UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. | Completion of Acquisition or Disposition of Assets. |
As previously reported, on January 3, 2024, Enovis Corporation (the “Company” or “Enovis”) completed its previously announced acquisition of LimaCorporate S.p.A. (“Lima”) from Emil Holding II S.à r.l (“Seller”). Pursuant to the Share Purchase Agreement, dated September 22, 2023, between Seller and the Company, the Company acquired all of the issued and outstanding share capital of Lima from the Seller.
This Amendment No. 1 to Current Report on Form 8-K/A (“Amendment No. 1”) is filed to amend the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) by the Company on January 3, 2024 (the “Initial Report”) to include the historical financial statements of Lima and certain pro forma financial information required by Item 9.01 (a) and (b) of Form 8-K.
The pro forma financial information included in this Amendment No. 1 has been presented for informational purposes only. It does not purport to represent the actual results of operations that Enovis and Lima would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after the consummation of the acquisition. Except as described above, all other information in the Initial Report remains unchanged and is incorporated by reference herein.
Item 9.01. | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired.
The audited consolidated financial statements of Lima as of and for the years ended December 31, 2022 and December 31, 2021, together with the notes related thereto and the Independent Auditors’ Report thereon, are filed as Exhibit 99.1 to this Amendment No. 1 and included herein.
The unaudited condensed consolidated financial statements of Lima as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, are filed as Exhibit 99.2 to this Amendment No. 1 and included herein.
(b) Pro Forma Financial Information.
The Company’s unaudited pro forma condensed combined balance sheet as of September 30, 2023 and unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 and the nine months ended September 30, 2023, together with the notes related thereto, are filed as Exhibit 99.3 to this Amendment No. 1 and included herein.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 21, 2024 | ENOVIS CORPORATION | |||||
By: | /s/ Phillip B. Berry | |||||
Name: | Phillip B. Berry | |||||
Title: | Senior Vice President and Chief Financial Officer |
Exhibit 23.1
Consent of Independent Auditors
We consent to incorporation by reference in the registration statements (No.s 333-150710, 333-173883, 333-183115, 333-211357, 333-238564, 333-266526, 333-272340) on Form S-8 and in the registration statement (No. 333-253236) on Form S-3 of Enovis Corporation of our report dated February 1, 2024, with respect to the consolidated financial statements of Limacorporate S.p.A., which report appears in the Form 8-K/A of Enovis Corporation dated February 20, 2024.
/s/ KPMG S.p.A.
Padua, Italy
February 20, 2024
KPMG S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Limited, società di diritto inglese. | Ancona Bari Bergamo Bologna Bolzano Brescia Catania Como Firenze Genova Lecce Milano Napoli Novara Padova Palermo Parma Perugia Pescara Roma Torino Treviso Trieste Varese Verona |
Società per azioni Capitale sociale Euro 10.415.500,00 i.v. Registro Imprese Milano Monza Brianza Lodi e Codice Fiscale N. 00709600159 R.E.A. Milano N. 512867 Partita IVA 00709600159 VAT number IT00709600159 Sede legale: Via Vittor Pisani, 25 20124 Milano MI ITALIA |
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) |
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Note | 31/12/2022 restated |
31/12/2021 restated |
01/01/2021 | |||||||||||||
ASSETS |
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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 | |||||||||||
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Total non-current assets |
554,859 | 567,843 | 559,625 | |||||||||||||
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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 | |||||||||||
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Total current assets |
199,088 | 189,617 | 189,340 | |||||||||||||
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TOTAL ASSETS |
753,947 | 757,461 | 748,965 | |||||||||||||
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EQUITY AND LIABILITIES |
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Equity |
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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 | ) | ||||||||
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Total equity attributable to the owners of the parent |
306,564 | 320,463 | 316,194 | |||||||||||||
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Total equity |
306,564 | 320,463 | 316,194 | |||||||||||||
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Non-current liabilities |
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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 | |||||||||||
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Total non-current liabilities |
48,541 | 322,875 | 320,137 | |||||||||||||
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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 | |||||||||||
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Total current liabilities |
398,842 | 114,123 | 112,635 | |||||||||||||
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TOTAL EQUITY AND LIABILITIES |
753,947 | 757,461 | 748,965 | |||||||||||||
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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 | ||||||||
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Total revenue and income |
251,467 | 214,517 | ||||||||||
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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 | ||||||||
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Operating costs |
(256,167 | ) | (200,570 | ) | ||||||||
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Operating profit |
(4,700 | ) | 13,947 | |||||||||
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Financial income |
[3.28 | ] | 14,561 | 7,829 | ||||||||
Financial expense |
[3.28 | ] | (22,609 | ) | (20,785 | ) | ||||||
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Net financial expense |
(8,048 | ) | (12,956 | ) | ||||||||
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Pre-tax income (loss) |
(12,748 | ) | 991 | |||||||||
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Income tax benefit (expense) |
[3.29 | ] | (6,526 | ) | (3,529 | ) | ||||||
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Profit (loss) for the year |
(19,273 | ) | (2,539 | ) | ||||||||
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of which attributable to the owners of the parent |
(19,273 | ) | (2,539 | ) | ||||||||
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2022 | 4 |
Statement of comprehensive income
(000) |
||||||||||||
Note | 2022 restated | 2021 restated | ||||||||||
Profit (loss) for the year |
(19,273 | ) | (2,539 | ) | ||||||||
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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 | ) | ||||||
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54 | 2 | |||||||||||
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Items that are or may be reclassified to profit or loss (B) |
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Exchange differences on translation of foreign operations |
[3.12 | ] | 871 | 1,842 | ||||||||
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871 | 1,842 | |||||||||||
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Other comprehensive income (expense), net of tax (A+B) |
925 | 1,844 | ||||||||||
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Comprehensive income (expense) for the year |
(18,348 | ) | (695 | ) | ||||||||
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Comprehensive income (expense) attributable to: |
||||||||||||
Owners of the parent |
(18,348 | ) | (695 | ) | ||||||||
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2022 | 5 |
Statement of changes in equity
(000) |
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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 | |||||||||||||||||||||||||||||||||
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Impact of correction of errors |
(6,945 | ) | (6,945 | ) | (6,945 | ) | ||||||||||||||||||||||||||||||||||||||||||
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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 | |||||||||||||||||||||||||||||||||
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Statement of comprehensive income |
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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 |
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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 | ] | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||
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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 | ||||||||||||||||||||||||||||||||||
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Statement of comprehensive income |
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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 |
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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 | |||||||||||||||||||||||||||||||||||
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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 | ||||||||||||||||||||||||||||||||||||
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2022 | 6 |
Statement of cash flows
(000) |
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Note | 2022 restated | 2021 restated | ||||||||||
Operating activities |
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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 | ) | ||||||||
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Cash flows from operating activities A) |
50,739 | 48,414 | ||||||||||
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Investing activities |
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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 | |||||||||
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Cash flows used in investing activities B) |
(35,090 | ) | (34,056 | ) | ||||||||
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Financing activities |
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Third party funds |
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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 | ) | |||||||
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Cash flows from (used in) in financing activities C) |
(11,231 | ) | (19,127 | ) | ||||||||
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Increase (decrease) in liquid funds (A ± B ± C) |
4,417 | (4,770 | ) | |||||||||
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Opening cash and cash equivalent |
21,503 | 26,273 | ||||||||||
Closing cash and cash equivalent |
25,920 | 21,503 | ||||||||||
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Increase (decrease) in cash and cash equivalents |
4,417 | (4,770 | ) | |||||||||
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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 parents 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 parents 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 Groups 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 Groups 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 parents 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 acquirees 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 groups 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 parents 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 parents 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 groups 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 groups 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 groups 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 groups 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 groups 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 shareholders 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 parents or groups most recent plans. Reference should be made to note [2.4.6] Impairment losses.
Loss allowance
The loss allowance is managements 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 groups 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 entitys 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 groups 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 groups 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 policiesAmendments to IAS 1 and IFRS Practice statement 2 and Definition of accounting estimatesAmendments 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 groups 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 groups 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 groups 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 groups 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 groups 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 groups implicit multiple, no impairment indicators have been detected to date for goodwill allocated to the Group CGU.
The group separately measured TechMah Medical LLCs 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 managements estimate of the expected credit losses on trade receivables from customers. The estimate is based on the groups 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 parents 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 groups 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 parents profit for the previous year; |
| the translation reserve, with a positive balance of 2,379 thousand, reflects the changes in the groups 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 parents 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 parents 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 parents 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 groups 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 companys 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 |
| Limacorporates turnover in the various regions; |
| Limacorporates 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 groups 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 groups activities. Specifically, senior management reviews the groups results as a whole as it does not have identifiable operating segments. Therefore, the groups 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 contracts future cash outflows; these outflows are partly tied to the groups business plan assuming the milestones will be achieved as agreed with TechMahs 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 contracts future cash outflows; these outflows are partly tied to the groups business plan assuming the milestones will be achieved as agreed with TechMahs 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 groups risk management system lies with the parents board of directors, which is in charge of developing and monitoring the groups risk management policies.
The groups 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 groups 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 groups 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 groups 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 groups 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 groups 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 groups 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 groups 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 groups 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 arms 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 parents 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 parents separate financial statements and the groups 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 groups 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 parents shareholders approved the 2016-2030 virtual share plan for one of its managers. This includes the free award of options to subscribe the parents 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 managers 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 IIs 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 plans 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 Entitys 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 groups 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 groups 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
Piazza Salvemini, 20
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 Companys 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 Companys 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 Companys 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
2
Exhibit 99.2
Condensed consolidated interim financial statements as of and for the nine-months ended 30 September 2023
Contents
Condensed consolidated statement of financial position |
3 | |||
Condensed consolidated income statement |
4 | |||
Condensed consolidated statement of comprehensive income |
5 | |||
Condensed consolidated statement of changes in equity |
6 | |||
Condensed consolidated statement of cash flows |
7 | |||
Notes to the condensed consolidated interim financial statements |
8 |
2
Condensed consolidated statements of financial position
(000) |
||||||||||
ASSETS |
Note | 30/09/2023 | 31/12/2022 Restated |
|||||||
Non-current assets |
||||||||||
Other intangible assets |
[3.1] | 20,625 | 58,234 | |||||||
Goodwill |
[3.2] | 384,268 | 384,216 | |||||||
Property, plant and equipment |
[3.3] | 77,173 | 79,837 | |||||||
Equity investments |
[3.4] | 2 | 2 | |||||||
Deferred tax assets |
[3.5] | 33,322 | 31,709 | |||||||
Other non-current financial assets |
[3.6] | 940 | | |||||||
Other non-current assets |
[3.7] | 958 | 861 | |||||||
|
|
|
|
|||||||
Total non-current assets |
517,289 | 554,859 | ||||||||
|
|
|
|
|||||||
Current assets |
||||||||||
Inventories |
[3.8] | 91,033 | 86,728 | |||||||
Trade receivables |
[3.9] | 72,829 | 70,161 | |||||||
Current tax assets |
[3.10] | 1,386 | 2,087 | |||||||
Other current assets |
[3.11] | 13,929 | 14,192 | |||||||
Cash and cash equivalents |
[3.12] | 27,127 | 25,920 | |||||||
|
|
|
|
|||||||
Total current assets |
206,304 | 199,088 | ||||||||
|
|
|
|
|||||||
TOTAL ASSETS |
723,593 | 753,947 | ||||||||
|
|
|
|
|||||||
LIABILITIES |
||||||||||
Equity |
||||||||||
Share capital |
[3.13] | 9,868 | 9,868 | |||||||
Share premium reserve |
[3.13] | 14,425 | 14,425 | |||||||
Other reserves |
[3.13] | 380,751 | 323,510 | |||||||
Retained earnings (losses carried forward) |
[3.13] | (41,236 | ) | (21,966 | ) | |||||
Profit (loss) attributable to the owners of the parent |
[3.13] | (47,784 | ) | (19,273 | ) | |||||
|
|
|
|
|||||||
Total equity attributable to the owners of the parent |
316,024 | 306,564 | ||||||||
|
|
|
|
|||||||
Total equity |
316,024 | 306,564 | ||||||||
|
|
|
|
|||||||
Non-current liabilities |
||||||||||
Non current financial liabilities |
[3.16] | 285,597 | 10,165 | |||||||
Employee benefits |
[3.15] | 1,258 | 1,296 | |||||||
Deferred tax liabilities |
[3.5] | 9,273 | 19,275 | |||||||
Provisions for risks and charges |
[3.14] | 29,473 | 17,156 | |||||||
Other non-current liabilities |
[3.18] | 870 | 649 | |||||||
|
|
|
|
|||||||
Total non-current liabilities |
326,471 | 48,541 | ||||||||
|
|
|
|
|||||||
Current liabilities |
||||||||||
Current financial liabilities |
[3.16] | 20,102 | 336,659 | |||||||
Trade payables |
[3.19] | 33,405 | 36,564 | |||||||
Current tax liabilities |
[3.20] | 1,917 | 877 | |||||||
Other current liabilities |
[3.21] | 25,673 | 24,742 | |||||||
|
|
|
|
|||||||
Total current liabilities |
81,097 | 398,842 | ||||||||
|
|
|
|
|||||||
TOTAL EQUITY AND LIABILITIES |
723,593 | 753,947 | ||||||||
|
|
|
|
The notes commenting on the individual items are an integral part of these condensed consolidated interim financial statements.
3
Condensed consolidated income statements
(000) |
||||||||||
Note | 30/09/2023 | 30/09/2022 Restated |
||||||||
Revenue |
[3.22] | 200,736 | 178,794 | |||||||
Other revenues and income |
[3.22] | 4,214 | 3,472 | |||||||
|
|
|
|
|||||||
Total revenues and income |
204,950 | 182,266 | ||||||||
|
|
|
|
|||||||
Raw materials, consumables, supplies and goods |
[3.24] | (50,902 | ) | (42,250 | ) | |||||
Services |
[3.25] | (63,036 | ) | (60,200 | ) | |||||
Change in w.i.p., semi-finished products and finished goods |
[3.26] | 3,890 | 2,326 | |||||||
Personnel expenses |
[3.27] | (67,412 | ) | (56,313 | ) | |||||
Amortisation and Depreciation |
[3.28] | (22,972 | ) | (26,131 | ) | |||||
Impairment losses on trade receivables |
[3.28] | (944 | ) | (101 | ) | |||||
Impairment losses on fixed assets |
[3.28] | (38,082 | ) | (853 | ) | |||||
Other operating costs |
[3.29] | (10,565 | ) | (1,195 | ) | |||||
Internal work capitalised |
[3.23] | 9,156 | 10,181 | |||||||
|
|
|
|
|||||||
Operating costs |
(240,868 | ) | (174,534 | ) | ||||||
|
|
|
|
|||||||
Operating profit (loss) |
(35,918 | ) | 7,732 | |||||||
|
|
|
|
|||||||
Financial income |
[3.30] | 11,574 | 19,789 | |||||||
Financial expense |
[3.30] | (32,605 | ) | (17,959 | ) | |||||
|
|
|
|
|||||||
Net financial income (expense) |
(21,030 | ) | 1,830 | |||||||
|
|
|
|
|||||||
Pre-tax income (loss) |
(56,949 | ) | 9,562 | |||||||
|
|
|
|
|||||||
Income tax benefit/(expense) |
[3.31] | 9,164 | (266 | ) | ||||||
|
|
|
|
|||||||
Profit (loss) for the year |
(47,784 | ) | 9,296 | |||||||
|
|
|
|
|||||||
of which attributable to the owners of the parent |
(47,784 | ) | 9,296 | |||||||
|
|
|
|
The notes commenting on the individual items are an integral part of these condensed consolidated interim financial statements.
4
Condensed consolidated statements of comprehensive income
Statement of comprehensive income
(000) |
||||||||||||
Note | 30/09/2023 | 30/09/2022 Restated |
||||||||||
Profit (loss) for the year |
(47,784 | ) | 9,296 | |||||||||
|
|
|
|
|||||||||
Other comprehensive income (expense) |
||||||||||||
Items that will never be reclassified to profit or loss (A) |
||||||||||||
Remeasurements of the net defined benefit liability (asset) |
[3.15] | | | |||||||||
Related tax |
[3.15] | | | |||||||||
|
|
|
|
|||||||||
| | |||||||||||
|
|
|
|
|||||||||
Items that are or may be reclassified to profit or loss (B) |
||||||||||||
Exchange differences on translation of foreign operations |
[3.13] | 628 | 457 | |||||||||
|
|
|
|
|||||||||
628 | 457 | |||||||||||
|
|
|
|
|||||||||
Other comprehensive income (epense), net of tax (A+B) |
628 | 457 | ||||||||||
|
|
|
|
|||||||||
Comprehensive income (expense) for the year |
(47,156 | ) | 9,753 | |||||||||
|
|
|
|
|||||||||
Comprehensive income (expense) attributable to: |
||||||||||||
Owners of the parent |
(47,156 | ) | 9,753 | |||||||||
|
|
|
|
The notes commenting on the individual items are an integral part of these condensed consolidated interim financial statements.
