Consolidated and Statutory Financial Statements · Alternate Auditors Michele Crisci Luigi Provaggi Independent Auditors Deloitte & Touche S.p.A. 6 GROUP STRUCTURE The following graph

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2

Consolidated and

Statutory Financial

Statements for the year ended March 31, 2018

3

4

Index ADMINISTRATION AND CONTROLLING BOARD 5

GROUP STRUCTURE 6

MANAGEMENT REPORT TO THE CONSOLIDATED FINANCIAL STATEMENTS AND TO THE

STATUTORY FINANCIAL STATEMENTS 8 Main economic and financial data 12

Performance of the period 35

Overview of ongoing projects and main project acquisitions 23

Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to 36

The Group’s organizational structure 37

Research and Innovation 37

Knowledge Sharing Group 38

Information Technology 38

Human Resources 39

Shareholder 41

Treasury shares 41

Transactions with related parties 41

Unconventional or unusual operations 42

Significant events subsequent to year end and outlook 42

Other disclosures 43

Operating performance and financial position of Permasteelisa S.p.A. 45

Approval of the Statutory Financial Statements and allocation of 2018 result 48

Permasteelisa Group Consolidated Financial Statements as of March 31, 2018 50 Consolidated income statement 51

Consolidated statement of comprehensive income 52

Consolidated statement of financial position 53

Consolidated statement of cash flows 54

Consolidated statement of net equity changes 56

Notes to the Consolidated Financial Statements 58

Appendix I: Permasteelisa Group’s companies 105

Permasteelisa S.p.A. – Statutory Financial Statements as of March 31, 2018 109 Income Statement 110

Statement of Comprehensive Income 111

Statement of Financial Position 112

Statement of cash flows 112

Statement of net equity changes 112

Notes to the Statutory Financial Statements 117

Appendix I: Receivables and payables broken down by geographical area 166

Auditors’ report on the Consolidated and Statutory Financial Statements 170 Company name Permasteelisa S.p.A. with soles Shareholder Registered Office Share capital Viale E. Mattei, 21/23 Euro 6,900,000 fully paid in 31029 Vittorio Veneto (TV) - Italy Treviso REA (Economic and Administrative Repertory) enrolment no. 169833

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ADMINISTRATION AND CONTROLLING BOARDS

Board of Directors in charge

Chairman Davide Croff

Chief Executive Officer Riccardo Mollo

Directors

Laurence William Bates (CCI) (*)

Nicola Greco

Sachio Matsumoto (CCI) (CRN)

Harumi Matsumura (CRN)

Hwa Jin Song Montesano

Daizo Motoyoshi (CCI)

Motohiko Shintani

(*)Resignation Director with effect from March 31, 2018

(CCI) Member of the Internal Control Committee (CRN) Member of the Remuneration and Nominating Committee

Board of Statutory Auditors

Chairman

Standing Auditors

Eugenio Romita

Antonella Alfonsi

Roberto Spada

Alternate Auditors Michele Crisci

Luigi Provaggi

Independent Auditors Deloitte & Touche S.p.A.

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

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8

PERMASTEELISA S.p.A.

Management Report to the

Consolidated Financial Statements and

to the Statutory Financial Statements

9

MANAGEMENT REPORT Dear Shareholder,

The following report accompanies the Consolidated Financial Statements and the Financial Statements of Permasteelisa S.p.A. as of March 31, 2018. We wish to illustrate the data related to the exercise of the Group and of the Parent Company, both with reference to the current financial year and to future prospects.

During the month of August 2017 LIXIL announced its decision to sell 100% of the shares of Permasteelisa S.p.A. to Grandland Holding Group Limited, a leading Chinese architectural design and construction company.

Combining Permasteelisa’s position as a premium leader in the market and its scale across EMEA, North and South America as well as parts of Asia, along with Grandland’s industrial integration capabilities and strength in China, will create an even a bigger player in the curtain wall segment globally. While Permasteelisa will maintain its operating independence, the opportunities for operating synergies with Grandland are tremendous.

Such transaction is subject to customary closing conditions and regulatory approvals, including in China, the United States and Russia. The approval process in the United States is still ongoing as of March 31, 2018.

The fiscal year 2018 (April 2017 – March 2018) has been characterized by a better performance compared with the same period of previous year (April – March 2017), both in economic and financial terms; in particular the EBIT normalized has been increased for 11 million of Euro and the Net Financial Position has been improved for approx 87 million Euro thanks to the actions implemented to optimize and to reduce the working capital and to the positive cash flow of new projects.

The order intake has been lower compared with the same period of previous year, in particular for Interiors and Marine Segment.

The new orders acquired during the period April – March 2018 amount to Euro 1,322 million (March 2017: Euro 1,524 million) and the main increase have been recognized in Europe Region (United Kingdom and other European markets, such as France, Switzerland and Poland) and in North America area having the Group been awarded of two iconic towers in San Francisco for around 250 million USD, all in accordance to the market strategy of the Group.

The low acquisition of orders in the Interiors Business Unit has led the management to review the global business model, while for the Marine Business Unit a new strategy has been identified through a possible alliance with one of the most important players in the field of shipbuilding.

The backlog continues to remain over Euro 2 billion, even if it is affected by the weak Euro / USD exchange rate compared to previous year.

The normalized operating profit (Normalized EBIT without the depreciation of the goodwill deriving from the merger operation, carried out in 2010, of the companies Terre Alte S.p.A. and Montrachet S.p.A, hereafter referred to as Monnalisa) achieved in March 2018 is equal to Euro 15.1 million (1.2% on total Revenues), while in March 2017 it was equal to Euro 4.1 million (0.3% on total Revenues). Despite the improvement in the Group's economic performance compared to the previous year, during the period the Group's result has been influenced by the reduction in the margin on some projects, the negative outcome of some legal cases and a lower volume of orders acquired.

The improvement against the previous year has been reached thanks to the better performance recognized on some projects and to the cost savings on the general overheads.

The normalized result before tax (Normalized EBIT) achieved in March 2018 is negative for Euro -14.1 million (March 2017: Euro -22.9 million) due to the impact of financial expenses for Euro 28.6 million (March 2017: Euro 27.0 million).

The financial expenses of the period mainly include:

• interest on financial debt for Euro 4.2 million • hedging costs related to forex exposure for Euro 14.9 million • forex differences arising from non-project related items or not hedgeble items for Euro 6.5 million • bank commissions on collaterals issued in favor of US sureties for Euro 1.3 million • provision for interests on a legal case in Middle East for Euro 1.8 million

Being the Group mainly exposed to GB pound, US dollar and Russian ruble, currencies with an higher interest rate than Euro, the Group bears negative carry forwards, accounted into the financial expenses.

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The normalized net result achieved in March 2018 is negative for Euro -23.6 million (March 2017: Euro -41.1 million) due to the impact of taxes for Euro 9.4 million (March 2017: Euro 18.2 million).

The tax expenses of the period are mainly affected by the tax assessment in Chinese entities for previous fiscal years, which has a total impact on taxes for Euro 3.8 million. In addition the reduction of the Corporate tax rate in USA from 34% to 21% has required an adjustment of the deferred tax assets for Euro 1.9 million.

A continuous effort in terms of working capital management and cash management has allowed the Group to achieve a better net financial position: as of March 31, 2018 it is equal to Euro 295 million compared with Euro 382 million as of March 31, 2017, best result achieved since 2014 year.

The main events that affected the net financial position as of March 2018, against March 2017, are:

• cash collection on a main project in Qatar, for Euro 67 million;

• cash collection on an other project in Qatar, Doha, for Euro 11.5 million;

• cash collection for the old factory sale in Thailandia (formalized in October 2017), for Euro 7.4 million;

• payment of a lawsuit lost on a project in London for Euro 21.8 million. Against this payment an additional shareholder loan has been granted and paid for Euro 20 million;

• finally, during the year, part of the shareholder loan has been repaid for Euro 36.2 million and US 14.8 million as well as to reduce the bank debt with the cash surplus.

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Main economic and financial data To ensure a more precise and significant analysis of the performance of Permasteelisa Group, the economic figures presented in the table below have been appropriately normalized. The closing figures have been adjusted for the effects of the merger of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. occurred in the year 2010 (mainly depreciation of intangible and tangible assets) for Euro 6,649 thousand.

The Group's results for the year 2018 are summarised here below:

€ thousands

IV Quarter 2018

Normalized (Jan-Mar

2018)

IV Quarter

2018 (Jan-Mar

2018)

IV Quarter 2017

Normalized (Jan-Mar

2017)

IV Quarter 2017

(Jan-Mar 2017)

March 31, 2018

Normalized

March 31, 2017

Normalized

March 31, 2018

March 31,

2017

339,063 339,063 338,139 338,139 Operating

revenues 1,276,666 1,286,482 1,276,666 1,286,482

9,248 9,248 20,414 20,414 EBITDA 29,597 20,940 29,527 20,940

2.7% 2.7% 6.0% 6.0% % 2.3% 1.6% 2.3% 1.6%

5,731 4,064 16,089 14,427 EBIT 15,140 4,095 8,491 (2,554)

1.7% 1.2% 4.8% 4.3% % 1.2% 0.3% 0.7% -0.2%

(2,690) (4,357) 10,704 9,042 Result

before tax (14,127) (22,880) (20,776) (29,529)

-0.8% -1.3% 3.2% 2.7% % -1.1% -1.8% -1.6% -2.3%

(3,222) (4,436) 4,737 3,526 Net result (23,574) (41,111) (28,418) (45,955)

-1.0% 1.3% 1.4% 1.0% % -1.8% -3.2% -2.2% -3.6%

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March 31,

2018 March 31,

2017 € thousands

Non current assets (a) 174,193 187,006

Net working capital (b) 279,555 369,930

Severance indemnity fund, pension funds and other employee benefits (c) (31,447) (32,386)

Net Invested capital 422,301 524,550

Net financial debt/(Net cash surplus) (d) 71,490 126,978

Shareholder’s loan (e) 223,661 255,093

Shareholder's equity (including minority interests) (f) 127,150 142,479

Coverage 422,301 524,550

Capital expenditure on tangible and intangible assets 12,289 13,896

Average workforce 5,852 6,248

a) Sum of the captions included in the consolidated statement of financial position referring to notes 15, 16, 18, 19, 20;

b) Sum of the captions included in the consolidated statement of financial position referring to notes 21, 22, 23, 24, 25, 26, 28, 33, 34, 35, 36, 37, 38;

c) Sum of the captions included in the consolidated statement of financial position referring to notes 31 and 32;

d) Caption included in the consolidated statement of financial position referring to note 27 and 30, net of the Shareholder’s loan for Euro 223,661 thousand (Euro 255,093 thousand as of March 31, 2017);

e) Caption included in the consolidated statement of financial position referring to note 30;

f) Caption included in the consolidated statement of financial position referring to note 29.

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Performance for the period The C.T.B.U.H. (Council on Tall Buildings and Urban Habitat), in its report about skyscrapers completed during the past year, highlights that 2017 has definitely been a record year for the geographical distribution of these constructions, with 144 over 200 m tall buildings realized in 69 towns in 23 countries around the world.

These figures, compared to those of year 2016 (127 buildings in 54 towns in 18 countries), suggests that the rate of urbanization is increasing worldwide and, not by chance, the 34% of skyscrapers realized in 2017 have a residential use. China leads the ranking with 76 new skyscrapers (which is the 53% of the total) followed by United States (10 buildings) and South Korea (7 buildings). A long list in which the only European country is Turkey in the fifth position with 4 buildings. The prevalence of Asian countries is clear with 109 buildings equal to the 76% of the total and Shenzhen, for the second consecutive year, is the town where the largest number of skyscrapers has been completed (12 buildings). The year 2017 also set a new record for over 200 m tall skyscrapers, they are infact 144, of which 15 over 300 m tall. There are 1,319 over 200 m tall buildings worldwide, which means 402% more than at the beginning of the new millennium, in 2000 year they were just 263.

Amongst the buildings completed in 2017 it is worth to point out:

• The Ping An Finance Center of Shenzhen, 599 m, the tallest building of 2017, the forth in the global general ranking;

• The Skyland Towers of Istanbul, 284 m, in the seventh position of the tallest European skyscrapers; • The Britam Tower of Nairobi, 201 m, the tallest building in Kenya and at the second position amongst the

tallest skyscrapers in Africa.

During the year Permasteelisa Group has obtained several important iconic projects, but the true challenge is a more incisive commercial penetration in China. During the year the order intake has been definitely lower than last year particularly for Interior and Marine Business Units as detailed in the graph below.

The effect of the Brexit decision and the possible geographical re-allocation of the investments foreseen in the UK market will have to be carefully evaluated since it could be a chance for the Group that is well placed in all the European markets where ex-UK investments could be potentially repositioned.

The EBITDA of the period, equal to 29.6 million Euro, has been characterized by some events that have negatively contributed to the company’s performance, amongst which:

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• The delay of the order intake in Interiors and Marine Business Units, that for the projects nature generates a faster margin, has strongly influenced the contribution expected from new projects.

• Some claims towards clients have not been deemed to have reached an advanced negotiation stage and, therefore, have not been recorded as revenues according to IAS 11. However, since the costs have been already accounted for, a momentary imbalance has been generated. The management expects these claims to reach an advanced negotiation stage in the following quarters and consequently, to be duly accounted for in the near future.

• The Group continued having a prudent approach, like in the previous year, in evaluating risks related to credit collection and project completion, expecially in the areas of Asia and Middle East.

• The final account reached for some projects, which allowed the collection of outstanding receivables, has generated a reduction in the revenues mainly related to some variations not fully recognized.

• Finally, following the assessment on the projects carried out by the new management of Permasteelisa North America Corp., a reevaluation of the costs to complete on some projects in the USA has been performed and the associated losses have been recognized.

The net financial costs, equal to Euro 28.6 million, are substantially linked to the forward points linked to the currency hedging, in particular in Russian ruble and in US dollar, and due to the negative carry of the interest rates toward Euro in addition to the cost of debt.

The net result after depreciations (including the effect deriving from the merger occurred in the year 2010 between Terre Alte S.p.A. and Montrachet S.p.A. at that time parent companies of Permasteelisa S.p.A.) and after taxes is a loss of Euro 28.4 million against a loss of Euro 45.9 million in the previous year.

The Group continued to reimburse the installments of the Shareholder’s loan as well as part of the Banks debt.

During the year the Group has implemented a plan to reduce the overheads costs, reducing all external services costs with savings of 15-20% for the main fixed costs items, such: consultancies, rental costs, traveling expenses and other indirect costs non-project related. Furthermore the Group has carried out the rationalization in Engineering and Production processes with a view to preserve and increase profitability in the next years, as well as its capacity to generate positive cash flows in the different geographic and market context.

Performance on the market: new orders, backlog, Group positioning

ORDERS ACQUISITION

The table here below provides a breakdown of new orders for the period April – March by product range. New orders for Curtain walls amounted to Euro 1,171 million (March 2017: Euro 1,305 million) and those for Interiors, Contract and Marine to Euro 151 million (March 2017: Euro 219 million).

The acquisition of new orders is thus divided between the different products:

€ thousands

IV Quarter IV Quarter

2018 2017 March 31, % March 31, % Variation Variation % (Jan-Mar18)

(Jan-Mar17)

2018 2017

330,933 387,600 Curtain walls-

Aluminum 1,073,490 81.2 1,212,026 79.5 (138,536) -11.4

1,475 1,082 Curtain walls-Steel 97,372 7.4 92,744 6.1 4,628 5.0

332,408 388,682 Subtotal Curtain walls

1,170,862 88.6 1,304,770 85.6 (133,908) -10.3

(58) 90 Glazed Metal Works 5,124 0.4 6,999 0.5 (1,875) -26.8

20,490 20,255 Shops 87,659 6.6 121,074 7.9 (33,415) -27.6

20,432 20,345 Subtotal Interiors 92,783 7.0 128,073 8.4 (35,290) -27.6

11,415 14,424 Contract 44,263 3.3 41,718 2.7 2,545 6.1

3,479 6,369 Marine 14,205 1.1 49,492 3.3 (35,287) -71.3

367,734 429,820 Totale orders 1,322,113 100.0 1,524,053 100.0 (201,940) -13.3

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

Breakdown of the Curtain walls segment (aluminum and steel) by geographical area:

€ thousands



(Jan-Mar17)

2018 2017

100,230 125,396 North America 475,125 40.6 496,303 38.0 (21,178) -4.3

(31) 280 South America

(48) 0.0 28,691 2.2 (28,739) -100.2

165,931 77,469 UK + Ireland 357,082 30.5 289,061 22.1 68,021 23.5

179 54,891 France 24,692 2.1 116,856 9.0 (92,164) -78.9

4,029 1,327 Germany 25,524 2.2 7,370 0.6 18,154 246.3

9,374 11,100 Switzerland 46,629 4.0 42,277 3.2 4,352 10.3

0 0 Italy 0 0.0 275 0.0 (275) -100.0

3,930 1,430 Spain 12,687 1.1 7,405 0.6 5,282 71.3

8,665 (911) Russia 40,475 3.5 (205) 0.0 40,680 n.a.

181 623 Other Europe 34,219 2.9 (33) 0.0 34,252 n.a.

192,289 145,929 Subtotal Europe

541,308 46.3 463,006 35.5 78,302 16.9

(89) 1,100 Middle East 13,423 1.1 111,924 8.6 (98,501) -88.0

49 2 Central Asia 2,714 0.2 196 0.0 2,518 n.a.

8,901 12,839 Australia 32,235 2.8 30,287 2.3 1,948 6.4

1,094 1,171 Hong Kong 33,344 2.8 46,553 3.6 (13,209) -28.4

30,013 5,725 China 68,898 5.9 26,358 2.0 42,540 161.4

330 25,899 Japan 5,188 0.4 25,095 1.9 (19,907) -79.3

(378) 70,341 Other Asia (1,325) -0.1 76,357 5.9 (77,682) -101.7

39,960 115,975 Subtotal Asia 138,340 11.8 204,650 15.7 (66,310) -32.4

332,408 388,682 Total Exteriors 1,170,862 100.0 1,304,770 100.0 (133,908) -10.3

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Breakdown of the Interiors segment by geographical area:

€ thousands


2018 2017 March 31, % March 31, % Variation Variation % (Jan-Mar18) (Jan-Mar17)

2018 2017

6,096 (1,688) America 12,189 13.1 17,727 13.9 (5,538) -31.2

127 1,195 UK + Ireland 7,556 8.1 5,412 4.2 2,144 39.6

(131) 338 Russia 1,122 1.2 2,346 1.8 (1,224) -52.2

185 214 Italy 978 1.1 2,484 2.0 (1,506) -60.6

30 104 France 154 0.2 824 0.6 (670) -81.3

(6) 992 Other Europe 795 0.9 2,687 2.1 (1,892) -70.4

205 2,843 Subtotal Europe

10,604 11.5 13,753 10.7 (3,148) -22.9

293 6,570 Middle East 2,850 3.1 15,078 11.8 (12,228) -81.1

5,480 1,412 Hong Kong 18,075 19.5 37,284 29.1 (19,209) -51.5

6,551 3,472 China 26,452 28.5 21,903 17.1 4,549 20.8

489 2,484 Japan 8,301 8.9 7,965 6.2 336 4.2

1,318 5,252 Other Asia 14,311 15.4 14,363 11.2 (52) -0.4

13,838 12,620 Subtotal Asia 67,139 72.3 81,515 63.6 (14,376) -17.6

20,432 20,345 Total

Interiors 92,783 100.0 128,073 100.0 (35,290) -27.6

Breakdown of the Contract segment by geographical area:

€ thousands


2018 2017

March 31, % March 31, % Variatio

n Variation % (Jan-Mar18) (Jan-Mar17)

2018 2017

9,705 2,139 America 33,118 74.8 29,738 71.3 3,380 11.4

1,442 1,758 Italy 3,487 7.9 (452) -1.1 3,939 n,a,

302 579 UK 1,443 3.2 3,219 7.7 (1,776) -55.2

69 (130) Other Europe

210 0.5 3,866 9.3 (3,656) -94.6

(103) (48) Middle East 6,005 13.6 (4,779) -11.5 10,784 n,a,

0 10,126 Hong Kong 0 0.0 10,126 24.3 (10,126) -100.0

11,415 14,424 Total Contract

44,263 100.0 41,718 100.0 2,545 6.1

Breakdown of the Marine segment by geographical area:

€ thousands

IV Quarter

IV Quarter

March 31,

%

March 31,

%

Variation

Variation %

2018 2017 2018 2017 (Jan-Mar18)

(Jan-Mar17)

162 4,197 Italy 10,307 72.6 37,000 74.8 (26,693) -72.1

3,317 (148) France 3,898 27.4 10,172 20.5 (6,274) -61.7

0 2,320 Norway 0 0.0 2,320 4.7 (2,320) -100.0

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3,479 6,369 Total

Marine 14,205 100.0 49,492 100.0 (35,387) -71.3

During the period April 1, 2017 – March 31, 2018, the Group recorded order cancellations for 43 million Euro in America (Euro 8 million in Spain, Euro 45 million in Dubai, Euro 54 million in Saudi Arabia and 5 million Euro in America in the previous period April 1, 2016 – March 31, 2017).

Backlog

- Curtain Walls

The economic backlog of curtain walls as of March 31, 2018 amounts to 1,995.1 million Euro, as detailed by geographical area in the table below

€ million March 31,

2018 % March 31,

2017 %

Europe 356.9 17.9 370.0 17.7

United kingdom 471.6 23.6 340.0 16.2

Middle East 83.6 4.2 135.6 6.5

America 773.3 38.8 838.1 40.0

Asia 309.7 15.5 410.8 19.6

Total 1,995.1 100.0 2,094.5 100.0

- Contract

The economic backlog of contracts as of March 31, 2018 amounts to 60 million Euro, as detailed by geographical area in the table below:


2018 % March 31,

2017 %

Europe 2.1 3.5 3.3 5.5

United kingdom 1.5 2.5 2.7 4.5

Middle East 3.6 6.0 4.7 7.8

America 44.1 73.5 39.3 65.3

Asia 8.7 14.5 10.2 16.9

Total 60.0 100.00 60.2 100.00

- Marine

The economic backlog of marine as of March 31, 2018 amounts to 43 million Euro, as detailed by geographical area in the table below:


2018 % March 31,

2017 %

Italy 31.5 73.3 37.0 76.3

France 8.9 20.7 9.3 19.2

Norway 2.6 6.0 2.2 4.5

Total 43.0 100.0 48.5 100.0

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Operating performance - Results

Operating revenues

As detailed in the table below, operating revenues for the period April – March, by product and by geographical area, amounted to 1,276,666 thousand Euro, with a decrease of 0.8% compared to the previous year (March 31, 2017: Euro 1,286,482 thousand).

Operating revenues broken down by product are shown below:

€ thousands



2018 2017

272,182 290,228 Curtain walls -

Alumium 1,045,547 81.9 1,108,990 86.2 (63,443) -5.7

24,472 8,659 Curtain walls - Steel 55,330 4.3 22,815 1.8 32,515 142.5

296,654 298,887 Subtotal Curtain walls

1,100,877 86.2 1,131,805 88.0 (30,928) -2.7

3,943 7,591 Glazed Metal Works

21,130 1.7 20,983 1.6 147 0.7

22,025 20,727 Shops 98,104 7.7 103,282 8.0 (5,178) -5.0

25,968 28,318 Subtotal Interiors 119,234 9.4 124,265 9.6 (5,031) -4.0

7,501 9,999 Contract 36,217 2.8 29,283 2.3 6,934 23.7

8,940 935 Marine 20,338 1.6 1,129 0.1 19,209 n.a.

339,063 338,139

Total Operating Revenues

1,276,666 100.0 1,286,482 100.0 (9,816) -0.8

Breakdown of the Curtain walls segment (aluminum and steel) by geographical area:

€ thousands



(Jan-Mar18)

2018 2017

106,936 113,259 North America 381,840 34.7 463,227 40.9 (81,387) -17.6

3,374 3,232 South America 13,025 1.2 4,417 0.4 8,608 194.9

64,302 60,724 UK + Ireland 236,010 21.4 229,567 20.3 6,443 2.8

16,568 9,281 France 44,009 4.0 42,974 3.8 1,035 2.4

1,125 1,879 Germany 12,234 1.1 15,625 1.4 (3,391) -21.7

10,745 5.666 Switzerland 44,719 4.1 12,223 1.1 32,496 265.9

2,219 344 Italy 3,631 0.3 3,373 0.3 258 7.6

1,850 3,604 Spain 5,495 0.5 7,651 0.7 (2,156) -28.2

16,115 15,892 Russia 75,702 6.9 64,448 5.7 11,254 17.5

1,494 7,928 Other Europe 5,865 0.5 18,418 1.6 (330) -5.3

114,418 99,652 Subtotal Europe 427,665 38.8 382,056 33.8 45,609 11.9

23,748 15,854 Middle East 56,424 5.1 47,259 4.2 9,165 19.4

710 3,494 Central Asia 3,189 0.3 14,122 1.2 (10,933) -77.4

7,555 4,559 Australia 21,747 2.0 15,332 1.3 6,415 41.8

20,442 36,811 Hong Kong 107,061 9.7 101,952 9.0 5,109 5.0

14,148 18,183 China 70,240 6.4 77,245 6.8 (7,005) -9.1

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(107) 542 Singapore 790 0.1 6,851 0.6 (6,061) -88.5

2,066 3,157 Japan 8,230 0.7 11,920 1.1 (3,690) -31.0

3,364 144 Other Asia 10,666 1.0 7,424 0.7 3,242 43.7

47,468 63,396 Subtotal Asia 218,734 19.9 220,724 19.5 (1,990) -0.9

296,654 298,887 Total Exteriors 1,100,877 100.0 1,131,805 100.0 (30,928) -2.7

Breakdown of the Interiors segment by geographical area:

€ thousands



(Jan-Mar17)

2018 2017

1,392 6,224 America 13,633 11.4 26,450 21.3 (12,817) -48.5

1,700 3,235 UK + Ireland

6,978 5.9 15,323 12.3 (8,345) -54.5

296 149 Russia 1,339 1.1 2,521 2.0 (1,182) -46.9

770 7 Italy 2,015 1.7 1,985 1.6 30 1.5

(6) 264 France 149 0.1 1,146 0.9 (997) -87.0

57 471 Other Europe

1,968 1.6 1,793 1.5 175 9.8

2,817 4,126 Subtotal Europe

12,449 10.4 22,768 18.3 (10,319) -45.3

821 2,603 Middle East

8,660 7.3 6,760 5.4 1,900 28.1

2 4 North Africa

5 0.0 2 0.0 3 150.0

8,599 8,806 Hong Kong 41,228 34.6 29,779 24.0 11,449 38.4

7,321 4,855 China 21,749 18.2 21,791 17.5 (42) -0.2

1,858 707 Japan 8,443 7.1 2,294 1.9 6,149 268.0

3,158 993 Other Asia 13,067 11.0 14,421 11.6 (1,354) -9.4

20,936 15,361 Subtotal Asia

84,487 70.9 68,285 55.0 16,202 23.7

25,968 28,318 Total

Interiors 119,234 100.0 124,265 100.0 (5,031) -4.0

Breakdown of the Contract segment by geographical area:

€ thousands



2018 2017

2,396 7,242 America 23,168 64.0 15,408 52.6 7,760 50.4

717 2,004 Italy 3,139 8.7 12,853 43.9 (9,714) -75.6

563 512 United Kingdom 1,924 5.3 1,022 3.5 902 88.3

684 1,263 Other Europe 2,246 6.2 1,520 5.2 726 47.8

3,136 (2,320) Middle East 5,733 15.8 (3,134) -10.7 8,867 n,a,

0 1,293 Central Asia 0 0.0 1,416 4.8 (1,416) -100.0

5 5 Hong Kong 7 0.0 198 0.7 (191) -96.5

7,501 9,999 Total Contract 36,217 100.0 29,283 100.0 6,934 23.7

20

Breakdown of Marine revenues by geographical area is shown below:

€ thousands



2018 2017

5,908 207 Italy 13,420 66.0 207 18.3 13,213 n.a.

1,883 680 France 4,975 24.4 874 77.4 4,101 n.a.

1,149 48 Norway 1,943 9.6 48 4.3 1,895 n.a.

8,940 935 Total Marine 20,338 100.0 1,129 100.0 19,209 n.a.

Profitability

The normalized consolidated data of year ended on March 2018 show a positive EBITDA of Euro 29.6 million (March 2017: positive EBITDA of Euro 20.9 million), that corresponds to 2.3% of operating revenues (March 2017: 1.6%), and a positive normalized EBIT of Euro 15.1 million (March 2017: positive normalized EBIT of Euro 4.1 million), that corresponds to 1.2% of operating revenues (March 2017: 0.3%).

Financial performance - Results

The consolidated non-current assets amounted to Euro 174,193 thousands (March 2017: Euro 187,006 thousand); the decrease of Euro 12,813 thousand compared to the closing figures of the previous year is mainly due to the negative effect of exchange rates (approximately Euro 2.4 million) and the increase given by new investments (approximately Euro 12.3 million), net of the depreciation for the year (approximately Euro 21.1 million).

The consolidated net working capital presents a positive value for approximately Euro 279,555 thousand (March 2017: Euro 369,930 thousand), showing a decrease compared to the closing figures of the previous year due to the reduction in the operating working capital (i.e. the sum of the assets for contracts work-in-progress, inventories and trade receivables minus liabilities for contracts work-in-progress and trade payables and advances from customers) from Euro 426,943 to Euro 298,892 thousand.

The Group net financial position shows at the year ended March 2018 a negative balance of Euro 295,151 thousand compared to the previous year negative balance of Euro 382,071 thousand (March 2017).

The net financial expenses are equal to Euro 28,649 thousand at March 2018 compared to Euro 26,975 thousand for the previous year March 2017. For more details, please refer to the comments under the note “11 – Net financial expenses”.

The net consolidated equity (including minority interests) decreases from Euro 142,479 thousand to Euro 127,150 thousand; the negative variation for Euro 15,329 thousand is mostly due to:

€ thousands

- loss of the period Euro (28,418)

- translation reserve variation Euro (10,224)

- hedging reserve variation Euro 23,252

- gain/(losses) actuarial variation Euro (73)

- other variations Euro 134

21

Investments

The investments as of March 31, 2018 were equal to approximately Euro 12.3 million of which approximately Euro 11.1 million for technical investments and the remaining for software and other intangible activities.

€ thousands March 31,

2018

March 31, 2017

Land and buildings 640 520

Machinery and equipment 2,098 1,565

Equipment 1,895 4,132

Other tangible fixed assets 3,889 2,946

Fixed assets in progress 2,617 838

Total Technical investments 11,139 10,001

The main increases were recorded in Germany for Euro 5.1 million (March 2017: Euro 4.8 million), in Italy for Euro 0.9 million (March 2017: Euro 0.6 million), in Great Britain for Euro 0.5 million (March 2017: 0.5 million), in America for Euro 1.9 million (March 2017: Euro 1.1 million), in Asia for Euro 0.8 million (March 2017: Euro 1.1 million), in Netherlands for 0.8 million (March 2017: 0.6 million) and were mainly incurred to enhance production capacity and replace or renew plants and equipments.

In October 2017, the sale of the production site in Thailand has been completed; for more details, reference is made to the comments in note 16 "Tangible fixed assets" of these Explanatory Notes.

22

23

Overview of ongoing projects and main project acquisitions

Permasteelisa Group's main ongoing projects for the year ended March 2018 have been broken down into the

Group's two main sectors:

Exteriors

Interiors & Contract

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MAIN PROJECT ACQUISITIONS AS OF MARCH 31, 2018

Battersea Power Station - Phase 3A, Prospect

Place

London – United Kingdom

Design Architect: Gehry Partners, LLP

Executive Architect: Adamson Associates (International) Ltd.

The iconic Battersea Power Station project aims to bring back to life both the Power Station facility itself and the surrounding area situated along the banks of the River Thames. More precisely Phase 3 involves the construction of around 1,300 homes in a range of styles and sizes, along with a 160-room hotel, restaurants, leisure facilities and retail spaces. The scheme is developed in two different phases: Phase 3A and Phase 3B. Frank Gehry has designed Prospect Place, a complex of five buildings located on the opposite side of Electric Boulevard with undulating façade offering luxury apartments, penthouses and townhouses, each boasting terrace or winter garden, and sitting above double heights retail and dining spaces. The project is acquired by Permasteelisa (UK) Limited and it will be developed in partnership with Permasteelisa S.p.A. Completion is scheduled in late 2020. Scope of Work: two Frank Gehry's buildings of the Phase 3A. The

scope includes design, supply and installation of around 27,200 sqm (292,700 sq ft) of complex 3D shaped envelope, including unitized and stick system façades.

Geneva Airport, Aile Est

Geneva - Switzerland

Architect: Rogers Stirk Harbour + Partners

Executive Architect: Atelier d'architecture Jacques Bugna

The Aile Est (East wing) project represents an important improvement for Genève Aéroport in terms passenger comfort and flexibility of its operation. The project is designed to meet the objective of delivering an energy positive building in regards to energy consumption. To maximize daylight to a neighboring building to the landside and to eliminate the risk of glare from the fully glazed façade facing the airfield the building leans at 26 degrees to the vertical. The project is acquired by Josef Gartner Switzerland AG and it will be developed in partnership with Josef Gartner GmbH. Completion is scheduled in 2019. Scope of Work: 16,200 sqm (174,375 sq ft) of façade area. Steel and glass façades, louvres, louvre windows, doors.

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KGX1 Project - Google UK Headquarters


Architect: BIG & Heatherwick Studio

KGX1 will be Google's UK headquarters. It is designed by BIG and Heatherwick Studio and is located in King’s Cross, at the heart of one of the most exciting and recently redeveloped neighborhoods in north London. The project reflects Google’s unique approach to the creation of a large headquarters building in an urban environment. The so-called “landscraper” is 330 m (1,082 ft) long and up to eleven stories high, with approximately 687,000 sqm of office space. The main contractor is Lendlease. Upon its completion, Google's King's Cross campus will be able to house approximately 7,000 employees, thus strengthening the economy of the so-called Knowledge Quarter, a new world-class centre for research under development in this area. Scope of Work: KGX1 will have the world’s biggest timber and glass façade. Engineered and produced in Germany and the UK, with a total surface of approx. 23,300 sqm (250,700 sq ft), made of nearly 1,000 timber mullions which span up to three floors, 1,975 glass panels, 1,675 sun blinds and 3,600 t of precast units.

International Quarter London – Building S9



Sitting within a 22-acre site that connects seamlessly to Queen Elizabeth Olympic Park and the emerging Cultural and Education District, the new International Quarter London is in the heart of Stratford. Adjacent to the cultural and education district, Building S9 is part of the wider International Quarter project that comprises 12 buildings in total. The building is a split-level commercial development of 5 & 9 stories, and will form the new offices of Cancer Research UK. The full-height glazing allows natural light to penetrate all sides of the building, and this, coupled with a large floor plates and a central atrium, create a healthy and vibrant working space for staff and clients. The project is acquired by Permasteelisa (UK) Limited and will be developed in collaboration with Scheldebouw B.V. The completion is due at the beginning of 2019. Scope of Work: 14,300 sqm (153,900 sq ft) of unitized office curtain wall, principally with Closed Cavity Façade (mfreeS-CCF) panels and intregrated blinds. The Project is managed with PMF, the program developed by Permasteelisa Group for project management.

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JNBY Headquarters

Hangzhou - China

Architect: Renzo Piano Building Workshop, architects in

collaboration with Greentown Orient Architects (Hangzhou)

Ph: © RPBW – Render by Cristiano Zaccaria and Stefano D’Atri

This large-scale development comprises a series of low-rise buildings sitting on a so-called "superblock", a gated community measuring around 45,500 sqm (489,800 sq ft). Most facilities, hosting offices, event space, art centers, designer shops and retail area, are placed around the perimeter of the campus thus creating an extensive backyard, “the Urban Park”. The buildings facing the Park, feature extensive green planted façades, which act as solar shading devices, while the other elevations are equipped with aluminum panels, fritted glass, and architectural concrete. IGU (Insulating Glass Units) façades with low-e coating and motorized sunshades systems permit to control daylighting and improve thermal efficiency, thus ensuring maximum comfort to the internal spaces. The project is acquired by Josef Gartner Curtain Wall (Shanghai) Co. Ltd. and will be developed in collaboration with Josef Gartner Curtain Wall (Suzhou) Co., Ltd. The completion is due in mid-2019. Scope of Work: 19 low-rise office buildings, for a total façade area of around 87,300 sqm (939,700 sq ft) of IGU façades with low-e coating and motorized sunshades.

