Josef Gartner GmbH

Gundelfingen

Befreiender Konzernabschluss gem. §291 HGB
zum Geschäftsjahr vom 01.04.2020 bis zum 31.03.2021

Permasteelisa S.p.A.

Vittorio Veneto/Italien

Consolidated Financial Statements for the year ended March 31, 2021

(Translation from the Italian original which remains the definitive version)

Company name

Permasteelisa S.p.A. with soles Shareholder

Registered office

Viale E. Mattei, 21/23

31029 Vittorio Veneto (TV)

Share Capital

Euro 6.900.000 fully paid in Treviso REA (Economic and Administrative Repertory) enrolment no. 169833

ADMINISTRATION AND CONTROLLING BOARDS

Board of Directors in charge as at April 1, 2020 and up to September 30, 2020

Chairman	Davide Croff
Chief Executive Officer	Klaus Ernst Lother
Directors	Marc Dobro
	Toshihiro Iwata (CCI)
	Hirofumi Koizumi (CCI)
	Sachio Matsumoto (CCI) (CRN)
	Hwa Jin Song Montesano (CRN)
	Motohiko Shintani
	(CCI) Member of the Internal Control Committee
	(CRN) Member of the Remuneration and Nominating Committee

Board of Directors in charge since September 30, 2020

Chairman	Peter Alexander Bacon
Chief Executive Officer	Klaus Ernst Lother

Board of Statutory Auditors

Chairman	Eugenio Romita
Standing Auditors	Antonella Alfonsi
	Roberto Spada
Alternate Auditors	Michele Crisci
	Luigi Provaggi
Independent Auditors	Deloitte & Touche S.p.A.

GROUP STRUCTURE

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

PERMASTEELISA S.p.A.

Management Report to the Consolidated Financial Statements

MANAGEMENT REPORT ON OPERATIONS

Dear Shareholder,

The following report accompanies the Permasteelisa S.p.A. Consolidated and Statutory Financial Statements as of March 31, 2021. It shows the Group and its Parent Company's management data, based on the current financial year and prospects.

The fiscal year 2021 (April 2020 - March 2021) has been influenced by several relevant events among which:

―	The Covid-19 pandemic, whose spread began in the last quarter of the previous financial year (January -March 2020), characterized the evolution of the entire 2021 financial year (April 2020 - March 2021), although was different from country to country. As a result of the restrictions introduced by local governments and the consequent uncertainty spread at the macroenomic level, the Group observed effects in terms of delay in the acquisition of new orders as well as a slowdown in the progress of ongoing projects, albeit with a gradual recovery in the course of the financial year. It should be noted that, as also illustrated below, the effects of this event are constantly monitored by management, in order to predict the possible impacts on operating activities and the necessary lines of action.
―	On June 26, 2020, the sale of 100% of the shares of Permasteelisa Japan KK by the subsidiary Permasteelisa Pacific Holdings Ltd to the buyer LIXIL Corporation, the ultimate parent at the date of completion of the transaction, was finalized. Permasteelisa Group continues its collaboration with the former subsidiary Permasteelisa Japan KK, in particular in the completion of Japanese projects, through the production plant and the design center located in China.
―	On 30 September 2020, the sale of 100% of the shares of Permasteelisa S.p.A. was completed by the shareholder Lixil Corporation to the new buyer ACR III Construction Holdings B.V., a Dutch investment company indirectly controlled by Atlas Holdings LLC. At the same time, 100% of the shares of Permasteelisa S.p.A. were transferred from ACR III Construction Holdings B.V. up to Permasteelisa Group B.V., current sole shareholder of Permasteelisa S.p.A. As of that date, Permasteelisa Group has been indirectly controlled by Atlas Holdings LLC ("Atlas"), a US company of industrial holdings active in very diversified sectors, including construction and engineering services, construction materials, management services and solutions, automotive, energy, metals, food, packaging, paper, and logistics. With a focus on manufacturing industry, distribution and services, Atlas' goal is to develop businesses that can grow over time and achieve better performance than competitors in their respective competence areas. Atlas qualifies as a "long-term" investor.
―	On 30 September 2020, as part of the transaction detailed above, the sale of 10% of the shares of Joseph Gartner GmbH by Permasteelisa S.p.A. was finalized in favor of ACR III Construction Holdings B.V.
―	In December 2020, the sale of the production site in Heerlen (Holland) was finalized, as part of the restructuring actions that the Group has undertaken since the beginning of 2019.
―	In the first months of 2021, the production activity at the Dongguan (China) industrial site was closed, again as part of the restructuring actions, and the closure of the local subsidiary is expected within the first quarter of the following year (April - June 2021).
―	In the first months of 2021, as part of the Group's reorganization actions and in the light of the market conditions dictated by the global pandemic, the parent company Permasteelisa S.p.A. reached a trade union agreement on a voluntary exit plan for redundant employees.

Despite the protraction of the global pandemic for the entire last year, the results achieved by the Group in financial year 2021 (April 2020 - March 2021), although still negative, show an improvement in line with expectations compared to the previous financial year 2020 (April 2019 - March 2020) and include the effect of restructuring actions already commenced. Figures show a decline in revenues and in the acquisition of new orders, negatively affected by the pandemic. In particular, revenues are equal to Euro 885.1 million (March 2020: Euro 1,182.9 million) while the operating result (EBIT) is negative for Euro 71.5 million (March 2020: negative for Euro 121.7 million), including restructuring costs of Euro 20.2 million (March 2020: Euro 27.8 million) relating to actions included in the restructuring plan commenced at the beginning of 2019 (hereinafter also Turnaround Plan) and relating mainly to the Europe area (Euro 10.7 million), North America (Euro 5.8 million) and Asia (Euro 3.4 million).

In the fiscal year ended March 31, 2021 the Parent Permasteelisa S.p.A. received capital injections totalling Euro 79 million, which allowed to cover losses incurred in the period and to strengthen the financial position. At the end of the year, the consolidated net equity (including minority interest) is equal to Euro 123.9 million (March 2020: Euro 101.4 million) and the net financial position is positive for Euro 96.2 million (March 2020: Euro 30.5 million) net of the effects of IFRS 16 Leases (Euro 136.1 million and Euro 69.5 million respectlively at March 2021 and March 2020 if determined gross of these effects). The financial resources available appear to be coherent with the expected financial needs and this will allow the Group to continue during the new fiscal year the implementation of the restructuring actions originally included in the Turnaround Plan and reflected in the Business Plan 2022-2025 prepared by the Directors with the support of the new shareholder and approved by the Board of Directors on May 27, 2021 (hereinafter also the "Business Plan").

The new orders acquired during the period April 2020 - March 2021 were equal to Euro 726 million (March 2020 Euro 903 million) and the main projects have been awarded in the European Region (United Kingdom, France, Russia and Switzerland) and in Asia (Australia, China and Hong Kong). In particular, acquisitions in the North America area were lower than the previous year, although the last quarter (January - March 2021) has highlighted a level of acquisitions improved compared to the previous quarters. It should be noted that the total orders acquired by the Group in the quarter January - March 2021, equal to Euro 208 million, are higher than those acquired in the same period of the previous year (Euro 200 million). In general, both the American and European markets, strategic for the Group, suffered from a slowdown in investment decisions, mainly attributable to the Covid-19 pandemic, the effects of which continued into the first quarter of the new financial year (April -June 2021).

The backlog, equal to Euro 1.3 billion at the end of March 2021 (March 2020: Euro 1.6 billion), included the negative effect of Euro 126 million, due to the suspension of two American projects, whose restart is not certain.

As highlighted above, the operating profit (EBIT) achieved in March 2021 was negative and equal to Euro 71.5 million (-8.1% on total revenues), while in March 2020 it was negative for Euro 121.7 million (-10.3% on total revenues). The Group performance in fiscal year 2021 was mainly due to:

―	restructuring costs of Euro 20.2 million (March 2020: Euro 27.8 million) connected to the workforce reduction plan in Europe, the reorganization plan of activities in North America and the closure of a factory in China;
―	the costs allocation for guarantee works for some projects in the UK area;
―	In general, the lower progress during the last year on some ongoing projects, due to the lockdown caused by the Covid-19 pandemic and the related effect of under-absorption of operating costs.

These effects were partially offset by an improvement in margins for some projects and an important reduction in fixed costs.

The result before tax (EBT) achieved in March 2021 was negative for Euro 62.9 million (March 2020: negative for Euro 134.6 million) due to net financial expenses of Euro 4.1 million (March 2020: Euro 12.3 million) significantly lower than costs incurred in the previous year thanks to the Group's financial and equity strengthening actions, which have drastically reduced interest expense and costs associated with hedging on foreign currencies. In addition, the Group achieved a positive result of Euro 12.7 million, deriving from the sale of equity investments in subsidiaries.

The net result in March 2021 was negative for Euro 66.4 million (March 2020: negative for Euro 146.3 million).

As stated above, the capital contributions received, totaling Euro 79 million, allowed to strengthen the Group's equity and the net financial position. At March 31, 2021 the net financial position was positive and equal to Euro 96.2 million (March 2020: Euro 30.5 million), including Euro 39.9 million of financial liabilities for leasing (March 2020: Euro 39.0 million).

With reference to relevant subsequent events, to be noted the decision and agreement reached by the Parent Company Permasteelisa S.p.A. about the sale of the subsidiary Permasteelisa Espana S.A.U.

On June 2, 2021, in fact, a sales agreement (SPA) was signed between Permasteelisa S.p.A. and a German industrial group, whose execution was subject to the fulfillment of certain conditions precedent, which were subsequently accomplished.

Main economic and financial data

Permasteelisa Group ("Permasteelisa") is a global leader in the engineering, project management, manufacturing, installation and after-sales service of advanced building façades and architectural envelopes. Permasteelisa's three brands, Permasteelisa, Gartner and Scheldebouw, are recognized as the premier integrated providers of high quality, bespoke curtain walls solutions in the world. Collectively, the company employs more than 4,000 associates, designing, fabricating and installing premier projects out of locations in 30 countries, including eight production facilities and eight principal design offices.

The effects of the COVID pandemic have continued to impact the operations and, the different evolution of the emergency in the various countries, forced the Group to periodic lockdowns affecting both manufacturing and installation activities. Those measures led to delays in revenue recognition and in some cases to incremental costs. The impact in recent months has been less severe than it was in prior periods during the early spread of COVID. In fact, despite the impacts of the COVID pandemic, Permasteelisa continued to execute on its project backlog with minimal negative financial impact in the last quarter.

The impact of the COVID pandemic on the global economic environment determined in general delays in the investment decisions, which has in turn slowed the pace of large commercial office developments, Permasteelisa's primary end market. In addition, Brexit caused delays in certain investment decision in the United Kingdom, one of the main geographies in which Permasteelisa operates. Despite these unfavorable events, Permasteelisa awarded contracts totaling Euro 208 million in the quarter ended March 31, 2021 (Euro 201 million in the last quarter ended March 31, 2020). In particular, we highlight the acquisition of two major projects in the United States for a total of Euro 61 million, one in Italy (Euro 31 million) and one in France (Euro 17 million). The project backlog as at 31 March 2021, even if lower than the value as at March 2020 (Euro 1.6 billion), exceeds Euro 1.3 billion, thus providing coverage to production foreseen for the following fiscal year. Permasteelisa is actively involved in bidding for further new projects in the US, Europe, UK and Asia.

With reference to the financial position as at 31 March 2021, it should be noted that the Group has no debt towards financial institutions, with a positive cash position and a level of working capital that is coherent with business needs. In this regard, we remind that the Company benefited from capital contributions, first by LIXIL Corporation, with a capital contribution of Euro 10 million and, at the closing date of the agreement with the new shareholder Permasteelisa Group BV, for Euro 69 million.

Permasteelisa's Management is also constantly focused on the evolution of the restructuring actions that were originally planned in the Turnaround Plan and which during the period were defined in detail, partly implemented rather than reflected in the Business Plan. These actions affect three main areas of intervention with the aim of improving overall company performance. In particular:

―	to establish a solid backlog of high quality projects, through a careful and selective assessment of the offers, in particular with regards to the estimate of construction costs and in the evaluation of contractual conditions;
―	to improve the execution phase of the project to prevent any reduction in margins, through the revision of the design at corporate level, the optimization of design costs and construction costs, the definition of group standards for typical / repetitive components, the evaluation of alternative make-or-buy choices, etc.
―	to carry out a restructuring plan of the organizational structure, aimed at reducing the costs of the group, reducing its operating structure and exiting the markets / divisions that are not part of its core business. In this regard, as already mentioned, during the quarter January - March 2021, the Dongguan production plant was closed, reducing the workforce by 144 units, and the process of downsizing the Italian activities was launched through an agreement with the trade unions for an exit incentive plan for up to 134 employees.

The operating result (EBIT) achieved in the year ended March 2021 is still negative for Euro 71.5 million, although improved compared to March 2020 (negative for Euro 121.7 million) in particular due to the progress of the projects that had already shown in previous year negative performances as well as due to the effects already mentioned in terms of slowdown in production of projects as a result of the Covid-19 emergency together with the implementation of the aforementioned restructuring actions which determined the occurrence of restructuring costs for Euro 20.2 million (March 2020: Euro 27.8 million).

However, some events observed in the last quarter of the year and which have produced positive effects on the result should be noted; in particular:

―	an agreement reached with a customer in the Middle East area about a substantially completed project whose contract had been unilaterally terminated by the customer in June 2020. This agreement had a positive effect of approximately Euro 5 million;
―	the formalization of the final account of a project in the United Kingdom resulted in an increase in the operating margin in the order of Euro 2 million;
―	the formalization of an agreement for a project in Germany thanks to which margins were improved by approximately Euro 2 million;
―	the achievement of an advanced stage of completion for a project in the United States which made it possible to mitigate some risks previously included and highlighted an increase in margins of approximately Euro 2.5 million;
―	the formalization of the final account of a project in China which led to the recognition of the variations under discussion, contributing to an improvement in margins of Euro 1.1 million.

Group results for fiscal year 2021 compared with prior period are summarized below:

€ thousands	March 31, 2021	March 31, 2020
Operating revenues	885,066	1,182,944
EBITDA	(41,618)	(83,404)
%	-4.7%	-7.1%
Adjusted EBITDA ⁽¹⁾	(19,854)	(55,606)
%	-2.2%	-4.7%
EBIT	(71,535)	(121,652)
%	-8.1%	-10.3%
Result before tax	(62,866)	(134,591)
%	-7.1%	-11.4%
Net result	(66,429)	(146,277)
%	-7.5%	-12.4%

⁽¹⁾ Net of Non Recurring costs related to Restructuring actions and impairment of intangible assets.

€ thousands	March 31, 2021	March 31, 2020
Non current assets ^(a)	105,768	117,880
Net working capital ^(b)	(46,584)	(14,225)
Severance indemnity fund, pension funds and other employees benefits ^(c)	(31,476)	(32,792)
Net invested capital	27,708	70,863
Net financial debt/(Net cash surplus) ^(d)	(96,227)	(30,487)
Shareholders' equity (including minority interests) ^(e)	123,935	101,350
Coverage	27,708	70,863
Investment on tangible and intangible assets	8,666	9,314
Average workforce	4,582	5,370

^a) Sum of the captions included in the consolidated statement of financial position referring to notes 15, 16,16A, 18, 19, 20;
^b) Sum of the captions included in the consolidated statement of financial position referring to notes 1, 21, 22, 23, 24, 25, 26, 33, 34, 35, 36, 31;
^c) Sum of the captions included in the consolidated statement of financial position referring to notes 31 e 32;
^d) Caption included in the consolidated statement of financial position referring to notes 27 e 30;
^e) Caption included in the consolidated statement of financial position referring to note 29.

Performance for the period

For many people, 2020 will be remembered as the year characterized by a recession induced by the pandemic which is the most serious in contemporary Italian history in times of peace. In the first half of 2020, GDP was 12 per cent lower than the same period in 2019. In April, industrial production was more than 40 per cent below the level at the beginning of the year. In this context, the Italian government has launched very extensive interventions in support of the economy (Source: Banca Italia) from which Permasteelisa S.p.A. also benefited to contain the effects of the factory lockdown and on projects.

Furthermore, with the global COVID-19 pandemic in early 2020, numerous projects around the world, in various phases, stopped due to lockdowns and the introduction of various restrictions that have impacted production activities and construction sites. In 2020, there were 106 completions of buildings taller than 200 meters, a 20% decline from 133 in 2019, and nearing a level last seen in 2014, when 105 such buildings were constructed. In addition, 2020 is the second year in a row in which the number of completed buildings declined.

In addition to the effects of the global pandemic on the one hand and China's efforts to reduce its debt on the other, in 2020 there remain some factors that have already emerged in 2019, including some political and environmental public statements against needless production of exceedingly tall buildings, and therefore a deterrent factor during the year.

The tallest building to complete in 2020 was Central Park Tower in New York City, at 472 meters. This is the first time in five years in which the tallest completed building was not in China, and the first time since 2014, when One World Trade Center was completed, that the tallest building of the year was in the United States.

New York City thus reached the top of the list with the two tallest buildings completed in 2020, namely Central Park Tower, at 472 meters, and One Vanderbilt, at 427 meters.

On the European front, however, during this year, London completed four buildings of over 200 meters; the highest number in a year despite the UK finalizing its exit from the European Union, which should lead to a reduction in office spaces demand. Before 2020, London appears to have only five buildings over 200 meters to its credit and all built in different years.

Based on current estimates, the Council on Tall Buildings and Urban Habitat (CTBUH) predicts that between 125 and 150 buildings with a height of 200 meters or more will be completed in 2021. Of these, between 14 and 30 will likely be supertalls (buildings at least 300 meters high).

Looking at the first 30 completions expected in 2021, 18 are in China, 5 in the United States and 2 in Saudi Arabia. All of the buildings that will go into operation in Riyadh next year are part of the King Abdullah Financial District (KAFD), which will comprise around 50 buildings upon completion.

It is reasonable to predict that COVID-19 will affect investments and the construction market in general over the next few months. Some projects that should have been completed by the end of 2021 are already expected to be finished in 2022, including the 644-meter-tall Merdeka PNB118 in Kuala Lumpur.

Note that the two tallest buildings expected to be completed in 2021 are Riverview Plaza A1 in Wuhan (436 meters) and 111 West 57th Street in New York City (435 meters); both are located in the two cities most affected by the 2020 pandemic. This could be interpreted as a symbol of the resilience of cities and the large building industry.

It is also possible that the availability of vaccines and other positive developments in the battle against the pandemic could change by the middle of the year, which gives CTBUH further confidence in the possibility of reaching the target of 125-150 completions foreseen for 2021.

Within the reference market just described, over the last year, the Permasteelisa Group followed its commercial strategy by winning orders on several important projects for Euro 725.6 million (March 2020: Euro 902.6 million). The North American Curtain Wall market made up 22.3 per cent of orders while Europe represented 59.1 per cent and Asia 18.6 per cent. The Group's greater selectivity on the North American market continues, in line with the strategic guidelines contained in the Business Plan, and in any case affected by the general contraction of the market due to the pandemic. The European market benefited from the acquisition of an important project in the Russia area for over Euro 180 million, while the UK market contracted by 9.4 per cent compared to the previous year.

The Asian market was mainly affected by the reduction in new orders in China and Japan, following the exit of the Group from the latter country. In particular, the "Interior" business segment recorded a marked contraction following the fewer openings of new high fashion stores due to Covid.

The order intake trend during the year is better highlighted in the following graph, compared with the previous year.

The effects of Covid-19 are likely to continue to have an impact on investment decisions, at least in the first quarter of next year.

The March 31, 2021 EBITDA, negative by Euro 42 million, although still negative, has definitely improved compared to the previous year (March 2020: negative for Euro 83 million), and includes approximately 20 million Euro of restructuring costs associated with the Turnaround Plan.

The losses incurred and the Covid-19 emergency, required an analysis to evaluate the presence of impairment losses with regards to the fixed assets in the balance sheet (impairment test). As a result of this assessment, the characteristics of which are widely described in the explanatory notes, no further write-downs of intangible assets have been recorded nor have any reversal been made with reference to the assets recognized in the consolidated financial statements.

The March 31, 2021 operating result (EBIT) is negative for Euro 71.5 million, improve with respect to previous year, negative for Euro 121.7 million.

The net financial result is positive and equal to Euro 8.7 million, thanks to the positive contribution from the sale of the investment in the Japanese subsidiary. Net financial expenses, equal to Euro 4.1 million, have significantly decreased compared to those of the previous year (Euro 12.2 million), thanks to the reduction in interest rates and the cost of currency hedging.

The net result after depreciations, write-downs and taxes is negative for Euro 66.4 million compared to a loss of Euro 146.3 million in the previous year.

As already mentioned, the Group was recapitalized during the year for a total of Euro 79 million, strengthening the financial situation and allowing to have a positive net financial position of approximately Euro 136.1 million - excluding the effects deriving from the application of IFRS16 - available to face the challenges that lie ahead for new financial year.

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

Orders acquisition

As detailed in the table here below, new orders for the period April - March by product show that new orders for Curtain Walls amounted to Euro 676 million (March 31, 2020: Euro 759 million) and those for Interiors, Contract and Marine to Euro 50 million (March 31, 2020: Euro 144 million).

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

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
187,651	156,977	Curtain walls - Alu	667,530	92.0	741,190	82.1
2,356	8,446	Curtain walls - Steel	8,100	1.1	17,311	1.9
190,007	165,423	Subtotal Curtain walls	675,630	93.1	758,501	84.0
135	1,711	Glazed Metal Works	341	0.0	22,047	2.4
15,507	16,230	Shops	45,442	6.3	83,690	9.3
15,642	17,941	Subtotal Interiors	45,783	6.3	105,737	11.7
55	4,594	Contract	1,966	0.3	5,100	0.6
2,119	12,599	Marine	2,180	0.3	33,303	3.7
207,823	200,557	Total Orders	725,559	100.0	902,641	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
187,651	(73,660)	-9.9
2,356	(9,211)	-53.2
190,007	(82,871)	-10.9
135	(21,706)	-98.5
15,507	(38,248)	-45.7
15,642	(59,954)	-56.7
55	(3,134)	-61.5
2,119	(31,123)	-93.5
207,823	(177,082)	-19.6

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

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
79,004	128,148	North America	150,361	22.3	230,722	30.4
32,668	(2,684)	UK + Ireland	78,752	11.7	86,915	11.5
19,805	260	France	47,070	7.0	31,080	4.1
5,368	1,358	Germany	12,064	1.8	69,928	9.2
2,761	6,175	Switzerland	26,313	3.9	18,144	2.4
31,347	0	Italy	32,681	4.8	150	0.0
537	2,014	Spain	1,591	0.2	4,292	0.6
2,497	754	Russia	186,514	27.6	1,371	0.2
4,398	5,985	Other Europe	14,075	2.1	46,362	6.1
99,381	13,862	Subtotal Europe	399,060	59.1	258,242	34.1
0	113	Middle East	0	0.0	41,948	5.5
5	0	Central Asia	9	0.0	0	0.0
2,587	444	Australia	69,798	10.3	86,148	11.4
4,458	2,895	Hong Kong	37,732	5.6	8,627	1.1
4,575	20,002	China	17,653	2.6	64,947	8.6
0	721	Japan	0	0.0	69,090	9.1
(3)	(762)	Other Asia ^(*)	1,017	0.1	(1,223)	-0.2
11,617	23,300	Subtotal Asia	126,200	18.6	227,589	30.0
190,007	165,423	Tot Curtain walls	675,630	100.0	758,501	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
79,004	(80,361)	-34.8
32,668	(8,163)	-9.4
19,805	15,990	51.4
5,368	(57,864)	-82.7
2,761	8,169	45.0
31,347	32,531	n.a.
537	(2,701)	-62.9
2,497	185,143	n.a.
4,398	(32,287)	-69.6
99,381	140,818	54.5
0	(41,948)	-100.0
5	9	0.0
2,587	(16,350)	-19.0
4,458	29,105	337.4
4,575	(47,294)	-72.8
0	(69,090)	-100.0
(3)	2,240	183.2
11,617	(101,389)	-44.5
190,007	(82,871)	-10.9

^(*) The figure under "Other Asia" in March 2020 includes negative changes in contract amounts on projects acquired in prior years for Euro -760 thousand in Malaysia and Euro -458 thousands in Philippines.

It should be noted that the absence of orders acquired in 2021 in the Middle East area reflects the strategic choices outlined in the Business Plan.

Breakdown of the Interiors segment by geographical area:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
89	17	America	1,559	3.4	1,685	1.6
144	653	UK + Ireland	(76)	-0.2	11,826	11.3
89	135	Russia	560	1.2	15,652	14.8
0	291	Italy	(209)	-0.5	836	0.8
0	780	France	145	0.3	1,374	1.3
0	96	Other Europe	248	0.6	2,516	2.4
233	1,955	Subtotal Europe	668	1.4	32,204	30.6
10	9	Middle East	350	0.8	326	0.3
2,940	7,884	Hong Kong	10,067	22.0	20,982	19.8
8,345	3,927	China	25,455	55.6	30,797	29.1
0	3,300	Japan	0	0.0	6,278	5.9
4,025	849	Other Asia	7,684	16.8	13,465	12.7
15,310	15,960	Subtotal Asia	43,206	94.4	71,522	67.5
15,642	17,941	Total Interiors	45,783	100.0	105,737	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
89	(126)	-7.5
144	(11,902)	-100.6
89	(15,092)	-96.4
0	(1,045)	-125.0
0	(1,229)	-89.4
0	(2,268)	-90.1
233	(31,536)	-97.9
10	24	7.4
2,940	(10,915)	-52.0
8,345	(5,342)	-17.3
0	(6,278)	-100.0
4,025	(5,781)	-42.9
15,310	(28,316)	-39.6
15,642	(59,954)	-56.7

Breakdown of the Contract segment by geographical area:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
29	1,134	America	1,399	71.2	1,134	22.2
26	3,459	Italy	570	29.0	3,646	71.5
0	0	United Kingdom	0	0.0	25	0.5
0	1	Other Europe	(3)	-0.2	295	5.8
55	4,594	Total Contract	1,966	100.0	5,100	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
29	265	23.4
26	(3,076)	-84.4
0	(25)	-100.0
0	(298)	-101.0
55	(3,134)	-61.5

Breakdown of the Marine segment by geographical area:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
1,198	7,150	Italy	1,249	57.3	15,846	47.6
640	5,598	France	650	29.8	10,097	30.3
281	(161)	Norway	281	12.9	4,223	12.7
0	12	Other Europe	0	0.0	3,137	9.4
2,119	12,599	Total Marine	2,180	100.0	33,303	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
1,198	(14,597)	-92.1
640	(9,447)	-93.6
281	(3,942)	-93.3
0	(3,137)	-100.0
2,119	(31,123)	-93.5

It should be noted that the absence of orders acquired in 2021 in the Marine sector reflects the strategic choices outlined in the Business Plan.

