the first application, in the current year, of the IFRS 15 accounting standard. The Group has applied this principle according to the retrospective method, therefore the cumulative effect at the date of the initial application (modified retrospective appoach) has been accounted as an adjustment of the opening balance of the retained earnings. The result was a negative adjustment, net of the tax, of Euro 52,940 thousand, mainly attributable to: - costs for obtaining contracts capitalized up to March 2018 and considered non-incremental to obtain the contract with the customer, for approximately Euro 12 million, net of the tax effect; - revenues from contractual changes recognized up to March 2018, which, because of the new and more stringent provisions included in the new accounting standard, must be deferred over time, for approximately Euro 41 million, net of the tax effect. See also refer to the introductory paragraph and the comment to note 22. The item “Retained earnings” also includes the devaluation, equal to Euro 2,183 thousand, deriving from the first application of the accounting standard IFRS 9. 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

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

March 31, 2019

March 31, 2018

0 0 0

0 158,480 158,480

Amounts payable to banks and other financial creditors current 92


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

0 0 311 311

0 65,181 123,428 188,609

The net financial position of the Group as of March 31, 2019, is positive for Euro 82 million (March 2018: negative balance for Euro 295 million), thanks to the capital injection fully paid in year 2019 by the Shareholder for total Euro 472 million, which allowed the Group to repay all the outstanding loans. As of March 31, 2019, there are not oustanding loans except for a residual current account overdraft equal to Euro 311 thousand. During the reporting period, all the medium-long term financing issued by the Shareholder and the short term bank loan intended to cover the Group's cash requirements have been fully repaid. Finance lease liabilities As in the previous year, March 31, 2019, also in the reporting period April 1, 2019 – March 31, 2019, Finance lease liabilities. Net financial position To complete the information reported in these notes, the Group financial position as of March 31, 2019 is reported below.

€ thousands

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

March 31, 2019

March 31, 2018

82,617 (311) 0 0 82,306

51,938 (123,428) (65,181) 0 (136,671)

0 0 0

0 (158,480) (158,480)

82,306

(295,151)

As already above described, as of March 31, 2019, the Group has not any outstanding loans nor towards the Shareholder Lixil nor towards banks or other financial institute. The average rates recorded by the Group during the period are as follows: a) current account deposits and bank deposits: 0.53% (March 2018: 0.55%); b) short-term loans: 1.25% (March 2018: 0.97%); c) mortgages and medium-long-term loans: not reported because there were no these kind of loans during (same as at March 31, 2018);

the year

d) Shareholder loan: spread equal to 0.96% % (March 2018: 0.95%); e) liabilities on financial leasing: not recognized as there are no financial leases (same as at March 31, 2018). The actual average rate over overall indebtedness stood at 1.1% (March 2018: 0.95%).

31. Severance indemnity fund In accordance with Italian 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. 93


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”.

€ thousands

Severance indemnity fund Permasteelisa S.p.A. Severance indemnity fund Consorzio Marine Project Solutions S.c.a.r.l.

March 31 2019

March 31 2018

3,225 45 3,270

3,380 12 3,392

The table set out below refers exclusively to the severance indemnity fund share accrued prior to 2007 for Permasteelisa S.p.A. € thousands

March 31 2019

March 31 2018

3,225 0 3,225

3,380 0 3,380

March 31 2019

March 31 2018

3,380 (155) 3,225

3,452 (72) 3,380

March 31 2019

March 31 2018

Current service costs Other movements Payments Expenses recognized in the income statement Actuarial (Profit)/Loss

3,380 (300) 56 89

3,452 0 (172) 45 55

Net recognised liability as of March 31

3,225

3,380

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

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 2019

March 31 2018

0 56 56

0 45 45

Principal economic actuarial assumption:

94


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

March 31 2019

March 31 2018

1.12% 1.50% 2.63%

1.37% 1.50% 2.63%

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 year-end 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 2019

March 31 2018

Inflation rate +0,25 p.p. -0,25 p.p.

3,312 3,206

3,428 3,305

Discount rate +0,25 p.p. -0,25 p.p.

3,175 3,348

3,269 3,468

March 31, 2019

March 31, 2018

26,067 2,652 28,719

24,656 3,399 28,055

March 31, 2019

March 31, 2018

28,055 664 28,719

28,934 (879) 28,055

The average financial duration of the obligation is 11 years.

32. Pension funds and other employee benefits â‚Ź thousands

Pension funds Other employee benefits

Movements of the severance indemnity fund â‚Ź thousands

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

95


Pension funds € thousands

Gartner GmbH pension fund Other minor pension funds

March 31, 2019

March 31, 2018

24,404 1,663 26,067

24,284 372 24,656

March 31, 2019

March 31, 2018

24,284 120 24,404

24,505 (221) 24,284

March 31, 2019

March 31, 2018

24,284 (1,063) 457 726 24,404

24,505 (1,049) 93 735 24,284

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

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, 2019

March 31, 2018

275 451 726

280 455 735

March 31, 2019

March 31, 2018

1.90% 1.75% 0.00%

1.90% 1.75% 0.00%

Principal economic actuarial assumption:

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

96


Variations in actuarial assumptions

Inflation rate +1 p.p. -1 p.p. Discount rate +1 p.p. -1 p.p.

March 31, 2019

March 31, 2018

27,477 21,833

27,359 21,712

21,251 28,404

21,101 28,333

March 31, 2019

March 31, 2018

481 2,171 2,652

460 2,939 3,399

March 31, 2019

March 31, 2018

3,399 (747) 2,652

3,946 (547) 3,399

The average financial duration of the obligation is 15 years.

Other employee benefits € thousands

Dutch "Jubilee" fund Other funds

Other employee benefits movements € thousands

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

33. Provisions for risks and charges

€ thousands

Balance as of April 1, 2017 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, 2018

€ thousands

Balance as of April 1, 2018 Reclassifications Provisions made during the year Provisions used during the year

Provision for losses on equity investments

Warranty provision

Provision for risks on ongoing jobs

Provision for tax risks

Other provision

Total

0

11,149 (195) 10,748 (9,008) (238) (890) 11,566

5,512

1,321

29,971

2,716 (1,194) (37) (687) 6,310

1,000

4,082 (25,150) (1,100) (1,091) 6,712

47,953 (195) 18,546 (35,352) (1,375) (2,847) 26,730

0

Provision for losses on equity investments

0

Warranty Provision for provision risks on ongoing jobs

11,566 (177) 25,619 (14,217)

6,310 (335) 11,771 (231)

(179) 2,142

Provision for tax risks

Other provision

Total

2,142

6,712 (2,190) 6,203 (1,986)

26,730 (2,702) 44,067 (16,434)

474

97


Provisions reversed during the year Exchange rate differences on translation Balance as of March 31, 2019

0

(283) 879 23,387

(4,627) 591 13,479

(1,000) 52 1,668

(100) 377 9,016

(6,010) 1,899 47,550

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. As already described above in note 9 (“Provision for warranties”), change of the period is mainly due to the combine effect of provisions made in the North America area for Euro 17.9 million and utilization for Euro 8.7 million. 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 Euro 3.4 million), in Germany (approximately Euro 1.3 million) and in Middle East (approximately Euro 0.6 million). Provision for tax risks As of March 31, 2019, provisions for tax risks is related to the Indian tax dispute for Euro 1,179 thousand. The provision of the period equal to Euro 474 thousand is related to Middle East area, while the provision of previous period equal to Euro 1,000 thousand and related to possible tax risks in Russia, has been reversed during the year. Other provisions The amount refers to provisions made for risks considered probable in ongoing legal proceedings. The item "Provisions made during the year" is mainly due to provisions made in the American area for Euro 3.1 million, in the European area for Euro 0.9 million and in the Middle East area for Euro 0.6 million. As part of its business activities, the Group is a party to numerous proceedings, both in and out of court, mainly against customers and suppliers. With its own dedicated professional resources and with the support of external professionals, the Group protects its positions in the management of these disputes. The contingent liabilities deriving from these proceedings are periodically evaluated on the basis of the opinion expressed by the appointed professionals as well as the prudent assessment of the Directors, and the provisions made reflect the situations for which it is considered probable that the Group will incur charges. There are, however, a significant number of disputes in relation to which it is believed that such conditions do not exist, in view of the initial stage of the proceedings or the uncertainties associated with their outcome, which do not allow a reliable estimate to be made. For further details on the contingent liabilities connected with these proceedings, reference should be made to note 42.

34. Trade payables to third parties € thousands

Trade payables to third parties

March 31, 2019

March 31, 2018

247,030 247,030

251,835 251,835

As of March 31, 2019, trade payables include invoices to be received for Euro 111,139 thousand (March 2018: Euro 90,356 thousand) and retentions for Euro 18,580 thousand (March 2018: Euro 16,461 thousand), expiring mostly within the year ended March 2020.

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

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

March 31, 2019

March 31, 2018

1 1

1 1

98


36. Income tax payables € thousands

Tax income payables

March 31, 2019

March 31, 2018

11,478 11,478

20,294 20,294

The income tax payables, net of the income tax receivables reported under note 25, show a net credit position for Euro 1,355 thousand while in the previous year there was a net debit position for Euro 8,278 thousand. It is due to the losses accounted in the period that reduced the tax impact. The difference for Euro 8,816 thousand is mainly due to the income taxes paid during the reporting period April 1, 2018 – March 31, 2019 in North Europe.

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, 2019

March 31, 2018

5,128 3,008 402 3,901 48,606 24,503 5,566 91,114

9,907 3,008 163 3,620 37,666 15,617 3,847 73,828

March 31, 2019

March 31, 2018

20,645 3,858 24,503

8,074 7,543 15,617

The caption “Other liabilities” includes: € thousands

Forward liabilities Other liabilities

Forward liabilities are referred for Euro 20,627 thousand to foreign currency transactions (March 2018: Euro 8,074 thousand) and for Euro 18 thousand to commodity transactions (March 2018: no forward liabilities for commodity transactions).

38. Non-current liabilities held for sale As of March 31, 2019 there were no non-current liabilities held for sale.

39. Risk management Exposure to credit risk, 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. 99


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

March 31, 2019

March 31, 2018

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

103,325 86,922 427 158,719 33 1,462 109,027 94 460,009

136,721 65,808 784 134,855 135 1,620 107,227 157 447,307

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

(67,356) (3,536) 389,117

(24,064) 529 423,772

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 March 2019

Provision for bad debts March 2019

Net receivables March 2019

Gross receivables March 2018

Provision for bad debts March 2018

Net receivables March 2018

331,304 49,501 9,288 69,916 460,009

(42,896) (1,851) (1,036) (21,573) (67,356)

288,408 47,650 8,252 48,343 392,653

299,255 53,497 28,590 65,965 447,307

(3,923) (722) (101) (19,318) (24,064)

295,332 52,775 28,489 46,647 423,243

(3,536) 389,117

529 423,772

As of March 31, 2019 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 74% of the total (March 2018: 70%) and the credit due for over one year amounted to 12% (March 2018: 11%). Interest rate risk The Group’s exposure to changes in interest rates relates primarily to interest-earning assets and interest-earning 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 was done assuming that all the other variables, in particular the exchange rates of foreign currencies, remain stable. 100


Considering that the reference interest rates (mainly Euribor 3 months) both during the fiscal year 2019 and the fiscal year 2018 were negative, and considering the variable interest rate loans negotiated by the Group are floored at zero, a reduction of 100 basis point on reference rates currently does not entil any positive effect on the result of the period and on the net equity. On the same basis has been done also the analysis of previous year.

€ thousands

March 31, 2019 Variable rate loans

€ thousands

March 31, 2018 Variable rate loans

Result for the period +100 bp - 100 bp

Net equity +100 bp - 100 bp

(3,380)

40

(3,380)

40

(3,380)

40

(3,380)

40

Result for the period +100 bp - 100 bp

Net equity +100 bp - 100 bp

(4,226)

171

(4,226)

171

(4,226)

171

(4,226)

171

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, both at 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 instruments and financial liabilities associated to derivative instruments. Exposure to the liquidity risk associated to financial liabilities other than derivative instruments March 31, 2019

€ thousands

Carrying value Contractual Cash Flows

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

274,030 0 0 311 274,341

274,030 0 0 311 274,341

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

264,939 0 0 311 265,250

6,655 0 0 0 6,655

2,435 0 0 0 2,435

Contractual Cash Flows less than 1 year

Contractual Cash Flows between 1 and 5 years

Contractual Cash Flows exceeding 5 years

242,361

7,156

2,318

65,181

158,480

March 31, 2018

€ thousands

Carrying value Contractual Cash Flows

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

Contractual Cash Flows less than 1 year

251,835 0 223,661

251,835 0 223,661

101


Amounts payables to banks Total booked value

123,428 598,924

123,428 598,924

123,428 430,970

165,636

2,318

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments March 31, 2019

â‚Ź thousands

Carrying value

Contractual Cash Flows

Contractual Cash Flows less than 1 year

Contractual Cash Flows between 1 and 5 years

Contractu al 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 Assets from fair-value valuation of commodities - in flows - out flows Liabilities from fair-value valuation of commodities - in flows - out flows Total booked value

(9,187)

20,627

(16)

18

11,442

(9,187)

(9,187)

(616,014)

(616,014)

606,827

606,827

20,627

20,627

(839,784)

(839,784)

860,411

860,411

(16)

(16)

(681)

(681)

665

665

18

18

(2,569)

(2,569)

2,587

2,587

11,442

11,442

0

0

0

0

0

0

0

0

0

0

Contractual Cash Flows between 1 and 5 years

Contractu al Cash Flows exceeding 5 years

March 31, 2018

â‚Ź migliaia

Carrying value

Contractual Cash Flows

Contractual Cash Flows less than 1 year

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

(13,151)

8,074

177

0

(13,151)

(13,151)

(784,466)

(784,466)

771,315

771,315

8,074

8,074

(567,969)

(567,969)

576,043

576,043

177

177

(2,564)

(2,564)

2,741

2,741

0

0

0

0

0

0

0

0

0

0

0

0

102


- out flows (4,900)

Total booked value

0

0

(4,900)

(4,900)

0

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 cash flows. 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 82,617 thousand and Euro 51,938 thousand respectively as of March 31, 2019 and as of March 31, 2018; b) trade receivables for Euro 389,117 thousand and Euro 423,772 thousand respectively as of March 31, 2019 and as of March 31, 2018. 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” of accounting principles 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, 2019 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

(188) 1.657 (298) (482) (379) (16) (469) (71) (246)

(188) 1.657 (298) (482) (379) (16) (469) (71) (246)

Result for the period

Net equity

163 925 (198) (409) (139)

163 925 (198) (409) (139)

March 2019

GBP USD HKD SGD THB AUD CNY Others

€ thousands

March 31, 2018

GBP USD HKD SGD THB

103


AUD QAR Others

(13) (2) (221) 106

(13) (2) (221) 106

A 10% increase of the Euro against the following currencies as of March 31, 2019 and as of March 31, 2018 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 related foreign exchange risk, particularly on aluminum purchases, which are one of the main project 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 projects, 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, 2019: € 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

Note (18)

Total liabilities

Level 2

Level 3

Totale

(26) (27)

9,203 82,617 91,820

9,203 82,617 91,820

(37) (30)

20,645 311 20,956

20,645 311 20,956

Total assets

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

Level 1

In the reporting period April 1, 2018 – March 31, 2019, there were no transfers between levels in the fair value hierarchy.

104


Assets and liabilities not measured at fair value on recurring basis: The carrying amount of “Trade 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, 2019, 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 For 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 Group 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, since 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, 2019 the Group considers that there are not retentions out of normal market conditions.

