Enovis (ENOV) 8-K/A Consolidated financial statements restated as at 31 December 2022

Exhibit 99.1

Consolidated financial statements restated as at 31 December 2022

Contents

Consolidated financial statements restated as at 31 December 2022 of the Limacorporate Group	3
Notes to the Consolidated financial statements restated as at 31 December 2022	8
Other information	48

2022 2

Consolidated financial statements restated as at 31 December 2022 of the Limacorporate Group

Statement of financial position

(€‘000)
	Note			31/12/2022 restated			31/12/2021 restated			01/01/2021
ASSETS
Non-current assets
Other intangible assets		[3.1	]		58,234			53,595			44,477
Goodwill		[3.2	]		384,216			398,305			396,900
Property, plant and equipment		[3.3	]		79,837			81,773			85,288
Equity investments		[3.4	]		2			2			402
Deferred tax assets		[3.5	]		31,709			33,462			31,895
Other non-current assets		[3.6	]		861			705			663
Total non-current assets					554,859			567,843			559,625
Current assets
Inventories		[3.7	]		86,728			87,421			84,166
Trade receivables		[3.8	]		70,161			66,891			63,070
Current tax assets		[3.9	]		2,087			2,554			4,361
Other current assets		[3.10	]		14,192			11,247			11,469
Cash and cash equivalents		[3.11	]		25,920			21,503			26,273
Total current assets					199,088			189,617			189,340
TOTAL ASSETS					753,947			757,461			748,965
EQUITY AND LIABILITIES
Equity
Share capital		[3.12	]		9,868			9,868			9,868
Share premium reserve		[3.12	]		14,425			14,425			14,425
Other reserves		[3.12	]		323,510			317,570			310,762
Retained earnings (accumulated deficit)		[3.12	]		(21,966	)		(18,862	)		(6,380	)
Profit (loss) for the year		[3.12	]		(19,273	)		(2,539	)		(12,482	)
Total equity attributable to the owners of the parent					306,564			320,463			316,194
Total equity					306,564			320,463			316,194
Non-current liabilities
Non-current financial liabilities		[3.15	]		10,165			283,573			287,407
Employee benefits		[3.14	]		1,296			1,442			1,421
Deferred tax liabilities		[3.5	]		19,275			17,296			12,986
Provisions for risks and charges		[3.13	]		17,156			15,314			12,847
Other non-current liabilities		[3.16	]		649			5,250			5,476
Total non-current liabilities					48,541			322,875			320,137
Current liabilities
Current financial liabilities		[3.15	]		336,659			61,536			61,156
Trade payables		[3.17	]		36,564			32,343			28,941
Current tax liabilities		[3.18	]		877			202			491
Other current liabilities		[3.19	]		24,742			20,041			22,047
Total current liabilities					398,842			114,123			112,635
TOTAL EQUITY AND LIABILITIES					753,947			757,461			748,965

2022 3

Income statement

(€‘000)
	Note			2022 restated			2021 restated
Revenue		[3.20	]		245,669			210,543
Other revenues and income		[3.20	]		5,798			3,973
Total revenue and income					251,467			214,517
Raw materials, consumables, supplies and goods		[3.21	]		(56,391	)		(53,530	)
Services		[3.22	]		(81,645	)		(69,910	)
Change in w.i.p., semi-finished products and finished goods		[3.23	]		(887	)		2,058
Personnel expenses		[3.24	]		(76,858	)		(60,773	)
Amortisation and Depreciation		[3.25	]		(35,408	)		(32,517	)
Impairment losses on trade receivables		[3.25	]		(502	)		(429	)
Impairment losses on fixed assets		[3.25	]		(16,152	)		(209	)
Other operating costs		[3.26	]		(1,857	)		(1,509	)
Internal work capitalised		[3.27	]		13,532			16,250
Operating costs					(256,167	)		(200,570	)
Operating profit					(4,700	)		13,947
Financial income		[3.28	]		14,561			7,829
Financial expense		[3.28	]		(22,609	)		(20,785	)
Net financial expense					(8,048	)		(12,956	)
Pre-tax income (loss)					(12,748	)		991
Income tax benefit (expense)		[3.29	]		(6,526	)		(3,529	)
Profit (loss) for the year					(19,273	)		(2,539	)
of which attributable to the owners of the parent					(19,273	)		(2,539	)

2022 4

Statement of comprehensive income

(€‘000)
	Note			2022 restated			2021 restated
Profit (loss) for the year					(19,273	)		(2,539	)
Other comprehensive income (expense)
Items that will never be reclassified to profit or loss (A)
Remeasurements of the net defined benefit liability (asset)		[3.14	]		71			3
Related tax		[3.14	]		(17	)		(1	)
					54			2
Items that are or may be reclassified to profit or loss (B)
Exchange differences on translation of foreign operations		[3.12	]		871			1,842
					871			1,842
Other comprehensive income (expense), net of tax (A+B)					925			1,844
Comprehensive income (expense) for the year					(18,348	)		(695	)
Comprehensive income (expense) attributable to:
Owners of the parent					(18,348	)		(695	)

2022 5

Statement of changes in equity

(€‘000)
	Note			Share capital		Share premium reserve		Legal reserve		Merger reserve		Equity Injections		Translation reserve			Actuarial reserve			Other reserves			Retained earnings including Profit (loss) for the year			Total equity attributable to the owners of the parent			Total equity
Balance at 1 January 2021 as previously reported					9,868		14,425		2,101		288,261		23,088		(334	)		(25	)		(2,328	)		(11,917	)		323,139			323,139
Impact of correction of errors																								(6,945	)		(6,945	)		(6,945	)
Restated balance at 1 January 2021					9,868		14,425		2,101		288,261		23,088		(334	)		(25	)		(2,328	)		(18,862	)		316,194			316,194
Statement of comprehensive income
Profit for the year		[3.12	]		—		—		—		—		—		—			—			—			(2,539	)		(2,539	)		(2,539	)
Other comprehensive income		[3.12	]		—		—		—		—		—		1,842			2			—			—			1,844			1,844
Comprehensive income					—		—		—		—		—		1,842			2			—			(2,539	)		(694	)		(694	)
Owner transactions
Allocation of the loss for the previous year		[3.12	]		—		—		—		—		—		—			—			—			—			—			—
Other owner transactions		[3.12	]		—		—		—		—		4,963		—			—						—			4,963			4,963
Total owner transactions					—		—		—		—		4,963		—			—			—			—			4,963			4,963
Other changes		[3.12	]		—		—		—		—		—		—			—			—			—			—			—
At 31 December 2021 restated					9,868		14,425		2,101		288,261		28,051		1,508			(23	)		(2,328	)		(21,401	)		320,463			320,463
Statement of comprehensive income
Profit for the year		[3.12	]		—		—		—		—		—		—			—			—			(19,273	)		(19,273	)		(19,273	)
Other comprehensive income		[3.12	]		—		—		—		—		—		871			54			—			—			925			925
Comprehensive income					—		—		—		—		—		871			54			—			(19,273	)		(18,349	)		(18,349	)
Owner transactions
Allocation of the loss for the previous year		[3.12	]		—		—		—		—		—		—			—			565			(565	)		—			—
Other owner transactions		[3.12	]		—		—		—		—		—		—			—						—			—			—
Total owner transactions					—		—		—		—		—		—			—			565			(565	)		—			—
Other changes		[3.12	]		—		—		—		—		—		—			—			4,450			—			4,450			4,450
At 31 December 2022 restated					9,868		14,425		2,101		288,261		28,051		2,379			31			2,687			(41,239	)		306,564			306,564

2022 6

Statement of cash flows

(€‘000)
	Note		2022 restated			2021 restated
Operating activities
Profit (loss) for the year		[3.12]		(19,273	)		(2,539	)
Income tax (benefit)/expense		[3.29]		6,526			3,529
Net financial (income)/expense		[3.28]		10,809			13,979
Amortisation, depreciation and impairment losses		[3.25]		50,649			32,726
Accruals/(Release) to provisions		[3.26]		1,842			3,204
Net (gains)/loss on disposals		[3.20] [3.26]		(629	)		(550	)
FX on contingent consideration		[3.28]		1,031			1,384
Cash flows from operating activities before changes in working capital				50,955			51,734
Change in inventories		[3.7]		693			(3,255	)
Change in trade receivables		[3.8]		(3,270	)		(3,502	)
Change in trade payables		[3.17]		4,220			3,402
Change in other assets/liabilities		[3.10] [3.16] [3.19]		316			523
Change in non-current assets		[3.6]		(156	)		358
Income taxes paid				(2,019	)		(846	)
Cash flows from operating activities A)				50,739			48,414
Investing activities
Acquisitions of property, plant and equipment		[3.3]		(25,234	)		(21,983	)
Disposal of property, plant and equipment		[3.3]		1,418			2,108
Acquisitions of intangible assets		[3.1]		(12,229	)		(14,229	)
Disposal of intangible assets		[3.1]		955			47
Cash flows used in investing activities B)				(35,090	)		(34,056	)
Financing activities
Third party funds
Net change in current financial liabilities		[3.15]		8,916			805
Gross change in non-current financial liabilities		[3.15]		(0	)		(572	)
Decrease in lease liabilities		[3.15]		(4,401	)		(3,384	)
Net interest income		[3.28]		163			154
Net interest paid		[3.28]		(15,911	)		(16,131	)
Cash flows from (used in) in financing activities C)				(11,231	)		(19,127	)
Increase (decrease) in liquid funds (A ± B ± C)				4,417			(4,770	)
Opening cash and cash equivalent				21,503			26,273
Closing cash and cash equivalent				25,920			21,503
Increase (decrease) in cash and cash equivalents				4,417			(4,770	)

2022 7

Notes to the Consolidated financial statements restated as at 31 December 2022

[2.1] General information

The Limacorporate Group (the “group”) designs, creates and sells joint implants and repair solutions in the medical sector.

The parent, Limacorporate S.p.A. (“Limacorporate” or the “parent”), was set up and is domiciled in Italy. Its registered office is at Via Nazionale 52, San Daniele del Friuli (Udine) and its company registration number is 173824.

The group carries out most of its business at its registered office while some activities are also performed by the subsidiaries.

The consolidated financial statements restated as at and for the year ended 31 December 2022 include the financial statements of the parent and the subsidiaries (together the “group”).

These consolidated financial statements as at 31 December 2022 were approved by the parent’s board of directors at its meeting on January 31, 2024.

The parent is managed and coordinated by Emil Holding II S.à.r.l., whose details are provided below:

• Registered office: 26A, Boulevard Royal, L-2449 Luxembourg.

• Legal form: limited liability company.

• Description of its business activities and main operations: holding company

• Ultimate parent’s name: Emil NewCo S.à.r.l.

• Name of the ultimate indirect parent: EQT Luxembourg Management S.à r.l.

[2.2] Basis of presentation

The consolidated financial statements restated as at 31 December 2022 is prepared in accordance with the IFRS issued by International Accounting Standards Board (IASB).

The Group’s equity and profit for the year previously reported, were restated in accordance with IAS 8 due to a correction of error related to the payback mechanism accounted in compliance with IFRS 15, retrospectively, as reduction of revenue (variable consideration). The note [4.1] Correction of errors describes the corrected error and includes the reconciliation schedules of the Group’s equity and profit both for the current year and for the comparative periods.

These consolidated financial statements restated as at 31 December 2022 comprise the statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and these notes. They comply with the provisions of IAS 1 Presentation of financial statements and the general principle of historical cost, except for those items that, pursuant to the IFRS, are measured at fair value, as explained in the accounting policies of the individual captions in note 2.4 Basis of preparation. The statement of financial position has been prepared by separating assets and liabilities into current and non-current, whereas costs are classified in the income statements on the basis of their nature. The statement of cash flows has been prepared using the indirect method.

The notes to the consolidated financial statements restated as at 31 December 2022 include the information generally required by ruling legislation and the IFRS, suitably presented with reference to the financial statements schedules used.

The consolidated financial statements restated as at 31 December 2022 have been prepared on a going concern basis, as the related assumptions are deemed to be met.

All figures are in thousands of Euros, unless indicated otherwise. The Euro is the parent’s functional and presentation currency. For each financial statements caption, the corresponding amount of the previous year is provided for comparative purposes.

2022 8

[2.3] Consolidation scope

The consolidated financial statements restated of the Limacorporate Group as at 31 December 2022 include the financial statements of the parent and the Italian and foreign subsidiaries at 31 December 2022.

Subsidiaries are those companies over which the group has control, as defined by IFRS 10 consolidated financial statements restated as at 31 December 2022. Control exists when the group has the power to, directly or indirectly, govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the Consolidated financial statements restated as at 31 December 2022 starting from when control is assumed and until such control ceases to exist.

The table below lists the companies included in the consolidation scope at 31 December 2022.

Subsidiaries are included in the consolidation scope from when the group acquires control, as defined above, and are excluded from when the group no longer has control.

Amounts in thousands (of the stated currency)

	Registered office	Currency	Share/quota capital		Equity		Profit (Loss) for the year		%
LIMA AUSTRIA GmbH	Seestadtstrasse 27 Top 6-7, 1220 Vienna (Austria)	(EUR)		35		1,278		172		100	%
LIMA BELGIUM SRL	Chaussée de Wavre 504, boîte 5A - 1390 Grez Doiceau (Belgium)	(EUR)		30		-1,250		289		100	%
LIMA CZ s.r.o.	Do Zahràdek I., 157/5 - 155 21 Praha 5 - Třebonice - (Czech Republic)	(CZK)		200		116,390		16,178		100	%
LIMA DENMARK ApS	Lyngebaekgards Alle 2, 2990 Niva (Denmark)	(DKK)		500		427		142		100	%
LIMA DEUTSCHLAND GmbH	Kapstadtring 10, - 22297 Hamburg - (Germany)	(EUR)		25		5,291		1,674		100	%
LIMA DO BRASIL LTDA	Al. Campinas, 728 – 2° andar salas 201, 202, 203 e 204.- Jardim Paulista - Sao Paulo - SP - CEP:01404- 001 (Brazil)	(BRL)		1,500		-10,475		7,754		100	%
LIMA FRANCE Sas	1, Allée des Alisiers - Immeuble “Le Galilée” - 69500 Bron - (France)	(EUR)		40		440		161		100	%
LIMA IMPLANTES PORTUGAL S.U. LDA	Rua Pêro Vaz de Caminha 8 E 2660-441 Stº António Cavaleiros - (Portugal)	(EUR)		5		2,357		125		100	%
LIMA IMPLANTES Slu	C/ Manuel Tovar, 33-35 28034 Madrid - (Spain)	(EUR)		200		1,089		29		100	%
LIMA JAPAN K.K.	Tokyo Front Terrace 13F 2-3-14 Higashi Shinagawa, Shinagawa, Tokyo, 140-0002 , (Japan)	(JPY)		10,000		-984,102		-34,681		100	%
LIMA KOREA Co., Ltd	Zero Building 11th Floor, 14 Teheran Ro 84 Gil, Gangnam Gu, Seoul 06178 - (Korea)	(KRW)		100,000		-1,932,158		299,988		100	%
LIMA NETHERLANDS B.V.	Bergweg 153A, 3707AC Zeist - (Netherlands)	(EUR)		18		1,007		232		100	%
LIMA O.I. d.o.o. - ORTOPEDIJA I IMPLANTATI	Ante Kovačića, 3 - 10000 Zagreb - (Croatia)	(HRK)		300		32,024		1,586		100	%
LIMA ORTHOPAEDICS AUSTRALIA Pty Ltd	Unit 1, 40 Ricketts Road - Mt Waverley, 3149 Victoria - (Australia)	(AUD)		0		21,875		405		100	%
LIMA ORTHOPAEDICS NEW ZEALAND Pty Ltd	20 Crummer Rd Grey Lynn 1021 Auckland 1021 - New Zealand	(NZD)		0		10,014		195		100	%
LIMA ORTHOPAEDICS SOUTH AFRICA (PTY) LTD	Northlands Deco Park, Stand 326, 10 Newmarket Street, Design Boulevard, Northriding, 2186 (South Africa)	(ZAR)		0		-11,459		-92		100	%
LIMA ORTHOPAEDICS UK Ltd	4 Office Village Forder Way Cygnet Park Hampton Peterborough Peterborough PE7 8GX (United Kingdom)	(GBP)		0		6,932		947		100	%
LIMA POLSKA SP. z.o.o.	ul. Ul Lopuszanska 95 - 02-457 Warsaw (Poland)	(PLN)		5		472		1,126		100	%
LIMA SK S.r.o.	Cesta na Stadiòn 7 - 97404 Banska Banska Bystrica - (Slovakia)	(EUR)		7		6,371		313		100	%
LIMA SWEDEN AB	Box 180 - SE-184 22 Akersberga - (Sweden)	(SEK)		100		1,678		666		100	%
LIMA SWITZERLAND SA	Birkenstrasse, 49 - 6343 Rotkreuz - Zug - (Switzerland)	(CHF)		100		2,084		328		100	%
TASFIYE HALINDE LIMA TURKEY ORTOPEDI AS	Serifali Mah. Hendem Cad.No: 54 Canan Residence OFIS A-2,34775 - UMRANIYE - Istanbul - (Turkiye)	(TRY)		50		-13,713		-11,252		100	%
LIMA USA Inc.	2001 NE Green Oaks Blvd, Suite 100 - Arlington, TX 76006 - (United States)	(USD)		20		79,420		-1,368		100	%
LIMA SM S.p.A. in liquidazione	Strada Borrana, 38 - Serravalle 47899 - (Repubblica di San Marino)	(EUR)		2,701		4,051		-1,174		100	%
TechMah Medical LLC	2099 Thunderhead Road, Suite 302 - Knoxville, TN 37922 - (United States)	(USD)		29,084		961		-8,268		100	%
LIMA (BEIJING) MEDICAL DEVICES CO., LTD.	Room 616, 6/F, Building 1, No.1, Lize Zhong 2 Road, Chaoyang District, Beijing, China	(CNY)		3,014		-3,784		-2,761		100	%
LIMA ORTHOPAEDICS CANADA INC.	3715 Laird Road Suite Unit 9, Mississauga, ON, Canada	(CAD)		200		221		28		100	%

Lima Orthopaedics Canada Inc. incorporated under Canadian law in October 2021 was included in the consolidation scope in 2022. It began operations in the first half of 2022 and was not consolidated in 2021 as it was not yet up and running and was immaterial.

The reporting date of all of the consolidated companies is 31 December.

2022 9

The basis of consolidation is set out below:

• Adopting the line-by-line method, showing the portions of equity and profit or loss for the year attributable to non-controlling interests and recognising assets, liabilities, revenue and costs regardless of the percentage held in the subsidiaries.

• Eliminating items deriving from intragroup transactions involving consolidated companies, including any unrealised gains and losses arising from intragroup transactions and recognising the resulting deferred tax effects.

• Eliminating intragroup dividends and reallocating them to opening equity reserves.

• Eliminating the carrying amount of investments in consolidated companies and the relevant portion of equity, allocating the resulting positive and negative differences to the relevant captions (assets, liabilities and equity), as defined at the time of acquisition of the investment and considering any subsequent variations. After control is acquired, any acquisitions of non-controlling interests or sales of shares to non-controlling interests that do not entail loss of control are recognised as owner transactions and the relevant effects are taken directly to equity. Any differences between the change in equity attributable to non-controlling interests and cash and cash equivalents exchanged are recognised under changes in equity attributable to the owners of the parent.

• The financial statements of foreign operations are translated into Euros using the annual average rate for income statement items and the closing rate for statement of financial position items. The difference between the two rates along with the translation differences deriving from changes in opening and closing exchange rates are recognised as changes in equity.

