De Wave S.r.l.

De Wave S.r.l.

Westoverledingen

Befreiender Jahresabschluss zum Geschäftsjahr vom 01.01.2023 bis zum 31.12.2023

De Wave S.r.l.

Mailand/Italie

General information about the company

Financial Statements as at 31/12/2023

Balance Sheet

Income Statement

Cash flows statement, indirect method

Information at the bottom of the cash flow statement

The cash flows statement includes all outgoing and incoming cash flows that occurred during the financial year.

In the financial statement, individual cash flows are distinctly presented in one of the following categories:

a. income management;

b. investment activity;

c. financing activity.

The categories of financial flows are presented in the sequence indicated above.

The financial flow of income management is determined by the indirect method, that is, by adjusting the profit or loss reported in the income statement.

The algebraic sum of the financial flows of each above-mentioned category represents the net change (increase or decrease) in liquid availability that occurred during the fiscal year.

The presentation format of the financial statement is scalar.

Interest paid and collected are distinctly presented among the financial flows of income management, except in special cases where they directly relate to investments (investment activities) or financing (financing activities);

Received and paid dividends are distinctly presented, respectively, in income management and in financing activities; Financial flows related to income taxes are distinctly indicated and classified in income management.

Please note that the item investments in intangible assets presents a deviation compared to the movement of intangible assets resulting from the goodwill generated following the acquisition of the Tecnavi S.r.l. business unit that took place during the year.

The financial flow before variations in net working capital differs from the calculation of reported EBITDA exposed in management report mainly due to the effect of devaluations for permanent losses of value.

Explanatory note to the financial statements, initial part

Dear Sole Shareholder,

this explanatory note is an integral part of the balance sheet as of 31/12/2023.

The financial statements is prepared in accordance with the provisions of articles 2423 and following of the civil code and the national accounting principles as published by the Italian Accounting Body; it therefore clearly and truthfully represents the company's financial and equity situation and the economic result of the financial year.

The content of the balance sheet and the income statement is that provided by articles 2424 and 2425 of the civil code, while the cash flow statement has been prepared in accordance with art. 2425-ter.

The explanatory note, drafted in accordance with art. 2427 of the civil code, also contains all the useful information to provide a correct interpretation of the balance sheet and is accompanied by the Management Report, containing the information provided for by art. 2428 Civil Code.

The 2023 financial year can be considered the concluding act of a particular and complex process of acquiring control of the company and the group. We recall indeed that starting from the acquisition of control of the group by Serpeverde S.p.a ., a company indirectly owned by an investment vehicle of certain private investment funds sponsored and ultimately controlled by Platinum Equity, LLC (together with its affiliated investment vehicles, "Platinum"), the Company has started:

Having said that, the financial results both in terms of income and assets are positively influenced by the recognition of a profit in the income statement and a credit in the balance sheet for Euro 7.5 million confirmed by the favourable outcome of arbitration no. 1521/2021, established at the Milan Arbitration Chamber in 2021 by Serpeverde S.p.a. (then merged into De Wave S.r.l.) against the previous owners, which accepted the arbitration request recognising a liability ex art. 1337 c.c. and settling the compensation in favour of the company for that amount. It is recalled in terms of cause of action briefly what has already been reported in previous budgets and reports about the presence of an inherited order portfolio with zero or negative margins.

In this context and given the evidentiary elements of the arbitration the outcomes were already mature and knowable in the 2023 fiscal year following the deposit of the final report (which took place in April 2023) with which the CTU had ascertained the existence of most of the behaviors and accounting operations contested by the Company, in light of what described and the reasons underlying the CTU, the compensation in favor of the Company was to be considered reasonably certain and therefore the related accounting effects led to the recognition of a profit equivalent to 7.5 million, assumed in the current budget.

Subsequently, on February 14, 2024, the competent college deposited the arbitration award with the Milan Arbitration Chamber, recognizing liability and compensation as reported above and for which the losing party commits to pay by June 30, 2024, the amount of 7.5 million in favor of De Wave S.r.l.

Environmental, geo-political and economic-financial impacts on the financial statements as at 31 December 2023

The company has assessed that there are no accounting effects on the budget as of December 31, 2023 resulting from the ongoing climate change.

The company has also assessed, regarding the Russo-Ukrainian and Israeli-Palestinian conflicts, that there are no direct accounting impacts on the budget as of December 31, 2023. This impact is reported in the appropriate paragraphs of the Management Report.

Criteria applied

Form and content of the financial statements

The information contained in this document is presented in the order in which the related items are listed in the balance sheet and income statement.

With reference to what is indicated in the introductory part of this supplementary note, it is certified that, pursuant to article 2423, 3rd paragraph of the civil code, if the information required by specific legal provisions is not sufficient to provide a truthful and correct representation of the company's situation, additional information deemed necessary for the purpose is provided.

The financial statements, as well as this supplementary note, have been prepared in euro units. Differences resulting from rounding of values to the unit are allocated to the appropriate equity reserve.

Accounting policies

The general clause for the preparation of the budget (art. 2423 c.c.), its drafting principles (art. 2423-bis c.c.) and the evaluation criteria established for individual items (art. 2426 c.c.) have been complied with.

In particular:

Structure and content of the financial statements

The balance sheet, income statement, cash flow statement and the accounting information contained in this explanatory note are compliant with the accounting records, from which they have been directly inferred.

In the presentation of the balance sheet and income statement, groupings of items preceded by Arabic numerals have not been made, as optionally provided for by art. 2423 ter of the Civil Code.

Under art. 2424 of the Civil Code, it is confirmed that there are no assets or liabilities that fall under more than one item of the balance sheet prospectus.

Exceptional cases pursuant to art. 2423, fifth paragraph, of the Italian Civil Code

No exceptional cases have occurred that have made it necessary to resort to the exceptions referred to in art. 2423, paragraphs 4 and 5 of the Civil Code.

Changes in accounting policies

It should be noted that the Company during the 2024 fiscal year is making appropriate assessments in order to evaluate any impacts on revenue recognition criteria in light of the forecasts of the amended OIC Principle 34.

Amount and nature of individual revenue/cost elements of exceptional size or incidence

It is noted, under art. 2427, point 13 of the C.C., exceptional economic elements of size or incidence have been recorded. In particular, reference is made to what is described in the initial part of the explanatory note with reference to the income recorded following the arbitral proceedings.

Comparability and adaptation issues

In accordance with article 2423 ter of the civil code, it should be noted that during the current financial year, for a better representation, some reclassifications have been made among the balance sheet items at 31.12.2022 in order to make the balances between the two financial years comparable. In particular, these adjustments have affected the items B.I Intangible assets and B.II Tangible assets, the items A.1 Revenue from sales and services and A.3 Changes in works in progress on order.

Assessment criteria applied

The criteria used in evaluating balance sheet items and value adjustments are in compliance with the provisions of the civil code and the indications contained in the accounting principles issued by the Italian Accounting Body. They have also not changed compared to the previous financial year.

In accordance with article 2427 paragraph 1 no. 1 of the civil code, the most significant evaluation criteria adopted are illustrated, in accordance with the provisions contained in article 2426 of the civil code, with particular reference to those balance sheet items for which the legislator admits different evaluation and adjustment criteria or for which no specific criteria are provided.

The accounting values expressed in currency have been registered, after conversion into euros according to the exchange rate in effect at the time of their recording, or at the exchange rate at the closing date of the fiscal year in accordance with the indications of accounting principle OIC 26.

The relative gains and losses on exchange are recorded in the income statement and any net profit is set aside in a special undistributable reserve until it is realized.

