Civitanavi Systems — Audit Report / Information 2023

Mar 15, 2024

Civitanavi System S.p.A. - Remarks of the outgoing Board of Statutory Auditors

1. Background

2. 1. Development of the acƟviƟes of the Board of Statutory Auditors provided for by the law
3. 1. Remarks on the composiƟon of the Board of Statutory Auditors
4. 1. AcƟviƟes carried out by the Board of Auditors: areas of acƟvity and required commitment
5. 1. Remarks on the remuneraƟon of the Board of Statutory Auditors
6. 1. Conclusions

1. Background

As known, the mandate of the Board of Statutory Auditors of Civitanavi System S.p.A. currently in office will expire on the date of the Shareholders' MeeƟng called to approve the financial statements as of December 31st, 2023. On such occasion, the Shareholders' MeeƟng will be called to resolve upon the appointment of a new supervisory body.

In accordance with point Q.1.5. of the Rules of Conduct for the Board of Statutory Auditors of Listed Companies of the CNDCEC of December 21st, 2023 (hereinaŌer the "Rules of Conduct"), it is "good pracƟce that the outgoing board expresses to the shareholders, in view of the renewal, its orientaƟon on the professional profiles and skills that properly complement the qualitaƟve composiƟon of the board, as well as the Ɵme commitment required to perform the task and the remuneraƟon appropriate to aƩract persons of adequate standing, without neglecƟng the provisions of law no. 49 of April 21st, 2023. Such document shall be published on the company's website well in advance of the publicaƟon of the noƟce of call of the shareholders' meeƟng relaƟng to the renewal of the board'.

This document is drawn up by the Board of Statutory Auditors in office in compliance with the abovemenƟoned indicaƟon and with the aim of fostering knowledge on the part of the Shareholders' MeeƟng and of the candidate for the office as Statutory Auditors providing an exhausƟve picture of the acƟviƟes that the Company's Board of Statutory Auditors is required to perform, in order to assess in an informed manner the professional skills required and the adequacy of the remuneraƟon proposed for the performance of the office.

In fact, with reference to the profile of professionalism, Conduct Rule Q.1.1. provides that "The board of statutory auditors, in its capacity as the PIE's internal control and audit commiƩee, shall be composed of members, as a whole, competent in the sector in which the audited company is acƟve. This implies that the individual auditor may not possess such experƟse at the Ɵme of appointment, it being understood that they shall gain it during the term of office, by documenƟng themselves, obtaining informaƟon (also from the company) and availing of the experience on the peculiariƟes of the sector gained by their colleagues". Consistent indicaƟons may also be found in ArƟcle 19, paragraph 3, of LegislaƟve Decree 39/2010, pursuant to which "the members of the internal control and audit commiƩee, as a whole, are competent in the sector in which the audited enƟty is acƟve".

Before being made available to shareholders, this document was sent to the Chairman of the Board of Directors to be brought to the aƩenƟon of the Company's Board of Directors.

2. Development of the acƟviƟes of the Board of Statutory Auditors provided for by the law

Reference is hereby made to the reformaƟon of the statutory audit discipline implemented at European level (so-called "European ReformaƟon") with the promulgaƟon of the following acts:

• RegulaƟon (EU) no 537/2014 on the audit of Public Interest EnƟƟes (so-called PIEs), directly applicable as of June 17th, 2016;
• DirecƟve no. 2014/56/EU transposed into Italian law by LegislaƟve Decree no. 135/2016, which amended the provisions envisaged by LegislaƟve Decree no. 39/2010.

With the European ReformaƟon, the lawmaker intended to strengthen the quality of audiƟng and to reinforce, in parƟcular, the mechanisms for verifying the independence of the auditor, by providing the Supervisory Body, in its capacity as Internal Control and Audit CommiƩee, with specific monitoring acƟviƟes.

