Particle Measuring Systems S.r.l.

Particle Measuring Systems S.r.l.

Sede Legale.

Ufficio Commerciale, Xxxxxxx xxxxxxx, Magazzino e Logistica: Xxx xx Xxxxxx Xxxxxxxx, 00 – 00000 Xxxxxxxx (Xxxx)

Tel: x00 00 00000000 – Fax: x00 00 0000000 CCIAA Roma – P.I. – C.F.:10427421002

Capitale Sociale Euro 20,000 i.v.

Società con Socio Unico Soggetta a Direzione e Coordinamento da parte di Spectris Plc.

FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS AS AT 31 DECEMBER 2022

STATEMENT OF FINANCIAL POSITION

ASSETS	2022	2021
Non-current assets
Intangible assets	431.330	706.773
Tangible assets	321.369	300.397
Defferred tax assets	237.851	255.371
Other non-current assets	34.532	34.532
Total non-current assets	1.025.082	1.297.073
Current assets
Inventory	745.071	890.030
Financial assets available for sale	197.889	197.889
Trade receivables	5.174.627	4.073.194
Advance taxes	148.243	138.075
Tax credits	483.374	940.496
Other current assets	5.676.515	5.268.638
Cash and equivalents	151.257	99.168
Total current assets	12.576.976	11.607.490
TOTAL ASSETS	13.602.058	12.904.563

LIABILITIES AND EQUITY	2022	2021
Equity
Share capital	20.000	20.000
Other reserves	7.242.434	6.061.415
Operating profit	900.114	1.132.988
Total Equity	8.162.548	7.214.403
Non-current liabilities
Severance pay	889.380	877.027
Other liabilities	169.592	428.403
Total non-current liabilities	1.058.972	1.305.430
Current liabilities
Bank Paybles	164	1.053
Trade liabilities	2.147.698	2.303.586
Tax liabilities	350.468	452.396
Other liabilities	1.882.208	1.627.695
Total current liabilities	4.380.538	4.384.730
TOTAL LIABILITIES AND EQUITY	13.602.058	12.904.563

SEPARATE OR COMPREHENSIVE INCOME STATEMENT

Income statement	2022	2021
Income	16.441.386	15.055.344
Other revenues and income	1.961.885	1.610.844
Costs of raw materials, consumables, and goods	(9.745.945)	(8.612.416)
Changes in goods	(144.959)	211.727
Cost for services	(1.425.652)	(1.133.877)
Costs for leased assets of third parties	(106.962)	(76.588)
Costs for personnel	(4.847.510)	(4.915.713)
Other operative costs	(80.700)	(66.822)
Amortization and depreciation	(399.470)	(392.370)
Operating profit	1.652.072	1.680.129
Financial profit	24.303	3.827
Financial expense	(30.786)	(35.443)
Exchange gains/(losses)	(126.367)	(31.362)
Profit/(loss) before taxes	1.519.222	1.617.151
Taxes	(619.108)	(484.163)
Profit/(loss) for the year	900.114	1.132.988

	2022	2021
Profit/(loss) for the year
Other components of comprehensive income
Gains/(losses) from discounting future benefit liabilities to employees	63.211	(25.076)
Deferred taxes on gains (losses) to be discounted	(15.171)	6.018
Total other components of total profit	(48.040)	(19.058)
Total profit/(loss) total for the year	948.154	1.113.930

	Share Capital	Legal reserve	Foreign exchange reserve	Reserve from IFRS 9	Reserve from IFRS 16	Reserve from IAS 19	Transla- tion Reserve	Retained earnings	Profit or loss	Equity
At 1 January 2021	20.000	4.000	-	150.194	(13.894)	(254.187)	-	4.802.562	1.143.766	5.852.441
Increase	-	-	-	-	-	(19.057)	14	1.338.704	-	1.319.661
Decrease	-	-	-	-	-	46.710	-	-	-	46.710
Appropriation for previus year’s
profit	-	-	-	-	-	-	-	-	(1.143.766)	(1.143.766)
Profit for the year 2019	-	-	-	-	-	-	-	-	1.132.988	1.132.988
Exchange differences from con-
version to the Euro (decreases)	-	-	-	-	-	-	-	-	-	-
Exchange differences from con-
version to Euro (increments)	-	-	6.369	-	-	-	-	-	-	6.369
At 31 December 2021	20.000	4.000	6.369	150.194	-13.894	-226.534	14	6.141.266	1.132.988	7.214.403
Increase	-	-	-	-	-	-	-	1.132.969	-	1.132.988
Decrease	-	-	-	-	-	48.040	-	-	-	48.040
Appropriation for previus year’s
profit	-	-	-	-	-	-	-	-	(1.132.988)	(1.132.988)
Profit for the year 2020	-	-	-	-	-	-	-	-	900.114	900.114
Exchange differences from con-
version to the Euro (decreases)	-	-	(6.369)	-	-	-	-	6.369	-	-
Exchange differences from con-
version to Euro (increments)			-	-	-	-	10	-	-	-
At 31 December 2022	20.000	4.000	-	150.194	(13.894)	(178.494)	24	7.280.604	900.114	8.162.548

STATEMENT OF CHANGES IN EQUITY

-

Cash Flow Statement

(Euro)	31/12/2022	31/12/2021
CASH FLOWS FROM OPERATIONS (A):
Net profit for the period	900.114	1.132.988
Corrections for:
- Taxes on income	619.108	484.163
- Depreciation and depreciation of fixed assets	399.470	392.421
- Provision for funds	251.893	182.359
- Interest receivable	(24.303)	(3.827)
- Interest payable	30.786	35.443
- Change in staff funds
Other non-monetary changes	(247.474)	(1.098.409)
	1.929.595	1.125.138
- Changes in other assets and liabilities:
- Decrease/(increase) in inventories	144.959	(211.726)
- Decrease/(increase) in trade credits	(534.120)	(19.291)
- Increase/(decrease) in trade debts	(166.298)	312.541
- Increase/(decrease) in other receivables/payables and other assets/liabilities	(548.381)	(1.042.924)
(Use of funds)	(6.030)	(298.945)
(Income tax paid)	(415.986)	(599.022)
	(1.525.856)	(1.859.367)
CASH FLOWS FROM OPERATIONS (A)	403.739	(734.229)
CASH FLOW FROM INVESTMENT ACTIVITIES (B):
Acquisitions of intangible assets	(60.421)	(226.024)
Acquisitions of physical assets	(109.375)	(16.362)
Divestments of intangible assets	77.933	1.090.407
Divestments of tangible assets	3.230	8.425
CASH FLOW FROM INVESTMENT ACTIVITIES (B):	(88.633)	856.446
CASH FLOW FROM FINANCING ACTIVITIES (C):
Interest paid New liabilities for leased goods Payment of financial liabilities for leased assets Other changes in net worth	14.315 (277.332)	(39.270) (109.524)
CASH FLOW FROM FINANCING ACTIVITIES (C):	(263.017)	(148.794)
NET CASH FLOW FOR THE PERIOD (A+B+C)	52.089	(26.577)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	99.168	125.745
CASH AND CASH EQUIVALENTS AT END OF PERIOD	151.257	99.168

NOTES TO THE FINANCIAL STATEMENTS CLOSED AT DECEMBER 31st, 2022

1. REGULATORY FRAMEWORK

The European Union, with the approval of Regulation no. 1606/2002 of July 19th, 2002, of immediate application for Member States, has standardized the International Accounting Standards, also deciding the entities required to apply them and giving member states the option of allowing or prescribing the preparation of annual accounts also in accordance with international accounting standards.

The Italian legislature issued a Legislative Decree no. 38 of February 28th, 2005 in which it exercised the options provided in article 5 of the aforementioned regulation.

The Company, in accordance with the art. 2364 of the Italian Civil Code, has utilized the statutory clause that fore- sees the opportunity to approve the financial statement by 180 days after the end of the financial year. The reason of the approval extension is due to obtaining all the relevant information useful to the preparation of the Statutory Financial Statement in order to provide a truthful and correct representation of the Statutory Financial Statement itself.

2. GENERAL INFORMATION

The sole shareholder company Particle Measuring Systems S.r.l. (hereafter "PMS" or the "Company"), is a company incorporated and registered in Italy with registered office in Xxxxxxxx (XX), xxx xx Xxxxxx Xxxxxxxx xx. 34, which has a permanent establishment in Belgium and Denmark.

