ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2015investor.tbsgroup.com/images/pdf/IR/TBS_financial_statements_2015.pdfFinancial Statements at 31 December 2017. The new Board of Directors

ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2015

www.tbsgroup.com

TBS Group SpaAREA Science Park

Padriciano 9934149 Trieste - Italy

tel. +39 040 92291fax +39 040 9229999

[email protected]

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Annual Financial Statements as at 31 December 2015Financial Statements as of 31.12.2015 approved by Shareholders’ Meeting on 28 April 2016

This document is an English translation of an Italian language Annual Financial Report. In the event of any inconsistency or interpretation difficulties reference should be made to the Italian language Annual Financial Report, which shall in any event prevail.

Table of ContentsAnnual Financial Report

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Table of Contents

7 GOVERNANCE BODIES

11 GROUP HIGHLIGHTS

13 Key figures

14 Financial Highlights

15 Group’s structure

17 DIRECTORS’ REPORT ON OPERATIONS

20 Performance and financial highlights 23 Group economic and financial management 28 Economic and financial management of the parent company 29 Business outlook 29 Productive activities 39 Investments 40 Research & development 40 Parent company shares owned by it or by subsidiaries 41 Financial instruments 47 Information on personnel and the environment 48 Intergroup transactions and with related parties 48 Information on corporate governance 56 Subsequent events 57 Proposal for resolution

Table of ContentsAnnual Financial Report

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59 Consolidated financial statements

59 Consolidated statement of financial position 60 Consolidated statement of income 61 Consolidated statement of comprehensive income 62 Consolidated cash flow statements 63 Summary statement of changes in consolidated shareholders’ equity 64 Consolidated statement notes 128 Auditors’ report

131 Financial statements

131 Statement of financial position 132 Income statement 133 Statement of comprehensive income 133 Cash flow statements 135 Statement of changes in shareholders’ equity 136 Notes to the Financial Statements 185 Report of the Board of Statutory Auditors 187 Auditors’ report

Annual Financial Report

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GOVERNANCE BODIES

Governance BodiesAnnual Financial Report

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Governance BodiesAnnual Financial Report

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BOARD OF DIRECTORS

Chairman Diego BravarCEO Paolo SalottoDirectors Laura Amadesi Dario Scrosoppi Carlo Solcia

BOARD OF STATUTORY AUDITORS Chairman Andrea FasanAuditors Renato Furlani Luciano Lomarini Alternate Auditors Alessandro Baldan Andrea Vucetti

INDEPENDENT AUDITORSReconta Ernst & Young Spa

GROUP HIGHLIGHTS

Group HighlightsAnnual Financial Report

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TBS Group

TBS Group was founded in research environment in the late 1980s as a advanced clinical engineering service provider.

In line with integrated technology development (in both IT and telematics), the company’s growth was marked by developments in Clinical Engineering itself. In fact, Clinical Engineering was no longer merely restricted to the secure and efficient management of biomedical equipment, but had expanded to comprise the integrated management of all technologies implemented in hospitals and social and healthcare facilities.

Throughout the world, healthcare costs are the most significant item in public expenditure; they are growing faster than the GDP and threatening to become unsustainable. Technology accounts for 50% of overall costs.

In this context, the Group’s vision is to work towards containment and requalification of expenditure in the technology sector, especially in healthcare area, offering an integrated management that aims to improve the quality of social and healthcare services provided to citizens and to positively influence their healthcare expectations.

The Group’s mission is to develop outsourced integrated Clinical Engineering, e-Health and e-Government services so as to enhance the safety, effectiveness and efficiency of technologies used in hospitals, social and healthcare facilities as well as in other local authority entities. These technologies include biomedical equipment, additional medical devices, medical IT systems and solutions, telecare and telemedicine systems and solutions and e-Government systems and solutions.

Since December 2009 TBS Group is listed on AIM Italia (Italian Stock Exchange segment).TBS Group operates with two Business Units:

• Medical Devices and ICT systemsTBS Group provides to public and private healthcare institutions a complete range of technologies management

services in outsourcing, in particular of all medical devices, from the most simple to more complex, and all ICT systems and solutions, on a high security level in multivendor terms and with a widespread network of engineers and technicians, both biomedical and IT, presented on site and on the territory. Also offers telecare and telemedicine solutions to favor the diagnostic and therapeutical continuity between the hospital and the territory and to implement telematic services of social-healthcare home assistance.

The services offered by TBS Group can be provided selectively or as part of a highly-flexible, integrated service depending on the customer requirements.• Integrated Solutions of e-Health&e-Government

TBS Group develops own solutions, provides related services, operates as system integrator and offers specific know how and projection skills in the following fields: • medical IT services and products for the supply and/or consultancy on purchases, installation, testing and integrated

management of all medical IT systems and solutions, and their integration with the public administration ones in hospitals and social healthcare structures

• products, systems and solutions for the supply and management of computerised running of demographic, social, tax, administration and government services as well as of human resources management, protocol and document management for the Public institutions, in particular for the local entities.


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Key figures

Group 1Business Unit 2Countries 20Companies more than 20Personnel 2,400 Internal workshops over 300 Regional operational centres 46 Competence centres or companies 26 Healthcare structures over 1,000 Public bodies and local entities over 200 Medical equipment and devices managed 850,000 Maintenance activities 1,300,000 Telecare and telemedicine users 32,000

note: as at 31 December 2015


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Financial Highlights

Revenue EBITDA

Shareholders’ equity Net financial debt (NFD)

1513 14

233.

8

218.

2

229.

5

1513 14

22.6

20.0

23.9

1513 14

53.5

50.6 51

.6

1513 14

84.5

59.9 62

.5


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Group’s structure

Insiel Mercato (Italy)

Erre Effe Informatica (Italy)

Integrated solutions of e-Health & e-GovernmentMedical devices and ICT systems

TBS Group

PCS (Austria)

Crimo Italia (Italy)55.7%

TBS IT (Italy)100%

100%

51%

100%

Italy Operations

100% TBS Group also participates in:

–�03 Enterprise (Italy)–�Fondazione Easy Care (Italy)–�Consorzio sociale Care Expert (Italy)– SLT

–�Sinopharm TBS (China)

MSI MedServ International (Germany)100%

TBS BE (Belgium)100%

TBS ES (Spain)100%

TBS FR (France)100%

TBS GB (UK)96.13%

Surgical Technologies (The Netherlands)100%

TBS PT (Portugal)100%

100% TBS India (India)

TBS SE (Serbia)100%

Foreign operations

TBS Bohemia (Czech Republic)100%

EBM (Italy)100%

TBS Imaging (Italy)100%

TeSAN Televita (Italy)75.1%

Burgatti (Italy)65%

Crimo France (France)100%

Crimo Instrumentation Medicale79.8%

note: as at 31 December 2015

DIRECTORS’ REPORT ON OPERATIONS

Directors’ Report on OperationsAnnual Financial Report

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Directors’ management report for the financial statements and the consolidated financial statements as at 31 December 2015

Shareholders,We would like to submit the consolidated financial statements of the TBS Group as at 31 December 2015 for

your consideration. They were drawn up in accordance with the IAS/IFRS international accounting standards, and accompanied by this Report which serves to illustrate the performance of the Group as a whole both with respect to the year just ended and the future prospects for the current year. The considerations set out here below, in addition to the further information required under article 2428 of the Civil Code, also apply to the report on operations of the Parent Company, TBS Group S.p.A. In fact, the Company has decided to make use of the faculty provided under article 40, second paragraph, letter 2-bis) of Legislative Decree 127/1991 to present the report on operations for the financial statements for the year and the consolidated financial statements in a single document.

The consolidated financial statements comprise the financial statements of TBS Group S.p.A. and the subsidiaries over which it exercises direct and indirect control.

The list of companies included in the scope of consolidation as at 31 December 2015 is as follows:

Subsidiary Registered Office Share capital Type of Investment

Shareholding % Consolidation method

TBS Group Spa Trieste (Italy) EUR 4,142,137 Parent Company Parent Company

Tesan Televita Srl Udine (Italy) EUR 46,800 Indirect 75.1 Line by line

PCS Professional Clinical Software GmbH Klagenfurt (Austria) EUR 1,230,000 Indirect 100 Line by line

TBS FR Telematic & Biomedical Services Sarl

Lyon (France)EUR 1,690,500 Direct 100 Line by line

TBS BE Telematic & Biomedical Services BVBA

Loncin (Belgium)EUR 150,000 Direct 100 Line by line

TBS G.B. Telematic & Biomedical Services Ltd.

Southend on Sea (United Kingdom) GBP 500,000 Direct 96.13 (1) Line by line

Telematic & Biomedical Services SL (single-member Company)

Barcelona (Spain)EUR 650,000 Direct 100 Line by line

STB Servicios Telematicos e Biomedicos Lda Unipessoal

Lisbon (Portugal)EUR 100,000 Direct 100 Line by line

Surgical Technologies BV Didam (The Netherlands) EUR 18,200 Direct 100 Line by line

Crimo Italia Srl Gualdo Tadino (Italy) EUR 103,165 Direct 55.75 Line by line

Elettronica Bio Medicale Srl Foligno (Italy) EUR 1,897,765 Direct 100 Line by line

MSI MedServ International Deutschland GmbH

Pfullendorf (Germany)EUR 321,000 Direct 100 Line by line

TBS IT Srl (single member Company) Trieste (Italy) EUR 5,295,860 Direct 100 Line by line

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Subsidiary Registered Office Share capital Type of Investment


TBS SE Telematic & Biomedical Services Doo

Belgrade (Serbia)RSD 465,000 Direct 100 Line by line

Insiel Mercato S.p.A. Trieste (Italy) EUR 3,246,808 Direct 100 Line by line

TBS INDIA Telematic&Biomedical Services Prv. Ltd

Bangalore (India)INR 5,000,100 Direct 100 Line by line

Erre Effe Informatica Srl Arezzo (Italy) EUR 41,280 Indirect 51 (2) Line by line

TBS Imaging Srl Fisciano (Italy) EUR 100,000 Indirect 100 Line by line

Ing. Burgatti Spa San Lazzaro di Savena (Italy) EUR 312,000 Indirect 65 (3) Line by line

TBS Bohemia S.r.o. Prague (Czech Republic): CZK 200,000 Direct 100 Line by line

Crimo France sas Ablon sur Seine (France) EUR 40,000 Indirect 100 Line by line

Crimo Instrumentation Medicale Sl Castillon de la Plana (Spain) EUR 10,000 Indirect 79.8 Line by line

(1) Following the valuation of final sale of the remaining 3.87% of the shares, the consolidation percentage is 100%(2) Following the valuation of final sale of the remaining 49% of the shares, the consolidation percentage is 100%(3) Following the valuation of a put and call option on the remaining 35% of the shares, the consolidation percentage is 100%

PERFORMANCE AND FINANCIAL HIGHLIGHTS

The following significant events occurred in 2015. They are described in further detail in the press releases on the company’s website in the Investor Relations and News & Media section.

Regarding Corporate Governance, we remind you that the Shareholders’ Meeting held on 28 April decided on five members to be appointed to the Board of Directors for the next three financial periods, until the approval of the Financial Statements at 31 December 2017. The new Board of Directors members are: Laura Amadesi, Diego Bravar, Paolo Salotto, Dario Scrosoppi, Carlo Solcia.

On 7 May, the Board of Directors confirmed the appointment of Diego Bravar as Chairman of the Company, and Paolo Salotto as the CEO, assigning them the relevant powers. The Board further successfully assessed the requirement of independence in respect of board member Carlo Solcia. At the same time, members were appointed to the Internal Control and Risks Committee in the persons of Carlo Solcia, as Chairman, and Laura Amadesi and Dario Scrosoppi. The same people Carlo Solcia, again as Chairman, and Laura Amadesi and Dario Scrosoppi were duly appointed as members of the Nomination, Remuneration and Governance Committee.

On 25 May and 17 June 2015, the Board appointed the new manager for Investor Relations and the new Supervisory Body, respectively.

At the end of 2015, on 21 December, the Board of Directors of the TBS Group updated the governance system, to optimise and simplify decision-making and operating processes.

In order to more effectively achieve objectives, it streamlined the existing Committees into a single structure, the Management Committee, which will be responsible for monitoring the economic/financial performance of activities in regards to objectives, making assessments of the implementation of development programs, analysing market trends and proposing actions to take advantage of potential opportunities.

The fixed members of this Committee, who are considered key people, are Chief Executive Officer Paolo Salotto, who serve as chairman, the Business Unit General Managers Fabio Faltoni, Nicola Pangher and Alberto Steindler, the Director of Administration, Finance and Control Stefano Beorchia, the Director of Human Resources, Organisation and Quality Nicola Seren, and the Director of Industrialisation Giuseppe Giusto.


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We note that the simplification of the organisational structure of the TBS Group in Italy continued with the following transactions: • merger by incorporation of the company Tesan into EBM, finalised on 19 February 2015;• transfer of the ownership of Insiel Mercato from TBS IT to the TBS Group (already holding 49.29%), whereas ow-

nership in TBS Imaging (formerly REM DI S.r.l.) was transferred from the TBS Group to EBM;• merger between TBS Imaging and Delta X, on 18 September, with legal effect as of 1 October 2015;• sale of 16% of the company SLT (taking the stake from 56% to 40%, with the consequent exit from the scope of

consolidation), for Euro 300 thousand on 31 August 2015.Work continued on implementing the strategic lines for services to manage and maintain multi-vendors of medical-

imaging equipment. On this point, we note that on 7 January 2015, the subsidiary Elettronica Bio Medicale S.r.l.- making use of the subsidiary Delta X S.r.l. - signed the definitive contract for the purchase of 51% of the share capital of Ing. Burgatti S.p.A. of San Lazzaro di Savena (BO). The purchase price for 51% of the shares was confirmed at Euro 2,900,000 and has been fully paid. On 4 August 2015, the minority shareholders of Ing. Burgatti made use of the right - foreseen in the contract to sell the company - to exercise an intermediate put option to sell 14% of the company. This was completed on 22 October 2015 for the amount of Euro 684 thousand.

To achieve the objective of completing the portfolio of services offered by Group companies, on 23 July 2015 the subsidiary TBS FR completed its acquisition of 100% of Crimo France Sas, a company that offers maintenance services for biomedical equipment, in particular endoscopic devices and surgical instruments. Crimo France employs around sixty people and operates throughout the transalpine region. During the last financial year it registered turnover of over Euro 7 million. The maximum purchase price was set at Euro 6.0 million, and included the company’s net financial position at the date of sale. Euro 2.9 million was paid upon signing the contract and the balance was paid in March 2016.

During 2015, we continued to grow the maintenance services of IT systems in hospitals and other public and private entities. Included among the most relevant results, we remind you that TBS IT was awarded:• on 31 March 2015, the renewal of the contract regarding the integrated management service supporting the dia-

gnostic and outpatient equipment at the Regional San Carlo Hospital in Potenza; the contract is effective from 1 October 2014 for five years, and has a total value of Euro 1.4 million, of which Euro 998 thousand are attributable to the Company;

• on 1 May 2015, TBS IT signed a contract for the coordination, management and development of the electronic me-dical file [“CCE - Cartella Clinica Elettronica”] application solution with the “Ospedale Niguarda Cà Granda” Hospital in Milan; the contract is effective for nine years, for a total value of approximately Euro 2.2 million;

• on 20 May 2015, the Company signed the contract to for to manage the information systems for the Municipality of Mogliano Veneto; the contract runs for 4 years (with the possible addition of another 6 months), for a total value of Euro 1.37 million.Finally, we outline some of the relevant events that occurred during the period in the Group’s most important

companies.EBM was awarded the renewal of the contract in respect of the maintenance of the proprietary electro-medical

equipment at the Hospitals of the Greater North Western Region of Tuscany; the agreement is effective from 1 January 2015 for three years and has a total value of over Euro 25.3 million (excluding VAT), of which almost Euro 20.3 million refer to EBM.

On 5 June 2015, TBS Imaging was awarded the supply of 16 newly manufactured ultrasounds on a lease bases for the Hospital in Avellino. The contract has a 5-year duration and a total value of Euro 415,000.


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The company TBS GB was awarded:• on 20 February 2015, the renewal of the contract for the management and maintenance of biomedical equipment

of the 32 Nuffield Health hospitals, one of the largest UK Charities active in healthcare services. The contract – which will be valid for two years – runs from 1 April 2015 and has a total financial value of over 2.7 million pounds sterling;

• on 17 June 2015, a five-year contract to provide clinical engineering services to the Royal National Orthopaedic Hospital; the total value is estimated at approximately Euro 5.3 million pounds. TBS India won a tender on 6 November 2015 issued by the local authorities to provide assistance and maintenance

services for over 33 thousand pieces of biomedical equipment for approximately 1,400 hospitals and healthcare systems located throughout the region of Andhra Pradesh. TBS India’s offer was the best of the five put forward. The total value of the assets that TBS will take on is estimated at 4.5 billion Indian rupees, equal to Euro 62.9 million at the current exchange rate. The order relative to the first year was received on 4 November 2015 and amounts to Euro 5.3 million (382.2 million Indian rupees).

Furthermore, we remind you that the company TBS Bohemia was established on 29 January 2015. It is a 100% subsidiary of the TBS Group Spa and will operate in the field of clinical engineering in the Czech Republic.

For Insiel Mercato, we note that the “Just one patient” project carried out in partnership with Azienda Sanitaria of Florence has received the prestigious 2015 Digital Health Innovation prize, awarded on 12 May 2015 during the Digital Health Innovation Convention, organised by Politecnico di Milano.

On 1 June 2015, the Cerved Rating Agency – an Italian rating agency specialising in assessing the creditworthiness of non-financial companies – updated its rating of the TBS Group, which had originally voluntarily submitted to an evaluation on 25 June 2014. A new rating of A3.1 was assigned, confirming an improvement compared to the previous B1.1. level; this evaluation represents the sixth level in the Cerved risk scale that covers 13 classes (from A1.1, representing the first level to the least risk at C2.1). The relevant statement defines the TBS Group as a “company with solid fundamentals and a good ability to meet its financial commitments. Its credit risk is low.”

We recall that in 2013, the public administration debt payment plan began to repay back debts to creditors (both natural persons and legal entities) totalling Euro 57 billion. The estimates of payments made by debtor entities to creditors from these resources by 20 July 2015 come to a total of Euro 38.6 billion, equal to around 69.0% (at the end of January 2015 they came to Euro 36.5 billion). The initial availability of liquid funds for the Public Administration led to a significant improvement in payment times in 2013 and 2014, which then slowed in 2015. This was also confirmed in figures from the relative trade association (payment times released by Assobiomedica indicate an improvement of around 70 days in 2013 and 2014, and an additional improvement of 39 days between 2014 and 2015).

Finally, we recall that on 30 July 2015 the TBS Group repaid the bond loan of Euro 10 million, as well as the interest for the period, subscribed on 9 February 2012 with the Fondo Italiano di Investimento.


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GROUP ECONOMIC AND FINANCIAL MANAGEMENT

The table below presents a summary of the Group financial data for 2015 and a comparison with 2014, in accordance with IAS/IFRS, with further information on the interim EBITDA, corresponding to earnings before amortisation and depreciation, write-downs of intangible assets and property, plant and equipment, measurement of investment, net financial expenses and income taxes. Since the composition of the EBITDA, identified also with reference to the income statement of the separate financial statements of the Parent Company, is not regulated by the reference accounting standards, the calculation criterion the Company applies might not be homogeneous with that used by others, and therefore may not prove comparable.

(thousands of Euro) 2015 2014 (*)

Revenue from sales and services 232,556 228,340

Other income 1,292 1,192

Total revenue and income 233,848 229,532

Cost of materials 30,727 31,309

External services costs 82,113 80,218

Personnel costs 95,697 92,970

Other operating costs 5,597 3,995

Cost adjustments for in-house generation of non-current assets -3,317 -2,998

Other provisions 384 161

Total costs 211,201 205,655

EBITDA 22,647 23,877

EBITDA % 9.7% 10.4%

Amortisation and write-downs on fixed assets 11,828 10,499

EBIT (operating profit) 10,819 13,378

EBIT % 4.6% 5.8%

Gains (losses) from investments -28 -47

Financial income 827 372

Financial charges -6,391 -6,953

PROFIT BEFORE TAX 5,227 6,750

Income taxes -2,908 -4,524

PROFIT FOR THE YEAR 2,319 2,226

Result from assets held for sale 551 122

PROFIT FOR THE YEAR 2,870 2,348

attributable to the Group 2,410 1,896

attributable to third parties 460 452

(*) 2014 figures restated as a result of the application of IFRS 5

The consolidated financial statements of your Group closed as at 31 December 2015 with total revenues and other income of Euro 233.8 million, an increase of Euro 4.3 million over the Euro 229.5 million of the previous year, up +1.9%.

TBS Group has therefore confirmed its capacity to grow, also thanks to new acquisitions, reinforcing its European leadership in clinical engineering outsourced services.


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The evolution of revenues and income broken down by geographic area achieved by companies of the TBS Group in Italy (TBS Group Spa, EBM, Crimo Italia, Insiel Mercato, Erre Effe, Tesan Televita, TBS IT, TBS Imaging and Ing. Burgatti), Austria (PCS), Germany (MSI), the UK (TBS GB), France (TBS FR and Crimo France), Spain (TBS ES), Belgium (TBS BE), Portugal (TBS PT), Holland (ST NL), Serbia (TBS SE), and India (TBS India), can be summarised as follows for the last two years:

Revenue

(thousands of Euro) 2015 2014 (*) difference difference%

Italy 160,883 156,841 4,042 2.6%

United Kingdom 29,563 26,586 2,977 11.2%

France 15,699 13,189 2,510 19.0%

Austria 9,728 8,298 1,429 17.2%

Germany 2,899 2,505 394 15.7%

Spain 4,615 4,763 -148 -3.1%

Other European Union countries 5,939 5,638 302 5.3%

Other non-European Union countries 4,522 11,711 -7,189 -61.4%

TOTAL 233,848 229,532 4,317 1.9%


Analysis of the revenues by geographical area confirms that Europe is the main market for the Group: Italy represents 68.8% of turnover (68.3% in 2014), other European countries 29.3% (compared to 26.6% in 2014), while non European countries fell due to international tenders, from 5.1% in 2014 to 1.9% in 2015.

In order to better understand the trends behind the increase in revenues, we analyse the results obtained in each of the business lines the Group has operations in.

The details of the business lines demonstrate growing revenues in the Medical Devices and ICT Systems Business Unit, which went from Euro 196.8 million in 2014 to Euro 199.8 million in 2015, with an increase of Euro 3.0 million (+1.5%) and a percentage of total revenues equal to 85.4% (85.7% in 2014).

The Integrated e-Health & e-Government Solutions Business Unit also grew, going from the Euro 32.7 million of 2014 to Euro 34.1 million in 2015, with a change of Euro +1.3 million (+4.1%) and a percentage of total revenues that rose to 14.6% (14.3% in 2014).

Consolidated EBITDA settled at Euro 22.6 million, down by Euro -1.2 million (-5.2%) on the Euro 23.9 million of 2014.

This reduction in EBITDA is due primarily to:• the reduction in the prices of services offered to customers, connected to the “spending review” policies, immediate

application of which worked against the simultaneous decrease in services offered;• extraordinary costs associated with company merger operations (Tesan to EBM, Delta X to TBS Imaging) and new

acquisitions (Ing. Burgatti and Crimo France), with the related integration into the Group’s procedures and systems;• lack of contribution connected to project development services, global supplies and the maintenance of equipment

envisaged in the context of international tenders.


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EBITDA can be broken down as follows for the BUs “Medical Devices and ICT Systems” and “Integrated e-Health & e-Government Solutions.”

EBITDA per BU

(millions of Euro) ACT 2015 ACT 2014 (*)

Medical Devices and ICT Systems 19.4 21.2

% on revenues 9.7% 10.8%

e-Health & e-Government Integrated Solutions 3.3 2.7


Total 22.6 23.9



2015 EBITDA for the Division “Medical Devices and ICT Systems,” was equal to Euro 19.4 million, a decrease of Euro 1.8 million with respect to 2014, with a percentage change in the revenues in question that went from 10.8% in 2014 to 9.7% in 2015.

The “Integrated e-Health & e-Government Solutions” Division also saw an increase in EBITDA, going from Euro 2.7 to 3.3 million, with a positive change in the percentage of revenues, rising from 8.2% in 2014 to 9.7% in 2015.

Please refer to the explanatory notes to the Group’s consolidated financial statements as at 31 December 2015 for additional details on the information concerning costs and investments, in addition to the results of the separate business segments.

EBIT is equal to Euro 10.8 million, with a decrease of Euro 2.6 million compared to the previous year; the change is mostly the result of the already described decrease in EBITDA, but also due to greater amortisation/depreciation following the acquisitions made during 2015.

The net financial income for the financial year decreased slightly to Euro 5.6 million (Euro 6.6 million in the previous financial year). The drop is mainly due to the lower cost for operations without recourse, due to the drop in the Euribor (on average 0.25% less with respect to 2014) and for customer DSO applied in addition to the best conditions obtained. Medium/long-term operations also benefited from a reduction in spreads generally applied by financial institutions, all with an average overall debt that was Euro 18.8 million higher than the previous financial year.

The decrease in income taxes from Euro 4.5 million in 2014 to Euro 2.9 million in 2015 was primarily due to the reduction of IRAP caused by the full deduction in the cost of labour costs for employees hired on open-ended contracts.

The fall in EBITDA therefore was more than offset by the reduction in net financial charges and taxes; the consequence is a profit of Euro 2.9 million for financial year 2015, an improvement of Euro 0.5 million compared with 2014, also thanks to the positive Euro 0.6 million generated by the partial disposal of SLT.


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The table below presents a summary of the Group’s key financial data for 2015 and a comparison with 2014, in accordance with IAS/IFRS:

(thousands of Euro) 31/12/2015 31/12/2014

Intangible assets 62,871 54,481

Tangible assets 22,858 19,899

Other non-current assets 11,484 9,941

Non-current assets 97,213 84,321

Current assets 167,962 167,816

Assets held for sale 333 0

TOTAL ASSETS 265,508 252,137

Group net equity 51,083 49,038

Equity attributable to third parties 2,392 2,616

Net Equity 53,475 51,654

Non-current liabilities 71,608 52,633

Current liabilities 140,425 147,851

Liabilities held for sale 0 0

NET EQUITY AND LIABILITIES 265,508 252,137

Net financial debt (NFD) and operating working capital (OWC) were calculated starting from the summary of the statement of financial position.


Non-current financial liabilities -50,608 -33,378

Current financial liabilities -71,080 -65,550

Other financial assets 2,145 436

Current financial assets 9,878 5,192

Cash and cash equivalents 25,171 30,763

Net financial debt -84,494 -62,537


Inventories 11,993 9,465

Trade receivables 105,519 110,823

Trade payables -38,706 -38,866

Operating working capital 78,806 81,422

As of 31 December 2015, net financial debt stood at Euro 84.5 million, an increase of Euro 22.0 million compared to the Euro 62.5 million reported at the end of 2014; this increase can mainly be ascribed to the price to acquire Crimo France and 65% of the company Ing. Burgatti, to which was added the appreciation in the relevant put & call under the contract and the incorporation of the company’s financial debt and change in the net working capital.

The sizeable increase in net working capital with respect to the previous year, amounting to Euro 14.0 million, can be traced to the regulations regarding split payments, which had a significant impact on other current assets and liabilities, which fell by Euro 12.8 million; operating working capital fell from Euro 81.4 million at the end of 2014 (35.5% of revenues) to Euro 78.8 million at 31 December 2015 (33.7% of revenues).


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The financial movements are analysed in the summary elements from the cash-flow statement, summarised below.

CONSOLIDATED CASH-FLOW STATEMENT

(thousands of Euro) 31/12/2015 31/12/2014 (*)

CASH FLOW GENERATED BY OPERATING ACTIVITIES 7,198 16,431

CASH FLOW USED BY INVESTMENT ACTIVITIES -14,471 -12,122

CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,759 -1,335

TOTAL CASH FLOWS -5,514 2,974

CASH AND CASH EQUIVALENTS (NET) AT THE START OF THE YEAR 30,763 27,659

Net foreign-exchange differences -78 130

CASH AND CASH EQUIVALENTS (NET) AT THE END OF THE YEAR 25,171 30,763


Cash flow from operating activities in 2015 had a positive balance of Euro 7.2 million, as a consequence of the profit before tax (+5.2 million), amortisation and write-downs (Euro +11.9 million), financial charges (Euro +6.4 million), the change in working capital for the year (Euro -12.1 million) and taxes paid (Euro -4.2 million).

Investment activities used cash flow for a total of Euro 14.5 million gross of disinvestments.Cash flows from financing activities (balance between increase and decrease of financial liabilities, including

interest payments) generated Euro 1.8 million.The resulting total cash flow was Euro -5.5 million.The key economic and financial indicators as at 31 December 2015 and 2014, deriving from the ratios between

certain data recorded in the income statement and balance sheet above, are shown below.

31/12/2015 31/12/2014

EBITDA/Total revenue and income 9.7% 10.4%

EBIT/Total revenue and income 4.6% 5.8%

EBT/Total revenue and income 2.2% 2.9%

Net profit for the year/Total revenue and income 1.2% 1.0%

Financial charges/Revenue 2.7% 3.0%

NFD/Group net equity 1.7 1.3

Total liabilities/Net Group Equity 5.2 5.1

NFD/EBITDA 3.7 2.6

OWC/Total revenue and income 33.3% 35.1%


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ECONOMIC AND FINANCIAL MANAGEMENT OF THE PARENT COMPANY

The table below summarises the evolution of the basic data of your Parent Company compared to the previous year as far as the income statement is concerned:

(thousands of Euro) 2015 2014


Other income 289 234


Cost of materials 1,748 6,373

External services costs 5,688 7,091

Personnel costs 3,535 4,008

Other operating costs 564 653

Cost adjustments for in-house generation of non-current assets -239 -336


Total costs 11,298 17,789

EBITDA -1,922 -192

EBITDA % -20.5% -1.1%

Amortisation and write-downs on fixed assets 924 1,132

EBIT (operating profit) -2,846 -1,324

EBIT % -30.4% -7.5%

Gains (losses) from investments 304 -17

Dividends 6,210 5,787

Financial income 1,518 980

Financial charges -2,671 -2,085


Income taxes 1,169 645

PROFIT FOR THE PERIOD 3,684 3,986

Revenues for the parent company can mainly be traced to:• trading activities related to biomedical equipment, following the awarding of international tenders;• management fees billed to its subsidiaries and for consultancy and coordination services given, and the revenues

related to administrative, legal and tax service contracts with Group companies. The decrease in revenues from Euro 17.6 million in 2014 to Euro 9.4 million 2015 is mainly due to the drop in

turnover from international tenders, which led to a consequent reduction in EBITDA, which went from Euro -0.2 million in 2014 to Euro -1.9 million in 2015, a drop of Euro 1.7 million, despite containment of central costs.

EBIT went from -1.3 million in 2014 to -2.8 million in 2015, a change of Euro 1.5 million, less than the change in EBITDA.

Dividends rose by Euro 0.4 million, mainly due to greater dividends received from the subsidiary TBS GB. Profit for 2015 came to Euro 3.7 million, showing a slight decrease of Euro 0.3 million over 2014.


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The table below, instead, summarises the processing of the basic data of your Company compared to the previous year as far as the equity/financial situation is concerned.


Non-current assets 92,910 78,650

Current assets 43,238 44,940

TOTAL ASSETS 136,148 123,590

Net Equity 73,983 71,107

Non-current liabilities 39,266 29,770

Current liabilities 22,900 22,713

NET EQUITY AND LIABILITIES 136,148 123,590

The increase in non-current assets of Euro 14.3 million is almost entirely due to the Euro 14.7 million increase in equity investments, which went from Euro 74.8 million (2014) to Euro 89.5 million (2015), due to the acquisition of 59.71% of the shares of Insiel Mercato from the subsidiary TBS IT (for Euro 13.5 million), the recapitalisation of TBS ES through conversion of a financial receivable (for Euro 0.4 million), recapitalisation of MSI (for Euro 0.5 million), the net effects of the sales of the majority of SLT shares, and revaluation of the residual shares (for Euro 0.3 million).

Current assets fell by Euro 1.7 million, mainly due to the decrease in current financial assets (Euro -3.7 million) due to the decrease in financial receivables due from subsidiaries, partially balanced by the increase in liquidity (Euro +1.3 million).

The increase in Shareholders’ Net Equity (Euro +2.9 million) is due to the results for 2015.Non-current liabilities increased by Euro 9.5 million due to the increase in non-current financial liabilities consequent

to new mortgages taken out during 2015. Current liabilities came to Euro 22.9 million and were substantially unchanged.

BUSINESS OUTLOOK

In the course of 2016, the TBS Group will maintain its position in Italy and Europe, in a macro-economic situation which forecasts an improvement in the main economic benchmarks.

The TBS Group will continue its growth based on the implementation of the strategies set out in this document, both through internal and external lines, paying constant attention to their economic and financial sustainability.

Finally, the Group will continue its commitment to improving productivity, both by further consolidating legal entities operating in the same country, especially in Italy, and through the process of rationalising internal costs, aimed at maximising synergies with all Group companies.

PRODUCTIVE ACTIVITIES

The TBS Group offers integrated clinical engineering, ICT and e-Health & e-Government services to hospitals and healthcare facilities, both public and private, in Italy and abroad.

The Group’s vision is to propose innovative solutions that work towards reducing and upgrading healthcare expenses in the technological sector, through integrated management, in order to increase the efficiency and quality of social/healthcare and public administration services provided to citizens.

TBS Group’s mission is to develop and manage integrated clinical engineering, ICT, e-Health & e-Government services through outsourcing, to render the use of technology in hospitals, social/healthcare, public administration contexts and home-based care safe, effective and efficient in Italy.


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TBS Group operates through Group Management, mainly concentrated in the parent company TBS Group S.p.A. and with two Business Units (the Medical Devices and ICT Systems and Integrated e-Health & e-Government Solutions) to manage and development the productive activities of the Group companies.

Group Management

The Parent Company TBS Group S.p.A. with the Chairman and the CEO, the Corporate Departments, and the staff provide the Group companies with management and administrative assistance services, the supply of services in general, and consulting and coordination services for the companies, especially in the financial area.

In addition, it carries out control activities in the interest of the parent company TBS Group S.p.A. and management and development activities for the Group’s productive activities with the Group General Managers who operate within the two aforementioned Business Units (BU).

Finally, the TBS Group also develops project services, global supplies and maintenance of biomedical equipment for hospitals located in foreign countries.

The productive activities supplied by your Group broken down into the two BUs, “Medical Devices and ICT Systems” and “e-Health & e-Government Integrated Solutions”, are illustrated below.

Medical Devices and ICT Systems BU

The TBS Group provides public and private healthcare structures with outsourced technology management services, in particular for medical devices, from the simplest to the most complex, and for all ICT systems and solutions, at the highest levels of security, with a multivendor logic and an extensive network of engineers, technicians, biomedical engineers and IT experts, both on-site and locally. It also provides telemedicine and telecare solutions to favour diagnostic and therapeutic continuity between hospitals and regions and for the implementation of telematic services for home-based social/healthcare assistance.

The services offered by the TBS Group can be provided both in a selective manner and within the context of integrated services, with a high degree of flexibility based on the specific needs of the individual customer.

During the course of 2015, the Group’s productive activities relating to the BU were carried out, in the context of specific contracts, in roughly 1,000 Healthcare Facilities and/or Hospitals, public and/or private, in 16 different countries, directly or through its subsidiaries, outside of Italy: Austria, Belgium, Chile, China, United Arab Emirates, France, Germany, India, Holland, Peru, Portugal, the United Kingdom, Gabon, Nigeria and Spain, and in around 200 other public entities in Italy.

Specifically, to carry out technical activities and for integrated management of biomedical equipment, ICT systems for Telemedicine and Telecare and for other home-based technology, the Group made use of:• around 320 technical clinical engineering workshops located within healthcare structures, that operate with speci-

fic first level contact centers and with national and Group level data centers;• 8 specialised workshops for the maintenance of endoscopy equipment, with specific contact centers;• 1 specialised workshop for the maintenance of ultrasound probes, with one specific contact centre;• 4 specialised workshops for the maintenance of surgical tools, with one specific contact centre;• 3 specialised workshops for diagnostic imaging, with one specific contact centre;• 1 specialised workshops for brachytherapy and cobalt therapy equipment, with one specific contact centre;• 3 specialised workshops for the management of maintenance for telecare and telemedicine systems, with 9 con-

tact centers for the management of said services and with 4 data centers.


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As a whole, the BU’s productive activities were focused on the outsourced management and maintenance of:• around 850,000 biomedical and endoscopy equipment and surgical instruments. For the machine fleet, manage-

ment activities were provided including purchase consulting, analysis and evaluation of inventory with renewal plans, training of user personnel, risk evaluation, acceptance inspection and maintenance activities at our labora-tories, with over 1,300,000 interventions, of which 900,000 schedule maintenance and safety checks, 400,000 maintenance interventions for malfunctions, of which 100,000 for surgical instruments;

• around 145,000 ICT systems, for which 62,000 maintenance interventions were carried out, of which: around 27,000 remotely, around 30,000 for corrective maintenance at the customer’s premises, around 4,500 IMAC inter-ventions (Install, Move, Add, Change), and around 300 corrective maintenance interventions at our workshops;

• around 32,000 telecare and telemedicine systems installed at patient residences, which led to around 16,500 tech-nical maintenance interventions and/or equipment installation interventions. The service provided involved around 6.5 million telephone calls.We will now present the activities carried out by the companies in the Italy BU that are part of the Group’s General

Department of Fabio Faltoni (EBM, TBS IT, Tesan Televita, Crimo Italia, TBS Imaging and Ing. Burgatti). In 2015, also at the level of the MD&ICT Italy BU, the Group continued to simplify the corporate structure while also

strengthening and focussing business through business combinations and new acquisitions.Specifically, the merger of Tesan into EBM was completed, as well as the acquisition of the new company Ing.

Burgatti through the subsidiary Delta X, the transfer of the equity investment in TBS Imaging (formerly REM DI) to EBM, with the subsequent merger of Delta X into TBS Imaging. The acquisition at the end of the year of the endoscopy business unit from the company Mercury allowed EBM to strengthen productivity for the Endoscopy Laboratory, acquiring not only technical resources, but also highly developed industrial skills and professionalism. Finally, a portion of the investment in SLT was sold, which left the scope of consolidation.

During 2015, EBM strengthened its role as a leading clinical engineering company in Italy and in general for technical healthcare services, coordinating and defining the strategies of the companies in the MD&ICT Italy BU. The business combinations referenced in the introduction made it possible to better establish an approach for individual businesses in the sector, concentrating operations in the areas of diagnostic imaging, specialised and multifunctional service centres and home-based technical services. In particular, activities to develop design services continued in order to expand the services offered from equipment management to supply a fully integrated solution that fits the customer’s specific requirements.

This last activity made it possible to consolidate and expand the private customer base, more sensitive and attentive to global proposals, with the company seen as a single provider that can resolve all technical problems relative to assessment, design, supply and management of technology.

As is now well established, the services supplied are related to integrated and global management of electromedical equipment, providing all the necessary technical support to maintain all equipment (repairs, checks, safety inspections) as well as offering consulting support related to purchase management, technology HTA, personnel training and designing of systems and processes.

During 2015, participation in public tenders and commercial negotiations with private customers also was extended. The price review in terms of traditional clinical engineering services pushed the company to take even more decisive steps at the commercial level, in compliance with that already defined for years in the Group’s business plan.

EBM was involved in a total of 124 bid/tender opportunities, participating in 114 commercial initiatives, 68 of which were assigned during the year, with a satisfactory 41 awarded to EBM. Specifically, most of the proposals were made against tenders/negotiations (new tenders or renewals) for maintenance of electromedical equipment (46 tenders/requests) for a total of around Euro 288 million in tender value. Of these, 26 were assigned during the year (for Euro 272 million in tender value), with 16 awarded to EBM.

Unfortunately, with respect to the original tender values, bids were recorded with notable discounts that on average amounted to 16% during 2015, while frequently exceeding 25-30%. This phenomenon also affected EBM, which was


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forced to apply discounts to acquire new positions and to keep in step with the competition.In other sectors, tenders/bids for service centers played an important role (CUP, Help Desk, Call centers) and for

home-based ventilotherapy with respective numbers of 6 and 17, for around Euro 127 million in tender value for service centers (CUP Lazio) and Euro 72 million for home-based ventilotherapy. EBM participated in 19 initiatives, excluding tenders specifically aimed at service cooperatives based on the costs foreseen for the staff and services requested (including the Lazio region). At present 7 tenders/projects have been assigned, 3 of which awarded to EBM.

In regards to telecare, teleaid and telemedicine, there were 33 opportunities for tenders/bids, for a total of Euro 6.4 million in tender value. EMB participated in all of these. At present 23 initiatives have been assigned, 16 of which to EBM. This sector continues to show low unit volumes and healthcare and regional structures continue to have serious difficulties in developing an innovative market in the current situation caused by the economic crisis and spending review. Nonetheless, sizeable centralised financing aimed at dehospitalisation of patients is being seen, also aimed at managing chronic illness which suggest that already this year there will be a notable reversal of trend for this specific market, which in any case will be part of a wider array of home-based multiservice offerings (auxiliary, ventilation, home equipment, service centers, etc.).

In 2015 a pleasing 37 tenders/projects were awarded to EBM (both public and private) for a total of around Euro 95 million. The amounts for the full duration of an individual contract vary between Euro 5-10 thousand (teleaid) to over Euro 20 million for IEO of Milan and ESTAV NO in Tuscany. To these contracts should also be added two notable tenders awarded with the framework agreement formula relative to supplies of home-based ventilotherapy for the AASSLLs of East Sicily and the new Rome1 ASL, contracts with “open” revenue volumes, correlated to the quantity of patients acquired, which when fully operational could reach variable amounts of between Euro 2 - 3 million per year.

Among new tenders awarded, we note AO Cannizzaro of Catania, AOU Umberto I of Rome, the ASL of ASTI, AO Riuniti Marche Nord and AOU of Cagliari, as well as renewals with IEO Milan and ESTAV NO in Tuscany.

The CONSIP SIGAE4 agreement, awarded during the previous year, and the subject of an appeal by EBM, as well as a further 10 additional appeals, saw a positive ruling by the Lazio Regional Administrative Court in 2015 that annulled the entire tender procedure. At present the entire affair is awaiting the definitive judgement by the Council of State, based on the appeal presented by the companies awarded the tender and CONSIP. Regardless of the final ruling on this affair, it should be recalled that the SIGAE4 tender had a negative influence on the clinical engineering market both in terms of lowering maintenance fees and in terms of the “commoditisation” of the sector, which due to the erosion in margins is eliminating the most qualified components with the highest added value from bidding.

During 2015, activities to reorganise and improve production processes continued with success, involving all technical and operational sectors, with specific reference to the technical area which saw the establishment of an Industrialisation unit relative to the Business Unit, to provide better support and control over activities relative to providing local services.

All existing quality certifications were confirmed, as well as those for specific operating activities: Quality (ISO 9001), Medical devices (ISO 13485), Contact Center (ISO 15838) and Fluorinated Gases (DPR 43/2012) and the sectors of Environment (ISO 14001) and Health and Safety (ISO 18001) with the extension of the same to the former Tesan locations in Vicenza and Padua. In addition, additional certifications were granted involving Information Security Management (ISO 27001) and IT Service Management (ISO 20000).

Within the new Industrialisation area, the Procurement Area has been strengthened to increase cooperation with technology producers/suppliers, reconfirming shared management of maintenance contracts and obtaining a 30% increase in Service Arm activities, consolidating local commercial presence and improving the professional training technical and engineering personnel.

The activation of home-based ventilotherapy contracts has led to cooperation with suppliers of equipment for this specific market sector.