Going concern

The Directors have a reasonable expectation that the Company has adequate resources to continue to exist operationally for a period of at least 12 months from the date of signing of this financial statement, continuing to adopt the assumption of going concern in the preparation of the annual financial statement.

At the current state, the most recent analyses on the economic and financial performance of the Company for 2024 do not highlight any financial tension for the current year.

Based on the analyses carried out, the Directors believe that at the current state there are no significant uncertainties that could cast doubt on the going concern of the company and the group.

As for the global economy hit by the COVID-19 viral pandemic and the Russian-Ukrainian war events, the Directors believe the negative effects are now weak and that operations can continue, not believing that this will affect the Company's ability to continue as a functioning business.

Intangible fixed assets

Intangible assets, where the assumptions provided by accounting principles exist, are recorded in the assets of the balance sheet at the purchase and/or production cost, increased by directly attributable ancillary charges, for externally acquired goods and based on the production cost for those internally generated, and are depreciated in constant instalments based on their future usefulness.

The value of fixed assets is presented net of depreciation funds and write-downs.

Depreciation was carried out in accordance with the following preset plan, which is believed to ensure a correct distribution of the cost incurred over the useful life of the assets in question:

The depreciation criterion for intangible assets has been applied systematically in each financial year in constant quotas, in relation to the residual possibility of economic use of each single asset or expense.

Intangible assets are registered with the approval of the board of statutory auditors in cases provided for by law.

If a permanent loss of value, regardless of the depreciation already accounted for, results, the asset is correspondingly written down; if in subsequent financial years the reasons that justified the write-down are no longer present, the original value is restored, within the limits of the value that the activity would have had if the value adjustment had never taken place, except for the goodwill item and "Multi-year charges" referred to in number 5 of art. 2426 of the civil code.

Installation and expansion costs

The installation and expansion costs have been entered on the asset side of the balance sheet because they have multi-year utility; these costs have been amortised over five years.

Development costs

The development costs have been entered on the asset side of the balance sheet because they have, according to prudent judgement, the characteristics required by OIC 24: the costs are recoverable and are related to specific achievable development projects for which the company has the necessary resources. Furthermore, the costs relate to a clearly defined product or process that is identifiable and measurable. Since it is not possible to reliably estimate their useful life, these costs are amortised over a period not exceeding five years.

Industrial patent rights and rights to use intellectual works

Tangible assets consisting of patent rights and rights to use intellectual works are entered in the assets of the balance sheet only if they are individually identifiable and if the company acquires the right to benefit from future economic benefits deriving from the same asset. The item under examination is related to Know How and was entered following the allocation of the deficit as a result of the merger operation that took place in the previous financial year. The useful life of this asset, for the purpose of calculating the amortisation period, has been estimated at 10 years.

Concessions, licenses, trademarks

This heading refers to the De Wave trademark and was recorded following the allocation of the deficit resulting from the merger operation that took place in the previous financial years. The useful life of such an asset, for the purpose of calculating the depreciation period, has been estimated at 5 years.

Goodwill

Goodwill, under the conditions indicated by accounting principles, has been recorded in the asset side of the balance sheet as it was acquired for value.

Goodwill includes the amounts resulting from deficits for merger operations and is amortised according to its useful life, which is estimated at the initial recognition of goodwill and is not changed in subsequent financial years.

For the purpose of calculating the useful life of goodwill, the Company has taken into consideration the information available to estimate the period within which the economic benefits associated with goodwill are likely to manifest, as well as the time period within which it expects to financially recover the investment made, determining a useful life of 15 years.

Other intangible assets

Other intangible assets are recognised at the purchase cost, also including incidental expenses, and are depreciated within the legal or contractual limit provided for them.

Improvements on third-party assets

Improvements on third-party assets are capitalized and listed under "other intangible assets" if they are not separable from the assets themselves (otherwise they are listed under "tangible assets" in the specific belonging section), they are amortized systematically taking into account the shorter period between the one related to the expected future utility and the remaining lease period, also considering any renewal period, if dependent on the Company.

Tangible fixed assets

Assets belonging to the category of tangible assets, recognized on the date on which the transfer of risks and benefits connected to the acquired asset occurs, are listed in the balance sheet at the purchase and/or production cost, increased by the ancillary charges sustained until the goods are ready for use and in any case within the limit of the recoverable value. The production cost corresponds to all the manufacturing costs incurred until the asset becomes operational, whether these are costs directly attributable to it, or costs related to common processing for the reasonably attributable portion to it.

Modernizations and improvements that extend the economic life of the assets are capitalized to increase the assets they pertain to. The costs of ordinary maintenance and repair are fully charged to the income statement of the financial year in which they were incurred.

Such assets are exposed in the balance sheet net of depreciation and write-down funds.

The book value of the assets, grouped into homogeneous classes by nature and year of acquisition, is distributed over the years in which they are expected to be used. Fixed assets are depreciated systematically for constant quotas, through the allocation to the income statement of depreciation quotas corresponding to predefined plans, defined at the time the asset is available and ready for use, referring to the presumed residual possibility of using the assets themselves. These plans, subject to annual verification, are formed with reference to the gross value of the assets and assuming equal to zero the realization value at the end of the process.

For fixed assets that became operational during the year, the rates are reduced by 50%, a percentage considered representative of the lesser use of the asset, assuming that purchases are evenly distributed throughout the year. Depreciation is also calculated on assets temporarily not in use.

The depreciation of fixed assets, whose use is limited in time, was operated in accordance with the following predefined plan:

The criteria for depreciating fixed assets have not changed compared to those applied in the previous year.

For the purposes and effects of art.10 of the law of March 19, 1983, n.72, as also recalled by subsequent monetary revaluation laws, it is specified that for tangible assets still existing in the assets, no monetary revaluation has ever been carried out.

In case there is a permanent loss of value, regardless of the depreciation already accounted for, the asset is correspondingly devalued; if in subsequent exercises the reasons that justified the devaluation no longer exist, the original value is restored, within the limits of the value that the activity would have had if the value adjustment had never taken place.

Financial fixed assets

Participations

Participations are registered among financial fixed assets when they are intended for a permanent stay in the company's assets. Participations are valued at the historical cost of purchase and subscription, including any ancillary costs, and reduced for permanent losses in value if the subsidiaries have sustained losses and profits are not foreseeable in the immediate future to absorb the losses sustained.

The original value of the participation is restored in subsequent exercises if the reasons for the devaluation carried out no longer exist.

Receivables

The receivables registered among the financial fixed assets have been valued in the balance sheet at the probable realizable value, in accordance with what is provided for by art. 2426, paragraph 1, n. 8 of the Civil Code; for such receivables the irrelevance of the application of the amortized cost method and/or discounting has been verified, in order to meet the need to provide a true and correct representation of the company's financial and economic situation, therefore they have been registered at nominal value. This event occurred for example in the presence of receivables with a maturity of less than twelve months or, in relation to the amortized cost criterion, in the case where transaction costs, commissions and any other difference between initial value and maturity value are of little relevance or, still, in the case of discounting, in the presence of an interest rate deducible from the contractual terms not significantly different from the market interest rate.

Impairment Test

For most of the non-material assets (financial and goodwill), specific impairment tests are also carried out in this financial statement to verify the recoverability of the value recorded in the balance sheet . The recovery value is usually estimated through the application of a Discounted Cash Flow Analysis based on the discounting of future financial flows predicted from specific business using a Wheighted Average Cost of Capital (WACC) rate. If alternative criteria are used, it is given specific mention in this note.