Backlog

- Curtain Walls

The economic backlog of Curtain walls as of March 31, 2021 amounts to Euro 1,284.2 million and it is broken down by geographical area as follow:

(€ million)	March 31, 2021	%	March 31, 2020	%
Europe	422.1	32.9	303.9	19.7
United Kingdom	236.0	18.4	293.8	19.1
Middle East	7.1	0.5	38.5	2.5
America	383.0	29.8	620.0	40.2
Asia	236.0	18.4	285.8	18.5
Total	1,284.2	100.0	1,542.0	100.0

- Contract

The economic backlog of Contract as of March 31, 2021 amounts to Euro 11.1 million and it is broken down by geographical area as follow:

(€ million)	March 31, 2021	%	March 31, 2020	%
Europe	1.8	16.5	8.6	27.6
Middle East	0.4	3.7	0.7	2.2
America	8.9	79.8	21.9	70.2
Total	11.1	100.0	31.2	100.0

- Marine

The economic backlog of marine segment as of March 31, 2021 amounts to 39.9 million Euro, as detailed by geographical area in the table below:

€ million

	March 31, 2021	%	March 31, 2020	%
Italy	31.2	78.1	47.5	79.3
France	8.5	21.4	11.1	18.5
Norway	0.2	0.5	1.2	2.0
Other Europe	0.0	0.0	0.1	0.2
Total	39.9	100.0	59.9	100.0

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 Euro 885,066 thousand, with a decrease of 25.2% compared to the previous year (March 31, 2020: Euro 1,182.9 thousand).

Operating revenues broken down by product are shown below:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
202,092	226,626	Curtain walls - Alu	744,986	84.2	956,601	80.9
1,656	9,523	Curtain walls -Steel	22,242	2.5	76,279	6.4
203,748	236,149	Subtotal Curtain walls	767,228	86.7	1,032,880	87.3
1,968	6,731	Glazed Metal Works	18,384	2.1	17,043	1.4
14,378	6,872	Shops	56,102	6.3	80,330	6.8
16,346	13,603	Subtotal Interiors	74,486	8.4	97,373	8.2
3,417	6,449	Contract	21,324	2.4	25,258	2.2
9,439	7,463	Marine	22,028	2.5	27,433	2.3
232,950	263,664	Total Operating Revenues	885,066	100.0	1,182,944	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
202,092	(211,615)	-22.1
1,656	(54,037)	-70.8
203,748	(265,652)	-25.7
1,968	1,341	7.9
14,378	(24,228)	-30.2
16,346	(22,887)	-23.5
3,417	(3,934)	-15.6
9,439	(5,405)	-19.7
232,950	(297,878)	-25.2

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

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
43,513	81,343	North America	240,193	31.3	376,599	36.4
70	695	South America	152	0.0	3,059	0.3
41,861	53,813	UK + Ireland	135,961	17.7	200,135	19.4
15,801	10,797	France	51,716	6.7	40,365	3.9
9,612	10,774	Germany	39,962	5.2	30,464	2.9
11,923	7,248	Switzerland	38,128	5.0	61,792	6.0
2,165	2,611	Italy	6,871	0.9	14,519	1.4
2,785	4,882	Spain	15,264	2.0	21,541	2.1
7,991	3,431	Russia	19,751	2.6	22,218	2.2
10,081	12,398	Other Europe	42,364	5.5	28,622	2.8
102,219	105,954	Subtotal Europe	350,017	45.6	419,656	40.7
8,018	18,380	Middle East	25,298	3.3	69,183	6.7
624	0	Central Asia	670	0.1	0	0.0
21,306	7,833	Australia	54,065	7.1	34,476	3.3
6,912	6,696	Hong Kong	16,261	2.1	42,693	4.1
13,649	8,107	China	56,263	7.3	49,154	4.8
239	(65)	Singapore	455	0.1	177	0.0
3,172	2,339	Japan	7,058	0.9	20,419	2.0
4,026	4,867	Other Asia	16,796	2.2	17,464	1.7
49,304	29,777	Subtotal Asia	150,898	19.7	164,383	15.9
203,748	236,149	Tot Curtain walls	767,228	100.0	1,032,880	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
43,513	(136,406)	-36.2
70	(2,907)	-95.0
41,861	(64,174)	-32.1
15,801	11,351	28.1
9,612	9,498	31.2
11,923	(23,664)	-38.3
2,165	(7,648)	-52.7
2,785	(6,277)	-29.1
7,991	(2,467)	-11.1
10,081	13,742	48.0
102,219	(69,639)	-16.6
8,018	(43,885)	-63.4
624	670	0.0
21,306	19,589	56.8
6,912	(26,432)	-61.9
13,649	7,109	14.5
239	278	157.1
3,172	(13,361)	-65.4
4,026	(668)	-3.8
49,304	(13,485)	-8.2
203,748	(265,652)	-25.7

Breakdown of the Interiors segment by geographical area:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
1,463	1,287	America	4,692	6.3	6,462	6.7
982	4,385	UK + Ireland	11,597	15.6	9,885	10.2
331	525	Russia	3,221	4.3	923	0.9
4	(385)	Italy	311	0.4	150	0.2
(3)	600	France	239	0.3	1,487	1.5
332	(3,406)	Other Europe	950	1.3	1,598	1.6
1,646	1,719	Subtotal Europe	16,318	21.9	14,043	14.4
100	100	Middle East	266	0.4	576	0.6
3,045	4,676	Hong Kong	15,302	20.5	20,196	20.7
6,157	6,060	China	26,321	35.3	36,724	37.7
2,209	(3,877)	Singapore	5.342	7,2	2,901	3.0
1,726	3,638	Other Asia	6.245	8,4	16,471	16.9
13,137	10,497	Subtotal Asia	53,210	71.4	76,292	78.3
16,346	13,603	Total Interiors	74,486	100.0	97,373	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
1,463	(1,770)	-27.4
982	1,712	17.3
331	2,298	249.0
4	161	107.3
(3)	(1,248)	-83.9
332	(648)	-40.6
1,646	2,275	16.2
100	(310)	-53.8
3,045	(4,894)	-24.2
6,157	(10,403)	-28.3
2,209	2,441	84.1
1,726	(10,226)	-62.1
13,137	(23,082)	-30.3
16,346	(22,887)	-23.5

Breakdown of the Contract segment by geographical area:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
1,508	4,475	America	12,434	58.3	17,703	70.1
400	322	Italy	3,185	14.9	1,771	7.0
0	88	United Kingdom	12	0.1	121	0.5
849	999	Other Europe	4,005	18.8	3,094	12.2
660	565	Middle East	1,688	7.9	2,569	10.2
3,417	6,449	Total Contract	21,324	100.0	25,258	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
1,508	(5,269)	-29.8
400	1,414	79.8
0	(109)	-90.1
849	911	29.4
660	(881)	-34.3
3,417	(3,934)	-15.6

Breakdown of Marine revenues by geographical area is shown below:

€ thousands

IV Quarter 2021 (Jan-Mar21)	IV Quarter 2020 (Jan-Mar20)		March 31, 2021	%	March 31, 2020	%
7,751	3,642	Italy	17,592	79.9	13,814	50.4
1,241	1,533	France	3,310	15.0	5,771	21.0
429	810	Norway	1,055	4.8	4,728	17.2
18	1,478	Other Europe	71	0.3	3,120	11.4
9,439	7,463	Total Marine	22,028	100.0	27,433	100.0

IV Quarter 2021 (Jan-Mar21)	Variation	Variation %
7,751	3,778	27.3
1,241	(2,461)	-42.6
429	(3,673)	-77.7
18	(3,049)	-97.7
9,439	(5,405)	-19.7

Profitability

As highlighted in the section "Main economic and financial data", the consolidated figures of the fiscal year ended on March 2021 show a negative EBITDA of Euro 41.6 million (March 2020: EBITDA of negative Euro 83.4 million), that corresponds to -4.7% of operating revenues (March 2020: -7.1%), and a EBIT of negative Euro 71.5 million (March 2020: EBIT of negative Euro 121.6 million), that corresponds to -8.1% of operating revenues (March 2020: -10.3%).

Financial performance - Results

Consolidated non-current assets were Euro 105,768 thousands (March 2020: Euro 117,880 thousands); the decrease of Euro 12,112 thousands compared to the closing figures of the previous year is due to the sale of a property in the Netherlands, to the devaluation of intangible assets by the Parent Company and to lower net investments compared to amortization for the period.

The currency rate impact on the consolidated fixed assets for the current year is almost nil (same as previous period, March 2020).

The consolidated net working capital was negative for Euro 46,584 thousand (March 2020: Euro 14,225 thousand), showing a negative variation compared to the closing figures of the previous year due to the decrease in the operating working capital (intended as the sum of the items included in the balance sheet statement in notes 22, 23, 34) which went from Euro 66,923 thousand to Euro 56,010 thousand. This decrease is due to the normal progress of ongoing projects and the changes on financial items associated with contract assets and trade receivables and payables. There are no extraordinary components to highlight.

The Group net financial position for the year ended March 2021 showed a balance of Euro 96,227 thousand compared to the Euro 30,487 thousand of previous year (March 2020), including lease liabilities for Euro 39,908 thousand. During the year, capital contributions received were Euro 79 million (previous year: Euro 140 million), allowing the Group to maintain a positive net financial position, free of bank debt.

The net financial expenses were Euro 4,073 thousand at March 2021 compared to Euro 12,250 thousand for March 2020, thanks to the sharp reduction in interest expense and costs for currency hedging. For more details, please refer to the comments under the note "11 - Net financial expenses".

The net consolidated equity (including minority interests) increases from Euro 101,350 thousand to Euro 123,935 thousand; the positive variation for Euro 22,585 thousand was mostly due to:

€ thousands

- loss of the period	Euro	(66,423)
- translation reserve variation	Euro	9,292
- hedging reserve variation	Euro	(432)
- gain/(losses) actuarial variation	Euro	(159)
- Shareholder's equity injection	Euro	78,940
- Proceeds from disposal of equity investmen	it Euro	1.055

Investments

The investments as of March 31, 2021 were equal to approximately Euro 8.7 million of which approximately Euro 6.2 million for technical investments and the remaining for software and other intangible activities.

€ thousands

	March 31, 2021	March 31, 2020
Land and buildings	1,327	349
Machinery and equipment	825	1,401
Equipment	1,029	1,664
Other tangible fixed assets	2,909	2,679
Fixed assets in progress	144	1,848
Total technical investments	6,234	7,941

The main increases were recorded in Germany for Euro 0.8 million (March 2020: Euro 2.4 million), in Italy for Euro 0.7 million (March 2020: Euro 1.4 million), in America for Euro 0.3 million (March 2020: Euro 1.3 million), in Netherlands for Euro 0.9 million (March 2020: Euro 1.3 million), in Asia for Euro 2.2 million (March 2020: Euro 0.5 million), in Australia for Euro 0.8 million, in UK for Euro 0.3 million and for Euro 0.1 million in the rest of Europe and were mainly incurred to replace or renew plants and equipments.

Overview of ongoing projects and main project acquisitions

The main projects of the Permasteelisa Group at March 31, 2021 have been broken down into the following paragraph between completed projects and ongoing projects and divided between the following business areas:

A) Completed projects: Curtain walls - Exteriors

―	1 Denison Street
―	22 Bishopsgate
―	Academy Museum of Motion Pictures
―	Gateway of Pacific, Phase I
―	GIOIA 22 One Vanderbilt

B) Ongoing and new projects: Curtain walls - Exteriors

―	33 Charterhouse Place
―	200 Park
―	Altiplano
―	Bankside Yards, BY3
―	Battersea Power Station, Phase 3A, Prospect Place
―	Centre de Recherche Servier Paris-Saclay
―	DUO Towers
―	MOL Campus
―	One Sydney Harbour (OSH) 1
―	One Sydney Harbour (OSH) 2
―	One Wilton Park
―	PNB 118
―	The Spiral

Main risks and uncertainties which Permasteelisa S.p.A. and the Group are exposed to Covid-19 pandemic

The Covid-19 pandemic that occurred at the beginning of 2020, starting from the Asian area, determined from January 2020 the suspension of activities carried out in the design and engineering offices, factories and construction sites in Shanghai, Suzhou and Dongguan.

As for Italy, on February 21, several cases of coronavirus emerged and with the Prime Ministerial Decree of March 11, 2020, the Italian government, first in Europe, introduced travel restrictions up to the progressive lockdown.

In this context, Permasteelisa Group has implemented a series of measures at all levels of the organization, at the headquarters in Italy and abroad, as well as in the various construction sites, aimed at guaranteeing the health and safety of its personnel, preventing the spread of the Covid-19 infection and ensure, in compliance with the indications of the authorities in the individual countries, where possible the continuity of the business.

In particular, at the beginning of February 2020, an Executive Council was organized (the Group Emergency Team) in order to centrally support and manage the Covid-19 threat to our associates and business operations throughout Permasteelisa Group.

The Executive Council leveraged Permasteelisa Group global procurement in order to support Hong Kong and Mainland China associates with facemasks including respirators and hand sanitizers sourced from European and North American suppliers to satisfy a complete depletion of these resources in the Asian market. Permasteelisa Group leveraged the same global procurement reach to support our European and North American associates with Covid-19 supplies in the second quarter of 2020 in order to resume normalized work operations in these markets.

In addition to personal protective equipment that was distributed by the Group Emergency Team, the executive council has frequently communicated status updates to all associates on how the Company was managing and mitigating the effects of the pandemic on associates and business operations.

The Group Emergency Team implemented in rapid succession, starting from late first quarter and throughout second quarter 2020, emergency temporary remote working guidelines, a halt to business travel, and Covid-19 response plans, awareness training, and IT infrastructure to cope with the need to convert traditionally office based work functions to remote working.

Permasteelisa Group's Covid-19 webportal was also created and implemented to uniformly manage the reporting and status of all Covid-19 suspected and positive cases, and temporary shutdowns of offices, factories and construction sites in Asia, Europe, Middle East and North America.

Starting from the third quarter 2020, the Covid-19 regulations imposed by local governments and vast differences in Covid-19 risk levels by country and location became unwieldy to convert into a unified set of global Permasteelisa Group Covid-19 rules and therefore the Executive Council remanded responsibility to local managers to implement the best approach given local regulation and Covid-19 levels of risk.

Reporting through the Covid-19 webportal remained a requirement for each subsidiary. Covid-19 positive cases of internal associates remained low until the fourth quarter 2020. The emergence of colder weather in the northern hemisphere coupled with increased holiday gatherings are believed to be among the contributors to the sudden fourth quarter spike in Covid-19 positive cases.

The spike of cases observed in the fourth quarter 2020 has persisted through the first quarter of 2021, with some Permasteelisa Group locations suffering a number of positive cases equal or higher than the cases observed during the whole 2020.

Despite Covid-19 mitigation measures have largely been successful with major workplace outbreaks prevented, the trend in Covid-19 positive cases has raised to 12%. This despite an increasing percentage of associate vaccinations throughout Asia, Europe, Middle East and North America. The increase in Covid-19 positive cases with the suspected source as the workplace is primarily within our construction work environments.

Tracing of vaccinated associates remains a challenge due to the many country privacy laws in which Permasteelisa Group operates.

Health and Safety management

Nearly all major Permasteelisa Group Companies including operations in China, Hong Kong, Thailand, Singapore, Australia, Spain, Italy, Netherlands, UK, and USA possess ISO 45001 certified Occupational Health & Safety management systems that have been independently audited during Fiscal Year 2021.

In addition to this baseline level of Health & Safety management, a number of improvement activities including addition of new HSE applications have been implemented Permasteelisa Group worldwide. Over the past years, Permasteelisa Group has implemented an integrated strategy called the Group Integrated Management System (GiMS). The GiMS approach is one that harmonizes aspects of the way occupational health & safety, environment, and quality management are controlled throughout all Permasteelisa Group Companies.

The GiMS approach supports the independent certification of ISO management systems and provides visibility to management of trends and risks that may require additional attention and resources to mitigate and control. GiMS Health and Safety applications have facilitated the identification of areas needing improvement, specifically factory based risks that have prompted additional attention to Hazard Awareness. Factories in Germany, Italy, Spain, China, Thailand, USA, and Canada have participated in a focused training and identification of workplace Hazards.

Hazard Awareness training has been supported by the GiMS Hazard Alert application. Hazard Alerts are the observations of unsafe conditions or behaviors (that cannot be immediately remedied) and require an assignment of action to eliminate or control the risk. The purpose of the Hazard Alert application is twofold. One, Hazard Alerts that are identified as "Severe" or "Potentially fatal" are automatically distributed by email alert to managers including senior leadership to raise awareness of emerging or existing risks in the workplace from "the ground up" associate level to senior leadership. Two, the Hazard Alert application is designed to support the finding and fixing of risks in the workplace before they can convert into a near miss incident or injury event. 239 Hazard Alerts were raised during the financial year 2021, including 48 of them identified as Severe or Potentially Fatal. Through the proactive identification of all 239 workplace hazards, Permasteelisa Group companies eliminated or controlled the lurching risks to associates and the business that could have otherwise gone unnoticed.

The GiMS Inspection and Audit application was released in the fourth quarter of 2020. The inspection and audit application provides the means to uniformly control in local languages the proactive verification of compliance to health and safety requirements in our work environments. The purpose of the inspection and audit application is to harmonize the way each Group company manages the many local safety inspections (including compliance) and provides real time visibility to potential sources of emerging or existing risks to local management and also senior leadership.

The uniform GiMS dataset of information collected through the various QHSE applications is yielding actionable intelligence to the leadership team. The introduction of an analytics engine (Power BI) to the GiMS QHSE applications in 2020 third quarter has increased manager and senior leadership consumption of important risk metrics and actions. The data analysis provides a simple and intuitive means to uniformly analyze large datasets of Health and Safety data to provide insights to management on areas needing additional attention and improvement.

Permasteelisa Group has also raised the profile and approach to the prevention of Severe Injuries and Fatalities (SIF) and Potential for Severe Injuries and Fatalities (P-SIF) with a three-layer approach.

Layer 1, focus on risk assessments for all factory production and construction site activities (Plan).

Layer 2, finding and fixing risks through "Hazard Alerts" and "Inspection and Audits" (Check).

Layer 3, Hazard Awareness and training are the final layer of defense. (Action). If a SIF risk breaches the first two layers of defense the only remaining control is the associate situational awareness and training that can avoid a potential harmful contact and injury.

Severe Injury and Fatality Prevention has always been the focus of Permasteelisa Group health and safety initiatives, however, there has been a renewed focus through 2020 fourth quarter and 2021 first quarter, and beyond through the financial year 2022 to control and eliminate SIF risks in the workplace.

In this regard, Permasteelisa recorded 23 incidents during the last quarter (January - March 2021), with an RIR of 1.7 for the quarter and a RIR LTM of 1.5. As mentioned above, the management of the group does not focus only on reducing the number of accidents, but also on the severity of accidents. Given the nature of the business, which includes both the manufacture and installation of exterior façades, the management of the group is focused on proactively identifying hazards in the workplace before they can become an accident or injury. Additionally, when workplace hazards with the potential for serious injury and death (P-SIF) are identified, group management is alerted and corrective actions are shared globally through a corporate network of health and safety professionals.

Risks Management

Except for factors described above relating to Covid-19, the financial year ended March 31, 2021 did not require changes in management approach and was not influenced by events that could generate substantial variations in the types of risk to which the Group is exposed: in fact, although the Group's economic result remains negative and such as to require particular attention in assessing the going concern, the recapitalisations observed by the end of the year to cover the losses and to strengthen the Group's financial position, together with the restructuring actions launched in previous years, the positive effects of which began to materialize in 2021, as well as the actions to be implemented in accordance with the Business Plan, effectively mitigated this risk.

Market fluctuations and situations that led to serious repercussions on the Group's results during the year led the management to increase its focus on preventing the risks associated with the Permasteelisa Group's business. These risks are political, technical, and technological, financial and credit, environmental and commercial. Emerging markets have higher overall financial and credit risk profiles than those present on the Group's historical markets (Europe and the United States) and the Group monitors and manages carefully the order acquisition process acting with a higher level of selection, in particular in the emerging markets.

During the year, the Group's commitment continued to improve the risk analysis methodologies in the bidding phase, as well as activities aimed at managing financial risks were implemented.

Risks associated with general economic conditions

The Group's global structure contributes on the one hand to the balance of overall economic risks, on the other hand however it increases the exposure to different risk situation on the international environment. At the date, there are no specific economic environment with high level of threats the Group deems necessary to report and the company reaffirms its policy to promptly cover relevant exposures to exchange rates. One year after the beginning of the Covid-19 pandemic, it can be observed that the main risk for the Group is the slowdown in the acquisition of new orders, particularly in some markets, due to the extension of the decision-making phase concerning investments in large buildings due to the significant uncertainties that characterized the current macroeconomic context. However, signs of economic recovery noted from the quarter April - June 2021 and the expectation of macroeconomic growth for the future months, make it reasonable to expect a gradual reduction in the level of risk deriving from the deterioration of the overall economic context due to the global pandemic. Although uncertainties remain regarding the future development of the economy and the reference markets, it is desirable that these risks are mitigated on the one hand by the economic policy actions undertaken by the governments of the various countries, in order to relaunch and support future growth, and on the other, by the ability to adapt shown by the organizational structure of the Group.

Risks associated with the Group's result

Due to the losses incurred by the Group during the year, equal to Euro 66.4 million, strongly reduced compared to the previous year and in line with expectations in light of the planned restructuring actions, capital injections were made by the shareholders for a total of Euro 79 million. This allowed the Group to strengthen its financial situation and to implement the actions aimed at pursuing the objectives of returning to profitability in the mid term as defined in the Business Plan. The financial situation assumes an important role considering that among the factors that define the level of risk perceived by the market, the credit rating assigned to the Group plays a key role as it affects the Group's ability to access funding and related financial conditions.

Furthermore, it should be noted that the Business Plan prepared at Group level for the period 2022 - 2025, used for the evaluations made in preparing the financial statements, and primarily the impairment test, is based on assumptions about the future performance of the Company and the Group which are subject to material uncertainty, due to their nature but also to the specific characteristics of the sector in which the Group operates and to the disruption elements enclosed in the challenges the Group is facing to restore profitability, in particular, with regards to the order intake objectives as well as the progressive improvement of projects' performance, which are further increased by the uncertainty connected to the current market conditions, in which the impacts of the Covid-19 emergency and the recovery timeframe of the world economy remain uncertain and difficult to predict and it is therefore possible that differences, potentially of significant amount, from forecast figures taken into consideration arise in future fiscal years, which could lead to adjustments in carrying values of assets that cannot be quantified nor predicted as of today.

Risks associated with financing requirements

This category includes the risks associated with the Group's capital availability, which is influenced by credit and liquidity management. The Permasteelisa Group's net financial position, even if affected by the losses incurred, benefited from the mentioned capital injections that enabled to close the fiscal year with a positive cash balance of approximately Euro 136,1 million, without financial debt - excluding the lease liabilities deriving from the application of IFRS 16. Considering the Group's net financial position as of March 31, 2021 and of the expected cash needs included in the Business Plan approved on May 27, 2021, the Group is deemed to have sufficient resources to meet the financial needs foreseen in the short term both to support the business and the investments and to continue the restructuring actions already commenced. Moreover, the liquidity management aims at reaching the indipendence of each ongoing project from a financial prospective, considering currency constraints that some countries may have in place which will restrict the Group's financial resources availability. The governance of financial risks defines a system of operating limits, at the Group and individual company level, with intragroup debt limits periodically monitored. Reference should be made to the previous paragraph about creditworthiness.

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

The Permasteelisa Group, which operates on different markets worldwide, is naturally exposed to market risks associated with exchange and interest rate fluctuations and with prices of commodities that are widely employed in its business (aluminum). These risks are covered with exchange rates (currency swaps) and commodity prices (commodity swaps) financial hedging instruments as soon as a new project is assigned or the award is highly probable; in addition, risks deriving from unexpected fluctuation of commodity prices are mitigated also through the relationships with suppliers. In this way, the "exchange rate" and "commodity price" risks need to be managed with the client only in the period between the formulation of an offer until its potential assignment (except for the rare cases when the offer is formulated at current exchange rate/prices). In such context, the main risk due to exchange rates (and to the interest rate which influences the "forward" exchange rate) and to the commodity prices is related to the hedging transactions for projects that might be cancelled, leaving the hedging position exposed; such risk is low and mitigated by the rights to reimbursements from the client for costs incurred for cancelled order.

In addition, with regards to the consolidated financial statements, Permasteelisa Group is exposed to "translation" risks because of the translation of foreign currency to Euro: such a risk is intrinsically part of a global company's income statement and has not become more critical during the current general market crisis.

Supplier Relationships Risks

Relationships with the suppliers have always been one of Permasteelisa Group main strengths; suppliers are constantly monitored therefore the potential risks are adequately covered by Group activities which help to manage any unusual situation that may arise.

Management Risks

"Management risks" are alleviated by a strong Group bond and are dealt with using "retention policies." During the fiscal year there were some important roles and organisational changes that the Group managed effectively, relying on a large set of qualified professional resources with experience in the reference sector.

Competitiveness risks

This risk naturally increases with the transition of the construction market to emerging markets.

