NEXT RE SIIQ S.p.A. — Annual Report 2023

Jun 17, 2024

Contents

1. COMPANY PROFILE
COMPANY INFORMATION AND STRUCTURE
GROUP STRUCTURE
COMPANY OFFICES/POSITIONS
SHAREHOLDING STRUCTURE AS AT 31 DECEMBER 2023
2. DIRECTORS REPORT ON OPERATIONS
CONSOLIDATED FINANCIAL HIGHLIGHTS
RELEVANT EVENTS DURING THE YEAR
EVENTS FOLLOWING THE REPORTING PERIOD
STOCK PERFORMANCE
THE ECONOMIC CONTEXT AND THE REAL ESTATE MARKET
REAL ESTATE PORTFOLIO
ECONOMIC PERFORMANCE ANALYSIS
BALANCE SHEET ANALYSIS
TRANSACTIONS WTH RELATED PARTIES
LEGAL AND REGULATORY FRAMEWORK OF LISTED REAL ESTATE INVESTMENT COMPANIES (SIIQ)
RISK MANAGEMENT
CORPORATE GOVERNANCE
REMUNERATION REPORT
ORGANISATIONAL MODEL & CODE OF ETHICS
EQUITY INVESTMENTS HELD BY DIRECTORS AND MEMBERS OF THE BOARD OF STATUTORY AUDITORS
OTHER INFORMATION ON THE MANAGEMENT
UPDATE ON THE IMPACT OF COVID-19
FORESEABLE PERFORMANCE TREND
NEXT RE SIGNFICANT DATA
RECONCILIATION BETWEEN THE SHAREHOLDERS' EQUITY AND THE PARENT COMPANY'S NET PROFIT AND THE SHAREHOLDERS' EQUITY AND THE CONSOLIDATED NET PROFIT
PROPOSED ALLOCATION OF OPERATING RESULTS FOR THE PERIOD
EPRA PERFORMANCE INDICATOR
3. CONSOLIDATED FINANCIAL STATEMENTS OF THE NEXT RE SIIQ S.P.A. GROUP
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF PROFIT/(LOSS)
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CONSOLIDATED CASH-FLOW STATEMENT
CONSOLIDATED PROFIT (LOSS) PER SHARE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

AMNEXES
REPORT OF THE INDEPENDENT AUDITORS
4. FINANCIAL STATEMENTS OF NEXT RE SIIQ S.P.A.
FINANCIAL STATEMENTS OF NEXT RE
STATEMENT OF FINANCIAL POSITION
STATEMENT OF PROFIT/(LOSS)
STATEMENT OF OTHER COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
CASH FLOW STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
MANAGEMENT AND COORDINATION ACTIVITIES
CERTIFICATION OF THE FINANCIAL STATEMENTS
ANNEXES
REPORT OF THE INDEPENDENT AUDITORS
REPORT OF THE BOARD OF STATUTORY AUDITORS
VALUATIONS OF INDEPENDENT EXPERTS

1. COMPANY PROFILE

Company information and structure

NEXT RE SIIQ S.p.A. (hereinafter also referred to as "NEXT RE" or the "Company" or the "Parent Company") with registered office in Rome, Via Zara 28, Tax Code and VAT no. 00388570426, REA number RM-1479336, is a real estate investment company with shares listed on the Euronext Milan market ("EXM") organised and managed by Borsa Italiana S.p.A.

The Company currently manages a portfolio consisting of office and commercial properties.

Group structure

The NEXT RE group (hereinafter also referred to as the "Group") includes, in addition to the Parent Company, the wholly-owned subsidiary Fidelio Engineering S.r.l. (hereinafter also "Fidelio" or the "Subsidiary").

The corporate purpose of the Subsidiary is to carry out activities in Italy and abroad aimed at redeveloping and enhancing the value of areas subject to real estate development or existing buildings subject to redevelopment.

Company offices/positions

Board of Directors

The composition of the Board of Directors— appointed by the Shareholders' Meeting on April 26, 2021and supplemented by the Shareholders' Meeting on November 10, 2021— was as follows until May 16, 2023:

• Giancarlo Cremonesi Chairman Stefano Cervone Managing Director Luca Nicodemi Independent Director Giuseppe Colombo Director Daniela Becchini Independent Director Camilla Giugni Giovanni Naccarato Eleonora Linda Lecchi Maria Spilabotte
• Independent Director Vice-Chairman and Director Independent Director Independent Director

Following the May 16, 2023 Shareholders' Meeting, the composition of the Board of Directors was redetermined as follows:

Mirko Bertaccini	Chairman
Giovanni Naccarato	Managing Director
Giuseppe Colombo	Vice-Chairman
Luca Matrigiani	Independent Director
Eleonora Linda Lecchi	Independent Director
Maria Spilabotte	Independent Director

Board of Statutory Auditors

At the date of approval of this Report, and until the date of the General Meeting of Shareholders convened to approve the financial statements for the year ending December 31, 2023, the composition of the Board of Statutory Auditors was as follows:

Luigi Mandolesi	Chairman
Sara Mattiussi	Statutory Auditor
Domenico Livio Trombone	Statutory Auditor
Sergio Mariotti	Alternate Auditor
Barbara Premoli	Alternate Auditor

The manager in charge pursuant to Article 154-bis paragraph 2 TUF (Consolidated Finance Act)

Francesca Rossi

Independent Auditors

EY S.p.A. is appointed as statutory auditor for the period 2021-2029.

Shareholding structure as at 31 December 2023

Shareholder	Percentage % on capital
CPI Property Group S.A.	79.79%
Dea Capital Partecipazioni S.p.A.	4.99%
National Association of Pensions and Assistance for Accountants and Commercial Experts	2.76%
Other shareholders	12.29%
Treasury shares	0.17%
	TOT. 100.00%

2. DIRECTORS' REPORT ON OPERATIONS

Consolidated financial highlights

The following are the key indicators of the NEXT RE Group as at 31 December 2023 compared to 31 December 2022.

PERFORMANCE		31/12/2023	31/12/2022
Rental income	Euro/million	6.4	5.8
Net operating income (NOI)	Euro/million	5.1	4.3
Fund from operation (FFO)	Euro/million	-2.1	-2.7
EBITDA	Euro/million	0.64	0.03
EBIT (Operating income)	Euro/million	-7.7	2.7
Consolidated profit/(loss) for the year	Euro/million	-9.44	0.35
ASSETS		31/12/2023	31/12/2022

Total assets	Euro/million	140.9	157.2
Investment property	Euro/million	130.1	135.9
Commercial surface	m²	43,879	43,879
Occupancy	%	100%	98%
WALT	Years	4	3.8
Portfolio assets	No.	6	6

INDEBTEDNESS		31/12/2023	31/12/2022
Consolidated shareholders' equity	Euro/million	76.5	85.9
EPRA NRV	Euro/million	76.5	85.9
Total financial indebtedness	Euro/million	57.08	53.17
Net loan to value (NET LTV)	%	44%	39%
EPRA LTV	%	44%	40%
Portfolio Loan to value (LTV)	%	42%	44%

The main results of the 2023 financial year are shown below:

• the Consolidated net result for the year 2023 was equal to a loss of € -9.44 million, compared to a profit of € 0.35 million as at 31 December 2022;
• EBITDA for the year 2023 is negative and amounted to € -0.64 million compared to € 0.03 million in December 2022;
• Shareholders' equity was € 76.5 million as at 31 December 2023 compared to € 85.9 million as at 31 December 2022;
• Total financial debt was € 57.08 million as at 31 December 2023 compared to € 53.17 million as at 31 December 2022;
• the Net Loan to Value was 44% as at 31 December 2023 compared to 39% as at 31 December 2022.

Consolidated profit/(loss) for the year is about € -9.44 million and reflects the negative adjustment to fair value of Investment Properties of about € 7 million resulting from the adjustment of asset values as estimated by the independent expert. The loss for the year also reflects the impact of the write-down of deferred tax assets in the amount of € 0.2 million.

Consolidated EBITDA which represents the margin before the result of financial management, asset adjustments, and taxes, is € -0.64 million and incorporates, in addition to the margin of Net Rental Revenues of € 5.1 million (€ 4.3 million as of December 31, 2022), Personnel Costs of € 2.7 million and General Costs of € 2.9 million. Personnel Costs and General Costs incorporate the economic effects, amounting to approximately € 2.2 million, of the settlement agreements with the previous top management resolved by the Board of Directors on March 21, 2023 concerning the terms and conditions of the consensual early termination of the executive employment relationships of the General Manager and the Chief Investment Officer as well as the early termination of the offices of the Chairman and the Chief Executive Officer.

Total financial debt improved by approximately € 3.9 million compared to 31 December 2022. The change is mainly attributable to: i) the reduction in financial payables as a result of early repayments of bank loans and real estate leases totalling € 6.3 million, which led to a corresponding decrease in liquidity, ii) the increase, due to the recognition of interest accrued during the year of € 1.3 million, in financial payables related to credit facility agreements disbursed by CPI Property Group S.A. for which the Company has the option to repay at maturity in 2026, and iii) financial outlays related to the above-mentioned settlement agreements.

The Net Loan to Value is 44% and increased against the above-mentioned effects in relation to Total Financial Debt. The value of Investment property decreased by approximately 4% compared to 31 December 2022 following the recognition of negative fair value adjustments as estimated by the independent expert.

Please refer to the sections on The Real Estate Portfolio, Analysis of Operating Performance and Analysis of Financial Performance in this Report for further details.

Alternative performance measures

The content of the "alternative performance measures" not established by the international accounting standards adopted by the European Union (IFRS-EU), used in this Report in order to allow for a better assessment of the Company's profit and loss and financial position in accordance with the recommendations of the Guidelines published in October 2015 by ESMA, is provided below. The meaning, content and basis for the calculation of these indicators are outlined below:

Net operating income (NOI): indicates the profitability of the real estate portfolio and corresponds to the item Net rental income in the Financial Statements.

EBITDA: Earnings before value adjustments such as depreciation and amortisation of fixed assets, fair value adjustments of Investment property and Financial assets at fair value, results of financial management and taxes. EBITDA measures the Company's operating performance.

Total financial debt: calculated in accordance with the ESMA Guidelines on financial debt, published on 4 March 2021, which the supervisory authority Consob has asked to be adopted as of 5 May 2021.

Net Loan to Value (Net LTV): Ratio between Payables to banks and other lenders, net of Cash and cash equivalents, and the value of Investment Property. This measures the sustainability of the Company's financial structure.

EPRA LTV: The indicator is calculated in accordance with EPRA guidelines and is the ratio of the Group's net debt to the market value of the assets held. The indicator expresses the leverage of the company from the shareholders' perspective.

Portfolio Loan to value (LTV): Ratio between the nominal value of residual debt relating to the loans taken out

for the assets in the portfolio and the market value of all the assets in the portfolio (Investment property, measured at fair value, and the market value of the portion of the asset in Rome, Via Zara recorded under Other tangible assets). This indicator measures the sustainability of financial debt related to real estate assets.

Fund from operation (FFO): is calculated as net income/(loss) for the period adjusted for non-cash cost and revenue components and non-recurring income components.

EPRA NRV (NET REINSTATEMENT VALUE): this measure aims to represent the value of net assets over the long term. It represents the repurchase value of the company, assuming the company does not sell real estate. It is calculated starting from the relevant shareholders' equity (as reported in the financial statements according to IFRS principles) excluding certain assets and liabilities that are not expected to arise under normal business conditions, such as the fair value of hedging derivatives; deferred taxes on market valuations of real estate and hedging derivatives.

WALT: index relating to the overall weighted average lease term on the outstanding annual leases of NEXT RE's real estate portfolio as at 31 December 2022. The above index was calculated on the first contractual expiry date of the individual lease contracts in place, not taking into account any early termination options.

Occupancy: ratio between leasable area and leased area of assets in the portfolio.

Relevant events during the year

The main relevant events of the 2023 financial year are shown below.

On 1 January 2023, the company announced that the deadline for the fulfilment of the conditions precedent set out in the framework agreement (the "Framework Agreement") signed on 5 August 2021 with the controlling shareholder CPI PG, DeA Capital S.p.A., De Agostini S.p.A. and DeA Capital Real Estate SGR S.p.A., amended on 5 July 2022 by the "Deed of Reinstatement and Amendment to the Framework Agreement" (the "Deed of Reinstatement"), which lost effectiveness on 31 December 2022, expired.

Therefore, the Company announced that: (i) the prerequisites for the partial execution, up to an amount of Euro 1 billion, of the capital increase based on the proxy conferred on 26 April 2021 by the Extraordinary Shareholders' Meeting of NEXT RE to the Company's Board of Directors, pursuant to Article 2443 of the Italian Civil Code, have not been realised within the desired timeframe; (ii) the shareholders' agreements contained in the Framework Agreement, as amended by the Deed of Reinstatement, have lost their effectiveness on 31 December 2022 due to the natural expiry of the term.

On 6 February 2023, the Company announced that it had approved the preliminary results for the year ended 31 December 2022, reporting the following as the main preliminary results for 2022:

• the preliminary Net Profit for the year 2022 showed a profit of EUR 0.3 million compared to the profit of EUR 0.4 million as of 31 December 2021;
• the preliminary EBITDA for the year 2022 was positive and estimated at EUR 1 thousand compared to EUR -1.7 million for the year 2021;
• preliminary shareholders' equity was estimated at EUR 85.9 million as of 31 December 2022 compared to EUR 85.5 million as of 31 December 2021;
• preliminary Total Financial Debt was estimated at EUR 53.22 million as of 31 December 2022 compared to EUR 61.04 million as of 31 December 2021;
• preliminary Net Loan to Value was estimated at 39% as of 31 December 2022 compared to 44% as of 31 December 2021.

On the same date, the Board of Directors also approved the 2023-2026 Business Plan, providing for the following three strategic objectives (the 'Business Plan') :

• stabilisation of the Company's operating cash flows and economic results;

• increasing the profitability of the real estate portfolio, also through the implementation of the process of its valorisation and rotation;
• rationalisation and streamlining of the Company's economic and financial structure in order to facilitate, and better convey, the capital increase project, according to a timeframe consistent with that of the proxy granted to the Board of Directors by the Shareholders' Meeting of 26 April 2021, to be exercised by the date of the Shareholders' approval of the financial statements as of 31 December 2023, pursuant to Article 2443 of the Italian Civil Code, also excluding option rights pursuant to Article 2441, paragraphs 4 and 5, of the Italian Civil Code.

On 21 March 2023, the Company announced that it had approved the Annual Financial Report for the year ended 31 December 2022, prepared in accordance with international accounting standards (IAS/IFRS), reporting the following as the main results for the year 2022, which did not differ significantly from the preliminary figures already disclosed to the market on 6 February 2023:

• the Consolidated Profit/(Loss) for the year showed a profit of EUR 0.35 million compared to the profit of EUR 0.43 million as of 31 December 2021;
• Consolidated EBITDA was positive at EUR 30,000 compared to EUR -1.7 million in 2021;
• Consolidated shareholders' equity was EUR 85.9 million as of 31 December 2022 compared to EUR 85.5 million as of 31 December 2021;
• Total consolidated financial debt was EUR 53.17 million as of 31 December 2022 compared to EUR 61.03 million as of 31 December 2021;
• Profit/(Loss) for the year was EUR 0.35 million compared to profit of EUR 0.43 million as at 31 December 2021;
• Shareholders' Equity was EUR 85.9 million as of 31 December 2022 compared to EUR 85.5 million as of 31 December 2021;
• Net Loan to Value was 39% as of 31 December 2022 compared to 44% as of 31 December 2021.

On the same date, the Board of Directors took note of the evaluations expressed by the controlling shareholder CPI PG, which, in the context of the economic-financial rebalancing envisaged by the Industrial Plan, which aims at maintaining a management balance, assuming only a moderate - and possible - growth of the portfolio, proposed a different cost balance of the current governance and managerial structure aimed, inter alia, at further and significant rationalisation of costs. In this context, in view of the willingness expressed by the Chairman of the Board of Directors, Giancarlo Cremonesi, by the Chief Executive Officer (as well as General Manager) Stefano Cervone and by the Chief Investment Officer Claudio Carserà - all of whom are related parties of the Company pursuant to Article 2.1, letter (a) of the "Procedure on Transactions with Related Parties of NEXT RE SIIQ S.P. A" - in order to facilitate the aforementioned path, the Board of Directors approved the settlement agreements concerning the terms and conditions: (i) of the consensual early termination of the executive employment relationships of the General Manager and the Chief Investment Officer effective as of 30 April 2023 as well as, (ii) of the termination of the offices of the Chairman and the Chief Executive Officer effective as of the conclusion of the Shareholders' Meeting called to approve the 2022 financial statements (the "Settlement Agreements").

On the same date, the Board of Directors also acknowledged the concurrent resignations of Directors Giuseppe Colombo, Luca Nicodemi (Independent Director and Chairman of the Appointments and Remuneration Risk Control Committee), Giovanni Naccarato (Executive Director and CFO of the Company) and Camilla Giugni (Independent Director and member of the Appointments and Remuneration Risk Control Committee) from their respective offices (resignations effective as of the conclusion of the Shareholders' Meeting convened to approve the 2022 financial statements), deemed appropriate, also taking into account the Company's cost rationalisation plan currently being implemented, in order to refer all decisions on the new composition of the Board of Directors to the Shareholders' Meeting.

Therefore, following the resignation of the majority of the directors in office, pursuant to Article 16 of the Bylaws, the Board of Directors appointed by the Shareholders' Meeting of 26 April 2021 and supplemented by the Shareholders' Meeting of 10 November 2021, took note of its own forfeiture, remaining in office until the

date of the reconstitution of the new Board of Directors by the Shareholders' Meeting to approve the 2022 financial statements. Therefore, the calendar of corporate events was changed, which set 27 April 2023 as the date for the Shareholders' Meeting to approve the 2022 financial statements.

On 27 March 2023, the Company resolved to convene the Ordinary Shareholders' Meeting on first call for 16 May 2023 at 4:00 p.m. and, if necessary, on second call for 17 May 2023, at the same place and time, to resolve on: (i) the approval of the financial statements for the year ended 31 December 2022; (ii) the advisory vote on the second section of the Report on remuneration policy and compensation paid pursuant to art. 123-ter of the Consolidated Law on Financial Intermediation; (iii) the appointment of the Board of Directors and the Chairman, subject to determination of the number of Directors, term of office and remuneration; (iv) the renewal of the authorisation to purchase and dispose of treasury shares pursuant to Articles 2357 et seq. of the Italian Civil Code and Article 132 of the Consolidated Law on Financial Intermediation, subject to revocation of the resolution passed by the Shareholders' Meeting of 26 April 2022 to the extent not used.

On 21 April 2023, the Company announced that it had made available to the public at its registered office, on the Company's website and on the authorised storage mechanism 1Info the lists duly submitted - together with the documentation required by the regulations and by Article 16 of the Articles of Association - for the renewal of the Board of Directors respectively: (i) by the majority shareholder CPI Property Group S.A. and (ii) by the minority shareholder Associazione Cassa di Previdenza e Assistenza a favore dei Ragionieri e Periti Commerciali.

On 27 April 2023, the Company approved the Additional Financial Information as of 31 March 2023, reporting the following as the main consolidated results for the first quarter of 2023:

• the Consolidated Profit/(Loss) showed a loss of EUR -2.9 million as of 31 March 2023 (EUR -0.6 million as of 31 March 2022);
• Consolidated EBITDA was negative at -€2.5 million as of 31 March 2023 (-€0.2 million as of 31 March 2022);
• Consolidated Shareholders' Equity was EUR 83 million as of 31 March 2023 compared to EUR 85.9 million as of 31 December 2022;
• Consolidated Total Financial Debt was EUR 58.5 million as of 31 March 2023 compared to EUR 53.2 million as of 31 December 2022;
• Net Loan to Value was 43% as of 31 March 2023 compared to 39% as of 31 December 2022.

On 16 May 2023, the Shareholders' Meeting of the Company passed the following resolutions:

• unanimously approved the Annual Report 2022, in the version prepared by the Board of Directors and published on 20 April 2023 on the Company's website as well as on the authorised storage mechanism 1Info;
• expressed a favourable opinion on the second section of the Report on the remuneration policy and compensation paid prepared by the Board of Directors pursuant to Article 123-ter of Legislative Decree No. 58/1998
• appointed the new Board of Directors, setting the number of members at seven and establishing the duration of the Board of Directors at three financial years, and therefore until the date of the Shareholders' Meeting called to approve the financial statements as of 31 December 2025, in the persons of:
  • 1) Mirko Bertaccini, as Chairman;
  • 2) Giovanni Naccarato;
  • 3) Giuseppe Colombo;
  • 4) Camilla Giugni (*);
  • 5) Maria Spilabotte (*);
  • 6) Luca Matrigiani (*);
  • 7) Eleonora Linda Lecchi (*).

(*) Director declared to be independent pursuant to the laws and regulations in force and the Corporate Governance Code.

The Directors were drawn from the list presented by the majority shareholder CPI Property Group S.A., which received favourable votes equal to approximately 92.07% of the capital present and voting, with the exception of Director Eleonora Linda Lecchi, drawn from the list presented by the minority shareholder Associazione Cassa Nazionale di Previdenza e Assistenza a favore dei Ragionieri e Periti Commerciali, which received favourable votes equal to approximately 7.92% of the capital present and voting.

• authorised the Board of Directors to purchase and dispose of treasury shares pursuant to Article 2357 et seq. of the Italian Civil Code and Article 5 of EU Regulation No. 596/2014, Article 132 of the Consolidated Law on Finance, and Article 144-bis of the Regulation adopted by Consob Resolution No. 11971/99, subject to revocation of the shareholders' resolution of 26 April 2022 authorising the purchase and disposal of treasury shares, to the extent not used.

On the same date, the Company's Board of Directors, which met under the chairmanship of the newly appointed Mirko Bertaccini, appointed Giovanni Naccarato as Chief Executive Officer of the Company, assigned to the Chairman Mirko Bertaccini, in addition to the legal representation of the Company, the position of Director in charge of the internal control and risk management system, also appointing him as Employer, and elected Director Giuseppe Colombo as Vice-Chairman of the Board of Directors. The Board of Directors then ascertained the existence of the regulatory and statutory requirements, also in terms of gender balance, for its members for the administrative body to be duly constituted. 147-ter, paragraph 4, and 148, paragraph 3, of the Consolidated Law on Finance, article 2, recommendation 7, of the Corporate Governance Code to which the Company adheres, as well as article 16 of the Regulation adopted with Consob Resolution no. 20249/2017 in the case of Directors Camilla Giugni, Luca Matrigiani, Maria Spilabotte and Eleonora Linda Lecchi. The Board also resolved to set up the Independent Committee with proposing and advisory functions in the areas of controls, risks, appointments, remuneration, related party transactions, investments and divestments, composed solely of non-executive and independent Directors in the persons of Luca Matrigiani (President), Camilla Giugni ed Eleonora Linda Lecchi.

On 13 June 2023, the Company announced that the Board of Directors, in the context of the reorganisation of corporate governance, resolved to appoint Ms. Francesca Rossi - who also holds the position of Head of Administration, Financial Statements and Accounting Department as well as Manager in charge of drafting corporate accounting documents - as the new Chief Financial Officer, effective until the date of the Shareholders' Meeting called to approve the 2025 financial statements.

On July 27, 2023, the Company announced that it had approved the Preliminary Consolidated Results as of June 30, 2023, as summarized below:

• preliminary Net Income for the first half of 2023 showed a loss of € 6.1 million compared to the profit of € 0.2 million as of June 30, 2022;
• preliminary EBITDA for the first half of 2023 was negative and estimated at € 1.9 million compared to € - 0.5 million for the first half of 2022;
• preliminary Shareholders' Equity was estimated at € 79.8 million as of June 30, 2023 compared to € 85.9 million as of December 31, 2022;
• preliminary Total Financial Debt was estimated at € 58.3 million as of June 30, 2023 compared to € 53.2 million as of December 31, 2022;
• preliminary Net Loan to Value was estimated to be 44% as of June 30, 2023 compared to 39% as of December 31, 2022.

On September 14, 2023, the Company announced that it had approved the Condensed Half-Yearly Financial Report as of June 30, 2023, prepared in accordance with international accounting standards (IAS/IFRS). The main results for the first half of 2023 did not differ from the preliminary figures disclosed to the market on July 27, 2023, as follows:

Directors' Report on operations

• the consolidated Profit/(Loss) for the period showed a loss of € 6.1 million for the first half of 2023 compared to the profit of € 0.16 million as of June 30, 2022;
• the consolidated EBITDA for the first half of 2023 is negative and equal to € -1.9 million compared to € 0.5 million for the first half of 2022;
• consolidated Shareholders' Equity was € 79.8 million as of June 30, 2023 compared to EUR 85.9 million as of December 31, 2022;
• consolidated Total Financial Debt was € 58.3 million as of June 30, 2023 compared to € 53.2 million as of December 31, 2022;
• Net Loan to Value was 44% as of June 30, 2023 compared to 39% as of December 31, 2022.

On October 24, 2023, the Company announced that it had approved the Supplementary Financial Information as of September 30, 2023, the main consolidated results of which are as follows:

• the Group Profit/(Loss) shows a loss of € 5.8 million as of September 30, 2023 (€ 0.3 million as of September 30, 2022);
• Consolidated EBITDA was negative € 1.3 million as of September 30, 2023 (€ 0.7 million as of September 30, 2022);
• consolidated Shareholders' Equity amounted to € 80 million as of September 30, 2023 compared to € 85.9 million as of December 31, 2022;
• consolidated Total Financial Debt amounted to € 57.4 million as of September 30, 2023 compared to € 53.2 million as of December 31, 2022;
• Net Loan to Value as of September 30, 2023 was 43% compared to 39% as of December 31, 2022.

There are no further significant events during the reference period.

Events following the reporting period

On March 4, 2024, the Board of Directors approved the terms and conditions of the proposal for the sale of Next Re's wholly owned shareholding in its subsidiary Fidelio Engineering S.r.l., for an amount equal to Fidelio's equity value as of the date of the deed of sale. The transaction qualifies as a related party transaction of minor significance.

Stock performance

NEXT RE is a company listed on the Euronext Milan market of the Italian Stock Exchange. Its ordinary shares admitted to trading are identified by the ISIN Code IT0005330516 and the Alphanumeric Code NR¹ .

The following graph shows the performance of NEXT RE stock over the period 2 January 2023 - 29 December 2023 and the volumes traded on the Euronext Milan in 2023.

Source: Bloomberg

NEXT RE's share price performance in 2023 was influenced, inter alia, by the following elements: (i) the publication, on 06 February 2023, of the preliminary results for the financial year ending 31 December 2022; (ii) the approval, on the same date, of the business plan for the period 2023 - 2026; (iii) the approval by the Board of Directors, on 21 March 2023, of the financial statements for the year ending 31 December 2022 and the resolution regarding the postponement of the shareholders' meeting to 16 May 2023 called to approve the financial statements and renew the entire Board of Directors; (iv) the publication, on 20 April 2023, of the Annual Financial Report as at 31 December 2022; (v) the publication, on 21 April 2023, of the lists for the appointment of the new Board of Directors; (vi) the approval, on 27 April 2023, of the additional financial information as at 31 March 2023; (vii) the approval, on 16 May 2023, of the Annual Financial Report and the appointment, on the same date, of the new Board of Directors and the new CEO; (viii) the appointment, on 13 June 2023, of the new CFO; ix) the publication, on September 28, 2023, of the Half-Yearly Financial Report as of June 30, 2023; x) the approval, on October 24, 2023, of additional financial information as of September 30, 2023.

In 2023, the total volumes traded on Euronext Milan amounted to approximately 400 thousand ordinary shares for a total value of approximately € 1,355 thousand, corresponding to a weighted average price for volumes

¹The Company's share capital, as set forth in the related notice of change dated 30 December 2021, consists of 22,025,109 shares, of which: (i) 11,013,054 listed ordinary shares (ISIN IT0005330516); (ii) 11,012,055 class B shares, without the right to attend or vote at the Company's ordinary shareholders' meeting and with the same right to share in profits as the ordinary shares automatically and proportionately reduced to the extent necessary so that the right to share in profits of each class B shareholder, taking into account any other ordinary shares held, is equal to - and, in any event, not more than - 60% of the rights to share in the profits of the Company.

traded on Euronext Milan of € 3.4 per share. Average weekly volumes were approximately 7,694 shares, with a high of 59,684 shares traded in the week between 23 and 27 January 2023.

The graph below shows the performance of the NEXT RE share and the FTSE Italia All-Share index (base 100), over the period 2 January 2023 - 29 December 2023.

Source: Bloomberg

In 2023, the NEXT RE share recorded a decrease (-7.5%) than the FTSE Italia All-Share index (19.2%).

Reported below is the data recorded by the NEXT RE share during the 2 January 2023 - 29 December 2023 period (inclusive).

Table 1

		Date
Maximum official price (Eu)	3.54	31/08/2023
Minimum official price (Eu)	3.16	24/07/2023
Last official price (Eu)	3.22	29/12/2023
No. of listed ordinary shares1	10,974,849	31/12/2023
Capitalisation of listed ordinary shares1 (Eu)	35,339,014	31/12/2023
Free float percentage of listed ordinary shares2.3 (%)	35.56%	31/12/2023

Notes: 1) 11,013,054 listed ordinary shares, net of 38,205 treasury shares. Please recall that, as shown above, the share capital also includes 11,012,555 unlisted category B shares; 2) Calculated excluding the equity investments of CPI Property Group (5,971,020 listed ordinary shares) and DeA Capital Partecipazioni S.p.A. (1,101,255 listed ordinary shares) in the Company's listed ordinary share capital; 3) Date of the last extraordinary shareholders' meeting of the Company.

For further information on the NEXT RE share performance and for company updates please visit the corporate website www.nextresiiq.it and, more specifically, the Investors section.

The economic context and the real estate market

Macroeconomic framework and real estate market

The world economy slowed in the spring. Growth remained solid in the United States but shrank sharply in China. Globally, the contraction in the manufacturing cycle was compounded by signs of weakening in services in the summer; the recovery in international trade eased. In the third quarter, reductions in oil supply induced higher prices; natural gas prices also rose. In the United States and the United Kingdom, core inflation, while remaining high, continued to decline, and the stance of monetary policies remained restrictive. Geopolitical tensions continue to weigh on the global outlook, accentuated by the tragic events in the Middle East. In Italy, the cyclical phase has recently shown marked volatility. After a strong rise in the first quarter, GDP shrank in the second, reflecting the decline in value added in industry and the fading of the expansion in services, which had been virtually uninterrupted since the spring of 2021 following gradual reopening after the pandemic crisis. In the third quarter, activity would remain sluggish in both manufacturing and services. The sharp rise in GDP in the first quarter was largely offset by the larger-than-expected decline in the second quarter. Consumer inflation, which had been falling since the end of last year, rose slightly in September mainly due to higher fuel prices. Core inflation was broadly unchanged after gradually falling since April due to easing production pressures and weakening domestic demand. In the expectations of households and businesses, price dynamics will ease in the coming months.

Real estate market trends in Italy

During the first nine months of 2023, the volume invested was approximately 3 to 4 billion, a reduction of nearly 70 percent compared to the same period in 2022. The general slowdown in investment was seen in all asset classes, and particularly in the office sector, where there is an increasing wait-and-see attitude and confirmation of a reduced presence of large transactions. Challenging debt market conditions contribute to a particularly depressed market, impacting both Core transactions, where investors are forced to proceed full equity, and value-add transactions where the cost of financing often has a critical impact on the potential purchase price of opportunities in the market. In terms of prime yields, rising interest rates and the general climate of uncertainty stemming from the macroeconomic environment continue to push up net yields. The stabilization recorded in the second quarter of 2023 sees the prime net yield for office space in Milan confirmed at 4 percent, while in Rome - for the same asset class - there is an increase to 4.5 percent. As for Logistics, the prime net yield, which had remained stable in the first and second quarters of 2023, now stands at 5.3 percent, gaining 100 bps over the second quarter of 2022.

The Office Market in Rome

During the first nine months of 2023, the invested volume decreased by almost 70 percent compared to the same period in 2022. The general slowdown in investment has been seen in all asset classes, and particularly in the office sector, where an increasing wait-and-see attitude can be observed. Difficult debt market conditions contribute to a particularly depressed market, in terms of prime yields, rising interest rates and the general climate of uncertainty resulting from the macroeconomic environment continue to push up net yields. The stabilization recorded in the second quarter of 2023 sees the prime net yield for office space in Milan confirmed at 4 percent, while in Rome - for the same asset class - there is an increase to 4.5 percent. As of today, the take-up volume recorded in the first three periods of 2023 for the city of Rome has already exceeded the take-up for the entire year 2022, already registering an increase of +28% over the entire calendar year (2022 to 2023), although the comparison with Q3 of the previous year alone shows a decrease of about 20% (Q3 2022 vs Q3 2023).

Regarding vacancy, the overall level of vacant space in Rome in Q3 2023 was 8.4 percent, returning to the value recorded in Q1 2023, confirming the excellent take-up volumes recorded precisely in the first half of 2023. On the rental front during Q3 2023 average rents increased in almost all districts of the Capital. Since the beginning of 2023 in Rome, investment in the office sector has declined 67 percent from the previous year's quarter. In general, a wait-and-see attitude on the part of investors is confirmed in this second half of the year as well. In terms of yields, the rise in interest rates and the increased risk of the macroeconomic

situation have pushed yields upward since Q2 2022; however, after a strong growth over the past year, prime yields seem to have stabilized in the last quarter.

The Office Market in Milan

During the third quarter of 2023, the Milan market shows, a good dynamism of indicators, both in terms of absorption and rents. The rental market in Milan registers a positive phase due to high demand toward new and quality product; moreover, the downturn recorded in the investment market has not yet been reflected in take-up volumes. Over the past two years, and after the Covid pause, rents have been gradually rising. In Milan, the low supply of quality product has continued to push up prime rents, now standing at over 600/sqm/y with peaks of 700/sqm/y in the Duomo CBD. In the third quarter of the year (Q3 2023), prime rents confirmed the trend already seen during the first half of the year 2023, registering a new increase in almost all areas of the city. On the investment side, there has been a major reduction related to the macroeconomic environment, rising inflation and interest rates, and the resulting climate of uncertainty, which have indirectly impacted volumes, which are down from the strong growth seen during 2022 (a record post-Covid year in which there had been a significant increase in volumes invested). With about 851 million investments in Milan since the beginning of the year, there is a sharp slowdown in the investment market in the office asset class, with a negative change compared to the same quarter of 2022 of about 80 percent. In terms of prime yield, rising interest rates and the general climate of uncertainty stemming from the macroeconomic environment continues to push up net yields. The stabilization seen in the second quarter of 2023, sees the prime net yield for office space in Milan confirmed at 4 percent. In terms of yields, after the growth witnessed during 2022 (+100 basis points from Q2 2022 to Q2 2023), prime yields appear to have stabilized during Q3 2023, standing at 4 percent for the CBD Prime office space, while reflecting the macroeconomic conditions and the general uncertainty and instability in the markets (mainly due to the continued rise in the cost of money).

The Office Market in Bari

After the surge that lasted from the end of the pandemic restrictions until the first half of 2022, the Bari directional market continued to show signs of cooling, which began in the last half of the year. In the first half of 2023, transactions related to the directional market stood at 30, about 30 percent less than in the same period last year. Price data is also not encouraging: negative six-month changes in all areas of the city, with peaks in the business district and suburbs - -1.6 percent and -2.2 percent, respectively - continue to drive down office prices. Negative half-yearly changes are also reported on the rent front (-0.7 percent half-yearly city average) and a slight reduction in the lease term, from 5.5 months last half-year to the current 4.8 months.

The Retail Market in Rome

The Roman retail market registered a trend increase of 7 percent, confirming a growth trend in which the halfyearly trade now exceeds the first half of 2019, a pre-pandemic year, by 24 percent.

Average prices are discounting a generalized decline, at around -1.3 percent half-yearly, showing a downward trend that is only partially noticeable in the annual figure. With average discounts stable, sales times are slightly reduced (8 months). On the rental front, the average level of rents remains broadly stable on both a half-year and annual basis, but with declines in the more central areas, coupled with stability in the average annual gross rental yield (7.5 percent). Rental periods are slightly reduced to 6 months. The still positive result of sales and purchases, combined with the first signs of a fall in prices, leads operators to formulate cautious revisions for the first half of 2024 in terms of the number of transactions, but more pessimistic in terms of price levels. Forecasts on the number of transactions are of stability, associated with downward changes in average prices. With regard to rentals, a decrease in the number of contracts and stability in the level of rents are expected.

The Retail Market in Milan

In the first half of the year, the volume of retail purchases and sales in the Milan market suffered a slight setback on a trend basis (-2.6%), although in the context of a trend that exceeds pre-pandemic levels. In the retail sector, the average price trend continues to rise on an annual basis (+1.8% on a six-month basis), for the fourth consecutive six-month period after the pandemic, with very heterogeneous variations in the

different areas of the city. However, the slowdown in buying and selling seems to be reflected in the six-month performance, which is flat in the center and negative in the semi-center (-1.6%), with a good result in the suburbs (+1.6%). The speed of absorption decreases as the location becomes more central, with average sales times of 4-5 months in the center and 6-7 months in the suburbs. The average discount on the asking price is increasing slightly (9-10%).

The rental segment is more dynamic, with average rents rising on a six-month basis (+1.3%). The market is registering rapid absorption times (3-4 months), slightly more relaxed in the suburbs. Average annual gross yields remain stable at 6.7%. Expectations for the performance of the commercial retail sector for the first half of 2024 indicate a slight decline in the number of transactions and average price levels. Rents are expected to remain stable.

Real estate portfolio

As of December 31, 2023, NEXT RE's portfolio consisted of 6 assets, 3 for commercial use and 3 mainly for office use, with a total market value as of December 31, 2023 of 132.05 million euros, of which 130.07 million euros were classified in the Financial Statements and Consolidated Financial Statements under the item Investment Property and 1.99 million euros were classified under Other Tangible Assets, but recognized for 1.7 million euros net of the related depreciation (as instrumental and not investment portion).

The properties are located in Milan (3), Rome (2) and Bari (1). The total gross area of the portfolio is of 43,879 sqm, while the commercial area is of 24,819 sqm.

No new investments were made by Next Re SIIQ during the financial year 2023.

As at 31 December 2023, all the properties in the Company's portfolio were fully leased/used.

Again, in terms of occupancy and use of the real estate portfolio, it should be noted that:

• effective as of 1 October 2020, NEXT RE directly uses a portion of the property in Rome at Via Zara 22/32. The portions used by NEXT RE are: the offices on the first floor, four parking spaces and a warehouse in the basement, the areas of which are hereinafter referred to as "Zara Accessory Portion". The remaining areas of the property are: "Zara Investment Portion" with respect to areas leased to third parties - "Zara Common and Non-Leasable Portion" with respect to the remaining common areas. The property in Rome at Via Zara 22/32 is therefore now completely used and occupied, but partially leased;
• effective as of 1 October 2021, the lease agreement with the Guardia di Finanza for the building in Rome at Via Vinicio Cortese, expired; pending the definition of negotiations for a possible new lease agreement, the tenant continues to use the building, paying the related occupancy indemnity to NEXT RE;
• On April 20, 2023, a new lease was signed with Luisa Via Roma S.p.A. for the recently renovated office space on the third floor of the Via Spadari 2 building in Milan.

There are therefore 7 tenants/users of the properties in the portfolio as at 31 December 2023 - net of NEXT RE: OVS S.p.A., Ministry of Justice, Guardia di Finanza, Embassy of Canada, Dico S.p.A., ITX Italia S.r.l. and Luisa Via Roma S.p.A.

The following table provides a breakdown of the real estate portfolio held by NEXT RE.

Table 2

			Table 2			Directors' Report on operations
Property Number	City	Address	Intended use	Gross area (sqm)	Commercial area (sqm)	Tenants	Market value as at 31/12/2023
1A	Milan	Via Spadari, 2	Commercial	2,858	2,014 OVS S.p.A.		47,500
1B	Milan	Via Spadari, 2	Management offices	285		267 ITX Italia S.r.l.
1C	Milan	Via Spadari, 2	Management offices	591		541 Luisa Via Roma S.p.A.	8,250
	Milan	Via Spadari, 2	Non-leasable areas	65	-	n.a.
	Milan	Via Cuneo 2	Commercial	6,395	3,327 OVS S.p.A.		25,950
	Milan	Corso San Gottardo 29/31	Commercial	4,928	2,620 OVS S.p.A.		15,650
		Via Zara 22/32	Commercial	523	492 Dico S.p.A.
			Management offices (Investment)	3,113		2,189 Embassy of Canada	13,717
1D 2 3 4A	Rome		Non-leasable areas	946	-	n.a.
4B	Rome	Via Zara 22/32		476		388 NEXT RE SIIQ	1,983
4C	Rome	Via Zara 22/32
4D	Rome	Via Zara 22/32	Management offices (Accessory)
5 6	Bari Rome	Viale Saverio Dioguardi, 1 Via Vinicio Cortese 147	Management offices Management offices/Archive	19,118 4,580		10,485 Ministry of Justice 2,496 Guardia di Finanza (Finance Police)	14,300 4,700

Key events in 2023 relating to NEXT RE's real estate portfolio

During the year, Next RE performed asset management activities on property assets and continued to manage relationships with tenants of individual properties, all as described in the following paragraphs, property by property.

Milan – Via Spadari, 2

Regarding the Via Spadari property, NEXT RE owns the first, second and third floors of the building, as well as the first and second basement floors. With regard to the entire property, it should be noted that during 2022 NEXT RE, together with the owners of the other units, will begin a major renovation of the common parts of the complex - facades, porter's lodge, vertical connections and common areas - which will be approved by the condominium assembly at the end of 2021 and completed in the second half of 2023. In addition, for the third floor, which is the exclusive property of NEXT RE, the surface improvement and refurbishment works have been completed (541 square metres of commercial space). In addition, following the completion of the work on the third floor, on 20 April 2023 the Company signed a new lease with Luisa Via Roma S.p.A. for a period of 6 years, with the possibility of renewal for a further 6 years, at a rent of € 300 thousand. At the date of this report, the building is 100% leased.

Milan – Via Cuneo, 2

For the property in question, the relationship with the tenant OVS S.p.A. continued during the year without any particular critical elements. Nor were there any significant events during the financial year, following the termination of the contribution package with which Next RE SIIQ intended to support the tenant OVS S.p.A. in managing the negative economic-financial effects of the COVID-19 emergency, the war between Ukraine and Russia and the increase in commodity prices.

Milan – Corso San Gottardo, 29/31

For the property in question, the relationship with the tenant OVS S.p.A. continued during the year under review without any particular critical elements. There were also no significant events during the year under review, following the termination of the package of assistance provided by Next RE SIIQ to help the tenant, OVS S.p.A., to manage the negative economic and financial impact of the COVID-19 emergency, the war between Ukraine and Russia and the increase in raw material prices.

Rome – Via Zara 22/32

The rental relationships with the Canadian Embassy and with DICO S.p.A., as well as the instrumental use of certain premises by NEXT RE, continued without significant elements in the year under review.

Bari – Viale Saverio Dioguardi, 1

During 2023, the rental relationship with the Ministry of Justice continued without any particularly critical elements.

Rome - Via Vinicio Cortese 147

With regard to the building, the lease with the Guardia di Finanza expired on 30 September 2021. However, at the date of this report, the Guardia di Finanza is renting the property under an occupancy compensation scheme. During 2023, NEXT RE carried out targeted extraordinary maintenance works on the property, also in view of the planned upgrading/enhancement works of the property related to the possible signing of the new lease with the Guardia di Finanza.

Events subsequent to 31 December 2023 relating to the real estate portfolio

Regarding the building in Milan, Via Spadari, as regards the retail part, it should be noted that on 25 January 2024, following the discussions that took place during the second half of 2023, the lease with OVS S.p.A. was renegotiated, also taking into account the impact of the renovation of the common parts of the complex on the retail part. The new lease, while keeping the rent and the reference area unchanged, provides for (i) the granting of a one-off discount, (ii) the landlord's right, exercisable until 31 December 2024, to unilaterally extend the first term of the lease by a further 18 months and (iii) the waiver of the legal pre-emption right in favour of the tenant, maintaining the traditional pre-emption right limited to companies operating in the same reference sector.

Summary of the real estate portfolio as at 31 December 2023

2024, following the discussions that took place during the second half of 2023, the lease with OVS S.p.A. was renegotiated, also taking into account the impact of the renovation of the common parts of the complex on the retail part. The new lease, while keeping the rent and the reference area unchanged, provides for (i) the granting of a one-off discount, (ii) the landlord's right, exercisable until 31 December 2024, to unilaterally extend the first term of the lease by a further 18 months and (iii) the waiver of the legal pre-emption right in favour of the tenant, maintaining the traditional pre-emption right limited to companies operating in the same reference sector. Summary of the real estate portfolio as at 31 December 2023
The table below summarises the main characteristics of NEXT RE's property portfolio. The average gross yield has been calculated on the basis of the annual rents in force as at 31 December 2023, determined on the basis of what is reported later in this chapter.			Table 3
Real estate portfolio	Market value as at 31/12/2023 (A)	Lease fees as at 31/12/2023 (B)	Gross average yield as at 31/12/2023 (B/A)	Gross area (sqm)	Leasable area (sqm)	Leased area (sqm)	Vacant area (sqm)	Occupancy rate
Milan, Via Spadari 2 (Commercial)	47,500	1,981	4.17%	2,858	2,014	2,014	0	100%
Milan, Via Spadari 2 (Management offices)	8,250	128	1.55%	1028*	808	808	0	100%
Milan, Via Cuneo 2	25,950	1,329	5.12%	6,395	3,327	3,327	0	100%
	15,650	619	3.96%	4,928	2,620	2,620	0	100%
Milan, Corso San Gottardo 29/31			5.33%	3,636	2,681	2,681	0	100%
Rome, Via Zara 22/32 (Investment)	13,717	731						100%
Rome, Via Zara 28 (Accessory)	1,983	n.a.	n.a.	1422*	388	388	0
Bari, Viale Saverio Dioguardi 1	14,300	963	6.73%	19,118	10,485	10,485	0	100%
Rome, Via Vinicio Cortese 147	4,700	586	12.47%	4,580	2,496	2,496	0	100%

Table 3

Main real estate indicators

Market value of the real estate portfolio

As at 31 December 2023, NEXT RE owns a real estate portfolio of 6 assets for a total value of € 132.05 million. Compared to 31 December 2022, the value of the real estate portfolio owned decreased by 6 million euros, mainly due to: (i) the negative effects related to the macroeconomic context and in particular the increase in interest rates, (ii) the strong slowdown in the market recovery trend that occurred. For an analysis of the changes in value of each asset, please refer to the notes to the consolidated and individual financial statements at 31 December 2023.

The following graph and table represent the change in market value of the property portfolio owned by the NEXT RE Group between 31 December 2023 and 31 December 2022.

Real estate portfolio	Table 4 Market value as	Divestments	Capitalised	Delta fair value	Market value as at
Milan, Via Spadari 2 (Commercial)	at 31/12/2022 53,300	2023 -	costs 585	(6,385)	31/12/2023 47,500
Milan, Via Spadari 2 (Management offices)	8,150	-	513	(413)	8,250
Milan, Via Cuneo 2	25,850	-	-	100	25,950
Milan, Corso San Gottardo 29/31	15,900	-		- - 250	15,650
Rome, Via Zara 22/32 (Investment)	13,193	-	-	524	13,717
Rome, Via Zara 28 (Accessory)	1,907	-	-	76	1,983
Bari, Viale Saverio Dioguardi 1	14,700	-	-	(400)	14,300
Rome, Via Vinicio Cortese 147	4,850	-	-	(150)	4,700
TOTAL	137,850	-	1,098	(6,898)	132,050

It should be noted that the above market values also include the value attributed by the independent valuer to the part of the property in Rome, Via Zara, for instrumental use, amounting to €1,983 thousand at 31 December 2023 (€1,907 thousand at 31 December 2022). This portion will not be recognised at fair value under investment property, but will be depreciated and recognised under other tangible assets for €1,723 thousand at 31 December 2023 (€1,780 thousand at 31 December 2022).

Value of outstanding annual lease payments and stabilised annual lease payments as at 31 December 2023

Existing yearly rents shall mean the annual leases in effect on the date of reference. Stabilised yearly lease fees are effective lease fees under various contracts (thus taking into account the maximum value of the fee contractually envisaged on the basis of any step-up) known and contracted at the reference date. The rents shown do not include the market rents of the vacant and/or rented property units and do not include uncertainties such as the ISTAT adjustment and any variable rent component. Only for the property on Via Vinicio Cortese in Rome, the last rent in force before the expiry of the contract has been taken into account, on the basis of which the tenant's compensation for occupation is still being paid.

The value of existing yearly rents as at 31 December 2023 is € 6.43 million distributed among the various properties as shown in the following chart.

The value of stabilised yearly rents is equal to € 7,1 million as shown in the chart below.

Graph 5

Net rental income for the year 2023

The net rental income attributable to the 2023 financial year resulting from the Profit and loss account is:

Table 5

Description	31/12/2023
	(€/000)
Rental income	6,386
Net real estate costs	(1,285)
Net rental income	5,101

• o revenues relating to the property in Milan, Via Spadari and the property in Milan, Via Cuneo are recorded, on the other hand, net of the annual portion of the capex contribution paid to the tenant in 2018 and 2021 and net of temporary rent reductions granted to the tenant for the applicable period;
• o rental income is recognised in the income statement on a straight-line basis.

Property data by intended use

the item Net rental income also includes revenue from charge-backs to tenants; o revenues relating to the property in Milan, Via Spadari and the property in Milan, Via Cuneo are recorded, o on the other hand, net of the annual portion of the capex contribution paid to the tenant in 2018 and 2021 and net of temporary rent reductions granted to the tenant for the applicable period; rental income is recognised in the income statement on a straight-line basis. o						With respect to what was previously stated in the tables relating to lease fees, it must be noted that:
Property data by intended use
according to the main intended use of the individual properties (only for the Rome, Via Zara property has been considered the main intended use of the office building which also includes the residual commercial portion of the ground floor considered).			Table 6 Market value as		Lease fees as	Gross average yield
Prevalent intended use	Leasable area (sqm)	Leased area (sqm)	at 31/12/2023 (A)	% value of total portfolio	at 31/12/2023 (B)	as at 31/12/2023 (B/A)	Occupancy rate
Commercial	7,692	7,692	89,100	67.47%	3,929	4.41%	100%
	16,470	16,470	40,967	31.02%	2,407	5.88%	100%
Management offices (Investment)		388	1,983	1.50%	-	n.a.	100%
Management offices (Accessory)	388			100%	6,336	4.80%	100%

(Euro thousands)	Commercial	Management offices	Total Portfolio
Real estate assets as at 1 January 2023	95,050	40,893	135,943
Purchases	0	0	0
Capitalised costs	585	513	1,098
Reclassifications	0	0	0
Balance prior to the valuation of real estate assets	95,635	41,406	137,041
Net write-ups/(write-downs) for the year	(6,536)	(438)	(6,974)
Balance as at 31 December 2023	89,099	40,968	130,067

Table 7

Duration of lease contracts (WALT)

Table 8

			Directors' Report on operations
	Duration of lease contracts (WALT)
termination options.	first contractual expiry date of the individual lease contracts in place, not taking into account any early	Table 8
			WALT on lease	WALT on lease
CITY	PROPERTY	TENANT	fees as at	fees as at
			31/12/2022	31/12/2023
	Via Spadari 2 - Management offices	ITX Italia S.r.l.	0.8	7,8
Milan	Via Spadari 2 - Management offices Via Spadari 2 - Commercial	Luisa Via Roma S.p.A.	N.A. 5.0	6.0 4.0
	Via Cuneo 2	OVS S.p.A.	5.0	3,3
	Corso San Gottardo 29/31		5.5	4,5
		Embassy of Canada	3.1	2,1
Rome	Via Zara 22/30	DICO S.p.A.	4.3	3,3
	Via Vinicio Cortese 147	Guardia di Finanza (Finance Police)	0.0	0.0
Bari	Viale Saverio Dioguardi, 1	Ministry of Justice	2.0	1.0

Tenants

NEXT RE's real estate portfolio is leased to/used by, as at 31 December 2023, 7 (seven) different tenants/users (net of NEXT RE for the accessory portion): OVS S.p.A., Ministry of Justice, Guardia di Finanza, Embassy of Canada, Dico S.p.A., ITX Italia S.r.l. and Luisa Via Roma S.p.A..