Oceanwide Center

San Francisco, CA - USA

Architect: Foster + Partners

Collaborating Architect: Heller Manus Architects

Ph: © Foster + Partners / Heller Manus Architects

The new addition to San Francisco’s downtown is a mixed-used development located in the Transbay neighborhood, at the corner of First and Mission Streets. Designed by Foster + Partners, the development by Oceanwide Holdings will comprise two high-rise towers and provide the city with 93,000 sqm (1M sq ft) of office space, 265 luxury residential units and a 171-key luxury hotel. The tallest tower, on First Street, will rise 277 m (910 ft) and is going to become the second tallest in the city. The 61-story building mixed-use residential and office tower will have a curtain wall which incorporates recessed, stainless steel diagrid cladding, floor-to-ceiling high performance glass, and a custom aluminum profile, for a total of 11,500 units. The second tower, on Mission Street, will rise 197 m (645 ft). This elegant 54-story mixed-use residential and hotel building will have a cladding that features unique 'glass vitrine' windows, in a modern interpretation of the traditional bay window buildings. The project, acquired by Permasteelisa North America Corp., will be developed in partnership with Permasteelisa S.p.A.

and Josef Gartner GmbH, and is due for completion in 2021. Scope of work: First Street Tower: 67,800 sqm (730,000 sq ft) of curtain wall. Mission Street Tower: approx. 28,000 sqm (300,000 sq ft) of single skin aluminum façade with natural stone cladding and 'glass vitrine' windows.

First Street Tower: 277 m (910 ft)

Mission Street Tower: 197 m (645 ft)

27

UTS Central

Sydney – Australia

Architect: Francis-Jones Morehen Thorp (FJMT)

Located on the corner of Broadway and Jones Street, at the heart of the University of Technology Sydney (UTS) City Campus, the project consists of the redevelopment of the existing Building 2 and the construction of a state-of-the-art, 16-story high facility for students and research. The new scheme features a glass-encased podium (levels 3 to 7) and a nine-level, twisted tower dedicated to various research activities. The new building's two belowground floors (levels 1 and 2) house a large Science lab for around 250 students. An outdoor terrace on level 8 runs the full length of the building providing an excellent point overlooking Alumni Green, a central meeting place for the university community. The project, acquired by Permasteelisa PTY Ltd., will be developed in partnership with Dongguan Permasteelisa Curtain Wall Co. Ltd. and Global Architectural Co., Ltd. It is due to completion in late 2018. Scope of Work: 9,000 sqm (96,800 sq ft) of mfreeS-CCF system, combined with soffits and ledges that give to the building a "Twisting" form.

Varso Tower

Varsavia - Polonia


Ph: © Foster + Partners

Varso Tower is a flagship, mixed-use scheme to be developed in central Warsaw, directly opposite the Zlote Tarasy shopping centre; the complex includes one of Europe's tallest tower and two mid-rise buildings. Varso Tower is planned to be linked with the Central Railway Station trough an underground corridor and it houses shops, restaurants and cafes on the ground levels, a large parking garage on three underground floors plus around 140,000 sqm (1,507,000 sq ft) of high-quality, flexible office space on the upper floors. Furthermore, the development features an observation deck at 230 m (754 ft) and a glazed public courtyard at ground level. The scheme includes state-of-the-art technologies to reduce water and energy consumption and aims at BREEAM Outstanding certification. The project is acquired by Scheldebouw B.V. and is due for completion in late 2019.

Scope of work: 49,400 sqm (531,700 sq ft) of standard panelized system with triple glazing.

310 m (1,017 ft)

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MAIN ONGOING PROJECTS AS OF MARCH 31, 2018

45 Park Place

New York, NY – USA

Design Architect: SOMA Architects

Architect of Record: Ismael Leyva Architects, P.C.

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

DUO Towers

Paris – France

Architect: Ateliers Jean Nouvel

Located in the Bruneseau-Massena district, this mixed-use complex will host offices, hotels, commercial activities for a total area of about 105,250 sqm (1,132,901 sq ft). The project comprises two towers: DUO1 - 180 m / 591 ft tall - for commercial use and with shops at the Group floor and DUO2 - 120 m / 400 ft tall - will be the seat for a hotel, shops and office spaces. The project, acquired by Permasteelisa France S.a.s., is developed in partnership with Permasteelisa S.p.A and is due for completion in 2020. The 27- and 39-levels buildings offer extremely flexible spaces which enable the tenants multiple configuration options for the offices. Furthermore the scheme is designed to respect the highest standards of environmental and energy performances.

203 m (666 ft)

DUO 1: 180 m (591 ft)

DUO 2: 120 m (400 ft)

29

Folsom Bay Tower

San Francisco, CA – USA

Architect: Studio Gang

Ph.: Courtesy of Studio Gang

Folsom Bay Tower is a 39-story landmark tower located on the easternmost corner of the Transbay Redevelopment Area in San Francisco. The tower twists around the core, creating a spiraled façade that rises 122 m (400 ft). The tower offers around 900 sqm (10,000 sq ft) of retail space fronting Folsom and Main Streets. The design is an evolution of the classic San Francisco bay window, twisting incrementally over the height of the tower to provide views, light and air to the residential units and, at the same time, improve its energy performance. The project aims to the certification goal of LEED Silver®. The project is acquired by Permasteelisa North America Corp. and is due for completion in 2019.

Torre Atrio Bogotà

Bogotà – Colombia

Architect: Rogers Stirk Harbour + Partners (RSHP) Atrio is a major mixed-use commercial development located at the intersection of Calle 6 and Avenida Caracas, in Bogotà that features two towers - North and South - which will redefine the city’s skyline. The North Tower will offer office, residential and retail space. The project is acquired by Permasteelisa S.p.A. and developed in partnership with Permasteelisa Colombia S.A.S. The project involves the design, production and installation of 14,800 sqm (159,300 sq ft) of unitized curtain walling system, 8,000 sqm (86,100 sq ft) of cladding, 11,900 sqm (128,100 sq ft) of unitized façades, 3,000 sqm (32,300 sq ft) of stick façades, glass parapets and canopies. The Project is managed with PMF, the programme developed by Permasteelisa Group for project management and it shall be completed during the first months of 2019. Scope of work: 58,500 sqm (629,700 sq ft) of double and single stick façade, glass roofs and louvres.

122 m (400 ft)

200 m (656 ft)

30

PNB 118

Kuala Lumpur – Malaysia

Architect: Fender Katsalidis Architects

RSP Architects Planners & Engineers

PNB 118 is a 635 m (2,083 ft) tower under construction in Kuala Lumpur. The development’s phase 1 comprises an iconic 118-story mega-tall tower that will be completed by 2020; the whole development will reach its completion by 2024. Tower: around 123,000 sqm (1,324,000 sq ft) of unitized curtain wall, GRP cladding to the spire (135 m / 443 ft tall). Podium: 27,000 sqm (290,626 sq ft) of curtain wall, canopy, skylight sloping glazing, storefront, column cladding, stick system glass wall. The project was acquired by Global Wall (Malaysia) Sdn Bhd.

Sporting d’Hiver

Monte Carlo – Principality of Monaco


Co-Architect: Alexandre Giraldi Architecte D.P.L.G.

The Sporting d'Hiver complex is located in the very heart of Monte Carlo and features a series of mixed-use pavilions that provide residential, office and retail space, together with a 3,000 sqm (32,300 sq ft) conference facility, new pedestrianized spaces with restaurants and an art gallery. The organization of the residential blocks is modular, allowing for a wide range of apartment fit-out options. A contractible façade system installed on each module's

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

635 m (2,083 ft)

31

Uber Headquarters


Architect: SHoP Architects

Located in the Mission Bay neighborhood of San Francisco, the

development includes two buildings offering around 39,000 sqm

(420,000 sq ft) of office space: an 11-story tower at 1455 Third Street

and a 6-story structure at 1515 Third Street. Both structures feature

state-of-the-art transparent, motorized "breathing" façades, which

open to full high atrium. The two buildings are connected by a series

of three angling glass-and-steel bridges. The project, acquired by

Permasteelisa North America Corp., will be developed in partnership with Bleu Tech Montreal Inc., Josef Gartner

GmbH and Permasteelisa S.p.A. and is due for completion in early 2019.

32

MAIN COMPLETED PROJECTS AS OF MARCH 31, 2018

10 Fenchurch Avenue

London - United Kingdom

Architect: Eric Parry Architects

Project designed by Eric Parry Architects acquired by Permasteelisa (UK) Limited and developed in partnership with Josef Gartner GmbH. The iconic building provides commercial office space, retail use at the lower levels and a public passageway at street level, but it also incorporates a publicly accessible rooftop garden. Design, production and installation of 18,000 sqm (193,750 sq ft) of terracotta panels and sunscreen louvres with flip-flop paint, mfreeS-CCF and stick system façade. Completed at the beginning of 2018.

41 Tehama


Architect: Arquitectonica

Designed by the architectural firm Arquitectonica, 41 Tehama is a 36,000 sqm (389,000 sq ft) new luxury multifamily complex located in San Francisco’s South of Market (SoMa) neighborhood. 16,100 sqm (173,300 sq ft) of curtain wall, window wall and doors, 900 sqm (9,700 sq ft) of glass balconies, 100 sqm (1,100 sq ft) of windscreen and 600 sqm (6,500 sq ft) of metal panels, soffits and canopies.

Bloomberg



Bloomberg’s new European HQ is a pioneering building complex which utilizes unique forms and material. The distinctive façade features floor-to-ceiling glazing with large-scale bronze vertical wings installed at different angles for sun and glare protection and engineered to optimize natural ventilation via centrally controlled ventilation flaps integrated into the façade. Glass and metal curtain wall (21,000 sqm / 226,050 sq ft), curved steel and glass façade (3,820 sqm / 41,100 sq ft) for the ground floor, arcade, glass façade, glass roof (1,500 sqm / 16,100 sq ft), stepped ramp clad in bronze, panoramic glass lifts and sliding doors.

Columbia University - Lenfest Center for the Arts

New York, NY – USA

Architect: Renzo Piano Building Workshop in collaboration with Davis Brody Bond LLP (New York),

architects

The Lenfest Center for the Arts is part of the new Manhattanville campus of Columbia University in NYC. The façade of the eight-story building consists of tall, narrow panels with large cutout openings. Its opaque outer shell consists of 6 mm (0.02 ft) thick aluminum panels which are curved along the long edges. This creates fluent transitions between non-transparent and transparent areas and a homogeneous overall appearance. All façade units extend over two stories, and are up to 8 m (26 ft) high. The 200 sqm (2,153 sq ft) steel and glass skylight is equipped with external grating for sun shading. The 360 sqm (3,875 sq ft) steel and glass storefront on the ground floor has modules of 1.8 m x 4.8 m (5.9 ft. x 15.75 ft). It was realized with custom steel profiles developed exclusively for this project. Aluminum cladding, façade and soffit; steel and glass skylight and storefront for an overall area of over 6,000 sqm (64,600 sq ft).

116 m (380 ft)

33

One Spinningfields Manchester – United kingdom

Architect: SimpsonHaugh and Partners

One Spinningfields is one of the final pieces of the Spinningfields Masterplan in Manchester and replaces the existing 1960’s Quay House. The 19-story commercial building includes 24,800 sqm (267,000 sq ft) of office spaces, retail spaces, a restaurant and a basement car park. The restaurant, located on the top of the building, has a glass-enclosed roof terrace giving patrons unparalleled views of Greater Manchester. 20,900 sqm (225,000 sq ft) of single, double and triple façades. Completed in mid-2017.

Princeton University - Lewis Center for the Arts

Princeton, NJ - USA

Architect: Steven Holl Architects

Associate Architect: BNIM

Different buildings have been added to the Lewis Center for the Arts - including a theater and dance building, an arts building and a music building with practice rooms. Overlook views through the glazed façades into the rehearsal and practice spaces are supposed to become a source of inspiration and to provoke curiosity and interaction. This special double-glazing with capillary infills prevents full transparency yet allows daylight to flood large rooms and theaters. The glass panes of the cable wall façade are up to 5.7 m x 2.95 m in size. Mullion-transom façade (in total 3,000 sqm / 32,300 sq ft) made of vertical and horizontal steel T-profiles; two cable wall façades of 1,200 sqm (12,900 sq ft) each, with 36 mm vertical ropes and horizontal T-profiles.

Shanghai Foxconn Plaza (Foxconn Headquarters)

Shanghai – China

Architect: Kris Yao|Artech

Foxconn Headquarters is a new office development located in Shanghai, more precisely in the Lujiazui financial center by the Huang Pu River. The high-rise building, which has been designed by Kris Yao | Artech, comprises four underground floors and rises to 21 levels. The design includes sustainable features as the building aims to the LEED certification goal. Besides other sustainable features, the building can boast solar panels, a rainwater harvesting system and a geothermal heat exchange system. The project – acquired by Josef Gartner Curtain Wall (Shanghai) Co., Ltd and managed with PMF, the program developed by Permasteelisa Group for project management – consists of the supply and installation of approximately 46,850 mq (504,300 sq ft) of unitized curtain walls. Completed at the beginning of 2018.

34

INTERIORS & CONTRACT

During the year ended as of March 31, 2018, the Group acquired 11 projects from new

and existing clients.

The main acquired projects include:

Tiffany: 26 shops

Ermenegildo Zegna: 23 shops

Lumberjack: 14 shops

L'Oréal: 12 shops

Victoria's Secret: 12 shops

Salvatore Ferragamo: 8 shops

Louis Vuitton: 7 shops

35

Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to No changes in the management approach or events that generate substantial changes in the risk profiles, to which the Group is exposed to, occurred in the year ended March 31, 2018: at the same time, the market fluctuation led the Management to increase the preventive attention to the risks connected to Permasteelisa Group activity. These risks are political, technical and technological, financial and credit, environmental and commercial. The main attention is focused on financial and credit risk: certainly the present growing markets have financial and credit risks higher than main historical markets of the Group (Europe and United States); this fact does not represent a real warning but only more attention.

Risks associated with general economic conditions

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

Risks associated with the Group's results

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

The combination of all these factors and synergies, which have been ongoing for several years with pleasing results, is what allows Permasteelisa Group and its Shareholder to look at future market evolutions assuredly.

Risks associated with financing requirements

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

Risks associated with fluctuations in exchange and interest rates, commodity prices and the cancellation of assigned projects orders

Permasteelisa Group is naturally exposed to market risks associated with fluctuations in exchange rates, interest rates and with prices of commodities that are widely employed in its business (aluminum). As soon as a new project is assigned, these risks are readily covered with financial instruments aimed at fixing both exchange rates (currency swaps) and commodity prices (commodities swaps). Risks deriving from unexpected fluctuation of commodity prices are also mitigated through favorable and commited relationships with suppliers. As mentioned before, because these market risks are immediately covered after the assignment of new projects, both “exchange rate risk” and “commodity price risk” are threatening for the sole period that lies in between the formulation of an offer until its potential assignment (except if the offer, but this only happens rarely, is formulated at current exchange rate/prices). To this extent, after the assignment of a project, the Group is exposed to “exchange risks” and “commodity price risks” only in the case in which a project becomes cancelled, leaving the hedging position uncovered. However, this risk is by every means considerably low and is duly taken care of by rights to reimbursements agreed upon with the client beforehand.

36

Furthermore, in the framework of the consolidation of its accounts, Permasteelisa Group is exposed to "translation" risks as a result of the translation of foreign currency amounts to the Euro. This is, nevertheless, always a risk that is inherently part of a global company's income statement and has not become more critical as a result of the current general crisis of the markets.

Risks associated with relationships with suppliers

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

Risks associated with management

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

Risks associated with competitiveness in the areas the Group works in

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

Risks associated with environmental policies

Environmental policies are by no means a risk to the Group’s operations. Quite oppositely, the Group's environmental policy should be considered an opportunity rather than a risk. Indeed, more restrictive regulations and procedures, especially in the area of bioclimatic and environmentally sustainable architecture, will translate into more favorable market conditions for the company and the Group's products and advanced technologies.

***

As Parent company, Permasteelisa S.p.A. is inherently exposed to the same risks and uncertainties previously described for the Group.

Further details are provided in the dedicated notes to both the Consolidated Financial Statements and the Statutory Financial Statements, including more technical information on the management of some of the business risks illustrated here.

37

The Group’s organizational structure

With regard to the Group's structure, on March 29, 2017, the Consorzio Marine Project Solutions’ Meeting approved

the transformation of the Consorzio into a Società consortile a responsabilità limitata, with an authorized share

capital of Euro 500,000. This transformation has become effective since 9 June 2017.

It should also be noted that during the year just ended, the following companies were established:

- Marine Project Solutions - France Branch;

- Marine Project Solutions - Norway Branch, both headed by the subsidiary and consolidated Marine Project

Solutions Scarl, 55.5% owned by the Parent Company.

Research and Innovation During the reporting period April 1, 2017 – March 31, 2018, Permasteelisa has continued organizational growth and consolidation through continued technical education and the application of Group-wide processes including the introduction of Tender and Site Installation.

The Group has continued to develop, refine and release new applications of its project realization set of tools (PMF) through proprietary curtain wall configuration management and BIM integration. These tools are continuously implemented across the Group and enable a standardized project management and execution platform across all design and production centers. The PMF suite of tools is also interfaced with standardized Group process across all facets of project execution including design, procurement, production and site installation.

In order to streamline and improve project execution efficiency, the innovations and solutions team have continued development of accurate analysis software and tools that enables early stage project decision making particularly in areas of structural adequacy, safety and security as well as energy performance and occupant comfort.

Research and development has continued to deliver onto the market new innovative applications and technologies in the fields of physical protection and energy and sustainability. Research, development and commercialization of patented dissipative façade systems and components have resulted in advancements in blast enhanced façade systems with numerous project applications. Further development of advanced dynamic facades systems such as the mfreeS-CCF integrated with proprietary building management systems has resulted in award-winning holistic energy efficient and occupant comfort focused buildings. In response to market gaps identified as well as trends, future developments and research is being focused in the fields of 3D printing technologies, fire protection and sustainable materials. Group-wide implementation of the research innovations has continued through specialist training in R&D application technologies and associated proprietary developed software tools.

Recognition that design is at the core of the Permasteelisa Group has resulted in the establishment of new innovative training in design-ability and design management and the new company role of Lead Concept Designers. This role is focused on streamlining the role and impacts of design across all aspects of project execution from providing initial conceptual pre-construction service support to architects and clients through to final project delivery and close out. The development of this role and training required has been undertaken with world-leading design schools and universities and subsequently resulted in the commissioning of a number of LCD’s across all regions where the Group is present.

With reference to research and development costs, overall cost for the financial year recorded in the profit and loss account by the Group equated to Euro 2,120 thousands (March 2017: Euro 2,289 thousands) of which Euro 255 thousands (March 2017: Euro 250 thousands) for amortization of costs capitalized over previous financial years under the category “Development costs” included in the item “Intangible assets”.

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Knowledge Sharing Group There are many activities ongoing that started in the beginning of this year. The primary are the following.

With regards of the LCD’s and the selection of the new Candidates, a new path has been created for the proper training of them through the Kolding School of Southern Denmark based on the previous positive experience.

The Permasteelisa Training Accademy, or PTAc, has still an important role for the knowledge sharing in the Group. Currently there are a lot of documentation under preparation regarding the advanced courses for the PTAc II. It is a long process that requires time and experience from the top technical persons that have taken the duty to prepare such material.

Design-Ability courses are still considered and will be repeated to complete and to cover 100% of the pertinent population of technical managers.

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

Information Technology During the fiscal year April 1, 2017 – March 31, 2018, Permasteelisa has achieved a series of development and strengthening plans in the Information Technology area, with the goal of improving and standardize the services provided to the Group companies, through the adoption of new technologies (e.g. Mobile ready applications) and solutions (e.g. CRM) with particular attention to safety and protection of the datas.

With reference to the area of management systems and solutions, particularly in the SAP area, considerable effort has been spent for the diffusion of new solutions to support the Groups’s standard processes in the logistic field (e.g. implementation of the management digital solution of transport documents - Digital Delivery Notes, finalization of the feasibility analysis for the support through RFID of the activities in the Logistics, Production and Site activities, porting on mobile technology for new transactions), revenues and receivable process (e.g. companies roll-out concerning SAP SD solution), purchasing and payable process covering the Asian Companies (PO Management, Contracts, Vendor Invoicing, through business workflows and authorization processes completely managed by SAP).

Two new legal entities have been defined and, concerning new functionalities, during the fiscal year 2018, the project related to the implementation of the new Treasury software solution through SAP Treasury Management has been carried out. Finally, in the production field the project that has determined the definition of a new standard version of the Timesheet has been issued at a Group level in order to account the hours on the project (Timesheet mobile ready on SAP FIORI technology).

Concerning the Group’s Infrastructures, the multi-year plan has continued with the purpose of improving the quality and the availability of the services provided and to respect the mandatory guidelines set out both by the parent company and the new laws.

With particular reference to IT Governance, in order to align the IT procedures and the organization with the new European regulation, the GDPR project has been completed.

Again, with reference to the Group’s infrastructures, the following activities have been carried out: the strengthening of the new perimeter security architecture (Roll-Out of the new Web Content Filtering Solution) that currently covers all the companies of the Group, the project of technological strengthening of the infrastructures and network services aimed at costs optimization, the project for the setup of the new infrastructure HANA for SAP, the standardization and optimization of the process to manage Client operating systems (new logics for Windows 10) and new functionalities and services in Group Datacenter and in IT Disaster Recovery.

Finally, in “Enterprise applications” during the fiscal year 2018 many project activities have been carried out in order to adapt Permasteelisa solutions to BIM standards making the Permasteelisa Group BIM platform (PMF) more consistent with the international standards and able to interface at data level with different market standards. Therefore, it has been completed the new CRM solution for Sales & Tender processes support and a series of specific initiatives in innovative fields thanks to the adoption of a new solution for the Business Process Automation (e.g. QHSE processes management).

39

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

Workforce at year end

Area March 31,

2018 March 31,

2017 Variation

2018-2017

Italy 843 852 (9) Other Europe 1,666 1,630 36 Asia 1,367 1,608 (241) Middle East 435 417 18 Australia 56 47 9 USA 1,422 1,359 63

Total 5,789 5,913 (124)

Average workforce during the period

Area March 31,

2018 March 31,

2017 Variation

2018-2017

Italy 847 852 (5) Other Europe 1,648 1,593 55 Asia 1,488 1,750 (262) Middle East 426 425 1 Australia 52 53 (1) USA 1,391 1,575 (184)

Total 5,852 6,248 (396)

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

Workforce at year end

March 31, 2018

March 31, 2017

Variation 2018-2017

Blue collars 229 224 5 White collars 605 628 (23)

Total 834 852 (18)

Average workforce during the period

March 31, 2018

March 31, 2017

Variation 2018-2017

Blue collars 226 228 (2) White collars 617 624 (7)

Total 843 852 (9)

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Human resources

The current economic environment is characterized by an increasing complexity and high level of competitiveness, which compels Permasteelisa S.p.A. to strengthen the strategy of integration and cooperation within the Group Companies.

Internationality and global vision, as well as the ability to adapt to the differences and peculiarities of local markets and the focus on a more punctual and rigorous interaction between the different Group Companies, are some of the factors that can allow us to compete more efficaciously both in projects of greater complexity and in a wider range of business segments.

Permasteelisa Group is continuing its organizational change process, strengthening its matrix structure, thanks to the redefinition of positions and responsibilities (technical and managerial), the hiring of new managers, and the inclusion of internal resources from other geographical areas of the Group.

In this context, the Human Resources Direction had an increasingly key role in supporting the integration between the various departments within the Organization, focused on providing a careful assistance to business needs and improving the synergies between the different disciplines / areas and the management of internal relations.

Moreover, the Human Resources Direction has played a strategic role in the recruitment of new managers and the inclusion of managers from other geographical areas of the Group, in top management functions.

Significant steps have been made towards the realization of solid and constructive relations with the trade union, signing a three-year second-level agreement, which provides a variable bonus linked to Company Performance and a fixed one through welfare services. With this agreement, the Human Resources Direction laid the foundations for a medium-term period of "social peace", paying high attention to the employees needs reported by the trade union on a daily basis.

The Education and Development program remains an important focus for the Management of Permasteelisa employees. This program, mentioned hereafter, has been developed through trainings for improving managerial, technical and professional skills, and introducing new young talents with apprenticeship contract.

Managerial Training

During the just ended year, Managerial Training was focused, in particular, on the improvement of soft skills and abilities to manage change, addressing both to the top and the middle level management.

Top Management was involved in coaching programs, aiming at improving their leadership style and be more efficient to achieve the business targets.

The coaching sessions therefore were meant to give the people involved the tools that allow them to process and identify their goals, strengthen their effectiveness and performance, adopting managerial behaviors that can reinforce their leadership in transmitting and supporting the ongoing change and integration processes.

Moreover, Permasteelisa invested on the professional growth of the Project Management team with the aim to reinforce the managerial and technical skills of those people who are responsible for respecting the job objectives and productivity.

Specifically, an education program was developed around the relational and technical tools typical of the Project Manager.

As in last years, particular attention was paid to the Performance Appraisal process, crucial for achieving company objectives, organizational development, staff enhancement and orientation, especially in a "challenging" business context, such as the current one.

The Performance Appraisal Process is, in fact, a fundamental element in the implementation of a transparent communication model, focused on aligning the expected behaviors, increasing staff motivation and results orientation, as well as identifying the training needs, defining development plans and possible actions based on meritocracy principles.

The 90% of the employment population has taken part in the evaluation process, sharing the business objectives, with particular attention to the alignment to Lixil Values and to Permasteelisa Leadership models.

Technical and Specialist training

The development plan of technical skills was considerably reinforced during last year, through specific actions and educational courses focused on analyzing the most important technical topics.

41

These courses allowed the attendees to improve specific abilities and new techniques aimed at providing innovative technical solutions, guaranteeing the excellent quality required by the market and always awarded to the Permasteelisa Group.

As for the specific technical training activities, we point out the attention dedicated to the development of skills for 3D modeling that is increasingly requested during the tender phase.

Permasteelisa was also focused on the introduction of the innovative FMEA methodology within the production processes. This method allows to assess the risks already in the first design phases, thus reducing the probability of errors and final performance not in line with our quality standards.

Linguistic Training

The "global" opening of Permasteelisa is now one of the essential conditions for competing on international markets. Actually, the knowledge of foreign languages represents now a necessary requisite in a context in which the markets are increasingly "open" and the interaction between the various legal entities of the Permasteelisa Group is very important for achieving the business results.

Therefore, an important training effort was made in implementing new language courses based on the above mentioned needs. In particular, English, French and Spanish courses were implemented to support new business initiatives.

IT and security training

In the last year, we gave space to the new features that characterize the 2015 revision of ISO 9001 and ISO 13001: 2015.

The training project we developed was aimed at communicating and broadcasting the updates related to the new quality standards, environment and safety and to sensitize to the importance that each function plays for the purposes of environmental protection and the raising of the product quality level.

On the IT side we offered a training course for workers' staff aimed at strengthening the skills on the use of operating systems, welfare management tools as well as time and attendance management system.

Corporate Welfare 2017-2018

Permasteelisa confirms itself for the excellence of its management models and for its avant-garde welfare system within the multinational realities of the territory. During the last year, the employees had a lot of choices among different offers of personal services, through the "Permasteelisa Welfare Box" platform, in which numerous additional services were available. The most used services were coupons, reimbursement for medical expenses and the purchase of school supplies and language courses for the children of our employees.

Moreover, the Company’s welfare policies launched in recent years, such as the nursery school and the inter-company child care school for employees' children were confirmed, as well as the "Prevenire è Vita" project, providing free check-up for all employees with a particular focus on oncology and cardiovascular pathologies.

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

Treasury shares As of March 31, 2018 the Company does not own any treasury shares.

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

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Unconventional or unusual operations There are no entries or transactions resulting from unconventional or unusual operations during the year 2018 having any relevance to the operating performance and the financial position for the period of the Group and of the Parent company Permasteelisa S.p.A.

Significant events subsequent to year end and outlook

Significant events subsequent to year end

There are no significant events subsequent to year end.

Business Outlook

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

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

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

attentive selection of the growth opportunities in the emerging markets;

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

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

Permasteelisa Group has also identified numerous areas of potential expansion:

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

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

the introduction of new projects and the expansion in the related markets;

the retro-fit building;

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

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

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

The backlog level of Permasteelisa Group allows the company to have a good sight of the future development of the market, making it stronger against the volatility of new orders acquisitions and the uncertainty of the current market. However, the management remains strongly committed to defining the closure of some old projects, both in terms of execution and of the amounts due, as well as in the resolution of some legal cases in progress.

As a consequence, the Group faces the financial year 2019 with confidence, counting on a continuously growing economic backlog, featured by a major influence, if compared to the recent past, of the markets within the Group which register higher profitability, such as United States and Europe.

Even though lower revenues are expected for the next year due to a poor order intake of the first months of 2018, Permasteelisa keeps on implementing a strategy of profitability recovery.

The continuation of a virtuous management as well as the confirmation of the capability demonstrated so far to properly react to the frequent and often quick markets’ fluctuations are entrusted to the attentive realization of the policies of commercial and strategic development.

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Other disclosures Pursuant to Leg. Decree 231/2001, Permasteelisa’s Board of Directors, by resolution of March 15, 2017, approved the current version of the Organizational, Management and Control Model that replaced the previous versions approved in 2005, 2007, 2009 and in 2014.

With the adoption of this model, the Company intends to pursue the following main objectives:

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

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

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

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

The Model consists of a General and five Special Sections.

In the General Section are described the contents and the impacts of the Leg. Decree 231/01, the general features of the Model, the categories of Offences that could result in the Company’s liability, the features, the powers and functions of the Compliance Board (that must be named by the Board of Directors), the disciplinary system and the guiding principles of staff training.

In the Special Section are indicated the sensitive activities for the Company pursuant to the Decree, i.e. those at risk of crime, the general principles of behavior, elements of prevention in defense of these activities and the control measures essential for the prevention or mitigation of the offenses, to be transposed into the operational procedures and corporate practices, so as to make them suitable to prevent the commission of crimes.

It is also integral part of the document the following:

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

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

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

The Model is available on the section Financial Info - Governance of the corporate website (www.permasteelisagroup.com).

It is noted that the Permasteelisa’s Board of Directors, by resolution of 30 September 2016, approved the revision of the Group Code of Conduct previously approved at 23rd April 2015, which fully replaces the previous Code of Ethics. The purpose of the Code is to trace a common line in order to operate according to shared principles of integrity, ethics in business activities, respect in the workplace, proper use of corporate assets and contribution to society (social responsibility).

The code is aimed at all those who collaborate with the Group through any form of working relationship or partnership, and clearly and transparently defines the values through which the Group aims to achieve its objectives, as well as the related responsibilities both within the company and externally. Such conduct is essential for the correct function, reliability and reputation of the Group.

In the course of its activities, Permasteelisa considers the respect for the law and relevant regulations of the countries in which it operates as its guiding principle, considering honesty, reliability, impartiality, loyalty, correctness and good faith as key factors for the Group's success.

The Group acknowledges the importance of its ethical-social responsibility in business and it is committed to safeguarding the interests of its stakeholders and others with whom it interacts.

The Code is available on the section Financial Info – Governance – Regulations & Codes of the corporate website: www.permasteelisagroup.com.

Permasteelisa proceeded to update the minimum security measures for the protection of personal data processed in the exercise of its activity, thereby complying with the minimum obligations in relation to privacy protection.

44

The Security Policy Document (DPS) continues to be prepared voluntarily by Permasteelisa, despite Italian Decree Law 9 February 2012, no. 5, removing the obligation to do so.

45

Operating performance and financial position of Permasteelisa S.p.A. The tables below were prepared based on the Statutory Financial Statements for the year ending as of March 31, 2018 which we address to. The Statutory Financial Statements were prepared in compliance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (“IASB”) and certified by the European Union, in addition to the provisions issued pursuant to Art. 9 of Leg. Decree no. 38/2005

Operating performance

The Parent Company's Income statement for the year 2018 shows a profit of Euro 3,090 thousand against the previous year that had closed with a profit of Euro 7,129 thousand.

The summary results are as follows:

€ thousand March 31, 2018

March 31, 2017

Revenues 121,513 126,348

Other operating income 814 751

Total operating revenues 122,327 127,099

Raw materials and consumables used (49,281) (42,881)

Services expenses and use of third party assets (54,683) (52,398)

Personnel expenses (51,191) (53,995)

Net Depreciation, amortization and impairment losses (4,965) (5,419)

Net Bad debts provision (2,193) (1,172)

Net Provision for risks and charges 76 (3,252)

Other operating expenses (302) (336)

Cost Recovery 28,454 30,345

In-house enhancement of fixed assets 5 3

Total operating expenses (134,080) (129,105)

Operating result (11,753) (2,006)

Financial income 89,994 120,672

Financial expenses (71,567) (105,614)

Net financial income (expenses) 18,427 15,058

Revaluation of equity investments 0 1,000

Write-downs of equity investments (4,367) (4,000)

Profit before tax 2,307 10,052

Income tax expense 783 (2,923)

Profit after tax 3,090 7,129

Compared to the previous fiscal year, the turnover has been decreased for the fiscal year April 1, 2017 – March 31, 2018 (from Euro 127 million to Euro 122 million), contributing to the reduction in the operating income.

The good performance referred to the operating activities of Permasteelisa S.p.A., which confirms the positive trend already achieved in the previous year, was associated with a heavily negative operating result of the Azerbaijan branch which substantially determined the operating loss achieved by the company in 2018.

With regard to the net financial result, the positive balance benefited from the dividends distributed by subsidiaries for approximately Euro 25 million (2017: Euro 20 million).

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Financial position

The Parent Company's Financial position is summarised in the table below:


2018 March 31,

2017

Non-current assets (a) 318,659 320,905

Net working capital (b) 75,151 114,110

Severance indemnity fund (c) (3,380) (3,452)

Net invested capital 390,430 431,563

Net financial debt /(Net cash surplus) (d) (33,773) 7,287

Shareholder’s loan (e) 223,661 255,093

Shareholder’s equity (including minority interests) (f) 170,542 169,183

Coverage 390,430 431,563

Capital expenditure on tangible and intangible assets 1,712 4,327

Average workforce 843 852

a) Sum of the captions included in the statement of financial position referring to notes 15, 16, 17, 18;

b) Sum of the captions included in the statement of financial position referring to notes 19, 20, 21, 22, 23, 24, 30, 31, 32, 33, 34 (in the notes 22 and 32 it should be considered only the amount related to trade receivables and trade payables from/to subsidiaries);

c) Caption included in the statement of financial position referring to note 29;

d) Caption included in the statement of financial position referring to note 22, 25, 28 and 32 net of the Shareholder’s loan for Euro 223,661 thousand (Euro 255,093 thousand as of March 31, 2017);

e) Caption included in the statement of financial position referring to note 28;

f) Caption included in the statement of financial position referring to note 27.

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Reconciliation between the result of the period and the net equity of the parent company and the correspondent amounts of the Group

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

€ thousands

Result March 31,

2018

Net Equity as of March 31,

2018

Result March 31,

2017

Net Equity as of March 31,

2017

Parent Company balances 3,090 170,542 7,129 169,183

Share of consolidated subsidiaries’ equity and result net of book value of related equity interests 9,315 (97,157) (41,350) (77,853)

Excess cost allocation (4,677) 45,557 (4,677) 47,603

Reversal of inter-group dividends (40,809) 0 (23,505) 0

Effect of other consolidation entries 4,663 8,208 16,449 3,546

Share attributable to minority interests (148) (10,108) 678 (10,632)

Group balances (28,566) 117,042 (45,276) 131,847

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Approval of the Statutory Financial Statements and allocation of 2018 result

Shareholder,

We submit to your approval the Statutory Financial Statements of the Company for the period ended March 31,

2018, that show a gain for the period of Euro 3,090,431.29 leaving to you any decision about its destination.