The Company is a wholly owned subsidiary of Spectris Plc (Holding Company of the Spectris Group) through Spec- tris Group Holding Limited, based in Egham, (UK).

The Company carries out the design, development activities and marketing of products and services for environ- mental monitoring within the industry, mainly pharmaceutical, electronics, and life science industry, and sales activ- ities of consumable products for industrial microbiology. It, through offering a wide range of tools, enables its cus- tomers to monitor environmental quality and weigh fact-based decisions in order to improve the productivity of their processes and meet the regulatory requirements to which they are subjected. The instruments marketed by the Company are used globally in particle monitoring activities.

Specifically, the Company offers products and services related to cleanroom monitoring, aero dispersion research, parenteral sampling, filter and in-line testing in purified water and process chemicals, point-of-use monitoring of inert gases, aerial sampling of microbial activity, and compressed gas monitoring.

The Company's reference clients are represented by major multinational companies operating in the pharmaceutical industry, including in particular: GlaxoSmithKline Biologicals, Patheon Italia by Thermo Xxxxxxx Scientific, Merck Serono, BSP Pharmaceuticals, Les Laboratoires Medis, and Boehringer Ingelheim Animal Health France with re- gard to the production of completely sterile drugs and medical devices with very low risk of contamination.

Moreover, the Company works on behalf of public institutions and international bodies that, as part of their functions, need to monitor the dispersion of particles in the environment and the degree of environmental pollution/alteration, as they are responsible for monitoring, prevention and public health protection roles. Finally, the Company provides support services to many hospital companies for clean-room management.

The Company's target market is the European market, with a predominant focus on Italy. Specifically, the Italian market is managed directly from Italy, while the European market is managed mainly through permanent establish- ments based in Belgium and Denmark.

The statutory audit of the financial statements is handled by the Audit firm RSM Società di Revisione e Or- ganizzazione Contabile S.p.A., appointed with shareholder’s meeting minutes.

3. SIGNIFICANT EVENTS THAT OCCURRED DURING THE FISCAL YEAR

Significant events that occurred during the year are set out in the Management Report, to which we refer.

4. PREPARATION PRINCIPLES

The financial statements for the year closed as of December 31st, 2022, which are expressed in euros, have been prepared by the directors of the Company:

- in accordance with International Accounting Standards issued by the International Accounting Standards Board (IASB) and approved by the European Union, including all International Financial Reporting Stand- ards (IFRSs) and interpretations of the International Financial Reporting Interpretation Committee (IFRIC) and the former Standing Interpretations Committee (SIC). The set of all standards and interpretations refer- enced above is referred to as "IFRS-EU";

- in the going concern perspective and on the assumption that the Company will be able to meet the repay- ment conditions of third-party financial parties.

It shall be noted that the Company adopted international accounting standards for the first time from the year ended as of December 31st, 2012, in implementation of paragraph 3 of article 9 of Legislative Decree no. 38 of February 28th, 2005.

The financial statements for the year ended December 31st, 2022, consist of the balance sheet, income statement - separate and comprehensive, statement of changes in equity, cash flow statement, and notes to the financial state- ments.

In particolar:

- In the balance sheet current and non-current assets and liabilities are shown separately: current assets and liabilities are those assets and liabilities, respectively, that are supposed to be realized or settled within twelve months after the financial statements date;

- in the income statement, the analysis of costs is made according to their nature;

- the statement of the other items comprehended in the profit and loss provides for the economic result inte- grated by those income and expenses that by express provision of IFRS are recognized in equity;

- the indirect method is used for the cash flow statement in accordance with IAS 7, distinguishing cash flows from operating, investing and financing activities;

- the statement of equity changes has been prepared by providing separate evidence of the other components of the profit and loss.

The rules for including the transactions of the permanent establishment located in Denmark expressed in currencies different than euros are the follows:

- assets and liabilities are translated using the exchange rates in use at the financial statements date;

- expenses and revenues are translated at the average exchange rate for the year;

- translation exchange differences, recorded in equity, include both exchange differences generated by the translation of economic quantities at an exchange rate different from the closing exchange rate used for balance sheet items and those generated by the translation of opening shareholders' equity at an exchange rate different from the closing exchange rate for the reporting period.

The financial statements for the year ended December 31st, 2022, are accompanied by the management report prepared by the directors of the Company, describing the activities carried out during the year, the outlook for oper- ations, relations with related parties, and significant events after the end of the year.

5. MARKET FIELD REPORTING

No segment information as per IFRS 8 has been provided, since the Company has neither securities traded in regulated markets, nor has any ongoing procedures aimed at listing any category of financial instruments in a public market.

6. DISCRETIONARY JUDGEMENTS AND SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of the PMS S.r.l. financial statements requires the directors to make estimates and assumptions that affect the values of costs, revenues, assets and liabilities in the financial statements and related disclosures, as well as the disclosure of contingent assets and liabilities as of the reporting date; consequently, the uncertainty surrounding the estimates could result in outcomes that will require significant adjustment to the carrying value of these assets and liabilities in the future.

Specifically, estimates are based on parameters available at the time the financial statements are prepared and are used to recognize provisions for loan losses, depreciation, amortization, depreciation, employee benefits, taxes, and other provisions.

Income taxes (current and deferred) are determined according to a prudent interpretation of current tax regulations. This process sometimes involves complex estimates in determining taxable income and deductible and taxable temporary differences between book and tax values. In particular, deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which they can be recovered. The assessment of the recoverability of deferred tax assets takes into account estimated future taxable income and is based on prudent tax planning.

Estimates and assumptions are reviewed periodically, and the effects of any changes are reflected in the income statement.

7. ACCOUNTING PRINCIPLES APPLIED AND VALUATION CRITERIA Intangible Assets

In accordance with IAS 38, intangible assets, which can be capitalized only if they are identifiable assets that will generate future economic benefits, are initially recorded at purchase cost, plus any incidental expenses and those direct costs necessary to prepare the asset for use.

Internally generated assets, with the exception of development costs, cannot be recognized as intangible assets. Development activity takes the form of translating research findings or other knowledge into a well-defined program for producing new products or processes.

The cost of an internally generated intangible asset includes all directly attributable costs necessary to create, pro- duce, and prepare the asset so that it is capable of operating in the manner intended by management.

After initial recognition, intangible assets are entered in the financial statements at cost net of amortization, calcu- lated on a straight-line basis over the estimated useful life of the asset, and accumulated impairment losses.

However, if an intangible asset has an indefinite useful life, it is not amortized, but is subjected to an annual impair- ment analysis at the end of the fiscal year in order to recognize any impairment losses; an intangible asset has an indefinite useful life if there is no foreseeable limit to the period over which it is expected to generate net cash inflows for the company.

Amortization begins when the asset is available for use, that is, when it is in the position and condition necessary for it to be capable of operating in the manner intended by management.

The book value of intangible assets is subject to impairment test when events or changes in circumstances indicate that the book value cannot be recovered. If there is such an indication and where the value exceeds the estimated realizable value, the assets are written down to reflect their realizable value. This value coincides with the higher of the net selling price of the asset and its value in use.

The following main intangible assets can be identified within the Company:

Software

The costs of software licences, including expenses incurred to make the software ready for use, are amortised over three years, while costs related to the routine maintenance of software programmes are expensed as incurred.

Tangible Assets

Tangible assets are recognised at their purchase or production cost adjusted by the respective depreciation and any accumulated impairment losses.

Newly acquired tangible assets, as required by IAS 16, are recognised as assets if the following conditions are met:

- it is probable that the future economic benefits associated with them will flow to the company;

- their cost can be reliably determined.

The cost of an item of property, plant and equipment, whether purchased from third parties or constructed on a self- constructed basis, is inclusive of directly attributable costs and includes all costs necessary to bring the asset into use for the purpose for which it was acquired.

Borrowing costs, if they are directly attributable to the acquisition, construction or production of a tangible fixed asset, are capitalised as part of the cost of the asset.

According to IAS 23, capitalizable borrowing costs are those that would not have been incurred had the expenditure for that asset not been incurred.