Permasteelisa in the last several years has implemented a strategy which aim at the positioning on historical markets such as Europe, North America and in the main Asian countries, by enhancing the competitive advantages deriving from its global structure and distinctive skills. Strengthened by all this, the Group must refine its design, construction, installation and project management processes.

Environmental policy risks

The environmental policy, for the Group, does not intrinsically determine any risk, given the non-sensitivity of production processes for the purposes of policy and environmental sustainability. On the other hand, it should be considered an opportunity since more restrictive regulations and procedures, especially in bioclimatic and environmentally sustainable architecture, as well as with regards to regulations connected to the energy efficiency, the Company and the Group can expect this to translate into more favourable market conditions for their products and advanced technologies.

^***

The 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 Consolidated and Statutory Financial Statements' explanatory notes, including more technical information on the management of some of the business risks illustrated here.

The Group's organisational structure

With regard to the Group's structure, the following should be noted during the reporting period April 1, 2020 -March 31, 2021.

On June 26, 2020, the sale to Lixil Corporation of the shares held by Permasteelisa Pacific Holdings Ltd. (99.93%) in Permasteelisa Japan KK was finalized and on August 21, 2020 of the remaining shares held by Permasteelisa PTY Ltd. (0.07%).

On 30 September 2020, the sale of 100% of the shares of the Parent Company Permasteelisa S.p.A. was completed from Lixil Corporation to ACR III Construction Holdings B.V. On the same date, 100% of the shares of the Parent Company Permasteelisa S.p.A. were transferred from ACR III Construction Holdings B.V. to other Dutch companies wholly owned by each transferor company, until the transfer to Permasteelisa Group B.V., current sole shareholder of the parent company Permasteelisa S.p.A.

On 30 September 2020, the Parent Company Permasteelisa S.p.A. sold 10.1% of the shares of the subsidiary Josef Gartner Gmbh to the indirect parent company ACR III Construction Holdings B.V.

On February 16, 2021, Permasteelisa S.p.A. completed the purchase of 51% of the shares of Permasteelisa Gartner Middle East LLC. The company is now wholly owned by the Permasteelisa Group.

On 23 March 2021 the company Scheldebouw BV sold 100% of Scheldebouw (UK) Ltd. to Permasteelisa International Holding B.V., a Dutch company belonging to the new chain of control. The new name of Scheldebouw (UK) Ltd., starting from the same date, is Permasteelisa Collateral Management Ltd.

Research and Innovation

During the reporting period April 1, 2020 - March 31, 2021, Permasteelisa Group has continued organisational growth and consolidation through technical education & training, implementation of Group-wide processes and application of R&D innovations into projects, providing Permasteelisa Group with a market distinction and dominance in the top segment of the curtain walling market.

The Group has continued to develop, refine and release new applications of its project realization set of tools (PMF) through proprietary curtain wall configuration management, optimization and project control tools & BIM integration. These tools are continuously implemented across the Group and have enabled a standardized and integrated project management process and execution platform across all design, procurement and production 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 Innovation and Technology team (I&T) has continued the development of accurate analytical software and tools that enables early stage project decision making, particularly in areas of structural adequacy, safety and security, energy performance, life-cycle assessment and occupant comfort.

Research, development and innovation has endeavored to meet market design and construction trends and continued to deliver into the market new innovative applications and technologies in the fields of physical protection, energy and sustainability, occupant comfort and intelligent façades and control systems. Development and commercialization of patented dissipative façade systems and components have resulted in advancements in blast enhanced façade systems. Equally upgrades of developed advanced dynamic façades systems such as the Mfree-S Closed Cavity façade (CCF) integrated with novel proprietary building management and control systems has resulted in award-winning, holistic energy efficient and occupant comfort focused buildings of which even the highest ranked Gold WELL certification and BREEAM Outstanding award were handed out, which only a few buildings in the whole world have achieved today.

Group-wide implementation of the research innovations has also continued through specialist training in I&T application technologies and associated proprietary developed software tools. The Innovation & Technology group continues to eliminate the most important barriers for the adoption of the innovation solutions into building projects of new geographical areas by means of producing scientific papers, pre-normative documents and high level technical knowledge transfers in several universities and industry technical committees. Through lecturing on master classes at several universities (e.g. West of England & CWCT, Cambridge, Ghent, Stanford, Berkeley) a large target audience of master students and professionals were reached who currently work for world leading architectural studio's, global main contractor's firms, leading consultancy offices and façade component suppliers. As such, a first CCF implementation in the US market (Google building) is currently being designed and constructed.

Close to Ghent University, a Permasteelisa Group research and test center was built where world leading research and project testing are now being undertaken in the fields of higher acoustics, long term accelerated durability performance testing of dynamic façade components and also outdoor testing to investigate the impact of dynamic behavior of façades and control systems on the energy saving potential & human comfort increase. These factors are important in the evaluation and further development of sustainable and well-being buildings and the achievement of outstanding certificates in the future.

The research synergy with the Universities Cambridge, UWE&CWCT and Ghent University is further enhanced, and is now also expanding their capabilities by means of provision of suitable research topics for PhD & MSc students and world unique test equipment to enable us to investigate combined mechanical testing of solarthermal, fire, blast and impact loading phenomena on glass and façade systems and their components. Today's missing scientific information is resulting in overdesign and excessive material use. Therefore, studies, to reduce material use, are targeted to obtain excellent life-cycle performance achievements, which are high on the agenda of governmental goals and as such become urgent and important target requirements imposed by our clients and building partners.

Group design management has placed greater attention in the past year on quality of project design and in particular major projects in the USA. This is supported by peer reviews both during the tender process, as well as during the early stages of project execution. In addition, design efficiency is being studied and workload tools have been developed and launched. In order to maintain design quality in the future, emphasis is being placed on worldwide design training and programs have been launched.

With reference to research and development costs, overall cost for the financial year recorded in the profit and loss account by the Group equated to Euro 1,353 thousands (March 2020: Euro 1,648 thousands) of which Euro 111 thousands (March 2020: Euro 131 thousands) for amortization of costs capitalized over previous financial years under the category "Development costs" included in the item "Intangible assets".

Knowledge Sharing Group

To maintain continuity and uniformity of technical knowledge among the various Associated Companies, the Group has consolidated and uses the PTAc (Permasteelisa Technical Academy) containing the technical knowledge basis in multiple levels of complexity. To the most experienced people, who are able to guarantee the distribution of knowledge through well-defined and organized courses, the task of training younger colleagues and supporting the solution of complex or new situations that may be encountered in increasingly challenging projects.

As far as the PTAc is concerned, it is a compendium of chapters that describe, with different complexity, all the most important activities that technicians are required to do in their role, from system drawings to design development, structural calculations and building physics. This fundamental technical content is constantly evolving especially when new advanced solutions identified by Innovation & Technology have to be included. In particular, during the past fiscal year, new advanced study material was implemented to be added to the existing one, relating to the disciplines of structural calculation applied to façades. At the moment not all the modules of the topics to be developed are ready yet, but the activities are in an advanced state of completion (they will continue into the next year). Subsequently, knowledge sharing takes place through courses that are organized with a defined frequency according to the topic to be discussed.

As for the specific training of the discipline, the activities took place this year with dedicated videos in order to allow participation even remotely, thus facilitating the involvement of as many people as possible within the technical department.

Apart from the above, further sessions were also held more targeted to specific topics, such as work planning, to obtain a more uniform planning methodology among the various subsidiaries, and a course in legal matters to better understand the contractual aspects in the various markets, especially the English one.

On the other hand, as regards the news coming from the Innovation and Technology (I&T) Group, whether they are new products or advanced technologies, when ready to be used, the training process is well defined: it is carried out by I&T personnel after identifying a reference person in the Company who will become its Expert. Specific training will be done and, at the time of the first utilization of the new technology, he will be followed step by step during the project development, supported by an expert from the I&T Group in order to consolidate the knowledge thus acquired.

Information Technology

During the fiscal year 2021, Permasteelisa has implemented many development and consolidation plans regarding the Information Technology activity, with the goal of improving and standardizing the perimeter of the services provided to the Group companies, through the adoption of new technologies and solutions concerning the following fields.

IT Governance

Important emphasis was given to the area of IT Governance in order to achieve ever greater standardization, improving the control capacity and the overall safety and reliability criteria. In particular, a whole series of new policies, procedures and standards requirements, were released at Group level. At each subsidiary was required to align, in some areas, with the best Group practices, improving overall the resilience of its local systems to face the new and increasingly critical IT threats.

Group IT Infrastructure

Coherently with the actions held in the previous years, the new plan for the technological renovation of all the Core Group Infrastructure has been analyzed and defined for the period 2020-2023 and in particular as regards the Server, Networking and Security areas.

Some enforcement systems of Group infrastructure and services standardization, governance and implementation criteria, have been put in place. We refer in particular to the various logical and physical security systems, the protection of authentication and management of roles and accesses, to hardening systems.

During the year, the new architecture was also created for the management of Virtual Workstations (VDI) in the area Design, in order to help the execution of new projects, ensuring greater flexibility and reliability. This new architecture will gradually become the standard for all of the Group's design centers.

In the period under review, the Service for the constant monitoring of criteria and potential risks in the Security area was further specialized and improved; the same was extended to all the subsidiaries of the Group.

With reference to the technological renewal and overall improvement, in particular for safety criteria, it was concluded the project for the definition of the new data backup architecture for the ASIA and SEMEA Region.

SAP

With specific reference to the area of management systems and solutions, in particular in the SAP area, during the FY 2021 was implemented the new Group solution for the management of end-to-end traceability of materials for the various projects. This solution, completely mobile-ready and which uses new Industry 4.0 technologies (RFID chip, IoT devices etc.), will be gradually adopted by all the Group's plants, replacing what has been in place up to now.

Also in the SAP area and in order to keep the environment constantly updated, in line also with the constraints relating to the product releases, the project for the migration to S4 / HANA of the various modules has been succefully completed. This initiative has involved all resources at the Group level and today allows Permasteelisa to be able to plan the provision of new services for the Business using new technologies and new features.

In the security area, moreover, detailed verification activities on the status of the entire SAP architecture have been carried on, aligning certain areas with best practices.

Enterprise Applications

Concerning enterprise applications, enforcement measures have been put in place to improve and strengthen the BIM (Building Information Modeling) of the proprietary PMF solution, both through the release of new features and through the introduction of new modules. The PMF was also further extended in order to fully support the process for managing the traceability of materials on job orders.

As part of the support for design and site management activities, on Business side, it has been further developed the BIM.360 platform for the "full digital" management of on-site activities on new projects (e.g. Battersea). The "full digital" mangemement has been realized through the standardization of the main functions (e.g. Checklist, Issue Management, Document management and so on), through the interfacing with the processes for the management of non-conformities and the creation of material, and, finally, through a dedicated website to support training activities on the solution.

Because of the critical issues created by Covid-19, advanced management of quality controls in production has been activated on some projects, carried out remotely through the use of an augmented reality viewer. The same solution will also be progressively extended to support the on-site activities.

Thanks to the utilization of the Autodesk Cloud technologies (Forge), the new solution called PMF WEB has also been improved; it allows the visualization of the 3D Model of the building and it enables detailed navigation on all elements of the building.

Finally, for the benefit of all Group companies, new modules and solutions of the PMF ecosystem have been developed in different fields, such as the solution for the management of transmittals (project documentation -TLM), the solution for the management of workloads (design area) and the new functionalities in the area of noncompliance management.

Human Resources

In the following charts we report, respectively, the total staff at the end of the year and the average staff of the Group compared to that of the previous year:

Workforce at year end

Area	March 31, 2021	March 31, 2020	Variation 2020-2021
Italy	675	739	(64)
Other Europe	1,449	1,586	(137)
Asia	788	1,067	(279)
Middle East	292	400	(108)
Australia	59	63	(4)
Usa	880	1,163	(283)
Total	4,143	5,018	(875)

Average workforce during the period

Area	March 31, 2021	March 31, 2020	Variation 2021-2020
Italy	707	768	(61)
Other Europe	1,518	1,600	(82)
Asia	928	1,135	(207)
Middle East	346	397	(51)
Australia	61	60	1
Usa	1,022	1,410	(388)
Total	4,582	5,370	(788)

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, 2021	March 31, 2020	Variation 2021-2020
Blue collars	194	203	(9)
White collars	472	526	(54)
Total	666	729	(63)

Average workforce during the period

	March 31, 2021	March 31, 2020	Variation 2021-2020
Blue collars	199	208	(9)
White collars	499	548	(49)
Total	698	756	(58)

As of March 31, 2021, the workforce is composed for the 79% by resources employed in technical and manufacturing functions, the remaining 21% by resources employed in staff functions.

The 92% of technical and manufacturing functions employees is dedicated to the main business area of the Company that consists in design, production and installation of architectural envelopes and curtain wall. The remaining 8% is dedicated to the development of Contract and Interiors projects.

The 99% of employees is hired with an indeterminate-time contract out of which the 0,5% with professional apprenticeship scheme; the remaining 1% with determined-time contract.

In the Fiscal Year 2021 the turnover (entry) was equal to 1% while the turnover (exit) in the same period was equal to 10%. This last data also includes the resources transaction towards other Companies of the Group worldwide.

Human resources

During FY 2021 the "Turn Around Plan" started in 2019 with the focus on the reorganization of the Group continued, through a transversal project on all companies with specific actions and interventions.

This scenario, together with the slowdown in the construction market, forced the company to implement an important strategy of repositioning, consolidation and innovation to ensure future sustainability. As part of the actions to adapt the structure to the expected future volumes and turnover and a necessary reduction in fixed costs, the Company has also highlighted the need to reduce the workforce.

Thanks to good trade union relations, the company was able to manage this moment of difficulty and staff reduction by implementing a series of actions shared with the trade union parties that had as their objective the voluntary exit of redundant employees.

The negotiation that lasted a few months resulted in the recognition of an incentive to leave the employee based on the age of the employee, the social shock absorber and an outplacement service aimed at guaranteeing concrete support for the relocation of the outgoing employee.

Despite the difficulties imposed by the international social context and the specific company situation, the Company Management and Human Resources Management have worked synergistically for a profitable management of the business and of the organization itself.

With the start of the fiscal year 2021, Permasteelisa S.p.A. has in fact given itself a new Organizational Structure, which over the months has been revised at several levels with the main objective of laying the foundations for a more flexible and qualified company organization. The main areas of intervention are attributable to:

―	greater flexibility with interventions to reduce hierarchical levels and search for greater intra-departmental synergies;
―	greater effectiveness of processes and redefinition of responsibilities;
―	focus on results with continuous and constant collaboration and interaction between Project Team and staff departments.

With a view to continuous improvement and efficiency of business activities and processes, there has been no lack of business investments aimed at innovation and which concern among other things:

―	the purchase of new software, including numerical simulation, tools designed to make the calculation activities of the engineering team faster and more timely, as well as to improve the quality control of the building and the safety of the construction site;
―	the implementation of IT tools aimed at monitoring the progress of work with RFI and related documents;
―	the replacement of obsolete equipment in the production area, with the purchase of machinery equipped with more advanced technological safety devices.

The company's commitment has also remained high with regard to the growth of people and their career paths, with a considerable effort in terms of engagement and career development.

The continuous attention to personnel has led, for example, to the definition of a "rewarding" process, which began with the identification of strategic resources (Key People - Talents) conducted through analysis of the performance and growth potential of employees, with consequent an ad hoc individual development plan, as well as the identification of professional opportunities such as: on-site training experiences, job rotation and company rotation; promotions to organizational positions with higher responsibilities.

We also worked on the Performance Evaluation tool; the goal was to make it more "user friendly" and effective, giving space not only to sharing the expected targets but also and above all to the skills needed to reach them, jointly supporting the line managers in managing feedback. This made it possible to significantly strengthen the boss-collaborator relationship in a particular year in which the distances imposed by the epidemiological emergency and consequently the reduced possibility of exchange and sharing vis-a-vis of information and knowledge in real time, could have influenced the involvement and the enthusiasm of the work teams.

In light of the many events and also changes that have taken place in the following year, we highlight, among other things, a constant alignment and involvement of resources in informative but also motivational meetings, held in groups with the presence of HR, Department Directors and the General Manager, and also individually.

The skills mapping program was also included and launched in HR planning, as a tool that photographs the set of skills and knowledge present within the organization, identifying the know-how and know-how associated with each task. The development phases of the project were: a first analysis of the organizational positions and the related "job descriptions"; a subsequent verification of individual skills and of the gaps present; the definition of training and development actions aimed at accompanying the employee in covering his role or preparing him to take on new positions that provide for different or greater skills and responsibilities.

Considering it a strategic moment of the Knowledge Management project, in FY 2021 the mapping of skills was addressed to the core departments, namely Design and Project Management, with the aim of being extended and possibly completed by FY 2022 for all company departments.

Attention to the well-being of its staff in the company has also remained one of the focuses of Permasteelisa, however we must point out that this fiscal year, strongly marked by the pandemic, has influenced the development of the "well-being" project aimed at psychophysical well-being, started in the previous fiscal year. The imagined program could not, in fact, find continuation due to the restrictions imposed by the legislation, which suspended the training activities in presence and was therefore rescheduled in the following FY.

The particular emergency situation has however forced us to revisit the way of working using home working massively, a modality that our organization has strongly encouraged even in less critical moments, with a view to favoring the reconciliation between working life and family needs.

Recruitment and Employer Branding

The Talent Acquisition process represents a key moment in the planning and organization of processes aimed at successfully pursuing corporate business objectives. In the current fiscal year, Permasteelisa continued to strengthen the process, even if the onset of the epidemiological emergency and consequently the launch and use of the Covid layoffs, have made the acquisition of new professionals more difficult.

As a company recognized in the area, however, we have tried to maintain high sensitivity and interaction with schools, purely of a technical nature, with which for years we have been able to establish an excellent collaboration aimed at the inclusion of young resources in the context of design and production.

In this regard, the partnership with the mechatronic ITS is considered particularly fruitful, thanks to which in recent years we have welcomed and trained several students through curricular internships; training and accompaniment that subsequently led to the direct hiring of the boys in the company.

Another noteworthy project that has been introduced is the dual apprenticeship, a particular type of contract that allows young people to attend a professional training course to obtain a degree and at the same time to be hired as apprentices in the company, effectively anticipating entry into the world of work.

Training Activities

The professional growth of the staff, as the driving force for the development of our organization, has always been the cornerstone of our commitment to guaranteeing high quality and excellence standards.

For this reason, attention has always been constant over the years to enhance the skills and attitudes of individuals and teams, through tools and initiatives aimed at enriching technical-professional knowledge and management skills.

During the last fiscal year, however, in the face of the health emergency and its protraction, the planned training activities have undergone a contraction. On the one hand, the partial suspension from normal working activities led to a greater concentration in the operational management of the orders, in order to respect the times and costs of carrying them out; on the other hand, the provision of remote courses was not easy to implement for the training categories of interest.

Specifically, in the year just ended, the training activity mainly concerned the technical-specialist field and safety.

The Covid-19 emergency has, for example, influenced the continuous training update of the human resources function and the security office, with respect to the constantly evolving regulatory landscape, which has seen the succession of new regulations / decrees and the need to implement them to translate them into organizational processes and procedures aimed at effective personnel management.

At the same time, the introduction of "Home Working" combined with a wider use of new technologies, the digitization of processes, the establishment of real information assets has increasingly highlighted the theme of "cybersecurity". In order to guarantee the protection of information and everything that may be exposed to risks, it was necessary to deepen skills aimed at managing issues relating to digital security from a technical and regulatory compliance point of view.

During fiscal year 2021, safety activities also continued through the provision of training courses aimed at educating employees on issues related to health and safety in the workplace: general-specific training Legislative Decree 81 / 08, first aid, supervisors, etc.

An important internal information activity was also conducted with respect to the company measures in force for the active prevention of the risk of Covid-19 contagion.

Corporate Welfare 2020-2021

The corporate welfare is usually considered as the ensemble of products and services that the Company provides to its employees with the aim of improving their private and professional life. It concerns instruments that support family incomes, supplementary pension and health care provision, training and study incentives, mobility support, balance between work and private life and free-time proposals.

In order to be ever closer to the employee, Permasteelisa, in addition to what has already been stated in the introduction, has guaranteed continuity in the provision of services that are recognized as very useful by its employees. The main areas of focus are:

―	Heath care assistance, which consists of a free and full check-up;
―	The annual fiscal program, referred to all the employees. Every year the Company provides the tax declaration service in its offices;
―	Family: providing a nursery and a kindergarten with advantageous criteria for the employee;

The IT platform called "Permasteelisa Welfare Box" active since 2017 is a consolidated tool.

This tool allows the employee to access with ease and immediacy, through the web, a wide range of opportunities that are constantly enriched and updated thanks to a network made available by the supplier and which covers the following areas: shopping vouchers, vouchers, health and welfare, cinema vouchers or vouchers for recreational activities, sporting activities and leisure time initiatives, travel, reimbursements for school and educational expenses and public transport season tickets.

Shareholder

The Company is now owned by the sole shareholder Permasteelisa Group B.V.

Treasury shares

As of March 31, 2021 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.

Unconventional or unusual operations

There are no entries or transactions resulting from unconventional or unusual operations during the year 2021 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

Below is an indication of significant events occurring after March 31, 2021, according to IAS 10 these did not lead to adjustments to the financial statements:

―

As part of the restructuring actions and strategic consolidation of the Group, on 2 June 2021 a sales agreement (SPA) was signed between the parent company Permasteelisa S.p.A. and a German industrial group, regarding the sale of the subsidiary Permasteelisa Espana S.A.U. The conditions precedent to which the effectiveness of the agreement was subject were fulfilled at the beginning of July 2021.

There were no other significant events after the year end to report.

Business Outlook

The Group's management believes that the recession effects on the global economy due to Covid-19 may have an impact on investment decisions even in the early months of the new financial year with consequent repercussions in the acquisitions of new orders. In this regard, the first quarter, ended June 2021, showed delays in the acquisition of some important projects whose definition has been postponed but for which Pre Construction Service Agreements (PCSA) contracts were nevertheless finalized; the prospects for a gradual recovery of the reference macroeconomic context, also driven by government interventions in support of the economy, make it possible to consider a gradual recovery to be reasonable.

The Permasteelisa Group backlog level as well as restructuring activities defined in the Business Plan for the purpose of completing the process aimed at reducing costs and risks, allow us to look with confidence to the future business evolution, to make Permasteelisa Group stronger and more reactive to order volatility and to the uncertainties of the current market; nevertheless the Directors, given these significant uncertainties, carefully monitor the situation to identify any potential negative developments and remain strongly committed to the continuous implementation of the restructuring plan, to the strategic and organisational review aimed at bringing the Permasteelisa Group back to satisfactory profitability levels through strong direct and indirect costs reduction actions, reviewing its current industrial and organisational structure.

Considering the above, the Group looks to fiscal year 2022 as a year of transition and with a strong commitment aimed at completing the above actions and pursuing a strategy to recover mid term profitability.

The timely implementation of the strategic and organisational guidelines depends upon continuing active management and on the ability demonstrated so far in promptly reacting to frequent and sudden market fluctuations.

Other disclosures

The Permasteelisa Group's Internal Control and Risk Management System consists of a set of rules, procedures and organizational structures aimed at identifying, measuring, managing and monitoring the main risks, with the aim of:

(i) Ensuring the preservation of the company capital (including safeguarding the assets value and protection against losses)

(ii) Verifying the implementation of company strategies and policies, the effective and efficient management of company processes, the reliability of financial information, the reliability and security of company information and IT procedures, compliance with laws, regulations and internal company procedures, the prevention of the risk that the company may be involved, even involuntarily, in unlawful activities and the containment of the risk within the maximum accepted limit (risk tolerance - risk appetite).

The Internal Control System not only concerns the company functions typically responsible for control activities, but involves the entire organisation in defining, developing and applying the system of controls to prevent, identify, measure, communicate and manage risks at every stage, from planning to implementation, to control, with the aim of covering all types of company risk.

The company figures involved in the Internal Control System are identified consistently with the hierarchical/functional system of each department, in relation with the division of responsibilities. The current controls are divided into three categories:

1. First level controls or line controls: these are the control activities carried out by the line functions and are designed to ensure the proper performance of operations. They are carried out by the same operational structures that carry out a specific activity (e.g. hierarchical, systematic and random controls). They may also be verification activities incorporated into procedures and IT systems. The operating structures are primarily responsible for the risk management process: in the course of day-to-day operations, these structures must identify, measure, assess, monitor, mitigate and report the risks arising from ordinary business activities in accordance with the risk management process

2. Second level controls or controls on risks and compliance: this is the so-called management control that concerns the planning and control of the company's business. The functions responsible for these controls are distinct from the production functions, since they contribute to the definition of risk management policies and the process of managing typical company risks such as operational risk, financial risk and (non) compliance with the rules of company operations

3. Third level controls or internal audit (Internal Audit): they consist of general verification activities on the structure and functionality of internal controls. The main task is to identify anomalous trends, violations of procedures and regulations and periodically to assess the completeness, functionality and adequacy, in terms of efficiency and effectiveness, of the system of internal controls, including those on the information system, at predetermined intervals in relation to the nature and intensity of the risks.

Internal Audit

Third level control is assigned to the Internal Audit function of Permasteelisa S.p.A., in compliance with the International Professional Practices Framework (IPPF) issued by the Institute of Internal Auditors (IIA), the Internal Audit has the task of assisting the organisation in the pursuit of its objectives through a systematic professional approach, which generates added value as it is aimed at assessing and improving control, risk management and Corporate Governance processes.

As required by the IPPF, the Internal Audit activity must be independent and the Internal Auditors must be objective in carrying out their work. Therefore, Internal Audit reports to a level of the organisation that allows the Internal Audit activity to fulfil entirely its responsibilities (Board of Directors).

Internal Audit, aims to protect and enhance the value of the organisation, providing objective assurance and advice.

Internal auditing activities include:

―	assurance services: an objective review of evidence in order to obtain an independent assessment of the organisation's risk management, control or governance processes
―	consulting services: support and assistance services, the nature and scope of which are agreed with the client, aimed at providing added value and improving the organisation's governance, risk management and control processes, without assuming managerial responsibility in this respect.