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, 2019

March 31, 2018

14,233 23,588 1,416 39,237

12,363 22,586 2,973 37,922

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. The impacts on next fiscal year following the introduction of new accounting standard IFRS 16 – Leases are described at the beginning of the notes, in the accounting standards section. 105


Forward contracts € thousands

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

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

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

March 31, 2019

March 31, 2018

1,456,023 3,542 1,459,565

1,352,065 2,744 1,354,809

671,916 784,107 1,456,023

538,817 813,248 1,352,065

3,397 145 3,542

2,744 0 2,744

As described in the section on the accounting standards, hedging derivative instruments on foreign currencies and commodities are measured at their “fair value”. As of March 31, 2019, the measurement at the “fair value” of currency hedging instruments results in a profit for Euro 9,187 thousand (March 2018: Euro 15,151 thousand) and a loss for Euro 20,627 thousand (March 2018: Euro 8,074 thousand), booked respectively under the items forward assets (note 26) and forward liabilities (note 37). Note that these amounts refer respectively for Euro 3,583 thousand (March 2018: Euro 7,656 thousand) and Euro 11,715 thousand (March 2018: Euro 2,319 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 results in a profit for Euro 16 thousands (March 2018: Euro -176 thousand) and a loss for Euro 18 thousands (March 2018: Euro 0 thousand), entered respectively under the items forward assets (note 26) and forward liabilities (note 37). Other commitments As of March 31, 2019 the Group has no other significant commitments to highlight.

42. Contingent assets and liabilities The main guarantees for third parties issued by the Group are listed below: -

Guarantees for works: for the value of Euro 1,140.9 million (Euro 1,267.8 million as of March 31, 2018) and issued by Credit Institutes and Insurance Companies to clients for the proper completion of works (Euro 895.7 million), contractual advances (Euro 192.9 million) and retentions withheld as guarantee (Euro 52.3 million).

-

Guarantees issued following VAT repayment requests issued by Credit Institutions and Insurance Companies: for the value of Euro 7.0 million (Euro 15.3 million as of March 31, 2018)

-

Other guarantees for a total of Euro 5.7 million (Euro 4.5 million as of March 31, 2018) 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 113.7 million as of March 31, 2019 (Euro 101.4 million as of March 31, 2018). It should also be noted that, with reference to projects completed or in progress, the Group is involved in certain legal proceedings or disputes with third parties (customers or suppliers/subcontractors) that have not resulted in legal proceedings, for a maximum amount in terms of possible exposure of Euro 154 million. Although there is a possibility that the Group may not incur any liability, on the basis of the information available at the date and taking into account the valuation elements collected by the external consultants who assist the companies of the Group, the possible result of these disputes cannot be determined, neither quantitatively nor in terms of time. The settlement of such disputes may be complex and may be concluded in the long term. Therefore, in order not to compromise the future stages of the judicial proceedings and of negotiations with the counterparties, no further details on the existing procedures are provided in this document. 106


If, on the other hand, there are risks considered probable in the outcome of ongoing legal proceedings, a specific provision is set aside by the Group as described in note 33. This provision is not included in the exposure for contingent liabilities mentioned above for Euro 154 million.

43. Transactions with related parties Relationships with not consolidated subsidiaries and associated companies Transactions with related parties, as defined by IAS 24 and carried out during the fiscal year 2019, were of an ordinary nature. During the reporting period April 1, 2018 – March 31, 2019, 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 not consolidated and associated subsidiaries”. These are commercial relationships made under normal business management, normally regulated by market conditions. Operating revenues with not consolidated subsidiaries and associated companies € thousand

March 31, 2019

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

March 31, 2018

30 0 30

0.0% 0.0% 0.0%

30 0 30

0.0% 0.0% 0.0%

1,116,873

100.0%

1,276,666

100.0%

Operating costs with not consolidated subsidiaries and associated companies € thousand

Mobil Project S.p.A. Totale Totale costi operativi

March 31, 2019

March 31, 2018

0 0

0.0% 0.0%

145 145

0.0% 0.0%

1,500,525

100.0%

1,268,175

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 Group statements of financial position and profit and loss is not relevant in percentage terms.

107


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 ordinary management and carried out on an arm’s length basis. Amounts are stated in units. Group Company

Transaction type

Related party

Permasteelisa S.p.A.

Costs back charge

No. 2 Managers/employees of Permasteelisa Spa

EURO

1,079.38

Permasteelisa S.p.A. (1) Facility Management

Fondazione Ugo e Olga Levi Onlus (Davide Croff is the President)

EURO

(168,513.39)

(54,611.34)

(168,513.39)

(54,611.34)

Marine Project Solutions S.c.a r.l. (2)

Purchase of goods and services

Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl)

EURO

(7,515,336.81)

(992,784.13)

(7,515,336.81)

(992,784.13)

Marine Project Solutions S.c.a r.l. (2)

Purchase of goods and services on behalf of MPS Norwegian Branch Office

EURO

(690,749.02)

(68,090.00)

(690,749.02)

(68,090.00)

Marine Project Solutions S.c.a r.l. (2)

Purchase of goods and services on behalf of MPS France Branch

EURO

(1,792,965.11)

(499,383.55)

(1,792,965.11)

(499,383.55)

Marine Project Solutions S.c.a r.l. (2)

Purchase of goods and services on behalf of MPS Montecarlo Branch

EURO

(2,574,806.67)

(792,216.05)

(2,574,806.67)

(792,216.05)

Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA

Fees for administrative and accounts support

Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA

Fees for administrative and accounts support

Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl) Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl) Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl) Cicero Augusto Oliveira De Alencar (Executive Officer of the associate Permasteelisa Do Brasil up to November 9, 2018) is retired Partner of the company RSM Brasil BPO S/S, previously named Acal Consultoria e Auditoria S/S. Leonardo De Mello Biar (Executive Officer of the associate Permasteelisa Do Brasil up to November 9, 2018) is partner of the company RSM Brasil BPO

Local Currenc y

Revenue/ (Cost) in local currency

Local Currency

Revenue/ (Cost) in local currency

Local Currency

1,079.38

BRL

(99,110.57)

(22,625.94)

BRL

(51,946.36)

(11,858.83)

108


S/S, previously named Acal Consultoria e Auditoria S/S.

Permasteelisa Colombia S.a.s.

Fees for legal, addimistrative, accounts support and legal representation

Permasteelisa Turkey İnşaat Ticaret Limited Şirketi

Fees for accounts and business support

Permasteelisa Gartner Middle East LLC

Fees for sales support (Abu Dhabi Branch)

Permasteelisa Gartner Middle East LLC

Fees for sales support (Dubai Branch)

Permasteelisa Gartner Middle East LLC

Fees for sales support and services

Camilo Antonio Cortes Guarin (Alternate Legal Representative and Alternate Director of associate Permasteelisa Colombia S.a.s. up to February 1, 2019) is Partner of Dentons Cardenas & Cardenas. Natalia Andrea Davila Alzate (Second Alternate Legal representative of associate Permasteelisa Colombia S.a.s. up to February 1, 2019) is associated member of Dentons Cardenas & Cardenas.

COP

(93,006,566.00)

(26,573.93)

Mert Çetinkaya (Director of associate Permasteelisa Turkey İnşaat Ticaret Limited Şirketi) is also Assistant Auditor of the company Lidya Bağımsız Denetim & SMMM A.Ş.

TRY

(63,102.97)

(10,425.45)

AED

(97,241.00)

(22,864.43)

AED

(36,465.00)

(8,574.07)

AED

(230,000.00)

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

(241,500.00)

(54,080.27)

(58,529.80)

109


Permasteelisa Gartner Middle East LLC

Permasteelisa Gartner Qatar LLC

Fees for sales support (Sharjah Branch)

Fees for sales support

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

Links Commercial Brokers WLL (Shareholder of the Company at 51% Permasteelisa Gartner Qatar LLC)

AED

(75,000.00)

(17,634.87)

QAR

(219.62)

(52.10)

revenue/receivable (cost)/(payable)

1,079.38

0.00

(12,917,060.89)

(2,465,614.87)

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. The are no transactions with LIXIL Group Corporation, the parent company that exercises the management and coordination of Permasteelisa S.p.A.

(1) With reference to the “Facility Management” item, it should be noted that the commitments as of March 31, 2019 are equal to costs of Euro 597,300.00 and payables for Euro 710,706. (2) With reference to the “purchase of goods and services” item, it should be noted that the commitments as of March 31, 2019 are equal to costs/payables for Euro 18,302,783.94.

110


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

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

March 31, 2019

March 31, 2018

9,124 402 468 9,994

5,390 226 436 6,052

Total remuneration is included in personnel expenses and the breakdown by function is the following: â‚Ź thousands

General manager Chief executive officer ed altri componenti del Consiglio di Amministrazione Holding function manager

March 31, 2019

March 31, 2018

2,847 3,912 2,235

2,572 1,430 2,050

9,994

6,052

Change of the period is due to the payment during the fiscal year 2019 of bonuses to eligible managers and related to the Group incentive plan (Long Term Incentive Plan) that covered the period 2015-2018. The transactions carried out during the year are related solely to the contracts regulating their positions within the Group.

44. Fees payable to the independent auditors or audit firm of Group companies The amount of fees payable to the independent 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 2,195 thousand of which Euro 1,590 thousand for audit services, Euro 474 thousand for tax services and Euro 131 thousand for other services. The fees of Independent Auditors for the Parent Company amount to Euro 344 thousand of which Euro 146 thousand for fees for the statutory audit, Euro 88 thousand for other audit activities, Euro 26 thousand for tax services, Euro 50 thousand for other services related to the J-SOX audit required by Shareholder and Euro 34 thousand for other non-recurring consultancy fees.

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

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 2019 having any relevance on the operating performance and the financial position of the period for the Group and for the Parent company Permasteelisa S.p.A..

47. Subsequent events As of May 8, 2019, the Board of Directors of Permasteelisa SpA has acknowledged the resignation with immediate effect by the Chief Executive Officer Riccardo Mollo.

111


On the same date, the Board of Directors of Permasteelisa S.p.A. co-opted Mr. Klaus Ernst Lother as a member of the Board with the favorable opinion of the Board of Statutory Auditors. As of May 8, 2019, Mr. Klaus Ernst Lother was also appointed, with immediate effect, as Chief Executive Officer of the Permasteelisa Group. In April 2019 the subsidiary Permasteelisa Gartner Saudi Llc finalized the negotiation with a new client about the resumption of the works for an iconic project in Saudi Arabia suspended for several years. In June 2019 Permasteelisa Gartner Saudi Llc collected the first tranche of payments relating to receivables for works already done, amounting to approximately Euro 18 million. No major other events have occurred after the end of the financial year.

112


PERMASTEELISA S.p.A. Appendix to the Consolidated Financial Statements

113


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

Parent Company Permasteelisa S.p.A.

Vittorio Veneto (TV) Italy

6,900,000

EURO

Subsidiary companies Bleu Tech Montreal Inc. Dongguan Permasteelisa Curtain Wall Co. Ltd. Global Architectural Co. Ltd. Global Wall Malaysia Sdn. Bhd. Josef Gartner & Co. UK Ltd. Josef Gartner Curtain Wall (Shanghai) Co. Ltd. Josef Gartner Curtain Wall (Suzhou) Co. Ltd.

Laval, Quebec (Canada)

100 (*)

CAD

23,000,000

CNY

110,000,000

THB

1,000,000 (*)

MYR

20,000

GBP

Shanghai (R.P.C.)

10,000,000

CNY

Taicang City (R.P.C.)

22,000,000

CNY

25,000

MOP

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

Josef Gartner (Macau) Ltd.

Macao (R.P.C.)

Josef Gartner Switzerland AG Josef Gartner GmbH

Arlesheim (Switzerland) Gundelfingen (Germany)

OOO Josef Gartner Permasteelisa Colombia SAS

San Pietroburgo (Russia) 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 Permasteelisa Gartner Saudi Arabia Llc

100,000 10,000,000

5,383,800

100,000,000

30,000

100.00 Scheldebouw B.V. 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

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

RUB

COP

BRL

100.00

Josef Gartner Switzerland AG

1.00

100.00 Permasteelisa S.p.A.

100.00

Permasteelisa S.p.A.

99.00

Permasteelisa North America Corp.

1.00

100.00

174,290

EURO

100.00 Permasteelisa S.p.A.

100.00

1,644,336

EURO

100.00 Permasteelisa S.p.A.

100.00

Dubai (United Arabian Emirates)

300,000

AED

100.00 Josef Gartner GmbH

49.00 (**)

Doha (Qatar)

200,000

QAR

97.00 Josef Gartner GmbH

49.00 (***)

SAR

Permasteelisa Gartner 100.00 Qatar Llc Permasteelisa Gartner

Riyadh (Arabia Saudita)

300,000

5.00

114


Permasteelisa Hong Kong Limited Permasteelisa Ireland Ltd

2,000,000

HKD

Dublino (Ireland)

50,000

EURO

Permasteelisa (India) Private Bangalore (India) Limited

2,984,000,900

Permasteelisa Japan K.K.

Hong Kong (R.P.C.)

Tokyo (Japan)

Middle East Llc Permasteelisa Pacific 99.52 Holdings Ltd. 100.00 Permasteelisa S.p.A. Permasteelisa Pacific Holdings Ltd. 99.40 Permasteelisa Hong Kong Limited Permasteelisa Pacific Holdings Ltd. 99.52

INR

204,500,000

JPY

Permasteelisa PTY Ltd. Permasteelisa Hong Kong Limited

Permasteelisa Macau Limited

Macao (R.P.C.)

Permasteelisa Mongolia Llc

Ulaanbaatar (Mongolia)

Permasteelisa North America Corp.

Windsor (USA)

100,000

Permasteelisa Pacific Holdings Ltd.

Singapore

Permasteelisa Philippines Inc. Permasteelisa Projects (Thailand) Ltd

Pasig City (Philippines) Chonburi Province (Thailand)

Permasteelisa PTY Limited

Chipping (Australia)

Norton

MOP

130,000,000,00

MNT

30,132

USD

95.00 100.00 100.00 99.91

0.0067 99.93

0.07 99.00

99.52 Permasteelisa Pacific Holdings Ltd Permasteelisa Pacific 99.52 Holdings Ltd

1.00 100.00

100.00 Permasteelisa S.p.A.

100.00

Permasteelisa S.p.A.

54.25

75,380,800

SGD

99.52

10,200,000

PHP

99.51

4,000,000

THB

15,434,956

AUD

N/A

AZN

100.00 Permasteelisa S.p.A

Josef Gartner GmbH Permasteelisa Pacific Holdings Ltd Global Architectural Co. 48.76 Ltd Permasteelisa Pacific Holdings Ltd. 99.52 Permasteelisa Hong Kong Limited

45.27 99.99 48.998 54.17

45.83

Permasteelisa S.p.A. Azerbaijan Branch Office Permasteelisa Turkey İnşaat Tіcaret Limited Şirketi

Baku (Republic of Azerbaijan) Taipei (Taiwan)

22,275

TRY

100.00 Permasteelisa S.p.A.

Permasteelisa UK Ltd.

Smirne (Turkey)

16,790,350

GBP

100.00 Permasteelisa S.p.A.

100.00

RI.ISA d.o.o.

Londra (UK)

55,200

HRK

98.55 Pemasteelisa S.p.A.

98.55

Scheldebouw B.V. Scheldebouw UK Ltd.

Rijeka (Croatia) Middelburg (Holland)

EURO GBP

100.00 Permasteelisa S.p.A. 100.00 Scheldebouw B.V.

100.00 100.00

3,040,326 1,000

100.00 100.00

(*) It refers to the paid-up capital (**) 100% in terms of the right to the sharing of profit and of losses (***) 97% in terms of the right to the sharing of profit and of losses

List of jointly controlled subsidiaries: COMPANY NAME Cladding Technology Italia (CTI) – winding up Marine Project Solutions S.c.a.r.l

REGISTERED OFFICE

SHARE CAPITAL

Milano (Italy) Vittorio Veneto (Italy)

CURRENCY

N/A (****)

EURO

366,500 (*)

EURO

% OF CONSOLIDATION

OWNERSHIP

- Permasteelisa S.p.A. 100

Permasteelisa S.p.A.

% OWNERSHIP REGISTRATION 50.00 55.50

(****) The Consortium Capital Fund amounts to Euro 50,000 (*) It refers to the paid-up capital

List of associated companies: COMPANY NAME

REGISTERED OFFICE

Interoxyd AG

Altenrhein (Switzerland)

SHARE CAPITAL 50,000

CURRENCY

CHF

% OF CONSOLIDATION

Scheldebouw B.V.