5
Condensed consolidated statements of changes in equity
(000) |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Note | Share capital |
Share premium reserve |
Legal reserve |
Merger reserve |
FTA reserve |
Capital contribution |
Translation reserve |
Reserve for defined benefit plans (IAS 19) |
Other reserves |
Retained earnings including Profit (loss) for the year |
Total equity attributable to the owners of the parent |
Total equity |
||||||||||||||||||||||||||||||||||||||||
At 1 January 2022 |
9,868 | 14,425 | 2,101 | 288,261 | (3,840 | ) | 28,051 | 1,508 | (23 | ) | 1,511 | (12,742 | ) | 329,121 | 329,121 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
At 1 January 2022 restated |
9,868 | 14,425 | 2,101 | 288,261 | | 28,051 | 1,508 | (23 | ) | (2,329 | ) | (21,401 | ) | 320,462 | 320,462 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Statement of comprehensive income |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) for the year |
[3.13] | | | | | | | | | | 9,296 | 9,296 | 9,296 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
[3.13] | | | | | | | 457 | | | | 457 | 457 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income |
| | | | | | 457 | | | 9,296 | 9,753 | 9,753 | ||||||||||||||||||||||||||||||||||||||||
Owner transactions |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of the loss for the previous year |
[3.13] | | | | | | | | | 565 | (565 | ) | | | ||||||||||||||||||||||||||||||||||||||
Other owner transactions |
[3.13] | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Total owner transactions |
| | | | | | | | 565 | (565 | ) | | | |||||||||||||||||||||||||||||||||||||||
Other changes |
[3.13] | | | | | | | | | 1,989 | | 1,989 | 1,989 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
At 30 September 2022 |
9,868 | 14,425 | 2,101 | 288,261 | | 28,051 | 1,965 | (23 | ) | 225 | (12,670 | ) | 332,204 | 332,204 | ||||||||||||||||||||||||||||||||||||||
|
|
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|
|
|
|
|
|
|||||||||||||||||||||||||||||
| | 0 | | 3,840 | (0 | ) | 0 | (0 | ) | (3,840 | ) | (9,943 | ) | (9,944 | ) | (9,944 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
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|
|
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|
|
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|
|
|
|||||||||||||||||||||||||||||
At 1 January 2023 |
9,868 | 14,425 | 2,101 | 288,261 | (3,840 | ) | 28,051 | 2,379 | 31 | 6,526 | (41,193 | ) | 306,610 | 306,610 | ||||||||||||||||||||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Payback |
3,840 | (3,840 | ) | (46 | ) | (46 | ) | (46 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
At 1 January 2023 restated |
9,868 | 14,425 | 2,101 | 288,261 | | 28,051 | 2,379 | 31 | 2,686 | (41,239 | ) | 306,564 | 306,564 | |||||||||||||||||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
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|
|
|
|
|
|
|||||||||||||||||||||||||||||
Statement of comprehensive income |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit (loss) for the year |
[3.13] | | | | | | | | | | (47,784 | ) | (47,784 | ) | (47,784 | ) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income |
[3.13] | | | | | | | 628 | | | | 628 | 628 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income |
| | | | | | 628 | | | (47,784 | ) | (47,156 | ) | (47,156 | ) | |||||||||||||||||||||||||||||||||||||
Owner transactions |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of the loss for the previous year |
[3.13] | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||
Other owner transactions |
[3.13] | | | | | | 46,296 | | | | 46,296 | 46,296 | ||||||||||||||||||||||||||||||||||||||||
Total owner transactions |
| | | | | 46,296 | | | | | 46,296 | 46,296 | ||||||||||||||||||||||||||||||||||||||||
Other changes |
[3.13] | | | | | | | | 0 | 10,317 | 3 | 10,321 | 10,321 | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
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|
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|
|
|
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|
|
|
|||||||||||||||||||||||||||||
At 30 September 2023 |
9,868 | 14,425 | 2,101 | 288,261 | | 74,347 | 3,007 | 31 | 13,003 | (89,020 | ) | 316,024 | 316,024 | |||||||||||||||||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
The notes commenting on the individual items are an integral part of these condensed consolidated interim financial statements.
6
Condensed consolidated statements of cash flows
(000) |
||||||||
30/09/2023 | 30/09/2022 Restated |
|||||||
Operating activities |
||||||||
Profit (loss) for the period |
(47,784 | ) | 9,296 | |||||
Income tax (benefit)/expense |
(9,164 | ) | 266 | |||||
Net financial (income)/expense |
21,030 | (589 | ) | |||||
Amortisation, depreciation and impairment losses |
59,295 | 26,340 | ||||||
Accruals/(Release) to provisions |
12,317 | 2,760 | ||||||
Net (gains)/loss on disposals |
(685 | ) | (469 | ) | ||||
FX on contingent consideration |
1,243 | 2,395 | ||||||
Equity-settled share based payment transaction |
9,285 | |||||||
Cash flows from operating activities before changes in working capital |
45,537 | 39,999 | ||||||
Change in inventories |
(4,305 | ) | (2,726 | ) | ||||
Change in trade receivables |
(2,668 | ) | (2,679 | ) | ||||
Change in trade payables |
(3,158 | ) | 808 | |||||
Change in other current assets/liabilities |
2,960 | (341 | ) | |||||
Change in non-current assets |
(97 | ) | (207 | ) | ||||
Income taxes paid |
(2,489 | ) | (678 | ) | ||||
|
|
|
|
|||||
Cash flows from operating activities A) |
35,780 | 34,177 | ||||||
|
|
|
|
|||||
Investing activities |
||||||||
Acquisitions of property, plant and equipment |
(18,142 | ) | (17,359 | ) | ||||
Disposal of property, plant and equipment |
687 | 582 | ||||||
Acquisitions of intangible assets |
(2,947 | ) | (8,202 | ) | ||||
Disposal of intangible assets |
| 463 | ||||||
|
|
|
|
|||||
Cash flows used in investing activities B) |
(20,402 | ) | (24,516 | ) | ||||
|
|
|
|
|||||
Financing activities |
||||||||
Third party funds |
||||||||
Bonds repayment |
(274,039 | ) | ||||||
Bank loans repayment |
(47,000 | ) | ||||||
Bonds issuance |
279,613 | |||||||
Net change in current financial liabilities |
| |||||||
Net change in non-current financial liabilities |
| |||||||
Payment of lease liability |
(3,363 | ) | (3,480 | ) | ||||
Gross interest received |
243 | 107 | ||||||
Gross interest paid |
(20,921 | ) | (11,054 | ) | ||||
Capital injection |
46,296 | | ||||||
Other financial liabilities |
5,000 | 9,518 | ||||||
|
|
|
|
|||||
Cash flows used in financing activities C) |
(14,171 | ) | (4,909 | ) | ||||
|
|
|
|
|||||
Increase (decrease) in cash and cash equivalents (A ± B ± C) |
1,207 | 4,751 | ||||||
|
|
|
|
|||||
Opening cash and cash equivalent |
25,920 | 21,503 | ||||||
Closing cash and cash equivalent |
27,127 | 26,254 | ||||||
|
|
|
|
|||||
Increase (decrease) in cash and cash equivalents |
1,207 | 4,751 | ||||||
|
|
|
|
7
Notes to the condensed consolidated interim financial statements
[2.1] General information
The Limacorporate Group (the group) creates, designs and sells joint implants and orthopaedic 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 condensed consolidated interim financial statements as of and for the nine-months ended 30 September 2023 include the financial statements of the parent and the subsidiaries (together the group).
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 |
| Parents name: Emil NewCo S.à.r.l. |
| Name of the ultimate indirect parent: EQT Luxembourg Management S.à r.l. |
In early July 2023 the management of Limacorporate announced the strategic decision, substantially taken over the weeks before the reporting date, to stop the Smart Space project (referred to TechMah CGU), all digital activities and resources have been refocused on other projects.
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 an amount in a range of USD 5.5 11.5 million.
The company has filed a Defendants Answer To Verified Amended Complaint and Defendants Counterclaims which contains a request for compensatory damages in an amount to be determined at trial, but not less than $ 50 million.
[2.2] Format and content of the condensed consolidated interim financial statements
The condensed consolidated income statement and consolidated statement of comprehensive income for the nine-month period ended 30 September 2023 and the nine-month period ended 30 September 2022 have been prepared in accordance with IAS 34 issued by International Accounting Standards Board (IASB). They do not include all the information that would be required for the annual consolidated financial statements and should be read in conjunction with the consolidated financial statements for the year ended as of 31 December 2022 and 31 December 2021 which was prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
The term IFRS is also used to refer to all revised international accounting standards (IAS), all interpretations of the International Financial Reporting Interpretations Committee (IFRIC), formerly known as the Standing Interpretations Committee (SIC).
8
These condensed consolidated interim financial statements comprise the statements of financial position, profit or loss, 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. 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 condensed consolidated interim financial statements include the information generally required by ruling legislation and the IFRS, suitably presented with reference to the financial statements schedules used.
The condensed consolidated interim financial statements have been prepared on a going concern basis, as the related assumptions are deemed to be met.
All figures are in Euros, unless indicated otherwise. The Euro is the parents functional and presentation currency. For each financial statements caption, the corresponding amount of the previous year is provided for comparative purposes.
Correction of error
As already reported in the consolidated financial statements as of 31 December 2022 prepared in accordance with the IFRS issued by IASB, the Group restated the Groups equity and profit for the year previously determined under the IFRS endorsed by the European Union. Accordingly, the Group also restated the comparative information of this condensed consolidated interim financial statements as of and for the nine-months ended 30 September 2023.
In the consolidated financial statements as of 31 December 2022 prepared the Group corrected the payback treatment in compliance with IFRS 15 considering it as a variable consideration. The company incorrectly accounted for the payback treatment as a provision in previously issued financial statements. The effect of the correction of error as of 1 January 2021 is a lower Groups net equity of 6.9 million. For the correction reflected in the opening equity please refer to the previous mentioned consolidated financial statements as of 31 December 2022. Instead, as provide for IAS 8, in the table below are reflected the effects affecting the profit and loss of the consolidated interim financial statements as of and for the nine- months ended 30 September 2022 that led to a decrease of the net result of the period of 1.3 million.
9
Reconciliations of the statement of profit or loss
(000) |
||||||||||||||||
Note | As previously reported 30/09/2022 |
Error correction | As restated 30/09/2022 |
|||||||||||||
Revenue |
[3.22] | 180,485 | (1,691 | ) | 178,794 | |||||||||||
Other revenues and income |
[3.22] | 3,472 | 3,472 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Total revenue and income |
183,957 | (1,691 | ) | 182,266 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Raw materials, consumables, supplies and goods |
[3.24] | (42,250 | ) | (42,250 | ) | |||||||||||
Services |
[3.25] | (60,200 | ) | (60,200 | ) | |||||||||||
Change in w.i.p., semi-finished products and finished goods |
[3.26] | 2,326 | 2,326 | |||||||||||||
Personnel expenses |
[3.27] | (56,313 | ) | (56,313 | ) | |||||||||||
Amortisation and Depreciation |
[3.28] | (26,131 | ) | (26,131 | ) | |||||||||||
Impairment losses on trade receivables |
[3.28] | (101 | ) | (101 | ) | |||||||||||
Impairment losses on fixed assets |
[3.28] | (853 | ) | (853 | ) | |||||||||||
Other operating costs |
[3.29] | (1,195 | ) | (1,195 | ) | |||||||||||
Internal work capitalised |
[3.23] | 10,181 | 10,181 | |||||||||||||
|
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|
|
|
|
|||||||||||
Operating costs |
(174,534 | ) | | (174,534 | ) | |||||||||||
|
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|
|
|||||||||||
Operating profit |
9,422 | (1,691 | ) | 7,732 | ||||||||||||
|
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|
|
|
|
|||||||||||
Financial income |
[3.30] | 19,789 | 19,789 | |||||||||||||
Financial expense |
[3.30] | (17,959 | ) | (17,959 | ) | |||||||||||
|
|
|
|
|
|
|||||||||||
Net financial expense |
1,830 | | 1,830 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Pre-tax income (loss) |
11,252 | (1,691 | ) | 9,562 | ||||||||||||
|
|
|
|
|
|
|||||||||||
Income tax benefit (expense) |
[3.31] | (672 | ) | 406 | (266 | ) | ||||||||||
|
|
|
|
|
|
|||||||||||
Profit (loss) for the year |
10,581 | (1,285 | ) | 9,296 | ||||||||||||
|
|
|
|
|
|
|||||||||||
of which attributable to the owners of the parent |
10,581 | (1,285 | ) | 9,296 | ||||||||||||
|
|
|
|
|
|
(000) |
||||||||||||||||
Note | As previously reported 30/09/2022 |
Error correction | As restated 30/09/2022 |
|||||||||||||
Profit (loss) for the year |
10,581 | (1,285 | ) | 9,296 | ||||||||||||
|
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|
|
|
|||||||||||
Other comprehensive income (expense) |
||||||||||||||||
Items that will never be reclassified to profit or loss (A) |
| | | |||||||||||||
Remeasurements of the net defined benefit liability (asset) |
[3.15] | | | | ||||||||||||
Related tax |
[3.15] | | | | ||||||||||||
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Items that are or may be reclassified to profit or loss (B) |
||||||||||||||||
Exchange differences on translation of foreign operations |
[3.13] | 797 | | 797 | ||||||||||||
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|
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|
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|||||||||||
797 | | 797 | ||||||||||||||
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|
|
|
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Other comprehensive income (expense), net of tax (A+B) |
797 | | 797 | |||||||||||||
|
|
|
|
|
|
|||||||||||
Comprehensive income (expense) for the year |
11,378 | (1,285 | ) | 10,093 | ||||||||||||
|
|
|
|
|
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Comprehensive income (expense) attributable to: |
| |||||||||||||||
Owners of the parent |
11,378 | (1,285 | ) | 10,093 | ||||||||||||
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10
[2.3] Consolidation scope
The condensed consolidated interim financial statements of the Limacorporate Group include the financial statements of the parent and the Italian and foreign subsidiaries as at 30 September 2023 and detailed in the following table:
Description |
Location |
Currency |
% | |||
LIMA AUSTRIA GmbH | Seestadtstrasse 27 Top 6-7, 1220 Wien (Osterreich) | (EUR) | 100% | |||
LIMA BELGIUM SRL | Chaussée de Wavre 504, boîte 5A - 1390 Grez Doiceau (Belgium) | (EUR) | 100% | |||
LIMA CZ s.r.o. | Do Zahràdek I., 157/5 - 155 21 Praha 5 - Třebonice - (Czech Republic) | (CZK) | 100% | |||
LIMA DENMARK ApS | Lyngebaekgards Alle 2, 2990 Niva (Denmark) | (DKK) | 100% | |||
LIMA DEUTSCHLAND GmbH | Gasstraße 18 | Haus 1 - 22761 Hamburg - Germany | (EUR) | 100% | |||
LIMA DO BRASIL LTDA | Al. Campinas, 728 2° andar salas 201, 202, 203 e 204.- Jardim Paulista - Sao Paulo - SP - CEP:01404-001 (Brasil) | (BRL) | 100% | |||
LIMA FRANCE Sas | 1, Allée des Alisiers - Immeuble Le Galilée - 69500 Bron - (France) | (EUR) | 100% | |||
LIMA IMPLANTES PORTUGAL S.U. LDA | Rua Pêro Vaz de Caminha 8 E 2660-441 Stº António Cavaleiros - (Portugal) | (EUR) | 100% | |||
LIMA IMPLANTES Slu | Francisco Sancha, 4 3ª planta | 28034 Madrid | España | (EUR) | 100% | |||
LIMA JAPAN K.K. | Tokyo Front Terrace 13F 2-3-14 Higashi Shinagawa,Shinagawa, Tokyo, 140-0002 , (Japan) | (JPY) | 100% | |||
LIMA KOREA Co., Ltd | 2Fl., EunSung Bldg., 741 Yeongdong-daero, Gangnam Gu, Seoul, 06071, Korea |
(KRW) | 100% | |||
LIMA NETHERLANDS B.V. | Bergweg 153A, 3707AC Zeist - (Netherlands) | (EUR) | 100% | |||
LIMA O.I. d.o.o. - ORTOPEDIJA I IMPLANTATI | Ante Kovačića, 3 - 10000 Zagreb - (Croatia) | (EUR) | 100% | |||
LIMA ORTHOPAEDICS AUSTRALIA Pty Ltd | Unit 1, 40 Ricketts Road - Mt Waverley, 3149 Victoria - (Australia) | (AUD) | 100% | |||
LIMA ORTHOPAEDICS NEW ZEALAND Pty Ltd | 20 Crummer Rd Grey Lynn 1021 Auckland 1021 - New Zealand | (NZD) | 100% | |||
LIMA ORTHOPAEDICS SOUTH AFRICA (PTY) LTD | Northlands Deco Park, Stand 326, 10 Newmarket Street, Design Boulevard, Northriding, 2186 (South Africa) |
(ZAR) | 100% | |||
LIMA ORTHOPAEDICS UK Ltd | 4 Office Village Forder Way Cygnet Park Hampton Peterborough Peterborough PE7 8GX (United Kingdom) | (GBP) | 100% | |||
LIMA POLSKA SP. z.o.o. | ul. Ul Lopuszanska 95 - 02-457 Warsaw (Poland) | (PLN) | 100% | |||
LIMA SK S.r.o. | Cesta na Stadiòn 7 - 97404 Banska Banska Bystrica - (Slovakia) | (EUR) | 100% | |||
LIMA SWEDEN AB | Box 180 - SE-184 22 Akersberga - (Sweden) | (SEK) | 100% | |||
LIMA SWITZERLAND SA | Birkenstrasse, 49 - 6343 Rotkreuz - Zug - (Switzerland) | (CHF) | 100% | |||
TASFIYE HALINDE LIMA TURKEY ORTOPEDI AS | Serifali Mah. Hendem Cad.No: 54 Canan Residence OFIS A-2,34775 - UMRANIYE - Istanbul - (Turkiye) | (TRY) | 100% | |||
LIMA USA Inc. | 2001 NE Green Oaks Blvd, Suite 100 - Arlington, TX 76006 - (United States) | (USD) | 100% | |||
LIMA SM S.p.A. in liquidazione | Strada Borrana, 38 - Serravalle 47899 - (Repubblica di San Marino) | (EUR) | 100% | |||
LIMA (BEIJING) MEDICAL DEVICES CO., LTD. | Room 616, 6/F, Building 1, No.1, Lize Zhong 2 Road, Chaoyang District, Beijing, China | (CNY) | 100% | |||
LIMA ORTHOPAEDICS CANADA INC. | 3715 Laird Road Suite Unit 9, Mississauga, ON, Canada | (CAD) | 100% |
Subsidiaries are those companies over which the group has control, as defined by IFRS 10 Consolidated financial statements. Control exists when the group has the power to, directly or indirectly, govern the financial and operating policies of an entity to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements starting from when control is assumed and until such control ceases to exist.
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.
On 1 January 2023, the subsidiary TechMah Medical LLC was merged by incorporation into the subsidiary Lima USA Inc.
The interim reporting date of all the consolidated companies is 30 September.