The following rates were applied in translating the financial statements of foreign operations:

Currency	Average Rate		Closing Rate
AUD - Australian Dollar		1.51670		1.56930
BRL - Brazilian Real		5.43990		5.63860
CAD - Canadian Dollar		1.36950		1.44400
CHF - Swiss Franc		1.00470		0.98470
CZK - Czech Koruna		7.07880		7.35820
CNY - Yuan Renminbi		24.56590		24.11600
DKK - Danish Krone		7.43960		7.43650
GBP - Pound Sterling		0.85276		0.88693
HRK - Croatian Kuna		7.53490		7.53650
JPY - Japanese Yen		138.0274		140.66
KRW - South Korean Won		1,358.07		1,344.09
NZD - New Zealand Dollar		1.65820		1.67980
PLN - Polish Zloty		4.68610		4.6808
SEK - Swedish Krona		10.62960		11.12180
TRY - Turkish Lira		17.40880		19.96490
USD - US Dollar		1.05300		1.06660
ZAR - South African Rand		17.20860		18.0986

[2.4] Basis of preparation

[2.4.1] Business combinations and goodwill

Business combinations are recognised using the acquisition method under IFRS 3. To this end, the identifiable assets acquired and the liabilities assumed are recognised at their respective acquisition-date fair value. The consideration transferred in a business combination is the aggregate of the fair value, at the date of exchange, of assets acquired, liabilities assumed and equity instruments issued by the acquirer, in exchange for control of the acquiree.

2022 10

Goodwill is the positive difference between the consideration transferred, increased by both the fair value at the acquisition date of any non-controlling interests already held in the acquiree and the amount of non-controlling interests held in the acquiree by third parties (measured at fair value or based on the present value of the acquiree’s identifiable net assets), and the fair value of such assets and liabilities.

At the acquisition date, goodwill is allocated to each of the largely independent cash-generating units that are expected to benefit from the synergies of the business combination.

If the difference between the consideration transferred (increased by the above components) and the fair value of the net assets acquired is negative, this is recognised as a gain from a bargain purchase in the income statement in the year of acquisition.

Any goodwill related to non-controlling interests is included in the carrying amount of the relevant equity investments.

After initial recognition, goodwill is not amortised and is recognised net of any cumulative impairment losses, calculated using the methods set out in section [2.4.6] Impairment losses.

As set out in section [3.2] Goodwill of this report, the market multiples method is used to determine the fair value of goodwill, using listed comparable companies (these multiples are compared with the implicit multiple calculated using the group’s actual figures), except for CGU TechMah for which the value in use is defined using estimated future cashflows by applying a discount rate.

IFRS 3 is not applied retrospectively to business combinations that took place prior to 1 January 2018, i.e., the date of the parent’s transition to the IFRS. Accordingly, the amount of goodwill determined under the previous reporting standards, i.e., the carrying amount at such date, is maintained for such business combinations, subject to the recognition of any impairment losses.

[2.4.2] Intangible assets

An intangible asset is an identifiable asset without physical substance, controlled by the group and that generates future economic benefits, in addition to goodwill when acquired against consideration.

Identifiability is defined with reference to the possibility of distinguishing the intangible asset acquired from goodwill. An intangible asset is identifiable when it: (i) arises from a legal or contractual right or (ii) is separable, i.e., can be sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract. An entity controls an asset if it has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others to such benefits.

Intangible assets are stated at cost, which is determined in the same manner as for property, plant and equipment.

Intangible assets with finite useful lives are amortised over their estimated useful lives starting from when they are available for use.

The amortisation rates adopted in 2022 are shown in the following table by asset category:

	2022
Development expenditure	5 - 10 years
Industrial patents and intellectual property rights	10 - 20 years
Concessions, licences, trademarks and similar rights	3 - 4 - 5 years
Other	Contract term / maximum 6 years

Development expenditure

Development expenditure is expensed when incurred.

Development expenditure incurred for a specific project is only capitalised when the group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use and for sale, its intention to complete such asset and use or sell it, how the intangible asset will generate probable future economic benefits, the availability of adequate technical, financial and other resources to complete the development and its ability to measure reliably the expenditure attributable to the intangible asset during its development.

2022 11

Subsequent to initial recognition, development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation of the asset starts from when the development phase has been completed and the asset is available for use. The asset is amortised over the period for which the underlying project is expected to generate revenue for the group.

Industrial patents and intellectual property rights

Industrial patents and intellectual property rights refer to costs for patents owned by Limacorporate S.p.A..

Concessions, licences, trademarks and similar rights

This caption refers to costs to file and register trademarks and costs incurred to acquire commercial licences. The acquisition costs are amortised over a period equal to the useful life of the acquired right.

Other intangible assets

This caption refers to leasehold improvements. The capitalised costs are amortised on the basis of the residual term of the relevant lease contract.

[2.4.3] Property, plant and equipment

Property, plant and equipment are recognised at acquisition or production cost including directly attributable costs incurred to ready the asset for its intended use. Such cost includes costs to replace parts of equipment and plant when they are incurred if they meet the recognition requirements.

Assets acquired under business combinations before 1 January 2018 (the date of the parent’s transition to the IFRS) are recognised at their pre-existing carrying amount, determined within such business combinations in accordance with the previous reporting standards, i.e., at deemed cost.

The carrying amount (cost less accumulated depreciation and cumulative impairment losses) of the replaced parts of equipment and plant is taken to profit or loss at the time of replacement.

Maintenance and repair costs, which do not add to the value of the assets and/or prolong their residual useful lives, are expensed when incurred. Otherwise they are capitalised.

Property, plant and equipment are stated net of any accumulated depreciation and any cumulative impairment losses determined using the methods set out below. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset for the group.

The depreciation rates used are shown in the following table by asset category:

	2022
Buildings		3%
Light constructions		10%
General and specific plant		10% - 15.5%
Machinery		15.5%
Sundry and small equipment		25%
Production equipment		10%
Office furniture and machines		12%
Electronic office machines		20%
Transport vehicles		20%
Cars		25%
Right-of-use assets		Lease term

The residual value of the assets, the useful life and the depreciation method applied are reviewed at each year end and adjusted prospectively if necessary.

2022 12

If significant parts of an item of property, plant and equipment have different useful lives, such parts are recognised separately. Land, free of construction or annexed to buildings, is recognised separately and is not depreciated since it has an unlimited useful life.

The carrying amount of an item of property, plant and equipment and every significant part initially recognised is eliminated on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of the item (calculated as the difference between the carrying amount of the asset and the net disposal proceeds) is included in profit or loss when the item is derecognised.

[2.4.4] Leases

IFRS 16 defines the recognition, measurement, presentation and disclosure requirements for leases. Under IFRS 16, lessees are required to recognise all leases using a single accounting model similar to that used to recognise finance leases under IAS 17.

If a contract contains a lease, at the commencement date, the lessee shall recognise an asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The lessee shall recognise interest on the lease liability and depreciation of the right-of-use asset separately. At inception of a contract, the entity shall assess whether the contract is, or contains, a lease. The contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. An entity shall determine the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.

[2.4.5] Equity investments

Investments in associates and joint ventures are measured using the equity method, recognising the group’s share of the profits or losses for the year in the income statement, with the exception of the effects related to other changes in the equity of the investee, other than owner transactions, that are directly recognised in other comprehensive income.

In the event of losses exceeding the carrying amount of the equity investment, the excess is recognised in a specific provision to the extent the parent is obliged to fulfil legal or constructive obligations to the investee or to cover its losses.

Investments in other companies are measured at fair value and the fair value gains and losses are taken to equity. If fair value cannot be reliably determined, they are measured at cost, adjusted for any impairment losses.

[2.4.6] Impairment losses

At the reporting date, the carrying amount of property, plant and equipment, intangible assets, financial assets and equity investments is tested for indicators of impairment. Should such indicators exist, the group estimates the recoverable amount of the asset to check the recoverability of the carrying amount and determine any impairment loss to be recognised. Intangible assets with indefinite useful lives or not yet available for use are tested for impairment at least annually, irrespective of whether any indication of impairment exists, or more frequently if an indication of impairment exists.

In order to identify impairment losses, assets are grouped into the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets (the cash-generating unit, CGU). Reference should be made to section [3.2] Goodwill for details of the group’s CGU. The goodwill generated by business combinations is allocated to the CGU that is expected to benefit from the combinations’ synergies. The recoverable amount of an asset or a CGU is the higher of its value in use and its fair value less costs to sell.

2022 13

Multiples are compared with the implicit multiple calculated using the group’s actual figures. When the carrying amount of an asset or a CGU exceeds its recoverable amount, the group recognises an impairment loss in profit or loss. Impairment losses on the CGU are allocated first to reduce the carrying amount of any goodwill allocated to it and then to the other assets of the CGU pro rata on the basis of their carrying amounts. Impairment losses on goodwill cannot be reversed. Impairment losses on other assets are reversed to the carrying amount that would have been determined (net of amortisation and depreciation) had no impairment losses been recognised in prior years.

The market multiples method is used to determine the value in use using listed comparable companies for the group’s CGU except for TechMah CGU where the value in use of the CGU Techmah is defined using estimated future cashflows by applying a discount rate (weighted average cost of capital).

[2.4.7] Financial instruments

The financial instruments held by the group are described below.

Financial assets

Financial assets include equity investments, current securities, loans and borrowings, as well as derivatives with a positive fair value, trade receivables and other assets, in addition to cash and cash equivalents.

Specifically, cash and cash equivalents include cash, bank deposits and highly marketable securities that are readily convertible to cash and are subject to an immaterial risk of changes in value.

Current securities include short-term or marketable securities which represent temporary investments of available funds and do not meet the requirements to be classified as cash and cash equivalents. Financial assets represented by debt instruments are classified in the consolidated financial statements restated as at 31 December 2022 and measured using the business model adopted by the group for managing financial assets and based on the cash flows related to each financial asset. Financial assets also include equity investments not held for trading. Such assets are strategic investments and the group has opted to recognise fair value gains or losses thereon through profit or loss (fair value through profit or loss, FVTPL).

Financial assets are tested for impairment using a model based on expected credit losses.

Financial liabilities

Financial liabilities include loans and borrowings, as well as derivatives with a negative fair value, trade payables and other liabilities.

Financial liabilities are classified and measured at amortised cost, with the exception of those initially measured at fair value, e.g., financial liabilities related to earn-out considerations for business combinations and derivatives and financial liabilities for options on non-controlling interests.

Derecognition of financial assets and liabilities

A financial asset or liability (or, where applicable, part of a financial asset/liability or part of a group of similar financial assets/liabilities) is derecognised when the group unconditionally transfers the contractual rights to receive the cash flows of the financial asset or the obligation to make payments or fulfil other obligations related to the liability.

[2.4.8] Inventories

Raw materials and packaging are measured at the lower of purchase cost and estimated replacement value based on market trends. The cost is calculated using the weighted average cost for the year.

Semi-finished products and finished goods are measured at purchase or production cost, considering their stage of completion, or their realisable value based on market trends, if lower. The production cost includes the reasonably attributable portion of direct and indirect manufacturing costs.

2022 14

The resulting amount is written down through the allowance for inventory write-down to account for items whose expected realisable value is lower than their cost.

[2.4.9] Trade receivables and other assets and trade payables and other liabilities

Trade receivables and other assets that derive from the supply of credit facilities, goods or services to third parties are classified under current assets, except when they are due after one year of the reporting date with reference to loans and receivables. If they have a set due date, current and non-current loan assets, other current and non-current assets and trade receivables, with the exception of derivatives, are measured at amortised cost calculated using the effective interest method. If they do not have a set due date, financial assets are measured at cost. Loans and receivables due after one year that are non-interest bearing or accruing interest lower than market rates are discounted using market rates.

The above financial assets are measured using the expected credit loss impairment model introduced by IFRS 9.

Trade payables and other liabilities that arise from the acquisition of credit facilities, goods or services from a third party supplier are classified under current liabilities, except when they are due after one year of the reporting date with reference to loans and borrowings.

On initial recognition, current and non-current loans and borrowings, other current and non-current liabilities and trade payables are stated at fair value, which normally coincides with the transaction price including transaction costs. Subsequently, all financial liabilities are measured at amortised cost calculated using the effective interest method.

[2.4.10] Employee benefits

The liability related to short-term employee benefits paid during the employment relationship is recognised on an accruals basis at the amount accrued at the reporting date.

The liability related to employee benefits paid upon or after termination of the employment relationship via defined benefit plans, is recognised at the amount accrued at the reporting date.

The liability related to employee benefits paid upon or after termination of the employment relationship via defined benefit plans, net of any plan assets and advances granted, is calculated using actuarial assumptions and recognised on an accruals basis in line with the service needed to obtain the benefits. Such liability is calculated by independent actuaries. The gain or loss deriving from the actuarial calculation is fully recognised in the statement of comprehensive income for the relevant year.

Defined benefit plan liabilities are measured using the actuarial assumptions set out in section [3.14] Employee benefits of the notes to the consolidated financial statements restated as at 31 December 2022.

[2.4.11] Provisions for risks and charges

The provisions for risks and charges are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation or transfer it to third parties at the reporting date. Where the effect of the discounting is material, the provisions are calculated by discounting the estimated future cash flows at a rate that reflects current market assessments of the time value of money. When discounting is used, the carrying amount of the provision increases to reflect the passage of time and this increase is recognised as borrowing cost.

2022 15

[2.4.12] Share-based payments

The grant-date fair value of equity-settled share-based payment arrangements agreed with employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions. With regard to non-vesting conditions, any differences between expected and actual outcomes do not have an impact on the consolidated financial statements restated as at 31 December 2022.

The fair value of the amount payable to employees in respect of cash-settled share-based payments is recognised as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at the settlement date based on the fair value of the share-based payments. Any fair value gains or losses are recognised in profit or loss.

The parent has had agreements with some managers for the award of options and/or shares for several years (see section [4.8] Incentive plans).

[2.4.13] Revenue and expense

Based on the five-step model introduced by IFRS 15, the group recognises revenue after identifying the contract(s) with a customer and the performance obligations in the contract (transfer of goods and/or services), determining the transaction price to which it expects to be entitled in exchange for fulfilling performance obligations (at a point in time or over time). Revenue is measured on the basis of the transaction price excluding amounts collected on behalf of third parties. Based on the group’s internal analysis of contracts with customers, the group has not identified any performance obligations that are satisfied over time and, therefore, the group recognises revenue upon the transfer of control of the promised goods or services to the customer. Revenue is measured to the extent that it is probable that the economic benefits will flow to the group and the amount can be measured reliably.

Revenue is adjusted for any discounts and volume rebates allowed by the group in contracts with customers and for the payback (variable considerations) see [3.20] Revenue and other revenue and income and [3.13] Provisions for risks and charges for payback system.

Expense is recognised when the goods and services are sold or consumed during the year or by systematic allocation, or when it is not possible to identify their future use.

Expense items are classified by nature in accordance with the applicable IFRS.

[2.4.14] Government grants

Grants related to income are taken to profit or loss in the year in which the relevant expense is recognised.

Grants related to assets received for projects and development activities are recognised under liabilities and subsequently recognised under operating revenue in line with the amortisation and depreciation of the relevant assets.

Grants due for investments in research and development are recognised in line with the progress of the research, calculated on the basis of the progress reports issued to the relevant bodies and the stage of completion reported by those in charge of the research, if all requirements for their disbursement are met.

[2.4.15] Financial income and expense

Financial income and expense are recognised on an accruals basis on the basis of interest accrued on the net amount of the relevant financial assets and liabilities, using the effective interest method.

2022 16

[2.4.16] Dividends

Dividends are recognised when the shareholder’s right to receive payment is established.

[2.4.17] Income taxes

Income taxes recognised in profit or loss are the sum of current and deferred taxes.

Income taxes for the year are determined on the basis of ruling legislation. They are recognised in profit or loss, except for those related to items recognised directly in equity, for which the tax effect is accounted for directly in equity.

Income tax liabilities are recognised under current tax liabilities, net of advances paid. Any tax credits are recognised under current tax assets.

Deferred tax assets and liabilities are calculated on the temporary differences between the carrying amounts of assets and liabilities (resulting from the application of the accounting policies set out in note [2.4] Basis of preparation) and their tax bases (deriving from the application of the tax legislation ruling in the country of the subsidiaries). Current and deferred tax assets and liabilities are offset when the group has the legally enforceable right to offset.

Deferred taxes are calculated using the tax rates expected to be enacted in the years in which the temporary differences will be recovered or settled. Deferred tax assets and liabilities are not discounted.

Deferred tax assets are recognised on temporary differences and to the extent that it is probable the group will have future taxable profits that will allow their recovery.

[2.4.18] Fair value

IFRS 13 is a common framework for fair value measurement and relevant disclosure when this measurement is required or allowed by other IFRS. Specifically, the standard sets out the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

IFRS 13 establishes a hierarchy that categorises the inputs used in the valuation techniques adopted to measure fair value into different levels, as follows:

• level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date;

• level 2: inputs other than quoted prices included in level 1 that are observable for the assets or liabilities, either directly or indirectly;

• level 3: unobservable inputs for the assets or liabilities.

In some cases, the inputs used to measure the fair value of an asset or a liability might be categorised within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The group recognises transfers among the different levels of the fair value hierarchy at the end of the year in which the transfer took place.

Reference should be made to the notes to the individual financial statements items for the definition of the fair value hierarchy level used to classify the individual instruments measured at fair value or whose fair value is disclosed.

The fair value of derivatives is calculated by discounting estimated cash flows using the market interest rates at the reporting date and the credit default swaps issued by the counterparty and group companies, to include the non-performance risk explicitly provided for under IFRS 13.

Where market prices are not available, the fair value of non-derivative medium/long-term financial instruments is calculated by discounting estimated cash flows using the market interest rates at the reporting date and considering counterparty risk for financial assets and credit risk for financial liabilities.

2022 17

[2.4.19] Use of estimates

In preparing the consolidated financial statements restated as at 31 December 2022, the directors were required to apply accounting policies that are, at times, based on judgements or past experience or assumptions deemed reasonable and realistic at the time, depending on the relevant circumstances. The application of such estimates and assumptions impacts the carrying amounts recognised in the statement of financial position, income statement, statement of comprehensive income and statement of cash flows, in addition to the disclosure provided. The end results of the assessments in which such estimates and assumptions were used may differ from those recognised in the consolidated financial statements restated as at 31 December 2022 due to the inherent uncertainty of the assumptions and the conditions underlying the estimates.

Actual results may differ from those estimated. Estimates and assumptions are reviewed on an ongoing basis. The effect of a change in accounting estimates is recognised in profit or loss in the period of the change, if the change affects that period only, or the period of the change and future periods, if the change affects both.

Estimates mainly refer to the following captions:

• Impairment losses on non-current assets and goodwill;

• loss allowance;

• allowance for inventory write-down;

• recoverability of deferred tax assets;

• estimate of the provisions for risks and contingent liabilities;

• financial liabilities;

• employee incentive plans.

Impairment losses on non-current assets and goodwill

Non-current assets include property, plant and equipment, intangible assets including goodwill and other financial assets.

Management periodically revises the carrying amount of non-current assets held and used and assets held for sale when events and circumstances require such revision. This is performed using the estimates of cash flows the group expects to derive from using or selling the asset and suitable discount rates for calculating the present value.

When the carrying amount of a non-current asset has been impaired, the group recognises an impairment loss equal to the excess between the carrying amount and the amount to be recovered through use or sale of the asset, determined using the parent’s or group’s most recent plans. Reference should be made to note [2.4.6] Impairment losses.

Loss allowance

The loss allowance is management’s best estimate of the potential credit losses on trade receivables from end customers. Reference should be made to note [2.4.8] Trade receivables and other assets and trade payables and other liabilities for a description of the criteria used in estimating the allowance.

Allowance for inventory write-down

Inventories of slow-moving raw materials and finished goods are periodically analysed on the basis of historical data and the possibility of selling them at prices lower than normal market transactions. If, as a result, the carrying amount of inventories needs to be written down, the group recognises a specific allowance for inventory write-down.

Recoverability of deferred tax assets

The group pays taxes in numerous countries and some estimates are required to calculate the taxes in each jurisdiction. It recognises deferred tax assets to the extent that it is probable that future taxable profits will be available and over a period of time compatible with the time horizon implicit in the management estimates.

