Form 8-K/A Manitex International, For: Jan 15

Form 8-K/A Manitex International, For: Jan 15

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March 26, 2015 4:49 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of the earliest event reported) January 15, 2015

MANITEX INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

Michigan

001-32401

42-1628978

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


9725 Industrial Drive, Bridgeview, Illinois				60455
(Address of Principal Executive Offices)				(Zip Code)

(708) 430-7500

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

This Amendment No. 1 on Form 8-K/A amends and supplements the Current Report on Form 8-K of Manitex International, Inc. a Michigan corporation (the “Registrant”), filed with the Securities and Exchange Commission (the “Commission”) on January 21, 2015 (the “Initial Form 8-K”) to include financial statements and pro forma financial information permitted pursuant to Item 9.01 of Form 8-K to be excluded from the Initial Form 8-K and filed by amendment to the Initial Form 8-K no later than 71 days after the date on which the Initial Form 8-K was required to be filed. As previously reported in the Initial Form 8-K, effective as of January 15, 2015 the Registrant completed the purchase of PM Group on January 15, 2015.

Item 9.01

Financial Statement Exhibits

(a)	Financial Statement of Business Acquired

Audited financial statements of the PM Group for the year ended December 31, 2013 that include audited statements of financial position as of December 31, 2013 and 2012, and consolidated statements of income, consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the years ended December 31, 2013, 2012 and 2011 and the related Independent Auditors Report thereon are included as Exhibit 99.1 to this Current Report on Form 8-K/A and are incorporated herein by reference.

Unaudited interim financial statements of PM Group for the nine month period ended September 30, 2014 that include unaudited condensed consolidated statements of financial position as of September 30, 2014 and December 31, 2013 and condensed consolidated unaudited statements of income, unaudited condensed consolidated statements of comprehensive income, unaudited condensed consolidated statements of changes in equity and unaudited statements of cash flows for the nine month periods ended September 30, 2014 and 2013 are included as Exhibit 99.2 to this Current Report on Form 8-K/A and are incorporated herein by reference.

(b)	Pro Forma Financial Information

The Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013, the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014, the Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine month period ended September 30, 2014, and the notes to the Unaudited Pro Forma Condensed Consolidated Financial Information of Manitex are included as Exhibit 99.3 to this Current Report on Form 8-K/A and are incorporated herein by reference.

(c)	Exhibit Index


23.1		Consent of Deloitte & Touche S.p.A.

99.1		Audited financial statements of PM Group for the year ended December 31, 2013

99.2		Unaudited interim financial statements of PM Group for the nine month period ended September 30, 2014

99.3		Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013, Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014, Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine month period ended September 30, 2014, and the notes to the Unaudited Pro Forma Condensed Consolidated Financial Information of Manitex International, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 26, 2015


MANITEX INTERNATIONAL, INC.

By:		/s/ DAVID H. GRANSEE
Name:		David H. Gransee
Title:		Vice President & Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description

23.1		Consent of Deloitte & Touche S.p.A.

99.1		Audited financial statements of PM Group for the year ended December 31, 2013

99.2		Unaudited interim financial statements of PM Group for the nine month period ended September 30, 2014

99.3		Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013, Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014, Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine month period ended September 30, 2014, and the notes to the Unaudited Pro Forma Condensed Consolidated Financial Information of Manitex International, Inc.

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statement Nos. 333-191881 and 333-202103 on Form S-3 and No. 333-126978 on Form S-8 of our report dated December 1, 2014, relating to the financial statements of PM Group S.p.A. included in this Current Report on Form 8-K/A.

/s/ Deloitte & Touche S.p.A.

Milan, Italy

March 26, 2015

Exhibit 99.1

ANNUAL REPORT AT DECEMBER 31, 2013

GROUP CONSOLIDATED FINANCIAL STATEMENTS

PM GROUP

Deloitte & Touche S.p.A.

Piazza Malpighi 4/2

40123 Bologna

Italia

Tel +39 051 65811

Fax +39 051 230874

www.deloitte.it

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of

PM Group S.p.A.

We have audited the accompanying consolidated financial statements of PM Group S.p.A. and its subsidiaries (the “Group”) which comprise the consolidated statement of financial position as of December 31, 2013 and 2012, and the consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2013, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PM Group S.p.A. and its subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ Deloitte & Touche S.p.A.

Bologna, Italy

December 1, 2014

Consolidated Statement of Financial Position


(in Euro)		31/12/2013		31/12/2012
NON-CURRENT ASSETS

Tangible assets	(1)		19,256,205		24,730,071
Goodwill	(2)		33,192,959		68,142,670
Other intangible assets	(3)		3,715,926		6,740,592
Investments in other entities			1,560		3,952
Deferred tax assets	(4)		5,703,493		8,055,179
Other non-current assets	(5)		161,832		298,531

Total non-current assets			62,031,975		107,970,995

CURRENT ASSETS

Inventory	(6)		13,851,167		30,999,477
Trade receivables	(7)		28,521,700		31,900,571
Current tax receivables	(8)		2,066,842		2,469,100
Dividends receivable			300,000		0
Cash and cash equivalents	(9)		2,220,199		2,217,357
Other current assets	(10)		1,570,414		1,282,425

Total current assets			48,530,322		68,868,930

Assets held for sale	(32)		44,640,884		0

TOTAL ASSETS			155,203,181		176,839,925

LIABILITIES AND SHAREHOLDERS’ EQUITY

Share capital			23,311,420		23,311,420
Reserves			-34,324		-185,602
Accumulated deficit			-49,299,634		-12,360,095
Shareholders’ equity - Group			-26,022,538		10,765,723
Capital and reserves of non-controlling interests			905,756		957,823
Net profit (loss) attributable to non-controlling interests			29,961		-31,573
Shareholders’ equity attributable to non-controlling interests			935,717		926,250

TOTAL SHAREHOLDERS’ EQUITY	(11)		-25,086,821		11,691,973

NON-CURRENT LIABILITIES

Non-current financial payables	(12)		1,137,551		19,041,611
Employee benefits	(13)		1,413,558		2,640,541
Provisions for risks and charges	(14)		1,437,325		1,091,403
Deferred tax liabilities	(15)		3,038,312		2,883,045

Total non-current liabilities			7,026,746		25,656,600

CURRENT LIABILITIES

Current financial payables	(16)		100,162,961		102,583,464
Liabilities for financial instruments and derivatives	(17)		2,141,069		3,140,057
Current tax payables	(18)		1,624,037		2,102,781
Current trade payables	(19)		22,131,036		25,238,003
Other current liabilities	(20)		4,498,986		6,427,047

Total current liabilities			130,558,089		139,491,352

Liabilities held for sale	(32)		42,705,167		0

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			155,203,181		176,839,925

PM GROUP

Consolidated Statement of income


(in Euro)		31/12/2013		31/12/2012		31/12/2011
Revenue from operating activities	(21)		78,599,391		89,499,575		77,456,904
Other revenue and income	(22)		1,813,681		2,089,834		1,672,182
Change in inventories or finished goods and work in progress			-3,729,115		-939,667		678,906
Increase in non-current assets due to capitalisation of internal costs	(23)		2,028,908		2,288,470		2,123,202
Cost of raw material	(24)		-39,324,976		-46,406,557		-38,953,219
Services	(25)		-12,862,803		-18,570,751		-18,812,548
Personnel	(26)		-17,921,205		-16,497,431		-16,061,409
Other operating expenses	(27)		-2,532,914		-2,799,310		-2,718,078
Depreciation and amortisation	(28)		-3,048,540		-3,505,865		-3,429,054
Impairment of goodwill and development costs	(28)		-18,057,240		0		0
Provisions	(29)		-1,567,575		-1,120,276		-1,626,687

Operating profit /(loss)			-16,602,388		4,038,022		330,199

Financial income and exchange gains	(30)		1,724,164		1,171,385		741,674
Financial expenses and exchange losses	(30)		-6,634,041		-8,203,773		-7,290,800

Loss before taxation			-21,512,265		-2,994,366		-6,218,927

Taxes on income	(31)		-980,858		-526,165		319,986

Net Loss from contiunuing operations			-22,493,123		-3,520,531		-5,898,941

Profit (Loss) from discontinued operations	(32)		-14,467,773		931,037		312,388

Net Loss for the period			-36,960,896		-2,589,494		-5,586,553

Profit (Loss) attributable to non-controlling interests			29,961		-31,573		-18,925

Net Loss attributable to the Group			-36,990,857		-2,557,921		-5,567,628

PM GROUP

Consolidated statement of comprehensive income


(in Euro)	31/12/2013			31/12/2012			31/12/2011
Net Loss for the period (A)		(36,960,896	)		(2,589,494	)		(5,586,553	)

Gains/(losses) from translation into Euro of financial statements of foreign entities		168,800			(116,578	)		(70,398	)

Total other items of comprehensive income that will be recycled through the income statement, net of tax effect (b1)		168,800			(116,578	)		(70,398	)

Actuarial gains/(losses) from defined benefit plans		(17,435	)		0			0

Total other items of comprehensive income that will not subsequently be recycled through the income statement, net of tax effect (b2)		(17,435	)		0			0

Total other items of comprehensive income, net of tax effect (b1) + (b2) = (B)		151,365			(116,578	)		(70,398	)

Total comprehensive (loss) for the period (A)+(B)		(36,809,531	)		(2,706,072	)		(5,656,951	)

Total comprehensive income (loss) attributable to non-controlling interests		29,961			(35,884	)		(21,675	)

TOTAL COMPREHENSIVE (LOSS) ATTRIBUTABLE TO THE GROUP		(36,839,492	)		(2,670,188	)		(5,635,276	)

PM GROUP

Consolidated Statement of changes in equity


(in Euro)	Share capital		Reserve for additional paid-in capital			Translation reserve			Reserve under IAS 19			Total reserves			Accumulated Deficit			Shareholders’ equity - Group			Capital and reserves of non- controlling interests			Profit/ (Loss) attributable to non- controlling interests			Shareholders’ equity of non- controlling interests			TOTAL SHAREHOLDERS’ EQUITY
Shareholders’ equity at 1/1/2011		17,811,420		3,281,863			(5,774	)					3,276,089			(4,234,459	)		16,853,050			990,265			(6,456	)		983,809			17,836,859
Share capital increase		5,500,000		(3,281,863	)								(3,281,863	)					2,218,137												2,218,137
Movement on translation reserve							(67,648	)					(67,648	)					(67,648	)		(2,750	)					(2,750	)		(70,398	)
Loss for year ended December 31, 2011													0			(5,567,628	)		(5,567,628	)					(18,925	)		(18,925	)		(5,586,553	)

Shareholders’ equity at 31/12/2011		23,311,420		0			(73,422	)		0			(73,422	)		(9,802,087	)		13,435,911			987,515			(25,381	)		962,134			14,398,045

Movement on translation reserve							(112,267	)					(112,267	)					(112,267	)		(4,311	)					(4,311	)		(116,578	)
Loss for year ended December 31, 2012													0			(2,557,921	)		(2,557,921	)					(31,573	)		(31,573	)		(2,589,494	)

Shareholders’ equity at 31/12/2012		23,311,420		0			(185,689	)		0			(185,689	)		(12,360,008	)		10,765,723			983,204			(56,954	)		926,250			11,691,973

Movement on translation reserve							168,800						168,800						168,800									0			168,800
Movement on IAS 19 reserve										(17,435	)		(17,435	)					(17,435	)								0			(17,435	)
Effect of Acquisition of 41% of Air Service													0						0			(13,494	)					(13,494	)		(13,494	)
Effect of share capital increase PM Argentina													0			7,000			7,000			(7,000	)					(7,000	)		0
Other movements													0			44,231			44,231									0			44,231

Profit (Loss) for year ended December 31, 2013													0			(36,990,857	)		(36,990,857	)					29,961			29,961			(36,960,896	)

Shareholders’ equity at 31/12/2013		23,311,420		0			(16,889	)		(17,435	)		(34,324	)		(49,299,634	)		(26,022,538	)		962,710			(26,993	)		935,717			(25,086,821	)

PM GROUP

Consolidated Statement of cash flows


(in Euro)	2013			2012			2011
Cash flows generated by operating activities
Net Loss for the period		(36,960,896	)		(2,589,494	)		(5,586,553	)
Adjustments made in order to reconciile net loss with the cash flows generated by operating activities
- Depreciation and amortization		4,260,362			4,736,000			4,609,807
- Impairment		31,161,078			0			0
- Deferred tax/Deferred tax income		1,358,668			(517,350	)		(505,299	)
- Income and expenses on derivatives		(891,250	)		699,108			856,722
- Financial income recognized in Statement of Income		(832,914	)		(1,171,385	)		(741,674	)
- Finance costs recognised in Statement of Income		6,634,041			7,504,665			6,434,078
- Change in Employee Severance Indemnity Provision and other employee benefits		(147,157	)		156,835			(196,349	)

Operating profit before changes in working capital		4,581,932			8,818,379			4,870,732
Effect of changes in assets and liabilities in net working capital
- Trade receivables		(13,403,851	)		1,544,207			(1,759,298	)
- Inventory		4,540,514			8,734,411			(8,883,337	)
- Other current assets		(197,938	)		472,449			(669,455	)
- Trade payables		7,271,301			(8,480,233	)		7,449,004
- Other current liabilities		775,744			(6,530,114	)		5,474,122
- Tax receivables		(624,357	)		(251,491	)		(252,590	)
- Tax payables		213,148			1,532,111			217,617
- Taxes paid during the period		(430,618	)		(561,151	)		(247,717	)
- Other non current assets		16,488			(27,751	)		4,406
- Provisions for risks and charges		1,743,204			82,669			(143,290	)

Cash generated by operating activities (A)		4,485,567			5,333,486			6,060,194

Cash flows generated (absorbed) by investing activities

- Payments for property, plant and equipment		(1,046,042	)		(1,625,351	)		(1,355,838	)
- Proceeds from disposal of property, plant and equipment		184,603			205,710			193,468
- Payments for intangible assets		(2,716,892	)		(2,758,025	)		(2,403,850	)
- Interest received		3,948			11,059			54,083
- Proceeds on sale of financial assets		413			0			0

Change in cash absorbed by investing activities (B)		(3,573,971	)		(4,166,607	)		(3,512,137	)

Cash flows generated by operating activities after cash flows absorbed by investing activities (A-B)		911,596			1,166,879			2,548,057

Cash flows (absorbed) generated by financing activities
Short term financial payables and derivatives arranged (repaid)		2,778,715			3,761,876			1,673,646
Medium/long term financial payables and derivatives arranged (repaid)		1,419,965			(3,160,896	)		(1,621,996	)
Interest paid		(5,237,304	)		(5,870,815	)		(4,391,006	)
Share capital increase and reserves paid in cash		30,737			0			2,218,137

Change in cash absorbed by financing activities		(1,007,887	)		(5,269,835	)		(2,121,219	)

Movement on translation reserve		168,800			(116,578	)		(70,398	)
Reclassification of assets held for sale		(69,668	)		0			0
Increase (decrease) in cash and cash equivalents		2,842			(4,219,534	)		356,440

Cash and cash equivalents at start of period		2,217,357			6,436,891			6,080,451

Cash and cash equivalents at end of period		2,220,199			2,217,357			6,436,891

PM GROUP

EXPLANATORY NOTES

General information

PM Group S.p.A. (the “Parent Company” or “Company” or “PM”) is a company which is subject to the laws of the Italian Republic. PM Group S.p.A. and its subsidiaries (“PM Group” or “Group”) operate primarily in Italy, France, Spain, Chile, Romania, Argentina and the United States of America. The Group manufactures: (i) truck mounted hydraulic knuckle boom cranes (“Business Unit PM”), (ii) truck mounted aerial platforms (“Business Unit Oil & Steel”) and (iii) production, sale and rental of building structure, like scaffolding, formworks for walls and slabs (“Business Unit Pilosio”).

Structure and content of the consolidated financial statements

The group consolidated financial statements to which these explanatory notes relate (hereinafter: the “Group Consolidated Financial Statements”) include: (i) the statements of income, comprehensive income, changes in equity and cash flows for the years ended December 31, 2011, 2012 and 2013 and (ii) the statements of financial position as of December 31, 2012 and 2013. The Group Consolidated Financial Statements have been drawn up in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The designation “IFRS” also includes all valid International Accounting Standards (“IAS”), as well as all interpretations of the IFRS Interpretation Committee, previously known as the International Financial Reporting Interpretations Committee (“IFRIC”), and before that the Standing Interpretations Committee (“SIC”). The financial statements were authorized and approved on December 1, 2014, by Board of Directors. This basis of preparation was considered best to represent the balance sheet, income statement and financial situation of the Company and the Group:

•

Statement of financial position prepared with current assets/liabilities classified separately from non-current assets/liabilities;

•

Statement of income costs classified based on their nature;

•

Statement of cash flows prepared under the indirect method.

PM GROUP

Group organizational structure

The chart below shows the Group’s organizational structure as at December 31, 2013:

LOGO

Significant Accounting Policies

Basis of preparation

These consolidated financial statements have been prepared in Euro which is the main currency in the countries where the PM Group companies conduct their business.

The amounts reported in the consolidated financial statements are stated in Euro.

The consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

PM GROUP

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Group and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

•

has power over the investee;

•

is exposed, or has rights, to variable returns from its involvement with the investee; and

•

has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Companies which PM Group controls directly or indirectly are consolidated on a line-by-line basis. This involves including all assets and liabilities in their entirety from the date when control was acquired until the date when it ends. Control may be exercised through a direct or indirect holding of a majority of shares with voting rights or through a dominant influence expressed by the power to determine, also indirectly under contractual or legal agreements, the financial and operational decisions of the entity, while obtaining the related benefits, even without any share ownership relationship. The presence of potential voting rights exercisable at the reporting date is considered for the purposes of determining control.

PM GROUP

The main consolidation principles adopted when applying the line-by-line consolidation method are as follows:

subsidiaries are consolidated from the date on which control is effectively transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group;

if necessary, adjustments are made to the financial statements of subsidiaries in order to bring the accounting principles used into line with those adopted by the Group;

the assets and liabilities, income and expenses of companies consolidated under the line-by-line method are included in full in the consolidated financial statements. The carrying amount of the investments is eliminated against the corresponding portion of equity of the consolidated companies while attributing to each asset and liability item its fair value at the date of acquisition of control (acquisition method as defined by IFRS 3 “Business combinations”). Any residual positive difference is recorded under “Goodwill” while any residual negative difference is recorded in the income statement.

Receivable and payable, revenue and cost balances between consolidated companies and the effects of all significant transactions between them are eliminated;

The portions of shareholders’ equity and the net profit/loss for the period attributable to non-controlling interests are disclosed separately under shareholders’ equity and in the consolidated income statement;

Subsidiaries consolidated on a line-by-line basis but held for sale are classified in accordance with IFRS 5. Therefore, once consolidated on a line-by-line basis, the related assets are classified under a single caption “Assets held for sale”, the liabilities are classified under a single caption “Liabilities held for sale” and the result for the period is classified in the income statement under a single caption “Profit or loss from discontinued operations”

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

For the purposes of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Euros using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange

PM GROUP

differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income.

Financial statements expressed in currencies other than the Euro are translated into Euro applying the rules indicated above. The exchange rates applied for 2013 are shown below:



2011
Currency	Closing	Average
US Dollar	1.29	1.39
Romanian Lei	4.32	4.24
GB Pound	0.84	0.87
Chilean Peso	672.00	672.47
Argentinean Peso	5.57	5.74

2012
Currency	Closing	Average
US Dollar	1.32	1.29
Romanian Lei	4.44	4.46
GB Pound	0.82	0.81
Chilean Peso	631.73	625.07
Argentinean Peso	6.49	5.85

2013
Currency	Closing	Average
US Dollar	1.38	1.33
Romanian Lei	4.47	4.42
GB Pound	0.83	0.85
Chilean Peso	724.77	658.27
Argentinean Peso	8.99	7.28
Brazilian Real	3.26	2.87
Mexican Peso	18.07	16.96

The separate financial statements which have been consolidated have a December 31 reporting date i.e. the same as the consolidated financial statements and are those specifically prepared and approved by the Boards of Directors of the individual companies, as adjusted, where necessary, to bring them into line with the accounting principles of the holding company.