The basis of consolidation is set out below:
| 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. |
11
| 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 2023 |
Closing rate: 30/09/2023 |
Average rate 2022 |
Closing rate: 30/09/2022 |
||||||||||||
AUD - Australian Dollar |
1.6205 | 1.6339 | 1.5044 | 1.5076 | ||||||||||||
BRL - Brazilian Real |
5.4245 | 5.3065 | 5.4631 | 5.2584 | ||||||||||||
CAD - Canadian Dollar |
1.4576 | 1.4227 | 1.3643 | 1.3401 | ||||||||||||
CHF - Swiss Franc |
0.9774 | 0.9669 | 1.0118 | 0.9561 | ||||||||||||
CNY - Yuan Renminbi |
7.6235 | 7.7352 | 7.0193 | 6.9368 | ||||||||||||
CZK - Czech Koruna |
23.8359 | 24.3390 | 24.6248 | 24.5490 | ||||||||||||
DKK - Danish Krone |
7.4486 | 7.4571 | 7.4399 | 7.4365 | ||||||||||||
GBP - Pound Sterling |
0.8707 | 0.8646 | 0.8472 | 0.8830 | ||||||||||||
HRK - Croatian Kuna |
n.a | n.a | 7.5335 | 7.5240 | ||||||||||||
JPY - Yen |
149.6515 | 158.1000 | 135.9679 | 141.0100 | ||||||||||||
KRW - Won |
1,410.2500 | 1,425.2600 | 1,348.7900 | 1,400.6900 | ||||||||||||
NZD - New Zealand Dollar |
1.7547 | 1.7575 | 1.6468 | 1.7177 | ||||||||||||
PLN - Zloty |
4.5820 | 4.6283 | 4.6724 | 4.8483 | ||||||||||||
SEK - Swedish Krona |
11.4789 | 11.5325 | 10.5274 | 10.8993 | ||||||||||||
TRY - Turkish Lira |
24.1485 | 29.0514 | 16.8796 | 18.0841 | ||||||||||||
USD - US Dollar |
1.0833 | 1.0594 | 1.0638 | 0.9748 | ||||||||||||
ZAR - Rand |
19.8865 | 19.9813 | 16.9517 | 17.5353 |
[2.4] Basis of presentation
[2.4.1] Business combinations and goodwill
Business combinations are recognised using the acquisition method under IFRS 3. To this end, the acquired identifiable assets and the assumed liabilities 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, assumed liabilities and equity instruments issued by the acquirer, in exchange for control of the acquiree.
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 acquirees identifiable net assets), and the fair value of such assets and liabilities.
At the acquisition date, goodwill is allocated to the single cash-generating unit that is 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.
12
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 on assets.
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 groups 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 parents 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 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 and 2023 are shown in the following table by asset category:
Description |
2023 - 2022 (*) | |
Start-up and capital costs |
3 - 4 - 5 years | |
Development expenditure |
5 - 10 years | |
Patents and intellectual property rights |
10 - 20 years | |
Licences, trademarks and simiilar rights |
3 - 4 - 5 years | |
Other |
Contract term/Maximum 6 years |
* | There were no changes to the amortisation rates |
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.
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.
Patents and intellectual property rights
Patents and intellectual property rights refer to costs for patents owned by Limacorporate S.p.A.
13
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 carried out in prior years. 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 parents e 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:
2023 | 2022 | |||
Buildings |
3% | 3% | ||
Light constructions |
10% | 10% | ||
Generic and specific plant |
10% - 15.5% | 10% - 15.5% | ||
Machinery |
15.5% | 16% | ||
Sundry and small equipment |
25% | 25% | ||
Production equipment |
10% | 10% | ||
Office furniture and machines |
12% | 12% | ||
Electronic office machines |
20% | 20% | ||
Transport vehicles |
20% | 20% | ||
Cars |
25% | 25% | ||
Right-of-use assets |
Lease term | Lease term |
The residual value of the assets, the useful life and the depreciation method applied are reviewed at each periods end and adjusted prospectively if necessary.
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.
14
[2.4.4] Leases
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.
[2.4.5] Equity investments
Investments in associates are measured using the equity method, recognising the groups share of the profits or losses for the period 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 groups CGU. 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.
The market multiples method is used to determine the value in use using listed comparable companies. These multiples are compared with the implicit multiple calculated using the groups 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 periods.
[2.4.7] Financial instruments
The financial instruments held by the group are described below.
Financial assets
Financial assets include equity investments, 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.
Financial assets represented by debt instruments are classified in the consolidated financial statements 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.
15
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 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.
Derivatives and hedging transactions
To cover-interest-rate risks, interest-rate swap contracts are generally used. All derivatives are measured at fair value. If an economic hedge does not qualify for hedge accounting, then any derivative used is measured at fair value with all changes in fair value recognised in profit or loss. These changes will not be offset by gains or losses on the hedged item when the hedged item is not also measured at FVTPL.
[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 period.
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.
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 loans and receivables, 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 part 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, with the exception of derivatives, all financial liabilities are measured at amortised cost calculated using the effective interest method. Hedged financial liabilities are measured in accordance with hedge accounting.
16
[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.
Defined benefit plan liabilities are measured using the actuarial assumptions set out in section [3.15] Employee benefits.
[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.
[2.4.12] Share-based payments
The grant-date fair value of equity-settled share-based payment arrangements granted to 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.
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 agreements with some managers for the award of options and/or shares (see section [4.7] Management 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 groups 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.
17
Revenue is adjusted for any discounts and volume rebates allowed by the group in contracts with customers and for the payback (variable considerations) see [3.22] Revenue and other revenue and income and [3.14] Provisions for risks and charges for payback system.
Expense is recognised when the goods and services are sold or consumed during the period 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 are recognized when there is reasonable assurance that the grant will be received.
Grants related to income are taken to profit or loss in the period 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 the basis of interest accrued on the net amount of the relevant financial assets and liabilities, using the effective interest method.
[2.4.16] Dividends
Dividends are recognised when the shareholders 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 period 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 payables 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 presentation) 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 periods 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.
18
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: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs). |
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 periods 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.
[2.4.19] Use of estimates
In preparing the condensed consolidated interim financial statements, 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 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. |
19
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 parents or groups most recent plans. Reference should be made to note [3.28] Impairment losses.
Loss allowance
The loss allowance is managements best estimate of the potential credit losses on trade receivables from end customers. Reference should be made to note [3.9] Trade receivables and other assets and [3.19] 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.
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.
Employee incentive plans and financial liabilities
Reference is made to section [4.7] for a description of the calculation of the fair value of share-based payments as part of group management incentive plans.
Section [3.16] provides details of the calculation of fair value of the groups 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 financial statements prepared for consolidation purposes of the consolidated companies are translated using the closing rates for asset and liability captions, including goodwill and consolidation adjustments, and the average rate for the period (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.
20
[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 entitys 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 [4.1] provides information about the single operating segment identified.
[2.4.22.1] New standards and interpretations applicable from 1 January 2023
The amendments to the IFRS adopted during the period included:
Document Title |
Issued Date |
Effective Date | ||
IFRS 17, Insurance contracts | December 2021 | Annual periods beginning on or after 1 January 2023. | ||
Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8 | February 2021 | Annual periods beginning on or after 1 January 2023 | ||
Amendment to IAS 12 deferred tax related to assets and liabilities arising from a single transaction | May 2021 | Annual periods beginning on or after 1 January 2023 | ||
Amendment to IAS 12 - International tax reform - pillar two model rules | May 2021 | 23 May 2023 |
There are not any material impact from the application of these amendments.
[2.4.22.2] Other Standards
Document Title |
Issue date by IASB |
Effective date of IASB document | ||
Amendments | ||||
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) | September 2014 | Deferred until the completion of the IASB project on the equity method | ||
Amendment to IAS 1 Non-current liabilities with covenants | October 2022 | 1 January 2024 | ||
Amendment to IFRS 16 Leases on sale and leaseback | September 2022 | 1 January 2024 |
21
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. There are not any material impact from the application of these amendments.
[3] Notes to the condensed consolidated interim financial statements
Below are comments on the statement of financial position captions as at 30 September 2023. For details on statement of financial position captions deriving from related party transactions, reference should be made to note [4.5] Related party transactions.
[3.1] Other intangible assets
The carrying amount of other intangible assets at each period is as follows:
| 20,625 thousand at 30 September 2023; |
| 58,234 thousand at 31 December 2022; |
Changes in other intangible assets between 30 September 2023 and 31 December 2022 and a breakdown of historical cost, accumulated amortisation and any cumulative impairment losses are summarised in the following tables.
(000) |
||||||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Reclassifications | Decreases | Amortization | 30/09/2023 | |||||||||||||||||||||
Development expenditure |
37,118 | (548 | ) | 1,837 | | (35,492 | ) | (508 | ) | 2,407 | ||||||||||||||||||
Industrial patents and intellectual property rights |
2,208 | (0 | ) | 198 | | (0 | ) | (273 | ) | 2,133 | ||||||||||||||||||
Concessions, licences, trademarks and similar rights |
5,900 | 38 | 856 | 26 | (150 | ) | (2,434 | ) | 4,236 | |||||||||||||||||||
Assets under development and payments on account |
12,507 | (400 | ) | 747 | (26 | ) | (1,272 | ) | | 11,556 | ||||||||||||||||||
Other |
500 | (9 | ) | 13 | | (112 | ) | (99 | ) | 293 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
58,234 | (919 | ) | 3,651 | | (37,026 | ) | (3,314 | ) | 20,625 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(000) |
||||||||||||
30/09/2023 | ||||||||||||
Description |
Historical Cost | Accumulated Amortization |
Carrying amount |
|||||||||
Development expenditure |
3,548 | 1,141 | 2,407 | |||||||||
Industrial patents and intellectual property rights |
3,739 | 1,606 | 2,133 | |||||||||
Concessions, licences, trademarks and similar rights |
20,265 | 16,030 | 4,236 | |||||||||
Assets under development and payments on account |
11,556 | | 11,556 | |||||||||
Other |
1,615 | 1,323 | 293 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
40,724 | 20,099 | 20,625 | |||||||||
|
|
|
|
|
|
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.
Capitalized development expenditure amounts to 2,407 thousand at 30 September 2023 compared to 37,118 thousand at 31 December 2022. The significant decrease is mainly due to the write-off, made in the first nine months of 2023, of developments costs related to TechMah business, as consequence of the interruption of the project and the subscription of a new partnership with a software supplier on shoulder preoperative planning.
The decision to interrupt the project was formalized by an internal communication issued on 7 July 2023 by the new CEO, who was appointed on 12 September 2022, after investing several months in reviewing the pre-existing technologies strategy and consequently re-defining the strategy for 2023 and further years. See also [4.8] Events after the reporting date.
22
Industrial patents and intellectual property rights, amounting to 2,133 thousand and 2,208 thousand at 30 September 2023 and 31 December 2022, respectively, are comprised of costs incurred by Limacorporate S.p.A. to acquire patents in half of 2023 and previous period.
Concessions, licences, trademarks and similar rights amounting to 4,236 thousand and 5,900 thousand at 30 September 2023 and 31 December 2022, respectively. The amount is mainly referred to the parent cost to register Lima products on the European, US, Chinese, Korean and Japanese markets.
Assets under development and payments on accounts, amounting to 11,556 thousand and 12,507 thousand at 30 September2023 and 31 December 2022, respectively.
[3.2] Goodwill
Goodwill amounts to 384,268 thousand and 384,216 thousand at 30 September 2023 and 31 December 2022, respectively.
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 a two operating 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 groups performance and takes strategic decisions about its product offering and investments at group level.
The goodwill recognised in Limacorporate condensed consolidated interim financial statements in relation to the above- mentioned merger, together with other items of goodwill, was tested for impairment as at 31 December 2022. Specifically, the recoverable amount of the groups 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 to be impaired.
At 30 September 2023 management evaluated that there are no indicators of triggering events which required to update the impairment test of Group CGU performed at 31 December 2022. In the context of the acquisition of Limacorporate Group by Enovis, the enterprise value shows the full recoverability of goodwill (25 September 2023 public information are available on Enovis Corporation website: 800 million transaction includes a cash payment of 700 million at closing, and 100 million in shares of Enovis common stock expected to be issued within 18 months after closing ).
Given the decision taken in early July by the management to interrupt the Smart Space project, an impairment test of TechMah CGU has been performed and led to the full write-off of the capitalized cost of Techmah CGU at 30 September 2023. See also [3.1] Other intangible assets.
[3.3] Property, plant and equipment
The carrying amount of property, plant and equipment and other assets at each period end is as follows:
| 77,173 thousand at 30 September 2023; |
| 79,837 thousand at 31 December 2022. |
23
Changes in property, plant and equipment assets between 30 September 2023 and 31 December 2022 and a breakdown of historical cost, accumulated amortisation and any cumulative impairment losses are summarised in the following tables:
(000) |
||||||||||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Reclassifications | Decreases | Other changes |
Depreciation | 30/09/2023 | ||||||||||||||||||||||||
Land and buildings |
15,496 | | 119 | | | | (514 | ) | 15,102 | |||||||||||||||||||||||
Leased land and buildings |
6,755 | (46 | ) | 1,035 | | | (143 | ) | (2,775 | ) | 4,825 | |||||||||||||||||||||
Plant and equipment |
16,416 | 5 | 1,270 | 118 | | | (3,062 | ) | 14,746 | |||||||||||||||||||||||
Leased plant and equipment |
79 | 0 | | | | | (12 | ) | 67 | |||||||||||||||||||||||
Industrial and commercial equipment |
34,674 | (222 | ) | 10,340 | 45 | (657 | ) | | (11,715 | ) | 32,465 | |||||||||||||||||||||
Leased industrial and commercial equipment |
19 | (0 | ) | 45 | | | | (15 | ) | 49 | ||||||||||||||||||||||
Other assets |
1,787 | (17 | ) | 475 | | (31 | ) | | (484 | ) | 1,730 | |||||||||||||||||||||
Other leased assets |
2,299 | (23 | ) | 1,116 | | 0 | (14 | ) | (1,081 | ) | 2,298 | |||||||||||||||||||||
Assets under construction and payments on account |
2,311 | (0 | ) | 3,743 | (163 | ) | | | | 5,891 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
TOTAL |
79,837 | (304 | ) | 18,142 | | (687 | ) | (157 | ) | (19,659 | ) | 77,173 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(000) |
||||||||||||||||
Description |
30/09/2023 | |||||||||||||||
Historical Cost |
Accumulated Depreciation |
Accumulated Impairment Losses |
Carrying amount |
|||||||||||||
Land and buildings |
23,990 | 8,888 | | 15,102 | ||||||||||||
Leased land and buildings |
17,458 | 12,632 | | 4,825 | ||||||||||||
Plant and equipment |
60,532 | 45,786 | | 14,746 | ||||||||||||
Leased plant and equipment |
202 | 134 | | 67 | ||||||||||||
Industrial and commercial equipment |
144,966 | 112,067 | 434 | 32,465 | ||||||||||||
Leased industrial and commercial equipment |
74 | 25 | | 49 | ||||||||||||
Other assets |
8,290 | 6,560 | | 1,730 | ||||||||||||
Other leased assets |
5,330 | 3,032 | | 2,298 | ||||||||||||
Assets under construction and payments on account |
5,891 | | | 5,891 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
TOTAL |
266,732 | 189,124 | 434 | 77,173 | ||||||||||||
|
|
|
|
|
|
|
|
Land and building, amounting to 15,102 thousand at 30 September 2023 and 15,496 thousand at 31 December 2022. The decrease occurred during the first nine months of 2023 is mainly due to the amortization effect.
Plant and equipment, amounting to 14,746 thousand at 30 September 2023 and 16,416 thousand at 31 December 2022. The decrease in plant and equipment during the first nine months of 2023 mainly refers to the amortization effect. The investments of 1,270 thousand refer to the acquisition of production machines.
Industrial and commercial equipment amounting to 32,465 thousand and 34,674 thousand at 30 September 2023 and 31 December 2022, respectively and is chiefly comprised of equipment capitalised during the current and previous years. The decrease of 657 thousand is mainly due to write-off of obsoleted instrument sets.
Other assets amounting to 1,730 thousand and 1,787 thousand at 30 September 2023 and 31 December 2022, respectively. This category includes office furniture and machines, electronic office machines, transport vehicles and cars. Investments, during the first nine months of 2023 amounting to 475 thousand refer to purchases of electronic office machines and furniture.
Asset under construction amounting to 5,891 thousand and 2,311 thousand at 30 September 2023 and 31 December 2022, respectively. The increase in assets under construction and payments on account during 2023 is mainly due to costs incurred to expand the Villanova production facility and for the purchase of production equipment and machinery.
Some plant and equipment are subject to a special lien at the reporting dates. Additional information is provided in note [3.16] Current and non-current financial liabilities.
24
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) |
||||||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Decreases | Other changes |
Depreciation | 30/09/2023 | |||||||||||||||||||||
Right-of-use assets |
||||||||||||||||||||||||||||
Leased land and buildings |
6,755 | (46 | ) | 1,035 | | (143 | ) | (2,775 | ) | 4,825 | ||||||||||||||||||
Leased plant and equipment |
79 | 0 | | | | (12 | ) | 67 | ||||||||||||||||||||
Leased industrial and commercial equipment |
19 | (0 | ) | 45 | | | (15 | ) | 49 | |||||||||||||||||||
Other leased assets |
2,299 | (23 | ) | 1,116 | 0 | (14 | ) | (1,081 | ) | 2,298 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
9,153 | (69 | ) | 2,195 | 0 | (157 | ) | (3,883 | ) | 7,239 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities deriving from the application of IFRS 16 are included under current and non-current financial liabilities (analysed in note [3.16] Current and non-current financial liabilities). Changes in current and non-current lease liabilities between 30 September 2023 and 31 December 2022 are set out below:
(000) |
||||||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Decreases | Other changes |
Reclassifications | 30/09/2023 | |||||||||||||||||||||
Lease liabilities as per IFRS 16 - non-current portion |
4,552 | (6 | ) | 2,194 | (605 | ) | (157 | ) | (1,474 | ) | 4,504 | |||||||||||||||||
Lease liabilities as per IFRS 16 - current portion |
3,265 | (63 | ) | 1 | (2,758 | ) | | 1,474 | 1,920 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
7,817 | (68 | ) | 2,195 | (3,363 | ) | (157 | ) | | 6,424 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The decrease in lease liabilities of current portion of 2,758 thousand refers to the payments of the period.
The increase of 2,194 thousand refers for about 700 thousand to new offices in Germany and for about 1,494 to other assets.
[3.4] Equity investments
Equity investments amount to 2 thousand as at 30 September 2023 and no changes in the caption occurred compared to 31 December 2022.
The following information is provided on direct and indirect equity investments in subsidiaries, associates and other companies.
Subsidiaries
On 1 January 2023, the subsidiary TechMah Medical LLC was merged by incorporation into the subsidiary Lima USA Inc.
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..at 30 September 2023.
[3.5] Deferred tax assets and liabilities
Deferred tax assets and liabilities are only offset when there is a legal provision 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.
25
Deferred tax assets and liabilities are broken down as follows on 30 September 2023 and 31 December 2022:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Deferred tax assets |
12,681 | 11,558 | 1,123 | |||||||||
Deferred tax assets arising on consolidation |
20,641 | 20,151 | 490 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
33,322 | 31,709 | 1,613 | |||||||||
|
|
|
|
|
|
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Deferred tax liabilities |
8,713 | 9,414 | (701 | ) | ||||||||
Deferred tax liabilities arising on consolidation |
560 | 9,861 | (9,301 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
9,273 | 19,275 | (10,002 | ) | ||||||||
|
|
|
|
|
|
[3.6] Other non-current financial assets
Other non-current financial assets amounting to 940 thousand at 30 September 2023. The amount refers to fair value of Interest Rate Swap at 30 September 2023 subscribed in first nine months of 2023 as described in note [3.17] Derivatives.