2022 18

Estimate of the provisions for risks and contingent liabilities

The group could be subject to legal and tax disputes regarding a vast range of issues that are subject to the jurisdiction of various countries. Disputes and litigation against the group are subject to a different degree of uncertainty, including the facts and circumstances inherent to each dispute, the jurisdiction and different applicable laws. In the ordinary course of business, management consults its legal consultants and legal and tax experts. The group recognises a liability for such disputes when it is deemed probable that they will result in an outflow of resources and when the amount of the resulting losses can be reasonably estimated. If an outflow of resources is possible but the amount cannot be determined, such fact is disclosed in the notes to the consolidated financial statements restated as at 31 December 2022.

Employee incentive plans and financial liabilities

Reference is made to section [4.8] Incentive plans for a description of the calculation of the fair value of share-based payments as part of group management incentive plans. Section [3.15] Current and non-current financial liabilities provides details of the calculation of fair value of the group’s financial liabilities.

[2.4.20] Translation of foreign currency items

The financial statements of each consolidated company are prepared using the functional currency related to the economy where each company operates. Transactions in currencies other than the functional currency are recognised at the exchange rate at the date of the transaction. Foreign currency monetary assets and liabilities are subsequently translated at the closing rate and any exchange differences are taken to profit or loss. Foreign currency non-monetary assets and liabilities recognised at historical cost are translated using the exchange rate at the date of the transaction.

For consolidation purposes, the foreign currency reporting packages of consolidated companies are translated using the closing rates for asset and liability captions, including goodwill and consolidation adjustments, and the average rate for the year (if similar to the respective transaction-date rates) or the period under consolidation, if lower, for income statement captions. The relevant exchange differences are taken directly to the statement of comprehensive income and reclassified to profit or loss when control over the investee is lost and, thus, it is deconsolidated.

[2.4.21] Operating segments

An operating segment is a component of an entity:

• that engages in business activities from which it may earn revenue and incur expenses (including revenue and expenses relating to transactions with other components of the same entity);

• whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and

• for which discrete financial information is available.

Note [4.2] Operating segments provides information about the single operating segment identified.

[2.4.22] New standards and interpretations, revisions and amendments to existing standards

As required by IAS 8 Accounting policies, changes in accounting estimates and errors, below are the new standards and interpretations, in addition to amendments to existing and applicable standards and interpretations, applicable starting from 1 January 2022 and not yet in effect at the reporting date.

2022 19

[2.4.22.1] New standards and interpretations applicable from 1 January 2022

The amendments to the IFRS adopted during the year included:

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

• Amendments to IFRS 3 Business combinations: which update the reference in IFRS 3 to the revised conceptual framework without significantly changing its requirements.

• Amendments to IAS 16 Property, plant and equipment: which prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced during the testing of such item. An entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

• Amendments to IAS 37 Provisions, contingent liabilities and contingent assets: which specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (e.g., direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (e.g., the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

• Annual Improvements 2018-2020: which amend 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 of the amendments are effective for annual periods beginning on or after 1 January 2022.

The adoption of the other standards and interpretations detailed above has not had a material impact on the measurement of the group’s asset, liabilities, costs and revenue.

[2.4.22.2] Standards, amendments and interpretations not yet mandatory and not adopted early at 31 December 2022

On 18 May 2017, the IASB published IFRS 17 Insurance contracts which will replace IFRS 4 Insurance contracts.

The objective of the new standard is to ensure that an entity provides relevant information that faithfully represents the rights and obligations deriving from insurance contracts issued. The IASB developed the standard to eliminate inconsistencies and deficiencies in existing accounting standards, providing a single principle-based framework covering all types of insurance contracts, including reinsurance contracts held by an insurance company.

The new standard also sets out presentation and disclosure requirements to improve the comparability between entities operating in the insurance industry.

Under IFRS 17, an entity measures an insurance contract using a general accounting model or a simplified version called the premium allocation approach.

The main features of the general model are:

• estimates and assumptions of future cash flows are always current;

• measurement reflects the time value of money;

• estimates make maximum use of observable market data;

• there is a current and explicit measurement of risk;

• expected profit is deferred and aggregated in groups of insurance contracts at initial recognition; and

• expected profit is recognised over the coverage period after adjustments from changes in the cash flows assumptions related to each group of contracts.

Under the premium allocation approach, an entity measures the liability for the remaining coverage of a group of insurance contracts on the condition that, at initial recognition, the entity reasonably expects that this will be an approximation of the general model. Contracts with a coverage period of one year or less are automatically eligible for PAA. The simplifications arising from PAA do not apply to the measurement of the liability for incurred claims, measured under the general model. However, there is no need to discount those cash flows if the balance is expected to be paid or received in one year or less from the date the claims are incurred.

2022 20

An entity shall apply the new standard to issued insurance contracts, including reinsurance contracts issued, reinsurance contracts held and also to investment contracts with a discretionary participation feature (DPF).

The standard is effective for annual periods beginning on or after 1 January 2023. Early application is permitted only for entities that apply IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers.

The directors do not expect the adoption of this standard to have a significant effect on the group’s consolidated financial statements restated as at 31 December 2022.

On 9 December 2021, the IASB published “Amendments to IFRS 17 Insurance contracts: Initial application of IFRS 17 and IFRS 9 – Comparative information”. The amendment is a transition option relating to comparative information about financial assets presented on initial application of IFRS 17. The amendment is aimed at helping entities to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, and therefore improve the usefulness of comparative information for users of financial statements. IFRS 17 incorporating the amendment is effective for annual reporting periods beginning on or after 1 January 2023.

On 12 February 2021, the IASB published “Disclosure of accounting policies—Amendments to IAS 1 and IFRS Practice statement 2” and “Definition of accounting estimates—Amendments to IAS 8”. These amendments will help companies improve accounting policy disclosures so that they provide more useful information to investors and other primary users of the financial statements and distinguish changes in accounting estimates from changes in accounting policies. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and early adoption is permitted.

On 7 May 2021, the IASB published “Amendments to IAS 12 Income taxes: Deferred tax related to assets and liabilities arising from a single transaction” which clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and early adoption is permitted.

Limacorporate S.p.A. did not opt for early adoption of these standards.

Other standards, amendments and interpretations

• On 23 January 2020, the IASB published “Amendments to IAS 1 Presentation of financial statements: classification of liabilities as current or non-current” and, on 31 October 2022, “Amendments to IAS 1 Presentation of financial statements: non-current liabilities with covenants” which clarify how an entity classifies debt and other financial liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and early adoption is permitted.

• On 22 September 2022, the IASB published “Amendments to IFRS 16 Leases: lease liability in a sale and leaseback” which requires a seller-lessee to measure lease liabilities arising from a sale and leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and early adoption is permitted.

• On 30 January 2014, the IASB published IFRS 14 Regulatory deferral accounts permits a first-time adopter of IFRS Standards to continue to recognise its rate regulation activities in accordance with its previous GAAP. As the parent and group are not a first-time adopter, this standard is not applicable.

The group will adopt such new standards and amendments, on the basis of the relevant application date, and will assess the potential impacts on the consolidated financial statements restated as at 31 December 2022 when they are endorsed by IASB.

2022 21

[3] Notes to the consolidated financial statements restated as at 31 December 2022

Below are comments on the statement of financial position captions as at 31 December 2022. For details on statement of financial position captions deriving from related party transactions, reference should be made to note [4.6] Related party transactions.

[3.1] Other intangible assets

Other intangible assets at 31 December 2022 amount to €58,234 thousand, up €4,639 thousand on the previous year end (€53,595 thousand). Changes in other intangible assets in 2021 and 2022 and a breakdown of historical cost, accumulated amortisation and any cumulative impairment losses are summarised in the following tables.

(€‘000)
	01/01/2021		Exchange difference		Increases		Reclassifications		Decreases		Amortisation		31/12/2021 restated
Development expenditure		664		1,414		7,322		28,340		0		-3,858		33,882
Industrial patents and intellectual property rights		1,181		0		413		924		0		-455		2,063
Concessions, licences, trademarks and similar rights		5,016		10		2,411		1,722		0		-2,914		6,245
Assets under development and payments on account		37,267		1,041		3,893		-30,987		-38		0		11,176
Other		349		2		53		1		-9		-167		229
Total		44,477		2,467		14,092		0		-47		-7,394		53,595

(€‘000)
	31/12/2021 restated		Exchange difference		Increases		Reclassifications		Decreases		Amortisation		31/12/2022 restated
Development expenditure		33,882		2,057		5,132		943		0		-4,896		37,118
Industrial patents and intellectual property rights		2,063		0		485		0		0		-339		2,208
Concessions, licences, trademarks and similar rights		6,245		51		2,322		446		0		-3,165		5,900
Assets under development and payments on account		11,176		19		3,911		-1,646		-953		0		12,507
Other		229		2		271		257		-2		-257		500
Total		53,595		2,129		12,121		0		-955		-8,657		58,234

€‘000
	01/01/2021
	Historical cost		Accumulated amortisation		Carrying amount
Development expenditure		1,639		975		664
Industrial patents and intellectual property rights		2,984		1,802		1,181
Concessions, licences, trademarks and similar rights		18,905		13,889		5,016
Assets under development and payments on account		37,267		—		37,267
Other		1,207		859		348
Total		62,002		17,525		44,477

2022 22

€‘000
	31/12/2021 restated
	Historical cost		Accumulated amortisation		Carrying amount
Development expenditure		38,593		4,711		33,882
Industrial patents and intellectual property rights		3,904		1,841		2,063
Concessions, licences, trademarks and similar rights		21,272		15,027		6,245
Assets under development and payments on account		11,176		0		11,176
Other		1,246		1,017		229
Total		76,191		22,596		53,595

€‘000
	31/12/2022 restated
	Historical cost		Accumulated amortisation		Carrying amount
Development expenditure		46,425		9,307		37,118
Industrial patents and intellectual property rights		3,663		1,455		2,208
Concessions, licences, trademarks and similar rights		22,359		16,458		5,901
Assets under development and payments on account		12,507		0		12,507
Other		1,731		1,231		500
Total		86,685		28,451		58,234

Intangible assets with an indefinite useful life only comprise goodwill, while the other assets (development expenditure, industrial patents and intellectual property, concessions, licences, trademarks and similar rights, other intangible assets and assets under development and payments on account) all have a finite life. More information on each item is provided below.

Development expenditure, amounting to €37,118 thousand, comprises:

• €1,060 thousand incurred by the parent mainly related to Physica and Hybrid Glenoid;

• €14,424 thousand related to the allocation of part of the goodwill arising on consolidation transferred at the acquisition date for TechMah Medical LLC (resulting from a step acquisition achieved in stages but consolidated at 100% as per the anticipated acquisition method). Such goodwill was partly allocated to development expenditure and partly to goodwill. The relevant estimated useful life is ten years;

• €1,382 thousand for the recognition of the additional new milestone agreed with the sellers of such company in June 2020 via an addendum to the initial agreement, for the development of an additional implant technology to those agreed at the acquisition;

• €20,252 thousand related to costs capitalised by TechMah Medical LLC for the development of its products which will enrich the group’s portfolio with digital solutions designed to assist surgeons with operations. The same applies as for the second point regarding amortisation.

The significant increase on the previous year end is due to the costs incurred by TechMah Medical LLC in 2022 to develop products. The recoverability of TechMah costs is supported by the result of the discounted cash flow method applied to test the TechMah CGU; based on the impairment test exercise at 31 December 2022 the VIU is lower than the carrying amount of the CGU so, as provided for IAS 36, management fully impaired firstly the goodwill. The carrying amount of the CGU after the impairment of goodwill is recoverable by the VIU defined.

In summer 2023 the Management of Limacorporate took the strategic decision to stop the Spart Space project (TechMah business). All digital activities and resources have been refocused on other projects (please refer to Events after the reporting date paragraph).

Amortisation of this caption amounts to €4,896 thousand.

Industrial patents and intellectual property rights, amounting to €2,208 thousand, are comprised of costs incurred by Limacorporate S.p.A. to acquire patents in 2022 and previous years.

2022 23

Concessions, licences, trademarks and similar rights of €5,900 thousand are comprised of costs incurred by:

• the parent (€2,861 thousand) for costs to register Lima products on the European, US, Chinese, Korean and Japanese markets;

• other group companies (€448 thousand) for costs mainly to register products on the Brazilian market;

• the parent (€2,336 thousand) for costs incurred to purchase commercial licences (€1,146 thousand), software programs (€1,086 thousand) and to register trademarks (€104 thousand);

• other group companies (€255 thousand). Amortisation of this caption amounts to €3,165 thousand.

Assets under development and payments on account, amounting to €12,507 thousand, is comprised of the following:

• €12,107 thousand for costs incurred by Limacorporate S.p.A. for development activities, payments on account for software licences, costs to register the Lima products and costs incurred to acquire patents;

• €400 thousand related to other group companies.

“Other”, amounting to €500 thousand, refers to the following companies for leasehold improvements:

• Limacorporate S.p.A. for €19 thousand;

• Lima USA for €269 thousand;

• Lima Orthopaedics Australia for €23 thousand;

• Lima Implantes for €56 thousand;

• Lima Korea for €115 thousand;

• other group companies for €18 thousand.

The capitalised costs are amortised over the residual term of the relevant lease contract and amortisation of this caption amounts to €257 thousand.

Total amortisation of intangible assets taken to profit or loss amounts to €8,657 thousand.

[3.2] Goodwill

Goodwill amounts to €384,216 thousand.

Pursuant to IAS 36, goodwill is not subject to amortisation, but is tested for impairment at least annually or more frequently if events or circumstances indicate that it might be impaired. With regard to testing goodwill for impairment, the group identified two CGUs for its operations,-one for the Group except TechMah (“Group CGU”) and one related to TechMah . It considered the sources of information set out by IAS 36 such as the fact that management monitors the group’s performance and takes strategic decisions about its product offering and investments at group level, except for TechMah business which is a separate CGU.

The goodwill recognised in the consolidated financial statements restated as at 31 December 2022 in relation to the above-mentioned merger, together with other items of goodwill, was tested for impairment at the reporting date. Specifically, the recoverable amount of the group’s assets was calculated by estimating their fair value and comparing it with the carrying amount of consolidated net invested capital at 31 December 2022 in order to examine whether recognised amounts had been impaired.

The market multiples method is used to determine the fair value of goodwill of the Group CGU, using listed comparable companies. These multiples are compared with the implicit multiple calculated using the group’s actual figures. The market multiples analysis based on companies operating in sectors comparable to those of Limacorporate (performed on the date the impairment test was carried out on seven comparable companies) provides supporting evidence about the carrying amount of goodwill recognised in the 2022 consolidated financial statements restated as at 31 December 2022. This is because the market multiples (which show an average enterprise value of between 15 and 17 times gross operating profit) are higher and/or in line with the multiple obtained by comparing the group’s actual net invested capital at the end of 2022 (i.e., including goodwill) to consolidated gross operating profit.

2022 24

As a result of such checks, based on market references (i.e., market multiples) compared with the group’s implicit multiple, no impairment indicators have been detected to date for goodwill allocated to the Group CGU.

The group separately measured TechMah Medical LLC’s business related to the Smart SPACE digital solution.

The recoverable value of the TechMah CGU was determined as its value in use, on the basis of the cashflows discounted using a rate that reflects the risk conditions (WACC of 13.5%). The recoverable amount determined with aforementioned method led to the full impairment of goodwill (€ 15,109 thousand) allocated to the CGU.

[3.3] Property, plant and equipment

Property, plant and equipment and other assets amount to €79,837 thousand, down €1,936 thousand compared to 31 December 2021 (€81,773 thousand).

Changes in property, plant and equipment in 2021 and 2022 and a breakdown of historical cost, accumulated depreciation and any cumulative impairment losses are summarised in the following tables:

(€‘000)
	01/01/2021		Exchange difference		Increases		Decreases		Depreciation		Reclassifications		Other changes		31/12/2021 restated
Land and buildings		15,907		0		508		0		-703		34		0		15,746
Leased land and buildings		9,364		377		827		-78		-2,539		0		-880		7,071
Plant and equipment		17,945		14		1,753		-754		-4,282		343		0		15,019
Leased plant and equipment		26		0		0		0		-15		0		2		13
Industrial and commercial equipment		35,489		670		15,676		-626		-14,967		578		0		36,820
Leased industrial and commercial equipment		15		0		935		0		-315		0		0		635
Other assets		1,605		35		643		-22		-576		0		0		1,683
Other leased assets		2,695		7		1,221		0		-1,726		0		-52		2,145
Assets under construction and payments on account		2,244		81		1,349		-78		0		-955		0		2,641
Total	��	85,288		1,184		22,912		-1,558		-25,123		0		-930		81,773

(€‘000)
	31/12/2021 restated		Exchange difference		Increases		Reclassifications		Decreases		Other changes		Depreciation		31/12/2022 restated
Land and buildings		15,746		0		456		35		-67		0		-674		15,496
Leased land and buildings		7,071		226		2,087		0		-5		623		-3,247		6,755
Plant and equipment		15,019		0		3,601		2,255		-17		0		-4,442		16,416
Leased plant and equipment		13		0		82		0		0		0		-16		79
Industrial and commercial equipment		36,820		258		14,647		-63		-1,156		0		-15,832		34,674
Leased industrial and commercial equipment		635		0		0		0		0		-58		-558		19
Other assets		1,683		15		706		3		-20		0		-600		1,787
Other leased assets		2,145		2		1,577		0		0		90		-1,514		2,299
Assets under construction and payments on account		2,641		64		1,991		-2,231		-154		0		0		2,311
Total		81,773		566		25,145		0		-1,418		655		-26,884		79,837

(€‘000)
	01/01/2021
	Historical cost		Accumulated depreciation		Accumulated impairment losses		Carrying amount
Land and buildings		24,082		7,610		565		15,907
Leased land and buildings		18,471		9,107		—		9,364
Plant and equipment		53,382		35,437		—		17,945
Leased plant and equipment		117		91		—		26
Industrial and commercial equipment		116,513		80,857		167		35,489
Leased industrial and commercial equipment		30		15		—		15
Other assets		6,727		5,122		—		1,605
Other leased assets		6,176		3,481		—		2,695
Assets under construction and payments on account		2,244		—		—		2,244
Total		227,741		141,720		733		85,288

2022 25

	31/12/2021 restated
	Historical cost		Accumulated depreciation		Accumulated impairment losses		Carrying amount
Land and buildings		24,624		8,313		565		15,746
Leased land and buildings		17,344		10,273		0		7,071
Plant and equipment		54,318		39,299		0		15,019
Leased plant and equipment		119		106		0		13
Industrial and commercial equipment		132,183		95,196		167		36,820
Leased industrial and commercial equipment		966		331		0		635
Other assets		7,257		5,574		0		1,683
Other leased assets		6,016		3,871		0		2,145
Assets under construction and payments on account		2,641		0		0		2,641
Total		245,468		162,963		733		81,773

	31/12/2022 restated
	Historical cost		Accumulated depreciation		Accumulated impairment losses		Carrying amount
Land and buildings		23,870		8,374		0		15,496
Leased land and buildings		19,868		13,113		0		6,755
Plant and equipment		59,135		42,719		0		16,416
Leased plant and equipment		202		122		0		80
Industrial and commercial equipment		141,939		107,009		256		34,674
Leased industrial and commercial equipment		66		47		0		19
Other assets		7,937		6,150		0		1,787
Other leased assets		5,069		2,770		0		2,299
Assets under construction and payments on account		2,311		0		0		2,311
Total		260,397		180,304		256		79,837

The €456 thousand increase in land and buildings during the year is chiefly due to costs incurred by the parent to build the new electrical substation at the Villanova production facility and to acquire land to extend the production facility.

The increase in plant and machinery mainly refers to the construction of plant for the new electrical substation, the completion of the new packaging line and investments made to purchase production machinery, specifically additive manufacturing machines.

Industrial and commercial equipment amounts to €34,674 thousand and is chiefly comprised of surgical instruments capitalised during the current and previous years.

Other assets include office furniture and machines, electronic office machines, transport vehicles and cars. Investments, amounting to €706 thousand, refer to purchases of electronic office machines and furniture.