The following graph shows the analysis of the concentration by individual tenant based on existing annual rents as at 31 December 2023 (for the property in Rome Via Cortese the occupation indemnity paid by the Guardia di Finanza was considered).

Occupancy rate

The occupancy rate of NEXT RE's real estate portfolio will be 100% as of 31 December 2023 compared to 31 December 2022 due to the lease of the property in Milan, Via Spadari, to the tenant Luisa Via Roma S.p.A..

Geographical allocation

As at 31 December 2023, NEXT RE's real estate portfolio is distributed across 3 (three) different cities: Milan, Rome and Bari.

The following graph shows the geographical allocation analysis (NORTH - CENTRE - SOUTH) of the portfolio based on the market values of the properties as at 31 December 2023

Geographical allocation of properties on the market value as at 31 December 2023

For further information on real estate assets, please refer to the in-depth description provided in the Notes to the financial statements "Note 1. Investment property".

ECONOMIC PERFORMANCE ANALYSIS

A management reclassification of the operating results is provided below in order to facilitate a better understanding of how the operating results were determined for the year.

		Directors' Report on operations
A management reclassification of the operating results is provided below in order to facilitate a better
Table 9
(Values in Euro thousands)	31/12/2023	31/12/2022
Rental income	6,386	5,821
Costs relating to property assets	(1,285)	(1,526)
Net Operating Income	5,101	4,295
Net income/(expenses) from property disposal	0	676
Other revenues and income	5	501
Personnel costs	(2,680)	(2,059)
Overhead costs	(2,882)	(3,134)
Other costs and expenses	(185)	(248)
EBITDA	(641)	30
Amortisation and write-downs	(112)	(200)
Fair value adjustment of property investments	(6,974)	2,892
EBIT	(7,727)	2,722
Fair value adjustment of financial instruments	0	(53)
Financial income/(expenses)	(1,460)	(1,653)
EBT (Earnings Before Taxes)	(9,187)	1,017
	(253)	(665)
Taxes

Table 9

Net Operating Income: The real estate management margin was € 5,101 thousand, an increase of approximately € 806 thousand compared to the previous year. The item Rental income showed a net increase of € 565 thousand, mainly due to ISTAT adjustments of leases recorded in the period and fees for new leases recorded on a straight-line basis. The balance of the item Costs related to real estate assets at 31 December 2023 was lower than the balance at 31 December 2022 by € 241 thousand due to the sale of the Verona property at the end of 2022, which, being vacant, generated higher costs of € 378 thousand in the previous year for utilities, management fees, security, consultancy and IMU.

The item Net income/(expenses) from the sale of real estate is zero. This is because the previous year included the result of the sale of the Verona plant in 2022.

The item Other revenues and income decreased by € 496 thousand with respect to the balance relating to 2022, which includes the net proceeds of € 469 thousand resulting from the agreement concluded on 28 June 2022 for the transfer of the bonds issued by the euro subfund of the Luxembourg fund "Historic & Trophy Building Fund" managed by Main Source S.A. "Fondo HTBF- €" and the settlement of the ordinary and summary judicial proceedings relating to the recovery of the credits relating to the bonds.

Personnel costs: The change from the previous year is due to the effect of the settlement agreements on the terms of the mutually agreed early termination of the employment of the General Manager and the Chief Investment Officer of € 1,971 thousand and the resulting reduction in personnel expenses of € 759 thousand. In addition, the previous year included the provision for short and long-term incentive bonuses of € 598 thousand.

Overhead costs: this item amounted to € 2,882 thousand at 31 December 2023, a net decrease of € 252 thousand compared to 31 December 2022, mainly due to: i) lower legal fees of € 185 thousand, ii) lower communication costs of € 126 thousand and iii) higher bank commissions of € 69 thousand incurred for the early repayment of loans with Unicredit Leasing and Banca Centro Lazio. This item also includes € 729 thousand for asset advisory fees accrued to Dea Capital RE SGR under the asset advisory agreement.

The item Amortisation, depreciation and write-downs includes, inter alia, the depreciation of the portion of the Rome, Via Zara asset used for business purposes for € 57 thousand.

The item Other costs and expenses includes, inter alia, the ordinary costs of CONSOB and stock exchange contributions, membership fees and charges on the disposal of financial assets.

The item Fair value adjustment of financial instruments is equal to 0 and has decreased by € 53 thousand compared to 31 December 2022, as the securities in the portfolio at that date will be disinvested during the first months of 2023.

The item Fair value adjustments of property investments includes the net negative fair value adjustment of investment property of € 6,974 thousand.

The item Financial income/(expenses) consisted mainly of interest paid on loans granted by the parent company CPI PG, amounting to € 1,349 thousand, and interest earned on ordinary current accounts and on the fixed-term deposit open at the end of the year, amounting to €40 thousand.

The item Taxes as at 31 December 2023 reflects the write-down of deferred tax assets of € 190 thousand and IRAP contingent liabilities of € 64 thousand.

Balance sheet analysis

		Directors' Report on operations
Balance sheet analysis
December 2023 and 31 December 2022.	The following table shows the composition of the Group's invested capital and sources of financing as at 31 Table 10
Values in Euro thousands		31/12/2023	31/12/2022
	Fixed capital	131,907	137,893
A.
B.	Financial instruments	0	544
C.	Net working capital	(743)	(1,806)
D=A.+B.+C.	Invested capital	131,164	136,630
E.	Shareholders' equity	(76,489)	(85,915)
F.	Other non-current assets and liabilities	2,407	2,459
G.	Long-term payables to banks and other lenders	(62,334)	(66,663)
H.	Long-term financial derivative liabilities	0	0
I.	Short-term payables to banks and other lenders	(489)	(1,569)
J.	Short-term financial derivative liabilities	0	0
K.	Securities held for trading	0	0
L.	Available cash and cash equivalents	5,742	15,059
M.=G.+H.+I.+J.+K.+L.	Total financial debt	(57,081)	(53,174)

COMPOSITION OF ITEMS:

B. Financial instruments include investments in bonds and mutual funds, other financial assets measured at fair value and derivative assets;

C. Net working capital: this includes trade receivables and payables and other current assets and liabilities;

F. Other non-current assets and liabilities: these include other non-current assets, employee benefits, provisions for risks and assets and liabilities relating to deferred and pre-paid tax assets and liabilities and non-current tax payables;

I. Total Financial Debt: is determined as required by Consob in Attention Notice no. 5/21 with evidence of the method of representation indicated in the Guidelines on disclosure requirements pursuant to EU Regulation 2017/1129 (so-called Prospectus Regulation) published by ESMA as further specified below.

The net working capital is negative equal to € 743 thousand.

Shareholders' equity, including the profit for the period of € 9,440 thousand, amounted to € 76,489 thousand.

The balance of Other net non-current assets and liabilities amounted to € 2,407 thousand and related to: i) other non-current assets of € 2,471 thousand, ii) employee severance indemnity fund of € -20 thousand, iii) risk provisions of € -27 thousand and v) non-current tax liabilities of € -17 thousand.

The following tables show the Total Financial Debt of the Group as at 31 December 2023 and 31 December 2022, as required by Consob in Attention Notice no. 5/21 with evidence of the method of representation indicated in the Guidelines on disclosure requirements under EU Regulation 2017/1129 (so-called Prospectus Regulation) published by ESMA. As of 5 May 2021, the Guidelines update the previous CESR Recommendations (including references in Communication no. DEM/6064293 of 28-7-2006 on net financial position).

Table 11
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		Directors' Report on operations
	In this respect, the ESMA Guidelines provide for the following main changes to the debt statement:
	a. reference is no longer made to Net financial position, but to Total financial debt;
	b. non-current financial debt also includes trade and other non-current payables, i.e. payables that are not remunerated but have a significant implicit or explicit financing component;
separately.	c. as part of current financial debt, the current portion of non-current financial debt should be shown
	Table 11
		31/12/2023	31/12/2022
A.	Values in Euro thousands Cash and cash equivalents	2,334	15,059
B.	Cash equivalents	3,408	0
C.	Other current financial assets	0	0
D.	Liquidity	5,742	15,059
E.	Current financial debt (including debt instruments, but excluding the current	0	0
	portion of non-current financial debt)
F.	Current portion of the non-current financial payable	(489)	(1,569)
G.= (E+F)	Current financial debt	(489)	(1,569)
H.= (G-D)	Net current financial debt	5,253	13,489
I.	Non-current financial debt (excluding current portion and debt instruments)	(62,334)	(66,663)
J.	Debt instruments	0	0
K. L.=(I+J+K)	Trade payables and other non-current payables Non-current financial debt	0 (62,334)	0 (66,663)

Total financial debt increased by € 3.9 million compared to 31 December 2022. The change is mainly due to: i) the reduction in financial liabilities following the early repayment of the loan with Banca Centro Lazio and the real estate lease with UniCredit Leasing for a total amount of € 6.3 million, with a corresponding decrease in liquidity and ii) the increase in financial liabilities due to the recognition of interest accrued in the first half of the year for € 1.3 million related to the credit facility agreements granted by CPI PI, which the Company has the option to repay at maturity in 2026. Liquidity decreased significantly, not only as a result of the abovementioned repayments, but also as a result of the cash outflows related to the severance agreements signed with the former top management. Cash equivalents include a three-month term deposit with Unicredit.

Transactions with related parties

Information on transactions with related parties is provided below.

SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

There were no significant transactions with related parties in the first half of 2023.

TRANSACTIONS AND RELATION WITH RELATED PARTIES OF LESSER IMPORTANCE

On 21 March 2023, the Board of Directors of the Company approved the Settlement Agreements concerning the terms and conditions of (i) the mutually agreed early termination of the executive employment contracts of the Chief Executive Officer (Stefano Cervone) and the Chief Investment Officer (Claudio Carserà) with effect from 30 April 2023 and (ii) the termination of the respective offices of the Chairman of the Board of Directors (Giancarlo Cremonesi) and the Chief Executive Officer (Stefano Cervone) with effect from the conclusion of the General Meeting of Shareholders approving the 2022 financial statements (the "Settlement Agreements").

As all the aforementioned parties are related parties of the Company pursuant to article 2.1, letter (a) of the "Procedure on Related Party Transactions of NEXT RE SIIQ S.p.A." (the "RPT Procedure"), the aforementioned transactions relating to the Transaction Agreements have been qualified as related party transactions of minor

importance, applying the countervalue index pursuant to paragraph 1.1, letter (a) of Annex 3 of the Regulation approved by Consob Resolution no. 17221/2010, as subsequently amended (the "RPT Regulation"); therefore, pursuant to article 7, paragraph 1, letter a) of the RPT Regulation and articles 4.2 and 4.3 of the RPT Procedure, the opinions of the Related Parties and Investments Committee and of the Appointments and Remuneration Risk Control Committee were obtained in advance, as well as the opinion of the Board of Statutory Auditors, each for the aspects within their respective competence.

In particular, the Related Parties and Investments Committee considered it to be in the Company's interest to enter into the Transaction Agreements in order to (i) reduce recurring business costs in line with the cost efficiency plan envisaged in the 2023-2026 Business Plan, aimed at maximising future performance and results of operations, (ii) maintain the existing relationship with the strategic advisor, Dea Capital SGR S.p.A., which ensures appropriate supervision of the management of the Group's real estate assets and real estate investment and disinvestment transactions, and whose skills, experience and relationships are useful in taking advantage of any new market opportunities that may be functional for the Group, and (iii) to avoid the risk of any litigation with the aforementioned related parties and to define any issues that may arise in relation to labour and administrative relations, while identifying a consensual exit path from the Company that will facilitate an orderly handover.

The Related Parties and Investments Committee and the Appointments and Remuneration Risk Control Committee, which held a joint meeting prior to the Board of Directors' meeting of 21 March 2023, considered the Settlement Agreements to be economically advantageous in order to determine in advance the cost to the Company of the amicable termination of the employment and administrative relationships with the aforementioned persons, recognising the same amounts in accordance with the provisions of their respective employment contracts and the Company's current remuneration policy, as well as in line with market practices in similar situations; furthermore, the terms of the Settlement Agreements were considered to be substantially correct in that the amicable termination of the existing employment relationships with the Chief Executive Officer and the Chief Investment Officer was formalised in the context of formal agreements with specific provisions for waivers aimed at settling the relationships in a tombstone manner, to be reproduced in the Settlement Protocol pursuant to Article 2113 of the Civil Code, which will also have the effects of effectiveness of the amicable termination of the relationship pursuant to Article 26, paragraph 7 of Legislative Decree no. 151/2015.

Considering the foregoing, the Related Parties and Investments Committee and the Appointments and Remuneration Risk Control Committee gave a favourable opinion on the Company's interest in entering into the Transaction Agreements and on the appropriateness and substantial fairness of the related terms and conditions.

With regard to the terms and conditions of the Transaction Agreements, the Company disclosed, firstly by means of a press release dated 21 March 2023 and subsequently in the Report on remuneration policy and remuneration paid pursuant to Article 123-ter of the TUF, to which reference should be made, that, in accordance with the provisions of the remuneration policy and in line with market practice in similar situations:

• to Lawyer Giancarlo Cremonesi, also in consideration of the waiver of any right or claim against the Company and its subsidiaries, was granted compensation for his resignation from the positions of Director and Chairman of the Board of Directors of the Company and Sole Director of the subsidiary Fidelio Engineering S.r.l., for an amount equal to the remaining year of the fixed gross remuneration decided in respect of the aforementioned positions;
• to Mr Stefano Cervone, also in consideration of the waiver of any right or claim against the Company and its subsidiaries, was granted compensation for his resignation from the offices of Director and Chief Executive Officer of the Company, for an amount equal to the remaining year of the gross fixed remuneration decided in respect of the aforementioned offices, as well as the severance package provided for in the agreement of 15 February 2018 for the amicable early termination of the executive employment relationship existing with the Company as General Manager;

• to Mr Claudio Carserà, also in consideration of the waiver of any right or claim against the Company and its subsidiaries, was granted the severance package provided for in the agreement of 15 February 2018 for the amicable early termination of his executive employment relationship with the Company as Chief Investment Officer.

On 16 May 2023, the newly constituted Board of Directors of the Company, after hearing the opinion of the newly constituted Committee of Independent Directors, approved the fixed additional remuneration to be paid to the Directors holding special offices pursuant to article 2389, paragraph 3, of the Italian Civil Code and, in particular, to the newly appointed Chairman of the Board of Director in charge of the Internal Control and Risk Management System, Mirko Bertaccini, and to the Chief Executive Officer, Giovanni Naccarato, both of whom, pursuant to article 2.1, letter a) of the RPT Procedures, as related parties of the Company.

The newly formed Independent Committee, a body to which the Board of Directors has also delegated the functions of Related Party Transactions Committee pursuant to the RPT Regulation and the RPT Procedure, has given its favourable opinion pursuant to Article 7 of the RPT Regulation and Article 4.2 of the RPT Procedure, in compliance with the provisions - at the level of primary legislation - of Article 2391-bis of the Italian Civil Code.

In particular, the Independent Committee considered that: (i) the interest of the Company in entering into each transaction existed in order to provide itself with a management with operational and managerial powers within the administrative body; (ii) the economic terms of each transaction were reasonable and fair in order to adequately remunerate the powers of the Chairman and Chief Executive Officer and the Chief Executive Officer, as well as the responsibilities arising from the granting of the aforementioned powers by the Board of Directors, (iii) congruous economic conditions, also in view of the Company's desire to initiate a process of rationalisation and containment of corporate costs, as well as in view of the total remuneration paid to the former Chief Executive Officer, taking into account, inter alia, his employment relationship and the title conferred on him as Chief Executive Officer of the Company.

In light of the above, the Independent Committee gave a favourable opinion on the Company's interest in entering into each transaction and on the appropriateness and fairness in substance of the related terms.

On 13 June 2023, the Company's Board of Directors, after hearing the opinion of the Independent Committee, resolved to assign the role and functions of CFO - until the date of the Shareholders' Meeting convened to approve the financial statements as of 31 December 2025 and against the payment of an additional fee for the functions and related responsibilities - to the Director of Administration, Financial Statements and Accounting as well as Manager in charge of preparing the Company's financial reports, Francesca Rossi, a related party of the Company pursuant to Article 2.1 (a) of the RPT Procedure.

The transaction was therefore classified as a related party transaction of minor significance as it did not exceed the materiality threshold set out in Annex 3 of the RPT Regulation (i.e. the countervalue materiality index).

In particular, the Committee of Independent Directors, at its meeting of 13 June 2023, considered that: (i) the Company's interest in carrying out the transaction to provide itself with a CFO was valid; (ii) the transaction was worthwhile, also in view of the cost savings achieved by avoiding the need to launch an external selection process for this function; (iii) the terms and conditions of the transaction were fair and it was also in the interest of the Company and all its stakeholders.

The Independent Committee therefore gave a favourable opinion on the Company's interest in entering into the transaction and on the appropriateness and substantial fairness of the terms of the transaction.

No other related party transactions of minor significance than the above were reported.

Legal and regulatory framework of Listed Real Estate Investment Companies (SIIQ)

The special regime for listed real estate investment companies ("SIIQ"), established and governed by Article 1, paragraphs 119-141-bis of Italian Law no. 296/2006 (hereinafter also referred to as "Law no. 296/2006") and subsequent amendments, and by the provisions of the implementing Decree of the Italian Ministry of Economy and Finance no. 174/2007 (hereinafter also referred to as the "Decree"), provides for the exemption from taxation for IRES purposes and proportionally from IRAP ("Special Regime") of business income deriving, inter alia, from real estate leasing activities (the so-called "exempt management"). On the other hand, the profits derived from all other activities carried out by the SIIQ are subject to ordinary IRES (corporate tax) and IRAP (regional business tax) taxation (ordinary management).

The regulation of the special regime has been amended as a result of Italian Decree Law no. 133/2014, the "Unblock Italy" decree (hereinafter also known as "Italian Decree Law no. 133/2014" and, along with Italian Law no. 296/2006 and the Decree, the "SIIQ Legislation"), in force since 13 September 2014 and converted with amendments by Italian Law no. 164 of 11 November 2014. More recently, Art. 1, paragraph 718 of Italian Law no. 234 of 30 December 2021 ("2022 Budget Law") amended, effective as of 1 January 2022, Art. 1, paragraph 125 of Italian Law no. 296/2006 (relating to the extension of the Special Regime to subsidiaries, referred to below in the paragraph "Requirements of the Special Regime for SIIQs").

Requirements of the Special Regime for SIIQs

The requirements for access to the Special Regime required by the SIIQ Legislation can be summarised as follows:

(i) Subjective requirements

The Special Regime is available to companies that:

• a. are established as joint-stock companies listed in regulated markets in Italy or in EU or EEA member states included on the "White list" referred to in Ministerial Decree of 4 September 1996;
• b. mainly carry out real estate leasing activities.

The provisions of Art. 1, paragraph 125 of Italian Law no. 296/2006, as amended by Art. 1, paragraph 718 of the 2022 Budget Law, establish that the Special Regime may be extended, in the presence of a joint option, to joint stock companies, limited partnerships and limited liability companies, provided that the relative share capital is not less than that specified in Art. 2327 of the Italian Civil Code (€ 50,000), which are unlisted, resident in Italy, also primarily engaged in real estate leasing activities, as defined in paragraph 121 of Article 1 of Italian Law no. 296/2006, in which, alternatively:

1) a SIIQ or SIINQ (Unlisted Real Estate Investment Company) holds more than 50% of the voting rights at the ordinary shareholders' meeting and 50% of the profit sharing rights; or

2) at least one SIIQ or SIINQ and one or more other SIIQs or SIINQs or real estate FIAs (alternative investment funds) referred to in Art. 12 of M.D. no. 30 of 5 March 2015, whose assets are at least 80% invested in real estate for lease purposes or in investments in SIIQs or SIINQs or other real estate AIFs that invest in the same assets or rights in the same proportions, jointly hold 100% of the investment in its share capital, as well as voting rights in the ordinary meeting and profit sharing rights, provided that the SIIQ or SIINQ or the investing SIIQs or SIINQs hold at least 50% of the voting rights in the ordinary shareholders' meeting and profit sharing rights.

Since 2009 the Special Regime has also been extended to Italian permanent establishments - which mainly carry out real estate lease activities - of companies resident in EU or EEA member states included on the above-mentioned "White list".

(ii) Statutory Requirements

The Articles of Association of the SIIQ must necessarily contain certain provisions and in particular:

• a. rules in terms of investments;
• b. limits to risk concentration on investments and counterparties;
• c. maximum leverage limit, individual and at group level.

(iii) Shareholding Structure Requirements

Paragraph 119 of Italian Law 296/06 also sets the following requirements:

• a. Control requirement: no shareholder may hold, directly or indirectly, more than 60% of the voting rights at the ordinary shareholders' meeting and more than 60% of the rights to participate in the profits of the SIIQ;
• b. Free float requirement: for this requirement to be met, at least 25% of the shares must be held by Shareholders who, at the time the option is exercised, do not directly or indirectly own more than 2% of the voting rights at the Ordinary Shareholders' Meeting or more than 2% of the rights to participate in profits (not required for companies already listed).

(iv) Objective requirements

Application of the Special Regime is subject to the condition that the companies concerned "mainly carry out real estate lease activities" (Art. 1, par. 121, Italian Law 296/2006 and Art. 1 of the Decree). This prevalence must be verified on the basis of two indices:

• a. Asset test: real estate properties intended for lease, investments in other SIIQs or SIINQs, investments in real estate funds and in qualified real estate SICAFs must represent at least equal to 80% of the assets;
• b. Profit test: during each year, income from lease activities, income from SIIQs or SIINQs, income from real estate funds and qualified real estate SICAFs, capital gains realised on properties intended for lease, must represent at least 80% of the positive components of the income statement.

Failure to comply with one of the prevailing conditions (asset test or profit test) for three consecutive years results in the definitive termination of the Special Regime and the application of the ordinary rules as from the second of the years considered. Failure to comply with both prevalence parameters for even just one tax period will result in the automatic forfeiture of the SIIQ Special Regime with effect from the same period.

(v) Additional provisions

• a. Companies that opt for the Special Regime have the obligation, in each financial year, to distribute to shareholders (i) at least 70% of the net profit deriving from real estate leasing activities, from the ownership of investments in SIIQ/SIINQ and in SICAF and qualified real estate funds (as resulting from the Income Statement of the relevant annual financial statements), if the total profit for the year available for distribution is equal to or higher than the exempt operating income, or (ii) at least 70% of the total profit for the year available for distribution, if this is lower than the profit deriving from the leasing activity and from the ownership of equity investments in SIIQ, SIINQ and qualified real estate funds or SICAF (socalled exempt management).
• b. Furthermore, there is the obligation to distribute, in the two financial years following the year of realisation, 50% of the income deriving from net capital gains realised on real estate properties intended for lease and on investments in SIIQ, SIINQ and qualified real estate funds or SICAF.

Failure to distribute the portion of exempt management profit subject to the mandatory distribution described above will result in the forfeiture of the special SIIQ scheme with immediate effect.

Causes of immediate termination of the Special Regime

Companies must meet the requirements set forth in paragraph 119 of Italian Law 296/06 within the first period of effectiveness of the SIIQ regime and for its entire duration. If one of the above-mentioned requirements with the exception of the free float requirement - is no longer met, the SIIQ regime will be terminated with effect from the same tax period.

In particular, the following constitute grounds for immediate termination of the SIIQ special regime:

• (i) the revocation of the admission to the listing of shares in regulated markets (it being understood that the mere temporary suspension of shares from trading does not constitute a cause for termination),
• (ii) non-compliance with the shareholding requirement, which requires no shareholder to directly or indirectly hold more than 60% of the voting rights at the Ordinary Shareholders' Meeting and more than 60% of the rights to share in profits; however, where the 60% shareholding requirement is exceeded as a result of extraordinary corporate transactions or transactions in the capital market, the special regime is suspended until the shareholding requirement is re-established (Italian Inland Revenue Circular no. 32/E/2015, in para. 2 "Requirements and procedures for access to the regime" states, moreover, that "where the control requirement ...is exceeded for a limited period of time, it will be deemed as having been met, without interruption, for the entire tax period. It is understood that this requirement must be met at the end of the tax period considered...").

The Company's exercise of the option and maintenance of the SIIQ regime

The Company exercised the option to access the Special Regime on 7 September 2016, with effect from the tax period beginning on 1 January 2017, and has met all the requirements deemed necessary for the application of the tax benefits provided by the special legislation on SIIQ (including the so-called control requirement) by the end of the 2017 financial year: consequently, the Special Regime takes effect from the first tax period for which the option is exercised (1 January 2017). Accordingly, in the same manner in which the option was exercised (7 September 2016), Agenzia delle Entrate (the Italian Inland Revenue Agency) was notified (17 January 2018) of the integration of participatory requirements which were not in their possession at the time of exercising the option.

It should be noted that, as a result of the takeover bid promoted by the controlling shareholder CPI PG, the latter now owns more than 60% of the ordinary shares. Specifically, as at 26 November 2021, CPI PG held a total of 77.1078% of the Company's subscribed capital, represented by 16,983,075 voting shares, of which no. 11,012,055 shares not admitted to trading (the "Unlisted Shares"), equal to the total of the Company's Unlisted Shares, and no. 5,971,020 ordinary shares admitted to trading on the Euronext Milan market (equal to 54.22% of the total of the listed shares), thus failing to meet the control requirement.

In order to once again meet the control requirement and continue to apply the Special Regime by 31 December 2021, on 26 November 2021 the Board of Directors convened the Extraordinary Shareholders' Meeting for 27 December 2021, submitting to it the proposal for the mandatory conversion, in a 1:1 ratio, of 11,012,055 unlisted ordinary shares into 11,012,055 category B shares, without the right to attend or vote at the Company's ordinary shareholders' meeting and with the same right to share in profits as the ordinary shares, which will be automatically and proportionately reduced to the extent necessary so that the right to share in profits of each category B shareholder, taking into account any other ordinary shares held, is equal to - and, in any event, not more than - 60% of the rights to share in the profits of the Company.

On 27 December 2021, the Extraordinary Shareholders' Meeting unanimously approved such mandatory conversion, as a result of which CPI PG came to hold a total stake equal to 77.1078% of the Company's subscribed share capital, represented by (i) 5,971,020 ordinary shares with voting rights admitted to trading on the EXM market - equal to 54.22% of the share capital with voting rights at the ordinary shareholders' meeting of the Company - and (ii) 11,012,055 Category B shares, with the characteristics described above.

At the Annual General Meeting to approve the 2022 financial statements, held on 16 May 2023, it was announced that CPI PG had increased its holding of ordinary shares (No. 7,061,263 ordinary shares),

representing 64.11% of the capital entitled to vote at the Company's ordinary general meetings, and that the Company therefore did not meet the control requirement as at 31 December 2022.

As a result of the reports and verifications promptly carried out by the Company, CPI PG re-established the control in June 2023 through the sale of 500,000 ordinary shares (see Internal Dealing Communication dated 23 June 2023).

As at 31 December 2023, CPI PG therefore held a total interest of 79.79% of the Company's total subscribed share capital, represented by (i) 6,561,263 ordinary shares with voting rights admitted to trading on the EXM market, representing 59.57% of the share capital with voting rights at the Company's ordinary shareholders' meeting, and (ii) 11,012,055 class B shares with the characteristics described above.

With reference to the prevalence tests carried out as at 31 December 2023, these showed that both the asset test and the income test were above 80% and therefore the objective requirements were maintained as at that date.

As expected, article 1, paragraph 119 of Law 296/06 provides that if, at the end of the tax period, the control requirement is exceeded as a result of extraordinary corporate or capital market transactions, the special regime is suspended until the requirement is re-established. The suspension is a different and additional hypothesis to the termination of the special regime, from which it differs in that, when the control requirement is re-established, it entails the possibility of reapplying the special regime from the tax period in which it occurs, without the need to exercise a new option and pay a new 'entry tax'. Therefore, in the present case, since the control requirement occurred on 31 December 2023, the suspension of the application of the special regime for the Company only concerned the tax period 2022, with the consequent recalculation of the taxable income and the subjection of all the income generated by the Company in that year to IRES and IRAP in accordance with the ordinary tax rules applicable.

Specifically, the recalculation of the taxes due for the 2022 tax period resulted in a higher IRAP to be paid in arrears of €64 thousand and the recognition of a loss for IRES purposes of €3.5 million to be transferred to the tax consolidation to which the Company adheres. On 3 November 2023, the Company paid in active repentance the higher IRAP, together with penalties for late payment and interest, resulting from the recalculation of the taxes due for the 2022 tax period in accordance with the normal rules for determining them.

Given that the control requirement was reinstated in June 2023 and was maintained and verified as at 31 December 2023, the Company will be able to return to the application of the Special Regime as early as the 2023 tax period. The reinstatement of the control requirement and the end of the suspension period of the Special Regime have been duly and promptly notified to the Italian Inland Revenue Agency.

Risk management

MAIN RISKS AND UNCERTAINTIES TO WHICH NEXT RE IS EXPOSED

During the financial year 2023, NEXT RE was exposed to a number of risks, identified as financial, operational, strategic and compliance risks. In order to control, prevent and minimise these risks, the company applies the international principles of Enterprise Risk Management (ERM), a risk management technique that tends to protect NEXT RE from the possible materialisation of the aforementioned risks through the use of various tools. In accordance with the principles of the Self-Regulatory Code of Listed Companies, the newly formed Board of Directors has (i) appointed the Director in charge of the Internal Control and Risk Management System; (ii) established the "Independent Committee" with proposal and advisory functions in the areas of controls, risks, appointments, remuneration, related party transactions, investments and divestments. The Committee is composed of "Independent" Directors who oversee the process of identifying the main corporate risks, through which the risk factors for the Issuer are identified, including all risks that may be relevant to the medium and long term sustainability of the Company's business. The internal control and risk management system is a set of rules, procedures and organisational structures designed to monitor compliance with

corporate strategies, the effectiveness and efficiency of corporate processes, compliance with laws and regulations, as well as with the Articles of Association, corporate rules and procedures. This system must be designed to facilitate the adequate identification, measurement, management and monitoring of the risks assumed by the issuer and the degree of its exposure to risk factors, taking into account the possible correlations between the various risk factors, the significant likelihood of the risk occurring, the impact of the risk on the company's operations and, finally, the overall magnitude of the risk. In essence, it must enable the various types of risk to which the firm is exposed over time, such as operational, market, liquidity, credit, settlement, legal, reputational, etc., to be managed in a reasonably timely manner.

1. FINANCIAL RISKS

The activities carried out by the Company expose it to a series of financial risks: market risk, interest rate risk, credit risk and liquidity risk.

1.1 Market risks

Real estate investments are measured at fair value and changes in fair value are recognised in the profit or loss for the period; therefore, fluctuations in the real estate market, arising from adverse changes in macroeconomic variables, may affect the Company's results. Market risk is the risk of losses related to fluctuations in the prices of properties in the portfolio. This risk also includes the effects of the rate of vacancy of properties (the so-called Vacancy Risk).

Market risk thus includes Price Risk, which can be identified as the risk of depreciation of a financial instrument or portfolio as a result of unfavourable market trends. As NEXT RE is a company that operates within the real estate market, it is therefore subject to the aforementioned risk. Risks related to price fluctuations are also monitored with the support of independent experts. The real estate portfolio is mainly made up of high-quality, diversified properties in large urban centres, particularly Milan and Rome, cities whose real estate markets are less volatile than those of secondary cities. In terms of vacancy risk, the Company favours long-term lease contracts and implements an active asset management process aimed at understanding the needs of tenants and maximising their degree of satisfaction.

1.2 Interest rate risk

The risk of loss from the financing of operating activities consists mainly of increased borrowing costs due to rising interest rates. The Company's exposure to interest rate risk is mitigated by intercompany financing at fixed rates. With regard to the existing variable-rate loans, the Company has embarked on a rationalisation and streamlining of its economic and financial structure in accordance with the guidelines of the industrial plan approved by the Board of Directors on 6 February 2023, which provides for the early repayment of almost all variable-rate loans using existing cash.

1.3 Credit risk

Credit risk or counterparty insolvency risk arises from the loss that the Issuer may incur as a result of the inability of a contractual counterparty to fulfil its obligations, in particular that of meeting its payment obligations. In this regard, it must be noted that the Company's investment strategy favours counterparties with a high credit rating. It is considered that the write-downs already made are representative of the actual risk of non-collectability. With reference to bank deposits and assets for derivative instruments, it must be noted that the Company operates on a continuous and lasting basis with counterparties of primary standing, with an acceptable credit rating, thereby limiting the relevant credit risk.

1.4 Liquidity risk

Liquidity risk is the risk that the Issuer will have difficulty in meeting future obligations associated with financial and commercial liabilities to the extent and within the maturity dates set.

The Company has cash and cash equivalents of € 5,742 thousand at 31 December 2023 and financial liabilities of € 62,823 thousand of which € 489 thousand is due within the next financial year. The Company regularly updates its financial projections to monitor and promptly identify any actions to be taken.

The change in the cash and cash equivalents position recorded in 2023 is due to the cash outflows resulting from the repayment of loans as well as the effects related to the settlement agreements mentioned above.

2. OPERATIONAL RISKS

This is the risk of incurring in losses from inadequate or failed internal processes, human resources and internal systems or from external events. Operational risks are addressed through the adoption of appropriate internal procedures and the articulation of the internal control system.

2.1 Tenants risk

This risk is mitigated by the provisions of the company's Articles of Association, so the company cannot generate: directly and indirectly, lease fees from the same tenant or from tenants belonging to the same group, to an extent exceeding 2/3 of the total leases of the Group; the 30% limit stated above does not apply if the Company's real estate assets are leased to tenants belonging to a group of national or international importance.

2.2 Reputational risk

Reputation has been evaluated as a form of trust in respect of the future and, consequently, reputational risk is considered as the loss of this trust, a loss generated as a result of a series of negative choices or operational errors. It then results in a loss of Trust or Credibility of the company by customers, shareholders, investors and counterparties.

The Group mitigates this risk with an adequate organisational structure and with actions deemed useful for improving company communication through procedures suitable for regulating relations with stakeholders and investors.

2.3 Climate change risk

Climate change risk in the context of the Company's business translates into the risk that assets do not meet certain characteristics - required by new regulations, increased operating costs or ever higher stakeholder expectations - and lose value in terms of both fees and fair value.

The Company recognises that the transition to a low-carbon, more sustainable, resource-efficient and circular economy, in line with the United Nations Sustainable Development Goals, is a key step in ensuring the longterm competitiveness of the EU and global economy. The Company is continuing the process of adapting its operational and organisational structure, which it started in 2021, with the aim of introducing principles and criteria in its operational management and investment processes to oversee and monitor ESG risks.

On 15 September 2022, the Sustainability Policy was approved with the aim of gathering, organising and implementing the actions and processes necessary to integrate the ESG sustainability principles to which the Company intends to refer, and identifying the specific transversal actions necessary to implement these ESG components in Next Re's strategy and operations. The Sustainability Policy provided for the creation of a special technical committee to guide, monitor and support the Board of Directors in relation to ESG issues (the "ESG Committee"), which is currently being reorganised as part of the corporate governance reorganisation process.

At the date of this financial statement, the entire property portfolio has been certified according to the BREEAM In Use protocol, in line with the sustainability path taken.

With particular reference to transition risks and their potential reflection in the fair value of the property portfolio, as described above, the Company has engaged in a process of integrating ESG factors into its business model, through which an analysis has been carried out and is ongoing to identify potential interventions on the assets to reduce their environmental impact. On the other hand, objective parameters and specific databases are not yet available to accurately reflect the impact of ESG issues in property valuations, although there is a different valuation in the property market for properties that achieve good/very good levels of energy efficiency, as these properties are more attractive to higher quality tenants.

With regard to the adverse weather phenomena that occurred in northern Italy during the summer of 2023, the Company did not record any damage to the property it owns in Milan. It should also be noted that the insurance policies taken out by NEXT RE on its real estate portfolio have an "all risk" formula that protects the property in the event of such events; the same policies did not undergo any price increases upon renewal at the end of the 2023 financial year.

3. STRATEGIC RISKS

Strategic risk is the actual or potential risk of an impact on revenues or capital resulting from poor business decisions related to choices of strategic objectives of the company, business strategies and resources used to achieve strategic goals.

The Company mitigates this risk by implementing a process of strategic planning and investment analysis and assessment, in line with the Business Plan.

4. COMPLIANCE AND LEGAL RISK

Compliance risk is the risk of incurring judicial or administrative sanctions, financial losses or reputational damage as a result of breaches of self-regulation rules or laws, regulations or supervisory authority orders.

Legal risk is the risk of loss or impairment of portfolio assets due to inadequate or incorrect contracts or legal documents, or those containing clauses that prove to be significantly onerous. This risk is understood as a manifestation of operational risk that makes it necessary to diagnose the cause of the loss or impairment in the portfolio.

This section includes the risks related to Liability pursuant to Italian Legislative Decree no. 231/01, sanctions related to breaching the regulations for listed companies, liability pursuant to Italian Law 262/05 and finally the risk of maintaining the requirements of the SIIQ regime.

• o Liability pursuant to Italian Legislative Decree 231/01: the Company has adopted an Organisational Model pursuant to Italian Legislative Decree 231/01 as more fully described in the section "Organisational Model and Code of Ethics" relating to Compliance with Italian Legislative Decree no. 231/2001.
• o Penalties for breaches of the regulations governing listed companies: the Company ensures constant monitoring of compliance with the regulatory provisions that apply to it as a listed company, with specific reference to the rules on market abuse (Reg. EU 596/2014 and its implementing European and national provisions including Italian Legislative Decree no. 107 of 10 August 2018), to the regulations on transactions with related parties pursuant to Consob 17221/10 (as amended) and the disclosure requirements prescribed by the TUF and the Issuers' Regulation. It is also planned to constantly monitor the evolution of legislation and market regulations and the possible effects on the Company's obligations.
• o Liabilities pursuant to Law 262/05: application of penalties related to the liabilities of the Manager responsible for drafting the company's financial reports.

The measures adopted to monitor risk exposure and mitigate its impact are described below. In compliance with this law, the Company has adopted an administrative-accounting control system connected with financial reporting, suitable for providing adequate certainty regarding the true and fair representation of the economic, equity and financial information produced, through appropriate administrative-accounting procedures, for drafting the annual financial statements, the half-year financial statements and financial reporting in general. The operational activities of implementation and audit are referred to the internal structure that operates according to the guidelines and under the supervision of the Manager in charge appointed by the Board of Directors in accordance with the law.

Maintenance of SIIQ regime requirements

The maintenance of SIIQ status is subject to the compliance with the subjective, shareholding, objective and statutory requirements provided for by the relevant legislation. NEXT RE is exposed to the risk that some of the aforementioned requirements may no longer be met and, as a result, it will lose its SIIQ status. The

occurrence of this circumstance would result in the loss of the tax benefits related to this regime, in particular the exemption of rental income from income tax; in addition, NEXT RE would not be required to distribute dividends under the terms of the SIIQ legislation.

The Company ensures constant monitoring of compliance with tax regulations and verifies that the income and equity requirements provided for by the SIIQ regime are maintained. The controls adopted for the purpose of monitoring risk exposure and mitigating its impact are as follows: the assessments made on the tax model adopted are examined with the support of selected specialist professionals and the Administrative Department, which monitor regulatory developments and accounting processes. Specifically, separate accounts must be kept for taxable and exempt management. The Management monitors, on a half-yearly basis and in advance in the case of extraordinary operations, asset tests and profit tests as well as profiles relating to the composition of the shareholding structure and the relevant control structure in order to monitor and comply with the requirements established by the regulations.

With regard to compliance with the participation requirements (including the "control" requirement), please refer to what has already been described above in the section of this report entitled "Legal and Regulatory Framework of Listed Real Estate Investment Companies (SIIQ)".

Moreover, as at 31 December 2023, all the Objective Requirements, both the Asset Test and the Profit Test, were met. In fact, with regard to the Asset Test, the value of the real estate owned and used for rental is higher than 80% of the total value of the assets and, with regard to the Profit Test, the amount of revenues from the rental activity of real estate owned by way of ownership or other real right is higher than 80% of the positive components of the income statement.

With regard to the individual Statutory Requirements, the following must be noted. The Articles of Association, under Article 4, states the following:

(1) Rules in terms of investments

"The Company does not invest in a single real estate property having unitary urban and functional characteristics: (i) directly, in excess of 2/3 of the total value of its real estate assets; and (ii) directly and/or through subsidiaries, real estate funds and other real estate investment vehicles, in an amount greater than 2/3 of the total value of the real estate assets of the group it belongs to. In this regard, it must be noted that, in the case of development plans that are subject to a single urban planning design, those portions of the property that are subject to individual and functionally autonomous building permits or that are equipped with sufficient works so as to guarantee connection to public services cease to have unitary urban and functional features";

(2) Limits on the concentration of investment and counterparty risks

"The Company cannot generate: (i) directly, lease payments, from a single tenant or from tenants belonging to the same group, in excess of 2/3 of the Company's total lease payments; and (ii) directly and through subsidiaries, real estate funds and other real estate investment vehicles, lease fees, coming from the same tenant or tenants belonging to the same group, in an amount greater than 2/3 of the total lease fees of the Group". The above mentioned limit does not apply if the Company's real estate is leased to any tenant(s) belonging to a group of national or international relevance.

(3) Maximum financial leverage level

The Company can assume: (i) directly, financial indebtedness (including financial payables to subsidiaries and the parent company), net of cash and cash equivalents and financial receivables from the parent company, for a total nominal value not exceeding 70% of the sum of the total value of its real estate assets, the carrying amount of the investments in subsidiaries and the nominal value of the financial receivables from subsidiaries; and (ii) directly and through subsidiaries, real estate funds and other real estate investment vehicles, consolidated financial indebtedness (including payables to the parent company), net of cash and cash equivalents and financial receivables from the parent company, for a total nominal value not exceeding 70% of the total value of the Group's real estate assets. The aforesaid limits may be exceeded under exceptional

circumstances or, in any case, not dependent on the will of the Company. Unless the Shareholders and/or the Company are otherwise interested, the overrun shall not extend beyond 24 months.

The rules on investments in real estate, risk concentration limits and leverage provided for in points (1), (2) and (3) above shall apply for as long as the Company retains the status of a SIIQ. Once the qualification of SIIQ ceases to exist, with the consequent definitive termination of the special regime for listed real estate investment companies in the cases envisaged by the laws and regulations applicable from time to time, these rules will cease to have effect.

However, it is confirmed that the limits set out in points (1), (2) and (3) above have not been exceeded.

As described in the previous section of this report, entitled "Legal and Regulatory Framework of SIIQs", the application of the special regime was suspended for the 2022 tax period, taking into account the temporary lack of control by CPI PG, and immediately reinstated as of June 2023, with the consequent recalculation of the taxable income and the subjection of all the income received by the Company to IRES and IRAP in accordance with the ordinary tax rules in force.

The subsequent reinstatement of the control requirement during June 2023 and its maintenance and fulfilment as of 31 December 2023 allowed the Company, together with the fulfilment of the other requirements provided for by the regulations - which, as just mentioned, were, as of 31 December 2023, fulfilled -, to return to apply the Special Regime as of the 2023 tax period, as duly and timely notified to the Inland Revenue.

Corporate Governance

Information on the corporate governance system of NEXT RE can be found in the Corporate Governance Report for the year 2023, approved by the Board of Directors on 12 March 2024 also - among other things - for the approval of the draft Financial Statements as at 31 December 2023. The Report provides a description of the corporate governance system adopted by the Company and the specific procedures for adherence to the Corporate Governance Code, in compliance with the obligations set forth in Article 123-bis of the TUF.

The Report - to which reference must be made - is published in accordance with the procedures provided for by the laws and regulations in force and is available at the Company's registered office, on the Company's website at www.nextresiiq.it as well as on the authorised distribution and storage mechanism 1Info at the following URL www.1info.it.

BODIES

Board of Directors

Until 16 May 2023, the Board of Directors - appointed by the Shareholders' Meeting of 26 April 2021 and supplemented by the Shareholders' Meeting of 10 November 2021 - was composed of nine members, five of whom were independent, in the persons of Messrs. Giancarlo Cremonesi as Chairman, Stefano Cervone, Luca Nicodemi, Giuseppe Colombo, Daniela Becchini, Camilla Giugni, Giovanni Naccarato, Eleonora Linda Lecchi and Maria Spilabotte, in office until the date of the Shareholders' Meeting called to approve the financial statements as of 31 December 2023.

It should be noted that the Shareholders' Meeting of 26 April 2021 set the number of Directors at seven, in the persons of: (i) Giancarlo Cremonesi, Chairman; (ii) Stefano Cervone; (iii) Giuseppe Colombo; (iv) Giovanni Naccarato; (v) Maria Spilabotte; (vi) Camilla Giugni; (vii) Eleonora Linda Lecchi. The aforementioned Directors were taken from the list submitted by the majority shareholder CPI PG, which received approval representing approximately 96.93% of the capital present and voting, with the exception of Director Eleonora Linda Lecchi, who was taken from the list submitted by the minority shareholder "Associazione Cassa Nazionale di Previdenza e Assistenza a favore dei Ragionieri e Periti Commerciali", which received approval representing approximately 3.06% of the capital present and voting.

The Board of Directors, at its meeting on 26 April 2021, resolved to: (i) to appoint the Chairman, Giancarlo Cremonesi, as the Director responsible for the internal control and risk management system; (ii) to appoint Stefano Cervone as Chief Executive Officer of the Company; (iii) to appoint Giovanni Naccarato as Vice Chairman of the Board; (iv) to consider that the regulatory and legal requirements are met by its members, also in terms of gender balance; in particular, that the independence requirements set out in Articles 147-ter, paragraph 4, and 148, paragraph 3, of the Consolidated Law on Finance, Article 2, Recommendation no. 7 of the Corporate Governance Code and Article 16 of the Market Regulation are met by Directors Camilla Giugni, Eleonora Linda Lecchi, Giovanni Naccarato and Maria Spilabotte.

Subsequently, on 10 November 2021, the Shareholders' Meeting redefined the number of members of the Board of Directors to nine, resulting in the appointment of two new members, Daniela Becchini and Luca Nicodemi, who were appointed on the basis of the proposals submitted by the majority shareholder CPI PG, which were approved by 100% of the capital present and voting. In particular, Luca Nicodemi was appointed jointly by De Agostini S.p.A. and DeA Capital S.p.A. in accordance with the provisions of the Framework Agreement signed on 5 August 2021, amended on 23 September 2021, and the related shareholders' agreements, which entered into force on 31 December 2022.

The Board of Directors, thus integrated, met on 26 November 2021 and assessed the existence of (i) the requirements of honourability pursuant to Article 147-quinquies of the TUF and Ministerial Decree No. 162 of 30 March 2000 and (ii) the requirements of independence pursuant to Articles 147-ter, paragraph 4, and 148, paragraph 3, of the TUF, Article 2, Recommendation No. 7, of the Corporate Governance Code and Article 16 of the Market Regulation with respect to the aforementioned new directors. On the same date, the Board of Directors granted certain financial powers to Director Giovanni Naccarato, making him an executive director of the Company.

On 21 March 2023, the Board of Directors approved, inter alia, the settlement agreements concerning the terms and conditions of the termination of the offices of Chairman of the Board of Directors, Giancarlo Cremonesi, and Chief Executive Officer, Stefano Cervone, with effect from the conclusion of the Shareholders' Meeting convened to approve the 2022 financial statements.

Subsequently, the Board of Directors took note of the contextual resignations of Directors Giuseppe Colombo, Luca Nicodemi, Giovanni Naccarato and Camilla Giugni from their respective positions (also with effect from the end of the Shareholders' Meeting for the approval of the 2022 financial statements), which it deemed appropriate, also taking into account the corporate cost rationalisation plan currently being implemented, in order to refer all decisions on the new composition of the Board of Directors to the Shareholders' Meeting.

Therefore, following the resignation of the majority of the Directors in office, pursuant to Article 16 of the Articles of Association, the Board of Directors appointed by the Shareholders' Meeting of 26 April 2021 and supplemented by the Shareholders' Meeting of 10 November 2021, remained in office until the date of the reconstitution of the new Board of Directors at the Shareholders' Meeting of 16 May 2023.

The Shareholders' Meeting held on 16 May 2023 redetermined the composition of the Board of Directors to seven members, four of whom are independent, namely Mirko Bertaccini, Chairman, Giovanni Naccarato, Giuseppe Colombo, Luca Matrigiani, Camilla Giugni, Eleonora Linda Lecchi and Maria Spilabotte, to serve until the date of the Shareholders' Meeting convened to approve the financial statements at 31 December 2026.

The Directors were elected from the list submitted by the majority shareholder CPI Property Group S.A. (holding approximately 82.10% of the share capital), which received approximately 92.07% of the share capital present and voting, with the exception of Director Eleonora Linda Lecchi, drawn from the list submitted by the minority shareholder Associazione Cassa Nazionale di Previdenza e Assistenza a favore dei Ragionieri e Periti Commerciali (holder of a total shareholding of approximately 2.75% of the share capital), who received votes in favour representing approximately 7.92% of the share capital present and voting.

The Board of Directors of the Company, which also met on 16 May 2023, appointed Giovanni Naccarato as Chief Executive Officer of the Company, with responsibility to the Chairman Mirko Bertaccini, in addition to the legal representation of the Company, the position of Director in charge of the internal control and risk

management system, also appointing him as employer, and elected Director Giuseppe Colombo as Vice Chairman of the Board of Directors.

The Board of Directors has then ascertained that the legal and regulatory requirements, including those relating to gender balance, are met for the Board to be properly constituted. 147-ter, paragraph 4, and 148, paragraph 3, of the Consolidated Law on Finance, Article 2, Recommendation 7, of the Corporate Governance Code, to which the Company adheres, as well as Article 16 of the Regulation adopted by Consob Resolution No. 20249/2017, with respect to Directors Camilla Giugni, Luca Matrigiani, Maria Spilabotte and Eleonora Linda Lecchi.

Board of Statutory Auditors

The Shareholders' Meeting of 26 April 2021 appointed the Board of Statutory Auditors, whose term of office will expire on the date of the Shareholders' Meeting convened to approve the financial statements at 31 December 2023, in the persons of (i) Luigi Mandolesi, Chairman; (ii) Domenico Livio Trombone, Permanent Auditor; (iii) Sara Mattiussi, Permanent Auditor; (iv) Giuliana Maria Converti, Alternate Auditor; (v) Sergio Mariotti, Alternate Auditor.

The aforementioned members of the Board of Statutory Auditors were drawn from the list presented by the majority shareholder CPI PG, which obtained favourable votes amounting to approximately 96.93% of the capital present and voting, with the exception of the Statutory Auditors Luigi Mandolesi and Sergio Mariotti, drawn from the list presented by the minority shareholder Associazione Cassa Nazionale di Previdenza e Assistenza a favore dei Ragionieri e Periti Commerciali, which obtained favourable votes amounting to approximately 3.06% of the capital present and voting.

The Board of Statutory Auditors, which met following the Shareholders' Meeting of 26 April 2021, positively assessed the suitability of its members and the adequate composition of the body, with reference, inter alia, to the possession of the requirements of professionalism, competence, honourableness and independence required by law, as well as the requirements of independence set forth in the Corporate Governance Code.

The above composition of the Board of Statutory Auditors has not changed as of the date of approval of this Report.

Independent Auditors

The Shareholders' Meeting held on 26 April 2021 appointed EY S.p.A. to audit the accounts for the period 2021- 2029.

Remuneration report

Pursuant to Art. 84-quater, paragraph 1, of the Issuers' Regulation, implementing Art. 123-ter of the TUF, the "Remuneration Report" is published in accordance with the procedures provided for by the laws and regulations in force and is available at the registered office, on the Company's website and on the authorised distribution and storage mechanism 1Info.

Organisational model & Code of Ethics

On 25 May 2022, the Board of Directors approved the latest update of the Organisational, Management and Control Model pursuant to Legislative Decree no. 231/2001 (hereinafter also referred to as the "Organisational Model") and, in particular, the General Section, the Special Section, the Code of Ethics, the List of Suspected Offences and the Additional Annexes to the General Section.

