Esprinet S p A : Independent auditor’s report – Financial Statement 2020

Independent auditor's report

in accordance with article 14 of Legislative Decree No. 39 of 27 January 2010 and article 10 of Regulation (EU) No. 537/2014

To the Shareholders of Esprinet SpA

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Esprinet SpA (hereinafter, also, "the Company"), which comprise the statement of financial position as of 31 December 2020, the separate income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Company as of 31 December 2020, and of the result of its operations and 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 regulations issued to implement article 9 of Legislative Decree No. 38/05.

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 this report. We are independent of the Company pursuant to the regulations and standards on ethics and independence applicable to audits of financial statements under Italian law. 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 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.

Key Audit Matters	Auditing procedures performed in
	response to key audit matters
Investments in subsidiaries

Note 5 "Investments" to the separate financial statements as of 31 December 2020.

In the separate financial statements as of 31 December 2020 investments in subsidiaries, valued at cost, amounted to Euro 83 million.

The Company verifies annually if there is an indication that investments in subsidiaries might be impaired and, when necessary, compares the carrying amount of the investments to their respective recoverable amounts, in compliance with the requirements established by the International Accounting Standard "IAS 36 - Impairment of Assets".

The recoverable amount of investments in subsidiaries has been measured as the higher of value in use, which has been calculated as the present value of future cash flows for 2021-2025 and the estimate of a terminal value, and fair value less costs of disposal, determined through the income approach.

As of 31 December 2020, and as a result of the analysis performed, the directors recognized in the separate income statement an impairment losse amount of Euro 4,8 million.

We consider the valuation of investments in subsidiaries a key audit matter due to its materiality and the level of judgement required by the directors in the estimation process with reference to potential indicators of impairment and the estimate of the recoverable amount.

We gained an understanding and evaluated the procedures implemented by the directors to verify the carrying amount of the investments in subsidiaries and their potential impairment indicators.

We verified the method used by the directors to identify and evaluate potential impairment indicators of the investments in subsidiaries. We compared book values of investments with the corresponding equity values as of 31 December 2020 and compared the business performance of each investment with forecasts set out by the directors.

We discussed with the directors, and the auditors of the subsidiaries, the financial performance as well as the corresponding information and data used in the context of the impairment tests performed.

We verified the valuation method, mathematical accuracy and reasonableness of the assumptions used in the impairment test.

In order to support the analyses, we engaged experts belonging to the PwC network.

Revenue recognition net of rebates and discounts

Note 2.4.2 "Critical accounting estimates and assumptions - Revenues adjustments and credit notes to be issued toward customers" to the separate financial statements as of 31 December 2020

2 of 7

Key Audit Matters	Auditing procedures performed in
	response to key audit matters

The Company operates in the 'business-to- business' (B2B) distribution of Information Technology (IT) and consumer electronics.

In line with industry's practices, the Company recognizes rebates and discounts to customers based on contractual agreements in place. Such adjustments, including the year-end estimate, are accounted for as a reduction in revenues and account receivables.

Revenue recognition, net of rebates and discounts, required audit focus due to the significant number of transactions and elements of uncertainty inherent in the estimation process due to numerous contracts with a variety of contractual terms and complex calculations.

We gained an understanding and evaluated the internal control system implemented by the Company related to the revenue recognition process under IFRS 15, including adjustments for rebates and discounts towards customers.

We validated the operating effectiveness of key controls (manual and automated) identified, in certain instances engaging experts in IT systems and business process analysis belonging to the PwC network.

We carried out testing procedures on a sample basis and analyzed the supporting documentation obtained to verify the existence, completeness, accuracy and cut-off of transactions.

Additionally, we verified the reasonableness of the directors' assumptions by comparing prior year's estimate against actual results and comparing estimates as of 31 December 2020 with credit notes issued after year-end.

We analyzed the main commercial agreements in place with customers to verify that related contractual terms were properly evaluated by the directors in the revenue's adjustments computation.

We performed external confirmation procedures on a sample basis with the aim of obtaining additional evidence to support trade receivables booked and related revenues.

Accounting of costs adjustments from suppliers

Note 2.4.2 "Critical accounting estimates and assumptions - Costs adjustments and credit notes due from vendors" to the separate financial statements as of 31 December 2020

The Company has agreements in place with suppliers for reimbursements of joint marketing activities, contractual stock protection, rebates for

We gained an understanding and evaluated the internal control system implemented by the Company related to

3 of 7

Key Audit Matters	Auditing procedures performed in
	response to key audit matters

achieving targets and incentives of various kind. These adjustments, including the year-end estimate, are accounted for as a reduction in costs and account payables.

The accounting for costs adjustments from suppliers required audit focus, due to the significant number of transactions and elements of uncertainty inherent to the estimation process due to numerous contracts with a variety of contractual terms and complex calculations.

adjustments from suppliers.

We validated the operating effectiveness of the key controls (manual and automated) identified.

We carried out testing procedures on a sample basis through the analysis of the supporting documentation and the contractual terms in place with suppliers.

Additionally, we verified the reasonableness of the directors' assumptions by comparing prior year's estimate against actual results and comparing estimates as of 31 December 2020 with credit notes received after year- end.

We performed external confirmation procedures on a sample basis with the aim of obtaining additional evidence to support trade payables and related costs.

Contingent liabilities and Provisions for risks and charges

Note 26 "Non-current provisions and other liabilities" to the separate financial statements as of 31 December 2020

The Company is involved in several tax disputes.

Consistent with previous years, the directors, with the support of external legal and tax counsel, do not consider the risk of occurrence of significant liabilities related to these matters to be probable. As such, no specific provision has been recorded. The Company directors' judgement is high in connection with these disputes, specifically with reference to the assessment of the uncertainties related to their expected results.

Management's assessment of risks related to these proceedings was an area of focus in the context of our audit activities. This was due to the complexity and uncertainty of management's estimate.

We analyzed management's process to identify and evaluate contingent liabilities and estimate related accruals.

Among other things, these activities have been performed through various discussions held with Esprinet's directors with the aim of gaining an understanding of the liabilities' estimation process, the defensive strategy and actions which have been defined based on claims received.

We analyzed supporting documentation underlying the facts of these disputes and have obtained confirmations directly from the company's external tax and legal counsel.

4 of 7

Key Audit Matters	Auditing procedures performed in
	response to key audit matters
	We verified the adequacy of the financial
	statements disclosure based on international
	financial reporting standards requirements,
	also considering information and data
	obtained during our audit.

Responsibilities of the Directors and the Board of Statutory Auditors for the Financial Statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05 and, in the terms prescribed by 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, in preparing the financial statements, for the appropriate application of the going concern basis of accounting, and for disclosing matters related to going concern. In preparing the financial statements, the directors use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The board of statutory auditors is responsible for overseeing, in the terms prescribed by law, 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 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of our audit conducted in accordance with International Standards on Auditing (ISA Italia), we exercised our professional judgement and maintained professional scepticism throughout the audit. Furthermore:

• We identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error; we designed and performed audit procedures responsive to those risks; we 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;

5 of 7