The €1,991 thousand increase in assets under construction and payments on account during the year is chiefly due to costs incurred to expand the Villanova production facility and for the purchase of production equipment and machinery.

Some plant and machinery are subject to a special lien at the reporting dates. Additional information is provided in note [3.15] Current and non-current financial liabilities.

Changes in right-of-use assets deriving from the application of IFRS 16 are set out in the following tables, where such changes are shown for each asset category along with details on the historical cost and accumulated depreciation:

(€‘000)
	01/01/2021		Exchange difference		Increases		Decreases		Depreciation		Other changes		31/12/2021 restated
Right-of-use assets
Leased land and buildings		9,364		377		827		-78		-880		-2,539		7,071
Leased plant and equipment		26		0		0		0		2		-15		13
Leased industrial and commercial equipment		15		0		935		0		0		-315		635
Other leased assets		2,695		7		1,221		0		-52		-1,726		2,145
Total		12,100		384		2,983		-78		-930		-4,595		9,864

2022 26

(€‘000)
	31/12/2021 restated		Exchange difference		Increases		Decreases		Depreciation		Other changes		31/12/2022 restated
Right-of-use assets
Leased land and buildings		7,071		226		2,087		-5		623		-3,247		6,755
Leased plant and equipment		13		0		82		0		0		-16		79
Leased industrial and commercial equipment		635		0		0		0		-58		-558		19
Other leased assets		2,145		2		1,577		0		90		-1,514		2,300
Total		9,864		228		3,746		-5		655		-5,335		9,153

Lease liabilities deriving from the application of IFRS 16 are included under current and non-current financial liabilities (analysed in note [3.15] Current and non-current financial liabilities). Changes in current and non-current lease liabilities from 1 January 2021 to 31 December 2022 are set out below:

(€‘000)
	01/01/2021		Increases		Decreases			Reclassifications			31/12/2021 restated
Lease liabilities as per IFRS 16 - non-current portion		6,573		1,369		—			(3,518	)		4,423
Lease liabilities as per IFRS 16 - current portion		3,384		—		(3,384	)		3,518			3,518
Total		9,957		1,369		(3,384	)		—			7,941

(€‘000)
	31/12/2021 restated		Exchange difference		Increases		Decreases		Other changes		Reclassifications		31/12/2022 restated
Lease liabilities as per IFRS 16 - non-current portion		4,423		83		3,663		0		655		-4,273		4,552
Lease liabilities as per IFRS 16 - current portion		3,518		-7		40		-4,559		0		4,273		3,265
Total		7,941		76		3,703		-4,559		655		0		7,817

[3.4] Equity investments

Equity investments amount to €2 thousand at 31 December 2022.

The following information is provided on direct and indirect equity investments in subsidiaries, associates and other companies.

Subsidiaries

All of the subsidiaries are included in the consolidation scope.

Other companies

Equity investments in other companies amount to €2 thousand and refer to CAAF Interregionale dipendenti S.r.l., Consorzio Friuli Energia, Terra degli Elimi and CE.R.ME.T..

[3.5] Deferred tax assets and liabilities

Deferred tax assets and liabilities are only offset when this is legally provided for within the same tax jurisdiction. The group recognised deferred tax assets and liabilities on the temporary differences between carrying amounts and tax bases. The latter were calculated using the rates ruling when the temporary differences will reverse in the different countries where the group operates.

2022 27

Deferred tax assets and liabilities are broken down as follows at 31 December 2022 and 2021:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Deferred tax assets		11,558		11,947		12,758		-390		-811
Deferred tax assets arising on consolidation		20,151		21,515		19,137		-1,364		2,378
Total		31,709		33,462		31,895		-1,754		1,567

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Deferred tax liabilities		9,414		7,931		5,461		1,483		2,470
Deferred tax liabilities arising on consolidation		9,861		9,364		7,525		497		1,839
Total		19,275		17,295		12,986		1,980		4,309

Reference should be made to section [3.29] of these notes for more details on deferred tax assets and liabilities and the differences that generated them.

The recoverability of DTA accrued at 31 December 2022 was based on the business plan prepared by the management which shows the recoverability considering the future taxable incomes.

[3.6] Other non-current assets

Other non-current assets, amounting to €861 thousand, mainly refer to guarantee deposits for lease contracts taken out by the group and prepayments (€162 thousand), mostly for insurance and maintenance.

[3.7] Inventories

A breakdown of inventories at 31 December 2022 and 2021 is provided below:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021			Variation 2022 vs 2021		Variation 2021 vs 2020
Raw materials and supplies		6,272		6,094		6,106			178		-12
Work in progress and semi-finished products		11,533		12,861		14,344			-1,328		-1,483
Contract work in progress		0		0		0			0		0
Finished goods		79,583		77,993		74,875			1,590		3,118
Payments on account		0		0		0	��		0		0
Goods in transit		831		647		177			184		470
Allowance for inventory write-down		-11,492		-10,174		-11,336			-1,318		1,162
Total		86,728		87,421		84,166			-693		3,255

Inventories were measured using the cost of the production company for the consolidated companies.

2022 28

The allowance for inventory write-down, amounting to €11,492 thousand at 31 December 2022, changed as follows during the year:

(€‘000)
Balance at 01/01/2021	11,336
Exchange difference	74
Utilisations	-1,952
Accruals	716
Balance at 31/12/2021 restated	10,174
Exchange difference	54
Utilisations	-1,883
Accruals	3,146
Balance at 31/12/2022 restated	11,491

Utilisations of the allowance refer to the scrapping of obsolete goods by Limacorporate S.p.A. and subsidiaries during the year.

[3.8] Trade receivables

Trade receivables at 31 December 2022 amount to €70,161 thousand, compared to €66,891 thousand at the previous year end, and are broken down as follows:

(€‘000)
	Gross amount		Loss allowance		Carrying amount 31/12/2021 restated
Trade receivables - third parties		68,971		2,082		66,889
Trade receivables - related parties		2		—		2
Total		68,973		2,082		66,891

(€‘000)
	Gross amount		Loss allowance		Carrying amount 31/12/2022 restated
Trade receivables - third parties		72,527		2,387		70,140
Trade receivables - related parties		21		—		21
Total		72,548		2,387		70,161

Trade receivables originate from group activities and are broken down by geographical segment as follows:

(€‘000)
	Total Italy 31/12/2021 restated		Total EU 31/12/2021 restated		Rest of world 31/12/2021 restated		Total 31/12/2021 restated
Trade receivables		21,642		20,938		24,309		66,889
From subsidiaries		0		0		2		2
From associates		0		0		0		0
From parents		0		0		0		0
From subsidiaries of parents		0		0		0		0
Total		21,642		20,938		24,311		66,891

(€‘000)
	Total Italy 31/12/2022 restated		Total EU 31/12/2022 restated		Rest of world 31/12/2022 restated		Total 31/12/2022 restated
Trade receivables		23,021		20,681		26,438		70,140
From subsidiaries		0		0		0		0
From associates		0		0		0		0
From parents		0		21		0		21
From subsidiaries of parents		0		0		0		0
Total		23,021		20,702		26,438		70,161

Trade receivables in foreign currency are detailed in section [4.2] Financial instruments – Fair value and risk management under Other information, to which reference should be made.

2022 29

The loss allowance amounts to €2,387 thousand at 31 December 2022 (31 December 2021: €2,082 thousand).

The loss allowance is management’s estimate of the expected credit losses on trade receivables from customers. The estimate is based on the group’s expected credit losses, determined using past experience with similar receivables, current and historical overdue amounts, losses and collections, a careful monitoring of credit quality and forecasts of economic and market conditions.

Changes in the loss allowance in 2022 and 2021 are as follows:

(€‘000)
	2022 restated		2021 restated
Opening balance		2,082		1,940
Exchange difference		33		10
Accruals		519		544
Utilisations		-247		-412
Closing balance		2,387		2,082

Specifically:

(€‘000)
	Receivables impaired individually		Receivables impaired collectively		Total
01/01/2021 restated		1,660		280		1,940
Utilisations		-398		-14		-412
Accruals		406		138		544
Exchange difference		11		0		11
31/12/2021 restated		1,679		404		2,082
Utilisations		-230		-17		-247
Accruals		324		195		519
Exchange difference		-10		43		33
31/12/2022 restated		1,763		624		2,387

A breakdown of the loss allowance by past due category is as follows:

(€‘000)
	Not yet due		Overdue								Total
			<30 days		30 - 90 days		90 - 180 days		Over 180 days
Gross trade receivables at 01 January 2021 restated		38,238		6,112		5,375		4,306		10,968		64,998
Loss allowance		0		0		0		64		1,876		1,940
Net trade receivables at 01 January 2021 restated		38,238		6,112		5,375		4,242		9,092		63,058
Gross trade receivables at 31 December 2021 restated		41,111		6,422		5,362		4,622		11,454		68,971
Loss allowance		0		0		0		24		2,059		2,082
Net trade receivables at 31 December 2021 restated		41,114		6,422		5,362		4,598		9,395		66,891
Gross trade receivables at 31 December 2022 restated		47,203		7,324		6,108		4,519		7,394		72,548
Loss allowance		0		0		1		1		2,385		2,387
Net trade receivables at 31 December 2022 restated		47,203		7,324		6,107		4,518		5,009		70,161

[3.9] Current tax assets

Tax assets at 31 December 2022 amount to €2,087 thousand and include direct taxes, particularly in relation to the parent’s IRES and IRAP for €1,619 thousand.

2022 30

[3.10] Other current assets

Other current assets at 31 December 2022 amount to €14,192 thousand, compared to €11,247 thousand at the previous year end, and are broken down as follows:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Grants		5,281		4,976		4,807		305		169
Other tax assets		827		758		1,024		69		-266
Advances to agents		776		779		964		-3		-185
VAT		1,317		1,340		923		-23		417
Advances to suppliers		1,327		939		804		388		135
Hire and maintenance		873		657		669		216		-12
Other sundry		1,354		420		489		934		-69
VAT to be offset		325		118		461		207		-343
Insurance premiums and sureties		574		507		396		67		111
Other		676		239		349		437		-110
VAT claimed for reimbursement		289		289		289		0		0
Other tax credit		0		0		104		0		-104
Rent		32		112		88		-80		24
Deductible taxes		0		50		50		-50		0
Social security institutions		20		20		21		0		-1
IRAP-IRES reimbursement		18		18		18		0		0
Tax withholdings		2		8		7		-6		1
Factoring interest		40		10		3		30		7
Accrued income		3		3		3		0		0
Tax assets - interest		454		0		0		454		0
Leasing fees		0		0		0		0		0
IRPEF reimbursement		4		5		0		-1		5
Total		14,192		11,247		11,469		2,945		-222

Grants chiefly refer to the amount accrued by the parent (€5,281 thousand) and are broken down as follows:

• SIB grant (€4,630 thousand);

• MCBEES grant (€258 thousand);

• AIM grant (€40 thousand);

• IAREPAM grant (€158 thousand;

• PROST3SIS grant (€195 thousand).

Other assets also include guarantee deposits on gas and electricity consumption (€472 thousand).

[3.11] Cash and cash equivalents

Cash and cash equivalents at 31 December 2022 amount to €25,920 thousand, compared to €21,503 thousand at the previous year end. This caption shows the group’s liquidity at the reporting date.

Reference should be made to the statement of cash flows for an analysis of changes in cash and cash equivalents.

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Bank and postal accounts		25,903		21,486		26,257		4,417		-4,771
Cash-in-hand and cash equivalents		17		17		16		0		1
Total		25,920		21,503		26,273		4,417		-4,770

2022 31

[3.12] Equity

Equity attributable to the owners of the parent amounts to €306,564 thousand, and is broken down as follows:

	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Share capital		9,868		9,868		9,868		0		0
Share premium reserve		14,425		14,425		14,425		0		0
Legal reserve		2,101		2,101		2,101		0		0
Equity injections		28,051		28,051		23,088		0		4,963
Merge reserve		288,261		288,261		288,261		0		0
Actuarial reserve		31		-23		-25		54		2
Translation reserve		2,379		1,508		-334		871		1,842
Other reserves		2,687		-2,329		-2,329		5,016		0
Retained earnings (losses carried forward)		-21,966		-18,862		-6,380		-3,104		-12,482
Profit (loss) for the year		-19,273		-2,539		-12,482		-16,735		9,943
Equity		306,564		320,463		316,194		-13,899		4,269

The share capital at 31 December 2022 is €9,868 thousand and is fully subscribed and paid up. It is comprised of 9,989,718 ordinary shares without a nominal amount. It is unchanged on the previous year end.

The share premium reserve amounts to €14,425 thousand and is unchanged on the previous year end.

The legal reserve amounts to €2,101 thousand. This reserve is not distributable and did not change during the year.

Negative goodwill, amounting to €288,261 thousand, comprises the effects of the reverse merger between the parent and Emil Holding III S.p.A. in October 2016 on equity.

Capital injections for capital increase, amounting to €28,051 thousand, comprise the contribution in kind made in 2021 by the shareholder for the acquisition of TechMah Medical (€4,963 thousand), the capital injection made by the shareholder in June 2020 (€20,000 thousand) and the effects of a contribution in kind made in 2019 by the shareholder in relation to the transaction carried out by the subsidiary Lima USA with Hospital for Special Surgery (HSS) (€3,088 thousand).

The contribution in kind made by the shareholder in 2021 is directly related to the shared-based payment of certain milestones regarding the acquisition of TechMah Medical. Under the agreement signed in 2018, the subsidiary Lima USA would allocate the founding shareholders of TechMah Medical a set number of new EmilNewCo Sarl (indirect parent of Limacorporate S.p.A. with a 100% interest) shares upon reaching set targets regarding the development of new products benefiting the group.

The above-mentioned allocation of shares in October 2021 led to a share capital increase for EmilNewCo and the recognition of an amount due from the founding shareholders of TechMah Medical equal to the liability recognised by Lima USA for the contractual milestones to be settled. The two transactions between the founding shareholders of Techmah Medical and Lima Group (EmilNewCo Sarl, Limacorporate S.p.A. and Lima USA) were offset using claim notes, which generated the capital injection referred to above.

With a similar transaction, the collaboration agreement signed with HSS in January 2019 for the production of implants within the hospital led to the following agreements:

• a six-year lease for the premises where Lima USA will produce the implants for HSS, of which payment for the first three years has been made by awarding HSS a fixed number of new EmilNewCo Sarl shares and the second three years will be paid by monthly instalments;

• a clause which establishes that HSS will bear an agreed amount of the cost of any leasehold improvements made by Lima USA and will receive an agreed number of new EmilNewCo Sarl shares in return.

The above-mentioned allocation of shares led to a share capital increase for EmilNewCo and the recognition of an amount due from HSS. The prepaid lease instalments and the set amount related to the leasehold improvements generated a liability for Lima USA towards HSS. The two transactions between HSS and Lima Group (EmilNewCo, Limacorporate S.p.A. and Lima USA) have been offset using claim notes, which generated the capital injection referred to above.

2022 32

Other reserves also include:

• the revaluation reserve, which arose from the merger of Lima S.p.A., amounts to €111 thousand and is recognised in compliance with Law no. 413 of 30 December 1991 in relation to deferred tax on the revalued amount of land and industrial buildings. There were no changes in the reserve during the year;

• the reserve deriving from the application of IAS 19 Employee benefits amounting to €31 thousand;

• the IFRS 2 reserve amounting to €4,650 thousand deriving from the accounting treatment of cash-settled share-based payment and equity-settled share-based payment arrangements;

• the reserve for unrealised exchange rate gains of €1,764 thousand, comprising the net unrealised gains on the allocation of the parent’s profit for the previous year;

• the translation reserve, with a positive balance of €2,379 thousand, reflects the changes in the group’s share of the equity of consolidated companies due to changes in exchange rates of such companies’ functional currencies compared to the presentation currency of the Consolidated financial statements restated as at 31 December 2022.

The correction of error on payback for €6.945 thousand has been recorded on retained earnings / losses carried forward.

The following table provides information on the possibility of use and distribution of each of the parent’s equity items, along with their utilisations in the last three years:

Description	Amount		Possibility of use		Available portion		Utilisation in the previous three years to cover losses		Utilisation in the previous three years for other reasons
Share capital		9,868		B
Share premium reserve		14,425		A, B		14,425
Legal reserve		2,101		B		2,101
Capital injections for capital increase		28,051		A, B, C		28,051		9,215
Merge reserve		288,261		A, B, C		288,288		246
Actuarial reserve		31
Translation reserve		2,379
Other reserves		2,687
Retained earnings (losses carried forward)		-21,966				10,770
TOTAL		325,838				343,635		9,461		0
Non-Distributable Portion (Legal Reserve)						2,101
Non-Distributable Portion (Reserve For Unrealised Exchange Rate Gains)						1,199
Capitalised Start-Up And Development Costs)						14,387
Residual Distributable Amount						325,949

* A: for capital increases; B: to cover losses; C: dividends

The following supplementary information is provided on the parent’s reserves:

1) Reserves or other provisions that do not contribute to the taxable profit of shareholders in the event of distribution regardless of when they are formed.

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021
Emil Holding III merger reserve		288,261		288,261		288,261
Capital injections for capital increase		28,051		28,051		23,088
Share premium reserve		14,425		14,425		14,425
Total		330,737		330,737		325,774

2022 33

2) Reserves or other provisions that do contribute to the taxable profit of the parent in the event of distribution regardless of when they are formed.

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021
Revaluation reserve as per Law no. 413/1991		111		111		111
Reserve as per article 55 of Presidential decree no. 917/86		—		—		—
Total		111		111		111

3) Reserves included in share capital.

Reserves or other provisions that contribute to the taxable profit of shareholders in the event of distribution, irrespective of when they were set up, for a free share capital increase by using the reserve as per the shareholders’ resolution of 15 October 1999.

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021
Extraordinary reserve		540		540		540
Total		540		540		540

[3.13] Provisions for risks and charges

Details of this caption and changes therein during 2021 and 2022 are provided below:

(€‘000)
	01/01/2021		Exchange differences		Increases		Decreases		Reclassification		31/12/2021 restated
Pension and similar provisions		889		0		198		-162		0		925
Other provisions		11,958		-4		4,226		-1,222		-569		14,389
Total		12,847		-4		4,424		-1,384		-569		15,314

(€‘000)
	31/12/2021 restated		Exchange differences		Increases		Decreases		Reclassification		31/12/2022 restated
Pension and similar provisions		925		0		236		-576		0		585
Other provisions		14,389		14		4,166		-1,997		0		16,571
Total		15,314		14		4,402		-2,573		0		17,156

Agents’ termination indemnity (€585 thousand) is the estimated liability deriving from the application of ruling legislation and the contractual clauses in relation to the termination of agency contracts. Unlike accruals to the provision for risks, guarantees and other provisions, accruals to agents’ termination indemnity are classified by nature among costs for services. The decreases of the year refer to utilisations of the provision following the termination of agency contracts and the release of the provision when not due.

Other provisions, amounting to €16,571 thousand, are comprised as follows:

• the provision for charges of €1,859 thousand, of which €1,460 thousand related to commission expense on revenue yet to be invoiced; and €399 thousand related to highly probable non-competition agreements the payment date of which is not yet known;

• the provision related to the payback system for €14.3 million;

• compensation for damage caused by products of €300 thousand;

• other disputes/contingent liabilities of €95 thousand.

The decreases of the year mainly refer to the release of a provision following the signing of a settlement agreement with an agent.

The accruals of the year mainly refer to the best estimate of the amounts due under the payback system.

2022 34

The market in which the Group operates is strictly controlled by laws and regulations such as, e.g., the EU Medical Devices Regulation (‘MDR’) in Europe and the Federal Food, Drug and Cosmetic Act (‘FDCA’) in USA. In order to demonstrate adherence to regulatory requirements and to maintain the ability to sell its products, the Group must obtain and maintain authorisations and certifications from the relevant authorities. Discussions are currently underway with the Australian authority, the Therapeutic Goods Administration (the ‘TGA’), which has been provided with clarification regarding an observation made by the TGA on the high revision rate of certain elements of the ‘SMR’ shoulder solution.