With this update, the Company has taken steps to: (i) incorporate the new regulations introduced on the subject of the administrative liability of companies (i.e. the extension of the types of offences referred to in Leg. 231/2001); (ii) redesigning the mapping of risk-crime activities through a "business process" logic, in line with the organisational structure adopted by the Company and the organisational safeguards in place, as elements

mitigating the risk of committing the offences referred to in Legislative Decree 231/2001; (iii) adapting the functional tools for the operation of the Supervisory Board, including information flows.

The changes made to the Organisational Model were previously reviewed and approved by the Supervisory Body pursuant to Italian Legislative Decree 231/2001 that was newly appointed.

Equity investments held by directors and members of the board of statutory auditors

As at 31 December 2023, no member of the Board of Directors and the Board of Statutory Auditors holds any interest in the share capital of NEXT RE, either directly or indirectly through subsidiaries, trusts or intermediaries.

Other information on the management

Personnel and organisational structure

As of 31 December 2023, the workforce consisted of 4 employees, 2 of whom were executives, including the Chief Financial Officer and Manager in charge of preparing corporate accounting documents, pursuant to and for the purposes of Article 154-bis of the TUF and Article 21-bis of the Articles of Association, Ms. Francesca Rossi.

Research and development activities

The Company did not engage in any research and development activities during 2023.

Treasury shares and/or shares of parent companies

As at 31 December 2023, the Company directly held a total of 38,205 treasury shares equal to 0.17% of the share capital.

Relationships with subsidiaries, associates, parent companies and companies subject to the control of parent companies

With reference to the type of transactions between Group companies and transactions with related parties, reference must be made to Annex 1 - Transactions with related parties of the notes to the Consolidated Financial Statements and Annual Financial Statements.

Secondary offices

As of 31 December 2023, the Company had no secondary offices or local units, following the termination, effective 16 June 2023 of the local unit previously established at the building in Milan, Via Spadari No. 2.

Personal data processing according to Italian Legislative Decree no. 196/2003

The Company processes personal data in compliance with the provisions of EU Regulation 679/2016 and Italian Legislative Decree no. 196 of 2003, as amended.

The Company, as data controller, undertakes to protect the confidentiality and rights of data subjects and, in accordance with the principles dictated by the aforementioned regulations, the processing of data provided is based on the principles of correctness, lawfulness and transparency.

Certification pursuant to Article 2.6.2, paragraph 9 of the Markets Regulation organised and managed by Borsa Italiana S.p.A.

The Board of Directors of NEXT RE certifies meeting the conditions set forth in Article 16 of the Rules adopted by Consob resolution no. 20249 of 28 December 2017 on markets (formerly Article 37 of Consob Regulation no. 16191/2007).

Option to opt-out (OPT-OUT) from the obligation to publish a disclosure document in the event of significant transactions

Pursuant to Article 3 of Consob Resolution no. 18079 of 20 January 2012, notice is hereby given that the Company avails itself of the exemption provided for by Articles 70, paragraph 8, and 71, paragraph 1-bis, of the Issuers' Regulation.

Definition of SME

With reference to the definition of a SME, as per article 1, paragraph 1, letter w-quater.1) of the TUF, it is noted that on the date of these financial statements, the Company falls within this definition as it has a turnover of less than € 300 million and a market capitalisation of less than € 500 million.

Disclosure of non-financial information

The Company does not exceed the thresholds envisaged by Article 2 of Italian Legislative Decree no. 254 of 30 December 2016 and therefore the disclosure of non-financial information was not drafted.

Certifications

On 7 August 2019, the Company achieved the ISO 9001:2015 certification, effective from 25 July 2019; this was renewed on 10 June 2022.

On 26 April 2023, an audit was carried out to assess the compliance of the management system with the ISO 9001:2015 standard, which resulted in a positive outcome with no findings.

ESG

The Group has embarked on the path of integrating ESG (Environmental, Social, Governance) objectives into its business strategy, believing that adherence to and promotion of environmental, social and corporate governance standards contributes, inter alia, to increasing the value of its real estate portfolio, improving its performance over time and fostering the creation of shared value for all stakeholders and the sustainable success of the Company.

The first important step in this direction was to obtain certification according to the BREEAM In Use protocol on the entire real estate portfolio, thus highlighting the Company's effective commitment to sustainability. This important achievement was followed by the adoption of the Sustainability Policy, on 15 September 2022, which identifies the sustainability principles adopted by the Company and identifies the specific transversal actions necessary to implement ESG components in the Group's strategy and operations, helping to improve the impact on all operational areas of the Company's business.

Update on the impact of COVID-19

With regard to the impact of the COVID-19 pandemic on the income statement for 2023, it should be noted that rental income includes a reduction of € 224 thousand due to the reversal, for the portion relating to the period, of temporary rent reductions granted to OVS in previous years.

On the other hand, with regard to the future impact, it should be noted that the rent reductions granted to the customer OVS will have a negative impact totalling € 898 thousand due to the IFRS 16 accounting treatment, which provides for the linearisation of these effects over the duration of the contract.

Foreseeable performance trend

NEXT RE, in the first half of 2023 - following the formalisation of the Transaction Agreements - achieved a significant reduction in corporate costs functional to the effective pursuit of the Company's objectives of streamlining and stabilising operating cash flows and economic results.

Similarly, in the first half of 2023, and in line with the guidelines of the Business Plan 2023 - 2026, almost all exposures to credit institutions have been prepaid in order to rationalise the financial structure.

The implementation of the above measures has enabled the Company to achieve economic and financial efficiency gains, which are reflected in the inertial forecast of the profit and loss account and cash flow for the year 2024 (so-called "steady state"), approved by the Board of Directors on 12 March 2024. In the absence of any changes in the property portfolio and the dynamics of its management in the short to medium term, these projections allow for positive cash flows and economic results.

As far as future years are concerned, the evolution of operations will be based on three main drivers that represent the guidelines of the 2024-2028 Business Plan approved on 12 March 2024, summarised below: (i) capital increases in kind for €300 million declined over the 2024-2026 timeframe consistent with the new delegation of authority to increase share capital - pursuant to Article 2443 of the Italian Civil Code, including with the exclusion of option rights pursuant to Article 2441, paragraphs 4 and 5, of the Italian Civil Code requested by the Board of Directors to the Shareholders' Meeting up to a maximum of €500 million; ii) rotation of the existing real estate portfolio through the sale of lower-yielding assets in order to re-invest the proceeds in higher-yielding properties aimed at servicing the debt; iii) repayment of the shareholders' loans granted by CPI PG maturing naturally in the first half of 2026 through the aforementioned portfolio rotation and cash generated by the new contributed assets.

Next RE SIIQ S.p.A. - Significant data

The reclassified income statement of the parent company NEXT RE SIIQ S.p.A. is shown below with a comment on the main items:

(Values in Euro thousands)	31/12/2023	31/12/2022
Rental income	6,386	5,821
Costs relating to property assets	(1,293)	(1,526)
Net Operating Income	5,092	4,295
Net income/(expenses) from property disposal	0	676
Other revenues and income	5	501
Personnel costs	(2,680)	(2,059)
Overhead costs	(2,880)	(3,142)
Other costs and expenses	(184)	(248)
EBITDA	(647)	23
Amortisation and write-downs	(112)	(200)
Fair value adjustment of property investments	(6,974)	2,892
EBIT	(7,733)	2,716
Fair value adjustment of financial instruments	0	(53)
Financial income/(expenses)	(1,460)	(1,653)
EBT (Earnings Before Taxes)	(9,193)	1,010
Taxes	(251)	(664)
Net result for the period	(9,444)	346

Table 12

Net Operating Income: The real estate management margin amounted to € 5,092 thousand and increased compared to that achieved in 2022 by approximately € 797 thousand. Rental income showed a net increase of €565 thousand, mainly due to the ISTAT adjustments of the leases recorded in the period and the straightline recording of the fees for the new leases. The balance of the property expenses item at 31 December 2023 was €233 thousand lower than at 31 December 2022 due to the sale of the Verona property at the end of 2022, which, being vacant, generated higher costs of €378 thousand in the previous year for utilities, management fees, security, consultancy and IMU.

The item Net income/(expenses) from the sale of real estate has a zero balance as the previous year included the result of the sale of the Verona plant in 2022.

The item Other revenues and income decreased by €496 thousand with respect to the balance relating to 2022, which includes the net proceeds of €469 thousand resulting from the agreement concluded on 28 June 2022 for the transfer of the bonds issued by the euro subfund of the Luxembourg fund "Historic & Trophy Building Fund" managed by Main Source S.A. "Fondo HTBF- €" and the settlement of the ordinary and summary judicial proceedings relating to the recovery of the credits relating to the bonds.

Personnel costs: the change from the previous year is due to the effect of the settlement agreements on the terms of the mutually agreed early termination of the employment of the General Manager and the Chief Investment Officer of €1,971 thousand and the resulting reduction in personnel expenses of €759 thousand. In addition, the previous year included the provision for short and long-term incentive bonuses of €598 thousand.

General costs: the item shows a balance of €2,880 thousand at 31 December 2023 and shows a net decrease of €262 thousand compared to 31 December 2022, mainly due to i) lower legal fees of €185 thousand, ii) lower communication costs of €126 thousand and iii) higher bank fees of €69 thousand incurred for the early

repayment of loans with Unicredit Leasing and Banca Centro Lazio. This item also includes €729 thousand for asset advisory fees accrued to Dea Capital RE SGR under the asset advisory agreement.

The item Amortisation, depreciation and write-downs includes, inter alia, the depreciation portion of the portion of the Rome, Via Zara asset for instrumental use in the amount of €57 thousand.

The item Other costs and expenses includes, inter alia, the ordinary costs of CONSOB and stock exchange contributions, membership fees and charges on the disposal of financial assets.

The item Fair value adjustment of financial instruments is equal to zero and has decreased by €53 thousand compared to 31 December 2022, as the securities in the portfolio at that date will be disinvested during the first months of 2023.

The item Fair value adjustments of property investments includes the net negative adjustment to the fair value of investment property in the amount of €6,974 thousand.

The item Financial income/(expenses) consisted mainly of interest expenses on loans granted by the parent company, CPI PG, amounting to €1,349 thousand, and interest income on ordinary current accounts and on the fixed-term deposit opened at the end of the year, amounting to €40 thousand.

The item Taxes at 31 December 2023 includes the write-off of deferred tax assets of €190 thousand, IRAP contingent liabilities of €64 thousand and the negative effect of IRES of €3 thousand transferred to the tax consolidation by the subsidiary Fidelio.

The reclassified statement of invested capital and sources of financing at 31 December 2023 compared to 31 December 2022 is shown below.

	The item Financial income/(expenses) consisted mainly of interest expenses on loans granted by the parent company, CPI PG, amounting to €1,349 thousand, and interest income on ordinary current accounts and on the fixed-term deposit opened at the end of the year, amounting to €40 thousand.
consolidation by the subsidiary Fidelio.	The item Taxes at 31 December 2023 includes the write-off of deferred tax assets of €190 thousand, IRAP contingent liabilities of €64 thousand and the negative effect of IRES of €3 thousand transferred to the tax
	The reclassified statement of invested capital and sources of financing at 31 December 2023 compared to 31
	Table 13
(Values in Euro thousands)
Item		31/12/2023	31/12/2022
A.	Fixed capital	131,914	137,901
B.	Financial instruments	0	544
C.	Net working capital	(745)	(1,775)
D=A.+B.+C.	Invested capital	131,169	136,670
E.	Shareholders' equity	(76,480)	(85,911)
F.	Other non-current assets and liabilities	2,407	2,459
G.	Long-term payables to banks and other lenders	(62,334)	(66,663)
H.	Long-term financial derivative liabilities	0	0
I.	Short-term payables to banks and other lenders	(489)	(1,569)
J.	Short-term financial derivative liabilities	0	0
K.	Securities held for trading	0	0
	Available cash and cash equivalents	5,728	15,015
L.		(57,095)	(53,218)
M.=G.+H.+I.+J.+K.+L. N.=E.+F.+M.	Total financial debt Sources of financing	(131,169)	(136,670)

Table 13

COMPOSITION OF ITEMS:

A. Fixed capital: includes real estate investments, intangible assets, rights of use, other tangible assets and investments;

B. Financial instruments include investments in bonds and mutual funds, other financial assets measured at fair value and derivative assets;

C. Net working capital: this includes trade receivables and payables and other current assets and liabilities;

F. Other non-current assets and liabilities: these include other non-current assets, employee benefits, provisions for risks and assets and liabilities relating to deferred and pre-paid tax assets and liabilities and non-current tax payables;

I. Total Financial Debt: is determined as required by Consob in Attention Notice no. 5/21 with evidence of the method of representation indicated in the Guidelines on disclosure requirements pursuant to EU Regulation 2017/1129 (so-called Prospectus Regulation) published by ESMA as further specified below.

The net working capital is negative equal to € 745 thousand.

Shareholders' equity, including the loss for the period of € 9,444 thousand, amounted to € 76,480 thousand.

The balance of Other net non-current assets and liabilities amounted to € 2,407 thousand and related to: i) other non-current assets of € 2,471, thousand, ii) employee severance indemnity fund of € -20 thousand, iii) risk provisions of € -27 thousand, iv) deferred tax liabilities of € -17 thousand.

The following tables show the Total Financial Debt of the Company as at 31 December 2023 and 31 December 2022, as required by Consob in Attention Notice no. 5/21 with evidence of the method of representation indicated in the Guidelines on disclosure requirements under EU Regulation 2017/1129 (so-called Prospectus Regulation) published by ESMA. As of 5 May 2021, the Guidelines update the previous CESR Recommendations (including references in Communication no. DEM/6064293 of 28-7-2006 on net financial position).

In this respect, the ESMA Guidelines provide for the following main changes to the debt statement:

a. reference is no longer made to Net financial position, but to Total financial debt;

b. non-current financial debt also includes trade and other non-current payables, i.e. payables that are not remunerated but have a significant implicit or explicit financing component;

c. as part of current financial debt, the current portion of non-current financial debt should be shown separately.

The table below shows the total financial liabilities of NEXT RE as at 31 December 2023.

	indicated in the Guidelines on disclosure requirements under EU Regulation 2017/1129 (so-called Prospectus Regulation) published by ESMA. As of 5 May 2021, the Guidelines update the previous CESR Recommendations (including references in Communication no. DEM/6064293 of 28-7-2006 on net financial
	In this respect, the ESMA Guidelines provide for the following main changes to the debt statement:
	a. reference is no longer made to Net financial position, but to Total financial debt;
	b. non-current financial debt also includes trade and other non-current payables, i.e. payables that are not remunerated but have a significant implicit or explicit financing component;
	c. as part of current financial debt, the current portion of non-current financial debt should be shown
	The table below shows the total financial liabilities of NEXT RE as at 31 December 2023.
	Table 14
(Values in Euro thousands)		31/12/2023	31/12/2022
A.	Cash and cash equivalents	2,320	15,015
B.	Cash equivalents	3,408	0
C.	Other current financial assets	0	0
D.	Liquidity	5,728	15,015
E.	Current financial debt (including debt instruments, but excluding the current portion of non-current financial debt)	0	0
F.	Current portion of the non-current financial payable	(489)	(1,569)
G.= (E+F)	Current financial debt	(489)	(1,569)
	Net current financial debt	5,239	13,445
H.= (G-D)	Non-current financial debt (excluding current portion and debt instruments)	(62,334)	(66,663)
I.		0	0
J.	Debt instruments
K.	Trade payables and other non-current payables	0	0
L.=(I+J+K)	Non-current financial debt	(62,334)	(66,663)

Reconciliation between the Shareholders' Equity and the Parent Company's net profit and the Shareholders' Equity and the consolidated net profit

			Directors' Report on operations
Reconciliation between the Shareholders' Equity and the Parent Company's net profit and the Shareholders' Equity and the consolidated net profit
Pursuant to Consob notice no. DEM/6064293 of 28 July 2006, below is a reconciliation of the results for the year and shareholders' equity of the parent company NEXT RE SIIQ S.p.A. with the consolidated results and shareholders' equity as at 31 December 2023.	Table 15
Values in Euro	31/12/2023		31/12/2022
	Shareholders' equity	Results	Shareholders' equity	Results
Values of the Parent Company	76,480,318	(9,443,859)	85,910,546	346,304
Recognition of shareholders' equity of subsidiary	14,447	0	9,184	0
Adjusted results for the year of the subsidiary Elimination of the carrying value of investments	4,241 (10,000)	4,241 0	5,263 (10,000)	5,263 0

Table 15

Proposed allocation of operating results for the period

The financial statements of NEXT RE SIIQ S.p.A., as at 31 December 2023, show a loss of € 9,443,858.95.

The Shareholders' Meeting is asked to approve the following proposed resolution:

"The Shareholders' Meeting,

• having acknowledged the Board of Directors' Report on Operations and the applicable provisions of law;
• having acknowledged the Report of the Board of Statutory Auditors and the Report of the Independent Auditors;

resolved:

• o to approve the financial statements for the year ended on 31 December 2023 and the Board of Directors' Report on Operations;
• o to carry forward the loss for the year of EUR 9,443,858.95.

EPRA performance indicator

This section of the financial report presents some performance indicators calculated in accordance with the best practices defined by EPRA (European Public Real Estate) and reported in the EPRA Best Practices Recommendations guide. In particular:

EPRA Earnings: is an indicator of the company's operating performance and represents the income generated net of Fair Value adjustments, gains and losses from property disposals and other limited items that do not represent the company's core business.

NET ASSET VALUE METRICS: these are the main performance indicators that provide stakeholders with information on the fair value of the company's assets and liabilities and are calculated by adjusting the Shareholders' Equity as reported in the financial statements in accordance with IFRS principles by certain items, excluding certain assets and liabilities that are not expected to arise under normal business conditions over the long term.

In October 2019, EPRA, through its Best Practices Recommendations, introduced three new Net asset Value metrics: EPRA Net Reinstatement Value (NRV), EPRA Net Tangible Assets Value (NTA) and EPRA Net Disposal Value (NDV) which replace the previous metrics: EPRA NAV² and EPRA NNNAV³ . The new metrics express the net asset value to stakeholders, assuming different reference contexts.

NET REINSTATEMENT VALUE (NRV): this indicator aims to represent the value of net assets over the long term. It represents the repurchase value of the company, assuming the company does not sell real estate. It is calculated starting from the relevant Group shareholders' equity (as reported in the financial statements according to IFRS principles) excluding certain assets and liabilities that are not expected to arise under normal business conditions, such as the Fair Value of hedging derivatives; deferred taxes on market valuations of real estate and hedging derivatives.

NET TANGIBLE ASSETS (NTA): the assumption underlying the calculation of indicator ratio is that the company buys and sells real estate, which impacts the company's deferred tax liability. It represents a scenario where some properties could be subject to sale. As at 31 December 2022 the Group has no properties held for sale for this reason deferred taxes coincide with those excluded in the calculation of NRV.

In contrast to the NRV, the value of goodwill and intangible assets recorded in the financial statements are also excluded from shareholders' equity attributable to the Group.

NET DISPOSAL VALUE (NDV): represents the value for stakeholders in a scenario in which the company is sold, where deferred taxes, financial instruments and other adjustments are calculated to the maximum extent of their liability net of the relevant tax effect. In this sale scenario, the Group's equity is adjusted to take into account the fair value of the financial debt.

EPRA Cost Ratios: these are indicators which aim to make the company's significant structural and operating costs more comparable. They are calculated as the percentage of operating costs and overheads, net of management fees and other limited items that do not represent the company's business, of gross lease income. EPRA Cost Ratios are twofold: gross and net of direct costs of Vacancies.

EPRA Net Initial Yield (NIY): is a performance indicator and expresses the ratio of annualised end-of-period rental income (including variable and temporary revenues), net of unrecoverable operating costs, to the market value of Real Estate Assets, net of properties under development.

² EPRA Net Asset Value (NAV): represented the Fair Value of net assets considering a long-term time horizon and business continuity; it is calculated starting from the relevant shareholders' equity (as reported in the financial statements according to IFRS principles) excluding certain assets and liabilities that are not expected to arise under normal business conditions, such as the Fair Value of hedging derivatives or deferred taxes on market valuations of real estate and hedging derivatives.

³ EPRA Triple Net Asset Value (NNNAV): represented the value of the relevant equity by including in the calculation the Fair Value of the main equity components that are not included in the EPRA NAV, such as (i) hedging financial instruments, (ii) financial debt and (iii) deferred taxes.

						Directors' Report on operations
EPRA topped-up NIY: this is a performance measurement indicator obtained by adjusting EPRA Net Initial Yield with annualised end-of-period lease income (including variable and temporary revenues) and when fully operational, i.e. excluding any temporary incentives (such as fee reductions and step-ups).
EPRA Vacancy Rate: this measures the vacancy rate of the portfolio as the ratio of the assumed market fee (ERV) of unoccupied premises to the ERV of the entire portfolio.
Like for like Rental Growth: measures the growth rate of revenues from rental activities relative to the homogeneous perimeter (assets present for the entire period of the current and previous year).
In February 2022, EPRA, through an update of the Best Practices Recommendations Guidelines 2022, introduced a new financial indicator, the EPRA LTV (Loan-to-Value), which expresses the company's leverage from the shareholders' perspective. The following table summarises the key performance indicators resulting from the application of the EPRA
Best Practices recommendations compared to the previous year's results.		Table 16
		31 December 2023		31 December 2022	∆ Y-Y	∆ Y-Y (%)
	€ million	€ per share	€ million	€ per share
EPRA Earning	(2.3)	(0.1)	(3.2)	(0.1)	0.9	27.1%
	%		%
EPRA Cost Ratio	111.2%		120.1%		-8.9%
(including direct vacancy costs) EPRA Cost Ratio
(excluding direct vacancy costs)	110.9%		115.1%		-4.2%
LIKE FOR LIKE RENTS	8.8%		0.1%		8.7%
		31 December 2023		31 December 2022	∆ Y-Y	∆ Y-Y (%)
EPRA NRV	76.5	3.5	85.9	3.9	(9.4)	-11.0%
EPRA NTA	76.5	3.5	85.9	3.9	(9.4)	-10.9%
EPRA NDV	79.0	3.6	91.3	4.1	(12.3)	-13.5%
	%		%
EPRA LTV	43.8%		39.8%		4.1%
EPRA Net Initial Yield	4.1%		3.5%		0.6%
EPRA Topped-up Net Initial Yield EPRA vacancy rate	4.6% 0.0%		3.9% 3.4%		0.7% -3.4%

Table 17

			Directors' Report on operations
	The table below shows the calculation of Epra Earnings and Epra Earnings per share:
	Table 17
	EPRA Earnings (Euro/000)	31 December 2023	31 December 2022
	Net result on IFRS basis	(9,440)	352
	Variations to calculate EPRA Earnings:
(i)	Changes in value of investment properties, development properties held for investment and other interests	6,974	(2,892)
(ii)	Profits or losses on disposal of investment properties, development properties held	0	(676)
(iii)	for investment and other interests Profits or losses on sales of trading properties including impairment charges in
(iv)	respect of trading properties Tax on profits or losses on disposals
(v)	Negative goodwill / goodwill impairment
(vi)	Changes in fair value of financial instruments and associated close-out costs	134	53
(vii)	Acquisition costs on share deals and non-controlling joint venture interests
(viii)	Deferred tax in respect of EPRA adjustments	0	0
(ix)	Adjustments (i) to (viii) above in respect of joint ventures (unless already included under proportional consolidation)
(x)	Non-controlling interests in respect of the above
	EPRA Earnings	(2,332)	(3,163)
	Basic number of shares	22,025,109	22,025,109
	EPRA Earnings per Share (EPS)	(0.1)	(0.1)
	The EPRA Earnings indicator is calculated by adjusting the consolidated net result by non-monetary items
	(write-downs, adjustment of the Fair Value of real estate and financial instruments recorded in the profit and loss account, any write-downs and write-ups of goodwill), by non-recurring items (capital gains and losses

The EPRA Earnings indicator is calculated by adjusting the consolidated net result by non-monetary items (write-downs, adjustment of the Fair Value of real estate and financial instruments recorded in the profit and loss account, any write-downs and write-ups of goodwill), by non-recurring items (capital gains and losses deriving from the sale of real estate, profits from trading activities with relevant current taxes, costs relating to the early closure of loans), by deferred taxes relating to the Fair Value of real estate and financial instruments recorded in the profit and loss account and by the adjustments themselves stated above pertaining to third parties.

At 31 December 2023, this indicator showed a negative value of €2,332 thousand, a decrease of approximately €831 thousand compared to the previous year. The change was mainly due to i) the increase in the property management margin of approximately €753 thousand due to higher rental income of €512 thousand as a result of ISTAT adjustments to leases recorded in the period and rents for new leases recorded on a straightline basis, and lower property-related costs of €242 thousand due to the sale of the Verona property in December 2022, which, being vacant, generated higher non-recoverable costs in 2022, (ii) lower net proceeds from the sale of properties of €676 thousand, (iii) an increase in personnel expenses of €621 thousand due to the net effect of the charges arising from the settlement agreements signed with top management and the lower costs resulting therefrom, (iv) the negative change in fair value of investment properties of €6,974 thousand.

The following table shows the calculation of the Epra Cost Ratios:

Table 18

			Directors' Report on operations
	The following table shows the calculation of the Epra Cost Ratios: Table 18
	EPRA Cost Ratios (Euro/000)		31 December 2023	31 December 2022
Include: (i)	Administrative/operating costs reported in the IFRS income statement		6,880	6,834
(ii)	Net service charge costs/fees
	(iii) Management fees net of realised/estimated returns
(iv)	Other income/charge-backs to cover costs net of related income
(v)	Share of general real estate costs of real estate investments accounted for using the equity method
Exclude:
(vi)	Write-downs of investment properties
(vii) Land annuity costs
	(viii) Charges to be charged back to tenants not separately invoiced
	EPRA costs (including direct costs on the vacant portfolio)		A 6,880	6,834
(ix)	Direct costs on the vacant portfolio		(15)	(283)
	EPRA costs (excluding direct costs on the vacant portfolio)		B 6,865	6,551
(x)	Gross rental income (net of land rent costs)		6,188	5,688
(xi)	Less: other overhead costs included in gross rental income (if significant)
	(xii) Plus: share of real estate revenues of real estate investments accounted for
	using the equity method
	Gross rental fees	C	6,188	5,688
	EPRA Cost Ratio (including direct costs on the vacant portfolio)	A/C	111.2%	120.1%
	EPRA Cost Ratio (excluding direct costs on the vacant portfolio)	B/C	110.9%	115.2%

The EPRA Cost Ratio as at 31 December 2023 showed a decrease from 120.1% of last year to 111.2% (110.9%, excluding vacancy costs) mainly as a result of lower costs related to real estate assets recorded with respect to the balance as of 31 December 2022, which included costs incurred on the Verona building that, being vacant, were not reversible, as well as higher rental income recorded in 2023.

Specifically, administrative and operating costs consisted of i) net real estate costs of € 1,140 thousand, ii) personnel costs of € 2,680 thousand and iii) overhead costs of € 3,060 thousand.

Direct costs on the vacant portfolio decreased in relation to the portion of costs of €215 thousand incurred by the Group in relation to the Verona property sold on 28 December 2022.

As at 31 December 2023, there were no capitalised operating expenses on the value of property.

					Directors' Report on operations
The following table shows the EPRA NAV indicators that are compared to those measured as at 31 December 2022.
	Table 19
	EPRA NRV			EPRA NTA		EPRA NDV
EPRA Net Asset Value Metrics (Euro/000) Shareholders' equity IFRS	31/12/2023 76,489	31/12/2022 85,915	31/12/2023 76,489	31/12/2022 85,915	31/12/2023 76,489	31/12/2022 85,915
Include / Exclude:
i) Hybrid instruments
Diluted NAV	76,489	85,915	76,489	85,915	76,489	85,915
Include*:
ii.a) revaluations in investment property (if IAS 40 cost option is used)
ii.b) revaluations of properties under construction (IPUC) (if IAS 40 cost option is used)
ii.c) Revaluations of other non-recurring investments iii) Revaluations of lease contracts held as finance
leases
iv) Revaluations trading properties
Diluted NAV at Fair Value	76,489	85,915	76,489	85,915	76,489	85,915
Exclude:
v) Deferred taxes in connection with FV gains on investment property
vi) Fair value of financial instruments
vii) Goodwill arising from deferred taxes
viii.a) Goodwill as per IFRS financial statements
viii.b) Intangible assets as per IFRS financial			(37)	(63)
statements Include:
ix) Fair value of fixed-rate debt					4,045	5,420
x) Revaluations of Intangible assets at FV
xi) Taxes on transfers of real estate
NAV	76,489	85,915	76,452	85,852	79,021	91,335
Number of fully diluted shares	22,025,109	22,025,109	22,025,109	22,025,109	22,025,109	22,025,109
NAV per share	3.5	3.9	3.5	3.9	3.6	4.1
The NRV/NAV decreased compared to 31 December 2022 due to the change in shareholders' equity, which
decreased as a result of the negative net result of €9,440 thousand; for the same reason, the NTA also
decreased compared to the result for the same period of the previous year. The difference between the latter
indicator and the NRV relates to the exclusion of the intangible assets recognised in the balance sheet.

The NDV decreased by approximately 13.25% compared to the previous year. This change reflects, in addition to the above, the lower positive impact compared to last year of the fair value measurement of the financial debt, which is determined by discounting the cash flows at a rate composed of a base rate derived from the term structure of interest rates and a "market" spread.

This is due to the use of an updated rate curve and market spread rate with the conditions in place as at 31 December 2023, as well as the different composition of the debt, both in terms of duration and in terms of cost.

					Directors' Report on operations
The following table shows the EPRA LTV indicator that is compared to that measured at 31 December 2022.
The indicator is obtained by relating the Group's net debt to the market value of the assets held by the Group
and measures the sustainability of financial debt related to real estate assets.
		Table 20
			Proportional consolidation
		Investments in	Significant	Minority	Aggregate	Aggregate
EPRA LTV	Group Values	Joint Ventures	investments	investments	31/12/2023	31/12/2022
Include:
Funding from Financial Institutions	62,764				62,764	68,022
Financial bills of exchange Hybrid Instruments (including Convertible
Securities, Preference Shares, Options,
Perpetuals Bonds) Bonds
Currency derivatives (futures, swaps, options
and forwards)
Net current payables Real estate for business use (debt)	743				743	1,809
Current accounts (with equity features)
Excluding:
Cash and cash equivalents	5,742				5,742	15,059
Net debt (a)	57,766	0.0	0.0	0.0	57,766	54,772
Include:
Real estate for business use Real estate investments at fair value	1,723 130,067				1,723 130,067	1,780 135,943
Properties for sale
Development properties
Intangible assets
Net current receivables	-				-
Financial assets
Total value Investment property (b)	131,790	0.0	0.0	0.0	131,790	137,723
LTV (a/b)	43.8%	0.0%	0.0%	0.0%	43.8%	39.8%

The EPRA Net Initial Yield (NIY) and the EPRA topped-up NIY are shown below:

Table 21

			Directors' Report on operations
The EPRA Net Initial Yield (NIY) and the EPRA topped-up NIY are shown below:
Table 21
EPRA NIY and topped-up NIY (Euro/000)		31/12/2023	31/12/2022
Market value of the wholly-owned portfolio		130,067	135,943
Market value of the partially-owned portfolio (share of JVs/Funds)
Assets held for sale (including those held partially)
Minus: Development properties
Market value of the overall portfolio		130,067	135,943
Estimation of transfer costs
Market value of the real estate portfolio	B	130,067	135,943
Annualised gross rent fees		6,436	6,173
Non-recoverable real estate costs		(1,140)	(1,391)
Annualised net rent fees	A	5,295	4,782
Plus: Increases for rent fee changes and other temporary		671	520
incentives to tenants
Annualised net topped-up rent fees EPRA NIY	C A/B	5,966 4.1%	5,302 3.5%

The NIY is obtained by comparing annualised end-of-period lease income (including variable and temporary revenues), net of stranded operating expenses, with the market value of real estate assets, net of properties under development. Annualised rental income includes all adjustments that the company is contractually entitled to consider at the end of each financial year (indexing and other changes). Real Estate to be considered for NIY purposes includes: (i) wholly owned properties; (ii) any properties held in joint ventures; and (iii) properties held for trading purposes. Excludes property under development and land (investment property under development).

EPRA Topped-up NIY is a performance measurement indicator obtained by adjusting EPRA Net Initial Yield with annualised end of period rental income (including variable and temporary income) and when fully operational, i.e. excluding any temporary incentives (such as lease reductions and step ups).

The increase in the indices is attributable to the combined effect of the reduction in the value of the real estate portfolio, for the reasons mentioned above, and the increase in annualised rents.

The EPRA vacancy rate, calculated as per Epra guidance on non-development properties, was 0% as at 31 December 2023 (it was 3.4% as at 31 December 2022). The reduction is attributable to the sale of the property located in Verona, which was vacant until the closing date of the sale, which occurred at the end of 2022, and to the fact that the vacant real estate unit referable to the portion of the third floor for office use of the property located in Milan, via Spadari, was rented starting from May 2023. EPRA Vacancy Rate 31/12/2023 31/12/2022 Estimated rent fees on vacant spaces A - 238 Estimated rent fees on the overall portfolio B 7,135 7,035 EPRA Vacancy Rate A/B 0.0% 3.4%

Table 22

EPRA Vacancy Rate		31/12/2023	31/12/2022
Estimated rent fees on vacant spaces	A		238
Estimated rent fees on the overall portfolio	B	7,135	7,035
EPRA Vacancy Rate	A/B	0.0%	3.4%

				Directors' Report on operations
The following table shows the reconciliation of the rents recorded in 2023 and 2022 with the rents calculated
on a like-for-like basis4				(assets present for the entire period of the current and previous year) taking into
account the use of the properties and their location.
		Table 23
Like for like rent (Euro/000)	commercial	office properties	hotel properties	change in property	total
Lease fees as at 30 June 2022	properties 3,455	2,225	8	portfolio perimeter 0	5,688
Fees for properties acquired/disposed of in 2022 Fees for properties acquired/disposed of in 2023				(8)	(8)
Like-for-like fees as at 30 June 2022 (B)	3,455	2,225	8	(8)	5,680
New contracts signed	153				153
Closed contracts Renegotiation			(8)		(8)
Inflation	289	59			348
Other changes	8				8
Like-for-like fees as at 30 June 2023 (A)	3,904	2,284	0	(8)	6,180
Fees for properties acquired/disposed of in 2022 Fees for properties acquired/disposed of in 2023				8
Lease fees as at 30 June 2023	3,904	2,284	0	0	6,188
like for like (A) - (B)	449	59	(8)	0	500
like for like rental Growth %	13%	3%	N/A	N/A	8.8%
Like for like rents (Euro/000)	Milan	Rome	Other cities	change in property portfolio perimeter	total
Lease fees as at 30 June 2022	3,452	1,265	971	0	5,688
Fees for properties acquired/disposed of in 2022	0	0	0	(8)	0
Fees for properties acquired/disposed of in 2023 Like-for-like fees as at 30 June 2022 (B)	0 3,452	0 1,265	0 971	(8)	0 5,680
New contracts signed	153				153
Closed contracts			(8)		(8)
Renegotiation					0
Inflation Other changes	298 8	50			348 8
Like-for-like fees as at 30 June 2023 (A)	3,910	1,315	963	(8)	6,180

Renegotiation
Fees for properties acquired/disposed of in 2023
				portfolio perimeter	total
Lease fees as at 30 June 2022	3,452	1,265	971	0	5,688
Fees for properties acquired/disposed of in 2022	0	0	0	(8)	0
Fees for properties acquired/disposed of in 2023	0	0	0		0
Like-for-like fees as at 30 June 2022 (B)	3,452	1,265	971	(8)	5,680
New contracts signed Closed contracts Renegotiation Inflation Other changes	153 298 8	50	(8)		153 (8) 0 348 8
Like-for-like fees as at 30 June 2023 (A)	3,910	1,315	963	(8)	6,180
Fees for properties acquired/disposed of in 2022 Fees for properties acquired/disposed of in 2023				8	0
Lease fees as at 30 June 2023	3,910	1,315	963	0	6,188
like for like (A) - (B) like for like rental Growth %	458 13%	50 4%	(8) N/A	0 N/A	500 8.8%
Like-for-like rental growth is calculated on the basis of rents booked in accordance with IFRS 16.
The increase in like-for-like rents compared to the previous period is mainly due to i) the signing of a new lease with the tenant Luisa Via Roma in 2023 for the third floor office part of the building in Milan, Via Spadari, which was vacant at 31 December 2022, and ii) the increase in rents related to the Istat adjustment and other residual

The increase in like-for-like rents compared to the previous period is mainly due to i) the signing of a new lease with the tenant Luisa Via Roma in 2023 for the third floor office part of the building in Milan, Via Spadari, which was vacant at 31 December 2022, and ii) the increase in rents related to the Istat adjustment and other residual changes.

⁴ The real estate portfolio includes the following properties Rome, via Zara (€13,717 thousand), Rome, via Cortese (€4,700 thousand), Milan, via Spadari (€55,750 thousand), Milan, C.so San Gottardo (€15,650 thousand), Milan, via Cuneo (25,950 thousand), Bari, via Dioguardi (€14,300 thousand).

More information on investment property

In accordance with EPRA Best Practices Recommendations updated as at October 2019, the capital expenditure investments made in the last two financial years are shown:

		Directors' Report on operations
In accordance with EPRA Best Practices Recommendations updated as at October 2019, the capital
	Table 24
Capital expenditure - EUR/000	31 December 2023	31 December 2022
Purchases	-	-
Development	-	-
Investment property	1,098	851
Increase leasable area	356	658
No Increase leasable area	742	193
Tenant incentives
Other unallocated expenses
Capitalised interest (if applicable)	-	-
Total CapEx	1,098	851
Conversion from accrual to cash basis

Table 24

The item Costs to increase leasable area refers to the renovation costs incurred in relation to the office portion of the third floor of the building located in Milan, Via Spadari, acquired in the previous year, for the valorisation and redevelopment works of the areas completed in the first half of 2023 aimed at leasing the space.

The Company also incurred costs, classified among those not increasing the leasable surfaces, on the entire building in Milan Via Spadari for €742 thousand, in relation to which, in 2021, a major investment programme was started together with the owners of the other building units on the common portions of the complex for the upgrading of the common surfaces of the building - façades, porter's lodge, vertical connections.

There are no joint ventures in the Group.

The estimated Rental Value of Vacant Space is given in the previous paragraph on the Epra Vacancy Rate.

For the accounting policies adopted for the various categories of real estate, see Notes 1 and 2 to the Consolidated Financial Statements.

On the other hand, with reference to the valuation of the real estate portfolio, the choice of independent experts and the valuation criteria used, please refer to the paragraph Real estate portfolio in the Directors' Report on Operations and the paragraph Use of estimates and assumptions in the Notes to the Consolidated Financial Statements.

3. CONSOLIDATED FINANCIAL STATEMENTS OF THE NEXT RE SIIQ S.P.A. GROUP

Consolidated financial statements

The consolidated financial statements are drawn up in euro units.

Consolidated statement of financial position

Consolidated statement of financial position	Consolidated Financial Statements of the NEXT RE S.p.A. Group
	Note	31/12/2023	of which with	31/12/2022	of which with
			related parties		related parties
ASSETS
Non-current assets
Investment property	1	130,066,859	0	135,942,648	0
Other tangible fixed assets Rights of use	2 3	1,749,117 51,046	0 0	1,813,815 73,542	0 0
Intangible assets	4	39,572	0	62,753	0
Deferred tax assets	5	0	0	190,329	0
Other non-current assets	6	2,471,161	0	2,435,583	0
Total non-current assets		134,377,755	0	140,518,670	0
Current assets
Financial assets at fair value	7	0	0	543,578	0
Receivables and other current assets	8	813,488	0	1,101,887	0
Cash and cash equivalents	9	5,741,857	0	15,058,512	0
Total current assets		6,555,345	0	16,703,977	0
TOTAL ASSETS		140,933,100	0	157,222,647	0
SHAREHOLDERS' EQUITY
Share capital		63,264,528	0	63,264,528	0
Share premium reserve		22,931,342	0	22,931,342	0
Other reserves		12,458,219	0	12,111,652	0
Profits/(Losses) carried forward		(12,780,995)	0	(12,785,995)	0
Other items of the comprehensive income statement		55,530	0	41,899	0
Profit/(loss) for the year		(9,439,618)	0	351,567	0
GROUP SHAREHOLDERS' EQUITY		76,489,006	0	85,914,993	0
Minorities' equity TOTAL SHAREHOLDERS' EQUITY	10	0 76,489,006	0 0	0 85,914,993	0 0
LIABILITIES
Non-current liabilities
Employee benefits	11	19,821	0	66,393	0
Provisions for risks	12	26,971	0	74,224	0
Payables to banks and other lenders	13	62,333,612	61,809,161	66,662,960	60,460,161
Trade payables and other non-current payables	14	17,726	0	26,876	0
Total non-current liabilities		62,398,130	61,809,161	66,830,453	60,460,161
Current liabilities
Payables to banks and other lenders Trade payables and other payables	13 14	489,404 1,556,560	0 576,948	1,569,018 2,908,183	0 819,058
Total current liabilities		2,045,964	576,948	4,477,201	819,058
TOTAL LIABILITIES		64,444,094	62,386,109	71,307,654	61,279,219
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		140,933,100	62,386,109	157,222,647
					61,279,219

Consolidated statement of profit/(loss)

			Consolidated Financial Statements of the NEXT RE S.p.A. Group
Consolidated statement of profit/(loss)
	Note	31/12/2023	of which with related parties	31/12/2022	of which with related parties
Rental income	15	6,385,770	0	5,821,399	0
Property operating expenses	16	(1,284,938)	0	(1,526,490)	0
Net rental income		5,100,832	0	4,294,909	0
Proceeds from sale of investment properties		0		1,420,000	0
Expenses related to the sale of investment properties		0		(744,350)	0
Total income/expenses of investment properties disposal	17	0		675,650	0
Personnel costs		(2,680,184)	0	(2,058,978)	0
Wages and salaries		(501,945)	0	(908,290)	0
National insurance charges		(165,591)	0	(477,870)	0
Severance indemnity fund (TFR)		(32,895)	0	(80,737)	0
Other personnel costs		(1,979,753)	0	(592,081)	0
Overhead costs		(2,881,900)	(1,522,496)	(3,134,469)	(1,476,034)
Amortisation, depreciation and write-downs of fixed assets		(111,875)	0	(199,797)	0
Total operating costs	18	(5,673,959)	(1,522,496)	(5,393,244)	(1,476,034)
Other revenues and income	19	5,301	0	501,167	0
Other costs and expenses	20	(184,917)	0	(248,291)	0
Total other revenues and income/other costs and expenses		(179,616)	0	252,876	0
Positive change in fair value of investment property		624,211	0	3,572,167	0
Negative change in fair value of investment property		(7,598,319)	0	(680,000)	0
Net Change in fair value of investment property	21	(6,974,108)	0	2,892,167	0
Operating income		(7,726,851)	(1,522,496)	2,722,358	(1,476,034)
Fair value adjustment of financial assets	22	0	0	(52,908)	0
Financial income	23	40,407	0	4,543	0
Financial expenses	23	(1,500,494)	(1,349,000)	(1,657,159)	(1,431,888)
Pre-tax result		(9,186,938)	(2,871,496)	1,016,834	(2,907,922)
Taxes	24	(252,680)	0	(665,267)	0
Profit/(Loss) for the period		(9,439,618)	(2,871,496)	351,567	(2,907,922)
Group Profit/(Loss)		(9,439,618) 0	(2,871,496) 0	351,567 0	(2,907,922) 0
Minorities' Profit/(Loss)

Consolidated statement of other comprehensive income

	Consolidated Financial Statements of the NEXT RE S.p.A. Group
Consolidated statement of other comprehensive income
	31/12/2023	31/12/2022
Profit/(Loss) for the period	(9,439,618)	351,567
Actuarial gains/(losses)**	13,631	65,666
Total other items of the comprehensive income statement	13,631	65,666
Total comprehensive profit/(loss)	(9,425,987)	417,233
Total Group comprehensive profit/(loss) Total Minorities' comprehensive profit/(loss)	(9,425,987) 0	417,233 0

Consolidated statement of changes in shareholders' equity

					Consolidated statement of changes in shareholders' equity			Other items of
		Share capital	Share premium reserve	Fair value reserve	Legal reserve	Other reserves	Profits (losses) carried forward	the comprehensive income statement	Profit (Loss) for the period	Total Group shareholders' equity	Minorities' equity	Total Shareholders' Equity
Balance as at 01/01/2022		63,264,528	22,931,342	8,139,414	7,122,550	(3,577,649)	(12,785,179)	(26,767)	426,520	85,497,760	0	85,497,760
Allocation of 2021 result		0	0	405,969	21,367	0	(816)	0	(426,520)	0	0	0
Other items of comprehensive income		0	0	0	0	0	0	65,666	0	65,666		65,666
Share-based payments reserve Result for the period		0 0	0 0	0 0	0 0	0 0	0 0	0 0	0 351,567	0 351,567	0 0	0 351,567
Total comprehensive profit/loss		0	0	0	0	0	0	65,666	351,567	417,233	0	417,233
Minorities' result for the period		0	0	0	0	0	0	0	0	0	0	0
Balance as at 31/12/2022	10	63,264,528	22,931,342	8,545,384	7,143,917	(3,577,649)	(12,785,995)	41,899	351,567	85,914,993	0	85,914,993
								Other items of
	Notes	Share capital	Share premium reserve	Fair value reserve	Legal reserve	Other reserves	Profits (losses) carried forward	the comprehensive income statement	Profit (Loss) for the year	Total Group shareholders' equity	Minorities' equity	Total
Balance as at 01/01/2023		63,264,528	22,931,342	8,545,384	7,143,917	(3,577,649)	(12,785,995)	41,899	351,567	85,914,993	0	85,914,993
Allocation of 2022 result		0	0	328,989	17,578	0	5,000	0	(351,567)	0	0	0
Other items of comprehensive income		0	0	0	0	0	0	13,631	0	13,631	0	13,631
Share-based payments reserve		0	0	0	0	0	0		0	0	0	0
		0	0	0	0	0	0	0	(9,439,618)	(9,439,618)	0	(9,439,618)
Result for the period		0	0	0	0	0	0	13,631	(9,439,618)	(9,425,987)	0	(9,425,987)
Total comprehensive profit/loss						0	0	0	0	0	0	0
Minorities' result for the period Balance as at 31/12/2023	10	0 63,264,528	0 22,931,342	0 8,874,373	0 7,161,495	(3,577,649)	(12,780,995)	55,530	(9,439,618)	76,489,006	0	76,489,006

						carried forward	the comprehensive income statement	Profit (Loss) for the period	Total Group shareholders' equity	Minorities' equity	Total Shareholders' Equity
Balance as at 01/01/2023	63,264,528	22,931,342	8,545,384	7,143,917	(3,577,649)	carried forward (12,785,995)	Other items of the comprehensive income statement 41,899	Profit (Loss) for the year 351,567	Total Group shareholders' equity 85,914,993	Minorities' equity 0	Total 85,914,993
Allocation of 2022 result	0	0	328,989	17,578	0	5,000	0	(351,567)	0	0	0
Other items of comprehensive income	0	0	0	0	0	0	13,631	0	13,631	0	13,631
Share-based payments reserve	0	0	0	0	0	0		0	0	0	0
Result for the period	0	0	0	0	0	0	0	(9,439,618)	(9,439,618)	0	(9,439,618)
	0	0	0	0	0	0	13,631	(9,439,618)	(9,425,987)	0	(9,425,987)
Total comprehensive profit/loss			0	0	0	0	0	0	0	0	0
Minorities' result for the period	0	0							76,489,006	0

Consolidated Cash-flow Statement

	of which		of which
	31/12/2023	with related parties	31/12/2022	with related parties
Profit before tax		(9,186,938) (2,871,496)		1,016,834 (2,907,922)
Adjustments:
Amortisation, depreciation and write-downs of fixed assets	111,875	0	199,797	0
Total income/(expenses) from disposal of real estate	0	0	(675,650)	0
Extraordinary income from financial assets	0	0	(468,750)	0
Positive/(negative) fair value of investment properties	6,974,108		0 (2,892,167)	0
Fair value adjustment of financial instruments	0	0	52,908	0
Financial income	(40,407)	0	(4,543)	0
Financial expenses	1,500,494	1,349,000	1,657,159	1,431,888
Financial expenses paid	(94,227)	0	(244,323)	0
Financial income collected	2,838	0	4,536	0
Provision for severance and other risks	27,878	-	154,961	0
Cash flow generated by operations			(704,379) (1,522,496) (1,199,238) (1,476,034)
Taxes (net of deferred taxes)	(64,036)	0	0	0
Cash flow generated by operations net of taxes			(1,199,238) (1,522,496) (1,199,238) (1,476,034)
Other assets/other liabilities	(1,386,836)	(242,110)	1,386,390	482,647
Change in trade receivables	(81,984)	0	336,939	0
Change in trade payables	(513,688)	(242,110)	305,796	482,647
Change in other current assets	172,426	0	(247,259)	0
Change in other current liabilities	(935,585)	0	1,025,382	0
Change in other non-current assets	(35,577)	0	(214,064)	0
Change in tax receivables	197,957	0	504,639	0
Change in tax payables	(137,023)	0	(200,455)	0
Change in severance indemnity fund (TFR)	(53,362)	0	(124,588)	0
Cash flow before investments and financing		(2,155,251) (1,764,606)	187,152	(993,387)
Investments and divestments	9,226,418		0 9,226,418	0
(Increase)/decrease in properties	(915,298)	0	5,975,943	0
(Increase)/decrease in financial instruments	543,577	0	3,250,475	0
Financial assets	(6,789,683)		0 (1,201,212)	0
Other changes in equity	0	0	0	0
Increase in financial payables	0	0	0	0
Decrease in financial payables	(6,789,683)	0	(1,201,212)	0
Cash and cash equivalents generated during the year Note 25.		(9,316,655) (1,764,606)	8,212,358	(993,387)
Initial cash and cash equivalents	15,058,512		6,846,154
Final cash and cash equivalents	5,741,857		15,058,512

(**)This item includes interest-bearing time deposits maturing on 29 February 2024 of €3,250 thousand and security deposits of €150 thousand provided by customers to guarantee rental agreements.

Consolidated profit (loss) per share

	31/12/2023	31/12/2022
Profit/(Loss) for the period	(9,439,618)	351,567
Weighted average number of ordinary shares outstanding	21,987,004	21,987,004
Basic profit (loss) per share Note 26.	-0.4293	0.0160
	31/12/2023	31/12/2022
Profit/(Loss) for the period	(9,439,618)	351,567
Weighted average number of ordinary shares for diluted earnings per share purposes	21,987,004	21,987,004
Diluted profit (loss) per share Note 26.	-0.4293	0.0160

Notes to the consolidated financial statements

GENERAL INFORMATION

NEXT RE SIIQ S.p.A. (hereinafter also referred to as "NEXT RE" or the "Company" or the "Parent Company") with registered office in Rome, Via Zara 28, Tax Code and VAT no. 00388570426, REA number RM-1479336, is a real estate investment company, established in Italy, with shares listed on the Euronext Milan market ("EXM") organised and managed by Borsa Italiana S.p.A.

NEXT RE SIIQ S.p.A. is a subsidiary and subject to the Management and Coordination of CPI Property Group S.A.. For more information, please refer to the chapter Management and coordination activities.

NEXT RE SIIQ is the Parent Company of the NEXT RE SIIQ Group formed by itself and its wholly-owned subsidiary Fidelio Engineering S.r.l..

NEXT RE's Consolidated Financial Statements as at 31 December 2023 have been drafted in accordance with International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board (IASB), as published in the Official Journal of the European Union (OJEU).

The Board of Directors on 12 March 2024 authorised the publication of these consolidated financial statements.

The consolidated financial statements are audited by EY S.p.A. pursuant to Article 14 of Italian Legislative Decree no. 39 of 27 January 2010 and Article 10 of Regulation (EU) no. 537/2014 based on engagement granted by the Shareholders' Meeting of 26 April 2021, and awarded pursuant to Italian Legislative Decree no. 39 of 27 January 2010, for a term of nine financial years (2021-2029).