OWNERSHIP

18.00

115


The liquidation process of the subsidiary Permasteelisa Taiwan Ltd. was concluded on August 24, 2018. Regarding the Consorzio Dyepower, created with the aim of promoting, planning and carrying out research and development activities in the organic/hybrid photovoltaic sector, the cancellation process has been closed on August 21, 2018. On August 28, 2018 Permasteelisa Participations S.r.l. sold the participation held in the associate Mobil Project S.p.A. On January 28, 2019 the shareholders meeting of Permasteelisa Participations S.r.l. approved to start the liquidation process for the company, concluded on March 28, 2019 with the cancellation.

116


117


Permasteelisa S.p.A. – Statutory Financial Statements as of March 31, 2019

118


Income Statement as of March 31, 2019 Notes

March 31, 2019

March 31, 2018*

97,994,398 3,779,385 101,773,783

121,512,323 814,339 122,326,662

(38,900,490) (56,328,448) (55,765,758) (4,336,996) (2,557,980) (11,570,400) (753,433) (1,830,424) 31,795,147 379,165 (139,869,617)

(49,280,568) (54,682,884) (51,190,981) (4,964,543) 0 (2,193,485) 76,270 (302,879) 28,454,162 5,220 (134,079,688)

Operating result

(38,095,834)

(11,753,026)

Financial incomes Financial expenses Net financial expenses

67,852,046 (46,547,279) 21,304,767

89,994,202 (71,567,347) 18,426,855

0 (342,329,366) (359,120,433) (3,222,695) (362,343,128)

0 (4,366,886) 2,306,943 783,489 3,090,432

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 Devaluation of intangible assets Bad debts provision Provision for risks and charges Other operating expenses Costs Recovery In-house enhancement of fixed assets Total operating expenses

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

4 1 5 5 6 7 7 8 9 10

11 12 13

14

* The Company has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

119


Statement of Comprehensive Income as of March 31, 2019 March 31, 2019

March 31, 2018*

(362,343,128)

3,090,432

Hedging reserves for risks variation, net of tax Gains / (losses) from the translation of the Branch

(281,735) 1,447,553

610,946 (2,300,513)

Total comprehensive income/(loss) that may be reclassified to Income Statement

1,165,818

(1,689,567)

Gains/(losses) on actuarial evaluation

(67,559)

(41,279)

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

(67,559)

(41,279)

(1,098,259)

(1,730,846)

(361,244,869)

1,359,586

In Euro

Profit/(loss) of the period (A) Items 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)

* The Company has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not restated.

120


Statement of Financial Position as of March 31, 2019 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 Total current assets Total assets Equity Share capital Legal reserve IAS 19 Reserve Translation reserve Foreign Exchange Risk Hedging Reserve Commodities Risk Hedging Reserve Capital injection 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 Loss on construction contract Fund 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

Notes 15 16 17 18 19 20 21 22 22 23 24 25

27 27 27 27 27 27 27 27 27 27

28 29 19 30 28 20 20 20 31 32 32 33 34

March 31, 2019

March 31, 2018*

7,932,681 20,627,183 185,073,590 366,608 6,675,228 220,675,290 29,605,750 9,782,814 59,662,661 268,032,371 6,542,249 14,074,120 29,460,523 417,160,488 637,835,778

11,047,922 22,740,720 284,503,970 366,608 13,231,634 331,890,854 55,700,515 19,633,062 65,916,353 296,234,475 5,343,652 21,938,963 3,387,763 468,154,783 800,045,637

6,900,000 1,380,000 (513,716) 2,059,869 (108,334) (6,304) 472,000,000 163,999,280 (5,215,570) (362,343,127) 278,152,098

6,900,000 1,380,000 (446,157) 612,826 167,098 0 0 163,999,280 (5,161,073) 3,090,432 170,542,406

0 3,224,767 58,373 2,036,569 5,319,709 6,888 4,141,633 434,322 24,017,207 25,233,804 14,528,098 260,049,047 0 25,952,973

158,480,000 3,380,084 5,795,518 1,011,642 168,667,244 187,561,816 1,243,290 0 26,144,531 40,321,938 16,447,964 173,467,712 0 15,648,736

354,363,972 637,835,779

460,835,987 800,045,637

* The Company has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

121


Statement of cash flows as of March 31, 2019 â‚Ź thousands

March 31, 2019

March 31, 2018 (3) (4)

(362,343)

3,090

3,223 (10,669) 7,183 4,337 2,558 99 753 11,570 342,329 300 (144) 361,539

(783) (4,873) 4,711 4,965 0 (94) (76) 2,193 4,367 172 (45) 10,537

(275) (6) (67) (3,145) 27,550 (16,808) 4,334 14,635 (10) (7,532) 10,669 1,448 30,793

610 0 (41) 0 8,205 17,095 23,859 (10,736) (1,218) (4,489) 4,890 (2,317) 35,858

29,989

49,485

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)

(2,419) 653 0 (242,899) (244,665)

(1,604) 66 113 (5,567) (6,992)

Cash flows generated (absorbed) by financing activities Net change in financial payables to banks Net change in financial payables to Shareholders Change in intercompany current accounts Capital injection

(122.373) (223.661) 114,783 472,000

(46,149) (31,432) 33,655 0

Cash flows generated (absorbed) by operating activities Result of the period Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities: - Taxes - Interest income - Interest expense - Depreciation and amortization expenses and impairment losses - Devaluation of intangible assets - 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 foreign exchange risk commodities reserve - Changes in IAS 19 reserve - Changes in IFRS 15 reserve - Changes in assets and liabilities for contracts work-in-progress (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)

122


Net cash flows generated (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 overdrafts and other short-term loans Shareholder’s loan

240,749

(43,926)

26,073

(1,433)

3,388 0

4,820 0

29,461

3,388

29,456 5 29,461

3,380 8 3,388

(1)

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. (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, provisions for risks and charges. (3)

Starting from the fiscal year 2019, the Companies has decided to modify the cash flow statement, with respect to the approach adopted in previous years, to allow a clearer representation of the change in net cash and cash equivalents accordingly to IAS 7. The comparative data has been therefore restated uniformly. (4)

The Company has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

123


Statement of Net Equity Changes as of March 31, 2018 Share capital

Legal reserve

Share premium

Revaluation 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)

2,913

(444)

0

(404)

(3)

(5,161)

169,183

(â‚Ź thousands)

Balance as of April 1, 2017 Income (expenses) recognized directly in equity: Translation differences

(2,301)

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

(2,301) 611

611 0 0 (41)

(41)

0

0

0

0

0

0

0

0

(2,301)

611

0

(41)

0

0

0

0

0

0

0

0

0

(2,301)

611

0

(41)

0

Net result for the period Total Income (expenses) for the period

0

(1,731)

3,090

3,090

3,090

1,359

Transactions with Shareholder: Destination of operating result

0 0 0

Other changes Dividends Rounding

Balance as of March 31, 2018(*)

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)

612

167

0

(445)

(3)

(2,071)

170,542

* The Company has adopted the modified retrospective method in the first-time application of IFRS 15. Therefore, the comparative table has not been restated.

124


as of March 31, 2019 Share capital

Legal reserve

Share premium

Revaluation 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)

613

167

0

(445)

(3)

(2,071)

170,542

(3,145)

(3,145)

(5,216)

167,397

(â‚Ź thousands)

Balance as of April 1, 2018 Effect first application IFRS 15 Balance as of April 1, 2018 adjusted Income (expenses) recognized directly in equity: Translation differences

6,900

1,380

0

0

4

163,789

312

(103)

613

167

0

(445)

(3)

1,447

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

1,447 (275)

(6)

(281) 0 0 (68)

0

0

0

0

0

0

0

0

1,447

(275)

(6)

(68)

(68) 0

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

0

0

0

0

0

0

0

0

1,447

(275)

(6)

(68)

0

0

(2,047)

(362,343)

(362,343)

(362,343)

(364,390)

0 0

Capital injection

472,000

472,000

Other charges

0

Roundingi

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)

2,060

(108)

(6)

(513)

471,997

(367,558)

278,152

Balance as of March 31,

2019

125


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) and interiors systems. The Statutory Financial Statements of 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, 2019. 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 are the same as those used for the Statutory Financial Statements as of March 31, 2018. The statement of financial position, the income statement, the statement of cash flows and of net equity changes 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. Starting from the financial year 2019, the Company decided to modify the cash flow statement, with respect to the approach adopted in previous years, to allow a clearer representation of the change in net cash accordingly to IAS 7. Therefore, to homogeneous the financial data, it has decided to restate also the comparative figures.

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, 2019 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 126


by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”). 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, 2018. (b) Basis of preparation The financial statements have been prepared based on the going concern assumption. When assessing the appropriateness of this assumption, the Directors - having taken into account the significant losses generated by the Company and the Group during the accounting period - have considered the current financial situation of the Group, considerably strengthened by the contributions made by the Shareholder during the period, as well as the economic and financial projections included in the Business Plan prepared with reference to the period 2020-2024, which foresee the need for additional financial resources over the mid-term, which the Group trust being able to fund with the support of the Shareholder. Moreover, the preparation of the financial statements requires management to make evaluations, estimates and assumptions which have an effect on the application of the accounting standards and on the book values of the assets and liabilities, costs and revenues. The evaluations made are the best possible on the basis of the information currently available. The estimates and related assumptions are based on past experience and on several other factors which have been deemed reasonable considering the circumstances, the results of which form the basis for the measurement of the book value of the assets and liabilities which cannot be accurately inferred from other sources. The effective results may be different with respect to the estimates made, characterised by material uncertainty due to their nature as well as in consideration of the specific sector in which the Company operates and the moment of discontinuity which the Group is facing. The items which are affected the most by estimates and the use of hypothetical assumptions are the fixed assets, in particular in relation to the impairment test carried out which, as mentioned, is based on forecasts regarding the future performance of the Company and the Group and therefore aleatory under many aspects. For the same reasons, a similar consideration concerns the deffered tax assets, whose recoverability depends on future results. Other items subject to a significant use of estimates are the recoverability of the receivables, the valuation of the work-in-progress - in relation to the estimates of the related costs which influence the stage of completion - the contingent liabilities relating to warranty works, projects’ risks and outstanding disputes, the outcome of which is uncertain and whose measurement is based on available information. The estimates and the underlying assumptions are periodically reviewed. The changes of accounting estimates are recognised during the period in which the estimate is revised if the change concerns just that period, or in the period of the change and in future ones if the change concerns both the current period and futures ones. The Directors, having assessed the circumstances illustrated above, have deemed that suitable elements exist for supporting the ability of the Company to fulfil its obligations in the foreseeable future and in particular over the next 12 months and have therefore considered it appropriate to adopt the going concern assumption when preparing the financial statements. The annual financial statements have been prepared on the basis of the general principle of the historical cost, with the exception of the financial statement items which, in compliance with the IFRS, are measured on the basis of fair value as indicated further on in the measurement criteria. The accounting standards illustrated further on have been applied consistently for all the periods presented in these financial statements. (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 127


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, 2019 and the comparative exchange rates of the previous year are as follows: 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 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

March 31, 2019 Exchange rate at the Average exchange balance sheet date rate of the year 35.632000 7.465200 9.659000 4.126100 1.582100 1.500000 8.819500 1.521400 34.659000 1.123500 321.050000 1.118100 7.433800 9.084100 59.075000 7.539700 4.583800 4.089500 4.213100 72.856400 77.719000 4.076400 0.858300 1,276.460000 124.450000 4.300600 1.910000 2,956.500000 6.344600 26,064.000000 4.386500 3,570.250000

37.441139 7.457398 9.627554 4.252937 1.587549 1.519018 9.081716 1.572170 35.340238 1.158037 320.527324 1.146763 7.413991 9.354154 61.255463 7.769098 4.719519 4.215275 4.342687 75.289531 80.956819 4.213975 0.881976 1,289.341587 128.400393 4.291264 1.968687 2,927.726786 6.052780 26,789.000000 4.380395 3,499.805079

March 31, 2018 Exchange rate at the Average exchange rate balance sheet date of the year 38.478000 7.453000 9.677000 4.524900 1.603600 1.589500 9.669600 1.615800 35.928300 1.232100 312.130000 1.177900 7.432300 9.959700 64.374000 7.746800 4.765800 4.484800 4.620400 70.889700 80.296000 4.326200 0.874900 1,310.890000 131.150000 4.210600 2.094600 2,949.450000 4.897600 28,112.000000 4.093800 3,439.760000

38.630060 7.441515 9.491200 4.297707 1.512588 1.500682 9.141240 1.586516 35.078307 1.170468 309.772574 1.135464 7.457202 9.415505 59.478733 7.746634 4.872652 4.260484 4.389451 67.744317 75.462448 4.131364 0.882046 1,298.568532 129.689943 4.220926 1.991155 2,835.881468 4.309918 26,595.939286 3.765271 3,434.826468

(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 remeasured 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 the next paragraph “e�). 128


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)

As shown above, 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; consequently, 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: - 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. 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 satisfied; 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 price 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 aluminum purchase for the contracts work-in-progress. When the Company 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 129


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 Company 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 rollover 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 is always satisfied; 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 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. (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

130


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 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

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. (iv)

Amortisation

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. (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. 131


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 it is highly probable these items are 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 (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-in-progress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-inprogress). 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, (e.g. commissions, consultancies, etc.) directly attributable to the acquisition of the financial asset itself. 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. (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. 132


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 cash-generating 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. (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 either direct their accruing indemnity 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. 133


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. An independent qualified actuary does the calculation. (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 because 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 based on 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 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. (u) 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 over-time 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 (cost-to-cost). 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. 134


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 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 Company 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. (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. (z) New accounting standards Accounting standards, amendments and interpretations applied since April 1, 2018 IFRS 15 – Revenue from Contracts with Customers. Published on May 28, 2014 and integrated with further clarifications published on 12 April 2016. The IASB issued IFRS 15 with the intent of replacing 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 key 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; 135


-

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.

In addition to the five-step model, IFRS 15 also covers contract costs, contract modifications and financial statements disclosures. The standard must be applied for reporting periods beginning on or after January 1, 2018 but may be applied in advance. The Company did not apply for early application of this standard, but it has been opted for applying as from the reporting period beginning on April 1, 2018 using retrospective approach and accounting the cumulative effect of initially applying at the date of initial application (modified retrospective approach). This effect has been recognised as corresponding adjustment to the opening balance of retained earnings in the reporting period that includes the date of initial application that, for Permasteelisa S.p.A., is April 1, 2018 - March 31, 2019. Under transition method, the Company has applied this Standard retrospectively only to contracts that were not completed at the date of initial application (April 1, 2018). As part of the IFRS 15 project, the Company has defined the effects of applying IFRS 15 for the first time on its consolidated financial statements as required by IAS 8. The implementation project has led to identification of the following key differences compared to the provisions included in the standards previously applied by the Company, in particular compared to IAS 11. Costs to obtain a contract: the Company shall recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. It showed that, for the Company, the costs incurred for the preparation of the offers could not be included in the contract costs and not be accounted as a year-end asset, if the contract with the customer is not obtained. Contract modifications: a contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. If both sides have approved change in the scope of a contract without having determined the corresponding change in price, the entity shall estimate changes in the transaction price, due to modification, in accordance with this Standard to estimate of variable consideration and its constraints. In particular, an entity has to include in the transaction price the amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur once the uncertainty related to the variable consideration is subsequently resolved. The adoption of IFRS 15 has entailed a reduction on Company equity at April 1, 2018 equal to Euro 3,145 thousand, net of the related tax effect, due to: -

costs to obtain contracts (tender costs) non incremental and capitalized as of March 31, 2018, equal to Euro 2,100 thousand;

-

revenues from contract modifications or subject to estimate of variable considerations (claims and variations) that must be deferred as recognition, equal to Euro 1.045 thousand.