Intercompany loans

Intragroup financing, with a maturity of more than 12 months, non-interest bearing or at significantly lower rates than the market, are initially recorded at a value equal to the future financial flows of the financing discounted at the market rate. The difference compared to the cash availability granted to the subsidiaries is recorded as an increase in the value of the participations.

Financial leasing

The purchase operations of instrumental goods on lease are accounted for through asset representation with the exposure of the costs for the leasing fees in the income statement and the residual commitment towards the grantor among the commitments assumed in the following note. Therefore, the data required by art 2427 n. 22 necessary to evaluate the different representation that would have been had on the assets and on the social economic result had these contracts been accounted for according to the financial methodology of IAS 17 are reported in the dedicated section.

Inventories

The remnants of goods are valued at the lower of the purchase and/or production cost and the realizable value deduced from the market trend.

The purchase cost includes any directly attributable ancillary charges.

The production cost includes the direct and indirect costs incurred during production and necessary to bring warehouse remnants to their current condition and location, for the reasonably attributable share of the product relative to the manufacturing period until the time when the good can be used.

Contract work in progress

Work in progress includes medium-long term contracts and is evaluated on the basis of the percentage of completion method, defined on the basis of the cost-to-cost method, while invoicing is recognized through the work progress status (WPS), as contractually agreed and satisfying the conditions provided for by OIC 23. This method has been adopted as it allows an adequate correlation between costs and revenues attributed to the balance sheet.

Any lifetime losses on contracts estimated with reasonable approximation are fully charged to the decrease of the value of work in progress on order in the financial year in which they become known. If such loss exceeds the value of work in progress, the Company records a specific fund for risks and charges equal to the excess.

Any probable losses are recognized in the fiscal year in which they are foreseeable, based on an objective and reasonable assessment of existing circumstances. Losses are recognized regardless of the state of progress of the order. No loss compensations are made with positive margins expected on other orders. For the recognition of losses, the orders are therefore considered individually. Additional considerations are included among the order revenues only when by the balance sheet date there is formal acceptance by the client of such additional considerations; or, even in the absence of formal acceptance, at the balance sheet date it is highly probable that the request for additional considerations will be accepted based on the most recent information and historical experience.

The sums received from the client during the execution of the work, representing forms of financial advance, are recorded in the balance sheet liabilities under a specific item of advances from customers, while those paid to subcontractors are recorded in this item among the advances of remainders.

The method of calculating the percentage of progress and therefore of valuation of work in progress, is the "Direct Costing" criterion.

Current receivables

The receivables recorded in current assets have been valued in the balance sheet at the likely realization value, in accordance with the provisions of art. 2426, paragraph 1, n. 8 of the Civil Code; the irrelevance of applying the amortized cost method and/or discounting for these receivables has been verified, for the purpose of providing a true and correct representation of the company's equity and economic situation, therefore they have been recorded at nominal value. This event occurred, for example, in the presence of receivables with a maturity of less than twelve months or, with reference to the amortized cost criterion, where transaction costs, commissions, and any other difference between initial value and maturity value are of little relevance or, again, in the case of discounting, in the presence of an interest rate inferred from contractual conditions not significantly different from the market interest rate.

The value of credits, as determined above, is adjusted, if necessary, by a specific depreciation fund, shown as a direct reduction of the value of the credits themselves, in order to align them with their presumed realization value.

The amount of depreciation carried out during the period is recorded in the income statement.

Credits transferred following factoring operations are removed from the balance sheet only if they are transferred pro-solutum, and if essentially all the risks related to the credit are transferred. Credits transferred pro-solvendum, or in any case without the transfer of all risks, remain registered in the balance sheet and a financial liability of equal amount is recorded in the liabilities against the advance received.

Cash and equivalents

Cash availability is valued at nominal value, with separate indication of bank and postal deposits and of cash and values in cash.

Accruals and deferred income

The accruals and deferrals item includes portions of costs and revenues attributable to the financial year, but payable in subsequent years and portions of costs and revenues incurred by the end of the financial year, but attributable to subsequent years, according to the accrual principle.

Shareholder’s equity

The items are shown in the balance sheet at their book value according to the indications contained in the OIC 28 accounting principle.

Provisions for risks and charges

The funds for risks and charges have been allocated to cover liabilities whose existence is considered certain or probable, for which the amount or the date of occurrence cannot be determined at the end of the financial year.

The establishment of the funds was carried out in accordance with the principles of prudence and competence, observing the prescriptions of the accounting standard OIC 31. The related provisions are recognized in the income statement of the relevant financial year, according to the "by nature" classification criterion of costs.

Employee severance indemnity

The TFR (employee severance indemnity) was calculated in accordance with the provisions of art. 2120 of the civil code, taking into account the legislative provisions and the specifics of the contracts and professional categories, and includes the annual quotas accrued and the revaluations carried out on the basis of the ISTAT coefficients.

Pursuant to Law 296/2006, the TFR accrued from 01 January 2007 was paid by the company to the new treasury fund established at INPS and to the complementary pension funds as chosen by each employee. This choice solely refers to employees hired by the split company and later employees of the beneficiary company (in reference to the establishment of the company by splitting off from Demont srl), therefore the balance sheet item refers to the debt accrued towards employees in force at the end of the financial year and not yet paid to the employees.

The amount of the fund is reported net of the advances paid out and the quotas used for the termination of employment contracts during the fiscal year, and represents the certain debt towards the employees at the closing date of the balance sheet.

Payables

Payables have been recorded in the balance sheet according to the amortized cost principle, as defined by art.2426 c.2 c.c., taking into account the time factor, in accordance with art. 2426, paragraph 1, n. 8 of the civil code. For debts for which the irrelevance of the application of the amortized cost method and/or of discounting has been verified, for the purpose of providing a truthful and correct representation of the company's financial and economic situation, the registration according to the nominal value has been maintained. This circumstance occurred, for example, in the presence of payables with a maturity less than twelve months or, in reference to the amortized cost criterion, in the case where transaction costs, commissions and any other difference between initial value and maturity value are of little relevance or, again, in the case of discounting, in the presence of an interest rate deducible from the contractual conditions not significantly different from the market interest rate.

Payables for vacations accrued by employees and for deferred remuneration, including what is owed to social security institutions, are allocated based on the amount that should be paid in the event of termination of employment at the balance sheet date.

Accrued and deferred income

Accruals and deferrals have been calculated based on the accrual principle, by allocating costs and/or revenues common to two financial years.

Contributions

Contributions are accounted for using the "income-based" method, whereby the amount of the contribution is recorded in the income statement based on the useful life of the asset to which it refers.

Capital contributions are also recorded in deferred liabilities and their accrual is postponed to subsequent years. The same will be released to the income statement in conjunction with the depreciation of the assets for which they have been recognised.

Income taxes

Income taxes for the financial year are reported in the income statement in accordance with the principles of accrual and fair and accurate representation of the company's financial situation, and in accordance with the OIC 25 accounting standard.

The company has opted for the adoption of the tax consolidation regime under art. 117 TUIR with its subsidiaries PM5 S.r.l. and Palamar S.r.l., accounting for the tax consolidation charges and the related debts to the subsidiaries as a negative taxable base arises from the subsidiaries themselves.

Commitments, risk and warranties

The supplementary information system provided for in point 9 of art. 2427 C.C. includes the risks and commitments undertaken by the company relating to leasing contracts, for this purpose the residual value of such commitments equal to the rents still to be paid increased by the relative redemption prices has been indicated. Among the commitments, the amounts of contractual guarantees issued post-delivery of the projects are also reported, for which the company resorts to coverage with a specific surety guarantee issued by banks or insurance companies.

Financial Statement

The financial statement includes all outgoing and incoming cash flows that occurred during the financial year.