May 24, 2018

On behalf of the Board of Directors

The Chief Executive Officer The Chairman of the Board of Directors

Riccardo Mollo Davide Croff

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Approval of the Statutory Financial Statements and allocation of 2018 result

Shareholder,

we submit to your approval the Statutory Financial Statements of the Company for the period ended March 31, 2018, that show a gain for the period of Euro 3,090,431.29 leaving to you any decision about its destination

24 May 2018

On behalf of the Board of Directors

The Chief Executive Officer The Chairman of the Board of Directors

Riccardo Mollo Davide Croff

50

Permasteelisa

Group

Consolidated

Financial Statements as of March 31,2018

51

Consolidated income statement as of March 31, 2018

March 31, 2018

March 31, 2017

€ thousands

Operating revenues 1,262,537 1,279,416

Other operating income 4 14,129 7,066

Total operating revenues 3 1,276,666 1,286,482

Raw materials and consumables used 5 (350,790) (359,225)

Services expenses and use of third party assets 5 (506,391) (477,326)

Personnel expenses 6 (389,600) (409,954)

Depreciation, amortization and impairment losses 7 (21,106) (23,494)

Bad debts provision 8 (4,372) (5,234)

Provision for risks and charges 9 15,029 (8,094)

Other operating expenses 10 (12,995) (8,920)

Cost recovery 1,059 2,899

In-house enhancement of fixed assets 991 312

Total operating expenses (1,268,175) (1,289,036)

Ordinary activity result 8,491 (2,554)

Financial income 83,893 128,842

Financial expenses (112,542) (155,817)

Net financial income/(expenses) 11 (28,649) (26,975)

Revaluation of equity investments 12 0 0

Write-downs of equity investments 12 (618) 0

Profit before tax (20,776) (29,529)

Income tax expense 13 (7,642) (16,426)

Profit after tax (28,418) (45,955)

Attributable to:

Group (28,566) (45,277)

Minority 148 (678)

Profit for the period (28,418) (45,955)

52

Consolidated statement of comprehensive income as of March 31, 2018

March 31,

2018 March 31,

2017

€ thousands

Profit/(Loss) for the period (A) (28,418) (45,955)

Items that may be reclassified to the Income statement: Hedging reserves for risks variation, net of tax

23,251 (4,474)

Gains/(losses) on exchange differences on translating foreign operations

(10,224) 2,355

Total items that may be reclassified to the Income statement 13,027 (2,119)

Items that will never be reclassified to the Income statement: Actuarial gains/(losses):

(73)

(483)

Total items that will never be reclassified to the Income statement: (73) (483)

Total Other comprehensive income, net of tax (B) 12,954 (2,602)

Total Comprehensive income attributable to: (15,464) (48,557)

Group (14,806) (47,886)

Minority (658) (671)

Total Comprehensive income (A)+(B) (15,464) (48,557)

53

Consolidated statement of financial position as of March 31, 2018

€ thousands Notes March 31, 2018

March 31, 2017

Intangible assets 15 74,090 80,965

Tangible assets 16 93,570 98,569

Equity investments in not consolidated subsidiaries 18 6,083 6,083

Equity investments in associated companies 19 406 1,136

Other non-current assets 20 44 253

Deferred tax assets 21 51,317 45,999

Total non-current assets 225,510 233,005

Contracts work-in-progress 22 466,834 696,089

Inventories 22 31,932 37,109

Trade receivables from third parties 23 423,772 487,611

Trade receivables from not consolidated and associated subsidiaries

24 64 28

Income tax receivables 25 12,016 9,393

Other current assets 26 88,814 97,889

Cash and cash equivalents 27 51,938 43,258

Assets held for sale 28 0 5,213

Total current assets 1,075,370 1,376,590

Total assets 1,300,880 1,609,595

Equity

Share capital 29 6,900 6,900

Legal reserve 29 1,380 1,380

IAS 19 Reserve 29 (7,137) (7,064)

Hedging reserves for risks 29 10,270 (14,716)

Translation reserve 29 12,162 23,315

Other reserves 29 199,611 199,611

Retained earnings 29 (77,578) (32,302)

Profit/(loss) for the period 29 (28,566) (45,277)

Total equity attributable to the Group 117,042 131,847

Minority interests 29 10,108 10,632

Total equity 127,150 142,479

Liabilities

Amounts payables to banks and other financial creditors 30 158,480 205,040

Severance indemnity fund 31 3,392 3,452

Pension funds and other employee benefits 32 28,055 28,934

Provisions for risks and charges 33 26,730 47,953

Deferred tax liabilities 21 50,632 55,913

Total non-current liabilities 267,289 341,292

Amounts payable to banks and other financial creditors 30 188,609 220,289

Excess of progress billings over work-in-progress 22 194,730 269,566

Advances from customers 22 177,144 260,672

Trade payables to third parties 34 251,835 263,655

Trade payables to not consolidated and associated subsidiaries 35 1 1

Income tax payables 36 20,294 29,305

Other current liabilities 37 73,828 82,336

Liabilities held for sale 38 0 0

Total current liabilities 906,441 1,125,824

Total liabilities 1,173,730 1,467,116

Total equity and liabilities 1,300,880 1,609,595

54

Consolidated statement of cash flows as of March 31, 2018

€ thousands March 31, 2018

March 31, 2017

Cash flows generated (absorbed) by operating activities

Result before tax (20,776) (29,529)

Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities:

- Interest income (524) (598)

- Interest expense 6,639 5,827

- Depreciation and amortization expenses and impairment losses 21,106 23,494

- Gain/(loss) on disposal of tangible and intangible assets 6 344

- Gain on disposal of asset held for sale (2,411) 0

- Provision for risks and charge (15,029) 8,094

- Bad debts provision 4,372 5,234

- Equity investments write-downs/(revaluations) 618 0

- Severance indemnity fund payments to employees (232) (110)

- Severance indemnity fund expenses 100 110

- Pension fund payments (1,057) (1,081)

- Other employee benefits payments 800 1,405

- Pension fund expenses (1,670) (589)

- Other employee benefits net variation 1,069 1,018

Total adjustments 13,787 43,148

Changes in operating activities:

- Changes in hedging reserve 24,986 (7,583)

- Changes in IAS 19 reserve (73) (918)

- Changes in contracts work-in-progress (net), inventories and advances 70,670 48,984

- Changes in the other captions of working capital (1) 52,823 (81,589)

- Changes in the other captions of operating capital (2) 17,608 (15,659)

- Changes in the fair value evaluation of derivatives instruments (10,608) 10,556

- Income tax paid (36,622) (12,948)

- Interests paid (6,860) (5,716)

- Interest received 524 598

- Effect of exchange rate changes on operating activities cash flows (12,109) 3,877

Total changes 100,339 (60,398)

Net cash flows absorbed by operating activities (A) 93,350 (46,779)

Cash flows generated (absorbed) by investing activities

Purchases of tangible and intangible assets (12,082) (16,088)

Proceeds from disposal of tangible and intangible assets 649 1,281

Proceeds from disposal of asset held for sale 7,414 0

Changes in not consolidated subsidiaries, associated companies and other equity investments

0 (289)

Net cash flows absorbed by investing activities (B) (4,019) (15,096)

Cash flows generated (absorbed) by financing activities

Lease obligation (principal) (21) (18)

Payment / receipt of dividends to / from third parties 625 300

Minority acquisitions

Net cash flows generated by financing activities (C) 604 282

55

Net increase/(decrease) in cash surplus/(deficit) (A+B+C) 89,935 (61,593)

Net cash surplus/(deficit) as of 1 April (D) (382,049) (322,268)

Effect of exchange rate changes on balances held in foreign currency (E)

(3,037) 1,812

Net cash surplus/(deficit) as of 31 March (A+B+C+D+E) (295,151) (382,049)

Net cash surplus/(deficit) includes:

Bank and post current accounts and deposits 51,802 43,102

Cash in hand 136 156

Bank overdrafts and other short-term loans (123,428) (170,214)

Shareholders’ loan (223,661) (255,093)

(295,151) (382,049)

(1) The other captions of working capital refer to the following captions included in the statement of financial position of the Group: trade receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies. (2) The other captions of operating capital refer to the following captions included in the statement of financial position of the Group: income tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provisions for risks and charges.

56

Consolidated statement of net equity changes as of March 31, 2018

Share capital

Legal reserve

Share premium

Revaluation reserve

Translation reserve

Foreign exchang

e risk hedging reserve

(*)

Commodities risk hedging

reserve (*)

IAS 19 Reserve

(**)

Other reserve

Retained earnings

Group net equity

Minority interest

Total

€ thousands

Balance as of April 1, 2016 6,900 1,380 0 0 17,858 (6,850) (283) (6,146) 199,611 (32,737) 179,733 11,213 190,946

Income (expenses) recognized directly in equity Translation differences 5,456 (3,129) 2,327 28 2,355 Foreign exchange risk hedging reserve variation (5,157) (5,157) (22) (5,179) Commodities risk hedging reserve variation 703 703 2 705 Interest rate risk hedging reserve variation 0 0 Changes in IAS 19 Reserve (483) (483) (483)

0 0 0 0 5,456 (8,286) 703 (483) 0 0 (2,610) 8 (2,602)

Net result for the period (45,276) (45,276) (678) (45,954)

Total Income (expenses) for the period 0 0 0 0 5,456 (8,286) 703 (483) 0 (45,276) (47,886) (670) (48,556)

Transactions with Shareholder:

Increase of share capital 0 0 0 Destination of operating result

0 0 0 Dividends 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0

Other net equity variations: Minority interests acquisition 0 0 0 Other variations (435) 435 0 89 89 Roundings 0 0 0

0 0 0 0 0 0 0 (435) 0 435 0 89 89

Balance as of March 31, 2017 6,900 1,380 0 0 23,314 (15,136) 420 (7,064) 199,611 (77,578) 131,847 10,632 142,479

57

Share capital

Legal reserve

Share premium

Revaluation reserve

Translation reserve

Foreign exchange

risk hedging reserve

(*)


reserve (*)

IAS 19 Reserve

(**)

Other reserve

Retained earnings

Group net equity

Minority interest

Total

€ thousands

Balance as of April 1, 2017 6,900 1,380 0 0 23,314 (15,136) 420 (7,064) 199,611 (77,578) 131,847 10,632 142,479

Income (expenses) recognized directly in equity Translation differences (11,152) 1,567 (32) (9,617) (607) (10,224) Foreign exchange risk hedging reserve variation 23,836 23,386 (222) 23,614 Commodities risk hedging reserve variation (386) (386) 23 (363) Interest rate risk hedging reserve variation 0 0 0 Changes in IAS 19 Reserve (73) (73) 0 (73)

0 0 0 0 (11,152) 25,403 (418) (73) 0 0 13,761 (806) 12,954

Net result for the period (28,566) (28,566) 148 (28,418)

Total Income (expenses) for the period 0 0 0 0 (11,152) 25,403 (418) (73) 0 (28,566) (14,806) (658) (15,464)


Increase of share capital 0 0 0 Destination of operating result 0 0 0 Dividends 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0

Other net equity variations: Minority interests acquisition 0 0 0 Other variations 0 134 134 Roundings 0 0 0

0 0 0 0 0 0 0 0 0 0 0 134 134

Balance as of March 31, 2018 6,900 1,380 0 0 12,162 10,267 2 (7,137) 199,611 (106,144) 117,042 10,108 127,150

58

Notes to the Consolidated Financial Statements

Company’s information

Permasteelisa S.p.A. (hereinafter referred to as the “Company” or “Parent Company”) is a company domiciled in Italy that operates internationally both directly and indirectly through its subsidiaries in the field of the design, production and installation of architectural components (curtain walls) and interiors systems. The Company’s Consolidated Financial Statements as of March 31, 2018 include the Company and its subsidiaries involved in the consolidation (hereinafter referred to as the “Group”) which are listed in the table annexed to the Notes to the Consolidated Financial Statements entitled “Permasteelisa Group’s companies”. This table also highlights the Group’s equity investments in non-consolidated subsidiaries, associated and other companies.

The Consolidated Financial Statements of the Permasteelisa S.p.A. Group have been prepared in Euro, which is the currency of the economic area in which the Company operates. The Consolidated Financial Statements were approved by the Board of Directors on May 24, 2018 and will be submitted to the approval by the Shareholder meeting called on July 26, 2018. These financial statements are subject to audit by Deloitte & Touche S.p.A

Financial tables

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

The statement of financial position, the income statement, the statement of cash flows and of net equity changes used for the period closed as of March 31, 2018 are prepared in thousands of Euro and are characterised as follows:

Statement of financial position

The methods whereby assets and liabilities are broken down into “current and non-current” was adopted, with separate indication of assets and liabilities held for sale, if any.

Current assets include assets (such as inventories, assets for contracts work-in-progress and trade receivables) which are sold, consumed or realised as part of the normal operating cycle, even when they are not expected to be realised within 12 months after the balance sheet date. Some current liabilities, such as trade payables and some accruals for employees and other operating costs, are part of the working capital used in the normal operating cycle. Such operating items are classified as current liabilities even if they are due to be settled more than 12 months after the balance sheet date.

Income statement

The adopted method breaks costs down based on their nature.

Statement of cash flows

The indirect method was employed.

Statement of net equity changes

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

Accounting principles

(a) Statement of compliance

The Permasteelisa Group adopts the IFRS International Accounting Standards issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union. IFRS is understood to include also the International Accounting Standards (“IAS”) that are currently in force in addition to the interpretations made available by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”).

These Consolidated Financial Statements were prepared in accordance with the accounting standards described in the paragraphs below, namely the same standards that were used to prepare the Consolidated Financial Statements as of March 31, 2017.

The Consolidated Financial Statements have been prepared on a going concern basis.

59

(b) Basis of preparation

The financial statements are presented in Euro, rounded to the nearest thousands. They are prepared on the historical cost basis except for the following assets and liabilities that, if any, are stated at their fair value: derivative financial instruments, financial instruments held for trading, financial instruments classified as available-for-sale.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting principles exposed in the following paragraphs have been consistently applied for all the periods included in this Consolidated Financial Statements.

These accounting principles have generally been applied consistently by the Group companies in the preparation of the financial statements for consolidation purposes; but, where necessary, specific adjustments have been applied by the Company to make these financial statements in compliance with IFRS.

(c) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled directly or indirectly by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.

The subsidiaries are consolidated using the line by line method.

The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

All subsidiaries are included in the Consolidated Financial Statements, unless some considered not material. Not consolidated subsidiaries are stated at their “fair value”.

Receivables and payables, income and expenses and all relevant transaction occurred between consolidated companies, are eliminated in preparing the Consolidated Financial Statements, unless they are immaterial; in particular intragroup gains deriving from contracts work-in-progress realized in the Group are eliminated.

The minority interests and the result attributable to minority are indicated separately in the consolidated statement of financial position and in the consolidated income statement.

Most of consolidated subsidiaries have changed the reporting period closing to 31st of March, except for Permasteelisa (India) Private Limited whose financial period already ends as of March 31. Specific financial statements for consolidation purposes are prepared by those residual subsidiaries whose reporting period closing remains as of December 31. They concern to Chinese, Russian, Azerbaijan, Turkey and Colombia subsidiaries.

(ii) Associates

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies (generally accompanied by a percentage of ownership is between 20% and 50%). The Consolidated Financial Statements include the Group’s share of the total recognized gains and losses of associated companies on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its equity investment in an associated company, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associated company.

Unrealised gains arising from transactions with associated companies are eliminated to the extent of the Group’s equity investment in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of “impairment”.

(d) Basis of conversion of foreign currency

(i) Foreign currency transactions

60

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on this translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at “fair value” are translated to Euro at foreign exchange rates ruling at the dates the “fair value” was determined.

(ii) Subsidiaries Financial Statements

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Euro at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Euro at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity through the statement of comprehensive income.

The exchange rates used for the closing as of March 31, 2018 and the comparative exchange rates of the previous year are as follows:

March 31, 2018 March 31, 2017

Currency Exchange rate at the balance sheet

date

Average exchange rate of the year

Exchange rate at the balance sheet date


Thai Baht 38.478000 38.630060 36.724000 38.568788

Danish Krone 7.453000 7.441515 7.437900 7.439046

Norwegian Krone 9.677000 9.491200 9.168300 9.156729

Dubai Dirham 4.524900 4.297707 3.924666 4.028349

Australian Dollar 1.603600 1.512588 1.398200 1.457498

Canadian Dollar 1.589500 1.500682 1.426500 1.439896

Hong Kong Dollar 9.669600 9.141240 8.307400 8.514244

Singapore Dollar 1.615800 1.586516 1.494000 1.518078

Taiwan Dollar 35.928300 35.078307 32.459852 34.842052

Usa Dollar 1.232100 1.170468 1.069100 1.097343

Hungarian Forint 312.130000 309.772574 307.620000 310.709743

Swiss Franc 1.177900 1.135464 1.069600 1.083519

Croatian Kuna 7.432300 7.457202 7.446500 7.496835

Pataca Macau 9.959700 9.415505 8.556711 8.770815

Philippine Peso 64.374000 59.478733 53.658000 52.840309

Chinese Renminbi 7.746800 7.746634 7.364200 7.380853

Malasyan Ringitt 4.765800 4.872652 4.731300 4.611466

Riyal Qatar 4.484800 4.260484 3.891524 3.994329

Riyal Saudi Arabia 4.620400 4.389451 4.009296 4.115675

Russian Ruble 70.889700 67.744317 60.313000 69.234071

Indian Rupia 80.296000 75.462448 69.396500 73.578130

Israeli Shekel 4.326200 4.131364 3.885300 4.166112

Pound Sterling 0.874900 0.882046 0.855530 0.841310

Korean Won 1,310.890000 1,298.568532 1,194.540000 1,260.343587

Japanese Yen 131.150000 129.689943 119.550000 118.807507

Polish Zloty 4.210600 4.220926 4.226500 4.352367

Manat Azerbaigian 2.094600 1.991155 1.843556 1.801443

Tugrik Mongolia 2,949.450000 2,835.881468 2,616.568795 2,472.955659

Turkish Lira 4.897600 4.309918 3.889400 3.515119

Vietnam Dong 28,112.000000 26,595.939286 24,329.160080 24,636.203495

Brazil Real 4.093800 3.765271 3.380000 3.621599

Peso Colombiano 3,439.760000 3,434.826468 3,088.452043 3,258.684320

61

(iii) Net investment in foreign operations

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

(e) Business combinations

Business combinations initiated before January 1, 2010 and completed before that date are recognized on the basis of IFRS 3 (2004).

Such business combinations are recognized using the purchase method, were the purchase cost is equal to the fair value at the date of the exchange of the assets acquired and the liabilities incurred or assumed, plus costs directly attributable to the acquisition. This cost is allocated by recognizing the assets, liabilities and identifiable contingent liabilities of the acquired company at their fair values. Any positive difference between the cost of the acquisition and the fair value of the net assets acquired pertaining to the Shareholder Parent Company is recognized as goodwill. Any negative difference is recognized in profit or loss. If the fair value of the assets, liabilities and contingent liabilities can only be calculated on a provisional basis, the business combination is recognized using such provisional values. The value of the non-controlling interests is determined in proportion to the interest held by minority Shareholder in the net assets. In the case of business combination achieved in stages, at the date of acquisition of control the net assets acquired previously are remeasured to fair value and any adjustments are recognized in equity. Any adjustments resulting from the completion of the measurement process are recognized within twelve month of the acquisition date.

Business combination carried out as from January 1, 2010 are recognized on the basis of IFRS 3 (2008).

More specifically, business combination are recognized using the acquisition method where the purchase cost is equal to the fair value at the end of exchange of the assets acquired and the liabilities incurred or assumed as well as equity instruments issued by the purchaser.

Costs directly attributable to the acquisition are recognized though profit or loss.

This cost is allocated by recognizing the assets, liabilities and identifiable contingent liabilities of the acquired company at their fair values as at the acquisition date. Any positive difference between the price paid, measured at fair value as at the acquisition date plus the value of any non-controlling interests, and the net value of the identifiable assets and liabilities of the acquiree measured at fair value is recognized as goodwill. Any negative difference is recognized in profit or loss.

The value of non-controlling interests is determined either in proportion to the interest held by minority Shareholder in the net identifiable assets of the acquiree or at their fair value as at the acquisition date.

If the “fair value” of the assets, liabilities and contingent liabilities can only be calculated on a provisional basis, the business combination is recognised using such provisional values. Any adjustments resulting from the completion of the measurement process are recognized within twelve month of the date of acquisition, restating comparative figures.

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

(f) Derivative financial instruments

The Group uses derivative financial instruments (generally forward exchange contracts and swaps) only to hedge its exposure to foreign currency risk, to commodities risk and interest risk coming from its operating and financial activities in currencies other than Euro.

According to its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. Anyway, derivative financial instruments for which the criterion to record the operations as hedging operations are not respected, are recorded as trading instruments.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss account. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see the accounting policy described in section “g”).

The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

62

(g) Hedging

(i) Cash flow hedging (foreign currency risk)

The Group uses derivative financial instruments to hedge its exposure to foreign currency risk coming from its operating and financial activities in currency other than Euro.

In particular, the Group uses derivative financial instruments to hedge the foreign currency risk related to the contracts work-in-progress cash flows. When the Group acquires a job whose future cash flows are denominated in foreign currency, specific forward exchange contracts or swaps on foreign currency are concluded to hedge the foreign currency risk existing on those future cash flows; therefore these hedging operations are related to highly probable future transactions as the job that is hedged is effectively acquired when the hedging contract or contracts are concluded. Considering the length of the Group contracts, the estimation of the timing of the future cash flows is very difficult and subject to changes that can be also relevant; as a consequence, the Group policy consists in making an initial hedging of future cash flows based on a rough estimation of the future cash flows timing and subsequently in:

- rolling over the forward exchange contracts or swaps on foreign currency if at the expiry date the correspondent cash flows related to the job does not occur;

- in concluding another forward exchange contract or swap on foreign currency, of opposite sign and same expiry date of the existing hedging contracts, if the cash flow related to the job occurs in advance with respect to the expiry date of the existing hedging contracts.

The gains and losses deriving from the roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement; they are included in the operating revenues or operating expenses if related to hedging operations of job contracts cash flows.

The ineffective part of any profit or loss is recognized immediately in the income statement as financial components.

On the basis of the method used for hedging the future cash flows related to contracts work-in-progress in foreign currency, the prospective effectiveness is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of a forward exchange contract or swap on foreign currency are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur.

If the hedged transaction is no longer expected to take place, the cumulative unrealised gains or losses recognized in equity are recognised immediately in the income statement as financial components.

Finally, according to the Group policy the foreign currency risk hedging is made on the spot rate; as a consequence, the difference between spot rate and forward rate recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on foreign currency, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such.

(ii) Hedge of monetary assets and liabilities

The Group uses derivative financial instruments also to hedge economically the foreign exchange exposure of a recognised monetary asset or liability as the loans in foreign currency; in this case no hedge accounting is applied and any gain or loss on the hedging instrument is recognised in the income statement.

(iii) Cash flow hedging (commodities price risk)

The Group uses derivative financial instruments also to hedge price risk on commodities coming from its operating activities.

In particular, the Group uses derivative financial instruments to hedge the price risk related to aluminum purchase for the contracts work-in-progress. When the Group acquires a job whose future cash flows are related to aluminum purchase, specific forward contracts or future on alluminium are concluded to hedge the price risk existing on this commodity; therefore these hedging operations are related to highly probable future transactions as the job that is hedged, with regard to the aluminum purchase, is effectively acquired when the hedging contract or contracts are concluded. In consideration of the variability of the price of aluminum, the aim of hedging is to freeze this price already since the acquisition of the order itself; subsequently, as the aluminum order as well as the relevant price are agreed with the supplier, the Group shall complete the aluminum forward purchase by completing a transaction of opposite sign. If, upon expiry of the transaction, the order has not been defined yet for the supplier, the hedging contract(s) shall be rolled over.

63

The gains and losses deriving from the regulation of the operations on maturity, including the effect of the possible roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part; these gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement (arrival of the goods); they are included in the operating expenses.

The ineffective part of any profit or loss is recognized immediately in the income statement as financial components.

On the basis of the method used for hedging of the price risk on the future cash flows payments related to aluminum purchases on contracts work-in-progress, the prospective effectiveness is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of an hedging contract by operation of the opposite sign when the order to the supplier is fixed are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur.

If the hedged transaction is no longer expected to take place, the losses or profits on the accumulated price difference recognized in equity are recognized immediately in the income statement as financial components.

Finally, according to the Group policy the commodities price risk is made on the spot price; as a consequence, the difference between spot price and forward price recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on commodities, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such.

(iv) Hedge of net investment in foreign operation

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

(h) Tangible assets

(i) Owned tangible assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (depreciation criteria are reported below) and impairment losses (see accounting policy “o”). The cost of self-constructed assets includes the cost of materials, direct labour, and the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment according to the “component approach”.

(ii) Leases assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The owner-occupied property acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation (depreciation criteria are reported below) and impairment losses. Lease payments are accounted for as described in accounting policy “w”.

(iii) Subsequent costs

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense when incurred.

(iv) Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation is applied from the date the tangible assets are available for use. Land is not depreciated. The estimated useful lives are as follows:

buildings 20-40 years

plant and machinery 5-25 years

equipment 4-5 years

other assets 4-8 years

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

(i) Intangible assets

64

(i) Goodwill

Goodwill arising on business combinations is initially measured at cost as established at the acquisition date, as defined in the above paragraph. Goodwill is not amortised, but is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

On disposal of part or whole of a business which was previously acquired and which gave rise to the recognition of goodwill, the remaining amount of the related goodwill is included in the determination of the gain or loss on disposal.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.

Other development expenditure is recognised in the income statement as an expense as incurred.

Capitalised development expenditure is stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “o”).

(iii) Other intangible assets

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “o”).

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

(iv) Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(v) Amortization

Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill, intangible assets with an indefinite useful life and intangible assets not yet available to be used are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

rights to use intellectual property (software) 3-5 years

trademarks and similar rights 3 years

capitalised development costs 5 years

customer relationship 20 years

(j) Trade receivables to third parties

Trade receivables are recognised initially at fair value and subsequently recorded at the amortised cost, using the effective interest method, net of impairment losses related to amounts considered recoverable, recorded as provision. The estimation of the recoverable amounts is based on future expected cash flows.

Trade receivables, whose expiry date is within ordinary trade terms, are not discounted.

(k) Contracts work-in-progress

Contracts work-in-progress are reported in accordance with the progress stage (or completion percentage) of the works, according to which the costs, revenues, and margin are recognised based on the progress of the productive activity. The policy adopted by the Group is the completion percentage determined by applying the “incurred cost” (cost to cost) criterion.

The valuation reflects the best estimate of the contracts made as at the reporting date. Periodically, the assumptions underlying the evaluations are updated. Any economic effect is recorded in the year in which the updates have been made.

65

The contract revenues include the payments agreed upon by contract, work changes, price revision, incentives, and any claims, to the extent that these are likely to be reliably valuated. In particular, the valuation of claims was guided, based on certain technical and legal analysis, towards the positive results that could reasonably be achieved from disputes with the customers.

The contracts costs include all the costs that refer directly to the project, the costs that may be attributed to the contract activity in general and that may be allocated to the said project, in addition to any other costs that may be specifically charged to the customer based on the contractual clauses.

The contract costs also include the pre-operative costs, which is to say the costs incurred in the initial phase of the contract before the construction activity is began (costs or preparing, tenders, design costs, costs for organization and start-up of production, construction site installation costs) and the post-operative costs that are incurred after the contract is closed (removal of the construction site, return of plant/equipment to base, etc.).

Should the completion of a project be forecast to lead to a loss, this shall be recognised in its entirety in the year in which it may be reasonably expected.

The contracts in progress are set out net of any depreciation fund and/or final losses, as well as the progress billings for the contract being carried out.

This analysis is carried out on a contract by contract basis: should the difference be positive (due to contracts in progress greater than the amounts of the progress billings), it is classified among the assets (contracts work-in-progress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-in-progress).

Should the final losses fund for the individual contract exceed the value of the work entered in the assets, this excess is classified under the provision for risks and charges.

Contracts with payment denominated in foreign currency other than the functional currency (Euro for the Group) are valuated by converting the accrued share of payments determined based on the completion percentage method, at the exchange rate ruling at the reporting date for the portion not invoiced yet, and at the exchange rate ruling at the transaction date for the portion already invoiced.

(l) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost determining method selected as a Group principle is the weighted average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and works in progress, cost includes an appropriate share of overheads based on normal operating capacity.

(m) Other financial assets

Other financial assets that the Group intends and is able to hold until maturity are recorded at the fair value of the initial consideration given in exchange plus the related transaction costs. Subsequently, they are valued on an amortised-cost basis using the original effective interest method.

Financial assets are derecognised when, following their sale or settlement, the Group is no longer involved in their management and has transferred all risks and rewards of ownership.

(n) Cash and cash equivalents

Cash and cash equivalents include bank and post current accounts and deposits. Bank overdrafts, advances and other short-term loans which are repayable on demand and form an integral part of the Group’s cash managements are considered as components of cash surplus or deficit for cash flow statement purposes.

(o) Impairment of tangible and intangible assets

The carrying amounts of tangible and intangible are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

Even if there are no indication of impairment, for goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

66

(i) Calculation of recoverable amount

The recoverable amount of an asset is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

(ii) Reversal of impairment

An impairment loss, except if in respect of goodwill, is reversed and recorded in the income statement, only if the reasons for the impairment loss cease to exist.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognised.

(p) Equity

(i) Share capital

Share capital includes the subscribed and paid up Company’s share capital.

(ii) Dividends

Dividends are recognised as a liability in the period in which they are declared.

(q) Amounts payable to banks and other financial creditor

Amounts payable to banks and other financial creditors are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings or loans on an effective interest basis.

(r) Pension funds and other employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the terms of the Group’s obligations. The calculation is performed by a qualified actuary.

(iii) Severance indemnity fund

Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code, is deferred compensation and is based on the employees’ years of service and the compensation earned by the employee during the service period.

Starting from January 1, 2007, Italian Law introduced for employees the choice to direct their accruing indemnity either to supplementary pension funds or leave the indemnity as an obligation of the company. Companies that employ at least 50 employees should transfer the employee severance indemnity to the “Treasury fund” managed by INPS, the Italian Social Security Institute.

Consequently, the Company’s obligation to INPS and the contributions to supplementary pension funds take the form, under IAS 19, of a “Defined contribution plan”.

Under IAS 19 - Employee Benefits, the employee severance indemnity as calculated is considered a “Defined benefit plan” and the related liability recognized in the statement of financial position (Provision for employee severance indemnities) is determined by actuarial calculations.

According to IAS 19 (Employee Benefits), the remeasurements of actuarial gains and losses are recognized in other components of other comprehensive income. Service cost of Italian companies that employ less than 50 employees, as well as interest expenses related to the “time value” component of the actuarial calculations (the latter classified as Finance expenses), are recognized in the separate income statement.

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(s) Provision for risks and charges

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimation of the obligation amount can be done.

Provisions are recorded on the basis of the best estimation of the amount that the Group would pay to settle the obligation or to transfer it to third parties at the reporting period.

If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(t) Trade payables to third parties

Trade payables are recorded at the amortised cost, using the effective interest method. Trade payables, whose expiry dates are within the ordinary trade terms, are not discounted.

(u) Other financial liabilities

The other financial liabilities are initially recorded at cost, net of any transaction costs directly attributable to their creation. Following initial recording, financial liabilities are valued on an amortised-cost basis using the effective interest method.

Financial liabilities are derecognised when, following their sale or settlement, the Group is no longer involved in their management and has transferred all risks and rewards of ownership.

(v) Revenue recognition

(i) Contracts work-in-progress

As soon as the outcome of a contract can be estimated reliably, contract revenue and expenses are recognised in the income statement in proportion to the stage of completion of the contract that is calculated based on the costs effectively incurred and total costs included in the contract budget. An expected loss on a contract is recognised immediately in the income statement.

(ii) Goods sold and services rendered

Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed checking the work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(w) Expenses

(i) Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

(ii) Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(iii) Net financial expenses

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends, foreign exchange gains and losses except for those related to cash flow hedging operations that are included in the operating revenues or expenses, and premiums and discounts related to all forward exchange contracts and swaps on foreign currency.

Interest income is recognised in the income statement as it accrues, using the effective interest method.

Dividends income is recognised in the income statement on the date the entity’s right to receive payments is established. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as defined under IAS 23 – Borrowing Costs), which are assets that necessarily

68

take a substantial period of time to get ready for their intended use or sale, are capitalised and amortised over the useful life of the class of assets to which they refer.

All other borrowing costs are expensed when incurred.

(x) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes arising from the distribution of dividends are recognised when the liability associated to the payment of the same dividend is acknowledged. This is justified by the fact that the Group is able to manage the time plan for the distribution of the reserves and it is probable that they will not be reversed in the foreseeable future.

(y) Non-current assets held for sale and discontinued operations

Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.

Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement.

A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify as discontinued operation if it meets the criteria mentioned above.

(z) New accounting standards

Accounting standards, amendments and interpretations applied since April 1, 2017

· Amendments to IAS 12 Income taxes - Recognition of deferred tax assets for unrealized losses; · Amendments to IAS 7 Statement of cash flow - Disclosure initiative; · Amendments to IFRS 12 - Disclosure of investments in other entities.

The adoption of the aforementioned changes did not have significant effects on the Group's consolidated financial

statements.

Accounting standards, amendments and interpretations effective from April 1, 2017 and not relevant for the Group

There are no accounting standards, amendments and interpretations effective from April 1, 2017 and not relevant for the Group.

Accounting standards, amendments and interpretations not yet in force and applied in advance

The Group has not applied the following standards, both new and amended, which have been issued but are not

yet in force.

Accounting standards, amendments and interpretations not yet applicable and not adopted in advance by the Group

69

Standard IFRS 15 – Revenue from Contracts with Customers (published on May 28, 2014 and integrated with further clarifications published on 12 April 2016) which is intended to replace the standards IAS 18 – Revenue and IAS 11 – Construction Contracts, as well as the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter Transactions Involving Advertising Services. The standard establishes a new model of recording revenues, which will be applied to all contracts entered into with customers excluding those which fall within the scope of application of other IAS/IFRS standards such as leases, insurance contracts and financial instruments. The essential steps for recording revenues in accordance with the new model are:

- the identification of the contract with the customer;

- the identification of the performance obligations of the contract;

- the determination of the price;

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

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

The standard is applicable commencing from January 1, 2018 but may be applied in advance. The Group does not apply for early application of this standard, but it has been opted for applying as from next year using retrospective approach and accounting the cumulative effect of initially applying at the date of initial application (modified retrospective approach). This effect will be recognised as corresponding adjustment to the opening balance of retained earnings in the reporting period that includes the date of initial application that, for Permasteelisa Group, is April 1, 2018 - March 31, 2019.

Under transition method, the Group shall apply this Standard retrospectively only to contracts that are not completed contracts at the date of initial application (April 1, 2018).

During the past year, the Group carried out an extensive survey to identify potential effects from adoption of the new Standard. It showed that areas most affected by new provisions are:

Costs to obtain a contract: the Group shall recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. It showed that, for the Group, the costs incurred for the preparation of the offers could not be included in the contract costs and not be accounted as a year-end asset, if the contract with the customer is not obtained. Estimated impact on capitalized costs for the year-end offers (March 31, 2018), at Group level, is about Euro 12 million net of tax effects and the opening balance of the retained earning as of April 1, 2018 will be negative rectified for the same amount.

Contract modifications: a contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. If both sides have approved change in the scope of a contract without having determined the corresponding change in price, the entity shall estimate changes in the transaction price, due to modification, in accordance with this Standard to estimate of variable consideration and its constraints. In particular, an entity has to include in the transaction price the amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur once the uncertainty related to the variable consideration is subsequently resolved. Estimated impact on variations and claims for the year-end (March 31, 2018), at Group level, is about Euro 40 million net of tax effects and the opening balance of the retained earning as of April 1, 2018 will be negative rectified for the same amount.

Final version of IFRS 9 - Financial Instruments (published on July 24, 2014). The document encompasses the results of the phases relating to Classification and Measurement, Impairment, and Hedge Accounting, of the IASB project aimed at replacing IAS 39:

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

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

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

The new standard, which replaces the previous versions of IFRS 9, must be applied to all financial statements commencing on or after January 1, 2018.

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The application of IFRS 9 had not a significant impact on the Group's Financial Statement. In particular, referring to trade receivables and to contract assets, representative of most of the Group’s credit exposure, current accounting procedures of impairment are basically equated to new Standards’ rules, whose application should not involve key effects. Regarding to the existing hedging relationships, the current accounting procedures seem to satisfy the hedge accounting requirements regulated by the new Standard IFRS 9. The Group is continuing an asset analysis of the new types of transactions eligible for hedge accounting - in particular to hedging of net positions and natural hedging - in order to align with the Group's risk management strategies.

Standard IFRS 16 - Leases. Issued by the IASB in January 2016, IFRS 16 introduces a single model for accounting for leases in the lessee's financial statements, eliminating the distinction between operating and financial leasing, according to which the lessee recognizes an asset that represents the right to use the underlying asset and a liability that reflects the obligation to pay the rent. Optional exemptions are provided for short-term leases and for those of modest value. IFRS 16 replaces the current lease forecasts, including IAS 17 "Leasing", IFRIC 4 "Determining whether an agreement contains a lease", SIC-15 "Operating leases - Incentives" and SIC-27 "Evaluation of the substance of the legal leasing transactions ".