In compliance with the provisions of Article 5, paragraph 2, of Legislative Decree no. 38 of 28 February 2005, the consolidated financial statements are prepared using the Euro as the functional currency. The amounts in the consolidated financial statements are shown in Euro. The rounding of figures contained in the notes to the financial statements is carried out in such a way as to ensure consistency with the amounts shown in the statement of financial position and the statement of profit/(loss) for the year. The notes to the consolidated financial statements are drawn up in Euro '000, unless otherwise stated.

The financial statements have been drafted on a going concern basis. The financial statements have been prepared on a going concern basis. The directors have assessed that there are no uncertainties about the Group's ability to continue as a going concern because:

• the negative result for the year ended 31 December 2023 is mainly due to the effects of the governance reorganisation that took place in the first half of the year and the negative changes in fair value of the real estate assets recorded at 31 December 2023, the latter being mainly the result of the macroeconomic context, as further described in Note 1;
• on 12 March 2024, the Board of Directors approved the new Business Plan 2024-2028, which envisages the following three drivers: i) expansion of the real estate portfolio through capital increases in kind over the three-year period 2024-2026; ii) rotation of the portfolio through asset sales; and iii) repayment of the loans granted by CPI PG with natural maturity in the first half of 2026. The above capital increases have been planned within a timeframe consistent with the new authorisation to increase share capital requested by the Board of Directors to the Shareholders' Meeting pursuant to Article 2443 of the Italian Civil Code, also excluding the option rights pursuant to Article 2441, paragraphs 4 and 5 of the Italian Civil Code;
• also on 12 March 2024, the Board of Directors approved the economic-financial projections in the socalled Steady State Scenario for the year 2024, which forecast positive results and cash flows even without the implementation of the aforementioned drivers and strategic options outlined in the 2024- 2028 Business Plan.

PRINCIPLES OF NEW APPLICATION

The Group has not proceeded with early adoption of any new standards, interpretations or amendments issued but not yet effective. A number of amendments and interpretations apply for the first time in 2023 but have not had an impact on the 2023 consolidated financial statements.

The document "Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2", issued by the IASB in February 2021, clarified that complete financial statement disclosures should include material information about accounting policies, together with other explanatory information, and about significant decisions, other than those involving accounting estimates, that management has made in the process of applying those policies and their effects. Information is material if, taken together with other information in the financial statements, it could reasonably be expected to influence the decisions that the primary users of the financial statements make on the basis of those financial statements.

The changes have affected the disclosure of accounting policies, but not the measurement and presentation of the elements of the consolidated financial statements.

FORMAT OF THE FINANCIAL STATEMENTS ADOPTED BY THE GROUP AND BASIC CRITERIA

The financial statements and relevant disclosures have been drafted in accordance with IAS 1.

The consolidated financial statements as at 31 December 2023 consist of the following primary schedules:

• o Consolidated statement of financial position, which is presented by showing current and non-current assets and current and non-current liabilities separately, with a description in the notes for each item of assets and liabilities of the amounts that are expected to be settled or recovered within and beyond 12 months following the reporting date;
• o Consolidated statement of profit or loss for the year, showing separately the Costs relating to real estate assets that contribute to "Net rental income" and other costs classified by nature;
• o Consolidated statement of other comprehensive income;
• o Consolidated statement of changes in shareholders' equity;
• o Consolidated cash flow statement, drafted using the indirect method.

The Consolidated Financial Statements include the Notes to the financial statements, which contain a list of relevant accounting policies and other explanatory information.

The Consolidated Financial Statements have been prepared under the historical cost principle, except for investment properties, financial instruments and assets, derivative financial instruments and non-cash distribution liabilities, which are carried at fair value.

CONSOLIDATION PRINCIPLES

The consolidated financial statements have been drafted on the basis of the financial statements as at 31 December 2023 drawn up by the companies included in the scope of consolidation and adjusted to align them with IFRS-compliant accounting policies and classification criteria. The scope of consolidation includes the Parent Company, whose financial statements are prepared in accordance with IAS/IFRS, and Fidelio Engineering S.r.l., which prepares simplified financial statements as a micro enterprise.

Subsidiaries are all companies over which the Group has control, directly or indirectly, to determine significant activities (i.e. financial and management policies).

Consolidation principles can be summarised as follows:

• subsidiaries are consolidated from the date on which control is effectively transferred to the Parent Company and cease to be consolidated from the date on which control is transferred outside the Parent Company; such control exists when the Parent Company has the power, directly or indirectly, to determine the financial and operating policies of an enterprise so as to obtain benefits from its activities.

• Subsidiaries are consolidated on a line-by-line basis; the technique consists in consolidating all the items in the financial statements in their overall amount, i.e. regardless of the percentage of ownership. Only when determining shareholders' equity and the results for the year is any minority interest shown on a separate line in the balance sheet and income statement;
• all intragroup balances and transactions, including any unrealised profits deriving from transactions between Group companies, are completely eliminated. Unrealised losses are eliminated except when they represent an indicator of impairment to be recognised in the income statement.

VALUATION CRITERIA AND ACCOUNTING PRINCIPLES

The main measurement policies and accounting principles are set out below.

Investment property

Investment property is property held to earn rentals and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes.

Investment property is initially recognised at cost including accessory acquisition costs and, consistently with the provisions of IAS 40, is subsequently measured at fair value, recognising the effects deriving from changes in the fair value of the investment property in the income statement during the financial year in which they occur.

The costs of subsequent work are only capitalised, increasing the carrying amount of the investment property, when it is likely that the work will yield future economic benefits and the related costs may be measured reliably. Other maintenance and repair costs are expensed to the income statement when incurred.

Investment property is derecognised when it is sold or when the investment becomes permanently unfit for use and future economic benefits are not expected to flow from its sale. Any gains or losses on the retirement or disposal of investment property are recognised in the income statement in the year in which the asset is retired or disposed of.

IFRS 13 defines fair value as 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 (exit price).

In particular, when measuring the fair value of investment property, in accordance with IFRS 13 the Group must ensure that the fair value reflects, inter alia, the current revenues based on rent and on other reasonable and sustainable assumptions that market participants would use in determining the price of the investment property under current conditions.

Pursuant to IFRS 13, the measurement of a non-financial asset at fair value considers the ability of a market participant to generate economic benefits by using the asset for its highest and best use or by selling it to another market participant that would use it for its highest and best use.

According to IFRS 13, an entity must use measurement techniques suited to the circumstances and for which sufficient data is available to assess fair value, while maximising the use of the relevant observable inputs and minimising the use of non-observable inputs. Fair value is measured on the basis of transactions observable in an active market, adjusted, where necessary, on the basis of the specific characteristics of each investment property. If this information is not available, when determining fair value for the measurement of investment property the Parent Company uses the discounted cash flow method (for a variable period in reference to the duration of the contracts in place) associated with the future net income on the rental of the property and assuming the sale of the property at the end of the period.

Investment property is measured on a half-yearly basis by external independent appraisers with adequate, recognised professional qualifications and recent experience with the lease and the characteristics of the properties being measured. See the paragraph "Use of estimates and assumptions" below for further details.

Leased properties held for the purpose of earning lease payments and/or for capital appreciation are classified as investment property and measured at fair value.

In relation to climate change, the Group has begun a process of integrating ESG issues into its business model, through a careful analysis of its assets to identify potential actions to reduce their environmental impact. The methods used to determine fair value are in line with standards and best practice and already reflect all the considerations made by market participants.

The property valuations performed by the independent valuer take into account key elements that contribute to the impact of climate change on property values, including: i) exposure to natural disasters, ii) energy sustainability, iii) asset adaptation and resilience, iv) regulation and ESG standards, and v) increasing investor awareness. The impact of the above may vary depending on the geographical characteristics and dynamics of the local real estate market, and an increasingly sensitive market to ESG standards is an increasingly integral part of real estate investment decisions.

Tangible assets

Tangible assets are recorded at purchase cost, net of accumulated depreciation, grants related to assets and any impairment losses.

Maintenance and repair costs are charged to the income statement of the year in which they are incurred, with the exception of those of an incremental nature, which are capitalised on the value of the assets concerned and depreciated in relation to the residual possibility of use of the latter.

Gains or losses on the sale of fixed assets are recognised under the income statement.

Buildings used for the business are depreciated at a rate of 3.33% and considering a useful life of 30 years.

Leases - Rights of use and financial liabilities

At the time of initial recognition of an agreement, the right of use and the debt are measured by discounting future rentals, throughout the duration of the lease, also taking into account the possibility of renewing the lease agreements or terminating them early, only in cases where the exercise of these options is deemed reasonably certain. In order to calculate the current value of the liability under the lease, the Group established an incremental borrowing rate comparable to the interest rate at which the tenant would finance itself through a contract with similar terms and guarantees in order to obtain an asset with a value similar to the right of use in a similar economic environment.

Liabilities deriving from the lease are classified under the item Financial payables to banks and other lenders in the statement of financial position with a distinction between current and non-current portion.

The above does not apply to short-term and/or low-value leases.

Intangible assets

An intangible asset is recognised only if it is identifiable, controllable, and can be expected to generate future economic benefits and its cost can be measured reliably.

Intangible assets with a finite useful life are recognised at purchase or production cost, including incidental expenses and the relevant depreciation, calculated on a straight-line basis over the assets' remaining useful life and in accordance with IAS 38.

Amortisation is recognised from the moment the asset is available for use or is capable of operating in accordance with the Group's understanding and ceases on the date on which the asset is classified as held for sale or is derecognised.

Purchased software licenses are recorded on the basis of the costs incurred for the purchase and start-up of the specific software, net of amortisation and accumulated impairment losses. These costs are amortised over the assets' useful life. Costs associated with the development or maintenance of computer programmes are recognised as an expense when incurred. Computer software development costs recognised as assets are amortised over the estimated useful life.

Financial assets

Classification of financial assets

On the date of initial recognition, financial assets are classified as financial assets at amortised cost, at fair value through other comprehensive income and at fair value through the income statement, based on both the business model adopted by the Group and the contractual cash flow characteristics of the instrument.

For this purpose, the test of whether the instrument generates cash flows representing solely payments of principal and interest (i.e. SPPI) is referred to as the "SPPI test" and is performed at the level of the individual instrument. The business model for the management of financial assets relates to the way in which the Group manages its financial assets in order to generate cash flows. The business model determines whether cash flows will come from collecting cash under the agreement, selling financial assets, or both.

Below is a description of the main features of the above assets.

1. Financial assets held for collection (Category 1)

Financial assets falling into this category are held with the aim of collecting their cash flows and the cash flows are representative of the passage of time and the repayment of capital. Assets in this category are valued at amortised cost and are recorded under Receivables and other assets.

1. Financial assets held for collection and sale (Category 2)

Financial assets in this category are held for the purpose of collecting cash flows or being sold and these flows are representative of the passage of time and the repayment of principal.

Assets included in this category are recorded in the balance sheet at fair value, while in the income statement they are recorded using the amortised cost criterion and the changes in fair value are recorded in the Other comprehensive income statement components, with a reversal to the income statement at the time of their disposal and/or write-down.

1. Financial assets held for a purpose other than the above (Category 3)

Financial assets that do not fall into one of the two previous categories belong to Category 3. These financial assets are measured at fair value through profit or loss and are recorded under Financial assets at fair value.

Temporary investments of liquidity in UCITS, mutual fund units, derivatives and any instruments whose cash flows do not represent the mere passing of time and repayment of capital are measured at fair value with a balancing entry in the income statement.

Trade and other receivables are held until collection in accordance with contractual maturities and an analysis of the characteristics of the contractual cash flows concluded that they meet the criteria for measurement at amortised cost in accordance with IFRS 9.

Impairment of financial assets

IFRS 9 requires the Group to recognise expected credit losses on all items such as loans and trade receivables deriving from lease activities, using either a 12-month period or the entire contractual life of the instrument as a reference. The Parent Company applies the simplified approach by recording any expected losses on all trade receivables on the basis of their residual contractual duration.

Fair value hierarchy according to IFRS 13

The Group determines fair value in accordance with IFRS 13 whenever such a measurement criterion is required by international accounting standards.

The 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 (the so-called "exit-price").

The fair value of assets and liabilities is classified in a fair value hierarchy with three different levels, defined as follows, based on the inputs and valuation techniques used to measure fair value:

• o Level 1: determination of fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities. This category includes instruments relating to temporary investments of liquidity in UCITS, mutual funds, SICAVs and portfolios of mutual funds with which the Group operates through managers in active markets;
• o Level 2: determination of fair value based on inputs other than the quoted prices included in "Level 1" but which are directly or indirectly observable;
• o Level 3: determination of fair value based on valuation models whose inputs are not based on observable market data (unobservable inputs). As at 31 December 2022, the fair value of investment properties is included in this level.

It should be noted that the valuation of financial instruments may involve significant discretion even though, where available, prices quoted in active markets are used as the best estimate of the fair value of all derivative instruments.

Cash and cash equivalents

Cash and cash equivalents include: cash on hand, demand deposits with banks and other highly liquid shortterm investments. Bank overdrafts are reported under loans in current liabilities in the statement of financial position.

Shareholders' equity

The share capital represents the nominal value of payments and contributions made by shareholders. Incremental costs directly attributable to the issue of new shares or options are reported under a special reserve in the shareholders' equity.

The purchase cost of treasury shares is recorded as a reduction of the shareholders' equity; the effects of any subsequent transactions between shareholders on these shares are also recorded directly under shareholders' equity.

Share-based payments

In the case of share-based payment transactions settled with equity instruments of the Group, the fair value on the grant date of the options granted to employees is recognised under personnel expenses, with a relevant increase in equity under Other reserves, over the period during which the employees obtain the unconditional right to the incentives.

The estimate of the fair value of the options considers all the vesting conditions relating to the market, in terms of relative positioning with respect to the Peer Group (market condition). In addition, in order for the final amount recognised to be based on the number of incentives that will actually vest, the cost is adjusted to reflect both vesting conditions and the achievement of the so-called "non-market" condition. With reference to non-vesting conditions, any differences between the assumptions made at the grant date and the actual ones will have no impact on the financial statements.

Employee benefits

Post-employment benefits (termination benefits or TFR) and other long-term benefits are subject to actuarial valuations to express the present value of the benefit, payable at the end of employment or subsequently, accrued by employees at the balance sheet date.

The cost of expected benefits under the defined benefit plan is determined using the projected unit credit actuarial method.

Write-ups, which include actuarial gains and losses, changes in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets, are recognised immediately in the statement of financial position by debiting or crediting retained earnings through other comprehensive income during the period in which they arise.

Write-ups are not reclassified to the profit and loss account in subsequent years.

Past service cost is recognised in the income statement at the remotest of the following dates:

• o the date on which a plan amendment or curtailment occurs;
• o the date on which the relevant restructuring costs are recognised.

Net interest on the net defined benefit liability/asset shall be determined by multiplying the net liability/asset by the discount rate. The Group recognises the following changes in the net defined benefit obligation in cost of sales, administrative expenses and selling and distribution costs in the income statement (by nature):

• o service costs, including current and past service costs, gains and losses on non-routine curtailments and settlements;
• o net interest income or expense.

Following this method, the liability recorded is representative of the current value of the obligation, net of any plan assets, adjusted for any actuarial losses or gains not accounted for.

Provisions for risks and charges

Provisions for risks and charges are made when the Group must meet a current obligation (legal or implicit) resulting from a past event, an outflow of resources to meet this obligation is likely and it is possible to make a reliable estimate of its amount. When the Group considers that a provision for risks and charges will be partly or fully reimbursed, the indemnity is recorded separately under assets if, and only if, it is practically certain. In such a case, the cost of the provision, if any, is presented in profit or loss less the amount recognised for the indemnity.

If the effect of the value of money over time is significant, the provisions are discounted using a pre-tax discount rate that reflects, where appropriate, the specific risks of the liabilities. When the liability is discounted, the increase in the provision due to the passage of time is recognised as a finance charge.

Contingent assets are not recognised in the financial statements and are disclosed when it is likely that there will be an economic benefit. However, if the realisation of revenue is virtually certain, then the relevant asset is not a contingent asset and its recognition is appropriate.

With regard to climate change, there are no risks related to the need to comply with new regulatory requirements and obligations for the sector. Legislation introduced in response to climate change could create new obligations that did not previously exist.

Climate change and possible regulatory developments may require us to reconsider this assumption resulting in the need to recognise previously unrecognised liabilities.

Financial liabilities

Borrowings are initially recognised at fair value less transaction costs incurred, and subsequently measured at amortised cost using the effective interest rate method. Loans are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. If the forecasts of cash flows generated by a financial liability are revised/modified, it is necessary to reflect the changes by recalculating the amortised cost of the liability and recording any differences under the income statement.

The Group's financial liabilities include trade and other payables, loans, including financial instruments and derivative financial instruments.

The Group's financial debt is primarily represented by loans to CPI PG, the company that exercises management and coordination activities, and it is reasonably foreseeable that the financial exposure will remain, also in future years, with respect to the latter; therefore, at present, no loans are expected that might contain clauses linking contractual cash flows to the achievement of climate-related objectives or that might influence the way in which the loan is classified and measured.

Derecognition of financial assets and liabilities

Financial assets are derecognised from the balance sheet when the right to receive the cash flows is extinguished and substantially all the risks and rewards of ownership of the asset are transferred (so-called Derecognition) or when an asset is deemed to be totally non-recoverable after all necessary recovery procedures have been carried out.

Financial liabilities are derecognised from the balance sheet when the specific contractual obligation has been settled. A modification of existing contractual terms also qualifies as settlement, if the new terms have significantly changed the original agreements and in any case when the present value of the cash flows to be generated by the revised agreements deviates by more than 10% from the value of the discounted cash flows of the original liability.

Financial assets and liabilities are offset in the balance sheet when there is a legal right of set-off, which is currently exercisable, and there is an intention to settle the relationship on a net basis (i.e. to realise the asset and settle the liability at the same time).

Revenues

Revenues are recognised to the extent where economic benefits are likely by the Group and the relevant amounts can be reliably estimated, regardless of the collection date. Revenues are measured at the fair value of the consideration received or receivable, taking into account contractually defined payment terms and excluding discounts, allowances and other sales taxes.

The criteria for recognising revenues, broken down by type, are set out below:

• o rental income: these are revenues deriving from the rental of buildings recorded as investment property in accordance with IAS 40 and are recorded on a straight-line basis as provided for by IFRS 16 (paragraph 81), on an accrual basis, based on the existing lease agreements;
• o revenues from the sale of properties: revenues from the sale of properties are recognised in the income statement net of costs to sell during the transfer to the buyer of all significant risks and benefits associated with ownership; a transfer which normally takes place on the date of signing the notarial deed.

The contributions paid to customers, so-called capex contribution, for redevelopment works of buildings are used to reduce future rents over the duration of the lease agreement.

Costs

Operating costs and other operating expenses are recognised as components of profit or loss when they are incurred on the basis of the service rendered and when they do not qualify for recognition as assets in the balance sheet.

Financial income and expenses

Financial income and expenses are accounted for on an accruals basis, using (where applicable) the effective interest rate method.

Dividends are recognised when the Shareholders' right to receive payment arises, which normally corresponds to the date of the Shareholders' Meeting that resolves on their distribution.

Current taxes

Current income taxes is calculated on the basis of estimated taxable income. The current tax liability is recorded in the balance sheet net of any tax advances paid.

Tax payables and receivables for current taxes are recognised at the amount expected to be paid/recovered to/from the tax authorities on the basis of the nominal tax rates in force on the balance sheet date, with the exception of those directly attributable to equity, as they relate to adjustments to balance sheet assets and liabilities recognised directly to equity. Other non-income related taxes, such as property and capital taxes, are included under operating expenses.

The Parent Company, as a SIIQ, is subject to a special taxation regime, pursuant to which, among other things, business income deriving from property rental activities is exempt from corporate income tax (IRES) and regional tax on production activities (IRAP) and the portion of statutory profit corresponding to it is subject to taxation by the shareholders when it is distributed in the form of dividends. Taxes are then calculated on the income generated by the non-exempt management.

Deferred taxes

With regard to non-exempt management, pre-paid and deferred taxes are recognised using the global liability allocation method. They are calculated on the temporary differences between the values of assets and liabilities in the financial statements and the corresponding values recognised for tax purposes. Pre-paid tax assets on tax losses that can be carried forward and on deductible temporary differences are recognised to the extent that it is probable that future taxable income will be available, even taking into account the special regime for SIIQs, in respect of which they can be recovered. Deferred tax assets and liabilities are calculated using the tax rates expected to apply when the temporary differences will be realised or settled. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Current and deferred tax assets and liabilities are offset when income taxes are levied by the taxation authority itself, when there is a legal right of set-off and when the time-frames of the expected reversal are consistent.

Profit /(loss) per share

Profit/(loss) per share is given by the ratio between the result for the year and the weighted average number of ordinary shares in issue during the year, excluding treasury shares in the portfolio. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potential ordinary shares with a dilutive effect and taking into account, in the calculation of the number of shares outstanding, the potential dilutive effect of options granted to beneficiaries of stock option plans.

Use of estimates and assumptions

The drafting of the annual financial report requires the Group to make estimates and assumptions that could influence the carrying amounts of certain assets and liabilities, costs and revenues, as well as the disclosure of contingent assets/liabilities on the reporting date.

The drafting of the financial statements and notes required the use of estimates and assumptions in determining certain assets and liabilities. The subsequent results that will derive from the occurrence of events may therefore differ from these estimates. The estimates and assumptions considered are reviewed on a continuous basis and the effects of any changes are immediately recognised in the financial statements.

Estimates are used to determine the fair value of investment property, financial instruments and derivative financial instruments. Estimates and assumptions are based on data reflecting the current state of available knowledge and the support of independent experts and advisors has been relied upon for most of these assessments.

Property valuations are carried out twice a year, on 30 June and 31 December using appraisals drafted by independent experts of recognised professionalism and integrity.

In fact, real estate appraisal assignments are only given to experts who undertake to operate with independence, integrity and objectivity.

The Board of Directors of NEXT RE SIIQ S.p.A. on 22 June 2022, in compliance with the Parent Company's Independent Experts procedure, appointed the company Colliers Valuation Italy S.r.l. for the three-year assignment to carry out a six-monthly valuation of Group assets for a fee of € 10,000 for the first valuation as at 30 June 2022 and € 6,000 for each of the subsequent valuations on a constant basis.

In addition to following the recommendations of the supervisory authorities and the various best practices of the sector, the Parent Company has adopted a specific company procedure which, on the basis of current legislation, establishes, among other, the rules for selecting and appointing independent experts, providing (as

specified above) that only persons who meet pre-established professional, independence and integrity requirements can be appointed.

Valuations by the Independent Expert are carried out for each property using valuation criteria compatible with the provisions of IFRS 13 and explained below:

• o Comparative (or Market) Method: it is based on the comparison between the Property and other comparable assets, recently bought and sold and/or leased or currently offered on the same market or on competitive markets.

• o Income method: it takes into consideration two different methodological approaches:

  • Direct Capitalisation: is based on capitalising, at a rate deducted from the real estate market, the future net income generated by the properties;
  • Discounted Cash-Flow (DCF) method, based:

• a) On calculating, over a period of n. years, future net income from the lease of the property;

• b) On calculating the property's Market Value by capitalising in perpetuity, at the end of such period, the net income;
• c) Discounting up to the date of the net income (cash flow) valuation.

The above methods shall be applied individually to each property or combined with each other, depending on the specificities of the property. Valuations are carried out on the basis of the maximum and best use of the properties subject to valuation, taking into account, among all the technically possible, legally permissible and financially feasible uses only those potentially capable of conferring the maximum value on the properties themselves. The maximum and best use is determined on the basis of specific considerations according to the type / location / urban characteristics of the property subject to valuation and the reference real estate market.

In determining capitalisation and discount rates used in the valuation of individual properties, account is taken of:

• o the type of tenant currently occupying the property or responsible for compliance with the leasing obligations and possible future occupants of vacant properties, as well as the general perception by the market of their creditworthiness;
• o the sharing of insurance and maintenance responsibilities between landlord and tenant;
• o the property's residual economic life.

Operating procedures for the periodic valuation of properties are governed by a specific internal procedure that regulates all activities of the process: from the selection and appointment of experts, documentation that is sent to them, valuation methods, survey of the properties subject to valuation, operating rules and coordination with the experts, to monitoring the whole process.

Information and data used for the purpose of valuations include, among others:

• o information supplied to the experts by the Parent Company, such as current lease payments, terms and conditions of existing leases, property taxes, costs related to property management, including any envisaged incremental costs (capital expenditure);
• o assumptions made directly by the experts (typically linked to the reference market, such as the discount rate, the capitalisation rate, the inflation curve, etc.). The definition of the above evaluation elements is based on their professional opinion, taking into account a careful observation of the reference market.

The information forwarded to the experts, the assumptions and the evaluation models used by them are reviewed by the relevant Departments who are responsible for the organisation, coordination of valuation activities, as well as their monitoring and verification.

With reference to the sensitivity of fair value measurements to changes in the main unobservable inputs, it must be noted that there would be reductions in the fair value under the following assumptions:

• o decreases in current lease levels and/or estimated annual fees per sqm;
• o an increase in discount rates and / or capitalisation rate;

o the emergence of unforeseen incremental expenses on the properties;

• o for properties on which future incremental expenses are expected (capex), an increase in the estimate of such expenses, and/or an extension of the timing thereof;
• o problems with collecting payments from current tenants.

Conversely, opposing changes in the above phenomena would result in an increase in fair value.

The fair value of financial instruments is calculated on the basis of prices directly observable on the market, where available, or, for financial instruments with restricted circulation, using specific valuation techniques (mainly based on present value) that maximise observable market inputs.

In the rare circumstances where this is not possible, the inputs are also estimated with the methodological support of external advisers, taking into account the characteristics of the instruments being valued. Changes in the assumptions made in estimating the input data could affect the fair value recognised in the financial statements for these instruments.

In view of its sector, it is estimated that the climate risk will not have a significant impact on the use of accounting standards and the use of estimates and assumptions. Furthermore, at present it is believed that climate change will not result in a material adjustment within the next fiscal year.

Segment reporting

The Management views the Group as a single segment. The Parent Company currently manages a portfolio of office and commercial properties of various sizes but the management process together with the risks incurred remains the same for all types of properties. In addition, the information reviewed by the Board of Directors shows only the values of the real estate portfolio broken down by property and between executive and commercial use, while the economic values are analysed by property. Considering the reporting structure used, the resource allocation process and the Group's activities, the Management therefore identifies only one segment (i.e. NEXT RE).

Comments to the Notes to the consolidated financial statements

ASSETS

Note 1. Investment property

	31/12/2023	31/12/2022
Investment property	130,067	135,943
Investment property	130,067	135,943

Changes during the year in the item Investment property are shown below.

	Buildings
Net carrying amount as at 31/12/2022	135,943
Increases	1,098
Decreases	0
Write-ups (write-downs)	(6.974)
Net carrying amount as at 31/12/2023	130,067

The Real Estate Portfolio directly held by the NEXT RE Group recorded a total valuation of € 130,067 thousand as at 31 December 2023.

The table below describes the changes in the values of each property that occurred during 2023.
-------------------------------------------------------------------------------------------------	--	--

Property	31/12/2022 Increases Decreases			Book value before adjustment	Market value	Adjustment to market value	31/12/2023
Milan, Via Spadari commercial	53,300	585	0	53,885	47,500	(6,385)	47,500
Milan, Via Spadari offices	8,150	513	0	8,663	8,250	(413)	8,250
Milan, Via Cuneo	25,850	0	0	25,850	25,950	100	25,950
Milan, C.S. Gottardo	15,900	0	0	15,900	15,650	(250)	15,650
Rome, Via Zara	13,193	0	0	13,193	13,717	524	13,717
Bari, V. Dioguardi	14,700	0	0	14,700	14,300	(400)	14,300
Rome, Via Vinicio Cortese	4,850	0	0	4,850	4,700	(150)	4,700
	135,943	1,098	0	137,041	130,067	(6,974)	130,067

The item Increases includes capitalised costs in the amount of €1,098 thousand that were mainly incurred with reference to the new office portions of the building in Milan, Via Spadari, as part of the redevelopment project completed in the first half of 2023, as well as for the refurbishment of the common portions of the complex - façades, porter's lodge, vertical connections and common areas - extraordinary condominium works completed in the second half of the year.

The item Fair value adjustments refers to adjustments made during the period to the value of real estate in order to adjust it to the relative fair value, in accordance with the relevant accounting standards.

The fair value adjustment incorporates the results of the market value appraisals on the properties drafted by the independent expert, in compliance with the RICS Valuation - Professional Standards, which incorporate the IVS (International Valuation Standards), and in accordance with applicable regulations and recommendations of the regulators.

The following are the considerations relating to the change in the fair value recorded for each property in comparison with the previous year.

• property located in Milan, Via Spadari 2 commercial: the change in fair value recognised as of 31 December 2023, amounting to € -6,385 thousand, is mainly attributable to the increase in the discount rate used, which reflects the generalised increase in market rates, and the capitalisation rate. The negative effect deriving from these changes was not absorbed by the positive effects deriving from the decrease in the expected CapEx, the updating of the rents according to the Istat index and the assumption made by the Independent Expert in relation to the re-contractualisation at the second maturity at a higher ERV according to market dynamics;
• property located in Milan, Via Spadari 2 offices: the change in fair value recognised as of 31 December 2023 was €-413 thousand and was impacted by the updating of the discount rate connected to the increase in BTP and EURIBOR and by the increase in the capitalisation rate used by the Independent Expert, the effects of which were partially offset by the stipulation of a new lease agreement for the spaces previously not leased, the advancement of the relative rent scaling and the decrease in the CapEx forecast;
• property located in Milan, Via Cuneo 2: the change in fair value recognised as of 31 December 2023, equal to €100 thousand, is mainly attributable to the updating of rents according to the Istat index, partially offset by the updating of the discount rate related to the increase in BTP and EURIBOR;
• property located in Milan, Corso San Gottardo 29/31: the change in fair value recognised as of 31 December 2023, equal to €-250 thousand, is mainly attributable to the updating of the discount rate connected to the increase in BTP and EURIBOR, only partially offset by the updating of rents according to the ISTAT index and the advancement of the lease agreement (which provides for a scaling for the first few years of the lease);
• property located in Rome, Via Zara 22-32: the positive change in fair value recognised as of 31 December 2023, amounting to €524 thousand, is mainly attributable to the updating of rents in accordance with the Istat index and the progress of the contractual scaling of the tenant DICO S.p.A., which were partially offset by the negative effect due to the updating of the discount rate connected to the increase in BTP and EURIBOR;
• property located in Bari, via Dioguardi 1: the change in fair value recognised as of 31 December 2023, equal to €-400 thousand, is due to the update of the discount rate connected to the increase in BTP and EURIBOR partially offset by the decrease in the expected CapEx;
• property located in Rome, Via Vinicio Cortese 147: the change in fair value recognised as of 31 December 2023, equal to -€150 thousand, was due to the update of the discount rate related to the increase in BTP and EURIBOR partially offset by the time shift of CapEx.

As required by IFRS 13, a disclosure of the fair value hierarchy is provided below.

The fair value hierarchy classifies the inputs of valuation techniques used to establish the fair value based on three levels. In particular:

• o Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• o Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, directly or indirectly, for the asset or liability. If the asset or liability has a specified (contractual) duration, a Level 2 input must be observable for substantially the entire duration of the asset or liability;
• o Level 3 inputs are unobservable inputs for the asset or liability.

The real estate portfolio has been valued using Level 3 fair value models, as the directly/indirectly non-market observable inputs used in the valuation models predominate over the market observable inputs.

The following table shows NEXT RE Group's real estate portfolio broken down by legal form type of the property, measured at fair value as at 31 December 2023:

Milan, Via Spadari commercial Full ownership IAS 40, fair value 31/12/2023 47,500 Milan, Via Spadari offices Full ownership IAS 40, fair value 31/12/2023 8,250 Milan, Via Cuneo Full ownership IAS 40, fair value 31/12/2023 25,950 Milan, C.S. Gottardo Full ownership IAS 40, fair value 31/12/2023 15,650 Rome, Via Zara Full ownership IAS 40, fair value 31/12/2023 13,717 Bari, V. Dioguardi Full ownership IAS 40, fair value 31/12/2023 14,300 Rome, Via Vinicio Cortese Full ownership IAS 40, fair value 31/12/2023 4,700 130,067 The unobservable inputs that NEXT RE considers to be most significant are the discount rate, the capitalisation or cap rate (the main difference in the calculation between the net capitalisation rate and the gross capitalisation rate is the inclusion of stranded costs such as IMU, insurance and management costs in the gross capitalisation rate) and the ERV (Estimated Rental Value or Annual Rent per Square Metre), as changes in these inputs have a significant impact on fair value. The inflation rate was assumed to be 2%, in line with the Bank of Italy's published consumer inflation expectations (4.7% over 12 months and 4.2% over 24 months) and the European Central Bank's (ECB) target of below but close to 2% in the medium term. The following table shows unobservable inputs used for each asset as at 31 December 2023: Property Legal nature Method Discount rate Gross exit cap rate ERV €/sqm/y 5.83% for retail for retail portion: 4.32% gross cap rate, 4% net 1,100 for retail portion portion Milan, Via Spadari Full ownership Income (DCF) cap rate; for office portion: 4.75% gross cap rate, and 440 for office 5.93% for office 4% net cap rate portion portion 6.47% 5.07% gross cap rate, 4,5% net cap rate 400 Milan, Via Cuneo Full ownership Income (DCF)	Property	Legal nature	Accounting criteria	Last appraisal date	Significant inputs not observable on the market (level 3) €/000
Milan, C.S. Gottardo Full ownership 5.18% gross cap rate, 4.75% net cap rate		Income (DCF)	7.23%			350

					130,067
in these inputs have a significant impact on fair value.				The unobservable inputs that NEXT RE considers to be most significant are the discount rate, the capitalisation or cap rate (the main difference in the calculation between the net capitalisation rate and the gross capitalisation rate is the inclusion of stranded costs such as IMU, insurance and management costs in the gross capitalisation rate) and the ERV (Estimated Rental Value or Annual Rent per Square Metre), as changes
of below but close to 2% in the medium term.				The inflation rate was assumed to be 2%, in line with the Bank of Italy's published consumer inflation expectations (4.7% over 12 months and 4.2% over 24 months) and the European Central Bank's (ECB) target The following table shows unobservable inputs used for each asset as at 31 December 2023:
Property	Legal nature	Method	Discount rate	Gross exit cap rate	ERV €/sqm/y
Milan, Via Spadari	Full ownership	Income (DCF)	5.83% for retail portion 5.93% for office portion	for retail portion: 4.32% gross cap rate, 4% net cap rate; for office portion: 4.75% gross cap rate, 4% net cap rate	1,100 for retail portion and 440 for office portion
Milan, Via Cuneo	Full ownership	Income (DCF)	6.47%	5.07% gross cap rate, 4,5% net cap rate	400
Milan, C.S. Gottardo	Full ownership	Income (DCF)	7.23%	5.18% gross cap rate, 4.75% net cap rate	350
					300 for office portion and 220 for commercial
Rome, Via Zara	Full ownership	Income (DCF)	6.78%	5.27% gross cap rate, 4.5% net cap rate	unit
Bari, V. Dioguardi	Full ownership	Income (DCF)	6.91%	6.36% gross cap rate, 5% net cap rate	100
Rome, Via Vinicio Cortese	Full ownership	Income (DCF)	8.32%	7.12% gross cap rate, 6.25% net cap rate	155
Property	Legal nature	Method	Discount rate	The following table shows unobservable inputs used for each asset as at 31 December 2022: Gross exit cap rate	ERV €/sqm/y
Milan, Via Spadari	Full ownership	Income (DCF)	5.16% for retail portion 5.31% for office portion	for retail portion: 3.85% gross cap rate,3.5% net cap rate; for office portion: 4.51% gross cap rate, 3.75% net cap rate	1,050 for retail portion and 440 for office portion
Milan, Via Cuneo	Full ownership	Income (DCF)	5.91%	5.09% gross cap rate, 4,5% net cap rate	400
Milan, C.S. Gottardo	Full ownership	Income (DCF)	6.67%	5.18% gross cap rate, 4.75% net cap rate	350
Rome, Via Zara	Full ownership	Income (DCF)	6.22%	5.32% gross cap rate, 4.5% net cap rate	300
Bari, V. Dioguardi	Property Leasing	Income (DCF)	6.35%	6.38% gross cap rate, 5% net cap rate	100
	Full ownership	Income (DCF)	7.75%	7.12% gross cap rate, 6.25% net cap rate	155
Rome, Via Vinicio Cortese

	5.16% for retail portion 5.31% for office portion	for retail portion: 3.85% gross cap rate,3.5% net cap rate; for office portion: 4.51% gross cap rate, 3.75% net cap rate	1,050 for retail portion and 440 for office portion

The capitalisation rate, or cap rate, is the rate that represents the existing market relationship between the rental income (net or gross) and the value of a given property; as a measure of the return on investment, the capitalisation rate implicitly reflects the risk of the investment in the property being valued, or the average risk of the market class to which the property belongs. The main difference between the gross cap rate and the net cap rate is the inclusion of stranded costs (i.e. IMU, insurance and management costs) in the former. The

cap rate is estimated by the Indipendent Expert on the basis of a market analysis of transactions involving similar properties, derived from the internal database and third party databases (Real Capital Analytics), taking into account characteristics such as asset class, size, location (micro, macro accessibility, also taking into account future infrastructure improvements, if any), potential investors interested in the property, general property market conditions and current market trends.

The cap rates for the assets in Bari, Rome and Milan (Corso San Gottardo and Via Cuneo) remained virtually unchanged, while for the assets in Milan Via Spadari (both office and retail portions) there was a gradual increase in line with the market analysis, which observed an increase in the prime yield for the Milan office segment from 3.75%, recorded in the fourth quarter of 2022, to 4%, recorded in the first quarter of 2023, and then remained stable. Similarly, for the retail prime yield in Milan, an increase was observed from 3.5% in 2022 to 4% in 2023. For secondary locations, however, this increase was less pronounced and therefore the Independent Expert deemed it appropriate to keep capitalisation rates unchanged.

The ERV is estimated by the Independent Expert by means of a market survey aimed at identifying the parameters within which sales and leases of properties with a similar destination to those under assessment are concluded. The surveys regarding unit rental values were based on sources such as the database of the Agenzia delle Entrate's real estate market observatory (OMI values referring to the first half of 2023) and the most relevant real estate portals. In addition, for the primary locations (Milan and Rome), the Independent Expert consulted its own internal database reporting lease transactions recorded in the market by the most relevant real estate operators and office space rentals. In the determination of the explicit flows of the valuation model, the lease values for the leased portions are represented on the basis of the contractual terms in force. For leases with a passing rent of less than 10% compared to the potential market rent (ERV), the Independent Expert considered the re-contractualisation to the market rent at the second lease expiry date and also assumed a free rent period of twelve months.

The ERV has not changed compared to 31 December 2022, except for the one assumed for the Milan asset, Via Spadari retail part, which has increased from €1,050/sq.m/y to €1,100/sq.m/y; the Independent Expert considered it appropriate to increase this input on the basis of the market analysis mentioned above.

The change in the discount and capitalisation rates at 31 December 2023 compared with 31 December 2022 was influenced by the general increase in market interest rates, in particular BTPs and Euribor. The 6-month Euribor used to determine the rates rose from 2.41% at 1 December 2022 to 4.03% at 1 December 2023, while the average monthly yield over recent years of BTPs with maturities corresponding to those of the valuation models rose from 1.89% at 1 December 2022 to 2.25% at 1 December 2023. The determination of these rates reflects, in addition to exogenous economic factors, the specific conditions of the assets being valued.

To confirm the soundness of the valuation process, a sensitivity analysis of the value of the real estate portfolio was carried out, with the support of the Independent Expert, in relation to changes in unobservable inputs. In particular, the fluctuation of the value of the Company's real estate portfolio was determined by varying the ERV of the individual properties by +/- 5%, the Gross Cap rate by +/- 0.25 bps and the discount rate by +/- 0.5%.

The changes applied to the unobservable inputs were determined on the basis of the Independent Expert's judgement and, in the case of the discount rate, on the basis of the changes recorded in the inputs themselves.

The maximum variation recorded is within a range of +8% and -7% of the value of the real estate portfolio. The results of the analyses carried out for the different scenarios presented above are summarised below:

Consolidated Financial Statements of the NEXT RE S.p.A. Group

Scenary	Sensitivity analysis result	Variazione % rispetto al valore di mercato del portafoglio immobiliare al 31/12/2023*
Market value as at 31/12/2023 -5% ERV	129.1	-2%
Market value as at 31/12/2023 +5% ERV	134.85	2%
Market value as at 31/12/2023 -0,25% Gross Cap rate	136.75	4%
Market value as at 31/12/2023 +0,25% Gross Cap rate	127.8	-3%
Market value as at 31/12/2023 -0,5% discount rate	137.25	4%
Market value as at 31/12/2023 +0,5% discount rate	127.1	-4%
Market value as at 31/12/2023 -5% ERV and - 0,25% Gross cap rate	133.8	1%
Market value as at 31/12/2023 -5% ERV and + 0,25% Gross cap rate	125.15	-5%
Market value as at 31/12/2023 + 5% ERV and - 0,25% Gross cap rate	139.7	6%
Market value as at 31/12/2023 + 5% ERV and + 0,25% Gross cap rate	130.45	-1%
Matrket value as at 31/12/2023 -5% ERV and - 0,5% Discount rate	134.25	2%
Matrket value as at 31/12/2023 -5% ERV and + 0,5% Discount rate	124.3	-6%
Matrket value as at 31/12/2023 +5% ERV and - 0,5% Discount rate	140.4	6%
Matrket value as at 31/12/2023 +5% ERV and +0,5% Discount rate	130	-2%
Market value as at 31/12/2023 -0,5% discount rate and -0,25% Gross cap rate	142.2	8%
Market value as at 31/12/2023 -0,5% discount rate and +0,25% Gross cap rate	132.85	1%
Market value as at 31/12/2023 +0,5% discount rate and -0,25% Gross cap rate	131.6	0%
Market value as at 31/12/2023 +0,5% discount rate and +0,25% Gross cap rate	123.05	-7%

Market value as at 31/12/2023 -0,5% discount rate and +0,25% Gross cap rate						132.85		1%
Market value as at 31/12/2023 +0,5% discount rate and -0,25% Gross cap rate						131.6		0%
Market value as at 31/12/2023 +0,5% discount rate and +0,25% Gross cap rate						123.05		-7%
*equal to Euro 132,050 thousand including the portion for instrumental use of the asset in Rome, via Zara equal to Euro 1,983 thousand
The results highlight the interrelationships between the inputs considered in determining fluctuations in the value of the real estate portfolio; for example, in the different scenarios the assumed market rents may have a different impact in terms of return or risk, which could be reflected in the estimate of capitalisation and discount rates. Similarly, changes in discount and capitalisation rates could result in offsetting changes in the value of the portfolio due to changes in market rents or in the rates themselves, but with different signs. Finally, a reduction in expected returns and an increase in the expectation of the sale value of an asset and a
consequent increase in uncertainty could result in zero changes in the value of the portfolio. The following table shows the value of the Company's real estate portfolio, the residual debt related to the outstanding loans referred to the assets, the Net Asset Value (provided on a voluntary basis and calculated as the ratio between the nominal residual debt of the loans and the fair value of the assets), and the real estate Loan to value indicator calculated as the ratio between the residual debt of the loans referred to the assets and the relative fair values as of 31 December 2023.
Property	Legal nature	Lending counterparty	Values as at 31 December 2023	Remaining debt as at 31 December 2023**	Net Asset Value Euro	Loan to Value	Maturity	Duration (years)
Milan, Via Spadari	Full ownership	CPI PG S.A.	55,750	22,687	33,063	41%	27/01/2026	2.1
Milan, Via Cuneo	Full ownership	CPI PG S.A.	25,950	14,481	11,469	56%	27/01/2026	2.1
Milan, C.S. Gottardo	Full ownership	CPI PG S.A.	15,650	10,861	4,789	69%	27/01/2026	2.1
Rome, Via Zara*** Rome, Via Vinicio Cortese	Full ownership Full ownership	CPI PG S.A. Intesa San Paolo	15,700 4,700	6,577 616	9,123 3,763	42% 20%	27/01/2026 05/12/2025	2.1 1.9
Bari, V. Dioguardi	Full ownership	Intesa San Paolo ****	14,300	321 -	14,300	0%	01/07/2025	1.5

It must be noted that debt maturities shown above incorporate the extensions of the latter below the moratorium under Article 56 of Italian Decree Law no. 18 of 17 March 2020, converted, with amendments, by Italian Law no. 27 of 24 April 2020 following the extension - pursuant to Article 1, paragraph 248, of Italian Law no. 178 of 30 December 2020 (Balance sheet forecast for the 2021 financial year and multi-annual budget for the 2021-2023 three-year period) - of the suspension of payments.

Note 2. Other tangible fixed assets

The value of Other tangible fixed assets as at 31 December 2023 was € 1,749 thousand compared to the value as at 31 December 2022 of € 1,814 thousand.

	31/12/2023	31/12/2022
Instrumental building	1,723	1,780
Other assets	26	34
Other tangible assets	1,749	1,814

The main changes during the year were as follows:

	Instrumental building	Other assets	Total
Net carrying amount as at 01/01/2023	1,780	34	1,814
Increases	0	0	0
Decreases	0	0	0
Amortisation and write-downs	(57)	(8)	(65)
Final balance as at 31/12/2023	1,723	26	1,749
Historical cost	1,909	50	1,959
Accumulated amortisation	(186)	(24)	(210)
Net carrying amount	1,723	26	1,749

This item mainly includes the value, net of the relative depreciation provision, of the instrumental portion of the building in Rome, Via Zara 28 (headquarters of the Parent Company) for € 1,723 thousand. The decrease compared to 31 December 2022 is attributable to the recognition of depreciation.

The Group has no commitments to purchase new fixed assets.

Note 3. Rights of use

	31/12/2023	31/12/2022
Rights of use	51	74
Rights of use	51	74

	Rights of use
Net carrying amount as at 01/01/2023	74
Increases	0
Decreases	0
Amortisation and write-downs	(23)
Net carrying amount as at 31/12/2023

The item as at 31 December 2023includes the value of the rights of use with reference to the leasing contracts relating to three company cars; the decrease compared to 31 December 2022 is attributable to the recognition of depreciation.

Note 4. Intangible assets

The value of intangible assets as at 31 December 2023 was € 40 thousand compared to the value as at 31 December 2022 of €63 thousand.

The item mainly includes the asset with a defined useful life related to the costs incurred in relation to the project for implementing the accounting and management systems Business Central and RefTree, which entered into operation at the beginning of H2 2020. The change refers to the recognition of amortisation for the year.

Note 5. Deferred tax assets

The item as at 31 December 2022 included deferred tax assets of €190 thousand accrued over the three-year period 2018-2021. The item decreased by €190 thousand as a result of the write-down of these assets as, in view of the special SIIQ regime to which the parent company belongs and the economic projections of the non-core activities, it is not expected that they will be able to be utilised in future years through the taxable income of the aforementioned activities.

Note 6. Other non-current assets

The table below summarises the status of Other non-current assets as at 31 December 2023 and 31 December 2022.

	31/12/2023	31/12/2022
Capex contribution Milan, Via Spadari	367	489
Capex contribution Milan, Via Cuneo	279	371
Covid Concessions Milan, Via Spadari	468	499
Covid Concessions Milan, Via Cuneo	206	274
Linearisation of fees	1,151	803
Other non-current assets	2,471	2,436

The item as at 31 December 2023 amounted to € 2,471 thousand and mainly refers to:

• o the long-term portion of the capex contribution disbursed to the customer OVS in 2018 for the property in Milan, Via Spadari for € 367 thousand and in the second half of 2021, for the property in Milan, Via Cuneo for € 279 thousand; these contributions disbursed to the tenant for property upgrading works are deducted from future rents over the term of the contract;
• o the portions related to temporary rent reductions granted to the tenant OVS for € 674 thousand, with reference to the lease agreements of the Milan Via Cuneo and Via Spadari assets, which will be recognised in the income statement in the years beyond the following year as a reduction of rental income;
• o the effects arising from the linearisation of rents in the amount of € 1,151 thousand, which will be reflected in the income statement in the years beyond the following year.

Note 7. Financial assets at fair value

	31/12/2023	31/12/2022
Other financial investments	0	544
Financial assets at fair value	0	544

This item includes financial assets measured at fair value with a balancing entry in the income statement and had a balance of zero at 31 December 2023.

Below are the changes that occurred in the year 2023.

	UCITS	OTHER	Total
Net carrying amount as at 01/01/2023	544	0	544
Increases	2,000	0	2,000
Decreases	(2,544)	0	(2,544)
Reclassifications	0	0	0
Fair value adjustment	0	0	0
Net carrying amount as at 31/12/2023	0	0	0

The item Financial assets at fair value, which had increased by €2 thousand in the first half of 2023, decreased as a result of the sale of investment positions. The offsetting entry in the income statement for this disposal is €17 thousand and is included in item 21, Other costs and expenses.

Note 8. Receivables and other current assets

This item includes financial assets measured at amortised cost comprising trade receivables, tax receivables and other receivables as detailed below.

	31/12/2023	31/12/2022
Receivables from tenants	400	319
Provision for bad debts	(251)	(251)
Net customer receivables	149	68
Tax receivables	116	309
Accruals and deferrals	92	265
Concessions to customers - COVID-19	228	224
Capex contribution - current portion	215	215
Security deposits	1	1
Other receivables	12	20
Total	813	1,102

Net customer receivables

Net customer receivables showed a balance of € 149 thousand (€ 68 thousand as at 31 December 2022) and consisted mainly of:

• o receivables from tenants of owned properties for € 149 thousand; the amount includes receivables for invoices and credit notes to be issued for € 45 thousand;
• o receivables completely written down for € 251 thousand.

With reference to the provision to cover losses, changes for the period are shown below.

	Provision for bad debts
Balance as at 01/01/2023	(251)
Provisions	0
Releases	0
Use	0
Balance as at 31/12/2023	(251)

The provision for bad debts did not change from the previous year.

The Parent Company reasonably expects that unimpaired receivables will be collected within twelve months, as to date there are no expected losses due to non-collectability or other causes of non-realisation of tenant

receivables. At the date of this report, the trade receivables invoiced as at 31 December 2023 had been fully collected.

Tax receivables

	31/12/2023	31/12/2022
Receivables from Revenue for VAT	85	290
Receivables from Revenue for taxes	15	4
Other tax receivables	16	15
Current tax receivables	116	309

Tax receivables show a balance of € 116 thousand (€ 309 thousand as at 31 December 2022) and consist mainly of:

• o receivable from the tax authorities resulting from the VAT settlement for the month of December 2023 for € 85 thousand (€ 290 thousand as at 31 December 2022). The receivable at 31 December 2022 was partially used during the year as a set-off against payments due for withholding taxes on employees, selfemployed persons and contributions;
• o IRES receivables for €15 thousand;
• o tax receivables due to others for € 16 thousand.

Accruals and deferrals

This item, amounting to € 92 thousand (€ 265 thousand as at 31 December 2022), mainly refers to the deferral of costs pertaining to the following year.

Deferred costs for concessions to customers - COVID-19

The item refers to the temporary reductions granted to the customer OVS with reference to lease fees covered by specific agreements signed in July 2020, March 2021, August 2021 and May 2022. The above-mentioned temporary rent reductions will be charged to the income statement, as a reduction of rental income, in the year 2023; the portion that will be charged in subsequent years is recorded under Receivables and other non-current assets.

Capex contribution - current portion

The item refers to the portion within the next financial year of the capex contribution disbursed in 2018 to the customer OVS for the property in Milan, Via Spadari and for the property in Milan, Via Cuneo disbursed during the second half of 2021. The above amount refers to the portion that will be deducted from rental income over the next 12 months.