In order to achieve the above objectives, the Internal Audit activity includes services with a high added value including, for example, it:

―	supervises the verification of the operation and suitability of the Internal Control system through the planning of audits on the parent company and subsidiaries. As far as Permasteelisa S.p.A. is concerned, Internal Audit also carries out activities to verify the effective application of the control protocols provided for by the Organisation, Management and Control Model according to Legislative Decree 231/01. If necessary during the year, it carries out extra-plan audits at the request of the Board of Directors or Top Management
―	carries out periodic monitoring activities (follow up) of the implementation of possible corrective actions on the critical issues identified in the audit activities
―	provides management with consulting services on the Internal Control System in order to promote the integration of controls into company processes, evaluating, among other things, their effectiveness and efficiency
―	assists the Organismo di Vigilanza (Supervisory Board) in the management of investigation activities on reports, including anonymous reports, received through the whistleblowing channels implemented by the company
―	supports the activities of the Organismo di Vigilanza
―	conducts six-monthly reports summarizing the activities carried out for the benefit of the Board of Directors and the Board of Statutory Auditors
―	maintains relations and ensures information flows with the Supervisory Board, the Board of Statutory Auditors and the Independent Auditors.

The Internal Audit function, in the exercise of its functions, has free access to data, documentation and information useful for carrying out its activities.

During the 2021 fiscal year, the Internal Audit Department performed its activities in accordance with the audit plan approved by the Board of Directors, reporting on its implementation on a periodic basis to the Board of Directors, the Top Management, the Supervisory Board, the Board of Statutory Auditors and the Independent Auditors.

Organisation, Management and Control Model ex Legislative Decree 231 /2001

As part of the prevention of a hypothetical commission of crimes in accordance with Legislative Decree 231/2001, which regulates the administrative liability of entities, Permasteelisa S.p.A. has adopted an Organisation, Management and Control Model in order to create a system of rules aimed at preventing the adoption of unlawful conduct considered potentially relevant for the application of this legislation. The Model, which was first issued in 2005, has been periodically reviewed in the light of new legislation and internal organisational changes. The last version was approved on 5 July 2019.

The Organisational Model is part of the more general system of corporate governance adopted by the Permasteelisa Group. With the adoption of the Model, Permasteelisa S.p.A. intended to comply punctually with the regulations, to comply with the inspiring principles of the Decree, as well as to improve and make the already existing system of internal controls and corporate governance as efficient as possible.

The main objective of the model is to create an organic and structured system of control principles and procedures, aimed at preventing, where possible and concretely feasible, the commission of the crime covered by the Decree. The model is integrated with the Company's Internal Control System and implements the process of spreading a business culture based on fairness, transparency and legality.

The model also proposes the following goals:

―	to provide adequate information to employees and those who act on behalf of the Company, or are linked to the Company by relationships relevant for the purposes of the Decree, regarding activities that involve the risk of committing offences
―	to spread a business culture that is based on legality, as the Company rejects any conduct that does not comply with the law or internal provisions, and in particular with the provisions contained in its organisational model
―	to promote a culture of control
―	to implement an effective and efficient organisation of business activity, with particular emphasis on decision making and transparency, the provision of controls, both prior and subsequent, and the management of internal and external information
―	to implement all necessary measures to eliminate as soon as possible any situations of risk of offences being committed
―	to allow the company to constantly monitor and carefully supervise its activities, so as to be able to intervene promptly if risk profiles arise and, if necessary, to apply the disciplinary measures provided for by the same Model

The Model consists of a General Part and a Special Part.

The General Section describes the contents and impacts of Legislative Decree 231/01, the general characteristics of the Model, the categories of Offences that may involve the responsibility of Permasteelisa S.p.A., the characteristics, powers and functions of the Organismo di Vigilanza, the disciplinary system and personnel training activities.

The Special Section indicates the sensitive activities within the scope of the Decree, i.e. at risk of crime, the general principles of conduct, the elements of prevention to protect the above mentioned activities and the essential control measures for the prevention or mitigation of offences, to be implemented in the company's operating procedures and practices, so as to make them suitable for preventing the commission of offences.

The following are also an integral part of the document:

―	the list of sensitive activities identified in the context of risk and control self-assessment activities, available in the company's records, reported in the individual sections of the Special Part of the document
―	the Code of Ethics which defines the principles and rules of conduct of the Group
―	all provisions, internal measures, acts and business operating procedures that the document implements. These acts and documents can be found in the manner provided for their distribution within the Company.

The Model is available on the company website www.permasteelisagroup.com.

Organismo di Vigilanza (Supervisory Board)

Permasteelisa S.p.A., in compliance with Article 6, paragraph 1, letter b) of Legislative Decree 231/01, has established, since 2005, an Organismo din Vigilanza (OdV) with a collective composition that reflects the requirements of autonomy, independence, professionalism and continuity of action. The Organismo di Vigilanza is made up of three members, of which two external - one is the Chairman - and one internal member.

The members of the OdV are chosen among subjects who possess the specific skills required in relation to the specific nature of the OdV's powers and related professional content. The OdV currently in charge was appointed by the Board of Directors for a period of three financial years, i.e. until the approval of the financial statements at 31 March 2023.

During the fiscal year 2021, the OdV met six times and periodically reported to the Board of Directors and the Board of Statutory Auditors on the activities carried out in relation to the updating of the Organisation, Management and Control Model pursuant to Legislative Decree 231/01, the monitoring of the effective implementation of the provisions of the Model itself and the Code of Ethics, the results of training activities and the investigations carried out following reports.

Whistleblowing

With regard to whistleblowing, the Permasteelisa Group has made available to employees and third parties the email address organismodivigilanza@permasteelisagroup.com to report directly to the OdV possible violations of the Model and the Code of Ethics. The OdV guarantees confidentiality and protection from any form of retaliation.

The OdV can also be contacted by ordinary mail at the offices of Vittorio Veneto (TV).

Internal procedures have been adopted in order to regulate reports and to advertise them on the company intranet. Specific training activities have been implemented in order to disseminate these communication tools.

Checks on reports are carried out by the Organismo di Vigilanza, through the Internal Audit department, which guarantees the utmost confidentiality in protecting the identity of the reporter.

Code of Ethics

The Permasteelisa Group has drawn up its own Code of Ethics, approved by the Board of Directors of Permasteelisa S.p.A. on 30 September 2020. The Code of Ethics is a summary of the Group's values in carrying out its social activities and aims to draw a common line to operate according to shared principles of integrity, ethics in business activities, respect for the working environment, proper use of company assets and contribution to the community (social responsibility).

The purpose of the Code of Ethics is to set out the rules of conduct and the ethical-social values that must permeate the Company's activities, in parallel with the pursuit of its purpose and objectives, in accordance with the provisions of this document. In particular, the Code of Ethics contains the description of the rules of conduct to be adopted towards the various recipients, as well as the behavioural principles to be followed with regard to the following aspects:

―	Integrity in the market
―	Ethics in business activities
―	Respect in the workplace
―	Proper use of goods
―	Contribution to society.

The document is translated into 9 languages and is available in the English version on the company website www.permasteelisagroup.com.

In addition, in order to integrate and clarify the concepts expressed in the Code of Ethics, Permasteelisa Group has issued several Company Policies for the areas considered to be at higher risk, including Anti-Corruption, Conflict of Interest, Anti-Discrimination and Harassment, and Protection of Personal Data. These Policies have been implemented by the Permasteelisa Group and specific training programmes have been subsequently implemented in order to facilitate their understanding by Group members.

The Group's management is strongly committed to raising awareness and spreading Compliance issues within the corporate culture, through the various tools available (training programs, specific corporate communications, etc.).

Moreover, Permasteelisa Group requires all its suppliers to operate in compliance with the Code itself and to certify that the principles contained therein are already in place or will be with the beginning and/or renewal of a contractual relationship. Permasteelisa Group also requires its suppliers to comply with applicable laws and regulations and ethical rules equivalent to those contained in the Code itself.

In particular, the Permasteelisa Group requires its suppliers to comply with, among others, anti-corruption and antitrust laws, laws that require them to treat workers fairly, to respect human rights, to provide a healthy and safe environment and to protect the quality of the environment.

General Data Protection Regulation

In recognition of the entry into force of the General Data Protection Regulation EU 679/16 on May 24, 2016 (GDPR), which became directly applicable in all Member States of the European Community from May 25, 2018, Permasteelisa S.p.A. promptly adapted to the requirements of the Regulation: specific privacy risk assessment activities were carried out and, consequently, the relevant and necessary requirements were identified and implemented. In each of the Group's European companies, contact persons, privacy delegates, have been identified and assigned the task of monitoring and monitoring over time the implementation of the necessary requirements.

With a view to adopting uniform policies within the same Group, Permasteelisa has issued the Privacy Policy "Personal Data Protection", which serves as a guideline for the Group.

In order to make its employees aware of the issues and criticalities inherent to the processing of personal data, specific training activities have been carried out for Group personnel who process personal data in the performance of their duties (employees and specific figures at the production plant).

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

The tables below were prepared based on the Statutory Financial Statements for the year ended on March 31, 2021 to which we refer for further details. 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 2021 shows a net loss of Euro 81.4 million against the previous year that had closed with a net loss of Euro 274.4 million.

The summary results are as follows:

€ thousands	March 31, 2021	March 31 2020
Revenues	84,054	99,592
Other operating income	1,777	690
Total operating revenues	85,831	100,282
Raw materials and consumables used	(38,626)	(37,609)
Services expenses and use of third party assets	(40,881)	(54,214)
Personnel expenses	(45,290)	(49,836)
Depreciation and amortization	(3,285)	(3,664)
Rights of use depreciation	(961)	(1,113)
Impairment on tangible and intangible assets	(2,173)	(1,871)
Bad debts provision	(1,808)	(1,092)
Provision for risks and charges	(13,754)	(12,551)
Other operating expenses	(773)	(974)
Cost Recovery	28,223	29,973
In-house enhancement of fixed assets	2	379
Total operating expenses	(119,326)	(132,572)
Operating result	(33,495)	(32,290)
Financial income	25,672	40,402
Financial expenses	(23,472)	(39,467)
Net financial income (expenses)	2,200	935
Revaluation of equity investments	6	0
Write-downs of equity investments	(37,042)	(116,392)
Devaluation of other financial assets	(11,470)	(122,750)
Result before tax	(79,801)	(270,497)
Income tax expense	(1,577)	(3,919)
Result after tax	(81,378)	(274,416)

Comparing the data for the fiscal year 2021 with that of the previous year, there is a decrease in the operating revenues, from approximately Euro 100 million in March 2020 to Euro 86 million in March 2021, mainly due to the delay in the progress of some ongoing projects and the reduction in revenues generated by the Interiors business.

The operating result remains negative (Euro -33 million in March 2021 and Euro -32 million in March 2020).

The economic result was negatively affected by the revision of completion costs for some projects on the French market as well as by the allocation of costs for guarantee works for some projects on the English market.

The restructuring plan initiated by the Group in the early months of 2019 led to the recognition by the Parent Company of restructuring costs equal to approximately Euro 10 million in the year (March 2020 Euro 15 million). These costs relate to the workforce reduction plan agreed with the trade unions between October and November 2020 (Euro 6.7 million recorded among the net Provisions), to the write-down of some development and implementation costs of a management software for the projects developed by the Parent Company, following the Group's decision to abandon this project (Euro 1.0 million recorded under the "Impairment of intangible assets" item) and other reorganization actions, which partly involved the exit of personnel (Euro 1.4 million recorded under the "Personnel expenses" item).

The net financial result balance was positive for Euro 2.2 million (March 2020: Euro 0.9 million) thanks to the reduction in interest expenses and costs for currency financial hedges, due to the Shareholder's capital injections (Euro 79 million in March 2021 and Euro 140 million in March 2020) which strengthened the Group's financial position and of the Company itself. In 2021 there were no dividend distributions by subsidiaries, as in the previous year.

During the year, it became necessary to make write-downs of equity investments for a total of Euro 37 million (March 2020: Euro 116 million) and write-downs of other financial assets for Euro 11 million (March 2020: Euro 123 million), based on the impairment tests prepared at March 31, 2021, for the differences between the book value and the Shareholders' equity deriving from permanent losses accrued by the subsidiaries.

Financial position

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

€ thousands	March 31, 2021	March 31, 2020
Non-current assets ^(a)	168,093	182,440
Net working capital ^(b)	(3,711)	18,904
Severance indemnity fund ^(c)	(2,697)	(2,825)
Net invested capital	161,685	198,519
Net financial debt /(Net cash surplus) ^(d)	21,726	54,770
Shareholder's equity ^(e)	139,959	143,749
Coverage	161,685	198,519
Capital expenditure on tangible and intangible assets	2,860	2,369
Average workforce	698	756

^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;
^e) Caption included in the statement of financial position as total equity.

Comparing the balance sheet figures as at 31 March 2021 with those corresponding to 31 March 2020, it is noted that:

―	fixed assets, decreased by approximately Euro 14 million, due to the write-downs of equity investments in subsidiaries, net of the recapitalisations that took place during the year;
―	the net working capital, decreased by approximately Euro 23 million, due to the reduction in activities for contract work in progress and trade receivables;
―	net financial debt, which fell by approximately Euro 33 million, thanks to the positive effects deriving from the shareholder's capital contribution and the reduction in exposure in terms of net working capital.

The shareholders' equity of the Parent Company as at 31 March 2021 was equal to Euro 140 million, substantially unchanged compared to the previous year (March 2020: Euro 144 million).

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, 2021	Net Equity as of March 31 al, 2021	Result March 31, 2020	Net Equity as of March 31, 2020
Parent Company balances	(81,378)	139,959	(274,416)	143,749
Share of consolidated subsidiaries' equity and result net of book value of related equity interests	17,335	(18,460)	136,052	(47,209)
Excess cost allocation	(1,899)	6,969	(5,607)	8,856
Reversal of inter-group dividends	0	0	(1,042)	0
Effect of other consolidation entries	(486)	(4,532)	(1,264)	(4,046)
Share attributable to minority interests	1,559	(4,084)	11	(7,403)
Group balances	(64,869)	119,851	(146,266)	93,947

Permasteelisa Group

Consolidated Financial Statements as of March 31, 2021

PERMASTEELISA GROUP-CONSOLIDATED FINANCIAL STATEMENT AS OF 31 MARCH 2021

Consolidated income statement as of March 31, 2021

€ thousands		March 31, 2021	March 31, 2020
Operating revenues		867,932	1,171,280
Other operating revenues	4	17,134	11,664
Total operating revenues	3	885,066	1,182,944
Raw materials and consumables used	5	(262,376)	(330,464)
Services expenses and use of third party asset	5	(330,649)	(448,147)
Personnel expenses	6	(304,728)	(409,125)
Depreciation and amortization expenses	7	(12,661)	(13,541)
Right-of-use assets depreciation	7	(15,083)	(15,964)
Impairment on tangible and intangible assets	7	(2,173)	(8,742)
Bad debts provision	8	(5,299)	(21,976)
Provision for risks and charges	9	(19,179)	(52,783)
Other operating expenses	10	(8,158)	(8,786)
Cost recovery		3,460	3,444
In-house enhancement of fixed assets		245	1,488
Total operating costs		(956,601)	(1,304,596)
Operating result		(71,535)	(121,652)
Financial income		38,040	73,403
Financial expenses		(42,113)	(85,653)
Net financial expenses	11	(4,073)	(12,250)
Profit on equity investments disposal	12	12,754	0
Revaluation of equity investments	12	0	0
Write-downs of equity investments	12	(12)	(689)
Result before tax		(62,866)	(134,591)
Income tax expense	13	(3,563)	(11,686)
Result after tax		(66,429)	(146,277)
Attributable to:
Group		(64,869)	(146,266)
Minority		(1,560)	(11)
Result for the period		(66,429)	(146,277)

Consolidated statement of comprehensive income as of March 31, 2021

€ thousands	March 31, 2021	March 31, 2020
Result of the period (A)	(66,429)	(146,277)
Items that may be reclassified to the Income statement:
Hedging reserves for risks variation, net of tax	(432)	2,101
Gains/(losses) on exchange differences on translating foreign operations	9,292	(4,778)
Total items that may be reclassified to the Income statement	8,860	(2,677)
Actuarial gains/(losses)	159	(1,214)
Total items that will never be reclassified to the Income statement:	159	(1,214)
Total Other comprehensive income, net of tax (B)	9,019	(3,891)
Total Comprehensive income (A)+(B)	(57,410)	(150,168)
Total Comprehensive income attributable to: Group ^(*)	(56,816)	(149,967)
Minority	(594)	(201)
	(57,410)	(150,168)

Consolidated statement of financial position as of March 31, 2021

€ thousands	Notes	March 31, 2021	March 31, 2020
Intangible assets	15	4,670	5,993
Tangible assets	16	62,134	73,146
Right-of-use assets	16A	38,749	38,522
Other equity investments	19	168	169
Other non-current assets	20	47	50
Deferred tax assets	21	17,572	23,956
Total non-current assets		123,340	141,836
Contracts work-in-progress	22	250,066	247,695
Inventories	22	32,786	37,263
Trade receivables from third parties	23	266,116	341,620
Income tax receivables	25	11,986	12,732
Other current assets	26	42,909	60,029
Cash and cash equivalents	27	136,142	69,972
Asset held for sale	1	0	6,900
Total current assets		740,005	776,211
Total assets		863,345	918,047
Equity
Share capital	29	6,900	6,900
Legal reserve	29	1,380	1,380
IAS 19 Reserve	29	(8,805)	(8,940)
Hedging reserves for risks	29	(1,171)	(1,194)
Translation reserve	29	11,463	3,568
Other reserves	29	890,551	811,611
Retained earnings	29	(715,598)	(573,111)
Profit/(loss) for the period	29	(64,869)	(146,267)
Total equity attributable to the Group		119,851	93,947
Minority interests	29	4,084	7,403
Total equity		123,935	101,350
Liabilities
Lease liabilities - non current	30	27,065	25,188
Severance indemnity fund	31	2,755	2,874
Pension funds and other employee benefits	32	28,721	29,918
Provisions for risks and charges	33	84,727	76,245
Deferred tax liabilities	21	11,987	13,969
Total non-current liabilities		155,255	148,194
Amounts payable to banks and other financial creditors	30	7	459
Lease liabilities - current	30	12,843	13,838
Excess of progress billings over work-in-progress	22	196,945	240,975
Loss on construction contract Fund	22	13,600	20,126
Advances from customers	22	119,779	86,078
Trade payables to third parties	34	162,633	212,487
Income tax payables	36	4,049	2,664
Other current liabilities	37	74,299	88,882
Liability held for sale	1	0	2,994
Total current liabilities		584,155	668,503
Total liabilities		739,410	816,697
Total equity and liabilities		863,345	918,047

Consolidated statement of cash flow as of March, 31, 2021

€ thousands	March 31, 2021	March 31, 2020
Result of the period	(66,429)	(146,277)
Adjustments made to reconcile the result before tax with the cash flow changes generated (absorbed) by operating activities:
- Income tax expenses	3,563	11,686
- Interest income	(267)	(4,232)
- Interest expense	918	1,516
- Dividends income	0	0
- Depreciation and amortization expenses	12,661	13,541
- Right-of-use assets depreciation	15,083	15,964
- Impairment on tangible and intangible assets	2,173	8,742
- (Gain)/loss on disposal of tangible and intangible assets ⁽³⁾	(4,952)	(4,202)
- (Gain)/loss on disposal of assets held for sale ⁽⁴⁾	(12,748)	0
- (Gain)/loss on disposal of equity investments ⁽⁵⁾	(6)	0
- Provision for risks and charge	19,179	52,783
- Bad debts provision	5,299	21,976
- Equity investments write-downs/(revaluations)	12	689
- Severance indemnity fund payments to employees	(314)	(618)
- Severance indemnity fund expenses	196	222
- Pension fund payments	(1,483)	(1,243)
- Other employee benefits payments	684	2,767
- Pension fund expenses	(142)	(235)
- Other employee benefits net variation	54	158
Total adjustments	39,910	119,514
Changes in operating activities:
- Changes in hedging reserve	37	2,009
- Changes in IAS 19 reserve	159	(1,214)
- Changes in contracts work-in-progress (net), inventories and advances	(17,484)	(42,672)
- Changes in the other captions of working capital ⁽¹⁾	20,353	(53,600)
- Changes in the other captions of operating capital ⁽²⁾	(3,651)	13,202
- Changes in the fair value evaluation of derivatives instruments	4,043	(11,688)
- Income tax paid	(3,149)	(9,381)
- Interests paid	(926)	(1,861)
- Interest received	267	4,232
- Effect of exchange rate changes on operating activities cash flows	8,968	(3,890)
Total changes	8,617	(104,863)
Net cash flows absorbed by operating activities (A)	(17,902)	(131,626)
Cash flows generated (absorbed) by investing activities
Purchases of tangible and intangible assets	(8,170)	(9,238)
Profit on disposal of tangible assets ⁽³⁾	4,952	4,202
Proceeds from disposal of tangible and intangible assets ⁽³⁾	5,671	2,229
Profit from disposal of asset held for sale ⁽⁴⁾	12,748	0
Proceeds from disposal of asset held for sale (net of cashflow) ⁽⁴⁾	3,401	0
Profit from disposal of equity investment ⁽⁵⁾	6	0
Proceeds from disposal of equity investment ⁽⁵⁾	1,055	0
Changes in not consolidated subsidiaries, associated companies and other equity investments	(11)	(453)
Net cash flows absorbed by investing activities (B)	19,652	(3,260)
Cash flows generated (absorbed) by financing activities
Bank overdrafts and other short-term loans	(452)	148
Net change in lease liabilities	(13,924)	(15,459)
Payment / receipt of dividends to / from third parties	0	0
Capital injection	78,940	140,000
Net cash flows generated by financing activities (C)	64,564	124,689
Net increase/(decrease) in cash surplus/(deficit) (A+B+C)	66,314	(10,197)
Net cash surplus/(deficit) as of 1 April (D)	69,972	82,617
Effect of exchange rate changes on balances held in foreign currency (E)	(144)	(795)
Net cash surplus/(deficit) as of 31 March (A+B+C+D+E)	136,142	71,625
Net cash surplus/(deficit) includes:
Bank and post current accounts and deposits	136,030	71,508
Cash in hand	112	117
	136,142	71,625
Of which:
Cash and cash equivalent related to the assets held for sale	0	1,653
Cash and cash equivalent net of the assets held for sale	136,142	69,972

⁽¹⁾ The other captions of working capital refer to the following captions included in the statement of financial position of the Group: trade receivables and payables from/to third parties and from/to not consolidated subsidiaries and associated companies.
⁽²⁾ The other captions of operating capital refer to the following captions included in the statement of financial position of the Group: income tax receivables and payables, deferred tax assets and liabilities, other current assets and liabilities, provisions for risks and charges.
⁽³⁾ The value as at 31 March 2021 mainly refers to the effects of the sale of a factory in the Netherlands.
⁽⁴⁾ The value at March 31, 2021 refers to the effects of the sale of the investment in the Japanese subsidiary.
⁽⁵⁾ The value at March 31, 2021 refers to the effects of the sale of a minority interest in the shares held in the German subsidiary.

Consolidated statement of net equity changes As of March 31, 2021

€ thousands	Share capital	Legal reserve	Share premium	Translation reserve	Foreign exchange risk hedging reserve	Commodities risk hedging reserve
Balance as of April 1, 2019	6,900	1,380	0	7,947	(3,086)	(1)
Income (expenses) recognized directly in equity
Translation differences				(4,379)	(83)	(9)
Foreign exchange risk hedging reserve variation					2,261
Commodities risk hedging reserve variation						(276)
Interest rate risk hedging reserve variation
	0	0	0
Net result for the period
Total Income (expenses) for the period	0	0	0	(4,379)	2,178	(286)
Transactions with Shareholder:
Capital injection
Increase of share capital
Destination of operating result
Dividends
	0	0	0	0	0	0
Other net equity variations:
Minority interests acquisition
Other variations
Roundings
	0	0	0	0	0	0
Balance as of March 31, 2020	6,900	1,380	0	3,568	(908)	(286)

€ thousands	IAS 19 Reserve	Other reserve	Retained earnings	Group net equity	Minority interest	Total
Balance as of April 1, 2019	(7,726)	671,611	(573,112)	103,913	7,604	111,517
Income (expenses) recognized directly in equity
Translation differences				(4,471)	(306)	(4,778)
Foreign exchange risk hedging reserve variation				2,261	137	2,398
Commodities risk hedging reserve variation				(276)	(21)	(297)
Interest rate risk hedging reserve variation	(1,214)			(1,214)	0	(1,214)
	(1,214)	0	0	(3,700)	(190)	(3,891)
Net result for the period			(146,267)	(146,267)	(11)	(146,277)
Total Income (expenses) for the period	(1,214)	0	(146,267)	(149,967)	(201)	(150,168)
Transactions with Shareholder:
Capital injection		140,000		140,000	0	140,000
Increase of share capital				0	0	0
Destination of operating result				0	0	0
Dividends				0	0	0
	0	140,000	0	140,000	0	140,000
Other net equity variations:
Minority interests acquisition				0	0	0
Other variations				0	0	0
Roundings				0	0	0
	0	0	0	0	0	0
Balance as of March 31, 2020	(8,940)	811,611	(719,378)	93,947	7,403	101,350

€ thousands	Share capital	Legal reserve	Share premium	Translation reserve	Foreign exchange risk hedging reserve ^(*)	Commodities risk hedging reserve ^(*)
Balance as of April 1, 2020	6,900	1,380	0	3,568	(908)	(286)
Income (expenses) recognized directly in equity:
Translation differences				7,895	449	19
Foreign exchange risk hedging reserve variation					(516)
Commodities risk hedging reserve variation						71
Changes in IAS 19 Reserve
	0	0	0	7,895	(67)	90
Net result for the period
Total Income (expenses) for the period	0	0	0	7,895	(67)	90
Transactions with Shareholder:
Capital injection
Increase of share capital
Destination of operating result
Dividends
	0	0	0	0	0	0
Other net equity variations:
Minority interests acquisition
Minority interests disposal
Other variations
Roundings
	0	0	0	0	0	0
Balance as of March 31, 2021	6,900	1,380	0	11,463	(975)	(196)

€ thousands	IAS 19 Reserve	Other reserve	Retained earnings	Group net equity	Minority interest	Total
Balance as of April 1, 2020	(8,940)	811,611	(719,378)	93,947	7,403	101,350
Income (expenses) recognized directly in equity:
Translation differences				8,363	929	9,292
Foreign exchange risk hedging reserve variation				(516)	(1)	(517)
Commodities risk hedging reserve variation				71	14	85
Changes in IAS 19 Reserve	135			135	24	159
	135	0	0	8,053	966	9,019
Net result for the period			(64,869)	(64,869)	(1,560)	(66,429)
Total Income (expenses) for the period	135	0	(64,869)	(56,816)	(594)	(57,410)
Transactions with Shareholder:
Capital injection		78,940		78,940	0	78,940
Increase of share capital				0	0	0
Destination of operating result				0	0	0
Dividends				0	0	0
	0	78,940	0	78,940	0	78,940
Other net equity variations:
Minority interests acquisition				0	0	0
Minority interests disposal			3,780	3,780	(2,725)	1,055
Other variations				0	0	0
Roundings				0	0	0
	0	0	3,780	3,780	(2,725)	1,055
Balance as of March 31, 2021	(8,805)	890,551	(780,467)	119,851	4,084	123,935

Notes to the Consolidated Financial Statements

Company's information

Permasteelisa S.p.A. (hereafter 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, 2021 include the Company and its subsidiaries involved in the consolidation (hereafter 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 July 5, 2021 and will be submitted to the approval by the Shareholder meeting called on July 28, 2021. 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, 2020.