A full list of the investments included in the scope of consolidation at December 31, 2013 with details of shareholders’ equity and profit/loss for the period calculated in accordance with the applicable accounting standards (some subsidiaries prepared their separate financial statements at December 31, 2013 in accordance with Italian or foreign statutory reporting principles but prepared consolidated reporting packages for the PM consolidation process in accordance with IFRS) is shown in the following table:

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Consolidated companies:


Name		Location	Country		Share Capital (local currency/000)	Shareholders’ equity (Euro/000)	Including profit (loss) for 2013 (Euro/000)	% interest held
1	PM Group	San Cesario sul Panaro	Italy	EUR	23,311	(26,478)	(40,371)
2	Autogru PM RO	Arad	Romania	RON	8,482	2,163	1		100.00	%
3	PM North America	Rolling Meadows, Ill	USA	USD	25	104	1		100.00	%
4	PM France	Chassieu	France	EUR	150	(368)	(6)		100.00	%
5	PM Argentina	Buenos Aires	Argentina	ARS	60	252	(1,072)		100.00	%
6	PM Deutschland	Ulm	Germany	EUR	25	32	2		100.00	%
7	PM Chile	Santiago	Chile	CLP	19,742	(149)	(385)		100.00	%
8	Oil & Steel	San Cesario sul Panaro	Italy	EUR	362	(5,611)	(8,112)		100.00	%
9	PM Oil & Steel UK	London	UK	GBP	300	(10)	0		100.00	%
10	PM Oil & Steel France	Chassieu	France	EUR	35	(137)	(126)		100.00	%
11	PM Oil & Steel Iberica	Valencia	Spain	EUR	200	103	(102)		100.00	%
12	Air Service	Modena	Italy	EUR	115	77	(38)		100.00	%
13	Pilosio	Feletto Umberto	Italy	EUR	5,000	1,186	(8,485)		100.00	%
14	Electroelsa	Poggibonsi	Italy	EUR	400	2,216	61		60.00	%
15	PM Oil & Steel do Brasil	Sao Paulo	Brazil	BRL	600	177	(7)		100.00	%
16	PM Oil & Steel Mexico	Mexico City	Mexico	MXN	350	14	(5)		100.00	%

All Group companies are consolidated on a line-by-line basis.

At December 31, 2013, changes to the scope of consolidation or to the percentage interests held in subsidiaries compared to December 31, 2012 were as follows.

PM Argentina: following a share issue (Euro 1,000 thousand) wholly subscribed by PM Group, the percentage interest held by PM Group increased from 95% to 100 %

PM Oil & Steel was incorporated on January 31, 2013 and is owned by PM Chile (99.99%) and PM Argentina (0.01%)

PM Oil & Steel Mexico was incorporated on November 13, 2013 and is owned by PM Chile (95%) and PM North America (5%)

These changes did not have any significant effect on the 2013 consolidated financial statements.

Going Concern

In the year ended December 31, 2013, the Group incurred losses totaling Euro 36,991 thousand which reduced its shareholders’ equity to Euro (26,023) thousand. The losses were primarily due to impairment charges recognized on goodwill and development cost assets as described in more detail in note 2. At December 31, 2013, financial payables amounted to Euro 101,300 thousand compared to Euro 95,826 at December 31, 2012, excluding the financial payables of the Pilosio S.p.A (“Pilosio BU”). As a consequence of the financial results, the Group was not in compliance with covenants set out in the loan agreements as of December 31, 2013. The Group failed to make principal repayments due on certain loans payable outstanding at December 31, 2013, and starting in July 2013 failed to make payments on interest accruing on the senior loan payable. This resulted in the Group defaulting on its loans payable to the creditor banks totaling Euro 78,921 thousand at December 31, 2013. Consequently, the balance in default has been reclassified to current financial payables in the consolidated financial statements.

In 2014, management finalized an operation (“the Operation”) intended to restructure the financial indebtedness of the Group and restore the equity level. The Operation was to be implemented in accordance with Article 182 bis of the Bankruptcy Act. When the new business plan was being finalized, two entities - Manitex International Inc. (“Manitex” or “the Investor”) and Columna Holdings Limited (the company wholly controlling the parent company of PM Group - “Columna”) submitted to the Company and the creditor banks certain proposals to invest in the Company and its subsidiary Pilosio S.p.A. Following the negotiations between Manitex, Columna and the creditor banks, the Operation was finalized on July 2014.

PM GROUP

The main terms of the Operation are as follows:

•

Increase the net equity of the PM Group by Euro 44.5 million through a capital contribution of Euro 12 million cash and the acquisition of Euro 32.5 million of outstanding principal loans payable balance from the credit banks by Manitex. Subsequent to the capital contribution, Manitex will own 100% of the shares of PM Group;

•

Modification of the repayment terms of the remaining outstanding principal balance of approximately Euro 32.5 million through an extension of the maturity date, and covenants on terms more favorable to Group.;

•

Restructuring the financial position of Oil & Steel S.p.A (“Oil & Steel) through PM Group’s purchase of Oil & Steel’s loans payable balance from the creditor banks totaling approximately Euro 6,077 thousand at a purchase price corresponding to 15% of the outstanding balance. This amount foregone by the creditor banks would lead to a further reduction of the Group’s outstanding loans payable by approximately Euro 5.1 million;

•

A further purchase of Euro 5,000 thousand of the outstanding loan payable through a put and call option agreement between Manitex and the creditor bank. The agreement will be settled based on a purchase price to be determined from the consolidated financial statements of the PM Group at December 31, 2017;

•

Additional loan of Euro 1,500 thousand granted by existing creditor banks to Oil & Steel S.p.A.;

•

Repayment of a portion of the loans payable balance totaling Euro 5,250 thousand by PM Group when the Debt Restructuring Agreement becomes effective;

•

The sale of Pilosio for a price of Euro 1,000 to a company owned by Columna, and therefore associated company of the current majority shareholder of PM group, and therefore, a related party.

The above terms have been included in Commitment Letters signed by Columna and Manitex respectively on July 16, 2014 and July 17, 2014 as well as in the PM Group and Oil & Steel Debt Restructuring Agreement signed by the creditor banks in July 2014. Both the Commitment Letters and the PM Group and Oil & Steel Debt Restructuring Agreement (collectively the “Agreement”) are subject to certain conditions, the most significant of which is the definitive approval by the competent Courts of the Agreement with respect to Article 182 bis of the Bankruptcy Act, signed by PM Group, Oil & Steel and the creditor banks. On November 18, 2014, the Courts in Modena have approved the Agreement.

In view of the expected impact of the Operation and taking into account the difficult conditions in some of its main markets, the Group has prepared a new Business Plan for the period 2014 – 2017 which was approved by the holding company Board of Directors on June 10, 2014. Both the new business plan and the Operation provide that, before Manitex is offered the option to subscribe to the share capital increase, the current shareholders must be offered the chance to subscribe a share capital increase also for Euro 44,500 thousand.

Regardless of whether the share capital increase is subscribed to by the current shareholders or by Manitex, the new Business Plan forecasts sufficient cash flows to meet the Group’s remaining obligations following the completion of the Operation.

The situation outlined above - specifically: i) the Group’s current negative shareholders’ equity and precarious financial situation; ii) issues and uncertainty regarding the economic environment; iii) the resulting uncertainty which inevitably affects the forecasts reflected in the Business Plan in relation to the Group’s future operating performance (in terms of both revenue and profitability); iv) the fact that the Operation has not yet been completed – confirms the existence of uncertainty that could cast doubts over the Group’s ability to continue to operate as a going concern. Nonetheless, after evaluating the uncertainties described above, given the state of progress of the Operation and the fact that the Courts in Modena have approved the Agreement in terms of Article 182 bis of the Bankruptcy Act signed by PM Group, Oil & Steel and the

PM GROUP

creditor banks, management considers it probable that the Operation will have a positive outcome in the near future and, consequently, that the Group’s economics and financial situation will be improved. For these reasons, management reasonably believes that the Group has sufficient resources to continue to operate in the near future and have, therefore, prepared these consolidated financial statements on a going concern basis.

Note that failure to complete the Operation would undermine the going concern assumption and require the Group to follow the procedures provided for by law when dealing with business failure. This would result in changes to the valuation criteria applied to a number of assets and liabilities, in particular to tangible and intangible assets and deferred tax assets, which ultimately could result in significant writedowns.

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:

•

deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 respectively;

•

assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

PM GROUP

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see note above) less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

PM GROUP

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when the goods are delivered and title has passed, at which time all the following conditions are satisfied:

•

the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

•

the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

•

the amount of revenue can be measured reliably;

•

it is probable that the economic benefits associated with the transaction will flow to the Group; and

•

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract. The stage of completion of the contract is determined as follows:

•

installation fees are recognised by reference to the stage of completion of the installation, determined as the proportion of the total time expected to install that has elapsed at the end of the reporting period;

PM GROUP

•

servicing fees included in the price of products sold are recognised by reference to the proportion of the total cost of providing the servicing for the product sold; and

•

revenue from time and material contracts is recognised at the contractual rates as labour hours and direct expenses are incurred.

Dividend and interest income

Dividend income from investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

PM GROUP

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Retirement benefit costs and termination benefits

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:

•

service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

•

net interest expense or income; and

•

remeasurement.

The Group presents the first two components of defined benefit costs in profit or loss in the line item personel. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognised in the consolidated statement of financial position represents the actual deficit or surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the consolidated statement of income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

PM GROUP

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Property, plant and equipment

Tangible assets are stated in the consolidated statement of financial position at acquisition or production cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Assets under construction are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Freehold land is not depreciated.

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method as follows:


		Depreciation rate
Buildings		3%
Plant and machinery		10 – 15.5%
Industrial and commercial equipment		25%
Other tangible assets		10 – 25%

PM GROUP

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives, as follows:


	Depreciation rate
Development costs		20	%
Patents and intellectual property rights		20	%
Concessions, licenses, trademarks		20	%

The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

Internally-generated intangible assets - research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

•

the technical feasibility of completing the intangible asset so that it will be available for use or sale;

•

the intention to complete the intangible asset and use or sell it;

•

the ability to use or sell the intangible asset;

•

how the intangible asset will generate probable future economic benefits;

PM GROUP

•

the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

•

the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

PM GROUP

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Restructurings

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

Warranties

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management’ best estimate of the expenditure required to settle the Group’s obligation.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.

PM GROUP

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. As of 31 December 2013 and 2012, the Group did not have any “held-to-maturity” investments, AFS financial assets or FVTPL. The Group does not enter into hedge transactions for speculative purposes.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, bank balances and cash) are measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For all financial assets, objective evidence of impairment could include:

•

significant financial difficulty of the issuer or counterparty; or

•

breach of contract, such as a default or delinquency in interest or principal payments; or

•

it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or

•

the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an

PM GROUP

allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

PM GROUP

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

•

it has been incurred principally for the purpose of repurchasing it in the near term; or

•

on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

•

it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

•

such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

•

the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

•

it forms part of a contract containing one or more embedded derivatives, and IAS 39 permits the entire combined contract to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item. Fair value is determined in the manner described in paragraph “Fair Value measurment”.

Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

PM GROUP

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:

•

the amount of the obligation under the contract, as determined in accordance with IAS 37; and

•

the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate. Further details of derivative financial instruments are disclosed in note 17.

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

Embedded derivatives

Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL.

Use of estimates

Preparation of financial statements requires Group Management to make estimates and assumptions based on complex and/or subjective judgments. These estimates are based on past experience and assumptions considered reasonable and realistic on the basis of information known at the time of the estimate. The use of such estimates and assumptions has effects on the amount of assets and liabilities, on the determination and disclosure of contingent assets and liabilities at the reporting date and on the amount of revenues and costs in the reporting period. The final amount of the line items in relation to which the estimate and assumptions were made might differ from that reported in the financial statements. This is due to the uncertainty which characterizes the assumptions and conditions based on which the estimates are made.

PM GROUP

Estimates are used to record provisions for bad debts, provisions for obsolete and slow moving inventory, depreciation and amortization, impairment of assets, provisions for employee benefits, tax provisions and other provisions. Estimates and assumptions are revised periodically and the effects of any variation are immediately reflected in the financial statements.

At this point, we note that the situation created by the current economic and financial crisis made it necessary to make assumptions regarding future performance and these assumptions are subject to uncertainty. We cannot exclude the possibility that, in the coming year, actual results will be different than those forecast and, therefore, the carrying amount of the related items might have to be adjusted - possibly significantly – though, obviously, the amount of any such adjustments cannot be estimated or foreseen. This applies all the more in light of the uncertainties affecting the going concern assumption, as described in the previous notes.

Main estimates made by Management

We summarize below the key estimates and the main assumptions made by Management when applying the accounting principles and which could have a significant effect on the amounts reported or in relation to which significant adjustments to the reported amount of assets and liabilities could emerge in the reporting period after the one to which the consolidated financial statements relate.

•

Non-current assets: non-current assets include intangible assets (including Goodwill) and equity investments. The Group periodically revises the carrying amount of non-current assets held and utilized and the carrying amount of assets held for sale, when facts and circumstances make this necessary. This process is performed using estimates of the cash flows expected from the use or sale of the asset and appropriate discount rates to calculate the present value. In accordance with the accounting principles adopted to prepare the financial statements, the carrying value of goodwill is tested each year for any impairment which should be reflected in the income statement. The impairment test involves allocating the goodwill to cash generating units and determining its recoverable amount. If recoverable amount is lower than the carrying amount of the cash generating units, the goodwill allocated to them is adjusted accordingly. The allocation of goodwill to the cash generating units and the determination of their recoverable amount requires the use of estimates which depend on factors that may change over time with consequent effects – possibly significant – on the valuations performed by management.

•

Impairment of value of assets: in accordance with the accounting principles applied by the Group, tangible and intangible assets with a determinate useful life are tested for impairment. Impairment adjustments are recorded when there are indicators which suggest it will prove difficult to recover the net carrying amount of the assets through use. Testing for such indicators of impairment requires the management to make subjective assessments based on the information available within the Group and on the market, as well as based on their past experience. Moreover, when a potential impairment of value is identified, the Group calculates the amount using appropriate valuation techniques. Proper identification of factors indicating a potential impairment of value and estimates of the amount in question rely on factors which may vary over time, influencing the valuations and estimates made by management. When the carrying amount of a non-current asset has been impaired, the Company adjusts it for the difference between the carrying amount of the asset and its recoverable amount through use or disposal, as determined based on the Group’s most recent business plans. It should also be noted that the recoverability of the assets reported in the financial statements is subject to realization of the business plans. This must be considered bearing in mind the inherent uncertainty attaching to business plans, in relation to whether expected events will occur and their timing and amount, and, inevitably, the uncertainty regarding the going concern assumption as previously described.

PM GROUP

•

Depreciation and amortization of non-current assets: the depreciation and amortization of non-current assets is a significant cost for the Group. The cost of property, plant and equipment is depreciated on a straight-line basis over the estimated useful lives of the related assets. Management determines the useful lives of the Group’s non-current assets when they are acquired. This is based on prior experience for similar assets, market conditions and any information on future events which could have an impact on useful life, including technological changes. Therefore, actual useful life might differ from estimated useful life. The Group periodically evaluates technological changes and changes regarding the industry in order to update estimated useful life. Such periodic updates might lead to a change of depreciation/amortization period and, therefore, to the depreciation/amortization charges for future reporting periods.

•

Deferred taxation: deferred tax assets are recognized based on taxable income expected in future periods. The valuation of expected taxable income for the purposes of recognition of deferred tax assets depends on factors which may vary over time and could have significant effects on the valuation of deferred tax assets.

•

Provisions for legal and tax risks: provisions made for legal and tax risks represent the risk of losing such disputes. The amount of any provision created for such risks represents Management’s best estimate at the reporting date. That estimate involves the making of assumptions which depend on factors that may change over time and which could, therefore, have effects on the current estimates made by management when preparing the Group consolidated financial statements.

Moreover, details are provided below of important accounting estimates made by Management when preparing the financial statements, including those where Management involved independent experts (actuaries and financial advisors). Attention is drawn to the fact that any future changes to the conditions underlying the judgments, assumptions and estimates used could have an impact on the results for future reporting periods.

•

Actuarial calculation of defined benefit pension plans: in order to calculate defined benefit plans in relation to post-employment benefits, the Group uses the support of an actuary. The demographic and economic/financial assumptions made by the actuary for the purposes of this calculation are shown in detail in Note 13 :

Estimates made for purposes of impairment test of goodwill: see Note 2 for method adopted and results of test.

New accounting standards

The Group has adopted the following new accounting standard and amended standards from the fiscal year ended December 31, 2013:

•

IAS 1 Presentation of Financial Statements. Description: revisions to the presentation of items in other comprehensive income.

•

IFRS 7 Financial Instruments: Disclosures. Description: disclosure related to offsetting of financial assets and liabilities.

•

IFRS 10 Consolidated Financial – Statements. Description: Amendments for definition of control, elements of control and basis of existence of control to be applied, regardless of the nature of the investee;

•

IFRS 11 Joint Arrangements. Description: regarding arrangements of which two or more parties have joint control, provide the classification of a joint arrangement based on legal form, contractual arrangement on assets or liabilities and other facts and conditions, not based on only legal form of the arrangement Provide accounting treatment for each classification.

PM GROUP

•

IFRS 12 Disclosure of Interests in Other Entities. Description: expansion of the scope of the disclosure of ownership of interests in other entities, including unconsolidated structured entities;

•

IFRS 13 Fair Value – Measurement. Description: guidance on fair value measurement to be applied by all standards and unification of the definition of fair value which was previously provided separately in each standard;

•

IAS 19 Employee Benefits. Description: revisions to recognition and presentation of actuarial gains and losses, past service cost, interest cost and others, and revision to disclosure of retirement benefits;

•

IAS 28 Investments in Associates and Joint Ventures. Description: amendments based on IFRS 10, IFRS 11 and IFRS 12;

•

IAS 36 Impairment of Assets. Description: amendments to recoverable amount disclosures for non-financial assets.

The effect of the above standards on the consolidated financial statements is immaterial.

New Accounting Standards Not Yet Adopted by the Group

By the date of approval of the consolidated financial statements, new accounting standards, amended standards and new interpretations that have been issued, but have not been early adopted by the Group are as follows.

The implications from adoption of these standards and interpretations are assessed by the Group; however, we evaluate that none of them will have a material impact on our operating results and financial condition.