Maintenance and repair costs are recognised directly in the income statement for the year in which they are incurred. Costs incurred after initial recognition are recognised as assets if, and only if, it is probable that the future economic benefits associated with them will flow to the enterprise and if they relate to identifiable assets or, again, if they relate to expenditures intended to extend the useful life of the assets to which they relate, or to increase their productive capacity, or even to improve the quality of the products obtained from them. If, on the other hand, these expenses are similar to maintenance costs, they will be charged to the profit and loss account as incurred.

Depreciation quotas, systematically charged to the profit and loss account, have been calculated taking into account the economic-technical life of the assets, based on the criterion of residual possibility of utilisation. If the total cost of an asset, even if used under a finance lease, is composed of one or more elements having a significant cost with respect to the total cost of the asset, these elements must be depreciated separately.

If the asset consists of several significant components with different useful lives, each component is depreciated separately ('component approach' under IAS 16). The value to be depreciated is determined as the difference be- tween the cost, as identified above, and its final realisable value, if significant and objectively determinable.

The depreciation rate estimated by the Company for the various categories of tangible fixed assets is as follows:

Plant and machinery 5 - 6 years

Equipment 5 - 8 years

Other assets 5 - 6 years

For assets that were purchased and/or entered into operation during the year, depreciation was provided on a pro- rata temporis basis, in relation to the date on which the asset entered into operation. The depreciation of decom- missioned assets was also carried out pro-rata temporis.

The residual values, useful lives and depreciation methods of property, plant and equipment are reviewed at each financial year-end and, where appropriate, adjusted prospectively.

Losses in value of non-financial assets

Pursuant to IAS 36, on the date the balance sheet is made up, the Company verifies the existence of events or circumstances that raise doubts about the recoverability of the carrying amount of finite life tangible and intangible assets.

Upon the occurrence of events that suggest a potential impairment of tangible, intangible assets, the recoverable amount of the asset is estimated and compared with its net carrying value to quantify any potential impairment.

With reference to intangible assets with an indefinite useful life or not yet available for use, this test is performed at least annually.

In line with the provisions set forth by the accounting standards, the value assessment is carried out with respect to the single asset, where possible, or to an aggregation of assets and/or activities (the so-called 'cash generating unit').

Given the size of the company, its organisational and business structure, and the absence of homogenous divisions or sub-aggregations generating independent cash inflows, the cash generating units has been identified for the whole business compendium.

The recoverable amount is determined as the higher of the net selling price and its value in use.

In determining the value in use, expected future cash flows are discounted using a pre-tax discount rate that reflects the current market estimate of the cost of money in relation to time and the specific risks of the activity. If the recoverable amount of the asset is less than its net book value, the value of the asset is reduced to its recoverable amount.

The depreciation is charged to the profit and loss account immediately, unless the asset is valued under the reval- uation method in which case the depreciation reduces the revaluation reserve.

If the reasons for impairment losses recognised in prior years no longer apply, the carrying amount of the asset (or cash-generating unit), with the exception of goodwill, is increased to the new value resulting from an estimate of its recoverable amount, but not exceeding the net carrying value that the asset would have had if the impairment loss had not been recognised.

The value restatement is allocated to the in the income statement immediately, unless the asset is measured at revalued amount (fair value), in which case the value restatement is allocated to the revaluation reserve.

Inventory

Inventories are stated at the lower of cost and net realisable value, which is the amount that an enterprise expects to receive by selling these items in the normal course of business, net of selling costs. Cost is determined using the annual weighted average costs' method.

The stock of finished goods that cannot be sold are totally depreciated.

Trade and Other Receivables

Trade and other receivables are initially recognised at fair value. Receivables whose due dates fall within normal commercial terms or which bear interest at market value are not discounted and are recorded in the balance sheet at their nominal value. In the event of significant differences between nominal value and fair value, receivables are recognised at fair value, and are subsequently measured at amortised cost, using the effective interest rate method, net of the allowance for impairment.

IFRS 9 International Financial Reporting Standards defines a new impairment/writedown model for these assets, with the aim of providing useful information to users of financial statements on the related expected losses.

According to this model, the Company evaluate the receivables by adopting an expected loss approach (Expected Loss), replacing the IAS 39 framework typically based on the assessment of observed losses (Incurred Loss).

For trade receivables, the Company adopts a simplified approach, which does not require the recognition of periodic changes in credit risk, but rather the recognition of an Expected Credit Loss ("ECL") calculated over the entire life of the receivable (so-called lifetime ECL).

In particular, the policy implemented by the company, as also required by the parent company, envisages the strat- ification of trade receivables into categories on the basis of days past due, defining the allocation based on the historical experience of credit losses, adjusted to take into account specific forecast factors referred to creditors and the economic environment. Trade receivables are fully written down in the absence of a reasonable expectation of recovery, i.e. in the presence of inactive trade counterparties.

The carrying amount of the financial asset is reduced through a dedicated fund for doubtful receivables and the amount of the loss is recognised in the income statement.

When payment of amounts due exceeds standard terms of payment granted to clients, the receivable is discounted.

Foreign Currency Transactions

Monetary assets and liabilities in foreign currencies at the date of the financial statements are translated at the ex- change rate in effect on the reporting date; Non-monetary assets and liabilities measured at the historical cost are converted at the exchange rate current on the date of transaction.

The foreign exchange differences arising upon settlement of these transactions or translation of cash assets and liabilities are recognised in the income statement.

Deferred Tax Assets and Tax Credits

The company recognises deferred or prepaid taxes on temporary differences between the values of assets and liabilities in the balance sheet and their tax values.

Deferred tax assets are provided for only to the extent that future tax burdens will probably exist, against which this asset balance can be used.

Deferred tax assets are recorded also in the presence of tax losses or tax credits carried forward, to the extent that it is probable that future taxable profit will be available.

Deferred tax assets are measured based on the tax rates that are expected to apply in the year in which such assets are realised, based on tax rates and tax laws that have been enacted or substantively enacted by the bal- ance sheet date.

The value to be carried forward of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow part or all of that asset to be utilized.

Deferred tax assets and deferred tax liabilities are offset if there is a legal right to offset current tax assets and current tax liabilities and the deferred income taxes refer to the same tax authority.

Current taxes relating to items recorded in the income statement are also recognized in in the statement of compre- hensive income and not in the separate income statement.

Tax receivables arising from periodic tax obligations for direct, indirect or other taxes are recognised at the amount expected to be recovered by applying the tax rates and regulations in place at the time the receivable was accrued.

Cash and cash equivalents

Cash and cash equivalents include cash on hand as well as on-demand and short-term bank deposits and other short term financial investments readily convertible in cash and that do not have a significant risk of a change in value.

For the purposes of the cash flow statement, cash and cash equivalents include cash and cash equivalents at banks.

Liabilities for Pensions and Employee Benefits

Employee benefits essentially include severance indemnity provision.

Defined contribution plans

A defined contribution plan is a pension plan under which the Company pays fixed contributions to a separate entity. The Company has no legal or other obligation to pay additional contributions if the fund is not sufficient to pay all employees benefits for the period of employment.

Employee contribution obligations for pensions and other benefits are charged to the profit and loss account as in- curred.

This category includes the staff severance fund instalments accrued from January 1st, 2007 allocated either to a form of supplementary pension fund or to the Treasury Fund set up at INPS.

Defined benefit plans

Net obligations related to defined benefit plans payable to employees after the period of employment in the Com- pany, consisting of staff leaving indemnity, accrued up to 31st December 2006 and subsequent revaluations, are calculated separately for each plan, by estimating, using actuarial techniques, the amount of any future benefits accrued to employees during the year and in prior years.

The benefit thus determined is discounted to present value and shown less the fair value of any related assets. The calculation is performed by an independent actuary, using the projected unit credit method.

Employee benefits in the form of share-based payments

The Company does not directly provide incentive plans in favour of its managers and employees responsible for company results or of strategic interest. Stock option plans, provided by the parent company Spectris Plc, assigned to managers and/or employees of PMS, are paid by the latter in its capacity as withholding agent.

Provisions for risks and charges

The company recognises provisions for risks and charges when:

- it must meet a current obligation (legal or implicit) deriving from a past event

- it is probable that an outflow of Group resources will be required to satisfy the obligation

- the value of the obligation can be reliably estimated.

Changes in estimates are reflected in the income statement for the period in which the change occurred.

Financial Liabilities

Financial liabilities include financial payables.

In accordance with IFRS 9, they also include trade and other payables. Financial liabilities are recognised at their nominal value, which is generally representative of their fair value.