IFRS 16 is applicable for annual periods beginning on or after January 1, 2019. Early adoption is permitted for entities applying IFRS 15 "Revenues from contracts with customers" on the date of first application of the IFRS 16, faculty that the Group will not use.

The Group has launched a project aimed at identifying the potential impacts deriving from the adoption of the new Standard in terms of updating existing systems, processes and procedures. At the current state of the analysis, it is not yet possible to estimate reliably the effects of the application of the new Standard from the point of view of the valuation of the financial statement items.

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Notes to the Consolidated Financial Statements

1. Assets classified as held for sale

As of March 31, 2018, the Group does not hold non-current assets and liabilities held for sale.

2. Acquisitions of subsidiaries

On March 29, 2017, the Consorzio Marine Project Solutions’ Meeting approved the transformation of the Consorzio

into a Società consortile a responsabilità limitata, with an authorized share capital of Euro 500,000. This

transformation has become effective since June 9, 2017.

It should also be noted that, during the year just ended, the following entities were established:


- Marine Project Solutions - Norway Branch,

both headed by the consolidated subsidiary Marine Project Solutions Scarl, 55.5% owned by the Parent Company.

3. Operating revenues

Operating revenues broken down by product are shown below:


March 31, 2017

Curtain walls 1,100,877 1,131,805

Interiors 119,234 124,265

Contract 36,217 29,283

Marine 20,338 1,129

1,276,666 1,286,482

Operating revenues broken down by geographical area are shown below:


March 31, 2017

North America 418,594 504,916

South America 13,075 5,000

Benelux 2,399 2,824

France 49,403 45,347

Germany 12,660 16,600

Italy 22,185 18,419

Spain 5,766 7,666

Switzerland 45,235 12,313

United Kingdom 234,695 243,830

Ireland 10,233 2,082

Other European countries 7,652 5,284

Other Central Asian countries 3,189 15,539

Other African countries 5 2

United Arab Emirates 14,258 10,519

Qatar 12,464 10,998

Saudi Arabia 43,534 29,166

Other Middle Eastern countries 561 202

Australia 22,766 15,943

72

China 91,989 99,035

Japan 16,674 14,214

Hong Kong 145,647 127,340

India (111) 594

Korea 2,764 831

Russia 77,534 66,982

Singapore 2,616 7,116

Taiwan 3,137 10,709

Thailandia 6,654 1,728

Macau 2,649 4,588

Other Asian countries 8,439 6,695

Total 1,276,666 1,286,482

4. Other operating income

The Other operating incomes included in the total operating revenues are the followings:


March 31, 2017

Gains on tangible and intangible assets disposals 2,605 303

Rental income 1,268 1,007

Insurance indemnities 152 30

Sale of scrap 1,677 1,756

Other revenues 8,427 3,970

14,129 7,066

The item "Other revenues" includes Euro 1,305 thousand concerning non recurring revenues from vendors, Euro

108 thousand for recovery of staff costs and other personnel costs, Euro 756 thousand for cost recovery to the

Japanese Ultimate Parent Company, Euro 934 thousand of subsidies from the Chinese government and Euro 2,360

thousand related to other revenues on some projects.

The items “Gains on tangible and intangible assets disposals” includes the income (equal to Euro 2,411 thousand)

realized from the disposal of the old Factory in Thailand (GAT1) occurred in October 2017 and classified as “asset

held for sale” in the previous fiscal year (April 1, 2016 – March 31, 2017).

5. Raw materials and consumables used and services expenses and use of third party assets

With reference to the Group's activity, the comparison between different periods of the value of raw materials and consumables used and services expenses and use of third party assets is not very significant as it depends on the different costs mix of job orders executed in each period.

The percentage impact of the item raw materials and consumables used over the total operating revenues is equal to 27.5%, while the percentage impact of the item services expenses and use of third party assets over the total operating revenues increased from 37.1% to 39.7% compared to March 2017.

It is worth to be highlight that the item services expenses and use of third party assets expenses includes remuneration due to statutory auditors amounting to Euro 96 thousand.

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6. Personnel expenses


March 31, 2017

Wages and salaries 326,135 343,759

Social contribution 41,253 40,999

Contributions to defined contribution plans 1,300 1,083

Increase in liability for severance indemnities fund 56 30

Severance indemnities assigned to pension fund or Inps 2,368 2,598

Increase in liability for defined benefit plans (732) (786)

Increase in liability for other long-term benefits (5) 446

Termination benefits 427 840

Other personnel costs 18,798 20,985

389,600 409,954

The Personnel expenses do not present a significant change compared to the same period in the previous year March 31, 2017.

The average workforce for the period was 5,852 units.

7. Depreciation, amortization and impairment losses

€ thousands

March 31,

2018 March 31,

2017

Tangible assets depreciation 13,114 15,218

Intangible assets amortization 7,992 8,266

Impairment losses 0 10

21,106 23,494

8. Bad debts provision


March 31, 2017

Bad debts provision 4,372 5,234

4,372 5,234

The variance of “bad debts provision” is due to the combined effects of provisions and releases occurred during the reporting period. In particular, the provisions are related to the European area for Euro 4.4 million, to American area for Euro 0.5 million and to Asian area for Euro 0.6 million.

Please refer to note 23 relating to “Trade receivables from third parties” for a more detailed analysis.

9. Provision for risks and charges


March 31, 2017

Provision for disputes and legal actions (23,886) 3,849 Provision for warranties 1,974 256 Provision for jobs risks 1,486 (940) Provision for work in progress risks 5,397 4,929

(15,029) 8,094

With reference to the item “Provision for disputes and legal actions” there has been a release in UK area for Euro 24.3 million related to the end of a legal proceeding for which it was estabilished a risk fund in the previous fiscal year.

With reference to the item "Provision for work in progress risk", the ending balance as of March 31, 2018 is due to the combined effects of net provisions and releases occurred during the reporting period equal to Euro 0.8 million in the Middle Eastern area (March 2017: Euro 3.5 million), Euro 4.2 million in the European area (March 2017:

74

Euro 2.2 million), and Euro 0.4 million in the American area (March 2017: net release for Euro 2.7 million). There are not provisions in the Asian area (March 2017: Euro 1.9 million).

Please refer to note 33 relating to “Provisions for risks and charges” for a more detailed analysis.

10. Other operating expenses


March 31, 2017

Other taxes 10,438 6,732

Losses on tangible and intangible assets disposal 199 647

Utilization of Bad debts provision (922) (172)

Trade receivables write-off 742 452

Other expenses 2,538 1,261

12,995 8,920

The increase in the caption “Other taxes” is mainly due to the increase of the sales taxes in the America area.

11. Net financial expenses


March 31, 2017

Dividends and other incomes 625 300

Interest income 524 598

Exchange rate gains 72,830 113,804

Other commission income 64 111

Financial income on foreign currency risk hedging 1,742 2,866

Commercial income on foreign currency risk hedging 8,108 11,163

Total financial income 83,893 128,842

Bank interests expenses 4,165 4,137

Exchange rate losses 79,364 120,215

Interest expenses on financial leases 2 0

Bank charges 612 580

Bond commissions 1,169 161

Other interests expenses 2,471 1,690

Financial expenses on foreign currency risk hedging 8,471 7,488

Commercial expenses on foreign currency risk hedging 16,206 21,455

Commercial expenses on commodities hedging 82 91

Total financial expenses 112,542 155,817

Total net financial expenses (28,649) (26,975)

The profit and losses on foreign exchange rates reported in the above table respectively include gains for Euro 17,320 thousand (March 2017: Euro 36,730 thousand) and losses for Euro 31,151 thousand (March 2017: Euro 13,860 thousand) arising from year end closing evaluation.

As of March 31, 2018, the net financial expenses amounted to Euro 28,649 thousand, while as of March 31, 2017 amounted to Euro 26,975 thousand. The negative variation for Euro 1,674 thousand is mainly due to the combination of the variations of the following items:

- exchange rate losses, net of gains, increasing for Euro 123 thousand: net losses on exchange increased from Euro 6,411 thousand (March 2017) to Euro 6,534 thousand (March 2018).

- commercial and financial expenses on foreign currency risk hedging, net of incomes, decreased from Euro 15,005 thousand (March 2017) to Euro 14,909 thousand (March 2018). This financial items is related to the forward points applied to foreign currency sales hedging, particularly for Rublo and US Dollar, and due to the difference on interest rates against the Euro.

- Interest expenses, net of incomes, increased from Euro 5,559 thousand (March 2017) to Euro 7,206 thousand (March 2018) with a variation for Euro 1,838 thousand related to provisions for interests on a legal action in the Middle East.

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12. Revaluation and write-downs of equity investments

During the reporting period April 1, 2017 – March 31, 2018, as well as in 2017 fiscal year, there have not been any revaluations of equity investments.

During the reporting period April 1, 2017 – March 31, 2018, there have been write-downs of equity investments for Euro 618 thousand (March 2017: no write-downs of equity investments occurred) of which:

- Euro 25 thousand related to the write-down of equity investments in Consorzio CTI in liquidation;

- Euro 593 thousand related to the write-down of equity investments in Consorzio Dyepower in liquidation.

13. Income tax expenses

Taxes recognised in the income statement € thousands

March 31, 2018

March 31, 2017

Current tax expenses

Current year 23,785 12,768

Adjustments for prior years (**) 5,278 1,088

29,063 13,856

Deferred tax expenses

Origination and reversal of temporary differences (14,413) 2,031

Originary tax rates change (2) (23)

Adjustments for prior years (***) (5,093) 2,211

Tax losses (1,913) (1,649)

(21,421) 2,570

Total income tax expenses in the income statement 7,642 16,426

(**) Including provisions for tax audits or inspections of which Euro 3.8 million related to the Chinese area. (***) It mainly includes the effect of the release of the write-down of deferred tax assets recorded in previous years and relating to the Netherlands area.

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Reconciliation of effective tax rate

€ thousands

March 31,

2018 March 31,

2017

Profit before tax (20,776) (29,529)

Income tax using the domestic corporation tax rate 24% (4,986) 27.5% (8,120)

Effect of tax rates in foreign jurisdictions 4,319 5,949

Non-deductible expenses 2,297 4,688

Tax exempt revenues 3,369 7,127

Tax incentives not recognised in the income statement (174) 95

Current year tax benefits not recognized 3,042 1,073

Recognition of tax benefits not recognized in prior years (1,049) 0

Utilization of tax benefits not recognized in prior years (3,094) 0

Change in tax rate effect 1,871 119

Under/(over) provision in prior years (current tax expense) 5,277 1,088

Under/(over) provision in prior years (deferred tax expense) (5,093) 2,211

Other taxes 826 472

Others 1,037 1,724

(36.7%) 7,642 (55.6%) 16,426

5. Intangible assets

€ thousands Development

costs Rights to

use intellectual

property

Licences and trade-

marks

Other intangible

assets

Intangible assets in

progress and advances

Total

Balance as of April 1, 2016 1 4,199 1 78,173 2,899 85,273

Acquisitions 2,254 2 388 1,252 3,896

Other increases 583 254 837

Transfer from assets held for sale 22 43 65

Disposals (28) (28)

Consolidation area variations 3 3

Other decreases (837) (837)

Amortization (1) (1,831) (6,434) (8,266)

Impairment losses

Exchange rate differences on translation

9 13 22

Balance as of March 31, 2017 (0) 5,208 3 72,440 3,314 80,965

Balance as of April 1, 2017 (0) 5,208 3 72,440 3,314 80,965

Acquisitions 719 10 60 361 1,150


Transfer from assets held for sale 0

Disposals 0

Consolidation area variations 0


Amortization (1,672) (1) (6,320) (7,993)

Impairment losses 0


(18) (14) (32)

Balance as of March 31, 2018 4,394 12 66,226 3,458 74,090

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Carrying amounts As of April 1, 2016 attributable to:

Cost 2,433 19,681 890 181,827 2,899 207,730 Accumulated amortization (2,432) (15,482) (889) (103,654) 0 (122,457)

1 4,199 1 78,173 2,899 85,273

As of March 31, 2017 attributable to: Cost 2,433 22,115 913 182,018 3,314 210,793

Accumulated amortization (2,433) (16,907) (910) (109,578) 0 (129,828)

0 5,208 3 72,440 3,314 80,965

As of April 1, 2017 attributable to:

Cost 2,433 22,115 913 182,018 3,313 210,793 Accumulated amortization (2,433) (16,907) (910) (109,578) 0 (129,828)

0 5,208 3 72,440 3,313 80,965


Accumulated amortization (2,433) (18,115) (843) (115,805) 0 (137,196)

0 4,394 12 66,226 3,458 74,090

The increase for the period referred to the caption “Rights to use intellectual property” equal to Euro 719 thousand

is mainly due to the increasing of the Holding (Euro 428 thousand) linked to the acquisition of new licenses for

technical department and project management (Catia, Mathcad, Primavera and others for Euro 178 thousand), to

the acquisition of new functionalities for the solution PMF (Euro 69 thousand), to upgrade the new infrastructure

HANA for SAP (Euro 35 thousand), to the acquisition of new functionalities and developed services in IT Disaster

Recovery area (Euro 39 thousand), to the acquisition of the patent Dyepower (Euro 65 thousand) and other

developments (Euro 42 thousand).

The increase for the period referred to the caption “Assets in progress and advances“ equal to Euro 361 thousand

is mainly due to other investments for the analysis and the implementation of P3 project for document management

(Euro 53 thousand), for other developments for the new Treasury software solution through SAP Treasury

Management (Euro 41 thousand), for the acquisition and the implementation of the software K2 license for the

realization of workflow processes in OHSE environment (Euro 131 thousand), for the development of the new

Timesheet SAP Fiori solution (Euro 38 thousand) and of the new CRM solution to support Sale & Tender processes

(Euro 44 thousand), and other developments for Euro 54 thousand.

Impairment losses and subsequent reversals

During the year the management has assessed the existence of indicators of impairment losses by considering both external sources and internal ones and has concluded that for the year ended as of March 31, 2018 there were no indications of impairment losses as a result of which it had been necessary for the Group to assess the recoverable amount of intangible assets, in particular with reference to the “customer relationship” identified during the allocation of the excess cost paid by Terre Alte S.p.A. for the acquisition of Permasteelisa Group.

78

16. Tangible assets

€ thousands Land and buildings

Plant and machinery

Equipments Other tangible

assets

Tangible assets in progress and

advances

Total

Balance as of April 1, 2016 61,934 20,044 8,524 13,575 1,763 105,840

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

Other increases 115 961 103 143 1,322

Transfer from assets held for sale 1,988 351 177 84 2,600

Transfer to assets held for sale (5,124) (7) (2) (79) (5,212)

Disposals (91) (821) (72) (269) (1,253)

Other decreases (1,322) (1,322)

Depreciation (3,184) (4,230) (3,249) (4,555) (15,218)

Impairment losses (11) (11)

Exchange rate differences on translation 491 685 187 420 39 1,822

Balance as of March 31, 2017 56,649 18,555 9,784 12,342 1,239 98,569

Balance as of April 1, 2017 56,649 18,555 9,784 12,342 1,239 98,569

Non-current assets held for sale as of April 1, 2017 (*)

5,124 0 7 2 79 5,212

Balance as of April 1, 2017, including non-current assets held for sale

61,773 18,555 9,791 12,344 1,319 103,782

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

Other increases 58 212 166 88 524

Disposals relating to non-current assets held for sale (**)

(4,871) (28) (7) (2) (76) (4,984)

Disposals (148) (54) (298) (171) (4) (675)


Depreciation (2,739) (3,762) (2,602) (4,010) (13,113)

Exchange rate differences on translation (567) (830) (280) (880) (22) (2,579)

Balance as of March 31, 2018 54,146 16,191 8,665 11,258 3,311 93,570

(*) as of March 31, 2017 assets are included in the "Non-current assets held for sale" commented in note 28. (**) the value refers to assets classified as "Non-current assets held for sale" at March 31, 2017.

As of March 31, 2017, the closing balance for the tangible assets was rectified for the net book value of the of the factory site in Thailand – GAT1. The latter was reclassified under the item “non-current assets held for sale”. The disposal of the site in comment has been finalized in October 2017 for a net book value as of March 31, 2018 equal to Euro 4,984 thousand. For a more clear exposure of the movements, in the above table, the net book value of the “non-current assets held for sale” as of March 31, 2017 has been shown separately, while its disposal was highlighted in a separate row "Disposals relating to non-current assets held for sale". The difference between the two net amounts is due only to the exchange difference between the two commented periods. Carrying amounts


Cost

119,150

63,275

37,943

49,830

1,763

271,961

Accumulated amortization (57,216) (43,231) (29,419) (36,255) 0 (166,121)

61,934

20,044 8,524 13,575 1,763 105,840

79

As of March 31, 2017 attributable to:

Cost

123,872

68,822

43,457

53,431

1,239

290,821 Accumulated amortization (67,223) (50,267) (33,673) (41,089) 0 (192,251)

56,649 18,555 9,784 12,342 1,239 98,569


Cost

123,872

68,822

43,457

53,431

1,239

290,821


56,649 18,555 9,784 12,342 1,239 98,569

As of March 31, 2018 attributable to:

Cost

122,875

68,284

41,115

50,561

3,310

286,145


54,146 6,191 8,665 11,258 3,310 93,570

The main increases were made in Germany for Euro 5.1 million (March 2017: Euro 4.8 million), in Italy for Euro 0.9 million (March 2017: Euro 0.6 million), in United Kingdom for Euro 0.5 million (March 2017: 0.5 million), in America for Euro 1.9 million (March 2017: 1.1 million), in Asia for 0.8 million (March 2017: 1.1 million), in Netherlands for 0.8 million (March 2017: 0.6 million) and are mainly due to the increase in the production capacity and the replacement and innovation of the plants.

Regarding the significant asset disposals occurred during the period, it is mentioned the disposal of the old factory site in Thailand (GAT1) which has a net book value as of March 31, 2018 equal to Euro 4.984 thousand as detailed in the above table under the item “Disposals relating to non-current assets held for sale”. In the previous fiscal year April 1, 2016 – March 31, 2017, these assets were reclassified under the item “Transfer to assets held for sale”.

Impairment losses and subsequent reversal

At the reporting date there have not been particular indications of impairment losses related to tangible assets.

Leased plant and machinery

As of March 31, 2018 the Group does not hold leased plant and machinery (March 2017: Euro 21 thousand); please refer to note 30 related to payables to banks and other financial creditors.

Tangible assets in progress

As of March 31, 2018 the Group holds tangible assets under construction for the total amount of Euro 3,311 thousand (March 2017: Euro 1,239 thousand). The increase of Euro 2.617 thousand is mainly due to the new investments realized in Germany (Euro 2.5 million).

Other information

As of March 31, 2018 the Group doesn’t have mortgages on buildings or on other tangible assets; please refer to the note 42 related to contingencies.

17. Equity investments in not consolidated subsidiaries

As of March 31, 2018 the Group doesn’t have any equity investments in not consolidated subsidiaries.

80

18. Equity investments in associated companies

The Group has the following equity investments in associated companies:

% ownership Carrying amount

€ thousands Country March 31, 2018

March 31, 2017

March 31, 2018

March 31, 2017

Mobil Project S.p.A. Italy 20% 20% 6,083 6,083

6,083 6,083

Summary financial information on associated companies – 100%:

€ thousands Assets Liabilities Net Equity Revenues Profit/(Loss)

March 31, 2018

Mobil Project S.p.A. (*) 37,462 27,292 10,170 38,073 3,872

37,462 27,292 10,170 38,073 3,872

(*) Latest available statement: December 31, 2017

19. Other equity investments

The balance as of March 31, 2018 includes the Parent company's equity investment in Consorzio Interaziendale Prealpi for Euro 367 thousand (March 2017: Euro 367 thousand) and the equity investment in Interoxyd for Euro 39 thousand (March 2017: Euro 39 thousand).

With reference to the investment in the Consorzio Dyepower, whose value is zero at 31 March 2018, in February 2018 the consortium members approved the final liquidation financial statements with the related allotment plan. The evaluation of the investment led to a write-down of Euro 593 thousand as indicated in note 12.

20. Other no-current assets

The caption amounting to Euro 44 thousand (March 2017: Euro 253 thousand) is related to investments in other secondary securities.

21. Deferred tax assets and deferred tax liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets (-) Liabilities (+) Net

€ thousands March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017 March 31, 2018 March 31, 2017

Tangible assets (72) 312 6,235 6,515 6,163 6,827

Intangible assets 117 237 17,727 19,268 17,844 19,505

Other investments 0 0 0 0 0 0

Inventories (13,442) (6,486) 3,574 9,962 (9,868) 3,476

Trade receivables 0 0 0 0 0 0

Financial payables (2,277) (2,268) 0 0 (2,277) (2,268)

Pension funds and other employee benefits

(6,344) (5,019) (73) 42 (6,417) (4,977)

Provisions for risks and charges

(4,280) (4,619) 7,500 4,785 3,220 166

Trade payables 0 0 0 0 0 0

Hedging (397) (3,920) 462 938 65 (2,982)

Other items (4,948) (4,969) 15,207 14,517 10,259 9,548

Tax value of loss carry-forwards

(19,674) (19,267) 0 (114) (19,674) (19,381)

Tax (assets)/liabilities (51,317) (45,999) 50,632 55,913 (685) 9,914

Set off 0 0 0 0 0 0

Net tax (assets)/liabilities

(51,317) (45,999) 50,632 55,913 (685) 9,914

81

The deferred tax assets on tax losses included in the financial statements and entered in the table above for a total amount of Euro 19.7 million, are related to approximately Euro 2.7 million by the subsidiary Permasteelisa North America Corp. and to approximately Euro 3.8 million by the subsidiary Scheldebouw BV and have expiry date between 2023 and 2033. The residual part is related to other subsidiaries of the Group and have no expiry date.

Following the reduction from 34% to 21% of the corporate tax rate in the United States, the amount of deferred tax assets was accordingly adjusted.

With reference to the Group companies overall, no deferred tax assets were recorded relating to tax losses for Euro 20 million (March 2017: Euro 26 million). This amount refers in particular to the North European companies.

The amount relating to tax losses for which deferred tax assets were not recorded amounted to Euro 102 million and it refers to European companies for approximately Euro 49 million (March 2017: Euro 39 million), of which the major part can be used without expiry date, for Euro 46.8 million related to Asian companies (March 2017: Euro 53.5 million) of which Euro 36.5 million (March 2017: Euro 41.1 million) can be used before 2022 and Euro 3.0 (March 2017: Euro 4.4 million) related to American companies that can be used between the 2023 and the 2033. The residual amount has not time limitation.

The deferred tax assets had not been booked on the aforementioned temporary differences and tax losses as the required conditions were not in place, pursuant to the criteria envisaged by the international accounting principles, hinting at a probable future taxable income on which the Group may use the benefits arising there from.

In addition, with reference to the retained earnings of subsidiaries taxable in Italy if they were repatriated through dividends distribution deferred tax liabilities were not recognized on the portion of them for which the distribution is not likely in the foreseeable future.

Movement in deferred tax assets and liabilities during the year

€ thousands Balance as of April 1,

2016

Transfer from assets held for sale

Recognised in income statement

Recognised in equity

Exchange differences

Other changes

Balance as of March

31, 2017

Tangible assets 7,787 (824) (182) 0 46 0 6,827

Intangible assets 21,021 0 (1,538) 0 22 0 19,505

Inventories 6,321 0 (2,569) 0 (276) 0 3,476

Financial payables (2,357) 0 91 0 (2) 0 (2,268)

Pension funds and other (5,652) 0 882 (353) (17) 163 (4,977)

Provisions for risks and charges

(10,493) 0 10,818 0 (159) 0 166

Hedging (2,263) (78) (169) 238 (710) 0 (2,982)

Other items 13,697 0 (3,246) (1,412) 611 (102) 9,548

Tax value of loss carry-forwards

(18,238) 0 (1,522) 0 (487) 866 (19,381)

9,823 (902) 2,565 (1,527) (972) 927 9,914

€ thousands Balance as

of April 1, 2017

Recognised in income statement

Recognised in equity

Exchange differences

Other changes

Balance as of March 31,

2018

Tangible assets 6,827 (552) 0 (112) 0 6,163

Intangible assets 19,505 (1,617) 0 (44) 0 17,844

Inventories 3,476 (13,400) 0 56 0 (9,868)

Financial payables (2,268) (9) 0 0 0 (2,277)

Pension funds and other (4,977) (1,391) (13) 77 (113) (6,417)

Provisions for risks and charges 166 2,628 0 148 278 3,220

Hedging (2,982) (130) 3,739 351 (913) 65

Other items 9,548 (4,714) 4,198 190 1,037 10,259

Tax value of loss carry-forwards (19,381) (2,235) (281) 1,267 956 (19,674)

9,914 (21,420) 7,643 1,933 1,245 (685)

82

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

Assets for contracts work-in-progress and inventories


March 31, 2017

Assets for contracts work-in-progress 466,834 696,089

Raw materials and consumables used 2,801 3,359

Semi-processed goods 155 75

Finished goods 49 153

Advances 28,928 33,522

Inventories 31,933 37,109

Liabilities for contracts work-in-progress and advances from customers


March 31, 2017

Liabilities for contracts work-in-progress 194,730 269,566

Advances from customers 177,144 260,672

371,874 530,238

Contracts work-in-progress


March 31, 2017

Costs incurred on uncompleted contracts 5,740,793 6,209,876

Estimated earnings 774,007 761,921

Less billings to date (6,242,696) (6,545,274)

272,104 426,523


Liabilities for contracts work-in-progress (194,730) (269,566)

272,104 426,523

Contracts work-in-progress, equal to Euro 466,834 thousand (March 2017: Euro 696,089 thousand), are shown net of the provision for work in progress, equal to Euro 45,144 thousand (March 2017: Euro 41,273 thousand).

KAFD project is one of the more significant work in progress and it concerns the construction of thirteen buildings in the financial district area of Riyadh, Saudi Arabia.

KAFD project has been suspended since 2016 due to financial difficulties faced by the local general contractor. The Group is exposed on this project for an amount around Euro 90 million of which receivables for Euro 56 million and work in progress not yet invoiced for Euro 34 million.

The Group's management is engaged in negotiations at various levels with the local counterparts to obtain the collection of overdue receivables, proceeding with the invoicing of the work in progress and the execution of the project. Despite the uncertainties regarding the successful conclusion of these negotiations in progress, the management is confident that the Group will be able to collect its receivables in a short time.

83

23. Trade receivables from third parties


March 31, 2017

Trade receivables from third parties 447,836 511,202

Bad debts provision (24,064) (23,591)

423,772 487,611

As of March 31, 2018 trade receivables include guarantee retentions for Euro 201,743 thousand (March 2017: Euro 207,721 thousand) related to contracts work-in-progress, of which Euro 76,920 thousand expiring beyond fiscal year 2019 (March 2017: Euro 98,962 thousand).

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


March 31, 2017

Balance as of April 1 23,591 19,509

Transfer from “Assets held for sale” 0 1,046

Reclassification (946) (2,685)

Utilization (1,400) (172)

Reversal (978) (88)

Provision 5,567 5,323

Exchange rate differences on translation (1,769) 658

Balance as of March 31 24,064 23,591

The item “Reclassification”, amounted to Euro (946) thousand, is related to the devaluation of the inventories; therefore, the amount has been reclassified under the item “Asset and liabilities for contract work-in-progress and inventories” following its proper nature.

It is specified that the item includes receivables for Euro 56 million related to the KAFD project as commented in note 22.

24. Amounts receivable from not consolidated subsidiaries


March 31, 2017

Receivables from non-consolidated subsidiaries

Mobil Project SpA 58 22

Permasteelisa Partecipation S.r.l. 6 0

Consorzio Cladding Technology Italia 0 1

Consorzio Dyepower 0 5

64 28

25. Income tax receivables


March 31, 2017

Tax income receivables 12,016 9,393

12,016 9,393

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

84

26. Other current asset


March 31, 2017

VAT receivables 17,095 17,904

Advances to employees 453 411

Other receivables 59,083 61,544

Accrued income and deferred charges 12,183 18,030

88,814 97,889

The caption “Other receivables” includes:


March 31, 2017

Forward assets 12,975 15,359


Loans to other third parties 34 30

59,083 61,544

The item “Forward assets” relates for Euro 13,151 thousand to foreign currency transactions (March 2017: Euro 15,335 thousand) and for Euro (176) thousand to the transactions on commodities (March 2017: Euro 24 thousand).

The item “Other receivables” does not show relevant variations compared to the previous fiscal year. It should also be noted that the item in comment includes the receivables for Euro 24.3 million related to an insurance reimbursement in the United Kingdom for which a legal risks provision was recorded during the last fiscal year.

27. Cash and cash equivalents


March 31, 2017


Cash in hand 136 156

51,938 43,258

The balance of bank and post current accounts and deposits includes approximately Euro 11.4 million (March 2017: Euro 3.5 million) of time deposits related to Group’s German companies; in Germany the law provides, for companies operating in construction of buildings, the obligation to deposit a certain amount of financial deposit for its sub-contractors.

28. Non-current assets held for sale

As of March 31, 2018, the Group does not hold no-current assets held for sale.

As of March 31, 2017, the item inlcuded the amounts related to the factory in Thailand, GAT1, which has been sold in October 2017 recognizing a gain of Euro 2,411 thousand as described in note 4.

The movement of the item is included in note 16.

29. Net equity

Net equity changes

Please refer to the relevant table that precedes the notes to the consolidated financial statements related to March 31, 2018 and the comparative year March 31, 2017.

Share capital

As of March 31, 2018 the share capital amounted to Euro 6,900 thousand and includes 25,613,544 ordinary shares issued without nominal value.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are equal since there are no preference shares.

85

Legal reserve, share premium reserve and revaluation reserve

They refer to the legal reserve, share premium reserve and revaluation reserve of parent company Permasteelisa S.p.A.

Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the foreign subsidiaries.

Hedging reserve for risks

This includes the foreign exchange risk hedging reserve, the commodities risk hedging reserve and the interest risk hedging reserve.

The foreign exchange risk hedging reserve and the commodities risk hedging reserve include the effective portion of the net differences accumulated in the “fair value” of the hedging instruments respectively on foreign currencies and commodities, associated to hedged but not yet performed transactions.

The changes in these reserves are stated in the following table:

Foreign exchange risk hedging

reserve (*) Commodities risk hedging

reserve (*)

€ thousands

Amount before tax

Tax Amount after tax

Amount before tax

Tax Amount after tax

Reserve as of March 31, 2017 (19,212) 4,039 (15,173) 450 (25) 425

Increase/(decrease) 13,779 (3,990) 9,789 28 (35) (7)

Currency translation differences

1,905 (339) 1,566 (34) 2 (32)

Release to income statement 17,521 (3,698) 13,823 (377) 18 (359)

Reserve as of March 31, 2018 13,993 (3,988) 10,005 67 (40) 27

(*) Minority portion included

IAS 19 Reserve

This reserve is related to the application of the revised IAS 19 - Employee benefits, the IAS 19 Reserve has been set up (for more details, please refer to the notes, letter “r”); in particular, this reserve includes the gains (losses) actuarial variations. This reserve, as of March 31, 2018, shows a negative balance of Euro 7,137 thousand, due to the recognition during the year of negative actuarial variation of Euro 73 thousand, net of related taxes amounted to Euro 39 thousand.

Other reserves

It includes the other consolidation reserves different from the previous ones and from retained earnings.

Minority interests

It includes the share capital and the other specific reserves of Group companies’ net equity in which there are some minority Shareholders, as well as the translation reserve for the minority portion.

Capital management

In the area of capital management, the Group aims at adding value for the Shareholder, safeguard the continuity of the business and support the development of the Group. The Group has thus tried to keep a suitable capitalisation level to enable both the achievement of a suitable return on capital for the Shareholder and ensure the accessibility in economic terms of external financing sources, also by achieving a suitable rating.

The Group constantly monitors its level of indebtedness in reference to the net equity and especially the net level of indebtedness and the cash generation from operations.

To this end, the Group pursues the ongoing improvement of profitability in its business areas. It may also sell part of its own assets to reduce the value of debt, while the Board of Directors may suggest to the Shareholder's Meeting to reduce or increase the share capital or, if legally viable, distribute the reserves.

The capital is understood to be the value added by the Shareholder (share capital and the share-premium reserve, net of the value of the treasury share if any), and generated by the Group in terms of the results achieved by the

86

management (legal reserve and profit carried over included the results for the year), excluding the profit and loss entered directly into the net equity and minority interests.

30. Amounts payable to banks and other financial creditors


March 31, 2017

Amounts payable to banks and other financial creditors non-current

Finance lease liabilities 0 3

Medium-long term Shareholder’s loan 158,480 205,037

158,480 205,040

Amounts payable to banks and other financial creditors current

Current portion of finance lease liabilities 0 18

Current portion of the medium-long term Shareholder’s loan 65,181 50,056

Bank current accounts, advances and other short term loans 123,428 170,214

188,609 220,288

The net financial position of the Group including Shareholder’s loan as of March 31, 2018, is negative for Euro 295 million as fully detailed below.

The loan in use for an amount of Euro 347 million are related to medium and long-term loan granted by the Shareholder for Euro 224 million, and short-term loan, for an amount of Euro 123 million, related to contracts for credit facilities on a rotating basis. The aim of these loans is to cover the Group’s working capital requirements.

During the period from April 1, 2017 to March 31, 2018 have been repaid:

- a Shareholder’s loan for the total amount of Euro 36 million in two tranches: in the months of September, 2017 and March 2018; and

- the four tranches of Shareholder’s loan in USD with a countervalue of Euro 12 million.

In terms of mortgages on real estate or other fixed assets owned by the Group, please refer to note 42.

Finance lease liabilities

As of March 31, 2018 the Group has not any finance lease liabilities. The variation compared to the previous period (March 2017) is due to the completion of lease payments related to contracts in the Asian area (the average effective rate with reference to financial lease liabilities as at March 31, 2017, was 1.88 %).

Minimum payments

Interest Principal Minimum payments

Interest Principal

€ thousands March 2018

March 2018

March 2018

March 2017

March 2017

March 2017

Expiry date:

Less than 1 year 0 0 0 20 2 18

Between 1 and 5 years 0 0 0 4 0 3

More than 5 years 0 0 0 0 0 0

0 0 0 24 2 21

87

Net financial position

To complete the information reported in these notes, the Group financial position as of March 31, 2018 is reported below.


March 31, 2017

Cash and cash equivalents 51,938 43,258

Amounts payables to bank (123,428) (170,214)

Shareholder’s loan (65,181) (50,056)

Finance lease liabilities 0 (18)

Net financial position – short term (136,671) (177,030)

Finance lease liabilities 0 (3)


Net financial position – medium/long term (158,480) (205,040)

Total net financial position (295,151) (382,070)

It should be noted that the financial exposure to the parent company LIXIL amounts to a total of Euro 224 million and that payables to banks include short-term loans of approximately Euro 108 million obtained from Japanese credit institutions.

The average rates recorded by the Group during the period are as follows:

a) current account deposits and bank deposits: 0.55% (March 2017: 0.39%);

b) short-term loans: 0.97% (March 2017: 0.99%);

c) mortgages and medium-long-term loans: not reported because there were no these kind of loans during the year (same as at March 31, 2017);

d) Shareholder loan: spread equal to 0.95% % (March 2017: 0.95%);

e) liabilities on financial leasing: not recognized as there are no financial leases (March 2017: 1.88%).

The actual average rate over overall indebtedness stood at 1% (March 2017: 1%).

31. Severance indemnity fund

In accordance with national regulations, the amount due to each employee accrues on the basis of the service performed and must be paid when the employee leaves the company. The payment due upon termination of the employment relationship is calculated on the basis of its duration and the taxable salary of each employee. The liability, revalued annually based upon the official cost of living index and legal interest, is not associated with any condition or accrual period, or any funding obligation; therefore, there are no assets at the service of the fund.

The regulations were supplemented by Italian Legislative Decree no. 252/2005 and by Italian Law no. 296/2006 (Finance 2007) which, for companies with at least 50 employees, established that the shares accrued since 2007 are used, at the option of employees, either for the INPS Treasury Fund or for other forms of supplementary pension schemes, assuming the nature of “defined contribution plan”. The revaluations of the amounts in existence at the dates of option are, however, still accounted to the severance indemnity fund, along with, for companies with less than 50 employees, also the shares accrued and not used for the supplementary pension scheme. In accordance with IAS 19 (2011), that fund is accounted for as “Defined benefits plan”.

