Elica

Audit Report / Information • Mar 28, 2022

ELICA S.p.A.

Registered office in Fabriano (AN), Via Ermanno Casoli No. 2 Share capital Euro 12,664,560.00 fully paid-in Marche Companies Registration Office Tax and VAT No.: 00096570429

REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS' MEETING (in accordance with Article 153 of Legislative Decree 58/1998 and Article 2429, paragraph 2 of the Civil Code)

Dear Shareholders,

we were appointed by the Shareholders' Meeting of April 29, 2021 (in accordance with applicable legal, regulatory and statutory provisions) and our mandate will conclude at the Shareholders' Meeting for the approval of the financial statements at December 31, 2023.

We have complied with the limit on the number of offices envisaged by Article 144 terdecies of the Issuers' Regulation.

We acknowledge that the composition of the Board of Statutory Auditors complies with the provisions on gender diversity (as per Article 148, paragraph 1-bis, of Legislative Decree 58/1998, as amended by Article 1, paragraph 303, Law No. 160 of December 27, 2019, and applied pursuant to Article 1, paragraph 304 of the same law, as well as in accordance with the provisions of Consob Communication No. 1/20 of January 30, 2020).

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During the year ended December 31, 2021, in continuity with the previous Board of Statutory Auditors, we performed the supervisory activities required by law, in accordance with the "Conduct principles for the Board of Statutory Auditors in listed companies" and recommended by the Italian Accounting Profession (Consigli Nazionale dei Dottori Commercialisti e degli Esperti Contabili), the Consob provisions concerning corporate controls and activities of the Board of Statutory Auditors and the indications of the Self-Governance Code of the Company.

In particular, also in accordance with the recommendations issued by Consob, we performed the following:

• we verified compliance with law, the By-Laws and the regulations;
• during the year:
• i) we met 21 times in the performance of our duties;
• ii) we attended 1 Shareholders' Meeting, 9 Board of Directors' meetings, 4 Control, Risks and Sustainability Committee meetings and 5 meetings of the Appointments and Remuneration Committee;

all meetings were held in compliance with the applicable laws, the By-Laws and the regulations governing their functioning. The motions were passed in compliance with law and the company By-Laws and were not imprudent, reckless or such as to compromise the integrity of the company's assets;

• periodically, we received information from the Directors on the general performance and on the outlook, as well as on the most significant operations, in terms of size and nature, carried out by the Company and its subsidiaries.

In relation to such, we can reasonably assure that the actions taken are in conformity with law and the By-Laws of the company and were not imprudent, risk related, in potential conflict of interest or contrary to the motions passed, or such as to compromise the integrity of the company assets;

• the following assignments were awarded to the Audit Firm KPMG S.p.A. and its network:

Type of service	Service provider	Company	Remuneration
			(Euro thousands)
Audit	Kpmg SpA	Elica S.p.A.	223
Audit	Kpmg SpA	Air Force SpA	15
Audit	Kpmg SpA	EMC Fime Srl	22
Audit	Kpmg Cardenas Dosal, S.C.	Elicamex S.A.de C.V.	29
Audit	Kpmg Polska	Elica Group Polska
Audit	Kpmg China	S.p.z.o.o. Zhejiang Elica Putian	34
		Electric Co. Ltd	50
Audit	Kpmg Japan	Ariafina CO., LTD	7
Other services	Kpmg SpA	Elica S.p.A.	47
Total			427

• we constantly monitored the independence of the Independent Audit Firm, noting the absence of any critical aspects;

• we held 3 meetings with the head of the independent audit firm, in accordance with Article 150, paragraph 3 of Legislative Decree 58/1998. During the meetings no significant information warranting disclosure became evident;