As already described above, this negative effect has been recognized as adjustment to the opening balance of retained earnings of reporting period of initial application and corresponding to April 1, 2018. Comparative figures are not restated according to the modified retrospective approach. IFRS 9 – Financial Instruments (and Amendment to IFRS 9 - Prepayment Features with negative compensation). Published on July 24, 2014, the standard is the result of the IASB’s work that intended to replace IAS 39 and the main features are: -

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;

136


-

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 relationship, 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 had not a significant impact on the Company's Financial Statement and no effects have been recognized as adjustments to the opening balance of retained earnings for the reporting period April 1, 2018 – March 31, 2019. In particular, referring to trade receivables and to contract assets, representative of most of the Company’s credit exposure, current accounting procedures of impairment are basically equated to new Standards’ rules, whose application should not involve key effects. This is based on the fact that the indicators used to quantify credit risk previously used under IAS 39, such as client risk, country risk and the assessment of relevant macroeconomic information already reflects a valuation method based on expected risk. Credit risk is that deriving from the Company’s exposure to potential losses arising from the customers’ noncompliance with their obligations. Management of this risk starts as early as the assessment of offers, through a careful analysis of the characteristics of the countries in which the Company’s activities should be carried out and the customers requesting an offer, and continues during the whole project execution. Regarding to the existing hedging relationships, the current accounting procedure satisfies the hedge accounting requirements regulated by the new Standard IFRS 9. Amendments to IFRS 4 - Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts. This amendment is addressed to those entities whose primary business is the insurance activity. The adoption of this amendment had no impact on the scope of Company's Financial Statement. Amendments to IFRS 2 Share-based payment - Classification and measurement of share-based payments. The adoption of this amendment had no impact on the scope of Company's Financial Statement. Annual Improvements to IFRS Standards 2014-2016. The adoption of this amendment had no impact on the scope of Company's Financial Statement. Amendments to IAS 40 - Transfers of investment property. The adoption of this amendment had no impact on the scope of Company's Financial Statement. IFRIC 22 - Foreign currency transactions and advance consideration. The adoption of this amendment had no impact on the scope of Company's Financial Statement. Accounting standards, amendments and interpretations not yet in force and applied in advance The Company has not applied in advance standards, both new and amended, which have been issued but are not yet in force. Accounting standards, amendments and interpretations approved by the European Union, not yet mandatorily applicable and not adopted in advance by the Company IFRS 16 – Leases. The IASB issued this standard in January 2016. IFRS 16 replaces the current standards on leases, including IAS 17 - Leases, IFRIC 4 - Determining whether an arrangement contains a lease, SIC 15 - Operating leases - Incentives and SIC 27 Evaluating the substance of transactions in the legal form of a lease. The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset to differentiate between lease and service agreements specifically referring to: asset identification, right to replacement of the asset, right to obtain all the economic benefits arising out of use of the asset and right to control the use of the asset underlying the agreement. The standard introduces a single lessee accounting model for recognising and measuring lease agreements, which provides for the underlying asset – including assets underlying operating leases – to be recognised in the statement of financial position as assets and lease financial liability. On the contrary, the standard does not provide significant changes for lessor accounting. The new standard is applicable from January 1, 2019 but the early adoption is allowed. 137


The Company completed a preliminary assessment of in order to identify the potential impacts deriving from the first application of the new Standard (April 1, 2019). This process included the mapping of all the contracts in scope of IFRS 16 and an analysis of the main relevant clauses. The Company adopted the practical expedient prescribed by IFRS 16:C3 that allows the company to not reassess whether a contract is, or contain, a lease at the date of the initial application but use the conclusions previously identified applying IAS 17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease. In accordance with the IFRS 16:C4, this practical expedient has been applied to all contracts. The process for the implementation of the new Standard is ongoing and it includes the fitting of an IT infrastructure that is aimed at the management of the accounting matters, alignment of the administrative processes and related controls. The Company has decided to adopt the practical expedient envisaged by IFRS 16 paragraph C5 point b) and paragraph C8, based on which the Company will record, on 1 April 2019 (date of first adoption), a financial liability corresponding to the current value of the remaining payments due for the leases in existence at the date of first application, with an asset of the same value, reflecting the right of use of the leased asset, as the contra-entry. The Company elects to apply the practical expedient prescribed by the IFRS 16:5(a) to the short-term lease (contracts with lease term of 12 months or less). Moreover, the Company elects to apply the practical expedient prescribed by IFRS 16:5(b) that refers to the low-value asset (leases of underlying assets with a value, when new, in the order of magnitude of Euro 5,000 or less). For these contracts the application of IFRS 16 does not require the recognition of a lease liability and a right of use asset at the commencement date of the lease. Lease payments are recognized as an expense over the lease term on a straight-line basis and when incurred. With reference to the transition rules, the company is going to apply the following practical expedients available for the modified retrospective approach: -

classify the contracts with lease term of 12 months or less as short term lease and accounted for by simply recognizing an expense, typically straight-line, over the lease term;

-

rule out the initial direct costs from the value of the right-of-use assets at April 1, 2019;

-

use of all the information available at the transition date for the definition of the lease term with particular reference to the extension options and early termination options.

IFRIC 23 - Uncertainty over income tax treatment. On June 7, 2017, the IASB published interpretation “Uncertainty over Income Tax Treatments (IFRIC Interpretation 23)”. The interpretation applies to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments. An entity is required to use judgement to determine whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity is to assume that a taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. An entity has to consider whether it is probable that the relevant authority will accept each tax treatment, or Company of tax treatments, that it used or plans to use in its income tax filing. IFRIC 23 is effective for annual reporting periods beginning on or after 1 January 2019 but the earlier application is permitted. Directors are evaluating the potential impact on the consolidated financial statements of the Company resulting from the application of the amendment. On October 12, 2017, the IASB issued the amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”). The amendments clarify that a company applies IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture, including impairment requirements. These amendments are to be applied for financial periods beginning on January 1, 2019, though early adoption is allowed. Accounting standards, amendments and interpretations not yet endorsed by the European Union IFRS 17- Insurance Contracts. The IFRS 17 replaces the IFRS 4 Insurance Contracts. The entity has to apply the new standard to the insurance contract issued, including the reinsurance contracts, to the reinsurance contracts held and to the investment contracts with a discretionary participation feature (DPF). IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. Earlier application is permitted if both IFRS 15

138


Revenue from Contracts with Customers and IFRS 9 Financial Instruments have also been applied. Directors do not expect any significant effect on the consolidated financial statements of the Company when this amendment is adopted. Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following amendments to IFRSs: -

IFRS 3 Business Combinations and IFRS 11 Joint Arrangements — The amendments clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

-

IAS 12 Income Taxes — The amendments clarify that an entity should recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized the transactions that generated the distributable profits. This is the case irrespective of whether different tax rates apply to distributed and undistributed profits.

-

IAS 23 Borrowing Costs — The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

Amendment to IAS 19 - Plant amendment, curtailment or settlement. Amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement. Directors do not expect any significant effect on the consolidated financial statements of the Company when this amendment is adopted. Amendments to IFRS 3 - Definition of a Business. The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020 but the early adoption is allowed. Directors do not expect any significant effect on the consolidated financial statements of the Company when this amendment is adopted. Amendments to IAS 1 and IAS 8 - Definition of Material. The document introduced a revised definition of “material” which is quoted in the IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies, changes in Accounting Estimates and Errors. The purpose of the amendment is to give a more specific definition of material; it introduced the “obscured information” concept. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Directors do not expect any significant effect on the consolidated financial statements of the Company when this amendment is adopted.

Information on impairment test prepared during the year Due to the significant losses generated by the Company and by the Group in the accounting period, the Directors have recognised the presence of indicators of possible impairment of the value of the assets recorded, in particular for the equity investments in subsidiaries, as of 31 March 2019. The method adopted for the preparation of the Impairment Test and the related results are illustrated below: • the test was carried out with reference to the main five subsidiaries in relation to the losses accrued from them and / or to the presence of significant differentials between the book value and the shareholders' equity of the subsidiary. Please refer to note 17 for quantitative data. • the recoverable amount compared with the book value of equity investment was determined as the value in use, defined as the current value of the expected cash flows using a rate which reflects the specific risks of the CGU as of the measurement date (so-called Discounted Cash Flow method). • the expected cash flows derived from the 2020-2024 Business Plan (hereinafter also the “Plan”), were used, a plan drawn up also with the support of qualified external professionals, suitably appointed, as approved by the Board of Directors on 4 June 2019. The plan includes strategic action, launched and to be launched, identified by the Directors for the recovery of satisfactory Group performances and therefore includes lines of intervention also characterised by elements of decisive discontinuity with respect to the situation existing as of 31 March 2019. At this regards, it is hereby specified that the expected cash flows used for the purpose of the impairment test have been taken from the Plan however taking into account just the action for which the requirements state by the accounting standard IAS 36.44 have been met as of the date of closing. 139


• the discounting back rate used is the weighted average cost of the capital (so-called WACC post-tax), calculated considering the structure of the capital of a panel of comparable companies. The method applied is the Capital Asset Pricing Model, on the basis of which the rate is determined using a mathematical model provided by the sum of the return of a risk-free asset, to which the risk premium is added. The market risk premium is in turn provided by the result of the average market risk for the specific sector beta. The WACC used is from 9.74% to 11. 1%. • the “g” growth rate for the determination of the cash flows beyond the explicit period of the Plan is aligned to the expected inflation in the reference countries in which the Company operates. The g-rate used is 1% for each equity investments tested. It is hereby specified that the estimates used are based on internal evaluations relating to future events which may not occur or may occur with different results and timing with respect to forecasts, therefore determining the possibility of differences, even significant, with respect to the forecast data considered, which could therefore lead to adjustments in values, not quantifiable and not predictable as of today. The recovery of the net invested capital therefore depends on the achievement of the objectives defined by the Plan from which the projections used in the evaluation have been taken. In this connection it is emphasised that the Plan on which the test is based is in turn based on hypothetical assumptions regarding the future performance of the Company and of the Group characterised by material uncertainty due to their nature as well as in relation to the sector in which the Company and the Group operate and the elements of discontinuity enclosed in the challenges which the Company and the Group is facing to return to positive profitability. On conclusion of the impairment test, it became necessary to proceed with the write-down of the analized equity investments for Euro 341,700 thousand.

140


Notes to the Statutory Financial Statements 1. Operating revenues Operating revenues by geographical area are shown in the following table. € thousands

United States United Kingdom France Ireland Italy Colombia Hong Kong Monaco Denmark Japan Qatar Saudi Arabia Holland Dubai Norway Russia Germany Austria Turkey Canada Spain Thailand Kuwait Switzerland Oman Poland Australia Mongolia Singapore Philippine Romania South Africa Azerbaijan China Bahrain Malaysia Belgium Panama Total

March 31, 2019

March 31, 2018

25,288 22,120 17,388 15,217 7,443 5,811 3,211 2,433 2,550 717 531 477 201 181 145 90 47 47 26 21 10 9 4 3 2 1 1 0 0 0 0 (5) (2,195) 0 0 0 0 0 101,774

31,687 34,813 6,616 8,505 6,699 10,282 5,841 9,551 1,453 693 1,763 (13) (91) 389 42 1,893 22 0 216 239 172 122 216 55 0 380 2 28 1 49 1 5 (153) 455 303 51 38 2 122,327

2. Non-current assets classified as held for sale The Company does not have “Non-current assets held for sale”. 141


3. Acquisitions of subsidiaries It is noted that there were no acquisitions of new company in the Group in the reporting period Arpil 1, 2018 – March 31, 2019.

4. Other operating income € thousands

Gains on tangible and intangible assets disposals Insurance indemnities Rental income Sale of scraps Other revenues

March 31, 2019

March 31, 2018

85 4 0 294 3,396 3,779

95 9 1 290 419 814

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 item raw materials and consumables used over the total operating revenues is equal to 94% (85% in previous year). The increase in the percentage impact on the total revenues is mainly due to the reduction in revenues. In fact, the operating revenues are determined based on the progress of project costs, and that are affected by the revision of the estimates of costs to terminate the contracts. As of March 31, 2019, the item services expenses and use of third party assets includes remuneration due to the statutory auditors amounting to Euro 93 thousand (March 2018: Euro 94 thousand).

6. Personnel expenses € thousands

Wages and salaries Social contributions Severance indemnities Other personnel costs

March 31, 2019

March 31, 2018

39,512 11,163 2,672 2,419 55,766

35,813 10,602 2,407 2,369 51,191

The caption includes directors’ remunerations for Euro 3,912 thousand (March 2018: Euro 1,430 thousand). The average workforce for the period was 809 units (March 2018: 843 units). The increase of this item in the reporting period is mainly due to the bonus payment. Please refer to note 39 “Transactions with related parties - transactions with management that have a key function within the Company”.

7. Depreciation, amortization and impairment losses € thousands

Intangible assets amortization Tangible assets depreciation Devaluation of intangible assets

March 31, 2019

March 31, 2018

2,010 2,327 2,558 6,895

2,272 2,693 0 4,965

142


8. Bad debts provision € thousands

Bad debts provision

March 31, 2019

March 31, 2018

11,570 11,570

2,193 2,193

The item “bad debts provision” mainly concerns to a provision recognized during the reporting period and related to an Italian project acquired in the year 2011 and for which the legal dispute was closed through a settlement agreement with the client. Moreover, the Company has prudentially recognized additional provisions on some outstanding receivables considered to be at risk. With reference to the movements of this item, please refer to note 21.

9. Provision for risks and charges € thousands

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

March 31, 2019

March 31, 2018

300 4 699 (250)

(850) 282 (200) 692

753

(76)

March 31, 2019

March 31, 2018

249 185 1,396 1,830

263 1 39 303

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

11. Net financial expenses € thousands

March 31, 2019

March 31, 2018

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

25,000 10,601 69 29,764 0 2,341 77 67,852

25,000 4,729 55 59,061 0 1,025 124 89,994

Interest expenses from subsidiaries Bank interests expenses Loan charges Exchange rate losses Bank charges Other interests expenses Financial expenses on foreign currency risk hedging

3,308 3,778 0 29,955 95 96 8,734

515 4,111 0 60,994 88 84 5,055 143


Commercial expenses on foreign currency risk hedging Total financial expenses Total net financial income/(expenses)

581 46,547 21,305

720 71,567 18,427

As of March 31, 2019, the net financial expenses amounted to Euro 3,695 thousand, excluding dividends from subsidiaries, while as of March 31, 2018 amounted to Euro 6,573 thousand. The net positive variation for Euro 2,878 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, increased from Euro 4,626 thousand (March 2018) to Euro 6,897 thousand (March 2019) with a negative variation for Euro 2,271 thousand; - exchange rate losses, net of gains, decreased from Euro 1,933 thousand (March 2018) to Euro 191 thousand (March 2019) with a positive variation for Euro 1,742 thousand; - interest expenses, net of incomes, decreased from Euro 14 thousand (March 2018) to Euro (3,993) thousand (March 2019) with a positive variation for Euro 3,407 thousand.

12. Revaluation of equity investments During the fiscal year 2019 (April 2018 - March 2019) no revaluations of investments were made.

13. Write-downs of equity investments In fiscal year 2019 (April 2018 - March 2019) the investment in the following companies was written down: - J. Gartner Gmbh for Euro 141,100 thousand - Permasteelisa North America Corp. for Euro 143,000 thousand - Permasteelisa Pacific Holdings Ltd. (Singapore) for Euro 27,000 thousand - Scheldebouw BW for Euro 30,600 thousand - Permasteelisa Participations S.r.l. for Euro 629 thousand following the liquidation of the same. For more details on the impairment test on the above equity investments, please refer to note 17.

14. Income tax expense Taxes recognised in the Income Statement â‚Ź thousands

Current tax expense Income/(Expenses) for Italian national tax consolidation (Ires) Other current tax expense 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, 2019

March 31, 2018

0 1,078 (2) 1,076

0 123 72 195

(2,436) 4,583 2,147 3,223

(978) 0 (978) (783)

The item "Other current tax expense" includes the effects of the conciliation proposal formalized by the Company on the legal procedure described in note 38.