Note 9. Cash and cash equivalents

	31/12/2023	31/12/2022
Bank deposits	2,342	15,059
Time deposit	3,250	0
Restricted current accounts	150	0
Cash and cash in hand	0	0
Total	5,742	15,059

Cash and cash equivalents totalled €5,742 thousand (€15,059 thousand as of 31 December 2022) and consisted of bank deposits. Deposits for contractual guarantees refer to the amount paid by the tenant Luisa Via Roma to cover the guarantee envisaged in the lease agreement. Time deposits refer to an interest-bearing current account with a three-month restriction opened in November 2023.

This item decreased significantly compared to 31 December 2002 as a result of the repayments of the UniCredit Leasing and Banca Centro Lazio loans and the financial expenses related to the settlement agreements.

SHAREHOLDERS' EQUITY

Note 10. Shareholders' Equity

The share capital, fully subscribed and paid up, amounted to € 63,265 thousand as at 31 December 2023 and consisted of 11,013,054 ordinary shares, with no par value, of which 11,012,055 class B shares, with no right to participate in and vote at the Parent Company's ordinary shareholders' meeting and with a limited right to participate in profits, and not admitted to trading on EURONEXT Milan. The latter holds 38,205 treasury shares.

The consolidated profit for 2022 of €351,567 was allocated €17,578 to the legal reserve, €328,988 to the fair value reserve, and €5,000 was carried forward.

The item Other Comprehensive Income was positive and amounted to € 56,000, and included the effects of the actuarial valuation of the parent company's employees' termination indemnity in accordance with IAS 19.

The reserve for share-based payments was zero as at 31 December 2023; for further details, please refer to the section on Incentive Plans.

It should be noted that the authorisation granted to the Board of Directors on 26 April 2021 in accordance with Article 2443 of the Italian Civil Code, with the exclusion of the option rights provided for in Article 2441, paragraphs 4 and 5 of the Italian Civil Code, will expire with the date of the Shareholders' Meeting to approve the financial statements for the year ending 31 December 2023.

On 12 March 2024, the Board of Directors decided to convene an Ordinary and Extraordinary General Meeting of Shareholders to be held on 23 April 2024 to, inter alia, authorise the Board of Directors to increase the share capital by a maximum amount of also in divisible form, in one or more tranches, within the time limit of the approval of the financial statements as at 31 December 2026 by the Shareholders' Meeting, pursuant to Article 2443 of the Italian Civil Code, also excluding the option rights pursuant to Article 2441, paragraphs 4 and 5, of the Italian Civil Code.

With regard to the information on the shareholding requirements necessary to maintain the SIIQ regime, please refer to what is set out in detail in the sections "Legal and regulatory framework of the SIIQs" and "Maintenance of the SIIQ regime requirements" in the Report on Operations and "Information on the special regime for listed real estate investment companies - SIIQs" in the Annual Report.

LIABILITIES

Note 11. Employee benefits

The table below summarises the status of employee benefits as at 31 December 2023. The item includes the value, calculated in accordance with IAS 19, of severance indemnities remaining with the company and accrued as at 31 December 2023.

	31/12/2023	31/12/2022
Employee benefits	20	66
Total Employee benefits	20	66

Changes in the item are shown below.

	31/12/2023	31/12/2022
Initial balance as at 01/01/2023	66	189
Actuarial gains or losses	(13)	(66)
Use	(53)	(125)
Provisions	19	65
Financial expense IAS 19	1	3
Final balance as at 31/12/2023	20	66

The closing balance, amounting to € 20 thousand as at 31 December 2023 (€ 66 thousand as at 31 December 2021), reflects the current value of the Parent Company's commitment to employees for severance pay, calculated on the basis of current legislative provisions and collective employment agreements and the underlying actuarial dynamics.

Use during the year refers to the payment of severance indemnities to terminated employees for € 53 thousand.

The service cost is classified in the income statement as € 19 thousand (€ 65 thousand as at 31 December 2022) in personnel costs, € 1 thousand (€ 3 thousand as at 31 December 2022) in interest cost classified under financial expenses and € 13 thousand (€66 thousand as profit as at 31 December 2022) in actuarial gain classified under other comprehensive income as required by IAS 19.

The demographic and financial assumptions used are set out below:

DEMOGRAPHIC ASSUMPTIONS	EMPLOYEES	FINANCIAL ASSUMPTIONS 31/12/2023
Likelihood of death	RG48 mortality tables	Annual discount rate	3.17%
Likelihood of disability	INPS tables broken down by age and gender	Annual inflation rate	2.00%
Likelihood of retirement	100% when AGO requirements are met	Annual rate of increase in severance indemnity (TFR)	3.00%
Likelihood of receiving, at the beginning of the year, an advance on the severance indemnity set aside equal to 70%	3%	Annual rate of salary increase	3%
Likelihood of resignation	5%

The Severance Indemnity Fund (TFR) is part of the defined benefit plans.

Specifically, it must be noted that:

• o the annual discount rate used to calculate the current value of the obligation was inferred, consistently with paragraph 83 of IAS 19, by the Iboxx Corporate AA Index with duration 10+ recognised on the measurement date;
• o the annual rate of increase of the employee severance indemnity as provided for by Article 2120 of the Italian Civil Code is equal to 75% of inflation plus 1.5 percentage points;
• o the annual rate of salary increase applied exclusively for Companies with an average of fewer than 50 employees during 2006 was determined equal to 3%.

As at 31 December 2023, the Group's workforce consisted of 4 employees. Below are the point-in-time and average employee numbers as at 31 December 2023 and 31 December 2022, broken down by category:

Breakdown by qualification	31/12/2023	31/12/2022
Executives	2	4
Middle managers	1	1
Employees	1	2
Total	4	7
Breakdown by period average	31/12/2023	31/12/2022
Executives	3	4
Middle managers	1	1
Employees	1	2

Note 12. Provisions for risks

The item Provisions for risks, included in non-current liabilities, decreased by €47 thousand following the full utilisation of the provision for risks allocated in the previous year for €57 thousand and the adjustment of the remaining positions for €10 thousand due to the updated estimate of contingent liabilities related to pending situations for which the existence is not certain and the amount is undetermined.

Note 13. Payables to banks and other lenders

Payables to banks and other lenders amounted to €62,823 thousand (€68,232 thousand as of 31 December 2022), divided between the current and non-current portions, as detailed below.

	31/12/2023	31/12/2022
Non-current
Mortgages and loans	62,292	62,525
Borrowings from other financing entities	42	4,138
Total Payables to banks and other lenders (non-current)	62,334	66,663
Current
Mortgages and loans	472	822
Borrowings from other financing entities	17	747
Total Payables to banks and other lenders (current)	489	1,569
Total	62,823	68,232

Compared to the previous year, Mortgages and loans decreased due to the repayment, in advance and on a voluntary basis, in the first quarter of 2023, of the loan granted by Banca Centro Lazio in 2021, whose residual debt as of 31 December 2022 was €1,491 thousand, divided between the non-current portion of €1,122 thousand and the current portion of €368 thousand.

Similarly, payables to other financial institutions decreased as a result of the early repayment of the property lease with Unicredit Leasing for the building in Bari, Via Dioguardi. The repayment took place in the first quarter of 2023 and the remaining debt at 31 December 2022 was 4,810 thousand euro, of which 4,079 thousand euro was non-current and 731 thousand euro was current.

The following table summarises the terms and conditions of the main mortgages and bank loans outstanding on the reporting date.

Bank	Original amount	Residual debt as at 31/12/2023 Nominal values	Residual debt as at 31/12/2023 Carrying amount at amortised cost	Of which within one year	Of which beyond one year	Guarantees	Additional guarantees and clauses
CPI PG	54,606	54,606	58,425	0	58,425
CPI PG	3,366	3,366	3,564	0	3,564
Intesa San Paolo S.p.A.	3,900	616	624	306	318	Second degree mortgage	Channelling of lease fees
Intesa San Paolo S.p.A.	2,100	321	331	166	165	Second degree mortgage	Channelling of lease fees
	65,972	58,909	62,764	472	62,292

The item Payables to banks and other lenders takes in due account the extensions granted by banks that have been reflected in the amortised cost of payables, where applicable, and in the classification of the latter as current and non-current.

The item Payables to other lenders refers to the lease contracts for company cars.

Pursuant to IAS 7 Cash Flow Statement, the table below shows the changes that occurred in liabilities arising from financing. The table reconciles the cash flows shown in the Cash Flow Statement with the total changes recorded during the period in balance sheet items that make up Total financial debt.

			Non-monetary flows
	31/12/2022	Cash flow	Changes in fair value	Other changes	31/12/2023
Payables to banks and other lenders (non-current)	66,663	(5,240)	0	911	62,334
Payables to banks and other lenders (current)	1,569	(1,545)	0	469	489
Net liabilities from financing activities	68,232	(6,790)	0	1,381	62,823
Cash and cash equivalents	(15,059)	9,317	0	0	(5,742)
Total financial debt	53,173	(2,527)	0	1,381	57,081

Pursuant to IFRS 7, the table below provides a maturity analysis of financial liabilities:

Liabilities	Carrying amount				within 1 year 1-2 years 2-5 years beyond 5 years
Payables to banks and other lenders	62,823	489	494	61,840	-

For information on financial indebtedness in accordance with the requirements of the CONSOB Communication of 28 July 2006 and in compliance with ESMA Recommendation no. 32-382-1138 of 2021, please see the section Analysis of financial performance and financial debt included in the Directors' Report on Operations.

Note 14. Trade payables and other payables

The table below summarises the situation of trade and other payables as at 31 December 2023.

	31/12/2023	31/12/2022
Non-Current
Tax payables	18	27
Total Trade payables and other non-current payables	18	27
Current
Trade payables to third parties	650	835
Payables due to related parties	577	819
Other payables	286	869
Tax payables	35	162
Payables to national insurance agencies	9	223
Total trade payables and other current payables	1,557	2,908

Trade payables to third parties

The item trade payables to third parties shows a balance of € 650 thousand (€ 835 thousand as at 31 December 2022).

Payables due to related parties

This item includes payables due to Dea Capital SGR for asset advisory fees of € 407 thousand, as well as € 170 thousand relating to amounts due to professional directors and statutory auditors.

Other payables

	31/12/2023	31/12/2022
Due to employees	36	696
Other payables	244	167
Payables due to the Supervisory Board	6	6
Total Other payables	286	869

Other payables amounted to € 286 thousand as at 31 December 2023, compared to a balance of € 869 thousand as at 31 December 2022, and consisted mainly of:

• o payables to personnel for € 36 thousand relating accrued holidays, leaves of absence and additional monthly payments accrued as at 31 December 2023;
• o other payables, amounting to € 244 thousand (€ 167 thousand as at 31 December 2022);
• o payables to members of the supervisory body were instead equal to € 6 thousand.

Tax payables

	31/12/2023	31/12/2022
Non-current tax payables	18	27
Current tax payables	35	162
Total Tax payables	53	189

The item non-current tax payables shows a balance of € 18 thousand (€ 27 thousand as at 31 December 2022). The item refers to taxes relating to previous years and amounts payable after twelve months due to the instalment plan currently being implemented with Italian Inland Revenue.

Current tax payables show a balance of € 35 thousand (€ 162 thousand as at 31 December 2022) and mainly refer to:

• o withholding taxes on employee and self-employed income paid in January 2024 for € 26 thousand;
• o the current portion of payables for irregularity notice instalments of the merged company Cortese Immobiliare S.r.l. for € 9 thousand.

Payables to national insurance agencies

	31/12/2023	31/12/2022
Payables to INPS	7	221
Payables to INAIL	1	2
Various social security institutions	1	0
Total payables to national insurance agencies	9	223

Payables to social security institutions amounted to € 7 thousand (€ 221 thousand as at 31 December 2022) and mainly refer to contributions relating to the month of December 2023 paid in January 2024. The liability to INPS at 31 December 2022 related to the provision for contributions related to short-term incentive compensation of 157 thousand euros.

Risks

The risks to which the Group is exposed and the relevant mitigations are explained in detail in the section on risk management in the Directors' Report on Operations.

Guarantees

With regard to the loan contracts that the Parent Company has in place with Intesa Sanpaolo, a mortgage was issued on the property in Rome, Via Cortese, for an original value of € 16 million; it must be noted that the residual debt as at 31 December 2023 is equal to € 955 thousand and the market value of the property is € 4,700 thousand.

The Group does not have any loan contracts that provide for covenants.

Provisions, commitments and contingent liabilities and assets

The Parent Company recognised provisions in the financial statements as at 31 December 2023 for risks in connection with the probability of using resources to settle obligations in the amount of € 27 thousand, as indicated in note 12. Provisions for risks.

A brief description of the contingent liabilities as at 31 December 2023 is given below.

• 1. The Parent Company continues to deal with the lawsuit filed by Sorgente Group Italia S.r.l., challenging the Board of Directors' resolution of 29 October 2020 approving the share capital increase, the Board of Directors' resolution of 7 October 2020 accepting the offer of CPI Property Group S.A. and the Shareholders' resolution of 27 August 2020 authorising the Board of Directors to increase the share capital pursuant to Article 2443 of the Italian Civil Code; the Parent Company's legal counsel considers the risk of losing the case to be only possible.
• 1. Within the framework of the settlement agreement signed on 28 June 2022, Castello SGR waived the acts of the proceedings under reference Nos. 24624/2021 R.G. - Court of Rome. The judge has not yet taken the consequent measures following the filing of the relevant waiver and acceptance deeds pursuant to Article 306 of the Italian Code of Criminal Procedure and the next hearing for the statement of conclusions is set for 11 December 2024. It should be noted that, with reference to the aforesaid litigation, the risk of losing the case is deemed by the Group's counsel to be possible, albeit remote.
• 1. On 20 January 2022, NEXT RE was served with a summons to appear before the Court of Rome, Section XVI, in the context of the pending case no. RG 5998/2021, together with an application for precautionary attachment requesting the seizure of assets owned by Sorgente S.G.R. S.p.A. and Sorgente Group Italia S.r.l.. In particular, NEXT RE was sued as a third party by the Special Curator of the closed-end real estate investment fund called "Fondo Aida", wholly and indirectly owned by SIAE,

which requested (i) to declare null and void or, in the alternative, to revoke and declare ineffective against Fondo AIDA the deeds of transfer of the property located in Rome, Via Zara no. 28, dated 18 February 2015 and 31 May 2017; and (ii) in the further alternative, condemn Next Re, jointly and severally with the other defendants and respondents (i.e. Sorgente S.G.R., Sorgente Group, Saites and Castello SGR S.p.A., the latter in its capacity as transferee of a business unit of Sorgente S.G.R. and therefore jointly and severally liable with the transferor), to pay compensation for the damages suffered by Fondo Aida as a result of the aforementioned contribution transactions, as well as for the damages suffered by Fondo Aida as a result of the non-payment of the loans granted by it to Saites. On 15 June 2022, Next Re made a formal appearance before the court, raising various procedural and substantive objections and requesting that the claims brought against it by the Special Trustee of Fondo Aida and Sorgente Group Italia be dismissed in their entirety. At the end of the first hearing, held on 5 July 2022, the judge set the deadlines for the submission of pleadings pursuant to article 183, paragraph 6, of the Italian Code of Criminal Procedure and, at the subsequent hearing held on 28 February 2023, ordered a technical evaluation to enable the claims to be assessed, appointing the court-appointed expert and inviting him to attend the hearing on 12 September 2023. As of the date of this report, the expert witness has commenced expert operations, at the conclusion of which the final expert witness report is expected to be filed by 9 July 2024; the Group's legal advisors believe that the risk of losing the case can be considered between remote and possible.

INCOME STATEMENT

Note 15. Rental income

	31/12/2023	31/12/2022
Property leases	6,188	5,688
Charge-backs to tenants	145	133
Release of the provision for bad debts	53	0
Rental income	6,386	5,821

The item amounting to € 6,386 thousand as at 31 December 2023 includes rental income and the relevant charge-backs of costs to tenants as well as other revenues related to out-of-period income from higher real estate costs recognised in the previous year. Rental income showed a net increase of € 565 thousand mainly due to ISTAT revaluations of leases recognised in the period and fees for new leases recognised on a straightline basis.

The breakdown of revenues by property is shown below.

Property	31/12/2023	31/12/2022
Milan, Via Spadari	2,080	1,720
Milan, Via Cuneo	1,167	1,063
Milan, C.so San Gottardo	804	754
Rome, Via Zara	772	727
Bari, Via Dioguardi	968	963
Rome, Via Cortese	587	586
Verona - Via Unità d'Italia	8	8
Total	6,386	5,821

Note 16. Costs relating to property assets

The balance of the item Costs relating to property assets as at 31 December 2023 was € 1,285 thousand, significantly lower than the balance at 31 December 2022 of € 1,526 thousand.

The following table shows the costs by type and compares them with 31 December 2022.

	31/12/2023	31/12/2022
IMU	710	810
Maintenance and running costs of premises	235	274
Technical advice	134	87
Real estate consulting	28	83
Contract registration taxes	64	67
Surveillance and concierge	-	52
Utilities	13	41
Property, building and facility management costs	26	35
Insurance	28	26
Other taxes and duties	4	25
Legal, notary and professional fees	35	19
Other expenses	8	7
Costs relating to property assets	1,285	1,526

The costs for IMU and registration taxes relate to the taxes levied on the real estate portfolio. Property, building and facility management costs relate to the ordinary and administrative management of the properties in the portfolio. Maintenance costs relate to charges incurred for the ordinary and extraordinary management of the buildings, while the item utilities includes expenses for the supply of telephone, electricity, water and gas to the properties. Insurance refers to all risk policies taken out with reference to the properties in the portfolio.

The item decreased by €241 thousand compared to the value recorded at 31 December 2022, due to the sale of the Verona asset at the end of 2022, which, being vacant, generated higher costs of €378 thousand in the previous year for utilities, management fees, security, consultancy and IMU.

Note 17. Total income/(expenses) from disposal of real estate

The item as at 31 December 2023 was zero as no assets were sold during the year.

Note 18. Total operating costs

	31/12/2023	31/12/2022
Wages and salaries	502	908
Social Contribution	166	478
Severance indemnity fund (TFR)	33	81
Other personnel costs	1,979	592
Sub-total a) Personnel costs	2,680	2,059
Legal and notary fees	454	639
Directors' fees	709	736
Asset advisory fee	730	704
Communications and marketing costs	37	163
Other consultancy and advices	191	123
IT and consultancy fees	125	105
Remuneration of professional auditors	119	98
Fees paid to the Board of Statutory Auditors	85	83
Administrative and financial consulting	88	105
Remuneration of the Supervisory Body	40	67
Real estate consulting and independent expert	11	63
Travel, transport and car expenses	32	53
Insurance	60	51
HR Services	24	40
Internal auditor fees	34	33
Management, cleaning and maintenance expenses of premises	21	19
Utilities	12	15
Security	14	14
Charges and banking fees	79	10
Other	15	12
Technical advice	2	1
Sponsorships	0	0
Subtotal b) Overheads	2,882	3,134
Amortisation, depreciation and write-downs of fixed assets	112	200
Total operating costs	5,674	5,393

Total operating costs include personnel costs, overhead costs and amortisation, depreciation and write-downs of fixed assets.

Personnel expenses amounted to € 2,680 thousand for the year ended 31 December 2023 and increased compared to the previous year due to the combined effect of higher expenses of € 1,971 thousand arising from the settlement agreements on the terms of the early mutual termination of the employment relationships of the General Manager and the Chief Investment Officer and the resulting reduction in personnel expenses of € 759 thousand. In addition, the previous year included the provision for short and long-term incentive bonuses of €598 thousand.

The item General costs showed a balance of €2,882 thousand at 31 December 2023 and decreased by a net €252 thousand compared to 31 December 2022, mainly due to i) lower legal fees of €185 thousand, ii) lower communication costs of €126 thousand and iii) higher bank commissions of €69 thousand incurred for the early repayment of loans with Unicredit Leasing and Banca Centro Lazio. This item also includes €729 thousand for asset advisory fees accrued to Dea Capital RE SGR under the asset advisory agreement.

The item Amortisation, depreciation and write-downs includes the amortisation for the financial year of intangible assets (€ 25 thousand), rights of use (€ 22 thousand) and other tangible assets for € 65 thousand,

of which € 57 thousand relate to the accessory part of the property in Rome, Via Zara, depreciated at a rate of 3%. This item, as of 31 December 2022, also included the depreciation of the value of furniture and furnishings related to the Verona property in the amount of € 93 thousand.

Note 19. Other revenues and income

The table below summarises other revenues and income as at 31 December 2023.

	31/12/2023	31/12/2022
Extraordinary income from financial assets	0	469
Other revenues and income	5	32
Total Other revenues and income		5 501

The item as of 31 December 2023 showed a value of €5,000. It should be noted that the value as of 31 December 2022 included the economic effect arising from the signing of the settlement agreement concerning the transfer of the bonds issued by the Euro Sub-fund of the Luxembourg-law Fund "Historic & Trophy Building Fund" managed by Main Source S.A. "HTBF- € Fund", as well as the settlement of the ordinary and executive judicial proceedings related to the recovery of the credits related to the Bond.

Note 20. Other costs and expenses

	31/12/2023	31/12/2022
Shareholders' meetings, financial statements, Consob obligations, Stock Exchange	80	75
Provisions for risks	10	74
Membership fees	31	47
Realised losses on financial assets at fair value	17	0
Other expenses	46	52
Total Other costs and charges	184	248

Other costs and expenses include costs incurred for Consob and Borsa Italia contributions and other association obligations and contributions. The item includes the loss realised on the disposal of financial instruments measured at fair value in the amount of €17 thousand.

Note 21. Positive/(negative) fair value of investment properties

	31/12/2023	31/12/2022
Negative fair value of investment properties	(7,598)	(680)
Positive fair value of investment properties	624	3,572
Total	(6,974)	2,892

This item includes write-ups and write-downs carried out on the value of investment property in the portfolio on the basis of appraisals drafted by independent experts. See Note 1 for the relevant comments. Investment property.

Note 22. Fair value adjustment of financial assets

	31/12/2023	31/12/2022
Fair value adjustment of financial assets	0	53
Fair value adjustment of financial assets	0	53

The item is equal to zero due to the fact that the Group, as at 31 December 2023, did not hold any financial instruments in its portfolio.

Note 23. Financial income/(expenses)

	31/12/2023	31/12/2022
Interest income on bank accounts	40	5
Financial income	40	5
Interest on CPI PG loans	(1,349)	(1,432)
Interest on financing from banks	(105)	(119)
Interest on leases	(42)	(99)
Interest expense due on other payables	(4)	(7)
Financial expenses	(1,500)	(1,657)

The item Financial expenses consisted mainly of interest expenses on loans granted by the parent company CPI PG of €1,349 thousand and interest on bank and lease financing of €147 thousand. Interest on lease and bank financing decreased compared to the previous year due to the early repayment of the property lease with Unicredit Leasing and the loan with Banca Centro Lazio in the first quarter of 2023.

Note 24. Taxes

For income deriving from exempt operations, the Company applies the special rules set forth in Article 1, paragraph 119 et seq. of Law No. 296/2006 and the related implementing decree, while for income deriving from non-exempt operations it applies the ordinary taxation rules for IRES and IRAP purposes. As of 31 December 2023, the tax consolidation resulted in a tax loss and no deferred taxation was recognised due to its foreseeable recoverability. The item includes the write-down of deferred tax assets for €190 thousand and IRAP contingent liabilities for €64 thousand. For further details, see the section "Legal and Regulatory Framework of SIIQs" included in the Report on Operations.

Note 25. Cash flow statement

The cash flow statement is presented using the indirect method.

In 2023, operating activities generated a negative cash flow of € 704 thousand (in 2022, a negative cash flow of € 1,199 thousand).

During the year, investment/disinvestment transactions generated a negative cash flow of €372 thousand, while the repayment of financial debts absorbed cash of € 6,790 thousand.

Note 26. Earning per share

The weighted average number of ordinary shares outstanding, used for the calculation of basic and diluted earnings per share, does not include the 38,105 treasury shares in the portfolio.

The share capital as at 31 December 2023 is divided into 11,013,054 ordinary shares and 11,012,055 Class B shares, all without par value. Class B shares attribute the same right to share in profits as the ordinary shares, which will be automatically and proportionately reduced to the extent necessary so that the right to share in profits of each class B shareholder, taking into account any other ordinary shares held, is equal to - and, in any event, not more than - 60% of the rights to share in the profits of the Company. Pursuant to Art. 24 of the Articles of Association, profits that the Shareholders' Meeting resolves to distribute shall be allocated equally to ordinary shares and Class B shares, it being understood that profits due to the shareholders holding Class B shares but not distributed to them due to the aforementioned limits set forth in the Articles of Association shall be allocated to the statutory reserve. In light of the above, the weighted average number of ordinary shares and Class B shares was taken into account in the calculation of earnings per share.

Events after year-end

No events occurred after the balance sheet date that required changes in the values of the latter.

For a description of events after the reporting period, reference must be made to the chapter with the heading Events after the reporting period and Foreseeable performance trend included in the Directors' Report on Operations.

Incentive plans

On 10 November 2021, the Shareholders' Meeting approved the share-based plan called "Stock Grant Plan 2021-2026" aimed at aligning the interests of the management with those of the Shareholders, favouring an increase in the market value of the shares and the creation of value for all stakeholders over the medium-long term, in implementation of the provisions of the current Remuneration Policy for 2021-2023 approved by the Shareholders' Meeting on 26 April 2021 and in compliance with the provisions of the Framework Agreement and the Asset Advisory Agreement signed between the Company and DeA Capital Real Estate SGR S.p.A., as well as in line with generally accepted international practice and in accordance with the recommendations of the Corporate Governance Code, which the Company follows.

The Plan provides for the free and personal allocation, in one or more tranches to be implemented within five years from the date of the shareholders' meeting approval, of treasury shares of the Company to the beneficiaries to be identified by the Board of Directors, with the assistance of the Remuneration Committee, from amongst the Directors, managers, other employees, collaborators and consultants of the Company and companies belonging to its Group (including key managers of companies belonging to the DeA Capital Group in execution of the Framework Agreement and the Asset Advisory Agreement), up to a maximum number of treasury shares corresponding to 3% of the Company's existing share capital pro tempore at the date of each implementation of the Plan.

On 27 April 2022, the Board of Directors of the Parent Company approved the Implementing Regulations (hereinafter also the "Regulations") of the First Cycle 2022 - 2024 Stock Grant Plan (hereinafter also the "Plan"), which provides for the free assignment to the beneficiaries of a maximum of 206,176 ordinary treasury shares upon the achievement of pre-established targets or the occurrence of certain conditions.

In particular, the Plan provides for the free assignment of the shares to the beneficiaries, identified as the Executive Directors with management powers and the Executives of the Company, subject to the maintenance of the Relevant Relationship (of administration, dependence, collaboration/consultancy) by each beneficiary until the final date of the vesting period set at 31 December 2024 and the achievement in the period 2022 - 2024 of one or more specific Performance Objectives conditional to the achievement of the Gate Objective that constitutes the condition for access to the First Cycle of the Plan.

The Company used the services of an external consultant for the purpose of the valuation of the rights assigned, which was carried out by reflecting the financial market conditions valid at the valuation date and concerned the total fair value of the Plan, which is influenced by the number of rights that will mature in accordance with the rules set forth in the performance conditions as well as the fair value of each right.

The class of rights subject to estimation concerns the "non-market based" component, being, in this case, the free assignment of rights to receive a maximum number of Ordinary Shares correlated to the achievement of Economic-Financial (NAV and cumulative EBITDA level) and qualitative (ESG Indicators) targets not related to market conditions. In this case, the vesting conditions, as indicated by IFRS 2, were considered by adjusting the number of equity instruments included in the valuation of the transaction amount.

The total fair value of the vesting rights, relating to the 1st Cycle 2022 - 2024, was determined by applying the binomial tree model for the valuation of American Cox-Ross-Rubinstein (CRR) options, also taking into account the Good Leaver clause provided for in the Regulation. The fair value was estimated to be zero because, as at 31 December 2023, the prerequisite for achieving the Gate Objective, which is the condition for access to Cycle I of the Plan, is not deemed to have been met.

All information referring to the Stock Grant Plan 2021-2026 is described in the Information Document prepared pursuant to Article 84-bis, paragraph 1, of Consob Regulation no. 11971/1999 and in accordance with Schedule no. 7 of Annex 3A of the same Regulation, available to the public on the website https://www.nextresiiq.it/, Governance - Shareholders' Meeting section.

The Board of Directors' meeting of 21 March 2023 decided to postpone to a subsequent board meeting, following the outcome of the Shareholders' Meeting's determinations, the resolutions on the short-term incentive scheme for the financial year 2023 (MBO 2023), in consideration of the significant changes in corporate governance during the half-year period.

Update on the impact of COVID-19 on the 2023 accounts

In relation to the impact of the COVID-19 pandemic on the Company's accounts, the Company continues to recognise the effects of temporary rent reductions granted to tenants on a linear basis over the duration of contracts. In the financial year, € 224 thousand was recognised as a reduction of rental income for so-called COVID concessions, while reductions of € 898 thousand will be recognised on a straight-line basis in subsequent periods, up to 2027, as a reduction of rental income.

Considerations regarding existing conflicts and the macro-economic scenario

The global macroeconomic environment in 2023 was characterised by a significant decline in energy commodity prices compared to the levels recorded in 2022 and a gradual increase in interest rates; high inflation, which has not yet normalised, and a situation of geopolitical instability due to the wars in Ukraine and the Middle East.

With reference to the conflict between Russia and Ukraine and the conflict in the Middle East, the management conducted an analysis of the potential risks arising from them in view of the business in which the Group operates, the commercial counterparties and the financial structure.

The Company's revenues, as known, consist of rentals from the lease of the six buildings. The Company's customer portfolio, as at 31 December 2023, did not present any issues related to non-collection or uncertainties on the collectability of receivables. All receivables invoiced as of 31 December 2023 were collected by January 2024.

The Real Estate Business Area, as part of its relations with customers, monitors their performance and identifies any critical issues related to credit management.

With reference to the increases in energy commodity prices, the Group has not been significantly exposed to this phenomenon; this is because all the properties owned, with the exception of a portion used by NEXT RE (for instrumental use) are leased and, therefore, operating costs, such as typically utilities, are borne by the tenants.

The Group does not operate directly with parties affected by the sanctions and restrictive measures imposed by the EU on Russia.

With reference to the financial year 2023, the Company did not have any credit access needs. As of 31 December 2023, 98% of the debt structure consisted of payables to the parent company CPI Property Group S.A., a company exercising management and coordination activities over NEXT RE; these payables are due in the financial year 2026. In this context, therefore, the Group considers that it is not significantly exposed to the risk of access to credit and, consequently, it has not taken any action to mitigate it. Moreover, to the Company's knowledge, the parent company is not significantly exposed to the risk of the impact of the Russia-Ukraine conflict.

In light of the above and the fact that the rate applied to shareholders' loans is fixed, the Group is not significantly impacted by the phenomenon of rising interest rates connected to the macroeconomic scenario arising from the conflict between Russia and Ukraine.

Finally, taking into account the sector in which the Group operates, the latter is not impacted by any critical issues concerning the procurement of raw materials. Taking the above into account, Management deemed that the conflict between Russia and Ukraine did not have any significant impact on the Company's operations.

With reference to the macroeconomic scenario and its impact on the financial statements, as represented in Note 1. Investment property, the variables used in the valuation of assets were affected by the general increase in interest rates. The changes in fair value related to the increase in interest rates had a significant impact on

the result for the year 2023 and, as also represented by the results of the sensitivity analyses conducted, could also have an impact in the future should the macroeconomic scenario continue to significantly influence the variables used in the valuation process of real estate assets and contribute to a greater level of uncertainty in determining fair values.

Certification of the Consolidated Financial Statements

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB REGULATION NO. 11971 OF MAY 14TH, 1999 AND SUBSEQUENT AMENDMENTS

• 1. We, the undersigned, Giovanni Naccarato, as Chief Executive Officer, and Francesca Rossi, as Manager responsible for the preparation of the corporate accounting documents of NEXT RE SIIQ S.p.A., having also considered the provisions of art, 154-bis, paragraphs 3 and 4, of the Legislative Decree No. 58 of February 24th, 1998, hereby certify:
  2. the adequacy in light of the Company's characteristics, and
  3. the effective application of the administrative and accounting procedures adopted in preparing the consolidated financial statements during the period 1 January – 31 December 2023.
• 1. We further certify that:
  2. 2.1 the Consolidated Financial Statements:

a) have been prepared in accordance with the international financial reporting standards recognized in the European Union under the EC Regulation 1606/2002 of the European Parliament and of the Council of July 19th, 2002,

b) are consistent with the entries in the accounting books and records,

c) is apt to provide a true and fair representation of the balance sheet, income statement and financial position of the Issuer and all of the companies included in the scope of the consolidation;

2.2 the report on operations provides a reliable analysis of the developments and results from operations, as well as of the position of the Issuer and all of the companies included in the scope of the consolidation, together with a description of the main risks and uncertainties to which it is exposed.

Rome, March 12, 2024

Chief Executive Officer

Manager responsible for the preparation of the corporate accounting documents

Dott. Giovanni Naccarato

Dott.ssa Francesca Rossi

Annexes

Annex 1 - Transactions with related parties

The following table shows the amount of transactions with related parties.

(Values in euro)

Related party	Payables to banks and other lenders	Trade payables and other payables	Overhead costs	Financial expenses
CPI Property Group S.A.	61,809,161	-	-	1,349,000
Dea Capital Real Estate SGR S.p.A.	-	406,314	729,367	-
Directors	-	99,240	708,735	-
Statutory Auditors	-	71,394	84,394	-
Total	61,809,161	576,948	1,522,496	1,349,000

Remuneration for the financial year for employees, excluding non-monetary benefits, for the General Manager/Key Managers amounted to approximately € 2,237 thousand for the financial year 2023.

Annex 2 - Auditing Firm Fees

The following table, pursuant to Art. 149-duodecies of the Consob Issuers' Regulation, highlights the fees accrued for the 2022 financial year for the statutory audit services for the financial statements of NEXT RE SIIQ S.p.A.

(Values in euro)

Assignment	Authorised	Fees*
Statutory audit of the annual and consolidated financial statements	EY S.p.A.	113,481
Audit procedures on reporting package for purpose of consolidation by CPI PG	EY S.p.A.	5,500
Total		118,981

*in addition to CONSOB contribution and flat-rate expenses

Report of the Independent Auditors

EY S.p.A. Via Lombardia, 31 00187 Roma

Tel: +39 D6 324751 Fax: +39 06 324755504 ey.com

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010 and article 10 of EU Regulation n. 537/2014 (Translation from the original Italian text)

To the Shareholders of NEXT RE SIIQ S.p.A.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of NEXT RE SIIQ S.p.A. (the Group), which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated statement of profit/(loss), the consolidated statement of other comprehensive income, consolidated statement of changes in shareholder's equity and the consolidated of cash flows statement for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2023, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing art. 9 of Legislative Decree n. 38/2005.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of NEXT RE SIIQ S.p.A. in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We identified the following key audit matters:

Key Audit Matter	Audit Response
Valuation of Investment Properties

Investment properties as of 31 December Our audit procedures in response to this

EY S.p.A.
Sode Logale: Via Micravigli, 12 - 20123 Millano
Sode Secondaria: Via Lombardia, 31 - 00187 Roma Soci Social Euro Zella, 31 - Cordraviano
Cartaka Sociale Euro Zero Dol OD Live Collul di Miano Monza Brianza Lodi
Britita Maria Drivino della mirro Resolu e COAA di Milliano

A mamber firm of Ernst & Young Clobal Limitsd

2023 amounted to Euro 130,067 thousand key audit matter included, among others:

and are stated at fair value in accordance with International Financial Reporting Standards IAS 40 Investment properties, recognizing the effects of changes of fair values in the income statement. Management has estimated the fair value of investment properties with the support of reports prepared by independent experts.

The fair value estimate involves the use of valuation models that require forecasting of future costs and revenues of each property and the use of assumptions about the occupancy rate of properties, real estate and financial markets' trends within the current global macroeconomic framwork, the impact of climate change, as well as the general economic conditions that affect the level of rents and reliability of tenants.

We considered that these items represent a key audit matter, due to the materiality of the investment properties stated at fair value and the changes in fair value during the period, as well as the judgment required by Management in assessing the above-mentioned assumptions used in the fair value models.

The paragraphs "Note 1. Investment properties" and "Use of estimates and assumptions" of the notes to the consolidated financial statements describe respectively the criteria and models for real estate portfolio valuation and the selection process of the independent expert.

• · the assessment and understanding of the process for determining the value of investment properties adopted by the Company;
• · the assessment of the company's process related to the selection and use of independent experts appointed in order to prepare a fair value estimate;
• the tracing of the amounts used by independent experts with the balance sheet figures:
• the assessment and discussion with Management and their independent experts of the key market assumptions used in the valuation process;
• · the testing of the valuation models adopted by the company and on the reports prepared by the independent expert.

In performing our audit procedures, we also involved our experts in real estate valuation techniques.

Lastly, we have reviewed the disclosures provided in the notes to the consolidated financial statements.

Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements

The Directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing art. 9 of Legislative Decree n. 38/2005, and, within the terms provided by the law, for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

The Directors are responsible for assessing the Group's ability to continue as a going concern and, when preparing the consolidated financial statements, for the appropriateness of the going concern assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial statements on a going concern basis unless they either intend to liquidate the NEXT RE SIIQ or to cease operations, or have no realistic alternative but to do so.

The statutory audit committee ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have exercised professional judgment and maintained professional skepticism throughout the audit. In addition:

• we have identified and assessed the risks of material misstatement of the [consolidated] financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• · we have obtained an understanding of internal control relevant to the audit 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;
• . we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;
• we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.

Building a better working world

However, future events or conditions may cause the Group to cease to continue as a going concern;

• · we have evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
• · we have obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We have communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We have provided those charged with governance with a statement that we have complied with the ethical and independence requirements applicable in Italy, and we have communicated them all matters that may reasonably be thought to bear on our independence, and where applicable, the actions taken to eliminate relevant risks or the safeguard measures applied.

From the matters communicated with those charged with governance, we have determined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We have described these matters in our auditor's report.

Additional information pursuant to article 10 of EU Regulation n. 537/14

The shareholders of NEXT RE SIIQ S.p.A., in the general meeting held on April 29, 2021, engaged us to perform the audits of the consolidated financial statements for each of the years ending 31 December 2021 to 31 December 2029.

We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU Regulation n. 537/2014, and that we have remained independent of the Group in conducting the audit.

We confirm that the opinion on the consolidated financial statements included in this report is consistent with the content of the additional report to the audit committee (Collegio Sindacale) in their capacity as audit committee, prepared pursuant to article 11 of the EU Regulation n. 537/2014.

Report on compliance with other legal and regulatory requirements

Opinion on the compliance with Delegated Regulation (EU) 2019/815

The Directors of NEXT RE SIIQ S.p.A. are responsible for applying the provisions of the European Commission Delegated Regulations (EU) 2019/815 for the regulatory technical standards on the specification of a single electronic reporting format (ESEF - European Single Electronic Format) (the "Delegated Regulation") to the consolidated financial statements, to be included in the annual financial report.

We have performed the procedures under the auditing standard SA Italia n. 700B, in order to express an opinion on the compliance of the consolidated financial statements with the provisions of the Delegated Regulation.

In our opinion, the consolidated financial statements as at December 31, 2023 have been prepared in the XHTML format in compliance with the provisions of the Delegated Regulation.

Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39 dated 27 January 2010 and of article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998

The Directors of NEXT RE SIIQ S.p.A. are responsible for the preparation of the Directors' Report on Operations and of the Report on Corporate Governance and Ownership Structure of NEXT RE SIIQ as at 31 December 2023, including their consistency with the related consolidated financial statements and their compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Directors' Report on Operations and of specific information included in the Report on Corporate Governance and Ownership Structure as provided for by article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the consolidated financial statements of NEXT RE SIIQ Group as at 31 December 2023 and on their compliance with the applicable laws and regulations, and in order to assess whether they contain material misstatements.

In our opinion, the Directors' Report on Operations and the above mentioned specific information included in the Report on Corporate Governance and Ownership Structure are consistent with the consolidated financial statements of NEXT RE SIIQ Group as at December 31, 2023 and comply with the applicable laws and regulations.

With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have no matters to report.

Rome, March 29, 2024

EY S.D.A. Signed by: Filippo Maria Aleandri, Auditor

The accompanying consolidated financial statements of NEXT RE SIIQ S.p.A. constitute a non-official version which is not compliant with the provisions of the Commission Delegated Regulation (EU) 2019/815.

This independent auditor's report has been translated into the English language solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.

4. FINANCIAL STATEMENTS OF NEXT RE SIIQ S.P.A.

Financial statements of NEXT RE

The financial statements are drawn up in euro units.

Statement of financial position

	Note	31/12/2023	of which related parties	31/12/2022	of which related parties
ASSETS
Non-current assets
Investment property	1	130,066,859	-	135,942,648	0
Other property, plant and equipment	2	1,749,117	-	1,813,815	0
Rights of use	3	51,046	-	73,542	0
Intangible assets	4	36,738	-	61,253	0
Shares held in subsidiaries	5	10,000	10,000	10,000	10,000
Deferred tax assets	6	-	-	190,329	0
Other non-current assets	7	2,471,161		2,435,583
Total non-current assets		134,384,922	10,000	140,527,170	10,000
Current assets
Financial assets at fair value	8	-	-	543,578	0
Receivables and other current assets	9	810,552	-	1,103,282	0
Available cash and cash equivalents	10	5,727,988	-	15,014,502	0
Total current assets		6,538,540	-	16,661,362	0
Total assets		140,923,461	10,000	157,188,532	10,000
EQUITY
Share capital		63,264,528	0	63,264,528	0
Share premium reserve		22,931,342	0	22,931,342	0
Other reserves		12,457,956	0	12,111,652	0
Profits/(Losses) carried forward		(12,785,179)	0	(12,785,179)	0
Other items of the comprehensive income		55,530	0	41,899	0
Profits/(Losses) carried forward for the period		(9,443,859)	0	346,304	0
Total Shareholders' equity	11	76,480,318	0	85,910,546	0
LIABILITIES
Non-current liabilities
Employee benefits	12	19,821	-	66,393	0
Provisions for risks	13	26,971	-	74,224	0
Payables to banks and other lenders	14	62,333,612	61,809,161	66,662,960	60,460,161
Trade payables and other non-current payables	15	17,726	-	26,876	0
Total non-current liabilities		62,398,129	61,809,161	66,830,453	60,460,161
Current liabilities
Payables to banks and other lenders	14	489,404	-	1,569,018	0
Trade payables and other payables	15	1,555,610	576,948	2,878,515	819,058
Total current liabilities		2,045,013	576,948	4,447,533	819,058
Total liabilities		64,443,143	62,386,109	71,277,986	61,279,219
Total liabilities and Shareholders' equity		- 140,923,461	- 62,386,109	- 157,188,532	0 61,279,219

Statement of profit/(loss)

of which di cui con parti Note 31/12/2023 31/12/2022 related correlate parties Lease income 16 6,385,770 0 5,821,399 0 Costs relating to property assets 17 (1,293,438) (29,572) (1,526,490) 0 Net lease income 5,092,331 (29,572) 4,294,909 0 Proceeds from sale of investment properties 0 0 1,420,000 0 Expenses related to the sale of investment properties 0 0 (744,350) 0 Total income/expenses of investment properties disposal 18 0 0 675,650 0 Personnel expenses (2,680,184) 0 (2,058,978) 0 Wages and salaries (501,945) 0 (908,290) 0 National insurance charges (165,591) 0 (477,870) 0 Severance indemnity fund (TFR) (32,895) 0 (80,737) 0 Other personnel costs (1,979,753) 0 (592,081) 0 Overhead costs (2,879,583) (1,531,496) (3,141,745) (1,505,890) Amortisation/Depreciation (111,709) 0 (199,797) 0 Total operating costs 19 (5,671,476) (1,531,496) (5,400,520) (1,505,890) Other revenues and income 20 5,301 0 501,167 0 Other costs and expenses 21 (184,384) 0 (247,760) 0 Total other income/(other expenses) (179,083) 0 253,407 0 Positive fair value of investment property 624,211 0 3,572,167 0 Negative fair value of investment property (7,598,319) 0 (680,000) 0 Net movement in fair value of investment property 22 (6,974,108) 0 2,892,167 0 Net operating income (7,732,335) (1,561,068) 2,715,613 (1,505,890) Fair value adjustment of financial assets 23 0 0 (52,908) 0 Financial income 24 40,281 0 4,536 0 Financial expenses 24 (1,500,471) (1,349,000) (1,657,101) (1,431,888) Profit before tax (9,192,526) (2,910,068) 1,010,141 (2,937,778) Taxes 25 (251,333) 0 (663,837) 0	Statement of profit/(loss)		Financial Statements of NEXT RE SIIQ S.p.A.

Statement of other comprehensive income

	31/12/2023	31/12/2022
Profit/(Loss) for the period	(9,443,859)	346,304
Actuarial gains/(losses) (*)	13,631	65,666
Total other items of the comprehensive income statement	13,631	65,666
Total comprehensive profit/(loss)	(9,430,	411,970

(*) items not reclassifiable to the income statement

Statement of changes in shareholders' equity

Statement of changes in shareholders' equity
		Share capital	Share premium reserve	Fair value reserve	Legal reserve	Other reserves	Profits (losses) carried forward	Other items of the comprehensive income statement	Profit (Loss) for the period	Total
Balance as at 01/01/2022		63,264,528	22,931,342	8,139,414	7,122,550	(3,577,648)	(12,785,179)	(23,767)	427,336	85,497,760
Allocation of 2021 result		0	0	405,969	21,367	0	0	0	(427,336)	0
Other items of comprehensive income Share-based payments reserve		0 0	0 0	0 0	0 0	0 0	0 0	65,666 0	0 0	65,666 0
Result for the period		0	0	0	0	0	0	0	346,304	346,304
Total comprehensive profit/loss		0	0	0	0	0	0	65,666	346,304	411,970
Balance as at 31/12/2022	11	63,264,528	22,931,342	8,545,383	7,143,917	(3,577,648)	(12,785,179)	41,899	346,304	85,910,546
	Notes	Share capital	Share premium reserve	Fair value reserve	Legal reserve	Other reserves	Profits (losses) carried forward	Other items of the comprehensive income statement	Profit (Loss) for the year	Total Group shareholders' equity
		63,264,528	22,931,342	8,545,383	7,143,917	(3,577,648)	(12,785,179)	41,899	346,304	85,910,547
Balance as at 01/01/2023		0	0	328,989	17,315	0	0	0	(346,304)	0
Allocation of 2022 result			0	0	0	0	0	13,631	0	13,631
Other items of comprehensive income		0			0	0	0	0	0	0
Share-based payments reserve		0	0	0
Result for the period		0	0	0	0	0	0	0	(9,443,859)
Total comprehensive profit/loss		0	0	0	0	0	0	13,631	(9,443,859)	(9,443,859) (9,430,228)

							carried forward	comprehensive income statement	Profit (Loss) for the period	Total
							carried forward	Other items of the comprehensive income statement	Profit (Loss) for the year	Total Group shareholders' equity
Balance as at 01/01/2023		63,264,528	22,931,342	8,545,383	7,143,917	(3,577,648)	(12,785,179)	41,899	346,304	85,910,547
Allocation of 2022 result		0	0	328,989	17,315	0	0	0	(346,304)	0
Other items of comprehensive income Share-based payments reserve		0 0	0 0	0 0	0 0	0 0	0 0	13,631 0	0 0	13,631 0
Result for the period		0	0	0	0	0	0	0	(9,443,859)	(9,443,859)
Total comprehensive profit/loss		0	0	0	0	0	0	13,631	(9,443,859)	(9,430,228)
Balance as at 31/12/2023	11	63,264,528	22,931,342	8,874,372	7,161,232	(3,577,648)	(12,785,179)	55,530	(9,443,859)	76,480,319

Cash flow statement

Cash flow statement
	31/12/2023	of which with related parties	31/12/2022	of which with related parties
Profit before tax	(9,192,526)	(2,910,068)	1,010,141	(2,937,778)
Adjustments:
Amortisation, depreciation and write-downs of fixed assets	111,709	0	199,797	0
Total income/(expenses) from disposal of real estate	0	0	(675,650)	0
Extraordinary income from financial assets	0	0	(468,750)	0
Positive/(negative) fair value of investment properties	6,974,108	0	(2,892,167)	0
Fair value adjustment of financial instruments	0	0	52,908	0
Financial income	(40,281)	0	(4,536)	0
Financial expenses	1,500,471	1,349,000	1,657,101	1,431,888
Financial expenses paid	(94,227)	0	(244,322)	0
Financial income collected	2,838	0	4,536	0
Provision for severance and other risks	27,878	-	154,961	0
Cash flow generated by operations	(710,030)	(1,561,068)	(1,205,983)	(1,505,890)
Taxes (net of deferred taxes)	(64,036)	0	0
Cash flow generated by operations net of taxes	(774,066)	(1,561,068)	(1,205,983)	(1,505,890)
Other assets/other liabilities	(1,351,044)	(242,110)	1,358,737	482,647
Change in trade receivables	(81,984)	0	336,939	0
Change in trade payables	(482,228)	(242,110)	276,679	482,647
Change in other current assets	176,758	0	(247,259)	0
Change in other current liabilities	(935,585)	0	1,028,365	0
Change in other non-current assets	(35,577)	0	(214,064)	0
Change in tax receivables	197,957	0	503,121	0
Change in tax payables	(137,023)	0	(200,455)	0
Change in severance indemnity fund (TFR)	(53,362)	0	(124,588)	0
Cash flow before investments and financing	(2,125,110)	(1,803,178)	152,755	(1,023,243)
Investments and divestments	(371,721)	0	9,226,418	0
(Increase)/decrease in properties	(915,298)	0	5,975,943	0
(Increase)/decrease in financial instruments	543,577	0	3,250,475	0
Financial assets	(6,789,683)	0	(1,201,212)	0
Other changes in equity	0	0	0	0
Increase in financial payables	0	0	0	0
Decrease in financial payables	(6,789,683)	0	(1,201,212)	0
Cash and cash equivalents generated during the year Note 26.	(9,286,514)	(1,803,178)	8,177,960	(1,023,243)
Initial cash and cash equivalents	15,014,502		6,836,541

Notes to the financial statements

GENERAL INFORMATION

NEXT RE SIIQ S.p.A. (hereinafter also referred to as "NEXT RE" or the "Company") with registered office in Rome, Via Zara 28, Tax Code and VAT no. 00388570426, REA number RM-1479336, is a real estate investment company, established in Italy, with shares listed on the Euronext Milan market ("EXM") organised and managed by Borsa Italiana S.p.A.

NEXT RE SIIQ S.p.A. is a subsidiary and subject to the Management and Coordination of CPI Property Group S.A.. For more information, please refer to the chapter Management and coordination activities.

NEXT RE SIIQ is the Parent Company of the NEXT RE SIIQ Group formed by itself and its wholly-owned subsidiary Fidelio Engineering S.r.l..

NEXT RE's financial statements as at 31 December 2023 have been drafted in accordance with International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board (IASB), as published in the Official Journal of the European Union (OJEU).

The Board of Directors on 12 March 2024 authorised the publication of these financial statements. The financial statements are audited by EY S.p.A. pursuant to Article 14 of Italian Legislative Decree no. 39 of 27 January 2010 and Article 10 of Regulation (EU) no. 537/2014 based on engagement granted by the Shareholders' Meeting of 26 April 2021, and awarded pursuant to Italian Legislative Decree no. 39 of 27 January 2010, for a term of nine financial years (2021-2029).

In compliance with the provisions of Article 5, paragraph 2, of Legislative Decree no. 38 of 28 February 2005, the financial statements are prepared using the euro as the functional currency. The amounts in the financial statements are shown in euro. The rounding of figures contained in the notes to the financial statements is carried out in such a way as to ensure consistency with the amounts shown in the statement of financial position and the statement of profit/(loss) for the year. The notes to the financial statements are drawn up in euro '000, unless otherwise stated.