[3.7] Other non-current assets
Other non-current assets, amounting to:
| 958 thousand at 30 September 2023; |
| 861 thousand at 31 December 2022. |
Refer to guarantee deposits, mainly for rental contracts taken out by the group.
[3.8] Inventories
A breakdown of inventories at 30 September 2023 and 31 December 2022 is provided below:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Raw materials and supplies |
6,755 | 6,272 | 483 | |||||||||
Work in progress and semi-finished products |
11,996 | 11,533 | 463 | |||||||||
Finished goods |
83,509 | 79,583 | 3,926 | |||||||||
Goods in transit |
1,166 | 831 | 335 | |||||||||
Allowance for inventory write-down |
(12,393 | ) | (11,492 | ) | (901 | ) | ||||||
|
|
|
|
|
|
|||||||
TOTAL |
91,033 | 86,727 | 4,306 | |||||||||
|
|
|
|
|
|
Inventories were measured using the cost of the production company for the consolidated companies.
The allowance for inventory write-downs, amounting to 12,393 thousand at 30 September 2023 and 11,492 thousand at 31 December 2022, changed as follows during the period:
(000) |
||||
Description |
Amount | |||
Balance at 31/12/2022 restated |
11,492 | |||
Exchange difference |
46 | |||
Utilisations |
(795 | ) | ||
Accruals |
1,651 | |||
|
|
|||
Balance at 30/09/2023 |
12,393 | |||
|
|
Utilisations of the allowance during the first nine months of 2023 is mainly referred to the scrapping of obsolete goods by Limacorporate S.p.A. and the accruals done by the subsidiaries and Limacorporate S.p.A..
26
[3.9] Trade receivables
Trade receivables at 30 September 2023 amount to 72,829 thousand, compared to 70,161 thousand at 31 December 2022, and are broken down as follows:
(000) |
||||||||||||
Description |
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 | |||||||||
|
|
|
|
|
|
(000) |
||||||||||||
Description |
Gross Amount |
Loss allowance |
Carrying Amount 30/09/2023 |
|||||||||
Trade receivables - third parties |
76,337 | 3,508 | 72,829 | |||||||||
Trade receivables - related parties |
0 | | 0 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
76,337 | 3,508 | 72,829 | |||||||||
|
|
|
|
|
|
The loss allowance amounts to 3,508 thousand and 2,387 thousand at 30 September 2023 and 31 December 2022, respectively.
The loss allowance is managements estimate of the expected credit losses on trade receivables from customers. The estimate is based on the groups 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 2023 and 2022 are as follows:
(000) |
||||
Description |
30/09/2023 | |||
Balance at 31/12/2022 restated |
2,387 | |||
Exchange difference |
33 | |||
Accruals |
1,233 | |||
Utilisations |
(145 | ) | ||
|
|
|||
Closing balance |
3,508 | |||
|
|
The utilisations mainly refer to losses related to various positions against small different clients.
[3.10] Current tax assets
Tax assets amounting to 1,386 thousand and 2,087 thousand at 30 September 2023 and 31 December 2022, respectively and include direct taxes, particularly in relation to the parents IRES for 463 thousand and 1,619 thousand at 30 September 2023 and 31 December 2022, respectively.
27
[3.11] Other current assets
Other current assets amounting to 13,928 thousand and 14,192 thousand at 30 September 2023 and 31 December 2022, respectively, and are broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Grants |
5,023 | 5,281 | (258 | ) | ||||||||
Advances to suppliers |
1,032 | 1,327 | (295 | ) | ||||||||
Advances to agents |
920 | 776 | 144 | |||||||||
VAT |
1,377 | 1,317 | 60 | |||||||||
VAT to be offset |
949 | 325 | 624 | |||||||||
Other tax assets |
221 | 827 | (606 | ) | ||||||||
Insurance premiums and sureties |
841 | 574 | 267 | |||||||||
Hire and maintenance |
1,213 | 873 | 340 | |||||||||
Other sundry |
842 | 1,354 | (512 | ) | ||||||||
Other |
1,511 | 1,538 | (27 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
13,928 | 14,192 | (237 | ) | ||||||||
|
|
|
|
|
|
Assets for research grants refer mainly to:
| PON-SIB grant (4,630 thousand at 30 September 2023 and 4,630 at 31 December 2022); |
| MCBEES grant (0 at 30 September 2023 and 258 thousand at 31 December 2022); |
| AIM grant (40 thousand at 30 September 2023 and 40 thousand at 31 December 2022); |
| IAREPAM grant (158 thousand at 30 September 2023 and 158 thousand at 31 December 2022); |
| PROST3SIS grant (195 thousand at 30 September 2023 and 195 thousand at 31 December 2022). |
Other assets also include guarantee deposits on gas and electricity consumption (472 thousand at 30 September 2023 and 31 December 2022).
Hire and maintenance amounting to 1,213 thousand and 873 thousand at 30 September 2023 and 31 December 2022, respectively. The increase is mainly due to prepayments of the new maintenance agreement.
[3.12] Cash and cash equivalents
Cash and cash equivalents amounting to 27,127 thousand and 25,920 thousand at 30 September 2023 and 31 December 2022, respectively.
This caption shows the groups 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) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Bank and postal accounts |
27,110 | 25,903 | 1,207 | |||||||||
Cash-in-hand and cash equivalents |
17 | 17 | (0 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
27,127 | 25,920 | 1,207 | |||||||||
|
|
|
|
|
|
28
[3.13] Equity
Equity attributable to the owners of the parent amounts to 316,024 thousand and 306,564 thousand at 30 September 2023 and 31 December 2022, respectively and is broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Share capital |
9,868 | 9,868 | 0 | |||||||||
Share premium reserve |
14,425 | 14,425 | 0 | |||||||||
Legal reserve |
2,101 | 2,101 | (0 | ) | ||||||||
Capital contributions |
74,347 | 28,051 | 46,296 | |||||||||
Merger reserve |
288,261 | 288,261 | 0 | |||||||||
Actuarial reserve |
31 | 31 | 0 | |||||||||
Translation reserve |
3,007 | 2,379 | 628 | |||||||||
Other reserves |
13,003 | 2,687 | 10,316 | |||||||||
Retained earnings (losses carried forward) |
(41,236 | ) | (21,966 | ) | (19,270 | ) | ||||||
Loss for the year |
(47,784 | ) | (19,273 | ) | (28,511 | ) | ||||||
|
|
|
|
|
|
|||||||
Equity |
316,024 | 306,564 | 9,460 | |||||||||
|
|
|
|
|
|
Parents share capital at 30 September 2023 and 31 December 2022 is 9,868 thousand and is fully subscribed and paid up. It comprises of 9,868 thousand ordinary shares without a nominal amount.
The share premium reserve amounts to 14,425 thousand and it is unchanged during the period.
Legal reserve amount to 2,101 thousand at 30 September 2023 and 2,101 thousand at 31 December 2022. This reserve is not distributable. Merger reserve, amounting to 288,261 thousand at 30 September 2023 and 31 December 2022 and no changes during the period under analysis, comprises the effects of the reverse merger between the parent and Emil Holding III S.p.A. in October 2016 on equity.
Capital contribution for capital amounting to 74,347 thousand at 30 September 2023 and 28,051 thousand at 31 December 2022.
The transactions that affected this caption are summarised below:
a. | 4,963 thousand for the contribution in kind made in 2021 by the shareholder for the acquisition of TechMah Medical. |
The contribution in kind 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 allocated 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) have been offset using claim notes, which generated the capital injection referred to above.
b. | capital injection by the shareholder of 20,000 thousand in June 2020. |
c. | 3,088 thousand for the agreement with HSS (Hospital for Special Surgery). On 4 January 2019, Lima USA and HSS (the operator of the most prestigious US orthopaedic surgery hospital in New York) signed a collaboration agreement for the production of implants on hospital grounds, via the following agreements: |
I. | a six-year lease for the premises where Lima USA will produce the implants for HSS, of which payment for the first three years have been made by awarding HSS a fixed number of new Emil NewCo shares and the second three years will be paid by monthly instalments; |
II. | a supply contract which establishes that HSS will bear the cost of any leasehold improvements made by Lima USA and will receive a set number of new Emil NewCo shares in return. |
The accounting effects of the above transaction with HSS are as follows:
| recognition of other right-of-use assets for 1,793 thousand, lease liabilities of 875 thousand and other reserves of 918 thousand. |
29
| recognition of greater leasehold improvement costs of 2,170 thousand with a balancing increase of 2,170 thousand in other reserves. |
d. | Capital injection by the shareholder of 46,296 thousand in February 2023. |
Actuarial reserve was set up as a result of application of IAS 19 for post-employment benefits and has a positive balance of 31 thousand at 30 September 2023 and 31 December 2022, respectively.
Translation reserve, with a positive balance of 3,007 thousand at 30 September 2023 and 2,379 thousand at 31 December 2022, reflects the changes in the groups 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 condensed consolidated interim financial statements.
The main items making up the other reserves are as follows:
| 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 three-year period. |
| the IFRS 2 reserve amounting to 15,028 thousand and 4,650 at 30 September 2023 and 31 December 2022, respectively, deriving from the accounting treatment of cash-settled share-based payment and equity-settled share-based payment arrangements, due to a new incentive plan signed by the company during the third part of 2022; |
| other sundry reserves of 1,764 thousand and 1,987 thousand at 30 September 2023 and 31 December 2022, respectively. |
Retained earnings (losses carried forward) amount to a negative net balance of 41,236 thousand at 30 September 2023 and 21,966 thousand at 31 December 2022.
The following supplementary information is provided on the parents 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) |
||||||||
30/09/2023 | 31/12/2022 Restated |
|||||||
Emil Holding III merger reserve |
288,261 | 288,288 | ||||||
Capital injections for capital increase |
74,347 | 28,051 | ||||||
Share premium reserve |
14,425 | 14,425 | ||||||
|
|
|
|
|||||
TOTAL |
377,033 | 330,764 | ||||||
|
|
|
|
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) |
||||||||
30/09/2023 | 31/12/2022 Restated |
|||||||
Revaluation reserve as per Law no. 413/1991 |
111 | 111 | ||||||
|
|
|
|
|||||
TOTAL |
111 | 111 | ||||||
|
|
|
|
30
3) | Reserves included in share capital. |
Reserves or other provisions that do 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) |
||||||||
30/09/2023 | 31/12/2022 Restated |
|||||||
Extraordinary reserve |
540 | 540 | ||||||
|
|
|
|
|||||
TOTAL |
540 | 540 | ||||||
|
|
|
|
[3.14] Provisions for risks and charges
Details of this caption and changing between 30 September 2023 and 31 December 2022 are set out below.
(000) |
||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Decreases | Reclassifications | 30/09/2023 | ||||||||||||||||||
Pension and similar provisions |
584 | (0 | ) | 183 | | | 768 | |||||||||||||||||
Other provisions |
16,572 | 1 | 12,675 | (542 | ) | | 28,705 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL |
17,156 | 1 | 12,858 | (542 | ) | | 29,473 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Agents termination indemnity (768 thousand and 584 thousand at 30 September 2023 and 31 December 2022, respectively) 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, warranties and other provisions, accruals to agents termination indemnity are classified by nature among costs for services.
Other provisions, amounting to 28,705 thousand and 16,572 thousand at 30 September 2023 and 31 December 2022 respectively, are mainly comprised as follows:
| the provision for charges of 1,521 thousand and 1,859 thousand at 30 September 2023 and 31 December 2022, respectively, of which 1,521 thousand and 1,460 thousand related to commission expense on revenue yet to be invoiced, nil thousand and nil thousand related to highly probable consultancy success fees the payment date of which is not yet known, both respectively at 30 September 2023 and 31 December 2022 and nil thousand at 30 September 2023 and 399 thousand at 31 December 2022 related to highly probable non- competition agreements the payment date of which is not yet known; |
| The provision related to the payback system 17,774 thousand that increases from the prior period for an amount equal to 3,457 thousand; |
| compensation for damage caused by products of 545 thousand and 300 thousand at 30 September 2023 and 31 December 2022, respectively. |
| The provision of 8,533 thousand for some claims arose during the year |
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.
[3.15] Employee benefits
Employee benefits amounts to 1,258 thousand and 1,296 thousand at 30 September 2023 and 31 December 2022, respectively.
31
At 30 September 2023 this item mainly consists of post-employment benefits due upon termination of employment pursuant to current legislation in Italy. The actuarial model used to measure Italian post-employment benefits (TFR) is based on the same assumptions previously used for measurement at 31 December 2022, illustrated in the notes to the consolidated financial statements at 31 December 2022, to which reference should be made, as there were no significant changes in the demographic or economic assumptions underlying the actuarial calculation in the half of 2023 and 2022, respectively.
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Balance at 1 January |
1,296 | 1,442 | (146 | ) | ||||||||
Exchange difference |
(32 | ) | (13 | ) | (19 | ) | ||||||
Benefits settled/advances paid |
(183 | ) | (189 | ) | 6 | |||||||
Accruals |
1,393 | 1,716 | (323 | ) | ||||||||
Cometa Fund, other pension funds |
(1,226 | ) | (1,599 | ) | 373 | |||||||
Post-employment benefits Substitute tax on revaluation |
9 | 9 | ||||||||||
Interest |
| 10 | (10 | ) | ||||||||
Actuarial gain |
| (71 | ) | 71 | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
1,258 | 1,296 | (38 | ) | ||||||||
|
|
|
|
|
|
[3.16] Current and non-current financial liabilities
Non-current financial liabilities, amounting to 285,597 thousand at 30 September 2023 and 10,165 at 31 December 2022, comprise the portion of loans and borrowings due after one year and are broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Non-current bank loans and borrowings |
191 | 363 | (172 | ) | ||||||||
Non-current bank loans and borrowings (due after five years) |
2 | 2 | 0 | |||||||||
Bonds |
280,635 | | 280,635 | |||||||||
Other financial liabilities |
| 5,248 | (5,248 | ) | ||||||||
Derivatives |
265 | | 265 | |||||||||
Lease liabilites as per IFRS 16 |
4,504 | 4,552 | (48 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
285,597 | 10,165 | 275,432 | |||||||||
|
|
|
|
|
|
Derivatives, amounting to 265 thousand at 30 September 2023, refer to fair value of Interest Rate Cap subscribed in first nine months of 2023 as described in note [3.17] Derivatives.
32
Current financial liabilities, amounting to 20,102 thousand at 30 September 2023 and 336,659 at 31 December 2022, comprise the current portion of loans and borrowings and are broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Credit cards |
454 | 383 | 71 | |||||||||
Current bank loans and borrowings |
12,000 | 54,000 | (42,000 | ) | ||||||||
Bank loans and borrowings - current portion |
301 | 386 | (85 | ) | ||||||||
Bonds - current portion |
| 274,039 | (274,039 | ) | ||||||||
Accrued expenses on bonds - due within one year |
4,977 | 1,979 | 2,998 | |||||||||
Accrued financial expense - due within one year |
265 | 298 | (33 | ) | ||||||||
Loans and borrowings with other financial backers |
185 | 2,310 | (2,125 | ) | ||||||||
Lease liabilites as per IFRS 16 |
1,920 | 3,265 | (1,345 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
20,102 | 336,660 | (316,558 | ) | ||||||||
|
|
|
|
|
|
Current financial liabilities chiefly include the bond issued by Limacorporate S.p.A. in 2017 equal to 0 thousand and 274,039 thousand at 30 September 2023 and 31 December 2022, respectively, related to 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, equipment 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 bond, 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, equipment 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. |
54 million was used at 31 December 2022.
If more than 35% (as explained in financing agreement) 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 (represented by the utilization of the revolving facility less cash and cash equivalents) and consolidated EBITDA 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 (used for 12 million at 30 September 2023).
33
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 parents shareholder.
A covenant exists on the new revolving facility similar, whereby if more than 40% (as explained in financing agreement) of the available amount of the revolving facility is used (i.e., draw-downs exceeding 26 million), a covenant related to the ratio of Super Senior Net Debt (represented by the utilization of the revolving facility less cash and cash equivalents) and consolidated EBITDA which cannot exceed 1.53, is activated under the terms of the contract. Such covenant was not tested as at 30 September 2023 since the testing condition had not been met.
Non-current financial liabilities (Other current financial liabilities) and current financial liabilities (Other loan and borrowing) also include liabilities for the purchase of business units related to the amount due in 2024 for the acquisition of a business unit from the groups Sicilian distributor. The non-current amount is nil at 30 September 2023 and 185 thousand at 31 December 2022. The current amount is 185 thousand at 30 September 2023 and nil at 31 December 2022.
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 (residual amount includes current and no current portion of medium/long- term loans):
(000) | ||||||||||||||||
Company |
Description |
Original amount |
Rate |
Expiry date |
Residual amount at 30/09/2023 |
Guarantee | ||||||||||
Limacorporate S.p.A. |
SICAT sustainable growth fund 1st progress report |
274 | Fixed | 30/06/2026 | 105 | None | ||||||||||
Limacorporate S.p.A. |
SICAT sustainable growth fund 2nd progress report |
339 | Fixed | 30/06/2026 | 138 | None | ||||||||||
Limacorporate S.p.A. |
Sustainable grow th 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 | 171 | Government guarantee | ||||||||||
Lima Austria |
Covid-19 subsidised loan |
200 | 0% until August 2022, then a floating loan |
31/12/2024 | 75 | None | ||||||||||
|
|
|
|
|||||||||||||
Total |
1,319 | 495 | ||||||||||||||
|
|
|
|
Current and non current bank loan and borrowing include the group medium-long term loans that are explained in part also in the table above and are the follows:
| subsidised loan of 500 thousand granted by BNP Paribas to Lima France in May 2020 to be used to offset the negative economic effects of the Covid-19 pandemic. The interest subsidised rate was 0.45%; The residual amount at 30 September 2023 is 171. |
| subsidised loan of 200 thousand granted by Unicredit Bank of Austria to Lima Austria in August 2020. Like the above loans, the Austrian group company applied for this loan to offset the negative economic effects of the Covid-19 pandemic. The subsidised interest rate applied is 0.00% until August 2022 after which it will be the 3M Euribor + 0.75%; The residual amount at 30 September 2023 is 75 thousand. |
Accrued financial expense and accrued expenses on bonds due within one year include interest accrued at each reporting date and not yet paid.
Other financial liabilities (non-current) and Other loans and borrowings (current)include mainly the amounts yet to be paid in relation to the acquisition of TechMah Medical LLC (contingent consideration).
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 of 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.
34
The Complaint contains high level allegations that Lima USA, Inc. and Limacorporate S.p.A. breached the Investor and Founders Agreement (I&F 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.