During the year, in correspondence with the merger of Delta X into TBS Imaging and the acquisition of Ing. Burgatti Spa, transfer of all activities and skills to the new entity, controlled by EBM itself, continued. Reorganisation and


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integration is still under way of processes to define access methods to services and account for the same.Acquisition of the Mercury business unit made it possible to begin restructuring the internal EBM endoscopy

laboratory, increasing specialisation and industrialisation of all operating processes, with the objective of improving the quality of repairs and optimising production costs. In this sector, specific commercial projects are already planned for 2016 aimed at taking action in the public and private market, offering turnkey solutions and responding to the progressive decline in prices and quality in the entire sector.

During the year, the process continued of consolidating the specialist centres relative to assistance and management for specific classes of equipment correlated with high-level skills and notable management costs. This aspect, in addition to allowing containment and control of external costs, also supported an improvement in the management and qualifications of technical personnel. Special attention was paid to a new operational division relative to the design and creation of “turnkey” Operating Rooms. Numerous opportunities throughout Italy were identified, with notable interest from customers that led to a number of design offers that will already see revenues in 2016. Unfortunately, these processes, which in any case require a maturation time of several months, saw a slowdown in both the public and private sector due to current economic problems.

Management control systems were reinforced through specific structures in the Industrialisation Department, in particular focused on production processes, in order to guarantee better monitoring of margins on work orders, above all in the case of innovative clinical engineering services that also include industrialisation activities for home-based and ICT aspects.

In regards to investments, those relative to development activities aimed at allowing the company to be able to obtain new production processes and new organisational structures continued, as well as new services to increase future revenues.

In compliance with that established in the Group’s strategic guidelines, during 2015 and following the merger with Tesan, commercial projects in the home-based and telemedicine sectors intensified, as well as for management of IT systems and ICT in general. Therefore, actions aimed at the home-based technical services market continued, working to integrate and take advantage of the sector through the activities and skills coming from Tesan, in order to overcome the fragmentation which characterises this market.

To that end, we note the successes, which also involved activities relative to Tesan, with reference to the now fully mature Domino project for the ASL of Arezzo, with extension to other areas within ESTAV SE, its growth within the Umbria region, confirmation of the work order for ASL of Teramo, the activation of the tender to manage all of the aids within ESTAV South East of Tuscany, and activation of a home-based ventilotherapy tender in East Sicily.

Thanks to the strengthening of the structure and the “corporate” image, important sales projects and project development were carried out with the central healthcare structures of the Veneto region, a historic customer and of strategic importance for the company, sharing specific initiatives within the current contract, which will be renewed in 2016.

Operating activities in the telecare sector in 2015 essentially involved the continuation of work orders and contracts from the previous year, with some specific successes in Sicily, Apulia and Emilia Romagna.

In terms of investments, during 2015, together with the former Tesan, the process to activate and configure the new highly reliable Contact Center continued (Interactive Intelligence of Bizmatica), transferring all services managed to the same. In addition, the perfection and installation of the ATC/TTC platform for telemedicine and telemonitoring continued, developed together with Caribel Programmazione Srl and Insiel Mercato, which represents one of the most advanced products on the market, having obtained the CE Medical Devices stamp.

Tesan Televita, which is now directly controlled after the merger of EBM with Tesan, was transferred to EBM, and saw its revenues and EBITDA remain essentially stable during 2015. As known, its activities focus exclusively on CUP and teleaid services for the FVG Region, as well as small intercompany activities. Tesan Televita operates in a very small geographical area, which exposes it to changes in the regional market and makes it increasingly necessary to develop a business plan in 2016 that foresees greater involvement with the entire MD&ICT Italy BU.


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No important changes were seen in the Teleaid-Telecontrol areas, or for Projects.TBS IT S.r.l., which we recall was created from the 2012 acquisition of the former Agile business unit, is currently

focused on IT services (HW and SW technical support) and integration systems for PA and Healthcare customers. The TBS Group’s strategic plan once again confirmed the importance of developing “Innovative” Clinical Engineering

Services in Italy, in the context of the Global Service business model, which aims at integrating traditional Clinical Engineering Services with other IT/ICT services for Healthcare customers, while also diversifying within other customer segments (PA and Private). More specifically, the evolution towards a model of offerings that provides complete and integrated answers for the entire world of medical, telematic and IT technologies found in the Healthcare sector, using structures and process that have already been created and used within the Group for medical technologies.

In the light of these considerations, management of TBS IT has always focussed on ensuring close sales, operational, administrative and financial coordination with EBM, to guarantee that all possible synergies with the healthcare world are fully developed.

In 2015, the parent company gave new indications regarding a plan to integrate and combine the business unit activities by country, as well as specific specialist activities relative to IT and ICT. On the basis of these indications, with the assistance of external consultants, a working group was established to carefully evaluate the current situation and to propose possible solutions for integration between TBS IT with INSIEL Mercato and EBM, giving life to a new center specialising in IT and correlated services.

The objective of this process is to complete the integration phase by the end of the first half of 2016.At present, while awaiting completion of the reorganisation, in TBS we can state that the call centre and operation

areas have been successfully integrated with EBM’s operating structures, while serious difficulties continue in terms of transferring healthcare domain expertise by the other companies of the Group.

Thanks to the specialised contribution provided by Sales Management and the support of some external consultants, in 2015 the first important contract with the healthcare segment was activated, with Azienda Ospedaliera Niguarda of Milan, which entrusted TBS IT with maintenance of its current internal platform and subsequently development of the new version. This contract, based on the reuse regulation, foresees extension to other healthcare entities in the Lombardy Region and other Italian regions, with notable possibilities for commercial expansion and a specific presence on the market.

As in previous years, TBS IT’s activities continued with management and development of Schengen contracts and reconfirming of maintenance and systems operating contracts with the activation of services with the ASL of Rome H. While significant increases in sales were not seen, TBS IT ended 2015 with an improved EBITDA, even if the final result was negative, above all due to amortisation/depreciation of investments made and in course. Activities to reorganise staff will continue and intensify in 2016. The past year saw the application of a solidarity contract that includes various solutions following integration processes.

In addition, tenders and negotiations are currently in course in the area of local and regional healthcare for over Euro 5 million, aimed at the “core” sectors of Global IT and System Integration.

Another important sector that has seen several companies within the Medical Devices and ICT Italy BU experience success is that of Diagnostic Imaging management. This is also a strategic choice for the Group at both the Italian and international level, aimed at developing and strengthening “innovative” Clinical Engineering services. Therefore, work is being done in Italy to create a specific specialised production entity aimed at the diagnostic imaging technology market, both in reference to high tech (TAC, RMN, PET, etc.) and for traditional diagnostic imaging, with the objective of providing customers with a single “solution” for the entire radiology department.

In terms of Diagnostic Imaging, EBM’s efforts were carried out in synergy with the subsidiary DELTA X (later merged with TBS Imaging), which during the course of the year completed the purchase of 65% of the shares of Ing. Burgatti S.p.A. di Bologna, and with TBS Imaging which, during the year completed technical and commercial restructuring.

As in previous years, the specific activities continued for diagnostic imaging in the area of traditional radiography and ultrasound, strengthening the internal operations organisation, also through the contribution provided by Ing. Burgatti


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Spa and through full transfer of the activities held by EBM through the global service contracts that it manages.Revenues from activities pertaining to Delta X increased, exceeding Euro 4 million, which were included in the

comprehensive income statement for TBS Imaging. In terms of operations, specialised personnel was seconded by EBM to achieve geographic coverage of services in the south of the country. Progressive integration of Ing. Burgatti will allow for the establishment of a specialised structure for activities relative to traditional radiology at the Bologna structure and that will extend its activities to the central and south areas of Italy through the Fisciano operating base, which will serve a technical support role for personnel operating in this area.

The high-tech component of diagnostic imaging will remain the responsibility of the former REM DI area of TBS Imaging, which having completed the start-up phase and achieved all the objectives initially set, relative to restructuring and reorganising staff, reconstructing the sales network to the historical perimeter, recovering historic contracts and once again industrialising production processes, can no work to expand within the reference market, above all in the regions of central and northern Italy, taking advantage of the sales assistance from Ing. Burgatti Spa and investing in new technical resources based in the production offices in Bologna.

Revenues of TBS Imaging, with the perimeter held equal, meaning the former Delta X component is excluded, referring to the high-tech division, saw a 13% increase with respect to 2014, amounting to around Euro 9.8 million, confirming the positive response seen on the reference market and solid recovery of historic customers. With the addition of the former Delta X component, a Euro 14 million increase is seen in overall revenues, with EBITDA of Euro 2.3 million, up by 53% with respect to the pro-forma figure at the end of 31/12/2014 for the two merged companies, which saw EBITDA of around Euro 1.5 million.

Ing. Burgatti Spa, acquired in January 2015, and at present held at 65% by TBS Imaging, contributed around Euro 5.8 million in revenues to the consolidated figure, with EBITDA of around Euro 980 thousand. The company’s activities, historically based in Emilia Romagna, saw further development in revenues with respect to 2014 (+26%), also outside of the regional area, thanks also to the innovative contribution of products and services provided by the MD&ICT Italy BU.

The merger process between Delta X and TBS Imaging completed in 2015, the acquisition of the equity investment in Ing. Burgatti Spa and the strong integration with the historic activities of EBM, even if not yet fully operational, have led to synergies in terms of revenues and market opportunities, transforming the new company TBS Imaging into an important source of skills related to diagnostic imaging, supporting the development of innovative Clinical Engineering in Italy, in this sector as well. A specialised entity that consolidates around Euro 20 million in revenues with around Euro 3.3 million in EBITDA, is currently the most important services company in the diagnostic imaging sector in Italy.

Again in 2015, Crimo Italia operated in an area that deals with the specific repair of biomedical and endoscopy equipment and surgical instruments, and it provides clinical engineering services, especially for healthcare entities and private institutions. The results the company obtained in this specific market were positive and further established its position as an Italian leader, even in the face of a worsening economic crisis and heavy competition, which were a feature of certain specific sectors in which it operates.

During the year, improvement of sales coverage throughout Italy continued, which nonetheless still has certain critical areas within the country.

In terms of the number of repairs, significant growth was seen in certain departments (flexible endoscopy and electromedical equipment), while others remained at the levels of previous years (drills, optical/tools). The strength of the company’s activities is most certainly customer satisfaction with the rapidity of service, quality of repairs, and efficiency of the part collection system, which in any case allows it to maintain its sales prices at satisfactory margins.

Integration with EBM within the MD&ICT BU led to benefits felt in specific revenues, helping to stabilise the company’s turnover.

In regards to personnel management, Crimo Italia fulfilled all of the requirements envisaged in the regulations in effect and in addition to the risk evaluation document, is working towards certifying its Safety Management System


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in conformance with OHSAS 18001 norms and is currently creation its organisation, management and control model pursuant to article 6, paragraph 3 of Italian Legislative Decree no. 231 of 8.6.2001. In fact, its personnel represent a very important resource for the company which bases its success on the high level of professionalism and specialisation of its workers.

The companies falling under foreign BU under the responsibility of the Group’s General Management, under Mr. Nicola Pangher are TBS GB, TBS FR, TBS ES, ST NL, TBS India, TBS BE, STB, MSI, Crimo FR, CRIMO Instrumentation Medicale and the JV Sinopharm TBS.

2015 was also a year of growth, in which the foreign companies saw 8% growth in terms of EBITDA and 9% growth in regards to turnover.

The United Kingdom continued to be the second largest market after Italy, with 11% growth in turnover, while EBITDA remained stable. The English national healthcare system is suffering heavy losses, and private operators are also reducing costs. Against this trend, we need to significantly increase turnover in order to manage this pressure on prices.

TBS FR remained stable with turnover of around Euro 13 million and profits down slightly. TBS FR further strengthened its leadership in the French market. TBS FR Sarl acquired 100% of Crimo France Sas, a company providing endoscopy and surgical instrument services.

TBS ES continued to suffer from the crisis in the Iberian Peninsula, with worsening of its results with respect to 2014, but for the first time in 5 years ended the year with positive EBITDA. Activities continued in South America, here also a positive EBITDA was achieved. The Group Company known as STB, located in Portugal, continued to offer a positive contribution to the Group in terms of profitability.

In Holland, the Surgical Technologies BV continued to maintain excellent profitability in the endoscopy repair sector. In Germany, MSI completed its turnaround and returned to positive EBITDA, due in particular to sales of used

endoscopes at the global level.In India, TBS India continued to grow, increasing turnover by 45%, with EBITDA up by 48%. The most important event

during the year was doubtless the awarding of the tender held by local authorities for assistance and maintenance services in the Andhra Pradesh region.

The JV Sinopharm TBS was sold and the group is exploring other possible solutions to increase its presence in the Chinese market.

Integrated e-Health & e-Government Solutions BU

The companies that are part of this BU develop solutions, provide the connected services, act as systems integrators, and offer specific skills and design capacities for the following areas:• medical IT services and products for the supply, installation, inspection and integrated management of all medical

IT systems and solutions, and their integration with administrative systems and solutions in hospital and social/he-althcare environments. The areas of hospital IT systems and transfusion medicine support systems are of particular importance, the latter characterised by leadership in the Italian market;

• IT products, systems and solutions for PA - production and management of integrated systems to digitally manage demographic, social, tax, administrative and government services, for management of human resources, protocols and document management for local entities, Regions and other public administration bodies;

• in 2015, as in the previous year and in line with the group’s strategic guidelines, a strong push was given to system integration activities, increasing the provision of specialised services for third party products and supporting the specialised companies in other BUs to better position themselves in this sector.PCS Professional Clinical Software GmbH, part of this BU, is the second largest company in Austria supplying

integrated IT hospital solutions, and also serving the nearby German-speaking markets.


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Insiel Mercato S.p.A. is a leading company in Italy, both for the supply and management of IT solutions for hospitals and social/healthcare sectors, and for the PA sector.

Also in 2015 the industrial activities of the BU were developed both in Italy and abroad, recording an increase with respect to 2014 in terms of the impact of foreign activities, which reached 30% of the BU’s total production value. The countries in which the BU operated during the year other than Italy were Austria, Germany, Slovenia, Switzerland and the United Kingdom. It should be highlighted that the system to digitalise intensive therapy and operating room services for the entire Carinthia Region began operating, serving as the foundation for the dissemination of these activities in the Italian market as well, with operations on the Swiss market being strengthened by the Austrian company PCS Professional Clinical Software GmbH.

Specifically, with reference to the Italian market, 2015 revenues figure, and as a consequence the margin, was still partially influenced negatively by the gradual decrease of the direct and indirect effects of the application of Italian Decree Law no. 95 of 6 July 2012 and the subsequent stability law of December 2012, actions collectively known as “spending review”, and the more recent reductions in ordinary assistance and maintenance fees, with effects on the first in particular, consequent to the conversion to law of Decree Law no. 78 of 19 June 2015 (conversion law no. 125 of 6 August 2015) regarding the purchase of goods and services for healthcare, which required entities to renegotiate existing services contracts (with a minimum reduction of 5%). Recall that, for Insiel Mercato, fees for financial year 2015 represented 40.9% of total revenues.

While the situation was extremely competitive, the BU still confirmed it as an important player in the sector through some significant achievements by its subsidiaries (Insiel Mercato S.p.A. and Erre Effe Informatica S.r.l.). Specifically, the most important company in the BU, Insiel Mercato, continued to work on important contracts and was awarded numerous projects in the e-Health area:• Azienda Sanitaria dell’Alto Adige: continuation of activities to activate and integrate the clinical repository,

digitalisation of the prescription process, evolution of the digitalised multiprofessional assistance documentation system and design of information integration between the hospital, territory and primary care;

• Azienda Sanitaria Locale VCO (Omegna): completion of the dissemination in the various hospital systems of the phi-Technology clinical file developed previously;

• Marche Region: continuation of activities relative to the regional healthcare database, data centre infrastructure, electronic healthcare file infrastructure, healthcare card and continuation of activities to manage the regional CUP system;

• Lombardia Informatica: continuation, through an extension of the original contract while awaiting the results of the new tender, in which companies belonging to the other BU participated, of system integration activities in the context of the SISS1 project carried out through a temporary association of businesses with Almaviva, Bitmedia, Dedalus, Deloitte, Hi Tech;

• Veneto Region: activation of the innovative SPISAI healthcare information system and support in transferring the advanced regional system for screening to other entities within the region.

In regards to the e-Government sector:• Legislative Decree no. 118 of 23 June 2011: initial dissemination to clients of software to harmonise accoun-

ting systems and financial statement tables for the Regions, local entities and their bodies, in accordance with articles 1 and 2 of Italian Law no. 42 of 5 May 2009;

• Tuscany Region: continuation of development and maintenance services for the IT system of the European So-cial Fund. Completion of integration services between the FSE system and the Libretto Formativo while awaiting awarding of the tender issued by the Tuscany Region on the subject;

• Insiel S.p.A.: joint development of the co-owned ASCOT products and assessment of hypotheses for joint deve-lopment of healthcare line products. More generally, the BU’s activities were concentrated on the integrated management of IT products and services both for

the Public Institutions and Healthcare, aimed at meeting the requirements of over 500 customers and supporting almost


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1000 organisations which use them, providing innovative systems through solutions aimed at integration, interoperability and application cooperation, in line with the biggest technological platforms on the market and with open-source systems.

In addition, in 2015 the BU continued to carry out its industrial investment plan, which continued at the level of the previous year, and focussed its efforts in particular on the development and updating of its proprietary products portfolio. While planning investments to develop products, product lines were favoured that, due to characteristics of independence on the Italian market, could be placed in international markets, with particular reference to German language ones (DACH) used by the subsidiary PCS Professional Clinical Software GmbH. In particular, a detailed internationalisation plan was developed for IT systems supporting transfusion medicine, a sector in which Insiel Mercato is the Italian market leader. The activities carried out refer to the implementation of new functions for application modules or significant improvements of existing functions. The main areas in which research and development activities are focussed, which mainly saw investments in products within the healthcare area, were: integration of healthcare products in the Lisa line, with components developed using the phi-Technology platform; development of the user interface for the Aster line; internationalisation SIO; management system for transport of goods and patients in hospital and inter-hospital environments; Empowered Citizen project to develop the platform to support various corporate software programs.

Activities to increase integration between Insiel Mercato and other subsidiaries of the TBS Group continued, creating both commercial and operational synergies.

Abroad, the BU’s industrial activities were mainly developed by the company PCS Professional Clinical Software GmbH in Austria, Germany and Switzerland.

The main software developed by the company, Patidok 2.0, is the most widespread Hospital Information System in Austria, used by more than 50 public and private healthcare structures, and has reached such a degree of reliability that it is also used by customers located in Germany, Switzerland and Italy as well.

The IT application solutions offered by the companies in the BU total around 150.


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INVESTMENTS

Investments in intangible assets totalling Euro 10,128 thousand were made in 2015, in the following areas:

Intangible assets with a finite useful life

(thousands of Euro) Acquisitions during the year (*)

Development 287

Concessions, licenses, trademarks and similar rights 959

Other intangible fixed assets 5,721

Fixed assets in progress 3,161

Total 10,128

(*) including investments for changes in the scope of consolidation

The investments made mainly include:• in the “Development” category, mainly supported by EBM to obtain new production processes, more efficient orga-

nisational structures, and products to place on the market;• in the category, “Industrial patents, intellectual property rights and works, licenses and trademarks,” which mainly

include licenses and software programs, increases during the year were purchases made by EBM (Euro 409 thou-sand), TBS IT (Euro 121 thousand) and by TBS GB (Euro 112 thousand);

• in the category “Other property, plant and equipment,” the value of customer relations following acquisition of Ing. Burgatti (Euro 1,806 thousand) and Crimo France (Euro 3,784 thousand);

• in the category “Assets under construction” costs incurred by the subsidiaries Insiel Mercato and TBS IT for the development of new functions and application modules for the companies’ own proprietary product portfolio (re-spectively, Euro 1,112 and 635 thousand), costs incurred by the subsidiary EBM for Euro 821 thousand (of which Euro 783 thousand sustained during the year) to manage specialised centers created to limit company costs and internalise services and by the parent company for the creation of software (Euro 155 thousand);

• costs incurred by the subsidiary Ing. Burgatti and TBS FR (respectively, Euro 271 and 30 thousand).In 2015, investments in property, plant and equipment for Euro 7,901 thousand were made during the year in the

following areas:

Tangible assets

(thousands of Euro) Acquisitions during the year (*)

Land and buildings 1,110

Plants and machinery 6,027

Other tangible fixed assets 764

Total 7,901

(*) including investments for changes in the scope of consolidation


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Among the main investments, we note:• in the item “Land and buildings,” the change in the scope of consolidation for Crimo France (Euro 951 thousand);• in the item “plants and machinery,” we mainly find equipment to carry out clinical engineering activities for the EBM

companies (Euro 1,788 thousand), machinery required to provide activities in the endoscopy sector for TBS GB (Euro 738 thousand), assets acquired by TBS Imaging (formerly REM DI) (Euro 700 thousand), by Ing. Burgatti (Euro 490 thousand), by TBS India (Euro 469 thousand) and by Crimo Italia (Euro 409 thousand);

• in the item “other tangible fixed assets,” we mainly find electronic office equipment, furniture and furnishings, cars and motor vehicles. Investments made during the year amounted to Euro 764 thousand (of which Euro 283 made by the subsidiary EBM and Euro 96 thousand by TBS IT).

RESEARCH & DEVELOPMENT

During the course of 2015, research and development activities continued for both the Medical Devices and ICT Systems BU and the Integrated Solutions of e-Health & e-Government BU.

The strategic objective pursued in 2015 and also planned for 2015-2016 was, in fact, the development and proposal to the market of an ICT platform that integrates, in the context of big data methods, management of healthcare technology resources and clinical and molecular data.

Below we summarise the R&D projects financed by regional entities, the Ministry of Research and the European Union.

The parent company TBS Group is involved in the project “From nutrigenetics to nutriceutics for personalised medicine,” financed by MIUR in the context of Law 297, which will be completed this year. In the last quarter of 2015, a new project was begun, called “eHealth platform for molecular medicine,” also financed by MIUR. Both projects involve a large number of participants, including two regional universities and other research institutes.

The subsidiary EBM, in regards to ICT, moved forward with the projects financed by the EU in the context of the 7th Framework Programme: CHROMED - Clinical tRials fOr elderly patients with MultiplE Disease, for which the company is the head of an international consortium of companies and universities, with the objective of assessing the impact of the adoption of a support system for management of the health status and lifestyle of elderly patients; I-DONT-FALL - Integrated prevention and Detection sOlutioNs Tailored to the population and Risk Factors associated with FALLs which has the objective of assessing and intelligent ICT platform to manage falls in the assisted population, and was completed during the year.

The subsidiary Insiel Mercato was awarded public financing in various Italian regions for the following projects: PARIDE - Platform for the Rational Insertion and Integration of Electromedical Data; SMART AGEING - Services platform for the acquisition and processing of personal information to extend active life and improve well-being, for treatment and prevention in the senior population; NECTE - Network for Electronic Clinical Trial Environment.

In addition, in 2015, the group consolidated its entry into HORIZON 2020, the new European Union Research and Development framework programme, moving forward with the project ENRICH_ME “Enabling robot and assisted living environment for independent care and health monitoring of elderly” project, as the leader of an international partnership.

TBS Group will take into consideration the possibility to use the tax credit as per Law 190/2014 for the research and development activities in 2015.


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PARENT COMPANY SHARES OWNED BY IT OR BY SUBSIDIARIES, ALSO THROUGH TRUST COMPANIES OR THIRD PARTIES

The total amount of own shares held by TBS Group as of 31 December 2015 was 764,210 shares. The number of shares issued minus the total number of own shares held by TBS Group following the acquisitions at the end of 2015 communicated on today’s date is equal to 41,421,366 shares.

Subsidiaries do not have shares of the Parent Company, not even through trust companies or third parties.

FINANCIAL INSTRUMENTS: GROUP GOALS AND POLICIES AND DESCRIPTION OF THE RISKS

With reference to article 40 of Legislative Decree 127/1991, the main risks and uncertainties to which TBS Group is exposed are provided below, subdivided into the following categories:– External risks– Internal risks – Financial risks

The Parent Company, through its subsidiaries, and in relation to its management and coordination, also has to manage these risks and uncertainties, for which the information pursuant to article 2428, paragraph 1 is hereby provided.

EXTERNAL RISKS

Risks connected to the current economic situation

The economic-financial situation of the Group may be influenced by the general economic situation of the country that it is operating in, since public spending, which affects the reference sector, is related to the performance of the gross domestic product of a country.

The most immediate consequence may be a requirement to reduce the prices of the service and products offered by your group, without having to reduce the activities, since quality and quantity levels of the services provided must be maintained.

The cost reduction policy may also be an opportunity to develop the services provided by your group to customers, since they have often promoted good cost reduction policies due to more efficient use of human resources and the benefits resulting from the economies of scale in purchasing processes and management of suppliers.

In any case, the healthcare and public administration sectors are characterised by a very low level of cyclicity, representing a typically defensive market which is less prone to decline than others in periods of crisis.

Risks connected to the laws and regulations for the sectors of activity

The constant growth of healthcare expenditure and the citizens’ increased awareness of healthcare with a resulting increase in expectations regarding the level and extent of healthcare services supplied lead hospital and social healthcare facilities on the one hand to improve quality and spectrum of services supplied, and on the other to increase their efficiency and cut waste.

The need to meet these market pressures is persuading hospital and social healthcare facilities, both public and private, to invest considerable resources in technologies that allow them to optimize processes so as to increase quality and reduce costs. It is nevertheless not easy to estimate the future permanence of these market trends and availability of adequate public financial resources for the purpose.


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The Italian health market is highly regulated and influenced by the public sector, which conditions its spending dynamics. The allocation of public financial resources could in the future be limited by the parallel growth of private hospital and social healthcare facilities, and therefore the future development of the Group companies’ activities will also depend on their ability to continue to penetrate the private market.

The segment in which the Group operates is also marked by technological changes. The future development of the Group’s activity will therefore also depend on its ability to stay in step with technological development and keep a qualitatively high level of services.

The factors mentioned above could have negative impacts on the economic and financial position of the Group if they actually come into effect and are improperly managed.

An additional risk could be connected to the entry of new competitors on the market, especially for certain activities with lower added value, which could offer services at lower prices based on their streamlined organisational structures, even if potentially to the detriment of the quality of the services offered and continuity of the same.

The continuous growth of the Group over the last few years and the acquisitions carried out may work against the development of new competitors. In addition, the continuing difficulty of accessing capital markets is a greater obstacle for smaller companies.

Risks connected to activities carried out abroad

The Group continues to maintain its historical presence almost exclusively in European countries (around 98% of turnover); it has a strong presence of Central and Western Europe and in countries that were less affected by the crisis (France, the United Kingdom, Austria and Holland).

In the case the Group continues to significantly increase “trading” activities, it could be exposed to risks of various types, deriving, by way of example, from changes in the geopolitical situation, the local regulatory situation, the economic and social situation and by extraordinary events not currently foreseeable, such as difficulties in obtaining loan guarantees, liability connected with the delivery of goods supplied and at the time ownership of the same is transferred, as well as insurance for after-sales activity during the warranty period. In 2015, these activities were greatly reduced with respect to the previous year, but the current strategy plans for an increase in these operations.

The probability that these events take place varies based on the geographic area considered. Nonetheless, one or more of these events could have a negative impact on the Group’s economic and financial situation.

Risks connected to compliance in regards to health, safety and the environment

The Group’s activities, in the various countries in which it operates, are subject to multiple local laws and regulations in regards to health, safety and the environment, which are all entirely respected. Within each company of the group, specific structures dedicated to the issue in question have been established.

INTERNAL RISKS

Risks connected to lacking or delayed implementation of the business strategy

The TBS Group intends to follow a growth and development strategy, focussed in particular on consolidating and increasing the market share it has acquired in each of the business areas in which it operates.


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In the case the TBS Group is not able to effectively carry out its strategy, or achieve it according to schedule, or if the assumptions on which the strategy is based are unfounded, the capacity of the TBS Group to increase its revenues and profitability could be damaged and this could have a negative effect on the Group’s activities and its prospects for growth, as well as on its economic, equity and financial situation.

Risks connected to new acquisitions

The TBS Group, in consideration of the characteristics of the market in which it operates, pursues and intends to continue to pursue a strategy of growth through acquisitions. The success of this strategy is also dependent on the Group’s capacity to coordinate and integrate the individual managing procedures of recently acquired companies through the parent company’s organisational system, as well as for companies that may be acquired in the future. The Group cannot be sure that efforts related to integration and management will achieve the desired results. Therefore, in the case that the Group faces difficulties in integrating and managing recently acquired companies, or that may be acquired in the future, this could have a negative impact on the Group’s economic, equity and financial situation.

Risks connected with the suppliers of the produce and services the Group uses to carry out its business strategy

The Group companies are exposed to risks associated with the type of activities carried out and with the methods of supplying services.

In particular, the e-Health & e-Government Business Unit includes medical IT services and products.Potential defects in carrying out these activities or in the products could generate liability of the Group companies

to customers or third parties and give rise to subsequent claims for compensation for damage. For this reason, and to cover these risks, the Group has stipulated appropriate insurance policies to cover third-party and employee liability, and product liability.

However, there can be no certainly that the insurance coverage is adequate for potential damage caused by the events listed above. The risk that the Group has to shoulder possible additional burdens and cost therefore cannot be ruled out, with consequent negative effects on the economic and financial situation.

Please note that in recent years there have never been events causing cases of Group Company liability for those risks following which the Group has had to sustain expenses. This is why the directors of the Group Companies have not deemed it necessary to make specific allocations for this purpose.

The Risk Management Committee, established in 2013, continued to carry out case analyses and evaluate possible actions to be taken in order to mitigate the risks to the business as a whole, in part through regular meetings.

Activities performed in 2015, based on the catalogue of risks that is constantly updated, were particularly focused on monitoring and controlling actions implemented to improve processes. Auditing and follow up activities were also carried out with the assistance of Internal Audit, which is part of the Risk Management Committee. In 2015, special efforts were made to optimise existing insurance coverage, to make it more suitable and appropriate for risk mitigation purposes.

Risks connected to belonging to a group of companies

During the last year, the companies of the Group had, and continued to have relationships of various natures with the other companies within the Group, as well as with other related parties, identified on the basis of the principles of IAS 24.


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The Company works within the scope of a Group of companies, and acts as the Parent Company. More specifically, it provides consultancy and coordination services in the administrative, legal and tax areas on behalf of the Group companies. The reciprocal services and obligations between the subsidiaries and the Parent Company are governed by a specific framework service contract.

In addition, in the context of productive and commercial synergy, the companies of the Group have reciprocal relations based on which they purchase and sell intercompany products and services. Relations between Group companies are regulated according to market conditions, taking into account the quality of the goods and the services provided.

Relations with related parties include transactions resulting from normal economic-financial relations with companies or key individuals as determined by the shareholders or directors of the Company or subsidiaries or who are linked by family relations. These transactions are governed on an arm’s length basis.

The TBS Group Board of Directors, having heard the favourable opinion of the independent director and the board of auditors, approved the Procedure for Related Parties at its meeting on 16 December 2010. The procedure took effect on 1 January 2011. Following the amendments made to the AIM Issuers’ Regulations by Borsa Italiana, in effect as of 1 March 2012, said procedure was reviewed by the Board of Directors on 29 March 2012 and the relative updates took effect immediately. Further amendments were approved by the Board of Directors at its meeting of 28 September 2012. Following additional changes to the AIM Issuers’ Regulations, which took effect on 1 July 2015, these Regulations were reviewed by the Board of Directors on 18 December 2015, with the relative changes taking effect on 1 January 2016.

The Internal Control and Risk Committee, chaired by the independent director, whose vote when negative is determinant, investigates all cases relative to relations with related parties and expresses an opinion which is submitted to the Board of Directors which resolves on the issue in question.

During the course of 2015, all the opinions were positive, sometimes with conditions or with recommendations, and were approved by the Board of Directors.

The information on relations with related parties requested by Consob communication no. 6064293 of 28 July 2006 is presented in note 36 to the consolidated financial statements and note 32 of the separate financial statements. Infra-group financing was also monitored and authorised using a similar procedure that is regulated within the Internal Control System.

Risks connected to dependence on certain key roles and concentration of powers granted to certain individuals

The companies of the Group partially depend on the contribution of skills and relationships offered by certain key roles. The possible loss of these individuals and a lack of speedy replacement with appropriate management, could determine, although to a lesser degree given the size the Group has now achieved, a reduction in the Group’s competitiveness, affect its planned growth objectives, as well as having a negative effect on the Group’s activities and results. Nonetheless, the review of the organisational structure which occurred in 2015, through extraordinary rationalisation and business combination operations involving the structures of certain Group companies and the simultaneous issuing of a new organisation chart for the parent company, have made it possible to mitigate this risk.

To that end, we recall that the Board of Directors of the TBS Group acted at the end of 2015 to update its governance system, to optimise and simplify decision making and operational processes, rationalising the existing committees into a single Management Committee.


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Risks of suspension or interruption of service.

In 2015, your company externalised operational management of IT infrastructure, networks and IT systems, entrusting them to the subsidiary Insiel Mercato. While maintaining supervision and control over the activities externalised through the parent company’s Corporate IT Systems and Solutions Department, it can be excluded that the transfer, management and maintenance of the IT services and data processing, also of third parties, could generate the risk of a suspension or interruption of the services provided to customers and/or breach of the obligations to comply with rules and regulations. Nonetheless, this risk appears to be mitigated by the adoption of procedures aimed at guaranteeing business continuity through disaster recovery procedures and tools.

FINANCIAL RISKS

With reference to letter d) bis of paragraph 2 of article 40 of Italian Legislative Decree 127/1991, and article 2428, 6-bis of the Italian Civil Code for the Parent Company, please note that the main financial instruments used by the Group are trade receivables and payables, cash and cash equivalents and bank borrowing.

The Group’s financial management is handled and coordinated by the Parent Company TBS Group; in fact, the main bank credit lines, whether direct or in the form of guarantee, are chiefly concentrated at the Parent Company.

At 31 December 2015, there were no derivatives contracts, with the exception of four interest rate swap contracts (all subscribed in 2015 and better described below), intended as hedges against the risk of changes in interest rates.

Risks relating to the payment terms of clients

The revenues generated by TBS Group come from services supplied to hospital and public social healthcare facilities and from consulting and coordination services.

A receivables write-down provision equal to approximately 2.6% of the gross amount of the trade receivables has been allocated to protect against residual doubtful debts

Payments made by Group companies are affected, especially in Italy and Spain, by the long payment times associated with the public administration, with receipt times in Italy that from trade association figures (the payment times announced by Assobiomedica indicate an improvement of around 70 days between 2013 and 2014 and a further improvement of 39 days between 2014 and 2015).

Notable receivables in Italy regard the Public Administration, for which the risk of insolvency is connected to Country risk and is further reduced by transfers of credit without resource, carried out through specialised factoring companies.

Risks relating to the variation in exchange rates

This type of risk also did not show any notable changes with respect to 2014, because the presence of transactions outside of the Eurozone is quite limited and in any case, characterised by economic and financial flows internal to the country in question, which further reduces the related risk. Residual risk remains connected to the transfer of financial flows between countries outside of the Eurozone towards the parent company, even if at the end of the year there are not financial debts of the companies using currencies other than the Euro in regards to TBS Group S.p.A.

The Group’s consolidated financial statements are stated in Euro. However, considering the fact that the separate financial statements of some Group companies are stated in currencies other than the Euro, the economic and financial


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figures of the Group could be affected by changes in exchange rates between the respective currencies and the Euro because of conversion into Euro at the time of consolidation.

These companies are TBS GB (United Kingdom), which has an incidence of 12.6% on the Group’s 2015 consolidated revenues and TBS India, with an incidence of 1.5% of the Group’s 2015 consolidated revenues. However, both the revenues and costs of TBS GB and TBS India are stated and recognized in the same currency, thereby attaining a partial natural hedging.

In any case, exchange rate changes occurring during the year did not lead to significant profits or losses for the Group’s consolidated financial statements.

The Group’s growth strategy, which also envisaged development in areas that do not use the Euro, could increase the effects indicated above that derive from oscillations in exchange rates. To this end, we want to in any case recall that the international tenders awarded as of today have mainly been in the Euro and hence subject to potential risk only for the portion of acquisitions carried out in non-Euro areas.

Risks related to financial debt and fluctuation of interest rates

The Group obtains its financial resources mainly through the traditional banking channel and with traditional instruments such as medium/long-term loans, mortgages, short-term bank credit lines, flows deriving from operating activities in the context of commercial relationships, including through transfers of credit without recourse for services rendered and creditors for the purchases of goods and services, through capital increases, convertible and non-convertible bond loans and, finally, through intercompany loans deriving from the operating activities of its subsidiaries.

Furthermore, with a view to generally reduce risks, the Group Companies concentrate their financial operations only on primary banks and on instruments that are easy to liquidate.

Net consolidated financial debt of TBS Group as at 31 December 2015 is equal to about Euro 84.5 million. It is primarily due to working capital needs linked to the payment terms by its customers in several geographic areas and to financing acquisition transactions executed in previous years.

Finally, we recall that on 30 July 2015 the TBS Group repaid the bond loan of Euro 10 million, as well as the interest for the period, subscribed on 9 February 2012 with the Fondo Italiano di Investimento.

We also recall the issuing of a non-convertible bond loan, approved by the Shareholders’ Meeting of the TBS Group on 25 August 2014. Placement of the bond loan, called “TBS Group S.p.A. 6.5% 2014 - 2019” (ISINIT0005058372) was completed on 29 October for a five year period, at a nominal annual rate of 6.5%.

In addition, we note that debt payable to other providers, mainly due to the valuation of put and call options, is around Euro 2.5 million (short and medium/long term), while debt payable to leasing companies amounts to Euro 3.1 million.

Residual financial payables (net of cash and cash equivalents) refer to the banking system.As the Company’s gross financial debt is mainly characterised by variable interest rates in so far as they are linked to

the 3- and 6-month Euribor rates, financial expenses could rise if interest rates increase, leading to negative effects on the Group’s economic and financial position. This did not occur in 2015, with a decrease of around 0.25% in the Euribor rate with respect to the previous year.

The Group’s strategy is aimed at reducing the risk associated with long-term debt, by balancing fixed rate and variable rate loans, assessing, both initially and periodically, if and to what degree variable rates should be converted to fixed rates, by monitoring market rate trends.

At 31 December 2015, the amount of medium/long-term loans came to Euro 50.6 million. Of this debt, Euro 15 million is at fixed rate and relative to the aforementioned bond loan, while Euro 21.7 million is associated with 4 interest rate swap contracts (all subscribed in 2015), which serve to hedge against changes in the interest rate. The


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conditions of the interest rate swap contracts were negotiated so as to coincide with the conditions of the underlying commitments. These contracts satisfy the hedging requirements indicated in IAS 39 and fair value changes are therefore recognised directly to shareholders’ net equity.

The new medium/long-term loans subscribed in 2015 with maturity exceeding 37 months were subject to coverage. The Group’s policy is to keep the total amount of financial debt with a fixed interest rate above 30%.

For the portion relative to short-term debt, all regulated with the current Euribor variable rate, it is also necessary to consider that no recourse factoring operations for receivables create a partial natural hedge of over 50% of short-term debt on turnover in Italy.

As a consequence, there is a risk tied to a potential worsening of the general market conditions. It should also be stressed that the reference rate reached its maximum at 5% in the last 17 years, and an average value of about 2.2%.

The Parent Company took out several loans, which demand observance of specific financial indicators that are described in the explanatory notes to the financial statements. The Parent Company nevertheless deems that these financial indicators - to be calculated periodically - have no features or burdens dissimilar to those generally found in market practice. At the end of 2015, these parameters were all respected, with the exception of a single covenant relative to a loan granted by Unicredit maturing in 2018. This exception led to reclassification of Euro 1,000 thousand from non-current financial liabilities (long-term) to current financial liabilities (short-term). In any case, it is confirmed that the original repayment plan for the loan in question will be respected.

The risks of refinancing debt are managed through monitoring the maturities of credit lines and coordinating debt with types of investment, in terms of the liquidity of assets.

It should be understand that there is no guarantee that in the future the Group will be able to negotiate and obtain the loans necessary to develop its activities or to refinance those maturing, with the same methods, terms and conditions obtained. As a consequence, any worsening in terms of economic conditions for new loans and a possible future reduction in the credit capacity in terms of the banking system could have negative effects on the Group’s economic and financial situation and limit its ability to grow.

Relative to the risks connected to Public Administration payment times, please refer to that already stated above in this report.

INFORMATION ON PERSONNEL AND THE ENVIRONMENT

Total personnel operating within the context of the Group totalled 2,475 units at the end of 2015, an increase of 106 units with respect to 2014.

The increase substantially derives from the strengthening of the structures within TBS India and TBS Imaging, but the largest part is due to the inclusion within the scope of consolidation of Crimo France and Ing. Burgatti, which more than compensate for the exit of SLT.

These centers, in addition to directly providing services from specially qualified technicians to the market and the companies of the group, are also important vehicles for knowledge sharing and training, both through on the job shadowing and through the development of specific training modules aimed at Group staff.

TBS Group continues to provide operational support for the specialist degree in Clinical Engineering at the Università degli Studi in Trieste and other universities, through its own teachers. In addition, at the end of 2015, Executive Master in Business Administration in Bio-Medical Technology and ICT & Innovation Management for MIB - Master in Business Administration in Trieste were completed, which among others saw the participation of twelve employees of TBS Group employees.

In regards to certifications, at the beginning of 2016 the subsidiary EBM obtained ISO 27001 certification (international standard to guarantee own data security, minimising the risks of unauthorised access or data loss and guaranteeing effective management of protective measures adopted), as well as ISO 20000 (international standard


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aimed at improving the provision of IT services, with the objective of achieving the utmost quality for services provided combined with cost containment).

In terms of organisational development, we note that the path to revise the organisational model begun in 2013, with approval of the Governance Model, which was outlined in detail in the Directors’ Reports accompanying previous financial statements continued in 2015, and mapping of processes, which will be integrated with the matrix of powers already established and approved. For every area of responsibility, the main management processes for the operating and support activities were identified, and for every process levels of responsibility and interaction between the corporate and local structures were defined.

Additional steps along the path to implement this Governance Model include the formal issuing of the guidelines and procedures relative to the mapped processes, full application of the functional matrix that defines relations between corporate directors and those with similar roles within the subsidiaries, and effective definition and implementation of coordination activities relative to support processes.

We inform that, following the Decree Law which simplified Decree Law no. 5 of 9 February 2012, converted through Law no. 35 of 4 April 2012, which amended certain provisions regarding minimum security measures, in particular eliminating a deadline for the preparation of the Security Policy Document, above all in the light of the adoption of new IT tools which occurred in 2016 by the TBS Group S.p.A., it was held appropriate to complete updating of the Corporate Privacy manual (formerly the Security Policy Document) on 01/03/2016, which may also be used as a guideline on the topic for the Italian subsidiaries.

INTERGROUP TRANSACTIONS AND WITH RELATED PARTIES

The Company works within the scope of a Group of companies, and acts as the Parent Company. More specifically, it provides consultancy and coordination services in the administrative, legal and tax areas on behalf of the Group companies. The reciprocal services and obligations between the subsidiaries and the Parent Company are governed by a specific framework service contract.

In addition, in the context of productive and commercial synergy, the companies of the Group have reciprocal commercial relations by which they sell products and services to some Group companies and acquire products and services from the same Group companies. Relations between Group companies are regulated according to market conditions, taking into account the quality of the goods and the services provided.

Relations with related parties include transactions resulting from normal economic-financial relations with companies or key individuals as determined by the shareholders or directors of the Company or subsidiaries or who are linked by family relations. These transactions are governed on an arm’s length basis.

The information on relations with related parties requested by Consob communication no. 6064293 of 28 July 2006 is presented in note 36 to the consolidated financial statements and note 32 of the separate financial statements.

Infra-group financing was also monitored and authorised using a similar procedure that is regulated within the Internal Control System.

REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE

Report approved by the Board of Directors on 24 March 2016.Website: www.tbsgroup.comThe Company has a traditional corporate governance system. The board of directors is elected by the Shareholders’

Meeting and the Board of Statutory Auditors performs the tasks required by article 2403 of the Italian Civil Code.The Company is listed on AIM Italy/Italy Alternative Capital Market, managed by Borsa Italiana. In 2011, the


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Company obtained the necessary requirements envisaged in article 116 of the TUF to be considered an issuer of financial instruments distributed among the public in a significant manner.