IFRS	Mandatory adoption (for fiscal year beginning on)	Description of new standards and amendments
IFRS 2 Share-based Payment	July 1, 2014	Amendments for the definition of vesting conditions

IFRS 3 Business Combinations	July 1, 2014	Amendments for accounting treatment for contingent consideration in a business combination

	July 1, 2014	Clarifying scope exceptions for joint arrangements under IFRS 3

IFRS 8 Operating Segments	July 1, 2014	Adding disclosure requirements for aggregation of operating segments and clarifying rules relating to segment assets

IFRS 11 Joint Arrangements	January 1, 2016	Modifications of accounting for the acquisition of an interest in a joint operation in circumstances in which the activity of the joint operation constitutes a business as defined in IFRS 3

IFRS 13 Fair Value Measurement	July 1, 2014	Clarifying a scope exception for measuring the fair value of a portfolio

IFRS 14 Regulatory Deferral Accounts	January 1, 2016	Issuance of requirements for accounting treatment for regulatory deferral accounts for rate-regulated activities

PM GROUP


IAS 16 Property, Plant and Equipment		July 1, 2014	Amendments for accounting treatment for revaluation model

IAS 19 Employee Benefits		July 1, 2014	Clarifying accounting treatment for contributions from employees or third parties as required in the terms of defined benefit plans

IAS 24 Related Party Disclosures		July 1, 2014	Clarifying that a management entity that provides key management personnel services to a reporting entity is deemed to be identified as a related party

IAS 32 Financial Instruments: Presentation		January 1, 2014	Clarifying conditions on offset disclosure and adding guidelines

IAS 38 Intangible Assets		July 1, 2014	Amendments to accounting treatment for revaluation mode

l IAS 39 Financial Instruments: Recognition and Measurement		January 1, 2014	Requirements for continuation of hedge accounting in certain circumstances in which there is a change in counterparty to a hedging instrument

IAS 40 Investment Property		July 1, 2014	Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property

IFRIC 21 Levies		January 1, 2014	Clarifying the accounting for levies

IFRS 10 IFRS 12 Investment Entities IAS 27		January 1, 2014	Accounting treatment for the investments held by investment entities(measure their investments at fair value through profit or loss instead of consolidating them)

IAS 16 IAS 38	Clarification of Acceptable Methods of Depreciation and Amortisation	January 1, 2016	Clarifying that a revenue-based method is not considered to be an acceptable method of depreciation and amortization in principle

The implications from adoption of these standards have not yet evaluated by Group:


IFRS 9 Financial Instruments	To be determined	Amendments for hedge accounting

IFRS 15 Revenue from Contracts with Customers	January 1, 2017	Amendments for accounting treatment for recognizing revenue

PM GROUP

Comments on items in the Statement of Financial Position

ASSETS

Note 1 - Tangible assets

The following table shows the opening balances, movements during 2013 and 2012 and the closing balances for tangible assets:


(in Euro)	01/01/13		Exchange difference		Reclass. Assets held for sale		Additions		Disposals		Reclassification		Depreciation		Impairment		31/12/13
Cost
		4,691,449		-2,237		0		0		5,687		0		0		0		4,683,525
Buildings		19,215,150		-16,408		-461,964		81,536		222,802		0		0		0		18,595,512
Plant and machinery		22,327,549		-18,852		-13,177,215		14,103		25,606		0		0		0		9,119,979
Industrial and commercial equipment		11,099,755		-7,000		-2,892,172		141,819		102,405		1,565		0		0		8,241,562
Other assets		5,624,084		-53,622		-1,452,164		222,907		116,102		0		0		0		4,225,103
Assets under construction and payments on advance		251,306		-119		-249,750		13,795		0		-1,565		0		0		13,667

Total Cost of Tangible Assets		63,209,293		-98,238		-18,233,265		474,160		472,602		0		0		0		44,879,348


(in Euro)	01/01/13		Exchange difference		Reclass. Assets held for sale		Additions		Disposals		Reclass.		Depreciation		Impairment		31/12/13
Accumulated depreciation and impairment
Land		0		0		0		0		0		0		0		0		0
Buildings		6,457,288		-842		-386,523		0		162,802		0		571,941		0		6,479,062
Plant and machinery		17,116,071		-13,875		-10,066,174		0		25,657		0		530,574		0		7,540,939
Industrial and commercial equipment		10,426,153		-5,567		-2,641,396		0		101,598		0		269,641		0		7,947,233
Other assets		4,479,710		-18,305		-1,144,136		0		87,507		0		261,058		165,089		3,655,909

Total accumulated depreciation and impairment of tangible asset		38,479,222		-38,589		-14,238,229		0		377,564		0		1,633,214		165,089		25,623,143

Net Book Value		24,730,071		-59,649		-3,995,036		474,160		95,038		0		-1,633,214		-165,089		19,256,205


(in Euro)					01/01/12		Exchange difference		Additions		Disposals		Reclassification		Depreciation		31/12/12
Cost
Land						4,702,338		-10,890		0		0		0		0		4,691,448
Buildings						19,067,693		-49,172		402,733		203,131		-2,972		0		19,215,151
Plant and machinery						22,171,185		-69,222		228,383		62,439		59,642		0		22,327,549
Industrial and commercial equipment						10,771,197		-18,753		341,366		1,546		7,491		0		11,099,755
Other assets						5,472,386		-16,251		371,038		195,554		-7,535		0		5,624,084
Assets under construction and payments on advance						39,698		-1,076		281,831		3,960		-65,187		0		251,306

Total Cost of Tangible Assets						62,224,497		-165,364		1,625,351		466,630		-8,561		0		63,209,293


(in Euro)					01/01/12		Exchange difference		Additions		Disposals		Reclass.		Depreciation*		31/12/12
Accumulated depreciation and impairment
Buildings						6,021,730		-1,212		0		203,131		325		639,576		6,457,288
Plant and machinery						16,040,277		-35,957		0		47,914		-6,768		1,166,433		17,116,071
Industrial and commercial equipment						9,923,635		-9,770		0		1,546		-938		514,772		10,426,153
Other assets						4,241,441		-7,390		0		119,364		-1,180		366,203		4,479,710

Total accumulated depreciation and impairment of tangible asset						36,227,083		-54,329		0		371,955		-8,561		2,686,984		38,479,222

Net Book Value						25,997,414		-111,035		1,625,351		94,675		0		-2,686,984		24,730,071

*	The caption differs on the same one reported in Statement Income for the BU Pilosio’s depreciation included in the caption “Profit/Loss from discontinued operations”.

PM GROUP

The main capital expenditures during the reporting period is analyzed as follows:

•

Euro 62 thousand for industrial equipment and tooling

•

Euro 33 thousand for replacing parts of existing plant and equipment.

•

Euro 32 thousand for purchases of hardware and electronic office equipment.

•

Euro 18 thousand for the building in Via Modenese, 4985, San Cesario sul Panaro (MO) and to the purchase of a lightweight canopy for the prototypes division.

In 2013, 2012 and 2011, depreciation of tangible assets totaled € 1,633 thousand, € 1,753 thousand and € 1,892 thousand, respectively.

Note 2 - Goodwill


(in Euro)	2013		2012
Beginning balance		68,142,670		68,142,670

Reclassification of Asset held for sale		-20,078,655		0
Impairment		-14,871,056		0

Ending balance		33,192,959		68,142,670

Goodwill has been allocated for impairment testing purposes to the following cash-generating units:


(in Euro)	01/01/13		Reclass. Ass. held for sale		Impairment		31/12/13
PM - cash generating unit		33,192,959		0		0		33,192,959
Oil & Steel - cash generating unit		14,871,056		0		-14,871,056		0
Pilosio - cash generating unit		20,078,655		-20,078,655		0		0

Goodwill		68,142,670		-20,078,655		-14,871,056		33,192,959

PM cash-generating unit

The recoverable value of goodwill related to the CGU PM at December 31, 2013 was determined using value in use. The cash flows of the PM cash generating units as per the Business Plan 2014-2017, approved by the Board of Directors, were discounted. For impairment test purposes, cash flows for 2018 were also estimated applying a long term growth rate of 2%.

The discount rate used was the Weighted Average Cost of Capital of 11.06% (post tax)- which also takes account of the CGU’s particular situation of financial distress as described in the note on the Going Concern issue.

The main assumptions made for the Business Plan of the PM cash generating units are as follows:

•

Increase in sales until sales revenue of Euro 73,016 thousand is reached in 2016 (CAGR 2013-16= 7.5%);

•

Increase in profitability until an EBITDA margin of 15.7% is achieved in 2016 through the following measures:

•

Improve distribution capacity on emerging non-EU markets: Russia and Central Asia, Middle East and Africa, Far East, North, Central and South America;

PM GROUP

•

Renewal of medium/large range and development of “super heavy” segment i.e. over 85 tonnes;

•

Increased profitability thanks to greater efficiency, standardization of components and new industrial investments.

Oil & Steel cash-generating unit

The recoverable amount of goodwill related to the CGU Oil & Steel at December 31, 2013 was determined using value in use. The cash flows of the Oil & Steel cash generating units as per the Business Plan 2014-2017, approved by the Board of Directors, were discounted. For impairment test purposes, cash flows for 2018 were also estimated applying a long term growth rate of 2%.

The discount rate used was the Weighted Average Cost of Capital of 11.06% - which also takes account of the CGU’s particular situation of financial distress as described in the note on the Going Concern issue.

The main assumptions made for the Business Plan of the Oil & Steel cash generating units are as follows:

•

Increase volumes to achieve sales revenue of Euro 24,463 thousand (CAGR 2013-16= 10.7%);

•

EBITDA margin of 5.8% in 2016 due to the following measures:

•

Improve distribution capacity on emerging non-EU markets, also due to synergies with PM network, and through shared resources;

•

Increased profit on sales due to commercial development of “KIT” product;

•

Cost reduction due to standardization / modularity of basic components and new industrial synergies with PM.

The above assumptions are inherently uncertain given that they relate to forecasts of future events. Moreover, the uncertainty regarding the underlying assumptions for the Business Plan is increased by the ongoing difficult national and international economic environment and the difficult situation on the markets where the Group operates. The uncertainty regarding the going concern assumption must also be taken into account, as highlighted in the Note on the Going Concern issue.

The downwards adjustment of growth and future profit assumptions for the Oil & Steel cash-generating unit (compared to those made previously) led to lower forecasts of income and cash flows in the years covered by the Business Plan (compared to previous Business Plans). Consequently, it also led to the impairment of intangible assets and deferred tax assets relating to said cash-generating unit. Furthermore, the ongoing difficult economic environment and inability to fulfil financial obligations meant that the selling price less cost to sell negotiated for the Pilosio cash-generating unit was lower than the carrying amounts of its net assets in previous years; this selling price was supported by an independent expert appraisal of the cash-generating unit.

The results of the impairment test for the Oil & Steel BU led to the total impairment of goodwill by an amount of Euro 14,871 thousand and the total impairment of the Euro 2,327 thousand of R&D costs capitalized by the Oil & Steel BU.

Meanwhile, the value of the goodwill of the Pilosio cash-generating unit was impaired for Euro 13.104 thousand and brought into line with the selling price less cost to sell of that company, as established in the binding commitment signed in relation to the Debt Restructuring Operation described above, whose legal effect is subject to final approval of the PM Restructuring Agreement. This was the main reason for the loss of

PM GROUP

around Euro 14.4 million from discontinued operations. We note, however, that the selling price of Pilosio for Euro 1,000 thousand was analyzed by an independent expert, as Pilosio will be sold to a related entity, who concluded that it was reasonable. Consequently, the assets and liabilities of that cash-generating unit were reclassified to “Assets held for sale” and “Liabilities held for sale”.

With reference to the PM cash generating unit, it should be noted that, if all of the operating cash flows (2014 – 2018) used in the related impairment test were 2% lower than shown in the Business Plan, the result of the impairment test would show that discounted cash flows and carryng amount of the CGU broadly matched.

Finally, it is worth noting that the estimates and Business Plan figures to which the aforementioned parameters are applied are determined by Group management based on its past experience and on expectations regarding the future development of the markets on which the Group operates. Estimation of the recoverable amount of the cash generating units requires Management to use its discretion and market estimates. The Group cannot guarantee that the value of goodwill will not be impaired in future periods. In fact, various factors also including the evolution of the difficult market environment could require the value of goodwill to be reassessed. The circumstances and events that could require a further impairment test will be constantly monitored by the Group.

However, the Group cannot guarantee that the value of goodwill will not be further impaired in future periods. In fact, a number of factors also regarding the evolution of the difficult market environment could make it necessary to redetermine the value of goodwill. The circumstances and events that could require a further impairment test will be constantly monitored by the Group.

Note 3 – Other intangible assets

The following table shows the opening balances, movements during 2013 and 2012 and the closing balances for other intangible assets:


(in Euro)	01/01/13		Exchange difference		Reclass. Assets held for sale		Additions		Reclassification		Impairment		Amortization		31/12/13
Cost
Development costs		10,963,015		-10		-784,613		0		2,930,002		0		0		13,108,394
Patents and intellectual property rights		2,599,033		0		-1,039,262		8,705		364,494		0		0		1,932,970
Concessions, licences, trademarks and similar		51,131		-472		0		38,365		0		0		0		89,024
Assets in progress and payments on advance		2,285,139		0		-47,292		2,040,278		-3,294,496		0		0		983,629
Other		82,083		0		-82,083		280		0		0		0		280

Total		15,980,401		-482		-1,953,250		2,087,628		0		0		0		16,114,297


(in Euro)	01/01/13		Exchange difference		Reclass. Assets held for sale		Additions		Reclassification		Impairment		Amortization		31/12/13
Accumulated amortisation and impairment
Development costs		7,176,944		1,993		-524,966		0		0		2,373,043		1,204,465		10,231,479
Patents and intellectual property rights		1,933,773		0		-675,193		0		0		0		203,110		1,461,690
Concessions, licences, trademarks and similar		49,513		-114		0		0		0		0		7,695		57,094
Assets in progress and payments on advance		0		0		0		0		0		648,052		0		648,052
Other		79,579		0		-79,579		0		0		0		56		56

Total		9,239,809		1,879		-1,279,738		0		0		3,021,095		1,415,326		12,398,371

Net Book Value		6,740,592		-2,361		-673,512		2,087,628		0		-3,021,095		-1,415,326		3,715,926

Capitalized development costs relate to new products, as described in Note 23 below.

PM GROUP

Assets in progress, at their completion, are amortized over five years, being it the estimated useful life of the Group’s new products without any significant restyling processes.

Impairment of Euro 3,021 thousand for the year ended December 31, 2013 refer to the development costs of which Euro 696 thousand relating to PM Group S.p.A. (following a review of future plans for certain projects in relation to which research and development costs were recorded) and Euro 2,325 thousand relating to Oil & Steel S.p.A. whose value has been impaired (based on the impairment test performed on this BU, as described in the previous paragraph (“Main estimates made by Management”).

Amortization of intangible assets totaled €1,415 thousand, €1,753 thousand and €1,537 thousand in 2013, 2012 and 2011, respectively.


(in Euro)	01/01/12		Additions		Reclassification		Amortization		31/12/12
Cost
Development costs		8,940,381		195,654		1,826,980		0		10,963,015
Patents and intellectual property rights		2,215,819		322,308		200,898		0		2,739,025
Concessions, licences, trademarks and similar		50,851		280		0		0		51,131
Assets in progress and payments on advance		2,074,984		2,238,033		-2,027,878		0		2,285,139
Other		80,333		1,750		0		0		82,083

Total		13,362,368		2,758,025		0		0		16,120,393


(in Euro)	01/01/12		Additions		Reclassification		Amortization*		31/12/12
Accumulated amortisation and impairment
Development costs		5,432,352		0		0		1,744,593		7,176,945
Patents and intellectual property rights		1,779,554		0		0		294,209		2,073,763
Concessions, licences, trademarks and similar		40,617		0		0		8,897		49,514
Other		78,125		0		0		1,454		79,579

Total		7,330,648		0		0		2,049,153		9,379,801

Net Book Value		6,031,720		2,758,025		0		-2,049,153		6,740,592

*	The caption differs from the same one reported in the Statement of Income because BU Pilosio’s amortization is included in the caption “Profit/Loss from discontinued operations”.

Note 4 - Deferred tax assets

Deferred tax assets mainly include the deferred tax assets of PM Group S.p.A. (Euro 4,952 thousand at December 31, 2013, regarding the Imposta sul Reddito delle Società (“I.RE.S.”) and the Imposta Regionale sulle Attività Produttive (“I.R.A.P.”) effect calculated on taxed provisions – Euro 1,317 thousand on the amount not deductible for I.RE.S purposes, Euro 3,495 thousand in relation to interest and similar expenses and Euro 140 thousand on prior year tax losses). Management consider these deferred tax assets recoverable on the basis of the future profits contained in the Business Plan and also taking account of the expected reversal of part of the deferred tax liabilities recorded under non-current liabilities.

The deferred tax assets of subsidiary Oil & Steel S.p.A. have been written down in full given the uncertainty over their recoverability through the generation of taxable income in the near future.

PM GROUP


(in Euro)	1/1/2013		Statement of Income		Reclass. Assets held for sale		Exch. Diff. and other changes		31/12/2013
Provisions for risks and charges		306,824		-142,558		-28,304		0		135,962
Inventory		1,215,312		-419,767		-89,514		0		706,031
Provision for bad debts		861,741		-197,368		-391,019		0		273,354
Provision for losses on derivatives		863,516		-231,228		-56,265		0		576,023
Tax losses		698,916		-86,916		-102,466		0		509,534
Interest expenses		4,006,341		-153,297		-357,777		0		3,495,267
Other		102,529		17,942		-55,698		-57,451		7,322

Deferred tax assets		8,055,179		-1,213,192		-1,081,043		-57,451		5,703,493


(in Euro)	1/1/2012		Statement of Income		31/12/2012
Provisions for risks and charges		341,452		-34,628		306,824
Inventory		1,021,191		194,122		1,215,313
Provision for bad debts		781,677		80,064		861,741
Provision for losses on derivatives		622,303		241,213		863,516
Tax losses		1,057,548		-358,632		698,916
Interest expenses		3,429,669		576,670		4,006,339
Other		80,850		21,680		102,530

Deferred tax assets		7,334,690		720,489		8,055,179

Note 5 – Other non-current assets

Other non-current assets are analyzed as follows:


(in Euro)	31/12/2013		31/12/12
Other receivables		161,832		298,531

Other non-current assets		161,832		298,531

Current assets

Note 6 - Inventory

For details of changes in each inventory category, see the figures highlighted in the Income Statement.

PM GROUP

The following tables contain a breakdown of net inventory by category and movements on the inventory obsolescence provision (deducted directly from inventory):


(in Euro)	31/12/2013		31/12/12
Raw, ancillary and consumable materials		10,162,235		13,074,487
Work in progress		680,084		564,443
Semi-finished goods		744,358		2,161,957
Finished goods		4,862,442		17,114,399
Inventory obsolescence provision		-2,597,952		-1,915,809

Inventory		13,851,167		30,999,477

Breakdown and movement on inventory obsolescence provision:

(in Euro)

01/01/12

Addition

Utilised

Other
movements

31/12/12

Inventory obsolescence provision

1,938,304

345,176

-367,575

-96

1,915,809

(in Euro)

01/01/13

Reclass. Assets
held for sale

Addition

Utilised

Other
movements

31/12/13

Inventory obsolescence provision

1,915,809

-243,392

1,008,637

-78,953

-4,149

2,597,952

The provision was utilized in relation to the scrapping of obsolete products during the period. The amount allocated was determined to take account of slow moving and obsolete inventory and to bring the value of inventory into line with estimated realizable value.

The amounts allocated to the Inventory provision were € 1,009 thousand, € 320 thousand and, € 880 thousand in 2013, 2012 and 2011, respectively.

Note 7 – Current trade receivables

Current trade receivables are analyzed as follows:


(in Euro)	31/12/13		31/12/12
Current trade receivables		30,924,832		36,391,684
Payments on account		0		-45,009
Other receivables		118,950		0
Allowance for bad debts		-2,522,082		-4,446,104

Trade receivables		28,521,700		31,900,571

Trade receivables are broken down by due date as follows:

At 31 December 2013

At 31 December 2012

Due within
a year

Overdue

Balance at
31/12/2013

Due within a
year

Overdue

Balance at
31/12/2012

Trade receivables Gross

19,161,295

11,882,487

31,043,782

19,379,981

16,966,694

36,346,675

Allowance for bad debts

-2,522,082

-2,522,082

-4,446,104

-4,446,104

Trade receivables Net

19,161,295

9,360,405

28,521,700

19,379,981

12,520,590

31,900,571

PM GROUP

The carrying amount of trade receivables is brought into line with estimated realizable value by means of a specific allowance for bad debt. Movements on the allowance for bad debts are shown in the following table

(in Euro)

01/01/13

Reclass. Assets
held for sale

Increases

Amount written
off during 2013 as
uncollectible

Exchange
differences

31/12/13

Allowance for bad debts

4,446,104

-1,491,616

486,788

903,800

-15,394

2,522,082

(in Euro)

01/01/12

Increases

Amount written
off during 2012 as
uncollectible

Exchange
differences

31/12/12

Allowance for bad debts

3,761,300

820,314

131,616

-3,894

4,446,104

The 2012 increase in allowance for bad debts differs from the amount reported as “Bad debt provision” in the Statement of Income as the increase includes also the bad debt provision for the BU Pilosio which has been reported among the caption “Profit/Loss from discontinued operations” in the Statement of Income.

The amounts allocated to the Bad debt provision were € 487 thousand, € 482 thousand and € 880 thousand in 2013, 2012 and 2011, respectively.

Allowance for bad debts is recognised against trade receivables that are past due at the end of the reporting period based on estimated irrecoverable amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty’s current financial position, as per the aged analysis below. Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which the Group has not recognised an allowance for bad debts because there has not been a significant change in credit quality and the amounts are still considered recoverable.