144


Reconciliation of effective tax rate € thousands

March 31, 2019 Profit before tax Income tax using the domestic corporation tax rate (Ires) Non-deductible expenses Tax exempt revenues Current tax benefits not recognised in the income statement

24%

Under/(over) provision for prior year taxes Other taxes Other -0.9%

March 31, 2019 (359,120) (86,188) 72,913 (5,600)

March 31, March 31, 2018 2018

24%

(2,307) 554 1,557 (6,000)

10,040

2,917

0 1,061 10,997 3,223

73 123 (7) (783)

33.9%

15. Intangible assets € thousands

Balance as of April 1, 2017 Acquisitions Other increases Decrease Other decreases Amortization Balance as of March 31, 2018

Development costs

Rights to use intellectual property

Licenses and trademarks

Other intangible assets

Intangible assets in progress and advances

Total

0

4,957 428 156

0

4,251 9 60

3,313 361 (216)

3,458

12,521 798 0 0 0 (2,271) 11,048

0

(1,493) 4,048

0

(778) 3,542

2,433 (2,433) 0

18,904 (13,947) 4,957

0 0 0

13,281 (9,030) 4,251

3,313

2,433 (2,433) 0

19,488 (15,440) 4,048

0 0 0

13,350 (9,808) 3,542

3,458 38,729 0 (27,681) 3,458 11,048

Development costs

Rights to use intellectual property

Licenses and trademarks

Other intangible assets

Intangible assets in progress and advances

Total

0

4,048 400 316

0

3,542 22

3,458 1,030

11,048 1,452 316 0 (316) (2,558) (2,009) 7,933

Carrying amounts As of April 1, 2017 attributable to: Cost Accumulated amortization

As of March 31, 2018 attributable to: Cost Accumulated amortization

€ thousands

Balance as of April 1, 2018 Acquisitions Other increases Decrease Other decreases Devaluation of intangible assets Amortization Balance as of March 31, 2019

37,931 (25,410) 3,313 12,521

(316)

0

(1,493) 3,271

0

(2,558) (516) 490

4,172

145


Carrying amounts As of April 1, 2018 attributable to: Cost Accumulated amortization

As of March 31, 2019 attributable to: Cost Accumulated amortization

2,433 (2,433) 0

19,488 (15,440) 4,048

0 0 0

13,350 (9,808) 3,542

3,458 38,729 0 (27,681) 3,458 11,048

2,433 (2,433)

20,204 (16,933)

0 0

0

3,271

0

13,372 (10,324) (2,558) 490

4,172 40,181 0 (29,690) (2,558) 4,172 7,933

The increase for the period referred to the caption “Rights to use intellectual property” for Euro 400 thousand is related to the acquisition of new Simpana license for the back up of corporate data (Euro 45 thousand), the implementation in all the companies of the Group of the K2 Business Process Automation platform for the realization of Workflow processes within QHSE (Euro 85 thousand), the patent Dyepower registration in the major European countries (Euro 29 thousands), the completion of the HANA for SAP upgrade (Euro 48 thousand), the completion of consolidation and migration of data in the platform CRM Salesforce (Euro 29 thousand), the acquisition and the implementation of the new licence “Neptune” which is used for Production, Supply Chain and Site Management (Euro 19 thousand), the developments on electronic invoicing and automatic payments to suppliers (Euro 52 thousand), the implemention of measures for the enforcement of security and authentication criteria relating to the Google APPS Group platform (Euro 38 thousand), and other developments for Euro 55 thousand. The increase referred to the caption “Intangible assets in progress and advances” for Euro 1,030 thousand is mainly due to the development of the housing module prototype “Nomaad” (Euro 731 thousand), to the new developments for PMF solution (Euro 87 thousand), to additional implementation on CRM solution to support the Sales & Tender process (Euro 25 thousand), to the consultancy activities and the creation of the new Group website (Euro 70 thousand), to the development of software dedicated to the technical department (Catia, Autocad, Inventor for Euro 38 thousand), to the development of SAP both for admistrative purposes (the IFRS16 tool to manage the leasing) and for logistics purposes (management and traceability of materials) for Euro 37 thousand, and finally some other developments for 42 thousand. Impairment losses and subsequent reversal The item “Other intangible assets”, with respect to March 31, 2018, is showing a devaluation recognized in the reporting period following the results of the impairment test prepared by the Directors in relation to the customer relationship booked as asset in previous years and related to the Monnalisa merger, previously mentioned.

146


16. Tangible assets â‚Ź thousands

Land and buildings

Plant and machinery

Equipment

Other tangible assets

Tangible assets in progress and advances

Total

Balance as of April 1, 2017 Acquisitions Other increases Decrease Other decreases Depreciation Exchange rate adjustment

17,889 122

4,773 256 15 (3)

170 206

1,737 186

31 143

Balance as of March 31, 2018

17,145

(1,195) (6) 3,840

(49) (6) 321

(582) (2) 1,276

159

24,600 913 15 (66) (15) (2,692) (14) 22,741

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

30,308 (13,163) 17,145

26,753 (22,913) 3,840

4,072 (3,751) 321

9,593 (8,317) 1,276

159 0 159

70,885 (48,144) 22,741

â‚Ź thousands

Land and buildings

Plant and machinery

Equipment

Other tangible assets

Tangible assets in progress and advances

Total

Balance as of April 1, 2018 Acquisitions Other increases Decrease Other decreases Depreciation Exchange rate adjustment

17,145 6

3,840 476 108 (128)

321 16

1,276 224 28 (82)

159 136

Balance as of March 31, 2019

15,855

(916) 3 3,383

(54) 4 287

(504) 1 943

159

22,741 858 136 (653) (136) (2,327) 8 20,627

30,308 (13,163) 17,145

26,753 (22,913) 3,840

4,072 (3,751) 321

9,593 (8,317) 1,276

159 0 159

70,885 (48,144) 22,741

29,236 (13,381) 15,855

26,686 (23,303) 3,383

4,104 (3,817) 287

9,453 (8,510) 943

159 0 159

69,638 (49,011) 20,627

(63) (15)

(866)

Carrying amounts As of April 1, 2017 attributable to: Cost Accumulated amortization

As of March 31, 2018 attributable to: Cost Accumulated amortization

(443)

(136) (853)

Carrying amounts As of April 1, 2018 attributable to: Cost Accumulated amortization

As of March 31, 2019 attributable to: Cost Accumulated amortization

147


The investments of the period are related to: -

“Plant and Machinery” to the acquisiton of specific machinery (Euro 355 thousand) and to the revamping of a work center (Euro 22 thousand) in Vittorio Veneto factory, the replacement of the REI doors in the same factory in compliance with the new fire protection law (Euro 52 thousand), to the acquiaition of specific machinery for Test & Lab (Euro 26 thousand), to the acquition of two charging stations for electric vehicles (Euro 14 thousand), and to the acquition of some minor machinery for the factory in Vittorio Veneto (Euro 7 thousand).

-

“Other assets” to the acquisition of various furniture and furnishings (Euro 25 thousand), other then various office equipments (Euro 199 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 136 thousand is due to the adaptation to the fire prevention requirements in the Vittorio Veneto site (Euro 31 thousand), to the installation of devices for protection against surges and lightning at the same site (Euro 35 thousand), to the revamping of the aircraft engine used in the Test & Lab (Euro 48 thousand), to the electrical system adjustment in San Vendemiano site (Euro 15 thousand), and to minor work in progress for Euro 7 thousand. Other information As of March 31, 2019, the Company does not 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

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 Marine Project Solutions Scarl

March 31, 2019

Germany Spain France USA UK Ireland Singapore Holland Turkey Italy Brazil Croatia Colombia Italy

Carrying amounts

March 31, 2018

March 31, 2019

March 31, 2018

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% 100.00%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% 100.00%

10,444 2,560 6,462 120,253 16,104 (50) 4,874 25,533

151,544 2,560 6,462 33,884 6,154 (50) 31,874 53,133

100.00%

100.00%

(1,509)

(1,509)

0%

99.00%

0

50

99.00%

99.00%

18

18

98.55% 100.00% 55.50%

98.55% 100.00% 55.50%

76 31 277 185,073

76 31 277 284,504

Please refer to the Consolidated Financial Statements Appendix for the complete list of subsidiaries either directly or indirectly controlled by the Company.

The following table shows the movements recorded during the year: 148


€ thousands

Carrying amounts at the beginning of the year Increases / acquisitions Decreases / liquidations Devaluation Revaluation Balance as of March 2019

March 31, 2019

March 31, 2018

284,504 242,898 (629) (341,700) 0 185,073

282,686 5,567 0 (3,749) 0 284,504

During the reporting period the value of the equity investments changed as a consequence of some subsidiaries recapitalisations carried out by the Company, and following the devaluations recognized on March 31, 2019 based on the impairment tests, as below described. Moreover, it should be noted that the value of the equity investment in Permasteelisa Participations S.r.l. is now equal to zero following the liquidation of the subsidiary, a process started and completed during the year. Summary financial information on subsidiaries: € thousands

March 31, 2019 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 DoBrasil,Industria,Comercio Ltda RI.ISA d.o.o. Permasteelisa Colombia Marine Project Solutions Scarl

€ thousands

March 31, 2018 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 Marine Project Solutions Scarl

Assets

Liabilities

Net Equity

Revenues

Profit/ (loss)

275,446 7,555 32,442 348,615 142,704 7,934 126,638 80,036 (685) 285 802 3,683 8,703 1,034,158

203,686 4,725 27,386 278,994 138,370 5,935 136,699 75,627 1,085 464 69 3,206 7,997 884,243

71,760 2,830 5,056 69,621 4,334 1,999 (10,061) 4,409 (1,770) (179) 733 477 706 149,915

220,188 9,575 26,663 302,439 238,937 10,614 11,244 102,286 (12) (55) 1,174 12,049 13,722 948,824

(23,529) (583) 1,385 (222,196) (2,928) (100) (12,363) 2,185 (634) (41) 47 0 (167) (258,924)

Assets

Liabilities

Net Equity

Revenues

Profit/ (loss)

336,210 5,460 25,633 250,257 181,266 7,758 108,098 105,330 (237) 6,097 349 762 8,594 10,352 1,045,929

200,963 2,047 21,962 172,191 181,125 5,657 102,615 104,806 1,272 4,768 497 74 8,099 9,440 815,516

135,247 3,413 3,671 78,066 141 2,101 5,483 524 (1,509) 1,329 (148) 688 495 912 230,413

208,620 6,169 20,377 420,587 217,476 7,553 3,217 109,502 (6) 0 (107) 1,193 12,787 18,252 1,025,620

10,705 (179) 869 (3,734) (2,188) 194 (2,104) 5,086 (584) 616 (107) 58 451 375 9,458 149


The following table shows the comparison of the net equity held with respect to the carrying amount of the investments held: € thousands

31 marzo 2019 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 DoBrasil,Industria,ComercioLtda RI.ISA d.o.o. Permasteelisa Colombia Marine Project Solutions Scarl

Net Equity

% ownership

Pro rata equity

Equity investment

Differential

71,760 2,830 5,056 69,621 4,334 1,999 (10,061) 4,409 (1,770) (179) 733 477 706 149,915

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.25% 100.00% 100.00% 100.00% 98.55% 100.00% 55.50%

71,760 2,830 5,056 69,621 4,334 1,999 (5,458) 4,409 (1,770) (179) 722 477 392 154,193

10,444 2,560 6,462 120,253 16,104 (50) 4,874 25,533 (1,509) 18 76 31 278 185,074

61,316 270 (1,406) (50,633) (11,769) 2,049 (10,332) (21,124) (261) (197) 646 446 114 (30,881)

As a consequence of the negative results achieved during the year, impairment indicators were observed for the following equity investments. Impairment testing was therefore carried out to assess the recoverability of the values on the basis of forecast data on the performance of the subsidiaries: - Permasteelisa UK Ltd - Josef Gartner GmbH - Scheldebouw B.V. - Permasteelisa North America Corp. - Permasteelisa Pacific Holdings Ltd In particular, in the preparation of the impairment test, the recoverable amount compared with the book value of the investment was determined as the present value of expected cash flows (adopting the “Discounted Cash Flow method”), derived from economic and financial projections made with reference to the individual subsidiaries, consistently with the 2020-2024 Business Plan and taking into account only those actions for which the requirements of IAS 36.44 are met at the closing date. The growth rate used to determine cash flows beyond the explicit forecast period was 1%, in line with the inflation expected in the markets on which these subsidiaries operate. The discount rate of the cash flows thus determined coincides with the weighted average cost of the capital (the “Post-tax WACC”) which varies depending on the reference markets, from 9.74% to 11.10%. With regard to the subsidiary Permasteelisa UK Ltd, which recorded a negative result of Euro 2,928 thousand in the financial year and at 31 March had a difference between the book value and the pro-quota share of equity of Euro 11,769 thousand, the impairment test did not required adjustments to the value of the investment. It is therefore considered that this differential is not indicative of a impairment loss and can reasonably be recovered in the future. The German company Josef Gartner GmbH achieved a negative result of Euro 23,529 thousand in the financial year and, as a result of the impairment test carried out, the equity investment was written down by Euro 141,100 thousand. This writedown led to the book value at 31 March 2019 being lower by Euro 61,316 thousand than the pro-quota share of equity at the same date. With regard to the Dutch-based subsidiary Scheldebouw B.V., the latter made a profit of Euro 2,185 thousand in the period, although the impairment test carried out resulted in a write-down of Euro 30,600 thousand that reduced the difference between the book value and the pro-quota share of equity at 31 March to Euro 21,124 thousand. The US subsidiary recorded a very significant loss in the period (Euro 222,196 thousand) which required the Company to carry out recapitalisation actions during the year. The impairment test showed the need to make adjustments to the value of the investment for Euro 143,000 thousand that, at 31 March 2019, reduced the difference between the book value and 150


the pro-quota share of the equity to Euro 50,633 thousand. Based on the projections made and taking into account the planned policy actions, it is considered that this residual difference can be reasonably expected to be recovered in the midterm. The subsidiary Permasteelisa Pacific Holdings Ltd, which operates in the Far East, recorded a loss of Euro 12,363 thousand in the year and, following the impairment test, the investment was written down by Euro 27,000 thousand. Therefore, at 31 March 2019 the difference between the book value and the pro-quota share of equity was reduced and was negative by Euro 10,332 thousand. It is hereby specified that the estimates used are based on internal evaluations relating to future events which may not occur or may occur with quantitative results and timeframes other than the forecasts, with possible differences, even significant, on the forecast data considered. This therefore lead to value adjustments on the assets, not quantifiable and not predictable as of today. The recovery of the book values therefore depends on the actual achievement of the objectives. It is emphasised that the forecasts prepared are based on hypothetical assumptions regarding the future performance of the subsidiaries, such assumptions being characterised by material uncertainty, both due to their nature and to the specific aspects of the sector in which the companies operate. The elements of discontinuity of are ingrained in the challenges the Group has to meet for it to possibly return to positive profitability.

18. Other equity investments The balance as of March 31, 2019 includes for Euro 366 thousand (March 2018: Euro 366 thousand) the Parent company’s equity investment in Consorzio Interaziendale Prealpi.

19. Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to: Assets (-)

â‚Ź thousands

Tangible assets Intangible assets Inventories Financial liabilities Provision for risks and charges Hedging Other items IFRS15 Tax value of loss carry-forwards Tax (assets) / liabilities

Liabilities (+)

2019

2018

2019

2018

(79) 0 (640) (906) (229) (36) (513) (1,217) (3,055) (6,675)

(79) (1) (1,167) (2,265) (778) 0 (1,305) 0 (7,637) (13,232)

58 0 0 0 0 0 0 0 0 58

58 782 0 0 0 53 4,903 0 0 5,796

The reduction in deferred tax assets compared to the previous year derives both from the dynamics of the temporary differences on which these assets were recorded and from a prudent assessment of the conditions for the use of these deferred tax assets through future taxable income. For the same reason, the component relating to the benefit on the potential carrying forward of realised tax losses was reduced and no deferred tax assets were recorded on period losses. On the contrary, deferred taxes have recorded in relation to the adjustments made following the first-time adoption of IFRS 15 and, in particular, for the share of adjustments that is reasonably estimated to be reflected in the income statements of future years, once the conditions for recognition have been met. Movement in deferred tax assets and liabilities during the year Balance April 1, 2017

Taxes Taxes recognised recognised in in equity income statement

Other movements

Balance March 31, 2018

â‚Ź thousands

Tangible assets Intangible assets

(21) 849

(68)

(21) 781 151


Inventories Financial liabilities Provision for risks and charges Hedging Other items Tax value of loss carry-forwards

(194)

(973) (2,265) (993) (140) 4,543 (7,637) (6,637) Balance April 1, 2018

215 (931)

193 (14)

(978)

179

0

Taxes Taxes recognised recognised in in equity income statement

Other movements

(1,167) (2,265) (778) 53 3,598 (7,637) (7,436) Balance March 31, 2019

€ thousands

Tangible assets Intangible assets Inventories Financial liabilities Provision for risks and charges Hedging Other items IFRS15 Tax value of loss carry-forwards

(21) 781 (1,166) (2,265) (778) 53 3,598 0 (7,637) (7,436)

(781) 951 1,359 124 (4,090) 4,582 2,146

(425) 425 (89) (21) (1,217) (1,327)

0

(21) 0 (640) (906) (229) (36) (513) (1,217) (3,055) (6,617)

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, 2019

March 31, 2018

28,206 453 947 29,606

53,853 541 1,307 55,701

Assets for contracts work-in-progress, for Euro 28,206 thousand, are indicated in the balance sheet assets net of the adjustment funds for Euro 2,467 thousand. Liabilities for contracts work-in-progress and advances from customers € thousands

Liabilities for contracts work-in-progress Advances from customers Loss on construction contract Fund

March 31, 2019

March 31, 2018

4,142 24,017 434 28,593

1,243 26,145 0 27,388

March 31, 2019

March 31, 2018

540,634 31,307 (548,311) 23,630

671,701 16,068 (635,159) 52,610

Contract work-in-progress € thousands

Costs incurred on uncompleted contracts Estimated earnings to date on uncompleted contracts Less billings to date on uncompleted contracts

152


Assets for contracts work-in-progress Liabilities for contracts work-in-progress Loss on construction contract Fund

28,206 (4,142) (434) 23,630

53,853 (1,243) 0 52,610

Following the first application of the new accounting standard IFRS15, as a result of which, adjustments were made to the item in question which resulted in a reduction of Euro 4,362 thousand. The reduction has been recorded with effect on the initial balance as at April 1, 2018, in consideration of the fact that the Company decided to use the modified retrospective method, as illustred in the introductory paragraph of this note.

21. Trade receivables from third parties € thousands

Trade receivables from third parties Bad debts provision

March 31, 2019

March 31, 2018

21,355 (11,572) 9,783

28,247 (8,614) 19,633

As of March 31, 2019 trade receivables include guarantee retentions for Euro 6,756 thousand (March 2018: Euro 6,889 thousand) related to contracts work-in-progress. With reference to trade receivables in foreign currency from third parties, the following table summarizes the outstanding balance accounts at year-end (in Euro units):

March 31, 2019

Currency CHF EUR GBP JPY QAR USD

Receivable in foreign Counter-value in Euro currency at the end of the period 22,223 19,876 67,423 67,423 2,186 2,548 (300,000) (2,411) 131,635 32,188 5,090,759 4,531,161

March 31, 2018

Currency CHF EUR GBP JPY QAR USD

Receivable in foreign currency 22,223 0 4,220 (300,000) 131,635 5,223,114

Counter-value in Euro at the end of the period 18,867 0 4,824 (2,287) 29,351 4,239,197

The following table shows the changes of the provision for bad debts during the year: € thousands

March 31, 2019

March 31, 2018

Balance at the beginning of the accounting year Utilizations Provisions Reclassifications Exchange rate adjustment

8,614 (5,783) 11,570 (2,850) 21

6,497 (77) 2,194 0 0

Balance at the year-end

11,572

8,614

The item “Reclassification” refers to the write-down of the credit related to the reimbursement for damages due from a supplier. This receivable, net of the related provision, is included in the item "Other receivables" shown in note 24.

153


22. Amounts receivables from subsidiaries € thousands

Trade receivables – current Permasteelisa UK Ltd. Permasteelisa Gartner Saudi Arabia Llc. Permasteelisa North America Corp. Permasteelisa France S.a.s. Global Architectural Co. Ltd. Permasteelisa Pacific Holdings Ltd. Josef Gartner Curtain Wall (Shanghai) Ltd. OOO Josef Gartner Permasteelisa Colombia Sas Permasteelisa Gartner Middle East Llc Permasteelisa Gartner Qatar Llc Permasteelisa Ireland Ltd. Dongguan Permasteelisa Curtain Wall Josef Gartner Curtain Wall (Suzhou) Ltd. Permasteelisa (India) Private Limited Permasteelisa Hong Kong Limited Permasteelisa Philippines Inc. (2009: Blue Tech Philippines Inc.) Permasteelisa Mongolia Llc Permasteelisa Project (Thailand) Ltd Permasteelisa Monaco - Branch Pisa France Marine Project Solutions Scarl Josef Gartner Taiwan (Josef Gartner & Co. (HK) Ltd. branch) Global Wall Malaysia Sdn. Bhd. Scheldebouw B.V. Marine Project Solutions (Norvegian Branch) Josef Gartner GmbH Permasteelisa PTY Ltd Permasteelisa Japan K.K. Permasteelisa Macau Limited Bleu Tech Montreal Inc. Permasteelisa España S.A. Marine Project Solutions (France Branch) Permasteelisa Turkey Josef Gartner (Macau) Ltd. RI.ISA D.o.o. Permasteelisa Participations S.r.l. Commercial exchange rate adjustment

Financial receivables – Current Permasteelisa Gartner Middle East Llc Permasteelisa Pacific Holdings Ltd. Permasteelisa Gartner Qatar Llc Permasteelisa UK Ltd. Permasteelisa Turkey Permasteelisa Espana S.A. Permasteelisa Gartner Saudi Llc

March 31, 2019

March 31, 2018

10,086 8,990 7,835 5,513 4,354 3,954 2,226 1,992 1,898 1,381 1,241 1,183 1,115 953 880 806 798 789 655 650 471 455 401 246 137 133 64 25 17 13 7 7 5 1 0 0 382

17,025 3,881 8,173 2,842 4,921 1,624 4,191 1,952 4,961 918 3,621 890 1,030 824 1,627 2,391 784 771 572 1,220 132 411 307 1,952 0 210 65 35 3 0 3 0 4 1 41 6 (1,472)

59,663

65,916

103,777 87,641 45,375 12,297 1,950 1,203 0

86,443 71,897 0 25,945 1,903 270 87,507 154


0 0 0 15,789 268,032

Permasteelisa North America Corp. Scheldebouw B.V. Permasteelisa Participations S.r.l. Financial exchange rate adjustment

7,467 13,497 4,761 (3,456) 296,234

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. With reference to the financial receivables with the subsidiaries operating on the Middle Eastern Area, we recall the KAFD contract for the construction of thirteen buildings in the financial district of Riyadh, Saudi Arabia. This project was suspended since the year 2016 due to the difficulties of the main contractor in meeting its obligations. During the year, the Group’s management was able to negotiate the resumption of works with a new client, and in June 2019 the Company in Saudi Arabia has collected from this new client the first tranche of payments, equal to Euro 18 million, used to decrease the financial loan with the Group Parent Company. It should be noted that the financial receivables of the Parent Company towards Middle Eastern companies as of March 31, 2019, show a different composition compared to the previous year ended March 31, 2018. This is due to the change in the financing relationships among local companies, in particular between Permasteelisa Gartner Saudi Llc and Permasteelisa Gartner Qatar Llc. The Company offsetted the financial receivables with the American and Dutch companies following the recapitalisations occured during the year and that allowed the repayment of loans to the Parent Company. Current account positions are regulated according to market rates (three-month Euribor/Libor rate + 1% spread). Average rates on the intercompany current accounts in this year have been as follows:

Current account currency EURO

March 2019 Rate 1%

Current account currency

March 2018 Rate

EURO

0.17%

USD

3.5%

USD

1.98%

GBP

1.8%

GBP

0.91%

AUD

2.98%

AUD

2.25%

JPY

0.47%

JPY

1%

SGD

2.7%

SGD

1.64%

THB

2.67%

THB

2.08%

HKD

2.9%

HKD

1.45%

CAD

3.01%

CAD

1.83%

HRK

1.25%

HRK

0.83%

DKK

1%

DKK

0.22%

CHF

1%

CHF

-0.23%

RUB

9%

RUB

9.15%

QAR

3.75%

QAR

2.91%

AED

3.66%

AED

2.15%

With reference to trade receivables in foreign currency from subsidiaries, the following table summarizes the outstanding balance accounts at year-end (in Euro units):

Currency AUD CAD

March 31, 2019 Receivable in Counter-value in Euro at foreign currency the end of the period 64,322 101,764 13,192 19,788

Currency AUD CAD

March 31, 2018 Receivable in Counter-value in Euro at foreign currency the end of the period 103,542 64,569 0 0 155


CHF CNY GBP HKD HRK JPY SGD USD THB NOK

269 43,156 3,156,533 196,613 0 87,549 2,938,023 20,674,174 0 7,732

301 325,388 2,709,252 1,734,028 0 10,895,509 4,469,908 23,227,435 0 74,686

CHF CNY GBP HKD HRK JPY SGD USD THB NOK

0 325,388 4,027,894 4,196,427 306,147 5,571,557 2,088,514 20,719,278 25,085,351 0

0 42,003 4,603,833 433,981 41,191 42,482 1,292,557 538,471 20,359,834 0

With reference to financial receivables in foreign currency from subsidiaries, the following table summarizes the outstanding balance accounts at year-end (in Euro units):

March 31, 2019

Currency GBP HKD JPY SGD USD

Receivable in foreign currency 11,259,635 26,679,962 563,623,064 100,803,925 37,906,555

Counter-value in Euro at the end of the period 13,256,635 3,025,110 4,528,912 66,257,345 33,739,702

March 31, 2018

Currency GBP HKD JPY SGD USD

Receivable in foreign currency 22,984,270 0 566,365,891 83,438,616 187,235,468

Counter-value in Euro at the end of the period 26,270,739 0 4,318,459 51,639,198 151,964,506

23. Income tax receivables € thousands

Tax income receivables

March 31, 2019

March 31, 2018

6,542 6,542

5,344 5,344

It should be noted that the item mainly consists of IRES/IRAP and withholding tax receivables. It also includes the amount of Euro 1.6 million related to the refund claim of the taxes on dividends referring to fiscal year 2014 and to the request for reimbursement following the settlement of conciliation proposal concerning the assessment of withholding tax on dividends distributed in 2011 to the parent company Cima Claddings S.A. 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, 2019

March 31, 2018

3,355 5,457 5,262 14,074

3,263 14,325 4,351 21,939

March 31, 2019

March 31, 2018

2,066 3,391 5,457

7,971 6,354 14,326

The caption “Other receivables” includes:

Assets for the fair value assessment of derivatives instruments Other receivables

156


Assets for the fair value assessment of derivatives instruments are referred to foreign currency transactions for Euro 2,066 thousand (2018: Euro 7,971 thousand). The caption “Other receivables” as of March 31, 2019, includes Euro 2.8 million (March 2018: Euro 5.7 million) related to repayments owed from a supplier for damages. The Company, supported by the opinion of its legal consultants, continues to take action to receive this sum. Compared to the previous year, the exposure is reduced due to a provision for Euro 2.9 million that the Company prudentially recognized in the period.

25. Cash and cash equivalents € thousands

March 31, 2019

March 31, 2018

29,456 5 29,461

3,380 8 3,388

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, 2019

Currency CAD CHF CNY GBP HKD SGD EUR USD

Receivable in foreign currency 36,585 12,500 0 49,000 92,095 29,514 10,918 90,324

Counter-value in Euro at the end of the period 24,390 11,180 0 57,090 10,442 19,399 10,918 80,395

March 31, 2018

Currency CAD CHF CNY GBP HKD SGD EUR USD

Receivable in foreign currency 0 12,616 1,167 427,505 52,430 35,089 50,065 2,594,669

Counter-value in Euro at the end of the period 0 10,711 151 488,633 5,422 21,716 50,065 2,105,892

26. Non-current assets held for sale As of March 31, 2019, there are not “Non-current assets held for sale”.

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, 2019, 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 Directors on June 4th, 2019 which approved the Statutory Financial Statements and the Consolidated Financial Statements as of March 31, 2019. 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 157


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 Amount before tax Tax

Amount after tax

Reserve as of April 1, 2017 Increase/(decrease) Release to income statement

(584) 462 342

140 (111) (82)

(444) 351 260

Reserve as of March 31, 2018

220

(53)

167

Foreign exchange risk hedging reserve Amount before tax Tax Reserve as of April 1, 2018 Increase/(decrease) Release to income statement Reserve as of March 31, 2019

220 (176) (187) (143)

(53) 42 45 34

Amount after tax 167 (134) (142) (109)

Foreign exchange risk commodities reserve Amount before Amount after tax Tax tax Reserve as of April 1, 2018 Increase/(decrease) Release to income statement Reserve as of March 31, 2019

0

0

0

(8) 0 (8)

2 0 2

(6) 0 (6)

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, 2019 the reserve amounts to 163,789 thousand (March 2018: 163,789 thousand), the same compared to the previous year.

-

the item "IAS 19 Reserve" which had, as of March 31, 2018, a negative balance of Euro 446 thousand, was increased to a balance of Euro 514 thousand as of March 31, 2019, following the actuarial valuation of the period.

-

The item “Capital injection” includes the capital injections received from the Shareholder for a total amount of Euro 472 million. In the reporting period, considering the negative results archived by the Group, the Shareholder LIXIL intervened financially for total Euro 472 million. This recapitalization allowed the capital reinforcement and the improvement of the financial position of the Company and the Group as a consequence of the full repayment 158


of all the loans towards banks and the same Shareholder as described in the note “Amounts payable to banks and other financial creditors”. Retained earnings The item includes the effect of the first application, in the current year, of the new accounting standard “IFRS 15 – Revenue from Contracts with Customers” starting form April 1, 2018 (for more details please refer to the letter “z” in the section “new accounting standard”). The Company has applied this principle according to the retrospective method, therefore the cumulative effect at the date of the initial application (modified retrospective approach) has been accounted as an adjustment of the opening balance of the retained earnings. The result was a negative adjustment of Euro 3,145 thousand, mainly attributable to costs for obtain contracts capitalized up to March 2018 and revenues from contractual changes recognized up to March 2018, that, because of the new and more stringent provisions included in the new accounting standard, must be deffered over time. 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.

2018 Amount Possibility of use (*) Share capital

6,900,000

Legal reserve

1,380,000

B

Share premium

0

A,B,C

Revaluation reserve

0

A,B

Extraordinary reserve

0

A,B,C

Merger surplus reserve Other merger reserve Retained earnings IAS conversion reserve - severance IAS 19 reserve Capital injection Other reserves

Available amount 2019

Not-available amount 2019

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

A,B,C

163,786,313

A,B,C

163,786,313

3,815

(5,215,570)

A,B,C

(5,215,570)

9,288,094

311,948

-

311,948

(513,716)

-

(513,716)

472,000,000

A,B,C

472,000,000

0

Other IAS conversion reserves IAS conversion reserve - land

0

IAS conversion reserve - goodwill

(16,545)

(16,545)

IAS conversion reserve - web costs

(86,251)

(86,251)

IAS conversion reserve - IAS 39

0

Total other IAS conversion reserve items

(102,796)

A,B,C

Foreign exchange risk hedging reserve Commodities Risk hedging reserve

(108,334)

-

(108,334)

(6,304)

-

(6,304)

0

-

2,059,869

-

Risk hedging reserve on interest Translation reserve Total reserves

633,595,225

(102,796)

2,059,869 630,467,947

Not-distributable amount Distributable remaining amount

3,127,278

9,288,094

645,903 629,822,044

(*) A: for share capital increase; B: for hedging losses; C: for distribution to the partners.

159


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.

28. Amounts payable to banks and other financial creditors € thousands

March 31, 2019

March 31, 2018

0 0

158,480 158,480

0 7 7

65,181 122,380 187,561

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

It should be noted that the financial exposure of the company as of March 31, 2019 is positive and it amounts to Euro 37 million (March 2018: negative for Euro 220 million), thanks to the capital injection received in the reporting period from the Shareholder Lixil for totally Euro 472 million. This contribution has permitted to the company the reimbursement of all its outstanding financial payables to the banks ant to the Shareholedr too. As of March 31, 2019, there are no loans in use, but only a residual net amount of current account overdrafts for Euro 7 thousand. During the reporting year both the medium-long term Shareholder’s loans and the short-term bank loans were repaid.

Net financial position To complete the information reported in these notes, the Company financial position as of March 31, 2019 is below reported.