The TBS Group has issued ordinary shares and convertible bonds, for which the possibility of conversion has passed without the bondholder having exercised said option, as well as a bond loan reserved for professional investors.

Share capital amounts to Euro 4,218,557.60, fully paid up, divided into 42,185,576 shares of a nominal value of Euro 0.10 each. Number of own shares: 764,210, equal to 1.812% of share capital.

The convertible bond loan held by Fondo Italiano di Investimento SGR S.p.A., for which the conversion deadline expired on 8 February 2015, was issued for a total of Euro 10,000,002.10 and was repaid by the TBS Group on 30 July 2015, making use of the right foreseen in the loan regulations that allowed early repayment in advance of the original maturity date in February 2016.

On 31 October 2014, the bond loan “TBS Group S.p.A. 6.50% 2014- 2019” was issued for a nominal Euro 15,000,000.00, code ISIN IT0005058372, consisting of 150 bearer bonds of a nominal value of Euro 100,000.00 each, non divisible, on the multilateral trading facility for bonds organised and managed by Borsa Italia, known as EXTRAMOT, and reserved for professional investors.

Article 8 of the Articles of Associations sets the threshold beyond which transfer of shares or changes in voting right options must be communicated at 5%, in compliance with the AIM Italia Regulations, which identify the category of shareholders classified as significant pursuant to the equity investments rules established in the Consolidated Law on Finance at 5% or higher. The violation of this communication obligation leads to suspension of voting rights for a year, as envisaged in the Articles of Association.

The same article of the Articles of Association envisages applicability to the Company, even if not listed on a regulated market, of articles 106-109 of the TUF in regards to takeover and public swap offers, and implemented the establishment of the Panel of Arbitrators envisaged in the Issuers’ Regulations.

At present there are no shareholder agreements within the Company. The Company’s website lists the major shareholders of the Company, as of 31/12/2015.

The Company has adopted almost all the institutions and procedures envisaged and suggested by Borsa Italiana’s Code of Conduct.

The Company has an Internal Control System, a Procedure for Related Parties, Significant Transactions, Reverse Take-Overs and Substantial Changes of Business, a Procedure Regarding Internal Management and External Communication of Privileged information, which also foresees procedures regarding corporate information in general, and a Procedure Regarding Transactions Made by Directors and Other Key Figures.

During 2013, the Company, completing the corporate procedure in regards to privileged information, established, pursuant to article 115-bis of Legislative Decree 58/98 and articles 152-bis and subsequent of Issuers’ Regulation no. 11971, the Register of individuals that have access to privileged TBS Group S.p.A. information, ensuring in this way improved traceability of access to market-sensitive information, so as to allow subsequent verification. Management of the same has been entrusted to the Secretary of the Board who, supervising the completeness of the pre-board disclosure, also preserves the privacy of the data and information provided.

On 28 April 2015, the Shareholders’ Meeting resolved to reduce the number of members on the Board of Directors from nine to five. The current Board of Directors was appointed by the same Shareholders’ Meeting using the methods foreseen in article 21 of the Articles of Association, and their terms will expire as of the Shareholders’ Meeting to approve the financial statements for 2017.

The Board is as follows:• Diego Bravar, Chairman, born in 1948, initially appointed in 1996, in office since 2015, with his term expiring as of

the Shareholders’ Meeting which approves the financial statements for 2017, executive with powers, other roles: Vice President of Confindustria FVG, Sole Director of Biovalley Investments S.r.l., Director of CE &IT S.p.A., Vice President of FIT (Trieste International Foundation for Scientific Progress and Freedom), Director of the Istituto Scientifico Biomedico Euro Mediterraneo (ISBEM S.C.P.A.), Director of the MIB School of Management, Director of the


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Università degli Studi di Trieste, Director of O3 Enterprise S.r.l., Chariman of the Technical/Scientific Committee for Fondazione ITS Volta, member of the Steering Committee for Fondazione Italiana Fegato – ONLUS, member of the Technical/Scientific Council for Area Science Park, member of the Assonime Committee;

• Paolo Salotto, Chief Executive Officer, born in 1967, initially appointed in 2005, in office since 2015, with his term expiring as of the Shareholders’ Meeting which approves the financial statements for 2017, executive with powers, other roles: Chairman of Insiel Mercato S.p.A., Chairman and CEO of Seges S.r.l., Chairman of Elettronica Biomedicale S.r.l., CEO of Fra-Ser S.p.A., director of TBS GB Telematic & Biomedical Services Ltd., director of TBS INDIA Telematic and Biomedical Services Private Ltd., director of Sinopharm TBS (Beijing) Clinical Engineering Technology Co. Ltd., Auditor of Impresa di Costruzioni Mari & Mazzaroli, Auditor of Emme Due S.p.A.;

• Laura Amadesi, Director, born in 1968, initially appointed in 2012, in office since 2015, with her term expiring as of the Shareholders’ Meeting which approves the financial statements for 2017, non-executive, other roles: Interpor-to Bologna S.p.A., member of the Internal Control and Risks Committee and the Appointments, Remuneration and Governance Committee;

• Dario Scrosoppi, Director, born in 1955, initially appointed in 2003, in office since 2015, with his term expiring as of the Shareholders’ Meeting which approves the financial statements for 2017, non-executive, member of the Internal Control and Risks Committee and the Appointments, Remuneration and Governance Committee;

• Carlo Solcia, Director, born in 1966, initially appointed from 2007 to 2009, in office since 2015, with his term expi-ring as of the Shareholders’ Meeting which approves the financial statements for 2017, non-executive, indepen-dent pursuant to the Code of Conduct and the Consolidated Law of Finance, other roles: Chairman of MS Growth Ventures S.r.l., Chairman of Terra Nova Capital S.r.l., director of LGH S.r.l., director of Lipogems International S.p.A., director of Resono Ophthalmic S.r.l., Chairman of the Internal Control and Risk Committee and of the Committee for Appointments, Remuneration and Governance.The process of updating corporate governance, begun in 2013, continued and at its meeting on 30 April 2015, the

Board of Directors of the Company, implementing the recommendations found in the Code of Conduct, maintained separation between the roles of Chairman and Chief Executive Officer.

During the same meeting, the Board of Directors established that the ordinary and extraordinary administrative powers remain fully assigned to the Board, with the exception of those powers expressly granted to the Chairman and Chief Executive Officer as identified below, with the additional exception of mandates expressly granted by the Board of Directors for specific single actions or categories of actions and without prejudice to the responsibilities assigned exclusively to the Shareholders’ Meeting.

During the same meeting, the Chairman was granted the following powers:• The Chairman is responsible for legally representing the Company, pursuant to article 28 of the Articles of

Association and is identified as the employer for the Company itself, through granting of all decision making and spending powers pursuant to article 2 of Legislative Decree 81/2001, as amended, to protect health and safety in the workplace.

• In addition, the Chairman is responsible for supervising the functioning of the Internal Control System, the ade-quacy of which is nonetheless assessed by the Board, and to periodically inform the BoD about the activities of the Internal Auditor, in order to ensure effective implementation of the control system (procedures foreseen and regularity of behaviour) ensuring compliance with internal and external rules (respectively procedures and laws).

• The Chairman is assigned the following powers:• Representing the Company, in general, with third-parties and judicial authorities;• Representing the Company with public entities and offices, including Customs, private offices, Chambers of Com-

merce, Stock Exchanges, National Commissions for Companies and the Stock Market, as well as all other Public Administrations or authorities;

• Representing the Company with any tax authority, national or local, and signing the fiscal and tax declarations envisaged under the law (IRPEF, IRAP, VAT, etc.);


51

• Designating the manager of the prevention and protection service in conformance with that envisaged in article 31 and subsequent of Legislative Decree 81/2001, as amended;

• Carrying out risk evaluations according to that envisaged in the regulations in effect from time to time, in coope-ration with the manager of the prevention and protection service and the company doctor and adopting, without limits on spending, all the necessary and appropriate measures for the protection of workplace health and safety, with the right to delegate, pursuant to that envisaged in article 16 of Legislative Decree 81/2001;

• Presenting allegations to the legal authorities and the police;• Representing the Company, without spending limits, also in executive venue, in front of any judicial, administrative,

tax, ordinary or special authority, of any level, country or office and hence, also in the Council of State and in front of the Court of Cassation;

And the CEO:• Representing the Company, in general, with third-parties and judicial authorities;• Representing the Company with customers, suppliers, agents and distributors;• Representing the Company with public entities and offices, including Customs, private offices, Chambers of Com-

merce, Stock Exchanges, National Commissions for Companies and the Stock Market, as well as all other Public Administrations or authorities;

• Representing the Company with the national and international financial community;• Managing the requirements and all communications with the Chamber of Commerce, the Register of Companies, the

Tax And Revenue Office and the VAT Offices; signing all the documentation required in order to execute individual cases, including the requirements necessary to obtain concessions, licenses and authorisations, permits, registra-tions and certificates;

• Representing the company in the execution of all the actions relevant to import and export operations including the possibility of executing all the customs operations (including certificate requests from the Chamber of Commerce and/or other relevant authorities and offices);

• Representing the Company with the financial administration and any tax authority, national or local, and signing the fiscal and tax declarations envisaged under the law;

• Appealing roles, presenting claims, complaints, grievances, memos and documents to any tax office or commission; depositing reimbursements and interest, providing receipts;

• Collecting sums;• Granting extensions on payment;• Giving and releasing security deposits;• Stipulating, amending and terminating contracts to open credit lines, leasing safety deposit boxes and deposit

contracts with credit institutions, including agreements for the activation of electronic banking products;• Requesting non-security backed loans and financing for amounts of up to Euro 5,000,000;• Requesting credit lines, credit facilities and guarantees for amounts of up to Euro 15,000,000;• Filing protests;• Requesting and receiving chequebooks; Issuing cheques, including overdrafts, as long as they are within the limits

of the credit lines granted;• Executing and receiving bank transfers, making payments;• Carrying out all the operations relevant to safety deposit boxes at credit institutions and other entities;• Arranging the payment of salaries and compensation subject to tax withholding, as well as the payment of taxes

due by the Company (VAT, obligatory social security and insurance payments, withholdings);• Executing debit and credit operations for the Company’s accounts with credit institutions and post offices;• Executing bill discounting signed by third parties, giving provisions to extinguish and withdraw bills of exchange and

RIBAs in the company’s name, deposit and issue receipts for cheques, promissory notes and postal bills;


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• Executing the granting of credit through securitisation and assignment deals with factors for amounts of up to Euro 15,000,000;

• Executing deeds recognising debts for amounts of less than Euro 500,000;• Signing compromises;• Advancing and supporting legal actions at any level and in any jurisdiction, both civil and criminal;• Presenting allegations to the legal authorities and the police;• Representing the Company, without spending limits, also in executive venue, in front of any judicial, administrative,

tax, ordinary or special authority, of any level, country or office and hence, also in the Council of State and in front of the Court of Cassation;

• Representing the Company, without spending limits, in employment disputes, at every level of court and jurisdiction, in front of the judicial authority responsible for employment issues, as well as in front of the Conciliation Commis-sions established at the Provincial Directorates and at Union Organisations in conciliation procedures;

• Settling disputes, conciliating tax, fiscal and employment law disputes, accepting or refusing settlement agreemen-ts;

• Settling civil disputes and conciliating disputes, accepting or refusing settlement agreements;• Defining the liquidation of damages and claims, for amounts less than Euro 500,000;• Deferring and reporting oaths, deferring and responding to queries and questions also in regards to civil claims,

bringing civil actions in criminal processes, electing domicile;• Discontinuing trial proceedings;• Hiring, dismissing, amending contractual conditions for employees and directors, disputing infractions, deciding in

regards to any disciplinary sanctions, deciding on promotions and transfers of personnel - exclusive of those with strategic functions (General Managers, Directors of Administration, Finance and Control), and also excluding person-nel with gross annual remuneration, not including variable elements and benefits, exceeding Euro 120,000.

• Stipulating collective labour contracts;• Representing the Company in its relations with employer associations, unions in general and workers’ representati-

ves; defining and signing union agreements;• Social security and insurance requirements: releasing payroll extracts and certifications regarding personnel, for so-

cial security, insurance or health insurance entities, for both public and private entities; supervising the observance of the requirements pertaining to the Company in regards to withholding;

• Executing guarantees;• Establishing, writing, renewing, extinguishing, cancelling pledges and privileges regarding third parties and to the

benefit of the Company; accepting cancellations, restrictions and reductions in the level of mortgages regarding third parties and to the benefit of the Company; waiving mortgages; executing any other mortgage operation re-garding third parties and to the benefit of the Company;

• Providing goods and services, in Italy and abroad, for any reason and for amounts lower than Euro 30,000,000 net of taxes; participating, also in temporary associations of businesses, in consortia, tenders, projects with pu-blic financing, bids, private requests for the execution of work orders and suppliers for amounts of less than Euro 30,000,000 net of taxes. Signing any deed necessary for the participation in said tenders, projects, competitions under the indicated threshold, as well as stipulation of the relative contracts and every action consequent to the awarding, including the possibility to issue sureties, guarantees, performance bonds, and to commit the company in all legal negotiation regarding execution of the contract.

• Signing of contracts to purchase and sell raw materials, semi-processed products, goods, equipment and more ge-nerally moveable and/or registered assets necessary for normal execution of company operations, also able to issue the relative purchase orders and stipulate supply contracts, with a unit cost, net of taxes, equal or lesser than Euro 500,000.

• Signing of contracts to obtain consulting or professional services, for maintenance or services on own goods or held


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for whatever purpose, for a value per single contract, net of taxes, equal or lesser than Euro 250,000. • Stipulating leasing, sub-leasing and free loan contracts for real estate for leasing costs of less than Euro 300,000

per individual financial year for a period equal to or less than six years;• Stipulating leasing, sub-leasing or free loan contracts, also financial or operating leases, involving moveable assets,

including registered assets, whether owned or pertaining to third-parties, with the exclusion of assets relative to the company’s activities, in amounts of less than Euro 300,000;

• Stipulating leasing – including financial or operating – contracts, subleasing and free loan contracts involving assets relative to the company’s activities for amounts less than Euro 3,000,000;

• Stipulating agency and business procurement contracts, and contracts for any other intermediation, commission and distribution relationship;

• Stipulating confidentiality agreements;• Stipulating sponsorship contracts and agreements and connected deeds for amounts of up to Euro 30,000, net of

taxes;• Registering trademarks and filing patents;• Appointing and revoking proxies for individual deeds within the limits of the powers granted;• Carrying out any action, even if not specifically listed above, with a spending threshold up to Euro 300,000; • Exercising any power falling to the Board of Directors with an expenditure threshold equal to Euro 2,500,000

should the nature of urgency so require, with the qualification that in said case, the CEO himself shall determine the nature of the operation’s urgency and upon its completion he must report on it at the first call of the Board meeting subsequent to execution of the urgent action.

During the course of 2015, the process of implementing the Governance within the Companies of the TBS Group continued, on the basis of the guidelines issued by the Parent Company. This process is still under way.

The Chief Executive Officer is the main individual responsible for managing the Company, but always acts within the strategic guidelines approved by the Board of Directors to which he reports in advance, even in the case of significant operations carried out by subsidiaries, except in rare cases of urgency, in which case he immediately brings his decisions to the Board for ratification.

In any case the Board examines and approves the Company’s strategic and financial indications and monitors their subsequent execution and any risks.

The frequency of the meetings of the Board of Directors allows for continuous updates on operating results.An independent director is also a member of the Board of Directors. Taking the provisions of the Borsa Italiana Code

of Conduct and the criteria set forth in the T.U.F. as guidelines, his requisites are checked by the Board of Directors and Board of Statutory Auditors each year.

During 2015, there were eleven meetings of the Board of Directors; the average duration of these meetings was around six hours.

The CFO and the General Managers were often present and invited to give presentations at the Board meetings.It is the consolidated practice of the Company to provide the members of the Board and the Board of Statutory

Auditors with the documentation for committee works in advance and in a timely manner. In the case of lengthy documents, the Regulations envisage the preparation of an executive summary. The Secretary of the Board is responsible for the disclosure necessary for implementation of Board resolutions.

The Board of Directors appointed an Internal Control Committee, currently made up of two non-executive directors and chaired by the independent director, and a Nomination, Remuneration and Governance Committee made up of three non-executive directors, one of whom is the independent director and chairs it.

On 18 December 2015, the Board of Directors acted to update its own governance system to optimise and simplify the decision making and operational processes through rationalisation of the existing Committees into a single structure, the Management Committee, which will be responsible for monitoring the economic/financial performance


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of activities in regards to objectives, making assessments of the implementation of development programs, analysing market trends and proposing actions to take advantage of potential opportunities.

The fixed members of this Committee, who are considered key people, are Chief Executive Officer, who serves as chairman, the Business Unit General Managers, the Director of Administration, Finance and Control, the Director of Human Resources, Organisation and Quality, and the Director of Industrialisation.

It was decided not to appoint a Director given that the internal control system answers to the Board of Directors and given that the Internal Control and Risk Committee is chaired by the independent Director.

A succession plan for the executive directors was not adopted.The Company has an internal control system with the purpose of ensuring effective running and management of

the Company’s activity through mapping, verification and assessment of the major risks.The Board supervises the functioning of this internal control system and assesses its adequacy.The Internal Control and Risk Committee carries out the internal control preliminary checking activity, collaborates

in managing and maintaining the system, examines the Internal Audit work plans, and expresses its opinion on the subject of transactions with related parties.

The Internal Control and Risk Committee and the Board of Statutory Auditors work in close contact and often call joint meetings.

The Internal Audit function also includes the Internal Control Supervisor, who reports directly to the Board of Directors. During 2015, the Audit Plan was approved and the Manager completed all of the tasks envisaged in said Plan, as well as the additional tasks that were entrusted to them by the Directors of other Group companies, also through 17 on site verifications of operations at companies within the Group. The Manager also viewed all of the information necessary to carry out these tasks. The Board of Statutory Auditors, Supervisory Body, Manager of the Administration and Control function, the Risk Management Committee and the Privacy, Safety and Environment, Quality and Information Technology functions all take part in the TBS Group internal control system.

The Nomination, Remuneration and Governance Committee works to create a policy relative to the nomination of administrative bodies and key people in the context of the Group and for the creation of a coherent remuneration policy. In addition, it expresses a preventive opinion on nominations for administrative bodies and Group key people and for the relative compensation. During the course of 2015, it expressed 22 opinions, delivered in advance to directors and read during the course of the meetings. The meetings that did not end with the preparation of an opinion had minutes drawn up.

The Shareholders’ Meeting held on 28 April 2015 resolved to allocate a maximum gross total amount per year of Euro 500,000 (five hundred thousand) to the Board of Directors, as well as reimbursement for travel expenses, including remuneration of directors assigned special tasks, giving the BoD the mandate to determine the amount of said fees.

Considering that the Board has, in addition, set remuneration only for the Chairman, the CEO and for the independent director because of the commitment demanded of him in the governance institutions of the Company, the Committee has expressed its favourable opinion for these cases of compensation and in any case voiced its opinion in the absence of the interested party.

No indemnities of any type are foreseen in the case of a public swap and there are no special agreements regulating treatments at the conclusion of employment for directors or key people within the Group, except for the General Manager for corporate activities of TBS Group S.p.A. and for the Chief Executive Officer of EBM S.r.l.

For the General Manager of corporate activities for TBS Group S.p.A., if the right to withdraw from the contract is exercised by TBS Group between 31/10/2016 and 01/05/2018, a termination indemnity will be paid falling within a range of between 67.5% and 137.5% of the annual gross salary agreed on and defined on the basis of the date of withdrawal.

In the case of an unjustified lack of approval by the BoD of the Business Plan, the draft financial statements or the company organisation chart, as well as in the case or revocation of the mandates (while maintaining his position as the


55

Director), the General Manager for corporate activities may withdraw from the contract for just cause and in this case, the TBS Group will pay an employment termination indemnity equal to 125% of the gross annual fees agreed upon.

In the case of dismissal for just cause, the Chief Executive Officer of EBM S.r.l. will receive compensation equal to the amount that would have been received up to the natural expiry of the current mandate.

The Board of Statutory Auditors, Internal Control and Risk Committee, Internal Audit and Supervisory Body have access to corporate information necessary for performing the tasks assigned to them.

The current Board of Statutory Directors was appointed by the Shareholders’ Meeting on 28 April 2015, using the methods foreseen in articles 21 and 30 of the Articles of Association, and their terms will expire as of the Shareholders’ Meeting to approve the financial statements for 2017.

The Auditors meet the independence requirements envisaged by law.They met seven times during 2015, of which three with the Internal Control Committee.The Board of Statutory Auditors includes:

• Andrea Fasan, Chairman, born in 1962, initially appointed in 2012, in office since 2012, term expiring as of the Shareholders’ Meeting which approves the financial statements for 2017, independent pursuant to the Code of Conduct, Chairman of the Board of Auditors of VIP Ceramica S.p.A., in liquidation, Chairman of the Board of Auditors of International Sports Capital S.p.A, Chairman of the Board of Auditors of FDAH S.p.A, Chairman of the Board of Auditors of S.P.A.M.I. S.r.l., Chairman of the Board of Auditors of Autoscout24 Italia S.r.l., Chairman of the Board of Auditors of Hoffmann Italia S.p.A., of Pittarosso S.p.A., Chairman of the Board of Auditors of Morellato S.p.A., Chair-man of the Board of Auditors of D.I.P. Diffusione Italiana Preziosi S.p.A., Chairman of the Board of Auditors of Forno D’Asolo S.p.A., Chairman of the Board of Auditors of IAMCO – International Aerospace Management Company Scarl, Chairman of the Board of Auditors of Gavioli S.p.A., Chairman of the Board of Auditors of Forall Confezioni S.p.A., Auditor of Capitolo V S.r.l. in liquidation, Auditor of Parcheggio e Immobiliare Prato della Valle S.r.l., Auditor of GN Hearing S.r.l., Auditor of Carel Industries S.p.A., Auditor of Semperflex Roiter S.r.l., Auditor of Airest S.p.A., Auditor of Allnex Italy S.r.l., Auditor of BKB Italia S.r.l., liquidator of Tacchificio 3C – of F.lli Cesarato S.n.c., liquidator of Gottardo S.r.l., liquidator of Video Distribuzione S.r.l., liquidator of Lifet S.a.s. di Sgabarosso Stefano & C., liquidator of Chia-ra Europa S.r.l., liquidator of Consorzio Edile Nordest, liquidator of Seven S.r.l. in liquidation, liquidator of Consorzio Planet Costruzioni, liquidator of Reenergy S.r.l., liquidator of Euroslot S.r.l. in liquidation, liquidator of Fintex S.r.l. in liquidation, legal administrator of Consul Media Service S.r.l.;

• Renato Furlani, Auditor, born in 1962, initially appointed in 2015, in office until the Shareholders’ Meeting to ap-prove the financial statements for 2017, independent as in the Code of Conduct, Auditor of Cava Romana S.p.A., Auditor of Alder S.p.A., Auditor of Bruno Pacorini S.r.l., Auditor of Cerere S.p.A., Auditor of Colombin & Figlio S.p.A., Auditor of Park San Giusto S.p.a., Auditor of Della Venice European Investment (VEI) Capital S.p.A., independent au-ditor of Interland – Consorzio per integrazione e lavoro Società Cooperativa Sociale; independent auditor of Ordine Regionale Psicologi;

• Luciano Lomarini, Auditor, born in 1955, initially appointed in 2009 until 2012, in office since 2015 and until the Shareholders’ Meeting to approve the financial statements for 2017, independent as in the Code of Conduct, Chair-man of the Board of Auditors of Elettronica Biomedicale S.r.l., Chairman of the Board of Auditors of TBS IT, Auditor of TBS Imaging S.r.l., Auditor of Ing. Burgatti Spa, Managing Director of Lomarini & Lomarini Consultant S.a.s., Sole Director of Redata S.r.l., Sole Director of Bunker S.r.l., Sole Director of Kell S.r.l.The independent auditing firm, Reconta Ernst & Young, was appointed by the Shareholders’ Meeting on 21 June

2011, and its mandate will expire as of the Shareholders’ Meeting called to approve the financial statements for 2019.In accordance with Law 231/2001, the Company updated its Organisation, Management and Control Model,

approved the Code of Ethics and nominated the Supervisory Body.Updating of the Model is continuous.It gave precise instructions to the Italian companies of the Group to ensure that they proceed in the same way, as

well as to the foreign companies to ensure that they adopt the Code of Ethics.


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The Company and its subsidiaries continue to map corporate risks and continue the subsequent reviewing and completion of the procedures.

The Internal Control and Risk Committee examined thirty one cases of relations with related parties during 2015 and reported the results of the preliminary check to the Board of Directors; a copy of the opinion is delivered to all directors before the meeting, and expressed its opinion in regards to privileged information and take-over bids.

The Shareholders’ Meeting did not authorise derogations to the prohibition of competition and to that end no problems were brought to the attention of the Board of Directors.

The Shareholders’ Meeting Regulations are also published on the Company’s web site.The role of Investor Relator is entrusted to the CFO, Stefano Beorchia (e-mail [email protected]) who prepared 27

press releases in 2015, with the assistance of the Marketing and Communication Department. He also assisted the Chairman and the Chief Executive Officer in their participation in the following events:• Small Cap Conference 2015, organised in Milan by Borsa Italiana on 19 November 2015, with 36 companies on AIM

Italy participating and 400 guests, including 80 investors.• Large & Midcap Event organised by CF&B in Paris on 7-8 October 2015. This was the fifteenth edition and saw the

presence of around 400 investors and 140 listed companies.• LUGANO MID&SMALL INVESTOR DAY, organised in Lugano on 25 September 2015 by IR Top in partnership with

Equita SIM and with the support of Borsa Italiano. This year was the IV edition. The event was an interesting oppor-tunity to meet with the Swiss financial community, in particular with reference to the family office, asset managers and fund managers.

• AIM INVESTOR DAY, organised in Milan on 15 April 2015 by IR Top, with the support of Borsa Italiano. This was the II edition. Around 150 investors and 20 listed companies participated in the meeting.

• The European Midcap Event organised by CF&B in Frankfurt on 4 March 2015. This was the eighth year for the event, and saw the presence of around 100 investors and 60 listed companies.Following these events and meetings with investors, the names of the same were added to a dedicated mailing list,

which currently contains over 150 names, of which two thirds foreign.

SUBSEQUENT EVENTS

The following significant events occurred in early 2016. They are described in further detail in the notices on our website in the Investor Relations section:

On 16 February 2016, the TBS Group, through the subsidiary TBS GB, was awarded two additional five year contracts with a total value of over £ 940,000 (Euro 1,245,000) for the supply, through an operating lease, and management of biomedical equipment for Bedford Hospital NHS Trust.

This British healthcare structures serves over 270,000 users in the province of Bedfordshire, north of London, in southern England.

The TBS Group continued its international development project with the acquisition of Tunemedix SL of Lisbon on 7 March 2016. The company specialises in supplying diagnostic imaging products and managing relative services.

The investment to acquire 51% of the company came to Euro 184,000, but this may rise to a total amount of Euro 251,000 based on the final economic results for 2015 achieved by the acquired company. The contract also foresees the possibility to exercise a call option in favour of the TBS Group and a put option in favour of the minority shareholders, to be exercised by 31 March 2021.

In financial year 2014, Tunemedix saw turnover of around Euro 1.4 million, and has a staff of around 10 employees.


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PROPOSAL FOR RESOLUTION BY THE SHAREHOLDERS’ MEETING

The Financial Statements for 2015 that we are submitting for your approval show a profit of Euro 3,684,371.29 that we suggest should be allocated to the extraordinary reserve.

We would like to thank you for the confidence you have entrusted us with and ask you to approve the financial statements along with the explanatory notes and this report on operations.

Trieste, 24 March 2016

On behalf of the Board of Directors Chief Executive Officer Paolo Salotto


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59

Consolidated Financial Statements as at 31 December 2015Annual Financial Report

Consolidated financial statements at 31 December 2015

Drawn up based on the International Financial Reporting Standards (IFRS)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(thousands of Euro) Notes 31/12/2015 31/12/2014

ASSETS

NON-CURRENT ASSETS

- Assets with indefinite useful life (goodwill) 36,943 31,557

- Intangible assets with finite useful life 25,928 22,924

Intangible assets 8 62,871 54,481

- Land and buildings 7,667 6,827

- Plants and machinery 12,341 9,735

- Other tangible assets 2,850 3,337

Tangible assets 9 22,858 19,899

- Investments in associated companies 10 1,084 782

- Investment in other companies 10 286 344

- Other financial assets 17 2,145 436

- Other non-current assets 10 624 587

- Prepaid tax assets 35 7,345 7,792

Other non-current assets 11,484 9,941

NON-CURRENT ASSETS 97,213 84,321

Inventories 11 11,993 9,465

Trade receivables 12 105,519 110,823

Assets held for trading 13 0 0

Other current assets 14 12,387 9,789

Income tax receivables 15 3,014 1,784

Current financial assets 17 9,878 5,192

Cash and cash equivalents 17 25,171 30,763

CURRENT ASSETS 167,962 167,816

Assets held for sale 7 333 -

TOTAL ASSETS 265,508 252,137

NET EQUITY

- Share capital 4,142 4,142

- Reserves 46,941 44,896

GROUP NET EQUITY 51,083 49,038

NET EQUITY ATTRIBUTABLE TO THIRD PARTIES 2,392 2,616

CONSOLIDATED NET EQUITY 16 53,475 51,654


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(thousands of Euro) Notes 31/12/2015 31/12/2014

LIABILITIES

Non-current financial liabilities 17 50,608 33,378

Employee severance indemnity [Italian TFR] 18 9,074 9,026

Deferred tax provision 35 10,161 8,930

Provisions for risks and charges 19 1,459 979

Other medium/long-term liabilities 20 306 320

NON-CURRENT LIABILITIES 71,608 52,633

Trade payables 21 38,706 38,866

Other current liabilities 22 29,171 42,018

Current financial liabilities 17 71,080 65,550

Income tax payables 15 1,468 1,418

CURRENT LIABILITIES 140,425 147,851

TOTAL LIABILITIES 212,033 200,484

Liabilities relative to assets held for sale 0 0


CONSOLIDATED INCOME STATEMENT

(thousands of Euro) Notes 31/12/2015 31/12/2014(*)

Revenue from sales and services 24 232,556 228,340

Other income 25 1,292 1,192


Cost of materials 26 30,727 31,309

External services costs 27 82,113 80,218

Personnel costs 28 95,697 92,970

Other operating costs 29 5,597 3,995

Cost adjustments for in-house generation of non-current assets 30 -3,317 -2,998

Amortisation and write-downs on fixed assets 31 11,828 10,499

Other provisions 32 384 161

Total operating costs 223,029 216,154

OPERATING PROFIT 10,819 13,378

Gains (losses) from investments 33 -28 -47

Financial income 34 827 372

Financial charges 34 -6,391 -6,953


Income taxes 35 -2,908 -4,524

PROFIT/(LOSS) FOR THE YEAR deriving from operating assets 2,319 2,226

Profit/(loss) from assets held for sale 7 551 122

PROFIT/(LOSS) FOR THE YEAR 2,870 2,348

(Profit)/Loss for the year attributable to minority interests -460 -452

PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE TO THE GROUP 2,410 1,896

Earnings per share attributable to ordinary shareholders of the Parent Company (in Euro) 6

- base 0.059 0.046

- diluted 0.059 0.046

(*) Data restated as a result of the application of IFRS 5


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CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

(thousands of Euro) Notes 31/12/2015 31/12/2014(*)

Profit/(Loss) for the year (A) 2,870 2,348

Other items of the comprehensive income statement that will be subsequently reclassified to profit/(loss) for the year

Fair value change in hedging derivatives -165

Tax effect on fair value change in hedging derivatives 45

Difference in foreign currency balance sheet translations 142 385

Other items of the comprehensive income statement that will not be subsequently reclassified to profit/(loss) for the year

Actuarial gains/losses 552 -1003

Tax effect on actuarial gains/losses -92 282

Actuarial profit/(loss) net of tax effect 460 -721

Total other comprehensive income statement items (B) 482 -336

Total profit/loss for the year (A)+(B) 3,352 2,012

Total profit for the year attributable to:

- Minority interests 478 381

- Group 2,874 1,631

Total 3,352 2,012



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CONSOLIDATED CASH-FLOW STATEMENT

(thousands of Euro) notes 31/12/2015 31/12/2014(*)

Profit before tax from operating assets 5,227 6,750

- Write-downs (revaluations) of investments 28 47

- Amortisation, depreciation and write-downs of tangible and intangible assets 11,828 10,499

- Write-downs/(write-backs) on non-investment assets 0 0

- Net increase/(decrease) in the Employee Severance Indemnity provision and other personnel funds 547 541

- Net increase/(decrease) in provisions for risks and charges 384 161

- Interest and other financial income -827 -373

- Financial expenses 6,391 6,953

Flow from disposed assets 0 -173

Total 23,578 24,405

Net change in working capital for the period

(Increase)/decrease in inventories -1,379 -42

(Increase)/decrease in trade receivables 8,998 5,993

Increase/(decrease) in trade payables -1,957 -9,242

Increase/(decrease ) in other receivables and payables -17,811 252

Changes in working capital from disposed assets 0 -838

Total -12,149 -3,877

Interest income and other financial income received 0 0

Income taxes paid -4,231 -4,097

CASH FLOW GENERATED BY OPERATING ACTIVITIES 7,198 16,431

- Purchases of intangible assets -4,528 -4,550

- Purchases of tangible assets -5,875 -6,859

- Net change in financial receivables and other financial assets 0 0

- Acquisitions of minority interests in consolidated investments 0 -384

- Acquisitions of other investments 0 -78

- Disposal of investments 94 0

- Disposal of intangible assets 111 347

- Disposal of tangible assets 249 464

- Acquisition of subsidiaries, net of financial resources -4,805 -1,050

Flow from investment activities from disposed assets 7 283 -12

CASH FLOW USED BY INVESTMENT ACTIVITIES -14,471 -12,122

CASH FLOWS FROM FINANCING ACTIVITIES

- Net Increase/(decrease) in current financial liabilities 1,193 -3,524

- Net Increase/(decrease) in non-current financial liabilities 13,288 13,283

- Net change in financial receivables and other financial assets -6,280 -1,796

Dividends distributed to third parties -1,151 -306

- Interest and other financial expenses paid -6,118 -6,702

- Interest receivables and other financial income received 827 379

Flow from financing activities from disposed assets 0 -2,669

CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,759 -1,335

TOTAL CASH FLOWS -5,514 2,974

CASH AND CASH EQUIVALENTS (NET) AT THE START OF THE YEAR 30,763 27,659

- Net foreign-exchange differences -78 130

CASH AND CASH EQUIVALENTS (NET) AT THE END OF THE YEAR 25,171 30,763



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SUMMARY STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ NET EQUITY

(thousands of Euro) Share capital

Reserve, Share

premium

Foreign currency

transl. reserve

Other reserves

and retained earnings

Profit for the period

GROUP NET EQUITY

Minority interests

and reserves

Profit (loss) attributable

to third parties

Net equity attributable

to third parties

Consolidated net equity

Consolidated shareholders' net equity 31/12/2013 IAS/IFRS 4,142 42,832 -982 12,765 -10,955 47,802 2,323 460 2,783 50,585

Allocation of 2013 profit 0 -10,955 10,955 0 460 -460 0 0

Changes in foreign currency translation reserve 385 385 0 385

Result at 31 December 2014 1,896 1,896 452 452 2,349

Actuarial profit/(loss) net of tax effect -650 -650 0 -71 -71 -721

Total profit/loss for the period 0 0 385 -650 1,896 1,631 0 381 381 2,012

Dividends resolved 0 0 -426 -426 -426

Distribution of dividends to fully consolidated companies due to call and put option contracts -133 -133 0 -133

Purchase of additional minority interests of subsidiaries 0 -262 -262 -122 -122 -384

Treasury shares 0 0 0 0 0 0

Consolidated shareholders' net equity 31/12/2014 IAS/IFRS 4,142 42,832 -597 765 1,896 49,038 2,235 381 2,616 51,654

Allocation of 2014 profit 0 1,896 -1,896 0 381 -381 0 0

Changes in foreign currency translation reserve 142 142 0 142

Result at 31 December 2015 2,410 2,410 460 460 2,870

Actuarial profit/(loss) net of tax effect 442 442 18 18 460

Fair-value measurement hedging derivatives net of tax effect -120 -120 0 -120

Total profit/loss for the period 0 0 142 322 2,410 2,874 18 460 478 3,352

Dividends resolved -704 -704 -351 -351 -1,055

Other changes 17 17 0 17

Distribution of dividends to fully consolidated companies due to call and put option contracts -142 -142 0 -142

Sale of subsidiary equity investment -336 -336 -336

Subsidiary purchase 0 0 0 -15 -15 -15

Consolidated shareholders' net equity 31/12/2015 IAS/IFRS 4,142 42,832 -455 2,153 2,410 51,083 1,933 460 2,392 53,475


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Notes to the Financial Statements

NOTE 1 – General information, layout and content of the Consolidated Financial Statements, IFRS com-pliance and scope of Consolidation

General information

“The purpose of TBS Group S.p.A. (hereinafter also “TBS Group” or “Parent Company”) and its direct and indirect subsidiaries (hereinafter jointly “the TBS Group” or “the Group”) is to supply products and above all services to both public and private health authorities in the following business sectors:”1. Medical Devices and ICT Systems: preventive and corrective maintenance of all the biomedical equipment and en-

doscopic devices of a public or private hospital, safety and operational quality checks on the same, IT-based ma-nagement, purchasing consultation, testing, training, telecare, telemonitoring, telediagnostics and teleconsulting for all public and private health structures and public social-healthcare structures, in a context of genuine social/healthcare integration.

2. Integrated e-Health & e-Government Solutions: medical IT services for the installation and integrated management of all IT systems (clinical and administrative) in the healthcare context. Finally, the development of IT products for the Public Administration with the provision of services related to their installation, testing and maintenance, and any integration necessary with other IT products already present in the local and regional entities or other public administration bodies.TBS Group S.p.A. is a company listed in AIM Italia, a market organised and managed by Borsa Italiana.The registered office of TBS Group S.p.A. is at the AREA Science Park in Padriciano (Trieste), Italy. The Group has

grown internally and through a series of key acquisitions in Italy and Europe, and now operates in ten European countries and India and China.

These consolidated financial statements were approved with a resolution of the Board of Directors on 24 March 2016.

Layout and content of the consolidated financial statements and IFRS compliance

The consolidated financial statements of the TBS Group were drawn up in compliance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and approved by the European Commission at the date of the financial statements. The IFRS are also intended to include all the main revised international accounting standards (IAS), all the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) previously known as the Standing Interpretations Committee (SIC).

The consolidated financial statements are based on the historical cost principle, except for the financial derivative instruments that are recorded at fair value.

The consolidated financial statements of the TBS Group are stated in Euro, which is the functional currency of the economies in which the Group mainly operates.

The values shown in the account schedules and explanatory notes are, if not otherwise specified, shown in thousands of Euro, meaning that the sum of rounded figures may not always coincide with the rounded total.

The TBS Group has adopted the following financial statements:1. Consolidated statement of financial position: assets and liabilities are distinctly classified between current and

non-current.


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2. Consolidated Income Statement: classification by type.3. Consolidated comprehensive income statement.4. Statement of changes in shareholders’ net equity.5. Consolidated cash-flow statement: the indirect method was adopted for stating the cash flows.

The accounting standards adopted are comparable to those used as at 31 December 2014, apart from the adoption of the following new or revised IFRS or IFRIC standards which were applied for the first time by the Group starting from 1 January 2015.

Accounting standards, amendments and interpretations applied from 1 January 2015

Below the nature and impact of each new standard/change is listed:

Changes to IAS 19 Defined contribution plan: employee contributions

IAS 19 requires entities to consider employee or third-party contributions in recording Defined Benefit Plans. When contributions are associated with the service rendered they should be allocated to the periods of service as a negative benefit. This amendment clarifies that, if the amount of the contributions is independent of the number of years of service, the entity can recognise these contributions as a reduction to the cost of service during the period in which the service is provided, rather than allocating the contributions to the periods of service.

The change came into effect for the financial periods starting from 01 July 2014 or afterwards. This change is not relevant for the Group, given that no entity that is part of the Group has plans that require contributions from employees or third parties.

Annual improvements to IFRS- 2010-2012 cycle

These improvements are in effect as of 1 July 2014. They include:

IFRS 2 Share-based payments

This improvement is applied prospectively and clarifies a number of points relative to the definition of performance and service conditions that represent conditions for accrual, including:• a performance-based condition must contain a service condition; • a performance-based objective must be achieved while the counterparty provides the service;• a performance-based objective can refer to operations or activities of an entity, or to those of another entity within

the same Group;• a performance-based objective can be a market condition or non-market-related condition;• If the counterpart ceases providing service during the accrual period, irrespective of the reason, the service condi-

tion is not satisfied.


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IFRS 3 Business Combinations

The change applies prospectively and clarifies that all agreements for potential payments classified as liabilities (or assets) arising from a business combination must be subsequently measured at fair value with a contra entry to the income statement, whether or not they fall within the scope of IFRS 9 (or IAS 39, whichever is applicable).

IFRS 8 Operating segments

The amendment applies retrospectively and clarifies that:• An entity should disclose information about the measurements made by management in applying the aggregation

criteria foreseen in section 12 of IFRS 8, including a brief description of the operating segments that have been combined and the economic characteristics (for example, sales or gross margin) used to determine whether the sectors are “similar”;

• It is necessary to present a reconciliation of the assets in the segment and total assets only if the reconciliation is presented to the highest decision-making authority, as required for liabilities in the segment.

IAS 16 Property, plant and equipment and IAS 38 Intangible assets

The amendment applies retrospectively and clarifies that in IAS 16 and IAS 38 an asset can be revalued with reference to observable data either by adjusting the asset’s gross and net book value, and by calculating the accounting market value, and adjusting the gross book value proportionately so that the book value is the same as the market value. In addition, accumulated amortisation and depreciation is the difference between the gross and book value of the asset.

IAS 24 Related party disclosures

The amendment applies retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related-party disclosure requirements. In addition, an entity that seeks recourse to a management entity must disclose the costs sustained for the management services.

Annual improvements to IFRS- 2011-2013 cycle

These improvements are in effect as of 1 July 2014. They include:


The amendment applies prospectively and for the purposes of exceptions to the scope of IFRS 3, clarifies that:• not only joint ventures but also joint arrangements fall outside the scope of IFRS 3;• this exclusion from the scope of IFRS 3 is only applicable in the drafting of the joint arrangement balance sheet.


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IFRS 13 Fair-value measurement

The amendment applies prospectively and clarifies that the portfolio exception foreseen in IFRS 13 can be applied not only to financial assets and liabilities, but also to the other contracts that fall within the scope of IFRS 9 (or IAS 39, whichever is applicable).

IAS 40 Investment property

The description of additional services in IAS 40 differentiates between investment property and property used by the owner (for example, property, plant and equipment). The amendment applies prospectively and clarifies that in order to define whether an operation represents the purchase of an asset or a business combination, IFRS 3 must be used and not the description of additional services found in IAS 40.

This refers to amendments to the principles and/or interpretations that did not have any impact on the consolidated financial statements at 31 December 2015.


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Scope of consolidation

The consolidated financial statements comprise the financial statements of TBS Group S.p.A. and the subsidiaries over which it exercises direct and indirect control.