[3.14] Employee benefits

Employee benefits chiefly refer to post-employment benefits recognised by the parent. These are defined benefit plans in accordance with IAS 19. Changes in the caption during the two years were as follows:

(€‘000)
	31/12/2022 restated			31/12/2021 restated			Variation 2022 vs 2021
Balance at 1 January		1,442			1,421			21
Exchange difference		(13	)		—			(13	)
Benefits settled/advances paid		(189	)		(123	)		(66	)
Accruals		1,716			1,651			65
Cometa Fund, other pension funds		(1,599	)		(1,376	)		(223	)
Post-employment benefits - Substitute tax on revaluation		—			(132	)		132
Interest		10			4			6
Actuarial (gain) loss		(71	)		(3	)		(68	)
Total		1,296			1,442			(146	)

The main actuarial assumptions used in determining the present value of post-employment benefits are set out below:

	31/12/2022	31/12/2021
Actual mortality rate	RG48 tables determined by the State general accountant	RG48 tables determined by the State general accountant
Actual invalidity rate	INPS disability/invalidity tables	INPS disability/invalidity tables
Rate of early terminations (dismissals and resignations)	Constant annual average rate of 5%	Constant annual average rate of 5%
Rate of requests for advances of post-employment benefits	- Constant annual average rate of 3% - Average amount of 70% of post-employment benefits accrued	- Constant annual average rate of 3% - Average amount of 70% of post-employment benefits accrued
Annual technical discount rate	3.6% - iBoxx index Eur Corporate AA 10	1% - iBoxx index Eur Corporate AA 10+
Annual future inflation rate	2.50%	1.50%
Pension dates	In line with ruling legislation	In line with ruling legislation
Annual increase in post-employment benefits	Fixed rate of 3.38% plus 75% of the inflation rate noted by ISTAT for December of the previous year	Fixed rate of 2.63% plus 75% of the inflation rate noted by ISTAT for December of the previous year

2022 35

The occurrence of reasonably possible changes in the actuarial assumptions at 31 December 2022 and 2021 would have impacted the defined benefit obligations by the amounts shown below:

2021 sensitivity analysis
(€‘000)	Defined benefit obligation
	+		-
Annual discount rate (+/- 0.50%)		959		999
Annual inflation rate (+/- 0.25%)		991		967
Annual turnover rate (+/- 2.00%)		978		979
2022 sensitivity analysis
(€‘000)	Defined benefit obligation
	+		-
Annual discount rate (+/- 0.50%)		890		922
Annual inflation rate (+/- 0.25%)		915		896
Annual turnover rate (+/- 2.00%)		907		906

The number of employees by category at the reporting date and the average for the year is set out below:

Workforce	31/12/2020		Incoming		Outgoing		Other changes		Reclassifications		31/12/2021		2021 average
Blue collars		227		11		-18		0		0		220		224
White collars		589		108		-104		-1		-1		591		590
Junior managers		90		7		-9		0		-12		76		83
Managers		32		5		-9		0		13		41		37
Total		938		131		-140		-1		0		928		933

Workforce	31/12/2021		Incoming		Outgoing		Other changes		Reclassifications		31/12/2022		2022 average
Blue collars		220		22		-14		-20		-4		204		212
White collars		591		140		-132		1		-2		598		595
Junior managers		76		8		-14		15		5		90		83
Managers		41		4		-9		4		1		41		41
Total		928		174		-169		0		0		933		931

[3.15] Current and non-current financial liabilities

Non-current financial liabilities, amounting to €10,165 thousand at 31 December 2022, comprise the portion of loans and borrowings due after one year and are broken down as follows:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Non-current bank loans and borrowings		363		746		1,379		-383		-633
Non-current bank loans and borrowings (due after five years)		2		0		41		2		-41
Bonds		0		272,556		271,136		-272,556		1,420
Other financial liabilities		5,248		5,848		8,279		-600		-2,431
Lease liabilities as per IFRS 16		4,552		4,423		6,573		129		-2,150
Derivatives		0		0		0		0		0
Total		10,165		283,573		287,407		-273,408		-3,834

2022 36

Current financial liabilities, amounting to €336,659 thousand, comprise the current portion of loans and borrowings and are broken down as follows:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Credit cards		383		47,000		40,000		-46,617		7,000
Advances on exports		0		7,771		14,817		-7,771		-7,046
Current bank loans and borrowings		54,000		3,518		3,384		50,482		134
Non-current bank loans and borrowings		386		1,346		1,318		-960		28
Bonds - current portion		274,039		882		909		273,157		-27
Accrued expenses on bonds - due within one year		1,979		0		0		1,979		0
Accrued financial expense - due within one year		298		401		405		-103		-4
Loans and borrowings with other financial backers		2,310		280		211		2,030		69
Lease liabilities as per IFRS 16		3,265		338		112		2,927		226
Total		336,659		61,536		61,156		275,123		380

Current financial liabilities chiefly include the bonds issued by Limacorporate S.p.A. in 2017 equal to €274,039 thousand at the reporting date. They are senior secured bonds redeemable in 2023 for a total nominal amount of €275 million. The bonds were initially recognised at fair value, net of directly related costs, and measured at amortised cost applying the effective interest rate method.

The bonds have coupons based on the 3-month Euribor plus a 3.75% spread, with a Euribor floor threshold of 0.00%. They are listed on the Euro MTF market of the Luxembourg Stock Exchange and the professional section of the ExtraMOT market of the Italian Stock Exchange.

The coupons mature every three months on 15 February, 15 May, 15 August and 15 November each year starting from 15 November 2017.

The following guarantees were issued in relation to the bonds:

• pledge on the shares of Limacorporate S.p.A.;

• pledge on the shares of some subsidiaries;

• pledge on some of the current accounts of the parent and some subsidiaries;

• special lien on plant, machinery and other items of property, plant and equipment of the parent;

• lien on certain categories of assets of some subsidiaries;

• guarantees on some categories of assets of the parent and some subsidiaries.

In relation to the refinancing put in place in 2017, as well as the issue of bonds, Limacorporate also finalised an agreement for a new super senior revolving credit facility for a maximum of €60 million. It may also be used partially, in several instalments with set repayment terms. If the financial covenants are complied with, the interest rate is the same as the bonds, i.e., 3-month Euribor plus a 3.75% spread, with a Euribor floor threshold of 0.00%.

The same guarantees provided for the issue of the bonds were granted for this revolving credit facility; specifically:

• pledge on the shares of Limacorporate S.p.A.;

• pledge on the shares of some subsidiaries;

• pledge on some of the current accounts of the parent and some subsidiaries;

• special lien on plant, machinery and other items of property, plant and equipment of the parent;

• lien on certain categories of assets of some subsidiaries;

• guarantees on some categories of assets of the parent and some subsidiaries.

At the reporting date, €54 million of the revolving facility was used (31 December 2021: €47 million).

If more than 35% of the available amount of the revolving facility is used (i.e., draw-downs exceeding €21 million), a covenant related to the ratio of super senior net debt (the amount drawn down from the revolving facility net of liquid funds) to consolidated gross operating profit (as defined in the loan agreement), which cannot exceed 1.83, is activated under the terms of the contract. Such covenant was complied with at 31 December 2022.

On 3 February 2023, the parent issued new senior secured bonds redeemable in February 2028 for a total nominal amount of €295 million. In addition to the bond issue, the parent also signed a new super senior revolving facility for a maximum of €65 million expiring in November 2027.

2022 37

On 9 March 2023, the parent privately placed additional notes with the same terms and conditions as the bonds, for an amount of €15 million.

The pre-existing bonds and super senior revolving facility were fully redeemed and repaid.

The bonds have coupons based on the 3-month Euribor plus a 5.75% spread, with a Euribor floor threshold of 0.00%. They are listed on the Euro MTF market of the Luxembourg Stock Exchange.

The completion of the refinancing also saw a significant capital injection of €46,295 thousand by the parent’s shareholder.

The management, after having carefully assessed, and positively considered, the effects of the actions in progress have the reasonable expectation that the Company may continue to operate in the foreseeable future, consequently the management have prepared the financial statements as at 31 December 2022 on a going concern basis.

Non-current financial liabilities include loans and borrowings from other financial backers (€185 thousand) related to the amount due in 2024 for the acquisition of a business unit from the group’s Sicilian distributor.

On 25 September 2017, the parent entered into an agreement with the agency MT Ortho to acquire its business unit comprising the components organised for the marketing, sale and after-sales assistance of Lima medical devices in Sicily and Calabria. Specifically, the business unit included:

• ongoing supply contracts with the healthcare facilities;

• supply contracts under negotiation;

• goodwill.

The consideration of €3.7 million was to be paid as follows:

• €740 thousand when the contract was signed;

• €2,960 thousand in six annual instalments (from 2018 to 2023), the payment of which depends on whether a certain level of sales is maintained in the region until the payment is complete.

The agreement was renegotiated in late 2020, accelerating the payment of the remaining 2021 instalments of €1,645 thousand against a €20 thousand decrease in the liability and the renegotiation of the commissions in the area.

Loans and borrowings from other financial backers also include amounts yet to be paid in relation to the acquisition of TechMah Medical LLC (contingent consideration). The difference on the previous year end is taken to profit or loss under financial income.

The caption also includes the non-current portion of the medium/long-term loans taken out by the parent for the SICAT and IAREPAM projects and by some branches in relation to the relief available for the Covid-19 pandemic, detailed as follows:

Description	Company	Original amount		Rate	Expiry date	Residual amount at 01/01/2021		Guarantee
SICAT sustainable growth fund 1st progress report	Limacorporate S.p.A.		274	Fixed	30/06/2026		190	None
SICAT sustainable growth fund 2nd progress report	Limacorporate S.p.A.		339	Fixed	30/06/2026		251	None
Covid-19 subsidised loan	Lima France		500	Fixed	31/05/2024		500	Government guarantee
Covid-19 subsidised loan	Lima Austria		200	0% until August 2022, then a floating loan	31/12/2024		200	None
Covid-19 subsidised loan	Lima Switzerland		407	Fixed	31/03/2025		407	None
Total			1,720				1,548

2022 38

Description	Company	Original amount		Rate	Expiry date	Residual amount at 31/12/2021		Guarantee
SICAT sustainable growth fund 1st progress report	Limacorporate S.p.A.		274	Fixed	30/06/2026		156	None
SICAT sustainable growth fund 2nd progress report	Limacorporate S.p.A.		339	Fixed	30/06/2026		206	None
Covid-19 subsidised loan	Lima France		500	Fixed	31/05/2024		512	Government guarantee
Covid-19 subsidised loan	Lima Austria		200	0% until August 2022, then a floating loan	31/12/2024		150	None
Total			1,313				1,024

Company	Description	Original amount		Rate	Expiry date		Residual amount at 31/12/2022		Guarantee
Limacorporate S.p.A.	SICAT sustainable growth fund 1st progress report		274	Fixed		30/06/2026		122	None
Limacorporate S.p.A.	SICAT sustainable growth fund 2nd progress report		339	Fixed		30/06/2026		161	None
Limacorporate S.p.A.	Sustainable growth fund “Project IAREPAM – Artificial Intelligence for the Efficient Development of an Implant in Additive Manufacturing” 1st progress report		6	Fixed		30/06/2031		6	None
Lima France	Covid-19 subsidised loan		500	Fixed		31/05/2024		363	Government guarantee
Lima Austria	Covid-19 subsidised loan		200	0% until August 2022, then a floating loan		31/12/2024		100	None
Total			1,319					751

Accrued financial expense and accrued expenses on bonds due within one year include interest accrued at each reporting date and not yet paid.

Finally, financial liabilities include lease liabilities deriving from the application of IFRS 16. The discount rate applied in 2022 was revised and modified to take into consideration the higher interest rates compared to previous years.

Changes in lease liabilities from 1 January 2021 to 31 December 2022 are set out below:

(€‘000)
	01/01/2021		Exchange differences		Increases		Decreases		Other changes		Reclassifications		31/12/2021 restated
Lease liabilities as per IFRS 16 - non-current portion		6,573		0		1,369		0		0		-3,518		4,424
Lease liabilities as per IFRS 16 - current portion		3,384		0		0		-3,384		0		3,518		3,518
Total		9,957		0		1,369		-3,384		0		0		7,941

(€‘000)
	31/12/2021 restated		Exchange differences		Increases		Decreases		Other changes		Reclassifications		31/12/2022 restated
Lease liabilities as per IFRS 16 - non-current portion		4,424		83		3,663		0		655		-4,273		4,552
Lease liabilities as per IFRS 16 - current portion		3,518		-7		40		-4,559		0		4,273		3,265
Total		7,941		76		3,703		-4,559		655		0		7,817

Lease liabilities are detailed by due dates as follows:

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021
Current liabilities - due within one year		3,265		3,518		3,384
Non-current liabilities - due from one to five years		3,997		4,328		6,022
Non-current liabilities - due after five years		555		95		551
Total		7,817		7,941		9,957

[3.16] Other non-current liabilities

Other non-current liabilities, amounting to €649 thousand (31 December 2021: €5,250 thousand), include incentive plans for some managers (€427 thousand) and the non-current portion of deferred income (€221 thousand), chiefly related to insurance costs.

The decrease on the previous year end is chiefly due to the pay-out of amounts to an outgoing manager and the fair value adjustment of the incentive plans.

2022 39

Reference should be made to note [4.8] incentive plans under section [4] Other information for further information about such plans.

[3.17] Trade payables

Trade payables amount to €36,564 thousand at 31 December 2022 (31 December 2021: €32,343 thousand) and refer to short-term obligations to suppliers of goods and services. They refer to positions payable in the short term and there are no amounts due after one year.

There are no differences between the carrying amount and fair value of such payables.

Trade payables at 31 December 2022 are broken down by geographical segment in the following table:

	Total Italy		Total EU		Rest of world		Total
Trade payables		19,196		8,941		8,077		36,214
Commercial paper		—		—		—		—
Payable to subsidiaries		—		—		—		—
Payable to associates		—		—		—		—
Payables to parents		—		350		—		350
Payables to subsidiaries of parents		—		—		—		—
Total		19,196		9,291		8,077		36,564

Trade payables at 31 December 2021 are broken down by geographical segment in the following table:

	Total Italy		Total EU		Rest of world		Total
Trade payables		18,297		7,366		6,330		31,993
Commercial paper						—		—
Payable to subsidiaries		—		—		—		—
Payable to associates		—		—		—		—
Payables to parents		—		350		—		350
Payables to subsidiaries of parents		—		—		—		—
Total		18,297		7,716		6,330		32,343

Trade payables at 01 January 2021 are broken down by geographical segment in the following table:

	Total Italy		Total EU		Rest of world		Total
Trade payables		16,316		6,208		5,491		28,016
Payable to subsidiaries		—		—		400		400
Debiti verso Imprese Collegate		—		—		—		—
Payables to parents		—		525		—		525
Payables to subsidiaries of parents		—		—		—		—
Total		16,316		6,733		5,891		28,941

Trade payables do not accrue interest. The terms and conditions for related parties do not differ from those applied for third party suppliers. Trade payables in foreign currencies are analysed in section [4.2] Financial risk management – Fair value and risk management to which reference should be made.

[3.18] Tax liabilities

Tax liabilities amount to €877 thousand at 31 December 2022 (31 December 2021: €202 thousand). Specifically, the caption is fully comprised of current taxes payable by foreign branches.

2022 40

[3.19] Other current liabilities

Other current liabilities are broken down in the following table. The main liabilities refer to payments on account, tax liabilities, social security charges payable, amounts due to employees and sundry liabilities mainly related to the payback system.

(€‘000)
	31/12/2022 restated		31/12/2021 restated		01/01/2021		Variation 2022 vs 2021		Variation 2021 vs 2020
Wages and salaries		1,848		2,347		3,386		-499		-1,039
Employee and performance bonus		8,911		6,064		6,197		2,847		-133
Directors’ fees		302		82		369		220		-287
Statutory auditors’ fees		34		35		18		-1		17
Liabilities for the purchase of business units		194		194		194		0		0
Payables to factors for collections received		7		2		5		5		-3
Foreign commissions		4		0		0		4		0
Sundry other liabilities		1,034		1,382		1,396		-348		-14
Payments on account		4,380		4,273		4,378		107		-105
IRPEF withholdings		1,241		978		812		263		166
Other tax liabilities		1,852		632		826		1,220		-194
VAT		1,280		1,384		1,344		-104		40
INPS - Inpdai - Previndai		2,390		1,616		2,048		774		-432
INAIL		19		18		3		1		15
Cometa Fund, other pension funds		292		255		226		37		29
Enasarco for agents		181		152		142		29		10
Other social security charges payable		612		425		442		187		-17
Accrued expenses:		0		0		0		0		0
Insurance premiums		5		9		10		-4		-1
Interest on non-current loans		0		9		0		-9		9
Other		80		152		189		-72		-37
Deferred income:		0		0		0		0		0
Grants related to assets		72		26		42		46		-16
Rent		1		0		0		1		0
Other		3		6		19		-3		-13
Total		24,742		20,041		22,047		4,701		-2,006

Payments on account amount to €4,380 thousand and include the following:

• PON SIB grant advance of €3,773 thousand, unchanged on the previous year end;

• MC BEES grant advance of €249 thousand, up €33 thousand on the previous year end;

• IAREPAM grant advance of €11 thousand (nil balance at the previous year end);

• advances received from customers of €340 thousand;

• other payments on account of €7 thousand.

Liabilities for the purchase of business units of €194 thousand (unchanged from the previous year) refers to the acquisition of the Lima Brazil business unit. This liability dates back to 2011 when the Brazilian business unit was set up.

Other tax liabilities include taxes, fines and interest which arose from the parent signing a mutually-agreed assessment settlement procedure with the tax authorities (Friuli-Venezia Giulia regional tax authorities).

On 4 December 2019, the company was notified of a preliminary assessment report by tax authorities.

2022 41

On 3 February 2020, the company replied to such preliminary assessment report, asking the tax authorities to recognize the lack of grounds of some of the allegations set out in the report and, accordingly, not to issue the assessment notices, reserving its right to present further pleadings and start negotiations with the tax authorities.

No issue of the assessment notices has been notified. In this context the risk was difficult to quantify and of an indeterminate amount, in light of the deductions made by the company and the failure to establish a cross-examination on the matter with the Tax Authority.

The company’s management believed that if taken the claim to court, then it is probable that it will be able to defend its position, however, at the end of 2022 management changed the strategy and intended to take in consideration to settle the claim (although not in agreement on the legitimacy and grounds of the add-backs proposed by the tax authorities), in order to avoid a lengthy dispute and based on its assessments on the cost-effectiveness of the legal procedure.

On 11 January 2023 the tax authorities notified to the company an Invitation (pursuant to article 5-ter of Legislative decree no. 218 of 19 June 1997), the invitation is a communication to appear in order to try to reach an agreement. the Invitation has been issued with year protocol 2022 and notified in early January to the company.

In march 2023 the company decided to accept the amount of the settlement proposed by the tax authorities.

The amount due is of about €1,477 at 31 December 2022 and is included in the caption “Other current liabilities”.

[3.20] Revenue and other revenue and income

Revenue amounts to €245,669 thousand, compared to €210,543 thousand in 2021, a year-on-year increase of 16.7%.

Revenue derives from sales and distribution contracts with group customers essentially related to the sale of orthopaedic implants, mostly for shoulders, hips and knees.

In accordance with IFRS 15, revenues are stated net of discounts and allowances and are constrained in order to only represent the ones that are highly probable to be collected. The constraints related to variable consideration refer to payback, amounting to € 2.9 million at 31 December 2022 (€ 2.3 million at 31 December 2021), established in connection with the activation of the Italian government payback provision as a retroactive rebate (i.e. variable consideration). Such variable considerations were estimated based on the publicly available information. The Italian payback law is a mechanism to obtain from suppliers a contribution to offset variances occurring when Italian government expenditures exceed their ceiling for the purchase of medical devices.