In the financial statement, individual cash flows are distinctly presented in one of the following categories:

a. income management;

The categories of financial flows are presented in the sequence indicated above.

The financial flow of income management is determined by the indirect method, that is, by adjusting the profit or loss reported in the income statement.

The algebraic sum of the financial flows of each above-mentioned category represents the net change (increase or decrease) in liquid availability that occurred during the fiscal year.

The presentation format of the financial statement is scalar.

Interest paid and collected are distinctly presented among the financial flows of income management, except in special cases where they directly relate to investments (investment activities) or financing (financing activities); Received and paid dividends are distinctly presented, respectively, in income management and in financing activities; Financial flows related to income taxes are distinctly indicated and classified in income management.

Use of estimates

The preparation of the financial statements requires the making of estimates and assumptions that affect the values of the assets and liabilities of the balance sheet and the information relating to potential assets and liabilities. The elaboration of such estimates involves the use of available information and the adoption of subjective evaluations and are based on experience. By their nature, the estimates and assumptions used can vary from year to year and, therefore, it cannot be excluded that in subsequent years the current balance sheet values may differ as a result of the change in the subjective evaluations used.

The main estimates for which the use of subjective evaluations is most required have been used, among other things, for:

Transactions, assets and liabilities in foreign currency

Revenues and income, costs and charges related to operations in currency are determined at the current exchange rate at the date on which the relevant operation is carried out. Monetary assets and liabilities in currency are recorded at the spot exchange rate at the end of the fiscal year; the resulting gains or losses on exchange are charged to the income statement and any net profit is allocated to a non-distributable reserve until realized.

Other Information

Transactions with a forward retrocession obligation

The company, pursuant to art. 2427 n. 6-ter, certifies that during the fiscal year it has not carried out any operation subject to the obligation of repurchase at term except for the credits transferred to the Factor with the "pro solvendo" clause. At the end of the fiscal year, the pro-solvendo transferred credits amount to Euro 2,886,473.

Explanatory notes, assets

Following, we analyze in detail the movements of the individual balance sheet items, according to the dictates of the current legislation.

Fixed Assets

Intangible fixed assets

After recording the depreciation charges for the financial year, amounting to Euro 8,096,270, intangible assets amount to Euro 59,907,222.

The table shows the movements of the assets in question.

Changes in intangible fixed assets

The decreases for the year are attributable to the relevant depreciation, while the increases are related to capitalizations occurred during the year and new acquisitions.

In item 1) "installation and expansion costs", the expenses incurred for the company's expansion were recorded in previous years, with the approval of the board of auditors.

In item 3) "Industrial patent and intellectual works rights": in this item, the costs for the purchase of software applications, such as costs incurred for the implementation of the Zucchetti platform, for the implementation of the software for the management of the gluing plant and the installation and configuration of the Fortinet devices, for a total of Euro 297,458. In the same item, there is also the "Know-How", originally registered in 2019, which has a residual value of Euro 6,244,117 legally protected originally registered in Spencer Contract S.r.l. based on business information and technical-industrial experiences possessed. Finally, during the year Euro 13,951 were reclassified from the "intangible assets in progress" account.

In item 4) "Concessions, licenses, trademarks and similar rights", the Wave brand was registered on 1/1/2020, legally protected by partial allocation of the merger deficit resulting from the extraordinary operations carried out in 2020. During 2021, the additional Spencer brand was also imported, legally protected acquired through the merger of Spencer Contract Srl for Euro 1,610,000. These assets are amortized assuming a useful life of 5 years. At the end of the year, this item amounts to Euro 833,333 net of the depreciation fund.

Item 5) "Goodwill" is made up of several components:

(i) the first, for a net book value at the end of the year equal to Euro 4.129.910 emerged as a cancellation difference within the extraordinary merger operation that involved the incorporation of the company XPP Two S.r.l. in 2016, originally holding 100% of De Wave S.r.l. The operation was carried out using the reverse merger technique. Therefore, a goodwill value of Euro 15.505.108 was registered in 2016, with the consent of the then auditors. In 2020, a depreciation of Euro 3.882.259 was applied. Finally, it should be noted that in 2021 a realignment was carried out for a value equal to Euro 6.454.479, under Art. 110 - DL 104/2020, as amended by Art.1, paragraph 83, Law 178/2020. This amount was registered among the assets for substitute tax from alignment, included in the item "credits for advance taxes" in compliance with the OIC 25 principle and it was partially released to the Profits and Loss account in the current year for Euro 3.873 proportionally to the tax benefit obtained.

The Directors, in line with previous years, have prudently monitored the recoverability of this amount through the impairment test with reference to the value of the goodwill to confirm or not its registration value in the 2023 budget. As required by accounting principles and prevailing practices, the recoverable amount is estimated as its value in use, and this was determined through the application of the Discounted Cash Flow ("DCF") method.

The cash flows used for the calculation of the recoverable value were elaborated starting from the 2024-2028 Business Plan, prepared by the Board of Directors and approved by them today.

In more detail, for the determination of the Equity Value, the discounting of the cash flows was carried out using a discount rate (WACC) that takes into account the specific risks of the activity and reflects current market assessments of the cost of money. The discount rate was determined to be 10.10% (10.76% in the previous year). For the determination of the recoverable value of the Net Invested Capital, it should be noted that it was determined by isolating all components related to participations as they are subject to separate impairments (as will be said below) and therefore determining a net operating invested capital that, compared to the entreprise value, did not require a devaluation.

Lastly, it should be noted that the outcomes of the arbitration award mentioned above have substantially resulted in the company being awarded a compensation amount to adjust the purchase price of the share incurred by Serpeverde S.p.a. (subsequently incorporated into De Wave). In principle, this would have a corresponding accounting impact in terms of lower goodwill. However, the company decided to record the entire proceeds in the income statement under item A5, having in the 2020 financial year written down a much larger sum (Euro 32,300,000) of goodwill arising from the reverse merger with Serpeverde, to which the compensation is ideally attributable. Thus, it has already absorbed the civil effects of said lower goodwill.

In item 6) "Intangible assets in progress and advances", costs incurred for Euro 845,370 are recorded, most of which relate to the implementation of the new ERP and reporting system, which is still in the implementation phase at the end of the financial year. During the financial year, Euro 114,677 were reclassified from this budget item to the following items:

In item 7) "Other intangible fixed assets", improvements on third-party goods were recorded during the financial year for a total of Euro 2,901,445, almost entirely related to the renovation of the offices at Via De Marini 60, Genova (Euro 2,159,475) and the renovation of the building and external areas of Via Colombo 51, Monfalcone (Euro 723.896).

Tangible fixed assets

After recording the depreciation for the financial year, amounting to Euro 901,911, the material fixed assets amount to Euro 4,566,740.

Changes in tangible fixed assets

The decreases for the year are attributable to the relevant depreciation, with the exception of Euro 24,019 which are related to the disposal of equipment.

The increases for the year are related to the purchase of instrumental goods for the renewal and replacement of similar fully depreciated goods now obsolete, damaged or otherwise unusable and is detailed below.

It should be noted that during the year Euro 61,167 were reclassified from the "work in progress tangible fixed assets" account to the "Plant and machinery" item and Euro 625,494 to the "Other goods" item.

The following table shows the movements of the fixed assets in question:

Regarding the increases for acquisitions of the "land and buildings" item for Euro 38,735, it should be noted that they refer to renovation works at the property located at Via Terza Armata 6, Monfalcone,

Regarding the plants and machinery (Euro 262,008) and industrial and commercial equipment (Euro 267,138), the increases refer to investments made in most of the shipyards where De Wave operates, while for other fixed assets they are mainly related to cars and supporting computer tools.