• we have noted the significant changes to the organisational structure, overseeing its adequacy for the efficient and lean management of the business; in relation to this, there are no observations to report;
• we assessed the adequacy of the internal control system and of the administration and accounting system and its reliability to correctly represent operations, through the obtaining of information from managers and we reviewed company documents and oversaw the financial disclosure process in accordance with Article 19 of Legislative Decree 39/2010;
• we reviewed the adequacy of the instructions given by the Parent Company to its subsidiaries to receive in a timely manner all necessary information to comply with the obligations required by law;
• we did not detect any atypical and/or unusual transactions (as defined by Consob Communication No. DEM/6064293 of July 28, 2006). We acknowledge that the information provided in the Financial Report regarding significant non-recurring events and operations and transactions between group companies or with related parties is adequate;
• we note the following significant operations:
• a) on March 16, 2021, the Board of Directors, noting the resignation of the Director and Chief Executive Officer Mauro Sacchetto, proceeded with his replacement with Giulio Cocci;
• b) on March 31, 2021, the company communicated to the trade union representatives the 2021-2023 industrial plan and the new Cooking area structure;
• c) on July 2, 2021, the full acquisition of Electric Motors Company S.r.l. and of CPS S.r.l., companies operating in the electric motors sector, were completed.
• d) on September 29, 2021, the following agreements were completed: i) the sale to Whirlpool of India Limited of an approx. 19% stake in the subsidiary Elica PB India Private Ltd.; ii) for the supply of products and the use of the Elica and Whirlpool brands in India; iii) for the governance of transactions between shareholders of the Indian company (shareholders' agreement), including put & call options;

• e) on December 9, 2021, at the Ministry for Economic Development, an agreement with the Trade Unions was signed, to settle the dispute regarding the industrial plan and the organisational structure of the Italy Cooking area;

• f) on December 13, 2021, the merger by incorporation of the company CPS S.r.l. into the company EMC FIME S.r.l. (previously Electric Motors Company S.r.l.) was completed;

• g) on December 6, 2021, EMC FIME S.r.l. approved a share capital increase of Euro 4,960,000.00 which, on December 20, 2021, was executed through the transfer by Elica of the "Fime motors business unit", with effect from January 1, 2022, according to the appraisal report drawn up as per Article 2465 of the Civil Code; The transfer value is Euro 14.9 million;
• the impairment tests, carried out according to the criteria and assumptions approved by the Board of Directors of February 10, 2022, indicate that the tests on goodwill did not result in an impairment, while those on investments resulted in an impairment of Euro 8.6 million for the Chinese subsidiary Zhejiang Elica Putian Electric Co. Ltd;
• the inter-company and related party transactions undertaken by the company and its subsidiaries in 2021, the parties involved and the relative financial effects are indicated in the notes to the financial statements, to which reference should be made, and which were appropriate and in the interests of the company;
• no petitions were received pursuant to Article 2408 of the Civil Code;
• on March 16, 2021, April 29, 2021 and May 5, 2021, as required by Article 2389, paragraph 3 of the Civil Code, we issued favourable opinions on the remuneration of the Executive Directors;
• the Company has complied with the Self-Governance Code promoted by Borsa Italiana S.p.A.; the Directors reported on such in the "Corporate Governance and Ownership Structure Report", approved by the Board of Directors on March 16, 2022;
• we have monitored, by acquiring information from the functions concerned, the disputes in which the Company is involved;
• we verified the company processes to draw up the remuneration policies of the Executive Directors, the Senior Executives and other key figures, both over the short and long-term, as outlined in the Remuneration Report, drawn up as per Article 123 ter and 84-quater of the Issuers' Regulation;

• we assessed at our meetings of April 29, 2021 and March 11, 2022 the existence of the requirements of our independence, including pursuant to the Corporate Governance Code for Listed Companies;

• we verified during the meetings of April 29, 2021 and March 11, 2022 the correct application of the assessment criteria and procedures adopted by the Board of Directors to assess the independence of its members and did not note any irregularities;