In the event of significant differences between nominal value and fair value, payables are recognised at their fair value, and are subsequently measured at amortised cost, using the effective interest rate method with the exception of short-term loans.

After initial recognition, loans are recognised at amortised cost, calculated by applying the effective interest rate. With the introduction of IFRS 9, when the terms of a financial liability that does not qualify as the original waiver are renegotiated, the difference between (i) the carrying amount of the liability prior to modification and (ii) the pre- sent value of the cash flows of the modified debt, discounted at the original rate (IRR), is recognised in the income statement.

Deferred-tax liabilities and tax payables

Taxes reflect a realistic estimate of the tax liability for current and deferred taxes, respectively, determined by ap- plying current legislation and the one is expected to be in effect when the asset is realised or the liability is settled. Deferred tax liabilities are recognised for all taxable temporary differences existing between the values of assets and liabilities recognised in the balance sheet and the corresponding tax values.

Deferred tax liabilities are measured at the tax rates that are expected to apply in the year in which these liabilities are extinguished, considering the rates in force and those already enacted or substantively enacted at the balance sheet date.

The current tax liability is recognised in the balance sheet net of any tax prepayments.

Revenue and income

On the basis of the five-step model introduced by IFRS 15, the company recognises revenue after having identified the contracts/agreements with its customers and the related services to be rendered to (transfer of goods and/or services), determined the fees to which it believes it is entitled for the performance of each of these services, and assessed the ways in which these services will be performed (performance at a specific time versus performance over time).

In particular, the company proceeds to recognise revenue only if the following requirements are met (the so-called 'contract' identification requirements with the customer):

a) the parties of the contract have approved the contract (in writing, orally or in accordance with other custom- ary business practices) and have agreed to perform their respective obligations; there is thus an agreement between the parties that creates rights and obligations that are enforceable regardless of the form in which the agreement is manifested;

b) the company may identify the rights of each party with respect to the goods or services to be transferred;

c) the company may identify the terms of payment for the goods or services to be transferred

d) the contract has commercial substance

e) it is likely that the company will receive the payment to which it is entitled to in exchange for the goods or services to be transferred to the customer.

If the above requirements are not met, the related revenue is recognised when:

(i) the company has already transferred control of the goods and/or rendered services to the customer and all, or substantially all, of the consideration promised by the customer has been received and is non-refundable; or

(ii) the contract has been dissolved and the consideration received by the company from the customer is non- refundable.

If the above requirements are met, the company applies the recognition rules described below.

Revenues from the sale of goods and products and for services is recognised when (or as and when) control of the good/service subject to the transaction is transferred to the buyer, or when (or as and when) the customer acquires full capacity to decide on the use of the transferred asset as well as to derive substantially all the benefits from it. Revenues are stated net of discounts, including, but not limited to, sales incentive programmes and customer bo- nuses, and taxes directly related to the sale of good.

Costs

Costs are accounted for on an accrual basis and related revenues. o Costs for the purchase of goods and services

Costs and other operating expenses are recognised in the income statement when they are incurred on an accrual basis and related to revenues, when they do not produce future economic benefits or do not qualify for recognition as assets in the statement of financial position.

o Staff costs

the staff costs including costs related to leaving indemnities are recognised in the income statement on an accrual basis.

o Financial expenses

Borrowing costs are recognised as an expense in the financial year in which they accrue. With regard to borrowing costs directly attributable to the acquisition, construction or production of a tangible fixed asset, please refer to what has been specified with reference to this item in the financial statements. Borrowing costs arising from the payment of lease instalments are directly charged to the profit and loss account for the year.

Leasing

According to IFRS 16, the lessee must recognise the assets and liabilities arising from contracts in the balance sheet, without distinguishing between operating and finance leases. The new standard principle provides a new definition of a lease and introduces a criterion based on the control (right of use) of an asset to distinguish leases from contracts for services, identifying the following elements as discriminating: the identification of the asset, the right to replace the asset, the right to obtain substantially all of the economic benefits derived from the use of the asset, and the right to direct the use of the asset underlying the contract. All contracts that fall within the definition of a lease, with the exception of contracts involving assets of low unit value and leases with a contractual term of twelve months or less, must be recognised in the balance sheet as a right-of-use asset with a corresponding bal- ancing entry as a financial liability.

Income Taxes

Current income taxes for the financial year are valued at the amount expected to be recovered from or paid to the tax authorities.

The rates and regulations used for the calculation are those which have been actually or substantively enacted as of the balance sheet date.

In relation to the recognition and measurement of deferred taxes, please refer to the sections "Deferred Tax Assets" and "Deferred Tax Liabilities".

Costs, revenues, assets and liabilities are recognised net of indirect taxes, such as value added tax, with the follow- ing exceptions:

- the tax on the purchase of such goods and services. is non-deductible;

- trade receivables and payables include the applicable indirect tax.

The net amount of indirect taxes to be recovered from or paid to the Treasury is included in the balance sheet either as a receivable or as a payable.

Transactions with affiliated and related entities

Transactions with affiliated and related entities are presented in the specific sections of the Management Report and the Notes to the Financial Statements.

8. CHANGES IN ACCOUNTING PRINCIPLE AND DISCLOSURES

Accounting standards, amendments and interpretations applicable to the financial statements as at 31 De- cember 2021

A brief description of the accounting standards, amendments and interpretations applicable to the financial state- ments for the year ended December 31st, 2022, is provided below.

Standards, amendments and interpretations that cannot be adopted by the company are excluded from the list. Accounting standards, amendments and interpretations applicable with effect from 1 January 2021.

Accounting standards, amendments and interpretations applicable with effect from January 1st, 2022: On May 14th, 2020, the IASB published the following amendments:

 Amendments to IFRS 3 Business Combinations. The amendments have the aim of updating the reference contained in the IFRS 3 to the Conceptual Framework in the review version, without this leading to changes in the IFRS 3 provisions.

 Amendments to IAS 16 Property, Plant and Equipment. The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss.

 Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The amendment clarifies that in the estimate of the onerous contract, costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.

 Annual Improvements 2018-2020. The amendments have been made on the IFRS 1 – First-time Adoption of International Financial Reporting Standards, to the IFRS 9 – Financial Instruments, to the IAS 41 – Agriculture and to the Illustrative Examples of the IFRS 16 – Leases.

IFRS accounting standards, amendments and interpretations not yet applicable and not early adopted

At the date of this document, the following new standards, amendments and interpretations have been issued that have not yet become effective:

 On May 18th, 2017, the IASB published IFRS 17 - Insurance Contracts (and subsequently, on 28 June 2020, the Amendments to IFRS 17) which is intended to replace IFRS 4 - Insurance Contracts. The purpose of this standard is to introduce an internationally consistent approach to accounting for insurance contracts. The stand- ard will apply as of 1 January 2023.

 On January 23rd, 2020, the IASB published an amendment entitled “Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current”. The document aims to clarify how to classify payables and other short-term or long-term liabilities. The amendments come into force on 1 January 2023.

 On February 12th, 2021, the IASB issued amendments to IAS 1 with a document entitled “Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting poli- cies” which change the disclosure requirements for accounting policies from “significant accounting policies” to “significant accounting policy disclosures”. The amendments provide guidance on when disclosures about ac- counting policies are likely to be considered significant. The amendments to IAS 1 are effective for annual periods beginning on or after 1 January 2023.

 On February 12th, 2021, the IASB issued amendments to IAS 8 with a document entitled “Amendments to IAS 8 Accounting policies, Changes in Accounting Estimate and Errors: Definition of Accounting Estimates”, which added the definition of Accounting Estimates in IAS 8 clarifying the difference between “changes in ac- counting estimates” and “changes in accounting standards”. The amendments also clarified that the effects of a change in an input or valuation technique are changes in accounting estimates unless they result from the cor- rection of prior period errors. The amendments introduced are relevant since changes in accounting estimates are applied with the perspective method to future transactions and other future events, while changes in account- ing standards are generally applied also with the retrospective method to past transactions and other past events. The amendments to IAS 8 will be effective as of 1 January 2023.