In this context, the Supervisory Body shall:

• inform the board of directors of the audited company of the outcome of the statutory audiƟng acƟvity (ArƟcle 19, paragraph 1, leƩer a), of LegislaƟve Decree no. 39/2010) and submit to that corporate body the addiƟonal report together with further observaƟons, if any (ArƟcle 11 RegulaƟon (EU) 537/2014);
• monitor the financial reporƟng process and make recommendaƟons/proposals aimed at ensuring its integrity (ArƟcle 19, paragraph 1, leƩer b), of LegislaƟve Decree 39/2010);
• monitor the effecƟveness of the firm's internal quality control and risk management systems and, if applicable, internal audit, with respect to the audited enƟty's financial reporƟng (ArƟcle 19, paragraph 1, leƩer c), of LegislaƟve Decree 39/2010);
• monitor the audiƟng acƟvity on the yearly financial statements, also taking into account any findings and outcome of the quality controls carried out by Consob (ArƟcle 19, paragraph 1, leƩer d), of LegislaƟve Decree 39/2010);
• verify the auditor's independence (ArƟcle 19, paragraph 1, leƩer e), of LegislaƟve Decree 39/2010);
• be responsible for the selecƟon procedure of the statutory auditor (ArƟcle 16 EU RegulaƟon 537/2014 and ArƟcle 19, paragraph 1, leƩer f), of LegislaƟve Decree 39/2010);
• approve the performance of non-audit services by the auditor and the enƟƟes of the relevant network (ArƟcle 5 RegulaƟon (EU) 537/2014).

It is also worth menƟoning the regulaƟon on non-financial informaƟon introduced by LegislaƟve Decree 254/2016, according to which the Supervisory Body shall:

• supervise the directors' compliance with the provisions envisaged by LegislaƟve Decree 254/2016 regarding the draŌing of the non-financial statement (ArƟcle 3, paragraph 7, of LegislaƟve Decree 254/2016);
• inform the Shareholders' MeeƟng of the outcome of the aforemenƟoned supervision (ArƟcle 3, paragraph 7, LegislaƟve Decree 254/2016);
• be heard by the administraƟve body in the event that, in excepƟonal circumstances, informaƟon may be omiƩed from the declaraƟon of non-financial nature that could jeopardize the company's commercial posiƟon (ArƟcle 3, paragraph 8, of LegislaƟve Decree 254/2016).

It should be noted, in this respect, that although Civitanavi Systems S.p.A. is not included among the enƟƟes required to draw up the non-financial statement, it decided to proceed with the draŌing of the Sustainability Report starƟng from the financial year ending 31/12/2022 on a voluntary basis.

3. Remarks on the composiƟon of the Board of Statutory Auditors

Taking into account the sector in which the Company is acƟve and the corporate organizaƟon, it is considered that the performance of the tasks assigned to the Board of Statutory Auditors requires, also in perspecƟve, the possession of specific skills in the following areas:

• Principles and operaƟng rules of listed companies;
• AccounƟng processes and the formaƟon of Financial Statements;
• NaƟonal and internaƟonal accounƟng standards;

• Economic and financial evaluaƟons;
• Risk management and internal control systems;
• Technical experƟse in the legal field;
• ExperƟse in finance and the funcƟoning of financial markets;
• RemuneraƟon policy competences;
• Internal audit processes;
• Compliance;
• Legal audit;
• ExperƟse on sustainability reporƟng standards.

In parƟcular, skills and experience in listed companies are deemed to be essenƟal. It is also appropriate for the Board of Statutory Auditors to have the experƟse of persons who have gained experience in the aforemenƟoned areas on a complementary basis. Hence, it is relevant that the members of the supervisory board have different backgrounds and jointly cover the aforesaid areas of competence.

On the basis of the self-assessment acƟviƟes carried out annually, the Board of Statutory Auditors in office has ascertained that it possesses the aforemenƟoned competences.

The Board has also ascertained that an important element of efficiency and effecƟveness in the performance of its duƟes is the high degree of complementarity of the academic and accrued experience of each member. This ensures a funcƟonal and complete coverage of the various issues that the Board is requested to oversee and results in fruiƞul work that allows, among other things, the professional enrichment of each member of the Board.

The Board also posiƟvely assessed its composiƟon in terms of gender diversity, skills and professionalism, and work experience.