€ thousands March 31 2018

March 31 2017

Severance indemnity fund Permasteelisa S.p.A. 3,380 3,452

Severance indemnity fund Consorzio Marine Project Solutions S.c.a.r.l. 12 0

3,392 3,452

88

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


March 31, 2017

Present value of the defined benefit obligation 3,380 3,452

Unrecognised actuarial gains and losses 0 0

Recognised liability for severance indemnity fund 3,380 3,452

Movements of the severance indemnity fund


March 31, 2017

Net recognised liability at the beginning of the period 3,452 3,452

Net variation of the period (72) 0

Net recognised liability as of March 31 3,380 3,452

The severance indemnity fund net variation is detailed in the following table:


March 31, 2017

Current service costs 3,452 3,452

Other movements 0 (2)

Payments (172) (110)

Expenses recognized in the income statement 45 30

Actuarial (Profit)/Loss 55 82


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


March 31, 2017

Current service costs 0 0

Interest on obligation 45 82

45 82

Principal economic actuarial assumption:

March 31, 2018

March 31, 2017

Discount rate as of March 31 1.37% 1.43%

Inflation rate 1.50% 1.50%

Future salary increase rate 2.63% 2.63%

The demographic technical data used is shown below:

Probability of death Mortality table RG48 published by the State General Accounting Tables

Probability of invalidity

INPS Tables split into age and gender

Probability of retirement

100% upon achieving AGO requirements

89

Set out below is the sensitivity analysis for each actuarial circumstance for the purposes of determining the year-end liability amount; the same shows the effects, expressed in absolute terms, of variations of the actuarial circumstances reasonably possible at that date.

Variations in actuarial assumptions

March 31, 2018

March 31, 2017

Inflation rate

+0.25 p.p. -0.25 p.p.

3,428 3,305

3,489 3,360

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

3,269 3,468

3,322 3,531

The average financial duration of the obligation is 13 years.

32. Pension funds and other employee benefits


March 31, 2017

Pension funds 24,656 24,988

Other employee benefits 3,399 3,946

28,055 28,934

Movements of the severance indemnity fund


March 31, 2017


Net variation of the period (879) 1,403


Pension funds


March 31, 2017

Gartner GmbH pension fund 24,284 24,505 Other minor pension funds 372 483

24,656 24,988

Gartner GmbH pension fund movements


March 31, 2017

Net recognised liability at the beginning of the period 24,505 24,166 Net variation of the period (221) 339


90

The net variation of Gartner GmbH pension fund is detailed in the following table:


March 31, 2017


Payments (1,049) (1,079) Actuatial gains/ losses 93 664 Expense recognised in the income statement 735 754


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


March 31, 2017

Current service costs 280 281


735 754


March 31, 2018

March 31, 2017

Discount rate as of March 31 1.90% 1.90%


Future salary increase rate 0.00% 0.00%


March 31, 2018

March 31, 2017

Inflation rate

+1 p.p. -1 p.p.

27,359 21,712

27,615 21,906

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

21,101 28,333

21,251 28,663

The average financial duration of the obligation is 15 years.

Other employee benefits


March 31, 2017

Dutch "Jubilee" fund 460 440

Transfers to non-current assets held for sale 0 0

Other funds 2,939 3,506

3,399 3,946

Other employee benefits movements € thousands March 31,

2018 March 31,

2017 Net recognised liability at the beginning 3,946 3,059 Assets / liabilities held for sale’s movements 0 458 Net variation of the period (547) 429


91

33. Provisions for risks and charges

€ thousands Provision for losses

on equity investments

Warranty provision

Provision for risks on

ongoing jobs

Provision for tax

risks

Other provision

Total

Balance as of April 1, 2016 0 10,592 6,910 1,372 2,094 20,968

Reclassifications 605 (766) 24,430 24,269

Transfer from liabilities held for sale movements

865 865

Provisions made during the year 11,417 2,945 30 5,632 20,024

Provisions used during the year (12,229) (395) (191) (541) (13,356)

Provisions reversed during the year (470) (3,453) (1,262) (5,185)


369 271 110 (382) 368

Balance as of March 31, 2017 0 11,149 5,512 1,321 29,971 47,953

€ thousands Provision for losses

on equity investments

Warranty provision

Provision for risks

on ongoing

jobs

Provision for tax risks

Other provision

Total

Balance as of April 1, 2017 0 11,149 5,512 1,321 29,971 47,953

Reclassifications (195) (195)

Provisions made during the year 10,748 2,716 1,000 4,082 18,546

Provisions used during the year (9,008) (1,194) (25,150) (35,352)

Provisions reversed during the year (238) (37) (1,100) (1,375)


(890) (687) (179) (1,091) (2,847)

Balance as of March 31, 2018 0 11,566 6,310 2,142 6,712 26,730

Warranty provision

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

Provision for risks on ongoing jobs

The utilization of the period arose from the occurrence of risks for which a dedicated provision had been made at the end of the previous year; as to the provisions for the period, the main allocations are related to the risks on jobs in Hong Kong (approximately 0.8 million) and in Qatar (approximately 1.2 million).

Provision for tax risks

As of March 31, 2018, provisions for tax risks is related to the Indian tax dispute for Euro 1,142 thousand. The provision of the period equal to Euro 1,000 thousand is related to future taxes risks in other areas of the Group.

Other provisions

The amount is related to provisions for risks on ongoing legal disputes that are considered probable.

The item "Provisions used during the year" is mainly due to the utilization of a legal risk fund booked in the United Kingdom, against which a receivable for insurance reimbursement was entered.

34. Trade payables to third parties


March 31, 2017

Trade payables to third parties 251,835 263,655

251,835 263,655

92

As of March 31, 2018, trade payables include invoices to be received for Euro 90,356 thousand (March 2017: Euro 89,035 thousand) and retentions for Euro 16,461 thousand (March 2017: Euro 18,112 thousand), expiring mostly within the year ended March 2019.

35. Trade payables to not consolidated and associated subsidiaries


March 31, 2017

Trade payables to not consolidated and associated subsidiaries

Consorzio Cladding Technology Italia 1 1

1 1

36. Income tax payables


March 31, 2017

Tax income payables 20,294 29,305

20,294 29,305

The income tax payables, net of the income tax receivables reported under note 25, showed a decrease of liabilities position from Euro 19,912 thousand to Euro 8,278 thousand.

The difference for Euro 11,634 thousand is mainly due to the income taxes paid during the reporting period April 1, 2017 – March 31, 2018 in North Europe.

37. Other current liabilities


March 31, 2017

VAT payables 9,907 7,655

Employees taxation payables 3,008 3,496

Other indirect taxes payables 163 270

Amounts payable to social agencies 3,620 4,479

Amounts payable to employees 37,666 35,724

Other liabilities 15,617 25,910

Accrued liabilities and deferred income 3,847 4,802

73,829 82,336

The caption “Other liabilities” includes:


March 31, 2017

Forward liabilities 8,074 21,066

Other liabilities 7,543 4,844

15,617 25,910

Forward liabilities are referred for Euro 8,074 thousand to foreign currency transactions (March 2017: Euro 21,066 thousand) while no forward liabilities have been recognized for commodity transactions (same as March 2017).

38. Non-current liabilities held for sale

As of March 31, 2018 there were no non-current liabilities held for sale.

39. Risk management

Exposure to credit, interest rate, commodity price and currency risks arises in the normal course of the Company’s business. Historically, derivative financial instruments are used by the Company to hedge its exposure to fluctuations in foreign exchange rates.

The Group also hedges itself against commodity price risks.

93

Credit risk

Credit risk is the risk that arises when a customer or counterparty may fail to meet his commitments when they become due and cause the Company to incur in a financial loss. The Company’s primary exposure to credit risk arises from its contract receivables. The Company has implemented a specific Risk management system to analyze each specific tender and a rating is given to each project and customer. Specific measures are applied to minimize the company’s risk and the system in place also allows to subsequently monitor the credit risk exposure on an ongoing basis.

Other financial assets of the Company with exposure to credit risk include cash and cash equivalents and derivative financial instruments to hedge the Company exposure to foreign currency risk. Cash and cash equivalents are held with banks with high credit ratings. Transactions involving derivative financial instruments are allowed only with counterparties that are of high credit quality. As such, the management does not expect any counterparty to fail to meet their commitments.

As of the balance sheet publication date, there were no significant concentrations of credit risk on specific customers or on specific geographical areas. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position.

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


March 31, 2017

Europe 136,721 129,259

Asia 65,808 61,905

Australia 784 1,753

North America 134,855 149,324

Central America 135 58

South America 1,620 97

Middle East 107,227 168,249

North Africa 157 92

Total gross receivables broken down by geographical area 447,307 510,737

March 31,

2018

March 31,

2017 Provision for bad debts (24,064) (23,591)

Exchange rate differences on translation 529 465

Total net receivables broken down by geographical area 423,772 487,611

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

€ thousands Gross receivables

Provision for bad debts

Net receivables

Gross receivables

Provision for bad

debts

Net receivables

March 2018

March 2018

March 2018

March 2017

March 2017

March 2017

Not past due 299,255 (3,923) 295,332 363,994 (2,777) 361,217

Past due 0-180 days 53,497 (722) 52,775 59,076 (155) 58,921

Past due 181-365 days 28,590 (101) 28,489 11,015 (1,073) 9,942

More than one year 65,965 (19,318) 46,647 76,652 (19,586) 57,066

Total 447,307 (24,064) 423,243 510,737 (23,591) 487,146

Exchange rate adjustment 529 465

423,772 487,611

As of March 31, 2018 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 70% of the total (March 2017: 74%) and the credit due for over one year amounted to 11% (March 2017: 12%).

94

Interest rate risk

The Group’s exposure to changes in interest rates relates primarily to interest-earning assets and interest-earning liabilities (amounts receivable from banks and other financial institutions or amounts payable to banks and other financial institutions). Interest rate risk is actively managed at central level to guarantee that interests payments are within acceptable levels and consistent with the Group’s business strategies.

The Group does not generally use derivative financial instruments to hedge its exposure to interest rate risk.

Sensitivity analysis

The impact of a variation of 100 basis points in interest rates on the year end date would have determined an increase (decrease) of the net equity and of the results for the period for the amounts shown below. The analysis was done assuming that all the other variables, in particular the exchange rate to foreign currencies, remain stable. On the same basis has been done also the analysis of previous year.

€ thousands Result for the period Net equity

+100 bp - 100 bp +100 bp - 100 bp

March 31, 2018

Variable rate loans (4,226) 3,755 (4,226) 3,755

(4,226) 3,755 (4,226) 3,755

€ thousands Result for the period Net equity

+100 bp - 100 bp +100 bp - 100 bp

March 31, 2017


(4,307) 3,807 (4,307) 3,807

Please note that the Group does not have any fixed rate loans ongoing.

Liquidity risk

Policies and procedures have been established to monitor and control liquidity, at both central level and individual subsidiary level, on a daily basis adopting a cash flow management approach.

The table below shows the detail of the future contractual flows of financial liabilities held by the Group, broken down into financial liabilities not associated to derivative instruments and financial liabilities associated to derivative instruments.

Exposure to the liquidity risk associated to financial liabilities other than derivative instruments


Carrying

value Contractual Cash Flows

Contractual Cash Flows less than 1

year

Contractual Cash Flows

between 1 and 5 years

Contractual Cash Flows exceeding 5

years

Financial liabilities other than derivatives

Trade payables 251,835 251,835 242,361 7,156 2,318

Financial leasing payables 0 0

Other financial payables 223,661 223,661 65,181 158,480

Amounts payables to banks 123,428 123,428 123,428

Total booked value 598,924 598,924 430,970 165,636 2,318

95


Carrying



year




years


Trade payables 263,655 263,655 252,442 1,508 9,705

Financial leasing payables 21 24 20 4 0

Other financial payables 255,093 255,093 50,056 205,037 0

Amounts payables to banks 170,215 170,215 170,215 0 0

Total booked value 688,984 688,987 472,733 206,549 9,705

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments

March 31, 2018

€ thousands Carrying



year




exceeding 5 years

Assets (-) / Liabilities (+)

Assets from fair-value valuation on forward contracts on currencies

(13,151) (13,151) (13,151) 0 0

- in flows (784,466) (784,466)

- out flows 771,315 771,315

Liabilities from fair-value valuation on forward contracts on currencies

8,074 8,074 8,074 0 0

- in flows (567,969) (567,969)

- out flows 576,043 576,043

Assets from fair-value valuation of commodities 177 177 177 0 0

- in flows (2,564) (2,564)

- out flows 2,741 2,741

Liabilities from fair-value valuation of commodities 0 0 0 0 0

- in flows 0 0

- out flows 0 0

Total booked value (4,900) (4,900) (4,900) 0 0

March 31, 2017

€ thousands Carrying



year



Contractual Cash

Flows exceeding

5 years

Assets (-) / Liabilities (+)


(15,335) (15,335) (15,335) 0 0

- in flows (703,898) (703,898)

- out flows 688,563 688,563


21,066 21,066 21,066 0 0

- in flows (733,027) (733,027)

- out flows 754,093 754,093

96

Assets from fair-value valuation of commodities (24) (24) (24) 0 0

- in flows (536) (536)

- out flows 512 512

Liabilities from fair-value valuation of commodities 0 0 0 0 0

- in flows 0 0

- out flows 0 0

Total booked value 5,707 5,707 5,707 0 0

Please note the value of assets and liabilities shown in the tables above are provided for information only; indeed, the derivative contracts do not in fact lead to the actual outlay or collection of the stated amounts which, on the contrary, are subject to the settlement of the difference between the two outflows.

Also note that to correctly assess the liquidity risk, it is necessary to bear in mind the financial assets held by the Group to offset the future cash flows arising from the aforementioned financial liabilities:

a) cash and cash equivalents for Euro 51,938 thousand and Euro 43,258 thousand respectively as of March 31, 2018 and as of March 31, 2017;

b) trade receivables for Euro 423,772 thousand and Euro 487,258 thousand respectively as of March 31, 2018 and as of March 31, 2017.

Foreign currency risk

The Group incurs foreign currency risk on contract revenues and purchases and on borrowings and loans denominated in a currency other than Euro. The foreign currencies giving rise this risk are primarily United State dollars, British pounds, Singapore dollars and Hong Kong dollars.

Generally the contracts are hedged for the total amount denominated in foreign currency or for a percentage higher than 90%; see paragraph “g” for a detailed description of the way used by the Group to hedge its job contracts in foreign currency.

In respect to monetary assets and liabilities held in foreign currency other that those related to the contracts, the Group’s policy consists in minimizing the net exposure to change in currency rates by specific medium/short-term forward exchange contracts, rolled over at maturity if necessary.

A 10% decrease of the Euro against the following currencies as of March 31, 2018 would have led to the following increase (decrease) of the results for the period and the net equity. The analysis has been performed considering that all the other variables, more specifically the interest rates, had remained constant. The analysis was performed on the same basis compared to the previous period.

€ thousands Result for the period

Net equity

March 31, 2018

GBP 163 163

USD 925 925

HKD (198) (198)

SGD (409) (409)

THB (139) (139)

AUD (13) (13)

QAR (2) (2)

Others (221) (221)

106 106


Net equity

March 31, 2017

GBP (30) (30)

USD 1.556 1.556

HKD (360) (360)

97

SGD (999) (999)

THB 98 98

AUD 10 10

QAR (2) (2)

Others 123 123

396 396

A 10% increase of the Euro against the following currencies as of March 31, 2018 and as of March 31, 2017 would have led to the same but opposite effect, again supposing that all other variables had remained constant.

Please note that the analysis did not take into account receivables, payables and future trade flows against which the hedging operations were performed. It is reasonable to believe that the variation of the exchange rates may lead to an opposite financial effect for this item, for a same or higher amount, on the hedged transactions.

Commodities price risk

The Group has a price risk exposure, including the related foreign exchange risk, particularly on aluminum purchases, which are one of the main project cost items for the Group.

As far as managing the aluminum price risk is concerned, the Group’s policy is oriented towards minimizing the need to resort to financial markets for hedging, by conducting relations with the suppliers in order to fix the price for specific time frames. However, in the past the rather swinging trend of the aluminum price has encouraged the Group to launch a limited and selective aluminum price hedging policy for a few specific orders, where freezing the price with the supplier, for the whole period of the order, was merely impossible or not immediate in any case.

For a detailed description of the Group’s practices of commodity hedging management on its own projects, please refer to paragraph “g” of accounting principles.

40. Fair value measurement

There are no financial assets or liabilities whose fair value significantly differs from their carrying amount.

IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement.

Levels used in the hierarchy are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the measurement date.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

Level 3 inputs are unobservable inputs for the assets and liabilities.

Assets and liabilities that are measured at fair value on a recurring basis The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018:

€ thousands Notes Level 1 Level 2 Level 3 Total

Equity investments in not consolidated subsidiaries (18)

Assets at fair value available for sale or held to maturity

Financial assets at fair value through profit or loss (26) 12,975 12,975

Cash and cash equivalents (27) 51,938 51,938

Total assets 64,913 64,913

Financial liabilities at fair value through profit or loss (37) 8,074 8,074

Amounts payables to banks and other financial creditors

(30) 347,089 347,089

Total liabilities 355,163 355,163

98

In the reporting period April 1, 2017 – March 31, 2018, there were no transfers between levels in the fair value hierarchy.

Assets and liabilities not measured at fair value on recurring basis

The carrying amount of “Current receivables” and “Other current assets” and of “Trade payables” and “Other current liabilities” approximates their fair value and are categorized in Level 2.

The main methods and assumptions used to estimate the “fair value” of the assets and liabilities recorded in the statement of financial position according to this principle or for which its disclosure is requested by the accounting principles in the notes, are as follows.

Not consolidated subsidiaries

As of March 31, 2018, the Group does not hold investments in non consolidated subsidiaries.

Securities

The Group presently does not hold significant amounts of securities held for trading or available for sale or held until their maturity.

Cash and cash equivalents

The carrying amount of Cash and cash equivalents usually approximates the fair value due to the short maturity of these instruments, which consist primarily of bank current accounts and time deposits. The fair value of Cash equivalents is determined with discounted expected cash flow techniques, using observable market yields.

Derivative contracts

They are evaluated using listed market prices.

Amounts payables to banks and other financial institutions

The fair value is calculated based on discounting of future cash flows with reference to principal and interest amounts.

Financial leases

As described in note 30, the Group does not hold significant liabilities for financial leases.

Trade receivables and payables and other receivables and payables

Receivables and payables with expiring date less than one year, their carrying amount is considered to approximate their fair value.

All the other receivables and payables with expiring date greater than one year are discounted to determine their fair value, except for those related to contracts monies retention; the Group considers that retentions do not represent in any way a financing transaction with the customer due to the fact that the payments terms are beyond one year, since retentions, in the different geographical areas in which the Group operates, are within the normal applied trade conditions; consequently there is no necessity to apply any discounting.

As of March 31, 2018 the Group considers that there are not retentions out of normal market conditions.

41. Commitments

At the balance sheet date, the Group has the followings commitments:

Operating leases


March 31, 2017

Payable:

less than 1 year 12,363 13,808

within 1 to 5 years 22,586 26,399

after 5 years 2,973 4,528

37,922 44,735

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

99

Forward contracts


March 31, 2017

Commitments for forward foreign exchange contracts 1,352,065 1,445,003

Commitments for forward contracts on commodities 2,744 512

1,354,809 1,445,515

Commitments for forward foreign exchange contracts (buy) 538,817 532,633

Commitments for forward foreign exchange contracts (sell) 813,248 912,370

1,352,065 1,445,003

Commitments for forward contracts on commodities (buy) 2,744 512

Commitments for forward contracts on commodities (sell) 0 0

2,744 512

As described in the section on the accounting standards, hedging derivative transactions on foreign currency and commodities are assessed on their “fair value”.

As of March 31, 2018, the assessment of the “fair value” of currency hedging results in a profit for Euro 13,151 thousand (March 2017: Euro 15,335 thousand) and loss for Euro 8,074 thousand (March 2017: Euro 21,066 thousand), booked respectively under the items forward assets (note 26) and forward liabilities (note 37). Note that these amounts refer respectively for Euro 7,656 thousand (March 2017: Euro 2,605 thousand) and Euro 2,319 thousand (March 2017: Euro 4,536 thousand) to the valuation of financial currency hedging transactions, namely those covering foreign currency assets and liabilities of financial nature.

On the same date, the “fair value” valuation of hedging transactions on commodities results in a profit for Euro (176) thousands (March 2017: Euro 24 thousand) and loss for Euro 0 thousands (March 2017: Euro 0 thousand), entered respectively under the items forward assets (note 26) and forward liabilities (note 37).

Other commitments

As of March 31, 2018 the Group has no other significant commitments to highlight.

42. Contingent assets and liabilities

The main guarantees for third parties issued by the Group are listed below:

Guarantees for works: for the value of Euro 1,267.8 million (Euro 1,257.8 million as of March 31, 2017) and

issued by Credit Institutes and Insurance Companies to clients for the proper completion of works (Euro 983.7

million), contractual advances (Euro 237.8 million) and retentions withheld as guarantee (Euro 46.3 million).

Guarantees issued following VAT repayment requests issued by Credit Institutions and Insurance Companies:

for the value of Euro 15.3 million (Euro 16.3 million as of March 31, 2017)

Other guarantees for a total of Euro 4.5 million (Euro 8.4 million as of March 31, 2017) which include payment

guarantees for values owed to third counterparties.

In respect of some guarantees issued to clients, companies of the Group benefit from guarantees given by suppliers and subcontractors for Euro 101.4 million as of March 31, 2018.

In February 2018, Permasteelisa S.p.A. has obtained the suspension of the collection initiated against the Company following the December 2016 notification of alleged omission of retention upon dividends distributed in 2011 to the parent company Cima Claddings S.A. The Company is waiting to know the outcome of the hearing, but supported by its consultants, believes that there are strong legal arguments about the unlawfulness of said assessment and therefore the risk of losing the case is not probable.

Finally, during the year April 1, 2017 – March 31, 2018, the first instance ruling was issued concerning a legal proceeding initiated by a local partner against the subsidiary Permasteelisa Gartner Qatar for the recognition of unpaid commissions. This sentence condemns the subsidiary for the recognition of 10 million QAR in favor of the counterparty. It should be noted that the subsidiary initiated a parallel process aimed at ascertaining the invalidity of the contracts at the base of the relations with the aforementioned local partner. With respect to this active case,

100

during the year the cassation ruling was issued, which upheld the appeal of the subsidiary Permasteelisa Gartner Qatar and referred to the decision in relation to the invalidity of the contracts at first instance. The subsidiary, supported by its consultants also in consideration of the favorable outcome of the cassation ruling, deems the risk of the outcome of liabilities related to the passive lawsuit not probable.

43. Transactions with related parties

Relationships with not consolidated subsidiaries and associated companies

During the reporting period April 1, 2017 – March 31, 2018, the Parent Company and other Group companies entered into relationships with non-consolidated subsidiaries. The economic effects are detailed in the below table, while for the balance sheet items please refer to Note 24 “amounts receivables from not consolidated subsidiaries” and Note 35 “trade payables to not consolidated and associated subsidiaries”. These are commercial relationships made under normal business management, normally regulated by market conditions.

Operating revenues with not consolidated subsidiaries and associated companies


March 31, 2017

Mobil Project S.p.A. 30 0.0% 300 0.0%

Consorzio Dyepower 0 0.0% 4 0.0%

Total 30 0.0% 304 0.0%

Total operating revenues 1,276,666 100.0% 1,286,482 100.0%

Operating costs with not consolidated subsidiaries and associated companies


March 31, 2017

Mobil Project S.p.A. 145 0.0% 0 0.0%

Total 145 0.0% 0 0.0%

Total operating costs 1,268,175 100.0% 1,289,036 100.0%

There are no financial charges and income from not consolidated subsidiaries and associated companies.

As evident from the amounts reported, the incidence of these transactions on the Group financial position is not

relevant in percentage terms.

101

Other relationships with other related parties in the context of the Permasteelisa Group

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

Group Company Transaction type Related party Local Currency

Revenue/ (Cost) in local currency March 31, 2018

Receivable/ (Payable) in local currency March 31, 2018

Revenue/ (Cost) in Euro March 31, 2018

Receivable/ (Payable) in Euro March 31, 2018

Permasteelisa S.p.A. Costs back charge No. 7 Managers/employees of Permasteelisa Spa EURO 10,414.05 149,00 10,414.05 149,00

Permasteelisa S.p.A. Passive lease and accessory charges

Fondazione Ugo e Olga Levi Onlus EURO (203,731.89) (203,731.89)

Permasteelisa S.p.A. (1) Facility Management Fondazione Ugo e Olga Levi Onlus EURO (110,858.50) (50,325.00) (110,858.50) (50,325.00)

Permasteelisa S.p.A. Energy expenses back charge

Fondazione Ugo e Olga Levi Onlus EURO 8,930.42 10,895.11 8,930.42 10,895.11

Permasteelisa S.p.A. Asset disposals Fondazione Ugo e Olga Levi Onlus EURO 90,000.00 90,000.00

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

Purchase of goods and services

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

EURO (9,594,246.78) (2,664,910.40) (9,594,246.78) (2,664,910.40)


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


EURO (140,520.60) (118,520.60) (140,520.60) (118,520.60)


Purchase of goods and services on behalf of MPS France Branch


EURO (1,287,258.16) (554,941.16) (1,287,258.16) (554,941.16)


Purchase of goods and services on behalf of MPS Montecarlo Branch


EURO (4,428,929.37) (1,626,030.23) (4,428,929.37) (1,626,030.23)

Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA

Fees for administrative and accounts support

Cicero Augusto Oliveira De Alencar (Executive Officer of the associate Permasteelisa Do Brasil) by way of the company Acal Consultoria e Auditoria S/S

BRL (143,089.80) (38,002.56)

Permasteelisa Gartner Middle East LLC

Fees for sales support (Abu Dhabi Branch)

The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links AED (92,610.00) (97,240.50) (21,548.70) (21,490.09)

102

Group, holds the 51% of Permasteelisa Gartner Middle East Llc)


Fees for sales support (Dubai Branch)

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

AED (34,729.00) (8,080.82)


Fees for sales support and services


AED (230,000.00) (241,500.00) (53,516.91) (53,371.35)


Fees for sales support (Sharjah Branch)


AED (75,000.00) (78,750.00) (17,451.17) (17,403.70)

Permasteelisa Gartner Qatar LLC

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

QAR (219,62) (51,55)

Permasteelisa Gartner Qatar LLC

Supply of Engineer- Sub Contract for Electrical & Mechanical Systems

Sitie Impianti Gulf Contracting Co.(subsidiary of Sitie Group Impianti Industriali Spa, in which the Director lng. Nicola Greco is a Director and holds an indirect partecipation)

USD (16,500.00) (13,391.77)

Permasteelisa Gartner Saudi Arabia LLC (3)

Supply and installation of "canopy"

Salini Impregilo Spa (company in which Ing Nicola Greco is a Director)

SAR 29,161,456.37 294,566.25 6,643,531.59 63,753.41

revenue/receivable 6,742,462.01 74,797.52

(cost)/(payable) (15,904,197.00) (5,120,414.29)

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

(1) With reference to the “Facility Management” item, it should be noted that the commitments as of March 31, 2018 are equal to costs of Euro 715,000.00 and payables for Euro 872,300.

(2) With reference to the “purchase of goods and services” item, it should be noted that the commitments as of March 31, 2018 are equal to costs/payables for Euro 31,551,919.39.

(3) With reference to the supply of "canopy" for a project in Riyadh, it should be noted that the commitments as af March 31, 2018 amounted to SAR 1,225,026.53 equal to revenues for Euro 279,084.22 and to receivables for Euro 265,134.30.

103

Transactions with key management personnel

The key management personnel compensations, as defined by IAS 24, are as follows:


2018 March 31,

2017

Benefits for salaries, wages, compensations, bonus 5,390 6,165

Post-employment benefits 226 251

Other benefits 436 297

6,052 6,713

Total remuneration is included in personnel expenses and the breakdown by function is the following:


March 31, 2017

General manager 2,572 2,768

Chief executive officer and other members of the Board of Directors 1,430 1,582

Holding function manager 2,050 2,363

6,052 6,713

44. Fees payable to the independent auditors or audit firm of Group companies

The amount of fees payable to the independent auditors or audit firm of each Group company (Deloitte & Touche S.p.A. which is the main auditor and other local auditors) amounts to Euro 1,994 thousand of which Euro 1,429 thousand for audit services, Euro 233 thousand for tax services and Euro 332 thousand for other services.

The fees of Independent Auditors for the Parent Company amount to Euro 251 thousand of which Euro 133 thousand for fees for the statutory audit, Euro 17 thousand for tax services, Euro 10 thousand for other services related to the J-SOX audit required by Shareholder and Euro 91 thousand for other consultancy fees.

45. Significant, non-recurring events and transactions

There are no events or significant non-recurring transactions to mention.

46. Positions or transactions deriving from unconventional and/or unusual operations

There are no entries or transactions resulting from unconventional or unusual operations during the year 2018 having any relevance on the operating performance and the financial position for the period of the Group and of the Parent company Permasteelisa S.p.A.

47. Subsequent events

There are not subsequent events to mention.

104


Appendix to the Consolidated Financial Statements

105

Appendix I: Permasteelisa Group’s companies

Following the list of companies and equity investments that are significant for the Group is reported.

Companies are listed broken down by type of controlling relationship and consolidation method. For each company, information is also provided on its scope, headquarters, nation of origin and share capital in the original currency.

The percentage of consolidation in the Group is also shown in addition to the percentage ownership held by Permasteelisa S.p.A. or other subsidiaries.

List of subsidiaries consolidated using the line-by-line method:

COMPANY NAME REGISTERED

OFFICE SHARE CAPITAL CURRENCY

% OF CONSOLIDATION

OWNERSHIP % OWNERSHIP REGISTRATION

Parent Company

Permasteelisa S.p.A.

Vittorio Veneto (TV) Italy

6,900,000 EURO

Subsidiary companies

Bleu Tech Montreal Inc. Laval, Quebec (Canada)

100 (*) CAD 100.00 Scheldebouw B.V. 100.00

Dongguan Permasteelisa Curtain Wall Co. Ltd.

Guang Dong (R.P.C.)

23,000,000 CNY 99.52 Permasteelisa Pacific Holdings Ltd.

100.00

Global Architectural Co. Ltd.

Chonburi Province (Thailand)

110,000,000 THB 99.52 Permasteelisa Pacific Holdings Ltd.

99.99

Global Wall Malaysia Sdn. Bhd.

Kuala Lumpur (Malaysia)

1,000,000 (*) MYR 69.66 Permasteelisa Pacific Holdings Ltd.

70.00

Josef Gartner & Co. UK Ltd.

Londra (UK) 20,000 GBP 100.00 Josef Gartner GmbH

100.00

Josef Gartner Curtain Wall (Shanghai) Co. Ltd.

Shanghai (R.P.C.) 10,000,000 CNY 74.64 Permasteelisa Pacific Holdings Ltd.

75.00

Josef Gartner Curtain Wall (Suzhou) Co. Ltd.

Taicang City (R.P.C.)

22,000,000 CNY 99.52 Permasteelisa Pacific Holdings Ltd.

100.00

Josef Gartner (Macau) Ltd.

Macao (R.P.C.) 25,000 MOP 99.52

Permasteelisa Hong Kong Limited Permasteelisa Pacific Holdings Ltd

96.00

4.00

Josef Gartner Switzerland AG

Arlesheim (Switzerland)

100,000 CHF 100.00 Josef Gartner GmbH 100.00

Josef Gartner GmbH

Gundelfingen (Germany)

10,000,000 EURO 100.00 Permasteelisa S.p.A. 100.00

OOO Josef Gartner San Pietroburgo (Russia)

4,000,000 RUB 100.00

Josef Gartner GmbH Josef Gartner Switzerland AG

99.00

1.00

Permasteelisa Colombia SAS

Bogotà (Colombia) 100,000,000 COP 100.00 Permasteelisa S.p.A. 100.00

Permasteelisa Do Brasil Construção, Indústria, Comèrcio Ltda

San Paolo (Brazil)

30,000 BRL 100.00

Permasteelisa S.p.A. Permasteelisa North America Corp.

99.00

1.00

Permasteelisa Espaňa S.A.U.

Madrid (Spain) 174,290 EURO 100.00 Permasteelisa S.p.A.

100.00

Permasteelisa France S.a.s.

Courbevoie (France)

1,644,336 EURO 100.00 Permasteelisa S.p.A.

100.00

Permasteelisa Gartner Middle East Llc

Dubai (United Arabian Emirates)

300,000 AED 100.00 Josef Gartner GmbH 49.00 (**)

Permasteelisa Gartner Qatar Llc

Doha (Qatar) 200,000 QAR 97.00 Josef Gartner GmbH 49.00 (***)

Permasteelisa Gartner Saudi Arabia Llc

Riyadh (Saudi Arabia)

300,000 SAR 100.00

Permasteelisa Gartner Qatar Llc Permasteelisa Gartner Middle East Llc

5.00

95.00

Permasteelisa Hong Kong Limited

Hong Kong (R.P.C.)

2,000,000 HKD 99.52 Permasteelisa Pacific Holdings Ltd.

100.00

106

Permasteelisa Ireland Ltd Dublino (Ireland) 50,000 EURO 100.00 Permasteelisa S.p.A. 100.00

Permasteelisa (India) Private Limited

Bangalore (India) 2,809,000,900 INR 99.40

Permasteelisa Pacific Holdings Ltd. Permasteelisa Hong Kong Limited

99.87

0.01

Permasteelisa Japan K.K.

Tokyo (Japan) 204,500,000 JPY 99.52

Permasteelisa Pacific Holdings Ltd. Permasteelisa PTY Ltd.

99.93

0.07

Permasteelisa Macau Limited

Macao (R.P.C.) 100,000 MOP 99.52

Permasteelisa Hong Kong Limited Permasteelisa Pacific Holdings Ltd

99.00

1.00

Permasteelisa Mongolia Llc

Ulaanbaatar (Mongolia)

130,000,000,00 MNT 99.52 Permasteelisa Pacific Holdings Ltd

100.00

Permasteelisa North America Corp.

Windsor (USA) 30,132 USD 100.00 Permasteelisa S.p.A. 100.00

Permasteelisa Pacific Holdings Ltd.

Singapore 75,380,800 SGD 99.52 Permasteelisa S.p.A. Josef Gartner GmbH

54.25

45.27

Permasteelisa Participations S.r.l.

Vittorio Veneto (Italy)

50,000 EURO 100 Permasteelisa S.p.A. Permasteelisa North America Corp.

99.00

1.00

Permasteelisa Philippines Inc.

Pasig City (Philippines)

10,200,000 PHP 99.51 Permasteelisa Pacific Holdings Ltd

99.99

Permasteelisa Projects (Thailand) Ltd

Chonburi Province (Thailand)

4,000,000 THB 48.76 Global Architectural Co. Ltd

48.998

Permasteelisa PTY Limited

Chipping Norton (Australia)

15,434,956 AUD 99.52

Permasteelisa Pacific Holdings Ltd. Permasteelisa Hong Kong Limited

54.17

45.83

Permasteelisa S.p.A. Azerbaijan Branch Office

Baku (Republic of Azerbaijan)

N/A AZN 100.00 Permasteelisa S.p.A 100.00

Permasteelisa Taiwan Ltd.

Taipei (Taiwan) 42,600,000 TWD 99.51 Permasteelisa Hong Kong Limited

99.99

Permasteelisa Turkey İnşaat Tіcaret Limited Şirketi

Smirne (Turkey) 22,275 TRY 100.00 Permasteelisa S.p.A.

100.00

Permasteelisa UK Ltd. Londra (UK) 8,290,350 GBP 100.00 Permasteelisa S.p.A. 100.00

RI.ISA d.o.o. Rijeka (Croatia) 55,200 HRK 98.55 Pemasteelisa S.p.A. 98.55

Scheldebouw B.V. Middelburg (Holland)

3,040,326 EURO 100.00 Permasteelisa S.p.A. 100.00

Scheldebouw UK Ltd. Middelburg (Holland)

1,000 GBP 100.00 Scheldebouw B.V. 100.00

(*) It refers to the paid-up capital

(**) 100% in terms of the right to the sharing of profit and of losses

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

List of jointly controlled subsidiaries:


OFFICE SHARE

CAPITAL CURRENCY

% OF CONSOLIDATION

OWNERSHIP % OWNERSHIP REGISTRATION

Cladding Technology Italia (CTI) – winding up

Milano (Italy)

N/A (****) EURO -


50.00

Marine Project Solutions S.c.a.r.l.