At 31 December 2013

Not Overdue

Overdue 0-30
days

Overdue 31-60
days

Overdue 61-90
days

Overdue 91-120
days

Overdue past
120 days

Balance at
31/12/2013

Trade receivable Impaired

746,383

317,240

42,696

36,043

2,808,660

3,951,022

Trade receivable not Impaired

19,161,295

5,145,359

1,166,386

566,467

169,109

884,144

27,092,760

Total Trade Receivable Gross

19,161,295

5,891,742

1,483,626

609,163

205,152

3,692,804

31,043,782

At 31 December 2012

Not Overdue

Overdue 0-30
days

Overdue 31-60
days

Overdue 61-90
days

Overdue 91-120 days

Overdue past
120 days

Balance at
31/12/2013

Trade receivable Impaired

196,421

88,650

98,262

224,288

4,982,252

5,589,873

Trade receivable not Impaired

19,379,981

8,323,006

966,458

249,673

834,160

1,003,524

30,756,802

Total Trade Receivable Gross

19,379,981

8,519,427

1,055,108

347,935

1,058,448

5,985,776

36,346,675

PM GROUP

Note 8 – Current tax receivables

Current tax receivables may be analyzed as follows:


(in Euro)	31/12/13		31/12/12
VAT receivable		655,730		1,415,379
IRES, IRAP and other income tax receivables		1,370,756		858,670
Other		40,356		195,051

Current tax receivables		2,066,842		2,469,100

Note 9 - Cash and cash equivalents

Cash and cash equivalents are analyzed as follows:


(in Euro)	31/12/13		31/12/12
Cash on hand		20,704		25,737
Cheques		5,857		204,639
Bank and post office accounts		2,193,638		1,986,981

Cash and cash equivalents		2,220,199		2,217,357

Note 10 – Other current assets

Other current assets are analyzed as follows:


(in Euro)	31/12/13		31/12/12
Receivables from suppliers		220,106		348,502
Other receivables		1,350,308		933,923

Other current assets		1,570,414		1,282,425

PM GROUP

LIABILITIES AND SHAREHOLDERS’ EQUITY

Note 11 – Shareholders’ Equity

Share capital

At December 31, 2013, the share capital of PM Group amounted to Euro 23,311,420 and was fully paid. Share capital consists of 101,312,500 ordinary shares, fully subscribed, with dividend rights and with no par value.

Following completion of the reverse merger between parent company Felicia Spa and subsidiary PM Group Spa (legally effective from July 4, 2008), all of the shareholders of PM Group spa signed a pledge in favor of the banks (B.P.E.R and Unicredit Banca d’Impresa SpA ) on all of the shares in PM, as security for the bank loan originally made to Felicia Spa.

Under the restructuring agreement signed by the Company, transactions involving the share capital are prohibited except for those provided for by Articles 2446 and 2447 of the Italian Civil Code; the distribution of dividends and/or reserves to the shareholders is also prohibited.

Translation reserve

This reserve, negative by Euro 17 thousand at December 31, 2013, includes the effects of the translation into Euro of seven sets of financial statements of foreign subsidiaries prepared in foreign currency (PM North America Llp – prepared in US Dollars; PM Oil & Steel UK Ltd – prepared in GB Pounds; Autogru PM RO – prepared in Romanian Lei; PM Argentina Sl – prepared in Argentinean Pesos; PM Chile – prepared in Chilean Pesos; PM Oil & Steel do Brasil – prepared in Brazilian Reals; PM Oil & Steel Mexico – prepared in Mexican Pesos).

IAS 19 Reserve

This is the negative reserve of Euro 18 thousand created in compliance with IAS 19 in relation to employee benefits (employee severance indemnity / Trattamento di Fine Rapporto or “TFR ).

Accumulated losses

This reserve showed accumulated losses of Euro 12,309 thousand at December 31, 2013. It includes the accumulated earnings and losses of the Company and the subsidiaries for 2012 and prior years, insofar as not allocated to other Holding Company reserves.

Capital and reserves pertaining to non-controlling interests

Capital and reserves pertaining to non-controlling interests, amounting to Euro 936 thousand at December 31, 2013, includes the portion of shareholders’ equity pertaining to the non-controlling shareholders of some subsidiaries (as indicated in the Group Organization Chart).

PM GROUP

Non-current liabilities

Note 12 – Non-current financial payables

Non-current financial payables are analyzed as follows:


(in Euro)	31/12/2013		31/12/12
Non-current portion of loans payable		802,451		16,916,456

Payables to other lenders		335,100		2,125,155

Non-current financial payables		1,137,551		19,041,611

Payables to other lenders due after more than a year, amounting to Euro 335 thousand at December 31, 2013, primarily relate to the Oil & Steel Business Unit (Euro 238 thousand) and include payables to Medioleasing (formerly Banca Marche) under the real estate finance lease entered into for the Oil & Steel factory in San Cesario sul Panaro (MO), Via Verdi 22.

Payables to other lenders are broken down by due date as follows:


(in Euro)	within a year		between one and five years		after more than five years		Balance 31/12/2013		within a year		between one and five years		after more than five years		Balance 31/12/2012
Minimum payments due under finance leases		535,253		344,729		0		879,981		1,018,108		2,274,710		0		3,292,818
Interest element		-27,481		-9,629		0		-37,110		-122,788		-149,555		0		-272,344

Present value of minimum payments due under finance leases		507,772		335,100		0		842,872		895,320		2,125,155		0		3,020,475

The portion of these payables due within a year is classified under Current financial payables, as analyzed in Note 16.

Non current portion of loans payable are due within one and five years, as shown in the table below:


(in Euro)	31/12/2013		31/12/12
Loans Payable due after between 1 and 5 years		802,451		16,916,456

Non-current portion of loans payable		802,451		16,916,456

PM GROUP

A detailed breakdown of loans payable is shown in the following table:


Bank	Interest rate	Original Maturity	Type	Loan amount €/1000		O/S Princ. 31/12/13		current		non- current		security
CARISBO	Eur 3M + 2,50	12/31/2014	unsecured loan		1,000		259,338		259,338		—	none
BPER (ex B.ca CRV)	Eur 3M + 2,50	12/31/2014	unsecured loan		1,000		923,105		923,105		—	none
BPER	Eur 3M + 2,50	12/31/2014	unsecured loan		1,500		1,500,000		1,500,000		—	none
BNL	Eur 3M + 2,50	12/31/2014	unsecured loan		600		600,000		600,000		—	none
MPS	Eur 3M + 2,50	12/31/2014	unsecured loan		5,500		5,500,000		5,500,000		—	none
UNICREDIT	Eur 3M + 2,50	12/31/2014	unsecured loan		2,000		2,000,000		2,000,000		—	none
BPER / UNICREDIT	—	12/31/2015	deferred interest - Senior loan		2,862		2,862,200		2,862,200		—	none
BPER / UNICREDIT	Eur 6M + 2,36	1/30/2017	Secured loan - Senior loan		26,993		26,993,000		26,993,000		—	mortgage + pledge on shares
BPER / UNICREDIT	Eur 6M + 2,86	1/30/2017	Secured loan - Senior loan		30,000		30,000,000		30,000,000		—	mortgage + pledge on shares
CARISBO	Eur 3M + 2,50	12/31/2014	unsecured loan		500		129,354		129,354		—	none
BPER (ex B.ca CRV)	Eur 3M + 2,51	12/31/2014	unsecured loan		750		692,329		692,329		—	none
BPER	Eur 3M + 2,52	12/31/2014	unsecured loan		1,000		1,000,000		1,000,000		—	none
BNL	Eur 3M + 2,53	12/31/2014	unsecured loan		300		300,000		300,000		—	none
MPS	Eur 3M + 2,54	12/31/2014	unsecured loan		500		500,000		500,000		—	none
BPER / UNICREDIT	—	12/31/2015	deferred interest - Senior loan		270		269,977		269,977		—	none
BPER / UNICREDIT	Eur 6M + 2,36	1/30/2017	Secured loan - Senior loan		5,807		5,807,000		5,807,000		—	pledge on shares
BANCA ITALO ROMENA	Eur 3M + 5%	6/30/2015	Secured loan		800		802,451				802,451	mortgage
DEBT ISSUANCE COSTS							—		415,601

TOTAL							80,138,754		78,920,702		802,451

As disclosed in the note related to the Going Concern assumption, the Group was not in compliance with covenants set out by the loan agreements as of December 31, 2013. The Group failed to make principal repayments due on certain loans payable outstanding at December 31, 2013, and, starting in July 2013, failed to make payments on interest accruing on a certain senior loan payable. This resulted in the Group defaulting on its loans payable to the creditor banks totaling Euro 78,921 thousand at December 31, 2013. Consequently, the balance in default has been reclassified to current financial payables in the consolidated financial statements.

The mortgage refers to the Oil & Steel S.p.A. factory located in S. Cesario sul Panaro (MO) The pledge refers to the 100% Oil & Steel S.p.A. and Pilosio S.p.A. shares, held by PM Group S.p.A.

Note 13 – Employee benefits

Movements on the employee severance indemnity / TFR provision during the period, including the effects of the actuarial valuation of the TFR, were as follows:


(in Euro)	31/12/12		Reclass. Assets held for sale		Increases		Decreases		31/12/13
Employee severance indemnity / TFR		2,640,541		-1,049,830		664,047		841,200		1,413,558

The estimates, demographic and economic/financial assumptions made, with the support of an independent actuary, for the actuarial calculation used to determine the defined benefit plans in relation to post-employment benefits (Employee severance indemnity provision) can be detailed as follows:

Annual discount

rate

Annual rate
of inflation

Annual
increase
rate

Probability of employee
leaving Group

Probability of
advance payment of
TFR

2.5%

10% frequency

PM GROUP

The amounts allocated to the Employee severance indemnity provision in 2013, 2012 and 2011 were € 664 thousand, € 809 thousand and € 769 thousand, respectively

A reconciliation of the defined benefit obligation is set out below:

2013

2012

Past Service Liability at Beginning of the period

2,640,541

2,483,706

Interest Cost

(included in Statement of Income)

66,545

(included in Statement of Income)

84,553

Actuarial (Gain)/Loss

(included in Other Comprehensive income)

17,435

(included in Statement of Income)

98,127

Payments

-298,516

-25,845

Reclassification Liabilities held for sales

-1,012,447

Past Service Liability at the end of the period

1,413,558

2,640,541

Actuarial gains and losses arising from changes in financial assumptions

30,961

176,493

Actuarial gains and losses arising from experience adjustment

-13,526

-78,366

Actuarial (Gain)/Loss

17,435

98,127

Employees in Italy are entitled to Trattamento di Fine Rapporto (“TFR,” commonly referred to as an employee leaving indemnity), which represents deferred compensation for employees in the private sector. Under Italian law, an entity is obligated to accrue for TFR on an individual employee basis payable to each individual upon termination of employment (including both voluntary and involuntary dismissal). The annual accrual is approximately 7% of total pay, with no ceiling, and is revalued each year by applying a preestablished rate of return of 1.50%, plus 75% of the Consumer Price Index, and is recorded by a book reserve. TFR is a plan unfunded.

In October 2006, the Italian Government passed a law, effective January 1, 2007, which reformed the current TFR system, in which employees are given the ability to make choices as to the destination of the investment of the TFR compensation. In particular, the new change allowed the employee to direct the TFR funds to a chosen pension fund, such as an industry fund, an existing company pension plan, open funds, and individual insurance policies, subject to Company agreement. If no choice was made, the TFR allocations were made automatically to the default pension fund, which may be the industry wide fund, a specific employer-sponsored plan, or, absent of these alternatives, the employee’s contributions were invested into a “residual” pension fund managed by the National Social Insurance Institute (INPS). Each Employee had until June 30, 2007 to make a decision as to the destination of his TFR allocation.

Note 14 – Provisions for risks and charges

Movements on provisions for risks and charges in 2013 and 2012 were as follows:


(in Euro)	01/01/13		Reclass. Ass. dest. for sale		Increases		Decreases		31/12/13
Product warranty provision		835,000		0		569,746		553,746		851,000
Prov. for retirement benefits & similar obligations		174,537		-99,061		6,012		682		80,806
Other provisions		81,866		-81,866		505,519		0		505,519

Provisions for risks and charges		1,091,403		-180,927		1,081,277		554,428		1,437,325


(in Euro)	01/01/12		Increases		Decreases		31/12/12
Product warranty provision		786,000		631,587		582,587		835,000
Prov. for retirement benefits & similar obligations		160,092		14,449		5		174,536
Other provisions		62,642		1,503,139		1,483,914		81,867

Provisions for risks and charges		1,008,734		2,149,175		2,066,506		1,091,403

PM GROUP

The “Provision for retirement benefits and similar obligations” represents the potential liability towards agents in the event that the agency relationship is terminated by the Group companies or if the agents retire.

The “Provision for product warranty risks” has been used to cover the cost of repairs and assistance under warranty and has been updated based on estimated requirements.

The increases in “Other provisions” mainly regard amounts allocated for several legal claims against Group companies (specifically Euro 20 thousand for PM Group S.p.A. and Euro 460 thousand for subsidiary Oil & Steel S.p.A.).

The amounts allocated to Provisions for risks and charges in 2013, 2012 and 2011 totaled € 1,081 thousand, € 639 thousand and € 746 thousand, respectively.

Note 15 – Provision for deferred taxes


(in Euro)	1/1/2012		Statement of Income		31/12/2012
Accelerated depreciation		94,742		-9,655		85,087
Goodwill		1,272,122		212,020		1,484,142
Amortization from merger		704,460		0		704,460
TFR under IAS		83,828		-11,109		72,719
Out of period income due to change of rate		-228,888		0		-228,888
Leasehold improvements		140,683		0		140,683
Finance leases (IAS 17)		545,138		8,706		553,844
Reversal of depreciation of land/building O&S		57,999		0		57,999
Other		9,822		3,177		12,999

Total		2,679,906		203,139		2,883,045


(in Euro)	1/1/2013		Statement of Income		Reclass. Liabilities held for sale		31/12/2013
Accelerated depreciation		85,087		-1,823		0		83,264
Goodwill		1,484,142		212,021		0		1,696,163
Amortization from merger		704,460		0		0		704,460
TFR under IAS		72,719		0		-6,661		66,058
Out of period income due to change of rate		-228,888		0		0		-228,888
Leasehold improvements		140,683		0		0		140,683
Finance leases (IAS 17)		553,844		0		-48,270		505,574
Reversal of depreciation of land/building O&S		57,999		0		0		57,999
Other		12,999		0		0		12,999

Total		2,883,045		210,198		-54,931		3,038,312

The deferred tax provision (Euro 3,038 thousand at December 31, 2013) largely relates to the deferral of gains realized on disposal of tangible assets held for more than three years, accelerated depreciation charged for tax purposes only until 2007 and the tax effects of the transition to IAS/IFRS.

PM GROUP

Current liabilities

Note 16 – Current financial payables


(in Euro)	31/12/2013		31/12/2012
Bank overdrafts, loans, advance on invoice and notes		20,734,487		17,437,089
Current portion of loans payable		78,920,702		76,948,205
Payables to other lenders		507,772		465,307

Current financial payables		100,162,961		94,850,601

Payables to other lenders represent the amount due within a year and they mainly refer to the current portion of Euro 238 thousand payable to Medioleasing (formerly Banca Marche) under the real estate finance lease entered into for the Oil & Steel factory in San Cesario sul Panaro (MO), Via Verdi 22 at December 31, 2013.

As further described in Note 12, the Group defaulted on its loans payable to the creditor banks totaling Euro 78,921 thousand at December 31, 2013. Consequently, the balance in default has been reclassified to current financial liabilities in the financial statements

The fair value of the current portion of loans payable is assumed to be equal to Euro 37,454 thousand plus n. 860 thousand of Manitex shares. The fair value was determined to be the residual value of current portion of loans payable at December 31, 2013 (Euro 78,921 thousand) resulting from the restructuring of the financial indebtedness of the Group upon completion of the Operation. Please refer to the note related to the going concern assumption for more details on terms of the Operation.

Note 17 – Liabilities for financial instruments and derivatives


(in Euro)	31/12/2013		31/12/12
Interest rate hedges		2,141,069		3,140,057

Liabilities for financial instruments and derivatives		2,141,069		3,140,057

The Group uses financial instruments available on the market (including derivatives) solely in order to minimize its cost of borrowing and hedge the risk of interest rate and exchange rate fluctuation.

On January 30, 2009, when it received a loan of Euro 76,500 thousand from BPER and UCB, the Group entered into the following contracts in order to hedge the related interest rate risk:

•

A contract, signed by PM Group, for an original notional amount of Euro 20,000 thousand (unchanged at December 31, 2013 and 2012), maturing on February 3, 2017 with interest payable every January 31 and July 31 each year; PM Group pays interest at a rate of 3.48% and receives from the counterparty interest at the Euribor rate for the period in question

•

A contract, signed by PM Group for an original notional amount of Euro 8,496 thousand (Euro 3,558 thousand at December 31, 2013 and Euro 4,970 thousand at December 31, 2012), by Oil & Steel for an original notional amount of Euro 2,904 thousand (Euro 1,216 thousand at December 31, 2013 and Euro 1,698 thousand at December 31, 2012) and by Pilosio for an original notional amount of Euro 6,850 thousand (Euro 2,870 thousand at December 31, 2013 and Euro 4,007 thousand at December 31, 2012), maturing on December 31, 2016. Interest is payable every January 31 and July 31 each year. The Group companies pay interest at a rate of 2.99% and receive from the counterparty interest at the Euribor rate for the period in question.

In accordance with IAS 32, IAS 39 and IFRS 7, these contracts have been recorded under “Liabilities for financial instruments and derivatives” (with a contra-entry to the Income Statement) in the amount of Euro 2,141 thousand which represents the fair value of the contracts at the reporting date. The change in fair value of these contracts is recorded in the financial income/expenses and exchange gains/losses captions of the Consolidated Statement of Income.

PM GROUP

At December 31, 2013, there were no transactions for the forward sale or purchase of currency.

Note 18 – Current tax payables

Current tax payables may be broken down as follows:


(in Euro)	31/12/2013		31/12/12
IRAP/IRES and other taxes on income (net of payments on account)		842,764		1,238,386
VAT payable		118,775		39,820
Personal income tax of employees & consultants		659,395		781,863
Other current tax payables		3,103		42,712

Current tax payables		1,624,037		2,102,781

Note 19 – Current trade payables

Current trade payables (including invoices to be received from suppliers) are analyzed as follows:


(in Euro)	31/12/2013		31/12/12
Trade payables		22,131,036		25,238,003

Current trade payables		22,131,036		25,238,003

Note 20 – Other current liabilities

Other current liabilities are analyzed as follows:


(in Euro)	31/12/2013		31/12/12
Social security and pension conts payable		644,655		1,140,485
Payables to INAIL and other welfare entities		25,107		58,402
Payables to employees for accrued holiday pay		253,416		424,950
Customer bonuses		37,740		37,740
Payables to employees		7,484		22,205
Salaries payable		1,772,560		1,112,919
Payables to directors and statutory auditors		160,498		249,705
Employee bonuses		50,000		148,750
Payables to agents		78,045		790,780
Other current payables		1,469,481		2,437,569

Other current liabilities		4,498,986		6,427,047

PM GROUP

“Other current payable” mainly includes liabilities towards customers for advances and deposits received, payables to insurance companies and remuneration payable under project based consulting contracts. INAIL is the public agency “Istituto Nazionale per l’Assicurazione degli Infortuni sul Lavoro”.

Sureties and guarantees

Information on sureties issued and guarantees at December 31, 2013 is provided below:

PM Business Unit:

Sureties issued by third parties in favor of third parties

These are guarantees issued in favor of third parties:

•

Surety of Euro 220 thousand issued by B.N.L. in favor of a supplier in relation to the rental contract for the property in Via dell’Industria 8.

•

Sureties totaling Euro 495 thousand issued by BPER in favor of third parties in relation to proper fulfilment of contractual obligations.

Oil & Steel Business Unit:

Sureties issued by third parties in favor of third parties

•

Surety for a maximum amount of Euro 2,600 thousand issued by the Company’s banks in favor of Nissan Italia as a guarantee of due payment of purchases made by Oil & Steel from said company. At the reporting date, the Company had utilized the available guarantee facility in the amount of Euro 1,049 thousand.

Operating leases

The following table contains details of the minimum operating lease payments due at December 31, 2013 and December 31, 2012. These contracts mainly relate to property and industrial equipment rental and to company car hire/rental.

At 31 December 2013

At 31 December 2012

(in Euro)

within a year

between one
and five years

after more
than five
years

31/12/2013

within a year

between
one and
five years

after
more than
five years

31/12/2012

Future minimum payments due under operating leases

736,257

614,470

1,350,727

1,928,788

4,869,010

1,230,091

8,027,889

Total Operating lease commitments

736,257

614,470

1,350,727

1,928,788

4,869,010

1,230,091

8,027,889

PM GROUP

Comments on main Income Statement items

Note 21 – Revenue from operating activities

Revenue from operating activities is analyzed below:


(in Euro)	2013		2012		2011
Revenue from products		75,715,695		81,736,949		74,228,796
Revenue from services		2,574,312		7,332,856		2,633,145
Rental income		145,939		121,117		246,587
Other revenue from operating activities		163,445		308,653		348,376

Revenue from operating activities		78,599,391		89,499,575		77,456,904

The following table provides a breakdown of consolidated revenue from operating activities between sales in Italy and sales in Other countries:


(in thousands of Euro)	Balance at 31.12.13				Balance at 31.12.12				Balance at 31.12.11				Diff 2013 vs 2012				Diff 2012 vs 2011
Italy		21,189	27	%		14,788	16.5	%		29,148	37.6	%		6,401	43.3	%		-14,360	-49.3	%
Other countries		57,409	73	%		74,711	83.5	%		48,309	62.4	%		-17,302	-23.2	%		26,402	54.7	%

Total Group		78,599				89,500				77,457				-10,900	-12.2	%		12,044	15.5	%

Note 22 – Other revenue and income

Other revenue and income are analyzed as follows:


(in Euro)	2013		2012		2011
Compensation for damages		11,773		22,600		60,253
Gains on disposal		17,562		15,108		62,767
Freight services		1,099,065		1,346,257		801,292
Other		685,281		705,869		747,870

Other revenue and income		1,813,681		2,089,834		1,672,182

“Freight Services” mainly includes revenues related to organization of freight service to customers. “Other” primarily includes sundry charges to customers.

