Audit Report / Information • Apr 9, 2024
Audit Report / Information
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To the Shareholders' Meeting of the Company SABAF S.p.A.
The Board of Statutory Auditors of SABAF S.p.A. (hereinafter also "SABAF" or "Company"), pursuant to Art. 153 of Legislative Decree no. 58 of 1998 (hereinafter also TUF) and Art. 2429, paragraph 2 of the Italian Civil Code, has to report to the Shareholders' Meeting called for the approval of the Financial Statements on the supervisory activity carried out during the financial year in the performance of its duties on any omissions and reprehensible facts if found and on the results of the financial year, as well as to formulate proposals related to the Financial Statements, the approval thereof and matters falling in its remit.
First, we note that the Board of Directors has called the Shareholders' Meeting on 8 May 2024 for the approval of the 2023 financial statements and, therefore, within the term of 180 days stated by Article 2364 of the Italian Civil Code, since the Company prepares the consolidated financial statements. We Note that the financial statement report was made available to the public within the term stated by Art. 154 ter of the TUF.
During the fiscal year ended 31 December 2023 and up to date, the Board of Statutory Auditors has carried out its supervisory activities in compliance with Law provisions, Rules of Behaviour of the Board of Statutory Auditors of listed companies issued by the Italian Board of Certified Public Accountants and Bookkeepers, the CONSOB provisions on corporate controls, the Corporate Governance Code, as well as by the provisions contained in Art. 19 of Italian Legislative Decree 39/2010.
The financial statements of SABAF were prepared in accordance with the IAS/IFRS international accounting standards issued by the International Accounting Standards Board (IASB) and approved by the European Union, as well as in accordance with the provisions issued by CONSOB in implementation of Art. 9, paragraph 3, of Legislative Decree 38/2005. The Financial Statements are also in XHTML - ESEF format in compliance with Legislative Decree No. 25 of 15 February 2016 implementing EU Directive 2013/50.
The Company's Financial Statements were prepared in accordance with the law and accompanied by the documents required by the Italian Civil Code and the TUF. Moreover, in accordance with law provisions, the Company prepared the Consolidated financial statements and the consolidated disclosure of nonfinancial information for the year 2023.
The Board of Statutory Auditors acquired the information necessary for the performance of the supervisory duties assigned to it by i) attending the meetings of the Board of Directors and the Board Committees, ii) the hearings of the Company's and the Group's management, iii) the exchange of information with the Independent Auditors and the Supervisory Body, iv) the information acquired from the competent company structures, as well as through the additional control activities carried out.
The Board of Statutory Auditors in office at the date of this Report was appointed by the Shareholders' Meeting of 6 May 2021 in the persons of Alessandra Tronconi (Chairman), Maria Alessandra Zunino de Pignier (Statutory Auditor), Mauro Giorgio Vivenzi (Statutory Auditor), as well as Christian Carini and Federico Pozzi (Alternate Auditors). The control body remains in office for three financial years and will expire on the date of the Shareholders' Meeting called to approve the Financial Statements for the year 2023.
The appointment was made on the basis of two lists submitted by the Shareholders Cinzia Saleri S.A.p.A and Quaestio Capital SGR S.p.A. respectively, in compliance with the applicable law, regulatory and statutory provisions.

The composition of the Board of Statutory Auditors complies with the gender distribution criterion set forth in Art. 148 of the TUF.
At the time of its appointment, the Board of Statutory Auditors checked the existence of the independence requirement as part of the broader process of self-assessment of the control body pursuant to Standard Q.1.7 of the Rules of Behaviour of listed companies; the check was carried out on the basis of the criteria envisaged by the aforesaid Standards and by the provisions of the Corporate Governance Code applicable to independent directors.
This assessment was carried out again on 10 March 2022, 14 March 2023 and 12 March 2024 and consequently communicated to the Board of Directors, which disclosed it in the Report prepared pursuant to Art. 123-bis of the TUF.
In carrying out its duties, the Board of Statutory Auditors carried out the supervisory activities required by Art. 2403 of the Italian Civil Code, Art. 149 of the TUF, Art. 19 of Legislative Decree No. 39/2010, CONSOB recommendations on corporate controls and the activities of the Board of Statutory Auditors and referring to the indications contained in the Corporate Governance Code, as well as the Rules of Behaviour of the Board of Statutory Auditors of listed companies.
Moreover, as part of its functions, and in relation to the financial year in question, the Board of Statutory Auditors:
Moreover, the Board of Statutory Auditors:

Consistent with the provisions of the Corporate Governance Code and the Corporate Governance Manual, which envisage that the self-assessment of the Board of Directors by distributing, compiling, collecting and processing questionnaires (process coordinated by the Lead Independent Director) is to be carried out at least every three years, the Company's Board of Directors carried out its last self-assessment in 2023.
The Board of Statutory Auditors also acknowledges that it has issued its consent, pursuant to Art. 5, paragraph 4, of Regulation (EU) 2014/537, to the provision by the Independent Auditors EY S.p.A. of services other than the external audit.
With regard to the Financial Statements for the year ended 31 December 2023, the following is noted:
Pursuant to Art. 19 of Legislative Decree 39/2010 (Consolidated External Audit Act), the Board of Statutory Auditors, in its role as an internal control and external audit committee of public interest entities, is required to supervise:
The Board of Statutory Auditors carried out its activities in collaboration with the Control, Risk and Sustainability Committee in order to coordinate their responsibilities and avoid overlapping of activities.
The Board of Statutory Auditors supervised the existence of rules and procedures relating to the process of formation and dissemination of financial information. In this regard, it should be noted that the Report on Corporate Governance and Ownership Structures illustrates how the Group defined its Internal Control and Risk Management System in relation to the financial reporting process at the consolidated level. The Financial Reporting Officer is Gianluca Beschi. The Financial Reporting Officer is supported by the Internal Audit Department to check the operation of the administrative and accounting procedures through control testing.

The Board of Statutory Auditors acknowledges that it has received adequate information on the monitoring of business processes with an administrative and accounting impact within the Internal Control System. This activity was carried out both during the year in relation to the regular management reports, and during the closing of the accounts for the preparation of the Financial Statements, in compliance with the monitoring and certification requirements to which SABAF is subject pursuant to Law no. 262/2005. In particular, the Board of Statutory Auditors acknowledged the Risk Assessment for 2023, as well as the periodic update on testing activities pursuant to Law no. 262/2005.
The adequacy of the administrative and accounting system was also assessed through the acquisition of information from the heads of the respective departments and the analysis of the results of the work carried out by the Independent Auditors.
No particular critical issues or elements hindering the issue of the certification by the Financial Reporting Officer and by the Chief Executive Officer concerning the adequacy of the administrative and accounting procedures for the preparation of the Financial statements of SABAF and the Consolidated Financial Statements for the year 2023 emerged.
The Board of Statutory Auditors supervised compliance with the regulations related to the preparation and publication of the Half-Yearly Report and the Interim Management Reports, as well as the settings given to them and the correct application of the accounting standards, also using the information obtained from the Independent Auditors.
Furthermore, it is acknowledged that:
In particular, all the main phases of the audit activity were illustrated to the Board of Statutory Auditors, including the identification of the risk areas, with a description of the related audit procedures adopted; moreover, the main accounting principles applied by SABAF have been followed.
The Board of Statutory Auditors also acknowledges that the Independent Auditors EY S.p.A. issued their opinions on the Consolidated Financial Statements and the Separate Financial Statements on 28 March 2024 and also issued on the same date the Additional Report to the Internal Control and Audit Committee pursuant to Article 11 of Regulation (EU) 2014/537.
The reports on the Separate financial statements and the Consolidated financial statements do not give rise to any observations or requests for information.
It is also acknowledged that the Independent Auditors expressed, in the reports mentioned above, a positive opinion with regard to consistency with the financial statements and compliance with the law with reference:
In the audit work, a special attention was paid to the key aspects relating to the impairment test.
Moreover, the reports issued by the Independent Auditors do not reveal any significant shortcomings in the Company's internal control system for financial information and accounting system.
The Board of Statutory Auditors supervised the independence of the Independent Auditors EY S.p.A., verifying the type and extent of services other than auditing with reference to SABAF and its subsidiaries and obtaining explicit confirmation from the Independent Auditors that the independence requirement was