The companies included in the scope of consolidation as at 31 December 2015 are listed below:

Subsidiary Registered Office

Share capital Type of Investment


TBS Group Spa Trieste (Italy) EUR 4,142,137 Parent Company Parent Company

Tesan Televita Srl Udine (Italy) EUR 46,800 Indirect 75.1 Line by line

PCS Professional Clinical Software GmbH Klagenfurt (Austria) EUR 1,230,000 Indirect 100 Line by line

TBS FR Telematic & Biomedical Services Sarl Lyon (France) EUR 1,690,500 Direct 100 Line by line

TBS BE Telematic & Biomedical Services BVBA Loncin (Belgium) EUR 150,000 Direct 100 Line by line

TBS G.B. Telematic & Biomedical Services Ltd. Southend on Sea (United Kingdom) GBP 500,000 Direct 96.13 (1) Line by line

Telematic & Biomedical Services SL (single-member Company) Barcelona (Spain) EUR 650,000 Direct 100 Line by line

STB Servicios Telematicos e Biomedicos Lda Unipessoal Lisbon (Portugal) EUR 100,000 Direct 100 Line by line

Surgical Technologies BV Didam (The Netherlands) EUR 18,200 Direct 100 Line by line

Crimo Italia Srl Gualdo Tadino (Italy) EUR 103,165 Direct 55.75 Line by line

Elettronica Bio Medicale Srl Foligno (Italy) EUR 1,897,765 Direct 100 Line by line

MSI MedServ International Deutschland GmbH

Pfullendorf (Germany) EUR 321,000 Direct 100 Line by line

TBS IT Srl (single member Company) Trieste (Italy) EUR 5,295,860 Direct 100 Line by line

TBS SE Telematic & Biomedical Services Doo Belgrade (Serbia) RSD 465,000 Direct 100 Line by line

Insiel Mercato S.p.A. Trieste (Italy) EUR 3,246,808 Direct 100 Line by line

TBS INDIA Telematic&Biomedical Services Prv. Ltd Bangalore (India) INR 5,000,100 Direct 100 Line by line

Erre Effe Informatica Srl Arezzo (Italy) EUR 41,280 Indirect 51 (2) Line by line

TBS Imaging Srl Fisciano (Italy) EUR 100,000 Indirect 100 Line by line

Ing. Burgatti Spa

San Lazzaro di Savena (Italy) EUR 312,000 Indirect 65 (3) Line by line

TBS Bohemia S.r.o.

Prague (Czech Republic): CZK 200,000 Direct 100 Line by line

Crimo France Sas Ablon sur Seine (France) EUR 40,000 Indirect 100 Line by line

Crimo Instrumentation Medicale Sl Castillon de la Plana (Spain) EUR 10,000 Indirect 79.8 Line by line

(1) Following the valuation of final sale of the remaining 3.87% of the shares, the consolidation percentage is 100%(2) Following the valuation of final sale of the remaining 49% of the shares, the consolidation percentage is 100%(3) Following the valuation of a put and call option on the remaining 35% of the shares, the consolidation percentage is 100%

The scope of consolidation as at 31 December 2015 has changed since 31 December 2014, following:• the acquisition on 8 January 2015 of a shareholding in Ing. Burgatti Spa;• the establishment on 29 January 2015 of TBS Bohemia, with a share capital payment of 200,000 Czech Koruna;


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• the acquisition on 8 July 2015 of the equity investment in Crimo France, which holds a 79.80% stake in Crimo In-strumentation Medicale;

• the sale on 31/08/2015 of 16% of the shares of the subsidiary SLT which leaves the scope of consolidation. The results of SLT up to the transfer date are reclassified among the item result of assets sold. As required under IFRS 5, the consolidated income statement for the previous period has been appropriately reclassified. Also recall that during the year Tesan was merged into EBM and Delta X was merged into REM DI, which changed

its company name to TBS Imaging.

NOTE 2 – Accounting standards

Consolidation principles

The consolidated financial statements comprise the TBS Group S.p.A. (Parent Company) financial statements and those of its subsidiaries drawn up as at 31 December each year. The financial statements of the subsidiaries are drawn up adopting the same accounting standards as the Parent Company. Any consolidation adjustments are introduced to make the items affected by application of different accounting standards homogeneous.

All balances and intergroup transactions, including any unrealised profits deriving from relations between Group companies, are completely eliminated. Unrealised profits and losses with associated companies are eliminated for the Group portion. Unrealised losses are eliminated, except for the case in which they represent permanent losses.

The subsidiaries are fully consolidated starting from the date of acquisition, or from the date when the Group acquires control, and they stop being consolidated on the date when control is transferred outside the Group.

The losses are attributed to the minority shareholders, even if this implies that the minority interests have a negative balance.

The changes in the equity investment of the parent company in a subsidiary that do not entail loss of control are recorded as capital transactions. In particular in acquisitions of minority interests, the difference between the price paid and the book value of net assets acquired is recognised directly in net equity.

If the parent company loses control of a subsidiary, it:• eliminates the assets (including any goodwill) and liabilities of the subsidiary;• eliminates the book values of any minority interest in the former subsidiary;• eliminates the foreign exchange differences recorded in shareholders’ net equity;• records the fair value of the consideration received;• records the fair value of any amount of investment kept in the former subsidiary;• records all gains and losses in the income statement;• reclassifies the parent company’s interest of the components previously recorded in the consolidated comprehensi-

ve income statement to the income statement or to retained earnings, as appropriate.

Foreign currency transactions and translation of financial statements of subsidiaries prepared in curren-cies other than the Euro currency

The consolidated financial statements are stated in Euro, which is both the functional and presentation currency adopted by the Parent Company. Each entity in the group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded at the functional currency rate at the date of the transaction.


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Monetary assets and liabilities denominated in foreign currencies are then converted at the financial statements reference date using the closing exchange rate. All differences are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to net equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax effects attributable to exchange differences on those borrowings are also dealt with in net equity. Non monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

The functional currency used by the British subsidiary TBS G.B. Telematic and Biomedical Services Ltd. is the British pound.

The functional currency used by the Serbian subsidiary TBS SE Doo is the Serbian dinar, that used by the Indian subsidiary TBS India Ltd. is the Indian rupee, that used by Czech subsidiary TBS Bohemia is the Czech koruna.

At the closing date of the financial statements, the assets and liabilities of subsidiaries, including any goodwill arising on acquisition of a foreign operation, are translated into the Group presentation currency (the Euro) at the exchange closing rate, while the income statements are translated at the average exchange rate for the reference period. The exchange differences arising on the translation at a different rate than the closing one, and those generated by the translation of the opening shareholders’ equities at an exchange rate different from the closing one, are taken directly to a separate component of net equity, in an appropriate reserve.

On disposal of a foreign entity, the differences in exchange rates recorded in shareholders’ net equity relating to that particular foreign entity are recognised in profit or loss.

The exchange rates applied as at 31 December 2015 for translating financial statements in foreign currency are as follows (1 Euro=foreign currency) and corresponding to those made available by the Italian Foreign Exchange Office:

Currency Average exchange rate 2015

Exchange rate as at 31/12/2015

Average exchange rate 2014

Exchange rate as at 31/12/2014

Pound Sterling (GBP) 0.72585 0.73395 0.80612 0.77890

Serbian dinar (RSD) 120.68667 121.45100 117.23087 121.12200

Indian rupee 71.19561 72.02150 81.04062 76.71900

Czech koruna 27.27918 27.02300 N/A N/A

Accounting policies

Intangible assets with indefinite useful life

Business combinations and goodwill

Business combinations are recorded using the acquisition method. The cost of an acquisition is measured as the sum of the transferred consideration measured at fair value as at the date of acquisition and the amount of any minority investment in the acquisition. The buyer must measure any minority investment in the acquisition at fair value or in proportion to the amount of the minority investment in the identifiable net assets of the acquisition. The acquisition costs are paid and classified as administrative expenses.

When the Group acquires a business, it must classify or designate the acquired financial assets or liabilities assumed according to the contractual terms, economic conditions and other pertinent conditions existing on the acquisition date. This includes a verification to determine if an incorporated derivative must be separated from the primary contract.


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If the business combination is carried out in two or more stages, the acquirer must recalculate the fair value of the investment previously held and measured with the equity method and record any resulting profit or loss in the statement of income.

The buyer must record all potential considerations at fair value as at the acquisition date. The change in fair value of the potential consideration classified as asset or liability must be recorded in the statement of income or statement of the other consolidated statement of comprehensive income components pursuant to the instructions set forth in IAS 39. If the potential considerations are classified in the shareholders’ net equity, its value must not be recalculated until its extinction is recorded against shareholders’ net equity.

Goodwill is initially measured at the cost that arises as an excess of the summation of the consideration paid and the amount recognised for the minority interests with respect to the identifiable acquired assets and liabilities taken on by the Group. If the consideration is less than the fair value of the net assets of the acquired subsidiary, the difference is recorded in profit and loss.

Following initial recognition, goodwill is no longer amortized and is measured at the reduced cost of the accumulated losses of value calculated with the methods described hereunder. In order to verify reduced value, the goodwill acquired in a business combination must, from the date of acquisition, be allocated to every Group cash generating unit that anticipates benefits from the combination, regardless of the fact that other assets or liabilities of the acquired entity are assigned to said units. Goodwill is tested for impairment annually and whenever circumstances indicate that its carrying value may be impaired, as provided for in IAS 36 - Impairment of assets.

Any impairment is identified through measurement of the capacity of single units to generate cash flows meant to recover allocated goodwill through the procedure indicated below in the “Impairment” section. When the recoverable amount of the cash generating unit is less than its carrying amount, an impairment loss is recognised in profit or loss. Should the causes having generated the impairment cease to exist, impairment losses are not reversed.

If the goodwill was allocated to a cash generating unit and the entity divests itself of part of the assets of that unit, the goodwill associated with the divested asset must be included in the book value of the asset when the profit or loss deriving from the divestment is determined. The goodwill associated with the divested asset must be determined based on the relevant values of the divested asset and of the part kept by the cash generating unit.


Intangible assets acquired separately are measured on initial recognition at cost, while those acquired in a business combination are measured at fair value as at the date of acquisition.

Following initial recognition, intangible assets with finite useful life are carried at cost less any accumulated amortisation and any impairment determined in accordance with the methods detailed in the “Impairment” section.

Intangible assets owned by the Group and acquired exclusively to manage specific contracts, are amortised over the shortest period between the intangible asset’s residual useful life and the residual duration of the underlying contract (three years on average).

For the remaining owned intangible assets with finite useful life, amortisation is calculated on a straight-line basis over an average period of five years, corresponding to the estimated useful life.

The useful life of an intangible asset is reviewed annually.


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The Group applies the following policies to intangible assets:

Development Costs Software, licenses and trademarks

Other intangible fixed assets

Useful lives Finite Finite Finite

Amortisation method used Amortised on a straight-line basis over a period of 5 years

Amortised on a straight-line basis over a period of 3/5 years

Amortised on a straight-line basis over a period of 3/10 years

Internally generated or acquired Internally generated/Acquired Internally generated/Acquired Acquired

Impairment test for recognition of impairment

Annually or more frequently if indicators of impairment exist



Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statements of income upon disposal.

Property, plant and equipment - Owned assets

Property, plant and equipment is stated at purchase or production cost. The cost of the assets includes directly attributable costs and those necessary for putting the asset into operation for the use for which it was acquired, in addition to the present value of the estimated cost for dismantling and removing the asset, where applicable and in presence of current obligations.

Improvements to leased assets are recognised at cost under property, plant and equipment coherently with the nature of the cost incurred.

The expenses incurred for ordinary and/or cyclical maintenance and repairs are directly recognised in the statements of income as incurred. The capitalization of costs related to the enlargement, updating or improvement of an asset owned or in use by third parties is carried out exclusively within the limits in which they meet the requirements for being separately identified as an asset or part of an asset.

The cost of property, plant and equipment is reduced by depreciation, calculated on a straight-line basis over the estimated useful life of the asset, and by any accumulated impairment, determined in accordance with the methodology detailed in the “Impairment” section.

For owned assets, the depreciation rates which correspond to the estimated useful lives are as follows:

Description Rate

Buildings 3%

Plants and machinery 15% and 25%

Industrial and commercial equipment 15% and 25%

Furnishings 15%

Office equipment 12%

Office electronic machines 20%

Motor vehicles 25%

Assets owned but acquired specifically to manage specific contracts are amortised over the shortest period between the intangible asset’s residual useful life and the residual duration of the underlying contract (three years on average).

The above depreciation rates are reviewed at least annually; any adjustments, as deemed appropriate, are applied prospectively.


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An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and residual carrying amount of the asset) is included in the statement of income in the year the asset is derecognised.

Property, plant and equipment - Leased assets

Assets held under finance leases, which substantially provide the Group with all the risks and rewards of ownership, are recognised as assets and liabilities at their fair value or, if lower, at the present value of the minimum lease payments including any sum to be paid for exercising the purchase option. The corresponding liability due to the lessor is recorded under financial liabilities.

Lease payments are apportioned between interest expense and reduction of financial liabilities so as to achieve a constant periodic interest rate on the outstanding balance of the liability. Financial expenses are included in statements of income.

Assets held under finance leases are depreciated using the following depreciation rates:

Description Rate

Buildings 3%

Industrial and commercial equipment 15% and 25%

Motor vehicles 25%

Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as operating leases. Operating lease expenditures are charged to the statement of income over the lease term.

Impairment of assets

At the balance sheet date and if there are any indicators of impairment, an assessment is carried out to determine the recoverable value of the intangible assets or property, plant and equipment, or group of intangible assets or property, plant and equipment (Cash Generating Units, hereinafter also referred to as CGUs), net of sale costs and value in use. When the asset’s carrying amount exceeds its recoverable amount the asset is written down to its recoverable amount.

The recoverable amount is the greater of 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 cost of money over time and the risks specific to the asset. For an asset that does not generate independent cash inflows, the recoverable amount is determined for the cash-generating unit to which it has been allocated. Impairment losses are recognised in the statement of income with the costs for amortisation and depreciation. Said impairment is reversed in the case that the reasons behind them cease to exist, with the exception of impairment relative to goodwill.

Investments in associated companies and joint ventures

The Group’s investment in its associates or joint ventures is accounted for using the net equity method of accounting. An associate or joint venture is an entity in which the Group has significant influence and which cannot be classified as a subsidiary.


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Under the net equity method, the investment in the associate or joint venture is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is not amortised.

After application of the net equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate.

The consolidated statement of income reflects the Group’s share in the results of operations of the associate. When there has been a change recognised directly in the net equity of the associate, the Group recognises its share of any such change and discloses those, when applicable, in the consolidated statements of changes in shareholders’ net equity.

The income statement reflects the share of the results of operations of the associate. The associated companies’ fiscal year and accounting policies used by the associated companies are the same as the

Group for similar transactions and events in similar circumstances.

Investment in other companies

Investments in other companies for which fair value cannot be reliably assessed are stated at the acquisition or subscription cost less any distribution of share capital and reserves and after any impairment, determined by the same methods indicated previously for property, plant and equipment. Should the reasons for the impairment cease to exist, the original value shall be restored in subsequent years.

Financial assets and other non-current assets

Receivables and other non-current assets to be held to maturity are recognised at cost, represented by the fair value of the initial consideration given, including transaction costs. The initial measurement is subsequently adjusted in order to reflect capital repayments, any write-downs and the amortisation of the difference between the repayment value and the valuation on initial recognition. Amortisation is recorded on the basis of the effective internal interest rate, represented by the rate which equals, at the time of the initial recognition, the present value of the estimated cash-flows and the measurement of initial recognition (amortised cost method).

Inventories

Inventories are valued at the lower of the purchase or manufacturing cost and net realisable value, represented by the amount that Group companies expect to receive from sale in the ordinary course of the business, less costs of completion and estimated selling costs.

The purchase cost, which also includes direct accessory costs (including shipping, handling, etc.), is calculated for raw materials and for finished products using the FIFO method. Service contracts in progress at the end of the year for which is not possible to reliably measure the accrued margin, are valued based on the specific costs incurred at the closing date of the balance sheet.

Slow-moving and obsolete stock is written-down according to its potential use or sales value.


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Trade receivables and other receivables

Trade receivables are recognised at their estimated realisable value, which corresponds to nominal value less write-downs reflecting the estimated losses, if any.

A provision for doubtful account is made when there is an objective indication (such as a probable insolvency or the debtor facing significant financial difficulty) that the Group is unable to recover all the amount due on the basis of original invoicing conditions. The book value of the receivable is reduced through a provision. Receivables subject to impairment are removed from the accounts when it is ascertained that they are not recoverable.

Any medium and long term loans containing an implicit interest component are discounted using an appropriate market interest rate.

Current financial assets

Financial assets kept for negotiation purposes are recorded on the basis of the negotiation date and, at the time of the initial entry on the balance sheet, are valued at the purchase price, represented by the fair value of the initial consideration given in exchange, net of transaction costs. Following the initial recognition, current financial assets are assessed at fair value and corresponding variation in fair value are included in profit and loss. The fair value of these instruments is determined by referring to the market value at the closing date of the period in which the instrument is recorded; the fair value of financial instruments not listed in an active market is determined by using valuation techniques commonly in use.

Treasury shares

Own shares are deducted from shareholders’ net equity. No gain or loss is recognised in the statements of income upon the purchase, sale, issue or cancellation of the own shares.

Share-based payments

Stock options are estimated at fair value using the model based on the Black and Scholes formula, determined by the date of assignment. The relevant cost is recognised in the statement of income under personnel costs (if concerning employees) or under service costs (if concerning directors) during the period in which the conditions for exercising them mature and a contra entry is recognised in an equivalent increase of the shareholders’ net equity. The changes in the present value of the shares after the date of assignment have no effect on the initial valuation. Any effect of dilution of options not yet exercised is reflected in the calculation of the diluted earnings per share.

Cash and cash equivalents

Cash and cash equivalents include deposits held at call or available in a very short period for which no expenses for collection have to be incurred. They are recorded at their nominal value.

For the purposes of the Consolidated Cash-Flow Statement, cash and cash equivalents is presented gross of bank overdrafts at the Financial Statements closing date.


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Termination indemnities

Employee benefits paid on or after termination of the employment through defined benefit programmes (Employee severance indemnity [Italian TFR]) or other long term benefits (Termination Indemnities) are recognised on an accrual basis.

The liability relating to defined benefit plans, net of any related plan asset, is determined on the basis of actuarial assumptions and is recognised on an accruals basis, in line with services rendered in order to obtain the benefits; liabilities are measured by an independent actuary. The part of actuarial profits and losses that must be recognised for each defined benefit plan, following the amendment to IAS 19 in effect as of 1 January 2013, is systematically booked directly to an item in the shareholders’ net equity, and will not be reclassified to the income statement in successive years.

Following amendments made to the Employee Severance Indemnity by law No. 296 of 27 December 2006 (Financial Law 2007) and subsequent Decrees and Regulations issued in early 2007, the Employee Severance Indemnity of Italian companies matured as at 1 January 2007 or at the date the option to be exercised by employees was selected is included in the category of programmes with defined contribution, both in the case of supplementary allowance as well as of allocation to the Treasury Fund of the INPS. The accounting of this Employee Severance Indemnity is therefore assimilated with other types of contribution deposits.

Provisions

Provisions for risks and future charges are recognised when the Group has a present obligation (legal or implicit) resulting from a past event, when it is probable that an outflow of Group’s resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Changes in the assessment are reflected in profit and loss of the period during which the change occurred. If the potential discount effect is significant, the provisions are discounted using a pre-tax discount rate that reflects the specific risks of the liabilities. Once the discount is carried out, the increase of the provision due to the passing of time is recognised as a financial expense.

Loans

All long-term loans are initially recognised at fair value of consideration received less directly attributable transaction costs.

After initial recognition, long-term debts are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

Derivatives

The Group uses financial derivative instruments such as interest rate swaps to hedge against risks resulting from interest rate fluctuations.

These derivative instruments are initially recognised at fair value at the date on which they are entered into; the fair value is then periodically measured and recorded in relation to the characteristics and to the subsequent classification of the instrument.


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For the purposes of hedge accounting, hedges are classified as:• fair-value hedges, if they refer to the exposure to the risk of changes in the fair value of the underlying asset or

liability; or to an irrevocable commitment (with the exception of exchange risks);• cash-flow hedges, if they refer to the exposure to the risk of fluctuation in cash flows attributable to a specific as-

set or liability or to a highly probable planned transaction or to the exchange rate risk of an irrevocable commitment;• hedge of a net investment in a foreign entity.

On entering into a hedge transaction, the Group designates and officially records the hedge ratio to which hedge accounting will be applied, its risk management strategy and objectives. The documentation includes details of the hedge instrument, the element or transaction being hedged, the type or risk and the method through which the company intends to measure hedge efficiency in offsetting exposure to changes in fair value of the element hedged or of the financial flows attributable to the hedged risk. These hedges are expected to be highly efficient in offsetting exposure of the element hedged from changes in fair value or of financial flows attributable to the hedged risk; valuations showing that the hedges are effectively highly efficient are carried out on an ongoing basis throughout the reporting periods to which they apply.

The fair value of interest rate swap contracts is determined by referring to the market value of similar instruments.Cash-flow hedges are recorded as assets when the fair value is positive and as liabilities when it is negative; in

these cases the derivative is measured at fair value and changes in value are recorded directly in a shareholders’ net equity reserve that is posted to the profit and loss account in the accounting periods in which the underlying cash-flows are manifested.

Any profit or loss deriving from changes in the fair value of derivatives not suited for hedge accounting is posted directly to profit or loss.

Trade payables and other debts

Trade payables with a due date within the standard commercial terms are not discounted and are recognised at cost (identified by the nominal value).

Other liabilities are entered at cost (identified by nominal value).

Assets held for sale (Discontinued operations)

Assets held for sale refers to those assets (or groups of assets held for sale) whose book value will be mainly recovered through sale rather than through continuous use. Assets held for sale are carried at the lesser of the net book value and the fair value, net of sales costs.

The condition for classification as held for sale is considered to be met only if the sale is highly probable and the asset or group held for sale is available for immediate sale in its current conditions. The actions required to complete the sale should indicate that it is improbable that significant changes could arise in distribution or that distribution is cancelled. Management must be committed to its sale, the completion of which must be envisaged within one year of the date of classification.


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Revenue recognition

Revenues are recognised when it is probable that the economic benefits will flow to the Group and the revenues can be reliably measured.

Revenue is shown net of discounts, reductions, returns and other sales taxes.In particular, revenue from the sale of goods is recognised according to the contractual terms when the significant

risks and rewards of ownership relating to the goods are transferred to the buyer. Rendering of services revenues are recognised by stage of completion. This is measured as the percentage of the

incidence of costs incurred with respect to the total costs estimated for each contract. When the contract outcome cannot be reliably measured, revenue is recognised only to the extent of the expenses incurred that are recoverable.

Financial revenue is recorded on an accrual basis.

Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all underlying conditions will be met.

When a grant relates to cost items, it is recognised as revenue over the proper period in order to be correlated to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of income over the expected useful life of the relevant asset.

Accounting for costs and expenses

Costs and expenses are recorded when they relate to goods and services sold or consumed during the year or by systematic allocation when their future utility cannot be identified.

Interest

Interest revenue and expense are recognised as the interest accrues on the net carrying amount of the underlying value of financial asset or liability, using the effective interest rate.

Dividends

Dividends are recognised when the right of shareholders to receive payment is established. This right arises following the decision made on distribution made (by 31 December each year) by the subsidiary.


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Income taxesCurrent tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date and in those countries in which the Group operates.

Current taxes relating to items recorded directly to equity are recognised directly to equity and not to the profit and loss.

Deferred taxesDeferred income tax is provided using the liability method on temporary differences at the balance-sheet date

between the reference fiscal values for assets and liabilities and the values recorded in the financial statements.Deferred tax liabilities are recognised for all taxable temporary differences, except:

• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a tran-saction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.Prepaid tax is recognised for all deductible temporary differences, carry-forward of tax losses, to the extent that

it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of deductible temporary differences and tax losses, can be utilised, except:• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recogni-

tion of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and intere-sts in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.In assessing the probability of the availability of a future income against the entry of deferred assets for tax losses

one considers: • there must exist sufficient temporary differences with regard to the same tax authorities and the same tax subject

that will turn into taxable amounts against which tax losses may be used prior to their expiration;• that unused tax losses result from identifiable causes that are unlikely to be repeated;• that there exist opportunities for tax planning on the basis of which there will be taxable income during the year in

which tax losses may be used.The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities relating to items recognised directly in net equity are recognised in net equity and not in the statement of income.


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Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set offering of current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Earnings per share

Earnings per share are calculated by dividing the net profit for the period attributable to the shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, net of own shares.

In order to calculate the diluted earnings per share, the weighted average number of shares outstanding, net of own shares, is modified assuming the conversion of all the potential shares with dilutive effect. Even the net profit of the Group is adjusted in order to consider the effects of the conversion, net of the relative taxes.

Use of estimates

The preparation of the Group financial statements requires the directors to make estimates and assumptions that affect the reported amounts of the assets and liabilities and the disclosure of information on contingent assets and liabilities at the date of the financial statements. Nonetheless, the uncertainty of these assumptions and estimates may determine impacts requiring a significant adjustment to the accounting value of these assets and/or liabilities at a future date.

The estimates are essentially used to recognize provisions for doubtful account, inventory obsolescence, amortisation, depreciation and write-downs of non-current property, plant and equipment and intangible assets, employee benefits, deferred income taxes and other provisions for risks and charges. Estimates and assumptions are revised periodically and the effects of every variation are immediately reflected on the profit and loss.

Specifically, goodwill is verified for any losses of value at least once a year; this test requires an estimate of the value in use of the CGU to which the goodwill is attributed, based in turn on an estimate of the cash flow expected from the unit and its discounting at an appropriate discount rate. As at 31 December 2015, the carrying value of goodwill was Euro 36,943 thousand (2014: Euro 31,557 thousand). Further details are provided in Note 8.

NOTE 3 – Segment reporting

Managerially, the Group is organised into two segments of business: Medical Devices and ICT Systems, and Integrated Solutions of e-Health & e-Government.

The Medical Devices and ICT Systems segment provides effective management support to public and private health facilities for medical devices and other telematic technology, both in terms of purchasing advice and lowering maintenance and operating costs and of training and enhanced safety. It also provides telemedicine and telecare solutions for the integration of assistance between the territory and the hospital and for the implementation of telematic assistance services for social and home healthcare for the purpose of cost reduction.

The Integrated e-Health & e-Government Solutions sector provides solutions and services for the integrated management of clinical reporting systems for hospitals and/or departments, local health units and/or home care services and IT solutions to manage the demographic, social, tax, administrative, management and document services of local and regional entities and the public administration in general.

This change in the definition of the Business Units rendered a reclassification of the comparative figures for the previous year necessary, due to the transfer of telemedicine and teleaid activities to the e-Health & e-Government sector from that of Medical Devices and ICT Systems.


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Management separately monitors the operating results of each business unit in order to make decisions on resource allocation and performance appraisal. The results of financial management and income taxes are managed at group level and are not therefore allocated to individual operating segments.

Prices for transferring items between operating segments are determined under the same conditions as those applied to third party transactions.

Operating segments

The table below presents data on Group revenues and results for the financial years ended 31 December 2015 and 2014 respectively.

(thousands of Euro) 2015 2014(*)

Medical Devices and ICT Systems

Integrated e-Health &

e-Government Solutions

Total Medical Devices and ICT Systems



Total

Revenue

Revenue from third parties and other revenue 199,770 34,078 233,848 196,798 32,734 229,532

Total revenue 199,770 34,078 233,848 196,798 32,734 229,532

Operating profit by business segment 10,075 744 10,819 12,964 414 13,378

Gains (losses) from investments -28 -47

Financial income (expenses) -5,564 -6,581

Profit before tax 5,227 6,750

Taxes 2,908 4,524

Net profit/(loss) for the period 2,319 2,226

Result of assets held for sale 551 122

Total 2,870 2,348


Revenue rose from Euro 196,798 thousand in 2014 to Euro 199,770 thousand in 2015 in the Medical Devices and ICT Systems segment, with an absolute increase of Euro 2,972 thousand and a percentage increase of 1.5%. The increase is attributable for Euro 8,257 thousand the entry of Ing. Burgatti (Euro 5,568 thousand) and of Crimo France (Euro 2,689 thousand), as well as in the increase in revenues from TBS GB (Euro 2,977 thousand). These increases were offset by the Parent Company’s drop in revenue due to the delayed start of some international projects that had characterised the previous financial year.

The operating profit of the segment fell, in absolute terms, by Euro 2,889 thousand, from Euro 12,964 thousand to Euro 10,075 thousand, with the incidence on revenue equal to 5.0% against 6.6% the previous year.

In the Integrated e-Health & e-Government Solutions revenues rose from 32,734 thousand in 2014 to Euro 34,078 thousand in 2015, an absolute increase of Euro 1,344 thousand and a percentage increase of 4.1%. This increase is due to PCS.

EBIT, positive at Euro 744 thousand, rose in absolute terms by Euro 330 thousand. This increase can be ascribed to the improvement in the profitability of PCS.


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The table below shows assets and investments relating to the Group’s individual operating segments as at 31 December 2015 and 2014:








Total

Assets and liabilities

Assets by segment 222,067 41,739 263,806 210,924 40,088 251,012

Equity investments 932 437 1,369 555 571 1,125

Non-allocated assets 0 0 0 0 0 0

Assets held for sale 333 0 333 0 0 0

Total assets 223,332 42,176 265,508 211,479 40,659 252,137

Liabilities by segment 181,820 30,212 212,033 171,218 29,265 200,483

Non-allocated liabilities 0 0 0 0 0 0

Liabilities held for sale 0 0 0 0 0 0

Total liabilities 181,820 30,212 212,033 171,218 29,265 200,483

(thousands of Euro) 31/12/2015 31/12/2014(*)







Total

Other information

Investments in fixed assets 16,649 1,380 18,029 10,733 1,751 12,483

Depreciation and amortisation 9,277 2,551 11,828 8,229 2,270 10,499

Write-downs of intangible assets 0 0 0 10 0 10

Write-downs of tangible assets 0 0 0 0 0 0

Other non-monetary costs 3,666 909 4,575 3,920 947 4,867


The following table shows Group revenue by geographic area as at 31 December 2015 and 2014:


Italy European Union

Other Total Italy European Union

Other Total

Revenue

Sales to third parties 160,883 68,443 4,522 233,848 156,843 61,058 11,631 229,532

Infra-sector Sales - - - -

Total revenue 160,883 68,443 4,522 233,848 156,843 61,058 11,631 229,532



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The increase in revenues seen in the other European Union countries is mainly due to the acquisition of Crimo France and the increase in revenues by TBS GB.

The decrease in revenues achieved in the other non-EU countries is mainly due to the lack of contribution of the Parent Company for international trading.

NOTE 4 – Business combinations

Acquisition of Ing. Burgatti S.p.a.

On 8 January 2015, the Group through its subsidiary Delta X, which during the year merged with REM DI, now known as TBS Imaging (100% held by EBM), signed the final contract to acquire Ing. Burgatti S.p.a. in San Lazzaro di Savena (Italy), a company operating in the health sector, providing distribution and technical assistance for radiology electro-medical equipment.

The purchase price for 51% of the share capital was Euro 2,900 thousand. In addition, on 28 October 2015 the intermediate put option was exercised in favour of the minority shareholders of Ing. Burgatti, as foreseen in the contract, representing 14% of the company’s share capital at the price of Euro 684 thousand.

The principal put option to be exercised for the purchase of the remaining capital was set at Euro 2,419 thousand. This amount was recorded among the non-current financial payables.

The fair value of assets and liabilities identified at the date of acquisition is as follows:

(thousands of Euro) Fair value at acquisition

Carrying value

Total current assets 4,254 4,313

Total non-current assets 2,791 288

TOTAL ASSETS 7,045 4,601

Total current liabilities 2,989 2,817

Total non-current liabilities 2,123 1,242


Fair value of net assets 1,933 542

Goodwill 4,069

Purchase price 6,002

Cash acquired 749

Note that the price for the acquisition was greater than the net fair value of the Company’s net assets as of the acquisition date. For said difference, goodwill was recognised in the amount of Euro 4,069 thousand.

The fair value of the net acquired assets includes Euro 1,806 thousand relating to the recognition of customer relations, gross of the related tax effect amounting to Euro 567 thousand.

Recognition of customer relations has been made on the basis of the discounted net margins that is believed the Company can develop according to its existing customer base as at the date of acquisition.

In calculating the time frame in which such margins will be achieved, an annual drop rate of 20% has been applied.It should be noted that the recognition for this business combination is to be considered final.Note that the contribution to the Group’s result made by the companies equals a profit of Euro 443 thousand, and

their contribution to consolidated revenue is Euro 5,568 thousand.The impairment test conducted on the Goodwill figures did not show any losses in value.


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Acquisition of Crimo France Sas

On 23 July 2015, the Group, through its subsidiary TBS France, signed the final contract to acquire Crimo France. The provisional price to acquire 100% of the share capital was Euro 6 million, of which Euro 2,926 thousand was paid on the acquisition date. The residual debt is recognised among current financial liabilities at 31 December 2015. Crimo France holds a 79.80% stake in Crimo Instrumentation Medicale.

The fair value of assets and liabilities identified at the date of acquisition is as follows:

(thousands of Euro) Fair value recorded in the financial statements at

acquisition

Carrying value

Total current assets 3,586 3,492

Total non-current assets 5,012 897

TOTAL ASSETS 8,598 4,389

Total current liabilities 1,802 1,599

Total non-current liabilities 2,180 730


Fair value of net assets 4,616 2,060

Goodwill 1,384

Price 6,000

Cash acquired 948

Note that the price set for the acquisition of the branch was greater than the net fair value of the assets as of the acquisition date. For said difference, goodwill was recognised in the amount of Euro 1,384 thousand.

The fair value of the net acquired assets includes recognition of the portfolio of existing customers at the acquisition date of Euro 3,784 thousand, gross of the related tax effect amounting to a total of Euro 1,261 thousand. This recognition was made on the basis of the discounted net margins that the company will develop on the basis of the list of existing customers as of the acquisition date.

In calculating the time frame in which such margins will be achieved, an annual drop rate of 10% has been applied.It should be noted that the recognition for this business combination is to be considered provisional.Note that the contribution to the Group’s result made by the companies equals a profit of Euro 291 thousand, and

their contribution to consolidated revenue is Euro 2,689 thousand.The impairment test conducted on the Goodwill figures did not show any losses in value.

NOTE 5 – Financial risk management

The main financial liabilities of the Group include bond loans, trade payables and miscellaneous payables and financial guarantees. The main objective of these liabilities is to finance the Group’s operations and its associated investment plans, including for entities external to the Group. The Group has financial receivables and other trade and non-trade receivables, cash and cash equivalents and short-term deposits directly originating from operating activities.

The assessment of interest rate risk, credit risk, liquidity risk and foreign exchange risk is a responsibility the Group Management is entrusted with, and the relevant information is given below.


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Interest rate risk

The Group is exposed to interest rate risk in that the existing financial debt is variable rate (Euribor, plus a margin which varies based on the line of financing in question), with the exception of the mini-bond loan which has a fixed interest rate of 6.5%. Fluctuations in market interest rates influence the cost of the various types of financing directly affecting financial expenses at Group level.

In 2015, the Group began a strategy aimed at controlling and covering risks deriving from interest rate fluctuations in relation to new medium/long term loans taken out during the year, with maturities exceeding 37 months. The Group’s policy is to keep the total amount of financial debt with a fixed interest rate between 30% and 60%.

Sensitivity analysis

The Company’s financial structure consists mainly of variable rate financial instruments. As a result, the sensitivity analysis is conducted solely for this type of instrument.

By virtue of the above, a hypothetical, instant and unfavourable 100 bps change in the short term interest rate, applicable to the variable rate of financial assets and liabilities, would increase net annual pre-tax charges by approximately Euro 604 thousand.

Liquidity risk

The Group continuously maintains balance and flexibility between funding sources and uses. Two primary factors that influence the Group’s liquidity are, on the one hand, resources generated or absorbed by operations or investments, and on the other hand, the expiry and renewal of debts. The breakdown of financial payables as at 31 December 2015 is presented under Note 17.

In any event, it is felt that liquidity from operations should be sufficient to cover requirements. It should however be emphasized that considering the fact that the customers primarily consist of public bodies, with significantly extended payment terms and anyway subject to the availability of financial resources, even linked to public debt management policies, the leading Italian Group companies have assigned credit to factoring companies in order to boost cash flows. Specifically, receivables (and relevant benefits and risks) totalling Euro 93.2 million (Euro 96.5 million as at 31 December 2014) were assigned during 2015.

Exchange rate risk

The Group operates primarily in the Eurozone. There is therefore no significant exposure to exchange rate risk.The main currency fluctuations relate to the translations into Euro of the financial statements of its English

subsidiary, which are presented in pounds sterling, its Indian subsidiary, presented in Indian rupees, its Serbian subsidiary, presented in Serbian dinars and the Chinese joint venture, presented in renminbi.


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Capital Management

The Group’s primary capital management objective is to guarantee that a solid credit rating and appropriate levels of capital indicators are maintained in order to support its work and maximize shareholder value.

The Group manages the capital structure, making changes to it in line with changes in economic conditions.The Group may adjust the dividends paid to shareholders, reimburse capital or issue new shares in order to maintain

or adapt the capital structure. The Group monitors its capital via the net financial debt / Group shareholders’ net equity ratio.This ratio for each period considered is shown below:


Non-current financial liabilities 50,608 33,378

Current financial liabilities 71,080 65,550

Non-current financial assets -2,145 -436

Current financial assets -9,878 -5,192

Cash and cash equivalents -25,171 -30,763

Net financial debt 84,494 62,537

Total net financial debt 84,494 62,537

Group shareholders' net equity 51,083 49,038

Ratio net financial debt/Group shareholders' net equity 1.65 1.28

Fair value valuation and the relative hierarchical levels of valuation

The following statement indicates the categories of financial instruments held by the Group:

on 31/12/2015

(thousands of Euro) Notes Borrowings and

receivables

Financial assets at fair value

recognised in the income statement

Derivatives Investments held to

maturity

Assets held for sale

Total Fair value

Financial assets as in the balance sheets

Other non-current financial assets 17 2,145 2,145 2,145

Other non-current assets 10 624 624 624

Trade receivables 12 105,519 105,519 105,519

Assets held for trading 13 - 0 - -

Other current assets 14 12,387 12,387 12,387

Current financial assets 17 9,852 26 9,878 9,878

Cash and cash equivalents 17 25,171 25,171 25,171

Total financial assets 155,698 0 0 26 0 155,724 155,724


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on 31/12/2015


receivables




maturity

Liabilities held for sale

Total Fair value

Financial liabilities as in the balance sheets

Non-current financial liabilities 17 50,443 165 50,608 50,608

Other medium/long-term liabilities 20 306 306 306

Trade payables 21 38,706 38,706 38,706

Other current liabilities 22 29,171 29,171 29,171

Current financial liabilities 17 71,080 71,080 71,080

Total financial liabilities 189,706 0 165 0 0 189,871 189,871

on 31/12/2014


receivables




maturity

Assets held for sale

Total Fair value


Other non-current financial assets 17 436 436 436



Assets held for trading 13 0 0 0


Current financial assets 17 5,166 26 5,192 5,192


Total financial assets 157,564 0 0 26 0 157,590 157,590

on 31/12/2014


receivables




maturity

Liabilities held for sale

Total Fair value


Non-current financial liabilities 17 33,484 33,484 34,002

Other medium/long-term liabilities 20 320 320 320

Trade payables 21 38,866 38,866 38,866



Total financial liabilities 180,238 0 0 0 0 180,238 180,756


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All the financial instruments recognised at fair value are classified in the three categories shown below:Level 1: market quotationLevel 2: evaluation techniques (based on observable market data) Level 3: evaluation techniques (not based on observable market data) During the year, following the disbursement of certain loans by various banking institutions to TBS Group S.p.A.,

four interest rate swap derivatives (IRS) were subscribed for a notional value of Euro 21.7 million. The conditions of the IRS contracts were negotiated to coincide with the conditions of the underlying commitments. These contracts fulfil the hedging requirements set in IAS 39 and fair value changes are therefore recognised directly to net equity.

Below are the main elements of the IRS contracts signed:

(thousands of Euro)

1) Date signed 30/09/2015

Date of maturity 28/06/2019

Initial notional value 13,196

Residual value at 31/12/2015 13,196

Fixed rate 0.28

Variable rate Euribor 3M

Fair value at 31/12/2015 90

(thousands of Euro)





Fixed rate 0.2



(thousands of Euro)





Fixed rate 0.49



(thousands of Euro)





Fixed rate 0.38




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From among said financial instruments, the Group values financial assets available for sale at fair value, the characteristics of which are detailed in Note 7. Financial assets available for sale as at 31 December 2015 can be classified as level 3 in the classification of fair value evaluation.

For all financial instruments, the relative nominal recognition value is the same as the fair value. Finally, note that there were no transfers from Level 1 to Level 2 or to Level 3 and vice versa.

NOTE 6 – Earnings per share

As required by IAS 33 – Earnings per share, information pertaining to the data used in calculating the basic and diluted earnings per share is provided.

Basic earnings per share are calculated by dividing the net profit for the period attributable to the ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, net of weighted treasury shares.

It is further highlighted that there are no preference dividends, conversions of preference shares or other similar effects that affect the financial results attributable to the holders of ordinary capital instruments.

The results and the number of ordinary shares used in the calculation of basic and diluted earnings per share are presented below.

Basic and diluted earnings per share (in Euro) 31/12/2015 31/12/2014

Net profit/(loss) attributable to ordinary shareholders of the parent company for the purposes of calculating basic and diluted earnings per share 2,410,666 1,897,110

Average weighted number of ordinary shares, including own shares, for the purposes of calculating basic and diluted earnings per share 41,591,969 41,591,969

Average weighted number of own shares -764,210 -764,210

Average weighted number of ordinary shares, excluding own shares, for the purposes of calculating basic and diluted earnings per share 40,827,759 40,827,759

Effect of dilution:

- share options

- conversion of convertible bond loan

Weighted average number of ordinary shares, excluding own shares, for the purposes of calculating diluted earnings per share 40,827,759 40,827,759

Earnings per share

- basic, per period income appertaining to ordinary shareholders of the parent company 0.059 0.046

- diluted, per period income appertaining to ordinary shareholders of the parent company 0.059 0.046

NOTE 7- IFRS 5 – Assets sold and/or held for sale

On 31 August 2015, 16% of the shares of the subsidiary SLT were sold for Euro 300 thousand. The residual equity investment, amounting to 40% of the capital, was classified in the balance sheet among

investments in associated companies and measured at fair value.


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SLT’s economic situation at the transfer date, compared with the previous year, is as follows:



Other income 8 7


Cost of materials 1276 1052

External services costs 596 686

Personnel costs 384 538

Other operating costs 19 16

Amortisation and write-downs on fixed assets 12 18


Total operating costs 2,287 2,310

OPERATING PROFIT 430 209

Financial income 3 2

Financial charges -3 -4

PROFIT BEFORE TAX 430 207

Income taxes 155 85

NET PROFIT OF THE PERIOD 275 122

Profit attributable to third parties -121

Deconsolidation effects 483

NET PROFIT DERIVING FROM ASSETS HELD FOR SALE 637 122

Details of the assets and liabilities at the transfer date of 31 August 2015 are as follows:

(thousands of Euro) 31/08/2015

ASSETS

NON-CURRENT ASSETS

Intangible assets 2

Tangible assets 39

Other non-current assets 33

NON-CURRENT ASSETS 74

Inventories 330

Trade receivables 1,341

Other current assets -

Cash and cash equivalents 52

CURRENT ASSETS 1,723

TOTAL ASSETS 1,797

LIABILITIES

Employee severance indemnity [Italian TFR] 144

Provisions for risks and charges 29

NON-CURRENT LIABILITIES 173

Trade payables 707

Income tax payables 155

CURRENT LIABILITIES 862

TOTAL LIABILITIES 1,035

Shareholders’ net equity 31/08/2015 762


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Additionally, on 27 December 2015, the TBS Group stipulated a contract that foresees the sale of all the shares held in Sinopharm TBS, equal to 50%, for the price of Euro 333 thousand.

Given that as of 31 December 2015 the transfer had not yet been completed, the equity investment was classified among the assets under assets held for sale, in the amount of Euro 333 thousand.

In the previous financial year, it had been recognised among the assets under investments in associates and joint ventures.