Finally, increases of Euro 507,424 are reported for office equipment listed among the "Other Goods".

Financial leases

The purchase of instrumental goods in leasing is accounted for by asset representation with the exposure of costs for leasing fees on income and the residual commitment towards the grantor among the order accounts. Therefore, this section includes the data required by art. 2427 n. 22 necessary to evaluate the different representation that would have had on the assets and on the social economic result if these contracts had been accounted for according to the financial methodology under IAS 17.

The amount of financial leasing fees recorded to Profit and Loss amounts to Euro 884,258.

The net impact on the income statement is Euro -126,124 while that on the net equity is Euro -195,136. The details are reported below:

Financial fixed assets

Changes in equity, other securities and financial derivative instruments fixed assets

The following table shows the movements of the fixed assets in question.

Regarding the participations in controlled companies, it is reported that during the year the increase in participations amounting to Euro 674,561 refers to the following scenarios:

Furthermore, following the impairment test, the Company in the current fiscal year has made the following writedowns, totaling Euro 566.985, as detailed:

Therefore, the shareholdings in subsidiaries at the end of the fiscal year refer to the following companies:

It is noted that the Company no longer holds control of FCR Finland OY, a company controlled until 31/12/20222, as the company's management is no longer under the control of De Wave S.r.l..

Impairment test

The Directors have identified the need to conduct an impairment test with reference to the value of the shares.

As provided by accounting principles and the main current practice, the use value was determined through the application of the Discounted Cash Flow ("DCF") method.

The cash flows used for the calculation of the recoverable value were processed based on the 2024-2028 Business Plan, approved by the Board of Directors as of today's date.

In greater detail, for the determination of the recoverable value of the Net Invested Capital, the discounting of cash flows was carried out using a discount rate (WACC) that takes into account the specific risks of the business and that reflects current market assessments of the cost of money. The applied discount rate was 10.20%/10.30% for subsidiaries based in Italy, 10.30% for EU subsidiaries and 10.40% for the non-EU subsidiary.

Lastly, it should be noted that in the previous fiscal year, the Company fully depreciated FCR Finland OY. This depreciation became necessary following the erroneous representation during the acquisition of a significant newbuilding project by the former owners and Directors, which created an unexpected financial need for the Finnish company. To address the cash requirement, the Company funded OY FCR Finland with Euro 3,504,245 to ensure the project's delivery. This funding was subsequently waived. FCR Finland OY filed for bankruptcy in March 2023, causing De Wave S.r.l. to lose control and therefore the stake in the Company was fully depreciated by Euro 4,333,131.

Changes and maturity of fixed assets

The following table shows the movements of the fixed assets in question.

It should be noted that the credits in question are related to financing, granted in previous years to controlled companies:

Furthermore, it should be noted in light of the better results achieved during the year as well as the favourable outcome of the impairment test carried out on De Wave Polska Sp. z o.o, the Company has proceeded to restore the value of the depreciated fixed credit in previous years for Euro 590,382. At the end of the year, the fixed credit towards the subsidiary amounts to Euro 1,384,283, following additional payments for Euro 862,000.

Regarding the financing to Palamar S.r.l., it should be noted that during the year additional disbursements were made for Euro 1,681,828, for a total immobilized credit of Euro 3,681,828. This credit was partially written down at the end of the year for Euro 1.889,844, following the impairment test carried out by the Company.

Regarding PM5, it should be noted that the credit, amounting to Euro 180,000, was entirely written down.

The financing to Precetti Inc. was partially repaid for Euro 910,084.

The effects of the changes that occurred during the year are summarized below:

These credits were not recognized in the financial statements according to the amortized cost criterion, as defined by art.2426 c.2 c.c. and taking into account the time factor, in accordance with the provisions of art. 2426, paragraph 1, n. 8 of the civil code.

Having indeed verified the irrelevance of the application of the amortized cost method and/or discounting for the purpose of providing a true and fair representation of the company's financial and economic situation, the registration was maintained according to the presumed realization value. This event occurred, for example, in the presence of credits with a maturity of less than twelve months or, in relation to the amortized cost criterion, where transaction costs, commissions and any other difference between initial value and maturity value are of little importance or, still, in the case of discounting, in the presence of an interest rate inferable from the contractual conditions not significantly different from the market interest rate.

The decreases recorded among other fixed assets relate to Euro 400,000 for the reclassification of the advance paid in 2022 for the acquisition of the stake in Wingeco S.r.l., which following the completion of the acquisition of the latter was reclassified among the participations.

Details of investments in subsidiaries

The following table shows the participations in controlled companies as well as the additional information required by art 2427 of the civil code.

^* Regarding the share owned in Precetti S.r.l., it should be noted that De Wave S.r.l. directly owns 25% and indirectly, through the wholly owned subsidiary Precetti USA, 75%.

The stakes in De Wave Polska Sp. z o.o., PM5 S.r.l., FCR Finland OY and Palamar S.r.l. have been fully depreciated.

Breakdown of fixed assets by geographical area

The following table shows the distribution by geographical area of the credits listed among the financial assets in question.

Value of financial fixed assets

The financial assets in the balance sheet have not been recorded at a value higher than their fair value

Current assets

This paragraph indicates the changes in the composition of the items of current assets.

Inventories

The following table presents information about the changes in the inventory.

For ongoing works for which the payments received for stages of work completed and recognised by the client exceed the production made according to the percentage of completion method, the advance amount has been included in the "advances from clients" item, as provided for by Document OIC no. 23.

Particularly regarding the decrease recorded in the period relating to the "Work in progress" item amounting to Euro 7,543,854, this is due to the natural progress of the projects underway at the end of the period.

Particularly referring to the increase in raw materials, supplies, and consumables, this is attributable to the increase in production volumes and the increase in material procurement in anticipation of the start of new projects at the Monfalcone plant.

Finally, regarding advances, a consequent decrease in value is reported in this case too due to the increase in production volumes and consequently of the turnover.

Current receivables

Changes and maturity on current receivables

The following table provides information on changes to receivables reported in current assets as well as, if significant, information on their maturity.

The decrease recorded in the year relating to the item "Trade receivables" amounting to Euro 8.360,407, accompanied by a significant increase in sales revenue (+57 million) and advances (+28 million) is mainly due to careful monitoring of collection policies and contractual discipline that markedly characterized the 2023 management trend in terms of operating working capital.

The amount due beyond the next financial year refers to receivables that will be collected more than 12 months after the end of the contractually agreed warranty period.

Please note that trade receivables are net of the loan loss provision, recorded in this financial year for Euro 1,862,883. This provision has been increased during the year due to a provision of Euro 855,433, recorded to cover receivable positions considered hard to collect, and has been used to fully cover the loss on receivables from the company FCR Finland OY (amounting to Euro 353,223) as it is subject to bankruptcy proceedings.

For more details on the composition of receivables from controlled companies, please refer to the dedicated section of the management report.

The tax receivables mainly concern the VAT credit outstanding as of December 31, 2023 for which the entire amount of Euro 1,581,235 was offset in 2024, credits for direct taxes IRES and IRAP for Euro 1,474.600, credits for foreign taxes amounting to Euro 124,979, tax credits for the purchase of instrumental goods and high-tech goods (4.0) amounting to Euro 1,056,743 and "Research and Development" tax credits amounting to Euro 213,573.

Regarding the movement of the credit for Advance Taxes, refer to the section of the income statement relating to deferred taxation, however specifying that the item includes the "Provision for substitute tax" recorded for the following reasons:

It is also added that the amount of commercial credits transferred pro soluto as of 31.12.23 is equal to Euro 933,419 while the amount of VAT credits transferred is equal to Euro 2,885,913 (as of 31.12.2022 it was Euro 2,814 thousand).