Note 23 – Increases in non-current assets due to capitalization of internal costs

This caption regards the capitalization of materials, services and labor costs incurred for the internal construction of equipment and the development of new products, as shown in the following table:


(in Euro)	2013		2012		2011
Increases in industrial equipment		26,929		133,490		155,479
Increases in development costs		2,001,979		2,154,980		1,967,723

Increases in non-current assets due to capitalisation of internal costs		2,028,908		2,288,470		2,123,202

PM GROUP

2013

PM’s research and development activities focus on the introduction into the range and into production of a new series of high performance medium size cranes with lifting capacity of between 25 and 40 tonnes; these cranes represent a significant portion of the Company’s product range.

Some of the most significant activities have included completion of the design and development of a new high performance truck-mounted crane, the PM 150, which is PM’s top of the range model.

In 2013, Oil & Steel continued to develop and manufacture new platform models which were launched on the market during the year, as follows:

Snake 2612, a small-sized articulated telescopic platform installed on a 3.5 tonne vehicle, designed to meet specific high performance requirements combined with limited size and weight.

Octopus 23, a self-propelled tracked platform with high performance levels.

2012

PM’s research and development activities focused on the global preview at SAIE 2012 in October of the new high performance range of medium sized cranes with lifting capacity from 25 to 40 tonnes/m, which represent a very important segment in the Company’s product range.

Production and shipment on the market commenced in the first quarter of 2013 with volumes showing strong growth.

The Company completed all of the new range of fly-jibs with six hydraulic pistons, offering excellent lifting performance and which are now fitted on all models of crane from 100 tonne/m downwards.

Development of the new generation of electronic limiters was completed. These optimize performance of all models and make the work of operators more efficient and safer.

In 2012, Oil & Steel continued to develop and manufacture new platform models which were launched on the market during the year, as follows:

The Snake 2312 Compact, a small-sized articulated telescopic platform installed on a 3.5 tonne vehicle, designed to meet specific high performance requirements combined with limited size.

The Snake 147, a highly compact articulated platform for installation on very light vehicles.

Also, during 2012, two new aerial platform models were previewed at SAIE 2012 trade fair – they are respectively truck mounted and on caterpillar tracks and are for work at 26m and 23m.

2011

PM’s research and development activities focused on starting production and launching on the market the new high performance crane with lifting capacity of 100 tonnes/m. This enabled PM to enter a new market segment with a highly innovative product.

A new series of fly-jib models with six hydraulic pistons, offering excellent lifting performance, was introduced into the range to be fitted on all models of crane from 100 tonne/m downwards.

The new generation of electronic limiters has gradually been reduced on all products in the PM range. These optimize the performance of all models and render the work of operators more efficient and safer.

PM GROUP

In 2011, Oil & Steel continued to develop and manufacture new platform models which were launched on the market during the year, as follows:

The Snake 2311 Compact, a small-sized articulated telescopic platform installed on a 3.5 tonne vehicle, designed to meet specific high performance requirements combined with limited size.

The Snake 2010 REL, an articulated telescopic platform with electrical/hydraulic controls, automatic stabilization and a home function.

During the year, two important projects got underway to develop two new aerial platform models - respectively truck mounted and on caterpillar tracks and for work at 26m and 23m. They will be presented at the SAIE 2012 trade fair.

Note 24 - Cost of raw materials

Purchases of raw materials are analyzed as follows:


(in Euro)	2013		2012		2011
Finished goods		6.712.683		10.185.411		14.893.576
Raw materials		30.833.182		28.666.885		31.097.793
Packaging and consumable materials		522.692		524.461		507.190
Change in inventory of raw materials and goods		1.256.419		7.029.800		-7.545.340

Total Costs of raw material		39.324.976		46.406.557		38.953.219

Most of the Group’s costs are incurred in Euro. Therefore, a breakdown of purchases of goods and other income statement expenses in foreign currency is not provided as it would not be significant.

Note 25 – Costs for services

Costs for services are analyzed as follows:


(in Euro)	2013		2012		2011
Outsourced production		4,145,506		8,293,662		9,257,235
Transport/freight		1,979,322		2,111,201		1,949,708
Agents’ commission		495,553		1,324,890		973,176
Legal and consulting costs		1,968,699		2,252,102		2,274,852
Utilities and other industrial services		866,069		807,227		749,180
Insurance		467,266		481,834		418,809
Repairs and maintenance		260,259		255,447		310,508
Marketing, trade fairs and advertising		715,758		689,598		667,074
Board of Statutory Auditors’ fees		91,582		98,567		99,688
Other costs for services		1,906,791		2,102,005		2,029,664
Technical assistance		-34,002		154,218		82,654

Costs for services		12,862,803		18,570,751		18,812,548

PM GROUP

Note 26 – Personnel costs


(in Euro)	2013		2012		2011
Wages and salaries		12,885,008		11,451,207		11,018,246
Directors’ remuneration and benefits		278,335		251,647		320,225
Social contributions		3,593,876		3,419,864		3,395,025
TFR, retirement benefits and similar		664,047		809,302		768,960
Other costs		499,939		565,411		558,953

Personnel costs		17,921,205		16,497,431		16,061,409

The Group’s average headcount, by employee category, is shown in the following table:


	2013		2012		2011
Managers		12		12		14
Staff		564		555		547

Total		576		567		561

Figures for the Pilosio BU are included for the sake of completeness. The related costs are included in the operating expenses detailed in Note 31.

Note 27 – Other operating expenses

Other operating expenses are analyzed as follows:


(in Euro)	2013		2012		2011
Rental of industrial and office buildings		717,345		817,791		706,124
Operating leases		411,289		421,367		344,358
Losses on disposals		0		3,375		75,873
Taxes other than income taxes		429,570		744,610		389,834
Bad debts		-6,946		3,396		31,692
Other operating expenses		981,656		808,771		1,170,197

Other operating expenses		2,532,914		2,799,310		2,718,078

Note 28 – Depreciation, amortization and impairment of non-current assets


(in Euro)	2013		2012		2011
Amortization of intangible assets		1,415,326		1,753,123		1,536,844
Depreciation of tangible assets		1,633,214		1,752,742		1,892,210
Impairment of tangible assets		165,089		0		0
Impairment of development costs		3,021,095		0		0
Impairment of goodwill		14,871,056		0		0

Depreciation, amortization and impairment of non-current assets		21,105,780		3,505,865		3,429,054

PM GROUP

Reference should be made to Notes 2 and 3, respectively, for the impairment of development costs and goodwill.

Note 29 – Provisions

These may be analyzed as follows:


(in Euro)	2013		2012		2011
Increase of provision for bad debts		486,788		481,614		880,221
Provisions for risks		569,746		631,587		740,462
Other provisions		511,041		7,075		6,004

Total		1,567,575		1,120,276		1,626,687

“Provisions for risks” essentially relate to amounts allocated to the product warranty provision (Euro 433 thousand for PM Group and Euro 137 thousand for Oil & Steel). “Other provisions” includes the amount allocated to the agents’ supplementary leaving indemnity provision (Euro 5 thousand by Oil&Steel SpA, Euro 1 thousand by PM Group) and amounts provided for several legal claims against Group companies (Euro 20 thousand by PM Group S.p.A., Euro 460 thousand by subsidiary Oil & Steel S.p.A. and Euro 25 thousand by subsidiary PM Oil & Steel France).

Note 30 – Financial income and expenses


(in Euro)	2013		2012		2011
Interest income on bank accounts		4,632		13,032		8,489
Interest income from customers		2,438		5,100		43,773
Income from derivatives		794,388		0		0
Other financial income		18,329		18,435		17,124

*Financial income*		*819,787*		*36,567*		*69,386*

Financial expenses on loans and finance leases		2,213,213		2,821,066		3,143,698
Financial expenses on current liabilities		724,307		895,903		709,163
Financial expenses on derivatives		767,617		1,313,004		1,364,745
Other interest and expenses		104,642		704,572		158,493
Bank charges		575,347		449,611		583,863

*Financial expenses*		*4,385,126*		*6,184,156*		*5,959,962*

Exchange gains - realized		378,876		538,229		469,101
Exchange gains - unrealized		525,501		596,589		203,187
Exchange losses - realized		1,258,200		1,755,723		488,489
Exchange losses - unrealized		990,715		263,894		842,349

*Net exchange losses*		*-1,344,538*		*-884,799*		*-658,550*

Financial income and expenses		-4,909,877		-7,032,388		-6,549,126

PM GROUP

Note 31 – Taxes on income

Taxes on income are analyzed as follows:


(in Euro)	2013		2012		2011
Current IRAP		271,770		957,555		401,526
Current IRES		-714,989		262,423		-187,843
Current foreign income taxes		687		24,209		70,554

*Current taxes*		*-442,532*		*1,244,187*		*284,237*

Deferred IRAP		26,139		25,134		27,720
Deferred IRES		184,059		180,408		194,171
Deferred taxes - foreign countries		0		0		0

*Deferred taxes expense*		*210,198*		*205,542*		*221,891*

Deferred tax income - IRAP		-58,207		27,010		22,689
Deferred tax income - IRES		-1,246,524		615,281		803,425
Deferred tax income - foreign countries		91,539		281,273		0

*Deferred tax income*		*-1,213,192*		*923,564*		*826,114*

Taxation		980,858		526,165		-319,986

Current taxes (I.RE.S. and I.R.A.P. for the Italian Group companies and equivalent taxes on income for foreign subsidiaries) refer to the tax charge calculated on the respective taxable income.

Deferred tax expenses have mainly been recognized in relation to accelerated depreciation and deferred gains on disposal.

Deferred tax income mainly relates to amounts allocated to taxed provisions and prior year tax losses.

The following table contains a reconciliation between the theoretical tax charge determined based on tax rates applicable in Italy for IRES (27.5%) and the effective tax charge:

(in Euro)

31/12/2013

31/12/2012

31/12/2011

Theoretical taxes on income

-5,915,873

-823,451

-1,710,205

Tax effect of permanent differences and prior year taxes

6,540,585

393,937

716,564

Taxes on income (current and deferred) recorded in financial statements excluding IRAP (A)

624,712

-429,514

-993,641

IRAP (B)

356,146

955,679

673,656

Taxes on income recorded in financial statements (current and deferred) (A+B)

980,858

526,165

-319,985

IRAP has not been reconciled as its tax base is different than profit before taxation.

PM GROUP

In 2013, the difference between the effective rate of 5% and the theoretical rate was mainly due to the impairment adjustments of goodwill recorded in the Income Statement which were not deductible for income tax purposes because no tax charge was recorded upon recognition of the goodwill in question.

Tax effect of permanent differences and prior year taxes are analyzed as follows:


(in Euro)	2013		2012		2011
Impairment of Goodwill		4,089,525		0		0
Impairment of Development Costs		564,025		0		0
Inventory obsolescence		208,450		0		0
Financial expenses not deductible		148,225		0		0
Impairment of Deferred Tax Asset		326,425		0		0
Taxes of previous year		0		127,875		0
Net exchange losses		0		0		90,750
Amortization not deductible		0		0		65,725
Other		1,203,935		266,062		560,089

Total		6,540,585		393,937		716,564

At December 31 2013 the Group has tax losses totaling Euro 2.900 thousand, for which it has not recognized any deferred tax assets.

Note 32 – Assets and liabilities held for sale. Profit/Loss from discontinued operations

The Group Consolidated Financial Statements, include the assets and liabilities of Pilosio S.p.A. and its subsidiaries. At December 31, 2013, a binding purchase commitment has been received from Columna in connection with the Operation, as previously described in the note related to the going concern assumption. The fulfilment of the purchase commitment is subject, among other things, to the definitive approval of the Agreement by the Court in Modena. The disposal price of Euro 1,000 thousand was based on management’s assessment, considering advice from an independent expert advisor and used to help determine the fair value of the assets held for sale included in the consolidated financial statements at December 31, 2013.

As a result of the above, the Consolidated Statement of Income includes “Profit/Loss from discontinued operations” related to the Pilosio BU, representing the after tax effect of the loss recorded upon the fair value measurement described in more detail in Note 2, partially offset by the profits of the discontinued operations, net of tax effects.

In accordance with IFRS 5, we provide below details of (i) the assets held for sale and the related liabilities at December 31, 2013, (ii) the items forming part of the discontinued operations/activities for the years ended December 31, 2013, 2012 and 2011, and (iii) the cash flow statement related to the discontinued operations for the years 2013, 2012 and 2011.

PM GROUP

ASSETS HELD FOR SALE


(in thousands of Euro)	31.12.2013
NON-CURRENT ASSETS

Tangible assets		3,651
Goodwill		6,975
Other intangible assets		979
Investments in subsidiaries and other entities		2
Deferred tax assets		1,203
Other non-current assets		299

Total non-current assets		13,108

CURRENT ASSETS

Inventory		12,608
Current trade receivables		17,113
Current tax receivables		1,027
Cash and cash equivalents		70
Other current assets		715

Total current assets		31,532

TOTAL ASSETS HELD FOR SALE		44,641


	31.12.2013
NON-CURRENT LIABILITIES

Non-current financial payables		1,324
Employee benefits		1,097
Provisions for risks and charges		1,397
Deferred tax liabilities		54

Total non-current liabilities		3,873

CURRENT LIABILITIES

Current financial payables		23,767
Liabilities for financial instruments and derivatives		108
Current tax payables		261
Dividends payable		300
Current trade payables		10,676
Other current liabilities		3,721

Total current liabilities		38,832

TOTAL LIABILITIES HELD FOR SALE		42,705


(in thousands of Euro)	2013			2012			2011
Revenue from operating activities		46,044			36,363			27,959
Other revenue		2,935			1,365			2,157
Operating expenses		-45,245			-33,505			-26,562
Depreciation, amortization and writedowns		-15,426			-1,636			-1,635
Financial income and expenses		-1,901			-1,150			-1,123
Taxes in income		-875			-506			-484

PROFIT/LOSS FROM DISCONTINUED OPERATIONS		-14,468			931			312

(in thousands of Euro)	31.12.2013			31.12.2012			31.12.2011
Cash flows generated by operating activities
Loss for period before non-controlling interests		(14,468	)		931			312
Adjustments made in order to reconciile net loss with the cash flows generated by operating activities		14,241			1,446			1,036
Operating profit (loss) before changes in working capital		(227	)		2,377			1,348
Effect of changes in assets and liabilities in net working capital		1,681			(2,577	)		(318	)

Change in cash generated (absorbed) by operating activities (A)		1,454			(200	)		1,030

Cash flows generated (absorbed) by investing activities (B)		(1,174	)		(1,056	)		(673	)

Cash flows generated (absorbed) by operating activities after cash flows absorbed by investing activities (A-B)		280			(1,256	)		357

Cash flows (absorbed) generated by financing activities		(815	)		759			(491	)

Increase (decrease) in cash and cash equivalents		(535	)		(497	)		(134	)

Cash and cash equivalents at start of period		604			1,101			1,235

Cash and cash equivalents at end of period		69			604			1,101

Note 33 – Fair Value measurement

IFRS 13 establishes a fair value hierarchy which classifies on three levels the inputs of the valuation techniques adopted to measure fair value. The fair value hierarchy gives highest priority to the quoted prices (unadjusted) on active markets for identical assets or liabilities (Level 1 inputs) and lowest priority to unobservable inputs (Level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or liability could be classified on several levels of the fair value hierarchy. In such cases, the fair value measurement is classified entirely on the same hierarchy level where the lowest level input is classified, taking account of its importance for the valuation.

PM GROUP

The levels used in the hierarchy are:

•

Level 1 inputs are quoted prices (unadjusted) on active markets for identical assets or liabilities that the entity can access at the measurement date;

•

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

•

Level 3 inputs are unobservable inputs for the asset or liability.

The following table shows the fair value hierarchy of Assets and Liabilities measured at fair value at December 31, 2013:


(in Euro)	Level 1		Level 2		Level 3		Total 31/12/2013
Liabilities for derivative financial instruments		0		-2,141,069		0		-2,141,069
Assets held for sale		0		0		44,640,884		44,640,884
Liabilities held for sale		0		0		-42,705,167		-42,705,167

Total		0		-2,141,069		1,935,717		-205,352

For more details of the valuation of Liabilities for derivative financial instruments, see Note 17. Meanwhile, for Assets held for sale, reference should be made to the section on the main estimates made by Management. Liabilities for derivative financial instruments did not change fair value hierarchy between December 31, 2012 and December 31, 2013. There were no assets held for sale at December 31, 2012.

The fair value of Liabilities for derivative financial Instruments is included in Level 2 of the fair value hierarchy and has been estimated with discounted cash flows models. The main inputs used are forward interest rates (from observable yield curves at the end of the reporting period), and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.

The fair value of Assets and Liabilities held for sale is included in Level 3 of the fair value hierarchy and has been estimated with reference of the fixed price set for the sale of Pilosio S.p.A. and its subsidiary Electroelsa S.p.A., as disclosed in the note related to the Going Concern assumption.

For financial instruments represented by short-term receivables, payables, and financial payables for which the present value of future cash flows does not differ significantly from carrying value, the carrying value is a reasonable approximation of the fair value. In particular, the carrying amount of Current receivables, Other current assets and of Trade payables and Other current liabilities, approximates their fair value and as such are classified as Level 1 in the fair value hierarchy. The fair value of the financial payables has been disclosed in the Note 16.

For other Statement of Financial Position items valued based on the criteria set out in the Valuation Criteria section, the carrying amount represents a reasonable approximation of fair value at December 31, 2013.

PM GROUP

Note 34 – Management of financial risks

Interest rate risk

The interest rate risk is the risk of an uncontrolled increase in expenses resulting from payment of variable rates of interest on the Group’s medium/long-term borrowing.

The objective of interest rate risk management is to limit and stabilize the flow of interest paid on such borrowing.

Hedging is arranged whenever considered useful in relation to loans arranged. It is done by entering into Interest Rate Swaps. The time period of the hedge cannot go beyond the expiry date of the loan.

Any interest rate fluctuation could have significant effects in terms of increases or decreases in borrowing costs.

The risk regards financial instruments subject to variable rates of interest, as recorded in the Statement of Financial Position. All of the Company’s borrowing is at variable rates of interest so it is exposed to the risk of interest rate fluctuation.

In 2009, the Group entered into contracts to manage the interest rate risk.

The Group has also estimated the impact of a +/- 0.50% change in interest rates, assuming all other variables remain constant, based on the following criteria, as applied to the consolidated six-monthly average balance:

•

The remuneration of liquidity which generates interest income depending in interbank rates was varied by +/- 0.50%;

•

Interest expenses on short and medium/term variable rate loans and on finance leases that include a clause index-linking the interest element of instalments were varied by +/- 0.50%;

•

The effects of fluctuation on derivatives used to manage the interest rate risk were not considered. In fact, increases or decreases in interest rates have a positive or negative impact on the mark to market value of the derivative instrument ( the portion hedged by IRA amounts to Euro 33.7 million);

•

The debt situation used for the purposes of the sensitivity analysis was at December 31, 2013.

Based on the above assumptions, interest rate fluctuation would have a positive or negative effect on the Statement of Income of Euro 632 thousand (Euro 613 thousand on 2012 financial statements).

Exchange rate risk

The exchange rate risk is the risk that exchange rates might fluctuate negatively in the period between when the target exchange rate is defined – or when a commitment is made to collect or pay amounts in foreign currency on a future date – and the moment when such commitments are transformed first into orders and, then, into purchases or sales. As there are no transactions to hedge the exchange rate risk in relation to specific commercial transactions, hedge accounting is not used.

As the Group operates on international markets, it is exposed to the risk of exchange rate fluctuation.

Sales revenue is generally generated in Euro – or, at least, index linked to the Euro – except on the UK market and the US market where it is generated in GB Pounds (GBP) and US Dollars (USD), respectively. Sales on the South American market are also made in Chilean Pesos (CLP) and Argentinean Pesos (ARS).