The write-down of the equity investment carried out during the year, equal to Euro 86 thousand, was recognised under the income statement item “result from assets held for sale”.

The total figure for the result from assets held for sale, Euro 551 thousand, can be broken down as follows:• SLT: profit, Euro 637 thousand• Sinopharm TBS: loss, Euro 86 thousand.

NOTE 8 – Intangible assets

Goodwill

Goodwill refers to cost of the business combination paid by the Group in excess allocation of merger deficits or for the acquisition of controlling interests in certain subsidiaries.

Goodwill posted prior to 31 December 2014 refers to the surplus paid by the Group as broken down below:• in 2014 for the acquisition of the REM business unit, now TBS Imaging; • in 2012 for the acquisition of the HiWeb business unit through the subsidiary Insiel Mercato; • in 2011 for the acquisition of a controlling interest in EBME;• in 2010 for the acquisition of controlling interest of TBS India and Erre Effe;• in 2009 for acquisition of controlling interest of MSI and Insiel Mercato and of recognition of the Put & Call option

regarding purchase of the minority interest of EBM and Caribel (merged with Insiel Mercato in 2014);• in 2008 for the acquisition of a controlling interest in Caribel (merged with Insiel Mercato in 2014) and in EBM, for

the acquisition of a further interest in Tesan and SLT, the NCA Group, the Panacea Group and in 2013 for the acqui-sition of a further interest in Caribel;

• in 2007 for acquisition of controlling interests in SLT, the Spanish NCA Group (then merged by incorporation by parent company TBS ES at the end of 2007) and the Panacea Group;

• in 2005 for acquisition of controlling interests in Surgical Technologies BV, Surgical Technologies Italia Srl and STI Deutschland GmbH (the latter then merged by incorporation by the respective parent companies TBS Group and TBS DE during 2007);

• in 2004 for the acquisition of the Clinical Engineering’s segment of General Electric Medical Systems;• in fiscal years prior to 2004 following Parent Company’s acquisition of various Business lines, even in several sta-

ges, in the sectors of the former Clinical Engineering Italy, e-Health Telemedicine and Telecare and of e-Health Patidok.


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The following table details the goodwill value allocated to the respective cash generating units (“CGU”):


Clinical Engineering Italy 18,778 11,408

Clinical Engineering Europe 6,098 4,642

Diagnostic Imaging 4,120 na

Telemedicine and telecare 0 7,560

e-Health& e-Government software production 4,921 4,921

Clinical Engineering India 3,026 3,026

Total goodwill 36,943 31,557

The book value of goodwill as at 31 December 2015 amounted to Euro 36,943 thousand. The difference compared to the value as at 31 December 2014, equal to Euro 5,386 thousand, derives from:• the recognition of goodwill for Euro 4,069 thousand following the merger of Ing. Burgatti Spa;• the recognition of goodwill for Euro 1,384 thousand following the merger of Crimo France Sas in the Clinical Engi-

neering Europe CGU;• SLT leaving the scope of consolidation, which included a goodwill value of Euro 139 thousand;• from recognition of the TBS GB EUR/GBP exchange rate difference of Euro 72 thousand attributed to the Clinical

Engineering Europe CGU. The Diagnostic Imaging CGU, in addition to the company Ing. Burgatti also includes TBS Imaging (which during the

year merged with Delta X) given that the business conducted by the 2 companies falls within the scope of diagnostic imaging (the goodwill relating to the acquisition by TBS Imaging of the REM business unit in liquidation for Euro 51,000 was reclassified from Clinical Engineering Italy to Diagnostic Imaging). Following the merger of Tesan into EBM, the goodwill of the Telemedicine and Telecare CGU was reclassified to the Clinical Engineering Italy CGU.

Goodwill impairment test

The residual goodwill recorded in the financial statements and detailed above was allocated to a number of CGUs in both business segments.

In particular, goodwill was allocated as follows (broken down by legal entity/business branch and reference CGU):

CGU – Cash Generating Units Goodwill for acquisition of business branches and/or companies

Clinical Engineering Italy EBM, Tecse, Serisia, DMS, Amplisim, General Electric, Surgical Technologies Italia, GS Service, Tecnobiopromo, Asic, SLT, Crimo, Pancli, MD, TBS IT, Finter, Medicall, Gesan, Comtel, Tesan, Tesan Televita,

Clinical Engineering Europe TBS FR, TBS GB, TBS PT, TBS BE, TBS ES, Surgical Technologies, MSI, EBME

Clinical Engineering India TBS India

Diagnostic Imaging Ing. Burgatti, TBS Imaging (formerly REM DI)

e-Health & e-Government Software Production Insiel Mercato, PCS, Eurosystems, Caribel, Erre Effe

The above CGUs were created by combining business activities based on the type of service provided and the areas in which cash flows are generated through the provision of such services.

As stated in IAS 36 – Impairment of assets, the impairment test was fully performed by comparing the recoverable amount of the goodwill with the corresponding carrying amount of the individual CGUs as at 31 December 2015.

Value in use was used for the recoverable amount as it is deemed reasonably higher than the fair value net of sale costs.


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Cash flow projections for 2016-2018, as taken from the financial plans prepared by the Parent Company and approved in December 2015 by its Board of Directors and by the Boards of Directors of the single subsidiaries, were normally used to calculate the value in use. Cash-flows for years subsequent to the last year included in the plan were discounted on the assumption of an indefinite time frame for the various CGUs at an annual growth rate ranging from 0.5-1% (3% for Clinical Engineering India CGU)

The main parameters used for calculating the discount rate (WACC) were:

CGU – Cash Generating Units Risk free Market premium

Unlevered Beta

Risk premium

Debt/equity ratio

Cost of debt

WACC

Clinical Engineering Italy 1.60% 5.50% 0.61 0.00% 1.16 5.00% 5.70%

Clinical Engineering Europe 1.48% 5.50% 0.61 0.00% 1.16 5.00% 5.70%

Clinical Engineering India 7.80% 5.50% 0.61 0.00% 1.16 5.00% 8.10%

Diagnostic Imaging 1.60% 5.50% 0.61 0.00% 1.16 5.00% 5.70%

e-Health & e-Government Software Production 1.60% 5.50% 0.58 3.00% 1.16 5.00% 6.90%

As regards the risk free rate, the average of the return rates for the last 6 months with respect to the start of the reference period for the budget (31.12.2015) for ten-year state securities for reference nations was used.

The unlevered Beta used in the various CGUs considered is the one which better reflects the information about the segment in which they operate.

To calculate the WACC for individual CGUs, the beta coefficient was used and redetermined considering the leverage arising from the Group’s debt/equity ratio very near to that resulting at 31 December 2015, a ratio deemed representative for the future years of the plan as well. This approach was adopted as the Parent Company manages its own financial debt and that of its subsidiaries through the disbursement of intercompany loans, based on individual company needs.

Impairment tests did not indicate that discounted cash-flows for the various CGUs exceeded the relative carrying values, therefore no impairment was necessary.

The value in use with reference to the CGUs is significantly greater than the book value of the capital invested. The results obtained were subjected to sensitivity tests, in order to determine how the result of this assessment

process would change as a function of the change in the growth rate considered for the projections beyond the plan period, or changes in the rate used for discounting of the flows themselves. In reference to the CGUs for which the value in use was not significantly higher than the book value of the capital invested, we provide the results of the sensitivity analysis below:• e-Health & e-Government Software Production CGU: with a growth hypothesis (rate g) of -1.0% (with respect to

the 0.5% used in the test), and a WACC higher by one percentage point, in any case no write-downs would be neces-sary. In addition, remember that the WACC used for the impairment test, equal to 6.9%, also includes a risk premium of 3%. In fact, management prudentially decided to use said premium in order to take into account the possibility that certain hypotheses of the plan do not come to fruition.

• The Clinical Engineering Italy, Clinical Engineering Europe and Diagnostic Imaging CGUs: with a growth hypothesis (rate g) of 0 (with respect to the 1.0% used in the test), and a WACC higher by one percentage point, in any case no write-downs would be necessary.

• Clinical Engineering India CGU: with a growth hypothesis (rate g) of 2.0% (with respect to the 3.0% used in the test), and a WACC higher by one percentage point, in any case no write-downs would be necessary.


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At 31 December 2015 (as seen in the following table), impairment losses totalled Euro 6,587 thousand for the e-Health & e-Government software production CGU, Euro 2,800 thousand for the Telemedicine and Telecare CGU, Euro 2,891 thousand for the Clinical Engineering Subitec CGU (no longer operating) and Euro 300 thousand for the Clinical Engineering Europe CGU.

(thousands of Euro) Residual goodwill at

31/12/2015

Total write-downs made

2013 2011 2010 2009 and beforehand

Clinical Engineering Italy 18,778 2,800 0 0 1,000 1,800

Clinical Engineering Europe 6,098 300 0 0 0 300

e-Health& e-Government software production 4,921 6,587 3,500 0 0 3,087

Clinical Engineering India 3,026 0 0 0 0 0

Diagnostic Imaging 4,120

Total goodwill 36,943 9,687 3,500 0 1,000 5,187


The table below provides a breakdown “Intangible assets with a finite useful life” as they appear in the Balance Sheet:


Development 2,326 2,555

Industrial patents, licenses, trademarks and similar rights 6,449 5,188

Other intangible fixed assets 13,646 11,129

Intangible fixed assets in progress and advances 3,507 4,052

Total intangible fixed assets 25,928 22,924

Changes in the period for “Intangible assets with a finite useful life” are shown below:

(thousands of Euro) Development Industrial patents, licenses,

trademarks and similar rights


Intangible investments in

progress and advances

Total Intangible fixed assets

Cost at 1 January 2015 net of provisions 2,555 5,188 11,129 4,052 22,924

Net increases 287 949 131 3,161 4,528

Net disposals - 20 80 11 111

Change in the scope of consolidation - 10 5,590 - 5,600

Depreciation in the period 1,083 2,774 3,149 - 7,006

Foreign exchange differences - - 3 - 3

Reclassifications and other 567 3,096 22 -3,695 -10

At 31 December 2015 2,326 6,449 13,646 3,507 25,928


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(thousands of Euro) At 1 January 2015

Cost or fair value 6,470 18,856 28,716 4,052 58,094

Amortisation provisions and impairment -3,915 -13,668 -17,587 0 -35,170

Residual net value 2,555 5,188 11,129 4,052 22,924

(thousands of Euro) At 31 December 2015

Total

Cost or fair value 7,324 22,891 34,382 3,507 68,104

Amortisation provisions and impairment -4,998 -16,442 -20,736 0 -42,176

Residual net value 2,326 6,449 13,646 3,507 25,928

Development costs mainly include expenses incurred by TBS IT and EBM for the development of software to be used for the execution of their activities. Investments for the year mainly refer to projects for the company EBM to achieve new production processes and more efficient organisation structures.

Costs for software, licenses and trademarks primarily relate to software licenses and programs acquired externally from third parties, to costs for the internal development of the portfolio of products to be offered to Public Administrations, mainly on the part of the companies that operate within the context of the “Integrated Solutions of e-Health & e-Government” Business Unit, costs sustained by EBM for software used for clinical engineering, costs sustained by the parent company for the implementation of management software, and costs sustained by the Group for the development of the international and multi-language Phi module, software used in the context of the e-Health and e-Government CGU. Increases during the year were acquisitions carried out by EBM (Euro 409 thousand), TBS IT (Euro 121 thousand) and TBS GB (Euro 112 thousand).

Amortisation is calculated on a straight-line basis over a period of 3/5 years.The other intangible assets item mainly included “portfolio orders” and “relations with customers” acquired through

business combinations. Increases during the year are relative to relationships with the customers of Ing. Burgatti (Euro 1,806 thousand) and Crimo France (Euro 3,784 thousand).

In particular, the item included net book values of:• Euro 82 thousand for the net book value of the customer relations which arose in 2007 following purchase of the

NCA Group, subsequently merged into TBS ES. The amortisation of the customer relations is on a straight line basis over a 10-year period;

• Euro 261 thousand relating to the net book value of relations with customers arising from the acquisition of the Panacea Group in August 2007; this asset is amortised on a straight-line basis over a period of 10 years;

• Euro 74 thousand relating to the net book value of relations with customers arising from the acquisition of Caribel in July 2008; this asset is amortised on a straight-line basis over a period of 10 years;

• Euro 2,140 thousand relating to the net book value of relations with customers arising from the acquisition of EBM in December 2008; this asset is amortised on a straight-line basis over a period of 10 years;

• Euro 1,756 thousand relating to the net book value of relations with customers arising from the acquisition of Insiel Mercato in December 2009; this asset is amortised on a straight-line basis over a period of 10 years;

• Euro 1,320 thousand relating to the net book value of relations with customers arising from the acquisition of TBS India in April 2010; this asset is amortised on a straight-line basis over a period of 10 years;

• Euro 561 thousand relating to the value of relations with customers arising from the acquisition of Erre Effe in December 2010. Relations with customers is amortised on a straight-line basis over a period of 10 years;

• Euro 1,767 thousand relating to the value of relations with customers arising from the acquisition of EBME in Au-gust 2011. The amortisation is on a straight-line basis over a period of 10 financial periods;


96

• Euro 17 thousand relative to the value of the relations with customers arising in May 2011 following the acquisi-tion of Delta X. The amortisation is on a straight-line basis over a period of 5 financial periods;

• Euro 158 thousand relative to the value of the portfolio of orders arising in February 2012 following the acquisi-tion of the branch of Agile. The amortisation is over a period of 7 years, as a function of the margins produced by the contracts taken into consideration and recognised in the portfolio;

• Euro 393 thousand relating to the value of relations with customers arising from the acquisition of the REM busi-ness unit in December 2014. The amortisation is on a straight-line basis over a period of 5 financial periods;

• Euro 1,445 thousand relating to the value of relations with customers arising in January 2015 following the acqui-sition of Ing. Burgatti. The amortisation is on a straight-line basis over a period of 5 financial periods;

• Euro 3,626 thousand relating to the value of relations with customers arising in August 2015 following the acqui-sition of Crimo France. The amortisation is on a straight-line basis over a period of 10 financial periods

Assets under construction primarily relate to:• costs incurred by Insiel Mercato (Euro 1,595 thousand, of which 1,112 during the year) and TBS IT (Euro 635 thou-

sand entirely during the year) for the development of new functions and new application models for the companies’ own proprietary product portfolio;

• costs incurred by the subsidiary EBM for Euro 821 thousand (of which 783 thousand during the year) for the ma-nagement of specialised centers created to limit corporate costs and internalise services;

• costs incurred by the Parent Company for the creation of management software (Euro 155 thousand);• costs incurred by the subsidiary Ing. Burgatti (Euro 271 thousand, entirely during the year);• costs incurred by the subsidiary TBS FR (Euro 30 thousand, entirely during the year).

Reclassifications from “Assets under construction” mainly refer to transfers: • to the category “Industrial patents, intellectual property rights and works, licenses and trademarks” of costs incur-

red by the Parent Company for software to manage clinical engineering activities and other applications (Euro 490 thousand), by Insiel Mercato (Euro 2,383 thousand) for software intended for public administration or hospitals and by PCS (Euro 216 thousand),

• to the category of “Development” for costs, totalling Euro 567 thousand, suffered by EBM and TBS IT for research.The amortisation of capitalised costs is based on the useful life estimated at three or five years.

NOTE 9 – Tangible fixed assets

The table below presents the net balances for fixed tangible assets:


Land and buildings 7,667 6,827

Plants and machinery 12,341 9,735

Other tangible fixed assets 2,850 3,337

Total tangible fixed assets 22,858 19,899


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Changes in the period are shown below:

(thousands of Euro) Land and buildings

Plants and machinery

Other tangible fixed assets

Total tangible fixed assets

Cost at 1 January 2015 net of provisions 6,827 9,735 3,337 19,899

Net increases 5 5,119 764 5,888

Disposals (historical cost) 0 1,035 276 1,311

Disposals (amortisation provision) 0 -788 -229 -1,017

Change in the scope of consolidation 1,105 908 0 2,013

Depreciation in the period 270 3,338 1,213 4,821

Impairment 0 0 0 0

Foreign exchange differences 0 161 10 171

Reclassifications and other 0 3 -1 2

At 31 December 2015 7,667 12,341 2,850 22,858


Cost or fair value 8,646 30,258 8,151 47,055

Amortisation provisions and impairment -1,819 -20,523 -4814 -27,156

Residual net value 6,827 9,735 3,337 19,899


Total

Cost or fair value 9,756 35,414 8,648 53,818

Amortisation provisions and impairment -2,089 -23,073 -5,798 -30,960

Residual net value 7,667 12,341 2,850 22,858

Land and buildings

Buildings, owned or leased, are relative to the parent company (Euro 1,078 thousand) and the subsidiaries PCS Professional Clinical Software GmbH (Euro 825), Crimo Italia (Euro 1,380 thousand), EBM (Euro 1,900), Insiel Mercato which merged by incorporation with Caribel (Euro 676 thousand), Erre Effe (Euro 384 thousand), TBS Imaging which merged by incorporation with Delta X (Euro 473 thousand) and Crimo France (Euro 951 thousand).

These are amortised at an annual rate of 3%. The subsidiary PCS has issued a Euro 500 thousand guarantee for the twenty-year loan granted by BKS in 2007.


The item mainly relates to Clinical Engineering equipment. Investments for the year totalled Euro 5,119 thousand and were mainly relative to equipment to be used for the execution of EBM’s activities for Euro 1,788 thousand, for machines necessary for the execution of activities in the endoscopy sector for TBS GB for Euro 738 thousand, assets acquired by REM DI (Euro 700 thousand), by Ing. Burgatti (Euro 490 thousand), by TBS India (Euro 469 thousand) and by Crimo Italia (Euro 409 thousand).


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This item primarily relates to electronic office equipment, furniture and furnishings, cars and motor vehicles. Investments made during the year amounted to Euro 764 thousand (of which Euro 283 made by the subsidiary EBM and Euro 96 thousand by TBS IT).

Financial leased assets mainly refer to the equipment, vehicles, plants and machinery, and buildings of consolidated companies; minimum payments, present value and the presumed repayment period of these leased assets are detailed in the table below.


Minimum payment Present value Minimum payment Present value

Within 1 year 818 694 407 323

Between 1 and 5 years 2,086 1,784 1,161 936

Over 5 years 651 623 732 679

Total minimum payments 3,556 3,101 2,300 1,938

Financial charges - 455 - - 362

Total minimum payments’ present value 3,101 3,101 1,938 1,938

Present value was determined based on the amortisation schedules communicated by finance leasing companies and does not significantly diverge from the present value of minimum payments calculated by discounting cash flows due to the instalment payments as indicated in the schedule at the same interest rate of the finance lease contract.

NOTE 10 – Other non-current assets

Investments in associated companies

The table summarises the breakdown of investments in associated companies:

(thousands of Euro) 31/12/2015 % held 31/12/2014 % held

SMS in liquidation 0 24.50% 17 24.50%

TH MED - 40.00% - 40.00%

O3 Enterprise 35 24.40% 26 20.00%

Easy Care Foundation 16 25.00% 16 25.00%

SIGE Consortium 10 33.33% 10 33.33%

Care Expert Social Consortium 2 25.00% 0 25.00%

Kell 0 0.00% 59 24.00%

Saim 236 46.50% 235 46.50%

Sinopharm TBS(*) 0 50.00% 419 50.00%

SLT 785 40.00%

Total investments in associated companies and joint ventures 1,084 782

(*) Value of the equity investment reclassified among assets held for sale in compliance with IFRS 5. See NOTE 7 for more details.


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None of the companies mentioned are listed on any regulated or organised market.The SLT, which was a subsidiary until 31 August 2015, was recognised among associated companies after the sale

of 16% of the shares, given that the percentage stake held in the company fell to 40%.While awaiting completion of the sale formalised in the contract stipulated on 27 December 2015, the equity

investment in Sinopharm TBS (Beijing) Clinical Engineering was reclassified among assets held for sale, in compliance with IFRS 5.

The following table summarises the essential information on these investments on the basis of the last approved financial statements as at 31 December 2014:

(thousands of Euro) 31/12/2014

O3 Care Expert Social

Consortium

SIGE Consortium

Saim Easy Care Foundation

SLT

Current assets 486 258 18,910 2,645 270 1,157

Non-current assets 23 4 0 0 71 59

Current liabilities -349 -210 -18,877 -2,450 -247 -481

Non-current liabilities -56 0 0 0 0 -117

Net assets (liabilities) 104 52 33 195 94 618

Revenue 506 270 3,707 1,306 246 2,717

Operating result 7 8 -4 3 8 428

Note that figures for the subsidiary TH Med are not available.

Other investments

Interests held by the Group in other companies are summarized below:

(thousands of Euro) 31/12/2015 % held 31/12/2014 % held

Medic4All AG 50 2.37% 50 2.37%

Molecular Biology Consortium 2 2.00% 2 2.00%

ISBEM 30 7.96% 30 7.96%

UTE (ES) 25 n,d, 5 n,d,

ReMedia Consortium 1 n,d, 1 n,d,

Ancitel 133 7.13% 196 7.13%

Venice Research Consortium 0 n,d, 16 n,d,

IRCAB Foundation 17 n,d, 17 n,d,

Sanitanet 12 10.00% 12 10.00%

Polo meccatronico umbro 1 n,d, 1 n,d,

ITS Foundation 15 n,d, 13 n,d,

Other investments n,d, n,d,

Total investments in other companies 286 343


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Other non-current assets


Other non-current assets 624 587

Total other non-current assets 624 587

Other non-current assets as at 31 December 2015 almost entirely relate to deposits and guarantees.

NOTE 11 – Inventories

The breakdown of inventories as at 31 December 2015 and as at 31 December 2014 is as follows:


Work in progress on order

Cost 815 814

Work in progress on order write-down provision -552 -552

Net realisable value 263 262

Inventories consumables, spare parts and goods

Cost 13,000 10,164

Inventory write-down provision -1,270 -969

Net realisable value 11,730 9,195

Inventory advances 0 8

Total 11,993 9,465

Work in progress refers to the subsidiaries PCS and MSI.In particular, Euro 552,000 relates to a single project referred to as NoeHIT for the supply of software programmes

and services in the Lower Austria Region. The value at issue is fully covered by drawing from the provision for impairment of contract work, accrued in previous years to cover a customer dispute, regarding which legal proceedings have been brought to recover the amounts owing.

Raw materials mainly consisted of consumables and spare parts for endoscopy and clinical engineering activities, mainly stored at contracting parties’ premises. They are valued at the purchase cost calculated using the FIFO method, adjusted by the inventory write-down provision of Euro 1,270 thousand at 31 December 2015 (Euro 969 thousand at 31 December 2014).

Overall changes in the inventory write-down provision for the two financial periods are shown below:


Inventory write-down provision at start of the period 969 744

Utilization in the year -44 -30

Change in the scope of consolidation 177

Provisions of the period 168 255

Inventory write-down provision at end of the period 1,270 969


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NOTE 12 – Trade receivables

The table below provides a breakdown of trade receivables:


Trade receivables 109,722 114,656

Receivables write-down provision -4,203 -3,833

Total 105,519 110,823

Trade receivables as at 31 December 2015 amount to Euro 105,519 thousand (Euro 110,823 thousand as at 31 December 2014), net of a receivables write-down provision of Euro 4,203 thousand (Euro 3,833 thousand as at 31 December 2014). As in previous years, even in 2015 some Group companies entered into non-recourse factoring deals, resulting in receivables assigned totalling Euro 93.2 million being removed from the balance sheets (Euro 96.5 million in 2014).

Changes in the receivables write-down provision in the two periods under consideration are as follows:


At the start of the period 3,833 3,505

Change in the scope of consolidation 207 0

Provisions 783 1,229

Utilisation -620 -901

At the end of the period 4,203 3,833

The analysis of the past-due loans and those to mature as at 31 December 2015 is as follows:

(thousands of Euro) Total Not overdue

< 30 days 30-60 days 60-90 days 90-180 days

Over 180 days

Trade receivables at 31/12/2015 109,772 63,280 4,038 4,897 5,610 6,839 25,109



Over 180 days

Receivables write-down provision at 31/12/2015 4,203 4,203

The analysis of the receivables write-down provision at 31 December 2014 was the following:



Over 180 days

Trade receivables at 31/12/2014 114,656 86,438 1,439 4,374 2,012 5,591 14,802



Over 180 days

Receivables write-down provision at 31/12/2014 3,833 3,833


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The high total for overdue receivables is justified by the fact that the Group works primarily with public bodies, which are known for their extended repayment time frames. Despite payments being received with significant delays compared to contractual repayment terms, this does not expose the amounts shown to any repayment risk, apart from those amounts already presented in the financial statements.

NOTE 13 - Assets held for trading

The item “Assets held for trading” had a value of zero at the end of 2015, as at the end of the previous year.

NOTE 14 – Other current assets

The table below provides a breakdown of other current assets:


Social security receivables 464 182

Receivables for contributions to public entities 159 673

Receivables from employees 184 196

Other prepaid expenses and accrued income 973 581

Other tax receivables 3,313 2,034

Other receivables 7,293 6,123

Total other current assets 12,386 9,789

Receivables from employees mainly consist of advances paid to employees against expenses incurred for performing their work and of cash given to employees who travel at the time of their recruitment and withheld when the employee leaves the company.

Other tax credits mostly include VAT credits.Receivables from other mainly include receivables from temporary associations of companies for rebilling the

subsidiary EBM for Euro 4,989 thousand.

NOTE 15 – Income taxes payable and receivable


Income tax receivable 3,014 1,784

Total income tax receivables 3,014 1,784

Income tax receivables refers to amounts receivable from individual countries for direct taxes (IRES - corporate income tax and income tax of various countries) which should be recovered within the following year, as well as amounts receivable for tax withheld by companies on interest receivables. During the course of 2012, income tax receivables were booked for the reimbursement of income taxes for previous years, following the presentation of the request for IRES reimbursement following the lack of the IRAP deduction relative to expenses for payroll employees and assimilated for the years 2007-2011, equal to a total of Euro 1,354,000 not yet deposited.


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Income tax payables 1,468 1,418

Total income tax payables 1,468 1,418

Income taxes payable refer to current taxes for the year still to be paid and record the amounts that the individual companies must pay to the financial administrations of the individual countries. Such payables are calculated in accordance with the tax rates currently in force in the individual countries.

NOTE 16 – Consolidated shareholders’ net equity

As at 31 December 2015, the item amounted to Euro 53,475 thousand as opposed to Euro 51,654 thousand as at 31 December 2014. For changes in shareholders’ net equity, please refer to the relevant “Statement of changes in consolidated shareholders’ net equity”.

Share capital

The subscribed and paid-up share capital of TBS Group at 31 December 2015 consists of 41,421,370 shares, entirely subscribed and paid up (net of own shares), with a nominal value of Euro 0.10 each.

The total amount of own shares held by the Company as at 31 December 2015 amounts to 764,210. The value shown in the financial statements is net of the own shares held by the company, for the part attributable

to capital (Euro 76,000).Share premium accountThe share premium account, set up following a number of Parent Company capital increases, amounted to Euro

42,832,000 at 31 December 2015.

Foreign currency translation reserve

The foreign currency translation reserve as at 31 December 2015 showed a loss of Euro 455 thousand (loss of Euro 597 thousand as at 31 December 2014) and was generated by including the following into the consolidated statements: the subsidiary TBS GB, whose functional currency is the British pound, TBS SE, whose functional currency is the Serbian dinar, TBS India, whose currency is the Indian rupee and TBS Bohemia, whose currency is the Czech koruna.

Other reserves and retained earnings

Other reserves include:• the First-time Adoption (FTA) reserve deriving from the first-time application of the international accounting stan-

dards as at 1 January 2004;• retained earnings: the item includes the retained results achieved by the consolidated companies and their consoli-

dation adjustments;• the item also includes actuarial gains/losses net of the relative tax effects, following the amendment to IAS 19

entering into force.


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Minority interests and reserves

As at 31 December 2015, the item amounted to Euro 2,392 thousand as opposed to Euro 2,616 thousand as at 31 December 2014.

This change, and the profits in the period attributable to minority interests, is primarily attributable to:• dividends distributed by Tesan Televita to minority interests (Euro 54 thousand);• dividends distributed by Crimo Italia for minorities (Euro 243 thousand);• dividends distributed by SLT to minorities (Euro 54 thousand);• the exit of SLT from the scope of consolidation for Euro 336 thousand;• actuarial gains/losses net of the relative tax effect, booked following the amendment to IAS 19 entering into ef-

fect, attributable to minority interests.For the changes in shareholders’ net equity attributable to minority interests, please refer to the “Summary

statement of changes in shareholders’ net equity.”

NOTE 17 - Net financial debt

The Group’s net financial debt can be broken down as follows:


A. Current financial assets 9,878 5,192

B. Cash and cash equivalents 25,171 30,763

C. Liquidity (A. + B.) 35,049 35,955

D. Non-current financial assets 2,145 436

E. Non-current financial liabilities 50,608 33,378

F. Current financial liabilities 71,080 65,550

G. Net financial debt (C. + D. - E. - F.) -84,494 -62,537

Total financial debt -84,494 -62,537

For further information on the breakdown of financial assets and liabilities, please refer to the paragraphs below.


The table below provides a breakdown of the current financial assets:


Short-term financial receivables 9,854 5,168

Marketable securities 24 24

Total current financial assets 9,878 5,192

Short-term financial receivables total Euro 9,879 thousand and mainly include loans transferred without recourse and not collected as at 31 December 2015 for Euro 8,068 thousand for EBM, Euro 638 thousand for Crimo Italia and for Euro 769 thousand for Insiel Mercato.

The securities are held by Insiel Mercato.


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The table below provides a breakdown of cash and cash equivalents on hand:



Total cash and cash equivalents 25,171 30,763

This relates to temporary cash on hand at banking institutions and liquid assets normally on hand at company offices.

Other non-current financial assets

The table below provides a breakdown of the non-current financial assets:


Other non-current financial assets 2,145 436

Total other financial assets 2,145 436

Other non-current financial assets mainly refer to receivables for TBS India associated with interest-bearing bank deposits held by the company, following the awarding of tenders, and to a policy held by EBM, which partially covers severance and end-of-term indemnities for directors.

Non-current financial liabilities

The table below provides a breakdown of the non-current financial liabilities:


within 5 years over 5 years Total within 5 years over 5 years Total

Bond loans 14,449 14,449 24,326 24,326

Leasing contracts debts 1,784 623 2,407 936 679 1,615

Medium/long term bank loans 30,856 225 31,081 4,593 286 4,879

Payables to other lenders 2,671 2,671 2,558 2,558

Total non-current financial liabilities 49,760 848 50,608 32,413 965 33,378


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Non-current financial liabilities are detailed in the following table:

Non-current liabilities(thousands of Euro)

31/12/2015 31/12/2014

Convertible bond loan 0 9,997

Mini bond loan 14,449 14,329

Euro 3 million loan granted to TBS Group by Banca Popolare in January 2015 1,712 na

Euro 3.5 million loan granted to TBS Group by Friuladria Credit Agricole in May 2015 2,465 na

Euro 15 million loan granted to TBS Group by Banca Popolare di Milano in June 2015 9,478 na

Euro 4 million loan granted to TBS Group by BNL in October 2015 2,652 na

Euro 1.5 million loan granted to TBS Group by Mediocredito del FVG in July 2015 780 na

Euro 3 million mortgage granted to TBS Group by UniCredit in July 2015 2,276 na

Euro 500 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2015 334 na

Euro 3 million mortgage granted to TBS Group by Banca Raiffeisen in December 2015 2,418 na

Loan granted to EBM by CariUmbria Intesa San Paolo in June 2015 for the original amount of Euro 2.5 million. 1,778 na

Euro 2.5 million loan granted to TBS Group by Cassa di Risparmio del FVG in August 2014 0 287

Euro 3 million mortgage granted to TBS Group by UniCredit in March 2014 0 1,719

Euro 2.5 million loan granted to TBS Group by Friuladria in December 2013 1,070 1,570

Euro 1,000 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2012 0 204

Euro 6 million loan granted to EBM by Ca.ri.FVG Banca Intesa in November 2015 4,861 0

Mortgage granted by BKS to PCS in December 2007 485 547

Euro 5 million loan granted to TBS Group and Insiel Mercato by Banca Popolare di Milano in March 2011 0 265

Loan granted to Erre Effe by MPS in October 2013 for the original amount of Euro 150,000 0 53

Euro 180,000 loan granted to Caribel, merged with Insiel Mercato, by Antonveneta in September 2008 33 52

Euro 150 thousand loan granted to REM DI by Banca Popolare della Campania in October 2014 0 135

Euro 100 thousand loan granted to Delta X (now TBS Imaging) by Banca di Credito Cooperativo in 2014 33 47

Loan granted to Ing. Burgatti by Cassa di Risparmio di Bologna 51 na

Loan granted to Ing. Burgatti by Banca Popolare Emilia Romagna 278 na

Loan granted to Ing. Burgatti by Banca di Desio 102 na

Loan granted to Ing. Burgatti by Emilbanca 113 na

Loan granted to TBS India to purchase equipment 163 na

Total medium/long term portion of medium/long loans 31,081 4,879

Derivatives of TBS Group measured at fair value 165 0

Financial payable to minority shareholders for the acquisition of a 35.00% interest in Ing. Burgatti (put & call option) 2,418 na

P.I.A. loan granted to subsidiary Insiel Mercato 84 125

Financial payable to Erre Effe minority shareholders for the acquisition of a 49.00% interest in Erre Effe (put & call options) 0 1,144

Financial payable to TBS GB minority shareholders for the acquisition of a 3.87% interest in TBS GB 0 1,278

Other payables of the subsidiary EBM 4 11

Total medium/long term portion of debts payable to others 2,671 2,558

Non-current portion of leasing contracts’ debts 2,407 1,615

Total non-current financial liabilities 50,608 33,378

Some loans require compliance (financial covenants) with certain parameters based on the consolidated financial statements of the Parent Company at the year-end.

These financial parameters, to be calculated on an annual basis, do not have characteristics or expenses different from those generally established under market practices.


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Note that at the end of 2015 all of these parameters were fully respected, with the exception of a single covenant relative to a loan granted by Unicredit, maturing in 2018. This lack of respect led to it being reclassified from non-current financial liabilities (long-term), to current financial liabilities (short-term) in the amount of Euro 1,000 thousand. In any case, we confirm that the original repayment plan for this loan will be respected.

On 30 July 2015 the TBS Group repaid the bond loan of Euro 10 million, as well as the interest for the period, subscribed on 9 February 2012 with the Fondo Italiano di Investimento.

Five year non-convertible bond loan (mini bond)

On 25 August 2014 the Extraordinary Shareholders’ Meeting of TBS Group resolved the issuing of a non-convertible bond loan with a duration of five years for a total amount of Euro 15 million. The placement of this loan ended on 29 October 2014. The five year bond loan - reserved exclusively for Italian and foreign institutional investors, with an annual nominal rate of 6.5% - consists of 150 bonds with a nominal unit value of Euro 100,000 each, not divisible, and was issued at 100% of the nominal value. Banca Popolare di Vicenza was the arranger, subscriber of the securities and guarantor of 100% of the total amount, while placement of securities with foreign institutional investors was done by KNG Securities LLP. The capital will be repaid in a single payment at maturity (October 2019), while interest accrued will be paid on a quarterly basis. The value of the loan at 31 December 2015, booked at the amortised cost, is equal to Euro 14,449 thousand, entirely medium/long-term, net of issuing costs attributed to the loan.

The bond loan contract envisages respect for the parameters calculated with reference to the yearly and consolidated financial statements, as well as the respect for the other pre-established contractual conditions. As of 31 December 2015, these parameters and conditions were respected.

Leasing contracts debts

Leasing contract debts refer to financial leasing contracts stipulated by the parent company and the subsidiaries Tesan, Crimo Italia, TBS ES, Insiel Mercato, EBM, Erre Effe, TBS Imaging and Crimo France. For additional details, please refer to the section in Note 8 on leased assets.

Medium/long term bank loans

The characteristics of the major loans currently active are described below.


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• Euro 3 million loan granted to TBS Group by Banca Popolare in January 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in March 2015 and the final

one is due for payment in December 2019. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,446 thousand, consisting of Euro 734 thousand

repayable over the short term and Euro 1,712 thousand repayable over the medium/long term.

• Euro 3.5 million loan granted to TBS Group by Banca Popolare Friuladria - Gruppo Credit Agricole in May 2015The loan is repayable in half-yearly deferred instalments; the first instalment came due in November 2015 and the

final one is due for payment in May 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 3,146 thousand, consisting of Euro 681 thousand


• Euro 15 million loan granted to TBS Group by Banca Popolare di Milano in June 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in September 2015 and the

final one is due for payment in June 2019. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 13,147 thousand, consisting of Euro 3,670

thousand repayable over the short term and Euro 9,477 thousand repayable over the medium/long term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated

accounting values, regarding the ratio between net financial debt and shareholders’ net equity, between net financial debt and EBITDA and between net financial debt and net financial expense. If those indicators should not fall within the settled limits, the Bank is entitled to rescind the contract, in accordance to Italian Civil Code, article 1456. As at 31 December 2015, the Company respected these parameters.

• Euro 4 million loan granted to TBS Group by BNL Gruppo BNP Paribas in October 2015The loan is repayable in half-yearly deferred instalments; the first will come due in April 2016, with a duration of

18 months and an option to extend it for an additional 18 months, with the final rate consequently coming due in October 2018. The loan interest rate is the 6-month Euribor rate plus a spread.

At 31 December 2015, the outstanding loan amount was Euro 3,985 thousand, consisting of Euro 1,333 thousand repayable over the short term and Euro 2,652 thousand repayable over the medium/long term.

Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated accounting values, regarding the ratio between net financial debt and shareholders’ net equity, between net financial debt and EBITDA and between net financial debt and net financial expense. If those indicators should not fall within the settled limits, the Bank is entitled to rescind the contract, in accordance to Italian Civil Code, article 1456. As at 31 December 2015, the Company respected these parameters.

• Euro 1.5 million loan granted to TBS Group by Mediocredito del FVG in July 2015.The loan is repayable in half-yearly deferred instalments; the first instalment came due in December 2015 and the

final one is due for payment in June 2018. The interest rate is equal to the Euribor 365 plus a spread.At 31 December 2015, the outstanding loan amount was Euro 1,265 thousand, consisting of Euro 485 thousand

repayable over the short term and Euro 780 thousand repayable over the medium/long term.


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• Euro 3 million loan granted to TBS Group by UniCredit in July 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in October 2015 and the final

one is due for payment in July 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,852 thousand, consisting of Euro 576 thousand

repayable over the short term and Euro 2,276 thousand repayable over the medium/long term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated


• Euro 500 thousand loan granted to TBS Group by Mediocredito del Trentino Alto Adige in September 2015.The loan is repayable in half-yearly deferred instalments; the first instalment comes due in April 2016 and the final

one is due for payment in October 2018. The loan interest rate is the 6-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 498 thousand, consisting of Euro 164 thousand

repayable over the short term and Euro 334 thousand repayable over the medium/long term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated


• Euro 3 million mortgage granted to TBS Group by Banca Raiffeisen in December 2015.The loan is repayable in half-yearly deferred instalments; the first instalment comes due in April 2016 and the final

one is due for payment in October 2020. The loan interest rate is the 6-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,991 thousand, consisting of Euro 573 thousand


• Euro 2.5 million loan granted to EBM by Cassa di Risparmio dell’Umbria Gruppo Intesa San Paolo in June 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in September 2015 and the

final one is due for payment in June 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,262 thousand, consisting of Euro 484 thousand


• Euro 0.4 million loan granted to Crimo Italia by Cassa di Risparmio dell’Umbria Gruppo Intesa San Paolo in June 2015.The loan is repayable in 18 monthly deferred instalments; the first instalment came due in July 2015 and the final

one is due for payment in December 2016. The loan interest rate is the 1-month Euribor rate plus a spread.As at 31 December 2015 the outstanding amount of the loan was Euro 268 thousand, entirely repayable over the

short term.

• Euro 6 million loan granted to EBM by Cassa di Risparmio del Friuli Venezia Giulia Gruppo Intesa San Paolo in Novem-ber 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in February 2016 and the

final one is due for payment in November 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 6 million, consisting of Euro 1,139 thousand



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Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated accounting values, regarding the ratio between net financial debt and shareholders’ net equity and between EBITDA and net financial debt. If those indicators should not fall within the settled limits, the Bank is entitled to rescind the contract, in accordance to Italian Civil Code, article 1456. Nonetheless, the first indication of whether these parameters are respected will be given with the consolidated results of the parent company TBS Group at 31 December 2016.

• Euro 300 thousand loan granted to Ing. Burgatti by Cassa di Risparmio di Bologna in April 2015.The loan is repayable in monthly deferred instalments; the first instalment came due in May 2015 and the final one

is due for payment in April 2017. At 31 December 2015, the outstanding loan amount was Euro 201 thousand, consisting of Euro 150 thousand


• Euro 400 thousand loan granted to Ing. Burgatti by Banca Popolare Emilia Romagna in September 2015.The loan is repayable in monthly deferred instalments; the first instalment came due in October 2015 and the final

one is due for payment in September 2019. At 31 December 2015, the outstanding loan amount was Euro 464 thousand, consisting of Euro 186 thousand


• Euro 2.5 million loan granted to TBS Group by Cassa di Risparmio del Friuli Venezia Giulia in August 2014.The loan is repayable over 18 monthly deferred instalments with the first instalment paid in September 2014 and

the last instalment due in February 2016. The interest rate for the loan is a fixed rate plus the 1-month Euribor. As at 31 December 2015 the outstanding amount of the loan was Euro 296 thousand, entirely repayable over the

short term.

• Euro 3 million loan granted to TBS Group by UniCredit in March 2014.“The loan is repayable in quarterly deferred instalments; the first instalment expired in June 2014 and the final one

is due for payment in March 2018.” The loan interest rate is the 3-month Euribor rate plus a spread. As at 31 December 2015 the outstanding amount of the loan was Euro 1,748 thousand, entirely repayable over

the short term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated

accounting values, regarding the ratio between net financial debt and shareholders’ net equity and between EBITDA and net financial debt. Note that at the end of 2015, the covenant relative to the ratio between net financial debt and shareholders’ net equity was not met. This lack of respect led to it being reclassified from non-current financial liabilities (long-term), to current financial liabilities (short-term) in the amount of Euro thousand. In any case, we confirm that the original repayment plan for this loan will be respected.

• Euro 200 thousand loan granted to Ing. Burgatti by Emilbanca in September 2014.The loan is repayable in monthly deferred instalments; the first instalment came due in October 2014 and the final

one is due for payment in September 2019. The loan interest rate is the 6-month Euribor rate plus a spread. At 31 December 2015, the outstanding loan amount was Euro 152 thousand, consisting of Euro 39 thousand


• Euro 500 thousand loan granted to Ing. Burgatti by Desio in June 2014.The loan is repayable in monthly deferred instalments; the first instalment came due in July 2014 and the final one

is due for payment in July 2017. The loan interest rate is the 6-month Euribor rate plus a spread.


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At 31 December 2015, the outstanding loan amount was Euro 272 thousand, consisting of Euro 170 thousand repayable over the short term and Euro 102 thousand repayable over the medium/long term.

• Euro 2.5 million loan granted to TBS Group by Banca Popolare Friuladria - Gruppo Credit Agricole in December 2013.The Euro 2.5 million loan is repayable in 20 quarterly deferred instalments with the first instalment due in March

2014 and the last instalment in December 2018. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 1,569 thousand, consisting of Euro 499 thousand


• Loan granted to TBS Group by Medio Credito del Trentino Alto Adige in September 2012 for the original amount of Euro 1 million.The loan is repayable in quarterly deferred instalments; the first instalment expired in December 2012 and the final

one is due for payment in September 2016. The loan interest rate is the 3-month Euribor rate plus a spread. As at 31 December 2015 the outstanding amount of the loan was Euro 204 thousand, entirely repayable over the

short term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated

accounting values, regarding the ratio between net financial debt and shareholders’ net equity and between EBITDA and net financial debt. If those indicators should not fall within the settled limits, the Bank is entitled to rescind the contract, in accordance to Italian Civil Code, article 1456. As at 31 December 2015, the Company respected these parameters.