met. The statement on independence has been included, pursuant to Art. 11, paragraph 2, letter a), of Regulation (EU) 2014/537, in the above-mentioned Additional Report.
The fees paid by the SABAF Group to the Independent Auditors and to the companies belonging to the network of the Independent Auditors themselves are as follows:
| Assets | Amount €/000 |
|---|---|
| Audit of the Parent company | 59 |
| Audit of the Italian subsidiaries | 33 |
| Audit of the foreign subsidiaries | 65 |
| Certification services | - |
| Other services | 83 |
| Total | 240 |
In the light of the above, the Board of Statutory Auditors considers that the Independent Auditors EY S.p.A. meet the requirement of independence.
The Board of Statutory Auditors assessed and supervised the adequacy of internal control and the effectiveness of the internal control and risk management systems. The Board of Statutory Auditors acknowledges that it has verified the most significant activities carried out by the overall internal control and risk management system by attending the meetings of the Control, Risk and Sustainability Committee (also with functions of Committee for related-party transactions) attended by:
The Board of Statutory Auditors also acknowledges that it attended the periodic meetings among the Company's control bodies attended by:
In particular, as part of these activities, the Board of Statutory Auditors acknowledges that it has received and examined:
The Board of Statutory Auditors then reviewed every six months the periodic reports on the activities carried out by the Supervisory Body and examined the activity plan and the budget allocated for 2023. Similarly, the Board of Statutory Auditors acknowledged the compliance with the provisions of Legislative Decree no. 231/2001 and the activity plan for 2023.

Following the activities carried out during the 2023 financial year, as detailed above, the Board of Statutory Auditors shared the positive assessment expressed by the Control, Risk and Sustainability Committee with regard to the adequacy of the Internal Control and Risk Management System.
The main transactions carried out by the Company during 2023, with respect to which the Board of Statutory Auditors monitored compliance with the principles of proper management, are summarised below.
Consistent with the budget, the Group invested €16.9 million. This is mainly investment aimed at (i) expanding the international production footprint, where it should be noted that work on the construction of the San Luis Potosi plant in Mexico was completed; (ii) product innovation, including the development of components for induction cooking; (iii) industrialising new products; and (iv) optimising the efficiency and automation of production processes.
On 14 July 2023, Sabaf S.p.A. announced that, through its subsidiary Sabaf America Inc.1, it signed an agreement to purchase 51% of Mansfield Engineered Components LLC ("MEC"), a US company based in Mansfield (Ohio) and the leading North American manufacturer of hinges for household appliances (mainly ovens, washing machines and refrigerators).
In connection with the acquisition of MEC) on 14 July 2023, the Board of Directors exercised the proxy granted by the Shareholders' Meeting on 4 May 2020, resolving on a reserved capital increase for a nominal amount of €1,153,345, corresponding to 10% of the share capital, with the exclusion of the right of option pursuant to Article 2441, fourth paragraph, second sentence of the Italian Civil Code, through the issue of 1,153,345 new ordinary shares with a par value of €1.00. The newly issued shares were offered as part of a reserved placement and fully subscribed by Montinvest s.r.l., a company controlled by Fulvio Montipò. The issue price of the new shares, including the share premium, was determined at €15.91 per share, equal to the average stock market price of the Sabaf share recorded in June, increased by a premium of €0.52 per share (and therefore for a total value of €17,311,708). The capital increase took place on 20 July 2023.
Following the supervision and control activities carried out during the year, the Board of Statutory Auditors can certify that:
The Board of Statutory Auditors, during the financial year ended 31 December 2023, assessed the application of the corporate governance rules set out in the Corporate Governance Code and the relative level of compliance, also by analysing the Report on corporate governance and ownership structures and comparing its contents with what emerged during the general supervisory activity carried out during the year. The Board also acknowledges that, on 16 December 2021, the Company's Board of Directors adopted the Corporate Governance Manual setting out the principles, rules and operating procedures to enable the Company to implement the recommendations of the Corporate Governance Code.
Moreover, compliance with the obligation on the part of SABAF to inform the market in its Report on corporate governance and ownership structures of its level of compliance with the Code itself was assessed, also in accordance with the provisions of Art. 123-bis of the TUF. The Board of Statutory Auditors is of the