The financial statements have been drafted on a going concern basis. The financial statements have been prepared on a going concern basis. The directors have assessed that there are no uncertainties about the Group's ability to continue as a going concern because:

• the negative result for the year ended 31 December 2023 is mainly due to the effects of the governance reorganisation that took place in the first half of the year and the negative changes in fair value of the real estate assets recorded at 31 December 2023, the latter being mainly the result of the macroeconomic context, as further described in Note 1;
• on 12 March 2024, the Board of Directors approved the new Business Plan 2024-2028, which envisages the following three drivers: i) expansion of the real estate portfolio through capital increases in kind over the three-year period 2024-2026; ii) rotation of the portfolio through asset sales; and iii) repayment of the loans granted by CPI PG with natural maturity in the first half of 2026. The above capital increases have been planned within a timeframe consistent with the new authorisation to increase share capital requested by the Board of Directors to the Shareholders' Meeting pursuant to Article 2443 of the Italian Civil Code, also excluding the option rights pursuant to Article 2441, paragraphs 4 and 5 of the Italian Civil Code;
• also on 12 March 2024, the Board of Directors approved the economic-financial projections in the socalled Steady State Scenario for the year 2024, which forecast positive results and cash flows even without the implementation of the aforementioned drivers and strategic options outlined in the 2024- 2028 Business Plan.

NEXT RE SIIQ S.p.A., as Parent Company, also prepared the Consolidated Financial Statements of the NEXT RE Group as at 31 December 2023.

PRINCIPLES OF NEW APPLICATION

In preparing these financial statements, the accounting standards and valuation criteria applied are consistent with those used for the 2022 financial statements, except for the adoption of new standards and amendments effective 1 January 2023.

The Company has not proceeded with early adoption of any new standards, interpretations or amendments issued but not yet effective. A few amendments and interpretations apply for the first time in 2023 but have not had an impact on the 2023 annual financial statements.

The document "Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2", issued by the IASB in February 2021, clarified that complete financial statement disclosures should include material information about accounting policies, together with other explanatory information, and about significant decisions, other than those involving accounting estimates, that management has made in the process of applying those policies and their effects. Information is material if, taken together with other information in the financial statements, it could reasonably be expected to influence the decisions that the primary users of the financial statements make on the basis of those financial statements.

The changes have affected the disclosure of accounting policies, but not the measurement and presentation of the elements of the consolidated financial statements.

FORMAT OF THE FINANCIAL STATEMENTS ADOPTED BY THE COMPANY

The financial statements and relevant disclosures have been drafted in accordance with IAS 1.

The Financial Statements as at 31 December 2023 consist of the following primary schedules:

• o Statement of financial position, which is presented by showing current and non-current assets and current and non-current liabilities separately, with a description in the notes for each item of assets and liabilities of the amounts that are expected to be settled or recovered within and beyond 12 months following the reporting date;
• o Statement of profit or loss for the year, showing separately the Costs relating to real estate assets that contribute to "Net rental income" and other costs classified by nature;
• o Statement of other comprehensive income;
• o Statement of changes in shareholders' equity;
• o Cash flow statement, drafted using the indirect method.

The financial statements include the Notes to the financial statements, which contain a list of relevant accounting policies and other explanatory information.

The financial statements have been prepared under the historical cost principle, except for investment property, financial instruments and assets, derivative financial instruments and non-cash distribution liabilities, which are carried at fair value.

VALUATION CRITERIA AND ACCOUNTING PRINCIPLES

The main measurement policies and accounting principles are set out below.

Investment property

Investment property is real estate that is owned in order to collect rent and/or to seek the appreciation of invested capital and not to be used in production, in the supply of goods, in the provision of services or in the administration of the company.

Investment property is initially recognised at cost including accessory acquisition costs and, consistently with the provisions of IAS 40, is subsequently measured at fair value, recognising the effects deriving from changes in the fair value of the investment property in the income statement during the financial year in which they occur.

The costs of subsequent work are only capitalised, increasing the carrying amount of the investment property, when it is likely that the work will yield future economic benefits and the related costs may be measured reliably. Other maintenance and repair costs are expensed to the income statement when incurred.

Investment property is derecognised when it is sold or when the investment becomes permanently unfit for use and future economic benefits are not expected to flow from its sale. Any gains or losses on the retirement or disposal of investment property are recognised in the income statement in the year in which the asset is retired or disposed of.

IFRS 13 defines fair value as 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 (exit price).

In particular, when measuring the fair value of investment property, in accordance with IFRS 13 the Company must ensure that the fair value reflects, inter alia, the current revenues based on rent and on other reasonable and sustainable assumptions that market participants would use in determining the price of the investment property under current conditions.

Pursuant to IFRS 13, the measurement of a non-financial asset at fair value considers the ability of a market participant to generate economic benefits by using the asset for its highest and best use or by selling it to another market participant that would use it for its highest and best use.

According to IFRS 13, an entity must use measurement techniques suited to the circumstances and for which sufficient data is available to assess fair value, while maximising the use of the relevant observable inputs and minimising the use of non-observable inputs. Fair value is measured on the basis of transactions observable in an active market, adjusted, where necessary, on the basis of the specific characteristics of each investment property. If this information is not available, when determining fair value for the measurement of investment property the Company uses the discounted cash flow method (for a variable period in reference to the duration of the contracts in place) associated with the future net income on the rental of the property and assuming the sale of the property at the end of the period.

Investment property is measured on a half-yearly basis by external independent appraisers with adequate, recognised professional qualifications and recent experience with the lease and the characteristics of the properties being measured. See the paragraph "Use of estimates and assumptions" below for further details.

Leased properties held for the purpose of earning lease payments and/or for capital appreciation are classified as investment property and measured at fair value.

With reference to climate change, the Company has started a process of integrating ESG issues within its business model, as part of which a careful analysis of its assets is under way, aimed at identifying potential measures to reduce their environmental impact. The methods for determining fair value are aligned with the requirements of the standards, as well as with best practices, and already reflect all the considerations made by market participants.

Tangible assets

Tangible assets are recorded at purchase cost, net of accumulated depreciation, grants related to assets and any impairment losses.

Maintenance and repair costs are charged to the income statement of the year in which they are incurred, with the exception of those of an incremental nature, which are capitalised on the value of the assets concerned and depreciated in relation to the residual possibility of use of the latter.

Gains or losses on the sale of fixed assets are recognised under the income statement.

Buildings used for the business are depreciated at a rate of 3.33% and considering a useful life of 30 years.

Leases - Rights of use and financial liabilities

At the time of initial recognition of an agreement, the right of use and the debt are measured by discounting future rentals, throughout the duration of the lease, also taking into account the possibility of renewing the

lease agreements or terminating them early, only in cases where the exercise of these options is deemed reasonably certain. In order to calculate the current value of the liability under the lease, the Company established an incremental borrowing rate comparable to the interest rate at which the tenant would finance itself through a contract with similar terms and guarantees in order to obtain an asset with a value similar to the right of use in a similar economic environment.

Liabilities deriving from the lease are classified under the item Financial payables to banks and other lenders in the statement of financial position with a distinction between current and non-current portion.

The above does not apply to short-term and/or low-value leases.

Intangible assets

An intangible asset is recognised only if it is identifiable, controllable, and can be expected to generate future economic benefits and its cost can be measured reliably.

Intangible assets with a finite useful life are recognised at purchase or production cost, including incidental expenses and the relevant depreciation, calculated on a straight-line basis over the assets' remaining useful life and in accordance with IAS 38.

Amortisation is recognised from the moment the asset is available for use or is capable of operating in accordance with the Company's understanding and ceases on the date on which the asset is classified as held for sale or is derecognised.

Purchased software licenses are recorded on the basis of the costs incurred for the purchase and start-up of the specific software, net of amortisation and accumulated impairment losses. These costs are amortised over the assets' useful life. Costs associated with the development or maintenance of computer programmes are recognised as an expense when incurred. Computer software development costs recognised as assets are amortised over the estimated useful life.

Shares held in subsidiaries

Subsidiaries are companies in which NEXT RE has the independent power to exercise control over the management of the company and to obtain the benefits of its activities. Control is presumed to exist when the Company holds, directly and indirectly, the majority of the voting rights exercisable in an ordinary shareholders' meeting, including any potential voting rights deriving from convertible instruments. Investments in subsidiaries are recorded at cost, adjusted for impairment losses determined by applying the impairment test.

If the reasons that led to the recognition of losses cease to apply, the value of the investments is reinstated.

Financial assets

Classification of financial assets

On the date of initial recognition, financial assets are classified as financial assets at amortised cost, at fair value through other comprehensive income and at fair value through the income statement, based on both the business model adopted by the Company and the contractual cash flow characteristics of the instrument.

For this purpose, the test of whether the instrument generates cash flows representing solely payments of principal and interest (i.e. SPPI) is referred to as the "SPPI test" and is performed at the level of the individual instrument. The Company's business model for managing financial assets relates to the way in which the Company manages its financial assets in order to generate cash flows. The business model determines whether cash flows will come from collecting cash under the agreement, selling financial assets, or both.

Below is a description of the main features of the above assets.

1. Financial assets held for collection (Category 1)

Financial assets falling into this category are held with the aim of collecting their cash flows and the cash flows are representative of the passage of time and the repayment of capital. Assets in this category are valued at amortised cost and are recorded under Receivables and other assets.

1. Financial assets held for collection and sale (Category 2)

Financial assets in this category are held for the purpose of collecting cash flows or being sold and these flows are representative of the passage of time and the repayment of principal.

Assets included in this category are recorded in the balance sheet at fair value, while in the income statement they are recorded using the amortised cost criterion and the changes in fair value are recorded in the Other comprehensive income statement components, with a reversal to the income statement at the time of their disposal and/or write-down.

1. Financial assets held for a purpose other than the above (Category 3)

Financial assets that do not fall into one of the two previous categories belong to Category 3. These financial assets are measured at fair value through profit or loss and are recorded under Financial assets at fair value.

Temporary investments of liquidity in UCITS, mutual fund units, derivatives and any instruments whose cash flows do not represent the mere passing of time and repayment of capital are measured at fair value with a balancing entry in the income statement.

Trade and other receivables are held until collection in accordance with contractual maturities and an analysis of the characteristics of the contractual cash flows concluded that they meet the criteria for measurement at amortised cost in accordance with IFRS 9.

Impairment of financial assets

IFRS 9 requires the Company to recognise expected credit losses on all items such as loans and trade receivables deriving from lease activities, using either a 12-month period or the entire contractual life of the instrument as a reference. The Company applies the simplified approach by recording any expected losses on all trade receivables on the basis of their residual contractual duration.

Fair value hierarchy according to IFRS 13

The Company determines fair value in accordance with IFRS 13 whenever such a measurement criterion is required by international accounting standards.

The 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 (the so-called "exit-price").

The fair value of assets and liabilities is classified in a fair value hierarchy with three different levels, defined as follows, based on the inputs and valuation techniques used to measure fair value:

• o Level 1: determination of fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities. This category includes instruments relating to temporary investments of liquidity in UCITS, mutual funds, SICAVs and portfolios of mutual funds with which the Company operates through managers in active markets;
• o Level 2: determination of fair value based on inputs other than the quoted prices included in "Level 1" but which are directly or indirectly observable;
• o Level 3: determination of fair value based on valuation models whose inputs are not based on observable market data (unobservable inputs). As at 31 December 2022, the fair value of investment properties is included in this level.

It must be noted that the valuation of financial instruments may involve significant discretionary powers, even though the Company uses, where available, prices quoted in active markets as the best estimate of the fair value of all derivative instruments.

Cash and cash equivalents

Cash and cash equivalents include: cash on hand, demand deposits with banks and other highly liquid shortterm investments. Bank overdrafts are reported under loans in current liabilities in the statement of financial position.

Shareholders' equity

The share capital represents the nominal value of payments and contributions made by shareholders. Incremental costs directly attributable to the issue of new shares or options are reported under a special reserve in the shareholders' equity.

The purchase cost of treasury shares is recorded as a reduction of the shareholders' equity; the effects of any subsequent transactions between shareholders on these shares are also recorded directly under shareholders' equity.

Share-based payments

In the case of share-based payment transactions settled with equity instruments of the Company, the fair value on the grant date of the options granted to employees is recognised under personnel expenses, with a relevant increase in equity under Other reserves, over the period during which the employees obtain the unconditional right to the incentives.

The estimate of the fair value of the options considers all the vesting conditions relating to the market, in terms of relative positioning with respect to the Peer Group (market condition). In addition, in order for the final amount recognised to be based on the number of incentives that will actually vest, the cost is adjusted to reflect both vesting conditions and the achievement of the so-called "non-market" condition. With reference to non-vesting conditions, any differences between the assumptions made at the grant date and the actual ones will have no impact on the financial statements.

Employee benefits

Post-employment benefits (termination benefits or TFR) and other long-term benefits are subject to actuarial valuations to express the present value of the benefit, payable at the end of employment or subsequently, accrued by employees at the balance sheet date.

The cost of expected benefits under the defined benefit plan is determined using the projected unit credit actuarial method.

Write-ups, which include actuarial gains and losses, changes in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets, are recognised immediately in the statement of financial position by debiting or crediting retained earnings through other comprehensive income during the period in which they arise.

Write-ups are not reclassified to the profit and loss account in subsequent years.

Past service cost is recognised in the income statement at the remotest of the following dates:

• o the date on which a plan amendment or curtailment occurs;
• o the date on which the company recognises the relevant restructuring costs.

Net interest on the net defined benefit liability/asset shall be determined by multiplying the net liability/asset by the discount rate. The Company recognises the following changes in the net defined benefit obligation in cost of sales, administrative expenses and selling and distribution costs in the income statement (by nature):

• o service costs, including current and past service costs, gains and losses on non-routine curtailments and settlements;
• o net interest income or expense.

Following this method, the liability recorded is representative of the current value of the obligation, net of any plan assets, adjusted for any actuarial losses or gains not accounted for.

Provisions for risks and charges

Provisions for risks and charges are made when the Company must meet a current obligation (legal or implicit) resulting from a past event, an outflow of resources to meet this obligation is likely and it is possible to make a reliable estimate of its amount. When the Company considers that a provision for risks and charges will be partly or fully reimbursed, the indemnity is recorded separately under assets if, and only if, it is practically certain. In such a case, the cost of the provision, if any, is presented in profit or loss less the amount recognised for the indemnity.

If the effect of the value of money over time is significant, the provisions are discounted using a pre-tax discount rate that reflects, where appropriate, the specific risks of the liabilities. When the liability is discounted, the increase in the provision due to the passage of time is recognised as a finance charge.

Contingent assets are not recognised in the financial statements and are disclosed when it is likely that there will be an economic benefit. However, if the realisation of revenue is virtually certain, then the relevant asset is not a contingent asset and its recognition is appropriate.

With reference to climate change, in view of the sector to which it belongs, there are no risks relating to the need to meet new regulatory requirements and obligations. Legislation introduced in response to climate change could result in new obligations that did not previously exist.

Climate change and possible regulatory developments may require us to reconsider this assumption resulting in the need to recognise previously unrecognised liabilities.

Financial liabilities

Borrowings are initially recognised at fair value less transaction costs incurred, and subsequently measured at amortised cost using the effective interest rate method. Loans are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. If the forecasts of cash flows generated by a financial liability are revised/modified, it is necessary to reflect the changes by recalculating the amortised cost of the liability and recording any differences under the income statement.

The Company's financial liabilities include trade and other payables, loans, including financial instruments and derivative financial instruments.

The Company's financial debt is primarily represented by loans to CPI PG, the company that exercises management and coordination activities, and it is reasonably foreseeable that the financial exposure will remain, also in future years, with respect to the Parent Company; therefore, at present, no loans are expected that might contain clauses linking contractual cash flows to the achievement of climate-related objectives or that might influence the way in which the loan is classified and measured.

Derecognition of financial assets and liabilities

Financial assets are derecognised from the balance sheet when the right to receive the cash flows is extinguished and substantially all the risks and rewards of ownership of the asset are transferred (so-called Derecognition) or when an asset is deemed to be totally non-recoverable after all necessary recovery procedures have been carried out.

Financial liabilities are derecognised from the balance sheet when the specific contractual obligation has been settled. A modification of existing contractual terms also qualifies as settlement, if the new terms have significantly changed the original agreements and in any case when the present value of the cash flows to be generated by the revised agreements deviates by more than 10% from the value of the discounted cash flows of the original liability.

Financial assets and liabilities are offset in the balance sheet when there is a legal right of set-off, which is currently exercisable, and there is an intention to settle the relationship on a net basis (i.e. to realise the asset and settle the liability at the same time).

Revenues

Revenues are recognised to the extent where economic benefits are likely by the Company and the relevant amounts can be reliably estimated, regardless of the collection date. Revenues are measured at the fair value of the consideration received or receivable, taking into account contractually defined payment terms and excluding discounts, allowances and other sales taxes.

The criteria for recognising revenues, broken down by the Company's revenue type, are set out below:

• o rental income: these are revenues deriving from the rental of buildings recorded as investment property in accordance with IAS 40 and are recorded on a straight-line basis as provided for by IFRS 16 (paragraph 81), on an accrual basis, based on the existing lease agreements;
• o Revenues from the sale of properties: revenues from the sale of properties are recognised in the income statement net of costs to sell during the transfer to the buyer of all significant risks and benefits associated with ownership; a transfer which normally takes place on the date of signing the notarial deed.

The contributions paid to customers, so-called capex contribution, for redevelopment works of buildings are used to reduce future rents over the duration of the lease agreement.

Costs

Operating costs and other operating expenses are recognised as components of profit or loss when they are incurred on the basis of the service rendered and when they do not qualify for recognition as assets in the balance sheet.

Financial income and expenses

Financial income and expenses are accounted for on an accruals basis, using (where applicable) the effective interest rate method.

Dividends are recognised when the Shareholders' right to receive payment arises, which normally corresponds to the date of the Shareholders' Meeting that resolves on their distribution.

Current taxes

Current income taxes are calculated on the basis of estimated taxable income. The current tax liability is recorded in the balance sheet net of any tax advances paid.

Tax payables and receivables for current taxes are recognised at the amount expected to be paid/recovered to/from the tax authorities on the basis of the nominal tax rates in force on the balance sheet date, with the exception of those directly attributable to equity, as they relate to adjustments to balance sheet assets and liabilities recognised directly to equity. Other non-income related taxes, such as property and capital taxes, are included under operating expenses.

The Company, as a SIIQ, is subject to a special taxation regime, pursuant to which, among other things, business income deriving from property rental activities is exempt from corporate income tax (IRES) and regional tax on production activities (IRAP) and the portion of statutory profit corresponding to it is subject to taxation by the shareholders when it is distributed in the form of dividends. Taxes are then calculated on the income generated by the non-exempt management.

Deferred taxes

With regard to non-exempt management, pre-paid and deferred taxes are recognised using the global liability allocation method. They are calculated on the temporary differences between the values of assets and liabilities in the financial statements and the corresponding values recognised for tax purposes. Pre-paid tax assets on tax losses that can be carried forward and on deductible temporary differences are recognised to

the extent that it is probable that future taxable income will be available, even taking into account the special regime for SIIQs, in respect of which they can be recovered. Deferred tax assets and liabilities are calculated using the tax rates expected to apply when the temporary differences will be realised or settled. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Current and deferred tax assets and liabilities are offset when income taxes are levied by the taxation authority itself, when there is a legal right of set-off and when the time-frames of the expected reversal are consistent.

Profit /(loss) per share

Profit/(loss) per share is given by the ratio between the result for the year and the weighted average number of ordinary shares in issue during the year, excluding treasury shares in the portfolio. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue assuming the conversion of all potential ordinary shares with a dilutive effect and taking into account, in the calculation of the number of shares outstanding, the potential dilutive effect of options granted to beneficiaries of stock option plans.

Use of estimates and assumptions

The drafting of the annual financial report requires the Company to make estimates and assumptions that could influence the carrying amounts of certain assets and liabilities, costs and revenues, as well as the disclosure of contingent assets/liabilities on the reporting date.

The drafting of the financial statements and notes required the use of estimates and assumptions in determining certain assets and liabilities. The subsequent results that will derive from the occurrence of events may therefore differ from these estimates. The estimates and assumptions considered are reviewed on a continuous basis and the effects of any changes are immediately recognised in the financial statements.

Estimates are used to determine the fair value of investment property, financial instruments and derivative financial instruments. Estimates and assumptions are based on data reflecting the current state of available knowledge and the support of independent experts and advisors has been relied upon for most of these assessments.

Property valuations are carried out twice a year, on 30 June and 31 December using appraisals drafted by independent experts of recognised professionalism and integrity.

In fact, real estate appraisal assignments are only given to experts who undertake to operate with independence, integrity and objectivity.

The Board of Directors of NEXT RE SIIQ S.p.A. on 22 June 2022, in compliance with the Company's Independent Experts procedure, appointed the company Colliers Valuation Italy S.r.l. for the three-year assignment to carry out a six-monthly valuation of NEXT RE assets for a fee of € 10,000 for the first valuation as at 30 June 2022 and € 6,000 for each of the subsequent valuations on a constant basis.

In addition to following the recommendations of the supervisory authorities and the various best practices of the sector, NEXT RE has adopted a specific company procedure which, on the basis of current legislation, establishes, among other, the rules for selecting and appointing independent experts, providing (as specified above) that only persons who meet pre-established professional, independence and integrity requirements can be appointed.

Valuations by the Independent Expert are carried out for each property using valuation criteria compatible with the provisions of IFRS 13 and explained below:

• o Comparative (or Market) Method: it is based on the comparison between the Property and other comparable assets, recently bought and sold and/or leased or currently offered on the same market or on competitive markets.
• o Income method: it takes into consideration two different methodological approaches:
  • Direct Capitalisation: is based on capitalising, at a rate deducted from the real estate market, the future net income generated by the properties;
  • II. Discounted Cash-Flow (DCF) method, based:

• a) On calculating, over a period of n. years, future net income from the lease of the property;
• b) On calculating the property's Market Value by capitalising in perpetuity, at the end of such period, the net income;
• c) Discounting up to the date of the net income (cash flow) valuation.

The above methods shall be applied individually to each property or combined with each other, depending on the specificities of the property. Valuations are carried out on the basis of the maximum and best use of the properties subject to valuation, taking into account, among all the technically possible, legally permissible and financially feasible uses only those potentially capable of conferring the maximum value on the properties themselves. The maximum and best use is determined on the basis of specific considerations according to the type / location / urban characteristics of the property subject to valuation and the reference real estate market.

In determining capitalisation and discount rates used in the valuation of individual properties, account is taken of:

• o the type of tenant currently occupying the property or responsible for compliance with the leasing obligations and possible future occupants of vacant properties, as well as the general perception by the market of their creditworthiness;
• o the sharing of insurance and maintenance responsibilities between landlord and tenant;
• o the property's residual economic life.

Operating procedures for the periodic valuation of properties are governed by a specific internal procedure that regulates all activities of the process: from the selection and appointment of experts, documentation that is sent to them, valuation methods, survey of the properties subject to valuation, operating rules and coordination with the experts, to monitoring the whole process.

Information and data used for the purpose of valuations include, among others:

• o information supplied to the experts by NEXT RE, such as current lease payments, terms and conditions of existing leases, property taxes, costs related to property management, including any envisaged incremental costs (capital expenditure);
• o assumptions made directly by the experts (typically linked to the reference market, such as the discount rate, the capitalisation rate, the inflation curve, etc.). The definition of the above evaluation elements is based on their professional opinion, taking into account a careful observation of the reference market.

The information forwarded to the experts, the assumptions and the evaluation models used by them are reviewed by the relevant Departments who are responsible for the organisation, coordination of valuation activities, as well as their monitoring and verification.

With reference to the sensitivity of fair value measurements to changes in the main unobservable inputs, it must be noted that there would be reductions in the fair value under the following assumptions:

• o decreases in current lease levels and/or estimated annual fees per sqm;
• o an increase in discount rates and / or capitalisation rate;
• o the emergence of unforeseen incremental expenses on the properties;
• o for properties on which future incremental expenses are expected (capex), an increase in the estimate of such expenses, and/or an extension of the timing thereof;
• o problems with collecting payments from current tenants.

Conversely, opposing changes in the above phenomena would result in an increase in fair value.

The fair value of financial instruments is calculated on the basis of prices directly observable on the market, where available, or, for financial instruments with restricted circulation, using specific valuation techniques (mainly based on present value) that maximise observable market inputs.

In the rare circumstances where this is not possible, the inputs are also estimated with the methodological support of external advisers, taking into account the characteristics of the instruments being valued. Changes

in the assumptions made in estimating the input data could affect the fair value recognised in the financial statements for these instruments.

In view of its sector, it is estimated that the climate risk will not have a significant impact on the use of accounting standards and the use of estimates and assumptions. Furthermore, at present it is believed that climate change will not result in a material adjustment within the next fiscal year.

Segment reporting

The Management views the Company as a single segment. NEXT RE currently manages a portfolio of office and commercial properties of various sizes but the management process together with the risks incurred remains the same for all types of properties. In addition, the information reviewed by the Board of Directors shows only the values of the real estate portfolio broken down by property and between executive and commercial use, while the economic values are analysed by property. Considering the reporting structure used, the resource allocation process and the Company's activities, Management therefore identifies only one segment (i.e. NEXT RE).

INFORMATION ON THE SPECIAL REGIME OF LISTED REAL ESTATE INVESTMENT COMPANIES - SIIQ

The special regime for Listed Real Estate Investment Companies (SIIQ) introduced and governed by Italian Law no. 296/2006 (hereinafter also Law no. 296/2006) and subsequent amendments, as well as by the provisions contained in the implementing regulation of the Italian Ministry of Economy and Finance no. 174/2007 (hereinafter also the Decree), entails exemption from taxation for IRES purposes and proportionally from IRAP (special regime) of business income deriving, among other things, from real estate leasing activities (the so-called exempt management).

The regulation of the special regime has been amended as a result of Italian Decree Law no. 133/2014 (hereinafter also known as Italian Legislative Decree no. 133/2014), in force since 13 September 2014 and converted by Italian Law no. 164 of 11 November 2014.

For the purposes of applying the Special Regime, the net profit deriving from exempt management is destined to be taxed by the shareholders, as a consequence of its distribution. The distribution must compulsorily be resolved (under the penalty of forfeiture of the special scheme) upon approval of the financial statements for the year during which the exempt profit was formed. In particular, the special regime involves the obligation, in each financial year, to distribute to shareholders (i) at least 70% of the net profit deriving from real estate leasing activities, from the ownership of investments in SIIQ / SIINQ and in Sicaf and qualified real estate funds so-called "exempt management" (as resulting from the Income Statement of the relevant annual financial statements), if the total profit for the year available for distribution is equal to or higher than the exempt operating income, or (ii) at least 70% of the total profit available for distribution, if this is less than the net profit of exempt management. The obligation to distribute the above amount relates to the net profit of the income statement deriving from exempt management available, according to statutory rules, for distribution to shareholders (Art. 7 of the "decree")

With Decree Law no. 133/2014, a further mandatory distribution of profits was envisaged, which is complementary to the pre-existing one, and which consists of the obligation to distribute, in the subsequent two years to the year of realisation, 50% of the proceeds corresponding to the net capital gains realised that originate from the sale of properties destined for leasing, of investments in SIIQ / SIINQ and in SICAF and qualified real estate funds.

NEXT RE exercised its option to enter into this special regime, on 7 September 2016, effective for the tax period beginning on 1 January 2017.

NEXT RE, taking into account the change in the share capital notified to the market on 21 December 2017, has announced that the total shareholding held as at 31 December 2017 (directly and indirectly) by the then Controlling Shareholder Sorgente SGR S.p.A. is less than 60% of the Company's share capital. Accordingly, in the same manner in which the option was exercised (7 September 2016), Agenzia delle Entrate (the Italian Inland Revenue Agency) was notified (17 January 2018) of the integration of participatory requirements which were not in their possession at the time of exercising the option.

Having satisfied all the necessary requirements for the application of the tax benefits provided by the special SIIQ regulations (including the so-called "control" requirement), in accordance with the provisions of the Company's Business Plan, the Special SIIQ Regime took effect from 1 January 2017.

INFORMATION ON COMPLIANCE WITH STATUTORY REQUIREMENTS (Art. 3, paragraph 2. Italian Ministerial Decree no. 174 of 7 July 2007)

With regard to the Statutory Requirements of NEXT RE SIIQ S.p.A., Art. 4 of the Articles of Association provides:

(1) Rules in terms of investments

The Company does not invest in a single real estate property having unitary urban and functional characteristics: (i) directly, in excess of 2/3 of the total value of its real estate assets; and (ii) directly and/or through subsidiaries, real estate funds and other real estate investment vehicles, in an amount greater than 2/3 of the total value of the real estate assets of the group it belongs to. In this regard, it must be noted that, in the case of development plans that are subject to a single urban planning design, those portions of the property that are subject to individual and functionally autonomous building permits or that are equipped with

sufficient works so as to guarantee connection to public services cease to have unitary urban and functional features.

(2) Limits on the concentration of investment and counterparty risks

The Company cannot generate: (i) directly, lease payments, from a single tenant or from tenants belonging to the same group, in excess of 2/3 of the Company's total lease payments; and (ii) directly and through subsidiaries, real estate funds and other real estate investment vehicles, rents, coming from the same tenant or tenants belonging to the same group, in an amount greater than 2/3 of the total lease payments of the Group. The above mentioned limit does not apply if the Company's real estate is leased to any tenant(s) belonging to a group of national or international relevance.

(3) Maximum financial leverage level

The Company can assume: (i) directly, financial indebtedness (including financial payables to subsidiaries and the parent company), net of cash and cash equivalents and financial receivables from the parent company, for a total nominal value not exceeding 70% of the sum of the total value of its real estate assets, the carrying amount of the investments in subsidiaries and the nominal value of the financial receivables from subsidiaries; and (ii) directly and through subsidiaries, real estate funds and other real estate investment vehicles, consolidated financial indebtedness (including payables to the parent company), net of cash and cash equivalents and financial receivables from the parent company, for a total nominal value not exceeding 70% of the total value of the Group's real estate assets.

The aforesaid limits may be exceeded under exceptional circumstances or, in any case, not dependent on the will of the Company. Unless the Shareholders and/or the Company are otherwise interested, the overrun shall not extend beyond 24 months. The rules on investments in real estate, risk concentration limits and leverage provided for in points (1), (2) and (3) above shall apply for as long as the Company retains the status of a SIIQ. Once the qualification of SIIQ ceases to exist, with the consequent definitive termination of the special regime for listed real estate investment companies in the cases envisaged by the laws and regulations applicable from time to time, these rules will cease to have effect.

However, it is confirmed that the limits set out in points (1), (2) and (3) above have not been exceeded by NEXT RE SIIQ S.p.A.

INFORMATION ON COMPLIANCE WITH THE REQUIREMENTS FOR PERMANENCE IN THE SPECIAL SYSTEM

(1) Objective requirements

As envisaged by Art. 1, par. 121, of Italian Law no. 296/2006, the SIIQ must carry out mainly real estate leasing activities. This activity is considered to be prevalent if the real estate held as property or other rights in rem assigned to the lease, the investments in SIIQ / SIINQ and in real estate Funds (or SICAF) represent at least 80% of the assets (capital requirements) and if, in each financial year, the revenues deriving therefrom represent at least 80% of the positive components of the income statement (economic parameter). Failure to comply for three consecutive periods with one of the two requirements indicated above determines the definitive ending of the special regime from the second of the three financial years. Failure to comply with both requirements, with reference to the same year, determines the definitive ending of the special regime starting from the year in relation to which the condition of disqualification is realised.

The results of the calculation of the aforementioned parameters are shown below, both of which have been complied with for 2023, based on the balance sheet and income statement figures shown in the Financial Statements of NEXT RE as at 31 December 202.

Capital requirements

		31/12/2023	31/12/2022
NEXT RE SIIQ S.p.A. - Capital requirements
Value of properties intended for lease	(A)	130,067	135,943
Investment in SIINQ and in qualified real estate funds	(B)	0	0
Numerator total	(C)=(A)+(B)	130,067	135,943
Total of balance sheet assets	(D)	140,923	157,189
Elements excluded from the denominator of the relationship:		0	0
Carrying amount of SIIQ registered office		(1,723)	(1,780)
Cash and cash equivalents		(2,478)	(15,015)
Loans to Group companies		0	0
Trade receivables		(150)	(68)
Deferred tax assets		(0)	(190)
Tax credits (including VAT)		(111)	(309)
Pre-paid expenses		(92)	(265)
Total adjustments	(E)	(4,554)	(17,627)
Denominator total:	(F)=(D)+(E)	136,370	139,562
adjusted balance sheet assets
Capital requirements	(C)/(F)	95.38%	97.41%

Capital requirements, as shown in the table above, are given by the ratio between:

• o the numerator, totalling € 130,067 thousand, which includes the carrying amount of properties to be leased. This amount corresponds to the book value of "Investment property";
• o the denominator, equal to a total of € 136,370 thousand, which includes total assets (€ 140,923 thousand) adjusted to exclude, in application of the criteria indicated in Article 6 of Ministerial Decree 174/2007: the book value of the properties used as the headquarters of the SIIQ (equal to € 1,723 thousand as at 31 December 2023); ii) the value of cash and cash equivalents (€ 2,478 thousand); iii) the value of trade receivables deriving both from exempt management and, as clarified by the Revenue Agency circular no. 8/E of 2008, from taxable management (€ 150 thousand) iv) the value of tax receivables (€ 111 thousand); v) deferrals (€ 92 thousand), vi) deferred tax assets if existent.

Revenue parameter

€ '000			31/12/2023 31/12/2022
NEXT RE SIIQ S.p.A. - Revenue parameter
Rental fees and similar revenues	(A)	6,188	5,688
"Realised" gains on property sales	(B)	0	750
Dividends from SIIQ / SIINQ, SICAF and qualified real estate funds	(C)	0	0
Numerator total	(D)=(A)+(B)+(C)	6,188	6,438
Total positive economic components	(E)	7,059	13,109
Elements excluded from the denominator of the relationship:
Write-ups of properties		(624)	(3,572)
Revenue from charge-backs of costs		(132)	(242)
Revenue from cost adjustments or related to hedging instruments		0	0
Contingent assets, fund releases and other reinstatements		(58)	(298)
Deferred tax assets and interest on tax credits		(3)	0
Total adjustments	(F)	(817)	(6,638)
Denominator total: adjusted positive economic components	(G)=(E)+(F)	6,242	6,478
Revenue parameter	(D)/(G)	99.15%	99.47%

The revenue parameter, as shown in the table above, is given by the ratio between:

• o the numerator, amounting to a total of € 6,188 thousand, refers to revenues from rents on properties used for this activity (investment properties);
• o the denominator is equal to a total of € 6,242 thousand. This amount corresponds to the total amount of the positive components of the Income Statement (€ 7,059 thousand), adjusted in order to exclude the write-ups of properties recorded during the financial year in application of the fair value model for the valuation of the property portfolio (€ 624 thousand). Moreover, in order not to affect the relationship with other elements that are not directly related to the exempt management, or with taxable management and whose inclusion in the denominator of the relationship could alter the result of the verification of the criterion of capital prevalence, the following are excluded: i) income representing charge-backs of costs such as, mainly, those relating to charge-backs of costs to tenants of leased properties (also excluded from the numerator of the revenue parameter) for € 132 thousand; ii) contingent assets and releases of provisions for € 58 thousand; iii) income for taxes for € 3 thousand.

With reference instead to the distribution obligations envisaged by Art. 1, paragraph 123 and 123-bis, of Italian Law no. 296/2006, it must be noted that the financial statements for the 2023 financial year closed with a negative net result of € -9,444 thousand (given by negative results from exempt management of € -9,123 thousand and negative results from taxable management of € -322 thousand).

With reference to the result for the financial year 2023, no distribution obligation therefore arose.

Finally, the conditions for a mandatory distribution in 2023 have not been met with regard to the further distribution obligation provided for in Article 1, paragraph 123-bis of Law No. 296/2006.

(2) Subjective requirements

NEXT RE SIIQ S.p.A., which draws up the financial statements in application of international accounting standards, complies with the subjective requirements provided for by the relevant legislation for the permanence in the special regime, being a company: i) set up as a joint-stock company; ii) resident for tax purposes in Italy; iii) whose shares are traded on the Borsa Italiana.

It is also confirmed that in 2023 no extraordinary transactions took place which affected the requirements for permanence in the special regime.

(3) Requirements relating to the holding structure

According to the information held by the Company, as at 31 December 2023 there are no shareholders who hold directly or indirectly, pursuant to Art. 1, par. 119, of Italian Law no. 296/2006 and amended by Italian Law no. 164/2014, more than 60% of the voting rights in the ordinary shareholders' meeting and more than 60% of the rights to participate in profits. In this regard, it is recalled that in the previous tax period ending 31 December 2021, as a result of the takeover bid launched by the controlling shareholder CPI PG, the latter came to own a percentage of ordinary shares in excess of 60%.

Specifically, as at 26 November 2021, CPI PG held, in total, a 77.1078% interest in the Company's subscribed capital, represented by 16,983,075 shares with voting right, of which 11,012,055 shares not admitted to trading (the "Unlisted Shares"), equal to all the unlisted shares of the Company, and 5,971,020 ordinary shares admitted to trading on the Euronext Milan market (equal to 54.22% of the total listed shares), resulting in failure to meet the control requirement.

In order to once again meet the control requirement and continue to apply the Special Regime by 31 December 2021, on 26 November 2021 the Board of Directors convened the Extraordinary Shareholders' Meeting for 27 December 2021, submitting to it the proposal for the mandatory conversion, in a 1:1 ratio, of 11,012,055 unlisted ordinary shares into 11,012,055 category B shares, without the right to attend or vote at the Company's ordinary shareholders' meeting and with the same right to share in profits as the ordinary shares, which will be automatically and proportionately reduced to the extent necessary so that the right to share in profits of each category B shareholder, taking into account any other ordinary shares held, is equal to - and, in any event, not more than - 60% of the rights to share in the profits of the Company.

On 27 December 2021, the Extraordinary Shareholders' Meeting unanimously approved such mandatory conversion, as a result of which CPI PG came to hold a total stake equal to 77.1078% of the Company's subscribed share capital, represented by (i) 5,971,020 ordinary shares with voting rights admitted to trading on the EXM market - equal to 54.22% of the share capital with voting rights at the ordinary shareholders' meeting of the Company - and (ii) 11,012,055 Category B shares, with the characteristics described above.

As described in the section of the Directors' Report entitled "Legal and Regulatory Framework of the SIIQs" to which reference is made, the application of the special regime was suspended for the 2022 tax period in view of the temporary absence of the control requirement by CPI PG, to be immediately reinstated as from June 2023, with the consequent recalculation of the taxable income and the subjection of all the income received by the Company to IRES and IRAP in accordance with the ordinary taxation rules in force.

The subsequent reinstatement of the control requirement during June 2023 and its maintenance and fulfilment as at 31 December 2023, together with the fulfilment of the other requirements provided for by the Regulations - which, as just mentioned, were fulfilled as at 31 December 2023 - allowed the Company to return to the application of the special regime as from the 2023 tax period, as duly and timely notified to the Inland Revenue.

Breakdown of economic components into exempt management and taxable management and relevant distribution criteria

The following table shows the profit and loss account as at 31 December 2023 broken down into exempt management and taxable management (data in € '000).

	Total (A)	Exempt management (B)	Taxable management (A)-(B)
Revenues from sales and services	6,333	6,333	0
Other revenues	58	58	0
Gross revenues	6,391	6,391	0
Cost for raw materials and services	(3,387)	(3,358)	(29)
Staff costs	(2,680)	(2,657)	(23)
Other operating expenses	(865)	(856)	(9)
Operating costs	(6,932)	(6,871)	(61)
Gross operating profit	(541)	(480)	(61)
Value adjustments	(7,096)	(7,095)	(1)
Operating profit	(7,637)	(7,575)	(62)
Financial income	40	30	10
Financial expenses	(1,596)	(1,578)	(18)
Income before taxes	(9,193)	(9,123)	(70)

The results reported in the previous table relating to the two management types, derive from the separation of the economic components of the year 2023 as resulting from the separate accounting adopted by the Company for these components. Separate accounting has, in fact, the purpose of identifying the operating results of the tax-exempt and taxable activity through: i) the attribution to each of the two management types of the economic components specifically attributable to them; ii) the attribution to each of the two management types, according to a reasonable pro rata percentage, of the "common" economic components (insofar as they are not specifically related to one of the two management types).

In particular, it must be noted that, for the purposes of allocating these "common" components to exempt (or taxable) management, NEXT RE has adopted the revenue parameter as more accurately calculated and expressed in the percentage (99.15%) shown in the table above in the section on the "revenue parameter", as this is considered the most suitable percentage parameter for making the above allocation, as - after stripping out the economic components that do not relate to any activities carried out - it effectively expresses the percentage incidence of rental activities with respect to all activities carried out by the Company.

It is also specified that for income deriving from exempt management, the specific regulation envisaged by Art. 1, paragraphs 119 et seq., of Italian Law no. 296/2006 and the relevant implementing decree applies, while for income deriving from taxable management, the ordinary taxation rules for IRES and IRAP purposes have been applied.

Comments to the Notes to the financial statements

ASSETS

Note 1. Investment property

	31/12/2023	31/12/2022
Investment property	130,067	135,943
Investment property	130,067	135,943

Changes during the year in the item Investment property are shown below.

	Buildings
Net carrying amount as at 31/12/2022	135,943
Increases	1,098
Decreases	0
Write-ups (write-downs)	(6,974)
Net carrying amount as at 31/12/2022	130,067

The Real Estate Portfolio directly held by NEXT RE recorded a total valuation of € 130,067 thousand as at 31 December 2023.

The table below describes the changes in the values of each property that occurred during 2023.

Property	31/12/2022	Increases	Decreases	Book value before adjustment	Market value	Adjustment to market value	31/12/2023
Milan, Via Spadari commercial	53,300	585	0	53,885	47,500	(6,385)	47,500
Milan, Via Spadari offices	8,150	513	0	8,663	8,250	(413)	8,250
Milan, Via Cuneo	25,850	0	0	25,850	25,950	100	25,950
Milan, C.S. Gottardo	15,900	0	0	15,900	15,650	(250)	15,650
Rome, Via Zara	13,193	0	0	13,193	13,717	524	13,717
Bari, V. Dioguardi	14,700	0	0	14,700	14,300	(400)	14,300
Rome, Via Vinicio Cortese	4,850	0	0	4,850	4,700	(150)	4,700
	135,943	1,098	0	137,041	130,067	(6,974)	130,067

The item Increases includes capitalised costs in the amount of €1,098 thousand that were mainly incurred with reference to the new office portions of the building in Milan, Via Spadari, as part of the redevelopment project completed in the first half of 2023, as well as for the refurbishment of the common portions of the complex - façades, porter's lodge, vertical connections and common areas - extraordinary condominium works completed in the second half of the year.

The item Fair value adjustments refers to adjustments made during the period to the value of real estate in order to adjust it to the relative fair value, in accordance with the relevant accounting standards.

The fair value adjustment incorporates the results of the market value appraisals on the properties drafted by the independent expert, in compliance with the RICS Valuation - Professional Standards, which incorporate the IVS (International Valuation Standards), and in accordance with applicable regulations and recommendations of the regulators.

The following are the considerations relating to the change in the fair value recorded for each property in comparison with the previous year>

• property located in Milan, Via Spadari 2 - commercial: the change in fair value recognised as of 31 December 2023, amounting to € 6,385 thousand, is mainly attributable to the increase in the discount rate used, which reflects the generalised increase in market rates, and the capitalisation rate. The

negative effect deriving from these changes was not absorbed by the positive effects deriving from the decrease in the expected CapEx, the updating of the rents according to the Istat index and the assumption made by the Independent Expert in relation to the re-contractualisation at the second maturity at a higher ERV according to market dynamics;

• property located in Milan, Via Spadari 2 offices: the change in fair value recognised as of 31 December 2023 was €-413 thousand and was impacted by the updating of the discount rate connected to the increase in BTP and EURIBOR and by the increase in the capitalisation rate used by the Independent Expert, the effects of which were partially offset by the stipulation of a new lease agreement for the spaces previously not leased, the advancement of the relative rent scaling and the decrease in the CapEx forecast;
• property located in Milan, Via Cuneo 2: the change in fair value recognised as of 31 December 2023, equal to €100 thousand, is mainly attributable to the updating of rents according to the Istat index, partially offset by the updating of the discount rate related to the increase in BTP and EURIBOR;
• property located in Milan, Corso San Gottardo 29/31: the change in fair value recognised as of 31 December 2023, equal to €-250 thousand, is mainly attributable to the updating of the discount rate connected to the increase in BTP and EURIBOR, only partially offset by the updating of rents according to the ISTAT index and the advancement of the lease agreement (which provides for a scaling for the first few years of the lease);
• property located in Rome, Via Zara 22-32: the positive change in fair value recognised as of 31 December 2023, amounting to €524 thousand, is mainly attributable to the updating of rents in accordance with the Istat index and the progress of the contractual scaling of the tenant DICO S.p.A., which were partially offset by the negative effect due to the updating of the discount rate connected to the increase in BTP and EURIBOR;
• property located in Bari, via Dioguardi 1: the change in fair value recognised as of 31 December 2023, equal to €-400 thousand, is due to the update of the discount rate connected to the increase in BTP and EURIBOR partially offset by the decrease in the expected CapEx;
• property located in Rome, Via Vinicio Cortese 147: the change in fair value recognised as of 31 December 2023, equal to -€150 thousand, was due to the update of the discount rate related to the increase in BTP and EURIBOR partially offset by the time shift of CapEx.

As required by IFRS 13, a disclosure of the fair value hierarchy is provided below.

The fair value hierarchy classifies the inputs of valuation techniques used to establish the fair value based on three levels. In particular:

• o Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• o Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, directly or indirectly, for the asset or liability. If the asset or liability has a specified (contractual) duration, a Level 2 input must be observable for substantially the entire duration of the asset or liability;
• o Level 3 inputs are unobservable inputs for the asset or liability.

The real estate portfolio has been valued using Level 3 fair value models, as the directly/indirectly non-market observable inputs used in the valuation models predominate over the market observable inputs.

The following table shows NEXT RE Group's real estate portfolio broken down by legal form type of the property, measured at fair value as at 31 December 2023:

Property		Legal nature	Accounting criteria	Last appraisal date	Significant inputs not observable on the market (level 3) €/000
Milan, Via Spadari commercial		Full ownership	IAS 40, fair value	31/12/2023		47,500
Milan, Via Spadari offices		Full ownership	IAS 40, fair value	31/12/2023		8,250
Milan, Via Cuneo		Full ownership	IAS 40, fair value	31/12/2023		25,950
Milan, C.S. Gottardo		Full ownership	IAS 40, fair value	31/12/2023		15,650
Rome, Via Zara		Full ownership	IAS 40, fair value	31/12/2023		13,717
Bari, V. Dioguardi		Full ownership	IAS 40, fair value	31/12/2023		14,300
Rome, Via Vinicio Cortese		Full ownership	IAS 40, fair value	31/12/2023		4,700
						130,067
in these inputs have a significant impact on fair value. of below but close to 2% in the medium term. Property	Legal nature	Method	Discount rate	gross capitalisation rate) and the ERV (Estimated Rental Value or Annual Rent per Square Metre), as changes The inflation rate was assumed to be 2%, in line with the Bank of Italy's published consumer inflation expectations (4.7% over 12 months and 4.2% over 24 months) and the European Central Bank's (ECB) target The following table shows unobservable inputs used for each asset as at 31 December 2023: Gross exit cap rate		ERV €/sqm/y
			5.83% for retail
Milan, Via Spadari	Full ownership	Income (DCF)	portion 5.93% for office portion	for retail portion: 4.32% gross cap rate, 4% net cap rate; for office portion: 4.75% gross cap rate, 4% net cap rate		1,100 for retail portion and 440 for office portion
Milan, Via Cuneo	Full ownership	Income (DCF)	6.47%	5.07% gross cap rate, 4,5% net cap rate		400
Milan, C.S. Gottardo	Full ownership	Income (DCF)	7.23%	5.18% gross cap rate, 4.75% net cap rate		350

Milan, Via Cuneo		Full ownership	IAS 40, fair value	31/12/2023	25,950
Milan, C.S. Gottardo		Full ownership	IAS 40, fair value	31/12/2023	15,650
Rome, Via Zara		Full ownership	IAS 40, fair value	31/12/2023	13,717
Bari, V. Dioguardi		Full ownership	IAS 40, fair value	31/12/2023	14,300
Rome, Via Vinicio Cortese		Full ownership	IAS 40, fair value	31/12/2023	4,700
					130,067
in these inputs have a significant impact on fair value.				The unobservable inputs that NEXT RE considers to be most significant are the discount rate, the capitalisation or cap rate (the main difference in the calculation between the net capitalisation rate and the gross capitalisation rate is the inclusion of stranded costs such as IMU, insurance and management costs in the gross capitalisation rate) and the ERV (Estimated Rental Value or Annual Rent per Square Metre), as changes
of below but close to 2% in the medium term.				The inflation rate was assumed to be 2%, in line with the Bank of Italy's published consumer inflation expectations (4.7% over 12 months and 4.2% over 24 months) and the European Central Bank's (ECB) target The following table shows unobservable inputs used for each asset as at 31 December 2023:
Property	Legal nature	Method	Discount rate	Gross exit cap rate	ERV €/sqm/y
Milan, Via Spadari	Full ownership	Income (DCF)	5.83% for retail portion 5.93% for office portion	for retail portion: 4.32% gross cap rate, 4% net cap rate; for office portion: 4.75% gross cap rate, 4% net cap rate	1,100 for retail portion and 440 for office portion
Milan, Via Cuneo	Full ownership	Income (DCF)	6.47%	5.07% gross cap rate, 4,5% net cap rate	400
Milan, C.S. Gottardo	Full ownership	Income (DCF)	7.23%	5.18% gross cap rate, 4.75% net cap rate	350
					300 for office portion and 220 for commercial
Rome, Via Zara	Full ownership	Income (DCF)	6.78%	5.27% gross cap rate, 4.5% net cap rate	unit
Bari, V. Dioguardi	Full ownership	Income (DCF)	6.91%	6.36% gross cap rate, 5% net cap rate	100
Rome, Via Vinicio Cortese	Full ownership	Income (DCF)	8.32%	7.12% gross cap rate, 6.25% net cap rate	155
Property	Legal nature	Method	Discount rate	The following table shows unobservable inputs used for each asset as at 31 December 2022: Gross exit cap rate	ERV €/sqm/y
Milan, Via Spadari	Full ownership	Income (DCF)	5.16% for retail portion 5.31% for office portion	for retail portion: 3.85% gross cap rate,3.5% net cap rate; for office portion: 4.51% gross cap rate, 3.75% net cap rate	1,050 for retail portion and 440 for office portion
Milan, Via Cuneo	Full ownership	Income (DCF)	5.91%	5.09% gross cap rate, 4,5% net cap rate	400
	Full ownership	Income (DCF)	6.67%	5.18% gross cap rate, 4.75% net cap rate	350
Milan, C.S. Gottardo		Income (DCF)	6.22%	5.32% gross cap rate, 4.5% net cap rate	300
Rome, Via Zara	Full ownership				100
Bari, V. Dioguardi	Property Leasing	Income (DCF)	6.35%	6.38% gross cap rate, 5% net cap rate
Rome, Via Vinicio Cortese	Full ownership	Income (DCF)	7.75%	7.12% gross cap rate, 6.25% net cap rate	155

	5.16% for retail portion 5.31% for office portion	for retail portion: 3.85% gross cap rate,3.5% net cap rate; for office portion: 4.51% gross cap rate, 3.75% net cap rate	1,050 for retail portion and 440 for office portion

The capitalisation rate, or cap rate, is the rate that represents the existing market relationship between the rental income (net or gross) and the value of a given property; as a measure of the return on investment, the capitalisation rate implicitly reflects the risk of the investment in the property being valued, or the average risk of the market class to which the property belongs. The main difference between the gross cap rate and the net cap rate is the inclusion of stranded costs (i.e. IMU, insurance and management costs) in the former. The

cap rate is estimated by the Indipendent Expert on the basis of a market analysis of transactions involving similar properties, derived from the internal database and third party databases (Real Capital Analytics), taking into account characteristics such as asset class, size, location (micro, macro accessibility, also taking into account future infrastructure improvements, if any), potential investors interested in the property, general property market conditions and current market trends.

