- v.2.6.2

EDAC VERSILIA S.R.L.

## Explanatory notes to the Financial Statements as at 31-12-2017

### Explanatory notes, first part

Dear Shareholders, these Explanatory Notes are an integral part of the financial statements as at 31/12/2017. The financial statements are drawn up in condensed form as the limits have not been exceeded for two consecutive financial years as per art. 2435-bis of the Italian Civil Code. These financial statements are in compliance with the provisions of articles 2423 et seq. of the Italian Civil Code and national accounting standards as published by the Italian Accounting Body. Therefore they clearly, truly and fairly represent the financial position and operating result of the year. The contents of the Balance Sheet and Income Statement are those envisaged by articles 2424 and 2425 of the Italian Civil Code. The explanatory notes, drafted pursuant to art. 2427 of the Italian Civil Code, also contain all information useful for providing a correct interpretation of the financial statements. Also provided herein is the information required by numbers 3 and 4 of art. 2428 of the Italian Civil Code, since, as permitted by art. 2435-bis of the Italian Civil Code, the Management Report was not prepared. These financial statements for the year ended 31/12/2017 show an operating result of €109,571.00. The year of reference of the financial statements saw a substantial increase in revenues compared to the previous year. Production costs also saw an increase, closely related to higher company operations, though to a lesser extent compared to revenues, and this led to an improvement in the result for the year.

####### Content criteria

######## Preparation of the financial statements

The information included in this document is presented in the order in which the related items are specified on the balance sheet and income statement. With regard to that which was mentioned in the introduction to these explanatory notes, note that, in accordance with art. 2423, 3rd paragraph of the Italian Civil Code, where the information required by specific provisions of law is insufficient for providing a true and correct portrayal of the company's situation, all additional information deemed necessary to this purpose is also supplied. There were no exceptional cases that required recourse to exceptions pursuant to art. 2423, paragraphs 4 and 5 and art. 2423-bis, paragraph 2 of the Italian Civil Code. The financial statements, as well as these explanatory notes, have been prepared in euros.

######## Drafting principles of the financial statements

The valuation of the items of the financial statements was performed in compliance with the general principles of prudence and on a going-concern basis. In accordance with art. 2423-bis, para. 1, point 1-bis of the Italian Civil Code, the items are recognised and presented taking into account the substance of the transaction or contract. In preparing the financial statements, income and charges were booked on an accrual basis regardless of the actual date of payment and/or of the document. Risks and losses pertaining to the year were taken into account, even if awareness of such was only gained after year-end.

######## Structure and contents of the Financial Statements

The balance sheet, income statement and all accounting information contained in these notes comply with the accounting records from which they have been directly disclosed. In presenting the balance sheet and income statement, no items preceded by Arabic numerals were grouped together, as is instead permitted by art. 2423 ter of the Italian Civil Code. In accordance with art. 2423-ter of the Italian Civil Code, all items of the financial statements are comparable with the previous year, so there has been no need to adapt any item from last year. In accordance with art. 2424 of the Italian Civil Code, there are no elements of assets or liabilities that fall under more than one item of the financial statements.

Financial statements as at 31-12-2017

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