Vittorio Veneto (Italy)

366.500 (*) EURO 100.00


55.50

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

(*) It refers to the paid-up capital

107

List of associated companies:

COMPANY NAME REGISTERED OFFICE SHARE

CAPITAL CURRENCY % OF CONSOLIDATION OWNERSHIP

Mobil Project S.p.A. San Vendemiano (Italy) 500,000 EURO Permasteelisa Partecipations S.r.l. 20.00

List of other subsidiaries in more than 10% measure:


OFFICE SHARE

CAPITAL

CURRENCY

% OF CONSOLIDATION

OWNERSHIP

Interoxyd AG Altenrhein (Switzerland) 50,000 CHF Scheldebouw B.V. 18.00 Dyepower Consorzio – winding up Roma (Italy) N/A (*****) EURO Permasteelisa S.p.A. 49.90

(****) The Consortium Capital Fund amounts to Euro 352,564

Regarding the Consorzio Dyepower, which has been created with the aim of promoting, planning and carrying out research and development activities in the organic/hybrid photovoltaic sector, it is specified that in February 2018 the consortium members approved the final liquidation balance with the relative allotment plan. The effects on the valuation of the participation are described in note 12.

Furthermore, on March 29, 2017, the Consorzio Marine Project Solutions’ Meeting approved to transform the Consorzio into a Società Consortile a Responsabilità Limitata, with an authorized share capital of Euro 500,000. This transformation has become effective since 9 June 2017.

108

109

Permasteelisa S.p.A. – Statutory

Financial Statements

as of March 31, 2018

110

Income Statement


Notes March, 31 2018

March, 31 2017

In Euro

Revenues 121,512,323 126,348,444

Other operating incomes 4 814,339 750,614

Total operating revenues 1 122,326,662 127,099,058

Raw materials and consumables used 5 (49,280,568) (42,881,382) Services expenses and use of third party assets 5 (54,682,884) (52,397,880)

Personnel expenses 6 (51,190,981) (53,995,110)

Depreciation, amortization and impairment losses 7 (4,964,543) (5,419,186)

Bad debts provision 8 (2,193,485) (1,172,342)

Provision for risks and charges 9 76,270 (3,251,602)

Other operating expenses 10 (302,879) (335,373)

Costs Recovery 28,454,162 30,344,979

In-house enhancement of fixed assets 5,220 2,572

Total operating expenses (134,079,688) (129,105,324)

Operating result (11,753,026) (2,006,266)

Financial incomes 89,994,202 120,671,987

Financial expenses (71,567,347) (105,614,357)

Net financial expenses 11 18,426,855 15,057,630

Revaluation of equity investments 12 0 1,000,000

Write-downs of equity investments 13 (4,366,886) (4,000,000)

Profit/(loss) before tax 2,306,943 10,051,364

Income tax expenses 14 783,489 (2,923,094)

Profit/(loss) after tax 3,090,432 7,128,270

111

Statement of Comprehensive Income


March 31,

2018 March 31,

2017

In Euro Profit/(loss) of the period (A) 3,090,432 7,128,270

Items that may be reclassified to Income Statement:

Hedging reserves for risks variation, net of tax 610,946 (228,612)

Gains / (losses) from the translation of the Branch (2,300,513) 316,404

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

(1,689,567) 87,792

Items that will never be reclassified to Income Statement: Gains/(losses) on actuarial evaluation

(41,279)

(23,162)

Total comprehensive income/(loss) that will never be reclassified to Income Statement (41,279) (23,162)

Total Other comprehensive income, net of tax (B) (1,730,846) 64,630

Total Comprehensive income/(loss) (A)+(B) 1,359,586 7,192,900

112

Statement of Financial Position


In Euro Notes March 31, 2018

March 31, 2017

Assets

Intangible assets 15 11,047,922 12,521,517

Tangibles assets 16 22,740,720 24,599,620

Equity investments in subsidiaries 17 284,503,970 282,686,835

Other equity investments 18 366,608 1,097,180

Deferred tax assets 19 13,231,634 12,695,869

Total non-current assets 331,890,854 333,601,021

Contracts work-in-progress and inventories 20 55,700,515 52,388,836

Trade receivables from third parties 21 19,633,062 35,353,485

Trade receivables from subsidiaries 22 65,916,353 87,931,935

Financial receivables from subsidiaries 22 296,234,475 284,786,117

Income tax receivables 23 5,343,652 3,747,376

Other current assets 24 21,938,963 15,856,736 Cash and cash equivalents 25 3,387,763 4,819,866

Assets held for sale 26 0 0

Total current assets 468,154,783 484,884,351

Total assets 800,045,637 818,485,372

Equity

Share capital 27 6,900,000 6,900,000

Legal reserve 27 1,380,000 1,380,000

IAS 19 Reserve 27 (446,157) (404,877)

Translation reserve 27 612,826 2,912,988

Foreign Exchange Risk Hedging Reserve 27 167,098 (443,681)

Other reserves 27 163,999,280 163,999,280

Retained earnings 27 (5,161,073) (12,289,344)

Profit/(loss) for the period 27 3,090,432 7,128,270

Total equity 170,542,406 169,182,636

Liabilities

Amounts payable to banks and other financial creditors 28 158,480,000 205,036,595

Severance indemnity fund 29 3,380,084 3,452,323

Deferred tax liabilities 19 5,795,518 6,058,876

Provisions for risks and charges 30 1,011,642 3,804,636

Total non-current liabilities 168,667,244 218,352,430

Amounts payable to banks and other financial creditors 28 187,561,816 218,585,496

Excess of progress billings over work-in-progress 20 1,243,290 3,329,153

Advances from customers 20 26,144,531 11,850,477

Trade payables to third parties 31 40,321,938 36,753,735

Trade payables to subsidiaries 32 16,447,964 14,604,609

Financial payables to subsidiaries 32 173,467,712 128,363,951

Current tax liabilities 33 0 0

Other current liabilities 34 15,648,736 17,462,885

Total current liabilities 460,835,987 430,950,306

Total equity and liabilities 800,045,637 818,485,372

113




March 31, 2017

Cash flows generated (absorbed) by operating activities

Result before tax 2,307 10,051

Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities:

- Interest income (4,873) (4,099)

- Interest expense 4,711 4,982

- Depreciation and amortization expenses and impairment losses 4,965 5,419

- Gain/loss on disposal of tangible and intangible assets (94) (20)

- Provision for risks and charge (76) 3,252

- Bad debts provision 2,193 1,172

- Equity investments write-downs/(revaluations) 4,367 3,000

- Severance indemnity fund payments to employees 172 (110)

- Severance indemnity fund expenses (45) 110

Total adjustments 11,320 13,706

Changes in operating activities

- Changes in foreign exchange risk hedging reserve 610 (229)

- Changes in IAS19 reserve (41) (23)

- Changes in assests and liabilities for contracts work-in-progress 8,205 23,307

- Changes in trade receivables/payables to third parties 17,095 (26,223)

- Changes in trade receivables/payables to subsidiaries 23,859 (12,993)

- Changes in other captions of operating capital (1) (10,736) 210

- Income tax paid (1,218) (1,445)

- Interests paid (4,489) (5,091)

- Interest received 4,890 4,083

- Effect of exchange rate changes on operating activities cash flows (2,317) 335

Total changes 35,858 (18,069)

Net cash flows generated by operating activities (A) 49,485 5,688

Cash flows generated (absorbed) by investing activities

Net investment in tangible and intangible assets (1,604) (4,300)

Proceeds from disposal of tangible and intangible assets 66 31

Changes in subsidiaries equity investments 113 (142)

Changes in other equity investments (5,567) (289)

Net cash flows absorbed by investing activities (B) (6,992) (4,700)

Cash flows generated (absorbed) by financing activities

Change in intercompany current accounts 33,655 (49,684)

Net cash flows generated (absorbed) by financing activities (C) 33,655 (49,684)

Net increase/(decrease) in cash surplus/(deficit) (A+B+C) 76,148 (48,696)

Net cash surplus/(deficit) as of April 1 (D) (418,802) (370,106)

Effect of exchange rate changes on balances held in foreign currency (E)

0 0

114

Net cash surplus/(deficit) as of March 31 (A+B+C+D+E) (342,654) (418,802)

Net cash surplus/(deficit) includes:


Cash in hand 8 5

Bank overdrafts and other short-term loans (122,381) (168,529)


(342,654) (418,802)

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

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

115

Statement of Net Equity Changes


Share

capital Legal

reserve Share

premium Revaluation

reserve Merger surplus reserve

Other merger reserve

IAS conversion reserve (not

available)

Other IAS conversion

reserve

Translation reserve

Foreign exchange risk

hedging reserve


reserve

IAS 19 Reserve

Other reserves

Retained earnings

Net equity

€ thousands

Balance as of April 1, 2016

6,900 1,380 0 0 4 163,789 312 (103) 2,597 (215) 0 (381) (3) (12,290) 161,990

Income (expenses) recognized directly in equity:

Translation differences

316 316

Foreign exchange risk hedging reserve variation

(229) (229)

Commodities risk hedging reserve variation

Interest rate risk hedging reserve variation

Changes in IAS Reserve

(23) (23)

0 0 0 0 0 0 0 0 316 (229) 0 (23) 0 0 64

Net result for the period

7,129 7,129

Total Income (expenses) for the period

0 0 0 0 0 0 0 0 316 (229) 0 (23) 0 7,129 7,193


Destination of operating result

Other changes

Dividends

Rounding

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Balance as of March 31, 2017

6,900 1,380 0 0 4 163,789 312 (103) 2,913 (444) 0 (404) (3) (5,161) 169,183

116


Share

capital Legal

reserve Share

premium Revaluation

reserve Merger surplus reserve

Other merger reserve

IAS conversion

reserve (not available)

Other IAS conversion

reserve

Translation reserve

Foreign exchang

e risk hedging reserve


reserve

IAS 19 Reserve

Other reserves

Retained earnings

Net equity

€ thousands

Balance as of April 1, 2017 6,900 1,380 0 0 4 163,789 312 (103) 2,913 (444) 0 (404) (3) (5,161) 169,183

Income (expenses) recognized directly in equity:

Translation differences (2,301) (2,301)

Foreign exchange risk hedging reserve variation

611 611

Commodities risk hedging reserve variation

0

Interest rate risk hedging reserve variation

0

Changes in IAS Reserve (41) (41)

0 0 0 0 0 0 0 0 (2,301) 611 0 (41) 0 0 (1,731)

Net result for the period 3,090 3,090

Total Income (expenses) for the period

0 0 0 0 0 0 0 0 (2,301) 611 0 (41) 0 3,090 1,359


Destination of operating result 0

Other changes 0

Dividends 0

Rounding 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Balance as of March 31, 2018 6,900 1,380 0 0 4 163,789 312 (103) 612 167 0 (445) (3) (2,071) 170,542

117

Notes to the Statutory Financial Statements

Company’s information

Permasteelisa S.p.A. (hereinafter referred to as the “Company”) is a company domiciled in Italy that operates internationally both directly and indirectly through its subsidiaries in the field of the design, production and installation of architectural components (curtain walls) and interiors systems. The Statutory Financial Statements of Permasteelisa S.p.A. have been drawn up in Euro, which is the currency of the economic area in which the Company operates. Permasteelisa S.p.A., as Parent Company, has also prepared the Consolidated Financial Statements of Permasteelisa Group as of March 31, 2018. These financial statements are subject to audit by Deloitte & Touche S.p.A.

Financial tables

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

Statement of financial position

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

Income statement

The adopted method breaks costs down based on their nature.


The indirect method was employed.

Statement of net equity changes

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

Accounting principles

(a) Statement of compliance

The Statutory Financial Statements as of March 31, 2018 represent the separate financial statements of the Parent Company Permasteelisa S.p.A. and have been prepared according to IFRS International Accounting Standards issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union. IFRS is understood to include also the International Accounting Standards (“IAS”) that are currently in force in addition to the interpretations made available by the International Financial Reporting Interpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”).

118

According to the European Regulation n. 1606 dated 19 July 2002, the Company adopted the International Accounting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) for the preparation of the separate financial statements and for the preparation of the Consolidated Financial Statements too.

These Statutory Financial Statements were prepared in accordance with the accounting standards described in the paragraphs below, namely the same standards that were used to prepare the Statutory Financial Statements as of March 31, 2017.

The Statutory Financial Statements have been prepared on a going concern basis.

(b) Basis of preparation

The financial statements are presented in Euro on the historical cost basis except for the following assets and liabilities that are stated at their fair value: derivative financial instruments, financial instruments held for trading, financial instruments classified as available-for-sale.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting principles exposed in the following paragraphs have been consistently applied for all the periods included in this Statutory Financial Statements.

c) Basis of conversion of foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Euro at the foreign exchange rate ruling at that date. Foreign exchange differences arising on this translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Euro at foreign exchange rates ruling at the dates the fair value was determined.

The exchange rates used for the closing as of March 31, 2018, and the comparative exchange rates of the previous year March 31, 2017, are as follows:

March 31, 2018 March 31, 2017

Currency Exchange rate at the balance sheet date


Exchange rate at the balance sheet date


Thai Bath 38.478000 38.630060 36.724000 38.568788 Danish Krone 7.453000 7.441515 7.437900 7.439046

Norwegian Krone 9.677000 9.491200 9.168300 9.156729

Dubai Dirham 4.524900 4.297707 3.924666 4.028349

Australian Dollar 1.603600 1.512588 1.398200 1.457498

Canadian Dollar 1.589500 1.500682 1.426500 1.439896

Hong Kong Dollar 9.669600 9.141240 8.307400 8.514244

Singapore Dollar 1.615800 1.586516 1.494000 1.518078

Taiwan Dollar 35.928300 35.078307 32.459852 34.842052

United States Dollar 1.232100 1.170468 1.069100 1.097343

Hungarian Forint 312.130000 309.772574 307.620000 310.709743

Swiss Franc 1.177900 1.135464 1.069600 1.083519 Croatian Kuna 7.432300 7.457202 7.446500 7.496835 Pataca Macau 9.959700 9.415505 8.556711 8.770815 Philippine Peso 64.374000 59.478733 53.658000 52.840309 Chinese Renminbi 7.746800 7.746634 7.364200 7.380853

119

Malayan Ringitt 4.765800 4.872652 4.731300 4.611466 Riyal Qatar 4.484800 4.260484 3.891524 3.994329 Riyal Saudi Arabia 4.620400 4.389451 4.009296 4.115675 Russian Ruble 70.889700 67.744317 60.313000 69.234071 Indian Rupia 80.296000 75.462448 69.396500 73.578130 Israeli Shekel 4.326200 4.131364 3.885300 4.166112 Pound Sterling 0.874900 0.882046 0.855530 0.841310

Korean Won 1,310.890000 1,298.568532 1,194.540000 1,260.343587

Japanese Yen 131.150000 129.689943 119.550000 118.807507

Polish Zloty 4.210600 4.220926 4.226500 4.352367

Manat Azerbaigian 2.094600 1.991155 1.843556 1.801443

Mongol Tugrik 2,949.450000 2.835.881468 2,616.568795 2,472.955659

Turkish Lira 4.897600 4.309918 3.889400 3.515119

Vietnam Dong 28,112.000000 26,595.939286 24,329.160080 24,636.203495

Brazil Real 4.093800 3.765271 3.380000 3.621599

Colombian Pesos 3,439.760000 3,434.826468 3,088.452043 3,258.684320

(d) Derivative financial instruments

The Company uses derivative financial instruments (generally forward exchange contracts and swaps) only to hedge its exposure to foreign currency risk, to commodities risk and interest risk coming from its operating and financial activities.

According to its treasury policy, the Company does not hold or issue derivative financial instruments for trading purposes. Anyway, derivative financial instruments for which the criterion to record the operations as hedging operations are not respected, are recorded as trading instruments.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss account.

However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see the accounting policy described in the next paragraph “e”).

The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

(e) Hedging

(i) Cash flow hedging (foreign currency risk)

As shown above, the Company uses derivative financial instruments to hedge its exposure to foreign currency risk coming from its operating and financial activities.

In particular, the Company uses derivative financial instruments to hedge the foreign currency risk related to the contracts work-in-progress cash flows. When the Company acquires a job whose future cash flows are denominated in foreign currency, specific forward exchange contracts or swaps on foreign currency are concluded to hedge the foreign currency risk existing on those future cash flows. Therefore, these hedging operations are related to highly probable future transactions as the job that is hedged is effectively acquired when the hedging contract or contracts are concluded. Considering the length of the Company contracts, the estimation of the timing of the future cash flows is very difficult and subject to changes that can be also relevant; consequently, the Company policy consists in making an initial hedging of future cash flows based on a rough estimation of the future cash flows timing and subsequently in:

- rolling over the forward exchange contracts or swaps on foreign currency if at the expiry date the

correspondent cash flows related to the job does not occur;

- concluding another forward exchange contract or swap on foreign currency, of opposite sign and same

expiry date of the existing hedging contracts, if the cash flow related to the job occurs in advance with

respect to the expiry date of the existing hedging contracts.

The gains and losses deriving from the roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part. These gains and losses are removed from the net equity and recorded in the income statement in the same period or

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periods during which the hedged forecast transaction affects income statement; they are included in the operating revenues or operating expenses if related to hedging operations of job contracts cash flows.

The ineffective part of any gain or loss is recognised immediately in the income statement.

The Company does not measure the prospective effectiveness of its hedging operations as, on the basis of the method used for hedging the future cash flows related to contracts work-in-progress in foreign currency, the Company considers that it is always included in the range requested by IAS 39 (80%-125%). Any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of a forward exchange contract or swap on foreign currency are not performed correctly; the measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur.

If the hedged transaction is no longer expected to take place, the cumulative unrealised gains or losses recognised in equity are recognised immediately in the income statement as financial components.

Finally, according to the Company policy the foreign currency risk hedging is made on the spot rate. As a consequence, the difference between spot rate and forward rate recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on foreign currency are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such.

(ii) Hedge of monetary assets and liabilities

The Company uses derivative financial instruments also to hedge economically the foreign exchange exposure of a recognised monetary asset or liability as the loans in foreign currency; in this case, no hedge accounting is applied and any gain or loss on the hedging instrument is recognised directly in the income statement.

(iii) Cash flow hedging (Commodities Risk)

The Company uses derivative financial instruments also to hedge price risk on commodities coming from its operating activities.

In particular, the Company uses derivative financial instruments to hedge the price risk related to aluminium purchase for the contracts work-in-progress. When the Company acquires a job whose future cash flows are related to aluminium purchase, specific forward contracts or future on aluminium are concluded to hedge the price risk existing on this commodity. Therefore, these hedging operations are related to highly probable future transactions as the job that is hedged, with regard to the aluminium purchase, is effectively acquired when the hedging contract or contracts are concluded. In consideration of the variability of the price of aluminium, the aim of hedging is to freeze this price already since the acquisition of the order itself. Subsequently, as the aluminium order, as well as the relevant price are agreed with the supplier, the Company shall complete the aluminium forward purchase by completing a transaction of opposite sign. If, upon expiry of the transaction, the order has not been defined yet for the supplier, the hedging contract(s) shall be rolled over.

The gains and losses deriving from the regulation of the operations on maturity, including the effect of the possible roll-over operation of these derivative financial instruments and from their evaluation at fair value are recognised directly in the net equity in a specific reserve for the effective part. These gains and losses are removed from the net equity and recorded in the income statement in the same period or periods during which the hedged forecast transaction affects income statement (arrival of the goods); they are included in the operating expenses.

The ineffective part of any profit or loss is recognised immediately in the income statement as financial components.

The Company does not measure the prospective effectiveness of its hedging operations as, based on the method used for hedging of the price risk on the future cash flows payments related to aluminium purchases on contracts work-in-progress. The Company considers that it is always included in the range requested by IAS 39 (80%-125%); any ineffectiveness can occur retrospectively only if the roll-over operations or the closing in advance of an hedging contract by operation of the opposite sign when the order to the supplier is fixed are not performed correctly. The measurement of the retrospective ineffectiveness is therefore made continuously monitoring that these cases do not occur.

If the hedged transaction is no longer expected to take place, the losses or profits on the accumulated price difference recognized in equity are recognized immediately in the income statement as financial components.

Finally, according to the Company policy, the price risk on commodities is made on the spot price. As a consequence, the difference between spot price and forward price recorded when a roll-over operation is performed and the interest component included in the fair value of the forward contracts or swaps on commodities, are always recorded in the income statement in the financial components as hedging expenses/revenues, regardless whether the contract does or does not comply with the requirements for being considered as such.

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(f) Tangible assets

(i) Owned tangible assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (depreciation criteria are reported below) and impairment losses (see accounting policy “n”). The cost of self-constructed assets includes the cost of materials, direct labour, and the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment according to the “component approach”.

(ii) Subsequent costs

The Company recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

(iii) Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation is applied from the date the tangible assets are available for use. Land is not depreciated. The estimated useful lives are as follows:

- buildings 33 years

- plant and machinery 7-25 years

- equipment 4-5 years

- other assets 4-8 years

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

(g) Intangible assets

(i) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Company has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.

Other development expenditure is recognised in the income statement as an expense as incurred.

Capitalised development expenditure is stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “n”).

(ii) Other intangible assets

Other intangible assets that are acquired by the Company are stated at cost less accumulated amortization (amortization criteria are reported below) and impairment losses (see accounting policy “n”).

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

(iii) Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as income statement when incurred.

(iv) Amortisation

Amortization is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and intangible assets not yet

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available to be used are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

- rights to use intellectual property (software) 3-5 years

- capitalised development costs 5 years

- customer relationship 20 years

(h) Investments in subsidiaries and associate companies

Investments in subsidiaries and associate companies are stated at cost adjusted for any impairment losses.

Any positive difference, arising on acquisition, between the purchase cost and the fair value of net assets acquired by the Company in the investee company is, accordingly, included in the carrying amount of the investment.

Investments in subsidiaries and associate companies are tested annually or more often if necessary, for impairment. Where evidence of impairment exists, an impairment loss is recognized directly in the income statement as devaluation. If the company’s share of losses of the investee exceeds the carrying amount of the investment and if the company has an obligation or intention to cover these losses, the value of the investment is reduced to zero and the share of additional losses is recognized as a provision in the liabilities. If the impairment loss subsequently no longer exists or is reduced, a reversal is recognized in the income statement up to the limit of the cost of the investment.

(i) Trade receivables to third parties

Trade receivables are recognised initially at fair value and subsequently recorded at the amortised cost, using the effective interest method, net of impairment losses related to amounts considered recoverable, recorded as provision. The estimation of the recoverable amounts is based on future expected cash flows.

Trade receivables, whose expiry date is within ordinary trade terms, are not discounted.

(j) Contracts work-in-progress

Contracts work-in-progress are reported in accordance with the progress stage (or completion percentage) of the works, according to which the costs, revenues, and margin are recognised based on the progress of the productive activity. The policy adopted by the Company is the completion percentage determined by applying the “incurred cost” (cost to cost) criterion.

The valuation reflects the best estimate of the contracts made as at the reporting date. Periodically, the assumptions underlying the evaluations are updated. Any economic effect is recorded in the year in which the updates have been made.

The contract revenues include the payments agreed upon by contract, work changes, price revision, incentives, and any claims, to the extent that these are likely to be reliably valuated. In particular, the valuation of claims was guided, based on certain technical and legal analysis, towards the positive results that could reasonably be achieved from disputes with the customers.

The contracts costs include all the costs that refer directly to the project, the costs that may be attributed to the contract activity in general and that may be allocated to the said project, in addition to any other costs that may be specifically charged to the customer based on the contractual clauses. The contract costs also include: the pre-operative costs, which is to say the costs incurred in the initial phase of the contract before the construction activity is began (costs or preparing, tenders, design costs, costs for organization and start-up of production, construction site installation costs); and the post-operative costs that are incurred after the contract is closed (removal of the construction site, return of plant/equipment to base, etc.).

Should the completion of a project be forecast to lead to a loss, this shall be recognised in its entirety in the year in which it may be reasonably expected.

The contracts in progress are set out net of any depreciation fund and/or final losses, as well as the progress billings for the contract being carried out.

This analysis is carried out on a contract-by-contract basis: should the difference be positive (due to contracts in progress greater than the amounts of the progress billings), it is classified among the assets (contracts work-in-progress); on the other hand, should the difference be negative, it is classified among the liabilities (liabilities for contracts work-in-progress).

Should the final losses fund for the individual contract exceed the value of the work entered in the assets, this excess is classified under the provision for risks and charges.

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Contracts with payment denominated in foreign currency other than the functional currency (Euro for the Company) are valuated by converting the accrued share of payments determined based on the completion percentage method, at the exchange rate ruling at the reporting date for the portion not yet invoiced, and at the exchange rate ruling at the transaction date for the portion already invoiced.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost determining method is the weighted average cost and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and works in progress, cost includes an appropriate share of overheads based on normal operating capacity.

(l) Other financial assets

Other financial assets that the Company intends and is able to hold until maturity are recorded at the fair value of the initial consideration given in exchange plus the related transaction costs, (e.g. commissions, consultancies, etc.) directly attributable to the acquisition of the financial asset itself. Subsequently, they are valued on an amortised-cost basis using the original effective interest method.

Financial assets are derecognised when, following their sale or settlement, the Company is no longer involved in their management and has transferred all risks and rewards of ownership.

(m) Cash and cash equivalents

Cash and cash equivalents include bank and post current accounts and deposits. Bank overdrafts, advances and other short-term loans, which are repayable on demand and form an integral part of the Company’s cash managements are considered as components of cash surplus or deficit for cash flow statement purposes.

(n) Impairment of tangible and intangible assets

The carrying amounts of tangible and intangible are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

Even if there are no indication of impairment, for goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

(i) Calculation of recoverable amount

The recoverable amount of an asset is the greater of their net selling price and value in use. In assessing value in

use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the asset. For an asset that does

not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit

to which the asset belongs.

(ii) Reversal of impairment

An impairment loss, except if in respect of goodwill, is reversed and recorded in the income statement, only if the

reasons for the impairment loss cease to exist. An impairment loss is reversed only to the extent that the asset’s

carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or

amortization, if no impairment loss had been recognised.

(o) Equity

(i) Share capital

Share capital includes the subscribed and paid up Company’s share capital.

(ii) Dividends

Dividends are recognised as a liability in the period in which they are declared.

(iii) Treasury shares

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Treasury shares are entered as write-down of the Shareholder’s equity. The original cost of treasury shares and the income arising from their subsequent sale, if pertinent, are entered as movements in the Shareholder’s equity.

(p) Amounts payable to banks and other financial creditors

Amounts payable to banks and other financial creditors are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings or loans on an effective interest basis.

(q) Pension funds and other employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income

statement as incurred.

(ii) Severance indemnity fund

Employee severance indemnity, mandatory for Italian companies pursuant to art. 2120 of the Italian Civil Code is deferred compensation and is based on the employees’ years of service and the compensation earned by the employee during the service period.

Starting from January 1, 2007, Italian Law introduced for employees the choice to either direct their accruing indemnity to supplementary pension funds or leave the indemnity as an obligation of the company. Companies that employ at least 50 employees should transfer the employee severance indemnity to the “Treasury fund” managed by INPS, the Italian Social Security Institute.

Consequently, the Company’s obligation to INPS and the contributions to supplementary pension funds take the form, under IAS 19, of a “Defined contribution plan”.

Under IAS 19 - Employee Benefits, the employee severance indemnity as calculated is considered a “Defined benefit plan” and the related liability recognized in the statement of financial position (Provision for employee severance indemnities) is determined by actuarial calculations.

According to IAS 19 (Employee Benefits), the remeasurements of actuarial gains and losses are recognized in other components of other comprehensive income. Service cost of Italian companies that employ less than 50 employees, as well as interest expenses related to the “time value” component of the actuarial calculations (the latter classified as Finance expenses), are recognized in the separate income statement.

The discount rate is that attributable to obligations with “AA” rating with due date similar to that relating to the obligation of the Company. An independent qualified actuary does the calculation.

(r) Provision for risks and charges

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation because of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimation of the obligation amount can be done.

Provisions are recorded based on the best estimation of the amount that the Company would pay to settle the obligation or to transfer it to third parties at the reporting period.

If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(s) Trade payables to third parties

Trade payables are recorded at the amortised cost, using the effective interest method. Trade payables, whose expiry dates are within the ordinary trade terms, are not discounted.

(t) Other financial liabilities

The financial liabilities are initially recorded at cost, corresponding to the “fair value” of the liability net of transaction costs that are directly attributable to the issuance of that financial liability.

Following initial recording, financial liabilities are valued on an amortised-cost basis using the effective interest method.

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Financial liabilities are derecognised when, following their sale or settlement, the Company is no longer involved in their management and has transferred all risks and rewards of ownership.

(u) Revenue recognition

(i) Contracts work-in-progress

As soon as the outcome of a contract can be estimated reliably, contract revenues and expenses are recognised in the income statement in proportion to the stage of completion of the contract that is calculated based on the costs effectively incurred and total costs included in the contract budget. An expected loss on a contract is recognised immediately in the income statement.

(ii) Goods sold and services rendered

Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed checking the work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(v) Expenses

(i) Operating lease payments

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

(ii) Net financial expenses

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends, foreign exchange gains and losses except for those related to cash flow hedging operations that are included in the operating revenues or expenses, and premiums and discounts related to all forward exchange contracts and swaps on foreign currency.

Interest income is recognised in the income statement as it accrues, using the effective interest method.

Dividends income is recognised in the income statement on the date the entity’s right to receive payments is established. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets (as defined under IAS 23 – Borrowing Costs), which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised and amortised over the useful life of the class of assets to which they refer.

All other borrowing costs are expensed when incurred.

(w) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. This is justified by the fact that the Company is able to manage the time plan for the distribution of the reserves and it is quite possible that they will not be distributed in the near future.

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(x) Non-current assets held for sale and discontinued operations

Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.

Impairment losses on initial classification as held for sale are included in profit and loss, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement.

A discontinued operation is a component of the Company’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify as discontinued operation if the criteria mentioned above are observed.

(y) New accounting standards

Accounting standards, amendments and interpretations applied since April 1, 2017

· Amendment to IAS 12 - Income taxes – Recognising deferred tax assets for unrealised losses; · Amendment to IAS 7 - Statement of cash flow – Disclosure initiative; · Amendment to IFRS 12 – Disclosure of interests in other entities.

The directors do not expect a significant effect on the Company's financial statements from the adoption of such

amendments.

Accounting standards, amendments and interpretations effective from April 1, 2017 and not relevant for the

Company

There are no accounting standards, amendments and interpretations effective from April 1, 2017 and not relevant for the Company.

Accounting standards, amendments and interpretations not yet in force and applied in advance

The Company has not applied the following standards, both new and amended, which have been issued but are

not yet in force.

Accounting standards, amendments and interpretations not yet applicable and not adopted in advance by the Company

Standard IFRS 15 – Revenue from Contracts with Customers (published on May 28, 2014 and amended with further clarification published on April 12, 2016) which is intended to replace the standards IAS 18 – Revenue and IAS 11 – Construction Contracts, as well as the interpretations IFRIC 13 – Customer Loyalty Programmes, IFRIC 15 – Agreements for the Construction of Real Estate, IFRIC 18 – Transfers of Assets from Customers and SIC 31 – Revenues-Barter Transactions Involving Advertising Services.

The standard establishes a new model of recording revenues, which will be applied to all contracts entered into with customers excluding those that fall within the scope of application of other IAS/IFRS standards such as leases, insurance contracts and financial instruments. The essential steps for recording revenues in accordance with the new model are:

- the identification of the contract with the customer;

- the identification of the performance obligations of the contract;

- the determination of the price;

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

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

The standard is applicable commencing from January 1, 2018 but may be applied in advance.

Company does not apply for early application of this standard, but it has been opted for applying as from next year using retrospective approach and accounting cumulative effect of initially applying at the date of initial application (modified retrospective approach). This effect will be recognised as corresponding adjustment to the opening

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balance of retained earnings in the reporting period that includes the date of initial application that, for Permasteelisa S.p.A., is April 1, 2018 - March 31, 2019.

Under transition method, the Company shall apply this Standard retrospectively only to contracts that are not completed contracts at the date of initial application (April 1, 2018).

During the past year, the Company carried out an extensive survey to identify potential effects from adoption of the new Standard. It showed that areas most affected by new provisions are:

Costs to obtain a contract: the Company shall recognise as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognised as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained. It showed that, for the Company, the costs incurred for the preparation of the offers could not be included in the contract costs and not be accounted as a year-end asset, if the contract with the customer is not obtained. Estimated impact on capitalized costs for the year-end offers (at March 31, 2018), at company level, is about Euro 2,200 thousand net of tax effects.

Contract modifications: a contract modification is a change in the scope or price (or both) of a contract that is approved by the parties to the contract. If both sides have approved change in the scope of a contract without having determined the corresponding change in price, the entity shall estimate changes in the transaction price, due to modification, in accordance with this Standard to estimate of variable consideration and its constraints. In particular, an entity has to include in the transaction price the amount of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur once the uncertainty related to the variable consideration is subsequently resolved.

In the light of the new rules of new Standard in terms of contractual changes and estimate of variable consideration, the Company has conducted an analysis of Variations and Claims included as revenues under contracts existing at the year-end date (March 31, 2018). Moreover the Company has estimated a corresponding negative adjustment on opening balance of retained earnings for the next period of Euro 1,100 thousand net of tax effect.

Final version of IFRS 9 - Financial Instruments (published on July 24, 2014). The document encompasses the results of the phases relating to Classification and Measurement, Impairment, and Hedge Accounting, of the IASB project aimed at replacing IAS 39:

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

liabilities.

- with reference to the impairment model, the new standard requires that the estimate of losses on

receivables is performed on the basis of the expected losses model (and not on the incurred losses model

used by IAS 39) using information supportable and available at no cost or unreasonable effort, which

includes historical, current and prospective data;

- introduces a new hedge accounting model (increase of the type of transactions eligible for hedge

accounting, modification of the methods of accounting for forward contracts and options when included in

an hedge accounting relationship, modifications to the effectiveness test).

The new standard, which replaces the previous versions of IFRS 9, must be applied to all financial statements commencing on or after January 1, 2018.

The application of IFRS 9 should not have a significant impact on the Company's Financial Statement. In particular, referring to trade receivables and to contract assets, representative of most of the Company's credit exposure, current accounting procedures of impairment are basically equated to new Standards’ rules, whose application should not involve key effects. Regarding to the existing hedging relationships, the current accounting procedures seem to satisfy the hedge accounting requirements regulated by the new Standard IFRS 9. The Company is continuing the analysis of the new types of transactions eligible for hedge accounting - in particular to hedging of net positions and natural hedging - in order to align with the Group's risk management strategies.

Standard IFRS 16 - Leases. Issued by the IASB in January 2016, IFRS 16 introduces a single model for accounting for leases in the lessee's financial statements, eliminating the distinction between operating and financial leasing, according to which the lessee recognizes an asset that represents the right to use the underlying asset and a liability that reflects the obligation to pay the rent. Optional exemptions are provided for short-term leases and for those of modest value. IFRS 16 replaces the current lease forecasts, including IAS 17 "Leasing", IFRIC 4

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"Determining whether an agreement contains a lease", SIC-15 "Operating leases - Incentives" and SIC-27 "Evaluation of the substance of the legal leasing transactions ".

IFRS 16 is applicable for annual periods beginning on or after January 1, 2019. Early adoption is permitted for entities applying IFRS 15 "Revenues from contracts with customers" on the date of first application of the IFRS 16, faculty that the Company will not use.

The Company has launched a project aimed at identifying the potential impacts deriving from the adoption of the new Standard in terms of updating existing systems, processes and procedures. At the current state of the analysis, it is not yet possible to estimate reliably the effects of the application of the new Standard from the point of view of the valuation of the financial statement items.

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Notes to the Statutory Financial Statements

1. Operating revenues

Operating revenues by geographical area are shown in the following table:

€ thousands

March 31, 2018

March 31, 2017


United States 31,687 27,374

Colombia 10,282 4,139

Principality of Monaco 9,551 1,299

Ireland 8,505 1,424

Italy 6,699 16,992

France 6,616 21,682

Hong Kong 5,841 2,200

Russia 1,893 2,600

Qatar 1,763 1,090

Denmark 1,453 1,184

Japan 693 1,180

China 455 0

Dubai 389 1,366

Poland 380 18

Bahrain 303 0

Canada 239 210

Kuwait 216 (3)

Turkey 216 418

Spain 172 50

Thailand 122 86

Switzerland 55 263

Malaysia 51 (2)

Philippine 49 0

Norway 42 134

Belgium 38 0

Mongolia 28 (1)

Germania 22 728

South Africa 5 2

Panama 2 152

Australia 2 0

Romania 1 0

Singapore 1 7

Jordan 0 177

Czech Republic 0 87

Finland 0 18

Malta 0 9

Portugal 0 7

Austria 0 2

Georgia 0 (1)

Kazakhstan 0 (124)

Saudi Arabia (13) 398

Holland (91) 292

Azerbaijan (153) 7,026

Total 122,327 127,099

130

2. Non-current assets classified as held for sale

The Company does not have “Non-current assets held for sale”.