On 20th November 2023 the company filed a motion to dismiss, stating that Lima did not breach the I&F Agreement and has no liability to Plaintiffs.
On 22nd December 2023 the company was served an Amended Complaint by the TechMah Founders, which reiterated their previous allegations.
The company has filed a Defendants Answer To Verified Amended Complaint and Defendants Counterclaims which contains a request for compensatory damages in an amount to be determined at trial, but not less than $ 50 million.
As the matter is now going to be addressed by the court there is no contingent consideration to be recorded as a financial liability in the financial statements as at 30th September 2023. In view of these recent events and also based on the support of legal counsel, a certain amount has been provided together with other claims.
Finally, financial liabilities include lease liabilities deriving from the application of IFRS 16. The discount rate applied at 30 September 2023 and 31 December 2022 was revised and modified to take into consideration the higher interest rates compared to previous years.
Changing in the caption between 30 September 2023 and 31 December 2022 are set out below:
(000) |
||||||||||||||||||||||||||||
Description |
31/12/2022 Restated |
Exchange Difference |
Increases | Decreases | Other changes | Reclassifications | 30/09/2023 | |||||||||||||||||||||
Lease liabilities as per IFRS 16 - non-current portion |
4,552 | (6 | ) | 2,194 | (605 | ) | (157 | ) | (1,474 | ) | 4,504 | |||||||||||||||||
Lease liabilities as per IFRS 16 - current portion |
3,265 | (63 | ) | 1 | (2,758 | ) | | 1,474 | 1,920 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
TOTAL |
7,817 | (68 | ) | 2,195 | (3,363 | ) | (157 | ) | | 6,424 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities are detailed by due dates as follows:
(000) |
||||||||
Descrizione |
30/09/2023 | 31/12/2022 Restated |
||||||
Current liabilities - due within one year |
1,920 | 3,265 | ||||||
Non-current liabilities - due from one to five years |
4,317 | 3,997 | ||||||
Non-current liabilities - due after five years |
187 | 555 | ||||||
|
|
|
|
|||||
TOTAL |
6,424 | 7,817 | ||||||
|
|
|
|
[3.17] Derivatives
The derivatives refer to the interest rate swap and to the interest rate cap signed to hedge the bond issued in the first nine months of 2023.
The fair value of interest rate cap at 30 September 2023 is negative for 265 thousand and is included in non-current financial liabilities. The fair value of interest rate swap at 30 September 2023 is positive for 940 thousand and is included in non-current financial assets.
The derivatives are not listed. Therefore, their fair value is measured using financial techniques and compared to the counterparts measurement.
Although the derivatives were subscribed for hedging purposes, the Company decided not to apply hedge accounting, therefore fair value gains or losses on the derivative are recognized in profit or loss.
35
[3.18] Other non-current liabilities
Other non-current liabilities, amounting to 870 thousand and 649 thousand at 30 September 2023 and 31 December 2022 respectively and include incentive plans for some managers (230 thousand and 73 thousand at 30 September 2023 and 31 December 2022, respectively) and the non-current portion of deferred income (210 thousand and 221 thousand at 30 September 2023 and 31 December 2022, respectively), chiefly related to insurance costs.
The significant decrease during the half of 2022 is referred to the step down from the role of CEO which led to the partial liquidation of the VSP, and the remained part was reclassified on other liabilities (see paragraph [3.21]).
Reference should be made to note [4.7] Management Incentive plans for further information about such plans.
[3.19] Trade payables
Trade payables amount to 33,405 thousand and 36,564 thousand at 30 September 2023 and 31 December 2022 respectively 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 do not accrue interest. The terms and conditions for related parties do not differ from those applied for third party suppliers.
(000) |
||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
||||||
Trade Payables |
33,143 | 36,214 | ||||||
Payables to subsidiaries |
| | ||||||
Payables to parents |
262 | 350 | ||||||
|
|
|
|
|||||
TOTAL |
33,405 | 36,564 | ||||||
|
|
|
|
[3.20] Current tax liabilities
Tax liabilities amount to 1,917 thousand and 877 thousand at 30 September 2023 and 31 December 2022, respectively. Specifically, the caption is comprised of the parents IRAP payable (1,093 thousand at 30 September 2023) while the remainder refers to current taxes payable by all of the foreign branches (824 thousand at 30 September 2023).
36
[3.21] 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 and amounts due to employees:
(000) |
||||||||||||
Description |
30/09/2023 | 31/12/2022 Restated |
Variation | |||||||||
Wages and salaries |
1,910 | 1,848 | 62 | |||||||||
Employee and performance bonus |
9,619 | 8,911 | 708 | |||||||||
Directors fees |
411 | 302 | 109 | |||||||||
Statutory auditors fees |
53 | 34 | 19 | |||||||||
Liabilities for the purchase of business units |
194 | 194 | 0 | |||||||||
Payables to factors for collections received |
44 | 7 | 37 | |||||||||
Foreign commissions |
| 4 | (4 | ) | ||||||||
Sundry other liabilities |
2,233 | 1,034 | 1,199 | |||||||||
Payments on account |
4,767 | 4,380 | 387 | |||||||||
IRPEF withholdings |
903 | 1,241 | (338 | ) | ||||||||
Other tax liabilities |
351 | 1,852 | (1,501 | ) | ||||||||
VAT |
2,138 | 1,280 | 858 | |||||||||
INPS - Inpdai - Previndai |
2,118 | 2,390 | (272 | ) | ||||||||
INAIL |
37 | 19 | 18 | |||||||||
Cometa Fund and other pension funds |
280 | 292 | (12 | ) | ||||||||
Enasarco for agents |
116 | 181 | (65 | ) | ||||||||
Other social security charges payable |
377 | 612 | (235 | ) | ||||||||
Accrued expenses: |
||||||||||||
Insurance premiums |
2 | 5 | (3 | ) | ||||||||
Interests on non-current loans |
1 | | 1 | |||||||||
Other sundry |
102 | 80 | 22 | |||||||||
Deferred income: |
||||||||||||
Grants related to assets |
19 | 72 | (53 | ) | ||||||||
Rent |
0 | 1 | (1 | ) | ||||||||
Other sundry |
| 3 | (3 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
25,673 | 24,742 | 931 | |||||||||
|
|
|
|
|
|
Payments on account amount to 4,767 thousand and 4,380 thousand at 30 September 2023 and 31 December 2022, respectively include the following:
| PON SIB grant advance of 3,773 thousand, unchanged on the previous period; |
| MC BEES grant advance of nil thousand at 30 September 2023 and 249 thousand at 31 December 2022; |
| PROST3SIS grant advance of 196 thousand at 30 September 2023 and nil thousand at 31 December 2022; |
| IAREPAM grant advance of 11 thousand at 30 September 2023 and 31 December 2022; |
| LOGIN grant advances received from customers of 127 thousand and nil thousand at 30 September 2023 and 31 December 2022 respectively; |
| advances received from customers of 354 thousand and 231 thousand at 30 September 2023 and 31 December 2022 respectively; |
| other payments on account of 306 thousand and 116 thousand at 30 September 2023 and 31 December 2022 respectively. |
Liabilities for the purchase of business units of 194 thousand (unchanged from the previous period) 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) for about 1,476 thousand, under which the first instalment was paid on 3 April 2023 and the second instalment was paid on 31 July (the parent opted for settlement in four quarterly instalments).
[3.22] Revenue and other revenue and income
Revenue amounts to 200,736 thousand on 30 September 2023, compared to 178,794 thousand on 30 September 2022.
37
Revenue derives from sales and distribution contracts with group customers essentially related to the sale of orthopaedic implants, mostly 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 3.5 million, established in connection with the activation of the Italian government payback provision as a retroactive rebate (i.e. variable consideration). Such variable consideration was 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.
Revenueis broken down by geographical segment as follows:
(000) |
||||||||||||
Revenue by GEOGRAPHICAL SEGMENT |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Europe |
128,849 | 103,676 | 25,173 | |||||||||
APAC |
28,710 | 28,063 | 647 | |||||||||
United States |
32,980 | 31,331 | 1,649 | |||||||||
Rest of world |
10,197 | 15,724 | (5,527 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total sales revenue |
200,736 | 178,794 | 21,942 | |||||||||
|
|
|
|
|
|
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, 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 as variable consideration under IFRS 15.
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.
38
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; |
| Limacorporates turnover in the various regions; |
| Limacorporates market share in the various regions. |
Other revenue and income are broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Service recharges |
2,639 | 1,950 | 690 | |||||||||
Lease income |
306 | 337 | (31 | ) | ||||||||
Recharges to subsidiaries/associates |
10 | 18 | (8 | ) | ||||||||
Gains |
735 | 508 | 435 | |||||||||
Release of the provision for risks |
| 5 | 223 | |||||||||
Other income |
224 | 487 | (264 | ) | ||||||||
Grants related to income |
122 | 96 | 26 | |||||||||
Grants related to assets |
54 | 19 | 35 | |||||||||
Other revenue - previous years |
90 | 47 | 43 | |||||||||
Other revenue |
34 | 5 | 29 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
4,214 | 3,472 | 1,178 | |||||||||
|
|
|
|
|
|
The increase in revenue from recharges for services is linked to the rise in turnover and sales.
[3.23] Internal work capitalised
This caption amounts to 9,156 thousand on 30 September 2023 and 10,181 thousand on 30 September 2022. It may be broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Increases in property, plant and equipment for capitalisation of equipment |
7,776 | 7,822 | (46 | ) | ||||||||
ncreases in intangible assets for capitalisation of sundry costs |
545 | (545 | ) | |||||||||
increases in property, plant and equipment for internal work |
1,380 | 1,814 | (434 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
9,156 | 10,181 | (1,025 | ) | ||||||||
|
|
|
|
|
|
Increases in property, plant and equipment for capitalisation of equipment and internal work both refer to the capitalisation of equipment built internally. This equipment is provided to hospitals on a free loan basis to be used to implant the groups products.
Increases in intangible assets for capitalisation of sundry costs (nil thousand) refer to the capitalisation of internal and external costs incurred for product development projects.
39
[3.24] Raw materials, consumables, supplies and goods
This caption amounts to 50,902 thousand on 30 September 2023, compared to 42,250 thousand on 30 September 2022. It is broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Purchase of raw materials |
9,240 | 7,121 | 2,119 | |||||||||
Purchase of semi-finished products |
19,029 | 16,164 | 2,866 | |||||||||
Purchase of finished goods |
10,164 | 7,185 | 2,979 | |||||||||
Individual tool components |
10,742 | 10,951 | (210 | ) | ||||||||
Opening balance of raw materials, consumables, supplies and goods |
6,272 | 6,094 | 178 | |||||||||
Closing balance of raw materials, consumables, supplies and goods |
(6,755 | ) | (6,522 | ) | (232 | ) | ||||||
Other purchases |
2,210 | 1,257 | 953 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
50,902 | 42,250 | 8,652 | |||||||||
|
|
|
|
|
|
[3.25] Services
Services amount to 63,036 thousand on 30 September 2023, compared to 60,200 thousand on 30 September 2022. The caption is broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Outsourced processing and analyses |
2,495 | 2,483 | 12 | |||||||||
Transport costs for sales |
4,749 | 4,021 | 728 | |||||||||
Transport costs for purchases |
667 | 608 | 59 | |||||||||
Energy, power supply |
1,872 | 2,822 | (951 | ) | ||||||||
Administrative services |
1,506 | 1,566 | (59 | ) | ||||||||
Maintenance and repair |
1,691 | 1,479 | 212 | |||||||||
Maintenance of HW/SW/office equipment |
2,113 | 1,966 | 147 | |||||||||
Technical and commercial consultancy |
4,826 | 4,300 | 526 | |||||||||
Non-recurring consultancy |
1,080 | 1,880 | (800 | ) | ||||||||
Conferences and trade fairs |
2,453 | 1,614 | 840 | |||||||||
WorkShop |
1,373 | 1,744 | (370 | ) | ||||||||
Enasarco commissions and charges |
22,268 | 19,460 | 2,808 | |||||||||
Travel costs |
3,684 | 3,273 | 412 | |||||||||
Insurance costs |
2,961 | 2,660 | 301 | |||||||||
Directors fees |
572 | 2,551 | (1,979 | ) | ||||||||
Royalties |
509 | 990 | (481 | ) | ||||||||
Others |
8,216 | 6,784 | 1,432 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
63,036 | 60,200 | 2,837 | |||||||||
|
|
|
|
|
|
The increase in this caption is chiefly due to fees directly related to the growth in turnover and higher processing, transport costs and commissions also tied to the rise in sales.
Management remuneration at 30 September 2022 include 941 thousand for management incentive plans (30 September 2023: nil thousand). Reference should be made to section [4.7] Management Incentive plans for a description of such plans.
[3.26] Change in work in progress, semi-finished products and finished goods
This caption shows a positive balance of 3,890 thousand on 30 September 2023 (30 September 2022: 2,326 thousand).
40
[3.27] Personnel expenses
Personnel expenses amount to 67,412 thousand on 30 September 2023, compared to 56,313 thousand on 30 September 2022, and are broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Wages and salaries |
56,225 | 45,747 | 10,802 | |||||||||
Social security contributions |
9,694 | 9,188 | 542 | |||||||||
Post-employment benefits |
1,393 | 1,319 | 74 | |||||||||
Other costs |
99 | 59 | 40 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
67,412 | 56,313 | 11,457 | |||||||||
|
|
|
|
|
|
[3.28] Amortisation, depreciation and impairment losses
Amortisation amount to 22,972 thousand on 30 September 2023, compared to 26,131 thousand on 30 September 2022, and include depreciation of right-of-use assets of 3,883 thousand on 30 September 2023 (30 September 2022: 4,007 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 |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Amortisation of intangible assets |
3,314 | 6,244 | (2,973 | ) | ||||||||
Depreciation of property, plant and equipment |
15,776 | 15,880 | (72 | ) | ||||||||
Depreciation of leased assets |
3,883 | 4,007 | (124 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
22,972 | 26,131 | (3,169 | ) | ||||||||
|
|
|
|
|
|
The impairment losses on trade receivables of 428 thousand (30 september 2022: 101 thousand) include the accrual for net impairment losses on trade receivables recognised pursuant to IFRS 9.
During the first nine months of 2023 the group impaired developments costs related to TechMah business, as consequence of the interruption of the project and the subscription of a new partnership with a software supplier on shoulder preoperative planning for an amount of 36,615 thousand.
As of the date of preparation of these condensed consolidated interim financial statements, the relevant losses are not expected to be reversed.
[3.29] Other operating costs
Other operating costs amount to 10,565 thousand on 30 September 2023, compared to 1,195 thousand in on 30 September 2022.
41
The caption is broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Taxes and duties |
576 | 613 | (37 | ) | ||||||||
Tax expense - previous years |
2 | 8 | (7 | ) | ||||||||
Gifts and donations |
83 | 12 | 71 | |||||||||
Other costs |
258 | 522 | (263 | ) | ||||||||
Losses on assets |
51 | 39 | 12 | |||||||||
Sundry costs - previous years |
1 | 1 | 1 | |||||||||
Provision for risks |
9,594 | | 9,594 | |||||||||
|
|
|
|
|
|
|||||||
TOTAL |
10,565 | 1,195 | 9,370 | |||||||||
|
|
|
|
|
|
[3.30] Net financial (income) expense
Net financial (income) expense amounts to 21,030 thousand negative on 30 September 2023, compared to 1,830 thousand positive on 30 September 2022, and is broken down as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Exchange gains |
3,111 | 13,481 | (10,371 | ) | ||||||||
Other interest income |
7,524 | 107 | 7,417 | |||||||||
Financial income for adjusting liabilities to fair value |
940 | 6,201 | (5,261 | ) | ||||||||
Financial Income |
11,574 | 19,789 | (8,215 | ) | ||||||||
Exchange losses |
(5,386 | ) | (6,801 | ) | 1,415 | |||||||
Interest on bonds |
(19,548 | ) | (7,937 | ) | (11,610 | ) | ||||||
Other interest and financial expenses |
(7,406 | ) | (3,221 | ) | (4,185 | ) | ||||||
Financial expense for adjusting liabilities to fair value |
(265 | ) | | (265 | ) | |||||||
Financial Expenses |
(32,605 | ) | (17,959 | ) | (14,645 | ) | ||||||
|
|
|
|
|
|
|||||||
TOTAL |
(21,030 | ) | 1,830 | (22,860 | ) | |||||||
|
|
|
|
|
|
The increase in financial expenses during the period is chiefly due to higher interests on bond.
Financial income include an amount for adjusting the derivatives fair value (940 thousand at 30 September 2023 and nil at 30 September 2022) and for adjusting to fair value the liability of Techmahs acquisition (nil thousand at 30 September 2023 and 6,201 thousand at 30 September 2022).
The change in other interest income refers to the release of financial expenses related to the financial liability of Techmah, which, as specified in Note 3.16, is zero as of September 30, 2023.
Exchange losses amount to 5,386 consist in 1,291 related to realised exchange losses and 4,095 refers to unrealised exchange losses.
Exchange gains amount to 3,111 consist in 1,057 related to realised exchange gains and 2,054 refers to unrealised exchange gains.
[3.31] Income tax (benefit) expense
Income tax (benefit) expense amounts to (9,164) thousand on 30 September 2023 compared to an Income tax expense of 266 thousand on 30 September 2022.
The decrease in deferred tax liabilities is mainly related to the write off of Techmahs development costs.
42
[4.1] 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 groups activities. Specifically, senior management reviews the groups results as a whole as it does not have identifiable operating segments. Therefore, the groups operations are presented as a single segment for IFRS 8 reporting purposes.
A breakdown of revenue earned in 2023 and 2022 by product line, distribution channel and geographical segment is shown below:
(000) |
||||||||||||
Revenue by PRODUCT LINE |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Hip |
67,981 | 64,383 | 3,598 | |||||||||
Extremities |
81,935 | 72,674 | 9,261 | |||||||||
Knee |
43,502 | 35,185 | 8,317 | |||||||||
Fixation& Other |
7,319 | 6,553 | 766 | |||||||||
|
|
|
|
|
|
|||||||
Total sales revenue |
200,736 | 178,794 | 21,941 | |||||||||
|
|
|
|
|
|
(000) |
||||||||||||
Revenue by DISTRIBUTION CHANNEL |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Direct customers |
168,313 | 141,986 | 26,327 | |||||||||
Indirect channel |
32,423 | 36,808 | (4,385 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total sales revenue |
200,736 | 178,794 | 21,942 | |||||||||
|
|
|
|
|
|
(000) |
||||||||||||
Revenue by GEOGRAPHICAL SEGMENT |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Europe |
128,849 | 103,676 | 25,173 | |||||||||
APAC |
28,710 | 28,063 | 647 | |||||||||
United States |
32,980 | 31,331 | 1,649 | |||||||||
Rest of world |
10,197 | 15,724 | (5,527 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total sales revenue |
200,736 | 178,794 | 21,942 | |||||||||
|
|
|
|
|
|
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 2023 and 2022.