Breakdown of current receivables by geographical area

The following table shows the distribution by geographical area of receivables recorded in current assets.

Cash and cash equivalents

The following table provides information on changes in liquid assets. The movement of liquid assets during the financial year is detailed, as required by the OIC 10 principle, in the cash flow statement included in the financial statement templates.

The increase recorded in the financial year for the item "bank and postal deposits" amounting to Euro 16,010,770 is particularly due to a careful policy of improving the composition of operating working capital, as well as to the improvement of credit management.

Regarding the company's liquid assets, it is noted that there are no restrictions of any kind about their use.

Financial activities that do not constitute fixed assets

The following table presents information on the changes in active derivative financial instruments.

The item "active financial instruments", amounting to Euro 323,363, consists of a hedge instrument calculated based on market value (known as "mark to market") as of December 31, 2023, and amounting to Euro 30,717 in favor of the Company.

Furthermore, it is noted that during the year four "flexible forward" hedge contracts were signed, three of which expired on December 31, 2023, and the last one with an expiration date of August 30, 2024. These instruments were accounted for as non-hedging derivatives as they do not have the characteristics required by the reference accounting principles for accounting as hedging instruments. For this reason, the related positive fair value as of December 31, 2023, amounting to Euro 292,646, was recorded in the Income Statement as a revaluation of derivative financial instruments.

Accrued income and prepaid expenses

The following table presents information on changes in accrued income and prepaid expenses.

The "prepaid expenses" item, amounting to Euro 1,198,958, mainly refers to insurance costs, software maintenance, surety policies, and leasing fees paid during the year but pertaining to the following year.

Capitalised financial expenses

All interests and other financial charges have been entirely expensed in the year. For the purposes of art. 2427, c. 1, n. 8 of the civil code, it is therefore certified that there are no capitalizations of financial charges.

Notes to the financial statements, equity and liability

Following, we analyze in detail the movements of the individual balance sheet items, according to the dictates of the current legislation.

Shareholders’ Equity

The items are shown in the balance sheet at their book value according to the indications contained in the OIC 28 accounting principle.

Changes in equity

With reference to the closing fiscal year, the following tables show the changes in individual equity items, as well as the details of other reserves, if present in the balance sheet.

The share capital of 6,000,000 euros is fully paid up.

The following changes occurred during the fiscal year ended 31/12/2023:

Availability and use of equity

The following tables analytically indicate the equity items, specifying their origin, possibility of use and distributability, as well as their actual use in the previous three fiscal years.

Legend: A: for capital increase; B: for loss coverage; C: for distribution to partners; D: for other statutory obligations; E: other

Changes in the reserve for hedging

According to art. 2427-bis, paragraph 1b-quater of the civil code, the movements of the fair value reserves occurred during the year are shown in the following table.

The decrease of Euro 379,223 refers to the change in the reserve for derivative operations to hedge interest rates on medium-long term bank loans, the evaluation at fair value required this provision in implementation of the new financial structure wanted by D. Lgs 139/2015 and from the OIC 32 principle.

Provision for risks and charges

The following table shows information about the changes in the funds for risks and charges.

The decrease in the tax fund, including deferred, is attributable to the use of the fund following the depreciation quota of the trademarks having only civil relevance.

Other funds

The other provision are detailed as follows:

Moreover, it should be noted that in this exercise the fund for covering losses attributed to the subsidiary De Wave Polska Sp. z o.o was fully used against the financial credit as of 31/12/2023.

Employee severance indemnity

The following table provides information about the changes in the end of subordinate employment relationship treatment.

The uses of the exercise refer to the advances and settlements of the end of employment relationship treatment occurred during the exercise, while other changes include transfers to the INPS treasury fund and to complementary pension funds.

Payables

For the debts entered in the balance sheet, this paragraph provides the information required by art. 2427 paragraph 1 of the Civil Code.

Changes and maturity of payables

The following table sets out the information regarding the changes in debts and any information regarding their due dates.

Payables to banks

The "Payables to bank" are those attributable to the signing of "Senior Facilities Agreement" contracts granted to the Group by a pool of banks, part of which in favor of the former indirect parent company Serpeverde S.p.A. for the acquisition of shares of DW Group S.p.A. (formerly DW Group S.a r.l.) and a part granted in favor of De Wave S.r.l. and the former subsidiary Spencer Contract S.r.l., all companies now incorporated into De Wave S.r.l..

Loans are evaluated according to the criterion of amortized cost, taking into account the time factor;

The following is a detail of the medium and long term loans in place at the end of the financial year:

Please note that in relation to compliance with covenants financials included in the senior facilities agreement signed at the time of transfer of ownership to the new shareholder on October 30, 2019, the company has an agreement in place since March 2022 which among other things sets the leverage ratio at a consolidated level (single covenant) for testing dates in 2023 at a level compatible with the market reality and which is widely complied with.

Based on the calculations of the Ebitda adjusted set in the financing agreement, the consolidated Leverage ratio as of December 31, 2023, is well below the limit.

It should be added that on January 18, 2024, the suspensive conditions related to the Consent Letter accepted on December 30, 2023, by the pool of financing banks for the Senior Facilities Agreement of October 30, 2019, have occurred. The effectiveness of the aforementioned letter allows the company to (i) reshape the repayment plan of the loans (ii) increase the basket of permitted financial transactions in order to review the financial structure of the group (iii) reset the covenant related to the leverage ratio with new levels in line with the development of the business plan, with minimum levels at 2.5x and maximum at 3.5x.

“Payables to other financiers, amounting to Euro 2,886,473, include the amount of credit transferred on a pro solvendo basis to Factoring companies.

The "Advances", amounting to Euro 59,396,206, exclusively include commitments to customers for contractually agreed and invoiced advances. In particular, the increase of 28,309,498 compared to the previous year, is due to the advance, contractually agreed, obtained for the start of activities related to new significant orders.

"Trade payables" amount to Euro 48,840,359 showing a decrease of Euro 15,980,734 at the end of the year. The decrease in this item is in line with the decrease in receivables shown in current assets.

It is noted that during the year some payment extensions (maturity factor) were agreed with specific suppliers for a total amount as of 31.12.2023 of approximately Euro 1.2 million.

The "Payables to subsidiares" consist of trade debts to the subsidiaries De Wave Polska Sp. z o. O. Precetti S.r.l., Precetti Inc., Tecnavi S.r.l., Palamar S.r.l., PM5 S.r.l., PM4.0 S.r.l., Wingeco S.r.l. and De Wave Shanghai Shipservice Ltd for whose composition reference is made to the paragraph "Relations with controlled companies, connected, controlling and associated" of the Management Report.

The "Tax payables" are essentially related to the VAT debt of the German permanent establishment for Euro 625,398 and to the withholding taxes on employees' wages for Euro 797,263.

The "Payables to social security institutions" consist of debts to INPS (Euro 908,083), INAIL (Euro 94,122) and other welfare and assistance funds (Euro 190,744).

The item "Other payables" mainly includes liabilities to staff for ordinary wages / employee bonuses (Euro 1,632,790), for exit incentives (Euro 140,000) and deferred rights (Euro 2,407,853).

Breakdown of payables by geographical area

The following table shows the breakdown of debts by geographical area.

Payables secured by granted guarantees on company assets

In the following table, the debts secured by real guarantees on company assets are indicated separately for each item, with specific indication of the nature of the guarantees.

The guarantees refer to the pledge on the company shares of De Wave S.r.l. and on the company shares of the controlled companies Tecnavi S.r.l. and Precetti Inc.