3. Acquisitions of subsidiaries

On March 29, 2017, the Consorzio Marine Project Solutions’ Meeting, approved the transformation of the Consorzio

into a Società consortile a responsabilità limitata, with an authorized share capital of Euro 500,000. This

transformation has become effective since June 9, 2017.

It should also be noted that, during the year just ended, the following entities were established:


- Marine Project Solutions - Norway Branch,

both headed by the subsidiary and consolidated entity Marine Project Solutions S.c.a.r.l., 55.5% owned by the

Parent Company.

4. Other operating income


March 31, 2017

Gains on tangible and intangible assets disposals 95 1

Insurance indemnities 9 7

Rental income 1 18

Sale of scraps 290 191

Other revenues 419 534

814 751

5. Raw materials and consumables used and services expenses and use of third party assets

With reference to the Company's activity, the comparison between different periods of the value of raw materials and consumables used and services expenses and use of third party assets is not very significant as it depends on the different costs mix of the job orders executed in each period.

The percentage impact of the sum of the two captions over the total operating revenues increased from 75% (as of March 31, 2017), to 85% (as of March 31, 2018).

As of March 31, 2018, the item services expenses and use of third party assets includes remuneration due to the statutory auditors amounting to Euro 94 thousand (March 2017: Euro 146 thousand).

6. Personnel expenses


March 31, 2017

Wages and salaries 35,813 37,951

Social contributions 10,602 10,986

Severance indemnities 2,407 2,628

Other personnel costs 2,369 2,430

51,191 53,995

The caption includes directors’ remunerations for Euro 1,430 thousand (March 2017: Euro 1,582 thousand).

The average workforce for the period was 843 units (March 2017: 852 units). The personnel expenses does not show significant changes compared to the same in the previous period.

131

7. Depreciation, amortization and impairment losses


March 31, 2017

Intangible assets amortization 2,272 2,495

Tangible assets depreciation 2,693 2,924

4,965 5,419

8. Bad debts provision


March 31, 2017

Bad debts provision 2,193 1,172

2,193 1,172

9. Provision for risks and charges


March 31, 2017

Provision for disputes and legal actions (850) (130)

Provision for warranties 282 (118)

Provision for jobs risks (200) 500

Provision for work in progress risks 692 3,000

(76) 3,252

A more detailed analysis is provided in Note 30, relating to “Provisions for risks and charges”.

10. Other operating expenses


March 31, 2017

Other taxes 263 268

Loss on tangible and intangible assets disposals 1 21

Other expenses 39 46

303 335

11. Net financial expenses


March 31, 2017

Dividends from subsidiaries 25,000 20,000

Interest income from subsidiaries 4,729 3,989

Interest income 55 110

Exchange rate gains 59,061 94,154

Other commissions 0 0

Financial income on foreign currency risk hedging 1,025 2,370

Commercial income on foreign currency risk hedging 124 49

Total financial income 89,994 120,672

Interest expenses from subsidiaries 515 675

Bank interests expenses 4,111 4,118

Loan charges 0 0

Exchange rate losses 60,994 94,012

132

Bank charges 88 96

Other interests expenses 84 189

Financial expenses on foreign currency risk hedging 5,055 5,774

Commercial expenses on foreign currency risk hedging 720 750

Total financial expenses 71,567 105,614

Total net financial income/(expenses) 18,427 15,058

As of March 31, 2018, the net financial expenses amounted to Euro 6,573 thousand, excluding dividends from subsidiaries, while as of March 31, 2017 amounted to Euro 4,942 thousand.

The net negative variation for Euro 1,631 thousand is mainly due to the combination of the variations of the following items:

- commercial and financial expenses on foreign currency risk hedging, net of incomes, increased from Euro 4,105 thousand (March 2017) to Euro 4,626 thousand (March 2018) with a negative variation for Euro 521 thousand;

- exchange rate losses, net of gains, decreased from Euro (142) thousand (March 2017) to Euro 1,933 thousand (March 2018) with a negative variation for Euro 2,075 thousand;

- interest expenses, net of incomes, decreased from Euro 979 thousand (March 2017) to Euro 14 thousand (March 2018) with a positive variation for Euro 965 thousand.

12. Revaluation of equity investments

During the fiscal year 2018 (April 2017 - March 2018) no revaluations of investments were made.

13. Write-downs of equity investments

In fiscal year 2018 (April 2017 - March 2018) the investment in the following companies was written down:

- Permasteelisa Pacific Holdings Ltd. (Singapore) for Euro 2,230 thousand;

- Permasteelisa Turkey Insaat Ticaret Limited Sirkety for Euro 1,519 thousand;

- Dyepower Consorzio – in liquidation for Euro 593 thousand;

- Cladding Technology Italia (CTI) – in liquidation for Euro 25 thousand.

14. Income tax expense

Taxes recognised in the Income Statement € thousands March 31,

2018 March 31,

2017 Current tax expense

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

0 123

2,595 0

Adjustments for prior years 72 922

195 3,517

Deferred tax expense

Origination and reversal of temporary differences (978) (594)

Adjustments for prior years 0 0

(978) (594)

Total income tax expense in the income statement (783) 2,923

133

Reconciliation of effective tax rate € thousands

March 31, 2018

March 31, 2018

March 31, 2017

March 31, 2017

Profit before tax (2,307) 10,051

Income tax using the domestic corporation tax rate (Ires) 24% 554 27.5% 2,764 Non-deductible expenses 1,557 3,359 Tax exempt revenues (6,000) (5,500)

Current tax benefits not recognised in the income statement 2,917 1,063

Under/(over) provision for prior year taxes Other taxes Other

73

123

922 0

(7) 315

33.9% (783) 29.1% 2,923

15. Intangible assets

€ thousands Development costs

Rights to use intellectual

property

Licenses and

trademarks

Other intangible

assets



Total


Acquisitions 2,136 364 1,252 3,752


Decrease (18) (18)


Amortization (1) (1,651) (843) (2,495)

Balance as of March 31, 2017 0 4,957 0 4,251 3,313 12,521

Carrying amounts


Cost 2,433 16,215 0 12,663 2,898 34,209

Accumulated amortization (2,432) (12,308) 0 (8,187) 0 (22,927)

1 3,907 0 4,476 2,898 11,282



0 4,957 0 4,251 3,313 12,521

134

€ thousands

Development costs

Rights to use intellectual

property

Licenses and

trademarks

Other intangible

assets



Total


Acquisitions 428 9 361 798

Other increases 156 60 (216) 0

Decrease 0

Other decreases 0

Amortization (1,493) (778) (2,271)

Balance as of March 31, 2018 0 4,048 0 3,542 3,458 11,048

Carrying amounts


Cost 2,433 18,904 0 13,281 3,313 37,931


0 4,957 0 4,251 3,313 12,521



0 4,048 0 3,542 3,458 11,048

The increase for the period referred to the caption “Rights to use intellectual property” for Euro 428 thousand is related to the acquisition of new license for technical and project management department (Catia, Mathcad, Primavera, etc, for Euro 178 thousand), to the acquisition of new solutions for PMF (Euro 69 thousand), to the upgrade of HANA for SAP, (Euro 35 thousand), to the acquisition of new solutions and implementation for IT Disaster Recovery (Euro 39 thousand), to the acquisition of patent Dyepower (Euro 65 thousand) and other developments (Euro 42 thousand).

The increase referred to the caption “Intangible assets in progress and advances” for Euro 361 thousand is mainly related to the implementation and development of the project P3 (Euro 53 thousand), to additional development of the new Treasury software solution through Sap Treasury Management modules (Euro 41 thousand), to the acquisition and implementation of the K2 software licenses for the realization of the Workflow processes in the QHSE (Euro 131 thousand), to the development of the new Timesheet SAP Fiori solution (Euro 38 thousand) and new CRM solution to support Sales & Tender processes (Euro 44 thousand) and other developments (Euro 54 thousand).


The management considered that, with respect to March 31, 2017, no specific impairment losses occurred which would have led the Company to measure the recoverable value of intangible assets through the relevant impairment tests.

135

16. Tangible assets


Plant and machinery

Equipment

Other tangible

assets


advances

Total

Balance as of April 1, 2016 18,642 5,101 148 2,031 1,048 26,970

Acquisitions 169 78 301 26 574

Other increases 115 792 136 1,043

Decrease (10) (3) (13)

Other decreases (1,043) (1,043)

Depreciation (868) (1,275) (53) (728) (2,924)

Exchange rate adjustment (4) (3) (7)

Balance as of March 31, 2017 17,889 4,773 170 1,737 31 24,600

Carrying amounts


Cost 30,070 25,568 3,865 9,363 1,048 69,914


18,642 5,101 148 2,031 1,048 26,970

As of March 31, 2017 attributable to: Cost 30,185 26,511 3,934 9,758 31 70,419


17,889 4,773 170 1,737 31 24,600


Plant and machinery

Equipment

Other tangible

assets


advances

Total

Balance as of April 1, 2017 17,889 4,773 170 1,737 31 24,600

Acquisitions 122 256 206 186 143 913

Other increases 15 15

Decrease (3) (63) (66)


Depreciation (866) (1,195) (49) (582) (2,692)

Exchange rate adjustment (6) (6) (2) (14)

Balance as of March 31, 2018 17,145 3,840 321 1,276 159 22,741

Carrying amounts


Cost 30,185 26,511 3,934 9,758 31 70,419


17,889 4,773 170 1,737 31 24,600

As of March 31, 2018 attributable to: Cost 30,308 26,753 4,072 9,593 159 70,885


17,145 3,840 321 1,276 159 22,741

136

The investments as regards:

- “Lands and Buildings” to the structural operations at Milan office (Euro 114 thousand), and other minor operations at Vittorio Veneto and S. Vendemiano sites (Euro 8 thousand).

- “Plant and Machinery” to the acquisition of specific plants useful for the Dyepower project (Euro 83

thousand), to the revamping for handling panels robotic area (Euro 24 thousand) and to the fire detection

system for Vittorio Veneto plant (Euro 33 thousand), to the plant updating of the new offices in Milan (Euro

14 thousand), and to the purchasing of other minor machinery for Vittorio Veneto site (Euro 102 thousand).

- “Equipment and other assets” to the acquisition of some equipment useful for Dyepower project (Euro 175

thousand) and other various equipment for Vittorio Veneto site (Euro 31 thousand).

- “Other assets” to the acquisition of two 3D painters (Euro 59 thousand), one “spectrophotometer” (Euro 8

thousand), four uninterruptible power supply (UPS) for Vittorio Veneto and S. Vendemiano offices (Euro

28 thousand), a videoconferencing equipment for the new Milan offices (Euro 11 thousand) and other office

tools (Euro 80 thousand).


At the reporting date, there have not been particular indications of impairment losses related to tangible assets.

Leased plant and machinery

The Company has no leased plant and machinery.

Tangible assets in progress

The increase of the period for Euro 144 thousand is due to the upgrading of the video surveillance system in Vittorio Veneto office building (Euro 77 thousand), the revamping of a Numerical Control Machines in Vittorio Veneto plant (Euro 31 thousand) and other minor activities in progress (Euro 36 thousand).

Other information

As of March 31, 2018, the Company does not have mortgages on buildings and other tangible assets.

17. Equity investments in subsidiaries

The Company has the following equity investments in subsidiaries:

€ thousands % ownership Carrying amount

Country March 31, 2018

March 31, 2017

March 31, 2018

March 31, 2017

Josef Gartner GmbH Germany 100.00% 100.00% 151,544 151,544

Permasteelisa Espana S.A.U. Spain 100.00% 100.00% 2,560 2,560

Permasteelisa France S.a.s. France 100.00% 100.00% 6,462 6,462

Permasteelisa North America Corp. USA 100.00% 100.00% 33,884 33,884

Permasteelisa UK Ltd. UK 100.00% 100.00% 6,154 754

Permasteelisa Ireland Ltd. Ireland 100.00% 100.00% (50) (50)

Permasteelisa Pacific Holdings Ltd. Singapore 54.25% 54.25% 31,874 34,104

Scheldebouw B.V. Holland 100.00% 100.00% 53,133 53,133

Permasteelisa Turkey Insaat Ticaret Limited Sirketi

Turkey 100.00% 100.00% (1,509) 10

Permasteelisa Participations S.r.l. Italy 99.00% 99.00% 50 50

Permasteelisa Do Brasil Construcao, Industria, Comercio Ltda

Brazil 99.00% 99.00% 18 18

RI.ISA d.o.o Croatia 98.55% 98.55% 76 76

Permasteelisa Colombia Colombia 100.00% 100.00% 31 31

Marine Project solution S.c.a.r.l. Italy 55.50% 55.50% 277 111

284,504 282,687

137

Summary financial information on subsidiaries: € thousands Assets Liabilities Net Equity Revenues Profit/

(loss)

March 31, 2018

Josef Gartner GmbH 336,210 200,963 135,247 208,620 10,705

Permasteelisa Espana S.A.U. 5,460 2,047 3,413 6,169 (179)

Permasteelisa France S.a.s. 25,633 21,962 3,671 20,377 869

Permasteelisa North America Corp. 250,257 172,191 78,066 420,587 (3,734)

Permasteelisa UK Ltd. 181,266 181,125 141 217,476 (2,188)

Permasteelisa Ireland Ltd. 7,758 5,657 2,101 7,553 194

Permasteelisa Pacific Holdings Ltd. 108,098 102,615 5,483 3,217 (2,104)

Scheldebouw B.V. 105,330 104,806 524 109,502 5,086

Permasteelisa Turkey Insaat Ticaret Limited Sirketi (237) 1,272 (1,509) (6) (584)

Permasteelisa Participations S.r.l. 6,097 4,768 1,329 0 616

Permasteelisa DoBrasil,Industria,Comercio Ltda 349 497 (148) (107) (107)

RI.ISA d.o.o. 762 74 688 1,193 58

Permasteelisa Colombia 8,594 8,099 495 12,787 451

Marine Project solutions S.c.a.r.l. 10,352 9,440 912 18,252 375

1,045,929 815,516 230,413 1,025,620 9,458

€ thousands Assets Liabilities Net Equity Revenues Profit/ (loss)

March 31, 2017

Josef Gartner GmbH 358,434 218,678 139,756 169,905 7,463

Permasteelisa Espana S.A.U. 8,218 4,626 3,592 7,680 139

Permasteelisa France S.a.s. 17,994 15,193 2,801 46,280 948

Permasteelisa North America Corp. 261,042 171,478 89,564 438,837 2,793

Permasteelisa UK Ltd. 146,848 148,051 (1,203) 242,925 (2,791)

Permasteelisa Ireland Ltd. 4,019 2,112 1,907 827 158

Permasteelisa Pacific Holdings Ltd. 138,554 118,917 19,637 7,756 (13,441)

Scheldebouw B.V. 102,689 107,146 (4,457) 114,182 5,818

Permasteelisa Turkey Insaat Ticaret Limited Sirketi 31 1,285 (1,254) 6 (344)

Permasteelisa Participations S.r.l. 6,099 5,385 714 0 285

Permasteelisa DoBrasil,Industria,Comercio Ltda 568 629 (61) (57) (126)

RI.ISA d.o.o. 947 315 632 1,235 119

Permasteelisa Colombia 8,827 8,777 50 11 17

Marine Project solution S.c.a.r.l. 5,250 5,012 238 941 38

1,059,520 807,604 251,916 1,030,528 1,076

138

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

€ thousands Net Equity % ownership Pro rata equity

Equity investment

Differential

March 31, 2018

Josef Gartner GmbH 135,247 100.00% 135,247 151,544 (16,297)

Permasteelisa Espana S.A.U. 3,413 100.00% 3,413 2,560 853

Permasteelisa France S.a.s. 3,671 100.00% 3,671 6,462 (2,791)

Permasteelisa North America Corp. 78,066 100.00% 78,066 33,884 44,182

Permasteelisa UK Ltd. 141 100.00% 141 6,154 (6,013)

Permasteelisa Ireland Ltd. 2,101 100.00% 2,101 (50) 2,151

Permasteelisa Pacific Holdings Ltd. 5,483 99.52% 5,457 31,874 (26,391)

Scheldebouw B.V. 524 100.00% 524 53,133 (52,609)

PermasteelisaTurkeyInsaatTicaretLimitedSirketi

(1,509) 100.00% (1,509) (1,509) 0

Permasteelisa Participations S.r.l. 1,329 100.00% 1,329 50 1,279

Permasteelisa DoBrasil,Industria,ComercioLtda

(148) 100.00% (148) 18 (166)

RI.ISA d.o.o. 688 98.55% 678 76 612

Permasteelisa Colombia 495 100.00% 495 31 464

Marine Project solutions S.c.a.r.l. 912 55.50% 506 277 635

230,413 229,971 284,504 (54,091)

It should be noted that for investments with a negative difference between the book value and the pro-quota value of shareholders' equity, a specific impairment test was carried out to assess the recoverability of the values based on the subsidiaries company’s forecast data. Following the aforementioned valuation, the equity investment on Permasteelisa Pacific Holdings Ltd. (Singapore) and on Permasteelisa Turkey Insaat Ticaret has been devaluated. No other impairment losses have been detected for the other subsidiaries equity investments.

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

18. Other equity investments

The balance as of March 31, 2018 includes for Euro 366 thousand (March 2017: Euro 366 thousand) the Parent company’s equity investment in Consorzio Interaziendale Prealpi, for Euro 0 thousand (March 2017: Euro 25 thousand) the equity investment in the Consorzio Cladding Technology Italia (CTI) and for Euro 0 thousand (March 2017: 706 thousand) the equity investment in the Consorzio Dyepower.

19. Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to:

Assets (-) Liabilities (+) Net (-)

€ thousands 2018 2017 2018 2017 2018 2017

Tangible assets (79) (79) 58 58 (21) (21)

Intangible assets (1) (1) 782 850 781 849

Inventories (1,167) (973) 0 0 (1,167) (973)

Financial liabilities (2,265) (2,265) 0 0 (2,265) (2,265)

Provision for risks and charges (778) (993) 0 0 (778) (993)

Hedging 0 (140) 53 0 53 (140)

Other items (1,305) (608) 4,903 5,151 3,598 4,543

Tax value of loss carry-forwards (7,637) (7,637) 0 0 (7,637) (7,637)

Tax (assets) / liabilities (13,232) (12,696) 5,796 6,059 (7,436) (6,637)

Set off

Net tax (assets) / liabilities (13,232) (12,696) 5,796 6,059 (7,436) (6,637)

139

Movement in deferred tax assets and liabilities during the year

Balance April 1, 2016

Taxes recognised in income

statement

Taxes recognised in

equity

Other movements

Balance March 31,

2017

€ thousands

Tangible assets (25) 4 (21) Intangible assets 925 (76) 849 Inventories (136) (837) (973) Financial liabilities (2,265) (2,265) Provision for risks and charges (888) (105) (993) Hedging (87) (53) (140) Other items 4,130 420 (7) 4,543 Tax value of loss carry-forwards (7,637) (7,637)

(5,983) (594) (60) 0 (6,637)

Balance April 1, 2017

Taxes recognised in

income statement

Taxes recognised in

equity

Other movements

Balance March 31,

2018

€ thousands

Tangible assets (21) (21) Intangible assets 849 (68) 781 Inventories (973) (194) (1,167) Financial liabilities (2,265) (2,265) Provision for risks and charges (993) 215 (778) Hedging (140) 193 53 Other items 4,543 (931) (14) 3,598 Tax value of loss carry-forwards (7,637) (7,637)

(6,637) (978) 179 0 (7,436)

20. Assets for contracts work-in-progress and inventories

Assets for contracts work-in-progress and inventories


March 31, 2017


Raw materials and consumables 541 550

Advances 1,307 3,176

55,701 52,389

Assets for contracts work-in-progress, for Euro 53,853 thousand, are indicated in the balance sheet assets net of the adjustment funds for Euro 5,717 thousand.

Liabilities for contracts work-in-progress and advances from customers


March 31, 2017

Liabilities for contracts work-in-progress 1,243 3,329

Advances from customers 26,145 11,850

27,388 15,179

140

Contract work-in-progress


March 31, 2017

Costs incurred on uncompleted contracts 671,701 602,321

Estimated earnings to date on uncompleted contracts 16,068 21,381

Less billings to date on uncompleted contracts (635,159) (578,368)

52,610 45,334

Assets for contracts work-in-progress

53,853

48,663

Liabilities for contracts work-in-progress (1,243) (3,329)

52,610 45,334

21. Trade receivables from third parties


March 31, 2017

Trade receivables from third parties 28,247 41,850

Bad debts provision (8,614) (6,497)

19,633 35,353

As of March 31, 2018 trade receivables include guarantee retentions for Euro 6,889 thousand (March 2017: Euro 3,195 thousand) related to contracts work-in-progress.

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

March 31, 2018 March 31, 2017

Currency

Receivable in foreign

currency

Counter-value in Euro at the end of

the period

Currency

Receivable in foreign currency


the period

CHF 22,223 18,867 CHF 22,223 20,777

GBP 4,220 4,824 GBP 4,220 4,933

JPY (300,000) (2,287) JPY (300,000) (2,509)

QAR 131,635 29,351 QAR 131,635 33,826

USD 5,223,114 4,239,197 USD 14,495,610 13,558,704

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


2018 March 31,

2017

Balance at the beginning of the accounting year 6,497 5,397

Utilizations (77) (72)

Reversal 0 0

Provision 2,194 1,172

Balance at the year-end 8,614 6,497

141

22. Amounts receivables from subsidiaries


March 31, 2017

Trade receivables – current Permasteelisa UK Ltd. 17,025 12,781

Permasteelisa North America Corp. 8,173 7,507

Permasteelisa Colombia Sas 4,961 0

Global Architectural Co. Ltd. 4,921 7,004

Josef Gartner Curtain Wall (Shanghai) Ltd. 4,191 3,359

Permasteelisa Gartner Saudi Arabia Llc. 3,881 3,534

Permasteelisa Gartner Qatar Llc 3,621 23,426

Permasteelisa France S.a.s. 2,842 4,854

Permasteelisa Hong Kong Limited 2,391 1,653

OOO Josef Gartner 1,952 3,416

Scheldebouw B.V. 1,952 4,273

Permasteelisa (India) Private Limited 1,627 2,670

Permasteelisa Pacific Holdings Ltd. 1,624 1,305

Permasteelisa Monaco - Branch Pisa France 1,220 0

Dongguan Permasteelisa Curtain Wall 1,030 506

Permasteelisa Gartner Middle East Llc 918 2,171

Permasteelisa Ireland Ltd. 890 91

Josef Gartner Curtain Wall (Suzhou) Ltd. 824 756

Permasteelisa Philippines Inc. 784 759

Permasteelisa Mongolia Llc 771 735

Permasteelisa Project (Thailand) Ltd 572 655

Josef Gartner Taiwan (Josef Gartner & Co. (HK) Ltd. branch) 411 340

Global Wall Malaysia Sdn. Bhd. 307 240

Josef Gartner GmbH 210 2,490

Marine Project Solutions S.c.a.r.l. 132 93

Permasteelisa PTY Ltd 65 115

RI.ISA D.o.o. 41 207

Permasteelisa Japan K.K. 35 (101)

Permasteelisa Participations S.r.l. 6 7

Permasteelisa Turkey 4 3

Permasteelisa España S.A. 3 70

Permasteelisa Macau Limited 3 5

Josef Gartner (Macau) Ltd. 1 4

Bleu Tech Montreal Inc. 0 576

Josef Gartner Switzerland AG 0 54

Commercial exchange rate adjustment (1,472) 2,374

65,916 87,932

Financial receivables – Current

Permasteelisa Gartner Saudi Llc 87,507 0

Permasteelisa Gartner Middle East Llc 86,443 72,178


Permasteelisa UK Ltd. 25,945 0


Permasteelisa North America Corp. 7,467 0

Permasteelisa Participations S.r.l. 4,761 5,377

Permasteelisa Turkey 1,903 1,671

Permasteelisa Espana S.A. 270 870

Permasteelisa Gartner Qatar Llc 0 80,465

Financial exchange rate adjustment (3,456) 36,873

296,234 284,786

142

Current financial receivables mainly include balance amounts concerning intercompany current account positions, which highlight the role of central treasury function played by the Parent company.

Permasteelisa Gartner Saudi Llc is involved in KAFD project, related to the installation of curtain walls on thirteen towers in the financial district of Riyadh in Saudi Arabia, suspended for about 2 years due to financial difficulties faced by the local general contractor. The local company is exposed on this project with receivables for Euro 56 million and in work in progress not yet invoiced for Euro 34 million. The Group's management is engaged in negotiations at various levels with the local counterparts to obtain the collection of overdue receivables, proceeding with the invoicing of the work in progress and the execution of the project. Despite the uncertainties regarding the successful conclusion of these negotiations in progress, the management is confident that the local company will be able to collect its receivables in a short time and allow Permasteelisa S.p.A. to collect its financial receivables of Euro 87,507 thousand.

Current account positions are regulated according to market rates (three-month Euribor/Libor rate + 0.50% spread). Average rates on the intercompany current accounts in this year have been as follows:

March

2018 March

2017

Current account currency Rate Current account currency Rate

EURO 0.17% EURO 0.20%

USD 1.98% USD 1.36%

GBP 0.91% GBP 0.94%

AUD 2.25% AUD 2.36%

JPY 0.47% JPY 0.47%

SGD 1.64% SGD 1.44%

THB 2.08% THB 2.09%

HKD 1.45% HKD 1.20%

CAD 1.83% CAD 1.41%

HRK 0.83% HRK 1.04%

DKK 0.22% DKK 0.31%

CHF -0.23% CHF -0.24%

RUB 9.15% RUB 11.32%

QAR 2.91% QAR 2.07%

AED 2.15% AED 1.39%

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

March 31, 2018 March 31, 2017

Currency Receivable in

foreign currency


the period

Currency Receivable in

foreign currency


the period

AUD 103,542 64,569 AUD 161,860 115,763

CAD 0 0 CAD 844,873 592,270

CHF 0 0 CHF 58,183 54,397

CNY 325,388 42,003 CNY 325,388 44,185

GBP 4,027,894 4,603,833 GBP 4,881,278 5,705,560

HKD 4,196,427 433,981 HKD 13,833,415 1,665,192

HRK 306,147 41,191 HRK 1,563,362 209,946

JPY 5,571,557 42,482 JPY (10,201,529) (85,333)

SGD 2,088,514 1,292,557 SGD 1,658,122 1,109,854

USD 20,719,278 538,471 USD 42,071,121 39,351,904

THB 25,085,351 20,359,834 THB 110,918,472 3,020,327

143

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

March 31, 2018 March 31, 2017

Currency


currency


the period

Currency


currency


the period GBP 22,984,270 26,270,739 GBP 0 0 JPY 566,365,891 4,318,459 JPY 761,156,614 6,366,847 SGD 83,438,616 51,639,198 SGD 80,029,708 53,567,408 USD 187,235,468 151,964,506 USD 210,332,060 196,737,499

23. Income tax receivables


March 31, 2017

Tax income receivables 5,344 3,747

5,344 3,747

It should be noted that the item mainly consists of IRES/IRAP and withholding tax receivables. It also includes the

amount of Euro 1,1 million related to the refund claim of the taxes on dividends referring to fiscal year 2014.

The item “Income tax receivables” should be analysed in conjunction with the item 33 "Current tax liabilities".

24. Other current assets


March 31, 2017

VAT receivables 3,263 698


Accrued income and deferred charges 4,351 6,729

21,939 15,857

The caption “Other receivables” includes:

March 31, 2018

March 31, 2017

Assets for the fair value assessment of derivatives instruments 7,971 2,232


14,326 8,430

Assets for the fair value assessment of derivatives instruments are referred to foreign currency transactions for Euro 7,971 thousand (2017: Euro 2,232 thousand).

The caption “Other receivables” includes Euro 5,7 million related to repayments owed from a supplier for damages. The Company, in respect of its rights which have previously been legally recognised, has taken action to receive this sum. The Company's position for the right to said damages is sufficiently supported by legal opinion.

25. Cash and cash equivalents


March 31, 2017


Cash and cash equivalents 8 5

3,388 4,820

144

With reference to currency cash and cash equivalents, the following table summarizes the outstanding balance accounts at year-end (in Euro units):

March 31, 2018 March 31, 2017

Currency


currency


the period

Currency


currency


the period CHF 12,616 10,711 CHF 12,703 11,877 CNY 1,167 151 CNY 1,167 158 GBP 427,505 488,633 GBP 694,026 811,224 HKD 52,430 5,422 HKD 20,995 2,527 SGD 35,089 21,716 SGD 9,135 6,115 EUR 50,065 50,065 EUR 65 65 USD 2,594,669 2,105,892 USD 3,563,790 3,333,449

26. Non-current assets held for sale


March 31, 2017

Non-current assets held for sale 0 0

0 0

As of March 31, 2018, there are not “Non-current assets held for sale”.

27. Net equity

Net equity changes

Please refer to the relevant table that precedes the notes to the Statutory Financial Statements.

Share capital

As of March 31, 2018, the share capital amounted to Euro 6,900 thousand and includes 25,613,544 ordinary shares issued without nominal value.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are equal since there are no preference shares.

Please refer to the Management Report concerning the net result allocation proposal made by the Board of Directors on May 24th, 2018 which approved the Statutory Financial Statements and the Consolidated Financial Statements as of March 31, 2018.

Legal reserve

The legal reserve, amounting to Euro 1,380 thousand, was restored after the merger of the holding companies Terre Alte S.p.A. and Montrachet S.p.A. into Permasteelisa S.p.A. occurred in October 2010 with fiscal and civil effect backdated to January 1, 2010.

Foreign exchange risk hedging reserve, commodities risk hedging reserve and interest risk hedging reserve

The foreign exchange risk hedging reserve includes the effective portion of the net differences accumulated in the “fair value” of the hedging instruments on currencies, associated to hedged and not yet performed transactions. The changes in these reserves are stated in the following table:

145

Foreign exchange risk hedging reserve

Amount before

tax Tax Amount after

tax

Reserve as of April, 2016 (302) 87 (215)

Increase/(decrease) (491) 107 (384)

Release to income statement 209 (54) 155

Reserve as of March 31, 2017 (584) 140 (444)


Amount before

tax Tax Amount after

tax

Reserve as of April 1, 2017 (584) 140 (444)

Increase/(decrease) 462 (111) 351

Release to income statement 342 (82) 260

Reserve as of March 31, 2018 220 (53) 167

As of March 31, 2018 there are no commodities and interest risks.

Other reserves

They include merger surplus reserve, the non-available IAS conversion reserve and other IAS conversion reserves and other merger reserves. The relevant statement of net equity changes highlights variations of these items during the year.

In particular:

- the item “other merger reserve” arose during the period due to the merger of holding companies Terre Alte

S.p.A. and Montrachet S.p.A. into Permasteelisa S.p.A. occurred on 22 October 2010 with fiscal and Italian

law effects backdated on 1 January 2010. Due to the kind of merger (reverse merger), the share capital

and all the reserves of Permasteelisa S.p.A. existing at the merger date were maintained and the remaining

components of the merged companies (share capital, share premium and losses carried forward) were

incorporated in the item “other merger reserve”. As of March 31, 2018 the reserve amounts to 163,789

thousand (March 2017: 163,789 thousand), the same compared to the previous year.

- the item "IAS 19 Reserve" which had, as of March 31, 2017, a negative balance of Euro 404 thousand,

was increased to a balance of Euro 446 thousand as of March 31, 2018, following the actuarial valuation

of the period.

146

Information on reserve

The following table reports information on net equity items sorted by origin, available amounts for use, distribution and amounts already used in the previous three years.

2018 Amount Possibility of

use (*) Available amount

2018

Not-available

amount 2018

Amounts used in the previous

3 years to hedge losses

Amounts used in the previous 3 years for

other reasons

Share capital 6,900,000

Legal reserve 1,380,000 B 1,380,000

Share premium 0 A,B,C

Revaluation reserve 0 A,B Extraordinary reserve 0 A,B,C

Merger surplus reserve 3,815 A,B,C 3,815

Other merger reserve 163,786,313 A,B,C 163,786,313

Retained earnings (5,161,073) A,B,C (5,161,073) 25,137,452

IAS conversion reserve - severance

311,948 - 311,948

IAS 19 reserve (446,157) (446,157)

Other reserves 0

Other IAS conversion reserves

IAS conversion reserve - land 0

IAS conversion reserve - goodwill

(16,545) (16,545)

IAS conversion reserve - web costs

(86,251) (86,251)

IAS conversion reserve - IAS 39

0

Total other IAS conversion reserve items

(102,796) A,B,C (102,796)


167,098 - 167,098

Commodities Risk hedging reserve

0 -

Risk hedging reserve on interest

0 -

Translation reserve

612,826 - 612,826

Total reserves 160,551,974 158,522,444 2,029,530 25,137,452

Not-distributable amount 3,684,192

Distributable remaining amount

162,206,636

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

Capital management

In the area of capital management, the Company aims at adding value for the Shareholder, safeguard the continuity of the business and support the development of the Group. The Company has thus tried to keep a suitable capitalisation level to enable both the achievement of a suitable return on capital for the Shareholder and ensure the accessibility in economic terms of external financing sources, also by achieving a suitable rating.

The Company constantly monitors its level of indebtedness in reference to the net equity and especially the net level of indebtedness and the cash generation from operations.

To this end, the Company pursues the ongoing improvement of profitability in its business areas. It may also sell part of its own assets to reduce the value of debt, while the Board of Directors may suggest to the Shareholder's Meeting to reduce or increase the share capital or, if legally viable, distribute the reserves. In this framework the Company also proceeds to buy back treasury shares, clearly within the limits authorised by the Shareholder's Meeting, following the same approach aimed at adding value compatible with the aims of achieving a balanced financial standing and improve the rating.

147

The capital is understood to be the value added by the Shareholder (share capital and the share-premium reserve, net of the value of the treasury share), and generated by the Company in terms of the results achieved by the management (legal reserve and retained earnings, included the results for the year), excluding the profit and loss entered directly into the net equity, except for the revaluation reserve, the merger surplus reserve and the IAS/IFRS conversion reserve.

28. Amounts payable to banks and other financial creditors


March 31, 2017

Amounts payable to banks and other financial creditors non-current

Medium and long term Shareholder’s loan 158,480 205,037

158,480 205,037

Amounts payable to banks and other financial creditors current

Medium and long term Shareholder’s loan (current portion) 65,181 50,056

Bank accounts, advances and other short-term loans 122,380 168,529

187,561 218,585

It should be noted that the financial exposure to the Shareholder LIXIL amounts to a total of Euro 224 million and

the payables to banks include short-term facilities for approximately Euro 108 million obtained from Japanese credit

institutions.

The short-term bank loans in use, for an amount of Euro 122 million, relate to contracts for credit facilities on a

rotating basis, to cover the Group's cash requirements.

During the period from April 1, 2017 to March 31, 2018, it should be noted as follow:

- in May, August, November 2017 and February 2018 have been repaid four tranches of Shareholder’s loan in

USD for a counter value of Euro 12.6 million;

- in August 2017, a further loan of Euro 20 million was disbursed by the Shareholder to cover the payment of a

lawsuit in the UK;

- in September 2017 and March 2018 have been repaid two tranches of Shareholder’s loan for a value of Euro

36.2 million.

In terms of mortgages on real estate or other fixed assets owned by the Company, please refer to note 37 “Commitments”.

Net financial position

To complete the information reported in these notes, the Company financial position as of March 31, 2018 is below reported.


March 31, 2017

Cash and cash equivalents 3,388 4,820

Financial receivables from subsidiaries 296,234 284,786

Financial payables to subsidiaries (173,468) (128,364)

Amounts payables to bank (122,380) (168,529)


Net financial position - short term (61,407) (57,343)


Net financial position - medium/long term (158,480) (205,037)

Total net financial position (219,887) (262,380)

148

The net financial position of the Company including Shareholder’s loan as of March 31, 2018, is negative for Euro 220 million including an amount of “cash & bank deposits” for Euro 3 million.