It is broken down by geographical segment as follows:

(€‘000)
	2022 restated		2021 restated		Variation
Italy		45,227		39,950		5,277
Rest of Europe		97,948		79,011		18,937
APAC		37,652		38,357		(705	)
United States		43,111		35,283		7,828
Rest of world		21,731		17,942		3,789
Total		245,669		210,543		35,126

Under Italian healthcare regulations, each region is allocated an annual budget for purchasing medical devices. Upon exceeding the assigned budget, the region can ask suppliers of medical devices to reimburse a portion of the excess amount in proportion to the annual market share of each supplier in the region involved (the payback system). Specifically, pursuant to Decree law no. 115 of 9 August 2022 (converted into Law no. 142/2022), the Ministry for Health, with Ministerial decree published on 15 September 2022 (“Decree 216/2022”), set the amounts exceeding the regional budgets for each year from 2015 to 2018 and, with Ministerial decree published on 6 October 2022 (“Decree 251/2022”), set out guidelines for the Italian regions to follow in requesting reimbursements under the payback system.

Under the payback system, each region issues payment orders to suppliers of medical devices. At the date of these consolidated financial statements restated as at 31 December 2022, Limacorporate S.p.A. and Lima SM in liquidation received payment orders for reimbursements under the payback system for amounts totalling €8.8 million for 2015, 2016, 2017 and 2018 which were recognised under provisions for risks and charges.

2022 42

Should a supplier not pay the requested amounts within 30 days, Decree 216/2022 provides that such amounts be offset against any amounts due to such suppliers from each region and/or body partnered with regional healthcare authorities. In addition, under Decree law no. 4 of 11 January 2023, the due date for the payment of such amounts was deferred to 30 April 2023. Decree law no. 34 of 30 March 2023 as modified by Law Decree n 132 of 15th november 2023 then further deferred the payment to 30th November 2023. On 24 November 2023 the Lazio regional administrative court has referred to the Italian Constitutional Court a series of points around the constitutional legitimacy of the legislation that disciplines the payback system for medical devices. As a consequence, al proceedings pending before the Lazio regional administrative court are, de facto, suspended until the Constitutional Court rules on the above.

Additionally, on 30 November 2023 the Lazio regional administrative court has issued a specific ruling to Limacorporate S.p.A., confirming that all requests for payment received from the regions are to be suspended until the Constitutional Court rules on the above.

In line with the approach adopted by other suppliers of medical devices, Limacorporate contested Decree 216/2022 and Decree 251/2022 before the Lazio regional administrative court, contesting, inter alia, whether the decrees comply with the constitution. The parent also contested the individual deeds through which the regions involved individually settled and requested the amounts deemed due to it.

Furthermore, as it cannot be excluded that the Italian Ministry for Health may deem that the regional budgets for each year from 2019 to 2022 have been exceeded and, thus, that the Italian regions may issue further payment orders for each of those years, the group has calculated its best estimate of amounts probably due, based on:

• publicly available data on spending by the regions over the relevant budgets

• Limacorporate’s turnover in the various regions;

• Limacorporate’s market share in the various regions.

Other revenue and income are broken down as follows:

(€‘000)
	2022 restated		2021 restated		Variation
Service recharges		2,805		2,048		757
Lease income		449		441		8
Recharges to subsidiaries/associates		24		1		23
Gains		863		675		188
Release of the provision for risks		106		0		106
Other income		535		489		46
Grants related to income		615		475		140
Grants related to assets		84		77		7
Other revenute - previous years		283		-249		532
Other revenue		33		16		17
Total		5,798		3,973		1,825

The increase in revenue from recharges for services is linked to the rise in turnover and sales.

2022 43

[3.21] Raw materials, consumables, supplies and goods

This caption amounts to €56,391 thousand, compared to €53,530 thousand in 2021. It is broken down as follows:

(€‘000)
Description	2022 restated		2021 restated		Variation
Purchase of raw materials		9,350		9,038		312
Purchase of semi-finished products		21,353		21,567		-214
Purchase of finished goods		10,218		6,136		4,082
Individual tool components		13,501		15,135		-1,634
Opening balance of raw materials, consumables, supplies and goods		6,094		6,106		-12
Closing balance of raw materials, consumables, supplies and goods		-6,272		-6,094		-178
Other purchases		2,146		1,642		504
TOTAL		56,391		53,530		2,860

[3.22] Services

Services amount to €81,645 thousand, up 16.8% on the €69,910 thousand of 2021. The caption is broken down as follows:

(€‘000)
Description	31/12/2022 restated		31/12/2021 restated		Variation
Outsourced processing and analyses		3,310		4,347		-1,037
Transport costs for sales		5,551		4,750		801
Transport costs for purchases		790		631		159
Energy, power supply		3,622		1,194		2,428
Administrative services		1,891		1,693		198
Maintenance and repair		2,226		1,825		400
Maintenance of HW/SW/office equipment		2,700		2,071		629
Technical and commercial consultancy		5,895		5,535		360
Non-recurring consultancy		635		5,386		-4,751
Conferences and trade fairs		2,354		1,026		1,328
WorkShop		2,812		1,414		1,399
Enasarco commissions and charges		28,074		23,670		4,405
Travel costs		4,561		2,670		1,892
Insurance costs		3,524		3,078		446
Directors’ fees		2,784		799		1,986
Royalties		1,360		936		424
Others		9,555		8,886		669
TOTAL		81,645		69,910		11,735

The increase in this caption is chiefly due to fees directly related to the growth in turnover and higher energy costs tied to the rise in utilities costs.

Directors’ fees for 2022 include €941 thousand for management incentive plans (2021: €466 thousand). Reference should be made to section [4.8] Incentive plans for a description of such plans. The increase in directors’ fees is attributable to the costs incurred due to the CEO stepping down.

[3.23] Change in work in progress, semi-finished products and finished goods

This caption shows a negative balance of €887 thousand for 2022 (2021: positive balance of €2,058 thousand).

2022 44

[3.24] Personnel expenses

Personnel expenses amount to €76,858 thousand, compared to €60,773 thousand in 2021, and are broken down as follows:

(€‘000)
Description	31/12/2022 restated		31/12/2021 restated		Variation
Wages and salaries		63,080		48,151		14,928
Social security contributions		11,980		10,485		1,495
Post-employment benefits		1,716		1,726		-10
Other costs		82		411		-329
Total		76,858		60,773		16,085

Reference should be made to note [3.14] Employee benefits for details on the workforce.

Personnel expenses for 2022 include €3,928 thousand for management incentive plans. Reference should be made to section [4.8] Incentive plans for a description of such plans and the related costs.

[3.25] Amortisation, depreciation and impairment losses

Amortisation, depreciation and impairment losses amount to €35,408 thousand in 2022, compared to €32,517 thousand in 2021, and include depreciation of right-of-use assets of €5,335 thousand (2021: €4,595 thousand). Reference should be made to note [3.3] Property, plant and equipment for details on the individual categories.

The caption is broken down as follows:

(€‘000)
Description	2022 restated		2021 restated		Variation
Amortisation of intangible assets		8,657		7,393		1,263
Depreciation of property, plant and equipment		21,416		20,529		887
Depreciation of leased assets		5,335		4,595		740
Total		35,408		32,517		2,891

Other impairment losses of €16,152 thousand (2021: €209 thousand) refer to impairment losses on intangible assets and property, plant and equipment for which the related costs are not expected to be recovered as of the date of preparation of these consolidated financial statements restated as at 31 December 2022. The caption also includes the impairment loss on the goodwill generated by the acquisition of the subsidiary TechMah. Reference should be made to note [3.2] Goodwill for details.

The impairment losses on trade receivables of €502 thousand (2021: €429 thousand) include the net impairment losses on trade receivables recognised pursuant to IFRS 9.

[3.26] Other operating costs

Other operating costs amount to €1,857 thousand in 2022, compared to €1,509 thousand in 2021, and are broken down as follows:

(€‘000)
	2022 restated		2021 restated		Variation
Taxes and duties		1,053		904		149
Other costs		18		16		2
Losses on assets		52		94		-42
Gifts and donations		670		490		180
Sundry costs - previous years		234		125		109
Tax expense - previous years		0		-51		51
Provision for risks		-170		-69		-101
Total		1,857		1,509		348

2022 45

[3.27] Internal work capitalised

This caption amounts to €13,532 thousand for 2022 and €16,250 thousand for 2021. It may be broken down as follows:

(€‘000)
Description	31/12/2022 restated		31/12/2021 restated		Variation
Increases in property, plant and equipment for capitalisation of equipment		10,291		11,856		-1,565
Increases in intangible assets for capitalisation of sundry costs		759		1,826		-1,068
Increases in property, plant and equipment for internal work		2,483		2,568		-85
Total		13,532		16,250		-2,717

Increases in property, plant and equipment for the capitalisation of surgical instruments and internal work both refer to the capitalisation of surgical instruments built internally. These surgical instruments are provided to hospitals on a free loan basis to be used to implant the group’s products.

Increases in non-current assets for capitalisation of costs (€759 thousand) refer to the capitalisation of internal and external costs incurred for product development projects.

[3.28] Financial income and expense

Net financial expense amounts to €8,048 thousand in 2022, compared to €12,956 thousand in 2021, and is broken down as follows:

(€‘000)
	2022 restated		2021 restated		Variation
Exchange gains		-7,416		-6,986		-430
Other interest income		-163		-154		-9
Fair value gain on liabilities		-6,981		-688		-6,293
Financial income		-14,561		-7,829		-6,732
Exchange losses		6,478		5,645		833
Interest on bonds		11,320		10,484		835
Other interest and financial expenses		4,811		4,069		742
Fair value losses on liabilities		0		586		-586
Financial expense		22,609		20,785		1,824
Total		8,048		12,956		-4,908

The €6,732 thousand increase in financial income during the year is chiefly due to fair value gains on the liability for the acquisition of TechMah.

The higher interest rates on bonds and the revolving credit facility in the second half of the year following the rise in the Euribor led to an increase in net borrowing costs.

2022 46

[3.29] Income taxes

Income taxes amount to €6,526 thousand compared to €3,529 thousand in 2021. The caption is broken down as follows:

€‘000
	2022 restated		2021 restated
Pre-tax income (loss)		-12,748		991
Income taxes calculated using the the theorical IRES rate (24%)		3,059		-238
IRAP		-252		-809
Effect of different taxation of foreign companies		-1,924		-673
Patent Box effect		0		0
Other taxes		5,642		5,249
Income tax benefit (expense)		6,526		3,529

Taxes relative to previous years refer to taxes for 2016 defined with the mutually-agreed assessment settlement procedure (tax settlement). Reference should be made to section [3.19] Other current liabilities for more information.

The main temporary differences that led to the recognition of deferred tax assets and liabilities are set out in the following table along with relevant effects:

(€’000)
Description	31/12/2022 restated				31/12/2021 restated
	Temporary differences		Tax effect		Temporary differences		Tax effect
Change in deferred tax assets:
Provision for risks and charges		14,682		-3,751		13,147		-3,207
Allowance for inventory write-down		6,178		-1,483		5,972		-1,443
Amortisation of trademarks		149		-42		128		-36
Amortisation of goodwill		670		-69		1,386		-387
Unpaid directors’ fees		262		-63		40		-10
Agents’ termination indemnity		97		-27		268		-75
Exchange losses		11,309		-2,713		10,007		-2,402
Impairment losses on equity investments		0		0		565		-136
Impairment losses on intangible assets		152		-37		222		-57
ACE deduction		8,966		-2,152		6,254		-1,501
Non-deductible interest as per article 96 of the		0		0		3,103		-745
Consolidated income tax act
Fiscal losses		979		-235		0		0
Difference between carrying amount and tax base		953		-229		640		-154
IFRS 16		99		-72		302		-87
Incentive plans		0		0		4,217		-1,012
Post-employment benefits		37		-19		76		-18
Other variations		532		-128		136		-34
Deferred tax assets - subsidiaries (Lima AU, Lima ES,		0		-538		0		-642
Lima BR, Lima NZ, Lima DK, Lima PL)
Deferred tax assets on consolidation adjustments		0		-20,151		0		-21,516
Total change in deferred tax assets		45,068		-31,709		46,463		-33,462
Change in deferred tax liabilities
Taxed grands		3,692		886		3,754		901
Exchange gains		7,874		1,890		7,976		1,914
Other variations		641		154		456		117
Deferred tax liabilities - subsidiaries (Lima AU, Lima ES,		0		6,484		0		5,000
Lima CZ, Lima JP, Lima NZ, Lima PL, Lima UK and
Lima USA)
Deferred tax assets on consolidation adjustments		0		9,861		0		9,364
Total change in deferred tax liabilities		12,207		19,275		12,186		17,296
Net change in deferred tax (assets) liabilities		32,861		-12,434		34,277		-16,166

The deferred tax assets and liabilities includes the taxes calculated on the temporary differences arising between the book value of assets and liabilities and the corresponding tax values (especially for taxed funds and non-deductible interest). Considering 3 years history, 2020,2021, 2022 the fiscal year 2022 was the first year of fiscal losses of the Group. The tax rate for the fiscal year 2022 is mainly impacted by the full impairment of the Goodwill related to TechMah CGU as described in paragraph [3.2].

2022 47

Other information

[4.1] Correction of errors

The accounting policies set out in the relevant section of these notes have been applied to prepare the Consolidated financial statements restated at 31 December 2022 following the correction of error related to the payback mechanism accounted according to IFRS 15, Revenue from Contracts with Customers, retrospectively, as reduction of revenue (variable consideration).

Although the correction did not result in an application of a new accounting standard, it impacted the one adopted in relation to the payback mechanism as described in paragraph [3.20] Revenue and other revenue and income. The error has been corrected by restating each of the affected financial statement line items for the current period and the previous one.

As per the IAS.8, par. 49, the following tables show the amounts of the error correction for previously reported amounts . The error refers to the payback system accounted for as variable consideration under IFRS15 instead of IAS37. The correction of error has been accounted for retrospectively at 1 January 2021.

The information presented covers the impact of the correction, in 2021 and 2022, on the financial position and financial performance.

The effect of the restatement on the 2021 figures is a decrease on the opening balances of Retained earnings (accumulated deficit) for €6,945 thousand related to the correction of error of previous years and an increase of the period loss for €1,713 thousand. The table reported below summarize the effects of the restatement on the financial statements as at 1 January 2021 and 31 December 2021.

2022 48

Reconciliations of the statement of financial position and the statement of profit or loss

			Impact of correction of errors
	Note		As previously stated 01/01/21			Adjustments			As restated 01/01/2021
Other intangible assets		[3.1]		44,477						44,477
Goodwill		[3.2]		396,900						396,900
Property, plant and equipment		[3.3]		85,288						85,288
Equity investments		[3.4]		402						402
Deferred tax assets		[3.5]		29,702			2,193			31,895
Other non-current assets		[3.6]		663						663
				557,432			2,193			559,625
Inventories		[3.7]		84,166						84,166
Trade receivables		[3.8]		63,070						63,070
Current tax assets		[3.9]		4,361						4,361
Other current assets		[3.10]		11,469						11,469
Cash and cash equivalents		[3.11]		26,273						26,273
Total current assets				189,340			—			189,340
TOTAL ASSETS				746,772			2,193			748,965
Equity
Share capital		[3.12]		9,868						9,868
Share premium reserve		[3.12]		14,425						14,425
Other reserves		[3.12]		310,762						310,762
Retained earnings (accumulated deficit)		[3.12]		565			(6,945	)		(6,380	)
Profit (loss) for the year		[3.12]		(12,482	)					(12,482	)
				323,139			(6,945	)		316,194
Total equity				323,139			(6,945	)		316,194
Non-current liabilities
Non-current financial liabilities		[3.15]		287,222						287,222
Employee benefits		[3.14]		1,421						1,421
Deferred tax liabilities		[3.5]		12,986						12,986
Provisions for risks and charges		[3.13]		3,894			9,138			13,032
Other non-current liabilities		[3.16]		5,476						5,476
Total non-current liabilities				310,999			9,138			320,137
Current liabilities
Current financial liabilities		[3.15]		59,511						59,511
Trade payables		[3.17]		28,941						28,941
Current tax liabilities		[3.18]		491						491
Other current liabilities		[3.19]		23,692						23,692
Total current liabilities				112,635			—			112,635
TOTAL EQUITY AND LIABILITIES				746,772			2,193			748,965

2022 49

Reconciliations of the statement of financial position and the statement of profit or loss

			Impact of correction of errors
(€‘000)
	Note		As previously stated 31/12/21			Adjustments			As restated 31/12/2021
ASSETS
Non-current assets
Other intangible assets		[3.1]		53,595						53,595
Goodwill		[3.2]		398,305						398,305
Property, plant and equipment		[3.3]		81,773						81,773
Equity investments		[3.4]		2					��	2
Deferred tax assets		[3.5]		30,728			2,734			33,462
Other non-current assets		[3.6]		705						705
Total non-current assets				565,109			2,734			567,842
Current assets
Inventories		[3.7]		87,421						87,421
Trade receivables		[3.8]		66,891						66,891
Current tax assets		[3.9]		2,554						2,554
Other current assets		[3.10]		11,247						11,247
Cash and cash equivalents		[3.11]		21,503						21,503
Total current assets				189,617			—			189,617
TOTAL ASSETS				754,726			2,734			757,460
EQUITY AND LIABILITIES
Equity
Share capital		[3.12]		9,868						9,868
Share premium reserve		[3.12]		14,425						14,425
Other reserves		[3.12]		317,570						317,570
Retained earnings (accumulated deficit)		[3.12]		(11,917	)		(6,945	)		(18,862	)
Profit (loss) for the year		[3.12]		(825	)		(1,713	)		(2,538	)
Total equity attributable to the owners of the parent				329,121			(8,658	)		320,463
Total equity				329,121			(8,658	)		320,463
Non-current liabilities
Non-current financial liabilities		[3.15]		283,573						283,573
Employee benefits		[3.14]		1,442						1,442
Deferred tax liabilities		[3.5]		17,296						17,296
Provisions for risks and charges		[3.13]		3,922			11,392			15,314
Other non-current liabilities		[3.16]		5,250						5,250
Total non-current liabilities				311,483			11,392			322,875
Current liabilities
Current financial liabilities		[3.15]		61,536						61,536
Trade payables		[3.17]		32,343						32,343
Current tax liabilities		[3.18]		202						202
Other current liabilities		[3.19]		20,041						20,041
Total current liabilities				114,122			—			114,122
TOTAL EQUITY AND LIABILITIES				754,726			2,734			757,460

2022 50

			Impact of correction of errors
(€‘000)
	Note		As previously stated 31/12/21			Adjustments			As restated 31/12/2021
Revenue		[3.20]		212,798			(2,254	)		210,543
Other revenues and income		[3.20]		3,973						3,973
Total revenue and income				216,771			(2,254	)		214,517
Raw materials, consumables, supplies and goods		[3.21]		(53,530	)					(53,530	)
Services		[3.22]		(69,910	)					(69,910	)
Change in w.i.p., semi-finished products and finished goods		[3.23]		2,058						2,058
Personnel expenses		[3.24]		(60,773	)					(60,773	)
Amortisation and Depreciation		[3.25]		(32,517	)					(32,517	)
Impairment losses on trade receivables		[3.25]		(429	)					(429	)
Impairment losses on fixed assets		[3.25]		(209	)					(209	)
Other operating costs		[3.26]		(1,509	)					(1,509	)
Internal work capitalised		[3.27]		16,250						16,250
Operating costs				(200,570	)		—			(200,570	)
Operating profit				16,201			(2,254	)		13,947
Financial income		[3.28]		7,829						7,829
Financial expense		[3.28]		(20,785	)					(20,785	)
Net financial expense				(12,956	)		—			(12,956	)
Pre-tax income (loss)				3,245			(2,254	)		991
Income tax benefit (expense)		[3.29]		(4,070	)		541			(3,529	)
Profit (loss) for the year				(825	)		(1,713	)		(2,539	)
of which attributable to the owners of the parent				(825	)		(1,713	)		(2,539	)

			Impact of correction of errors
(€‘000)
	Note		As previously stated 31/12/21			Adjustments			As restated 31/12/2021
Profit (loss) for the year				(825	)		(1,713	)		(2,539	)
Other comprehensive income (expense)
Items that will never be reclassified to profit or loss (A)
Remeasurements of the net defined benefit liability (asset)		[3.14]		3			—			3
Related tax		[3.14]		(1	)		—			(1	)
				2			—			2
Items that are or may be reclassified to profit or loss (B)
Exchange differences on translation of foreign operations		[3.12]		1,842			—			1,842
				1,842			—			1,842
Other comprehensive income (expense), net of tax (A+B)				1,844			—			1,844
Comprehensive income (expense) for the year				1,019			(1,713	)		(695	)
Comprehensive income (expense) attributable to:				—
Owners of the parent				1,019			(1,713	)		(695	)

The effect originated by the restatement on the figures as at 31 December 2022 is a decrease of revenues for an amount equal to €2,925 thousand. The table reported below summarize the effects of the restatement on the financial statements as at 31 December 2022.