• Mortgage granted by BKS to PCS in December 2007.The Euro 819 thousand loan is secured by a Euro 500 thousand mortgage. It is repayable in monthly instalments,

and the first instalment was paid in January 2008. The loan interest rate is the 3-month Euribor rate plus a spread. Following the purchase of nearby land used as an employee car park, the original amount was increased by Euro 140 thousand in September 2008.

The total outstanding loan amount as at 31 December 2015 was Euro 547 thousand, consisting of Euro 62 thousand repayable over the short term and Euro 485 thousand repayable over the medium/long term.

• Euro 5 million loan granted to TBS Group by Banca Popolare di Milano (now transferred to Insiel Mercato) in March 2011.“The loan is repayable in quarterly deferred instalments; the first instalment expired in June 2011 and the final one

is due for payment in March 2016.” The loan interest rate is equal to the arithmetic mean of the daily 6-month Euribor rates plus a spread.

As at 31 December 2015 the outstanding amount of the loan was Euro 265 thousand, entirely repayable over the short term.

• Euro 150 thousand loan granted to Erre Effe by Banca Monte dei Paschi di Siena in October 2013.The Euro 150 thousand loan is repayable in 6 half-yearly deferred instalments with the first instalment due in June

2014 and the last instalment in December 2016. The loan interest rate is the 6-month Euribor rate plus a spread. As at 31 December 2015 the outstanding amount of the loan was Euro 53 thousand, entirely repayable over the

short term.


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Payables to other lenders

Medium/long term loans payable to others are detailed in the following table:• Financial payable due to the former shareholders of Crimo France from TBS FR for the balance of the purchase of

Crimo France shares for Euro 3,086 thousand.• P.I.A. loan (Integrative Incentive Package for local development) with a starting capital of Euro 206 thousand, gran-

ted in November 2007 by the Ministry of Productive Activities to Caribel, now Insiel Mercato, apart from Euro 386 thousand granted in 2009.The loan is repaid in annual instalments. The date of extinction is March 2018. The outstanding loan amount as at

31 December 2015 is Euro 125 thousand of which Euro 41 thousand falls due within the year and Euro 84 thousand comes due after the year. The loan is tied to execution of the Aster-Med project.

Current financial liabilities

The table below provides a breakdown of the current financial liabilities:


Short-term leasing 694 323

Short-term payables to banks 47,922 47,519

Debts payable to factors 16,570 16,216

Other short-term financial liabilities 5,894 1,492


Current financial liabilities relate to those Group short-term borrowings from leasing companies, factoring companies, banks, other financial institutions and other lenders.


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Amounts due to banks include bank overdrafts, advanced payments of invoices, current portion of medium/long term borrowings and other short term loans.


Convertible bond loan 0

Euro 3 million loan granted to TBS Group by Banca Popolare in January 2015 734 -

Euro 3.5 million loan granted to TBS Group by Friuladria Credit Agricole in May 2015 681 -

Euro 15 million loan granted to TBS Group by Banca Popolare di Milano in June 2015 3,670 -

Euro 4 million loan granted to TBS Group by BNL in October 2015 1,333 -

Euro 1.5 million loan granted to TBS Group by Mediocredito del FVG in July 2015 485 -

Euro 3 million mortgage granted to TBS Group by UniCredit in July 2015 576 -

Euro 500 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2015 164 -

Euro 3 million mortgage granted to TBS Group by Banca Raiffeisen in December 2015. 573 -

Loan granted to EBM by CariUmbria Intesa San Paolo in June 2015 for the original amount of Euro 2.5 million. 484 -

Loan granted to Crimo by CariUmbria Intesa San Paolo in June 2015 for the original amount of Euro 0.4 million. 268 -

Euro 2.5 million loan granted to TBS Group by Cassa di Risparmio del FVG in August 2014 296 1,680

Euro 3 million mortgage granted to TBS Group by UniCredit in March 2014 1,748 722

Euro 2.5 million loan granted to TBS Group by Friuladria in December 2013 499 476

Mortgage granted to TBS Group by BMPS in April 2010 - 368

Loan granted to TBS Group by Mediocredito in August 2012 for the original amount of Euro 1,000 thousand - 353

Euro 1,000 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2012 204 260

Euro 6 million loan granted to EBM by Ca.ri.FVG Banca Intesa in November 2015 1,139 -

Euro 3 million loan granted to TBS Group by BNL in December 2012 - 1,000

Euro 1 million loan granted to TBS Group by MPS in September 2014 - 1,000

Mortgage granted by BKS to PCS in December 2007 62 59

Euro 5 million loan granted to TBS Group by Banca Popolare di Milano in March 2011, transferred to Insiel Mercato in 2011 265 1,045

Euro 180,000 loan granted to Caribel, merged with Insiel Mercato, by Antonveneta in September 2008 19 19

Loan granted to Erre Effe by MPS in October 2013 for the original amount of Euro 150,000 53 50

Euro 150,000 loan granted to REMI DI (now TBS Imaging) by Banca Popolare della Campania in October 2014 41 15

Euro 100 thousand loan granted to Delta X (now TBS Imaging) by Banca di Credito Cooperativo in 2014 12 49

Euro 300 thousand loan granted to Ing. Burgatti by Cassa di Risparmio di Bologna in April 2015 150 -

Euro 400 thousand loan granted to Ing. Burgatti by Banca Popolare Emilia Romagna in September 2015 186 -

Euro 500 thousand loan granted to Ing. Burgatti by Banca Desio in June 2014 170 -

Euro 200 thousand loan granted to Ing. Burgatti by by Emilbanca in September 2014 39 -

Euro 800 thousand loan granted to Ing. Burgatti by Banca di Bologna in July 2014 240 -

Euro 200 thousand loan granted to Ing. Burgatti by by BNL in October 2013 56 -

Euro 500 thousand loan granted to Ing. Burgatti by Banca Popolare dell'Emilia Romagna in October 2011 89 -

Total non-current portion of long-term loans 14,236 7,096

Current account overdrafts, advances on invoices and other short-term borrowings 33,686 40,423


TBS FR financial payable for the balance of Crimo France shares 3,086 -

Financial payable to Erre Effe minority shareholders for the acquisition of a 49.00% interest in Erre Effe (put & call options) 1,221 -

Financial payable to TBS GB minority shareholders for the acquisition of a 3.87% interest in TBS GB 1,278 -


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F.I.T. loan granted to subsidiary Caribel, merged with Insiel Mercato - 28

P.I.A. loan granted to subsidiary Caribel, merged with Insiel Mercato 41 41

TBS IT debts payable to Agile procedure - 1,152

Debts payable to EBM minority shareholders -

Debts payable to Erre Effe minority shareholders 47 65

MSI loan - 3

Payables for various Sava loans of the subsidiary EBM 3 11

Other financial payables 218 192

Total short-term portion of other borrowings 5,894 1,492

Current leasing contracts’ debts 694 323

Current payables to factoring companies 16,570 16,216

Total current financial liabilities 71,080 65,550

Payables due to other lenders include:• Euro 1,278 thousand financial payable to TBS GB minority shareholders.

On the basis of the agreement signed with the minority shareholder of EBME, the Group acted to evaluate a put option in favour of the minority shareholder and a call option in favour of the TBS Group, for repurchase of the exchanged TBS GB shares. • Euro 1,221 thousand financial payable to Erre Effe minority shareholders.

Based on the agreement signed by Erre Effe minority shareholders, the Group proceeded with valorisation of the Put & Call option for purchase of 49% of Erre Effe shares.

NOTE 18 – Employee Severance Indemnity

The table below shows changes in the Employee Severance Indemnity [Italian TFR] provision:


At the start of the period 9,026 7,835

Change in the scope of consolidation 683 0


Actuarial gains (losses) -553 721

Financial charges 151 118

Benefits paid -780 -426

At the end of the period 9,074 9,026


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According to international accounting standards, and IAS 19 in particular, the employee severance indemnity is regarded as a defined benefit obligation whereby the liability is measured on the basis of actuarial methods.

In the aftermath of the Italian Financial Law 2007, for Italian companies the employee severance indemnity accrued from 1 January 2007 or from the date the option to be exercised by employees was selected is included in the category of programmes with defined contribution, both in the case of supplementary allowance as well as in the case of allocation to the INPS Treasury Fund. The accounting of this Employee Severance Indemnity is therefore assimilated with other types of contribution deposits.

At 31 December 2015 and 31 December 2014 the breakdown of the provisions by Italian and foreign companies, which said reserve applies to, is expressed in percentage terms and absolute values in the following table:


% Valore % Valore

Italian companies 91.0% 8,261 81.2% 7,325

Foreign companies 9.0% 813 18.8% 1,701

Total 100.0% 9,074 100.0% 9,026

Employee Severance Indemnity [Italian TFR] liabilities were measured by independent actuaries, applying the Projected Unit Credit Method.

For Italian entities, the actuarial assumptions used were as follows:

31/12/2015 31/12/2014

Annual probability of termination due to death ISTAT 08 death-rate tables lowered to 85%, lowered per

gender

ISTAT 08 death-rate tables lowered to 85%, lowered per

gender

Annual probability of termination due to disability INPS data lowered to 70%

INPS data lowered to 70%

Annual probability of attrition due to other causes 3.80% 5.00%

Annual probability of request of indemnity advance by employees 1.54% 2.00%

Annual interest rate 2.03% 1.49%

Annual inflation rate 2.00% 2.00%

Retirement age according to current INPS retirement rules

according to current INPS retirement rules

In order to indicate the potential effects that could have occurred to the Group’s defined benefit obligations following changes in some of the main actuarial hypotheses, we indicate the following:• in the case the discount rate used were to increase by 0.5%, the debt registered in the financial statements would

be reduced by Euro 354 thousand;• in the case the discount rate used were to decrease by 0.5%, the debt registered in the financial statements would

be increased by Euro 383 thousand;• if pension costs were increased by 1%, the impact on the debt booked to the balance sheet would increase by Euro

205 thousand; • if pension costs were decreased by 1%, the impact on the debt booked to the balance sheet would decrease by

Euro 197 thousand.


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The actuarial calculations relating to Austrian and French subsidiaries took into account the discount rate and the retirement age that are more pertinent to them and, in particular:

31/12/2015 31/12/2014

PCS TBS FR PCS TBS FR

Discount rate 2,0% 2.0% 1.5% 1.6%

Retirement age 62 65 62 65

Annual rate of real salary increase 2.75% 0.58% 2.75% 1.2%

NOTE 19 – Provisions for risks and charges

The table below provides a breakdown of provisions for liabilities and charges:

(thousands of Euro) Other provisions for liabilities and

charges

FISC Provision for litigation

Total

At 1 January 2015 380 339 260 979

Change in the scope of consolidation 23 212 170 405

Provisions for the year 320 42 22 384

Utilisation for the year -241 -85 -30 -356

Reclassifications and other 47 0 0 47

At 31 December 2015 529 508 422 1,459

Other provisions for future liabilities and charges regard:• Euro 138 thousand to the provision created by the parent company to cover the risk of having to pay possible

contingent liabilities to the purchaser of Subitec, sold on 23 December 2014. The allocations made during the year for this risk amounted to Euro 47 thousand, classified under financial expense. The use for compensation requests during the year amounted to Euro 82 thousand;

• for Euro 141 thousand for provisions carried out during the year by EBM for risks deriving from the breakage of components connected to high-tech D.I. equipment that the company holds due to a maintenance full risk contract (the previous year’s provision of Euro 120 thousand was used during the year);

• Euro 131 thousand for provisions (of which Euro 104 thousand during the year) by Insiel Mercato in relation to possible contractual risks;

• Euro 33 thousand for the provisions of TBS India hedging the risk connected with the SLA clause included in custo-mer contracts. Usage during the year amounted to Euro 7 thousand;

• Euro 45 thousand for provisions during the year by PCS for legal risks (use during the year of Euro 20 thousand);• Euro 30 thousand for provisions during the year by Crimo Italia for contractual risks;• Euro 12 thousand for provisions during the year by Crimo France for contractual risks (use during the year of Euro

11 thousand).The provision for disputes refers to:• Euro 19 thousand (the provision of Euro 30 thousand for the previous year was used during this year) to the subsi-

diary TBS FR and for Euro 33 thousand (of which Euro 3 thousand allocated during the year) to the Parent Company for possible risks for disputes with personnel;

• Euro 200 thousand to EBM for the possible risk of adverse outcomes in disputes.


117

The supplementary customer indemnity provision was allocated by the Italian companies EBM, Tesan, Crimo Italia and TBS Group and includes provisions for indemnity payable in certain cases of dissolution of agent contracts. The provision was calculated in accordance with the Collective Bargaining Agreements for Agents and Sales Representatives for Industry of 20 March 2002 and is recorded at current value (the provisions amount in total to Euro 42 thousand and the utilisation of Euro 85 thousand).

NOTE 20 - Other medium/long-term liabilities


Other non-current liabilities 306 320

Total other non-current liabilities 306 320

Other medium/long-term liabilities mainly refer to deferred income relating to grants obtained. The amount will be recognised in the Income Statement as revenue, according to the occurrence, on the basis of

depreciation schedules of property, plant and equipment that the grants were obtained for.

NOTE 21 – Trade payables

The table below provides a breakdown of trade payables:


Payables to suppliers 38,706 38,866

Total trade payables 38,706 38,866

Payables to suppliers as at 31 December 2015 amount to Euro 38,706 thousand (38,866 thousand as at 31 December 2014).

Trade payables are not interest bearing and the payment terms are in line with the commercial practices of the business areas in which they fall. Trade payables are not secured.

NOTE 22 – Other current liabilities

The table below provides a breakdown of other current liabilities:


Payables to employees 9,655 9,297

Payables to social security institutions 5,671 5,753

Customer advance payments on invoices 3,170 1,196

VAT payables 4,985 16,778

Other tax liabilities 2,980 3,228

Other payables 2,710 5,766

Total other current liabilities 29,171 42,018


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Payables to employees include payables for salaries and wages for the month of December 2015, to be paid in the following month, and payables to employees for holidays and leave.

Social security liabilities primarily consist of payables to the Italian Institute for Social Security (INPS), the Italian Workers’ Compensation Authority (INAIL) and the Local Social Security Institutes, as well as amounts due for contributions towards leave.

VAT liabilities fell notably with respect to the previous year following the implementation of split payments. This new regulation foresees that VAT relative to the sale of goods and the provision of services invoiced after 1 January 2015 is paid directly by public assignees and/or customers.

Other taxes payables primarily comprise employee and collaborator tax withholdings.The Other payables item relates to various payables such as amounts due to directors, freelancers, etc.

NOTE 23 - Guarantees granted, commitments and financial liabilities

Assets pledged as guarantees for financial liabilities

The subsidiary PCS has issued an Euro 500 thousand mortgage-backed security against the loan granted by BKS.

Guarantees givenThe Parent Company provided Bid Bond, Performance Bond and Advance Bond guarantees for Euro 2,125 thousand

in favour of customers relative to participation in international tenders.Tesan and Tesan Televita have provided guarantees to the value of Euro 883 thousand in favour of customers for

participation in calls for tender.EBM has provided insurance guarantees to the value of Euro 40,211 thousand for the proper execution of works in

favour of customers and for participation in calls for tender. Insiel Mercato has provided guarantees to the value of Euro 2,555 thousand in favour of customers and for

participation in calls for tender.

NOTE 24 – Revenue

The table below provides a breakdown of revenues as at 31 December 2015 and 31 December 2014:

(thousands of Euro) 31/12/2015 31/12/2014 (*)

Revenue from the sale of goods and services 232,564 228,655

Change in work in progress on order -8 -315

Total revenue 232,556 228,340

(*) Data restated pursuant to IFRS 5

Revenues primarily relate to contractual amounts accrued on the basis of the progress of services performed and accrued in the year, changes in contract work in progress for services that have a value at year-end but have not been completed, invoices issued to customers or entities in temporary joint ventures with the Group for the sale of consumables and spare parts, and ISTAT adjustment invoices in the period at issue and previous periods.

The increase in revenues can mainly be attributed to the change in the scope of consolidation (Ing. Burgatti and Crimo France).


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NOTE 25 - Other revenue and income

The table below provides a breakdown of other revenue and income as at 31 December 2015 and 31 December 2015:


Contributions 714 793

Other operating revenue 578 399

Total other income 1,292 1,192


Revenue contributions include both revenues linked to cost components and revenues linked to investments in non-current intangible fixed assets, and are recognised on an accruals basis for their offsetting against related costs.

Positive components relative to the use of the provisions for risks and charges are included among other revenues, where risks did not arise or arose at a value of less than that allocated.

NOTE 26 – Cost of raw materials and consumables

The table below provides a breakdown of the cost of raw materials and consumables as at 31 December 2015 and 31 December 2014


Raw materials, consumables and goods 33,262 30,797

Changes in inventories of raw materials, consumables and goods 2,535 512

Total raw materials, consumables and goods 30,727 31,309


The costs shown primarily relate to the purchase of spare parts for medical devices on receipt of orders.


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NOTE 27 – Service costs

The table below provides a breakdown of service costs as at 31 December 2015 and 31 December 2014:


Consultancy and technical contracts 47,870 46,691

Legal, administrative and commercial services 5,379 5,950

Travel expenses 3,445 3,306

Telephone expenses 1,661 1,595

Directors’ remuneration 1,102 920

Board of statutory auditors remuneration 409 334

Commissions 1,933 1,535

Bank commissions and factoring charges 1,683 1,521

Third Party Insurance 1,273 1,293

Transportation and shipping 1,605 1,496

Other repairs and maintenance 980 939

Advertising, promotion, exhibitions and trade fairs 756 643

Use of third party assets 3,348 3,366

Vehicle rental 3,750 3,665

Other service costs 6,919 6,964

Total service costs 82,113 80,218


The increase in service provision costs as at 31 December 2015 compared to the previous year was strictly linked to the increase in turnover following the acquisitions of Ing. Burgatti and Crimo France. “Other service costs” is a residual item that includes other charges such as utilities, postal charges and meal vouchers.

The following table provides the 2015 fees for the services involving the audit of the separate and consolidated financial statements, and the limited audit for the half-year report (without issuing the associated report), as provided by the auditing firms and by other companies belonging to its network.


Party who provided the service - fees for the year amount amount

Reconta Ernst & Young S.p.A. Parent Company - TBS Group Spa - auditing service 107 96

Reconta Ernst & Young S.p.A. Parent Company - TBS Group S.p.A. - other services 14 11

Reconta Ernst & Young S.p.A. Italian subsidiaries - auditing services 187 214

Reconta Ernst & Young S.p.A. foreign subsidiaries – auditing service 74 69

Reconta Ernst & Young S.p.A. foreign subsidiaries – other services 19

Other auditing firms - auditing services 14 14

Total 415 404


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NOTE 28 – Personnel costs

The table below provides a breakdown of personnel costs as at 31 December 2015 and 31 December 2014:


Salaries and wages 71,737 69,518

Social security contributions on salaries 18,708 18,217

Retirement benefits 271 331

Employee Severance Indemnity 3,220 3,197

Other personnel costs 1,761 1,707

Total personnel costs 95,697 92,970

(*) Dati riesposti in seguito all’applicazione dell’IFRS 5

The increase in personnel costs as at 31 December 2015 compared to the previous year is primarily due to the acquisitions during the year of Ing. Burgatti and Crimo France.

The “Other personnel costs” item primarily relates to costs for temporary work and staff leaving incentives for the year.

The changes in the number of Group employees in the last two financial years, taking into account the companies acquired in the periods, are summarised below:

01/01/2015 Recruitment Resignations 31/12/2015

Managers 30 2 3 29

Employees 2,305 484 343 2,446

Total 2,335 486 346 2,475

In the amount of 72 units, the increase is from the newly acquired Ing. Burgatti and Crimo France.

NOTE 29 – Other operating costs

The table below provides a breakdown of other operating costs as at 31 December 2015 and 31 December 2014:


Write-downs of receivables under current assets 783 1,225

Taxes and duties 675 708

Other costs 4,139 2,062

Total other operating costs 5,597 3,995


“Other costs” primarily relate to membership charges, marketing and promotional costs and costs pertaining to previous years.


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NOTE 30 - Cost adjustments for in-house generation of non-current assets

The following table illustrates the extent of the cost adjustments for in-house generation of non-current assets as at 31 December 2015 and 31 December 2014:


Cost adjustments for in-house generation of non-current assets -3,317 -2,998

Total cost adjustments for in-house generation of non-current assets -3,317 -2,998

The item “Cost adjustments for in-house generation of non-current assets” as at 31 December 2015 amounted to Euro 3,317 thousand (Euro 2,998 thousand at 31 December 2014). It related entirely to personnel and service expenses incurred for some development of new software and information technology. In particular, should such costs be deducted from the corresponding Income Statement item, there would be a reduction in personnel and service costs.

NOTE 31 – Amortisation, depreciation and write-downs

The following table shows the breakdown of amortisation, depreciation and write-downs as at 31 December 2015 and 31 December 2014:


Depreciation of tangible fixed assets 4,820 4,341

Amortisation of intangible fixed assets 7,008 6,148

Write-downs of assets 0 10

Total amortisation, depreciation and impairment 11,828 10,499


The increase in the amortisation of intangible fixed assets at 31 December 2015 with respect to 31 December 2014 is above all due to the amortisation of the customer portfolios of Ing. Burgatti and Crimo France. The increase in depreciation of tangible fixed assets is due to the newly acquired Ing. Burgatti.

NOTE 32 – Other provisions for risks and charges

The table below provides a breakdown of other provisions for doubtful account as at 31 December 2015 and 31 December 2014:


Provisions Contractual risk provision for disputes 22 0

Provisions Supplementary customer indemnity provision 43 41

Provisions Other provisions for liabilities and charges 319 120

Total allocation to provisions 384 161

Please refer to Note 19 for the related comments.


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NOTE 33 – Gains (losses) from investments


Write-downs on equity investments -63 -62

Revaluations of equity investments 35 15

Total (write-downs) revaluations -28 -47

NOTE 34 – Financial income and charges

The table below provides a breakdown of financial income and expenses as at 31 December 2015 and 31 December 2014:


Interest payable on loans 6,154 6,775

Other financial charges 86 60

Actuarial termination indemnity loss 151 118

Total Financial Expenses 6,391 6,953

Bank interest receivable 116 121

Other interest receivable 162 41

Other financial income 549 210

Total Financial Income 827 372

Total financial income and expenses 5,564 6,581


The decrease in financial expense is due to the decrease in the cost of debt and expenses following credit assignment operations. The increase in financial income is due to positive foreign exchange differences realised during the year.

NOTE 35 - Income taxes

The table below provides a breakdown of income taxes distinguishing between current, deferred and pre-paid taxes. A breakdown of Italian and foreign taxes is provided in relation to current taxes.


Current IRAP 861 2,053

IRES 834 1,119

Current income taxes, Foreign 1,481 1,677

Current income taxes 3,176 3,172

(Pre-paid)/deferred taxes -268 -325

Total income taxes 2,908 4,524



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The following table shows the tax incidence on earnings before tax as at 31 December 2015 and 31 December 2014:


Pre-tax profit 5,227 6,750

Income taxes 2,908 4,524

Incidence on earnings before taxes 55.6% 67.0%


The decrease impact with respect to 2014 is mainly due to the deductibility in 2015, for IRAP purposes, of the cost of employees hired on open-ended contracts.

With reference to deferred tax assets, note that liabilities for deferred tax of Euro 48 thousand were booked directly as a contra-entry in shareholders’ net equity. This amount refers to the tax effects:• of actuarial losses calculated based on IAS 19 for Euro 93 thousand (debit). • the fair value measurement of future cash flows for derivatives based on IAS 39 for Euro 45 thousand (credit).

Deferred tax receivables and payables

The following table details deferred tax assets:


Financial statements

Income statement Financial statements

Income statement

Deferred income on previous losses 1,098 170 928 -67

Capitalization write-off 506 36 457 2

Revenue recognition 106 -15 121 -15

Receivables for prepaid tax for substitute tax 3,165 -692 4,157 -692

Other temporary differences 2,470 41 2,129 568

Total prepaid tax receivables 7,345 -460 7,792 -204

The Group recorded prepaid taxes relating to temporary differences between the civil and fiscal assessment of Group companies, based on the consideration that future taxable amounts will absorb all the temporary differences (including consolidation adjustments) that generated them. In calculating prepaid taxes, reference was made to the rates in force in the various countries.


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One of the most significant amounts is the allocation of deferred tax assets on tax losses arising in TBS FR, MFI and TBS ES that can be offset by the future taxable profits of the companies in which the losses arose. In particular, the deferred tax assets recorded and the theoretical tax assets arising from tax losses that may be carried forward are as follows:


Deferred tax assets recorded

Theoretical deferred tax assets

Deferred tax assets recorded

Theoretical deferred tax assets

TBS FR 942 1,269 710 1,037

MSI 156 156 121 121

TBS ES 0 1,503 97 1,503

Deferred tax receivables on losses carried forward 1,098 2,928 928 2,661

The amount of deferred tax receivables which can be carried forward, linked to the corresponding tax base, can be broken down by individual company as follows:

(thousands of Euro) Unlimited Total

TBS FR 942 942

MSI 156 156

Deferred tax receivables on losses carried forward 1,098 1,098

Among the most important amounts are also deferred tax assets for Euro 3,465 thousand, equal to the residual tax benefit deriving from the future deductibility of the goodwill liberated in 2010 for the subsidiary EBM. In years following 2010 deferred tax assets booked were in fact released to the statement of income for a tenth in each year, in correspondence to the tax deductibility of the amortisation of the goodwill carried out exclusively in the financial statements of the subsidiary drawn up in accordance with Italian accounting principles.

Details of deferred tax liabilities are as follows:


Financial statements

Income statement Financial statements

Income statement

Difference between fiscal-IFRS goodwill amortisation 4,106 50 4,056 77

Deferred tax following orders portfolio and relations with customers 4,109 -870 3,128 -783

Other temporary differences 1,946 100 1,746 178

Total deferred tax liabilities 10,161 -720 8,930 -528

The deferred tax liabilities were recorded against all the taxable temporary differences, and more specifically:• on write-downs of goodwill amortisation after their initial recognition on the basis of the fiscally deductible amor-

tisation;• on the portfolio order and customer relations accounting on the basis of the purchase price allocations of the va-

rious purchases made by the Group.


126

NOTE 36 – Related party disclosures

The consolidated financial statements include the financial statements of the TBS Group and of those subsidiaries falling under the scope of consolidation.

Transactions between TBS Group and the related subsidiaries were eliminated from the Consolidated Financial Statements.

Transactions with related parties (relating to financial and equity interests) were not removed when preparing the consolidated financial statements and are broken down as follows:


costs revenue receivables payables costs revenue receivables payables

SEGES 83 0 0 40 153 0 0 53

Paolo Salotto 281 0 0 41 214 0 0 48

Alessandro Firpo 0 0 0 0 123 0 0 17

MEA Consulting 25 0 0 0 38 0 0 38

Capitol Health 3 0 0 0 11 0 0 3

Nicholas Bosanquet 56 0 0 0 41 0 0 0

Innovation Global Health S.A. 130 0 0 47 141 0 0 26

Total 578 0 0 128 721 0 0 185

Mr. Paolo Salotto is the Chief Executive Officer of the TBS Group and the costs indicated in the table refer to fees accrued during 2015 as the Director of Strategic Planning, Director of M&A, General Manager for Corporate activities and Managing Director.

Seges Srl is considered a related party since Mr. Paolo Salotto is its Chairman. Relations with Seges are governed by a consulting contract, with particular reference to administration, accounting and legal issues.

Mr. Alessandro Firpo is no longer a Director of the Company. Innovating Global Health S.A. is considered to be a related party as it is a subsidiary of Capitol Health Special Fund

L.P., one of the shareholders of the Company. Relations with Innovating Global Health SA are regulated by a strategic and financial consulting agreement under General Management.

The services company MEA Consulting is a related party in that Laura Amadesi, a Director of the TBS Group is a shareholder and partner of said company. Costs for the year relative to MEA Consulting refer to consulting activities.

Mr. Nicholas Bosanquet is a manager at TBS GB, and entered into a consultancy contract with TBS GB.Relations with the associated companies are stated in amounts in thousands of Euro as at 31 December

2015 below.


costs revenue receivables payables costs revenue receivables payables

REM 97 0 0 0 664 22 27 0

SAIM - Südtirol Alto Adige Informatica Medica Srl 0 1,316 1,859 0 0 1,272 1,800 0

03 Enterprise 36 0 36 57 72 0 26 42

TH MED Group SarL 0 0 24 0 0 0 7 0

SIGE 0 0 11 0 0 1,641 10,647 1,152

Easy Care 0 0 10 0 0 0 16 0

S.M.S. Srl in liquidation 0 0 0 0 0 0 17 0

SLT 3 16 850 16 0 0 0 0

Total 136 1,332 2,739 73 736 2,935 12,540 1,194


127

Accrued remuneration for TBS Group directors with strategic responsibilities is shown below:


Salaries(*) Remuneration(**) Salaries(*) Remuneration(**)

Diego Bravar 122 140

Nicola Pangher 125 5 107 15

Fabio Faltoni N/A 208

Paolo Salotto(***)

(*) The amounts shown relate to the gross salaries paid to Company employees(**) The amounts shown relate to remuneration paid to Company directors(***) For the fees relative to Mr. Paolo Salotto please refer to the figures in the table above, “Relations with other related parties”

NOTE 37 – Subsequent events

The significant events that occurred after 31 December 2015 and up to the date of the financial statements were prepared are described below:

On 7 March 2016, the TBS Group, which already had a presence in Portugal through the subsidiary TBS PT, acquired Tunemedix SL of Lisbon, a company specialising in supplying diagnostic imaging products and managing associated services.

The investment to acquire 51% of the company came to Euro 184,000, but this may rise to a total amount of Euro 251,000 based on the final economic results for 2015 achieved by the acquired company. The contract also foresees the possibility to exercise a call option in favour of the TBS Group and a put option in favour of the minority shareholders, to be exercised by 31 March 2020.

Founded in 2011, Tunemedix, with its logistics offerings of spare parts for high-tech equipment such as TACs and MRIs, is rapidly growing, even beyond the Iberian Peninsula. Tunemedix also offers used equipment to emerging markets with lower budgets.





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129


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131

Financial Statements as at 31 December 2015Annual Financial Report

Financial statements as 31 December 2015

Drawn up in accordance with international accounting principles

STATEMENT OF FINANCIAL POSITION

Notes 31/12/2015 of which with related parties

31/12/2014 of which with related parties

ASSETS

- Assets with indefinite useful life (goodwill)

- Intangible assets with finite useful life 4 380,671 380,671

Intangible assets 5 1,350,881 1,680,160

- Land and buildings 1,731,552 2,060,831

- Plants and machinery 1,077,845 1,119,075

- Other tangible assets 216,181 161,361

Tangible assets 258,798 358,182

- Investments in subsidiaries 6 1,552,824 1,638,618

- Investments in associated companies and joint ventures 88,261,468 74,134,868

- Investment in other companies 1,111,676 597,376

Investments 92,706 92,709

- Other financial assets 7 89,465,850 74,824,953

- Other non-current assets 14 15 15

- Prepaid tax assets 8 17,449 19,749

Other non-current assets 31 142,495 106,200

TOTAL NON-CURRENT ASSETS 159,959 125,964

CURRENT ASSETS 92,910,185 78,650,366

Inventories

Trade receivables 9 411,760 1,053,783

Assets held for trading 10 9,494,135 7,535,368 8,485,935 6,135,428

Other current assets 11

Income tax receivables 11 1,006,173 409,689 1,591,830 443,789

Current financial assets 12 1,844,631 917,287

Cash and cash equivalents 14 19,095,312 18,849,980 22,798,218 22,454,366

TOTAL CURRENT ASSETS 14 11,386,296 10,092,726

TOTAL ASSETS 43,238,307 44,939,779

TOTALE ATTIVITÀ 136,148,492 123,590,145


132

Notes 31/12/2015 of which with related parties


TOTAL SHAREHOLDERS’ NET EQUITY AND LIABILITIES

NET EQUITY

- Share capital 4,142,137 4,142,137

- Reserves 69,840,558 66,964,785

TOTAL SHAREHOLDERS' EQUITY 13 73,982,695 71,106,922

NON-CURRENT LIABILITIES

Non-current financial liabilities 14 38,188,690 28,539,029

Employee severance indemnity [Italian TFR] 15 276,528 328,872

Deferred tax provision 31 625,568 696,754

Provisions for risks and charges 16 174,775 205,257

Other medium/long-term liabilities 0

TOTAL NON-CURRENT LIABILITIES 39,265,561 29,769,912

CURRENT LIABILITIES

Trade payables 17 2,085,877 859,492 3,503,981 908,897

Other current liabilities 18 3,578,987 2,216,493 4,645,764 1,988,602

Current financial liabilities 14 16,796,073 0 13,721,173 1,663,219

Income tax payables 12 439,299 842,393

TOTAL CURRENT LIABILITIES 22,900,236 22,713,311

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 136,148,492 123,590,145

Income statement

Notes 2015 of which with related parties

2014 of which with related parties

Revenue from sales and services 20 9,087,029 7,593,165 17,362,968 7,598,598

Other income 21 289,266 175,259 234,321

Total revenue and income 9,376,295 17,597,289

Cost of materials 22 1,748,010 11,250 6,372,757 216,667

External services costs 23 5,687,705 1,138,590 7,091,157 768,710

Personnel costs 24 3,534,554 4,007,912

Other operating costs 25 563,587 7,622 652,825 97,899

Cost adjustments for in-house generation of non-current assets 26 -239,221 -336,084

Amortisation and write-downs on fixed assets 27 924,407 1,131,994

Other provisions 28 3,258 648

Total operating costs 12,222,300 18,921,209

OPERATING PROFIT -2,846,005 -1,323,920

Gains (losses) from investments 29 303,802 303,802 -17,070 -17,070

Gains from equity investments 30 6,209,950 6,209,950 5,786,919 5,786,919

Financial income 30 1,518,217 1,186,040 980,480 956,201

Financial charges 30 2,670,744 30,835 2,084,785 55,790

PROFIT BEFORE TAX 2,515,220 3,341,624

Income taxes 31 -1,169,151 -644,572

NET PROFIT FOR THE YEAR 3,684,371 3,986,196


133

COMPREHENSIVE INCOME STATEMENT

2015 2014

Net profit for the year (A) 3,684,371 3,986,196

Other components of the comprehensive income statement that will be subsequently reclassified to profit/(loss) for the year

Fair value change in hedging derivatives -165,170

Tax effect on fair value change in hedging derivatives 45,422

-119,748

Other items of the comprehensive income statement that will not be subsequently reclassified to profit/(loss) for the year

Actuarial gains/losses 20,149 -39,400

Tax effect on actuarial gains/losses -4,836 10,835

15,313 -28,565

Total other components of the comprehensive income statement net of taxes (B) -104,435 -28,565

Total profit/loss for the year (A)+(B) 3,579,936 3,957,631

CASH-FLOW STATEMENT



Adjustments to reconcile before tax income with financial flows net of operating activities:

Profit before tax 2,515,220 3,341,624

- Amortisation, depreciation and write-downs of tangible and intangible assets 924,407 1,131,994

- Writedowns/(writebacks) on investments -303,802 17,070

- (Gain)/losses on disposal of non-current assets, including investments 0 0

-Changes in deferred and prepaid taxes 0 - 1

- Net increase/(decrease) in the Employee Severance Indemnity provision and other personnel funds 0 265,344

- Net increase/(decrease) in provisions for risks and charges 3,258 647

- Dividends attributable -6,209,950 -6,209,950 - 5,786,919 - 5,786,919

- Interest and other financial income -1,518,217 -1,186,040 - 980,480 956,201

- Financial expenses 2,718,213 30,835 2,084,785 55,790

- Costs for share-based payments 0 0

Total -1,870,871 74,064

Net change in working capital for the period

(Increase)/decrease in inventories 642,023 1,493,831

(Increase)/decrease in trade receivables -1,008,200 -1,399,940 3,603,339

Increase/(decrease) in trade payables -1,418,104 -49,405 - 3,805,741 534,198

(Increase)/decrease in various receivables -87,128 34,100 1,829,926 - 493,460

Increase/(decrease) in other liabilities -1,665,190 -1,435,328 1,812,313 1,281,811

Total -3,536,599 4,933,668 - 1,604,612

Interest income and other financial income received 0 -

Income taxes paid 0 -


134



CASH FLOW GENERATED (USED) BY OPERATING ACTIVITIES - 4,475,558 5,007,733

- Purchases of intangible assets -395,680 - 713,036

- Purchases of tangible assets -125,930 - 282,085

- Net change in financial receivables and other financial assets 0 1,000

-Recapitali/establishment of subsidiaries -557,243 -557,243 - 3,667,070

- (Acquis.)/sales of equity investments -13,390,804 - 932,297

- Dividends received 5,990,873 5,890,873 7,927,456 - 3,667,070

- Disposal of intangible assets 10,501 14,369

- Disposal of tangible assets 1,775 359 7,927,456

- Acquisition of subsidiaries, net of cash acquired 0 0 0

CASH FLOWS PROVIDED BY (USED IN) INVESTMENT ACTIVITIES -8,466,508 2,348,696

- Net Increase/(decrease) in current financial liabilities 2,909,730 1,941,167 - 9,784,041

- Net (increase)/decrease in current financial assets 3,532,935 - 302,425

- Net Increase/(decrease) in non-current financial liabilities 9,649,661 13,829,927 - 9,664,737

- Net (increase)/decrease in non-current financial assets 0 0

- Capital Increase 0 0

- Purchase of own shares 0 0

- Dividends paid -704,163 0

Dividends distributed to third parties 0 0

- Interest and other financial expenses paid -2,670,744 -30,835 - 2,079,829

- Interest receivables and other financial income received 1,518,217 1,186,040 980,480

- Other changes 0 - 55,790

CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES 14,235,636 2,644,112 956,201

CASH ACQUIRED WITH MERGER OPERATION 0 3,161

TOTAL CASH FLOWS 1,293,570 10,000,540

CASH AND CASH EQUIVALENTS (NET) AT THE START OF THE YEAR 10,092,726 89,025

CASH AND CASH EQUIVALENTS (NET) AT THE END OF THE YEAR 11,386,296 10,092,726


135

Summary statement of changes in shareholders’ net equity.

Share capital Reserve, Share premium

Other reserves and retained

earnings

Net profit for the period

NET EQUITY

Shareholders' net equity 31/12/2013 IAS/IFRS 4,142,138 42,832,382 23,663,009 (3,488,238) 67,149,291

Allocation of 2013 profit (3,488,238) 3,488,238 0

Net profit as at 31 December 2014 3,986,196 3,986,196

Actuarial gains/losses (28,565) (28,565)

Total profit/loss for the period 0 0 (28,565) 3,986,196 3,957,631

Dividends resolved 0

Shareholders' net equity 31/12/2014 IAS/IFRS 4,142,138 42,832,382 20,146,206 3,986,196 71,106,922

Allocation of 2014 profit 3,986,196 (3,986,196) 0

Net profit as at 31 December 2015 3,684,371 3,684,371

Actuarial gains/losses 15,313 15,313

Fair-value measurement hedging derivatives net of tax effect (119,748) (119,748)

Total profit/loss for the period 0 0 (104,435) 3,684,371 3,579,936

Dividends resolved (704,163) (704,163)

Shareholders' net equity 31/12/2015 IAS/IFRS 4,142,138 42,832,382 23,323,804 3,684,371 73,982,695


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Notes to the Financial Statements

NOTE 1 - General information, layout and content of the financial statements and IFRS compliance

General information

TBS Group S.p.A. is the Parent Company of Italian and foreign companies that provide products and above all services to healthcare facilities, both public and private, in the following sectors of activity:

1, Medical devices and ICT Systems: preventive and corrective maintenance of all biomedical equipment and endoscopic and ultrasound instruments of public or private hospitals, verifications of safety and functional quality checks, electronic management, advice on purchasing, inspections and training. It also provides telemedicine and telecare solutions to favour diagnostic and therapeutic continuity between hospitals and regions and for the implementation of telematic services for home-based social/healthcare assistance.

2, Integrated e-Health & e-Government Solutions: IT services and products with the production, installation, inspection and management of digital medical systems and solutions and their integration with administrative systems, in hospital and social/healthcare environments. In addition, development of IT products, systems and solutions for Public Administration with the production and management of integrated systems to digitally manage demographic, social, tax, administrative and government services, for management of human resources, protocols and document management for Public Administration, in particular for local entities.In addition, the Company offers its subsidiaries strategic, consulting and coordination services as well as

administrative assistance.TBS Group S.p.A. is a company listed in AIM Italia, a market organised and managed by Borsa Italiana.The registered office of TBS Group S.p.A. is at the AREA Science Park in Padriciano (Trieste), Italy. The company has

developed the size of its group through a series of acquisitions of subsidiaries held to be strategic in Italy, Europe and, over the last few years, in India and China.

These financial statements were approved with a resolution of the Board of Directors on 24 March 2016.

Layout and content of the financial statements for the year and IFRS compliance

The financial statements for the year are the separate financial statements of the TBS Group S.p.A. parent company.The financial statements of the TBS Group S.p.A. were drawn up in compliance with the International Financial

Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and approved by the European Commission as of 31 December 2015. The IFRS are also intended to include all the main revised international accounting standards (IAS), all the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) previously known as the Standing Interpretations Committee (SIC).

The financial statements for the year are based on the historical cost principle, except for the financial derivative instruments that are recorded at fair value.


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The TBS Group S.p.A. financial statements are presented in Euro. The values shown in the accounting schedules of the Balance Sheet, Statement of Income and Statement of Comprehensive Income are in Euro, while the other accounting schedules and explanatory notes are expressed in thousand of Euro.

The company has adopted the following financial statements:1. Statement of financial position: assets and liabilities are distinctly classified between current and non-current.2. Income statement: classification by type.3. Comprehensive income statement.4. Cash flow statement: the indirect method was adopted for stating the cash flows.5. Summary statement of changes in shareholders’ net equity.

NOTE 2 – Preparation criteria, accounting standards and valuation criteria

These annual financial statements and the relative tables were prepared and are shown in Euro, while the tables contained in the explanatory notes are shown in thousands of Euro, with the consequence that the sum of the rounded amounts does not always coincide with the rounded total.

Homogeneity of the accounting principles, new or reviewed IFRS and IFRIC principles and interpretations adopted in effect or that will come into effect in subsequent years

The accounting standards adopted are comparable to those used as at 31 December 2014, apart from the adoption of the following new or revised IFRS or IFRIC standards which were applied for the first time by the Company from 1 January 2015.

Accounting standards, amendments and interpretations applied from 1 January 2015

Below the nature and impact of each new standard/change is listed:

Changes to IAS 19 Defined contribution plan: employee contributions

IAS 19 requires entities to consider employee or third-party contributions in recording Defined Benefit Plans. When contributions are associated with the service rendered they should be allocated to the periods of service as a negative benefit. This amendment clarifies that, if the amount of the contributions is independent of the number of years of service, the entity can recognise these contributions as a reduction to the cost of service during the period in which the service is provided, rather than allocating the contributions to the periods of service.

The change came into effect for the financial periods starting from 01 July 2014 or afterwards. This change was not significant for the company, given that there are no plans that foreseen contributions made by employees or third parties.


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2010-2012 annual improvement project

These improvements are effective as of 1 July 2014 and it is not expected that they will have a material effect on the company. They include:

IFRS 2 Share-based payments

This improvement is applied prospectively and clarifies a number of points relative to the definition of performance and service conditions that represent conditions for accrual, including:• a performance-based condition must contain a service condition; • a performance-based objective must be achieved while the counterparty provides the service;• a performance-based objective can refer to operations or activities of an entity, or to those of another entity within

the same Group;• a performance-based objective can be a market condition or non-market-related condition;• If the counterpart ceases providing service during the accrual period, irrespective of the reason, the service

condition is not satisfied.