The cap rates for the assets in Bari, Rome and Milan (Corso San Gottardo and Via Cuneo) remained virtually unchanged, while for the assets in Milan Via Spadari (both office and retail portions) there was a gradual increase in line with the market analysis, which observed an increase in the prime yield for the Milan office segment from 3.75%, recorded in the fourth quarter of 2022, to 4%, recorded in the first quarter of 2023, and then remained stable. Similarly, for the retail prime yield in Milan, an increase was observed from 3.5% in 2022 to 4% in 2023. For secondary locations, however, this increase was less pronounced and therefore the Independent Expert deemed it appropriate to keep capitalisation rates unchanged.

The ERV is estimated by the Independent Expert by means of a market survey aimed at identifying the parameters within which sales and leases of properties with a similar destination to those under assessment are concluded. The surveys regarding unit rental values were based on sources such as the database of the Agenzia delle Entrate's real estate market observatory (OMI values referring to the first half of 2023) and the most relevant real estate portals. In addition, for the primary locations (Milan and Rome), the Independent Expert consulted its own internal database reporting lease transactions recorded in the market by the most relevant real estate operators and office space rentals. In the determination of the explicit flows of the valuation model, the lease values for the leased portions are represented on the basis of the contractual terms in force. For leases with a passing rent of less than 10% compared to the potential market rent (ERV), the Independent Expert considered the re-contractualisation to the market rent at the second lease expiry date and also assumed a free rent period of twelve months.

The ERV has not changed compared to 31 December 2022, except for the one assumed for the Milan asset, Via Spadari retail part, which has increased from €1,050/sq.m/y to €1,100/sq.m/y; the Independent Expert considered it appropriate to increase this input on the basis of the market analysis mentioned above.

The change in the discount and capitalisation rates at 31 December 2023 compared with 31 December 2022 was influenced by the general increase in market interest rates, in particular BTPs and Euribor. The 6-month Euribor used to determine the rates rose from 2.41% at 1 December 2022 to 4.03% at 1 December 2023, while the average monthly yield over recent years of BTPs with maturities corresponding to those of the valuation models rose from 1.89% at 1 December 2022 to 2.25% at 1 December 2023. The determination of these rates reflects, in addition to exogenous economic factors, the specific conditions of the assets being valued.

To confirm the soundness of the valuation process, a sensitivity analysis of the value of the real estate portfolio was carried out, with the support of the Independent Expert, in relation to changes in unobservable inputs. In particular, the fluctuation of the value of the Company's real estate portfolio was determined by varying the ERV of the individual properties by +/- 5%, the Gross Cap rate by +/- 0.25 bps and the discount rate by +/- 0.5%.

The changes applied to the unobservable inputs were determined on the basis of the Independent Expert's judgement and, in the case of the discount rate, on the basis of the changes recorded in the inputs themselves.

The maximum variation recorded is within a range of +8% and -7% of the value of the real estate portfolio. The results of the analyses carried out for the different scenarios presented above are summarised below:

Scenary	Sensitivity analysis result	Variazione % rispetto al valore di mercato del portafoglio immobiliare al 31/12/2023*
Market value as at 31/12/2023 -5% ERV	129.1	-2%
Market value as at 31/12/2023 +5% ERV	134.85	2%
Market value as at 31/12/2023 -0,25% Gross Cap rate	136.75	4%
Market value as at 31/12/2023 +0,25% Gross Cap rate	127.8	-3%
Market value as at 31/12/2023 -0,5% discount rate	137.25	4%
Market value as at 31/12/2023 +0,5% discount rate	127.1	-4%
Market value as at 31/12/2023 -5% ERV and - 0,25% Gross cap rate	133.8	1%
Market value as at 31/12/2023 -5% ERV and + 0,25% Gross cap rate	125.15	-5%
Market value as at 31/12/2023 + 5% ERV and - 0,25% Gross cap rate	139.7	6%
Market value as at 31/12/2023 + 5% ERV and + 0,25% Gross cap rate	130.45	-1%
Matrket value as at 31/12/2023 -5% ERV and - 0,5% Discount rate	134.25	2%
Matrket value as at 31/12/2023 -5% ERV and + 0,5% Discount rate	124.3	-6%
Matrket value as at 31/12/2023 +5% ERV and - 0,5% Discount rate	140.4	6%
Matrket value as at 31/12/2023 +5% ERV and +0,5% Discount rate	130	-2%
Market value as at 31/12/2023 -0,5% discount rate and -0,25% Gross cap rate	142.2	8%
Market value as at 31/12/2023 -0,5% discount rate and +0,25% Gross cap rate	132.85	1%
	131.6	0%
Market value as at 31/12/2023 +0,5% discount rate and -0,25% Gross cap rate

								1%
								0%
								-7%
*equal to Euro 132,050 thousand including the portion for instrumental use of the asset in Rome, via Zara equal to Euro 1,983 thousand
The results highlight the interrelationships between the inputs considered in determining fluctuations in the value of the real estate portfolio; for example, in the different scenarios the assumed market rents may have a different impact in terms of return or risk, which could be reflected in the estimate of capitalisation and discount rates. Similarly, changes in discount and capitalisation rates could result in offsetting changes in the value of the portfolio due to changes in market rents or in the rates themselves, but with different signs. Finally,				a reduction in expected returns and an increase in the expectation of the sale value of an asset and a
consequent increase in uncertainty could result in zero changes in the value of the portfolio. The following table shows the value of the Company's real estate portfolio, the residual debt related to the outstanding loans referred to the assets, the Net Asset Value (provided on a voluntary basis and calculated as the ratio between the nominal residual debt of the loans and the fair value of the assets), and the real estate Loan to value indicator calculated as the ratio between the residual debt of the loans referred to the assets and the relative fair values as of 31 December 2023.
Property	Legal nature	Lending counterparty	Values as at 31 December 2023	Remaining debt as at 31 December 2023**	Net Asset Value Euro	Loan to Value	Maturity	Duration (years)
Milan, Via Spadari	Full ownership	CPI PG S.A.	55,750	22,687	33,063	41%	27/01/2026	2.1
Milan, Via Cuneo	Full ownership	CPI PG S.A.	25,950	14,481	11,469	56%	27/01/2026	2.1
Milan, C.S. Gottardo	Full ownership	CPI PG S.A.	15,650	10,861	4,789	69%	27/01/2026	2.1
Rome, Via Zara*** Rome, Via Vinicio Cortese	Full ownership Full ownership	CPI PG S.A. Intesa San Paolo	15,700 4,700	6,577 616	9,123 3,763	42% 20%	27/01/2026 05/12/2025	2.1 1.9
Bari, V. Dioguardi	Full ownership	Intesa San Paolo ****	14,300	321 -	14,300	0%	01/07/2025	1.5

It must be noted that debt maturities shown above incorporate the extensions of the latter below the moratorium under Article 56 of Italian Decree Law no. 18 of 17 March 2020, converted, with amendments, by Italian Law no. 27 of 24 April 2020 following the extension - pursuant to Article 1, paragraph 248, of Italian Law no. 178 of 30 December 2020 (Balance sheet forecast for the 2021 financial year and multi-annual budget for the 2021-2023 three-year period) - of the suspension of payments.

Note 2. Other tangible assets

	31/12/2023	31/12/2022
Instrumental building	1,723	1,780
Other assets	26	34
Other tangible assets	1,749	1,814

The main changes during the year were as follows:

	Instrumental building	Other assets	Total
Net carrying amount as at 01/01/2023	1,780	34	1,814
Increases	0	0	0
Decreases	0	0	0
Amortisation and write-downs	(57)	(8)	(65)
Final balance as at 31/12/2023	1,723	26	1,749
Historical cost	1,909	50	1,959
Accumulated amortisation	(186)	(24)	(210)
Net carrying amount	1,723	26	1,749

This item mainly includes the value, net of the related accumulated depreciation, of the instrumental portion of the building in Rome, Via Zara 28 for € 1,723 thousand. The reduction compared to 31 December 2022 is attributable to the recognition of depreciation.

The company has no commitments to purchase new fixed assets.

Note 3. Rights of use

The value of the item Rights of Use as at 31 December 2023 was €51 thousand compared to the value as at 31 December 2022 of € 74 thousand.

		31/12/2023 31/12/2022
Rights of use	51	74
Rights of use	51	74
		Rights of use
Net carrying amount as at 01/01/2023			74
Increases			0
Decreases			0
Amortisation and write-downs			(23)
Net carrying amount as at 31/12/2023			51

The item as at 31 December 2023 includes the value of the rights of use with reference to the leasing contracts relating to three company cars; the reduction compared to the balance at 31 December 2022 is due to the recognition of depreciation allowances.

Note 4. Intangible assets

The value of intangible assets as at 31 December 2023 was € 37 thousand compared to the value as at 31 December 2022 of Euro 61 thousand.

	31/12/2023	31/12/2022
REF - BC Software	37	61
Intangible assets	37	61

The item mainly includes the asset with a defined useful life related to the costs incurred in relation to the project for implementing the accounting and management systems Business Central and RefTree, which entered into operation at the beginning of H2 2020. The change refers to the recognition of amortisation for the year.

Note 5. Shares held in subsidiaries

	31/12/2023	31/12/2022
Fidelio Engineering S.r.l.	10	10
Net carrying amount as at 31/12/2022	10	10

The value of the item Equity investments was € 10 thousand and refers entirely to the wholly-owned subsidiary Fidelio Engineering S.r.l. incorporated in 2021.

As at 31 December 2023, the subsidiary had a net worth of € 19 thousand including a profit for the year of € 4 thousand.

Note 6. Deferred tax assets

The item as at 31 December 2022 included deferred tax assets of €190 thousand accrued over the three-year period 2018-2021. The item decreased by €190 thousand as a result of the write-down of these assets as, in view of the special SIIQ regime to which the parent company belongs and the economic projections of the non-core activities, it is not expected that they will be able to be utilised in future years through the taxable income of the aforementioned activities.

Note 7. Other non-current assets

The table below summarises the status of Other non-current assets as at 31 December 2023 and 31 December 2022.

	31/12/2023	31/12/2022
Capex contribution Milan, Via Spadari	367	489
Capex contribution Milan, Via Cuneo	279	371
Covid Concessions Milan, Via Spadari	468	499
Covid Concessions Milan, Via Cuneo	206	274
Linearisation of fees	1,151	803
Other non-current assets	2,471	2,436

The item as at 31 December 2023 amounted to € 2,471 thousand and mainly refers to:

o the long-term portion of the capex contribution disbursed to the customer OVS in 2018 for the property in Milan, Via Spadari for € 367 thousand and in the second half of 2021, for the property in Milan, Via Cuneo for € 279 thousand; these contributions disbursed to the customer for property upgrading works are deducted from future rents over the term of the contract;

• o the portions related to temporary rent reductions granted to the tenant OVS for € 674 thousand, with reference to the lease agreements of the Milan Via Cuneo and Via Spadari assets, which will be recognised in the income statement in the years beyond the following year as a reduction of rental income;
• o the effects arising from the linearisation of rents in the amount of € 1,151 thousand, which will be reflected in the income statement in the years beyond the following year.

Note 8. Financial assets at fair value

This item includes financial assets measured at fair value through profit or loss and, as at 31 December 2023, had a balance of zero as shown below.

	31/12/2023	31/12/2022
Other financial investments	0	544
Financial assets at fair value	0	544

Following are the changes that occurred in the year 2023.

	UCITS	OTHER	Total
Net carrying amount as at 01/01/2023	544	0	544
Increases	2,000	0	2,000
Decreases	(2,544)	0	(2,544)
Reclassifications	0	0	0
Fair value adjustment	0	0	0
Net carrying amount as at 31/12/2023	0	0	0

The item Financial assets at fair value, which had increased by €2 thousand in the first half of 2023, decreased as a result of the sale of investment positions. The offsetting entry in the income statement for this disposal is €17 thousand and is included in item 21, Other costs and expenses.

Note 9. Receivables and other current assets

This item includes financial assets measured at amortised cost comprising trade receivables, tax receivables and other receivables as detailed below.

	31/12/2023	31/12/2022
Receivables from tenants	400	319
Provision for bad debts	(251)	(251)
Net customer receivables	149	68
Tax receivables	111	309
Accruals and deferrals	92	265
Concessions to customers - COVID-19	228	224
Capex contribution - current portion	215	215
Receivables from the subsidiary for the tax consolidation	3	1
Security deposits	1	1
Other receivables	12	20
Total	811	1,103

Net customer receivables

Net customer receivables showed a balance of € 149 thousand (€ 68 thousand as at 31 December 2022) and consisted mainly of:

• o receivables from tenants of owned properties for € 149 thousand; the amount includes receivables for invoices and credit notes to be issued for € 45 thousand;
• o receivables completely written down for € 251 thousand.

With reference to the provision to cover losses, changes for the period are shown below.

	Provision for bad debts
Balance as at 01/01/2023	(251)
Provisions	0
Releases	0
Use	0
Balance as at 31/12/2023	(251)

The provision for bad debts did not change from the previous year.

The Company reasonably expects that unimpaired receivables will be collected within twelve months, as to date there are no expected losses due to non-collectability or other causes of non-realisation of tenant receivables. At the date of this report, the trade receivables invoiced up to 31 December 2023 have been collected in full.

Tax receivables

	31/12/2023	31/12/2022
Receivables from Revenue for VAT	80	290
Receivables from Revenue for taxes	15	4
Other tax receivables	16	15
Current tax receivables	111	309

Tax receivables show a balance of € 11 thousand (€ 309 thousand as at 31 December 2022) and consist mainly of:

• o receivable from the tax authorities resulting from the VAT settlement for the month of December 2023 for € 80 thousand (€ 290 thousand as at 31 December 2022). The receivable as at 31 December 2022 was used to offset payments due for withholding taxes on employees and self-employed persons during the year;
• o IRES receivables for € 15 thousand;
• o tax receivables due to others for € 16 thousand.

Accruals and deferrals

This item, amounting to € 92 thousand (€ 265 thousand as at 31 December 2022), mainly refers to the deferral of costs pertaining to the following year.

Deferred costs for concessions to COVID-19 customers

The item refers to the temporary reductions granted to the customer OVS with reference to lease fees covered by specific agreements signed in July 2020, March 2021, August 2021 and May 2022. The above-mentioned temporary rent reductions will be charged to the income statement, as a reduction of rental income, in the year 2024; the portion that will be charged in subsequent years is recorded under Receivables and other non-current assets.

Capex contribution - current portion

The item refers to the portion within the next financial year of the capex contribution disbursed in 2018 to the customer OVS for the property in Milan, Via Spadari and for the property in Milan, Via Cuneo disbursed during

the second half of 2021. The above amount refers to the portion that will be deducted from rental income over the next 12 months.

Note 10. Cash and cash equivalents

	31/12/2023	31/12/2022
Bank deposits	2,328	15,015
Time deposit	3,250	0
Restricted current accounts	150	0
Cash and cash in hand	0	0
Total	5,728	15,015

Cash and cash equivalents totalled € 5,742 thousand (€ 15,059 thousand as at 31 December 2022) and consist of bank deposits. Deposits for contractual guarantees refer to the amount paid by the tenant Luisa Via Roma to cover the guarantee envisaged in the lease agreement. Time deposits refer to an interest-bearing current account with a three-month restriction opened in November 2023.

This item decreased significantly compared to 31 December 2022 as a result of the repayments of the UniCredit Leasing and Banca Centro Lazio loans and the financial expenses related to the settlement agreements.

SHAREHOLDERS' EQUITY

Note 11. Shareholders' Equity

The share capital, fully subscribed and paid up, amounted to € 63,265 thousand as at 31 December 2022 and consisted of 11,013,054 ordinary shares, with no par value, of which 11,012,055 class B shares, with no right to participate in and vote at the Company's ordinary shareholders' meeting and with a limited right to participate in profits, and not admitted to trading on EURONEXT Milan. The Company holds 38,205 treasury shares.

The profit for the financial year 2022 in the amount of € 346,303.60 was allocated in the amount of € 17,315.18 to the legal reserve and in the amount of € 328,988.42 to the fair value reserve as per the resolution of the Shareholders' Meeting of 15 May 2023.

The item Other comprehensive income was positive and amounted to € 56 thousand; it is related to the effects of the actuarial valuation of the severance indemnity (TFR) of the Company's employees in accordance with IAS 19.

The reserve for share-based payments was zero as at 31 December 2023; for further details, please refer to the section on Incentive Plans.

The schedule pursuant to Article 2427, number 7-bis of the Italian Civil Code is provided below.

Description	31/12/2023	Possibility Available of use amount		Dividends	Summary of the uses made in the previous three years
				for loss coverage	others
Share capital	63,265
Capital reserves:
Share premium reserve	22,931	C	22,931
Profit reserves:
Legal reserve	7,161	B
Fair value reserve	8,874
Reserve for loss coverage		B
Other reserves:
Capital increase costs	(3,429)
Negative reserve for treasury share purchases	(149)
Other items of the comprehensive income statement	56
Profit/(Loss) carryforward	(12,785)
Profit (loss) for the period	(9,444)
Total	76,480
Non distributable amount			5,509
Residual distributable amount			17,422

(*) A: for capital increase, B: to cover losses, C: for distribution to shareholders

It should be noted that the authorisation granted to the Board of Directors on 26 April 2021 in accordance with Article 2443 of the Italian Civil Code, with the exclusion of the option rights provided for in Article 2441, paragraphs 4 and 5 of the Italian Civil Code, will expire with the date of the Shareholders' Meeting to approve the financial statements for the year ending 31 December 2023.

On 12 March 2024, the Board of Directors decided to convene an Ordinary and Extraordinary General Meeting of Shareholders to be held on 23 April 2024 to, inter alia, authorise the Board of Directors to increase the share

capital by a maximum amount of 500 milion including any share premium also in divisible form, in one or more tranches, within the time limit of the approval of the financial statements as at 31 December 2026 by the Shareholders' Meeting, pursuant to Article 2443 of the Italian Civil Code, also excluding the option rights pursuant to Article 2441, paragraphs 4 and 5, of the Italian Civil Code.

With regard to the information on the shareholding requirements necessary to maintain the SIIQ regime, please refer to what is set out in detail in the sections "Legal and regulatory framework of the SIIQs" and "Maintenance of the SIIQ regime requirements" in the Report on Operations and "Information on the special regime for listed real estate investment companies - SIIQs" in the Annual Report.

LIABILITIES

Note 12. Employee benefits

The table below summarises the status of employee benefits as at 31 December 2023. The item includes the value, calculated in accordance with IAS 19, of severance indemnities remaining with the company and accrued as at 31 December 2023.

	31/12/2023	31/12/2022
Employee benefits	66	66
Total Employee benefits	66	66

Changes in the item are shown below.

	31/12/2023	31/12/2022
Initial balance as at 01/01/2023	66	189
Actuarial gains or losses	(13)	(66)
Use	(53)	(125)
Provisions	19	65
Financial expense IAS 19	1	3
Final balance as at 31/12/2023	20	66

The closing balance, amounting to € 20 thousand as at 31 December 2023 (€ 66 thousand as at 31 December 2022), reflects the current value of the Company's commitment to employees for severance pay, calculated on the basis of current legislative provisions and collective employment agreements and the underlying actuarial dynamics.

Use during the year refers to the payment of severance indemnities to terminated employees for € 53 thousand.

The service cost is classified in the income statement as € 19 thousand (€ 65 thousand as at 31 December 2022) in personnel costs, € 1 thousand (€ 3 thousand as at 31 December 2022) in interest cost classified under financial expenses and €13 thousand (€66 thousand as gain as at 31 December 2022) in actuarial gain classified under other comprehensive income as required by IAS 19.

The demographic and financial assumptions used are set out below:

DEMOGRAPHIC ASSUMPTIONS	EMPLOYEES	FINANCIAL ASSUMPTIONS 31/12/2023
Likelihood of death	RG48 mortality tables	Annual discount rate	3.17%
Likelihood of disability	INPS tables broken down by age and gender	Annual inflation rate	2%
Likelihood of retirement	100% when AGO requirements are met	Annual rate of increase in severance indemnity (TFR)	3%
Likelihood of receiving, at the beginning of the year, an advance on the severance indemnity set aside equal to 70%	3%	Annual rate of salary increase	3%
Likelihood of resignation	5%

The Severance Indemnity Fund (TFR) is part of the defined benefit plans.

Specifically, it must be noted that:

• o the annual discount rate used to calculate the current value of the obligation was inferred, consistently with paragraph 83 of IAS 19, by the Iboxx Corporate AA Index with duration 10+ recognised on the measurement date;
• o the annual rate of increase of the employee severance indemnity as provided for by article 2120 of the Italian Civil Code is equal to 75% of inflation plus 1.5 percentage points;
• o the annual rate of salary increase applied exclusively for Companies with an average of fewer than 50 employees during 2006 was equal to 3%.

As at 31 December 2023, the Company's workforce consisted of 4 employees. Below are the point-in-time and average employee numbers as at 31 December 2023 and 31 December 2022, broken down by category:

Breakdown by qualification	31/12/2023	31/12/2022
Executives	2	4
Middle managers	1	1
Employees	1	2
Total	4	7
Breakdown by period average	31/12/2023	31/12/2022
Executives	3	4
Middle managers	1	1
Employees	1	2

Note 13. Provisions for risks

The item Provisions for risks, included in non-current liabilities, decreased by €47 thousand following the full utilisation of the provision for risks allocated in the previous year for €57 thousand and the adjustment of the remaining positions for €10 thousand due to the updated estimate of contingent liabilities related to pending situations for which the existence is not certain and the amount is undetermined.

Note 14. Payables to banks and other lenders

	31/12/2023	31/12/2022
Non-current
Mortgages and loans	62,292	62,525
Borrowings from other financing entities	42	4,138
Total Payables to banks and other lenders (non-current)	62,334	66,663
Current
Mortgages and loans	472	822
Borrowings from other financing entities	17	747
Total Payables to banks and other lenders (current)	489	1,569
Total	62,823	68,232

The following table summarises the terms and conditions of the main mortgages and bank loans outstanding on the reporting date.

Bank	Original amount	Residual debt as at 31/12/2023 Nominal values	Residual debt as at 31/12/2023 Carrying amount at amortised cost	Of which within one year	Of which beyond one year	Guarantees	Additional guarantees and clauses
CPI PG	54,606	54,606	58,245	0	58,245
CPI PG	3,366	3,366	3,564	0	3,564
Intesa San Paolo S.p.A.	3,900	616	624	306	318	Second degree mortgage	Channelling of lease fees
Intesa San Paolo S.p.A.	2,100	321	331	166	165	Second degree mortgage	Channelling of lease fees
	63,972	58,909	62,764	472	62,292

The item Payables to banks and other lenders takes in due account the extensions granted by banks that have been reflected in the amortised cost of payables, where applicable, and in the classification of the latter as current and non-current.

The item Payables to other lenders refers to the lease contracts for company cars.

Pursuant to IAS 7 Cash Flow Statement, the table below shows the changes that occurred in liabilities arising from financing. The table reconciles the cash flows shown in the Cash Flow Statement with the total changes recorded during the period in balance sheet items that make up Total financial debt.

			Non-monetary flows
	31/12/2022	Cash flow	Changes in fair value	Other changes	31/12/2023
Payables to banks and other lenders (non-current)	66,663	(5,240)	0	911	62,334
Payables to banks and other lenders (current)	1,569	(1,550)	0	470	489
Net liabilities from financing activities	68,232	(6,790)	0	1,381	62,823
Cash and cash equivalents	(15,015)	9,287	0	0	(5,728)
Total financial debt	53,217	2,497	0	1,381	57,095

Pursuant to IFRS 7, the table below provides a maturity analysis of financial liabilities:

Liabilities	Carrying amount				within 1 year 1-2 years 2-5 years beyond 5 years
Payables to banks and other lenders	62,823	489	494	61,840	-

For information on financial indebtedness in accordance with the requirements of the CONSOB Communication of 28 July 2006 and in compliance with ESMA Recommendation no. 32-382-1138 of 2021, please see the section Analysis of financial performance and financial debt included in the Directors' Report on Operations.

Note 15. Trade payables and other payables

The table below summarises the situation of trade and other payables as at 31 December 2022.

	31/12/2023	31/12/2022
Non-Current
Tax payables	18	27
Total Trade payables and other non-current payables	18	27
Current
Trade payables to third parties	650	805
Payables due to related parties	577	819
Other payables	286	869
Tax payables	34	162
Payables to national insurance agencies	9	223
Total trade payables and other current payables	1,556	2,878

Trade payables to third parties

The item trade payables to third parties shows a balance of € 650 thousand (€ 805 thousand as at 31 December 2022).

Payables due to related parties

This item includes payables due to Dea Capital SGR for asset advisory fees of € 407 thousand, as well as € 170 thousand relating to amounts due to professional directors and statutory auditors.

Other payables

	31/12/2023	31/12/2022
Due to employees	36	696
Other payables	244	167
Payables due to the Supervisory Board	6	6
Total Other payables	286	869

Other payables amounted to € 286 thousand as at 31 December 2023, compared to a balance of € 869 thousand as at 31 December 2022, and consisted mainly of:

• o payables to personnel for € 36 thousand relating to accrued holidays, leaves of absence and additional monthly payments accrued as at 31 December 2023;
• o other payables, amounting to € 244 thousand (€ 167 thousand as at 31 December 2022);
• o payables to members of the supervisory body were instead equal to € 6 thousand.

Tax payables

	31/12/2023	31/12/2022
Non-current tax payables	18	27
Current tax payables	34	162
Total Tax payables	52	189

Non-current tax payables present a balance of € 18 thousand (€ 27 thousand as at 31 December 2022). The item refers to taxes related to previous years and amounts due beyond twelve months due to the instalment plan in place with the Revenue Agency.

Current tax payables show a balance of € 34 thousand (€ 162 thousand as at 31 December 2022) and mainly refer to:

• o withholding taxes on employee and self-employed income paid in January 2024 for € 25 thousand;
• o the current portion of payables for irregularity notice instalments of the merged company Cortese Immobiliare S.r.l. for € 9 thousand.

Payables to national insurance agencies

	31/12/2023	31/12/2022
Payables to INPS	7	221
Payables to INAIL	1	2
Various social security institutions	1	0
Total payables to national insurance agencies	9	223

Payables to social security institutions amounted to € 9 thousand (€ 223 thousand as at 31 December 2022) and mainly refer to contributions relating to the month of December 2023 paid in January 2024.

Risks

The risks to which the Company is exposed and the relevant mitigations are explained in detail in the section on risk management in the Directors' Report on Operations.

Guarantees

With regard to the loan contracts that the Company has in place with Intesa Sanpaolo, a mortgage was issued on the property in Rome, Via Cortese, for an original value of € 16 million; it must be noted that the residual debt as at 31 December 2023 is equal to € 995 thousand and the market value of the property is € 4,700 thousand.

The Company does not have any loan contracts that provide for covenants.

Provisions, commitments and contingent liabilities and assets

The company recognised provisions in the financial statements at 31 December 2023 for risks in connection with the probability of using resources to settle obligations in the amount of € 27 thousand, as indicated in note 13. Provisions for risks.

A brief description of the contingent liabilities as at 31 December 2023 is given below.

1. NEXT RE continues to deal with the lawsuit filed by Sorgente Group Italia S.r.l., challenging the Board of Directors' resolution of 29 October 2020 approving the share capital increase, the Board of Directors' resolution of 7 October 2020 accepting the offer of CPI Property Group S.A. and the Shareholders' resolution of 27 August 2020 authorising the Board of Directors to increase the share capital pursuant to Article 2443 of the Italian Civil Code; the Company's legal counsel considers the

risk of losing the case to be only possible.

• 1. Within the framework of the settlement agreement signed on 28 June 2022, Castello SGR waived the acts of the proceedings under reference Nos. 24624/2021 R.G. - Court of Rome. The judge has not yet taken the consequent measures following the filing of the relevant waiver and acceptance deeds pursuant to Article 306 of the Italian Code of Criminal Procedure and the next hearing for the statement of conclusions is set for 11 December 2024. It should be noted that, with reference to the aforesaid litigation, the risk of losing the case is deemed by the Group's counsel to be possible, albeit remote.
• 1. On 20 January 2022, NEXT RE was served with a summons to appear before the Court of Rome, Section XVI, in the context of the pending case no. RG 5998/2021, together with an application for precautionary attachment requesting the seizure of assets owned by Sorgente S.G.R. S.p.A. and Sorgente Group Italia S.r.l.. In particular, NEXT RE was sued as a third party by the Special Curator of the closed-end real estate investment fund called "Fondo Aida", wholly and indirectly owned by SIAE, which requested (i) to declare null and void or, in the alternative, to revoke and declare ineffective against Fondo AIDA the deeds of transfer of the property located in Rome, Via Zara no. 28, dated 18 February 2015 and 31 May 2017; and (ii) in the further alternative, condemn Next Re, jointly and severally with the other defendants and respondents (i.e. Sorgente S.G.R., Sorgente Group, Saites and Castello SGR S.p.A., the latter in its capacity as transferee of a business unit of Sorgente S.G.R. and therefore jointly and severally liable with the transferor), to pay compensation for the damages suffered by Fondo Aida as a result of the aforementioned contribution transactions, as well as for the damages suffered by Fondo Aida as a result of the non-payment of the loans granted by it to Saites. On 15 June 2022, Next Re made a formal appearance before the court, raising various procedural and substantive objections and requesting that the claims brought against it by the Special Trustee of Fondo Aida and Sorgente Group Italia be dismissed in their entirety. At the end of the first hearing, held on 5 July 2022, the judge set the deadlines for the submission of pleadings pursuant to article 183, paragraph 6, of the Italian Code of Criminal Procedure and, at the subsequent hearing held on 28 February 2023, ordered a technical evaluation to enable the claims to be assessed, appointing the court-appointed expert and inviting him to attend the hearing on 12 September 2023. As of the date of this report, the expert witness has commenced expert operations, at the conclusion of which the final expert witness report is expected to be filed by 9 July 2024; the Group's legal advisors believe that the risk of losing the case can be considered between remote and possible.

INCOME STATEMENT

Note 16. Rental income

	31/12/2023	31/12/2022
Property leases	6,188	5,688
Charge-backs to tenants	145	133
Release of the provision for bad debts	53	0
Rental income	6,386	5,821

The item amounting to € 6,386 thousand as at 31 December 2023 includes rental income and the relevant charge-backs of costs to tenants as well as other revenues related to out-of-period income from higher real estate costs recognised in the previous year. Rental income showed a net increase of € 565 thousand mainly due to ISTAT revaluations of leases recognised in the period and fees for new leases recognised on a straightline basis.

The breakdown of revenues by property is shown below.

Property	31/12/2023	31/12/2022
Milan, Via Spadari	2,080	1,720
Milan, Via Cuneo	1,167	1,063
Milan, C.so San Gottardo	804	754
Rome, Via Zara	772	727
Bari, Via Dioguardi	968	963
Verona - Via Unità d'Italia	587	8
Rome, Via Cortese	8	586
Total	6,386	5,821

Note 17. Costs relating to property assets

The balance of the item Costs relating to property assets as at 31 December 2023 was € 1,293 thousand, significantly lower than the balance at 31 December 2022 of € 1,526 thousand. The following table shows the costs by type and compares them with 31 December 2022.

	31/12/2023	31/12/2022
IMU	710	810
Maintenance and running costs of premises	235	274
Technical advice	142	87
Real estate consulting	28	83
Contract registration taxes	64	67
Surveillance and concierge	0	52
Utilities	13	41
Property, building and facility management costs	26	35
Insurance	28	26
Other taxes and duties	4	25
Legal, notary and professional fees	35	19
Other expenses	8	7
Costs relating to property assets	1,293	1,526

The costs for IMU and registration taxes relate to the taxes levied on the real estate portfolio. Property, building and facility management costs relate to the ordinary and administrative management of the properties in the portfolio. Maintenance costs relate to charges incurred for the ordinary and extraordinary management of the

buildings, while the item utilities includes expenses for the supply of telephone, electricity, water and gas to the properties. Insurance refers to all risk policies taken out with reference to the properties in the portfolio.

This item decreased by €233 thousand compared to the value recorded as of 31 December 2022 due to the sale, at the end of 2022, of the Verona asset, which, being vacant, generated, in the previous year, higher costs of €378 thousand for utilities, management charges, security, consulting and IMU.

Note 18. Total income/(expenses) from disposal of real estate

The item as at 31 December 2023 was zero as no assets were sold during the year.

Note 19. Operating costs

		31/12/2023 31/12/2022
Wages and salaries	502	908
Social contribution	166	478
Severance indemnity fund (TFR)	33	81
Other personnel costs	1,979	592
Sub-total a) Personnel costs	2,680	2,059
Legal and notary fees	454	639
Directors' fees	709	736
Asset advisory fee	730	704
Communications and marketing costs	37	163
Other consultancy and advices	200	130
IT and consultancy fees	125	105
Remuneration of professional auditors	119	98
Fees paid to the Board of Statutory Auditors	85	83
Administrative consulting	82	66
Remuneration of the Supervisory Body	40	67
Real estate consulting and independent expert	11	63
Travel, transport and car expenses	32	53
Insurance	60	51
HR Services	24	40
Financial consultancy	0	39
Internal auditor fees	34	33
Management, cleaning and maintenance expenses of premises	21	19
Utilities	12	15
Security	14	14
Charges and banking fees	79	10
Other	12	12
Technical advice	0	1
Subtotal b) Overheads	2,880	3,141
Amortisation, depreciation and write-downs of fixed assets	112	200
Total operating costs	5,672	5,400

Total operating costs include personnel costs, overhead costs and amortisation, depreciation and write-downs of fixed assets.

Personnel expenses amounted to € 2,680 thousand for the year ended 31 December 2023 and increased compared to the previous year due to the combined effect of higher expenses of € 1,971 thousand arising from the settlement agreements on the terms of the early mutual termination of the employment relationships of the General Manager and the Chief Investment Officer and the resulting reduction in personnel expenses of

€ 759 thousand. In addition, the previous year included the provision for short and long-term incentive bonuses of €598 thousand.

The item General costs showed a balance of €2,880 thousand at 31 December 2023 and decreased by a net €261 thousand compared to 31 December 2022, mainly due to i) lower legal fees of €185 thousand, ii) lower communication costs of €126 thousand and iii) higher bank commissions of €69 thousand incurred for the early repayment of loans with Unicredit Leasing and Banca Centro Lazio. This item also includes €729 thousand for asset advisory fees accrued to Dea Capital RE SGR under the asset advisory agreement.

The item Amortisation, depreciation and write-downs includes the amortisation for the financial year of intangible assets (€ 25 thousand), rights of use (€ 22 thousand) and other tangible assets for € 65 thousand, of which € 57 thousand relate to the accessory part of the property in Rome, Via Zara, depreciated at a rate of 3%. This item, as of 31 December 2022, also included the depreciation of the value of furniture and furnishings related to the Verona property in the amount of € 93 thousand.

Note 20. Other revenues and income

The table below summarises other revenues and income as at 31 December 2023.

		31/12/2023 31/12/2022
Extraordinary income from financial assets	0	469
Other revenues and income	5	32
Total Other revenues and income	5	501

The item as of 31 December 2023 showed a value of €5,000. It should be noted that the value as of 31 December 2022 included the economic effect arising from the signing of the settlement agreement concerning the transfer of the bonds issued by the Euro Sub-fund of the Luxembourg-law Fund "Historic & Trophy Building Fund" managed by Main Source S.A. "HTBF- € Fund", as well as the settlement of the ordinary and executive judicial proceedings related to the recovery of the credits related to the Bond.

Note 21. Other costs and expenses

		31/12/2023 31/12/2022
Shareholders' meetings, financial statements, Consob obligations, Stock Exchange	80	75
Provisions for risks	10	74
Membership fees	31	47
Realised losses on financial assets at fair value	17	0
Other expenses	46	52
Total Other costs and charges	184	248

Other costs and charges include costs incurred for Consob and Borsa Italia contributions and other association obligations and contributions. The item includes the loss realised on the disposal of financial instruments measured at fair value in the amount of €17 thousand.

Note 22. Positive/(negative) fair value of investment properties

	31/12/2023	31/12/2022
Negative fair value of investment properties	(7,598)	(680)
Positive fair value of investment properties	624	3,572
Total	(6,974)	2,892

This item includes write-ups and write-downs carried out on the value of investment property in the portfolio on the basis of appraisals drafted by independent experts. See Note 1 for the relevant comments. Investment property.

Note 23. Fair value adjustment of financial assets

	31/12/2023	31/12/2022
Fair value adjustment of financial assets	0	53
Fair value adjustment of financial assets	0	53

The item is zero due to the fact that the Company, as at 31 December 2023, did not hold any financial instruments in its portfolio.

Note 24. Financial income/(expenses)

	31/12/2023	31/12/2022
Interest income on bank accounts	40	5
Financial income	40	5
Interest on CPI PG loans	(1,349)	(1,432)
Interest on financing from banks	(105)	(119)
Interest on leases	(42)	(99)
Interest expense due on other payables	(4)	(7)
Financial expenses	(1,500)	(1,657)

Financial expenses consisted mainly of interest expenses on loans granted by the parent company CPI PG for €1,349 thousand and interest on bank and lease financing for €147 thousand. Interest on lease and bank financing decreased compared to the previous year due to the early repayment of the property lease with Unicredit Leasing and the loan with Banca Centro Lazio in the first quarter of 2023.

Note 25. Taxes

For income deriving from exempt management, the Company applies the specific regulation envisaged by Art. 1, paragraphs 119 et seq., of Italian Law no. 296/2006 and the relevant implementing decree, while for income deriving from taxable management, the ordinary taxation rules for IRES and IRAP purposes are applied. As of 31 December 2023, the tax consolidation resulted in a tax loss and no deferred taxation was recognised due to its foreseeable recoverability. The item includes the write-down of deferred tax assets for €190 thousand and IRAP contingent liabilities for €64 thousand. For further details, see the section "Legal and Regulatory Framework of SIIQs" included in the Report on Operations.

Note 26. Cash flow statement

The cash flow statement is presented using the indirect method.

In 2023, operating activities generated a negative cash flow of € 710 thousand (in 2022, a negative cash flow of € 1,206 thousand).

During the year, investment/disinvestment transactions generated a negative cash flow of €372 thousand, while the repayment of financial debt absorbed cash of €6,790 thousand.

Events after year-end

No events occurred after the balance sheet date that required changes in the values of the latter.

For a description of events after the reporting period, reference must be made to the chapter with the heading Events after the reporting period and Foreseeable performance trend included in the Directors' Report on Operations.

Incentive plans

On 10 November 2021, the Shareholders' Meeting approved the share-based plan called "Stock Grant Plan 2021-2026" aimed at aligning the interests of the management with those of the Shareholders, favouring an increase in the market value of the shares and the creation of value for all stakeholders over the medium-long term, in implementation of the provisions of the current Remuneration Policy for 2021-2023 approved by the Shareholders' Meeting on 26 April 2021 and in compliance with the provisions of the Framework Agreement and the Asset Advisory Agreement signed between the Company and DeA Capital Real Estate SGR S.p.A., as well as in line with generally accepted international practice and in accordance with the recommendations of the Corporate Governance Code, which the Company follows.

The Plan provides for the free and personal allocation, in one or more tranches to be implemented within five years from the date of the shareholders' meeting approval, of treasury shares of the Company to the beneficiaries to be identified by the Board of Directors, with the assistance of the Remuneration Committee, from amongst the Directors, managers, other employees, collaborators and consultants of the Company and companies belonging to its Group (including key managers of companies belonging to the DeA Capital Group in execution of the Framework Agreement and the Asset Advisory Agreement), up to a maximum number of treasury shares corresponding to 3% of the Company's existing share capital pro tempore at the date of each implementation of the Plan.

On 27 April 2022, the Board of Directors of NEXT RE approved the Implementing Regulations (hereinafter also the "Regulations") of the First Cycle 2022 - 2024 Stock Grant Plan (hereinafter also the "Plan"), which provides for the free assignment to the beneficiaries of a maximum of 206,176 ordinary treasury shares upon the achievement of pre-established targets or the occurrence of certain conditions.

In particular, the Plan provides for the free assignment of the shares to the beneficiaries, identified as the Executive Directors with management powers and the Executives of the Company, subject to the maintenance of the Relevant Relationship (of administration, dependence, collaboration/consultancy) by each beneficiary until the final date of the vesting period set at 31 December 2024 and the achievement in the period 2022 - 2024 of one or more specific Performance Objectives conditional to the achievement of the Gate Objective that constitutes the condition for access to the First Cycle of the Plan.

The Company used the services of an external consultant for the purpose of the valuation of the rights assigned, which was carried out by reflecting the financial market conditions valid at the valuation date and concerned the total fair value of the Plan, which is influenced by the number of rights that will mature in accordance with the rules set forth in the performance conditions as well as the fair value of each right.

The class of rights subject to estimation concerns the "non-market based" component, being, in this case, the free assignment of rights to receive a maximum number of Ordinary Shares correlated to the achievement of Economic-Financial (NAV and cumulative EBITDA level) and qualitative (ESG Indicators) targets not related to market conditions. In this case, the vesting conditions, as indicated by IFRS 2, were considered by adjusting the number of equity instruments included in the valuation of the transaction amount.

The total fair value of the vesting rights, relating to the 1st Cycle 2022 - 2024, was determined by applying the binomial tree model for the valuation of American Cox-Ross-Rubinstein (CRR) options, also taking into account the Good Leaver clause provided for in the Regulation. The fair value was estimated to be zero because, as at 31 December 2023, the prerequisite for achieving the Gate Objective, which is the condition for access to Cycle I of the Plan, is not deemed to have been met.

All information referring to the Stock Grant Plan 2021-2026 is described in the Information Document prepared pursuant to Article 84-bis, paragraph 1, of Consob Regulation no. 11971/1999 and in accordance with Schedule no. 7 of Annex 3A of the same Regulation, available to the public on the website https://www.nextresiiq.it/, Governance - Shareholders' Meeting section.

The Board of Directors' meeting of 21 March 2023 decided to postpone to a subsequent board meeting, following the outcome of the Shareholders' Meeting's determinations, the resolutions on the short-term incentive scheme for the financial year 2023 (MBO 2023), in consideration of the significant changes in corporate governance during the half-year period.

Update on the impact of COVID-19 on the 2023 accounts

In relation to the impact of the COVID-19 pandemic on the Company's accounts, the Company continues to recognise the effects of temporary rent reductions granted to tenants on a linear basis over the duration of contracts. In the financial year, € 224 thousand was recognised as a reduction of rental income for so-called COVID concessions, while reductions of € 898 thousand will be recognised on a straight-line basis in subsequent periods, up to 2027, as a reduction of rental income.

Consideration of existing conflicts and the macroeconomic scenario

The global macroeconomic environment in 2023 was characterised by a significant decline in energy commodity prices compared to the levels recorded in 2022 and a gradual increase in interest rates; high inflation, which has not yet normalised, and a situation of geopolitical instability due to the wars in Ukraine and the Middle East.

With reference to the conflict between Russia and Ukraine and the conflict in the Middle East, the management conducted an analysis of the potential risks arising from them in view of the business in which the Group operates, the commercial counterparties and the financial structure.

The Company's revenues, as known, consist of rentals from the lease of the six buildings. The Company's customer portfolio, as at 31 December 2023, did not present any issues related to non-collection or uncertainties on the collectability of receivables. All receivables invoiced as of 31 December 2023 were collected by January 2024.

The Real Estate Business Area, as part of its relations with customers, monitors their performance and identifies any critical issues related to credit management.

With reference to the increases in energy commodity prices, the Group has not been significantly exposed to this phenomenon; this is because all the properties owned, with the exception of a portion used by NEXT RE (for instrumental use) are leased and, therefore, operating costs, such as typically utilities, are borne by the tenants.

The Group does not operate directly with parties affected by the sanctions and restrictive measures imposed by the EU on Russia.

With reference to the financial year 2023, the Company did not have any credit access needs. As of 31 December 2023, 98% of the debt structure consisted of payables to the parent company CPI Property Group S.A., a company exercising management and coordination activities over NEXT RE; these payables are due in the financial year 2026. In this context, therefore, the Group considers that it is not significantly exposed to the risk of access to credit and, consequently, it has not taken any action to mitigate it. Moreover, to the Company's knowledge, the parent company is not significantly exposed to the risk of the impact of the Russia-Ukraine conflict.

In light of the above and the fact that the rate applied to shareholders' loans is fixed, the Group is not significantly impacted by the phenomenon of rising interest rates connected to the macroeconomic scenario arising from the conflict between Russia and Ukraine.

Finally, taking into account the sector in which the Group operates, the latter is not impacted by any critical issues concerning the procurement of raw materials. Taking the above into account, Management deemed that the conflict between Russia and Ukraine did not have any significant impact on the Company's operations.

With reference to the macroeconomic scenario and its impact on the financial statements, as represented in Note 1. Investment property, the variables used in the valuation of assets were affected by the general increase in interest rates. The changes in fair value related to the increase in interest rates had a significant impact on the result for the year 2023 and, as also represented by the results of the sensitivity analyses conducted, could also have an impact in the future should the macroeconomic scenario continue to significantly influence the variables used in the valuation process of real estate assets and contribute to a greater level of uncertainty in determining fair values.

Management and coordination activities

The Company is subject to management and coordination by CPI Property Group S.A.. Below are the key figures from the last financial statements approved by CPI Property Group S.p.A.

Certification of the Financial Statements

CERTIFICATION OF THE FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB REGULATION NO. 11971 OF MAY 14TH, 1999 AND SUBSEQUENT AMENDMENTS

• 1. We, the undersigned, Giovanni Naccarato, as Chief Executive Officer, and Francesca Rossi, as Manager responsible for the preparation of the corporate accounting documents of NEXT RE SIIQ S.p.A., having also considered the provisions of art, 154-bis, paragraphs 3 and 4, of the Legislative Decree No. 58 of February 24th, 1998, hereby certify:
  2. the adequacy in light of the Company's characteristics, and
  3. the effective application of the administrative and accounting procedures adopted in preparing the financial statements during the period 1 January – 31 December 2023.
• 1. We further certify that:
  2. 2.1 the Financial Statements:

a) have been prepared in accordance with the international financial reporting standards recognized in the European Union under the EC Regulation 1606/2002 of the European Parliament and of the Council of July 19th, 2002,

b) are consistent with the entries in the accounting books and records,

c) is apt to provide a true and fair representation of the balance sheet, income statement and financial position of the Issuer;

2.2 the report on operations provides a reliable analysis of the developments and results from operations, as well as of the position of the Issuer, together with a description of the main risks and uncertainties to which it is exposed.

Rome, March 12, 2024

Chief Executive Officer

Manager responsible for the preparation of the corporate accounting documents

Dott. Giovanni Naccarato

Dott.ssa Francesca Rossi

Annexes

Annex 1 - Transactions with related parties

	Financial Statements of NEXT RE SIIQ S.p.A.
Annexes
Annex 1 - Transactions with related parties
The following table shows the amount of transactions with related parties.
(Values in euro)
Related party	Shares held in	Payables to banks and	Trade payables and	Cost related to	Overhead	Financial
Fidelio Engineering S.r.l.	subsidiaries 10,000	other lenders 0	other payables 0	real estate 29,572	costs 9,000	expenses 0
CPI Property Group S.A.	0	61,809,161	0	0	0	1,349,000
Dea Capital Real Estate SGR S.p.A.	0	0	406,314	0	729,367
Directors	0	0	99,240	0	708,735	0
Statutory Auditors	0	0	71,395	0	84,394	0

Annex 2 - Auditing Firm Fees

The following table, pursuant to Art. 149-duodecies of the Consob Issuers' Regulation, highlights the fees accrued for the 2023 financial year for the statutory audit services for the financial statements of NEXT RE SIIQ S.p.A.

(Values in euro)

Assignment	Authorised	Fees*
Statutory audit of the annual and consolidated financial statements	EY S.p.A.	113,481
Audit procedures on reporting package for purpose of consolidation by CPI PG	EY S.p.A.	5,500
Total		118,981

*in addition to CONSOB contribution and flat-rate expenses

Report of the Independent Auditors

EY S.D.A. Via Lo mbardia, 31 00187 Roma

Tel: +39 D6 324751 Fax: +39 06 324755504 ey.com

Independent auditor's report pursuant to article 14 of Legislative Decree n. 39, dated 27 January 2010 and article 10 of EU Regulation n. 537/2014 (Translation from the original Italian text)

To the Shareholders of NEXT RE SIIQ S.p.A.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of NEXT RE SIIQ S.p.A. (the Company), which comprise the statement of financial position as at 31 December 2023, the statement of profit/(loss), the statement of other comprehensive income, the statement of changes in shareholders' equity and the cash flows statement for the year then ended, and notes to the financial statements, including material accounting policy information.

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 December 2023, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing art. 9 of Legislative Decree n. 38/2005.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the regulations and standards on ethics and independence applicable to audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

K

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We identified the following key audit matters:

Key Audit Matter	Audit Response
Valuation of Investment Properties

Investment properties as of 31 December 2023 amounted to Euro 130,067 thousand and audit matter included, among others:

Our audit procedures in response to this key

E Y S.p.A.
Sede Logaio: Via Moravigil, 12 - 20123 Milano
Sode Sacondaria: Via Lombardia, 31 - 00187 Roma Capitale Sociale Euro 2.600.000.00 Lv.
Brillia alla S.O. dell'Angreso presso in CDAA di Milano Monza Brianza Lodi
Codico flocale e numaro di Iscrizione 00434000684 - numero

A momber firm of Ernst & Young Clobal Limited

are stated at fair value in accordance with International Financial Reporting Standards IAS 40 Investment properties, recognizing the effects of changes of fair values in the income statement. Management has estimated the fair value of investment properties with the support of reports prepared by independent experts.

The fair value estimate involves the use of valuation models that require forecasting of future costs and revenues of each property and the use of assumptions about the occupancy rate of properties, real estate and financial markets' trends within the current global macroeconomic framwork, the impact of climate change, as well as the general economic conditions that affect the level of rents and reliability of tenants.

We considered that these items represent a key audit matter, due to the materiality of the investment properties stated at fair value and the changes in fair value during the period, as well as the judgment required by Management in assessing the above-mentioned assumptions used in the fair value models.

The paragraphs "Note 1. Investment properties" and "Use of estimates and assumptions" of the notes to the financial statements describe respectively the criteria and models for real estate portfolio valuation and the selection process of the independent expert.

• the assessment and understanding of the process for determining the value of investment properties adopted by the Company;
• the assessment of the company's process related to the selection and use of independent experts appointed in order to prepare a fair value estimate:
• · the tracing of the amounts used by independent experts with the balance sheet figures:
• the assessment and discussion with Management and their independent experts of the key market assumptions used in the valuation process;
• · the testing of the valuation models adopted by the company and on the reports prepared by the independent expert.

In performing our audit procedures, we also involved our experts in real estate valuation techniques.

Lastly, we have reviewed the disclosures provided in the notes to the financial statements.

Responsibilities of Directors and Those Charged with Governance for the Financial Statements

The Directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the regulations issued for implementing art. 9 of Legislative Decree n. 38/2005, and, within the terms provided by the law, for such internal control as they determine is necessary to

enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Directors are responsible for assessing the Company's ability to continue as a going concern and, when preparing the financial statements, for the appropriateness of the going concern assumption, and for appropriate disclosure thereof. The Directors prepare the financial statements on a going concern basis unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The statutory audit committee ("Collegio Sindacale") is responsible, within the terms provided by the law, for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a quarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have exercised professional judgment and maintained professional skepticism throughout the audit. In addition:

• · we have identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error, designed and performed audit procedures responsive to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• · we have obtained an understanding of internal control relevant to the audit 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 Company's internal control;
• · we have evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors;
• we have concluded on the appropriateness of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• we have evaluated the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We have communicated with those charged with governance, identified at an appropriate level as required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We have provided those charged with governance with a statement that we have complied with the ethical and independence requirements applicable in Italy, and we have communicated them all matters that may reasonably be thought to bear on our independence, and where applicable, the actions taken to eliminate relevant risks or the safeguard measures applied.

From the matters communicated with those charged with governance, we have determined those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We have described these matters in our auditor's report.

Additional information pursuant to article 10 of EU Regulation n. 537/14

The shareholders of NEXT RE SIIQ S.p.A., in the general meeting held on April 29, 2021, engaged us to perform the audits of the financial statements for each of the years ending 31 December 2021 to 31 December 2029.