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, 2021 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 realized as part of the normal operating cycle, even when they are not expected to be realized 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, 2020, except for those described in the paragraph "new accounting standards".

(b) Basis of preparation

The consolidated financial statements have been prepared based on the going concern assumption.

In assessing the appropriateness of this assumption, the Directors considered the economic and financial performance achieved by the Group in the fiscal year just ended, that, although still negative, improved compared to the prior year, as well as the increased level of risk and uncertainty regarding the future economic scenarios determined by the persistence of the Covid-19 emergency. Furthermore, the economic performance of the Group, which includes the effect of some restructuring actions, was in line with expectations and the capital injections made during the year by the shareholders allowed to cover the losses accrued by the Group in the period and to maintain a positive net financial position. At the end of the fiscal year the Group has no debt toward banks and has financial resources which are deemed appropriate to meet the financial needs foreseen in the short term as part of the business plan for the period 2022-2025, prepared by management at Group level and approved on May 27, 2021 (hereinafter the "Business Plan").

The effects of the Covid-19 pandemic continued to affect company activities during the year 2021 and forced the Group to periodic lockdowns both in the production and the installation phases. These measures led to delays in the recognition of project revenues and, in some cases, to incremental costs. The impact in the last months of the fiscal year was less severe comparing to the initial spread of Covid-19.

In addition, the uncertainties associated with the Covid-19 pandemic have caused delays in the investment decisions of operators in the sector which have slowed down the acquisition of new orders by the Group. It is believed that this situation may persist in the new financial year, albeit with the expectation of a progressive recovery sustained by the positive effects deriving from the incentive and protection measures initiated by governments as well as by the slowdown in the spread of the virus as a result of vaccination programs and restrictions introduced. With reference to the level of acquisition of new orders, it should be noted that the objectives outlined in the Business Plan envisage a sharp recovery of the order intake for the new financial year, estimated to be slightly higher than that observed in the 2019 financial year. Current backlog of orders guarantees significant coverage of the production targets set for next year, partially reducing uncertainty. These effects are constantly monitored by management, in order to predict the possible impacts on operating activities and the necessary lines of action to mitigate the effects of the emergency situation.

The Business Plan is based on hypothetical assumptions about the future performance of the Company and the Group characterized by significant profiles of uncertainty, due to their nature but also to the specific characteristics of the sector in which the Group operates and to the disruption elements enclosed in the challenges that the Company is facing in order to return to a positive profitability, in particular with respect to the order intake objectives and the progressive improvement of projects' performance, which are further increased by the uncertainty connected to the current market condition, in which the impacts of the Covid-19 emergency and the recovery timeframe of the world economy remain uncertain and difficult to predict and it is therefore possible that differences, potentially of significant amount, from forecast figures taken into consideration would arise in future fiscal years, which could lead to adjustments in carrying value of assets that cannot be quantified nor predicted as of today.

Having considered the above-described uncertainties, at the date of the preparation of the financial statements, no critical elements emerged against the appropriateness of the going concern assumption, in particular for the next 12 months. In this regard, it is believed that, thanks to the capital injections granted by the shareholders and thanks to the effects of the restructuring actions already commenced, the Group has sufficient financial resources to meet the financial needs expected in the short term as reflected in the Business Plan, both to support the business and to continue the restructuring actions already started, even in case of potential reductions in the volume of production which might derive from the continuance of the current pandemic emergency.

Nevertheless, relevant risk and uncertainty remain regarding the macroeconomic evolution in the markets, which the management will continue to monitor and evaluate with extreme accuracy through the actions which are better described in the paragraph "Business Outlook".

Having assessed the above circumstances, the Directors concluded that there are adequate elements to support the Group's ability to meet its obligations in the foreseeable future, particularly in the next 12 months and they deemed appropriate to adopt the going concern assumption in preparing the consolidated financial statements.

The preparation of the financial statements requires management to make evaluations, estimates and assumptions which have an effect on the application of accounting standards and on the book values of assets and liabilities, costs and revenues. Evaluations made are the best possible based on the information currently available. Estimates and related assumptions are based on experience and several other factors which are reasonable considering the circumstances, the results of which form the basis for the measurement of the book value of assets and liabilities which cannot be accurately desumed from other sources. Actual results may be different from the estimates made, that are subject to material uncertainty due to their nature and to the specific characteristics of the sector in which the Group operates, and the restructuring phase in which the Group is involved and finally, of the global market situation caused by the Covid-19 pandemic.

Items which are affected the most by estimates and the use of hypothetical assumptions are the fixed assets, particularly in connection to the impairment test based on forecasts regarding the future performance of the Group which are aleatory under many aspects, as further specified below. Similar considerations apply to the deferred tax assets; whose recoverability depends on future results. Other items subject to a significant use of estimates are the recoverability of receivables, valuation of the work-in-progress - with reference to the estimates of the related costs which influence the stage of completion -, contingent liabilities relating to warranty works, projects' risks and outstanding disputes, the outcome of which is uncertain and whose assessment is based on available information.

The estimates and the underlying assumptions are periodically revised. Changes in estimate are recognised in the period in which the estimate is reviewed if the review concerns only that period, if the review concerns current and future periods, they are recognised in current and future periods.

The annual financial statements have been prepared based on the general principle of historical cost, with the exception of the financial statement items which, in compliance with the IFRS, are measured based on fair value as indicated further on in the measurement criteria.

The accounting standards have been applied consistently for the periods presented in these consolidated financial statements.

These accounting standards have generally been applied on a uniform basis by the Group companies when drawing up the accounts for consolidation purposes; however, where necessary, the Parent Company has made the necessary adjustments to adapt them to the IFRS.

(c) Basis of consolidation

(i) Subsidiaries

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

The subsidiaries are consolidated using the line by line method.

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

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

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

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

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

(ii) Associates

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

Unrealized gains arising from transactions with associated companies are eliminated to the extent of the Group's equity investment in the entity. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of "impairment".

(d) Basis of conversion of foreign currency

(i) Foreign currency transactions

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

(ii) Subsidiaries Financial Statements

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

The exchange rates used for the closing as of March 31, 2021 and the comparative exchange rates of the previous year are as follows:

	March 31, 2021		March 31, 2020
Currency	Exchange rate at the balance sheet date	Average exchange rate of the year	Exchange rate at the balance sheet date	Average exchange rate of the year
Thai Baht	36.658000	36.192685	35.925000	34.411182
Danish Krone	7.437300	7.445823	7.467400	7.468035
Norwegian Krone	9.995500	10.676973	11.510000	10.027993
Dubai Dirham	4.306000	4.286195	4.023600	4.081069
Australian Dollar	1.541200	1.626059	1.796700	1.631461
Canadian Dollar	1.478200	1.541041	1.561700	1.478490
Hong Kong Dollar	9.115300	9.048189	8.494500	8.686161
Singapore Dollar	1.576800	1.59309	1.563300	1.524477
Taiwan Dollar	33.424500	33.768141	33.153700	34.153076
Usa Dollar	1.172500	1.167109	1.095600	1.111245
Hungarian Forint	363.270000	356.681345	360.02000	330.529673
Swiss Franc	1.10700	1.076248	1.058500	1.096243
Croatian Kuna	7.570500	7.559163	7.625500	7.435159
Pataca Macau	9.388800	9.319631	8.749300	8.946754
Philippine Peso	56.901000	57.123768	55.865000	57.142470
Chinese Renminbi	7.681200	7.900192	7.778400	7.741819
Malasyan Ringitt	4.861800	4.866726	4.733000	4.627622
Riyal Qatar	4.267900	4.248272	3.988000	4.044957
Riyal Saudi Arabia	4.396900	4.376673	4.108500	4.167216
Russian Ruble	88.317500	86.649744	85.948600	72.163786
Indian Rupia	85.813000	86.593778	82.898500	78.794703
Israeli Shekel	3.917800	3.944925	3.901800	3.920724
Pound Sterling	0.852090	0.892486	0.886430	0.874635
Korean Won	1,324.190000	1,351.906196	1,341.030000	1,314.251515
Japanese Yen	129.910000	123.683403	118.900000	120.805564
Polish Zloty	4.650800	4.49828	4.550600	4.302694
Manat Azerbaigian	1.993300	1.984096	1.862500	1.889149
Tugrik Mongolia	3,341.400000	3,311.44442	3,043.290000	2,992.381439
Turkish Lira	9.725000	8.585061	7.206300	6.515167
Vietnam Dong	27,054.000000	27,053.952899	25,893.000000	25,827.166667
Brazil Real	6.740900	6.31043	5.700100	4.572119
Colombia Peso	4,372.050000	4,312.428587	4,451.640000	3,757.624470

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

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

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

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

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. Any adjustments resulting from the completion of the measurement process are recognized within twelve month of the date of acquisition, restating comparative figures.

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

(f) Derivative financial instruments

The Group uses derivative financial instruments (generally forward exchange contracts, swap and future) only to hedge its exposure to foreign currency risk, to commodities risk and interest risk coming from its operating and financial activities.

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

Derivatives are initially recognized at cost on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The gain or loss on re-measurement to fair value is recognized immediately in profit or loss account.

However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see the accounting policy described in section "g").

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

(g) Hedging

(i) Cash flow hedging (foreign currency risk)

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

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

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

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

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

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

If the hedged transaction is no longer expected to take place, the cumulative unrealized gains or losses recognized in equity are recognized 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 recognized 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 recognized 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 aluminum are concluded to hedge the price risk existing on this commodity; therefore, these hedging operations are related to highly probable future transactions as the job that is hedged, with regard to the aluminum purchase, is effectively acquired when the hedging contract or contracts are concluded. In consideration of the variability of the price of aluminum, the aim of hedging is to freeze this price already since the acquisition of the order itself; subsequently, as the aluminum order as well as the relevant price are agreed with the supplier, the Group shall complete the aluminum forward purchase by completing a transaction of opposite sign. If, upon expiry of the transaction, the order has not been defined yet for the supplier, the hedging contract(s) shall be rolled over.

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

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

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

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

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

(iv) Hedge of net investment in foreign operation

The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an effective hedge is recognized directly in equity. The ineffective portion is recognized immediately in income statement. No hedging of this type are in place in the Group, during the reporting period of analysis.

(h) Tangible assets

(i) Owned tangible assets

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

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

(ii) Subsequent costs

The Group recognizes 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 recognized in the income statement as an expense when 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	20-40 years
plant and machinery	5-25 years
equipment	4-5 years
other assets	4-8 years

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

(i) Intangible assets

(i) Goodwill

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

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

At the closing date of the reporting period the Group assets do not include any goodwill amounts.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized 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 capitalized if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalized includes the cost of materials, direct labour and an appropriate proportion of overheads.

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

Capitalized 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 recognized in the income statement as an expense as incurred.

(iv) Subsequent expenditure

Subsequent expenditure on capitalized intangible assets is capitalized 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

(i-bis) Rights-of-use

The new accounting standard IFRS 16"Leases" defines a standard form for recognizing leasing contracts, eliminating the distinction between operating and financial leases, and providing for the recognition of an asset for the right to use the good and a liability for the lease. A contract is, or contains, a lease if, in return for consideration, it gives the right to control the use of a specified asset for a period of time. Assets for the right to use leased assets are initially valued at cost, and subsequently depreciated over the term of the lease contract defined during the analysis, taking into account any extension or termination options that can reasonably be exercised. The cost of right to use assets includes the initially recognized value of the lease liability, the initial direct costs incurred, the estimate of any restoration costs to be incurred at the end of the contract and the advance payments relating to the lease made at the date of first transition net of any lease incentives received. The related liabilities for leased assets are initially measured at the present value of the payments due for the fixed lease payments to be made at the date of signing the lease agreement and for the exercise price of the purchase option and redemption option if reasonably exercisable, discounted using the interest rate implicit in the lease, if determinable, or the marginal lending rate at the date. Liabilities for leased assets are subsequently increased by the interest that accrues on these liabilities and decreased in correlation with the lease payments. Liabilities for leased assets are in any case restated to take account of changes in the payments due for the lease, adjusting the right of use asset for the same value. However, if the carrying amount of the asset underlying the right of use is zero and there is a further reduction in the valuation of the lease liability, that difference is recognized in profit or loss. In the event of changes in the lease agreement, these changes are accounted for as a separate lease when rights of use are added to one or more underlying assets and the lease consideration increases by an amount that reflects the separate price for the increase in the asset leased. In relation to changes that are not accounted for as a separate lease, the lease liability is restated by discounting the lease payments due using a revised discount rate, based on the new lease term. These adjustments to liabilities are accounted for by making a corresponding change in the asset underlying the right of use, recording any gain or loss relating to the partial or total termination of the contract in the income statement. No rights of use assets are recognized in relation to: i) short-term leases; ii) leases where the underlying asset is of low value. Payments due for these types of lease contracts are recognized as operating expenses on a straight-line basis. The income statement recognizes, under operating costs, depreciation of right of use assets and, in the financial section, the interest payable accrued on the lease liability, if not capitalized. The income statement also includes: (i) instalments relating to short-term leases of modest value, as allowed by IFRS 16 in a simplified manner; and (ii) variable lease instalments, not included in the determination of the lease liability (e.g. instalments based on the use of the leased asset).

(j) Trade receivables to third parties

Trade receivables are recognized initially at fair value and subsequently recorded at the amortized 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 recognized based on the progress of the operating activity. The policy adopted by the Group is the completion percentage determined by applying the "incurred cost" (cost to cost) criterion.

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

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

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

The contract costs also include the pre-operative costs, which is to say the costs incurred in the initial phase of the contract before the construction activity is begun (design costs, costs for organisation 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 recognized in its entirety in the year in which it may be reasonably expected.

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

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

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

Contracts with payment denominated in foreign currency other than the functional currency (Euro for the Group) are evaluated 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 realizable value. Net realizable 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 amortized-cost basis using the original effective interest method.

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

(n) Cash and cash equivalents

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

(o) Impairment of tangible and intangible assets

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

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

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

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

At the closing date and in the previous years reporting periods, there are not any goodwill or assets with indefinite useful life recognized.

(i) Calculation of recoverable amount

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

(ii) Reversal of impairment

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

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

(p) Equity

(i) Share capital

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

(ii) Dividends

Dividends are recognized 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 recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, they are stated at amortized cost with any difference between cost and redemption value being recognized 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 recognized as an expense in the income statement as incurred.

(ii) Defined benefit plans

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

(iii) Severance indemnity fund

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

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

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

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

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

(s) Provision for risks and charges

A provision is recognized 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 amortized 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 amortized-cost basis using the effective interest method.

Financial liabilities are derecognized 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 recognized in the income statement over-time in proportion to the stage of completion of the contract that is calculated based on the costs effectively incurred and total costs included in the contract budget (cost-to-cost). An expected loss on a contract is recognized immediately in the income statement.

(i) Goods sold and services rendered

Revenue from the sale of goods is recognized in the income statement at a point in time when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognized 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 recognized if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(w) Expenses

(i) Leases payments

The accounting principles IFRS 16 "Leases" introduced a single method to account for leases, eliminating the distinction between operating and finance leases. Please refer to the note (i-bis) Rights-of-use which also includes the exposure in the income statement of these contracts.

(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 recognized in the income statement as it accrues, using the effective interest method.

Dividends income is recognized 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 recognized 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 capitalized and amortized 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 recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized 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 realization 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 recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional income taxes arising from the distribution of dividends are recognized 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 recognized 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 not yet in force and applied in advance

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

Accounting standards, amendments and interpretations approved by the European Union, not yet mandatorily applicable and not adopted in advance by the Group

On May 28, 2020, the IASB published an amendment to IFRS 16 - Leases "COVID-19 related rent concessions" which allows lessees the possibility not to evaluate the changes to the leasing contracts related to COVID-19 that resulted in a reduction to the rents due by 30 June 2021 as a modification of the lease contract, recognizing them directly in the income statement. This amendment is effective for financial years starting from 1 June 2020.

On 25 June 2020, the IASB published an amendment called "Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)". The amendments allow for the extension of the temporary exemption from the IFRS 9 application until January 1, 2023. These changes will come into effect on January 1, 2021.

On 27 August 2020, the IASB published the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 -Interest Rate Benchmark Reform - Phase 2, which supplement the provisions already issued in 2019 on the subject of rate replacement of interest benchmark as a consequence of the reform already introduced previously. These changes will be effective from 1 January 2021.

The accounting standards, amendments and interpretations published by the IASB and the International Financial Reporting Standard Interpretations Committee ('IFRS IC') for which at the date of this document, the competent bodies of the European Union have not yet completed the approval process are listed below:

On May 14, 2020, the IASB published the following amendments called:

―	Amendments to IFRS 3 Business Combinations. The amendments are intended to update the reference in IFRS 3 to the Conceptual Framework in the revised version, without this entailing changes to the provisions of IFRS 3;
―	Amendments to IAS 16 Property, Plant and Equipment. The changes are intended not to allow the amount received from the sale of goods produced in the test phase of the activity to be deducted from the cost of tangible assets. These sales revenues and the related costs will therefore be recognized in the income statement;
―	Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The amendment clarifies that in the estimate of the possible cost of a contract, all costs directly attributable to the contract must be considered;
―	Annual Improvements 2018-2020: the changes were made to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples of IFRS 16 Leases.

All changes will take effect on January 1, 2022.

On May 18, 2017, the IASB published IFRS 17 - Insurance Contracts (and subsequently, on June 25, 2020, Amendments to IFRS 17) which is intended to replace IFRS 4 - Insurance Contracts.

The standard applies from 1 January 2023.

On 23 January 2020, followed by a subsequent amendment of 15 July 2020, the IASB published an amendment called "Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current". The document aims to clarify how to classify debts and other short or long-term liabilities. The changes come into effect from January 1, 2023.

Any impacts deriving from these new standards, amendments and interpretations have not been considered significant on the Group's consolidated financial statements.

The principles, amendments and interpretations that by their nature cannot be adopted by the Group are excluded from the list.

Information on impairment test prepared during the year

Due to the losses generated by the Group in the accounting period, although in reduction compared to the previous year and taking into account the uncertainties deriving from the reference context due to the persistence of the Covid-19 health emergency, the Directors have recognised indicators which might impair the assets value and have subjected the entire consolidated net invested capital as of 31 March 2021 to an impairment test.

The method adopted for the preparation of the Impairment Test and the related results are illustrated below:

―	a single cash generating unit (CGU) has been identified, corresponding to the Group considering the high operational inter-relationship existing between the Group companies and the various sectors in which the Group operates;
―	the recoverable amount compared with the consolidated net invested capital was determined as the value in use, defined as the value of the expected cash flows using a rate which reflects the CGU risks on the measurement date (so-called Discounted Cash Flow method);
―	the expected cash flows derived from the new 2022-2025 Business Plan (hereafter the "Business Plan"), were used. A plan drawn up by the Group Management with the support of the new Shareholder and approved by the Board of Directors on May 27, 2021.

The Business Plan includes launched and to be launched strategic actions identified by the Directors for the recovery of satisfying Group performances and includes action guidelines which had elements of decisive discontinuity as at March 31, 2021. The expected cash flows used for the impairment test have been taken from the Business Plan just considering the actions which accounting standard IAS 36 par. 44 considers to have been met as of the date of closing;

―

the discount rate used is the weighted average cost of the capital (so-called WACC post-tax), calculated considering the capital structure of a panel of comparable companies. The method applied is the Capital Asset Pricing Model, on which the rate is determined using a mathematical model provided by the sum of the return of a risk-free asset, to which the risk premium is added. The market risk premium is provided by the result of the average market risk for the specific sector beta. The WACC used is 13.3%; It should be noted that the forecast data reflected in the Business Plan have been prepared taking into account the reference macroeconomic context and therefore the effects of Covid-19 and in any case, in determining the discount rate, an execution risk component was also considered, with a consequent increase in the WACC used to take into account the uncertain macroeconomic evolution in the reference markets.

―

the "g" growth rate for the determination of the cash flows beyond the explicit forecast period (2025) is aligned to the expected inflation in the countries in which the Group operates. The g-rate used is 1.8%.

Estimates used are based on internal evaluations relating to future events which may not occur or may occur with different results and timing to that forecasted. These could create significant differences to the forecast data which are not quantifiable or predictable and lead to value adjustments. The recovery of the net invested capital depends on the achievement of the objectives defined by the Business Plan from which the projections used in the evaluation have been taken. The Business Plan on which the test is based uses hypothetical assumptions regarding the Group's future performance. These are characterised by material uncertainty due to their nature, the sector in which the Group operates and the elements of discontinuity enclosed in the challenges which the Group is facing to return to profitability. It also considers the uncertainty of the current market in which the world economy remains uncertain and difficult to predict.

As in previous years, there are no assets with an indefinite useful life.

Because of the impairment test, it was unnecessary to proceed with any write-down or revaluation of the Group's consolidated net invested capital.

Sensitivity analyses were carried out supporting of the impairment test, on the main parameters of the model and all the examined cases confirmed the positive outcome of the test, i.e. the recoverable net value was always higher than the value of consolidated net invested capital.

Sensitivity analyses were conducted on:

―	discount rate (WACC rate): compared to the base rate of 13.3%, a range of variation between -1% and + 1.5% was considered, i.e. WACC rate between 12.3% and 14.8%;
―	growth rate "g" (g rate): compared to the base rate of 1.8%, a range of variation between -1.5% and + 1% was considered, i.e. the g rates between 0.3% and 2.8%;

from the combination of these ranges of rates, in any case the impairment test gave a positive result.

Analysis of income statement and financial positions

1. Assets and liabilities classified as held for sale

As of March 31, 2021, the Group does not hold non-current assets and liabilities held for sale.

The amounts as of March 31, 2020 refer to the subsidiary Permasteelisa Japan KK whose sale to LIXIL Corporation took place on June 26, 2020 and resulted in the recognition of a gain of Euro 12,748 thousand.

2. Acquisitions of subsidiaries

During the year ended as of March 31, 2021, there were no company acquisitions.

3. Operating revenues

Operating revenues broken down by product are shown below:

€ thousands	March 31, 2021	March 31, 2020
Curtain walls	767,228	1,032,880
Interiors	74,486	97,373
Contract	21,324	25,258
Marine	22,028	27,433
	885,066	1,182,944

Operating revenues broken down by geographical area are shown below:

€ thousands	March 31, 2021	March 31, 2020
North America	257,322	399,287
South America	148	4,537
Benelux	21,341	14,969
France	55,266	47,795
Germany	40,771	30,503
Italy	27,960	30,253
Spain	10,041	21,885
Switzerland	38,128	61,792
United Kingdom	140,910	198,450
Ireland	6,666	11,765
Other European countries	27,533	21,758
Other Central Asian countries	710	(42)
United Arab Emirates	(2,278)	25,250
Qatar	618	(318)
Saudi Arabia	28,911	47,393
Other Middle Eastern countries	1	3
Australia	54,450	36,804
China	82,584	85,878
Japan	7,905	22,766
Hong Kong	30,632	61,616
India	349	1,861
Korea	716	3,885
Russia	26,910	25,824
Singapore	5,797	3,078
Taiwan	2,074	3,426
Thailand	990	3,111
Macau	930	1,272
Other Asian countries	17,681	18,143
Total	885,066	1,182,944

The operating revenues in the fiscal year 2021 equal to Euro 885,066 thousand (March 2020: Euro 1,182,944 thousand) decreased for 25.2% compared to previous year; this is mainly due to product Curtain Walls (-25.7%) related to Nord America area (-36.2%) and Middle Eastern area (-63.4%) while European area and Asia area have lower reduction percentage than the Group average (-16.6% European area and -8.2% Asian area).This is due to lower progress on some projects due to the lockdown caused by the Covid-19 pandemic in different countries during the year and to the greater selection in the acquisition phase of new projects and the Group decision to exit from some markets considered no longer strategic such as the Middle East area.

4. Other operating revenues

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

€ thousands	March 31, 2021	March 31, 2020
Gains on tangible and intangible assets disposals	5,712	4,782
Rental income	772	710
Insurance indemnities	89	31
Sale of scrap	1,853	1,794
Other revenues	8,708	4,347
	17,134	11,664

The caption "Gains on tangible and intangible assets disposals" includes Euro 5,634 thousands related to the sale of a factory in the Netherlands (March 2020: Euro 4,467 thousands related to the sale of a warehouse in Hong Kong).