The change applies prospectively and clarifies that all agreements for potential payments classified as liabilities (or assets) arising from a business combination must be subsequently measured at fair value with a contra entry to the income statement, whether or not they fall within the scope of IFRS 9 (or IAS 39, whichever is applicable).

IFRS 8 Operating segments

The amendment applies retrospectively and clarifies that:• An entity should disclose information about the measurements made by management in applying the aggregation

criteria foreseen in section 12 of IFRS 8, including a brief description of the operating segments that have been combined and the economic characteristics (for example, sales or gross margin) used to determine whether the sectors are “similar”;

• It is necessary to present a reconciliation of the assets in the segment and total assets only if the reconciliation is presented to the highest decision-making authority, as required for liabilities in the segment.

IAS 16 Property, plant and equipment and IAS 38 Intangible assets

The amendment applies retrospectively and clarifies that in IAS 16 and IAS 38 an asset can be revalued with reference to observable data either by adjusting the asset’s gross and net book value, and by calculating the accounting market value, and adjusting the gross book value proportionately so that the book value is the same as the market value. In addition, accumulated amortisation and depreciation is the difference between the gross and book value of the asset.


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IAS 24 Related party disclosures

The amendment applies retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related-party disclosure requirements. In addition, an entity that seeks recourse to a management entity must disclose the costs sustained for the management services.


The amendment applies prospectively and for the purposes of exceptions to the scope of IFRS 3, clarifies that:not only joint ventures but also joint arrangements fall outside the scope of IFRS 3;this exclusion from the scope of IFRS 3 is only applicable in the drafting of the joint arrangement balance sheet.


The amendment applies prospectively and clarifies that the portfolio exception foreseen in IFRS 13 can be applied not only to financial assets and liabilities, but also to the other contracts that fall within the scope of IFRS 9 (or IAS 39, whichever is applicable).


The description of additional services in IAS 40 differentiates between investment property and property used by the owner (for example, property, plant and equipment). The amendment applies prospectively and clarifies that in order to define whether an operation represents the purchase of an asset or a business combination, IFRS 3 must be used and not the description of additional services found in IAS 40.

2011-2013 annual improvement project

These improvements are effective as of 1 July 2014 and it is not expected that they will have a material effect on the company. They include:


The amendment applies prospectively and clarifies that the portfolio exception foreseen in IFRS 13 can be applied not only to financial assets and liabilities, but also the other contracts that fall within the scope of IFRS 9 or IAS 39.


The description of ancillary services in IAS 40 differentiates between investment property and property occupied by the owner (for example, property, plant and equipment). The amendment applies prospectively and clarifies that, to


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determine whether an operation represents the purchase of an asset or a business combination, IFRS 3 must be used and not the description of ancillary services found in IAS 40.

IFRS 15 Revenue from Contracts with Customers

This IFRS was issued in May2014 and issues a new five stage model that will apply to revenues deriving from contracts with customers. IFRS 15 foresees recognition of revenues in an amount which reflects the payment to which the entity believes it is entitled in exchange for transferring goods or services to the customer. The standard provides a more structured approach to recognising and measuring the revenues.

The new standard applies to all entities and will replace all the current requirements found in the IFRS in regards to recognising revenues. The standard is effective for financial years that begin on or after 1 January 2017, with full retrospective or modified application. Early application is allowed. The company is currently assessing the impact of IFRS 15 and foresees that the new standard will be applied when it becomes obligatory.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments clarify the principle contained in IAS 16 and IAS 38 that revenues reflect a model of economic benefits that are generated through the management of a business (which the activity is part of), rather than the economic benefits that are consumed through use of the good. It follows that a revenue-based method cannot be used for depreciation and amortisation of property, plant and equipment and can only be used in very limited circumstances for the amortisation of intangible assets. The amendments must be applied prospectively for financial years beginning on or after 1 January 2016. Early application is allowed. It is not expected that the company will see any impacts from the application of these amendments, given that the TBS Group S.p.A. does not use revenue-based methods to amortise or depreciate its non-current assets.

Amendments to IAS 27: Equity Method in Separate Financial Statements

The amendments will allow entities to use the net equity method to recognise investments in subsidiaries, joint ventures and related companies in their separate financial statements. Entities that are already applying the IFRS and decide to change the accounting criteria, passing the net equity method in their separate financial statements, must apply the change retrospectively. In the case of initial adoption of the IFRS, an entity that decides to use the net equity method in their separate financial statements must apply it as of the date they transition to the IFRS. The amendments are effective for financial years beginning on or after 1 January 2016. Early application is allowed. These amendments did not have any impact on the TBS Group S.p.A.’s individual financial statements as at 31 December 2015. The company does not foresee applying these changes in the future.

Accounting policies

The accounting principles and valuation criteria adopted for the preparation of the financial statements at 31 December 2015 are provided below.


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Intangible assets with indefinite useful life - goodwill

Goodwill deriving from the acquisition of a company branch is initially booked at cost, and represents the excess of the cost of the business combination with respect to the share pertaining to the company of the net fair value of the assets, liabilities and potential liabilities that can be identified for the acquired branch. After initial booking, the goodwill is not subject to amortisation and is decreased for any accumulated impairment, determined using the methods described below.

Goodwill is subjected to recoverability analysis on an annual basis or more frequently in the case in which events or changes of circumstances occur which could lead to possible impairment.

At the end of the impairment test, as of the acquisition date, any goodwill arising is allocated to each of the cash flow generating units which are expected to benefit from the synergistic effects deriving from the acquisition, independent of whether other assets or liabilities of the company are assigned to said units or groups of units.

Each unit or group of units for which goodwill is allocated:• represents the lowest level at which the goodwill is monitored for the purposes of internal management within the

company; and• is not larger than the segments that can be identified on the basis of the method of presenting the segment

reporting provided in the TBS Group S.p.A. consolidated financial statements, determined in the basis of the that indicated in IFRS 8 Segment reporting.Any impairment is identified through measurement of the capacity of single units to generate cash flows meant to

recover allocated goodwill through the procedure indicated below in the “Impairment” section. When the recoverable amount of the cash generating unit is less than its carrying amount, an impairment loss is recognised in profit or loss. Should the causes having generated the impairment cease to exist, impairment losses are not reversed.

At the time of the transfer of a part or an entire company previous acquired, and from which goodwill had arisen through the acquisition, in determining the capital gains or losses from the transfer booked to the statement of income, the corresponding residual value of the goodwill is taken into account.


Intangible assets acquired separately are initially capitalised at cost.Following initial recognition, intangible assets with finite useful life are carried at cost less any accumulated

amortisation and any impairment determined in accordance with the methods detailed in the “Impairment” section.The useful life of an intangible asset is reviewed annually.The Company applies the following policies to intangible assets:

Development costs Software, licenses and trademarks


Useful lives Finite Finite Finite

Amortisation method used Amortised on a straight-line basis over a period of

5 years

Amortised on a straight-line basis over a period of

5 years

Amortised on a straight-line basis over a period of

3 years

Internally generated or acquired Internally generated/Acquired

Internally generated/Acquired

Acquired

Impairment test for recognition of impairment Annually or more frequently if indicators of

impairment exist

Annually or more frequently if indicators of

impairment exist

Annually or more frequently if indicators of

impairment exist


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Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statements of income upon disposal.

Property, plant and equipment - Owned assets

Property, plant and equipment is stated at purchase or production cost. The cost of the assets includes directly attributable costs and those necessary for putting the asset into operation for the use for which it was acquired, in addition to the present value of the estimated cost for dismantling and removing the asset, where applicable and in presence of current obligations.

Improvements to leased assets are recognised at cost under property, plant and equipment coherently with the nature of the cost incurred.

The expenses incurred for ordinary and/or cyclical maintenance and repairs are directly recognised in the statements of income as incurred. The capitalization of costs related to the enlargement, updating or improvement of an asset owned or in use by third parties is carried out exclusively within the limits in which they meet the requirements for being separately identified as an asset or part of an asset.

The cost of property, plant and equipment is reduced by depreciation, calculated on a straight-line basis over the estimated useful life of the asset, and by any accumulated impairment, determined in accordance with the methodology detailed in the “Impairment” section.

For owned assets, the depreciation rates which correspond to the estimated useful lives are as follows:

Description Rate

Buildings 3%

Plants and machinery 15%

Industrial and commercial equipment 15%

Furnishings 12%

Office equipment 12%

Office electronic machines 20%

Motor vehicles 25%

The above depreciation rates are reviewed at least annually; any adjustments, as deemed appropriate, are applied prospectively.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and residual carrying amount of the asset) is included in the statement of income in the year the asset is derecognised.

Property, plant and equipment - Leased assets

Assets held under finance leases, which substantially provide the Company with all the risks and rewards of ownership, are recognised as assets and liabilities at their fair value or, if lower, at the present value of the minimum lease payments including any sum to be paid for exercising the purchase option. The corresponding liability due to the lessor is recorded under financial liabilities.

Lease payments are apportioned between interest expense and reduction of financial liabilities so as to achieve a constant periodic interest rate on the outstanding balance of the liability. Financial expenses are included in statements of income.


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Assets held under finance leases are depreciated using the following depreciation rates:

Description Rate

Buildings 3%

Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as operating leases. Operating lease expenditures are charged to the statement of income over the lease term.

Impairment of assets

At the balance sheet date and if there are any indicators of impairment, an assessment is carried out to determine the recoverable value of the intangible assets or property, plant and equipment, or group of intangible assets or property, plant and equipment (Cash Generating Units, hereinafter also referred to as CGUs), net of sale costs and value in use. When the asset’s carrying amount exceeds its recoverable amount the asset is written down to its recoverable amount.

The recoverable amount is the greater of 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 cost of money over time and the risks specific to the asset. For an asset that does not generate independent cash inflows, the recoverable amount is determined for the cash-generating unit to which it has been allocated. Impairment losses are recognised in the statement of income with the costs for amortisation and depreciation. Said impairment is reversed in the case that the reasons behind them cease to exist, with the exception of impairment relative to goodwill.

Investments in subsidiaries and associated companies

Investments in subsidiaries are booked at purchase or subscription cost, less any capital repayments or write-downs, determined by the same methods indicated previously for property, plant and equipment. Should the reasons for the impairment cease to exist, the original value shall be restored in subsequent years. These adjustments are booked to the statement of income.

The risk deriving from any losses that exceed shareholders’ net equity is booked in a special fund in the amount in which the company is committed to fulfil legal or implicit obligations for the investee company or in any case to cover its losses.

The closing date of the fiscal year for most of the subsidiaries and associated companies is the same as that of the Company. For the direct subsidiary TBS India, the closing date of the fiscal year is 31 March of each year. This company therefore prepares a reporting package in conformance with the main international accounting principles as of 31/12.

Investment in other companies

Investments in other companies for which fair value cannot be reliably assessed are stated at the acquisition or subscription cost less any distribution of share capital and reserves and after any impairment, determined by the same methods indicated previously for property, plant and equipment. Should the reasons for the impairment cease to exist, the original value shall be restored in subsequent years.


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Financial assets and other non-current assets

Receivables and other non-current assets to be held to maturity are recognised at cost, represented by the fair value of the initial consideration given, including transaction costs. The initial measurement is subsequently adjusted in order to reflect capital repayments, any write-downs and the amortisation of the difference between the repayment value and the valuation on initial recognition. Amortisation is recorded on the basis of the effective internal interest rate, represented by the rate which equals, at the time of the initial recognition, the present value of the estimated cash-flows and the measurement of initial recognition (amortised cost method).

Inventories

Inventories are valued at the lower of the purchase or manufacturing cost and net realisable value, represented by the amount that the Company expects to receive from sale in the ordinary course of the business, less costs of completion and estimated selling costs.

The purchase cost, which also includes direct accessory costs (including shipping, handling, etc.), is calculated using the weighted average cost method.

Slow-moving and obsolete stock is written-down according to its potential use or sales value.

Trade receivables and other receivables

Trade receivables are recognised at their estimated realisable value, which corresponds to nominal value less write-downs reflecting the estimated losses, if any.

A provision for doubtful account is made when there is an objective indication (such as a probable insolvency or the debtor facing significant financial difficulty) that the Company is unable to recover the entireamount due on the basis of original invoicing conditions. The book value of the receivable is reduced through a provision. Receivables subject to impairment are removed from the accounts when it is ascertained that they are not recoverable.

Any medium and long term loans containing an implicit interest component are discounted using an appropriate market interest rate.


Financial assets kept for negotiation purposes are recorded on the basis of the negotiation date and, at the time of the initial entry on the balance sheet, are valued at the purchase price, represented by the fair value of the initial consideration given in exchange, net of transaction costs. Following the initial recognition, current financial assets are assessed at fair value and corresponding variation in fair value are included in profit and loss. The fair value of these instruments is determined by referring to the market value at the closing date of the period in which the instrument is recorded; the fair value of financial instruments not listed in an active market is determined by using valuation techniques commonly in use.

Own shares

Own shares are deducted from shareholders’ net equity. No gain or loss is recognised in the statements of income upon the purchase, sale, issue or cancellation of the own shares.


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Share-based payments

Stock options are estimated at fair value using the model based on the Black and Scholes formula, determined by the date of assignment. The relevant cost is recognised in the statement of income under personnel costs (if concerning employees) or under service costs (if concerning directors) during the period in which the conditions for exercising them mature and a contra entry is recognised in an equivalent increase of the shareholders’ net equity. The changes in the present value of the shares after the date of assignment have no effect on the initial valuation.


Cash and cash equivalents include deposits held at call or available in a very short period for which no expenses for collection have to be incurred. They are recorded at their nominal value.

For the purposes of the Cash-Flow Statement, cash and cash equivalents is presented gross of bank overdrafts at the Financial Statements closing date.

Termination indemnities

Employee benefits paid on or after termination of employment through defined benefit programmes (Employee Severance Indemnity) or other long term benefits (Employee Severance Indemnity [Italian TFR]) are recognised on an accrual basis.

The liability relating to defined benefit plans, net of any related plan asset, is determined on the basis of actuarial assumptions and is recognised on an accruals basis, in line with services rendered in order to obtain the benefits; liabilities are measured by an independent actuary.

The part of actuarial profits and losses that must be recognised for each defined benefit plan, following the amendment to IAS 19 in effect as of 1 January 2013, is systematically booked directly to an item in the shareholders’ net equity, and will not be reclassified to the income statement in successive years.

Following amendments made to the Employee Severance Indemnity by law No. 296 of 27 December 2006 (Financial Law 2007) and subsequent Decrees and Regulations issued in early 2007, the Employee Severance Indemnity matured as at 1 January 2007 or at the date the option to be exercised by employees was selected is included in the category of programmes with defined contribution, both in the case of supplementary allowance as well as of allocation to the Treasury Fund of the INPS. The accounting of this Employee Severance Indemnity is therefore assimilated with other types of contribution deposits.

Provisions

Provisions for risks and future charges are recognised when the Company has a present obligation (legal or implicit) resulting from a past event, when it is probable that an outflow of Company’s resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Changes in the assessment are reflected in profit and loss of the period during which the change occurred. If the potential discount effect is significant, the provisions are discounted using a pre-tax discount rate that reflects the specific risks of the liabilities. Once the discount is carried out, the increase of the provision due to the passing of time is recognised as a financial expense.


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Loans

All long-term loans are initially recognised at fair value of consideration received less directly attributable transaction costs.

After initial recognition, long-term debts are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process.

Trade payables and other debts

Trade payables with a due date within the standard commercial terms are not discounted and are recognised at cost (identified by the nominal value).

Other liabilities are entered at cost (identified by nominal value).

Items in foreign currency

Transactions in foreign currencies are initially recorded at the functional currency rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are then translated at the financial statements reference date using the closing exchange rate. All exchange differences are booked to the statement of income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

Revenue recognition

Revenues are recognised when it is probable that the economic benefits will flow to the Company and the revenues can be reliably measured.

Revenue is shown net of discounts, reductions, returns and other sales taxes. In particular, revenue from the sale of goods is recognised according to the contractual terms when the significant

risks and rewards of ownership relating to the goods are transferred to the buyer. Rendering of services revenues are recognised by stage of completion. This is measured as the percentage of the

incidence of costs incurred with respect to the total costs estimated for each contract. When the contract outcome cannot be reliably measured, revenue is recognised only to the extent of the expenses incurred that are recoverable.

Financial revenue is recorded on an accrual basis.

Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all underlying conditions will be met.

When a grant relates to cost items, it is recognised as revenue over the proper period in order to be correlated to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the statement of income over the expected useful life of the relevant asset.


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Accounting for costs and expenses

Costs and expenses are recorded when they relate to goods and services sold or consumed during the year or by systematic allocation when their future utility cannot be identified.

Interest

Interest income and expense are recognised as the interest accrues on the net carrying amount of the underlying value of financial asset or liability, using the effective interest rate.

Dividends

Dividends are recognised when the right of shareholders to receive payment is established. This right arises following the decision made on distribution made (by 31 December each year) by the subsidiary.

Income taxes

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date and in those countries in which the Group operates.

Current taxes relating to items recorded directly to equity are recognised directly to equity and not to the profit and loss.

Deferred taxes

Deferred income tax is provided using the liability method on temporary differences at the balance-sheet date between the reference fiscal values for assets and liabilities and the values recorded in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences, except:• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction

that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.Prepaid tax is recognised for all deductible temporary differences, carry-forward of tax losses, to the extent that

it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of deductible temporary differences and tax losses, can be utilised, except:• where the deferred income tax asset relating to the deductible temporary difference arises from the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and


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• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.In assessing the probability of the availability of a future income against the entry of deferred assets for tax losses

one considers: • there must exist sufficient temporary differences with regard to the same tax authorities and the same tax subject

that will turn into taxable amounts against which tax losses may be used prior to their expiration;• that unused tax losses result from identifiable causes that are unlikely to be repeated;• that there exist opportunities for tax planning on the basis of which there will be taxable income during the year in

which tax losses may be used.The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities relating to items recognised directly in net equity are recognised in net equity and not in the statement of income.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set offering of current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Use of estimates

The preparation of the financial statements requires the directors to make estimates and assumptions that affect the reported amounts of the assets and liabilities and the disclosure of information on contingent assets and liabilities at the date of the financial statements. Nonetheless, the uncertainty of these assumptions and estimates may determine impacts requiring a significant adjustment to the accounting value of these assets and/or liabilities at a future date.

The estimates are essentially used to recognize provisions for doubtful account, amortisation, valuations of investments, write-downs of non-current property, plant and equipment and intangible assets, employee benefits, deferred income taxes and other provisions for risks and charges. Estimates and assumptions are revised periodically and the effects of every variation are immediately reflected on the profit and loss.

NOTE 3 – Financial risk management

The main financial liabilities of the Company include bank loans, trade payables and miscellaneous payables and financial guarantees. The main objective of these liabilities is to finance the Company’s operating activities. The Company has financial receivables and other receivables, both trade and non, and cash and cash equivalents that originate directly from operating activities and from its activities as a parent company.

The assessment of interest rate risk, credit risk, liquidity risk and foreign exchange risk is a responsibility Company Management is entrusted with, and the relevant information is given below.


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Interest rate risk

TBS Group’s exposure to changes in interest rate mainly involves medium/long-term obligations taken on by the company, which have variable interest rates linked to various indexes.

As of 2015, TBS began a strategy aimed at controlling and covering risks deriving from interest rate fluctuations in relation to new medium/long term loans taken out during the year, with maturities exceeding 37 months.

During the year, four interest rate swap derivative contracts (IRS) were signed. The conditions of the IRS contracts were negotiated to coincide with the conditions of the underlying commitments. These contracts fulfil the hedging requirements set in IAS 39 and fair value changes are therefore recognised directly to net equity.

Nonetheless, a risk exists connected to the possible worsening of general market conditions. Note that the Company also holds sizeable financial receivables in regards to the subsidiaries, some of which are

subject to variable rates.

Sensitivity analysis

The Company’s financial structure partially consists of variable rate financial instruments. As a result, the sensitivity analysis is conducted solely for this type of instrument.

By virtue of the above, a hypothetical, instant and unfavourable 100 bps change in the short term interest rate, applicable to the variable rate of financial assets and liabilities, would increase net annual pre-tax charges by approximately Euro 76 thousand.

Credit risk

Most of the Company’s receivables are held by its subsidiaries and are contracted with public bodies or private bodies affiliated with the public sector. Hence, the Company is not significantly exposed to credit risk.

Country riskStarting in 2012, the Company began to work with some foreign customers. At the end of 2015, it has receivables

with the Ministry of Health of the Republic of Gabon, the Ministry of Health of Honduras and two hospitals in China. In regards to these positions, the Company constantly monitors the situation, also carrying out an evaluation of the political, social and economic risks for the areas in which it operates.

In the case that the Company continues to grow significantly in this way in 2016, above all for international trading activities, it could expose the Company to various types of risks deriving from, for example, changes in local regulations, the political, economic and social situation and extraordinary events today unforeseeable.

The probability that these events take place varies from one country to the next, and is hard to forecast. Nevertheless, one or more of these events could have a negative impact on the Company’s economic and financial situation.


150

Liquidity risk

In the context of the activities carried out by the Company as the parent company, note financing activities for some subsidiaries. On the other hand, in the case that some Group companies have financial availability that exceeds their normal requirements, said amounts are transferred to the parent company under the form of loans.

That being said, the Company continuously maintains balance and flexibility between funding sources and uses. Two primary factors that influence the Company and the Group’s liquidity are, on the one hand, resources generated or absorbed by operations or investments of the company itself and/or subsidiaries, and on the other hand, the expiry and renewal of debts. The breakdown of financial payables as at 31 December 2015 is presented under Note 14.

In any event, it is felt that liquidity from operations deriving from management at the Group level should be sufficient to cover requirements. It should however be emphasized that considering the fact that the customers primarily consist of public bodies, with significantly extended payment terms and anyway subject to the availability of financial resources, even linked to public debt management policies, the leading Italian Group companies have assigned credit to factoring companies in order to boost cash flows.

Finally, note that some loans require compliance (financial covenants) with certain parameters based on the consolidated financial statements of the TBS Group S.p.A. at year-end. For additional comments, please refer to Note 14.

Exchange rate risk

The Company operates primarily in the Eurozone. There is therefore no significant exposure to exchange rate risk. In reference to the foreign customers cited above, note that the Company invoices its services and/or sales of goods in Euro.

Capital Management

The Company’s primary capital management objective is to guarantee that a solid credit rating and appropriate levels of capital indicators are maintained in order to support its work and maximize shareholder value.

The Company manages the capital structure, making changes to it in line with changes in economic conditions.The Company may adjust the dividends paid to shareholders, reimburse capital or issue new shares in order to

maintain or adapt the capital structure.The Company monitors its capital via the net financial debt / shareholders net equity ratio. This ratio for each period

considered is shown below:

(thousands of Euro) 31/12/2015 of which with related parties


Non-current financial liabilities 38,189 28,539

Current financial liabilities 16,796 0 13,721 1,663

Non-current financial assets 0 0

Current financial assets -19,095 -18,850 -22,798 -22,454

Cash and cash equivalents -11,386 -10,093

Net financial debt 24,503 9,369

Net Equity 73,983 71,107

Net financial debt/ Shareholders' net equity ratio 0.33 0.13


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Fair value valuation and the relative hierarchical levels of valuation

The following statement indicates the categories of financial instruments held by the Company:

on 31/12/2015


receivables




maturity

Total Fair value






Current financial assets 14 19,095 19,095 19,095


Total financial assets 40,998 0 0 0 40,998 40,998


Non-current financial liabilities 14 38,024 165 38,189 38,189


Trade payables 17 2,086 2,086 2,086



Total financial liabilities 60,485 0 165 0 60,650 60,650


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al 31/12/2014


receivables




maturity

Total Fair value






Current financial assets 14 22,798 22,798 22,798


Total financial assets 42,989 0 0 0 42,989 42,989


Non-current financial liabilities 14 28,539 28,539 28,539


Trade payables 17 3,504 3,504 3,504



Total financial liabilities 50,410 0 0 0 50,410 50,410

All the financial instruments recognised at fair value are classified in the three categories shown below:• Level 1: market quotation• Level 2: evaluation techniques (based on observable market data) • Level 3: evaluation techniques (not based on observable market data)

For all financial instruments, the relative nominal recognition value is the same as the fair value.Note that there were no transfers from Level 1 to Level 2 or to Level 3 and vice versa.

NOTE 4 - Assets with indefinite useful life (goodwill)

This item includes goodwill (Euro 94 thousand) arising from the merger by incorporation of Panacea Clinical Services Srl during financial year 2009 and goodwill (Euro 287 thousand) arising from the merger by incorporation of Tecnobiopromo Srl during financial year 2014. On the basis of the impairment test carried out in reference to the Clinical Engineering Italy CGU to which the goodwill was attributed, a need to carry out impairment was not found.


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NOTE 5 - Intangible Assets with finite useful life

The table below provides a breakdown “Intangible assets with a finite useful life” as they appear in the Balance Sheet:


Development 0 0

Concessions, licenses, trademarks and similar rights 1,196 1,354

Other Intangible fixed assets 0 1

Intangible assets under construction and advances 155 326

Total Intangible fixed assets 1,351 1,680

Changes in the period for “Intangible assets with a finite useful life” are shown below:

(thousands of Euro) Development Concessions, licenses,

trademarks and similar rights

Other intangible

assets

Intangible assets under construction

and advances

Total intangible

assets

Cost at 1 January 2015 net of provisions 0 1,354 1 326 1,680

Net increases 0 28 0 357 385

Disposals (historical cost) 0 0 0 0 0

Disposals (amortisation provision) 0 0 0 0 0

Revaluations 0 0 0 0 0

Impairment 0 0 0 0 0

Depreciation in the period 0 714 1 0 715

Foreign exchange differences 0 0 0 0 0

Reclassifications and other 0 528 0 -528 0

At 31 December 2015 0 1,196 0 155 1,351


Total

Cost or fair value 1,413 10,457 79 326 12,276

Amortisation provisions and impairment -1,413 -9,104 -78 0 -10,595

Residual net value 0 1,354 1 326 1,680


Total

Cost or fair value 1,413 11,014 79 155 12,661

Amortisation provisions and impairment -1,413 -9,817 -79 0 -11,310

Residual net value 0 1,196 0 155 1,351

Costs for software, trades and licenses mainly include software licenses and programs acquired externally for pay, costs sustained for implementation of Piteco software for treasury management, the various Hyperion software modules and the costs sustained for the development of the Pharma Phi module, for email software, business continuity software, endoscopy management software, and SI3C Gestapp software relative to electromedical equipment management. Amortisation is calculated on a straight-line basis over a period of 5 years.


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Assets under construction relate to costs incurred during the year for the creation of other management software (Euro 155 thousand). Reclassifications mainly refer to transfer to the category “Industrial patents, intellectual property rights and works, licenses and trademarks” for various Hyperion software modules (Euro 55 thousand), of software created to guarantee business continuity (Euro 39 thousand), the SI3C Gestapp software (Euro 235 thousand), endoscopy management software developed by foreign subsidiaries (Euro 110 thousand), and business continuity software (Euro 39 thousand).

NOTE 6 – Tangible fixed assets

The table below presents the net balances for fixed tangible assets:


Land and buildings 1,078 1,119

Plants and machinery 216 161

Other tangible fixed assets 259 358

Total tangible fixed assets 1,553 1,639

Changes in the period are shown below:

(thousands of Euro) Land and buildings


Other property, plant and

equipment

Total tangible fixed assets

Cost at 1 January 2015 net of provisions 1,119 161 358 1,639

Net increases 0 94 32 126

Disposals (historical cost) 0 0 7 7

Disposals (amortisation provision) 0 0 -5 -5

Revaluations 0 0 0 0

Impairment 0 0 0 0

Depreciation in the period 41 39 130 210

Foreign exchange differences 0 0 0 0


At 31 December 2015 1,078 216 259 1,553


Total

Cost or fair value 1,374 333 1,030 2,737

Amortisation provisions and impairment 255 171 672 1,099

Residual net value 1,119 161 358 1,639


Total

Costo o fair value 1,374 427 1,055 2,857

Fondo ammortamento ed impairment 297 211 797 1,305

Valore netto residuo 1,078 216 259 1,553


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Land and buildings

These are buildings that are leased. These are amortised at an annual rate of 3%. The table below indicates the total of minimum payments due for leasing and the current value as of the date of

the financial statements, indicated by the presumed repayment period.


Minimum payment Present value Minimum payment Present value

Within 1 year 71 44 71 44

Between 1 and 5 years 284 198 284 198

Over 5 years 174 190 248 235

Total minimum payments 529 432 603 477

Financial charges -97 -126

Total minimum payments’ present value 432 432 477 477

The leasing contract stipulated by the Company envisages a variable financial cost of 5.75%.Present value was determined based on the amortisation schedule communicated by finance leasing companies

and does not significantly diverge from the present value of minimum payments calculated by discounting cash flows due to the rental payments as indicated in the schedule at the same interest rate of the finance lease contract.

Of the debts indicated above at 31 December 2015, Euro 44 thousand are short-term and Euro 388 thousand medium/long term (of which Euro 190 thousand beyond 5 years).


The item mainly includes heating systems, and telephone and data transmission systems.


This item includes electronic office equipment, furniture and furnishings, cars and mobile radio equipment.


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NOTE 7–Investments in subsidiaries, associated companies and other companies

Investments in subsidiaries(thousands of Euro)

balance 1/1/2015

reclassified recapitalised purchase/sale

transfer/merger

capital gains/capital losses

writedown/writeback

balance 31/12/2015

EBM 32,453 100 32,553

TBS GB 6,374 6,374

TBS FR 2,620 2,620

TBS BE 304 304

STB 388 388

Surgical Technologies 2,637 2,637

SLT 307 -307 0

CRIMO Italia 2,323 2,323

TBS INDIA 6,092 6,092

TBS SE 5 5

TBS ES 4,550 389 4,939

TBS IT 11,140 11,140

INSIEL MERCATO 3,842 13,488 17,330

MSI 1,000 550 1,550

TBS Imaging (ex REM DI) 100 -100 0

TBS Bohemia 7 7

sub total 74,135 -307 1,039 13,495 -100 0 0 88,261

Investments in associated companies and joint ventures(thousands of Euro)

balance 1/1/2015


transfer/merger


writedown/writeback

balance 31/12/2015

Sinopharm TBS 560 -227 333

SLT 307 -88 530 750

SMS Srl in liquidation 8 -8 0

Fond,Easy Care 27 27

Cons.Soc.Care Expert 2 2

sub total 597 307 -88 0 -8 303 1,112

Investment in other companies(thousands of Euro)

balance 1/1/2015


transfer/merger


writedown/writeback

balance 31/12/2015

ISBEM 30 30

Medic4All AG 50 50

CBM Consorzio 2 2

Credito Coop,Lombardo 0 0

Fondazione ITS 10 10

F.do cons. Re-Media 1 1

sub total 93 0 0 0 0 0 0 93

TOTAL 74,825 0 1,039 13,407 -100 -8 303 89,467


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Purchases refers to:• the purchase of the residual 59.71% of Insiel Mercato shares from the subsidiary TBS IT; following this transaction,

TBS now has direct control over Insiel Mercato, which was previously indirectly controlled through TBS IT;• the establishment of TBS Bohemia s.r.l., with registered office in Prague. The new company, 100% controlled by the

TBS Group, will operate in the field of clinical engineering, offering multi-vendor outsourcing services to both public and private healthcare facilities in the Czech Republic. The initial share capital of TBS Bohemia amounts to 200,000 korunas (Euro 7,190).

Sales refer to:• the sale of 100% of the units of TBS Imaging (formerly REM DI) to the subsidiary EBM; following this operation,

control over TBS Imaging is exercised indirectly by TBS Group through EBM;• the sale of 16% of SLT shares to third parties.

Reclassifications refer to:• reclassification of SLT from a subsidiary of the TBS Group to an associated company, following said sale, after which

TBS Group’s stake fell from 56% to 40%.

Recapitalisations refer to:• the renunciation and conversion to equity of the financial payable held by TBS Group of Euro 389 thousand in

regards to the Spanish subsidiary TBS ES SL.• the increase in the net equity of MSI by Euro 550 thousand;• the increase in the net equity of EBM by Euro 100 thousand as an effect of the transfer of 100% of the shares of

TBS Imaging.

Revaluations refer to:• fair value measurement of the remaining shares of SLT.

Write-downs refer to:• the write-down on the equity investment in Sinopharm following the signing of the contract to sell all of the shares

held, signed by TBS Group on 27 December 2015, for the price of Euro 333 thousand. At 31 December 2015, the sale had not yet been completed.

Capital losses refer to:• capital losses on the shares of the associate SMS following liquidation of the company.


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Below the data required under article 2427, paragraph 5 of the Civil Code is provided for subsidiaries and associated companies:

Company name(thousands of Euro)

Registered Office Currency Share Capital

SE 31/12/2015

(IAS)

2015 attributable result (IAS)

Share % 2015

Share % 2014

Values recognised on

the financial statements

Investments in subsidiaries

EBM Srl Foligno Euro 1,898 45,704 2,406 100 100 32,553

TBS GB Ltd Southend on Sea (UK) Euro 681 8,373 2,565 96.13 96.13 6,374

TBS FR SarL Lyon (France) Euro 1,691 1,775 167 100 100 2,620

TBS BE Bvba Loncin (Belgium) Euro 150 416 4 100 100 304

STB Lda Lisbon (Portugal) Euro 100 414 102 100 100 388

Surgical Tech.Bv Didam (The Netherlands) Euro 18 924 410 100 100 2,637

Crimo Italia Srl Gualdo Tadino (Italy) Euro 103 3,928 592 55.75 55.75 2,323

TBS INDIA Ltd Bangalore (India) Euro 69 2,612 697 100 100 6,092

TBS SE Doo Belgrade (Serbia) Euro 4 -167 -16 100 100 5

TBS ES SL unipersonal Barcelona (Spain) Euro 650 3,468 -231 100 100 4,939

TBS IT Srl Trieste (Italy) Euro 5,296 4,359 -1,150 100 100 11,140

INSIEL MERCATO S.p.A. Trieste (Italy) Euro 3,247 11,102 199 100 100 17,330

MSI GmbH Pfullendorf (Germany) Euro 321 -16 -78 100 100 1,550

TBS Bohemia s.r.o. Prague (Czech Republic) Euro 7 -34 -41 100 100 7

Total 88,261

Company name(thousands of Euro)

Registered Office Currency Share Capital

SE 31/12/2014

(IAS)

2014 attributable result (IAS)

Share % 2014

Share % 2013

Value attributed

in financial statements

Investments in associated companies and joint ventures

Sinopharm TBS Beijing (China) Euro 1,216 838 (*) 21 (*) 50(*) 50 333

SLT Cernusco sul Naviglio (Italy) Euro 47 611 123 56 56 750

Fondaz.Easy Care Reggio Emilia (Italy) Euro 230 -143 8 25 25 27

Cons.Soc.Care Expert Reggio Emilia (Italy) Euro 40 53 8 25 25 2

Total 1,112

(*) figures at 31.12.13

Data regarding Net Equity and the results for the period indicated for the subsidiaries are taken from the reporting packages prepared in accordance with the IAS/IFRS principles for the creation of the consolidated financial statements and, for only those companies held to be significant for the group, subjected to inspection by the audit firm.

Figures regarding Shareholders’ Net Equity and the results for the year indicated by the associated companies are taken from the most recent available financial statements approved by the relevant shareholders’ meetings (31 December 2014).

The recoverability of the book value of the investments was verified using impairment tests. Specifically, said value was compared with the equity value of the various companies (enterprise value obtained from the impairment test to which the net financial position of the same was added - in some cases aggregated into a single CGU).

Cash flow projections for 2016-2018, as taken from the financial plans prepared by the TBS Group and approved by its Board of Directors and by the Boards of Directors of the single subsidiaries, were normally used to carry out the impairment test. Cash-flows for years subsequent to the last year included in the plan were discounted on the


159

assumption of an indefinite time frame for the various CGUs at an annual growth rate ranging from 0.5%-1% (3% only for the Indian subsidiary).

The impairment tests did not indicate the need to carry out impairment.

NOTE 8 – Other non-current assets


Other non-current assets 17 20

Total other non-current assets 17 20

This item is entirely composed of security deposits.

NOTE 9 – Inventories


Inventories consumables, spare parts and goods

Cost 589 1,099

Inventory write-down provision -177 -45

Net realisable value 412 1,054

Inventory advances 0 0

Total inventories 412 1,054

Inventories derive from the merger by incorporation of the subsidiary Tecnobiopromo, which occurred in 2014.Changes in the provision for inventory write-down in the two years under consideration are as follows:


Inventory write-down provision as at 1 January 45 0

Utilization in the year 0

Reclassifications 0

Foreign exchange differences 0 0


Inventory write-down provision as at 31 December 177 45

The write-down carried out in 2015 (Euro 132 thousand) is relative to inventory deriving from the merger by incorporation of the subsidiary Tecnobiopromo.

NOTE 10 – Trade receivables


Trade receivables – customers 2,014 2,374

Trade receivables from related parties 7,535 6,135

Receivables write-down provision -55 -25

Total trade receivables 9,494 8,486


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For the details of the item trade receivables from related parties, please refer to Note 32.Changes in the receivables write-down provision in the two years under consideration are as follows:


At 1 January 25 0

Provisions 30 0

Increases from Tecnobiopromo merger 0 25

Utilisation 0 0

At 31 December 55 25

The analysis of the past-due loans and those to mature as at 31 December 2015 is as follows:


Overdue0 - 30

30 - 60 60 - 90 90 - 120 120 - 150 150 - 180 180-360 oltre 360

Trade receivables – customers 2,014 171 9 22 11 12 8 4 77 1,699

Trade receivables from related parties 7,535 3,510 22 74 1,051 182 110 339 495 1,752

Receivables write-down provision -55 - - - - - - - - - 55

Total 9,494 3,681 31 96 1,062 194 118 343 572 3,451

The overdue “over 360 days” category includes the Euro 906 thousand receivable due from the Ministry of Health of Gabon. On the basis of negotiations in course with the customer, the directors believe that the entire receivable will be paid in the next few months.

The analysis of receivables by geographic area is as follows:

Receivables by geographic area (thousands of Euro) From related parties From others Total

Italy 5,273 369 5,642

EU 2,091 4 2,095

non EU 171 1,586 1,757

Total 7,535 1,959 9,494

Non-EU receivables mainly include the aforementioned receivable due from the Ministry of Health of Gabon (Euro 906 thousand) and the receivable due from the Ministry of Health of Honduras (Euro 344 thousand).

NOTE 11 – Other current assets


Social security receivables 21 21

Receivables for contributions to public entities 120 370

Receivables from employees 12 19

Other prepaid expenses and accrued income 155 173

Other tax receivables 211 524

Other receivables 77 41

Receivables from related parties 410 444

Total other current assets 1,006 1,592


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Amounts receivable for contributions refer to credits from M.I.U.R. (Euro 110 thousand) and from the Friuli Venezia Giulia region (Euro 10 thousand).

Receivables from employees mainly consist of advances to employees for expenses to be sustained in the execution of their work.

Other tax credits mostly include VAT credits.The item “Other receivables” mainly consists of advances to suppliers.Receivables from related parties refer to receivables from subsidiaries which arose following tax consolidation (Euro

410 thousand).Assets held for trading The item “Assets held for trading” had a value of zero at the end of 2015, as at the end of the 2014.

NOTE 12 – Income taxes payable and receivable


Income tax receivable 1,845 917

Total income tax receivables 1,845 917

The item income tax receivables mainly consists of:• receivables due from the tax authorities for advances paid during the year on direct taxes (Euro 970 thousand); • credits with the Treasury following the request reimbursement of IRES for non-deduction of IRAP relative to

expenses for payroll employees and assimilated for the years 2007-2011, for both the company and subsidiaries included in tax consolidation (Euro 868 thousand);

• credits for withholdings relative to interest receivable from banks (Euro 7 thousand).


Income tax payables 439 842

Total tax payables 439 842

The item tax payables consists of payables due to the tax authorities for direct taxes (IRES) which should be paid or compensated within the next financial year.

NOTE 13 – Shareholders’ net equity

As at 31 December 2015, the item amounted to Euro 73,983 thousand as opposed to Euro 71,107 thousand as at 31 December 2014. For changes in shareholders’ net equity, please refer to the relevant “Statement of changes in shareholders’ net equity”.

Share capitalThe subscribed and paid-up share capital of TBS Group at 31 December 2015 amounts to Euro 4,142,137 and

consists of 41,421,370 shares with a nominal value of Euro 0.10 each. The total amount of own shares held by the Company as at 31 December 2015 amounts to 764,210 (unchanged

with respect to 31 December 2014).


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The value shown in the financial statements is net of the own shares held by the company, for the part attributable to capital (Euro 76,000).

Share premium account

The share premium account, set up following a number of Company capital increases, amounted to Euro 42,832 thousand as at 31 December 2015 (unchanged with respect to 31 December 2014). That in the reserve is also booked net of the own shares held by the company, for the part attributable to the share premium (Euro 986 thousand).

Other reserves and retained earnings

Other reserves include:• the First-time Adoption (FTA) reserve deriving from the first-time application of the international accounting

standards as at 1 January 2010;• the IAS reserve deriving from application of the international accounting standards after 1 January 2010;• profit/loss carried forward.

The reserves are composed as follows:

SCHEDULE OF AVAILABILITY, DISTRIBUTABILITY AND USE OF SHAREHOLDERS’ EQUITY

(thousands of Euro) Summary of uses made in the three previous years:

Nature/Description Amount Possibility of use Share available to hedge losses

for other reasons

Capital 4,142

Legal reserve 844 - loss coverage 844

Share premium reserve 42,832 - loss coverage 42,832

- distribution to shareholders

Revaluation reserve 10,037 - loss coverage 10,037

- Own share purchase reserve

Optional extraordinary reserve 13,410 - loss coverage 13,410 3,488

- capital increase


FTA reserve -862 -862

IAS reserve -350 -350

Profit (loss) carried forward 246 - loss coverage 246

- capital increase


Net profit for the period 3,684 3,684

Total 73,983 69,841

Non-distributable share 12,725

Residual distributable share 57,116


163

In regards to the non-distributable share, which comes to a total of Euro 12,725 thousand, this is the sum of the net residual value at 31/12/2015 of the development costs capitalised during the year and in previous years (Euro 1,129 thousand) of intangible assets under construction (Euro 155 thousand), of the capital gains which arose in 2011 following the transfer of the e-Health branch (Euro 560 thousand), of the legal reserve (Euro 844 thousand) and, on the basis of that envisaged in article 2426 of the Civil Code, the amount of the capital gains deriving from the application in previous years of the shareholders’ net equity method of valuing investments in subsidiaries (Euro 10,037 thousand).

NOTE 14 - Net financial debt

The Company’s net financial debt can be broken down as follows:

(thousands of Euro) 31/12/2015 of which with related parties


A. Current financial assets 19,095 18,850 22,798 22,454

B. Cash and cash equivalents 11,386 10,093

C. Liquidity (A. + B.) 30,482 32,891

D. Non-current financial assets 0 0

E. Non-current financial liabilities 38,189 28,539

F. Current financial liabilities 16,796 0 13,721 1,663

G. Net financial debt (D + E + F -C ) 24,503 9,369

For further information on the breakdown of financial assets and liabilities, please refer to the paragraphs below.



Short-term financial receivables 245 344

Short-term financial receivables from related parties 18,850 22,454

Marketable securities 0 0

Total current financial assets 19,095 22,798

Short-term financial receivables refer, for Euro 218 thousand, to an interest-bearing receivable due from Subitec, a former subsidiary sold to third-parties in December 2014.

Financial receivables from related parties refer in part to dividends approved but not yet paid as of 31 December 2015 and in part to loans granted to subsidiaries.

These loans envisage the payment of interest, governed under market conditions. For detailed information on their composition, please refer to Note 32.


164




Total cash and cash equivalents 11,386 10,093

The balance indicates cash and cash equivalents in existence as of the final date of the year.