[4.2] Financial instruments - 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.
43
(000) |
||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount | Fair value | |||||||||||||||||||||||||||||||||||||||||||||
30 September 2023 |
Note | Fair value - hedging instruments |
Mandatorly at FVTPL - other |
FVOCI debt instruments |
FVOCI equity instruments |
Financial assets measured at fair value |
Other labilities |
Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||
Financial assets measured at fair value |
||||||||||||||||||||||||||||||||||||||||||||||
Hedging interest rate swap |
[3.17] | 940 | 940 | 940 | 940 | |||||||||||||||||||||||||||||||||||||||||
940 | | | | | | 940 | | 940 | | 940 | ||||||||||||||||||||||||||||||||||||
Financial assets not measured at fair value |
||||||||||||||||||||||||||||||||||||||||||||||
Trade receivables and other assets |
[3.9][3.11] | 87,285 | 87,285 | 87,285 | 87,285 | |||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents |
[3.12] | 27,127 | 27,127 | 27,127 | 27,127 | |||||||||||||||||||||||||||||||||||||||||
| | | | 114,412 | | 114,412 | | 114,412 | | 114,412 | ||||||||||||||||||||||||||||||||||||
Financial liabilities measured at fair value |
||||||||||||||||||||||||||||||||||||||||||||||
Hedging interest rate swap |
[3.17] | 280 | | 280 | 280 | 280 | ||||||||||||||||||||||||||||||||||||||||
Liabilities for acquisitons - MT Ortho |
[3.16] | 185 | 185 | | 185 | 185 | ||||||||||||||||||||||||||||||||||||||||
Liabiites for acquisitions - TechMah |
[3.16] | | | |||||||||||||||||||||||||||||||||||||||||||
280 | | | | | 185 | 465 | | 280 | 185 | 465 | ||||||||||||||||||||||||||||||||||||
Financial liabilities not measured at fair value |
||||||||||||||||||||||||||||||||||||||||||||||
Bank credit facilities |
[3.16] | 454 | 454 | 454 | 454 | |||||||||||||||||||||||||||||||||||||||||
Secured bank loans |
[316] | 12,000 | 12,000 | 12,000 | 12,000 | |||||||||||||||||||||||||||||||||||||||||
Unsecured bank loans |
[3.16] | 495 | 495 | 495 | 495 | |||||||||||||||||||||||||||||||||||||||||
Secured bonds - listed bonds |
[3.16] | 280,635 | 280,635 | 280,635 | 280,635 | |||||||||||||||||||||||||||||||||||||||||
Lease liabilities - IFRS 16 |
[3.16] | 6,424 | 6,424 | 6,424 | 6,424 | |||||||||||||||||||||||||||||||||||||||||
Trade payables and otter Labilities |
[3.19][3.21] | 58,130 | 58,130 | 58,130 | 58,130 | |||||||||||||||||||||||||||||||||||||||||
| | | | | 358,137 | 358,137 | | 358,137 | | 358,137 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
TOTAL |
1,221 | | | | 114,412 | 358,322 | 473,955 | | 473,770 | 185 | 473,955 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Financial instruments measured at fair value
At 30 September 2023 the Management, as specified in note 3.16, assumes that there is no contingent consideration to be recorded as a financial liability of Techmah.
Financial instruments not measured at fair value
Type | Measurement technique | |
Secured bonds | Discounted cash flows: | |
Lease liabilities | This measurement technique | |
Secured bank loans | considers the present value of | |
Unsecured bank loans | estimated payments, discounted using a discount rate that reflects the risk. |
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 groups risk management system lies with the parents board of directors. This committee is in charge of developing and monitoring the groups risk management policies.
44
The groups 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 groups 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 groups 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 refers to the need to meet the groups financial needs in the short term. |
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 groups 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. The derivatives are referred of the interest rate swap and a cap contract put in place by the parent to hedge fluctuations in payments of interest on the bond issued in 2023. At 31 December 2022, 30 September 2022 and 31 December 2021 there werent derivatives. A 100bps increase in the interest rate applied to the first nine months of 2023 would have led to an increase in financial expense of roughly 0.5 million.
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.
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 groups 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 groups receivables are due from public institutions, thus solely linked to the country risk. Moreover, payments from public administration have improved notably in some cases in recent years thanks to measures taken to cut public entity debt with private companies.
45
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 30 September 2023 and 2022, the group does not have exposures with individual customers for more than 10% of its total trade receivables.
The amount of financial assets for which recovery is doubtful is immaterial in terms of the total amount of receivables and is, in any case, covered by adequate accruals to the relevant allowances.
Liquidity risk
Liquidity risk derives from the ability to obtain financial resources at a sustainable cost to carry out the groups normal business operations.
The group uses the usual tools to manage current trade receivables, as well as partially using the 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.
[4.3] Significant non-recurring transactions
The condensed consolidated interim financial statements were not affected by significant non-recurring transactions.
[4.4] Guarantees
Reference should be made to section [3.16] of the notes to the condensed consolidated interim financial statements.
[4.5] 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 arms length basis. They do not include typical and/or unusual transactions.
Details of related party transactions carried out during 30 September 2023 and 30 September 2022 are as follows:
(000) |
||||||||||||||||||||||||||||
30.09.2023 | ||||||||||||||||||||||||||||
Payables | Receivables | Other non- current liabilities |
Other current liabilities |
Sundry recharges |
Services | Personnel expenses |
||||||||||||||||||||||
EMIL HOLDING II S.à.r.l. |
263 | | | | 10 | 263 | | |||||||||||||||||||||
Senior Management |
| | 303 | 411 | | 566 | 9,285 | |||||||||||||||||||||
Short-term |
411 | 566 | | |||||||||||||||||||||||||
Post-empoyment |
| | | |||||||||||||||||||||||||
Other long - term |
| | ||||||||||||||||||||||||||
Share based benefits |
303 | | | 9,285 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
263 | | 303 | 411 | 10 | 829 | 9,285 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No other significant related party transactions took place during the period.
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.
46
Transactions with Emil Holding II S.à.r.l.
Financial transactions with the ultimate parent are part of the parents normal business operations and take place at conditions similar to those applied to transactions with non-related parties.
[4.6] Fees of directors, statutory auditors and key management personnel
The remuneration of managers and the fees paid to statutory auditors were as follows:
(000) |
||||||||||||
Description |
30/09/2023 | 30/09/2022 Restated |
Variation | |||||||||
Statutory auditors fees |
38 | 38 | 1 | |||||||||
Directors fees |
542 | 2,485 | (1,943 | ) | ||||||||
|
|
|
|
|
|
|||||||
TOTAL |
580 | 2,522 | (1,942 | ) | ||||||||
|
|
|
|
|
|
[4.7] Management Incentive plans
In accordance with IFRS 2, the parent identified cash-settled share-based payment incentive plans for some managers.
| 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 Entitys 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 December 31, 2023. |
47
| 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 380.1 thousand.
The fair value of the Equity-settled Bonus Payments at grant date amounted to 16,348.0 thousand.
The movement of the interest rate curve and volatility is not expected to result in a significant change in the cash-settled bonus payment.
This plan led to a recognition of personnel expenses of 9,285 thousand at 30 September 2023.
[4.8] Events after the reporting date
With reference to the Investor and Founders Agreement described in the note 2.1, 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
48
KPMG S.p.A.
Revisione e organizzazione contabile
Piazza Salvemini, 20
35131 PADOVA PD
Telefono +39 049 8249101
Email it-fmauditaly@kpmg.it
PEC kpmgspa@pec.kpmg.it
Independent Auditors Review Report
To the board of directors of Limacorporate S.p.A.
Results of Review of Condensed Consolidated Interim Financial Information
We have reviewed the accompanying condensed consolidated statement of financial position of Limacorporate S.p.A. and its subsidiaries (the Company) as of September 30, 2023 and 2022, the related condensed consolidated statements of income, changes in equity, and cash flows for the nine-month periods ended September 30, 2023 and 2022, and the related notes (collectively referred to as the condensed consolidated interim financial information).
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in accordance with International Accounting Standards 34, Interim Financial Reporting (IAS 34).
Basis for Review Results
We conducted our reviews in accordance with auditing standards generally accepted in the United States of America (GAAS) applicable to reviews of interim financial information. A review of condensed consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. A review of condensed consolidated interim financial information is substantially less in scope than an audit conducted in accordance with GAAS, the objective of which is an expression of an opinion regarding the financial information as a whole and accordingly, we do not express such an opinion. 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 reviews. We believe that the results of the review procedures provide a reasonable basis for our conclusion.
Responsibilities of Management for the Condensed Consolidated Interim Financial Information
Management is responsible for the preparation and fair presentation of the condensed consolidated interim financial information in accordance with IAS 34 and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of condensed consolidated interim financial information that is free from material misstatement, whether due to fraud or error.
Limacorporate S.p.A.
Independent Auditors Review Report
September 30, 2023 and 2022
Report on Condensed Consolidated Balance Sheet as of December 31, 2022
We have previously audited, in accordance with GAAS, the consolidated statement of financial position as of December 31, 2022, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended (not presented herein); and we expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated February 1, 2024. In our opinion, the accompanying condensed consolidated statement of financial position of the Company as of December 31, 2022 is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. The audit report includes an emphasis of matter paragraph that refers to the restatement of the 2022 financial statements for error corrections.
KPMG S.p.A.
Padua, Italy
February 1, 2024
2
Exhibit 99.3
ENOVIS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
SEPTEMBER 30, 2023
1
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2023
($ in thousands)
Enovis Historical As of September 30, 2023 |
Lima Historical As of September 30, 2023 (Note 2) |
Transaction Accounting Adjustments |
Note 4 | Financing Adjustments |
Note 4 | Pro Forma Combined |
||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ | 32,129 | $ | 28,653 | $ | (777,790 | ) | (a) | $ | 781,315 | (a) | $ | 64,307 | |||||||||||
Trade receivables, less allowance for credit losses |
277,029 | 76,925 | | | 353,954 | |||||||||||||||||||
Inventories, net |
470,913 | 96,153 | 38,459 | (b) | | 605,525 | ||||||||||||||||||
Prepaid expenses |
28,974 | 3,121 | | | 32,095 | |||||||||||||||||||
Other current assets |
45,142 | 13,055 | | | 58,197 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total current assets |
854,187 | 217,907 | (739,331 | ) | $ | 781,315 | 1,114,078 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Property, plant and equipment, net |
260,190 | 73,868 | 102,025 | (m) | | 436,083 | ||||||||||||||||||
Goodwill |
2,027,154 | 405,881 | (145,426 | ) | (c) | | 2,287,609 | |||||||||||||||||
Intangible assets, net |
1,100,959 | 21,785 | 319,215 | (d) | | 1,441,959 | ||||||||||||||||||
Lease asset - right of use |
63,487 | 7,646 | | | 71,133 | |||||||||||||||||||
Other assets |
94,940 | 37,203 | 7,957 | (o) | (8,000 | ) | (n) | 132,100 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total assets |
$ | 4,400,917 | $ | 764,290 | $ | (455,560 | ) | $ | 773,315 | $ | 5,482,962 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Current portion of long-term debt |
$ | | $ | 19,205 | $ | (19,205 | ) | (e) | $ | 20,000 | (j) | $ | 20,000 | |||||||||||
Accounts payable |
125,060 | 35,284 | | | 160,344 | |||||||||||||||||||
Accrued liabilities |
230,224 | 31,170 | 80,000 | (f) | | 341,394 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total current liabilities |
355,284 | 85,659 | 60,795 | 20,000 | 521,738 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Long-term debt, less current portion |
395,000 | 296,903 | (296,903 | ) | (e) | 823,277 | (j) | 1,218,277 | ||||||||||||||||
Non-current lease liability |
49,176 | 4,757 | | | 53,933 | |||||||||||||||||||
Other liabilities |
159,725 | 42,117 | 126,443 | (k) | | 328,285 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities |
959,185 | 429,436 | (109,665 | ) | 843,277 | 2,122,233 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity: |
||||||||||||||||||||||||
Common stock |
55 | 10,423 | (10,423 | ) | (g) | | 55 | |||||||||||||||||
Additional paid-in capital |
2,952,975 | 417,403 | (417,403 | ) | (h) | (61,962 | ) | (l) | 2,891,013 | |||||||||||||||
Retained earnings |
539,507 | (92,972 | ) | 81,931 | (i) | (8,000 | ) | (n) | 520,466 | |||||||||||||||
Accumulated other comprehensive loss |
(52,915 | ) | | | | (52,915 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total shareholders equity |
3,439,622 | 334,854 | (345,895 | ) | (69,962 | ) | 3,358,619 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Noncontrolling interest |
2,110 | | | | 2,110 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total equity |
3,441,732 | 334,854 | (345,895 | ) | (69,962 | ) | 3,360,729 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total liabilities and equity |
$ | 4,400,917 | $ | 764,290 | $ | (455,560 | ) | $ | 773,315 | $ | 5,482,962 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
2
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For The Nine Months Ended September 30, 2023
($ in thousands)
Enovis Historical Nine Months Ended September 30, 2023 |
Lima Historical Nine Months Ended September 30, 2023 (Note 2) |
Transaction Accounting Adjustments |
Note 5 | Financing Adjustments |
Note 5 | Pro Forma Combined | ||||||||||||||||||||||
Net sales |
$ | 1,252,177 | $ | 220,370 | $ | | $ | | $ | 1,472,547 | ||||||||||||||||||
Cost of sales |
525,787 | 70,284 | 12,003 | (a), (f) | | 608,074 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross profit (loss) |
726,390 | 150,086 | (12,003 | ) | | 864,473 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Selling, general and administrative expense |
619,294 | 136,575 | 5,597 | (f) | | 761,466 | ||||||||||||||||||||||
Research and development expense |
57,012 | 13,315 | | | 70,327 | |||||||||||||||||||||||
Amortization of acquired intangibles |
98,256 | 3,590 | 12,910 | (c) | | 114,756 | ||||||||||||||||||||||
Insurance settlement loss (gain) |
| | | | | |||||||||||||||||||||||
Restructuring and other charges |
11,782 | 41,259 | | | 53,041 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total operating expenses |
786,344 | 194,739 | 18,507 | | 999,590 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Operating income (loss) |
(59,954 | ) | (44,653 | ) | (30,510 | ) | | (135,117 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest expense, net |
15,496 | 27,626 | (27,886 | ) | (d) | 42,408 | (d) | 57,644 | ||||||||||||||||||||
Debt extinguishment charges |
| | | | | |||||||||||||||||||||||
Unrealized (gain) loss on investment in ESAB Corporation |
| | | | | |||||||||||||||||||||||
Other (income) expense, net |
(665 | ) | (6,707 | ) | | | (7,372 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income (loss) from continuing operations before taxes |
(74,785 | ) | (65,572 | ) | (2,624 | ) | (42,408 | ) | (185,389 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income tax benefit |
(17,878 | ) | (9,929 | ) | (717 | ) | (e) | (11,591 | ) | (40,115 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) from continuing operations |
(56,907 | ) | (55,643 | ) | (1,907 | ) | (30,817 | ) | (145,274 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income (loss) from discontinued operations, net of taxes |
21,096 | | | | 21,096 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) |
(35,811 | ) | (55,643 | ) | (1,907 | ) | (30,817 | ) | (124,178 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Less: Net income attributable to noncontrolling interest from continued operations net of taxes |
414 | | | | 414 | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest from discontinued operations net of taxes |
| | | | | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) attributable to Enovis Corporation |
$ | (36,225 | ) | $ | (55,643 | ) | $ | (1,907 | ) | $ | (30,817 | ) | $ | (124,592 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) per share - basic |
||||||||||||||||||||||||||||
Continuing operations |
(1.05 | ) | (2.66 | ) | ||||||||||||||||||||||||
Discontinued operations |
0.39 | 0.39 | ||||||||||||||||||||||||||
Consolidated operations |
(0.67 | ) | (2.27 | ) | ||||||||||||||||||||||||
Net income (loss) per share - diluted |
||||||||||||||||||||||||||||
Continuing operations |
(1.05 | ) | (2.66 | ) | ||||||||||||||||||||||||
Discontinued operations |
0.39 | 0.39 | ||||||||||||||||||||||||||
Consolidated operations |
(0.67 | ) | (2.27 | ) |
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
3
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2022
($ in thousands)
Envois Historical Year Ended December 31, 2022 |
Lima Historical Year Ended December 31, 2022 (Note 2) |
Transaction Accounting Adjustments |
Note 5 | Financing Adjustments |
Note 5 | Pro Forma Combined | ||||||||||||||||||||||
Net sales |
$ | 1,563,101 | $ | 261,255 | $ | | $ | | $ | 1,824,356 | ||||||||||||||||||
Cost of sales |
693,718 | 84,559 | 30,995 | (a) (f) | | 809,272 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Gross profit |
869,383 | 176,696 | (30,995 | ) | | 1,015,084 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Selling, general and administrative expense |
772,913 | 147,325 | 18,405 | (b) (f) | | 938,643 | ||||||||||||||||||||||
Research and development expense |
60,827 | 17,988 | | | 78,815 | |||||||||||||||||||||||
Amortization of acquired intangibles |
126,301 | 9,101 | 12,899 | (c) | | 148,301 | ||||||||||||||||||||||
Insurance settlement gain |
(36,705 | ) | | | | (36,705 | ) | |||||||||||||||||||||
Restructuring and other charges |
17,225 | 16,981 | | | 34,206 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total operating expenses |
940,561 | 191,395 | 31,304 | | 1,163,260 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Operating income (loss) |
(71,178 | ) | (14,699 | ) | (62,299 | ) | | (148,176 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Interest expense, net |
24,052 | 15,795 | (15,927 | ) | (d) | 58,052 | (d) | 81,972 | ||||||||||||||||||||
Debt extinguishment charges |
20,396 | | | 8,000 | (g) | 28,396 | ||||||||||||||||||||||
Unrealized (gain) loss on investment in ESAB Corporation |
(102,669 | ) | | | | (102,669 | ) | |||||||||||||||||||||
Gain on cost basis investment |
(8,800 | ) | | | | (8,800 | ) | |||||||||||||||||||||
Other (income) expense, net |
(2,088 | ) | (10,678 | ) | | | (12,766 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income (loss) from continuing operations before taxes |
(2,069 | ) | (19,816 | ) | (46,372 | ) | (66,052 | ) | (134,309 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income tax benefit |
36,120 | 6,861 | (12,674 | ) | (e) | (15,867 | ) | 14,440 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) from continuing operations |
(38,189 | ) | (26,677 | ) | (33,698 | ) | (50,185 | ) | (148,749 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Income (loss) from discontinued operations, net of taxes |
26,430 | | | | 26,430 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) |
(11,759 | ) | (26,677 | ) | (33,698 | ) | (50,185 | ) | (122,319 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Less: Net income attributable to noncontrolling interest from continued operations net of taxes |
567 | | | | 567 | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest from discontinued operations net of taxes |
966 | | | | 966 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) attributable to Enovis Corporation |
$ | (13,292 | ) | $ | (26,677 | ) | $ | (33,698 | ) | $ | (50,185 | ) | $ | (123,852 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net income (loss) per share - basic |
||||||||||||||||||||||||||||
Continuing operations |
(0.72 | ) | (2.75 | ) | ||||||||||||||||||||||||
Discontinued operations |
0.47 | 0.47 | ||||||||||||||||||||||||||
Consolidated operations |
(0.25 | ) | (2.28 | ) | ||||||||||||||||||||||||
Net income (loss) per share - diluted |
||||||||||||||||||||||||||||
Continuing operations |
(0.72 | ) | (2.75 | ) | ||||||||||||||||||||||||
Discontinued operations |
0.47 | 0.47 | ||||||||||||||||||||||||||
Consolidated operations |
(0.25 | ) | (2.28 | ) |
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
4
Note 1 Basis of Presentation
The Acquisition is preliminarily being accounted for as a business combination using the acquisition method with Enovis as the accounting acquirer in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations (ASC 805). Under this method of accounting, the aggregate transaction consideration will be allocated to Limas assets acquired and liabilities assumed based upon their estimated fair values at the date of completion of the Acquisition. The process of valuing the net assets of Lima immediately prior to the Acquisition is preliminary. Any differences between the estimated fair value of the consideration transferred and the estimated fair value of the assets acquired and liabilities assumed will be recorded as goodwill. Accordingly, the aggregate transaction consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value.