The item "Other revenues" includes Euro 1,860 thousand (March 2020: Euro 1,059 thousand) concerning nonrecurring revenues due to reversal of cost provisions made in the previous year and Euro 1,939 thousand related to small jobs for maintenance and visual mock-up in China (March 2020: Euro 2,032 thousand).

The item "Other revenues" includes also some utilization of fund provision for jobs revenues that were accrued in the previous years: Euro 1,300 thousand in Italy and Euro 3,293 thousand in China.

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. Furthermore, the reduction in operating revenues described in Note 3. is also reflected in a decrease in the project operating costs.

The percentage impact of the item "raw materials and consumables used' over the total operating revenues is equal to 29.6% (27.9% in previous year).

The percentage impact of the item "services expenses and use of third party assets" over the total operating revenues is quite unchanged from 37.9% to 37.4% compared to March 2020.

It highlights that the item "services expenses and use of third party assets expenses" includes remuneration due to Statutory Auditors amounting to Euro 93 thousand.

6. Personnel expenses

€ thousands	March 31, 2021	March 31, 2020
Wages and salaries	250,881	347,725
Social contribution	34,624	40,176
Contributions to defined contribution plans	1,161	1,385
Increase in liability for severance indemnities fund	32	41
Severance indemnities assigned to pension fund or Inps	2,204	2,141
Increase in liability for defined benefit plans	(935)	(608)
Increase in liability for other long-term benefits	312	384
Termination benefits	2,605	951
Other personnel costs	13,844	16,930
	304,728	409,125

The Personnel expenses decreased for 26% compared to previous year. This is mainly due to Asian and North America areas, where the employees decreased respectively for 207 and 388 units to meet the needs of site installation and site management for projects in progress and to the reorganisation process started by the Group at the beginning of fiscal year 2020.

The average workforce for the period was 4,582 units (March 2020: 5,370 units).

7. Depreciation, amortization and impairment losses

€ thousands	March 31, 2021	March 31, 2020
Tangible assets depreciation	11,035	11,655
Intangible assets amortization	1,626	1,886
Right-of-use assets depreciation	15,083	15,964
Devaluation of intangible assets	2,173	1,871
Devaluation of tangible assets	0	6,871
	29,917	38,247

The item "Devaluation of intangible assets" for Euro 2,173 thousand (March 2020: Euro 1,871 thousand) includes Euro 1,033 thousand related to the devaluation of some intangible assets in progress costs related to the implementation of a software for the project management developed by Permasteelisa S.p.A., following the Group's decision to abandon this project; Euro 1,047 thousand related to some development and design costs of a new products considered no longer strategic and therefore no longer recoverable. In the previous year, the decision to abandon some investment projects relating to software had led to the recognition of write-downs of approximately Euro 1,871 thousand.

The item "Devaluation of tangible assets" as of March 31, 2021 is zero while in March 2020 included Euro 6,567 thousand deriving from the decision to close a European production plant, as part of the restructuring actions launched by the Group starting from 2019 (hereinafter also Turnaround Plan).

8. Bad debts provision

€ thousands	March 31, 2021	March 31, 2020
Bad debts provision	5,299	21,976
	5,299	21,976

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 1.0 million (March 2020: Euro 10.2 million), to American area for Euro 2.7 million (March 2020: Euro 2.8 million) and to Middle Eastern area for Euro 1.0 million (March 2020: Euro 9.8 million).

Group net bad debts provision, for fiscal year 2021, includes Euro 2.5 million (March 2020: Euro 2.5 million) related to the higher level of risk associated with the Covid-19 pandemic, in terms of expected future losses on trade receivables, in compliance with accounting standard IFRS 9.

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

9. Provision for risks and charges

€ thousands	March 31, 2021	March 31, 2020
Provision for disputes and legal actions	1,776	25,586
Provision for warranties	11,965	751
Provision for jobs risks	(4,038)	3,168
Provision for write-down on work-in-progress risks	2,736	14,373
Provision for restructuring costs	6,740	8,905
	19,179	52,783

The item "Provision for disputes and legal actions" includes provisions in European area for 5.3 million (March 2020: Euro 4.4 million) and in the Middle Eastern area for Euro 0.6 million (March 2020: Euro 7.2 million) and releases in American area for Euro 4.2 million (March 2020: Euro 13.9 million of provision).

The item "Provision for warranties" included provisions in European area for 9,9 million and in the Middle Eastern area for Euro 1.5 million.

With reference to the item " Provision for jobs risks ", it is mainly due to the releases in the Asian area for 4,9 million (March 2020: provisions made in the European area for Euro 2.6 million and the Middle Eastern area for Euro 1.6 million). The related provision for risks is shown in the balance sheet under non-current liabilities under the item "Provisions for risks and charges" (Note 33).

With reference to the item " Provision for write-down on work-in-progress risk ", the ending balance as of March 31, 2021 is due to the combined effects of net provisions and releases occurred during the reporting period for Euro 4.3 million in the European area (March 2020: Euro 1.9 million), Euro 0.6 million in the Asian area (March 2020: net release for Euro 4.9 million), Euro 2.1 million in the American area (March 2020: net release for Euro 1.4 million), and Euro 0.1 million in the Middle Eastern area (March 2020: Euro 2.1 million). The related writedown provision is shown in the balance sheet item as an adjustment to the item "Assets for contract work in progress ", under current assets (Note 22).

With reference to the item "Provision for restructuring costs" it is due to the reorganisation plan (Turnaround Plan) undertaken by the Group starting from the end of 2019 fiscal year. This Plan led to the allocation of Euro 6.7 million for interventions in the European area, relating to actions already approved and communicated, and in particular for charges to be incurred in relation to the organic reduction plan at the Parent Company Permasteelisa S.p.A.

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

10. Other operating expenses

€ thousands	March 31, 2021	March 31, 2020
Other taxes	6,995	8,005
Losses on tangible and intangible assets disposal	759	579
Other costs	404	202
	8,158	8,786

11. Net financial expenses

€ thousands	March 31, 2021	March 31, 2020
Dividends and other incomes	0	0
Interest income	267	4,232
Exchange rate gains	35,506	57,001
Other commission income	121	54
Financial income on foreign currency risk hedging	510	1,848
Commercial income on foreign currency risk hedging	1,639	10,265
Commercial income on commodities hedging	(3)	3
Total financial income	38,040	73,403
Bank interests expenses	37	327
Exchange rate losses	33,963	60,767
Interest expenses on financial leases	424	283
Bank charges	989	775
Bond commissions	980	1,494
Other interests expenses	458	906
Financial expenses on foreign currency risk hedging	1,567	5,929
Commercial expenses on foreign currency risk hedging	3,546	14,958
Commercial expenses on commodities hedging	149	214
Total financial expenses	42,113	85,653
Total net financial expenses	(4,073)	(12,250)

The profit and losses on foreign exchange rates reported in the above table respectively include gains for Euro 1,670 thousand (March 2020: Euro 27,383 thousand) and losses for Euro 6,346 thousand (March 2020: Euro 16,726 thousand) arising from year end closing evaluation.

As of March 31, 2021, the net financial expenses amounted to Euro 4,073 thousand, while as of March 31, 2020 amounted to Euro 12,250 thousand. The positive variation for Euro 8,177 thousand is mainly due to the combination of the variations of the following items:

―	the positive net effect of exchange rate losses, net of gains, for Euro 5,309 thousand: net losses on exchange rate was Euro 3,766 thousand in March 2020 while in March 2021 the net exchange gain was Euro 1,543 thousand;
―	commercial and financial expenses on foreign currency risk hedging, net of incomes, decreased by Euro 5,810 thousand from Euro 8,774 thousand (March 2020) to Euro 2,964 thousand (March 2021). This financial item is related to the forward points applied to foreign currency sales hedging, particularly for US Dollar, and due to the difference on interest rates against the Euro. This item benefited from the recapitalization actions of the Group and the US subsidiary, which took place both during 2020 and at the start of 2021. This made it possible to significantly reduce the financial exposure denominated in US dollars, and consequently the related hedging charges;
―	to the net negative effect of interest income and expenses, for Euro 3,368 thousand: in March 2020 the net interest income was equal to Euro 2,716 thousand, while in March 2021 the net interest expenses amounted to Euro 652 thousand. The positive effect of the previous year was due to the collection of interest income for Euro 3,953 thousand following the favorable outcome of a lawsuit in Northern Europe.

12. Revaluation and write-downs of equity investments

During the reporting period April 1, 2020 - March 31, 2021, as in the previous one, there have not been any revaluations of equity investments.

During the current reporting period, there have been equity investment write-down for Euro 12 thousand related to the devaluation on the equity investment of Prealpi Trevigiane Consortium recorded in the accounting books of the holding Permasteelisa S.p.A., against capital contributions for Euro 11 thousand made in the same year.

In the fiscal year 2021 (April 2020 - March 2021), there has been also profit on equity investment disposal for Euro 12,754 thousand of which:

―	Euro 12,748 thousand due to the sale of the subsidiary Permasteelisa Japan KK to Lixil Group which has took place as of June 26, 2020;
―	Euro 6 thousand due to the sale of the 10.1% of the investment on the subsidiary Joseph Gartner GmbH from the holding Permasteelisa S.p.A. to the shareholder ACR III Holding BV.

13. Income tax expenses

Taxes recognized in the income statement

€ thousands	March 31, 2021	March 31, 2020
Current tax expenses
Current year	8,387	5,776
Provision for risk on taxes	383	2,990
Adjustments for prior year	(7,381)	(38)
	1,389	8,728
Deferred tax expenses
Origination and reversal of temporary differences	2,136	(2,140)
Originary tax rates change	0	(96)
Adjustments for prior years	25	1,048
Tax losses	13	4,146
	2,174	2,958
Total income tax expenses in the income statement	3,563	11,686

The item "Adjustments for prior year" is mainly related to the American subsidiary which benefited from the reimbursement of taxes on previous years for Euro 5,600 thousand following the restatement of the calculation of previous taxes, for the five tax periods prior to the years 2018, 2019 and 2020, as part of the tax incentives associated with the Covid-19 pandemic (Coronavirus Aid, Relief, and Economic Security Act - CARES Act).

Reconciliation of effective tax rate

€ thousands	March 31, 2021	March 31, 2020
Profit before tax	(62,866)		(134,591)
Income tax using the domestic corporation tax rate	(15,088)	24%	(32,302)
Effect of tax rates in foreign jurisdictions	5,882		14,118
Non-deductible expenses	1,880		1,817
Tax exempt revenues	5,585		6,252
Tax incentives not recognised in the income statement	0		0
Current year tax benefits not recognized	8,315		9,955
Recognition of tax benefits not recognized in prior years	0		0
Utilization of tax benefits not recognized in prior years	(1,655)		1,164
Change in tax rate effect	0		(96)
Under/(over) provision in prior years (current tax expense)	(7,381)		(38)
Under/(over) provision in prior years (deferred tax expense)	13		592
Other taxes	1,554		5,564
Others	4,458		4,660
	3,563	(5.7%)	11,686

15. Intangible assets

€ thousands	Development costs	Rights to use intellectual property	Licences and trademarks	Other intangible assets	Intangible assets in progress and advances	Total
Balance as of April 1, 2019	0	3,604	13	592	4,171	8,380
Acquisitions		575	4	330	464	1,373
Other increases		372				372
Transfer from assets held for sale		(1)				(1)
Disposals						0
Consolidation area variations						0
Other decreases					(372)	(372)
Amortization		(1,585)	(2)	(299)		(1,886)
Impairment losses					(1,871)	(1,871)
Exchange rate differences on translation		(2)				(2)
Balance as of March 31, 2020	0	2,963	15	623	2,392	5,993
Balance as of April 1, 2020	0	2,963	15	623	2,392	5,993
Acquisitions		1,792	4	170	466	2,432
Other increases		282		25		307
Disposals		(1)				(1)
Other decreases					(260)	(260)
Amortization		(1,408)	(2)	(216)		(1,626)
Impairment losses		(81)			(2,092)	(2,173)
Exchange rate differences on translation		(2)	1			(2)
Balance as of March 31, 2021	0	3,545	17	602	506	4,670
Carrying amounts
As of April 1, 2019 attributable to:
Cost	2,433	23,066	909	182,062	4,171	212,641
Accumulated amortization	(2,433)	(19,462)	(896)	(121,835)	0	(144,626)
Impairment losses	0	0	0	(59,635)	0	(59,635)
	0	3,604	13	592	4,171	8,380
As of March 31, 2020 attributable to
Cost	2,433	24,010	913	122,757	4,263	154,376
Accumulated amortization	(2,433)	(21,047)	(898)	(122,134)	0	(146,512)
Impairment losses	0	0	0	0	(1,871)	(1,871)
	0	2,963	15	623	2,392	5,993
As of April 1, 2020 attributable to:
Cost	2,433	24,010	913	122,757	4,263	154,376
Accumulated amortization	(2,433)	(21,047)	(898)	(122,134)	0	(146,512)
Impairment losses	0	0	0	0	(1,871)	(1,871)
	0	2,963	15	623	2,392	5,993
As of March 31, 2021 attributable to:
Cost	2,433	26,081	917	122,952	2,598	154,981
Accumulated amortization	(2,433)	(22,455)	(900)	(122,350)	0	(148,138)
Impairment losses		(81)		0	(2,092)	(2,173)
	0	3,545	17	602	506	4,670

The increase for the period referred to the caption "Rights to use intellectual property" equal to Euro 1,792 thousand is mainly due to the acquisition of new licenses for Server products as part of the contract renewal process with Microsoft (Euro 1,408 thousand) and BricsCad, in perspective to be added to Autocad (Euro 28 thousand), of new developments for PMF solution (Euro 61 thousand), the purchase of new licenses for the management of Virtual Workstations in the Design area (Euro 58 thousand), the filing of various national phases of the patent for the "Vibration Dumping system" and the request for a European and extra-European patent for the" Dissipative bracket "solution (Euro 39 thousand), and other developments for Euro 98 thousand.

The increase for the period referred to the caption "Assets in progress and advances" equal to Euro 466 thousand is mainly due to the new developments for the PMF solution (Euro 50 thousand), the developments related to implementation of a new application for Workload with Microsoft Project (Euro 63 thousand), the activation of the project for the migration of the various SAP modules to S4 / HANA (Euro 287 thousand) now substantially completed, in addition to other developments for Euro 65 thousand.

Impairment losses and subsequent reversals

The item "Other intangible assets" has been affected during the year for the write-down recognized of some development costs and the implementation of a management software for the orders developed by the Parent Company equal to Euro 1,033 thousand, following the Group's decision to abandon this project and Euro 1,047 thousand relating to development and design costs for new products deemed no longer strategic and therefore no longer recoverable. In the previous year, the decision to abandon other investment projects relating to software had led to the recognition of write-downs of approximately Euro 1,871 thousand.

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, 2019	52,516	14,181	8,530	9,719	1,121	86,067
Acquisitions	349	1,401	1,664	2,679	1,848	7,941
Other increases		822	339	53		1,214
Transfer from assets held for sale		(1)		(32)		(33)
Disposals	(564)	(247)	(102)	(1,315)		(2,228)
Other decreases	(430)				(784)	(1,214)
Depreciation	(2,729)	(2,956)	(2,473)	(3,497)		(11,655)
Impairment loss	(6,568)	(303)				(6,871)
Exchange rate differences on translation	(99)	(36)	7	73	(20)	(75)
Balance as of March 31, 2020	42,475	12,861	7,965	7,680	2,165	73,146
Balance as of April 1, 2020	42,475	12,861	7,965	7,680	2,165	73,146
Transfer from assets held for sale	0	1	0	32	0	33
Balance as of April 1, 2020	42,475	12,862	7,965	7,712	2,165	73,179
Acquisitions	1,327	825	1,029	2,909	144	6,234
Other increases	321	785	178	644	0	1,928
Disposals from assets held for sale	0	(1)	0	(30)	0	(31)
Disposals	(4,660)	(534)	(318)	(159)	0	(5,671)
Other decreases	0	0	0	0	(1,975)	(1,975)
Depreciation	(2,714)	(2,851)	(2,267)	(3,203)	0	(11,035)
Impairment loss	(270)	0	0	0	0	(270)
Exchange rate differences on translation	55	(61)	(70)	(144)	(5)	(225)
Balance as of March 31, 2021	36,534	11,025	6,517	7,729	329	62,134

Carrying amounts

As of April 1, 2019
Cost	121,712	67,373	42,397	50,704	1,121	283,307
Accumulated amortization	(69,196)	(53,193)	(33,867)	(40,985)	0	(197,241)
	52,516	14,181	8,530	9,719	1,121	86,066
As of March 31, 2020
Cost	120,968	69,313	44,305	52,162	2,165	288,913
Accumulated amortization	(71,925)	(56,149)	(36,340)	(44,482)	0	(208,896)
Impairment loss	(6,568)	(303)	0	0	0	(6,871)
	42,475	12,861	7,965	7,680	2,165	73,146
As of April 1, 2020
Cost	120,968	69,313	44,305	52,162	2,165	288,913
Accumulated amortization	(71,925)	(56,149)	(36,340)	(44,482)	0	(208,896)
Impairment loss	(6,568)	(303)	0	0	0	(6,871)
	42,475	12,861	7,965	7,680	2,165	73,146
As of March 31, 2021
Cost	111,443	70,025	45,124	55,414	329	282,335
Accumulated amortization	(74,639)	(59,000)	(38,607)	(47,685)	0	(219,931)
Impairment loss	(270)	0	0	0	0	(270)
	36,534	11,025	6,517	7,729	329	62,134

The main increases were made in Germany for Euro 0.8 million (March 2020: Euro 2.4 million), in Italy for Euro 0.7 million (March 2020: Euro 1.4 million), in America for Euro 0.3 million (March 2020: 1.3 million), in Netherlands for 1.0 million (March 2020: 1.3 million), in Asia for 3.0 million (March 2020: 0.5 million), and are mainly due to the increase in the production capacity and the replacement and innovation of the plants.

Impairment losses and subsequent reversal

The impairment loss recognized in the year 2021 and equal to Euro 270 thousand relates to a warehouse in Italy. In March 2020, a loss of Euro 6.6 million was recognized following the closure of a factory in the Netherlands, while in China impairment losses on tangible fixed assets of Euro 0.3 million had been recognized.

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

For the valuations used preparing the impairment test, see the appropriate section "Information on impairment test" prepared during the year.

Tangible assets in progress

At March 31, 2021 the Group holds tangible assets in progress for Euro 329 thousand (March 2020: Euro 2,165 thousand). The decrease of Euro 1,836 thousands is mainly due to the completion of tangible assets in progress and advances and their transfer to relevant asset category, for Euro 1,975 thousand; and to investments for Euro 144 thousand.

Other information

As of March 31, 2021 the Group doesn't have mortgages on buildings or on other tangible assets; please refer to the note 42 related to contingencies.

16 A. Right-of-use assets

€ thousands	Land and buildings	Plant and machinery	Equipments	Other tangible assets	Total
First application IFRS 16 as of 01 April 19	41,261	0	1,622	1,610	44,493
Acquisitions	7,021	979	1,948	2,076	12,024
Transfer from assets held for sale	(557)	0	(20)	0	(577)
Disposals	(1,103)	0	0	(165)	(1,268)
Depreciation	(13,209)	(194)	(1,307)	(1,254)	(15,964)
Exchange rate differences on translation	(186)	0	4	(4)	(186)
Balance as of March 31, 2020	33,227	785	2,247	2,263	38,522
Balance as of April 1, 2020	33,227	785	2,247	2,263	38,522
Transfer from assets held for sale	557	0	20		577
Balance as of April 1, 2020	33,784	785	2,267	2,263	39,099
Acquisitions	16,143	616	154	1,229	18,142
Disposals from assets held for sale	(505)		(17)		(522)
Disposals	(1,820)		(32)	(190)	(2,042)
Depreciation	(12,552)	(280)	(1,043)	(1,208)	(15,083)
Exchange rate differences on translation	(778)		(41)	(26)	(845)
Balance as of March 31, 2021	34,272	1,121	1,288	2,068	38,749

Right-of-use assets amount to Euro 38,749 thousand (March 2020: Euro 38,522 thousand). The item includes the values from the application of IFRS 16. The Group has adopted IFRS 16 starting from 1 ^st , April 2019. The increases for the year mainly refer to new contracts and renewals stipulated by the companies of the Group. In particular, the category "land and buildings" includes: Euro 4.3 million relating to offices and warehouses in Hong Kong, Euro 3.3 million relating to the industrial site in Canada, Euro 3.4 million relating to offices and warehouses in the North America and Euro 1.2 million relating to offices and warehouses in Australia.

Right-of-use assets mainly refer to the category of Land and Buildings, equal to Euro 34,272 thousand and relate to production sites and offices in North America (Euro 12,171 thousand), Asia (Euro 14,143 thousand) and Europe (Euro 7,915 thousand).

17. Equity investments in not consolidated subsidiaries

As of March 31, 2021 the Group doesn't have any equity investments in not consolidated subsidiaries.

18. Equity investments in associated companies

As of March 31, 2021, the Group doesn't hold any equity investments in associated companies.

19. Other equity investments

The balance as of March 31, 2021 includes the Parent company's equity investment in Interoxyd for Euro 39 thousand (March 2020: Euro 39 thousand) and the Parent company's equity investment in Consorzio Interaziendale Prealpi which, during the year, was written down for Euro 12 thousand, against capital payments for Euro 11 thousand.

20. Other non-current assets

The amount of Euro 47 thousand (March 2020: Euro 50 thousand) is related to certificates of deposit acquired by the Hong Kong subsidiary and given as a guarantee to training institutes.

21. Deferred tax assets and deferred tax liabilities

Deferred tax assets and liabilities are attributable to the following:

	Assets (-)		Liabilities (+)
€ thousands	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Tangible assets	(524)	(557)	(2,896)	(2,634)
Intangible assets	0	(1)	8.449	8,891
Inventories	(5,869)	(4,011)	75	28
Financial payables	(289)	(704)	0	0
Pension funds and other employee benefits	(2,929)	(4,990)	0	(53)
Provisions for risks and charges	(461)	(1,413)	0	0
Hedging	(501)	(1,107)	80	(215)
Other items	(871)	(1,755)	6,278	7,952
IFRS15	(714)	(2,427)	0	0
Tax value of loss carry-forwards	(5,414)	(6,991)	0	0
Tax (assets)/liabilities	(17,572)	(23,956)	11,986	13,969

With reference to the deferred tax assets on tax losses carryforward, included in the financial statements for Euro 5.4 million, it is noted as following:

―	Euro 1.1 million are related to tax losses with expiry date between the 2022 and the 2025 and are referred to some European subsidiaries, Euro 0,2 million with expiry date beyond 2025 and are referred to subsidiary in Asia;
―	the residual amount for Euro 4.1 million is referred to tax losses carryforward with not time limitation and related to other subsidiaries of the Group.

The maintenance among the asset values of the aforementioned deferred tax assets recorded against previous tax losses was based on the assessments made on the expectation of future taxable income sufficient to ensure their recovery, taking into account the constraints of use. Further benefits were not valued as a result of the considerations developed regarding the recovery prospects.

With reference to the Group companies overall, no deferred tax assets were recognized relating to tax losses carryforward comprehensively equal to Euro 86 million (March 2020: Euro 73 million). This amount refers in particular to the European companies.

The amount relating to tax losses carryforward for which deferred tax assets were not recognized amounted to Euro 555 million (March 2020: Euro 289 million), and it refers to European companies for approximately Euro 157 million (March 2020: Euro 136 million), of which the major part can be used without expiry date, for Euro 103 million related to Asian companies (March 2020: Euro 43 million) of which Euro 30 million (March 2020: Euro 39 million) can be used before 2025 and Euro 277 (March 2020: Euro 100 million) related to American companies of which the major part can be used without expiry date.

The deferred tax assets had not been booked on the aforementioned temporary differences and tax losses carryforward based on the evaluations performed by the management of each Group entities' that, in the last periods, has deemed appropriate to adopt a prudent approach when considering the existence of conditions for deferred tax utilization based on future taxable income.

In addition, with reference to the retained earnings of subsidiaries taxable in Italy if they were repatriated through dividends distribution deferred tax liabilities were not recognized on the portion of them for which the distribution is not likely in the foreseeable future.

Movement in deferred tax assets and liabilities during the year

€ thousands	Balance as of April 1, 2019	Recognised in income statement	Recognised in equity	Exchange differences	Other changes	Balance as of March 31, 2020
Tangible assets	5,273	(1,780)		1	(6,685)	(3,191)
Intangible assets	1,427	784			6,679	8,890
Inventories	(2,461)	1,621	(3,332)	(35)	224	(3,983)
Financial payables	(906)	202				(704)
Pension funds and other	(5,522)	794	(465)	56	94	(5,043)
Provisions for risks and charges	2,508	(372)		60	(3,609)	(1,413)
Hedging	(4,830)	(794)	(43)	191	4,154	(1,322)
Other items	14,070	(7,737)	700	138	(974)	6,197
IFRS15	(10,699)	3,728	2,621		1,923	(2,427)
Tax value of loss carryforwards	(14,506)	6,512		408	595	(6,991)
	(15,646)	2,958	(519)	819	2,401	(9,987)

€ thousands	Balance as of April 1, 2020	Recognised in income statement	Recognised in equity	Exchange differences	Other changes	Balance as of March 31, 2021
Tangible assets	(3,191)	(235)		7	(1)	(3,420)
Intangible assets	8,890	(445)			4	8,449
Inventories	(3,983)	1,702		(89)	(3,424)	(5,794)
Financial payables	(704)	415				(289)
Pension funds and other	(5,043)	1,184	54	67	809	(2,929)
Provisions for risks and charges	(1,413)	144		70	738	(461)
Hedging	(1,322)	(1,180)	1,273	14	794	(421)
Other items	6,197	(2,680)	167	19	1,704	5,407
IFRS15	(2,427)	1,671		42		(714)
Tax value of loss carry-forwards	(6,991)	1,598		(442)	421	(5,414)
	(9,987)	2,174	1,494	(312)	1,045	(5,586)

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

Assets for contracts work-in-progress and inventories

€ thousands	March 31, 2021	March 31, 2020
Assets for contracts work-in-progress	250,066	247,695
Raw materials and consumables used	2,016	2,047
Semi-processed goods	218	233
Finished goods	0	0
Advances	30,552	34,983
Inventories	32,786	37,263

Liabilities for contracts work-in-progress and advances from customers

€ thousands	March 31, 2021	March 31, 2020
Liabilities for contracts work in progress	196,945	240,975
Loss on construction contracts fund	13,600	20,126
Advances from customers	119,779	86,078
	330,324	347,179

Liabilities for contract work in progress were reduced due to the progress made in the last year on projects that has shown a deterioration in margins in previous years.