Non-current financial liabilities

The table below provides a breakdown of the non-current financial liabilities:

(thousands of Euro)

31/12/2015 31/12/2014

within 5 years over 5 years Total within 5 years over 5 years Total

Leasing contracts debts 198 190 389 198 235 433

Medium/long term bank loans 23,186 23,186 3,780 3,780

Convertible bond loan 0 0 9,997 0

Mini bond loan 14,449 14,449 14,329 14,329

Financial payables MTM derivatives 165 165 0 0

Total non-current financial liabilities 37,998 190 38,189 28,304 235 28,539


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Non-current financial liabilities are detailed in the following table:

Non-current financial liabilities(thousands of Euro) 31/12/2015 31/12/2014

Non-current portion of leasing contracts’ debts 389 433

Euro 2,500 thousand loan granted to TBS Group by Cassa di Risparmio del FVG in August 2014 0 287

Loan granted to TBS Group by Friuladria in December 2013 for the original amount of Euro 2,500 thousand 1,070 1,570

Loan granted to TBS Group by Mediocredito del Trentino in September 2012 for the original amount of Euro 1,000 thousand 0 204

Euro 3,000 thousand loan granted to TBS Group by UniCredit in March 2014 0 1,719

Euro 3,000 thousand loan granted to TBS Group by Banca Popolare di Verona in January 2015 1,712 n,a,

Euro 3,500 thousand loan granted to TBS Group by Friuladria Credit Agricole in May 2015. 2,465 n,a,

Euro 15,000 thousand loan granted to TBS Group by Banca Popolare di Milano in June 2015 9,478 n,a,

Euro 4,000 thousand loan granted to TBS Group by BNL in October 2015 2,652 n,a,

Euro 1,500 thousand loan granted to TBS Group by Mediocredito del FVG in July 2015. 780 n,a,

Euro 3,000 thousand mortgage granted to TBS Group by UniCredit in July 2015 2,276 n,a,

Euro 500 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2015 334 n,a,

Euro 3,000 thousand mortgage granted to TBS Group by Banca Raiffeisen in December 2015. 2,418 n,a,

Total medium/long term portion of medium/long loans 23,186 3,780

Convertible bond loan 0 9,997

Mini bond loan 14,449 14,329

Financial payables MTM derivatives 165 0

Total non-current financial liabilities 38,189 28,539

Some loans require compliance (financial covenants) with certain parameters based on the consolidated financial statements at year-end.

These financial parameters, to be calculated on an annual basis, do not have characteristics or expenses different from those generally established under market practices and at the end of 2015 were all respected.

with the exception of a single covenant relative to a loan granted by Unicredit and maturing in 2018. This lack of respect led to it being reclassified from non-current financial liabilities (long-term), to current financial liabilities (short-term) in the amount of Euro 990 thousand. In any case, we confirm that the original repayment plan for this loan will be respected.

We note that on 30 July 2015 the TBS Group repaid the bond loan of Euro 10 million in advance, as well as the interest for the period, subscribed on 9 February 2012 with the Fondo

Italiano di Investimento. The company made use of the right foreseen in the loan rules, which allowed early repayment, originally foreseen for February 2016.


166

Five year non-convertible bond loan (mini bond)

On 25 August 2014 the Extraordinary Shareholders’ Meeting of TBS Group resolved the issuing of a non-convertible bond loan with a duration of five years for a total amount of Euro 15 million. The placement of this loan ended on 29 October 2014. The five year bond loan - reserved exclusively for Italian and foreign institutional investors, with an annual nominal rate of 6.5% - consists of 150 bonds with a nominal unit value of Euro 100,000 each, not divisible, and was issued at 100% of the nominal value. Banca Popolare di Vicenza was the arranger, subscriber of the securities and guarantor of 100% of the total amount, while placement of securities with foreign institutional investors was done by KNG Securities LLP. The capital will be repaid in a single payment at maturity (October 2019), while interest accrued will be paid on a quarterly basis.

The fair value of this bond loan at issue was equal to its nominal value (Euro 15 million). The value of the loan at 31 December 2015, booked at the amortised cost, is equal to Euro 14,449 thousand, entirely medium/long-term, net of issuing costs attributed to the loan.

The bond loan contract envisages respect for the parameters calculated with reference to the yearly and consolidated financial statements, as well as the respect for the other pre-established contractual conditions. As of 31 December 2015, these parameters and conditions were respected.

Leasing contracts debts

The leasing contract debt refers to the leasing contract stipulated for the acquisition of the property in Cernusco al Naviglio. For additional details, please refer to the section in Note 6 on leased assets.



• Euro 2.5 million loan granted to TBS Group by Cassa di Risparmio del FVG in August 2014The loan is repayable over 18 monthly deferred instalments with the first instalment paid in September 2014 and

the last instalment due in February 2016. The interest rate for the loan is a fixed rate plus the 1-month Euribor. As at 31 December 2015 the outstanding amount of the loan was Euro 296 thousand, entirely repayable over the

short term.

• Euro 2.5 million loan granted to TBS Group by Friuladria in December 2013.The loan is repayable over 20 quarterly deferred instalments with the first falling due in March 2014 and the last

instalment due in December 2018. The loan interest rate is the 3-month Euribor rate plus a spread. At 31 December 2015, the outstanding loan amount was Euro 1,569 thousand, consisting of Euro 499 thousand


• Euro 3 million granted to TBS Group by Banca Popolare di Verona in January 2015The loan is repayable in quarterly deferred instalments; the first instalment came due in March 2015 and the final

one is due for payment in December 2019. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,446 thousand, consisting of Euro 734 thousand



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• Euro 3.5 million loan granted to TBS Group by Friuladria Credit Agricole in May 2015.The loan is repayable in half-yearly deferred instalments; the first instalment came due in November 2015 and the

final one is due for payment in May 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 3,146 thousand, consisting of Euro 681 thousand


• Euro 15 million loan granted to TBS Group by Banca Popolare di Milano in June 2015.The loan is repayable in quarterly deferred instalments; the first instalment came due in September 2015 and the

final one is due for payment in June 2019. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 13,148 thousand, consisting of Euro 3,670

thousand repayable over the short term and Euro 9,478 thousand repayable over the medium/long term.

• Euro 4 million loan granted to TBS Group by BNL in October 2015The loan is repayable in half-yearly deferred instalments; the first instalment comes due in April 2016 and the final

one in October 2018. The loan interest rate is the 6-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 3,985 thousand, consisting of Euro 1,333 thousand


• Euro 1.5 million loan granted to TBS Group by Mediocredito del FVG in July 2015.The loan is repayable in half-yearly deferred instalments; the first instalment came due in December 2015 and the

final one is due for payment in June 2018. The loan interest rate is the 12-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 1,265 thousand, consisting of Euro 485 thousand


• Euro 3 million mortgage granted to TBS Group by UniCredit in July 2015The loan is repayable in quarterly deferred instalments; the first instalment came due in October 2015 and the final

one is due for payment in July 2020. The loan interest rate is the 3-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,852 thousand, consisting of Euro 576 thousand

repayable over the short term and Euro 2,276 thousand repayable over the medium/long term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated


• Euro 0.5 million loan granted to TBS Group by Mediocredito del Trentino in September 2015The loan is repayable in half-yearly deferred instalments; the first instalment comes due in April 2016 and the final

one is due for payment in October 2018. The loan interest rate is the 6-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 498 thousand, consisting of Euro 164 thousand

repayable over the short term and Euro 334 thousand repayable over the medium/long term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated



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• Euro 3 million mortgage granted to TBS Group by Banca Raiffeisen in December 2015.The loan is repayable in half-yearly deferred instalments; the first instalment comes due in April 2016 and the final

one is due for payment in October 2020. The loan interest rate is the 6-month Euribor rate plus a spread.At 31 December 2015, the outstanding loan amount was Euro 2,991 thousand, consisting of Euro 573 thousand


• Euro 3 million loan granted to TBS Group by UniCredit in March 2014.“The loan is repayable in quarterly deferred instalments; the first instalment expired in June 2014 and the final one

is due for payment in March 2018.” The loan interest rate is the 3-month Euribor rate plus a spread. As at 31 December 2015 the outstanding amount of the loan was Euro 1,748 thousand, entirely repayable over

the short term.Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated

accounting values, regarding the ratio between net financial debt and shareholders’ net equity and between EBITDA and net financial debt. If those indicators should not fall within the settled limits, the Bank is entitled to rescind the contract, in accordance to Italian Civil Code, article 1456. These parameters were not respected by the company at 31 December 2015, therefore the entire payable was classified as a short-term payable.

• Loan granted to TBS Group by Medio Credito del Trentino Alto Adige in September 2012 for the original amount of Euro 1 million.The loan is repayable in quarterly deferred instalments; the first instalment expired in December 2012 and the final

one is due for payment in September 2016. The loan interest rate is the 3-month Euribor rate plus a spread. Moreover the loan agreement requires the compliance with indicators calculated on TBS Group audited consolidated

accounting values, regarding the ratio between net financial debt and shareholders’ net equity and between EBITDA and net financial debt. In the case that said parameters do not fall within the established limits, the Bank will have the right to consider the contract rescinded, pursuant to article 1456 of the Civil Code unless appropriate equity, financial and management operations are not agreed upon with the Institute in order to resolve the situation within 180 days of the date slippage of the Covenant is communicated. As at 31 December 2015, the Company respected these parameters.

As at 31 December 2015 the outstanding amount of the loan was Euro 204 thousand, entirely repayable over the short term.


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Current financial liabilities

The table below provides a breakdown of the short term interest-bearing loans and borrowings:


Short-term leasing 44 44


Debts payable to factors 0 0

Other short-term financial liabilities 210 174

Other financial debt due to related parties 0 1,663


Details of current financial liabilities are shown below:


Euro 2,500 thousand loan granted to TBS Group by Cassa di Risparmio del FVG in August 2014 296 1,680

Euro 1,000 thousand loan granted to TBS Group by Monte dei Paschi in September 2014. 0 1,000

Euro 3,000 thousand loan granted to TBS Group by Banca Popolare di Verona in January 2015 734 0

Mortgage granted to TBS Group by BMPS in April 2010 0 368

Euro 4,000 thousand loan granted to TBS Group by BNL in October 2015 1,333 0

Euro 3,000 thousand loan granted to TBS Group by UniCredit in March 2014 1,748 722

Loan granted to TBS Group by Mediocredito in August 2012 for the original amount of Euro 1,000 thousand 0 353

Loan granted to TBS Group by Mediocredito del Trentino in September 2012 for the original amount of Euro 1,000 thousand 204 260

Loan granted to TBS Group by BNL in December 2012 for the original amount of Euro 3,000 thousand 0 1,000

Loan granted to TBS Group by Friuladria in December 2013 for the original amount of Euro 2,500 thousand 499 476

Euro 3,500 thousand loan granted to TBS Group by Friuladria Credit Agricole in May 2015. 681 0

Euro 5 million loan granted to TBS Group by Banca Popolare di Milano in March 2011, transferred to Insiel Mercato in 2011 422 0

Euro 15,000 thousand loan granted to TBS Group by Banca Popolare di Milano in June 2015 3,670 0

Euro 3,000 thousand mortgage granted to TBS Group by UniCredit in July 2015 576 0

Euro 1,500 thousand loan granted to TBS Group by Mediocredito del FVG in July 2015. 485 0

Euro 500 thousand loan granted to TBS Group by Mediocredito del Trentino in September 2015 164 0

Euro 3,000 thousand mortgage granted to TBS Group by Banca Raiffeisen in December 2015. 573 0

- Total non-current portion of short-term interest-bearing loans 11,385 5,859

- Current account overdrafts, advances on invoices and other short-term borrowings 5,156 5,981

Total short-term bank loans 16,542 11,840

Current leasing contracts’ debts 44 44

Other short-term financial liabilities 210 174

Other financial payables to related parties 0 1,663

Total current financial liabilities 16,796 13,721


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NOTE 15 – Employee Severance Indemnity

The table below shows changes in the Employee Severance Indemnity provision:


At 1 January 329 249


Increases from Tecnobiopromo merger 42

Actuarial gains/losses -22 39

Payments to pension funds -171 -270

Financial charges 6 5

Benefits paid -38 -1

At 31 December 277 329

Defined benefit plans in effect in Italy refer exclusively to the Employee Severance Indemnity. With the adoption of the new international principles and IAS 19 in particular, the employee severance indemnity is regarded as a defined benefit obligation whereby the liability is measured on the basis of actuarial methods.

Employee Severance Indemnity liabilities were measured by independent actuaries, applying the Projected Unit Credit Method.

Following the issuing of Law 296 of 27 December 2006 (2007 Financial Law) and subsequent Decrees and Regulations issued in early 2007, the Employee Severance Indemnity matured as at 1 January 2007 or at the date the option to be exercised by employees was selected is included in the category of programmes with defined contribution, both in the case of supplementary allowance as well as of allocation to the Treasury Fund of the INPS. The accounting of this Employee Severance Indemnity is therefore assimilated with other types of contribution deposits.

The main assumptions used in determining the current value of the Employee Severance Indemnity are illustrated below:

31/12/2015 31/12/2014

Annual probability of termination due to death ISTAT 07 death-rate tables lowered to 85%, lowered per

gender

ISTAT 07 death-rate tables lowered to 85%, lowered per

gender

Annual probability of termination due to disability INPS data lowered to 70% INPS data lowered to 70%

Annual probability of attrition due to other causes 3.80% 5.00%

Annual probability of request of indemnity advance by employees 1.54% 2.00%

Annual interest rate 2.03% 1.49%

Annual inflation rate 2.00% 2.00%

Retirement age according to current INPS retirement rules

according to current INPS retirement rules

In order to indicate the potential effects that could have occurred to the Company’s defined benefit obligations following changes in some of the main actuarial hypotheses, we indicate the following: • in the case the discount rate used were to increase by 0.5%, the debt registered in the financial statements would

be equal to Euro 264 thousand;• in the case the discount rate used were to decrease by 0.5%, the debt registered in the financial statements would

be equal to Euro 290 thousand;


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• in the case the inflation rate increased by 1%, the debt registered in the financial statements would be equal to Euro 285 thousand;

• in the case the inflation rate decreased by 1%, the debt registered in the financial statements would be equal to Euro 269 thousand.

NOTE 16 – Provisions for risks and charges

(thousands of Euro) Risk provisions Provision for investment risks

Supplementary agent indemnity

provision

Total

At 1 January 2015 202 0 3 205

Impairment 0 0 0 0

Resecuritisations 0 0 0 0

Provisions for the year 50 0 0 50


Utilisation for the year -81 0 0 -81

At 31 December 2015 172 0 3 175

The provision for risks consists of: • an allocation made in previous years for potential disputes with personnel equal to Euro 30 thousand;• an allocation made during the year for potential disputes with personnel equal to Euro 3 thousand;• the residual provision, of Euro 138 thousand, relative to possible contingent liabilities seen by the former subsidiary

Subitec GmbH, which arose subsequent to the full sale of the shares of the same by TBS on 23 December 2014, but pertaining to the period during which Subitec was under its control, management and coordination, for which TBS must be responsible. At 31 December 2014, this provision came to Euro 172 thousand, and was used in the amount of Euro 81 thousand during the year following contingencies which arose, and was added to with a further allocation of Euro 47 thousand during the year against further future contingent liabilities.The supplemental agent indemnity provision was established following the merger by incorporation of the

subsidiary Tecnobiopromo in financial year 2014.

NOTE 17 – Trade payables

Payables to suppliers as at 31 December 2015 amount to Euro 2,086 thousand (3,504 thousand as at 31 December 2014).


Payables to suppliers 1,226 2,590

Trade payables to related parties 859 914

Total trade payables 2,086 3,504

Trade payables are not interest bearing and the payment terms are in line with the commercial practices of the business areas in which they fall. Trade payables are not secured.

Trade payables to related parties mainly are constituted by payables to subsidiaries and associated companies. The associated details are provided in Note 32.


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NOTE 18 – Other current liabilities

The table below provides a breakdown of other current liabilities:


Payables to employees 429 586

Payables to social security institutions 265 340

Customer advance payments on invoices 280 950

VAT payables 3 11

Other tax liabilities 295 596

Other payables 90 174

Other financial payables to related parties 6 0

Payables to subsidiaries for tax consolidation 2,211 1,989

Total other current liabilities 3,579 4,646

Among other payables are deferred income for contributions for investments in intangible assets equal to Euro 31 thousand, which will be booked as revenue as attributable in relation to costs to which they are correlated.

NOTE 19 – Guarantees granted, commitments and financial liabilities

Guarantees given


Third parties for guarantees granted 214,041 235,541

Commitments for purchase or sale 2,498 2,422

Other commitments 265 1,310

Total 216,804 239,273

Garanzie ottenute


Third parties for guarantees received 2,125 4,926

Total 2,125 4,926

The Company provided guarantees, and signed letters of comfort and credit mandates in favour of subsidiaries totalling Euro 214,041 thousand.

“Commitments for purchase and sale” include a value of Euro 2,498 thousand that represents the residual commitment in consideration of the “Put & Call” options connected to the acquisition of the controlling investment in Erre Effe (Euro 1,220 thousand) and TBS GB (Euro 1,278 thousand).

Note that with the transfer of the branch to the subsidiary Insiel Mercato completed in November 2011, the Company transferred the residual debt for the mortgage contract stipulated with Banca Pop. di Milano. Nonetheless, as of 31.12.2014, despite the transferor having informed the bank of said transfer, the credit institution has not yet provided information regarding effectuation of the assignment. Hence, the company continues to have joint and several liabilitiesfor the residual debt existing as of the end of the year and booked to the financial statements of the subsidiary for a total of Euro 265 thousand.


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The company also obtained third party guarantees totalling Euro 2,125 thousand in relation to participation in international tenders in Uruguay, Romania, Albania, Swaziland, Uganda, Belize, Malta, Tunisia, Turkey, Vietnam and China.

NOTE 20 – Revenue


Revenue from the sale of goods and services 1,494 9,764

Change in work in progress on order 0 0

Revenues from related parties 7,593 7,599

Total revenue 9,087 17,363

Revenues from the sale of goods and services mainly refer to fees received for the provision and installation of biomedical equipment in Honduras, at the paediatric hospital in the capital Tegucigalpa. Through the contract with the Ministry of Health of Honduras, TBS Group provides biomedical equipment and relative training services to medical staff. The relative revenues recognised during the year amount to Euro 671 thousand.

Revenues from the sale of goods and services also refers to the supply and installation of biomedical equipment in Belize (Euro 161 thousand), Swaziland (Euro 89 thousand), and in China, in particular in the province of Sichuan (Euro 56 thousand).

In regards to the item “Revenues from related parties,” this includes management fees invoiced to the subsidiaries on the basis of a “Strategic Management Services Agreement or Management Service Agreement” signed in 2010 between TBS Group and each of the subsidiaries.

TBS Group S.p.A. as the parent company has a highly skilled central structure, which the group companies do not have and no not intend to obtain, for reasons of efficiency and associated expenses, which is able to provide Company Management services. Hence, TBS Group S.p.A. has undertaken to make available to the companies of the group consulting and coordination services aimed at leading, implementing and expanding the business of its subsidiaries and at obtaining a high degree of efficiency and better use of resources, as well as offering specialised services, which can be identified as follows:a) use of the results of the research and development carried out within the group;b) assistance with administrative, financial and management control problems;c) support for company organisation activities in regards to coordination of legal activities and supervision of quality

policies;d) supervision of human resources management policies, in particular for training activities, identification of criteria

to recruit qualified personnel, the determination of tools to evaluate individual and collective performance, and to define payment policies;

e) coordination of technical activities, particularly in defining production processes, with a particular focus on policies to reduce industrial costs, including through international checks o the best purchase prices for materials and equipment;

f) definition of commercial policies, to coordinate the portfolio of services offered, both at an inter-company level and between the various “Business Units” and to optimise the distribution networks;

g) assistance with IT system activities, to optimise the use of the most efficient solutions and coordinate the purchase and use of hardware systems and software products;

h) consulting and assistance in the establishment of marketing strategies, including review and analysis of market data, the selection and valuation of specific communication methods to be used in the context of activities to promote services;

i) all other consulting and assistance in management and strategic issues that could lead to significant developments of business in the interest of the Group companies.


174

Revenues relative to payment for said services (Management Fees) for 2015 totalled Euro 4,943 thousand (Euro 4,844 thousand in the previous year).

In addition, during the year large amounts of revenue were booked relative to service and release contracts stipulated with some Italian companies in the group and other re-invoicing for Euro 2,650 thousand (Euro 2,755 thousand in the previous year).

The subdivision of revenues by geographic area is illustrated in the table below:

Revenues by geographic area

(thousands of Euro) From related parties From others Total

Italy 4,885 493 6,138

EU 2,608 18 2,626

Non EU 100 983 324

Total 7,593 1,494 9,087

NOTE 21 - Other revenue and income


Contributions 112 234

Other operating revenue from related parties 175 0

Other operating revenue 2 0

Total other income 289 234

The item grants consists of:• contributions connected to development costs for Euro 31 thousand (also recognised under the form of tax re-

ceivables). Their booking to the statement of income occurs in correlation with the amortisation of the capitalised projects to which they refer (Pharma Phi);

• contributions by M.I.U.R. for Euro 70 thousand relative to two research projects presented by the Consorzio per il Centro di Biomedicina Molecolare Scrl;

• contributions from the Friuli Venezia Giulia region for Euro 9 thousand relative to the ultrasound probe maintenance lab;

• contributions from the Friuli Venezia Giulia region for Euro 1 thousand for training of personnel. Other revenue from related parties mainly refers to income from building leases.

NOTE 22 – Cost of raw materials and consumables


Raw materials, consumables and goods 1,095 4,662

Acquisition of materials from related parties 11 217

Changes in inventories of raw materials, consumables and goods 642 1,494

Total raw materials, consumables and goods 1,748 6,373


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The item “Raw materials, consumables and goods” mainly refers to purchases relative to the supply and installation of biomedical equipment at hospitals in Honduras and in Belize. For the relative details, please refer to Note 20.l

NOTE 23 – Service costs

Below is the composition of service costs:

(thousands of Euro) 2015 of which withrelated parties

2014 of which withrelated parties

Consultancy and technical contracts 333 18 850 15

Legal, administrative and commercial services 1,626 504 2,698 556

Travel expenses 330 376

Telephone expenses 130 129 30

Directors’ remuneration 233 367

Board of statutory auditors remuneration 100 96

Commissions 8 11

Bank commissions and factoring charges 208 189

Insurances 454 437

Transportation and shipping 71 105

Other repairs and maintenance 42 27

Advertising, promotion, exhibitions and trade fairs 249 0 203 6

Leases and rentals 310 18 294 16

Vehicle rental 111 7 130 2

Other service costs 1,483 591 1,181 144

Total service costs 5,688 1,139 7,091 769

The payments contractually established for the year 2015 made to Reconta Ernst & Young are equal to Euro 107 thousand for services to audit the consolidated financial statements for the year and for carrying out some limited auditing procedures at 30.6.2015, the latter without issuing of the associated report. Compensation for activities other than auditing totalled Euro 14 thousand.

NOTE 24 – Personnel costs

The table below provides a breakdown of personnel costs as at 31 December 2015 and 31 December 2014:


Salaries and wages 2,586 2,922

Social security contributions 769 893

Retirement benefits 6 7

Employee Severance Indemnity and similar obligations 173 181

Other personnel costs 0 4

Total personnel costs 3,535 4,008


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The item includes all expenses for payroll employees, including merit raises, changes of category, cost of living increases, costs for holidays matured and not used, and legal allocations and collective contracts.

Employment figures

Initial staff, divided by category, underwent the following changes with respect to the previous year.

Payroll Staff Managers and mid-level managers

Employees Blue-collar staff Total

Average 2014 21 47 0 68

Average 2015 21 40 0 61

The national labour contract used is that for the metalworking industry.

NOTE 25 – Other operating costs

The table below provides a breakdown of other operating costs as at 31 December 2015 and 31 December 2014.

(thousands of Euro) 2015 of which withrelated parties

2014 of which withrelated parties

Write-downs of receivables under current assets 30 0

Taxes and duties 7 15

Other costs 527 8 638 98

Total other operating costs 564 8 653 98

NOTE 26 - Cost adjustments for in-house generation of non-current assets


Cost adjustments for in-house generation of non-current assets 239 336

Total cost adjustments for in-house generation of non-current assets 239 336

The item “Cost adjustments for in-house generation of non-current assets” as at 31 December 2015 amounted to Euro 239 thousand (Euro 336 thousand at 31 December 2014). It related entirely to personnel and for the execution of some projects to develop new software and information technology. In particular, should such costs be deducted from the corresponding income statement item, there would be a reduction in personnel costs.

NOTE 27 – Amortisation, depreciation and write-downs


Depreciation of tangible fixed assets 210 187

Amortisation of intangible fixed assets 714 945

Total amortisation, depreciation and impairment 924 1,132


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NOTE 28 – Other provisions


Allocation to contractual risk provision for disputes 0 0

Supplementary customer indemnity provision 0 1

Allocation to other provisions for liabilities and charges 3 0

Total allocation to provisions 3 1

The allocation of Euro 3 thousand was made during the year for potential disputes with employees.

NOTE 29 – Gains (losses) from investments

(thousands of Euro) 2015

of which with related parties

2014


Reval. equity investments in subsidiaries 0 0

Reval. equity investments in related parties and joint ventures 530 530 0

Reval. minority shareholdings 0 0

Reval. financial assets held for sale 0 0

Write-downs of investments in subsidiaries due to impairment 0 0

Write-downs of investments in related parties and joint ventures 227 227 17 17

Write-downs of minority shareholdings 0 0

Write-downs of financial assets held for sale 0 0

Total gains (losses) from investments 304 304 -17 -17

The revaluation of equity investments totalling Euro 530 thousand refers to the revaluation carried out for the associate SLT Srl.

The write-down on equity investments totalling Euro 227 thousand refers to the write-down carried out on the joint venture Sinopharm TBS.


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NOTE 30 – Income from investments, financial income and financial expenses

(thousands of Euro)

2015


2014

of which withrelated parties

Gains from equity investments 6,210 6,210 5,787 5,787

Bank interest receivable 1,213 1,186 970 956

Other interest receivable 0 5

Other financial income 305 6

Total financial income 1,518 1,186 980 956

Bank interest payables and from related parties 1,016 31 1,034 56

Leasing interest payable 4 13

Interest payable convertible bond loan 468 800

Interest payable Minibond 1,095 183

Other interest payable 15 13

Other financial charges 65 37

Actuarial termination indemnity loss 6 5

Expense from sale of equity investments 3 0

Total financial expenses 2,671 31 2,085 56

Total financial income and expense and dividends 5,057 7,365 4,683 6,687

Interest receivable came to a total of Euro 1,213 thousand and mainly includes interest deriving from loans granted to subsidiaries (Euro 1,186 thousand) and in a residual amount to interest for the year matured in regards to banks (Euro 27 thousand).

Interest payable totalled Euro 2,671 thousand and mainly included interest accrued on the part of banking institutions (Euro 985 thousand), interest payable for the convertible bond loan (Euro 468 thousand) and the interest payable relative to the non-convertible mini bond loan (Euro 1,095 thousand).

The detail of income from investments in subsidiaries is as follows:

Dividends from subsidiaries (Related Parties)


TBS GB 2,607 1,804

EBM 2,609 2,846

Surgical Technologies 300 500

Crimo Italia 307 264

SLT 68 105

TBS FR 0 0

TBS BE 100 100

TBS INDIA 0 108

TBS Imaging (formerly REM DI) 159 0

TBS PT (STB) 60 60

Total dividends 6,210 5,787

Total income from investments in subsidiaries 6,210 5,787


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NOTE 31 - Income taxes for the year

The table below illustrates the composition of income taxes, distinguishing between the current, deferred and prepaid components:


IRAP 0 0

IRES -1,122 -794

Allocation to the tax risk provision

Taxes for previous years 19 -23

Substitute tax 0 0

Taxes for previous years (allocation to the tax risk provision) 0 0

Taxes for previous years 0 0

Current income taxes -1,102 -818

(Pre-paid)/deferred taxes -67 173

Total income taxes -1,169 -645

Note that the company adhered to the provisions pursuant to article 117 and subsequent of the T.U.I.R. (so-called “Consolidated Tax Act”) as the parent company.

The amount of IRES shown in the table (positive for Euro 1,122 thousand) refers to the income from consolidation deriving from the valuation of the tax losses seen by the Company during the year and used to compensate for the taxable amounts of other subsidiaries in the context of tax consolidation. The amount indicated also includes the benefit deriving from the deductibility of TBS Group interest payable thanks to the use of part of the ROL (reduction of labour hours) by some consolidated companies, a benefit which was not booked to said subsidiaries but kept by the parent company.

The following table shows the tax incidence on earnings before tax as at 31 December 2015 and 31 December 2014:


Pre-tax profit 2,515 3,342

Income taxes -1,169 -645

Incidence on earnings before taxes -46.5% -19.3%

The change in the impact of taxes on before tax amounts is mainly due to lower operating profit from the company.


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Deferred tax receivables and payables

The following table details deferred tax assets:

(thousands of Euro) PREPAID TAXES

2015 2014

PREPAID TAX CREDIT IRES IRAP TOTAL IRES IRAP TOTAL

Pharma Phi grant taxed in cash 9 0 9 17 17

Exchange losses from valuations 1 0 1 0 0

Membership fees in cash 1 0 1 1 1

Inventory write-down provision 42 0 42 12 12

Directors' fees in cash 4 0 4 6 6

Risk provisions 8 0 8 8 8

Employee severance indemnity 2 0 2 0

Reversal of multi-year costs, former Tecnobiopromo 1 0 1 2 0 2

Reversal of capital increase expenses 26 4 29 51 7 58

MTM derivatives 45 0 45 0

TOTAL 139 4 142 99 8 106

The Company recorded prepaid taxes relating to temporary differences between the civil and fiscal assessment, based on the consideration that future taxable amounts will absorb all the temporary differences that generated them.

Details of deferred tax liabilities are as follows:

(thousands of Euro) DEFERRED TAXES

2015 2014

PROVISION FOR DEFERRED TAX IRES IRAP TOTAL IRES IRAP TOTAL

Deductions credit write-down EC framework 51 51 64 64

Deductions EC-directors software framework 0 0

Taxable portion, transfer capital gains 259 259 297 297

Dividends not received 6 6 5 5

MIUR grant taxed in cash 121 121 118 118

Amortisation changes, 2012 Cernusco property improvements 0 0

Exchange rate differences 0 0 0

Deferred on mini bond expenses 154 154 185 185

Leasing 28 28 25 3 28

Employee Severance Indemnity discounting 5 5 0

TOTAL 626 0 626 694 3 697

Note that the company booked Euro 5 thousand for deferred tax payables relative to actuarial gains booked against the comprehensive income statement.


181

NOTE 32 – Related party disclosures

Pursuant to Consob letter 6064293 of 28 July 2006, the disclosure relative to related parties is presented in these Notes, in the appropriate sections.

Payables and receivables, as well as financial income and expense that TBS Group S.p.A. has with its subsidiaries, associated companies and related parties, for the period in question, are those summarised in the tables below:

Relations with subsidiaries

(thousands of Euro) RECEIVABLES / PAYABLES 2015 REVENUES / EXPENSES 2015

Company Receivablescomm.

Receivablesfinancial

Receivables for tax

consolidation

Payables comm.

Payables financial

Payables for tax

consolidation

Revenuecomm.

Income from

investment

Financial income

Costscomm.

Chargesfin.

TesanTelevita * 17 0 0 0 0 19 45 0 0 0 0

PCS 147 0 0 7 0 0 199 0 0 18 0

TBS FR 524 2,715 0 10 0 0 558 0 66 9 0

TBS BE 15 0 0 0 0 0 72 100 0 0 0

TBS GB 413 0 0 16 0 0 1,008 2,607 0 21 0

TBS ES 92 0 0 0 0 0 269 0 3 0 0

STB 47 320 0 0 0 0 89 60 0 0 0

Surgical Technologies 159 0 0 0 0 0 252 300 0 0 0

SLT 0 0 0 0 0 0 56 68 0 9 0

CRIMO Italia 81 0 0 0 0 136 175 307 2 2 0

EBM 1,872 8,131 0 122 0 1,414 2,934 2,609 512 107 0

MSI 682 761 0 7 0 0 150 0 29 1 0

TBS IT 168 0 0 0 0 631 254 0 212 6 0

INSIEL MERCATO 876 0 69 502 0 5 895 0 0 440 31

TBS INDIA 85 0 0 20 0 0 98 0 0 13 0

TBS SE 85 155 0 0 0 0 2 0 0 0 0

Erre Effe Informatica 23 0 43 0 0 4 32 0 0 0 0

TBS IMAGING 2,172 6,728 298 53 0 3 653 159 362 1 0

Ing. Burgatti 0 0 0 0 0 0 0 0 0 0 0

TBS BOHEMIA 13 40 0 0 0 0 10 0 0 0 0

CRIMO FRANCE 0 0 0 0 0 0 0 0 0 0 0

CRIMO Instrumentation Medicale 0 0 0 0 0 0 0 0 0 0 0

Total 7,470 18,850 410 737 0 2,211 7,753 6,210 1,186 627 31


182

(thousands of Euro) RECEIVABLES / PAYABLES 2014 REVENUES / EXPENSES 2014

Company Receivablescomm.

Receivablesfinancial

Receivables for tax

consolidation

Payables comm.

Payables financial

Payables for tax

consolidation

Revenuecomm.

Income from

investment

Financial income

Costscomm.

Chargesfin.

TESAN 278 0 0 148 0 846 328 0 0 87 1

TesanTelevita 16 0 0 0 0 14 48 0 0 0 0

PCS 77 0 0 9 0 0 166 0 0 19 0

TBS FR 247 0 0 4 192 0 529 0 0 0 4

TBS BE 19 0 0 0 0 0 69 100 0 0 0

TBS GB 442 0 0 15 0 0 983 1,804 0 17 0

TBS ES 103 389 0 21 0 0 283 0 15 21 0

STB 26 325 0 0 0 0 57 60 1 0 0

Surgical Technologies 35 0 0 0 0 0 123 500 0 0 0

SLT 112 0 0 2 0 33 94 105 0 11 0

CRIMO Italia 83 0 99 0 0 20 167 264 3 0 0

EBM 914 10,042 0 83 0 341 2,825 2,846 479 75 0

MSI 538 761 0 6 0 0 128 0 29 6 0

TBS IT 1,204 7,724 0 0 0 698 243 0 280 0 0

INSIEL MERCATO 410 0 36 106 1,472 5 965 0 42 62 50

TBS INDIA 70 108 0 13 0 0 79 108 0 13 0

TBS SE 83 155 0 0 0 0 0 0 0 0 0

Erre Effe Informatica 17 0 0 0 0 28 32 0 0 0 0

Delta X 184 0 152 9 0 3 54 0 0 0 0

Sinopharm TBS 0 0 0 303 0 0 0 0 0 208 0

EBME 0 0 0 13 0 0 0 0 0 0 0

TBS IMAGING 1,275 2,950 157 52 0 0 425 0 108 8 0

Total 6,135 22,454 444 784 1,663 1,989 7,599 5,787 956 527 56

Relations with associated companies

Company name (thousands of Euro) trade receivables trade payables other payables revenue costs

Sinopharm TBS 2 0 24

SLT 65 11 6 16 3

Easy Care Foundation 0 0 0 0

Consorz.Soc.Care Expert 0 0 0 0

Total 65 13 6 16 27

The operations carried out with subsidiaries and associated companies essentially involve the provision of services, and obtaining and using financial means. These are part of ordinary operations and are regulated at market conditions - that is the conditions that would be applied between two independent parties.


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Relations with other related parties

Company name (thousands of Euro) trade receivables trade payables revenue costs

SEGES 0 22 0 65

Paolo Salotto 0 41 0 281

Capitol Health 0 0 0 3

MEA Consulting 0 0 0 25

Innovating Global Health S.A. 0 47 0 130

Total 0 110 0 504

The services company MEA Consulting is a related party in that Laura Amadesi, a Director of the TBS Group is a shareholder and partner of said company.

Mr. Paolo Salotto, formerly a member of the TBS Group Board of Directors, was appointed as the Managing Director of TBS Group on 19 December 2013. The costs indicated in the table refer to the fees accrued during the course of 2015 as the Managing Director of TBS Group, Director of Strategic Planning, Director of M&A, and General Manager for Corporate activities.

Seges Srl is considered a related party since Mr. Paolo Salotto is its Chairman. Relations with Seges are governed by a consulting contract, with particular reference to administration, accounting and legal issues.

Capitol Health Consultants Inc. is considered to be a related party as it is a subsidiary of Capitol Health Special Fund L.P., one of the shareholders of the Company. Costs for the year relative to Capitol Health Consultants Inc. refer to payments connected to the activities of a member of the Board of Directors.

Innovating Global Health S.A. is considered to be a related party as it is a subsidiary of Capitol Health Special Fund L.P., one of the shareholders of the Company. Relations with Innovating Global Health S.A. are regulated by a strategic and financial consulting agreement under General Management, which was activated during the course of 2013.

Accrued remuneration for directors with key responsibilities:


Salaries(*) Remuneration(**) Salaries(*) Remuneration(**)

Diego Bravar 122 140

Nicola Pangher 125 5 107 15

Fabio Faltoni n,a, 58

Paolo Salotto (***)

(*) The values indicated refer to gross salaries received as an employee of the company.(**) The values indicated refer to remuneration received as director of the company.(***) For the fees relative to Mr. Paolo Salotto please refer to the figures in the table above, “Relations with other related parties”


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NOTE 33 – Subsequent events

The significant events that occurred after 31 December 2015 and up to the date the financial statements were prepared are below.

On 7 March 2016, the TBS Group, which already had a presence in Portugal through the subsidiary TBS PT, acquired Tunemedix SL of Lisbon, a company specialising in supplying diagnostic imaging products and managing associated services.

The investment to acquire 51% of the company came to Euro 184,000, but this may rise to a total amount of Euro 251,000 based on the final economic results for 2015 achieved by the acquired company.

The contract also foresees the possibility to exercise a call option in favour of the TBS Group and a put option in favour of the minority shareholders, to be exercised by 31 March 2020.

Founded in 2011, Tunemedix, with its logistics offerings of spare parts for high-tech equipment such as TACs and MRIs, is rapidly growing, even beyond the Iberian Peninsula. Tunemedix also offers used equipment to emerging markets with lower budgets.





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Board of statutory auditors’ report on the year ending at 31.12.2015(pursuant to article 2429, paragraph 2 of the Civil Code)

Shareholders,With this document, the Board of Auditors provides information about its activities for the year ending at 31

December 2015, as required under article 2429, paragraph 2 of the Civil Code, taking into account the principles of conduct recommended by the National Board of Chartered Accountants [the Italian Accounting Body].

Supervision

We supervised the observance of the Law and the Articles of Association, and respect of the principles of proper administration.

We participated in the Shareholders’ Meetings and the meetings of the Board of Directors, carried out in conformance with the legal norms or the Articles of Association.

We obtained from the relevant bodies, with the frequency established under the Law and/or the Articles of Association, the information required under article 2381, paragraph 5 of the Civil Code, both in regards to the Company and the subsidiaries, not discovering operations that were manifestly imprudent, hazardous, in conflict of interest or such to compromise the integrity of company equity.

The Board of Statutory Auditors acknowledged and supervised the principles of proper administration, to the extent of its responsibilities, through direct observation and gathering of information from department managers.

The Company exercises management and coordination activities in regards to its subsidiaries. The relationships which exist between TBS Group S.p.A. and the companies of the group include operations that involve public interest, and are regulated under normal market conditions, taking into account the quality and specific nature of the services provided. Appropriate disclosures of these relationships are provided in the documents accompanying the consolidated financial statements and separate financial statements for the year.

Company operations pursuant to articles 2391 and 2391-bis of the Civil Code were resolved in respect of the regulations in effect, the Company’s Code of Conduct and the internal procedure for valuation and approval of operations with related parties, established in conformance with that envisaged in article 13 of the AIM Regulation, providing adequate and timely information to the public when necessary.

We acquired information and supervised the financial disclosure processes, the adequacy of the corporate organisation, administration and accounting structure and the functioning of the Company’s internal control system, to the extent of our responsibilities, including through meetings with department managers and the members of the Supervisory Body, the Internal Control Committee and the manager of Internal Audit. To that end, we have no special observations to note.

We have periodically met with managers from the auditing firm, maintaining contact throughout the year, as well as a constant exchange of information.

We have exchanged information with the auditors of the subsidiary EBM S.r.l. and no relative data and information arose which would require mention in this report.

The supervisory activities described above were carried out through a total of seven meetings of the Board of Statutory Auditors, three of which involved the Internal Control Committee, and during the eleven meetings of the Board of Directors. No complaints were received pursuant to article 2408 of the Civil Code during the course of the supervisory activities, as described above, nor did other significant issues arise which would require mention in this report.


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Financial statements for the year

The 2015 financial statements of TBS Group S.p.A. were approved by the Board of Directors on 24 March 2016 and were prepared in conformance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Board (IABS) and adopted by the European Union and IAS.

We have examined the financial statements of the year ending at 31.12.2015, in regards to which we note the following.1 Management indicates net profits of Euro 3,684,371. The Board of Directors, in the Notes to the Financial

Statements, illustrated the valuation criteria adopted and provided the information required under the regulations in regards to both the balance sheet and the income statement, as well as providing all other information considered necessary to ensure the highest possible level of clarity in the statements.

2 As we are not responsible for auditing the financial statements, we supervised the general structure used for the same, and its general compliance with the Law in terms of both its form and structure, and in that regard we have no special observations to note. We verified observance of the regulations of the Law in regards to the preparation of the report on operations and in that regard we have no special observations to note.

3 For the purposes of article 2426, first paragraph, no. 5 of the Civil Code, we note that no capitalisation of enlargement or system costs occurred, nor of research, development or publicity costs with multi-year utility.

4 Pursuant to Article 2426, first paragraph, no. 6 of the Civil Code, and in light of the results of the impairment test carried out in reference to the Clinical Engineering Italy CGU, we express our consent to keep goodwill in the financial statements relating to the merger carried out in 2014 with the Company Tecnobiopromo S.r.l., as well as keeping the goodwill arising in 2009.

5 To the best of our knowledge, the directors, in preparing the financial statements, did not deviate from the regulations of the Law, pursuant to article 2423, paragraph 4 of the Civil Code.

6 The audit firm released its report today, pursuant to articles 14 and 16 of Legislative Decree 39 of 27.1.2010, without exceptions, reservations, or requests for information.

7 The administrative body of the TBS Group S.p.a. parent company have prepared the consolidated financial statements at 31 December 2015 in accordance with IAS/IFRS which show a profit for the year attributable to the Group of Euro 2.41 million. The Group’s consolidated financial statement was subject to audit by the firm that issued its report today, pursuant to Articles 14 and 16 of Legislative Decree. 39 of 27.1.2010, without exceptions, reservations, or requests for information.

Conclusions

Also considering the results of the activities carried out by the entity assigned to audit the accounts, the Board proposes that the Shareholders’ Meeting approve the financial statements for the year ending at 31.12.2015, as prepared by the Directors, together with the proposal for allocation of the profits for the year, as formulated by the directors.

Trieste, 07 April 2016

for the Board of Statutory Auditors The Chairman (Andrea Fasan)


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Company data and information for the shareholders

HeadquartersTBS Group SpaAREA Science Park. Padriciano 9934149 Trieste – ItalyTel. +39 040 92291Fax 040 9229999www.tbsgroup.com

Legal dataShare capital: 4,218,557.60 fully paid-upNumber of ordinary shares: 42,185,576Own shares: 764,210Fiscal code, VAT and Companies’Register of Trieste under n. IT 00707060323REA 95352

Investor Relationse-mail: [email protected]. +39 040 92291Fax +39 040 9229999

The present document is also available in thesection “Investor Relations” on the websitewww.tbsgroup.com

redpointcommunication

redpointcommunication

ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2015

www.tbsgroup.com

TBS Group SpaAREA Science Park

Padriciano 9934149 Trieste - Italy

tel. +39 040 92291fax +39 040 9229999

[email protected]

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Documents

ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2015investor.tbsgroup.com/images/pdf/IR/TBS_financial_statements_2015.pdfFinancial Statements at 31 December 2017. The new Board of Directors