2022 51

Reconciliations of the statement of financial position and the statement of profit or loss

			Impact of correction of errors
(€‘000)
	Note		As previously stated 31/12/22			Adjustments			As restated 31/12/2022
ASSETS
Non-current assets
Other intangible assets		[3.1]		58,234						58,234
Goodwill		[3.2]		384,216						384,216
Property, plant and equipment		[3.3]		79,837						79,837
Equity investments		[3.4]		2						2
Deferred tax assets		[3.5]		31,694			15			31,709
Other non-current assets		[3.6]		861						861
Total non-current assets				554,844			15			554,859
Current assets
Inventories		[3.7]		86,728						86,728
Trade receivables		[3.8]		70,161						70,161
Current tax assets		[3.9]		2,087						2,087
Other current assets		[3.10]		14,192						14,192
Cash and cash equivalents		[3.11]		25,920						25,920
Total current assets				199,088			—			199,088
TOTAL ASSETS				753,932			15			753,947
EQUITY AND LIABILITIES
Equity
Share capital		[3.12]		9,868						9,868
Share premium reserve		[3.12]		14,425						14,425
Other reserves		[3.12]		323,510						323,510
Retained earnings (accumulated deficit)		[3.12]		(13,308	)		(8,658	)		(21,966	)
Profit (loss) for the year		[3.12]		(27,885	)		8,612			(19,274	)
Total equity attributable to the owners of the parent				306,610			(47	)		306,564
Total equity				306,610			(47	)		306,564
Non-current liabilities
Non-current financial liabilities		[3.15]		10,165						10,165
Employee benefits		[3.14]		1,296						1,296
Deferred tax liabilities		[3.5]		19,275						19,275
Provisions for risks and charges		[3.13]		8,296			8,860			17,156
Other non-current liabilities		[3.16]		649						649
Total non-current liabilities				39,680			8,860			48,541
Current liabilities
Current financial liabilities		[3.15]		336,659						336,659
Trade payables		[3.17]		36,564						36,564
Current tax liabilities		[3.18]		877						877
Other current liabilities		[3.19]		33,542			(8,800	)		24,742
Total current liabilities				407,641			(8,800	)		398,842
TOTAL EQUITY AND LIABILITIES				753,932			14			753,946

2022 52

			Impact of correction of errors
(€‘000)
	Note		As previously stated 31/12/22			Adjustments			As restated 31/12/2022
Revenue		[3.20]		248,594			(2,925	)		245,669
Other revenues and income		[3.20]		5,798						5,798
Total revenue and income				254,392			(2,925	)		251,467
Raw materials, consumables, supplies and goods		[3.21]		(56,391	)					(56,391	)
Services		[3.22]		(81,645	)					(81,645	)
Change in w.i.p., semi-finished products and finished goods		[3.23]		(887	)					(887	)
Personnel expenses		[3.24]		(76,858	)					(76,858	)
Amortisation and Depreciation		[3.25]		(35,408	)					(35,408	)
Impairment losses on trade receivables		[3.25]		(502	)					(502	)
Impairment losses on fixed assets		[3.25]		(16,152	)					(16,152	)
Other operating costs		[3.26]		(16,113	)		14,256			(1,857	)
Internal work capitalised		[3.27]		13,532						13,532
Operating costs				(270,424	)		14,256			(256,167	)
Operating profit				(16,032	)		11,331			(4,700	)
Financial income		[3.28]		14,561						14,561
Financial expense		[3.28]		(22,609	)					(22,609	)
Net financial expense				(8,048	)		—			(8,048	)
Pre-tax income (loss)				(24,080	)		11,331			(12,748	)
Income tax benefit (expense)		[3.29]		(3,806	)		(2,720	)		(6,526	)
Profit (loss) for the year				(27,886	)		8,612			(19,274	)
of which attributable to the owners of the parent				(27,886	)		8,612			(19,274	)

2022 53

Reconciliations of the statement of cash flows

		Impact of correction of errors
(€‘000)
	Note	As previously stated 31/12/2022			Adjustments			As restated 31/12/2022
Operating activities
Profit (loss) for the period	[3.12]		(27,885	)		8,612			(19,273	)
Income tax (benefit)/expense	[3.29]		3,806			2,720			6,526
Net financial (income)/expense	[3.28]		10,809			—			10,809
Amortisation, depreciation and impairment losses	[3.25]		50,649			—			50,649
Accruals/(Release) to provisions	[3.26]		4,374			(2,532	)		1,842
Net (gains)/loss on disposals	[3.20] [3.26]		(629	)		—			(629	)
FX on contingent consideration	[3.28]		1,031			—			1,031
Cash flows from operating activities before changes in working capital			42,155			8,800			50,955
Change in inventories	[3.7]		693			—			693
Change in trade receivables	[3.8]		(3,270	)		—			(3,270	)
Change in trade payables	[3.17]		4,220			—			4,220
Change in other assets/liabilities	[3.10] [3.16] [3.19]		9,116			(8,800	)		316
Change in non-current assets	[3.6]		(156	)		—			(156	)
Income taxes paid			(2,019	)		—			(2,019	)
Cash flows from operating activities A)			50,739			—			50,739
Investing activities
Acquisitions of property, plant and equipment	[3.3]		(25,234	)		—			(25,234	)
Disposal of property, plant and equipment	[3.3]		1,418			—			1,418
Acquisitions of intangible assets	[3.1]		(12,229	)		—			(12,229	)
Disposal of intangible assets	[3.1]		955			—			955
Cash flows used in investing activities B)			(35,090	)		—			(35,090	)
Financing activities
Third party funds
Net change in current financial liabilities	[3.15]		8,916						8,916
Gross change in non-current financial liabilities	[3.15]		(0	)		—			(0	)
Decrease in lease liabilities	[3.15]		(4,401	)		—			(4,401	)
Net interest income	[3.28]		163			—			163
Net interest paid	[3.28]		(15,911	)		—			(15,911	)
Cash flows from (used in) financing activities C)			(11,233	)		—			(11,233	)
Increase (decrease) in liquid funds (A ± B ± C)			4,417			—			4,417
Opening cash and cash equivalent			21,503			—			21,503
Closing cash and cash equivalent			25,920			—			25,920
Increase (decrease) in cash and cash equivalents			4,417			—			4,417

2022 54

				Impact of correction of errors
(€000)
	Note			As previously  stated 31/12/22			Adjustments		As restated 31/12/2022
Profit (loss) for the year					(27,886	)		8,612		(19,274	)
Other comprehensive income (expense)
Items that will never be reclassified to profit or loss (A)
Remeasurements of the net defined benefit liability (asset)		[3.14	]		71			—		71
Related tax		[3.14	]		(17	)		—		(17	)
					54			—		54
Items that are or may be reclassified to profit or loss (B)
Exchange differences on translation of foreign operations		[3.12	]		871			—		871
					871			—		871
Other comprehensive income (epense), net of tax (A+B)					925			—		925
Comprehensive income (expense) for the year					(26,961	)		8,612		(18,349	)
Comprehensive income (expense) attributable to:
Owners of the parent					(26,961	)		8,612		(18,349	)

In the statutory consolidated financial statement as at 31 December 2022 the payback was incorrectly accounted for as operating cost in the profit and loss as of 31 December 2022.

[4.2] Operating segments

The disclosure about operating segments was prepared in accordance with IFRS 8 Operating segments which provides for the presentation of information in line with the measures adopted by the chief operating decision maker to make operating decisions.

At operating level, the group has a matrix organisational structure split by product line, distribution channel and geographical segment providing a coherent strategic vision of the business. This structure can be seen in the way management monitors and directs the group’s activities. Specifically, senior management reviews the group’s results as a whole as it does not have identifiable operating segments. Therefore, the group’s operations are presented as a single segment for IFRS 8 reporting purposes.

2022 55

A breakdown of revenue earned in 2022 and 2021 by product line, distribution channel and geographical segment is shown below:

(€‘000)
Revenue by PRODUCT LINE	31/12/2022 restated		31/12/2021 restated
Hip		88,142		78,307
Extremities		98,537		83,966
Knee		49,234		39,700
Fixation & Other		9,756		8,570
Total sales revenue		245,669		210,543

(€‘000)
Revenue by DISTRIBUTION CHANNEL	31/12/2022 restated		31/12/2021 restated
Direct customers		195,629		178,786
Indirect channel		50,040		31,757
Total sales revenue		245,669		210,543

(€‘000)
Revenue by GEOGRAPHICAL SEGMENT	31/12/2022 restated		31/12/2021 restated
Italy		45,227		39,960
Resto of Europe		97,948		79,001
APAC		37,652		38,357
United States		43,111		35,283
Rest of world		21,731		17,942
Total sales revenue		245,669		210,543

As required by IFRS 8, it is noted that the group does not have individual customers that generate revenue of 10% or more of its total revenue in 2022 and 2021.

The following table shows non-current assets other than financial assets and deferred tax assets by geographical segment at 31 December 2022 and 2021, allocated in line with the country where they are held. Unallocated non-current assets entirely consist of goodwill.

(€‘000)
	31/12/2022 restated		31/12/2021 restated
Italy		444,336		442,738
USA		50,006		61,606
Rest of Europe		15,106		21,593
APAC		6,827		7,940
Rest of the world		6,873		502
Total non-current assets		523,148		534,379

[4.3] ERRORstruments - Fair value and risk management

A. Accounting classification and fair value

The next table shows the carrying amount and fair value of each financial asset and liability, including their fair value hierarchy level. Information about the fair value of financial assets and liabilities not measured at fair value is not provided as their carrying amount reasonably approximates their fair value.

Trade receivables and other assets and trade payables and other liabilities classified as held for sale are not included in the table. Their carrying amount reasonably approximates their fair value.

2022 56

(€‘000)		Carrying Amount														Fair value
31/12/2021 unaudited	Notes	Fair value – Hedging instruments		Mandatorily at FVTPL - other		FVOCI - debt instruments		FVOCI - equity instruments		Financial Assets measured at amortised cost		Other liabilities		Total		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
			—												—		—		—		—		—
Financial assets not measured at fair value
Trade receivables and other assets	[3.8] [3.10]										78,138				78,138				78,138				78,138
Cash and cash equivalents	[3.11]										21,503				21,503				21,503				21,503
			—		—		—		—		99,642		—		99,642		—		99,641		—		99,641
Financial liabilities measured at fair value
Liabilities for acquisitions - MT Ortho	[3.15]												185		185						185		185
Liabilities for acquisitions - Techmah	[3.15]												13,434		13,434						13,434		13,434
			—		—		—		—		—		13,619		13,619		—		—		13,619		13,619
Financial liabilities not measured at fair value
Bank credit facilities	[3.15]												1,199		1,199				1,199				1,199
Secured bank loans	[3.15]												47,000		47,000				47,000				47,000
Undecured bank loans	[3.15]												1,024		1,024				1,024				1,024
Secured bonds - listed bonds	[3.15]												272,556		272,556				272,556				272,556
Lease liabilities - IFRS16	[3.15]												7,941		7,941				7,941				7,941
Trade payables and other liabilities	[3.18] [3.20]												52,385		52,385				52,385				52,385
		—		—		—		—		—		382,105		382,105				382,105				382,105
TOTALE			—		—		—		—		99,642		395,723		495,365		—		481,746		13,619		495,365
(€‘000)		Carrying Amount														Fair value
31/12/2022 restated	Notes	Fair value – Hedging instruments		Mandatorily at FVTPL - other		FVOCI - debt instruments		FVOCI - equity instruments		Financial Assets measured at amortised cost		Other liabilities		Total		Level 1		Level 2		Level 3		Total
Financial assets measured at fair value
		—												—		—		—		—		—
Financial assets not measured at fair value
Trade receivables and other assets	[3.8] [3.10]										84,353				84,353				84,353				84,353
Cash and cash equivalents	[3.11]										25,920				25,920				25,920				25,920
			—		—		—		—		110,273		—���		110,273		—		110,273		—		110,273
Financial liabilities measured at fair value
Liabilities for acquisitions - MT Ortho	[3.15]												185		185						185		185
Liabilities for acquisitions - Techmah	[3.15]												7,373		7,373						7,373		7,373
			—		—		—		—		—		7,558		7,558		—		—		7,558		7,558
Financial liabilities not measured at fair value
Bank credit facilities	[3.15]												383		383				383				383
Secured bank loans	[3.15]												54,000		54,000				54,000				54,000
Undecured bank loans	[3.15]												751		751				751				751
Secured bonds - listed bonds	[3.15]												274,039		274,039				264,982				264,982
Lease liabilities - IFRS16	[3.15]												7,817		7,817				7,817				7,817
Trade payables and other liabilities	[3.18] [3.20]												70,105		70,105				70,105				70,105
		—		—		—		—		—		407,095		407,095				398,038				398,038
TOTALE			—		—		—		—		110,273		414,653		524,926		—		508,311		7,558		515,869

B. Fair value measurement

i. Measurement techniques and significant unobservable inputs

The following tables present the measurement techniques and significant unobservable inputs used to determine the fair value of level 2 and 3 financial instruments in the statement of financial position.

2022 57

Financial instruments measured at fair value

2021
Type	Measurement technique	Unobservable significant inputs	Relationship between unobservable sig. inputs and fair value measurement
Liabilities for TechMah acquisition	Discounted cash flows: This measurement technique considers the present value of the estimated payments, discounted using a discount rate that reflects the risk.	– At 31 December 2021, these milestones have been estimated by independent experts as USD15.2 million.	The estimated fair value would decrease if: - achievement of each milestone does not happen in accordance with the agreed timeline
	These estimated cash flows are estimated by independent experts that define the net present value of the contract’s future cash outflows; these outflows are partly tied to the group’s business plan assuming the milestones will be achieved as agreed with TechMah’s former owners.	– At 31 December 2021, independent experts have expected future cash outflows of USD9.3 million if the milestones are reached. – Discount rate that reflects the risk (31 December 2021: 3.39%).	- the discount rate reflecting the risk is higher
2022
Type	Measurement technique	Unobservable significant inputs	Relationship between unobservable sig. inputs and fair value measurement
Liabilities for TechMah acquisition	Discounted cash flows: This measurement technique considers the present value of the estimated payments, discounted using a discount rate that reflects the risk.	– At 31 December 2022, these milestones have been estimated by independent experts as USD7.4 million.	The estimated fair value would decrease if: - achievement of each milestone does not happen in accordance with the agreed timeline
	These estimated cash flows are estimated by independent experts that define the net present value of the contract’s future cash outflows; these outflows are partly tied to the group’s business plan assuming the milestones will be achieved as agreed with TechMah’s former owners.	– At 31 December 2022, independent experts have expected future cash outflows of USD5.6 million if the milestones are reached. – Discount rate that reflects the risk (31 December 2022: 7.32%).	- the discount rate reflecting the risk is higher

Financial instruments not measured at fair value

Type	Measurement technique
Secured bonds Lease liabilities Secured bank loans Unsecured bank loans	Discounted cash flows: This measurement technique considers the present value of estimated payments, discounted using a discount rate that reflects the risk.

2022 58

Reconciliation of level 3

(€‘000)	Liabilities
Balance at 31 December 2020		21,265
Gain (losses)
- Net change in fair value (unrealised)		(680	)
- Foreing exchange (gain) losses		1,264
Payments		(8,415	)
Balance at 31 December 2021 restated		13,434
Gain (losses)
- Net change in fair value (unrealised)		(6,981	)
- Foreing exchange (gain) losses		921
Payments
Balance at 31 December 2022 restated		7,374

Sensitivity analysis

The reasonably possible changes at 31 December 2022 to one of the significant unobservable inputs would have the following effects on the fair value of the consideration:

€‘000
	Decrease					31 December 2022			Increase
Equity value		-10	%	-5	%		0	%		5	%	10	%
Techma liability		7,362		7,369			7,373			7,383		7,389

C. Financial risk management

The group is exposed to the following risks deriving from its use of financial instruments:

• credit risk;

• liquidity risk;

• market risk.

Risk management system

Overall responsibility for the design and oversight of the group’s risk management system lies with the parent’s board of directors, which is in charge of developing and monitoring the group’s risk management policies.

The group’s risk management policies are designed to identify and analyse any risks it is exposed to, establish appropriate limits and controls and monitor the risks and compliance with such limits. The committee regularly revisits the policies and related systems to align them with market developments and the group’s business. The group aims to create a disciplined and constructive control environment through training programmes, standards and management procedures so that its employees are familiar with their roles and responsibilities.

The board of directors ensures compliance with the risk polices and management procedures and checks that the risk management system is appropriate to deal with risks that could affect the group.

The group’s financial instruments comprise cash and cash equivalents, loans, trade receivables and payables, current and non-current assets and liabilities as well as derivatives.

In its normal business operations, the group is exposed to:

• market risk, mainly currency and interest rate risks;

• commercial or counterparty credit risks, related to the risk of default on commercial or financial obligations by various counterparties as part of normal business operations or lending, investment and hedging transactions;

• liquidity risk, related to the availability of financial resources and access to the credit market and to the need to meet the group’s financial needs in the short term.

2022 59

Financial risk management is carried out centrally and essentially ensures that there are enough financial resources to meet business development needs and that resources are suitably invested in profitable activities.

Market risk

Market risk can be broken down into the following components:

• interest rate risk,

• currency risk.

Interest rate risk

The group’s exposure to interest rate risk is chiefly related to cash and cash equivalents, bonds and bank loans and borrowings, especially the revolving credit facility that is managed centrally. At 31 December 2022, the group does not have any interest rate hedges. A 100bps increase in the interest rate applied would have led to an increase of roughly €3.2 million in financial expense.

Currency risk

As the group sells its products in various countries, it is exposed to currency risk. This risk mainly derives from sales in currencies other than the Euro, like the US dollar, British pound, Japanese yen and Australian dollar.

The group regularly assesses its exposure to market financial risks. It does not manage such risks by using derivatives.