Loans made by shareholders of the company

At the end of the fiscal year, there are no debts towards controlling companies.

Accrued and deferred liabilities

Deferred liabilities include contributions and tax credits whose competence is postponed to subsequent years as they will be released to the income statement in conjunction with the depreciation of the assets for which they were recognized.

The following table presents information on changes in accrued and deferred liabilities.

Notes to the financial statements, income statement

The income statement highlights the economic result of the year.

It provides a representation of management operations, through a summary of positive and negative income components that contributed to determining the economic result. The positive and negative income components, entered in the budget as provided by article 2425-bis of the civil code, are distinguished according to their belonging to the various managements: characteristic, accessory and financial.

The characteristic activity identifies the income components generated by operations that occur continuously and in the relevant sector for management, which identify and qualify the peculiar and distinctive part of the economic activity carried out by the company, for which it is intended.

Financial activity consists of operations that generate income and expenses of a financial nature.

Residually, the accessory activity consists of operations that generate income components that are part of ordinary activity but do not fall under the characteristic and financial activity.

Value of production

Revenues are recognized on an accrual basis, net of returns, allowances, discounts and bonuses, as well as taxes directly related to them.

As regards the sale of goods, the related revenues are recognized when there has been a substantial and not formal transfer of ownership, taking as a reference parameter, for the substantial transfer, the transfer of risks and benefits. Revenues from service provisions are recognized when the service is provided, or when the performance has been carried out; in the particular case of continuous service provisions, the related revenues are recognized for the accrued portion.

With reference to work in progress on order (or contracts), the considerations acquired definitively are recognized in the item "sales revenues and services", while the change in work in progress on order equal to the change in stocks for work performed and not yet definitively settled at the beginning and end of the fiscal year is recognized in the item "changes in work in progress on order". The contract revenues include:

Increases in fixed assets for internal works are recorded based on production cost, which includes direct costs (materials and labor direct, design costs, external supplies, etc.) and general production costs, for the portion reasonably attributable to the asset for the period of its manufacture until the asset is ready for use; with the same criteria, any charges related to the financing of its manufacture are added.

Breakdown of sales and service revenue by activity category

The following table illustrates the distribution of sales and service revenue according to activity categories.

For further information and analysis of variations compared to the previous year, please refer to the "Management Trend" section of the Management Report.

Breakdown of sales and service revenue by geographic area

The following table illustrates the distribution of sales and service revenue according to geographic areas

Regarding the composition of revenues, it should be noted that they consist of Euro 228,629,037 (79%) from revenues derived from the activity of "New Building" and Euro 59,886,807 (21%) from "Refitting" activities.

Change in work in progress

This entry summarizes the positive or negative changes between the final and initial stocks of work in progress on order (orders)

Other revenues and income

This entry includes the compensation of Euro 7.5 million resulting from the Arbitration Award no. 1521/2021 mentioned in the premise.

In addition, the entry includes income from expense recharges of Euro 490,327, active surpluses of Euro 1,214,841, contributions from tax credits of Euro 97,464, other revenues and income of Euro 67,575.

Production costs

Costs and charges are attributed according to competency and nature, net of returns, allowances, discounts and premiums, in accordance with the principle of correlation with revenues, and entered in the respective items as provided by the OIC 12 accounting principle. As for the purchase of goods, the related costs are recorded when there has been a substantial and not formal transfer of ownership, taking as a reference parameter, for the substantial transfer, the transfer of risks and benefits. In the case of purchase of services, the related costs are recorded when the service has been received, or when the performance has been concluded, while, in the presence of continuing service performances, the related costs are recorded for the accrued portion.

Below is a detailed breakdown of the production costs:

Please note that in previous years, a management incentive program was signed, through which some Directors and employees of the Group have been given the right to subscribe to a special category of shares issued by the parent company Cruise Holding Limited, which will give the right to benefit from increasing returns upon the occurrence of certain conditions. The aforementioned program contains specific clauses of transfer restrictions, "tag along", "drag along", and the treatment of shares assigned to a participant in the incentive program in the case of termination of employment or collaboration with the Group.

For further information and analysis of variations compared to the previous year, please refer to the "Management Trend" section of the Management Report.

Financial Income and Expenses

Financial income and expenses are recognized on an accrual basis, relating to the portion accrued in the fiscal year.

Composition of income from participation

During the fiscal year under review, the Company received dividends from the subsidiaries PM 4.0 S.r.l. for Euro 1,130,000 and from Tecnavi S.r.l. for Euro 300,000.

Breakdown of interest and other financial charges by type of debt The following table shows the interest and other financial charges referred to in art. 2425, no. 17 of the civil code, with a specific breakdown between those related to bond loans, debts to banks and to other cases.

The bank's financial charges for the fiscal year are composed:

Other financial income

Financial income other than income from participations consists of accrued interest on financial receivables from controlled companies amounting to Euro 153,116 and other interest income amounting to Euro 100,486.

Foreign exchange gains/losses

Below is the information relating to exchange rate gains or losses, distinguishing the realized part from the part deriving from valuations of assets and liabilities in currency recorded on the balance sheet at the end of the fiscal year.

Value adjustments of financial assets

With reference to participations, as previously described, in the current fiscal year, the Company carried out the following devaluations, for a value equal to Euro 566,985, summarized below:

With reference to financial receivables, the Company also proceeded to write off the entire financial exposure to the subsidiary PM5 S.r.l. for Euro 180,000 as well as part of the financial receivable from Palamar S.r.l. for Euro 1,963,646. At the end of the fiscal year, financial receivables from Palamar S.r.l amount to Euro 1,791,984.

Finally, given the improved situation found in relation to the subsidiary De Wave Polska SP Z.o.o., as previously described, the Company has restored part of the immobilized credit towards subsidiaries for Euro 590,382.

Lastly, with reference to derivative financial instruments, the Company recorded a financial income of Euro 292,646.

Taxes on the income for the year

The company has provided for the allocation of the year's taxes based on the application of current tax rules. Current taxes refer to the taxes for the year as resulting from tax returns.

It should be noted that, starting from the 2021 fiscal year, the Company has joined the Group taxation along with the subsidiary PM5 S.r.l. and that in the 2023 fiscal year the subsidiary Palamar S.r.l. also joined.

Deferred taxes and prepaid taxes refer to positive or negative income components subject to taxation or deduction in different financial years than those of civil accounting.

The item is composed as follows:

Current taxes

Current taxes are represented by the IRAP for the fiscal year amounting to Euro 370,570 and the charge from tax consolidation amounting to Euro 458,953, resulting from the capitalization of tax losses transferred to the Group by the consolidated company PM5 S.r.l. for Euro 88,903 and by the consolidated company Palamar S.r.l. for Euro 370,050.

The reconciliation between the current tax charge and the theoretical tax charge is shown below:

Reconciliation between the current tax charge and the theoretical tax charge (IRAP)

Reconciliation between the current tax burden and the theoretical tax burden (IRES)

Taxes related to previous years

The taxes related to previous years amounting to Euro 59,606 refer to the difference between the IRAP allocated in the budget for the previous year and that resulting from the IRAP declaration 2023.

Deferred and Advanced Taxes

This item includes the impact of deferred taxation on the current financial statements. It refers to temporary differences between the values attributed to an asset or liability according to civil law criteria and the corresponding values recognized for these elements for tax purposes.

The company has determined the deferred tax with reference to IRES and IRAP.

The following tables describe the temporary differences that led to the recognition of deferred and advanced taxes, specifying the applied rate and changes compared to the previous year, the amounts credited or charged to the income statement or net equity.