 On May 7th 2021, the IASB issued amendments to IAS 12 with a document entitled “Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction”, which clarify whether the exemption for initial recognition applies to certain transactions involving the simultaneous recognition of both an asset and a liability (e.g. a lease within the scope of IFRS 16). The amendments introduce an additional criterion for the exemption from initial recognition in IAS 12.15, whereby the exemption does not apply to the initial recognition of an asset or liability that, at the time of the transaction, gives rise to equal taxable and deductible temporary differences. The amendments to IAS 12 will be effective as of January 1st 2023.

Any impacts resulting from these new standards, amendments and interpretations are not expected to be material on the company's financial statements. Standards, amendments and interpretations that by their nature cannot be adopted by the company are excluded from the list.

9. EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS

NON-CURRENT ASSETS

9.1 Intangible assets

Details of intangible assets and changes during the year are summarised in the following table:

	Movimentazione costo storico
Description	Cost at 1/1/2022	Increases	Decreases	Cost at 31/12/2022	NBV 2021	NBV 2022
Software Improvements to third party assets	228.004 50.816	10.197 -	- -	238.201 50.816	16.791 17.735	15.764 7.760
Other Assets from IFRS 16	1.478.970	50.224	77.932	1.451.262	672.247	407.806
Total	1.757.790	60.421	77.932	1.740.280	706.773	431.330

	Movimentazione fondo ammortamento
Description	Fund as at 1/1/2021	Amortization	Uses	Fund as at 31/12/2021
Software	211.213	11.224,11	-	222.437
Improvements to third	33.081	9.974,88	-	43.056
Other Assets from IFRS 16	806.724	291.370	54.638	1.043.456
Total	1.051.018	312.569	54.638	1.308.949

According to IFRS16, Lease agreements in application of IFRS 16 are not considered as transfer of ownership and are treated as intangible assets.

More specifically, the value as of 31 December 2022 of € 407,806 refers for € 228,000 to leased offices and for € 179,806 to cars. Please note that, pursuant IFRS 16, the capitalized cost of leased equipment has been fully depre- ciated on December 31 th 2022.

9.2 Tangible assets

The breakdown of tangible assets and changes during the year are shown in the following table.

	Movement of purchase cost
Description	Cost at 1/1/2022	Increases	Decreases	Riclassifica- tion	Cost at 31/12/2022	NBV 2021	NBV 2022
Plant and machinery	445.690	14.700	-	-	460.390	177.771	55.098
Equipment	622.162	74.492	3.230	-	693.424	72.448	118.676
Other fixed assets	201.368	20.184	-	-	221.552	48.678	47.596
Accounts on other tangi- ble assetes	1.500	-	1.500	-	-	1.500	-
Total	1.270.720	109.375	4.730	-	1.375.365	300.897	321.369

	Movement of the amortization fund
Description	Fund as at 1/1/2022	Amortization	Uses	Riclassifica- tion	Fund as at 31/12/2022
Plant and machinery	267.919	37.373	-	-	305.292
Equipment	549.715	28.263	3.230	-	574.748
Other fixed assets	152.690	21.266	-	-	173.956
Total	970.324	86.902	3.230	-	1.053.996

9.3 Non-current deferred tax assets

The balance of deferred tax assets prepaid taxes due beyond the year is shown below.

Prepaid tax assets 2022 2021 Variation

Deffered tax assets	237.851	255.371	(17.520)
Total	237.851	255.371	(17.520)

The balance of deferred tax assets is summarised below:

Description	2021	Accrual	Utilization	2022
Goodwill	88.484	-	14.748	73.736
Material activities	8.234	3.467	37	11.664
Depreciation of inventories	39.995	9.460	-	49.455
Provision for write-downs	60.679	-	-	60.679
Employee bonuses	122.788	134.368	122.788	134.368
Maintenance	1.680	-	491	1.189
Losses on unrealised foreign exchange	175	-	34	141
Profit on unrealised foreign exchange	(126)	-	(1.378)	(1.504)
IAS 19	24.827	-	15.171	9.656
IAS 19 on FTA reserve	46.710	-	-	46.710
Totale	393.446	147.295	151.891	386.094

Beyond the financial year:

Description	2022	2021
Goodwill	58.990	73.738
Material activities	11.664	8.234
Depreciation of inventories	49.455	39.995
Provision for write-downs	60.679	60.679
Maintenance	697	1.188
IAS 19	9.656	24.827
IAS 19 on FTA reserve	46.710	46.710
Total	237.851	255.371

9.4 Other non current assets

Other non-current assets	2022	2021	Variation
Deposits on immovable property	34.532	34.532	-
Total	34.532	34.532	-

9.5 Inventories

The following table summarises the breakdown of inventories:

Inventory	2022	2021	Variation
Finished products and goods Inventory depreciation fund	951.135 (206.064)	1.056.677 (166.647)	(105.542) (39.417)
Total	745.071	890.030	(144.959)

9.6 Financial assets available for sale

Financial assets available for sale	2022	2021	Variation
Financial assets available for sale	197.889	197.889	0
Totale	197.889	197.889	0

With regard to the above financial activities, it should be noted that the entire value comes from a bankruptcy pro- cedure (composition with creditors) involving the client Corden Pharma Latina Spa (CPL Spa), more in detail:

PMS srl has a receivable to CPL Spa of € 272,209, for which a provision of the same amount had already been accrued. In April 2021 the Italian Court has published the decree of approval relating CPL restructuring plan in which it has been decided the issuance of participatory financial instruments to repay creditors. The first tranche of these instruments that has been assigned to PMS Srl is valued € 197,889.

9.7 Trade receivables

Trade receivables consist of receivables from customers and Group companies and are stated in the balance sheet net of the allowance for doubtful accounts, as shown in the table below.

Trade credits	2022	2021	Variation
Trade receivables	4.448.805	3.930.284	518.521
Intercompany credits	1.004.485	421.573	582.912
Bad debt fund	(278.664)	(278.664)	-
Total	5.174.627	4.073.194	1.101.433

Movements in the provision for doubtful accounts are shown in the following table:

Bad debt fund	Amount
Balance at 31/12/2020	280.002
Uses	1.339
Balance at 31/12/2021	278.664
Uses	0
Balance at 31/12/2022	278.664

The amount of the bad debt funds represents the reasonable estimate of the possible loss identified in the face of the specific risk of bad debt recorded in the financial statements.

It should be noted that the provision allocated in the financial statements as at 31st December 2022 equal to Euro 278,664 is considered adequate to cover the collectability risks of outstanding receivables.

9.8 Current deferred tax assets

The balance of deferred tax assets within the year is shown below.

Deferred tax assets	2022	2021	Delta
Prepaid tax assets	148.243	138.075	10.168
Total	148.243	138.075	10.168

Details of the deferred tax asset are summarised below.

Descrizione	2022	2021
Goodwill	14.747	14.747

Bonus employees Maintenace Forex	134.368 491 (1.363)	122.788 491 49
Total	148.243	138.075

9.9 Tax receivables

Tax receivables are broken down as follows:

Tax receivables	2022	2021	Variation
Receivable VAT	202.713	656.454	(453.741)
Receivable foreign VAT	138.724	-	138.724
Tax recevaible on investments ex L 178/2021	23.181	18.523	4.658
Foreign tax	118.757	-	118.757
Receivable IRES	-	265.519	(265.519)
Totale	483.374	940.496	(457.122)

9.10 Other current assets

Other current assets are broken down as follows:

Other current assets	2022	2021	Variation
Credits - cash pooling	5.385.999	5.202.597	183.402
Advances to suppliers	271.314	50.381	220.933
Prepayments	11.461	13.065	-
Miscellaneous claims	7.741	2.595	5.146
Total	5.676.515	5.268.638	407.877

9.11 Cash and cash equivalents

Cash and cash equivalents amount to € 151,257 as summarised below:

Cash and equivalents	2022	2021	Variation
Bank accounts Cash on hand	151.067 190	99.108 60	51.959 130
Total	151.257	99.168	52.089

These items include balances on current accounts held with banks and cash in the company's cash funds. For a description of the changes in this class of values, please refer to the cash flow statement.

9.12 Shareholders’ Equity

As at 31st December 2022, the Company's share capital, fully subscribed and paid-up by the sole shareholder Spec- tris Plc, amounted to € 20,000.

Please refer to the statement of changes in shareholders' equity as at 31st December 2022 and 31 December 2021 for details.

The following table shows the changes that occurred in the item Other reserves.