4. AcƟviƟes carried out by the Board of Auditors: areas of acƟvity and required commitment

4.1. The main areas and acƟviƟes carried out by the Board of Auditors are the following:

(i) Supervision of compliance with the law and the by-laws

• aƩendance at all meeƟngs of the Board of Directors (BoD) and the various commiƩees (see table below);
• issuance of opinions and cerƟficaƟons on individual resoluƟons;
• aƩendance at specific meeƟngs with the Internal Audit (IA) funcƟon and the Supervisory Board (SB);
• further insights.

(ii) Sustainability Report

• aƩendance at regular meeƟngs to monitor draŌing process of the sustainability report, drawn up on a voluntary basis for the financial years 2022 and 2023, and its methodological approach;
• targeted meeƟngs with the appointed consulƟng firm.

(iii) Supervision of compliance with the principles of correct administraƟon

• aƩendance at all meeƟngs of the Board of Directors and the various commiƩees;
• selecƟve meeƟngs with management funcƟons for in-depth analysis of relevant transacƟons;
• further invesƟgaƟon, whenever deemed appropriate.

(iv) Supervision of the adequacy of the organizaƟonal structure

• aƩendance at all meeƟngs of the Board of Directors and the various commiƩees, in parƟcular the Control and Risk, Related Party TransacƟons and Sustainability CommiƩee (CRRPTSC) and the RemuneraƟon and Appointments CommiƩee (RAC);
• aƩendance at specific meeƟngs with the Chief Financial Officer (CFO);
• performance of site visits and inspecƟons;
• aƩendance at meeƟngs with the Chief ExecuƟve Officer (CEO).

(v) Supervision on the adequacy and funcƟoning of the internal control and risk management system (ICRMS)

• aƩendance at all meeƟngs of the Board of Directors and the various commiƩees, in parƟcular the CRRPTSC;
• aƩendance at meeƟngs with the IA Officer;
• aƩendance at meeƟngs, held at least on an yearly basis, with the Supervisory Board pursuant to LegislaƟve Decree 231/2001 and the CEO;
• further invesƟgaƟon whenever deemed appropriate.

(vi) Supervision of the adequacy of the administraƟve and accounƟng system

• aƩendance at all meeƟngs of the Board of Directors and the various commiƩees, in parƟcular the CRRPTSC and the RAC;
• aƩendance at regular meeƟngs with the CFO and his structure;
• aƩendance at periodic meeƟngs with the AudiƟng Firm and review of the addiƟonal report prepared by the same pursuant to ArƟcle 11 of RegulaƟon (EU) 537/2014.

(vii) Audit Controls and Monitoring AcƟviƟes

• approval of permiƩed non-audit services (NAS);
• aƩendance at meeƟngs with the audit team, several Ɵmes during the year, to understand the Work Plan, the materiality thresholds applied, the execuƟon of the various steps, any amendments of accounƟng errors, etc;
• ExaminaƟon and discussion with the AudiƟng Firm of the independence declaraƟons.

4.2. The following table summarizes the number of meeƟngs in relaƟon to which the minutes were drawn up aƩended by the Board of Statutory Auditors in the financial years 2021 (from the date of appointment on October 7th, 2021), 2022 and 2023 and the average duraƟon of these meeƟngs.

MeeƟng	2021		2022		2023
	Average duraƟon (h)	Number of meeƟng s	Average duraƟon (h)	Number of meeƟngs	Average duraƟon (h)	Number of meeƟng s
Board of Auditors	4:00	2	4:00	5	4:00	6
Shareholders' MeeƟng	00:40	3	00:40	2	00:40	2
Board of Directors	00:38	5	01:06	10	00:45	9
Control and Risk, Related Party TransacƟons and Sustainability CommiƩee - RemuneraƟon and Appointments CommiƩee	-	-	00:51	9	00:52	8
Total hours per year	13:10 hours		40:05 hours		39:12 hours

Based on the provisions of current regulaƟons and the indicaƟons provided for in the Self-Regulatory Code of Listed Companies approved in January 2020 by the Corporate Governance CommiƩee and promoted by Borsa Italiana S.p.A., to which Civitanavi System S.p.A. adheres, the Statutory Auditors are required to aƩend meeƟngs of the Board of Directors, the Control and Risks, Related Party TransacƟons and Sustainability CommiƩee and the RemuneraƟon and Appointments CommiƩee.