The Company and certain of its subsidiaries entered into an Amendment of its Existing Credit Agreement to provide for the Term Loan Facility. The Company has additionally authorized the issuance of its $460,000,000 of 3.875% Convertible Senior Notes due 2028 as part of the offering, and will use a portion of the proceeds from this offering of Convertible Notes, together with approximately $400 million of borrowings from the Term Loan Facility and cash on hand, to fund the cash purchase price for the Lima Acquisition.
The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Acquisition and Debt Financing had been completed on the dates set forth above, nor is it indicative of the future results or financial position of the Business. In addition, the unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dissynergies, operating efficiencies or cost savings that may result from the Acquisition.
All amounts presented within the notes to the unaudited pro forma condensed combined financial statements are presented in thousands of U.S. Dollars and have been prepared by applying Envois historical accounting policies. The unaudited pro forma condensed combined balance sheet as of September 30, 2023 gives effect to the Acquisition and the Debt Financing as if those transactions had been completed on September 30, 2023, and are applied to the unaudited condensed combined balance sheet of Enovis as of September 30, 2023.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 and the nine months ended September 30, 2023 give effect to the Acquisition and the Debt Financing as if those transactions had occurred on January 1, 2022, the first day of fiscal year 2022 and are applied to the historical results of Enovis.
The assumptions and estimates underlying the adjustments to the pro forma financial statements are described in the accompanying notes.
The pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed. The pro forma adjustments have been made solely for the purpose of providing unaudited pro forma combined financial information and actual adjustments, when recorded, may differ materially.
The pro forma financial statements have been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Transactions had been completed on the dates or for the periods presented, nor do they purport to project the results of operations or financial position for any future period or as of any future date. In addition to the pro forma adjustments, various other factors will have an effect on the financial condition and results of operations after the completion of the Transactions. The actual balance sheet and statements of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors.
The historical financial statements of Enovis were prepared in accordance with U.S. GAAP and have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma adjustments which are necessary to account for the Acquisition and the Debt Financing. The unaudited pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable.
5
Note 2 Adjustments to the Historical Financial Information of Lima
The historical financial information of Lima was prepared in accordance with IFRS issued by the International Accounting Standards Board (IASB) and presented in EUR.
Reclassification adjustments have been made to Limas historical financial information to comply with Enovis presentation.
The historical financial information was translated from EUR to USD using the following historical exchange rates:
EUR to USD | ||||
Period end exchange rate as at September 30, 2023 |
$ | 1.06 | ||
Average exchange rate for the 9 months ended September 30, 2023 |
1.08 | |||
Average exchange rate for the year ended December 31, 2022 |
1.05 |
6
UNAUDITED SCHEDULE OF ADJUSTED CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION OF LIMA
As of September 30, 2023
(in thousands)
IFRS | U.S. GAAP | |||||||||||||||||||||||||||
Lima historical September 30, 2023 EUR |
IFRS to U.S. GAAP differences - EUR |
Note | Presentation Reclassification EUR |
Note | Lima adjusted historical September 30, 2023 EUR |
Lima adjusted historical September 30, 2023 USD |
||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||||||
Cash and cash equivalents |
| 27,127 | | | | | | 27,127 | $ | 28,653 | ||||||||||||||||||
Trade receivables |
72,829 | | | 72,829 | 76,925 | |||||||||||||||||||||||
Inventories |
91,033 | | | 91,033 | 96,153 | |||||||||||||||||||||||
Prepaid expenses |
| | 2,955 | (aa | ) | 2,955 | 3,121 | |||||||||||||||||||||
Other current assets |
13,929 | | (1,569 | ) | (aa | ) | 12,360 | 13,055 | ||||||||||||||||||||
Current tax assets |
1,386 | | (1,386 | ) | (aa | ) | | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total current assets |
206,304 | | | 206,304 | 217,907 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Property, plant and equipment |
77,173 | (7,239 | ) | (b | ) | | 69,934 | 73,868 | ||||||||||||||||||||
Goodwill |
384,268 | | | 384,268 | 405,881 | |||||||||||||||||||||||
Intangible assets, net |
| | 20,625 | (bb | ) | 20,625 | 21,785 | |||||||||||||||||||||
Other intangible assets |
20,625 | | (a | ) | (20,625 | ) | (bb | ) | 0 | | ||||||||||||||||||
Lease asset - right of use |
| 7,239 | (b | ) | | 7,239 | 7,646 | |||||||||||||||||||||
Other assets |
| | 35,222 | (cc | ) | 35,222 | 37,203 | |||||||||||||||||||||
Equity investments |
2 | | (2 | ) | (cc | ) | | | ||||||||||||||||||||
Deferred tax assets |
33,322 | | (33,322 | ) | (cc | ) | | | ||||||||||||||||||||
Other non-current financial assets |
940 | | (940 | ) | (cc | ) | | | ||||||||||||||||||||
Other non-current assets |
958 | | (958 | ) | (cc | ) | | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total assets |
| 723,592 | | | | | | 723,592 | $ | 764,290 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
7
UNAUDITED SCHEDULE OF ADJUSTED CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION OF LIMA
(continued)
As of September 30, 2023
(in thousands)
IFRS | U.S. GAAP | |||||||||||||||||||||||||||
Lima historical September 30, 2023 EUR |
IFRS to U.S. GAAP differences - EUR |
Note | Presentation Reclassification EUR |
Note | Lima adjusted historical September 30, 2023 EUR |
Lima adjusted historical September 30, 2023 USD |
||||||||||||||||||||||
LIABILITIES AND EQUITY |
||||||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||||||
Current portion of long-term debt |
| | | | | 18,182 | (dd) | | 18,182 | $ | 19,205 | |||||||||||||||||
Trade payables |
33,405 | | | 33,405 | 35,284 | |||||||||||||||||||||||
Accrued liabilities |
| 1,920 | (b) | 27,590 | (ee) | 29,510 | 31,170 | |||||||||||||||||||||
Current financial liabilities |
20,102 | (1,920 | ) | (b) | (18,182 | ) | (dd) | | | |||||||||||||||||||
Current tax liabilities |
1,917 | | (1,917 | ) | (ee) | | | |||||||||||||||||||||
Other current liabilities |
25,673 | | (25,673 | ) | (ee) | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total current liabilities |
81,098 | | | 81,098 | 85,659 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Long-term debt, less current portion |
| | 281,093 | (ff) | 281,093 | 296,903 | ||||||||||||||||||||||
Non-current lease liability |
| 4,504 | (b) | | 4,504 | 4,757 | ||||||||||||||||||||||
Other liabilities |
| | 39,874 | (gg) | 39,874 | 42,117 | ||||||||||||||||||||||
Non current financial liabilities |
285,597 | (4,504 | ) | (b) | (281,093 | ) | (ff) | | | |||||||||||||||||||
Employee benefits |
1,258 | | (1,258 | ) | (gg) | | | |||||||||||||||||||||
Deferred tax liabilities |
9,273 | | (9,273 | ) | (gg) | | | |||||||||||||||||||||
Provisions for risks and charges |
29,473 | (1,000 | ) | (c) | (28,473 | ) | (gg) | | | |||||||||||||||||||
Other non-current liabilities |
870 | | (870 | ) | (gg) | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total liabilities |
| 407,568 | | (1,000 | ) | | | | 406,568 | $ | 429,436 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Equity |
||||||||||||||||||||||||||||
Common stock |
| | 9,868 | (hh) | 9,868 | 10,423 | ||||||||||||||||||||||
Share capital |
9,868 | | (9,868 | ) | (hh) | | | |||||||||||||||||||||
Additional paid-in capital |
| | 395,176 | (ii) | 395,176 | 417,403 | ||||||||||||||||||||||
Share premium reserve |
14,425 | | (14,425 | ) | (ii) | | | |||||||||||||||||||||
Other reserves |
380,751 | | (380,751 | ) | (ii) | | | |||||||||||||||||||||
Retained earnings |
| | (a) | (88,020 | ) | (jj) | (88,020 | ) | (92,972 | ) | ||||||||||||||||||
Retained earnings (accumulated deficit) |
(41,236 | ) | | 41,236 | (jj) | | | |||||||||||||||||||||
Profit (loss) for the year |
(47,784 | ) | 1,000 | (c) | 46,784 | (jj) | | | ||||||||||||||||||||
Accumulated other comprehensive loss |
| | | | | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total shareholders equity |
316,024 | 1,000 | | 317,024 | 334,854 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Noncontrolling interest |
| | | | | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total equity |
316,024 | 1,000 | | 317,024 | 334,854 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total liabilities and equity |
| 723,592 | | | | | | 723,592 | $ | 764,290 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
8
UNAUDITED SCHEDULE OF ADJUSTED CONDENSED COMBINED STATEMENT OF OPERATIONS OF LIMA
For The Nine Months Ended September 30, 2023
(in thousands)
IFRS | U.S. GAAP | |||||||||||||||||||||||
Lima nine months ended September 30, 2023 |
IFRS to U.S. GAAP differences - EUR |
Note | Presentation Reclassification EUR |
Note | Lima adjusted nine months ended September 30, 2023 EUR |
Lima adjusted nine months ended September 30, 2023 USD |
||||||||||||||||||
Revenue |
| 200,736 | | | | (200,736 | ) | (aa) | | | $ | | ||||||||||||
Other revenues and income |
4,214 | | (4,214 | ) | (aa, kk) | | | |||||||||||||||||
Raw materials, consumables, supplies and goods |
50,902 | | (50,902 | ) | (bb, dd) | | | |||||||||||||||||
Services |
63,036 | 8,283 | (a,b) | (71,319 | ) | (bb, cc, dd) |
| | ||||||||||||||||
Change in W.I.P., semi-finished products and finished |
(3,890 | ) | | 3,890 | (bb) | | | |||||||||||||||||
Personnel expenses |
67,412 | | (67,412 | ) | (bb, cc) | | | |||||||||||||||||
Amortisation and depreciation |
22,972 | (3,883 | ) | (b) | (19,089 | ) | (ee) | | | |||||||||||||||
Impairment losses on trade receivables |
944 | | (944 | ) | (ff) | | | |||||||||||||||||
Impairment losses on fixed assets |
38,082 | | (38,082 | ) | (gg) | | | |||||||||||||||||
Other operating costs |
10,565 | (1,000 | ) | (c) | (9,565 | ) | (cc) | | | |||||||||||||||
Internal work capitalised |
(9,156 | ) | | 9,156 | (bb, cc) | | | |||||||||||||||||
Financial income |
(11,574 | ) | | 11,574 | (hh, ii) | | | |||||||||||||||||
Financial expense |
32,605 | 175 | (b) | (32,780 | ) | (hh, ii) | | | ||||||||||||||||
Income taxes |
(9,164 | ) | | 9,164 | (jj) | | | |||||||||||||||||
Net sales |
| | 203,401 | (aa) | 203,401 | 220,370 | ||||||||||||||||||
Cost of sales |
| | 64,872 | (bb, ee) | 64,872 | 70,284 | ||||||||||||||||||
Selling, general and administrative expense |
| | 126,059 | (cc, ee, ff) |
126,059 | 136,575 | ||||||||||||||||||
Research and development expense |
| | 12,290 | (dd) | 12,290 | 13,315 | ||||||||||||||||||
Amortization of acquired intangibles |
| | 3,314 | (ee) | 3,314 | 3,590 | ||||||||||||||||||
Restructuring and other charges |
| | 38,082 | (gg) | 38,082 | 41,259 | ||||||||||||||||||
Interest expense, net |
| | 25,499 | (hh) | 25,499 | 27,626 | ||||||||||||||||||
Other (income) expense, net |
| | (6,191 | ) | (ii, kk) | (6,191 | ) | (6,707 | ) | |||||||||||||||
Income tax benefit |
| | | | | (9,164 | ) | (jj) | | (9,164 | ) | $ | (9,929 | ) |
9
UNAUDITED SCHEDULE OF ADJUSTED CONDENSED COMBINED STATEMENT OF OPERATIONS OF LIMA
For The Year Ended December 31, 2022
(in thousands)
IFRS | U.S. GAAP | |||||||||||||||||||||||
Lima Year Ended December 31, 2022 EUR |
IFRS to U.S. GAAP differences - EUR |
Note | Presentation Reclassification EUR |
Note | Lima adjusted Year Ended December 31, 2022 EUR |
Lima adjusted Year Ended December 31, 2022 USD |
||||||||||||||||||
Revenue |
| 245,669 | | | | (245,669 | ) | (aa) | | | $ | | ||||||||||||
Other revenues and income |
5,798 | | (5,798 | ) | (aa, kk) | | | |||||||||||||||||
Raw materials, consumables, supplies and goods |
56,391 | | (56,391 | ) | (bb, dd) | | | |||||||||||||||||
Services |
81,645 | 11,655 | (a,b) | (93,300 | ) | (bb, cc, dd) |
| | ||||||||||||||||
Change in W.I.P., semi-finished products and finished |
887 | | (887 | ) | (bb) | | | |||||||||||||||||
Personnel expenses |
76,858 | | (76,858 | ) | (bb, cc) | | | |||||||||||||||||
Amortisation and depreciation |
35,408 | (5,335 | ) | (b) | (30,073 | ) | (ee) | | | |||||||||||||||
Impairment losses on trade receivables |
502 | | (502 | ) | (ff) | | | |||||||||||||||||
Impairment losses on fixed assets |
16,152 | | (16,152 | ) | (gg) | | | |||||||||||||||||
Other operating costs |
1,857 | | (1,857 | ) | (cc) | | | |||||||||||||||||
Internal work capitalised |
(13,532 | ) | | 13,532 | (bb, cc) | | | |||||||||||||||||
Financial income |
(14,561 | ) | | 14,561 | (hh, ii) | | | |||||||||||||||||
Financial expense |
22,609 | (220 | ) | (b) | (22,389 | ) | (hh, ii) | | | |||||||||||||||
Income taxes expense (benefit) |
6,526 | | (6,526 | ) | (jj) | | | |||||||||||||||||
Net sales |
| | 248,506 | (aa) | 248,506 | 261,255 | ||||||||||||||||||
Cost of sales |
| | 80,433 | (bb, ee) | 80,433 | 84,559 | ||||||||||||||||||
Selling, general and administrative expense |
| | 140,136 | (cc, ee, ff) |
140,136 | 147,325 | ||||||||||||||||||
Research and development expense |
| | 17,110 | (dd) | 17,110 | 17,988 | ||||||||||||||||||
Amortization of acquired intangibles |
| | 8,657 | (ee) | 8,657 | 9,101 | ||||||||||||||||||
Restructuring and other charges |
| | 16,152 | (gg) | 16,152 | 16,981 | ||||||||||||||||||
Interest expense, net |
| | 15,024 | (hh) | 15,024 | 15,795 | ||||||||||||||||||
Other (income) expense, net |
| | (10,157 | ) | (ii, kk) | (10,157 | ) | (10,678 | ) | |||||||||||||||
Income tax benefit |
| | | | | 6,526 | (jj) | | 6,526 | $ | 6,861 |
10
Statement of financial position IFRS to U.S. GAAP and Reclassification Adjustments
a - Under U.S. GAAP, only certain development costs that are proven to have alternative future use can be capitalized. As some of the costs incurred by Lima do not have alternative future use, such capitalized costs would be adjusted under U.S. GAAP, however, the balance will be valued in connection with purchase accounting and no adjustment is reflected herein for the IFRS to U.S. GAAP conversion.
b - As of January 1, 2019, Enovis and Lima adopted ASC 842, Leases and IFRS 16, Leases, respectively. U.S. GAAP follows finance lease and operating lease models for lessees, which impacts the pattern of expense recognition associated with the lease. Under IFRS, lessees account for all their leases under one accounting model, which is effectively equivalent to that of a finance lease under U.S. GAAP. To comply with U.S. GAAP, the unaudited Schedule of Adjusted Condensed Combined Statement of Financial Position as of September 30, 2023 includes a reclassification to Lease asset right-of-use of 7.2 million, Accrued liabilities of 1.9 million, and Non-current lease liability of 4.5 million. The company is continuing to evaluate the classification of potential finance leases under US GAAP.
c - As of September 30, 2023, Limas Provisions for risks and charges includes an accrued liability for legal defense costs. As Enovis does not include such costs in estimates of loss accruals under ASC 450, an adjustment to reverse the effect of such legal defense costs is recorded on the unaudited Schedule of Adjusted Condensed Combined Statement of Financial Position as of September 30, 2023.