Credit risk

Receivables are reported after the bad debt provision which is calculated based on the risk of default by debtors, as determined considering available information on the debtor’s ability to pay and taking historical data into account.

PM GROUP

The credit risk is the possibility that a debtor might cause an economic and financial loss by failing to fulfil a payment obligation.

Each PM Group company manages directly the credit risk in relation to its own customers.

There are no significant concentrations of credit risk within the Group.

Liquidity risk

The liquidity risk is the possibility that the Group might be incapable of raising the financial resources needed to guarantee its current operations and fulfil its obligations as they fall due.

Consequently, the PM Group

•

periodically tests its forecast funding requirements based on operational requirements, in order to take prompt action to raise any additional resources needed,

•

performs all actions necessary to raise such resources,

•

manages an appropriate portfolio of credit facilities in terms of maturity, nature and level of availability.

Note 12 contains a breakdown of payables by due date.

As highlighted in the earlier “Going Concern” section, at the date of preparation of the Group consolidated financial statements, the Group found itself in a situation where it was defaulting on its borrowing. In terms of Article 1456 of the Italian Civil Code, this would entitle the banks to terminate its loan agreements. The “Going Concern” section contains a description of the measures taken by the Group to deal with this situation. If said measures do not have a positive outcome, the Group would no longer be capable of meeting its debt repayment obligations.

San Cesario sul Panaro, December 1, 2014

FOR THE BOARD OF DIRECTORS

THE PRESIDENT

(Giuliano Asperti)

PM GROUP

Exhibit 99.2

UNAUDITED CONDENSED GROUP CONSOLIDATED FINANCIAL

STATEMENTS AS OF AND FOR THE NINE-MONTH ENDED

SEPTEMBER 30, 2014 AND 2013

PM GROUP

Condensed Consolidated Statement of Financial Position (unaudited)


(in Euro)			30/09/2014		31/12/2013
NON-CURRENT ASSETS
Tangible assets	(1	)		18,614,976		19,256,205
Goodwill	(2	)		33,192,959		33,192,959
Other intangible assets	(3	)		3,825,746		3,715,926
Investments in other entities				1,560		1,560
Deferred tax assets	(4	)		5,988,051		5,703,493
Other non-current assets				140,870		161,832

Total non-current assets				61,764,162		62,031,975

CURRENT ASSETS
Inventory	(5	)		19,809,268		13,851,167
Trade receivables	(6	)		20,277,192		28,521,700
Current tax receivables				3,059,867		2,066,842
Dividends receivable				300,000		300,000
Cash and cash equivalents	(7	)		1,683,500		2,220,199
Other current assets				1,720,205		1,570,414

Total current assets				46,850,032		48,530,322

Assets held for sale	(26	)		46,798,757		44,640,884

TOTAL ASSETS				155,412,950		155,203,181

LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital				23,311,420		23,311,420
Reserves				-15,467		-34,324
Accumulated deficit				-50,760,044		-49,299,634

Shareholders’ equity—Group				-27,464,091		-26,022,538

Capital and reserves of non-controlling interests				935,717		905,756
Net profit (loss) attributable to non-controlling interests				-131,310		29,961
Shareholders’ equity attributable to non-controlling interests				804,407		935,717

TOTAL SHAREHOLDERS’ EQUITY				-26,659,684		-25,086,821

NON-CURRENT LIABILITIES
Non-current financial payables	(8	)		717,700		1,137,551
Employee benefits	(9	)		1,352,744		1,413,558
Provisions for risks and charges	(10	)		1,427,880		1,437,325
Deferred tax liabilities	(11	)		3,197,327		3,038,312

Total non-current liabilities				6,695,651		7,026,746

CURRENT LIABILITIES
Current financial payables	(12	)		99,853,416		100,162,961
Liabilities for financial instruments and derivatives	(13	)		1,728,343		2,141,069
Current tax payables				1,859,592		1,624,037
Current trade payables	(14	)		23,046,403		22,131,036
Other current liabilities				3,665,980		4,498,986

Total current liabilities				130,153,734		130,558,089

Liabilities held for sale	(26	)		45,223,248		42,705,167

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				155,412,950		155,203,181

PM GROUP

Condensed Consolidated Statement of income for the nine-month period ended September 30, 2014 and 2013 (unaudited)


(in Euro)			9 M 2014		9 M 2013
Revenue from operating activities	(15	)		53,541,589		50,775,349
Other revenue and income	(16	)		1,470,589		1,243,245
Change in inventories or finished goods and work in progress				2,249,274		-590,896
Increase in non-current assets due to capitalisation of internal costs	(17	)		886,388		1,557,402
Costs of raw material	(18	)		-30,206,923		-25,718,000
Services	(19	)		-9,649,637		-10,176,099
Personnel	(20	)		-12,402,311		-13,384,012
Other operating expenses	(21	)		-1,452,021		-1,968,510
Depreciation and amortisation	(22	)		-1,943,126		-2,526,532
Impairment of tangible assets	(22	)		0		-158,024
Provisions	(23	)		-45,374		-49,452

Operating profit /(loss)				2,448,447		-995,531

Financial income and exchange gains	(24	)		1,466,332		1,429,092
Financial expenses and exchange losses	(24	)		-4,376,074		-4,816,147

Loss before taxation				-461,295		-4,382,586

Taxes on income	(25	)		-770,222		468,422

Net Loss from continuing operations				-1,231,516		-3,914,164

Profit (Loss) from discontinued operations	(26	)		-360,204		364,152

Net Loss for the period				-1,591,720		-3,550,012

Profit (Loss) attributable to non-controlling interests				-131,310		43,978

Net Loss attributable to the Group				-1,460,410		-3,593,990

PM GROUP

Condensed Consolidated statement of comprehensive income for the nine-month period ended September 30, 2014 and 2013 (unaudited)


(in Euro)	30/09/2014			30/09/2013
Net Loss for the period (A)		(1,591,720	)		(3,550,012	)

Gains/(losses) from translation into Euro of financial statements of foreign entities		18,857			(4,286	)

Total other items of comprehensive income that will be recycled through the income statement, net of tax effect (b1)		18,857			(4,286	)

Actuarial gains/(losses) from defined benefit plans		0			0

Total other items of comprehensive income that will not subsequently be recycled through the income statement, net of tax effect (b2)		0			0

Total other items of comprehensive income, net of tax effect (b1) + (b2) = (B)		18,857			(4,286	)

Total comprehensive (loss) for the period (A)+(B)		(1,572,863	)		(3,554,298	)

Total comprehensive income (loss) attributable to non-controlling interests		(131,310	)		43,978

TOTAL COMPREHENSIVE (LOSS) ATTRIBUTABLE TO THE GROUP		(1,441,553	)		(3,598,276	)

PM GROUP

Condensed Consolidated Statement of changes in equity (unaudited)


(in Euro)	Share capital		Translation reserve			Reserve under IAS 19			Total reserves			Accumulated Deficit			Shareholders’ equity - Group			Capital and reserves of non-controlling interests			Accumulated Profit/(Loss) attributable to non-controlling interests			Shareholders’ equity of non-controlling interests			TOTAL SHAREHOLDERS’ EQUITY
Shareholders’ equity at 01/01/2013		23,311,420		(185,689	)		0			(185,689	)		(12,360,008	)		10,765,723			983,204			(56,954	)		926,250			11,691,973
Movement on translation reserve		0		(4,286	)		0			(4,286	)		0			(4,286	)		1,891			0			1,891			(2,395	)
Effect of Acquisition of 41% of Air Service		0		0			0			0			0			0			(13,494	)		0			(13,494	)		(13,494	)
Loss for period ended September 30, 2013		0		0			0			0			(3,593,990	)		(3,593,990	)		0			43,978			43,978			(3,550,012	)

Shareholders’ equity at 30/09/2013		23,311,420		(189,975	)		0			(189,975	)		(15,953,998	)		7,167,447			971,601			(12,976	)		958,625			8,126,072

Shareholders’ equity at 01/01/2014		23,311,420		(16,889	)		(17,435	)		(34,324	)		(49,299,634	)		(26,022,538	)		962,710			(26,993	)		935,717			(25,086,821	)

Movement on translation reserve		0		18,857			0			18,857			0			18,857			0			0			0			18,857
Loss for period ended September 30, 2014		0		0			0			0			(1,460,410	)		(1,460,410	)		0			(131,310	)		(131,310	)		(1,591,720	)

Shareholders’ equity at 30/09/2014		23,311,420		1,968			(17,435	)		(15,467	)		(50,760,044	)		(27,464,091	)		962,710			(158,303	)		804,407			(26,659,684	)

PM GROUP

Condensed Consolidated Statement of cash flows for the nine-month period ended September 30, 2014 and 2013 (unaudited)


(in Euro)	9 M 2014			9 M 2013
Cash flows generated by operating activities
Net Loss for period		(1,591,720	)		(3,550,012	)
Adjustments made in order to reconciile net loss with the cash flows generated by operating activities
- Depreciation and amortization		2,801,958			3,425,856
- Impairment		0			158,024
- Deferred tax/Deferred tax income		(261,454	)		(659,167	)
- Expenses on derivatives		(471,609	)		(968,618	)
- Financial income recognized in Statement of Income		(235,625	)		(399,484	)
- Finance costs recognised in Statement of Income		4,376,442			5,529,618
- Change in Employee Severance Indemnity Provision and other employee benefits		(55,083	)		(85,068	)
Operating profit before changes in working capital		4,562,909			3,451,149
Effect of changes in assets and liabilities in net working capital
- Trade receivables		5,946,029			(4,544,166	)
- Inventory		(6,230,700	)		(3,435,372	)
- Other current assets		(146,726	)		269,889
- Trade payables		1,805,405			7,932,634
- Other current liabilities		(59,976	)		638,771
- Tax receivables		(374,417	)		(965,155	)
- Tax payables		321,645			527,432
- Taxes paid during the period		(420,171	)		(230,892	)
- Other non current assets		5,673			10,851
- Provisions for risks and charges		418,624			(19,168	)

Cash generated by operating activities (A)		5,828,295			3,635,973

Cash flows generated (absorbed) by investing activities
- Payments for property, plant and equipment		(622,801	)		(749,127	)
- Proceeds from disposal of property, plant and equipment		57,501			393,948
- Payments for intangible assets		(1,379,740	)		(1,869,195	)
- Interest received		6,657			3,054

Change in cash absorbed by investing activities (B)		(1,938,383	)		(2,221,320	)

Cash flows generated by operating activities after cash flows absorbed by investing activities (A-B)		3,889,912			1,414,653

Cash flows (absorbed) generated by financing activities
Short term financial payables and derivatives arranged (repaid)		(2,202,430	)		3,003,998
Medium/long term financial payables and derivatives arranged (repaid)		(936,884	)		(438,481	)
Interest paid		(1,281,699	)		(3,842,894	)
Share capital increase and reserves paid in cash		0			(13,494	)

Change in cash absorbed by financing activities		(4,421,013	)		(1,290,871	)

Movement on translation reserve		18,857			(2,395	)
Increase (decrease) in cash and cash equivalents		(512,244	)		121,387

Cash and cash equivalents at start of period		2,220,199			2,217,357

Cash and cash equivalents classified as assets held for sale at beginning of the period		69,668
Cash and cash equivalents classified as assets held for sale at end of the period		94,123

Cash and cash equivalents at end of period		1,683,500			2,338,744

PM GROUP

EXPLANATORY NOTES

General information

PM Group S.p.A. (the “Parent Company” or “Company” or “PM”) is a company which is subject to the laws of the Italian Republic. PM Group S.p.A. and its subsidiaries (“PM Group” or “Group”) operate primarily in Italy, France, Spain, Chile, Romania, Argentina and the United States of America. The Group manufactures: (i) truck mounted hydraulic knuckle boom cranes (“Business Unit PM”), (ii) truck mounted aerial platforms (“Business Unit Oil & Steel”) and (iii) structure, like scaffolding, formworks for walls and slabs (“Business Unit Pilosio”).

Structure and content of the condensed consolidated financial statements

The unaudited interim group condensed consolidated financial statements to which these explanatory notes relate (hereinafter: the “Interim Group Condensed Consolidated Financial Statements”) include: (i) the statements of income, comprehensive income, changes in equity and cash flows for the period ended September 30, 2014 and 2013 and (ii) the statements of financial position as of September 30, 2014 and December 31, 2013. The Interim Group Condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting”, as issued by the International Accounting Standard Board (“IASB”). The financial statements were authorized and approved on February 13, 2014 by Board of Directors. This basis of preparation was considered best to represent the balance sheet, income statement and financial situation of the Company and the Group:

•

Statement of financial position prepared with current assets/liabilities classified separately from non-current assets/liabilities;

•

Statement of income costs classified based on their nature;

•

Statement of cash flows prepared under the indirect method.

PM GROUP

Group organizational structure

The chart below shows the Group’s organizational structure as at September 30, 2014:

LOGO

Significant Accounting Policies

Basis of preparation

Our interim Condensed Consolidated Financial Statements are unaudited. In the opinion of Group management, the financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the nine-month period then ended. The Condensed Consolidated Balance Sheet at December 31, 2013, presented herein, has been derived from our audited balance sheet included in our Group Consolidated Financial Statements for the fiscal year ended December 31, 2013, but does not include all disclosures required by IFRS. These financial statements should be read in conjunction with the Group consolidated financial statements and the related notes at December 31, 2013, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The designation “IFRS” also includes all valid International Accounting Standards (“IAS”), as well as all interpretations of the IFRS Interpretation Committee, previously known as the International Financial Reporting Interpretations Committee (“IFRIC”), and before that the Standing Interpretations Committee (“SIC”). The results of operations for the nine-months ended September 30, 2014 are not necessarily indicative of operating results for the full year.

PM GROUP

These condensed consolidated financial statements have been presented in Euro which is the main currency in the countries where the PM Group companies conduct their business. A summary of the Group’s significant accounting policies is identified in the explanatory notes to the Group Consolidated Financial Statements at December 31, 2013. There have been no changes to the Group’s significant accounting policiies in the nine-month period ended September 30, 2014.

Foreign currencies

Financial statements expressed in currencies other than the Euro are translated into Euro. The exchange rates applied for 2014 and 2013 are shown below:


30/09/2014
Currency	Closing		Average
US Dollar		1.26		1.36
Romanian Lei		4.41		4.45
GB Pound		0.78		0.81
Chilean Peso		755.46		760.32
Argentinean Peso		10.65		10.82
Brazilian Real		3.08		3.10
Mexican Peso		17.00		17.78

30/09/2013
Currency	Closing		Average
US Dollar		1.35		1.32
Romanian Lei		4.46		4.41
GB Pound		0.84		0.85
Chilean Peso		682.17		643.17
Argentinean Peso		7.82		6.95
Brazilian Real		3.04		2.79

A full list of the investments included in the scope of consolidation at September 30, 2014 with details of shareholders’ equity and profit/loss for the period calculated in accordance with the applicable accounting standards is shown in the following table:

PM GROUP

Consolidated companies:


Name		Location	Country		Share Capital (local currency/000)	Shareholders’ equity (Euro/000)	Including profit (loss) for 2013 (Euro/000)	% interest held
1	PM Group	San Cesario sul Panaro	Italy	EUR	23,311	(25,921)	557
2	Autogru PM RO	Arad	Romania	RON	8,482	2,194	1	100.00%
3	PM North America	Rolling Meadows, Ill	USA	USD	25	112	(1)	100.00%
4	PM France	Chassieu	France	EUR	150	(374)	(6)	100.00%
5	PM Argentina	Buenos Aires	Argentina	ARS	60	238	25	100.00%
6	PM Deutschland	Ulm	Germany	EUR	25	34	1	100.00%
7	PM Chile	Santiago	Chile	CLP	19,742	(749)	(603)	100.00%
8	Oil & Steel	San Cesario sul Panaro	Italy	EUR	362	(6,529)	(917)	100.00%
9	PM Oil & Steel UK	London	UK	GBP	300	(9)	2	100.00%
10	PM Oil & Steel France	Chassieu	France	EUR	35	(193)	(80)	100.00%
11	PM Oil & Steel Iberica	Valencia	Spain	EUR	200	61	(42)	100.00%
12	Air Service	Modena	Italy	EUR	115	31	(46)	100.00%
13	Pilosio	Feletto Umberto	Italy	EUR	5,000	1,154	(32)	100.00%
14	Electroelsa	Poggibonsi	Italy	EUR	400	2,011	(328)	60.00%
15	PM Oil & Steel do Brasil	Sao Paulo	Brazil	BRL	600	183	(5)	100.00%
16	PM Oil & Steel Mexico	Mexico City	Mexico	MXN	350	(51)	(63)	100.00%

All Group companies are consolidated on a line-by-line basis.

At September 30, 2014, there were no changes to the scope of consolidation or to the percentage interests held in subsidiaries at December 31, 2013.

Going Concern

As disclosed in the Group Consolidated Financial Statements at December 31, 2013, in 2014, Management finalized an operation (the “Operation”) intended to restructure the financial indebtedness of the Group and restore the equity level. The Operation was to be implemented in accordance with Article 182 bis of the Bankruptcy Act and finalized on July 2014.

The main terms of the Operation have been included in Commitment Letters signed by Columna and Manitex, as well as in the PM Group and Oil & Steel Debt Restructuring Agreement signed by the creditor banks (collectively the “Agreement”). On November 18, 2014, the Courts in Modena approved the Agreement.

On January 15, 2015 Manitex completed the acquisition of PM Group and made a capital contribution of Euro 44.5 million in accordance with the terms of the Operation. On January 15, 2015, the sale of Pilosio was completed.

In view of the expected impact of the Operation and taking into account the difficult conditions in some of its main markets, the Group has prepared a new Business Plan for the period 2014 – 2017, which was approved by the holding company Board of Directors on June 10, 2014. The new Business Plan forecasts sufficient cash flows to meet the Group’s remaining obligations following the completion of the Operation.

After having evaluated the uncertainty regarding the economic environment, and the resulting uncertainty which inevitably affects the forecasts reflected in the Business Plan in relation to the Group’s future operating performance (in terms of both revenue and profitability), given the progress of the Operation, Management considers it probable that the Group’s economics and financial situation will be improved. For these reasons, Management reasonably believes that the Group has sufficient resources to continue to operate in the near future and, therefore, have prepared these condensed consolidated financial statements on a going concern basis.

PM GROUP

Recently Adopted Accounting Standards and Amendments

The Group has adopted the new standards and amendments, that are applicable from January 1, 2014, in the preparation of its unaudited interim condensed consolidated financial statements; their application did not have any effect on the unaudited interim condensed consolidated financial statements.

Comments on items in the Statement of Financial Position

ASSETS

Note 1—Tangible assets

The following tables show the opening balances, movements during the period ended September 30, 2014 and the closing balances for tangible assets:


(in Euro)	01/01/14		Exchange difference		Additions		Disposals		Reclassification		Depreciation		30/09/14
Cost
Land		4,683,525		5,246		0		0		0		0		4,688,771
Buildings		18,595,512		21,771		24,835		0		0		0		18,642,118
Plant and machinery		9,119,979		36,433		155,700		47,336		3,257		0		9,268,033
Industrial and commercial equipment		8,241,562		11,515		129,463		84,031		10,388		0		8,308,897
Other assets		4,225,103		-14,672		92,055		472,352		-1,124		0		3,829,010
Assets under construction and payments on advance		13,667		203		59,462		0		-13,645		0		59,687

Total Cost of Tangible Assets		44,879,348		60,496		461,515		603,719		-1,124		0		44,796,516


(in Euro)	01/01/14		Exchange difference		Additions		Disposals		Reclass.		Depreciation		30/09/14
Accumulated depreciation and impairment
Land		0		0		0		0		0		0		0
Buildings		6,479,062		38		0		0		0		447,653		6,926,753
Plant and machinery		7,540,939		25,940		0		45,029		0		312,582		7,834,432
Industrial and commercial equipment		7,947,233		9,292		0		84,031		0		149,606		8,022,100
Other assets		3,655,909		-1,106		0		444,452		-1,124		189,028		3,398,255

Total accumulated depreciation and impairment of tangible asset		25,623,143		34,164		0		573,512		-1,124		1,098,869		26,181,540

Net Book Value		19,256,205		26,332		461,515		30,207		0		-1,098,869		18,614,976

PM GROUP

Note 2—Goodwill


(in Euro)	30/09/14	31/12/13
Beginning balance	33,192,959		68,142,670

Reclassification of Asset held for sale	0		-20,078,655
Impairment	0		-14,871,056

Ending balance	33,192,959		33,192,959

As there were no indicators of a possible loss in value at September 30, 2014, compared with the previous evaluation, it was not necessary to carry out a new impairment test.