These rules and indicaƟons were fully complied with by the Board of Statutory Auditors: in fact, in the threeyear period 2021-2023, the members of the Board of Statutory Auditors aƩended all the meeƟngs of the Board of Directors and the above-menƟoned CommiƩees.

In addiƟon to the average duraƟon of meeƟngs shown in the table, the effort required of auditors to study documents and prepare for meeƟngs must obviously be added, which - although not analyƟcally quanƟfiable - represents a parƟcularly significant element.

The Chairman of the Board of Statutory Auditors also devotes Ɵme to planning meeƟngs, drawing up the minutes, draŌing the reports of the Supervisory Body, exchanging correspondence and liaising with management, the Chairmen of the CommiƩees and the Supervisory Board, in order to ensure the best coordinaƟon of the work of the Supervisory Body itself.

5. Remarks on the remuneraƟon of the Board of Statutory Auditors

The elements underlying the assessment of the appropriateness of the remuneraƟon of the Board of Statutory Auditors are defined as follows in Conduct Rule Q.1.5:

• the scope and complexity of the assignment in relaƟon to the nature, size, including economic size (e.g. volume of posiƟve income components and assets), complexity, sector of acƟvity, organizaƟonal structure, number and size of companies included in the consolidaƟon, status and other characterisƟcs of the company, also considering comparable foreign experiences;
• any document drawn up by the outgoing Board of Statutory Auditors, carefully assessing the Ɵme commitment required to perform the task, as well as the professional skills and experience required;
• the remuneraƟon paid to non-execuƟve directors as well as the criteria for remuneraƟon for aƩending internal commiƩees' meeƟngs;
• with reference to the remuneraƟon of the Chairman of the Board of Auditors, the Ɵme commitment required to perform his funcƟon, as well as the remuneraƟon paid to the Chairman of the Control and Risk commiƩee;
• the regulaƟons in force.

In consideraƟon of the acƟviƟes described in the preceding paragraphs, the annual remuneraƟon of each Standing Auditor, resolved by the Company's Shareholders' MeeƟng on April 29th, 2022, is equal to Euro 9,000; the annual remuneraƟon of the Chairman of the Board of Statutory Auditors is equal to Euro 12,000.

It should be noted that, following the latest amendment to the Corporate Governance Code, many listed companies have provided for the integraƟon of the emolument of the Statutory Auditors due to the greater commitment required, as well as establishing an aƩendance fee of equal amount for the Chairman of the Board of Statutory Auditors and the Standing Auditors for each meeƟng of the CommiƩees they aƩend having previously effected preliminary acƟviƟes.

6. Conclusions

In conclusion, from the standpoint of the professional skills of the members of the Board of Statutory Auditors, considering: (i) the sector in which the company is acƟve, (ii) the complexity of the relevant corporate organizaƟon, as well as (iii) the size of the reference Group, it is deemed desirable, if not

appropriate, that also the new supervisory body is provided with skills and experience gained on a complementary basis in the relevant knowledge areas, as menƟoned in § 3 above.

It is important, in parƟcular, that these competences are well balanced and spread among the different members of the supervisory board and are accompanied by an appropriate knowledge of the operaƟng rules of listed companies.

Lastly, from the remuneraƟon standpoint, the Board deems it appropriate to evaluate, in addiƟon to the above-menƟoned elements, the growth that has occurred, the complexity of the business model adopted, the expansion of the Group's perimeter, as well as the new obligaƟons required by recently enacted regulaƟons.

For completeness of informaƟon, please refer to the texts of Rules Q.1.1. and Q.1.5. of the Rules of Conduct for the Board of Statutory Auditors of Listed Companies of the CNDCEC of December 21st, 2023.

Pedaso, March 11th 2024

The Board of Statutory Auditors

Marco Donadio, Chairman

Eleonora Mori, Standing Auditor

Cesare Tomasseƫ, Standing Auditor