aa Adjustment to reclassify a portion of Limas Other current assets to Prepaid expenses and Limas Current tax assets to Other current assets
bb Adjustment to reclassify Limas Other intangible assets to Intangible assets, net
cc Adjustment to reclassify Limas Equity investments, Deferred tax assets, Other non-current financial assets, and Other non-current assets to Other assets
dd Adjustment to reclassify Limas Current financial liabilities to Current portion of long-term debt
ee Adjustment to reclassify Limas Current tax liabilities, and Other liabilities to Accrued liabilities
ff Adjustment to reclassify Limas Non-current financial liabilities to Long-term debt
gg Adjustment to reclassify Limas Other non-current liabilities, Employee benefits, Deferred tax liabilities, and Provision for risks and charges to Other liabilities
hh Adjustment to reclassify Limas Share capital to Common stock
ii Adjustment to reclassify Limas Share premium reserve, and Other reserves to Additional paid-in capital
jj Adjustment to reclassify Limas Retained earnings (accumulated deficit), and Profit (loss) for the year to Retained earnings
11
Statement of operations IFRS to U.S. GAAP and Reclassification Adjustments
a - To adjust for certain development costs capitalized by Lima into intangible assets, net. Lima capitalizes certain costs such as software licenses and research and development to intangible assets in accordance with IFRS. Under U.S. GAAP, only research and development costs that are proven to have alternative future use can be capitalized. As some of the costs incurred by Lima do not have alternative future use, such capitalized costs are adjusted. The impact of the adjustment on the unaudited Schedule of Adjusted Condensed Combined Statement of Operations for the nine months ended September 30, 2023 and year ended December 31, 2022 is calculated as the incremental expense that would have been recorded in accordance with U.S. GAAP during the respective periods. The adjustments result in an increase to Services for the nine months ended September 30, 2023 and year ended December 31, 2022 totaling 4.6 million and 6.1 million, respectively.
b - As of January 1, 2019, Enovis and Lima adopted ASC 842, Leases and IFRS 16, Leases, respectively. U.S. GAAP follows finance lease and operating lease models for lessees, which impacts the pattern of expense recognition associated with the lease. Under IFRS, lessees account for all their leases under one accounting model, which is effectively equivalent to that of a finance lease under U.S. GAAP. To comply with U.S. GAAP, the unaudited Schedule of Adjusted Condensed Combined Statement of Operations for the nine months ended September 30, 2023 and year ended December 31, 2022 includes a reclassification from Depreciation and Amortisation and Financial Expense to Services of 3.7 million and 5.6 million, respectively. The company is continuing to evaluate the classification of potential finance leases under US GAAP.
c - For the nine months ended September 30, 2023, Limas Other operating costs includes certain activity for legal defense costs. As Enovis does not include such costs in estimates of loss accruals under ASC 450, an adjustment to reverse the effect of such legal defense costs is recorded on the unaudited Schedule of Adjusted Condensed Combined Statement of Operations for the nine months ended September 30, 2023.
aa Adjustment to reclassify Limas Revenue and a portion of Other revenues and income to Net sales. Reclassification to Net sales consists of revenue related to sales activities
bb Adjustment to reclassify Limas Raw materials, Change in W.I.P., semi-finished products and finished, Services, Personnel, and Internal work capitalised to Cost of sales. Reclassification to Cost of sales consists of raw material costs, changes in W.I.P., semi-finished products and finished, personnel costs and services costs related to production
cc Adjustment to reclassify Limas Services, Personnel, Internal work capitalised, and Other operating costs to Selling, general and administrative expense. Reclassification to Selling, general and administrative expense consist of service costs, salary and wages expense of employees
dd Adjustment to reclassify Limas Raw materials and Services to Research and development expense. Reclassification to Research and development expense consist of raw material and services costs related to research and development activities
ee Adjustment to reclassify Limas Amortisation and depreciation to Cost of Sales, Selling, general and administrative expense and Amortization of acquired intangibles
ff Adjustment to reclassify Limas Impairment losses on trade receivables to Selling, general and administrative expense
gg Adjustment to reclassify Limas Impairment losses on fixed assets to Restructuring and other charges
hh Adjustment to reclassify a portion of Limas Financial income and Financial expense to Interest expense, net. Reclassification of Interest expenses consists of interest income and financial charges related to bonds and loans
ii Adjustment to reclassify a portion of Limas Financial income and Financial expense to Other expense, net
jj Adjustment to reclassify Limas Income tax expense (benefit) to Income tax expense (benefit)
kk Adjustment to reclassify a portion of Limas Other revenues and income to Other expense, net
12
Note 3 Preliminary Aggregate Transaction Consideration and Allocation
Estimated Aggregate Transaction Consideration
The following table summarizes the preliminary estimated aggregate transaction consideration for the Lima Business:
(in thousands) |
Amount | |||
Closing cash consideration |
$ | 415,740 | ||
Cash paid to settle Lima historical long-term debt |
351,009 | |||
Estimated fair value of shares to be issued as contingent consideration (i) |
80,000 | |||
|
|
|||
Preliminary aggregate transaction consideration |
$ | 846,749 | ||
|
|
(i) | Reflects the preliminary fair value of the contingent consideration payable to Lima based on the historical share price of Enovis and will change through the closing date of the acquisition. As part of the purchase consideration, Enovis may issue up to 1,942,686 shares of Enovis common stock as a result of the arrangement within approximately 18 months after closing. The market price of the Enovis common stock may fluctuate between the timing of issuance, a 5% fluctuation in the market price of the common stock would have approximately a $3.5 million impact on the aggregate transaction consideration. |
13
Preliminary Aggregate Transaction Consideration Allocation
The assumed accounting for the Acquisition, including the preliminary aggregate transaction consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon the preliminary estimate of fair values. For the preliminary estimate of fair value of assets acquired and liabilities assumed of Lima, management used publicly available benchmarking information, as well as a variety of other assumptions, including market participant assumptions. Management is expected to use widely accepted income-based, market-based, and cost-based valuation approaches in connection with the finalization of purchase accounting for the Acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances. The purchase price adjustments applied to the historical financial information of Lima are preliminary and subject to change as additional information becomes available and as additional analyses are performed.
The following table summarizes the preliminary aggregate transaction consideration allocation, as if the Acquisition had been completed on September 30, 2023, with excess recorded to Goodwill:
(in thousands) |
Amount | |||
Preliminary aggregate transaction consideration |
$ | 846,749 | ||
|
|
|||
Assets |
||||
Cash and cash equivalents |
28,653 | |||
Trade receivables |
76,925 | |||
Inventories |
134,612 | |||
Prepaid expenses |
3,121 | |||
Other current assets |
13,055 | |||
Property, plant and equipment |
175,893 | |||
Intangible assets |
341,000 | |||
Lease asset - right of use |
7,646 | |||
Other assets |
45,160 | |||
|
|
|||
Total assets |
826,065 | |||
Liabilities |
||||
Accounts payable |
35,284 | |||
Accrued liabilities |
31,170 | |||
Non-current lease liability |
4,757 | |||
Other liabilities |
168,560 | |||
|
|
|||
Total liabilities |
239,771 | |||
|
|
|||
Less: Estimated preliminary net assets acquired |
586,294 | |||
|
|
|||
Goodwill (see Footnote 4(c)) |
$ | 260,455 | ||
|
|
14
Note 4 Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet
Adjustments included in the Transaction Accounting Adjustments column and Financing Adjustments column in the accompanying unaudited pro forma condensed combined balance sheet as of September 30, 2023 are as follows:
(a) Reflects adjustment to Cash and cash equivalents:
(in thousands) |
Amount | |||
Pro forma transaction accounting adjustments: |
||||
Estimated transaction costs (i) |
$ | (11,041 | ) | |
Cash paid to settle Lima historical long-term debt |
(351,009 | ) | ||
Cash paid for acquisition of Lima |
(415,740 | ) | ||
|
|
|||
Net pro forma transaction accounting adjustments to Cash and cash equivalents |
$ | (777,790 | ) | |
|
|
|||
Pro forma financing adjustments: |
||||
Cash from new Debt Financing, net of debt issuance costs and capped call fees (ii) |
$ | 781,315 | ||
|
|
|||
Net pro forma adjustments to Cash and cash equivalents |
$ | 3,525 | ||
|
|
(i) | These costs consist of legal advisory, financial advisory, accounting and consulting costs expected to be incurred by Enovis. This is a preliminary estimate of costs and is subject to change upon close of the Transactions. |
(ii) | New Debt Financing is reduced for debt issuance costs and original issue discount of $16.7 million as referenced in Footnote 4(j) and adjustments for capped call transaction of $56.0 million as referenced in Footnote 4(l). |
(b) Represents a $38.5 million adjustment to the inventory balance to account for the preliminary adjustment to fair value of the inventory acquired as of the Acquisition Date. The estimated range of calculated value for inventory is based on preliminary estimates and assumptions. The final value determination of the acquired inventory may differ from this preliminary determination. The related assumptions and inputs will be refined as more data becomes available to determine the fair value indication.
(c) Preliminary adjustment to Goodwill, which represents the excess of the estimated aggregate transaction consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed and the elimination of Limas historical Goodwill.
(in thousands) |
Amount | |||
Pro forma transaction accounting adjustments: |
||||
Goodwill resulting from the Acquisition (Note 3) |
$ | 260,455 | ||
Elimination of the Lima historical Goodwill |
(405,881 | ) | ||
|
|
|||
Net pro forma adjustments to Goodwill |
$ | (145,426 | ) | |
|
|
15
(d) Reflects the preliminary purchase accounting adjustment for estimated intangibles based on the acquisition method of accounting. Adjustments to preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information consists of the following:
(in thousands) |
Preliminary Fair Value |
Estimated Useful Life (Years) |
||||||
Pro forma transaction accounting adjustments: |
||||||||
Estimated fair value Technology |
$ | 182,000 | 15 | |||||
Estimated fair value Customer Relationships |
115,000 | 15 | ||||||
Estimated fair value Trade Name |
44,000 | 20 | ||||||
Less: Historical Lima Intangible assets, net of amortization |
(21,785 | ) | ||||||
|
|
|||||||
Net pro forma adjustments to Intangible assets, net |
$ | 319,215 | ||||||
|
|
(e) Reflects the settlement of historical Lima existing debt.
(f) Record estimated fair value of shares to be issued as contingent consideration.
(g) Reflects the elimination of Limas historical Common stock.
(h) Reflects the elimination of Limas historical Additional paid-in capital.
(i) Reflects the preliminary adjustment to Retained earnings, which includes the elimination of Limas historical Retained earnings.
(in thousands) |
Amount | |||
Pro forma transaction accounting adjustments: |
||||
Estimated transaction costs (i) |
$ | (11,041 | ) | |
Less: Historical Lima Retained earnings elimination |
92,972 | |||
|
|
|||
Net pro forma adjustments to Retained earnings |
$ | 81,931 | ||
|
|
(i) | These costs consist of legal advisory, financial advisory, accounting and consulting costs expected to be incurred by Enovis. This is a preliminary estimate of costs and is subject to change upon close of the Transactions. |
(j) Reflects the Debt Financing obtained from the Lenders, net of unamortized debt issuance costs. The adjustment to current and long-term debt is comprised of the following items:
(in thousands) |
Current portion of long-term debt |
Long-term debt | Total | |||||||||
Pro forma financing adjustments: |
||||||||||||
Convertible Notes |
$ | | $ | 460,000 | $ | 460,000 | ||||||
Term Loan |
20,000 | 380,000 | 400,000 | |||||||||
Less: Debt issuance costs and original issue discount |
| (16,723 | ) | (16,723 | ) | |||||||
|
|
|
|
|
|
|||||||
Net pro forma financing adjustments |
$ | 20,000 | $ | 823,277 | $ | 843,277 | ||||||
|
|
|
|
|
|
16
(k) Reflects the adjustments to record a deferred tax liability of $126.4 million resulting from pro forma fair value adjustments for the assets acquired and liabilities assumed. The estimate of the deferred tax was determined based on the estimated book basis of the net assets acquired after the application of acquisition accounting as compared to the tax basis of the net assets acquired using an estimated blended statutory tax rate of 27.3% for Intangible assets, net and estimated statutory tax rate of 27.9% for Property, plant and equipment, net and Inventories, net. Adjustments to established deferred tax assets and liabilities due to refined determination of statutory rates, changes in tax elections, as well as the changes in the estimates of the fair value of assets acquired and liabilities assumed may occur in conjunction with the finalization of the acquisition accounting and these changes in estimates could be material.
(l) Reflects a $61.9 million adjustment to record the capped call transactions entered into in connection with the issuance of the Convertible Notes. As these transactions meet certain accounting criteria, the capped call transactions are recorded in Shareholders equity and are not accounted for as derivatives.
(m) Reflects the preliminary purchase accounting adjustment of $102.0 million for Property, plant and equipment based on the acquisition method of accounting.
(n) Reflects the extinguishment of deferred financing fees associated with the bridge financing.
(o) Reflects a $7.9 million indemnification asset related to the settlement of certain litigation matters as agreed to in the purchase agreement. The estimated indemnification asset approximates the value of the related liability at September 30, 2023 and is recorded as an adjustment to Other current assets in the pro forma condensed combined balance sheet.
17
Note 5 Pro Forma Adjustments to the Unaudited Condensed Combined Statement of Operations
Adjustments included in the Transaction Accounting Adjustments column and Financing Adjustments in the accompanying unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023 and the fiscal year ended December 31, 2022 are as follows:
(a) Reflects $10.1 million for nine months ended September 30, 2023 and a $28.3 million for the year ended December 31, 2022 adjustments associated with the step-up in estimated fair value of Inventories, net recognized through Cost of sales during the 18 months after the acquisition.
A 10% change in the estimated fair value of Inventories, net would cause a corresponding increase or decrease in Cost of sales of approximately $1.0 million and $2.8 million for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively. Pro forma Cost of sales is preliminary and based on assumption that the inventory will be sold within 18 months of the closing date after the Transaction. The amount of Cost of sales following the Transaction may differ significantly between periods based upon the final value assigned and actual inventory turnover for each period.
(b) Reflects a $11.0 million adjustments to Selling, general and administrative expense (SG&A) related to expected transaction expenses.
(c) The following table reflects adjustments to Amortization of acquired intangibles related to amortization expense for the newly identified intangible assets, less the amortization expense on Limas historical intangible assets. Management is still in the process of evaluating the fair value of the intangible assets. Any resulting change in the fair value would have a direct impact to amortization expense, which could be material.
(in thousands) |
For the Nine Months Ended September 30, 2023 |
For the Year Ended December 31, 2022 |
||||||
Pro forma transaction accounting adjustments: |
||||||||
Amortization expense of Technology |
$ | 9,100 | $ | 12,133 | ||||
Amortization expense of Customer Relationships |
5,750 | 7,667 | ||||||
Amortization expense of Trade Name |
1,650 | 2,200 | ||||||
Less: Historical amortization |
(3,590 | ) | (9,101 | ) | ||||
|
|
|
|
|||||
Net pro forma adjustments to Amortization of acquired intangibles |
$ | 12,910 | $ | 12,899 | ||||
|
|
|
|
A 10% change in the valuation of technology intangible assets, customer relationship intangible assets, and trade name intangible assets would cause a corresponding increase or decrease in the amortization expense of approximately $1.7 million and $2.2 million for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
(d) Reflects the expense related to the financing and amortization of issuance costs related to the Transactions:
(in thousands) |
For the Nine Months Ended September 30, 2023 |
For the Year Ended December 31, 2022 |
||||||
Pro forma transaction adjustments: |
||||||||
Remove historical Lima Interest expense |
$ | (27,886 | ) | $ | (15,927 | ) | ||
Pro forma financing adjustments: |
||||||||
Interest expense from the financing transactions |
$ | 42,408 | $ | 58,052 |
The interest expense included in the unaudited pro forma condensed combined financial information was calculated using an effective interest rate, which considers transaction costs and issuance discounts, and reflects an approximate weighted-average interest rate of 6.9%. Actual interest rates may vary from those depicted in the pro forma amounts.
18
A sensitivity analysis on interest expense for the nine months ended September 30, 2023 and the year ended December 31, 2022 has been performed to assess the effect of a 12.5 basis point change of the hypothetical interest on the Debt Financing. The following table shows the change in the Interest expense for the Debt Financing described above:
(in thousands) |
For the Nine Months ended September 30, 2023 |
For the Year Ended December 31, 2022 |
||||||
Interest expense assuming: |
||||||||
Increase of 0.125% |
$ | 402 | $ | 569 | ||||
Decrease of 0.125% |
$ | (402 | ) | $ | (569 | ) |
(e) Adjustment to reflect the income tax impact of the pro forma adjustments related to the Transactions using the estimated blended statutory tax rate of 27.3%. Income tax rates do not take into account any possible future tax events or changes in planned structure for the combined company. The effective tax rate of the combined company could be significantly different than what is presented in the pro forma financial information.
(f) Adjustment to reflect the incremental depreciation expense associated with the fair value step up of Property, plant and equipment. The following table reflects adjustments to Cost of sales and Selling, general and administrative expense related to depreciation expense for the increase in fair value of Property, plant and equipment. Management is still in the process of evaluating the fair value of the Property, plant and equipment assets. Any resulting change in the fair value would have a direct impact to depreciation expense, which could be material.
(in thousands) |
For the Nine Months ended September 30, 2023 |
For the Year Ended December 31, 2022 |
||||||
Pro forma transaction adjustments Cost of Sales: |
||||||||
Incremental depreciation expense associated with Property, plant and equipment |
$ | 1,903 | $ | 2,636 | ||||
Net pro forma adjustments to Cost of sales |
$ | 1,903 | $ | 2,636 | ||||
Pro forma transaction adjustments Selling, general and administrative expense: |
||||||||
Incremental depreciation expense associated with Property, plant and equipment |
$ | 5,597 | $ | 7,364 | ||||
Net pro forma adjustments to Selling, general and administrative expense |
$ | 5,597 | $ | 7,364 |
(g) Reflects an $8.0-million adjustment to Debt extinguishment charges related to bridge financing fees.
19
Note 6 Pro Forma Earnings Per Share
The unaudited pro forma condensed combined basic and diluted earnings per share calculations are based on the condensed combined basic and diluted average shares of Enovis and Lima.
(in thousands, except per share data) |
For the Nine Months ended September 30, 2023 |
For the Year Ended December 31, 2022 |
||||||
Pro Forma Weighted Average Shares |
||||||||
Basic weighted average number of common shares outstanding historical |
54,549,369 | 54,065,420 | ||||||
Pro Forma Earnings per Share |
||||||||
Pro forma Net income (loss) from continuing operations |
(145,274 | ) | (148,749 | ) | ||||
Basic Pro Forma |
$ | (2.66 | ) | (2.75 | ) | |||
Diluted Pro Forma |
$ | (2.66 | ) | (2.75 | ) |
20