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

Although during the year there was a contraction in the volume of advances from customers due to the reduction of new orders, the final balance as at 31 March 2021 benefits from a significant advance relating to a project in the Russia area, collected in March 2021.

Contracts work-in-progress

€ thousands	March 31, 2021	March 31, 2020
Costs incurred on uncompleted contracts	5,447,773	5,675,602
Estimated earnings	514,953	532,690
Less billings to date	(5,923,206)	(6.221,698)
	39,521	(13,406)
Assets for contracts work-in-progress	250,066	247,695
Liabilities for contracts work-in-progress	(196,945)	(240,975)
Loss on construction contracts fund	(13,600)	(20,126)
	39,521	(13,406)

Contracts work-in-progress, equal to Euro 250,066 thousand (March 2020: Euro 247,695 thousand), are shown net of the provision for work in progress, equal to Euro 52,682 thousand (March 2020: Euro 52,409 thousand).

The total net change in contract work in progress went from a negative value of Euro 13,406 thousand in the previous financial year (March 2020) to a positive value for Euro 39,521 thousand in financial year 2021.

This increase was mainly determined both by the progress on projects that had liabilities at the end of the previous year due to the revision of the estimated completion costs.

23. Trade receivables from third parties

€ thousands	March 31, 2021	March 31, 2020
Trade receivables from third parties	344,708	422,435
Bad debts provision	(78,592)	(80,815)
	266,116	341,620

As of March 31, 2021 trade receivables include guarantee retentions for Euro 171,461 thousand (March 2020: Euro 207,876 thousand) related to contracts work-in-progress, of which Euro 68,341 thousand expiring beyond fiscal year 2022 (March 2020: Euro 95,236 thousand expiring beyond 31 March 2021).

The reduction in trade receivables from third parties equal to Euro 77,727 thousand is mainly due to the collections on some European and Asian projects completed during the year 2021 and to the collection of guarantee retentions on Group projects for which the final account with the client has been reached.

The following table shows the changes of the provision for bad debts during the year.

€ thousands	March 31, 2021	March 31, 2020
Balance as of April 1	80,815	67,356
Transfer from "Assets held for sale"	20	0
Balance as of April 1	80,835	67,356
Reclassification	(50)	(4,167)
Utilization	(3,649)	(5,498)
Net Provision	5.299	21,976
Exchange rate differences on translation	(3,808)	1,168
Disposals from assets held for sale	(35)	(20)
Balance as of March 31	78,592	80,815

The item "Reclassification" amounted to a negative value for Euro 50 thousand (March 2020: Euro 4,167 thousand) has been reclassified from the allowance for doubtful accounts as they relate to write-downs of other receivables and to risks on projects, therefore reclassified following the nature of the same.

The provision, for Euro 5,299 thousand (March 2020: Euro 21,976 thousand), is mainly related to risks on receivables in the American area for Euro 2,658 thousand (March 2020: Euro 2,767 thousand), in the European area for Euro 1,001 thousand (March 2020: Euro 10,164 thousand), in the Middle Eastern area for Euro 989 thousand (March 2020: Euro 9,780 thousand) and in the Asian Area for Euro 651 thousands (March 2020: Euro 736 thousand).

24. Amounts receivable from not consolidated and associated subsidiaries

As of March 31, 2021 the Group doesn't have any receivable from not consolidated and associated subsidiaries.

25. Income tax receivables

€ thousands	March 31, 2021	March 31, 2020
Tax income receivables	11,986	12,732
	11,986	12,732

26. Other current asset

€ thousands	March 31, 2021	March 31, 2020
VAT receivables	13,452	11,555
Advances to employees	234	273
Other receivables	18,340	42,546
Accrued income and deferred charges	10,883	5,655
	42,909	60,029

The caption "Other receivables" includes:

€ thousands	March 31, 2021	March 31, 2020
Forward assets	6,935	13,783
Other receivables	11,405	28,763
	18,340	42,546

The item "Forward assets" relates for Euro 6,927 thousand to foreign currency transactions (March 2020: Euro 13,778 thousand) and for Euro 8 thousand to the transactions on commodities (March 2020: Euro 5 thousand).

The item "Other receivables" has been decreased mainly due to the collection of the insurance reimbursement in the United Kingdom of Euro 15.8 million, collected for the 50% in April 2020 and the remaining 50% in June 2020.

€ thousands	March 31, 2021	March 31, 2020
Bank and post current accounts and deposits	136,030	69,857
Cash in hand	112	115
	136,142	69,972

The balance of bank and post current accounts and deposits, refundable on request, includes Euro 15,861 thousand (March 2020: Euro 11,515 thousand) referred to:

―	Euro 7.797 thousand of time deposits related to the German company. In Germany the law (Act for Securing of Receivables under Construction Agreement - BaufordSiG) provides, for companies operating in construction of buildings, the obligation to deposit a certain amount of financial deposit for its sub-contractors.
―	Euro 7.869 thousand of time deposit of Permasteelisa SpA equal to Euro 6,0 million related to agreements signed for the exit from the Marine Business, and a time deposit of Euro 1,869 thousand of a guarantee issued for a Singapore project.

The balance of the bank and post current accounts and deposits benefited during the year from both capital contributions by the shareholders for Euro 79 million, as well as the collection at the end of March 2021 of an advance payment of Euro 53 million relating to a new project in Russia.

28. Non-current assets held for sale

As at March 31, 2021 there are no non-current assets held for sale. Last year this item referred to the subsidiary Permasteelisa Japan KK whose sale to Lixil Corporation took place on June 26, 2020, as set out in Note 1.

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, 2021 and the comparative year March 31, 2020.

Share capital

As of March 31, 2021 the share capital amounted to Euro 6,900 thousand and includes 25,613,544 ordinary shares issued without nominal value.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares are equal since there are no preference shares.

Legal reserve, share premium reserve and revaluation reserve

They refer to the legal reserve, share premium reserve and revaluation reserve of parent company Permasteelisa S.p.A.

Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the foreign subsidiaries.

Hedging reserve for risks

This includes the foreign exchange risk hedging reserve, the commodities risk hedging reserve and the interest risk hedging reserve.

The foreign exchange risk hedging reserve and the commodities risk hedging reserve include the effective portion of the net differences accumulated in the "fair value" of the hedging instruments respectively on foreign currencies and commodities, associated to hedged but not yet performed transactions.

The changes in these reserves are stated in the following table:

	Foreign exchange risk hedging reserve ^(*)			Commodities risk hedging reserve ^(*)
€ thousands	Amount before tax	Tax	Amount aftertax	Amount before tax	Tax	Amount aftertax
Reserve as of March 31, 2020	(2,073)	1,127	(946)	(363)	53	(310)
Increase/(decrease)	(1,524)	(399)	(1,923)	(50)	17	(33)
Currency translation differences	511	(61)	450	16	3	19
Release to income statement	3,107	(1,004)	2,103	343	(55)	288
Reserve as of March 31, 2021	21	(337)	(316)	(54)	18	(36)

^(*) 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, 2021, shows a negative balance of Euro 8,805 thousand, due to the recognition during the year of positive actuarial variation of Euro 135 thousand, net of related taxes amounted to Euro 45 thousand.

Other reserves

It includes the other consolidation reserves different from the previous ones and from retained earnings.

In the reporting period, considering the negative results and in order to further strengthen the Group's capital and financial situation, the Parent Company benefited from recapitalisations for a total of Euro 78,940 thousand, first through the intervention of LIXIL Corporation with a capital injection of Euro 10 million and then at the closing of the deal Permasteelisa Group B.V. made a capital injection of Euro 69 million.

Retained earnings

The variation of the period it is due to the loss of the previous period; furthermore, was reported the variation due to the partial disposal of a subsidiary without loss of control, which took place on 30 September 2020.

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. Minority interests includes the variation due to the partial disposal of the equity investment in a subsidiary without loss of control, which took place on 30 September 2020.

30. Amounts payable to banks and other financial creditors

€ thousands	March 31, 2021	March 31, 2020
Amounts payable to banks and other financial creditors non-current
Finance lease liabilities	27,065	25,188
	27,065	25,188
Amounts payable to banks and other financial creditors current
Current portion of finance lease liabilities	12,843	13,838
Bank current accounts, advances and other short term loans	7	459
	12,850	14,297

The net financial position of the Group as of March 31, 2021 is positive for Euro 96,227 thousand (March 2020: positive balance for Euro 30,487 thousand).

As of March 31, 2021, there are not outstanding loans except for a residual current account overdraft equal to Euro 7 thousand.

Lease liabilities

Lease liabilities at March 31, 2021 amount to Euro 39,908 thousand and relate to the accounting of liabilities based on the IFRS16 - Leases standard. At March 31, 2020 the amount for lease liabilities was equal to Euro 39,026 thousand.

The present value of future payments for leasing contracts, is made up as follows:

€ thousands	March 31, 2021	March 31, 2020
Lease liabilities less than 1 year	12,858	13,838
Lease liabilities between 1 and 5 years	23,338	21,142
Lease liabilities exceeding 5 years	3,712	4,046
Total Lease Liabilities	39,908	39,026

Net financial position

To complete the information reported in these notes, the Group financial position as of March 31, 2021 is reported below, compared to the previous year.

€ thousands	March 31, 2021	March 31, 2020
Cash and cash equivalents	136,142	69,972
Amounts payables to bank	(7)	(459)
Shareholder's loan	0	0
Finance lease liabilities	(12,843)	(13,838)
Net financial position - short term	123,292	55,675
Finance lease liabilities	(27,065)	(25,188)
Shareholder's loan	0	0
Net financial position - medium/long term	(27,065)	(25,188)
Total net financial position	96,227	30,487

As already described above, as of March 31, 2021 the Group has not any outstanding loans nor towards the Parent Company nor towards banks or other financial institute, except for liabilities relating to leases.

The average rates recorded by the Group during the period are as follows:

a) current account deposits and bank deposits: 0.14% (March 2020: 0.37%);

b) short-term loans: not reported because there were no these kind of loans during the year (March 2020: 1.29%);

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, 2020);

d) shareholder loan: not reported because there were no these kind of loans during the year (same as at March 31, 2020);

e) liabilities on financial leases: 1.07% (March 2020: 0.91%).

31. Severance indemnity fund

In accordance with Italian regulations, the amount due to each employee accrues on the basis of the service performed and must be paid when the employee leaves the company. The payment due upon termination of the employment relationship is calculated on the basis of its duration and the taxable salary of each employee. The liability, revalued annually based upon the official cost of living index and legal interest, is not associated with any condition or accrual period, or any funding obligation; therefore, there are no assets at the service of the fund.

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, 2021	March 31, 2020
Severance indemnity fund Permasteelisa S.p.A.	2,697	2,825
Severance indemnity fund Consorzio Marine Project Solutions S.c.a.r.l.	58	49
	2,755	2,874

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

€ thousands	March 31, 2021	March 31, 2020
Present value of the defined benefit obligation	2,697	2,825
Unrecognised actuarial gains and losses	0	0
Recognised liability for severance indemnity fund	2,697	2,825

Movements of the severance indemnity fund

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning of the period	2,825	3,225
Acquisition increases	0	0
Net variation of the period	(128)	(400)
Net recognised liability as of March 31	2,697	2,825

The severance indemnity fund net variation is detailed in the following table:

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning of the period	2,825	3,225
Other movements	0	0
Payments	(291)	(335)
Expenses recognized in the income statement	38	58
Actuarial (Profit)/Loss	125	(123)
Net recognised liability as of March 31	2,697	2,825

The item "Expense recognized in the income statement' included in the previous table is composed as follows:

€ thousands	March 31, 2021	March 31, 2020
Current service costs	0	0
Interest on obligation	38	58
	38	58

Principal economic actuarial assumption:

	March 31, 2021	March 31, 2020
Discount rate as of March 31	0.72%	1.42%
Inflation rate	0.80%	1.20%
Future salary increase rate	2.10%	2.40%

The demographic technical data used is shown below:

Probability of death	Mortality table RG48 published by the State General Accounting Tables
Probability of invalidity	INPS Tables split into age and gender
Probability of retirement	100% upon achieving AGO requirements

Set out below is the sensitivity analysis for each actuarial circumstance for the purposes of determining the year-end liability amount; the same shows the effects, expressed in absolute terms, of variations of the actuarial circumstances reasonably possible at that date.

Variations in actuarial assumptions

	March 31, 2021	March 31, 2020
Inflation rate
+0.25 p.p.	2,773	2,842
-0.25 p.p.	2,690	2,799
Discount rate
+0.25 p.p.	2,665	2,786
-0.25 p.p.	2,799	2,856

The average financial duration of the obligation is 10.4 years.

32. Pension funds and other employee benefits

€ thousands	March 31, 2021	March 31, 2020
Pension funds	26,628	27,515
Other employee benefits	2,093	2,403
	28,721	29,918

Movements of the severance indemnity fund

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning of the period	29,918	28,719
Net variation of the period	(1,197)	1,199
Net recognised liability as of March 31	28,721	29,918

Pension funds

€ thousands	March 31, 2021	March 31, 2020
Gartner GmbH pension fund	24,904	25,817
Other minor pension funds	1,724	1,698
	26,628	27,515

Gartner GmbH pension fund movements

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning of the period	25,817	24,404
Net variation of the period	(913)	1,413
Net recognised liability as of March 31	24,904	25,817

The net variation of Gartner GmbH pension fund is detailed in the following table

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning of the period	25,817	24,404
Transfer from not consolidated subsidiaries	0	0
Payments	(1,110)	(1,104)
Actuarial gains/ losses	(307)	1,802
Expense recognised in the income statement	504	715
Net recognised liability as of March 31	24,904	25,817

The item "Expense recognized in the income statement' included in the previous table is composed as follows:

€ thousands	March 31, 2021	March 31, 2020
Current service costs	277	262
Interest on obligation	227	453
	504	715

Principal economic actuarial assumption:

	March 31, 2021	March 31, 2020
Discount rate as of March 31	1.05%	0.90%
Inflation rate	1.00%	1.00%
Future salary increase rate	0.00%	0.00%

Variations in actuarial assumptions

	March 31, 2021	March 31, 2020
Inflation rate
+1 p.p.	28,073	29,161
-1 p.p.	22,258	25,817
Discount rate
+1 p.p.	21,715	22,409
-1 p.p.	28,943	30,159

The average financial duration of the obligation is 14 years.

Other employee benefits

€ thousands	March 31, 2021	March 31, 2020
Dutch "Jubilee" fund	402	388
Other funds	1,691	2,015
	2,093	2,403

Other employee benefits movements

€ thousands	March 31, 2021	March 31, 2020
Net recognised liability at the beginning	2,403	2,652
Net variation of the period	(310)	(249)
Net recognised liability as of March 31	2,093	2,403

33. Provisions for risks and charges

€ thousands	Warranty provision	Provision for risks on ongoing jobs	Provision for tax risks	Other provision	Total
Balance as of April 1, 2019	23,387	13,479	1,668	9,016	47,550
Reclassifications	1,129	(4,200)		(6,519)	(9,590)
Net provisions during the year	18,024	3,190	2,901	36,992	61,107
Provisions used during the year	(17,541)	(22)	(1,074)	(4,107)	(22,744)
Exchange rate differences on translation	151	188	2	278	619
Transfer from "Assets held for sale"	(697)				(697)
Balance as of March 31, 2020	24,453	12,635	3,497	35,660	76,245

€ thousands	Warranty provision	Provision for risks on ongoing jobs	Provision for tax risks	Other provision	Total
Balance as of April 1, 2020	24,453	12,635	3,497	35,660	76,245
Transfer from "Assets held for sale"	697
Balance as of April 1, 2020	25,150	12,635	3,497	35,660	76,942
Reclassifications	(75)	(1,215)		(4,682)	(5,972)
Net provisions during the year	18,287	(3,973)	383	9,111	23,808
Provisions used during the year	(6,383)	(64)		(549)	(6,996)
Exchange rate differences on translation	(554)	(354)	(220)	(1,257)	(2,385)
Disposals from assets held for sale	(670)				(670)
Balance as of March 31, 2021	35,755	7,029	3,660	38,283	84,727

Warranty provision

A warranty provision is booked in the Financial Statement based on an historical trend analysis of warranty costs incurred in the previous years. Such provision is done for all jobs subject to a fixed warranty period. As already described above in note 9 ("Provision for warranties"), change of the period is mainly due to the European area and Middle Eastern area, depending on the provision and uses made in the period.

Provision for risks on ongoing jobs

The decrease of the provision during the year is mainly due to releases in the Asian area.

Provision for tax risks

The provision for tax risks, substantially unchanged during the year, refers to tax risks relating to the Middle East area.

Other provisions

The amount refers to provisions made for risks considered probable in ongoing legal proceedings. The item "Provisions made during the year" is mainly due to provisions made in the European area for Euro 5.3 million, while in the American area, following the conclusion of a legal case, there were releases for Euro 4.2 million for the portion of the fund exceeding the related disbursement, while the utilization portion, for Euro 4.3 million, was included in the item "reclassifications" since it was shown in the income statement to offset the higher costs for legal disputes (included in "Costs for services and use of third party assets" in Note 5). The item includes also net provisions for restructuring costs for Euro 6.7 million related to the Group Restructuring Plan.

As part of its business activities, the Group is a party to numerous proceedings, both in and out of court, mainly against customers and suppliers. With its own dedicated professional resources and with the support of external professionals, the Group protects its positions in the management of these disputes. The contingent liabilities deriving from these proceedings are periodically evaluated on the basis of the opinion expressed by the appointed professionals as well as the prudent assessment of the Directors, and the provisions made reflect the situations for which it is considered probable that the Group will incur charges. There are, however, a significant number of disputes in relation to which it is believed that such conditions do not exist, in view of the initial stage of the proceedings or the uncertainties associated with their outcome, which do not allow a reliable estimate to be made. For further details on the contingent liabilities connected with these proceedings, reference should be made to note 42.

34. Trade payables to third parties

€ thousands	March 31, 2021	March 31, 2020
Trade payables to third parties	162,633	212,487
	162,633	212,487

As of March 31, 2021, trade payables include invoices to be received for Euro 70,239 thousand (March 2020: Euro 73,004 thousand) and retentions for Euro 15,054 thousand (March 2020: Euro 17,730 thousand), expiring mostly within the year ended March 2022.

35. Trade payables to not consolidated and associated subsidiaries

€ thousands	March 31, 2021	March 31, 2020
Trade payables to not consolidated and associated subsidiaries Consorzio Cladding Technology Italia	0	1
	0	1

36. Income tax payables

€ thousands	March 31, 2021	March 31, 2020
Tax income payables	4,049	2,664
	4,049	2,664

The income tax payables, net of the income tax receivables reported under note 25, show a net credit position for Euro 7,937 thousand while in the previous year there was a net credit position for Euro 10,068 thousand. The variation is due to the losses accounted in the period that reduced the tax impact.

The negative difference for Euro 2,131 thousand is mainly due to the income taxes paid during the reporting period April 1, 2020 - March 31, 2021 in North Europe.

37. Other current liabilities

€ thousands	March 31, 2021	March 31, 2020
VAT payables	8,734	7,016
Employees taxation payables	2,673	3,039
Other indirect taxes payables	83	133
Amounts payable to social agencies	1,912	2,636
Amounts payable to employees	40,458	55,617
Other liabilities	16,247	14,982
Accrued liabilities and deferred income	4,192	5,459
	74,299	88,882

The caption "Other liabilities" includes:

€ thousands	March 31, 2021	March 31, 2020
Forward liabilities	10,732	12,982
Other liabilities	5,515	2,000
	16,247	14,982

Forward liabilities are referred for Euro 10,672 thousand to foreign currency transactions (March 2020: Euro 12,938 thousand) and for Euro 61 thousand to commodity transactions (March 2020: Euro 44 thousand).

38. Non-current liabilities held for sale

As at March 31, 2021 there are no non-current liabilities held for sale. Last year this item referred to the subsidiary Permasteelisa Japan KK whose sale to Lixil Corporation took place on June 26, 2020, as set out in Note 1.

39. Risk management

Exposure to credit risk, interest rate, commodity price and currency risks arises in the normal course of the Company's business. It should also be noted that the uncertainties of the macroeconomic and sector context deriving from the Covid-19 pandemic and the discontinuities that the Group is facing given the restructuring phase in which it is engaged lead to an increase in the overall risk level.

Historically, derivative financial instruments are used by the Company to hedge its exposure to fluctuations in foreign exchange rates.

The Group also hedges itself against commodity price risks.

Credit risk

Credit risk is the risk that arises when a customer or counterparty may fail to meet his commitments when they become due and cause the Group to incur in a financial loss. The Group's primary exposure to credit risk arises from its contract receivables. The Group 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 Group'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 Group with exposure to credit risk include cash and cash equivalents and derivative financial instruments to hedge the Group exposure to foreign currency risk. Cash and cash equivalents are held with banks with high credit ratings. Transactions involving derivative financial instruments are allowed only with counterparties that are of high credit quality. As such, the management does not expect any counterparty to fail to meet their commitments.

As of the balance sheet publication date, there were no significant concentrations of credit risk on specific customers or on specific geographical areas. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments, in the statement of financial position.

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

€ thousands	March 31, 2021	March 31, 2020
Europe	113,599	130,499
Asia	45,087	59,599
Australia	419	373
North America	109,825	142,263
Central America	51	787
South America	1	1
Middle East	78,747	87,002
North Africa	91	91
Total gross receivables broken down by geographical area	347,820	420,615
Provision for bad debts	(78,592)	(80,815)
Exchange rate differences on translation	(3,112)	1,820
Total net receivables broken down by geographical area	266,116	341,620

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

€ thousands	Gross receivables March 2021	Provision for bad debts March 2021	Net receivables March 2021	Gross receivables March 2020	Provision for bad debts March 2020	Net receivables March 2020
Not past due	237,675	(40,874)	196,801	310,060	(47,978)	262,082
Past due 0-180 days	61,804	(5,756)	56,048	48,461	(6,501)	41,960
Past due 181-365 days	10,200	(3,225)	6,975	21,902	(358)	21,544
More than one year	38,141	(28,737)	9,404	40,192	(25,978)	14,214
Total	347,820	(78,592)	269,228	420,615	(80,815)	339,800
Exchange rate adjustment			(3,112)			1,820
			266,116			341,620

As of March 31, 2021 the receivables that had not yet reached the expiry date, net of the Provision for bad debts, amounted to 73% of the total (March 2020: 77%) and the credit due for over one year amounted to 3% (March 2020: 4%).

Interest rate risk

The Group's exposure to changes in interest rates is mainly related to cash and cash equivalents, also taking into account the absence of payables to credit institutions. Interest rate risk is actively managed centrally in order to ensure that interest payments are within acceptable levels consistent with the Group's strategies. The Group does not normally use derivative instruments to hedge the interest rate risk.

Sensitivity analysis

The impact of a variation of 100 basis points in interest rates on the year-end date would have determined an increase (decrease) of the net equity and of the results for the period for the amounts shown below. The analysis was done assuming that all the other variables, in particular the exchange rates of foreign currencies, remain stable.

Considering that the reference interest rates (mainly Euribor 3 months) both during the fiscal year 2021 and the fiscal year 2020 were negative, and considering the variable interest rate loans negotiated by the Group are floored at zero, a reduction of 100 basis point on reference rates currently does not entail any positive effect on the result of the period and on the net equity. On the same basis has been done also the analysis of previous year.

During the fiscal 2021 there are no variable rate loans, so this analysis it is not applicable; below there are reported only the data of previous year.

€ thousands	Result for the period		Net equity
March 31, 2020	+100 bp	- 100 bp	+100 bp	- 100 bp
Variable rate loans	(241)	0	(241)	0
	(241)	0	(241)	0

Please note that the Group does not have any fixed rate loans ongoing.

Liquidity risk

The liquidity management within the Group policies seeks the current projects' financial independence. This may be conditioned by changes in temporal dynamics, currency or other restrictions in the countries where the Group operates. Permasteelisa Group's financial position has been affected by the losses incurred in the last financial years, which have been covered with the shareholders' capital injections which allowed the year to end with a positive cash balance of approximately Euro 136 million - gross of the effect deriving from the first application of IFRS 16.

The Group will have adequate financial resources to meet the needs deriving from the continuation of operations and to support the restructuring actions undertaken. It should also be noted that the uncertainties connected to the continuation of the Covid-19 pandemic, together with the assumptions described in the "basis of preparation" paragraph, entail a significant variability of the results with the consequent difficulties in developing reliable forecasts.

Policies and procedures have been established to monitor and control liquidity, both at central level and individual subsidiary level, on a daily basis adopting a cash flow management approach.

The table below shows the detail of the future contractual flows of financial liabilities held by the Group, broken down into financial liabilities not associated to derivative instruments and financial liabilities associated to derivative instruments.