Description	2021	Increases	Decreases	2022
Legal reserve	4.000	-	-	4.000
Reservation under IFRS 9	150.194	-	-	150.194
Reservation under IFRS 16	(13.894)	-	-	(13.894)
Provision from IAS 19	(226.534)	48.040	-	(178.494)
Translation reserve	14	10	-	24
Forex exchange reserve	6.369	-	6.369	-
Retained earnings	6.141.266	1.139.338	-	7.280.604
Totale	6.061.415	1.187.388	6.369	7.242.434

The profit of the previous year, equal to Euro 1,132,988, was completely carried forward as decided by the Share- holders' Meeting on June 27th, 2022.

Please note that the “Forex exchange reserve”, equal to Euro 6,369, has been transferred to the retained earnings, since they regard realised forex exchange earnings in the course of the year closed by December 31st, 2022.

The table below shows the shareholders’ equity items broken down by origin, availability for use and distribution:

Descrizione	Importo	Possibilità di utilizzo (*)	Quota disponibile	Quota non distribuibile
Share Capital	20.000	A	-	20.000
Legal reserve	4.000	A, B	4.000	4.000
Reservation under IFRS 9	150.194	A, B	150.194	150.194
Reservation under IFRS 16	(13.894)		-	-
Provision from IAS 19	(226.534)		-	-
Translation reserve	24	A, B	24	24
Forex exchange reserve	-	A, B	-	-
Retained earnings	7.280.604	A, B, C	7.280.604	-
Profit	900.114	A, B, C	900.114	-
Totale	8.162.548		8.334.936	174.218

(*) A: capital increase, B: loss allowance, C: for distribution to shareholders.

9.13 Employees' severance indemnity

The movements in the provision for staff leaving indemnity at the end of the year is shown in the table below:

Movement of the Present Value of the obligation
Defined Benefit Obligation at 31/12/2021	877.027
Cost for services	85.018
Financial expenses	(3.722)
Actuarial (profit)/loss	(63.211)
Balance movements of the fund	(5.731)
Defined Benefit Obligation at 31/12/2022	889.380

The accrued cost attributable to the present year was charged to the income statement in the item “Personnel costs”.

The valuations were carried out with the support of an independent actuary in accordance with IAS 19. The main assumptions adopted are summarised in the following tables.

Financial and economic assumptions

Discount rate Curva Eur Composite AA at 30.11.2022

Deadlines (years)	Rate
1	3,013%
2	3,354%
3	3,443%
4	3,499%
5	3,542%
7	3,642%
8	3,685%
9	3,712%
10	3,740%
15	3,860%

Rate of inflation European curve Zero-Coupon In- flation-Indexed Swap at 30.11.2022

Deadlines (years)	Rate
1	4,525%
2	3,414%
3	3,047%
4	2,866%
5	2,735%
6	2,656%
7	2,605%
8	2,565%
9	2,559%
10	2,550%
12	2,556%
15	2,577%
20	2,539%
25	2,563%
30	2,588%

Expected rate of wage increase (including inflation)	2,74%
Percentage of severance pay claimed in advance	70,00%

Demographic assumptions

Minimum requirements for retirement	According to the latest legislative provisions
Mortality tables	SI 2019
Annual Average Staff Leaving Rate*	10,69%
Annual probability of advance request	2,00%

* calculated for any cause of elimination, in the first ten years following the assessment

The sensitivity analysis of the main valuation parameter is shown below, showing the effects (in absolute value) that would have occurred as a result of changes in actuarial assumptions that were reasonably possible at that date:

Sensitivity analysis	Sensitivity	TREATMENT OF TERMINATION OF EMPLOYMENT New DBO
Discount rate	+1,00%	828.894
	-1,00%	920.123

It should be noted that the weighted average duration of the obligation of the defined benefit plan as of 31st Decem- ber 2022 is approximately ten years.

Disbursements under the plan are summarised below:

Expected payments	TREATMENT OF TERMINATION OF EMPLOYMENT
Expected payments at 31.12.2023	102.741
Expected payments at 31.12.2024	106.448
Expected payments at 31.12.2025	108.420
Expected payments at 31.12.2026	109.665
Expected payments at 31.12.2027	110.107
Expected payments from 1.01.2028 at 31.12.2032	568.762

9.14 Other non current payables

Other non-current liabilities	2022	2021	Variation
Liabilities from IFRS 16	169.592	428.403	(258.811)
Total	169.592	428.403	(258.811)

In accordance with IFRS 16, leasing contracts are not considered as transfer of ownership and are treated as intan- gible assets.

The liability quantified on the basis of the current value of the payments defined contractually with the supplier over time for a total amount of Euro 449,311, of which Euro 169,592 is for amounts with a duration of more than one year. Non-current payables under IFRS 16 with residual duration of more than 5 years are equal to zero.

It should be noted that the total amount of Euro 449,311 refers for Euro 265,771 to leased offices and Euro 183,540 to cars.

9.15 Bank payable

Bank payable	2022	2021	Variation
Bank Payable	164	1.053	(889)
Totale	164	1.053	(889)

9.16 Trade payables

The following table summarises the balance of trade payables:

Trade liabilities	2022	2021	Variation
Trade payables	941.431	1.107.729	(166.298)

Group companies liabilities	1.206.267	1.195.857	10.410
Total	2.147.698	2.303.586	(155.888)

9.17 Tax payables

Tax payables are summarised below:

Tax payable	2022	2021	Variation
IRES	259.678	-	259.678
IRAP	1.936	39.159	(37.223)
Foreign tax	-	158.277	(158.277)
WHT on employees	85.546	195.528	(109.982)
WHT on professionals	3.308	2.663	(645)
Other WHT and VAT	-	56.768	(56.768)
Total	350.468	452.396	(101.928)

9.18 Other current payables

Other current liabilities	2022	2021	Variation
Debts to employees	1.005.867	845.980	159.887
Amounts owed to social security institutions	288.369	254.597	33.772
Accruals and deferred income	308.253	228.877	79.376
Liabilities from IFRS 16	279.719	298.240	- 18.521
Total	1.882.208	1.627.695	254.513

9.19 Revenues

Revenues are detailed below:

Income	2022	2021	Variation
Income	16.441.386	15.055.344	1.386.042
Total	16.441.386	15.055.344	1.386.042

The breakdown of revenues by geographic area shows revenues to Italy of 9,139,308 (equal to € 8,347,859 in FY2021), to intra-EU countries of € 6,242,042 (equal to € 4,977,621 in FY2021) and Revenue from non-EU countries equal to € 880,036 (equal to € 1,729,864 in FY2021).

9.20 Other revenues and income

Other revenue and income	2022	2021	Variation
Recharge to Group companies Other income	1.433.517 528.368	1.157.778 453.066	275.739 70.307
Total	1.961.885	1.610.844	346.046

9.21 Costs of raw materials, supplies and goods

This item is broken down as follows:

Cost of raw materials, consumables and goods	2022	2021	Variation
Purchases of goods	8.901.549	7.893.952	1.007.597
Other purchases	199.292	158.719	40.573
Purchases of instruments	99.718	61.338	38.380
Packing and other costs	338.282	286.625	51.657
Laboratory materials	207.104	211.782	(4.678)
Total	9.745.945	8.612.416	1.133.529

The item Purchase of goods, amounting to €8,901,549, includes costs for the purchase of products from other Group entities (mainly from PMS Inc. - USA). In particular, this item includes the amounts related to the allocation of indirect product costs (so-called 'Overheads') and general and administrative costs related to the purchase of these prod- ucts.