2022 60

Its exposure in relation to foreign currency assets and liabilities is detailed in the following table (countervalue of the respective currencies in Euro):

€‘000
	Currency		Amount in currency		Exchange rate		Counter value in Euro
Trade receivables
		AUD		2,493		2		1,588
		BRL		16,391		6		2,907
		CHF		479		1		487
		CZK		32,315		24		1,340
		DKK		1,219		7		164
		GBP		2,570		1		2,898
		HRK		7,526		8		999
		JPY		527,636		141		3,751
		KRW		3,980,038		1,344		2,961
		NZD		971		2		578
		PLN		14,923		5		3,188
		SEK		2,914		11		262
		TRY		3,483		20		174
		USD		10,596		1		9,935
		CAD		100		1		69
		CNY		308		7		42
Other assets
		USD		1,417		1		1,328
		AUD		234		2		149
		BRL		5,584		6		990
		CHF		52		1		53
		CNY		463		7		63
		CZK		2,090		24		87
		DKK		0		7		0
		GBP		110		1		124
		HRK		96		8		13
		JPY		32,436		141		231
		KRW		389,216		1,344		290
		NZD		30		2		18
		PLN		427		5		91
		SEK		247		11		22
		TRY		4,172		20		209
		ZAR		1		18		0
		CAD		133		1		92
Cash and cash equivalents
		AUD		1,185		2		755
		BRL		3,845		6		682
		CHF		187		1		190
		CZK		21,266		24		882
		DKK		645		7		87
		GBP		908		1		1,024
		HRK		5,773		8		766
		JPY		37,994		141		270
		KRW		823,810		1,344		613
		NZD		594		2		353
		PLN		3,018		5		645
		SEK		3,024		11		272
		TRY		2,280		20		114
		USD		5,360		1		5,025
		ZAR		1,447		18		80
		CAD		328		1		227
		CNY		1,227		7		167

2022 61

€‘000
	Currency		Amount in currency		Exchange rate		Counter value in Euro
Trade payables
		AUD		206		2		131
		CAD		85		1		59
		CHF		457		1		465
		CZK		911		24		38
		DKK		1,428		7		192
		GBP		606		1		683
		JPY		77,918		141		554
		KRW		62,011		1,344		46
		NZD		252		2		150
		PLN		2,520		5		538
		SEK		2,289		11		206
		TRY		1,133		20		57
		USD		3,330		1		3,122
		ZAR		77		18		4
		HRK		68		8		9
		BRL		28		6		5
		CNY		62		7		8
Financial liabilities
		AUD		498		2		318
		CAD		1		1		0
		CHF		359		1		364
		CZK		6,357		24		264
		GBP		212		1		240
		JPY		56,134		141		399
		KRW		159,876		1,344		119
		NZD		163		2		97
		TRY		0		20		0
		USD		10,671		1		10,004
		HRK		577		8		77
		BRL		291		6		52
		CNY		283		7		38
Other liabilities
		AUD		1,049		2		668
		CAD		3		1		2
		CHF		804		1		817
		CZK		4,928		24		204
		DKK		238		7		32
		GBP		882		1		995
		JPY		154,243		141		1,097
		KRW		110,305		1,344		82
		NZD		211		2		125
		SEK		1,111		11		100
		TRY		4		20		0
		USD		1,490		1		1,397
		ZAR		66		18		4
		HRK		261		8		35
		BRL		617		6		110

2022 62

Sensitivity analysis of currency risk

The financial assets and liabilities in currencies other than the functional currency of each group company at 31 December 2022 and 2021 were identified to perform the sensitivity analysis of currency risk. The group also considered foreign currency intragroup assets and liabilities to assess the potential effects on the profit or loss for the year.

Two scenarios were considered with a 5% appreciation or depreciation in the nominal exchange rate between the currency in which the caption is expressed and the Euro.

The next table shows the results of the sensitivity analysis:

€‘000
	5% appreciation				5% depreciation
	31 December				31 December
Currency	2022		2021		2022			2021
USD		1,961		2,232		(1,868	)		(2,126	)
JPY		943		1,092		(898	)		(1,040	)
PLN		613		537		(583	)		(512	)
KRW		494		576		(470	)		(549	)
GBP		447		415		(426	)		(395	)
BRL		501		391		(477	)		(373	)
CHF		71		124		(68	)		(118	)
AUD		18		176		(18	)		(167	)
TRY		74		151		(71	)		(144	)
SEK		62		115		(59	)		(109	)
CZK		92		100		(88	)		(95	)
DKK		33		76		(31	)		(73	)
HRK		82		58		(78	)		(55	)
Other		115		74		(110	)		(70	)
Total		5,507		6,117		(5,245	)		(5,826	)

Credit risk

Credit risk is the risk that a customer or counterparty to a financial instrument may default on a contractual obligation generating a loss for the group. It mainly arises on trade receivables and debt instruments.

The group’s maximum exposure to this type of risk is the assets’ carrying amount.

Some of the markets on which the group operates have a higher level of risk, such as southern Italy, where the health system is deeply in debt, southern European countries, like Spain and Portugal, and eastern European countries, such as Croatia, the Czech Republic and Slovakia, where collection times are very long.

Most of the group’s receivables are due from public institutions, thus solely linked to the country risk. Moreover, payments from public administrations have improved notably in some cases in recent years thanks to measures taken to cut public entity debt with private companies.

Credit risk is also mitigated by the fact that the group is increasing its sales in countries with shorter average collection times. Therefore, the weight of markets with higher credit risk will be reduced.

At 31 December 2021 and 2022, the group does not have exposures with individual customers for more than 10% of its total trade receivables. Its top ten customers account for around 6% of total trade receivables at 31 December 2021 and 2022.

2022 63

The amount of financial assets for which recovery is doubtful is immaterial in terms of the total amount of trade receivables and is, in any case, covered by adequate accruals to the relevant allowances. The following table shows the group’s exposure to credit risk (amounts are inclusive of the loss allowance):

(€‘000)
	Not yet due		Overdue								Total
			<30 days		30 - 90 days		90 - 180 days		Over 180 days
Gross trade receivables at 31 December 2021 restated		41,111		6,422		5,362		4,622		11,454		68,971
Loss allowance		0		0		0		24		2,059		2,082
Net trade receivables at 31 December 2021 restated		41,114		6,422		5,362		4,598		9,395		66,891
Gross trade receivables at 31 December 2022 restated		47,203		7,324		6,108		4,519		7,394		72,548
Loss allowance		0		0		1		1		2,385		2,387
Net trade receivables at 31 December 2022 restated		47,203		7,324		6,107		4,518		5,009		70,161

The group monitors credit risk by grouping trade receivables by the credit worthiness of the customers, considering whether they belong to the private or public sector, their geographical location, relationship with the group and any previous financial difficulties.

Receivables are broken down by geographical segment as follows:

	Total Italy		Total EU		Rest of world		Total
Trade receivables		23,021		20,681		26,438		70,140
From subsidiaries		0		0		0		0
From associates		0		0		0		0
From parents		0		21		0		21
From subsidiaries of parents		0		0		0		0
TOTAL		23,021		20,702		26,438		70,161

Liquidity risk

Liquidity risk derives from the ability to obtain financial resources at a sustainable cost to carry out the group’s normal business operations.

The group uses the usual tools to manage current trade receivables, as well as partially using the credit facilities available. Moreover:

• the group has debt instruments and credit lines to deal with liquidity requirements;

• there are no significant concentrations of liquidity risk with regard to financial assets.

The table below summaries the ageing of financial liabilities at 31 December 2022 on the basis of non-discounted contractual payments. The refinancing completed in the first quarter of 2023 guarantees enough liquid funds to the group to make the liquidity risk in the medium term immaterial.

	Within one year		After one year			After five years		Total
Credit cards		383		0			0		383
Advances on exports		0		0			0		0
Current bank loans and borrowings		54,298		0			0		54,298
Non-current bank loans and borrowings		386		363			2		751
Bonds		276,018		0			0		276,018
Loans and borrowings with other financial backers		2,310		5,248	��		0		7,558
Lease liabilites as per IFRS 16		3,265		3,997			555		7,817
TOTAL		336,659		9,607			557		346,824

[4.4] Significant non-recurring transactions

None.

2022 64

[4.5] Guarantees

Reference should be made to section [3.15] of the notes to the Consolidated financial statements restated as at 31 December 2022.

[4.6] Related party transactions

The group carries out transactions with the ultimate parent recognised in line with the provisions of IAS 24. They are all financial in nature and are performed with full transparency and on an arm’s length basis. They do not include typical and/or unusual transactions.

Details of related party transactions carried out in 2022 and 2021 are as follows:

(€‘000)
2021 restated
	Payables		Receivables		Other non- current liabilities		Other current liabilities		Sundry recharges		Services		Personnel expenses
EMIL HOLDING II S.à.r.l.		350		0				0		-1		350		0
Senior Management		0		0		4,812		82		0		741		-806
Short-term								82				275
Post-empoyment
Other long - term
Share based benefits						4,812						466		-806
Total		350		0		4,812		82		-1		1,091		-806

(€‘000)
2022 restated
	Payables		Receivables		Other non- current liabilities		Other current liabilities		Sundry recharges		Services		Personnel expenses
EMIL HOLDING II S.à.r.l.		350		21		—		—		-24		350		—
Senior Management		—		—		72		302		—		2,703		3,928
Short-term								302				586
Post-empoyment												1,176
Other long - term
Share based benefits						72						941		3,928
Total		350		21		72		302		-24		3,054		3,928

No other significant related party transactions took place during the year.

The group operates in a market dominated by entities directly or indirectly controlled by the Italian government through state bodies, agencies, related parties and other organisations (entities related to government bodies). The parent does not carry out transactions with other entities related to government bodies, such as, for example, the sale and purchase of goods and materials, the supply or receipt of services, leasing of assets or use of public services.

Transactions with Emil Holding II S.à.r.l.

Financial transactions with the ultimate parent are part of the parent’s normal business operations and take place at conditions similar to those applied to transactions with unrelated parties.

2022 65

[4.7] Fees of directors, statutory auditors and key management personnel

The fees paid to directors and statutory auditors were as follows:

	2022		2021		Variation
Statutory auditors’ fees		57		57		0
Directors’ fees		2,704		741		1,963
TOTAL		2,760		798		1,962

The fees of the independent auditors and entities belonging to its network for the statutory audit of the parent’s separate financial statements and the group’s consolidated financial statements restated as at 31 December 2022 and related activities amount to €237 thousand.

[4.8] Incentive plans

In accordance with IFRS 2, the parent identified cash-settled share-based payment and equity-settled share-based payment incentive plans for some managers.

Assumptions about the fair value of the share-based payment plans are based on the Monte Carlo method (by simulating the group’s gross operating profit and equity value).

In previous years, the parent had defined two types of plan:

• Virtual share plan (“VSP”)

On 23 November 2016, the parent’s shareholders approved the 2016-2030 virtual share plan for one of its managers. This includes the free award of options to subscribe the parent’s ordinary shares. The manager has the right to receive a number of options each year calculated using a pre-set formula.

The plan vests on 31 December 2030 although this date may be brought forward in the case of i) an IPO, ii) a change of control, or iii) leaver events that lead to the beneficiary leaving the parent.

The manager’s right to exercise the options vests in line with their continued employment relationship with the events i), ii) and iii) being early exercise events.

This plan qualifies as a cash-settled plan under IFRS 2. Its fair value was calculated using market models and the market data at the reporting dates (such as interest rate curves, historical price curves of listed comparable companies’ shares, price volatility of listed comparable companies’ shares) as well as non-market conditions (the probability that the above events will take place). The parent updates the calculation each year. After the sole beneficiary of the VSP stepped down in the first half of 2022, the amount due under the VSP was defined and paid during the year.

• MPP plan

In September 2016, the parent introduced an incentive plan for some group employees who signed agreements with Emil Holding I (Emil Holding II’s controlling shareholder) providing for i) the award of shares of Emil Holding II (the company that manages and coordinates the parent) to the plan beneficiaries, ii) the granting of call options by the beneficiaries to Emil Holding I whereby Emil Holding I can acquire the shares held by the beneficiaries if certain events occur, iii) the granting of put options by Emil Holding I to the beneficiaries whereby the latter can sell their shares in Emil Holding II at the same conditions set for the call option, generating an amount equal to the difference between the amount paid by the beneficiaries (on the subscription date or deferred) and the carrying amount of the shares at the option exercise date. The options can be exercised if one of the events occurs.

This plan qualifies as a cash-settled plan under IFRS 2. Its fair value was calculated using market models and the market data at the reporting dates (such as interest rate curve) as well as non-market conditions (the probability that the above leaver events will take place). The plan liability represents the plan’s future value less the cost incurred by each beneficiary as its initial investment to enter the plan. The parent updates the calculation each year.

These plans led to recognition of a non-current liability of €0 million at 31 December 2022 and costs of services and personnel expenses for the year of €346 thousand (€5.1 million and €340 thousand for 2021, respectively).

2022 66

• The Bonus Payments

Starting from June 2022 the Controlling Entity and the Entity agreed with certain employees some compensation plans which provide that upon occurrence of certain events (the “Bonus Payment Trigger Events”) a payment of a certain amount based on the enterprise value of the Entity at the trigger event date (the “Trigger Event Enterprise Value”).

The Bonus Payment Trigger Events occur at the first of the following events:

• the listing of Emil NewCo S.a.r.l. or any entity of the Lima Group of companies which holds, directly and indirectly, all or substantially all of the assets of the Lima Group, on a regulated stock exchange;

• in case no listing pursuant to paragraph a) has taken place, (i) any sale or transfer by Emil Holding I to a third party purchaser (not related to any EQT Funds) of more than 50% of the ordinary shares held by Emil Holding I in Emil NewCo S.a.r.l. or (ii) any sale to a third party purchaser (not related to any EQT Funds) of more than 50% of the shares in any other entity which holds, directly or indirectly, all or substantially all of the business or assets of the Lima Group; or

• an asset sale of all or substantially all of the assets of the Lima Group which results in the EQT Funds no longer holding any interest (except for unsubstantial assets) in the Lima Group.

Considering that the amount to be paid to the employees is based on the Trigger Event Enterprise Value of the Entity and is therefore based on the value of the Entity’s equity instrument, the Bonus Payment falls within the scope of the “IFRS 2 – Share Based Payments”.

In particular, the management accounted for the Bonus Payment as follows:

(i) the agreements in which the Entity has the obligation to settle the payment as cash-settled share-based payments (the “Cash-settled Bonus Payments”);

(ii) the agreements in which the obligation is settled by Emil Holding I as equity-settled share-based payments (the “Equity-settled Bonus Payments”).

In accordance with IFRS 2, the Equity-settled Bonus Payments are measured at the fair value of grant date. Instead, the Cash-settled Bonus Payments are measured at the fair value of grant date and then re-measured at each reporting date until settlement.

The fair value of the Bonus Payments is recognized as an expense during the vesting period.

In order to evaluate the fair value of the Bonus Payments, the management used a Monte Carlo valuation model.

• The Grant Dates considered for the valuation are: June 6, 2022, June 18, 2022, June 28, 2022, and August 9, 2022, which are the grant dates of the major part of the agreements.

• The management of the company has assumed that the exercise of the plan will occur following an Exit Event on June 30, 2024 with a probability of 100%.

• The riskfree interest rate is retrieved from public Information Provider and range from a minimun of 1.3% and maximum of 1.8% over the grant dates.

• The volatility was estimated based on historical series of Equity Value from comparable companies. An adjustment was then applied in order to obtain the volatility relative to Enterprise Value, considering the framework derived from the Merton model.

• Expected dividends rate is 0% for all the Bonus Payments.

• Employee exit rate is 0% for all the Bonus Payments.

The fair value of the Cash-settled Bonus Payments at grant date amounted to € 464.3 thousand.

The fair value of the Equity-settled Bonus Payments at grant date amounted to € 17,752.0 thousand.

As of 31 December 2022, this plan involves 11 employees and led to a recognition of personnel expenses of €4,523 thousand in 2022.

2022 67

[4.9] Information pursuant to article 1.125 of Law no. 124/2017

Pursuant to article 1 of Law no. 124 of 4 August 2017, in compliance with the transparency obligation, it is noted that the group received the following grants in 2022.

Granting body	Grant received		Reason
EUROPEAN COMMISSION		33	H2020 MSCA ITN 2017 mCBEEs - 764977: Advanced integrative solutions to corrosion problems beyond micro-scale: towards long-term durability of miniaturized Biomedical, Electronic and Energy systems
MINISTRY FOR ECONOMIC DEVELOPMENT		6	Project IAREPAM Artificial Intelligence for the Efficient Development of an Implant in Additive Manufacturing - subsidised loan
MINISTRY FOR ECONOMIC DEVELOPMENT		11	Project IAREPAM Artificial Intelligence for the Efficient Development of an Implant in Additive Manufacturing - advance on the 1st progress report
TOTAL		50

The loan taken out to carry out the SICAT research and development project (commented on in note [3.15] Current and non-current financial liabilities in the notes to the consolidated financial statements restated as at 31 December 2022) bears interest at a subsidised rate of 0.80%.

The loan taken out to carry out the IAREPAM research and development project (commented on in note [3.15] Current and non-current financial liabilities in the notes to the consolidated financial statements restated as at 31 December 2022) bears interest at a subsidised rate of 0.13%.

For the purposes of the above disclosure requirements, in relation to any other relevant grants received, reference should also be made to the national register which is available for public consultation.

[4.10] Going concern

Though some parts of the world still felt the effects of the Covid-19 pandemic in early 2022, the current global situation means this is not a tangible or imminent significant factor in the group’s ability to continue as a going concern.

Due to the completion of the refinancing of the group described earlier and the economic and financial forecasts for the current year, supported by the group’s performance in early 2023, the directors believe that going concern is comfortably ensured.

[4.11] Events after the reporting date

As described in more detail in the paragraph [3.15] Current and non-current financial liabilities, the group completed the restructuring of its credit facilities and bonds at the beginning of 2023, deferring maturity to early 2028. This was partly financed by a capital injection by the shareholder.

On 16 March 2023, the parent Limacorporate S.p.A. signed a mutually-agreed assessment settlement procedure with the tax authorities following the tax assessment carried out on 2016.

In summer 2023 the management of Limacorporate took the strategic decision to stop the Smart Space project (referred to TechMah CGU), all digital activities and resources have been refocused on other projects. The event has been considered as non-adjusting event under IAS 10 as the decision has been fully taken in 2023.

On 18th September 2023 the company was served a Complaint filed by the founding shareholders of TechMah Medical (“TechMah Founders”) versus Lima USA Inc. and Limacorporate S.p.A. for alleged breach contract based on the milestones set out in the Investor and Founders Agreement entered into by TechMah Medical LLC, TechMah Founders, Lima USA Inc., and Limacorporate S.p.A. on 8th October 2021.

The Complaint contains high level allegations that Lima USA, Inc. and Limacorporate S.p.A. breached the Investor and Founders Agreement by not using their “reasonable best efforts” to achieve some Regulatory Milestones and by failing to pay out certain Commercial Milestones the Founders assume have been met. The Founders have claimed damages in a range of USD 5.5 – 11.5 million.

2022 68

On 15th November 2023 the company filed a Motion to dismiss providing evidence that Lima did not breach the Investor and Founders Agreement Agreement and has no liability to Plaintiffs.

Enovis Corporation, an innovation-driven, medical technology growth company listed in NYSE, announced on September 25, 2023 a definitive agreement to acquire LimaCorporate S.p.A..

On 03 January 2024 Enovis Corporation (NYSE: ENOV) announced the completion of the acquisition of the shares of Limacorporate S.p.A. as anticipated on 25 September 2023. On the same date, Limacorporate S.p.A. fully reimbursed its bond and revolving credit facility. Such reimbursement was fully funded by an intercompany loan granted by Enovis Corporation.

On 09 January 2024 Limacorporate S.p.A. transferred the shares of Lima USA to Enovis Corporation

31 January 2024

2022 69

KPMG S.p.A.

Revisione e organizzazione contabile

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35131 PADOVA PD

Telefono +39 049 8249101

Email it-fmauditaly@kpmg.it

PEC kpmgspa@pec.kpmg.it

Independent Auditors’ Report

To the board of directors of

Limacorporate S.p.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Limacorporate S.p.A. and its subsidiaries (the Company), which comprise the consolidated statements of financial position as of December 31, 2022 and 2021, and January 1, 2021, and the related consolidated statements of comprehensive income, comprehensive income, changes in equity, and cash flows for the years ended December 31, 2022 and 2021, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and January 1, 2021, and its financial performance and its cash flows for the years ended December 31, 2022 and 2021 in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

As described in Note 4.1 “Correction of errors” to the consolidated financial statements, the Company has restated the 2022 and 2021 financial statements for a correction of an error related to the payback mechanism accounted in compliance with IFRS 15, Revenue from Contracts with Customers. Our opinion is not modified in respect of this matter.

Limacorporate S.p.A.

Independent Auditors’ Report

December 31, 2022 and 2021

Responsibilities of Management for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS as issued by the IASB, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise significant doubt about the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are authorized for issuance.

Auditors’ 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 auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. 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. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

• 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 Company’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise significant doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

KPMG S.p.A.

Padua, Italy

February 1, 2024

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