The average rates recorded by the Company during the period are as follows:

a. current account deposits and bank deposits: 0.28% (March 2017 0%);

b. short-term loans: 0.93% (March 2017: 0.97%);

c. mortgages and medium- long term loans: not detected as there were no such financing during the current year (same of March 2017);

d. shareholder’s loan: spread applied equal to 0.95% (March 2017: 0.95%);

e. liabilities on financial leasing: not detected as there are not financial leases.

The actual average rate over overall indebtedness stood at 0.98% (March 2017: 1%).

29. Severance indemnity fund

In accordance with national regulations, the amount due to each employee accrues on the basis of the service performed and must be paid when the employee leaves the Company. The payment due upon termination of the employment relationship is calculated on the basis of its duration and the taxable salary of each employee. The liability, revalued annually based upon the official cost of living index and legal interest, is not associated with any condition or accrual period, or any funding obligation; therefore, there are no assets at the service of the fund.

The regulations were supplemented by Italian Legislative Decree no. 252/2005 and by Italian Law no. 296/2006 (Finance 2007) which, for companies with at least 50 employees, established that the shares accrued since 2007 are used, at the option of employees, either for the INPS Treasury Fund or for other forms of supplementary pension schemes, assuming the nature of “defined contribution plan”. The revaluations of the amounts in existence at the dates of option are still, however, accounted to the severance indemnity fund, along with, for companies with less than 50 employees, also the shares accrued and not used for the supplementary pension scheme. In accordance with IAS 19 (2011), that fund is accounted for as “Defined benefits plan”.

The table reported above refers exclusively to the severance indemnity accrued before 2007.


March 31, 2017

Present value of the defined benefit obligation 3,380 3,452

Unrecognised actuarial gains and losses 0 0

Recognised liability for severance indemnity fund 3,380 3,452

Movements of the severance indemnity fund € thousands

March 31, 2018

March 31, 2017

Net recognised liability as of April 1 3,452 3,452

Other movements 0 (2)

Payments (172) (110)

Actuarial (gains)/losses 55 30

Expenses recognised in the income statement 45 82


Expenses recognised in the income statement


2018 March 31,

2017


45 82

149


March 31, 2018

March 31, 2017

Actuarial rate as of March 31 1.37% 1.43%


Future TFR increase rate 2.63% 2.63%

Principal demographic actuarial assumption:

Probability of death Mortality table RG48 published by the State General Accounting Tables

Probability of invalidity INPS Tables split into age and gender

Probability of retirement 100% upon achieving AGO requirements

Set out below is the sensitivity analysis for each actuarial circumstance for the purposes of determining the amount of year-end liability; the same shows the effects, expressed in absolute terms, of variations of the actuarial circumstances reasonably possible at that date.


March 31, 2018

March 31, 2017

Inflation rate

+0.25 p.p. 3,428 3,489

-0.25 p.p. 3,305 3,360

Discount rate

+0.25 p.p. 3,269 3,322

-0.25 p.p. 3,468 3,531

The average financial duration of the obligation amounts to 13 years.

30. Provisions for risks and charges

€ thousands Provision for losses in a subsidiary

Warranty provision


ongoing jobs

Other provisions

Total

Balance as of April 1, 2016 0 182 2,025 1,346 3,553

Provisions made during the year 295 500 1,000 1,795

Provisions used during the year (413) (413)

Provisions reversed during the year (1,130) (1,130)

Balance as of March 31, 2017 0 64 2,525 1,216 3,805

150

€ thousands Provision for losses in a subsidiary

Warranty provision


ongoing jobs

Other provisions

Total

Balance as of April 1, 2017 0 64 2,525 1,216 3,805

Provisions made during the year 282 300 150 732

Provisions used during the year (500) (500)

Provisions reversed during the year (1,000) (1,000)

Movements of the year (*) (2,025) (2,025)

Balance as of March 31, 2018 0 346 300 366 1,012

(*) Euro 2,025 thousand have been reclassified from the provision for risks to the provision for work in progress risk.

31. Trade payables to third parties


March 31, 2017

Trade payables to third parties 40,322 36,754

40,322 36,754

As of March 31, 2018, trade payables includes invoices to be received for Euro 8,182 thousand (March 2017: Euro 8,857 thousand) and retentions for Euro 868 thousand (March 2017: Euro 939 thousand).

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

March 31, 2018 March 31, 2017

Currency

Payable in foreign

currency

Counter-value in Euro at the end of the

period

Currency

Payable in foreign

currency


period

AUD 3,855 2,404 AUD 3,855 2,757

CAD 2,006 1,262 CAD 2,006 1,406

CHF 38,265 32,486 CHF 37,936 35,467

GBP 25,372 29,000 GBP 104,229 121,830

HKD 119 12 HKD 0 0

JPY 10,627,384 81,032 JPY 2,646,188 22,135

SGD 24 15 SGD 0 0

KWD 0 0 KWD 23,409 71,833

RUB 687 10 RUB 0 0

USD 491,610 399,001 USD 2,061,737 1,928,479

EUR 18,666 18,666 EUR 6,871 6,871

32. Trade payables to subsidiaries


March 31, 2017

Trade payables

Permasteelisa UK Ltd. 1,981 121

Permasteelisa Hong Kong Limited 1,106 1,180


RI.ISA D.o.o. 596 738

Permasteelisa Gartner Middle East Llc 249 203

Permasteelisa Gartner Saudi Llc 236 149

Permasteelisa Pacific Holdings Ltd. 170 233

Permasteelisa Gartner Qatar Llc 126 121

151

Josef Gartner GmbH 100 102

Global Architectural Co. Ltd. 98 103

Permasteelisa North America Corp. 90 86

Josef Gartner Curtain Wall (Shanghai) Co. Ltd. 55 33

Permasteelisa PTY Limited 53 43

Bleu Tech Montreal Inc. 32 0

OOO Josef Gartner 23 14

Josef Gartner Switzerland AG 23 26

Permasteelisa France S.a.s. 23 5

Permasteelisa Ireland Ltd. 11 1

Josef Gartner Curtain Wall (Suzhou) Co. Ltd. 4 4

Permasteelisa Turkey 4 0

Permasteelisa España S.A. 2 1

Marine Project Solutions 2 0

Permasteelisa (India) Private Ltd. 0 205

Commercial exchange rate adjustment 10,447 9,986

16,448 14,605

Financial payables Josef Gartner GmbH 115,608 92,670

Permasteelisa Gartner Qatar Llc 42,435 0

Permasteelisa France S.a.s. 12,669 7,584


Permasteelisa Ireland Ltd. 2,547 3,560

Permasteelisa North America Corp. 0 9,676

Permasteelisa Gartner Saudi Llc 0 3,084

Permasteelisa UK Ltd. 0 5,292

Financial exchange rate adjustment (8,251) (7,128)

173,468 128,364

As far as financial payables are concerned, the same applies as for financial receivables as per item 22.

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

March 31, 2018 March 31, 2017

Currency Payable in foreign

currency


the period

Currency

Payable in foreign

currency


the period

AUD 217,896 135,879 AUD 206,865 147,951

CAD 47,024 29,584 CAD 1,309 918

CHF 26,380 22,396 CHF 28,182 26,348

CNY 340,668 43,975 CNY 170,443 23,145

GBP 157,364 179,865 GBP 104,603 122,267

HKD 1,137,609 117,648 HKD 1,453,647 174,982

JPY 12,536 96 JPY 0 0

QAR 233,165 51,990 QAR 207,924 53,430

EUR 6,177 6,177 EUR 0 0

USD 2,726,284 2,212,713 USD 2,470,474 2,310,798

THB 3,215,893 83,577 THB 3,346,646 91,130

152

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

March 31, 2018 March 31, 2017


currency


the period

Currency

Payable in foreign

currency


the period

AUD 7,624,297 4,754,488 AUD 8,560,235 6,122,325

GBP 0 0 GBP 4,419,965 5,166,347

HKD 31,734,058 3,281,838 HKD 105,478,552 12,696,939

With reference to payables in foreign currency to third parties, the following table summarizes the outstanding balance accounts as at March 31, 2018 (in Euro):

March 31, 2018 March 31, 2017


currency


the period

Currency

Payable in foreign

currency


period

RUB 2,788 39 RUB 0 0

USD 11,115,000 9,021,183 USD 25,971,667 24,293,019

33. Current tax liability

At March 31, 2018 the Company has no tax liabilities. The item “Current tax liabilities” should be analysed in conjunction with the item 23 " Income tax receivables”.

34. Other current liabilities


March 31, 2017

Employees taxation payables 1,399 1,456 Amounts payable to social agencies 3,101 2,924

Amounts payable to employees 9,132 9,116 Other liabilities 1,934 3,685 Accrued liabilities and deferred income 83 282

15,649 17,463

Other liabilities


March 31, 2017

Forward liabilities 1,805 3,416

Other liabilities 129 269

1,934 3,685

Forward liabilities are referred for Euro 1,805 thousand to foreign currency transactions (March 2017: Euro 3,416 thousand).

35. Risk management

The exposure to credit, interest rate, commodity price and currency risks, arises in the normal course of the

Company’s business. Historically, derivative financial instruments are used by the Company to hedge its exposure

to fluctuations in foreign exchange rates. The Company also hedges itself against commodity price risks.

153

Credit Risk

Credit risk is the risk that arises when a customer or counterparty may fail to meet his commitments when they become due and cause the Company to incur in a financial loss. The Company’s primary exposure to credit risk arises from its contract receivables. The Company has implemented a specific Risk management system to analyze each specific tender and a rating is given to each project and customer. Specific measures are applied to minimize the company’s risk and the system in place allows to subsequently monitoring the credit risk exposure on an ongoing basis.

Other financial assets of the Company with exposure to credit risk include cash and cash equivalents and derivative financial instruments to hedge the Company exposure to foreign currency risk. Cash and cash equivalents are held with banks with high credit ratings. Transactions involving derivative financial instruments are allowed only with counterparties that are of high credit quality. As such, the management does not expect any counterparty to fail to meet their commitments.

At the balance sheet date, there were no significant concentrations of credit risk on specific customers or on specific geographical areas. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position.

With reference to trade receivables from third parties, from subsidiaries and associated companies, as well as financial receivables from subsidiaries recorded in the financial statements, the maximum credit risk exposure by geographical area is listed in Appendix I.

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

€ thousands Gross Receivables

Bad debts provision

Net Receivables

Gross Receivables

Bad debts provision

Net Receivables

March 31, 2018

March 31, 2018

March 31, 2018

March 31, 2017

March 31, 2017

March 31, 2017

Not past due 11,377 (2,524) 8,853 14,490 (646) 13,844 Past due 0-180 days 2,708 0 2,708 15,696 (1) 15,695 Past due 181-365 days 1,725 0 1,725 765 (5) 760 More than one year 11,150 (6,090) 5,060 9,089 (5,845) 3,244

Total 26,960 (8,614) 18,346 40,040 (6,497) 33,543

Exchange rate adjustment 1,287 1,810

19,633 35,353

As of March 31, 2018 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 45% of the total (March 2017: 41%) and the credit due for over one year amounted to 26% (March 2017: 9%).

Interest rate risk

The Company’s exposure to changes in interest rates relates primarily to interest-earning assets and interest-earning liabilities (amounts receivable from banks and other financial institutions or amounts payable to banks and other financial institutions). Interest rate risk is actively managed at central level to guarantee that interests payments are within acceptable levels and consistent with the Company’s business strategies.

The Company does not generally use derivative financial instruments to hedge its exposure to interest rate risk.


The impact of a variation of 100 basis points in interest rates on the year-end date would have determined an increase (decrease) of the net equity and of the results for the period for the amounts shown below. The analysis was done assuming that all the other variables, in particular the exchange rate to foreign currencies, remain stable. On the same basis has been done also the analysis of previous year.


Net equity

+100 bp - 100 bp +100 bp - 100 bp

March 31, 2018


(4,226) 3,755 (4,226) 3,755

154


Net equity

+100 bp - 100 bp +100 bp - 100 bp

March 31, 2017


(4,307) 4,307 (4,307) 4,307

Please note that the Company does not have any fixed rate loans.

Liquidity risk

Policies and procedures have been established to monitor and control liquidity, at both central level and individual subsidiary level, on a daily basis adopting a cash flow management approach.

The table below shows the detail of the future contractual flows of financial liabilities held by the Company, broken down into financial liabilities not associated to derivative instruments and financial liabilities associated to derivative instruments.

Exposure to the liquidity risk associated to financial liabilities other than derivative instruments March 31, 2018

€ thousands Carrying value Contractual Cash Flows

Contractual Cash

Flows less than 1 year




years


Trade payables 40,322 40,322 40,322 0 0

Trade payables to subsidiaries 16,448 16,448 16,448 0 0

Amounts payable to banks 122,381 122,381 122,381 0 0

Financial payables to subsidiaries 173,468 173,468 173,468 0 0

Financial payables to shareholder 223,661 223,661 65,181 158,480 0

Total 576,280 576,280 417,800 158,480 0

€ thousands

March 31, 2017

Carrying value Contractual Cash Flows


year




years


Trade payables 36,754 36,754 36,754 0 0

Trade payables to subsidiaries 14,605 14,605 14,605 0 0

Amounts payable to banks 168,529 168,529 168,529 0 0

Financial payables to subsidiaries 128,364 128,364 128,364 0 0

Financial payables to shareholder 255,093 255,093 50,056 205,037 0

Total 603,345 603,345 398,308 205,037 0

155

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments

March 31, 2018

€ thousands Carrying value



year




years Assets (-) / Liabilities (+)


(7,971) (7,971) (7,971) 0 0

- in flows (351,074) (351,074)

- out flows 343,103 343,103


1,805 1,805 1,805 0 0

- in flows (143,926) (143,926)

- out flows 145,731 145,731

Total booked value (6,166) (6,166) (6,166) 0 0

March 31, 2017

€ thousands Carrying value



year




years Assets (-) / Liabilities (+)


(2,232) (2,232) (2,232) 0 0

- in flows (231,427) (231,427)

- out flows 229,195 229,195


3,416 3,416 3,416 0 0

- in flows (205,845) (205,845)

- out flows 209,261 209,261

Total booked value 1,184 1,184 1,184 0 0

Please note the value of assets and liabilities shown in the tables above are provided for information only; indeed, the derivative contracts do not in fact lead to the actual outlay or collection of the stated amounts that, on the contrary, are subject to the settlement of the difference between the two outflows.

Also, note that to assess correctly the liquidity risk, it is necessary to bear in mind the financial assets held by the Company to offset the future cash flows arising from the aforementioned financial liabilities:

a) cash and cash equivalents for Euro 3,388 thousand and Euro 4,820 thousand respectively as of March 31,

2018 and as of March 31, 2017;

b) trade receivables from third parties for Euro 19,633 thousand and Euro 35,353 thousand respectively as

of March 31, 2018 and as of March 31, 2017;

c) trade receivables from subsidiaries for Euro 65,916 thousand and Euro 87,932 thousand respectively as

of March 31, 2018 and as of March 31, 2017;

d) financial receivables from subsidiaries for Euro 296,234 thousand and Euro 284,786 thousand respectively

as of March 31, 2018 and as of March 31, 2017.

Foreign currency risk

The Company incurs foreign currency risk on contract revenues and purchases and on borrowings and loans denominated in a currency other than Euro. The foreign currencies giving rise this risk are primarily United State dollars and Great Britain pounds.

Generally, the contracts are hedged for the total amount denominated in foreign currency; see paragraph “e” for a detailed description of the way used by the Company to hedge its job contracts in foreign currency.

156

In respect to monetary assets and liabilities held in foreign currency other that those related to the contracts, the Company’s policy consists in minimizing the net exposure to change in exchange rates by specific medium/short-term forward exchange contracts, rolled over at maturity if necessary.


A 10% decrease of the Euro against the following currencies as of March 31, 2018 would have led to the following increase (decrease) of the results for the period and the net equity. The analysis has been performed considering that all the other variables, more specifically the interest rates, had remained constant. The analysis was performed on the same basis compared to the previous period.


Net equity

March 31, 2018

GBP 108 108 USD 2,451 2,451 HKD 29 29 SGD 118 118 AUD (7) (7) THB (2) (2) YEN 4 4 Others (8) (8)

2,693 2,693

€ thousands Result for the

period Net equity

March 31, 2017

GBP 206 206 USD 2,929 2,929 HKD 136 136 SGD 109 109 AUD (8) (8) THB (2) (2) YEN 4 4 Others 55 55

3,429 3,429

A 10% increase of the Euro against the following currencies as of March 31, 2018 and as of March 31, 2017 would have led to the same but opposite effect, again supposing that all other variables had remained constant.

Please note that the analysis did not take into account receivables, payables and future trade flows against which the hedging operations were performed. It is reasonable to believe that the variation of the exchange rates may lead to an opposite financial effect for this item, for a same or higher amount, on the hedged transactions.

Commodities price risk

The Company has a price risk exposure, including the related foreign exchange risk, particularly on aluminium purchases, which are one of the main project cost items.

As far as managing the aluminium price risk is concerned, the Company’s policy is oriented towards minimizing the need to resort to financial markets for hedging, by conducting relations with the suppliers in order to fix the price for specific periods.

For a detailed description of the Company’s practices of commodity hedging management on its own orders, please refer to paragraph “Accounting principle” included at the beginning of the notes.

157

36. Fair value measurement

There are no financial assets or liabilities whose fair value significantly differs from their carrying amount.

IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy at the lowest level input that is significant to the entire measurement.

Levels used in the hierarchy are as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the

Group can access at the measurement date.

- Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets

or liabilities, either directly or indirectly.

- Level 3 inputs are unobservable inputs for the assets and liabilities.

Assets and liabilities that are measured at fair value on a recurring basis

The following table shows the fair value hierarchy for financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018:

€ thousands Notes Level 1 Level 2 Level 3 Total

Not consolidated subsidiaries

Assets at fair value available for sale or held to

maturity

Financial assets at fair value through profit or loss (24) 7,971 7,971

Financial receivables from subsidiaries (22) 296,234 296,234

Cash and cash equivalents (25) 3,388 3,388

Total Assets 0 307,593 0 307,593

Financial liabilities at fair value through profit or

loss

(34)

1,805

1,805

Amounts payables to banks and other financial

creditors (current) (28)

187,562 187,562

Amounts payables to banks and other financial

creditors (non-current) (28)

158,480 158,480

Financial payables to subsidiaries (32) 173,468 173,468

Total Liabilities 0 521,315 0 521,315

During the year 2018, there were no transfers between Levels in the fair value hierarchy.

Assets and liabilities not measured at fair value on recurring basis

The carrying amount of Current receivables and Other current assets and of Trade payables and Other current liabilities approximates their fair value and are categorized in Level 2.

The main methods and assumptions used to estimate the “fair value” of the assets and liabilities recorded in the statement of financial position according to this principle or for which its disclosure is requested by the accounting principles in the notes, are as follows:

Securities

The Company presently does not hold significant amounts of securities held for trading or available for sale or held until their maturity.

158

Cash and cash equivalents

The carrying amount of Cash and cash equivalents usually approximates the fair value due to the short maturity of these instruments, which consist primarily of bank current accounts and time deposits. The fair value of Cash equivalents is determined with discounted expected cash flow techniques, using observable market yields.

Derivatives contracts

They are evaluated using listed market prices.

Amounts payables to banks and other financial institutions

The fair value is calculated based on discounting of future cash flows with reference to principal and interest amounts.

Finance leases

As described in note 28, the Company does not hold significant liabilities for financial leases.

Trade receivables and payables and other receivables and payables

Receivables and payables with expiring date of less than one year are considered to have a carrying value that approximates their fair value. All the other receivables and payables with expiring dates greater than one year are discounted to determine their fair value, except for those related to contracts with retentions. The Company considers that retentions do not represent in any way a financing transaction with the customer due to the fact that the payments terms are beyond one year, as retentions, in the different geographical areas in which the Company operates, are within the normal applied trade conditions; consequently there is no necessity to apply any discounting.

As of March 31, 2018, the Company considers that there are not retentions out of normal market conditions.

37. Commitments

At the balance sheet date, the Company has the followings commitments:

Operating leases € thousands

March 31, 2018

March 31, 2017

Payable:

less than 1 year 1,782 1,711

within 1 to 5 years 2,637 1,755

after 5 years 18 0

4,437 3,466

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

Forward contracts € thousands

March 31, 2018

March 31, 2017

Commitments for forward foreign exchange contracts 494,944 458,181 Commitments for forward contracts on commodities 0 0

494,944 458,181

Commitments for forward foreign exchange contracts (buy) 128,399 108,919 Commitments for forward foreign exchange contracts (sell) 366,545 349,262

494,944 458,181

159

As described in the section on the accounting standards, hedging derivative operations on currency and commodities are assessed on their “fair value”.

As of March 31, 2018 the assessment of the fair value of currency hedging brought to the entry of profits for Euro 7,971 thousand (March 2017: Euro 2,232 thousand) and losses for Euro 1,805 thousand (March 2017: Euro 3,416 thousand) booked respectively under the items forward assets (note 24) and forward liabilities (note 34). Note that the stated amounts of Euro 7,362 thousand (March 2017: Euro 2,004 thousand) and Euro 1,585 thousand (March 2017: Euro 2,386 thousand) refer, respectively, to the valuation of financial currency hedging transactions, namely those covering foreign currency assets and liabilities of financial nature.

Other commitments

As of March 31, 2018 the Company has no other significant commitments to highlight.

38. Contingent assets and liabilities

The main guarantees for third parties issued by the Parent Company are listed below:

Guarantees for works: amounting to Euro 8.2 million (Euro 15.2 million as of March 31, 2017) and issued

by Credit Institutions and Insurance Companies to clients for the proper completion of works (Euro 7.9

million), contractual advances (0.3 million) referring to projects in progress.

Guarantees issued following VAT repayment requests and other guarantees to third parties issued by

Credit Institutions and Insurance Companies: for the value of Euro 13.3 million (Euro 12.9 million as of

March 31, 2017)

Counter-guarantees issued by Credit Institutions and Insurance Companies in the interests of subsidiary

and/or affiliated companies for a total of Euro 605.7 million (Euro 685.4 million as of March 31, 2017) for

the correct execution of works, contractual advances and retentions withheld as guarantees.

Against some guarantees issued to clients, the Parent Company benefits from suppliers guarantees that amounted to Euro 1.1 million as of March 31, 2018.

In February 2018, Permasteelisa S.p.A. has obtained the suspension of the collection initiated against the Company following the December 2016 notification of alleged omission of retention upon dividends distributed in 2011 to the parent company Cima Claddings S.A. The Company is waiting to know the outcome of the hearing, but supported by its consultants, believes that there are strong legal arguments about the unlawfulness of said assessment and therefore the risk of losing the case is not probable.

39. Transaction with related parties

Relationships with subsidiaries

During the year, the Company entered into significant relationships with direct and indirect subsidiaries, concerning trade and financial transactions entered into as part of the normal management activities usually regulated by market conditions.

As for the financial effects of these transactions, they are already described in explanatory notes 22 and 32 on payables and receivables concerning subsidiaries. The following is a summary table highlighting the impact of these positions on financial statement items of the same nature.


Total Versus third parties

% Related parties

%

Trade receivables 85,549 19,633 23% 65,916 77%

Financial receivables – current 296,234 0 0% 296,234 100%

Other receivables 21,939 21,939 100% 0 100%

Trade payables 56,770 40,322 71% 16,448 29%

Financial payables – current 361,030 187,562 52% 173,468 48%

Financial payables – non current 158,480 158,480 100% 0 0%

Other payables 15,649 15,471 99% 178 1%

160


Total Versus third parties

% Related Parties

%

Trade receivables 123,285 35,353 29% 87,932 71%

Financial receivables – current 284,786 0 0% 284,786 100%

Other receivables 15,857 15,853 100% 4 0%

Trade payables 51,359 36,754 72% 14,605 28%

Financial payables – current 128,364 0 0% 128,364 100%

Financial payables – non current 205,037 205,037 100% 0 0%

Other payables 17,463 17,131 98% 332 2%

As far as the economic effects of these relations, they are included in the relevant column “Related parties” of the income statement and they are detailed in the following table which also highlights the impact of these positions on the financial statement item total they belong to.

Operating revenues to subsidiaries


2018 March 31,

2017

Permasteelisa UK Ltd. 22,834 18.7% 28,347 22.3%

Permasteelisa North America Corp. 16,981 13.9% 15,836 12.5%

Permasteelisa Colombia Sas 12,759 10.4% 4,247 3.3%

Permasteelisa Monaco - Branch Pisa France 9,930 8.1% 0 0.0%

Permasteelisa France S.a.s. 7,751 6.3% 22,417 17.6%

Permasteelisa Ireland Ltd 5,798 4.7% 1,333 1.0%

Permasteelisa Hong Kong Limited 5,224 4.3% 2,218 1.7%

Scheldebouw B.V. 2,948 2.4% 5,950 4.7%

Permasteelisa Gartner Qatar Llc 1,875 1.5% 1,200 0.9%

J. Gartner GmbH 1,026 0.8% 2,222 1.7%

OOO Josef Gartner 800 0.7% 1,116 0.9%

Dongguan Permasteelisa Curtain Wall Co. Ltd. 455 0.4% 0 0.0%

Permasteelisa Gartner Middle East Llc 328 0.3% 679 0.5%

Bleu Tech Montreal Inc. 240 0.2% 40 0.0%

Permasteelisa Gartner Saudi Llc 236 0.2% 272 0.2%

Permasteelisa Espana S.A.U. 217 0.2% 52 0.0%

Marine Project Solutions S.c.ar.l. 154 0.1% 8 0.0%

Permasteelisa (INDIA) Private Ltd. 40 0.0% 0 0.0%

Global Architectural Co. Ltd. 13 0.0% 18 0.0%

Permasteelisa (Pacific) Holdings Ltd. 5 0.0% 28 0.0%

RI.SA. D.o.o. 4 0.0% 0 0.0%

Permasteelisa Japan K.K. 2 0.0% 2 0.0%

J. Gartner Curtain Wall (Shanghai) Ltd. 1 0.0% 0 0.0%

Gartner Taiwan 1 0.0% 0 0.0%

Permasteelisa Philippines Inc. 0 0.0% 1 0.0%

Permasteelisa PTY Limited (91) -0.1% 0 0.0%

Permasteelisa Projects (Thailand) Ltd 0 0.0% 1 0.0%

Permasteelisa Turkey Insaat Ticaret Limited Sirketi 0 0.0% 2 0.0%

Total 89,531 73.2% 85,989 67.7%

Total operating revenues 122,327 100.0% 127,099 100.0%

161

Operating costs from subsidiaries


March 31, 2017

Permasteelisa North America Corp. (5,670) 4.2% (6,501) 5.0%

J. Gartner GmbH (3,897) 2.9% (3,635) 2.8%

Permasteelisa Hong Kong Limited (3,716) 2.8% (2,721) 2.1%

Permasteelisa UK Ltd. (1,780) 1.3% (1,886) 1.5%

Permasteelisa Gartner Middle East Llc (1,257) 0.9% (2,041) 1.6%

Permasteelisa (Pacific) Holdings Ltd. (1,177) 0.9% (1,924) 1.5%

OOO Josef Gartner (1,034) 0.8% (914) 0.7%

Permasteelisa Gartner Saudi Llc (993) 0.7% (445) 0.3%

J. Gartner Curtain Wall (Shanghai) Ltd. (976) 0.7% (1,083) 0.8%

Permasteelisa France S.a.s. (468) 0.3% (580) 0.4%

Bleu Tech Montreal Inc. (355) 0.3% (445) 0.3%

Permasteelisa Japan K.K. (318) 0.2% (248) 0.2%

Permasteelisa Gartner Qatar Llc (290) 0.2% (424) 0.3%

Global Architectural Co. Ltd. (272) 0.2% (448) 0.3%

Permasteelisa Monaco - Branch Pisa France (253) 0.2% 0 0.0%

Permasteelisa Ireland Ltd (215) 0.2% (16) 0.0%

Dongguan Permasteelisa Curtain Wall Co. Ltd. (189) 0.1% (251) 0.2%

Permasteelisa (INDIA) Private Ltd. (181) 0.1% (380) 0.3%

Permasteelisa Espana S.A.U. (122) 0.1% (157) 0.1%

Permasteelisa Projects (Thailand) Ltd (100) 0.1% (62) 0.0%

Gartner Taiwan (70) 0.1% (17) 0.0%

Josef Gartner Curtain Wall (Suzhou) Co. Ltd. (68) 0.1% (87) 0.1%

Global Wall (Malaysia) Sdn Bhd (66) 0.0% (47) 0.0%

Marine Project Solutions S.c.ar.l. (43) 0.0% (91) 0.1%

Permasteelisa Mongolia LLC (36) 0.0% (88) 0.1%

Permasteelisa Philippines Inc. (25) 0.0% (70) 0.1%

Permasteelisa Colombia Sas (24) 0.0% 0 0.0%

Permasteelisa Macau Limited (4) 0.0% (5) 0.0%

Josef Gartner (Macau) Limited (2) 0.0% (4) 0.0%

Permasteelisa Partecipation SrL 0 0.0% 0 0.0%

Permasteelisa Turkey Insaat Ticaret Limited Sirketi 6 0.0% (120) 0.1%

Josef Gartner Switzerland AG 6 0.0% 33 0.0%

Permasteelisa PTY Limited 83 -0.1% 68 -0.1%

Consorzio Dyepower Scheldebouw B.V.

310 640

-0.2% 0.5%

0 (782)

0.0% 0.6%

RI.SA. D.o.o. 1,108 -0.8% 1,004 -0.8%

Total (21,448) 16.0% (24,367) -18.9%

Total operating costs (134,080) 100.0% 129,105 100.0%

The operating costs highlighted in the table above are mainly included in the items “raw materials and consumables used”, “services expenses and use of third party assets” and “costs recovery”.

Financial income to subsidiaries


March 31, 2017

J. Gartner GmbH 25,000 27.8% 20,000 16.6%

Permasteelisa Gartner Middle East Llc 1,663 1.8% 429 0.4%

162

Permasteelisa (Pacific) Holdings Ltd. 1,361 1.5% 1,174 1.0%

Permasteelisa Gartner Qatar Llc 699 0.8% 1,205 1.0%

Permasteelisa North America Corp. 438 0.5% 309 0.3%


Permasteelisa UK Ltd. 201 0.2% 2 0.0%

Scheldebouw B.V. 25 0.0% 31 0.0%

Permasteelisa Partecipation SrL 9 0.0% 11 0.0%

Permasteelisa Turkey Insaat Ticaret Limited Sirketi 3 0.0% 3 0.0%


Total 29,729 33.0% 23,988 20.0%

Total financial income 89,994 100.0% 120,672 100.0%

Financial expenses from subsidiaries


March 31, 2017

Permasteelisa (Pacific) Holdings Ltd. 237 0.3% 310 0.3%

J. Gartner GmbH 180 0.3% 221 0.3%

Permasteelisa Gartner Qatar Llc 62 0.1% 0 0.1%

Permasteelisa France S.a.s. 17 0.0% 24 0.0%


Permasteelisa Ireland Ltd 6 0.0% 5 0.0%

Permasteelisa North America Corp. 3 0.0% 8 0.0%

Permasteelisa UK Ltd. 3 0.0% 99 0.0%


Permasteelisa Gartner Middle East Llc 0 0.0% 8 0.0%

Total 515 0.7% 675 0.6%

Total financial expenses 71,567 100.0% 105,614 100.0%

Other relationships with other related parties in the context of the Permasteelisa S.p.A.

Expenses incurred for the members of the Board of Directors and for the Company’s managers with strategic responsibilities are included under “Personnel expenses” and they amount to Euro 4,136 thousand whereas remuneration for Statutory Auditors is included in item “Services expenses and use of third-party assets” and they amount to Euro 94 thousand.

As of March 31, 2018 the Company showed a debit balance towards other related parties of Euro 314 thousand.

During the year, the Company has entered directly into the following relations with related parties, other than its subsidiaries:

Group company Transaction type Related parties Revenue /

(Cost) in Euro 2018

Receivable/ (Payable) in Euro



Costs back charge No. 7 Managers/employees of Permasteelisa Spa

10,414.05 149.00


Passive lease and accessory charges

Fondazione Ugo e Olga Levi Onlus

(203,731.89)


Facility Management Fondazione Ugo e Olga Levi Onlus

(110,858.50) (50,325.00)


Energy expenses back charge

Fondazione Ugo e Olga Levi Onlus

8,930.42 10,895.11


Asset disposals Fondazione Ugo e Olga Levi Onlus

90,000.00

revenues/receivables 98,930.42 11,044.21

(expenses)/(payables) (314,590.39) (50,325.00)

163

The Company has terminated the lease contract related to Venice offices owned by Fondazione Ugo and Olga Levi Onlus. The lease has been replaced by a Facility Management agreement which provides the reduction of spaces available to the Company. The parties have agreed the sale of some assets (furniture and fixtures) owned by the same and located in the premises no longer used.

These transactions are regulated at normal market conditions.

Transactions with key management personnel

The remuneration of top managers, as defined by the IAS 24 Standard, that have a key function within the Company, amounted in total to Euro 4,136 thousand, of which Euro 1,430 thousand can be referred to specific members of the Company’s Board of Directors, Euro 1,837 thousand concern Managers with Holding functions and Euro 869 thousand for the Company’s Business Unit Manager functions.

40. Emoluments of Independent Auditors

The fees of Independent Auditors amount to Euro 251 thousand of which Euro 133 thousand for statutory audit fees, Euro 17 thousand for tax services, Euro 10 thousand for other services related to the J-SOX audit required by Shareholder and Euro 91 thousand for other consultancy fees.

41. Positions or transactions deriving from unconventional and/or unusual operations

There are no positions or transactions deriving from unconventional and/or unusual operations to highlight.

42. Subsequent events

No major events have occurred after the end of the financial year.

164

165


Appendix to the Statutory Financial

Statements

166

Appendix I: Receivables and payables broken down by geographical area Receivables and payables, included in the Statement of financial position as of March 31, 2018, are reported in the following tables broken down by geographical area:

a) Trade receivables from subsidiaries;

b) Financial receivables from subsidiaries;

c) Trade payables from subsidiaries;

d) Financial payables from subsidiaries.

Trade receivables from subsidiaries

€ thousands

March 31,

2018

March 31, 2017


Australia 65 116

Azerbaijan (217) 271

Canada 0 590

China 5,849 5,114

Colombia 4,767 0

Croatia 41 210

United Arab Emirates 920 2,186

Philippines 794 888

France 2,842 3,495

Germany 210 2,490

Japan 35 (100)

Jordan 1 49

Hong Kong 2,391 1,662

India 1,626 2,670

Ireland 890 91

Italy 139 101

Macao 4 9

Malaysia 306 240

Mongolia 785 865

Netherlands 1,952 4,272

Principality of Monaco 1,220 1,359

Qatar 3,669 24,472


Russia 1,952 3,416

Singapore 1,552 1,328

Spain 3 70


Switzerland 0 54

Taiwan 412 342

Thailand 5,531 7,971

Turkey 4 3

65,916 87,932

167

Financial receivables from subsidiaries


2018

March 31, 2017


Azerbaijan 365 (2,758)


Italy 3,148 5,264

Netherlands 13,497 15,375

Qatar (844) 95,120

United Kingdom 26,271 126

Singapore 73,560 75,868

Spain 270 870

United States 6,820 968

Turkey 1,903 1,671

296,235 284,786

Trade payables from subsidiaries


2018

March 31,

2017

Saudi Arabia 235 7,255

Azerbaijan 0 2,147

Australia 53 44

China 30 0

Croatia 57 37

United Arab Emirates 596 738

France 253 676

Germany 23 6

United Kingdom 100 102

Hong Kong 1,980 122

India 1,605 1,419

Ireland 0 205

Italy 11 2

Netherlands 9,963 7

Qatar 1,017 1,251

Russia 120 123

Singapore 23 14

Spain 165 237

United States 3 1

Switzerland 90 87

Thailand 22 26

Turkey 98 106

Saudi Arabia 4 0

16,448 14,605

168

Financial payables from subsidiaries

€ thousands

March 31,

2018

March 31,

2017

Saudi Arabia 0 3,084

Azerbaijan 0 (7,128)


France 115,607 92,668

Germany 0 5,292


Ireland (8,251) 0

Singapore 42,435 13,627


173,467 128,364

169

170


Auditors’ report on the Consolidated

and Statutory Financial

Statements

Documents

Consolidated and Statutory Financial Statements · Alternate Auditors Michele Crisci Luigi Provaggi Independent Auditors Deloitte & Touche S.p.A. 6 GROUP STRUCTURE The following graph