€ thousands

Cash and cash equivalents Financial receivables from subsidiaries Financial payables to subsidiaries Amounts payables to bank Shareholder’s loan Net financial position - short term

March 31, 2019

March 31, 2018

29,461 268,032 (260,049) (7) 0 37,437

3,388 296,234 (173,468) (122,380) (65,181) (61,407) 160


Shareholder’s loan Net financial position - medium/long term Total net financial position

0 0

(158,480) (158,480)

37,437

(219,887)

The net financial position of the Company as of March 31, 2019, is positive for Euro 37 million including an amount of “cash & bank deposits” for Euro 29 million. The average rates recorded by the Company during the period are as follows: a. current account deposits and bank deposits: 0.73% (March 2018 0.28%); b. short-term loans: 1.25% (March 2018: 0.93%); c. mortgages and medium- long term loans: not detected as there were no such financing during the current year (same of March 2018); d. shareholder’s loan: spread applied equal to 0.96% (March 2018: 0.95%); e. liabilities on financial leasing: not detected as there are not financial leases; f. on intercompany current accounts: 3.16% (March 2018: 0.82%) g. on the liabilities of intercompany accounts: 1.64% (March 2019: 0.53%) The actual average rate over overall indebtedness stood at 1.30% (March 2018: 0.98%).

29. Severance indemnity fund In accordance with Italian 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, 2019

March 31, 2018

3,225 0 3,225

3,380 0 3,380

March 31, 2019

March 31, 2018

3,380 0 (300) 0 56 89 3,225

3,452 0 (172) 0 55 45 3,380

Movements of the severance indemnity fund € thousands

Net recognised liability as of April 1 Other movements Payments Movements Actuarial (gains)/losses Expenses recognised in the income statement Net recognised liability as of March 31 Expenses recognised in the income statement

161


â‚Ź thousands

March 31, 2019

March 31, 2018

56 56

45 45

March 31, 2019

March 31, 2018

1.12% 1.50% 2.63%

1.37% 1.50% 2.63%

Interest on obligation

Principal economic actuarial assumption::

Actuarial rate as of March 31 Inflation rate Future TFR increase rate Principal demographic actuarial assumption: Probability of death

Mortality table RG48 published by the State General Accounting Tables

Probability of invalidity

INPS Tables split into age and gender 100% upon achieving AGO requirements

Probability of retirement

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, 2019

March 31, 2018

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

3,312 3,206

3,428 3,305

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

3,175 3,348

3,269 3,468

The average financial duration of the obligation amounts to 11 years.

30. Provisions for risks and charges â‚Ź thousands

Balance as of April 1, 2017 Provisions made during the year Provisions used during the year Provisions reversed during the year Movements during the period Balance as of March 31, 2018

Provision for losses in a subsidiary

Warranty provision

Provision for risks on ongoing jobs

Other provisions

Total

0

64 282

2,525 300 (500)

1,216 150

3,805 732 (500) (1,000) (2,025) 1,012

(1,000) 0

346

(2,025) 300

366

162


â‚Ź thousands

Provision for losses in a subsidiary

Warranty provision

Provision for risks on ongoing jobs

Other provisions

Total

0

346 349 (345)

300 700

366 400

1,012 1,449 (345) (100) 21 2,037

Balance as of April 1, 2018 Provisions made during the year Provisions used during the year Provisions reversed during the year Foreign exchange translation effect Balance as of March 31, 2019

(100) 0

21 1,021

350

666

The warranty provision is recorded in the Financial Statement based on an analysis of the historical trend of the warranty costs incurred in previous years and it is determined for all the projects subject to a specific guarantee period. The provision for risks on ongoing jobs recognized in the reporting period represents the best risk estimation deriving from the completion of some projects in Azerbaijan. The other provisions refer to provisions made based on probable risks on ongoing legal cases.

31. Trade payables to third parties â‚Ź thousands

March 31, 2019

March 31, 2018

25,234 25,234

40,322 40,322

Trade payables to third parties

As of March 31, 2019, trade payables include invoices to be received for Euro 6,567 thousand (March 2018: Euro 8,182 thousand) and retentions for Euro 845 thousand (March 2018: Euro 868 thousand). With reference to trade payables in foreign currency to third parties, the following table summarizes the outstanding balance accounts at year-end (in Euro): March 31, 2019

Currency AUD CAD CHF GBP HKD JPY PLN SGD RUB USD EUR

Payable in foreign currency 3,855 2,006 37,692 61,587 122 22,048,951 139 29 764 286,625 135,520

March 31, 2018

Counter-value in Euro at the end of the period 2,436 1,337 33,710 71,755 14 177,171 32 19 10 255,118 135,520

Currency AUD CAD CHF GBP HKD JPY PLN SGD RUB USD EUR

Payable in foreign currency 3,855 2,006 38,265 25,372 119 10,627,384 0 24 687 491,610 18,666

Counter-value in Euro at the end of the period 2,404 1,262 32,486 29,000 12 81,032 0 15 10 399,001 18,666

163


32. Trade payables to subsidiaries â‚Ź thousands

Trade payables Permasteelisa Gartner Qatar Llc Permasteelisa Hong Kong Limited RI.ISA D.o.o. Scheldebouw B.V. Permasteelisa Pacific Holdings Ltd. Permasteelisa North America Corp. Josef Gartner GmbH Permasteelisa Gartner Saudi Llc Permasteelisa UK Ltd. Permasteelisa Gartner Middle East Llc Global Architectural Co. Ltd. Josef Gartner Curtain Wall (Shanghai) Co. Ltd. Permasteelisa France S.a.s. Permasteelisa PTY Limited OOO Josef Gartner Josef Gartner Switzerland AG Permasteelisa Ireland Ltd. Josef Gartner Curtain Wall (Suzhou) Co. Ltd. Permasteelisa EspaĂąa S.A. Bleu Tech Montreal Inc. Marine Project Solutions Permasteelisa Colombia Sas Permasteelisa Turkey Commercial exchange rate adjustment Financial payables Permasteelisa North America Corp. Josef Gartner GmbH Permasteelisa France S.a.s. Permasteelisa Pacific Holdings Ltd. Permasteelisa Gartner Saudi Llc Scheldebouw B.V. Permasteelisa Ireland Ltd. Permasteelisa Gartner Qatar Llc Financial exchange rate adjustment

March 31, 2019

March 31, 2018

1,740 1,128 637 493 419 418 387 286 253 241 203 59 48 48 40 28 19 4 2 1 1 1 0 8,072

126 1,106 596 1,017 170 90 100 236 1,981 249 98 55 23 53 23 23 11 4 2 32 2 0 4 10,447

14,528

16,448

136,246 77,136 20,281 11,824 9,042 3,334 2,186 0 0

0 115,608 12,669 8,460 0 0 2,547 42,435 (8,251)

260,049

173,468

As far as financial payables are concerned, the same applies as for financial receivables as per item 22. With reference to trade payables in foreign currency to subsidiaries, the following table summarizes the outstanding balance accounts at year end (in Euro):

March 31, 2019

Currency AUD CAD CHF

Payable in foreign currency

Counter-value in Euro at the end of the period

550,106 933 31,199

347,706 622 27,904

Currency AUD CAD CHF

March 31, 2018 Payable in foreign Counter-value in Euro at the currency end of the period 217,896 47,024 26,380

135,879 29,584 22,396 164


373,294 209,845 1,247,432 0 233,665 27,767 13,553 0 4,673,294 6,528,098

CNY GBP HKD JPY QAR SAR SGD EUR USD THB

49,510 244,489 141,440 0 57,138 6,590 8,908 0 4,159,858 183,209

CNY GBP HKD JPY QAR SAR SGA EUR USD THB

340,668 157,364 1,137,609 12,536 233,165 0 0 6,177 2,726,284 3,215,893

43,975 179,865 117,648 96 51,990 0 0 6,177 2,212,713 83,577

With reference to financial payables in foreign currency to subsidiaries, the following table summarizes the outstanding balance accounts at year-end (in Euro):

Curren cy

March 31, 2019 Payable in foreign Counter-value in Euro at the currency end of the period

Curren cy

March 31, 2018 Payable in foreign Counter-value in Euro at the currency end of the period

AUD HKD

18,357,877 0

AUD HKD

7,624,297 31,734,058

11,603,487 0

4,754,488 3,281,838

With reference to financial payables in foreign currency to third parties, the following table summarizes the outstanding balance accounts as at March 31, 2019 (in Euro):

Curren cy

March 31, 2019 Payable in foreign Counter-value in Euro at the currency end of the period

RUB USD

12,437 0

171 0

Curren cy

March 31, 2018 Payable in foreign Counter-value in Euro at the currency end of the period

RUB USD

2,788 11,115,000

39 9,021,183

33. Current tax liability At March 31, 2018 the Company has no tax liabilities. 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, 2019

March 31, 2018

1,459 3,223 8,750 12,105 416 25,953

1,399 3,101 9,132 1,934 83 15,649

March 31, 2019

March 31, 2018

11,642

1,805

Other liabilities € thousands

Forward liabilities

165


463 12,105

Other liabilities

129 1,934

Forward liabilities are referred for Euro 11,642 thousand to foreign currency transactions (March 2018: Euro 1,805 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. 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 allows to subsequently monitoring 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 March 31, 2019

Bad debts provision March 31, 2019

Net Receivables March 31, 2019

Gross Receivables March 31, 2018

Bad debts provision March 31, 2018

Net Receivables March 31, 2018

8,572 556 108 11,322 20,558

(2,500) 0 0 (9,073) (11,573)

6,072 556 108 2,249 8,985 797 9,782

1,377 2,708 1,725 11,150 26,960

(2,524) 0 0 (6,090) (8,614)

8,853 2,708 1,725 5,060 18,346 1,287 19,633

As of March 31, 2019 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 62% of the total (March 2018: 45%) and the credit due for over one year amounted to 23% (March 2018: 26%). Interest rate risk The Company’s exposure to changes in interest rates relates primarily to interest-earning assets and interest-earning 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. 166


Sensitivity analysis Considering that the Company does not have outstanding loans at the closing date, the analysis shown below refers to the fluctuation of the interest rates to which the Company was exposed during the year. 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 rates of foreign currencies, remain stable. Considering that the reference interest rates (mainly Euribor 3 months) both during the fiscal year 2019 and the fiscal year 2018 were negative, and considering the variable interest rate loans negotiated by the Group are floored at zero, a reduction of 100 basis point on reference rates currently does not entil any positive effect on the result of the period and on the net equity. On the same basis has been done also the analysis of previous year. â‚Ź thousands

Result for the period +100 bp

Marzch 31, 2019 Variable rate loans

â‚Ź thousands

- 100 bp

+100 bp

- 100 bp

(3,380)

40

(3,380)

40

(3,380)

40

(3,380)

40

Result for the period +100 bp

March 31, 2018 Variable rate loans

Net equity

Net equity

- 100 bp

+100 bp

- 100 bp

(4,226)

171

(4,226)

171

(4,226)

171

(4,226)

171

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 instruments and financial liabilities associated to derivative instruments. Exposure to the liquidity risk associated to financial liabilities other than derivative instruments March 31, 2019

â‚Ź thousands

Financial liabilities other than derivatives Trade payables Trade payables to subsidiaries Amounts payable to banks Financial payables to subsidiaries Financial payables to shareholder 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

25,234 14,528 7 260,049 0 299,818

25,234 14,528 7 260,049 0 299,818

25,234 14,528 7 260,049 0 299,818

0 0 0 0 0 0

0 0 0 0 0 0

167


March 31, 2018

€ thousands

Financial liabilities other than derivatives Trade payables Trade payables to subsidiaries Amounts payable to banks Financial payables to subsidiaries Financial payables to shareholder 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

40,322 16,448 122,381 173,468 223,661 576,280

40,322 16,448 122,381 173,468 223,661 576,280

40,322 16,448 122,381 173,468 65,181 417,800

0 0 0 0 158,480 158,480

0 0 0 0 0 0

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments

€ thousands

March 31, 2019 Contractual Contractual Cash Flows Cash Flows less than 1 between 1 year and 5 years

Carrying value

Contractual Cash Flows

Contractual Cash Flows exceeding 5 years

(2,066)

(2,066)

(2,066)

0

0

11,624

(357,348) 355,282 11,624

(357,348) 355,282 11,624

0

0

0

(352,789) 364,413 0

(352,789) 364,413 0

0

0

18

0 0 18

0 0 18

0

0

(2,569) 2,587

(2,569) 2,587

9,576

9,576

9,576

0

0

Carrying value

Contractual Cash Flows

March 31, 2018 Contractual Contractual Cash Flows Cash Flows less than 1 between 1 year and 5 years

Contractual Cash Flows exceeding 5 years

(7,971)

(7,971)

(7,971)

0

0

1,805

(351,074) 343,103 1,805

(351,074) 343,103 1,805

0

0

(6,166)

(143,926) 145,731 (6,166)

(143,926) 145,731 (6,166)

0

0

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 on commodities contracts on currencies - in flows - out flows Liabilities from fair-value valuation on commodities 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

168


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 that, on the contrary, are subject to the settlement of the difference between the two outflows. Also, note that to assess correctly 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 29,460 thousand and Euro 3,388 thousand respectively as of March 31, 2019 and as of March 31, 2018; b) trade receivables from third parties for Euro 9,783 thousand and Euro 19,633 thousand respectively as of March 31, 2019 and as of March 31, 2018; c) trade receivables from subsidiaries for Euro 59,663 thousand and Euro 65,916 thousand respectively as of March 31, 2019 and as of March 31, 2018; d) financial receivables from subsidiaries for Euro 268,032 thousand and Euro 296,234 thousand respectively as of March 31, 2019 and as of March 31, 2018. 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 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 exchange rates by specific medium/short-term 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, 2019 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, 2019 GBP USD HKD SGD THB AUD CNY Others

€ thousands

March 31, 2018 GBP USD

Result for the period 3 1,840 4 226 (17) (28) 4 (13) 2,019

Risultato dell'esercizio 108 2,451

Net equity

3 1,840 4 226 (17) (28) 4 (13) 2,019

Patrimonio netto 108 2,451 169


HKD SGD THB AUD CNY Others

29 118 (2) (7) 4 (8) 2,693

29 118 (2) (7) 4 (8) 2,693

A 10% increase of the Euro against the following currencies as of March 31, 2019 and as of March 31, 2018 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 related foreign exchange risk, particularly on aluminium purchases, which are one of the main project 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 periods. 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, 2019: € 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 Total Assets

Notes

Level 1

Level 2

0

(2,066) 268,032 29,461 295,427

(24) (22) (25)

Level 3

Total

0

(2,066) 268,032 29,461 295,427

170


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 Total Liabilities

(34) (28)

11,642 7

11,642 7

(28)

0

0

(32)

260,049 271,698

260,049 271,698

0

0

During the year 2019, 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. 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, 2019, 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

March 31, 2019

March 31, 2018

1,669 2,536

1,782 2,637 171


after 5 years

4 4,209

18 3,466

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. Please refer to the introductory paragraph of this note for an illustration of the estimated impacts of the introduction in the next year of the new accounting standard IFRS 16 - Leases.

Forward contracts March 31, 2019

March 31, 2018

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

708,354 2,877 711,231

494,944 0 494,944

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

300,058 408,296 708,354

128,399 366,545 494,944

2,732 145 2,877

0 0 0

€ thousands

Commitments for derivative hedging contracts on commodities (buy) Commitments for derivative hedging contracts on commodities (sell)

As described in the section on the accounting standards, hedging derivative operations on currency and commodities are measured on their “fair value”. As of March 31, 2019 the measurement of the fair value of currency hedging brought to the entry of profits for Euro 2,066 thousand (March 2018: Euro 7,971 thousand) and losses for Euro 11,624 thousand (March 2018: Euro 1,805 thousand) booked respectively under the items forward assets (note 24) and forward liabilities (note 34). Note that the stated amounts of Euro 1,971 thousand (March 2018: Euro 7,362 thousand) and Euro 11,120 thousand (March 2018: Euro 1,585 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, 2019 the Company has no other significant commitments to highlight.