9.22 Changes in inventories

Changes in inventories of goods are summarised in the following table:

Change in inventories	2022	2021	Variation
Change in invetories of goods	144.959	211.727	-66.768
Total	144.959	211.727	-66.768

9.23 Costs for services

This item breaks down as follows:

Costs for services	2022	2021	Variation
Consulting	353.206	355.439	(2.233)
Travel expenses, hotels and restaurants	233.705	85.419	148.286
External processing, calibration services, assistance	6.263	9.596	(3.333)
Freight	270.610	271.044	(434)
Utilities	98.382	96.257	2.125
Maintenance and repair work	190.784	131.556	59.228
Advertising and promotions	43.193	23.814	19.379
Insurances	17.576	16.280	1.296
Other costs for services	211.933	144.472	67.461
Total	1.425.652	1.133.877	291.775

9.24 Personnel costs

This item breaks down as follows:

Costi per il personale	2022	2021	Variation
Wages and salaries	3.527.438	3.655.738	(128.300)
Social security contributions	984.098	986.766	(2.668)
Severance pay	251.893	182.359	69.534

Other costs for staff	84.081	90.850	(6.769)
Totale	4.847.510	4.915.713	(68.203)

The exact number of employees of the Company is shown below:

Employees	2022	2021
Executives	1	-
Executives and employees	55	52
Workmen	4	4
Total	60	56

9.25 Financial expenses and income

This item breaks down as follows:

Financial income and expenses	2022	2021	Variation
Inter-company interest expense	-	45	(45)
Other financial charges	6.266	2.397	3.869
Interest Payable from IFRS 16	24.520	33.001	(8.481)
Total charges	30.786	35.443	(4.657)
Inter-company interest income	20.581	-	20.581
IAS 19 interest	3.722	3.826	(104)
Total proceeds	24.303	3.826	20.477
Foreign exchange gains and losses	(126.367)	(31.362)	(95.005)
Total	(132.850)	62.979	(195.829)

9.26 Taxes

Imposte dell'esercizio	2022	2021	Variation
Current tax	629.249	481.918	147.331
Deferred tax	(7.818)	(17.060)	9.242
Tax of the previous year	(2.323)	19.305	(21.628)
Totale	619.108	484.163	134.945

With reference to deferred tax assets, please refer to the detail reported in the section on Assets - Deferred Tax Assets.

Remuneration due, in general, to Members of the Board of Directors and the Control Body

The directors did not receive any remuneration.

The annual fee payable to the audit firm is equal to Euro 15,000, as established by the Shareholder meeting dated June 27th 2022, with which the charge was conferred for the three year period 2022-2024.

SUPPLEMENTARY INFORMATION: RISK MANAGEMENT ON FINANCIAL INSTRUMENTS (IFRS 7)

IFRS 7 requires disclosures concerning:

(a) the significance of financial instruments with respect to the entity's financial position and financial perfor- xxxxx,

(b) the nature and extent of risks arising from financial instruments to which an entity is exposed during the period and at the balance sheet date, and how the entity manages those risks.

The purpose of IFRS 7 is to complement the disclosure obligations that apply to financial assets and financial liabil- ities required by IAS 32 and IFRS 9.

It should be noted that the financial assets in the asset items consist solely of trade receivables, while with regard to the liability items, the Company has no complex financial transactions nor the use of derivative instruments Additional information required is described below.

a) Credit Risk

Credit risk essentially arises from trade receivables. Most of the Company's receivables are due from third parties of proven commercial and financial reliability. In fact, the Company has put in place procedures to ensure that products’ sales are made to customers proven to be reliable in the past. In addition, the Company constantly controls its commercial exposure and monitors the collection of receivables within the pre-established contractual deadlines.

The amount of financial assets deemed to be of doubtful recoverability is not significant and is in any case covered by appropriate allocations to the provision for bad debts.

The breakdown of outstanding trade receivables as at 31 December 2022 is shown below:

Expiration range	Italy	Belgium	Denmark	Total	Inc. %
Credit to expire	2.936.645	406.055	209.487	3.552.187	80%
Expired credits	434.359	455.796	7.576	897.730	20%
from 0 to 30 giorni	186.205	128.711	7.576	322.492	7%
from 31 to 60 giorni	135.356	271.051		406.407	9%
from 61 to 90 giorni	5.292	71.615		76.906	2%
from 91 to 120 giorni	30.363	4.493		34.856	1%
from over 120 giorni	77.143	-20.074		57.069	1%
Grand total	3.371.004	861.850	217.063	4.449.917	100%

In accordance with the requirements of IFRS 7 paragraph 36, the the first three customers in terms of exposure as at 31 December 2022 are shown below:

Client	Importo
I.M.A. Industria Macchine Automatiche SPA	401.116
BSP Pharmaceuticals S.p.A.	263.003
Corden Pharma Latina Spa	108.087
Total	772.206

b) Financial and liquidity risk

Liquidity risk represents the risk that financial resources available in the short term may not be sufficient to cover maturing obligations arising from the normal cycle of operations and investments made.

Moreover, the Company has no financial transactions in place involving the use of derivatives. Below is the liquidity schedule pursuant to IFRS 7, paragraph 39.

Amounts at Dicember 31st 2022

Description	Amount	Exp < 1 year	Exp > 1 year	Exp > 5 years
Bank payable	164	164	-	-
Commercial payable	2.147.698	2.147.698	-	-
Tax payable	350.468	350.468	-	-
Financial Payable	-	-	-	-
Other payable	2.051.800	1.882.208	169.592	-
Total	4.550.130	4.380.538	169.592	-

Amounts at Dicember 31st 2021

Description	Amount	Exp < 1 year	Exp > 1 year	Exp > 5 years
Bank payable	1.053	1.053	-	-
Commercial payable	2.303.586	2.303.586	-	-
Tax payable	452.396	452.396	-	-
Financial Payable	-	-	-	-
Other payable	2.056.097	1.627.695	428.403	-
Total	4.813.133	4.384.730	428.403	-

Fair value

The table below compares, by individual class, the carrying amount and fair value of the financial instruments held by the Company:

	Book value		Fair Value
Financial asset	31/12/2022	31/12/2021	31/12/2022	31/12/2021
Cash	151.067 197.889	99.108 197.889	151.067 197.889	99.108 197.889
Financial assets available for sale
Totale attività finanziarie	348.955	296.997	348.955	296.997

The Company has a cash pooling agreement in place with its parent company Spectris Plc which, it is believed, will not result in any criticality on the Company's liquidity in the short -medium term.

c) Market risk

There are three types of risk arising from the fluctuation of a financial instrument’s future cash flows:

 Interest rate risk

 Exchange rate risk

 Price risk

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate due to changes in market interest rates. In the period under review, The Company has operated a cash pooling structure with the Parent Company and the exposure to interest rate risk is limited to the correspondent current account only.

Foreign Currency Risk

The foreign currency transaction risk, as defined by IFRS 7, arises from fluctuations in the exchange rates of mon- etary assets and liabilities denominated in foreign currencies. The Company is internationally active and is therefore exposed to exchange rate risk arising from the different currencies in which it operates (mainly Danish krone).

Price risk

The main price risk is identified in the risk of price changes in products being marketed and raw materials. In order to monitor this risk, the company pays special attention to procurement policies, including inventory management, commercial policies towards customers and optimisation of fixed costs.

Other Risks

All legal provisions for personnel safety are implemented and all production departments and warehouses are ade- quately protected by fire-fighting systems, which are constantly updated and maintained.

It is not considered relevant to provide the information on the concentration of risks, required by IFRS 7.B 8., given that the financial assets essentially consist of trade receivables, adequately fractioned, and tax receivables for which the recoverability is not in doubt, also by offsetting with tax liabilities.

d) Capital risk

The Company's objective in managing capital risk is primarily to safeguard business continuity so as to ensure returns to shareholders and benefits to other stakeholders. The Company also aims at maintaining an optimal capital structure in order to reduce the cost of debt.

Significant non-recurring events and transactions after the year-end and before the approval of the financial statements (IAS 10)

No significant events occurred after the end of the financial year and before the approval of the financial statements.

Any atypical and/or unusual transactions

The Company did not enter into any atypical and/or unusual transactions. The following section on management and coordination activities pursuant to Article 2497-bis of the Italian Civil Code summarises the transactions carried out with related parties.

Commitments and guarantees

It is noted that on December 31st, 2022, a bank guarantee was issued by HSBC Continental Europe, Italy in favour of the customer Fidia Farmaceutici Spa for an amount equal to Euro 18,000. This guarantee expires on December 21st, 2024.

The previous bank guarantee issued by HSBC Continental Europe, Italy in favour of the customer Fidia Farmaceutici Spa dated August 17th, 2021, expires on July 31st, 2022.

MANAGEMENT AND COORDINATION ACTIVITIES

In compliance with the requirements of Article 2497-bis, paragraph 4, it is reported that the Company's management and coordination activities are exercised by the parent company Spectris PLC, the parent company under British law based in Egham - United Kingdom

Below are the key balance sheet figures as at December 31st 2022, also prepared in accordance with international accounting standards.