opinion that the Report on corporate governance was prepared in accordance with the provisions of Art. 123-bis of the TUF and the Corporate Governance Code and following the format made available by the Corporate Governance Committee of Borsa Italiana S.p.A.
With regard to the Separate financial statements for the year ended 31 December 2023, the Consolidated financial statements for the year ended on the same date and the related Report on operations, note the following:
In relation to the presentation of the Consolidated non-financial statement, the Board of Statutory Auditors, in compliance with Legislative Decree no. 254 of 30 December 2016, monitored the adequacy of the procedures, processes and structures governing the preparation, reporting, measurement and presentation of non-financial results and information. The Board of Statutory Auditors also supervised the performance of the preparatory activities for the preparation of the non-financial statement as well as the compliance with the provisions set forth in Legislative Decree 254/2016, as part of the functions assigned to it by the regulations, also acquiring the certification issued by the appointed auditor EY S.p.A. on 28 March 2024, which specifies the procedures carried out and the information assumed and analysed by the auditor EY S.p.A. for the purpose of expressing its opinion. These activities, as also expressed in the report of EY S.p.A., did not give rise to any matters requiring disclosure in this report.

The Board of Statutory Auditors supervised the adequacy of the instructions given by the Company to the subsidiaries, in accordance with Art. 114, paragraph 2 of the TUF.
Periodic meetings with the management and the company in charge of Internal Audit did not reveal any critical elements to be reported in this report.
Finally, we acknowledged that to date no communications have been received from the Control Bodies of the Subsidiaries containing findings to be noted in this report.
In relation to the provisions of Art. 2391-bis of the Italian Civil Code, the Board of Statutory Auditors acknowledges that the Board of Directors adopted a procedure for the regulation of Related-Party Transactions, whose main objective is to define the guidelines and criteria for identifying related-party transactions and setting out roles, responsibilities and operating methods so as to guarantee, for such transactions, adequate information transparency and the related procedural and substantial correctness.
That procedure was prepared in compliance with what was established by the CONSOB Regulation on Related Parties (no.17221 dated 12 March 2010 as amended) and was last updated by the Board of Directors on 3 August 2021 in order to implement the amendments made to the aforementioned Regulation by CONSOB Resolution No. 21624/2020.
The Board of Statutory Auditors supervised the effective application of the rules by the Company and has no observations to make in this regard in this Report.
On 19 March 2024, the Board of Directors stated that the financial statements closed with a profit of €3,503,797. The Board of Directors proposes to distribute an ordinary dividend of €0.54 per share to the Shareholders, with the exclusion of the treasury shares on the ex-date, by distributing the entire profit for 2023 and, for the residual part, by distributing a portion of the Extraordinary Reserve.
The Board of Statutory Auditors expresses its favourable opinion for the approval of the Separate financial statements at 31 December 2023 and has no objections to make to the draft resolution presented by the Board of Directors as formulated in the Explanatory Notes and in the Directors' Report on Operations.
Ospitaletto, 29 March 2024
The Board of Statutory Auditors
___________________________ Alessandra Tronconi (Chairman)
___________________________
Maria Alessandra Zunino de Pignier (Standing Auditor)
___________________________ Mauro Vivenzi (Standing Auditor)
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