Exposure to the liquidity risk associated to financial liabilities other than derivative instruments

€ thousands	March 31, 2021
	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	162,633	162,633	152,902	5,115	4,616
Financial leasing payables	39,908	39,908	12,858	23,338	3,712
Other financial payables	0	0	0	0	0
Amounts payables to banks	7	7	7	0	0
Total booked value	202,548	202,548	165,767	28,453	8,328

€ thousands	March 31, 2020
	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	212,487	212,487	202,875	6,772	2,840
Financial leasing payables	39,026	39,026	13,838	21,142	4,046
Other financial payables	0	0	0	0	0
Amounts payables to banks	459	459	459	0	0
Total booked value	251,972	251,972	217,172	27,914	6,886

Exposure to the liquidity risk associated to financial liabilities related to derivative instruments

	March 31, 2021
€ thousands	Carrying value	Contractual Cash Flows	Contractual Cash Flows less than 1 year	Contractual Cash Flows between 1 and 5 years	Contractual Cash Flows exceeding 5 years
Assets (-) / Liabilities (+)
Assets from fair-value valuation on forward contracts on currencies	(6,927)	(6,927)	(6,927)	0	0
- in flows		(254,969)	(254,969)
- out flows		248,042	248,042
Liabilities from fair-value valuation on forward contracts on currencies	10,671	10,671	10,671	0	0
- in flows		(473,551)	(473,551)
- out flows		484,222	484,222
Assets from fair-value valuation of commodities	(8)	(8)	(8)	0	0
- in flows		(95)	(95)
- out flows		87	87
Liabilities from fair-value valuation of commodities	61	61	61	0	0
- in flows		(632)	(632)
- out flows		693	693
Total booked value	3,797	3,797	3,797	0	0

	March 31, 2020
€ thousands	Carrying value	Contractual Cash Flows	Contractual Cash Flows less than 1 year	Contractual Cash Flows between 1 and 5 years	Contractual Cash Flows exceeding 5 years
Assets (-) / Liabilities (+)
Assets from fair-value valuation on forward contracts on currencies	(13,778)	(13,778)	(13,778)	0	0
- in flows		(346,260)	(346,260)
- out flows		332,482	332,482
	12,938	12,938	12,938	0	0
Liabilities from fair-value valuation on forward contracts on currencies		(452,015)	(452,015)
- in flows		464,953	464,953
- out flows
Assets from fair-value valuation of commodities	(5)	(5)	(5)	0	0
- in flows		(1,213)	(1,213)
- out flows		1,208	1,208
Liabilities from fair-value valuation of commodities	44	44	44	0	0
- in flows		(316)	(316)
- out flows		360	360
Total booked value	(801)	(801)	(801)	0	0

Please note the value of assets and liabilities shown in the tables above are provided for information only; indeed, the derivative contracts do not in fact lead to the actual outlay or collection of the stated amounts which, on the contrary, are subject to the settlement of the difference between the two cash flows.

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 136,142 thousand and Euro 69,972 thousand respectively as of March 31, 2021 and as of March 31, 2020;

b) trade receivables for Euro 266,116 thousand and Euro 341,620 thousand respectively as of March 31, 2021 and as of March 31, 2020.

Liquidity risk exposure relating to contingent liabilities

With reference to the liquidity risk relating to potential liabilities, please refer to Note 42 " Contingent assets and liabilities " where the amounts relating to the guarantees issued by the Group in favor of third parties are shown, in particular in favor of customers for the proper execution of the works (so-called performance bonds).

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, Hong Kong dollars and Chinese yuan.

Generally, the contracts are hedged for the total amount denominated in foreign currency or for a percentage higher than 90%; see paragraph "g" of accounting principles for a detailed description of the way used by the Group to hedge its job contracts in foreign currency.

In respect to monetary assets and liabilities held in foreign currency other that those related to the contracts, the Group's policy consists in minimizing the net exposure to change in currency rates by specific medium/short-term forward exchange contracts, rolled over at maturity if necessary.

A 10% decrease of the Euro against the following currencies as of March 31, 2021 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, 2021
GBP	79	79
USD	1,031	1,031
HKD	(259)	(259)
SGD	(530)	(530)
THB	23	23
AUD	33	33
CNY	(837)	(837)
Others	177	177
	(283)	(283)

€ thousands	Result for the period	Net equity
March 31, 2020
GBP	(525)	(525)
USD	2,866	2,866
HKD	(430)	(430)
SGD	(996)	(996)
THB	(71)	(71)
AUD	(16)	(16)
CNY	(394)	(394)
Others	87	87
	521	521

A 10% increase of the Euro against the following currencies as of March 31, 2021 and as of March 31, 2020 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, 2021 :

€ thousands	Note	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)		6,935		6,935
Cash and cash equivalents	(27)		136,142		136,142
Total assets			143,077		143,077
Financial liabilities at fair value through profit or loss	(37)		10,732		10,732
Amounts payables to banks and other financial creditors (current)	(30)		12,850		12,850
Amounts payables to banks and other financial creditors (non current)	(30)		27,065		27,065
Total liabilities			50,647		50,647

In the reporting period April 1, 2020 - March 31, 2021, 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 "Trade receivables" and "Other current assets" and of "Trade payables" and "Other current liabilities" approximates their fair value and are categorized in Level 2.

The main methods and assumptions used to estimate the "fair value" of the assets and liabilities recorded in the statement of financial position according to this principle or for which its disclosure is requested by the accounting principles in the notes, are as follows.

Not consolidated subsidiaries

As of March 31, 2021, 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 financial leases shown at March 31, 2020 are related to the application of the new IFRS16 standard starting from 1 ^st April 2020.

Trade receivables and payables and other receivables and payables

For receivables and payables with expiring date less than one year, their carrying amount is considered to approximate their fair value.

All the other receivables and payables with expiring date greater than one year are discounted to determine their fair value, except for those related to contracts monies retention; the Group considers that retentions do not represent in any way a financing transaction with the customer due to the fact that the payments terms are beyond one year, since retentions, in the different geographical areas in which the Group operates, are within the normal applied trade conditions; consequently there is no necessity to apply any discounting.

As of March 31, 2021 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:

Forward contracts

€ thousands	March 31, 2021	March 31, 2020
Commitments for forward foreign exchange contracts	726,643	820,887
Commitments for forward contracts on commodities	780	3,471
	727,423	824,358
Commitments for forward foreign exchange contracts (buy)	294,070	376,767
Commitments for forward foreign exchange contracts (sell)	432,573	444,120
	726,643	820,887
Commitments for forward contracts on commodities (buy)	87	3,471
Commitments for forward contracts on commodities (sell)	693	0
	780	3,471

As described in the section on the accounting standards, hedging derivative instruments on foreign currencies and commodities are measured at their "fair value".

As of March 31, 2021, the measurement at the "fair value" of currency hedging instruments results in a profit for Euro 6,927 thousand (March 2020: Euro 13,778 thousand) and a loss for Euro 10,671 thousand (March 2020: Euro 12,938 thousand), booked respectively under the items "forward assets" (note 26) and "forward liabilities" (note 37). Note that these amounts refer respectively for Euro 2,928 thousand (March 2020: Euro 3,321 thousand) and Euro 4,123 thousand (March 2020: Euro 2,541 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 8 thousand (March 2020: Euro 5 thousand) and a loss for Euro 61 thousand (March 2020: Euro 44 thousand), entered respectively under the items "forward assets" (note 26) and "forward liabilities" (note 37).

Other commitments

As of March 31, 2021 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 627.6 million (March 2020: Euro 996.6 million) and issued by Credit Institutes and Insurance Companies to clients for the proper completion of works (Euro 450.8 million), contractual advances (Euro 132.6 million) and retentions withheld as guarantee (Euro 44.2 million).
―	Guarantees issued following VAT repayment requests issued by Credit Institutions and Insurance Companies: for the value of Euro 3.9 million (March 2020: Euro 4.0 million).
―	Other guarantees for a total of Euro 14.9 million (March 2020: Euro 11.8 million) 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 105.8 million as of March 31, 2021 (Euro 109.7 million as of March 31, 2020).

For projects completed or in progress, the Group is involved in legal proceedings or disputes with third parties (customers or suppliers/subcontractors) that have not resulted in legal proceedings, for a possible exposure of Euro 40 million.

Based on the information available at the date of preparation of these financial statements and taking into account the assessment elements acquired by the external consultants who assist the Group companies, the result of these disputes cannot be determined, either quantitatively or temporally. It is not considered probable that the Group will incur any liability for these disputes. No amounts have been set aside for liabilities potentially resulting from these disputes.

The settlement of such disputes may be complex and concluded in the long term. To avoid compromising future stages of legal proceedings or negotiations with the counterparties, no further details on the existing procedures are provided in this document.

If there are risks considered probable in the outcome of other ongoing legal proceedings, a provision has been set aside by the Group as described in note 33. This provision is not included in the exposure for contingent liabilities mentioned above for Euro 40 million.

43. Transactions with related parties

Relationships with not consolidated subsidiaries and associated companies

Transactions with related parties, as defined by IAS 24 and carried out during the fiscal year 2021, were of an ordinary nature.

During the reporting period April 1, 2020 - March 31, 2021, the Parent Company and other Group companies did not enter into relationships with non-consolidated subsidiaries.

Other relationships with other related parties in the context of the Permasteelisa Group

The table below shows the operating and financial consequences of a number of relationships entered into during the period by Group companies with related parties, other than those described above. They refer to trade transactions entered into as part of the ordinary management and carried out on an arm's length basis. Amounts are stated in units.

Group Company	Transaction type	Related party	Local Currency	Revenue/ (Cost) in local currency March 31, 2021	Receivable/(Pay able) in local currency March 31, 2021	Revenue/ (Cost) in Euro March 31, 2021
Marine Project Solutions S.c.a r.l.	Purchase of goods and services	Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl)	EURO	(2,464,084.17)	36,532.55	(2,464,084.17)
Marine Project Solutions S.c.a r.l.	Purchase of goods and services on behalf of MPS Norwegian Branch Office	Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl)	EURO	(129,581.57)	0.00	(129,581.57)
Marine Project Solutions S.c.a r.l.	Purchase of goods and services on behalf of MPS France Branch	Metalsigma Tunesi Spa (its Legal Representative Flavio Tunesi is also the Director for the Marine Project Solutions Scarl)	EURO	(422,602.49)	(773.87)	(422,602.49)
Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA	Fees for administrative and accounts support	Leonardo De Mello Biar (Executive Officer of the associate Permasteelisa Do) is Partner of the company RSM Brasil BPO S/S, previously named Acal Consultoria e Auditoria S/S.	BRL	(166,211.59)	0.00	(26,339.19)
Permasteelisa Colombia S.a.s.	Fees for legal, adimistrative, accounts support and legal representation	Camilo Antonio Cortes Guarin (Alternate Legal Representative and Alternate Director of associate Permasteelisa Colombia S.a.s.) is Partner of Dentons Cardenas & Cardenas. Natalia Andrea Davila Alzate (Second Alternate Legal representative of associate Permasteelisa Colombia S.a.s.) is associated member of Dentons Cardenas & Cardenas.	COP	(198,266,807.00)	(43,245,624.00)	(45,975.67)
Permasteelisa Turkey İnşaat Ticaret Limited Şirketi	Fees for accounts and business support	Mert Çetinkaya (Director of associate Permasteelisa Turkey İnşaat Ticaret Limited Şirketi) is also Assistant Auditor of the company Lidya BağımsızDenetim & SMmM A.Ş.	TRY	(96,154.44)	(23,046.06)	(11,200.20)
Permasteelisa Gartner Middle East LLC	Fees for sales support (Abu Dhabi Branch)	The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links Group, holds the 51% of Permasteelisa Gartner Middle East Llc)	AED	(16,250.85)	0.00	(3,791.44)
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	(230,000.00)	0.00	(53,660.65)
Permasteelisa Gartner Middle East LLC	Fees for sales support (Sharjah Branch)	The Links Group Ltd (Links Commercial Brokers LLC, subsidiary of the Links Group, holds the 51% of Permasteelisa Gartner Middle East Llc)	AED	(75,000.00)	0.00	(17,498.04)
Permasteelisa Gartner Qatar LLC	Fees for sales support	Links Facility Services (Permasteelisa Gartner Qatar LLC è detenuta al 51% da Links Facility Services) Links Commercial Brokers WLL (Shareholder of the Company at 51% Permasteelisa Gartner Qatar LLC)	QAR	(219,615.00)	0.00	(51,695.14)
					revenue/receivable	235.00
					(cost)/(payable)	(3,226,428.55)

Group Company	Receivable/(Pay able) in Euro March 31, 2021
Marine Project Solutions S.c.a r.l.	36,532.55
Marine Project Solutions S.c.a r.l.	0.00
Marine Project Solutions S.c.a r.l.	(773.87)
Permasteelisa Do Brazil Construcao, Industria, Comercio LTDA	0.00
Permasteelisa Colombia S.a.s.	(9,891.38)
Permasteelisa Turkey İnşaat Ticaret Limited Şirketi	2,369.77
Permasteelisa Gartner Middle East LLC	0.00
Permasteelisa Gartner Middle East LLC	0.00
Permasteelisa Gartner Middle East LLC	0.00
Permasteelisa Gartner Qatar LLC	0.00
	36,532.55
	(13,035.03)

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.

Transactions with key management personnel

The key management personnel compensations, as defined by IAS 24, are as follows:

€ thousands	March 31, 2021	March 31, 2020
Benefits for salaries, wages, compensations, bonus	8,946	7,927
Post-employment benefits	279	166
Other benefits	375	387
	9,600	8,480

Total remuneration is included in personnel expenses and the breakdown by function is the following:

€ thousands	March 31, 2021	March 31, 2020
General manager	1,982	1,281
Chief executive officer and other members of the Board of Directors	2,970	4,602
Holding function manager	4,648	2,597
	9,600	8,480

It should be noted that the personnel cost figure set out above for the year 2021 includes the cost relating to the transaction bonus recognized for some top managers of the Group and relating to the sale of the Group by the previous shareholder.

While the previous fiscal year includes the cost relating to the exit from the Group of some top managers, which is part of the reorganisation plan.

The transactions carried out during the year are related solely to the contracts regulating their positions within the Group.

44. Fees payable to the independent auditors or audit firm of Group companies

The amount of fees payable to the independent auditors or audit firm of each Group company (Deloitte & Touche S.p.A. which is the main auditor and other local auditors) amounts to Euro 2,125 thousand of which Euro 1,595 thousand for audit services, Euro 368 thousand for tax services and Euro 162 thousand for other services.

The fees of Independent Auditors for the Parent Company amount to Euro 222 thousand of which Euro 169 thousand for fees for the statutory audit and Euro 53 thousand for other audit activities.

45. Significant, non-recurring events and transactions

As already highlighted both in the Management Report and in the Notes to the consolidated financial statements, during the year 2021 the Group has finalized some restructuring actions and launched others, as required by the Turnaround Plan. In particular, the procedures for the sale of a factory in the Netherland were concluded, a China factory was closed and in Italy was initiated the voluntary workforce reduction plan.

Finally, the sale process of the subsidiary Permasteelisa Japan KK was completed.

There are no further significant non-recurring events or transactions to report.

46. Positions or transactions deriving from unconventional and/or unusual operations

With the exception of the transactions listed in Note 45 as significant non-recurring events and transactions, there are no further entries or transactions resulting from unconventional or unusual operations during the year 2021 having any relevance on the operating performance and the financial position of the period for the Group and for the Parent company Permasteelisa S.p.A.

47. Subsequent events

Below is an indication of significant events occurring after March 31, 2021. According to IAS 10 these do not lead to adjustments to the financial statements:

―

On June 2, 2021 the Parent company Permasteelisa S.p.A. has signed a sale agreement - Sale and Purchase Agreement (SPA) - with a German industrial group regarding the sale of the subsidiary Permasteelisa Espana S.A.U, whose execution was subject to the fulfillment of some conditions precedent which were subsequently implemented at the beginning of July 2021.

There were no other significant events after the year end to report.

PERMASTEELISA S.p.A.

Appendix to the Consolidated Financial Statements

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	100.00	Permasteelisa Group B.V.	100.00
Subsidiary companies
Bleu Tech Montreal Inc.	Laval, Quebec (Canada)	100 ^(*)	CAD	100.00	Permasteelisa North America Corp.	100.00
Dongguan Permasteelisa Curtain Wall Co. Ltd. in liquidazione	Guang Dong (R.P.C.)	45,000,000	HKD	95.11	Permasteelisa Pacific Holdings Ltd.	100.00
Global Architectural Co. Ltd.	Chonburi Province (Thailand)	110,000,000	THB	95.10	Permasteelisa Pacific Holdings Ltd.	99.99
Global Wall Malaysia Sdn. Bhd.	Kuala Lumpur (Malaysia)	1,000,000 ^(*)	MYR	66.58	Permasteelisa Pacific Holdings Ltd.	70.00
Josef Gartner & Co. UK Ltd.	London (UK)	20,000	GBP	89.90	Josef Gartner GmbH	100.00
Josef Gartner Curtain Wall (Shanghai) Co. Ltd.	Shanghai (R.P.C.)	10,000,000	CNY	71.33	Permasteelisa Pacific Holdings Ltd.	75.00
Josef Gartner Curtain Wall (Suzhou) Co. Ltd.	Taicang City (R.P.C.)	22,000,000	CNY	95.11	Permasteelisa Pacific Holdings Ltd.	100.00
Josef Gartner Switzerland AG	Arlesheim (Switzerland)	100,000	CHF	89.90	Josef Gartner GmbH	100.00
Josef Gartner GmbH	Gundelfingen (Germany)	10,000,000	EURO	89.90	Permasteelisa S.p.A.	89.90
					ACRIII Construction Holdings B.V.	10.10
					Josef Gartner GmbH	99.00
OOO Josef Gartner	Moscow (Russia)	5,383,800	RUB	89.90	Josef Gartner Switzerland AG	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 (Brasil)				Permasteelisa S.p.A.	99.00
		30,000	BRL	100.00	Permasteelisa North America Corp.	1.00
Permasteelisa Espana S.A.U.	Madrid (Spain)	174,290	EURO	100.00	Permasteelisa S.p.A.	100.00
Permasteelisa France S.a.s.	Puteaux (France)	1,644,336	EURO	100.00	Permasteelisa S.p.A.	100.00
Permasteelisa Gartner	Dubai (United Arabian Emirates)	300,000	AED	95,05	Josef Gartner GmbH	49.00
Middle East LLC					Permasteelisa S.p.A.	51.00
Permasteelisa Gartner Qatar LLC	Doha (Qatar)	200,000	QAR	87.20	Josef Gartner GmbH	49.00 ^(**)
					Permasteelisa Gartner Qatar Llc	5.00
Permasteelisa Gartner Saudi Arabia LLC	Riyadh (Saudi Arabia)	300,000	SAR	94.79	Permasteelisa Gartner Middle East Llc	95.00
Permasteelisa Gartner Hong Kong Limited	Hong Kong (R.P.C.)	2,000,000	HKD	95.11	Permasteelisa Pacific Holdings Ltd.	100.00
Permasteelisa Ireland Ltd	Dublin (Ireland)	50,000	EURO	100.00	Permasteelisa S.p.A.	100.00
					Permasteelisa Pacific Holdings Ltd.	99.91
Permasteelisa (India) Private Limited	Bangalore (India)	3,183,855,700 ^(*)	INR	95.04	Permasteelisa Hong Kong Limited	0.0067
Permasteelisa Macau	Macao (R.P.C.)	100,000	MOP	95.11	Permasteelisa Hong	99.00
Limited					Kong Limited
					Permasteelisa Pacific Holdings Ltd	1.00
Permasteelisa Mongolia Llc	Ulaanbaatar (Mongolia)	12,014,600,000	MNT	95.11	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	Singapore	120,048,806	SGD	95.11	Permasteelisa S.p.A.	54.34
Holdings Ltd.					Josef Gartner GmbH	45.35
Permasteelisa Philippines Inc.	Pasig City (Philippines)	10,200,000	PHP	95.10	Permasteelisa Pacific Holdings Ltd	99.99
Permasteelisa Projects (Thailand) Ltd	Chonburi Province (Thailand)	4,000,000	THB	46.60	Global Architectural Co. Ltd	48.998
Permasteelisa PTY Limited	Chipping Norton (Australia)	15,434,956	AUD	95.11	Permasteelisa Pacific Holdings Ltd.	54.17
					Permasteelisa Hong Kong Limited	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 Turkey İnşaat Tіcaret Limited Şirketi	Smirne (Turkey)	22,275	TRY	100.00	Permasteelisa S.p.A.	100.00
Permasteelisa UK Ltd.	London (UK)	33,290,350	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 (The Netherlands)	3,040,326	EURO	100.00	Permasteelisa S.p.A.	100.00

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

List of jointly controlled subsidiaries:

COMPANY NAME	REGISTERED OFFICE	SHARE CAPITAL	CURRENCY	% OF CONSOLIDATION	OWNERSHIP	% OWNERSHIP REGISTRATION
Marine Project Solutions S.c.a.r.l	Vittorio Veneto (Italy)	366,500 ^(*)	EURO	100	Permasteelisa S.p.A.	55.50

^(*) It refers to the paid-up capital

List of associated companies:

COMPANY NAME	REGISTERED OFFICE	SHARE CAPITAL	CURRENCY	% OF CONSOLIDATION	OWNERSHIP
Interoxyd AG	Altenrhein (Switzerland)	50,000	CHF	Scheldebouw B.V.	18.00

On June 26, 2020, the company Permasteelisa Pacific Holdings Ltd has completed the sale of entire stake (99,93%) of the shares of Permasteelisa Japan KK to LIXIL Corporation.

Subsequently, on August 21, 2020, the company Permasteelisa PTY Limited has finalized the sale to LIXIL Corporation of the entire stake (0.07%) held in the company Permasteelisa Japan KK.

Consequently, Permasteelisa Japan KK left the Permasteelisa Group.

On September 30, 2020, Permasteelisa S.p.A. has finalized the sale of 10.1% of the participation held in Josef Gartner GmbH to the Dutch company ACR III Construction Holdings B.V., remaining the owner of an investment equal to 89.9%.

On February 16, 2021, Permasteelisa S.p.A. has completed the purchase of 51% of the shares of Permasteelisa Gartner Middle East LLC. The company is now wholly owned by the Permasteelisa Group.

On March 23, 2021, Scheldebouw B.V. has sold 100% of the investment held in Scheldebouw (UK) Ltd. to Permasteelisa International Holding B.V.

PERMASTEELISA S.p.A.

Auditors' report on the Consolidated and Statutory Financial Statements

Deloitte & Touche S.p.A.

Via Fratelli Bandiera., 3

31100 Treviso

Italia

Tel: +39 0422 587.5

Fax: +39 0422 587812

www.deloitte.it

INDEPENDENT AUDITOR'S REPORT

PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

To the Sole Shareholder of Permasteelisa S.p.A.

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of Permasteelisa S.p.A. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 March 2021, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 March 2021, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of Permasteelisa S.p.A. (the "Company") in accordance with the ethical requirements applicable under Italian law to the audit of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

The consolidated financial statements at 31 March 2021 show a loss of Euro 66 million, a consolidated net equity of Euro 124 million and a positive net financial position equal to Euro 96 million.

Losses incurred in the period, following those incurred in prior years, as well as the increased uncertainty determined by the COVID19 pandemic and the consequent deterioration of the general economic conditions, made it necessary for the Directors to perform a careful assessment of the going concern assumption.

In assessing the appropriateness of this assumption for the preparation on the consolidated financial statements, the Directors specify they considered the economic and financial results of the Group for the fiscal year ended on 31 March 2021 that, although still negative, improved compared to the prior year and include the effects of the restructuring actions commenced and of capital injections received during the fiscal year, totalling Euro 79 million, that allowed to cover the losses incurred in the period.

The Directors report that the projections included in the business plan prepared with regards to Permasteelisa Group for the period 2022-2025 (the "Business Plan"), used for the evaluations made in preparing the financial statements and primarily for the impairment test, are based on assumptions about the future performance of Group's companies which are subject to material uncertainty, due to their nature but also to the specific characteristics of the sector in which the Group operates and to the disruption elements enclosed in the challenges the Group is facing to restore profitability. In particular, significant uncertainty traits affect the projections with regards to the order intake objectives as well as the progressive improvement of projects' performance, which are further increased by the uncertainty connected to the current market condition, and it is therefore possible that differences, potentially of significant amount, from forecast figures taken into consideration arise in future fiscal years, which could lead to adjustments in carrying values of Group assets.

Furthermore, the Directors describe that the preparation of the financial statements required them to perform other evaluations, based upon estimates subject to material uncertainty and more specifically connected to the recoverability of deferred tax assets and receivables, to the valuation of work-inprogress, of contingent liabilities relating to warranty and to projects' risks as well as to outcome of outstanding disputes.

Finally, the Directors state that cash balances of Permasteelisa Group, equal to Euro 136 million as of March 31, 2021, appear coherent with the short term cash needs foreseen within the Business Plan and they therefore deem Permasteelisa Group has sufficient resources to meet the financial needs expected in the foreseeable future, deriving from both the operations and the restructuring actions already started, even in case of potential reductions in the value of production which might derive from the continuance of the current pandemic emergency. On the basis of the above considerations, the Directors conclude that they have deemed appropriate the adoption of the going concern assumption in the preparation of the consolidated financial statements and that they consider, in adopting this assumption, the evaluations made with reference to the aforementioned captions are reasonable, based on the information currently available.

Our opinion is not modified in respect of above mentioned matters.

Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated Financial Statements

The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and, within the terms established by law, for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they have identified the existence of the conditions for the liquidation of the Company or the termination of the business or have no realistic alternatives to such choices.

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

―	Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
―	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
―	Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
―	Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
―	Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
―	Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Opinion pursuant to art. 14 paragraph 2 (e) of Legislative Decree 39/10

The Directors of Permasteelisa S.p.A. are responsible for the preparation of the report on operations of Permasteelisa Group as at 31 March 2021, including its consistency with the related consolidated financial statements and its compliance with the law.

We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to express an opinion on the consistency of the report on operations with the consolidated financial statements of Permasteelisa Group as at 31 March 2021 and on its compliance with the law, as well as to make a statement about any material misstatement.

In our opinion, the above-mentioned report on operations is consistent with the consolidated financial statements of Permasteelisa Group as at 31 March 2021 and is prepared in accordance with the law.

With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10, made on the basis of the knowledge and understanding of the entity and of the related context acquired during the audit, we have nothing to report.

Treviso, Italy, 27 July 2021

DELOITTE & TOUCHE S.p.A.

Signed by Barbara Moscardi, Partner

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