38. Contingent assets and liabilities The main guarantees for third parties issued by the Parent Company are listed below: 

Guarantees for works: amounting to Euro 2.7 million (Euro 8.2 million as of March 31, 2018) and issued by Credit Institutions and Insurance Companies to clients for the proper completion of works (Euro 2.6 million), contractual advances (0.1 million) referring to projects in progress.

Guarantees issued following VAT repayment requests and other guarantees to third parties issued by Credit Institutions and Insurance Companies: for the value of Euro 7.1 million (Euro 13.3 million as of March 31, 2018).

172


Counter-guarantees issued by Credit Institutions and Insurance Companies in the interests of subsidiary and/or affiliated companies for a total of Euro 637.0 million (Euro 605.7 million as of March 31, 2018) 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 that amounted to Euro 1.7 million as of March 31, 2019 (March 2018: Euro 1.1 million). With regard to the Notice of Inspection received by the Company in December 2016, relating to the alleged failure to apply withholding tax on dividends distributed in 2011 to the then parent company Cima Claddings S.A., in 2019 the Company reflected in the financial statements the effects of the conciliation proposal formalised in May 2019 as a contra-entry to the tax credits previously recorded for the instalments paid.

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

Trade receivables Financial receivables – current Other receivables Trade payables Financial payables – current Financial payables – non current Other payables

March 31, 2019 Total

Versus third parties

%

%

69,446

9,783

14%

59,663

86%

268,032

0

0%

268,032

100%

14,074

14,074

100%

0

0%

39,762

25,234

63%

14,528

37%

260,056

7

0%

260,049

100%

0

0

0%

0

0%

25,953

25,782

99%

171

1%

Total

Versus third parties

%

Related parties

%

€ thousands

Trade receivables Financial receivables – current Other receivables Trade payables Financial payables – current Financial payables – non current Other payables

Related parties

March 31, 2018

85,549

19,633

23%

65,916

77%

296,234

0

0%

296,234

100%

21,939

21,939

100%

0

100%

56,770

40,322

71%

16,448

29%

361,030

187,562

52%

173,468

48%

158,480

158,480

100%

0

0%

15,649

15,471

99%

178

1%

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 North America Corp.

March 31, 2019

35,728

March 31, 2018

35.10%

16,981

13.90%

173


Permasteelisa UK Ltd. Permasteelisa France S.a.s. Permasteelisa Ireland Ltd Permasteelisa Colombia Sas Permasteelisa Hong Kong Limited Permasteelisa Monaco - Branch Pisa France Scheldebouw B.V. Permasteelisa Gartner Qatar Llc Permasteelisa Japan K.K. J. Gartner GmbH Marine Project Solutions S.c.ar.l. Permasteelisa Gartner Saudi Llc Marine Project Solutions (Norvegian Branch) OOO Josef Gartner Permasteelisa Gartner Middle East Llc Bleu Tech Montreal Inc. Permasteelisa Espana S.A.U. Global Architectural Co. Ltd. RI.SA. D.o.o. Permasteelisa (Pacific) Holdings Ltd. Permasteelisa PTY Limited J. Gartner Curtain Wall (Shanghai) Ltd. Permasteelisa Projects (Thailand) Ltd Global Wall (Malaysia) Sdn Bhd Dongguan Permasteelisa Curtain Wall Co. Ltd. Marine Project Solutions S.c.ar.l. Permasteelisa (INDIA) Private Ltd. Permasteelisa Japan K.K. Gartner Taiwan Total

30,858 16,502 7,686 5,016 4,954 2,393 2,052 979 639 600 461 413 145 130 121 104 49 7 6 4 4 2 2 1 0 0 0 0 0 108,856

30.30%

18.70%

107.0%

22,834 7,751 5,798 12,759 5,224 9,930 2,948 1,875 0 1,026 0 236 0 800 328 240 217 13 4 5 -91 1 0 0 455 154 40 2 1 89,531

Total operating revenues

101,774

100.0%

122,327

100.0%

16.20% 7.60% 4.90% 4.90% 2.40% 2.00% 1.00% 0.60% 0.60% 0.50% 0.40% 0.10% 0.10% 0.10% 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

6.30% 4.70% 10.40% 4.30% 8.10% 2.40% 1.50% 0.00% 0.80% 0.00% 0.20% 0.00% 0.70% 0.30% 0.20% 0.20% 0.00% 0.00% 0.00% -0.10% 0.00% 0.00% 0.00% 0.40% 0.10% 0.00% 0.00% 0.00% 73.2%

Operating costs from subsidiaries â‚Ź thousands

Permasteelisa North America Corp. J. Gartner GmbH Permasteelisa Hong Kong Limited Permasteelisa Gartner Saudi Llc Permasteelisa (Pacific) Holdings Ltd. Permasteelisa Gartner Middle East Llc J. Gartner Curtain Wall (Shanghai) Ltd. Permasteelisa UK Ltd. Permasteelisa Monaco - Branch Pisa France OOO Josef Gartner Bleu Tech Montreal Inc. Permasteelisa Ireland Ltd Dongguan Permasteelisa Curtain Wall Co. Ltd. Permasteelisa France S.a.s. Permasteelisa Japan K.K. Global Architectural Co. Ltd. Permasteelisa Espana S.A.U.

March 31, 2019

(5,837) (4,883) (2,687) (1,625) (1,254) (1,226) (1,053) (1,035) (588) (468) (452) (443) (420) (415) (408) (352) (176)

March 31, 2018

4.20% 3.50% 1.90% 1.20% 0.90% 0.90% 0.80% 0.70% 0.40% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.10%

(5,670) (3,897) (3,716) (993) (1,177) (1,257) (976) (1,780) (253) (1,034) (355) (215) (189) (468) (318) (272) (122)

4.20% 2.90% 2.80% 0.70% 0.90% 0.90% 0.70% 1.30% 0.20% 0.80% 0.30% 0.20% 0.10% 0.30% 0.20% 0.20% 0.10%

174


Permasteelisa PTY Limited Global Wall (Malaysia) Sdn Bhd Permasteelisa Gartner Qatar Llc Marine Project Solutions S.c.ar.l. Permasteelisa Colombia Sas Josef Gartner Curtain Wall (Suzhou) Co. Ltd. Josef Gartner Switzerland AG Permasteelisa Projects (Thailand) Ltd Gartner Taiwan Permasteelisa (INDIA) Private Ltd. Permasteelisa Macau Limited Permasteelisa Mongolia LLC Permasteelisa Philippines Inc. Marine Project Solutions (Norvegian Branch) Marine Project Solutions (France Branch) Josef Gartner (Macau) Limited Permasteelisa Turkey Insaat Ticaret Limited Sirketi Consorzio Dyepower Scheldebouw B.V. RI.SA. D.o.o. Total Total operating costs

(160) (151) (135) (134) (133) (129) (122) (81) (44) (20) (19) (18) (14) (8) (7) 0 0 0 33 1,094 (23,370) (139,870)

-0.10%

16.7%

83 (66) (290) (43) (24) (68) 6 (100) (70) (181) (4) (36) (25) 0 0 (2) 6 310 640 1,108 (21,448)

100.0%

(134,080)

100.0%

0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.80%

0.00% 0.20% 0.00% 0.00% 0.10% 0.00% 0.10% 0.10% 0.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.20% -0.50% -0.80% 16.0%

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

March 31, 2019

March 31, 2018

J. Gartner GmbH Permasteelisa Gartner Middle East Llc Permasteelisa Gartner Saudi Llc Permasteelisa (Pacific) Holdings Ltd. Permasteelisa North America Corp. Permasteelisa UK Ltd. Permasteelisa Gartner Qatar Llc Scheldebouw B.V. Permasteelisa Partecipation SrL Permasteelisa Turkey Insaat Ticaret Limited Sirketi Permasteelisa Espana S.A.U. Total

25,000 3,434 3,036 2,360 1,300 291 80 46 23 20 11 35,601

36.80%

Total financial income Financial expenses from subsidiaries

67,852

€ thousands

Permasteelisa Gartner Qatar Llc J. Gartner GmbH Permasteelisa (Pacific) Holdings Ltd. Permasteelisa France S.a.s. Permasteelisa North America Corp.

27.80%

52.5%

25,000 1,663 329 1,361 438 201 699 25 9 3 1 29,729

100.0%

89,994

100.0%

5.10% 4.50% 3.50% 1.90% 0.40% 0.10% 0.10% 0.00% 0.00% 0.00%

March 31, 2019 1,606 1,137 241 202 55

1.80% 0.40% 1.50% 0.50% 0.20% 0.80% 0.00% 0.00% 0.00% 0.00% 33.0%

March 31, 2018

3.50% 2.40% 0.50% 0.40% 0.10%

62 180 237 17 3

0.10% 0.30% 0.30% 0.00% 0.00%

175


Permasteelisa UK Ltd. Permasteelisa Ireland Ltd Scheldebouw B.V. Permasteelisa Gartner Saudi Llc Total Total financial expenses

32 29 6 0 3,308

0.10%

0.00%

0.00% 7.1%

3 6 0 7 515

46,547

100.0%

71.567

100.0%

0.10% 0.00%

0.00% 0.00% 0.00% 0.7%

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 7,842 thousand whereas remuneration for Statutory Auditors is included in item “Services expenses and use of third-party assets” and they amount to Euro 93 thousand. As of March 31, 2019 the Company showed a debit balance towards other related parties of Euro 171 thousand. During the year, the Company has entered directly into the following relations with related parties, other than its subsidiaries: Group company

Transaction type

Related parties

Revenue / (Cost) in Euro 2019

Receivable/ (Payable) in Euro as of March 31, 2019

Permasteelisa S.p.A. Permasteelisa S.p.A. (1)

Costs back charge Facility Management

No. 2 Managers/employees of Permasteelisa Spa Fondazione Ugo e Olga Levi Onlus

ricavo/credito (costo)/(debito)

1,079,38 (168,513,39)

(54,611,34)

1,079,38 (168,513,39)

0,00 (54,611,34)

It should be noted that the Company has a Facility Management contract related to the Venice offices owned by the Foundation Ugo and Olga Levi Onlus whose president is Mr. Davide Croff. These transactions are regulated at normal market conditions. Transactions with key management personnel The remuneration of top managers, as defined by the IAS 24 Standard, that have a key function within the Company, amounted in total to Euro 7,842 thousand, of which Euro 3,912 thousand can be referred to specific members of the Company’s Board of Directors, Euro 2,887 thousand concern Managers with Holding functions and Euro 1,043 thousand for the Company’s Business Unit Manager functions. During the year 2019 bonus have been paid to eligibles managers, related to the three-years group incentive plan called Long Term Incentive Plan, for the 2015-2018 period. Information on management and coordination activities Pursuant to art. 2497 bis of the Civil Code, the essential data of LIXIL Group Corporation's financial statements as of March 31, 2019, are below reported. This is the last approved balance sheet of the Company that excercises management and coordination on the Group and it is prepared accordingly to the international accounting standards. LIXIL Group Corporation Financial Data – March 2019 Profit&Loss Revenues Operating result Profit/(loss) before tax Net result

JPY / million 1,832,608 -15,029 -17,990 -49,288

EUR / thousands 14,725,657 -120,763 -144,556 -396,047 176


Balance Sheet

JPY / million

Intangible assets Tangible assets Non-current assets Total non-current assets Current assets Total Assets Equity Financial liabilities Provisions funds Other liabilities Total equity and liabilities

EUR / thousands

457,082 552,759 157,923 1,167,764 891,780 2,059,544 567,167 755,281 11,638 725,458 2,059,544

3,672,816 4,441,615 1,268,967 9,383,399 7,165,769 16,549,168 4,557,389 6,068,951 93,515 5,829,313 16,549,168

During the year, there have been no transactions with Lixil Group Corporation.

40. Emoluments of Independent Auditors The fees of Independent Auditors amount to Euro 344 thousand of which Euro 146 thousand for statutory audit fees, Euro 26 thousand for tax services, Euro 50 thousand for other services related to the J-SOX audit required by Shareholder, Euro 88 thousand for other consultancy fees and Euro 34 for other non-recurring specific consultancy fees.

41. Contributions and subsidies - information pursuant to article 1 paragraphs 125-129 of the law 124/2017 and subsequent amendments During the period January 1, 2018 – Decemebr 31, 2018, and in the first three months of year 2019, the Company received contributions and subsidies pursuant to article 1, paragraphs 125-129 of th law 124/2017 and subsequent amendments, as below detailed. The below table is showing the information on the lenders, on the amounts received and a short description of the reason. LENDERS

CONTRIBUTION for period January 1, 2018 – December 31, 2018

COBTRIBUTION for first three months of year 2019

36,133.50 24,698.31 24,147.50 84,979.31

12,570.66 0 14,687.50 27,258.16

GSE FONDIMPRESA FONDIRIGENTI TOTAL

REASONS

Photovoltaic incentive Training plans Manager training plans

42. 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.

43. Subsequent events As of May 8, 2019, the Board of Directors of Permasteelisa SpA has acknowledged the resignation with immediate effect by the Chief Executive Officer Riccardo Mollo. On the same date, the Board of Directors of Permasteelisa S.p.A. co-opted Mr. Klaus Ernst Lother as a member of the Board with the favorable opinion of the Board of Statutory Auditors. As of May 8, 2019, Mr. Klaus Ernst Lother was also appointed, with immediate effect, as Chief Executive Officer of the Permasteelisa Group. In April 2019 the subsidiary Permasteelisa Gartner Saudi Llc finalized the negotiation with a new client about the resumption of the works for an iconic project in Saudi Arabia suspended for several years. In June 2019 Permasteelisa 177


Gartner Saudi Llc collected the first tranche of payments relating to receivables for works already done, amounting to approximately Euro 18 million. No major other events have occurred after the end of the financial year.

178


179


PERMASTEELISA S.p.A. Appendix to the Statutory Financial Statements

180


Appendix I: Receivables and payables broken down by geographical area Receivables and payables, included in the Statement of financial position as of March 31, 2019, 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 March 31, 2019 â‚Ź thousands

Qatar United Kingdom United States France Thailand China Singapore Colombia Russia United Arab Emirates Irland Philippines India Mongolia Hong Kong Principality of Monaco Italy Taiwan Malaysia Netherlands Saudi Arabia Norway Germany Azerbaijan Australia Jordan Japan Macao Canada Spain Turkey Croatia

10,233 9,581 7,832 5,520 5,009 4,515 4,033 1,992 1,992 1,380 1,183 885 880 879 807 650 472 456 401 246 180 137 133 100 64 31 26 18 16 7 5 0 59,663

March 31, 2018 3,669 16,454 8,086 2,842 5,531 5,849 1,552 4,767 1,952 920 890 794 1,626 785 2,391 1,220 139 412 306 1,952 3,633 0 210 -217 65 1 35 4 0 3 4 41 65,916

Financial receivables from subsidiaries â‚Ź thousands

United Arab Emirates Singapore

March 31, 2019 110,031 92,843

March 31, 2018 84,167 73,560 181


Qatar United Kingdom Saudi Arabia United States Turkeya Spain Netherlands Italy Azerbaijan

40,750 13,119 7,440 1,995 1,950 1,203 0 -234 -1,065 268,032

-844 26,271 87,078 6,820 1,903 270 13,497 3,148 365 296,235

March 31, 2019 7,402 2,058 1,747 637 493 427 419 387 251 245 214 63 48 48 40 28 19 2 1 0 -1 14,528

March 31, 2018 9,963 120 1,605 596 1,017 165 90 100 1,980 253 98 57 53 23 23 22 11 3 30 4 235 16,448

March 31, 2019 136,246 77,136 20,281 11,824 9,042 3,334 2,186 0 260,049

March 31, 2018 8,460 115,607 12,669 42,435 0 0 2,547 -8,251 173,467

Trade payables from subsidiaries â‚Ź thousands

Italy Qatar Hong Kong Croatia Netherlands Singapore United States Germany United Kingdom United Arab Emirates Thailand China Australia France Russia Switzerland Irland Spain Canada Turkey Saudi Arabia

Financial payables from subsidiaries â‚Ź thousands

United States Germany France Singapore Qatar Netherlands Irland Italy

182


183


PERMASTEELISA S.p.A. Auditors’ report on the Consolidated and Statutory Financial Statements

184


Profile for Permasteelisa Group

Annual Report 2019  

Annual Report 2019