Recognition of deferred and advanced taxes and consequent effects

Bellow is the detailed movement of advanced taxes. This table presents the composition and movement including the amount of assets for advanced taxes and their construction compared to income components accumulated over time, giving rise to temporary differences in deductibility.

The "work-in-progress risk fund" on which deferred taxes are calculated, amounting to Euro 1,718,147 at the end of the year, was increased by Euro 1,291,512 and was partially used for Euro -706,290.

Deferred taxes for non-deductible interest expenses and tax losses carried forward have been allocated as their future recoverability is expected.

Regarding deferred taxes on goodwill, it should be noted that they are allocated if there is a temporary misalignment between the tax value and the civil value of the asset. In this regard, it is recalled that:

Below is the detail of the movement of deferred taxes:

With regard to the deferred tax liabilities relating to the registration of Brands not having tax relevance, the decrease of Euro 279,000 was made following the depreciation occurred during the fiscal year.

Deferred tax liabilities on active derivative instruments have been allocated following the positive fair value attributed to the derivative financial instruments subscribed by the Company.

Notes to the financial statements, cash flow statement

The company has prepared the financial statement, which is the summary document that reconciles the changes occurred during the year in the company's equity with the changes in the financial situation; it highlights the values related to the financial resources that the company needed during the year and their uses.

Regarding the method used, it is specified that it has adopted, according to the provisions of the OIC 10, the indirect method by which the cash flow is reconstructed by adjusting the non-monetary components of the year's result.

Notes to the financial statements, other information

The following are the other information required by the civil code.

Employment data

The following table shows the average number of employees, divided by category and calculated considering the annual average.

Remuneration, advances and loans granted to Directors and statutory auditors

The following table contains the information requested by article 2427 n. 16 c.c., specifying that there are no advances and credits and no commitments have been made on behalf of the administrative body due to any guarantees provided.

The remuneration of the Board of Auditors is reported net of expense reimbursements and social security contributions.

Remueration to the statutory auditor or audit firm

The following table shows the amounts due to the audit firm, broken down by type of service provided.

Securities issued by the company

The company has not issued any share or similar value falling within the provision of art. 2427 n. 18 civil code.

Details on other financial instruments issued by the company

The company has not issued other financial instruments pursuant to article 2346, paragraph 6, of the civil code.

Commitments, guarantees and contingent liabilities not resulting from the balance sheet

The following section reports the total amount of commitments, guarantees and potential liabilities not resulting from the balance sheet, indicating the nature of the real guarantees provided.

As the new budget provisions have eliminated the order accounts, also in accordance with what is provided in point 9 of art. 2427 c.c., in the preceding schedule, the commitments, guarantees and potential liabilities not resulting from the balance sheet have been reported.

It is specified that at the end of the fiscal year, the company has the following commitments for items not resulting from the balance sheet:

- commitments for leasing contracts relating to the yet to be paid discounted lease payments for Euro 1,802,423.

- commitments for contractual guarantees post delivery for Euro 17,567,985. It is noted that the total value of these commitments is covered by a surety guarantee issued by banks and insurance companies.

Information on assets and loans for a specific business

Assets intended for a specific business

It is confirmed that as of the closing date of the balance sheet, there are no assets earmarked for a specific deal as per no. 20 of art. 2427 of the civil code.

Financing for a specific business

It is confirmed that as of the closing date of the balance sheet, there are no financings for a specific deal as per no. 21 of art. 2427 of the civil code.

Related party transaction information

During the financial year, transactions with related parties were carried out, referring to the relationships between De Wave and its controlling and controlled companies.

In general, transactions with related parties are concluded at market conditions, for which reference is made to the summary illustrated in the relevant paragraph of the Management Report.

Information on agreements not resulting from the balance sheet

No agreement not resulting from the balance sheet was made during the financial year.

Information on significant events occurring after the end of the financial year

With reference to point 22-quater of art. 2427 of the civil code, regarding the reporting of the main significant events that occurred after the end of the financial year that significantly affected the asset, financial and economic trend, it is certified that after the end of the financial year no significant events took place that would make the financial situation substantially different from that resulting from the balance sheet at that date.

After the end of the financial year, in 2024, the following main and significant events are reported:

Companies that draw up the balance sheet of the largest/smallest group of companies of which it is part as a controlled company

In accordance with article 2427, numbers 22-quinquies and 22-sexies of the civil code, it is noted that the Company is required to prepare the consolidated financial statements.

It also indicates the place where a copy of the consolidated financial statements is available.

Information concerning derivative financial instruments ex art. 2427-bis of the Italian Civil Code

OTC DERIVATIVE FINANCIAL INSTRUMENTS (OVER THE COUNTER) (art. 2427-bis, co. 1, no. 1)

For the coverage of the risk of interest rate variation, the company has an IRS product (INTEREST RATE SWAP) in place, the underlying of which is represented by medium to long term residual financing of Euro 1,000 thousand.

The operation was carried out with the same financing Banks that calculated the market value (aka "mark to market") as of 31.12.2023 equal to Euro 30,717 in favor of the Company.

With reference to derivative financial instruments on interest rates, "mark to market" means, as of the reference date, the present value of the future cash flows of the single operation, calculated based on the discount factors attributable to each flow and derived from the interest rate curve and the volatility curve existing on the financial markets on said date.

It should be noted that during the year four "flexible forward" hedging contracts were signed, three of which expired on 31.12.2023 and the last one expiring on 30.08.2024. These instruments were accounted for as non-hedging derivatives as they did not have the characteristics required by the accounting standards for accounting as hedging instruments. As a result, the fair value of 31.12.2023, equal to Euro 292,646, was accounted for in the Income Statement as a revaluation of derivative financial instruments.

Summary prospectus of the company's balance sheet that carries out the management and coordination

In compliance with art. 2497-bis, paragraph 4, it is noted that the management and coordination activity of the Company is carried out by Cruise Holding Limited, a company based in London (Great Britain), 280 Bishopsgate registered in the Companies House with the number 12239290.

The key data of Cruise Holding Limited, as shown in the summary prospectus below, required by Article 2497-bis of the Civil Code, were extracted from the related financial statements for the year ended December 31, 2022. For a proper and comprehensive understanding of the financial and equity situation of Cruise Holding Limited as at December 31, 2022, as well as the financial performance achieved by such company in the year ended on that date, please refer to the reading of the financial statements which, accompanied by the auditing company's report, is available in the forms and ways provided by law

Below are the data related to the latest approved financial statements (31/12/2022):

Information pursuant to art. 1, paragraph 125, of Law August 4, 2017, no. 124

During the year under review, the company did not receive subsidies, contributions, paid assignments and any economic advantages that must be reported in the explanatory notes by public administrations and/or by subjects referred to in the first period of paragraph 125, art. 1, of L. 124/2017.

However, it should be noted that the company has benefited from tax credits resulting from: - purchase of instrumental goods and high-tech goods (4.0) for Euro 217,784;

Proposal for allocation of profits or coverage of losses

Dear Shareholders, in light of the above, the administrative body proposes to allocate the profit for the year amounting to Euro 1,166,740 to legal reserve for Euro 626,167 and to extraordinary reserve for Euro 540,573.

Explanatory note to the financial statements, final part

Dear Shareholders, We confirm that this budget, consisting of balance sheet, income statement, cash flow statement and explanatory note, truly and correctly represents the asset and financial situation of the company, as well as the economic result of the year and corresponds to the accounting records. We therefore invite you to approve the draft budget as of 31/12/2023 together with the proposal to allocate the result for the year, as prepared by the administrative body.

The Budget is true and real and corresponds to the accounting records