Consolidated Income Statement	£m
	2022	2021 restated	2021
Revenue	1.327,4	1.163,0	1.292,0
Cost of sales	(576,6)	(487,5)	(553,2)
Gross profit	750,8	675,5	738,8
Indirect production and engineering expenses	(114,1)	(92,6)	(95,9)
Sales and marketing expenses	(233,0)	(222,2)	(242,1)
Administrative expenses	(231,1)	(220,8)	245,9
Adjusted operating profit	222,4	189,6	209,4
Restructuring cost		(10,2)	(10,2)
Net transaction-related costs and fair value adjustments	(8,3)	(19,0)	(19,5)
Depreciation of acquisition-related fair value adj. to property, plant and equipment	(0,2)	(0,2)	(0,2)
Configuration and customization costs carried out by third parties on material SaaS projects	(21,7)	(7,0)	(5,2)
Profit on disposal of property	-	-	-
Impariment of goodwill	-	-	-
Amortisation and impairment of acquisition-related intangible assets	(19,6)	(13,3)	(19,4)
Operating profit	172,6	139,9	(154,9)
Fair value through profit and loss movements on equity investments	-	-	-
Share of post-tax result of joint venture	-	-	-
Fair value through profit and loss movements on debt investments	(4,1)	-	-
Impairment of non-current receivable from joint venture	-	-	-
Profit on disposal of businesses	0,3	226,5	226,5
Financial income	1,9	12,8	12,8
Finance costs	(19,2)	(5,4)	(5,6)
Profit before tax	151,5	(373,8)	(388,6)
Taxation change	(36,7)	(38,2)	(41,7)
Profit for the year from continuing operations attributable to owners of the Company	114,8	335,6	346,9
Basic earnings per share Interim dividend paid and final dividend proposed for the year (per share)	373,1	305,1p	305,1p
	75,4	71,8p	71,8p

TRANSACTIONS WITH RELATED PARTIES (IAS 24)

The following table shows the balance sheet figures with related parties as at December 31st 2022 and the economic effects of related party transactions during the years ended 31 December 2022.

It should be noted that relations with Spectris PLC refer to a cash pooling agreement for the management of cash relations between the two companies, which as of 31 December 2022 showed a credit balance of € 5,385,999.26. The Company also has relations with other companies in the Spectris PLC group. It should be noted that transac- tions with related parties take place at normal market conditions.

PMS ITALIA	PMS Inc. US	PMS Belgio	PMS Danimarca	PMS Gmbh	CAS Clean Air Ser- vice AG – PMS Svizzera	PMS Japan	Spectris Shanghai	Spectris Taiwan	Zhuhai OMEC In- struments Co. LTD Cina	TOTAL
Credits	722.195	74.275	17.026	63.161	80.542	1.854	8.269	1.980	-	969.301
Liabilities	646.368	-	170	9.874	-	-	-	-	-	656.412
Income	1.955.245	230.348	47.309	119.981	172.281	96.143	27.848	73.422	-	2.722.578
Costs	3.378.812	-	2.720	42.831	-	-	-	-	20.343	3.444.705

PMS Belgio	PMS Inc. US	PMS Danimarca	PMS Italia	CAS Clean Air Service AG - PMS Svizzera	PMS Gmbh	Malvern Pa- nalytical SAS	TOTAL
Credits	16.595	-	-	10.859	-	-	27.454
Liabilities	285.328	341	74.275	-	17.351	80.096	457.391
Income	34.439	-	-	25.037	-	-	59.476
Costs	2.011.595	2.283	230.348	-	48.887	552.062	2.845.174

PMS Danimarca	PMS Inc. US	PMS Belgio	PMS italia	CAS Clean Air Service AG - PMS Svizzera	PMS Gmbh	TOTALE
Credits	-	341	170	6.899	321	7.731
Liabilities	75.437	-	17.026	-	-	92.463
Income	-	2.283	2.720	12.215	2.150	19.367
Costs	899.736	-	47.290	-	-	947.026

Proposed allocation of net income for the year

Dear Shareholders, in light of the above, the board of directors proposes to allocate the profit for the FY2022, equal to Euro 900,114.46, as follows:

 For an amount equal to 894,442.28 to the retained earnings reserve;

 For an amount equal to 5,672.18 to the reserve for forex gains.

Conclusions

The Managing Director, under IAS 1, declares that the above-mentioned financial statements fully comply with all international accounting standards in force at the time of its preparation.

Frascati, June 15th 2023

The Managing Director

Dott. Xxxxxx Xxxxxxx

PARTICLE MEASURING SYSTEMS S.R.L.

FINANCIAL STATEMENTS AS AT 31 DECEMBER 2022 INDEPENDENT AUDITOR’S REPORT IN ACCORDANCE WITH ARTICLE

14 OF LEGISLATIVE DECREE NO. 39 OF 27 JANUARY 2010

05 JULY 2023

This is an English translation of the original Italian document. In the event of any inconsistency or discrepancy between the Italian and the English version, the Italian original document shall prevail.

Independent auditor’s report in accordance with article 14 of Legislative decree no. 39 of 27 January 2010

To the Sole Quotaholder of Particle Measuring Systems S.r.l.

Report on the audit of the financial statements

Opinion

We carried out the audit of the financial statements of the company Particle Measuring Systems S.r.l. (the Company), consisting of the statement of financial position as at 31 December 2022, the comprehensive income statement, the statement of changes in equity, the cash flow statement for the year ended on that date and the notes to the financial statements which also include a summary of the most significant accounting principles adopted.

In our opinion the financial statements provide a true and fair view of the equity and financial situation of the company Particle Measuring Systems S.r.l. as at 31 December 2022, of the economic result and cash flows for the year ended on that date in compliance with the International Financial Reporting Standards adopted by the European Union.

Basis for opinion

We performed the audit in accordance with international auditing standards (ISA Italia). Our responsibilities under these standards are further described in the Responsibilities of the Auditing Firm for the Audit of the Financial Statements section of this report. We are independent from the Company in accordance with the rules and principles on ethics and independence applicable in the Italian legal system to the auditing of the financial statements. We believe we have acquired sufficient and appropriate audit evidence on which to base our

opinion.

Other matters – Comparative information

The Company's financial statements for the year ended 31 December 2021 were audited by another auditor who, on 23 June 2022, issued an unqualified opinion on these financial statements.

Other matters – Management and coordination activity

The Company, as required by law, has included in the notes to the financial statements main data of the latest financial statements of the company that exercises management and coordination over it. The opinion on the financial statements of Particle Measuring Systems S.r.l. does not extend to such data.

Responsibility of the Board of Directors on the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with the Italian regulations governing their preparation and, in accordance with the Italian law, for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The directors are responsible for assessing the company’s ability to continue as a going concern and for the appropriate use of the going concern basis in the preparation of the financial statements and for the related disclosures. The use of this basis of accounting is appropriate unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Independent auditors’ responsibilities for the audit of the financial statements

The objectives of our audit are to obtain reasonable assurance about whether the 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 a guarantee that an audit conducted in accordance with ISA Italia will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISA Italia, we exercise professional judgement and maintain professional scepticism throughout the planning and performance of the audit. We also:

- identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

- obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control;

- evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors;

- conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, then we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the company to cease to continue as a going concern;

- evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

Report on other legal and regulatory provisions

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

The directors of Particle Measuring Systems S.r.l. are responsible for the preparation of the directors’ report of Particle Measuring Systems S.r.l. as at and for the year then ended 31 December 2022, including the consistency with the financial statements and the compliance with the applicable laws.

We have been performed the procedures required by the Italian Standard on Auditing (SA Italia)

n. 720B in order to express an opinion on the consistency of the directors’ report with the financial statements of Particle Measuring Systems S.r.l. as at and for the year then ended 31

December 2022 and on the compliance of the same with the law, as well as to issue a declaration on any significant errors.

In our opinion the directors’ report is consistent with the financial statements of Particle Measuring Systems S.r.l. as of and for the year ended 31 December 2022 and is prepared in compliance with the applicable laws.

With reference to the declaration pursuant to art. 14, paragraph 2, letter e), of Legislative Decree 39/10, issued on the basis of the knowledge and understanding of the company and its context acquired during the audit, we have nothing to report.

Milan, 5 July 2023

RSM Società di Revisione e Organizzazione Contabile S.p.A.

Xxxx X’Xxxxxxxx (Partner)

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