Note 3—Other intangible assets

The following tables show the opening balances, movements during the period ended September 30, 2014 and the closing balances for other intangible assets:


(in Euro)	01/01/14		Exchange difference		Additions		Reclassification		Amortization		30/09/14
Cost
Development costs		13,108,394		20		0		89,147		0		13,197,561
Patents and intellectual property rights		1,932,970		1		78,893		0		0		2,011,864
Concessions, licences, trademarks and similar		89,024		611		465		0		0		90,100
Assets in progress and payments on advance		983,629		0		874,213		-89,147		0		1,768,695
Other		280		0		90		0		0		370

Total		16,114,297		632		953,661		0		0		17,068,590


(in Euro)	01/01/14		Exchange difference		Additions		Reclassification		Amortization		30/09/14
Accumulated amortisation and impairment
Development costs		10,231,479		21		0		0		713,525		10,945,025
Patents and intellectual property rights		1,461,690		0		0		0		129,560		1,591,250
Concessions, licences, trademarks and similar		57,094		195		0		0		1,116		58,405
Assets in progress and payments on advance		648,052		0		0		0		0		648,052
Other		56		0		0		0		56		112

Total		12,398,371		216		0		0		844,257		13,242,844

Net Book Value		3,715,926		416		953,661		0		-844,257		3,825,746

Capitalized development costs relate to new products, as described in Note 17 below.

Assets in progress, at their completion, are amortized over five years, being the estimated useful life of the Group’s new products without any significant restyling processes.

PM GROUP

Note 4—Deferred tax assets

Management consider these deferred tax assets recoverable on the basis of the future profits contained in the Business Plan.


(in Euro)	31/12/2013		Statement of Income		30/09/2014
Provisions for risks and charges		135,962		5,047		141,009
Inventory		706,031		68,338		774,369
Provision for bad debts		273,354		4,400		277,754
Provision for losses on derivatives		576,023		-106,424		469,599
Tax losses		509,534		80,069		589,603
Interest expenses		3,495,267		228,028		3,723,295
Other		7,322		5,100		12,422

Deferred tax assets		5,703,493		284,558		5,988,051

Note 5—Inventory

For details of changes in each inventory category, see the figures highlighted in the Income Statement.

The following tables contain a breakdown of net inventory by category and movements on the inventory obsolescence provision (deducted directly from inventory):


(in Euro)	30/09/2014		31/12/2013
Raw, ancillary and consumable materials		14,067,616		10,162,235
Work in progress		635,845		680,084
Semi-finished goods		816,443		744,358
Finished goods		6,711,446		4,862,442
Inventory obsolescence provision		-2,422,084		-2,597,952

Inventory		19,809,268		13,851,167

Note 6—Current trade receivables

Current trade receivables are analyzed as follows:


(in Euro)	30/09/14		31/12/13
Current trade receivables		22,493,251		30,924,832
Other receivables		182,293		118,950
Provision for bad debts		-2,398,353		-2,522,082

Trade receivables		20,277,192		28,521,700

PM GROUP

Note 7—Cash and cash equivalents

Cash and cash equivalents are analyzed as follows:


(in Euro)	30/09/14		31/12/13
Cash on hand		16,442		20,704
Cheques		163,000		5,857
Bank and post office accounts		1,504,057		2,193,638

Cash and cash equivalents		1,683,500		2,220,199

LIABILITIES

Note 8—Non-current financial payables

Non-current financial payables are analyzed as follows:


(in Euro)	30/09/2014		31/12/2013
Non-current portion of loans payable		676,784		802,451
Payables to other lenders		40,916		335,100

Non-current financial payables		717,700		1,137,551

Payables to other lenders are broken down by due date as follows:


(in Euro)	within a year		between one and five years		Balance 30/09/2014		within a year		between one and five years		Balance 31/12/2013
Minimum payments due under finance leases		411,035		43,462		454,497		535,253		344,729		879,981
Interest element		-10,669		-2,547		-13,216		-27,481		-9,629		-37,110

Present value of minimum payments due under finance leases		400,366		40,916		441,282		507,772		335,100		842,872

The portion of these payables due within a year is classified under Current financial payables, as analyzed in Note 12.

Non current portion of loans payable are due within one and five years, as shown in the table below:


(in Euro)	30/09/2014		31/12/13
Loans Payable due after between 1 and 5 years		676,784		802,451

Non-current portion of loans payable		676,784		802,451

PM GROUP

A detailed breakdown of loans payable is shown in the following table:


Bank	Interest rate	Original Maturity		Type	Loan amount €/1000		O/S Princ. 30/09/14		current		non- current		security
CARISBO	Eur 3M + 2,50		12/31/2014	unsecured loan		1,000		259,338		259,338		—	none
BPER (ex B.ca CRV)	Eur 3M + 2,50		12/31/2014	unsecured loan		1,000		923,105		923,105		—	none
BPER	Eur 3M + 2,50		12/31/2014	unsecured loan		1,500		1,500,000		1,500,000		—	none
BNL	Eur 3M + 2,50		12/31/2014	unsecured loan		600		600,000		600,000		—	none
MPS	Eur 3M + 2,50		12/31/2014	unsecured loan		5,500		5,500,000		5,500,000		—	none
UNICREDIT	Eur 3M + 2,50		12/31/2014	unsecured loan		2,000		2,000,000		2,000,000		—	none
BPER / UNICREDIT	-		12/31/2015	deferred interest—Senior loan		2,862		2,862,200		2,862,200		—	none
BPER / UNICREDIT	Eur 6M + 2,36		1/30/2017	Secured loan—Senior loan		26,993		26,993,000		26,993,000		—	mortgage + pledge on shares
BPER / UNICREDIT	Eur 6M + 2,86		1/30/2017	Secured loan—Senior loan		30,000		30,000,000		30,000,000		—	mortgage + pledge on shares
CARISBO	Eur 3M + 2,50		12/31/2014	unsecured loan		500		129,354		129,354		—	none
BPER (ex B.ca CRV)	Eur 3M + 2,51		12/31/2014	unsecured loan		750		692,329		692,329		—	none
BPER	Eur 3M + 2,52		12/31/2014	unsecured loan		1,000		1,000,000		1,000,000		—	none
BNL	Eur 3M + 2,53		12/31/2014	unsecured loan		300		300,000		300,000		—	none
MPS	Eur 3M + 2,54		12/31/2014	unsecured loan		500		500,000		500,000		—	none
BPER / UNICREDIT	-		12/31/2015	deferred interest—Senior loan		270		269,977		269,977		—	none
BPER / UNICREDIT	Eur 6M + 2,36		1/30/2017	Secured loan—Senior loan		5,807		5,807,000		5,807,000		—	pledge on shares
BANCA ITALO ROMENA	Eur 3M + 5%		6/30/2015	Secured loan		800		680,185				680,185	mortgage
DEBT ISSUANCE COSTS										-339,346

TOTAL								80,016,488		78,996,957		680,185

At September 30, 2014, the Group was not in compliance with covenants set out by the loan agreements, and resulted in the Group defaulting on its loans payable to the creditor banks totaling Euro 78,997 thousand. Consequently, the balance in default has been reclassified to current financial payables in the consolidated financial statements.

The mortgage refers to the Oil & Steel S.p.A. factory located in S. Cesario sul Panaro (MO). The pledge refers to the 100% Oil & Steel S.p.A. and Pilosio S.p.A. shares, held by PM Group S.p.A.

Note 9—Employee benefits

Movements on the employee severance indemnity / TFR provision during the period, including the effects of the actuarial valuation of the TFR, were as follows:


(in Euro)	31/12/13		Increases		Decreases		30/09/14
Employee severance indemnity / TFR		1,413,558		459,227		520,041		1,352,744

Note 10—Provisions for risks and charges

Movements on provisions for risks and charges in 2014 were as follows:


(in Euro)	31/12/13		Increases		Decreases		30/09/14
Product warranty provision		851,000		16,074		0		867,074
Prov. for retirement benefits & similar obligations		80,806		0		0		80,806
Other provisions		505,519		0		25,519		480,000

Provisions for risks and charges		1,437,325		16,074		25,519		1,427,880

PM GROUP

The “Provision for product warranty risks” has been updated based on estimated requirements.

Note 11—Provision for deferred taxes


(in Euro)	31/12/2013		Statement of Income		30/09/2014
Accelerated depreciation		83,264		0		83,264
Goodwill		1,696,163		159,015		1,855,178
Amortization from merger		704,460		0		704,460
TFR under IAS		66,058		0		66,058
Out of period income due to change of rate		-228,888		0		-228,888
Leasehold improvements		140,683		0		140,683
Finance leases (IAS 17)		505,574		0		505,574
Reversal of depreciation of land/building O&S		57,999		0		57,999
Other		12,999		0		12,999

Total		3,038,312		159,015		3,197,327

The deferred tax provision (Euro 3,197 thousand at September 30, 2014) largely relates to the deferral of gains realized on disposal of tangible assets held for more than three years, accelerated depreciation charged for tax purposes only until 2007 and the tax effects of the transition to IAS/IFRS.

Note 12—Current financial payables


(in Euro)	30/09/2014		31/12/2013
Bank overdrafts, loans, advance on invoice and notes		20,456,093		20,734,487
Current portion of loans payable		78,996,957		78,920,702
Payables to other lenders		400,366		507,772

Current financial payables		99,853,416		100,162,961

Payables to other lenders represents the amount due within a year and mainly relates to the current portion of Euro 349 thousand payable to Medioleasing (formerly Banca Marche) under the real estate finance lease entered into for the Oil & Steel factory in San Cesario sul Panaro (MO), Via Verdi 22 at September 30, 2014. As further described in Note 8, the Group defaulted on its loans payable to the creditor banks totaling Euro 78,997 thousand at September 30, 2014. Consequently, the balance in default has been reclassified to current financial liabilities in the financial statements.

PM GROUP

The fair value of the current portion of loans payable is assumed to be equal to Euro 40,420 thousand plus 860 thousand of Manitex shares. The fair value was determined to be the residual value of current portion of loans payable at September 30, 2014 (Euro 78,997 thousand) resulting from the restructuring of the financial indebtedness of the Group upon completion of the Operation. Please refer to the note related to the going concern assumption for more details on terms of the Operation.

Note 13—Liabilities for financial instruments and derivatives


(in Euro)	30/09/2014		31/12/2013
Interest rate hedges		1,728,343		2,141,069

Liabilities for financial instruments and derivatives		1,728,343		2,141,069

In accordance with IAS 32, IAS 39 and IFRS 7, these contracts have been recorded under “Liabilities for financial instruments and derivatives” (with a contra-entry to the Income Statement) in the amount of Euro 1,728 thousand which represents the fair value of the contracts at the reporting date. The change in fair value of these contracts is recorded in the financial income/expenses and exchange gains/losses captions of the Interim Condensed Consolidated Statement of Income.

At September 30, 2014, there were no transactions for the forward sale or purchase of currency.

Note 14—Current trade payables

Current trade payables (including invoices to be received from suppliers) are analyzed as follows:


(in Euro)	30/09/2014		31/12/2013
Trade payables		23,046,403		22,131,036

Current trade payables		23,046,403		22,131,036

PM GROUP

Comments on main Income Statement items

Note 15—Revenue from operating activities

Revenue from operating activities is analyzed below:


(in Euro)	9M 2014		9M 2013
Revenue from operating activities		52,137,327		49,039,645
Revenue from services		1,167,565		1,471,649
Rental income		101,193		114,702
Other revenue from operating activities		135,505		149,353

Revenue from operating activities		53,541,589		50,775,349

Note 16—Other revenue and income

Other revenue and income are analyzed as follows:


(in Euro)	9M 2014		9M 2013
Compensation for damages		58,014		2,080
Gains on disposal		7,656		16,088
Freight services		789,820		870,841
Other		615,099		354,236

Other revenue and income		1,470,589		1,243,245

“Freight Services” mainly includes revenues related to organization of freight service to customers. “Other” primarily includes sundry charges to customers.

Note 17—Increases in non-current assets due to capitalization of internal costs


(in Euro)	9M 2014		9M 2013
Increases in industrial equipment		12,174		23,850
Increases in development costs		874,213		1,533,552

Increases in non-current assets due to capitalisation of internal costs		886,388		1,557,402

PM’s research and development activities focus on the introduction into the product range new series of light weight high performance cranes.

PM GROUP

Note 18—Costs of raw materials

Costs of raw materials are analyzed as follows:


(in Euro)	9M 2014		9M 2013
Finished goods		4,637,379		3,600,513
Raw materials		28,975,463		22,551,672
Packaging and consumable materials		372,720		406,504
Change in inventory of raw materials and goods		-3,778,640		-840,688

Total Costs of raw material		30,206,923		25,718,000

Note 19—Costs for services

Costs for services are analyzed as follows:


(in Euro)	9M 2014		9M 2013
Outsourced production		3,037,617		3,088,466
Transport/freight		1,439,896		1,507,329
Agents’ commission		376,282		343,002
Legal and consulting costs		1,387,357		1,505,860
Utilities and other industrial services		617,734		648,891
Insurance		353,670		358,440
Repairs and maintenance		196,389		194,888
Marketing, trade fairs and advertising		358,127		597,455
Board of Statutory Auditors’ fees		68,687		73,932
Other costs for services		1,432,911		1,462,712
Technical assistance		380,967		395,123

Costs for services		9,649,637		10,176,099

Note 20—Personnel costs


(in Euro)	9M 2014		9M 2013
Wages and salaries		8,659,470		9,681,131
Directors’ remuneration and benefits		215,062		196,101
Social contributions		2,640,837		2,653,973
TFR, retirement benefits and similar		459,227		503,983
Other costs		427,714		348,824

Personnel costs		12,402,311		13,384,012

PM GROUP

The Group’s average headcount, by employee category, is shown in the following table:


	9M 2014		9M 2013
Managers		13		12
Staff		552		566

Total		565		578

Figures for the Pilosio BU are included for the sake of completeness. The related costs are included in the operating expenses detailed in Note 26.

Note 21—Other operating expenses

Other operating expenses are analyzed as follows:


(in Euro)	9M 2014		9M 2013
Rental of industrial and office buildings		523,636		540,479
Operating leases		238,656		337,396
Losses on disposals		238		0
Taxes other than income taxes		334,619		287,651
Bad debts		16,910		-6,350
Other operating expenses		337,964		809,334

Other operating expenses		1,452,021		1,968,510

Note 22—Depreciation, amortization and impairment of non-current assets


(in Euro)	9M 2014		9M 2013
Amortization of intangible assets		844,257		1,306,094
Depreciation of tangible assets		1,098,869		1,220,438
Impairment of tangible assets		0		158,024

Depreciation, amortization and impairment of non-current assets		1,943,126		2,684,556

Certain tangible assets have been impaired as the related fair value resulting from their sale was lower that their carrying amount.

Note 23—Provisions

These may be analyzed as follows:


(in Euro)	9M 2014		9M 2013
Provision for bad debts		54,818		45,490
Provions for risks		16,074		0
Other provisions		-25,519		3,962

Total		45,374		49,452

PM GROUP

“Provisions for risks” primarily relate to amounts allocated to the product warranty provision. “Other provisions” relate to favorable adjustments to provisions accrued in previous periods settled by the Group during 2014 amounting to approximately Euro 20 thousand. Amounts were recorded in “Other operating expenses”.

Note 24—Financial income and expenses


(in Euro)	9M 2014		9M 2013
Interest income on bank accounts		2,829		4,150
Interest income from customers		5,832		2,438
Income from derivatives		412,932		878,094
Other financial income		10,204		14,312
*Financial income*		*431,797*		*898,993*
Financial expenses on loans and finance leases		1,630,853		1,686,483
Financial expenses on current liabilities		489,364		490,700
Financial expenses on derivatives		552,766		609,493
Other interest and expenses		68,390		68,865
Bank charges		377,499		471,573
*Financial expenses*		*3,118,872*		*3,327,114*
Exchange gains—realized		359,943		256,052
Exchange gains—unrealized		674,592		274,047
Exchange losses—realized		635,852		429,795
Exchange losses—unrealized		621,350		1,059,238
*Net exchange losses*		*-222,667*		*-958,934*

Financial income and expenses		-2,909,742		-3,387,056

Note 25—Taxes on income

Tax for the nine month period is charged on the base of the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax loss of the nine month period.

Note 26—Assets and liabilities held for sale. Profit/Loss from discontinued operations

The Interim Condensed Consolidated Financial Statements, include the assets and liabilities of Pilosio S.p.A. and its subsidiaries. On January 15, 2015 Pilosio was sold to a company owned by Columna at a price of Euro 1,000 thousand as previously described in the Group Consolidated Financial Statements at December 31, 2013.

As a result of the above, the Condesed Consolidated Statement of Income includes “Profit/Loss from discontinued operations” related to Pilosio, representing the loss of the discontinued operations, net of tax effects.

In accordance with IFRS 5, we provide below details of (i) the assets held for sale and the related liabilities at September 30, 2014, (ii) the items forming part of the discontinued operations/activities for the period ended September 30, 2014, and September 30, 2013, and (iii) cash flow information related to the discontinued operations for the period ended September 30, 2014 and 2013.

PM GROUP


ASSETS HELD FOR SALE
(in thousands of Euro)	30.09.2014			31.12.2013
NON-CURRENT ASSETS
Tangible assets		3,171			3,651
Goodwill		6,975			6,975
Other intangible assets		1,134			979
Investments in subsidiaries and other entities		2			2
Deferred tax assets		1,337			1,203
Other non-current assets		314			299

Total non-current assets		12,932			13,108

CURRENT ASSETS
Inventory		12,881			12,608
Current trade receivables		19,484			17,113
Current tax receivables		408			1,027
Cash and cash equivalents		94			70
Other current assets		1,000			715

Total current assets		33,866			31,532

TOTAL ASSETS HELD FOR SALE		46,799


(in thousands of Euro)	9/30/2014			9/30/2013
Revenue from operating activities		30,656			34,685
Other revenue		902			4,299
Operating expenses		-29,635			-36,208
Depreciation, amortization and writedowns		-1,151			-1,121
Financial income and expenses		-759			-775
Taxes in income		-373			-516

PROFIT/ (LOSS) FROM DISCONTINUED OPERATIONS		-360			364


(in thousands of Euro)	9/30/2014			9/30/2013
Cash flows generated by operating activities
Profit (Loss) for period before non-controlling interests		(360	)		364
Adjustments made in order to reconciile net profit (loss) with the cash flows generated by operating activities		729			901
Operating profit (loss) before changes in working capital		369			1,265
Effect of changes in assets and liabilities in net working capital		(208	)		516

Change in cash generated (absorbed) by operating activities (A)		161			1,781

Cash flows generated (absorbed) by investing activities (B)		(534	)		(624	)

Cash flows generated (absorbed) by operating activities after cash flows absorbed by investing activities (A-B)		(373	)		1,157

Cash flows (absorbed) generated by financing activities		397			(1,075	)

Increase (decrease) in cash and cash equivalents		24			82

Cash and cash equivalents at start of period		70			604

Cash and cash equivalents at end of period		94			686


	30.09.2014		31.12.2013
NON-CURRENT LIABILITIES
Non-current financial payables		807		1,324
Employee benefits		1,103		1,097
Provisions for risks and charges		1,375		1,397
Deferred tax liabilities		53		54

Total non-current liabilities		3,339		3,873

CURRENT LIABILITIES
Current financial payables		24,740		23,767
Liabilities for financial instruments and derivatives		49		108
Current tax payables		377		261
Dividends payable		300		300
Current trade payables		11,681		10,676
Other current liabilities		4,738		3,721

Total current liabilities		41,884		38,832

TOTAL LIABILITIES HELD FOR SALE		45,223

Note 27—Fair Value measurement

PM GROUP

The levels used in the hierarchy are:

•

Level 1 inputs are quoted prices (unadjusted) on active markets for identical assets or liabilities that the entity can access at the measurement date;

•

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;

•

Level 3 inputs are unobservable inputs for the asset or liability.

The following table shows the fair value hierarchy of Assets and Liabilities measured at fair value at September 30, 2014:


(in Euro)	Level 1		Level 2		Level 3		Total 30/09/2014
Liabilities for derivative financial instruments		0		-1.728.343		0		-1.728.343

Total		0		-1.728.343		0		-1.728.343

Liabilities for derivative financial instruments did not change fair value hierarchy between December 31, 2013 and September 30, 2014.