We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU Regulation n. 537/2014, and that we have remained independent of the Company in conducting the audit.

We confirm that the opinion on the financial statements included in this report is consistent with the content of the additional report to the audit committee (Collegio Sindacale) in their capacity as audit committee, prepared pursuant to article 11 of the EU Regulation n. 537/2014.

Report on compliance with other legal and regulatory requirements

Opinion on the compliance with Delegated Regulation (EU) 2019/815

The Directors of NEXT RE SIIQ S.p.A. are responsible for applying the provisions of the European Commission Delegated Regulations (EU) 2019/815 for the regulatory technical standards on the specification of a single electronic reporting format (ESEF - European Single Electronic Format) (the "Delegated Regulation") to the financial statements, to be included in the annual financial report.

We have performed the procedures under the auditing standard SA Italia n. 700B, in order to express an opinion on the compliance of the financial statements with the provisions of the Delegated Regulation.

In our opinion, the financial statements as at December 31, 2023 have been prepared in the XHTML format in compliance with the provisions of the Delegated Regulation.

Opinion pursuant to article 14, paragraph 2, subparagraph e), of Legislative Decree n. 39 dated 27 January 2010 and of article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998

The Directors of NEXT RE SIIQ S.p.A. are responsible for the preparation of the Directors' Report on Operations and of the Report on Corporate Governance and Ownership Structure of NEXT RE SIIQ S.p.A. as at 31 December 2023, including their consistency with the related financial statements and their compliance with the applicable laws and regulations.

We have performed the procedures required under audit standard SA Italia n. 720B, in order to express an opinion on the consistency of the Directors' Report on Operations and of specific information included in the Report on Corporate Governance and Ownership Structure as provided for by article 123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the financial statements of NEXT RE SIIQ S.p.A. as at 31 December 2023 and on their compliance with the applicable laws and regulations, and in order to assess whether they contain material misstatements.

In our opinion, the Directors' Report on Operations and the above mentioned specific information included in the Report on Corporate Governance and Ownership Structure are consistent with the financial statements of NEXT RE SIIQ S.p.A. as at December 31, 2023 and comply with the applicable laws and regulations.

With reference to the statement required by art. 14, paragraph 2, subparagraph e), of Legislative Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have no matters to report.

Rome, March 29, 2024

EY S.p.A. Signed by: Filippo Maria Aleandri, Auditor

The accompanying financial statements of NEXT RE SIIQ S.p.A. constitute a non-official version which is not compliant with the provisions of the Commission Delegated Regulation (EU) 2019/815. This independent auditor's report has been translated into the English language solely for the convenience of international readers. Accordingly, only the original text in Italian language is authoritative.

Report of the Board of Statutory Auditors

To the Shareholders of NEXT RE SIIQ S.p.A. (the "Company" or "NEXT RE")

Dear Shareholders.

Pursuant to Article 153 of Legislative Decree No. 58/1998 (hereinafter also "TUF") and Article 2429, paragraph 2, of the Italian Civil Code, the Board of Statutory Auditors is required to report to the Shareholders' Meeting, convened to approve the financial statements for the year ended 31 December 2023, on the supervisory activities performed during the year in the fulfilment of its duties, on any omissions and reprehensible facts that may have been detected, and on the results of the financial year.

The Board of Auditors is also called upon to make any proposals regarding the budget and its approval.

Appointment and Activities of the Board of Statutory Auditors

The Board of Statutory Auditors in office as of this report was appointed at the Shareholders' Meeting held on 26 April 2021, and therefore in office until the Shareholders' Meeting called to approve the financial statements as of 31 December 2023, and is composed of the Chairman of the Board of Statutory Auditors Luigi Mandolesi and Standing Auditors Domenico Livio Trombone and Sara Mattiussi.

With reference to the provisions of application criterion 8. I. of the Self-Regulatory Code of Listed Companies approved by the Corporate Governance Committee (the "Self-Regulatory Code") regarding the independence requirements for members of the Board of Statutory Auditors, no one holds, nor has recently held, even indirectly, any relations with the Company or persons connected to the Company, such as to condition ther autonomy of judgement. The outcome of this verification was report on Corporate Governance and Ownership (the 'Corporate Governance Report') prepared pursuant to Article 123-bis of the Consolidated Law on Finance

Each Statutory Auditor has also complied with the limit on the accumulation of offices provided for in Article 148-bis of the Consolidated Law on Finance and its implementing regulations (Articles 144 duodecies to 144quinquiesdecies of Consob Regulation 11971/99 ("Issuers' Regulations"), as referred to in the Bylaws.

Supervisory activities concerning compliance with the Law and the Articles of Association, compliance with the principles of proper administration, and the adequacy of the organisational, administrative and accounting structure adopted by the Company, as well as pursuant to Legislative Decree no. 39/2010 and subsequent amendments and additions.

The Board of Statutory Auditors carried out its supervisory duties pursuant to the applicable laws and regulations, in accordance with the principles of conduct recommended by the National Council of Certified Public Accountants and Accounting Experts, observing the duties set forth in Article 149 of Legislative Decree No. 58/1998 ("TUIF") and, for the applicable provisions, of the Civil Code, as well as Consob communications on corporate controls and the activities of the Board of Statutory Auditors (specifically, communication No. DEM/1025564 of 6 April 2001 and subsequent communications). In addition, the Board of Statutory Auditors

in the performance of its supervisory duties took into account the provisions of European Regulation No. 537 of 16 April 2014 ("EU Regulation 537/2014") and the conduct guidelines contained in the Corporate Governance Code for Listed Companies.

The Board of Statutory Auditors acquired the information instrumental to the performance of the tasks assigned to it through participation in the meetings of the board of directors and of the endoconsiliari committees. meetings with the main corporate functions - in particular, the control functions and the Supervisory Board, the company management, as well as through discussions with the Manager in charge of preparing the accounting and corporate documents and with the Auditing Company appointed to audit the annual accounts, EY S.p.A.

The information set forth in Consob Communication DEM 1025564/2001, as amended and supplemented by Communication DEM/3021582 of 4 April 2003, and subsequently by Communication DEM 6031329 of 7 April 2006, is provided below.

Special Regime for Listed Real Estate Investment Companies (SIIQs)

The Board of Statutory Auditors monitored the fulfilment of the requirements for the special regime of the Società di Investimento Immobiliare Quotate ("SIIQ") introduced and regulated by Law No. 296/2006 (hereinafter also "Law No. 296/2006") and subsequent amendments, as well as by the provisions contained in the implementing regulation of the Ministry of Economy and Finance No. 174/2007, which allows exemption from IRES taxation and proportional IRAP taxation of business income deriving from real estate leasing activities

The Company exercised the option to access this special regime, on 7 September 2016, with effect from the tax period commencing on 1 January 2017, and met all the necessary requirements for the application of the tax benefits provided for by the special SIIQ legislation by the 2017 financial year and notified the Inland Revenue on 17 January 2018 of the integration of the participation requirements that were not held at the time of exercising the option.

In the explanatory note "Disclosure on the Special Regime for Listed Investment Companies - SIIQs" of the financial statements as of 3 1 December 2023, the directors acknowledge that NEXT Re as of 31 December 2023 has met the objective requirements for remaining in the Special Regime and that as of 31 December 2023, all other requirements for remaining in the Special Regime (including the so-called "control" requirement) also continue to be maintained and met.

As mentioned in the section "Significant events during the year" of the Report on Operations, On 1 January 2023, the Company announced that the deadline for the conditions precedent had expired provided for in the framework agreement (the "Framework Agreement") signed on 5 August 2021 with the controlling shareholder CPI PG, DeA Capitai S.p.A., De Agostini S.p.A. and DeA Capitai Real Estate SGR S.p.A., as amended on 5 July 2022 by the "Deed of Reinstatement and Amendment to the Framework Agreement" (the "Deed of Reinstatement"), which became effective on 31 December 2022. Accordingly, the Company announced that: (i) the prerequisites for the partial execution, up to the amount of Euro 1 billion, of

by Consob Resolution No. 11971/99, subject to revocation of the shareholders' resolution of 26 April 2022 authorising the purchase and disposal of treasury shares, to the extent not used. On the same date, the Board of Directors of the Company, which met under the chairmanship of the newly appointed Mirko Bertaccini, appointed Giovanni Naccarato as Chief Executive Officer of the Company, assigned to the Chairman Mirko Bertaccini, in addition to the legal representation of the office of Director in charge of the internal control and risk management system, also appointing him as Employer, and elected Director Giuseppe Colombo as Vice-Chairman of the Board of Directors. [The Board of Directors then ascertained the existence of the regulatory and statutory requirements, also in terms of gender balance, for its members in order for the administrative body to be duly constituted. 147-ter, paragraph 4, and 148, paragraph 3, of the Consolidated Law on Finance, article 2, recommendation 7, of the Corporate Governance Code to which the Company adheres, as well as article 16 of the Regulation adopted with Consob Resolution no. 20249/2017 in the case of Directors Camilla Giugni, Luca Matrigiani, Maria Spilabotte and Eleonora Linda Lecchi. The Board also resolved to set up the Independent Committee with proposing and advisory functions in the areas of controls, risks, appointments, remunerations with related parties, investments and divestments, composed solely of non-executive and independent Directors in the persons of Luca Matrigians (Chairman), Camilla Giugni and Eleonora Linda Lecchi.

On 13 June 2023, the Company announced that the Board of Directors, in the context of the reorganisation of corporate governance, resolved to appoint Ms Francesca Rossi - who also holds the position of Head of Administration, Financial Statements and Accounting as well as Financial Reporting Officer - as the new Chief Financial Officer, effective until the date of the Shareholders' Meeting to approve the 2025 financial statements.

On 27 July 2023, the Company announced that it had approved the Preliminary Consolidated Results as at 30 June 2023.

On 14 September 2023, the Company announced that it had approved the Condensed Half-Yearly Financial Report for the six months ended 30 June 2023, prepared in accordance with International Financial Reporting Standards (IAS/IFRS). The main results for the first half of 2023 did not differ from the preliminary figures disclosed to the market on 27 July 2023.

On 24 October 2023, the Company announced that it had approved the Additional Financial Information as at 30 September 2023.

Significant economic, financial and asset transactions and their compliance with the law and the articles of association.

In 2023, the Board of Statutory Auditors monitored compliance with the Law and the Articles of Association, receiving periodic information from the directors on the general performance of operations, its foreseable evolution, as well as on the most significant economic, financial and equity transactions resolved and implemented during the year, carried out by the Company and its subsidiary,

The meetings of the Board of Directors were held in compliance with the statutory, legislative and regulatory provisions governing its functioning, and, to the extent of its competence, it can be reasonably assured that the actions resolved upon were in compliance with the Law and the Articles of Association. During these meetings, the Directors provided, on a quarterly basis, in accordance with the procedures established by the Company's corporate governance rules, information on the general performance of operations and its foreseeable evolution, on the activities carried out and on the most significant economic, financial and equity transactions of the Company and or its subsidiary. Refering to their report for an illustration of the main initiatives undertaken during the financial year, the Board of Statutory Auditors certifies that, to the best of its knowledge, these have been based on principles of correct administration and are not manifestly imprudent or risky or such as to compromise the integrity of the Company's assets.

Regarding the effects of COVID-19, the Board takes note of what the Directors indicated in the paragraph "Update on the effects of COVID-19" in the Management Report and in particular the impact of the pandemic on the 2023 income statement.

Rental revenues take into account a reduction of €224,000 related to the release of temporary rent reductions granted to OVS in previous years.

On the other hand, with reference to future impacts, it should be noted that the fee reductions granted to the customer OVS will have a negative impact for a total of €898 thousand due to the IFRS 16 accounting treatment that provides for the linearisation of these effects over the contractual term.

Events occurred after the reporting period

After the necessary in-depth examination of the events that significantly influenced the financial year 2023, with regard to the significant events subsequent to the end of the financial year, the following should be noted. On 4 March 2024, the Board of Directors approved the terms and conditions of the proposal for the sale of the 100% equity investment held by Next Re in the subsidiary Fidelia Engineering S.r.1., for a consideration equal to the value of Fidelia's Shareholders' Equity at the deed of sale. The transaction takes the form of a transaction with a related party of minor importance.

Atypical and/or unusual transactions, including those within the group or with related parties

The Board of Statutory Auditors has not become aware of any atypical and/or unusual transactions during the 2022 financial year, including those between group companies or with related parties. In this regard, it should be noted that:

• on the basis of the analyses performed, there are no transactions that are atypical/unusual with Group companies, third parties or other related parties;
• the procedures adopted by the company regarding related party transactions comply with the principles set forth in Consob Regulation No. 17221 of 12 March 2010, updated with the amendments made by Consob Resolution No. 19974 of 27 April 2017;

• intra-group or related party transactions did not present any critical profiles.

The Board of Statutory Auditors monitored the concrete implementation of the rules with related parties also through its participation in the Committee of Independent Directors ('Committee').

The Board of Statutory Auditors has analysed the transactions with related parties and or intra-group, on which it reports the following:

• intra-group transactions, both of a commercial and financial nature, concerning subsidiaries and the parent company, are regulated on an equivalent basis to those prevailing in transactions between independent parties. They are adequately described in the financial statements;
• Transactions with other related parties of greater and lesser significance are indicated in the management report where transactions subject to prior examination by the Committee of Independent Directors for Related Party Transactions are specified;
• with reference to NEXT Re's transactions with related parties, the main balance sheet and profit and loss account balances for the year 2023 arising from transactions with related parties are summarised in the Explanatory notes to Appendix 1;
• Detailed information on the remuneration due for the year 2023 to the members of the management and control bodies and to the Executives with strategic responsibilities is provided in the remuneration report prepared pursuant to ait. 123-ter of the Consolidated Law on Finance. In particular, the Shareholders' Meeting - held on 26 April 2021 - approved the new Remuneration Policy of NEXT Re SIIQ S.p.A. for the financial years 2021-2023, illustrated in the Remuneration Policy Report prepared by the Board of Directors pursuant to Articles 123-ter of the Consolidated Law on Finance and in compliance with Principle XVI of the Code;
• In the Report on Operations and in the notes to the annual financial statements, the directors provide adequate information on intra-group transactions and related party transactions.

With regard to Related Party Transactions of Lesser Relevance, the following should be noted.

• on 21 March 2023, the Board of Directors of the Company approved the settlement agreements concerning the terms and conditions (i) the consensual early termination of the executive employment relationships of the General Manager (Stefano Cervone) and of the Chief Investment Officer (Claudio Carserà) effective as of 30 April 2023 as well as (ii) the termination of the respective offices of the Chairman of the Board of Directors (Giancarlo Cremonesi) and of the Chief Executive Officer (Stefano Cervone), effective as of the conclusion of the Shareholders' Meeting to approve the 2022 financial statements (the "Settlement Agreements").

Since all the above-mentioned parties are related parties of the Company pursuant to article 2.1, letter (a) of the "Procedure on Transactions with Related Parties of NEXT RE SIIQ S.P.A." (the "Procedure OPC"), the aforesaid transactions relating to the Transaction Agreements were qualified as transactions with related parties of lesser importance, in application of the countervalue index pursuant to paragraph I. 1., letter (a) of Annex 3 to the Regulation approved by Consob resolution no.

The Board of Statutory Auditors verified the existence of adequate rules and processes to safeguard the financial information formation process, specifically examining the process that allows the Manager in charge of preparing the company's accounting and corporate records ("Dirigente Preposto"), appointed pursuant to Law 262/2005, and the Company's Chief Executive Officer to issue the certifications required by Article 154bis of the Consolidated Law on Finance. In compliance with the provisions of Article 150, paragraph 3, of Legislative Decree 58/1998 (Consolidated Law on Finance), the Board of Statutory Auditors met periodically with the Auditing Company in order to exchange mutual information. During the meetings, no acts or facts considered censurable or irregularities that required the formulation of specific reports pursuant to Article 155, paragraph 2, of Legislative Decree 58/1998 (Consolidated Law on Finance) were brought to the attention of the Board of Statutory Auditors.

The Board of Statutory Auditors analysed the methodological framework adopted by the Auditor and acquired the necessary information on the audit approach used for the various significant areas of the financial statements, sharing issues related to business risks, as well as receiving updates on the progress of the audit assignment and the main issues of concern to the Auditor.

The Board of Statutory Auditors then examined the reports prepared by the Auditing Company, EY S.p.A., which was entrusted with the legal audit for the financial years 2021-2029.

On 29 March 2024, the Independent Auditors issued the Audit Report prepared pursuant to Article 14 of Legislative Decree No. 39/2010 and Article 10 of Regulation (EU) No. 537/2014 for the financial statements as at 31 December 2021. For the opinion and statement, please refer to the Report issued by the Independent Auditors.

In particular, it should be noted that in the Audit Report on the Financial Statements, the Auditor has:

• issued an opinion stating that the Financial Statements give a true and fair view of the financial position of the Company as at 31 December 2023, the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, as well as the measures issued in implementation of Article 9 of Legislative Decree No. 38/2005:
• Declare, pursuant to article 14, paragraph 2, letter e) of Legislative Decree no. 39/10 and article 123bis, paragraph 4, of Legislative Decree no. 58/98, that we have performed the procedures indicated in the auditing standard (ISA Italia) no. 720B in order to express an opinion on the consistency of the report on operations and certain specific information contained in the report on corporate governance and ownership structure indicated in article 123-bis, paragraph 4, of Legislative Decree no. 58/98, with the financial statements of NEXT Re SIQ as of December 31, 2023 and their compliance with the law. Legislative Decree no. 58/98, with the financial statements of NEXT Re SIIQ as at 31 December 2023 and their compliance with the law, as well as to issue a statement on any significant errors.

The Auditor, in his reports, did not point out any remarks or requests for information.

The Auditor's Report, issued pursuant to Article 10 of EU Regulation 537/2014 and to which reference is made, sets out the key aspects of the related audit and the related audit procedures applied. The aforementioned key aspects were analysed in detail and updated during the periodic meetings held by the Board of Statutory Auditors with the Independent Auditors.

The Auditor did not report any events or circumstances identified during the course of the audit that would raise significant doubts about the entity's ability to continue as a going concern, or any significant deficiencies in the internal control system for financial reporting and or in the accounting system, or any significant issues regarding actual or suspected non-compliance with laws and regulations or statutory provisions identified during the course of the audit.

With regard to events after the balance sheet date, the Company stated in the Report on Operations that no events occurred after the balance sheet date that would have led to an adjustment of the balance sheet values.

Independence of the auditing firm. Indication of whether any further engagements have been entrusted to the auditing firm or to persons linked to the auditing firm by ongoing relationships and the related costs.

The Board of Statutory Auditors has received the Statutory Auditor's declaration of annual confirmation of independence drawn up pursuant to Article 6(2)(a) of Regulation (EU) No. 537/2014 and pursuant to paragraph 17 of ISA Italia 260, which confirms compliance with the ethical principles set out in Articles 9 and 9 bis of Legislative Decree 39/2010, finding no situations that could compromise the independence of the auditing firm during the period from 1 January 2023 until the date of issue of the declaration (29 March 2024).

Appendix 2 to the Notes to the Company's Financial Statements sets forth the fees of the Independent Auditors and reports the table, prepared pursuant to Article 149-duodecies of the Consob Issuers' Regulations, of the fees paid to EY S.p.A. for the year.

Taking into account:

• the declaration of independence issued by EY S.p.A. pursuant to Article 6(2)(a) of EU Regulation No. 537/2014 and the transparency report produced by the same and published on its website pursuant to Article 13 of the aforementioned Regulation:

• of the tasks assigned to it and the companies belonging to its network by NEXT Re SIIQ S.p.A. and the companies of the Group;

no situations were found that compromised the auditor's independence.

Information on the possible submission of complaints pursuant to Article 2408 of the Civil Code and complaints

During 2023, no complaints pursuant to Article 2408 of the Civil Code were received and no complaints of any kind were filed.

Indication of the existence of opinions issued in accordance with the law during the financial year

During the financial year 2023, they were released:

• 86opinions, 6 of which by the Appointments and Remuneration Risk Control Committee and 2 by the Related Party Transactions Committee;
• No. 2 half-yearly reports of the Internal Audit Function, on 20 July 2023 and on 19 February 2024 by Mr. Dinarelli:
• No. 2 half-yearly reports of the Supervisory Board, dated 22 July 2023 and 29 February 2024.

Indication of the frequency and number of meetings of the Board of Directors, the Executive Committee and the Board of Auditors.

During the financial year, the Board of Statutory Auditors participated:

• 12 meetings of the Board of Directors,
• 8 Endoconsiliar Committees:
• 1 Members' Meetings.

There were 8 meetings of the Board of Auditors.

Supervisory activities on compliance with the principles of sound administration

The Board of Auditors monitored compliance with the principles of proper administration by collecting information from the heads of company departments and meetings with the auditing firm for the mutual exchange of relevant data and information, and has no particular observations to report in this regard.

The transactions resolved and implemented by the Board of Directors appear to be in compliance with the law and the Articles of Association, not in conflict with the resolutions passed by the Shareholders' Meeting, and based on principles of proper administration.

The Management Report for the financial year 2022 complies with the laws and regulations in force and is consistent with the resolutions adopted by the Board of Directors, with the events of the financial year and with those of significance after the end of the financial year. The Half-Yearly Financial Report has been disclosed as required by law and regulations in force.

Supervisory activities on compliance with the principles of sound administration

Board of Auditors monitored compliance with the principles of proper administration by collecting information from the heads of corporate functions and meetings with the auditing firm for the mutual exchange of relevant data and information, and has no particular observations to report in this regard.

The transactions resolved and implemented by the Board of Directors appear to be in compliance with the law and the Articles of Association, not in conflict with the resolutions passed by the Shareholders' Meeting, and based on principles of proper administration.

The Management Report for the financial year 2023 complies with the laws and regulations in force and is consistent with the resolutions adopted by the Board of Directors, with the facts of the financial statements for the year and with those of significance after the end of the financial year. The Half-Yearly Financial Report was published in accordance with the law and regulations in force.

Supervisory activities concerning the adequacy of the organisational structure, the internal control system

The Board of Statutory Auditors has acquired knowledge - by obtaining data and information from the heads of the various corporate functions also by means of, where necessary, direct investigations - and supervised, to the extent of its competence, the adequacy of the Company's organisational structure. Furthermore, it has found it to be appropriate to the characteristics of the Company, as well as to the activity performed.

With reference to the internal control and risk management system ("SCIGR"), the Board of Statutory Auditors recalls the information provided in the Report on Corporate Governance and Ownership Structure on the SCIGR and the Report on Corporate Risk Factors prepared by the director in charge of the SCIGR, Dr. Mirko Bertaccini, on 4 March 2024.

On the subject of risk management, the Board of Statutory Auditors acknowledges that the risk management model is adequate and reliable, however it reiterates that it periodically monitors financial risks in particular, also in a multi-year perspective, periodically updating the assessment of these risks.

The Board of Statutory Auditors has periodically met with the Supervisory Board ('SB') in order to ascertain the activities carried out by the latter during the 2023 financial year, and the reports on the activities carried out by the latter have not revealed any reprehensible facts or specific violations of the Model itself.

In summary, in the light of the overall activity of the Board of Auditors, considered:

• the organisational structure;
• the existing set of procedures;
• the results of the verification and evaluation activities received by the Board of Auditors from the Internal Audit function and the Auditing Company;
• the report on risk factors drawn up by the director in charge of the SCIGR pursuant to Article 5 paragraph I) letter a) of the Guidelines of the SCIGR of NEXT Re S.p.A.
• the information taken in the participation of the Board of Auditors in the Board of Directors and in the endoconsiliar committees;
• the exchange of information with the Statutory Auditor and the Supervisory Board 231/200 I.

The Board of Statutory Auditors did not find any critical situations or elements that could lead it to consider the internal control system inadequate.

Supervision of the adequacy of the administrative and accounting system and its reliability in representing management events

The Board of Statutory Auditors has acquired knowledge and monitored, to the extent of its competence, the adequacy of the Company's administrative and accounting structure in correctly representing management events, by: i) gathering information from the heads of the various from the Independent Auditors and from the Manager in charge of preparing the company's financial reports; ii) participating in the work of the Independent Committee and the endoconsiliar Committees; iii) examining the results of the activities carried out by the Internal Audit function.

The Board of Statutory Auditors also acknowledged the Attestations, dated 29 March 2024, on the financial statements as of 31 December 2023, pursuant to Article 154-bis, paragraph 5, of Legislative Decree 58/1998 and Article 81-ter of Consob Regulation No. 11971 of 14 May 1999, in which the Chief Executive Officer and the Manager in charge of preparing the company's financial reports attest:

• the adequacy and effective application of the administrative and accounting procedures referred to in Article 154-bis, paragraph 3 of the TUIF;
• that the annual financial statements are prepared in accordance with the applicable international accounting standards recognised in the European Community pursuant to Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002;
• the correspondence of the documents with the entries in the books and records;
• the suitability of the documents to provide a true and fair representation of the assets and liabilities, economic and financial situation of the issuer

The Chief Executive Officer and the Manager Responsible for Financial Reporting also certify that the Management Report includes a reliable analysis of the performance and result of operations, as well as the issuer's situation, together with a description of the main risks and uncertainties to which they are exposed.

Observations on the adequacy of the provisions issued by the company to its subsidiaries pursuant to Article 114(2) of Legislative Decree 58/1998

The Board of Statutory Auditors acquired knowledge and monitored, to the extent of our competence, the provisions issued by the Company to its subsidiaries, pursuant to Article 114, paragraph 2 of the Consolidated Law on Finance, which appear to be adequate; analysed the suitability of the company organisation and the procedures adopted to regularly provide the Company with the economic and financial data of its subsidiaries.

Observations on any significant aspects that emerged during the meetings held with the auditors pursuant to Article 150(2) of Legislative Decree 58/1998

The Independent Auditors, periodically met by the undersigned Board of Auditors, in accordance with the provisions of Article 150, paragraph 3, of Legislative Decree No. 58/1998 (Consolidated Law on Finance) in order to exchange reciprocal information, did not highlight any acts or facts deemed reprehensible and/or irregularities that required the formulation of specific reports pursuant to Article 155, paragraph 2, of Legislative Decree No. 58/1998 (Consolidated Law on Finance).

No information was reported by the auditor on events or circumstances identified during the course of the audit that would cast significant doubt on the Company's or the Group's ability to continue as a going concern, or on significant deficiencies in the internal control system in relation to the financial reporting process and/or accounting system, or on any significant matters concerning actual or alleged non-compliance with laws and regulations or statutory provisions identified during the course of the audit.

The Report on the Audit of the Annual Financial Statements sets out the key aspects that in the auditor's professional opinion were most significant in the audit of the annual financial statements.

Company's adherence to the Corporate Governance Code of the Committee for the Corporate Governance of Listed Companies

In relation to the provisions of Article 149, paragraph 1, letter c-bis, of the Consolidated Law on Financial Intermediation concerning the supervision by the Board of Statutory Auditors 'on the procedures for the concrete implementation of the corporate governance rules set forth in codes of conduct drawn up by management companies of regulated markets or by trade associations, which the company, by means of public disclosures, declares that it complies with, the Board of Statutory Auditors notes that.

• NEXT Re adheres to the Self-Regulatory Code; the Board of Auditors has monitored the concrete implementation of the corporate governance rules set forth therein, and in this regard, the Corporate Governance Report contains information on the ownership structure, adherence to the codes of conduct and compliance with the ensuing commitments, highlighting the choices that the Company has made in applying the principles of self-discipline;
• 3.C.5 of the Self-Regulatory Code, the Board of Statutory Auditors monitored the correct application of the assessment criteria and procedures adopted by the Board of Directors to evaluate the independence of the Directors, as well as their compliance with the provisions of point 3.
• in relation to the assessment to be carried out pursuant to Article 15, paragraph 2, of the Corporate Governance Code, verified the existence of the independence requirements for all Statutory Auditors, informing the Board of Directors of the outcome of the assessment, which was notified in the Corporate Governance Report.

Pursuant to Article 149, paragraph 1, letter c-bis of the Consolidated Finance Act, the Board of Statutory Auditors monitored the concrete implementation of the corporate governance rules set forth in the Corporate Governance Code adopted by the Board of Directors. In particular, with regard to the activities envisaged by the Corporate Governance Code, during the financial year, the Board of Statutory Auditors, in addition to the

7 meetings within its competence, ensured its presence at the meetings of the Board of Directors and the meetings of the endoconsiliar Committees, as well as the Shareholders' Meetings.

The Board of Statutory Auditors, to the extent of its competence, in accordance with the provisions of the Corporate Governance Code, verified the contents of the Report on Corporate Governance prepared in accordance with the instructions contained in the Regulation of Organised Markets managed by Borsa Italiana S.p.A. and in the Consolidated Law on Finance and approved by the Board of Directors on 21 March 2023;

the Board of Statutory Auditors, to the extent of its competence, in accordance with the provisions of the Corporate Governance Code, also verified the contents of the Report on Remuneration prepared by the Directors. With regard to Section I of the aforementioned report, which was expressly approved by the Shareholders' Meeting, it was drafted in accordance with the instructions contained in the Regulation of Organised Markets managed by Borsa Italiana S.p.A. and in the Consolidated Finance Act.

During the financial year 2023, the Board of Statutory Auditors verified the correct application of the criteria and procedures adopted by the Board of Directors to assess the independence of directors.

The assessment was conducted on the basis of the Report on the Results of the Self-Assessment of the Board of Directors and Committees of NEXT Re SIIQ S.p.A. drawn up as a result of the self-assessment process on the composition and functioning of the Board of Directors and its Independent Committee for the financial year 2023, in compliance with the principles of best practice as in particular recommended by the application criterion 1.C.1 g) of the Code of Conduct for Listed Companies implemented by the Company with the Framework Resolution of 15 April 2016.

With regard to the assessment of the independence of its members, the Board of Statutory Auditors verified the existence of the relevant requirements, provided for by both the Consolidated Finance Act and the Corporate Governance Code.

Supervisory activities on the statutory audit of the annual accounts and observations on any relevant issues arising during the meetings held with the auditors pursuant to Article 150, paragraph 2, of Legislative Decree 58/1008

In accordance with the provisions of Article 19 of Legislative Decree No. 39/2010, the Board of Statutory Auditors, in its capacity as the 'Internal Control and Audit Committee', carried out the prescribed supervisory activity on the operations of the Auditing Company EY S.p.A. (the 'Auditing Company' or 'EY'), maintaining periodic meetings and exchanges of data and information with its representatives on the activities carried out, also pursuant to Article 150 of the TUIF. During these meetings, no facts deemed reprehensible, or irregularities were brought to the attention of the Board of Auditors.

The Board of Statutory Auditors analysed the work performed by the auditing firm and, in particular, the methodological framework, the audit approach and the planning of the audit work.

The Board of Statutory Auditors also received information regarding the fees invoiced for the legal audit of the financial statements as of 31 December 2023. The notes to the financial statements contain the information on fees required by Article 149 duodecies of the Issuers' Regulation.

EY issued, on 29 March 2024, its audit report on the financial statements and transmitted without comments the "Additional Report" referred to in Art. 11 of EU Regulation 537/2014 in which it expressed its opinion confirming that the financial statements give a true and fair view of the financial position of the Company as of 31 December 2023, of its results of operations and of its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the measures issued in implementation of Article 9 of Legislative Decree No. 38/2005.

EY also expressed its opinion pursuant to Article 14, paragraph 2, letter e), of Legislative Decree 39/10 and Article 123-bis, paragraph 4, of Legislative Decree 58/98 on the consistency of the report on operations and certain specific information contained in the report on corporate governance and ownership structure indicated in Article. 123-bis, par. 4, of Legislative Decree 58/98, with the financial statements of NEXT Re SIQ S.p.A. as of 31 December 2023 and their compliance with the law, stating that they are consistent with the financial statements of NEXT Re SIIQ S.p.A. as of 31 December 2023 and have been prepared in accordance with the law.

Lastly, on 29 March 2024, the Board of Statutory Auditors received the annual confirmation of independence from the auditing firm pursuant to Article 6, paragraph 2 letter a) of EU Reg. 537/2014 and analysed the risks relating to the independence of the auditing firm and the measures taken by the latter to limit their occurrence, also taking into account the engagements for non-audit services described above. During the year, no critical issues arose with regard to the independence of the Audit Firm.

On 29 March 2024. the Independent Auditional Report pursuant to Article 11 of Regulation (EU) No. 537/2014, of which the annual confirmation of Independence is an integral part.

The auditor did not consider issuing a letter of suggestion to management.

No information was reported by the auditor on events or circumstances identified during the course of the audit that would cast significant doubt on the Company's or the Group's ability to continue as a going concern, or on significant deficiencies in the internal control system in relation to the financial reporting process and or accounting system, or on any significant matters concerning actual or alleged non-compliance with laws and regulations or statutory provisions identified during the course of the audit.

The Auditor's Report on the Audit of the Annual Financial Statements contains an illustration of the key issues that in the Auditor's professional opinion were most significant in the individual financial statements for the year: (i) fair value measurement (IAS 40) of real estate assets.

Observations on any significant aspects that emerged during the meetings held with the auditors pursuant to Article 150(2) of Legislative Decree 58/1998

On the aforementioned key aspects, for which the Auditor's Report illustrates in detail the audit procedures adopted, the Auditor does not express a separate opinion, as they were addressed in the audit and in forming the opinion on the financial statements as a whole. The above-mentioned key aspects were analysed in detail and updated during the regular meetings that the Board of Auditors held with the Auditing Firm.

The Board of Statutory Auditors recommends that the administrative body monitor these areas of the financial statements on a regular basis, even every six months.

Control Body Self-Assessment Process

Lastly, in observance of the new standard Q.1.1 "Self-Assessment of the Board of Statutory Auditors" included in May 2019 in the Rules of Conduct of the Board of Statutory Auditors of Listed Companies issued in April 2018 by the National Council of Chartered Accountants, the Board of Statutory Auditors carried out a self assessment on 24 October 2023, on the occasion of its appointment, on its adequacy in terms of powers, functioning and composition.

The self-assessment report does not highlight any particular critical issues or areas for operational and behavioural improvement.

The results of the self-assessment conducted are forwarded to the Board of Directors, which discloses them in the Corporate Governance Report.

Concluding remarks on the supervisory activity carried out as well as on any omissions, reprehensible facts or irregularities found during the same and indication of any proposals to the shareholders' meeting pursuant to Article 153, paragraph 2, of Legislative Decree 58/98.

In compliance with Consob provisions. the Board of Statutory Auditors specifies that the activities caried out did not reveal any omissions, reprehensible facts or elements of inadequacy of the organisational structure, the internal control system or the administrative accounting system that are relevant for the purposes of this report.

On the basis of the supervisory activity performed during the year, the Board of Statutory Auditors, considering the contents of the report prepared by the Independent Auditors, and having acknowledged the attestations issued jointly by the Chief Executive Officer and the Manager in charge of preparing the company's financial reports, finds no reasons, within its competence, to prevent the approval of the financial statements of NEXT RE SIIQ S.p.A. as of 31 December 2023.

The Board of Auditors

Dr. Luigi Mandolesi (President)

Mr. Domenico Livio Trombone (Standing Auditor)

Ms Sara Mattiussi (Standing Auditor)

Valuations of independent experts

COLLIERS VALUATION ITALY S.R.L.

Corso Matteotti 10

20121 Milano

Partita IVA 06 180000967 colliers.com

Colliers Valuation Italy S.r.l.

	1 Executive summary
	2 Introduction
	2.1 Object and purpose of the valuation
	2.2 Definition of Market Value
	2.3 Limitations and restrictions
	2.4 Conflict of interest
	2.5 Insurance
	2.6 Privacy
	2.7 Release form liability, identification and limitation of damages
	2.8 Independence of the parties
	2.9 Unit of measurement
	2.10 Reference date
	3 General Description of the SIIQ
	3.1 General description
	Valuation
	4.1 Theory and practice in the real estate sector
	4.2 Valuation Reports
	4.3 Rates
	5 ESG and Climate Change Considerations
	6 Conclusions

NEXT RE SIIQ
OWNERSHIP	As of 31% December 2023, the assets are owned by "Next RE SIIQ"
	The estimated amount for which an asset or liability
	should exchange on the valuation date between a
	willing buyer and a willing seller in an arm's length
	VALUATION PREMISES transaction, after proper marketing and where the
	parties had each acted knowledgeably, prudently
	and without compulsion"

2 Introduction

2.1 Object and purpose of the valuation

Object of this instruction is the valuation of the assets owned by Next RE SIIQ.

2.2 Definition of Market Value

In implementing the valuation process, Colliers confirms that the report is based on the valuation criteria contained in the Red Book RICS (Replacement cost approach, Comparison approach, Income approach, etc.) and in line with IVS (International Valuation Standards). Please note that in compliance with RICS Valuation Standards the valuation report may be subject to monitoring under the Institution's conduct & disciplinary regulations.

The "Current Value" or "Market Value" of a property is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion" (Red Book RICS). The Market Value refers to the fair amount (price) at which a piece of real estate can reasonably be transferred, at a certain date, from a seller to a purchaser, with neither of the two parties being forced to sell or purchase and both of which are fully aware of all of the significant factors regarding the subject property, of its possible uses, of its characteristics and of the existing market conditions.

The sale price of the asset will therefore be determined based on normal sales conditions, which are present when:

• · the seller truly intends to sell the asset and is not subject to circumstances of an economic/financial nature that influence its willingness to sell;
• · there is a reasonable amount of time, considering the type of asset and the market situation, to market the asset, carry out sales negotiations and define the relative contractual conditions;
• · the terms of the sales transaction reflect the true conditions of the real estate market of the zone in which the asset is located:

Colliers Valuation Italy S.r.l.

· offers to purchase the asset reflect real market conditions, and any offers that are not in line with the market (due to the subjective opinion of the purchaser, acting according to principles that do not significantly impact the market economically) are not taken into consideration.

2.3 Limitations and restrictions

We would like to draw attention to a number of fundamental assumptions to which we have referred in preparing this report:

• · Sources of information: this report has been prepared on the basis of information provided to us by the Client, who provide us all the relevant information concerning the asset;
• · Areas: these have been provided by the client and, according to the Clients instructions, were not verified during the course of the inspection;
• · Title deeds: the valuation is based on information provided by the client. Unless otherwise specified, it is assumed that the client possesses or will possess regular titles of ownership and that there are no third-party claims, obligations, restrictions and/or encumbrances and/or pending litigation that may impact use of the asset;
• · Leasing situation: the property's leasing situation was provided by the Client;
• · Regulatory assessments: without prejudice to what has been determined from the information provided by the client, no environmental impact surveys have been carried out, and it is assumed that the property is not in abnormal condition and that neither archaeological remains nor dangerous or deleterious materials that could adversely affect occupation of the site, marketing of the property or current/future values of the asset are present;
• · Expenses: no allowances have been made for any sale/purchase expenses, such as legal, tax or agency costs, except for those regarding letting of the areas. The property has been considered in its existing state, not encumbered by any mortgages and free from restrictions or easements of any type, except that which is specifically stated in the report;
• · Taxes, duties and other transfer costs: no deductions have been made from the values expressed in this report for any taxes or duties, or any legal, agency or other costs;

Should this information prove to be incorrect or incomplete, the property valuation could alter and, therefore, we reserve the right, if necessary, to revise our conclusions.

Colliers Valuation Italy S.r.l.

Pag. 6 di 20

.

Conflict of interest 2.4

Colliers is not aware of any conflict of interest that may arise from carrying out this assignment. Should we become aware of a potential conflict of interest, Colliers will promptly inform the Client, in order to decide upon how to proceed. We would like to inform that Colliers International SPA, a different company with a different share stakeholders' panel, is currently involved in the CO-agency activity on the asset located in Corso Italia 3, Milan. We confirm again that no conflict of interest arises.

25 Insurance

The professional activities performed by Colliers are covered by Professional Insurance, maximum coverage Euros 25,000,000.00 (euros twenty-five million/00).

2.6 Privacy

For the fulfilment of the obligation to verify customers and their data, we will enter into possession of your personal and tax data, which the law qualifies as personal. With reference to personal data, we inform you that all data processing is done in compliance with the provisions of articles 6 and 32 of the GDPR and through the adoption of the appropriate security measures.

Your personal data may be processed by Colliers, through manual processing (paper archives) or electronic tools (electronic databases, organized with various classification systems), according to logic strictly related to the purposes themselves and, in any case, so as to guarantee the security and confidentiality of the data.

The data controller is Colliers. Some categories of employees and collaborators of the Data Controller, as data processors, can access personal data for the purpose of fulfilling their job duties. Your data may be communicated to other managers who will be duly appointed as Data Processors, by the Data Controller. Your personal data will not be otherwise disseminated in any way. We point out that, in compliance with the principles of lawfulness, purpose limitation and minimization of data processing, pursuant to Article 5 of the retention period of your personal data is established for a period of time not exceeding the achievement of purposes for which they are collected and that the data will be processed in compliance with the mandatory time limits prescribed by law. You have the right to obtain from the data controller, the cancellation, limitation, updating, correction, portability, opposition to the processing of personal

Colliers Valuation Italy S.r.l.

Pag. 7 di 20

2.8 Independence of the parties

Colliers and the Client act as independent parties, each in respect of the limits of the other. In carrying out the activities envisaged by the assignment, Colliers reserves the right to use external advisors and/or collaborators, it being understood that no relationship shall be established between the Client and these external advisors and/or collaborators, and that Colliers shall remain solely and exclusively responsible for the work of external advisors and/or collaborators and for execution of the assignment at the agreed conditions, pursuant to the law. Colliers confirms that sub-contracting requires prior written consent by PGIM.

2.9 Unit of measurement

The areas in this report are expressed in square meters (sqm) and the values in Euros (€).

2.10 Reference date

This assignment refers to the date of 31/12/2023. Unless otherwise stated, any information emerging during this assignment refers to this date.

Colliers Valuation Italy S.r.l.

N.	Address	City	Province	Region	Market Value 31.12.2023
	Viale Saverio Dioguardi 1	Bari	BA	Puglia	14.300.000 €
	Corso San Gottardo 29/31	Milan	MI	Lombardy	15.650.000 €
3	Via Cuneo 2	Milan	MI	Lombardy	25.950.000 €
4	via Spadari 2 B	Milan	MI	Lombardy	8.250.000 €
5	via Spadari 2 A	Milan	MI	Lombardy	47,500,000 €
6	via Vinicio Cortese 147	Roma	RM	Lazio	4.700.000 €
	via Zara 22/32	Roma	RM	Lazio	15.700.000 €
	Total				132.050.000 €

4 Valuation

4.1 Theory and practice in the real estate sector

In determining the valuation process, we adhered to the generally accepted principles and criteria, in accordance with the International Valuation Standards (IVS) and the professional best practices in the appraisal field.

As far as property valuation criteria, practices and valuation theory in the real estate sector are concerned, three different approaches are used:

• · The construction cost approach, which expresses the value of an asset based on the costs necessary for its construction or replacement, appropriately depreciated according to age, general conditions, functional, economic or environmental obsolescence and all other age factors deemed relevant. The value of an asset can be calculated as the depreciated cost of reconstruction when there is no market for similar assets, and the value may be expressed as current cost of reconstruction. Determination of the construction cost has three fundamental components: appraisal of the land, estimate of the building construction cost and estimate of the appreciation/depreciation factors;
• · The Market Approach defined as "an approach that provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available" (Red Book RICS, January 2020). Such approach expresses the value of an asset based on the average sales prices observed in the local markets, taking into account specific characteristics of the individual assets. The prices used are those obtained from transactions that are comparable in terms of type, location and use of the asset. Application of the sales comparison approach is carried out following the achievement of two objectives: identification of a sample of homogeneous assets and determination of the transaction prices. Furthermore, the appreciation/depreciation factors must also be estimated. Use of this method leads to the determination of average values per square metre inferred from the market transactions;
• · The Income Approach, defined as the "approach that provides an indication of value by converting future cash flows to a single current capital value" (Red Book RICS). The income approach is based on the assumption that a rational buyer is not willing to pay a price greater than the present value of benefits that the asset will be able to produce. Application of this approach consists of three phases: determination of the expected economic benefits, Colliers Valuation Italy S.r.l. Pag. 11 di 20

definition of the type of algebraic relationship linking the value to income and selection of a discount/capitalisation rate.

4.2 Valuation Reports

The valuation activity has been described in reports, one for each asset, whose contents are essentially the same for each property.

Follow, by way of example and not limited to, the topics included:

• · An executive summary which displays the main information of the object of the report;
• · An introduction which defines the object and the purpose of the valuation, the limitations and restrictions;
• · A part dedicated to the description of the asset, including the description of the location, the size and area subdivision, the tenancy and the town planning considerations.
• · A market analysis, both general and specific of the office market in the area in which the assets are located;
• · The valuation process and the adopted criteria, the calculation of the commercial areas and of the Reinstatement Value;
• . The conclusions;
• The pictures of the assets. .

Colliers Valuation Italy S.r.l.

4.3 Rates

For the valuation of the assets we used two different rates:

Discount Rate: the discount rate was determined based on the ratio of equity to debt; in this case, we use the Weighted Average Cost of Capital as the discount rate.

In order to assess the appropriate discount rate, we applied the following equation:

WACC= Debt Ratio*Kd + Equity Ratio*Ke

Capitalization Rate: the adopted cap rates have been determined through comparison, by interviewing several of the main operators, both local and not, and by gathering their impressions after the description of the characteristics of the assets.

In this valuation, considering the management activity of the reference market of the initiative (both in terms of destination of use and location) and the timing variance both for the location of the spaces and the sale, the following factors have been taken into account (supported by a market analysis carried out among investors and credit institutes):

Economic Factors:

• · BTP- Buoni del Tesoro Poliennali (Italian Treasure Bonds): Average monthly yield over the past 5 years with maturity date based on the model term period. These values were taken from historical financial market series;
• · A premium risk specific of each single initiative, an additional premium location and a risk related to illiquidity.

Debt Factors:

• · Euribor 6 months: 4,03 % (issue date 01/12/2023);
• · Spread investment risk: It was adopted a rate of 1,75%. Based on market practice and modelled on the characteristics of the asset from the perspective of a hypothetical creditor, the determination process takes into account the asset type, market liquidity, and project feasibility. Generally, a minimum rate of 1.50% is assumed for residential/core-plus projects, up to a maximum of 4.00% for developments/opportunistic investments.
• · Debt Ratio: in this case we assumed a debt ratio of 60%, as Italian Best practice.

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5 ESG and Climate Change Considerations

In the past, the profitability of investments was assessed solely based on their ability to generate value. However, in the perspective of sustainable finance today, the potential benefits of the property for society as a whole and for the environment are now a fundamental component.

The RICS Valuation Standards - Red Book - Global Valuation Standards, referred to in this context, introduce the ESG theme and begin to provide some general guidance. RICS outlines the actions that the valuer should follow, referencing site inspections for collecting data relevant to the assessment of this aspect, and the content of valuation reports, although it does not provide detailed operational guidance.

The acronym ESG refers to the criteria that together define the framework for assessing the impact of a company's sustainability and ethical practices on its financial performance and operations. It includes three pillars: environmental, social, and governance, which collectively contribute to effective performance benefiting markets, companies, and the world as a whole.

Although ESG primarily pertains to companies and investors, ESG factors are also used to describe the characteristics and, if applicable, the operation of individual assets. They are particularly relevant in terms of market and societal perception and influence.

The range of issues to be addressed includes, but is not limited to, major physical risks such as floods, heat, fires, and storms, and transitional risks such as energy efficiency, carbon emissions, and climate impact. The impact of these risks can be influenced by the current and historical use of the land, as well as by design, configuration, accessibility, legislation, and regulatory management.

Sustainability issues can impact buyer behaviour and may also be considered by investors, institutional entities, insurers, and public authorities, especially in relation to:

• · Sustainability and ESG issues (see above), including, if applicable, climate change and resilience to climate change;
• · Configuration and design, including the use of materials and design increasingly oriented towards "well-being";
• · Accessibility and adaptability, including access and use by persons with reduced abilities;

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• · Carbon emissions, energy efficiency, building "intelligence," and other "usage costs";
• Tax considerations.

In addition to obtaining information on current or foreseen changes, all sustainability and ESG factors that could influence the valuation, such as existing or to-be-obtained certifications (LEED, BREEAM, WELL, APE, etc.) and obtained ESG benchmarks (GRESB, ISR Label, etc.), will be analyzed to duly consider them in both the "As is" property valuation and the "To be" valuation, postredevelopment. These certifications are observed to be of interest to international investors looking to acquire certified and conductive real estate assets, especially those associated with international corporations.

The table below displays the certifications related to the properties in the portfolio:

	N. Address	City	Destinazione d'uso	Data	Data certificazione validità rinnovo	Certificazioni Bream
	1 Viale Saverio Dioguardi 1	Bari	Direzionale	19/11/2021	19/11/2024 Good
	2 Corso San Gottardo 29/31	Milan	Commerciale	23/05/2022	23/05/2024	Pass
	3 Via Cuneo 2	Milan	Commerciale	23/05/2022	23/05/2024	Good
্র	via Spadari 2 B	Milan	Commerciale/Direzionale solo terzo piano	23/05/2022	23/05/2024	Good
	5 via Spadari 2 A	Milan				(solo porzione Uffici)
	6 via Vinicio Cortese 147	Roma	Direzionale/Archivio	23/05/2022	23/05/2024	Good
	7 via Zara 22/32	Roma	Commerciale/Direzionale	19/11/2021	19/11/2024	Good

The analysis of the impact of climate change on property values reveals a growing relevance of the ESG (Environmental, Social, and Governance) approach in real estate investment. It is essential to note that specific evidence may vary depending on the region, property type, and local conditions. Key elements contributing to the impact of climate change on property values include:

• · Exposure to natural disasters: Properties located in high-risk areas for catastrophic events such as floods, hurricanes, or fires may experience a decrease in market value.
• · Energy sustainability: Investor interest is increasing in properties adopting energy efficiency measures and renewable energy sources.
• · Adaptation and resilience: Properties designed to withstand the impacts of climate change, with advanced structural adaptation features and resilience systems, tend to maintain or increase their value over time.
• · Regulations and ESG standards: The adoption of stricter sustainability regulations and adherence to ESG standards can influence the values of real estate properties.

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6 Conclusions

Considering the foregoing, the Market Value of the assets included within Next RE SIIQ, in the current market conditions is equal to:

€ 132.050.000,00

(One Hundred Thirty-Two Million and Fifty Thousand /00)

N	Address	City	Province		Surface	GLA	Market Value
				Region			31.12.2023
	Viale Saverio Dioguardi 1	Bari	BA	Puglia	sam 19.118	sam 10.485	14.300.000 €
	Corso San Gottardo 29/31	Milan	MI	Lombardy	sqm 4.928	sqm 2.620	15.650.000 €
3	Via Cuneo 2	Milan	MI	Lombardy	sqm 6.395	sam 3.327	25.950.000 €
4	via Spadari 2 B	Milan	MI	Lombardy	sam 941	sam 809	8.250.000 €
5	via Spadari 2 A	Milan	MI	Lombardy	sqm 2.858	sqm 2.014	47.500.000 €
6	via Vinicio Cortese 147	Roma	RM	Lazio	sqm 4.580	sqm 2.496	4.700.000 €
	via Zara 22/32	Roma	RM	Lazio	sqm 5.058	sqm 3.068	15.700.000 €
	Total				sqm 43.879	sqm 24.819	132.050.000 €

The valuation was produced in relation to the specific assignment conferred the 06/07/2022 by Next RE SIIQ, pursuant to and in accordance with article 16, clause 5 of Ministerial Decree no. 30 of 5th March 2015; all the mentioned subjects are in possession of the requirements prescribed by clause 2 of the same article 16.

A copy of the engagement letter is attached, pursuant to and in accordance with article 16, clause 4, of the M.D. n. 30 of 5 March 2015.

The Colliers Valuation Italy Srl team participating in the valuation process for this property consisted of the following individuals:

• · Arch. Giuseppe Bonomi MRICS (CEO Chief Executive Officer Head of the Valuation Process)
• · Dott. Matteo Basile MRICS (Head of Valuation National clients)
• · Dott.ssa Chiara Citterio (Senior Valuer)

Colliers Valuation Italy Srl

Arch. Giuseppe Bonomi MRICS

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