• we examined the declarations of the Chief Executive Officer and the Corporate Financial Reporting Manager, pursuant to Article 154-bis of the Consolidated Finance Act;
• we note that the company has an Organisation and Management Model as per Legislative Decree 231/2001, structured by "business process";
• we held meetings with the Supervisory Board, reviewing the periodic reports prepared and received information on the activities scheduled for 2022;
• we acknowledge that pursuant to Legislative Decree 254/2016, implementation of EU Directive 2014/95 and in accordance with the provisions of Article 8 of EU Regulation 2020/852 "Taxonomy Regulation ", the Company has prepared, with reference to the financial year 2021, the consolidated non-financial report (NFR), which highlights the centrality and relevance that the Group attributes to sustainability objectives.

This NFR was approved by the Board of Directors on March 16, 2022, following its review by the Control, Risks and Sustainability Committee at its meeting of March 10, 2022. We do not report any observations in this regard.

In relation to the separate financial statements, we confirm that:

• they were prepared in accordance with International Accounting Standards (IAS/IFRS), as presented by the Board of Directors in the notes to the financial statements. The Directors have complied with current regulations regarding disclosure of the risk management and internal control system in connection with the financial reporting process;
• was prepared in compliance with the specifications required by EU Regulation No. 2019/85 ("ESEF Regulation") and, therefore, in the XHTML electronic format and presents, with reference to the consolidated financial statements at December 31, 2021, the Inline XBRL markings of the information according to the taxonomy indicated in the ESEF Regulation;
• the Notes to the Financial Statements provide information deemed appropriate to better represent the Company's equity, financial and operating situation;
• the information provided in the Directors' Report is complete and exhaustive, including with regard to subsequent events and the outlook, also considering the situation of uncertainty at the global level relating to the continued COVID-19 health emergency and the recent invasion of Ukraine by Russia.

With regards to the pandemic emergency, which was a feature also of 2021, we continued to supervise the adoption of the necessary prevention and containment measures in the workplace, in accordance with the indications issued by the competent Authorities. We however recommend that such monitoring is continued.

With regards to the recent invasion of Ukraine by Russia, we recommend monitoring the development of the situation and its operating-equity effects, as indicated latterly in Consob's call to attention of March 18, 2022.

The Independent Audit Firm KPMG S.p.A. today issued:

• the Auditors' Reports on parent company and consolidated financial statements without any exceptions or matters to be noted. Both the reports expressed an opinion on the consistency of the Directors' Report and of certain specific information contained in the corporate governance and ownership structure report with the financial statements, and on their compliance with law;
• the additional report required by Article 11 of Regulation (EC) 537/2014, upon which no significant deficiencies in terms of internal control regarding the financial disclosure process requiring reporting to the heads of "governance" were noted. As an attachment to the additional report, the Independent Audit Firm sent to the Board of Statutory Auditors the statement regarding its independence, as required by Article 6 of Regulation (EC) 537/2014, indicating no situations which may compromise such independence. This will be forwarded by the Board of Statutory Auditors to the Board of Directors;
• the report as per Legislative Decree 254/2016 and Consob Regulation No. 20267 on the Non-Financial Report of Elica S.p.A. and its subsidiaries, approved by the Board of Directors on March 16, 2022.

In the course of the supervisory activity and based on the information obtained, no significant omissions and/or significant matters or irregularities that would require reporting to the Supervisory Authority or mention in the present report were noted.

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Taking account of that outlined above, we do not indicate, to the extent of our remit, reasons which would prevent approval of the financial statements at December 31, 2021, as presented, nor observations regarding the proposal for the allocation of the net profit, drawn up by the Board of Directors.

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The Group consolidated financial statements have been reviewed by us and we report no further observations in this regard.

Lì, March 24, 2022

	THE BOARD OF STATUTORY AUDITORS
FREZZOTTI GIOVANNI	- Chairperson
BELLI MASSIMILIANO	- Statutory Auditor
ROMAGNOLI SIMONA	- Statutory Auditor