At December 31, 2013 assets and liabilities held for sale, related to the Business Unit Pilosio, were valued at fair value and disclosed in Level 3 of the fair value hierarchy. At September 30, 2014 assets and liabilities held for sale are no longer valued at fair value because at that date, as consequence of the loss incurred by Pilosio during the first nine month of 2014, their carrying amounts are lower of their fair value less costs to sell.

For financial instruments represented by short-term receivables, payables, and financial payables for which the present value of future cash flows does not differ significantly from carrying value, the carrying value is a reasonable approximation of the fair value. In particular, the carrying amount of Current receivables, Other current assets, Trade payables and Other current liabilities, approximates their fair value. The fair value of the financial payables has been disclosed in Note 12.

For other Statement of Financial Position items the carrying amount represents a reasonable approximation of fair value at September 30, 2014.

San Cesario sul Panaro, February 13, 2015

FOR THE BOARD OF DIRECTORS

THE PRESIDENT

David J. Langevin

PM GROUP

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

Manitex International, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Information

On January 21, 2015, Manitex International, Inc. (“Manitex” or the “Company”), a Michigan corporation, announced that the PM Group (“PM”) acquisition closed on January 15, 2015. As a condition of the PM acquisition, PM concurrently disposed of its assets and liabilities held for sale.

The acquisition has been accounted for using acquisition accounting in accordance with Financial Accounting Standard Codification “(ASC”) Section 805. The following Unaudited Pro Forma Condensed Consolidated Financial Information includes the Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014, the Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine months ended September 30, 2014 and the Unaudited Pro Forma Condensed Consolidated Statement of Income for the fiscal year ended December 31, 2013.

The following Unaudited Pro Forma Condensed Consolidated Statements of Income for the nine months ended September 30, 2014 and fiscal year ended December 31, 2013 give effect to the Company’s purchase of PM, assuming that the acquisition was consummated on January 1, 2013. The Pro Forma Condensed Consolidated Balance Sheet presents the financial position of the Company as if the acquisition of PM occurred on September 30, 2014. The pro forma adjustments, which are based on available information and are directly attributable to the acquisition, are factually supportable and are expected to have a continuing impact, have been applied to the historical financial statements of the Company and PM. The pro forma allocation of the purchase price to the acquired assets and liabilities is based in part on an independent appraisal and other studies completed subsequent to the PM acquisition. The purchase price allocation is preliminary and is subject to revision, as the Company has not received all the information necessary to complete the purchase price allocation.

The historical financial statements of PM are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and are presented in Euros. Adjustments have been made to adjust PM’s IFRS financial information to the Company’s accounting policies under generally accepted accounting principles in the United States of America (“US GAAP”) and Euro amounts have been translated into US dollars using the following exchange rages:

The Pro Forma Condensed Consolidated Financial Information, which has been prepared in accordance with rules prescribed by Article 11 of Regulation S-X, is provided for informational purposes only and is not necessarily indicative of the past or future results of operations or financial position of the Company.

This information should be read in conjunction with the Company’s previously filed Current Report on Form 8-K, dated January 21, 2015, the Company’s previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and the historical financial statements and accompanying notes of PM included in this Current Report on Form 8-K/A.

The unaudited Pro Forma Condensed Consolidated Financial Information does not reflect any changes in the business of the Company or PM or any other changes arising from other transactions since September 30, 2014.

Manitex International, Inc.

Unaudited Pro forma Condensed Consolidated Balance Sheet

(In thousands)


	Manitex September 30, 2014			PM Group September 30, 2014			PM Group September 30, 2014			Pro forma Adjustments			PM Group As Adjusted September 30, 2014		Pro forma Adjustments			Pro forma September 30, 2014
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited		Unaudited			Unaudited
ASSETS				Euros
Current assets
Cash	$	4,934			1,684		$	2,127		$	3,834	B		5,961	$	5,406	I	$	16,301
Trade receivables (net)		44,860			20,277			25,606						25,606					70,466
Accounts receivable finance		—						—						—					—
Other receivables		692			300			379						379					1,071
Inventory (net)		81,085			19,809			25,015			1,072	C		26,087					107,172
Deferred tax asset		1,272			—			—						—					1,272
Prepaid expense and other		1,908			4,780			6,036						6,036					7,944

Total current assets		134,751			46,850			59,163			4,906			64,069		5,406			204,226

Total fixed assets (net)		10,097			18,614			23,506			(2,484	) D		21,022					31,119
Investment in Subs																—			—
Intangible assets (net)		21,783			3,826			4,831			20,869	E		25,700					47,483
Deferred tax asset		1,936			5,988			7,562						7,562					9,498
Goodwill		22,213			33,193			41,916			(17,579	) E		24,337					46,550
Other long-term assets		1,019			141			178						178		1,143	L		2,340
Non—marketable equity investments					2			3						3					3
Assets of held for sale		—			46,799			59,098			(59,098	) H		—					—

Total assets	$	191,799			155,413		$	196,257		$	(53,386	)		142,871	$	6,549		$	341,219

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable—short term	$	7,393			99,854			126,096		$	(107,234	) F		18,862	$	1,500	J	$	27,755
Revolving credit facilities		2,676						—						—		200	L		2,876
Current portion of capital lease obligations		1,693						—						—					1,693
Accounts payable		27,263			23,046			29,102						29,102					56,365
Accounts payable related parties		1,230						—						—					1,230
Accrued expenses		8,508			3,588			4,533			1,701	G		6,233					14,742
Other current liabilities		1,883			3,666			4,629						4,629					6,512

Total current liabilities		50,646			130,154			164,360			(105,533	)		58,826		1,700			111,173

Long-term liabilities
Revolving term credit facilities		37,819						—						—					37,819
Deferred tax liability		4,077			3,197			4,037						4,037		247	K		8,361
Notes payable		2,130			718			907			43,628	F		44,535		12,500	J		59,165
Capital lease obligations		2,992						—						—					2,992
Convertible debt		—												—		14,286	K		14,286
Deferred gain on sale of building		1,363						—						—					1,363
Other long-term liabilities		1,065			2,781			3,512			(431	) G		3,081					4,146
Liabilities held for sale					45,223			57,108			(57,108	) H		—					—

Total long-term liabilities		49,446			51,919			65,564			(13,911	)		51,653		27,033			128,132

Total liabilities		100,092			182,073			229,924			(119,444	)		110,479		28,733			239,305

Commitments and contingencies
Shareholders’ equity
Preferred Stock		—						—						—					—
Common Stock		68,894			23,296			29,418			(29,418	)		—		10,124	A.1		79,018
Paid in capital		1,751						—			32,391			32,391		(31,924	) K, M		2,218
Retained earnings		21,488			(50,760	)		(64,100	)		64,100			—		(384	) N		21,104
Accumulated other comprehensive (loss) income		(426	)					—						—					(426	)

Equity attributed to shareholders of Manitex International, Inc.		91,707			(27,464	)		(34,682	)		67,073			32,391		(22,184	)		101,914

Equity attributed to noncontrolling interest		—			804			1,015			(1,015	)		—		—			—

Total equity		91,707			(26,660	)		(33,667	)		66,058			32,391		(22,184	)		101,914

Total liabilities and shareholders’ equity	$	191,799			155,413		$	196,257		$	(53,386	)		142,871	$	6,549		$	341,219

Manitex International, Inc.

Unaudited Pro forma Condensed Consolidated Statement of Income

(In thousands, except per share data)


	Manitex Nine Months Ended September 30, 2014			PM Group Nine Months Ended September 30, 2014			PM Group Nine Months Ended September 30, 2014			PM Pro forma Adjustments			Manitex Pro forma Adjustments			Pro forma Nine Months Ended September 30, 2014
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited
				Euros
Net revenues	$	197,172			53,542		$	72,582		$	—		$	—		$	269,754
Cost of sales		161,509						—			48,627	O, Q		—			210,136

Gross profit		35,663			53,542			72,582			(48,627	)		—			59,618
Operating expenses
Research and development costs		1,909			—			—			1,185	O, P		—			3,094
Selling, general and administrative expenses		21,554			—			—			22,619	O, R		(34	) U		44,139
Operating expenses		—			52,565			71,257			(71,257	) O					—

Total operating expenses		23,463			52,565			71,257			(47,453	)		(34	)		47,233
Operating income		12,200			977			1,325			(1,174	)		34			12,385
Other income (expense)
Interest expense		(2,192	)		(2,910	)		(3,945	)		1,325	S, T		(1,376	) V		(6,188	)
Foreign currency transaction losses		(27	)		—			—			(303	) S		—			(330	)
Other income (loss)		(67	)		1,471			1,994			26	S		—			1,953

Total other expense		(2,286	)		(1,439	)		(1,951	)		1,048			(1,376	)		(4,565	)
Income before income taxes		9,914			(462	)		(626	)		(126	)		(1,342	)		7,820
Income tax		3,283			770			1,044			(81	) W		(464	) W		3,782

Net income (loss)	$	6,631			(1,232	)	$	(1,670	)	$	(45	)	$	(878	)	$	4,038

Earnings Per Share
Basic	$	0.48														$	0.27
Diluted	$	0.48														$	0.27
Weighted average common shares outstanding
Basic		13,817,538												994,483	X		14,812,021
Diluted		13,862,651												994,483	X		14,857,134

Manitex International, Inc.

Unaudited Pro forma Condensed Consolidated Statement of Income

(In thousands, except per share data)


	Manitex Year Ended December 31, 2013			PM Group Year Ended December 31, 2013			PM Group Year Ended December 31, 2013			PM Pro forma Adjustments			Manitex Pro forma Adjustments			Pro forma Year Ended December 31, 2013
	Unaudited			Unaudited			Unaudited			Unaudited			Unaudited			Unaudited
				Euros
Net revenues	$	245,072			78,599		$	103,806		$	—		$	—		$	348,878
Cost of sales		198,596			—			—			71,268	Y, AA, AB		—			269,864

Gross profit		46,476			78,599			103,806			(71,268	)		—			79,014
Operating expenses
Research and development costs		2,912			—			—			2,644	Y,Z		—			5,556
Selling, general and administrative expenses		26,026			—			—			53,277	Y, AC (Note 1)		34	AF		77,337
Total operating expenses		—			97,015			128,128			(128,128	) Y					—

Total operating expenses		28,938			97,015			128,128			(72,207	)		34			84,893
Operating income		17,538			(18,416	)		(24,322	)		939			(34	)		(5,879	)
Other income (expense)
Interest expense		(2,946	)		(4,910	)		(6,485	)		3,104	AD, AE		(1,900	) AG		(8,227	)
Foreign currency transaction losses		(95	)		—			—			(1,776	) AD, AE		—			(1,871	)
Other income (loss)		(50	)		1,814			2,396			33	AD		—			2,379

Total other expense		(3,091	)		(3,096	)		(4,089	)		1,361			(1,900	)		(7,719	)
Income before income taxes		14,447			(21,512	)		(28,411	)		2,300			(1,934	)		(13,589	)
Income tax		4,269			981			1,296			669	AH		(571	) AH		5,663

Net income (loss)	$	10,178			(22,493	)	$	(29,707	)	$	1,631		$	(1,363	)	$	(19,261	)

Earnings Per Share
Basic	$	0.80														$	(1.41	)
Diluted	$	0.80														$	(1.41	)
Weighted average common shares outstanding
Basic		12,671,205												994,483	X		13,665,688
Diluted		12,717,575												994,483	X		13,665,688

Note 1.

Includes impairment charges of $20,496 that were recognized durrng 2013 that are .principally related to an impairment of Oil & Steel’s goodwill (a subsidiary of PM).

Manitex International, Inc. and Subsidiaries

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

In thousands except for share and per share data

Balance sheet

Pro forma adjustment to give effect to the purchase of PM for $32,392 along with the assumption of debt of $63,397 as if the acquisition occurred on September 30, 2014 for the balance sheet presented and on January 1, 2013 for the income statements presented.


A.1 Consideration exchanged
Cash	$	22,268
Manitex Stock (994,483 common shares at the closing price on January 15, 2015 of $10.18)		10,124

Total consideration	$	32,392

A.2 Purchase price allocation
Amounts assigned to intangible assets:
Trade names and trademarks	$	6,800
Customer relationships		10,000
Patented and unpatented technology		8,900
Cash		5,961
Trade and other receivables		25,985
Inventory		26,087
Prepaid expense and other		6,036
Total fixed asset		21,022
Deferred net tax assets		3,525
Other long-term assets		181
Accounts payable and accruals		(35,335	)
Other current liabilities		(4,629	)
Other long-term liabilities		(3,081	)
Assumed debt		(63,397	)

		8,055
Goodwill		24,337

	$	32,392

(1)	PM debt is solely a PM obligation and is secured solely by PM assets and lenders have no recourse to Manitex International, Inc. or any subsidiary other than PM.

In accordance with ASC 350 goodwill which is an indefinite lived asset is not amortized. Customer relationships and patented and unpatented technology are being amortized over 10 years. Trade names and trademarks have been determined to be indefinite lived assets and are not being amortized

B.	Pro forma adjustment made to increase cash by $3,834 of which $2,571 was cash contribution to PM by Manitex (cash portion of the purchase price retained by PM) and $1,263 represent proceeds from the completion of the disposition of assets and liabilities held for sale.

C.	Pro forma adjustment for $1,072 was made which represents the fair market adjustment to inventory.

D.	Pro forma adjustment of $2,484 was made to reduce the historic value of fixed assets to their fair value.

E.	Pro forma adjustments of $4,831 and $41,916 were made to eliminate historic intangible assets and goodwill, respectively. Additionally, adjustments of $25,700 were made to record intangible assets acquired as part of the PM acquisition and $24,337 to recognize the residual as goodwill.

Pro forma adjustments were made to reduce notes payable current by $61,887 which represents $54,073 of debt that was forgiven in connection with this transaction and an additional $7,814 of debt that was repaid at the time of transaction. Additionally, a pro forma adjustment of $1,719 to record the debt discount related to non-interest bearing debt assumed was made.

Another pro forma entry was made to reduce notes payable current and increase notes payable long-term by $43,628 to properly classify debt payable between short-term and long-term. As part of the transaction PM’s outstanding debt was restructured. This entry is being made to classify debt between short and long-term debt so that it conforms to the terms of current agreements.

G.	Pro forma adjustment of $1,701 was made to increase accrued expense and to decrease other long-term liabilities by an equal amount. This was done to properly classify the reserve for warranty and certain other liabilities as current liabilities in conformity with Manitex’s accounting policies.

A pro forma adjustment of $1,270 increasing other long-term liabilities was made. The amount reflects the fair market value of an earn out that one of the banks was given in connection with the PM acquisition.

H.	Pro forma adjustments were made to eliminate assets and liabilities held for sale as they were not acquired in this transaction.

I.	Pro forma adjustment was made to increase cash by $5,406 which represents the difference between the net proceeds received from the term loan and the convertible note less amount of cash used to acquire PM.

J.	Pro forma adjustments were made to increase notes payable short-term and notes payable long-term by $1,500 and $12,500, respectively to record a $14,000 term loan taken out in connection with transaction.

K.	Pro forma adjustments were made to increase convertible debt by $14,286, paid in capital by $467 and deferred tax by $247 to record a $15,000 convertible note that was issued in connection with the transaction.

Pro forma adjustment of $1,143 was made to record deferred bank fees and expense incurred or paid in connection with the issuance of the term loan and the convertible debt. Except for $200 that was prepaid, the fees and expenses were deducted from the loan proceeds. Pro forma adjustment to increase revolving credit facility by $200 to reflect a bank fee that was paid in November 2014 that related to the term loan.

M.	Pro forma adjustments of $32,391 were made to eliminate PM’s paid in capital.

N.	A pro forma adjustment was made to reduce retained earnings by $384 to recognize acquisition costs incurred after September 30, 2014.

Income Statement

Pro forma adjustments were made to split total operating expense between cost of sales, selling, general and administrative expenses and research and development costs. The result was to increase cost of sales, selling, general and administrative expenses and research and development costs by $48,934, $21,355 and $968, respectively and to reduce unclassified operating expenses by $71,257.

Pro forma adjustment to increase research and development costs by $217 which represents the net effect of expensing research and development costs that were capitalized in the period and eliminating the amortization of research and development expenses capitalized in prior periods. This adjustment was made to align the accounting for research and development costs to be consistent with Manitex’s accounting policies.

Q.	Pro forma adjustment to account for the difference between historical depreciation and depreciation calculated using the fair market value of assets, and their current useful lives subsequent to the PM acquisition. The net effect was to reduce cost of sales by $307.

Pro forma adjustment to account for the difference between historical amortization and amortization calculated using the fair market value of intangible assets, excluding goodwill, and the current useful lives subsequent to the PM acquisition. The net effect was to increase selling, general and administrative expenses by $1,264.

Pro forma adjustments were made to reclassify foreign currency gains and loss and other income that were included in interest expense. The effect of the entries was to reduce interest expense by $277, to show a loss on foreign currency transaction of $303 and to reflect other income of $26. This adjustment was made to align the expense classification with the accounting policies of Manitex.

T.	Pro forma adjustments were made that reduce interest expense by $1,048. This includes a reduction of interest for $1,432 related to debt forgiven or converted to non-interest bearing debt offset by amortization of $384 of debt discount related to the non-interest bearing debt.

U.	Pro forma adjustment of $34 was made to reduce selling, general and administrative expense. This amount represents acquisition expenses which were incurred prior to September 30, 2014.

Pro forma adjustments of $1,376 were made to record interest expense for the term loan and the convertible debt issued in connection with the transaction. The term loan has a variable interest rate. It is expected that the actual interest rates that will apply to the term loan may differ from the rates set out herein due to changes in LIBOR. The effect of a change of 12.5 bps in the interest rates would result in an increase or decrease in interest expense of $43 for the nine months ended September 30, 2014.

W.	Pro forma adjustments were made to tax effect the above pro forma adjustments. The PM pro forma adjustments were tax effected using the Italian statutory income tax rates. The Manitex pro forma adjustments were tax effected using the Company’s effective rate.

X.	Pro forma adjustment to record 994,483 shares of common stock issued in connection with this transaction.

Pro forma adjustments were made to split total operating expense between cost of sales, selling, general and administrative expenses and research and development costs. The result was to increase cost of sales, selling, general and administrative expenses and research and development costs by $70,802, $51,746 and $5,580, respectively and to reduce unclassified operating expenses by $128,128. . This adjustment was made to align the expense classification with the accounting policies of Manitex.

Pro forma adjustment to decrease research and development costs by $2,936 which represent the net effect of expensing research and development costs that were capitalized in the period, eliminating the amortization of research and development expenses capitalized in prior periods and eliminating an impairment charge recorded in 2013 related to capitalized research and development costs. This adjustment was made to align the accounting for research and development cost so as to be consistent with Manitex’s accounting policies.

AA.

Pro forma adjustment of $1,072 to expense the fair market value inventory adjustment (step up) as all inventory associated with inventory step up is assumed to have been sold at December 31, 2013.

AB.

Pro forma adjustment to account for the difference between historical depreciation and depreciation calculated using the fair market value of assets, and their current useful lives subsequent to the PM acquisition. The net effect was to reduce cost of sales by $606.

AC.

AD.

Pro forma adjustments were made to reclassify foreign currency gains and loss and other income that were included in interest expense. The effect of the entries was to reduce interest expense by $1,743, to show a loss on foreign currency transaction of $1,776 and to reflect other income of $33. This adjustment was made to align the expense classification with the accounting policies of Manitex.

AE.	Pro forma adjustments were made that reduce interest expense by $1,361. This includes a reduction of interest for $1,943 related to debt forgiven or converted to non-interest bearing debt offset by amortization of $582 of debt discount related to the non-interest bearing debt.

AF.

Pro forma adjustment of $34 was made to transfer expenses from the nine months ended September 30, 2014 into 2013 the assumed year of acquisition.

AG.

Pro forma adjustments of $1,900 were made to record interest expense for the term loan and the convertible debt issued in connection with the transaction. The term loan has a variable interest rate. It is expected that the actual interest rates that will apply to the term loan may differ from the rates set out herein due to changes in LIBOR. The effect of a change of 12.5 bps in the interest rates would result in an increase or decrease in interest expense of $67 for the year ended December 31, 2013.

AH.

Pro forma adjustments were made to tax effect the above pro forma adjustments. The PM pro forma adjustments were tax effected using the Italian statutory income tax rates. The Manitex pro forma adjustments were tax effected using the Company’s effective rate.

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Nine months ended September 30, 2014

Average Rate

Year ended December 31, 2013

Average Rate

As of September 30, 2014